Xerxes Abadiano v.
Spouses Martir (July C to Victor Garde, as evidenced by a
31, 2008)
Subject: Property, Evidence1
Facts: Inocentes Banares and the heirs of
his wife, Feliciana Villanueva executed an
Agreement of Partition dated June 1, 1922
over Lot No. 1318. The lot was partitioned
and distributed to the following: (1)
Demetrio Banares (Lot No. 1318-A), (2)
Ramon and David Abadiano –grandchildren
of Inocentes and Feliciana (Lot No. 1318-B)
and (3) Amando Banares (Lot No. 1318-C).
The partition is embodied in a notarized
Deed of Partition. In 1923, an Original
Certificate of Title (OCT) No. 20641 was
issued in the name of the spouses. In 1939,
David Abadiano, who was absent during the
execution of the Agreement of Partition,
executed a Deed of Confirmation
acknowledging and ratifying the document
of partition. OCT No. 20641 was
administratively reconstituted in 1962 and in
lieu thereof, OCT No. RO-8211 was issued
over Lot No. 1318, still in the name of the
spouses. The Agreement of Partition and the
Deed of Confirmation were annotated at the
back of the OCT. In 1957, Demetrio sold his
share to his son Leopoldo. The latter then
filed a petition praying for confirmation of
the Agreement and the Deed of
Confirmation and the Deed of Sale between
him and his father, and for the issuance of a
new title over the property. The Court
ordered the issuance of a Transfer
Certificate of Title (TCT) in the name of
Leopoldo, Amando, and Ramon and David.
Petitioner insists that this is the valid and
subsisting title over the property and there
was no other sale to anyone.
Respondents allege however that prior to
the issuance of the TCT, Ramon for himself
and on behalf of David, had already sold
their rights and interests over Lot No. 1318-
1
I won’t be discussing evidence. Wala akong
karapatan. The case touches on Rule 130,
Section 3 
notarized document of sale (Compra Y
Venta) dated June 3, 1922. They further
allege that from the time of sale, Victor
Garde and his heirs were in continuous,
public, peaceful and uninterrupted
possession and occupation in the concept of
an owner of the Lot. Victor’s heirs sold the
same to Jose Garde who in turn sold it to
Lolita Martir in 1979. Alleging that the
Abadianos entered the property and
harvested sugarcane from it, the spouses
filed an Action to Quiet Title and/or Recovery
of Possession with Damages in 1982. The
trial court ruled for the Martirs, holding that
the spouses and their predecessors-in-
interest have been in possession of the
property for 60 years and the Abadianos
therefore were guilty of laches. CA affirmed.
Hence, this Petition for Review on Certiorari.
Issue: WON the petitioner is guilty of laches
Held: No. Under the Property Registration
Decree, no title to registered land in
derogation of the title of the registered
owner shall be acquired by prescription or
adverse possession. Nonetheless, even if a
Torrens title is indefeasible and
imprescriptible, the registered landowner
may lose his right to recover the possession
of his registered property by reason of
laches. Laches has been defined as
neglect or omission to assert a right,
taken in conjunction with lapse of time
and other circumstances causing
prejudice to an adverse party. The four
basic elements are: 1) conduct on the part
of the defendant, or of one under whom he
claims, giving rise to the situation of which
complaint is made and for which the
complaint seeks a remedy; 2) delay in
asserting the complainant’s rights, the
complainant having had knowledge or notice
of the defendant’s conduct and having been
afforded an opportunity to institute suit; 3)
lack of knowledge or notice on the part of
the defendant that the complainant would
assert the right on which he bases his suit;
and 4) injury or prejudice to the defendant in
the event relief is accorded to the
complainant or the suit is not held to be
barred.
Petitioner had reasonable ground to believe
that the property, being still in the name of
his predecessor in interest, continued to be
theirs, especially considering that the
annotation of the purported sale was done
only in 1982. That the petitioner and his co-
heirs waited until the death of Amando to try
and occupy the land is understandable since
any action may sow dissent within the
family. In determining whether a delay
in seeking to enforce a right
constitutes laches, the existence of a
confidential relationship between the
parties is an important circumstance
for consideration, a delay under such
circumstances not being so strictly
regarded as where the parties are
strangers to each other. The doctrine of
laches is not strictly applied between
near relatives, and the fact that parties
are connected by ties of blood or
marriage tends to excuse an otherwise
unreasonable delay. In addition, several
other factors militate against the finding of
laches on the part of the petitioner: a) no
annotation was made of Compra Y Venta on
the OCT or the TCT; b)neither respondents
nor any of their predecessors in interest
participated in any of the proceedings for
the issuance of the OCT or the TCT; and c)
the TCT bears out that the fact that the
purported Compra Y Venta was annotated
thereon only in 1982. It is most telling that
respondents, have themselves failed to have
the same property transferred in their name
or even only to have the sale annotated on
the title of the property.
Accessories Specialist Inc., a.k.a. Arts
21 Corporation vs. Alabanza
July 23, 2008
Nachura, J.
Labor Law. Promissory estoppel may arise
from the making of a promise, even though
without consideration, if it was intended that
the promise should be relied upon, as in fact
it was relied upon, and if a refusal to enforce
it would virtually sanction the perpetration
of fraud or would result in other injustice.
The principle of promissory estoppel is a
recognized exception to the three-year
prescriptive period enunciated in Article 291
of the Labor Code.
Labor Law. The posting of a bond is
indispensable to the perfection of an appeal
in cases involving monetary awards from the
decision of the Labor Arbiter. The filing of
the bond is not only mandatory but also a
jurisdictional requirement that must be
complied with in order to confer jurisdiction
upon the NLRC.
Facts:
On September 27, 2002, respondent
Alabanza filed a complaint against
petitioners Arts 21 and Hashimoto for and in
behalf of her husband for non-payment of
salaries, separation pay and 13th month pay.
Respondent’s husband was the Vice-
President, Manager and Director of Arts 21
and had been with the company from 1975
to 1997. He was compelled by the owner,
Hashimoto, to file his involuntary resignation
on October 17, 1997 on the ground that Arts
21 allegedly suffered losses. Respondent’s
husband demanded payment of his money
claims upon resignation but was told that
rank and file employees will be paid first and
thus waited for his turn. Respondent’s
husband made several demands but Arts 21
just kept on assuring him that he will be paid
his money claims. Respondent’s husband
died on August 5, 2002 with his claims still
unpaid.
Petitioners invoke Art. 291 of the
Labor Code and contend that respondent’s
husband voluntarily resigned in October,
1997, thus the cause of action has already
prescribed since the case was filed in 2002
only, beyond the three-year-period within
which money claims should be filed.
The Labor Arbiter rendered a decision
ordering petitioner to pay respondent over
P4M. Petitioners filed an appeal along with a
motion to reduce bond, attaching receipts
for cash bond amounting to P290K and
appeal fee for P170.00. The motion was
denied and petitioners were given 10 days
within which to file the required bond.
Petitioners filed a motion for reconsideration
which the NLRC denied ordering the
dismissal of the appeal for non-perfection
thereof due to non-compliance with the bond
requirement. The resolution became final
and executory and a writ of execution was
issued by the Labor Arbiter upon motion by
respondent. Petitioners filed a petition for
certiorari with the Court of Appeals praying
for the issuance of a TRO and a writ of
preliminary injunction. The petition was
dismissed.
Issue No. 1:
WON the cause of action of
respondent has already prescribed/
Held: NO.
Ratio:
Based on the findings of facts of the
Labor Arbiter, it was petitioner Arts 21 which
was responsible for the delay in the
institution of the complaint. When
petitioner’s husband filed his resignation he
immediately asked for the payment of his
money claims. However, the management of
Arts 21 promised him that he would be paid
immediately after the claim of the rank-and-
file employees had been paid. Jones relied
on this representation.
Promissory estoppel may arise from
the making of a promise, even though
without consideration, if it was intended that
the promise should be relied upon, as in fact
it was relied upon, and if a refusal to enforce
it would virtually sanction the perpetration
of fraud or would result in other injustice.
The principle of promissory estoppel is a
recognized exception to the three-year
prescriptive period enunciated in Article 291
of the Labor Code.
In order to make out a claim of
promissory estoppel, a party bears the
burden of establishing the following
elements: (1) a promise was reasonably
expected to induce action or forbearance;
(2) such promise did, in fact, induce such
action or forbearance; and (3) the party
suffered detriment as a result. All the
requisites are present in this case. The
Court, therefore, finds ample justification not
to follow the prescriptive period imposed
under Art. 291 of the Labor Code. Great
injustice will be committed if respondent’s
claims will be brushed aside on a mere
technicality, especially when it was
petitioner’s own action that prevented
respondent from interposing the claims
within the required period.
Issue No. 2:
WON the posting of the complete
amount of the bond in an appeal from the
decision of the Labor Arbiter to the NLRC is
an indispensable requirement for the
perfection of the appeal despite the filing of
a motion to reduce the amount of the appeal
bond.
Held: YES.
Ratio:
Article 223 of the Labor Code
mandates that in case of a judgment of the
Labor Arbiter involving a monetary award,
an appeal by the employer to the NLRC may
be perfected only upon the posting of a cash
or surety bond issued by a reputable
bonding company duly accredited by the
Commission, in the amount equivalent to the
monetary award in the judgment appealed
from.
 The posting of a bond is indispensable
to the perfection of an appeal in cases
involving monetary awards from the decision
of the Labor Arbiter.
The filing of the bond is not only
mandatory but also a jurisdictional
requirement that must be complied with in
order to confer jurisdiction upon the NLRC.
Non-compliance therewith renders the
decision of the Labor Arbiter final and
executory. This requirement is intended to
assure the workers that if they prevail in the
case, they will receive the money judgment
in their favour upon the dismissal of the
employer’s appeal. It is intended to
discourage employers from using an appeal
to delay or evade their obligation to satisfy
their employees’ just and lawful claims.
The failure of petitioners to comply
with the requirement of posting a bond
equivalent in amount to the monetary award
is fatal to their appeal. Section 6 of the New
Rules of Procedure of the NLRC mandates,
among others, that no motion to reduce
bond shall be entertained except on
meritorious grounds and upon the posting of
a bond in a reasonable amount in relation to
the monetary award. The NLRC has full
discretion to grant or deny their motion to
reduce the amount of the appeal bond. The
finding of the NLRC that petitioners did not
present sufficient justification for the
reduction thereof is generally conclusive
upon the Court absent a showing that the
denial was tainted with bad faith.
Furthermore, appeal is not a
constitutional right, but a mere statutory
privilege. Parties who seek to avail
themselves of it must comply with the
statutes or rules allowing it.
Petition DENIED.
Associated Bank (United Overseas Bank
[Phils.] v. Spouses Pronstroller
(July 14, 2008)
Subjects: Agency and Partnership,
Torts and Damages
Facts: In 1988, the spouses Vaca executed
a real estate mortgage in favor of petitioner
bank over their parcel of land in Quezon
City. For failure of the spouses Vaca to pay
their obligation, the subject property was
sold at public auction with the petitioner as
the highest bidder. TCT was issued to
petitioner. The spouses Vaca however
commenced an action for the nullification of
the real estate mortgage and the foreclosure
sale. Petitioner filed a petition for a writ of
possession. The cases reached the SC, which
eventually decided that the petitioner has a
right to possess the property.
During their pendency however, the
petitioner advertised the property for sale.
The spouses Pronstroller offered to purchase
the property. Said offer was made through
Atty. Soluta, Jr., the bank’s VP, Corporate
Secretary and a member of its Board of
Directors. Respondents paid P750th or 10%
of the purchase price. Petitioner, through
Atty. Soluta, and respondents executed a
Letter-Agreement containing the terms and
conditions of the sale. One of the terms was
that the Pronstrollers have to make 10%
deposit and balance of P6.75M to be
deposited under escrow agreement. This
was modified by another letter-agreement
which allowed the spouses to pay the
balance of the purchase price after the SC
resolution of the cases.
By the end of 1993, petitioner reorganized
its management and the new management
discovered that the spouses failed to pay the
balance of the purchase price. The bank
then rescinded the sale and suggested that
spouses come up with a new proposal. The
parties failed to reach an agreement and the
spouses informed the bank that they would
be enforcing their second Letter-Agreement.
Petitioner countered that it was not aware of
the existence of such agreement and Atty.
Soluta was not authorized to represent the
bank. Respondents commenced the suit for
specific performance. During the pendency
of this case, the bank sold the property to
spouses Vaca. Trial court ruled in favor of
the respondents and applied the doctrine of
“apparent authority”. CA upheld the RTC
decision. Hence, this petition for review on
certiorari.
Issue: 1) WON the petitioner is bound by the
letter-agreement signed by Atty. Soluta
under the doctrine of apparent authority
Held: Yes. The general rule is that, in the
absence of authority from the board of
directors, no person, not even its
officers, can validly bind a corporation.
The power and responsibility to decide
whether the corporation should enter into a
contract that will bind the corporation is
lodged in the board of directors. However,
the board may validly delegate some of its
functions and powers to officers, committees
and agents. The authority of such individuals
to bind the corporation is generally derived
from law, corporate by-laws or authorization
from the board, either expressly or
impliedly, by habit, custom, or
acquiescence, in the general course of
business. The authority of a corporate officer
or agent on dealing with third persons may
be actual or apparent. The doctrine of
apparent authority with special reference to
banks, had long been recognized in this
jurisdiction. Apparent authority is
derived not merely from practice. Its
existence may be ascertained through
1) the general manner in which the
corporation holds out an officer or
agent as having the power to act, or in
other words, the apparent authority to
act in general, with which it clothes
him; or 2) the acquiescence in his acts
of particular nature, with actual or
constructive knowledge thereof, within
or beyond the scope of his ordinary
powers. Accordingly, the authority to
act for and to bind a corporation may
be presumed from acts of recognition
in other instances, wherein the power
was exercised without any objection
from its board or shareholders. The bank
had previously allowed Atty. Soluta to enter
into the first agreement without a board
resolution; thus it had clothed him with
apparent authority to modify the same via
the second letter-agreement. It is not the
quantity of similar acts which establishes
apparent authority, but the vesting of a
corporate officer with the power to bind the
corporation. Naturally, the third person has
to rely upon the external manifestations of
corporate consent. The public has to rely on
the trustworthiness of bank officers and their
acts.
Issue: 2) WON the bank is liable for moral
damages
Held: Yes. Art. 2209 of the NCC allows the
recovery of moral damages in breaches of
contract where the party acted fraudulently
and in bad faith. As found by the CA,
petitioner undoubtedly acted fraudulently
and in bad faith in breaching the letter-
agreements. Despite the pendency of the
case in the RTC, it sold the subject property
to spouses Vaca. This is apart from its act of
unilaterally rescinding the subject contract.
Clearly, petitioner’s acts are brazen
attempts to frustrate the decision that the
court may render in favor of respondents. It
is likewise apparent that because of
petitioner’s acts, respondents were
compelled to litigate justifying the award of
attorney’s fees and expenses of litigation.
Ayson vs Spouses Paragas
Ynares-Santiago – 2008
Topic: Possession and Ownership;
Equitable Mortgage;
Facts
The controversy commenced with the filing
of an ejectment complaint by petitioner
Ayson against respondent-spouses Paragas
on the basis that petitioner is the registered
owner of the property being occupied by the
respondent-spouses who, according to
petitioner, are just occupying the said land
through the latter’s tolerance without rent.
MTCC decided in favor of petitioner. RTC
affirmed the MTCC Decision. During the
pendency of the appeal with the RTC,
respondent-spouses filed against petitioner
a complaint for declaration of nullity of Deed
of Sale, in effect questioning OWNERSHIP.
Respondent Felix Paragas (husband) alleged
that Ayson’s father made him sign a Deed of
Absolute Sale over Maxima’s (wife) property
under threat that Felix will be incarcerated.
RTC rendered its decision in favor of
respondent-spouses declaring the Deed of
Absolute Sale as an equitable mortgage.
Issue 1
WON the decision of the court in the
ejectment case where ownership was raised
as defense by the Spouses Paragas, is
conclusive on the issue of ownerhip such
that the complaint for declaration of nullity
of Deed of Sale by the respondent-spouses
is barred.
Decision 1
No. Action by the respondent-spouse is not
barred.
Ratio 1
It must be remembered that in ejectment
suits the issue to be resolved is merely the
physical possession over the property, i.e.,
possession de facto and not possession de
jure, independent of any claim of ownership
set forth by the party-litigants. Should the
defendant in an ejectment case raise the
defense of ownership in his pleadings and
the question of possession cannot be
resolved without deciding the issue of
ownership, the issue of ownership shall be
resolved only to determine the issue of
possession. The judgment rendered in such
an action shall be conclusive only with
respect to physical possession and shall in
no wise bind the title to the realty or
constitute a binding and conclusive
adjudication of the merits on the issue of
ownership. Therefore, such judgment shall
not bar an action between the same parties
respecting the title or ownership over the
property, which action was precisely
resorted to by respondent-spouses in this
case.
Issue 2
WON the Deed of Absolute Sale is an
equitable mortgage.
Decision 2
Yes. It is an equitable mortgage; hence, the
property is still under the ownership of the
spouses.
Ratio 2
The Civil Code enumerates the cases in
which a contract, purporting to be a sale, is
considered only as a contract of loan
secured by a mortgage as per Article 1604
in relation Article 1602. In this case, the
evidence before the RTC had established
that the possession of the subject property
remained with respondent-spouses despite
the execution of the Deed of Absolute Sale.
Issue 3
WON the Deed of Absolute Sale was
executed through fraud, making the said
contract merely voidable, and the action to
annul voidable contracts based on fraud
prescribed in four (4) years from the
discovery of fraud.
Decision 3 and Ratio 3
An equitable mortgage is a voidable
contract. As such, it may be annulled within
four (4) years from the time the cause of
action accrues. This case, however, not only
involves a contract resulting from fraud, but
covers a transaction ridden with threat,
intimidation, and continuing undue influence
which started when petitioner’s father Thus,
the four-year period should start from the
time the defect in the consent ceases.
Philippine Veterans Bank vs Monillas
Nachura – 2008
Topic: Effects of Prior Registration of
Mortgage shall Prevail over the Belated
Annotation of a Lis Pendens.
Benjamin Monillas executed a deed of sale
of his share over the property to his brother,
Ireneo. Ireneo then caused the transfer of
the title in his name. Ireneo mortgaged
twenty-two (22) lots to petitioner Philippine
Veterans Bank (PVB). Benjamin Monillas filed
for the nullification of the deed of sale and
for the recovery of the property, which the
RTC decided on his favor; hence, he filed for
the declaration of the nullity of the titles
issued in PVB's name. He caused the
annotation of notices of lis pendens relating
to the said case on the titles of the lots.
While the case remained pending, PVB
foreclosed the mortgage, PVB was the
highest bidder Benjamin Monillas,
The RTC ruled against PVB. The RTC
rationalized that while the annotation of the
notices of lis pendens succeeded the
registration of the mortgage, still the effect
of the notices was that PVB acquired
knowledge of an impediment against its
interest, and as a matter of fact, PVB
ignored the notices and slept on its rights, as
it did not intervene in the said civil case.
Issue
WON the prior registered mortgage and the
already concluded foreclosure proceedings
should prevail over the subsequent
annotation of the notices of lis pendens on
the lot titles.
Decision
Prior registered mortgage of PVB and the
foreclosure proceedings already conducted
prevail over Benjamin Monilla's subsequent
annotation of the notices of lis pendens on
the titles to the property.
Ratio
A prior registration of a lien creates a
preference; hence, the subsequent
annotation of an adverse claim cannot
defeat the rights of the mortgagee, or the
purchaser at the auction sale whose rights
were derived from a prior mortgage validly
registered. A contrary rule will make a prior
registration of a mortgage or any lien
nugatory or meaningless.
Bank of the Philippine Islands v.
Spouses Royeca
(July 21, 2008)
Subject: Obligations and Contracts
Facts : In 1993, spouses Royeca executed
and delivered to Toyota Shaw, Inc. a
promissory note for P577,008 payable in 48
equal monthly installments. It provides for a
penalty of 3% for every month or fraction of
a month that an installment remains unpaid.
To secure the payment of said promissory
note, the spouses executed a Chattel
Mortgage in favor of Toyota over a certain
motor vehicle. Toyota assigned the interest
over the Chattel with Far East Bank and
Trust Company (FEBTC) which eventually
merged with BPI. The bank claimed that the
spouses failed to pay 4 monthly
amortizations and made formal demands.
The respondents refused to pay on the
ground that they have paid their obligation
by issuing 8 postdated checks in different
amounts. FEBTC then filed a complaint for
replevin and damages. The spouses filed a
counterclaim for damages. They averred
that they were in good faith since they did
not receive any notice from the drawee
banks or from FEBTC that these checks were
dishonored. MeTC ruled for the spouses. On
appeal the RTC reversed, holding for the BPI.
The CA ruled for the spouses and reinstated
the MeTC decision.
Issues: WON tender of checks constitutes
payment
Held: No. Settled is the rule that
payment must be in legal tender. A
check is not legal tender and, therefore,
cannot constitute a valid tender of payment.
Since a negotiable instrument is only a
substitute for money and not money, the
delivery of such an instrument does not, by
itself, operate as payment. Mere delivery
of checks does not discharge the
obligation under a judgment. The
obligation is not extinguished and
remains suspended until the payment
by commercial document is actually
realized.
To establish their defense, the respondents
therefore had to present proof, not only that
they delivered the checks to the petitioner,
but also that the checks were encashed. The
respondents failed to do so. As a general
rule, one who pleads payment has the
burden of proving it. Even where the plaintiff
must allege non-payment, the general rule is
that the burden rests on the defendant to
prove payment, rather than on the plaintiff
to prove non-payment. The debtor has the
burden of showing with legal certainty that
the obligation has been discharged by
payment.
Corinthian Gardens Association vs
Spouses Tanjangcos and Spouses
Cuasos
June 27, 2008
Nachura, J.
Torts and Damages:
* (ELEMENTS/REQUISITES)
 In every tort case filed under
Article 2176, plaintiff has to prove by
a preponderance of evidence:
(1) the damages suffered by
the plaintiff;
(2) the fault or negligence of
the defendant or some other person
for whose act he must respond;
and
(3) the connection of cause and
effect between the fault or negligence
and the damages incurred.
* (DEFINITION)
A negligent act is an
inadvertent act; it may be merely
carelessly done from a lack of
ordinary prudence and may be
one which creates a situation
involving an unreasonable risk
to another because of the expectable
action of the other, a third person, an
animal, or a force of nature. A
negligent act is one from which an
ordinary prudent person in the
actor's position, in the same or
similar circumstances, would foresee
such an appreciable risk of harm
to others as to cause him not to do
the act or to do it in a more
careful manner.
* (TEST)
The test to determine the
existence of negligence in a particular
case may be stated as follows: Did
the defendant in committing the
alleged negligent act use that
reasonable care and caution which
an ordinary person would have used
in the same situation?
Facts:
Tanjangcos owned joined lots in
Corinthian Gardens. Spouse Cuasos,
on the other hand, own a lot adjacent
to the former’s.
Before the Cuasos constructed their
house, it was surveyed by De Dios
Realty (surveyor) as per
recommendation of the petitioner
association. Later on, the petitioner
approved the plans made by CB Paras
Construction (builder). Corinthian
conducted periodic ocular inspections
in order to determine compliance with
the approved plans pursuant to the
Manual of Rules and Regulations of
Corinthian (MRRC). Unfortunately,
after construction, the perimeter
fence of the Cuasos’ encroached upon
the Tanjangcos’ lot.
Issue:
Whether Corinthian was negligent
under the circumstances and, if so, whether
such negligence contributed to the injury
suffered by the Tanjangcos.
Decision:
Corinthian is negligent. Its approval of
the plan is tainted with negligence.
Ratio:
Petitioner is found negligent under the
TEST. The MRRC provides that no new
constructions can be started without the
approval of the petitioner association. Thus,
it is reasonable to assume that
Corinthian, through its representative, in the
approval of building plans, and in the
conduct of periodic inspections of on-
going construction projects within the
subdivision, is responsible in insuring
compliance with the approved plans,
inclusive of the construction of perimeter
walls.
Corinthian’s failure to prevent the
encroachment of the Cuasos’
perimeter wall into Tanjangcos’
property – despite the inspection
conducted – constitutes negligence
and, at the very least, contributed to
the injury suffered by the
Tanjangcos.

NB
1. The court here categorized the case
as falling under tort. Take note that
there are discussions regarding
similarity or difference of a QD and a
tort. (just thinking out loud)
2. This is another case where the court
ruled using Article 2176 despite the
fact that there is an existing
contractual obligation between the
parties. (just a thought to ponder on)
April 30, 2008
G.R. No. 140944
RAFAEL ARSENIO S. DIZON, IN HIS
CAPACITY AS THE JUDICIAL
ADMINISTRATOR OF THE ESTATE OF
THE DECEASED JOSE P. FERNANDEZ v.
COURT OF TAX APPEALS AND
COMMISSIONER OF INTERNAL REVENUE
Ponente
Justice Nachura
Subject
Estate Taxation – Allowable Deductions,
Date-of-Death Valuation Principle
Facts
Jose P. Fernandez died in November 7, 1987.
Thereafter, a petition for the probate of his
will was filed. The probate court appointed
Atty. Rafael Arsenio P. Dizon as
administrator of the Estate of Jose
Fernandez.
An estate tax return was filed later on which
showed ZERO estate tax liability. BIR
thereafter issued a deficiency estate tax
assessment, demanding payment of Php
66.97 million as deficiency estate tax. This
was subsequently reduced by CTA to Php
37.42 million. The CA affirmed the CTA’s
ruling, hence, the instant petition.
The petitioner claims that in as much as the
valid claims of creditors against the Estate
are in excess of the gross estate, no estate
tax was due. On the other hand,
respondents argue that since the claims of
the Estate’s creditors have been condoned,
such claims may no longer be deducted from
the gross estate of the decedent.
Issue
Whether the actual claims of creditors may
be fully allowed as deductions from the
gross estate of Jose despite the fact that the
said claims were reduced or condoned
through compromise agreements entered
into by the Estate with its creditors
Decision
YES.
Ratio
Following the US Supreme Court’s ruling in
Ithaca Trust Co. v. United States, the Court
held that post-death developments are not
material in determining the amount of
deduction. This is because estate tax is a
tax imposed on the act of transferring
property by will or intestacy and, because
the act on which the tax is levied occurs at a
discrete time, i.e., the instance of death, the
net value of the property transferred should
be ascertained, as nearly as possible, as of
the that time. This is the date-of-death
valuation rule.
The Court, in adopting the date-of-death
valuation principle, explained that:
• First. There is no law, nor do we
discern any legislative intent in our
tax laws, which disregards the date-
of-death valuation principle and
particularly provides that post-death
developments must be considered in
determining the net value of the
estate. It bears emphasis that tax
burdens are not to be imposed, nor
presumed to be imposed, beyond
what the statute expressly and clearly
imports, tax statutes being construed
strictissimi juris against the
government.
 • Second. Such construction finds
relevance and consistency in our
Rules on Special Proceedings wherein
the term "claims" required to be
presented against a decedent's estate
is generally construed to mean debts
or demands of a pecuniary nature
which could have been enforced
against the deceased in his lifetime,
or liability contracted by the deceased
before his death. Therefore, the
claims existing at the time of death
are significant to, and should be made
the basis of, the determination of
allowable deductions.
EZTINOZO vs. CA
• FEBRUARY 12, 2008
• NACHURA, J.
• SUBJECT AREA: Rule 45; Rule 65
• NATURE: Petition for Certiorari under
Rule 65
• FACTS: Petitioner was charged with
the crime of estafa. It was alleged that
petitioner represented herself to the
complainants that she was the owner
of a recruitment agency and that she
was recruiting workers to be sent
abroad. She asked from these
complainants the payment of
placement and processing fees
totaling P15,000.00. Complainants
were promised that they would be
deployed by July 1986. However,
private complainants never left the
country.
• In her defense, she contended that
she was merely an agent of the real
recruiter, a certain Fe Corazon
Ramirez, and the money she received
from the Complainants was remitted
to Ramirez.
• The RTC found her guilty of seven
counts of estafa. The petitioner
appealed the case to the CA. The CA
affirmed the ruling of the RTC.
• On May 30, 2001, within the 15-day
reglementary period to file a motion
for reconsideration or a petition for
review, petitioner filed with the
appellate court a Motion for Extension
of Time to File a Motion for
Reconsideration. On June 28, 2001,
the CA denied the said motion
pursuant to Rule 52, Section 1 of the
Rules of Court and Rule 9, Section 2 of
the Revised Internal Rules of the
Court of Appeals (RIRCA).
• Petitioner then filed a Motion for
Reconsideration of the June 28, 2001
Resolution of the CA. The appellate
court denied the same, on August 17,
2001.
• Hence, this instant Petition for
Certiorari under Rule 65.
• ISSUE: WON petition for certiorari
under Rule 65 is the proper remedy.
• HELD: It was not the proper remedy.
The petitioner should have filed it
under Rule 45.
• RATIO: Section 1 of Rule 45 of the
Rules of Court expressly provides that
a party desiring to appeal by
certiorari from a judgment or final
order or resolution of the CA may file
a verified petition for review on
certiorari. Petition for certiorari
under Rule 65 lies only when the
judgment or final order was
rendered without or in excess of
jurisdiction, or with grave abuse
of discretion and where there is
no appeal or plain, speedy and
adequate remedy in the ordinary
course of law.
• In this case, appeal by certiorari was
available to petitioner. There was no
grave abuse of discretion committed
by the CA in its decision. The CA
correctly denied petitioner’s Motion
for Extension of Time to File a Motion
for Reconsideration. The rule is that
the 15-day reglementary period for
 appealing or filing a motion for
reconsideration or new trial cannot be
extended, except in cases before the
Supreme Court, as one of last resort,
which may, in its sound discretion
grant the extension requested This
rule also applies even if the motion is
filed before the expiration of the
period sought to be extended.
• DISPOSITVE: Petition for Certiorari
dismissed
FAR EAST BANK & TRUST COMPANY,
Petitioner, - versus - GOLD PALACE
JEWELLERY CO., as represented by Judy
L. Yang, Julie Yang-Go and Kho Soon
Huat, Respondent
• FACTS: Samuel Tagoe, a foreigner,
purchased from Gold Palace (SM
North) jewelries worth PHP
258,000.00. As payment, he offered a
foreign draft issued by the United
Overseas Bank of Malaysia addressed
to Land Bank, and payable to Gold
Palace for PHP 380,000.00. Judy
Yang, the assistant GM of Gold Palace
inquired from Far East Bank (SM
North) regarding the draft’s nature.
The teller told her that it was similar
to a manager’s check but advised her
to not release the jewelry until the
draft has been cleared. Following the
advice, Yang Issued a cash invoice to
Tagoe & told him that the jewelries
would be released when the draft had
been cleared. Julie Yang-Go, the
manager of Gold Palace, deposited
the draft in the company’s account
with Far East Bank SM North. The
latter presented it for clearing to LBP,
the drawee bank, who cleared the
same. United Overseas account with
LBP was debited and Gold Palace’s
account with Far East was credited
with the amount stated in the draft.
The pieces of jewelry were then
released to Tagoe and because the
amount in the draft was more than
the value of the goods, a check for
PHP 122,000 was issued to him. It
was encashed by Tagoe.
• 3 weeks after, LBP informed Far East
that the amount in the foreign draft
had been materially-altered from PHP
300.00 to PHP 380,000.00 and that
they will be returning it. Far East thus
refunded the amount paid by LBP.
Thus, Far East had to seek
reimbursement from Gold Palace but
they were only able to debit PHP
168,053.37, which was done without a
prior written notice to Gold Palace as
they only informed them by phone.
They thus demanded the difference of
PHP 211,946.64 from Gold Palace. As
the latter did not respond favorably,
Far East instituted a civil case for sum
of money and damages. Gold Palace
denies the allegations in the
complaint and claims as their defense
that the subject foreign draft has been
cleared and it was not they who
caused the alteration. The RTC ruled
in favor of Far East but this was
reversed by the CA as Far East failed
to undergo the proceedings on the
protest and thus, Far East could not
charge Gold Palace on its secondary
liability as an indorser. It further said
that the drawee bank had cleared the
check and its remedy should be
against the part responsible for the
alteration.
• ISSUE: WHETHER OR NOT FAR
EAST BANK COULD PROCEED
AGAINST GOLD PALACE.
• HELD: No.
• RATIO: The acceptor, by accepting
the instrument, engages that he will
pay it according to the tenor of his
acceptance. This provision applies
with equal force in case the drawee
pays a bill without having previously
accepted it. His actual payment of the
amount in the check implies not only
his assent to the order of the drawer
and a recognition of his corresponding
 obligation to pay the aforementioned
sum, but also, his clear compliance
with that obligation. Actual payment
by the drawee is greater than his
acceptance, which is merely a
promise in writing to pay. The
payment of a check includes its
acceptance.
• Unmistakable herein is the fact that
the drawee bank cleared and paid the
subject foreign draft and forwarded
the amount thereof to the collecting
bank. LBP was liable on its payment
of the check according to the tenor of
the check at the time of payment,
which was the raised amount. Thus,
LBP could no longer repudiate the
payment it erroneously made to a due
course holder. Gold Palace was not a
participant in the alteration of the
draft, was not negligent, and was a
holder in due course—it received the
draft complete and regular on its face,
before it became overdue and without
notice of any dishonor, in good faith
and for value, and absent any
knowledge of any infirmity in the
instrument or defect in the title of the
person negotiating it.
• This construction and application of
the law is in line with the sound
principle that where one of two
innocent parties must suffer a loss,
the law will leave the loss where it
finds it. It further reasserts the
usefulness, stability and currency of
negotiable paper without seriously
endangering accepted banking
practices. Banking institutions can
readily protect themselves against
liability on altered instruments either
by qualifying their acceptance or
certification, or by relying on forgery
insurance and special paper which will
make alterations obvious. The drawee
bank, in most cases, is in a better
position, compared to the holder, to
verify with the drawer the matters
stated in the instrument.
• Thus, considering that, in this case,
Gold Palace is protected by Section 62
of the NIL, its collecting agent, Far
East, should not have debited the
money paid by the drawee bank from
respondent company’s account. When
Gold Palace deposited the check with
Far East, the latter, under the terms of
the deposit and the provisions of the
NIL, became an agent of the former
for the collection of the amount in the
draft. The subsequent payment by the
drawee bank and the collection of the
amount by the collecting bank closed
the transaction insofar as the drawee
and the holder of the check or his
agent are concerned, converted the
check into a mere voucher, and, as
already discussed, foreclosed the
recovery by the drawee of the amount
paid. This closure of the transaction is
a matter of course.
• As the transaction in this case had
been closed and the principal-agent
relationship between the payee and
the collecting bank had already
ceased, the latter in returning the
amount to the drawee bank was
already acting on its own and should
now be responsible for its own
actions. Neither can petitioner be
considered to have acted as the
representative of the drawee bank
when it debited respondent’s account,
because, as already explained, the
drawee bank had no right to recover
what it paid. Likewise, Far East
cannot invoke the warranty of the
payee/depositor who indorsed the
instrument for collection to shift the
burden it brought upon itself. This is
precisely because the said
indorsement is only for purposes of
collection which, under Section 36 of
the NIL, is a restrictive indorsement. It
 did not in any way transfer the title of
the instrument to the collecting bank. Held/Ratio: YES.

• CA ruling is affirmed to the extent that • Proof of knowledge of and

Far East could not debit Gold Palace’s participation in the publication is
account. Its remedy is not against not required, if the accused has
been specifically identified as
Gold Palace but against the drawee-
“author, editor, or proprietor” or
bank or the person responsible for the “printer/publisher” of the
alteration. publication.

o Petitioner was not only the

“publisher,” but also the
Title: Fermin v. People “president” and
Date: 28 March 2008 “chairperson.”
Ponente: J. Nachura  Petitioner’s
Subject/Topic: Criminal Law, Libel criminal guilt should be
affirmed, whether or not
Facts: she had actual
knowledge and
• Cristy Fermin is the publisher and participation.
Bogs Tugas is the editor-in-chief of
Gossip Tabloid • The elements of libel were
• The June 14, 1995 headline and lead present.
story of the tabloid says that it is
improbable for Annabelle Rama to go o Evident imputation of the
to the US should it be true that she is crime of malversation
evading her conviction in an estafa (converting money for personal
case here in the Philippines for she use), of vices or defects for
and husband Eddie have more being fugitives from the law
problems/cases to confront there. This (evading prosecution in
was said to be due to their, especially America) and of being a
Annabelle's, using fellow Filipinos’ wastrel
money, failure to remit proceeds to o Attribution made publicly.
the manufacturing company of the Gossip Tabloid had a
cookware they were selling and not nationwide circulation.
being on good terms with the latter. o The victims were identified
• Annabelle and Eddie filed libel cases and identifiable.
against Fermin and Tugas before RTC o The article reeks of malice, as
of QC, Br. 218. it tends to cause the dishonor,
• RTC: Fermin and Tugas found guilty of discredit, or contempt of the
libel. complainants.
• CA: Tugas was acquitted on account  Malice in law - the
of non-participation but Fermin's article was malicious in
conviction was affirmed. itself; the imputations
• Fermin's motion for reconsideration were false.
was denied hence, this petition. She  Malice in fact - there
argues that she had no knowledge was motive to talk ill
and participation in the publication of against complainants
the article, that the article is not during the electoral
libelous and is covered by the campaign as Fermin is a
freedom of the press. close friend of Eddie's
opponent in the
Issue: WON Cristy Fermin is guilty Congressional race
of libel?
 • While complainants are considered
public figures for being personalities
in the entertainment business, media
people do not have the unbridled
license to malign their honor and
dignity by indiscriminately airing
fabricated and malicious comments,
whether in broadcast media or in
print, about their personal lives.
Note: CA erred in acquitting Tugas, he
being the editor-in-chief. But the SC
cannot reinstate the ruling of the trial
court convicting Bogs Tugas because
with his acquittal by the CA as that would
run afoul of his constitutional right
against double jeopardy.
Fernandez v. Comelec and Rodriguez
June 30, 2008; Nachura
Election Law; Appelate jurisdiction of
Comelec
Facts:
July 15, 2002 SK elections of Barangay
Pandan del Sur, Pandan, Catanduanes, resp.
Rodriguez won as SK chairman over pet.
Fernandez. Fernandez filed a protest in the
MCTC of Pandan. On January 12, 2004, MCTC
declared Fernandez as the winner and
ordered her proclamation. Rodriguez
appealed to Comelec, which, on Dec. 4,
2006 reversed the MCTC decision. Motion for
recon was denied, so Fernandez went to SC
arguing that that the Comelec has no
appellate jurisdiction over contests involving
SK officials decided by trial courts of limited
jurisdiction.
Issue: WON Comelec has jurisdiction.
Held: YES.
The Constitution [Art. IX-C, Sec. 2(2)] vests
in the COMELEC appellate jurisdiction over
all contests involving elective barangay
officials decided by trial courts of limited
jurisdiction. Construed in relation to the
provision in RA 7160 [LocGovCode] that
includes in the enumeration of barangay
officials the SK chairman,[Sec. 387(a)] the
constitutional provision indeed sanctions the
appellate review by the COMELEC of election
protests involving the position of SK
chairman, as in the instant case. Hence, we
find nothing improper in the COMELEC’s
assumption of jurisdiction over respondent’s
appeal.
Petitioner’s reliance on our ruling in Mercado
v. Board of Election Supervisors[1995] that
contests involving the SK chairman do not
fall within Section 252 of the Omnibus
Election Code and paragraph 2, Section 2,
Article IX-C of the Constitution, is misplaced.
The doctrine therein, as we explained in the
much later Marquez v. Commission on
Elections[1999], is no longer controlling.
Thus, the present rule is that trial courts of
limited jurisdiction have exclusive original
jurisdiction over election protests involving
barangay officials, which include the SK
chairman, and that the COMELEC has the
exclusive appellate jurisdiction over such
protests [Batoy v. Judge Calibo, Jr., 445 Phil.
547, 553-554 (2003); Beso v. Aballe, 382
Phil. 862, 870 (2000)].
Note: SC also dismissed the case as moot
and academic. By the time the case reached
the SC, the term of office of the SK chair
already expired. The discussion on Comelec
jurisdiction is for the guidance of the bench
and bar.
Ferrer v. Ombudsman
[COL. ARTURO C. FERRER (RET.), petitioner,
vs. HON. OFFICE OF THE OMBUDSMAN,
ROMEO G. DAVID, Former Administrator,
JOEMARI D. GEROCHI, Administrator,
National Food Authority (NFA), FRANCISCO
G. CORDOBA, JR., chairman, PBAC,
MARCELINO B. AGANA IV, EVANGELINE V.
ANAGO, BENJAMIN D. JAVIER, and CELIA Z.
TAN, Members, PBAC, respondents]
Aug. 6, 2008; Nachura
Ombudsman jurisdiction/authority
Facts:
The National Food Authority (NFA) needed
security services nationwide. The
Prequalification, Bids and Awards Committee
(PBAC) was tasked to undertake the pre-
qualification of prospective bidders, etc. The
bidding was held in June 1994, and among
the bidders were Odin Security Agency
(owned by petitioner) and Metroguard and
Protective Security Agency of the Philippines
(Metroguard) and Davao Security and
Investigation Agency, Inc. (DASIA).
Metroguard and DASIA were admittedly
“sister” agencies. Having perceived a
collusion between DASIA and Metroguard,
the other participating bidders, including
Odin, protested. NFA sought opinion of the
Office of the Govt. Corp. Counsel (OGCC),
which stated that bid proposal of both
Metroguard and DASIA should be rejected
for being collusive. Consequently, the bids of
the two agencies were rejected by NFA.
DASIA went to RTC, which ruled that the
rejection of DASIA’s bid invalid and illegal, in
violation of its right to due process. David
and Cordoba of NFA appealed to CA, but
during the pendency of the appeal,
respondents proceeded to award the
security service contracts to both
Metroguard and DASIA (kasi binding pa yung
ruling ng RTC na kasali sila sa bidding; at ok
din ung bids nila). This prompted petitioner
to file on August 23, 1996 a Complaint-
Affidavit against respondents before the
Office of the Ombudsman, but it was
dismissed outright for lack of merit based on
the Evaluation Report of Graft Investiation
Officer (GIO) Gruta dated October 25, 1996.
The said report was approved by then
Ombudsman Aniano A. Desierto on
November 27, 1996. Petitioner went to SC
on the following:
Issues:
1. Whether or not petitioner’s complaint
(OMB-0-96-1986) may be dismissed
on the basis of a resolution in another
complaint (OMB-0-96-1552) filed by
another complainant (Eugenio M.
Revita).
Petitioner contends that in issuing the
questioned Evaluation Report, GIO Gruta
failed to consider the merits of his complaint
but simply adopted the Resolution of GIO
Ginez-Jabalde in OMB-0-96-1552 which is
tantamount to a violation of his right to due
process. We disagree.
The prerogative as to whether or not a
complaint may be given due course belongs
exclusively to the Office of the Ombudsman,
through its assigned investigation officer,
who in this case was GIO Gruta. It is
apparent that GIO Gruta had carefully
studied the complaint which, indeed, raised
the very same arguments as in OMB-0-96-
1552 pertinent to the alleged collusion
between Metroguard and DASIA in the very
same public bidding held by NFA on June 21,
1994 and the purported unwarranted
benefits given to these security agencies by
respondents when they were awarded the
security service contracts for the NFA areas
of operations said agencies tendered their
bids for. Concurring with the
recommendation of GIO Ginez-Jabalde in
OMB-0-96-1552 to dismiss the complaint,
similarly approved by then Ombudsman
Desierto, does not necessarily indicate that
GIO Gruta did not exercise her independent
judgment in this case in concluding that the
complaint lodged by petitioner lacks merit.
To conduct a preliminary investigation when
deemed unnecessary as the same issues
being raised had already been resolved
would be superfluous.
2. Whether or not the decision of the
RTC-Davao, Br. 17, in Civil Case No.
23, 531 may be validly used as the
basis by respondents for the award of
the contracts for security services in
favor of Metroguard and DASIA,
notwithstanding the pendency of the
appeal of the decision with the Court
of Appeals, and despite the opinion of
the OGCC that Metroguard and DASIA
must be disqualified from the public
bidding on the ground of collusion
between them.
It bears mentioning that the Decision of the
RTC, Branch 17, Davao City already passed
upon the opinions of the OGCC and ruled
that there was no collusion between
Metroguard and DASIA. Since the CA had
not reversed and set aside the decision of
the RTC, Branch 17, Davao City at the time
GIO Gruta reviewed petitioner’s complaint
for alleged violation of Section 3(e) and (g)
of R.A. No. 3019, the RTC Decision remained
controlling. Thus, GIO Gruta was correct in
dismissing the charge for lack of merit.
3. Whether or not the Office of the
Ombudsman has no authority to
investigate charges of violation of
Republic Act 5487, otherwise known
as the Private Security Agency Law, to
determine the criminal liability of
respondents.
The jurisdiction of the Office of the
Ombudsman to investigate and prosecute
criminal cases pertains to violations of R.A.
No. 3019, as amended, R.A. No. 1379, as
amended, R.A. No. 6713, Title VII, Chapter II,
Section 2 of the Revised Penal Code, and
such other offenses committed by public
officers and employees in relation to office.
On the other hand, in R.A. No. 5487, it is the
Philippine National Police (PNP) that
exercises general supervision over the
operation of all private detective and
watchman security guard agencies. It has
the exclusive authority to regulate and to
issue the required licenses to operate
security and protective agencies. In this
case, in the absence of a declaration from
the PNP that a violation of the said law was
committed by Metroguard and DASIA, the
act of the NFA officials in awarding the
security service contracts to the said
agencies after a showing that their bids
were the most advantageous to the
government is presumed to be valid.
Verily, the Court has almost always adopted,
and quite aptly, a policy of non-interference
in the exercise of the Ombudsman’s
constitutionally mandated powers. The
Ombudsman has the power to dismiss a
complaint outright without going through a
preliminary investigation. To insulate the
Office of the Ombudsman from outside
pressure and improper influence, the
Constitution, as well as R.A. No. 6770, saw
fit to endow that office with a wide latitude
of investigatory and prosecutory powers,
virtually free from legislative, executive, or
judicial intervention. If the Ombudsman,
using professional judgment, finds the case
dismissible, the Court shall respect such
findings unless tainted with grave abuse of
discretion. The Ombudsman has discretion
to determine whether a criminal case, given
its attendant facts and circumstances,
should be filed or not. It is basically his
judgment call.
FIGUEROA vs. PEOPLE OF THE
PHILIPPINES
JULY 14, 2008
NACHURA, J.
SUBJECT AREA: Estoppel by laches
NATURE: Petition for review on certiorari
FACTS: Petitioner was charged with the
crime of reckless imprudence resulting in
homicide. The RTC found him guilty. In his
appeal before the CA, the petitioner, for the
first time, questioned RTCs jurisdiction on
the case.
The CA in affirming the decision of the RTC,
ruled that the principle of estoppel by laches
has already precluded the petitioner from
questioning the jurisdiction of the RTC—the
trial went on for 4 years with the petitioner
actively participating therein and without
him ever raising the jurisdictional infirmity.
The petitioner, for his part, counters that the
lack of jurisdiction of a court over the
subject matter may be raised at any time
even for the first time on appeal. As undue
delay is further absent herein, the principle
of laches will not be applicable.
Hence, this petition.
ISSUE: WON petitioner’s failure to raise the
issue of jurisdiction during the trial of this
case, constitute laches in relation to the
doctrine laid down in Tijam v. Sibonghanoy,
notwithstanding the fact that said issue was
immediately raised in petitioner’s appeal to
the CA
HELD: No.
RATIO: Citing the ruling in Calimlim vs.
Ramirez, the Court held that as a general
rule, the issue of jurisdiction may be raised
at any stage of the proceedings, even on
appeal, and is not lost by waiver or by
estoppel.
Estoppel by laches may be invoked to
bar the issue of lack of jurisdiction only
in cases in which the factual milieu is
analogous to that of Tijam v.
Sibonghanoy.
Laches should be clearly present for
the Sibonghanoy doctrine to be
applicable, that is, lack of jurisdiction must
have been raised so belatedly as to warrant
the presumption that the party entitled to
assert it had abandoned or declined to
assert it.
In Sibonghanoy, the party invoking lack of
jurisdiction did so only after fifteen years
and at a stage when the proceedings had
already been elevated to the CA.
Sibonghanoy is an exceptional case because
of the presence of laches.
In the case at bar, the factual settings
attendant in Sibonghanoy are not present.
Petitioner Atty. Regalado, after the receipt of
the Court of Appeals resolution finding her
guilty of contempt, promptly filed a Motion
for Reconsideration assailing the said court’s
jurisdiction based on procedural infirmity in
initiating the action. Her compliance with
the appellate court’s directive to show cause
why she should not be cited for contempt
and filing a single piece of pleading to that
effect could not be considered as an active
participation in the judicial proceedings so
as to take the case within the milieu of
Sibonghanoy. Rather, it is the natural fear
to disobey the mandate of the court that
could lead to dire consequences that
impelled her to comply.
The petitioner is in no way estopped by
laches in assailing the jurisdiction of the
RTC, considering that he raised the lack
thereof in his appeal before the appellate
court. At that time, no considerable period
had yet elapsed for laches to attach.
DISPOSITIVE: Petition for review on
certiorari is granted. Criminal case is
dismissed.
Flourish Maritime Shipping vs.
Almanzor
March 14, 2008
Nachura, J.
Labor Law. The choice of which amount to
award an illegally dismissed overseas
contract worker, i.e., whether his salaries for
the unexpired portion of his employment
contract, or three (3) months’ salary for
every year of the unexpired term, whichever
is less, comes into play only when the
employment contract concerned has a term
of at least one (1) year or more.
Facts:
Respondent Almanzor entered into a
two-year employment contract with
petitioner Flourish Maritime Shipping as
fisherman and was deployed to Taipei,
Taiwan. While on board, he was given an
instruction which he did not understand and
therefore was unable to obey. The master of
the vessel struck him and refused his
requested medical assistance. Respondent
was repatriated to the Philippines but was
not redeployed as promised, thus the
complaint for illegal dismissal, payment for
the unexpired portion of his employment
contract, earned wages, moral and
exemplary damages plus attorney’s fees.
Petitioners Flourish Maritime Shipping
and Uy contended that respondent
voluntarily resigned and that the same did
not comply with the grievance machinery
and arbitration clause embodied in the
employment contract.
The Labor Arbiter rendered a decision
in favour of respondent, awarding him six
months of his monthly pay (3months for
every year of the unexpired term). On
appeal, the NLRC affirmed in toto the Labor
Arbiter’s findings. The Court of Appeals, on
petition for certiorari, modified the NLRC
decision by increasing the monetary award
due respondent. The Court of Appeals
awarded respondent the unexpired portion
of the first year (11 months and 4 days) and
3 months for the unexpired second year, for
a total of 14 months and 4 days.
Issue No. 1:
WON respondent was illegally
dismissed from employment.
Held: YES.
Ratio:
Petitioners, as concluded by the Labor
Arbiter, failed to adduce any convincing
evidence to establish its claim that
respondent voluntarily residned from
employment. Likewise, the NLRC held that
petitioners failed to show that respondent
was not physically fit to perform work due to
his old age. Neither was it proved that the
employment contract indeed provided a
grievance machinery. Both labor tribunals
correctly concluded, as affirmed by the
Court of Appeals, that respondent was not
redeployed for work, in violation of their
employment contract. Perforce, the
termination of respondent’s services is held by the Labor Arbiter and affirmed by
without just or valid cause. the NLRC.

Issue No. 2: Galero vs. CA

WON the award made by the Court of

Appeals was contrary to law.
Facts:
Held: YES.
Ratio:
Section 10 of R.A. 8042 provides:
Section 10. Money Claims. – x x
x compensation from PPA in spite of the
xxxx
In case of termination of
overseas employment without just,
valid or authorized cause as defined
by law or contract, the worker shall be
entitled to the full reimbursement of
his placement fee with interest at
twelve percent (12%) per annum, plus
his salaries for the unexpired portion
of his employment contract or for
three (3) months for every year of the
unexpired term, whichever is less.
x x x x.
The correct interpretation of this
provision was settled in Marsaman Manning
Agency Inc. v. NLRC where this Court held
that “the choice of which amount to award
an illegally dismissed overseas contract
worker, i.e., whether his salaries for the
unexpired portion of his employment
contract, or three (3) months’ salary for
every year of the unexpired term, whichever
is less,” comes into play only when the
employment contract concerned has a term
of at least one year or more.
1. Resident Ombudsman for Phil.Ports
Authority-Port Management Office
(PPA-PMO) received two anonymous
letters.
2. The first letter alleged that Security
Guard Geocadin was receiving
fact that Geoacadin is assigned in and
is also receiving salary from
NAPOCOR.
3. Second letter alleged that Mr. Elizalde
(Port Manager of PPA) and Mr. Galero
(acting Port Police Division
Commander) was receiving shares in
the salaries of ghost employees like
Geocadin in PPA.
4. Resident Ombudsman Caigoy
recommended the filing of criminal
and administrative complaint against
Galero for dishonesty, falsification of
public documents and causing undue
injury to the government. Complaint
against Elizalde however is dismissed
for insufficient evidence.
5. Office of the Ombudsman for Visayas
found Galero guilty and recommended
Galero’s dismissal from service,
forfeiture of benefits and perpetual
disqualification from holding public
office.
6. CA affirmed the decision of the Office
of the Ombudsman Visayas.
Issue: Whether or not Galero is
administratively liable

The employment contract involved in

the instant case covers a two-year period Held: Yes but only for simple neglect of
but the overseas contract worker actually duty.
worked for only 26 days prior to his illegal
dismissal. Thus, the three months’ salary
rule applies. Respondent, therefore, is
Ratio:
entitled to six (6) months’ salary as correctly
1. That Geocadin is security guard of
PPA-PMO assigned to inspect
equipment at different PPA stations
was sufficiently established by the
records. He is therefore not a ghost
employee. Hence, nothing was
falsified and Galero is not dishonest in
certifying the DTR of Geocadin.
2. There was also no showing in the
records that Galero was in conclusion
with Geocadin in defrauding the
government, hence Galero cannot be
said to have intended to cause undue
injury to the Government.
3. Galero however is guilty of simple
neglect in failing to implement
measures which could have prevented
Geocadin from defrauding the
government.
4. Simple neglect of duty is defined as
the failure to give proper attention to
a task expected from an employee
resulting from either carelessness or
indifference.
5. In this case, had Galero performed the
task required of him, that is, to
monitor the employees’ attendance,
he would have discovered that indeed
Mr. Geocadin was dividing his time
between PPA and Napocor. Though
not required to know every detail of
his subordinates’ whereabouts, Galero
should have implemented measures
to make sure that the government
was not defrauded. As he was
required to sign Mr. Geocadin’s DTR,
Galero should have verified the
truthfulness of the entries therein.
6. Indeed, Galero neglected his duty
which caused prejudice to the
government in that Mr. Geocadin was
paid twice for his services.
7. These facts, taken together, are
sufficient to make Galero liable for
simple neglect of duty, but insufficient
to make him answer for charges of
dishonesty and falsification of
document.
Title: Luces v. Damole
Date: 14 March 2008
Ponente: J. Nachura
Subject/Topic: Criminal Law, Estafa
Facts:
• Petitioner Luces and respondent
Damole agreed that Luces would sell
the P.O. cards issued by the latter to
the former's customers. Luces would
get her commission therefrom in the
form of marked up prices. Petitioner
further agreed that she would hold
the P.O. cards as trustee of the
private complainant with the
obligation to remit the proceeds of the
sale thereof less the commission, and
before such remittance, to hold the
same in trust for the latter. Lastly,
petitioner undertook to return the
unsold PO cards.
• Initially, petitioner complied with her
obligations, but later she defaulted in
remitting the proceeds. Some P.O.
cards were even used by petitioner
herself and her relatives, but they did
not pay the corresponding price, nor
remitted the proceeds.
• Damole filed a civil case for collection
of money and a criminal case for
estafa.
1. Petitioner - found guilty
of violation of Article 315(1) (b)
(through misappropriation or
conversion).
2. CA affirmed the RTC
decision but with modification
on the penalty.
• Damole filed a petition before
the SC, arguing that the CA erred in
convicting her and that she is only
liable civilly and not criminally.
Issue: WON Luces is criminally
liable for estafa?
Held/Ratio: YES.
The elements of estafa through
misappropriation or conversion (Article
315(1) (b)) were present.
1. That the money, goods or other
personal property is received by the
offender in trust, or on commission, or
for administration, or under any other
obligation involving the duty to deliver
or return the same.
o It was established that
petitioner received from the
private complainant the subject
PO cards to be sold by the
former on commission, as
evidenced by their Trust Receipt
Agreements
2. That there be misappropriation or
conversion of such money or property
by the offender or denial on his part of
such receipt.
o Using or disposing
of P.O. cards by Luces for her
and her relatives’ own personal
purpose and benefit, constitutes
breach of trust, unfaithfulness
and abuse of confidence.
o The failure of
LUCES to account for them
establishes the felony of estafa
through abuse of confidence by
misappropriation or conversion.
3. That such misappropriation or
conversion or denial is to the prejudice of
another
1. Damole was deprived of
her right to enjoy the proceeds
of the sale as a result of
petitioner’s unauthorized use of
the PO cards.
4. That there is a demand made by the
offended party on the offender.
o In spite of repeated
demands made upon Luces by
Damole, she has failed and
refused to comply with her
obligation.
The civil case filed by the
Damole is not a prejudicial
question. The issues were
different.
• Civil case - Damole’s right to
recover from Luces the amount
representing the value of the P.O.
cards allegedly embezzled by the
latter.
• Criminal case - WON Luces’
failure to account for the proceeds of
the sale of P.O. cards and/or to return
the unsold P.O. cards as Damole’s
trustee constitutes estafa under Art.
315 par. 1 (b) of the RPC.
MATA vs AGRAVANTE
August 6, 2008
Nachura, J.
TORTS AND DAMAGES:
* DEFINITION
Article 19 which contains what
is commonly referred to as the
principle of abuse of rights, is
not a panacea for all human
hurts and social grievances.
The object of this article is to
set certain standards which
must be observed not only in
the exercise of one’s rights but
also in the performance of
one’s duties.
STANDARDS (A19)
Act with justice, Give everyone
his due, and Observe honesty and
good faith.
* DEFINITION
Article 21 refers to acts contra
bonos mores
ELEMENTS
(1) an act which is legal; (2) but
which is contrary to morals,
good custom, public order or
public policy; and (3) is done
with intent to injure.
* The common element under
Articles 19 and 21 is that the
act complained of must be
intentional, and attended with
malice or bad faith.

* There is no hard and fast
rule which can be applied to
determine whether or not the
principle of abuse of rights may
be invoked. The question of
whether or not this principle
has been violated, depends on
the circumstances of each
case.
Facts
Mata owns a security agency.
Respondents were former security
gurads who filed a complaint in the
NLRC for non-payment of salaries and
wages. They then subsequently filed
an affidavit complaint with the PNP,
copies were then sent to various
offices including the Office of the
President and the DPWH, petitioner’s
biggest client.
Issue
Whether or not respondents
furninshing of copies to the PNP,
DPWH etal was tainted with bad faith
and hence liable for damages.
Decision
Respondents not liable. There was no
malicious intent to injure petitioner’s
good name and reputation. The
respondents merely wanted to call the
attention of responsible government
agencies in order to secure
appropriate action upon an erring
private security agency and obtain
redress for their grievances.
Ratio
In filing the letter-complaint with the
Philippine National Police and
furnishing copies thereof to seven (7)
other executive offices of the national
government, the defendants-
appellants may not be said to be
motivated simply by the desire to
“unduly prejudice the good name and
reputation” of plaintiff-appellee. Such
act was consistent with and a rational
consequence of seeking justice
through legal means for the alleged
abuses defendants-appellants
suffered in the course of their
employment.
The act of furnishing copies was
merely to inform said offices of the
fact of filing of such complaint, as is
usually done by individual
complainants seeking official
government action to address their
problems or grievances.
In the absence of proof that there was
malice or bad faith on the part of the
respondents, no damages can be
awarded.
MERALCO vs WILCON BUILDERS
SUPPLY, INC.
June 30, 2008
Nachura, J.
TORTS AND DAMAGES:
* RIDJO DOCTRINE (Ridjo Tape
vs CA)
Public utility has the imperative
duty to make a reasonable
and proper inspection of its
apparatus and equipment to
ensure that they do not
malfunction. Its failure to
discover the defect, if any,
considering the length of time,
amounts to inexcusable
negligence; its failure to make
the necessary repairs and
replace the defective electric
meter installed within the
 consumer’s premises limits the
latter’s liability.
Defect may be inherent,
intentional or unintentional,
which therefore covers
tampering, mechanical defects
and mistakes in the
computation of the consumers’
billing
Facts
Wilcon Builders is a registered
customer of MERALCO. In 1991,
MERALCO’s inspectors did a routine
inspection of the electric meters of
Wilcon. Allegedly, the meters were
found to have been tampered.
Meralco seized the meters and later
informed Wilcon of the tampering and
was demanding s certain sum
representing the unregistered electric
consumption.
Wilcon, for its part, said that the
reason for the abrupt decrease in
their consumption was the breaking
down of their 7.5 ton air-conditioning
unit in 1986.
Issue
Whether or not MERALCO is negligent
applying the Ridjo Doctrine.
Decision
MERALCO is negligent. Public service
companies which do not exercise prudence
in the discharge of their duties shall be
made to bear the consequences of such
oversight.
Ratio
According to the petitioner, there was
a sudden drop in respondent’s electric
consumption during the last quarter of
1984. If this contention were true, the
moment a sudden drop of electric
consumption was reflected in its records,
petitioner should have conducted an
immediate investigation to make sure
that there was nothing wrong with the
meter, especially because, by its own
account, the subject meter had a history of
previous tampering.
We cannot sanction a situation
wherein the defects in the electric meter are
allowed to continue indefinitely until
suddenly the public utilities concerned
demand payment for the unrecorded
electricity utilized when, in the first place,
they should have remedied the situation
immediately. If we turn a blind eye on
MERALCO’s omission, it may encourage
negligence on the part of public
utilities, to the detriment of the consuming
public.
Novicio vs People
GR No 163331
Date: August 29, 2008
Petitioner: Arellano Novicio
Respondent: People of the Philippines
Nature: Petition for Review On
Certiorati (Rule 45)
for the reversal of the CA
decision
Facts:
o The incident took place on Sept 24,
1998 in Bacong San Luis, Aurora.
o Mario Mercado was already drinking
with his friends when Arellano Novicio
arrived.
o (MERCADO’S VERSION)Novicio drew a
gun, pointed it at Mercado, and
threatened him. When Mercado was
about to stand, Novicio shot him.
Mercado ran and hid as Novicio
 attempted to shoot him for a second
time.
o (NOVICIO’S VERSION) Mercado loudly
exclaimed lies and fabrications
intended to provoke Novicio. When
Novicio asked him to stop, Mercado
got mad. Mercado drew his gun and
pointed it at Novicio. Novicio tried to
wrest the gun and a scuffle ensued.
The gun fired accidentally.
o Novicio was charged with the crime of
frustrated homicide, since all the
acts of execution that would have
caused the death of Mercado if not for
the timely and effective medical
attention given to him.
Issue (1) : WON Novicio acted in
self-defense.
Held: No.
Ratio: There was no unlawful aggression on
the part of Mario to
justify Novicio’s act of
shooting him.
No reason to depart from
the findings of RTC and CA.
Issue (2): WON there was intent to
kill.
Held: Yes.
Ratio: Intent to kill is manifested in the act of
using the lethal weapon,
attempting to shoot the
victim for a second time,
and the seriousness of
the injury sustained.
Decision: Petition denied.
TITLE OF THE CASE: OLIVEROS V. SISON
DATE OF PROMULGATION: March 14,
2008
SUBJECT AREA: Civil Procedure
KEY DOCTRINES/CONCEPTS: Gross
Ignorance of the Law; Indirect
Contempt
FACTS:
Before the SC is a Motion for Partial
Reconsideration filed by Judge Dionisio C.
Sison seeking the reversal the SC decision
finding him guilty of gross ignorance of the
law and fined P1,000. Judge Sison failed to
abide by the requirements under the
Revised Rules on Civil Procedure in citing
complainant spouses Arleen and Lorna
Oliveros for indirect contempt. As gleaned
from the resolution, the contempt charge
was not filed as a separate and independent
petition from the principal action pending
before the court. Also, the warrant of arrest
was issued on the same day that the motion
for contempt was made in a hearing in which
the complainant spouses failed to appear.
Complainant spouses Oliveros filed a
petition for certiorari before the CA
questioning the contempt order.
Subsequently, they filed the present
administrative case with the SC. They failed
to inform the SC of the petition for certiorari
pending before the CA.

ISSUE 1: WON JUDGE SISON IS GUILTY
OF GROSS IGNORANCE OF THE LAW
decided separately, unless the
court in its discretion orders the
consolidation of the contempt
charge and the principal action
for joint hearing and decision.

DECISION: Yes.
Good faith in situations of fallible discretion
inheres only within the parameters of
RATIO: tolerable misjudgment and does not apply
where the issues are so simple and the
applicable legal principle evident and basic
as to be beyond permissible margins of
Rule 71 of the Revised Rules on Civil
error. When the law is so elementary, not to
Procedure explicitly sets out the
know it constitutes gross ignorance of the
requirements for instituting a complaint for
law.
indirect contempt.

Moreover, complainants should have been

SEC. 4. How proceedings
given the opportunity to be heard and to
commenced. – Proceedings for
defend themselves against the contempt
indirect contempt may be
charge, involving as it does such a dire
initiated motu proprio by the
consequence as imprisonment for six
court against which the
months. The undue haste in disposing of the
contempt was committed by an
motion for contempt deprived complainants
order or any formal charge
of one of man’s most fundamental rights,
requiring the respondent to
the right to be heard.
show cause why he should not
be punished for contempt.

In all other cases, charges for ISSUE 2: WON COMPLAINANT SPOUSES

indirect contempt shall be OLIVEROS MAY BE HELD LIABLE FOR
commenced by a verified CONTEMPT FOR NOT DISCLOSING THE
petition with supporting PETITION FOR CERTIORARI INVOLVING
particulars and certified true THE SAME ISSUE PENDING BEFORE THE
copies of documents or papers CA
involved therein, and upon full
compliance with the
requirements for filing initiatory
pleadings for civil actions in the DECISION: Yes
court concerned. If the
contempt charges arose out of
or are related to a principal RATIO:
action pending in court, the
petition for contempt shall
allege that fact but said petition Complainants themselves admitted that
shall be docketed, heard and
they failed to inform this Court of the
petition they filed before the CA within five
days after they “learn[ed] that the same or
similar action or claim has been filed or is
pending,” as provided by the Rules. They,
however, argue that they were not aware of
such requirement. While that may have been
true, their argument becomes untenable
when seen in the light of their subsequent
actions. The Verification/Certification of the
Petition for Certiorari before the CA clearly
shows that both complainants signed the
same. Thus, they are presumed to have read
its contents. This should have already made
them aware of the requirement to inform the
Court of the filing of the case before the CA
considering that in the latter case, they are
praying for the nullification of the very same
Order for which they were seeking
administrative sanctions against respondent
Judge before this Court. Thus, there appears
a real possibility that the pernicious effect
sought to be prevented by the rules
requiring the Certification against Forum
Shopping would arise. Accordingly, the
complainants could be held liable for
contempt of this Court.
Orozco v CA
August 13, 2008
J. Nachura
Subject Area: employer-employee
relationship, control test, economic reality
test
Facts: Orozco was a columnist of PDI whose
column was discontinued. She is now suing
for illegal dismissal as an employee.
Issue: (In the first place) WON a columnist is
an employee of the newspaper.
Decision: No.
Ratio:
Control Test - The main determinant of the
ee-er relationship is whether the rules set by
the er are meant to control not just the
results of the work but also the means and
methods to e used by the hired party in
order to achieve the results.
Petitioner was engaged as a columnist for
her talent, skill, experience, and unique
viewpoint as a feminist advocate. How she
utilized all these in writing her column was
not subject to dictation. Any rules imposed
on her as to length of articles, time of
submission, etc. are merely general
guidelines dictated by the nature of the
newspaper business itself.
Economic Reality Test – This is especially
appropriate when there is no written
agreement, as in this case. The benchmark
is the economic dependence of the worker
on the employee.
Petitioner’s main occupation is not as
columnist but as women’s rights advocate,
and she also contributes articles to other
publications.
Magalang vs. CA
February 26, 2008
J. Nachura
Subject area: CivPro, decisions – final and
executor; effect, decisions – coordinate
courts
Facts: Magalang filed for illegal dismissal.
NLRC rendered a decision, denied Motion for
Reconsideration of Magalang who filed an
appeal with the CA 9th Division; denied MFR
of employer who filed an appeal with the CA
4th Division. CA 9th Division promulgated
decision first, no appeal made. 4th Division
subsequently rendered inconsistent
decision.
Issue: WON the decision of the 4th Division is
valid
Decision: No.
Ratio:
Various divisions of the CA are, in a sense,
coordinate courts, and pursuant to the policy
of judicial stability, a division of the
appellate court should not interfere with the
decision of other divisions.
Further, no appeal was interposed against
the 9th Division’s decision; therefore, it
already attained finality. When a decision
becomes final and executor, the court loses
jurisdiction and not even an appellate court
will have the power to review the said
judgment. Just as the losing party has the
privilege to file an appeal within the
prescribed period, so does the winner have
the correlative right to enjoy the finality of
the decision.
TITLE OF THE CASE: PARISCHA V. DON
LUIS DISON REALTY
DATE OF PROMULGATION: March 14,
2008
SUBJECT AREA: Corporation Law, Civil
Procedure, Obligations and Contracts
KEY DOCTRINES/CONCEPTS: Standing
to Sue of a Corporation; Capacity to
Sue of an Officer on Behalf of a
Corporation; Unlawful Detainer
FACTS:
Respondent Don Luis Dison Realty, Inc. and
petitioners Parischa executed two Contracts
of Lease whereby the former, as lessor,
agreed to lease to the latter Units 22, 24,
32, 33, 34, 35, 36, 37 and 38 of the San Luis
Building located at Ermita, Manila.
Petitioners, in turn, agreed to pay monthly
rentals.
Petitioners paid the monthly rentals until
May 1992. After that, however, petitioners
refused to pay the rent. Petitioners assert
that their refusal to pay the rent was
justified because of the internal squabble in
respondent company as to the person
authorized to receive payment. Also,
petitioners alleged that they were prevented
from using the units rented. Petitioners
eventually paid their monthly rent for
December 1992 in the amount of
P30,000.00, and claimed that respondent
waived its right to collect the rents for the
months of July to November 1992 since
petitioners were prevented from using some
of the units. However, they again withheld
payment starting January 1993 because of
respondent’s refusal to turn over Rooms 36,
37 and 38.
A complaint for ejectment was filed by
private respondent through its
representative, Ms. Bautista, before the
MeTC.
The MeTC considered petitioners’ non-
payment of rentals as unjustified. The court
held that mere willingness to pay the rent
did not amount to payment of the obligation.
The court did not give credence to
petitioners’ claim that private respondent
failed to turn over possession of the
premises. The court, however, dismissed
the complaint because of Ms. Bautista’s
alleged lack of authority to sue on behalf of
the corporation.
The RTC of Manila reversed and set aside
the MeTC Decision. It adopted the MeTC’s
finding on petitioners’ unjustified refusal to
pay the rent, which is a valid ground for
ejectment. It, however, it upheld Ms.
Bautista’s authority to represent respondent
notwithstanding the absence of a board
resolution to that effect, since her authority
was implied from her power as a general
manager/treasurer of the company.
The CA affirmed the RTC Decision but
deleted the award of attorney’s fees.
ISSUE 1: WON RESPONDENT COMPANY
HAS STANDING TO SUE
DECISION: Yes
its board of directors and/or its duly
authorized officers and agents. Physical
acts, like the signing of documents, can be
performed only by natural persons duly
authorized for the purpose by corporate by-
laws or by a specific act of the board of
directors. Thus, any person suing on behalf
of the corporation should present proof of
such authority.

Although Ms. Bautista initially failed to show

that she had the capacity to sign the
RATIO:
verification and institute the ejectment case
on behalf of the company, when confronted
with such question, she immediately
Although the SEC suspended and eventually presented the Secretary’s Certificate
revoked respondent’s certificate of confirming her authority to represent the
registration on February 16, 1995, records company. There is ample jurisprudence
show that it instituted the action for holding that subsequent and substantial
ejectment on December 15, 1993. compliance may call for the relaxation of the
Accordingly, when the case was rules of procedure in the interest of justice.
commenced, its registration was not yet In Novelty Phils., Inc. v. Court of Appeals,
revoked. Besides, the SEC later set aside its the Court faulted the appellate court for
earlier orders of suspension and revocation dismissing a petition solely on petitioner’s
of respondent’s certificate, rendering the failure to timely submit proof of authority to
issue moot and academic. sue on behalf of the corporation. In Pfizer,
Inc. v. Galan, we upheld the sufficiency of a
petition verified by an employment specialist
despite the total absence of a board
resolution authorizing her to act for and on
ISSUE 2: WON MS. BAUTISTA HAS behalf of the corporation. Lastly, in China
CAPACITY TO SUE IN BEHALF OF THE Banking Corporation v. Mondragon
COMPANY International Philippines, Inc, we relaxed the
rules of procedure because the corporation
ratified the manager’s status as an
DECISION: Yes authorized signatory. In all of the above
cases, we brushed aside technicalities in the
interest of justice. This relaxation of the
rules applies only to highly meritorious
RATIO:
cases, and when there is substantial
compliance.

A corporation has no powers except those

expressly conferred on it by the Corporation
Code and those that are implied from or are
incidental to its existence. In turn, a ISSUE 3: WON THE DENIAL OF THE
corporation exercises said powers through MOTION TO INHIBIT CA JUSTICE RUBEN
REYES IS PROPER
DECISION: Yes
RATIO:
First, the motion to inhibit came after the
appellate court rendered the assailed
decision, that is, after Justice Reyes had
already rendered his opinion on the merits
of the case. It is settled that a motion to
inhibit shall be denied if filed after a member
of the court had already given an opinion on
the merits of the case, the rationale being
that “a litigant cannot be permitted to
speculate on the action of the court x x x
(only to) raise an objection of this sort after
the decision has been rendered.”
Second, it is settled that mere suspicion that
a judge is partial to one of the parties is not
enough; there should be evidence to
substantiate the suspicion. Bias and
prejudice cannot be presumed, especially
when weighed against a judge’s sacred
pledge under his oath of office to administer
justice without regard for any person and to
do right equally to the poor and the rich.
There must be a showing of bias and
prejudice stemming from an extrajudicial
source, resulting in an opinion on the merits
based on something other than what the
judge learned from his participation in the
case.
ISSUE 4: WON THE PETITIONERS MAY
BE VALIDLY EJECTED FROM THE LEASED
PREMISES
DECISION: Yes
RATIO:
Unlawful detainer cases are summary in
nature. In such cases, the elements to be
proved and resolved are the fact of lease
and the expiration or violation of its terms.
Specifically, the essential requisites of
unlawful detainer are: 1) the fact of lease by
virtue of a contract, express or implied; 2)
the expiration or termination of the
possessor’s right to hold possession; 3)
withholding by the lessee of possession of
the land or building after the expiration or
termination of the right to possess; 4) letter
of demand upon lessee to pay the rental or
comply with the terms of the lease and
vacate the premises; and 5) the filing of the
action within one year from the date of the
last demand received by the defendant.[49]
It is undisputed that petitioners and
respondent entered into two separate
contracts of lease involving nine (9) rooms
of the San Luis Building. Records, likewise,
show that respondent repeatedly demanded
that petitioners vacate the premises, but the
latter refused to heed the demand; thus,
they remained in possession of the
premises. The only contentious issue is
whether there was indeed a violation of the
terms of the contract.
This issue involves questions of fact, the
resolution of which requires the evaluation
of the evidence presented. The MeTC, the
RTC and the CA all found that petitioners
failed to perform their obligation to pay the
stipulated rent. It is settled doctrine that in
a civil case, the conclusions of fact of the
trial court, especially when affirmed by the
Court of Appeals, are final and conclusive,
and cannot be reviewed on appeal by the
Supreme Court.
DATE OF PROMULGATION: September
21, 2007

Petitioners’ justifications are belied by the

evidence on record. As correctly held by the
CA, petitioners’ communications to SUBJECT AREA: Civil Procedure
respondent prior to the filing of the
complaint never mentioned their alleged
inability to use the rooms. What they KEY DOCTRINES/CONCEPTS:
pointed out in their letters is that they did Conclusiveness of Judgment;
not know to whom payment should be Attachment; Mode of Service for
made. Although petitioners stated in their Resident Temporarily Out of the
December 30, 1993 letter that respondent Philippines; Damages
failed to fulfill its part of the contract,
nowhere did they specifically refer to their
inability to use the leased rooms. Besides,
FACTS:
at that time, they were already in default on
their rentals for more than a year.
Complaint for a sum of money with
prayer for the issuance of a writ of
preliminary attachment (FIRST CASE)
What was clearly established by the
evidence was petitioners’ non-payment of
rentals because ostensibly they did not know
to whom payment should be made. Petitioner PCIB filed against respondent
However, this did not justify their failure to Alejandro a complaint for a sum of money
pay. They should have availed of the with prayer for the issuance of a writ of
provisions of the Civil Code of the Philippines preliminary attachment. Said complaint
on the consignation of payment and of the alleged that on September 10, 1997,
Rules of Court on interpleader. Alejandro, a resident of Hong Kong,
executed in favor of PCIB a promissory note
obligating himself to pay P249,828,588.90
plus interest. In view of the fluctuations in
In light of the foregoing disquisition,
the foreign exchange rates which resulted in
respondent has every right to exercise his
the insufficiency of the deposits of Alejandro
right to eject the erring lessees. Moreover,
as security for the loan, PCIB requested the
Article 1673 of the Civil Code gives the
latter to put up additional security.
lessor the right to judicially eject the lessees
Alejandro sought a reconsideration of said
in case of non-payment of the monthly
request pointing out petitioner’s alleged
rentals. A contract of lease is a consensual,
mishandling of his account due to its failure
bilateral, onerous and commutative contract
to carry out his instruction to close his
by which the owner temporarily grants the
account as early as April 1997, when the
use of his property to another, who
prevailing rate of exchange of the US Dollar
undertakes to pay the rent therefor. For
to Japanese yen was US$1.00:JPY127.50.
failure to pay the rent, petitioners have no
The amount of P249,828,588.90 was the
right to remain in the leased premises.
consolidated amount of a series of yen loans
TITLE OF THE CASE: PCIB V. granted by PCIB to Alejandro during the
ALEJANDRO months of February and April 1997.

In praying for the issuance of a writ of
preliminary attachment under Section 1
paragraphs (e) and (f) of Rule 57 of the
Rules of Court, petitioner alleged that (1)
respondent fraudulently withdrew his
unassigned deposits notwithstanding his
verbal promise to PCIB not to withdraw the
same prior to their assignment as security
for the loan; and (2) that respondent is not a
resident of the Philippines.
The trial court granted the application and
issued the writ ex parte after PCIB posted a
Php 18.7M bond, issued by Prudential
Guarantee & Assurance Inc. Also, the bank
deposits of Alejandro with RCBC were
garnished. Alejandro, through counsel,
voluntarily submitted to the jurisdiction of
the court.
Subsequently, Alejandro filed a motion to
quash the writ contending that the
withdrawal of his unassigned deposits was
not fraudulent as it was approved by PCIB.
He also alleged that petitioner knew that he
maintains a permanent residence at Calle
Victoria, Ciudad Regina, Batasan Hills,
Quezon City, and an office address in Makati
City at the Law Firm Romulo Mabanta
Buenaventura Sayoc & De los Angeles,
where he is a partner. In both addresses,
petitioner regularly communicated with him
through its representatives. Respondent
added that he is the managing partner of
the Hong Kong branch of said Law Firm; that
his stay in Hong Kong is only temporary; and
that he frequently travels back to the
Philippines.
The trial court issued an order quashing the
writ and holding that the withdrawal of
respondent’s unassigned deposits was not
intended to defraud petitioner. It also found
that the representatives of petitioner
personally transacted with respondent
through his home address in Quezon City
and/or his office in Makati City. It thus
concluded that petitioner misrepresented
and suppressed the facts regarding
respondent’s residence considering that it
has personal and official knowledge that for
purposes of service of summons,
respondent’s residence and office addresses
are located in the Philippines.
With the denial of PCIB’s motion for
reconsideration, it elevated the case to the
CA via a petition for certiorari. The petition
was dismissed for failure to prove that the
trial court abused its discretion in issuing the
aforesaid order. PCIB filed a motion for
reconsideration but was denied. On petition
with the SC, the case was dismissed for late
filing. PCIB filed a motion for
reconsideration but was likewise denied
with finality on March 6, 2000.
Complaint for damages (SECOND CASE
AND CASE BEFORE THE COURT)
Meanwhile, on May 20, 1998, Alejandro filed
for damages in the amount of P25 Million on
the attachment bond posted by Prudential
Guarantee & Assurance, Inc. on account of
the wrongful garnishment of his deposits.
He presented evidence showing that his
P150,000.00 RCBC check payable to his
counsel as attorney’s fees, was dishonored
by reason of the garnishment of his
deposits. He also testified that he is a
graduate of the Ateneo de Manila University
in 1982 with a double degree of Economics
and Management Engineering and of the
University of the Philippines in 1987 with the
degree of Bachelor of Laws. Respondent
likewise presented witnesses to prove that
he is a well known lawyer in the business
community both in the Philippines and in
Hong Kong.
The trial court awarded damages to
Alejandro in the amount of P25 Million
without specifying the basis thereof. It also
denied petitioner’s motion for
reconsideration.
PCIB elevated the case to the CA which
affirmed the findings of the trial court. It
held that in claiming that respondent was
not a resident of the Philippines, petitioner
cannot be said to have been in good faith
considering that its knowledge of
respondent’s Philippine residence and office
address goes into the very issue of the trial
court’s jurisdiction which would have been
defective had respondent not voluntarily
appeared before it. The CA, however,
reduced the amount of damages awarded to
petitioner and specified their basis: P2M as
nominal damages; P5M as moral damages;
and P1M as attorney’s fees, to be satisfied
against the attachment bond under
Prudential Guarantee & Assurance, Inc.
Both parties moved for reconsideration. The
CA denied PCIB’s motion for reconsideration
but granted that of Alejandro’s by ordering
PCIB to pay additional P5M as exemplary
damages.
ISSUE 1: WON THE COURT CAN PASS
UPON THE ISSUES OF PROPRIETY OF
THE ISSUANCE OF A WRIT OF
ATTACHMENT, MISREPRESENTATION BY
PCIB AND RESIDENCE OF ALEJANDRO
DECISION: No.
RATIO:
The ruling of the trial court that PCIB is not
entitled to a writ of attachment because
Alejandro is a resident of the Philippines,
that his act of withdrawing his deposits with
petitioner was without intent to defraud, and
that PCIB misrepresented that Alejandro was
residing out of the Philippines, is now
beyond the power of this Court to review,
having been the subject of a final and
executory order. The rule on conclusiveness
of judgment precludes the relitigation of a
particular fact or issue in another action
between the same parties even if based on a
different claim or cause of action. The
judgment in the prior action operates as
estoppel as to those matters in issue or
points controverted, upon the determination
of which the finding or judgment was
rendered. Hence, the issues of
misrepresentation by petitioner and the
residence of respondent for purposes of
service of summons can no longer be
questioned by petitioner in this case.
ISSUE 2: WON PCIB IS LIABLE FOR
DAMAGES FOR THE IMPROPER
ISSUANCE OF THE WRIT OF
ATTACHMENT AGAINST ALEJANDRO
DECISION: Yes.
RATIO:
PCIB is barred by the principle of
conclusiveness of judgment from
invoking good faith in the application
for a writ of attachment in order to
avoid liability for damages
The trial court settled in its final order the
two grounds invoked by PCIB for the
issuance of a writ for preliminary
attachment. Contrary to the assertions of
PCIB, Alejandro is a resident of the
Philippines, and he did not withdraw his
deposits from PCIB with intent to defraud
creditors. Firstly, in the hearings of the
motion, and oral arguments of counsels
before the SC, it appeared that PCIB
personally transacted with Alejandro mainly
through the latter’s Metro Manila residence,
either in Alejandro’s home address in
Quezon City or his main business address at
the ROMULO MABANTA BUENAVENTURA
SAYOC & DELOS ANGELES in Makati. Thus
PCIB could not deny personal and official
knowledge that Alejandro’s residence for
purposes of service of summons is in the
Philippines. Secondly, the amount
withdrawn by Alejandro from PCIB was not
part of his peso deposits assigned with the
bank to secure the loan. Proof that the
withdrawal was not intended to defraud PCIB
as creditor is that plaintiff approved and
allowed said withdrawals. Moreover, the
tenor of the final order of the trial court
which quashed the writ evidently considers
PCIB to have acted in bad faith by resorting
to a deliberate strategy to mislead the court.
Thus, PCIB cannot again invoke good faith in
the present case since such issue was
already aired and squarely ruled upon in the
first case. Similarly, in the case of Hanil
Development Co., Ltd. v. Court of Appeals,
the Court debunked the claim of good faith
by a party who maliciously sought the
issuance of a writ of attachment, the bad
faith of said party having been previously
determined in a final decision which voided
the assailed writ.
Discussion on when attachment is
proper as a means for the court to
acquire jurisdiction (over the res, not
over the non-resident defendant)
The circumstances under which a writ of
preliminary attachment may be issued are
set forth in Section 1, Rule 57 of the Rules of
Court, to wit:
SEC. 1. Grounds upon
which attachment may issue. —
At the commencement of the
action or at any time before
entry of judgment, a plaintiff or
any proper party may have the
property of the adverse party
attached as security for the
satisfaction of any judgment
that may be recovered in the
following cases:
f) In an action
against a party who resides out
of the Philippines, or on whom
summons may be served by
publication.
The purposes of preliminary attachment are:
(1) to seize the property of the debtor in
advance of final judgment and to hold it for
purposes of satisfying said judgment, as in
the grounds stated in paragraphs (a) to (e)
of Section 1, Rule 57 of the Rules of Court;
or (2) to acquire jurisdiction over the action
by actual or constructive seizure of the
property in those instances where personal
or substituted service of summons on the
defendant cannot be effected, as in
paragraph (f) of the same provision.
Corollarily, in actions in personam, such as
the case for collection of sum of money,
summons must be served by personal or
substituted service, otherwise the court will
not acquire jurisdiction over the defendant.
In case the defendant does not reside
and is not found in the Philippines (and
hence personal and substituted service
cannot be effected), the remedy of the
plaintiff in order for the court to
acquire jurisdiction to try the case is to
convert the action into a proceeding in
rem or quasi in rem by attaching the
property of the defendant. The service
of summons in this case (which may be
by publication coupled with the sending
by registered mail of the copy of the
summons and the court order to the
last known address of the defendant),
is no longer for the purpose of
acquiring jurisdiction but for
compliance with the requirements of
due process.
Discussion on the propriety of issuing a
writ of attachment / proper mode of
service in the case of a resident
temporarily out of the Philippines
PCIB seeks to nuance its argument by saying
that it considers Alejandro a resident
temporarily out of the Philippines such that
attachment is still a proper and available
remedy.
However, the SC held that where the
defendant is a resident who is temporarily
out of the Philippines, attachment of his/her
property in an action in personam, is not
always necessary in order for the court to
acquire jurisdiction to hear the case.
Section 16, Rule 14 of the Rules of
Court reads:
Sec. 16. Residents
temporarily out of the
Philippines. – When an action is
commenced against a
defendant who ordinarily
resides within the Philippines,
but who is temporarily out of it,
service may, by leave of court,
be also effected out of the
Philippines, as under the
preceding section.
The preceding section referred to in the
above provision is Section 15 which provides
for extraterritorial service – (a) personal
service out of the Philippines, (b) publication
coupled with the sending by registered mail
of the copy of the summons and the court
order to the last known address of the
defendant; or (c) in any other manner which
the court may deem sufficient.
In Montalban v. Maximo, the Court held that
substituted service of summons (under
the present Section 7, Rule 14 of the Rules
of Court) is the normal mode of service of
summons that will confer jurisdiction on the
court over the person of residents
temporarily out of the Philippines. Meaning,
service of summons may be effected by (a)
leaving copies of the summons at the
defendant’s residence with some person of
suitable discretion residing therein, or (b) by
leaving copies at the defendant’s office or
regular place of business with some
competent person in charge thereof.
Hence, the court may acquire jurisdiction
over an action in personam by mere
substituted service without need of
attaching the property of the defendant.
The rules on the application of a writ of
attachment must be strictly construed in
favor of the defendant. For attachment is
harsh, extraordinary, and summary in
nature; it is a rigorous remedy which
exposes the debtor to humiliation and
annoyance. It should be resorted to only
when necessary and as a last remedy.
In the instant case, it must be stressed that
the writ was issued by the trial court mainly
on the representation of petitioner that
respondent is not a resident of the
Philippines. Obviously, the trial court’s
issuance of the writ was for the sole purpose
of acquiring jurisdiction to hear and decide
the case. Had the allegations in the
complaint disclosed that respondent has a
residence in Quezon City and an office in
Makati City, the trial court, if only for the
purpose of acquiring jurisdiction, could have
served summons by substituted service on
the said addresses, instead of attaching the
property of the defendant. The
misrepresentation of petitioner that
respondent does not reside in the Philippines
and its omission of his local addresses was
thus a deliberate move to ensure that the
application for the writ will be granted.
In light of the foregoing, the Court of
Appeals properly sustained the finding of the
trial court that petitioner is liable for
damages for the wrongful issuance of a writ
of attachment against respondent.
Discussion on damages
Anent the actual damages, the Court of
Appeals is correct in not awarding the same
inasmuch as the respondent failed to
establish the amount garnished by
petitioner. It is a well settled rule that one
who has been injured by a wrongful
attachment can recover damages for the
actual loss resulting therefrom. But for such
losses to be recoverable, they must
constitute actual damages duly established
by competent proofs, which are, however,
wanting in the present case.
Nominal damages may be awarded to a
plaintiff whose right has been violated or
invaded by the defendant, for the purpose of
vindicating or recognizing that right, and not
for indemnifying the plaintiff for any loss
suffered by him. Its award is thus not for the
purpose of indemnification for a loss but for
the recognition and vindication of a right. In
this case, nominal damages is proper
considering that the right of respondent to
use his money has been violated by its
garnishment. The amount of nominal
damages must, however, be reduced from
P2 million to P50,000.00 considering the
short period of 2 months during which the
writ was in effect as well as the lack of
evidence as to the amount garnished.
The award of attorney’s fees is proper when
a party is compelled to incur expenses to lift
a wrongfully issued writ of attachment. The
basis of the award thereof is also the
amount of money garnished, and the length
of time respondents have been deprived of
the use of their money by reason of the
wrongful attachment. It may also be based
upon (1) the amount and the character of
the services rendered; (2) the labor, time
and trouble involved; (3) the nature and
importance of the litigation and business in
which the services were rendered; (4) the
responsibility imposed; (5) the amount of
money and the value of the property
affected by the controversy or involved in
the employment; (6) the skill and the
experience called for in the performance of
the services; (7) the professional character
and the social standing of the attorney; (8)
the results secured, it being a recognized
rule that an attorney may properly charge a
much larger fee when it is contingent than
when it is not. All the aforementioned
weighed, and considering the short period of
time it took to have the writ lifted, the
favorable decisions of the courts below, the
absence of evidence as to the professional
character and the social standing of the
attorney handling the case and the amount
garnished, the award of attorney’s fees
should be fixed not at P1 Million, but only at
P200,000.00.
The courts below correctly awarded moral
damages on account of petitioner’s
misrepresentation and bad faith; however,
we find the award in the amount of P5
Million excessive. Moral damages are to be
fixed upon the discretion of the court taking
into consideration the educational, social
and financial standing of the parties. Moral
damages are not intended to enrich a
complainant at the expense of a defendant.
They are awarded only to enable the injured
party to obtain means, diversion or
amusements that will serve to obviate the
moral suffering he has undergone, by reason
of petitioner’s culpable action. Moral
damages must be commensurate with the
loss or injury suffered. Hence, the award of
moral damages is reduced to P500,000.00.
Considering petitioner’s bad faith in securing
the writ of attachment, we sustain the award
of exemplary damages by way of example or
correction for public good. While as a
general rule, the liability on the attachment
bond is limited to actual (or in some cases,
temperate or nominal) damages, exemplary
damages may be recovered where the
attachment was established to be
maliciously sued out. Nevertheless, the
award of exemplary damages in this case
should be reduced from P5M to P500,000.00.
TITLE OF THE CASE: PEOPLE V.
TERRADO
DATE OF PROMULGATION: July 14,
2008
SUBJECT AREA: Criminal Procedure
KEY DOCTRINES/CONCEPTS: Special
Civil Action for Certiorari in Criminal
Cases; Double Jeopardy
FACTS:
Accused Joseph Terrado was charged with
Carnapping under Republic Act 6538,
otherwise known as the “Anti-Carnapping
Act of 1972.” According to the Information,
the accused carted away a motorized
tricycle after threatening the driver with a
fan knife. The accused was arraigned and
pleaded not guilty to the crime charged.
The defense claimed that the accused
merely borrowed the tricycle from its driver
Dalmacio. However, when accused was
about to return the same, he hit a stone, lost
control of the tricycle and bumped a tree.
Three persons came and helped him bring
the tricycle back to the roadside. The
accused returned the tricycle at around
11:00 pm of the same day to the Spouses
Garcia, owners of the tricycle. The defense
did not deny that the tricycle, when
returned, was damaged and, in fact, the
accused voluntarily paid the amount of
P8,000.00 as partial remuneration for the
repair of the tricycle.
The trial court acquitted accused Terrado for
failure of the prosecution to establish intent
to take the tricycle and intent to gain from
the same. Thus, the court held that the
prosecution failed to prove the guilt of the
accused beyond reasonable doubt.
The prosecution filed a Motion for
Reconsideration which the trial court denied.
Aggrieved, the complainants come to this
Court via a Petition for Certiorari seeking to
annul and set aside the decision
ISSUE 1: WON THE PUBLIC
RESPONDENT IN RENDERING THE
QUESTIONED DECISION ACTED WITH
GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION.
DECISION: No.
RATIO:
The special civil action for certiorari is
intended for the correction of errors of
jurisdiction or grave abuse of discretion
amounting to lack or excess of jurisdiction.
Its principal office is to keep the inferior
court within the parameters of its jurisdiction
or to prevent it from committing such a
grave abuse of discretion amounting to lack
or excess of jurisdiction.
By grave abuse of discretion is meant such
capricious and whimsical exercise of
judgment as is equivalent to lack of
jurisdiction. The abuse of discretion must be
grave as where the power is exercised in an
arbitrary or despotic manner by reason of
passion or personal hostility and must be so
patent and gross as to amount to an evasion
of positive duty or to a virtual refusal to
perform the duty enjoined by or to act at all
in contemplation of law.
While petitioner alleges grave abuse of
discretion amounting to lack or excess of
jurisdiction, the imputation is premised on
the averment that the trial court reached its
conclusions based on speculation, surmises
and conjectures. As alleged by the
petitioners, the accused forcibly took the
vehicle from the complainant’s driver and
the public respondent acquitted the accused
for alleged failure to meet the element of
intent to gain. Specifically, the allegations
delve on the misapprehension of facts by
the trial court.
As a rule, factual matters cannot be
normally inquired into by the Supreme Court
in a certiorari proceeding. The present
recourse is a petition for certiorari under
Rule 65. It is a fundamental aphorism in law
that a review of facts and evidence is not
the province of the extraordinary remedy of
certiorari, which is extra ordinem – beyond
the ambit of appeal.
At least, the mistakes ascribed to the trial
court are not errors of jurisdiction correctible
by the special civil action for certiorari, but
errors of judgment, which is correctible by a
petition for review on certiorari under Rule
45 of the Revised Rules of Court. The mere
fact that a court erroneously decides a case
does not necessarily deprive it of
jurisdiction. Thus, assuming arguendo that
the trial court committed a mistake in its
judgment, the error does not vitiate the
decision, considering that it has jurisdiction
over the case.
In our jurisdiction, availment of the remedy
of certiorari to correct an erroneous acquittal
may be allowed in cases where petitioner
has clearly shown that the public respondent
acted without jurisdiction or with grave
abuse of discretion amounting to lack or
excess of jurisdiction. However, and more
serious than the procedural infraction, if the
petition merely calls for an ordinary review
of the findings of the court a quo, we would
run afoul of the constitutional right against
double jeopardy. Such recourse is
tantamount to converting the petition for
certiorari into an appeal, which is proscribed
by the Constitution, the Rules of Court and
prevailing jurisprudence on double jeopardy.
Verdicts of acquittal are to be regarded as
absolutely final and irreviewable. The
fundamental philosophy behind the principle
is to afford the defendant, who has been
acquitted, final repose and to safeguard him
from government oppression through the
abuse of criminal processes.
[G.R. No. 178884, June 30, 2008]
RICARDO P. PRESBITERO, JR., JANET
PALACIOS, CIRILO G. ABRASIA,
ARMANDO G. ALVAREZ, NENITO A.
ARMAS, RENE L. CORRAL, JOEMARIE A.
DE JUAN, ENRILICE C. GENOBIS,
WILLIAM A. PRESBITERO AND REYNO N.
SOBERANO, PETITIONERS, VS.
COMMISSION ON ELECTIONS, ROMMEL
YOGORE, GLORY GOMEZ, DAN YANSON,
JOENITO DURAN, SR., LUCIUS BODIOS
AND REY SUMUGAT, RESPONDENTS.
FACTS: The MCTC Valladolid-San Enrique-
Pulupandan, Negros Occidental ordered the
municipal election officer (EO) of Valladolid
to include the names of 946 individuals in
the list of qualified voters of the said
municipality for the May 2007 elections.
Prompted by the advice of COMELEC Manila
that decisions of trial courts of limited
jurisdiction in inclusion/exclusion cases
attain finality only after the lapse of five
days from receipt of notice sans any appeal
therefrom, the acting provincial election
supervisor (PES), directed the EO on May 13,
2007 not to comply with the MCTC order.
Thus, the said 946 were disallowed by the
board of election inspectors to vote. These
946 moved for the issuance of a TRO to
prevent the Municipal Board of Canvassers
from canvassing the election returns & from
proclaiming the winning candidates for the
local positions in the municipality. Such was
granted. However, the MBOC continued
canvassing & proclaimed the winning
candidates. Presbitero et al thus filed before
the COMELEC a pet. for declaration of failure
of election and the holding of a special
election because 946 voters were
disenfranchised, the Election Officer of the
municipality (also the ef-officio chair of the
MBOC) was abruptly replaced, the # of
voters was unusually low, no less than 2,000
supporters of petitioners failed to vote as
their names were missing from the list of
voters, the MBOC defied the TRO, and the
acting provincial election supervisor and
acting election officer threated & coerced
the vice-chair & member-secretary of the
MBOC to continue w/ the canvassing & the
proclamation.
ISSUE: WHETHER OR NOT THERE WAS A
FAILURE OF ELECTION.
HELD: NO. THERE WAS NO FAILURE OF
ELECTION.
RATIO: A failure of election may be declared
only in the three instances stated in Section
6 of the OEC: the election has not been
held; the election has been suspended
before the hour fixed by law; and the
preparation and the transmission of the
election returns have given rise to the
consequent failure to elect, meaning nobody
emerged as the winner. Furthermore, the
reason for such failure of election should be
force majeure, violence, terrorism, fraud or
other analogous causes. Finally, before the
COMELEC can grant a verified petition
seeking to declare a failure of election, the
concurrence of 2 conditions must be
established, namely: (1) no voting has taken
place in the precincts concerned on the date
fixed by law or, even if there was voting, the
election nevertheless resulted in a failure to
elect; and (2) the votes cast would affect the
result of the election.
In the instant case, it is admitted by the
petitioners that elections were held in the
subject locality. Also, the private
respondents and four of the petitioners won
in the elections and were proclaimed as the
duly elected municipal officials. There is
nothing in the records from which the Court
can make even a slim deduction that there
has been a failure to elect. Absent any proof
that the voting did not take place, the
alleged disenfranchisement of the 946
individuals and 2,000 more supporters of the
petitioners cannot even be considered as a
basis for the declaration of a failure of
election. Had petitioners been aggrieved by
the allegedly illegal composition and
proceedings of the MBOC, then they should
have filed the appropriate pre-proclamation
case contesting the aforesaid composition or
proceedings of the board, rather than
erroneously raising the same as grounds for
the declaration of failure of election. On the
TRO issued by the MCTC and the subsequent
defiance thereof by the MBOC, suffice it to
state that the propriety of suspending the
canvass of returns or the proclamation of
candidates is a pre-proclamation issue that
is solely within the cognizance of the
COMELEC.[21] In sum, petitioners have not
adduced any ground which will warrant a
declaration of failure of election.
TITLE OF THE CASE: SALVADOR V.
MAPA
DATE OF PROMULGATION: November
28, 2007
SUBJECT AREA: Civil Procedure;
Criminal Law
KEY DOCTRINES/CONCEPTS: Special
Civil Action for Certiorari (Rule 65) vs.
Petition for Review on Certiorari (Rule
45); Prescription; Ex Post Facto Laws
FACTS:
On October 8, 1992 then President Fidel V.
Ramos issued Administrative Order No. 13
creating the Presidential Ad Hoc Fact-Finding
Committee on Behest Loans. Behest loans
are loans granted by government banks or
GOCC at the behest, command, or urging by
previous government officials to the
disadvantage of the Philippine government.
The Committee was tasked to inventory all
behest loans and determine the courses of
action that the government should take to
recover these loans.
By Memorandum Order No. 61 dated
November 9, 1992, the functions of the
Committee were expanded to include all
non-performing loans which shall embrace
behest and non-behest loans. Said
Memorandum also named criteria to be
utilized as a frame of reference in
determining a behest loan
Several loan accounts were referred to the prescription commenced to run from the
Committee for investigation, including the date the said instrument were executed.
loan transactions between Metals
Exploration Asia, Inc. (MEA), now Philippine
Eagle Mines, Inc. (PEMI) and the In the case at bar, the loans were entered
Development Bank of the Philippines (DBP). into by virtue of public documents (e.g.,
The Committee determined that they bore notarized contracts, board resolutions,
the characteristics of behest loans, as approved letter-request) during the period of
defined under Memorandum Order No. 61 1978 to 1981. Records show that the
because the stockholders and officers of complaint was referred and filed with the
PEMI were known cronies of then President Ombudsman on October 4, 1996 or after the
Ferdinand Marcos; the loan was under- lapse of more than fifteen years from the
collateralized; and PEMI was violation of the law. Therefore, the offenses
undercapitalized at the time the loan was charged had already prescribed.
granted.

Also pointed out was that the Presidential Ad

Consequently, Atty. Orlando L. Salvador, Hoc Committee on Behest Loans was
Consultant of the Fact-Finding Committee, created on October 8, 1992 under
and representing the PCGG, filed with the Administrative Order No. 13. Subsequently,
Ombudsman a sworn complaint for violation Memorandum Order No. 61, dated
of Sections 3(e) and (g) of Republic Act No. November 9, 1992, was issued defining the
3019, or the Anti-Graft and Corrupt Practices criteria to be utilized as a frame of reference
Act, against the respondents Mapa, Jr. et. al. in determining behest loans. Accordingly, if
these Orders are to be considered the bases
of charging respondents for alleged offenses
The Ombudsman dismissed the complaint on committed, they become ex-post facto laws
the ground of prescription. It stressed that which are proscribed by the Constitution.
Section 11 of R.A. No. 3019 as originally
enacted, provides that the prescriptive
period for violations of the said Act (R.A. The Committee filed a Motion for
3019) is ten (10) years. Moreover, the Reconsideration, but the Ombudsman
computation of the prescriptive period of a denied it on July 27, 1998.
crime violating a special law like R.A. 3019 is
governed by Act No. 3326 which provides
that prescription shall begin to run from the
day of the commission of the violation of
law, and if the same be not known at the
ISSUE 1: WON THE PRESENT PETITION
time, from the discovery thereof and the
FOR REVIEW ON CERTIORARI SHOULD
institution of the judicial proceedings for its
BE DISMISSED FOR BEING THE WRONG
investigation and punishment. Corollary
REMEDY IN ELEVATING THE CASE TO
thereto, the Supreme Court in the case of
THE SC.
People vs. Dinsay, C.A. 40 O.G. 12th Supp.,
50, ruled that when there is nothing which
was concealed or needed to be discovered
because the entire series of transactions DECISION: No.
were by public instruments, the period of
RATIO: and not from the day of such
commission.

A petition for review on certiorari under Rule

45 is not the proper mode by which
resolutions of the Ombudsman in
preliminary investigations of criminal cases ISSUE 3: WON ADMINISTRATIVE
are reviewed by the SC. The remedy from ORDER NO. 13 AND
the adverse resolution of the Ombudsman is MEMORANDUM ORDER NO. 61
a petition for certiorari under Rule 65. ARE EX-POST FACTO LAW[S].

However, though captioned as a Petition for DECISION: No.

Review on Certiorari, the SC treated the
petition as one filed under Rule 65 since a
reading of its contents reveals that petioner RATIO:
imputes grave abuse of discretion to the
Ombudsman for dismissing the complaint.
The averments in the complaint, not the
The SC did not sustain the Ombudsman’s
nomenclature given by the parties,
declaration that Administrative Order No. 13
determine the nature of the action.
and Memorandum Order No. 61 violate the
prohibition against ex post facto laws for
ostensibly inflicting punishment upon a
person for an act done prior to their issuance
and which was innocent when done.
ISSUE 2: WON THE CRIME
DEFINED BY SEC. 3(e) AND (g) OF
R.A. 3019 HAS ALREADY
PRESCRIBED The constitutionality of laws is presumed. To
justify nullification of a law, there must be a
clear and unequivocal breach of the
Constitution, not a doubtful or arguable
DECISION: No implication. Furthermore, the Ombudsman
has no jurisdiction to entertain questions on
the constitutionality of a law. The
RATIO: Ombudsman, therefore, acted in excess of
its jurisdiction in declaring unconstitutional
the subject administrative and
It is well-nigh impossible for the State memorandum orders.
to have known the violations of R.A.
No. 3019 at the time the questioned
transactions were made because the In any event, the SC held that Administrative
public officials concerned connived or Order No. 13 and Memorandum Order No. 61
conspired with the beneficiaries of the are not ex post facto laws.
loans. Thus, the prescriptive period
should be computed from the
discovery of the commission thereof
An ex post facto law has been defined as Title of the Case: Sps Santos v Heirs of
one — (a) which makes an action done Lustre
before the passing of the law and which was August 6, 2008 NACHURA
innocent when done criminal, and punishes
CivPro: forum shopping, prescription
such action; or (b) which aggravates a crime
or makes it greater than it was when
committed; or (c) which changes the
punishment and inflicts a greater Facts:
punishment than the law annexed to the
crime when it was committed; or (d) which
alters the legal rules of evidence and Lustre owned a lot which she mortgaged &
receives less or different testimony than the later on sold to Natividad Santos who
law required at the time of the commission subsequently sold it to her son Froilan for
of the offense in order to convict the which a TCT was issued in his name.
defendant. This Court added two (2) more to
the list, namely: (e) that which assumes to
regulate civil rights and remedies only but in
Lustre’s heirs Macaspac & Maniquiz filed w/
effect imposes a penalty or deprivation of a
RTC of Gapan, Nueva Ecija a Complaint for
right which when done was lawful; or (f) that
Declaration of the Inexistence of Contract,
which deprives a person accused of a crime
Annulment of Title, Reconveyance and
of some lawful protection to which he has
Damages against Froilan Santos.
become entitled, such as the protection of a
former conviction or acquittal, or a
proclamation of amnesty.
Lustre’s other heirs filed a Complaint for
Annulment of Transfer Certificate of Title
and Deed of Absolute Sale against spouses
The constitutional doctrine that outlaws an
Santos, Froilan Santos, R Transport Corp,
ex post facto law generally prohibits the
Cecilia Macaspac with the same RTC.
retrospectivity of penal laws. Penal laws are
Macaspac was impleaded as defendant in
those acts of the legislature which prohibit
the 2nd case because she refused to join the
certain acts and establish penalties for their
other heirs as plaintiffs.
violations; or those that define crimes, treat
of their nature, and provide for their
punishment. The subject administrative and
memorandum orders clearly do not come Alleging that the plaintiffs’ right of action for
within the shadow of this definition. annulment of the Deed of Sale and TCT had
Administrative Order No. 13 creates the long prescribed and was barred by laches,
Presidential Ad Hoc Fact-Finding Committee petitioners filed a Motion to Dismiss, also on
on Behest Loans, and provides for its the ground of litis pendentia.
composition and functions. It does not mete
out penalty for the act of granting behest
loans. Memorandum Order No. 61 merely The RTC denied the Motion to Dismiss. They
provides a frame of reference for then filed a petition for certiorari with the
determining behest loans. Not being penal Court of Appeals (CA) which dismissed the
laws, Administrative Order No. 13 and petition for lack of merit.
Memorandum Order No. 61 cannot be
characterized as ex post facto laws.
Issue #1: Was there forum shopping
Decision: No
Ratio:
Forum shopping exists when the elements of
litis pendentia are present or when a final
judgment in one case will amount to res
judicata in the other. Its elements are
identity of the subject matter, identity of the
causes of action and identity of the parties
in the two cases. There is substantial
identity of parties when there is a
community of interest between a party in
the first case and a party in the second case.
There is no forum shopping because there is
no identity of parties because the plaintiff in
the 1st case (Macaspac) does not, in fact,
share a common interest with the plaintiffs
in the 2nd case.
Plaintiffs in both cases are the heirs of
Lustre; they are therefore co-owners of the
property. However, the fact of being a co-
owner does not necessarily mean that a
plaintiff is acting for the benefit of the co-
ownership when he files an action respecting
the co-owned property. Co-owners are not
parties inter se in relation to the property
owned in common. The test is whether the
“additional” party, the co-owner in this case,
acts in the same capacity or is in privity with
the parties in the former action. [28]
Macaspac filed the 1st case seeking the
reconveyance of the property to her, and not
to Lustre or her heirs. This is a clear act of
repudiation of the co-ownership which would
negate a conclusion that she acted in privity
with the other heirs or that she filed the
complaint in behalf of the co-ownership. In
contrast, respondents were evidently acting
for the benefit of the co-ownership when
they filed the 2nd case wherein they prayed
that TCT Lustre be reinstated, or a new
certificate of title be issued in her name.
Issue #1: Does prescription or laches apply?
Decision: No
Ratio:
The action for reconveyance on the ground
that the certificate of title was obtained by
means of a fictitious deed of sale is virtually
an action for the declaration of its nullity,
which does not prescribe. Moreover, a
person acquiring property through fraud
becomes, by operation of law, a trustee of
an implied trust for the benefit of the real
owner of the property. An action for
reconveyance based on an implied trust
prescribes in ten years. And in such case,
the prescriptive period applies only if there
is an actual need to reconvey the property
as when the plaintiff is not in possession of
the property. Otherwise, if plaintiff is in
possession of the property, prescription does
not commence to run against him. Thus,
when an action for reconveyance is
nonetheless filed, it would be in the nature
of a suit for quieting of title, an action that is
imprescriptible.
It follows then that the respondents’ present
action should not be barred by laches.
Laches is a doctrine in equity, which may be
used only in the absence of, and never
against, statutory law. Obviously, it cannot
be set up to resist the enforcement of an
imprescriptible legal right.[39]
Title of the Case: Tabuada v Hon Ruiz
June 27, 2008 NACHURA
SpecPro: non-contentious nature of special
proceedings, compromise/amicable
settlement
Facts:
In the proceedings for the settlement of the
intestate estate, trial court issued the
following Order:
In view of the strong manifestation of the
parties herein and their respective counsel
that they will be able to raise (sic) an
amicable settlement, finally, on or before 25
December 2004, the Court will no longer be
setting the pending incidents for hearing as
the parties and their counsel have assured
this Court that they are going to submit a
“Motion for Judgment Based On An Amicable
Settlement” on or before 25 December
2004.
The RTC, invoking Section 3,[5] Rule 17, of
the Rules of Court, terminated the
proceedings on account of the parties’
failure to submit the amicable settlement
and to comply with its Order.
Issue #1: Was the termination of the case
premature?
Decision: Yes
Ratio:
While a compromise agreement or an
amicable settlement is very strongly
encouraged, the failure to consummate one
does not warrant any procedural sanction,
much less provide an authority for the court
to jettison the case. The case should not
have been terminated or dismissed by the
trial court on account of the mere failure of
the parties to submit the promised amicable
settlement and/or the Motion for Judgment
Based On An Amicable Settlement. Given
the non-contentious nature of special
proceedings[11] (which do not depend on
the will of an actor, but on a state or
condition of things or persons not entirely
within the control of the parties interested),
its dismissal should be ordered only in the
extreme case where the termination of the
proceeding is the sole remedy consistent
with equity and justice, but not as a penalty
for neglect of the parties therein.
The third clause of Section 3, Rule 17, which
authorizes the motu propio dismissal of a
case if the plaintiff fails to comply with the
rules or any order of the court,[13] cannot
even be used to justify the convenient,
though erroneous, termination of the
proceedings herein. The RTC, in its Order,
neither required the submission of the
amicable settlement or the aforesaid Motion
for Judgment, nor warned the parties that
should they fail to submit the compromise
within the given period, their case would be
dismissed. Hence, it cannot be categorized
as an order requiring compliance to the
extent that its defiance becomes an affront
to the court and the rules. And even if it
were worded in coercive language, the
parties cannot be forced to comply, for, as
aforesaid, they are only strongly
encouraged, but are not obligated, to
consummate a compromise. An order
requiring submission of an amicable
settlement does not find support in our
jurisprudence and is premised on an
erroneous interpretation and application of
the law and rules.
MAYOR JOSE UGDORACION, JR. v
COMMISSION ON ELECTIONS and
EPHRAIM M. TUNGOL
April 18, 2008, NACHURA
PUB OFF
• Acquisition of a permanent resident
status abroad constitutes an
abandonment of domicile and
residence in the Philippines. Thus, the
 “green card” status in the USA is a
renunciation of one’s status as a
resident of the Philippines.
• Domicile is the place where one
actually or constructively has his
permanent home, where he, no
matter where he may be found at any
given time, eventually intends to
return (animus revertendi) and remain
(animus manendi).
• Domicile is classified into (1) domicile
of origin, which is acquired by every
person at birth; (2) domicile of choice,
which is acquired upon abandonment
of the domicile of origin; and (3)
domicile by operation of law, which
the law attributes to a person
independently of his residence or
intention.
FACTS
Jose Ugdoracion and Ephraim Tungol were
rival mayoralty candidates in Albuquerque,
Bohol in the May 2007 elections. Tungol filed
a petition to cancel Ugdoracion’s Certificate
of Candidacy contending that the latter’s
declaration of eligibility for Mayor
constituted material misrepresentation; that
he is actually a “green card” holder or a
permanent resident of the US. It appears
that Ugdoracion became a permanent US
resident on September 26, 2001 and was
issued an Alien Number by the USINS.
Ugdoracion, on the other hand, presented
the following documents as proof of his
substantial compliance with the residency
requirement: (1) a residence certificate; (2)
an application for a new voter’s registration;
and (3) a photocopy of Abandonment of
Lawful Permanent Resident Status.
COMELEC cancelled Ugdoracion’s COC and
removed his name from the certified list of
candidates for Mayor. His motion for recon
was denied. Hence, the petition imputing
grave abuse of discretion to the COMELEC.
ISSUE #1
Whether there is material misrepresentation
which is a valid ground for the cancellation
of Ugdoracion’s COC
DECISION
YES
RATIO
Section 74, in relation to Section 78 of the
Omnibus Election Code, requires that the
facts stated in the COC must be true, and
any false representation therein of a
material fact shall be a ground for
cancellation thereof, thus:
SEC. 74. Contents of certificate
of candidacy. — The certificate
of candidacy shall state that
the person filing it is
announcing his candidacy for
the office stated therein and
that he is eligible for said office;
if for Member of the Batasang
Pambansa, the province,
including its component cities,
highly urbanized city or district
or sector which he seeks to
represent; the political party to
which he belongs; civil status;
his date of birth; residence; his
post office address for all
election purposes; his
profession or occupation; that
he will support and defend the
Constitution of the Philippines
and will maintain true faith and
allegiance thereto; that he will
obey the laws, legal orders, and
decrees promulgated by the
duly constituted authorities;
that he is not a permanent
resident or immigrant to a
foreign country; that the
obligation assumed by his oath
is assumed voluntarily, without
mental reservation or purpose
of evasion; and that the facts
stated in the certificate of
candidacy are true to the best
of his knowledge.
xxxx
SEC. 78. Petition to deny due
course to or cancel a certificate
of candidacy. – A verified
petition seeking to deny due
course or to cancel a certificate
of candidacy may be filed by
any person exclusively on the
ground that any material
 representation contained
therein as required under
Section 74 hereof is false. The
petition may be filed at any
time not later than twenty-five
days from the time of the filing
of the certificate of candidacy
and shall be decided, after due
notice and hearing not later
than fifteen days before the
election.
The false representation contemplated by
Section 78 of the Code pertains to material
fact, and is not simply an innocuous mistake.
A material fact refers to a candidate’s
qualification for elective office such as one’s
citizenship and residence. Aside from the
requirement of materiality, a false
representation under Section 78 must
consist of a “deliberate attempt to mislead,
misinform, or hide a fact which would
otherwise render a candidate ineligible.”
Section 74 specifically requires a statement
in the COC that the candidate is “not a
permanent resident or an immigrant to a
foreign country.” Ugdoracion explicitly
stated in his COC that he had resided in
Albuquerque, Bohol before the May 2007
elections for 41 years. Even if Ugdoracion
might have been of the mistaken belief that
he remained a resident of the Philippines, he
hid the fact of his immigration to the USA
and his status as a “green card” holder.
Although Ugdoracion have won the election
as Mayor of Albuquerque before, it does not
substitute for the specific requirements of
law on a person’s eligibility for public office
which he lacked, and does not cure his
material misrepresentation which is a valid
ground for the cancellation of his COC.
ISSUE #2
Whether Ugdoracion lost his domicile of
origin
DECISION
YES
RATIO
Residence, in contemplation of election laws,
is synonymous to domicile. Domicile is the
place where one actually or constructively
has his permanent home, where he, no
matter where he may be found at any given
time, eventually intends to return (animus
revertendi) and remain (animus manendi).
Domicile is classified into (1) domicile of
origin, which is acquired by every person at
birth; (2) domicile of choice, which is
acquired upon abandonment of the domicile
of origin; and (3) domicile by operation of
law, which the law attributes to a person
independently of his residence or intention.
We are guided by three basic rules: (1) a
man must have a residence or domicile
somewhere; (2) domicile, once established,
remains until a new one is validly acquired;
and (3) a man can have but one residence or
domicile at any given time.
The general rule is that the domicile of origin
is not easily lost; it is lost only when there is
an actual removal or change of domicile, a
bona fide intention of abandoning the former
residence and establishing a new one, and
acts which correspond with such purpose. In
the instant case, however, Ugdoracion’s
acquisition of a lawful permanent resident
status in the US amounted to an
abandonment and renunciation of his status
as a resident of the Philippines; it
constituted a change from his domicile of
origin, which was Albuquerque, Bohol, to a
new domicile of choice, which is the USA.
Title of the Case: Unlad v Dragon
June 27, 2008 NACHURA
ObliCon: jurisdiction, rescission
Facts: The parties entered in a Memorandum
of Agreement: respondents as controlling
stockholders of the Rural Bank shall allow
Unlad Resources to subscribe to a minimum
of P480, 000 common or preferred non-
voting shares of stock with a total par value
of P4.8 M and pay up immediately P1.2M for
said subscription; that the respondents,
upon the signing of the said agreement shall
transfer control and management over the
Rural Bank to Unlad Resources. The
respondents complied with their obligation
but the petitioners did not, thus respondents
filed a Complaint for rescission of the
agreement and the return of control and
management of the Rural Bank from
petitioners to respondents, plus damages.
RTC declared the MOA rescinded &ordered
to immediately return control and
management over the Rural to respondents.
Petitioners appealed to the CA which
dismissed the appeal for lack of merit.
Petitioners contend that the issues court are
intra-corporate in nature and are, therefore,
beyond the jurisdiction of the trial court.
They point out that respondents' complaint
charged them with mismanagement and
alleged dissipation of the assets of the Rural
Bank.
Issue #1: Does RTC have jurisdiction over
the case?
Decision: Yes
Ratio:
The main issue in this case is the rescission
of the Memorandum of Agreement. This is to
be distinguished from respondents'
allegation of the alleged mismanagement
and dissipation of corporate assets by the
petitioners, which is based on the prayer for
receivership over the bank. The two issues,
albeit related, are obviously separate, as
they pertain to different acts of the parties
involved. The issue of receivership does not
arise from the parties' obligations under the
Memorandum of Agreement, but rather from
specific acts attributed to petitioners as
members of the Board of Directors of the
Bank. Clearly, the rescission of the
Memorandum of Agreement is a cause of
action within the jurisdiction of the trial
courts, notwithstanding the fact that the
parties involved are all directors of the same
corporation.
The petitioners insist that the trial court had
no jurisdiction over the complaint because
the issues involved are intra-corporate in
nature. This point has been rendered moot
by RA 8799, also known as the Securities
Regulation Code, which took effect in 2000,
transferred jurisdiction over such disputes to
the RTC.
Issue #2: Has the action prescribed?
Decision: No
Ratio:
Petitioners contend that the action for
rescission has prescribed under Article 1398
of the Civil Code, which provides: The action
to claim rescission must be commenced
within 4 years. This is an erroneous
proposition. Article 1389 specifically refers
to rescissible contracts as, clearly, this
provision is under the chapter entitled
"Rescissible Contracts."
Article 1389 applies to rescissible contracts,
as enumerated and defined in Articles 1380
and 1381. The "rescission" in Article 1381 is
not akin to the term "rescission" in Article
1191 and Article 1592. In Articles 1191 and
1592, the rescission is a principal action
which seeks the resolution or cancellation of
the contract while in Article 1381, the action
is a subsidiary one limited to cases of
rescission for lesion as enumerated in said
article.
The prescriptive period applicable to
rescission under Articles 1191 and 1592, is
found in Article 1144, which provides that
the action upon a written contract should be
brought within ten years from the time the
right of action accrues.
Article 1381 sets out what are rescissible
contracts, to wit:
Article 1381. The following contracts are
rescissible:
(1) Those which are entered into by
guardians whenever the wards whom they
represent suffer lesion by more than one-
fourth of the value of the things which are
the object thereof;
(2) Those agreed upon in representation of
absentees, if the latter suffer the lesion
stated in the preceding number;
(3) Those undertaken in fraud of creditors
when the latter cannot in any other manner
collect the claims due them;
(4) Those which refer to things under
litigation if they have been entered into by
the defendant without the knowledge and
approval of the litigants or of competent
judicial authority;
(5) All other contracts specially declared by
law to be subject to rescission.
The Memorandum of Agreement subject of
this controversy does not fall under the
above enumeration. Accordingly, the
prescriptive period that should apply to this
case is that provided for in Article 1144, to
wit: The following actions must be brought
within ten years from the time the right of
action accrues: (1) Upon a written contract;
Based on the records of this case, the action
was commenced on July 3, 1987, while the
Memorandum of Agreement was entered
into on December 29, 1981. Article 1144
specifically provides that the 10-year period
is counted from "the time the right of action
accrues." The right of action accrues from
the moment the breach of right or duty
occurs. Thus, the original Complaint was filed
well within the prescriptive period.
Issue #2: Did the RTC correctly rule for the
rescission of the MOA?
Decision: Yes
Ratio:
Petitioners failed to fulfill their obligation
under the MOA. Even they admit the same,
albeit laying the blame on respondents.
It is true that respondents increased the
Rural Bank's authorized capital stock to only
P5 million, which was not enough to
accommodate the P4.8 million worth of
stocks that petitioners were to subscribe to
and pay for. However, respondents' failure
to fulfill their undertaking in the agreement
would have given rise to the scenario
contemplated by Article 1191 of the Civil
Code, which reads:
Article 1191. The power to rescind reciprocal
obligations is implied in reciprocal ones, in
case one of the obligors should not comply
with what is incumbent upon him.
The injured party may choose between the
fulfillment and the rescission of the
obligation, with the payment of damages in
either case. He may also seek rescission,
even after he has chosen fulfillment, if the
latter should become impossible.
The court shall decree the rescission
claimed, unless there be just cause
authorizing the fixing of a period.
This is understood to be without prejudice to
the rights of third persons who have
acquired the thing, in accordance with
Articles 1385 and 1388 and the Mortgage
Law.
Thus, petitioners should have exacted
fulfillment from the respondents or asked for
the rescission of the contract instead of
simply not performing their part of the
Agreement. But in the course of things, it
was the respondents who availed of the
remedy under Article 1191, opting for the
rescission of the Agreement in order to
regain control of the Rural Bank.
Having determined that the rescission of the
subject Memorandum of Agreement was in
order, the trial court ordered petitioner
Unlad Resources to return to respondents
the management and control of the Rural
Bank and for the latter to return the sum of
P1,003,070.00 to petitioners.
Mutual restitution is required in cases
involving rescission under Article 1191. This
means bringing the parties back to their
original status prior to the inception of the
contract.[14] Article 1385 of the Civil Code
provides, thus:
ART. 1385. Rescission creates the obligation
to return the things which were the object of
the contract, together with their fruits, and
the price with its interest; consequently, it
can be carried out only when he who
demands rescission can return whatever he
may be obligated to restore.
Neither shall rescission take place when the
things which are the object of the contract
are legally in the possession of third persons
who did not act in bad faith.
In this case, indemnity for damages may be
demanded from the person causing the loss.
This Court has consistently ruled that this
provision applies to rescission under Article
1191:
[S]ince Article 1385 of the Civil Code
expressly and clearly states that "rescission
creates the obligation to return the things
which were the object of the contract,
together with their fruits, and the price with
its interest," the Court finds no justification
to sustain petitioners' position that said
Article 1385 does not apply to rescission
under Article 1191.[15]
Rescission has the effect of "unmaking a
contract, or its undoing from the beginning,
and not merely its termination."[16] Hence,
rescission creates the obligation to return
the object of the contract. It can be carried
out only when the one who demands
rescission can return whatever he may be
obliged to restore. To rescind is to declare a
contract void at its inception and to put an
end to it as though it never was. It is not
merely to terminate it and release the
parties from further obligations to each
other, but to abrogate it from the beginning
and restore the parties to their relative
positions as if no contract has been made.[17]
Accordingly, when a decree for rescission is
handed down, it is the duty of the court to
require both parties to surrender that which
they have respectively received and to place
each other as far as practicable in his
original situation. The rescission has the
effect of abrogating the contract in all parts.
[18]
Clearly, the petitioners failed to fulfill their
end of the agreement, and thus, there was
just cause for rescission. With the contract
thus rescinded, the parties must be restored
to the status quo ante, that is, before they
entered into the Memorandum of
Agreement.
 Primer on the SC Decision in Neri vs. Senate Committee
April 3, 2008 in CuRReNT IsSues
Primer on the Supreme Court Decision in
Neri vs. Senate Committee and its Implications

IN GENERAL:

What is the case of Neri vs. Senate Committee?

This case is about the Senate investigation of anomalies concerning

the NBN-ZTE project. During the hearings, former NEDA head Romulo
Neri refused to answer certain questions involving his conversations
with President Arroyo on the ground they are covered by executive
privilege. When the Senate cited him in contempt and ordered his
arrest, Neri filed a case against the Senate with the Supreme Court.
On March 25, 2008, the Supreme Court ruled in favor of Neri and
upheld the claim of executive privilege.

What is “executive privilege”?

It is the right of the President and high-level executive branch

officials to withhold information from Congress, the courts and the
public. It is a privilege of confidentiality which applies to
certain types of information of a sensitive character that would be
against the public interest to disclose. Executive privilege is
based on the constitution because it relates to the President’s
effective discharge of executive powers. Its ultimate end is to
promote public interest and no other.

Is executive privilege absolute?

No. Any claim of executive privilege must be weighed against other

interests recognized by the constitution, like the state policy of
full public disclosure of all transactions involving public interest,
the right of the people to information on matters of public concern,
the accountability of public officers, the power of legislative
inquiry, and the judicial power to secure evidence in deciding cases.

Did the revocation by the President of E.O. 464 on March 6, 2008

diminish the concept of executive privilege?

No. Executive privilege may still be invoked despite the President’s

revocation of E.O. 464 because it is based on the constitution.

ON THE CONTENTS OF THE SUPREME COURT DECISION:

What events led to the filing of the case before the Supreme Court?

On April 21, 2007, the DOTC and Zhing Xing Telecommunications

Equipment (ZTE), a corporation owned by the People’s Republic of
China, executed a “Contract for the Supply of Equipment and Services
for the National Broadband Network Project” (NBN-ZTE Contract) worth
US$329,481,290.00 (around PhP 16B). The project sought to provide
landline, cellular and internet services in government offices
nationwide and was to be financed through a loan by China to the
Philippines. President Arroyo witnessed the contract signing in
China.

After its signing, reports of anomalies concerning the project (e.g.,

bribery, “overpricing” by US$ 130M, “kickback commissions” involving
top government officials, and loss of the contract) prompted the
Senate, through the Committees on Accountability of Public Officers
and Investigations (Blue Ribbon), Trade and Commerce, and National
Defense and Security, to conduct an inquiry in aid of legislation.
The inquiry was based on a number of Senate resolutions and in
connection with pending bills concerning funding in the procurement
of government projects, contracting of loans as development
assistance, and Senate concurrence to executive agreements.

In one of the hearings held on Sept. 26, 2007, former NEDA Director
General Romulo Neri testified that President Arroyo initially gave
instructions for the project to be undertaken on a Build-Operate-
Transfer (BOT) arrangement so the government would not spend money
for it, but eventually the project was awarded to ZTE with a
government-to-government loan from China. He also said that then
COMELEC Chairman Benjamin Abalos, the alleged broker in the project,
offered him PhP 200M in exchange for NEDA’s approval of the project.
Neri testified that when he told President Arroyo of the bribe offer,
she told him not to accept it. But Neri refused to answer questions
about what he and the President discussed after that, invoking
executive privilege since they concerned his conversations with the
President. The Senate required him to appear again and testify on
November 20, 2007. On November 15, 2007, Executive Secretary Eduardo
Ermita wrote the Senate Committees and asked that Neri’s testimony on
November 20, 2007 be dispensed with because he was invoking executive
privilege “by Order of the President” specifically on the following
questions:

a. Whether the President followed up on the NBN project?

b. Were you dictated to prioritize the ZTE?
c. Whether the President said to go ahead and approve the
project after being told about the alleged bribe?

When Neri failed to appear on November 20, 2007, the Senate required
him to show cause why he should not be cited in contempt. Neri
explained that he thought the only remaining questions were those he
claimed to be covered by executive privilege and that should there be
new matters to be taken up, he asked that he be informed in advance
of what else he needs to clarify so he could prepare himself.

On Dec. 7, 2007, Neri questioned the validity of the Senate’s show

cause order before the Supreme Court. On January 30, 2008, the
Senate cited Neri in contempt and ordered his arrest for his failure
to appear in the Senate hearings. On February 1, 2008, Neri asked the
Supreme Court to stop the Senate from implementing its contempt
order, which the Court granted on Feb. 5, 2008. The Supreme Court
also required the parties to observe the status quo prevailing before
the issuance of the contempt order.

What reasons were given for the claim of executive privilege?

Executive Secretary Ermita said that “the context in which executive

privilege is being invoked is that the information sought to be
disclosed might impair our diplomatic as well as economic relations
with the People’s Republic of China.” Neri further added that
his “conversations with the President dealt with delicate and
sensitive national security and diplomatic matters relating to the
impact of the bribery scandal involving high government officials and
the possible loss of confidence of foreign investors and lenders in
the Philippines.”

What issues were considered by the Supreme Court in resolving the

case?

The Supreme Court said there were two crucial questions at the core
of the controversy:

a. Are the communications sought to be elicited by the three

questions covered by executive privilege?
b. Did the Senate Committees commit grave abuse of discretion in
citing Neri in contempt and ordering his arrest?

How did the Supreme Court resolve these issues?

The Supreme Court first recognized the power of Congress to conduct

inquiries in aid of legislation. The Court said that the power
extends even to executive officials and the only way for them to be
exempted is through a valid claim of executive privilege.

On the first question, the Supreme Court said that the communications
sought to be elicited by the three questions are covered by the
presidential communications privilege, which is one type of executive
privilege. Hence, the Senate cannot compel Neri to answer the three
questions.

On the second question, the Supreme Court said that the Senate
Committees committed grave abuse of discretion in citing Neri in
contempt. Hence, the Senate order citing Neri in contempt and
ordering his arrest was not valid.

What are the types of executive privilege?

a. state secrets (regarding military, diplomatic and other

security matters)
b. identity of government informers
c. information related to pending investigations
d. presidential communications
e. deliberative process

In what cases is the claim of executive privilege highly recognized?

The claim of executive privilege is highly recognized in cases where
the subject of inquiry relates to a power textually committed by the
constitution to the President, such as the commander-in-chief,
appointing, pardoning, and diplomatic powers of the President.
Information relating to these powers may enjoy greater
confidentiality than others.

What specifically are the executive privileges relating to

deliberations or communications of the President and other government
officials?

These are the presidential communications privilege and the

deliberative process privilege.

How are the presidential communications privilege and the

deliberative process privilege distinguished?

The presidential communications privilege applies to decision-making

of the President. It pertains to “communications, documents or other
materials that reflect presidential decision-making and deliberations
and that the President believes should remain confidential”.

The deliberative process privilege applies to decision-making of

executive officials. It includes “advisory opinions, recommendations
and deliberations comprising part of a process by which governmental
decisions and policies are formulated.”

Unlike the deliberative process privilege, the presidential

communications privilege applies to documents in their entirety, and
covers final and post-decisional materials as well as pre-
deliberative ones.

Moreover, congressional or judicial negation of the presidential

communications privilege is always subject to greater scrutiny than
denial of the deliberative process privilege.

What is the type of executive privilege claimed in this case?

The type of executive privilege claimed in this case is the

presidential communications privilege.

Is there a presumption in favor of presidential communications?

Yes. Presidential communications are “presumptively privileged”.

The presumption is based on the President’s generalized interest in
confidentiality. The privilege is necessary to guarantee the candor
of presidential advisors and to provide the President and those who
assist him with freedom to explore alternatives in the process of
shaping policies and making decisions and to do so in a way many
would be unwilling to express except privately.

The presumption can be overcome only by mere showing of public need

by the branch seeking access to presidential communications.
Who are covered by the presidential communications privilege?

Aside from the President, the presidential communications privilege

covers senior presidential advisors or Malacanang staff who
have “operational proximity” to direct presidential decision-making.

What are the elements of the presidential communications privilege?

The following are the elements of the presidential communications

privilege:

a. The protected communication must relate to a “quintessential

and non-delegable presidential power”.
b. The communication must be authored or “solicited and
received” by a close advisor of the President or the President
himself. The advisor must be in “operational proximity” with the
President.
c. The privilege is a qualified privilege that may be overcome
by a showing of adequate or compelling need that would justify the
limitation of the privilege and that the information sought is
unavailable elsewhere by an appropriate investigating agency.

What are examples of “quintessential and non-delegable presidential

powers” which are covered by the presidential communications
privilege?

The privilege covers only those functions which form the core of
presidential authority. These are functions which
involve “quintessential and non-delegable presidential powers” such
as the powers of the president as commander-in-chief (i.e., to call
out the armed forces to suppress violence, to declare martial law, or
to suspend the privilege of the writ of habeas corpus), the power to
appoint officials and remove them, the power to grant pardons and
reprieves, the power to receive ambassadors, and the power to
negotiate treaties and to enter into execute agreements.

Are the elements of the presidential communications privilege present

in this case?

Yes. The communications elicited by the three questions are covered

by the presidential communications privilege because:

a. First, the communications relate to the power of the

President to enter into an executive agreement with other countries.
b. Second, the communications are received by Neri, who as a
Cabinet member can be considered a close advisor of the President.
c. Third, the Senate Committees have not adequately shown a
compelling need for the answers to the three questions in the
enactment of a law and of the unavailability of the information
elsewhere by an appropriate investigating authority.

Does the grant of the claim of executive privilege violate the right
of the people to information on matters of public concern?

No, for the following reasons:

a. Neri appeared before the Senate on Sept. 26, 2007 and was
questioned for 11 hours. He also expressed his willingness to answer
more questions from the Senators, except the three questions.
b. The right to information is subject to limitation, such as
executive privilege.
c. The right of Congress to obtain information in aid of
legislation cannot be equated with the people’s right to
information. Congress cannot claim that every legislative inquiry is
an exercise of the people’s right to information.

Was the claim of executive privilege properly invoked by the

President in this case?

Yes. For the claim to be properly invoked, there must be a formal

claim by the President stating the “precise and certain reason” for
preserving confidentiality. The grounds relied upon by Executive
Secretary Ermita are specific enough, since what is required is only
that an allegation be made “whether the information demanded involves
military or diplomatic secrets, closed-door Cabinet meetings, etc.”
The particular ground must only be specified, and the following
statement of grounds by Executive Secretary Ermita satisfies the
requirement: “The context in which executive privilege is being
invoked is that the information sought to be disclosed might impair
our diplomatic as well as economic relations with the People’s
Republic of China.”

What reasons were given by the Supreme Court in holding that it was
wrong for the Senate to cite Neri in contempt and order his arrest?

a. There was a legitimate claim of executive privilege.

b. The Senate’s invitations to Neri did not include the possible
needed statute which prompted the inquiry, the subject of inquiry,
and the questions to be asked.
c. The contempt order lacked the required number of votes.
d. The Senate’s rules of procedure on inquiries in aid of
legislation were not duly published.
e. The contempt order is arbitrary and precipitate because the
Senate did not first rule on the claim of executive privilege and
instead dismissed Neri’s explanation as unsatisfactory.

IMPLICATIONS OF THE SUPREME COURT DECISION:

Who has the burden of showing whether or not a claim of executive

privilege is valid?

Executive privilege is in derogation of the search for truth.

However, the decision recognized Presidential communications as
presumptively privileged. Hence, the party seeking disclosure of the
information has the burden of overcoming the presumption in favor of
the confidentiality of Presidential communications.

This presumption is inconsistent with the Court’s earlier statement

in Senate vs. Ermita (April 20, 2006) that “the presumption inclines
heavily against executive secrecy and in favor of disclosure”. It
is also inconsistent with constitutional provisions on transparency
in governance and accountability of public officers, and the right of
the people to information on matters of public concern.

Does the decision expand the coverage of executive privilege?

Yes, the decision expands the coverage of executive privilege in at

least two ways:

a. The decision explained that the presidential communications

privilege covers communications authored or “solicited and received”
by a close advisor of the President or the President himself. This
means that the privilege applies not only to communications that
directly involve the President, but also to communications involving
the President’s close advisors, i.e., those in “operational
proximity” with the President. There is no definition
of “operational proximity”, so it is not clear how far down the chain
of command the privilege extends. This expansion of the coverage of
the privilege means that information in many areas of the executive
branch will become “sequestered” from public view.

b. The decision also stated that the presidential communications

privilege applies to documents in their entirety, and covers final
and post-decisional materials as well as pre-deliberative ones. This
means that the privilege protects not only the deliberative or advice
portions of documents, i.e., communications made in the process of
arriving at presidential decisions, but also factual material or
information concerning decisions already reached by the President.

How will the decision affect other investigations?

The decision makes it easy for the President to invoke executive

privilege, since what is required is only that an allegation be
made “whether the information demanded involves military or
diplomatic secrets, closed-door Cabinet meetings, etc.” This in
effect will enable the use of executive privilege to hide misconduct
or crime. According to Fr. Bernas, S.J., the implication of the
ruling is that once the “presidential communications privilege” is
invoked, no evidence is needed to support it even if there are valid
reasons for disclosing the information sought. “This would
revolutionize the doctrine in a manner that can affect all other
investigations. This can, for instance, hamper effective use of the
… writ of amparo and writ of habeas data. It can also cripple
efforts to battle official corruption ….”

In particular, what is the effect of the decision on the Senate’s

power to conduct inquiries in aid of legislation?

The decision severely limits the Senate’s power of legislative

inquiry and its ability to investigate government anomalies in aid of
legislation. The decision encroaches upon matters internal to the
Senate as an institution separate from and co-equal to other branches
of government.

The decision, for instance, requires the Senate to give its questions
in advance of its hearings. But this is a requirement applicable
only to the question hour and not to inquiries in aid of
legislation. Moreover, it is impractical, since follow-up questions
of Senators will be difficult to anticipate.

The decision also requires the Senate to publish its rules of

procedure on legislative inquiries every three years. But the
Senate traditionally considered as a continuing body. Senate
committees continue to work even during senatorial elections. By
tradition and practice, the Senate does not re-publish its rules. To
require publication of its rules every three years is unnecessary and
inconsistent with its tradition and practice.

Did the Supreme Court ruling establish a doctrine on executive

privilege?

No. Although the vote is 9 – 6 in favor of upholding the claim of

executive privilege, two of the nine Justices concurred merely in the
result, while one Justice argued not on the basis of executive
privilege. Hence, only six out of the nine Justices explained their
votes in favor of the claim of executive privilege. Six out of a
total of 15 Justices do not establish a doctrine.

Can the Senate continue with its investigations despite the Supreme
Court ruling?

The decision does not stop the Senate from continuing with its
investigations and from undertaking other inquiries, although the
government has already declared that officials will not appear unless
the Senate rules are first published. Should Neri (and other
officials) appear, the Senate can ask him questions other than the
three questions. But Neri may again invoke executive privilege on
other questions, which could result in another case before the
Supreme Court, and the cycle may be repeated again and again. Such a
situation, particularly where there appears to be a pattern of
concealment in government activities, will ultimately be harmful to
public interest.

Prepared by:
ATTY. CARLOS P. MEDINA, JR.
Ateneo Human Rights Center
March 30, 2008