G.R. No.
163707 September 15, 2006 Remedios and her minor children discharge the estate of Sima
MICHAEL C. GUY, petitioner,
vs.
HON. COURT OF APPEALS, HON. SIXTO MARELLA, JR.,
Presiding Judge, RTC, Branch 138, Makati City and minors,
KAREN DANES WEI and KAMILLE DANES WEI, represented by
their mother, REMEDIOS OANES, respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari assails the January 22,
2004 Decision1 of the Court of Appeals in CA-G.R. SP No. 79742,
which affirmed the Orders dated July 21, 20002 and July 17,
20033 of the Regional Trial Court of Makati City, Branch 138 in
SP Proc. Case No. 4549 denying petitioner's motion to dismiss;
and its May 25, 2004 Resolution4 denying petitioner's motion for
reconsideration.
The facts are as follows:
On June 13, 1997, private respondent-minors Karen Oanes Wei
and Kamille Oanes Wei, represented by their mother Remedios
Oanes (Remedios), filed a petition for letters of administration5
before the Regional Trial Court of Makati City, Branch 138. The
case was docketed as Sp. Proc. No. 4549 and entitled Intestate
Estate of Sima Wei (a.k.a. Rufino Guy Susim).
Private respondents alleged that they are the duly
acknowledged illegitimate children of Sima Wei, who died
intestate in Makati City on October 29, 1992, leaving an estate
valued at P10,000,000.00 consisting of real and personal
properties. His known heirs are his surviving spouse Shirley Guy
and children, Emy, Jeanne, Cristina, George and Michael, all
surnamed Guy. Private respondents prayed for the appointment
of a regular administrator for the orderly settlement of Sima
Wei's estate. They likewise prayed that, in the meantime,
petitioner Michael C. Guy, son of the decedent, be appointed as
Special Administrator of the estate. Attached to private
respondents' petition was a Certification Against Forum
Shopping6 signed by their counsel, Atty. Sedfrey A. Ordoñez.
In his Comment/Opposition,7 petitioner prayed for the dismissal
of the petition. He asserted that his deceased father left no
debts and that his estate can be settled without securing
letters of administration pursuant to Section 1, Rule 74 of the
Rules of Court. He further argued that private respondents
should have established their status as illegitimate children
during the lifetime of Sima Wei pursuant to Article 175 of the
Family Code.
The other heirs of Sima Wei filed a Joint Motion to Dismiss 8 on
the ground that the certification against forum shopping should
have been signed by private respondents and not their counsel.
They contended that Remedios should have executed the
certification on behalf of her minor daughters as mandated by
Section 5, Rule 7 of the Rules of Court.
In a Manifestation/Motion as Supplement to the Joint Motion to
Dismiss,9 petitioner and his co-heirs alleged that private
respondents' claim had been paid, waived, abandoned or
otherwise extinguished by reason of Remedios' June 7, 1993
Release and Waiver of Claim stating that in exchange for the
financial and educational assistance received from petitioner,
1
Wei from any and all liabilities.
The Regional Trial Court denied the Joint Motion to Dismiss as
well as the Supplemental Motion to Dismiss. It ruled that while
the Release and Waiver of Claim was signed by Remedios, it
had not been established that she was the duly constituted
guardian of her minor daughters. Thus, no renunciation of right
occurred. Applying a liberal application of the rules, the trial
court also rejected petitioner's objections on the certification
against forum shopping.
Petitioner moved for reconsideration but was denied. He filed a
petition for certiorari before the Court of Appeals which
affirmed the orders of the Regional Trial Court in its assailed
Decision dated January 22, 2004, the dispositive portion of
which states:
WHEREFORE, premises considered, the present
petition is hereby DENIED DUE COURSE and
accordingly DISMISSED, for lack of merit.
Consequently, the assailed Orders dated July 21, 2000
and July 17, 2003 are hereby both AFFIRMED.
Respondent Judge is hereby DIRECTED to resolve the
controversy over the illegitimate filiation of the
private respondents (sic) minors [-] Karen Oanes Wei
and Kamille Oanes Wei who are claiming successional
rights in the intestate estate of the deceased Sima
Wei, a.k.a. Rufino Guy Susim.
SO ORDERED.10
The Court of Appeals denied petitioner's motion for
reconsideration, hence, this petition.
Petitioner argues that the Court of Appeals disregarded existing
rules on certification against forum shopping; that the Release
and Waiver of Claim executed by Remedios released and
discharged the Guy family and the estate of Sima Wei from any
claims or liabilities; and that private respondents do not have
the legal personality to institute the petition for letters of
administration as they failed to prove their filiation during the
lifetime of Sima Wei in accordance with Article 175 of the
Family Code.
Private respondents contend that their counsel's certification
can be considered substantial compliance with the rules on
certification of non-forum shopping, and that the petition raises
no new issues to warrant the reversal of the decisions of the
Regional Trial Court and the Court of Appeals.
The issues for resolution are: 1) whether private respondents'
petition should be dismissed for failure to comply with the rules
on certification of non-forum shopping; 2) whether the Release
and Waiver of Claim precludes private respondents from
claiming their successional rights; and 3) whether private
respondents are barred by prescription from proving their
filiation.
The petition lacks merit.
Rule 7, Section 5 of the Rules of Court provides that the
certification of non-forum shopping should be executed by the
plaintiff or the principal party. Failure to comply with the
requirement shall be cause for dismissal of the case. However,
a liberal application of the rules is proper where the higher
interest of justice would be served. In Sy Chin v. Court of
Appeals,11 we ruled that while a petition may have been flawed
where the certificate of non-forum shopping was signed only by
counsel and not by the party, this procedural lapse may be
overlooked in the interest of substantial justice. 12 So it is in the
present controversy where the merits 13 of the case and the
absence of an intention to violate the rules with impunity
should be considered as compelling reasons to temper the strict
application of the rules.
As regards Remedios' Release and Waiver of Claim, the same
does not bar private respondents from claiming successional
rights. To be valid and effective, a waiver must be couched in
clear and unequivocal terms which leave no doubt as to the
intention of a party to give up a right or benefit which legally
pertains to him. A waiver may not be attributed to a person
when its terms do not explicitly and clearly evince an intent to
abandon a right.14
In this case, we find that there was no waiver of hereditary
rights. The Release and Waiver of Claim does not state with
clarity the purpose of its execution. It merely states that
Remedios received P300,000.00 and an educational plan for her
minor daughters "by way of financial assistance and in full
settlement of any and all claims of whatsoever nature and kind
x x x against the estate of the late Rufino Guy Susim."15
Considering that the document did not specifically mention
private respondents' hereditary share in the estate of Sima Wei,
it cannot be construed as a waiver of successional rights.
Moreover, even assuming that Remedios truly waived the
hereditary rights of private respondents, such waiver will not
bar the latter's claim. Article 1044 of the Civil Code, provides:
ART. 1044. Any person having the free disposal of his
property may accept or repudiate an inheritance.
Any inheritance left to minors or incapacitated
persons may be accepted by their parents or
guardians. Parents or guardians may repudiate the
inheritance left to their wards only by judicial
authorization.
The right to accept an inheritance left to the poor
shall belong to the persons designated by the testator
to determine the beneficiaries and distribute the
property, or in their default, to those mentioned in
Article 1030. (Emphasis supplied)
Parents and guardians may not therefore repudiate the
inheritance of their wards without judicial approval. This is
because repudiation amounts to an alienation of property16
which must pass the court's scrutiny in order to protect the
interest of the ward. Not having been judicially authorized, the
Release and Waiver of Claim in the instant case is void and will
not bar private respondents from asserting their rights as heirs
of the deceased.
Furthermore, it must be emphasized that waiver is the
intentional relinquishment of a known right. Where one lacks
knowledge of a right, there is no basis upon which waiver of it
can rest. Ignorance of a material fact negates waiver, and
waiver cannot be established by a consent given under a
mistake or misapprehension of fact.17
2
In the present case, private respondents could not have possibly
waived their successional rights because they are yet to prove
their status as acknowledged illegitimate children of the
deceased. Petitioner himself has consistently denied that
private respondents are his co-heirs. It would thus be
inconsistent to rule that they waived their hereditary rights
when petitioner claims that they do not have such right. Hence,
petitioner's invocation of waiver on the part of private
respondents must fail.
Anent the issue on private respondents' filiation, we agree with
the Court of Appeals that a ruling on the same would be
premature considering that private respondents have yet to
present evidence. Before the Family Code took effect, the
governing law on actions for recognition of illegitimate children
was Article 285 of the Civil Code, to wit:
ART. 285. The action for the recognition of natural
children may be brought only during the lifetime of
the presumed parents, except in the following cases:
(1) If the father or mother died during the minority
of the child, in which case the latter may file the
action before the expiration of four years from the
attainment of his majority;
(2) If after the death of the father or of the mother a
document should appear of which nothing had been
heard and in which either or both parents recognize
the child.
In this case, the action must be commenced within
four years from the finding of the document.
(Emphasis supplied)
We ruled in Bernabe v. Alejo18 that illegitimate children who
were still minors at the time the Family Code took effect and
whose putative parent died during their minority are given the
right to seek recognition for a period of up to four years from
attaining majority age. This vested right was not impaired or
taken away by the passage of the Family Code.19
On the other hand, Articles 172, 173 and 175 of the Family
Code, which superseded Article 285 of the Civil Code, provide:
ART. 172. The filiation of legitimate children is
established by any of the following:
(1) The record of birth appearing in the civil register
or a final judgment; or
(2) An admission of legitimate filiation in a public
document or a private handwritten instrument and
signed by the parent concerned.
In the absence of the foregoing evidence, the
legitimate filiation shall be proved by:
(1) The open and continuous possession of the status
of a legitimate child; or
(2) Any other means allowed by the Rules of Court and
special laws.
 ART. 173. The action to claim legitimacy may be
brought by the child during his or her lifetime and
shall be transmitted to the heirs should the child die
during minority or in a state of insanity. In these
cases, the heirs shall have a period of five years
within which to institute the action.
The action already commenced by the child shall
survive notwithstanding the death of either or both of
the parties.
ART. 175. Illegitimate children may establish their
illegitimate filiation in the same way and on the same,
evidence as legitimate children.
The action must be brought within the same period
specified in Article 173, except when the action is
based on the second paragraph of Article 172, in
which case the action may be brought during the
lifetime of the alleged parent.
Under the Family Code, when filiation of an illegitimate child is
established by a record of birth appearing in the civil register or
a final judgment, or an admission of filiation in a public
document or a private handwritten instrument signed by the
parent concerned, the action for recognition may be brought by
the child during his or her lifetime. However, if the action is
based upon open and continuous possession of the status of an
illegitimate child, or any other means allowed by the rules or
special laws, it may only be brought during the lifetime of the
alleged parent.
It is clear therefore that the resolution of the issue of
prescription depends on the type of evidence to be adduced by
private respondents in proving their filiation. However, it would
be impossible to determine the same in this case as there has
been no reception of evidence yet. This Court is not a trier of
facts. Such matters may be resolved only by the Regional Trial
Court after a full-blown trial.
While the original action filed by private respondents was a
petition for letters of administration, the trial court is not
precluded from receiving evidence on private respondents'
filiation. Its jurisdiction extends to matters incidental and
collateral to the exercise of its recognized powers in handling
the settlement of the estate, including the determination of
the status of each heir.20 That the two causes of action, one to
compel recognition and the other to claim inheritance, may be
joined in one complaint is not new in our jurisprudence.21 As
held in Briz v. Briz:22
The question whether a person in the position of the
present plaintiff can in any event maintain a complex
action to compel recognition as a natural child and at
the same time to obtain ulterior relief in the
character of heir, is one which in the opinion of this
court must be answered in the affirmative, provided
always that the conditions justifying the joinder of the
two distinct causes of action are present in the
particular case. In other words, there is no absolute
necessity requiring that the action to compel
acknowledgment should have been instituted and
prosecuted to a successful conclusion prior to the
action in which that same plaintiff seeks additional
relief in the character of heir. Certainly, there is
nothing so peculiar to the action to compel
acknowledgment as to require that a rule should be
3
here applied different from that generally applicable
in other cases. x x x
The conclusion above stated, though not heretofore
explicitly formulated by this court, is undoubtedly to
some extent supported by our prior decisions. Thus,
we have held in numerous cases, and the doctrine
must be considered well settled, that a natural child
having a right to compel acknowledgment, but who
has not been in fact acknowledged, may maintain
partition proceedings for the division of the
inheritance against his coheirs (Siguiong vs. Siguiong,
8 Phil., 5; Tiamson vs. Tiamson, 32 Phil., 62); and the
same person may intervene in proceedings for the
distribution of the estate of his deceased natural
father, or mother (Capistrano vs. Fabella, 8 Phil., 135;
Conde vs. Abaya, 13 Phil., 249; Ramirez vs. Gmur, 42
Phil., 855). In neither of these situations has it been
thought necessary for the plaintiff to show a prior
decree compelling acknowledgment. The obvious
reason is that in partition suits and distribution
proceedings the other persons who might take by
inheritance are before the court; and the declaration
of heirship is appropriate to such proceedings.
WHEREFORE, the instant petition is DENIED. The Decision
dated January 22, 2004 of the Court of Appeals in CA-G.R. SP
No. 79742 affirming the denial of petitioner's motion to dismiss;
and its Resolution dated May 25, 2004 denying petitioner's
motion for reconsideration, are AFFIRMED. Let the records be
REMANDED to the Regional Trial Court of Makati City, Branch
138 for further proceedings.
SO ORDERED.
G.R. No. 164527 August 15, 2007
FRANCISCO I. CHAVEZ, Petitioner,
vs.
NATIONAL HOUSING AUTHORITY, R-II BUILDERS, INC., R-II
HOLDINGS, INC., HARBOUR CENTRE PORT TERMINAL, INC.,
and MR. REGHIS ROMERO II, Respondents.
DECISION
VELASCO, JR., J.:
In this Petition for Prohibition and Mandamus with Prayer for
Temporary Restraining Order and/or Writ of Preliminary
Injunction under Rule 65, petitioner, in his capacity as
taxpayer, seeks:
to declare NULL AND VOID the Joint Venture Agreement (JVA)
dated March 9, 1993 between the National Housing Authority
and R-II Builders, Inc. and the Smokey Mountain Development
and Reclamation Project embodied therein; the subsequent
amendments to the said JVA; and all other agreements signed
and executed in relation thereto – including, but not limited to
the Smokey Mountain Asset Pool Agreement dated 26
September 1994 and the separate agreements for Phase I and
Phase II of the Project––as well as all other transactions which
emanated therefrom, for being UNCONSTITUTIONAL and
INVALID;
to enjoin respondents—particularly respondent NHA—from
further implementing and/or enforcing the said project and
other agreements related thereto, and from further deriving
and/or enjoying any rights, privileges and interest therefrom x
x x; and
to compel respondents to disclose all documents and
information relating to the project––including, but not limited
to, any subsequent agreements with respect to the different
phases of the project, the revisions over the original plan, the
additional works incurred thereon, the current financial
condition of respondent R-II Builders, Inc., and the transactions
made respecting the project.1
The Facts
On March 1, 1988, then President Corazon C. Aquino issued
Memorandum Order No. (MO) 1612 approving and directing the
implementation of the Comprehensive and Integrated
Metropolitan Manila Waste Management Plan (the Plan). The
Metro Manila Commission, in coordination with various
government agencies, was tasked as the lead agency to
implement the Plan as formulated by the Presidential Task
Force on Waste Management created by Memorandum Circular
No. 39. A day after, on March 2, 1988, MO 161-A3 was issued,
containing the guidelines which prescribed the functions and
responsibilities of fifteen (15) various government departments
and offices tasked to implement the Plan, namely: Department
of Public Works and Highway (DPWH), Department of Health
(DOH), Department of Environment and Natural Resources
(DENR), Department of Transportation and Communication,
Department of Budget and Management, National Economic and
Development Authority (NEDA), Philippine Constabulary
Integrated National Police, Philippine Information Agency and
the Local Government Unit (referring to the City of Manila),
Department of Social Welfare and Development, Presidential
Commission for Urban Poor, National Housing Authority (NHA),
Department of Labor and Employment, Department of
Education, Culture and Sports (now Department of Education),
and Presidential Management Staff.
Specifically, respondent NHA was ordered to "conduct
feasibility studies and develop low-cost housing projects at the
dumpsite and absorb scavengers in NHA resettlement/low-cost
housing projects."4 On the other hand, the DENR was tasked to
"review and evaluate proposed projects under the Plan with
regard to their environmental impact, conduct regular
monitoring of activities of the Plan to ensure compliance with
environmental standards and assist DOH in the conduct of the
study on hospital waste management."5
At the time MO 161-A was issued by President Aquino, Smokey
Mountain was a wasteland in Balut, Tondo, Manila, where
numerous Filipinos resided in subhuman conditions, collecting
items that may have some monetary value from the garbage.
The Smokey Mountain dumpsite is bounded on the north by the
Estero Marala, on the south by the property of the National
Government, on the east by the property of B and I Realty Co.,
and on the west by Radial Road 10 (R-10).
Pursuant to MO 161-A, NHA prepared the feasibility studies of
the Smokey Mountain low-cost housing project which resulted
in the formulation of the "Smokey Mountain Development Plan
and Reclamation of the Area Across R-10" or the Smokey
Mountain Development and Reclamation Project (SMDRP; the
Project). The Project aimed to convert the Smokey Mountain
dumpsite into a habitable housing project, inclusive of the
reclamation of the area across R-10, adjacent to the Smokey
Mountain as the enabling component of the project.6 Once
4
finalized, the Plan was submitted to President Aquino for her
approval.
On July 9, 1990, the Build-Operate-and-Transfer (BOT) Law
(Republic Act No. [RA] 6957) was enacted.7 Its declared policy
under Section 1 is "[t]o recognize the indispensable role of the
private sector as the main engine for national growth and
development and provide the most appropriate favorable
incentives to mobilize private resources for the purpose." Sec. 3
authorized and empowered "[a]ll government infrastructure
agencies, including government-owned and controlled
corporations and local government units x x x to enter into
contract with any duly pre-qualified private contractor for the
financing, construction, operation and maintenance of any
financially viable infrastructure facilities through the build-
operate-transfer or build and transfer scheme."
RA 6957 defined "build-and-transfer" scheme as "[a] contractual
arrangement whereby the contractor undertakes the
construction, including financing, of a given infrastructure
facility, and its turnover after the completion to the
government agency or local government unit concerned which
shall pay the contractor its total investment expended on the
project, plus reasonable rate of return thereon." The last
paragraph of Sec. 6 of the BOT Law provides that the
repayment scheme in the case of "land reclamation or the
building of industrial estates" may consist of "[t]he grant of a
portion or percentage of the reclaimed land or industrial estate
built, subject to the constitutional requirements with respect
to the ownership of lands."
On February 10, 1992, Joint Resolution No. 038 was passed by
both houses of Congress. Sec. 1 of this resolution provided,
among other things, that:
Section 1. There is hereby approved the following national
infrastructure projects for implementation under the provisions
of Republic Act No. 6957 and its implementing rules and
regulations:
xxxx
(d) Port infrastructure like piers, wharves, quays, storage
handling, ferry service and related facilities;
xxxx
(k) Land reclamation, dredging and other related development
facilities;
(l) Industrial estates, regional industrial centers and export
processing zones including steel mills, iron-making and
petrochemical complexes and related infrastructure and
utilities;
xxxx
(p) Environmental and solid waste management-related
facilities such as collection equipment, composting plants,
incinerators, landfill and tidal barriers, among others; and
(q) Development of new townsites and communities and related
facilities.
This resolution complied with and conformed to Sec. 4 of the
BOT Law requiring the approval of all national infrastructure
projects by the Congress.
On January 17, 1992, President Aquino proclaimed MO 4159
approving and directing the implementation of the SMDRP.
Secs. 3 and 4 of the Memorandum Order stated:
Section 3. The National Housing Authority is hereby directed to
implement the Smokey Mountain Development Plan and
Reclamation of the Area Across R-10 through a private sector
joint venture scheme at the least cost to the government.
Section 4. The land area covered by the Smokey Mountain
dumpsite is hereby conveyed to the National Housing Authority
as well as the area to be reclaimed across R-10. (Emphasis
supplied.)
In addition, the Public Estates Authority (PEA) was directed to
assist in the evaluation of proposals regarding the technical
feasibility of reclamation, while the DENR was directed to (1)
facilitate titling of Smokey Mountain and of the area to be
reclaimed and (2) assist in the technical evaluation of proposals
regarding environmental impact statements.10
In the same MO 415, President Aquino created an Executive
Committee (EXECOM) to oversee the implementation of the
Plan, chaired by the National Capital Region-Cabinet Officer for
Regional Development (NCR-CORD) with the heads of the NHA,
City of Manila, DPWH, PEA, Philippine Ports Authority (PPA),
DENR, and Development Bank of the Philippines (DBP) as
members.11 The NEDA subsequently became a member of the
EXECOM. Notably, in a September 2, 1994 Letter,12 PEA General
Manager Amado Lagdameo approved the plans for the
reclamation project prepared by the NHA.
In conformity with Sec. 5 of MO 415, an inter-agency technical
committee (TECHCOM) was created composed of the technical
representatives of the EXECOM "[t]o assist the NHA in the
evaluation of the project proposals, assist in the resolution of
all issues and problems in the project to ensure that all aspects
of the development from squatter relocation, waste
management, reclamation, environmental protection, land and
house construction meet governing regulation of the region and
to facilitate the completion of the project."13
Subsequently, the TECHCOM put out the Public Notice and
Notice to Pre-Qualify and Bid for the right to become NHA’s
joint venture partner in the implementation of the SMDRP. The
notices were published in newspapers of general circulation on
January 23 and 26 and February 1, 14, 16, and 23, 1992,
respectively. Out of the thirteen (13) contractors who
responded, only five (5) contractors fully complied with the
required pre-qualification documents. Based on the evaluation
of the pre-qualification documents, the EXECOM declared the
New San Jose Builders, Inc. and R-II Builders, Inc. (RBI) as the
top two contractors.14
Thereafter, the TECHCOM evaluated the bids (which include the
Pre-feasibility Study and Financing Plan) of the top two (2)
contractors in this manner:
(1) The DBP, as financial advisor to the Project,
evaluated their Financial Proposals;
5
(2) The DPWH, PPA, PEA and NHA evaluated the
Technical Proposals for the Housing Construction and
Reclamation;
(3) The DENR evaluated Technical Proposals on Waste
Management and Disposal by conducting the
Environmental Impact Analysis; and
(4) The NHA and the City of Manila evaluated the
socio-economic benefits presented by the proposals.
On June 30, 1992, Fidel V. Ramos assumed the Office of the
President (OP) of the Philippines.
On August 31, 1992, the TECHCOM submitted its
recommendation to the EXECOM to approve the R-II Builders,
Inc. (RBI) proposal which garnered the highest score of 88.475%.
Subsequently, the EXECOM made a Project briefing to President
Ramos. As a result, President Ramos issued Proclamation No.
3915 on September 9, 1992, which reads:
WHEREAS, the National Housing Authority has presented a
viable conceptual plan to convert the Smokey Mountain
dumpsite into a habitable housing project, inclusive of the
reclamation of the area across Road Radial 10 (R-10) adjacent
to the Smokey Mountain as the enabling component of the
project;
xxxx
These parcels of land of public domain are hereby placed under
the administration and disposition of the National Housing
Authority to develop, subdivide and dispose to qualified
beneficiaries, as well as its development for mix land use
(commercial/industrial) to provide employment opportunities
to on-site families and additional areas for port-related
activities.
In order to facilitate the early development of the area for
disposition, the Department of Environment and Natural
Resources, through the Lands and Management Bureau, is
hereby directed to approve the boundary and subdivision survey
and to issue a special patent and title in the name of the
National Housing Authority, subject to final survey and private
rights, if any there be. (Emphasis supplied.)
On October 7, 1992, President Ramos authorized NHA to enter
into a Joint Venture Agreement with RBI "[s]ubject to final
review and approval of the Joint Venture Agreement by the
Office of the President."16
On March 19, 1993, the NHA and RBI entered into a Joint
Venture Agreement17 (JVA) for the development of the Smokey
Mountain dumpsite and the reclamation of the area across R-10
based on Presidential Decree No. (PD) 75718 which mandated
NHA "[t]o undertake the physical and socio-economic upgrading
and development of lands of the public domain identified for
housing," MO 161-A which required NHA to conduct the
feasibility studies and develop a low-cost housing project at the
Smokey Mountain, and MO 415 as amended by MO 415-A which
approved the Conceptual Plan for Smokey Mountain and
creation of the EXECOM and TECHCOM. Under the JVA, the
Project "involves the clearing of Smokey Mountain for eventual
development into a low cost medium rise housing complex and
industrial/commercial site with the reclamation of the area
directly across [R-10] to act as the enabling component of the
Project."19 The JVA covered a lot in Tondo, Manila with an area
of two hundred twelve thousand two hundred thirty-four
(212,234) square meters and another lot to be reclaimed also in
Tondo with an area of four hundred thousand (400,000) square
meters.
The Scope of Work of RBI under Article II of the JVA is as
follows:
a) To fully finance all aspects of development of
Smokey Mountain and reclamation of no more than 40
hectares of Manila Bay area across Radial Road 10.
b) To immediately commence on the preparation of
feasibility report and detailed engineering with
emphasis to the expedient acquisition of the
Environmental Clearance Certificate (ECC) from the
DENR.
c) The construction activities will only commence
after the acquisition of the ECC, and
d) Final details of the contract, including
construction, duration and delivery timetables, shall
be based on the approved feasibility report and
detailed engineering.
Other obligations of RBI are as follows:
2.02 The [RBI] shall develop the PROJECT based on
the Final Report and Detailed Engineering as approved
by the Office of the President. All costs and expenses
for hiring technical personnel, date gathering,
permits, licenses, appraisals, clearances, testing and
similar undertaking shall be for the account of the
[RBI].
2.03 The [RBI] shall undertake the construction of
3,500 temporary housing units complete with basic
amenities such as plumbing, electrical and sewerage
facilities within the temporary housing project as
staging area to temporarily house the squatter
families from the Smokey Mountain while
development is being undertaken. These temporary
housing units shall be turned over to the [NHA] for
disposition.
2.04 The [RBI] shall construct 3,500 medium rise low
cost permanent housing units on the leveled Smokey
Mountain complete with basic utilities and amenities,
in accordance with the plans and specifications set
forth in the Final Report approved by the [NHA].
Completed units ready for mortgage take out shall be
turned over by the [RBI] to NHA on agreed schedule.
2.05 The [RBI] shall reclaim forty (40) hectares of
Manila Bay area directly across [R-10] as contained in
Proclamation No. 39 as the enabling component of the
project and payment to the [RBI] as its asset share.
2.06 The [RBI] shall likewise furnish all labor materials
and equipment necessary to complete all herein
development works to be undertaken on a phase to
phase basis in accordance with the work program
stipulated therein.
6
The profit sharing shall be based on the approved pre-feasibility
report submitted to the EXECOM, viz:
For the developer (RBI):
1. To own the forty (40) hectares of reclaimed land.
2. To own the commercial area at the Smokey
Mountain area composed of 1.3 hectares, and
3. To own all the constructed units of medium rise low
cost permanent housing units beyond the 3,500 units
share of the [NHA].
For the NHA:
1. To own the temporary housing consisting of 3,500
units.
2. To own the cleared and fenced incinerator site
consisting of 5 hectares situated at the Smokey
Mountain area.
3. To own the 3,500 units of permanent housing to be
constructed by [RBI] at the Smokey Mountain area to
be awarded to qualified on site residents.
4. To own the Industrial Area site consisting of 3.2
hectares, and
5. To own the open spaces, roads and facilities within
the Smokey Mountain area.
In the event of "extraordinary increase in labor, materials, fuel
and non-recoverability of total project expenses,"20 the OP,
upon recommendation of the NHA, may approve a
corresponding adjustment in the enabling component.
The functions and responsibilities of RBI and NHA are as
follows:
For RBI:
4.01 Immediately commence on the preparation of the FINAL
REPORT with emphasis to the expedient acquisition, with the
assistance of the [NHA] of Environmental Compliance
Certificate (ECC) from the Environmental Management Bureau
(EMB) of the [DENR]. Construction shall only commence after
the acquisition of the ECC. The Environment Compliance
Certificate (ECC) shall form part of the FINAL REPORT.
The FINAL REPORT shall provide the necessary subdivision and
housing plans, detailed engineering and architectural drawings,
technical specifications and other related and required
documents relative to the Smokey Mountain area.
With respect to the 40-hectare reclamation area, the [RBI] shall
have the discretion to develop the same in a manner that it
deems necessary to recover the [RBI’s] investment, subject to
environmental and zoning rules.
4.02 Finance the total project cost for land development,
housing construction and reclamation of the PROJECT.
4.03 Warrant that all developments shall be in compliance with
the requirements of the FINAL REPORT.
4.04 Provide all administrative resources for the submission of
project accomplishment reports to the [NHA] for proper
evaluation and supervision on the actual implementation.
4.05 Negotiate and secure, with the assistance of the [NHA] the
grant of rights of way to the PROJECT, from the owners of the
adjacent lots for access road, water, electrical power
connections and drainage facilities.
4.06 Provide temporary field office and transportation vehicles
(2 units), one (1) complete set of computer and one (1) unit
electric typewriter for the [NHA’s] field personnel to be
charged to the PROJECT.
For the NHA:
4.07 The [NHA] shall be responsible for the removal and
relocation of all squatters within Smokey Mountain to the
Temporary Housing Complex or to other areas prepared as
relocation areas with the assistance of the [RBI]. The [RBI] shall
be responsible in releasing the funds allocated and committed
for relocation as detailed in the FINAL REPORT.
4.08 Assist the [RBI] and shall endorse granting of exemption
fees in the acquisition of all necessary permits, licenses,
appraisals, clearances and accreditations for the PROJECT
subject to existing laws, rules and regulations.
4.09 The [NHA] shall inspect, evaluate and monitor all works at
the Smokey Mountain and Reclamation Area while the land
development and construction of housing units are in progress
to determine whether the development and construction works
are undertaken in accordance with the FINAL REPORT. If in its
judgment, the PROJECT is not pursued in accordance with the
FINAL REPORT, the [NHA] shall require the [RBI] to undertake
necessary remedial works. All expenses, charges and penalties
incurred for such remedial, if any, shall be for the account of
the [RBI].
4.10 The [NHA] shall assist the [RBI] in the complete
electrification of the PROJECT. x x x
4.11 Handle the processing and documentation of all sales
transactions related to its assets shares from the venture such
as the 3,500 units of permanent housing and the allotted
industrial area of 3.2 hectares.
4.12 All advances outside of project costs made by the [RBI] to
the [NHA] shall be deducted from the proceeds due to the
[NHA].
4.13 The [NHA] shall be responsible for the acquisition of the
Mother Title for the Smokey Mountain and Reclamation Area
within 90 days upon submission of Survey returns to the Land
Management Sector. The land titles to the 40-hectare
reclaimed land, the 1.3 hectare commercial area at the Smokey
Mountain area and the constructed units of medium-rise
permanent housing units beyond the 3,500 units share of the
[NHA] shall be issued in the name of the [RBI] upon completion
of the project. However, the [RBI] shall have the authority to
pre-sell its share as indicated in this agreement.
7
The final details of the JVA, which will include the construction
duration, costs, extent of reclamation, and delivery timetables,
shall be based on the FINAL REPORT which will be contained in
a Supplemental Agreement to be executed later by the parties.
The JVA may be modified or revised by written agreement
between the NHA and RBI specifying the clauses to be revised
or modified and the corresponding amendments.
If the Project is revoked or terminated by the Government
through no fault of RBI or by mutual agreement, the
Government shall compensate RBI for its actual expenses
incurred in the Project plus a reasonable rate of return not
exceeding that stated in the feasibility study and in the
contract as of the date of such revocation, cancellation, or
termination on a schedule to be agreed upon by both parties.
As a preliminary step in the project implementation,
consultations and dialogues were conducted with the settlers of
the Smokey Mountain Dumpsite Area. At the same time, DENR
started processing the application for the Environmental
Clearance Certificate (ECC) of the SMDRP. As a result however
of the consultative dialogues, public hearings, the report on the
on-site field conditions, the Environmental Impact Statement
(EIS) published on April 29 and May 12, 1993 as required by the
Environmental Management Bureau of DENR, the evaluation of
the DENR, and the recommendations from other government
agencies, it was discovered that design changes and additional
work have to be undertaken to successfully implement the
Project.21
Thus, on February 21, 1994, the parties entered into another
agreement denominated as the Amended and Restated Joint
Venture Agreement22 (ARJVA) which delineated the different
phases of the Project. Phase I of the Project involves the
construction of temporary housing units for the current
residents of the Smokey Mountain dumpsite, the clearing and
leveling-off of the dumpsite, and the construction of medium-
rise low-cost housing units at the cleared and leveled
dumpsite.23 Phase II of the Project involves the construction of
an incineration area for the on-site disposal of the garbage at
the dumpsite.24 The enabling component or consideration for
Phase I of the Project was increased from 40 hectares of
reclaimed lands across R-10 to 79 hectares.25 The revision also
provided for the enabling component for Phase II of 119
hectares of reclaimed lands contiguous to the 79 hectares of
reclaimed lands for Phase I.26 Furthermore, the amended
contract delineated the scope of works and the terms and
conditions of Phases I and II, thus:
The PROJECT shall consist of Phase I and Phase II.
Phase I shall involve the following:
a. the construction of 2,992 units of temporary
housing for the affected residents while clearing and
development of Smokey Mountain [are] being
undertaken
b. the clearing of Smokey Mountain and the
subsequent construction of 3,520 units of medium rise
housing and the development of the
industrial/commercial site within the Smokey
Mountain area
 c. the reclamation and development of a 79 hectare
area directly across Radial Road 10 to serve as the
enabling component of Phase I
Phase II shall involve the following:
a. the construction and operation of an incinerator
plant that will conform to the emission standards of
the DENR
b. the reclamation and development of 119-hectare
area contiguous to that to be reclaimed under Phase I
to serve as the enabling component of Phase II.
Under the ARJVA, RBI shall construct 2,992 temporary housing
units, a reduction from 3,500 units under the JVA.27 However, it
was required to construct 3,520 medium-rise low-cost
permanent housing units instead of 3,500 units under the JVA.
There was a substantial change in the design of the permanent
housing units such that a "loft shall be incorporated in each unit
so as to increase the living space from 20 to 32 square meters.
The additions and changes in the Original Project Component
are as follows:
ORIGINAL CHANGES/REVISIONS
1. TEMPORARY HOUSING
Wood/Plywood, ga. 31 G.I. Concrete/Steel
Frame Structure Sheet usable life of 3 years,
gauge 26 G.I. roofing sheets future 12 SM
floor area. use as permanent structures for
factory and warehouses mixed 17 sm & 12 sm
floor area.
2. MEDIUM RISE MASS
HOUSING
Box type precast Shelter Conventional and
precast component 20 square meter
concrete structures, 32 square floor area
with 2.4 meter meter floor area with loft
floor height; bare type, 160 units/ (sleeping
quarter) 3.6 m. floor building. height,
painted and improved
architectural façade, 80 units/building.
3. MITIGATING MEASURES
3.1 For reclamation work Use of clean
dredgefill material below the MLLW and SM
material mixed with dredgefill above MLLW.
a. 100% use of Smokey Mountain
material as dredgefill Use of Steel
Sheet Piles needed for longer depth
of embedment.
b. Concrete Sheet Piles short depth
of embedment
8
c. Silt removal approximately Need
to remove more than 3.0
1.0 meter only meters of silt after sub-soil
investigation.28
These material and substantial modifications served as
justifications for the increase in the share of RBI from
40 hectares to 79 hectares of reclaimed land.
Under the JVA, the specific costs of the Project were
not stipulated but under the ARJVA, the stipulated
cost for Phase I was pegged at six billion six hundred
ninety-three million three hundred eighty-seven
thousand three hundred sixty-four pesos (PhP
6,693,387,364).
In his February 10, 1994 Memorandum, the
Chairperson of the SMDRP EXECOM submitted the
ARJVA for approval by the OP. After review of said
agreement, the OP directed that certain terms and
conditions of the ARJVA be further clarified or
amended preparatory to its approval. Pursuant to the
President’s directive, the parties reached an
agreement on the clarifications and amendments
required to be made on the ARJVA.
On August 11, 1994, the NHA and RBI executed an
Amendment To the Amended and Restated Joint
Venture Agreement (AARJVA)29 clarifying certain
terms and condition of the ARJVA, which was
submitted to President Ramos for approval, to wit:
Phase II shall involve the following:
a. the construction and operation of an
incinerator plant that will conform to the
emission standards of the DENR
b. the reclamation and development of 119-
hectare area contiguous to that to be
reclaimed under Phase I to serve as the
enabling component of Phase II, the exact
size and configuration of which shall be
approved by the SMDRP Committee30
Other substantial amendments are the following:
4. Paragraph 2.05 of Article II of the ARJVA is hereby
amended to read as follows:
2.05. The DEVELOPER shall reclaim seventy nine (79)
hectares of the Manila Bay area directly across Radial
Road 10 (R-10) to serve as payment to the DEVELOPER
as its asset share for Phase I and to develop such land
into commercial area with port facilities; provided,
that the port plan shall be integrated with the
Philippine Port Authority’s North Harbor plan for the
Manila Bay area and provided further, that the final
reclamation and port plan for said reclaimed area
shall be submitted for approval by the Public Estates
Authority and the Philippine Ports Authority,
respectively: provided finally, that subject to par.
2.02 above, actual reclamation work may commence
upon approval of the final reclamation plan by the
Public Estates Authority.
 xxxx
9. A new paragraph to be numbered 5.05 shall be
added to Article V of the ARJVA, and shall read as
follows:
5.05. In the event this Agreement is revoked, cancelled or
terminated by the AUTHORITY through no fault of the
DEVELOPER, the AUTHORITY shall compensate the DEVELOPER
for the value of the completed portions of, and actual
expenditures on the PROJECT plus a reasonable rate of return
thereon, not exceeding that stated in the Cost Estimates of
Items of Work previously approved by the SMDRP Executive
Committee and the AUTHORITY and stated in this Agreement,
as of the date of such revocation, cancellation, or termination,
on a schedule to be agreed upon by the parties, provided that
said completed portions of Phase I are in accordance with the
approved FINAL REPORT.
Afterwards, President Ramos issued Proclamation No. 465 dated
August 31, 199431 increasing the proposed area for reclamation
across R-10 from 40 hectares to 79 hectares,32 to wit:
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic
of the Philippines, by virtue of the powers vested in me by the
law, and as recommended by the SMDRP Executive Committee,
do hereby authorize the increase of the area of foreshore or
submerged lands of Manila Bay to be reclaimed, as previously
authorized under Proclamation No. 39 (s. 1992) and
Memorandum Order No. 415 (s. 1992), from Four Hundred
Thousand (400,000) square meters, more or less, to Seven
Hundred Ninety Thousand (790,000) square meters, more or
less.
On September 1, 1994, pursuant to Proclamation No. 39, the
DENR issued Special Patent No. 3591 conveying in favor of NHA
an area of 211,975 square meters covering the Smokey
Mountain Dumpsite.
In its September 7, 1994 letter to the EXECOM, the OP through
then Executive Secretary Teofisto T. Guingona, Jr., approved
the ARJVA as amended by the AARJVA.
On September 8, 1994, the DENR issued Special Patent 3592
pursuant to Proclamation No. 39, conveying in favor of NHA a
401,485-square meter area.
On September 26, 1994, the NHA, RBI, Home Insurance and
Guaranty Corporation (HIGC), now known as the Home Guaranty
Corporation, and the Philippine National Bank (PNB)33 executed
the Smokey Mountain Asset Pool Formation Trust Agreement
(Asset Pool Agreement).34 Thereafter, a Guaranty Contract was
entered into by NHA, RBI, and HIGC.
On June 23, 1994, the Legislature passed the Clean Air Act. 35
The Act made the establishment of an incinerator illegal and
effectively barred the implementation of the planned
incinerator project under Phase II. Thus, the off-site disposal of
the garbage at the Smokey Mountain became necessary.36
The land reclamation was completed in August 1996.37
Sometime later in 1996, pursuant likewise to Proclamation No.
39, the DENR issued Special Patent No. 3598 conveying in favor
of NHA an additional 390,000 square meter area.
9
During the actual construction and implementation of Phase I of
the SMDRP, the Inter-Agency Technical Committee found and
recommended to the EXECOM on December 17, 1997 that
additional works were necessary for the completion and
viability of the Project. The EXECOM approved the
recommendation and so, NHA instructed RBI to implement the
change orders or necessary works.38
Such necessary works comprised more than 25% of the original
contract price and as a result, the Asset Pool incurred direct
and indirect costs. Based on C1 12 A of the Implementing Rules
and Regulations of PD 1594, a supplemental agreement is
required for "all change orders and extra work orders, the total
aggregate cost of which being more than twenty-five (25%) of
the escalated original contract price."
The EXECOM requested an opinion from the Department of
Justice (DOJ) to determine whether a bidding was required for
the change orders and/or necessary works. The DOJ, through
DOJ Opinion Nos. 119 and 155 dated August 26, 1993 and
November 12, 1993, opined that "a rebidding, pursuant to the
aforequoted provisions of the implementing rules (referring to
PD 1594) would not be necessary where the change orders
inseparable from the original scope of the project, in which
case, a negotiation with the incumbent contractor may be
allowed."
Thus, on February 19, 1998, the EXECOM issued a resolution
directing NHA to enter into a supplemental agreement covering
said necessary works.
On March 20, 1998, the NHA and RBI entered into a
Supplemental Agreement covering the aforementioned
necessary works and submitted it to the President on March 24,
1998 for approval.
Outgoing President Ramos decided to endorse the consideration
of the Supplemental Agreement to incoming President Joseph
E. Estrada. On June 30, 1998, Estrada became the 13th
Philippine President.
However, the approval of the Supplemental Agreement was
unacted upon for five months. As a result, the utilities and the
road networks were constructed to cover only the 79-hectare
original enabling component granted under the ARJVA. The 220-
hectare extension of the 79-hectare area was no longer
technically feasible. Moreover, the financial crises and
unreliable real estate situation made it difficult to sell the
remaining reclaimed lots. The devaluation of the peso and the
increase in interest cost led to the substantial increase in the
cost of reclamation.
On August 1, 1998, the NHA granted RBI’s request to suspend
work on the SMDRP due to "the delay in the approval of the
Supplemental Agreement, the consequent absence of an
enabling component to cover the cost of the necessary works
for the project, and the resulting inability to replenish the
Asset Pool funds partially used for the completion of the
necessary works."39
As of August 1, 1998 when the project was suspended, RBI had
"already accomplished a portion of the necessary works and
change orders which resulted in [RBI] and the Asset Pool
incurring advances for direct and indirect cost which amount
can no longer be covered by the 79-hectare enabling
component under the ARJVA."40
Repeated demands were made by RBI in its own capacity and on
behalf of the asset pool on NHA for payment for the advances
for direct and indirect costs subject to NHA validation.
In November 1998, President Estrada issued Memorandum Order
No. 33 reconstituting the SMDRP EXECOM and further directed it
to review the Supplemental Agreement and submit its
recommendation on the completion of the SMDRP.
The reconstituted EXECOM conducted a review of the project
and recommended the amendment of the March 20, 1998
Supplemental Agreement "to make it more feasible and to
identify and provide new sources of funds for the project and
provide for a new enabling component to cover the payment for
the necessary works that cannot be covered by the 79-hectare
enabling component under the ARJVA."41
The EXECOM passed Resolution Nos. 99-16-01 and 99-16-0242
which approved the modification of the Supplemental
Agreement, to wit:
a) Approval of 150 hectares additional reclamation in
order to make the reclamation feasible as part of the
enabling component.
b) The conveyance of the 15-hectare NHA Vitas
property (actually 17 hectares based on surveys) to
the SMDRP Asset Pool.
c) The inclusion in the total development cost of other
additional, necessary and indispensable infrastructure
works and the revision of the original cost stated in
the Supplemental Agreement dated March 20, 1998
from PhP 2,953,984,941.40 to PhP 2,969,134,053.13.
d) Revision in the sharing agreement between the
parties.
In the March 23, 2000 OP Memorandum, the EXECOM was
authorized to proceed and complete the SMDRP subject to
certain guidelines and directives.
After the parties in the case at bar had complied with the
March 23, 2000 Memorandum, the NHA November 9, 2000
Resolution No. 4323 approved "the conveyance of the 17-
hectare Vitas property in favor of the existing or a newly
created Asset Pool of the project to be developed into a mixed
commercial-industrial area, subject to certain conditions."
On January 20, 2001, then President Estrada was considered
resigned. On the same day, President Gloria M. Arroyo took her
oath as the 14th President of the Philippines.
As of February 28, 2001, "the estimated total project cost of
the SMDRP has reached P8.65 billion comprising of P4.78 billion
in direct cost and P3.87 billion in indirect cost," 43 subject to
validation by the NHA.
On August 28, 2001, NHA issued Resolution No. 4436 to pay for
"the various necessary works/change orders to SMDRP, to effect
the corresponding enabling component consisting of the
conveyance of the NHA’s Vitas Property and an additional 150-
hectare reclamation area" and to authorize the release by NHA
of PhP 480 million "as advance to the project to make the
10
Permanent Housing habitable, subject to reimbursement from
the proceeds of the expanded enabling component."44
On November 19, 2001, the Amended Supplemental Agreement
(ASA) was signed by the parties, and on February 28, 2002, the
Housing and Urban Development Coordinating Council (HUDCC)
submitted the agreement to the OP for approval.
In the July 20, 2002 Cabinet Meeting, HUDCC was directed "to
submit the works covered by the PhP 480 million [advance to
the Project] and the ASA to public bidding."45 On August 28,
2002, the HUDCC informed RBI of the decision of the Cabinet.
In its September 2, 2002 letter to the HUDCC Chairman, RBI
lamented the decision of the government "to bid out the
remaining works under the ASA thereby unilaterally terminating
the Project with RBI and all the agreements related thereto."
RBI demanded the payment of just compensation "for all
accomplishments and costs incurred in developing the SMDRP
plus a reasonable rate of return thereon pursuant to Section
5.05 of the ARJVA and Section 6.2 of the ASA."46
Consequently, the parties negotiated the terms of the
termination of the JVA and other subsequent agreements.
On August 27, 2003, the NHA and RBI executed a Memorandum
of Agreement (MOA) whereby both parties agreed to terminate
the JVA and other subsequent agreements, thus:
1. TERMINATION
1.1 In compliance with the Cabinet directive
dated 30 July 2002 to submit the works
covered by the P480 Million and the ASA to
public bidding, the following agreements
executed by and between the NHA and the
DEVELOPER are hereby terminated, to wit:
a. Joint Venture Agreement (JVA)
dated 19 March 1993
b. Amended and Restated Joint
Venture Agreement (ARJVA) dated
21 February 1994
c. Amendment and Restated Joint
Venture Agreement dated 11
August 1994
d. Supplemental Agreement dated
24 March 1998
e. Amended Supplemental
Agreement (ASA) dated 19
November 2001.
xxxx
5. SETTLEMENT OF CLAIMS
5.1 Subject to the validation of the DEVELOPER’s
claims, the NHA hereby agrees to initially compensate
the Developer for the abovementioned costs as
follows:
 a. Direct payment to DEVELOPER of the
amounts herein listed in the following
manner:
a.1 P250 Million in cash from the
escrow account in accordance with
Section 2 herewith;
a.2 Conveyance of a 3 hectare
portion of the Vitas Industrial area
immediately after joint
determination of the appraised
value of the said property in
accordance with the procedure
herein set forth in the last
paragraph of Section 5.3. For
purposes of all payments to be
made through conveyance of real
properties, the parties shall secure
from the NHA Board of Directors all
documents necessary and sufficient
to effect the transfer of title over
the properties to be conveyed to
RBI, which documents shall be
issued within a reasonable period.
5.2 Any unpaid balance of the DEVELOPERS claims
determined after the validation process referred to in
Section 4 hereof, may be paid in cash, bonds or
through the conveyance of properties or any
combination thereof. The manner, terms and
conditions of payment of the balance shall be
specified and agreed upon later within a period of
three months from the time a substantial amount
representing the unpaid balance has been validated
pursuant hereto including, but not limited to the
programming of quarterly cash payments to be
sourced by the NHA from its budget for debt servicing,
from its income or from any other sources.
5.3 In any case the unpaid balance is agreed to be
paid, either partially or totally through conveyance of
properties, the parties shall agree on which properties
shall be subject to conveyance. The NHA and
DEVELOPER hereby agree to determine the valuation
of the properties to be conveyed by getting the
average of the appraisals to be made by two (2)
mutually acceptable independent appraisers.
Meanwhile, respondent Harbour Centre Port Terminal, Inc.
(HCPTI) entered into an agreement with the asset pool for the
development and operations of a port in the Smokey Mountain
Area which is a major component of SMDRP to provide a source
of livelihood and employment for Smokey Mountain residents
and spur economic growth. A Subscription Agreement was
executed between the Asset Pool and HCPTI whereby the asset
pool subscribed to 607 million common shares and 1,143 million
preferred shares of HCPTI. The HCPTI preferred shares had a
premium and penalty interest of 7.5% per annum and a
mandatory redemption feature. The asset pool paid the
subscription by conveying to HCPTI a 10-hectare land which it
acquired from the NHA being a portion of the reclaimed land of
the SMDRP. Corresponding certificates of titles were issued to
HCPTI, namely: TCT Nos. 251355, 251356, 251357, and 251358.
Due to HCPTI’s failure to obtain a license to handle foreign
containerized cargo from PPA, it suffered a net income loss of
PhP 132,621,548 in 2002 and a net loss of PhP 15,540,063 in
11
2003. The Project Governing Board of the Asset Pool later
conveyed by way of dacion en pago a number of HCPTI shares
to RBI in lieu of cash payment for the latter’s work in SMDRP.
On August 5, 2004, former Solicitor General Francisco I.
Chavez, filed the instant petition which impleaded as
respondents the NHA, RBI, R-II Holdings, Inc. (RHI), HCPTI, and
Mr. Reghis Romero II, raising constitutional issues.
The NHA reported that thirty-four (34) temporary housing
structures and twenty-one (21) permanent housing structures
had been turned over by respondent RBI. It claimed that 2,510
beneficiary-families belonging to the poorest of the poor had
been transferred to their permanent homes and benefited from
the Project.
The Issues
The grounds presented in the instant petition are:
I
Neither respondent NHA nor respondent R-II builders may
validly reclaim foreshore and submerged land because:
1. Respondent NHA and R-II builders were never
granted any power and authority to reclaim lands of
the public domain as this power is vested exclusively
with the PEA.
2. Even assuming that respondents NHA and R-II
builders were given the power and authority to
reclaim foreshore and submerged land, they were
never given the authority by the denr to do so.
II
Respondent R-II builders cannot acquire the reclaimed
foreshore and submerged land areas because:
1. The reclaimed foreshore and submerged parcels of
land are inalienable public lands which are beyond the
commerce of man.
2. Assuming arguendo that the subject reclaimed
foreshore and submerged parcels of land were already
declared alienable lands of the public domain,
respondent R-II builders still could not acquire the
same because there was never any declaration that
the said lands were no longer needed for public use.
3. Even assuming that the subject reclaimed lands are
alienable and no longer needed for public use,
respondent R-II builders still cannot acquire the same
because there was never any law authorizing the sale
thereof.
4. There was never any public bidding awarding
ownership of the subject land to respondent R-II
builders.
5. Assuming that all the requirements for a valid
transfer of alienable public had been performed,
respondent R-II Builders, being private corporation is
 nonetheless expresslyprohibited by the Philippine
Constitution to acquire lands of the public domain.
III
Respondent harbour, being a private corporation whose
majority stocks are owned and controlled by respondent
Romero’s Corporations – R-II builders and R-II Holdings – is
disqualified from being a transferee of public land.
IV
Respondents must be compelled to disclose all information
related to the smokey mountain development and reclamation
project.
The Court’s Ruling
Before we delve into the substantive issues raised in this
petition, we will first deal with several procedural matters
raised by respondents.
Whether petitioner has the requisite locus standi to file this
case
Respondents argue that petitioner Chavez has no legal standing
to file the petition.
Only a person who stands to be benefited or injured by the
judgment in the suit or entitled to the avails of the suit can file
a complaint or petition.47 Respondents claim that petitioner is
not a proper party-in-interest as he was unable to show that "he
has sustained or is in immediate or imminent danger of
sustaining some direct and personal injury as a result of the
execution and enforcement of the assailed contracts or
agreements."48 Moreover, they assert that not all government
contracts can justify a taxpayer’s suit especially when no public
funds were utilized in contravention of the Constitution or a
law.
We explicated in Chavez v. PCGG49 that in cases where issues of
transcendental public importance are presented, there is no
necessity to show that petitioner has experienced or is in actual
danger of suffering direct and personal injury as the requisite
injury is assumed. We find our ruling in Chavez v. PEA 50 as
conclusive authority on locus standi in the case at bar since the
issues raised in this petition are averred to be in breach of the
fair diffusion of the country’s natural resources and the
constitutional right of a citizen to information which have been
declared to be matters of transcendental public importance.
Moreover, the pleadings especially those of respondents readily
reveal that public funds have been indirectly utilized in the
Project by means of Smokey Mountain Project Participation
Certificates (SMPPCs) bought by some government agencies.
Hence, petitioner, as a taxpayer, is a proper party to the
instant petition before the court.
Whether petitioner’s direct recourse to this Court was proper
Respondents are one in asserting that petitioner circumvents
the principle of hierarchy of courts in his petition. Judicial
hierarchy was made clear in the case of People v. Cuaresma,
thus:
12
There is after all a hierarchy of courts. That hierarchy is
determinative of the venue of appeals, and should also serve as
a general determinant of the appropriate forum for petitions
for the extraordinary writs. A becoming regard for that judicial
hierarchy most certainly indicates that petitions for the
issuance of extraordinary writs against first level ("inferior")
courts should be filed with the Regional Trial Court, and those
against the latter, with the Court of Appeals. A direct
invocation of the Supreme Court’s original jurisdiction to issue
these writs should be allowed only when there are special and
important reasons therefor, clearly and specifically set out in
the petition. This is established policy. It is a policy that is
necessary to prevent inordinate demands upon the Court’s time
and attention which are better devoted to those matters within
its exclusive jurisdiction, and to prevent further over-crowding
of the Court’s docket.51 x x x
The OSG claims that the jurisdiction over petitions for
prohibition and mandamus is concurrent with other lower
courts like the Regional Trial Courts and the Court of Appeals.
Respondent NHA argues that the instant petition is misfiled
because it does not introduce special and important reasons or
exceptional and compelling circumstances to warrant direct
recourse to this Court and that the lower courts are more
equipped for factual issues since this Court is not a trier of
facts. Respondents RBI and RHI question the filing of the
petition as this Court should not be unduly burdened with
"repetitions, invocation of jurisdiction over constitutional
questions it had previously resolved and settled."
In the light of existing jurisprudence, we find paucity of merit
in respondents’ postulation.
While direct recourse to this Court is generally frowned upon
and discouraged, we have however ruled in Santiago v. Vasquez
that such resort to us may be allowed in certain situations,
wherein this Court ruled that petitions for certiorari,
prohibition, or mandamus, though cognizable by other courts,
may directly be filed with us if "the redress desired cannot be
obtained in the appropriate courts or where exceptional
compelling circumstances justify availment of a remedy within
and calling for the exercise of [this Court’s] primary
jurisdiction."521avvphi1
The instant petition challenges the constitutionality and
legality of the SMDRP involving several hectares of government
land and hundreds of millions of funds of several government
agencies. Moreover, serious constitutional challenges are made
on the different aspects of the Project which allegedly affect
the right of Filipinos to the distribution of natural resources in
the country and the right to information of a citizen—matters
which have been considered to be of extraordinary significance
and grave consequence to the public in general. These concerns
in the instant action compel us to turn a blind eye to the
judicial structure meant to provide an orderly dispensation of
justice and consider the instant petition as a justified deviation
from an established precept.
Core factual matters undisputed
Respondents next challenge the projected review by this Court
of the alleged factual issues intertwined in the issues
propounded by petitioner. They listed a copious number of
questions seemingly factual in nature which would make this
Court a trier of facts.53
We find the position of respondents bereft of merit.
For one, we already gave due course to the instant petition in
our January 18, 2005 Resolution.54 In said issuance, the parties
were required to make clear and concise statements of
established facts upon which our decision will be based.
Secondly, we agree with petitioner that there is no necessity
for us to make any factual findings since the facts needed to
decide the instant petition are well established from the
admissions of the parties in their pleadings 55 and those derived
from the documents appended to said submissions. Indeed, the
core facts which are the subject matter of the numerous issues
raised in this petition are undisputed.
Now we will tackle the issues that prop up the instant petition.
Since petitioner has cited our decision in PEA as basis for his
postulations in a number of issues, we first resolve the query—is
PEA applicable to the case at bar?
A juxtaposition of the facts in the two cases constrains the
Court to rule in the negative.
The Court finds that PEA is not a binding precedent to the
instant petition because the facts in said case are substantially
different from the facts and circumstances in the case at bar,
thus:
(1) The reclamation project in PEA was undertaken
through a JVA entered into between PEA and AMARI.
The reclamation project in the instant NHA case was
undertaken by the NHA, a national government agency
in consultation with PEA and with the approval of two
Philippine Presidents;
(2) In PEA, AMARI and PEA executed a JVA to develop
the Freedom Islands and reclaim submerged areas
without public bidding on April 25, 1995. In the instant
NHA case, the NHA and RBI executed a JVA after RBI
was declared the winning bidder on August 31, 1992 as
the JVA partner of the NHA in the SMDRP after
compliance with the requisite public bidding.
(3) In PEA, there was no law or presidential
proclamation classifying the lands to be reclaimed as
alienable and disposal lands of public domain. In this
RBI case, MO 415 of former President Aquino and
Proclamation No. 39 of then President Ramos, coupled
with Special Patents Nos. 3591, 3592, and 3598,
classified the reclaimed lands as alienable and
disposable;
(4) In PEA, the Chavez petition was filed before the
amended JVA was executed by PEA and
AMARI.1avvphi1 In this NHA case, the JVA and
subsequent amendments were already substantially
implemented. Subsequently, the Project was
terminated through a MOA signed on August 27, 2003.
Almost one year later on August 5, 2004, the Chavez
petition was filed;
(5) In PEA, AMARI was considered to be in bad faith as
it signed the amended JVA after the Chavez petition
was filed with the Court and after Senate Committee
Report No. 560 was issued finding that the subject
lands are inalienable lands of public domain. In the
instant petition, RBI and other respondents are
13
considered to have signed the agreements in good
faith as the Project was terminated even before the
Chavez petition was filed;
(6) The PEA-AMARI JVA was executed as a result of
direct negotiation between the parties and not in
accordance with the BOT Law. The NHA-RBI JVA and
subsequent amendments constitute a BOT contract
governed by the BOT Law; and
(7) In PEA, the lands to be reclaimed or already
reclaimed were transferred to PEA, a government
entity tasked to dispose of public lands under
Executive Order No. (EO) 525.56 In the NHA case, the
reclaimed lands were transferred to NHA, a
government entity NOT tasked to dispose of public
land and therefore said alienable lands were
converted to patrimonial lands upon their transfer to
NHA.57
Thus the PEA Decision58 cannot be considered an authority or
precedent to the instant case. The principle of stare decisis 59
has no application to the different factual setting of the instant
case.
We will now dwell on the substantive issues raised by
petitioner. After a perusal of the grounds raised in this petition,
we find that most of these issues are moored on our PEA
Decision which, as earlier discussed, has no application to the
instant petition. For this reason alone, the petition can already
be rejected. Nevertheless, on the premise of the applicability
of said decision to the case at bar, we will proceed to resolve
said issues.
First Issue: Whether respondents NHA and RBI have been
granted
the power and authority to reclaim lands of the public domain
as
this power is vested exclusively in PEA as claimed by petitioner
Petitioner contends that neither respondent NHA nor
respondent RBI may validly reclaim foreshore and submerged
land because they were not given any power and authority to
reclaim lands of the public domain as this power was delegated
by law to PEA.
Asserting that existing laws did not empower the NHA and RBI
to reclaim lands of public domain, the Public Estates Authority
(PEA), petitioner claims, is "the primary authority for the
reclamation of all foreshore and submerged lands of public
domain," and relies on PEA where this Court held:
Moreover, Section 1 of Executive Order No. 525 provides that
PEA "shall be primarily responsible for integrating, directing,
and coordinating all reclamation projects for and on behalf of
the National Government." The same section also states that
"[A]ll reclamation projects shall be approved by the President
upon recommendation of the PEA, and shall be undertaken by
the PEA or through a proper contract executed by it with any
person or entity; x x x." Thus, under EO No. 525, in relation to
PD No. 3-A and PD No. 1084, PEA became the primary
implementing agency of the National Government to reclaim
foreshore and submerged lands of the public domain. EO No.
525 recognized PEA as the government entity "to undertake the
reclamation of lands and ensure their maximum utilization in
promoting public welfare and interests." Since large portions of
these reclaimed lands would obviously be needed for public
service, there must be a formal declaration segregating
reclaimed lands no longer needed for public service from those
still needed for public service.60
In the Smokey Mountain Project, petitioner clarifies that the
reclamation was not done by PEA or through a contract
executed by PEA with another person or entity but by the NHA
through an agreement with respondent RBI. Therefore, he
concludes that the reclamation is null and void.
Petitioner’s contention has no merit.
EO 525 reads:
Section 1. The Public Estates Authority (PEA) shall be primarily
responsible for integrating, directing, and coordinating all
reclamation projects for and on behalf of the National
Government. All reclamation projects shall be approved by the
President upon recommendation of the PEA, and shall be
undertaken by the PEA or through a proper contract executed
by it with any person or entity; Provided, that, reclamation
projects of any national government agency or entity
authorized under its charter shall be undertaken in consultation
with the PEA upon approval of the President. (Emphasis
supplied.)
The aforequoted provision points to three (3) requisites for a
legal and valid reclamation project, viz:
(1) approval by the President;
(2) favorable recommendation of PEA; and
(3) undertaken by any of the following:
a. by PEA
b. by any person or entity pursuant to a
contract it executed with PEA
c. by the National Government agency or
entity authorized under its charter to
reclaim lands subject to consultation with
PEA
Without doubt, PEA under EO 525 was designated as the agency
primarily responsible for integrating, directing, and
coordinating all reclamation projects. Primarily means "mainly,
principally, mostly, generally." Thus, not all reclamation
projects fall under PEA’s authority of supervision, integration,
and coordination. The very charter of PEA, PD 1084,61 does not
mention that PEA has the exclusive and sole power and
authority to reclaim lands of public domain. EO 525 even
reveals the exception—reclamation projects by a national
government agency or entity authorized by its charter to
reclaim land. One example is EO 405 which authorized the
Philippine Ports Authority (PPA) to reclaim and develop
submerged areas for port related purposes. Under its charter,
PD 857, PPA has the power "to reclaim, excavate, enclose or
raise any of the lands" vested in it.
Thus, while PEA under PD 1084 has the power to reclaim land
and under EO 525 is primarily responsible for integrating,
directing and coordinating reclamation projects, such authority
is NOT exclusive and such power to reclaim may be granted or
14
delegated to another government agency or entity or may even
be undertaken by the National Government itself, PEA being
only an agency and a part of the National Government.
Let us apply the legal parameters of Sec. 1, EO 525 to the
reclamation phase of SMDRP. After a scrutiny of the facts culled
from the records, we find that the project met all the three (3)
requirements, thus:
1. There was ample approval by the President of the
Philippines; as a matter of fact, two Philippine Presidents
approved the same, namely: Presidents Aquino and Ramos.
President Aquino sanctioned the reclamation of both the SMDRP
housing and commercial-industrial sites through MO 415 (s.
1992) which approved the SMDRP under Sec. 1 and directed
NHA "x x x to implement the Smokey Mountain Development
Plan and Reclamation of the Area across R-10 through a private
sector joint venture scheme at the least cost to government"
under Section 3.
For his part, then President Ramos issued Proclamation No. 39
(s. 1992) which expressly reserved the Smokey Mountain Area
and the Reclamation Area for a housing project and related
commercial/industrial development.
Moreover, President Ramos issued Proclamation No. 465 (s.
1994) which authorized the increase of the Reclamation Area
from 40 hectares of foreshore and submerged land of the Manila
Bay to 79 hectares. It speaks of the reclamation of 400,000
square meters, more or less, of the foreshore and submerged
lands of Manila Bay adjoining R-10 as an enabling component of
the SMDRP.
As a result of Proclamations Nos. 39 and 465, Special Patent No.
3591 covering 211,975 square meters of Smokey Mountain,
Special Patent No. 3592 covering 401,485 square meters of
reclaimed land, and Special Patent No. 3598 covering another
390,000 square meters of reclaimed land were issued by the
DENR.
Thus, the first requirement of presidential imprimatur on the
SMDRP has been satisfied.
2. The requisite favorable endorsement of the reclamation
phase was impliedly granted by PEA. President Aquino saw to it
that there was coordination of the project with PEA by
designating its general manager as member of the EXECOM
tasked to supervise the project implementation. The
assignment was made in Sec. 2 of MO 415 which provides:
Section 2. An Executive Committee is hereby created to
oversee the implementation of the Plan, chaired by the NCR-
CORD, with the heads of the following agencies as members:
The National Housing Authority, the City of Manila, the
Department of Public Works and Highways, the Public Estates
Authority, the Philippine Ports Authority, the Department of
Environment and Natural Resources and the Development Bank
of the Philippines. (Emphasis supplied.)
The favorable recommendation by PEA of the JVA and
subsequent amendments were incorporated as part of the
recommendations of the EXECOM created under MO 415. While
there was no specific recommendation on the SMDRP emanating
solely from PEA, we find that the approbation of the Project
and the land reclamation as an essential component by the
EXECOM of which PEA is a member, and its submission of the
SMDRP and the agreements on the Project to the President for
approval amply met the second requirement of EO 525.
3. The third element was also present—the reclamation was
undertaken either by PEA or any person or entity under
contract with PEA or by the National Government agency or
entity authorized under its charter to reclaim lands subject to
consultation with PEA. It cannot be disputed that the
reclamation phase was not done by PEA or any person or entity
under contract with PEA. However, the reclamation was
implemented by the NHA, a national government agency whose
authority to reclaim lands under consultation with PEA is
derived from its charter—PD 727 and other pertinent laws—RA
727962 and RA 6957 as amended by RA 7718.
While the authority of NHA to reclaim lands is challenged by
petitioner, we find that the NHA had more than enough
authority to do so under existing laws. While PD 757, the
charter of NHA, does not explicitly mention "reclamation" in any
of the listed powers of the agency, we rule that the NHA has an
implied power to reclaim land as this is vital or incidental to
effectively, logically, and successfully implement an urban land
reform and housing program enunciated in Sec. 9 of Article XIII
of the 1987 Constitution.
Basic in administrative law is the doctrine that a government
agency or office has express and implied powers based on its
charter and other pertinent statutes. Express powers are those
powers granted, allocated, and delegated to a government
agency or office by express provisions of law. On the other
hand, implied powers are those that can be inferred or are
implicit in the wordings of the law63 or conferred by necessary
or fair implication in the enabling act.64 In Angara v. Electoral
Commission, the Court clarified and stressed that when a
general grant of power is conferred or duty enjoined, every
particular power necessary for the exercise of the one or the
performance of the other is also conferred by necessary
implication.65 It was also explicated that when the statute does
not specify the particular method to be followed or used by a
government agency in the exercise of the power vested in it by
law, said agency has the authority to adopt any reasonable
method to carry out its functions.66
The power to reclaim on the part of the NHA is implicit from PD
757, RA 7279, MO 415, RA 6957, and PD 3-A,67 viz:
1. NHA’s power to reclaim derived from PD 757 provisions:
a. Sec. 3 of PD 757 implies that reclamation may be resorted to
in order to attain the goals of NHA:
Section 3. Progress and Objectives. The Authority shall have the
following purposes and objectives:
xxxx
b) To undertake housing, development, resettlement
or other activities as would enhance the provision of
housing to every Filipino;
c) To harness and promote private participation in
housing ventures in terms of capital expenditures,
land, expertise, financing and other facilities for the
sustained growth of the housing industry. (Emphasis
supplied.)
15
Land reclamation is an integral part of the development of
resources for some of the housing requirements of the NHA.
Private participation in housing projects may also take the form
of land reclamation.
b. Sec. 5 of PD 757 serves as proof that the NHA, as successor
of the Tondo Foreshore Development Authority (TFDA), has the
power to reclaim, thus:
Section 5. Dissolution of Existing Housing Agencies. The
People's Homesite and Housing Corporation (PHHC), the
Presidential Assistant on Housing Resettlement Agency (PAHRA),
the Tondo Foreshore Development Authority (TFDA), the
Central Institute for the Training and Relocation of Urban
Squatters (CITRUS), the Presidential Committee for Housing and
Urban Resettlement (PRECHUR), Sapang Palay Development
Committee, Inter-Agency Task Force to Undertake the
Relocation of Families in Barrio Nabacaan, Villanueva, Misamis
Oriental and all other existing government housing and
resettlement agencies, task forces and ad-hoc committees, are
hereby dissolved. Their powers and functions, balance of
appropriations, records, assets, rights, and choses in action, are
transferred to, vested in, and assumed by the Authority. x x x
(Emphasis supplied.)
PD 570 dated October 30, 1974 created the TFDA, which
defined its objectives, powers, and functions. Sec. 2 provides:
Section 2. Objectives and Purposes. The Authority shall have
the following purposes and objectives:
a) To undertake all manner of activity, business or
development projects for the establishment of
harmonious, comprehensive, integrated and healthy
living community in the Tondo Foreshoreland and its
resettlement site;
b) To undertake and promote the physical and socio-
economic amelioration of the Tondo Foreshore
residents in particular and the nation in general
(Emphasis supplied.)
The powers and functions are contained in Sec. 3, to wit:
a) To develop and implement comprehensive and
integrated urban renewal programs for the Tondo
Foreshore and Dagat-dagatan lagoon and/or any other
additional/alternative resettlement site and to
formulate and enforce general and specific policies
for its development which shall ensure reasonable
degree of compliance with environmental standards.
b) To prescribe guidelines and standards for the
reservation, conservation and utilization of public
lands covering the Tondo Foreshore land and its
resettlement sites;
c) To construct, acquire, own, lease, operate and
maintain infrastructure facilities, housing complex,
sites and services;
d) To determine, regulate and supervise the
establishment and operation of housing, sites, services
and commercial and industrial complexes and any
other enterprises to be constructed or established
within the Tondo Foreshore and its resettlement sites;
 e) To undertake and develop, by itself or through joint
ventures with other public or private entities, all or
any of the different phases of development of the
Tondo Foreshore land and its resettlement sites;
f) To acquire and own property, property-rights and
interests, and encumber or otherwise dispose of the
same as it may deem appropriate (Emphasis supplied.)
From the foregoing provisions, it is readily apparent that the
TFDA has the explicit power to develop public lands covering
the Tondo foreshore land and any other additional and
alternative resettlement sites under letter b, Sec. 3 of PD 570.
Since the additional and/or alternative sites adjacent to Tondo
foreshore land cover foreshore and submerged areas, the
reclamation of said areas is necessary in order to convert them
into a comprehensive and integrated resettlement housing
project for the slum dwellers and squatters of Tondo. Since the
powers of TFDA were assumed by the NHA, then the NHA has
the power to reclaim lands in the Tondo foreshore area which
covers the 79-hectare land subject of Proclamations Nos. 39
and 465 and Special Patents Nos. 3592 and 3598.
c. Sec. 6 of PD 757 delineates the functions and powers of the
NHA which embrace the authority to reclaim land, thus:
Sec. 6. Powers and functions of the Authority.—The Authority
shall have the following powers and functions to be exercised
by the Board in accordance with its established national human
settlements plan prepared by the Human Settlements
Commission:
(a) Develop and implement the comprehensive and integrated
housing program provided for in Section hereof;
xxxx
(c) Prescribe guidelines and standards for the reservation,
conservation and utilization of public lands identified for
housing and resettlement;
xxxx
(e) Develop and undertake housing development and/or
resettlement projects through joint ventures or other
arrangements with public and private entities;
xxxx
(k) Enter into contracts whenever necessary under such terms
and conditions as it may deem proper and reasonable;
(l) Acquire property rights and interests and encumber or
otherwise dispose the same as it may deem appropriate;
xxxx
(s) Perform such other acts not inconsistent with this Decree, as
may be necessary to effect the policies and objectives herein
declared. (Emphasis supplied.)
The NHA’s authority to reclaim land can be inferred from the
aforequoted provisions. It can make use of public lands under
letter (c) of Sec. 6 which includes reclaimed land as site for its
16
comprehensive and integrated housing projects under letter (a)
which can be undertaken through joint ventures with private
entities under letter (e). Taken together with letter (s) which
authorizes NHA to perform such other activities "necessary to
effect the policies and objectives" of PD 757, it is safe to
conclude that the NHA’s power to reclaim lands is a power that
is implied from the exercise of its explicit powers under Sec. 6
in order to effectively accomplish its policies and objectives
under Sec. 3 of its charter. Thus, the reclamation of land is an
indispensable component for the development and construction
of the SMDRP housing facilities.
2. NHA’s implied power to reclaim land is enhanced by RA 7279.
PD 757 identifies NHA’s mandate to "[d]evelop and undertake
housing development and/or resettlement projects through
joint ventures or other arrangements with public and private
entities."
The power of the NHA to undertake reclamation of land can be
inferred from Secs. 12 and 29 of RA 7279, which provide:
Section 12. Disposition of Lands for Socialized Housing.—The
National Housing Authority, with respect to lands belonging to
the National Government, and the local government units with
respect to other lands within their respective localities, shall
coordinate with each other to formulate and make available
various alternative schemes for the disposition of lands to the
beneficiaries of the Program. These schemes shall not be
limited to those involving transfer of ownership in fee simple
but shall include lease, with option to purchase, usufruct or
such other variations as the local government units or the
National Housing Authority may deem most expedient in
carrying out the purposes of this Act.
xxxx
Section 29. Resettlement.—With two (2) years from the
effectivity of this Act, the local government units, in
coordination with the National Housing Authority, shall
implement the relocation and resettlement of persons living in
danger areas such as esteros, railroad tracks, garbage dumps,
riverbanks, shorelines, waterways, and in other public places as
sidewalks, roads, parks, and playgrounds. The local government
unit, in coordination with the National Housing Authority, shall
provide relocation or resettlement sites with basic services and
facilities and access to employment and livelihood
opportunities sufficient to meet the basic needs of the affected
families. (Emphasis supplied.)
Lands belonging to the National Government include foreshore
and submerged lands which can be reclaimed to undertake
housing development and resettlement projects.
3. MO 415 explains the undertaking of the NHA in SMDRP:
WHEREAS, Memorandum Order No. 161-A mandated the
National Housing Authority to conduct feasibility studies and
develop low-cost housing projects at the dumpsites of Metro
Manila;
WHEREAS, the National Housing Authority has presented a
viable Conceptual Plan to convert the Smokey Mountain
dumpsite into a habitable housing project inclusive of the
reclamation area across R-10 as enabling component of the
Project;
WHEREAS, the said Plan requires the coordinated and
synchronized efforts of the City of Manila and other government
agencies and instrumentalities to ensure effective and efficient
implementation;
WHEREAS, the government encourages private sector initiative
in the implementation of its projects. (Emphasis supplied.)
Proceeding from these "whereas" clauses, it is unequivocal that
reclamation of land in the Smokey Mountain area is an essential
and vital power of the NHA to effectively implement its avowed
goal of developing low-cost housing units at the Smokey
Mountain dumpsites. The interpretation made by no less than
the President of the Philippines as Chief of the Executive
Branch, of which the NHA is a part, must necessarily command
respect and much weight and credit.
4. RA 6957 as amended by RA 7718—the BOT Law—serves as an
exception to PD 1084 and EO 525.
Based on the provisions of the BOT Law and Implementing Rules
and Regulations, it is unequivocal that all government
infrastructure agencies like the NHA can undertake
infrastructure or development projects using the contractual
arrangements prescribed by the law, and land reclamation is
one of the projects that can be resorted to in the BOT project
implementation under the February 10, 1992 Joint Resolution
No. 3 of the 8th Congress.
From the foregoing considerations, we find that the NHA has
ample implied authority to undertake reclamation projects.
Even without an implied power to reclaim lands under NHA’s
charter, we rule that the authority granted to NHA, a national
government agency, by the President under PD 3-A reinforced
by EO 525 is more than sufficient statutory basis for the
reclamation of lands under the SMDRP.
PD 3-A is a law issued by then President Ferdinand E. Marcos
under his martial law powers on September 23, 1972. It
provided that "[t]he provisions of any law to the contrary
notwithstanding, the reclamation of areas, underwater,
whether foreshore or inland, shall be limited to the National
Government or any person authorized by it under the proper
contract." It repealed, in effect, RA 1899 which previously
delegated the right to reclaim lands to municipalities and
chartered cities and revested it to the National Government. 68
Under PD 3-A, "national government" can only mean the
Executive Branch headed by the President. It cannot refer to
Congress as it was dissolved and abolished at the time of the
issuance of PD 3-A on September 23, 1972. Moreover, the
Executive Branch is the only implementing arm in the
government with the equipment, manpower, expertise, and
capability by the very nature of its assigned powers and
functions to undertake reclamation projects. Thus, under PD 3-
A, the Executive Branch through the President can implement
reclamation of lands through any of its departments, agencies,
or offices.
Subsequently, on February 4, 1977, President Marcos issued PD
1084 creating the PEA, which was granted, among others, the
power "to reclaim land, including foreshore and submerged
areas by dredging, filling or other means or to acquire
reclaimed lands." The PEA’s power to reclaim is not however
exclusive as can be gleaned from its charter, as the President
retained his power under PD 3-A to designate another agency to
reclaim lands.
17
On February 14, 1979, EO 525 was issued. It granted PEA
primary responsibility for integrating, directing, and
coordinating reclamation projects for and on behalf of the
National Government although other national government
agencies can be designated by the President to reclaim lands in
coordination with the PEA. Despite the issuance of EO 525, PD
3-A remained valid and subsisting. Thus, the National
Government through the President still retained the power and
control over all reclamation projects in the country.
The power of the National Government through the President
over reclamation of areas, that is, underwater whether
foreshore or inland, was made clear in EO 54369 which took
effect on June 24, 2006. Under EO 543, PEA was renamed the
Philippine Reclamation Authority (PRA) and was granted the
authority to approve reclamation projects, a power previously
reposed in the President under EO 525. EO 543 reads:
Section 1. The power of the President to approve reclamation
projects is hereby delegated to the Philippine Reclamation
Authority [formerly PEA], through its governing board, subject
to compliance with existing laws and rules and subject to the
condition that reclamation contracts to be executed with any
person or entity go through public bidding.
Section 2. Nothing in the Order shall be construed as
diminishing the President’s authority to modify, amend or
nullify PRA’s action.
Section 3. All executive issuances inconsistent with this
Executive Order are hereby repealed or amended accordingly.
(Emphasis supplied.)
Sec. 2 of EO 543 strengthened the power of control and
supervision of the President over reclamation of lands as s/he
can modify, amend, or nullify the action of PEA (now PRA).
From the foregoing issuances, we conclude that the President’s
delegation to NHA, a national government agency, to reclaim
lands under the SMDRP, is legal and valid, firmly anchored on
PD 3-A buttressed by EO 525 notwithstanding the absence of
any specific grant of power under its charter, PD 757.
Second Issue: Whether respondents NHA and RBI were given the
power and authority by DENR to reclaim foreshore and
submerged
lands
Petitioner Chavez puts forth the view that even if the NHA and
RBI were granted the authority to reclaim, they were not
authorized to do so by the DENR.
Again, reliance is made on our ruling in PEA where it was held
that the DENR’s authority is necessary in order for the
government to validly reclaim foreshore and submerged lands.
In PEA, we expounded in this manner:
As manager, conservator and overseer of the natural resources
of the State, DENR exercises "supervision and control over
alienable and disposable public lands." DENR also exercises
"exclusive jurisdiction on the management and disposition of all
lands of the public domain." Thus, DENR decides whether areas
under water, like foreshore or submerged areas of Manila Bay,
should be reclaimed or not. This means that PEA needs
authorization from DENR before PEA can undertake reclamation
projects in Manila Bay, or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition
of all lands of the public domain. Hence, DENR decides whether
reclaimed lands of PEA should be classified as alienable under
Sections 6 and 7 of CA No. 141. Once DENR decides that the
reclaimed lands should be so classified, it then recommends to
the President the issuance of a proclamation classifying the
lands as alienable or disposable lands of the public domain open
to disposition. We note that then DENR Secretary Fulgencio S.
Factoran, Jr. countersigned Special Patent No. 3517 in
compliance with the Revised Administrative Code and Sections
6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the
reclamation of areas under water, while PEA is vested with the
power to undertake the physical reclamation of areas under
water, whether directly or through private contractors. DENR is
also empowered to classify lands of the public domain into
alienable or disposable lands subject to the approval of the
President. On the other hand, PEA is tasked to develop, sell or
lease the reclaimed alienable lands of the public domain.70
Despite our finding that PEA is not a precedent to the case at
bar, we find after all that under existing laws, the NHA is still
required to procure DENR’s authorization before a reclamation
project in Manila Bay or in any part of the Philippines can be
undertaken. The requirement applies to PEA, NHA, or any other
government agency or office granted with such power under
the law.
Notwithstanding the need for DENR permission, we nevertheless
find petitioner’s position bereft of merit.
The DENR is deemed to have granted the authority to reclaim in
the Smokey Mountain Project for the following reasons:
1. Sec. 17, Art. VII of the Constitution provides that "the
President shall have control of all executive departments,
bureaus and offices." The President is assigned the task of
seeing to it that all laws are faithfully executed. "Control," in
administrative law, means "the power of an officer to alter,
modify, nullify or set aside what a subordinate officer has done
in the performance of his duties and to substitute the judgment
of the former for that of the latter."71
As such, the President can exercise executive power motu
proprio and can supplant the act or decision of a subordinate
with the President’s own. The DENR is a department in the
executive branch under the President, and it is only an alter
ego of the latter. Ordinarily the proposed action and the staff
work are initially done by a department like the DENR and then
submitted to the President for approval. However, there is
nothing infirm or unconstitutional if the President decides on
the implementation of a certain project or activity and requires
said department to implement it. Such is a presidential
prerogative as long as it involves the department or office
authorized by law to supervise or execute the Project. Thus, as
in this case, when the President approved and ordered the
development of a housing project with the corresponding
reclamation work, making DENR a member of the committee
tasked to implement the project, the required authorization
from the DENR to reclaim land can be deemed satisfied. It
cannot be disputed that the ultimate power over alienable and
disposable public lands is reposed in the President of the
18
Philippines and not the DENR Secretary. To still require a DENR
authorization on the Smokey Mountain when the President has
already authorized and ordered the implementation of the
Project would be a derogation of the powers of the President as
the head of the executive branch. Otherwise, any department
head can defy or oppose the implementation of a project
approved by the head of the executive branch, which is
patently illegal and unconstitutional.
In Chavez v. Romulo, we stated that when a statute imposes a
specific duty on the executive department, the President may
act directly or order the said department to undertake an
activity, thus:
[A]t the apex of the entire executive officialdom is the
President. Section 17, Article VII of the Constitution specifies
[her] power as Chief executive departments, bureaus and
offices. [She] shall ensure that the laws be faithfully executed.
As Chief Executive, President Arroyo holds the steering wheel
that controls the course of her government. She lays down
policies in the execution of her plans and programs. Whatever
policy she chooses, she has her subordinates to implement
them. In short, she has the power of control. Whenever a
specific function is entrusted by law or regulation to her
subordinate, she may act directly or merely direct the
performance of a duty x x x. Such act is well within the
prerogative of her office (emphasis supplied).72
Moreover, the power to order the reclamation of lands of public
domain is reposed first in the Philippine President. The Revised
Administrative Code of 1987 grants authority to the President
to reserve lands of public domain for settlement for any
specific purpose, thus:
Section 14. Power to Reserve Lands of the Public and Private
Domain of the Government.—(1) The President shall have the
power to reserve for settlement or public use, and for specific
public purposes, any of the lands of the public domain, the use
of which is not otherwise directed by law. The reserved land
shall thereafter remain subject to the specific public purpose
indicated until otherwise provided by law or proclamation.
(Emphasis supplied.)
President Aquino reserved the area of the Smokey Mountain
dumpsite for settlement and issued MO 415 authorizing the
implementation of the Smokey Mountain Development Project
plus the reclamation of the area across R-10. Then President
Ramos issued Proclamation No. 39 covering the 21-hectare
dumpsite and the 40-hectare commercial/industrial area, and
Proclamation No. 465 and MO 415 increasing the area of
foreshore and submerged lands of Manila Bay to be reclaimed
from 40 to 79 hectares. Having supervision and control over the
DENR, both Presidents directly assumed and exercised the
power granted by the Revised Administrative Code to the DENR
Secretary to authorize the NHA to reclaim said lands. What can
be done indirectly by the DENR can be done directly by the
President. It would be absurd if the power of the President
cannot be exercised simply because the head of a department
in the executive branch has not acted favorably on a project
already approved by the President. If such arrangement is
allowed then the department head will become more powerful
than the President.
2. Under Sec. 2 of MO 415, the DENR is one of the members of
the EXECOM chaired by the NCR-CORD to oversee the
implementation of the Project. The EXECOM was the one which
recommended approval of the project plan and the joint
venture agreements. Clearly, the DENR retained its power of
supervision and control over the laws affected by the Project
since it was tasked to "facilitate the titling of the Smokey
Mountain and of the area to be reclaimed," which shows that it
had tacitly given its authority to the NHA to undertake the
reclamation.
3. Former DENR Secretary Angel C. Alcala issued Special Patents
Nos. 3591 and 3592 while then Secretary Victor O. Ramos issued
Special Patent No. 3598 that embraced the areas covered by
the reclamation. These patents conveyed the lands to be
reclaimed to the NHA and granted to said agency the
administration and disposition of said lands for subdivision and
disposition to qualified beneficiaries and for development for
mix land use (commercial/industrial) "to provide employment
opportunities to on-site families and additional areas for port
related activities." Such grant of authority to administer and
dispose of lands of public domain under the SMDRP is of course
subject to the powers of the EXECOM of SMDRP, of which the
DENR is a member.
4. The issuance of ECCs by the DENR for SMDRP is but an
exercise of its power of supervision and control over the lands
of public domain covered by the Project.
Based on these reasons, it is clear that the DENR, through its
acts and issuances, has ratified and confirmed the reclamation
of the subject lands for the purposes laid down in
Proclamations Nos. 39 and 465.
Third Issue: Whether respondent RBI can acquire reclaimed
foreshore and submerged lands considered as inalienable and
outside the commerce of man
Petitioner postulates that respondent RBI cannot acquire the
reclaimed foreshore and submerged areas as these are
inalienable public lands beyond the commerce of man based on
Art. 1409 of the Civil Code which provides:
Article 1409. The following contracts are inexistent and void
from the beginning:
(1) Those whose cause, object or purpose is contrary to law,
morals, good customs, public order or public policy;
xxxx
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set
up the defense of illegality be waived.
Secs. 2 and 3, Art. XII of the Constitution declare that all
natural resources are owned by the State and they cannot be
alienated except for alienable agricultural lands of the public
domain. One of the State’s natural resources are lands of public
domain which include reclaimed lands.
Petitioner contends that for these reclaimed lands to be
alienable, there must be a law or presidential proclamation
officially classifying these reclaimed lands as alienable and
disposable and open to disposition or concession. Absent such
law or proclamation, the reclaimed lands cannot be the
19
enabling component or consideration to be paid to RBI as these
are beyond the commerce of man.
We are not convinced of petitioner’s postulation.
The reclaimed lands across R-10 were classified alienable and
disposable lands of public domain of the State for the following
reasons, viz:
First, there were three (3) presidential proclamations
classifying the reclaimed lands across R-10 as alienable or
disposable hence open to disposition or concession, to wit:
(1) MO 415 issued by President Aquino, of which Sec. 4
states that "[t]he land covered by the Smokey
Mountain Dumpsite is hereby conveyed to the National
Housing Authority as well as the area to be reclaimed
across R-10."
The directive to transfer the lands once reclaimed to
the NHA implicitly carries with it the declaration that
said lands are alienable and disposable. Otherwise,
the NHA cannot effectively use them in its housing and
resettlement project.
(2) Proclamation No. 39 issued by then President
Ramos by which the reclaimed lands were conveyed to
NHA for subdivision and disposition to qualified
beneficiaries and for development into a mixed land
use (commercial/industrial) to provide employment
opportunities to on-site families and additional areas
for port-related activities. Said directive carries with
it the pronouncement that said lands have been
transformed to alienable and disposable lands.
Otherwise, there is no legal way to convey it to the
beneficiaries.
(3) Proclamation No. 465 likewise issued by President
Ramos enlarged the reclaimed area to 79 hectares to
be developed and disposed of in the implementation
of the SMDRP. The authority put into the hands of the
NHA to dispose of the reclaimed lands tacitly sustains
the conversion to alienable and disposable lands.
Secondly, Special Patents Nos. 3591, 3592, and 3598 issued by
the DENR anchored on Proclamations Nos. 39 and 465 issued by
President Ramos, without doubt, classified the reclaimed areas
as alienable and disposable.
Admittedly, it cannot be said that MO 415, Proclamations Nos.
39 and 465 are explicit declarations that the lands to be
reclaimed are classified as alienable and disposable. We find
however that such conclusion is derived and implicit from the
authority given to the NHA to transfer the reclaimed lands to
qualified beneficiaries.
The query is, when did the declaration take effect? It did so
only after the special patents covering the reclaimed areas
were issued. It is only on such date that the reclaimed lands
became alienable and disposable lands of the public domain.
This is in line with the ruling in PEA where said issue was
clarified and stressed:
PD No. 1085, coupled with President Aquino’s actual issuance of
a special patent covering the Freedom Islands, is equivalent to
an official proclamation classifying the Freedom Islands as
alienable or disposable lands of the public domain. PD No. 1085
and President Aquino’s issuance of a land patent also constitute
a declaration that the Freedom Islands are no longer needed for
public service. The Freedom Islands are thus alienable or
disposable lands of the public domain, open to disposition or
concession to qualified parties.73 (Emphasis supplied.)
Thus, MO 415 and Proclamations Nos. 39 and 465 cumulatively
and jointly taken together with Special Patent Nos. 3591, 3592,
and 3598 more than satisfy the requirement in PEA that "[t]here
must be a law or presidential proclamation officially classifying
these reclaimed lands as alienable or disposable and open to
disposition or concession (emphasis supplied)."74
Apropos the requisite law categorizing reclaimed land as
alienable or disposable, we find that RA 6957 as amended by RA
7718 provides ample authority for the classification of
reclaimed land in the SMDRP for the repayment scheme of the
BOT project as alienable and disposable lands of public domain.
Sec. 6 of RA 6957 as amended by RA 7718 provides:
For the financing, construction, operation and maintenance of
any infrastructure projects undertaken through the build-
operate-and transfer arrangement or any of its variations
pursuant to the provisions of this Act, the project proponent x x
x may likewise be repaid in the form of a share in the revenue
of the project or other non-monetary payments, such as, but
not limited to, the grant of a portion or percentage of the
reclaimed land, subject to the constitutional requirements with
respect to the ownership of the land. (Emphasis supplied.)
While RA 6957 as modified by RA 7718 does not expressly
declare that the reclaimed lands that shall serve as payment to
the project proponent have become alienable and disposable
lands and opened for disposition; nonetheless, this conclusion is
necessarily implied, for how else can the land be used as the
enabling component for the Project if such classification is not
deemed made?
It may be argued that the grant of authority to sell public
lands, pursuant to PEA, does not convert alienable lands of
public domain into private or patrimonial lands. We ruled in
PEA that "alienable lands of public domain must be transferred
to qualified private parties, or to government entities not
tasked to dispose of public lands, before these lands can
become private or patrimonial lands (emphasis supplied)." 75 To
lands reclaimed by PEA or through a contract with a private
person or entity, such reclaimed lands still remain alienable
lands of public domain which can be transferred only to Filipino
citizens but not to a private corporation. This is because PEA
under PD 1084 and EO 525 is tasked to hold and dispose of
alienable lands of public domain and it is only when it is
transferred to Filipino citizens that it becomes patrimonial
property. On the other hand, the NHA is a government agency
not tasked to dispose of public lands under its charter—The
Revised Administrative Code of 1987. The NHA is an "end-user
agency" authorized by law to administer and dispose of
reclaimed lands. The moment titles over reclaimed lands based
on the special patents are transferred to the NHA by the
Register of Deeds, they are automatically converted to
patrimonial properties of the State which can be sold to Filipino
citizens and private corporations, 60% of which are owned by
Filipinos. The reason is obvious: if the reclaimed land is not
converted to patrimonial land once transferred to NHA, then it
would be useless to transfer it to the NHA since it cannot
legally transfer or alienate lands of public domain. More
importantly, it cannot attain its avowed purposes and goals
since it can only transfer patrimonial lands to qualified
20
beneficiaries and prospective buyers to raise funds for the
SMDRP.
From the foregoing considerations, we find that the 79-hectare
reclaimed land has been declared alienable and disposable land
of the public domain; and in the hands of NHA, it has been
reclassified as patrimonial property.
Petitioner, however, contends that the reclaimed lands were
inexistent prior to the three (3) Presidential Acts (MO 415 and
Proclamations Nos. 39 and 465) and hence, the declaration that
such areas are alienable and disposable land of the public
domain, citing PEA, has no legal basis.
Petitioner’s contention is not well-taken.
Petitioner’s sole reliance on Proclamations Nos. 39 and 465
without taking into consideration the special patents issued by
the DENR demonstrates the inherent weakness of his
proposition. As was ruled in PEA cited by petitioner himself, "PD
No. 1085, coupled with President Aquino’s actual issuance of a
special patent covering the Freedom Islands is equivalent to an
official proclamation classifying the Freedom islands as
alienable or disposable lands of public domain." In a similar
vein, the combined and collective effect of Proclamations Nos.
39 and 465 with Special Patents Nos. 3592 and 3598 is
tantamount to and can be considered to be an official
declaration that the reclaimed lots are alienable or disposable
lands of the public domain.
The reclaimed lands covered by Special Patents Nos. 3591,
3592, and 3598, which evidence transfer of ownership of
reclaimed lands to the NHA, are official acts of the DENR
Secretary in the exercise of his power of supervision and
control over alienable and disposable public lands and his
exclusive jurisdiction over the management and disposition of
all lands of public domain under the Revised Administrative
Code of 1987. Special Patent No. 3592 speaks of the transfer of
Lots 1 and 2, and RI-003901-000012-D with an area of 401,485
square meters based on the survey and technical description
approved by the Bureau of Lands. Lastly, Special Patent No.
3598 was issued in favor of the NHA transferring to said agency
a tract of land described in Plan RL-00-000013 with an area of
390,000 square meters based on the survey and technical
descriptions approved by the Bureau of Lands.
The conduct of the survey, the preparation of the survey plan,
the computation of the technical description, and the
processing and preparation of the special patent are matters
within the technical area of expertise of administrative
agencies like the DENR and the Land Management Bureau and
are generally accorded not only respect but at times even
finality.76 Preparation of special patents calls for technical
examination and a specialized review of calculations and
specific details which the courts are ill-equipped to undertake;
hence, the latter defer to the administrative agency which is
trained and knowledgeable on such matters.77
Subsequently, the special patents in the name of the NHA were
submitted to the Register of Deeds of the City of Manila for
registration, and corresponding certificates of titles over the
reclaimed lots were issued based on said special patents. The
issuance of certificates of titles in NHA’s name automatically
converts the reclaimed lands to patrimonial properties of the
NHA. Otherwise, the lots would not be of use to the NHA’s
housing projects or as payment to the BOT contractor as the
enabling component of the BOT contract. The laws of the land
have to be applied and interpreted depending on the changing
conditions and times. Tempora mutantur et legis mutantur in
illis (time changes and laws change with it). One such law that
should be treated differently is the BOT Law (RA 6957) which
brought about a novel way of implementing government
contracts by allowing reclaimed land as part or full payment to
the contractor of a government project to satisfy the huge
financial requirements of the undertaking. The NHA holds the
lands covered by Special Patents Nos. 3592 and 3598 solely for
the purpose of the SMDRP undertaken by authority of the BOT
Law and for disposition in accordance with said special law. The
lands become alienable and disposable lands of public domain
upon issuance of the special patents and become patrimonial
properties of the Government from the time the titles are
issued to the NHA.
As early as 1999, this Court in Baguio v. Republic laid down the
jurisprudence that:
It is true that, once a patent is registered and the
corresponding certificate of title is issued, the land covered by
them ceases to be part of the public domain and becomes
private property, and the Torrens Title issued pursuant to the
patent becomes indefeasible upon the expiration of one year
from the date of issuance of such patent.78
The doctrine was reiterated in Republic v. Heirs of Felipe
Alijaga, Sr.,79 Heirs of Carlos Alcaraz v. Republic,80 and the
more recent case of Doris Chiongbian-Oliva v. Republic of the
Philippines.81 Thus, the 79-hectare reclaimed land became
patrimonial property after the issuance of certificates of titles
to the NHA based on Special Patents Nos. 3592 and 3598.
One last point. The ruling in PEA cannot even be applied
retroactively to the lots covered by Special Patents Nos. 3592
(40 hectare reclaimed land) and 3598 (39-hectare reclaimed
land). The reclamation of the land under SMDRP was completed
in August 1996 while the PEA decision was rendered on July 9,
2002. In the meantime, subdivided lots forming parts of the
reclaimed land were already sold to private corporations for
value and separate titles issued to the buyers. The Project was
terminated through a Memorandum of Agreement signed on
August 27, 2003. The PEA decision became final through the
November 11, 2003 Resolution. It is a settled precept that
decisions of the Supreme Court can only be applied
prospectively as they may prejudice vested rights if applied
retroactively.
In Benzonan v. Court of Appeals, the Court trenchantly
elucidated the prospective application of its decisions based on
considerations of equity and fair play, thus:
At that time, the prevailing jurisprudence interpreting section
119 of R.A. 141 as amended was that enunciated in Monge and
Tupas cited above. The petitioners Benzonan and respondent Pe
and the DBP are bound by these decisions for pursuant to
Article 8 of the Civil Code "judicial decisions applying or
interpreting the laws of the Constitution shall form a part of
the legal system of the Philippines." But while our decisions
form part of the law of the land, they are also subject to
Article 4 of the Civil Code which provides that "laws shall have
no retroactive effect unless the contrary is provided." This is
expressed in the familiar legal maxim lex prospicit, non
respicit, the law looks forward not backward. The rationale
against retroactivity is easy to perceive. The retroactive
application of a law usually divests rights that have already
become vested or impairs the obligations of contract and
hence, is unconstitutional.
21
The same consideration underlies our rulings giving only
prospective effect to decisions enunciating new doctrines.
Thus, we emphasized in People v. Jabinal, 55 SCRA 607 [1974]
"x x x when a doctrine of this Court is overruled and a different
view is adopted, the new doctrine should be applied
prospectively and should not apply to parties who had relied on
the old doctrine and acted on the faith thereof.82
Fourth Issue: Whether respondent RBI can acquire reclaimed
lands when there was no declaration that said lands are no
longer needed for public use
Petitioner Chavez avers that despite the declaration that the
reclaimed areas are alienable lands of the public domain, still,
the reclamation is flawed for there was never any declaration
that said lands are no longer needed for public use.
We are not moved by petitioner’s submission.
Even if it is conceded that there was no explicit declaration
that the lands are no longer needed for public use or public
service, there was however an implicit executive declaration
that the reclaimed areas R-10 are not necessary anymore for
public use or public service when President Aquino through MO
415 conveyed the same to the NHA partly for housing project
and related commercial/industrial development intended for
disposition to and enjoyment of certain beneficiaries and not
the public in general and partly as enabling component to
finance the project.
President Ramos, in issuing Proclamation No. 39, declared,
though indirectly, that the reclaimed lands of the Smokey
Mountain project are no longer required for public use or
service, thus:
These parcels of land of public domain are hereby placed under
the administration and disposition of the National Housing
Authority to develop, subdivide and dispose to qualified
beneficiaries, as well as its development for mix land use
(commercial/industrial) to provide employment opportunities
to on-site families and additional areas for port related
activities. (Emphasis supplied.)
While numerical count of the persons to be benefited is not the
determinant whether the property is to be devoted to public
use, the declaration in Proclamation No. 39 undeniably
identifies only particular individuals as beneficiaries to whom
the reclaimed lands can be sold, namely—the Smokey Mountain
dwellers. The rest of the Filipinos are not qualified; hence, said
lands are no longer essential for the use of the public in
general.
In addition, President Ramos issued on August 31, 1994
Proclamation No. 465 increasing the area to be reclaimed from
forty (40) hectares to seventy-nine (79) hectares, elucidating
that said lands are undoubtedly set aside for the beneficiaries
of SMDRP and not the public—declaring the power of NHA to
dispose of land to be reclaimed, thus: "The authority to
administer, develop, or dispose lands identified and reserved by
this Proclamation and Proclamation No. 39 (s.1992), in
accordance with the SMDRP, as enhance, is vested with the
NHA, subject to the provisions of existing laws." (Emphasis
supplied.)
MO 415 and Proclamations Nos. 39 and 465 are declarations
that proclaimed the non-use of the reclaimed areas for public
use or service as the Project cannot be successfully
implemented without the withdrawal of said lands from public
use or service. Certainly, the devotion of the reclaimed land to
public use or service conflicts with the intended use of the
Smokey Mountain areas for housing and employment of the
Smokey Mountain scavengers and for financing the Project
because the latter cannot be accomplished without abandoning
the public use of the subject land. Without doubt, the
presidential proclamations on SMDRP together with the issuance
of the special patents had effectively removed the reclaimed
lands from public use.
More decisive and not in so many words is the ruling in PEA
which we earlier cited, that "PD No. 1085 and President
Aquino’s issuance of a land patent also constitute a declaration
that the Freedom Islands are no longer needed for public
service." Consequently, we ruled in that case that the
reclaimed lands are "open to disposition or concession to
qualified parties."83
In a similar vein, presidential Proclamations Nos. 39 and 465
jointly with the special patents have classified the reclaimed
lands as alienable and disposable and open to disposition or
concession as they would be devoted to units for Smokey
Mountain beneficiaries. Hence, said lands are no longer
intended for public use or service and shall form part of the
patrimonial properties of the State under Art. 422 of the Civil
Code.84 As discussed a priori, the lands were classified as
patrimonial properties of the NHA ready for disposition when
the titles were registered in its name by the Register of Deeds.
Moreover, reclaimed lands that are made the enabling
components of a BOT infrastructure project are necessarily
reclassified as alienable and disposable lands under the BOT
Law; otherwise, absurd and illogical consequences would
naturally result. Undoubtedly, the BOT contract will not be
accepted by the BOT contractor since there will be no
consideration for its contractual obligations. Since reclaimed
land will be conveyed to the contractor pursuant to the BOT
Law, then there is an implied declaration that such land is no
longer intended for public use or public service and, hence,
considered patrimonial property of the State.
Fifth Issue: Whether there is a law authorizing sale of
reclaimed lands
Petitioner next claims that RBI cannot acquire the reclaimed
lands because there was no law authorizing their sale. He
argues that unlike PEA, no legislative authority was granted to
the NHA to sell reclaimed land.
This position is misplaced.
Petitioner relies on Sec. 60 of Commonwealth Act (CA) 141 to
support his view that the NHA is not empowered by any law to
sell reclaimed land, thus:
Section 60. Any tract of land comprised under this title may be
leased or sold, as the case may be, to any person, corporation
or association authorized to purchase or lease public lands for
agricultural purposes. The area of the land so leased or sold
shall be such as shall, in the judgment of the Secretary of
Agriculture and Natural Resources, be reasonably necessary for
22
the purposes for which such sale or lease if requested and shall
in no case exceed one hundred and forty-four hectares:
Provided, however, That this limitation shall not apply to
grants, donations, transfers, made to a province, municipality
or branch or subdivision of the Government for the purposes
deemed by said entities conducive to the public interest; but
the land so granted donated or transferred to a province,
municipality, or branch or subdivision of the Government shall
not be alienated, encumbered, or otherwise disposed of in a
manner affecting its title, except when authorized by Congress;
Provided, further, That any person, corporation, association or
partnership disqualified from purchasing public land for
agricultural purposes under the provisions of this Act, may lease
land included under this title suitable for industrial or
residential purposes, but the lease granted shall only be valid
while such land is used for the purposes referred to. (Emphasis
supplied.)
Reliance on said provision is incorrect as the same applies only
to "a province, municipality or branch or subdivision of the
Government." The NHA is not a government unit but a
government corporation performing governmental and
proprietary functions.
In addition, PD 757 is clear that the NHA is empowered by law
to transfer properties acquired by it under the law to other
parties, thus:
Section 6. Powers and functions of the Authority. The Authority
shall have the following powers and functions to be exercised
by the Boards in accordance with the established national
human settlements plan prepared by the Human Settlements
Commission:
xxxx
(k) Enter into contracts whenever necessary under such terms
and conditions as it may deem proper and reasonable;
(l) Acquire property rights and interests, and encumber or
otherwise dispose the same as it may deem appropriate
(Emphasis supplied.)
Letter (l) is emphatic that the NHA can acquire property rights
and interests and encumber or otherwise dispose of them as it
may deem appropriate. The transfer of the reclaimed lands by
the National Government to the NHA for housing, commercial,
and industrial purposes transformed them into patrimonial
lands which are of course owned by the State in its private or
proprietary capacity. Perforce, the NHA can sell the reclaimed
lands to any Filipino citizen or qualified corporation.
Sixth Issue: Whether the transfer of reclaimed lands to RBI
was done by public bidding
Petitioner also contends that there was no public bidding but an
awarding of ownership of said reclaimed lands to RBI. Public
bidding, he says, is required under Secs. 63 and 67 of CA 141
which read:
Section 63. Whenever it is decided that lands covered by this
chapter are not needed for public purposes, the Director of
Lands shall ask the Secretary of Agriculture and Commerce for
authority to dispose of the same. Upon receipt of such
authority, the Director of Lands shall give notice by public
advertisement in the same manner as in the case of leases or
sales of agricultural public land, that the Government will lease
or sell, as the case may be, the lots or blocks specified in the
advertisement, for the purpose stated in the notice and subject
to the conditions specified in this chapter.
xxxx
Section 67. The lease or sale shall be made through oral
bidding; and adjudication shall be made to the highest bidder.
However, where an applicant has made improvements on the
land by virtue of a permit issued to him by competent
authority, the sale or lease shall be made by sealed bidding as
prescribed in section twenty-six of this Act, the provisions of
which shall be applied whenever applicable. If all or part of the
lots remain unleased or unsold, the Director of Lands shall from
time to time announce in the Official Gazette or in any other
newspapers of general circulation, the lease of sale of those
lots, if necessary.
He finds that the NHA and RBI violated Secs. 63 and 67 of CA
141, as the reclaimed lands were conveyed to RBI by negotiated
contract and not by public bidding as required by law.
This stand is devoid of merit.
There is no doubt that respondent NHA conducted a public
bidding of the right to become its joint venture partner in the
Smokey Mountain Project. Notices or Invitations to Bid were
published in the national dailies on January 23 and 26, 1992 and
February 1, 14, 16, and 23, 1992. The bidding proper was done
by the Bids and Awards Committee (BAC) on May 18, 1992. On
August 31, 1992, the Inter-Agency Techcom made up of the
NHA, PEA, DPWH, PPA, DBP, and DENR opened the bids and
evaluated them, resulting in the award of the contract to
respondent RBI on October 7, 1992.
On March 19, 1993, respondents NHA and RBI signed the JVA.
On February 23, 1994, said JVA was amended and restated into
the ARJVA. On August 11, 1994, the ARJVA was again amended.
On September 7, 1994, the OP approved the ARJVA and the
amendments to the ARJVA. From these factual settings, it
cannot be gainsaid that there was full compliance with the laws
and regulations governing public biddings involving a right,
concession, or property of the government.
Petitioner concedes that he does not question the public
bidding on the right to be a joint venture partner of the NHA,
but the absence of bidding in the sale of alienable and
disposable lands of public domain pursuant to CA 141 as
amended.
Petitioner’s theory is incorrect.
Secs. 63 and 67 of CA 141, as amended, are in point as they
refer to government sale by the Director of Lands of alienable
and disposable lands of public domain. This is not present in the
case at bar. The lands reclaimed by and conveyed to the NHA
are no longer lands of public domain. These lands became
proprietary lands or patrimonial properties of the State upon
transfer of the titles over the reclaimed lands to the NHA and
hence outside the ambit of CA 141. The NHA can therefore
legally transfer patrimonial land to RBI or to any other
interested qualified buyer without any bidding conducted by
the Director of Lands because the NHA, unlike PEA, is a
government agency not tasked to sell lands of public domain.
23
Hence, it can only hold patrimonial lands and can dispose of
such lands by sale without need of public bidding.
Petitioner likewise relies on Sec. 79 of PD 1445 which requires
public bidding "when government property has become
unserviceable for any cause or is no longer needed." It appears
from the Handbook on Property and Supply Management
System, Chapter 6, that reclaimed lands which have become
patrimonial properties of the State, whose titles are conveyed
to government agencies like the NHA, which it will use for its
projects or programs, are not within the ambit of Sec. 79. We
quote the determining factors in the Disposal of Unserviceable
Property, thus:
Determining Factors in the Disposal of Unserviceable Property
 Property, which can no longer be repaired or
reconditioned;
 Property whose maintenance costs of repair more than
outweigh the benefits and services that will be
derived from its continued use;
 Property that has become obsolete or outmoded
because of changes in technology;
 Serviceable property that has been rendered
unnecessary due to change in the agency’s function or
mandate;
 Unused supplies, materials and spare parts that were
procured in excess of requirements; and
 Unused supplies and materials that [have] become
dangerous to use because of long storage or use of
which is determined to be hazardous.85
Reclaimed lands cannot be considered unserviceable
properties. The reclaimed lands in question are very much
needed by the NHA for the Smokey Mountain Project because
without it, then the projects will not be successfully
implemented. Since the reclaimed lands are not unserviceable
properties and are very much needed by NHA, then Sec. 79 of
PD 1445 does not apply.
More importantly, Sec. 79 of PD 1445 cannot be applied to
patrimonial properties like reclaimed lands transferred to a
government agency like the NHA which has entered into a BOT
contract with a private firm. The reason is obvious. If the
patrimonial property will be subject to public bidding as the
only way of disposing of said property, then Sec. 6 of RA 6957
on the repayment scheme is almost impossible or extremely
difficult to implement considering the uncertainty of a winning
bid during public auction. Moreover, the repayment scheme of
a BOT contract may be in the form of non-monetary payment
like the grant of a portion or percentage of reclaimed land.
Even if the BOT partner participates in the public bidding,
there is no assurance that he will win the bid and therefore the
payment in kind as agreed to by the parties cannot be
performed or the winning bid prize might be below the
estimated valuation of the land. The only way to harmonize
Sec. 79 of PD 1445 with Sec. 6 of RA 6957 is to consider Sec. 79
of PD 1445 as inapplicable to BOT contracts involving
patrimonial lands. The law does not intend anything impossible
(lex non intendit aliquid impossibile).
Seventh Issue: Whether RBI, being a private corporation,
is barred by the Constitution to acquire lands of public domain
Petitioner maintains that RBI, being a private corporation, is
expressly prohibited by the 1987 Constitution from acquiring
lands of public domain.
Petitioner’s proposition has no legal mooring for the following
reasons:
1. RA 6957 as amended by RA 7718 explicitly states
that a contractor can be paid "a portion as percentage
of the reclaimed land" subject to the constitutional
requirement that only Filipino citizens or corporations
with at least 60% Filipino equity can acquire the same.
It cannot be denied that RBI is a private corporation,
where Filipino citizens own at least 60% of the stocks.
Thus, the transfer to RBI is valid and constitutional.
2. When Proclamations Nos. 39 and 465 were issued,
inalienable lands covered by said proclamations were
converted to alienable and disposable lands of public
domain. When the titles to the reclaimed lands were
transferred to the NHA, said alienable and disposable
lands of public domain were automatically classified
as lands of the private domain or patrimonial
properties of the State because the NHA is an agency
NOT tasked to dispose of alienable or disposable lands
of public domain. The only way it can transfer the
reclaimed land in conjunction with its projects and to
attain its goals is when it is automatically converted
to patrimonial properties of the State. Being
patrimonial or private properties of the State, then it
has the power to sell the same to any qualified
person—under the Constitution, Filipino citizens as
private corporations, 60% of which is owned by
Filipino citizens like RBI.
3. The NHA is an end-user entity such that when
alienable lands of public domain are transferred to
said agency, they are automatically classified as
patrimonial properties. The NHA is similarly situated
as BCDA which was granted the authority to dispose of
patrimonial lands of the government under RA 7227.
The nature of the property holdings conveyed to BCDA
is elucidated and stressed in the May 6, 2003
Resolution in Chavez v. PEA, thus:
BCDA is an entirely different government entity. BCDA is
authorized by law to sell specific government lands that have
long been declared by presidential proclamations as military
reservations for use by the different services of the armed
forces under the Department of National Defense. BCDA’s
mandate is specific and limited in area, while PEA’s mandate is
general and national. BCDA holds government lands that have
been granted to end-user government entities––the military
services of the armed forces. In contrast, under Executive
Order No. 525, PEA holds the reclaimed public lands, not as an
end-user entity, but as the government agency "primarily
responsible for integrating, directing, and coordinating all
reclamation projects for and on behalf of the National
Government."
x x x Well-settled is the doctrine that public land granted to an
end-user government agency for a specific public use may
subsequently be withdrawn by Congress from public use and
declared patrimonial property to be sold to private parties.
R.A. No. 7227 creating the BCDA is a law that declares specific
military reservations no longer needed for defense or military
purposes and reclassifies such lands as patrimonial property for
sale to private parties.
24
Government owned lands, as long as they are patrimonial
property, can be sold to private parties, whether Filipino
citizens or qualified private corporations. Thus, the so-called
Friar Lands acquired by the government under Act No. 1120 are
patrimonial property which even private corporations can
acquire by purchase. Likewise, reclaimed alienable lands of the
public domain if sold or transferred to a public or municipal
corporation for a monetary consideration become patrimonial
property in the hands of the public or municipal corporation.
Once converted to patrimonial property, the land may be sold
by the public or municipal corporation to private parties,
whether Filipino citizens or qualified private corporations. 86
(Emphasis supplied.)
The foregoing Resolution makes it clear that the SMDRP was a
program adopted by the Government under Republic Act No.
6957 (An Act Authorizing the Financing, Construction, Operation
and Maintenance of Infrastructure Projects by the Private
Sector, and For Other Purposes), as amended by RA 7718, which
is a special law similar to RA 7227. Moreover, since the
implementation was assigned to the NHA, an end-user agency
under PD 757 and RA 7279, the reclaimed lands registered
under the NHA are automatically classified as patrimonial lands
ready for disposition to qualified beneficiaries.
The foregoing reasons likewise apply to the contention of
petitioner that HCPTI, being a private corporation, is
disqualified from being a transferee of public land. What was
transferred to HCPTI is a 10-hectare lot which is already
classified as patrimonial property in the hands of the NHA.
HCPTI, being a qualified corporation under the 1987
Constitution, the transfer of the subject lot to it is valid and
constitutional.
Eighth Issue: Whether respondents can be compelled to disclose
all information related to the SMDRP
Petitioner asserts his right to information on all documents such
as contracts, reports, memoranda, and the like relative to
SMDRP.
Petitioner asserts that matters relative to the SMDRP have not
been disclosed to the public like the current stage of the
Project, the present financial capacity of RBI, the complete list
of investors in the asset pool, the exact amount of investments
in the asset pool and other similar important information
regarding the Project.
He prays that respondents be compelled to disclose all
information regarding the SMDRP and furnish him with originals
or at least certified true copies of all relevant documents
relating to the said project including, but not limited to, the
original JVA, ARJVA, AARJVA, and the Asset Pool Agreement.
This relief must be granted.
The right of the Filipino people to information on matters of
public concern is enshrined in the 1987 Constitution, thus:
ARTICLE II
xxxx
SEC. 28. Subject to reasonable conditions prescribed by law,
the State adopts and implements a policy of full public
disclosure of all its transactions involving public interest.
ARTICLE III
SEC. 7. The right of the people to information on matters of
public concern shall be recognized. Access to official records,
and to documents, and papers pertaining to official acts,
transactions, or decisions, as well as to government research
data used as basis for policy development, shall be afforded the
citizen, subject to such limitations as may be provided by law.
In Valmonte v. Belmonte, Jr., this Court explicated this way:
[A]n essential element of these freedoms is to keep open a
continuing dialogue or process of communication between the
government and the people. It is in the interest of the State
that the channels for free political discussion be maintained to
the end that the government may perceive and be responsive to
the people’s will. Yet, this open dialogue can be effective only
to the extent that the citizenry is informed and thus able to
formulate its will intelligently. Only when the participants in
the discussion are aware of the issues and have access to
information relating thereto can such bear fruit.87
In PEA, this Court elucidated the rationale behind the right to
information:
These twin provisions of the Constitution seek to promote
transparency in policy-making and in the operations of the
government, as well as provide the people sufficient
information to exercise effectively other constitutional rights.
These twin provisions are essential to the exercise of freedom
of expression. If the government does not disclose its official
acts, transactions and decisions to citizens, whatever citizens
say, even if expressed without any restraint, will be speculative
and amount to nothing. These twin provisions are also essential
to hold public officials "at all times x x x accountable to the
people," for unless citizens have the proper information, they
cannot hold public officials accountable for anything. Armed
with the right information, citizens can participate in public
discussions leading to the formulation of government policies
and their effective implementation. An informed citizenry is
essential to the existence and proper functioning of any
democracy.88
Sec. 28, Art. II compels the State and its agencies to fully
disclose "all of its transactions involving public interest." Thus,
the government agencies, without need of demand from
anyone, must bring into public view all the steps and
negotiations leading to the consummation of the transaction
and the contents of the perfected contract.89 Such information
must pertain to "definite propositions of the government,"
meaning official recommendations or final positions reached on
the different matters subject of negotiation. The government
agency, however, need not disclose "intra-agency or inter-
agency recommendations or communications during the stage
when common assertions are still in the process of being
formulated or are in the exploratory stage." The limitation also
covers privileged communication like information on military
and diplomatic secrets; information affecting national security;
information on investigations of crimes by law enforcement
agencies before the prosecution of the accused; information on
foreign relations, intelligence, and other classified information.
25
It is unfortunate, however, that after almost twenty (20) years
from birth of the 1987 Constitution, there is still no enabling
law that provides the mechanics for the compulsory duty of
government agencies to disclose information on government
transactions. Hopefully, the desired enabling law will finally
see the light of day if and when Congress decides to approve
the proposed "Freedom of Access to Information Act." In the
meantime, it would suffice that government agencies post on
their bulletin boards the documents incorporating the
information on the steps and negotiations that produced the
agreements and the agreements themselves, and if finances
permit, to upload said information on their respective websites
for easy access by interested parties. Without any law or
regulation governing the right to disclose information, the NHA
or any of the respondents cannot be faulted if they were not
able to disclose information relative to the SMDRP to the public
in general.
The other aspect of the people’s right to know apart from the
duty to disclose is the duty to allow access to information on
matters of public concern under Sec. 7, Art. III of the
Constitution. The gateway to information opens to the public
the following: (1) official records; (2) documents and papers
pertaining to official acts, transactions, or decisions; and (3)
government research data used as a basis for policy
development.
Thus, the duty to disclose information should be differentiated
from the duty to permit access to information. There is no need
to demand from the government agency disclosure of
information as this is mandatory under the Constitution; failing
that, legal remedies are available. On the other hand, the
interested party must first request or even demand that he be
allowed access to documents and papers in the particular
agency. A request or demand is required; otherwise, the
government office or agency will not know of the desire of the
interested party to gain access to such papers and what papers
are needed. The duty to disclose covers only transactions
involving public interest, while the duty to allow access has a
broader scope of information which embraces not only
transactions involving public interest, but any matter contained
in official communications and public documents of the
government agency.
We find that although petitioner did not make any demand on
the NHA to allow access to information, we treat the petition
as a written request or demand. We order the NHA to allow
petitioner access to its official records, documents, and papers
relating to official acts, transactions, and decisions that are
relevant to the said JVA and subsequent agreements relative to
the SMDRP.
Ninth Issue: Whether the operative fact doctrine applies to the
instant petition
Petitioner postulates that the "operative fact" doctrine is
inapplicable to the present case because it is an equitable
doctrine which could not be used to countenance an
inequitable result that is contrary to its proper office.
On the other hand, the petitioner Solicitor General argues that
the existence of the various agreements implementing the
SMDRP is an operative fact that can no longer be disturbed or
simply ignored, citing Rieta v. People of the Philippines.90
The argument of the Solicitor General is meritorious.
The "operative fact" doctrine is embodied in De Agbayani v.
Court of Appeals, wherein it is stated that a legislative or
executive act, prior to its being declared as unconstitutional by
the courts, is valid and must be complied with, thus:
As the new Civil Code puts it: "When the courts declare a law to
be inconsistent with the Constitution, the former shall be void
and the latter shall govern. Administrative or executive acts,
orders and regulations shall be valid only when they are not
contrary to the laws of the Constitution." It is understandable
why it should be so, the Constitution being supreme and
paramount. Any legislative or executive act contrary to its
terms cannot survive.
Such a view has support in logic and possesses the merit of
simplicity. It may not however be sufficiently realistic. It does
not admit of doubt that prior to the declaration of nullity such
challenged legislative or executive act must have been in force
and had to be complied with. This is so as until after the
judiciary, in an appropriate case, declares its invalidity, it is
entitled to obedience and respect. Parties may have acted
under it and may have changed their positions. What could be
more fitting than that in a subsequent litigation regard be had
to what has been done while such legislative or executive act
was in operation and presumed to be valid in all respects. It is
now accepted as a doctrine that prior to its being nullified, its
existence as a fact must be reckoned with. This is merely to
reflect awareness that precisely because the judiciary is the
governmental organ which has the final say on whether or not a
legislative or executive measure is valid, a period of time may
have elapsed before it can exercise the power of judicial
review that may lead to a declaration of nullity. It would be to
deprive the law of its quality of fairness and justice then, if
there be no recognition of what had transpired prior to such
adjudication.
In the language of an American Supreme Court decision: "The
actual existence of a statute, prior to such a determination [of
unconstitutionality], is an operative fact and may have
consequences which cannot justly be ignored. The past cannot
always be erased by a new judicial declaration. The effect of
the subsequent ruling as to invalidity may have to be
considered in various aspects, with respect to particular
relations, individual and corporate, and particular conduct,
private and official." This language has been quoted with
approval in a resolution in Araneta v. Hill and the decision in
Manila Motor Co., Inc. v. Flores. An even more recent instance
is the opinion of Justice Zaldivar speaking for the Court in
Fernandez v. Cuerva and Co.91 (Emphasis supplied.)
This doctrine was reiterated in the more recent case of City of
Makati v. Civil Service Commission, wherein we ruled that:
Moreover, we certainly cannot nullify the City Government’s
order of suspension, as we have no reason to do so, much less
retroactively apply such nullification to deprive private
respondent of a compelling and valid reason for not filing the
leave application. For as we have held, a void act though in law
a mere scrap of paper nonetheless confers legitimacy upon past
acts or omissions done in reliance thereof. Consequently, the
existence of a statute or executive order prior to its being
adjudged void is an operative fact to which legal consequences
are attached. It would indeed be ghastly unfair to prevent
private respondent from relying upon the order of suspension in
lieu of a formal leave application.92 (Emphasis supplied.)
The principle was further explicated in the case of Rieta v.
People of the Philippines, thus:
26
In similar situations in the past this Court had taken the
pragmatic and realistic course set forth in Chicot County
Drainage District vs. Baxter Bank to wit:
The courts below have proceeded on the theory that the Act of
Congress, having been found to be unconstitutional, was not a
law; that it was inoperative, conferring no rights and imposing
no duties, and hence affording no basis for the challenged
decree. x x x It is quite clear, however, that such broad
statements as to the effect of a determination of
unconstitutionality must be taken with qualifications. The
actual existence of a statute, prior to [the determination of its
invalidity], is an operative fact and may have consequences
which cannot justly be ignored. The past cannot always be
erased by a new judicial declaration. The effect of the
subsequent ruling as to invalidity may have to be considered in
various aspects –with respect to particular conduct, private and
official. Questions of rights claimed to have become vested, of
status, of prior determinations deemed to have finality and
acted upon accordingly, of public policy in the light of the
nature both of the statute and of its previous application,
demand examination. These questions are among the most
difficult of those which have engaged the attention of courts,
state and federal, and it is manifest from numerous decisions
that an all-inclusive statement of a principle of absolute
retroactive invalidity cannot be justified.
In the May 6, 2003 Resolution in Chavez v. PEA,93 we ruled that
De Agbayani94 is not applicable to the case considering that the
prevailing law did not authorize private corporations from
owning land. The prevailing law at the time was the 1935
Constitution as no statute dealt with the same issue.
In the instant case, RA 6957 was the prevailing law at the time
that the joint venture agreement was signed. RA 6957, entitled
"An Act Authorizing The Financing, Construction, Operation And
Maintenance Of Infrastructure Projects By The Private Sector
And For Other Purposes," which was passed by Congress on July
24, 1989, allows repayment to the private contractor of
reclaimed lands.95 Such law was relied upon by respondents,
along with the above-mentioned executive issuances in pushing
through with the Project. The existence of such law and
issuances is an "operative fact" to which legal consequences
have attached. This Court is constrained to give legal effect to
the acts done in consonance with such executive and legislative
acts; to do otherwise would work patent injustice on
respondents.
Further, in the May 6, 2003 Resolution in Chavez v. PEA, we
ruled that in certain cases, the transfer of land, although illegal
or unconstitutional, will not be invalidated on considerations of
equity and social justice. However, in that case, we did not
apply the same considering that PEA, respondent in said case,
was not entitled to equity principles there being bad faith on
its part, thus:
There are, moreover, special circumstances that disqualify
Amari from invoking equity principles. Amari cannot claim good
faith because even before Amari signed the Amended JVA on
March 30, 1999, petitioner had already filed the instant case on
April 27, 1998 questioning precisely the qualification of Amari
to acquire the Freedom Islands. Even before the filing of this
petition, two Senate Committees had already approved on
September 16, 1997 Senate Committee Report No. 560. This
Report concluded, after a well-publicized investigation into
PEA’s sale of the Freedom Islands to Amari, that the Freedom
Islands are inalienable lands of the public domain. Thus, Amari
signed the Amended JVA knowing and assuming all the
attendant risks, including the annulment of the Amended JVA. 96
Such indicia of bad faith are not present in the instant case.
When the ruling in PEA was rendered by this Court on July 9,
2002, the JVAs were all executed. Furthermore, when
petitioner filed the instant case against respondents on August
5, 2004, the JVAs were already terminated by virtue of the MOA
between the NHA and RBI. The respondents had no reason to
think that their agreements were unconstitutional or even
questionable, as in fact, the concurrent acts of the executive
department lent validity to the implementation of the Project.
The SMDRP agreements have produced vested rights in favor of
the slum dwellers, the buyers of reclaimed land who were
issued titles over said land, and the agencies and investors who
made investments in the project or who bought SMPPCs. These
properties and rights cannot be disturbed or questioned after
the passage of around ten (10) years from the start of the
SMDRP implementation. Evidently, the "operative fact" principle
has set in. The titles to the lands in the hands of the buyers can
no longer be invalidated.
The Court’s Dispositions
Based on the issues raised in this petition, we find that the
March 19, 1993 JVA between NHA and RBI and the SMDRP
embodied in the JVA, the subsequent amendments to the JVA
and all other agreements signed and executed in relation to it,
including, but not limited to, the September 26, 1994 Smokey
Mountain Asset Pool Agreement and the agreement on Phase I
of the Project as well as all other transactions which emanated
from the Project, have been shown to be valid, legal, and
constitutional. Phase II has been struck down by the Clean Air
Act.
With regard to the prayer for prohibition, enjoining respondents
particularly respondent NHA from further implementing and/or
enforcing the said Project and other agreements related to it,
and from further deriving and/or enjoying any rights, privileges
and interest from the Project, we find the same prayer
meritless.
Sec. 2 of Rule 65 of the 1997 Rules of Civil Procedure provides:
Sec. 2. Petition for prohibition.—When the proceedings of any
tribunal, corporation, board, officer or person, whether
exercising judicial, quasi-judicial or ministerial functions, are
without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction,
and there is no appeal or any other plain, speedy, and adequate
remedy in the ordinary course of law, a person aggrieved
thereby may file a verified petition in the proper court, alleging
the facts with certainty and praying that judgment be rendered
commanding the respondent to desist from further proceedings
in the action or matter specified therein, or otherwise granting
such incidental reliefs as law and justice may require.
It has not been shown that the NHA exercised judicial or quasi-
judicial functions in relation to the SMDRP and the agreements
relative to it. Likewise, it has not been shown what ministerial
functions the NHA has with regard to the SMDRP.
A ministerial duty is one which is so clear and specific as to
leave no room for the exercise of discretion in its performance.
It is a duty which an officer performs in a given state of facts in
a prescribed manner in obedience to the mandate of legal
27
authority, without regard to the exercise of his/her own
judgment upon the propriety of the act done.97
Whatever is left to be done in relation to the August 27, 2003
MOA, terminating the JVA and other related agreements,
certainly does not involve ministerial functions of the NHA but
instead requires exercise of judgment. In fact, Item No. 4 of
the MOA terminating the JVAs provides for validation of the
developer’s (RBI’s) claims arising from the termination of the
SMDRP through the various government agencies. 98 Such
validation requires the exercise of discretion.
In addition, prohibition does not lie against the NHA in view of
petitioner’s failure to avail and exhaust all administrative
remedies. Clear is the rule that prohibition is only available
when there is no adequate remedy in the ordinary course of
law.
More importantly, prohibition does not lie to restrain an act
which is already a fait accompli. The "operative fact" doctrine
protecting vested rights bars the grant of the writ of prohibition
to the case at bar. It should be remembered that petitioner was
the Solicitor General at the time SMDRP was formulated and
implemented. He had the opportunity to question the SMDRP
and the agreements on it, but he did not. The moment to
challenge the Project had passed.
On the prayer for a writ of mandamus, petitioner asks the Court
to compel respondents to disclose all documents and
information relating to the project, including, but not limited
to, any subsequent agreements with respect to the different
phases of the Project, the revisions of the original plan, the
additional works incurred on the Project, the current financial
condition of respondent RBI, and the transactions made with
respect to the project. We earlier ruled that petitioner will be
allowed access to official records relative to the SMDRP. That
would be adequate relief to satisfy petitioner’s right to the
information gateway.
WHEREFORE, the petition is partially granted.
The prayer for a writ of prohibition is DENIED for lack of merit.
The prayer for a writ of mandamus is GRANTED. Respondent
NHA is ordered to allow access to petitioner to all public
documents and official records relative to the SMDRP—
including, but not limited to, the March 19, 1993 JVA between
the NHA and RBI and subsequent agreements related to the
JVA, the revisions over the original plan, and the additional
works incurred on and the transactions made with respect to
the Project.
No costs.
SO ORDERED.
G.R. No. 157330 November 23, 2011
LINA CALILAP-ASMERON, Petitioner,
vs.
DEVELOPMENT BANK OF THE PHILIPPINES, PABLO CRUZ,*
TRINIDAD CABANTOG,** ENI S.P. ATIENZA and EMERENCIANA
CABANTOG, Respondents.
DECISION
BERSAMIN, J.: II

The petitioner challenges the decision promulgated on June 21, Version of Respondents
2002,1 whereby the Court of Appeals (CA) affirmed the adverse
decision rendered by the Regional Trial Court, Branch 11, in DBP insisted that the petitioner’s real intention had been to
Malolos, Bulacan (RTC) in Civil Case No. 50-M-87 entitled Lina repurchase the two lots on installment basis. She manifested
Calilap-Asmeron v. Development Bank of the Philippines, Pablo her real intention to that effect in writing through her letter
Cruz, Trinidad Cabantog, Eni S.P. Atienza, and Emerenciana dated September 14, 1981, thus:
Cabantog,2 an action initiated to set aside the defendant bank’s
rescission of a deed of conditional sale involving foreclosed
property, and to annul the subsequent sales of the property to September 14, 1981
other persons.
DEVELOPMENT BANK OF THE PHIL.
Antecedents Acquired Assests [sic] Department
Makati, Metro Manila
On March 17, 1975, the petitioner and her brother Celedonio
Calilap constituted a real estate mortgage over two parcels of ATTENTION: MR. J.A. SANCHEZ, JR.
land covered by Transfer Certificate of Title (TCT) No. T- Assistant Manager
164117 and TCT No.T-160929, both of the Registry of Deeds of
Bulacan, to secure the performance of their loan obligation ------------------------------------------------------------
with respondent Development Bank of the Philippines (DBP).3
With the principal obligation being ultimately unpaid, DBP
foreclosed the mortgage. The mortgaged parcels of land were Dear Sir:
then sold to DBP as the highest bidder. The one-year
redemption period expired on September 1, 1981.4 I wish to inform your good office that I am interested to
reacquire the mortgage properties consisting of two (2) parcels
As to what thereafter transpired, the petitioner and DBP of land under TCT Nos. T-160929 and T-164117 located at
tendered conflicting versions. Sumapa, Malolos, Bulacan.

I I would like to reacquire the above stated properties under

installment basis but I am requesting your goodselves [sic] to
extend an extension of time up to the first week of November,
Version of Petitioner 1981 for my money is coming by that time.

The thrust of the petitioner’s suit is that DBP accorded to her a Your kind consideration on the above request is most highly
preferential right to repurchase the property covered by TCT appreciated, I remain.
No. 164117.5 Her version follows.
Very truly yours,
In August 1982, the petitioner negotiated with DBP to buy back
the property covered by TCT No. 164117 by offering ₱15,000.00
as downpayment. Her offer was rejected by an executive (sgd.)
officer of DBP’s Acquired Assets Department, who required her LINA CALILAP-ASMERON
to pay the full purchase price of ₱55,500.00 for the property Co-maker12
within ten days.6 She returned to DBP with the amount, only to
be told that DBP would not sell back only one lot. Being made The petitioner also sent a telegram on September 15, 1981, 13
to believe that the lot covered by TCT No. 164117 would be whereby she similarly expressed to DBP her interest in
released after paying two amortizations for the other lot (TCT reacquiring the properties. On November 16, 1981, DBP
No. 160929), however, she signed the deed of conditional sale received another telegram from her,14 requesting DBP to put
covering both lots for the total consideration of ₱157,000.00.7 the bidding of the properties on hold. A year later, she sent a
When she later on requested the release of the property under letter dated August 31, 1982 to reiterate her intention to
TCT No. 164117 after paying two quarterly amortizations, DBP repurchase the two properties and to offer to deposit
did not approve the release. She continued paying the ₱55,500.00 as initial payment, to wit:
amortizations until she had paid ₱40,000.00 in all, at which
point she sought again the release of the lot under TCT No.
August 31, 1982
164117. DBP still denied her request, warning that it would
rescind the contract should her remaining amortizations be still
not paid. On August 7, 1985, DBP rescinded the deed of The Manager
conditional sale over her objections.8 Acquired Assets Management Department
Development Bank of the Philippines
Makati, Metro Manila
On November 25, 1987, DBP sold the lot covered by TCT No.
164117 to respondent Pablo Cruz via a deed of absolute sale.9
The petitioner consequently filed a complaint for the rescission Dear Sir:
of the sale to Cruz on January 30, 1987.10 Notwithstanding their
knowledge of her pending suit against Cruz, respondents This has reference to our former properties consisting of two
Emerenciana Cabantog and Eni S.P. Atienza still bought the parcels of land with an aggregate area of 2,082.5 sq.m. covered
property from Cruz.11 Hence, Cabantog and Atienza were by TCT Nos. T-160929 and T-164117 together with all the
impleaded as additional defendants by amendment.

28
improvements erected thereon located at Bo. Sumpang
Matanda, Malolos, Bulacan.
I wish to inform you that in view of my intense desire to
preserve said properties for our family’s use, I am offering to
buy back these properties for P157,000.00, payable on terms,
balance to be paid in five (5) years on the quarterly
amortization plan.
This is my last appeal for your assistance in my wish to preserve
these properties and should I fail to consummate the sale, I
bind myself to whatever rules and regulations the Bank may
impose with regards to my deposit.
If this offer is acceptable to you, I am willing to deposit the
amount of P55,500.00 on or before September 10, 1982.
May I be advised accordingly?
Thank you.
Very truly yours,
(Sgd.)
LINA CALILAP-ASMERON15
The petitioner subsequently made the downpayment on
September 10, 1992,16 and DBP formally accepted the offer
through its letter dated September 14, 1982, stating therein
the terms and conditions.17 Said terms and conditions, which
were later embodied in the deed of conditional sale executed
on January 21, 1983, included one that bound her to pay the
first amortization of ₱7,304.15 three months from the
execution of the deed, and the remaining amortizations to be
due and payable every three months thereafter.18
DBP presented the duplicate copies of the receipts indicating
her timely payment for the first quarterly amortization;
however, she incurred delays in her subsequent installments. 19
She made her last payment amounting to ₱4,500.00 on March
12, 1985,20 leaving five quarterly amortizations unpaid.21
On January 20, 1986, the petitioner sent a handwritten letter
requesting DBP to put on hold any plans of selling the subject
property, viz:
January 20, 1986
Mr. V.M. Macapagal
Executive Officer
Acquired Assets Mgmt. Division
Development Bank of the Philippines
Makati, Metro Manila
Dear Sir:
This is with reference regarding my Sale Acct. No. 617 under
the name of my late brother Celedonio R. Calilap which are
located in Sumapa, Malolos, Bulacan.
In connection with these properties, I have already made an
arrangement that I’m going to pay my whole obligations
through a private financier under your Incentive Plan, which
according to my last communication with them it was extended
29
so I have to make an advance notice of four (4) days before
paying so I may know the exact amount.
I wanted it to be formal, so I send [sic] a letter to your good
office for the reason that last January 17, 1986, your appraiser
went to our place and made an assessment of my properties.
May I request again to please hold any sale of the said property
for I’m doing my best to settle my obligation at the soonest
possible time, for sure after a week or two after the snap
election.
Thank you very much for your kind consideration and hoping for
your help regarding my request.
Respectfully yours,
(sgd.)
LINA CALILAP-ASMERON22
DBP replied by its letter dated February 5, 1986,23 demanding
payment of the petitioner’s remaining obligation of
₱121,013.75 in cash, otherwise, it would be constrained to sell
the property. She responded via telegram,24 informing DBP that
she would be arriving on March 4, 1986. The telegram was
followed by a handwritten letter dated March 5, 198625 stating
her willingness to pay 10% of her outstanding obligations.
On March 12, 1986, DBP demanded the immediate remittance
of the promised amount via telegram.26 When she did not pay
the six quarterly amortizations, DBP rescinded the deed of
conditional sale and applied for a writ of possession on
November 17, 1986 in the RTC (Branch 17) in Malolos, Bulacan.
Its application for the writ of possession was granted on
November 18, 1986.27
Ruling of the RTC
Finding the petitioner’s complaint lacking in merit, the RTC
(Branch 11) rendered its decision on December 28, 1994
dismissing the case.28 It observed that the stipulations in the
deed of conditional sale and the tenor of the petitioner’s
communications to DBP clearly indicated that she had intended
to repurchase both foreclosed properties, not just the property
covered by TCT No. T-164117, thusly:
Lettered as she is, the plaintiff cannot now seek refuge on the
excuse that what she intends to buy was only the property
covered by TCT No. T-164117. The contents of her letter to the
Manager of the Acquired Assets Division of DBP dated August
31, 1982 (Exh. 1 and its submarkings) and to Asst. Manager J.A.
Sanchez of the DBP dated September 14, 1981 (Exh. 2) clearly
demonstrate in unequivocal terms that she intended to
reacquire both of her foreclosed properties. Moreso, the
telegrams sent by her (Exhs. 3 & 4) to defendant bank clearly
indicates the same intention.
The aforequoted terms and conditions in the conditional sale
which defendant failed to comply are clear and not susceptible
whatsoever to any other interpretation as to the intention of
the contracting parties. It is settled and fundamental that if the
terms of the contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of the
stipulations shall control (Art. 1370, Civil Code; Filoil Marketing
Corp. vs. IAC GR 67115; Mercantile Ins. Corp. vs.Ysmael GR
43862; Baliuag Transit Corp. vs. CA GR 80447). In addition, her
subsequent acts of writing DBP and complying with the terms of
the conditional sale bolster the fact of her acquiescence in the
said contract which she voluntarily entered into and she cannot
now take a contrary position.29
Ruling of the CA
The petitioner appealed, contending that:
I title of DBP as the registered owner of the property at the time
THE LOWER COURT GROSSLY ERRED IN NOT ANNULLING THE
RESCISSION MADE BY THE DEVELOPMENT BANK OF THE
PHILIPPINES (DBP) OF THE CONDITIONAL SALE OF JANUARY 4,
1983, APPELLANT HAVING ALREADY PAID A SUBSTANTIAL
AMOUNT OF P100,000.00 OR ABOUT TWO-THIRDS OF THE PRICE
OR CONSIDERATION.
II
THE LOWER COURT ERRED IN NOT ANNULLING THE SALE MADE
BY DBP TO PABLO CRUZ AS WELL AS THE SALE MADE BY THE
LATTER TO THE OTHER DEFENDANTS.
Yet, on June 21, 2002, the CA affirmed the RTC,30 pointing out
that the petitioner had not presented testimonial or
documentary evidence to support or corroborate her claim that
she had been misled into signing the deed of conditional sale. It
ruled that DBP could rescind the contract pursuant to the terms
of the deed of conditional sale itself, and that DBP exercised its
right to rescind only after she had failed to pay her quarterly
amortizations.31
Issues
In her present appeal, the petitioner submits:
I Regional Trial Court or other courts whenever authorized by
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS AND
REVERSIBLE ERROR WHEN IT DISREGARDED THE TESTIMONIAL
EVIDENCE ADDUCED BY THE PETITIONER, WHICH CLEARLY
DETAILED THE TRUTH SURROUNDING THE EXECUTION OF THE
DEED OF CONDITIONAL SALE OF THE SUBJECT LOT TO
RESPONDENT CRUZ, AND THE LATTER TO CO-RESPONDENTS
CABANTOG AND ATIENZA NULL AND VOID
II
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN
IT AFFIRMED THE DECISION OF THE LOWER COURT UPHOLDING
THE RESPONDENT BANK’S RESCISSION OF THE DEED OF
CONDITIONAL SALE CONSIDERING THAT THE PETITIONER HAD
ALREADY PAID A SUBSTANTIAL AMOUNT OF PHP100,000.00 OR
ABOUT TWO-THIRD OF THE FULL CONSIDERATION OF
PHP157,000.00.
The petitioner avers that her testimonial evidence sufficiently
established the facts behind the execution of the deed of
conditional sale; that she thereby proved that she had not fully
understood the terms contained in the deed; that DBP could not
resort to rescission because her nonpayment of the
amortizations was only a slight or casual breach; and that the
sale made by DBP to Cruz was tainted with bad faith, which was
also true with the sale from Cruz to Cabantog and Atienza.
30
DBP counters that the petitioner is raising questions of fact in
her present appeal, which is not allowed under Rule 45 of the
Rules of Court; and that it had the right to rescind the deed of
conditional sale under Article 1191 of the Civil Code.
On her part, Remedios Lim-Cruz, who had substituted her
deceased husband, argues that the petitioner did not prove bad
faith on the part of her husband in purchasing the property
from DBP; and that her husband had relied in good faith on the
of the sale.
Ruling
The appeal lacks merit.
I
Appeal under Rule 45 is
limited to questions of law only
The petitioner’s submissions, that her testimonial evidence
sufficiently established the facts behind the execution of the
deed of conditional sale, and that she had not fully understood
the terms contained in the deed of conditional sale, involved
questions of fact, for the consideration and resolution of them
would definitely require the appreciation of evidence. As such,
her petition for review is dismissible for raising factual issues.
Under Rule 45 of the Rules of Court, only questions of law may
be the proper subject of an appeal in this Court. The version of
Section 1 of Rule 45 in force at the time the petitioner
commenced her present recourse on April 28, 2003 expressly so
stated, to wit:
Section 1. Filing of petition with Supreme Court. — A party
desiring to appeal by certiorari from a judgment or final order
or resolution of the Court of Appeals, the Sandiganbayan, the
law, may file with the Supreme Court a verified petition for
review on certiorari. The petition shall raise only questions of
law which must be distinctly set forth. (1a, 2a) (emphasis
supplied)32
To be sure, we have not lacked in reminding that in exercising
its power of review the Court is not a trier of facts and does not
normally undertake the re-examination of the evidence
presented by the contending parties during the trial of the
case. For that reason, the findings of facts of the CA are
conclusive and binding on the Court.
It is true that the Court has recognized several exceptions, in
which it has undertaken the review and re-appreciation of the
evidence. Among the exceptions have been: (a) when the
findings of the CA are grounded entirely on speculation,
surmises or conjectures; (b) when the inference made by the
CA is manifestly mistaken, absurd or impossible; (c) when there
is grave abuse of discretion on the part of the CA; (d) when the
judgment of the CA is based on a misapprehension of facts; (e)
when the findings of facts of the CA are conflicting; (f) when
the CA, in making its findings, went beyond the issues of the
case, or its findings are contrary to the admissions of both the
appellant and the appellee; (g) when the findings of the CA are
contrary to those of the trial court; (h) when the findings of the
CA are conclusions without citation of specific evidence on
which they are based; (i) when the facts set forth in the
petition as well as in the petitioner’s main and reply briefs are
not disputed by the respondent; (j) when the findings of fact of
the CA are premised on the supposed absence of evidence and
contradicted by the evidence on record; and (k) when the CA
manifestly overlooked certain relevant facts not disputed by
the parties, which, if properly considered, would justify a
different conclusion.33
Although the petitioner submits that the CA made findings of
fact not supported by the evidence on record, this case does
not fall under any of the recognized exceptions. Her claim that
she had established the circumstances to prove her having been
misled into signing the deed of conditional sale was unfounded,
for the findings of fact of the CA rested on the records, as the
following excerpt from the assailed decision of the CA
indicates:
Appellant would like this Court to believe that she was misled
by appellee DBP’s representatives into signing the Deed of
Conditional Sale even if her original intention was to buy back
only one of the properties, i.e., that which was covered by TCT
No. T-164117. However, a closer scrutiny of the evidence on
record reveals that aside from her bare allegations as to the
circumstances leading to the signing of said Deed of Conditional
Sale, the appellant has not presented other evidence,
testimonial or documentary, to support or corroborate her
claims. On the other hand, appellee DBP has presented the
letter dated August 31, 1982 signed by appellant herself and
addressed to the Manager of the Acquired Assets Management
Department of the appellee DBP, expressing her intentions to
buy back her foreclosed properties. In fact, she offered therein
to pay a total of ₱157,000.00 for the two properties with
₱55,500.00 to be advanced by her as deposit and the balance to
be paid in five (5) years under a quarterly amortization plan.
Said letter has not been categorically denied by the appellant
as during her testimony she merely feigned any recollections of
its content. Moreover, it is well-settled that bad faith cannot
be presumed and must be established by clear and convincing
evidence.34 (emphasis supplied)
The petitioner apparently relied solely on her bare testimony to
establish her allegation of having been misled, and did not
present other evidence for the purpose. She seemingly forgot
that, firstly, her bare allegation of having been misled was not
tantamount to proof, and that, secondly, she, as the party
alleging a disputed fact, carried the burden of proving her
allegation.35 In other words, her main duty was to establish her
allegation by preponderance of evidence, because her failure to
do so would result in her defeat.36 Alas, she did not discharge
her burden.
On the other hand, the records contained clear indicia of her
real intention vis-à-vis her reacquisition of the two foreclosed
properties. The letters and telegrams she had dispatched to
DBP expressed the singular intention to repurchase both lots,
not just the one covered by TCT No. 164711. That intention
even became more evident and more definite when she set
down the payment terms for the repurchase of both lots in her
letter of August 31, 1982. Given all these, the CA rightly
concluded that her written communications to DBP had
revealed her earnest desire to re-acquire both foreclosed
properties.
II
Article 1332 of the Civil Code
did not apply to the petitioner
31
The petitioner would have us consider that she had not given
her full consent to the deed of conditional sale on account of
her lack of legal and technical knowledge. In effect, she pleads
for the application of Article 1332 of the Civil Code, which
provides:
Article 1332. When one of the parties is unable to read, or if
the contract is in a language not understood by him, and
mistake or fraud is alleged, the person enforcing the contract
must show that the terms thereof have been fully explained to
the former.
We cannot accede to the petitioner’s plea.
The pertinent terms of the deed of conditional sale read:
NOW THEREFORE for and in consideration of the foregoing
premises and for the total sum of ONE HUNDRED FIFTY SEVEN
THOUSAND PESOS (₱157,000.00), Philippine Currency, to be
fully paid as hereinafter set forth, the VENDOR agrees to
convey by way of sale and the VENDEE agrees to buy the above
stated properties covered by TCT Nos. T-160929 and T-164117,
more particularly described at the back hereof under the
following terms and conditions:
That the downpayment shall be ₱55,500 and the balance of
₱101,500 to be paid in five (5) years on the quarterly
amortization plan at 15% interest per annum the first
amortization of ₱7,304.15 shall be due and payable 3 mos. from
the date of execution of the Deed of Conditional Sale and all
subsequent amortizations shall be due and payable every three
(3) months thereafter;
That if the vendee fails to sign the sale document within 15
days from date of receipt of our notice of approval of the offer,
the approval hereof shall be deemed automatically revoked and
the deposit forfeited in accordance with the rules and
regulations of the Bank.
The Vendee/s may pay the whole or part of the account under
this contract at anytime during the term hereof; provided,
however, that if the vendee/s is in default in the payment of at
least six monthly amortizations, if payable monthly; two
quarterly amortizations, if payable quarterly; one semi-annual
and annual amortization if payable semi-annually and annually,
the Vendor may, in its option, declare the whole account due
and payable.
xxx
The title to the real estate property and all improvements
thereon shall remain in the name of the vendor until after the
purchase price, advances and interest shall have been fully
paid. The Vendee/s agrees that in the event of his failure to
pay the amortizations or installments as herein provided for,
the contract shall, at the option of the Vendor, be deemed and
considered annulled, and he shall forfeit, and by these
presents, hereby waives whatever right he might have acquired
to the said property. The Vendor shall then be at liberty to
dispose of same as if this contract has never been made; and in
the event of such annulment, all sums of money paid under the
contract shall be considered and treated as rentals for the use
of the property, and the Vendee/s waives all rights to ask or
demand the return thereof and he further agrees to vacate
peacefully and quietly said property, hereby waiving in favor of
the Vendor whatever expenses he may have incurred in the
property in the form of improvement or under any concept,
without any right to reimbursement whatsoever.
xxx
It is hereby agreed, covenanted and stipulated by and between
the parties hereto that should the Vendor decide to rescind this
contract in view of the failure of the Vendee/s to pay the
amortization/installments, when due, or otherwise fail/s to
comply with any of the terms and conditions herein stipulated,
and the Vendee/s refuse/s to peacefully deliver the possession
of the property hereinbove mentioned to the Vendor, thereby
obliging the Vendor to file suit in court with the view to taking
possession thereof, the Vendee/s hereby agree/s to pay all the
expenses of the suit incident thereto, all the damages that may
be incurred thereby, as well as attorney’s fees which it is
hereby agreed, shall be 10% of the total amount due and
outstanding, but in no case shall it be less than ₱100.00.37
It is quite notable that the petitioner did not specify which of
the stipulations of the deed of conditional sale she had
difficulty or deficiency in understanding. Her generalized
averment of having been misled should, therefore, be brushed
aside as nothing but a last attempt to salvage a hopeless
position. Our impression is that the stipulations of the deed of
conditional sale were simply worded and plain enough for even
one with a slight knowledge of English to easily understand.
The petitioner was not illiterate. She had appeared to the trial
court to be educated, its cogent observation of her as "lettered"
(supra, at p. 7 hereof) being based on how she had composed
her correspondences to DBP. Her testimony also revealed that
she had no difficulty understanding English, as the following
excerpt shows:
ATTY. CUISON
Q : Mrs. Witness, last time you identified the document,
captioned as Deed of Conditional Sale which was executed last
January 21, 1983, it was read in English language, correct?
A : Yes, sir.
Q : And, could you testify in this Court without in need of
interpreter?
A : Yes, sir.
Q : So, you are aware or comfortable with the English language?
A : Yes, sir.38
Nor was the petitioner’s ignorance of the true nature of the
deed of conditional sale probably true. By her own admission,
she had asked the bank officer why she had been made to sign
a deed of conditional sale instead of an absolute sale, which in
itself reflected her full discernment of the matters subject of
her dealings with DBP, to wit:
COURT:
Q : Now, before you signed this Deed of Conditional Sale
sometime on January 21, 1983, did you read this document?
32
A : Yes, your Honor, and I even told the officer of the Bank,
that why it should be a Deed of Probitional Sale when in fact it
should be a Deed of Absolute Sale because I paid already the
full amount of P55,500.00 for the property covered by TCT No.
164117 and they told me that after a few amortizations on the
other property, they are going to release the property which
was paid in full but did not push through, Your Honor.39
Thereby revealed was her distinctive ability to understand
written and spoken English, the language in which the terms of
the contract she signed had been written.
Clearly, Article 1332 of the Civil Code does not apply to the
petitioner. According to Lim v. Court of Appeals,40 the provision
came into being because a sizeable percentage of the country’s
populace had comprised of illiterates, and the documents at
the time had been written either in English or Spanish, viz:
In calibrating the credibility of the witnesses on this issue, we
take our mandate from Article 1332 of the Civil Code which
provides: "When one of the parties is unable to read, or if the
contract is in a language not understood by him, and mistake or
fraud is alleged, the person enforcing the contract must show
that the terms thereof have been fully explained to the
former." This substantive law came into being due to the
finding of the Code Commission that there is still a fairly large
number of illiterates in this country, and documents are usually
drawn up in English or Spanish. It is also in accord with our
state policy of promoting social justice. It also supplements
Article 24 of the Civil Code which calls on court to be vigilant in
the protection of the rights of those who are disadvantaged in
life.41 (Emphasis supplied)
III
DBP validly exercised its right to rescind the
deed of conditional sale upon the petitioner’s default
The petitioner argues that despite the right to rescind due to
nonpayment being stipulated in the deed of conditional sale,
DBP could not exercise its right because her nonpayment of an
obligation constituted only a slight or casual breach that did
not warrant rescission. Moreover, she posits that Article 119142
of the Civil Code empowers the court to fix the period within
which the obligor may comply with the obligation.
The petitioner’s argument lacks persuasion.
Firstly, a contract is the law between the parties. Absent any
allegation and proof that the contract is contrary to law,
morals, good customs, public order or public policy, it should
be complied with in good faith.43 As such, the petitioner, being
one of the parties in the deed of conditional sale, could not be
allowed to conveniently renounce the stipulations that she had
knowingly and freely agreed to.
Secondly, the issue of whether or not DBP validly exercised the
right to rescind is a factual one that the RTC and the CA
already passed upon and determined. The Court, which is not a
trier of facts, adopts their findings, and sustains the exercise by
DBP of its right to rescind following the petitioner’s failure to
pay her six monthly amortizations, and after her being given
due notice of the notarial rescission.44 As a consequence of the
valid rescission, DBP had the legal right to thereafter sell the
property to a person other than the petitioner, like Cruz. In
turn, Cruz could validly sell the property to Cabantog and
Trinidad, which he did.1âwphi1
And, thirdly, Article 1191 of the Civil Code did not prohibit the
parties from entering into an agreement whereby a violation of
the terms of the contract would result to its cancellation. In
Pangilinan v. Court of Appeals,45 the Court upheld the vendor’s
right in a contract to sell to extrajudicially cancel the contract
upon failure of the vendee to pay the installments and even to
retain the sums already paid, holding:
[Article 1191 of the Civil Code] makes it available to the injured
party alternative remedies such as the power to rescind or
enforce fulfillment of the contract, with damages in either case
if the obligor does not comply with what is incumbent upon
him. There is nothing in this law which prohibits the parties
from entering into an agreement that a violation of the terms
of the contract would cause its cancellation even without court
intervention. The rationale for the foregoing is that in contracts
providing for automatic revocation, judicial intervention is
necessary not for purposes of obtaining a judicial declaration
rescinding a contract already deemed rescinded by virtue of an
agreement providing for rescission even without judicial
intervention, but in order to determine whether or not the
rescission was proper. Where such propriety is sustained, the
decision of the court will be merely declaratory of the
revocation, but it is not itself the revocatory act. Moreover, the
vendor’s right in contracts to sell with reserved title to
extrajudicially cancel the sale upon failure of the vendee to
pay the stipulated installments and retain the sums and
installments already received has long been recognized by the
well-established doctrine of 39 years standing. The validity of
the stipulation in the contract providing for automatic
rescission upon non-payment cannot be doubted. It is in the
nature of an agreement granting a party the right to rescind a
contract unilaterally in case of breach without need of going to
court. Thus, rescission under Article 1191 was inevitable due to
petitioner’s failure to pay the stipulated price within the
original period fixed in the agreement.
ACCORDINGLY, the petition for review is DENIED for lack of
merit, and the decision of the Court of Appeals promulgated on
June 21, 2002 is AFFIRMED.
Costs of suit shall be paid by the petitioner.
SO ORDERED.
G.R. No. 157547 February 23, 2011
HEIRS OF EDUARDO SIMON, Petitioners,
vs.
ELVIN* CHAN AND THE COURT OF APPEALS, Respondent.
DECISION
BERSAMIN, J.:
There is no independent civil action to recover the civil liability
arising from the issuance of an unfunded check prohibited and
punished under Batas Pambansa Bilang 22 (BP 22).
Antecedents
33
On July 11, 1997, the Office of the City Prosecutor of Manila
filed in the Metropolitan Trial Court of Manila (MeTC) an
information charging the late Eduardo Simon (Simon) with a
violation of BP 22, docketed as Criminal Case No. 275381
entitled People v. Eduardo Simon. The accusatory portion
reads:
That sometime in December 1996 in the City of Manila,
Philippines, the said accused, did then and there willfully,
unlawfully and feloniously make or draw and issue to Elvin Chan
to apply on account or for value Landbank Check No. 0007280
dated December 26, 1996 payable to cash in the amount of
₱336,000.00 said accused well knowing that at the time of issue
she/he/they did not have sufficient funds in or credit with the
drawee bank for payment of such check in full upon its
presentment, which check when presented for payment within
ninety (90) days from the date thereof was subsequently
dishonored by the drawee bank for Account Closed and despite
receipt of notice of such dishonor, said accused failed to pay
said Elvin Chan the amount of the check or to make
arrangement for full payment of the same within five (5)
banking days after receiving said notice.
CONTRARY TO LAW. 1
More than three years later, or on August 3, 2000, respondent
Elvin Chan commenced in the MeTC in Pasay City a civil action
for the collection of the principal amount of ₱336,000.00,
coupled with an application for a writ of preliminary
attachment (docketed as Civil Case No. 915-00).2 He alleged in
his complaint the following:
xxx
2. Sometime in December 1996 defendant employing
fraud, deceit, and misrepresentation encashed a
check dated December 26, 1996 in the amount of
₱336,000.00 to the plaintiff assuring the latter that
the check is duly funded and that he had an existing
account with the Land Bank of the Philippines, xerox
copy of the said check is hereto attached as Annex
"A";
3. However, when said check was presented for
payment the same was dishonored on the ground that
the account of the defendant with the Land Bank of
the Philippines has been closed contrary to his
representation that he has an existing account with
the said bank and that the said check was duly funded
and will be honored when presented for payment;
4. Demands had been made to the defendant for him
to make good the payment of the value of the check,
xerox copy of the letter of demand is hereto attached
as Annex "B", but despite such demand defendant
refused and continues to refuse to comply with
plaintiff’s valid demand;
5. Due to the unlawful failure of the defendant to
comply with the plaintiff’s valid demands, plaintiff
has been compelled to retain the services of counsel
for which he agreed to pay as reasonable attorney’s
fees the amount of ₱50,000.00 plus additional amount
of ₱2,000.00 per appearance.
 ALLEGATION IN SUPPORT OF PRAYER
FOR PRELIMINARY ATTACHMENT
6. The defendant as previously alleged has been guilty
of fraud in contracting the obligation upon which this
action is brought and that there is no sufficient
security for the claims sought in this action which
fraud consist in the misrepresentation by the
defendant that he has an existing account and
sufficient funds to cover the check when in fact his
account was already closed at the time he issued a
check;
7. That the plaintiff has a sufficient cause of action
and this action is one which falls under Section 1, sub-
paragraph (d), Rule 57 of the Revised Rules of Court of
the Philippines and the amount due the plaintiff is as
much as the sum for which the plaintiff seeks the writ
of preliminary attachment;
8. That the plaintiff is willing and able to post a bond
conditioned upon the payment of damages should it
be finally found out that the plaintiff is not entitled to
the issuance of a writ of preliminary attachment.3
On August 9, 2000, the MeTC in Pasay City issued a writ of
preliminary attachment, which was implemented on August 17,
2000 through the sheriff attaching a Nissan vehicle of Simon.4
On August 17, 2000, Simon filed an urgent motion to dismiss
with application to charge plaintiff’s attachment bond for
damages,5 pertinently averring:
xxx
On the ground of litis pendentia, that is, as a consequence of
the pendency of another action between the instant parties for
the same cause before the Metropolitan Trial Court of Manila,
Branch X (10) entitled "People of the Philippines vs. Eduardo
Simon", docketed thereat as Criminal Case No. 275381-CR, the
instant action is dismissable under Section 1, (e), Rule 16, 1997
Rules of Civil Procedure, xxx
xxx
While the instant case is civil in nature and character as
contradistinguished from the said Criminal Case No. 915-00 in
the Metropolitan Trial Court of Manila, Branch X (10), the basis
of the instant civil action is the herein plaintiff’s criminal
complaint against defendant arising from a charge of violation
of Batas Pambansa Blg. 22 as a consequence of the alleged
dishonor in plaintiff’s hands upon presentment for payment
with drawee bank a Land Bank Check No. 0007280 dated
December 26, 1996 in the amount of ₱336,000- drawn allegedly
issued to plaintiff by defendant who is the accused in said case,
a photocopy of the Criminal information filed by the Assistant
City Prosecutor of Manila on June 11, 1997 hereto attached and
made integral part hereof as Annex "1".
It is our understanding of the law and the rules, that, "when a
criminal action is instituted, the civil action for recovery of civil
liability arising from the offense charged is impliedly instituted
with the criminal action, unless the offended party expressly
waives the civil action or reserves his right to institute it
separately xxx.
34
On August 29, 2000, Chan opposed Simon’s urgent motion to
dismiss with application to charge plaintiff’s attachment bond
for damages, stating:
1. The sole ground upon which defendant seeks to
dismiss plaintiff’s complaint is the alleged pendency
of another action between the same parties for the
same cause, contending among others that the
pendency of Criminal Case No. 275381-CR entitled
"People of the Philippines vs. Eduardo Simon" renders
this case dismissable;
2. The defendant further contends that under Section
1, Rule 111 of the Revised Rules of Court, the filing of
the criminal action, the civil action for recovery of
civil liability arising from the offense charged is
impliedly instituted with the criminal action which the
plaintiff does not contest; however, it is the
submission of the plaintiff that an implied reservation
of the right to file a civil action has already been
made, first, by the fact that the information for
violation of B.P. 22 in Criminal Case No. 2753841 does
not at all make any allegation of damages suffered by
the plaintiff nor is there any claim for recovery of
damages; on top of this the plaintiff as private
complainant in the criminal case, during the
presentation of the prosecution evidence was not
represented at all by a private prosecutor such that no
evidence has been adduced by the prosecution on the
criminal case to prove damages; all of these we
respectfully submit demonstrate an effective implied
reservation of the right of the plaintiff to file a
separate civil action for damages;
3. The defendant relies on Section 3 sub-paragraph (a)
Rule 111 of the Revised Rules of Court which
mandates that after a criminal action has been
commenced the civil action cannot be instituted until
final judgment has been rendered in the criminal
action; however, the defendant overlooks and
conveniently failed to consider that under Section 2,
Rule 111 which provides as follows:
In the cases provided for in Articles 31, 32, 33, 34 and
2177 of the Civil Code of the Philippines, an
independent civil action entirely separate and distinct
from the criminal action, may be brought by the
injured party during the pendency of criminal case
provided the right is reserved as required in the
preceding section. Such civil action shall proceed
independently of the criminal prosecution, and shall
require only a preponderance of evidence.
In as much as the case is one that falls under Art. 33
of the Civil Code of the Philippines as it is based on
fraud, this action therefore may be prosecuted
independently of the criminal action;
4. In fact we would even venture to state that even
without any reservation at all of the right to file a
separate civil action still the plaintiff is authorized to
file this instant case because the plaintiff seeks to
enforce an obligation which the defendant owes to
the plaintiff by virtue of the negotiable instruments
law. The plaintiff in this case sued the defendant to
enforce his liability as drawer in favor of the plaintiff
as payee of the check. Assuming the allegation of the
defendant of the alleged circumstances relative to the
 issuance of the check, still when he delivered the
check payable to bearer to that certain Pedro
Domingo, as it was payable to cash, the same may be
negotiated by delivery by who ever was the bearer of
the check and such negotiation was valid and
effective against the drawer;
5. Indeed, assuming as true the allegations of the
defendant regarding the circumstances relative to the
issuance of the check it would be entirely impossible
for the plaintiff to have been aware that such check
was intended only for a definite person and was not
negotiable considering that the said check was
payable to bearer and was not even crossed;
6. We contend that what cannot be prosecuted
separate and apart from the criminal case without a
reservation is a civil action arising from the criminal
offense charged. However, in this instant case since
the liability of the defendant are imposed and the
rights of the plaintiff are created by the negotiable
instruments law, even without any reservation at all
this instant action may still be prosecuted;
7. Having this shown, the merits of plaintiff’s
complaint the application for damages against the
bond is totally without any legal support and perforce
should be dismissed outright.6
On October 23, 2000, the MeTC in Pasay City granted Simon’s
urgent motion to dismiss with application to charge plaintiff’s
attachment bond for damages,7 dismissing the complaint of
Chan because:
xxx
After study of the arguments of the parties, the court resolves
to GRANT the Motion to Dismiss and the application to charge
plaintiff’s bond for damages.
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 as to represent the same interest in
both actions; (b) identity of rights asserted and relief prayed
for, the relief being founded on the same acts; and (c) the
identity in the two (2) cases should be such that the judgment,
which may be rendered in one would, regardless of which party
is successful, amount to res judicata in the other. xxx
A close perusal of the herein complaint denominated as "Sum of
Money" and the criminal case for violation of BP Blg. 22 would
readily show that the parties are not only identical but also the
cause of action being asserted, which is the recovery of the
value of Landbank Check No. 0007280 in the amount of
₱336,000.00. In both civil and criminal cases, the rights
asserted and relief prayed for, the reliefs being founded on the
same facts, are identical.
Plaintiff’s claim that there is an effective implied waiver of his
right to pursue this civil case owing to the fact that there was
no allegation of damages in BP Blg. 22 case and that there was
no private prosecutor during the presentation of prosecution
evidence is unmeritorious. It is basic that when a complaint or
criminal Information is filed, even without any allegation of
damages and the intention to prove and claim them, the
offended party has the right to prove and claim for them,
35
unless a waiver or reservation is made or unless in the
meantime, the offended party has instituted a separate civil
action. xxx The over-all import of the said provision conveys
that the waiver which includes indemnity under the Revised
Penal Code, and damages arising under Articles 32, 33, and 34
of the Civil Code must be both clear and express. And this must
be logically so as the primordial objective of the Rule is to
prevent the offended party from recovering damages twice for
the same act or omission of the accused.
Indeed, the evidence discloses that the plaintiff did not waive
or made a reservation as to his right to pursue the civil branch
of the criminal case for violation of BP Blg. 22 against the
defendant herein. To the considered view of this court, the
filing of the instant complaint for sum of money is indeed
legally barred. The right to institute a separate civil action
shall be made before the prosecution starts to present its
evidence and under circumstances affording the offended party
a reasonable opportunity to make such reservation. xxx
Even assuming the correctness of the plaintiff’s submission that
the herein case for sum of money is one based on fraud and
hence falling under Article 33 of the Civil Code, still prior
reservation is required by the Rules, to wit:
"In the cases provided for in Articles 31, 32, 33, 34 and 2177 of
the Civil Code of the Philippines, an independent civil action
entirely separate and distinct from the criminal action, may be
brought by the injured party during the pendency of criminal
case provided the right is reserved as required in the preceding
section. Such civil action shall proceed independently of the
criminal prosecution, and shall require only a preponderance of
evidence."
xxx
WHEREFORE, premises considered, the court resolves to:
1. Dismiss the instant complaint on the ground of "litis
pendentia";
2. Dissolve/Lift the Writ of Attachment issued by this
court on August 14, 2000;
3. Charge the plaintiff’s bond the amount of
₱336,000.00 in favor of the defendant for the
damages sustained by the latter by virtue of the
implementation of the writ of attachment;
4. Direct the Branch Sheriff of this Court to RESTORE
with utmost dispatch to the defendant’s physical
possession the vehicle seized from him on August 16,
2000; and
5. Direct the plaintiff to pay the defendant the sum of
₱5,000.00 by way of attorney’s fees.
SO ORDERED.
Chan’s motion for reconsideration was denied on December 20,
2000,8 viz:
Considering that the plaintiff’s arguments appear to be a mere
repetition of his previous submissions, and which submissions
this court have already passed upon; and taking into account
the inapplicability of the ratio decidendi in the Tactaquin vs.
Palileo case which the plaintiff cited as clearly in that case, the
plaintiff therein expressly made a reservation to file a separate
civil action, the Motion for Reconsideration is DENIED for lack of
merit.
SO ORDERED.
On July 31, 2001, the Regional Trial Court (RTC) in Pasay City
upheld the dismissal of Chan’s complaint, disposing:9
WHEREFORE, finding no error in the appealed decision, the
same is hereby AFFIRMED in toto.
SO ORDERED.
On September 26, 2001, Chan appealed to the Court of Appeals
(CA) by petition for review,10 challenging the propriety of the
dismissal of his complaint on the ground of litis pendentia.
In his comment, 11 Simon countered that Chan was guilty of bad
faith and malice in prosecuting his alleged civil claim twice in a
manner that caused him (Simon) utter embarrassment and
emotional sufferings; and that the dismissal of the civil case
because of the valid ground of litis pendentia based on Section
1 (e), Rule 16 of the 1997 Rules of Civil Procedure was
warranted.
On June 25, 2002, the CA promulgated its assailed decision,12
overturning the RTC, viz:
xxx
As a general rule, an offense causes two (2) classes of injuries.
The first is the social injury produced by the criminal act which
is sought to be repaired through the imposition of the
corresponding penalty, and the second is the personal injury
caused to the victim of the crime which injury is sought to be
compensated through indemnity which is also civil in nature.
Thus, "every person criminally liable for a felony is also civilly
liable."
The offended party may prove the civil liability of an accused
arising from the commission of the offense in the criminal case
since the civil action is either deemed instituted with the
criminal action or is separately instituted.
Rule 111, Section 1 of the Revised Rules of Criminal Procedure,
which became effective on December 1, 2000, provides that:
(a) When a criminal action is instituted, the civil action for the
recovery of civil liability arising from the offense charged shall
be deemed instituted with the criminal action unless the
offended party waives the civil action, reserves the right to
institute it separately or institute the civil action prior to the
criminal action.
Rule 111, Section 2 further states:
After the criminal action has been commenced, the separate
civil action arising therefrom cannot be instituted until final
judgment has been entered in the criminal action.
36
However, with respect to civil actions for recovery of civil
liability under Articles 32, 33, 34 and 2176 of the Civil Code
arising from the same act or omission, the rule has been
changed.
In DMPI Employees Credit Association vs. Velez, the Supreme
Court pronounced that only the civil liability arising from the
offense charged is deemed instituted with the criminal action
unless the offended party waives the civil action, reserves his
right to institute it separately, or institutes the civil action
prior to the criminal action. Speaking through Justice Pardo,
the Supreme Court held:
"There is no more need for a reservation of the right to file the
independent civil action under Articles 32, 33, 34 and 2176 of
the Civil Code of the Philippines. The reservation and waiver
referred to refers only to the civil action for the recovery of the
civil liability arising from the offense charged. This does not
include recovery of civil liability under Articles 32, 33, 34, and
2176 of the Civil Code of the Philippines arising from the same
act or omission which may be prosecuted separately without a
reservation".
Rule 111, Section 3 reads:
Sec. 3. When civil action may proceed independently. In the
cases provided in Articles 32, 33, 34, and 2176 of the Civil Code
of the Philippines, the independent civil action may be brought
by the offended party. It shall proceed independently of the
criminal action and shall require only a preponderance of
evidence. In no case, however, may the offended party recover
damages twice for the same act or omission charged in the
criminal action.
The changes in the Revised Rules on Criminal Procedure
pertaining to independent civil actions which became effective
on December 1, 2000 are applicable to this case.
Procedural laws may be given retroactive effect to actions
pending and undetermined at the time of their passage. There
are no vested rights in the rules of procedure. xxx
Thus, Civil Case No. CV-94-124, an independent civil action for
damages on account of the fraud committed against respondent
Villegas under Article 33 of the Civil Code, may proceed
independently even if there was no reservation as to its filing."
It must be pointed that the abovecited case is similar with the
instant suit. The complaint was also brought on allegation of
fraud under Article 33 of the Civil Code and committed by the
respondent in the issuance of the check which later bounced. It
was filed before the trial court, despite the pendency of the
criminal case for violation of BP 22 against the respondent.
While it may be true that the changes in the Revised Rules on
Criminal Procedure pertaining to independent civil action
became effective on December 1, 2000, the same may be given
retroactive application and may be made to apply to the case
at bench, since procedural rules may be given retroactive
application. There are no vested rights in the rules of
procedure.
In view of the ruling on the first assigned error, it is therefore
an error to adjudge damages in favor of the petitioner.
WHEREFORE, the petition is hereby GRANTED. The Decision
dated July 13, 2001 rendered by the Regional Trial Court of
Pasay City, Branch 108 affirming the dismissal of the complaint
filed by petitioner is hereby REVERSED and SET ASIDE. The case
is hereby REMANDED to the trial court for further proceedings.
SO ORDERED.
On March 14, 2003, the CA denied Simon’s motion for
reconsideration.13
Hence, this appeal, in which the petitioners submit that the CA
erroneously premised its decision on the assessment that the
civil case was an independent civil action under Articles 32, 33,
34, and 2176 of the Civil Code; that the CA’s reliance on the
ruling in DMPI Employees Credit Cooperative Inc. v. Velez 14
stretched the meaning and intent of the ruling, and was
contrary to Sections 1 and 2 of Rule 111 of the Rules of Criminal
Procedure; that this case was a simple collection suit for a sum
of money, precluding the application of Section 3 of Rule 111 of
the Rules of Criminal Procedure.15
In his comment,16 Chan counters that the petition for review
should be denied because the petitioners used the wrong mode
of appeal; that his cause of action, being based on fraud, was
an independent civil action; and that the appearance of a
private prosecutor in the criminal case did not preclude the
filing of his separate civil action.
Issue
The lone issue is whether or not Chan’s civil action to recover
the amount of the unfunded check (Civil Case No. 915-00) was
an independent civil action.
Ruling
The petition is meritorious.
A action shall be made before the prosecution starts presenting
Applicable Law and Jurisprudence on the
Propriety of filing a separate civil action based on BP 22
The Supreme Court has settled the issue of whether or not a
violation of BP 22 can give rise to civil liability in Banal v. Judge
Tadeo, Jr.,17 holding:
xxx
Article 20 of the New Civil Code provides:
Every person who, contrary to law, wilfully or negligently
causes damage to another, shall indemnify the latter for the
same.
Regardless, therefore, of whether or not a special law so
provides, indemnification of the offended party may be had on
account of the damage, loss or injury directly suffered as a
consequence of the wrongful act of another. The indemnity
which a person is sentenced to pay forms an integral part of the
penalty imposed by law for the commission of a crime (Quemel
v. Court of Appeals, 22 SCRA 44, citing Bagtas v. Director of
Prisons, 84 Phil 692). Every crime gives rise to a penal or
criminal action for the punishment of the guilty party, and also
37
to civil action for the restitution of the thing, repair of the
damage, and indemnification for the losses (United States v.
Bernardo, 19 Phil 265).
xxx
Civil liability to the offended party cannot thus be denied. The
payee of the check is entitled to receive the payment of money
for which the worthless check was issued. Having been caused
the damage, she is entitled to recompense.
Surely, it could not have been the intendment of the framers of
Batas Pambansa Blg. 22 to leave the offended private party
defrauded and empty-handed by excluding the civil liability of
the offender, giving her only the remedy, which in many cases
results in a Pyrrhic victory, of having to file a separate civil
suit. To do so may leave the offended party unable to recover
even the face value of the check due her, thereby unjustly
enriching the errant drawer at the expense of the payee. The
protection which the law seeks to provide would, therefore, be
brought to naught.
xxx
However, there is no independent civil action to recover the
value of a bouncing check issued in contravention of BP 22. This
is clear from Rule 111 of the Rules of Court, effective
December 1, 2000, which relevantly provides:
Section 1. Institution of criminal and civil actions. - (a) When a
criminal action is instituted, the civil action for the recovery of
civil liability arising from the offense charged shall be deemed
instituted with the criminal action unless the offended party
waives the civil action, reserves the right to institute it
separately or institutes the civil action prior to the criminal
action.
The reservation of the right to institute separately the civil
its evidence and under circumstances affording the offended
party a reasonable opportunity to make such reservation.
When the offended party seeks to enforce civil liability against
the accused by way of moral, nominal, temperate, or
exemplary damages without specifying the amount thereof in
the complaint or information, the filing fees therefor shall
constitute a first lien on the judgment awarding such damages.
Where the amount of damages, other than actual, is specified
in the complaint or information, the corresponding filing fees
shall be paid by the offended party upon the filing thereof in
court.
Except as otherwise provided in these Rules, no filing fees shall
be required for actual damages.
No counterclaim, cross-claim or third-party complaint may be
filed by the accused in the criminal case, but any cause of
action which could have been the subject thereof may be
litigated in a separate civil action. (1a)
(b) The criminal action for violation of Batas Pambansa Blg. 22
shall be deemed to include the corresponding civil action. No
reservation to file such civil action separately shall be
allowed.18
Upon filing of the aforesaid joint criminal and civil actions, the
offended party shall pay in full the filing fees based on the
amount of the check involved, which shall be considered as the
actual damages claimed. Where the complaint or information
also seeks to recover liquidated, moral, nominal, temperate or
exemplary damages, the offended party shall pay the filing fees
based on the amounts alleged therein. If the amounts are not
so alleged but any of these damages are subsequently awarded
by the court, the filing fees based on the amount awarded shall
constitute a first lien on the judgment.
Where the civil action has been filed separately and trial
thereof has not yet commenced, it may be consolidated with
the criminal action upon application with the court trying the
latter case. If the application is granted, the trial of both
actions shall proceed in accordance with section 2 of the Rule
governing consolidation of the civil and criminal actions.
Section 3. When civil action may proceed independently. – In
the cases provided in Articles 32, 33, 34 and 2176 of the Civil
Code of the Philippines, the independent civil action may be
brought by the offended party. It shall proceed independently
of the criminal action and shall require only a preponderance of
evidence. In no case, however, may the offended party recover
damages twice for the same act or omission charged in the
criminal action.
The aforequoted provisions of the Rules of Court, even if not
yet in effect when Chan commenced Civil Case No. 915-00 on
August 3, 2000, are nonetheless applicable. It is axiomatic that
the retroactive application of procedural laws does not violate
any right of a person who may feel adversely affected, nor is it
constitutionally objectionable. The reason is simply that, as a
general rule, no vested right may attach to, or arise from,
procedural laws.19 Any new rules may validly be made to apply
to cases pending at the time of their promulgation, considering
that no party to an action has a vested right in the rules of
procedure,20 except that in criminal cases, the changes do not
retroactively apply if they permit or require a lesser quantum
of evidence to convict than what is required at the time of the
commission of the offenses, because such retroactivity would
be unconstitutional for being ex post facto under the
Constitution.21
Moreover, the application of the rule would not be precluded
by the violation of any assumed vested right, because the new
rule was adopted from Supreme Court Circular 57-97 that took
effect on November 1, 1997.
Supreme Court Circular 57-97 states:
Any provision of law or Rules of Court to the contrary
notwithstanding, the following rules and guidelines shall
henceforth be observed in the filing and prosecution of all
criminal cases under Batas Pambansa Blg. 22 which penalizes
the making or drawing and issuance of a check without funds or
credit:
1. The criminal action for violation of Batas Pambansa
Blg. 22 shall be deemed to necessarily include the
corresponding civil action, and no reservation to file
such civil action separately shall be allowed or
recognized.22
2. Upon the filing of the aforesaid joint criminal and
civil actions, the offended party shall pay in full the
filing fees based upon the amount of the check
38
involved which shall be considered as the actual
damages claimed, in accordance with the schedule of
fees in Section 7 (a) and Section 8 (a), Rule 141 of the
Rules of Court as last amended by Administrative
Circular No. 11-94 effective August 1, 1994. Where the
offended party further seeks to enforce against the
accused civil liability by way of liquidated, moral,
nominal, temperate or exemplary damages, he shall
pay the corresponding filing fees therefor based on
the amounts thereof as alleged either in the
complaint or information. If not so alleged but any of
these damages are subsequently awarded by the
court, the amount of such fees shall constitute a first
lien on the judgment.
3. Where the civil action has heretofore been filed
separately and trial thereof has not yet commenced,
it may be consolidated with the criminal action upon
application with the court trying the latter case. If the
application is granted, the trial of both actions shall
proceed in accordance with the pertinent procedure
outlined in Section 2 (a) of Rule 111 governing the
proceedings in the actions as thus consolidated.
4. This Circular shall be published in two (2)
newspapers of general circulation and shall take
effect on November 1, 1997.
The reasons for issuing Circular 57-97 were amply explained in
Hyatt Industrial Manufacturing Corporation v. Asia Dynamic
Electrix Corporation,23 thus:
xxx
We agree with the ruling of the Court of Appeals that upon
filing of the criminal cases for violation of B.P. 22, the civil
action for the recovery of the amount of the checks was also
impliedly instituted under Section 1(b) of Rule 111 of the 2000
Rules on Criminal Procedure. Under the present revised Rules,
the criminal action for violation of B.P. 22 shall be deemed to
include the corresponding civil action. The reservation to file a
separate civil action is no longer needed. The Rules provide:
Section 1. Institution of criminal and civil actions. —
(a) x x x
(b) The criminal action for violation of Batas
Pambansa Blg. 22 shall be deemed to include the
corresponding civil action. No reservation to file such
civil action separately shall be allowed.
Upon filing of the aforesaid joint criminal and civil actions, the
offended party shall pay in full the filing fees based on the
amount of the check involved, which shall be considered as the
actual damages claimed. Where the complaint or information
also seeks to recover liquidated, moral, nominal, temperate or
exemplary damages, the offended party shall pay additional
filing fees based on the amounts alleged therein. If the amounts
are not so alleged but any of these damages are subsequently
awarded by the court, the filing fees based on the amount
awarded shall constitute a first lien on the judgment.
Where the civil action has been filed separately and trial
thereof has not yet commenced, it may be consolidated with
the criminal action upon application with the court trying the
latter case. If the application is granted, the trial of both
actions shall proceed in accordance with section 2 of this Rule
governing consolidation of the civil and criminal
actions.1avvphi1
The foregoing rule was adopted from Circular No. 57-97 of this
Court. It specifically states that the criminal action for violation
of B.P. 22 shall be deemed to include the corresponding civil
action. It also requires the complainant to pay in full the filing
fees based on the amount of the check involved. Generally, no
filing fees are required for criminal cases, but because of the
inclusion of the civil action in complaints for violation of B.P.
22, the Rules require the payment of docket fees upon the
filing of the complaint. This rule was enacted to help declog
court dockets which are filled with B.P. 22 cases as creditors
actually use the courts as collectors. Because ordinarily no
filing fee is charged in criminal cases for actual damages, the
payee uses the intimidating effect of a criminal charge to
collect his credit gratis and sometimes, upon being paid, the
trial court is not even informed thereof. The inclusion of the
civil action in the criminal case is expected to significantly
lower the number of cases filed before the courts for collection
based on dishonored checks. It is also expected to expedite the
disposition of these cases. Instead of instituting two separate
cases, one for criminal and another for civil, only a single suit
shall be filed and tried. It should be stressed that the policy
laid down by the Rules is to discourage the separate filing of
the civil action. The Rules even prohibit the reservation of a
separate civil action, which means that one can no longer file a
separate civil case after the criminal complaint is filed in court.
The only instance when separate proceedings are allowed is
when the civil action is filed ahead of the criminal case. Even
then, the Rules encourage the consolidation of the civil and
criminal cases. We have previously observed that a separate
civil action for the purpose of recovering the amount of the
dishonored checks would only prove to be costly, burdensome
and time-consuming for both parties and would further delay
the final disposition of the case. This multiplicity of suits must
be avoided. Where petitioners’ rights may be fully adjudicated
in the proceedings before the trial court, resort to a separate
action to recover civil liability is clearly unwarranted. In view
of this special rule governing actions for violation of B.P. 22,
Article 31 of the Civil Code cited by the trial court will not
apply to the case at bar.24
The CA’s reliance on DMPI Employees Credit Association v.
Velez25 to give due course to the civil action of Chan
independently and separately of Criminal Case No. 275381 was
unwarranted. DMPI Employees, which involved a prosecution for
estafa, is not on all fours with this case, which is a prosecution
for a violation of BP 22. Although the Court has ruled that the
issuance of a bouncing check may result in two separate and
distinct crimes of estafa and violation of BP 22,26 the
procedures for the recovery of the civil liabilities arising from
these two distinct crimes are different and non-
interchangeable. In prosecutions of estafa, the offended party
may opt to reserve his right to file a separate civil action, or
may institute an independent action based on fraud pursuant to
Article 33 of the Civil Code,27 as DMPI Employees has allowed.
In prosecutions of violations of BP 22, however, the Court has
adopted a policy to prohibit the reservation or institution of a
separate civil action to claim the civil liability arising from the
issuance of the bouncing check upon the reasons delineated in
Hyatt Industrial Manufacturing Corporation, supra.
To repeat, Chan’s separate civil action to recover the amount
of the check involved in the prosecution for the violation of BP
22 could not be independently maintained under both Supreme
Court Circular 57-97 and the aforequoted provisions of Rule 111
39
of the Rules of Court, notwithstanding the allegations of fraud
and deceit.
B
Aptness of the dismissal of the civil action
on the ground of litis pendentia
Did the pendency of the civil action in the MeTC in Manila (as
the civil aspect in Criminal Case No. 275381) bar the filing of
Civil Case No. 915-00 in the MeTC in Pasay City on the ground of
litis pendentia?
For litis pendentia to be successfully invoked as a bar to an
action, the concurrence of the following requisites is necessary,
namely: (a) there must be identity of parties or at least such as
represent the same interest in both actions; (b) there must be
identity of rights asserted and reliefs prayed for, the reliefs
being founded on the same facts; and, (c) the identity in the
two cases should be such that the judgment that may be
rendered in one would, regardless of which party is successful,
amount to res judicata in respect of the other. Absent the first
two requisites, the possibility of the existence of the third
becomes nil.28
A perusal of Civil Case No. 01-0033 and Criminal Case No.
275381 ineluctably shows that all the elements of litis
pendentia are attendant. First of all, the parties in the civil
action involved in Criminal Case No. 275381 and in Civil Case
No. 915-00, that is, Chan and Simon, are the same. Secondly,
the information in Criminal Case No. 275381 and the complaint
in Civil Case No. 915-00 both alleged that Simon had issued
Landbank Check No. 0007280 worth ₱336,000.00 payable to
"cash," thereby indicating that the rights asserted and the
reliefs prayed for, as well as the facts upon which the reliefs
sought were founded, were identical in all respects. And,
thirdly, any judgment rendered in one case would necessarily
bar the other by res judicata; otherwise, Chan would be
recovering twice upon the same claim.
It is clear, therefore, that the MeTC in Pasay City properly
dismissed Civil Case No. 915-00 on the ground of litis pendentia
through its decision dated October 23, 2000; and that the RTC
in Pasay City did not err in affirming the MeTC.
Wherefore, we grant the petition for review on certiorari, and,
accordingly, we reverse and set aside the decision promulgated
by the Court of Appeals on June 25, 2002. We reinstate the
decision rendered on October 23, 2000 by the Metropolitan
Trial Court, Branch 45, in Pasay City.
Costs of suit to be paid by the respondent.
SO ORDERED.
G.R. No. 126746 November 29, 2000
ARTHUR TE, petitioner,
vs.
COURT OF APPEALS, and LILIANA CHOA, respondents.
DECISION
KAPUNAN, J.:
Before us is a petition for review on certiorari which seeks to
reverse the Decision of the Court of Appeals Tenth Division,
dated 31 August 1994 in CA-G.R. SP No. 239711 and CA-G.R. SP
No. 261782 and the Resolution dated October 18, 1996 denying
petitioner’s motion for reconsideration.
The facts of the case are as follows:
Petitioner Arthur Te and private respondent Liliana Choa were
married in civil rites on September 14, 1988. They did not live
together after the marriage although they would meet each
other regularly. Not long after private respondent gave birth to
a girl on April 21, 1989, petitioner stopped visiting her.3
On May 20, 1990, while his marriage with private respondent
was subsisting, petitioner contracted a second marriage with a
certain Julieta Santella (Santella).4
On the basis of a complaint-affidavit filed by private
respondent sometime in June 1990, when she learned about
petitioner’s marriage to Santella, an information charging
petitioner with bigamy was filed with the Regional Trial Court
(RTC) of Quezon City on August 9, 1990.5 This case was
docketed as Criminal Case No. Q-90-14409.6
Meanwhile, on July 20, 1990, petitioner filed in the RTC of
Quezon City an action for the annulment of his marriage to
private respondent on the ground that he was forced to marry
her. He alleged that private respondent concealed her
pregnancy by another man at the time of their marriage and
that she was psychologically incapacitated to perform her
essential marital obligations.7
On November 8, 1990, private respondent also filed with the
Professional Regulation Commission (PRC) an administrative
case against petitioner and Santella for the revocation of their
respective engineering licenses on the ground that they
committed acts of immorality by living together and
subsequently marrying each other despite their knowledge that
at the time of their marriage, petitioner was already married to
private respondent. With respect to petitioner, private
respondent added that he committed an act of falsification by
stating in his marriage contract with Santella that he was still
single.8
After the prosecution rested its case in the criminal case for
bigamy, petitioner filed a demurrer to evidence with leave of
court and motion to inhibit the trial court judge for showing
antagonism and animosity towards petitioner’s counsel during
the hearings of said case.
The trial court denied petitioner’s demurrer to evidence in an
Order dated November 28, 1990 which stated that the same
could not be granted because the prosecution had sufficiently
established a prima facie case against the accused.9 The RTC
also denied petitioner’s motion to inhibit for lack of legal
basis.10
Petitioner then filed with the Court of Appeals a petition for
certiorari, alleging grave abuse of discretion on the part of the
trial court judge, Judge Cezar C. Peralejo, for (1) exhibiting
antagonism and animosity towards petitioner’s counsel; (2)
violating the requirements of due process by denying
petitioner’s [motion for reconsideration and] demurrer to
40
evidence even before the filing of the same; (3) disregarding
and failing to comply with the appropriate guidelines for judges
promulgated by the Supreme Court; and (4) ruling that in a
criminal case only "prima facie evidence" is sufficient for
conviction of an accused. This case was docketed as CA-G.R. SP
No. 23971.11
Petitioner also filed with the Board of Civil Engineering of the
PRC (PRC Board), where the administrative case for the
revocation of his engineering license was pending, a motion to
suspend the proceedings therein in view of the pendency of the
civil case for annulment of his marriage to private respondent
and criminal case for bigamy in Branches 106 and 98,
respectively of the RTC of Quezon City.12 When the Board
denied the said motion in its Order dated July 16, 1991,13
petitioner filed with the Court of Appeals another petition for
certiorari, contending that the Board gravely abused its
discretion in: (1) failing to hold that the resolution of the
annulment case is prejudicial to the outcome of the
administrative case pending before it; (2) not holding that the
continuation of proceedings in the administrative case could
render nugatory petitioner’s right against self-incrimination in
this criminal case for bigamy against him; and (3) making an
overly-sweeping interpretation that Section 32 of the Rules and
Regulations Governing the Regulation and Practice of
Professionals does not allow the suspension of the
administrative proceeding before the PRC Board despite the
pendency of criminal and/or administrative proceedings against
the same respondent involving the same set of facts in other
courts or tribunals. This petition was docketed as CA-G.R. SP
No. 26178.14
The two petitions for certiorari were consolidated since they
arose from the same set of facts.
On 31 August 1994, the Court of Appeals, Tenth Division,
rendered the assailed decision in the consolidated petitions.
The appellate court upheld the RTC’s denial of the motion to
inhibit due to petitioner’s failure to show any concrete
evidence that the trial court judge exhibited partiality and had
prejudged the case. It also ruled that the denial of petitioner’s
motion to suspend the proceedings on the ground of prejudicial
question was in accord with law.15 The Court of Appeals
likewise affirmed the RTC’s denial of the demurrer to evidence
filed by petitioner for his failure to set forth persuasive grounds
to support the same, considering that the prosecution was able
to adduce evidence showing the existence of the elements of
bigamy.16
Neither did the appellate court find grave abuse of discretion
on the part of the Board’s Order denying petitioner’s motion to
suspend proceedings in the administrative case on the ground
of prejudicial question. Respondent court held that no
prejudicial question existed since the action sought to be
suspended is administrative in nature, and the other action
involved is a civil case.17
Petitioner thereafter filed a motion for reconsideration of the
decision of the Court of Appeals but the same was denied.18
Hence, petitioner filed the instant petition raising the following
issues:
I
PUBLIC RESPONDENT COMMITTED A SERIOUS ERROR IN
REFUSING TO SUSPEND THE LEGAL [CRIMINAL AND
 ADMINISTRATIVE] PROCEEDINGS DESPITE THE
PENDENCY OF THE CIVIL CASE FOR DECLARATION OF
NULLITY OF MARRIAGE.
II
PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION
AND COMMITTED AN ERROR OF LAW IN NOT HOLDING
THAT THE DEMURRER TO EVIDENCE SHOULD HAVE
BEEN GIVEN DUE COURSE.
III
PUBLIC RESPONDENT COMMITTED A SERIOUS LEGAL
ERROR IN NOT HOLDING THAT THE TRIAL JUDGE A
QUO SHOULD HAVE INHIBITED HIMSELF.19
The petition has no merit.
While the termination of Civil Case No. Q-90-6205 for
annulment of petitioner’s marriage to private respondent has
rendered the issue of the propriety of suspending both the
criminal case for bigamy before the RTC of Quezon City, Branch
98 and the administrative case for revocation of petitioner’s
engineering license before the PRC Board moot and academic,
the Court shall discuss the issue of prejudicial question to
emphasize the guarding and controlling precepts and rules.20
A prejudicial question has been defined as one based on a fact
distinct and separate from the crime but so intimately
connected with it that it determines the guilt or innocence of
the accused, and for it to suspend the criminal action, it must
appear not only that said case involves facts intimately related
to those upon which the criminal prosecution would be based
but also that in the resolution of the issue or issues raised in
the civil case, the guilt or innocence of the accused would
necessarily be determined.21 The rationale behind the
principle of suspending a criminal case in view of a prejudicial
question is to avoid two conflicting decisions.22
The Court of Appeals did not err when it ruled that the
pendency of the civil case for annulment of marriage filed by
petitioner against private respondent did not pose a prejudicial
question which would necessitate that the criminal case for
bigamy be suspended until said civil case is terminated.
The outcome of the civil case for annulment of petitioner’s
marriage to private respondent had no bearing upon the
determination of petitioner’s innocence or guilt in the criminal
case for bigamy, because all that is required for the charge of
bigamy to prosper is that the first marriage be subsisting at the
time the second marriage is contracted.23 Petitioner’s
argument that the nullity of his marriage to private respondent
had to be resolved first in the civil case before the criminal
proceedings could continue, because a declaration that their
marriage was void ab initio would necessarily absolve him from
criminal liability, is untenable. The ruling in People vs.
Mendoza24 and People vs. Aragon25 cited by petitioner that no
judicial decree is necessary to establish the invalidity of a
marriage which is void ab initio has been overturned. The
prevailing rule is found in Article 40 of the Family Code, which
was already in effect at the time of petitioner’s marriage to
private respondent in September 1988. Said article states that
the absolute nullity of a previous marriage may not be invoked
for purposes of remarriage unless there is a final judgment
declaring such previous marriage void. Thus, under the law, a
41
marriage, even one which is void or voidable, shall be deemed
valid until declared otherwise in a judicial proceeding.26 In
Landicho vs. Relova,27 we held that:
Parties to a marriage should not be permitted to judge for
themselves its nullity, for this must be submitted to the
judgment of competent courts and only when the nullity of a
marriage is so declared can it be held as void, and so long as
there is no such declaration the presumption of marriage
exists.28
It is clear from the foregoing that the pendency of the civil case
for annulment of petitioner’s marriage to private respondent
did not give rise to a prejudicial question which warranted the
suspension of the proceedings in the criminal case for bigamy
since at the time of the alleged commission of the crime, their
marriage was, under the law, still valid and subsisting.
Neither did the filing of said civil case for annulment
necessitate the suspension of the administrative proceedings
before the PRC Board. As discussed above, the concept of
prejudicial question involves a civil and a criminal case. We
have previously ruled that there is no prejudicial question
where one case is administrative and the other is civil.29
Furthermore, Section 32 of the Rules and Regulations Governing
the Regulation and Practice of Professionals of the PRC Board
expressly provides that the administrative proceedings before it
shall not be suspended notwithstanding the existence of a
criminal and/or civil case against the respondent involving the
same facts as the administrative case:
The filing or pendency of a criminal and/or civil cases in the
courts or an administrative case in another judicial body against
an examinee or registered professional involving the same facts
as in the administrative case filed or to be filed before the
Board shall neither suspend nor bar the proceeding of the latter
case. The Board shall proceed independently with the
investigation of the case and shall render therein its decision
without awaiting for the final decision of the courts or quasi-
judicial body.
It must also be noted that the allegations in the administrative
complaint before the PRC Board are not confined to the issue of
the alleged bigamous marriage contracted by petitioner and
Santella. Petitioner is also charged with immoral conduct for
continued failure to perform his obligations as husband to
private respondent and as father to their child, and for
cohabiting with Santella without the benefit of marriage.30 The
existence of these other charges justified the continuation of
the proceedings before the PRC Board.
Petitioner also contends that the Court of Appeals erred in
upholding the trial court’s denial of his demurrer to evidence in
the criminal case for bigamy, arguing that the prosecution
failed to establish the existence of both the first and second
marriages beyond reasonable doubt. Petitioner claims that the
original copy of marriage contract between him and private
respondent was not presented, the signatures therein were not
properly identified and there was no showing that the
requisites of a valid marriage were complied with. He alleges
further that the original copy of the marriage contract between
him and Santella was not presented, that no proof that he
signed said contract was adduced, and that there was no
witness presented to show that a second marriage ceremony
participated in by him ever took place.31
We are not persuaded. The grant or denial of a demurrer to
evidence is left to the sound discretion of the trial court, and
its ruling on the matter shall not be disturbed in the absence of
a grave abuse of such discretion.32 In this case, the Court of
Appeals did not find any grave abuse of discretion on the part
of the trial court, which based its denial of the demurrer on
two grounds: first, the prosecution established a prima facie
case for bigamy against the petitioner; and second, petitioner’s
allegations in the demurrer were insufficient to justify the
grant of the same. It has been held that the appellate court will
not review in a special civil action for certiorari the
prosecution’s evidence and decide in advance that such
evidence has or has not yet established the guilt of the accused
beyond reasonable doubt.33 In view of the trial court’s finding
that a prima facie case against petitioner exists, his proper
recourse is to adduce evidence in his defense.34
The Court also finds it necessary to correct petitioner’s
misimpression that by denying his demurrer to evidence in view
of the existence of a prima facie case against him, the trial
court was already making a pronouncement that he is liable for
the offense charged. As correctly held by the Court of Appeals,
the order of the RTC denying the demurrer was not an
adjudication on the merits but merely an evaluation of the
sufficiency of the prosecution’s evidence to determine whether
or not a full-blown trial would be necessary to resolve the
case.35 The RTC’s observation that there was a prima facie
case against petitioner only meant that the prosecution had
presented sufficient evidence to sustain its proposition that
petitioner had committed the offense of bigamy, and unless
petitioner presents evidence to rebut the same, such would be
the conclusion.36 Said declaration by the RTC should not be
construed as a pronouncement of petitioner’s guilt. It was
precisely because of such finding that the trial court denied the
demurrer, in order that petitioner may present evidence in his
defense and allow said court to resolve the case based on the
evidence adduced by both parties.
Lastly, petitioner contends that his motion to inhibit Judge
Peralejo in Criminal Case No. Q-90-14409 should have been
granted since said judge exhibited partiality and bias against
him in several instances. First, when petitioner manifested that
he would file a motion for reconsideration of the denial of his
motion to suspend the proceedings in said case, the judge said
such motion was dilatory and would be denied even though the
motion for reconsideration had not yet been filed. Second,
when petitioner’s counsel manifested that he had just
recovered from an accident and was not physically fit for trial,
the judge commented that counsel was merely trying to delay
the case and required said counsel to produce a medical
certificate to support his statement. Third, when petitioner
manifested that he was going to file a demurrer to evidence,
the judge characterized the same as dilatory and declared that
he would deny the same. According to petitioner, the judge’s
hostile attitude towards petitioner’s counsel as shown in the
foregoing instances justified the grant of his motion to inhibit.
We agree with the appellate court that the grounds raised by
petitioner against Judge Peralejo did not conclusively show that
the latter was biased and had prejudged the case.37 In People
of the Philippines vs. Court of Appeals,38 this Court held that
while bias and prejudice have been recognized as valid reasons
for the voluntary inhibition of a judge under Section 1, Rule
137, the rudimentary rule is that the mere suspicion that a
judge is partial is not enough. There should be clear and
convincing evidence to prove the charge of bias and
partiality.39
42
Furthermore, since the grounds raised by petitioner in his
motion to inhibit are not among those expressly mentioned in
Section 1, Rule 137 of the Revised Rules of Court, the decision
to inhibit himself lay within the sound discretion of Judge
Peralejo. Said provision of law states:
Section 1. Disqualification of judges. – No judge or judicial
officer shall sit in any case in which he, or his wife or child, is
pecuniarily interested as heir, legatee, creditor or otherwise,
or in which he is related to either party within the sixth degree
of consanguinity or affinity, or to counsel within the fourth
degree, computed according to the rules of the civil law, or in
which he has been executor, administrator, guardian, trustee
or counsel, or in which he has presided in any inferior court
when his ruling or decision is the subject of review, without the
written consent of all parties in interest, signed by them and
entered upon the record.
A judge may, in the exercise of his sound discretion, disqualify
himself from sitting in the case, for just and valid reasons other
than those mentioned above.
Thus, it was not mandatory that the judge inhibit himself from
hearing and deciding the case.
This Court does not find any abuse of discretion by respondent
judge in denying petitioner’s motion to inhibit. The test for
determining the propriety of the denial of said motion is
whether petitioner was deprived a fair and impartial trial.40
The instances when Judge Peralejo allegedly exhibited
antagonism and partiality against petitioner and/or his counsel
did not deprive him of a fair and impartial trial. As discussed
earlier, the denial by the judge of petitioner’s motion to
suspend the criminal proceeding and the demurrer to evidence
are in accord with law and jurisprudence. Neither was there
anything unreasonable in the requirement that petitioner’s
counsel submit a medical certificate to support his claim that
he suffered an accident which rendered him unprepared for
trial. Such requirement was evidently imposed upon
petitioner’s counsel to ensure that the resolution of the case
was not hampered by unnecessary and unjustified delays, in
keeping with the judge’s duty to disposing of the court’s
business promptly.41
WHEREFORE, the petition is hereby DENIED for lack of merit.
SO ORDERED.
R. Nos. 160054-55 July 21, 2004
MANOLO P. SAMSON, petitioner,
vs.
HON. REYNALDO B. DAWAY, in his capacity as Presiding
Judge, Regional Trial Court of Quezon City, Branch 90,
PEOPLE OF THE PHILIPPINES and CATERPILLAR, INC.,
respondents.
DECISION
YNARES-SANTIAGO, J.:
Assailed in this petition for certiorari is the March 26, 2003
Order1 of the Regional Trial Court of Quezon City, Branch 90,
which denied petitioner’s – (1) motion to quash the
information; and (2) motion for reconsideration of the August 9,
2002 Order denying his motion to suspend the arraignment and
other proceedings in Criminal Case Nos. Q-02-108043-44.
Petitioner also questioned its August 5, 2003 Order2 which
denied his motion for reconsideration.
The undisputed facts show that on March 7, 2002, two
informations for unfair competition under Section 168.3 (a), in
relation to Section 170, of the Intellectual Property Code
(Republic Act No. 8293), similarly worded save for the dates
and places of commission, were filed against petitioner Manolo
P. Samson, the registered owner of ITTI Shoes. The accusatory
portion of said informations read:
That on or about the first week of November 1999 and
sometime prior or subsequent thereto, in Quezon City,
Philippines, and within the jurisdiction of this
Honorable Court, above-named accused,
owner/proprietor of ITTI Shoes/Mano Shoes
Manufactuirng Corporation located at Robinson’s
Galleria, EDSA corner Ortigas Avenue, Quezon City,
did then and there willfully, unlawfully and
feloniously distribute, sell and/or offer for sale
CATERPILLAR products such as footwear, garments,
clothing, bags, accessories and paraphernalia which
are closely identical to and/or colorable imitations of
the authentic Caterpillar products and likewise using
trademarks, symbols and/or designs as would cause
confusion, mistake or deception on the part of the
buying public to the damage and prejudice of
CATERPILLAR, INC., the prior adopter, user and owner
of the following internationally: "CATERPILLAR", "CAT",
"CATERPILLAR & DESIGN", "CAT AND DESIGN",
"WALKING MACHINES" and "TRACK-TYPE TRACTOR &
DESIGN."
CONTRARY TO LAW.3
On April 19, 2002, petitioner filed a motion to suspend
arraignment and other proceedings in view of the existence of
an alleged prejudicial question involved in Civil Case No. Q-00-
41446 for unfair competition pending with the same branch;
and also in view of the pendency of a petition for review filed
with the Secretary of Justice assailing the Chief State
Prosecutor’s resolution finding probable cause to charge
petitioner with unfair competition. In an Order dated August 9,
2002, the trial court denied the motion to suspend arraignment
and other proceedings.
On August 20, 2002, petitioner filed a twin motion to quash the
informations and motion for reconsideration of the order
denying motion to suspend, this time challenging the
jurisdiction of the trial court over the offense charged. He
contended that since under Section 170 of R.A. No. 8293, the
penalty4 of imprisonment for unfair competition does not
exceed six years, the offense is cognizable by the Municipal
Trial Courts and not by the Regional Trial Court, per R.A. No.
7691.
In its assailed March 26, 2003 Order, the trial court denied
petitioner’s twin motions.6 A motion for reconsideration
thereof was likewise denied on August 5, 2003.
43
Hence, the instant petition alleging that respondent Judge
gravely abused its discretion in issuing the assailed orders.
The issues posed for resolution are – (1) Which court has
jurisdiction over criminal and civil cases for violation of
intellectual property rights? (2) Did the respondent Judge
gravely abuse his discretion in refusing to suspend the
arraignment and other proceedings in Criminal Case Nos. Q-02-
108043-44 on the ground of – (a) the existence of a prejudicial
question; and (b) the pendency of a petition for review with the
Secretary of Justice on the finding of probable cause for unfair
competition?
Under Section 170 of R.A. No. 8293, which took effect on
January 1, 1998, the criminal penalty for infringement of
registered marks, unfair competition, false designation of origin
and false description or representation, is imprisonment from 2
to 5 years and a fine ranging from Fifty Thousand Pesos to Two
Hundred Thousand Pesos, to wit:
SEC. 170. Penalties. – Independent of the civil and
administrative sanctions imposed by law, a criminal
penalty of imprisonment from two (2) years to five (5)
years and a fine ranging from Fifty thousand pesos
(P50,000.00) to Two hundred thousand pesos
(P200,000.00), shall be imposed on any person who is
found guilty of committing any of the acts mentioned
in Section 155 [Infringement], Section 168 [Unfair
Competition] and Section 169.1 [False Designation of
Origin and False Description or Representation].
Corollarily, Section 163 of the same Code states that actions
(including criminal and civil) under Sections 150, 155, 164, 166,
167, 168 and 169 shall be brought before the proper courts with
appropriate jurisdiction under existing laws, thus –
SEC. 163. Jurisdiction of Court. – All actions under
Sections 150, 155, 164 and 166 to 169 shall be brought
before the proper courts with appropriate
jurisdiction under existing laws. (Emphasis supplied)
The existing law referred to in the foregoing provision is Section
27 of R.A. No. 166 (The Trademark Law) which provides that
jurisdiction over cases for infringement of registered marks,
unfair competition, false designation of origin and false
description or representation, is lodged with the Court of First
Instance (now Regional Trial Court) –
SEC. 27. Jurisdiction of Court of First Instance. – All
actions under this Chapter [V – Infringement] and
Chapters VI [Unfair Competition] and VII [False
Designation of Origin and False Description or
Representation], hereof shall be brought before the
Court of First Instance.
We find no merit in the claim of petitioner that R.A. No. 166
was expressly repealed by R.A. No. 8293. The repealing clause
of R.A. No. 8293, reads –
SEC. 239. Repeals. – 239.1. All Acts and parts of Acts
inconsistent herewith, more particularly Republic Act
No. 165, as amended; Republic Act No. 166, as
amended; and Articles 188 and 189 of the Revised
Penal Code; Presidential Decree No. 49, including
Presidential Decree No. 285, as amended, are hereby
repealed. (Emphasis added)
Notably, the aforequoted clause did not expressly repeal R.A.
No. 166 in its entirety, otherwise, it would not have used the
phrases "parts of Acts" and "inconsistent herewith;" and it would
have simply stated "Republic Act No. 165, as amended; Republic
Act No. 166, as amended; and Articles 188 and 189 of the
Revised Penal Code; Presidential Decree No. 49, including
Presidential Decree No. 285, as amended are hereby repealed."
It would have removed all doubts that said specific laws had
been rendered without force and effect. The use of the phrases
"parts of Acts" and "inconsistent herewith" only means that the
repeal pertains only to provisions which are repugnant or not
susceptible of harmonization with R.A. No. 8293.6 Section 27 of
R.A. No. 166, however, is consistent and in harmony with
Section 163 of R.A. No. 8293. Had R.A. No. 8293 intended to
vest jurisdiction over violations of intellectual property rights
with the Metropolitan Trial Courts, it would have expressly
stated so under Section 163 thereof.
Moreover, the settled rule in statutory construction is that in
case of conflict between a general law and a special law, the
latter must prevail. Jurisdiction conferred by a special law to
Regional Trial Courts must prevail over that granted by a
general law to Municipal Trial Courts.7
In the case at bar, R.A. No. 8293 and R.A. No. 166 are special
laws8 conferring jurisdiction over violations of intellectual
property rights to the Regional Trial Court. They should
therefore prevail over R.A. No. 7691, which is a general law.9
Hence, jurisdiction over the instant criminal case for unfair
competition is properly lodged with the Regional Trial Court
even if the penalty therefor is imprisonment of less than 6
years, or from 2 to 5 years and a fine ranging from P50,000.00
to P200,000.00.
In fact, to implement and ensure the speedy disposition of
cases involving violations of intellectual property rights under
R.A. No. 8293, the Court issued A.M. No. 02-1-11-SC dated
February 19, 2002 designating certain Regional Trial Courts as
Intellectual Property Courts. On June 17, 2003, the Court
further issued a Resolution consolidating jurisdiction to hear
and decide Intellectual Property Code and Securities and
Exchange Commission cases in specific Regional Trial Courts
designated as Special Commercial Courts.
The case of Mirpuri v. Court of Appeals,10 invoked by
petitioner finds no application in the present case. Nowhere in
Mirpuri did we state that Section 27 of R.A. No. 166 was
repealed by R.A. No. 8293. Neither did we make a categorical
ruling therein that jurisdiction over cases for violation of
intellectual property rights is lodged with the Municipal Trial
Courts. The passing remark in Mirpuri on the repeal of R.A. No.
166 by R.A. No. 8293 was merely a backgrounder to the
enactment of the present Intellectual Property Code and
cannot thus be construed as a jurisdictional pronouncement in
cases for violation of intellectual property rights.
Anent the second issue, petitioner failed to substantiate his
claim that there was a prejudicial question. In his petition, he
prayed for the reversal of the March 26, 2003 order which
sustained the denial of his motion to suspend arraignment and
other proceedings in Criminal Case Nos. Q-02-108043-44. For
unknown reasons, however, he made no discussion in support of
said prayer in his petition and reply to comment. Neither did he
attach a copy of the complaint in Civil Case No. Q-00-41446 nor
quote the pertinent portion thereof to prove the existence of a
prejudicial question.
44
At any rate, there is no prejudicial question if the civil and the
criminal action can, according to law, proceed independently of
each other.11 Under Rule 111, Section 3 of the Revised Rules on
Criminal Procedure, in the cases provided in Articles 32, 33, 34
and 2176 of the Civil Code, the independent civil action may be
brought by the offended party. It shall proceed independently
of the criminal action and shall require only a preponderance of
evidence.
In the case at bar, the common element in the acts constituting
unfair competition under Section 168 of R.A. No. 8293 is
fraud.12 Pursuant to Article 33 of the Civil Code, in cases of
defamation, fraud, and physical injuries, a civil action for
damages, entirely separate and distinct from the criminal
action, may be brought by the injured party. Hence, Civil Case
No. Q-00-41446, which as admitted13 by private respondent
also relate to unfair competition, is an independent civil action
under Article 33 of the Civil Code. As such, it will not operate
as a prejudicial question that will justify the suspension of the
criminal cases at bar.
Section 11 (c), Rule 116 of the Revised Rules on Criminal
Procedure provides –
SEC. 11. Suspension of arraignment. – Upon motion by
the proper party, the arraignment shall be suspended
in the following cases –
xxxxxxxxx
(c) A petition for review of the resolution of the
prosecutor is pending at either the Department of
Justice, or the Office of the President; Provided, that
the period of suspension shall not exceed sixty (60)
days counted from the filing of the petition with the
reviewing office.
While the pendency of a petition for review is a ground for
suspension of the arraignment, the aforecited provision limits
the deferment of the arraignment to a period of 60 days
reckoned from the filing of the petition with the reviewing
office. It follows, therefore, that after the expiration of said
period, the trial court is bound to arraign the accused or to
deny the motion to defer arraignment.
In the instant case, petitioner failed to establish that
respondent Judge abused his discretion in denying his motion to
suspend. His pleadings and annexes submitted before the Court
do not show the date of filing of the petition for review with
the Secretary of Justice.14 Moreover, the Order dated August
9, 2002 denying his motion to suspend was not appended to the
petition. He thus failed to discharge the burden of proving that
he was entitled to a suspension of his arraignment and that the
questioned orders are contrary to Section 11 (c), Rule 116 of
the Revised Rules on Criminal Procedure. Indeed, the age-old
but familiar rule is that he who alleges must prove his
allegations.
In sum, the dismissal of the petition is proper considering that
petitioner has not established that the trial court committed
grave abuse of discretion. So also, his failure to attach
documents relevant to his allegations warrants the dismissal of
the petition, pursuant to Section 3, Rule 46 of the Rules of Civil
Procedure, which states:
 SEC. 3. Contents and filing of petition; effect of
non-compliance with requirements. — The petition
shall contain the full names and actual addresses of
all the petitioners and respondents, a concise
statement of the matters involved, the factual
background of the case, and the grounds relied upon
for the relief prayed for.
It shall be filed in seven (7) clearly legible copies
together with proof of service thereof on the
respondent with the original copy intended for the
court indicated as such by the petitioner, and shall be
accompanied by a clearly legible duplicate original
or certified true copy of the judgment, order,
resolution, or ruling subject thereof, such material
portions of the record as are referred to therein,
and other documents relevant or pertinent thereto.
xxxxxxxxx
The failure of the petitioner to comply with any of
the foregoing requirements shall be sufficient
ground for the dismissal of the petition. (Emphasis
added)
WHEREFORE, in view of all the foregoing, the petition is
dismissed.
SO ORDERED.
G.R. No. 159323 July 31, 2008
COCA-COLA BOTTLERS (PHILS.), INC. and ERIC MONTINOLA,
Petitioners,
vs.
SOCIAL SECURITY COMMISSION and DR. DEAN CLIMACO,
Respondents.
DECISION
REYES, R.T., J.:
WE are confronted with triple remedial issues on prejudicial
question, forum shopping, and litis pendentia.
We review on certiorari the Decision1 of the Court of Appeals
(CA) upholding the order of the Social Security Commission
(SSC),2 denying petitioners’ motion to dismiss respondent
Climaco’s petition for compulsory coverage with the Social
Security System (SSS).
The Facts
Petitioner Coca-Cola Bottlers (Phils.), Inc. is a corporation
engaged in the manufacture and sale of softdrink beverages. 3
Co-petitioner Eric Montinola was the general manager of its
plant in Bacolod City.4 Respondent Dr. Dean Climaco was a
former retainer physician at the company’s plant in Bacolod
City.5
In 1988, petitioner company and Dr. Climaco entered into a
Retainer Agreement6 for one year, with a monthly
compensation of ₱3,800.00,7 where he "may charge professional
fees for hospital services rendered in line with his
45
specialization."8 The agreement further provided that "either
party may terminate the contract upon giving thirty (30)-day
written notice to the other."9 In consideration of the retainer’s
fee, Dr. Climaco "agrees to perform the duties and
obligations"10 enumerated in the Comprehensive Medical Plan,11
which was attached and made an integral part of the
agreement.
Explicit in the contract, however, is the provision that no
employee-employer relationship shall exist between the
company and Dr. Climaco while the contract is in effect.12 In
case of its termination, Dr. Climaco "shall be entitled only to
such retainer fee as may be due him at the time of
termination."13
Dr. Climaco continuously served as the company physician,
performing all the duties stipulated in the Retainer Agreement
and the Comprehensive Medical Plan. By 1992, his salary was
increased to ₱7,500.00 per month.14
Meantime, Dr. Climaco inquired with the Department of Labor
and Employment and the SSS whether he was an employee of
the company. Both agencies replied in the affirmative.15 As a
result, Dr. Climaco filed a complaint16 before the National
Labor Relations Commission (NLRC), Bacolod City. In his
complaint, he sought recognition as a regular employee of the
company and demanded payment of his 13th month pay, cost of
living allowance, holiday pay, service incentive leave pay,
Christmas bonus and all other benefits.17
During the pendency of the complaint, the company terminated
its Retainer Agreement with Dr. Climaco. Thus, Dr. Climaco
filed another complaint18 for illegal dismissal against the
company before the NLRC Bacolod City. He asked that he be
reinstated to his former position as company physician of its
Bacolod Plant, without loss of seniority rights, with full
payment of backwages, other unpaid benefits, and for payment
of damages.19
The Labor Arbiter, in each of the complaints, ruled in favor of
petitioner company.20 The first complaint was dismissed after
Labor Arbiter Jesus N. Rodriguez, Jr. found that the company
did not have the power of control over Dr. Climaco’s
performance of his duties and responsibilities. The validity of
the Retainer Agreement was also recognized. Labor Arbiter
Benjamin Pelaez likewise dismissed the second complaint in
view of the dismissal of the first complaint.1avvphi1
On appeal, the NLRC, Fourth Division, Cebu City, affirmed the
Arbiter disposition.21 On petition for review before the CA, the
NLRC ruling was reversed.22 The appellate court ruled that
using the four-fold test, an employer-employee relationship
existed between the company and Dr. Climaco. Petitioners
elevated the case through a petition for review on certiorari23
before this Court.
Meantime, on November 9, 1994, while the NLRC cases were
pending, Dr. Climaco filed with the SSC in Bacolod City, a
petition24 praying, among others, that petitioner Coca-Cola
Bottlers (Phils.), Inc. be ordered to report him for compulsory
social security coverage.
On April 12, 1995, petitioners moved for the dismissal of the
petition on the ground of lack of jurisdiction. They argued that
there is no employer-employee relationship between the
company and Dr. Climaco; and that his services were engaged
by virtue of a Retainer Agreement.25
Dr. Climaco opposed the motion.26 According to Dr. Climaco,
"[t]he fact that the petitioner [i.e., respondent Dr. Climaco]
does not enjoy the other benefits of the company is a question
that is being raised by the petitioner in his cases filed with the
National Labor Relations Commission (NLRC), Bacolod City,
against the respondent [i.e., petitioner company]."27
On July 24, 1995, the SSC issued an order stating among others,
that the resolution of petitioner company’s motion to dismiss is
held in abeyance "pending reception of evidence of the
parties."28
In view of the statements of Dr. Climaco in his opposition to the
company’s motion to dismiss, petitioners again, on March 1,
1996, moved for the dismissal of Dr. Climaco’s complaint, this
time on the grounds of forum shopping and litis pendentia.29
SSC and CA Dispositions
On January 17, 1997, the SSC denied petitioners’ motion to
dismiss, disposing as follows:
WHEREFORE, PREMISES CONSIDERED, the respondents’ Motion
to Dismiss is hereby denied for lack of merit.
Accordingly, let this case be remanded to SSS Bacolod Branch
Office for reception of evidence of the parties pursuant to the
Order dated July 24, 1995.
SO ORDERED.30
Petitioners’ motion for reconsideration31 received the same
fate.32
On April 29, 1997, the company filed a petition for certiorari
before the CA. On March 15, 2002, the CA dismissed the
petition, with a fallo reading:
WHEREFORE, under the premises, the Court holds that public
respondent Social Security Commission did not act with grave
abuse of discretion in issuing the disputed orders, and the
herein petition is therefore DISMISSED for want of merit.
SO ORDERED.33
Hence, the present recourse.
Issues
Petitioners raise the following issues for Our consideration:
WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS
ERRED IN RENDERING THE ASSAILED RESOLUTIONS, HAVING
DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD
WITH LAW AND THE APPLICABLE DECISIONS OF THIS HONORABLE
COURT, CONSIDERING THAT:
I.
THE PREVIOUS COMPLAINT FOR REGULARIZATION
AND/OR ILLEGAL DISMISSAL, WHICH IS NOW PENDING
RESOLUTION BEFORE THE SUPREME COURT, POSES A
46
PREJUDICIAL QUESTION TO THE SUBJECT OF THE
PRESENT CASE.
II.
GIVEN THE ATTENDANT CIRCUMSTANCES, RESPONDENT
CLIMACO IS GUILTY OF FORUM SHOPPING, WHICH
THEREBY CALLED FOR THE OUTRIGHT DISMISSAL OF
HIS PETITION BEFORE THE SOCIAL SECURITY
COMMISSION.
III.
THE PETITION SHOULD HAVE ALSO BEEN DISMISSED
OUTRIGHT ON THE GROUND OF LITIS PENDENTIA, AS
THERE ARE OTHER ACTIONS PENDING BETWEEN THE
SAME PARTIES FOR THE SAME CAUSE OF ACTION.34
(Underscoring supplied)
Our Ruling
The petition fails.
The Court notes that petitioners, in their petition, averred that
the appeal from the NLRC and CA dispositions on the illegal
dismissal of respondent Climaco is still pending with this Court.
Upon verification, however, it was unveiled that the said case
had already been decided by this Court’s First Division on
February 5, 2007.
While we deplore the failure of petitioners and counsel in
updating the Court on the resolution of the said related case,
We hasten to state that it did not operate to moot the issues
pending before Us. We take this opportunity to address the
questions on prejudicial question, forum shopping, and litis
pendentia.
No prejudicial question exists.
Petitioners allege that Dr. Climaco previously filed separate
complaints before the NLRC seeking recognition as a regular
employee. Necessarily then, a just resolution of these cases
hinge on a determination of whether or not Dr. Climaco is an
employee of the company.35 The issue of whether Dr. Climaco is
entitled to employee benefits, as prayed for in the NLRC cases,
is closely intertwined with the issue of whether Dr. Climaco is
an employee of the company who is subject to compulsory
coverage under the SSS Law. Hence, they argue, said
regularization/illegal dismissal case is a prejudicial question.
The argument is untenable.
Our concept of prejudicial question was lifted from Spain,
where civil cases are tried exclusively by civil courts, while
criminal cases are tried exclusively in criminal courts. Each kind
of court is jurisdictionally distinct from and independent of the
other. In the Philippines, however, courts are invariably
tribunals of general jurisdiction. This means that courts here
exercise jurisdiction over both civil and criminal cases. Thus, it
is not impossible that the criminal case, as well as the civil case
in which a prejudicial question may rise, may be both pending
in the same court. For this reason, the elements of prejudicial
question have been modified in such a way that the phrase
"pendency of the civil case in a different tribunal" has been
eliminated.36
The rule is that there is prejudicial question when (a) the
previously instituted civil action involves an issue similar or
intimately related to the issue raised in the subsequent criminal
action, and (b) the resolution of such issue determines whether
or not the criminal action may proceed.37 It comes into play
generally in a situation where a civil action and a criminal
action both pend and there exists in the former an issue which
must be preemptively resolved before the criminal action may
proceed. This is so because howsoever the issue raised in the
civil action is resolved would be determinative juris et de jure
of the guilt or innocence of the accused in the criminal case.38
Here, no prejudicial question exists because there is no
pending criminal case.39 The consolidated NLRC cases cannot
be considered as "previously instituted civil action." In Berbari
v. Concepcion,40 it was held that a prejudicial question is
understood in law to be that which must precede the criminal
action, that which requires a decision with which said question
is closely related.
Neither can the doctrine of prejudicial question be applied
by analogy. The issue in the case filed by Dr. Climaco with the
SSC involves the question of whether or not he is an employee
of Coca-Cola Bottlers (Phils.), Inc. and subject to the
compulsory coverage of the Social Security System. On the
contrary, the cases filed by Dr. Climaco before the NLRC
involved different issues. In his first complaint, 41 Dr. Climaco
sought recognition as a regular employee of the company and
demanded payment of his 13th month pay, cost of living
allowance, holiday pay, service incentive leave pay, Christmas
bonus and all other benefits.42 The second complaint43 was for
illegal dismissal, with prayer for reinstatement to his former
position as company physician of the company’s Bacolod Plant,
without loss of seniority rights, with full payment of
backwages, other unpaid benefits, and for payment of
damages.44 Thus, the issues in the NLRC cases are not
determinative of whether or not the SSC should proceed. It is
settled that the question claimed to be prejudicial in nature
must be determinative of the case before the court.45
There is no forum shopping.
Anent the second issue, petitioners posit that since the issues
before the NLRC and the SSC are the same, the SSC cannot
make a ruling on the issue presented before it without
necessarily having a direct effect on the issue before the NLRC.
It was patently erroneous, if not malicious, for Dr. Climaco to
invoke the jurisdiction of the SSC through a separate petition. 46
Thus, petitioners contend, Dr. Climaco was guilty of forum
shopping.
Again, We turn down the contention.
Forum shopping is a prohibited malpractice and condemned as
trifling with the courts and their processes.47 It is proscribed
because it unnecessarily burdens the courts with heavy
caseloads. It also unduly taxes the manpower and financial
resources of the judiciary. It mocks the judicial processes, thus,
affecting the efficient administration of justice.48
The grave evil sought to be avoided by the rule against forum
shopping is the rendition by two (2) competent tribunals of two
(2) separate and contradictory decisions. Unscrupulous
litigants, taking advantage of a variety of competent tribunals,
may repeatedly try their luck in several different fora until a
favorable result is reached.49
47
It is well to note that forum shopping traces its origin in private
international law on choice of venues, which later developed to
a choice of remedies. In First Philippine International Bank v.
Court of Appeals,50 the Court had occasion to outline the origin
of the rule on forum shopping. Said the Court:
x x x forum shopping originated as a concept in private
international law, where non-resident litigants are given the
option to choose the forum or place wherein to bring their suit
for various reasons or excuses, including to secure procedural
advantages, to annoy and harass the defendant, to avoid
overcrowded dockets, or to select a more friendly venue. To
combat these less than honorable excuses, the principle of
forum non conveniens was developed whereby a court, in
conflicts of law cases, may refuse impositions on its jurisdiction
where it is not the most "convenient" or available forum and
the parties are not precluded from seeking remedies elsewhere.
xxxx
In the Philippines, forum shopping has acquired a connotation
encompassing not only a choice of venues, as it was originally
understood in conflicts of laws, but also to a choice of
remedies. As to the first (choice of venues), the Rules of Court,
for example, allow a plaintiff to commence personal actions
"where the defendant or any of the defendants resides or may
be found, or where the plaintiff or any of the plaintiffs resides,
at the election of the plaintiff" (Rule 4, Sec. 2[b]). As to
remedies, aggrieved parties, for example, are given a choice of
pursuing civil liabilities independently of the criminal, arising
from the same set of facts. A passenger of a public utility
vehicle involved in a vehicular accident may sue on culpa
contractual, culpa aquiliana or culpa criminal – each remedy
being available independently of the others – although he
cannot recover more than once.
"In either of these situations (choice of venue or choice of
remedy), the litigant actually shops for a forum of his action.
This was the original concept of the term forum shopping.
"Eventually, however, instead of actually making a choice of
the forum of their actions, litigants, through the
encouragement of their lawyers, file their actions in all
available courts, or invoke all relevant remedies
simultaneously. This practice had not only resulted to (sic)
conflicting adjudications among different courts and
consequent confusion enimical (sic) to an orderly
administration of justice. It had created extreme inconvenience
to some of the parties to the action.
"Thus, ‘forum-shopping’ had acquired a different concept –
which is unethical professional legal practice. And this
necessitated or had given rise to the formulation of rules and
canons discouraging or altogether prohibiting the practice."
What therefore started both in conflicts of laws and in our
domestic law as a legitimate device for solving problems has
been abused and misused to assure scheming litigants of
dubious reliefs.51
Thus, in order to prevent forum shopping, the 1997 Rules of
Civil Procedure now provide:
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.52
Forum shopping is not only strictly prohibited but also
condemned. So much so that "[f]ailure to comply with the
foregoing requirements shall not be curable by mere
amendment of the initiatory pleading but shall be cause for the
dismissal of the case without prejudice. 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."53
There is forum shopping when one 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.54 In short, forum
shopping exists where the elements of litis pendentia are
present or where a final judgment in one case will amount to
res judicata in the other.55
There is res judicata when (1) there is a final judgment or
order; (2) the court rendering it has jurisdiction over the
subject matter and the parties; (3) the judgment or order is on
the merits; and (4) there is between the two cases identity of
parties, subject matter and causes of action.56
Measured by the foregoing yardstick, Dr. Climaco is not guilty
of forum shopping. While it is true that the parties are identical
in the NLRC and in the SSC, the reliefs sought and the causes of
action are different.
Admittedly, Dr. Climaco’s basis in filing the cases before the
NLRC and the SSC is his Retainer Agreement with the company.
This does not mean, however, that his causes of action are the
same:
x x x Some authorities declare the distinction between demands
or rights of action which are single and entire and those which
are several and distinct to be that the former arise out of one
and the same act or contract and the latter out of different
acts or contracts. This rule has been declared to be unsound,
however, and as evidence of its unsoundness, reference has
been made to the fact that several promissory notes may, and
often do, grow out of one and the same transaction, and yet
they do not constitute an entire demand. The better rule is
that the bare fact that different demands spring out of the
same or contract does not ipso facto render a judgment on one
a bar to a suit on another, however distinct. It is clear that the
right of a plaintiff to maintain separate actions cannot be
determined by the fact that the claims might have been
prosecuted in a single action. A plaintiff having separate
demands against a defendant may, at his election, join them in
48
the same action, or he may prosecute them separately, subject
of the power of the court to order their consolidation. There
may be only one cause of action although the plaintiff is
entitled to several forms and kinds of relief, provided there is
not more than one primary right sought to be enforced or one
subject of controversy presented for adjudication.57
(Underscoring supplied)
As the SSC and the CA correctly observed, different laws are
applicable to the cases before the two tribunals. The Labor
Code and pertinent social legislations would govern the cases
before the NLRC, while the Social Security Law would govern
the case before the SSC. Clearly, as the issues pending before
the NLRC and the SSC are diverse, a ruling on the NLRC cases
would not amount to res judicata in the case before the SSC.
The elements of litis pendentia are absent.
Lastly, petitioners contend that the petition of Dr. Climaco
before the SSC is defective because there were pending actions
between the same parties and involving the same issues in
different fora.58
For litis pendentia to exist, there must be (1) identity of the
parties or at least such as representing the same interests in
both actions; (2) identity of the rights asserted and relief
prayed for, the relief founded on the same facts; and (3)
identity of the two cases such that judgment in one, regardless
of which party is successful, would amount to res judicata in
the other.59
In the case under review, there is no litis pendentia to speak
of. As previously explained, although the parties in the cases
before the NLRC and the SSC are similar, the nature of the
cases filed, the rights asserted, and reliefs prayed for in each
tribunal, are different.lawp++il
As a last attempt, however, petitioners invoke Rule 16, Section
1(e) of the 1997 Rules of Civil Procedure. Petitioners contend
that the petition Dr. Climaco lodged with the SSC is "another
action" prohibited by the Rule.60
In Solancio v. Ramos,61 the issue centered on whether the
pending administrative case before the Bureau of Lands is
"another action," which would justify the dismissal of the
complaint of plaintiff against defendants before the then Court
of First Instance (now RTC) of Cagayan. Ruling in the negative,
the Court noted that "both parties as well as the trial court
have missed the extent or meaning of the ground of the motion
to dismiss as contemplated under the Rules of Court."62 Mr.
Justice Regala, who wrote the opinion of the Court, explained
the phrase "another action" in this wise:
This is not what is contemplated under the law because under
Section 1(d), Rule 16 (formerly Rule 8) of the Rules of Court,
[now Rule 1, Section 16(e) of the Rules of Court, supra] one of
the grounds for the dismissal of an action is that "there is
another action pending between the same parties for the same
cause." Note that the Rule uses the phrase "another action."
This phrase should be construed in line with Section 1 of Rule 2,
which defines the word action, thus –
"Action means an ordinary suit in a court of justice, by which
one party prosecutes another for the enforcement or protection
of a right, or the prevention or redress of a wrong. Every other
remedy is a special proceeding."63
Evidently, there is no "another action" pending between
petitioners and Dr. Climaco at the time when the latter filed a
petition before the SSC.

WHEREFORE, the petition is DENIED and the appealed decision

AFFIRMED.

Costs against petitioners.

SO ORDERED.

49