CA Justices Accused of Defying SC Ruling on Seafarer's Death Benefits Case

BERSAMIN, J.
SC DECISIONS
UNIVERSITY OF THE EAST COLLEGE OF LAW
A.M. No. RTJ-15-2426 June 16, 2015

[Formerly A.M. No. 05-3-83-MTC]
OFFICE OF THE COURT ADMINISTRATION, Complainant, vs. JUDGE

ALEXANDER BALUT, Respondent.
DISSENT
The well-written main opinion presents well the undeniable facts of the case against
respondent Judge, who has committed the grave offense of dipping his fingers into the
judicial funds in the custody of court employees working under him. It dismisses
respondent Judge from the service for gross misconduct.
Under ordinary circumstances, I would have no objection to imposing the supreme

penalty of dismissal from the service. Respondent Judge should not have sullied
himself by showing personal interest in the judicial funds because he should have been
well aware of their nature as fiduciary funds. He should not be condoned for what he
had done.
However, I respectfully urge that the Court takes note of certain circumstances that I
humbly suggest should be considered and treated as mitigating circumstances to
temper the supreme penalty of dismissal from the service to a lesser penalty.
The first is that respondent Judge had apparently no intention to misappropriate or

steal the funds. He willingly signed for the "borrowings," thereby evincing the lack of
the intention to appropriate the funds for himself. He also issued certifications of his
"borrowings." The implication of his doing so is that he intended all along to repay the
"borrowings."
The second is that respondent Judge already returned the funds he had "borrowed."
In the case of the Municipal Trial Court (MTC) in Bayombong, Nueva Vizcaya, Judith
En. Salimpade, Clerk of Court II, was found by the audit team to have incurred as of
August 31, 2003 a total shortage of P2,057 ,3 78.59. In the case of the audit of the
Municipal Circuit Trial Court (MCTC) of Aritao-Sta. Fe, the accountability of Lydia
Ramos, Clerk of Court of the MCTC of Aritao-Sta. Fe, was declared as fully settled as of
August 2004; while the accountability of Eduardo S. Esconde, whom Ramos had
succeeded in that position on July 16, 2000 without proper turnover of accountabilities,
was found to be short of P58,100.00 as of the time that the matter was submitted by the
Office of the Court Administrator to the Court for its consideration. Although said
accountable officers in both stations had revealed to the auditors that respondent Judge
had borrowed money from their collections, and that they had accommodated him only
out of fear of him, there is no question that: (1) he did return the P240,000.00 borrowed
to Salimpade, who issued a certification to the effect that he had thereby "completely
settled his monetary accountability to the MTC, Bayombong;" and (2) he returned the
amount ofP207,774.42 as of May 9, 2002 to the Clerk of Court of the MCTC.
The restitution of the "borrowed" funds can be taken as a mitigating factor in favor of
respondent Judge. The Court has held so in Perez v. People,1 a criminal case for
malversation:
It bears stressing that the full restitution of the amount malversed will not in any way
exonerate an accused, as payment is not one of the elements of extinction of criminal
Page 1 of 378
BERSAMIN, J. SC DECISIONS
liability. Under the law, the refund of the sum misappropriated, even before the
commencement of the criminal prosecution, does not exempt the guilty person from
liability for the crime. At most, then, payment of the amount malversed will only serve
as a mitigating circumstance akin to voluntary surrender, as provided for in paragraph
7 of Article 13 in relation to paragraph 10 of the same Article of the Revised Penal Code.
(Bold emphasis added)
The third is that respondent Judge has been in the service for nearly 22 years now. From
his position as an MCTC Judge in Nueva Vizcaya in 1993, he was promoted on
September 1, 2005 to the Regional Trial Court in Quezon City. The promotion surely
indicated that he had passed the Judicial and Bar Council's standard of scrutiny, earned
the President's stamp of approval, and eventually assumed the higher office.
The safekeeping of collected funds is essential to the goal of an orderly administration

of justice, and no protestation of good faith can override the mandatory nature of
circulars designed to promote full accountability for government funds. But while this
Court has sternly disciplined, and deservedly so, personnel in its ranks, warning that
the act of misappropriating judiciary funds constitutes dishonesty and grave
misconduct punishable by dismissal from service even on the first offense, it has time
and again extended nevertheless its benevolence to reduce the imposable penalty. The
benevolence occasionally exhibited by the Court finds legal basis in the postulate that
the disciplining authority has the discretion to consider mitigating circumstances in the
imposition of the proper penalty. As expounded in Arganosa-Maniego v. Salinas:2
Pursuant to Section 23, Rule XIV of the Omnibus Rules Implementing Book V of
Executive Order 292, Grave Misconduct and Dishonesty, being in the nature of grave
offenses, carry the extreme penalty of dismissal from the service with [accessory
penalties] ....
However, in several administrative cases, the Court has refrained from imposing the
actual penalties in the presence of mitigating factors. Factors such as the respondent's
length of service, the respondent's acknowledgement of his or her infractions and
feeling of remorse, family circumstances, humanitarian and equitable considerations,
respondent's advanced age, among other things, have had varying significance in the
Court's determination of the imposable penalty. (emphasis and words in bracket
added.)
Thusly, in Arganosa-Maniego v. Salinas, respondent Rogelio Salinas, albeit found liable

for gross misconduct and dishonesty for encashing two checks in the name of
complainant judge amounting to P22,521.00 by forging the latter's signature, was only
suspended for one year without pay, taking into account that the offense was his first in
his more than 10 years of government service, and that he acknowledged and exhibited
remorse for his infractions and restituted the amount involved.3 As the Court observed
there, where a penalty less severe would suffice, whatever missteps had been
committed by the employee ought not to be visited with a consequence as severe as
dismissal.4
In the matter of the Report on the Fil:zancial Audit on the Books of Accounts of Mr.
Delfin T Polido, Former Clerk of Court of Municipal Circuit Trial Court, Victoria-La
Paz, Tarlac,5 respondent judge was fined P10,000.00 for a shortage of P38,000.00 in the
judiciary fund. Respondent judge later restituted the shortage.
Page 2 of 378
IN VIEW OF THE FOREGOING CIRCUMSTANCES, I respectfully submit that

dismissal from the service is a penalty too severe for respondent Judge. Instead, I VOTE
that he should suffer suspension from office without pay for two years.
A.M. No. CA-13-51-J July 2, 2013
RE: LETTER COMPLAINT OF MERLITA B. FABIANA AGAINST PRESIDING

JUSTICE ANDRES B. REYES, JR., ASSOCIATE JUSTICES ISAIAS P. DICDICAN
AND STEPHEN C. CRUZ; CARAG JAMORA SOMERA AND VILLAREAL LAW
OFFICES AND ITS LAWYERS ATTYS. ELPIDIO C. JAMORA, JR. AND BEATRIZ
O. GERONILLA-VILLEGAS, LAWYERS FOR MAGSAYSAY MARITIME
CORPORATION AND VISAYAN SURETY AND INSURANCE CORPORATION.
DECISION
This administrative matter stems from the claim for death benefits by the heirs of the
late Marlon Fabiana (heirs of Fabiana) against manning agent Magsaysay Maritime
Corporation and its principal Air Sea Holiday GMBH-Stable Organizations Italia.
Complainant Merlita B. Fabiana, Marlons surviving spouse, hereby accuses Court of

Appeals (CA) Presiding Justice Andres B. Reyes, Jr., Associate Justice Isaias P. Dicdican
and Associate Justice Stephen C. Cruz, as the former Members of the CAs First
Division, of having openly defied the resolution promulgated by the Court on January
13, 2010 in G.R. No. 189726 entitled Heirs of the Late Marlon A. Fabiana, [herein
represented by Merlita B. Fabiana] v. Magsaysay Maritime Corp., et al., whereby the
Court had allegedly "fixed with finality complainants claims for death benefits and
other monetary claims, including damages and attorneys fees, against the Maritime
Company arising from the death of her husband."1
The relevant antecedents follow.
On December 19, 2007, the Labor Arbiter granted the following claims to the heirs of
Fabiana, to wit:
WHEREFORE, considering all the foregoing premises, respondents are liable to pay the
following to the complainants:
US $82,500.00 death benefits to complainant Merlita B. Fabiana;
US $16,500.00 to complainant Jomari Paul B. Fabiana;
Salary differentials from July 17, 2006 to April 23, 2007 computed at US $1,038
deducting the US $424.00 monthly salaries already paid by the respondents;
The difference of 1,500.00 Euro contributed by fellow Filipino seafarer and US $1,000
remitted by respondents computed at the rate of exchange at the time of payment;
Sick benefits from April 23, 2007 to May 11, 2007 computed at US $1,038.00 monthly
salary rate;
US $331.00 guaranteed overtime pay;
P7,574.00 actual damages;
Page 3 of 378
P100,000.00 for moral damages;
P1,000,000.00 exemplary damages;
Ten percent (10%) attorneys fees computed on the total awards.2
On December 10, 2008, the National Labor Relations Commission (NLRC) rendered its
decision,3 disposing:
WHEREFORE, foregoing premises considered, the appeal is MODIFIED in the sense

that the award of moral and exemplary damages are reduced to P50,000.00 each while
the other awards are AFFIRMED.
SO ORDERED.
The parties then separately brought their respective petitions for certiorari to the CA,
specifically:
(a)
C.A.-G.R. SP No. 109382 entitled Heirs of the late Marlon A. Fabiana, herein
represented by Merlita B. Fabiana v. National Labor Relations Commission, Magsaysay
Maritime Corporation and Air Sea Holiday GMBH-Stab[i]le Organizations Italia
(Hotel), assailing the jurisdiction of the NLRC in entertaining the appeal of Magsaysay
Maritime Corporation and its principal, and seeking the reinstatement of the moral and
exemplary damages as awarded by the Labor Arbiter (first petition);4 and
(b)
C.A.-G.R. SP No. 109699 entitled Magsaysay Maritime Corporation, Eduardo Manese,

Prudential Guarantee (Surety), and Air Sea Holiday GMBH-Stable Organizations, Italia
v. Heirs of the late Marlon Fabiana, and National Labor Relations Commission
challenging the propriety of the monetary awards granted to the heirs of Fabiana
(second petition).5
In the second petition, the petitioners averred that the late Marlon Fabiana had died
from a non-work related disease after his employment contract had terminated.
On August 20, 2009, when the heirs of Fabiana filed their comment vis--vis the second
petition, they sought the consolidation of the two petitions. Their request for
consolidation was not acted upon, however, but was soon mooted a month later by the
First Division of the CA promulgating its decision on the first petition (C.A.-G.R. No.
109382) on September 29, 2009,6 to wit:
WHEREFORE, premises considered, the petition is partly GRANTED. Accordingly, the

challenged Decision is AFFIRMED but MODIFIED insofar as interest at the rate of six
percent per annum (6% p.a.) is imposed on all the monetary awards, reckoned from the
Labor Arbiters judgment on 19 December 2007, except moral and exemplary damages
to which the same rate of interest is imposed, but reckoned from the time the
aforementioned decision was promulgated on 10 December 2008 by the NLRC Sixth
Division. An additional interest of twelve percent per annum (12% p.a.) is applied on
the total amount ultimately awarded upon finality of the decision until fully paid.
Page 4 of 378
The petitioners motion for preliminary mandatory injunction is deemed resolved by

this decision.
IT IS SO ORDERED.
Magsaysay Maritime Corporation filed on October 25, 2009 a motion for clarification in
C.A.-G.R. No. 109382 instead of a motion for reconsideration.7 In response, the CA
issued its clarification on November 26, 2009 by stating that the "affirmance with
modification" was but the "consequence of the certiorari petition being merely partially
granted."8
On their part, the heirs of Fabiana filed a motion for reconsideration in C.A.-G.R. No.
109382, which the CA denied. Hence, on November 23, 2009, they appealed to the Court
by petition for review on certiorari (G.R. No. 189726). However, the Court, through the
Third Division,9 denied the petition for review on certiorari through the resolution of
January 13, 2010,10 quoted as follows:
Acting on the petition for review on certiorari assailing the Decision dated 29
September 2009 of the Court of Appeals in CA-G.R. SP No. 109382, the Court resolves to
DENY the petition for failure to sufficiently show that the appellate court committed
any reversible error in the challenged decision as to warrant the exercise by this Court
of its discretionary appellate jurisdiction.
A careful consideration of the petition indicates a failure of the petitioners to show any
cogent reason why the actions of the Labor Arbiter, the National Labor Relations
Commission and the Court of Appeals which have passed upon the same issue should
be reversed. Petitioners failed to show that their factual findings are not based on
substantial evidence or that their decisions are contrary to applicable law and
jurisprudence.
SO ORDERED.
In the meanwhile, on October 16, 2009, the heirs of Fabiana moved to dismiss the
second petition (C.A.-G.R. SP. No. 109699) on the ground that the intervening
promulgation on September 29, 2009 by the First Division of the decision on the first
petition (C.A.-G.R. No. 109382) had rendered the second petition moot and academic.11
On June 4, 2010, however, the First Division of the CA, then comprised by Presiding
Justice Reyes, Jr., Associate Justice Dicdican (ponente) and Associate Justice Cruz,
denied the motion to dismiss filed in C.A.-G.R. SP. No. 109699,12 holding thusly:
This has reference to the motion filed by the private respondents, through their counsel,
to dismiss the petition in the case at bench on the ground that it has been rendered moot
and academic by the decision promulgated on September 29, 2009 by this Court in CA-
G.R. SP No. 109382.
After a judicious scrutiny of the whole matter, we find the said motion to dismiss to be
wanting in merit. It is not true that the petition in this case has been rendered moot and
academic by the decision promulgated by this Court on September 29, 2009 in CA-G.R.
SP No. 109382. The said decision rendered by this Court passed upon two limited issues
only, namely, the NLRCs jurisdiction to allow the petitioners appeal thereto despite
flaws in their verification and non-forum shopping papers and the propriety of the
reduction by the NLRC of the amount of damages awarded to the private respondents.
Page 5 of 378
A reading of the said decision will unmistakably bear this out. However, in the case at
bench, the petitioners have assailed omnibously the NLRCs awards in favor of the
private respondents for death benefits, sickness allowance, salary differentials and other
monetary claims. We have to pass upon the propriety of all these monetary awards.
WHEREFORE, in view of the foregoing premises, we hereby DENY the aforementioned

motion to dismiss filed in this case.
We hereby give the parties a fresh period of fifteen (15) days from notice hereof within
which to file memoranda in support of their respective sides of the case.
SO ORDERED.
The second petition (C.A.-G.R. SP. No. 109699) was ultimately resolved on September
16, 2011 by the Sixth Division of the CA, composed of Associate Justice Amelita G.
Tolentino, Associate Justice Normandie B. Pizarro (ponente) and Associate Justice Rodil
V. Zalameda, dismissing the petition upon not finding the NLRC to have gravely
abused its discretion.
As earlier adverted to, the complainant accuses Presiding Justice Reyes, Jr., Associate
Justice Dicdican and Associate Justice Cruz with thereby willfully disobeying the
resolution of January 13, 2010 promulgated by the Court.
The complaint lacks merit.
In administrative proceedings, the burden of substantiating the charges falls on the

complainant who must prove her allegations in the complaint by substantial
evidence.13 Here, the allegation of willful disobedience against respondent CA Justices
was unsubstantiated and baseless. The issues raised in the first petition (C.A.-G.R. No.
109382) were limited to the NLRCs jurisdiction over the appeal by Magsaysay
Maritime Corporation and its principal, and to the reduction of the amounts awarded as
moral and exemplary damages. In contrast, the second petition (C.A.-G.R. SP. No.
109699) concerned only the propriety of awarding monetary benefits. Under the
circumstances, the promulgation by the Court of the resolution of January 13, 2010 in
G.R. No. 189726 did not divest the respondents as members of the First Division of the
CA of the jurisdiction to entertain and pass upon the second petition (C.A.-G.R. SP. No.
109699), something that they sought to explain through their resolution promulgated on
June 4, 2010. The explanation, whether correct or not, was issued in the exercise of
judicial discretion. It is not for us to say now in a resolution of this administrative
complaint whether the explanation was appropriate or not, nor for the complainant to
herself hold them in error. The recourse open to the heirs of Fabiana, including the
complainant, was to move for the correction of the resolution, if they disagreed with it,
and, should their motion be denied, to assail the denial in this Court through the
remedy warranted under the law.
The complainants initiation of her complaint would take respondent Justices to task for
their regular performance of their office. Yet, as the surviving spouse of the late-
lamented Marlon, she was understandably desirous of the most favorable and quickest
outcome for the claim for death benefits because his intervening demise had rendered
her and her family bereft of his support. Regardless of how commendable were her
motives for initiating this administrative complaint, however, she could not substitute a
proper judicial remedy not taken with an improper administrative denunciation of the
Justices she has hereby charged. That is impermissible. If she felt aggrieved at all, she
Page 6 of 378
should have resorted to the available proper judicial remedy, and exhausted it, instead
of resorting to the unworthy disciplinary charge.
Truly, disciplinary proceedings and criminal actions brought against any Judge or
Justice in relation to the performance of official functions are neither complementary to
nor suppletory of appropriate judicial remedies, nor a substitute for such
remedies.14 The Court has fittingly explained why in In Re: Joaquin T. Borromeo,15 to
wit:
Given the nature of the judicial function, the power vested by the Constitution in the
Supreme Court and the lower courts established by law, the question submits to only
one answer: the administrative or criminal remedies are neither alternative nor
cumulative to judicial review where such review is available, and must wait on the
result thereof.
Simple reflection will make this proposition amply clear, and demonstrate that any
contrary postulation can have only intolerable legal implications. Allowing a party who
feels aggrieved by a judicial order or decision not yet final and executory to mount an
administrative, civil or criminal prosecution for unjust judgment against the issuing
judge would, at a minimum and as an indispensable first step, confer the prosecutor
(Ombudsman) with an incongruous function pertaining, not to him, but to the courts:
the determination of whether the questioned disposition is erroneous in its findings of
fact or conclusions of law, or both. If he does proceed despite that impediment,
whatever determination he makes could well set off a proliferation of administrative or
criminal litigation, a possibility hereafter more fully explored.
Such actions are impermissible and cannot prosper. It is not, as already pointed out,
within the power of public prosecutors, or the Ombudsman or his deputies, directly or
vicariously, to review judgments or final orders or resolutions of the Courts of the land.
The power of reviewby appeal or special civil actionis not only lodged exclusively
in the Courts themselves but must be exercised in accordance with a well-defined and
long established hierarchy, and long standing processes and procedures. No other
review is allowed; otherwise litigation would be interminable, and vexatiously
repetitive.
Moreover, in Re: Verified Complaint of Engr. Oscar L. Ongjoco, Chairman of the

Board/CEO of FH-Gymn Multi-Purpose and Transport Service Cooperative, against
Hon. Juan Q. Enriquez, Jr., Hon. Ramon M. Bato, Jr. and Hon. Florito S. Macalino,
Associate Justices, Court of Appeals,16 the Court ruminates:
In this regard, we reiterate that a judges failure to correctly interpret the law or to
properly appreciate the evidence presented does not necessarily incur administrative
liability, for to hold him administratively accountable for every erroneous ruling or
decision he renders, assuming he has erred, will be nothing short of harassment and
will make his position doubly unbearable. His judicial office will then be rendered
untenable, because no one called upon to try the facts or to interpret the law in the
process of administering justice can be infallible in his judgment. Administrative
sanction and criminal liability should be visited on him only when the error is so gross,
deliberate and malicious, or is committed with evident bad faith, or only in clear cases
of violations by him of the standards and norms of propriety and good behavior
prescribed by law and the rules of procedure, or fixed and defined by pertinent
jurisprudence.
Page 7 of 378
To be clear, although we do not shirk from the responsibility of imposing discipline on

the erring Judges or Justices and employees of the Judiciary, we shall not hesitate to
shield them from baseless charges that only serve to disrupt rather than promote the
orderly administration of justice.17
Even as we dismiss the administrative charge, we deem it necessary to observe further,

in the exercise of our administrative supervision over the CA, that the matter addressed
here was really simple and avoidable if only the CA had promptly implemented its
current procedure for the consolidation of petitions or proceedings relating to or arising
from the same controversies. Section 3(a), Rule III of the 2009 Internal Rules of the Court
of Appeals has forthrightly mandated the consolidation of related cases assigned to
different Justices, viz:
Section 3. Consolidation of Cases. When related cases are assigned to different

justices, they shall be consolidated and assigned to one Justice.
(a) Upon motion of a party with notice to the other party/ies, or at the instance of the
Justice to whom any or the related cases is assigned, upon notice to the parties,
consolidation shall ensue when the cases involve the same parties and/or related
questions of fact and/or law. (Emphases supplied)
xxxx
A perusal of the two petitions showed that they involved the same parties and the same
facts. Even their issues of law, albeit not entirely identical, were closely related to one
another. It could not also be denied that they assailed the same decision of the NLRC.
For these reasons alone, the request for consolidation by the heirs of Fabiana should
have been granted, and the two petitions consolidated in the same Division of the CA.
The consolidation of two or more actions is authorized where the cases arise from the
same act, event or transaction, involve the same or like issues, and depend largely or
substantially on the same evidence, provided that the court has jurisdiction and that
consolidation will not give one party an undue advantage or that consolidation will not
prejudice the substantial rights of any of the parties.18 As to parties, their substantial
identity will suffice. Substantial identity of parties exists when there is a community of
interest or privity of interest between a party in the first case and a party in the second,
even if the latter has not been impleaded in the first case.19 As to issues, what is
required is mere identity of issues where the parties, although not identical, present
conflicting claims.20 The justification for consolidation is to prevent a judge from
deciding identical issues presented in the case assigned to him in a manner that will
prejudice another judge from deciding a similar case before him.
We are perplexed why the CA did not act on and grant the request for consolidation
filed on August 20, 2009 by the heirs of Fabiana. In fact, the consolidation should have
been required as a matter of course even without any of the parties seeking the
consolidation of the petitions, considering that the two cases rested on the same set of
facts, and involved claims arising from the death of the late Marlon Fabiana.
It is true that under the Rules of Court,21 the consolidation of cases for trial is permissive
and a matter of judicial discretion.22 This is because trials held in the first instance
require the attendance of the parties, their respective counsel and their witnesses, a task
that surely entails an expense that can multiply if there are several proceedings upon
the same issues involving the same parties. At the trial stage, the avoidance of
Page 8 of 378
unnecessary expenses and undue vexation to the parties is the primary objective of
consolidation of cases.23 But the permissiveness of consolidation does not carry over to
the appellate stage where the primary objective is less the avoidance of unnecessary
expenses and undue vexation than it is the ideal realization of the dual function of all
appellate adjudications. The dual function is expounded thuswise:
An appellate court serves a dual function. The first is the review for correctness
function, whereby the case is reviewed on appeal to assure that substantial justice has
been done. The second is the institutional function, which refers to the progressive
development of the law for general application in the judicial system.
Differently stated, the review for correctness function is concerned with the justice of
the particular case while the institutional function is concerned with the articulation
and application of constitutional principles, the authoritative interpretation of statutes,
and the formulation of policy within the proper sphere of the judicial function.
The duality also relates to the dual function of all adjudication in the common law
system. The first pertains to the doctrine of res judicata, which decides the case and
settles the controversy; the second is the doctrine of stare decisis, which pertains to the
precedential value of the case which assists in deciding future similar cases by the
application of the rule or principle derived from the earlier case.
With each level of the appellate structure, the review for correctness function
diminishes and the institutional function, which concerns itself with uniformity of
judicial administration and the progressive development of the law, increases.24
In the appellate stage, therefore, the rigid policy is to make the consolidation of all cases
and proceedings resting on the same set of facts, or involving identical claims or
interests or parties mandatory. Such consolidation should be made regardless of
whether or not the parties or any of them requests it. A mandatory policy eliminates
conflicting results concerning similar or like issues between the same parties or interests
even as it enhances the administration of justice.
In this connection, the Court reminds all attorneys appearing as counsel for the
initiating parties of their direct responsibility to give prompt notice of any related cases
pending in the courts, and to move for the consolidation of such related cases in the
proper courts. This responsibility proceeds from their express undertakings in the
certifications against forum-shopping that accompany their initiatory pleadings
pursuant to Section 5 of Rule 7 and related rules in the Rules of Court, to the effect that
they have not theretofore commenced any actions or filed any claims involving the
same issues in any court, tribunal or quasi-judicial agency and, to the best of their
knowledge, no such other actions or claims are pending therein; that if there were such
other pending actions or claims, to render complete statements of the present status
thereof; and if they should thereafter learn that the same or similar actions or claims
have been filed or are pending, they shall report that fact within five days therefrom to
the courts wherein the said complaints or initiatory pleadings have been filed.
WHEREFORE, the Court DISMISSES the administrative complaint against Presiding

Justice Andres B. Reyes, Jr., Associate Justice Isaias P. Dicdican and Associate Justice
Stephen C. Cruz of the Court of Appeals for its lack of merit.
The Court of Appeals is DIRECTED to forthwith adopt measures that will ensure the
strict observance of Section 3, Rule III of the 2009 Internal Rules of the Court of Appeals,
Page 9 of 378
including the revision of the rule itself to make the consolidation of cases and
proceedings concerning similar or like issues or involving the same parties or interests
mandatory and not dependent on the initiative of the parties or of any of them.
All attorneys of the parties in cases brought to the third level courts either on appeal or
interlocutory review (like certiorari) are REQUIRED to promptly notify the reviewing
courts of the pendency of any other cases and proceedings involving the same parties
and issues pending in the same or other courts.
Let this decision be FURNISHED to the Court of Appeals, Sandiganbayan, Court of Tax
Appeals and the Office of the Court Administrator for their guidance; and to the
Integrated Bar of the Philippines for dissemination to all its chapters.
G.R. No. 171672 February 2, 2015
MARIETA DE CASTRO, Petitioner, vs. PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
The court should prescribe the correct penalties in complex crimes in strict observance
of Article 48 of the Revised Penal Code. In estafa through falsification of commercial
documents, the court should impose the penalty for the graver offense in the maximum
period. Otherwise, the penalty prescribed is invalid, and will not attain finality.
Antecedents
The petitioner, a bank teller of the BPI Family Savings Bank (BPI Family) at its branch in
Malibay, Pasay City, appeals the affirmance of her conviction for four counts of estafa
through falsification of a commercial document committed on separate occasions in
October and November 1993 by forging the signatures of bank depositors Amparo
Matuguina and Milagrosa Cornejo in withdrawal slips, thereby enabling herself to
withdraw a total ofP65,000.00 and P2,000.00 from the respective savings accounts of
Matuguina and Cornejo.
The antecedent facts were summarized in the assailed decision of the Court of Appeals
(CA),1 as follows:
As culled from the evidence, Matuguina and Cornejo left their savings account
passbooks with the accused within the space of a week in October - November 1993
when they went to the bank's Malibay branch to transact on their accounts. Matuguina,
in particular, withdrew the sum of P500 on October 29 and left her passbook with the
accused upon the latter's instruction. She had to return two more times before the
branch manager Cynthia Zialcita sensed that something wrong was going on. Leaming
of Matuguina's problem, Zialcita told the accused to return the passbook to her on
November 8. On this day, the accused came up with the convenient excuse that she had
already returned the passbook. Skeptical, Zialcita reviewed Matuguina's account and
found three withdrawal slips dated October 19, 29 and November 4, 1993 containing
signatures radically different from the specimen signatures of the depositor and
covering a total of P65,000. It was apparent that the accused had intervened in the
posting and verification of the slips because her initials were affixed thereto. Zialcita
instructed her assistant manager Benjamin Misa to pay a visit to Matuguina, a move
that led to the immediate exposure of the accused. Matuguina was aghast to see the
signatures in the slips and denied that the accused returned the passbook to her. When
Page 10 of 378
she went back to the bank worried about the unauthorized withdrawals from her
account, she met with the accused in the presence of the bank manager. She insisted
that the signatures in the slips were not her, forcing the accused to admit that the
passbook was still with her and kept in her house.
Zialcita also summoned Juanita Ebora, the teller who posted and released the
November 4 withdrawal. When she was asked why she processed the transaction,
Ebora readily pointed to the accused as the person who gave to her the slip. Since she
saw the accused's initials on it attesting to having verified the signature of the
depositor, she presumed that the withdrawal was genuine. She posted and released the
money to the accused.
On the same day, November 8, Zialcita instructed Misa to visit another depositor,
Milagrosa Cornejo, whom they feared was also victimized by the accused. Their worst
expectations were confirmed. According to Cornejo, on November 3, she went to the
bank to deposit a check and because there were many people there at the time, she left
her passbook with the accused. She returned days later to get it back, but the accused
told her that she left it at home. Misa now showed to her a withdrawal slip dated
November 4, 1993 in which a signature purporting to be hers appeared. Cornejo denied
that it was her signature. As with the slips affecting Matuguina, the initials of the
accused were unquestionably affixed to the paper.
Zialcita reported her findings posthaste to her superiors. The accused initially denied
the claims against her but when she was asked to write her statement down, she
confessed to her guilt. She started crying and locked herself inside the bathroom. She
came out only when another superior Fed Cortez arrived to ask her some questions.
Since then, she executed three more statements in response to the investigation
conducted by the bank's internal auditors. She also gave a list of the depositors'
accounts from which she drew cash and which were listed methodically in her diary.
The employment of the accused was ultimately terminated. The bank paid Matuguina
P.65,000, while Cornejo got her refund directly from the accused. In the course of her
testimony on the witness stand, the accused made these further admissions:
(a) She signed the withdrawal slips Exhibits B, C, D and H which contained the
fake signatures of Matuguina and Cornejo;
(b) She wrote and signed the confession letter Exhibit K; (c) She wrote the
answers to the questions of the branch cluster head Fred Cortez Exhibit L, and to
the auditors' questions in Exhibit M, N and O;
(d) Despite demand, she did not pay the bank.2
Judgment of the RTC
On July 13, 1998, the Regional Trial Court in Pasay City (RTC) rendered its judgment,3
finding the petitioner guilty as charged, and sentencing her to suffer as follows:
(a) In Criminal Case No. 94-5524, involving the withdrawal of P20,000.00 from
the account of Matuguina, the indeterminate sentence of two years, 11 months
and 10 days of prison correccional, as minimum, to six years, eight months and
20 days of prision mayor, as maximum, and to pay BPI Family P20,000.00 and the
costs of suit;
Page 11 of 378
(b) In Criminal Case No. 94-5525, involving the withdrawal of P2,000.00 from
Cornejo's account, the indeterminate sentence of three months of arresto mayor,
as minimum, to one year and eight months of prision correccional, as maximum,
and to pay BPI Family P2,000.00 and the costs of suit;
(c) In Criminal Case No. 94-5526, involving the withdrawal of P10,000.00 from
the account of Matuguina, the indeterminate sentence of four months and 20
days of arresto mayor, as minimum, to two years, 11 months and 10 days of
prision correccional, as maximum, and to pay BPI Family P10,000.00 and the
costs of suit;
and
(d) In Criminal Case No. 94-5527, involving the withdrawal of P35,000 from
Matuguina's account, the indeterminate sentence of two years, 11 months and 10
days of prision correccional, as minimum, to eight years of prision mayor, as
maximum, and to pay BPI Family P35,000.00 and the costs of suit.
Decision of the CA
On appeal, the petitioner contended in the CA that: (1) her conviction should be set
aside because the evidence presented against her had been obtained in violation of her
constitutional right against self-incrimination; (2) her rights to due process and to
counsel had been infringed; and (3) the evidence against her should be inadmissible for
being obtained by illegal or unconstitutional means rendering the evidence as the fruit
of the poisonous tree.
On August 18, 2005, the CA promulgated its decision4 affirming the judgment of the
RTC, to wit:
In summary, we find no grounds to disturb the findings of the lower court, except the
provision of the dispositive portion in case 94-5525 requiring the accused to pay BPI
Family P2,000. This must be deleted because the accused had already paid the amount
to the depositor.
IN VIEW OF THE FOREGOING, the decision appealed from is AFFIRMED, with the
modification that the award ofP2,000 to the complainant in case 94-5525 be deleted.
SO ORDERED.
Issues
In this appeal, the petitioner still insists that her conviction was invalid because her
constitutional rights against self-incrimination, to due process and to counsel were
denied. In behalf of the State, the Office of the Solicitor General counters that she could
invoke her rights to remain silent and to counsel only if she had been under custodial
investigation, which she was not; and that the acts of her counsel whom she had herself
engaged to represent her and whom she had the full authority to replace at any time
were binding against her.
Ruling of the Court
The appeal lacks merit.
Page 12 of 378
We first note that the petitioner has accepted the findings of fact about the transactions
that gave rise to the accusations in court against her for four counts of estafa through
falsification of a commercial document. She raised no challenges against such findings
of fact here and in the CA, being content with limiting herself to the supposed denial of
her rights to due process and to counsel, and to the inadmissibility of the evidence
presented against her. In the CA, her main objection focused on the denial of her right
against self-incrimination and to counsel, which denial resulted, according to her, in the
invalidation of the evidence of her guilt.
Debunking the petitioner's challenges, the CA stressed that the rights against self-
incrimination and to counsel guaranteed under the Constitution applied only during
the custodial interrogation of a suspect. In her case, she was not subjected to any
investigation by the police or other law enforcement agents. Instead, she underwent an
administrative investigation as an employee of the BPI Family Savings Bank, the
investigation being conducted by her superiors. She was not coerced to give evidence
against herself, or to admit to any crime, but she simply broke down bank when
depositors Matuguina and Cornejo confronted her about her crimes. We quote with
approval the relevant portions of the decision of the CA, viz:
The accused comes to Us on appeal to nullify her conviction on the ground that the
evidence presented against her was obtained in violation of her constitutional right
against self-incrimination. She also contends that her rights to due process and counsel
were infringed. Without referring to its name, she enlists one of the most famous
metaphors of constitutional law to demonize and exclude what she believes were
evidence obtained against her by illegal or unconstitutional means - evidence
constituting the fruit of the poisonous tree. We hold, however, that in the particular
setting in which she was investigated, the revered constitutional rights of an accused to
counsel and against self-incrimination are not apposite.
The reason is elementary. These cherished rights are peculiarly rights in the context of
an official proceeding for the investigation and prosecution for crime. The right against
self-incrimination, when applied to a criminal trial, is contained in this terse injunction -
no person shall be compelled to be a witness against himself. In other words, he may
not be required to take the witness stand. He can sit mute throughout the proceedings.
His right to counsel is expressed in the same laconic style: he shall enjoy the right to be
heard by himself and counsel. This means inversely that the criminal prosecution
cannot proceed without having a counsel by his side. These are the traditional rights of
the accused in a criminal case. They exist and may be invoked when he faces a formal
indictment and trial for a criminal offense. But since Miranda vs. Arizona 384 US 436,
the law has come to recognize that an accused needs the same protections even before
he is brought to trial. They arise at the very inception of the criminal process - when a
person is taken into custody to answer to a criminal offense. For what a person says or
does during custodial investigation will eventually be used as evidence against him at
the trial and, more often than not, will be the lynchpin of his eventual conviction. His
trial becomes a parody if he cannot enjoy from the start the right against self-
incrimination and to counsel. This is the logic behind what we now call as the Miranda
doctrine.
The US Supreme Court in Miranda spells out in precise words the occasion for the
exercise of the new right and the protections that it calls for. The occasion is when an
individual is subjected to police interrogation while in custody at the station or
otherwise deprived of his freedom in a significant way. It is when custodial
Page 13 of 378
investigation is underway that the certain procedural safeguards takes over - the person
must be warned prior to any questioning that he has the right to remain silent, that
anything he says can be used against him in a court of law, that he has the right to the
presence of an attorney, and that if he cannot afford an attorney one will be appointed
for him prior to any questioning.
We must, therefore, be careful to note what the Miranda doctrine does not say. It was
never intended to hamper the traditional law-enforcement function to investigate crime
involving persons not under restraint. The general questioning of citizens in the fact-
finding process, as the US Supreme Court recognizes, which is not preceded by any
restraint on the freedom of the person investigated, is not affected by the holding, since
the compelling atmosphere inherent in in-custody interrogation is not present.
The holding in Miranda is explicitly considered the source of a provision in our 1987 bill
of rights that any person under investigation for the commission of an offense shall
have the right to be informed of his right to remain silent and to have competent and
independent counsel, a provision identical in language and spirit to the earlier Section
20, Article IV of the 1973 Constitution. People vs. Caguioa 95 SCRA 2. As we can see,
they speak of the companion rights of a person under investigation to remain silent and
to counsel, to ensure which the fruit of the poisonous tree doctrine had also to be
institutionalized by declaring that any confession or admission obtained in violation of
these rights is inadmissible. But to what extent must the rights to remain silent and to
counsel be enforced in an investigation for the commission of an offense? The answer
has been settled by rulings of our Supreme Court in Caguoia and in the much later case
of Navallo vs Sandiganbayan 234 SCRA 175 incorporating in toto the Miranda doctrine
into the above-cited provisions of our bill of rights. Thus, the right to remain silent and
to counsel can be invoked only in the context in which the Miranda doctrine applies -
when the official proceeding is conducted under the coercive atmosphere of a custodial
interrogation. There are no cases extending them to a non-coercive setting. In Navallo,
the Supreme Court said very clearly that the rights are invocable only when the accused
is under custodial investigation. A person undergoing a normal audit examination is
not under custodial investigation and, hence, the audit examiner may not be considered
the law enforcement officer contemplated by the rule.
By a fair analogy, the accused in the case before us may not be said to be under
custodial investigation. She was not even being investigated by any police or law
enforcement officer. She was under administrative investigation by her superiors in a
private firm and in purely voluntary manner. She was not restrained of her freedom in
any manner. She was free to stay or go. There was no evidence that she was forced or
pressured to say anything. It was an act of conscience that compelled her to speak, a
true mental and moral catharsis that religion and psychology recognize to have salutary
effects on the soul. In this setting, the invocation of the right to remain silent or to
counsel is simply irrelevant.
The accused makes a final argument against her conviction by contending that she did
not get effective legal representation from her former counsel who was already old and
feeble when the case was being heard. In fact, the records show, her counsel died
during the pendency of the case, an octogenarian at that. One can truly make a case
from one's lack of a competent and independent counsel, but we are not prepared to say
that the accused was so poorly represented that it affected her fundamental right to due
process. Except for the several postponements incurred by her counsel, there is really no
showing that he committed any serious blunder during the trial. We have read the
Page 14 of 378
transcripts of the trial and failed to get this impression. The evidence against the
accused was simply too overwhelming. We may take note that once, the trial court
admonished the accused to replace her counsel due to his absences, but she did not. She
must live by that.5
Considering that the foregoing explanation by the CA was justly supported by the
records, and that her investigation as a bank employee by her employer did not come
under the coverage of the Constitutionally protected right against self-incrimination,
right to counsel and right to due process, we find no reversible error committed by the
CA in affirming the conviction of the petitioner by the RTC.
The guilt of the petitioner for four counts of estafa through falsification of a commercial
document was established beyond reasonable doubt. As a bank teller, she took
advantage of the bank depositors who had trusted in her enough to leave their
passbooks with her upon her instruction. Without their knowledge, however, she filled
out withdrawal slips that she signed, and misrepresented to her fellow bank employees
that the signatures had been verified in due course. Her misrepresentation to her co-
employees enabled her to receive the amounts stated in the withdrawal slips. She
thereby committed two crimes, namely: estafa, by defrauding BPI Family Savings, her
employer, in the various sums withdrawn from the bank accounts of Matuguina and
Cornejo; and falsification of a commercial document, by forging the signatures of
Matuguina and Cornejo in the withdrawal slips to make it appear that the depositor
concerned had signed the respective slips in order to enable her to withdraw the
amounts. Such offenses were complex crimes, because the estafa would not have been
consummated without the falsification of the withdrawal slips.
Nonetheless, there is a need to clarify the penalties imposable.
According to Article 48 of the Revised Penal Code,6 the penalty for a complex crime is
that corresponding to the most serious crime, the same to be applied in its maximum
period. Otherwise, the penalty will be void and ineffectual, and will not attain finality.
In the four criminal cases involved in this appeal, the falsification of commercial
documents is punished with prision correccional in its medium and maximum periods
(i.e., two years, four months and one day to six years) and a fine of P5,000.00.7 In
contrast, the estafa is punished according to the value of the defraudation, as follows:
with the penalty of prision correccional in its maximum period to prision mayor in its
minimum period (i.e., four years, two months and one day to eight years) if the amount
of the fraud is over Pl2,000.00 but does not exceedP22,000.00, and if such amount
exceeds P22,000.00, the penalty is imposed in the maximum period, adding one year for
each additional Pl0,000.00, but the total shall not exceed 20 years, in which case the
penalty shall be termed pris ion mayor or reclusion temporal, as the case may be, in
connection with the accessory penalties that may be imposed and for the purpose of the
other provisions of the Revised Penal Code; with the penalty of prision correccional in
its minimum and medium periods (i.e., six months and one day to four years and two
months) if the amount of the fraud is over P6,000.00 but does not exceed P12,000.00;
with the penalty of arresto mayor in its maximum period to prision correccional in its
minimum period (i.e., four months and one day to two years and four months) if the
amount of the fraud is over P200.00 but does not exceed P6,000.00; and with the penalty
of arresto mayor in its medium and maximum periods (i.e., two months and one day to
six months) if the amount of the fraud does not exceed P200.00.8
Page 15 of 378
In Criminal Case No. 94-5524, estafa was the graver felony because the amount of the
fraud was P20,000.00; hence, the penalty for estafa is to be imposed in its maximum
period. However, the RTC and the CA fixed the indeterminate sentence of two years, 11
months and 10 days of prison correccional, as minimum, to six years, eight months and
20 days of prision mayor, as maximum. Such maximum of the indeterminate penalty
was short by one day, the maximum period of the penalty being six years, eight months
and 21 days to eight years. Thus, the indeterminate sentence is corrected to three years
of prison correccional, as minimum, to six years, eight months and 21 days of prision
mayor, as maximum.
In Criminal Case No. 94-5525, involving P2,000.00, the estafa is punished with four
months and one day of arresto mayor in its maximum period to two years and four
months of prision correccional in its minimum period. The falsification of commercial
document is penalized with prision correccional in its medium and maximum periods
(i.e., two years, four months and one day to six years) and a fine of P5,000.00. The latter
offense is the graver felony, and its penalty is to be imposed in the maximum period,
which is from four years, nine months and 11 days to six years plus fine of PS,000.00.
The penalty next lower in degree is arresto mayor in its maximum period to prision
correccional in its minimum period (i.e., four months and one day to two years and four
months). Thus, the indeterminate sentence of three months of arresto mayor, as
minimum, to one year and eight months of prision correccional, as maximum that both
the RTC and the CA fixed was erroneous. We rectify the error by prescribing in lieu
thereof the indeterminate sentence of two years of prision correccional, as minimum, to
four years, nine months and 11 days of prision correccional plus fine of PS,000.00, as
maximum.
In Criminal Case No. 94-5526, involving P10,000.00, the RTC and the CA imposed the
indeterminate sentence of four months and 20 days of arresto mayor, as minimum, to
two years, 11 months and 10 days of prision correccional, as maximum. However, the
penalty for the falsification of commercial documents is higher than that for the estafa.
To accord with Article 48 of the Revised Penal Code, the penalty for falsification of
commercial documents (i.e., prision correccional in its medium and maximum periods
and a fine of P5,000.00) should be imposed in the maximum period. Accordingly, we
revise the indeterminate sentence so that its minimum is two years and four months of
prision correccional, and its maximum is five years of prision correccional plus fine
ofP5,000.00.
In Criminal Case No. 94-5527, where the amount of the fraud was P35,000.00, the
penalty for estafa (i.e., prision correccional in its maximum period to prision mayor in
its minimum period, or four years, two months and one day to eight years) is higher
than that for falsification of commercial documents. The indeterminate sentence of two
years, 11 months and 10 days of prision correccional, as minimum, to eight years of
prision mayor, as maximum, was prescribed. Considering that the maximum period
ranged from six years, eight months and 21 days to eight years, the CA should have
clarified whether or not the maximum of eight years of prision mayor already included
the incremental penalty of one year for every P10,000.00 in excess of P22,000.00. Absent
the clarification, we can presume that the incremental penalty was not yet included.
Thus, in order to make the penalty clear and specific, the indeterminate sentence is
hereby fixed at four years of prision correccional, as minimum, to six years, eight
months and 21 days of prision mayor, as maximum, plus one year incremental penalty.
In other words, the maximum of the indeterminate sentence is seven years, eight
months and 21 days of prision mayor.
Page 16 of 378
The CA deleted the order for the restitution of the P2,000.00 involved in Criminal Case
No. 94-5525 on the ground that such amount had already been paid to the complainant,
Milagrosa Cornejo. There being no issue as to this, the Court affirms the deletion.
The Court adds that the petitioner is liable to BPI Family for interest of 6% per annum
on the remaining unpaid sums reckoned from the finality of this judgment. This liability
for interest is only fair and just.
WHEREFORE, the Court AFFIRMS the decision promulgated by the Court of Appeals
on August 18, 2005, subject to the following MODIFICATIONS, to wit:
(1) In Criminal Case No. 94-5524, the petitioner shall suffer the indeterminate
penalty of three years of prison correccional, as minimum, to six years, eight
months and 21 days of prision mayor, as maximum;
penalty of two years of prision correccional, as minimum, to four years, nine
months and 11 days of prision correccional plus fine ofP5,000.00, as maximum;
penalty of two years and four months of prision correccional, as the minimum, to
five years of prision correccional plus fine of P5,000.00, as the maximum; and
penalty of four years of prision correccional, as minimum, to seven years, eight
months and 21 days of prision mayor, as maximum.
The Court ORDERS the petitioner to pay to BPI Family Saving Bank interest of 6% per
annum on the aggregate amount of P65,000.00 to be reckoned from the finality of this
judgment until full payment.
The petitioner shall pay the costs of suit.
G.R. No. 184762 February 25, 2015
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. DOMINGO GALLANO y

JARANILLA, Accused-Appellant.
DECISION
To convict an accused charged with qualified rape instead of rape in its simple form not
only condemns him to a more serious offense but also exposes him to an even greater
liability. As such, the State is mandated to sufficiently allege in the information and to
competently prove during trial the qualifying circumstances of minority and
relationship with the same certainty as the crime itself.
The Case
This appeal assails the decision promulgated on December 14, 2007,1 whereby the Court
of Appeals (CA) affirmed with modification the judgment2 rendered on March 22, 2004
by the Regional Trial Court (R TC), Branch 69, in Silay City, Negros Occidental finding
appellant Domingo Gallano y Jaranilla guilty of the crime of rape, qualified by minority
and relationship, and sentencing him to the supreme penalty of death therefor.
Page 17 of 378
Antecedents
Gallano was arraigned and tried under the following information, viz:
That on or about 2 January 2003, in Silay City, Philippines and within the jurisdiction of
this Honorable Court, the herein accused, with lewd design, and with force and
intimidation, did then and there wilfully, unlawfully and feloniously have carnal
knowledge with his niece, AAA,3 a 12-year-old minor, against the latter's will.
The aggravating circumstance of minority and relationship is present, the victim being
12 years old, and the accused being the victim's relative by affinity within the third civil
degree.
ACTS CONTRARY TO LAW.4
The facts presented by the Prosecution were summed up thusly:
Private complainant, AAA, and her brother lived with their maternal aunt, BBB, BBB's
husband, herein appellant, their children and BBB 's brother in Baranggay Guimbala-on,
Silay City (TSN, October 6, 2003, pp. 3-4).
On January 2, 2003, BBB went to the hospital to take care of her father and stayed there
for days. AAA was home and was about to make her brother go to sleep. She went
inside the bedroom to a mat when appellant took her aside, undressed her and laid her
down on the bed. Standing over her, appellant pointed his penis at her and warned her
not to tell her mother, otherwise, he would kill her. When appellant's penis touched
AAA's vagina, she felt pain and instinctively kicked him away. Feeling distraught,
AAA ran outside and cried (TSN, October 20, 2003, pp. 5-7).
On January 8, 2003, BBB's brother went to the hospital, he told BBB that he saw AAA
and appellant inside the room, standing and facing each other. This prompted BBB to
ask AAA about the incident. At first, AAA hesitated and refused to talk but later
admitted that she was raped. BBB brought AAA to the city health officer for
examination on January 9, 2003 (TSN, October 6, 2003, pp. 4-5).5
The City Health Officer who examined AAA found hymenal lacerations on AAA's
private part.6
Gallano denied the charge, and asserted alibi, insisting that on the day the rape was
committed he had been working in the sugarcane field, having left home for that
purpose at 5:00 a.m. and returning only at 5:00 p.m.; that he had brought his lunch then
because he would take an hour to walk from the sugarcane field to his house; and that
he had learned of the charge of rape against him only after his arrest and detention.7
Decision of the RTC
In its judgment, the RTC convicted Gallano of rape, qualified by minority and
relationship, disposing:
WHEREFORE, PREMISES CONSIDERED, this Court finds accused DOMINGO

GALLANO Y JARANILLA, Guilty (sic.) of the crime of Rape, defined in Article 266-A
in relation to Article 266-B, paragraph 5, sub-paragraph 1, of Republic Act No. 8353, as
his guilt had been established by the prosecution beyond any reasonable doubt.
Page 18 of 378
Accordingly, this Court sentences accused, DOMINGO GALLANO y JARANILLA, to

suffer the Supreme Penalty of Death (sic.)
Accused, Domingo Gallano y Jaranilla, is, further, ordered by this Court to pay minor,
[AAA], the sum of FIFTY THOUSAND PESOS (P50,000.00) as Moral Damages, and the
sum of FIFTY THOUSAND PESOS (P50,000.00), all in Philippine Currency, as
Exemplary Damages. Accused, Domingo Gallano y Jaranilla, is ordered remitted to the
National Penitentiary, Muntinlupa City, Rizal.
NO COSTS.
SO ORDERED.8
The RTC found AAA's testimony as credible, observing as follows:
Though a child, [AAA], demonstrated to this Court her capacity of observation,

recollection and communication. She showed that she can perceive and perceiving, can
make known her perception to this Court as she clearly and capably related the details
of her sad and horrible experience at the hands of the accused. She withstood a
thorough and exhaustive cross-examination. x x x It was a positive and credible account
she presented before this Court. There was not a motive ascribed and/or, in the very
least, suggested by the defense that might have raised doubt on her credibility and the
credibility of the statements she made before this Court.9
Anent Gallano's alibi, the RTC stated:
The sugarcane field where accused, Domingo Gallano y J aranilla, claimed he was at the
time of the occurrence of the incident subject of the present criminal action was,
likewise, located at Hda. Bias, Barangay Guimbala-on, a submitted distance of only four
(4) kilometers away from the house where the submitted offense was committed easily
accessible to the accused even by foot. Accused's statement was not corroborated nor
substantiated by other evidence, oral or otherwise. Under the given circumstances, the
physical impossibility of his presence at the scene of the crime, had not been established
sufficiently and convincingly. The burden of proof in setting in evidence the factual
circumstance/circumstances of the defense of alibi lies on the one who claims said
defense, the accused in the present criminal action, which failed to do miserably.10
In characterizing the offense as qualified rape, the RTC ruled that AAA was definitely
below 18 years old on January 2, 2003; and that such fact was not contested by
Gallano.11 As to the fact that AAA was Gallano' s relative by affinity within the third
civil degree, the RTC declared that such relationship had been sufficiently established.12
Judgment of the CA
On appeal, Gallano challenged his conviction, contending that the RTC committed the
following errors, to wit:
I.
THE COURT A QUO GRAVELY ERRED IN FINDING THE ACCUSED-APPELLANT

GUILTY BEYOND REASONABLE DOUBT OF THE CRIME OF RAPE
II.
Page 19 of 378
GRANTING ARGUENDO THAT ACCUSED-APPELLANT WAS GUILTY OF RAPING

[AAA], THE COURT A QUO GRAVELY ERRED IN IMPOSING THE DEA TH
PENALTY.13
The CA affirmed Gallano' s conviction for rape nonetheless because the State had
established all the elements of rape, including the force and intimidation employed by
Gallano.14 It opined that there was no reason advanced by Gallano to warrant
disturbing the RTC's appreciation of AAA's testimony; and agreed with the RTC that
his alibi and denial were worthless. Anent the second error, the CA said that the records
were "bereft of any independent evidence which would accurately show AAA's
age,"15 pointing out that even AAA had been uncertain about her own age; 16 and that
contrary to the State's theory, as advanced by the Office of the Solicitor General (OSG),
AAA's testimony to prove her age had been insufficient because Gallano' s admission of
it had not been express and clear.17 Prescinding from these observations, the CA
sustained the RTC's finding of AAA's minority because:
Be that as it may, the minority age of the victim was not questioned by the defense.
Although this Court held that the age of the victim is not certain, her still being a minor
below eighteen ( 18) years old is not contested. This Court has to rely on the observation
as stated in the assailed decision that the Court a quo is quite certain that the victim is
definitely below 18 years of age on January 2, 2003.18
The CA modified the penalty because of the intervening passage of Republic Act No.
9346,19 whereby the death penalty was prohibited from being imposed in case of
conviction, and instead imposed reclusion perpetua on Gallano.20 The CA awarded civil
indemnity of P75,000.00, moral damages awarded to 1!75,000.00, and exemplary
damages to P25,000.00.21
Issues
Hence, this appeal, with Gallano reiterating the alleged errors by the CA, arguing that
he should not be convicted of rape upon the sole testimony of AAA that had been
tainted with improbabilities and contrariness to human experience. Hence, his guilt had
not been established beyond reasonable doubt.22
Ruling
The conviction of Gallano is affirmed, but the characterization of the crime as qualified
rape is set aside. He could be held guilty only of simple rape.
Rape is a crime that is almost always committed in isolation or in secret, usually leaving
only the victim to testify about the commission of the crime.23 As such, the accused may
be convicted of rape on the basis of the victim's sole testimony provided such testimony
is logical, credible, consistent and convincing.24 Moreover, the testimony of a young
rape victim is given full weight and credence considering that her denunciation against
him for rape would necessarily expose herself and her family to shame and perhaps
ridicule.25 Indeed, it is more consistent with human experience to hold that a rape
victim of tender age will truthfully testify as to all matters necessary to show that she
was raped.26
After reviewing the records, the Court concludes that the trial court was not arbitrary in
its appreciation of the proof of rape, and, therefore, the CA correctly ruled that the
crime of rape was established beyond reasonable doubt even upon the lone testimony
Page 20 of 378
of the victim herself. With the lower courts not being shown by Gallano to have
overlooked any matter or circumstance of weight that could alter the result in his
favour, their appreciation must be viewed with respect. It is settled that the findings of
fact by the trial court are accorded great weight, and are even held to be conclusive and
binding unless they were tainted with arbitrariness or oversight.27 This respect is but a
recognition that the trial court is better situated to assess the testimonies and evidence
laid out before it during the trial.28
Nonetheless, Gallano was guilty only of simple rape, not of qualified rape. In order that
the accused is convicted of qualified rape under Article 266-B (1) of the Revised Penal
Code, two requisites must be met, namely: (1) the victim must be a less than 18 years
old; and (2) the offender must either be related to the victim by consanguinity of by
affinity within the third civil degree, or is the common-law spouse of the parent of the
victim. These two requisites must be both alleged and proved with absolute
certainty.29 Otherwise, the accused could only be held guilty of simple rape. The
qualifying circumstances of relationship and minority remain to be relevant in the crime
of rape despite the abolition of the death penalty under R.A. No. 9346. The accused's
civil liability depends on the mode of rape he committed.30
Although Gallano's relationship with AAA went uncontroverted because both he and
BBB had testified that they were legally married,31 AAA's minority was not thereby
competently established.
People v. Pruna32 states the controlling guidelines in evaluating evidence presented to

prove a rape victim's minority, to wit:
x x x [W]e hereby set the following guidelines in appreciating age, either as an element
of the crime or as a qualifying circumstance.
1. The best evidence to prove the age of the offended party is an original or
certified true copy of the certificate of live birth of such party.
2. In the absence of a certificate of live birth, similar authentic documents such as

baptismal certificate and school records which show the date of birth of the
victim would suffice to prove age.
3. If the certificate of live birth or authentic document is shown to have been lost
or destroyed or otherwise unavailable, the testimony, if clear and credible, of the
victim's mother or a member of the family either by affinity or consanguinity
who is qualified to testify on matters respecting pedigree such as the exact age or
date of birth of the offended party pursuant to Section 40, Rule 130 of the Rules
on Evidence shall be sufficient under the following circumstances:
a. If the victim is alleged to be below 3 years of age and what is sought to

be proved is that she is less than 7 years old;
b. If the victim is alleged to be below 7 years of age and what is sought to

be proved is that she is less than 12 years old;
c. If the victim is alleged to be below 12 years of age and what is sought to

be proved is that she is less than 18 years old.
Page 21 of 378
4. In the absence of a certificate of live birth, authentic document, or the

testimony of the victim's mother or relatives concerning the victim's age, the
complainant's testimony will suffice provided that it is expressly and clearly
admitted by the accused.
5. It is the prosecution that has the burden of proving the age of the offended
party. The failure of the accused to object to the testimonial evidence regarding
age shall not be taken against him. (Emphasis supplied)"33
The testimonies relevant to AAA's age were given as follows:
1. BBB testified that AAA was 13 years old at the time when her testimony was
taken but there was no birth certificate to prove AAA's age.34
2. BBB declared that she took AAA when the latter was only nine months old.35
3. AAA attested that she was 13 years old at the time of the taking of her
testimony but she did not know when she was born.36
4 . AAA said that she had been staying with BBB for about four years prior to the
time her testimony was taken.37
5. Gallano mentioned that he did not know AAA's age,38 but he answered on
cross-examination that AAA was from 12 to 13 years old when asked if he knew
AAA's age in 2003.39
6. Galiano stated on cross-examination that AAA had been living with them
since she was seven years old.40
It is clear that the Prosecution failed to adduce AAA' s certificate of live birth, the best
evidence to prove AAA's age in the context of Pruna. The Prosecution did not also
present any acceptable substitutionary documentary evidence to prove the same.
Instead, the Prosecution relied on the testimonies of AAA and BBB to establish AAA's
minority.
Did the testimonies of AAA and BBB suffice to prove AAA' s minority even if coupled
with Gallano's supposed admission of the same?
We answer in the negative.
BBB, who was AAA's aunt, was qualified to testify on AAA's pedigree, like her age and
her date of birth. Section 40, Rule 130 of the Rules of Court expressly stated
so.41 Conformably with Pruna,42 BBB's testimony would have sufficed considering that
the information alleged that AAA was 12 years old at the time of the commission of the
crime, and the Prosecution was trying to prove that AAA was below 18 years old for the
purpose of qualifying the rape committed by the accused. Yet, Pruna dictated that BBB's
testimony must be clear and credible.43 BBB's testimony failed this test. Although BBB
recalled that she had taken AAA under her wing when the latter had been nine months
old,44 BBB was apparently contradicted by AAA' s declaration that she had been staying
with BBB and her family for about four years reckoned from the time she gave her
testimony in court.45 Galiano complicated the contradiction between BBB and AAA by
attesting that AAA had started staying with them when she had been only seven years
Page 22 of 378
old.46 The effect of the contradictions was to cast doubt on BBB's personal knowledge of
AAA's age and date of birth, rendering BBB's testimony on AAA's minority unreliable.
Nevertheless, the OSG submits that AAA's testimony was enough to prove her age
because Gallano admitted to the same during crossexamination.47
We disagree with the State. The guidelines under Pruna require that the accused's
admission of the age of the victim must be express and clear.48 That was not the case
herein, for not only did Gallano declare that he did not know how old AAA was at the
time of the commission of the crime, but also that he had been vague and indefinite on
the matter as borne out by his tentative response of "12 or 13 years old" when asked
during cross-examination if he knew AAA's age in 2003.49 In other words, Gallano's
admission was not express and clear enough to establish AAA' s minority beyond
moral certainty.
With the State not having established AAA's minority with absolute certainty, the Court
rules out qualified rape as the crime committed by Gallano. We reiterate that in the
prosecution of rape in its qualified form, the victim's minority must be averred and
established "with equal certainty and clearness as the crime itself."50 As a consequence,
Gallano committed only simple rape, thus precluding the application of R.A. No. 9346.
Pursuant to Article 266-A of the Revised Penal Code, the proper penalty is reclusion
perpetua.
It further appears that despite already entertaining doubt about AAA' s minority, the
CA still affirmed Gallano's conviction for qualified rape by depending on the "certainty"
of the RTC's findings on AAA's minority.51 Such affirmance by the CA was
unwarranted because it was contrary to the guidelines defined by the Court in
Pruna.52The affirmance should be treated as another reversible error on the part of the
CA, considering that all doubts in a criminal prosecution should be resolved in favor of
the accused.
The modification of Gallano's civil liabilities is another consequence of the Prosecution's

failure to establish AAA's minority. To conform to prevailing jurisprudence, the award
of civil indemnity must be reduced to P50,000.00.53The award of moral damages is
similarly reduced to P50,000.00 in view of prevailing jurisprudence.54 Meanwhile, the
award for exemplary damages is increased to P30,000.00 to conform to recent
jurisprudence.55 The amounts of damages awarded should earn interest at the rate of
6% per annum from the finality of this judgment until said amounts are fully paid.56
WHEREFORE, the Court AFFIRMS the decision promulgated on December 14, 2007
with the MODIFICATION that appellant DOMINGO GALLANO y JARANILLA is
pronounced GUILTY beyond reasonable doubt of SIMPLE RAPE and is sentenced to
suffer reclusion perpetua, and to pay the victim AAA P50,000 as civil indemnity,P50,000
as moral damages, and P30,000 as exemplary damages, with all such amounts to earn
interest of 6% per annum from the finality of this decision until full payment. The
petitioner shall pay the costs of suit.
G.R. No. 213847 August 18, 2015
JUAN PONCE ENRILE, Petitioner, vs. SANDIGANBAYAN (THIRD DIVISION),

AND PEOPLE OF THE PHILIPPINES, Respondents.
DECISION
Page 23 of 378
The decision whether to detain or release an accused before and during trial is
ultimately an incident of the judicial power to hear and determine his criminal case. The
strength of the Prosecution's case, albeit a good measure of the accuseds propensity for
flight or for causing harm to the public, is subsidiary to the primary objective of bail,
which is to ensure that the accused appears at trial.1
The Case
Before the Court is the petition for certiorari filed by Senator Juan Ponce Enrile to assail
and annul the resolutions dated July 14, 20142 and August 8, 20143 issued by the
Sandiganbayan (Third Division) in Case No. SB-14-CRM-0238, where he has been
charged with plunder along with several others. Enrile insists that the resolutions,
which respectively denied his Motion To Fix Bail and his Motion For Reconsideration,
were issued with grave abuse of discretion amounting to lack or excess of jurisdiction.
Antecedents
On June 5, 2014, the Office of the Ombudsman charged Enrile and several others with
plunder in the Sandiganbayan on the basis of their purported involvement in the
diversion and misuse of appropriations under the Priority Development Assistance
Fund (PDAF).4 On June 10, 2014 and June 16, 2014, Enrile respectively filed his
Omnibus Motion5 and Supplemental Opposition,6 praying, among others, that he be
allowed to post bail should probable cause be found against him. The motions were
heard by the Sandiganbayan after the Prosecution filed its Consolidated Opposition.7
On July 3, 2014, the Sandiganbaya n issued its resolution denying Enriles motion,
particularly on the matter of bail, on the ground of its prematurity considering that
Enrile had not yet then voluntarily surrendered or been placed under the custody of the
law.8 Accordingly, the Sandiganbayan ordered the arrest of Enrile.9
On the same day that the warrant for his arrest was issued, Enrile voluntarily
surrendered to Director Benjamin Magalong of the Criminal Investigation and
Detection Group (CIDG) in Camp Crame, Quezon City, and was later on confined at the
Philippine National Police (PNP) General Hospital following his medical examination.10
Thereafter, Enrile filed his Motion for Detention at the PNP General Hospital ,11 and his
Motion to Fix Bail ,12 both dated July 7, 2014, which were heard by the Sandiganbayan
on July 8, 2014.13 In support of the motions, Enrile argued that he should be allowed to
post bail because: (a) the Prosecution had not yet established that the evidence of his
guilt was strong; (b) although he was charged with plunder, the penalty as to him
would only be reclusion temporal , not reclusion perpetua ; and (c) he was not a flight
risk, and his age and physical condition must further be seriously considered.
On July 14, 2014, the Sandiganbayan issued its first assailed resolution denying Enriles
Motion to Fix Bail, disposing thusly:
x x x [I]t is only after the prosecution shall have presented its evidence and the Court
shall have made a determination that the evidence of guilt is not strong against accused
Enrile can he demand bail as a matter of right. Then and only then will the Court be
duty-bound to fix the amount of his bail.
Page 24 of 378
To be sure, no such determination has been made by the Court. In fact, accused Enrile
has not filed an application for bail. Necessarily, no bail hearing can even commence. It
is thus exceedingly premature for accused Enrile to ask the Court to fix his bail.
Accused Enrile next argues that the Court should grant him bail because while he is
charged with plunder, "the maximum penalty that may be possibly imposed on him is
reclusion temporal, not reclusion perpetua." He anchors this claim on Section 2 of R.A.
No. 7080, as amended, and on the allegation that he is over seventy (70) years old and
that he voluntarily surrendered. "Accordingly, it may be said that the crime charged
against Enrile is not punishable by reclusion perpetua, and thus bailable."
The argument has no merit.
x x x [F]or purposes of bail, the presence of mitigating circumstance/s is not taken into
consideration. These circumstances will only be appreciated in the imposition of the
proper penalty after trial should the accused be found guilty of the offense charged. x x
x
Lastly, accused Enrile asserts that the Court should already fix his bail because he is not
a flight risk and his physical condition must also be seriously considered by the Court.
Admittedly, the accuseds age, physical condition and his being a flight risk are among
the factors that are considered in fixing a reasonable amount of bail. However, as
explained above, it is premature for the Court to fix the amount of bail without an
anterior showing that the evidence of guilt against accused Enrile is not strong.
WHEREFORE, premises considered, accused Juan Ponce Enriles Motion to Fix Bail
dated July 7, 2014 is DENIED for lack of merit.
SO ORDERED.14
On August 8, 2014, the Sandiganbayan issued it s second assailed resolution to deny

Enriles motion for reconsideration filed vis--vis the July 14, 2014 resolution.15
Enrile raises the following grounds in support of his petition for certiorari , namely:
A. Before judgment of the Sandiganbayan, Enrile is bailable as a matter of

right. Enrile may be deemed to fall within the exception only upon
concurrence of two (2) circumstances: (i) where the offense is punishable by
reclusion perpetua, and (ii) when evidence of guilt is strong.
B. The prosecution failed to show clearly and conclusively that Enrile, if ever
he would be convicted, is punishable by reclusion perpetua; hence, Enrile is
entitled to bail as a matter of right.
C. The prosecution failed to show clearly and conclusively that evidence of

Enriles guilt (if ever) is strong; hence, Enrile is entitled to bail as a matter of
right.
D. At any rate, Enrile may be bailable as he is not a flight risk.16
Enrile claims that before judgment of conviction, an accused is entitled to bail as matter
of right; th at it is the duty and burden of the Prosecution to show clearly and
Page 25 of 378
conclusively that Enrile comes under the exception and cannot be excluded from
enjoying the right to bail; that the Prosecution has failed to establish that Enrile, if
convicted of plunder, is punishable by reclusion perpetua considering the presence of
two mitigating circumstances his age and his voluntary surrender; that the
Prosecution has not come forward with proof showing that his guilt for the crime of
plunder is strong; and that he should not be considered a flight risk taking into account
that he is already over the age of 90, his medical condition, and his social standing.
In its Comment ,17 the Ombudsman contends that Enriles right to bail is discretionary
as he is charged with a capital offense; that to be granted bail, it is mandatory that a bail
hearing be conducted to determine whether there is strong evidence of his guilt, or the
lack of it; and that entitlement to bail considers the imposable penalty, regardless of the
attendant circumstances.
Ruling of the Court
The petition for certiorari is meritorious.
1. Bail protects the right of the accused to due process and to be presumed innocent
In all criminal prosecutions, the accused shall be presumed innocent until the contrary
is proved.18 The presumption of innocence is rooted in the guarantee of due process,
and is safeguarded by the constitutional right to be released on bail,19 and further binds
the court to wait until after trial to impose any punishment on the accused.20
It is worthy to note that bail is not granted to prevent the accused from committing
additional crimes.[[21] The purpose of bail is to guarantee the appearance of the
accused at the trial, or whenever so required by the trial court. The amount of bail
should be high enough to assure the presence of the accused when so required, but it
should be no higher than is reasonably calculated to fulfill this purpose.22 Thus, bail acts
as a reconciling mechanism to accommodate both the accuseds interest in his
provisional liberty before or during the trial, and the societys interest in assuring the
accuseds presence at trial.23
2. Bail may be granted as a matter of right or of discretion
The right to bail is expressly afforded by Section 13, Article III (Bill of Rights) of the
Constitution, viz.:
x x x All persons, except those charged with offenses punishable by reclusion perpetua
when evidence of guilt is strong, shall, before conviction, be bailable by sufficient
sureties, or be released on recognizance as may be provided by law. The right to bail
shall not be impaired even when the privilege of the writ of habeas corpus is
suspended. Excessive bail shall not be required.
This constitutional provision is repeated in Section 7, Rule 11424 of the Rules of Court ,
as follows:
Section 7. Capital offense or an offense punishable by reclusion perpetua or life

imprisonment, not bailable. No person charged with a capital offense, or an offense
punishable by reclusion perpetua or life imprisonment, shall be admitted to bail when
evidence of guilt is strong, regardless of the stage of the criminal prosecution.
Page 26 of 378
A capital offense in the context of the rule refers to an offense that, under the law
existing at the time of its commission and the application for admission to bail, may be
punished with death.25
The general rule is, therefore, that any person, before being convicted of any criminal
offense, shall be bailable, unless he is charged with a capital offense, or with an offense
punishable with reclusion perpetua or life imprisonment, and the evidence of his guilt
is strong. Hence, from the moment he is placed under arrest, or is detained or restrained
by the officers of the law, he can claim the guarantee of his provisional liberty under the
Bill of Rights, and he retains his right to bail unless he is charged with a capital offense,
or with an offense punishable with reclusion perpetua or life imprisonment, and the
evidence of his guilt is strong.26 Once it has been established that the evidence of guilt is
strong, no right to bail shall be recognized.27
As a result, all criminal cases within the competence of the Metropolitan Trial Court,
Municipal Trial Court, Municipal Trial Court in Cities, or Municipal Circuit Trial Court
are bailable as matter of right because these courts have no jurisdiction to try capital
offenses, or offenses punishable with reclusion perpetua or life imprisonment. Likewise,
bail is a matter of right prior to conviction by the Regional Trial Court (RTC) for any
offense not punishable by death, reclusion perpetua , or life imprisonment, or even
prior to conviction for an offense punishable by death, reclusion perpetua , or life
imprisonment when evidence of guilt is not strong.28
On the other hand, the granting of bail is discretionary: (1) upon conviction by the RTC
of an offense not punishable by death, reclusion perpetua or life imprisonment; 29 or (2)
if the RTC has imposed a penalty of imprisonment exceeding six years, provided none
of the circumstances enumerated under paragraph 3 of Section 5, Rule 114 is present, as
follows:
(a) That he is a recidivist, quasi-recidivist, or habitual delinquent, or has

committed the crime aggravated by the circumstance of reiteration;
(b) That he has previously escaped from legal confinement, evaded sentence, or
violated the conditions of his bail without valid justification;
(c) That he committed the offense while under probation, parole, or conditional
pardon;
(d) That the circumstances of hi s case indicate the probability of flight if released
on bail; or
(e) That there is undue risk that he may commit another crime during the
pendency of the appeal.
3. Admission to bail in offenses punished by death, or life imprisonment, or

reclusion perpetua is subject to judicial discretion
For purposes of admission to bail, the determination of whether or not evidence of guilt
is strong in criminal cases involving capital offenses, or offenses punishable with
reclusion perpetua or life imprisonment lies within the discretion of the trial court. But,
as the Court has held in Concerned Citizens v. Elma ,30 "such discretion may be
exercised only after the hearing called to ascertain the degree of guilt of the accused for
the purpose of whether or not he should be granted provisional liberty." It is axiomatic,
Page 27 of 378
therefore, that bail cannot be allowed when its grant is a matter of discretion on the part
of the trial court unless there has been a hearing with notice to the Prosecution. 31 The
indispensability of the hearing with notice has been aptly explained in Aguirre v.
Belmonte, viz. :32
x x x Even before its pronouncement in the Lim case, this Court already ruled in People
vs. Dacudao, etc., et al. that a hearing is mandatory before bail can be granted to an
accused who is charged with a capital offense, in this wise:
The respondent court acted irregularly in granting bail in a murder case without any
hearing on the motion asking for it, without bothering to ask the prosecution for its
conformity or comment, as it turned out later, over its strong objections. The court
granted bail on the sole basis of the complaint and the affidavits of three policemen, not
one of whom apparently witnessed the killing. Whatever the court possessed at the time
it issued the questioned ruling was intended only for prima facie determining whether
or not there is sufficient ground to engender a well-founded belief that the crime was
committed and pinpointing the persons who probably committed it. Whether or not the
evidence of guilt is strong for each individual accused still has to be established unless
the prosecution submits the issue on whatever it has already presented. To appreciate
the strength or weakness of the evidence of guilt, the prosecution must be consulted or
heard. It is equally entitled as the accused to due process.
Certain guidelines in the fixing of a bailbond call for the presentation of evidence and
reasonable opportunity for the prosecution to refute it. Among them are the nature and
circumstances of the crime, character and reputation of the accused, the weight of the
evidence against him, the probability of the accused appearing at the trial, whether or
not the accused is a fugitive from justice, and whether or not the accused is under bond
in other cases. (Section 6, Rule 114, Rules of Court) It is highly doubtful if the trial court
can appreciate these guidelines in an ex-parte determination where the Fiscal is neither
present nor heard.
The hearing, which may be either summary or otherwise, in the discretion of the court,
should primarily determine whether or not the evidence of guilt against the accused is
strong. For this purpose, a summary hearing means:
x x x such brief and speedy method of receiving and considering the evidence of guilt as
is practicable and consistent with the purpose of hearing which is merely to determine
the weight of evidence for purposes of bail. On such hearing, the court does not sit to
try the merits or to enter into any nice inquiry as to the weight that ought to be allowed
to the evidence for or against the accused, nor will it speculate on the outcome of the
trial or on what further evidence may be therein offered or admitted. The course of
inquiry may be left to the discretion of the court which may confine itself to receiving
such evidence as has reference to substantial matters, avoiding unnecessary
thoroughness in the examination and cross examination.33
In resolving bail applications of the accused who is charged with a capital offense, or an
offense punishable by reclusion perpetua or life imprisonment, the trial judge is
expected to comply with the guidelines outlined in Cortes v. Catral,34 to wit:
1. In all cases, whether bail is a matter of right or of discretion, notify the

prosecutor of the hearing of the application for bail or require him to submit his
recommendation (Section 18, Rule 114 of the Rules of Court, as amended);
Page 28 of 378
2. Where bail is a matter of discretion, conduct a hearing of the application for

bail regardless of whether or not the prosecution refuses to present evidence to
show that the guilt of the accused is strong for the purpose of enabling the court
to exercise its sound discretion; (Section 7 and 8, supra)
3. Decide whether the guilt of the accused is strong based on the summary of
evidence of the prosecution;
4. If the guilt of the accused is no t strong, discharge the accused upon the
approval of the bailbond (Section 19, supra) Otherwise petition should be
denied.
4. Enriles poor health justifies his admission to bail
We first note that Enrile has averred in his Motion to Fix Bail the presence of two
mitigating circumstances that should be appreciated in his favor, namely: that he was
already over 70 years at the time of the alleged commission of the offense, and that he
voluntarily surrendered.35
Enriles averment has been mainly uncontested by the Prosecution, whose Opposition
to the Motion to Fix Bail has only argued that
8. As regards the assertion that the maximum possible penalty that might be imposed
upon Enrile is only reclusion temporal due to the presence of two mitigating
circumstances, suffice it to state that the presence or absence of mitigating
circumstances is also not consideration that the Constitution deemed worthy. The
relevant clause in Section 13 is "charged with an offense punishable by." It is, therefore,
the maximum penalty provided by the offense that has bearing and not the possibility
of mitigating circumstances being appreciated in the accuseds favor.36
Yet, we do not determine now the question of whether or not Enriles averment on the
presence of the two mitigating circumstances could entitle him to bail despite the crime
alleged against him being punishable with reclusion perpetua ,37 simply because the
determination, being primarily factual in context, is ideally to be made by the trial
court.
Nonetheless, in now granting Enriles petition for certiorari, the Court is guided by the
earlier mentioned principal purpose of bail, which is to guarantee the appearance of the
accused at the trial, or whenever so required by the court. The Court is further mindful
of the Philippines responsibility in the international community arising from the
national commitment under the Universal Declaration of Human Rights to:
x x x uphold the fundamental human rights as well as value the worth and dignity of
every person. This commitment is enshrined in Section II, Article II of our Constitution
which provides: "The State values the dignity of every human person and guarantees
full respect for human rights." The Philippines, therefore, has the responsibility of
protecting and promoting the right of every person to liberty and due process, ensuring
that those detained or arrested can participate in the proceedings before a court, to
enable it to decide without delay on the legality of the detention and order their release
if justified. In other words, the Philippine authorities are under obligation to make
available to every person under detention such remedies which safeguard their
fundamental right to liberty. These remedies include the right to be admitted to bail.38
Page 29 of 378
This national commitment to uphold the fundamental human rights as well as value the
worth and dignity of every person has authorized the grant of bail not only to those
charged in criminal proceedings but also to extraditees upon a clear and convincing
showing: (1 ) that the detainee will not be a flight risk or a danger to the community;
and (2 ) that there exist special, humanitarian and compelling circumstances.39
In our view, his social and political standing and his having immediately surrendered
to the authorities upon his being charged in court indicate that the risk of his flight or
escape from this jurisdiction is highly unlikely. His personal disposition from the onset
of his indictment for plunder, formal or otherwise, has demonstrated his utter respect
for the legal processes of this country. We also do not ignore that at an earlier time
many years ago when he had been charged with rebellion with murder and multiple
frustrated murder, he already evinced a similar personal disposition of respect for the
legal processes, and was granted bail during the pendency of his trial because he was
not seen as a flight risk.40 With his solid reputation in both his public and his private
lives, his long years of public service, and historys judgment of him being at stake, he
should be granted bail.
The currently fragile state of Enriles health presents another compelling justification for
his admission to bail, but which the Sandiganbayan did not recognize.
In his testimony in the Sandiganbayan,41 Dr. Jose C. Gonzales, the Director of the
Philippine General Hospital (PGH), classified Enrile as a geriatric patient who was
found during the medical examinations conducted at the UP-PGH to be suffering from
the following conditions:
(1) Chronic Hypertension with fluctuating blood pressure levels on multiple

drug therapy; (Annexes 1.1, 1.2, 1.3);
(2) Diffuse atherosclerotic cardiovascular disease composed of the following :
a. Previous history of cerebrovascular disease with carotid and vertebral

artery disease ; (Annexes 1.4, 4.1)
b. Heavy coronary artery calcifications; (Annex 1.5)
c. Ankle Brachial Index suggestive of arterial calcifications. (Annex 1.6)
(3) Atrial and Ventricular Arrhythmia (irregular heart beat) documented by

Holter monitoring ; (Annexes 1.7.1, 1.7.2)
(4) Asthma-COPD Overlap Syndrom (ACOS) and postnasal drip syndrome;

(Annexes 2.1, 2.2)
(5) Ophthalmology:
a. Age-related mascular degeneration, neovascular s/p laser of the Retina,

s/p Lucentis intra-ocular injections; (Annexes 3.0, 3.1, 3.2)
b. S/p Cataract surgery with posterior chamber intraocular lens. (Annexes

3.1, 3.2)
(6) Historical diagnoses of the following:
Page 30 of 378
a. High blood sugar/diabetes on medications;
b. High cholesterol levels/dyslipidemia;
c. Alpha thalassemia;
d. Gait/balance disorder;
e. Upper gastrointestinal bleeding (etiology uncertain) in 2014;
f. Benign prostatic hypertrophy (with documented enlarged prostate on

recent ultrasound).42
Dr. Gonzales attested that the following medical conditions, singly or collectively, could
pose significant risk s to the life of Enrile, to wit: (1) uncontrolled hypertension, because
it could lead to brain or heart complications, including recurrence of stroke; (2)
arrhythmia, because it could lead to fatal or non-fatal cardiovascular events, especially
under stressful conditions; (3) coronary calcifications associated with coronary artery
disease, because they could indicate a future risk for heart attack under stressful
conditions; and (4) exacerbations of ACOS, because they could be triggered by certain
circumstances (like excessive heat, humidity, dust or allergen exposure) which could
cause a deterioration in patients with asthma or COPD.43
Based on foregoing, there is no question at all that Enriles advanced age and ill health
required special medical attention. His confinement at the PNP General Hospital, albeit
at his own instance,44 was not even recommended by the officer-in-charge (O IC) and
the internist doctor of that medical facility because of the limitations in the medical
support at that hospital. Their testimonies ran as follows:
JUSTICE MARTIRES:
The question is, do you feel comfortable with the continued confinement of Senator
Enrile at the Philippine National Police Hospital?
DR. SERVILLANO:
No, Your Honor.
JUSTICE MARTIRES:
Director, doctor, do you feel comfortable with the continued confinement of Senator
Enrile at the PNP Hospital ?
PSUPT. JOCSON:
No, Your Honor.
JUSTICE MARTIRES:
Why?
PSUPT. JOCSON:
Page 31 of 378
Because during emergency cases, Your Honor, we cannot give him the best.
JUSTICE MARTIRES:
At present, since you are the attending physician of the accused, Senator Enrile, are you
happy or have any fear in your heart of the present condition of the accused vis a vis the
facilities of the hospital?
DR. SERVILLANO:
Yes, Your Honor. I have a fear.
JUSTICE MARTIRES:
That you will not be able to address in an emergency situation?
DR. SERVILLANO:
Your Honor, in case of emergency situation we can handle it but probably if the
condition of the patient worsen, we have no facilities to do those things, Your Honor.45
Bail for the provisional liberty of the accused, regardless of the crime charged, should
be allowed independently of the merits of the charge, provided his continued
incarceration is clearly shown to be injurious to his health or to endanger his life.
Indeed, denying him bail despite imperiling his health and life would not serve the true
objective of preventive incarceration during the trial.
Granting bail to Enrile on the foregoing reasons is not unprecedented. The Court has
already held in Dela Rama v. The Peoples Court:46
x x x This court, in disposing of the first petition for certiorari, held the following:
x x x [ U]nless allowance of bail is forbidden by law in the particular case, the illness of
the prisoner,
independently of the merits of the case, is a circumstance, and the humanity of the law
makes it a consideration which should, regardless of the charge and the stage of the
proceeding, influence the court to exercise its discretion to admit the prisoner to bail ;47
xxx
Considering the report of the Medical Director of the Quezon Institute to the effect that
the petitioner "is actually suffering from minimal, early, unstable type of pulmonary
tuberculosis, and chronic, granular pharyngitis," and that in said institute they "have
seen similar cases, later progressing into advance stages when the treatment and
medicine are no longer of any avail;" taking into consideration that the petitioners
previous petition for bail was denied by the Peoples Court on the ground that the
petitioner was suffering from quiescent and not active tuberculosis, and the implied
purpose of the Peoples Court in sending the petitioner to the Quezon Institute for
clinical examination and diagnosis of the actual condition of his lungs, was evidently to
verify whether the petitioner is suffering from active tuberculosis, in order to act
accordingly in deciding his petition for bail; and considering further that the said
Peoples Court has adopted and applied the well-established doctrine cited in our
Page 32 of 378
above-quoted resolution, in several cases, among them, the cases against Pio Duran
(case No. 3324) and Benigno Aquino (case No. 3527), in which the said defendants were
released on bail on the ground that they were ill and their continued confinement in
New Bilibid Prison would be injurious to their health or endanger their life; it is evident
and we consequently hold that the Peoples Court acted with grave abuse of discretion
in refusing to re lease the petitioner on bail.48
It is relevant to observe that granting provisional liberty to Enrile will then enable him
to have his medical condition be properly addressed and better attended to by
competent physicians in the hospitals of his choice. This will not only aid in his
adequate preparation of his defense but, more importantly , will guarantee his
appearance in court for the trial.
On the other hand, to mark time in order to wait for the trial to finish before a
meaningful consideration of the application for bail can be had is to defeat the objective
of bail, which is to entitle the accused to provisional liberty pending the trial. There may
be circumstances decisive of the issue of bail whose existence is either admitted by the
Prosecution, or is properly the subject of judicial notice that the courts can already
consider in resolving the application for bail without awaiting the trial to finish. 49 The
Court thus balances the scales of justice by protecting the interest of the People through
ensuring his personal appearance at the trial, and at the same time realizing for him the
guarantees of due process as well as to be presumed innocent until proven guilty.
Accordingly, we conclude that the Sandiganbayan arbitrarily ignored the objective of

bail to ensure the appearance of the accused during the trial; and unwarrantedly
disregarded the clear showing of the fragile health and advanced age of Enrile. As such,
the Sandiganbayan gravely abused its discretion in denying Enriles Motion To Fix Bail.
Grave abuse of discretion, as the ground for the issuance of the writ of certiorari ,
connotes whimsical and capricious exercise of judgment as is equivalent to excess, or
lack of jurisdiction.50 The abuse must be so patent and gross as to amount to an evasion
of a positive duty or to a virtual refusal to perform a duty enjoined by law, or to act at
all in contemplation of law as where the power is exercised in an arbitrary and despotic
manner by reason of passion or hostility.51 WHEREFORE, the Court GRANTS the
petition for certiorari ; ISSUES the writ of certiorari ANNULING and SETTING ASIDE
the Resolutions issued by the Sandiganbayan (Third Division) in Case No. SB-14 CRM-
0238 on July 14, 2014 and August 8, 2014; ORDERS the PROVISIONAL RELEASE of
petitioner Juan Ponce Enrile in Case No. SB-14-CRM-0238 upon posting of a cash bond
of P1,000,000.00 in the Sandiganbayan; and DIRECTS the immediate release of
petitioner Juan Ponce Enrile from custody unless he is being detained for some other
lawful cause.
G.R. No. 197562 April 20, 2015
AURORA ENGSON FRANSDILLA, Petitioner, vs. PEOPLE OF THE

PHILIPPINES, Respondents.
DECISION
The complex crime of robbery in an inhabited house by armed persons and robbery
with violence against or intimidation of persons was committed when the accused, who
held firearms, entered the residential house of the victims and inflicted injury upon the
victims in the process of committing the robbery. Hence, the penalty is that imposed for
Page 33 of 378
the robbery in an inhabited house, the more serious crime. All the accused are liable
because the act of one is the act of all. The Case
Aurora Engson Fransdilla (Fransdilla), the lone appellant, seeks to reverse the decision
promulgated on February 28, 2011,1 whereby the Court of Appeals (CA) affirmed her
conviction and that of her co-accused for robbery on the basis of conspiracy, with
modifications as to the penalty imposed, under the decision rendered on September 15,
1999 by the Regional Trial Court (RTC), Branch 99, in Quezon City.2
Antecedents
As factual background, the CA adopted the summary rendered by the Office of the
Solicitor General (OSG) in its appellees brief, viz.:
On February 20, 1991 between 3 oclock and 4 oclock in the afternoon, at private
complainants residence at No. 24, Mabait St., Teachers Village, Quezon City, private
complainant Lalaine Yreverre saw appellant Aurora Engson in front of their gate. Upon
noticing Aurora, Lalaine went to the gate and asked Aurora what is their purpose, as
there were four (4) of them. Aurora then inquired about Cynthia Yreverre, Lalaines
sister. The latter replied that Cynthia was in the Japanese Embassy and asked Aurora if
there was any other person whom she wanted to talk to. It was then that Aurora told
Lalaine that she was from the Philippine Overseas Employment Agency (POEA). It was
upon said pretension that Lalaine offered herself to instead talk to her and allowed her
to enter their house. When they were already having a conversation, Aurora asked
Lalaine if she could use the telephone, which the latter acceded to and handed her a
cordless telephone. Lalaine noticed that Aurora seemed to keep on dialing the
telephone and even said that the person she was calling did not know how to use the
telephone. But still, Aurora kept on dialing the telephone.
Thereafter, appellant Aurora asked for a cigarette. After Lalaine gave Aurora the
cigarette, the four (4) other men outside the gate, who were with Aurora, suddenly
came inside the house. The four (4) men stood behind Aurora who was still dialing the
telephone. When Aurora told that she could not contact the person she was calling, she
asked Lalaine if she could use the comfort room, which the latter again permitted.
Aurora stood up, put down the telephone, got her bag and went to the comfort room.
When Aurora came back, she sat down again but in crossed-legs as she said she was
having a menstrual period. Upon saying that, Lalaines attention was focused on her. At
this juncture, accused Edgardo Cacal poked a gun at Lalaines neck and announced that
it was a hold-up. While appellant Edgardo Cacal was poking a gun at Lalaines neck,
accused Danilo Cuanang and the two (2) other men proceeded to the kitchen. In the
kitchen, Danilo and his two (2) other companions herded their maids, private
complainants niece and cousin inside the bodega.
Accused Cacal who was still poking the gun at Lalaines neck, thereafter, pulled
Lalaines hair and dragged her upstairs and brought her inside Cynthias room. The
gun still being poked at Lalaine, Cacal looked around the room and when he spotted
upon the vault he dropped Lalaine, opened the door and called for his companions to
come along. Accused Cuanang came up and the two (Cacal and Cuanang) carried the
vault and brought it downstairs. But before they went downstairs, they threatened
Lalaine not to follow them and to just stay in the room, but Lalaine opened the door and
followed them.
Page 34 of 378
When Lalaine was halfway downstairs, accused Cacal turned his back and saw her.
Accused Cacal then brought her inside her room. Inside the room, Cacal pushed her
towards her bed and she fell. Cacal told her to just stay, and then he searched the room.
Lalaine managed to stand up but Cacal slapped her. While sitting, accused Cuanang
came and tied her arms at her back. While she was being tied, appellant Aurora
Fransdilla peeped inside the room. It was also at the time that accused Cacal and
Cuanang searched the entire room and took all the jewelries and things they saw.
When Cuanang and Cacal left the room, Lalaine followed them. While in the middle
downstairs, she saw Cacal, Cuanang and their two other companions tucking their guns
around their waists. Appellants and their co-accused then left the house on board two
(2) cars that were waiting for them just outside the house, and one of which, a black
Colt Mirage, was driven by accused Manuel Silao, together with appellant Edgardo
Silao who was seated at the front passenger seat. At this point, Lalaine shouted for help,
thereafter, a relative came by to help and untied her. Lalaine then called her sister
Cynthia and related the incident. Cynthia reported the incident to the police authorities.
Not too long thereafter, the police investigated the incident.
In relation thereto, Lalaine executed her sworn statement on February 20, 1991 (Exhibit
"J"). After said investigation, Lalaine underwent medical examination at the East
Avenue Medical Center as her hands were bruised when she was tied by her hands and
her face being slapped by one of the accused. A medical certificate was issued in
relation thereto (Exhibit "N"). Thereafter, Lalaine went to Camp Karingal at Sikatuna,
Quezon City where there were at least fifteen(15) person(s) presented before her in the
police line-up, but she was not able to identify any of the accused among said line-up.
After which, she went to the Station Investigation Division (SID) Station 4, Quezon City
where she was shown about fifty (50) pictures in order for her to identify the robbers,
but she was not able to identify any of them.
Since she failed to identify any of the malefactors, she proceeded to the National Bureau
of Investigation (NBI), Manila. She was referred to a cartographer for the sketch of
herein appellants and their co-accused as the malefactors in robbing their house
(Exhibits "B", "C" and "D").
Thereafter, Lalaine proceeded to the Western Police District, Manila. There, she went to
the rogues gallery where a picture of about (5) persons were shown to her. After
carefully examining the pictures, Lalaine was able to pinpoint the picture of accused
Danilo Cuanang as one of the robbers. She was also able to identify Manuel "Sonny"
Silao in a group picture where she identified accused Cuanang (Exhibits "E" and "F") It
was also in said rogues gallery that they were able to get accused Cuanangs address at
Iriga, Cubao, Quezon City.
Lalaine, together with her police officers companions, proceeded to Cuanangs

indicated address. Upon arrival thereat, they inquired from the security guard of the
townhouse if Danilo Cuanang was residing there, which the latter confirmed.
On the following day Lalaine and her police companions went back to Cuanangs
house. Lalaine knocked at the door and accused Cuanang himself opened the door.
When Lalaine confronted him and told him that he was one of those who entered their
house, the latter did not answer. Lalaine asked Cuanang if he could come with them at
the PNPSID, Station 4, EDSA, Kamuning, Quezon City and the latter acceded.
Page 35 of 378
On their way to the police station, Lalaine inquired on Cuanang about their lady
companion (herein appellant Fransdilla), but the latter just bowed his head. When
Lalaine threatened him that if he would not tell the whereabouts of their lady
companion (herein appellant Aurora) he would be answerable for all the things stolen,
the latter replied that they had no share in the stolen items. Lalaine then asked the name
of their lady companion and the latter said that her name was Jessica Engson (also
known as Aurora Engson Fransdilla) and she was living in Antipolo Street, Sampaloc,
Manila. Cuanang also volunteered himself to accompany them to Auroras house
provided that they should not hurt him. Agreeing thereto, the group of Lalaine,
accompanied by Cuanang, proceeded to Auroras house at the given address. Upon
arrival thereat, Lalaine inquired from a child if Aurora was awake, and upon asking,
she saw appellant Aurora who was trembling at that time. Lalaine noticed that Aurora
was nervous and even told her that Lalaine was able to remember her face. Appellant
even voluntarily told Lalaine that she would tell her the whole truth. She (Aurora) told
that she was instructed by her companions Edgar (Silao), Sonny (Manuel Silao) and
Danilo Cacal. Lalaine even confronted her when she implicated her cousins (Sonny and
Edgar).
Upon reaching PNP Station 4, SID, Kamuning, Quezon City, Lalaine and her police
companions rested for a while before they proceeded to 921 Adelina St., Sampaloc,
Manila, where accused Manuel "Sonny" Silao lived. Upon reaching the said address,
Lalaine knocked at the gate, and a maid opened the same and allowed them to enter the
house. In the house, Lalaine asked the maid where Sonnys room was and the latter said
it was on the third floor. When Lalaine and her police companions were going upstairs,
they passed by the second floor and saw accused Cacal sitting on a folding bed. She
then told her police companions that that man (Cacal) was among those who entered
and robbed their house, Cacal just remained silent. Thereafter, the group proceeded to
the third floor of the house, knocked at the door and it was Manuels (a.k.a. Sonny) wife
who open edit. At this point, Manuel (a.k.a. Sonny) was lying on the bed and holding
his gun, thus, Pat. Randy Quitoriano immediately handcuffed him. Lalaines group
invited Manuel and Danilo to go with them at the police station; both acceded.
On March 21, 1991, Lalaine went back to the PNP Station 4, SID, Kamuning, Quezon
City, where she was informed that they (Rod Fortalezas group) were able to recover
some money (dollar bills) from appellant Edgardo Silao. When these dollar bills were
shown to her, she recognized that these were the same dollar bills withdrawn by her
sister Cynthia from the RCBC Bank as the bills bear red markings (Exhibits "M" to "M-
5".3
Fransdilla and her co-accused were eventually charged with robbery under the
following information, to wit:
That on or about the 20th day of February, 1991, in Quezon City Philippines and within
the jurisdiction of the Honorable Court, the above-named accused, conspiring together,
confederating with and mutually helping one another, did then and there wilfully,
unlawfully and feloniously with intent to gain, and by means of violence and
intimidation upon person rob the residence of CYNTHIA YREVERRE Y
PANGANIBAN located at No. 24-B Mabait St., Teachers Village, Quezon City, this
City, by pretending to be from PHILIPPINE OVERSEAS EMPLOYMENT AGENCY
(POEA) and once inside took, rob, and carried away the following items therefrom, to
wit:
Page 36 of 378
nine (9) pieces of expensive jewelry . P1.5 M

$30,000.00 (U.S. Dollars equivalent to ... 900,000.00
belonging to CYNTHIA YREVERRE Y PANGANIBAN.
P
two (2) pairs of gold earings ..
10,000.00
one (1) gold necklace with pendant 180,000.00
one (1) Louie Viton Brown Leather (sic) 11,000.00
one (1) Gucci Ladies watch . 13,000.00
two (2) gold earrings w/diamond

80,000.00
pendant
CASH MONEY .. 7,000.00
belonging to LALAINE YREVERRE Y Panganiban, all in the total amount of

PhP2,701,000.00, Philippines Currency, to the damage and prejudice of the said
offended party in the aforementioned sum and in such other amounts as maybe
awarded under the provisions of the Civil Code.
CONTRARY TO LAW.4
At the pre-trial conference, the parties stipulated as follows:
1. The identity of all the accused as indicated in the information.
2. The accused Manuel Silao and Edgar Silao are brothers and first cousins of
private complainant Cynthia Yreverre and prosecution witness Lalaine Yreverre.
3. The accused Manuel Silao had entered the house of complainant on several
occasions to visit relatives.
4. The accused Edgardo Cacal is the driver of Manuel Silao and knows Manuels
brother accused Edgar Silao.
5. The accused Manuel Silao has a pending criminal case for illegal possession of
firearms before the RTC, Manila.
6. The accused Manuel Silao is the owner of one Cal. 9mm Springfield bearing
Serial No. 64624 with one magazine containing eight (8) ammunitions, although
only 4 were delivered to the Court.
7. The accused were all investigated in connection with the instant case, without
the assistance of counsel.
8. The person depicted in the picture marked as Exhibit "E" is accused Manuel
Silao while the one in the photograph marked as Exhibit "D" is accused Danilo
Cuanang.
Page 37 of 378
9. On February 20, 1991, Edgar Silao was in Quezon City.5
The prosecution presented complainants Lalaine Yreverre and Cynthia Yreverre, NBI
Illustrator Amando Mendoza, SPO2 Randolf Quitoriano, RCBC Manager Ma. Teresa
Jamir, Joel Yreverre and Dr. Richard Pascual as its witnesses during the trial on the
merits. On its part, the defense relied on Celia Syquian, Edgardo Y. Silao, Dominador
Pilar, Lourdes Samson Lopez, and Danilo Cuanang as witnesses.
As stated, the RTC convicted Fransdilla and her co-accused of robbery, decreeing in its
decision of September 15, 1999, viz.:
WHEREFORE, premises considered, this Court finds accused AURORA ENGSON

FRANSDILLA, EDGARDO CACAL Y SANCHEZ, DANILO CUANANG Y VALDEZ,
MANUEL SILAO Y YREVERRE and EDGARDO SILAO Y YREVERRE GUILTY
BEYOND REASONABLE DOUBT of the crime of Robbery punished under Article 299
of the Revised Penal Code and in the application of the Indeterminate Sentence Law
and in the absence of any mitigating or aggravating circumstances, hereby sentences
said accused to imprisonment of TWELVE (12) YEARS AND ONE (1) DAY to
FOURTEEN (14) YEARS and EIGHT (8) MONTHS of reclusion temporal as minimum
to SEVENTEEN (17) YEARS, FOUR (4) MONTHS and ONE (1) DAY to TWENTY (20)
YEARS of reclusion temporal as maximum. Said accused are likewise ordered to
indemnify the herein private complainants the amount of TWO MILLION TWO
HUNDRED FIFTY THOUSAND, the value of the property taken less the amount
recovered, and to pay the amount of PhP200,000.00 as exemplary damages.
SO ORDERED.6
As to Fransdilla, the RTC ruled that several facts and circumstances either proved by
the Prosecution or admitted by the Defense established her having conspired with her
co-accused in committing the offense charged.7
Decision of the CA
On appeal, the CA affirmed the conviction of all of the accused, but modified the
penalty imposed by the RTC, as follows:8
WHEREFORE, the Decision dated September 15, 1999 of the trial court is affirmed
subject to the modification that accused-appellants and accused are sentenced to an
imprisonment ranging from twelve (12) years of prision mayor, as minimum, to
seventeen (17) years and four (4) months of reclusion temporal, as maximum.
SO ORDERED.
Rejecting the claim of insufficiency of the proof of conspiracy raised by Fransdilla, the
CA observed that the clear and categorical testimony of Lalaine positively showed that
Fransdillas acts demonstrated her common design with the other accused to commit
the robbery,9 stressing that "it is a common design which is the essence of conspiracy,
though the conspirators may act separately and on different manner but always leading
to the same unlawful result." It adverted to Fransdillas various acts as evincing her role
in the concerted resolve to commit the robbery, such as introducing herself to Lalaine as
a representative of the POEA in order to gain access into the house; trying to distract
Lalaine by using the telephone, asking for a cigarette, going to the bathroom, and
pretending that she was then having her menstrual period in order to have her cohorts
Page 38 of 378
enter the house; and peeping inside the bedroom when her co-accused were tying
Lalaine up to enable themselves to search for and take away jewelry and other
valuables inside the latters bedroom without hindrance.
Issue
The accused still insists on her innocence, protesting that the CA erred in affirming the
conviction despite the failure to establish her guilt beyond reasonable doubt as a co-
conspirator in robbery.10
Ruling of the Court
The Court AFFIRMS the decision of the CA.
1. Conspiracy of Fransdilla with her co-accused was established beyond reasonable doubt
It bears stressing that Fransdilla opted not to present evidence in her defense during the
trial. On appeal, the core of her contentions in the CA was that the Prosecution did not
establish her having conspired with the other accused in committing the robbery. She
reiterates such contentions here, stating that the States formal offer of evidence did not
include any reference to any evidence specifically incriminating her.
The Court rejects Fransdillas contentions.
Our review of the records of the trial reveals that contrary to Fransdillas contentions,
the State competently and credibly established her active participation in the execution
of the robbery through Lalaines testimony detailing her specific acts, as follows:
Q Miss Yrreverre, do you recall if there was any unusual incident that happened on
that particular date and time on February 20, 1991 between 3:00 oclock to 4:00 oclock
in the afternoon?
A Yes, sir.
Q What was it?
A On February 20, 1991, between 3:00 to 4:00 oclock in the afternoon while I was
resting at our sala I saw them and I met them at the gate and I asked the lady because
there were four of them I asked the lady to come in.
Q How did the lady come in?
A When I saw the lady I asked the lady what is her purpose and she said I am from
the POEA and she is looking for my sister Cynthia Yrreverre, sir.
Q What happened after that?
A When she inquired about my sister I told her that my sister Cynthia Yrreverre is in
Japan embassy and she said if there is any other person she could talked to.
Q What was your answer?
Page 39 of 378
A When she said that she is from POEA I recommended myself to her and I said you
can talk to me and I allowed her to enter our house, sir.
Q After you allowed that lady who represented herself to you that she is from the
POEA to enter, what happened next?
A I let her enter our house and I inquired and asked from her who are the persons she
know in POEA, sir.
Q And what happened next after that?
A She mentioned a name whom according to her from the POEA but I do not
remember anymore, sir.
Q What happened next after that?
A While we were chatting or conversing for a while she asked if she can use our
telephone, sir.
Q And what was your answer to that?
A I said yes and I handed to her the cordless telephone, sir.
Q What happened after you gave the telephone to the lady who represented herself
that she is from the POEA?
A After I gave the cordless telephone she keep on dialing, dialing and dialing and
according to her she constantly dialing the number and she even remarked: "the person
she is calling does not know how to use the telephone"
Q What happened after that remarks?
A She still kept on dialing and she remarked that she did not know how to use the
phone
A After that, she asked for a cigarette sir.
Q Did you give to the lady who represented herself that she is from the POEA a
cigarette?
A Yes, sir.
A After I gave the cigarette the four(4) men entered suddenly and came in our house.
Q Where did they come from?
A I do not know, sir.
Q From what direction of the house they came from Miss Witness, do you know?
Page 40 of 378
A They came from the outside of the gate, sir, and suddenly entered our house, sir.
Q When for the first time did you see that lady who represented herself that she is
from the POEA and the four (4) men burged (sic) in your house?
A Last February 20, 1991 only, sir.
xxxx
ATTY. COPE:
Q Miss Yrreverre, would you look around the courtroom and pinpoint if that lady
who represented herself from the POEA is here present?
A Witness is pointing to a lady wearing black and when asked by the interpreter she
answered to the name of Aurora Engson Fransdilla.
xxxx
Q Miss Yrreverre, what happened after four (4) men suddenly entered your residence
on that particular date and time you mentioned earlier?
A As I was looking on the lady dialing, kept on dialing the number in the
telephone I saw the four (4) men standing behind the lady, sir.
Q And when you saw the lady, you are referring to Aurora Engson
Fransdilla?
A Yes, sir.
A When we were in the sala we were talking Aurora Engson Fransdilla remarked she
can not really contact the number as it was busy, sir.
A And Aurora Engson Fransdilla after which asked if she can use the comfort room to
which I agreed, sir.
Q What happened next?
A She stood up and put down the cordless telephone and took her bag because she
wanted to get a napkin as she said she still has to call up before going to the comfort
room, sir.
A After which she sat down again and crossed legs and remarked that she had a
monthly period so my attention was focused on her, sir.
Page 41 of 378
A While my attention was with Aurora Engson Fransdilla, Cacal approached me and
poked the gun on my neck, sir.
A And he announced hold-up.
Q Who announced that hold-up?
A Cacal, sir.
A While Cacal poked a gun at my neck Cuanang and the two other men went to the
kitchen to which I could see very well in my position from where I stood, sir.
COURT:
Q How many men went to the kitchen?
A The three (3) others went to the kitchen, sir.
ATTY. COPE:
A While Cacal was poking the gun at my neck, I saw Cuanang and the two (2) men
herded our maids my one cousin and my niece, sir in the bodega, sir.
A And our maids and my niece and my cousin were locked inside the bodega, sir.
Q Where is this bodega located Miss Witness?
A In our kitchen, sir.
A While Cacal who was still poking the gun at my neck held and pulled the tail of my
hair and dragged me upstairs and brought me upstairs to the room of my sister Cynthia
Irreverre, sir
A While I was at the room of my sister Cynthia and while the gun was still poked at
my neck and still held by Cacal he looked around the room, sir.
A While I was looking around the room he saw the vault of my sister Cynthia
Yrreverre, sir.
Page 42 of 378
Q What happened next then?
A Suddenly he dropped me and opened the door and shouted that one (1) of your
should come up.
A While they carried the vault of my sister downstairs Cuanang came up and
Cuanang carried the vault with Cacal and before they went down they told me, Cacal
told me that you should not follow us. You should stay here.
xxxx
ATTY. COPE:
Q Miss Yrreverre, will you please describe the vault which Cuanang and Cacal got
from the room of your sister Cynthia Yrreverre?
A Witness is demonstrating the size of the vault it is a small one it is as small

television.
ATTY. VALDEZ:
Can we measure that Your Honor.
COURT:
You agree on the size.
WITNESS:
A Witness is pointing half of the area of the table which is more or less 1 1/2 x 1 1/2
cubic feet.
ATTY. COPE:
Q After Cuanang and Cacal brought out the vault from the room and you were told
by Cacal to stay from the room and not to get out, what did you do?
A When the two (2) got out I just stay and they simultaneously closed the door, sir.
Q What happened next then?
A When they closed the door I got the courage to open the door and followed them,
sir.
Q What happened then?
A I went down the stairs when I was at the middle of the stairs Cacal turned his back
and he saw me and came after me and brought me up to my room, sir.
Q How far was your room to the roomof your sister Cynthia Yrreverre?
Page 43 of 378
A Just near sir, the dividing portion for the room of my niece is so near.
Q What happened after Cacal brought you to your room?
A While I was in my room he pushed me towards my bed, sir.
A So when he pushed me and I was felt on my back he said to me just stay right there
and he searched my room (naghalughog), sir.
xxxx
ATTY. COPE:
Q How did you fall Miss Witness?
A When he pushed me I felt at my back sir and Cacal searched my room, sir.
A While Cacal was searching (naghahalughog) I stood up when Cacal saw me stood
up he slapped me, sir.
Q What happened when you were slapped by Cacal?
A He said (putang ina mo matigas ang ulo mo) son of a bitch you are hard headed.
Q And what happened after that?
A While I was sitting Cuanang came inside my room and he tied my hands at my
back, sir
A While I was being tied by Cuanang at my back Aurora Engson Fransdilla peeped
inside my room, sir.
Q Is that Aurora Engson Fransdilla the lady who represented to you from the POEA?
A Yes, sir.
Q What happened after that while you were hogtied by Cuanang and Aurora
Fransdilla peeped into your room?
A While my hands was (sic) tied, that was the time Cacal and Cuanang took my
jewelries, sir.
COURT:
Q Where did she get those pieces of jewelry?
A In my room at the headboard of my bed, sir.
Page 44 of 378
ATTY. COPE:
Q What else if there were any taken by Cacal and Cuanang?
A Many sir.
Q What are those?
A They took the following: two pairs of gold earrings, one gold necklace with
pendant, one Loui(s) Vuitton brown leather, one Gucci Ladies watch, two gold earrings
with diamond pendant and cash money of SEVEN THOUSAND (P7,000.00) PESOS.
ATTY. COPE:
Q This one gold necklace with pendant how much did you buy this?
A I bought that for P180,000.00, sir.
COURT:
How many karats this gold necklace?
WITNESS:
That is 18 karats gold, sir.
ATTY. COPE:
Q Miss Yrreverre, how about the two gold earrings with diamond pendant, how
much did you buy this?
A I bought that for EIGHTY THOUSAND (P80,000.00) PESOS.
COURT:
Q Do you know the karats of this diamond? How big is this?
A It is as big as big mongo, sir.
ATTY. COPE:
Q This two pairs of gold earrings, how much did you buy this, how much is this?
A TEN THOUSAND (P10,000.00) PESOS, sir.
Q What else?
A One gold necklace with pendant, sir.
Q How much is this?
A ONE HUNDRED EIGHTY THOUSAND (P180,000.00) PESOS, sir.
Q How about this Louie Vitton brown leather bag, how much did you buy this?
Page 45 of 378
A I bought that for ELEVEN THOUSAND (P11,000.00) PESOS, sir.
Q This Gucci ladies watch, how much did you buy this?
A THIRTEEN THOUSAND (P13,000.00) PESOS, sir.
COURT:
What kind of Gucci is this, US Gucci or Hongkong?
WITNESS:
I do not remember anymore, Your Honor.
COURT:
Q How much did you buy this?
A I bought that for THIRTEEN THOUSAND (P13,000.00) PESOS, sir.11
The State thus discharged its burden to produce before the trial court sufficient
evidence against all the accused, including Fransdilla, that would warrant a judgment
of conviction. Fransdillas non-presentation of her defense, despite her being directly
incriminated by Lalaine, denied the Court her explanation for her specific overt acts of
complicity in the robbery and thus rendered the incriminating evidence unrefuted. By
this the Court simply means that Fransdilla did not discharge her burden of evidence,
which is "the duty of a party to start and continue giving evidence at any stage of the
trial until he has established a prima facie case, or the like duty of the adverse party to
meet and overthrow that prima facie case thus established."12
As such, the prosecution successfully discharged its burden of proof against Fransdilla.
In the eyes of the law, conspiracy exists when two or more persons come to an
agreement concerning the commission of a crime and decide to commit it.13 For an
accused to be validly held to have conspired with her co-accused in committing the
crime, her overt acts must evince her active part in the execution of the crime agreed to
be committed. The overt acts of each of the conspirators must tend to execute the
offense agreed upon, for the merely passive conspirator cannot be held to be still part of
the conspiracy without such overt acts, unless such conspirator is the mastermind.
Here, Fransdilla was satisfactorily shown not to have been a mere passive
coconspirator, but an active one who had facilitated the access into the house by
representing herself as an employee of the POEA. In that respect, it is not always
required to establish that two or more persons met and explicitly entered into the
agreement to commit the crime by laying down the details of how their unlawful
scheme or objective would be carried out.14 Conspiracy can also be deduced from the
mode and manner in which the offense is perpetrated, or can be inferred from the acts
of the several accused evincing their joint or common purpose and design, concerted
action and community of interest.15 Once conspiracy is established, the act of each
conspirator is the act of all.
In establishing conspiracy, the State could rely on direct as well as circumstantial

evidence. Lalaines testimony against Fransdilla constituted both kinds of evidence.
Lalaines direct testimony showed the latters overt participation in the execution of the
Page 46 of 378
robbery, while the following circumstances indicated the unity of action and common
purpose or design to commit the robbery among Fransdilla and her co-accused,
specifically: (1) Fransdilla and her co-accused went together to the complainants house
at around 3:00 to 4:00 p.m. of February 20,1991; (2) she talked to Joel to solicit
information on the whereabouts of Cynthia; (3) upon learning that Cynthia was not
home, she stepped outside the gate and talked to two men sitting inside a vehicle
parked outside the house; (4) she pretended to be an employee of the POEA in order to
gain entry into the house; (5) she performed acts purposely aimed to distract Lalaine in
order to give her cohorts the opportunity to enter the house and commit the robbery; (5)
during the robbery, she was not tied up like the household members, but moved freely
around the house, and at one point Lalaine spotted her peeping into the bedroom
where Lalaine was then being held; and (7) she and the others fled together in two
separate vehicles after the robbery.
In light of the foregoing, the CA justly concluded that the State established beyond
reasonable doubt the guilt for of all the accused, including Fransdilla, for the robbery.
2. Correction of the Indeterminate Sentence was necessary to conform to the letter and spirit
the Indeterminate Sentence Law
That the trial judge fixed the indeterminate sentence at "imprisonment of TWELVE (12)
YEARS AND ONE (1) DAY to FOURTEEN (14) YEARS and EIGHT (8) MONTHS of
reclusion temporal as minimum to SEVENTEEN (17) YEARS, FOUR (4) MONTHS and
ONE (1) DAY to TWENTY (20) YEARS of reclusion temporal as maximum" was a
patent elementary error. Such fixing contravened the letter and spirit of the
Indeterminate Sentence Law, Section 1 of which reads: Section 1. Hereafter, in imposing
a prison sentence for an offense punished by the Revised Penal Code, or its
amendments, the court shall sentence the accused to an indeterminate sentence the
maximum term of which shall be that which, in view of the attending circumstances,
could be properly imposed under the rules of the said Code, and the minimum which
shall be within the range of the penalty next lower to that prescribed by the Code for
the offense; and if the offense is punished by any other law, the court shall sentence the
accused to an indeterminate sentence, the maximum term of which shall not exceed the
maximum fixed by said law and the minimum shall not be less than the minimum term
prescribed by the same. (As amended by Act No. 4225)
The CA justifiably deemed it necessary to correct the indeterminate sentence. Under

Section 1, supra, the minimum of the indeterminate sentence is a penalty "within the
range of the penalty next lower to that prescribed by the [Revised Penal] Code for the
offense," and the maximum is "that which, in view of the attending circumstances,
could be properly imposed under the rules of the said Code." Considering that the clear
objective of the Indeterminate Sentence Law is to have the convict serve the minimum
penalty before becoming eligible for release on parole pursuant to the Indeterminate
Sentence Law,16 both the minimum and the maximum penalties must be definite, not
ranging. This objective cannot be achieved otherwise, for determining when the convict
would be eligible for release on parole would be nearly impossible if the minimum and
the maximum were as indefinite as the RTC fixed the indeterminate sentence. Indeed,
that the
sentence is an indeterminate one relates only to the fact that such imposition would
leave the period between the minimum and the maximum penalties indeterminate" in
Page 47 of 378
the sense that he may, under the conditions set out in said Act, be released from serving
said period in whole or in part."17
3. Crime committed was the complex crime of robbery in an inhabited house by armed men
under Article 299 of the Revised Penal Code and robbery with violence against or
intimidation of persons under Article 294 of the Revised Penal Code
Citing Napolis v. Court of Appeals,18 the CA ruled that all the accused, including
Fransdilla, were guilty of committing the complex crime of robbery in an inhabited
house under Article 299, Revised Penal Code, and robbery with intimidation or violence
under Article 294, Revised Penal Code. Thus, it held that the penalty for the complex
crime under Article 48 of the Revised Penal Code was that for the more serious offense,
to be imposed in its maximum period. Taking into consideration that no mitigating or
aggravating circumstances were present, it set the indeterminate sentence of 12 years of
prision mayor, as minimum, to 17 years and four months of reclusion temporal, as
maximum.
We concur with the CA.
In Napolis v. Court of Appeals, the Court abandoned the doctrine adopted in United
States v. De los Santos19 that when the felonies of robbery in an inhabited house under
Article 299 of the Revised Penal Code and robbery with violence against or intimidation
of a person under Article 294 of the Revised Penal Code are committed, the penalty for
the latter crime (although the lighter one) should be imposed because the violence
against or intimidation of a person was the "controlling qualification," on the theory that
"robbery which is characterized by violence or intimidation against the person is
evidently graver than ordinary robbery committed by force upon things, because where
violence or intimidation against the person is present there is greater disturbance of the
order of society and the security of the individual." Writing for the Court, Chief Justice
Roberto R. Concepcion observed:
Upon mature deliberation, We find ourselves unable to share the foregoing view.
Indeed, one who, by breaking a wall, enters, with a deadly weapon, an inhabited house
and steals therefrom valuable effects, without violence against or intimidation upon
persons, is punishable under Art. 299 of the Revised Penal Code with reclusion
temporal. Pursuant to the above view, adhered to in previous decisions, if, aside from
performing said acts, the thief lays hand upon any person, without committing any of
the crimes or inflicting any of the injuries mentioned in subparagraphs (1) to (4) of Art.
294 of the same Code, the imposable penalty under paragraph (5) thereof shall be
much lighter. To our mind, this result and the process of reasoning that has brought it
about, defy logic and reason.
The argument to the effect that the violence against or intimidation of a person supplies
the "controlling qualification," is far from sufficient to justify said result. We agree with
the proposition that robbery with "violence or intimidation against the person is
evidently graver than ordinary robbery committed by force upon things," but, precisely,
for this reason, We cannot accept the conclusion deduced therefrom in the cases above
cited reduction of the penalty for the latter offense owing to the concurrence of
violation or intimidation which made it a more serious one. It is, to our mind, more
plausible to believe that Art. 294 applies only where robbery with violence against or
intimidation of a person takes place without entering an inhabited house, under the
conditions set forth in Art. 299 of the Revised Penal Code.
Page 48 of 378
We deem it more logical and reasonable to hold, as We do, when the elements of both
provisions are present, that the crime is a complex one, calling for the imposition as
provided in Art. 48 of said Code of the penalty for the most serious offense, in its
maximum period, which, in the case at bar, is reclusion temporal in its maximum
period. This penalty should, in turn, be imposed in its maximum period from nineteen
(19) years, one (1) month and eleven (11)days to twenty (20) years of reclusion
temporal owing to the presence of the aggravating circumstances of nighttime. x x x.20
Napolis v. Court of Appeals is controlling in this case. To start with, the information
fully alleged the complex crime of robbery in an inhabited house under Article 299,
Revised Penal Code, and robbery with intimidation or violence under Article 294,
Revised Penal Code by averring that "the above-named accused, conspiring together,
confederating with and mutually helping one another, did then and there wilfully,
unlawfully and feloniously with intent to gain, and by means of violence and
intimidation upon person rob the residence x x x." And, secondly, the Prosecution
competently proved the commission of the complex crime by showing during the trial
that the accused, after entering the residential house of the complainants at No. 24-B
Mabait St., Teachers Village, Quezon City, took away valuables, including the vault
containing Cynthias US dollar currencies, and in the process committed acts of violence
against and intimidation of persons during the robbery by slapping and threatening
Lalaine and tying her up, and herding the other members of the household inside the
bodega of the house.
Article 294 of the Revised Penal Code provides:
Article 294. Robbery with violence against or intimidation of persons; Penalties. Any
person guilty of robbery with the use of violence against or intimidation of any person
shall suffer:
1. The penalty of reclusion perpetua to death, when by reason or on occasion of

the robbery, the crime of homicide shall have been committed.21
2. The penalty of reclusion temporal in its medium period to reclusion perpetua

when the robbery shall have been accompanied by rape or intentional mutilation,
or if by reason or on occasion of such robbery, any of the physical injuries
penalized in subdivision 1 of Article 263 shall have been inflicted; Provided,
however, that when the robbery accompanied with rape is committed with a use
of a deadly weapon or by two or more persons, the penalty shall be reclusion
perpetua to death (As amended by PD No. 767).
3. The penalty of reclusion temporal, when by reason or on occasion of the

robbery, any of the physical injuries penalized in subdivision 2 of the article
mentioned in the next preceding paragraph, shall have been inflicted.
4. The penalty of prision mayor in its maximum period to reclusion temporal in

its medium period, if the violence or intimidation employed in the commission
of the robbery shall have been carried to a degree clearly unnecessary for the
commission of the crime, or when the course of its execution, the offender shall
have inflicted upon any person not responsible for its commission any of the
physical injuries covered by sub-divisions 3 and 4 of said Article 263.
5. The penalty of prision correccional in its maximum period to prision mayor in

its medium period in other cases. (As amended by R. A. 18).
Page 49 of 378
Paragraph 5, supra, is the relevant provision, under which the penalty is prision
correccional in its maximum period to prision mayor in its medium period.
On the other hand, Article 299 of the Revised Penal Code states:
Article 299. Robbery in an inhabited house or public building or edifice devoted to

worship. Any armed person who shall commit robbery in an inhabited house or
public building or edifice devoted to religious worship, shall be punished by reclusion
temporal, if the value of the property taken shall exceed 250 pesos, and if:
(a) The malefactors shall enter the house or building in which the robbery was
committed, by any of the following means:
1. Through an opening not intended for entrance or egress.
2. By breaking any wall, roof, or floor or breaking any door or window.
3. By using false keys, picklocks or similar tools.
4. By using any fictitious name or pretending the exercise of public authority.
Or if
(b) The robbery be committed under any of the following circumstances:
1. By the breaking of doors, wardrobes, chests, or any other kind of locked or

sealed furniture or receptacle;
2. By taking such furniture or objects to be broken or forced open outside the

place of the robbery.
When the offenders do not carry arms, and the value of the property taken exceeds 250
pesos, the penalty next lower in degree shall be imposed.
The same rule shall be applied when the offenders are armed, but the value of the
property taken does not exceed 250 pesos.
When said offenders do not carry arms and the value of the property taken does not
exceed 250 pesos, they shall suffer the penalty prescribed in the two next preceding
paragraphs, in its minimum period.
If the robbery be committed in one of the dependencies of an inhabited house, public

building, or building dedicated to religious worship, the penalties next lower in degree
than those prescribed in this article shall be imposed.
Relevant are paragraph (a)4 (because Fransdilla pretended to be from the POEA) and
paragraph (b)2 (because the accused brought the vault down from Cynthias upstairs
bedroom and forced it open outside the place where the robbery was committed),
supra. The penalty for the crime is reclusion temporal.
Under Article 48 of the Revised Penal Code, the penalty for the complex crime is that
for the more serious felony, which, in this case, was the robbery in an inhabited house
by armed men punishable by reclusion temporal, to be imposed in the maximum
Page 50 of 378
period(i.e., 17 years, four months and one day to 20 years). Hence, the maximum of the
indeterminate sentence of 12 years of prision mayor, as minimum, to 17 years and four
months of reclusion temporal, must be corrected to 17 years, four months and one day
of reclusion temporal.
4. Exemplary damages to be deleted for lack of legal basis
The CA affirmed the order of the RTC for the accused to return the value of the articles
stolen totalingP2,250,000.00 and to pay to the complainants P200,000.00 as exemplary
damages. Article 2230 of the Civil Code authorizes the grant of exemplary damages as
part of the civil liability in crimes only when one or more aggravating circumstances
were present in the commission of the crime. With the conceded absence of any
aggravating circumstance in the commission of the crime, therefore, we delete
the P200,000.00 as exemplary damages for lack of legal basis. However, interest of 6%
per annum should be imposed on the P2,250,000.00,22to be reckoned from the filing of
the information until full payment because the value of the stolen articles, which the
information individually averred, could be established with reasonable certainty.23
WHEREFORE, the Court DENIES the petition for review on certiorari and AFFIRMS in
all respects the conviction of accused AURORA ENGSON FRANSDILLA for the
complex crime of robbery in an inhabited house by armed men under Article 299 of the
Revised Penal Code and robbery with violence against and intimidation of persons
under Article 294 of the Revised Penal Code, subject to the following
MODIFICATIONS, namely: (1) she shall suffer the indeterminate sentence of 12 years of
prision mayor, as minimum, to 17 years, four months and one day of reclusion
temporal, as maximum; (2) the award of P200,000.00 as exemplary damages is deleted
for lack of legal basis; and (3) and the actual damages of P2,250,000.00 shall earn interest
of 6% per annum reckoned from the filing of the information until full payment.
G.R. No. 209287 July 1, 2014
MARIA CAROLINA P. ARAULLO, CHAIRPERSON, BAGONG ALYANSANG

MAKABAYAN; JUDY M. TAGUIWALO, PROFESSOR, UNIVERSITY OF THE
PHILIPPINES DILIMAN, CO-CHAIRPERSON, PAGBABAGO; HENRI KAHN,
CONCERNED CITIZENS MOVEMENT; REP. LUZ ILAGAN, GABRIELA
WOMEN'S PARTY REPRESENTATIVE; REP. CARLOS ISAGANI ZARATE, BAY
AN MUNA PARTY-LIST REPRESENTATIVE; RENATO M. REYES, JR.,
SECRETARY GENERAL OF BAYAN; MANUEL K. DAYRIT, CHAIRMAN, ANG
KAPATIRAN PARTY; VENCER MARI E. CRISOSTOMO, CHAIRPERSON,
ANAKBAYAN; VICTOR VILLANUEVA, CONVENOR, YOUTH ACT
NOW, Petitioners, vs. BENIGNO SIMEON C. AQUINO III, PRESIDENT OF THE
REPUBLIC OF THE PHILIPPINES; PAQUITO N. OCHOA, JR., EXECUTIVE
SECRETARY; AND FLORENCIO B. ABAD, SECRETARY OF THE DEPARTMENT
OF BUDGET AND MANAGEMENT, Respondents.
DECISION
For resolution are the consolidated petitions assailing the constitutionality of the
Disbursement Acceleration Program(DAP), National Budget Circular (NBC) No. 541,
and related issuances of the Department of Budget and Management (DBM)
implementing the DAP.
Page 51 of 378
At the core of the controversy is Section 29(1) of Article VI of the 1987 Constitution, a
provision of the fundamental law that firmly ordains that "[n]o money shall be paid out
of the Treasury except in pursuance of an appropriation made by law." The tenor and
context of the challenges posed by the petitioners against the DAP indicate that the
DAP contravened this provision by allowing the Executive to allocate public money
pooled from programmed and unprogrammed funds of its various agencies in the guise
of the President exercising his constitutional authority under Section 25(5) of the 1987
Constitution to transfer funds out of savings to augment the appropriations of offices
within the Executive Branch of the Government. But the challenges are further
complicated by the interjection of allegations of transfer of funds to agencies or offices
outside of the Executive.
Antecedents
What has precipitated the controversy?
On September 25, 2013, Sen. Jinggoy Ejercito Estrada delivered a privilege speech in the
Senate of the Philippines to reveal that some Senators, including himself, had been
allotted an additional P50 Million each as "incentive" for voting in favor of the
impeachment of Chief Justice Renato C. Corona.
Responding to Sen. Estradas revelation, Secretary Florencio Abad of the DBM issued a
public statement entitled Abad: Releases to Senators Part of Spending Acceleration
Program,1 explaining that the funds released to the Senators had been part of the DAP,
a program designed by the DBM to ramp up spending to accelerate economic
expansion. He clarified that the funds had been released to the Senators based on their
letters of request for funding; and that it was not the first time that releases from the
DAP had been made because the DAP had already been instituted in 2011 to ramp up
spending after sluggish disbursements had caused the growth of the gross domestic
product (GDP) to slow down. He explained that the funds under the DAP were usually
taken from (1) unreleased appropriations under Personnel Services;2 (2) unprogrammed
funds; (3) carry-over appropriations unreleased from the previous year; and (4) budgets
for slow-moving items or projects that had been realigned to support faster-disbursing
projects.
The DBM soon came out to claim in its website3 that the DAP releases had been sourced
from savings generated by the Government, and from unprogrammed funds; and that
the savings had been derived from (1) the pooling of unreleased appropriations, like
unreleased Personnel Services4 appropriations that would lapse at the end of the year,
unreleased appropriations of slow-moving projects and discontinued projects per zero
based budgeting findings;5 and (2) the withdrawal of unobligated allotments also for
slow-moving programs and projects that had been earlier released to the agencies of the
National Government.
The DBM listed the following as the legal bases for the DAPs use of savings, 6 namely:
(1) Section 25(5), Article VI of the 1987 Constitution, which granted to the President the
authority to augment an item for his office in the general appropriations law; (2) Section
49 (Authority to Use Savings for Certain Purposes) and Section 38 (Suspension of
Expenditure Appropriations), Chapter 5, Book VI of Executive Order (EO) No. 292
(Administrative Code of 1987); and (3) the General Appropriations Acts (GAAs) of
2011, 2012 and 2013, particularly their provisions on the (a) use of savings; (b) meanings
of savings and augmentation; and (c) priority in the use of savings.
Page 52 of 378
As for the use of unprogrammed funds under the DAP, the DBM cited as legal bases the
special provisions on unprogrammed fund contained in the GAAs of 2011, 2012 and
2013.
The revelation of Sen. Estrada and the reactions of Sec. Abad and the DBM brought the
DAP to the consciousness of the Nation for the first time, and made this present
controversy inevitable. That the issues against the DAP came at a time when the Nation
was still seething in anger over Congressional pork barrel "an appropriation of
government spending meant for localized projects and secured solely or primarily to
bring money to a representatives district"7 excited the Nation as heatedly as the pork
barrel controversy.
Nine petitions assailing the constitutionality of the DAP and the issuances relating to
the DAP were filed within days of each other, as follows: G.R. No. 209135 (Syjuco), on
October 7, 2013; G.R. No. 209136 (Luna), on October 7, 2013; G.R. No. 209155
(Villegas),8 on October 16, 2013; G.R. No. 209164 (PHILCONSA), on October 8, 2013;
G.R. No. 209260 (IBP), on October 16, 2013; G.R. No. 209287 (Araullo), on October 17,
2013; G.R. No. 209442 (Belgica), on October 29, 2013; G.R. No. 209517 (COURAGE), on
November6, 2013; and G.R. No. 209569 (VACC), on November 8, 2013.
In G.R. No. 209287 (Araullo), the petitioners brought to the Courts attention NBC No.
541 (Adoption of Operational Efficiency Measure Withdrawal of Agencies
Unobligated Allotments as of June 30, 2012), alleging that NBC No. 541, which was
issued to implement the DAP, directed the withdrawal of unobligated allotments as of
June 30, 2012 of government agencies and offices with low levels of obligations, both for
continuing and current allotments.
In due time, the respondents filed their Consolidated Comment through the Office of
the Solicitor General (OSG).
The Court directed the holding of oral arguments on the significant issues raised and
joined.
Issues
Under the Advisory issued on November 14, 2013, the presentations of the parties
during the oral arguments were limited to the following, to wit:
Procedural Issue:
A. Whether or not certiorari, prohibition, and mandamus are proper remedies to assail
the constitutionality and validity of the Disbursement Acceleration Program (DAP),
National Budget Circular (NBC) No. 541, and all other executive issuances allegedly
implementing the DAP. Subsumed in this issue are whether there is a controversy ripe
for judicial determination, and the standing of petitioners.
Substantive Issues:
B. Whether or not the DAP violates Sec. 29, Art. VI of the 1987 Constitution, which
provides: "No money shall be paid out of the Treasury except in pursuance of an
appropriation made by law."
Page 53 of 378
C. Whether or not the DAP, NBC No. 541, and all other executive issuances allegedly
implementing the DAP violate Sec. 25(5), Art. VI of the 1987 Constitution insofar as:
(a)They treat the unreleased appropriations and unobligated allotments

withdrawn from government agencies as "savings" as the term is used in
Sec. 25(5), in relation to the provisions of the GAAs of 2011, 2012 and 2013;
(b)They authorize the disbursement of funds for projects or programs not

provided in the GAAs for the Executive Department; and
(c)They "augment" discretionary lump sum appropriations in the GAAs.
D. Whether or not the DAP violates: (1) the Equal Protection Clause, (2) the system of
checks and balances, and (3) the principle of public accountability enshrined in the 1987
Constitution considering that it authorizes the release of funds upon the request of
legislators.
E. Whether or not factual and legal justification exists to issue a temporary restraining
order to restrain the implementation of the DAP, NBC No. 541, and all other executive
issuances allegedly implementing the DAP.
In its Consolidated Comment, the OSG raised the matter of unprogrammed funds in
order to support its argument regarding the Presidents power to spend. During the
oral arguments, the propriety of releasing unprogrammed funds to support projects
under the DAP was considerably discussed. The petitioners in G.R. No. 209287
(Araullo) and G.R. No. 209442 (Belgica) dwelled on unprogrammed funds in their
respective memoranda. Hence, an additional issue for the oral arguments is stated as
follows:
F. Whether or not the release of unprogrammed funds under the DAP was in accord
with the GAAs.
During the oral arguments held on November 19, 2013, the Court directed Sec. Abad to
submit a list of savings brought under the DAP that had been sourced from (a)
completed programs; (b) discontinued or abandoned programs; (c) unpaid
appropriations for compensation; (d) a certified copy of the Presidents directive dated
June 27, 2012 referred to in NBC No. 541; and (e) all circulars or orders issued in relation
to the DAP.9
In compliance, the OSG submitted several documents, as follows:
(1) A certified copy of the Memorandum for the President dated June 25, 2012
(Omnibus Authority to Consolidate Savings/Unutilized Balances and their
Realignment);10
(2) Circulars and orders, which the respondents identified as related to the DAP,
namely:
a. NBC No. 528 dated January 3, 2011 (Guidelines on the Release of Funds
for FY 2011);
b. NBC No. 535 dated December 29, 2011 (Guidelines on the Release of
Funds for FY 2012);
Page 54 of 378
c. NBC No. 541 dated July 18, 2012 (Adoption of Operational Efficiency
Measure Withdrawal of Agencies Unobligated Allotments as of June 30,
2012);
d. NBC No. 545 dated January 2, 2013 (Guidelines on the Release of Funds
for FY 2013);
e. DBM Circular Letter No. 2004-2 dated January 26, 2004 (Budgetary
Treatment of Commitments/Obligations of the National Government);
f. COA-DBM Joint Circular No. 2013-1 dated March 15, 2013 (Revised
Guidelines on the Submission of Quarterly Accountability Reports on
Appropriations, Allotments, Obligations and Disbursements);
g. NBC No. 440 dated January 30, 1995 (Adoption of a Simplified Fund
Release System in the Government).
(3) A breakdown of the sources of savings, including savings from discontinued

projects and unpaid appropriations for compensation from 2011 to 2013
On January 28, 2014, the OSG, to comply with the Resolution issued on January 21, 2014
directing the respondents to submit the documents not yet submitted in compliance
with the directives of the Court or its Members, submitted several evidence packets to
aid the Court in understanding the factual bases of the DAP, to wit:
(1) First Evidence Packet11 containing seven memoranda issued by the DBM
through Sec. Abad, inclusive of annexes, listing in detail the 116 DAP identified
projects approved and duly signed by the President, as follows:
a. Memorandum for the President dated October 12, 2011 (FY 2011
Proposed Disbursement Acceleration Program (Projects and Sources of
Funds);
b. Memorandum for the President dated December 12, 2011 (Omnibus

Authority to Consolidate Savings/Unutilized Balances and its
Realignment);
c. Memorandum for the President dated June 25, 2012 (Omnibus

Authority to Consolidate Savings/Unutilized Balances and their
Realignment);
d. Memorandum for the President dated September 4, 2012 (Release of

funds for other priority projects and expenditures of the Government);
e. Memorandum for the President dated December 19, 2012 (Proposed

Priority Projects and Expenditures of the Government);
f. Memorandum for the President dated May 20, 2013 (Omnibus Authority
to Consolidate Savings/Unutilized Balances and their Realignment to
Fund the Quarterly Disbursement Acceleration Program); and
g. Memorandum for the President dated September 25, 2013 (Funding for
the Task Force Pablo Rehabilitation Plan).
Page 55 of 378
(2) Second Evidence Packet12 consisting of 15 applications of the DAP, with

their corresponding Special Allotment Release Orders (SAROs) and
appropriation covers;
(3) Third Evidence Packet13 containing a list and descriptions of 12 projects

under the DAP;
(4) Fourth Evidence Packet14 identifying the DAP-related portions of the

Annual Financial Report (AFR) of the Commission on Audit for 2011 and 2012;
(5) Fifth Evidence Packet15 containing a letter of Department of Transportation

and Communications(DOTC) Sec. Joseph Abaya addressed to Sec. Abad
recommending the withdrawal of funds from his agency, inclusive of annexes;
and
(6) Sixth Evidence Packet16 a print-out of the Solicitor Generals visual

presentation for the January 28, 2014 oral arguments.
On February 5, 2014,17 the OSG forwarded the Seventh Evidence Packet,18 which listed
the sources of funds brought under the DAP, the uses of such funds per project or
activity pursuant to DAP, and the legal bases thereof.
On February 14, 2014, the OSG submitted another set of documents in further
compliance with the Resolution dated January 28, 2014, viz:
(1) Certified copies of the certifications issued by the Bureau of Treasury to the effect
that the revenue collections exceeded the original revenue targets for the years 2011,
2012 and 2013, including collections arising from sources not considered in the original
revenue targets, which certifications were required for the release of the
unprogrammed funds as provided in Special Provision No. 1 of Article XLV, Article
XVI, and Article XLV of the 2011, 2012 and 2013 GAAs; and (2) A report on releases of
savings of the Executive Department for the use of the Constitutional Commissions and
other branches of the Government, as well as the fund releases to the Senate and the
Commission on Elections (COMELEC).
RULING
I.
Procedural Issue:
a) The petitions under Rule 65 are proper remedies
All the petitions are filed under Rule 65 of the Rules of Court, and include applications
for the issuance of writs of preliminary prohibitory injunction or temporary restraining
orders. More specifically, the nature of the petitions is individually set forth hereunder,
to wit:
G.R. No. 209135 (Syjuco) Certiorari, Prohibition and Mandamus

G.R. No. 209136 (Luna) Certiorariand Prohibition
G.R. No. 209155 (Villegas) Certiorariand Prohibition
Page 56 of 378
G.R. No. 209164 (PHILCONSA) Certiorariand Prohibition

G.R. No. 209260 (IBP) Prohibition
G.R. No. 209287 (Araullo) Certiorariand Prohibition
G.R. No. 209442 (Belgica) Certiorari
G.R. No. 209517 (COURAGE) Certiorari and Prohibition

G.R. No. 209569 (VACC) Certiorari and Prohibition
The respondents submit that there is no actual controversy that is ripe for adjudication
in the absence of adverse claims between the parties;19 that the petitioners lacked legal
standing to sue because no allegations were made to the effect that they had suffered
any injury as a result of the adoption of the DAP and issuance of NBC No. 541; that
their being taxpayers did not immediately confer upon the petitioners the legal
standing to sue considering that the adoption and implementation of the DAP and the
issuance of NBC No. 541 were not in the exercise of the taxing or spending power of
Congress;20 and that even if the petitioners had suffered injury, there were plain, speedy
and adequate remedies in the ordinary course of law available to them, like assailing
the regularity of the DAP and related issuances before the Commission on Audit (COA)
or in the trial courts.21
The respondents aver that the special civil actions of certiorari and prohibition are not
proper actions for directly assailing the constitutionality and validity of the DAP, NBC
No. 541, and the other executive issuances implementing the DAP.22
In their memorandum, the respondents further contend that there is no authorized

proceeding under the Constitution and the Rules of Court for questioning the validity
of any law unless there is an actual case or controversy the resolution of which requires
the determination of the constitutional question; that the jurisdiction of the Court is
largely appellate; that for a court of law to pass upon the constitutionality of a law or
any act of the Government when there is no case or controversy is for that court to set
itself up as a reviewer of the acts of Congress and of the President in violation of the
principle of separation of powers; and that, in the absence of a pending case or
controversy involving the DAP and NBC No. 541, any decision herein could amount to
a mere advisory opinion that no court can validly render.23
The respondents argue that it is the application of the DAP to actual situations that the
petitioners can question either in the trial courts or in the COA; that if the petitioners
are dissatisfied with the ruling either of the trial courts or of the COA, they can appeal
the decision of the trial courts by petition for review on certiorari, or assail the decision
or final order of the COA by special civil action for certiorari under Rule 64 of the Rules
of Court.24
The respondents arguments and submissions on the procedural issue are bereft of
merit.
Section 1, Article VIII of the 1987 Constitution expressly provides:
Section 1. The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law.
Page 57 of 378
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the Government.
Thus, the Constitution vests judicial power in the Court and in such lower courts as
may be established by law. In creating a lower court, Congress concomitantly
determines the jurisdiction of that court, and that court, upon its creation, becomes by
operation of the Constitution one of the repositories of judicial power. 25 However, only
the Court is a constitutionally created court, the rest being created by Congress in its
exercise of the legislative power.
The Constitution states that judicial power includes the duty of the courts of justice not
only "to settle actual controversies involving rights which are legally demandable and
enforceable" but also "to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government." It has thereby expanded the concept of judicial
power, which up to then was confined to its traditional ambit of settling actual
controversies involving rights that were legally demandable and enforceable.
The background and rationale of the expansion of judicial power under the 1987
Constitution were laid out during the deliberations of the 1986 Constitutional
Commission by Commissioner Roberto R. Concepcion (a former Chief Justice of the
Philippines) in his sponsorship of the proposed provisions on the Judiciary, where he
said:
The Supreme Court, like all other courts, has one main function: to settle actual
controversies involving conflicts of rights which are demandable and enforceable. There
are rights which are guaranteed by law but cannot be enforced by a judicial party. In a
decided case, a husband complained that his wife was unwilling to perform her duties
as a wife. The Court said: "We can tell your wife what her duties as such are and that
she is bound to comply with them, but we cannot force her physically to discharge her
main marital duty to her husband. There are some rights guaranteed by law, but they
are so personal that to enforce them by actual compulsion would be highly derogatory
to human dignity." This is why the first part of the second paragraph of Section 1
provides that: Judicial power includes the duty of courts to settle actual controversies
involving rights which are legally demandable or enforceable
The courts, therefore, cannot entertain, much less decide, hypothetical questions. In a
presidential system of government, the Supreme Court has, also, another important
function. The powers of government are generally considered divided into three
branches: the Legislative, the Executive and the Judiciary. Each one is supreme within
its own sphere and independent of the others. Because of that supremacy power to
determine whether a given law is valid or not is vested in courts of justice.
Briefly stated, courts of justice determine the limits of power of the agencies and offices
of the government as well as those of its officers. In other words, the judiciary is the
final arbiter on the question whether or not a branch of government or any of its
officials has acted without jurisdiction or in excess of jurisdiction, or so capriciously as
to constitute an abuse of discretion amounting to excess of jurisdiction or lack of
jurisdiction. This is not only a judicial power but a duty to pass judgmenton matters of
this nature.
Page 58 of 378
This is the background of paragraph 2 of Section 1, which means that the courts cannot
hereafter evade the duty to settle matters of this nature, by claiming that such matters
constitute a political question. (Bold emphasis supplied)26
Upon interpellation by Commissioner Nolledo, Commissioner Concepcion clarified the

scope of judicial power in the following manner:
MR. NOLLEDO. x x x
The second paragraph of Section 1 states: "Judicial power includes the duty of courts of
justice to settle actual controversies" The term "actual controversies" according to the
Commissioner should refer to questions which are political in nature and, therefore, the
courts should not refuse to decide those political questions. But do I understand it right
that this is restrictive or only an example? I know there are cases which are not actual
yet the court can assume jurisdiction. An example is the petition for declaratory relief.
May I ask the Commissioners opinion about that?
MR. CONCEPCION. The Supreme Court has no jurisdiction to grant declaratory

judgments.
MR. NOLLEDO. The Gentleman used the term "judicial power" but judicial power is
not vested in the Supreme Court alone but also in other lower courts as may be created
by law.
MR. CONCEPCION. Yes.
MR. NOLLEDO. And so, is this only an example?
MR. CONCEPCION. No, I know this is not. The Gentleman seems to identify political
questions with jurisdictional questions. But there is a difference.
MR. NOLLEDO. Because of the expression "judicial power"?
MR. CONCEPCION. No. Judicial power, as I said, refers to ordinary cases but where
there is a question as to whether the government had authority or had abused its
authority to the extent of lacking jurisdiction or excess of jurisdiction, that is not a
political question. Therefore, the court has the duty to decide.27
Our previous Constitutions equally recognized the extent of the power of judicial
review and the great responsibility of the Judiciary in maintaining the allocation of
powers among the three great branches of Government. Speaking for the Court in
Angara v. Electoral Commission,28 Justice Jose P. Laurel intoned:
x x x In times of social disquietude or political excitement, the great landmarks of the

Constitution are apt to be forgotten or marred, if not entirely obliterated. In cases of
conflict, the judicial department is the only constitutional organ which can be called
upon to determine the proper allocation of powers between the several department and
among the integral or constituent units thereof.
xxxx
Page 59 of 378
The Constitution is a definition of the powers of government. Who is to determine the

nature, scope and extent of such powers? The Constitution itself has provided for the
instrumentality of the judiciary as the rational way. And when the judiciary mediates to
allocate constitutional boundaries, it does not assert any superiority over the other
department; it does not in reality nullify or invalidate an act of the legislature, but only
asserts the solemn and sacred obligation assigned to it by the Constitution to determine
conflicting claims of authority under the Constitution and to establish for the parties in
an actual controversy the rights which that instrument secures and guarantees to them.
This is in truth all that is involved in what is termed "judicial supremacy" which
properly is the power of judicial review under the Constitution. x x x29
What are the remedies by which the grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government
may be determined under the Constitution?
The present Rules of Court uses two special civil actions for determining and correcting
grave abuse of discretion amounting to lack or excess of jurisdiction. These are the
special civil actions for certiorari and prohibition, and both are governed by Rule 65. A
similar remedy of certiorari exists under Rule 64, but the remedy is expressly applicable
only to the judgments and final orders or resolutions of the Commission on Elections
and the Commission on Audit.
The ordinary nature and function of the writ of certiorari in our present system are
aptly explained in Delos Santos v. Metropolitan Bank and Trust Company:30
In the common law, from which the remedy of certiorari evolved, the writ of certiorari
was issued out of Chancery, or the Kings Bench, commanding agents or officers of the
inferior courts to return the record of a cause pending before them, so as to give the
party more sure and speedy justice, for the writ would enable the superior court to
determine from an inspection of the record whether the inferior courts judgment was
rendered without authority. The errors were of such a nature that, if allowed to stand,
they would result in a substantial injury to the petitioner to whom no other remedy was
available. If the inferior court acted without authority, the record was then revised and
corrected in matters of law. The writ of certiorari was limited to cases in which the
inferior court was said to be exceeding its jurisdiction or was not proceeding according
to essential requirements of law and would lie only to review judicial or quasi-judicial
acts.
The concept of the remedy of certiorari in our judicial system remains much the same as
it has been in the common law. In this jurisdiction, however, the exercise of the power
to issue the writ of certiorari is largely regulated by laying down the instances or
situations in the Rules of Court in which a superior court may issue the writ of certiorari
to an inferior court or officer. Section 1, Rule 65 of the Rules of Court compellingly
provides the requirements for that purpose, viz:
xxxx
The sole office of the writ of certiorari is the correction of errors of jurisdiction, which
includes the commission of grave abuse of discretion amounting to lack of jurisdiction.
In this regard, mere abuse of discretion is not enough to warrant the issuance of the
writ. The abuse of discretion must be grave, which means either that the judicial or
quasi-judicial power was exercised in an arbitrary or despotic manner by reason of
passion or personal hostility, or that the respondent judge, tribunal or board evaded a
Page 60 of 378
positive duty, or virtually refused to perform the duty enjoined or to act in

contemplation of law, such as when such judge, tribunal or board exercising judicial or
quasi-judicial powers acted in a capricious or whimsical manner as to be equivalent to
lack of jurisdiction.31
Although similar to prohibition in that it will lie for want or excess of jurisdiction,
certiorari is to be distinguished from prohibition by the fact that it is a corrective
remedy used for the re-examination of some action of an inferior tribunal, and is
directed to the cause or proceeding in the lower court and not to the court itself, while
prohibition is a preventative remedy issuing to restrain future action, and is directed to
the court itself.32 The Court expounded on the nature and function of the writ of
prohibition in Holy Spirit Homeowners Association, Inc. v. Defensor:33
A petition for prohibition is also not the proper remedy to assail an IRR issued in the
exercise of a quasi-legislative function. Prohibition is an extraordinary writ directed
against any tribunal, corporation, board, officer or person, whether exercising judicial,
quasi-judicial or ministerial functions, ordering said entity or person to desist from
further proceedings when said proceedings are without or in excess of said entitys or
persons jurisdiction, or are accompanied with grave abuse of discretion, and there is no
appeal or any other plain, speedy and adequate remedy in the ordinary course of law.
Prohibition lies against judicial or ministerial functions, but not against legislative or
quasi-legislative functions. Generally, the purpose of a writ of prohibition is to keep a
lower court within the limits of its jurisdiction in order to maintain the administration
of justice in orderly channels. Prohibition is the proper remedy to afford relief against
usurpation of jurisdiction or power by an inferior court, or when, in the exercise of
jurisdiction in handling matters clearly within its cognizance the inferior court
transgresses the bounds prescribed to it by the law, or where there is no adequate
remedy available in the ordinary course of law by which such relief can be obtained.
Where the principal relief sought is to invalidate an IRR, petitioners remedy is an
ordinary action for its nullification, an action which properly falls under the jurisdiction
of the Regional Trial Court. In any case, petitioners allegation that "respondents are
performing or threatening to perform functions without or in excess of their
jurisdiction" may appropriately be enjoined by the trial court through a writ of
injunction or a temporary restraining order.
With respect to the Court, however, the remedies of certiorari and prohibition are
necessarily broader in scope and reach, and the writ of certiorari or prohibition may be
issued to correct errors of jurisdiction committed not only by a tribunal, corporation,
board or officer exercising judicial, quasi-judicial or ministerial functions but also to set
right, undo and restrain any act of grave abuse of discretion amounting to lack or excess
of jurisdiction by any branch or instrumentality of the Government, even if the latter
does not exercise judicial, quasi-judicial or ministerial functions. This application is
expressly authorized by the text of the second paragraph of Section 1, supra.
Thus, petitions for certiorari and prohibition are appropriate remedies to raise
constitutional issues and to review and/or prohibit or nullify the acts of legislative and
executive officials.34
Necessarily, in discharging its duty under Section 1, supra, to set right and undo any act
of grave abuse of discretion amounting to lack or excess of jurisdiction by any branch or
instrumentality of the Government, the Court is not at all precluded from making the
inquiry provided the challenge was properly brought by interested or affected parties.
Page 61 of 378
The Court has been thereby entrusted expressly or by necessary implication with both
the duty and the obligation of determining, in appropriate cases, the validity of any
assailed legislative or executive action. This entrustment is consistent with the
republican system of checks and balances.35
Following our recent dispositions concerning the congressional pork barrel, the Court
has become more alert to discharge its constitutional duty. We will not now refrain
from exercising our expanded judicial power in order to review and determine, with
authority, the limitations on the Chief Executives spending power.
b) Requisites for the exercise of the power of judicial review were complied with
The requisites for the exercise of the power of judicial review are the following, namely:
(1) there must bean actual case or justiciable controversy before the Court; (2) the
question before the Court must be ripe for adjudication; (3) the person challenging the
act must be a proper party; and (4) the issue of constitutionality must be raised at the
earliest opportunity and must be the very litis mota of the case.36
The first requisite demands that there be an actual case calling for the exercise of
judicial power by the Court.37 An actual case or controversy, in the words of Belgica v.
Executive Secretary Ochoa:38
x x x is one which involves a conflict of legal rights, an assertion of opposite legal

claims, susceptible of judicial resolution as distinguished from a hypothetical or abstract
difference or dispute. In other words, "[t]here must be a contrariety of legal rights that
can be interpreted and enforced on the basis of existing law and jurisprudence." Related
to the requirement of an actual case or controversy is the requirement of "ripeness,"
meaning that the questions raised for constitutional scrutiny are already ripe for
adjudication. "A question is ripe for adjudication when the act being challenged has had
a direct adverse effect on the individual challenging it. It is a prerequisite that
something had then been accomplished or performed by either branch before a court
may come into the picture, and the petitioner must allege the existence of an immediate
or threatened injury to itself as a result of the challenged action." "Withal, courts will
decline to pass upon constitutional issues through advisory opinions, bereft as they are
of authority to resolve hypothetical or moot questions."
An actual and justiciable controversy exists in these consolidated cases. The

incompatibility of the perspectives of the parties on the constitutionality of the DAP and
its relevant issuances satisfy the requirement for a conflict between legal rights. The
issues being raised herein meet the requisite ripeness considering that the challenged
executive acts were already being implemented by the DBM, and there are averments
by the petitioners that such implementation was repugnant to the letter and spirit of the
Constitution. Moreover, the implementation of the DAP entailed the allocation and
expenditure of huge sums of public funds. The fact that public funds have been
allocated, disbursed or utilized by reason or on account of such challenged executive
acts gave rise, therefore, to an actual controversy that is ripe for adjudication by the
Court.
It is true that Sec. Abad manifested during the January 28, 2014 oral arguments that the
DAP as a program had been meanwhile discontinued because it had fully served its
purpose, saying: "In conclusion, Your Honors, may I inform the Court that because the
DAP has already fully served its purpose, the Administrations economic managers
have recommended its termination to the President. x x x."39
Page 62 of 378
The Solicitor General then quickly confirmed the termination of the DAP as a program,
and urged that its termination had already mooted the challenges to the DAPs
constitutionality, viz:
DAP as a program, no longer exists, thereby mooting these present cases brought to
challenge its constitutionality. Any constitutional challenge should no longer be at the
level of the program, which is now extinct, but at the level of its prior applications or
the specific disbursements under the now defunct policy. We challenge the petitioners
to pick and choose which among the 116 DAP projects they wish to nullify, the full
details we will have provided by February 5. We urge this Court to be cautious in
limiting the constitutional authority of the President and the Legislature to respond to
the dynamic needs of the country and the evolving demands of governance, lest we end
up straight jacketing our elected representatives in ways not consistent with our
constitutional structure and democratic principles.40
A moot and academic case is one that ceases to present a justiciable controversy by
virtue of supervening events, so that a declaration thereon would be of no practical use
or value.41
The Court cannot agree that the termination of the DAP as a program was a
supervening event that effectively mooted these consolidated cases. Verily, the Court
had in the past exercised its power of judicial review despite the cases being rendered
moot and academic by supervening events, like: (1) when there was a grave violation of
the Constitution; (2) when the case involved a situation of exceptional character and
was of paramount public interest; (3) when the constitutional issue raised required the
formulation of controlling principles to guide the Bench, the Bar and the public; and (4)
when the case was capable of repetition yet evading review.42
Assuming that the petitioners several submissions against the DAP were ultimately
sustained by the Court here, these cases would definitely come under all the exceptions.
Hence, the Court should not abstain from exercising its power of judicial review.
Did the petitioners have the legal standing to sue?
Legal standing, as a requisite for the exercise of judicial review, refers to "a right of
appearance in a court of justice on a given question."43 The concept of legal standing, or
locus standi, was particularly discussed in De Castro v. Judicial and Bar
Council,44 where the Court said:
In public or constitutional litigations, the Court is often burdened with the

determination of the locus standi of the petitioners due to the ever-present need to
regulate the invocation of the intervention of the Court to correct any official action or
policy in order to avoid obstructing the efficient functioning of public officials and
offices involved in public service. It is required, therefore, that the petitioner must have
a personal stake in the outcome of the controversy, for, as indicated in Agan, Jr. v.
Philippine International Air Terminals Co., Inc.:
The question on legal standing is whether such parties have "alleged such a personal
stake in the outcome of the controversy as to assure that concrete adverseness which
sharpens the presentation of issues upon which the court so largely depends for
illumination of difficult constitutional questions." Accordingly, it has been held that the
interest of a person assailing the constitutionality of a statute must be direct and
personal. He must be able to show, not only that the law or any government act is
Page 63 of 378
invalid, but also that he sustained or is in imminent danger of sustaining some direct
injury as a result of its enforcement, and not merely that he suffers thereby in some
indefinite way. It must appear that the person complaining has been or is about to be
denied some right or privilege to which he is lawfully entitled or that he is about to be
subjected to some burdens or penalties by reason of the statute or act complained of.
It is true that as early as in 1937, in People v. Vera, the Court adopted the direct injury
test for determining whether a petitioner in a public action had locus standi. There, the
Court held that the person who would assail the validity of a statute must have "a
personal and substantial interest in the case such that he has sustained, or will sustain
direct injury as a result." Vera was followed in Custodio v. President of the Senate,
Manila Race Horse Trainers Association v. De la Fuente, Anti-Chinese League of the
Philippines v. Felix, and Pascual v. Secretary of Public Works.
Yet, the Court has also held that the requirement of locus standi, being a mere
procedural technicality, can be waived by the Court in the exercise of its discretion. For
instance, in 1949, in Araneta v. Dinglasan, the Court liberalized the approach when the
cases had "transcendental importance." Some notable controversies whose petitioners
did not pass the direct injury test were allowed to be treated in the same way as in
Araneta v. Dinglasan.
In the 1975 decision in Aquino v. Commission on Elections, this Court decided to

resolve the issues raised by the petition due to their "far reaching implications," even if
the petitioner had no personality to file the suit. The liberal approach of Aquino v.
Commission on Elections has been adopted in several notable cases, permitting
ordinary citizens, legislators, and civic organizations to bring their suits involving the
constitutionality or validity of laws, regulations, and rulings.
However, the assertion of a public right as a predicate for challenging a supposedly

illegal or unconstitutional executive or legislative action rests on the theory that the
petitioner represents the public in general. Although such petitioner may not be as
adversely affected by the action complained against as are others, it is enough that he
sufficiently demonstrates in his petition that he is entitled to protection or relief from
the Court in the vindication of a public right.
Quite often, as here, the petitioner in a public action sues as a citizen or taxpayer to gain
locus standi. That is not surprising, for even if the issue may appear to concern only the
public in general, such capacities nonetheless equip the petitioner with adequate
interest to sue. In David v. Macapagal-Arroyo, the Court aptly explains why:
Case law in most jurisdiction snow allows both "citizen" and "taxpayer" standing in
public actions. The distinction was first laid down in Beauchamp v. Silk, where it was
held that the plaintiff in a taxpayers suit is in a different category from the plaintiff in a
citizens suit. In the former, the plaintiff is affected by the expenditure of public funds,
while in the latter, he is but the mere instrument of the public concern. As held by the
New York Supreme Court in People ex rel Case v. Collins: "In matter of mere public
right, howeverthe people are the real partiesIt is at least the right, if not the duty, of
every citizen to interfere and see that a public offence be properly pursued and
punished, and that a public grievance be remedied." With respect to taxpayers suits,
Terr v. Jordan held that "the right of a citizen and a taxpayer to maintain an action in
courts to restrain the unlawful use of public funds to his injury cannot be denied."45
Page 64 of 378
The Court has cogently observed in Agan, Jr. v. Philippine International Air Terminals
Co., Inc.46 that "[s]tanding is a peculiar concept in constitutional law because in some
cases, suits are not brought by parties who have been personally injured by the
operation of a law or any other government act but by concerned citizens, taxpayers or
voters who actually sue in the public interest."
Except for PHILCONSA, a petitioner in G.R. No. 209164, the petitioners have invoked
their capacities as taxpayers who, by averring that the issuance and implementation of
the DAP and its relevant issuances involved the illegal disbursements of public funds,
have an interest in preventing the further dissipation of public funds. The petitioners in
G.R. No. 209287 (Araullo) and G.R. No. 209442 (Belgica) also assert their right as
citizens to sue for the enforcement and observance of the constitutional limitations on
the political branches of the Government.47
On its part, PHILCONSA simply reminds that the Court has long recognized its legal
standing to bring cases upon constitutional issues.48 Luna, the petitioner in G.R. No.
209136, cites his additional capacity as a lawyer. The IBP, the petitioner in G.R. No.
209260, stands by "its avowed duty to work for the rule of law and of paramount
importance of the question in this action, not to mention its civic duty as the official
association of all lawyers in this country."49
Under their respective circumstances, each of the petitioners has established sufficient
interest in the outcome of the controversy as to confer locus standi on each of them.
In addition, considering that the issues center on the extent of the power of the Chief
Executive to disburse and allocate public funds, whether appropriated by Congress or
not, these cases pose issues that are of transcendental importance to the entire Nation,
the petitioners included. As such, the determination of such important issues call for the
Courts exercise of its broad and wise discretion "to waive the requirement and so
remove the impediment to its addressing and resolving the serious constitutional
questions raised."50
II.
Substantive Issues
1. Overview of the Budget System
An understanding of the Budget System of the Philippines will aid the Court in
properly appreciating and justly resolving the substantive issues.
a) Origin of the Budget System
The term "budget" originated from the Middle English word bouget that had derived
from the Latin word bulga (which means bag or purse).51
In the Philippine setting, Commonwealth Act (CA) No. 246 (Budget Act) defined
"budget" as the financial program of the National Government for a designated fiscal
year, consisting of the statements of estimated receipts and expenditures for the fiscal
year for which it was intended to be effective based on the results of operations during
the preceding fiscal years. The term was given a different meaning under Republic Act
No. 992 (Revised Budget Act) by describing the budget as the delineation of the services
and products, or benefits that would accrue to the public together with the estimated
unit cost of each type of service, product or benefit.52 For a forthright definition, budget
Page 65 of 378
should simply be identified as the financial plan of the Government,53 or "the master
plan of government."54
The concept of budgeting has not been the product of recent economies. In reality,
financing public goals and activities was an idea that existed from the creation of the
State.55 To protect the people, the territory and sovereignty of the State, its government
must perform vital functions that required public expenditures. At the beginning,
enormous public expenditures were spent for war activities, preservation of peace and
order, security, administration of justice, religion, and supply of limited goods and
services.56 In order to finance those expenditures, the State raised revenues through
taxes and impositions.57 Thus, budgeting became necessary to allocate public revenues
for specific government functions.58 The States budgeting mechanism eventually
developed through the years with the growing functions of its government and changes
in its market economy.
The Philippine Budget System has been greatly influenced by western public financial
institutions. This is because of the countrys past as a colony successively of Spain and
the United States for a long period of time. Many aspects of the countrys public fiscal
administration, including its Budget System, have been naturally patterned after the
practices and experiences of the western public financial institutions. At any rate, the
Philippine Budget System is presently guided by two principal objectives that are vital
to the development of a progressive democratic government, namely: (1) to carry on all
government activities under a comprehensive fiscal plan developed, authorized and
executed in accordance with the Constitution, prevailing statutes and the principles of
sound public management; and (2) to provide for the periodic review and disclosure of
the budgetary status of the Government in such detail so that persons entrusted by law
with the responsibility as well as the enlightened citizenry can determine the adequacy
of the budget actions taken, authorized or proposed, as well as the true financial
position of the Government.59
b) Evolution of the Philippine Budget System
The budget process in the Philippines evolved from the early years of the American
Regime up to the passage of the Jones Law in 1916. A Budget Office was created within
the Department of Finance by the Jones Law to discharge the budgeting function, and
was given the responsibility to assist in the preparation of an executive budget for
submission to the Philippine Legislature.60
As early as under the 1935 Constitution, a budget policy and a budget procedure were
established, and subsequently strengthened through the enactment of laws and
executive acts.61 EO No. 25, issued by President Manuel L. Quezon on April 25, 1936,
created the Budget Commission to serve as the agency that carried out the Presidents
responsibility of preparing the budget.62 CA No. 246, the first budget law, went into
effect on January 1, 1938 and established the Philippine budget process. The law also
provided a line-item budget as the framework of the Governments budgeting
system,63 with emphasis on the observance of a "balanced budget" to tie up proposed
expenditures with existing revenues.
CA No. 246 governed the budget process until the passage on June 4, 1954 of Republic
Act (RA) No. 992,whereby Congress introduced performance-budgeting to give
importance to functions, projects and activities in terms of expected results. 64 RA No.
992 also enhanced the role of the Budget Commission as the fiscal arm of the
Government.65
Page 66 of 378
The 1973 Constitution and various presidential decrees directed a series of budgetary
reforms that culminated in the enactment of PD No. 1177 that President Marcos issued
on July30, 1977, and of PD No. 1405, issued on June 11, 1978. The latter decree converted
the Budget Commission into the Ministry of Budget, and gave its head the rank of a
Cabinet member.
The Ministry of Budget was later renamed the Office of Budget and Management
(OBM) under EO No. 711. The OBM became the DBM pursuant to EO No. 292 effective
on November 24, 1989.
c) The Philippine Budget Cycle66
Four phases comprise the Philippine budget process, specifically: (1) Budget
Preparation; (2) Budget Legislation; (3) Budget Execution; and (4) Accountability. Each
phase is distinctly separate from the others but they overlap in the implementation of
the budget during the budget year.
c.1.Budget Preparation67
The budget preparation phase is commenced through the issuance of a Budget Call by
the DBM. The Budget Call contains budget parameters earlier set by the Development
Budget Coordination Committee (DBCC) as well as policy guidelines and procedures to
aid government agencies in the preparation and submission of their budget proposals.
The Budget Call is of two kinds, namely: (1) a National Budget Call, which is addressed
to all agencies, including state universities and colleges; and (2) a Corporate Budget
Call, which is addressed to all government-owned and -controlled corporations
(GOCCs) and government financial institutions (GFIs).
Following the issuance of the Budget Call, the various departments and agencies submit
their respective Agency Budget Proposals to the DBM. To boost citizen participation,
the current administration has tasked the various departments and agencies to partner
with civil society organizations and other citizen-stakeholders in the preparation of the
Agency Budget Proposals, which proposals are then presented before a technical panel
of the DBM in scheduled budget hearings wherein the various departments and
agencies are given the opportunity to defend their budget proposals. DBM bureaus
thereafter review the Agency Budget Proposals and come up with recommendations for
the Executive Review Board, comprised by the DBM Secretary and the DBMs senior
officials. The discussions of the Executive Review Board cover the prioritization of
programs and their corresponding support vis--vis the priority agenda of the National
Government, and their implementation.
The DBM next consolidates the recommended agency budgets into the National
Expenditure Program (NEP)and a Budget of Expenditures and Sources of Financing
(BESF). The NEP provides the details of spending for each department and agency by
program, activity or project (PAP), and is submitted in the form of a proposed GAA.
The Details of Selected Programs and Projects is the more detailed disaggregation of
key PAPs in the NEP, especially those in line with the National Governments
development plan. The Staffing Summary provides the staffing complement of each
department and agency, including the number of positions and amounts allocated.
The NEP and BESF are thereafter presented by the DBM and the DBCC to the President
and the Cabinet for further refinements or reprioritization. Once the NEP and the BESF
are approved by the President and the Cabinet, the DBM prepares the budget
Page 67 of 378
documents for submission to Congress. The budget documents consist of: (1) the
Presidents Budget Message, through which the President explains the policy
framework and budget priorities; (2) the BESF, mandated by Section 22, Article VII of
the Constitution,68 which contains the macroeconomic assumptions, public sector
context, breakdown of the expenditures and funding sources for the fiscal year and the
two previous years; and (3) the NEP.
Public or government expenditures are generally classified into two categories,

specifically: (1) capital expenditures or outlays; and (2) current operating expenditures.
Capital expenditures are the expenses whose usefulness lasts for more than one year,
and which add to the assets of the Government, including investments in the capital of
government-owned or controlled corporations and their subsidiaries.69 Current
operating expenditures are the purchases of goods and services in current consumption
the benefit of which does not extend beyond the fiscal year.70 The two components of
current expenditures are those for personal services (PS), and those for maintenance
and other operating expenses(MOOE).
Public expenditures are also broadly grouped according to their functions into: (1)
economic development expenditures (i.e., expenditures on agriculture and natural
resources, transportation and communications, commerce and industry, and other
economic development efforts);71 (2) social services or social development expenditures
(i.e., government outlay on education, public health and medicare, labor and welfare
and others);72(3) general government or general public services expenditures (i.e.,
expenditures for the general government, legislative services, the administration of
justice, and for pensions and gratuities);73 (4) national defense expenditures (i.e., sub-
divided into national security expenditures and expenditures for the maintenance of
peace and order);74 and (5) public debt.75
Public expenditures may further be classified according to the nature of funds, i.e.,
general fund, special fund or bond fund.76
On the other hand, public revenues complement public expenditures and cover all
income or receipts of the government treasury used to support government
expenditures.77
Classical economist Adam Smith categorized public revenues based on two principal
sources, stating: "The revenue which must defraythe necessary expenses of
government may be drawn either, first from some fund which peculiarly belongs to the
sovereign or commonwealth, and which is independent of the revenue of the people, or,
secondly, from the revenue of the people."78 Adam Smiths classification relied on the
two aspects of the nature of the State: first, the State as a juristic person with an artificial
personality, and, second, the State as a sovereign or entity possessing supreme power.
Under the first aspect, the State could hold property and engage in trade, thereby
deriving what is called its quasi private income or revenues, and which "peculiarly
belonged to the sovereign." Under the second aspect, the State could collect by
imposing charges on the revenues of its subjects in the form of taxes.79
In the Philippines, public revenues are generally derived from the following sources, to
wit: (1) tax revenues(i.e., compulsory contributions to finance government activities); 80
(2) capital revenues(i.e., proceeds from sales of fixed capital assets or scrap thereof and
public domain, and gains on such sales like sale of public lands, buildings and other
structures, equipment, and other properties recorded as fixed assets); 81 (3) grants(i.e.,
voluntary contributions and aids given to the Government for its operation on specific
Page 68 of 378
purposes in the form of money and/or materials, and do not require any monetary
commitment on the part of the recipient);82 (4) extraordinary income(i.e., repayment of
loans and advances made by government corporations and local governments and the
receipts and shares in income of the Banko Sentral ng Pilipinas, and other
receipts);83 and (5) public borrowings(i.e., proceeds of repayable obligations generally
with interest from domestic and foreign creditors of the Government in general,
including the National Government and its political subdivisions).84
More specifically, public revenues are classified as follows:85
General Income Specific Income

1. Subsidy Income from National 1. Income Taxes
Government 2. Property Taxes
2. Subsidy from Central Office 3. Taxes on Goods and Services
3. Subsidy from Regional 4. Taxes on International Trade and
Office/Staff Bureaus Transactions
4. Income from Government 5. Other Taxes 6.Fines and Penalties-Tax
Services Revenue
5. Income from Government 7. Other Specific Income
Business Operations
6. Sales Revenue
7. Rent Income
8. Insurance Income
9. Dividend Income
10. Interest Income
11. Sale of Confiscated Goods and
Properties
12. Foreign Exchange (FOREX)
Gains
13. Miscellaneous Operating and
Service Income
14. Fines and Penalties-Government
Services and Business
Operations
15. Income from Grants and
Donations
c.2. Budget Legislation86
The Budget Legislation Phase covers the period commencing from the time Congress
receives the Presidents Budget, which is inclusive of the NEPand the BESF, up to the
Presidents approval of the GAA. This phase is also known as the Budget Authorization
Phase, and involves the significant participation of the Legislative through its
deliberations.
Page 69 of 378
Initially, the Presidents Budget is assigned to the House of Representatives

Appropriations Committee on First Reading. The Appropriations Committee and its
various Sub-Committees schedule and conduct budget hearings to examine the PAPs of
the departments and agencies. Thereafter, the House of Representatives drafts the
General Appropriations Bill (GAB).87
The GABis sponsored, presented and defended by the House of Representatives

Appropriations Committee and Sub-Committees in plenary session. As with other laws,
the GAB is approved on Third Reading before the House of Representatives version is
transmitted to the Senate.88
After transmission, the Senate conducts its own committee hearings on the GAB. To
expedite proceedings, the Senate may conduct its committee hearings simultaneously
with the House of Representatives deliberations. The Senates Finance Committee and
its Sub-Committees may submit the proposed amendments to the GAB to the plenary of
the Senate only after the House of Representatives has formally transmitted its version
to the Senate. The Senate version of the GAB is likewise approved on Third Reading.89
The House of Representatives and the Senate then constitute a panel each to sit in the
Bicameral Conference Committee for the purpose of discussing and harmonizing the
conflicting provisions of their versions of the GAB. The "harmonized" version of the
GAB is next presented to the President for approval.90 The President reviews the GAB,
and prepares the Veto Message where budget items are subjected to direct veto, 91 or are
identified for conditional implementation.
If, by the end of any fiscal year, the Congress shall have failed to pass the GAB for the
ensuing fiscal year, the GAA for the preceding fiscal year shall be deemed re-enacted
and shall remain in force and effect until the GAB is passed by the Congress.92
c.3. Budget Execution93
With the GAA now in full force and effect, the next step is the implementation of the
budget. The Budget Execution Phase is primarily the function of the DBM, which is
tasked to perform the following procedures, namely: (1) to issue the programs and
guidelines for the release of funds; (2) to prepare an Allotment and Cash Release
Program; (3) to release allotments; and (4) to issue disbursement authorities.
The implementation of the GAA is directed by the guidelines issued by the DBM. Prior
to this, the various departments and agencies are required to submit Budget Execution
Documents(BED) to outline their plans and performance targets by laying down the
physical and financial plan, the monthly cash program, the estimate of monthly income,
and the list of obligations that are not yet due and demandable.
Thereafter, the DBM prepares an Allotment Release Program (ARP)and a Cash Release
Program (CRP).The ARP sets a limit for allotments issued in general and to a specific
agency. The CRP fixes the monthly, quarterly and annual disbursement levels.
Allotments, which authorize an agency to enter into obligations, are issued by the DBM.
Allotments are lesser in scope than appropriations, in that the latter embrace the general
legislative authority to spend. Allotments may be released in two forms through a
comprehensive Agency Budget Matrix (ABM),94 or, individually, by SARO.95
Page 70 of 378
Armed with either the ABM or the SARO, agencies become authorized to incur
obligations96 on behalf of the Government in order to implement their PAPs.
Obligations may be incurred in various ways, like hiring of personnel, entering into
contracts for the supply of goods and services, and using utilities.
In order to settle the obligations incurred by the agencies, the DBM issues a
disbursement authority so that cash may be allocated in payment of the obligations. A
cash or disbursement authority that is periodically issued is referred to as a Notice of
Cash Allocation (NCA),97 which issuance is based upon an agencys submission of its
Monthly Cash Program and other required documents. The NCA specifies the
maximum amount of cash that can be withdrawn from a government servicing bank for
the period indicated. Apart from the NCA, the DBM may issue a Non-Cash Availment
Authority(NCAA) to authorize non-cash disbursements, or a Cash Disbursement
Ceiling(CDC) for departments with overseas operations to allow the use of income
collected by their foreign posts for their operating requirements.
Actual disbursement or spending of government funds terminates the Budget

Execution Phase and is usually accomplished through the Modified Disbursement
Scheme under which disbursements chargeable against the National Treasury are
coursed through the government servicing banks.
c.4. Accountability98
Accountability is a significant phase of the budget cycle because it ensures that the
government funds have been effectively and efficiently utilized to achieve the States
socio-economic goals. It also allows the DBM to assess the performance of agencies
during the fiscal year for the purpose of implementing reforms and establishing new
policies.
An agencys accountability may be examined and evaluated through (1) performance

targets and outcomes; (2) budget accountability reports; (3) review of agency
performance; and (4) audit conducted by the Commission on Audit(COA).
2. Nature of the DAP as a fiscal plan
a. DAP was a program designed to promote economic growth
Policy is always a part of every budget and fiscal decision of any Administration. 99 The
national budget the Executive prepares and presents to Congress represents the
Administrations "blueprint for public policy" and reflects the Governments goals and
strategies.100 As such, the national budget becomes a tangible representation of the
programs of the Government in monetary terms, specifying therein the PAPs and
services for which specific amounts of public funds are proposed and
allocated.101 Embodied in every national budget is government spending.102
When he assumed office in the middle of 2010, President Aquino made efficiency and
transparency in government spending a significant focus of his Administration. Yet,
although such focus resulted in an improved fiscal deficit of 0.5% in the gross domestic
product (GDP) from January to July of 2011, it also unfortunately decelerated
government project implementation and payment schedules.103 The World Bank
observed that the Philippines economic growth could be reduced, and potential growth
could be weakened should the Government continue with its underspending and fail to
address the large deficiencies in infrastructure.104 The economic situation prevailing in
Page 71 of 378
the middle of 2011 thus paved the way for the development and implementation of the
DAP as a stimulus package intended to fast-track public spending and to push
economic growth by investing on high-impact budgetary PAPs to be funded from the
"savings" generated during the year as well as from unprogrammed funds. 105 In that
respect, the DAP was the product of "plain executive policy-making" to stimulate the
economy by way of accelerated spending.106 The Administration would thereby
accelerate government spending by: (1) streamlining the implementation process
through the clustering of infrastructure projects of the Department of Public Works and
Highways (DPWH) and the Department of Education (DepEd),and (2) front loading
PPP-related projects107 due for implementation in the following year.108
Did the stimulus package work?
The March 2012 report of the World Bank,109 released after the initial implementation of
the DAP, revealed that the DAP was partially successful. The disbursements under the
DAP contributed 1.3 percentage points to GDP growth by the fourth quarter of
2011.110 The continued implementation of the DAP strengthened growth by 11.8% year
on year while infrastructure spending rebounded from a 29% contraction to a 34%
growth as of September 2013.111
The DAP thus proved to be a demonstration that expenditure was a policy instrument
that the Government could use to direct the economies towards growth and
development.112 The Government, by spending on public infrastructure, would signify
its commitment of ensuring profitability for prospective investors. 113 The PAPs funded
under the DAP were chosen for this reason based on their: (1) multiplier impact on the
economy and infrastructure development; (2) beneficial effect on the poor; and (3)
translation into disbursements.114
b. History of the implementation of the DAP, and sources of funds under the DAP
How the Administrations economic managers conceptualized and developed the DAP,
and finally presented it to the President remains unknown because the relevant
documents appear to be scarce.
The earliest available document relating to the genesis of the DAP was the
memorandum of October 12,2011 from Sec. Abad seeking the approval of the President
to implement the proposed DAP. The memorandum, which contained a list of the
funding sources for P72.11 billion and of the proposed priority projects to be
funded,115 reads:
MEMORANDUM FOR THE PRESIDENT
xxxx
SUBJECT: FY 2011 PROPOSED DISBURSEMENT ACCELERATION PROGRAM

(PROJECTS AND SOURCES OF FUNDS)
DATE: OCTOBER 12, 2011
Mr. President, this is to formally confirm your approval of the Disbursement

Acceleration Program totaling P72.11 billion. We are already working with all the
agencies concerned for the immediate execution of the projects therein.
Page 72 of 378
A. Fund Sources for the Acceleration Program
Amount
(In Action
Fund Sources Description
million Requested
Php)
FY 2011 30,000 Unreleased Personnel Declare as

Unreleased Services (PS) savings and
Personal appropriations which approve/
Services (PS) will lapse at the end of authorize its use
Appropriations FY 2011 but may be for the 2011
pooled as savings and Disbursement
realigned for priority Acceleration
programs that require Program
immediate funding
FY 2011 482 Unreleased

Unreleased appropriations (slow
Appropriations moving projects and
programs for
discontinuance)
FY 2010 12,336 Supported by the GFI Approve and

Unprogrammed Dividends authorize its use
Fund for the 2011
Disbursement
Acceleration
Program
FY 2010 21,544 Unreleased With prior

Carryover appropriations (slow approval from
Appropriation moving projects and the President in
programs for November 2010
discontinuance) and to declare as
savings from Zero-based savings and
Budgeting with
Initiative authority to use
for priority
projects
FY 2011 Budget 7,748 FY 2011 Agency For information

items for Budget items that can
realignment be realigned within the
agency to fund new fast
disbursing projects
DPWH-3.981 Billion
DA 2.497 Billion
DOT 1.000 Billion
DepEd 270 Million
TOTAL 72.110
Page 73 of 378
B. Projects in the Disbursement Acceleration Program
(Descriptions of projects attached as Annex A)
GOCCs and GFIs

Agency/Project Allotment
(SARO and NCA Release) (in Million Php)
1. LRTA: Rehabilitation of LRT 1 and 2 1,868
2. NHA: 11,050
a. Resettlement of North Triangle residents to 450

Camarin A7
b. Housing for BFP/BJMP 500
c. On-site development for families living 10,000
along dangerous
100
d. Relocation sites for informal settlers
along Iloilo River and its tributaries
3. PHIL. HEART CENTER: Upgrading of 357
ageing physical plant and medical equipment
4. CREDIT INFO CORP: Establishment of 75

centralized credit information system
5. PIDS: purchase of land to relocate the PIDS 100
office and building construction
6. HGC: Equity infusion for credit insurance 400

and mortgage guaranty operations of HGC
7. PHIC: Obligations incurred (premium 1,496
subsidy for indigent families) in January-June
2010, booked for payment in Jul[y] Dec
2010. The delay in payment is due to the
delay in the certification of the LGU
counterpart. Without it, the NG is obliged to
pay the full amount.
8. Philpost: Purchase of foreclosed property. 644
Payment of Mandatory Obligations, (GSIS,
PhilHealth, ECC), Franking Privilege
9. BSP: First equity infusion out of Php 40B 10,000
capitalization under the BSP Law
10. PCMC: Capital and Equipment Renovation 280
11. LCOP: 105

a. Pediatric Pulmonary Program
b. Bio-regenerative Technology Program 35
(Stem-Cell Research subject to legal 70
review and presentation)
12. TIDCORP: NG Equity infusion 570
Page 74 of 378
TOTAL 26,945
NGAs/LGUs
Agency/Project Allotment
(SARO) Cash
(In Requirement
Million (NCA)
Php)
13. DOF-BIR: NPSTAR
centralization of data
processing and others (To be
synchronized with GFMIS
activities) 758 758
14. COA: IT infrastructure
program and hiring of
additional litigational experts 144 144
15. DND-PAF: On Base Housing
Facilities and Communication
Equipment 30 30
16. DA: 2,959 2,223
a. Irrigation, FMRs and
Integrated Community Based Multi-
Species
Hatchery and Aquasilvi 1,629 1,629
Farming
b. Mindanao Rural 919 183
Development Project
c. NIA Agno River Integrated
Irrigation Project 411 411
17. DAR: 1,293 1,293

a. Agrarian Reform
Communities Project 2 1,293 132
b. Landowners Compensation 5,432
18. DBM: Conduct of National

Survey of
Farmers/Fisherfolks/Ips 625 625
19. DOJ: Operating requirements

of 50 investigation agents and
15 state attorneys 11 11
20. DOT: Preservation of the Cine
Corregidor Complex 25 25
21. OPAPP: Activities for Peace
Process (PAMANA- Project
details: budget breakdown,
Page 75 of 378
implementation plan, and

conditions on fund release
attached as Annex B) 1,819 1,819
22. DOST 425 425

a. Establishment of National
Meterological and Climate
Center 275 275
b. Enhancement of Doppler
Radar Network for National
Weather Watch, Accurate
Forecasting and Flood Early
Warning 190 190
23. DOF-BOC: To settle the
principal obligations with
PDIC consistent with the
agreement with the CISS and
SGS 2,800 2,800
24. OEO-FDCP: Establishment of
the National Film Archive and
local cinematheques, and other
local activities 20 20
25. DPWH: Various infrastructure
projects 5,500 5,500
26. DepEd/ERDT/DOST: Thin
Client Cloud Computing
Project 270 270
27. DOH: Hiring of nurses and

midwives 294 294
28. TESDA: Training Program in
partnership with BPO industry
and other sectors 1,100 1,100
29. DILG: Performance Challenge
Fund (People Empowered
Community Driven
Development with DSWD and
NAPC) 250 50
30. ARMM: Comprehensive Peace
and Development Intervention 8,592 8,592
31. DOTC-MRT: Purchase of
additional MRT cars 4,500 -
32. LGU Support Fund 6,500 6,500
33. Various Other Local Projects 6,500 6,500

34. Development Assistance to the
Province of Quezon 750 750
Page 76 of 378
TOTAL 45,165 44,000
C. Summary
Fund Sources
Identified for Allotments Cash
Approval for Release Requirements for
(In Million Release in FY
Php) 2011
Total 72,110 72,110 70,895
GOCCs 26,895 26,895

NGAs/LGUs 45,165 44,000
For His Excellencys Consideration
(Sgd.) FLORENCIO B. ABAD
[/] APPROVED
[ ] DISAPPROVED
(Sgd.) H.E. BENIGNO S. AQUINO, III
OCT 12, 2011
The memorandum of October 12, 2011 was followed by another memorandum for the
President dated December 12, 2011116 requesting omnibus authority to consolidate the
savings and unutilized balances for fiscal year 2011. Pertinent portions of the
memorandum of December 12, 2011 read:
MEMORANDUM FOR THE PRESIDENT
xxxx
SUBJECT: Omnibus Authority to Consolidate Savings/Unutilized Balances and its

Realignment
DATE: December 12, 2011
This is to respectfully request for the grant of Omnibus Authority to consolidate

savings/unutilized balances in FY 2011 corresponding to completed or discontinued
projects which may be pooled to fund additional projects or expenditures.
In addition, Mr. President, this measure will allow us to undertake projects even if their
implementation carries over to 2012 without necessarily impacting on our budget
deficit cap next year.
BACKGROUND
Page 77 of 378
1.0 The DBM, during the course of performance reviews conducted on the
agencies operations, particularly on the implementation of their
projects/activities, including expenses incurred in undertaking the same,
have identified savings out of the 2011 General Appropriations Act. Said
savings correspond to completed or discontinued projects under certain
departments/agencies which may be pooled, for the following:
1.1 to provide for new activities which have not been anticipated
during preparation of the budget;
1.2 to augment additional requirements of on-going priority

projects; and
1.3 to provide for deficiencies under the Special Purpose Funds,

e.g., PDAF, Calamity Fund, Contingent Fund
1.4 to cover for the modifications of the original allotment class

allocation as a result of on-going priority projects and
implementation of new activities
2.0 x x x x
2.1 x x x
2.2 x x x
ON THE UTILIZATION OF POOLED SAVINGS
3.0 It may be recalled that the President approved our request for omnibus
authority to pool savings/unutilized balances in FY 2010 last November
25, 2010.
4.0 It is understood that in the utilization of the pooled savings, the DBM
shall secure the corresponding approval/confirmation of the President.
Furthermore, it is assured that the proposed realignments shall be within
the authorized Expenditure level.
5.0 Relative thereto, we have identified some expenditure items that may
be sourced from the said pooled appropriations in FY 2010 that will expire
on December 31, 2011 and appropriations in FY 2011 that may be declared
as savings to fund additional expenditures.
5.1 The 2010 Continuing Appropriations (pooled savings) is

proposed to be spent for the projects that we have identified to be
immediate actual disbursements considering that this same fund
source will expire on December 31, 2011.
5.2 With respect to the proposed expenditure items to be funded

from the FY 2011 Unreleased Appropriations, most of these are the
same projects for which the DBM is directed by the Office of the
President, thru the Executive Secretary, to source funds.
Page 78 of 378
6.0 Among others, the following are such proposed additional projects
that have been chosen given their multiplier impact on economy and
infrastructure development, their beneficial effect on the poor, and their
translation into disbursements. Please note that we have classified the list
of proposed projects as follows:
7.0 x x x
FOR THE PRESIDENTS APPROVAL
8.0 Foregoing considered, may we respectfully request for the Presidents

approval for the following:
8.1 Grant of omnibus authority to consolidate FY 2011

savings/unutilized balances and its realignment; and
8.2 The proposed additional projects identified for funding.
For His Excellencys consideration and approval.
(Sgd.)
[/] APPROVED
[ ] DISAPPROVED
(Sgd.) H.E. BENIGNO S. AQUINO, III
DEC 21, 2011
Substantially identical requests for authority to pool savings and to fund proposed
projects were contained in various other memoranda from Sec. Abad dated June 25,
2012,117 September 4, 2012,118 December 19, 2012,119May 20, 2013,120 and September 25,
2013.121 The President apparently approved all the requests, withholding approval only
of the proposed projects contained in the June 25, 2012 memorandum, as borne out by
his marginal note therein to the effect that the proposed projects should still be "subject
to further discussions."122
In order to implement the June25, 2012 memorandum, Sec. Abad issued NBC No. 541
(Adoption of Operational Efficiency Measure Withdrawal of Agencies Unobligated
Allotments as of June 30, 2012),123 reproduced herein as follows:
NATIONAL BUDGET CIRCULAR No. 541
July 18, 2012
TO: All Heads of Departments/Agencies/State Universities and Colleges and other

Offices of the National Government, Budget and Planning Officers; Heads of
Accounting Units and All Others Concerned
SUBJECT : Adoption of Operational Efficiency Measure Withdrawal of Agencies

Unobligated Allotments as of June 30, 2012
Page 79 of 378
1.0 Rationale
The DBM, as mandated by Executive Order (EO) No. 292 (Administrative Code of
1987), periodically reviews and evaluates the departments/agencies efficiency and
effectiveness in utilizing budgeted funds for the delivery of services and production of
goods, consistent with the government priorities.
In the event that a measure is necessary to further improve the operational efficiency of
the government, the President is authorized to suspend or stop further use of funds
allotted for any agency or expenditure authorized in the General Appropriations Act.
Withdrawal and pooling of unutilized allotment releases can be effected by DBM based
on authority of the President, as mandated under Sections 38 and 39, Chapter 5, Book
VI of EO 292.
For the first five months of 2012, the National Government has not met its spending
targets. In order to accelerate spending and sustain the fiscal targets during the year,
expenditure measures have to be implemented to optimize the utilization of available
resources.
Departments/agencies have registered low spending levels, in terms of obligations and

disbursements per initial review of their 2012 performance. To enhance agencies
performance, the DBM conducts continuous consultation meetings and/or send call-up
letters, requesting them to identify slow-moving programs/projects and the
factors/issues affecting their performance (both pertaining to internal systems and
those which are outside the agencies spheres of control). Also, they are asked to
formulate strategies and improvement plans for the rest of 2012.
Notwithstanding these initiatives, some departments/agencies have continued to post

low obligation levels as of end of first semester, thus resulting to substantial
unobligated allotments.
In line with this, the President, per directive dated June 27, 2012 authorized the
withdrawal of unobligated allotments of agencies with low levels of obligations as of
June 30, 2012, both for continuing and current allotments. This measure will allow the
maximum utilization of available allotments to fund and undertake other priority
expenditures of the national government.
2.0 Purpose
2.1 To provide the conditions and parameters on the withdrawal of

unobligated allotments of agencies as of June 30, 2012 to fund priority
and/or fast-moving programs/projects of the national government;
2.2 To prescribe the reports and documents to be used as bases on the

withdrawal of said unobligated allotments; and
2.3 To provide guidelines in the utilization or reallocation of the

withdrawn allotments.
3.0 Coverage
3.1 These guidelines shall cover the withdrawal of unobligated allotments

as of June 30, 2012 of all national government agencies (NGAs) charged
Page 80 of 378
against FY 2011 Continuing Appropriation (R.A. No.10147) and FY 2012

Current Appropriation (R.A. No. 10155), pertaining to:
3.1.1 Capital Outlays (CO);
3.1.2 Maintenance and Other Operating Expenses (MOOE) related

to the implementation of programs and projects, as well as
capitalized MOOE; and
3.1.3 Personal Services corresponding to unutilized pension

benefits declared as savings by the agencies concerned based on
their updated/validated list of pensioners.
3.2 The withdrawal of unobligated allotments may cover the identified

programs, projects and activities of the departments/agencies reflected in
the DBM list shown as Annex A or specific programs and projects as may
be identified by the agencies.
4.0 Exemption
These guidelines shall not apply to the following:
4.1 NGAs
4.1.1 Constitutional Offices/Fiscal Autonomy Group, granted fiscal

autonomy under the Philippine Constitution; and
4.1.2 State Universities and Colleges, adopting the Normative

Funding allocation scheme i.e., distribution of a predetermined
budget ceiling.
4.2 Fund Sources
4.2.1 Personal Services other than pension benefits;
4.2.2 MOOE items earmarked for specific purposes or subject to

realignment conditions per General Provisions of the GAA:
Confidential and Intelligence Fund;
Savings from Traveling, Communication, Transportation

and Delivery, Repair and Maintenance, Supplies and
Materials and Utility which shall be used for the grant of
Collective Negotiation Agreement incentive benefit;
Savings from mandatory expenditures which can be

realigned only in the last quarter after taking into
consideration the agencys full year requirements, i.e.,
Petroleum, Oil and Lubricants, Water, Illumination, Power
Services, Telephone, other Communication Services and
Rent.
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4.2.3 Foreign-Assisted Projects (loan proceeds and peso

counterpart);
4.2.4 Special Purpose Funds such as: E-Government Fund,

International Commitments Fund, PAMANA, Priority
Development Assistance Fund, Calamity Fund, Budgetary Support
to GOCCs and Allocation to LGUs, among others;
4.2.5 Quick Response Funds; and
4.2.6 Automatic Appropriations i.e., Retirement Life Insurance

Premium and Special Accounts in the General Fund.
5.0 Guidelines
5.1 National government agencies shall continue to undertake

procurement activities notwithstanding the implementation of the policy
of withdrawal of unobligated allotments until the end of the third quarter,
FY 2012. Even without the allotments, the agency shall proceed in
undertaking the procurement processes (i.e., procurement planning up to
the conduct of bidding but short of awarding of contract) pursuant to
GPPB Circular Nos. 02-2008 and 01-2009 and DBM Circular Letter No.
2010-9.
5.2 For the purpose of determining the amount of unobligated allotments

that shall be withdrawn, all departments/agencies/operating units (OUs)
shall submit to DBM not later than July 30, 2012, the following budget
accountability reports as of June 30, 2012;
Statement of Allotments, Obligations and Balances (SAOB);
Financial Report of Operations (FRO); and
Physical Report of Operations.
5.3 In the absence of the June 30, 2012 reports cited under item 5.2 of this
Circular, the agencys latest report available shall be used by DBM as basis
for withdrawal of allotment. The DBM shall compute/approximate the
agencys obligation level as of June 30 to derive its unobligated allotments
as of same period. Example: If the March 31 SAOB or FRO reflects actual
obligations of P 800M then the June 30 obligation level shall approximate
to P1,600 M (i.e., P800 M x 2 quarters).
5.4 All released allotments in FY 2011 charged against R.A. No. 10147
which remained unobligated as of June 30, 2012 shall be immediately
considered for withdrawal. This policy is based on the following
considerations:
5.4.1 The departments/agencies approved priority programs and

projects are assumed to be implementation-ready and doable
during the given fiscal year; and
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5.4.2 The practice of having substantial carryover appropriations

may imply that the agency has a slower-than-programmed
implementation capacity or agency tends to implement projects
within a two-year timeframe.
5.5. Consistent with the Presidents directive, the DBM shall, based on
evaluation of the reports cited above and results of consultations with the
departments/agencies, withdraw the unobligated allotments as of June
30, 2012 through issuance of negative Special Allotment Release Orders
(SAROs).
5.6 DBM shall prepare and submit to the President, a report on the
magnitude of withdrawn allotments. The report shall highlight the
agencies which failed to submit the June 30 reports required under this
Circular.
5.7 The withdrawn allotments may be:
5.7.1 Reissued for the original programs and projects of the

agencies/OUs concerned, from which the allotments were
withdrawn;
5.7.2 Realigned to cover additional funding for other existing

programs and projects of the agency/OU; or
5.7.3 Used to augment existing programs and projects of any

agency and to fund priority programs and projects not considered
in the 2012 budget but expected to be started or implemented
during the current year.
5.8 For items 5.7.1 and 5.7.2 above, agencies/OUs concerned may submit
to DBM a Special Budget Request (SBR), supported with the following:
5.8.1 Physical and Financial Plan (PFP);
5.8.2 Monthly Cash Program (MCP); and
5.8.3 Proof that the project/activity has started the procurement

processes i.e., Proof of Posting and/or Advertisement of the
Invitation to Bid.
5.9 The deadline for submission of request/s pertaining to these categories

shall be until the end of the third quarter i.e., September 30, 2012. After
said cut-off date, the withdrawn allotments shall be pooled and form part
of the overall savings of the national government.
5.10 Utilization of the consolidated withdrawn allotments for other

priority programs and projects as cited under item 5.7.3 of this Circular,
shall be subject to approval of the President. Based on the approval of the
President, DBM shall issue the SARO to cover the approved priority
expenditures subject to submission by the agency/OU concerned of the
SBR and supported with PFP and MCP.
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5.11 It is understood that all releases to be made out of the withdrawn

allotments (both 2011 and 2012 unobligated allotments) shall be within the
approved Expenditure Program level of the national government for the
current year. The SAROs to be issued shall properly disclose the
appropriation source of the release to determine the extent of allotment
validity, as follows:
For charges under R.A. 10147 allotments shall be valid up to

December 31, 2012; and
For charges under R.A. 10155 allotments shall be valid up to

December 31, 2013.
5.12 Timely compliance with the submission of existing BARs and other
reportorial requirements is reiterated for monitoring purposes.
6.0 Effectivity
This circular shall take effect immediately.
(Sgd.) FLORENCIO B. ABAD

Secretary
As can be seen, NBC No. 541 specified that the unobligated allotments of all agencies
and departments as of June 30, 2012 that were charged against the continuing
appropriations for fiscal year 2011 and the 2012 GAA (R.A. No. 10155) were subject to
withdrawal through the issuance of negative SAROs, but such allotments could be
either: (1) reissued for the original PAPs of the concerned agencies from which they
were withdrawn; or (2) realigned to cover additional funding for other existing PAPs of
the concerned agencies; or (3) used to augment existing PAPs of any agency and to fund
priority PAPs not considered in the 2012 budget but expected to be started or
implemented in 2012. Financing the other priority PAPs was made subject to the
approval of the President. Note here that NBC No. 541 used terminologies like
"realignment" and "augmentation" in the application of the withdrawn unobligated
allotments.
Taken together, all the issuances showed how the DAP was to be implemented and
funded, that is (1) by declaring "savings" coming from the various departments and
agencies derived from pooling unobligated allotments and withdrawing unreleased
appropriations; (2) releasing unprogrammed funds; and (3) applying the "savings" and
unprogrammed funds to augment existing PAPs or to support other priority PAPs.
c. DAP was not an appropriation measure; hence, no appropriation law was required to
adopt or to implement it
Petitioners Syjuco, Luna, Villegas and PHILCONSA state that Congress did not enact a
law to establish the DAP, or to authorize the disbursement and release of public funds
to implement the DAP. Villegas, PHILCONSA, IBP, Araullo, and COURAGE observe
that the appropriations funded under the DAP were not included in the 2011, 2012 and
2013 GAAs. To petitioners IBP, Araullo, and COURAGE, the DAP, being actually an
appropriation that set aside public funds for public use, should require an enabling law
for its validity. VACC maintains that the DAP, because it involved huge allocations that
Page 84 of 378
were separate and distinct from the GAAs, circumvented and duplicated the GAAs
without congressional authorization and control.
The petitioners contend in unison that based on how it was developed and
implemented the DAP violated the mandate of Section 29(1), Article VI of the 1987
Constitution that "[n]o money shall be paid out of the Treasury except in pursuance of
an appropriation made by law."
The OSG posits, however, that no law was necessary for the adoption and
implementation of the DAP because of its being neither a fund nor an appropriation,
but a program or an administrative system of prioritizing spending; and that the
adoption of the DAP was by virtue of the authority of the President as the Chief
Executive to ensure that laws were faithfully executed.
We agree with the OSGs position.
The DAP was a government policy or strategy designed to stimulate the economy
through accelerated spending. In the context of the DAPs adoption and
implementation being a function pertaining to the Executive as the main actor during
the Budget Execution Stage under its constitutional mandate to faithfully execute the
laws, including the GAAs, Congress did not need to legislate to adopt or to implement
the DAP. Congress could appropriate but would have nothing more to do during the
Budget Execution Stage. Indeed, appropriation was the act by which Congress
"designates a particular fund, or sets apart a specified portion of the public revenue or
of the money in the public treasury, to be applied to some general object of
governmental expenditure, or to some individual purchase or expense."124 As pointed
out in Gonzales v. Raquiza:125 "In a strict sense, appropriation has been defined as
nothing more than the legislative authorization prescribed by the Constitution that
money may be paid out of the Treasury, while appropriation made by law refers to the
act of the legislature setting apart or assigning to a particular use a certain sum to be
used in the payment of debt or dues from the State to its creditors."126
On the other hand, the President, in keeping with his duty to faithfully execute the
laws, had sufficient discretion during the execution of the budget to adapt the budget to
changes in the countrys economic situation.127 He could adopt a plan like the DAP for
the purpose. He could pool the savings and identify the PAPs to be funded under the
DAP. The pooling of savings pursuant to the DAP, and the identification of the PAPs to
be funded under the DAP did not involve appropriation in the strict sense because the
money had been already set apart from the public treasury by Congress through the
GAAs. In such actions, the Executive did not usurp the power vested in Congress under
Section 29(1), Article VI of the Constitution.
3. Unreleased appropriations and withdrawn unobligated allotments under the DAP

were not savings, and the use of such appropriations contravened Section 25(5), Article
VI of the 1987 Constitution.
Notwithstanding our appreciation of the DAP as a plan or strategy validly adopted by

the Executive to ramp up spending to accelerate economic growth, the challenges posed
by the petitioners constrain us to dissect the mechanics of the actual execution of the
DAP. The management and utilization of the public wealth inevitably demands a most
careful scrutiny of whether the Executives implementation of the DAP was consistent
with the Constitution, the relevant GAAs and other existing laws.
Page 85 of 378
a. Although executive discretion and flexibility are necessary in the execution of the
budget, any transfer of appropriated funds should conform to Section 25(5), Article VI
of the Constitution
We begin this dissection by reiterating that Congress cannot anticipate all issues and
needs that may come into play once the budget reaches its execution stage. Executive
discretion is necessary at that stage to achieve a sound fiscal administration and assure
effective budget implementation. The heads of offices, particularly the President,
require flexibility in their operations under performance budgeting to enable them to
make whatever adjustments are needed to meet established work goals under changing
conditions.128 In particular, the power to transfer funds can give the President the
flexibility to meet unforeseen events that may otherwise impede the efficient
implementation of the PAPs set by Congress in the GAA.
Congress has traditionally allowed much flexibility to the President in allocating funds
pursuant to the GAAs,129particularly when the funds are grouped to form lump sum
accounts.130 It is assumed that the agencies of the Government enjoy more flexibility
when the GAAs provide broader appropriation items.131 This flexibility comes in the
form of policies that the Executive may adopt during the budget execution phase. The
DAP as a strategy to improve the countrys economic position was one policy that
the President decided to carry out in order to fulfill his mandate under the GAAs.
Denying to the Executive flexibility in the expenditure process would be

counterproductive. In Presidential Spending Power,132 Prof. Louis Fisher, an American
constitutional scholar whose specialties have included budget policy, has justified
extending discretionary authority to the Executive thusly:
[T]he impulse to deny discretionary authority altogether should be resisted. There are
many number of reasons why obligations and outlays by administrators may have to
differ from appropriations by legislators. Appropriations are made many months, and
sometimes years, in advance of expenditures. Congress acts with imperfect knowledge
in trying to legislate in fields that are highly technical and constantly undergoing
change. New circumstances will develop to make obsolete and mistaken the decisions
reached by Congress at the appropriation stage. It is not practicable for Congress to
adjust to each new development by passing separate supplemental appropriation bills.
Were Congress to control expenditures by confining administrators to narrow statutory
details, it would perhaps protect its power of the purse but it would not protect the
purse itself. The realities and complexities of public policy require executive discretion
for the sound management of public funds.
xxxx
x x x The expenditure process, by its very nature, requires substantial discretion for
administrators. They need to exercise judgment and take responsibility for their actions,
but those actions ought to be directed toward executing congressional, not
administrative policy. Let there be discretion, but channel it and use it to satisfy the
programs and priorities established by Congress.
In contrast, by allowing to the heads of offices some power to transfer funds within
their respective offices, the Constitution itself ensures the fiscal autonomy of their
offices, and at the same time maintains the separation of powers among the three main
branches of the Government. The Court has recognized this, and emphasized so in
Bengzon v. Drilon,133 viz:
Page 86 of 378
The Judiciary, the Constitutional Commissions, and the Ombudsman must have the
independence and flexibility needed in the discharge of their constitutional duties. The
imposition of restrictions and constraints on the manner the independent constitutional
offices allocate and utilize the funds appropriated for their operations is anathema to
fiscal autonomy and violative not only of the express mandate of the Constitution but
especially as regards the Supreme Court, of the independence and separation of powers
upon which the entire fabric of our constitutional system is based.
In the case of the President, the power to transfer funds from one item to another within
the Executive has not been the mere offshoot of established usage, but has emanated
from law itself. It has existed since the time of the American Governors-General.134 Act
No. 1902 (An Act authorizing the Governor-General to direct any unexpended balances
of appropriations be returned to the general fund of the Insular Treasury and to transfer
from the general fund moneys which have been returned thereto), passed on May 18,
1909 by the First Philippine Legislature,135was the first enabling law that granted
statutory authority to the President to transfer funds. The authority was without any
limitation, for the Act explicitly empowered the Governor-General to transfer any
unexpended balance of appropriations for any bureau or office to another, and to spend
such balance as if it had originally been appropriated for that bureau or office.
From 1916 until 1920, the appropriations laws set a cap on the amounts of funds that
could be transferred, thereby limiting the power to transfer funds. Only 10% of the
amounts appropriated for contingent or miscellaneous expenses could be transferred to
a bureau or office, and the transferred funds were to be used to cover deficiencies in the
appropriations also for miscellaneous expenses of said bureau or office.
In 1921, the ceiling on the amounts of funds to be transferred from items under
miscellaneous expenses to any other item of a certain bureau or office was removed.
During the Commonwealth period, the power of the President to transfer funds
continued to be governed by the GAAs despite the enactment of the Constitution in
1935. It is notable that the 1935 Constitution did not include a provision on the power to
transfer funds. At any rate, a shift in the extent of the Presidents power to transfer
funds was again experienced during this era, with the President being given more
flexibility in implementing the budget. The GAAs provided that the power to transfer
all or portions of the appropriations in the Executive Department could be made in the
"interest of the public, as the President may determine."136
In its time, the 1971 Constitutional Convention wanted to curtail the Presidents
seemingly unbounded discretion in transferring funds.137 Its Committee on the Budget
and Appropriation proposed to prohibit the transfer of funds among the separate
branches of the Government and the independent constitutional bodies, but to allow
instead their respective heads to augment items of appropriations from savings in their
respective budgets under certain limitations.138 The clear intention of the Convention
was to further restrict, not to liberalize, the power to transfer appropriations.139 Thus,
the Committee on the Budget and Appropriation initially considered setting stringent
limitations on the power to augment, and suggested that the augmentation of an item of
appropriation could be made "by not more than ten percent if the original item of
appropriation to be augmented does not exceed one million pesos, or by not more than
five percent if the original item of appropriation to be augmented exceeds one million
pesos."140 But two members of the Committee objected to the P1,000,000.00 threshold,
saying that the amount was arbitrary and might not be reasonable in the future. The
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Committee agreed to eliminate theP1,000,000.00 threshold, and settled on the ten

percent limitation.141
In the end, the ten percent limitation was discarded during the plenary of the
Convention, which adopted the following final version under Section 16, Article VIII of
the 1973 Constitution, to wit:
(5) No law shall be passed authorizing any transfer of appropriations; however, the
President, the Prime Minister, the Speaker, the Chief Justice of the Supreme Court, and
the heads of Constitutional Commissions may by law be authorized to augment any
item in the general appropriations law for their respective offices from savings in other
items of their respective appropriations.
The 1973 Constitution explicitly and categorically prohibited the transfer of funds from
one item to another, unless Congress enacted a law authorizing the President, the Prime
Minister, the Speaker, the Chief Justice of the Supreme Court, and the heads of the
Constitutional omissions to transfer funds for the purpose of augmenting any item from
savings in another item in the GAA of their respective offices. The leeway was limited
to augmentation only, and was further constricted by the condition that the funds to be
transferred should come from savings from another item in the appropriation of the
office.142
On July 30, 1977, President Marcos issued PD No. 1177, providing in its Section 44 that:
Section 44. Authority to Approve Fund Transfers. The President shall have the
authority to transfer any fund appropriated for the different departments, bureaus,
offices and agencies of the Executive Department which are included in the General
Appropriations Act, to any program, project, or activity of any department, bureau or
office included in the General Appropriations Act or approved after its enactment.
The President shall, likewise, have the authority to augment any appropriation of the
Executive Department in the General Appropriations Act, from savings in the
appropriations of another department, bureau, office or agency within the Executive
Branch, pursuant to the provisions of Article VIII, Section 16 (5) of the Constitution.
In Demetria v. Alba, however, the Court struck down the first paragraph of Section 44
for contravening Section 16(5)of the 1973 Constitution, ruling:
Paragraph 1 of Section 44 of P.D. No. 1177 unduly over-extends the privilege granted
under said Section 16. It empowers the President to indiscriminately transfer funds
from one department, bureau, office or agency of the Executive Department to any
program, project or activity of any department, bureau or office included in the General
Appropriations Act or approved after its enactment, without regard as to whether or
not the funds to be transferred are actually savings in the item from which the same are
to be taken, or whether or not the transfer is for the purpose of augmenting the item to
which said transfer is to be made. It does not only completely disregard the standards
set in the fundamental law, thereby amounting to an undue delegation of legislative
powers, but likewise goes beyond the tenor thereof. Indeed, such constitutional
infirmities render the provision in question null and void.143
It is significant that Demetria was promulgated 25 days after the ratification by the
people of the 1987 Constitution, whose Section 25(5) of Article VI is identical to Section
16(5), Article VIII of the 1973 Constitution, to wit:
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Section 25. x x x
xxxx
5) No law shall be passed authorizing any transfer of appropriations; however, the

President, the President of the Senate, the Speaker of the House of Representatives, the
Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may,
by law, be authorized to augment any item in the general appropriations law for their
respective offices from savings in other items of their respective appropriations.
xxxx
The foregoing history makes it evident that the Constitutional Commission included
Section 25(5), supra, to keep a tight rein on the exercise of the power to transfer funds
appropriated by Congress by the President and the other high officials of the
Government named therein. The Court stated in Nazareth v. Villar:144
In the funding of current activities, projects, and programs, the general rule should still
be that the budgetary amount contained in the appropriations bill is the extent Congress
will determine as sufficient for the budgetary allocation for the proponent agency. The
only exception is found in Section 25 (5), Article VI of the Constitution, by which the
Chief Justice of the Supreme Court, and the heads of Constitutional Commissions are
authorized to transfer appropriations to augmentany item in the GAA for their
respective offices from the savings in other items of their respective appropriations. The
plain language of the constitutional restriction leaves no room for the petitioners
posture, which we should now dispose of as untenable.
It bears emphasizing that the exception in favor of the high officials named in Section
25(5), Article VI of the Constitution limiting the authority to transfer savings only to
augment another item in the GAA is strictly but reasonably construed as exclusive. As
the Court has expounded in Lokin, Jr. v. Commission on Elections:
When the statute itself enumerates the exceptions to the application of the general rule,
the exceptions are strictly but reasonably construed. The exceptions extend only as far
as their language fairly warrants, and all doubts should be resolved in favor of the
general provision rather than the exceptions. Where the general rule is established by a
statute with exceptions, none but the enacting authority can curtail the former. Not
even the courts may add to the latter by implication, and it is a rule that an express
exception excludes all others, although it is always proper in determining the
applicability of the rule to inquire whether, in a particular case, it accords with reason
and justice.
The appropriate and natural office of the exception is to exempt something from the
scope of the general words of a statute, which is otherwise within the scope and
meaning of such general words. Consequently, the existence of an exception in a statute
clarifies the intent that the statute shall apply to all cases not excepted. Exceptions are
subject to the rule of strict construction; hence, any doubt will be resolved in favor of
the general provision and against the exception. Indeed, the liberal construction of a
statute will seem to require in many circumstances that the exception, by which the
operation of the statute is limited or abridged, should receive a restricted construction.
Page 89 of 378
Accordingly, we should interpret Section 25(5), supra, in the context of a limitation on

the Presidents discretion over the appropriations during the Budget Execution Phase.
b. Requisites for the valid transfer of appropriated funds under Section 25(5), Article VI
of the 1987 Constitution
The transfer of appropriated funds, to be valid under Section 25(5), supra, must be
made upon a concurrence of the following requisites, namely:
(1) There is a law authorizing the President, the President of the Senate, the
Speaker of the House of Representatives, the Chief Justice of the Supreme Court,
and the heads of the Constitutional Commissions to transfer funds within their
respective offices;
(2) The funds to be transferred are savings generated from the appropriations for
their respective offices; and (3) The purpose of the transfer is to augment an item
in the general appropriations law for their respective offices.
b.1. First RequisiteGAAs of 2011 and 2012 lacked valid provisions to authorize
transfers of funds under the DAP; hence, transfers under the DAP were
unconstitutional
Section 25(5), supra, not being a self-executing provision of the Constitution, must have
an implementing law for it to be operative. That law, generally, is the GAA of a given
fiscal year. To comply with the first requisite, the GAAs should expressly authorize the
transfer of funds.
Did the GAAs expressly authorize the transfer of funds?
In the 2011 GAA, the provision that gave the President and the other high officials the
authority to transfer funds was Section 59, as follows:
Section 59. Use of Savings. The President of the Philippines, the Senate President, the
Speaker of the House of Representatives, the Chief Justice of the Supreme Court, the
Heads of Constitutional Commissions enjoying fiscal autonomy, and the Ombudsman
are hereby authorized to augment any item in this Act from savings in other items of
their respective appropriations.
In the 2012 GAA, the empowering provision was Section 53, to wit:
are hereby authorized to augment any item in this Act from savings in other items of
their respective appropriations.
In fact, the foregoing provisions of the 2011 and 2012 GAAs were cited by the DBM as
justification for the use of savings under the DAP.145
A reading shows, however, that the aforequoted provisions of the GAAs of 2011 and
2012 were textually unfaithful to the Constitution for not carrying the phrase "for their
respective offices" contained in Section 25(5), supra. The impact of the phrase "for their
respective offices" was to authorize only transfers of funds within their offices (i.e., in
Page 90 of 378
the case of the President, the transfer was to an item of appropriation within the
Executive). The provisions carried a different phrase ("to augment any item in this
Act"), and the effect was that the 2011 and 2012 GAAs thereby literally allowed the
transfer of funds from savings to augment any item in the GAAs even if the item
belonged to an office outside the Executive. To that extent did the 2011 and 2012 GAAs
contravene the Constitution. At the very least, the aforequoted provisions cannot be
used to claim authority to transfer appropriations from the Executive to another branch,
or to a constitutional commission.
Apparently realizing the problem, Congress inserted the omitted phrase in the
counterpart provision in the 2013 GAA, to wit:
are hereby authorized to use savings in their respective appropriations to augment
actual deficiencies incurred for the current year in any item of their respective
appropriations.
Even had a valid law authorizing the transfer of funds pursuant to Section 25(5), supra,
existed, there still remained two other requisites to be met, namely: that the source of
funds to be transferred were savings from appropriations within the respective offices;
and that the transfer must be for the purpose of augmenting an item of appropriation
within the respective offices.
b.2. Second Requisite There were no savings from which funds could be sourced for
the DAP
Were the funds used in the DAP actually savings?
The petitioners claim that the funds used in the DAP the unreleased appropriations
and withdrawn unobligated allotments were not actual savings within the context of
Section 25(5), supra, and the relevant provisions of the GAAs. Belgica argues that
"savings" should be understood to refer to the excess money after the items that needed
to be funded have been funded, or those that needed to be paid have been paid
pursuant to the budget.146 The petitioners posit that there could be savings only when
the PAPs for which the funds had been appropriated were actually implemented and
completed, or finally discontinued or abandoned. They insist that savings could not be
realized with certainty in the middle of the fiscal year; and that the funds for "slow-
moving" PAPs could not be considered as savings because such PAPs had not actually
been abandoned or discontinued yet.147 They stress that NBC No. 541, by allowing the
withdrawn funds to be reissued to the "original program or project from which it was
withdrawn," conceded that the PAPs from which the supposed savings were taken had
not been completed, abandoned or discontinued.148
The OSG represents that "savings" were "appropriations balances," being the difference
between the appropriation authorized by Congress and the actual amount allotted for
the appropriation; that the definition of "savings" in the GAAs set only the parameters
for determining when savings occurred; that it was still the President (as well as the
other officers vested by the Constitution with the authority to augment) who ultimately
determined when savings actually existed because savings could be determined only
during the stage of budget execution; that the President must be given a wide discretion
to accomplish his tasks; and that the withdrawn unobligated allotments were savings
Page 91 of 378
inasmuch as they were clearly "portions or balances of any programmed

appropriationfree from any obligation or encumbrances which are (i) still available
after the completion or final discontinuance or abandonment of the work, activity or
purpose for which the appropriation is authorized"
We partially find for the petitioners.
In ascertaining the meaning of savings, certain principles should be borne in mind. The
first principle is that Congress wields the power of the purse. Congress decides how the
budget will be spent; what PAPs to fund; and the amounts of money to be spent for
each PAP. The second principle is that the Executive, as the department of the
Government tasked to enforce the laws, is expected to faithfully execute the GAA and
to spend the budget in accordance with the provisions of the GAA.149 The Executive is
expected to faithfully implement the PAPs for which Congress allocated funds, and to
limit the expenditures within the allocations, unless exigencies result to deficiencies for
which augmentation is authorized, subject to the conditions provided by law. The third
principle is that in making the Presidents power to augment operative under the GAA,
Congress recognizes the need for flexibility in budget execution. In so doing, Congress
diminishes its own power of the purse, for it delegates a fraction of its power to the
Executive. But Congress does not thereby allow the Executive to override its authority
over the purse as to let the Executive exceed its delegated authority. And the fourth
principle is that savings should be actual. "Actual" denotes something that is real or
substantial, or something that exists presently in fact, as opposed to something that is
merely theoretical, possible, potential or hypothetical.150
The foregoing principles caution us to construe savings strictly against expanding the
scope of the power to augment. It is then indubitable that the power to augment was to
be used only when the purpose for which the funds had been allocated were already
satisfied, or the need for such funds had ceased to exist, for only then could savings be
properly realized. This interpretation prevents the Executive from unduly transgressing
Congress power of the purse.
The definition of "savings" in the GAAs, particularly for 2011, 2012 and 2013, reflected
this interpretation and made it operational, viz:
Savings refer to portions or balances of any programmed appropriation in this Act free
from any obligation or encumbrance which are: (i) still available after the completion or
final discontinuance or abandonment of the work, activity or purpose for which the
appropriation is authorized; (ii) from appropriations balances arising from unpaid
compensation and related costs pertaining to vacant positions and leaves of absence
without pay; and (iii) from appropriations balances realized from the implementation of
measures resulting in improved systems and efficiencies and thus enabled agencies to
meet and deliver the required or planned targets, programs and services approved in
this Act at a lesser cost.
The three instances listed in the GAAs aforequoted definition were a sure indication
that savings could be generated only upon the purpose of the appropriation being
fulfilled, or upon the need for the appropriation being no longer existent.
The phrase "free from any obligation or encumbrance" in the definition of savings in the
GAAs conveyed the notion that the appropriation was at that stage when the
appropriation was already obligated and the appropriation was already released. This
interpretation was reinforced by the enumeration of the three instances for savings to
Page 92 of 378
arise, which showed that the appropriation referred to had reached the agency level. It
could not be otherwise, considering that only when the appropriation had reached the
agency level could it be determined whether (a) the PAP for which the appropriation
had been authorized was completed, finally discontinued, or abandoned; or (b) there
were vacant positions and leaves of absence without pay; or (c) the required or planned
targets, programs and services were realized at a lesser cost because of the
implementation of measures resulting in improved systems and efficiencies.
The DBM declares that part of the savings brought under the DAP came from "pooling
of unreleased appropriations such as unreleased Personnel Services appropriations
which will lapse at the end of the year, unreleased appropriations of slow moving
projects and discontinued projects per Zero-Based Budgeting findings."
The declaration of the DBM by itself does not state the clear legal basis for the treatment
of unreleased or unalloted appropriations as savings.
The fact alone that the appropriations are unreleased or unalloted is a mere description
of the status of the items as unalloted or unreleased. They have not yet ripened into
categories of items from which savings can be generated. Appropriations have been
considered "released" if there has already been an allotment or authorization to incur
obligations and disbursement authority. This means that the DBM has issued either an
ABM (for those not needing clearance), or a SARO (for those needing clearance), and
consequently an NCA, NCAA or CDC, as the case may be. Appropriations remain
unreleased, for instance, because of noncompliance with documentary requirements
(like the Special Budget Request), or simply because of the unavailability of funds. But
the appropriations do not actually reach the agencies to which they were allocated
under the GAAs, and have remained with the DBM technically speaking. Ergo,
unreleased appropriations refer to appropriations with allotments but without
disbursement authority.
For us to consider unreleased appropriations as savings, unless these met the statutory
definition of savings, would seriously undercut the congressional power of the purse,
because such appropriations had not even reached and been used by the agency
concerned vis--vis the PAPs for which Congress had allocated them. However, if an
agency has unfilled positions in its plantilla and did not receive an allotment and NCA
for such vacancies, appropriations for such positions, although unreleased, may already
constitute savings for that agency under the second instance.
Unobligated allotments, on the other hand, were encompassed by the first part of the
definition of "savings" in the GAA, that is, as "portions or balances of any programmed
appropriation in this Act free from any obligation or encumbrance." But the first part of
the definition was further qualified by the three enumerated instances of when savings
would be realized. As such, unobligated allotments could not be indiscriminately
declared as savings without first determining whether any of the three instances
existed. This signified that the DBMs withdrawal of unobligated allotments had
disregarded the definition of savings under the GAAs.
Justice Carpio has validly observed in his Separate Concurring Opinion that MOOE
appropriations are deemed divided into twelve monthly allocations within the fiscal
year; hence, savings could be generated monthly from the excess or unused MOOE
appropriations other than the Mandatory Expenditures and Expenditures for Business-
type Activities because of the physical impossibility to obligate and spend such funds as
Page 93 of 378
MOOE for a period that already lapsed. Following this observation, MOOE for future
months are not savings and cannot be transferred.
The DBMs Memorandum for the President dated June 25, 2012 (which became the basis
of NBC No. 541) stated:
ON THE AUTHORITY TO WITHDRAW UNOBLIGATED ALLOTMENTS
5.0 The DBM, during the course of performance reviews conducted on the
agencies operations, particularly on the implementation of their
projects/activities, including expenses incurred in undertaking the same, have
been continuously calling the attention of all National Government agencies
(NGAs) with low levels of obligations as of end of the first quarter to speedup
the implementation of their programs and projects in the second quarter.
6.0 Said reminders were made in a series of consultation meetings with the
concerned agencies and with call-up letters sent.
7.0 Despite said reminders and the availability of funds at the departments
disposal, the level of financial performance of some departments registered
below program, with the targeted obligations/disbursements for the first
semester still not being met.
8.0 In order to maximize the use of the available allotment, all unobligated
balances as of June 30, 2012, both for continuing and current allotments shall be
withdrawn and pooled to fund fast moving programs/projects.
9.0 It may be emphasized that the allotments to be withdrawn will be based on

the list of slow moving projects to be identified by the agencies and their catch
up plans to be evaluated by the DBM.
It is apparent from the foregoing text that the withdrawal of unobligated allotments
would be based on whether the allotments pertained to slow-moving projects, or not.
However, NBC No. 541 did not set in clear terms the criteria for the withdrawal of
unobligated allotments, viz:
3.1. These guidelines shall cover the withdrawal of unobligated allotments as of

June 30, 2012 ofall national government agencies (NGAs) charged against FY
2011 Continuing Appropriation (R.A. No. 10147) and FY 2012 Current
Appropriation (R.A. No. 10155), pertaining to:
3.1.1 Capital Outlays (CO);
3.1.2 Maintenance and Other Operating Expenses (MOOE) related to the

implementation of programs and projects, as well as capitalized MOOE;
and
3.1.3 Personal Services corresponding to unutilized pension benefits

declared as savings by the agencies concerned based on their
undated/validated list of pensioners.
A perusal of its various provisions reveals that NBC No. 541 targeted the "withdrawal
of unobligated allotments of agencies with low levels of obligations"151 "to fund priority
Page 94 of 378
and/or fast-moving programs/projects."152 But the fact that the withdrawn allotments
could be "[r]eissued for the original programs and projects of the agencies/OUs
concerned, from which the allotments were withdrawn"153 supported the conclusion
that the PAPs had not yet been finally discontinued or abandoned. Thus, the purpose
for which the withdrawn funds had been appropriated was not yet fulfilled, or did not
yet cease to exist, rendering the declaration of the funds as savings impossible.
Worse, NBC No. 541 immediately considered for withdrawal all released allotments in
2011 charged against the 2011 GAA that had remained unobligated based on the
following considerations, to wit:
5.4.1 The departments/agencies approved priority programs and projects are

assumed to be implementation-ready and doable during the given fiscal year;
and
5.4.2 The practice of having substantial carryover appropriations may imply that
the agency has a slower-than-programmed implementation capacity or agency
tends to implement projects within a two-year timeframe.
Such withdrawals pursuant to NBC No. 541, the circular that affected the unobligated
allotments for continuing and current appropriations as of June 30, 2012, disregarded
the 2-year period of availability of the appropriations for MOOE and capital outlay
extended under Section 65, General Provisions of the 2011 GAA, viz:
Section 65. Availability of Appropriations. Appropriations for MOOE and capital

outlays authorized in this Act shall be available for release and obligation for the
purpose specified, and under the same special provisions applicable thereto, for a
period extending to one fiscal year after the end of the year in which such items were
appropriated: PROVIDED, That appropriations for MOOE and capital outlays under
R.A. No. 9970 shall be made available up to the end of FY 2011: PROVIDED, FURTHER,
That a report on these releases and obligations shall be submitted to the Senate
Committee on Finance and the House Committee on Appropriations.
and Section 63 General Provisions of the 2012 GAA, viz:
Section 63. Availability of Appropriations. Appropriations for MOOE and capital

outlays authorized in this Act shall be available for release and obligation for the
purpose specified, and under the same special provisions applicable thereto, for a
period extending to one fiscal year after the end of the year in which such items were
appropriated: PROVIDED, That a report on these releases and obligations shall be
submitted to the Senate Committee on Finance and the House Committee on
Appropriations, either in printed form or by way of electronic document.154
Thus, another alleged area of constitutional infirmity was that the DAP and its relevant
issuances shortened the period of availability of the appropriations for MOOE and
capital outlays.
Congress provided a one-year period of availability of the funds for all allotment classes
in the 2013 GAA (R.A. No. 10352), to wit:
Section 63. Availability of Appropriations. All appropriations authorized in this Act

shall be available for release and obligation for the purposes specified, and under the
same special provisions applicable thereto, until the end of FY 2013: PROVIDED, That a
Page 95 of 378
report on these releases and obligations shall be submitted to the Senate Committee on
Finance and House Committee on Appropriations, either in printed form or by way of
electronic document.
Yet, in his memorandum for the President dated May 20, 2013, Sec. Abad sought
omnibus authority to consolidate savings and unutilized balances to fund the DAP on a
quarterly basis, viz:
7.0 If the level of financial performance of some department will register below
program, even with the availability of funds at their disposal, the targeted
obligations/disbursements for each quarter will not be met. It is important to
note that these funds will lapse at the end of the fiscal year if these remain
unobligated.
8.0 To maximize the use of the available allotment, all unobligated balances at
the end of every quarter, both for continuing and current allotments shall be
withdrawn and pooled to fund fast moving programs/projects.
9.0 It may be emphasized that the allotments to be withdrawn will be based on

the list of slow moving projects to be identified by the agencies and their catch
up plans to be evaluated by the DBM.
The validity period of the affected appropriations, already given the brief Lifes pan of
one year, was further shortened to only a quarter of a year under the DBMs
memorandum dated May 20, 2013.
The petitioners accuse the respondents of forcing the generation of savings in order to
have a larger fund available for discretionary spending. They aver that the respondents,
by withdrawing unobligated allotments in the middle of the fiscal year, in effect
deprived funding for PAPs with existing appropriations under the GAAs.155
The respondents belie the accusation, insisting that the unobligated allotments were
being withdrawn upon the instance of the implementing agencies based on their own
assessment that they could not obligate those allotments pursuant to the Presidents
directive for them to spend their appropriations as quickly as they could in order to
ramp up the economy.156
We agree with the petitioners.
Contrary to the respondents insistence, the withdrawals were upon the initiative of the
DBM itself. The text of NBC No. 541 bears this out, to wit:
5.2 For the purpose of determining the amount of unobligated allotments that shall be
withdrawn, all departments/agencies/operating units (OUs) shall submit to DBM not
later than July 30, 2012, the following budget accountability reports as of June 30, 2012;
Statement of Allotments, Obligation and Balances (SAOB);
Financial Report of Operations (FRO); and
Physical Report of Operations.
Page 96 of 378
5.3 In the absence of the June 30, 2012 reports cited under item 5.2 of this Circular, the
agencys latest report available shall be used by DBM as basis for withdrawal of
allotment. The DBM shall compute/approximate the agencys obligation level as of
June 30 to derive its unobligated allotments as of same period. Example: If the March 31
SAOB or FRO reflects actual obligations of P 800M then the June 30 obligation level
shall approximate toP1,600 M (i.e., P800 M x 2 quarters).
The petitioners assert that no law had authorized the withdrawal and transfer of
unobligated allotments and the pooling of unreleased appropriations; and that the
unbridled withdrawal of unobligated allotments and the retention of appropriated
funds were akin to the impoundment of appropriations that could be allowed only in
case of "unmanageable national government budget deficit" under the GAAs,157 thus
violating the provisions of the GAAs of 2011, 2012 and 2013 prohibiting the retention or
deduction of allotments.158
In contrast, the respondents emphasize that NBC No. 541 adopted a spending, not
saving, policy as a last-ditch effort of the Executive to push agencies into actually
spending their appropriations; that such policy did not amount to an impoundment
scheme, because impoundment referred to the decision of the Executive to refuse to
spend funds for political or ideological reasons; and that the withdrawal of allotments
under NBC No. 541 was made pursuant to Section 38, Chapter 5, Book VI of the
Administrative Code, by which the President was granted the authority to suspend or
otherwise stop further expenditure of funds allotted to any agency whenever in his
judgment the public interest so required.
The assertions of the petitioners are upheld. The withdrawal and transfer of
unobligated allotments and the pooling of unreleased appropriations were invalid for
being bereft of legal support. Nonetheless, such withdrawal of unobligated allotments
and the retention of appropriated funds cannot be considered as impoundment.
According to Philippine Constitution Association v. Enriquez:159 "Impoundment refers

to a refusal by the President, for whatever reason, to spend funds made available by
Congress. It is the failure to spend or obligate budget authority of any type."
Impoundment under the GAA is understood to mean the retention or deduction of
appropriations. The 2011 GAA authorized impoundment only in case of unmanageable
National Government budget deficit, to wit:
Section 66. Prohibition Against Impoundment of Appropriations. No appropriations

authorized under this Act shall be impounded through retention or deduction, unless in
accordance with the rules and regulations to be issued by the DBM: PROVIDED, That
all the funds appropriated for the purposes, programs, projects and activities
authorized under this Act, except those covered under the Unprogrammed Fund, shall
be released pursuant to Section 33 (3), Chapter 5, Book VI of E.O. No. 292.
Section 67. Unmanageable National Government Budget Deficit. Retention or deduction

of appropriations authorized in this Act shall be effected only in cases where there is an
unmanageable national government budget deficit.
Unmanageable national government budget deficit as used in this section shall be

construed to mean that (i) the actual national government budget deficit has exceeded
the quarterly budget deficit targets consistent with the full-year target deficit as
indicated in the FY 2011 Budget of
Page 97 of 378
Expenditures and Sources of Financing submitted by the President and approved by

Congress pursuant to Section 22, Article VII of the Constitution, or (ii) there are clear
economic indications of an impending occurrence of such condition, as determined by
the Development Budget Coordinating Committee and approved by the President.
The 2012 and 2013 GAAs contained similar provisions.
The withdrawal of unobligated allotments under the DAP should not be regarded as
impoundment because it entailed only the transfer of funds, not the retention or
deduction of appropriations.
Nor could Section 68 of the 2011 GAA (and the similar provisions of the 2012 and 2013
GAAs) be applicable. They uniformly stated:
Section 68. Prohibition Against Retention/Deduction of Allotment. Fund releases from

appropriations provided in this Act shall be transmitted intact or in full to the office or
agency concerned. No retention or deduction as reserves or overhead shall be made,
except as authorized by law, or upon direction of the President of the Philippines. The
COA shall ensure compliance with this provision to the extent that sub-allotments by
agencies to their subordinate offices are in conformity with the release documents
issued by the DBM.
The provision obviously pertained to the retention or deduction of allotments upon

their release from the DBM, which was a different matter altogether. The Court should
not expand the meaning of the provision by applying it to the withdrawal of allotments.
The respondents rely on Section 38, Chapter 5, Book VI of the Administrative Code of
1987 to justify the withdrawal of unobligated allotments. But the provision authorized
only the suspension or stoppage of further expenditures, not the withdrawal of
unobligated allotments, to wit:
Section 38. Suspension of Expenditure of Appropriations.- Except as otherwise

provided in the General Appropriations Act and whenever in his judgment the public
interest so requires, the President, upon notice to the head of office concerned, is
authorized to suspend or otherwise stop further expenditure of funds allotted for any
agency, or any other expenditure authorized in the General Appropriations Act, except
for personal services appropriations used for permanent officials and employees.
Moreover, the DBM did not suspend or stop further expenditures in accordance with
Section 38, supra, but instead transferred the funds to other PAPs.
It is relevant to remind at this juncture that the balances of appropriations that

remained unexpended at the end of the fiscal year were to be reverted to the General
Fund. This was the mandate of Section 28, Chapter IV, Book VI of the Administrative
Code, to wit:
Section 28. Reversion of Unexpended Balances of Appropriations, Continuing

Appropriations.- Unexpended balances of appropriations authorized in the General
Appropriation Act shall revert to the unappropriated surplus of the General Fund at the
end of the fiscal year and shall not thereafter be available for expenditure except by
subsequent legislative enactment: Provided, that appropriations for capital outlays shall
remain valid until fully spent or reverted: provided, further, that continuing
appropriations for current operating expenditures may be specifically recommended
Page 98 of 378
and approved as such in support of projects whose effective implementation calls for
multi-year expenditure commitments: provided, finally, that the President may
authorize the use of savings realized by an agency during given year to meet non-
recurring expenditures in a subsequent year.
The balances of continuing appropriations shall be reviewed as part of the annual

budget preparation process and the preparation process and the President may approve
upon recommendation of the Secretary, the reversion of funds no longer needed in
connection with the activities funded by said continuing appropriations.
The Executive could not circumvent this provision by declaring unreleased

appropriations and unobligated allotments as savings prior to the end of the fiscal year.
b.3. Third Requisite No funds from savings could be transferred under the DAP to
augment deficient items not provided in the GAA
The third requisite for a valid transfer of funds is that the purpose of the transfer should
be "to augment an item in the general appropriations law for the respective offices." The
term "augment" means to enlarge or increase in size, amount, or degree.160
The GAAs for 2011, 2012 and 2013 set as a condition for augmentation that the
appropriation for the PAP item to be augmented must be deficient, to wit:
x x x Augmentation implies the existence in this Act of a program, activity, or project

with an appropriation, which upon implementation, or subsequent evaluation of
needed resources, is determined to be deficient. In no case shall a non-existent program,
activity, or project, be funded by augmentation from savings or by the use of
appropriations otherwise authorized in this Act.
In other words, an appropriation for any PAP must first be determined to be deficient
before it could be augmented from savings. Note is taken of the fact that the 2013 GAA
already made this quite clear, thus:
are hereby authorized to use savings in their respective appropriations to augment
actual deficiencies incurred for the current year in any item of their respective
appropriations.
As of 2013, a total of P144.4 billion worth of PAPs were implemented through the
DAP.161
Of this amount P82.5 billion were released in 2011 and P54.8 billion in 2012.162 Sec.
Abad has reported that 9% of the total DAP releases were applied to the PAPs
identified by the legislators.163
The petitioners disagree, however, and insist that the DAP supported the following
PAPs that had not been covered with appropriations in the respective GAAs, namely:
(i) P1.5 billion for the Cordillera Peoples Liberation Army;
(ii) P1.8 billion for the Moro National Liberation Front;
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(iii) P700 million for assistance to Quezon Province;164
(iv) P50 million to P100 (million) each to certain senators;165
(v) P10 billion for the relocation of families living along dangerous zones under
the National Housing Authority;
(vi) P10 billion and P20 billion equity infusion under the Bangko Sentral;
(vii) P5.4 billion landowners compensation under the Department of Agrarian

Reform;
(viii) P8.6 billion for the ARMM comprehensive peace and development
program;
(ix) P6.5 billion augmentation of LGU internal revenue allotments
(x) P5 billion for crucial projects like tourism road construction under the
Department of Tourism and the Department of Public Works and Highways;
(xi) P1.8 billion for the DAR-DPWH Tulay ng Pangulo;
(xii) P1.96 billion for the DOH-DPWH rehabilitation of regional health units; and
(xiii) P4 billion for the DepEd-PPP school infrastructure projects.166
In refutation, the OSG argues that a total of 116 DAP-financed PAPs were implemented,
had appropriation covers, and could properly be accounted for because the funds were
released following and pursuant to the standard practices adopted by the DBM. 167 In
support of its argument, the OSG has submitted seven evidence packets containing
memoranda, SAROs, and other pertinent documents relative to the implementation and
fund transfers under the DAP.168
Upon careful review of the documents contained in the seven evidence packets, we
conclude that the "savings" pooled under the DAP were allocated to PAPs that were not
covered by any appropriations in the pertinent GAAs.
For example, the SARO issued on December 22, 2011 for the highly vaunted Disaster
Risk, Exposure, Assessment and Mitigation (DREAM) project under the Department of
Science and Technology (DOST) covered the amount ofP1.6 Billion,169 broken down as
follows:
APPROPRIATION PARTICULARS AMOUNT

CODE AUTHORIZED
A.03.a.01.a Generation of new knowledge and
technologies and research capability
building in priority areas identified as
strategic to National Development
Personnel Services P 43,504,024
Maintenance and Other Operating 1,164,517,589
Expenses 391,978,387
Capital Outlays P 1,600,000,000
Page 100 of 378

the pertinent provision of the 2011 GAA (R.A. No. 10147) showed that Congress had
appropriated onlyP537,910,000 for MOOE, but nothing for personnel services and
capital outlays, to wit:
Personnel Maintenance Capital TOTAL

Services and Other Outlays
Operating
Expenditures
III. Operations
a. Funding Assistance to 177,406,000 1,887,365,000 49,090,000 2,113,861,000

Science
and Technology
Activities
1. Central Office 1,554,238,000 1,554,238,000

a. Generation of new
knowledge and
technologies and
research
capability building in
priority areas
identified as
strategic to National
Development 537,910,000 537,910,000
Aside from this transfer under the DAP to the DREAM project exceeding by almost
300% the appropriation by Congress for the program Generation of new knowledge
and technologies and research capability building in priority areas identified as
strategic to National Development, the Executive allotted funds for personnel services
and capital outlays. The Executive thereby substituted its will to that of Congress.
Worse, the Executive had not earlier proposed any amount for personnel services and
capital outlays in the NEP that became the basis of the 2011 GAA.170
It is worth stressing in this connection that the failure of the GAAs to set aside any
amounts for an expense category sufficiently indicated that Congress purposely did not
see fit to fund, much less implement, the PAP concerned. This indication becomes
clearer when even the President himself did not recommend in the NEP to fund the
PAP. The consequence was that any PAP requiring expenditure that did not receive any
appropriation under the GAAs could only be a new PAP, any funding for which would
go beyond the authority laid down by Congress in enacting the GAAs. That happened
in some instances under the DAP.
In relation to the December 22, 2011 SARO issued to the Philippine Council for
Industry, Energy and Emerging Technology Research and Development (DOST-
PCIEETRD)171 for Establishment of the Advanced Failure Analysis Laboratory, which
reads:
APPROPRIATION PARTICULARS AMOUNT

CODE AUTHORIZED
Page 101 of 378

Development, integration and coordination

of the National Research System for
A.02.a Industry, Energy and Emerging Technology
and Related Fields
Capital Outlays P 300,000,000
the appropriation code and the particulars appearing in the SARO did not correspond
to the program specified in the GAA, whose particulars were Research and
Management Services(inclusive of the following activities: (1) Technological and
Economic Assessment for Industry, Energy and Utilities; (2) Dissemination of Science
and Technology Information; and (3) Management of PCIERD Information System for
Industry, Energy and Utilities. Even assuming that Development, integration and
coordination of the National Research System for Industry, Energy and Emerging
Technology and Related Fields the particulars stated in the SARO could fall under
the broad program description of Research and Management Services as appearing in
the SARO, it would nonetheless remain a new activity by reason of its not being
specifically stated in the GAA. As such, the DBM, sans legislative authorization, could
not validly fund and implement such PAP under the DAP.
In defending the disbursements, however, the OSG contends that the Executive enjoyed
sound discretion in implementing the budget given the generality in the language and
the broad policy objectives identified under the GAAs;172 and that the President enjoyed
unlimited authority to spend the initial appropriations under his authority to declare
and utilize savings,173 and in keeping with his duty to faithfully execute the laws.
Although the OSG rightly contends that the Executive was authorized to spend in line
with its mandate to faithfully execute the laws (which included the GAAs), such
authority did not translate to unfettered discretion that allowed the President to
substitute his own will for that of Congress. He was still required to remain faithful to
the provisions of the GAAs, given that his power to spend pursuant to the GAAs was
but a delegation to him from Congress. Verily, the power to spend the public wealth
resided in Congress, not in the Executive.174 Moreover, leaving the spending power of
the Executive unrestricted would threaten to undo the principle of separation of
powers.175
Congress acts as the guardian of the public treasury in faithful discharge of its power of
the purse whenever it deliberates and acts on the budget proposal submitted by the
Executive.176 Its power of the purse is touted as the very foundation of its institutional
strength,177 and underpins "all other legislative decisions and regulating the balance of
influence between the legislative and executive branches of government."178 Such
enormous power encompasses the capacity to generate money for the Government, to
appropriate public funds, and to spend the money.179 Pertinently, when it exercises its
power of the purse, Congress wields control by specifying the PAPs for which public
money should be spent.
It is the President who proposes the budget but it is Congress that has the final say on
matters of appropriations.180For this purpose, appropriation involves two governing
principles, namely: (1) "a Principle of the Public Fisc, asserting that all monies received
from whatever source by any part of the government are public funds;" and (2) "a
Principle of Appropriations Control, prohibiting expenditure of any public money
without legislative authorization."181To conform with the governing principles, the
Executive cannot circumvent the prohibition by Congress of an expenditure for a PAP
Page 102 of 378

by resorting to either public or private funds.182 Nor could the Executive transfer
appropriated funds resulting in an increase in the budget for one PAP, for by so doing
the appropriation for another PAP is necessarily decreased. The terms of both
appropriations will thereby be violated.
b.4 Third Requisite Cross-border augmentations from savings were prohibited by the
Constitution
By providing that the President, the President of the Senate, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, and the Heads of the
Constitutional Commissions may be authorized to augment any item in the GAA "for
their respective offices," Section 25(5), supra, has delineated borders between their
offices, such that funds appropriated for one office are prohibited from crossing over to
another office even in the guise of augmentation of a deficient item or items. Thus, we
call such transfers of funds cross-border transfers or cross-border augmentations.
To be sure, the phrase "respective offices" used in Section 25(5), supra, refers to the
entire Executive, with respect to the President; the Senate, with respect to the Senate
President; the House of Representatives, with respect to the Speaker; the Judiciary, with
respect to the Chief Justice; the Constitutional Commissions, with respect to their
respective Chairpersons.
Did any cross-border transfers or augmentations transpire?
During the oral arguments on January 28, 2014, Sec. Abad admitted making some cross-
border augmentations, to wit:
JUSTICE BERSAMIN:
Alright, the whole time that you have been Secretary of Department of Budget and
Management, did the Executive Department ever redirect any part of savings of the
National Government under your control cross border to another department?
SECRETARY ABAD:
Well, in the Memos that we submitted to you, such an instance, Your Honor
JUSTICE BERSAMIN:
Can you tell me two instances? I dont recall having read your material.
SECRETARY ABAD:
Well, the first instance had to do with a request from the House of Representatives.
They started building their e-library in 2010 and they had a budget for about 207
Million but they lack about 43 Million to complete its 250 Million requirements. Prior to
that, the COA, in an audit observation informed the Speaker that they had to continue
with that construction otherwise the whole building, as well as the equipments therein
may suffer from serious deterioration. And at that time, since the budget of the House
of Representatives was not enough to complete 250 Million, they wrote to the President
requesting for an augmentation of that particular item, which was granted, Your Honor.
The second instance in the Memos is a request from the Commission on Audit. At the
time they were pushing very strongly the good governance programs of the
Page 103 of 378

government and therefore, part of that is a requirement to conduct audits as well as

review financial reports of many agencies. And in the performance of that function, the
Commission on Audit needed information technology equipment as well as hire
consultants and litigators to help them with their audit work and for that they
requested funds from the Executive and the President saw that it was important for the
Commission to be provided with those IT equipments and litigators and consultants
and the request was granted, Your Honor.
JUSTICE BERSAMIN:
These cross border examples, cross border augmentations were not supported by
appropriations
SECRETARY ABAD:
They were, we were augmenting existing items within their (interrupted)
JUSTICE BERSAMIN:
No, appropriations before you augmented because this is a cross border and the tenor
or text of the Constitution is quite clear as far as I am concerned. It says here, "The
power to augment may only be made to increase any item in the General
Appropriations Law for their respective offices." Did you not feel constricted by this
provision?
SECRETARY ABAD:
Well, as the Constitution provides, the prohibition we felt was on the transfer of
appropriations, Your Honor. What we thought we did was to transfer savings which
was needed by the Commission to address deficiency in an existing item in both the
Commission as well as in the House of Representatives; thats how we
saw(interrupted)
JUSTICE BERSAMIN:
So your position as Secretary of Budget is that you could do that?
SECRETARY ABAD:
In an extreme instances because(interrupted)
JUSTICE BERSAMIN:
No, no, in all instances, extreme or not extreme, you could do that, thats your feeling.
SECRETARY ABAD:
Well, in that particular situation when the request was made by the Commission and
the House of Representatives, we felt that we needed to respond because we
felt(interrupted).183
The records show, indeed, that funds amounting to P143,700,000.00 and P250,000,000.00
were transferred under the DAP respectively to the COA184 and the House of
Page 104 of 378

Representatives.185 Those transfers of funds, which constituted cross-border

augmentations for being from the Executive to the COA and the House of
Representatives, are graphed as follows:186
AMOUNT
DATE (In thousand pesos)
OFFICE PURPOSE
RELEASED Reserve Releases
Imposed
Commission on IT Infrastructure 11/11/11 143,700
Audit Program and hiring of
additional litigation
experts
Congress Completion of the 07/23/12 207,034 250,000
House of construction of the (Savings of HOR)
Representatives Legislative Library and
Archives
Building/Congressional
e-library
The respondents further stated in their memorandum that the President "made
available" to the "Commission on Elections the savings of his department upon [its]
request for funds"187 This was another instance of a cross-border augmentation.
The respondents justified all the cross-border transfers thusly:
99. The Constitution does not prevent the President from transferring savings of his
department to another department upon the latters request, provided it is the recipient
department that uses such funds to augment its own appropriation. In such a case, the
President merely gives the other department access to public funds but he cannot
dictate how they shall be applied by that department whose fiscal autonomy is
guaranteed by the Constitution.188
In the oral arguments held on February 18, 2014, Justice Vicente V. Mendoza,
representing Congress, announced a different characterization of the cross-border
transfers of funds as in the nature of "aid" instead of "augmentation," viz:
HONORABLE MENDOZA:
The cross-border transfers, if Your Honors please, is not an application of the DAP.
What were these cross-border transfers? They are transfers of savings as defined in the
various General Appropriations Act. So, that makes it similar to the DAP, the use of
savings. There was a cross-border which appears to be in violation of Section 25,
paragraph 5 of Article VI, in the sense that the border was crossed. But never has it been
claimed that the purpose was to augment a deficient item in another department of the
government or agency of the government. The cross-border transfers, if Your Honors
please, were in the nature of [aid] rather than augmentations. Here is a government
entity separate and independent from the Executive Department solely in need of
public funds. The President is there 24 hours a day, 7 days a week. Hes in charge of the
whole operation although six or seven heads of government offices are given the power
to augment. Only the President stationed there and in effect in-charge and has the
Page 105 of 378
responsibility for the failure of any part of the government. You have election, for one
reason or another, the money is not enough to hold election. There would be chaos if no
money is given as an aid, not to augment, but as an aid to a department like COA. The
President is responsible in a way that the other heads, given the power to augment, are
not. So, he cannot very well allow this, if Your Honor please.189
JUSTICE LEONEN:
May I move to another point, maybe just briefly. I am curious that the position now, I
think, of government is that some transfers of savings is now considered to be, if Im not
mistaken, aid not augmentation. Am I correct in my hearing of your argument?
HONORABLE MENDOZA:
Thats our submission, if Your Honor, please.
JUSTICE LEONEN:
May I know, Justice, where can we situate this in the text of the Constitution? Where do
we actually derive the concepts that transfers of appropriation from one branch to the
other or what happened in DAP can be considered a said? What particular text in the
Constitution can we situate this?
HONORABLE MENDOZA:
There is no particular provision or statutory provision for that matter, if Your Honor
please. It is drawn from the fact that the Executive is the executive in-charge of the
success of the government.
JUSTICE LEONEN:
So, the residual powers labelled in Marcos v. Manglapus would be the basis for this
theory of the government?
HONORABLE MENDOZA:
Yes, if Your Honor, please.
JUSTICE LEONEN:
A while ago, Justice Carpio mentioned that the remedy is might be to go to Congress.
That there are opportunities and there have been opportunities of the President to
actually go to Congress and ask for supplemental budgets?
HONORABLE MENDOZA:
If there is time to do that, I would say yes.
JUSTICE LEONEN:
So, the theory of aid rather than augmentation applies in extra-ordinary situation?
HONORABLE MENDOZA:
Page 106 of 378

Very extra-ordinary situations.
JUSTICE LEONEN:
But Counsel, this would be new doctrine, in case?
HONORABLE MENDOZA:
Yes, if Your Honor please.190
Regardless of the variant characterizations of the cross-border transfers of funds, the

plain text of Section 25(5), supra, disallowing cross border transfers was disobeyed.
Cross-border transfers, whether as augmentation, or as aid, were prohibited under
Section 25(5), supra.
4. Sourcing the DAP from unprogrammed funds despite the original revenue targets
not having been exceeded was invalid
Funding under the DAP were also sourced from unprogrammed funds provided in the
GAAs for 2011, 2012,and 2013. The respondents stress, however, that the
unprogrammed funds were not brought under the DAP as savings, but as separate
sources of funds; and that, consequently, the release and use of unprogrammed funds
were not subject to the restrictions under Section 25(5), supra.
The documents contained in the Evidence Packets by the OSG have confirmed that the
unprogrammed funds were treated as separate sources of funds. Even so, the release
and use of the unprogrammed funds were still subject to restrictions, for, to start with,
the GAAs precisely specified the instances when the unprogrammed funds could be
released and the purposes for which they could be used.
The petitioners point out that a condition for the release of the unprogrammed funds
was that the revenue collections must exceed revenue targets; and that the release of the
unprogrammed funds was illegal because such condition was not met.191
The respondents disagree, holding that the release and use of the unprogrammed funds
under the DAP were in accordance with the pertinent provisions of the GAAs. In
particular, the DBM avers that the unprogrammed funds could be availed of when any
of the following three instances occur, to wit: (1) the revenue collections exceeded the
original revenue targets proposed in the BESFs submitted by the President to Congress;
(2) new revenues were collected or realized from sources not originally considered in
the BESFs; or(3) newly-approved loans for foreign assisted projects were secured, or
when conditions were triggered for other sources of funds, such as perfected loan
agreements for foreign-assisted projects.192 This view of the DBM was adopted by all
the respondents in their Consolidated Comment.193
The BESFs for 2011, 2012 and 2013 uniformly defined "unprogrammed appropriations"
as appropriations that provided standby authority to incur additional agency
obligations for priority PAPs when revenue collections exceeded targets, and when
additional foreign funds are generated.194 Contrary to the DBMs averment that there
were three instances when unprogrammed funds could be released, the BESFs
envisioned only two instances. The third mentioned by the DBM the collection of new
revenues from sources not originally considered in the BESFs was not included. This
meant that the collection of additional revenues from new sources did not warrant the
Page 107 of 378

release of the unprogrammed funds. Hence, even if the revenues not considered in the
BESFs were collected or generated, the basic condition that the revenue collections
should exceed the revenue targets must still be complied with in order to justify the
release of the unprogrammed funds.
The view that there were only two instances when the unprogrammed funds could be
released was bolstered by the following texts of the Special Provisions of the 2011 and
2012 GAAs, to wit:
2011 GAA
1. Release of Fund. The amounts authorized herein shall be released only when the
revenue collections exceed the original revenue targets submitted by the President of
the Philippines to Congress pursuant to Section 22, Article VII of the Constitution,
including savings generated from programmed appropriations for the year:
PROVIDED, That collections arising from sources not considered in the aforesaid
original revenue targets may be used to cover releases from appropriations in this
Fund: PROVIDED, FURTHER, That in case of newly approved loans for foreign-
assisted projects, the existence of a perfected loan agreement for the purpose shall be
sufficient basis for the issuance of a SARO covering the loan proceeds: PROVIDED,
FURTHERMORE, That if there are savings generated from the programmed
appropriations for the first two quarters of the year, the DBM may, subject to the
approval of the President, release the pertinent appropriations under the
Unprogrammed Fund corresponding to only fifty percent (50%) of the said savings net
of revenue shortfall: PROVIDED, FINALLY, That the release of the balance of the total
savings from programmed appropriations for the year shall be subject to fiscal
programming and approval of the President.
2012 GAA
1. Release of the Fund. The amounts authorized herein shall be released only when the
the Philippines to Congress pursuant to Section 22, Article VII of the Constitution:
PROVIDED, That collections arising from sources not considered in the aforesaid
original revenue targets may be used to cover releases from appropriations in this
Fund: PROVIDED, FURTHER, That in case of newly approved loans for foreign-
assisted projects, the existence of a perfected loan agreement for the purpose shall be
sufficient basis for the issuance of a SARO covering the loan proceeds.
As can be noted, the provisos in both provisions to the effect that "collections arising
from sources not considered in the aforesaid original revenue targets may be used to
cover releases from appropriations in this Fund" gave the authority to use such
additional revenues for appropriations funded from the unprogrammed funds. They
did not at all waive compliance with the basic requirement that revenue collections
must still exceed the original revenue targets.
In contrast, the texts of the provisos with regard to additional revenues generated from
newly-approved foreign loans were clear to the effect that the perfected loan agreement
would be in itself "sufficient basis" for the issuance of a SARO to release the funds but
only to the extent of the amount of the loan. In such instance, the revenue collections
need not exceed the revenue targets to warrant the release of the loan proceeds, and the
mere perfection of the loan agreement would suffice.
Page 108 of 378

It can be inferred from the foregoing that under these provisions of the GAAs the
additional revenues from sources not considered in the BESFs must be taken into
account in determining if the revenue collections exceeded the revenue targets. The text
of the relevant provision of the 2013 GAA, which was substantially similar to those of
the GAAs for 2011 and 2012, already made this explicit, thus:
1. Release of the Fund. The amounts authorized herein shall be released only when the
the Philippines to Congress pursuant to Section 22, Article VII of the Constitution,
including collections arising from sources not considered in the aforesaid original
revenue target, as certified by the BTr: PROVIDED, That in case of newly approved
loans for foreign-assisted projects, the existence of a perfected loan agreement for the
purpose shall be sufficient basis for the issuance of a SARO covering the loan proceeds.
Consequently, that there were additional revenues from sources not considered in the
revenue target would not be enough. The total revenue collections must still exceed the
original revenue targets to justify the release of the unprogrammed funds (other than
those from newly-approved foreign loans).
The present controversy on the unprogrammed funds was rooted in the correct
interpretation of the phrase "revenue collections should exceed the original revenue
targets." The petitioners take the phrase to mean that the total revenue collections must
exceed the total revenue target stated in the BESF, but the respondents understand the
phrase to refer only to the collections for each source of revenue as enumerated in the
BESF, with the condition being deemed complied with once the revenue collections
from a particular source already exceeded the stated target.
The BESF provided for the following sources of revenue, with the corresponding
revenue target stated for each source of revenue, to wit:
TAX REVENUES
Taxes on Net Income and Profits

Taxes on Property
Taxes on Domestic Goods and Services
General Sales, Turnover or VAT

Selected Excises on Goods
Selected Taxes on Services

Taxes on the Use of Goods or Property or Permission to Perform Activities
Other Taxes
Taxes on International Trade and Transactions
NON-TAX REVENUES
Fees and Charges

BTR Income
Government Services
Interest on NG Deposits
Interest on Advances to Government Corporations
Income from Investments
Page 109 of 378

Interest on Bond Holdings
Guarantee Fee
Gain on Foreign Exchange
NG Income Collected by BTr
Dividends on Stocks
NG Share from Airport Terminal Fee
NG Share from PAGCOR Income
NG Share from MIAA Profit
Privatization
Foreign Grants
Thus, when the Court required the respondents to submit a certification from the
Bureau of Treasury (BTr) to the effect that the revenue collections had exceeded the
original revenue targets,195 they complied by submitting certifications from the BTr and
Department of Finance (DOF) pertaining to only one identified source of revenue the
dividends from the shares of stock held by the Government in government-owned and
controlled corporations.
To justify the release of the unprogrammed funds for 2011, the OSG presented the
certification dated March 4, 2011 issued by DOF Undersecretary Gil S. Beltran, as
follows:
This is to certify that under the Budget for Expenditures and Sources of Financing for
2011, the programmed income from dividends from shares of stock in government-
owned and controlled corporations is 5.5 billion.
This is to certify further that based on the records of the Bureau of Treasury, the
National Government has recorded dividend income amounting to P23.8 billion as of 31
January 2011.196
For 2012, the OSG submitted the certification dated April 26, 2012 issued by National
Treasurer Roberto B. Tan, viz:
This is to certify that the actual dividend collections remitted to the National
Government for the period January to March 2012 amounted to P19.419 billion
compared to the full year program of P5.5 billion for 2012.197
And, finally, for 2013, the OSG presented the certification dated July 3, 2013 issued by
National Treasurer Rosalia V. De Leon, to wit:
This is to certify that the actual dividend collections remitted to the National
Government for the period January to May 2013 amounted to P12.438 billion compared
to the full year program of P10.0198 billion for 2013.
Moreover, the National Government accounted for the sale of the right to build and
operate the NAIA expressway amounting to P11.0 billion in June 2013.199
The certifications reflected that by collecting dividends amounting to P23.8 billion in

2011, P19.419 billion in 2012, and P12.438 billion in 2013 the BTr had exceeded only
the P5.5 billion in target revenues in the form of dividends from stocks in each of 2011
Page 110 of 378

and 2012, and only the P10 billion in target revenues in the form of dividends from
stocks in 2013.
However, the requirement that revenue collections exceed the original revenue targets
was to be construed in light of the purpose for which the unprogrammed funds were
incorporated in the GAAs as standby appropriations to support additional expenditures
for certain priority PAPs should the revenue collections exceed the resource targets
assumed in the budget or when additional foreign project loan proceeds were realized.
The unprogrammed funds were included in the GAAs to provide ready cover so as not
to delay the implementation of the PAPs should new or additional revenue sources be
realized during the year.200 Given the tenor of the certifications, the unprogrammed
funds were thus not yet supported by the corresponding resources.201
The revenue targets stated in the BESF were intended to address the funding
requirements of the proposed programmed appropriations. In contrast, the
unprogrammed funds, as standby appropriations, were to be released only when there
were revenues in excess of what the programmed appropriations required. As such, the
revenue targets should be considered as a whole, not individually; otherwise, we would
be dealing with artificial revenue surpluses. The requirement that revenue collections
must exceed revenue target should be understood to mean that the revenue collections
must exceed the total of the revenue targets stated in the BESF. Moreover, to release the
unprogrammed funds simply because there was an excess revenue as to one source of
revenue would be an unsound fiscal management measure because it would disregard
the budget plan and foster budget deficits, in contravention of the Governments
surplus budget policy.202
We cannot, therefore, subscribe to the respondents view.
5. Equal protection, checks and balances, and public accountability challenges
The DAP is further challenged as violative of the Equal Protection Clause, the system of
checks and balances, and the principle of public accountability.
With respect to the challenge against the DAP under the Equal Protection
Clause,203 Luna argues that the implementation of the DAP was "unfair as it [was]
selective" because the funds released under the DAP was not made available to all the
legislators, with some of them refusing to avail themselves of the DAP funds, and
others being unaware of the availability of such funds. Thus, the DAP practised "undue
favoritism" in favor of select legislators in contravention of the Equal Protection Clause.
Similarly, COURAGE contends that the DAP violated the Equal Protection Clause
because no reasonable classification was used in distributing the funds under the DAP;
and that the Senators who supposedly availed themselves of said funds were differently
treated as to the amounts they respectively received.
Anent the petitioners theory that the DAP violated the system of checks and balances,
Luna submits that the grant of the funds under the DAP to some legislators forced their
silence about the issues and anomalies surrounding the DAP. Meanwhile, Belgica
stresses that the DAP, by allowing the legislators to identify PAPs, authorized them to
take part in the implementation and execution of the GAAs, a function that exclusively
belonged to the Executive; that such situation constituted undue and unjustified
legislative encroachment in the functions of the Executive; and that the President
arrogated unto himself the power of appropriation vested in Congress because NBC
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No. 541 authorized the use of the funds under the DAP for PAPs not considered in the
2012 budget.
Finally, the petitioners insist that the DAP was repugnant to the principle of public
accountability enshrined in the Constitution,204 because the legislators relinquished the
power of appropriation to the Executive, and exhibited a reluctance to inquire into the
legality of the DAP.
The OSG counters the challenges, stating that the supposed discrimination in the release
of funds under the DAP could be raised only by the affected Members of Congress
themselves, and if the challenge based on the violation of the Equal Protection Clause
was really against the constitutionality of the DAP, the arguments of the petitioners
should be directed to the entitlement of the legislators to the funds, not to the
proposition that all of the legislators should have been given such entitlement.
The challenge based on the contravention of the Equal Protection Clause, which focuses
on the release of funds under the DAP to legislators, lacks factual and legal basis. The
allegations about Senators and Congressmen being unaware of the existence and
implementation of the DAP, and about some of them having refused to accept such
funds were unsupported with relevant data. Also, the claim that the Executive
discriminated against some legislators on the ground alone of their receiving less than
the others could not of itself warrant a finding of contravention of the Equal Protection
Clause. The denial of equal protection of any law should be an issue to be raised only
by parties who supposedly suffer it, and, in these cases, such parties would be the few
legislators claimed to have been discriminated against in the releases of funds under the
DAP. The reason for the requirement is that only such affected legislators could
properly and fully bring to the fore when and how the denial of equal protection
occurred, and explain why there was a denial in their situation. The requirement was
not met here. Consequently, the Court was not put in the position to determine if there
was a denial of equal protection. To have the Court do so despite the inadequacy of the
showing of factual and legal support would be to compel it to speculate, and the
outcome would not do justice to those for whose supposed benefit the claim of denial of
equal protection has been made.
The argument that the release of funds under the DAP effectively stayed the hands of
the legislators from conducting congressional inquiries into the legality and propriety of
the DAP is speculative. That deficiency eliminated any need to consider and resolve the
argument, for it is fundamental that speculation would not support any proper judicial
determination of an issue simply because nothing concrete can thereby be gained. In
order to sustain their constitutional challenges against official acts of the Government,
the petitioners must discharge the basic burden of proving that the constitutional
infirmities actually existed.205 Simply put, guesswork and speculation cannot overcome
the presumption of the constitutionality of the assailed executive act.
We do not need to discuss whether or not the DAP and its implementation through the
various circulars and memoranda of the DBM transgressed the system of checks and
balances in place in our constitutional system. Our earlier expositions on the DAP and
its implementing issuances infringing the doctrine of separation of powers effectively
addressed this particular concern.
Anent the principle of public accountability being transgressed because the adoption
and implementation of the DAP constituted an assumption by the Executive of
Congress power of appropriation, we have already held that the DAP and its
Page 112 of 378
implementing issuances were policies and acts that the Executive could properly adopt
and do in the execution of the GAAs to the extent that they sought to implement
strategies to ramp up or accelerate the economy of the country.
6. Doctrine of operative fact was applicable
After declaring the DAP and its implementing issuances constitutionally infirm, we
must now deal with the consequences of the declaration.
Article 7 of the Civil Code provides:
Article 7. Laws are repealed only by subsequent ones, and their violation or non-
observance shall not be excused by disuse, or custom or practice to the contrary.
When the courts declared a law to be inconsistent with the Constitution, the former
shall be void and the latter shall govern.
Administrative or executive acts, orders and regulations shall be valid only when they
are not contrary to the laws or the Constitution.
A legislative or executive act that is declared void for being unconstitutional cannot
give rise to any right or obligation.206 However, the generality of the rule makes us
ponder whether rigidly applying the rule may at times be impracticable or wasteful.
Should we not recognize the need to except from the rigid application of the rule the
instances in which the void law or executive act produced an almost irreversible result?
The need is answered by the doctrine of operative fact. The doctrine, definitely not a
novel one, has been exhaustively explained in De Agbayani v. Philippine National
Bank:207
The decision now on appeal reflects the orthodox view that an unconstitutional act, for
that matter an executive order or a municipal ordinance likewise suffering from that
infirmity, cannot be the source of any legal rights or duties. Nor can it justify any official
act taken under it. Its repugnancy to the fundamental law once judicially declared
results in its being to all intents and purposes a mere scrap of paper. As the new Civil
Code puts it: When the courts declare a law to be inconsistent with the Constitution,
the former shall be void and the latter shall govern. Administrative or executive acts,
orders and regulations shall be valid only when they are not contrary to the laws of the
Constitution. It is understandable why it should be so, the Constitution being supreme
and paramount. Any legislative or executive act contrary to its terms cannot survive.
Such a view has support in logic and possesses the merit of simplicity. It may not
however be sufficiently realistic. It does not admit of doubt that prior to the declaration
of nullity such challenged legislative or executive act must have been in force and had
to be complied with. This is so as until after the judiciary, in an appropriate case,
declares its invalidity, it is entitled to obedience and respect. Parties may have acted
under it and may have changed their positions. What could be more fitting than that in
a subsequent litigation regard be had to what has been done while such legislative or
executive act was in operation and presumed to be valid in all respects. It is now
accepted as a doctrine that prior to its being nullified, its existence as a fact must be
reckoned with. This is merely to reflect awareness that precisely because the judiciary is
the governmental organ which has the final say on whether or not a legislative or
executive measure is valid, a period of time may have elapsed before it can exercise the
Page 113 of 378

power of judicial review that may lead to a declaration of nullity. It would be to deprive
the law of its quality of fairness and justice then, if there be no recognition of what had
transpired prior to such adjudication.
In the language of an American Supreme Court decision: The actual existence of a

statute, prior to such a determination [of unconstitutionality], is an operative fact and
may have consequences which cannot justly be ignored. The past cannot always be
erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity
may have to be considered in various aspects, with respect to particular relations,
individual and corporate, and particular conduct, private and official."
The doctrine of operative fact recognizes the existence of the law or executive act prior
to the determination of its unconstitutionality as an operative fact that produced
consequences that cannot always be erased, ignored or disregarded. In short, it nullifies
the void law or executive act but sustains its effects. It provides an exception to the
general rule that a void or unconstitutional law produces no effect.208 But its use must
be subjected to great scrutiny and circumspection, and it cannot be invoked to validate
an unconstitutional law or executive act, but is resorted to only as a matter of equity
and fair play.209 It applies only to cases where extraordinary circumstances exist, and
only when the extraordinary circumstances have met the stringent conditions that will
permit its application.
We find the doctrine of operative fact applicable to the adoption and implementation of
the DAP. Its application to the DAP proceeds from equity and fair play. The
consequences resulting from the DAP and its related issuances could not be ignored or
could no longer be undone.
To be clear, the doctrine of operative fact extends to a void or unconstitutional executive

act. The term executive act is broad enough to include any and all acts of the Executive,
including those that are quasi legislative and quasi-judicial in nature. The Court held so
in Hacienda Luisita, Inc. v. Presidential Agrarian Reform Council:210
Nonetheless, the minority is of the persistent view that the applicability of the operative
fact doctrine should be limited to statutes and rules and regulations issued by the
executive department that are accorded the same status as that of a statute or those
which are quasi-legislative in nature. Thus, the minority concludes that the phrase
executive act used in the case of De Agbayani v. Philippine National Bank refers only
to acts, orders, and rules and regulations that have the force and effect of law. The
minority also made mention of the Concurring Opinion of Justice Enrique Fernando in
Municipality of Malabang v. Benito, where it was supposedly made explicit that the
operative fact doctrine applies to executive acts, which are ultimately quasi-legislative
in nature.
We disagree. For one, neither the De Agbayani case nor the Municipality of Malabang
case elaborates what executive act mean. Moreover, while orders, rules and
regulations issued by the President or the executive branch have fixed definitions and
meaning in the Administrative Code and jurisprudence, the phrase executive act does
not have such specific definition under existing laws. It should be noted that in the
cases cited by the minority, nowhere can it be found that the term executive act is
confined to the foregoing. Contrarily, the term executive act is broad enough to
encompass decisions of administrative bodies and agencies under the executive
department which are subsequently revoked by the agency in question or nullified by
the Court.
Page 114 of 378
A case in point is the concurrent appointment of Magdangal B. Elma (Elma) as

Chairman of the Presidential Commission on Good Government (PCGG) and as Chief
Presidential Legal Counsel (CPLC) which was declared unconstitutional by this Court
in Public Interest Center, Inc. v. Elma. In said case, this Court ruled that the concurrent
appointment of Elma to these offices is in violation of Section 7, par. 2, Article IX-B of
the 1987 Constitution, since these are incompatible offices. Notably, the appointment of
Elma as Chairman of the PCGG and as CPLC is, without a question, an executive act.
Prior to the declaration of unconstitutionality of the said executive act, certain acts or
transactions were made in good faith and in reliance of the appointment of Elma which
cannot just be set aside or invalidated by its subsequent invalidation.
In Tan v. Barrios, this Court, in applying the operative fact doctrine, held that despite
the invalidity of the jurisdiction of the military courts over civilians, certain operative
facts must be acknowledged to have existed so as not to trample upon the rights of the
accused therein. Relevant thereto, in Olaguer v. Military Commission No. 34, it was
ruled that military tribunals pertain to the Executive Department of the Government
and are simply instrumentalities of the executive power, provided by the legislature for
the President as Commander-in-Chief to aid him in properly commanding the army
and navy and enforcing discipline therein, and utilized under his orders or those of his
authorized military representatives.
Evidently, the operative fact doctrine is not confined to statutes and rules and
regulations issued by the executive department that are accorded the same status as
that of a statute or those which are quasi-legislative in nature.
Even assuming that De Agbayani initially applied the operative fact doctrine only to
executive issuances like orders and rules and regulations, said principle can nonetheless
be applied, by analogy, to decisions made by the President or the agencies under the
executive department. This doctrine, in the interest of justice and equity, can be applied
liberally and in a broad sense to encompass said decisions of the executive branch. In
keeping with the demands of equity, the Court can apply the operative fact doctrine to
acts and consequences that resulted from the reliance not only on a law or executive act
which is quasi-legislative in nature but also on decisions or orders of the executive
branch which were later nullified. This Court is not unmindful that such acts and
consequences must be recognized in the higher interest of justice, equity and fairness.
Significantly, a decision made by the President or the administrative agencies has to be

complied with because it has the force and effect of law, springing from the powers of
the President under the Constitution and existing laws. Prior to the nullification or
recall of said decision, it may have produced acts and consequences in conformity to
and in reliance of said decision, which must be respected. It is on this score that the
operative fact doctrine should be applied to acts and consequences that resulted from
the implementation of the PARC Resolution approving the SDP of HLI. (Bold
underscoring supplied for emphasis)
In Commissioner of Internal Revenue v. San Roque Power Corporation,211 the Court

likewise declared that "for the operative fact doctrine to apply, there must be a
legislative or executive measure, meaning a law or executive issuance." Thus, the
Court opined there that the operative fact doctrine did not apply to a mere
administrative practice of the Bureau of Internal Revenue, viz:
Under Section 246, taxpayers may rely upon a rule or ruling issued by the
Commissioner from the time the rule or ruling is issued up to its reversal by the
Page 115 of 378
Commissioner or this Court. The reversal is not given retroactive effect. This, in essence,
is the doctrine of operative fact. There must, however, be a rule or ruling issued by the
Commissioner that is relied upon by the taxpayer in good faith. A mere administrative
practice, not formalized into a rule or ruling, will not suffice because such a mere
administrative practice may not be uniformly and consistently applied. An
administrative practice, if not formalized as a rule or ruling, will not be known to the
general public and can be availed of only by those with informal contacts with the
government agency.
It is clear from the foregoing that the adoption and the implementation of the DAP and
its related issuances were executive acts. The DAP itself, as a policy, transcended a
merely administrative practice especially after the Executive, through the DBM,
implemented it by issuing various memoranda and circulars. The pooling of savings
pursuant to the DAP from the allotments made available to the different agencies and
departments was consistently applied throughout the entire Executive. With the
Executive, through the DBM, being in charge of the third phase of the budget cycle the
budget execution phase, the President could legitimately adopt a policy like the DAP by
virtue of his primary responsibility as the Chief Executive of directing the national
economy towards growth and development. This is simply because savings could and
should be determined only during the budget execution phase.
As already mentioned, the implementation of the DAP resulted into the use of savings
pooled by the Executive to finance the PAPs that were not covered in the GAA, or that
did not have proper appropriation covers, as well as to augment items pertaining to
other departments of the Government in clear violation of the Constitution. To declare
the implementation of the DAP unconstitutional without recognizing that its prior
implementation constituted an operative fact that produced consequences in the real as
well as juristic worlds of the Government and the Nation is to be impractical and unfair.
Unless the doctrine is held to apply, the Executive as the disburser and the offices under
it and elsewhere as the recipients could be required to undo everything that they had
implemented in good faith under the DAP. That scenario would be enormously
burdensome for the Government. Equity alleviates such burden.
The other side of the coin is that it has been adequately shown as to be beyond debate
that the implementation of the DAP yielded undeniably positive results that enhanced
the economic welfare of the country. To count the positive results may be impossible,
but the visible ones, like public infrastructure, could easily include roads, bridges,
homes for the homeless, hospitals, classrooms and the like. Not to apply the doctrine of
operative fact to the DAP could literally cause the physical undoing of such worthy
results by destruction, and would result in most undesirable wastefulness.
Nonetheless, as Justice Brion has pointed out during the deliberations, the doctrine of
operative fact does not always apply, and is not always the consequence of every
declaration of constitutional invalidity. It can be invoked only in situations where the
nullification of the effects of what used to be a valid law would result in inequity and
injustice;212 but where no such result would ensue, the general rule that an
unconstitutional law is totally ineffective should apply.
In that context, as Justice Brion has clarified, the doctrine of operative fact can apply
only to the PAPs that can no longer be undone, and whose beneficiaries relied in good
faith on the validity of the DAP, but cannot apply to the authors, proponents and
implementors of the DAP, unless there are concrete findings of good faith in their favor
Page 116 of 378

by the proper tribunals determining their criminal, civil, administrative and other
liabilities.
WHEREFORE, the Court PARTIALLY GRANTS the petitions for certiorari and
prohibition; and DECLARES the following acts and practices under the Disbursement
Acceleration Program, National Budget Circular No. 541 and related executive
issuances UNCONSTITUTIONAL for being in violation of Section 25(5), Article VI of
the 1987 Constitution and the doctrine of separation of powers, namely:
(a) The withdrawal of unobligated allotments from the implementing agencies,

and the declaration of the withdrawn unobligated allotments and unreleased
appropriations as savings prior to the end of the fiscal year and without
complying with the statutory definition of savings contained in the General
Appropriations Acts;
(b) The cross-border transfers of the savings of the Executive to augment the
appropriations of other offices outside the Executive; and
(c) The funding of projects, activities and programs that were not covered by any
appropriation in the General Appropriations Act.
The Court further DECLARES VOID the use of unprogrammed funds despite the
absence of a certification by the National Treasurer that the revenue collections
exceeded the revenue targets for non-compliance with the conditions provided in the
relevant General Appropriations Acts.
G.R. No. 174433 February 24, 2014
PHILIPPINE NATIONAL BANK, Petitioner, vs. SPOUSES ENRIQUE MANALO &

ROSALINDA JACINTO, ARNOLD J. MANALO, ARNEL J. MANALO, and ARMA J.
MANALO, Respondents.
DECISION
Although banks are free to determine the rate of interest they could impose on their
borrowers, they can do so only reasonably, not arbitrarily. They may not take
advantage of the ordinary borrowers' lack of familiarity with banking procedures and
jargon. Hence, any stipulation on interest unilaterally imposed and increased by them
shall be struck down as violative of the principle of mutuality of contracts.
Antecedents
Respondent Spouses Enrique Manalo and Rosalinda Jacinto (Spouses Manalo) applied
for an All-Purpose Credit Facility in the amount of P1,000,000.00 with Philippine
National Bank (PNB) to finance the construction of their house. After PNB granted their
application, they executed a Real Estate Mortgage on November 3, 1993 in favor of PNB
over their property covered by Transfer Certificate of Title No. S- 23191 as security for
the loan.1 The credit facility was renewed and increased several times over the years.
On September 20, 1996, the credit facility was again renewed for P7,000,000.00. As a
consequence, the parties executed a Supplement to and Amendment of Existing Real
Estate Mortgage whereby the property covered by TCT No. 171859 was added as
security for the loan.
Page 117 of 378

The additional security was registered in the names of respondents Arnold, Arnel,
Anthony, and Arma, all surnamed Manalo, who were their children.2
It was agreed upon that the Spouses Manalo would make monthly payments on the
interest. However, PNB claimed that their last recorded payment was made on
December, 1997. Thus, PNB sent a demand letter to them on their overdue account and
required them to settle the account. PNB sent another demand letter because they failed
to heed the first demand.3
After the Spouses Manalo still failed to settle their unpaid account despite the two
demand letters, PNB foreclose the mortgage. During the foreclosure sale, PNB was the
highest bidder for P15,127,000.00 of the mortgaged properties of the Spouses Manalo.
The sheriff issued to PNB the Certificate of Sale dated November 13, 2000.4
After more than a year after the Certificate of Sale had been issued to PNB, the Spouses
Manalo instituted this action for the nullification of the foreclosure proceedings and
damages. They alleged that they had obtained a loan for P1,000,000.00 from a certain
Benito Tan upon arrangements made by Antoninus Yuvienco, then the General
Manager of PNBs Bangkal Branch where they had transacted; that they had been made
to understand and had been assured that the P1,000,000.00 would be used to update
their account, and that their loan would be restructured and converted into a long-term
loan;5 that they had been surprised to learn, therefore, that had been declared in default
of their obligations, and that the mortgage on their property had been foreclosed and
their property had been sold; and that PNB did not comply with Section 3 of Act No.
3135, as amended.6
PNB and Antoninus Yuvienco countered that the P1,000,000.00 loan obtained by the
Spouses Manalo from Benito Tan had been credited to their account; that they did not
make any assurances on the restructuring and conversion of the Spouses Manalos loan
into a long-term one;7 that PNBs right to foreclose the mortgage had been clear
especially because the Spouses Manalo had not assailed the validity of the loans and of
the mortgage; and that the Spouses Manalo did not allege having fully paid their
indebtedness.8
Ruling ofthe RTC
After trial, the RTC rendered its decision in favor of PNB, holding thusly:
In resolving this present case, one of the most significant matters the court has noted is
that while during the pre-trial held on 8 September 2003, plaintiff-spouses Manalo with
the assistance counsel had agreed to stipulate that defendants had the right to foreclose
upon the subject properties and that the plaintiffs[] main thrust was to prove that the
foreclosure proceedings were invalid, in the course of the presentation of their evidence,
they modified their position and claimed [that] the loan document executed were
contracts of adhesion which were null and void because they were prepared entirely
under the defendant banks supervision. They also questioned the interest rates and
penalty charges imposed arguing that these were iniquitous, unconscionable and
therefore likewise void.
Not having raised the foregoing matters as issues during the pre-trial, plaintiff-spouses
are presumably estopped from allowing these matters to serve as part of their evidence,
more so because at the pre-trial they expressly recognized the defendant banks right to
foreclose upon the subject property (See Order, pp. 193-195).
Page 118 of 378

However, considering that the defendant bank did not interpose any objection to these
matters being made part of plaintiffs evidence so much so that their memorandum
contained discussions rebutting plaintiff spouses arguments on these issues, the court
must necessarily include these matters in the resolution of the present case.9
The RTC held, however, that the Spouses Manalos "contract of adhesion" argument
was unfounded because they had still accepted the terms and conditions of their credit
agreement with PNB and had exerted efforts to pay their obligation;10 that the Spouses
Manalo were now estopped from questioning the interest rates unilaterally imposed by
PNB because they had paid at those rates for three years without protest;11 and that
their allegation about PNB violating the notice and publication requirements during the
foreclosure proceedings was untenable because personal notice to the mortgagee was
not required under Act No. 3135.12
The Spouses Manalo appealed to the CA by assigning a singular error, as follows:
THE COURT A QUO SERIOUSLY ERRED IN DISMISSING PLAINTIFF-

APPELLANTS COMPLAINT FOR BEING (sic) LACK OF MERIT
NOTWITHSTANDING THE FACT THAT IT WAS CLEARLY SHOWN THAT THE
FORECLOSURE PROCEEDINGS WAS INVALID AND ILLEGAL.13
The Spouses Manalo reiterated their arguments, insisting that: (1) the credit agreements
they entered into with PNB were contracts of adhesion;14 (2) no interest was due from
them because their credit agreements with PNB did not specify the interest rate, and
PNB could not unilaterally increase the interest rate without first informing them; 15 and
(3) PNB did not comply with the notice and publication requirements under Section 3 of
Act 3135.16On the other hand, PNB and Yuvienco did not file their briefs despite
notice.17
Ruling ofthe CA
In its decision promulgated on March 28, 2006,18 the CA affirmed the decision of the
RTC insofar as it upheld the validity of the foreclosure proceedings initiated by PNB,
but modified the Spouses Manalos liability for interest. It directed the RTC to see to the
recomputation of their indebtedness, and ordered that should the recomputed amount
be less than the winning bid in the foreclosure sale, the difference should be
immediately returned to the Spouses Manalo.
The CA found it necessary to pass upon the issues of PNBs failure to specify the
applicable interest and the lack of mutuality in the execution of the credit agreements
considering the earlier cited observation made by the trial court in its decision.
Applying Article 1956 of the Civil Code, the CA held that PNBs failure to indicate the
rate of interest in the credit agreements would not excuse the Spouses Manalo from
their contractual obligation to pay interest to PNB because of the express agreement to
pay interest in the credit agreements. Nevertheless, the CA ruled that PNBs
inadvertence to specify the interest rate should be construed against it because the
credit agreements were clearly contracts of adhesion due to their having been prepared
solely by PNB.
The CA further held that PNB could not unilaterally increase the rate of interest
considering that the credit agreements specifically provided that prior notice was
required before an increase in interest rate could be effected. It found that PNB did not
adduce proof showing that the Spouses Manalo had been notified before the increased
Page 119 of 378

interest rates were imposed; and that PNBs unilateral imposition of the increased
interest rate was null and void for being violative of the principle of mutuality of
contracts enshrined in Article 1308 of the Civil Code. Reinforcing its "contract of
adhesion" conclusion, it added that the Spouses Manalos being in dire need of money
rendered them to be not on an equal footing with PNB. Consequently, the CA, relying
on Eastern Shipping Lines, v. Court of Appeals,19 fixed the interest rate to be paid by the
Spouses Manalo at 12% per annum, computed from their default.
The CA deemed to be untenable the Spouses Manalos allegation that PNB had failed to
comply with the requirements for notice and posting under Section 3 of Act 3135. The
CA stated that Sheriff Norberto Magsajos testimony was sufficient proof of his posting
of the required Notice of Sheriffs Sale in three public places; that the notarized
Affidavit of Publication presented by Sheriff Magsajo was prima facie proof of the
publication of the notice; and that the Affidavit of Publication enjoyed the presumption
of regularity, such that the Spouses Manalos bare allegation of non-publication without
other proof did not overcome the presumption.
On August 29, 2006, the CA denied the Spouses Manalos Motion for Reconsideration
and PNBs Partial Motion for Reconsideration.20
Issues
In its Memorandum,21 PNB raises the following issues:
WHETHER OR NOT THE COURT OF APPEALS WAS CORRECT IN NULLIFYING

THE INTEREST RATES IMPOSED ON RESPONDENT SPOUSES LOAN AND IN
FIXING THE SAME AT TWELVE PERCENT (12%) FROM DEFAULT, DESPITE THE
FACT THAT (i) THE SAME WAS RAISED BY THE RESPONDENTS ONLY FOR THE
FIRST TIME ON APPEAL (ii) IT WAS NEVER PART OF THEIR COMPLAINT (iii)
WAS EXLUDED AS AN ISSUE DURING PRE-TRIAL, AND WORSE, (iv) THERE WAS
NO FORMALLY OFFERED PERTAINING TO THE SAME DURING TRIAL.
II
WHETHER OR NOT THE COURT OF APPEALS CORRECTLY RULED THAT THERE

WAS NO MUTUALITY OF CONSENT IN THE IMPOSITION OF INTEREST RATES
ON THE RESPONDENT SPOUSES LOAN DESPITE THE EXISTENCE OF FACTS
AND CIRCUMSTANCES CLEARLY SHOWING RESPONDENTS ASSENT TO THE
RATES OF INTEREST SO IMPOSED BY PNB ON THE LOAN.
Anent the first issue, PNB argues that by passing upon the issue of the validity of the
interest rates, and in nullifying the rates imposed on the Spouses Manalo, the CA
decided the case in a manner not in accord with Section 15, Rule 44 of the Rules of
Court, which states that only questions of law or fact raised in the trial court could be
assigned as errors on appeal; that to allow the Spouses Manalo to raise an issue for the
first time on appeal would "offend the basic rules of fair play, justice and due
process;"22 that the resolution of the CA was limited to the issues agreed upon by the
parties during pre-trial;23 that the CA erred in passing upon the validity of the interest
rates inasmuch as the Spouses Manalo did not present evidence thereon; and that the
Judicial Affidavit of Enrique Manalo, on which the CA relied for its finding, was not
Page 120 of 378

offered to prove the invalidity of the interest rates and was, therefore, inadmissible for
that purpose.24
As to the substantive issues, PNB claims that the Spouses Manalos continuous payment
of interest without protest indicated their assent to the interest rates imposed, as well as
to the subsequent increases of the rates; and that the CA erred in declaring that the
interest rates and subsequent increases were invalid for lack of mutuality between the
contracting parties.
Ruling
1. Procedural Issue
Contrary to PNBs argument, the validity of the interest rates and of the increases, and
on the lack of mutuality between the parties were not raised by the Spouses Manalos
for the first time on appeal. Rather, the issues were impliedly raised during the trial
itself, and PNBs lack of vigilance in voicing out a timely objection made that possible.
It appears that Enrique Manalos Judicial Affidavit introduced the issues of the validity
of the interest rates and the increases, and the lack of mutuality between the parties in
the following manner, to wit:
5. True to his words, defendant Yuvienco, after several days, sent us a document
through a personnel of defendant PNB, Bangkal, Makati City Branch, who
required me and my wife to affix our signature on the said document;
6. When the document was handed over me, I was able to know that it was a
Promissory Note which was in ready made form and prepared solely by the
defendant PNB;
xxxx
21. As above-noted, the rates of interest imposed by the defendant bank were
never the subject of any stipulation between us mortgagors and the defendant
PNB as mortgagee;
22. The truth of the matter is that defendant bank imposed rate of interest which
ranges from 19% to as high as 28% and which changes from time to time;
23. The irregularity, much less the invalidity of the imposition of iniquitous rates
of interest was aggravated by the fact that we were not informed, notified, nor
the same had our prior consent and acquiescence therefor. x x x25
PNB cross-examined Enrique Manalo upon his Judicial Affidavit. There is no showing
that PNB raised any objection in the course of the cross examination. 26 Consequently,
the RTC rightly passed upon such issues in deciding the case, and its having done so
was in total accord with Section 5, Rule 10 of the Rules of Court, which states:
Section 5. Amendment to conform to or authorize presentation of evidence. When

issues not raised by the pleadings are tried with the express or implied consent of the
parties, they shall be treated in all respects as if they had been raised in the pleadings.
Page 121 of 378

Such amendment of the pleadings as may be necessary to cause them to conform to the
evidence and to raise these issues may be made upon motion of any party at any time,
even after judgment; but failure to amend does not affect the result of the trial of these
issues. If evidence is objected to at the trial on the ground that it is not within the issues
made by the pleadings, the court may allow the pleadings to be amended and shall do
so with liberality if the presentation of the merits of the action and the ends of
substantial justice will be subserved thereby. The court may grant a continuance to
enable the amendment to be made.
In Bernardo Sr. v. Court of Appeals,27 we held that:
It is settled that even if the complaint be defective, but the parties go to trial thereon,
and the plaintiff, without objection, introduces sufficient evidence to constitute the
particular cause of action which it intended to allege in the original complaint, and the
defendant voluntarily produces witnesses to meet the cause of action thus established,
an issue is joined as fully and as effectively as if it had been previously joined by the
most perfect pleadings. Likewise, when issues not raised by the pleadings are tried by
express or implied consent of the parties, they shall be treated in all respects as if they
had been raised in the pleadings.
The RTC did not need to direct the amendment of the complaint by the Spouses
Manalo. Section 5, Rule 10 of the Rules of Court specifically declares that the "failure to
amend does not affect the result of the trial of these issues." According to Talisay-Silay
Milling Co., Inc. v. Asociacion de Agricultores de Talisay-Silay, Inc.:28
The failure of a party to amend a pleading to conform to the evidence adduced during
trial does not preclude an adjudication by the court on the basis of such evidence which
may embody new issues not raised in the pleadings, or serve as a basis for a higher
award of damages. Although the pleading may not have been amended to conform to
the evidence submitted during trial, judgment may nonetheless be rendered, not simply
on the basis of the issues alleged but also on the basis of issues discussed and the
assertions of fact proved in the course of trial. The court may treat the pleading as if it
had been amended to conform to the evidence, although it had not been actually so
amended. Former Chief Justice Moran put the matter in this way:
When evidence is presented by one party, with the expressed or implied consent of the
adverse party, as to issues not alleged in the pleadings, judgment may be rendered
validly as regards those issues, which shall be considered as if they have been raised in
the pleadings. There is implied, consent to the evidence thus presented when the
adverse party fails to object thereto." (Emphasis supplied)
Clearly, a court may rule and render judgment on the basis of the evidence before it
even though the relevant pleading had not been previously amended, so long as no
surprise or prejudice is thereby caused to the adverse party. Put a little differently, so
long as the basic requirements of fair play had been met, as where litigants were given
full opportunity to support their respective contentions and to object to or refute each
other's evidence, the court may validly treat the pleadings as if they had been amended
to conform to the evidence and proceed to adjudicate on the basis of all the evidence
before it.
There is also no merit in PNBs contention that the CA should not have considered and
ruled on the issue of the validity of the interest rates because the Judicial Affidavit of
Enrique Manalo had not been offered to prove the same but only "for the purpose of
Page 122 of 378
identifying his affidavit."29 As such, the affidavit was inadmissible to prove the nullity
of the interest rates.
We do not agree.
Section 5, Rule 10 of the Rules of Court is applicable in two situations. The first is when
evidence is introduced on an issue not alleged in the pleadings and no objection is
interposed by the adverse party. The second is when evidence is offered on an issue not
alleged in the pleadings but an objection is raised against the offer.30 This case comes
under the first situation. Enrique Manalos Judicial Affidavit would introduce the very
issues that PNB is now assailing. The question of whether the evidence on such issues
was admissible to prove the nullity of the interest rates is an entirely different matter.
The RTC accorded credence to PNBs evidence showing that the Spouses Manalo had
been paying the interest imposed upon them without protest. On the other hand, the
CAs nullification of the interest rates was based on the credit agreements that the
Spouses Manalo and PNB had themselves submitted.
Based on the foregoing, the validity of the interest rates and their increases, and the lack
of mutuality between the parties were issues validly raised in the RTC, giving the
Spouses Manalo every right to raise them in their appeal to the CA. PNBs contention
was based on its wrong appreciation of what transpired during the trial. It is also
interesting to note that PNB did not itself assail the RTCs ruling on the issues obviously
because the RTC had decided in its favor. In fact, PNB did not even submit its
appellees brief despite notice from the CA.
2. Substantive Issue
The credit agreement executed succinctly stipulated that the loan would be subjected to
interest at a rate "determined by the Bank to be its prime rate plus applicable spread,
prevailing at the current month."31 This stipulation was carried over to or adopted by
the subsequent renewals of the credit agreement. PNB thereby arrogated unto itself the
sole prerogative to determine and increase the interest rates imposed on the Spouses
Manalo. Such a unilateral determination of the interest rates contravened the principle
of mutuality of contracts embodied in Article 1308 of the Civil Code.32
The Court has declared that a contract where there is no mutuality between the parties
partakes of the nature of a contract of adhesion,33 and any obscurity will be construed
against the party who prepared the contract, the latter being presumed the stronger
party to the agreement, and who caused the obscurity.34 PNB should then suffer the
consequences of its failure to specifically indicate the rates of interest in the credit
agreement. We spoke clearly on this in Philippine Savings Bank v. Castillo,35 to wit:
The unilateral determination and imposition of the increased rates is violative of the
principle of mutuality of contracts under Article 1308 of the Civil Code, which provides
that [t]he contract must bind both contracting parties; its validity or compliance cannot
be left to the will of one of them. A perusal of the Promissory Note will readily show
that the increase or decrease of interest rates hinges solely on the discretion of
petitioner. It does not require the conformity of the maker before a new interest rate
could be enforced. Any contract which appears to be heavily weighed in favor of one of
the parties so as to lead to an unconscionable result, thus partaking of the nature of a
contract of adhesion, is void. Any stipulation regarding the validity or compliance of
the contract left solely to the will of one of the parties is likewise invalid. (Emphasis
supplied)
Page 123 of 378
PNB could not also justify the increases it had effected on the interest rates by citing the
fact that the Spouses Manalo had paid the interests without protest, and had renewed
the loan several times. We rule that the CA, citing Philippine National Bank v. Court of
Appeals,36 rightly concluded that "a borrower is not estopped from assailing the
unilateral increase in the interest made by the lender since no one who receives a
proposal to change a contract, to which he is a party, is obliged to answer the same and
said partys silence cannot be construed as an acceptance thereof."37
Lastly, the CA observed, and properly so, that the credit agreements had explicitly
provided that prior notice would be necessary before PNB could increase the interest
rates. In failing to notify the Spouses Manalo before imposing the increased rates of
interest, therefore, PNB violated the stipulations of the very contract that it had
prepared. Hence, the varying interest rates imposed by PNB have to be vacated and
declared null and void, and in their place an interest rate of 12% per annum computed
from their default is fixed pursuant to the ruling in Eastern Shipping Lines, Inc. v. Court
of Appeals.38
The CAs directive to PNB (a) to recompute the Spouses Manalos indebtedness under
the oversight of the RTC; and (b) to refund to them any excess of the winning bid
submitted during the foreclosure sale over their recomputed indebtedness was
warranted and equitable. Equally warranted and equitable was to make the amount to
be refunded, if any, bear legal interest, to be reckoned from the promulgation of the
CAs decision on March 28, 2006.39 Indeed, the Court said in Eastern Shipping Lines,
Inc. v. Court of Appeals40 that interest should be computed from the time of the judicial
or extrajudicial demand. However, this case presents a peculiar situation, the
peculiarity being that the Spouses Manalo did not demand interest either judicially or
extrajudicially. In the RTC, they specifically sought as the main reliefs the nullification
of the foreclosure proceedings brought by PNB, accounting of the payments they had
made to PNB, and the conversion of their loan into a long term one.41In its judgment,
the RTC even upheld the validity of the interest rates imposed by PNB. 42 In their
appellants brief, the Spouses Manalo again sought the nullification of the foreclosure
proceedings as the main relief.43 It is evident, therefore, that the Spouses Manalo made
no judicial or extrajudicial demand from which to reckon the interest on any amount to
be refunded to them. Such demand could only be reckoned from the promulgation of
the CAs decision because it was there that the right to the refund was first judicially
recognized. Nevertheless, pursuant to Eastern Shipping Lines, Inc. v. Court of
Appeals,44 the amount to be refunded and the interest thereon should earn interest to be
computed from the finality of the judgment until the full refund has been made.
Anent the correct rates of interest to be applied on the amount to be refunded by PNB,
the Court, in Nacar v. Gallery Frames45 and S.C. Megaworld Construction v.
Parada,46 already applied Monetary Board Circular No. 799 by reducing the interest
rates allowed in judgments from 12% per annum to 6% per annum.47 According to
Nacar v. Gallery Frames, MB Circular No. 799 is applied prospectively, and judgments
that became final and executory prior to its effectivity on July 1, 2013 are not to be
disturbed but continue to be implemented applying the old legal rate of 12% per
annum. Hence, the old legal rate of 12% per annum applied to judgments becoming
final and executory prior to July 1, 2013, but the new rate of 6% per annum applies to
judgments becoming final and executory after said dater.
Page 124 of 378

Conformably with Nacar v. Gallery Frames and S.C. Megaworld Construction v.

Parada, therefore, the proper interest rates to be imposed in the present case are as
follows:
1. Any amount to be refunded to the Spouses Manalo shall bear interest of 12%
per annum computed from March 28, 2006, the date of the promulgation of the
CA decision, until June 30, 2013; and 6% per annum computed from July 1, 2013
until finality of this decision; and
2. The amount to be refunded and its accrued interest shall earn interest of 6%
per annum until full refund.
WHEREFORE, the Court AFFIRMS the decision promulgated by the Court of Appeals
on March 28, 2006 in CA-G.R. CV No. 84396, subject to the MODIFICATION that any
amount to be refunded to the respondents shall bear interest of 12% per annum
computed from March 28, 2006 until June 30, 2013, and 6% per annum computed from
July 1, 2013 until finality hereof; that the amount to be refunded and its accrued interest
shall earn interest at 6o/o per annum until full refund; and DIRECTS the petitioner to
pay the costs of suit.
G.R. No. 209287 February 3, 2015
MARIA CAROLINA P. ARAULLO, CHAIRPERSON, BAGONG ALYANSANG

MAKABAYAN; JUDY M. TAGUIWALO, PROFESSOR, UNIVERSITY OF THE
PHILIPPINES DILIMAN, CO-CHAIRPERSON, PAGBABAGO; HENRI KAHN,
CONCERNED CITIZENS MOVEMENT; REP. LUZ ILAGAN, GABRIELA
WOMEN'S PARTY REPRESENTATIVE; REP. TERRY L. RIDON, KABATAAN
PARTYLIST REPRESENTATIVE; REP. CARLOS ISAGANI ZARATE, BAYAN
MUNA PARTY-LIST REPRESENTATIVE; RENATO M. REYES, JR., SECRETARY
GENERAL OF BAYAN; MANUEL K. DAYRIT, CHAIRMAN, ANG KAPATIRAN
PARTY; VENCER MARI E. CRISOSTOMO, CHAIRPERSON, ANAKBAYAN;
VICTOR VILLANUEVA, CONVENOR, YOUTH ACT NOW, Petitioners, vs.
BENIGNO SIMEON C. AQUINO III, PRESIDENT OF THE REPUBLIC OF THE
PHILIPPINES; PAQUITO N. OCHOA, JR., EXECUTIVE SECRETARY; AND
FLORENCIO B. ABAD, SECRETARY OF THE DEPARTMENT OF BUDGET AND
MANAGEMENT, Respondents.
RESOLUTION
The Constitution must ever remain supreme. All must bow to the mandate of this law.
Expediency must not be allowed to sap its strength nor greed for power debase its
rectitude.1
Before the Court are the Motion for Reconsideration2 filed by the respondents, and the
Motion for Partial Reconsideration3 filed by the petitioners in G.R. No. 209442.
In their Motion for Reconsideration, the respondents assail the decision4 promulgated
on July 1 2014 upon the following procedural and substantive errors, viz:
PROCEDURAL
Page 125 of 378

WITHOUT AN ACTUAL CASE OR CONTROVERSY, ALLEGATIONS OF GRAVE

ABUSE OF DISCRETION ON THE PART OF ANY INSTRUMENTALITY OF THE
GOVERNMENT CANNOT CONFER ON THIS HONORABLE COURT THE POWER
TO DETERMINE THE CONSTITUTIONALITY OF THE DAP AND NBC NO. 541
II
PETITIONERS ACTIONS DO NOT PRESENT AN ACTUAL CASE OR

CONTROVERSY AND THEREFORE THIS HONORABLE COURT DID NOT
ACQUIRE JURISDICTION
III
PETITIONERS HAVE NEITHER BEEN INJURED NOR THREATENED WITH INJURY

AS A RESULT OF THE OPERATION OF THE DAP AND THEREFORE SHOULD
HAVE BEEN HELD TO HAVE NO STANDING TO BRING THESE SUITS FOR
CERTIORARI AND PROHIBITION
IV
NOR CAN PETITIONERS STANDING BE SUSTAINED ON THE GROUND THAT

THEY ARE BRINGING THESE SUITS AS CITIZENS AND AS TAXPAYERS
THE DECISION OF THIS HONORABLE COURT IS NOT BASED ON A

CONSIDERATION OF THE ACTUAL APPLICATIONS OF THE DAP IN 116 CASES
BUT SOLELY ON AN ABSTRACT CONSIDERATION OF NBC NO. 5415
SUBSTANTIVE
THE EXECUTIVE DEPARTMENT PROPERLY INTERPRETED "SAVINGS" UNDER

THE RELEVANT PROVISIONS OF THE GAA
II
ALL DAP APPLICATIONS HAVE APPROPRIATION COVER
III
THE PRESIDENT HAS AUTHORITY TO TRANSFER SAVINGS TO OTHER

DEPARTMENTS PURSUANT TO HIS CONSTITUTIONAL POWERS
IV
THE 2011, 2012 AND 2013 GAAS ONLY REQUIRE THAT REVENUE COLLECTIONS
FROM EACH SOURCE OF REVENUE ENUMERATED IN THE BUDGET PROPOSAL
MUST EXCEED THE CORRESPONDING REVENUE TARGET
Page 126 of 378

THE OPERATIVE FACT DOCTRINE WAS WRONGLY APPLIED6
The respondents maintain that the issues in these consolidated cases were
mischaracterized and unnecessarily constitutionalized; that the Courts interpretation of
savings can be overturned by legislation considering that savings is defined in the
General Appropriations Act (GAA), hence making savings a statutory issue;7 that the
withdrawn unobligated allotments and unreleased appropriations constitute savings
and may be used for augmentation;8 and that the Court should apply legally recognized
norms and principles, most especially the presumption of good faith, in resolving their
motion.9
On their part, the petitioners in G.R. No. 209442 pray for the partial reconsideration of
the decision on the ground that the Court thereby:
FAILED TO DECLARE AS UNCONSTITUTIONAL AND ILLEGAL ALL MONEYS

UNDER THE DISBURSEMENT ACCELERATION PROGRAM (DAP) USED FOR
ALLEGED AUGMENTATION OF APPROPRIATION ITEMS THAT DID NOT HAVE
ACTUAL DEFICIENCIES10
They submit that augmentation of items beyond the maximum amounts recommended
by the President for the programs, activities and projects (PAPs) contained in the
budget submitted to Congress should be declared unconstitutional.
Ruling of the Court
We deny the motion for reconsideration of the petitioners in G.R. No. 209442, and
partially grant the motion for reconsideration of the respondents.
The procedural challenges raised by the respondents, being a mere rehash of their
earlier arguments herein, are dismissed for being already passed upon in the assailed
decision.
As to the substantive challenges, the Court discerns that the grounds are also
reiterations of the arguments that were already thoroughly discussed and passed upon
in the assailed decision. However, certain declarations in our July 1, 2014 Decision are
modified in order to clarify certain matters and dispel further uncertainty.
1. The Courts power of judicial review
The respondents argue that the Executive has not violated the GAA because savings as
a conceptis an ordinary species of interpretation that calls for legislative, instead of
judicial, determination.11
This argument cannot stand.
The consolidated petitions distinctly raised the question of the constitutionality of the
acts and practices under the DAP, particularly their non-conformity with Section 25(5),
Article VI of the Constitution and the principles of separation of power and equal
protection. Hence, the matter is still entirely within the Courts competence, and its
determination does not pertain to Congress to the exclusion of the Court. Indeed, the
interpretation of the GAA and its definition of savings is a foremost judicial function.
This is because the power of judicial review vested in the Court is exclusive. As clarified
in Endencia and Jugo v. David:12
Page 127 of 378

Under our system of constitutional government, the Legislative department is assigned

the power to make and enact laws. The Executive department is charged with the
execution of carrying out of the provisions of said laws. But the interpretation and
application of said laws belong exclusively to the Judicial department. And this
authority to interpret and apply the laws extends to the Constitution. Before the courts
can determine whether a law is constitutional or not, it will have to interpret and
ascertain the meaning not only of said law, but also of the pertinent portion of the
Constitution in order to decide whether there is a conflict between the two, because if
there is, then the law will have to give way and has to be declared invalid and
unconstitutional.
xxxx
We have already said that the Legislature under our form of government is assigned the
task and the power to make and enact laws, but not to interpret them. This is more true
with regard to the interpretation of the basic law, the Constitution, which is not within
the sphere of the Legislative department. If the Legislature may declare what a law
means, or what a specific portion of the Constitution means, especially after the courts
have in actual case ascertain its meaning by interpretation and applied it in a decision,
this would surely cause confusion and instability in judicial processes and court
decisions. Under such a system, a final court determination of a case based on a judicial
interpretation of the law of the Constitution may be undermined or even annulled by a
subsequent and different interpretation of the law or of the Constitution by the
Legislative department. That would be neither wise nor desirable, besides being clearly
violative of the fundamental, principles of our constitutional system of government,
particularly those governing the separation of powers.13
The respondents cannot also ignore the glaring fact that the petitions primarily and
significantly alleged grave abuse of discretion on the part of the Executive in the
implementation of the DAP. The resolution of the petitions thus demanded the exercise
by the Court of its aforedescribed power of judicial review as mandated by the
Constitution.
2. Strict construction on the accumulation and utilization of savings
The decision of the Court has underscored that the exercise of the power to augment
shall be strictly construed by virtue of its being an exception to the general rule that the
funding of PAPs shall be limited to the amount fixed by Congress for the
purpose.14 Necessarily, savings, their utilization and their management will also be
strictly construed against expanding the scope of the power to augment.15 Such a strict
interpretation is essential in order to keep the Executive and other budget implementors
within the limits of their prerogatives during budget execution, and to prevent them
from unduly transgressing Congress power of the purse.16 Hence, regardless of the
perceived beneficial purposes of the DAP, and regardless of whether the DAP is viewed
as an effective tool of stimulating the national economy, the acts and practices under the
DAP and the relevant provisions of NBC No. 541 cited in the Decision should remain
illegal and unconstitutional as long as the funds used to finance the projects mentioned
therein are sourced from savings that deviated from the relevant provisions of the
GAA, as well as the limitation on the power to augment under Section 25(5), Article VI
of the Constitution. In a society governed by laws, even the best intentions must come
within the parameters defined and set by the Constitution and the law. Laudable
purposes must be carried out through legal methods.17
Page 128 of 378

Respondents contend, however, that withdrawn unobligated allotments and unreleased

appropriations under the DAP are savings that may be used for augmentation, and that
the withdrawal of unobligated allotments were made pursuant to Section 38 Chapter 5,
Book VI of the Administrative Code;18 that Section 38 and Section 39, Chapter 5, Book
VI of the Administrative Code are consistent with Section 25(5), Article VI of the
Constitution, which, taken together, constitute "a framework for which economic
managers of the nation may pull various levers in the form of authorization from
Congress to efficiently steer the economy towards the specific and general purposes of
the GAA;"19 and that the Presidents augmentation of deficient items is in accordance
with the standing authority issued by Congress through Section 39.
Section 25(5), Article VI of the Constitution states:
Section 25. x x x x x x x
5) No law shall be passed authorizing any transfer of appropriations; however, the

Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may,
by law, be authorized to augment any item in the general appropriations law for their
respective offices from savings in other items of their respective appropriations.
xxxx
Section 38 and Section 39, Chapter 5, Book VI of the Administrative Code provide:
Section 38. Suspension of Expenditure of Appropriations. - Except as otherwise

provided in the General Appropriations Act and whenever in his judgment the public
interest so requires, the President, upon notice to the head of office concerned, is
authorized to suspend or otherwise stop further expenditure of funds allotted for any
agency, or any other expenditure authorized in the General Appropriations Act, except
for personal services appropriations used for permanent officials and employees.
Section 39. Authority to Use Savings in Appropriations to Cover Deficits.Except as

otherwise provided in the General Appropriations Act, any savings in the regular
appropriations authorized in the General Appropriations Act for programs and projects
of any department, office or agency, may, with the approval of the President, be used to
cover a deficit in any other item of the regular appropriations: Provided, that the
creation of new positions or increase of salaries shall not be allowed to be funded from
budgetary savings except when specifically authorized by law: Provided, further, that
whenever authorized positions are transferred from one program or project to another
within the same department, office or agency, the corresponding amounts appropriated
for personal services are also deemed transferred, without, however increasing the total
outlay for personal services of the department, office or agency concerned. (Bold
In the Decision, we said that:
Unobligated allotments, on the other hand, were encompassed by the first part of the
definition of "savings" in the GAA, that is, as "portions or balances of any programmed
appropriation in this Act free from any obligation or encumbrance." But the first part of
the definition was further qualified by the three enumerated instances of when savings
would be realized. As such, unobligated allotments could not be indiscriminately
declared as savings without first determining whether any of the three instances
Page 129 of 378

existed. This signified that the DBMs withdrawal of unobligated allotments had
disregarded the definition of savings under the GAAs.
xxxx
The respondents rely on Section 38, Chapter 5, Book VI of the Administrative Code of
1987 to justify the withdrawal of unobligated allotments. But the provision authorized
only the suspension or stoppage of further expenditures, not the withdrawal of
unobligated allotments, to wit:
xxxx
Moreover, the DBM did not suspend or stop further expenditures in accordance with
Section 38, supra, but instead transferred the funds to other PAPs.20
We now clarify.
Section 38 refers to the authority of the President "to suspend or otherwise stop further
expenditure of funds allotted for any agency, or any other expenditure authorized in
the General Appropriations Act." When the President suspends or stops expenditure of
funds, savings are not automatically generated until it has been established that such
funds or appropriations are free from any obligation or encumbrance, and that the
work, activity or purpose for which the appropriation is authorized has been
completed, discontinued or abandoned.
It is necessary to reiterate that under Section 5.7 of NBC No. 541, the withdrawn
unobligated allotments may be:
5.7.1 Reissued for the original programs and projects of the agencies/OUs concerned,
from which the allotments were withdrawn;
5.7.2 Realigned to cover additional funding for other existing programs and projects of
the agency/OU; or
5.7.3 Used to augment existing programs and projects of any agency and to fund
priority programs and projects not considered in the 2012 budget but expected to be
started or implemented during the current year.
Although the withdrawal of unobligated allotments may have effectively resulted in the
suspension or stoppage of expenditures through the issuance of negative Special
Allotment Release Orders (SARO), the reissuance of withdrawn allotments to the
original programs and projects is a clear indication that the program or project from
which the allotments were withdrawn has not been discontinued or abandoned.
Consequently, as we have pointed out in the Decision, "the purpose for which the
withdrawn funds had been appropriated was not yet fulfilled, or did not yet cease to
exist, rendering the declaration of the funds as savings impossible."21 In this regard, the
withdrawal and transfer of unobligated allotments remain unconstitutional. But then,
whether the withdrawn allotments have actually been reissued to their original
programs or projects is a factual matter determinable by the proper tribunal.
Also, withdrawals of unobligated allotments pursuant to NBC No. 541 which shortened
the availability of appropriations for MOOE and capital outlays, and those which were
Page 130 of 378

transferred to PAPs that were not determined to be deficient, are still constitutionally
infirm and invalid.
At this point, it is likewise important to underscore that the reversion to the General
Fund of unexpended balances of appropriations savings included pursuant to
Section 28 Chapter IV, Book VI of the Administrative Code22does not apply to the
Constitutional Fiscal Autonomy Group (CFAG), which include the Judiciary, Civil
Service Commission, Commission on Audit, Commission on Elections, Commission on
Human Rights, and the Office of the Ombudsman. The reason for this is that the fiscal
autonomy enjoyed by the CFAG
x x x contemplates a guarantee of full flexibility to allocate and utilize their resources

with the wisdom and dispatch that their needs require. It recognizes the power and
authority to levy, assess and collect fees, fix rates of compensation not exceeding the
highest rates authorized by law for compensation and pay plans of the government and
allocate and disburse such sums as may be provided by law or prescribed by them in
the course of the discharge of their functions.
Fiscal autonomy means freedom from outside control. If the Supreme Court says it
needs 100 typewriters but DBM rules we need only 10 typewriters and sends its
recommendations to Congress without even informing us, the autonomy given by the
Constitution becomes an empty and illusory platitude.
The Judiciary, the Constitutional Commissions, and the Ombudsman must have the
independence and flexibility needed in the discharge of their constitutional duties. The
imposition of restrictions and constraints on the manner the independent constitutional
offices allocate and utilize the funds appropriated for their operations is anathema to
fiscal autonomy and violative not only of the express mandate of the Constitution but
especially as regards the Supreme Court, of the independence and separation of powers
upon which the entire fabric of our constitutional system is based. x x x23
On the other hand, Section 39 is evidently in conflict with the plain text of Section 25(5),
Article VI of the Constitution because it allows the President to approve the use of any
savings in the regular appropriations authorized in the GAA for programs and projects
of any department, office or agency to cover a deficit in any other item of the regular
appropriations. As such, Section 39 violates the mandate of Section 25(5) because the
latter expressly limits the authority of the President to augment an item in the GAA to
only those in his own Department out of the savings in other items of his own
Departments appropriations. Accordingly, Section 39 cannot serve as a valid authority
to justify cross-border transfers under the DAP. Augmentations under the DAP which
are made by the Executive within its department shall, however, remain valid so long
as the requisites under Section 25(5) are complied with.
In this connection, the respondents must always be reminded that the Constitution is
the basic law to which all laws must conform. No act that conflicts with the Constitution
can be valid.24 In Mutuc v. Commission on Elections,25 therefore, we have emphasized
the importance of recognizing and bowing to the supremacy of the Constitution:
x x x The concept of the Constitution as the fundamental law, setting forth the criterion
for the validity of any public act whether proceeding from the highest official or the
lowest functionary, is a postulate of our system of government. That is to manifest
fealty to the rule of law, with priority accorded to that which occupies the topmost rung
in the legal hierarchy. The three departments of government in the discharge of the
Page 131 of 378
functions with which it is [sic] entrusted have no choice but to yield obedience to its
commands. Whatever limits it imposes must be observed. Congress in the enactment of
statutes must ever be on guard lest the restrictions on its authority, whether substantive
or formal, be transcended. The Presidency in the execution of the laws cannot ignore or
disregard what it ordains. In its task of applying the law to the facts as found in
deciding cases, the judiciary is called upon to maintain inviolate what is decreed by the
fundamental law. Even its power of judicial review to pass upon the validity of the acts
of the coordinate branches in the course of adjudication is a logical corollary of this
basic principle that the Constitution is paramount. It overrides any governmental
measure that fails to live up to its mandates. Thereby there is a recognition of its being
the supreme law.
Also, in Biraogo v. Philippine Truth Commission of 2010,26 we have reminded that:

The role of the Constitution cannot be overlooked. It is through the Constitution that
the fundamental powers of government are established, limited and defined, and by
which these powers are distributed among the several departments. The Constitution is
the basic and paramount law to which all other laws must conform and to which all
persons, including the highest officials of the land, must defer. Constitutional doctrines
must remain steadfast no matter what may be the tides of time. It cannot be simply
made to sway and accommodate the call of situations and much more tailor itself to the
whims and caprices of government and the people who run it.27
3. The power to augment cannot be used to fund non-existent provisions in the

GAA
The respondents posit that the Court has erroneously invalidated all the DAP-funded
projects by overlooking the difference between an item and an allotment class, and by
concluding that they do not have appropriation cover; and that such error may induce
Congress and the Executive (through the DBM) to ensure that all items should have at
least P1 funding in order to allow augmentation by the President.28
At the outset, we allay the respondents apprehension regarding the validity of the DAP
funded projects. It is to be emphatically indicated that the Decision did not declare the
en masse invalidation of the 116 DAP-funded projects. To be sure, the Court recognized
the encouraging effects of the DAP on the countrys economy,29 and acknowledged its
laudable purposes, most especially those directed towards infrastructure development
and efficient delivery of basic social services.30 It bears repeating that the DAP is a
policy instrument that the Executive, by its own prerogative, may utilize to spur
economic growth and development.
Nonetheless, the Decision did find doubtful those projects that appeared to have no
appropriation cover under the relevant GAAs on the basis that: (1) the DAP funded
projects that originally did not contain any appropriation for some of the expense
categories (personnel, MOOE and capital outlay); and (2) the appropriation code and
the particulars appearing in the SARO did not correspond with the program specified
in the GAA. The respondents assert, however, that there is no constitutional
requirement for Congress to create allotment classes within an item. What is required is
for Congress to create items to comply with the line-item veto of the President.31
After a careful reexamination of existing laws and jurisprudence, we find merit in the
respondents argument.
Page 132 of 378

Indeed, Section 25(5) of the 1987 Constitution mentions of the term item that may be the
object of augmentation by the President, the Senate President, the Speaker of the House,
the Chief Justice, and the heads of the Constitutional Commissions. In Belgica v.
Ochoa,32 we said that an item that is the distinct and several part of the appropriation
bill, in line with the item-veto power of the President, must contain "specific
appropriations of money" and not be only general provisions, thus:
For the President to exercise his item-veto power, it necessarily follows that there exists
a proper "item" which may be the object of the veto. An item, as defined in the field of
appropriations, pertains to "the particulars, the details, the distinct and severable parts
of the appropriation or of the bill." In the case of Bengzon v. Secretary of Justice of the
Philippine Islands, the US Supreme Court characterized an item of appropriation as
follows:
An item of an appropriation bill obviously means an item which, in itself, is a specific

appropriation of money, not some general provision of law which happens to be put
into an appropriation bill. (Emphases supplied)
On this premise, it may be concluded that an appropriation bill, to ensure that the
President may be able to exercise his power of item veto, must contain "specific
appropriations of money" and notonly "general provisions" which provide for
parameters of appropriation.
Further, it is significant to point out that an item of appropriation must be an item

characterized by singular correspondence meaning an allocation of a specified
singular amount for a specified singular purpose, otherwise known as a "line-item."
This treatment not only allows the item to be consistent with its definition as a "specific
appropriation of money" but also ensures that the President may discernibly veto the
same. Based on the foregoing formulation, the existing Calamity Fund, Contingent
Fund and the Intelligence Fund, being appropriations which state a specified amount
for a specific purpose, would then be considered as "line-item" appropriations which
are rightfully subject to item veto. Likewise, it must be observed that an appropriation
may be validly apportioned into component percentages or values; however, it is
crucial that each percentage or value must be allocated for its own corresponding
purpose for such component to be considered as a proper line-item. Moreover, as
Justice Carpio correctly pointed out, a valid appropriation may even have several
related purposes that are by accounting and budgeting practice considered as one
purpose, e.g., MOOE (maintenance and other operating expenses), in which case the
related purposes shall be deemed sufficiently specific for the exercise of the Presidents
item veto power. Finally, special purpose funds and discretionary funds would equally
square with the constitutional mechanism of item-veto for as long as they follow the
rule on singular correspondence as herein discussed. x x x (Emphasis supplied)33
Accordingly, the item referred to by Section 25(5) of the Constitution is the last and
indivisible purpose of a program in the appropriation law, which is distinct from the
expense category or allotment class. There is no specificity, indeed, either in the
Constitution or in the relevant GAAs that the object of augmentation should be the
expense category or allotment class. In the same vein, the President cannot exercise his
veto power over an expense category; he may only veto the item to which that expense
category belongs to.
Further, in Nazareth v. Villar,34 we clarified that there must be an existing item, project
or activity, purpose or object of expenditure with an appropriation to which savings
Page 133 of 378
may be transferred for the purpose of augmentation. Accordingly, so long as there is an

item in the GAA for which Congress had set aside a specified amount of public fund,
savings may be transferred thereto for augmentation purposes. This interpretation is
consistent not only with the Constitution and the GAAs, but also with the degree of
flexibility allowed to the Executive during budget execution in responding to
unforeseeable contingencies.
Nonetheless, this modified interpretation does not take away the cave at that only DAP
projects found in the appropriate GAAs may be the subject of augmentation by legally
accumulated savings. Whether or not the 116 DAP-funded projects had appropriation
cover and were validly augmented require factual determination that is not within the
scope of the present consolidated petitions under Rule 65.
4. Cross-border transfers are constitutionally impermissible
The respondents assail the pronouncement of unconstitutionality of cross-border

transfers made by the President. They submit that Section 25(5), Article VI of the
Constitution prohibits only the transfer of appropriation, not savings. They relate that
cross-border transfers have been the practice in the past, being consistent with the
Presidents role as the Chief Executive.35
In view of the clarity of the text of Section 25(5), however, the Court stands by its
pronouncement, and will not brook any strained interpretations.
5. Unprogrammed funds may only be released upon proof that the total revenues
exceeded the target
Based on the 2011, 2012 and 2013 GAAs, the respondents contend that each source of
revenue in the budget proposal must exceed the respective target to authorize release of
unprogrammed funds. Accordingly, the Courts ruling thereon nullified the intention of
the authors of the unprogrammed fund, and renders useless the special provisions in
the relevant GAAs.36
The respondents contentions are without merit.
To recall, the respondents justified the use of unprogrammed funds by submitting

certifications from the Bureau of Treasury and the Department of Finance (DOF)
regarding the dividends derived from the shares of stock held by the Government in
government-owned and controlled corporations.37 In the decision, the Court has held
that the requirement under the relevant GAAs should be construed in light of the
purpose for which the unprogrammed funds were denominated as "standby
appropriations." Hence, revenue targets should be considered as a whole, not
individually; otherwise, we would be dealing with artificial revenue surpluses. We
have even cautioned that the release of unprogrammed funds based on the
respondents position could be unsound fiscal management for disregarding the budget
plan and fostering budget deficits, contrary to the Governments surplus budget
policy.38
While we maintain the position that aggregate revenue collection must first exceed
aggregate revenue target as a pre-requisite to the use of unprogrammed funds, we
clarify the respondents notion that the release of unprogrammed funds may only occur
at the end of the fiscal year.
Page 134 of 378

There must be consistent monitoring as a component of the budget accountability phase

of every agencys performance in terms of the agencys budget utilization as provided
in Book VI, Chapter 6, Section 51 and Section 52 of the Administrative Code of
1987,which state:
SECTION 51. Evaluation of Agency Performance.The President, through the

Secretary shall evaluate on a continuing basis the quantitative and qualitative measures
of agency performance as reflected in the units of work measurement and other
indicators of agency performance, including the standard and actual costs per unit of
work.
SECTION 52. Budget Monitoring and Information System.The Secretary of Budget

shall determine accounting and other items of information, financial or otherwise,
needed to monitor budget performance and to assess effectiveness of agencies
operations and shall prescribe the forms, schedule of submission, and other components
of reporting systems, including the maintenance of subsidiary and other records which
will enable agencies to accomplish and submit said information requirements:
Provided, that the Commission on Audit shall, in coordination with the Secretary of
Budget, issue rules and regulations that may be applicable when the reporting
requirements affect accounting functions of agencies: Provided, further, that the
applicable rules and regulations shall be issued by the Commission on Audit within a
period of thirty (30) days after the Department of Budget and Management prescribes
the reporting requirements.
Pursuant to the foregoing, the Department of Budget and Management (DBM) and the
Commission on Audit (COA) require agencies under various joint circulars to submit
budget and financial accountability reports (BFAR) on a regular basis, 39 one of which is
the Quarterly Report of Income or Quarterly Report of Revenue and Other
Receipts.40 On the other hand, as Justice Carpio points out in his Separate Opinion, the
Development Budget Coordination Committee (DBCC) sets quarterly revenue targets
for aspecific fiscal year.41 Since information on both actual revenue collections and
targets are made available every quarter, or at such time as the DBM may prescribe,
actual revenue surplus may be determined accordingly and eleases from the
unprogrammed fund may take place even prior to the end of the fiscal year.42
In fact, the eleventh special provision for unprogrammed funds in the 2011 GAA
requires the DBM to submit quarterly reports stating the details of the use and releases
from the unprogrammed funds, viz:
11. Reportorial Requirement. The DBM shall submit to the House Committee on
Appropriations and the Senate Committee on Finance separate quarterly reports stating
the releases from the Unprogrammed Fund, the amounts released and purposes
thereof, and the recipient departments, bureaus, agencies or offices, GOCCs and GFIs,
including the authority under which the funds are released under Special Provision No.
1 of the Unprogrammed Fund.
Similar provisions are contained in the 2012 and 2013 GAAs.43
However, the Courts construction of the provision on unprogrammed funds is a

statutory, not a constitutional, interpretation of an ambiguous phrase. Thus, the
construction should be given prospective effect.44
6. The presumption of good faith stands despite the obiter pronouncement
Page 135 of 378

The remaining concern involves the application of the operative fact doctrine.
The respondents decry the misapplication of the operative fact doctrine, stating:
110. The doctrine of operative fact has nothing to do with the potential liability of
persons who acted pursuant to a then-constitutional statute, order, or practice. They are
presumed to have acted in good faith and the court cannot load the dice, so to speak, by
disabling possible defenses in potential suits against so-called "authors, proponents and
implementors." The mere nullification are still deemed valid on the theory that judicial
nullification is a contingent or unforeseen event.
111. The cases before us are about the statutory and constitutional interpretations of so-
called acts and practices under a government program, DAP. These are not civil,
administrative, or criminal actions against the public officials responsible for DAP, and
any statement about bad faith may be unfairly and maliciously exploited for political
ends. At the same time, any negation of the presumption of good faith, which is the
unfortunate implication of paragraphs 3 and 4 of page 90 of the Decision, violates the
constitutional presumption of innocence, and is inconsistent with the Honorable Courts
recognition that "the implementation of the DAP yielded undeniably positive results
that enhanced the economic welfare of the country."
112. The policy behind the operative fact doctrine is consistent with the idea that
regardless of the nullification of certain acts and practices under the DAP and/or NBC
No. 541, it does not operate to impute bad faith to authors, proponents and
implementors who continue to enjoy the presumption of innocence and regularity in
the performance of official functions and duties. Good faith is presumed, whereas bad
faith requires the existence of facts. To hold otherwise would send a chilling effect to all
public officers whether of minimal or significant discretion, the result of which would
be a dangerous paralysis of bureaucratic activity.45 (Emphasis supplied)
In the speech he delivered on July 14, 2014, President Aquino III also expressed the
view that in applying the doctrine of operative fact, the Court has already presumed the
absence of good faith on the part of the authors, proponents and implementors of the
DAP, so that they would have to prove good faith during trial.46
Hence, in their Motion for Reconsideration, the respondents now urge that the Court
should extend the presumption of good faith in favor of the President and his officials
who co-authored, proposed or implemented the DAP.47
The paragraphs 3 and 4 of page 90 of the Decision alluded to by the respondents read:
Nonetheless, as Justice Brion has pointed out during the deliberations, the doctrine of
operative fact does not always apply, and is not always the consequence of every
declaration of constitutional invalidity. It can be invoked only in situations where the
nullification of the effects of what used to be a valid law would result in inequity and
injustice; but where no such result would ensue, the general rule that an
unconstitutional law is totally ineffective should apply.
In that context, as Justice Brion has clarified, the doctrine of operative fact can apply
only to the PAPs that can no longer be undone, and whose beneficiaries relied in good
faith on the validity of the DAP, but cannot apply to the authors, proponents and
implementors of the DAP, unless there are concrete findings of good faith in their favor
Page 136 of 378

by the proper tribunals determining their criminal, civil, administrative and other
liabilities.48 (Bold underscoring is supplied)
The quoted text of paragraphs 3 and 4 shows that the Court has neither thrown out the
presumption of good faith nor imputed bad faith to the authors, proponents and
implementors of the DAP. The contrary is true, because the Court has still presumed
their good faith by pointing out that "the doctrine of operative fact xxx cannot apply to
the authors, proponents and implementors of the DAP, unless there are concrete
findings of good faith in their favor by the proper tribunals determining their criminal,
civil, administrative and other liabilities." Note that the proper tribunals can make
"concrete findings of good faith in their favor" only after a full hearing of all the parties
in any given case, and such a hearing can begin to proceed only after according all the
presumptions, particularly that of good faith, by initially requiring the complainants,
plaintiffs or accusers to first establish their complaints or charges before the respondent
authors, proponents and implementors of the DAP.
It is equally important to stress that the ascertainment of good faith, or the lack of it,
and the determination of whether or not due diligence and prudence were exercised,
are questions of fact.49 The want of good faith is thus better determined by tribunals
other than this Court, which is not a trier of facts.50
For sure, the Court cannot jettison the presumption of good faith in this or in any other
case. The presumption is a matter of law. It has had a long history. Indeed, good faith
has long been established as a legal principle even in the heydays of the Roman
Empire.51In Soriano v. Marcelo,52 citing Collantes v. Marcelo,53 the Court emphasizes
the necessity of the presumption of good faith, thus:
Well-settled is the rule that good faith is always presumed and the Chapter on Human
Relations of the Civil Code directs every person, inter alia, to observe good faith which
springs from the fountain of good conscience. Specifically, a public officer is presumed
to have acted in good faith in the performance of his duties. Mistakes committed by a
public officer are not actionable absent any clear showing that they were motivated by
malice or gross negligence amounting to bad faith. "Bad faith" does not simply connote
bad moral judgment or negligence. There must be some dishonest purpose or some
moral obliquity and conscious doing of a wrong, a breach of a sworn duty through
some motive or intent or ill will. It partakes of the nature of fraud. It contemplates a
state of mind affirmatively operating with furtive design or some motive of self-interest
or ill will for ulterior purposes.
The law also requires that the public officers action caused undue injury to any party,
including the government, or gave any private party unwarranted benefits, advantage
or preference in the discharge of his functions. x x x
The Court has further explained in Philippine Agila Satellite, Inc. v. Trinidad-
Lichauco: 54
We do not doubt the existence of the presumptions of "good faith" or "regular

performance of official duty", yet these presumptions are disputable and may be
contradicted and overcome by other evidence. Many civil actions are oriented towards
overcoming any number of these presumptions, and a cause of action can certainly be
geared towards such effect. The very purpose of trial is to allow a party to present
evidence to overcome the disputable presumptions involved. Otherwise, if trial is
deemed irrelevant or unnecessary, owing to the perceived indisputability of the
Page 137 of 378
presumptions, the judicial exercise would be relegated to a mere ascertainment of what

presumptions apply in a given case, nothing more. Consequently, the entire Rules of
Court is rendered as excess verbiage, save perhaps for the provisions laying down the
legal presumptions.
Relevantly, the authors, proponents and implementors of the DAP, being public
officers, further enjoy the presumption of regularity in the performance of their
functions. This presumption is necessary because they are clothed with some part of the
sovereignty of the State, and because they act in the interest of the public as required by
law.55 However, the presumption may be disputed.56
At any rate, the Court has agreed during its deliberations to extend to the proponents
and implementors of the DAP the benefit of the doctrine of operative fact. This is
because they had nothing to do at all with the adoption of the invalid acts and practices.
7. The PAPs under the DAP remain effective under the operative fact doctrine
As a general rule, the nullification of an unconstitutional law or act carries with it the
illegality of its effects. However, in cases where nullification of the effects will result in
inequity and injustice, the operative fact doctrine may apply.57 In so ruling, the Court
has essentially recognized the impact on the beneficiaries and the country as a whole if
its ruling would pave the way for the nullification of the P144.378 Billions58 worth of
infrastructure projects, social and economic services funded through the DAP. Bearing
in mind the disastrous impact of nullifying these projects by virtue alone of the
invalidation of certain acts and practices under the DAP, the Court has upheld the
efficacy of such DAP-funded projects by applying the operative fact doctrine. For this
reason, we cannot sustain the Motion for Partial Reconsideration of the petitioners in
G.R. No. 209442.
IN VIEW OF THE FOREGOING, and SUBJECT TO THE FOREGOING

CLARIFICATIONS, the Court PARTIALLY GRANTS the Motion for Reconsideration
filed by the respondents, and DENIES the Motion for Partial Reconsideration filed by
the petitioners in G.R. No. 209442 for lack of merit.
ACCORDINGLY, the dispositive portion of the Decision promulgated on July 1, 2014 is

hereby MODIFIED as follows:
WHEREFORE, the Court PARTIALLY GRANTS the petitions for certiorari and
prohibition; and DECLARES the following acts and practices under the Disbursement
Acceleration Program, National Budget Circular No. 541 and related executive
issuances UNCONSTITUTIONAL for being in violation of Section 25(5), Article VI of
the 1987 Constitution and the doctrine of separation of powers, namely:
(a) The withdrawal of unobligated allotments from the implementing agencies,

and the declaration of the withdrawn unobligated allotments and unreleased
appropriations as savings prior to the end of the fiscal year without complying
with the statutory definition of savings contained in the General Appropriations
Acts; and
(b) The cross-border transfers of the savings of the Executive to augment the
appropriations of other offices outside the Executive.
Page 138 of 378

The Court further DECLARES VOID the use of unprogrammed funds despite the
absence of a certification by the National Treasurer that the revenue collections
exceeded the revenue targets for non-compliance with the conditions provided in the
relevant General Appropriations Acts.
G.R. No. 157633 September 10, 2014
NORTHWEST AIRLINES, INC., Petitioner, vs. MA. CONCEPCION M. DEL

ROSARIO, Respondent.
DECISION
Under review is the decision promulgated on June 21, 2002,1 whereby the Court of
Appeals (CA) dismissed the petition for certiorari filed by Northwest Airlines, Inc. to
assail on the ground of grave abuse of discretion amounting to lack or excess of
jurisdiction the adverse decision of the National Labor Relations Commission (NLRC).
Antecedents
Petitioner Northwest Airlines, Inc. employed respondent Ma. Concepcion M. Del

Rosario on December 10, 1994 as one of its Manilabased flight attendants. On May 18,
1998, Del Rosario was assigned at the Business Class Section of Northwest Flight NW 26
bound for Japan. During the boarding preparations, Kathleen Gamboa, another flight
attendant assigned at the First Class Section of Flight NW 26, needed to borrow a wine
bottle opener from her fellow attendants because her wine bottle opener was dull.
Vivien Francisco, Gamboas runner, went to the Business Class Section to borrow a
wine bottle opener from Del Rosario, but the latter remarked that any flight attendant
who could not bring a wine bottle opener had no business working in the First Class
Section. Upon hearing this, Aliza Ann Escao, another flight attendant, offered her wine
bottle opener to Francisco. Apparently, Gamboa overheard Del Rosarios remarks, and
later on verbally confronted her. Their confrontation escalated into a heated argument.
Escao intervened but the two ignored her, prompting her to rush outside the aircraft to
get Maria Rosario D. Morales, the Assistant Base Manager, to pacify them.
The parties differed on what happened thereafter. Del Rosario claimed that only an
animated discussion had transpired between her and Gamboa, but Morales insisted that
it was more than an animated discussion, recalling that Del Rosario had even
challenged Gamboa to a brawl (sabunutan). Morales asserted that she had tried topacify
Del Rosario and Gamboa, but the two did not stop; that because the two were still
arguing although the Business Class passengers were already boarding, she ordered
them out of the plane and transfer to another nearby Northwest aircraft; that she
inquired from them about what had happened, and even asked if they were willing to
fly on the condition that they would have to stay away from each other during the
entire flight; that because Del Rosario was not willing to commit herself to do so, she
decided not to allow both of them on Flight NW 26, and furnished them a Notice of
Removal from Service (effectively informing Del Rosario of her dismissal from the
service pending an investigation of the fighting incident between her and Gamboa).
On May 19, 1998, Morales sent a letter to Del Rosario telling her that Northwest would
conduct an investigation of the incident involving her and Gamboa. The investigation
was held on May 28, 1998 before Atty. Ceazar Veneracion III, Northwests Legal
Counsel and Head of its Human Resources Department. All the parties attended the
investigation
Page 139 of 378

On June 19, 1998, Del Rosario was informed of her termination from the service.
Northwest stated that based on the results of the investigation, Del Rosario and
Gamboa had engaged in a fight on board the aircraft, even if there had been no actual
physical contact between them; and that because fighting was strictly prohibited by
Northwest to the point that fighting could entail dismissal from the service even if
committed for the first time, Northwest considered her dismissal from the service
justified and in accordance with the Rules of Conduct for Employees, as follows:
Section 1, General
x x x. Rule infractions will be dealt with according to the seriousness of the offense and
violators will be subjected to appropriate disciplinary action up to and including
discharge. Some acts of misconduct, even if committed for the first time, are so serious
that, standing alone, they justify immediate discharge. Some examples of these offenses
are violations of rules regarding theft,alcohol and drugs, insubordination, dishonesty,
fighting, falsification of records, sleeping on the job, failure to cooperate or lying in a
Company investigation, intentional destruction or abuse of property, threatening,
intimidating or interfering with other employees, abuse of nonrevenue and reduced
rate travel privileges and unauthorized use of Company communications systems. x x x
x
Section 24 (c), Disturbing Others, which states that:
Harassing, threatening, intimidating, assaulting, fighting or provoking a fight or similar

interference with other employees at any time, on or off duty is prohibited." (Italics
supplied)
Del Rosario subsequently filed her complaint for illegal dismissal against Northwest.2
Decision of the Labor Arbiter
In her decision dated January 18, 1999,3 Labor Arbiter Teresita D. Castillon-Lora ruled
in favor of Northwest, holding that the dismissal of Del Rosario had been justified and
valid upon taking into account that Northwest had been engaged in the airline business
in which a good public image had been demanded, and in which flightattendants had
been expected to maintain an image of sweetness and amiability; that fighting among
its employees even in the form of heated arguments or discussions were very
contradictory to that expected image;4and that it could validly dismiss its employees
like the respondent because it had been entitled to protect its business interests by
putting up an impeccable imageto the public.
Ruling of the NLRC
Upon appeal, the NLRC reversed the decision of the Labor Arbiter, and ruled in favor
of Del Rosario, declaring that the incident between her and Gamboa could not be
considered as synonymous with fighting as the activity prohibited by Northwests
Rules of Conduct; that based on Blacks Law Dictionary, fightreferred to a hostile
encounter, affray, or altercation; a physical or verbal struggle for victory, pugilistic
combat; that according to Bouviers Law Dictionary, fighting did not necessarily imply
that both parties should exchange blows, for it was sufficient that they voluntarily put
their bodies in position with that intent;5 and that the incident between Del Rosario and
Gamboa could notbe held similar to the fightthat Northwest penalized under its Rules
of Conduct.
Page 140 of 378

The NLRC further ratiocinated as follows:
Evident in the definition of fighting is the existence of an underlying hostility between

the parties which is sointense that there is an imminent danger of a physical conflict (if
there is none yet). In other words, when we say two people are fighting, at the very
least, they should project a general appearance of wanting to physically strike each
other. Was this the image that appellant and FA Gamboaprojected when they were
facing each other during the incident of May 18, 1998[?] We do not think so.
x x x Almost unanimously, the witnesses of NWA refer to the incident as "arguing" or a

"serious or animated discussion." An argument is an effort to establish belief bya course
of reasoning (Bouvier's Law Dictionary). In ordinary parlance, arguing is merely talking
or debating about a certain issue. There are nounderpinnings of animosity in the
discussion nor (sic) between the parties. These witnesses never saw any hostility
between the appellant and FA Gamboa. Neither did they see these two ladies wanting
to strike each other. What they saw were two FAs engaged in an animated verbal
exchange, arguing but not fighting.6
The NLRC ordered the reinstatement of Del Rosario to her former position without loss
of seniority rights and with payment of backwages, per diems, other lost income and
benefitsfrom June 19, 1998; as well as the payment of attorneys fees equivalent to 10%
of the monetary award.
Decision of the CA
Aggrieved, Northwest elevated the adverse decision of the NLRC to the CA on

certiorari, averring that the NLRC thereby committed grave abuse of discretion in
reversing the decision of the Labor Arbiter, and submitting that Del Rosarios dismissal
from the service had been for a just cause, with the evidence presented against her
being more than sufficient to substantiate its position that there had really been a fight
between her and Gamboa; and that the NLRC likewise gravely abused its discretion in
ordering the reinstatement of Del Rosario and the payment of her backwages and
attorneys fees.
As stated, the CA sustained the NLRC through its decision promulgated on June 21,
2002, observing that Northwest did not discharge its burden to prove not merely
reversible error but grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of the NLRC; and that, indeed, the NLRC had correctly held that Del
Rosarios conduct did not constitute serious misconduct, because the NLRC, in
determining the usual, ordinary and commonly understood meaning of the word
fighting, had resorted to authoritative lexicons that supported its conclusion that the
exchange of words between Del Rosario and Gamboadid not come within the definition
of the word fighting.7
The CA disposed thusly:
WHEREFORE, for lack of merit, the instant petition is DISMISSED. Accordingly, the
decision ofthe NLRC dated January 11, 2000, is hereby AFFIRMEDwith the
MODIFICATIONthat in lieu of reinstatement, petitioner is ordered to pay private
respondent separation pay equivalent to one month's salary for every year of service
plus full backwages without deduction or qualification, counted from the date of
dismissal until finality of this decision including other benefits to which she is entitled
Page 141 of 378

under the law. Petitioner is likewise ordered to pay respondent Del Rosario attorneys
feesconsisting of five(5%) per cent of the adjudged relief.
SO ORDERED.8
Issues
The issues are the following, namely: (1) Was Del Rosarios dismissal from the service
valid?; and (2) Were the monetary awards appropriate?
Ruling
The Court AFFIRMSthe decision of the CA.
As provided in Article 282 of the Labor Code, an employer may terminate an employee
for a just cause, to wit:
Art. 282. TERMINATION BY EMPLOYER
An employer may terminate an employee for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful

orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representative; and
(e) Other causes analogous to the foregoing.
Northwest argues that Del Rosario was dismissed on the grounds of serious misconduct
and willful disobedience. Misconduct refers to the improper or wrong conduct that
transgresses some established and definite rule of action, a forbidden act, a dereliction
of duty, willful in character, and implies wrongful intent and not mere error in
judgment. But misconduct or improper behavior, to be a just cause for termination of
employment, must: (a) be serious; (b) relate to the performance ofthe employees duties;
and (c) show that the employee has become unfit to continue working for the
employer.9
There is no doubt that the last two elements of misconduct were present in the case of
Del Rosario. The cause of her dismissal related to the performance of her duties as a
flightattendant, and she became unfit to continue working for Northwest. Remaining to
be determined is, therefore, whether the misconduct was serious as tomerit Del
Rosarios dismissal. In that respect, the fightbetween her and Gamboa should beso
seriousthat it entailed the termination of her employment even if it was her first offense.
Northwest insists that what transpired on May 18, 1998 between her and Gamboa was
obviously a form of fightthat it strictly prohibited, but Del Rosario disputes this by
contending thatit was only an animated discussion between her and Gamboa. She
Page 142 of 378

argues that as settled in American jurisprudence fightpertained to combat or battle, like

the hostile encounter or engagement between opposing forces, suggesting primarily the
notion of a brawl or unpremeditated encounter, or of a pugilistic combat;10 while
argumentwas a connected discourse based upon reason, or a course of reasoning
tending and intended to establish a position and to induce belief.11
In several rulings where the meaning of fightwas decisive, the Court has observed that
the term fightwas considered to be different from the term argument. In People v.
Asto,12 for instance, the Court characterized fightas not just a merely verbal tussle but a
physical combat between two opposing parties, to wit:
Well into their second bottle of gin, at about eleven o'clock that morning, Fernando
Aquino and Peregrino had a verbal tussle. Fernando Aquino declared that he was
going to run for councilor of Alcala, Pangasinan. Peregrino countered by saying: "If you
will run for that post, cousin, I will fight you." After a brief exchange of words,
Fernando Aquino, laughing, went to sit beside Abagat. As Aquino continued with his
mirth, Abagat stared at Peregrino with contempt.
xxx. A few minutes later, he heard a commotion in the plantation some two hundred
meters away. He claims to have seen several people fightingeach other with pieces of
wood butdid not go to the field to check what was happening.13 (Italics supplied.)
Similarly, in Pilares, Sr. v. People,14 fightwas held to be more than just an exchange of
words that usually succeeded the provocation by either party, thus:
When the petitioner was about to hand over the bottles of beer to the private
complainant, the latter called him "coward" and dared him to get out for a fight.
Insulted, the petitioner went out of his store and chased the private complainant. (Italics
supplied.)
Based on the foregoing, the incident involving Del Rosario and Gamboa could not be
justly considered as akin to the fightcontemplated by Northwest. In the eyes of the
NLRC, Del Rosario and Gamboa were arguing but not fighting. The understanding of
fight as one that required physical combat was absent during the incident of May 18,
1998. Moreover, the claim of Morales that Del Rosario challenged Gamboa to a brawl
(sabunutan) could not be given credence by virtue of its being self-serving in favor of
Northwest, and of its being an apparent afterthought on the part of Morales during the
investigation of the incident, without Del Rosario having the opportunity to contest
Morales' statement. In that context, the investigation then served only as Northwest's
means to establish that the grounds of a valid dismissal based on serious misconduct
really existed.
Moreover, even assuming arguendo that the incident was the kind of fight prohibited
by Northwest's Rules of Conduct, the same could not be considered as of such
seriousness as to warrant Del Rosario's dismissal from the service. The gravity of the
fight, which was not more than a verbal argument between them, was not enough to
tarnish or diminish Northwest's public image.
Under the circumstances, therefore, the CA properly ruled that the NLRC did not
gravely abuse its discretion amounting to lack or excess of jurisdiction by declaring Del
Rosario's dismissal unjustified. Northwest as the petitioner for certiorari must
demonstrate grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of the NLRC. Grave abuse of discretion, according to De las Santos v. Metropolitan
Page 143 of 378

Bank and Trust Company,15 "must be grave, which means either that the judicial or
quasi-judicial power was exercised in an arbitrary or despotic manner by reason of
passion or personal hostility, or that the respondent judge, tribunal or board evaded a
positive duty, or virtually refused to perform the duty enjoined or to act in
contemplation of law, such as when such judge, tribunal or board exercising judicial or
quasi-judicial powers acted in a capricious or whimsical manner as to be equivalent to
lack of jurisdiction." Alas, Northwest did not show how the NLRC could have abused
its discretion, let alone gravely, in ruling adversely against it.
WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals promulgated
on June 21, 2002; and ORDERS the petitioner to pay the costs of suit.
A.M. No. P-08-2465 January 12, 2015

[Formerly A.M. OCA IPI No. 04-1849-P]
CONCHITA S. BAHALA, Complainant, vs. CIRILO DUCA, SHERIFF III,

MUNICIPAL CIRCUIT TRIAL COURT IN CITIES, BRANCH 1, CAGAYAN DE
ORO CITY, Respondent.
DECISION
Complainant Conchita S. Bahala has charged grave abuse of discretion, gross

misconduct and violation of the Anti-Graft and Corrupt Practices Act (Republic Act No.
3019) against respondent Cirilo Duca, Sheriff III of the Municipal Trial Court in Cities
(MTCC), Branch 1, in Cagayan de Oro City in relation to his implementation of the writ
of execution issued in Civil Case No. 98-July-817 entitled Estate of Casimiro Tamparong
and Feliza Neri Tamparong, represented by Special Administratrix, Veronica T. Borja v.
Conchita S. Bahala and Mr. Bahala (Husband}, an action for ejectment.
Antecedents
On August 6, 1999, the MTCC rendered judgment in Civil Case No. 98-July-817 that
was adverse to Bahala.1Pending appeal, the Regional Trial Court (R TC) rendered a
judgment on the compromise agreement of the parties,2 pursuant to which Bahala paid
the balance of the money judgment, remained in the premises during the agreed
extension of two years, and paid her monthly rentals. By the end of the two-year
extension, she offered to sell the building standing on the property that she had
supposedly built in good faith. Not wanting to pay for the building, the plaintiff opted
to execute the judgment. On August 1, 2002, Sheriff Duca served the writ of
execution,3 but demanded P2,000.00 from her in order to delay its implementation. She
delivered the amount demanded on a Saturday at the Hall of Justice in the company of
her friend, Helen Peligro. Bahala averred, too, that Sheriff Duca had served the writ on
her more than 10 times, and that she had given him either P200.00 orP100.00 each time.
In 2003, she started to evade Sheriff Duca whenever heserved the writ.4
Without filing his return on the writ, Sheriff Duca served a notice of auction sale on
February 21, 2003,5 stating the amount of P210,000.00 as the rentals-in-arrears due and
demandable. The amount was allegedly his erroneous computation of the rentals-in-
arrears due because it was not based on the decision of the RTC. Consequently, Bahala
opposed the sale. In its order of May 5, 2003,6 the RTC ruled in her favor, to wit:
Wherefore, defendants opposition is granted, the sheriff is enjoined from proceeding

with the auction sale of defendant property and he is instead hereby directed to execute
Page 144 of 378

the parties agreement regarding ejectment and removal of defendant

buildings/structures from the leased property of the plaintiff.
So Ordered.
Despite the clear order of the RTC, Sheriff Duca proceeded with the auction sale on May
13, 2003,7 and awarded the building to the plaintiff as the sole and highest bidder. 8 On
October 6, 2003, he forcibly removed all the personal belongings of the actual occupants
of the building, and placed them outside the building and along the street. He
padlocked the building, and warned Bahala and her lessees not to re-enter the premises.
When she told him that his act was illegal, he retorted: Akong himuon ang akong gusto,
akong ning i-padlock ang imong building, walay makabuot sa ako. (I will do what I
want. I will padlock your building and nobody will stop me from doing this). Later that
afternoon, she started to voluntarily demolish the building, but he ordered her to stop
the demolition, threatening to file a case against her otherwise.9
In his answer,10 Sheriff Duca denied demanding and receiving any amount from Bahala.
He admitted meeting her only on four occasions, one of which was on a working day in
the Hall of Justice, as she was pleading that her lessees not be informed of the writ. He
also admitted not having filed any return because his implementation was not yet
complete at that time, and that he informed the plaintiff about the status of the
implementation of the writ. He maintained that the amount of P210,000.00 contained in
the notice of auction sale was based on the computation of the arrears submitted by the
plaintiff. As regards the auction sale, he received a copy of the RTCs order only on May
5, 2003 long after the property had been auctioned off on March 3, 2003. Hedenied using
force in ejecting the occupants of the building, stating that they had voluntary removed
their personal belongings themselves.
The Court resolved to re-docket this case as a regular administrative matter, and
referred it to the Executive Judge of the RTC in Cagayan de Oro City for investigation
and recommendation.11
In his report,12 then Executive Judge Edgardo T. Lloren found and concluded that
Sheriff Duca had committed simple misconduct for not filing his periodic report on the
writ pursuant to Section 14, Rule 39 of the Rules of Court, and for adopting the
computation of arrears made by the plaintiff. Accordingly, Judge Lloren recommended
that Sheriff Duca be suspended for six months and one day without pay; and that the
charges for violation of the Anti-Graft and Corrupt Practices Act be dismissed for lack
of merit.
The OCA agreed with Judge Llorens finding that Sheriff Duca had committed simple
misconduct in basing the amount stated in the notice of auction sale on the computation
submitted by the plaintiff.13 It also found Sheriff Duca liable for simple neglect of duty
for not complying with the requirements of Section 14, Rule 39 of the Rules of Court,
and recommended his suspension without pay for six months and one day with stern
warning against the commission of similar acts or omissions.14
Ruling
We agree with the findings of the OCA, but modify the recommended penalty.
As an agent of the law, a sheriff must discharge his duties with due care and utmost
diligence. He cannot afford to err while serving the courts writs and processes without
Page 145 of 378

affecting the integrity of his office and the efficient administration of justice. 15 He is not
given any discretion on the implementation of a writ of execution; hence, he must
strictly abide by the prescribed procedure to avoid liability.16
Section 14, Rule 39 of the Rules of Court requires a sheriff implementing a writ of
execution (1) to make and submit a return to the court immediately upon satisfaction in
part or in full of the judgment; and (2) if the judgment cannot be satisfied infull, to make
a report to the court within 30 days after his receipt of the writ and state why full
satisfaction could not be made. He shall continue making the report every 30 days in
the proceedings undertaken by him until the judgment is fully satisfied in order to
apprise the court on the status of the execution and to take necessary steps to ensure
speedy execution of decisions.17
Although Sheriff Duca thrice served the writ on Bahala,18 he filed his return only on
October 7, 2003 after her property had been levied and sold on public auction.19 His
excuses for his omission, that his "job was not yet finished," and that he had
informedthe plaintiff on the status of its implementation, did not exculpate him from
administrative liability, because there is no question that the failure to file a return on
the writ constituted "simple neglect of duty,"20 defined as the failure of an employee to
give his attention to the task expected of him, signifying a disregard of a duty resulting
from carelessness or indifference.21
In this regard, the OCA correctly observed:
As deputy sheriff, respondent could not be unaware of Section 14, Rule 39 of the 1997
Revised Rules of Civil Procedure x x x
xxxx
Based on the foregoing, it is mandatory for a sheriff to make a return of the writ of
execution to the court issuing it. If the judgment cannot be satisfied in full within thirty
(30) days after his receipt of the writ, the officer shall report to the court and state the
reason or reasons therefore. The court officer is likewise tasked to make a report to the
court every thirty (30) days on the proceedings taken thereon until the judgment is
satisfied in full or its effectivity expires. The raison d etrebehind this requirement is to
update the court on the status of the execution and to take necessary steps to ensurethe
speedy execution of decision.
A careful perusal of the records show that the writ of execution was issued on August 1,
2002. However, it was only more than a year later or on October 7, 2003 when
respondent sheriff was able to file his return of the writ. In his testimony before the
investigating judge on March 7, 2005, he was not even sure on when he first served the
writ of execution upon complainant but admitted of having served the same at least
three (3) times yet he failed to timely make a sheriffs return as required under Section
14, Rule 39 of the Rules of Civil Procedure. Respondent though belatedly submitted his
sheriffs return and furnished a copy thereof to the complainant only on October 7,
2003.
Due to respondents failure to makea timely return and periodic progress report of the
writ, the court was obviously unaware of the auction sale of defendants property
conducted by respondent-sheriff on March 3, 2003 that in its Order dated May 5, 2003, it
enjoined respondent sheriff from proceeding with the auction sale of defendants
property and directed him to execute the parties agreement regarding ejectment and
Page 146 of 378

removal of defendants buildings/structures from the leased property of the plaintiff.

By then, subject property was already auctioned and awarded to plaintiff, being the
highest bidder and defendants agents already ejected from subject property per his
Sheriffs Return of Service dated October 7, 2003.
Clearly, respondent sheriff is derelict in his submission of the returns thereof. His
explanation that "his job was not yet finished and talked to the plaintiff regarding the
same"is utterly wanting. A finding that he was remiss in the performance of his duty is
thus proper under the attendant circumstances. For such nonfeasance, respondent is
guilty of dereliction or simple neglect of his dutyas a sheriff, because he failed to submit
his Report of Service within thirty (30) days from receipt thereof and make periodic
reports to the court until the judgment was fully satisfied. In fine, the gravamen of
respondents shortcoming is in his failure to observe Sec. 14, Rule 39 of the Rules of
Court.22
Without doubt, Sheriff Duca played an indispensable part in the administration of

justice. His duties as a sheriff included the prompt enforcement of judgments and the
efficient implementation of orders and writs issued by the court. Any move or actuation
in the discharge of his duties that denoted complacency, or reflected inefficiency, or
constituted impropriety would equate to the disregard of the office he held. Thus, his
lapses in complying with Section 14, Rule 39 of the Rules of Court constituted sufficient
ground to order his dismissal, suspension from office or payment of a fine.23
Sheriff Ducas liability was not limited to his failure to file the return on the writ. The
OCA recommended that he be found liable also for simple misconduct because he was
guilty of the irregularity of relying on the computation of the plaintiff in charging
Bahala for the arrears in rentals amounting to P210,000.00, thus:
Respondents reliance on the computation of plaintiff for the rental-in-arrears

amounting to P210,000.00 contained in the Sheriffs Notice of Auction Sale is likewise
irregular. He should not have put undue reliance on the computation made by a private
individual not duly deputized by the court. It must be borne in mind that respondent
sheriff has, as an officer of the court, the duty to compute the amount due from the
judgment debtor. (Bagano v. Paninsoro, 246 SCRA 146) For such actuation, respondent
committed simple misconduct.24
Compounding this liability was his admission of not inquiring whether Bahala had paid
her rentals or not to the plaintiff.25
To be sure, the amount of P210,000.00 stated in the notice of levy did not conform with
the writ of execution that stated the following amounts to be due to the plaintiff from
Bahala, viz:
WRIT OF EXECUTION
xxxx
Whereas, Judgment on compromise agreement issued in this case by the Regional Trial
Court Branch 40, dated 10 November 1999, quoted as follows:
COMPROMISE AGREEMENT
Page 147 of 378

COME NOW the parties hereto, assisted by their respective counsels, and unto this
Honorable Court hereby submit the following Compromise Agreement, to wit:
xxxx
3) That the parties hereto are desirous of settling their dispute by compromise
agreement and have voluntarily agreed the following:
a) THAT defendant shall pay the sum of P17,900.00 upon signing of this
Compromise Agreement, P15,500.00 of which shall be taken from the amount
deposited with the Clerk of Court of the Municipal Trial Court of Cagayan de
Oro City to be applied in the manner as follows:
P5,900.00 -- for payment of arrears in rentals as of December 30, 1999;
10,000.00 -- as attorneys fees (part) per decision in Civil Case No. 98-Jul-
817
2,000.00 -- for reimbursement of expenses of litigation
b) THAT the period of lease is extended to two (2) years commencing on January
1, 2000 and termination January 30, 2002.
c) THAT the monthly rental shall be five thousand pesos (P5,000.00) payable to
the office of the plaintiff within the first (5) days of each and every month
without need of any demand.
x x x x26
It was Sheriff Ducas duty as court sheriff to know the computation of the amount due
in accordance with the writ of execution.27 He should have ensured that only those
ordained or decreed in the judgment would be the subject of execution. To accomplish
this, he must himself compute the correct amount due from the judgment obligor or
garnishee based strictly on the terms of the executory judgment, and, if necessary, he
must verify the amount from the court itself; in other words, he could not rely on the
computations submitted by private individuals not duly authorized to do so by the
issuing court.28 He could not delegate the official duty to compute or reckon the
amounts to be realize through execution to such individuals.29 In adopting the
computations submitted by the plaintiff without himself determining whether the
computations conformed to the terms of the judgment and the writ, he was guilty of
simple misconduct, an act that related to any unlawful conduct prejudicial to the rights
of the parties or to the right determination of the cause.30
Sheriff Duca should discharge his duties as a court sheriff with utmost care and
diligence, particularly that which pertained to the implementation of orders and
processes of the court. In the discharge of his duties, he acted as an agent of the court,
such that any lack of care and diligence he displayed would inevitably cause the erosion
of the faith of the people in the Judiciary.31
Anent the charge of violation of Section 3(e) of the Anti-Graft and Corrupt Practices Act,
Bahala did not adduce substantial evidence to establish that Sheriff Duca had
demanded and received monetary consideration to delay the implementation of the
writ of execution. The charge is dismissed for being without merit.
Page 148 of 378

We modify the recommended penalty of suspension from office without pay for six
months and one day. Under the Revised Uniform Rules on Administrative Cases in the
Civil Service, simple neglect of duty and simple misconduct are less grave offenses
punishable by suspension from office of one month and one day to six months for the
first offense. The offense charged being Sheriff Duca's first violation, he is appropriately
punished with suspension from office without pay for three months, with a stern
warning that the commission of the same or similar offense will be dealt with more
severely.
WHEREFORE, the Court FINDS and DECLARES respondent CIRILO DUCA, Sheriff III
of the Municipal Circuit Trial Court in Cities, Branch 1, in Cagayan de Oro City,
GUILTY of SIMPLE MISCONDUCT and SIMPLE NEGLECT OF DUTY, and,
accordingly, SUSPENDS him from office for three months without pay, with a stem
warning that any similar infraction in the future will be dealt with more severely.
SO ORDERED.
G.R. No. 210836
CHEVRON PHILIPPINES INC., Petitioner, vs. COMMISSIONER OF INTERNAL

REVENUE, Respondent.
RESOLUTION
Excise tax on petroleum products is essentially a tax on property, the direct liability for
which pertains to the statutory taxpayer (i.e., manufacturer, producer or importer). Any
excise tax paid by the statutory taxpayer on petroleum products sold to any of the
entities or agencies named in Section 135 of the National Internal Revenue Code (NIRC)
exempt from excise tax is deemed illegal or erroneous, and should be credited or
refunded to the ayor pursuant to Section 204 of the NIRC. This is because the exemption
granted under Section 135 of the NIRC must be construed in favor of the property itself,
that is, the petroleum products.
The Case
Before the Court is the Motion for Reconsideration filed by petitioner Chevron
Philippines, Inc. (Chevron)1 vis-a-vis the resolution promulgated on March 19,
2014,2 whereby the Courts Second Division denied its petition for review on certiorari
for failure to show any reversible error on the part of the Court of Tax Appeals (CTA)
En Banc. The CTA En Banc had denied Chevrons claim for tax refund or tax credit for
the excise taxes paid on its importation of petroleum products that it had sold to the
Clark Development Corporation (CDC), an entity exempt from direct and indirect taxes.
The Motion for Reconsideration was later on referred to the Court En Banc after the
Second Division noted that the CTA En Banc had denied Chevrons claim for the tax
refund or tax credit based on the ruling promulgated in Commissioner of Internal
Revenue v. Pilipinas Shell Petroleum Corporation (Pilipinas Shell) on April 25,
2012,3 but which ruling was meanwhile reversed upon reconsideration by the First
Division through the resolution promulgated on February 19, 2014.4 The Court En Banc
accepted the referral last June 16, 2015.
Antecedents
Page 149 of 378

Chevron sold and delivered petroleum products to CDC in the period from August
2007 to December 2007.5Chevron did not pass on to CDC the excise taxes paid on the
importation of the petroleum products sold to CDC in taxable year 2007; 6 hence, on
June 26, 2009, it filed an administrative claim for tax refund or issuance of tax credit
certificate in the amount of P6,542,400.00.7Considering that respondent Commissioner
of
Internal Revenue (CIR) did not act on the administrative claim for tax refund or tax
credit, Chevron elevated its claim to the CTA by petition for review on June 29,
2009.8 The case, docketed as CTA Case No. 7939, was raffled to the CTAs First Division.
The CTA First Division denied Chevrons judicial claim for tax refund or tax credit
through its decision dated July 31, 2012,9 and later on also denied Chevrons Motion for
Reconsideration on November 20, 2012.10
In due course, Chevron appealed to the CTA En Banc (CTA EB No. 964), which, in the
decision dated September 30, 2013,11 affirmed the ruling of the CTA First Division,
stating that there was nothing in Section 135(c) of the NIRC that explicitly exempted
Chevron as the seller of the imported petroleum products from the payment of the
excise taxes; and holding that because it did not fall under any of the categories
exempted from paying excise tax, Chevron was not entitled to the tax refund or tax
credit.
The CTA En Banc noted that:
Considering that an excise tax is in the nature of an indirect tax where the tax burden
can be shifted, Section 135(c) of the NIRC of 1997, as amended, should be construed as
prohibiting the shifting of the burden of the excise tax to tax-exempt entities who buys
petroleum products from the manufacturer/seller by incorporating the excise tax
component as an added cost in the price fixed by the manufacturer/seller.
xxxx
The above discussion is in line with the pronouncement made by the Supreme Court in
the case of Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation
(Shell case), involving Shells claim for excise tax refund for petroleum products sold to
international carriers. The Supreme Court held that the exemption from excise tax
payment on petroleum products under Section 135(a) of the NIRC of 1997, as amended,
is conferred on international carriers who purchased the same for their use or
consumption outside the Philippines. The oil companies which sold such petroleum
products to international carriers are not entitled to a refund of excise taxes previously
paid on the petroleum products sold. x x x
xxxx
Accordingly, petitioner is not entitled to any refund or issuance of tax credit certificate
on excise taxes paid on its importation of petroleum products sold to CDC pursuant to
the doctrine laid down by the Supreme Court in the Shell case.12
Chevron sought reconsideration, but the CTA En Banc denied its motion for that
purpose in the resolution dated January 7, 2014.13
Page 150 of 378

Chevron appealed to the Court,14 but the Court (Second Division) denied the petition
for review on certiorari through the resolution promulgated on March 19, 2014 for
failure to show any reversible error on the part of the CTA En Banc.
Hence, Chevron has filed the Motion for Reconsideration, submitting that it was
entitled to the tax refund or tax credit because ruling promulgated on April 25, 2012 in
Pilipinas Shell,15 on which the CTA En Banc had based its denial of the claim of
Chevron, was meanwhile reconsidered by the Courts First Division on February 19,
2014.16
Issue
The lone issue for resolution is whether Chevron was entitled to the tax refund or the
tax credit for the excise taxes paid on the importation of petroleum products that it had
sold to CDC in 2007.
Ruling of the Court
Chevrons Motion for Reconsideration is meritorious.
Pilipinas Shell concerns the manufacturers entitlement to refund or credit of the excise
taxes paid on the petroleum products sold to international carriers exempt from excise
taxes under Section 135(a) of the NIRC.
However, the issue raised here is whether the importer (i.e., Chevron) was entitled to
the refund or credit of the excise taxes it paid on petroleum products sold to CDC, a tax-
exempt entity under Section 135(c) of the NIRC.
Notwithstanding that the claims for refund or credit of excise taxes were premised on
different subsections of Section 135 of the NIRC, the basic tax principle applicable was
the same in both cases that excise tax is a tax on property; hence, the exemption from
the excise tax expressly granted under Section 135 of the NIRC must be construed in
favor of the petroleum products on which the excise tax was initially imposed.
Accordingly, the excise taxes that Chevron paid on its importation of petroleum
products subsequently sold to CDC were illegal and erroneous, and should be credited
or refunded to Chevron in accordance with Section 204 of the NIRC.
We explain.
Under Section 12917 of the NIRC, as amended, excise taxes are imposed on two kinds of
goods, namely: (a) goods manufactured or produced in the Philippines for domestic
sales or consumption or for any other disposition; and (b) things imported.
Undoubtedly, the excise tax imposed under Section 129 of the NIRC is a tax on
property.18
With respect to imported things, Section 131 of the NIRC declares that excise taxes on
imported things shall be paid by the owner or importer to the Customs officers,
conformably with the regulations of the Department of Finance and before the release
of such articles from the customs house, unless the imported things are exempt from
excise taxes and the person found to be in possession of the same is other than those
legally entitled to such tax exemption. For this purpose, the statutory taxpayer is the
importer of the things subject to excise tax.
Page 151 of 378

Chevron, being the statutory taxpayer, paid the excise taxes on its importation of the
petroleum products.19
Section 135 of the NIRC states:
SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or
Agencies. Petroleum products sold to the following are exempt from excise tax:
(a) International carriers of Philippine or foreign registry on their use or

consumption outside the Philippines: Provided, That the petroleum products
sold to these international carriers shall be stored in a bonded storage tank and
may be disposed of only in accordance with the rules and regulations to be
prescribed by the Secretary of Finance, upon recommendation of the
Commissioner;
(b) Exempt entities or agencies covered by tax treaties, conventions and other
international agreement for their use or consumption: Provided, however, That
the country of said foreign international carrier or exempt entities or agencies
exempts from similar taxes petroleum products sold to Philippine carriers,
entities or agencies; and
(c) Entities which are by law exempt from direct and indirect taxes. (Emphasis
supplied.)
Pursuant to Section 135(c), supra, petroleum products sold to entities that are by law
exempt from direct and indirect taxes are exempt from excise tax. The phrase which are
by law exempt from direct and indirect taxes describes the entities to whom the
petroleum products must be sold in order to render the exemption operative. Section
135(c) should thus be construed as an exemption in favor of the petroleum products on
which the excise tax was levied in the first place. The exemption cannot be granted to
the buyers that is, the entities that are by law exempt from direct and indirect taxes
because they are not under any legal duty to pay the excise tax.
CDC was created to be the implementing and operating arm of the Bases Conversion
and Development Authority to manage the Clark Special Economic Zone (CSEZ).20 As a
duly-registered enterprise in the CSEZ, CDC has been exempt from paying direct and
indirect taxes pursuant to Section 2421 of Republic Act No. 7916 (The Special Economic
Zone Act of 1995), in relation to Section 15 of Republic Act No. 9400 (Amending
Republic Act No. 7227, otherwise known as the Bases Conversion Development Act of
1992).22
Inasmuch as its liability for the payment of the excise taxes accrued immediately upon
importation and prior to the removal of the petroleum products from the
customshouse, Chevron was bound to pay, and actually paid such taxes. But the status
of the petroleum products as exempt from the excise taxes would be confirmed only
upon their sale to CDC in 2007 (or, for that matter, to any of the other entities or
agencies listed in Section 135 of the NIRC). Before then, Chevron did not have any legal
basis to claim the tax refund or the tax credit as to the petroleum products.
Consequently, the payment of the excise taxes by Chevron upon its importation of
petroleum products was deemed illegal and erroneous upon the sale of the petroleum
products to CDC. Section 204 of the NIRC explicitly allowed Chevron as the statutory
taxpayer to claim the refund or the credit of the excise taxes thereby paid, viz.:
Page 152 of 378

SEC 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit
Taxes. The Commissioner may
xxxx
(C) Credit or refund taxes erroneously or illegally received or penalties imposed

without authority, refund the value of internal revenue stamps when they are returned
in good condition by the purchaser, and, in his discretion, redeem or change unused
stamps that have been rendered unfit for use and refund their value upon proof of
destruction. No credit or refund of taxes or penalties shall be allowed unless the
taxpayer files in writing with the Commissioner a claim for credit or refund within two
(2) years after payment of the tax or penalty: Provided, however, That a return filed
showing an overpayment shall be considered as a written claim for credit or refund.
It is noteworthy that excise taxes are considered as a kind of indirect tax, the liability for
the payment of which may fall on a person other than whoever actually bears the
burden of the tax.23 Simply put, the statutory taxpayer may shift the economic burden
of the excise tax payment to another usually the buyer.
In cases involving excise tax exemptions on petroleum products under Section 135 of
the NIRC, the Court has consistently held that it is the statutory taxpayer, not the party
who only bears the economic burden, who is entitled to claim the tax refund or tax
credit.24 But the Court has also made clear that this rule does not apply where the law
grants the party to whom the economic burden of the tax is shifted by virtue of an
exemption from both direct and indirect taxes. In which case, such party must be
allowed to claim the tax refund or tax credit even if it is not considered as the statutory
taxpayer under the law.25
The general rule applies here because Chevron did not pass on to CDC the excise taxes
paid on the importation of the petroleum products, the latter being exempt from
indirect taxes by virtue of Section 24 of Republic
Act No. 7916, in relation to Section 15 of Republic Act No. 9400, not because Section
135(c) of the NIRC exempted CDC from the payment of excise tax.
Accordingly, conformably with Section 204(C) of the NIRC, supra, and pertinent
jurisprudence, Chevron was entitled to the refund or credit of the excise taxes
erroneously paid on the importation of the petroleum products sold to CDC.
WHEREFORE, the Court GRANTS petitioner Chevron Philippines, Inc. 's Motion for
Reconsideration; DIRECTS respondent Commissioner of Internal Revenue to refund the
excise taxes in the amount of P6,542,400.00
paid on the petroleum products sold to Clark Development Corporation in the period
from August 2007 to December 2007, or to issue a tax credit certificate of that amount to
Chevron Philippines, Inc.
G.R. No. 188016 January 14, 2015
REPUBLIC OF THE PHILIPPINES, represented by the COMMISSIONER OF

INTERNAL REVENUE, Petitioner, vs. TEAM (PHILS.) ENERGY CORPORATION
(formerly MIRANT (PHILS.) ENERGY CORPORATION), Respondent.
Page 153 of 378

DECISION
The Republic of the Philippines, represented by the Commissioner of Internal Revenue,

appeals the decision promulgated on April 15, 2009,1 whereby the Court of Tax Appeals
En Banc (CTA En Banc) upheld the decision of the CTA in Division rendered on May
15, 2008 ordering the Commissioner of Internal Revenue to refund or to issue a tax
credit certificate in favor of the respondent in the modified amount of P16,366,412.59
representing the respondent's excess and unutilized creditable withholding taxes for
calendar years 2002 and 2003. Antecedents
Respondent Mirant (Philippines) Energy Corporation, a domestic corporation, is

primarily engaged in the business of developing, designing, constructing, erecting,
assembling, commissioning, owning, operating, maintaining, rehabilitating, and
managing gas turbine and other power generating plants and related facilities for
conversion into electricity, coal, distillate and other fuel provided by and under contract
with the Government, or any subdivision, instrumentality or agency thereof, or any
government-owned or controlled corporations or any entity engaged in the
development, supply or distribution of energy.2 On August 16, 2001, the respondent
filed with the Securities and Exchange Commission (SEC) its Amended Articles of
Incorporation stating its intent to change its corporate name from Mirant (Philippines)
Mobile Corporation to Mirant (Philippines) Energy Corporation; and to include the
business of supplying and delivering electricity and providing services necessary in
connection with the supply or delivery of electricity. The SEC approved the amendment
on October 22, 2001.3
The respondent filed its annual income tax return (ITR) for calendar years 2002 and
2003 on April 15, 2003 and April 15, 2004, respectively, reflecting overpaid income taxes
or excess creditable withholding taxes in the amounts of P6,232,003.00
and P10,134,410.00 for taxable years 2002 and 2003, respectively.4 It indicated in the
ITRs its option for the refund of the tax overpayments for calendar years 2002 and
2003.5
On March 22, 2005, the respondent filed an administrative claim for refund or issuance
of tax credit certificate with the Bureau of Internal Revenue (BIR) in the total amount
of P16,366,413.00, representing the overpaid income tax or the excess creditable
withholding tax of the respondent for calendar years 2002 and 2003.6
Due to the inaction of the BIR and in order to toll the running of the two-year
prescriptive period for claiming a refund under Section 229 of the National Internal
Revenue Code (NIRC) of 1997, the respondent filed a petition for review in the Court of
Tax Appeals (CTA) on April 14, 2005.7 In the answer, the petitioner interposed the
following special and affirmative defenses, to wit:
xxxx
3. He reiterates and repleads the preceding paragraphs of this answer as part of

his Special and Affirmative Defenses;
4. Petitioners claim for refund is still subject to the administrative routinary

investigation/examination by the respondent's Bureau;
5. Taxes paid and collected are presumed to have been made in accordance with
law and implementing regulations, hence, not refundable.
Page 154 of 378

6. Petitioner's claim for refund/issuance of tax credit in the amount

of P16,366,413.00, as alleged overpaid income taxes or excess creditable
withholding taxes for taxable year ended December 31, 2002 and December 31,
2003 were not fully substantiated by proper documentary evidence.
7. Petitioner failed to prove that the amount of P16,366,413.00as alleged overpaid

income taxes or excess creditable withholding taxes for taxable year ended
December 31, 2002 and December 31, 2003 were included as part of its gross
income for the said taxable years 2002 and 2003, and did not carry-over to the
succeeding taxable quarter/year the subject of its claim, and the same were not
utilized in payment of its income tax liability for the succeeding taxable
quarter/year.
8. The filing of the instant petition for review with this Honorable Court was
premature since respondent was not given an ample opportunity to examine its
claim for refund;
9. Assuming but without admitting that petitioner is entitled to tax refund, it is

incumbent upon the latter to show that it complied with the provisions of
Sections 204in relation to Section 230 (now 229)of the Tax Code. Otherwise, its
failure to prove the same is fatal to its claim for refund.
10. Claims for refund are construed strictly against the claimant for the same
partake the nature of exemption from taxation (Commissioner of Internal
Revenue v. Ledesma, 31 SCRA 95) and as such, they are looked upon with
disfavor (Western Minolco Corp. v. Commissioner of Internal Revenue, 124
SCRA 121).8
On May 15, 2008, the CTA in Division rendered its decision in favor of the respondent,
disposing thusly:
WHEREFORE, the instant "Petition for Review" is hereby GRANTED. Accordingly,

respondent is hereby ORDERED TO REFUND or TO ISSUE A TAX CREDIT
CERTIFICATE in favor of petitioner in the modified amount of SIXTEEN MILLION
THREE HUNDRED SIXTY-SIX THOUSAND FOUR HUNDRED TWELVE AND 59/100
(P16,366,412.59), representing petitioner's excess and unutilized creditable withholding
taxes for calendar years 2002 and 2003. SO ORDERED.9
The CTA in Division found that the respondent had signified in its ITRs for the same
years its intent to have its excess creditable tax withheld for calendar years 2002 and
2003 be refunded; that the respondents administrative and judicial claims for refund
had been timely filed within the two-year prescriptive period under Section 204 (C) in
relation to Section 229 of the NIRC; that the fact of withholding had been established by
the respondent because it had submitted its certificate of creditable tax withheld at
source showing that the aggregate amount of P17,168,749.60 constituted the CWT
withheld by the respondent onits services to Republic Cement Corporation, Mirant
(Philippines) Industrial Power Corporation and Solid Development Corporation for
taxable years 2002 and 2003; and that the income from which the CWT had been
withheld was duly declared as part of the respondents income in itsannual ITRs for
2002 and 2003.
The petitioner then filed a motion for reconsideration, but the CTA in Division denied
the motion on September 5, 2008.
Page 155 of 378

The petitioner brought a petition for review before the CTA En Banc raising two issues,
namely:
I.
THE SECOND DIVISION OF THISHONORABLE COURT ERRED IN

HOLDING THAT RESPONDENT IS ENTITLED TO ITS CLAIMED REFUND OF
EXCESS ANDUNUTILIZED CREDITABLE WITHHOLDING TAXES FOR
CALENDAR YEARS 2002 AND 2003, SINCE THERE WAS A VIOLATION ON
THE PART OF THE RESPONDENT TO FULLY COMPLYWITH THE
REQUIREMENTS UNDER SECTION 76 OF THE 1997 TAX CODE.
II.
THE SECOND DIVISION OF THIS HONORABLE COURT ERRED IN NOT

APPLYING THE RULE THAT TAX REFUNDS BEING IN THE NATURE OF
TAX EXEMPTION ARE CONSTRUED STRICTISSIMI JURIS AGAINST THE
PERSON OR ENTITY CLAIMING THE EXEMPTION.10
On April 15, 2009, however, the CTA En Banc rendered its assailed judgment, disposing
thus: WHEREFORE, the instant petition is hereby DISMISSED. Accordingly, the
assailed Decision and Resolution are hereby AFFIRMED.
SO ORDERED.11
The CTA En Banc held that the defenses raised by the petitioner were general and
standard arguments to oppose any claim for refund by a taxpayer; that the trial proper
was conducted in the CTA in Division, during which the respondent presented
evidence of its entitlement to the refund and in negation of the defenses of the
petitioner; and that the petitioner raised the issue on the non-presentment of the
respondents quarterly returns for 2002 and 2003 only in the petition for review, which
was not allowed, stating thusly:
This cannot be allowed. Petitioner had the opportunity to raise this issue either during
the trial or at the latest, in his Motion for Reconsideration of the assailed Decision of the
Court in Division but he cited only the following grounds in his motion: x x x
xxxx
In its assailed Resolution, the Court in Division reiterated its finding that respondent
had complied with the substantiation requirements for its entitlement to refund. It also
ruled that the alleged under-declaration of respondent cannot be determined by the
Court since it is the duty of the BIR to investigate and confirm the truthfulness of each
and every item in the ITR. It finally declared that respondent, by presenting copies of
CWT certificates of unutilized CWT, sufficiently complied with the requirements of the
fact of withholding.
Thus, petitioner's averment that Section 76 of the NIRC speaks of quarterly income tax
payments which consequently requires the offer in evidence of quarterly income tax
returns is raised for the first time on appeal with the Court En Banc. It is a well-settled
rule that points of law, theories, issues and arguments not adequately brought to the
attention of the lower court need not be considered by the reviewing court as they
cannot be raised for the first time on appeal. x x x
Page 156 of 378

xxxx
In the present case, petitioner could have simply exercised his power to examine and
verify respondent's claim for refund by presenting the latter's quarterly income tax
returns. The BIR ought to have on file the originals or copies of respondent's quarterly
income tax returns for the subject years, on the basis of which it could rebut
respondent's claim that it did not carry-over its unutilized and excess creditable
withholding taxes for taxable years 2002 and 2003 to the succeeding taxable quarters of
taxable years 2003 and 2004. Petitioner's failure to present these vital documents before
the Court in Division to support his contention against the grant of a tax refund to
respondent, is fatal.
At any rate, Section 76 of the 1997 NIRC speaks only of the filing of the Final Adjusted
Return and as held by the Supreme Court, the Annual ITR or "(t)he Final Adjustment
Return is the most reliable first hand evidence of corporate acts pertaining to income
taxes. In it are found the itemization and summary of additions to and deductions from
income taxes due. These entries are not without rhyme or reason. They are required,
because they facilitate the tax administration process." And in this case, respondent
offered in evidence its Annual ITRs for calendar years 2002, 2003, and 2004.12
As to whether the respondent proved its entitlement to the refund, the CTA En Banc
declared:
However, petitioner's entitlement torefund is still subject to the satisfaction of the

requirements laid down by the NIRC of 1997, as amended, namely:
1. That the claim for refund was filed within the two-year reglamentary period
pursuant to Section 230 of the Tax Code, as amended;
2. That the fact of withholding isestablished by a copy of the statement duly

issued by the payor to the payee showing the amount paid and the amount
withheld therefrom; and
3. That the income upon which the taxes were withheld is included as part of the
gross income declared in the income tax return of the recipient.
Petitioner complied with the first requisite. The subject claim involves calendar years
2002 and 2003. Petitioner filed its Annual Income Tax Returns on April 15, 2003 and
April 15, 2004. Counting from these dates, petitioner had until April 15, 2005 and April
15, 2006 within which to file its administrative and judicial claims for refund. Petitioner
filed with the BIR its administrative claim for refund on March 22, 2005. The instant
petition was filed on April 15,2005. Hence, both the administrative and judicial claims
for refund weretimely filed within the two-year prescriptive period.
Anent the second requirement, the Supreme Court enunciated in the case of Banco
Filipino Savings and Mortgage Bank v. Court of Appeals, Court of Tax Appeals and
Commissioner of Internal Revenue that the fact of withholding isestablished by a copy
of the statement duly issued by the payor to the payee through the Certificates of
Creditable Taxes Withheld at Source. In the present case, petitioner submitted to this
Court as part of its documentary evidence ten (10) Certificates of Creditable Taxes
Withheld at Source. x x x
xxxx
Page 157 of 378

The aggregate amount of P17,168,749.60 constitutes the creditable withholding taxes

withheld from the Certificates of Creditable Tax Withheld at Source on its services to
Republic Cement Corporation, Mirant (Philippines) Industrial Power Corporation and
Solid Development Corporation for taxable years 2002 and 2003.
Regarding the third requisite, the income from which the creditable taxes were
withheld were duly declaredas part of petitioner's income in its Annual Income Tax
Returns for 2002 and 2003.13 x x x
Aggrieved, the petitioner has brought this appeal.
Issue
The issue is whether or not the respondent proved its entitlement to the refund.
The petitioner asserts the necessity of submission of the quarterly return of the
respondent to prove its entitlement to the refund pursuant to Sec. 76 of the NIRC
because such quarterly returns would establish the correctness of the total amount of
payments made and the taxes due as reported on the adjusted return at the end of the
year. The petitioner insists that the amount claimed for refund was not carried over to
the succeeding year; that the submission of the quarterly return would prevent the
possibility of a claimant carrying over the excess credit and then claiming a refund for
it; that the final adjustment return was not sufficient to establish the respondents claim
for refund because it only reflected the sum of the payments made and the taxes due for
the year; that the quarterly return was necessary to prove that the sum, as stated in the
adjusted return, was correct; and that should the respondent chose to carry over the
previous years excess credit, the quarterly returns would prove that the carrying-over
was properly done during the succeeding year.
In its comment/opposition, the respondent, while admitting having the burden of

proving the factual basis for its claim for refund, contends that it discharged its burden.
It counters that with the presentation of its annual ITRs for the years 2002, 2003 and
2004, it already properly established that its excess creditable withholding taxes for
taxable years 2002 and 2003 were not carried over to succeeding taxable periods.
In its reply, the petitioner states that the issue on the respondents failure to present its
quarterly income tax returns for taxable years 2002 and 2003, even if not raised by the
petitioner at the trial, could be raised before the CTA En Banc, because it was
interposed as a defense in the answer; and that every issue raised in an answer may be
raised on appeal even if it was not taken up in the court of original jurisdiction.
Ruling
The petition is without merit.
Section 76 of the NIRC outlines the mechanisms and remedies that a corporate taxpayer
may opt to exercise, viz:
Section 76. Final Adjusted Return.- Every corporation liable to tax under Section 27 shall
file a final adjustment return covering the total taxable income for the preceding
calendar of fiscal year. If the sum of the quarterly tax payments made during the said
taxable year is not equal to the total tax due on the entire taxable income of that year,
the corporation shall either:
Page 158 of 378

(A) Pay the balance of the tax still due; or
(B) Carry over the excess credit; or
(C) Be credited or refunded withthe excess amount paid, as the case may be.
In case the corporation is entitled to a tax credit or refund of the excess estimated
quarterly income taxes paid, the excess amount shown on its final adjustment return
may be carried over and credited against the estimated quarterly income tax liabilities
for the taxable quarters of the succeeding taxable years. Once the option to carry over
and apply the excess quarterly income tax against income tax due for the taxable years
of the succeeding taxable years has been made, such option shall be considered
irrevocable for that taxable period and no application for cash refund or issuance of a
tax credit certificate shall be allowed therefor. (emphasis supplied) The two options are
alternative and not cumulative in nature, that is, the choice of one precludes the other.
The logic behind the rule, according to Philam Asset Management, Inc. v.
Commissioner of Internal Revenue,14 is to ease tax administration, particularly the self-
assessment and collection aspects. In Philam Asset Management, Inc., the Court
expounds on the two alternative options of a corporate taxpayer on how the choice of
one option precludes the other, viz:
The first option is relatively simple. Any tax on income that is paid in excess of the
amount due the government may be refunded, provided that a taxpayer properly
applies for the refund.
The second option works by applying the refundable amount, as shown on the FAR of a
given taxable year, against the estimated quarterly income tax liabilities of the
succeeding taxable year.
These two options under Section 76 are alternative in nature. The choice of one
precludes the other. Indeed, in Philippine Bank of Communications v. Commissioner of
Internal Revenue, the Court ruled that a corporation must signify its intention
whether to request a tax refund or claim a tax credit by marking the corresponding
option box provided in the FAR. While a taxpayer is required to mark its choice in the
form provided by the BIR, this requirement is only for the purpose of facilitating tax
collection.
One cannot get a tax refund and a tax credit at the same time for the same excess
income taxes paid. x x x (emphasis supplied)
In Commissioner of Internal Revenuev. Bank of the Philippine Islands,15 the Court,

citing the pronouncement in Philam Asset Management, Inc., points out that Section 76
of the NIRC of 1997 is clear and unequivocal in providing that the carry-over option,
once actually or constructively chosen by a corporate taxpayer, becomes irrevocable.
The Court explains: Hence, the controlling factor for the operation of the irrevocability
ruleis that the taxpayer chose an option; and once it had already done so, it could no
longer make another one. Consequently, after the taxpayer opts to carry-over its excess
tax credit to the following taxable period, the question of whether or not it actually gets
to apply said tax credit is irrelevant. Section 76 of the NIRC of 1997 is explicit in stating
that once the option to carry over has been made, "no application for tax refund or
issuance of a tax credit certificate shall be allowed therefor."
Page 159 of 378

The last sentence of Section 76 of the NIRC of 1997 reads: "Once the option to carry-over
and apply the excess quarterly income tax against income tax due for the taxable
quarters of the succeeding taxable years has been made, such option shall be considered
irrevocable for that taxable periodand no application for tax refund or issuance ofa tax
credit certificate shall be allowed therefor." The phrase "for that taxable period" merely
identifies the excess income tax, subject of the option, by referring to the taxable period
when it was acquired by the taxpayer. In the present case, the excess income tax credit,
which BPI opted to carry over, was acquired by the said bank during the taxable year
1998. The option of BPI to carry over its 1998 excess income tax credit is irrevocable; it
cannot later on opt to apply for a refund of the very same 1998 excess income tax credit.
The Court of Appeals mistakenly understood the phrase "for that taxable period" as a
prescriptive period for the irrevocability rule. This would mean that since the tax credit
in this case was acquired in 1998, and BPI opted to carry it overto 1999, then the
irrevocability of the option to carry over expired by the end of 1999, leaving BPI free to
again take another option as regards its 1998 excess income tax credit. This construal
effectively renders nugatory the irrevocability rule. The evident intent of the legislature,
in adding the last sentence to Section 76 of the NIRC of 1997, is to keep the taxpayer
from flip-flopping on its options, and avoid confusion and complication as regards said
taxpayer's excess tax credit. The interpretation of the Court of Appeals only delays the
flip-flopping to the end of each succeeding taxable period.
The Court similarly disagrees in the declaration of the Court of Appeals that to deny the
claim for refund of BPI, because of the irrevocability rule, would be tantamount to
unjust enrichment on the part of the government. The Court addressed the very same
argument in Philam, where it elucidated that there would be no unjust enrichment in
the event of denial of the claim for refund under such circumstances, because there
would be no forfeiture of any amount in favor of the government. The amount being
claimed asa refund would remain in the account of the taxpayer until utilized in
succeeding taxable years, as provided in Section 76 of the NIRC of 1997. It is worthy to
note that unlike the option for refund of excess income tax, which prescribes after two
years from the filing of the FAR, there is no prescriptive period for the carrying over of
the same. Therefore, the excess income tax credit of BPI, which it acquired in 1998 and
opted to carry over, may be repeatedly carried over to succeeding taxable years, i.e., to
1999, 2000, 2001, and so on and so forth, until actually applied or credited to a tax
liability of BPI.16(emphasis ours) In the instant case, the respondent opted to be
refunded or to be issued a tax credit certificate, not to carry over the excess withholding
tax for taxable year 2002 to the following taxable year. The taking of the option was
duly noted by the CTA En Banc, citing the decision of the CTA in Division, as follows:
Under Line 30 of the 2002 Annual ITR, petitioner marked "x" the box "To be refunded".
In order toprove that petitioner did not carryover its 2002 excess withholding tax,
petitioner presented its 2003 Annual ITR which does not have any entry inLine 27A
"Prior Year's Excess Credits." Under Line 31 of the same2003 Annual ITR, petitioner
marked "x" the box "To be refunded" and petitioner presented its 2004 Annual ITR,
showing no entry in Line 27A "Prior Year's Excess Credit" to prove that it did not carry-
over its 2003 excess withholding tax.17
Consequently, the only issue that remains is whether the respondent was entitled to the
refund of excess withholding tax.
Page 160 of 378

The requirements for entitlement of a corporate taxpayer for a refund or the issuance of
tax credit certificate involving excess withholding taxes are as follows:
1. That the claim for refund was filed within the two-year reglementary period
pursuant to Section 22918 of the NIRC;
2. When it is shown on the ITR that the income payment received is being
declared part of the taxpayers gross income; and
3. When the fact of withholding is established by a copy of the withholding tax

statement, duly issued by the payor to the payee, showing the amount paidand
income tax withheld from that amount.
We do not expound anymore on the first requirement because even the petitioner does
not contest that the respondent filed its administrative and judicial claim for refund
within the statutory period.
With regard to the second requirement, it is fundamental that the findings of fact by the
CTA in Divisionare not to be disturbed without any showing of grave abuse of
discretion considering that the members of the Division are in the best position to
analyze the documents presented by the parties.19 Consequently, we adopt the findings
of the CTA in Division, which the CTA En Banc cited, as follows.
The above mentioned declarations are further supported by the testimonies of Ms.
Imelda Dela Cruz Tagama, petitioners Accounting Manager and Mr. Ruben R. Rubio,
the Independent Certified Public Accountant (ICPA) duly commissioned by the Court,
proving that the total amount of Creditable Withholding Tax per petitioner's Annual
ITRs for calendar years ended December 31, 2002 and December 31, 2003 agrees with
the total amount of Creditable Withholding Tax presented on petitioners Schedule of
Creditable Withholding Tax Certificates for the calendar years ended December 31, 2002
and December 31, 2003. Moreover, the total amount of gross sales/revenue reported in
the Annual ITRs for calendar years 2002 and 2003 is equal to the amounts recorded in
the General Ledger Listing of the Creditable Withholding Tax on the Transfer of Real
Property and Sale of Electricity, 2002 Reconciliation of Revenue per ITR and per General
Ledger. Hence, the third requirement is satisfied.20
With respect to the third requirement, the respondent proved that it had met the
requirement by presenting the 10 certificates of creditable taxes withheld at source. The
petitioner did not challenge the respondents compliance with the requirement.
We are likewise unmoved by the assertion of the petitioner that the respondent should
have submitted the quarterly returns of the respondent to show that it did not carry-
over the excess withholding tax to the succeeding quarter. When the respondent was
able to establish prima facie its right to the refund by testimonial and object evidence,
the petitioner should have presented rebuttal evidence to shift the burden of evidence
back to the respondent. Indeed, the petitioner ought to have its own copies of the
respondents quarterly returns on file, on the basis of which it could rebut the
respondent's claim that it did not carry over its unutilized and excess creditable
withholding taxes for the immediately succeeding quarters. The BIR's failure to present
such vital document during the trial in order to bolster the petitioner's contention
against the respondent's claim for the tax refund was fatal.21
Page 161 of 378

WHEREFORE, we DENY the petition for review on certiorari, and AFFIRM the decision
promulgated on April 15, 2009.
G.R. No. 183700 October 13, 2014
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. PABLITO ANDAYA y

REANO, Accused-Appellant.
DECISION
The non-presentation of the confidential informant as a witness does not ordinarily

weaken the State's case against the accused. However, if the arresting lawmen arrested
the accused based on the pre-arranged signal from the confidential informant who
acted as the poseur buyer, his nonpresentation must be credibly explained and the
transaction established by other ways in order to satisfy the quantum of proof beyond
reasonable doubt because the arresting lawmen did not themselves participate in the
buy-bust transaction with the accused.
Antecedents
On February 7, 2003, an information for violation of Section 5 of Republic Act No.

91651 (RA 9165) was filed charging Pablito Andaya y Reano (Andaya). The accusatory
portion of the information reads:
That on or about December 16, 2002 at around 9:50 o'clock in the evening at Brgy. San
Jose Sico, Batangas City, Philippines and within the jurisdiction of this Honorable
Court, the above-named accused, not being authorized by law, did then and there,
willfully, unlawfully and feloniously, sell, dispense or deliver, more or less 0.09 gram(s)
of Methamphetamine Hydrochloride (shabu), a dangerous drug, which is a clear
violation of the above-cited law. CONTRARY TO LAW.2
Upon arraignment,3 Andaya pleaded not guilty to the charge. Thereafter, trial on the
merits ensued.
The CA summed up the versions of the parties, as follows:4
Five (5) witnesses were presented by the prosecution, namely: SPO4 Delfin Alea, SPO3
Nelio Lopez, SPO2 Danilo Mercado, SPO4 Protasio Marasigan and Jupri Delantar.
SPO2 Delfin Alea testified that at about 8:00 o'clock in the evening of December 16,
2002, their asset who was conducting surveillance of Pablito Andaya in Barangay San
Jose Sico, Batangas City, arrived at their station. Said asset reported that he had
arranged to buy shabu from Pablito. A team composed of SPO1 Aguila, SPO1
Cabungcal, Eric de Chavez, PO1 Lindberg Yap, Edwalberto Villar and asset Bagsit was
constituted to conduct a buy-bust. Two (2) pieces of P100.00 bills both duly marked "X"
were recorded in the police blotter. Alea gave the marked bills to the asset. Upon
reaching the designated place, the team members alighted from their vehicles and
occupied different positions where they could see and observe the asset. The asset
knocked on the door of Pablito's house. Pablito came out. Pablito and the asset talked
briefly. The asset gave Pablito the marked money. The asset received something from
appellant. The pre-arranged signal signifying consummation of the transaction was
given. The team members approached Pablito and the asset, introduced themselves as
police officers and arrested accused. He was brought to the police station. The arrival of
Page 162 of 378

the team was recorded in the police blotter. The merchandise handed by accused to the
asset was sent to the Regional Crime Laboratory in Camp Vicente Lim, Canlubang,
Laguna. The specimen was positive for methampethamine Hydrochloride (shabu), a
dangerous drug.
SPO2 Lopez received the person of the accused, the marked money and the item
accused handed to the asset. Lopez prepared the request for laboratory examination. He
also prepared the documents required for filing of the case with the Public Prosecutor.
SPO2 Danilo Mercado recorded the marked bills in the police blotter before the buy-
bust. Upon the team's return, the marked money and the merchandise from accused
were turned over to SPO2 Mercado. He prepared a complaint sheet. Thereafter, he
turned over accused and the evidence to the Police Investigator.
SPo4 Protacio Marasigan received a written request for laboratory examination of the
subject merchandise. He brought the request to the crime laboratory in Laguna.
Jupri Delantar, a Forensic Chemical Officer in Camp Vicente Lim, Laguna, conducted
the examination. The merchandise tested positive for shabu.
Accused-appellant denied the charge. He stated that at about 9: 15 in the evening of

December 16, 2002 he was at home watching TV with his family when police officers
arrived. When he opened the door, a police officer poked his gun at him. Somebody else
held a long firearm. Pablito was handcuffed and brought outside. He refused to
negotiate and asked for a warrant. The policemen searched the house, turned over the
beddings and uncovered their furniture. No gun nor shabu was found. Pablito was
brought to the police station and detained. After three (3) days he was released. He
received a subpoena from the Public Prosecutor afterwards.
His wife Crisanta, corroborated appellants' testimony. She added having told her
husband about the loss of their cellphone and the money in his wallet. She was asked to
produce P5,000.00 which she was unable to do. She was able to raise only P2,000.00.
Judgment of the RTC
On February 21, 2006, the Regional Trial Court, Branch 4, in Batangas City (R TC)
rendered its judgment convicting Andaya as charged, and meted him the penalty of life
imprisonment,5 viz:
In the case at bar, the buy-bust operation conducted on the night of December 16, 2002
is supported by the police blotter wherein not only was the depaiiure and arrival of the
operatives have been duly recorded but also the two (2) pieces of marked one hundred
peso bills. The arrest of the accused was made after the police asset had given the pre-
arranged signal outside his house. The marked money was recovered from the very
hand of the accused while the deck of crystalline substances given to the asset upon the
latter's handing over to the accused the marked money has been turned over to the
police by the asset. The crystalline substance when examined at the police crime
laboratory was found to contain methamphetamine hydrochloride a dangerous and
prohibited drug and weighed 0.09 gram.
These foregoing facts have been clearly testified to by the Prosecution witnesses who
are members of the Philippine Integrated National Police Force stationed at Batangas
Page 163 of 378

City. No ill-motive has been imputed to any of these police officers prior to and at the
time the herein accused was arrested on the night of December 16, 2002.
The accused and his wife as a defense denied the sale of shabu that fateful night. There
were allegations in their testimonies that the police demanded money from them. The
wife of the accused even testified that she gave P 1,500.00 to the police officer who then
eventually released said accused. And early on, she even claimed money and a
cellphone were missing after the accused was arrested in their house.
The testimonies of the accused and his wife are bereft of any corroborating evidence
emanating from a disinterested source. It is no less than self-serving devoid of any
credence considering the following circumstances:
1. Scrutinizing the entirety of the testimony of the accused and his wife Crisanta
Andaya, there are material variances gleaned therefrom. The accused himself
never testified that he was pushed to a chair and yet witness Crisanta Andaya
said she saw her husband pushed to a chair. Also, the accused said there were
two guns poked at him when he opened the door but his wife said only one was
holding a gun while another had a long firearm on his shoulder.
2. The testimony of the accused was that only P500.00 was taken by the police
before his release. But the wife said P1,500.00 was given to the police before the
accused was released. 3. The accused and his wife never made any complaint to
the proper authorities as regards the alleged loss of money and cellphone when
the accused was arrested on December 16, 2002. Neither was there any complaint
filed by them for the alleged P500.00 or Pl1500.00 demanded from and given by
them to the police.
4. The accused was a resident of Barangay San Jose Sico, Batangas City since the
1980's why was it that it was at Rosario, Batangas where the accused was
arrested. The Defense gave no evidence to contest the presumption of guilt based
on flight.
5. It is significant to note also that the accused never bothered to ask who was
knocking at his door past 9:00 o'clock in the evening. While his family was
already lying in bed to sleep he was still watching T.V. These actuations of the
accused tend to support the fact that the police asset had made a deal with the
accused for the sale of shabu and was expecting the asset to come that night.
In the light of all foregoing considerations, the Court is left with no alternative than to
find the herein accused criminally liable for the offense charged in the information.
Wherefore, accused Pablito Andaya y Reano is found GUILTY beyond reasonable

doubt of violating Section 5, Article II of Republic Act No. 9165. He is therefore
sentenced to undergo life imprisonment and to pay the costs of this action. The 0.09
gram of methamphetamine hydrochloride subject of this case is confiscated and
directed to be proceeded against pursuant to law.
The accused may be credited with his preventive imprisonment if he is entitled to any.
SO ORDERED.6
Decision of the CA
Page 164 of 378

In his appeal, Andaya contended:
I.
THE TRIAL COURT GRAVELY ERRED IN NOT FINDING THE ACCUSED-

APPELLANT'S SEARCH AND ARREST AS ILLEGAL.
II.
THE TRIAL COURT GRAVELY ERRED IN CONVICTING ACCUSED-

APPELLANT OF THE CRIME CHARGED DESPITE THE FAIL URE OF THE
PROSECUTION TO PROVE HIS GUILT BEYOND REASONABLE DOUBT.7
On February 11, 2008, the CA promulgated its assailed decision affirming the
conviction,8 viz:
WHEREFORE, in view of the foregoing, the appeal is DISMISSED. The decision of

Branch IV, RTC, Fourth Judicial Region, Batangas City, in Criminal Case No. 12771 is
AFFIRMED in toto.
SO ORDERED.9
Issues
Hence, Andaya appeals, insisting that the search of his house and his person and his
arrest by the police officers violated his constitutional right against unreasonable
searches and seizures; and that the Prosecution's nonpresentation of the confidential
informant was adverse to the Prosecution, indicating that his guilt was not proved
beyond reasonable doubt.
Ruling
The appeal is meritorious.
To secure the conviction of the accused who is charged with the illegal sale of
dangerous drugs as defined and punished by Section 5, Article II of Republic Act No.
9165 (Comprehensive Drugs Act of 2002), the State must establish the concurrence of
the following elements, namely: (a) that the transaction or sale took place between the
accused and the poseur buyer; and ( b) that the dangerous drugs subject of the
transaction or sale is presented in court as evidence of the corpus delicti.10
We reiterate that a buy-bust operation is a valid and legitimate form of entrapment of

the drug pusher.11 In such operation, the poseur buyer transacts with the suspect by
purchasing a quantity of the dangerous drug and paying the price agreed upon, and in
turn the drug pusher turns over or delivers the dangerous drug subject of their
agreement in exchange for the price or other consideration. Once the transaction is
consummated, the drug pusher is arrested, and can be held to account under the
criminal law. The justification that underlies the legitimacy of the buy-bust operation is
that the suspect is arrested in jlagranti delicto, that is, the suspect has just committed, or
is in the act of committing, or is attempting to commit the offense in the presence of the
arresting police officer or private person.12 The arresting police officer or private person
is favored in such instance with the presumption of regularity in the performance of
official duty.
Page 165 of 378

Proof of the transaction must be credible and complete. In every criminal prosecution, it
is the State, and no other, that bears the burden of proving the illegal sale of the
dangerous drug beyond reasonable doubt.13 This responsibility imposed on the State
accords with the presumption of innocence in favor of the accused, who has no duty to
prove his innocence until and unless the presumption of innocence in his favor has been
overcome by sufficient and competent evidence.14
Here, the confidential informant was not a police officer. He was designated to be the
poseur buyer himself. It is notable that the members of the buy-bust team arrested
Andaya on the basis of the pre-arranged signal from the poseur buyer. The pre-
arranged signal signified to the members of the buy-bust team that the transaction had
been consummated between the poseur buyer and Andaya. However, the State did not
present the confidential informant/poseur buyer during the trial to describe how
exactly the transaction between him and Andaya had taken place. There would have
been no issue against that, except that none of the members of the buy-bust team had
directly witnessed the transaction, if any, between Andaya and the poseur buyer due to
their being positioned at a distance from the poseur buyer and Andaya at the moment
of the supposed transaction.
The CA did not find anything wrong or odd in the non-presentation of the poseur
buyer as a witness against the accused. In fact, it justified the non-presentation as
follows:
Appellant also questioned the failure of the prosecution to present the informer. The
court is aware of the considerations why confidential informants are usually not
presented by the prosecution. There is the need to hide their identity and preserve their
invaluable service to the police. (People v. Khor, 307 SCRA 295 [1999], citing People v.
Gireng, 241 SCRA 11 [1995].) Foremost is the desire to protect them from being objects
or targets of revenge by the criminals they implicate once they become known. (People
vs. Ong, G.R. No. 137348, June 21, 2004.)
In People vs Lopez (214 SCRA 323), it was held that there was no need for the
prosecution to present the confidential informer as the poseur buyer himself positively
identified the accused as the one who sold to him one deck of methamphetamine
hydrochloride or "shabu." The trial court then properly relied on the testimonies of the
police officers despite the decision of the prosecution not to present the informer.15
The foregoing justification by the CA was off-tangent and does not help the State's
cause any. It is obvious that the rulings cited to supp01i the need to conceal the
confidential infonnants' identities related to the confidential informants who gave
information against suspected drug dealers. The presentation of the confidential
informants as witnesses for the Prosecution in those instances could be excused because
there were poseur buyers who directly incriminated the accused. In this case, however,
it was different, because the poseur buyer and the confidential informant were one and
the same. Without the poseur buyer's testimony, the State did not credibly incriminate
Andaya.
Indeed, Section 5 of Republic Act No. 9165 punishes "any person, who, unless
authorized by law, shall sell, trade, administer, dispense, deliver, give away to another,
distribute, dispatch in transit or transport any dangerous drug, including any and all
species of opium poppy regardless of the quantity and purity involved, or shall act as a
broker in any of such transactions." Under the law, selling was any act "of giving away
any dangerous drug and/or controlled precursor and essential chemical whether for
Page 166 of 378
money or any other consideration;"16 while delivering was any act "of knowingly
passing a dangerous drug to another, personally or otherwise, and by any means, with
or without consideration."17 Given the legal characterizations of the acts constituting the
offense charged, the members of the buy-bust team could not incriminate Andaya by
simply declaring that they had seen from their positions the poseur buyer handing
something to Andaya who, in turn, gave something to the poseur buyer. If the
transaction was a sale, it was unwarranted to infer from such testimonies of the
members of the buy-bust team that what the poseur buyer handed over were the
marked P100.00 bills and that what Andaya gave to the poseur buyer was the shabu
purchased.
Another mark of suspicion attending the evidence of guilt related to the reliance by the
members of the buy-bust team on the pre-arranged signal from the poseur buyer. To
start with, the record does not show what the prearranged signal consisted of. It is
fundamental enough to expect the State to be clear and definite about its evidence of
guilt, particularly here where the conviction of Andaya would require him to spend the
rest of his natural life behind bars. Nothing less should be done here. Secondly, the
reliance on the supposed signal to establish the consummation of the transaction
between the poseur buyer and Andaya was unwarranted because the unmitigatedly
hearsay character of the signal rendered it entirely bereft of trustworthiness. The
arresting members of the buy-bust team interpreted the signal from the anonymous
poseur buyer as the sign of the consummation of the transaction. Their interpretation,
being necessarily subjective without the testimony of the poseur buyer, unfairly
threatened the liberty of Andaya. We should not allow that threat to perpetuate itself.
And, lastly, the reliance on the signal would deprive Andaya the right to confront and
test the credibility of the poseur buyer who supposedly gave it.
We should look at the situation of Andaya with utmost caution because of what our
judicial experience through the years has told us about unscrupulous lawmen resorting
to stratagems of false incrimination in order to arrest individuals they target for ulterior
reasons. In this case, the arrest did not emanate from probable cause, for the formless
signal from the anonymous poseur buyer did not establish beyond reasonable doubt the
elements of illegal sale of dangerous drugs under Section 5 of Republic Act No. 9165.
In affirming the RTC's conviction of the accused, the CA observed that the defense of
frame-up put up by the accused was discredited by the absence of proof of "any intent
on the paii of the police authorities to falsely impute such crime against the accused, the
presumption of regularity in the performance of official duty stands."18Such outright
rejection by the lower courts of Andaya's defense of frame-up is not outrightly binding.
For sure, the frame-up defense has been commonly used in prosecutions based on buy-
bust operations that have led to the an-est of the suspects.19 Its use might be seen as
excessive, but the failure of the accused to impute any ill motives to falsely incriminate
them should not deter us from scrutinizing the circumstances of the cases brought to us
for review. We should remind ourselves that we cannot presume that the accused
committed the crimes they have been charged with. The State must fully establish that
for us. If the imputation of ill motive to the lawmen is the only means of impeaching
them, then that would be the end of our dutiful vigilance to protect our citizenry from
false arrests and wrongful incriminations. We are aware that there have been in the past
many cases of false arrests and wrongful incriminations, and that should heighten our
resolve to strengthen the ramparts of judicial scrutiny.
Page 167 of 378

Nor should we shirk from our responsibility of protecting the liberties of our citizenry
just because the lawmen are shielded by the presumption of the regularity of their
performance of duty. The presumed regularity is nothing but a purely evidentiary tool
intended to avoid the impossible and time-consuming task of establishing every detail
of the performance by officials and functionaries of the Government. Conversion by no
means defeat the much stronger and much firmer presumption of innocence in favor of
every person whose life, property and liberty comes under the risk of forfeiture on the
strength of a false accusation of committing some crime.20 The criminal accusation
against a person must be substantiated by proof beyond reasonable doubt. The Court
should steadfastly safeguard his right to be presumed innocent. Although his innocence
could be doubted, for his reputation in his community might not be lily-white or
lustrous, he should not fear a conviction for any crime, least of all one as grave as drug
pushing, unless the evidence against him was clear, competent and beyond reasonable
doubt. Otherwise, the presumption of innocence in his favor would be rendered empty.
WHEREFORE, the Court REVERSES and SETS ASIDE the decision promulgated on
February 11, 2008; ACQUITS accused Pablito Andaya y Reano for failure to prove his
guilt beyond reasonable doubt; and ORDERS his immediate release from confinement
at the National Penitentiary in Muntinlupa City.
The Court DIRECTS that the Director of the Bureau of Corrections to implement the
immediate release of Pablito Andaya y Reano, unless he is confined for any other lawful
cause; and to report his compliance within ten days from receipt.
OCA IPI No. 12-204-CA-J
Re: VERIFIED COMPLAINT FOR DISBARMENT OF AMA LAND, INC.

(REPRESENTED BY JOSEPH B. USITA) AGAINST COURT OF APPEALS
ASSOCIATE JUSTICES HON. DANTON Q. BUESER, HON. SESINANDO E.
VILLON AND HON. RICARDO R. ROSARIO
DECISION
Unfounded administrative charges against sitting judges truly degrade their judicial
office, and interfere with the due performance of their work for the Judiciary. The
complainant may be held liable for indirect contempt of court as a means of vindicating
the integrity and reputation of the judges and the Judiciary.
AMA Land, Inc., (AMALI) brought this administrative complaint against Associate
Justice Danton Q. Bueser, Associate Justice Sesinando E. Villon and Associate Justice
Ricardo R. Rosario, all members of the Court of Appeals (CA), charging them with
knowingly rendering an unjust judgment, gross misconduct, and violation of their
oaths on account of their promulgation of the decision in C.A.-G.R. SP No. 118994
entitled Wack Wack Residents Association, Inc. v. The Honorable Regional Trial Court
of Pasig City, Branch 264, Assigned in San Juan, and AMA Land, Inc.
Antecedents
AMALI is the owner and developer of the 37-storey condominium project located along
Epifanio Delos Santos Avenue corner Fordham Street in Wack Wack, Mandaluyong
City.1 Due to the projects location, AMALI would have to use Fordham Street as an
access road and staging area for the construction activities. In that regard, AMALI
needed the consent of the Wack Wack Residents Association, Inc. (WWRAI).
Page 168 of 378

Accordingly, AMALI sent a notice to WWRAI, which ignored the notice. Left with no
option, AMALI set up a field office along Fordham Street that it enclosed with a
temporary fence. WWRAI allegedly tried to demolish the field office and set up a fence
to deny access to AMALIs construction workers, which prompted AMALI to file a
petition for the enforcement of an easement of right of way in the Regional Trial Court
(RTC) in Pasig City. The petition, which included an application for a temporary
restraining order (TRO) and/or writ of preliminary mandatory injunction (WPMI), was
docketed as Civil Case No. 65668.2 On July 24, 1997, the RTC granted AMALIs prayer
for the WPMI.3
In the meantime, AMALI converted the condominium project into a 34-storey building
of mixed use (to be known as the AMA Residences) after AMALIs petition for
corporate rehabilitation was approved.4
On January 26, 2010, WWRAI filed in Civil Case No. 65668 an urgent motion to set for
hearing its prayer for a TRO and/or writ of preliminary injunction (WPI) contained in
its answer. The denial of the prayer for injunction by the RTC impelled WWRAI to
bring a petition for certiorari with an application for a TRO and/or writ of preliminary
injunction in the CA to enjoin the RTC from proceeding in Civil Case No. 65668.5
After hearing, the CA issued a TRO, which prompted AMALI to file an Urgent Motion
to Lift and/or Dissolve Temporary Restraining Order and later on a Compliance and
Motion for Reconsideration.
On July 28, 2011, the CA issued a preliminary injunction and required AMALI to file its
Comment. AMALI complied and filed a Comment which also served as its motion for
partial reconsideration of the July 28, 2011 Resolution. On October 12, 2011, AMALI
filed an Urgent Motion to Resolve and to Approve Counterbond. Allegedly, these
motions were left unresolved when the CA Tenth Division, which included Associate
Justices Bueser and Rosario, required the parties to submit their respective
memoranda.6
On June 14, 2012, the Special Former Tenth Division of the CA promulgated a decision
granting the petition of WWRAI.7
AMALI consequently filed a petition for review on certiorari in this Court, docketed as
G.R. No. 202342, entitled AMA Land, Inc. v. Wack Wack Residents Association, Inc.8
AMALI then brought this administrative complaint, alleging that respondent Justices
had conspired with the counsels of WWRAI, namely: Atty. Archibald F. de Mata and
Atty. Myra Jennifer D. Jaud-Fetizanan, in rendering an unjust judgment. AMALI stated
that the decision of the CA had been rendered in bad faith and with conscious and
deliberate intent to favor WWRAI, and to cause grave injustice to AMALI. In thereby
knowingly rendering an unjust judgment, respondent Justices were guilty of gross
misconduct, and violated Canon 1, Rule 1.01 and Canon 1, Rules 10.01 and 10.03 of the
Code of Professional Responsibility, as well as Section 27, Rule 138 of the Rules of
Court.
Issue
Are the respondent Justices liable for knowingly rendering an unjust judgment and
violating Canon 1, Rule 1.01; Canon 10, Rules 10.01 and 10.03 of the Code of
Professional Responsibility; and Section 27, Rule 138 of the Rules of Court?
Page 169 of 378

Ruling
The administrative complaint is bereft of merit.
In administrative proceedings, the complainant has the burden of proving the

allegations of the complaint by substantial evidence.9 Failure to do so will lead to the
dismissal of the complaint for its lack of merit. This is because an administrative charge
against any official of the Judiciary must be supported by at least substantial
evidence.10 But when the charge equates to a criminal offense, such that the judicial
officer may suffer the heavy sanctions of dismissal from the service, the showing of
culpability on the part of the judicial officer should be nothing short of proof beyond
reasonable doubt, especially because the charge is penal in character.11
AMALI fell short of the requirements for establishing its charge of knowingly rendering
an unjust judgment against respondent Justices.
Knowingly rendering an unjust judgment constitutes a serious criminal offense. Article

204, Revised Penal Code, provides that any judge who "knowingly render[s] an unjust
judgment in any case submitted to him for decision" is punished with prision mayor
and perpetual absolute disqualification. To commit the offense, the offender must be a
judge who is adequately shown to have rendered an unjust judgment, not one who
merely committed an error of judgment or taken the unpopular side of a controversial
point of law.12 The term knowingly means "sure knowledge, conscious and deliberate
intention to do an injustice."13 Thus, the complainant must not only prove beyond
reasonable doubt that the judgment is patently contrary to law or not supported by the
evidence but that it was also made with deliberate intent to perpetrate an injustice.
Good faith and the absence of malice, corrupt motives or improper consideration are
sufficient defenses that will shield a judge from the charge of rendering an unjust
decision.14 In other words, the judge was motivated by hatred, revenge, greed or some
other similar motive in issuing the judgment.15 Bad faith is, therefore, the ground for
liability.16 The failure of the judge to correctly interpret the law or to properly
appreciate the evidence presented does not necessarily render him administratively
liable.17
But who is to determine and declare that the judgment or final order that the judicial
officer knowingly rendered or issued was unjust? May such determination and
declaration be made in administrative investigations and proceedings like a preliminary
investigation by the public prosecutor? The answers to these queries are obvious only
a superior court acting by virtue of either its appellate or supervisory jurisdiction over
the judicial actions involved may make such determination and declaration. Otherwise,
the public prosecutor or administrative hearing officer may be usurping a basic judicial
power of review or supervision lodged by the Constitution or by law elsewhere in the
appellate court.
Moreover, AMALIs allegations directly attacked the validity of the proceedings in the
CA through an administrative complaint. The attack in this manner reflected the
pernicious practice by disgruntled litigants and their lawyers of resorting to
administrative charges against sitting judges instead of exhausting all their available
remedies. We do not tolerate the practice. In Re: Verified Complaint of Engr. Oscar L.
Ongjoco, Chairman of the Board/CEO of FH-GYMN Multi-Purpose and Transport
Service Cooperative, against Hon. Juan Q. Enriquez, Jr., Hon. Ramon M. Bato, Jr. and
Hon. Florito S. Macalino, Associate Justices, Court of Appeals,18 we emphatically held
Page 170 of 378

that the filing of administrative complaints or even threats of the filing subverted and
undermined the independence of the Judiciary, to wit:
It is evident to us that Ongjocos objective in filing the administrative complaint was to

take respondent Justices to task for the regular performance of their sworn duty of
upholding the rule of law. He would thereby lay the groundwork for getting back at
them for not favoring his unworthy cause. Such actuations cannot be tolerated at all, for
even a mere threat of administrative investigation and prosecution made against a
judge to influence or intimidate him in his regular performance of the judicial office
always subverts and undermines the independence of the Judiciary.
We seize this occasion, therefore, to stress once again that disciplinary proceedings and
criminal actions brought against any judge in relation to the performance of his official
functions are neither complementary to nor suppletory of appropriate judicial remedies,
nor a substitute for such remedies. Any party who may feel aggrieved should resort to
these remedies, and exhaust them, instead of resorting to disciplinary proceedings and
criminal actions. (Bold emphasis supplied)
It appears that AMALI is prone to bringing charges against judicial officers who rule
against it in its cases. That impression is not at all devoid of basis. The complaint herein
is actually the second one that AMALI has brought against respondent Justices in
relation to the performance of their judicial duty in the same case. In its first complaint
entitled Re: Verified Complaint of AMA Land, Inc. against Hon. Danton Q. Bueser,
Hon. Sesinando E. Villon and Hon. Ricardo R. Rosario, Associate Justices of the Court of
Appeals,19 AMALI accused respondent Justices of: (a) dishonesty and violation of
Republic Act No. 3019, gross misconduct, and knowingly rendering an unjust judgment
or order, in violation of Section 8, Rule 140 of the Rules of Court; and (b) violating
provisions of the New Code of Judicial Conduct. The Court dismissed the first
complaint upon finding that it centered on the propriety of the interlocutory orders
issued by respondent Justices in C.A.-G.R. SP No. 118994. The Court appropriately
observed:
A perusal of the records of the case as well as the parties respective allegations
disclosed that the acts complained of relate to the validity of the proceedings before the
respondent CA Justices and the propriety of their orders in CA-G.R. SP No. 118994
which were done in the exercise of their judicial functions. Jurisprudence is replete with
cases holding that errors, if any, committed by a judge in the exercise of his adjudicative
functions cannot be corrected through administrative proceedings, but should instead
be assailed through available judicial remedies. Disciplinary proceedings against
justices do not complement, supplement or substitute judicial remedies and, thus,
cannot be pursued simultaneously with the judicial remedies accorded to parties
aggrieved by their erroneous orders or judgments.
xxxx
In this case, AMALI had already filed a petition for review on certiorari challenging the
questioned order of the respondent CA justices which is still pending final action by the
Court. Consequently, a decision on the validity of the proceedings and propriety of the
orders of the respondent CA Justices in this administrative proceeding would be
premature. Besides, even if the subject decision or portions thereof turn out to be
erroneous, administrative liability will only attach upon proof that the actions of the
respondent CA Justices were motivated by bad faith, dishonesty or hatred, or attended
by fraud or corruption, which were not sufficiently shown to exist in this case. Neither
Page 171 of 378
was bias as well as partiality established. Acts or conduct of the judge clearly indicative
of arbitrariness or prejudice must be clearly shown before he can be branded the stigma
of being biased and partial. In the same vein, bad faith or malice cannot be inferred
simply because the judgment or order is adverse to a party. Here, other than AMALIs
bare and self-serving claim that respondent CA Justices "conspired with WWRAIs
counsel in knowingly and in bad faith rendering an unjust judgment and in committing
xxx other misconduct," no act clearly indicative of bias and partiality was alleged except
for the claim that respondent CA Justices misapplied the law and jurisprudence. Thus,
the presumption that the respondent judge has regularly performed his duties shall
prevail. Moreover, the matters raised are best addressed to the evaluation of the Court
in the resolution of AMALIs petition for review on certiorari.
Finally, resort to administrative disciplinary action prior to the final resolution of the
judicial issues involved constitutes an abuse of court processes that serves to disrupt
rather than promote the orderly administration of justice and further clog the courts
dockets. Those who seek relief from the courts must not be allowed to ignore basic legal
rules and abuse of court processes in their efforts to vindicate their rights. (Bold
emphasis supplied)
This administrative case is no different from the first. They are identical, with the
complaint herein containing only a few but insignificant changes in relation to the first.
Both were intended to intimidate or to disparage respondent Justices in the
performance of their judicial functions.
The filing of the meritless administrative complaints by AMALI was not only repulsive,
but also an outright disrespect of the authority of the CA and of this Court. Unfounded
administrative charges against judges truly degrade the judicial office, and interfere
with the due performance of their work for the Judiciary. Although the Court did not
then deem fit to hold in the first administrative case AMALI or its representative
personally responsible for the unfounded charges brought against respondent Justices,
it is now time, proper and imperative to do so in order to uphold the dignity and
reputation of respondent Justices, of the CA itself, and of the rest of the Judiciary.
AMALI and its representatives have thereby demonstrated their penchant for
harassment of the judges who did not do its bidding, and they have not stopped doing
so even if the latter were sitting judges. To tolerate the actuations of AMALI and its
representatives would be to reward them with undeserved impunity for an obviously
wrong attitude towards the Court and its judicial officers.
Indeed, no judicial officer should have to fear or apprehend being held to account or to
answer for performing his judicial functions and office because such performance is a
matter of public duty and responsibility. The office and duty to render and administer
justice area function of sovereignty, and should not be simply taken for granted. As a
recognized commentator on public offices and public officers has written:20
It is a general principle, abundantly sustained by authority and reason, that no civil

action can be sustained against a judicial officer for the recovery of damages by one
claiming to have been injured by the officers judicial action within his jurisdiction.
From the very nature of the case, the officer is called upon by law to exercise his
judgment in the matter, and the law holds his duty to the individual to be performed
when he has exercised it, however erroneous or disastrous in its consequences it may
appear either to the party or to others.
Page 172 of 378

A number of reasons, any one of them sufficient, have been advanced in support of this
rule. Thus it is said of the judge: "His doing justice as between particular individuals,
when they have a controversy before him, is not the end and object which were in view
when his court was created, and he was selected to preside over or sit in it. Courts are
created on public grounds; they are to do justice as between suitors, to the end that
peace and order may prevail in the political society, and that rights may be protected
and preserved. The duty is public, and the end to be accomplished is public; the
individual advantage or loss results from the proper and thorough or improper and
imperfect performance of a duty for which his controversy is only the occasion. The
judge performs his duty to the public by doing justice between individuals, or, if he fails
to do justice as between individuals, he may be called to account by the State in such
form and before such tribunal as the law may have provided. But as the duty neglected
is not a duty to the individual, civil redress, as for an individual injury, is not
admissible."21
Accordingly, we now demand that AMALIs authorized representative, Joseph B. Usita,

its Senior Assistant Vice President, and the Members of the Board of Directors of
AMALI who had authorized Usita to file the present complaint, to show cause in
writing why they should not be held in indirect contempt of court for bringing the
unfounded and baseless charges against respondent Justices not only once but twice. To
be clear, the filing of unfounded and baseless administrative charges against sitting
judicial officers may constitute indirect contempt under Section 3(d), Rule 71 of the
Rules of Court, to wit:
Section 3. Indirect contempt to be punished after charge and hearing. After a charge
in writing has been filed, and an opportunity given to the respondent to comment
thereon within such period as may be fixed by the court and to be heard by himself or
counsel, a person guilty of any of the following acts may be punished for indirect
contempt:
(a)Misbehavior of an officer of a court in the performance of his official duties or

in his official transactions;
(b)Disobedience of or resistance to a lawful writ, process, order, or judgment of a

court, including the act of a person who, after being dispossessed or ejected from
any real property by the judgment or process of any court of competent
jurisdiction, enters or attempts or induces another to enter into or upon such real
property, for the purpose of executing acts of ownership or possession, or in any
manner disturbs the possession given to the person adjudged to be entitled
thereto;
(c)Any abuse of or any unlawful interference with the processes or proceedings

of a court not constituting direct contempt under section 1 of this Rule;
(d)Any improper conduct tending, directly or indirectly, to impede, obstruct, or

degrade the administration of justice;
(e)Assuming to be an attorney or an officer of a court, and acting as such without

authority;
(f)Failure to obey a subpoena duly served;
Page 173 of 378

(g)The rescue, or attempted rescue, of a person or property in the custody of an

officer by virtue of an order or process of a court held by him.
But nothing in this section shall be so construed as to prevent the court from issuing
process to bring the respondent into court, or from holding him in custody pending
such proceedings. (3a)
Anent indirect contempt, the Court said in Lorenzo Shipping Corporation v.

Distribution Management Association of the Philippines:22
Contempt of court has been defined as a willful disregard or disobedience of a public

authority. In its broad sense, contempt is a disregard of, or disobedience to, the rules or
orders of a legislative or judicial body or an interruption of its proceedings by
disorderly behavior or insolent language in its presence or so near thereto as to disturb
its proceedings or to impair the respect due to such a body. In its restricted and more
usual sense, contempt comprehends a despising of the authority, justice, or dignity of a
court. The phrase contempt of court is generic, embracing within its legal signification a
variety of different acts.
The power to punish for contempt is inherent in all courts, and need not be specifically
granted by statute. It lies at the core of the administration of a judicial system. Indeed,
there ought to be no question that courts have the power by virtue of their very creation
to impose silence, respect, and decorum in their presence, submission to their lawful
mandates, and to preserve themselves and their officers from the approach and insults
of pollution. The power to punish for contempt essentially exists for the preservation of
order in judicial proceedings and for the enforcement of judgments, orders, and
mandates of the courts, and, consequently, for the due administration of justice. The
reason behind the power to punish for contempt is that respect of the courts guarantees
the stability of their institution; without such guarantee, the institution of the courts
would be resting on a very shaky foundation.23 (Bold emphasis supplied)
ACCORDINGLY, the Court (a) DISMISSES the administrative complaint against

Associate Justice Danton Q. Bueser, Associate Justice Sesinando E. Villon and Associate
Justice Ricardo R. Rosario for its utter lack of merit; and (b) ORDERS Joseph B. Usita,
the Senior Assistant Vice President of AMA Land, Inc., and all the members of the
Board of Directors of AMA Land, Inc. who had authorized Usita to bring the
administrative complaint against respondent Associate Justices to show cause in
writing within 10 days from notice why they should not be punished for indirect
contempt of court for degrading the judicial office of respondent Associate Justices, and
for interfering with the due performance of their work for the Judiciary.
A.C. No. 6732 October 22, 2013
ATTY. OSCAR L. EMBIDO, REGIONAL DIRECTOR, NATIONAL BUREAU OF

INVESTIGATION, WESTERN VISA YAS, REGIONAL OFFICE NBI-WEVRO), FOR
SAN PEDRO, ILOILO CITY, Complainant, vs. ATTY. SALVADOR N. PE, JR.,
ASSISTANT PROVINCIAL PROSECUTOR, SAN JOSE, ANTIQUE, Respondent.
DECISION
A lawyer who forges a court decision and represents it as that of a court of law is guilty
of the gravest misconduct and deserves the supreme penalty of disbarment.
Page 174 of 378

The Case
Before this Court is the complaint for disbarment against Assistant Provincial
Prosecutor Atty. Salvador N Pe, Jr. respondent) of San Jose, Antique for his having
allegedly falsified an in existent decision of Branch 64 of the Regional Trial Court
stationed in Bugasong, Antique (RTC) instituted by the National Bureau of
Investigation (NBI), Western Visayas Regional Office, represented by Regional Director
Atty. Oscar L. Embido.
Antecedent
On July 7, 2004, Atty. Ronel F. Sustituya, Clerk of Court of the RTC, received a written
communication from Mr. Ballam Delaney Hunt, a Solicitor in the United Kingdom
(UK). The letter requested a copy of the decision dated February 12, 1997 rendered by
Judge Rafael O. Penuela in Special Proceedings Case No. 084 entitled In the Matter of
the Declaration of Presumptive Death of Rey Laserna, whose petitioner was one Shirley
Quioyo.1
On September 9, 2004, the RTC received another letter from Mr. Hunt, reiterating the
request for a copy of the decision in Special Proceedings Case No. 084 entitled In the
Matter of the Declaration of Presumptive Death of Rey Laserna.2
Judge Penuela instructed the civil docket clerk to retrieve the records of Special
Proceedings Case No. 084 entitled In the Matter of the Declaration of Presumptive
Death of Rey Laserna. It was then discovered that the RTC had no record of Special
Proceedings No. 084 wherein Shirley Quioyo was the petitioner. Instead, the court files
revealed that Judge Penuela had decided Special Proceedings No. 084 entitled In the
Matter of the Declaration of Presumptive Death of Rolando Austria, whose petitioner
was one Serena Catin Austria.
Informed that the requested decision and case records did not exist,3 Mr. Hunt sent a
letter dated October 12, 2004 attaching a machine copy of the purported decision in
Special Proceedings No. 084 entitled In the Matter of the Declaration of Presumptive
Death of Rey Laserna that had been presented by Shirley Quioyo in court proceedings
in the UK.4
After comparing the two documents and ascertaining that the document attached to the
October 12, 2004 letter was a falsified court document, Judge Penuela wrote Mr. Hunt to
apprise him of the situation.5
The discovery of the falsified decision prompted the Clerk of Court to communicate on
the situation in writing to the NBI, triggering the investigation of the falsification. 6
In the meanwhile, Dy Quioyo, a brother of Shirley Quioyo, executed an affidavit on

March 4, 2005,7 wherein he stated that it was the respondent who had facilitated the
issuance of the falsified decision in Special Proceedings No. 084 entitled In the Matter of
the Declaration of Presumptive Death of Rey Laserna for a fee of P60,000.00. The
allegations against the respondent were substantially corroborated by Mary Rose
Quioyo, a sister of Shirley Quioyo, in an affidavit dated March 20, 2005.8
The NBI invited the respondent to explain his side,9 but he invoked his constitutional
right to remain silent. The NBI also issued subpoenas to Shirley Quioyo and Dy Quioyo
but only the latter appeared and gave his sworn statement.
Page 175 of 378

After conducting its investigation, the NBI forwarded to the Office of the Ombudsman
for Visayas the records of the investigation, with a recommendation that the respondent
be prosecuted for falsification of public document under Article 171, 1 and 2, of the
Revised Penal Code, and for violation of Section 3(a) of Republic Act 3019 (The Anti-
Graft and Corrupt Practices Act).10 The NBI likewise recommended to the Office of the
Court Administrator that disbarment proceedings be commenced against the
respondent.11 Then Court Administrator Presbitero J. Velasco, Jr. (now a Member of the
Court) officially endorsed the recommendation to the Office of the Bar Confidant.12
Upon being required by the Court, the respondent submitted his counter-
affidavit,13 whereby he denied any participation in the falsification. He insisted that Dy
Quioyo had sought his opinion on Shirleys petition for the annulment of her marriage;
that he had given advice on the pertinent laws involved and the different grounds for
the annulment of marriage; that in June 2004, Dy Quioyo had gone back to him to
present a copy of what appeared to be a court decision;14 that Dy Quioyo had then
admitted to him that he had caused the falsification of the decision; that he had advised
Dy Quioyo that the falsified decision would not hold up in an investigation; that Dy
Quioyo, an overseas Filipino worker (OFW), had previously resorted to people on Recto
Avenue in Manila to solve his documentation problems as an OFW; and that he had
also learned from Atty. Angeles Orquia, Jr. that one Mrs. Florencia Jalipa, a resident of
Igbalangao, Bugasong, Antique, had executed a sworn statement before Police
Investigator Herminio Dayrit with the assistance of Atty. Orquia, Jr. to the effect that
her late husband, Manuel Jalipa, had been responsible for making the falsified
document at the instance of Dy Quioyo.15
Thereafter, the Court issued its resolution16 treating the respondents counter-affidavit
as his comment, and referred the case to the Integrated Bar of the Philippines (IBP) for
investigation, report and recommendation.
The IBPs Report and Recommendation
In a report and recommendation dated June 14, 2006,17 Atty. Lolita A. Quisumbing, the
IBP Investigating Commissioner, found the respondent guilty of serious misconduct
and violations of the Attorneys Oath and Code of Professional Responsibility , and
recommended his suspension from the practice of law for one year. She concluded that
the respondent had forged the purported decision of Judge Penuela by making it
appear that Special Proceedings No. 084 concerned a petition for declaration of
presumptive death of Rey Laserna, with Shirley Quioyo as the petitioner, when in truth
and in fact the proceedings related to the petition for declaration of presumptive death
of Rolando Austria, with Serena Catin Austria as the petitioner;18 and that the
respondent had received P60,000.00 from Dy Quioyo for the falsified decision. She
rationalized her conclusions thusly:
Respondents denials are not worthy of merit. Respondent contends that it was one
Manuel Jalipa (deceased) who facilitated the issuance and as proof thereof, he presented
the sworn statement of the widow of Florencia Jalipa (sic). Such a contention is hard to
believe. In the first place, if the decision was obtained in Recto, Manila, why was it an
almost verbatim reproduction of the authentic decision on file in Judge Penuelas
branch except for the names and dates? Respondent failed to explain this. Secondly,
respondent did not attend the NBI investigation and merely invoked his right to remain
silent. If his side of the story were true, he should have made this known in the
investigation. His story therefore appears to have been a mere afterthought. Finally,
Page 176 of 378

there is no plausible reason why Dy Quioyo and his sister, Mary Rose Quioyo would
falsely implicate him in this incident.19
In its Resolution No. XVII-2007-063 dated February 1, 200,20 the IBP Board of Governors
adopted and approved, with modification, the report and recommendation of the
Investigating Commissioner by suspending the respondent from the practice of law for
six years.
On December 11, 2008, the IBP Board of Governors passed Resolution No. XVIII-2008-
70921 denying the respondents motion for reconsideration and affirming Resolution
No. XVII-2007-063. The IBP Board of Governors then forwarded the case to the Court in
accordance with Section 12(b), Rule 139-B22 of the Rules of Court.
On January 11, 2011, the Court resolved: (1) to treat the respondents
comment/opposition as his appeal by petition for review; (2) to consider the
complainants reply as his comment on the petition for review; (3) to require the
respondent to file a reply to the complainants comment within 10 days from notice;
and (4) to direct the IBP to transmit the original records of the case within 15 days from
notice.
Ruling
We affirm the findings of the IBP Board of Governors. Indeed, the respondent was
guilty of grave misconduct for falsifying a court decision in consideration of a sum of
money.
The respondents main defense consisted in blanket denial of the imputation. He

insisted that he had had no hand in the falsification, and claimed that the falsification
had been the handiwork of Dy Quioyo. He implied that Dy Quioyo had resorted to the
shady characters in Recto Avenue in Manila to resolve the problems he had
encountered as an OFW, hinting that Dy Quioyo had a history of employing
unscrupulous means to achieve his ends.
However, the respondents denial and his implication against Dy Quioyo in the illicit
generation of the falsified decision are not persuasive. Dy Quioyos categorical
declaration on the respondents personal responsibility for the falsified decision, which
by nature was positive evidence, was not overcome by the respondents blanket denial,
which by nature was negative evidence.23
Also, the imputation of wrongdoing against Dy Quioyo lacked credible specifics and
did not command credence. It is worthy to note, too, that the respondent filed his
counter-affidavit only after the Court, through the en banc resolution of May 10, 2005,
had required him to comment.24 The belatedness of his response exposed his blanket
denial as nothing more than an after thought.
The respondent relied on the sworn statement supposedly executed by Mrs. Jalipa that
declared that her deceased husband had been instrumental in the falsification of the
forged decision. But such reliance was outrightly worthless, for the sworn statement of
the wife was rendered unreliable due to its patently hearsay character. In addition, the
unworthiness of the sworn statement as proof of authorship of the falsification by the
husband is immediately exposed and betrayed by the falsified decision being an almost
verbatim reproduction of the authentic decision penned by Judge Penuela in the real
Special Proceedings Case No. 084.
Page 177 of 378

In light of the established circumstances, the respondent was guilty of grave

misconduct for having authored the falsification of the decision in a non-existent court
proceeding. Canon 7 of the Code of Professional Responsibility demands that all
lawyers should uphold at all times the dignity and integrity of the Legal Profession.
Rule 7.03 of the Code of Professional Responsibility states that "a lawyer shall not
engage in conduct that adversely reflects on his fitness to practice law, nor shall he
whether in public or private life, behave in a scandalous manner to the discredit of the
legal profession." Lawyers are further required by Rule 1.01 of the Code of Professional
Responsibility not to engage in any unlawful, dishonest and immoral or deceitful
conduct.
Gross immorality, conviction of a crime involving moral turpitude, or fraudulent

transactions can justify a lawyers disbarment or suspension from the practice of
law.25 Specifically, the deliberate falsification of the court decision by the respondent
was an act that reflected a high degree of moral turpitude on his part. Worse, the act
made a mockery of the administration of justice in this country, given the purpose of
the falsification, which was to mislead a foreign tribunal on the personal status of a
person. He thereby became unworthy of continuing as a member of the Bar.
It then becomes timely to remind all members of the Philippine Bar that they should do
nothing that may in any way or degree lessen the confidence of the public in their
professional fidelity and integrity.26 The Court will not hesitate to wield its heavy hand
of discipline on those among them who wittingly and willingly fail to meet the
enduring demands of their Attorneys Oath for them to:
x x x support the Constitution and obey the laws as well as the legal orders of the duly
constituted authorities therein; xxx do no falsehood, nor consent to the doing of any in
court; x x x not wittingly or willingly promote or sue on groundless, false or unlawful
suit, nor give aid nor consent to the same; x x x delay no man for money or malice, and
x x x conduct themselves as lawyers according to the best of their knowledge and
discretion with all good fidelity as well to the courts as to their clients x x x.
No lawyer should ever lose sight of the verity that the practice of the legal profession is
always a privilege that the Court extends only to the deserving, and that the Court may
withdraw or deny the privilege to him who fails to observe and respect the Lawyers
Oath and the canons of ethical conduct in his professional and private capacities. He
may be disbarred or suspended from the practice of law not only for acts and omissions
of malpractice and for dishonesty in his professional dealings, but also for gross
misconduct not directly connected with his professional duties that reveal his unfitness
for the office and his unworthiness of the principles that the privilege to practice law
confers upon him.27 Verily, no lawyer is immune from the disciplinary authority of the
Court whose duty and obligation are to investigate and punish lawyer misconduct
committed either in a professional or private capacity.28 The test is whether the conduct
shows the lawyer to be wanting in moral character, honesty, probity, and good
demeanor, and whether the conduct renders the lawyer unworthy to continue as an
officer of the Court.29 WHEREFORE, the Court FINDS AND PRONOUNCES ASST.
PROVINCIAL PROSECUTOR SALVADOR N. PE, JR. guilty of violating Rule 1.01 of
Canon 1, and Rule 7.03 of Canon 7 of the Code of Professional Responsibility, and
DISBARS him effective upon receipt of this decision.
The Court DIRECTS the Bar Confidant to remove the name of ASST. PROVINCIAL
PROSECUTOR SALVADOR N. PE, JR. from the Roll of Attorneys.
Page 178 of 378

This decision is without prejudice to any pending or contemplated proceedings to be

initiated against ASST. PROVINCIAL PROSECUTOR SALVADOR N. PE, JR.
Let copies of this decision be furnished to the Office of the Bar Confidant the Office of
the Court Administrator for dissemination to all courts of the country and to the
Integrated Bar of the Philippines.
G.R. No. 160107 October 22, 2014
SPOUSES JAIME SEBASTIAN AND EVANGELINE SEBASTIAN, Petitioners, vs.

BPI FAMILY BANK, INC., CARMELITA ITAPO AND BENJAMIN
HAO, Respondents.
DECISION
The protection of Republic Act No. 6552 (Realty Installment Buyer Protection Act) does
not cover a loan extended by the employer to enable its employee to finance the
purchase of a house and lot. The law protects only a buyer acquiring the property by
installment, not a borrower whose rights are governed by the terms of the loan from the
employer.
The Case
Under appeal is the decision promulgated on November 21, 2002,1 whereby the Court
of Appeals (CA) affirmed the dismissal of the action for injunction filed by the
petitioners against the respondents to prevent the foreclosure of the mortgage
constituted on the house and lot acquired out of the proceeds of the loan from
respondent BPI Family Bank (BPI Family), their employer.
Antecedents
The petitioners are spouses who used to work for BPI Family. At the time material to
this case, Jaime was the Branch Manager of BPI Familys San Francisco del Monte
Branch in Quezon City and Evangeline was a bank teller at the Blumentritt Branch in
Manila. On October 30, 1987, they availed themselves of a housing loan from BPI
Family as one of the benefits extended to its employees. Their loan amounted
to P273,000.00, and was covered by a Loan Agreement,2 whereby they agreed that the
loan would be payable in 108 equal monthly amortizations of P3,277.57 starting on
January 10, 1988 until December 10, 1996;3 and that the monthly amortizations would be
deducted from his monthly salary.4 To secure the payment of the loan, they executed a
real estate mortgage in favor of BPI Family5 over the property situated in Bo. Ibayo,
Marilao, Bulacan and covered by TCT No. T-30.827 (M) of the Register of Deeds of
Bulacan.6
Apart from the loan agreement and the real estate mortgage, Jaime signed an undated
letter-memorandum addressed to BPI Family,7 stating as follows:
In connection with the loan extended to me by BPI Family Bank, I hereby authorize you
to automatically deduct an amount from my salary or any money due to me to be
applied to my loan, more particularly described as follows:
xxxx
Page 179 of 378

This authority is irrevocable and shall continue to exist until my loan is fully paid. I
hereby declare that I have signed this authority fully aware of the circumstances leading
to the loan extended to me by BPI Family Bank and with full knowledge of the rights,
obligations, and liabilities of a borrower under the law.
I am an employee of BPI Family Bank and I acknowledge that BPI Family Bank has
granted to me the above-mentioned loan in consideration of this relationship. In the
event I leave, resign or am discharged from the service of BPI Family Bank or my
employment with BPI Family Bank is otherwise terminated, I also authorize you to
apply any amount due me from BPI Family Bank to the payment of the outstanding
principal amount of the aforesaid loan and the interest accrued thereon which shall
thereupon become entirely due and demandable on the effective date of such discharge,
resignation or termination without need of notice of demand, and to do such other acts
as may be necessary under the circumstances. (Bold emphasis added)
x x x x.
The petitioners monthly loan amortizations were regularly deducted from Jaimes
monthly salary since January 10, 1988. On December 14, 1989, however, Jaime received
a notice of termination from BPI Familys Vice President, Severino P.
Coronacion,8 informing him that he had been terminated from employment due to loss
of trust and confidence resulting from his wilful non-observance of standard operating
procedures and banking laws. Evangeline also received a notice of termination dated
February 23, 1990,9 telling her of the cessation of her employment on the ground of
abandonment. Both notices contained a demand for the full payment of their
outstanding loans from BPI Family, viz:
Demand is also made upon you to pay in full whatever outstanding obligations by way
of Housing Loans,Salary Loans, etc. that you may have with the bank. You are well
aware that said obligations become due and demandable upon your separation from
the service of the bank.10 (Emphasis supplied.)
Immediately, the petitioners filed a complaint for illegal dismissal against BPI Family in
the National Labor Relations Commission (NLRC).11
About a year after their termination from employment, the petitioners received a
demand letter dated January 28, 1991 from BPI Familys counsel requiring them to pay
their total outstanding obligation amounting toP221,534.50.12 The demand letter stated
that their entire outstanding balance had become due and demandable upon their
separation from BPI Family. They replied through their counsel on February 12, 1991.13
In the meantime, BPI Family instituted a petition for the foreclosure of the real estate
mortgage.14 The petitioners received on March 6, 1991 the notice of extrajudicial
foreclosure of mortgage dated February 21, 1991.
To prevent the foreclosure of their property, the petitioners filed against the
respondents their complaint for injunction and damages with application for
preliminary injunction and restraining order15 in the Regional Trial Court (RTC) in
Malolos, Bulacan.16 They therein alleged that their obligation was not yet due and
demandable considering that the legality of their dismissal was still pending resolution
by the labor court; hence, there was yet no basis for the foreclosure of the mortgaged
property; and that the property sought to be foreclosed was a family dwelling in which
they and their four children resided.
Page 180 of 378

In its answer with counterclaim,17 BPI Family asserted that the loan extended to the
petitioners was a special privilege granted to its employees; that the privilege was
coterminous withthe tenure of the employees with the company; and that the
foreclosure of the mortgaged property was justified by the petitioners failure to pay
their past due loan balance.
Judgment of the RTC
On June 27, 1995, the RTC rendered judgment,18 disposing thusly:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court hereby renders

judgment DISMISSING the instant case as well as defendant banks counterclaim
withoutany pronouncement as to costs.
SO ORDERED.19
Decision of the CA
The petitioners appealed upon the following assignment of errors, namely:
I. THE TRIAL COURT ERRED IN FINDING THAT APPELLEE BANKS

FORECLOSURE OF THE REAL ESTATE MORTGAGE CONSTITUTED ON
APPELLANTS FAMILY HOME WAS IN ORDER.
A. Appellants cannot be consideredas terminated from their employment

with appellee bank during the pendency of their complaint for illegal
dismissal with the NLRC.
B. Appellee bank wrongfully refused to accept the payments of

appellants monthly amortizations.
II. THE TRIAL COUT ERRED IN DENYING APPELLANTS PRAYER FOR

INJUNCTION.
A. The foreclosure of appellants mortgage was premature.
B. Appellants are entitled to damages.20
On November 21, 2002, the CA promulgated its assailed decision affirming the
judgment of the RTC in toto.21
The petitioners then filed their motion for reconsideration,22 in which they contended
for the first timethat their rights under Republic Act No. 6552 (Realty Installment Buyer
Protection Act) had been disregarded, considering that Section 3 of the law entitled
them to a grace period within which to settle their unpaid installments without interest;
and that the loan agreement was in the natureof a contract of adhesion that must be
construed strictly against the one who prepared it, that is, BPI Family itself.
On September 18, 2003, the CA denied the petitioners motion for reconsideration.23
Issues
Page 181 of 378

In this appeal, the petitioners submit for our consideration and resolution the following
issues, to wit:
WHETHER OR NOT RESPONDENT COURT OF APPEALS GRAVELY ERRED IN

DECLARING THE FORECLOSURE OF THE REAL ESTATE MORTGAGE ON
PETITIONERS FAMILY HOME IN ORDER.
WHETHER OR NOT RESPONDENT COURT OF APPEALS GRAVELY ERRED IN

DENYING PETITIONERS MOTION FOR RECONSIDERATION DESPITE
JUSTIFIABLE REASONS THEREFOR.24
Ruling
The petition for review has no merit.
When the petitioners appealed the RTC decision to the CA, their appellants brief
limited the issues to the following:
(a) Whether or not appellee bank wrongfully refused to accept payments by

appellants of their monthly amortizations.
(b) Whether or not the foreclosure of appellants real estate mortgage was
premature.25
The CA confined its resolution to these issues. Accordingly, the petitioners could not
raise the applicability of Republic Act No. 6552, or the strict construction of the loan
agreement for being a contract of adhesion as issues for the first time either in their
motion for reconsideration or in their petition filed in this Court. To allow them to do so
would violate the adverse parties right to fairness and due process. As the Court held
in S.C. Megaworld Construction and Development Corporation v. Parada:26
It is well-settled that no question will be entertained on appeal unless it has been raised
in the proceedings below. Points of law, theories, issues and arguments not brought to
the attention of the lower court, administrative agency or quasi-judicial body, need not
be considered by the viewing court, as they cannot be raised for the first time at that late
stage. Basic considerations of fairness and due process impel this rule. Any issue raised
for the first time on appeal is barred by estoppel.
The procedural misstep of the petitioners notwithstanding, the Court finds no

substantial basis to reverse the judgments of the lower courts.
Republic Act No. 6552 was enacted to protect buyers of real estate on installment
payments against onerous and oppressive conditions.27 The protections accorded to the
buyers were embodied in Sections 3, 4 and 5 of the law, to wit:
Section 3. In all transactions or contracts, involving the sale or financing of real estateon
installment payments, including residential condominium apartments but excluding
industrial lots, commercial buildings and sales to tenants under Republic Act
Numbered Thirty-Eight hundred forty-four as amended byRepublic Act Sixty-three
hundred eighty-nine, where the buyer has paid atleast two years of installments, the
buyer is entitled to the following rights in case he defaults in the payment of succeeding
installments:
Page 182 of 378

(a) To pay, without additional interest, the unpaid installments due within the
total grace period earned by him which is hereby fixed at that rate of one month
grace period for every one year of installment payments made; provided, That
this right shall be exercised by the Buyer only once in every five years of the life
of the contract and its extensions, if any.
(b) If the contract is cancelled, the seller shall refund to the buyer the cash
surrender value of the payments on the property equivalent to fifty percent of
the total payments made, and, after five years of installments, an additional five
per cent every year but not to exceed ninety per cent of the total payments made;
Provided, That the actual cancellation or the demand for rescission of the
contract by a notarial act and upon full payment of the cash surrender value to
the buyer.
Down payments, deposits or options on the contract shall be included in the

computation of the total number of installment payments made.
SECTION 4. In case where less than two years of installments were paid, the seller shall
give the buyers a grace period of not less than sixty days from the date the installment
become due.
If the buyer fails to pay the installments due at the expiration of the grace period, the
seller may cancel the contract after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act.
SECTION 5. Under Section 3 and 4,the buyer shall have the right to sell his rights or
assign the same to another person or to reinstate the contract by updating the account
during the grace period and before actual cancellation of the contract. The deed of sale
or assignment shall be done by notarial act.
Having paid monthly amortizations for two years and four months, the petitioners now
insist that they were entitled to the grace period within which to settle the unpaid
amortizations without interest provided under Section 3, supra.28 Otherwise, the
foreclosure of the mortgaged property should be deemed premature inasmuch as their
obligation was not yet due and demandable.29
The petitioners insistence would have been correct if the monthly amortizations being
paid to BPI Family arose from a sale or financing of real estate. In their case, however,
the monthly amortizations represented the installment payments of a housing loan that
BPI Family had extended to them as an employees benefit. The monthly amortizations
they were liable for was derived from a loan transaction, not a sale transaction, thereby
giving rise to a lender-borrower relationship between BPI Family and the petitioners. It
bears emphasizing that Republic Act No. 6552 aimed to protect buyers of real estate on
installment payments, not borrowers or mortgagors who obtained a housing loan to
pay the costs of their purchase of real estate and used the real estate assecurity for their
loan. The "financing of real estate in installment payments" referred to in Section 3,
supra, should be construed only as a mode of payment vis--vis the seller of the real
estate, and excluded the concept of bank financing that was a type of loan. Accordingly,
Sections 3, 4 and 5, supra, must be read as to grant certain rights only to defaulting
buyers of real estate on installment, which rights are properly demandable only against
the seller of real estate.
Thus, in Luzon Brokerage Co., Inc. v.Maritime Building Co., Inc.,30 the Court held:
Page 183 of 378

Congress in enacting in September 1972 Republic Act 6552 (the Maceda law), has by law
which is its proper and exclusive province (and not that of this Court which is not
supposed to legislate judicially) has taken care of Justice Barredos concern over "the
unhappy and helpless plight of thousands upon thousands of subdivision buyers" of
residential lots.
The Act even in residential properties recognizes and reaffirms the vendor's right to
cancel the contractto sell upon breach and non-payment of the stipulated installments
but requires a grace period after at least two years of regular installment payments (of
one month for every one year of installment payments made, but to be exercise by the
buyer only once in every five years of the life of the contract) with a refund of certain
percentages of payments made on account of the cancelled contract (starting with fifty
percent with gradually increasing percentages after five years of installments). In case
of industrial and commercial properties, as in the case at bar, the Act recognizes and
reaffirms the Vendor's right unqualifiedly to cancel the sale upon the buyer's default.
The petitioners purchased the realestate from PHILVILLE Realty,31 not from BPI
Family. Without the buyer-seller relationship between them and BPI Family, the
provisions of Republic Act No. 6552 were inapplicable and could not be invoked by
them against BPI Family.
Apart from relying on the grace period provided in Republic Act No. 6552 to assert the
prematurity of the foreclosure of the mortgage,32 the petitioners argue that the
foreclosure of the mortgage was null and void because BPI Familys acceptance of their
late payments estopped it from invoking sanctions against them.33 They further argue
that the printed conditions appearing at the back of BPI Familys official receipt,34 which
the CA cited to affirm the validity of the foreclosure, partook of a contract of adhesion
that must be strictly construed against BPI Family as the party who prepared the
same.35
The petitioners arguments do not persuade. To reiterate, their reliance on Republic Act
No. 6552 was misplaced because its provisions could not extend to a situation bereft of
any seller-buyer relationship. Hence, they could not escape the consequences of the
maturity of their obligation by invoking the grace period provided in Section 3, supra.
The CA correctly found that there was basis to declare the petitioners entire
outstanding loan obligation matureas to warrant the foreclosure of their mortgage. It is
settled that foreclosure is valid only when the debtor is in default in the payment of his
obligation.36 Here, the records show that the petitioners were defaulting borrowers, a
fact that the CA thoroughly explained in the following manner:
Appellants insist that there was no valid ground for appellee bank to institute the
foreclosure proceedings because they still have a pending case for illegal dismissal
before the NLRC. They argue that the reason for the banks foreclosure is their dismissal
from employment. As they are still questioning the illegality of their dismissal, the bank
has no legal basis in foreclosing the property.
xxxx
The arguments fail to persuade Us.
First, appellants cannot rely on the mere possibility that if the decision of the NLRC will
be in their favor, part of the reliefs prayed for would be reinstatement without loss of
Page 184 of 378

seniority and other privilege. Such argument is highly speculative. On the contrary, in a
thirteen-page decision, the Labor Arbiter exhaustively discussed the validity of
appellant Jaime Sebastians termination. x x x
xxxx
Moreover, appellants appealed the Labor Arbiters decision as early as January 10, 1994.
To date, however, nothing has been heard from appellants if they obtained a favorable
judgment from the NLRC.
Second, even if it turns out the appellants werenot validly terminated from their
employment, there is valid reason to foreclose the mortgaged property.
Appellants themselves admit that they were in arrears when they made the late
payments in March, 1991. While this admission was not in the course of the testimony
of appellant Jaime Sebastian, this was done during the hearing of the case when the trial
judge propounded the question to him. Hence, this constitute (sic) judicial admission.
An admission, verbal or written, made by a party in the course of the trial or other
proceedings in the same case does not require proof. The admission may be
contradicted only by showing that it was made through palpable mistake or that no
such admission is made. Judicial admissions are those made voluntarily by a party,
which appear on record in the proceedings of the court. Formal acts done by a party or
his attorney in court on the trial of a cause for the purpose of dispensing with proof by
the opposing party of some fact claimed by the latter to be true.
xxxx
Fourth, the terms and conditions of the loan agreement, promissory notes and the real
estate mortgage contract, do not partake of a contract of adhesion. It must be noted that
appellants are personnel of the bank.
Jaime Sebastian was then a branch manager while his wife Evangeline was a bank teller.
It is safe to conclude that they are familiar with the documents they signed, including
the conditions stated therein. It is also presumed that they take ordinary care of their
concerns and that they voluntarily and knowingly signed the contract.
Appellant Jaime Sebastian, in his letter addressed to appellee bank, even acknowledged
that "in the event of resignation or otherwise terminated from his employment, the
principal as well as the interest due shall become entirely due and demandable" (Exh.
"E"). The freedom to enter into contracts is protected by law and the courts are not quick
to interfere with such freedom unless the contract is contrary to law, morals, good
customs, public policy or public order. Courts are not authorized to extricate parties
from the necessary consequences of their acts, and the fact that the contractual
stipulations may turn out to be financially disadvantageous will not relieve parties
thereto of their obligations,
Fifth, We cannot also buy appellants argument that appellee refused to accept the
subsequent payments made by them. It is settled that an issue which was not raised
during the trial in the court below could not be raised for the first time on appeal, as to
do so, would be offensive to the basic rules of fair play, justice and due process. Here,
appellant Jaime Sebastian twice testified before the Court, first, during the hearing on
the preliminary injunction and on the trial proper. Nothing was mentioned about the
refusal on the part of the bank to accept their subsequent payments.
Page 185 of 378

Assuming, arguendo, that appellee bank indeed refused to accept the subsequent
payment from appellants, they could have consigned the same before the Court. They
failed to do so. There was no effort on their part to continue paying their obligations.
Thus, having signed a deed of mortgage in favor of appellee bank, appellants should
have foreseen thatwhen their principal obligation was not paid when due, the
mortgagee has the right to foreclose the mortgage and to have the property seized and
sold with a view to applying the proceeds to the payment ofthe principal obligation.37
Equally notable was that Jaimes undated letter-memorandum to BPI Family expressly
stated the following:
x x x In the event I leave, resign or amdischarged from the service of BPI Family Bank or
my employment with BPI Family Bank is otherwise terminated, I also authorize you to
apply any amount due me from BPI Family Bank to the payment of the outstanding
principal amount of the aforesaid loan and the interest accrued thereon which shall
there upon become entirely due and demandable on the effective date of such
discharge, resignation or termination without need of notice of demand, and to do such
other acts as may be necessary under the circumstances.38
(Bold emphasis supplied.)
The petitioners thereby explicitly acknowledged that BPI Family Bank had granted the
housing loan inconsideration of their employer employee relationship. They were thus
presumed to understand the conditions for the grant of their housing loan. Considering
that the maturity of their loan obligation did not depend on the legality of their
termination from employment, their assertion that the resolution of their labor
complaint for illegal dismissal was prejudicial to the ripening of BPI Familys cause of
action was properly rejected. Indeed, a finding of illegal dismissal in their favor would
not automatically and exclusively result in their reinstatement. As fittingly ruled in Bani
Rural Bank, Inc. v. De Guzman:39
"By jurisprudence derived from this provision, separation pay may [also] be awarded to
an illegally dismissed employee in lieu of reinstatement." Section 4(b), Rule I of the
Rules Implementing Book VI of the Labor Code provides the following instances when
the award of separation pay, in lieu of reinstatement to an illegally dismissed employee,
is proper: (a) when reinstatement is no longer possible, in cases where the dismissed
employee s position is no longer available; (b) the continued relationship between the
employer and the employee is no longer viable due to the strained relations between
them; and(c) when the dismissed employee opted not to be reinstated, or the payment
of separation benefits would be for the best interest of the parties involved. In these
instances, separation pay is the alternative remedy to reinstatement in addition to the
award of backwages. The payment of separation pay and reinstatement are exclusive
remedies. The payment of separation pay replaces the legal consequences of
reinstatement to an employee who was illegally dismissed.
Nonetheless, it is noteworthy that the Labor Arbiter ultimately ruled that Jaimes
dismissal was valid and legal. Such ruling affirmed the legality of the termination of
James from BPI Familys employment. Under the circumstances, the entire unpaid
balance of the housing loan extended to him by BPI Family became due and
demandable upon such termination in accordance with Jaimes express and written
commitment to BPI Family. Even if we were to disregard this condition, their admission
of default in their monthly amortizations constituted an event of default within the
Page 186 of 378
context of Section 7 of the loan agreement that produced the same effect of rendering
any outstanding loan balance due and demandable. Section 7 the loan agreement reads
as follows:
SECTION 7. EVENTS OF DEFAULT
If any of the following Events of Default shall have occurred and be continuing:
a) The Borrower shall fail to pay when due the Loan(s) any installment thereof, or any
other amount payable under this Agreement the Note(s) or under the Collateral; or
xxxx
then, and in any such event, the Bank may by written notice to the Borrower cancel the
Commitment and/or declare all amounts owing to the Bank under this Agreement and
the Note(s), whether of principal, interest or otherwise, to be forthwith due and
payable, whereupon all such amounts shall become immediately due and payable
without demand or other notice of any kind, all of which are expressly waived by the
Borrower. The Borrower shall pay on demand by the Bank, in respect of any amount or
principal paid in advance of stated maturity pursuant to this Section 7, a prepayment
penalty equal to the rate mentioned in Section 2.07 (c).40
With demand, albeit unnecessary, having been made on the petitioners, they were
undoubtedly in default in their obligations.
The foreclosure of a mortgage is but the necessary consequence of the non-payment of

an obligation secured by the mortgage. Where the parties have stipulated in their
agreement, mortgage contract and promissory note that the mortgagee is authorized to
foreclose the mortgage upon the mortgagor's default, the mortgagee has a clear right to
the foreclosure in case of the mortgagor's default. Thereby, the issuance of a writ of
preliminary injunction upon the application of the mortgagor to prevent the foreclosure
will be improper.41 As such, the lower courts did not err in dismissing the injunction
complaint of the petitioners.
WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the
decision promulgated on November 21, 2002; and ORDERS the petitioners to pay the
costs of suit.
G.R. No. 160827 June 18, 2014
NETLINK COMPUTER INCORPORATED, Petitioner, vs. ERIC

DELMO, Respondent.
DECISION
In the absence of a written agreement between the employer and the employee that
sales commissions shall be paid in a foreign currency, the latter has the right to be paid
in such foreign currency once the same has become an established practice of the
former. The rate of exchange at the time of payment, not the rate of exchange at the time
of the sales, controls.
Antecedents
Page 187 of 378

On November 3, 1991, Netlink Computer, Inc. Products and Services (Netlink) hired
Eric S. Delmo (Delmo) as account manager tasked to canvass and source clients and
convince them to purchase the products and services of Netlink. Delmo worked in the
field most of the time. He and his fellow account managers were not required to
accomplish time cards to record their personal presence in the office of Netlink.1 He was
able to generate sales worth P35,000,000.00, more or less, from which he earned
commissions amounting to P993,558.89 and US$7,588.30. He then requested payment of
his commissions, but Netlink refused and only gave him partial cash advances
chargeable to his commissions. Later on, Netlink began to nitpick and fault find, like
stressing his supposed absences and tardiness. In order to force him to resign, Netlink
issued several memoranda detailing his supposed infractions of the companys
attendance policy. Despite the memoranda, Delmo continued to generate huge sales for
Netlink.2
On November 28, 1996, Delmo was shocked when he was refused entry into the
company premises by the security guard pursuant to a memorandum to that effect. His
personal belongings were still inside the company premises and he sought their return
to him. This incident prompted Delmo to file a complaint for illegal dismissal.3
In its answer to Delmos complaint,Netlink countered that there were guidelines

regarding company working time and its utilization and how the employees time
would be recorded. Allegedly, all personnel were required to use the bundy clock to
punch in and out in the morning, and in and out in the afternoon. Excepted from the
rules were the company officers, and the authorized personnel in the field project
assignments. Netlink claimed that it would be losing on the business transactions closed
by Delmo due to the high costs of equipment, and in fact his biggest client had not yet
paid. Netlink pointed out that Delmo had becomevery lax in his obligations, with the
other account managers eventually having outperformed him. Netlink asserted that
warning, reprimand, and suspension memoranda were given to employees who
violated company rules and regulations, but such actions were considered as a
necessary management tool to instill discipline.4
Ruling of the Labor Arbiter
On September 23, 1998, the Labor Arbiter ruled against Netlink and in favor of Delmo,
to wit:
WHEREFORE, judgment is hereby rendered declaring complainant as illegally and

unjustly dismissed and respondents are ordered to reinstate complainant to his former
position without loss of seniority rights with full backwages and other benefits and
respondents are hereby ordered to pay complainant as follows:
P161,000.00 - Backwages, basic pay and allowances from Nov. 1996 to Sept. 1998
15,000.00 - 13th month pay for 1996 to 1998

993,558.89 - unpaid commissions
P1,169,558.89 - Total
plus US$7,588.30 - unpaid commissions

plus 10% attorneys fees
Page 188 of 378

The reinstatement aspect is immediately executory even pending appeal. In case

reinstatement is no longer feasible, complainant shall be paid separation pay of one-
month pay for every year of service. All other claims are hereby dismissed.
SO ORDERED.5
Decision of the NLRC
On appeal, the National Labor Relations Commission (NLRC) modified the decision of
the Labor Arbiter by setting aside the backwages and reinstatement decreed by the
Labor Arbiter due to the existence of valid and just causes for the termination of
Delmos employment, to wit: WHEREFORE, premises considered, the decision of the
Labor Arbiter a quo is hereby SET ASIDEand a new one ENTERED, ordering the
respondents-appellantsto pay the following:
1. TWO THOUSAND PESOS (P2,000.00) as indemnity for failure to observe

procedural due process;
2. Unpaid commission in the amount of P993,558.89;
3. US$7,588.30 as unpaid commission;
4. P15,000.00 representing the 13th month pay for 1996, 1997, and 1998;
5. 10% attorneys fees of the total amount awarded.
SO ORDERED.6
The NLRC denied the motion for reconsideration, after which Netlink filed a petition
for certiorariin the CA.
Judgment of the CA
On May 9, 2003, the CA promulgated its assailed decision upholding the NLRCs ruling
subject to modifications,7viz:
In the present case, since the payment of the commission is made to depend on the
future and uncertain event which is the payment of the accounts by the persons who
have transacted business with the petitioner, without payment by the former to the
latter, the obligation to pay the commission has not yet arisen.
The evidence on record shows that the ALCATEL, private respondents biggest client
has not paid fully the amount it owes to the petitioner as of March 10, 1998. (Rollo, pp.
101, 397, 398) The obligation therefore, on the part of the petitioner to pay the private
respondent for his commission for the said unpaid account has not yet arisen. Thus it is
a grave abuse of discretion on the part of the public respondent to make petitioner liable
to the private respondent for the payment of the said commission, when it is clear on
the record, as We have discussed above, that the obligation therefor has not yet arisen.
Perusal of the records, likewise, show that petitioner failed to refute by evidence that
the private respondent is not entitled to the P993, 558.89 commission. Petitioner
however claimed that since the amounts out of which the commission will be taken has
not yet been paid fully, petitioner must, likewise, not be made liable for the said
Page 189 of 378

commission. However, public respondent committed grave abuse of discretion when it

disregard the evidence on record which is not disputed by the private respondent that
out of the total commissions of the private respondent, petitioner has paid the petitioner
in the amount of P216,799.45 in the form of advance payment. (Rollo, p. 12)
In view of the foregoing discussions, therefore, the advance payment made by the
petitioner in favorof the private respondent in the amount of P216, 799.45 must be
deducted to the P993, 558.89 unpaid commission of the private respondent. The
difference amounting to P776, 779.44 must likewise be deducted to the amount of P4,
066.19 which represents the amount which the petitioner had admitted as the net
commission payable to private respondent. The difference thereof amounting to P772,
713.25 shall represent the unpaid commission which shall be payable to the private
respondent by the petitioner upon payment of the accounts out of which such
commission shall be taken.
We, likewise, agree with the petitioner that the private respondent is not entitled to 13th
month pay in the years 1997 and 1998. The order of the public respondent making the
petitioner liable to the private respondent for the 13th month pay of the latter in the
years 1997 and 1998 is contrary to its findings that there are valid and just cause for the
termination of the private respondent from employment, although private respondent
was not given his right to due process. (Rollo, pp. 32-33) The rule applicable in the
present case is the decision of the Supreme Court in the case of Sebuguero vs National
Labor Relations Commission [248 SCRA 532, 547 (1995)] where it was ruled that "where
the dismissal of an employee is in fact for a just and valid cause and is so proven to be
but he is not accorded his right to due process,i.e., he was not furnished the twin
requirements of notice and the opportunityto be heard, the dismissal shall be upheld
but the employer must be sanctioned for non-compliance with the requirements of or
for failureto observe due process." Hence, petitioner should not be made to pay the 13th
month pay to private respondent whose employment was terminated for cause but
without due process in 1996.
xxxx
Thus, private respondent is entitled only to a 13th month pay computed pro-rata from
January 1996 to November 1996 which as properly computed by the petitioner amounts
to P4, 584.00. (Rollo, p. 11)
With respect to the other arguments of the petitioner, this Court is not persuaded.
Petitioner failed to refute by evidence that private respondent is not entitled to the
commissions payable in US dollars. Neither is there any reason for us to agree with the
petitioner that the computation of these commissions must be based on the value of
[the] Peso in relation to a Dollar at the time of sale. As properly observed by the Labor
Arbiter a quo, viz: "Likewise the devaluation of the peso cannot be used as a shield
against the complainant because that should have been the lookout of the respondent
company in providing for such a clause that in case of devaluation, the price agreed
upon should be at the exchange rate when the contract of sale had been consummated.
For the lack of foresight and inefficiency of the respondent company and as regards its
contracts or agreements with its clientele, the complainant should not be made to
suffer." (Labor Arbiter Ricardo Olairez Decision, September 23, 1998, pp. 11-12,
Rollo,pp. 328-329) In this regardtherefore, We uphold the well settled rule that "the
findings of facts of the NLRC, particularly where the NLRC and the Labor Arbiter are in
Page 190 of 378

agreement, are deemed binding and conclusive upon the Court." (Permex, Inc. vs
National Labor Relations Commission, 323 SCRA 121, 126).
xxxx
WHEREFORE, premises considered, the assailed Resolutions are hereby AFFIRMED

with MODIFICATION, ordering the petitioner to pay the private respondent the
following:
1. TWO-THOUSAND PESOS (P2,000.00) as indemnity for failure to observe

procedural due process;
2. P4,066.19 representing the unpaid commissions that have accrued in favor of

the private respondent;
3. P776,779.44 payable to the private respondent upon payment of the accounts

out of which the said amount will be taken;
4. P4,584.00 representing the unpaid 13th month pay of the private respondent;
5. US$7,588.30 as unpaid commission;
6. 10% attorneys fees of the total amount awarded excluding the amount
contained in the No.3 of this Order.
SO ORDERED.
Issues
Hence, this appeal.
Netlink submits that the CA committed a palpable and reversible error of law in not
holding that the applicable exchange rate for computing the US dollar commissions of
Delmo should be the rates prevailing at the time when the sales were actually
generated, not the rates prevailing at the time of the payment; and in awarding
attorneys fees.
In his comment,8 Delmo counters that because he had earned in US dollars it was only
fair that his commissions be paid in US dollars; that Netlink should not be allowed to
flip-flop after it had paid commissions in US dollar on the sales generated by its sales
agents on US-dollar denominated transactions; and that attorneys fees were warranted
because of the unanimous finding that there was violation of procedural due process.
In its reply,9 Netlink maintains that the commissions of Delmo should be based on sales
generated, actually paid by and collected from the customers; that commissions must be
paid on the basis of the conversion of the US dollar to the Philippine peso at the time of
sale; and that no cogent and justifiable reason existed for the award of attorneys fees.
To be considered for resolution are,therefore, the following, namely: (1) whether or not
the payment of the commissions should be in US dollars; and (2) whether or not the
award ofattorneys fees was warranted.
Ruling of the Court
Page 191 of 378

As a general rule, all obligations shall be paid in Philippine currency. However, the
contracting parties may stipulate that foreign currencies may be used for settling
obligations. This is pursuant to Republic Act No. 8183,10which provides as follows:
Section 1. All monetary obligations shall be settled in the Philippine currency which is
legal tender in the Philippines. However, the parties may agree that the obligation
ortransaction shall be settled in any other currency at the time of payment.
We remarked in C.F. Sharp & Co. v. Northwest Airlines, Inc.11 that the repeal of
Republic Act No. 529 had the effect of removing the prohibition on the stipulation of
currency other than Philippine currency, such that obligations or transactions could
already be paid in the currency agreed upon by the parties. However, both Republic
Act No. 529 and Republic Act No. 8183 did not stipulate the applicable rate of exchange
for the conversion of foreign currency-incurred obligations to their peso equivalent. It
follows, therefore, that the jurisprudence established under Republic Act No. 529 with
regard to the rate of conversion remains applicable. In C.F. Sharp, the Court cited Asia
World Recruitment,Inc. v. NLRC,12 to the effect that the real value of the foreign
exchange-incurred obligation up to the date of itspayment should be preserved.
There was no written contract between Netlink and Delmo stipulating that the latters
commissions would be paid in US dollars. The absence of the contractual stipulation
notwithstanding, Netlink was still liable to pay Delmo in US dollars because the
practice of paying its sales agents in US dollars for their US dollar-denominatedsales
had become a company policy. This was impliedly admitted by Netlink when it did not
refute the allegation that the commissions earned by Delmo and its other sales agents
had been paid in US dollars. Instead of denying the allegation, Netlink only sought a
declaration that the US dollar commissions be paid using the exchange rate at the time
of sale. The principle of non-diminution of benefits, which has been incorporated in
Article 10013 of the Labor Code, forbade Netlink from unilaterally reducing,
diminishing, discontinuing or eliminating the practice. Verily, the phrase "supplements,
or other employee benefits" in Article 100 is construed to mean the compensation and
privileges received by an employee aside from regular salaries or wages.
With regard to the length of timethe company practice should have been observed to
constitute a voluntary employer practice that cannot be unilaterally reduced,
diminished, discontinued or eliminated by the employer, we find that jurisprudence has
not laid down any rule requiring a specific mmimum number of years. In Davao Fruits
Corporation v. Associated Labor Unions,14 the company practice lasted for six years. In
Davao Integrated Port Stevedoring Services v. Abarquez,15 the employer, for three years
and nine months, approved the commutation to cash of the unenjoyed portion of the
sick leave with pay benefits of its intermittent workers. In Tiangco v. Leogardo, Jr.,16 the
employer carried on the practice of giving a fixed monthly emergency allowance from
November 1976 to February 1980, or three years and four months. In Sevilla Trading
Company v. Semana, 17 the employer kept the practice of including non-basic benefits
such as paid leaves for unused sick leave and vacation in the computation of their 13th-
month pay for at least two years.
With the payment of US dollar commissions having ripened into a company practice,
there is no way that the commissions due to Delmo were to be paid in US dollars or
their equivalent in Philippine currency determined at the time of the sales. To rule
Page 192 of 378

otherwise would be to cause an unjust diminution of the commissions due and owing
to Delmo.
Finally, we affirm the following justification of the CA in granting attorney's fees to

Delmo, viz: The award of attorney's fees must, likewise, be upheld in line of (sic) the
decision of the Supreme Court in the case of Consolidated Rural Bank (Cagayan Valley),
Inc. vs. National Labor Relations Commission, 301 SCRA 223, 235, where it was held
that "in actions for recovery of wages or where an employee was forced to litigate and
thus incur expenses to protect her rights and interests, even if not so claimed, an award
of attorney's fees equivalent to ten percent (10%) of the total award is legally and
morally justifiable. There is no doubt that in the present case, the private respondent
has incurred expenses for the protection and enforcement of his right to his
commissions.18
decision promulgated on May 9, 2003; and ORDERS the petitioner to pay the costs of
suit.
G.R. No. 167454 September 24, 2014
EMERITU C. BARUT, Petitioner, vs. PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
Petitioner Emeritu C. Barut, a guard of the Philippine National Construction

Corporation (PNCC), was tried for and found guilty of homicide by the Regional Trial
Court, Branch 276, in Muntinlupa City under the judgment rendered on December 11,
2000, whereby he was sentenced to suffer the indeterminate penalty of imprisonment
for 10 years and one day of prision mayor, as the minimum, to 17 years and eight
months of reclusion temporal, as the maximum, and to indemnify the heirs of Vincent
Ucag in the total amount of P250,000.00, inclusive of the actual and moral damages.1 On
appeal, the Court of Appeals (CA) affirmed the conviction of Barut through its decision
promulgated on March 17, 2005.2
Hence, Barut now seeks the review of his conviction by petition for review on certiorari.
Antecedents
It appears that at around 6:00 oclock in the afternoon of September 24, 1995 SPO4
Vicente Ucag was coming from a picnic in Laguna and returning home to Taguig,
Metro Manila on board a passenger jeepney driven by his brother Rolando on the South
Luzon Expressway. Ucags wife and 16 year-old son Vincent were then riding an
owner-type jeep driven by Rico Villas on the same route. When the latter vehicle exited
at the Sucat Interchange ahead of Ucags passenger jeepney, PNCC guards Conrado
Ancheta and Barut stopped Villas and directed him to park his vehicle at the road side.
After informing Villas that his vehicle had no headlights, Ancheta asked for his driving
license, but it took a while before Villas produced the same apparently waiting for his
companions in the passenger jeepney to arrive. Nonetheless, Villas ultimately
surrendered his driving license, and Ancheta issued to him a traffic violation report
(TVR) ticket. Right about then, the passenger jeepney carrying Ucag stopped where
Villas jeep had parked. Ucag and Danilo Fabiano, a co-passenger, alighted and
approached Ancheta and Barut to inquire what the matter was. Apprised of the reason
for the stoppage of Villas jeep, Ucag requested the return of Villas driving license. But
Page 193 of 378

Ancheta refused because hehad already issued the TVR ticket. Ucag argued with
Ancheta and Barut. Later on, however, Ucag turned around in order to avoid further
argument,and simply told Villas to return for his driving license the next day. This
apparently irked Ancheta, who dared Ucag to finish the issue right there and then.
Ancheta suddenly pulled out his .38 caliber revolver and fired it several times, hitting
Ucag on both thighs. Ucag fired back and hit Ancheta. Fabiano and Villas witnessed the
exchange of gunshots between Ucag and Ancheta.3
Upon seeing the exchange of gunshots, Vincent Ucag rushed towards his father to go to
his succor. Before Vincent could reach his father, however, Barut fired at Vincent in the
chest. Vincent, badly bleeding, tried to go back to the owner-type jeep where his mother
was, but fell to the ground before reaching the jeep. Vincent was rushed to the
Paraaque Medical Center, where he expired while undergoing emergency surgery. His
father was brought to the Camp Panopio Hospital in Quezon City for treatment and
medical attendance.4
Issues
In his petition for review on certiorari, Barut submits that:
(a) The CA misapprehended, overlooked or neglected facts that were favorable

to him; and
(b) The finding on the supposed consistency of the testimonies of the States
witnesses constituted a sweeping conclusion.
Ruling
We find no reversible error committed by the CA.
To start with, the CA held that it could not find from its review of the records any
compelling reason to set aside the factual findings of the trial court. It ruled that Villas
and Fabiano had clearly and consistently testified that Barut had been the person who
had shot Vincent; and that Baruts bare denial of firing at Vincent did not prevail over
their positive and categorical identification of him as the perpetrator.
Although the record of the trial islaid bare and open during every appeal in a criminal
case, the credibility of witnesses is a factual issue that the Court cannot disturb in this
appeal.5 We reiterate that the findings of fact by the trial court are accorded great
respect especially when affirmed on appeal by the CA.6 This great respect for such
findings rests mainly on the trial judges access to the witnesses while they testify in her
presence, giving the trial judge the personal and direct observation of their manner and
decorum during intensive grilling by the counsel for the accused, thereby enabling her
to see if the witnesses werefidgeting and prevaricating, or were sincere and
trustworthy.
Secondly, Barut adverts to the extra-judicial sworn statement that Villas gave at about
1:00 oclock in the afternoon of September 25, 1995 barely a day following the fatal
shooting of Vincent in which he declared not having seen Barut fire a gun. Barut
contends that this declaration definitely contradicted Villas court testimony on June 10,
1996, and manifested that he was "not clear and convincing because he never pointed
out who [had] really shot Vincent Ucag."7 Citing Villas answer of "Maybe he was hit" to
the question on direct examination: "What was the reason if you know why he
Page 194 of 378

[referring to Vincent Ucag] was weak?"8 Barut insists that Villas was thereby ambiguous
and gave rise to the doubt as "to who [had] really shot and killed the victim," whether it
was Ancheta (who had traded shots with the victims father), or himself.9
Noting that neither Ucag nor Ancheta had shot Vincent, the RTC explained that the
former could not anymore fire his gun at Vincent not only because Vincent was his own
son but also because he himself had already been lying on the ground after being hit in
his lower extremities; and that
Ancheta could not have fired at Vincent at all because he, too, had been already
wounded and lying on the groundand profusedly bleeding from his own gunshot
wounds. The RTC further noted that the slug extracted from the body of Vincent had
come from a .38 caliber revolver, not from Ucags .45 caliber firearm.
Baruts contention did not itselfgo unnoticed by the CA, which observed that the RTC
could not takethe declaration of Villas into consideration because Villas extra-judicial
sworn statement containing the declaration had not been offered and admitted as
evidence by either side. The CA stressed that only evidence thatwas formally offered
and made part of the records could be considered; and that in any event, the supposed
contradiction between the extra-judicial sworn statement and the court testimony
should be resolved in favor of the latter.
The CAs negative treatment of the declaration contained in Villas extra-judicial sworn
statement was inaccord with prevailing rules and jurisprudence. Pursuant to Section 34,
Rule 132 of the Rules of Court, the RTC as the trial court could consideronly the
evidence that had been formally offered; towards that end, the offering party must
specify the purpose for which the evidence was being offered. The rule would ensure
the right of the adverse party to due process of law, for, otherwise, the adverse party
would not be put in the position to timely object to the evidence, as well as to properly
counter the impact of evidence not formally offered.10 As stated in Candido v. Court of
Appeals:11
It is settled that courts will only consider as evidence that which has been formally
offered. x x x
A document, or any article for that matter, is not evidence when it is simply marked for
identification; it must be formally offered, and the opposing counsel given an
opportunity toobject to it or cross-examine the witness called upon to prove or identify
it. A formal offer is necessary since judges are required to base their findings of fact and
judgment only and strictlyupon the evidence offered by the parties at the trial. To
allow a party to attach any document to his pleading and then expect the court to
consider it as evidence may draw unwarranted consequences. The opposing party will
be deprived of his chance to examine the document and object to its admissibility. The
appellate court will have difficulty reviewing documents not previously scrutinized by
the court below. The pertinent provisions of the Revised Rules of Court on the inclusion
on appeal of documentary evidence or exhibits in the records cannot be stretched as to
include such pleadings or documents not offered at the hearing of the case.
The rule that only evidence formally offered before the trial court can be considered is
relaxed where two requisites concur, namely: one, the evidence was duly identified by
testimony duly recorded; and, two, the evidence was incorporated inthe records of the
case.12 Furthermore, the rule has no application where the court takes judicial notice of
adjudicative facts pursuant to Section 2,13 Rule 129 of the Rules of Court; or where the
Page 195 of 378
court relies on judicial admissions or draws inferences from such judicial admissions
within the context of Section 4,14 Rule 129 of the Rules of Court; or where the trial court,
in judging the demeanor of witnesses, determines their credibility even without the
offer of the demeanor as evidence.15
The Court also sees fit to correct the indeterminate sentence of 10 years and one day of
prision mayor, as the minimum, to 17 years and eight months of reclusion temporal, as
the maximum, fixed by the RTC and affirmed by the CA. The maximum of17 years and
eight months comes from the maximum period of reclusion temporal, but the
maximum of the indeterminate sentence should insteadcome from the medium period
of reclusion temporal, whose duration is from 14 years, eight months and one day to 17
years and four months, because neither the RTC nor the CA had found the attendance
of any aggravating circumstance. The minimum of the indeterminate sentence is fixed
at 10 years of prision mayor, and the maximum of 17 years and eight months of
reclusion temporalis modified to 17 years and four months of the medium period of
reclusion temporal.
Anent the civil liability, the RTC granted P250,000.00 without specifying the amounts
corresponding toactual and moral damages, as well as to the civil indemnity for the
death of Vincent. The CA affirmed the grant. Both lower courts thereby erred on a
matter of law. Actual and moral damages are different in nature and purpose. To start
with, different laws govern their grant, with the amounts allowed as actual damages
being dependent on proof of the loss to a degree of certainty, while the amounts
allowed as moral damages being discretionary on the part of the court. Secondly, actual
damages address the actual losses caused by the crime to the heirs of the victim; moral
damages assuage the spiritual and emotional sufferings of the heirs of the victim of the
crime. On the civil indemnity for death, law and jurisprudence have fixed the value to
compensate for the loss of human life. Thirdly, actual damages may not be granted
without evidence of actual loss; moral damages and death indemnity are always
granted in homicide, it being assumed by the law that the loss of human life absolutely
brings moral and spiritual losses as well as a definite loss. Moral damages and death
indemnity require neither pleading nor evidence simply because death through crime
always occasions moral sufferings on the part of the victims heirs.16 As the Court aptly
said in one case,17
x x x a violent death invariably and necessarily brings about emotional pain and
anguish on the partof the victims family. It is inherently human to suffer sorrow,
torment, pain and anger when a loved one becomes the victim of a violent or brutal
killing. Such violent death or brutal killing not only steals from the family of the
deceased his precious life, deprives them forever ofhis love, affection and support, but
often leaves them with the gnawing feeling that an injustice has been done to them.
The death indemnity and moral damages are fixed at P75,000.00 each in view of
homicide being a gross offense. Considering that the decisions of the lower courts
contained no treatment of the actual damages, the Court is now not in any position to
dwell on this. Nonetheless, the Court holds that despite the lack of such treatment,
temperate damages of P25,000.00 should be allowed. Article 2224 of the Civil
Codedeclares that temperate damages may be recovered when some pecuniary loss has
been suffered but its amount cannot be proved with certainty. There is no longer any
doubt that when actual damages for burial and related expenses are not substantiated
with receipts, temperate damages of atleast P25,000.00 are warranted, for it is certainly
unfair to deny to the surviving heirs of the victim the compensation for such expenses
Page 196 of 378

as actual damages.18 This is based on the sound reasoning that it would be anomalous
that the heirs of the victim who tried and succeeded in proving actual damages of less
than P25,000.00 would only be put in a worse situation than others who might have
presented no receipts at all but would still beentitled to P25,000.00 as temperate
damages.19
Also, in line with recent jurisprudence,20 the interest fixed by the RTC is reduced to six
percent (6%) per annumon all the items of civil liability computed from the date of the
finality of this judgment until fully paid.
WHEREFORE, the Court AFFIRMS the conviction for homicide of petitioner EMERITU
BARUT, subject to the MODIFICATIONS that: (a) his indeterminate sentence is from 10
years of prision mayor, as the minimum, to 17 years and four months of reclusion
temporal, as the maximum; (b) he shall pay to the heirs of the late Vincent Ucag civil
indemnity of P75,000.00 for his death;moral damages of P75,000.00; and emperate
damages of ~25,000.00, plus interest of six percent (6%) per annum on each of the items
of damages hereby awarded from the date of finality of this judgment until fully paid;
and (c) he shall pay the costs of suit.
G.R. No. 167454 September 24, 2014
EMERITU C. BARUT, Petitioner, vs. PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
Petitioner Emeritu C. Barut, a guard of the Philippine National Construction

Corporation (PNCC), was tried for and found guilty of homicide by the Regional Trial
Court, Branch 276, in Muntinlupa City under the judgment rendered on December 11,
2000, whereby he was sentenced to suffer the indeterminate penalty of imprisonment
for 10 years and one day of prision mayor, as the minimum, to 17 years and eight
months of reclusion temporal, as the maximum, and to indemnify the heirs of Vincent
Ucag in the total amount of P250,000.00, inclusive of the actual and moral damages.1 On
appeal, the Court of Appeals (CA) affirmed the conviction of Barut through its decision
promulgated on March 17, 2005.2
Hence, Barut now seeks the review of his conviction by petition for review on certiorari.
Antecedents
It appears that at around 6:00 oclock in the afternoon of September 24, 1995 SPO4
Vicente Ucag was coming from a picnic in Laguna and returning home to Taguig,
Metro Manila on board a passenger jeepney driven by his brother Rolando on the South
Luzon Expressway. Ucags wife and 16 year-old son Vincent were then riding an
owner-type jeep driven by Rico Villas on the same route. When the latter vehicle exited
at the Sucat Interchange ahead of Ucags passenger jeepney, PNCC guards Conrado
Ancheta and Barut stopped Villas and directed him to park his vehicle at the road side.
After informing Villas that his vehicle had no headlights, Ancheta asked for his driving
license, but it took a while before Villas produced the same apparently waiting for his
companions in the passenger jeepney to arrive. Nonetheless, Villas ultimately
surrendered his driving license, and Ancheta issued to him a traffic violation report
(TVR) ticket. Right about then, the passenger jeepney carrying Ucag stopped where
Villas jeep had parked. Ucag and Danilo Fabiano, a co-passenger, alighted and
approached Ancheta and Barut to inquire what the matter was. Apprised of the reason
Page 197 of 378

for the stoppage of Villas jeep, Ucag requested the return of Villas driving license. But
Ancheta refused because hehad already issued the TVR ticket. Ucag argued with
Ancheta and Barut. Later on, however, Ucag turned around in order to avoid further
argument,and simply told Villas to return for his driving license the next day. This
apparently irked Ancheta, who dared Ucag to finish the issue right there and then.
Ancheta suddenly pulled out his .38 caliber revolver and fired it several times, hitting
Ucag on both thighs. Ucag fired back and hit Ancheta. Fabiano and Villas witnessed the
exchange of gunshots between Ucag and Ancheta.3
Upon seeing the exchange of gunshots, Vincent Ucag rushed towards his father to go to
his succor. Before Vincent could reach his father, however, Barut fired at Vincent in the
chest. Vincent, badly bleeding, tried to go back to the owner-type jeep where his mother
was, but fell to the ground before reaching the jeep. Vincent was rushed to the
Paraaque Medical Center, where he expired while undergoing emergency surgery. His
father was brought to the Camp Panopio Hospital in Quezon City for treatment and
medical attendance.4
Issues
In his petition for review on certiorari, Barut submits that:
(a) The CA misapprehended, overlooked or neglected facts that were favorable

to him; and
(b) The finding on the supposed consistency of the testimonies of the States
witnesses constituted a sweeping conclusion.
Ruling
We find no reversible error committed by the CA.
To start with, the CA held that it could not find from its review of the records any
compelling reason to set aside the factual findings of the trial court. It ruled that Villas
and Fabiano had clearly and consistently testified that Barut had been the person who
had shot Vincent; and that Baruts bare denial of firing at Vincent did not prevail over
their positive and categorical identification of him as the perpetrator.
Although the record of the trial islaid bare and open during every appeal in a criminal
case, the credibility of witnesses is a factual issue that the Court cannot disturb in this
appeal.5 We reiterate that the findings of fact by the trial court are accorded great
respect especially when affirmed on appeal by the CA.6 This great respect for such
findings rests mainly on the trial judges access to the witnesses while they testify in her
presence, giving the trial judge the personal and direct observation of their manner and
decorum during intensive grilling by the counsel for the accused, thereby enabling her
to see if the witnesses werefidgeting and prevaricating, or were sincere and
trustworthy.
Secondly, Barut adverts to the extra-judicial sworn statement that Villas gave at about
1:00 oclock in the afternoon of September 25, 1995 barely a day following the fatal
shooting of Vincent in which he declared not having seen Barut fire a gun. Barut
contends that this declaration definitely contradicted Villas court testimony on June 10,
1996, and manifested that he was "not clear and convincing because he never pointed
out who [had] really shot Vincent Ucag."7 Citing Villas answer of "Maybe he was hit" to
Page 198 of 378

the question on direct examination: "What was the reason if you know why he
[referring to Vincent Ucag] was weak?"8 Barut insists that Villas was thereby ambiguous
and gave rise to the doubt as "to who [had] really shot and killed the victim," whether it
was Ancheta (who had traded shots with the victims father), or himself.9
Noting that neither Ucag nor Ancheta had shot Vincent, the RTC explained that the
former could not anymore fire his gun at Vincent not only because Vincent was his own
son but also because he himself had already been lying on the ground after being hit in
his lower extremities; and that
Ancheta could not have fired at Vincent at all because he, too, had been already
wounded and lying on the groundand profusedly bleeding from his own gunshot
wounds. The RTC further noted that the slug extracted from the body of Vincent had
come from a .38 caliber revolver, not from Ucags .45 caliber firearm.
Baruts contention did not itselfgo unnoticed by the CA, which observed that the RTC
could not takethe declaration of Villas into consideration because Villas extra-judicial
sworn statement containing the declaration had not been offered and admitted as
evidence by either side. The CA stressed that only evidence thatwas formally offered
and made part of the records could be considered; and that in any event, the supposed
contradiction between the extra-judicial sworn statement and the court testimony
should be resolved in favor of the latter.
The CAs negative treatment of the declaration contained in Villas extra-judicial sworn
statement was inaccord with prevailing rules and jurisprudence. Pursuant to Section 34,
Rule 132 of the Rules of Court, the RTC as the trial court could consideronly the
evidence that had been formally offered; towards that end, the offering party must
specify the purpose for which the evidence was being offered. The rule would ensure
the right of the adverse party to due process of law, for, otherwise, the adverse party
would not be put in the position to timely object to the evidence, as well as to properly
counter the impact of evidence not formally offered.10 As stated in Candido v. Court of
Appeals:11
It is settled that courts will only consider as evidence that which has been formally
offered. x x x
A document, or any article for that matter, is not evidence when it is simply marked for
identification; it must be formally offered, and the opposing counsel given an
opportunity toobject to it or cross-examine the witness called upon to prove or identify
it. A formal offer is necessary since judges are required to base their findings of fact and
judgment only and strictlyupon the evidence offered by the parties at the trial. To
allow a party to attach any document to his pleading and then expect the court to
consider it as evidence may draw unwarranted consequences. The opposing party will
be deprived of his chance to examine the document and object to its admissibility. The
appellate court will have difficulty reviewing documents not previously scrutinized by
the court below. The pertinent provisions of the Revised Rules of Court on the inclusion
on appeal of documentary evidence or exhibits in the records cannot be stretched as to
include such pleadings or documents not offered at the hearing of the case.
The rule that only evidence formally offered before the trial court can be considered is
relaxed where two requisites concur, namely: one, the evidence was duly identified by
testimony duly recorded; and, two, the evidence was incorporated inthe records of the
case.12 Furthermore, the rule has no application where the court takes judicial notice of
Page 199 of 378
adjudicative facts pursuant to Section 2,13 Rule 129 of the Rules of Court; or where the
court relies on judicial admissions or draws inferences from such judicial admissions
within the context of Section 4,14 Rule 129 of the Rules of Court; or where the trial court,
in judging the demeanor of witnesses, determines their credibility even without the
offer of the demeanor as evidence.15
The Court also sees fit to correct the indeterminate sentence of 10 years and one day of
prision mayor, as the minimum, to 17 years and eight months of reclusion temporal, as
the maximum, fixed by the RTC and affirmed by the CA. The maximum of17 years and
eight months comes from the maximum period of reclusion temporal, but the
maximum of the indeterminate sentence should insteadcome from the medium period
of reclusion temporal, whose duration is from 14 years, eight months and one day to 17
years and four months, because neither the RTC nor the CA had found the attendance
of any aggravating circumstance. The minimum of the indeterminate sentence is fixed
at 10 years of prision mayor, and the maximum of 17 years and eight months of
reclusion temporalis modified to 17 years and four months of the medium period of
reclusion temporal.
Anent the civil liability, the RTC granted P250,000.00 without specifying the amounts
corresponding toactual and moral damages, as well as to the civil indemnity for the
death of Vincent. The CA affirmed the grant. Both lower courts thereby erred on a
matter of law. Actual and moral damages are different in nature and purpose. To start
with, different laws govern their grant, with the amounts allowed as actual damages
being dependent on proof of the loss to a degree of certainty, while the amounts
allowed as moral damages being discretionary on the part of the court. Secondly, actual
damages address the actual losses caused by the crime to the heirs of the victim; moral
damages assuage the spiritual and emotional sufferings of the heirs of the victim of the
crime. On the civil indemnity for death, law and jurisprudence have fixed the value to
compensate for the loss of human life. Thirdly, actual damages may not be granted
without evidence of actual loss; moral damages and death indemnity are always
granted in homicide, it being assumed by the law that the loss of human life absolutely
brings moral and spiritual losses as well as a definite loss. Moral damages and death
indemnity require neither pleading nor evidence simply because death through crime
always occasions moral sufferings on the part of the victims heirs.16 As the Court aptly
said in one case,17
x x x a violent death invariably and necessarily brings about emotional pain and
anguish on the partof the victims family. It is inherently human to suffer sorrow,
torment, pain and anger when a loved one becomes the victim of a violent or brutal
killing. Such violent death or brutal killing not only steals from the family of the
deceased his precious life, deprives them forever ofhis love, affection and support, but
often leaves them with the gnawing feeling that an injustice has been done to them.
The death indemnity and moral damages are fixed at P75,000.00 each in view of
homicide being a gross offense. Considering that the decisions of the lower courts
contained no treatment of the actual damages, the Court is now not in any position to
dwell on this. Nonetheless, the Court holds that despite the lack of such treatment,
temperate damages of P25,000.00 should be allowed. Article 2224 of the Civil
Codedeclares that temperate damages may be recovered when some pecuniary loss has
been suffered but its amount cannot be proved with certainty. There is no longer any
doubt that when actual damages for burial and related expenses are not substantiated
with receipts, temperate damages of atleast P25,000.00 are warranted, for it is certainly
Page 200 of 378

unfair to deny to the surviving heirs of the victim the compensation for such expenses
as actual damages.18 This is based on the sound reasoning that it would be anomalous
that the heirs of the victim who tried and succeeded in proving actual damages of less
than P25,000.00 would only be put in a worse situation than others who might have
presented no receipts at all but would still beentitled to P25,000.00 as temperate
damages.19
Also, in line with recent jurisprudence,20 the interest fixed by the RTC is reduced to six
percent (6%) per annumon all the items of civil liability computed from the date of the
finality of this judgment until fully paid.
WHEREFORE, the Court AFFIRMS the conviction for homicide of petitioner EMERITU
BARUT, subject to the MODIFICATIONS that: (a) his indeterminate sentence is from 10
years of prision mayor, as the minimum, to 17 years and four months of reclusion
temporal, as the maximum; (b) he shall pay to the heirs of the late Vincent Ucag civil
indemnity of P75,000.00 for his death;moral damages of P75,000.00; and emperate
damages of ~25,000.00, plus interest of six percent (6%) per annum on each of the items
of damages hereby awarded from the date of finality of this judgment until fully paid;
and (c) he shall pay the costs of suit.
G.R. No. 171914 July 23, 2014
SOLEDAD L. LAVADIA, Petitioner, vs. HEIRS OF JUAN LUCES LUNA, represented

by GREGORIO Z. LUNA and EUGENIA ZABALLERO-LUNA,Respondents.
DECISION
Divorce between Filipinos is void and ineffectual under the nationality rule adopted by
Philippine law. Hence, any settlement of property between the parties of the first
marriage involving Filipinos submitted as an incident of a divorce obtained in a foreign
country lacks competent judicial approval, and cannot be enforceable against the assets
of the husband who contracts a subsequent marriage.
The Case
The petitioner, the second wife of the late Atty. Juan Luces Luna, appeals the adverse
decision promulgated on November 11, 2005,1 whereby the Court of Appeals (CA)
affirmed with modification the decision rendered on August 27, 2001 by the Regional
Trial Court (RTC), Branch 138, in Makati City.2 The CA thereby denied her right in the
25/100 pro indiviso share of the husband in a condominium unit, and in the law books
of the husband acquired during the second marriage.
Antecedents
The antecedent facts were summarized by the CA as follows:
ATTY. LUNA, a practicing lawyer, was at first a name partner in the prestigious law
firm Sycip, Salazar, Luna, Manalo, Hernandez & Feliciano Law Offices at that time
when he was living with his first wife, herein intervenor-appellant Eugenia Zaballero-
Luna (EUGENIA), whom he initially married ina civil ceremony conducted by the
Justice of the Peace of Paraaque, Rizal on September 10, 1947 and later solemnized in a
church ceremony at the Pro-Cathedral in San Miguel, Bulacan on September 12, 1948. In
ATTY. LUNAs marriage to EUGENIA, they begot seven (7) children, namely: Regina
Page 201 of 378

Maria L. Nadal, Juan Luis Luna, Araceli Victoria L. Arellano, Ana Maria L. Tabunda,
Gregorio Macario Luna, Carolina Linda L. Tapia, and Cesar Antonio Luna. After almost
two (2) decades of marriage, ATTY. LUNA and EUGENIA eventually agreed to live
apart from each other in February 1966 and agreed to separation of property, to which
end, they entered into a written agreement entitled "AGREEMENT FOR SEPARATION
AND PROPERTY SETTLEMENT" dated November 12, 1975, whereby they agreed to
live separately and to dissolve and liquidate their conjugal partnership of property.
On January 12, 1976, ATTY. LUNA obtained a divorce decree of his marriage with
EUGENIA from the Civil and Commercial Chamber of the First Circumscription of the
Court of First Instance of Sto. Domingo, Dominican Republic. Also in Sto.Domingo,
Dominican Republic, on the same date, ATTY. LUNA contracted another marriage, this
time with SOLEDAD. Thereafter, ATTY. LUNA and SOLEDAD returned to the
Philippines and lived together as husband and wife until 1987.
Sometime in 1977, ATTY. LUNA organized a new law firm named: Luna, Puruganan,
Sison and Ongkiko (LUPSICON) where ATTY. LUNA was the managing partner.
On February 14, 1978, LUPSICON through ATTY. LUNA purchased from Tandang
Sora Development Corporation the 6th Floor of Kalaw-Ledesma Condominium
Project(condominium unit) at Gamboa St., Makati City, consisting of 517.52 square
meters, for P1,449,056.00, to be paid on installment basis for 36months starting on April
15, 1978. Said condominium unit was to be usedas law office of LUPSICON. After full
payment, the Deed of Absolute Sale over the condominium unit was executed on July
15, 1983, and CCT No. 4779 was issued on August 10, 1983, which was registered
bearing the following names:
"JUAN LUCES LUNA, married to Soledad L. Luna (46/100); MARIO E. ONGKIKO,

married to Sonia P.G. Ongkiko (25/100); GREGORIO R. PURUGANAN, married to Paz
A. Puruganan (17/100); and TERESITA CRUZ SISON, married to Antonio J.M. Sison
(12/100) x x x" Subsequently, 8/100 share of ATTY. LUNA and 17/100 share of Atty.
Gregorio R. Puruganan in the condominium unit was sold to Atty. Mario E. Ongkiko,
for which a new CCT No. 21761 was issued on February 7, 1992 in the following names:
"JUAN LUCES LUNA, married to Soledad L. Luna (38/100); MARIO E. ONGKIKO,

married to Sonia P.G. Ongkiko (50/100); TERESITA CRUZ SISON, married to Antonio
J.M. Sison (12/100) x x x"
Sometime in 1992, LUPSICON was dissolved and the condominium unit was
partitioned by the partners but the same was still registered in common under CCT No.
21716. The parties stipulated that the interest of ATTY. LUNA over the condominium
unit would be 25/100 share. ATTY. LUNA thereafter established and headed another
law firm with Atty. Renato G. Dela Cruzand used a portion of the office condominium
unit as their office. The said law firm lasted until the death of ATTY. JUAN on July 12,
1997.
After the death of ATTY. JUAN, his share in the condominium unit including the
lawbooks, office furniture and equipment found therein were taken over by Gregorio Z.
Luna, ATTY. LUNAs son of the first marriage. Gregorio Z. Luna thenleased out the
25/100 portion of the condominium unit belonging to his father to Atty. Renato G. De la
Cruz who established his own law firm named Renato G. De la Cruz & Associates.
Page 202 of 378

The 25/100 pro-indiviso share of ATTY. Luna in the condominium unit as well as the
law books, office furniture and equipment became the subject of the complaint filed by
SOLEDAD against the heirs of ATTY. JUAN with the RTC of Makati City, Branch 138,
on September 10, 1999, docketed as Civil Case No. 99-1644. The complaint alleged that
the subject properties were acquired during the existence of the marriage between
ATTY. LUNA and SOLEDAD through their joint efforts that since they had no children,
SOLEDAD became co-owner of the said properties upon the death of ATTY. LUNA to
the extent of pro-indiviso share consisting of her share in the said properties plus
her share in the net estate of ATTY. LUNA which was bequeathed to her in the
latters last will and testament; and thatthe heirs of ATTY. LUNA through Gregorio Z.
Luna excluded SOLEDAD from her share in the subject properties. The complaint
prayed that SOLEDAD be declared the owner of the portion of the subject
properties;that the same be partitioned; that an accounting of the rentals on the
condominium unit pertaining to the share of SOLEDAD be conducted; that a receiver
be appointed to preserve ad administer the subject properties;and that the heirs of
ATTY. LUNA be ordered to pay attorneys feesand costs of the suit to SOLEDAD.3
Ruling of the RTC
On August 27, 2001, the RTC rendered its decision after trial upon the aforementioned
facts,4 disposing thusly:
WHEREFORE, judgment is rendered as follows:
(a) The 24/100 pro-indiviso share in the condominium unit located at the SIXTH
FLOOR of the KALAW LEDESMA CONDOMINIUM PROJECT covered by
Condominium Certificate of Title No. 21761 consisting of FIVE HUNDRED
SEVENTEEN (517/100) SQUARE METERS is adjudged to have been acquired by
Juan Lucas Luna through his sole industry;
(b) Plaintiff has no right as owner or under any other concept over the
condominium unit, hence the entry in Condominium Certificate of Title No.
21761 of the Registry of Deeds of Makati with respect to the civil status of Juan
Luces Luna should be changed from "JUAN LUCES LUNA married to Soledad
L. Luna" to "JUAN LUCES LUNA married to Eugenia Zaballero Luna";
(c) Plaintiff is declared to be the owner of the books Corpus Juris, Fletcher on
Corporation, American Jurisprudence and Federal Supreme Court Reports found
in the condominium unit and defendants are ordered to deliver them to the
plaintiff as soon as appropriate arrangements have been madefor transport and
storage.
No pronouncement as to costs.
SO ORDERED.5
Decision of the CA
Both parties appealed to the CA.6
On her part, the petitioner assigned the following errors to the RTC, namely:
Page 203 of 378

I. THE LOWER COURT ERRED IN RULING THAT THE CONDOMINIUM

UNIT WAS ACQUIRED THRU THE SOLE INDUSTRY OF ATTY. JUAN LUCES
LUNA;
II. THE LOWER COURT ERRED IN RULING THAT PLAINTIFFAPPELLANT

DID NOT CONTRIBUTE MONEY FOR THE ACQUISITION OF THE
CONDOMINIUM UNIT;
III. THE LOWER COURT ERRED IN GIVING CREDENCE TO PORTIONS OF

THE TESTIMONY OF GREGORIO LUNA, WHO HAS NO ACTUAL
KNOWLEDGE OF THE ACQUISITION OF THE UNIT, BUT IGNORED OTHER
PORTIONS OF HIS TESTIMONY FAVORABLE TO THE PLAINTIFF-
APPELLANT;
IV. THE LOWER COURT ERRED IN NOT GIVING SIGNIFICANCE TO THE

FACT THAT THE CONJUGAL PARTNERSHIP BETWEEN LUNA AND
INTERVENOR-APPELLANT WAS ALREADY DISSOLVED AND LIQUIDATED
PRIOR TO THE UNION OF PLAINTIFF-APPELLANT AND LUNA;
V. THE LOWER COURT ERRED IN GIVING UNDUE SIGNIFICANCE TO THE

ABSENCE OF THE DISPOSITION OF THE CONDOMINIUM UNIT IN THE
HOLOGRAPHIC WILL OF THE PLAINTIFF-APPELLANT;
VI. THE LOWER COURT ERRED IN GIVING UNDUE SIGNIFICANCE TO THE

FACTTHAT THE NAME OF PLAINTIFF-APPELLANT DID NOT APPEAR IN
THE DEED OF ABSOLUTE SALE EXECUTED BY TANDANG SORA
DEVELOPMENT CORPORATION OVER THE CONDOMINIUM UNIT;
VII. THE LOWER COURT ERRED IN RULING THAT NEITHER ARTICLE 148
OF THE FAMILYCODE NOR ARTICLE 144 OF THE CIVIL CODE OF THE
PHILIPPINES ARE APPLICABLE;
VIII. THE LOWER COURT ERRED IN NOT RULING THAT THE CAUSE OF
ACTION OF THE INTERVENOR-APPELLANT HAS BEEN BARRED BY
PESCRIPTION AND LACHES; and
IX. THE LOWER COURT ERRED IN NOT EXPUNGING/DISMISSING THE

INTERVENTION FOR FAILURE OF INTERVENOR-APPELLANT TO PAY
FILING FEE.7
In contrast, the respondents attributedthe following errors to the trial court, to wit:
I. THE LOWER COURT ERRED IN HOLDING THAT CERTAIN FOREIGN

LAW BOOKS IN THE LAW OFFICE OF ATTY. LUNA WERE BOUGHT WITH
THE USE OF PLAINTIFFS MONEY;
II. THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF PROVED BY

PREPONDERANCE OF EVIDENCE (HER CLAIM OVER) THE SPECIFIED
FOREIGN LAW BOOKS FOUND IN ATTY. LUNAS LAW OFFICE; and
III. THE LOWER COURT ERRED IN NOT HOLDING THAT, ASSUMING

PLAINTIFF PAID FOR THE SAID FOREIGN LAW BOOKS, THE RIGHT TO
Page 204 of 378

RECOVER THEM HAD PRESCRIBED AND BARRED BY LACHES AND

ESTOPPEL.8
On November 11, 2005, the CA promulgated its assailed modified decision,9 holding
and ruling:
EUGENIA, the first wife, was the legitimate wife of ATTY. LUNA until the latters
death on July 12, 1997. The absolute divorce decree obtained by ATTY. LUNA inthe
Dominican Republic did not terminate his prior marriage with EUGENIA because
foreign divorce between Filipino citizens is not recognized in our jurisdiction. x x x10
xxxx
WHEREFORE, premises considered, the assailed August 27, 2001 Decision of the RTC
of MakatiCity, Branch 138, is hereby MODIFIEDas follows:
(a) The 25/100 pro-indiviso share in the condominium unit at the SIXTH FLOOR
of the KALAW LEDESMA CONDOMINIUM PROJECT covered by
Condominium Certificate of Title No. 21761 consisting of FIVE HUNDRED
SEVENTEEN (517/100) (sic) SQUARE METERS is hereby adjudged to
defendants-appellants, the heirs of Juan Luces Luna and Eugenia Zaballero-Luna
(first marriage), having been acquired from the sole funds and sole industry of
Juan Luces Luna while marriage of Juan Luces Luna and Eugenia Zaballero-
Luna (first marriage) was still subsisting and valid;
(b) Plaintiff-appellant Soledad Lavadia has no right as owner or under any other
concept over the condominium unit, hence the entry in Condominium Certificate
of Title No. 21761 of the Registry of Deeds ofMakati with respect to the civil
status of Juan Luces Luna should be changed from "JUAN LUCES LUNA
married to Soledad L. Luna" to "JUAN LUCES LUNA married to Eugenia
Zaballero Luna";
(c) Defendants-appellants, the heirs of Juan Luces Luna and Eugenia Zaballero-
Luna(first marriage) are hereby declared to be the owner of the books Corpus
Juris, Fletcher on Corporation, American Jurisprudence and Federal Supreme
Court Reports found in the condominium unit.
No pronouncement as to costs.
SO ORDERED.11
On March 13, 2006,12 the CA denied the petitioners motion for reconsideration.13
Issues
In this appeal, the petitioner avers in her petition for review on certiorarithat:
A. The Honorable Court of Appeals erred in ruling that the Agreement for
Separation and Property Settlement executed by Luna and Respondent Eugenia
was unenforceable; hence, their conjugal partnership was not dissolved and
liquidated;
Page 205 of 378

B. The Honorable Court of Appeals erred in not recognizing the Dominican

Republic courts approval of the Agreement;
C. The Honorable Court of Appeals erred in ruling that Petitioner failed to

adduce sufficient proof of actual contribution to the acquisition of purchase of
the subjectcondominium unit; and
D. The Honorable Court of Appeals erred in ruling that Petitioner was not
entitled to the subject law books.14
The decisive question to be resolved is who among the contending parties should be
entitled to the 25/100 pro indivisoshare in the condominium unit; and to the law books
(i.e., Corpus Juris, Fletcher on Corporation, American Jurisprudence and Federal
Supreme Court Reports).
The resolution of the decisive question requires the Court to ascertain the law that
should determine, firstly, whether the divorce between Atty. Luna and Eugenia
Zaballero-Luna (Eugenia) had validly dissolved the first marriage; and, secondly,
whether the second marriage entered into by the late Atty. Luna and the petitioner
entitled the latter to any rights in property. Ruling of the Court
We affirm the modified decision of the CA.
1. Atty. Lunas first marriage with Eugenia subsisted up to the time of his death
The first marriage between Atty. Luna and Eugenia, both Filipinos, was solemnized in
the Philippines on September 10, 1947. The law in force at the time of the solemnization
was the Spanish Civil Code, which adopted the nationality rule. The Civil
Codecontinued to follow the nationality rule, to the effect that Philippine laws relating
to family rights and duties, or to the status, condition and legal capacity of persons were
binding upon citizens of the Philippines, although living abroad.15 Pursuant to the
nationality rule, Philippine laws governed thiscase by virtue of bothAtty. Luna and
Eugenio having remained Filipinos until the death of Atty. Luna on July 12, 1997
terminated their marriage.
From the time of the celebration ofthe first marriage on September 10, 1947 until the
present, absolute divorce between Filipino spouses has not been recognized in the
Philippines. The non-recognition of absolute divorce between Filipinos has remained
even under the Family Code,16 even if either or both of the spouses are residing
abroad.17 Indeed, the only two types of defective marital unions under our laws have
beenthe void and the voidable marriages. As such, the remedies against such defective
marriages have been limited to the declaration of nullity ofthe marriage and the
annulment of the marriage.
It is true that on January 12, 1976, the Court of First Instance (CFI) of Sto. Domingo in
the Dominican Republic issued the Divorce Decree dissolving the first marriage of Atty.
Luna and Eugenia.18 Conformably with the nationality rule, however, the divorce, even
if voluntarily obtained abroad, did not dissolve the marriage between Atty. Luna and
Eugenia, which subsisted up to the time of his death on July 12, 1997. This finding
conforms to the Constitution, which characterizes marriage as an inviolable social
institution,19 and regards it as a special contract of permanent union between a man and
a woman for the establishment of a conjugal and family life.20 The non-recognition of
absolute divorce in the Philippines is a manifestation of the respect for the sanctity of
Page 206 of 378

the marital union especially among Filipino citizens. It affirms that the extinguishment
of a valid marriage must be grounded only upon the death of either spouse, or upon a
ground expressly provided bylaw. For as long as this public policy on marriage
between Filipinos exists, no divorce decree dissolving the marriage between them can
ever be given legal or judicial recognition and enforcement in this jurisdiction.
2. The Agreement for Separation and Property Settlement was void for lack of court
approval
The petitioner insists that the Agreement for Separation and Property Settlement
(Agreement) that the late Atty. Luna and Eugenia had entered into and executed in
connection with the divorce proceedings before the CFI of Sto. Domingo in the
Dominican Republic to dissolve and liquidate their conjugal partnership was
enforceable against Eugenia. Hence, the CA committed reversible error in decreeing
otherwise.
The insistence of the petitioner was unwarranted.
Considering that Atty. Luna and Eugenia had not entered into any marriage settlement
prior to their marriage on September 10, 1947, the system of relative community or
conjugal partnership of gains governed their property relations. This is because the
Spanish Civil Code, the law then in force at the time of their marriage, did not specify
the property regime of the spouses in the event that they had not entered into any
marriage settlement before or at the time of the marriage. Article 119 of the Civil
Codeclearly so provides, to wit:
Article 119. The future spouses may in the marriage settlements agree upon absolute or
relative community of property, or upon complete separation of property, or upon any
other regime. In the absence of marriage settlements, or when the same are void, the
system of relative community or conjugal partnership of gains as established in this
Code, shall govern the property relations between husband and wife.
Article 142 of the Civil Codehas defined a conjugal partnership of gains thusly:
Article 142. By means of the conjugal partnership of gains the husband and wife place
in a common fund the fruits of their separate property and the income from their work
or industry, and divide equally, upon the dissolution of the marriage or of the
partnership, the net gains or benefits obtained indiscriminately by either spouse during
the marriage.
The conjugal partnership of gains subsists until terminated for any of various causes of
termination enumerated in Article 175 of the Civil Code, viz:
Article 175. The conjugal partnership of gains terminates:
(1) Upon the death of either spouse;
(2) When there is a decree of legal separation;
(3) When the marriage is annulled;
(4) In case of judicial separation of property under Article 191.
Page 207 of 378

The mere execution of the Agreement by Atty. Luna and Eugenia did not per sedissolve
and liquidate their conjugal partnership of gains. The approval of the Agreement by a
competent court was still required under Article 190 and Article 191 of the Civil Code,
as follows:
Article 190. In the absence of an express declaration in the marriage settlements, the
separation of property between spouses during the marriage shall not take place save in
virtue of a judicial order. (1432a)
Article 191. The husband or the wife may ask for the separation of property, and it shall
be decreed when the spouse of the petitioner has been sentenced to a penalty which
carries with it civil interdiction, or has been declared absent, or when legal separation
has been granted.
xxxx
The husband and the wife may agree upon the dissolution of the conjugal partnership
during the marriage, subject to judicial approval. All the creditors of the husband and of
the wife, as well as of the conjugal partnership shall be notified of any petition for
judicialapproval or the voluntary dissolution of the conjugal partnership, so that any
such creditors may appear atthe hearing to safeguard his interests. Upon approval of
the petition for dissolution of the conjugal partnership, the court shall take such
measures as may protect the creditors and other third persons.
After dissolution of the conjugal partnership, the provisions of articles 214 and 215 shall
apply. The provisions of this Code concerning the effect of partition stated in articles
498 to 501 shall be applicable. (1433a)
But was not the approval of the Agreement by the CFI of Sto. Domingo in the
Dominican Republic sufficient in dissolving and liquidating the conjugal partnership of
gains between the late Atty. Luna and Eugenia?
The query is answered in the negative. There is no question that the approval took place
only as an incident ofthe action for divorce instituted by Atty. Luna and Eugenia, for,
indeed, the justifications for their execution of the Agreement were identical to the
grounds raised in the action for divorce.21 With the divorce not being itself valid and
enforceable under Philippine law for being contrary to Philippine public policy and
public law, the approval of the Agreement was not also legally valid and enforceable
under Philippine law. Consequently, the conjugal partnership of gains of Atty. Luna
and Eugenia subsisted in the lifetime of their marriage.
3. Atty. Lunas marriage with Soledad, being bigamous, was void; properties acquired
during their marriage were governed by the rules on co-ownership
What law governed the property relations of the second marriage between Atty. Luna
and Soledad?
The CA expressly declared that Atty. Lunas subsequent marriage to Soledad on

January 12, 1976 was void for being bigamous,22 on the ground that the marriage
between Atty. Luna and Eugenia had not been dissolved by the Divorce Decree
rendered by the CFI of Sto. Domingo in the Dominican Republic but had subsisted until
the death of Atty. Luna on July 12, 1997.
Page 208 of 378

The Court concurs with the CA.
In the Philippines, marriages that are bigamous, polygamous, or incestuous are void.
Article 71 of the Civil Codeclearly states:
Article 71. All marriages performed outside the Philippines in accordance with the laws
in force in the country where they were performed, and valid there as such, shall also be
valid in this country, except bigamous, polygamous, or incestuous marriages as
determined by Philippine law.
Bigamy is an illegal marriage committed by contracting a second or subsequent

marriage before the first marriage has been legally dissolved, or before the absent
spouse has been declared presumptively dead by means of a judgment rendered in the
proper proceedings.23 A bigamous marriage is considered void ab initio.24
Due to the second marriage between Atty. Luna and the petitioner being void ab
initioby virtue of its being bigamous, the properties acquired during the bigamous
marriage were governed by the rules on co-ownership, conformably with Article 144 of
the Civil Code, viz:
Article 144. When a man and a woman live together as husband and wife, but they are
not married, ortheir marriage is void from the beginning, the property acquired by
eitheror both of them through their work or industry or their wages and salaries shall
be governed by the rules on co-ownership.(n)
In such a situation, whoever alleges co-ownership carried the burden of proof to

confirm such fact. To establish co-ownership, therefore, it became imperative for the
petitioner to offer proof of her actual contributions in the acquisition of property. Her
mere allegation of co-ownership, without sufficient and competent evidence, would
warrant no relief in her favor. As the Court explained in Saguid v. Court of Appeals:25
In the cases of Agapay v. Palang, and Tumlos v. Fernandez, which involved the issue of
co-ownership ofproperties acquired by the parties to a bigamous marriage and an
adulterous relationship, respectively, we ruled that proof of actual contribution in the
acquisition of the property is essential. The claim of co-ownership of the petitioners
therein who were parties to the bigamous and adulterousunion is without basis because
they failed to substantiate their allegation that they contributed money in the purchase
of the disputed properties. Also in Adriano v. Court of Appeals, we ruled that the fact
that the controverted property was titled in the name of the parties to an adulterous
relationship is not sufficient proof of coownership absent evidence of actual
contribution in the acquisition of the property.
As in other civil cases, the burden of proof rests upon the party who, as determined by
the pleadings or the nature of the case, asserts an affirmative issue. Contentions must be
proved by competent evidence and reliance must be had on the strength of the partys
own evidence and not upon the weakness of the opponents defense. This applies with
more vigor where, as in the instant case, the plaintiff was allowed to present evidence
ex parte. The plaintiff is not automatically entitled to the relief prayed for. The law
gives the defendantsome measure of protection as the plaintiff must still prove the
allegations in the complaint. Favorable relief can be granted only after the court
isconvinced that the facts proven by the plaintiff warrant such relief. Indeed, the party
alleging a fact has the burden of proving it and a mereallegation is not evidence.26
Page 209 of 378

The petitioner asserts herein that she sufficiently proved her actual contributions in the
purchase of the condominium unit in the aggregate amount of at least P306,572.00,
consisting in direct contributions ofP159,072.00, and in repaying the loans Atty. Luna
had obtained from Premex Financing and Banco Filipino totaling P146,825.30;27 and that
such aggregate contributions of P306,572.00 corresponded to almost the entire share of
Atty. Luna in the purchase of the condominium unit amounting to P362,264.00 of the
units purchase price of P1,449,056.00.28 The petitioner further asserts that the lawbooks
were paid for solely out of her personal funds, proof of which Atty. Luna had even sent
her a "thank you" note;29 that she had the financial capacity to make the contributions
and purchases; and that Atty. Luna could not acquire the properties on his own due to
the meagerness of the income derived from his law practice.
Did the petitioner discharge her burden of proof on the co-ownership?
In resolving the question, the CA entirely debunked the petitioners assertions on her
actual contributions through the following findings and conclusions, namely:
SOLEDAD was not able to prove by preponderance of evidence that her own
independent funds were used to buy the law office condominium and the law books
subject matter in contentionin this case proof that was required for Article 144 of the
New Civil Code and Article 148 of the Family Code to apply as to cases where
properties were acquired by a man and a woman living together as husband and wife
but not married, or under a marriage which was void ab initio. Under Article 144 of the
New Civil Code, the rules on co-ownership would govern. But this was not readily
applicable to many situations and thus it created a void at first because it applied only if
the parties were not in any way incapacitated or were without impediment to marry
each other (for it would be absurd to create a co-ownership where there still exists a
prior conjugal partnership or absolute community between the man and his lawful
wife). This void was filled upon adoption of the Family Code. Article 148 provided that:
only the property acquired by both of the parties through their actual joint contribution
of money, property or industry shall be owned in common and in proportion to their
respective contributions. Such contributions and corresponding shares were prima
faciepresumed to be equal. However, for this presumption to arise, proof of actual
contribution was required. The same rule and presumption was to apply to joint
deposits of money and evidence of credit. If one of the parties was validly married to
another, his or her share in the co-ownership accrued to the absolute community or
conjugal partnership existing in such valid marriage. If the party who acted in bad faith
was not validly married to another, his or her share shall be forfeited in the manner
provided in the last paragraph of the Article 147. The rules on forfeiture applied even if
both parties were in bad faith. Co-ownership was the exception while conjugal
partnership of gains was the strict rule whereby marriage was an inviolable social
institution and divorce decrees are not recognized in the Philippines, as was held by the
Supreme Court in the case of Tenchavez vs. Escao, G.R. No. L-19671, November 29,
1965, 15 SCRA 355, thus:
xxxx
As to the 25/100pro-indivisoshare of ATTY. LUNA in the condominium unit,

SOLEDAD failed to prove that she made an actual contribution to purchase the said
property. She failed to establish that the four (4) checks that she presented were indeed
used for the acquisition of the share of ATTY. LUNA in the condominium unit. This
was aptly explained in the Decision of the trial court, viz.:
Page 210 of 378

"x x x The first check, Exhibit "M" for P55,000.00 payable to Atty. Teresita Cruz Sison
was issued on January 27, 1977, which was thirteen (13) months before the
Memorandum of Agreement, Exhibit "7" was signed. Another check issued on April 29,
1978 in the amount of P97,588.89, Exhibit "P" was payable to Banco Filipino. According
to the plaintiff, thiswas in payment of the loan of Atty. Luna. The third check which was
for P49,236.00 payable to PREMEX was dated May 19, 1979, also for payment of the
loan of Atty. Luna. The fourth check, Exhibit "M", forP4,072.00 was dated December 17,
1980. None of the foregoing prove that the amounts delivered by plaintiff to the payees
were for the acquisition of the subject condominium unit. The connection was simply
not established. x x x"
SOLEDADs claim that she made a cash contribution of P100,000.00 is unsubstantiated.

Clearly, there is no basis for SOLEDADs claim of co-ownership over the 25/100 portion
of the condominium unit and the trial court correctly found that the same was acquired
through the sole industry of ATTY. LUNA, thus:
"The Deed of Absolute Sale, Exhibit "9", covering the condominium unit was in the
name of Atty. Luna, together with his partners in the law firm. The name of the plaintiff
does not appear as vendee or as the spouse of Atty. Luna. The same was acquired for
the use of the Law firm of Atty. Luna. The loans from Allied Banking Corporation and
Far East Bank and Trust Company were loans of Atty. Luna and his partners and
plaintiff does not have evidence to show that she paid for them fully or partially. x x x"
The fact that CCT No. 4779 and subsequently, CCT No. 21761 were in the name of
"JUAN LUCES LUNA, married to Soledad L. Luna" was no proof that SOLEDAD was a
co-owner of the condominium unit. Acquisition of title and registration thereof are two
different acts. It is well settled that registration does not confer title but merely confirms
one already existing. The phrase "married to" preceding "Soledad L. Luna" is merely
descriptive of the civil status of ATTY. LUNA.
SOLEDAD, the second wife, was not even a lawyer. So it is but logical that SOLEDAD
had no participation in the law firm or in the purchase of books for the law firm.
SOLEDAD failed to prove that she had anything to contribute and that she actually
purchased or paid for the law office amortization and for the law books. It is more
logical to presume that it was ATTY. LUNA who bought the law office space and the
law books from his earnings from his practice of law rather than embarrassingly beg or
ask from SOLEDAD money for use of the law firm that he headed.30
The Court upholds the foregoing findings and conclusions by the CA both because they
were substantiated by the records and because we have not been shown any reason to
revisit and undo them. Indeed, the petitioner, as the party claiming the co-ownership,
did not discharge her burden of proof. Her mere allegations on her contributions, not
being evidence,31 did not serve the purpose. In contrast, given the subsistence of the
first marriage between Atty. Luna and Eugenia, the presumption that Atty. Luna
acquired the properties out of his own personal funds and effort remained. It should
then be justly concluded that the properties in litislegally pertained to their conjugal
partnership of gains as of the time of his death. Consequently, the sole ownership of the
25/100 pro indivisoshare of Atty. Luna in the condominium unit, and of the lawbooks
pertained to the respondents as the lawful heirs of Atty. Luna.
WHEREFORE, the Court AFFIRMS the decision promulgated on November 11, 2005;
and ORDERS the petitioner to pay the costs of suit.
Page 211 of 378

A.M. No. SB-14-21-J September 23, 2014

[Formerly A.M. No. 13-10-06-SB]
RE: ALLEGATIONS MADE UNDER OATH AT THE SENATE BLUE RIBBON

COMMITTEE HEARING HELD ON SEPTEMBER 26, 2013 AGAINST ASSOCIATE
JUSTICE GREGORY S. ONG, SANDIGANBAYAN
The Majority holds Justice Gregory S. Ong of the Sandiganbayan guilty of gross
misconduct, dishonesty, and impropriety in violation of the New Code of Judicial
Conduct for the Judiciary.
I believe, however, that Justice Ong is administratively liable only for simple
misconduct, because that was the offense competently and properly established against
him, and the offense for which he is to be justly punished. I join the thorough
consideration of the record and recommendation for the suspension of Justice Ong for
three months by Justice Jose Portugal Perez and Justice Bienvenido L. Reyes. I humbly
opine that it is unjust to punish Justice Ong with the extreme penalty of dismissal from
the service if the serious charges of gross misconduct, dishonesty, and impropriety were
not clearly and convincingly proven by competent evidence.
In imposing the ultimate penalty of dismissal, the per curiam decision of the Majority
contained the following observations:
1. Justice Ong's association with Janet Lim Napoles during the pendency of, and after
the promulgation of the decision in the Kevlar case resulting in Napoles's acquittal
constituted gross misconduct notwithstanding the absence of direct evidence of
corruption or bribery in the rendition of the said judgment.
2. The testimonies of Benhur Luy and Marina Sula, the former employees of Napoles,
were considered substantial evidence establishing Napoles's contact with Justice Ong
during the pendency of the Kevlar case. The substance of their testimonies given
credence by the Majority are the following:
(a) Napoles revealed to them that she had a "connect" or "contact" in the
Sandiganbayan who could help "fix" the Kevlar case;
(b) Luy testified that Napoles told him that she gave money to Justice Ong but
did not disclose the amount;
(c) Napoles kept a ledger detailing her expense for the Sandiganbayan, which
reached Fl 00 Million; and
(d) Napoles' information about her association with Justice Ong was confirmed
when she was eventually acquitted in 2010, and when Luy and Sula saw him
visit her office after the promulgation of the decision in the Kevlar case, and
given the eleven checks issued by Napoles in 2012;
3. The evidence on record was insufficient to sustain the charge of bribery and
corruption against Justice Ong inasmuch as Luy and Sula had not themselves witnessed
him actually receiving money from Napoles. Considering that bribery and corruption
connote a grave misconduct, the quantum of proof should be more than substantial;
Page 212 of 378

4. By his act of going to Napoles's office on two occasions, Justice Ong exposed himself
to the suspicion that he had been partial to Napoles;
5. Investigating Justice Angelina Sandoval-Gutierrez found the testimonies of Luy and

Sula credible;
6. Justice Ong's act of voluntarily meeting with Napoles constituted impropriety,

because he must at all times be beyond reproach and should avoid even the mere
suggestion of partiality and impropriety;
7. According to Justice Sandoval-Gutierrez, the eleven checks supposedly issued as

advance interest for Justice Ong's deposit in AFPSLAI were given to him as
consideration for the favorable ruling in the Kevlar case; and
8. Justice Ong's denial and failure to disclose his attendance in Napoles's gatherings,
and his visits and social calls to Napoles constituted dishonesty.
To the Majority, Justice Ong's guilt for gross misconduct was anchored on the inference
from his association with Napoles having led to her acquittal in the Kevlar case. To
support the inference, the Majority accorded credence to the statements of Luy and Sula
to the effect that: (a) Napoles had told them on different occasions that she had a
"contact" in the Sandiganbayan; ( b) Na poles later on disclosed that Justice Ong was her
contact in the Sandiganbayan; and ( c) Napoles told Luy that she had paid money to
Justice Ong (whose amounts she did not bother to disclose).
The evidence required in administrative cases is concededly only substantial;1 that is,
the requirement of substantial evidence is satisfied although the evidence is not
overwhelming, for as long as there is reasonable ground to believe that the person
charged is guilty of the act complained of.2 However, the substantial evidence rule
should not be invoked to sanction the use in administrative proceedings of clearly
inadmissible evidence. Although strict adherence to technical rules is not required in
administrative proceedings, this lenity should not be considered a license to disregard
fundamental evidentiary rules.3 The evidence presented must at least have a modicum
of admissibility in order for it to have probative value. Not only must there be some
evidence to support a finding or conclusion, but the evidence must be substantial.
Substantial evidence is more than a mere scintilla; it means such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion.4 In my opinion,
administrative proceedings should not be treated differently under pain of being
perceived as arbitrary in our administrative adjudications.
The statements of Luy and Sula being relied upon were based not on the declarants'
personal knowledge, but on statements made to them by Napoles. I find it very odd
that the Majority would accord credence to such statements by Luy and Sula if they
themselves did not personally acquire knowledge of such matters. I insist that
elementary evidentiary rules must be observed even in administrative proceedings.
A most basic rule is that a witness can only testify on matters that he or she knows of
her personal knowledge.5This rule does not change even if the required standard be
substantial evidence, preponderance of evidence, proof beyond reasonable doubt, or
clear and convincing evidence. The observations that the statements of Luy and Sula
were made amidst the "challenging and difficult setting"6 of the Senate hearings, and
that the witnesses were "candid, straightforward and categorical" during the
administrative investigation7 did not excise the defect from them. The concern of the
Page 213 of 378

hearsay rule is not the credibility of the witness presently testifying, but the veracity
and competence of the extrajudicial source of the witness's information.
To be clear, personal knowledge is a substantive prerequisite for accepting testimonial

evidence to establish the truth of a disputed fact. The Court amply explained this in
Fatula v. People:8 To elucidate why x x x hearsay evidence was unreliable and
untrustworthy, and thus devoid of probative value, reference is made to Section 36 of
Rule 130, Rules o.f Court, a rule that states that a witness can testify only to those facts
that she knows of her personal knowledge; that is, which arc derived from her own
perception, except as otherwise provided in the Rules qf Court. The personal
knowledge of a witness is a substantive prerequisite for accepting testimonial evidence
that establishes the truth of a disputed fact. A witness bereft of personal knowledge of
the disputed fact cannot be called upon for that purpose because her testimony derives
its value not from the credit accorded to her as a witness presently testifying but from
the veracity and competency of the extrajudicial source of her information.
In case a witness is permitted to testify based on what she has heard another person say
about the facts in dispute, the person from whom the witness derived the information
on the facts in dispute is not in court and under oath to be examined and cross-
examined. The weight of such testimony then depends not upon the veracity of the
witness but upon the veracity of the other person giving the information to the witness
without oath. The information cannot be tested because the declarant is not standing in
court as a witness and cannot, therefore, be cross-examined.
It is apparent, too, that a person who relates a hearsay is not obliged to enter into any
particular, to answer any question, to solve any difficulties, to reconcile any
contradictions, to explain any obscurities, to remove any ambiguities; and that she
entrenches herself in the simple assertion that she was told so, and leaves the burden
entirely upon the dead or absent author. Thus, the rule against hearsay testimony rests
mainly on the ground that there was no opportunity to cross-examine the declarant.
The testimony may have been given under oath and before a court of .iustice, but if it is
offered against a party who is afforded no opportunity to crossexamine the witness, it is
hearsay just the same.
Moreover, the theory of the hearsay rule is that when a human utterance is offered as
evidence of the truth of the fact asserted, the credit of the assertor becomes the basis of
inference, and, therefore, the assertion can be received as evidence only when made on
the witness stand, subject to the test of cross-examination. However, if an extrajudicial
utterance is offered, not as an assertion to prove the matter asserted but without
reference to the truth of the matter asserted, the hearsay rule docs not apply. For
example, in a slander case, if a prosecution witness testifies that he heard the accused
say that the complainant was a thief, this testimony is admissible not to prove that the
complainant was really a thief, but merely to show that the accused uttered those
words. This kind of utterance is hearsay in character but is not legal hearsay. The
distinction is, therefore, between (a) the fact that the statement was made, to which the
hearsay rule docs not apply, and (b) the truth of the facts asserted in the statement, to
which the hearsay rule applies.
Section 36, Ruic 130 of the Rules of Court is understandably not the only rule that
explains why testimony that is hearsay should be excluded from consideration.
Excluding hearsay also aims to preserve the right of the opposing party to cross-
examine the original dcclarant claiming to have a direct knowledge of the transaction or
Page 214 of 378

occurrence. If hearsay is allowed, the right stands to be denied because the declarant is
not in court. It is then to be stressed that the right to cross-examine the adverse party's
witness, being the only means of testing the credibility of witnesses and their
testimonies, is essential to the administration of justice.
To address the problem of controlling inadmissible hearsay as evidence to establish the

truth in a dispute while also safeguarding a party's right to cross-examine her
adversary's witness, the Rules of'Court offers two solutions. The first solution is to
require that all the witnesses in a judicial trial or hearing be examined only in court
under oath or affirmation. Section 1, Rule 132 of the Rules of Court formalizes this
solution, viz:
Section 1. Examination to be done in open court. - The examination of witnesses

presented in a trial or hearing shall be done in open court, and under oath or
affirmation. Unless the witness is incapacitated to speak, or the question calls for a
different mode of answer, the answers of the witness shall be given orally. (1a)
The second solution is to require that all witnesses be subject to the crossexamination by
the adverse party. Section 6, Rule 132 of the Rules of Court ensures this solution thusly:
Section 6. Cross-examination; its purpose and extent. Upon the termination of the
direct examination, the witness may be cross-examined by the adverse party as to any
matters stated in the direct examination, or connected therewith, with sufiicicnt fullness
and freedom to test his accuracy and truthfulness and freedom from interest or bias, or
the reverse, and to elicit all important facts bearing upon the issue. (8a)
Although the second solution traces its existence to a Constitutional precept relevant to
criminal cases, i.e., Section 14, (2), Article III, of the 1987 Constitution, which guarantees
that: "Jn all criminal prosecutions. the accused shall xxx enjoy the right xxx to meet the
witnesses.face to face xxx," the rule requiring the cross-examination by the adverse
party equally applies to non-criminal proceedings.
We thus stress that the rule excluding hearsay as evidence is based upon serious
concerns about the trustworthiness and reliability of hearsay evidence due to its not
being given under oath or solemn affirmation and clue to its not being subjected to
cross-examination by the opposing counsel to test the perception, memory, veracity and
articulateness of the out-of-court declarant or actor upon whose reliability the worth of
the out-of-court statement depends.9
In addition, the Majority adverted to the following statements of Luy and Sula, to wit:
(a) Luy and Sula saw Justice Ong visit Napoles in her office; (b) there was a ledger
listing Napoles's alleged "Sandiganbayan" expenses; and (c) Luy personally prepared
the 11 checks allegedly issued by Napoles to Justice Ong as advance interest for the
latter's deposit in AFPSLAI as the basis for concluding that Justice Ong's association
with Napoles was more than merely casual; and that such association was instrumental
in Napoles's acquittal in the Kevlar case supposedly orchestrated by Justice Ong in
return for monetary consideration.
I cannot agree with the Majority.
Justice Ong admitted making visits to Napoles, but such visits apparently happened in
2012, or long after the promulgation of the decision in the Kevlar case. He maintained
Page 215 of 378

that he had made his visits only to thank her for accommodating his request for access
to the robe of the Black Nazarene.
The claim about the ledger and checks remained uncorroborated. No ledger or checks
or any other documents indicating the preparation of the ledger or the issuance of the
checks were actually presented. Nor was the connection of such ledger or the checks to
the fixing of the Kevlar case for monetary consideration ever established. In that light,
the adverse statements by Luy and Sula remained to be mere allegations that could not
be considered as evidence by any means.10
If the Majority concede that there was no sufficient evidence to support the charge of
bribery and corruption against Justice Ong, it became unreasonable for the Majority to
hold that the totality of the circumstances still showed his corrupt inclination. To let
ourselves as judges reach a conclusion of corrupt inclination despite the insufficient
basis to find bribery and corruption is to set at naught all our learning of rendering a
judgment of guilt only upon evidence that is sufficient, credible and reliable.
Having admitted visiting Napoles after the promulgation of the decision in the Kevlar
case, Justice Ong could be considered as fraternizing with a litigant, by which he surely
transgressed his duty as a judge to be beyond reproach and suspicion. 11 He thereby
violated Section 1 of Canon 4 (Propriety) of the New Code of Judicial Conduct.12 Yet,
such association with Napoles was still censurable. Under Rule 140 of the Rules of
Court, fraternizing with lawyers or litigants is classified as a light charge penalized with
a fine of not less than P1,000.00 but not exceeding P10,000.00 and/or censure,
reprimand, or admonition with warning.
The dishonesty of Justice Ong for having initially denied any acquaintance with
Napoles was not of the seriousness or gravity to merit the extreme penalty of dismissal.
His denial neither related to his official duties, nor to his qualifications as a Justice of the
Sandiganbayan. It was not akin to an act of dishonesty committed through the
falsification of one's daily time records,13 and was not similar to a judge's failure to
disclose in his application for appointment to the Judiciary pending criminal cases filed
against him.14
It is relevant to note that dishonesty is a serious charge punishable by the following: (a)
dismissal from the service, forfeiture of all or part of the benefits as the Court may
determine, and disqualification from reinstatement or appointment to any public office,
including government-owned or controlled corporations. Provided, however, that the
forfeiture of benefits shall in no case include accrued leave credits; or (b) suspension
from office without salary and other benefits for more than three (3) but not exceeding
six (6) months; or (c) a fine of more thanP20,000.00 but not exceeding P40,000.00.15 Even
so, the Court refrained in several instances from imposing these stiff administrative
penalties because of the presence of mitigating circumstances, like the length of service,
acknowledgment of fault, and feeling of remorse and humanitarian considerations.16
Nonetheless, the Court should appreciate mitigating circumstances in determining the

proper penalty to be imposed upon Justice Ong. At present, he is the longest-sitting
Justice in the Sandiganbayan. Moreover, as mentioned by the Majority, he has admitted
that his having associated himself to a former litigant in his court was an error, and has
asked forgiveness during the proceedings held by Justice Sandoval-Gutierrez.
Page 216 of 378

ACCORDINGLY, I VOTE to hold respondent JUSTICE GREGORY S. ONG guilty of

SIMPLE MISCONDUCT, to be punished with suspension from office for a period of
three months.
A.M. No. 08-19-SB-J April 12, 2011
ASSISTANT SPECIAL PROSECUTOR III ROHERMIA J. JAMSANI-

RODRIGUEZ, Complainant, vs. JUSTICES GREGORY S. ONG, JOSE R.
HERNANDEZ, and RODOLFO A. PONFERRADA,
SANDIGANBAYAN,Respondents.
RESOLUTION
We resolve: (a) the Joint Motion for Reconsideration dated September 14, 2010 filed by
respondents Sandiganbayan Associate Justice Gregory S. Ong (Justice Ong) and
Associate Justice Jose R. Hernandez (Justice Hernandez); and (b) the Motion for
Reconsideration (of the Honorable Courts Decision Dated 1 September) dated
September 15, 2010 of the complainant.
Both motions seek the reconsideration of the Decision rendered on August 24, 2010,
albeit on different grounds.
Through the Decision, we found and held Justice Ong and Justice Hernandez liable for
simple misconduct, and disposed against them and Associate Justice Rodolfo A.
Ponferrada (Justice Ponferrada), as follows:
1. ASSOCIATE JUSTICE GREGORY S. ONG is ordered to pay a fine of

15,000.00, with a stern warning that a repetition of the same or similar offense
shall be dealt with more severely;
2. ASSOCIATE JUSTICE JOSE R. HERNANDEZ is admonished with a warning

that a repetition of the same or similar offenses shall be dealt with more severely;
and
3. ASSOCIATE JUSTICE RODOLFO A. PONFERRADA is warned to be more

cautious about the proper procedure to be taken in proceedings before his court.1
A brief account of the factual antecedents is first given.
The complainant, then an Assistant Special Prosecutor III in the Office of the Special
Prosecutor, filed an affidavit-complaint dated October 23, 2008 charging Justice Ong,
Justice Hernandez and Justice Ponferrada, as the Members of the Fourth Division of the
Sandiganbayan with: (a) grave misconduct, conduct unbecoming a Justice, and conduct
grossly prejudicial to the interest of the service (grounded on their failing to hear cases
as a collegial body during the scheduled sessions of the Fourth Division held in Davao
City on April 24-28, 2006, with Justice Ong hearing cases by himself and Justice
Hernandez and Justice Ponferrada hearing other cases together; and on their having
unreasonably flexed their judicial muscle when she objected to the procedure); (b)
falsification of public documents (grounded on their issuance of orders relative to the
hearings in Davao City, signed by all three of them, that made it appear as if all of them
had been present during the particular hearing acting as a collegial body, when in truth
they were not); (c) improprieties in the hearing of cases that amounted to gross abuse of
judicial authority and grave misconduct (grounded on Justice Ong and Justice
Page 217 of 378

Hernandezs making the following intemperate and discriminatory utterances during

the hearings of their Division in Cebu City sometime in September 2006), to wit:
(a) We are playing Gods here, we will do what we want to do, your contempt is
already out, we fined you eighteen thousand pesos, even if you will appeal, by
that time I will be there, Justice of the Supreme Court.2;
(b) You are better than Director Somido? Are you better than Director Chua?
Are you here to supervise Somido? Your office is wasting funds for one
prosecutor who is doing nothing.3;
(c) Just because your son is always nominated by the JBC to Malacaang, you
are acting like that! Do not forget that the brain of the child follows that of their
(sic) mother4; and
(d) Justice Ong often asked lawyers from which law schools they had graduated,
and frequently inquired whether the law school in which Justice Hernandez had
studied and from which he had graduated was better than his (Justice Ongs)
own alma mater.
and (d) manifest partiality and gross ignorance of the law (grounded on the fact that
Criminal Case No. 25801, entitled People v. Puno, was dismissed upon a demurrer to
evidence filed by the accused upon a finding that the assailed contracts subject of the
criminal case had never been perfected contrary to the evidence of the Prosecution, the
dismissal order being signed by all three respondents).
In the Decision of August 24, 2010, we explained as follows:
A. Respondents Violation of the Provisions of PD 1606 and Revised Internal Rules

of the Sandiganbayan
xxx xxx xxx
We find that the procedure adopted by respondent Justices for their provincial hearings
was in blatant disregard of PD 1606, as amended, the Rules of Court, and the Revised
Internal Rules of the Sandiganbayan. Even worse, their adoption of the procedure
arbitrarily denied the benefit of a hearing before a duly constituted Division of the
Sandiganbayan to all the affected litigants, including the State, thereby rendering the
integrity and efficacy of their proceedings open to serious challenge on the ground that
a hearing before a duly constituted Division of the Sandiganbayan was of the very
essence of the constitutionally guaranteed right to due process of law.
Judges are not common individuals whose gross errors men forgive and time forgets.
They are expected to have more than just a modicum acquaintance with the statutes
and procedural rules. For this reason alone, respondent Justices adoption of the
irregular procedure cannot be dismissed as a mere deficiency in prudence or as a lapse
in judgment on their part, but should be treated as simple misconduct, which is to be
distinguished from either gross misconduct or gross ignorance of the law. The
respondent Justices were not liable for gross misconduct defined as the transgression
of some established or definite rule of action, more particularly, unlawful behavior or
gross negligence, or the corrupt or persistent violation of the law or disregard of well-
known legal rules considering that the explanations they have offered herein, which
the complainant did not refute, revealed that they strove to maintain their collegiality
Page 218 of 378

by holding their separate hearings within sight and hearing distance of one another.
Neither were they liable for gross ignorance of the law, which must be based on reliable
evidence to show that the act complained of was ill-motivated, corrupt, or inspired by
an intention to violate the law, or in persistent disregard of well-known legal rules; on
the contrary, none of these circumstances was attendant herein, for the respondent
Justices have convincingly shown that they had not been ill-motivated or inspired by an
intention to violate any law or legal rule in adopting the erroneous procedure, but had
been seeking, instead, to thereby expedite their disposition of cases in the provinces.
Nonetheless, it remains that the respondent Justices did not ensure that their
proceedings accorded with the provisions of the law and procedure. Their insistence
that they adopted the procedure in order to expedite the hearing of provincial cases is
not a sufficient reason to entirely exonerate them, even if no malice or corruption
motivated their adoption of the procedure. They could have seen that their procedure
was flawed, and that the flaw would prevent, not promote, the expeditious disposition
of the cases by precluding their valid adjudication due to the nullifying taint of the
irregularity. They knew as well that the need to expedite their cases, albeit
recommended, was not the chief objective of judicial trials. As the Court has reminded
judges in State Prosecutors v. Muro, viz:
Although a speedy determination of an action or proceeding implies a speedy trial, it

should be borne in mind that speed is not the chief objective of a trial. Careful and
deliberate consideration for the administration of justice is more important than a race
to end the trial. A genuine respect for the rights of all parties, thoughtful consideration
before ruling on important questions, and a zealous regard for the just administration of
law are some of the qualities of a good trial judge, which are more important than a
reputation for hasty disposal of cases.
xxx xxx xxx
What is required on the part of judges is objectivity. An independent judiciary does not
mean that judges can resolve specific disputes entirely as they please. There are both
implicit and explicit limits on the way judges perform their role. Implicit limits include
accepted legal values and the explicit limits are substantive and procedural rules of law.
The judge, even when he is free, is still not wholly free. He is not to innovate at
pleasure. He is not a knight-errant, roaming at will in pursuit of his own ideal of beauty
or goodness. He is to draw his inspiration from consecrated principles. He is not to
yield to spasmodic sentiment, to vague and unregulated benevolence. He is to exercise
a discretion informed by tradition, methodized by analogy, disciplined by system, and
subordinate to the "primordial necessity of order in the social life."
Relevantly, we do not consider the respondent Justices signing of the orders issued
during the flawed proceedings as a form of falsification or dishonesty, in that they
thereby made it appear that they had all been physically present when the truth was
different. Such act merely ensued from the flawed proceedings and cannot be treated as
a separate offense.
B. Unbecoming Conduct of Justice Ong and Justice Hernandez
The Court approves the Court Administrators finding and recommendation that no
evidence supported the complainants charge that Justice Ong and Justice Hernandez
had uttered the improper and intemperate statements attributed to them.
Page 219 of 378

A review of the transcripts of the stenographic notes for the hearings in which the
offensive statements were supposedly uttered by them has failed to substantiate the
complainants charge. In the absence of a clear showing to the contrary, the Court must
accept such transcripts as the faithful and true record of the proceedings, because they
bear the certification of correctness executed by the stenographers who had prepared
them.
Even so, Justice Ong and Justice Hernandez admitted randomly asking the counsels
appearing before them from which law schools they had graduated, and their engaging
during the hearings in casual conversation about their respective law schools. They
thereby publicized their professional qualifications and manifested a lack of the
requisite humility demanded of public magistrates. Their doing so reflected a vice of
self-conceit. We view their acts as bespeaking their lack of judicial temperament and
decorum, which no judge worthy of the judicial robes should avoid especially during
their performance of judicial functions. They should not exchange banter or engage in
playful teasing of each other during trial proceedings (no matter how good-natured or
even if meant to ease tension, as they want us to believe). Judicial decorum demands
that they behave with dignity and act with courtesy towards all who appear before their
court.
Indeed, Section 6, Canon 6 of the New Code of Judicial Conduct for the Philippine
Judiciary clearly enjoins that:
Section 6. Judges shall maintain order and decorum in all proceedings before the court
and be patient, dignified and courteous in relation to litigants, witnesses, lawyers and
others with whom the judge deals in an official capacity. Judges shall require similar
conduct of legal representatives, court staff and others subject to their influence,
direction or control.
We point out that publicizing professional qualifications or boasting of having studied

in and graduated from certain law schools, no matter how prestigious, might have even
revealed, on the part of Justice Ong and Justice Hernandez, their bias for or against
some lawyers. Their conduct was impermissible, consequently, for Section 3, Canon 4 of
the New Code of Judicial Conduct for the Philippine Judiciary, demands that judges
avoid situations that may reasonably give rise to the suspicion or appearance of
favoritism or partiality in their personal relations with individual members of the legal
profession who practice regularly in their courts.
Judges should be dignified in demeanor, and refined in speech. In performing their

judicial duties, they should not manifest bias or prejudice by word or conduct towards
any person or group on irrelevant grounds. It is very essential that they should live up
to the high standards their noble position on the Bench demands. Their language must
be guarded and measured, lest the best of intentions be misconstrued. In this regard,
Section 3, Canon 5 of the New Code of Judicial Conduct for the Philippine Judiciary,
mandates judges to carry out judicial duties with appropriate consideration for all
persons, such as the parties, witnesses, lawyers, court staff, and judicial colleagues,
without differentiation on any irrelevant ground, immaterial to the proper performance
of such duties.
In view of the foregoing, Justice Ong and Justice Hernandez were guilty of unbecoming
conduct, which is defined as improper performance. Unbecoming conduct "applies to a
broader range of transgressions of rules not only of social behavior but of ethical
practice or logical procedure or prescribed method."
Page 220 of 378
C. Respondent Justices Not Guilty of Manifest Partiality
The charge of manifest partiality for issuing the resolution granting the demurrer to
evidence of the accused in Criminal Case No. 25801 is dismissed. As already mentioned,
this Court upheld the assailed resolution on June 5, 2006 in G. R. No. 171116 by
declaring the petition of the Office of the Special Prosecutor assailing such dismissal to
have "failed to sufficiently show that the Sandiganbayan had committed any reversible
error in the questioned judgment to warrant the exercise by this Court of its
discretionary appellate jurisdiction."
In their Joint Motion for Reconsideration, Justice Ong and Justice Hernandez make it
clear that they:
[A]ccept with all humility, and therefore, will no longer contest the Honorable Courts
finding that the proceedings they had adopted in their provincial hearings fell short of
what the provisions of the law and rules require. For such shortcoming, respondents
Ong and Hernandez can only express their regret and apology.
Nonetheless, Justice Ong and Justice Hernandez pray for exoneration, contending that
they are not liable for simple misconduct despite the irregularity of their conduct for the
simple reason that, as the Decision has indicated, they "have not been ill-motivated or
inspired by an intention to violate any law or legal rules in adopting the erroneous
procedure, but had been seeking, instead, to thereby expedite their disposition of cases
in the provinces;" their actions were not willful in character or motivated by a
"premeditated, obstinate or intentional purpose;" or even if their actions might be
"irregular, wrongful, or improper," such could not be characterized as simple
misconduct necessitating administrative sanction.
Also, Justice Ong and Justice Hernandez posit that they cannot be made accountable for
unbecoming conduct because they admittedly posed questions on the law schools of
origin of the counsel appearing before them; that their propounding the queries, per se,
did not justify a finding of unbecoming conduct on their part considering that they
thereby never derided any law school or belittled the capabilities of lawyers on the basis
of their school affiliations, nor exhibited bias for or against any lawyer based on their
alma mater.
In the alternative, Justice Ong prays that the sanction imposed upon him be made equal
to that meted on Justice Hernandez. He "implores the Honorable Court to re-examine
the propriety of imposing a different and heavier penalty against him and take into due
consideration its own pronouncement in its decision that the Sandiganbayan is a
collegial court, and in a collegial court, the members act on the basis of consensus or
majority rule."
For her part, the complainant insists that respondent Justices be found guilty of all
administrative charges made against them; and that the penalties or chastisement be
increased to be commensurate to their infractions.
Ruling
Finding the arguments of the complainant to be matters that the Court fully dealt with
and discussed in the Decision, and there being no other substantial matters raised by
her, we deny her Motion for Reconsideration (of the Honorable Courts Decision Dated
1 September).
Page 221 of 378

We deny the plea of Justice Ong and Justice Hernandez for complete exoneration,
considering what we held in the Decision, which we reiterate hereunder, as follows:
Respondent Justices cannot lightly regard the legal requirement for all of them to sit
together as members of the Fourth Division "in the trial and determination of a case or
cases assigned thereto." The information and evidence upon which the Fourth Division
would base any decisions or other judicial actions in the cases tried before it must be
made directly available to each and every one of its members during the proceedings.
This necessitates the equal and full participation of each member in the trial and
adjudication of their cases. It is simply not enough, therefore, that the three members of
the Fourth Division were within hearing and communicating distance of one another at
the hearings in question, as they explained in hindsight, because even in those
circumstances not all of them sat together in session.
Indeed, the ability of the Fourth Division to function as a collegial body became
impossible when not all of the members sat together during the trial proceedings. The
internal rules of the Sandiganbayan spotlight an instance of such impossibility. Section
2, Rule VII of the Revised Internal Rules of the Sandiganbayan expressly requires that
rulings on oral motions made or objections raised in the course of the trial proceedings
or hearings are be made by the Chairman of the Division. Obviously, the rule cannot be
complied with because Justice Ong, the Chairman, did not sit in the hearing of the cases
heard by the other respondents. Neither could the other respondents properly and
promptly contribute to the rulings of Justice Ong in the hearings before him.
Moreover, the respondents non-observance of collegiality contravened the very

purpose of trying criminal cases cognizable by Sandiganbayan before a Division of all
three Justices. Although there are criminal cases involving public officials and
employees triable before single-judge courts, PD 1606, as amended, has always required
a Division of three Justices (not one or two) to try the criminal cases cognizable by the
Sandiganbayan, in view of the accused in such cases holding higher rank or office than
those charged in the former cases. The three Justices of a Division, rather than a single
judge, are naturally expected to exert keener judiciousness and to apply broader
circumspection in trying and deciding such cases. The tighter standard is due in part to
the fact that the review of convictions is elevated to the Supreme Court generally via the
discretionary mode of petition for review on certiorari under Rule 45, Rules of Court,
which eliminates issues of fact, instead of via ordinary appeal set for the former kind of
cases (whereby the convictions still undergo intermediate review before ultimately
reaching the Supreme Court, if at all).
In GMCR, Inc. v. Bell Telecommunication Philippines, Inc., the Court delved on the nature
of a collegial body, and how the act of a single member, though he may be its head,
done without the participation of the others, cannot be considered the act of the
collegial body itself. There, the question presented was whether Commissioner Simeon
Kintanar, as chairman of the National Telecommunications Commission (NTC), could
alone act in behalf of and bind the NTC, given that the NTC had two other
commissioners as members. The Court ruled:
First. We hereby declare that the NTC is a collegial body requiring a majority vote out
of the three members of the commission in order to validly decide a case or any
incident therein. Corollarily, the vote alone of the chairman of the commission, as in
this case, the vote of Commissioner Kintanar, absent the required concurring vote
coming from the rest of the membership of the commission to at least arrive at a
Page 222 of 378

majority decision, is not sufficient to legally render an NTC order, resolution or

decision.
Simply put, Commissioner Kintanar is not the National Telecommunications

Commission. He alone does not speak for and in behalf of the NTC. The NTC acts
through a three-man body, and the three members of the commission each has one
vote to cast in every deliberation concerning a case or any incident therein that is
subject to the jurisdiction of the NTC. When we consider the historical milieu in which
the NTC evolved into the quasi-judicial agency it is now under Executive Order No. 146
which organized the NTC as a three-man commission and expose the illegality of all
memorandum circulars negating the collegial nature of the NTC under Executive Order
No. 146, we are left with only one logical conclusion: the NTC is a collegial body and
was a collegial body even during the time when it was acting as a one-man regime.
The foregoing observations made in GMCR, Inc. apply to the situation of respondent
Justices as members of the Fourth Division. It is of no consequence, then, that no malice
or corrupt motive impelled respondent Justices into adopting the flawed procedure. As
responsible judicial officers, they ought to have been well aware of the indispensability
of collegiality to the valid conduct of their trial proceedings.
As to the argument of Justice Ong and Justice Hernandez against this Courts finding of
unbecoming conduct on their part, the matter has been fully addressed in the Decision
of August 24, 2010.
We hold to be not well taken the urging of Justice Ong that the penalty imposed upon
him be similar to that meted upon Justice Hernandez.
The variance in the responsibilities of respondent Justices as Members of their Division

compel the differentiation of their individual liabilities. Justice Ong, as the Chairperson,
was the head of the Division under the Internal Rules of the Sandiganbayan, being the
most senior Member, and, as such, he possessed and wielded powers of supervision,
direction, and control over the conduct of the proceedings of the Division. This
circumstance alone provided sufficient justification to treat Justice Ong differently from
the other respondents.
Moreover, we have noted in the Decision that in the exercise of his powers as Chairman
of the Fourth Division, Justice Ong exuded an
unexpectedly dismissive attitude towards the valid objections of the complainant, and
steered his Division into the path of procedural irregularity; and wittingly failed to
guarantee that proceedings of the Division that he chaired came within the bounds of
substantive and procedural rules. To be sure, Justice Hernandez and Justice Ponferrada
did not direct and control how the proceedings of the Division were to be conducted.
Their not being responsible for the direction and control of the running of the Division
and their having relied without malice on the Justice Ongs direction and control should
not be reproved as much as Justice Ongs misconduct. Hence, their responsibility and
liability as Members of the Division were properly diminished.
WHEREFORE, the Motion for Reconsideration (of the Honorable Courts Decision
Dated 1 September) dated September 15, 2010 of complainant Assistant Special
Prosecutor III Rohermia J. Jamsani-Rodriguez; and the Joint Motion for Reconsideration
dated September 14, 2010 of Associate Justice Gregory S. Ong and Associate Justice Jose
R. Hernandez are denied for lack of merit.
Page 223 of 378

G.R. No. 199139 September 9, 2014
ELSIE S. CAUSING, Petitioner, vs. COMMISSION ON ELECTIONS AND HERNAN

D. BIRON, SR., Respondents.
DECISION
The issue is whether the relocation of the petitioner by respondent Municipal Mayor
during the election period from her office as the Local Civil Registrar to the Office of the
Mayor just a few steps away constituted a prohibited act under the Omnibus Election
Codeand the relevant Resolution of the Commission on Elections.
The Case
Petitioner Elsie Causing (Causing) assails the Resolution of the Commission on

Elections En Banc(COMELECEn Banc) promulgated on September 9, 2011 dismissing
her complaint-affidavit dated June 8, 2010 docketed as E.O. CaseNo. 10-131 entitled
Elsie S. Causing v. Hernan D. Biron, Sr. charging Municipal Mayor HernanD. Biron, Sr.
(Mayor Biron) of Barotac Nuevo, Iloilo with violating COMELEC Resolution No. 8737
in relation to Section 261 (g),(h), and (x) of the Omnibus Election Code.1
Antecedents
On January 1, 1993, Causing assumed office as the Municipal Civil Registrar of Barotac
Nuevo, Iloilo. On May 28, 2010, Mayor Biron issued Memorandum No. 12, Series of
2010,2 which reads:
Office Order No. 12

Series of 2010
MRS. ELSIE S. CAUSING

Municipal Civil Registrar
LGU Barotac Nuevo
Exigencies of service so requiring, you are hereby detailed at the Office of the Municipal
Mayor effective upon receipt of this Order and shall likewise receive direct orders from
the undersigned as to particular functions our office may require from time to time.
For your information and strict compliance.
xxxx
On the same date, Mayor Biron also issued Office Order No. 13 detailing Catalina V.
Belonio (Belonio), another municipal employee, to the office of the Local Civil Registrar
of Barotac Nuevo, Iloilo to assume the functions and duties as Local Civil Registrar-
designate effective upon receipt of the order. Office Order No. 13 reads:
Office Order No. 13

Series of 2010
MS. CATALINA V. BELONIO

Administrative Officer III
Office of the Municipal Mayor
Page 224 of 378

Exigencies of service so requiring, you are hereby detailed at the Office of the Local
Civil Registrar and assume the functions and duties as LCR-Designate effective upon
receipt of this Order.
As such, you are hereby authorized to sign and issue documents relative thereto
including the claim for travel allowance and seminar expenses.
For you information and compliance.
x x x x3
On June 1, 2010, Mayor Biron issued to Causing Memorandum No. 17, Series of 2010,
and Memorandum No. 17-A, Series of 2010, respectively reading as follows:
Memorandum No. 17
You are hereby directed to report to the Office of the Mayor effective immediately upon
receipt of this Order and signing of MCR documents shall likewise be done at my office
where you will be provided with a table for this particular function.
For clarity purposes preparation ofsuch documents relative to civil registration

provided for under R.A.No. 9048 and R.A. 9255 shall be done at the office of MCR, after
which, the said documents shall be forwarded to you for your signature.
Additional duties and functions shall likewise be under my direct supervision.
Office Order No. 12 issued on May 28, 2010 is hereby repealed accordingly.
For your strict compliance.4
Memorandum No. 17-A
You are hereby directed to report to the Office of the Mayor effective immediately upon
receipt of this Order. You have to take action on R.A. 9048 and sign MCR documents at
my office where you will be provided with a table for this particular function.
For clarity purposes, preparation of documents relative to civil registration shall be

done at the office of MCR, after which, the said completed documents shall be
forwarded to you for your signature.
Additional duties and functions shall likewise be under my direct supervision.
Office Order No. 12 issued on May 28, 2010 is hereby repealed accordingly.
For your strict compliance.5
In view of the foregoing issuances by Mayor Biron, Causing filed the complaint-
affidavit dated June 8, 2010 in the Office of the Regional Election Director, Region VI, in
Iloilo City, claiming that Office Order No. 12 dated May 28, 2010 issued by Mayor Biron
ordering her detail to the Office of the Municipal Mayor, being made within the election
period and without prior authority from the COMELEC, was illegal and violative of
Section 1, Paragraph A, No. 1, in connection with Section 6 (B) of COMELEC Resolution
No. 8737, Series of 2009, to wit:
Page 225 of 378

xxxx
5. The issuance of Office Order No. 12 dated May 28, 2010 by the municipal mayor
ordering my detail atthe Office of the Municipal Mayor, made within the election
period and without prior written authority from the COMELEC is illegal and violative
of Section 1, Paragraph A, No 1 in connection with Section 6 (B) of COMELEC
Resolution No. 8737 (Series of 2009) otherwise known as " In the Matter of Enforcing the
Prohibition against appointment or hiring of new employees, creating or filing of new
positions, giving any salary increase or transferring or detailing any officer or employee
in the civil service and suspension of local elective officials in connection with the May
10, 2010 national and local elections;
xxxx
8. Further, said transfer of detail does not fall under any of the exceptions to the
requirement of prior authority from the COMELEC, as provided under Section 7 of
COMELEC Resolution No. 8737.
x x x x6
In his counter-affidavit,7 Mayor Biron countered that the purpose of transferring the
office of Causing was to closely supervise the performance of her functions after
complaints regarding her negative behavior in dealing with her co-employees and with
the public transacting business in her office had been received;8 that as the local chief
executive, he was empowered to take personnel actions and other management
prerogatives for the good of public service; that Causing was not being stripped of her
functions as the Municipal Civil Registrar; that she was not transferred or detailed to
another office in order to perform a different function; and that she was not demoted to
a lower position that diminishedher salary and other benefits.9
On March 1, 2011, Atty. Elizabeth Doronilla, the Provincial Election Supervisor (PES),
recommended the dismissal of the complaint-affidavit for lack of probable cause to
charge MayorBiron with the violation of Section (h) of the Omnibus Election Code, as
implemented by Resolution No. 8737.
On September 9, 2011, the COMELEC En Bancaffirmed the findings and

recommendation of PES Doronilla,10observing that Mayor Biron did not transfer or
detail Causing but only required her to physically report to the Mayors office and to
perform her functions thereat; and that he did not strip her of her functions as the
Municipal Civil Registrar, and did not deprive her of her supervisory functions over her
staff.11
Hence, this petition for certiorari.
Issues
Causing submits that Office Order 12 and Office Order 13 were gross violations of
COMELEC Resolution No. 8737, Series of 2009, that implemented Section 261 (g), (h),
and (x) of the Omnibus Election Code; that the prohibition contained in said provisions
covered any movement during the election period, whether it was by reassignment,
appointment, promotion, or demotion, regardless of rank, level or salaryof the affected
personnel; that her detail to the Office of the Mayor was a clear case of personnel
movement prohibited by law;12 and that Mayor Biron violated the provisions because
Page 226 of 378

he did not secure from the COMELEC the prior authority to transfer or detail her
during the election period.13
In addition, Causing claims that the COMELEC En Banccommitted grave abuse of

discretion in affirming the findings of PES Doronilla to the effect that there was no
probable cause to hold Mayor Biron liable for violating the Omnibus Election Code; and
that the COMELEC En Banc totally disregarded a crucial piece ofevidence the
existence of Office Order No. 13 that had ordered the detail of Belonio as the Local Civil
Registrar-designate.14
In his comment,15 Mayor Biron insists that the petition for certiorari should be
dismissed because of the petitioners failure to file a motion for reconsideration in the
COMELEC, and because of her failure to attach copies of equally important documents
pertinent to the case.16 He emphasizes that Office Order No. 12 was issued by his office
for the purpose of closely supervising her in performing her functions after complaints
about her behavior in dealing with her co-workers and withthe public transacting
business in her office had been received by his office.17 He accuses her of willfully
suppressing evidence, specifically the two office orders that clarified that she would still
be performing the functions of her office, albeit in the Office of the Mayor.18
Mayor Biron reiterates his counter-affidavit, namely: (a) that there was no transfer or
detail involved, and any movement of Causing, if at all, was a purely physical transfer,
that is, only a few steps from her office to the Office of the Mayor, without any change
in the present work, agency, position, rank and compensation;19 and (b) that granting
without admitting that the movement constituted reassignment, the same was not
covered by the provisions of COMELEC Resolution No. 8737, which expressly limited
the prohibition to either transfer or detail only.20 Mayor Biron posits that Office Order
No. 13 purportedly ordering the detail of Belonio as Local Civil Registrar-designate was
a mere piece of paper, which Belonio never received.21 He points out that his actions
were upheld by the decision dated August 13,2010 of the Regional Office of the Civil
Service Commission dismissing the appeal by Causing of the assailed office orders.22
Finally, Mayor Biron asserts that Causing did not demonstrate that the COMELEC En
Banccommitted grave abuse of discretion in affirming the findings that there was no
probable causeto hold him liable for violation of the Omnibus Election Code.23
On its part, the COMELEC, through the Office of the Solicitor General (OSG), 24 defends
its questioned resolution, stating that the words transferand detail, having already
acquired legislative and jurisprudential meanings, should not be understood in their
literal sense; that Causing was neither transferred nor detailed; that she was not moved
to a different office with the same rank, level and salary, or to another agency;25 and
that Mayor Birons act of transferring the office space of Causing was intra vires, and
found legal support in the power of supervision and control accorded to local chief
executives under the Local Government Code.26
Ruling
The petition has no merit.
1. Procedural Issue:
Causing did not file a motion for reconsideration before filing the petition for certiorari
Page 227 of 378

Section 7, Article IX-A of the Constitution states that unless otherwise provided by the
Constitution or by law, any decision, order, or ruling of each Commission may be
brought to the Court on certiorariby the aggrieved party within 30 days from receipt of
a copy thereof. For this reason, the Rules of Court(1997) contains a separate rule(Rule
64) on the review of the decisions of the COMELEC and the Commission on
Audit.27 Rule 64 is generally identical with certiorariunder Rule 65,28 except as to the
period of the filing of the petition for certiorari, that is, in the former, the period is 30
days from notice of the judgment or final order or resolution sought to be reviewed but,
in the latter, not later than 60 days from notice of the judgment, order or resolution
assailed.29
Mayor Biron indicates that Causing did not file a motion for reconsideration before
coming to the Court. Causing submits, however, that she was not required to file the
motion for reconsideration because the only recourse of an aggrieved party from the
decision of the COMELEC was the filing of the petition for certiorariunder either Rule
64 or Rule 65.30
The well-established rule is that the motion for reconsideration is an indispensable

condition before an aggrieved party can resort to the special civil action for
certiorariunder Rule 65 of the Rules of Court. The filing of the motion for
reconsideration before the resort to certiorariwill lie is intended to afford to the public
respondent the opportunity to correct any actual or fancied error attributed to it by way
of re-examination of the legal and factual aspects of the case.31
The rule is not absolute, however, considering that jurisprudence has laid down
exceptions to the requirement for the filing of a petition for certiorariwithout first filing
a motion for reconsideration, namely: (a) where the order is a patent nullity, as where
the court a quohas no jurisdiction; (b) where the questions raised in the
certiorariproceedings have been duly raised and passed upon by the lower court, or are
the same as those raised and passed upon in the lower court; (c) where there is an
urgent necessity for the resolution of the question, and any further delay would
prejudice the interests of the Government, or of the petitioner, or the subject matter of
the petition is perishable; (d) where, under the circumstances, a motion for
reconsideration would be useless; (e) where the petitioner was deprived of due process,
and there is extreme urgency for relief; (f) where, in a criminal case, relief from an order
ofarrest is urgent, and the granting of such relief by the trial court is improbable; (g)
where the proceedings in the lower court are a nullity for lack of due process; (h) where
the proceeding was ex parteor in which the petitioner had no opportunity to object; and
(i) where the issue raised is one purely oflaw or public interest is involved.
A perusal of the circumstances of the case shows that none of the foregoing exceptions
was applicable herein. Hence, Causing should have filed the motion for
reconsideration, especially because there was nothing in the COMELEC Rules of
Procedure thatprecluded the filing of the motion for reconsideration in election offense
cases.32
Accordingly, the petition must be dismissed.
2. Substantive Issues:
Mayor Birons acts did not violate the Omnibus Election Code and the COMELEC
Resolution
Page 228 of 378

On the merits, the petition should also fail.
E.O. Case No. 10-131 was founded on Mayor Birons alleged violation of COMELEC
Resolution No. 8737,Series of 2009, in relation to Section 261(g), (h) and (x) of the
Omnibus Election Code, which respectively provide:
Resolution No. 8737
Section 1. Prohibited Acts
A. During the election period from January 10, 2010 to June 09, 2010, no public
official shall, except upon prior authority of the Commission:
1. Make or cause any transfer or detail whatsoever of any officer or employee in

the civil service, including public school teachers. "Transfer" as used in this
provision shall be construed as any personnel movement from one government
agency to another or from one department, division, geographical unit or
subdivision of a government agency to another withor without the issuance of an
appointment.
xxxx
Section 261(g), (h) and (x) of the Omnibus Election Code
Sec. 261. Prohibited Acts. - The following shall be guilty of an election offense:
xxxx
(g) Appointment of new employees, creation of new position, promotion, or

giving salary increases. - During the periodof forty-five days before a regular
election and thirty days before a special election, (1) any head, official or
appointing officer of a government office, agency or instrumentality, whether
national or local, including government-owned or controlled corporations, who
appoints or hires any new employee, whether provisional, temporary or casual,
or creates and fills any new position, except upon prior authority of the
Commission. The Commission shall not grant the authority sought unless, it is
satisfied that the position to be filled is essential to the proper functioning of the
office or agency concerned, and that the position shall not be filled in a manner
that may influence the election.
As an exception to the foregoing provisions, a new employee may be appointed

in case of urgent need: Provided, however, That notice of the appointment shall
be given to the Commission within three days from the date of the appointment.
Any appointment or hiring in violation of this provision shall be null and void.
(2) Any government official who promotes, or gives any increase of salary or
remuneration or privilege to any government official or employee, including
those in government-owned or controlled corporations.
(h) Transfer of officers and employees in the civil service. - Any public official
who makes or causes any transfer or detail whatever of any officer or employee
in the civil service including publicschool teachers, within the election period
except upon prior approval of the Commission. x x x x
Page 229 of 378

(x) Suspension of elective provincial, city, municipal or barangay officer. - The

provisions of law to the contrary notwithstanding during the election period, any
public official who suspends, without prior approval of the Commission, any
elective provincial, city, municipal or barangay officer, unless said suspension
will be for purposes of applying the AntiGraft and Corrupt Practices Act in
relation to the suspension and removal of elective officials; in which case the
provisions of this section shall be inapplicable.
The only personnel movements prohibited by COMELEC Resolution No. 8737 were
transfer and detail. Transferis defined in the Resolution as "any personnel movement
from one government agency to another or from one department, division,
geographical unit or subdivision of a government agency to another with or without the
issuance of an appointment;" while detailas defined in the Administrative Code of
1987is the movement of an employee from one agency to another without the issuance
of an appointment.33 Having acquired technicaland legal meanings, transferand
detailmust be construed as such. Obviously, the movement involving Causing did not
equate to either a transfer or a detail within the contemplation of the law if Mayor Biron
only thereby physically transferred her office area from its old location tothe Office of
the Mayor "some little steps" away.34 We cannot accept the petitionersargument,
therefore, that the phrase "any transfer or detail whatsoever" encompassed "any and all
kinds and manner of personnel movement,"35 including the mere change in office
location.
Moreover, Causings too-literal understanding of transfershould not hold sway because

the provisions involved here werecriminal in nature. Mayor Biron was sought to be
charged with an election offense punishable under Section 264 of the Omnibus Election
Code.36 It is a basic rule of statutory construction that penal statutes are to be liberally
construed in favor of the accused. Every reasonable doubt must then be resolved in
favor of the accused.37 This means that the courts must not bring cases within the
provision of a law that are not clearly embraced by it. In short, no act can be
pronounced criminal unless it is clearly made so by statute prior to its commission
(nullum crimen, nulla poena, sine lege). So, too, no person who is not clearly within the
terms of a statute can be brought within them.
Equally material is that Mayor Birons act of transferring the office space of Causing
was rooted in his power of supervision and control over the officials and employees
serving in his local government unit, in order to ensure the faithful discharge of their
duties and functions.38 His explanation that he transferred Causings work station from
her original office to his office in order to closely supervise her after his office received
complaints against her could not be justly ignored. Verily, she thereafter continued to
perform her tasks, and uninterruptedly received her salaries as the Municipal Civil
Registrar even after the transfer to the Office of the Mayor.
The issuance of Office Order No. 13 by Mayor Biron detailing Belonio to the Office of
the Local Civil Registrar was not proof of Mayor Birons "crystal clear intention" to
replace and transfer her during the election period.39 As the COMELEC En Bancfound,
Belonio did not receive the order, and Causing remained as the Municipal Civil
Registrar, leaving the detailing of Belonio uncompleted. Without the actual
appointment of Belonio as the Municipal Civil Registrar, it would be unwarranted to
criminally charge Mayor Biron ofviolating Section 261 of the Omnibus Election Code.
Page 230 of 378

It is interesting to note that aside from the present election offense case, Causing
initiated an administrative case in the Civil Service Commission to challenge her
"reassignment" pursuant to the same office orders. In that administrative case, she
referred to the personnel movement not as a transferor detail, but as a reassignmentthat
constituted her constructive dismissal.40
On August 13, 2010, the CSC Regional Office No. 6 in Mandurriao, Iloilo City ruled
thatalthough Mayor Biron used the word detailin referring to the personnel movement
effected, the personnel action that actually took place, albeit a reassignment, was a valid
reassignment, viz: In the instant case, Causing is not stripped of her functions as
Municipal Civil Registrar (MCR). She was merely required to physically report to the
Mayors Office and perform her functions as Municipal Civil Registrar therein.
Definitely, she isstill the MCR, albeit doing her work physically outside of her usual
work station. She is also not deprived of her supervisory function over the staff as she
continues to review their work and signs documents they prepared. While she may
encounter difficulty in performing her duties as a supervisor as she is not physically
near her staff, that by itself, however, does not mean that she has lost supervision over
them. That difficulty, nonetheless, is not tantamount to constructive dismissal. That
Mayor Biron prefers to ensure that Causing faithfully discharging her duties as MCR is
principally an exercise of his sound judgment and discretion. He alone has the
discretion to decide when to resort to the necessity of implementing changes in the
workplace as he occupies the ideal vantage point and is in the best position to
determine the needs of his agency and how to satisfy those needs. Besides, contrary to
the allegations of Causing, none of the elements of constructive dismissal is present.
WHEREFORE, the instant appeal of Elsie B. Causing is DISMISSED. Office Order No.
12. Dated May 28, 2010 and Office Orders No. 17 and 17-A dated June 01, 2010 of Mayor
Hernan D. Biron, Sr. of Barotac Nuevo, Iloilo are AFFIRMED.41
Considering that reassignment was not prohibited by the Omnibus Election Code, there
was no probable cause to criminally charge Mayor Biron with the violation of the
Omnibus Election Code. WHEREFORE, the Court DISMISSES the petition for certiorari;
AFFIRMS the Resolution of the Commission on Elections promulgated on September 9,
2011 dismissing E.O. Case No. 10-131 entitled Elsie S. Causing v. Hernan D. Biron, Sr.;
and ORDERS the petitioner to pay the costs of suit.
A.M. OCA IPI No. 11-184-CA-J January 31, 2012
RE: VERIFIED COMPLAINT OF ENGR. OSCAR L. ONGJOCO, CHAIRMAN OF

THE BOARD/CEO OF FH-GYMN MULTI-PURPOSE AND TRANSPORT SERVICE
COOPERATIVE, AGAINST HON. JUAN Q. ENRIQUEZ, JR., HON. RAMON M.
BATO, JR. AND HON. FLORITO S. MACALINO, ASSOCIATE JUSTICES, COURT
OF APPEALS
RESOLUTION
Judicial officers do not have to suffer the brunt of unsuccessful or dissatisfied litigants
baseless and false imputations of their violating the Constitution in resolving their cases
and of harboring bias and partiality towards the adverse parties. The litigant who
baselessly accuses them of such violations is not immune from appropriate sanctions if
he thereby affronts the administration of justice and manifests a disrespect towards the
judicial office.
Page 231 of 378

Antecedents
On June 7, 2011, the Court received a letter from Engr. Oscar L. Ongjoco, claiming
himself to be the Chairman of the Board and Chief Executive Officer (CEO) of the FH-
GYMN Multi-Purpose and Transport Service Cooperative (FH-GYMN).1 The letter
included a complaint-affidavit,2 whereby Ongjoco charged the CAs Sixth Division
composed of Associate Justice Juan Q. Enriquez, Jr. (as Chairman), Associate Justice
Ramon M. Bato, Jr., and Associate Justice Florito S. Macalino as Members for rendering
an arbitrary and baseless decision in CA-G.R. SP No. 102289 entitled FH-GYMN Multi-
Purpose and Transport Service Cooperative v. Allan Ray A. Baluyut, et al.3
The genesis of CA-G.R. SP No. 102289 started on July 26, 2004 when FH-GYMN
requested the amendment of Kautusang Bayan Blg. 37-02-97 of the City of San Jose del
Monte, Bulacan through the Committee on Transportation and Communications
(Committee) of the Sangguniang Panlungsod (Sanggunian) in order to include the
authorization of FH-GYMNs Chairman to issue motorized tricycle operators permit
(MTOP) to its members.4 During the ensuing scheduled public hearings, City
Councilors Allan Ray A. Baluyut and Nolly Concepcion, together with ABC President
Bartolome B. Aguirre and one Noel Mendoza (an employee of the Sanggunian), were
alleged to have uttered statements exhibiting their bias against FH-GYMN, giving FH-
GYMN reason to believe that the Committee members were favoring the existing
franchisees Francisco Homes Tricycle
Operators and Drivers Association (FRAHTODA) and Barangay Mulawin Tricycle

Operators and Drivers Association (BMTODA).5 Indeed, later on, the Sanggunian,
acting upon the recommendation of the Committee, denied the request of FH-GYMN.6
On July 15, 2005, FH-GYMN brought a complaint in the Office of the Deputy
Ombudsman for Luzon charging Baluyut, Concepcion, Aguirre, Mendoza with
violations of Article 124(2)(d) of the Cooperative Code, Section 3(e) and (f) of the
Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act), and Section 5(a) of
Republic Act No. 6713 (Code of Conduct for Public Officials and Employees). The
complaint also charged Eduardo de Guzman (FRAHTODA President) and Wilson de
Guzman (BMTODA President). Eventually, the complaint of FH-GYMN was dismissed
for insufficiency of evidence as to the public officials, and for lack of merit and lack of
jurisdiction as to the private respondents. FH-GYMN sought reconsideration, but its
motion to that effect was denied.7
FH-GYMN timely filed a petition for review in the CA.
In the meanwhile, FH-GYMN filed in the Office of the President a complaint accusing
Overall Deputy Ombudsman Orlando C. Casimiro, Deputy Ombudsman Emilio A.
Gonzales III, and Graft Investigator and Prosecution Officer Robert C. Renido with a
violation of Section 3(i) of Republic Act No. 3019 arising from the dismissal of its
complaint.8
On January 31, 2011, the CAs Sixth Division denied the petition for review.9
FH-GYMN, through Ongjoco, moved for the reconsideration of the denial of the
petition for review, with prayer for inhibition,10 but the CAs Sixth Division denied the
motion.
Page 232 of 378

Thereafter, Ongjoco initiated this administrative case against the aforenamed member
of the CAs Sixth Division.
In the complaint, Ongjoco maintained that respondent members of the CAs Sixth
Division violated Section 14, Article VIII of the 1987 Constitution by not specifically
stating the facts and the law on which the denial of the petition for review was based;
that they summarily denied the petition for review without setting forth the basis for
denying the five issues FH-GYMNs petition for review raised; that the denial was
"unjust, unfair and partial," and heavily favored the other party; that the denial of the
petition warranted the presumption of "directly or indirectly becoming interested for
personal gain" under Section 3(i) of Republic Act No. 3019; and that the Ombudsman
officials who were probably respondent Justices schoolmates or associates persuaded,
induced or influenced said Justices to dismiss the petition for review and to manipulate
the delivery of the copy of the decision to FH-GYMN to prevent it from timely filing a
motion for reconsideration.11
Ruling
We find the administrative complaint against respondent Justices of the Court of

Appeals baseless and utterly devoid of legal and factual merit, and outrightly dismiss it.
Firstly, Ongjoco insists that the decision promulgated on January 31, 2011 by the CAs
Sixth Division had no legal foundation and did not even address the five issues
presented in the petition for review; and that the respondents as members of the CAs
Sixth Division thereby violated Section 14, Article VIII of the Constitution, which
provides as follows:
Section 14. No decision shall be rendered by any court without expressing therein
clearly and distinctly the facts and the law on which it is based.
No petition for review or motion for reconsideration of a decision of the court shall be
refused due course or denied without starting the legal basis therefor.
The insistence of Ongjoco is unfounded. The essential purpose of the constitutional

provision is to require that a judicial decision be clear on why a party has prevailed
under the law as applied to the facts as proved; the provision nowhere demands that a
point-by-point consideration and resolution of the issues raised by the parties are
necessary.12 Cogently, the Court has said in Tichangco v. Enriquez,13 to wit:
This constitutional provision deals with the disposition of petitions for review and of
motions for reconsideration. In appellate courts, the rule does not require any
comprehensive statement of facts or mention of the applicable law, but merely a
statement of the "legal basis" for denying due course.
Thus, there is sufficient compliance with the constitutional requirement when a

collegiate appellate court, after deliberation, decides to deny a motion; states that the
questions raised are factual or have already been passed upon; or cites some other legal
basis. There is no need to explain fully the courts denial, since the facts and the law
have already been laid out in the assailed Decision. (Emphasis supplied)
Its decision shows that the CAs Sixth Division complied with the requirements of the
constitutional provision,14 viz:
Page 233 of 378

The petition is without merit.
Petitioner alleged that the Ombudsman erred in not finding respondents liable for
violation of the Cooperative Code of the Philippines considering that their actuations
constituted acts of direct or indirect interference or intervention with the internal affairs
of FH-GYMN and that recommendation to deny FH-GYMNs application was
tantamount to "any other act inimical or adverse to its autonomy and independence."
We disagree.
It is well settled that in administrative proceedings, the complainant has the burden of
proving, by substantial evidence, the allegations in his complaint. Section 27 of the
Ombudsman Act is unequivocal. Findings of fact by the Office of the Ombudsman,
when supported by substantial evidence, are conclusive. Conversely, when the findings
of fact by the Ombudsman are not adequately supported by substantial evidence, they
shall not be binding upon the courts (Marcelo vs. Bungubung, 552 SCRA 589).
In the present case, the Deputy Ombudsman found no substantial evidence to prove
that there was interference in the internal affairs of FH-GYMN nor was there a violation
of the law by the respondents. As aptly ruled by the Ombudsman:
"While the utterances made by respondents Baluyot, Aguirre and Mendoza in the
course of public hearings earlier mentioned indeed demonstrate exaltation of
FRAHTODA and BMTODA, to the apparent disadvantage of FH-GYMN, the same does
not imply or suggest interference in the internal affairs of the latter considering that said
remarks or comments were made precisely in the lawful exercise of the mandate of the
Sangguniang Panlungsod of the locality concerned through the Committee on
Transporation and Communication. It is worthy to emphasize that were it not for the
complainants letter-request dated July 23, 2004, the committee concerned would not
have conducted the aforementioned public hearings, thus, there would have been no
occasion for the subject unfavorable remarks to unleash. Thus, it would be irrational to
conclude that simply because the questioned utterances were unfavorable to FH-
GYMN, the same constitutes interference or intervention in the internal affairs of the
said cooperative.
In the same vein, while respondents Baluyot, Concepcion and Aguirre rendered an
adverse recommendation as against complaints letter-request earlier mentioned, the
same does not signify giving of undue favors to FRAHTODA or BMTODA, or causing
of undue injury to FH-GYMN, inasmuch as said recommendation or decision, as the
records vividly show, was arrived at by the said respondents in honest exercise of their
sound judgment based on their interpretation of the applicable ordinance governing the
operation of tricycles within their area of jurisdiction. Evidence on record no doubt
failed to sufficiently establish that, in so making the questioned recommendation,
respondents Baluyot, Concepcion and Aguirre acted with manifest partiality, evident
bad faith or gross inexcusable negligence. It is likewise worthy to note that, contrary to
complainants insinuation, the letter-request adverted to was acted upon by
respondents Baluyot, Concepcion and Aguirre within a reasonable time and, as a matter
of fact, complainant had been notified of the action taken by the former relative to his
letter-request or proposals.
Time and again, it has been held, no less than by the Supreme Court, that mere
suspicions and speculations can never be the basis of conviction in a criminal case.
Guided by the same doctrinal rule, this Office is not duty-bound to proceed with the
Page 234 of 378

indictment of the public respondents as charged. Indeed well entrenched is the rule that
"(t)he purpose of a preliminary investigation is to secure the innocent against hasty,
malicious and oppressive prosecution and to protect him from an open and public
accusation of crime, from the trouble, expense and anxiety of a public trial, and also to
protect the state from useless and expensive trials (Joint Resolution, October 17, 2005,
Rollo pp. 142-143).
Moreover, petitioners failed to rebut the presumption of regularity in the performance

of the official duties of respondents by affirmative evidence of irregularity or failure to
perform a duty. The presumption prevails and becomes conclusive until it is overcome
by no less than clear and convincing evidence to the contrary. Every reasonable
intendment will be made in support of the presumption and in case of doubt as to an
officers act being lawful or unlawful, construction should be in favor of its lawfulness
(Bustillo vs. People of the Philippines, G.R. No. 160718, May 12, 2010).
There being no substantial evidence to reverse the findings of the Ombudsman, the
instant petition is denied.
WHEREFORE, premises considered the Petition for Review is DENIED for lack of
merit. The Joint Resolution dated October 17, 2005 and Joint Order dated April 25, 2006
of the Deputy Ombudsman of Luzon are AFFIRMED.
SO ORDERED.
Indeed, the definitive pronouncement of the CAs Sixth Division that "the Deputy
Ombudsman found no substantial evidence to prove that there was interference in the
internal affairs of FH-GYMN nor was there a violation of the law by the
respondents"15 met the constitutional demand for a clear and distinct statement of the
facts and the law on which the decision was based. The CAs Sixth Division did not
have to point out and discuss the flaws of FH-GYMNs petition considering that the
decision of the Deputy Ombudsman sufficiently detailed the factual and legal bases for
the denial of the petition.
Moreover, the CAs Sixth Division expressly found that FH-GYMN had not discharged
its burden as the petitioner of proving its allegations with substantial evidence.16 In
administrative cases involving judicial officers, the complainants always carried on
their shoulders the burden of proof to substantiate their allegations through substantial
evidence. That standard of substantial evidence is satisfied only when there is
reasonable ground to believe that the respondent is responsible for the misconduct
complained of although such evidence may not be overwhelming or even
preponderant.17
Secondly, Ongjoco ought to know, if he genuinely wanted the Court to sustain his
allegations of misconduct against respondent Justices, that his administrative complaint
must rest on the quality of the evidence; and that his basing his plain accusations on
hunches and speculations would not suffice to hold them administratively liable for
rendering the adverse decision. Nonetheless, he exhibited disrespect for respondent
Justices judicial office by still filing this administrative complaint against them despite
conceding in the administrative complaint itself his having no proof of his charges, viz:
21. The petition to review in determining probable cause in a preliminary investigation

had reached this far and may reach the Supreme Court due to corrupt practices and
culpable violation of the 1987 Constitution committed by Ombudsman officials and the
Page 235 of 378

herein respondents of the Court of Appeals. A Motion for Reconsideration was

submitted with prayer for the respondents to inhibit themselves to act on it. Otherwise,
it will add to congest the court docket which this Honorable Court should intercede to
look deeper into this matter by exercising its disciplinary functions over herein
respondents. The arbitrary denial of the Petition for Review rendered by the herein
respondents is meant that there is no sufficient ground out of the five (5) issues raised to
engender a well-founded belief that no single offense has been committed.18
xxx
24. Though there was no clear evidence to link Ombudsman officials, they may have
persuaded, induced or influenced the herein respondents, who are either their
schoolmates or associates, to deny the Petition for Review in their bid to establish
innocence on the related offense charged against them on 18 August 2010 before the
Office of the President docketed as OP-DC Case No. 11-C-006. Likewise, they may have
manipulated the delivery of a copy of Decision intended for the petitioner in order for
the latter to fail in submitting a motion for reconsideration purposely to make the
Decision final and executory by which the said Ombudsman officials could use such
Decision to attain impunity on complaint against them filed with the Office of the
President.19 (emphasis supplied)
It is evident to us that Ongjocos objective in filing the administrative complaint was to

take respondent Justices to task for the regular performance of their sworn duty of
upholding the rule of law. He would thereby lay the groundwork for getting back at
them for not favoring his unworthy cause. Such actuations cannot be tolerated at all, for
even a mere threat of administrative investigation and prosecution made against a
judge to influence or intimidate him in his regular performance of the judicial office
always subverts and undermines the independence of the Judiciary.20
We seize this occasion, therefore, to stress once again that disciplinary proceedings and
criminal actions brought against any judge in relation to the performance of his official
functions are neither complementary to nor suppletory of appropriate judicial remedies,
nor a substitute for such remedies.21 Any party who may feel aggrieved should resort to
these remedies, and exhaust them, instead of resorting to disciplinary proceedings and
criminal actions. We explained why in In Re: Joaquin T. Borromeo:22
Given the nature of the judicial function, the power vested by the Constitution in the
Supreme Court and the lower courts established by law, the question submits to only
one answer: the administrative or criminal remedies are neither alternative or
cumulative to judicial review where such review is available, and must wait on the
result thereof.
Simple reflection will make this proposition amply clear, and demonstrate that any
contrary postulation can have only intolerable legal implications. Allowing a party who
feels aggrieved by a judicial order or decision not yet final and executory to mount an
administrative, civil or criminal prosecution for unjust judgment against the issuing
judge would, at a minimum and as an indispensable first step, confer the prosecutor
(Ombudsman) with an incongruous function pertaining, not to him, but to the courts:
the determination of whether the questioned disposition is erroneous in its findings of
fact or conclusions of law, or both. If he does proceed despite that impediment,
whatever determination he makes could well set off a proliferation of administrative or
criminal litigation, a possibility hereafter more fully explored.
Page 236 of 378

Such actions are impermissible and cannot prosper. It is not, as already pointed out,
within the power of public prosecutors, or the Ombudsman or his Deputies, directly or
vicariously, to review judgments or final orders or resolutions of the Courts of the land.
The power of reviewby appeal or special civil actionis not only lodged exclusively
in the Courts themselves but must be exercised in accordance with a well-defined and
long established hierarchy, and long standing processes and procedures. No other
review is allowed; otherwise litigation would be interminable, and vexatiously
repetitive.
In this regard, we reiterate that a judges failure to correctly interpret the law or to
properly appreciate the evidence presented does not necessarily incur administrative
liability,23 for to hold him administratively accountable for every erroneous ruling or
decision he renders, assuming he has erred, will be nothing short of harassment and
will make his position doubly unbearable. His judicial office will then be rendered
untenable, because no one called upon to try the facts or to interpret the law in the
process of administering justice can be infallible in his judgment. 24 Administrative
sanction and criminal liability should be visited on him only when the error is so gross,
deliberate and malicious, or is committed with evident bad faith,25 or only in clear cases
of violations by him of the standards and norms of propriety and good behavior
prescribed by law and the rules of procedure, or fixed and defined by pertinent
jurisprudence.26
What the Court sees herein is Ongjocos proclivity to indiscriminately file complaints.
His proclivity reminds us now of Joaquin T. Borromeo whom this Court pronounced
guilty of indirect contempt of court he "repeatedly committed over time, despite
warnings and instructions given to him."27 The Court imposed the penalty for contempt
of court "to the end that he may ponder his serious errors and grave misconduct and
learn due respect for the Courts and their authority."28
Having determined that the administrative charge against respondent Justices had no
factual and legal bases, we cannot hesitate to shield them by immediately rejecting the
charge. We do so because unfounded administrative charges do not contribute anything
worthwhile to the orderly administration of justice; instead, they retard it.
Nor should we just let such rejected charge pass and go unchallenged. We recognize
that unfounded administrative charges against judges really degrade the judicial office,
and interfere with the due performance of their work for the Judiciary. Hence, we deem
to be warranted to now direct Ongjoco to fully explain his act of filing an utterly
baseless charge against respondent Justices.
ACCORDINGLY, the Court: (a) DISMISSES the administrative complaint against

Associate Justice Juan Q. Enriquez, Jr., Associate Justice Ramon M. Bato, Jr., and
Associate Justice Florito S. Macalino for its utter lack of merit; and (b) ORDERS Engr.
Oscar L. Ongjoco to show cause in writing within ten (10) days from notice why he
should not be punished for indirect contempt of court for degrading the judicial office
of respondent Associate Justices of the Court of Appeals, and for interfering with the
due performance of their work for the Judiciary.
G.R. No. 176951 June 28, 2011
League of Cities of the Philippines (LCP), represented by LCP National President

Jerry P. Treas; City of Calbayog, represented by Mayor Mel Senen S. Sarmiento; and
Jerry P. Treas, in his personal capacity as Taxpayer, Petitioners, vs. Commission on
Page 237 of 378

Elections; Municipality of Baybay, Province of Leyte; Municipality of Bogo, Province

of Cebu; Municipality of Catbalogan, Province of Western Samar; Municipality of
Tandag, Province of Surigao del Sur; Municipality of Borongan, Province of Eastern
Samar; and Municipality of Tayabas, Province of Quezon, Respondents.
RESOLUTION
We hereby consider and resolve: (a) the petitioners Motion for Leave to File Motion for
Reconsideration of the Resolution of 12 April 2011, attached to which is a Motion for
Reconsideration of the Resolution dated 12 April 2011 dated April 29, 2011 (Motion For
Reconsideration), praying that the resolution of April 12, 2011 be reconsidered and set
aside; and (b) the respondents Motion for Entry of Judgment dated May 9, 2011.
After thorough consideration of the incidents, we deny the Motion for

Reconsideration and grant the Motion for Entry of Judgment.
As its prayer for relief shows, the Motion for Reconsideration seeks the reconsideration,
reversal, or setting aside of the resolution of April 12, 2011.1 In turn, the resolution of
April 12, 2011 denied the petitioners Ad Cautelam Motion for Reconsideration (of the
Decision dated 15 February 2011).2 Clearly, the Motion for Reconsideration is really a second
motion for reconsideration in relation to the resolution dated February 15, 2011.3
Another indicium of its being a second motion for reconsideration is the fact that
the Motion for Reconsiderationraises issues entirely identical to those the petitioners
already raised in their Ad Cautelam Motion for Reconsideration (of the Decision dated 15
February 2011). The following tabulation demonstrates the sameness of issues between
the motions, to wit:
Motion for Reconsideration Ad Cautelam Motion for

of April 29, 2011 Reconsideration (of the Decision
dated 15 February 2011) dated
March 8, 2011
I. With due respect, neither the II. The Resolution Contravenes

Rules of Court nor jurisprudence The 1997 Rules Of Civil
allows the Honorable Court to Procedure And Relevant
take cognizance of Respondent Supreme Court Issuances.
Municipalities multiple motions.
By doing so, the Honorable
Court therefore acted contrary to
the Rules of Court and its
internal procedures.
II. Contrary to the ruling of the I. The Honorable Court Has No

Honorable Court in the Assailed Jurisdiction To Promulgate The
Resolution, the controversy Resolution Of 15 February 2011,
involving the Sixteen (16) Because There is No Longer Any
Cityhood laws had long been Actual Case Or Controversy To
resolved with finality;thus, the Settle.
principles of immutability of
judgment and res judicata are III. The Resolution Undermines
applicable and operate to The Judicial System In Its
Page 238 of 378

deprive the Honorable Court of Disregard Of The Principles

jurisdiction. Of Res Judicata And The
Doctrine of Immutability of
Final Judgments.
III. Contrary to the Assailed IV. The Resolution Erroneously

Resolution of the Honorable Ruled That The Sixteen (16)
Court, the sixteen (16) Cityhood Cityhood Bills Do Not
laws neither repealed nor Violate Article X, Sections 6 and
amended the Local Government 10 Of The 1987 Constitution.
Code. The Honorable Court
committed an error when it V. The Sixteen (16) Cityhood Laws
failed to rule in the Assailed Violate The Equal Protection
Resolution that the Sixteen (16) Clause Of The Constitution And
Cityhood Laws violated Article The Right Of Local Government
X, Sections 6 and 10 of the Units To A Just Share In The
Constitution. National Taxes.
IV. With due respect, the
constitutionality of R.A. 9009 is
not an issue in this case. It was
error on the part of the
Honorable Court to consider the
law arbitrary.
That Issue No. IV (i.e., the constitutionality of Republic Act No. 9009) appears in
the Motion for Reconsiderationbut is not found in the Ad Cautelam Motion for
Reconsideration (of the Decision dated 15 February 2011) is of no consequence, for the
constitutionality of R.A. No. 9009 is neither relevant nor decisive in this case, the
reference to said legislative enactment being only for purposes of discussion.
The Motion for Reconsideration, being a second motion for reconsideration, cannot be
entertained. As to that, Section 24 of Rule 51 of the Rules of Court is unqualified. The
Court has firmly held that a second motion for reconsideration is a prohibited
pleading,5 and only for extraordinarily persuasive reasons and only after an express
leave has been first obtained may a second motion for reconsideration be
entertained.6 The restrictive policy against a second motion for reconsideration has been
re-emphasized in the recently promulgated Internal Rules of the Supreme Court, whose
Section 3, Rule 15 states:
Section 3. Second motion for reconsideration. The Court shall not entertain a second
motion for reconsideration, and any exception to this rule can only be granted in the
higher interest of justice by the Court en banc upon a vote of at least two-thirds of its
actual membership. There is reconsideration "in the higher interest of justice" when the
assailed decision is not only legally erroneous, but is likewise patently unjust and
potentially capable of causing unwarranted and irremediable injury or damage to the
parties. A second motion for reconsideration can only be entertained before the
ruling sought to be reconsidered becomes final by operation of law or by the Courts
declaration.
In the Division, a vote of three Members shall be required to elevate a second motion for
reconsideration to the Court En Banc.
Page 239 of 378

We observe, too, that the prescription that a second motion for reconsideration "can
only be entertained before the ruling sought to be reconsidered becomes final by
operation of law or by the Courts declaration" even renders the denial of the
petitioners Motion for Reconsideration more compelling. As the resolution of April 12,
2011 bears out,7 the ruling sought to be reconsidered became final by the Courts
express declaration. Consequently, the denial of the Motion for Reconsideration is
immediately warranted.
Still, the petitioners seem to contend that the Court had earlier entertained and granted
the respondents own second motion for reconsideration. There is no similarity between
then and now, however, for the Court en banc itself unanimously declared in the
resolution of June 2, 2009 that the respondents second motion for reconsideration was
"no longer a prohibited pleading."8 No similar declaration favors the petitioners Motion
for Reconsideration.
Finally, considering that the petitioners Motion for Reconsideration merely rehashes the
issues previously put forward, particularly in the Ad Cautelam Motion for Reconsideration
(of the Decision dated 15 February 2011), the Court, having already passed upon such
issues with finality, finds no need to discuss the issues again to avoid repetition and
redundancy.
Accordingly, the finality of the resolutions upholding the constitutionality of the 16

Cityhood Laws now absolutely warrants the granting of respondents Motion for Entry
of Judgment.
WHEREFORE, the Court denies the petitioners Motion for Leave to File Motion for
Reconsideration of the Resolution of 12 April 2011 and the attached Motion for
Reconsideration of the Resolution of 12 April 2011; grants the respondents Motion for
Entry of Judgment dated May 9, 2011; and directs the Clerk of Court to forthwith issue
the Entry of Judgment in this case.
No further pleadings or submissions by any party shall be entertained.
G.R. No. 166357 January 14, 2015
VALERIO E. KALAW, Petitioner, vs. MA. ELENA FERNANDEZ, Respondent.
RESOLUTION
In our decision promulgated on September 19, 2011,1 the Court dismissed the complaint
for declaration of nullity of the marriage of the parties upon the following ratiocination,
to wit:
The petition has no merit. The CA committed no reversible error in setting aside the
trial court's Decision for lack of legal and factual basis.
xxxx
In the case at bar, petitioner failed to prove that his wife (respondent) suffers from
psychological incapacity. He presented the testimonies of two supposed expert
witnesses who concluded that respondent is psychologically incapacitated, but the
conclusions of these witnesses were premised on the alleged acts or behavior of
respondent which had not been sufficiently proven. Petitioners experts heavily relied
Page 240 of 378

on petitioners allegations of respondents constant mahjong sessions, visits to the

beauty parlor, going out with friends, adultery, and neglect of their children.
Petitioners experts opined that respondents alleged habits, when performed constantly
to the detriment of quality and quantity of time devoted to her duties as mother and
wife, constitute a psychological incapacity in the form of NPD.
But petitioners allegations, which served as the bases or underlying premises of the
conclusions of his experts, were not actually proven. In fact, respondent presented
contrary evidence refuting these allegations of the petitioner.
For instance, petitioner alleged that respondent constantly played mahjong and
neglected their children as a result. Respondent admittedly played mahjong, but it was
not proven that she engaged in mahjong so frequently that she neglected her duties as a
mother and a wife. Respondent refuted petitioners allegations that she played four to
five times a week. She maintained it was only two to three times a week and always
with the permission of her husband and without abandoning her children at home. The
children corroborated this, saying that they were with their mother when she played
mahjong in their relatives home. Petitioner did not present any proof, other than his
own testimony, that the mahjong sessions were so frequent that respondent neglected
her family. While he intimated that two of his sons repeated the second grade, he was
not able to link this episode to respondents mahjong-playing. The least that could have
been done was to prove the frequency of respondents mahjong-playing during the
years when these two children were in second grade. This was not done. Thus, while
there is no dispute that respondent played mahjong, its alleged debilitating frequency
and adverse effect on the children were not proven.
Also unproven was petitioners claim about respondents alleged constant visits to the
beauty parlor, going out with friends, and obsessive need for attention from other men.
No proof whatsoever was presented to prove her visits to beauty salons orher frequent
partying with friends. Petitioner presented Mario (an alleged companion of respondent
during these nights-out) in order to prove that respondent had affairs with other men,
but Mario only testified that respondent appeared to be dating other men. Even
assuming arguendothat petitioner was able to prove that respondent had an
extramarital affair with another man, that one instance of sexual infidelity cannot, by
itself, be equated with obsessive need for attention from other men. Sexual infidelity per
seis a ground for legal separation, but it does not necessarily constitute psychological
incapacity.
Given the insufficiency of evidence that respondent actually engaged in the behaviors
described as constitutive of NPD, there is no basis for concluding that she was indeed
psychologically incapacitated. Indeed, the totality of the evidence points to the opposite
conclusion. A fair assessment of the facts would show that respondent was not totally
remiss and incapable of appreciating and performing her marital and parental duties.
Not once did the children state that they were neglected by their mother. On the
contrary, they narrated that she took care of them, was around when they were sick,
and cooked the food they like. It appears that respondent made real efforts tosee and
take care of her children despite her estrangement from their father. There was no
testimony whatsoever that shows abandonment and neglect of familial duties. While
petitioner cites the fact that his two sons, Rio and Miggy, both failed the second
elementary level despite having tutors, there is nothing to link their academic short
comings to Malyns actions.
Page 241 of 378

After poring over the records of the case, the Court finds no factual basis for the
conclusion of psychological incapacity. There is no error in the CAs reversal of the trial
courts ruling that there was psychological incapacity. The trial courts Decision merely
summarized the allegations, testimonies, and evidence of the respective parties, but it
did not actually assess the veracity of these allegations, the credibility of the witnesses,
and the weight of the evidence. The trial court did not make factual findings which can
serve as bases for its legal conclusionof psychological incapacity.
What transpired between the parties is acrimony and, perhaps, infidelity, which may
have constrained them from dedicating the best of themselves to each other and to their
children. There may be grounds for legal separation, but certainly not psychological
incapacity that voids a marriage.
WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals

May 27, 2004 Decision and its December 15, 2004 Resolution in CA-G.R. CV No. 64240
are AFFIRMED. SO ORDERED.2
In his Motion for Reconsideration,3 the petitioner implores the Court to take a thorough
second look into what constitutes psychological incapacity; to uphold the findings of
the trial court as supported by the testimonies of three expert witnesses; and
consequently to find that the respondent, if not both parties, were psychologically
incapacitated to perform their respective essential marital obligation.
Upon an assiduous review of the records, we resolve to grant the petitioners Motion
for Reconsideration.
Psychological incapacity as a ground for the nullity of marriage under Article 36 of the
Family Code refers to a serious psychological illness afflicting a party even prior to the
celebration of the marriage that is permanent as to deprive the party of the awareness of
the duties and responsibilities of the matrimonial bond he or she was about to assume.
Although the Family Code has not defined the term psychological incapacity, the Court
has usually looked up its meaning by reviewing the deliberations of the sessions of the
Family Code Revision Committee that had drafted the Family Code in order to gain an
insight on the provision. It appeared that the members of the Family Code Revision
Committee were not unanimous on the meaning, and in the end they decided to adopt
the provision "with less specificity than expected" in order to have the law "allow some
resiliency in its application."4Illustrative of the "less specificity than expected" has been
the omission by the Family Code Revision Committee to give any examples of
psychological incapacity that would have limited the applicability of the provision
conformably with the principle of ejusdem generis, because the Committee desired that
the courts should interpret the provision on a case-to-case basis, guided by experience,
the findings of experts and researchers in psychological disciplines, and the decisions of
church tribunals that had persuasive effect by virtue of the provision itself having been
taken from the Canon Law.5
On the other hand, as the Court has observed in Santos v. Court of Appeals, 6 the
deliberations of the Family Code Revision Committee and the relevant materials on
psychological incapacity as a ground for the nullity of marriage have rendered it
obvious that the term psychological incapacity as used in Article 36 of the Family
Code"has not been meant to comprehend all such possible cases of psychoses as,
likewise mentioned by some ecclesiastical authorities, extremely low intelligence,
Page 242 of 378
immaturity, and like circumstances," and could not be taken and construed
independently of "but must stand in conjunction with, existing precepts in our law on
marriage." Thus correlated:-
x x x "psychological incapacity" should refer to no less than a mental (not physical)

incapacity that causes a party to be truly incognitive of the basic marital covenants that
concomitantly must be assumed and discharged by the parties to the marriage which,
as so expressed by Article 68 of the Family Code, include their mutual obligations to
live together, observe love, respect and fidelity and render help and support. There is
hardly any doubt that the intendment of the law has been to confine the meaning of
"psychological incapacity" to the most serious cases of personality disorders clearly
demonstrative of an utter insensitivity or inability to give meaning and significance to
the marriage. This psychologic condition must exist at the time the marriage is
celebrated. The law does not evidently envision, upon the other hand, an inability of the
spouse to have sexual relations with the other. This conclusion is implicit under Article
54 of the Family Code which considers children conceived prior to the judicial
declaration of nullity of the void marriage to be "legitimate."7
In time, in Republic v. Court of Appeals,8 the Court set some guidelines for the
interpretation and application of Article 36 of the Family Code, as follows:
(1) The burden of proof to show the nullity of the marriage belongs to the
plaintiff. Any doubt should be resolved in favor of the existence and
continuation of the marriage and against its dissolution and nullity. This is
rooted in the fact that both our Constitution and our laws cherish the validity of
marriage and unity of the family. Thus, our Constitution devotes an entire
Article on the Family, recognizing it "as the foundation of the nation." It decrees
marriage as legally "inviolable," thereby protecting it from dissolution at the
whim of the parties. Both the family and marriage are to be "protected" by the
state.
The Family Code echoes this constitutional edict on marriage and the family and
emphasizes their permanence, inviolability and solidarity.
(2) The root cause of the psychological incapacity must be (a) medically or
clinically identified, (b) alleged in the complaint, (c) sufficiently proven by
experts and (d) clearly explained in the decision. Article 36 of the Family Code
requires that the incapacity must be psychological not physical, althoughits
manifestations and/or symptoms may be physical. The evidence must convince
the court that the parties, or one of them, was mentally or psychically ill to such
an extent that the person could not have known the obligations he was assuming,
or knowing them, could not have given valid assumption thereof. Although no
example of such incapacity need be given here so as not to limit the application
of the provision under the principle of ejusdem generis, nevertheless such root
cause must be identified as a psychological illness and its incapacitating nature
fully explained. Expert evidence may be given by qualified psychiatrists and
clinical psychologists.
(3) The incapacity must be proven tobe existing at "the time of the celebration" of
the marriage. The evidence must show that the illness was existing when the
parties exchanged their "I dos." The manifestation of the illness need not be
perceivable at such time, but the illness itself must have attached at such
moment, or prior thereto.
Page 243 of 378
(4) Such incapacity must also be shown to be medically or clinically permanent

or incurable. Such incurability may be absolute or even relative only in regard to
the other spouse, not necessarily absolutely against everyone of the same sex.
Furthermore, such incapacity must be relevant to the assumption of marriage
obligations, not necessarily to those not related to marriage, like the exercise of a
profession or employment in a job. Hence, a pediatrician may be effective in
diagnosing illnesses of children and prescribing medicine to cure them but may
not be psychologically capacitated to procreate, bear and raise his/her own
children as an essential obligation of marriage.
(5) Such illness must be grave enough to bring about the disability of the party to
assume the essential obligations of marriage. Thus, "mild characteriological
peculiarities, mood changes, occasional emotional outbursts" cannot be accepted
as root causes. The illness must be shown as downright incapacity or inability,
not a refusal, neglect or difficulty, much less ill will. In other words, there is a
natal or supervening disabling factor in the person, an adverse integral element
in the personality structure that effectively incapacitates the person from really
accepting and thereby complying with the obligations essential to marriage.
(6) The essential marital obligations must be those embraced by Articles 68 up to

71 of the Family Code as regards the husband and wife as well as Articles 220,
221 and 225 of the same Code in regard to parents and their children. Such non-
complied marital obligation(s) must also be stated in the petition, proven by
evidence and included in the text of the decision.
(7) Interpretations given by the National Appellate Matrimonial Tribunal of the

Catholic Church in the Philippines, while not controlling or decisive, should be
given great respect by our courts. It is clear that Article 36 was taken by the
Family Code Revision Committee from Canon 1095 of the New Code of Canon
Law, which became effective in 1983 and which provides:
"The following are incapable of contracting marriage: Those who are unable to
assume the essential obligations of marriage due to causes of psychological
nature."
Since the purpose of including suchprovision in our Family Code is to harmonize

our civil laws with the religious faith of our people, it stands to reason that to
achieve such harmonization, great persuasive weight should be given to
decisions of such appellate tribunal. Ideally subject to our law on evidence
whatis decreed as canonically invalid should also be decreed civilly void.
This is one instance where, inview of the evident source and purpose of the
Family Code provision, contemporaneous religious interpretation is to be given
persuasive effect. Here, the State and the Church while remaining
independent, separate and apart from each other shall walk together in
synodal cadence towards the same goal of protecting and cherishing marriage
and the family as the inviolable base of the nation.
(8) The trial court must order the prosecuting attorney or fiscal and the Solicitor
General to appear as counsel for the state. No decision shall be handed down
unless the Solicitor General issues a certification, which will be quoted in the
decision, briefly stating therein his reasons for his agreement or opposition, as
the case may be, to the petition. The Solicitor General, along with the prosecuting
Page 244 of 378
attorney, shall submit to the court such certification within fifteen (15) days from
the date the case is deemed submitted for resolution of the court. The Solicitor
General shall discharge the equivalent function of the defensor vinculi
contemplated under Canon 1095.9
The foregoing guidelines have turned out to be rigid, such that their application to
every instance practically condemned the petitions for declaration of nullity to the fate
of certain rejection. But Article 36 of the Family Code must not be so strictly and too
literally read and applied given the clear intendment of the drafters to adopt its enacted
version of "less specificity" obviously to enable "some resiliency in its application."
Instead, every court should approach the issue of nullity "not on the basis of a priori
assumptions, predilections or generalizations, but according to its own facts" in
recognition of the verity that no case would be on "all fours" with the next one in the
field of psychological incapacity as a ground for the nullity of marriage; hence, every
"trial judge must take pains in examining the factual milieu and the appellate court
must, asmuch as possible, avoid substituting its own judgment for that of the trial
court."10
In the task of ascertaining the presence of psychological incapacity as a ground for the
nullity of marriage, the courts, which are concededly not endowed with expertise in the
field of psychology, must of necessity rely on the opinions of experts in order to inform
themselves on the matter, and thus enable themselves to arrive at an intelligent and
judicious judgment. Indeed, the conditions for the malady of being grave, antecedent
and incurable demand the in-depth diagnosis by experts.11
II
The findings of the Regional Trial Court (RTC) on the existence or non-existence of a
partys psychological incapacity should be final and binding for as long as such
findings and evaluation of the testimonies of witnesses and other evidence are not
shown to be clearly and manifestly erroneous.12 In every situation where the findings of
the trial court are sufficiently supported by the facts and evidence presented during
trial, the appellate court should restrain itself from substituting its own judgment. 13 It is
not enough reason to ignore the findings and evaluation by the trial court and
substitute our own as an appellate tribunal only because the Constitution and the
Family Code regard marriage as an inviolable social institution. We have to stress that
the fulfilment of the constitutional mandate for the State to protect marriage as an
inviolable social institution14 only relates to a valid marriage. No protection can be
accordedto a marriage that is null and void ab initio, because such a marriage has no
legal existence.15
In declaring a marriage null and void ab initio, therefore, the Courts really assiduously
defend and promote the sanctity of marriage as an inviolable social institution. The
foundation of our society is thereby made all the more strong and solid.
Here, the findings and evaluation by the RTC as the trial court deserved credence
because it was in the better position to view and examine the demeanor of the witnesses
while they were testifying.16 The position and role of the trial judge in the appreciation
of the evidence showing the psychological incapacity were not to be downplayed but
should be accorded due importance and respect.
Page 245 of 378

Yet, in the September 19, 2011 decision, the Court brushed aside the opinions tendered
by Dr. Cristina Gates,a psychologist, and Fr. Gerard Healy on the ground that their
conclusions were solely based on the petitioners version of the events.
After a long and hard second look, we consider it improper and unwarranted to give to
such expert opinions a merely generalized consideration and treatment, least of all to
dismiss their value as inadequate basis for the declaration of the nullity of the marriage.
Instead, we hold that said experts sufficiently and competently described the
psychological incapacity of the respondent within the standards of Article 36 of the
Family Code. We uphold the conclusions reached by the two expert witnesses because
they were largely drawn from the case records and affidavits, and should not anymore
be disputed after the RTC itself had accepted the veracity of the petitioners factual
premises.17
Admittedly, Dr. Gates based her findings on the transcript of the petitioners testimony,
as well as on her interviews of the petitioner, his sister Trinidad, and his son Miguel.
Although her findings would seem to be unilateral under such circumstances, it was not
right to disregard the findings on that basis alone. After all, her expert opinion took into
consideration other factors extant in the records, including the own opinions of another
expert who had analyzed the issue from the side of the respondent herself. Moreover, it
is already settled that the courts must accord weight to expert testimony on the
psychological and mental state of the parties in cases for the declaration of the nullityof
marriages, for by the very nature of Article 36 of the Family Code the courts, "despite
having the primary task and burden of decision-making, must not discount but,
instead, must consider as decisive evidence the expert opinion on the psychological and
mental temperaments of the parties."18
The expert opinion of Dr. Gates was ultimately necessary herein to enable the trial court
to properly determine the issue of psychological incapacity of the respondent (if not
alsoof the petitioner). Consequently, the lack of personal examination and interview of
the person diagnosed with personality disorder, like the respondent, did not per se
invalidate the findings of the experts. The Court has stressed in Marcos v. Marcos 19 that
there is no requirement for one to bedeclared psychologically incapacitated to be
personally examined by a physician, because what is important is the presence of
evidence that adequately establishes the partys psychological incapacity. Hence, "if the
totality of evidence presented is enough to sustain a finding of psychological incapacity,
then actual medical examination of the person concerned need not be resorted to."20
Verily, the totality of the evidence must show a link, medical or the like, between the
acts that manifest psychological incapacity and the psychological disorder itself. If other
evidence showing that a certain condition could possibly result from an assumed state
of facts existed in the record, the expert opinion should be admissible and be weighed
as an aid for the court in interpreting such other evidence on the causation.21 Indeed, an
expert opinion on psychological incapacity should be considered as conjectural or
speculative and without any probative value only in the absence of other evidence to
establish causation. The experts findings under such circumstances would not
constitute hearsay that would justify their exclusion as evidence.22 This is so,
considering that any ruling that brands the scientific and technical procedure adopted
by Dr. Gates as weakened by bias should be eschewed if it was clear that her psychiatric
evaluation had been based on the parties upbringing and psychodynamics.23 In that
context, Dr. Gates expertopinion should be considered not in isolation but along with
the other evidence presented here.
Page 246 of 378

Moreover, in its determination of the issue of psychological incapacity, the trial court
was expectedto compare the expert findings and opinion of Dr. Natividad Dayan, the
respondents own witness, and those of Dr. Gates.
In her Psychological Evaluation Report,24 Dr. Dayan impressed that the respondent had
"compulsive and dependent tendencies" to the extent of being "relationship dependent."
Based from the respondents psychological data, Dr. Dayan indicated that:
In her relationship with people, Malyne is likely to be reserved and seemingly detached
in her ways. Although she likes to be around people, she may keep her emotional
distance. She, too, values her relationship but she may not be that demonstrative of her
affections. Intimacy may be quite difficult for her since she tries to maintain a certain
distance to minimize opportunities for rejection. To others, Malyne may appear, critical
and demanding in her ways. She can be assertive when opinions contrary to those of
her own are expressed. And yet, she is apt to be a dependent person. At a less conscious
level, Malyne fears that others will abandon her. Malyne, who always felt a bit lonely,
placed an enormous value on having significant others would depend on most times.
xxxx
But the minute she started to care, she became a different person clingy and
immature, doubting his love, constantly demanding reassurance that she was the most
important person in his life. She became relationship-dependent.25
Dr. Dayan was able to clearly interpret the results of the Millon Clinical Multiaxial
Inventory test26 conducted on the respondent, observing that the respondent obtained
high scores on dependency, narcissism and compulsiveness, to wit:
Atty. Bretania
Q : How about this Millon Clinical Multiaxial Inventory?
A : Sir, the cut of the score which is supposed to be normal is 73 percental round and
there are several scores wherein Mrs. Kalaw obtained very high score and these are on
the score of dependency, narcissism and compulsion.
Q : Would you please tell us again, Madam Witness, what is the acceptable score?
A : When your score is 73 and above, that means that it is very significant. So, if 72 and
below, it will be considered as acceptable.
Q : In what area did Mrs. Kalaw obtain high score?
A : Under dependency, her score is 78; under narcissism, is 79; under compulsiveness, it
is 84.27
It is notable that Dr. Dayans findings did not contradict but corroborated the findings
of Dr. Gates to the effect that the respondent had been afflicted with Narcissistic
Personality Disorder as well as with AntiSocial Disorder. Dr. Gates relevantly testified:
ATTY. GONONG
Page 247 of 378

Q : Could you please repeat for clarity. I myself is [sic] not quite familiar with
psychology terms. So, more or less, could you please tell me in more laymans terms
how you arrived at your findings that the respondent is self-centered or narcissistic?
A : I moved into this particular conclusion. Basically, if you ask about her childhood
background, her fatherdied in a vehicular accident when she was in her teens and
thereafter she was prompted to look for a job to partly assume the breadwinners role in
her family. I gathered that paternal grandmother partly took care of her and her siblings
against the fact that her own mother was unable to carry out her respective duties and
responsibilities towards Elena Fernandez and her siblings considering that the husband
died prematurely. And there was an indication that Elena Fernandez on several
occasions ever told petitioner that he cannot blame her for being negligent as a mother
because she herself never experienced the care and affection of her own mother herself.
So, there is a precedent in her background, in her childhood, and indeed this seems to
indicate a particular script, we call it in psychology a script, the tendency to repeat
somekind of experience or the lack of care, lets say some kind of deprivation, there is a
tendency to sustain it even on to your own life when you have your own family. I did
interview the son because I was not satisfied with what I gathered from both Trinidad
and Valerio and even though as a young son at the age of fourteen already expressed
the he could not see, according to the child, the sincerity of maternal care on the part of
Elena and that he preferred to live with the father actually.
Q : Taking these all out, you came to the conclusion that respondent is self-centered and
narcissistic?
A : Actually respondent has some needs which tempts [sic] from a deprived childhood
and she is still insearch of this. In her several boyfriends, it seems that she would jump
from one boyfriend to another. There is this need for attention, this need for love on
other people.
Q : And that led you to conclude?
A : And therefore I concluded that she is self-centered to the point of neglecting her
duty as a wife and as a mother.28
The probative force of the testimony of an expert does not lie in a mere statement of her
theory or opinion, but rather in the assistance that she can render to the courts in
showing the facts that serve as a basis for her criterion and the reasons upon which the
logic of her conclusion is founded.29 Hence, we should weigh and consider the
probative value of the findings of the expert witnesses vis--vis the other evidence
available.
The other expert of the petitioner was Fr. Healy, a canon law expert, an advocate before
the Manila Archdiocese and Matrimonial Tribunal, and a consultant of the Family Code
Revision Committee. Regarding Father Healys expert testimony, we have once
declared that judicial understanding of psychological incapacity could be informed by
evolving standards, taking into account the particulars of each case, by current trends in
psychological and even by canonical thought, and by experience.30 It is prudent for us
to do so because the concept of psychological incapacity adopted under Article 36 of the
Family Code was derived from Canon Law.
Page 248 of 378

Father Healy tendered his opinion onwhether or not the respondents level of
immaturity and irresponsibility with regard to her own children and to her husband
constituted psychological incapacity, testifying thusly:
ATTY. MADRID
Q : Now, respondent Ma. Elena Fernandez claims that she is not psychologically
incapacitated. On the facts as you read it based on the records of this case before this
Honorable Court, what can you say to that claim of respondent?
A : I would say it is a clear case of psychological incapacity because of her immaturity

and traumatic irresponsibility with regards to her own children.
Q : So what you are saying is that, the claim of respondent that she is not
psychologically incapacitated is not true?
A : Yes. It should be rejected.
Q : Why do you say so?
A : Because of what she has manifested in her whole lifestyle, inconsistent pattern has
been manifested running through their life made a doubt that this is immaturity and
irresponsibility because her family was dysfunctional and then her being a model in her
early life and being the bread winner of the family put her in an unusual position of
prominence and then begun to inflate her own ego and she begun to concentrate her
own beauty and that became an obsession and that led to her few responsibility of
subordinating to her children to this lifestyle that she had embraced.
Q : You only mentioned her relationship with the children, the impact. How about the
impact on the relationship of the respondent with her husband?
A : Also the same thing. It just did notfit in to her lifestyle to fulfill her obligation to her
husband and toher children. She had her own priorities, her beauty and her going out
and her mahjong and associating with friends. They were the priorities of her life.
Q : And what you are saying is that, her family was merely secondary?
A : Secondary.
Q : And how does that relate to psychological incapacity?
A : That she could not appreciate or absorb or fulfill the obligations of marriage which
everybody takes for granted. The concentration on the husband and the children before
everything else would be subordinated to the marriage withher. Its the other way
around.
Her beauty, her going out, her beauty parlor and her mahjong, they were their priorities
in her life.
Q : And in medical or clinical parlance, what specifically do you call this?
A : That is narcissism where the person falls in love with himself is from a myt[h]ical
case in Roman history.
Page 249 of 378

Q : Could you please define tous what narcissism is?
A : Its a self-love, falling in love with oneself to make up for the loss of a dear friend as
in the case of Narcissus, the myth, and then that became known in clinical terminology
as narcissism. When a person is so concern[ed] with her own beauty and prolonging
and protecting it, then it becomes the top priority in her life.
xxxx
Q : And you stated that circumstances that prove this narcissism. How do you consider
this narcissism afflicting respondent, it is grave, slight or .?
A : I would say its grave from the actual cases of neglect of her family and that causes
serious obligations which she has ignored and not properly esteemed because she is so
concern[ed] with herself in her own lifestyle. Very serious.
Q : And do you have an opinion whether or not this narcissism afflicting respondent
was already existing at the time or marriage or even thereafter?
xxxx
A : When you get married you dont develop narcissism or psychological incapacity.
You bring with you into the marriage and then it becomes manifested because in
marriage you accept these responsibilities. And now you show that you dont accept
them and you are not capable of fulfilling them and you dont care about them.
Q : Is this narcissism, Fr. Healy, acquired by accident or congenital or what?
A : No. The lifestyle generates it. Once you become a model and still the family was
depended [sic] upon her and she was a model at Hyatt and then Rustans, it began to
inflate her ego so much that this became the top priority in her life. Its her lifestyle.
Q : What you are saying is that, the narcissism of respondent even expanded after the
marriage?
A : That could have expanded because it became very obvious after the marriage
because she was neglecting such fundamental obligations.
Q : And how about the matter of curability, is this medically or clinically curable, this
narcissism that you mentioned?
A : Lets say, it was manifested for so many years in her life. It was found in her family
background situation. Say, almost for sure would be incurable now.
Q : What specific background are you referring to?
A : Well, the fact when the father died and she was the breadwinner and her beauty was
so important to give in her job and money and influence and so on. But this is a very
unusual situation for a young girl and her position in the family was exalted in a very
very unusual manner and therefore she had that pressure on her and in her accepting
the pressure, in going along with it and putting it in top priority.31
Page 250 of 378

Given his credentials and conceded expertise in Canon Law, Father Healys opinions
and findings commanded respect. The contribution that his opinions and findings could
add to the judicial determination of the parties psychological incapacity was
substantive and instructive. He could thereby inform the trial court on the degrees of
the malady that would warrant the nullity of marriage, and he could as well thereby
provideto the trial court an analytical insight upon a subject as esoteric to the courts as
psychological incapacity has been. We could not justly disregard his opinions and
findings. Appreciating them together with those of Dr. Gates and Dr. Dayan would
advance more the cause of justice. The Court observed in Ngo Te v. Yu-Te:32
By the very nature of Article 36, courts, despite having the primary task and burden of
decision-making, must not discount but, instead, must consider as decisive evidence the
expert opinion on the psychological and mental temperaments of the parties.
Justice Romero explained this in Molina, as follows:
Furthermore, and equally significant, the professional opinion of a psychological expert

became increasingly important in such cases. Data about the person's entire life, both
before and after the ceremony, were presented to these experts and they were asked
togive professional opinions about a party's mental capacity at the time of the wedding.
These opinions were rarely challenged and tended to be accepted as decisive evidence
of lack of valid consent.
The Church took pains to point out that its new openness in this area did not amount to
the addition of new grounds for annulment, but rather was an accommodation by the
Church to the advances made in psychology during the past decades. There was now
the expertise to provide the all-important connecting link between a marriage
breakdown and premarital causes.
During the 1970s, the Church broadened its whole idea of marriage from that of a legal
contract to that of a covenant. The result of this was that it could no longer be assumed
in annulment cases that a person who could intellectually understand the concept of
marriage could necessarily give valid consent to marry. The ability to both grasp and
assume the real obligations of a mature, lifelong commitmentare now considered a
necessary prerequisite to valid matrimonial consent.
Rotal decisions continued applying the concept of incipient psychological incapacity,

"not only to sexual anomalies but to all kinds ofpersonality disorders that incapacitate a
spouse or both spouses from assuming or carrying out the essential obligations of
marriage. For marriage . . . is not merely cohabitation or the right of the spouses to each
other's body for hetero sexual acts, but is, in its totality the right to the community of
the whole of life; i.e., the right to a developing lifelong relationship. Rotal decisions
since 1973 have refined the meaning of psychological or psychic capacity for marriage
as presupposing the development of an adult personality; as meaning the capacity of
the spouses to give themselves to each other and to accept the other as a distinct person;
that the spouses must be `other oriented' since the obligations of marriage are rooted in
a self-giving love; and that the spouses must have the capacity for interpersonal
relationship because marriage is more than just a physical reality but involves a true
intertwining of personalities. The fulfillment of the obligations ofmarriage depends,
according to Church decisions, on the strength of this interpersonal relationship. A
serious incapacity for interpersonal sharing and support is held to impair the
relationship and consequently, the ability to fulfill the essential marital obligations. The
Page 251 of 378

marital capacity of one spouse is not considered in isolation but in reference to the
fundamental relationship to the other spouse.
Fr. Green, in an article in Catholic Mind, lists six elements necessary to the mature
marital relationship:
"The courts consider the following elements crucial to the marital commitment: (1) a
permanent and faithful commitment to the marriage partner; (2) openness to children
and partner; (3) stability; (4) emotional maturity; (5) financial responsibility; (6) an
ability to cope with the ordinary stresses and strains of marriage, etc."
Fr. Green goes on to speak about some of the psychological conditions that might lead
to the failure of a marriage:
"At stake is a type of constitutional impairment precluding conjugal communion even

with the best intentions of the parties. Among the psychic factors possibly giving rise to
his orher inability to fulfill marital obligations are the following: (1) antisocial
personality with its fundamental lack of loyalty to persons or sense of moral values; (2)
hyperesthesia, where the individual has no real freedom of sexual choice; (3) the
inadequate personality where personal responses consistently fall short of reasonable
expectations.
xxxx
The psychological grounds are the best approach for anyone who doubts whether he or
she has a case for an annulment on any other terms. A situation that does not fit into
any of the more traditional categories often fits very easily into the psychological
category.
As new as the psychological grounds are, experts are already detecting a shift in their
use. Whereas originally the emphasis was on the parties' inability to exercise proper
judgment at the time of the marriage (lack of due discretion), recent cases seem to be
concentrating on the parties' incapacity to assume or carry out their responsibilities and
obligations as promised(lack of due competence). An advantage to using the ground of
lack of due competence is that at the time the marriage was entered into civil divorce
and breakup of the family almost always is proof of someone's failure to carry out
marital responsibilities as promisedat the time the marriage was entered into."
Hernandez v. Court of Appeals emphasizes the importance of presenting expert

testimony to establish the precise cause of a party's psychological incapacity, and to
show that it existed at the inception of the marriage. And as Marcos v. Marcosasserts,
there is no requirement that the person to be declared psychologically incapacitated be
personally examined by a physician, if the totalityof evidence presented is enough to
sustain a finding of psychological incapacity. Verily, the evidence must show a link,
medical or the like, between the acts that manifest psychological incapacity and the
psychological disorder itself.
This is not to mention, but we mention nevertheless for emphasis, that the presentation
of expert proof presupposes a thorough and in-depth assessment of the parties by the
psychologist or expert, for a conclusive diagnosis of a grave, severe and incurable
presence of psychological incapacity.33
Page 252 of 378

Ngo Tealso emphasized that in light of the unintended consequences of strictly

applying the standards set in Molina,34 the courts should consider the totality of
evidence in adjudicating petitions for declaration of nullity of marriage under Article 36
of the Family Code, viz:
The resiliency with which the concept should be applied and the case-to-case basis by
which the provision should be interpreted, as so intended by its framers, had,
somehow, been rendered ineffectual by the imposition of a set of strict standards in
Molina, thus:
xxxx
Noteworthy is that in Molina, while the majority of the Courts membership concurred
in the ponencia of then Associate Justice (later Chief Justice) Artemio V. Panganiban,
three justices concurred "in the result" and another three--including, as aforesaid, Justice
Romero--took pains to compose their individual separate opinions. Then Justice
Teodoro R. Padilla even emphasized that "each case must be judged, not on the basis of
a priori assumptions, predilections or generalizations, but according to its own facts. In
the field of psychological incapacity as a ground for annulment of marriage, it is trite to
say that no case is on all fours with another case. The trial judge must take pains in
examining the factual milieu and the appellate court must, as much as possible, avoid
substituting its own judgment for that of the trial court."
Predictably, however, in resolving subsequent cases, the Court has applied the
aforesaid standards, without too much regard for the law's clear intention that each case
is to be treated differently, as "courts should interpret the provision on a case-to-case
basis; guided by experience, the findings of experts and researchers in psychological
disciplines, and by decisions of church tribunals."
In hindsight, it may have been inappropriate for the Court to impose a rigid set of rules,
as the one in Molina, in resolving all cases of psychological incapacity. Understandably,
the Court was then alarmed by the deluge of petitions for the dissolution of marital
bonds, and was sensitive to the OSG's exaggeration of Article 36 as the "most liberal
divorce procedure in the world." The unintended consequences of Molina, however, has
taken its toll on people who have to live with deviant behavior, moral insanity and
sociopathic personality anomaly, which, like termites, consume little by little the very
foundation of their families, our basic social institutions. Far fromwhat was intended by
the Court, Molina has become a strait-jacket, forcing all sizes to fit into and be bound by
it. Wittingly or unwittingly, the Court, in conveniently applying Molina, has allowed
diagnosed sociopaths, schizophrenics, nymphomaniacs, narcissists and the like,
tocontinuously debase and pervert the sanctity of marriage. Ironically, the Roman Rota
has annulled marriages on account of the personality disorders of the said individuals.
The Court need not worry about the possible abuse of the remedy provided by Article
36, for there are ample safeguards against this contingency, among which is the
intervention by the State, through the public prosecutor, to guard against collusion
between the parties and/or fabrication of evidence. The Court should rather be alarmed
by the rising number of cases involving marital abuse, child abuse, domestic violence
and incestuous rape.
In dissolving marital bonds on account of either party's psychological incapacity, the

Court isnot demolishing the foundation of families, but it is actually protecting the
sanctity of marriage, because it refuses to allow a person afflicted with a psychological
Page 253 of 378
disorder, who cannot comply with or assume the essential marital obligations, from
remaining in that sacred bond. It may be stressed that the infliction of physical violence,
constitutional indolence or laziness, drug dependence or addiction, and psycho sexual
anomaly are manifestations of a sociopathic personality anomaly. Let itbe noted that in
Article 36, there is no marriage to speak of in the first place, as the same is void from the
very beginning. To indulge in imagery, the declaration of nullity under Article 36 will
simply provide a decent burial to a stillborn marriage.
xxxx
Lest it be misunderstood, we are not suggesting the abandonment of Molina in this

case. We simply declare that, as aptly stated by Justice Dante O. Tinga in Antonio v.
Reyes, there is need to emphasize other perspectives as well which should govern the
disposition of petitions for declaration of nullity under Article 36. At the risk of being
redundant, we reiterate once more the principle that each case must be judged, not on
the basis of a priori assumptions, predilections or generalizations but according to its
own facts. And, to repeat for emphasis, courts should interpret the provision on a case-
to-case basis; guided by experience, the findings of experts and researchers in
psychological disciplines, and by decisions of church tribunals.35
III
In the decision of September 19, 2011,the Court declared as follows:
Respondent admittedly played mahjong, but it was not proven that she engaged in
mahjong so frequently that she neglected her duties as a mother and a wife. Respondent
refuted petitioners allegations that she played four to five times a week. She
maintained it was only two to three times a week and always withthe permission of her
husband and without abandoning her children at home. The children corroborated this,
saying that theywere with their mother when she played mahjong in their relatives
home.Petitioner did not present any proof, other than his own testimony, that the
mahjong sessions were so frequent that respondent neglected her family. While he
intimated that two of his sons repeated the second grade, he was not able to link this
episode to respondents mahjong-playing. The least that could have been done was to
prove the frequency of respondents mahjong-playing during the years when these two
children were in second grade. This was not done. Thus, while there is no dispute that
respondent played mahjong, its alleged debilitating frequency and adverse effect on the
children were not proven.36 (Emphasis supplied)
The frequency of the respondents mahjong playing should not have delimited our
determination of the presence or absence of psychological incapacity. Instead, the
determinant should be her obvious failure to fully appreciate the duties and
responsibilities of parenthood at the time she made her marital vows. Had she fully
appreciated such duties and responsibilities, she would have known that bringing
along her children of very tender ages to her mahjong sessions would expose them to a
culture of gambling and other vices that would erode their moral fiber.
Nonetheless, the long-term effects of the respondents obsessive mahjong playing surely
impacted on her family life, particularly on her very young children. We do find to be
revealing the disclosures made by Valerio Teodoro Kalaw37 the parties eldest son in
his deposition, whereby the son confirmed the claim of his father that his mother had
been hooked on playing mahjong, viz:
Page 254 of 378

ATTY. PISON: From the time before your parents separation, do you remember any
habit or activity or practice which your mother engaged in, before the separation?
WITNESS: Yeah, habit? She was a heavy smoker and she likes to play mahjong a lot,
and I cant remember.
xxxx
ATTY. PISON: You said that your mother played mahjong frequently. How frequent,
do you remember?
WITNESS : Not really, but it was a lot. Not actually, I cant, I cant
ATTY. PISON: How long would she stay playing mahjong say one session?
WITNESS : Really long cuzwe would go to my aunts house in White Plains and I think
we would get there by lunch then leave, we fall asleep. I think it was like one in the
morning. ATTY. PISON: You, you went there? She brought you?
WITNESS : Yeah, to play withmy cousins, yeah and my brothers & sisters.
ATTY. PISON: Were you brought all the time?
WITNESS: Yeah, almost all the time but sometimes, I guess shed go out by herself.38
The fact that the respondent brought her children with her to her mahjong sessions did
not only point to her neglect of parental duties, but also manifested her tendency to
expose them to a culture of gambling. Her willfully exposing her children to the culture
of gambling on every occasion of her mahjong sessions was a very grave and serious act
of subordinating their needs for parenting to the gratification of her own personal and
escapist desires. This was the observation of Father Healy himself. In that regard, Dr.
Gates and Dr. Dayan both explained that the current psychological state of the
respondent had been rooted on her own childhood experience.
The respondent revealed her wanton disregard for her childrens moral and mental
development. This disregard violated her duty as a parent to safeguard and protect her
children, as expressly defined under Article 209 and Article 220 of the Family Code, to
wit:
Article 209. Pursuant to the natural right and duty of parents over the person and
property of their unemancipated children, parental authority and responsibility shall
includethe caring for and rearing of such children for civic consciousness and efficiency
and the development of their moral, mental and physical character and well-being.
Article 220. The parents and those exercising parental authority shall have with respect
to their unemancipated children or wards the following rights and duties:
(1) To keep them in their company, to support, educate and instruct them by
right precept and good example, and to provide for their upbringing in keeping
with their means;
(2) x x x x
Page 255 of 378

(3) To provide them with moral and spiritual guidance, inculcate in them
honesty, integrity, self-discipline, self-reliance, industry and thrift, stimulate their
interest in civic affairs, and inspire in them compliance with the duties of
citizenship;
(4) To enhance, protect, preserve and maintain their physical and mental health
at all times;
(5) To furnish them with good and wholesome educational materials, supervise
their activities, recreation and association with others, protect them from bad
company, and prevent them from acquiring habits detrimental to their health,
studies and morals;
(6) x x x x
(7) x x x x
(8) x x x x
(9) x x x x (emphasis supplied)
The September 19, 2011 decision did not properly take into consideration the findings of
the RTC to the effect that both the petitioner and the respondent had been
psychologically incapacitated, and thus could not assume the essential obligations of
marriage. The RTC would not have found so without the allegation to that effect by the
respondent in her answer,39 whereby she averred that it was not she but the petitioner
who had suffered from psychological incapacity.
The allegation of the petitionerspsychological incapacity was substantiated by Dr.

Dayan, as follows:
ATTY. BRETAA:
Q : You stated earlier that both parties were behaviorally immature?
A : Yes, sir.
Q : And that the marriage was a mistake?
A : Yes, sir.
Q : What is your basis for your statement that respondent was behaviorally immature?
A : Sir, for the reason that even before the marriage Malyn had noticed already some of
those short temper of the petitioner but she was very much in love and so she lived-in
with him and even the time that they were together, that they were living in, she also
had noticed some of his psychological deficits if we may say so. But as I said, because
she is also dependent and she was one who determined to make the relationship work,
she was denying even those kinds of problems that she had seen.
Q : To make it clear, Madam witness, Im talking here of the petitioner, Mr. Kalaw.
What led you to conclude that Mr. Kalaw was behaviorally immature?
Page 256 of 378

A : I think he also mentioned that his concept of marriage was not duly stable then. He
was not really thinking of marriage except that his wife got pregnant and so he thought
that he had to marry her. And even that time he was not also a monogamous person.
Q : Are you saying, Madam Witness, that ultimately the decision to marry lied on the
petitioner? A : I think so, Sir.
Q : Now, in your report, Madam Witness, you mentioned here that the petitioner
admitted to you that in his younger years he was often out seeking other women. Im
referring specifically to page 18. He also admitted to you that the thought of
commitment scared him, the petitioner. Now, given these admissions by petitioner to
you, my questions is, is it possible for such a person to enter into marriage despite this
fear of commitment and given his admission that he was a womanizer? Is it possible for
this person to stop his womanizing ways during the marriage?
A : Sir, its difficult.
Q : It would be difficult for that person?
A : Yes, Sir.
Q : What is the probability of this person giving up his womanizing after marriage?
A : Sir, I would say the probability of his giving up is almost only 20%.
Q : So, it is entirely possible that the respondent womanized during his marriage with
the respondent?
A : Yes, Sir.
Q : What is the bearing of this fearof commitment on the part of the petitioner insofar as
his psychological capacity to perform his duties as a husband is concerned?
A : Sir, it would impair his ability to have sexual integrity and also to be fully
committed to the role of husband to Malyn.
Q : Madam Witness, you never directly answered my question on whether the

petitioner was psychologically incapacitated to perform his duty as a husband. You
only said that the petitioner was behaviorally immature and that the marriage was a
mistake. Now, may I asked [sic] you that question again and request you to answer that
directly?
A : Sir, he is psychologically incapacitated.40
Although the petitioner, as the plaintiff, carried the burden to prove the nullity of the
marriage, the respondent, as the defendant spouse, could establish the psychological
incapacity of her husband because she raised the matter in her answer. The courts are
justified in declaring a marriage null and void under Article 36 of the Family Code
regardless of whether it is the petitioner or the respondent who imputes the
psychological incapacity to the other as long as the imputation is fully substantiated
with proof. Indeed, psychological incapacity may exist in one party alone or in both of
them, and if psychological incapacity of either or both is established, the marriage has
to be deemed null and void.
Page 257 of 378

More than twenty (20) years had passed since the parties parted ways. By now, they
must have already accepted and come to terms with the awful truth that their marriage,
assuming it existed in the eyes of the law, was already beyond repair. Both parties had
inflicted so much damage not only to themselves, but also to the lives and psyche of
their own children. It would be a greater injustice should we insist on still recognizing
their void marriage, and then force them and their children to endure some more
damage. This was the very same injustice that Justice Romero decried in her erudite
dissenting opinion in Santos v. Court of Appeals:41
It would be great injustice, I believe, to petitioner for this Court to give a much too
restrictive interpretation of the law and compel the petitioner to continue to be married
to a wife who for purposes of fulfilling her marital duties has, for all practical purposes,
ceased to exist.
Besides, there are public policy considerations involved in the ruling the Court makes
today. It is not, in effect, directly or indirectly, facilitating the transformation of
petitioner into a "habitual tryster" or one forced to maintain illicit relations with another
woman or women with emerging problems of illegitimate children, simply because he
is denied by private respondent, his wife, the companionship and conjugal love which
he has sought from her and towhich he is legally entitled?
I do not go as far as to suggest that Art. 36 of the Family Code is a sanction for absolute
divorce but I submit that we should not constrict it to non-recognition of its evident
purpose and thus deny to one like petitioner, an opportunity to turn a new leaf in his
life by declaring his marriage a nullity by reason of his wifes psychological incapacity
to perform an essential marital obligation. In this case, the marriage never existed from
the beginning because the respondent was afflicted with psychological incapacity at
and prior to the time of the marriage. Hence, the Court should not hesitate to declare
the nullity of the marriage between the parties.
To stress, our mandate to protect the inviolability of marriage as the basic foundation of
our society does not preclude striking down a marital union that is "ill-equipped to
promote family life," thus:
Now is also the opportune time to comment on another common legal guide utilized in
the adjudication of petitions for declaration of nullity in the adjudication of petitions for
declaration of nullity under Article 36. All too frequently, this Court and lower courts,
in denying petitions of the kind, have favorably cited Sections 1 and 2, Article XV of the
Constitution, which respectively state that "[t]he State recognizes the Filipino family as
the foundation of the nation. Accordingly, it shall strengthen its solidarity and actively
promote its total development[t]," and that [m]arriage, as an inviolable social
institution, is the foundation of the family and shall be protected by the State." These
provisions highlight the importance of the family and the constitutional protection
accorded to the institution of marriage.
But the Constitution itself does not establish the parameters of state protection to
marriage as a social institution and the foundation of the family. It remains the province
of the legislature to define all legal aspects of marriage and prescribe the strategy and
the modalities to protect it, based on whatever socio-political influences it deems
proper, and subject of course to the qualification that such legislative enactment itself
adheres to the Constitution and the Bill of Rights. This being the case, it also falls on the
legislature to put into operation the constitutional provisions that protect marriage and
the family. This has been accomplished at present through the enactment of the Family
Page 258 of 378
Code, which defines marriage and the family, spells out the corresponding legal effects,
imposes the limitations that affect married and family life, as well as prescribes the
grounds for declaration of nullity and those for legal separation. While it may appear
that the judicial denial of a petition for declaration of nullity is reflective of the
constitutional mandate to protect marriage, such action in fact merely enforces a
statutory definition of marriage, not a constitutionally ordained decree of what
marriage is. Indeed, if circumstances warrant, Sections 1 and 2 of Article XV need not be
the only constitutional considerations to be taken into account in resolving a petition for
declaration of nullity. Indeed, Article 36 of the Family Code, in classifying marriages
contracted by a psychologically incapacitated person as a nullity, should be deemed as
an implement of this constitutional protection of marriage. Given the avowed State
interest in promoting marriage as the foundation of the family, which in turn serves as
the foundation of the nation, there is a corresponding interest for the State to defend
against marriages ill-equipped to promote family life. Void ab initio marriages under
Article 36 do not further the initiatives of the State concerning marriage and family, as
they promote wedlock among persons who, for reasons independent of their will, are
not capacitated to understand or comply with the essential obligations of
marriage.42(Emphasis supplied)
WHEREFORE, the Court GRANTS the Motion for Reconsideration; REVERSES and
SETS ASIDE the decision promulgated on September 19, 2011; and REINSTATES the
decision rendered by the Regional Trial Court declaring the marriage between the
petitioner and the respondent on November 4, 1976 as NULL AND VOID AB INITIO
due to the psychological incapacity of the parties pursuant to Article 36 of the Family
Code.
No pronouncement on costs of suit.
G.R. No. 179987 September 3, 2013
HEIRS OF MARIO MALABANAN, (Represented by Sally A.

Malabanan), Petitioners, vs. REPUBLIC OF THE PHILIPPINES, Respondent.
RESOLUTION
For our consideration and resolution are the motions for reconsideration of the parties
who both assail the decision promulgated on April 29, 2009, whereby we upheld the
ruling of the Court of Appeals (CA) denying the application of the petitioners for the
registration of a parcel of land situated in Barangay Tibig, Silang, Cavite on the ground
that they had not established by sufficient evidence their right to the registration in
accordance with either Section 14(1) or Section 14(2) of Presidential Decree No. 1529
(Property Registration Decree).
Antecedents
The property subject of the application for registration is a parcel of land situated in
Barangay Tibig, Silang Cavite, more particularly identified as Lot 9864-A, Cad-452-D,
with an area of 71,324-square meters. On February 20, 1998, applicant Mario
Malabanan, who had purchased the property from Eduardo Velazco, filed an
application for land registration covering the property in the Regional Trial Court (RTC)
in Tagaytay City, Cavite, claiming that the property formed part of the alienable and
disposable land of the public domain, and that he and his predecessors-in-interest had
been in open, continuous, uninterrupted, public and adverse possession and occupation
Page 259 of 378

of the land for more than 30 years, thereby entitling him to the judicial confirmation of
his title.1
To prove that the property was an alienable and disposable land of the public domain,
Malabanan presented during trial a certification dated June 11, 2001 issued by the
Community Environment and Natural Resources Office (CENRO) of the Department of
Environment and Natural Resources (DENR), which reads:
This is to certify that the parcel of land designated as Lot No. 9864 Cad 452-D, Silang
Cadastre as surveyed for Mr. Virgilio Velasco located at Barangay Tibig, Silang, Cavite
containing an area of 249,734 sq. meters as shown and described on the Plan Ap-04-
00952 is verified to be within the Alienable or Disposable land per Land Classification
Map No. 3013 established under Project No. 20-A and approved as such under FAO 4-
1656 on March 15, 1982.2
After trial, on December 3, 2002, the RTC rendered judgment granting Malabanans
application for land registration, disposing thusly:
WHEREFORE, this Court hereby approves this application for registration and thus
places under the operation of Act 141, Act 496 and/or P.D. 1529, otherwise known as
Property Registration Law, the lands described in Plan Csd-04-0173123-D, Lot 9864-A
and containing an area of Seventy One Thousand Three Hundred Twenty Four (71,324)
Square Meters, as supported by its technical description now forming part of the record
of this case, in addition to other proofs adduced in the name of MARIO MALABANAN,
who is of legal age, Filipino, widower, and with residence at Munting Ilog, Silang,
Cavite.
Once this Decision becomes final and executory, the corresponding decree of
registration shall forthwith issue.
SO ORDERED.3
The Office of the Solicitor General (OSG) appealed the judgment to the CA, arguing that
Malabanan had failed to prove that the property belonged to the alienable and
disposable land of the public domain, and that the RTC erred in finding that he had
been in possession of the property in the manner and for the length of time required by
law for confirmation of imperfect title.
On February 23, 2007, the CA promulgated its decision reversing the RTC and
dismissing the application for registration of Malabanan. Citing the ruling in Republic
v. Herbieto (Herbieto),4 the CA declared that under Section 14(1) of the Property
Registration Decree, any period of possession prior to the classification of the land as
alienable and disposable was inconsequential and should be excluded from the
computation of the period of possession. Noting that the CENRO-DENR certification
stated that the property had been declared alienable and disposable only on March 15,
1982, Velazcos possession prior to March 15, 1982 could not be tacked for purposes of
computing Malabanans period of possession.
Due to Malabanans intervening demise during the appeal in the CA, his heirs elevated
the CAs decision of February 23, 2007 to this Court through a petition for review on
certiorari.
Page 260 of 378

The petitioners assert that the ruling in Republic v. Court of Appeals and Corazon
Naguit5 (Naguit) remains the controlling doctrine especially if the property involved is
agricultural land. In this regard, Naguit ruled that any possession of agricultural land
prior to its declaration as alienable and disposable could be counted in the reckoning of
the period of possession to perfect title under the Public Land Act (Commonwealth Act
No. 141) and the Property Registration Decree. They point out that the ruling in
Herbieto, to the effect that the declaration of the land subject of the application for
registration as alienable and disposable should also date back to June 12, 1945 or earlier,
was a mere obiter dictum considering that the land registration proceedings therein
were in fact found and declared void ab initio for lack of publication of the notice of
initial hearing.
The petitioners also rely on the ruling in Republic v. T.A.N. Properties, Inc.6 to support
their argument that the property had been ipso jure converted into private property by
reason of the open, continuous, exclusive and notorious possession by their
predecessors-in-interest of an alienable land of the public domain for more than 30
years. According to them, what was essential was that the property had been
"converted" into private property through prescription at the time of the application
without regard to whether the property sought to be registered was previously
classified as agricultural land of the public domain.
As earlier stated, we denied the petition for review on certiorari because Malabanan
failed to establish by sufficient evidence possession and occupation of the property on
his part and on the part of his predecessors-in interest since June 12, 1945, or earlier.
Petitioners Motion for Reconsideration
In their motion for reconsideration, the petitioners submit that the mere classification of
the land as alienable or disposable should be deemed sufficient to convert it into
patrimonial property of the State. Relying on the rulings in Spouses De Ocampo v.
Arlos,7 Menguito v. Republic8 and Republic v. T.A.N. Properties, Inc.,9 they argue that
the reclassification of the land as alienable or disposable opened it to acquisitive
prescription under the Civil Code; that Malabanan had purchased the property from
Eduardo Velazco believing in good faith that Velazco and his predecessors-in-interest
had been the real owners of the land with the right to validly transmit title and
ownership thereof; that consequently, the ten-year period prescribed by Article 1134 of
the Civil Code, in relation to Section 14(2) of the Property Registration Decree, applied
in their favor; and that when Malabanan filed the application for registration on
February 20, 1998, he had already been in possession of the land for almost 16 years
reckoned from 1982, the time when the land was declared alienable and disposable by
the State.
The Republics Motion for Partial Reconsideration
The Republic seeks the partial reconsideration in order to obtain a clarification with
reference to the application of the rulings in Naguit and Herbieto.
Chiefly citing the dissents, the Republic contends that the decision has enlarged, by
implication, the interpretation of Section 14(1) of the Property Registration Decree
through judicial legislation. It reiterates its view that an applicant is entitled to
registration only when the land subject of the application had been declared alienable
and disposable since June 12, 1945 or earlier.
Page 261 of 378

Ruling
We deny the motions for reconsideration.
In reviewing the assailed decision, we consider to be imperative to discuss the different

classifications of land in relation to the existing applicable land registration laws of the
Philippines.
Classifications of land according to ownership
Land, which is an immovable property,10 may be classified as either of public dominion

or of private ownership.11Land is considered of public dominion if it either: (a) is
intended for public use; or (b) belongs to the State, without being for public use, and is
intended for some public service or for the development of the national wealth. 12 Land
belonging to the State that is not of such character, or although of such character but no
longer intended for public use or for public service forms part of the patrimonial
property of the State.13 Land that is other than part of the patrimonial property of the
State, provinces, cities and municipalities is of private ownership if it belongs to a
private individual.
Pursuant to the Regalian Doctrine (Jura Regalia), a legal concept first introduced into
the country from the West by Spain through the Laws of the Indies and the Royal
Cedulas,14 all lands of the public domain belong to the State.15 This means that the State
is the source of any asserted right to ownership of land, and is charged with the
conservation of such patrimony.16
All lands not appearing to be clearly under private ownership are presumed to belong
to the State. Also, public lands remain part of the inalienable land of the public domain
unless the State is shown to have reclassified or alienated them to private persons.17
Classifications of public lands according to alienability
Whether or not land of the public domain is alienable and disposable primarily rests on
the classification of public lands made under the Constitution. Under the 1935
Constitution,18 lands of the public domain were classified into three, namely,
agricultural, timber and mineral.19 Section 10, Article XIV of the 1973 Constitution
classified lands of the public domain into seven, specifically, agricultural, industrial or
commercial, residential, resettlement, mineral, timber or forest, and grazing land, with
the reservation that the law might provide other classifications. The 1987 Constitution
adopted the classification under the 1935 Constitution into agricultural, forest or timber,
and mineral, but added national parks.20 Agricultural lands may be further classified by
law according to the uses to which they may be devoted.21 The identification of lands
according to their legal classification is done exclusively by and through a positive act
of the Executive Department.22
Based on the foregoing, the Constitution places a limit on the type of public land that
may be alienated. Under Section 2, Article XII of the 1987 Constitution, only agricultural
lands of the public domain may be alienated; all other natural resources may not be.
Alienable and disposable lands of the State fall into two categories, to wit: (a)
patrimonial lands of the State, or those classified as lands of private ownership under
Article 425 of the Civil Code,23 without limitation; and (b) lands of the public domain, or
the public lands as provided by the Constitution, but with the limitation that the lands
Page 262 of 378

must only be agricultural. Consequently, lands classified as forest or timber, mineral, or

national parks are not susceptible of alienation or disposition unless they are
reclassified as agricultural.24 A positive act of the Government is necessary to enable
such reclassification,25 and the exclusive prerogative to classify public lands under
existing laws is vested in the Executive Department, not in the courts. 26 If, however,
public land will be classified as neither agricultural, forest or timber, mineral or national
park, or when public land is no longer intended for public service or for the
development of the national wealth, thereby effectively removing the land from the
ambit of public dominion, a declaration of such conversion must be made in the form of
a law duly enacted by Congress or by a Presidential proclamation in cases where the
President is duly authorized by law to that effect.27 Thus, until the Executive
Department exercises its prerogative to classify or reclassify lands, or until Congress or
the President declares that the State no longer intends the land to be used for public
service or for the development of national wealth, the Regalian Doctrine is applicable.
Disposition of alienable public lands
Section 11 of the Public Land Act (CA No. 141) provides the manner by which alienable
and disposable lands of the public domain, i.e., agricultural lands, can be disposed of, to
wit:
Section 11. Public lands suitable for agricultural purposes can be disposed of only as
follows, and not otherwise:
(1) For homestead settlement;
(2) By sale;
(3) By lease; and
(4) By confirmation of imperfect or incomplete titles;
(a) By judicial legalization; or
(b) By administrative legalization (free patent).
The core of the controversy herein lies in the proper interpretation of Section 11(4), in
relation to Section 48(b) of the Public Land Act, which expressly requires possession by
a Filipino citizen of the land since June 12, 1945, or earlier, viz:
Section 48. The following-described citizens of the Philippines, occupying lands of the
public domain or claiming to own any such lands or an interest therein, but whose titles
have not been perfected or completed, may apply to the Court of First Instance of the
province where the land is located for confirmation of their claims and the issuance of a
certificate of title thereafter, under the Land Registration Act, to wit:
xxxx
(b) Those who by themselves or through their predecessors-in-interest have been in

open, continuous, exclusive, and notorious possession and occupation of alienable and
disposable lands of the public domain, under a bona fide claim of acquisition of
ownership, since June 12, 1945, or earlier, immediately preceding the filing of the
applications for confirmation of title, except when prevented by war or force majeure.
Page 263 of 378

These shall be conclusively presumed to have performed all the conditions essential to a
Government grant and shall be entitled to a certificate of title under the provisions of
this chapter. (Bold emphasis supplied)
Note that Section 48(b) of the Public Land Act used the words "lands of the public
domain" or "alienable and disposable lands of the public domain" to clearly signify that
lands otherwise classified, i.e., mineral, forest or timber, or national parks, and lands of
patrimonial or private ownership, are outside the coverage of the Public Land Act.
What the law does not include, it excludes. The use of the descriptive phrase "alienable
and disposable" further limits the coverage of Section 48(b) to only the agricultural
lands of the public domain as set forth in Article XII, Section 2 of the 1987 Constitution.
Bearing in mind such limitations under the Public Land Act, the applicant must satisfy
the following requirements in order for his application to come under Section 14(1) of
the Property Registration Decree,28 to wit:
1. The applicant, by himself or through his predecessor-in-interest, has been in

possession and occupation of the property subject of the application;
2. The possession and occupation must be open, continuous, exclusive, and

notorious;
3. The possession and occupation must be under a bona fide claim of acquisition
of ownership;
4. The possession and occupation must have taken place since June 12, 1945, or
earlier; and
5. The property subject of the application must be an agricultural land of the

public domain.
Taking into consideration that the Executive Department is vested with the authority to
classify lands of the public domain, Section 48(b) of the Public Land Act, in relation to
Section 14(1) of the Property Registration Decree, presupposes that the land subject of
the application for registration must have been already classified as agricultural land of
the public domain in order for the provision to apply. Thus, absent proof that the land
is already classified as agricultural land of the public domain, the Regalian Doctrine
applies, and overcomes the presumption that the land is alienable and disposable as
laid down in Section 48(b) of the Public Land Act. However, emphasis is placed on the
requirement that the classification required by Section 48(b) of the Public Land Act is
classification or reclassification of a public land as agricultural.
The dissent stresses that the classification or reclassification of the land as alienable and
disposable agricultural land should likewise have been made on June 12, 1945 or earlier,
because any possession of the land prior to such classification or reclassification
produced no legal effects. It observes that the fixed date of June 12, 1945 could not be
minimized or glossed over by mere judicial interpretation or by judicial social policy
concerns, and insisted that the full legislative intent be respected.
We find, however, that the choice of June 12, 1945 as the reckoning point of the requisite
possession and occupation was the sole prerogative of Congress, the determination of
which should best be left to the wisdom of the lawmakers. Except that said date
qualified the period of possession and occupation, no other legislative intent appears to
Page 264 of 378

be associated with the fixing of the date of June 12, 1945. Accordingly, the Court should
interpret only the plain and literal meaning of the law as written by the legislators.
Moreover, an examination of Section 48(b) of the Public Land Act indicates that
Congress prescribed no requirement that the land subject of the registration should
have been classified as agricultural since June 12, 1945, or earlier. As such, the
applicants imperfect or incomplete title is derived only from possession and occupation
since June 12, 1945, or earlier. This means that the character of the property subject of
the application as alienable and disposable agricultural land of the public domain
determines its eligibility for land registration, not the ownership or title over it.
Alienable public land held by a possessor, either personally or through his

predecessors-in-interest, openly, continuously and exclusively during the prescribed
statutory period is converted to private property by the mere lapse or completion of the
period.29 In fact, by virtue of this doctrine, corporations may now acquire lands of the
public domain for as long as the lands were already converted to private ownership, by
operation of law, as a result of satisfying the requisite period of possession prescribed
by the Public Land Act.30 It is for this reason that the property subject of the application
of Malabanan need not be classified as alienable and disposable agricultural land of the
public domain for the entire duration of the requisite period of possession.
To be clear, then, the requirement that the land should have been classified as alienable
and disposable agricultural land at the time of the application for registration is
necessary only to dispute the presumption that the land is inalienable.
The declaration that land is alienable and disposable also serves to determine the point
at which prescription may run against the State. The imperfect or incomplete title being
confirmed under Section 48(b) of the Public Land Act is title that is acquired by reason
of the applicants possession and occupation of the alienable and disposable
agricultural land of the public domain. Where all the necessary requirements for a grant
by the Government are complied with through actual physical, open, continuous,
exclusive and public possession of an alienable and disposable land of the public
domain, the possessor is deemed to have acquired by operation of law not only a right
to a grant, but a grant by the Government, because it is not necessary that a certificate of
title be issued in order that such a grant be sanctioned by the courts.31
If one follows the dissent, the clear objective of the Public Land Act to adjudicate and
quiet titles to unregistered lands in favor of qualified Filipino citizens by reason of their
occupation and cultivation thereof for the number of years prescribed by law32 will be
defeated. Indeed, we should always bear in mind that such objective still prevails, as a
fairly recent legislative development bears out, when Congress enacted legislation
(Republic Act No. 10023)33 in order to liberalize stringent requirements and procedures
in the adjudication of alienable public land to qualified applicants, particularly
residential lands, subject to area limitations.34
On the other hand, if a public land is classified as no longer intended for public use or
for the development of national wealth by declaration of Congress or the President,
thereby converting such land into patrimonial or private land of the State, the
applicable provision concerning disposition and registration is no longer Section 48(b)
of the Public Land Act but the Civil Code, in conjunction with Section 14(2) of the
Property Registration Decree.35 As such, prescription can now run against the State.
Page 265 of 378

To sum up, we now observe the following rules relative to the disposition of public
land or lands of the public domain, namely:
(1) As a general rule and pursuant to the Regalian Doctrine, all lands of the
public domain belong to the State and are inalienable. Lands that are not clearly
under private ownership are also presumed to belong to the State and, therefore,
may not be alienated or disposed;
(2) The following are excepted from the general rule, to wit:
(a) Agricultural lands of the public domain are rendered alienable and
disposable through any of the exclusive modes enumerated under Section
11 of the Public Land Act. If the mode is judicial confirmation of imperfect
title under Section 48(b) of the Public Land Act, the agricultural land
subject of the application needs only to be classified as alienable and
disposable as of the time of the application, provided the applicants
possession and occupation of the land dated back to June 12, 1945, or
earlier. Thereby, a conclusive presumption that the applicant has
performed all the conditions essential to a government grant arises, 36 and
the applicant becomes the owner of the land by virtue of an imperfect or
incomplete title. By legal fiction, the land has already ceased to be part of
the public domain and has become private property.37
(b) Lands of the public domain subsequently classified or declared as no

longer intended for public use or for the development of national wealth
are removed from the sphere of public dominion and are considered
converted into patrimonial lands or lands of private ownership that may
be alienated or disposed through any of the modes of acquiring
ownership under the Civil Code. If the mode of acquisition is prescription,
whether ordinary or extraordinary, proof that the land has been already
converted to private ownership prior to the requisite acquisitive
prescriptive period is a condition sine qua non in observance of the law
(Article 1113, Civil Code) that property of the State not patrimonial in
character shall not be the object of prescription.
To reiterate, then, the petitioners failed to present sufficient evidence to establish that
they and their predecessors-in-interest had been in possession of the land since June 12,
1945. Without satisfying the requisite character and period of possession - possession
and occupation that is open, continuous, exclusive, and notorious since June 12, 1945, or
earlier - the land cannot be considered ipso jure converted to private property even
upon the subsequent declaration of it as alienable and disposable. Prescription never
began to run against the State, such that the land has remained ineligible for registration
under Section 14(1) of the Property Registration Decree. Likewise, the land continues to
be ineligible for land registration under Section 14(2) of the Property Registration
Decree unless Congress enacts a law or the President issues a proclamation declaring
the land as no longer intended for public service or for the development of the national
wealth.
WHEREFORE, the Court DENIES the petitioners' Motion for Reconsideration and the
respondent's Partial Motion for Reconsideration for their lack of merit.
G.R. No. 163753 January 15, 2014
Page 266 of 378

DR. ENCARNACION C. LUMANTAS, M.D., Petitioner, vs. HANZ CALAPIZ,

REPRESENTED BY HIS PARENTS, HILARIO CALAPIZ, JR. and HERLITA
CALAPIZ,Respondent.
DECISION
The acquittal of the accused does not necessarily mean his absolution from civil liability.
The Case
In this appeal, an accused desires the reversal of the decision promulgated on February
20, 2003,1 whereby the Court of Appeals (CA) affirmed the judgment rendered on
August 6, 1999 by the Regional Trial Court (RTC), Branch 13, in Oroquieta City ordering
him to pay moral damages despite his acquittal of the crime of reckless imprudence
resulting in serious physical injuries charged against him.2
Antecedents
On January 16, 1995, Spouses Hilario Calapiz, Jr. and Herlita Calapiz brought their 8-
year-old son, Hanz Calapiz (Hanz), to the Misamis Occidental Provincial Hospital,
Oroquieta City, for an emergency appendectomy. Hanz was attended to by the
petitioner, who suggested to the parents that Hanz also undergo circumcision at no
added cost to spare him the pain. With the parents consent, the petitioner performed
the coronal type of circumcision on Hanz after his appendectomy. On the following
day, Hanz complained of pain in his penis, which exhibited blisters. His testicles were
swollen. The parents noticed that the child urinated abnormally after the petitioner
forcibly removed the catheter, but the petitioner dismissed the abnormality as normal.
On January 30, 1995, Hanz was discharged from the hospital over his parents
protestations, and was directed to continue taking antibiotics.
On February 8, 1995, Hanz was confined in a hospital because of the abscess formation
between the base and the shaft of his penis. Presuming that the ulceration was brought
about by Hanzs appendicitis, the petitioner referred him to Dr. Henry Go, an urologist,
who diagnosed the boy to have a damaged urethra. Thus, Hanz underwent cystostomy,
and thereafter was operated on three times to repair his damaged urethra.
When his damaged urethra could not be fully repaired and reconstructed, Hanzs
parents brought a criminal charge against the petitioner for reckless imprudence
resulting to serious physical injuries. On April 17, 1997, the information3 was filed in the
Municipal Trial Court in Cities of Oroquieta City (MTCC), to which the latter pleaded
not guilty on May 22, 1998.4 Under the order of April 30, 1999, the case was transferred
to the RTC pursuant to Supreme Court Circular No. 11-99.5
At the trial, the Prosecution presented several witnesses, including Dr. Rufino Agudera
as an expert witness and as the physician who had operated on Hanz twice to repair the
damaged urethra. Dr. Agudera testified that Hanz had been diagnosed to have urethral
stricture and cavernosal injury left secondary to trauma that had necessitated the
conduct of two operations to strengthen and to lengthen the urethra. Although
satisfactorily explaining that the injury to the urethra had been caused by trauma, Dr.
Agudera could not determine the kind of trauma that had caused the injury.
In his defense, the petitioner denied the charge. He contended that at the time of his
examination of Hanz on January 16, 1995, he had found an accumulation of pus at the
Page 267 of 378

vicinity of the appendix two to three inches from the penis that had required immediate
surgical operation; that after performing the appendectomy, he had circumcised Hanz
with his parents consent by using a congo instrument, thereby debunking the parents
claim that their child had been cauterized; that he had then cleared Hanz on January 27,
1995 once his fever had subsided; that he had found no complications when Hanz
returned for his follow up check-up on February 2, 1995; and that the abscess formation
between the base and the shaft of the penis had been brought about by Hanzs burst
appendicitis.
Ruling of the RTC
In its decision rendered on August 6, 1999,6 the RTC acquitted the petitioner of the
crime charged for insufficiency of the evidence. It held that the Prosecutions evidence
did not show the required standard of care to be observed by other members of the
medical profession under similar circumstances. Nonetheless, the RTC ruled that the
petitioner was liable for moral damages because there was a preponderance of evidence
showing that Hanz had received the injurious trauma from his circumcision by the
petitioner. The decision disposed as follows:
WHEREFORE, for insufficiency of evidence, this court renders judgment acquitting the
accused, Dr. Encarnacion Lumantas, of reckless imprudence resulting in serious
physical injuries, but ordering him to pay Hanz CalapizP50,000.00 as moral damages.
No costs.
SO ORDERED.
Ruling of the CA
On appeal, the CA affirmed the RTC,7 sustaining the award of moral damages. It
opined that even if the petitioner had been acquitted of the crime charged, the acquittal
did not necessarily mean that he had not incurred civil liability considering that the
Prosecution had preponderantly established the sufferings of Hanz as the result of the
circumcision.
The petitioner moved for reconsideration, but the CA denied the motion on April 28,
2004.8
Hence, this appeal.
Issue
Whether the CA erred in affirming the petitioners civil liability despite his acquittal of
the crime of reckless imprudence resulting in serious physical injuries.
Ruling
The petition for review lacks merit.
It is axiomatic that every person criminally liable for a felony is also civilly
liable.9 Nevertheless, the acquittal of an accused of the crime charged does not
necessarily extinguish his civil liability. In Manantan v. Court of Appeals, 10the Court
elucidates on the two kinds of acquittal recognized by our law as well as on the
different effects of acquittal on the civil liability of the accused, viz:
Page 268 of 378

Our law recognizes two kinds of acquittal, with different effects on the civil liability of
the accused. First is an acquittal on the ground that the accused is not the author of the
act or omission complained of. This instance closes the door to civil liability, for a
person who has been found to be not the perpetrator of any act or omission cannot and
can never be held liable for such act or omission. There being no delict, civil liability ex
delicto is out of the question, and the civil action, if any, which may be instituted must
be based on grounds other than the delict complained of. This is the situation
contemplated in Rule 111 of the Rules of Court. The second instance is an acquittal
based on reasonable doubt on the guilt of the accused. In this case, even if the guilt of
the accused has not been satisfactorily established, he is not exempt from civil liability
which may be proved by preponderance of evidence only.
The Rules of Court requires that in case of an acquittal, the judgment shall state
"whether the evidence of the prosecution absolutely failed to prove the guilt of the
accused or merely failed to prove his guilt beyond reasonable doubt. In either case, the
judgment shall determine if the act or omission from which the civil liability might arise
did not exist."11
Conformably with the foregoing, therefore, the acquittal of an accused does not prevent
a judgment from still being rendered against him on the civil aspect of the criminal case
unless the court finds and declares that the fact from which the civil liability might arise
did not exist.
Although it found the Prosecutions evidence insufficient to sustain a judgment of

conviction against the petitioner for the crime charged, the RTC did not err in
determining and adjudging his civil liability for the same act complained of based on
mere preponderance of evidence.12 In this connection, the Court reminds that the
acquittal for insufficiency of the evidence did not require that the complainants
recovery of civil liability should be through the institution of a separate civil action for
that purpose.13
The petitioners contention that he could not be held civilly liable because there was no
proof of his negligence deserves scant consideration. The failure of the Prosecution to
prove his criminal negligence with moral certainty did not forbid a finding against him
that there was preponderant evidence of his negligence to hold him civilly liable. 14 With
the RTC and the CA both finding that Hanz had sustained the injurious trauma from
the hands of the petitioner on the occasion of or incidental to the circumcision, and that
the trauma could have been avoided, the Court must concur with their uniform
findings. In that regard, the Court need not analyze and weigh again the evidence
considered in the proceedings a quo. The Court, by virtue of its not being a trier of facts,
should now accord the highest respect to the factual findings of the trial court as
affirmed by the CA in the absence of a clear showing by the petitioner that such
findings were tainted with arbitrariness, capriciousness or palpable error.
Every person is entitled to the physical integrity of his body. Although we have long
advocated the view that any physical injury, like the loss or diminution of the use of
any part of ones body, is not equatable to a pecuniary loss, and is not susceptible of
exact monetary estimation, civil damages should be assessed once that integrity has
been violated. The assessment is but an imperfect estimation of the true value of ones
body. The usual practice is to award moral damages for the physical injuries
sustained.15 In Hanzs case, the undesirable outcome of the circumcision performed by
the petitioner forced the young child to endure several other procedures on his penis in
Page 269 of 378

order to repair his damaged urethra. Surely, his physical and moral sufferings properly
warranted the amount ofP50,000.00 awarded as moral damages.
Many years have gone by since Hanz suffered the injury. Interest of 6% per annum
should then be imposed on the award as a sincere means of adjusting the value of the
award to a level that is not only reasonable but just and commensurate. Unless we make
the adjustment in the permissible manner by prescribing legal interest on the award, his
sufferings would be unduly compounded. For that purpose, the reckoning of interest
should be from the filing of the criminal information on April 17, 1997, the making of
the judicial demand for the liability of the petitioner.
WHEREFORE, the Court AFFIRMS the decision promulgated on February 20, 2003,
with the modification that legal interest of 6% per annum to start from April 17, 1997 is
imposed on the award of:P50,000.00 as moral damages; and ORDERS the petitioner to
pay the costs of suit.
G.R. No. 173474 August 29, 2012
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. REYNALDO BELOCURA y

PEREZ, Accused-Appellant.
DECISION
The credibility of the evidence of the corpus delicti in a prosecution for illegal
possession of marij11ana under Republic Act No. 6425, as amended, depends on the
integrity of the chain of custody of the marijuana from the time of its seizure until the
time of its presentation as evidence in court. Short of that, the accused is entitled to an
acquittal because the State fails to establish the guilt of the accused beyond reasonable
doubt.
The Case
Reynaldo Belocura y Perez, a police officer charged with illegal possession of 1,789.823
grams of marijuana in violation of Republic Act No. 6425 (Dangerous Drugs Act of
1972), as amended by Republic Act No. 7659, was found guilty of the crime charged on
April 22, 2003 by the Regional Trial Court (RTC) in Manila, and sentenced to suffer
reclusion perpetua and to pay a fine of P 500,000.00.1
On appeal, the Court of Appeals (CA) affirmed the conviction on January 23,
2006.2 Hence, this final appeal for his acquittal.
Antecedents
Belocura was charged on April 13, 1999 by the Office of the City Prosecutor of Manila
with a violation of Section 8 of Republic Act No. 6425, as amended by Republic Act No.
7659, in the Manila RTC through the information:
That on or about March 22, 1999, in the City of Manila, Philippines, the said accused did
then and there willfully, unlawfully and knowingly have in his possession and under
his custody and control one (1) plastic bag colored red and white, with label "SHIN
TON YON", containing the following:
Page 270 of 378

One (1) newspaper leaf used to wrap one (1) brick of dried marijuana fruiting tops
weighing 830.532 grams;
One (1) newspaper leaf used to wrap one (1) brick of dried marijuana fruiting tops
weighing 959.291 grams.
With a total weight of 1,789.823 grams, a prohibited drug.
Contrary to law.3
After Belocura pleaded not guilty,4 the State presented three witnesses, namely: Insp.
Arlene Valdez Coronel, Chief Insp. Ferdinand Ortales Divina, and SPO1 Gregorio P.
Rojas. On the other hand, the Defense presented Belocura as its sole witness.
I The States Evidence
On March 22, 1999, at 11 oclock in the morning, Chief Insp. Divina was in his office in
the headquarters of the Western Police District (WPD) on United Nations Avenue in
Manila when he received a call from a male person who refused to identify himself for
fear of reprisal. The caller tipped him off about a robbery to be staged along Lopez
Street, Tondo, Manila. After relaying the tip to his superior officer, he was immediately
ordered to form a team composed of operatives of the District Intelligence Group and to
coordinate with the Special Weapons and Attack Team (SWAT) and the Mobile Patrol
of the WPD.
After a briefing, Chief Insp. Divina and the other operatives proceeded to Lopez Street,
reaching the site before 1:00 pm. Chief Insp. Divina and PO2 Eraldo Santos positioned
themselves along Vitas Street. At around 2:00 pm, Chief Insp. Divina spotted an owner-
type jeep bearing a spurious government plate (SBM-510) cruising along Vitas Street
and told the rest of the team about it. The numbers of the car plate were painted white.
The driver was later identified as Belocura. Chief Insp. Divina signaled for Belocura to
stop for verification but the latter ignored the signal and sped off towards Balut, Tondo.
The team pursued Belocuras jeep until they blocked its path with their Tamaraw FX
vehicle, forcing Belocura to stop. At this point, Chief Insp. Divina and the rest of the
team approached the jeep and introduced themselves to Belocura as policemen. Chief
Insp. Divina queried Belocura on the government plate. SPO1 Rojas confiscated
Belocuras Berreta 9 mm. pistol (Serial Number M13086Z) that was tucked in his waist
and its fully loaded magazine when he could not produce the appropriate documents
for the pistol and the government plate. They arrested him.
PO2 Santos searched Belocuras jeep, and recovered a red plastic bag under the drivers
seat. Chief Insp. Divina directed PO2 Santos to inspect the contents of the red plastic
bag, which turned out to be two bricks of marijuanawrapped in newspaper.
Afterwards, the team returned with Belocura to the WPD Headquarters on board the
Tamaraw FX. The team turned over the jeep and the red plastic bag with its contents to
the General Assignment Section for proper disposition.5
Chief Insp. Divina said that the caller did not mention anything about any vehicle; that
he and his men were in civilian clothes at the time; that it was PO2 Santos who
recovered the red plastic bag containing the marijuanabricks; and that SPO1 Rojas
examined the contents of the bag in his presence.6
Page 271 of 378

SPO1 Rojas confirmed his part in the operation.7 He conceded that he was not present
when the red plastic bag containing the bricks of marijuana was seized, and saw
the marijuana bricks for the first time only at the police station.8
Forensic Chemist Insp. Coronel attested that her office received from the General
Assignment Section of the WPD one red plastic bag labeled "SHIN TON YON"
containing two bricks of dried suspected marijuana fruiting tops individually wrapped
in newspaper at about 12:30 pm of March
23, 1999. The first brick bore the marking "RB-1" and weighed 830.532 grams while the
other bore the marking "RB-2" and weighed 959.291 grams, for a total weight of
1,789.823 grams. She conducted a chemical examination of the marijuana bricks
pursuant to the request for laboratory examination from Chief Insp. Nelson Yabut of
the WPD; and concluded as the result of three qualitative examinations that the
submitted specimen tested positive for marijuana, a prohibited drug.9
II Evidence of the Defense
Belocura denied the charge. His version, which differed from that of the Prosecution,
was as follows.
On March 22, 1999, Belocura was a police officer assigned in Police Station 6 of the WPD
with a tour of duty from 3:00 pm to 11:00 pm. At 2:00 pm of that day, he was on his way
to work on board his owner-type jeep when about thirty police officers blocked his
path. He introduced himself to them as a police officer, but they ignored him. Instead,
they disarmed and handcuffed him, and confiscated the memorandum receipt covering
his firearm, his money and his police ID card. He recognized some of his arrestors as
former members of the CIS. They forced him into their jeep, and brought him to the
WPD headquarters, where they locked him up in a room that looked like a bodega.
They subjected him to interrogation on his alleged involvement in a robbery hold-up.
They informed him of the drug-related charge to be filed against him only three days
later.
Belocura denied owning or possessing the bricks of marijuana, saying that he saw the
bricks of marijuana for the first time only in court. He insisted that it was physically
impossible for the bricks of marijuana to be found under the drivers seat of his jeep on
account of the clearance from the flooring being only about three inches. At the time of
his arrest, he was in Type-B uniform (i.e., blue pants with white side piping and blue T-
shirt) because he was reporting to work that afternoon. Belocura said that his arrest was
effected possibly because he had incurred the ire of a superior; that it was not unusual
for a policeman like him to incur the ire of a superior officer or a fellow policeman; that
he had arrested a suspect for drug pushing and had detained him in Police Precinct 2,
but the suspect turned out to be the nephew of Captain Sukila of Precinct 2 who
admitted to him that Captain Sukila owned the drugs; that on the day following the
arrest of the suspect, Captain Sukila called Belocura to request the release of the suspect
(ina-arbor ang huli ko); that he told Captain Sukila that they should meet the next day
so that he could turn over the suspect; and that on the next day, he was surprised to
learn that the suspect had already been released.10
Belocura did not personally know Chief Insp. Divina prior to his arrest,11 or the other
arresting policemen. He mentioned that his owner-type jeep had been assembled in
1995, and that he had attached the plate number assigned to his old vehicle pending the
registration of the jeep despite knowing that doing so was a violation of law; and that
Page 272 of 378
the incident involving the arrest of the nephew of Captain Sukila was the only reason
he could think of why charges were filed against him.12
On re-direct examination, Belocura replied that he did not see the bricks
of marijuana whether at the time of his arrest, or at the police precinct, or during the
inquest proceedings. On re-cross, he clarified that while the drivers seat were fixed to
the jeep, the bricks of marijuana could nevertheless be placed under the drivers seat
only if pressed hard enough, but in that case the wrappings would get torn because the
wirings of the car underneath the seat were exposed. He recalled that the wrappings of
the bricks of marijuana were intact.13
On April 22, 2003, the RTC convicted Belocura of the crime charged and sentenced him
to suffer reclusion perpetua and to pay the fine of P 500,000.00.14
As already stated, the CA affirmed the conviction.15
Issues
Belocura now submits that:16
I.
THE TRIAL COURT GRAVELY ERRED IN CONVICTING THE ACCUSED-

APPELLANT OF THE CRIME CHARGED NOTWITHSTANDING THE PHYSICIAL
IMPOSSIBILITY FOR THE DRIED BRICKS OF MARIJUANA PLACED UNDER THE
DRIVERS SEAT (sic).
II.
THE TRIAL COURT ERRED IN CONVICTING THE ACCUSED-APPELLANT OF THE

CRIME CHARGED BASED ON THE INCONSISTENT AND CONTRADICTORY
STATEMENTS OF THE PROSECUTION WITNESS.
III.
THE TRIAL COURT ERRED IN ADMITTING IN EVIDENCE THE MARIJUANA

DESPITE THE ILLEGALITY OF ITS SEIZURE DUE TO THE ABSENSE (sic) OF A
VALID SEARCH WARRANT.
IV.
THE TRIAL COURT ERRED IN CONVICTING THE ACCUSED-APPELLANT OF THE

CRIME CHARGED WHEN HIS GUILT WAS NOT PROVEN BEYOND REASONABLE
DOUBT.
Belocura argues that the Prosecution did not establish his guilt for the crime charged
beyond reasonable doubt; that his warrantless arrest was unlawful considering that his
only violation was only a breach of traffic rules and regulations involving the illegal use
of a government plate on his newly-assembled jeep; that the warrantless search of his
jeep was contrary to law for violating his right against illegal search and seizure
protected under Section 17, Article III (Bill of Rights) of the 1987 Constitution;17 and that
the bricks of marijuana supposedly seized from him, being the fruit of a poisonous tree,
were inadmissible against him.
Page 273 of 378

The Office of the Solicitor General (OSG) counters that Belocuras arrest and the ensuing
search of the jeep were valid, the search being incidental to a valid, albeit warrantless,
arrest; that the arresting policemen had a reasonable ground to effect his warrantless
arrest; that it became their duty following the lawful arrest to conduct the warrantless
search not only of the person of Belocura as the arrestee but also of the areas within his
reach, which then resulted in the recovery of the dried bricks of marijuana from under
the drivers seat; and that any irregularity attendant to the arrest was cured by
Belocuras failure to object to the validity of his arrest before entering his plea and by
his submission to the jurisdiction of the RTC when he entered his plea and participated
in the trial.18
Ruling
After a meticulous examination of the records, the Court concludes that a reversal of the
conviction is justified and called for.
No arrest, search and seizure can be made without a valid warrant issued by a
competent judicial authority. So sacred are the right of personal security and privacy
and the right from unreasonable searches and seizures that no less than the Constitution
ordains in Section 2 of its Article III, viz:
Section 2. The right of the people to be secure in their persons, houses, papers and
effects against unreasonable searches and seizures of whatever nature and for any
purpose, shall be inviolable, and no search warrant or warrant of arrest shall issue
except upon probable cause to be determined personally by the judge after examination
under oath or affirmation of the complainant and the witnesses he may produce, and
particularly describing the place to be searched, and the persons or things to be seized.
The consequence of a violation of the guarantees against a violation of personal security

and privacy and against unreasonable searches and seizures is the exclusion of the
evidence thereby obtained. This rule of exclusion is set down in Section 3(2), Article III
of the Constitution, to wit:
Section 3. xxx
(2) Any evidence obtained in violation of this or the preceding section shall be
inadmissible for any purpose in any proceeding.
Even so, the right against warrantless arrest, and the right against warrantless search
and seizure are not absolute. There are circumstances in which the arrest, or search and
seizure, although warrantless, are nonetheless valid or reasonable. Among the
circumstances are those mentioned in Section 5, Rule 113 of the Rules of Court, which
lists down when a warrantless arrest may be lawfully made by a peace officer or a
private person, namely:
(a) When, in his presence, the person to be arrested has committed, is actually
committing, or is attempting to commit an offense;
(b) When an offense has in fact just been committed, and he has personal knowledge of
facts indicating that the person to be arrested has committed it; and
(c) When the person to be arrested is a prisoner who has escaped from a penal
establishment or place where he is serving final judgment or temporarily confined
Page 274 of 378

while his case is pending, or has escaped while being transferred from one confinement
to another.
On the other hand, the constitutional proscription against warrantless searches and
seizures admits of the following exceptions, namely: (a) warrantless search incidental to
a lawful arrest recognized under Section 13, Rule 126 of the Rules of Court; 19 (b) seizure
of evidence under plain view; (c) search of a moving vehicle; (d) consented warrantless
search; (e) customs search; (f) stop-and-frisk situations (Terry search); and (g) exigent
and emergency circumstances.20 In these exceptional situations, the necessity for a
search warrant is dispensed with.
Belocura argues that his arrest and the ensuing search of his vehicle and recovery of the
incriminating bricks ofmarijuana were in violation of his aforementioned rights under
the Constitution because he was then violating only a simple traffic rule on the illegal
use of a government plate. He claims that the arresting policemen had no probable
cause to search his vehicle for anything.
The argument of Belocura does not persuade.
Belocura was caught in flagrante delicto violating Section 31 of Republic Act No. 4139
(The Land Transportation and Traffic Code).21 In flagrante delicto means in the very act
of committing the crime. To be caught in flagrante delicto necessarily implies the
positive identification of the culprit by an eyewitness or eyewitnesses. Such
identification is a direct evidence of culpability, because it "proves the fact in dispute
without the aid of any inference or presumption."22 Even by his own admission, he was
actually committing a crime in the presence or within the view of the arresting
policemen. Such manner by which Belocura was apprehended fell under the first
category in Section 5, Rule 113 of the Rules of Court. The arrest was valid, therefore,
and the arresting policemen thereby became cloaked with the authority to validly
search his person and effects for weapons or any other article he might use in the
commission of the crime or was the fruit of the crime or might be used as evidence in
the trial of the case, and to seize from him and the area within his reach or under his
control, like the jeep, such weapon or other article. The evident purpose of the
incidental search was to protect the arresting policemen from being harmed by him
with the use of a concealed weapon. Accordingly, the warrantless character of the arrest
could not by itself be the basis of his acquittal.23
In convicting Belocura as charged, the RTC relied on the testimonies of Chief Insp.
Divina and SPO1 Rojas to establish the fact of possession of the marijuana bricks. An
evaluation of the totality of the evidence on record indicates, however, that the corpus
delicti of the crime charged was not established beyond reasonable doubt.
The elements of illegal possession of marijuana under Republic Act No. 6425, as
amended, are that: (a) the accused is in possession of an item or object that is identified
to be marijuana, a prohibited drug; (b) such possession is not authorized by law; and (c)
the accused freely and consciously possessed the said drug.24 What must be proved
beyond reasonable doubt is the fact of possession of the prohibited drug itself. This may
be done by presenting the police officer who actually recovered the prohibited drugs as
a witness, being the person who has the direct knowledge of the possession.
Chief Insp. Divina who headed the team of policemen disclosed that it was PO2 Santos,
a member of the team, who had discovered and had actually recovered the red plastic
Page 275 of 378

bag containing the bricks of marijuana from the jeep. Excerpts of Chief Insp. Divinas
relevant declarations follow:
ATTY LEE:
q Mr. Witness, it was SPO1 Rojas who examined the contents of the plastic bag. That is
correct?
a I had testified that it was SPO1 Rojas who examined the contents.
q Okay, it was Mr. Rojas who retrieved the plastic bag? Is that correct?
a No sir, It was not SPO1 Rojas.
q It was not you who retrieved that plastic bag from the jeep?
a No, Sir. I was not the one.
q It was Dela Cruz?
a No, Sir.
q Who retrieved the plastic bag from the jeep?
WITNESS:
A It was PO2 Reynaldo Santos, Sir.
ATTY LEE :
q It was Santos who brought the plastic bag to the headquarters. Is that correct?
A Yes, Sir.
q And you never had a chance to examine that plastic bag, the contents of that plastic
bag is that correct?
a I had a chance to see it at the place where we had flagged down a vehicle.
q You saw only the plastic bag. Is that correct?
a No, Sir. When the bag was recovered from under the drivers seat and when it was
opened, I had the chance to see it.
THE COURT:
q Including the contents?
WITNESS:
a Yes, your Honor.
ATTY LEE:
Page 276 of 378

q It was not you who bring that bag to xxx
THE COURT:
Already answered.
ATTY LEE:
q And after that, you never had the chance to see that bag again. Is that correct?
a Not anymore Sir.25
The Prosecution also presented SPO1 Rojas, another member of the team, but he
provided no direct evidence about the possession by Belocura of the
confiscated marijuana bricks, and actually stated that he did not witness the recovery of
the marijuana bricks from Belocura, viz:
PUB. PROS. TAN, JR:
q While you were taking the gun of this accused what were your other companion
specifically Major Divina doing?
WITNESS:
a Since I was the first one who approached Reynaldo Belocura I was the one who took
the gun from his waistline and I informed Major Divina that I already took the gun and
place it inside the Tamaraw FX and when I left the members of the SWAT arrive at the
scene and I dont know what transpired.
PUB. PROS. TAN, JR:
q And where was Major Divina then?
a Beside the owner type jeep, sir.
q You are referring to the owner type jeep of the accused?
a Yes, sir.
q Did you go back to the said jeep?
a I did not return there anymore sir because the members of the other group
surrounded the place, sir.
q Since you were then at that scene did you come to know if there is any other thing
that was retrieved from the herein accused in the said vehicle?26
xxx
WITNESS:
a Yes. When I was there according to them marijuana was taken from the owner type
jeep.
Page 277 of 378

PUB. PROS. TAN, JR:
q Who said that?27
xxx
WITNESS:
a The member of the SWAT and other team, sir were there.
q And then what else happen after such recovery?
a Actually sir at the scene I did not see anything recovered but it was only in the office
that I heard their conversation about it.
q What did you see or observe while in your office?
a He was investigated.
q Investigated for what?
a According to them the recovery of the plate number and the expired MR of the gun
and themarijuana recovered.
PUB. PROS. TAN, JR:
q Before whom was he investigated?
WITNESS:
a General Assignment Section, sir.28
xxx
On further examination, SPO1 Rojas reiterated that he did not actually witness the
seizure of the marijuana bricks from Belocuras possession, to wit:
ATTY LEE:
q Mr. Witness, so you did not see the actual the alleged recovery of marijuana, is that
correct?
WITNESS:
a Yes sir.
ATTY LEE:
q And you have never that marijuana?
WITNESS:
a Yes sir. But only in the office.
Page 278 of 378

q What do you only took from the accused is a gun, is that correct?
a Yes sir.
q So you cannot say positively that there was a marijuana recovered from the accused
because you did not see?
a I just got the information from my co-police officer, sir.29
xxx
PUB. PROS TAN, JR:
q Were you able to see the marijuana in the police station?
WITNESS:
a Yes sir.
q You mean to say that was the first time that you saw the marijuana?
a Yes, sir.30
The Prosecution presented no other witnesses to establish the seizure of

the marijuana bricks from Belocura.
Based on the foregoing, Chief Insp. Divina and SPO1 Rojas declarations were
insufficient to incriminate Belocura, much less to convict him. If neither of them was
personally competent to be an eyewitness regarding the seizure of the marijuana bricks
from Belocura, their testimonies could not be accorded probative value, considering
that the Rules of Court requires that a witness could testify only to facts that he knew of
his own knowledge, that is, only to those facts derived from his own perception.31
Indeed, only PO2 Santos could reliably establish Belocuras illegal possession of
the marijuana bricks, if Chief Insp. Divinas account was to be believed. Surprisingly, the
RTC did not give due and proper significance to the failure to present PO2 Santos as a
witness against Belocura.
Nonetheless, the OSG contends that the State had no need to present PO2 Santos
because his testimony would only be corroborative; and that the testimonies of Chief
Insp. Divina and SPO1 Rojas sufficed to establish Belocuras guilt beyond reasonable
doubt.
The OSGs contention is grossly erroneous.
As the arresting officer who alone actually seized the marijuana bricks from Belocuras
vehicle beyond the viewing distance of his fellow arresting officers, PO2 Santos was the
Prosecutions only witness who could have reliably established the recovery from
Belocura of the marijuana bricks contained in the red plastic bag labeled as "SHIN TON
YON." Without PO2 Santos testimony, Chief Insp. Divinas declaration of seeing PO2
Santos recover the red plastic bag from under the drivers seat of Belocuras jeep was
worthless. The explanation why none of the other police officers could credibly attest to
Belocuras possession of the marijuana bricks was that they were at the time supposedly
Page 279 of 378

performing different tasks during the operation. Under the circumstances, only PO2
Santos was competent to prove Belocuras possession.
Worse, the Prosecution failed to establish the identity of the prohibited drug that
constituted the corpus delicti itself. The omission naturally raises grave doubt about
any search being actually conducted and warrants the suspicion that the prohibited
drugs were planted evidence.
In every criminal prosecution for possession of illegal drugs, the Prosecution must
account for the custody of the incriminating evidence from the moment of seizure and
confiscation until the moment it is offered in evidence. That account goes to the weight
of evidence.32 It is not enough that the evidence offered has probative value on the
issues, for the evidence must also be sufficiently connected to and tied with the facts in
issue. The evidence is not relevant merely because it is available but that it has an actual
connection with the transaction involved and with the parties thereto. This is the reason
why authentication and laying a foundation for the introduction of evidence are
important.33
Yet, no such accounting was made herein, as the following excerpts from the testimony
of Chief Insp. Divina bear out, to wit:
PUB. PROS TAN, JR:
q How about the plastic bag containing the suspected stuff, what did you do with the
same? You did not know?
WITNESS:
a I think it was turned over to the investigator of the General Assignment Section who
made the proper disposition.
q Who is the investigator again, Mr. witness?
a I remember SPO4 Boy Guzman
q Did you know what SPO4 Boy Guzman did with the accused as well as the
confiscated stuff?
xxx
WITNESS:
a The items upon turn over to the investigator on case were handed to the custodian
with proper receipt and after those disposition, there were case filed against the subject.
PUB. PROS. TAN, JR:
q Were you able to know what did they do with the accused as well as the confiscated
stuff if you know?
a I remember appearing in the MTC court Br, 20, I saw the exhibits, firearm and plate
number, two blocks of marijuana. I dont have any idea where did the investigator
brought them or have done.34
Page 280 of 378

xxx
q You never had a knowledge of what happened to that bag and the contents thereof?
a I learned later that the items that were confiscated were turned over to the General
Assignment Section which held the investigation.
q So, it was not your group who conducted the examination and the alleged things that
were recovered from the alleged accused?35
xxx
a No, Sir.
q How about the things that were allegedly recovered from the accused?
a I just said that it was the General Assignment Section who handled the investigation.36
The Prosecution thereby failed to establish the linkage between the bricks
of marijuana supposedly seized by PO2 Santos from Belocuras jeep following his arrest
and the bricks of marijuana that the Prosecution later presented as evidence in court.
That linkage was not dispensable, because the failure to prove that the specimens
of marijuana submitted to the forensic chemist for examination were the
same marijuana allegedly seized from Belocura irreparably broke the chain of custody
that linked the confiscated marijuana to the marijuanaultimately presented as evidence
against Belocura during the trial. Proof beyond reasonable doubt demanded that
unwavering exactitude must be observed in establishing the corpus delicti the body of
the crime whose core was the confiscated prohibited substances. Thus, every fact
necessary to constitute the crime must be established.37
The chain-of-custody requirement ensures that all doubts concerning the identity of the
evidence are removed.38The requirement has come to be associated with prosecutions
for violations of Republic Act No. 9165 (Comprehensive Drugs Act of 2002), 39 by reason
of Section 2140 of Republic Act No. 9165 expressly regulating the actual custody and
disposition of confiscated and surrendered dangerous drugs, controlled precursors,
essential chemicals, instruments, paraphernalia, and laboratory equipment. Section
21(a) of the Implementing Rules and Regulations of Republic Act No. 9165 issued by the
Dangerous Drugs Board pursuant to its mandate under Section 94 of Republic Act No.
9165 reiterates the requirement, stating:
xxx
(a) The apprehending officer/team having initial custody and control of the drugs shall,
immediately after seizure and confiscation, physically inventory and photograph the
same in the presence of the accused or the person/s from whom such items were
confiscated and/or seized, or his/her representative or counsel, a representative from
the media and the Department of Justice (DOJ), and any elected public official who shall
be required to sign the copies of the inventory and be given a copy thereof: Provided,
that the physical inventory and photograph shall be conducted at the place where the
search warrant is served; or at the nearest police station or at the nearest office of the
apprehending officer/team, whichever is practicable, in case of warrantless seizures;
Provided, further that non-compliance with these requirements under justifiable
grounds, as long as the integrity and the evidentiary value of the seized items are
Page 281 of 378

properly preserved by the apprehending officer/team, shall not render void and invalid
such seizures of and custody over said items.
xxx
That this case was a prosecution brought under Republic Act No. 6425 (Dangerous
Drugs Act of 1972), as amended by Republic Act No. 7659, did not matter. The chain-of-
custody requirement applied under both laws by virtue of the universal need to
competently and sufficiently establish the corpus delicti. It is basic under the Rules of
Court, indeed, that evidence, to be relevant, must throw light upon, or have a logical
relation to, the facts in issue to be established by one party or disproved by the
other.41 The test of relevancy is whether an item of evidence will have any value, as
determined by logic and experience, in proving the proposition for which it is offered,
or whether it would reasonably and actually tend to prove or disprove any matter of
fact in issue, or corroborate other relevant evidence. The test is satisfied if there is some
logical connection either directly or by inference between the fact offered and the fact to
be proved.42
The chain of custody is essential in establishing the link between the article confiscated
from the accused to the evidence that is ultimately presented to the court for its
appreciation. As the Court said in Mallillin v. People:43
As a method of authenticating evidence, the chain of custody rule requires that the
admission of an exhibit be preceded by evidence sufficient to support a finding that the
matter in question is what the proponent claims it to be. It would include testimony
about every link in the chain, from the moment the item was picked up to the time it is
offered into evidence, in such a way that every person who touched the exhibit would
describe how and from whom it was received, where it was and what happened to it
while in the witness possession, the condition in which it was received and the
condition in which it was delivered to the next link in the chain. These witnesses would
then describe the precautions taken to ensure that there had been no change in the
condition of the item and no opportunity for someone not in the chain to have
possession of the same.
While testimony about a perfect chain is not always the standard because it is almost
always impossible to obtain, an unbroken chain of custody becomes indispensable and
essential when the item of real evidence is not distinctive and is not readily identifiable,
or when its condition at the time of testing or trial is critical, or when a witness has
failed to observe its uniqueness. The same standard likewise obtains in case the
evidence is susceptible to alteration, tampering, contamination and even substitution
and exchange. In other words, the exhibits level of susceptibility to fungibility,
alteration or tamperingwithout regard to whether the same is advertent or otherwise
notdictates the level of strictness in the application of the chain of custody rule.44
The first link in the chain of custody started with the seizure from the jeep of Belocura
of the red plastic bag said to contain the marijuana bricks. The first link was immediately
missing because the Prosecution did not present PO2 Santos, the only person with
direct knowledge of the seizure and confiscation of the marijuana bricks. Without his
testimony, proof that the marijuana bricks were really taken from the jeep of Belocura
did not exist. The second link was the turnover of the marijuana bricks by PO2 Santos to
another officer back at the WPD Headquarters. As to this, Chief Insp. Divina stated that
he learned following the seizure by PO2 Santos that themarijuana bricks were turned
over to the General Assignment Section for investigation. That was all. On the other
Page 282 of 378
hand, SPO1 Rojas testimony contributed nothing to the establishment of the second
link because he had immediately left after seizing the gun from Belocura. As for the
subsequent links, the records45 showed that themarijuana bricks were forwarded to the
General Assignment Section on March 22, 1999, but the Prosecution did not prove the
identities of the officer from the General Assignment Section who received the red
plastic bag containing the marijuana bricks, and the officer from whom the receiving
officer received the marijuana bricks. Although Chief Insp. Nelson Yabut prepared the
request for laboratory examination of the marijuana bricks,46which were thereafter
examined by Forensic Chemist Valdez, the records did not show if Chief Insp. Yabut
was the officer who had received the marijuana bricks from the arresting team. The
request for laboratory examination was dated March 23, 1999, or the day following
Belocuras arrest and the seizure of the marijuana bricks from his jeep; however, the
Prosecution did not identify the person from whom Chief Insp. Yabut had received
themarijuana bricks.
Sadly, the Prosecution did not establish the links in the chain of custody. This meant
that the corpus delicti was not credibly proved. This further meant that the seizure and
confiscation of the marijuana bricks might easily be open to doubt and suspicion, and
thus the incriminatory evidence would not stand judicial scrutiny.
Thirdly, Belocuras denial assumed strength in the face of the Prosecutions weak
incriminating evidence. In that regard, Belocura denied possession of
the marijuana bricks and knowledge of them as well, to wit:
q Were you able to view the alleged marijuana that were confiscated from you?
a: I saw it for the first time when it was presented in Court, Sir.
q: Now, according to Inspector Divina, it was police officer Santos who was able to
recover from your vehicle these two bricks of marijuana. What can you say about this?
a: At first, I did not see this marijuana, Sir, that they are saying because they
immediately handcuffed me and disarmed me even before I could board my owner
type jeepney.47
The Court holds that the guilt of Belocura for the crime charged was not proved beyond
reasonable doubt. Mere suspicion of his guilt, no matter how strong, should not sway
judgment against him. Every evidence favoring him must be duly considered. Indeed,
the presumption of innocence in his favor was not overcome. Hence, his acquittal
should follow, for, as the Court fittingly said in Patula v. People:48
xxx in all criminal prosecutions, the Prosecution bears the burden to establish the guilt
of the accused beyond reasonable doubt. In discharging this burden, the Prosecutions
duty is to prove each and every element of the crime charged in the information to
warrant a finding of guilt for that crime or for any other crime necessarily included
therein. The Prosecution must further prove the participation of the accused in the
commission of the offense. In doing all these, the Prosecution must rely on the strength
of its own evidence, and not anchor its success upon the weakness of the evidence of the
accused. The burden of proof placed on the Prosecution arises from the presumption of
innocence in favor of the accused that no less than the Constitution has guaranteed.
Conversely, as to his innocence, the accused has no burden of proof, that he must then
be acquitted and set free should the Prosecution not overcome the presumption of
innocence in his favor. In other words, the weakness of the defense put up by the
Page 283 of 378

accused is inconsequential in the proceedings for as long as the Prosecution has not
discharged its burden of proof in establishing the commission of the crime charged and
in identifying the accused as the malefactor responsible for it.49
WHEREFORE, we REVERSE and SET ASIDE the decision promulgated on January 23,
2006; ACQUIT accusedREYNALDO BELOCURA y PEREZ for failure of the
Prosecution to prove his guilt beyond reasonable doubt;DIRECT the immediate release
from detention of REYNALDO BELOCURA y PEREZ, unless he is also detained for
some other lawful cause; and ORDER the Director of the Bureau of Corrections to
forthwith implement this decision upon receipt and to report his action hereon to this
Court within 10 days from receipt. No pronouncement on costs of suit.
G.R. No. 157900 July 22, 2013
ZUELLIG FREIGHT AND CARGO SYSTEMS, Petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION AND RONALDO V. SAN MIGUEL, Respondents.
DECISION
The mere change in the corporate name is not considered under the law as the creation
of a new corporation; hence, the renamed corporation remains liable for the illegal
dismissal of its employee separated under that guise.
The Case
Petitioner employer appeals the decision promulgated on November 6, 2001,1 whereby

the Court of Appeals (CA) dismissed its petition for certiorari and upheld the adverse
decision of the National Labor Relations Commission (NLRC) finding respondent
Ronaldo V. San Miguel to have been illegally dismissed.
Antecedents
San Miguel brought a complaint for unfair labor practice, illegal dismissal, non-
payment of salaries and moral damages against petitioner, formerly known as Zeta
Brokerage Corporation (Zeta).2 He alleged that he had been a checker/customs
representative of Zeta since December 16, 1985; that in January 1994, he and other
employees of Zeta were informed that Zeta would cease operations, and that all
affected employees, including him, would be separated; that by letter dated February
28, 1994, Zeta informed him of his termination effective March 31, 1994; that he
reluctantly accepted his separation pay subject to the standing offer to be hired to his
former position by petitioner; and that on April 15, 1994, he was summarily terminated,
without any valid cause and due process.
San Miguel contended that the amendments of the articles of incorporation of Zeta were
for the purpose of changing the corporate name, broadening the primary functions, and
increasing the capital stock; and that such amendments could not mean that Zeta had
been thereby dissolved.3
On its part, petitioner countered that San Miguels termination from Zeta had been for a
cause authorized by the Labor Code; that its non-acceptance of him had not been by any
means irregular or discriminatory; that its predecessor-in-interest had complied with
the requirements for termination due to the cessation of business operations; that it had
no obligation to employ San Miguel in the exercise of its valid management prerogative;
Page 284 of 378

that all employees had been given sufficient time to make their decision whether to
accept its offer of employment or not, but he had not responded to its offer within the
time set; that because of his failure to meet the deadline, the offer had expired; that he
had nonetheless been hired on a temporary basis; and that when it decided to hire
another employee instead of San Miguel, such decision was not arbitrary because of
seniority considerations.4
Decision of the Labor Arbiter
On November 15, 1999, Labor Arbiter Francisco A. Robles rendered a decision holding
that San Miguel had been illegally dismissed,5 to wit:
Contrary to respondents claim that Zeta ceased operations and closed its business, we
believe that there was merely a change of business name and primary purpose and
upgrading of stocks of the corporation. Zuellig and Zeta are therefore legally the same
person and entity and this was admitted by Zuelligs counsel in its letter to the VAT
Department of the Bureau of Internal Revenue on 08 June 1994 (Reply, Annex "A"). As
such, the termination of complainants services allegedly due to cessation of business
operations of Zeta is deemed illegal. Notwithstanding his receipt of separation benefits
from respondents, complainant is not estopped from questioning the legality of his
dismissal.6
xxxx
WHEREFORE, in view of the foregoing, complainant is found to have been illegally

dismissed. Respondent Zuellig Freight and Cargo Systems, Inc. is hereby ordered to
pay complainant his backwages from April 1, 1994 up to November 15, 1999, in the
amount of THREE HUNDRED TWENTY FOUR THOUSAND SIX HUNDRED
FIFTEEN PESOS (P324,615.00).
The same respondent is ordered to pay the complainant Ronaldo San Miguel attorneys
fees equivalent to ten percent (10%) of the total award.
All other claims are dismissed.
SO ORDERED.7
Decision of the NLRC
Petitioner appealed, but the NLRC issued a resolution on April 4, 2001,8 affirming the
decision of the Labor Arbiter.
The NLRC later on denied petitioners motion for reconsideration via its resolution
dated June 15, 2001.9
Decision of the CA
Petitioner then filed a petition for certiorari in the CA, imputing to the NLRC grave
abuse of discretion amounting to lack or excess of jurisdiction, as follows:
1. In failing to consider the circumstances attendant to the cessation of business

of Zeta;
Page 285 of 378

2. In failing to consider that San Miguel failed to meet the deadline Zeta fixed for
its employees to accept the offer of petitioner for re-employment;
3. In failing to consider that San Miguels employment with petitioner from April
1 to 15, 1994 could in no way be interpreted as a continuation of employment
with Zeta;
4. In admitting in evidence the letter dated January 21, 1994 of petitioners

counsel to the Bureau of Internal Revenue; and
5. In awarding attorneys fees to San Miguel based on Article 2208 of the Civil
Code and Article 111 of the Labor Code.
On November 6, 2002, the CA promulgated its assailed decision dismissing the petition
for certiorari,10 viz:
A careful perusal of the records shows that the closure of business operation was not
validly made. Consider the Certificate of Filing of the Amended Articles of
Incorporation which clearly shows that petitioner Zuellig is actually the former Zeta as
per amendment dated January 21, 1994. The same observation can be deduced with
respect to the Certificate of Filing of Amended By-Laws dated May 10, 1994. As aptly
pointed out by private respondent San Miguel, the amendment of the articles of
incorporation merely changed its corporate name, broadened its primary purpose and
increased its authorized capital stocks. The requirements contemplated in Article 283
were not satisfied in this case. Good faith was not established by mere registration with
the Securities and Exchange Commission (SEC) of the Amended Articles of
Incorporation and ByLaws. The factual milleu of the case, considered in its totality,
shows that there was no closure to speak of. The termination of services allegedly due
to cessation of business operations of Zeta was illegal. Notwithstanding private
respondent San Miguels receipt of separation benefits from petitioner Zuellig, the
former is not estopped from questioning the legality of his dismissal.
Petitioner Zuelligs allegation that the five employees who refused to receive the
termination letters were verbally informed that they had until 6:00 p.m. of March 1,
1994 to receive the termination letters and sign the employment contracts, otherwise the
former would be constrained to withdraw its offer of employment and seek for
replacements in order to ensure the smooth operations of the new company from its
opening date, is of no moment in view of the foregoing circumstances. There being no
valid closure of business operations, the dismissal of private respondent San Miguel on
alleged authorized cause of cessation of business pursuant to Article 283 of the Labor
Code, was utterly illegal. Despite verbal notice that the employees had until 6:00 p.m. of
March 1, 1994 to receive the termination letters and sign the employment contracts, the
dismissal was still illegal for the said condition is null and void. In point of facts and
law, private respondent San Miguel remained an employee of petitioner Zuellig. If at
all, the alleged closure of business operations merely operates to suspend employment
relation since it is not permanent in character.
Where there is no showing of a clear, valid, and legal cause for the termination of
employment, the law considers the matter a case of illegal dismissal and the burden is
on the employer to prove that the termination was for a valid or authorized cause.
Findings of facts of the NLRC, particularly when both the NLRC and Labor Arbiter are
in agreement, are deemed binding and conclusive upon the Supreme Court.
Page 286 of 378

As regards the second and last argument advanced by petitioner Zuellig that private
respondent San Miguel is not entitled to attorneys fees, this Court finds no reason to
disturb the ruling of the public respondent NLRC. Petitioner Zuellig maintains that the
factual backdraft (sic) of this petition does not call for the application of Article 2208 of
the Civil Code and Article 111 of the Labor Code as private respondents wages were
not withheld. On the other hand, public respondent NLRC argues that paragraphs 2
and 3, Article 2208 of the Civil Code and paragraph (a), Article 111 of the Labor Code
justify the award of attorneys fees. NLRC was saying to the effect that by petitioner
Zuelligs act of illegally dismissing private respondent San Miguel, the latter was
compelled to litigate and thus incurred expenses to protect his interest. In the same
passion, private respondent San Miguel contends that petitioner Zuellig acted in gross
and evident bad faith in refusing to satisfy his plainly valid, just and demandable claim.
After careful and judicious evaluation of the arguments advanced to support the
propriety or impropriety of the award of attorneys fees to private respondent San
Miguel, this Court finds the resolutions of public respondent NLRC supported by laws
and jurisprudence. It does not need much imagination to see that by reason of petitioner
Zuelligs feigned closure of business operations, private respondent San Miguel
incurred expenses to protect his rights and interests. Therefore, the award of attorneys
fees is in order.
WHEREFORE, in view of the foregoing, the resolutions dated April 4, 2001 and June 15,
2001 of the National Labor Relations Commission affirming the November 15, 1999
decision of the Labor
Arbiter in NLRC NCR 05-03639-94 (CA No. 022861-00) are hereby AFFIRMED and the
instant petition for certiorari is hereby DENIED and ordered DISMISSED.
SO ORDERED.
Hence, petitioner appeals.
Issues
Petitioner asserts that the CA erred in holding that the NLRC did not act with grave
abuse of discretion in ruling that the closure of the business operation of Zeta had not
been bona fide, thereby resulting in the illegal dismissal of San Miguel; and in holding
that the NLRC did not act with grave abuse of discretion in ordering it to pay San
Miguel attorneys fees.11
In his comment,12 San Miguel counters that the CA correctly found no grave abuse of
discretion on the part of the NLRC because the ample evidence on record showed that
he had been illegally terminated; that such finding accorded with applicable laws and
jurisprudence; and that he was entitled to back wages and attorneys fees.
In its reply,13 petitioner reiterates that the cessation of Zetas business, which resulted in
the severance of San Miguel from his employment, was valid; that the CA erred in
upholding the NLRCs finding that San Miguel had been illegally terminated; that his
acknowledgment of the validity of his separation from Zeta by signing a quitclaim and
waiver estopped him from claiming that it had subsequently employed him; and that
the award of attorneys fees had no basis in fact and in law.
Ruling
Page 287 of 378

The petition for review on certiorari is denied for its lack of merit.
First of all, the outcome reached by the CA that the NLRC did not commit any grave
abuse of discretion was borne out by the records of the case. We cannot undo such
finding without petitioner making a clear demonstration to the Court now that the CA
gravely erred in passing upon the petition for certiorari of petitioner.
Indeed, in a special civil action for certiorari brought against a court or quasi-judicial
body with jurisdiction over a case, petitioner carries the burden of proving that the
court or quasi-judicial body committed not a merely reversible error but a grave abuse
of discretion amounting to lack or excess of jurisdiction in issuing the impugned
order.14 Showing mere abuse of discretion is not enough, for it is necessary to
demonstrate that the abuse of discretion was grave. Grave abuse of discretion means
either that the judicial or quasi-judicial power was exercised in an arbitrary or despotic
manner by reason of passion or personal hostility, or that the respondent judge, tribunal
or board evaded a positive duty, or virtually refused to perform the duty enjoined or to
act in contemplation of law, such as when such judge, tribunal or board exercising
judicial or quasi-judicial powers acted in a capricious or whimsical manner as to be
equivalent to lack of jurisdiction.15 Under the circumstances, the CA committed no
abuse of discretion, least of all grave, because its justifications were supported by the
records and by the applicable laws and jurisprudence.
Secondly, it is worthy to point out that the Labor Arbiter, the NLRC, and the CA were
united in concluding that the cessation of business by Zeta was not a bona fide closure
to be regarded as a valid ground for the termination of employment of San Miguel
within the ambit of Article 283 of the Labor Code. The provision pertinently reads:
Article 283. Closure of establishment and reduction of personnel. The employer may
also terminate the employment of any employee due to the installation of labor-saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers
and the Department of Labor and Employment at least one (1) month before the
intended date thereof. x x x.
The unanimous conclusions of the CA, the NLRC and the Labor Arbiter, being in accord
with law, were not tainted with any abuse of discretion, least of all grave, on the part of
the NLRC. Verily, the amendments of the articles of incorporation of Zeta to change the
corporate name to Zuellig Freight and Cargo Systems, Inc. did not produce the
dissolution of the former as a corporation. For sure, the Corporation Code defined and
delineated the different modes of dissolving a corporation, and amendment of the
articles of incorporation was not one of such modes. The effect of the change of name
was not a change of the corporate being, for, as well stated in Philippine First Insurance
Co., Inc. v. Hartigan:16 "The changing of the name of a corporation is no more the
creation of a corporation than the changing of the name of a natural person is begetting
of a natural person. The act, in both cases, would seem to be what the language which
we use to designate it imports a change of name, and not a change of being."
The consequences, legal and otherwise, of the change of name were similarly dealt with
in P.C. Javier & Sons, Inc. v. Court of Appeals,17 with the Court holding thusly:
From the foregoing documents, it cannot be denied that petitioner corporation was
aware of First Summa Savings and Mortgage Banks change of corporate name to PAIC
Page 288 of 378
Savings and Mortgage Bank, Inc. Knowing fully well of such change, petitioner
corporation has no valid reason not to pay because the IGLF loans were applied with
and obtained from First Summa Savings and Mortgage Bank. First Summa Savings and
Mortgage Bank and PAIC Savings and Mortgage Bank, Inc., are one and the same bank
to which petitioner corporation is indebted. A change in the corporate name does not
make a new corporation, whether effected by a special act or under a general law. It has
no effect on the identity of the corporation, or on its property, rights, or liabilities. The
corporation, upon to change in its name, is in no sense a new corporation, nor the
successor of the original corporation. It is the same corporation with a different name,
and its character is in no respect changed. (Bold underscoring supplied for emphasis)
In short, Zeta and petitioner remained one and the same corporation. The change of
name did not give petitioner the license to terminate employees of Zeta like San Miguel
without just or authorized cause. The situation was not similar to that of an enterprise
buying the business of another company where the purchasing company had no
obligation to rehire terminated employees of the latter.18 Petitioner, despite its new
name, was the mere continuation of Zeta's corporate being, and still held the obligation
to honor all of Zeta's obligations, one of which was to respect San Miguel's security of
tenure. The dismissal of San Miguel from employment on the pretext that petitioner,
being a different corporation, had no obligation to accept him as its employee, was
illegal and ineffectual.
And, lastly, the CA rightfully upheld the NLRC's affirmance of the grant of attorney's
fees to San Miguel. Thereby, the NLRC did not commit any grave abuse of its
discretion, considering that San Miguel had been compelled to litigate and to incur
expenses to protect his rights and interest. In Producers Bank of the Philippines v. Court
of Appeals,19 the Court ruled that attorney's fees could be awarded to a party whom an
unjustified act of the other party compelled to litigate or to incur expenses to protect his
interest. It was plain that petitioner's refusal to reinstate San Miguel with backwages
and other benefits to which he had been legally entitled was unjustified, thereby
entitling him to recover attorney's fees.
WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals promulgated
on November 6, 2002; and ORDERS petitioner to pay the costs of suit.
G.R. No. 174113
PAZ CHENG y CHU, Petitioner, vs. PEOPLE OF THE PHILIPPINES, Respondent.
DISSENTING OPINION
I dissent. The State did not establish beyond reasonable doubt the culpability of the
accused for the crimes charged.
Based on the assailed decision of the CA, the following were the factual and procedural
antecedents, viz.:
Accused-Appellant was charged with 3 counts of Estafa under Article 315, par. 1 (b) of
the Revised Penal Code. Similarly worded except as to the date of the commission of
each estafa, the number of pieces of jewelry, and the amount involved, the 3
Informations charged as follows:
Page 289 of 378

That on or about the _day of ___ , 1997 in Quezon City. Philippines, the said accused,
did then and there willfully, unlawfully and feloniously defraud ROWENA
RODRIGUEZ in the following manner, to wit: the said accused received in trust from
said complainant _ pieces of Jewelry worth P __ , Philippine Currency, for the purpose
of selling the same on commission basis, under the express obligation on the part of said
accused of turning over the proceeds of the sale to said complainant if sold, or of
returning the same if unsold to said complainant, but the said accused, once in
possession of the said items, far from complying with her obligation as aforesaid, with
intent to defraud, unfaithfulness and grave abuse of confidence, failed and refused and
still fails and refuses to fulfill his aforesaid obligation despite repeated demands made
upon her to do so and instead misapplied, misappropriated and converted the same or
the value thereof, to her own personal use and benefit, to the damage and prejudice of
said ROWENA RODRIGUEZ in the aforesaid amount of __ Philippine Currency.
CONTRARY TO LAW.
Private Complainant testified as follows:
Private Complainant and Accused-Appellant entered into various and numerous

transactions. At times, Accused-Appellant acquired loans from Private Complainant or
acted as the latter's sales agent.
On July 12, 1997, Private Complainant delivered 2 pieces of jewelry amounting to

Pl8,000.00 for Accused-Appellant to sell on commission basis. Both agreed that
Accused-Appellant shall remit to Private Complainant the proceeds of the sale, or
return the jewelry if unsold after 1 month. The parties entered into a similar transaction
on July 16, 1997, but this time involving 3 pieces of jewelry valued at P36,000.00. The
agreement on these transactions were written in one document.
On August 12, 1997, Private Complainant delivered another set of jewelry amounting to
P257,950.00 reflected in a written agreement executed between the parties. Accused-
Appellant likewise issued a check worth Pl20,000.00 as security for the first two
deliveries and as partial payment for the last delivery.
When Accused-Appellant failed to return the unsold jewelries (sic) on due date, Private
Complainant presented the check for encashment. However, the check was dishonored
due to insufficiency of funds. Consequently, Accused-Appellant promised to pay
Private Complainant on the first week of November.
However, when Private Complainant re-deposited the check on November 4, 1997, the
check was again dishonored because the account was closed. When confronted,
Accused-appellant refused to pay Private Complainant and instead uttered: "AKALA
MO, BABAYARAN PA KITA?"
Private Complainant filed criminal charges for estafa against the Accused-Appellant.
The Defense presented Accused-Appellant and Virginia Araneta, who testified as

follows:
Accused-Appellant denied receiving any jewelry from Private Complainant or entering

into any agreement for her to sell said jewelry on commission basis. Accused-Appellant
denied signing the 2 written agreements presented by Private Complainant purporting
to be contracts for the sale of jewelries. (Sic)
Page 290 of 378

Accused-Appellant claimed that Private Complainant is a usurious money lender

engaged in what is otherwise known as "5-6." It was Private Complainant who loaned
her part of the capital for her vegetable business.
On one occasion, Virginia Araneta accompanied AccusedAppellant to borrow money

from Private Complainant. Accused-Appellant pledged some pieces of jewelry as
collateral for the loan and signed a written contract. Unfortunately, Accused-Appellant
failed to ask a copy of the written contract from Private Complainant. Private
Complainant also requested Accused-Appellant to issue a check to serve as a security
for said loan but promised not to deposit the same on due date.
Accused-Appellant admitted that her loan with Private Complainant remained unpaid
but she, nevertheless, was surprised of her arrest. It was only when she was at the
Quezon City Jail that she was informed by Private Complainant that Estafa cases were
filed against her.
The Regional Trial Court (RTC), Branch 226, in Quezon City found and declared the
petitioner guilty of three counts of estafa in Criminal Case No. Q-98-75440, Criminal
Case No. Q-98-75441 and Criminal Case No. Q-98-75442, all entitled People of the
Philippines v. Paz Cheng y Chu, through the judgment rendered on December 7,
2000,1 decreeing thusly:
In view of all the foregoing, this Court finds the accused guilty beyond reasonable
doubt of 3 counts of estafa, defined and penalized under Art. 315, 1 (b) of the Revised
Penal Code.
On the first count, accused is sentenced to an indeterminate penalty ranging from 4

years 2 months and 1 day to 6 years 8 months and 21 days to 8 years of prision
correccional in its maximum period to prision mayor in its minimum period
(maximum).
On the second count, accused is sentenced to an indeterminate penalty ranging from 6

months and 1 day to 1 year 8 months and 20 days of prison correccional in its minimum
and medium periods to 6 years 8 months and 21 days to 8 years of prision correccional
in its maximum period to prision mayor in its minimum period (Maximum).
On the third count, accused is sentenced to an indeterminate penalty ranging from 6

months 1 day to 1 year 8 months and 20 days of prision correccional in its minimum
and medium periods to 4 years 2 months and 1 day to 5 years 5 months and 10 days of
prision correccional in its maximum period to prision mayor in its minimum period
(minimum).
The sentence shall be served successively; and the accused is ordered to indemnify the
private complainant Rowena Rodriguez in the amount of P257,950.00, P36,000.00 and
Pl8,000.00 and to pay the costs of the suit.
SO ORDERED.2
On appeal, the petitioner submitted that:
Page 291 of 378

THE COURT A QUO GRAVELY ERRED IN GIVING WEIGHT AND CREDENCE TO

THE TESTIMONY OF THE PRIVATE COMPLAINANT AND IN TOTALLY
DISREGARDING THE VERSION OF THE DEFENSE.
II
THE COURT A QUO GRAVELY ERRED IN FINDING THE ACCUSED-APPELLANT

GUILTY BEYOND REASONABLE DOUBT OF THE THREE (3) COUNTS OF ESTAFA.3
Nonetheless, the CA affirmed the conviction of the petitioner with modification of the
penalties,4 to wit:
WHEREFORE, the instant Appeal is DISMISSED. The assailed Decision, dated

December 7, 2000, of the Regional Trial Court of Quezon City, Branch 226, in Criminal
Case No. Q98-75440-2, is hereby AFFIRMED with the following MODIFICATIONS:
1. On the first count, Accused-Appellant shall suffer the indeterminate penalty of

4 years and 2 months of Prision Correccional, as MINIMUM, to 20 years as
MAXIMUM;
2. On the second count, Accused-Appellant shall suffer the indeterminate

penalty of 4 years and 2 months of Prision Correccional, as MINIMUM, to 9
years as MAXIMUM;
3. On the third count, Accused-Appellant shall suffer the indeterminate penalty

of 4 years and 2 months of Prision Correccional, as MINIMUM, to 6 years, 8
months and 20 days, as MAXIMUM.
SO ORDERED.
The CA later denied the petitioner's motion for reconsideration on June 26, 2006.5
In her present appeal, the petitioner urges the Court to consider and resolve the
following issues, namely:
WHETHER THE PETITIONER COMMITTED THE CRIME OF ESTAFA UNDER

ARTICLE 315, PARAGRAPH l(B) OF THE REVISED PENAL CODE.
II
WHETHER THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN GIVING

WEIGHT TO THE EVIDENCE OF THE PROSECUTION AND FAILED TO CONSIDER
THE MERITS OF THE PETITIONER'S DEFENSE.6
In its comment,7 the Office of the Solicitor General (OSG) counters that the petitioner
hereby seeks the review of the facts and the evidence; that the appeal should be rejected
because it urges a departure from the general rule that the CA' s findings of fact, which
have affirmed the factual findings of the trial court, should be accorded great respect,
even finality; that this case did not constitute an exception to warrant the re-evaluation
of the unanimous findings of fact of the lower courts; that the Prosecution established
the guilt of the petitioner by sufficiently showing the concurrence of all the essential
Page 292 of 378

elements of the offense charged; and that her bare denial, being negative in nature, did
not prevail over the positive evidence presented against her.
Submission
I vote to acquit the petitioner on the ground that the State did not establish her guilt
for estafa through misappropriation beyond reasonable doubt. I insist that in every
criminal prosecution, the State must discharge the duty to establish the guilt of the
accused by proof beyond reasonable doubt. Otherwise, the accused is entitled to
acquittal.
The felony of estafa through misappropriation is defined and penalized in Article 315,
l(b) of the Revised Penal Code, viz:
Article 315. Swindling (estafa). - Any person who shall defraud another by any of the
means mentioned hereinbelow shall be punished by:
1st. The penalty of prision correccional in its maximum period to prision mayor in
its minimum period, if the amount of the fraud is over I 2,000 pesos but does not
exceed 22,000 pesos; and if such amount exceeds the latter sum, the penalty
provided in this paragraph shall be imposed in its maximum period, adding one
year for each additional 10,000 pesos; but the total penalty which may be
imposed shall not exceed twenty years. In such cases, and in connection with the
accessory penalties which may be imposed under the provisions of this Code, the
penalty shall be termed prision mayor or reclusion temporal, as the case may be.
2nd. The penalty of prision correccional in its minimum and medium periods, if the
amount of the fraud is over 6,000 pesos but does not exceed 12,000 pesos;
3rd. The penalty of arresto mayor in its maximum period to prision correccional in
its minimum period if such amount is over 200 pesos but does not exceed 6,000
pesos; and
4th. By arresto mayor in its maximum period, if such amount does not exceed 200
pesos, provided that in the four cases mentioned, the fraud be committed by any
of the following means:
1. With unfaithfulness or abuse of confidence, namely:
xxxx
(b) By misappropriating or converting, to the prejudice of another, money, goods, or

any other personal property received by the offender in trust or on commission, or
for administration, or under any other obligation involving the duty to make delivery
of or to return the same, even though such obligation be totally or partially
guaranteed by a bond; or by denying having received such money, goods, or other
property. (bold emphasis supplied)
xxxx
The elements of estafa through misappropriation are: (a) that personal property is
received in trust, on commission, for administration or under any other circumstances
involving the duty to make delivery of or to return the same, even though the
Page 293 of 378

obligation is guaranteed by a bond; (b) that there is conversion or diversion of such

property by the person who has so received it or a denial on her part that she received
it; (c) that such conversion, diversion or denial is to the injury of another; and (d) that
there be demand for the return of the property.8
According to the CA, the Prosecution established the petitioner's commission

of estafa through misappropriation, to wit:
All these elements were duly proven by the Prosecution.
The 2 written agreements stipulated that the pieces of jewelry were delivered to
Accused-Appellant to be sold on commission basis or to be returned if unsold within 1
month. Clearly, the jewelry delivered to Accused-Appellant was for a specific purpose,
that is, for Accused-Appellant to sell them, and in the event that it cannot be sold, to
return the same to Private Complainant.
Accused-appellant, however, insisted that the Prosecution "failed to prove the existence of
misappropriation" as there was no proof that the accused-appellant kept the proceeds of the sale."
We disagree.
The words "convert" and "misappropriate" as used in Article 315 connote an act of using
or disposing of another's property as if it were one's own or of devoting it to a purpose
or use different from that agreed upon. To "misappropriate" a thing of value for one's
own use or benefit, not only the conversion to one's personal advantage but also every
attempt to dispose of the property of another without a right. Misappropriation or
conversion may be proved by the prosecution by direct evidence or by circumstantial
evidence. Failure to account, upon demand, for funds or property held in trust, is
circumstantial evidence of misappropriation.
Demand need not be formal. It may be verbal. A query as to the whereabouts of the
money, such as the one proven in the case at bench, is tantamount to a demand. In this
case, despite repeated demands from Private Complainant, Accused-Appellant still
failed to return the jewelry or to remit the proceeds of the sale to the prejudice of
Private Complainant. Accused-Appellant's failure to account for the jewelry entrusted
to her by Private Complainant constitutes misappropriation. Accused-Appellant is,
thus, liable for conversion under Art. 315, par. 1 (b) of the Revised Penal Code.
xx x x9
The Majority concur with the CA.
However, I cannot join my distinguished Brethren in the conclusion that the CA

correctly affirmed the conviction of the petitioner. My assiduous and thorough review
of the records of the trial convinces me that the real agreement between the parties was
a sale of the items of jewelry, not the supposed agency to sell such items on commission
basis as the RTC and the CA concluded.
It is conceded that the text of Exhibits A, Exhibit A-1 and Exhibit A-2 the
documents evidencing the transactions - seemed to allude to the petitioner's obligation as
one of agency to sell the items of jewelry on commission basis. Under ordinary
circumstances, the literal terms of such documents would control and be regarded as
the manifestation of the true intention of the parties. But to give outright credence to the
Page 294 of 378

interpretation of the evidence as the CA did would be to ignore and disregard what
complainant Rowena Rodriguez had herself declared to be the true nature of the
transactions with the petitioner.
Rodriguez testified as follows:
Q. After the delivery of these several items totaling P257,950.00, what happened next?
A. She issued a check worth P120,000.00.
Q. What check is that?
A. PDCP Bank, sir.
Q. What is this check for, Ms. Witness?
A. As payment for the first and second transactions, sir, for P18,000.00 and P36,000.00
and the excess amount is applied for the third transaction.10
xxxx
Q. So, all in all, you have sixty (60) days period with respect to this item, and the first
delivery expired. I am referring to July 12, 1997 worth P18,000.00 which will mature on
September 11, so, from September 11, what happened?
A. These were considered paid because she issued me a check for the period of
August 13, so I was expecting that. 11
xxxx
By stating that the check issued by the petitioner was "payment for the first and second
transactions, sir, for Pl8,000.00 and P36,000.00 and the excess amount is applied for the
third transaction," Rodriguez revealed that she had sold the pieces of jewelry to the
latter. Thus, the petitioner was the buyer of Rodriguez, not an agent on commission
basis.
The right to a commission only establishes the relation of principal and agent, with the
agent coming under the obligation to turn over to the principal the amount collected
minus such commission. If the agent should retain more than the commission, she
would be guilty of estafa through misappropriation.12 Yet, because the transaction
between Rodriguez and the petitioner was a sale, the former effectively transferred to
the latter the possession and the ownership of the items of jewelry. 13 Once the
ownership of the jewelry became vested in the latter,14 she could not misappropriate the
items of jewelry.
The foregoing excerpts of testimony further showed Rodriguez to have "considered [the
items of jewelry] paid" by the petitioner.1awp++i1 We should consider and regard such
express declaration as a confirmation of the true nature of her agreement with the
petitioner as a sale of the jewelry. The CA erroneously ignored the testimony despite its
being a forthright judicial admission in the context of Section 4, Rule 129 of the Rules of
Court.15
Page 295 of 378

Although Rodriguez had described the petitioner's PDCP Check No. 003626 for
P120,000.00 (Exhibit B) as thesecurity for the items of jewelry listed under Exhibits A and
Exhibit A-1, and as the partial payment for the last delivery listed under Exhibits A-2, her
presenting the check to the drawee bank for payment or collection of theentire amount of
the check indicated that the check was always intended as payment. This finding is still
consistent with holding the transactions as sales of the items of jewelry. Indeed, the
presentment of the check to the drawee bank as the person primarily liable was
antithetical to the notion of having the check serve as mere security.
Clearly, the CA had no basis to hold the written text of Exhibits A, Exhibit A-1 and
Exhibit A-2 as controlling. In contracts the intent of the parties always prevails over the
written form.
Did the dishonor of PDCP Check No. 003626 affect the character of the transactions
between the petitioner and Rodriguez as sales of the items of jewelry?
I submit that the dishonor did not alter the character of the transactions as sales but
only rendered Rodriguez an unpaid seller. The relationship between them resulting
from the dishonor was that of a creditorand-debtor. In a purely debtor-and-creditor
relationship, the debtor who merely refuses to pay or denies the indebtedness cannot be
held liable for estafa by misappropriation. The reason is readily apparent. To convict a
person of estafa under Article 315, par 1 (b) of the Revised Penal Code, the State must
prove that she has the obligation to deliver or return the same money, goods or
personal property received.16 Considering that the petitioner already became the owner
of the pieces of jewelry, she could dispose of the same, and her disposal of them would
not amount to the misappropriation thereof.17 In short, the petitioner did not thereby
violate any trust or other obligation to account for the items of jewelry that she already
owned.
Considering that the Prosecution did not establish the petitioner's guilt for the crimes
of estafa through misappropriation beyond reasonable doubt, she was entitled to
acquittal,18 for it is always indispensable for the valid conviction of the accused that the
State shall prove the existence of all the essential elements of the offense charged
beyond reasonable doubt. With less than all the elements of the offense charged having
been established, it is unwarranted and unjust to still find her criminally liable.
G.R. No. 162230 August 13, 2014
ISABELITA C. VINUY A, VICTORIA C. DELA PENA, HERMINIHILDA

MANIMBO, LEONOR H. SUMA WANG, CANDELARIA L. SOLIMAN, MARIA L.
QUILANTANG, MARIA L. MAGISA, NATALIA M. ALONZO, LOURDES M.
NAVARO, FRANCISCA M. ATENCIO, ERLINDA MANALASTAS, TARCILA M.
SAMPANG, ESTER M. PALACIO, MAXIMA R. DELA CRUZ, BELEN A. SAGUM,
FELICIDAD TURLA, FLORENCIA M. DELA PENA, EUGENIA M. LALU, JULIANA
G. MAGAT, CECILIA SANGUYO, ANA ALONZO, RUFINA P. MALLARI,
ROSARIO M. ALARCON, RUFINA C. GULAPA, ZOILA B. MANALUS, CORAZON
C. CALMA, MARTA A. GULAPA, TEODORA M. HERNANDEZ, FERMIN B. DELA
PENA, MARIA DELA PAZ B. CULALA,ESPERANZA MANAPOL, JUANITA M.
BRIONES, VERGINIA M. GUEVARRA, MAXIMA ANGULO, EMILIA SANGIL,
TEOFILA R. PUNZALAN, JANUARIA G. GARCIA, PERLA B. BALINGIT, BELEN
A. CULALA, PILAR Q. GALANG, ROSARIO C. BUCO, GAUDENCIA C. DELA
PENA, RUFINA Q. CATACUTAN, FRANCIA A. BUCO, PASTORA C. GUEVARRA,
VICTORIA M. DELA CRUZ, PETRONILA 0. DELA CRUZ, ZENAIDA P. DELA
Page 296 of 378

CRUZ, CORAZON M. SUBA, EMERINCIANA A. VINUYA, LYDIA A. SANCHEZ,

ROSALINA M. BUCO, PATRICIA A. BERNARDO, LUCILA H. PAYAWAL,
MAGDALENA LIWAG, ESTER C. BALINGIT, JOVITA A. DAVID, EMILIA C.
MANGILIT, VERGINIA M. BANGIT, GUILERMA S. BALINGIT, TERECITA
PANGILINAN, MAMERTA C. PUNO, CRISENCIANA C. GULAPA, SEFERINA S.
TURLA, MAXIMA B. TURLA, LEONICIA G. GUEVARRA, ROSALINA M.
CULALA, CATALINA Y. MANIO, MAMERTA T. SAGUM, CARIDAD L. TURLA, et
al. in their capacityand as members of the "Malaya Lolas
Organizations," Petitioners, vs. THE HONORABLE EXECUTIVE SECRETARY
ALBERTO G. ROMULO, THE HONORABLE SECRETARY OF FOREIGN AFFAIRS
DELIA DOMINGOALBERT, THE HONORABLE SECRETARY OF JUSTICE
MERCEDITAS N. GUTIERREZ, and THE HONORABLE SOLICITOR GENERAL
ALFREDO L. BENIPAYO, Respondents.
RESOLUTION
Petitioners filed a Motion for Reconsideration1 and a Supplemental Motion for

Reconsideration,2 praying that the Court reverse its decision of April 28, 2010, and grant
their petition for certiorari.
In their Motion for Reconsideration, petitioners argue that our constitutional and
jurisprudential histories have rejected the Courts ruling that the foreign policy
prerogatives ofthe Executive Branch are unlimited; that under the relevant
jurisprudence and constitutional provisions, such prerogatives are proscribed by
international human rights and international conventions of which the Philippines is a
party; that the Court, in holding that the Chief Executive has the prerogative whether to
bring petitioners claims against Japan, has read the foreign policy powers of the Office
of the President in isolation from the rest of the constitutional protections that expressly
textualize international human rights; that the foreign policy prerogatives are subject to
obligations to promote international humanitarian law as incorporated intothe laws of
the land through the Incorporation Clause; that the Court must re-visit its decisions in
Yamashita v. Styer3 and Kuroda v. Jalandoni4 which have been noted for their prescient
articulation of the import of laws of humanity; that in said decision, the Court ruled that
the State was bound to observe the laws of war and humanity; that in Yamashita, the
Court expressly recognized rape as an international crime under international
humanitarian law, and in Jalandoni, the Court declared that even if the Philippines had
not acceded or signed the Hague Convention on Rules and Regulations covering Land
Warfare, the Rules and Regulations formed part of the law of the nation by virtue of the
Incorporation Clause; that such commitment to the laws ofwar and humanity has been
enshrined in Section 2, Article II of the 1987 Constitution, which provides "that the
Philippinesadopts the generally accepted principles of international law as part of the
law of the land and adheres to the policy of peace, equality, justice, freedom,
cooperation, and amity with all nations."
The petitioners added that the statusand applicability of the generally accepted
principles of international law within the Philippine jurisdiction would be uncertain
without the Incorporation Clause, and that the clause implied that the general
international law forms part of Philippine law only insofar as they are expressly
adopted; that in its rulings in The Holy See, v. Rosario, Jr.5 and U.S. v. Guinto6 the Court
has said that international law is deemed part of the Philippine law as a consequence of
Statehood; that in Agustin v. Edu,7 the Court has declared that a treaty, though not yet
ratified by the Philippines, was part of the law of the land through the Incorporation
Clause; that by virtue of the Incorporation Clause, the Philippines is bound to abide by
Page 297 of 378

the erga omnesobligations arising from the jus cogensnorms embodied in the laws of
war and humanity that include the principle of the imprescriptibility of war crimes; that
the crimes committed against petitioners are proscribed under international human
rights law as there were undeniable violations of jus cogensnorms; that the need to
punish crimes against the laws of humanity has long become jus cogensnorms, and that
international legal obligations prevail over national legal norms; that the Courts
invocation of the political doctrine in the instant case is misplaced; and that the Chief
Executive has the constitutional duty to afford redress and to give justice to the victims
ofthe comfort women system in the Philippines.8
Petitioners further argue that the Court has confused diplomatic protection with the
broader responsibility of states to protect the human rights of their citizens, especially
where the rights asserted are subject of erga omnesobligations and pertain to jus
cogensnorms; that the claims raised by petitioners are not simple private claims that are
the usual subject of diplomatic protection; that the crimes committed against petitioners
are shocking to the conscience of humanity; and that the atrocities committed by the
Japanese soldiers against petitionersare not subject to the statute of limitations under
international law.9
Petitioners pray that the Court reconsider its April 28, 2010 decision, and declare: (1)
that the rapes, sexual slavery, torture and other forms of sexual violence committed
against the Filipina comfort women are crimes against humanity and war crimes under
customary international law; (2) that the Philippines is not bound by the Treaty of Peace
with Japan, insofar as the waiver of the claims of the Filipina comfort women against
Japan is concerned; (3) that the Secretary of Foreign Affairs and the Executive Secretary
committed grave abuse of discretion in refusing to espouse the claims of Filipina
comfort women; and (4) that petitioners are entitled to the issuance of a writ of
preliminary injunction against the respondents.
Petitioners also pray that the Court order the Secretary of Foreign Affairs and the
Executive Secretary to espouse the claims of Filipina comfort women for an official
apology,legal compensation and other forms of reparation from Japan.10
In their Supplemental Motion for Reconsideration, petitioners stress that it was highly
improper for the April 28, 2010 decision to lift commentaries from at least three sources
without proper attribution an article published in 2009 in the Yale Law Journal of
International Law; a book published by the Cambridge University Press in 2005; and an
article published in 2006 in the Western ReserveJournal of International Law and
make it appear that such commentaries supported its arguments for dismissing the
petition, when in truth the plagiarized sources even made a strong case in favour of
petitioners claims.11
In their Comment,12 respondents disagree withpetitioners, maintaining that aside from

the statements on plagiarism, the arguments raised by petitioners merely rehashed
those made in their June 7, 2005 Memorandum; that they already refuted such
arguments in their Memorandumof June 6, 2005 that the Court resolved through
itsApril 28, 2010 decision, specifically as follows:
1. The contentions pertaining tothe alleged plagiarism were then already lodged
withthe Committee on Ethics and Ethical Standards of the Court; hence, the
matter of alleged plagiarism should not be discussed or resolved herein.13
Page 298 of 378

2. A writ of certioraridid not lie in the absence of grave abuse of discretion

amounting to lack or excess of jurisdiction. Hence, in view of the failureof
petitioners to show any arbitrary or despotic act on the part of respondents,the
relief of the writ of certiorariwas not warranted.14
3. Respondents hold that the Waiver Clause in the Treaty of Peace with Japan,
being valid, bound the Republic of the Philippines pursuant to the international
law principle of pacta sunt servanda.The validity of the Treaty of Peace was the
result of the ratification by two mutually consenting parties. Consequently, the
obligations embodied in the Treaty of Peace must be carried out in accordance
with the common and real intention of the parties at the time the treaty was
concluded.15
4. Respondents assert that individuals did not have direct international remedies
against any State that violated their human rights except where such remedies
are provided by an international agreement. Herein, neither of the Treaty of
Peace and the Reparations Agreement,the relevant agreements affecting herein
petitioners, provided for the reparation of petitioners claims. Respondents aver
that the formal apology by the Government of Japan and the reparation the
Government of Japan has provided through the Asian Womens Fund (AWF) are
sufficient to recompense petitioners on their claims, specifically:
a. About 700 million yen would be paid from the national treasury over the next
10 years as welfare and medical services;
b. Instead of paying the money directly to the former comfort women, the
services would be provided through organizations delegated by governmental
bodies in the recipient countries (i.e., the Philippines, the Republic of Korea,and
Taiwan); and
c. Compensation would consist of assistance for nursing services (like home

helpers), housing, environmental development, medical expenses, and medical
goods.16
Ruling
The Court DENIESthe Motion for Reconsiderationand Supplemental Motion for

Reconsideration for being devoid of merit.
1. Petitioners did not show that their resort was timely under the Rules of Court.
Petitioners did not show that their bringing ofthe special civil action for certiorariwas
timely, i.e., within the 60-day period provided in Section 4, Rule 65 of the Rules of
Court, to wit:
Section 4. When and where position filed. The petition shall be filed not later than
sixty (60) daysfrom notice of judgment, order or resolution. In case a motion for
reconsideration or new trial is timely filed, whether such motion is required or not, the
sixty (60) day period shall be counted from notice of the denial of said motion.
As the rule indicates, the 60-day period starts to run from the date petitioner receives
the assailed judgment, final order or resolution, or the denial of the motion for
reconsideration or new trial timely filed, whether such motion is required or not. To
Page 299 of 378

establish the timeliness of the petition for certiorari, the date of receipt of the assailed
judgment, final order or resolution or the denial of the motion for reconsideration or
new trial must be stated in the petition;otherwise, the petition for certiorarimust be
dismissed. The importance of the dates cannot be understated, for such dates determine
the timeliness of the filing of the petition for certiorari. As the Court has emphasized in
Tambong v. R. Jorge Development Corporation:17
There are three essential dates that must be stated in a petition for certiorari brought
under Rule 65. First, the date when notice of the judgment or final order or resolution
was received; second, when a motion for new trial or reconsideration was filed; and
third, when notice of the denial thereof was received. Failure of petitioner to comply
with this requirement shall be sufficient ground for the dismissal of the petition.
Substantial compliance will not suffice in a matter involving strict observance with the
Rules. (Emphasis supplied)
The Court has further said in Santos v. Court of Appeals:18
The requirement of setting forth the three (3) dates in a petition for certiorari under Rule
65 is for the purpose of determining its timeliness. Such a petition is required to be filed
not later than sixty (60) days from notice of the judgment, order or Resolution sought to
be assailed. Therefore, that the petition for certiorariwas filed forty-one (41) days from
receipt of the denial of the motion for reconsideration is hardly relevant. The Court of
Appeals was notin any position to determine when this period commenced to run and
whether the motion for reconsideration itself was filed on time since the material dates
were not stated. It should not be assumed that in no event would the motion be filed
later than fifteen (15) days. Technical rules of procedure are not designed to frustrate
the ends of justice. These are provided to effect the proper and orderly disposition of
cases and thus effectively prevent the clogging of court dockets. Utter disregard of the
Rules cannot justly be rationalized by harking on the policy ofliberal construction.19
The petition for certioraricontains the following averments, viz:
82. Since 1998, petitioners and other victims of the "comfort women system,"
approached the Executive Department through the Department of Justice in
order to request for assistance to file a claim against the Japanese officials and
military officers who ordered the establishment of the "comfort women" stations
in the Philippines;
83. Officials of the Executive Department ignored their request and refused to file
a claim against the said Japanese officials and military officers;
84. Undaunted, the Petitioners in turnapproached the Department of Foreign

Affairs, Department of Justice and Office of the of the Solicitor General to file
their claim against the responsible Japanese officials and military officers, but
their efforts were similarly and carelessly disregarded;20
The petition thus mentions the year 1998 only as the time when petitioners approached
the Department ofJustice for assistance, but does not specifically state when they
received the denial of their request for assistance by the Executive Department of the
Government. This alone warranted the outright dismissal of the petition.
Even assuming that petitioners received the notice of the denial of their request for
assistance in 1998, their filing of the petition only on March 8, 2004 was still way beyond
Page 300 of 378

the 60-day period. Only the most compelling reasons could justify the Courts acts of
disregarding and lifting the strictures of the rule on the period. As we pointed out
inMTM Garment Mfg. Inc. v. Court of Appeals:21
All these do not mean, however, that procedural rules are to be ignored or disdained at
will to suit the convenience of a party. Procedural law has its own rationale in the
orderly administration of justice, namely: to ensure the effective enforcement of
substantive rights by providing for a system that obviates arbitrariness, caprice,
despotism, or whimsicality in the settlement of disputes. Hence, it is a mistake to
suppose that substantive law and procedural law are contradictory to each other, or as
often suggested, that enforcement of procedural rules should never be permitted if it
would result in prejudice to the substantive rights of the litigants.
As we have repeatedly stressed, the right to file a special civil action of certiorariis
neither a natural right noran essential element of due process; a writ of certiorariis a
prerogative writ, never demandable as a matter of right, and never issued except in the
exercise of judicial discretion. Hence, he who seeks a writ of certiorarimust apply for it
only in the manner and strictly in accordance with the provisions of the law and the
Rules.
Herein petitioners have not shown any compelling reason for us to relax the rule and
the requirements under current jurisprudence. x x x. (Emphasis supplied)
2. Petitioners did not show that the assailed act was either judicial or quasi-judicial on
the part of respondents.
Petitioners were required to show in their petition for certiorarithat the assailed act was
either judicial or quasi-judicial in character. Section 1, Rule 65 of the Rules of
Courtrequires such showing, to wit:
Section 1. Petition for certiorari.When any tribunal, board or officer exercising judicial
or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or
with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is
no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified petition in the proper court, alleging the
facts with certainty and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental reliefs as
law and justice may require.
The petition shall be accompanied by a certified true copy of the judgment, order, or
resolution subject thereof, copies of all pleadings and documents relevant and pertinent
thereto, and a sworn certification of nonforum shopping as provided in the third
paragraph of Section 3, Rule 46. However, petitioners did notmake such a showing.
3. Petitioners were not entitled to the injunction.
The Court cannot grant petitioners prayer for the writ of preliminary mandatory
injunction. Preliminary injunction is merely a provisional remedy that is adjunct to the
main case, and is subject to the latters outcome. It is not a cause of action itself. 22 It is
provisional because it constitutes a temporary measure availed of during the pendency
of the action; and it is ancillary because it is a mere incident in and is dependent upon
the result of the main action.23 Following the dismissal of the petition for certiorari,
there is no more legal basis to issue the writ of injunction sought. As an auxiliary
Page 301 of 378

remedy, the writ of preliminary mandatory injunction cannot be issued independently

of the principal action.24
In any event, a mandatory injunction requires the performance of a particular act.

Hence, it is an extreme remedy,25 to be granted only if the following requisites are
attendant, namely:
(a) The applicant has a clear and unmistakable right, that is, a right in esse;
(b) There is a material and substantial invasion of such right; and
(c) There is an urgent need for the writ to prevent irreparable injury to the
applicant; and no other ordinary, speedy, and adequate remedy exists to prevent
the infliction of irreparable injury.26
In Marquez v. The Presiding Judge (Hon. Ismael B. Sanchez), RTC Br. 58, Lucena
City,27 we expounded as follows:
It is basic that the issuance of a writ of preliminary injunction is addressed to the sound
discretion of the trial court, conditioned on the existence of a clear and positive right of
the applicant which should be protected. It is an extraordinary, peremptory remedy
available only on the grounds expressly provided by law, specifically Section 3, Rule 58
of the Rules of Court. Moreover, extreme caution must be observed in the exercise of
such discretion. It should be granted only when the court is fully satisfied that the law
permits it and the emergency demands it. The very foundation of the jurisdiction to
issue a writ of injunction rests in the existence of a cause of action and in the probability
of irreparable injury, inadequacy of pecuniary compensation, and the prevention of
multiplicity of suits. Where facts are not shown to bring the case within these
conditions, the relief of injunction should be refused.28
Here, the Constitution has entrusted to the Executive Department the conduct of
foreign relations for the Philippines. Whether or not to espouse petitioners' claim
against the Government of Japan is left to the exclusive determination and judgment of
the Executive Department. The Court cannot interfere with or question the wisdom of
the conduct of foreign relations by the Executive Department. Accordingly, we cannot
direct the Executive Department, either by writ of certiorari or injunction, to conduct
our foreign relations with Japan in a certain manner.
WHEREFORE, the Court DENIES the Motion for Reconsideration and Supplemental
Motion for Reconsideration for their lack of merit.
G.R. No. 192432 June 23, 2014
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. LARRY MENDOZA y

ESTRADA, Accused-Appellant.
DECISION
The law enforcement agents who conduct buy-bust operations against persons
suspected of drug trafficking in violation of Republic Act No. 9165 (RA No. 9165),
otherwise known as the Comprehensive Dangerous Drugs Act of 2002, should comply
with the statutory requirements for preserving the chain of custody of the seized
evidence. Failing this, they are required to render sufficient reasons for their non-
Page 302 of 378

compliance during the trial; otherwise, the presumption that they have regularly
performed their official duties cannot obtain, and the persons they charge should be
acquitted on the ground of reasonable doubt.
The Case
This appeal seeks the review and reversal of the decision promulgated on April 26, 2010
in CA-G.R. CR-H.C. No. 03901 entitled People of the Philippines v. Larry Mendoza y
Estrada,1 whereby the Court of Appeals (CA) affirmed the judgment rendered on
February 24, 2009 by the Regional Trial Court (RTC), Branch 67, in Binangonan, Rizal
finding accused Larry Mendoza y Estrada guilty of a violation of Section 5 and a
violation of Section 11, Article II of RA No. 9165.2
Antecedents
The accusatory portion of the information charging the violation of Section 5 of RA No.
9165 reads:
That on or about the 28th day of August 2007, in the Municipality of Binangonan,
Province of Rizal, Philippines and within the jurisdiction of this Honorable Court, the
above-named accused, without having been authorized by law, did then and there
willfully, unlawfully and knowingly sell, deliver and give away to a poseur buyer (PO1
Arnel D. Diocena), 0.03 gram and 0.01 gram or a total weight of 0.04 gram of white
crystalline substance contained in two (2) heat-sealed transparent plastic sachets, which
substance was found positive to the test for Methylamphetamine hydrochloride
alsoknown as "shabu", a dangerous drug, in consideration of the amountof Php 500.00,
in violation of the above-cited law.
CONTRARY TO LAW.3
The accusatory portion of the information charging the violation of Section 11 of RA No.
9165 alleges:
That, on or about the 28th day of August 2007, in the Municipality of Binangonan,
Province of Rizal, Philippines and within the jurisdiction of this Honorable Court, the
above-named accused, not being lawfully authorized to possess any dangerous drug,
did, then and there willfully, unlawfully and knowingly possess and have in his
custody and control 0.01 gram of white crystalline substance contained in one (1) heat-
sealed transparent plastic sachet, which substance was found positive to the test for
Methylamphetamine hydrochloride also known as "shabu", a dangerous drug, in
violation of the above-cited law.
CONTRARY TO LAW.4
After the accused pleaded not guiltyto both informations,5 the State presented Sr. Insp.
Vivian C. Sumobay, PO1 Arnel D. Diocena and Insp. Alfredo DG Lim as its witnesses,
while the witnesses for the Defense were the accused himself, Lolita Flores and Analiza
Acapin.
The CA summarized the respective versions of the parties in the decision under review
as follows:
Evidence for the Prosecution
Page 303 of 378

As culled from the herein assailed Decision, the prosecution presented the following
witnesses:
"x x x Policemen Arnel Diocenaand Alfredo DG Limtestified that, on September 29,

2007, they received reports that an alias Larry was selling shabuat St. Claire Street,
Barangay Calumpang, Binangonan, Rizal. They organized a buy-bust operationwhere
Diocena acted as the poseur buyer while Lim servedas back-up. They proceeded to the
target area with their asset at around 10:45 p.m. There Diocena and the asset waited in
the corner on their motorcycle while Lim and the other cops positioned themselves in
the perimeter. The asset texted Larry and they waited for him to arrive. Later,Larry
arrived and told them, Pasensya na at ngayon lang dumating ang mga items. Larry
then asked them how much they were buying and Diocena told P500.00 worth. Larry
took out two plastic sachets of shabuand gave it to Diocena who gave him a
marked P500 bill (exhibit D). Diocenalit the left signal light of his motorcycle to signal
Lim and the other cops that the deal was done. They then arrested Larry who turned
out to be the accused. After frisking him, they recovered another sachet of shabufrom
him. Diocena marked the first two LEM-1and LEM-2while the one taken after the
frisk he marked LEM-3(TSN dated April 23 and July 17, 2008, exhibits D, E and F).
These were sent to the police crime lab for forensic testing where they tested positive for
0.03 (LEM-1), 0.01 (LEM-2) and 0.01 (LEM-3) grams for Methylamphetamine
Hydrochloride or shabu respectively (TSN dated December 5, 2007, exhibits A,B and
C). LEM-1 and LEM-2 were made the basis of the pushing charge while LEM-3 the
one for possession."
Evidence for the Defense
The defense witnesses version of facts, as summarized in the herein assailed Decision,
is as follows:
"x x x On that day, he was minding his own business, eating with his wife when his
friend Rolly Lopez knocked on the door. Rolly was wanted by the cops (may atraso)
and asked Mendoza for help to get them off his back.Rolly texted somebody and after
there was another knock. It was the police led by one Dennis Gorospewho asked
Mendoza for his identity. When he said yes, Gorospe cuffed him after showing him
sachets of shabuwith his initials. Gorospe was then taken to the police station where he
was interrogated and asked how much protection money he can cough up. When he
refused, he was arrested and drug tested. He claims that he was supposed to be a
regaloto the new police chief. (TSN dated August 27, October 9, November 26, 2008 and
February 18, 2009)6
Ruling of the RTC
On February 24, 2009, the RTC convicted the accused of the crimes charged,7 disposing:
We thus find accused Larry Mendoza GUILTY beyond reasonable doubt of violating
Section 5 of R.A. No. 9165 and sentence him to suffer a penalty of life imprisonment and
topay a fine of P500,000.00. We also find him GUILTYbeyond reasonable doubt of
violating Section 11 of R.A. No. 9165 and illegally possessing a total of 0.01 grams of
Methylamphetamine Hydrochloride or shabuand accordingly sentence him to suffer an
indeterminate penalty of 12 years and 1 day as minimum to 13 years as maximum and
to pay a fine of P300,000.00
Page 304 of 378

Let the drug samples in this case be forwarded to the Philippine Drug Enforcement
Agency (PDEA) for proper disposition. Furnish PDEA with a copy of this Decision per
OCA Circular No. 70-2007.
SO ORDERED.8
Judgment of the CA
The accused appealed, contendingthat the identity of the corpus delictiand the fact of
illegal sale had notbeen established beyond reasonable doubt; that PO1 Diocenas
testimony on the sale of the illegal drugs and on the buy-bust operation had not been
corroborated; that the Prosecution had patently failed to show compliance with the
requirements of Section 21 of RA No. 9165; and that such failure to show compliance
had negated the presumption of regularity accorded to the apprehending police
officers, and should warrant his acquittal.9
On April 26, 2010, the CA affirmed the conviction of the accused,10 holding and ruling
thusly:
x x x [I]t is worthy of mention that prosecution of cases for violation of the Dangerous
Drugs Act arising from buy-bust operations largely depend on the credibility of the
police officers who conducted them. Unless clear and convincing evidence is proffered
showing that the members of the buy-bust team were driven by any improper motive
or were not properly performing their duty, their testimonies on the operation deserve
full faith and credit.
Here, accused-appellant failed to present any plausible reason or ill-motive on the part
of the police officers to falsely impute to him such a serious and unfounded charge. We
thus are obliged to accord great respect to and treat with finality the findings of the trial
court on the prosecution witnesses credibility. After all, it is settled doctrine that the
trial courts evaluation of the credibility of a testimony is accorded the highest respect,
for the trial court has the distinct opportunity of directly observing the demeanor of a
witness and, thus, to determine whether he is telling the truth.
Accused-appellants argument that the procedural requirements of Section 21,

paragraph 1 of ArticleII of Republic Act No. 9165 with respect to the custody and
disposition of confiscated drugs were not complied with is equally bereft of merit.
xxxx
Verily, failure of the police officers to strictly comply with the subject procedure isnot
fatal [to] the integrity and the evidentiary value of the confiscated/seized items having
been properly preservedby the apprehending officer/team. Its non-compliance will not
render an accuseds arrest illegal or items seized/confiscated from him inadmissible.
For, what is of utmost importance is the preservation of the integrity and evidentiary
value of the seized items, as the same would be utilized in the determination of the guilt
or innocence of the accused.
xxxx
It thus behooves Us to believe that all the links in the chain from the moment it was
seized from the accused-appellant, marked in evidence and submitted to the crime
Page 305 of 378

laboratory, up to the time it was offered in evidence were sufficiently establishedin

this case.
We are thus constrained to uphold accused-appellants conviction.
xxxx
WHEREFORE, the instant appeal is DISMISSED. The assailed Decision dated February
24, 2009 is AFFIRMED.
SO ORDERED.11
Issue
In this appeal, the accused presentsthe lone issue of whether the CA erred in finding
him guilty beyond reasonable doubt of the violations of Section 5 and Section 11 of RA
No. 9165.
Ruling of the Court
The appeal is meritorious.
1. The State did not satisfactorilyexplain substantial lapses committed by the buy-
bust team in the chain of custody; hence, the guilt of the accused for the crime
charged was not established beyond reasonable doubt
The presentation of the dangerous drugs as evidence in court is material if not

indispensable in every prosecution for the illegal sale of dangerous drugs. As such, the
identityof the dangerous drugs should be established beyond doubt by showing thatthe
dangerous drugs offered in court were the same substances boughtduring the buy-bust
operation. This rigorous requirement, known under RA No. 9165 as the chain of
custody, performs the function of ensuring thatunnecessary doubts concerning the
identity of the evidence are removed.12 As the Court has expounded in People v.
Catalan,13 the dangerous drugs are themselves the corpus delicti; hence:
To discharge its duty of establishing the guilt of the accused beyond reasonable doubt,
therefore, the Prosecution must prove the corpus delicti.That proof is vital to a
judgment of conviction. On the other hand, the Prosecution does not comply with the
indispensable requirement of proving the violation of Section 5 of Republic Act No.
9165 when the dangerous drugs are missing but also when there are substantial gaps in
the chain of custody of the seized dangerous drugs that raise doubts about the
authenticity of the evidence presented in court.14
As the means of ensuring the establishment of the chain of custody, Section 21 (1) of RA
No. 9165 specifies that:
(1) The apprehending team having initial custody and control of the drugs shall,
same in the presence of the accused or the person/s from whom such items were
be required to sign the copies of the inventory and be given a copy thereof.
Page 306 of 378

The following guideline in the Implementing Rules and Regulations (IRR) of RA No.
9165 complements Section 21 (1) of RA No. 9165, to wit:
(a) The apprehending officer/team having initial custody and control of the drugs shall,
same inthe presence of the accused or the person/s from whom suchitems were
confiscated and/or seized, or his/her representative orcounsel, a representative from
be required to sign the copies of the inventory and be given a copy thereof: Provided,
that the physical inventory and photograph shall be conducted at the place where the
search warrant is served; or at the nearest police station or at the nearest office of the
apprehending officer/team, whichever is practicable, in case of warrantless seizures;
Provided, further, that non-compliance with these requirements under justifiable
grounds, as long as the integrity and the evidentiary value of the seized items are
properly preserved by the apprehending officer/team, shall not render void and invalid
suchseizures of and custody over said items;
Based on the foregoing statutory rules, the manner and timing of the marking of the
seized drugs or related items are crucial in proving the chain of custody. Certainly, the
marking after seizure by the arresting officer, being the starting point in the custodial
link, should be made immediately upon the seizure, or, if that is not possible, as close to
the time and place of the seizure as practicable under the obtaining circumstances. This
stricture is essential because the succeeding handlers of the contraband would use the
markings as their reference to the seizure. The marking further serves to separate the
marked seized drugs fromall other evidence from the time of seizure from the accused
until the drugs are disposed of upon the termination of the criminal proceedings. The
deliberate taking of these identifying steps is statutorily aimed at obviating switching,
"planting" or contamination of the evidence.15 Indeed, the preservation of the chain of
custody vis--vis the contraband ensures the integrity of the evidence incriminating the
accused, and relates to the element of relevancy as one of the requisites for the
admissibility of the evidence.
An examination of the records reveals that the buy-bust team did not observe the
statutory procedures on preserving the chain of custody.
To start with, the State did not show the presence during the seizure and confiscation of
the contraband, aswell as during the physical inventory and photographing of the
contraband, ofthe representatives from the media or the Department of Justice, or of
any elected public official. Such presence was precisely necessary to insulatethe
apprehension and incrimination proceedings from any taint of illegitimacy or
irregularity.16
It is notable that PO1 Diocena, although specifically recalling having marked the
confiscated sachets of shabuwith the initials of the accused immediately after the
seizure, did not state, as the following excerpts from his testimony indicate, if he had
madehis marking in the presence of the accused himself or of his representative, and in
the presence of a representative from the media or the Department of Justice, or any
elected public official, to wit:
Q - What did you do with the plasticsachets you bought or the plastic sachets handed to
you and the other plastic sachet Insp. Lim recovered from him?
A - I put markings, Maam.

Page 307 of 378
Q - What markings did you place on the plastic sachets?
A - LEM-1, LEM-2 and LEM-3.
Q - And after marking those specimen, what did you do with them?
A - We brought them to the police station.
Q - What did the police station do with the plastic sachets?
A - Our investigator took pictures and brought them to the PNP Crime Laboratory.
xxxx
Q - You said that you put markings on the specimen at the target area?
A - Yes, Maam.
Q - You prepared the listing of all the specimen and marked money you recovered from
the accused?
A - No, Maam.
Q - When you returned to the police station that was the only time that you took
pictures of the marked money?
A - Yes, Maam.
Q - To whom did you turn it over?
A - To our investigator, Maam.
Q - What is the name of your investigator?
A - PO1 Dennis Gorospe, Maam.17
Similarly, P/Insp. Lim did not mention in his testimony, the relevant portions of which
are quoted hereunder, that a representative from the media or the Department of
Justice, or any elected public official was present during the seizure and marking of the
sachets of shabu, as follows:
Q - What did you do with the subject sale and the one you recovered from the accused?
A - I told PO1 Diocena to mark it, the three heat-sealed plastic sachets.
Q - Do you know the markings placed on the plastic sachets?
A - LEM-1, LEM-2 and LEM-3.
Q - And aside from marking the specimen, what did you do with them?
A - I apprised the suspect of his rights, then right after that we went to the
headquarters.
Page 308 of 378

Q - And after you brought the accused and the specimen to the headquarters, what did
you do next with the specimen?
A - We submitted them to the Crime Laboratory for verification.
Q - Who personally brought them to the Crime Laboratory?
A - If I am not mistaken it was also PO1 Diocena and the other men.
xxxx
Q - Where was Officer Diocena when heput markings on the three plastic sachets you
recovered?
A - When I arrested the subject, he alighted from the motorcycle and he helped me in
arresting the accused, it was just then beneath the Meralco post.
Q - And the markings represent the initials of the accused?
A - I dont know, Maam, LEM, maybe, Maam.
Q - But it was Officer Diocena who put the markings?
A - Yes, Maam.
Q - Was there an inventory or list of the things you recovered from the accused?
A - Yes, Maam.
Q - Did you ask the accused to sign that inventory?
A - I was not able, Maam.18
The consequences of the failure ofthe arresting lawmen to comply with the
requirements of Section 21(1), supra, were dire as far as the Prosecution was concerned.
Without the insulating presence of the representative from the media or the Department
of Justice, or any elected public official during the seizure and marking of the sachets of
shabu, the evils of switching, "planting" or contamination of the evidence that had
tainted the buy-busts conducted under the regime of RA No. 6425 (Dangerous Drugs
Act of 1972) again reared their ugly heads as to negate the integrity and credibility of
the seizure and confiscation of the sachets of shabu that were evidence herein of
thecorpus delicti, and thus adversely affected the trustworthiness of the incrimination
of the accused. Indeed, the insulating presence of such witnesses would have preserved
an unbroken chain of custody.
Secondly, the records nowhere indicated, contrary to the claim of P/Insp. Lim, that the
buy-bust team, orany member thereof, had conducted the physical inventory of the
confiscated items. We know this because the States formal offer of evidence did not
include such inventory, to wit:
PROSECUTOR ARAGONES:
Page 309 of 378

Your Honor, we formally offer Exhibit "A", the Chemistry Report No. D-221-07; Exhibit
"B", the request for laboratory examination from the Binangonan Police Station; and
Exhibit "C", the subject specimen. This is to prove that after request made by the
Binangonan Police Station, examined by the forensic chemical officer, and after
examination proved positive to the test for methamphetamine hydrochloride. These
exhibits are offered as part of the testimony of the forensic chemist. Exhibit "D", the buy
bust money, the P500.00 bill used during the operation; Exhibit "D-1" is the marking
placed by Police Officer Diocena. This is to prove that this is the xerox copy of the
original buy bust money used during the buy bust operation conducted against the
accused. Exhibit "E" is the sworn statement of Police Officer Diocena. This is to prove all
the facts alleged in the information and as part of the testimony of the said police
officer. Exhibit "F" is the sworn statement of P/Insp. Alfredo Lim to prove all the facts
alleged in the information and as part of the testimony of said witness. That would be
all for our formal offer of evidence.19 Without the inventory having beenmade by the
seizing lawmen, it became doubtful whether any shabu had been seized from the
accused at all.
And, thirdly, although PO1 Diocena asserted that photographs of the confiscated items
and the marked money were taken at the police station,20 it still behooved him to justify
why the photographs of the seized shabuwas not taken immediately upon the
seizure,and at the place of seizure. The State did not explain this lapse. The pictorial
evidence of the latter kind would have more firmly established the identity of the
seizedshabufor purposes of preserving the chain of custody.
The last paragraph of Section 21(1) of the IRR of RA No. 9165 expressly provides a
saving mechanism tothe effect that not every case of non-compliance with the statutory
requirements for the physical inventory and photograph of the dangerous drugs being
made "in the presence of the accused or the person/s from whom such items were
the media and the Department of Justice (DOJ),and any elected public official who shall
be required to sign the copies of the inventory and be given a copy thereof" would
prejudice the States case against the accused. But in order for that saving mechanism to
apply, and thus save the day for the States cause, the Prosecution must have to
recognize first the lapse or lapses, and then credibly explain them.21
It appears that the application ofthe saving mechanism in this case was not warranted.
The Prosecution did notconcede that the lawmen had not complied with the
requirement for "the presence of the accused or the person/s from whom such items
were confiscated and/or seized, or his/her representative or counsel, a representative
from the media and the Department of Justice (DOJ), and any elected public official
who shall be required to sign the copies of the inventory and be given a copy thereof."
Also, the Prosecution did not tender any justification why no representatives from the
media or the Department of Justice, or any elected public official had been present
during the seizure and confiscation of the shabu. The omissions, particularly the failure
to justify on the part of the lawmen, were strange and improbable, particularly because
the records indicated that the lawmen had sufficient time and the opportunity to
prepare for the proper conductof the buy-bust operation against the accused due to
such operation having come in the aftermath of a successful test buy.
Anent the test buy, PO1 Diocena mentioned the same in his sinumpaang salaysay,
thusly:
Page 310 of 378

x x x Na itong sinasabi ng aming asset na alyas "Larry" ay matagal na naming

minamanmanan at sa katunayan ay nagsagawa na kami ng Test Buy noong Hulyo 10,
2007 at kami ay nakabili sa kanya ng isang pirasong maliit na plastic na may lamang
shabu at amin itong ipinasuri sa RIZAL PNP Crime Laboratory Office na nagbigay ng
positibong resulta sa pinagbabawal na droga at siya ay di namin kaagad nahuli
sapagkat siya ay huminto pansamantala sa pagbebenta ng iligal na droga. x x x22
Similarly, P/Insp. Lim adverted to the test buy in his own sinumpaang salaysayas
follows:
x x x Sapagkat ako ay bago lamang dito sa himpilan ng Binangonan, napagalaman ko

mula saaking mga kasamahan na itong sinasabi ng aming asset na alyas "Larry" ay
matagal na nilang minamanmanan at sa katunayan aynagsagawa ng Test Buy noong
Hulyo 10, 2007 laban dito kay alyas "Larry" at ang nabiling pinaghihinalaang shabu ay
ipinasuri sa RIZAL PNP Crime Laboratory Office na nagbigay ng positibong resulta sa
pinagbabawal na droga na kaya lamang hindi nahuhuli itong si alyas "Larry" sa
dahilang siya at huminto pansamantala sa pagbebenta ng iligal na droga.23
P/Insp. Lim reiterated his story on direct examination, viz:
Q - And what report, if any, was madeby that asset aside from there was an ongoing
sale of drugs in Calumpang?
A - That there was an ongoing sale byalias Larry na matagal na nilang minamatyagan,
in fact they havealready testbuy noong mga nakaraang taon, eh, wala pa ho ako noon.24
In all, the buy-bust team had about 48 days the period intervening between July 10,
2007, when the test buy was conducted, and August 28, 2007, when the crimes charged
were committed within which to have the media and the Department of Justice be
represented during the buy-bust operation, as well as to invite an elected public official
of the place of operation to witness the operation. It puzzles the Court, therefore, that
the buy-bust team did not prudently follow the procedures outlined in Section 21(1),
supra, despite their being experienced policemen who knew the significance of the
procedures in the preservation of the chain of custody.
With the chain of custody being demonstrably broken, the accused deserved to be
acquitted of the seriouscharges. Even if we rejected the frame-up defense of the accused,
the unexplained failures and lapses committed by the buy-bust team could not be fairly
ignored. At the very least, they raised a reasonable doubt on his guilt. "A reasonable
doubt of guilt," according toUnited States v. Youthsey:25
x x x is a doubt growing reasonably out of evidence or the lack of it. It is not a captious
doubt; not a doubt engendered merely by sympathy for the unfortunate position of the
defendant, or a dislike to accept the responsibility of convicting a fellowman. If, having
weighed the evidence on both sides, you reach the conclusion that the defendant is
guilty, to that degree of certainty as would lead you toact on the faith of it in the most
important and crucial affairs of your life, you may properly convict him. Proof beyond
reasonable doubt is notproof to a mathematical demonstration. It is not proof beyond
the possibility of mistake.
Thus, the accused was entitled to beacquitted and freed, for, as we pointed out in
People v. Belocura:26
Page 311 of 378

x x x in all criminal prosecutions, the Prosecution bears the burden to establish the guilt
of the accused beyond reasonable doubt. In discharging this burden, the Prosecutions
duty is to prove each and every element of the crime charged in the information to
warrant a finding of guilt for that crime or for any other crime necessarily included
therein. The Prosecution must further prove the participation of the accused in the
commission of the offense. In doing all these, the Prosecution must rely on the strength
of its own evidence, and not anchor its success upon the weakness of the evidence of the
accused. The burden of proof placed on the Prosecution arises from the presumption of
innocence in favor of the accused that no less thanthe Constitution has guaranteed.
Conversely, as to his innocence, the accused has no burden of proof, that he must then
be acquitted and set free should the Prosecution not overcome the presumption of
innocence in his favor. In other words, the weakness of the defense put up bythe
accused is inconsequential in the proceedings for as long as the Prosecution has not
discharged its burden of proof in establishing the commission of the crime charged and
in identifying the accused as the malefactor responsible for it.
2. The CA and the RTC erred in relying on the presumption of regularity in the
performance of duty of the arresting officers
Even if the foregoing conclusion already renders any further discussion of the
applicability of the presumption of regularity in favor of the members of the buy-bust
team superfluous, we need to dwell a bit on the matter if only to remind the lower
courtsnot to give too much primacy to the presumption of regularity in the performance
of official duty at the expense of the higher and stronger presumption of innocence in
favor of the accused in a prosecution for violation of the Comprehensive Drugs Act of
2002.
We have usually presumed the regularity of performance of their official duties in favor
of the members of buy-bust teams enforcing our laws against the illegal sale of
dangerous drugs. Such presumption is based on three fundamental reasons, namely:
first, innocence, and not wrong-doing, is to be presumed; second, an official oath will
not be violated; and, third, a republican form of government cannot survive long unless
a limit is placed upon controversies and certain trust and confidence reposed in each
governmental department or agent by every other such department or agent, at least to
the extent of such presumption.27 But the presumption is rebuttable by affirmative
evidence of irregularity or of any failure to perform a duty.28 Judicial reliance on the
presumption despite any hint of irregularity in the procedures undertaken by the
agents of the law will thus be fundamentally unsound because such hint is itself
affirmative proof of irregularity.
The presumption of regularity of performance of official duty stands only when no

reason exists in the records by which to doubt the regularity of the performance of
official duty. And even in that instance the presumption of regularity will not be
stronger than the presumption of innocence in favor of the accused. Otherwise, a mere
rule of evidence will defeat the constitutionally enshrined right to be presumed
innocent. Trial courts are instructed to apply this differentiation, and to always bear in
mind the following reminder issued in People v. Catalan:29
x x x We remind the lower courts that the presumption of regularity in the performance
of duty could not prevail over the stronger presumption of innocence favoring the
accused. Otherwise, the constitutional guarantee of the accused being presumed
innocent would be held sut ordinate to a mere rule of evidence allocating the burden of
Page 312 of 378

evidence. Where, like here, the proof adduced against the accused has not even
overcome the presumption of innocence, the presumption of regularity in the
performance of duty could not be a factor to adjudge the accused guilty of the crime
charged.
Moreover, the regularity of the performance of their duty could not be properly
presumed in favor of the policemen because the records were replete with indicia of
their serious lapses. As a rule, a presumed fact like the regularity of performance by a
police officer must be inferred only from an established basic fact, not plucked out from
thin air. To say it differently, it is the established basic fact that triggers the presumed
fact of regular performance. Where there is any hint of irregularity committed by the
police officers in arresting the accused and thereafter, several of which we have earlier
noted, there can be no presumption of regularity of performance in their favor.
WHEREFORE, the Court REVERSES and SETS ASIDE the decision promulgated on
April 26, 2010 by the Court of Appeals in CA-G.R. CR-H.C. No. 03901 entitled People of
the Philippines v. Larry Mendoza y Estrada; ACQUITS LARRY MENDOZA y
ESTRADA on the ground of reasonable doubt; and ORDERS his immediate release
from detention at the National Penitentiary, unless there are other lawful causes
warranting his continued detention.
The Director of Bureau of Corrections is directed to forthwith implement this decision

and to report to this Court his action hereon within ten (10) days from receipt.
No pronouncement on costs of suit.
G.R. No. 178512 November 26, 2014
ALFREDO DE GUZMAN, JR., Petitioner, vs. PEOPLE OF THE

PHILIPPINES, Respondent.
DECISION
Frustrated homicide requires intent to kill on the part of the offender. Without proof of
such intent, the felony may only be serious physical injuries. Intent to kill may be
established through the overt and external acts and conduct of the offender before,
during and after the assault, or by the nature, location and number of the wounds
inflicted on the victim.
The Case
Under review at the instance of the petitioner is the decision promulgated on September
27, 2006,1 whereby the Court of Appeals (CA) affirmed his conviction for frustrated
homicide committed against Alexander Flojo under the judgment rendered on
September 10, 2003 by the Regional Trial Court (RTC), Branch 213, in Mandaluyong
City in Criminal Case No. 191-MD.2
Antecedents
The CA summarized the versions of the parties as follows:
x x x [O]n December 24, 1997, at aboutten oclock in the evening, Alexander Flojo
(hereafter "Alexander") was fetching water below his rented house at 443 Aglipay
Page 313 of 378

Street, Old Zaniga St., Mandaluyong City when suddenly Alfredo De Guzman
(hereafter "Alfredo"), the brother of his land lady, Lucila Bautista (hereafter "Lucila"), hit
him on the nape. Alexander informed Lucila about what Alfredo did to him. Lucila
apologized to Alexander by saying, "Pasensya ka na Mang Alex" and told the latter to
just go up. Alexander obliged and went upstairs. He took a rest for about two hours.
Thereafter, at around 12:00 to 12:15 A.M., Alexander went down and continued to fetch
water. While pouring water into a container, Alfredo suddenly appeared in front of
Alexander and stabbed him on his left face and chest.
Cirilino Bantaya, a son-in-law of Alexander, saw the latter bleeding on the left portion
of his body and begging for help. Alexander then told Cirilino that Alfredo stabbed
him. Cirilino immediately loaded Alexander into his motorcycle (backride) and brought
him to the Mandaluyong City Medical Center. Upon arrival at the hospital, the doctors
immediately rendered medical assistance to Alexander. Alexander stayed in the
emergency room of said hospital for about 30 to 40 minutes. Then, he was brought to
the second floor of the said hospital where he was confined for two days. Thereafter,
Alexander was transferred to the Polymedic General Hospital where he was subjected
for (sic) further medical examination.
Alexander sustained two stabbed (sic) wounds. (sic) One of which was on the zygoma,
left side, and aboutone (1) cm. long. The other is on his upper left chest which
penetrated the fourth intercostal space at the proximal clavicular line measuring about
two (2) cm. The second stabbed (sic) wound penetrated the thoracic wall and left lung
of the victim which resulted to blood air (sic) in the thoracic cavity thus necessitating
the insertion of a thoracostomy tube toremove the blood. According to Dr. Francisco
Obmerga, the physician who treated the victim at the Mandaluyong City Medical
Center, the second wound was fatal and could have caused Alexanders death without
timely medical intervention. (Tsn, July 8, 1998, p.8).
On the other hand, Alfredo denied having stabbed Alexander. According to him, on
December 25,1997 at around midnight, he passed by Alexander who was, then, fixing a
motorcycle. At that point, he accidentally hit Alexanders back, causing the latter to
throw invective words against him. He felt insulted, thus, a fistfight ensued between
them. They even rolled on the ground. Alfredo hit Alexander on the cheek causing
blood to ooze from the latters face.3
The RTC convicted the petitioner, decreeing thusly:
PRESCINDING (sic) FROM THE FOREGOING
CONSIDERATIONS, the court finds accused Alfredo De Guzman y Agkis a.k.a.,

"JUNIOR," guilty beyond reasonable doubt for (sic) the crime of FRUSTRATED
HOMICIDE defined and penalized in Article 250 of the Revised Penal Code and in the
absence of any modifying circumstance, he is hereby sentenced to suffer the
indeterminate penalty of Six (6) Months and One (1) day of PRISION
CORR[R]ECCIONAL as MINIMUM to Six (6) Years and One (1) day of PRISION
MAYOR as MAXIMUM.
The accused is further ordered topay the private complainant compensatory damages in
the amount ofP14,170.35 representing the actual pecuniary loss suffered by him as he
has duly proven.
SO ORDERED.4
Page 314 of 378

On appeal, the petitioner contended that his guilt had not been proved beyond
reasonable doubt; that intent to kill, the critical element of the crime charged, was not
established; that the injuries sustained by Alexander were mere scuffmarks inflicted in
the heatof anger during the fist fight between them; that he did not inflict the
stabwounds, insisting that another person could have inflicted such wounds; and that
he had caused only slight physical injuries on Alexander, for which he should be
accordingly found guilty.
Nonetheless, the CA affirmedthe petitioners conviction, viz:
WHEREFORE, premises considered, the instant appeal is DISMISSED. The September

10, 2003 Decision of the Regional Trial Court of Mandaluyong City, Branch 213, is
hereby AFFIRMED in toto.
SO ORDERED.5
The CA denied the petitioners motion for reconsideration on May 2, 2007.6
Issue
Was the petitioner properly found guilty beyond reasonable doubt of frustrated
homicide?
Ruling
The elements of frustrated homicide are: (1) the accused intended to kill his victim, as
manifested by his use of a deadly weapon in his assault; (2) the victim sustained fatal or
mortal wound but did not die because of timely medical assistance; and (3) noneof the
qualifying circumstances for murder under Article 248 of the Revised Penal Code, as
amended, is present.7 Inasmuch as the trial and appellate courts found none of the
qualifying circumstances in murder under Article 248 to be present, we immediately
proceed to ascertain the presence of the two other elements.
The petitioner adamantly denies that intent to kill was present during the fistfight
between him and Alexander. He claims that the heightened emotions during the
fistfight naturally emboldened both of them, but he maintains that he only inflicted
minor abrasions on Alexander, not the stab wounds that he appeared to have sustained.
Hence, he should be held liable only for serious physical injuries because the intent to
kill, the necessary element to characterize the crime as homicide, was not sufficiently
established. He avers that such intentto kill is the main element that distinguishes the
crime of physical injuries from the crime of homicide; and that the crime is homicide
only if the intent to kill is competently shown.
The essential element in frustrated or attempted homicide is the intent of the offender to
kill the victim immediately before or simultaneously with the infliction of injuries.
Intent to kill is a specific intent that the State must allege in the information, and then
prove by either direct or circumstantial evidence, as differentiated from a general
criminal intent, which is presumed from the commission of a felony by dolo.8 Intent to
kill, being a state of mind, is discerned by the courts only through external
manifestations, i.e., the acts and conduct of the accused at the time of the assault and
immediately thereafter. In Rivera v. People,9 we considered the following factors to
Page 315 of 378

determine the presence of intent to kill, namely: (1) the means used by the malefactors;
(2) the nature, location, and number of wounds sustained by the victim; (3) the conduct
of the malefactors before, during, or immediately after the killing of the victim; and (4)
the circumstances under which the crime was committed and the motives of the
accused. We have also considered as determinative factors the motive of the offender
and the words he uttered at the time of inflicting the injuries on the victim.10
Here, both the trial and the appellate court agreed that intent to kill was present. We
concur with them. Contrary to the petitioners submission, the wounds sustained by
Alexander were not mere scuffmarks inflicted in the heat of anger or as the result ofa
fistfight between them. The petitioner wielded and used a knife in his assault on
Alexander. The medical records indicate, indeed, that Alexander sustained two stab
wounds, specifically, one on his upper left chest and the other on the left side of his
face. The petitioners attack was unprovoked with the knife used therein causing such
wounds, thereby belying his submission, and firmly proving the presence of intent to
kill. There is also to beno doubt about the wound on Alexanders chest being sufficient
to result into his death were it not for the timely medical intervention.
With the State having thereby shown that the petitioner already performed all the acts
of execution that should produce the felony of homicide as a consequence, but did not
produce it by reason of causes independent of his will, i.e., the timely medical attention
accorded to Alexander, he was properly found guilty of frustrated homicide.
We have no cogent reason to deviate from or to disregard the findings of the trial and
appellate courts on the credibility of Alexanders testimony. It is not disputed that the
testimony of a single but credible and trustworthy witness sufficed to support the
conviction of the petitioner. This guideline finds more compelling application when the
lone witness is the victim himself whose direct and positive identification of his
assailant is almost always regarded with indubitable credibility, owing to the natural
tendency of the victim to seek justice for himself, and thus strive to remember the face
of his assailant and to recall the manner in which the latter committed the
crime.11 Moreover, it is significant that the petitioners mere denial of the deadly
manner of his attack was contradicted by the credible physical evidence corroborating
Alexanders statements. Under the circumstances, we can only affirm the petitioners
conviction for frustrated homicide. The affirmance of the conviction notwithstanding,
we find the indeterminate penalty of "Six (6) Months and One (1) day of PRISION
CORR[R]ECCIONAL as MINIMUM to Six (6) Years and One (1) day of PRISION
MAYOR as MAXIMUM"12 fixed by the RTC erroneous despite the CA concurring with
the trial court thereon. Under Section 1 of the Indeterminate Sentence Law, an
indeterminate sentence is imposed on the offender consisting of a maximum term and a
minimum term.13 The maximum term is the penaltyproperly imposed under the
Revised Penal
Code after considering any attending modifying circumstances; while the minimum
term is within the range of the penalty next lower than that prescribed by the Revised
Penal Codefor the offense committed. Conformably with Article 50 of the Revised Penal
Code,14 frustrated homicide is punished by prision mayor, which is next lower to
reclusion temporal, the penalty for homicide under Article 249 of the Revised Penal
Code. There being no aggravating or mitigating circumstances present, however,
prision mayorin its medium period from eight years and one day to 10 years is
proper. As can be seen, the maximum of six years and one day of prision mayor as fixed
by the RTC and affirmed by the CA was not within the medium period of prision
Page 316 of 378

mayor. Accordingly, the correct indeterminate sentence is four years of prision

correccional, as the minimum, to eight years and one day of prision mayor, as the
maximum.
The RTC and the CA also agreed on limiting the civil liability to the sum of P14,170.35
as compensatory damages "representing the actual pecuniary loss suffered by
[Alexander] as he has duly proven."15 We need to revise such civil liability in order to
conform to the law, the Rules of Court and relevant jurisprudence. In Bacolod v.
People,16we emphatically declared to be "imperative that the courts prescribe the proper
penalties when convicting the accused, and determine the civil liability to be imposed
on the accused, unless there has been a reservation of the action to recover civil liability
or a waiver of its recovery." We explained why in the following manner:
It is not amiss to stress that both the RTC and the CA disregarded their express
mandate under Section 2, Rule 120 of the Rules of Courtto have the judgment, if it was
of conviction, state: "(1) the legal qualification of the offense constituted by the acts
committed by the accused and the aggravating or mitigating circumstances which
attended its commission; (2) the participation of the accused in the offense, whether as
principal, accomplice, or accessory after the fact; (3) the penalty imposed upon the
accused; and (4) the civil liability or damages caused by his wrongful act or omission to
be recovered from the accused by the offended party, if there is any, unless the
enforcement of the civil liability by a separate civil action has been reserved or waived."
Their disregard compels us to actas we now do lest the Court be unreasonably seen as
tolerant of their omission. That the Spouses Cogtas did not themselves seek the
correction of the omission by an appeal is no hindrance to this action because the Court,
as the final reviewing tribunal, has not only the authority but also the duty to correct at
any time a matter of law and justice.
We also pointedly remind all trial and appellate courts to avoid omitting reliefs that the
parties are properly entitled to by law or in equity under the established facts. Their
judgments will not be worthy of the name unless they thereby fully determine the
rights and obligations of the litigants. It cannot be otherwise, for only by a full
determination of such rights and obligations would they be true to the judicial office of
administering justice and equity for all. Courts should then be alert and cautious in
their rendition of judgments of conviction in criminal cases. They should prescribe the
legal penalties, which is what the Constitution and the law require and expect them to
do. Their prescription of the wrong penalties will be invalid and ineffectual for being
done without jurisdiction or in manifest grave abuse of discretion amounting to lack of
jurisdiction. They should also determine and set the civil liability ex delicto of the
accused, in order to do justice to the complaining victims who are always entitled to
them. The Rules of Court mandates them to do so unless the enforcement of the civil
liability by separate actions has been reserved or waived.17
Alexander as the victim in frustrated homicide suffered moral injuries because the
offender committed violence that nearly took away the victims life. "Moral damages
include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, moral damages may be recovered if they
are the proximate result of the defendant's wrongful act for omission." 18 Indeed, Article
2219, (1), of the Civil Code expressly recognizes the right of the victim in crimes
resulting in physical injuries.19 Towards that end, the Court, upon its appreciation of the
records, decrees that P30,000.00 is a reasonable award of moral damages.20 In addition,
Page 317 of 378

AAA was entitled to recover civil indemnity of P30,000.00.21 Both of these awards did
not require allegation and proof.
In addition, the amounts awarded ascivil liability of the petitioner shall earn interest of
6% per annumreckoned from the finality of this decision until full payment by the
accused. WHEREFORE, the Court AFFIRMS the decision promulgated on September
27, 2006 finding petitioner Alfredo De Guzman, Jr. GUILTY beyond reasonable doubt of
FRUSTRATED HOMICIDE, and SENTENCES him to suffer the indeterminate penalty
of four years of prision correccional, as the minimum, to eight years and one day of
prision mayor, as the maximum; ORDERS the petitioner to pay to Alexander Flojo civil
indemnity of P30,000.00; moral damages of P30,000.00; and compensatory damages of
Pl4,170.35, plus interest of 6% per annum on all such awards from the finality of this
decision until full payment; and DIRECTS the petitioner to pay the costs of suit.
G.R. No. 166836 September 4, 2013
SAN MIGUEL PROPERTIES, INC., PETITIONER, vs. SEC. HERNANDO B. PEREZ,

ALBERT C. AGUIRRE, TEODORO B. ARCENAS, JR., MAXY S. ABAD, JAMES G.
BARBERS, STEPHEN N. SARINO, ENRIQUE N. ZALAMEA, JR., MARIANO M.
MARTIN, ORLANDO O. SAMSON, CATHERINE R. AGUIRRE, AND ANTONIO
V. AGCAOILI, RESPONDENTS.
DECISION
The pendency of an administrative case for specific performance brought by the buyer
of residential subdivision lots in the Housing and Land Use Regulatory Board (HLURB)
to compel the seller to deliver the transfer certificates of title (TCTs) of the fully paid lots
is properly considered a ground to suspend a criminal prosecution for violation of
Section 25 of Presidential Decree No. 9571 on the ground of a prejudicial question. The
administrative determination is a logical antecedent of the resolution of the criminal
charges based on non-delivery of the TCTs.
Antecedents
Petitioner San Miguel Properties Inc. (San Miguel Properties), a domestic corporation
engaged in the real estate business, purchased in 1992, 1993 and April 1993 from B.F.
Homes, Inc. (BF Homes), then represented by Atty. Florencio B. Orendain (Orendain) as
its duly authorized rehabilitation receiver appointed by the Securities and Exchange
Commission (SEC),2 130 residential lots situated in its subdivision BF Homes
Paraaque, containing a total area of 44,345 square meters for the aggregate price
of P106,248,000.00. The transactions were embodied in three separate deeds of sale.3 The
TCTs covering the lots bought under the first and second deeds were fully delivered to
San Miguel Properties, but 20 TCTs covering 20 of the 41 parcels of land with a total
area of 15,565 square meters purchased under the third deed of sale, executed in April
1993 and for which San Miguel Properties paid the full price of P39,122,627.00, were not
delivered to San Miguel Properties.
On its part, BF Homes claimed that it withheld the delivery of the 20 TCTs for parcels of
land purchased under the third deed of sale because Atty. Orendain had ceased to be its
rehabilitation receiver at the time of the transactions after being meanwhile replaced as
receiver by FBO Network Management, Inc. on May 17, 1989 pursuant to an order from
the SEC.4
Page 318 of 378

BF Homes refused to deliver the 20 TCTs despite demands. Thus, on August 15, 2000,
San Miguel Properties filed a complaint-affidavit in the Office of the City Prosecutor of
Las Pias City (OCP Las Pias) charging respondent directors and officers of BF Homes
with non-delivery of titles in violation of Section 25, in relation to Section 39, both of
Presidential Decree No. 957 (I.S. No. 00-2256).5
At the same time, San Miguel Properties sued BF Homes for specific performance in the
HLURB (HLURB Case No. REM-082400-11183),6 praying to compel BF Homes to release
the 20 TCTs in its favor.
In their joint counter-affidavit submitted in I.S. No. 00-2256,7 respondent directors and
officers of BF Homes refuted San Miguel Properties assertions by contending that: (a)
San Miguel Properties claim was not legally demandable because Atty. Orendain did
not have the authority to sell the 130 lots in 1992 and 1993 due to his having been
replaced as BF Homes rehabilitation receiver by the SEC on May 17, 1989; (b) the deeds
of sale conveying the lots were irregular for being undated and unnotarized; (c) the
claim should have been brought to the SEC because BF Homes was under receivership;
(d) in receivership cases, it was essential to suspend all claims against a distressed
corporation in order to enable the receiver to effectively exercise its powers free from
judicial and extra-judicial interference that could unduly hinder the rescue of the
distressed company; and (e) the lots involved were under custodia legis in view of the
pending receivership proceedings, necessarily stripping the OCP Las Pias of the
jurisdiction to proceed in the action.
On October 10, 2000, San Miguel Properties filed a motion to suspend proceedings in
the OCP Las Pias,8 citing the pendency of BF Homes receivership case in the SEC. In
its comment/opposition, BF Homes opposed the motion to suspend. In the meantime,
however, the SEC terminated BF Homes receivership on September 12, 2000,
prompting San Miguel Properties to file on October 27, 2000 a reply to BF Homes
comment/opposition coupled with a motion to withdraw the sought suspension of
proceedings due to the intervening termination of the receivership.9
On October 23, 2000, the OCP Las Pias rendered its resolution,10 dismissing San
Miguel Properties criminal complaint for violation of Presidential Decree No. 957 on
the ground that no action could be filed by or against a receiver without leave from the
SEC that had appointed him; that the implementation of the provisions of Presidential
Decree No. 957 exclusively pertained under the jurisdiction of the HLURB; that there
existed a prejudicial question necessitating the suspension of the criminal action until
after the issue on the liability of the distressed BF Homes was first determined by the
SEC en banc or by the HLURB; and that no prior resort to administrative jurisdiction
had been made; that there appeared to be no probable cause to indict respondents for
not being the actual signatories in the three deeds of sale.
On February 20, 2001, the OCP Las Pias denied San Miguel Properties motion for
reconsideration filed on November 28, 2000, holding that BF Homes directors and
officers could not be held liable for the non-delivery of the TCTs under Presidential
Decree No. 957 without a definite ruling on the legality of Atty. Orendains actions; and
that the criminal liability would attach only after BF Homes did not comply with a
directive of the HLURB directing it to deliver the titles.11
San Miguel Properties appealed the resolutions of the OCP Las Pias to the Department
of Justice (DOJ), but the DOJ Secretary denied the appeal on October 15, 2001, holding:
Page 319 of 378

After a careful review of the evidence on record, we find no cogent reason to disturb the
ruling of the City Prosecutor of Las Pias City. Established jurisprudence supports the
position taken by the City Prosecutor concerned.
There is no dispute that aside from the instant complaint for violation of PD 957, there is
still pending with the Housing and Land Use Resulatory Board (HLURB, for short) a
complaint for specific performance where the HLURB is called upon to inquire into,
and rule on, the validity of the sales transactions involving the lots in question and
entered into by Atty. Orendain for and in behalf of BF Homes.
As early as in the case of Solid Homes, Inc. vs. Payawal, 177 SCRA 72, the Supreme
Court had ruled that the HLURB has exclusive jurisdiction over cases involving real
estate business and practices under PD 957. This is reiterated in the subsequent cases of
Union Bank of the Philippines versus HLURB, G.R. [No.] 953364, June 29, 1992 and C.T.
Torres Enterprises vs. Hilionada, 191 SCRA 286.
The said ruling simply means that unless and until the HLURB rules on the validity of
the transactions involving the lands in question with specific reference to the capacity of
Atty. Orendain to bind BF Homes in the said transactions, there is as yet no basis to
charge criminally respondents for non-delivery of the subject land titles. In other words,
complainant cannot invoke the penal provision of PD 957 until such time that the
HLURB shall have ruled and decided on the validity of the transactions involving the
lots in question.
WHEREFORE, the appeal is hereby DENIED.
SO ORDERED.12 (Emphasis supplied)
The DOJ eventually denied San Miguel Properties motion for reconsideration.13
Ruling of the CA
Undaunted, San Miguel Properties elevated the DOJs resolutions to the CA on

certiorari and mandamus (C.A.-G.R. SP No. 73008), contending that respondent DOJ
Secretary had acted with grave abuse in denying their appeal and in refusing to charge
the directors and officers of BF Homes with the violation of Presidential Decree No. 957.
San Miguel Properties submitted the issue of whether or not HLURB Case No. REM-
082400-11183 presented a prejudicial question that called for the suspension of the
criminal action for violation of Presidential Decree No. 957.
In its assailed decision promulgated on February 24, 2004 in C.A.-G.R. SP No.

73008,14 the CA dismissed San Miguel Properties petition, holding and ruling as
follows:
From the foregoing, the conclusion that may be drawn is that the rule on prejudicial
question generally applies to civil and criminal actions only.
However, an exception to this rule is provided in Quiambao vs. Osorio cited by the
respondents. In this case, an issue in an administrative case was considered a
prejudicial question to the resolution of a civil case which, consequently, warranted the
suspension of the latter until after termination of the administrative proceedings.
Page 320 of 378

Quiambao vs. Osorio is not the only instance when the Supreme Court relaxed the
application of the rule on prejudicial question.
In Tamin vs. CA involving two (2) civil actions, the Highest Court similarly applied the
rule on prejudicial question when it directed petitioner therein to put up a bond for just
compensation should the demolition of private respondents building proved to be
illegal as a result of a pending cadastral suit in another tribunal.
City of Pasig vs. COMELEC is yet another exception where a civil action involving a
boundary dispute was considered a prejudicial question which must be resolved prior
to an administrative proceeding for the holding of a plebiscite on the affected areas.
In fact, in Vidad vs. RTC of Negros Oriental, Br. 42, it was ruled that in the interest of
good order, courts can suspend action in one case pending determination of another
case closely interrelated or interlinked with it.
It thus appears that public respondent did not act with grave abuse of discretion x x x
when he applied the rule on prejudicial question to the instant proceedings considering
that the issue on the validity of the sale transactions x x x by x x x Orendain in behalf of
BF Homes, Inc., is closely intertwined with the purported criminal culpability of private
respondents, as officers/directors of BF Homes, Inc., arising from their failure to deliver
the titles of the parcels of land included in the questioned conveyance.
All told, to sustain the petitioners theory that the result of the HLURB proceedings is
not determinative of the criminal liability of private respondents under PD 957 would
be to espouse an absurdity. If we were to assume that the HLURB finds BFHI under no
obligation to delve the subject titles, it would be highly irregular and contrary to the
ends of justice to pursue a criminal case against private respondents for the non-
delivery of certificates of title which they are not under any legal obligation to turn over
in the first place. (Bold emphasis supplied)
On a final note, absent grave abuse of discretion on the part of the prosecutorial arm of
the government as represented by herein public respondent, courts will not interfere
with the discretion of a public prosecutor in prosecuting or dismissing a complaint filed
before him. A public prosecutor, by the nature of his office, is under no compulsion to
file a criminal information where no clear legal justification has been shown, and no
sufficient evidence of guilt nor prima facie case has been established by the complaining
party.
WHEREFORE, premises considered, the instant Petition for Certiorari and Mandamus
is hereby DENIED. The Resolutions dated 15 October 2001 and 12 July 2002 of the
Department of Justice are AFFIRMED.
SO ORDERED. 15
The CA denied San Miguel Properties motion for reconsideration on January 18, 2005.16
Issues
Aggrieved, San Miguel Properties is now on appeal, raising the following for
consideration and resolution, to wit:
Page 321 of 378

THE COURT OF APPEALS COMMITTED GRAVE, SERIOUS AND REVERSIBLE

ERRORS WHEN IT DISMISSED PETITIONERS CERTIORARI AND MANDAMUS
PETITION TO ORDER AND DIRECT RESPONDENT SECRETARY TO INDICT
RESPONDENTS FOR VIOLATION OF SECTION 25, PD. 957 IN THAT:
THE OBLIGATION OF PRIVATE RESPONDENTS TO DELIVER TO PETITIONER

THE TITLES TO 20 FULLY-PAID LOTS IS MANDATED BY SECTION 25, PD 957. IN
FACT, THE OFFICE OF THE PRESIDENT HAD DULY CONFIRMED THE SAME PER
ITS DECISION DATED 27 JANUARY 2005 IN O.P. CASE NO. 03-E-203, ENTITLED
"SMPI V. BF HOMES, INC.".
A FORTIORI, PRIVATE RESPONDENTS FAILURE AND/OR REFUSAL TO DELIVER

TO PETITIONER THE SUBJECT TITLES CONSTITUTES CRIMINAL OFFENSE PER
SECTIONS 25 AND 39, PD 957 FOR WHICH IT IS THE MINISTERIAL DUTY OF
RESPONDENT SECRETARY TO INDICT PRIVATE RESPONDENTS THEREFOR.
IN ANY EVENT, THE HLURB CASE DOES NOT PRESENT A "PREJUDICIAL

QUESTION" TO THE SUBJECT CRIMINAL CASE SINCE THE FORMER INVOLVES
AN ISSUE SEPARATE AND DISTINCT FROM THE ISSUE INVOLVED IN THE
LATTER. CONSEQUENTLY, THE HLURB CASE HAS NO CORRELATION, TIE NOR
LINKAGE TO THE PRESENT CRIMINAL CASE WHICH CAN PROCEED
INDEPENDENTLY THEREOF.
IN FACT, THE CRIMINAL CULPABILITY OF PRIVATE RESPONDENTS EMANATE

FROM THEIR MALA PROHIBITA NON-DELIVERY OF THE TITLES TO TWENTY
(20) FULLY-PAID PARCELS OF LAND TO PETITIONER, AND NOT FROM THEIR
NON-COMPLIANCE WITH THE HLURBS RULING IN THE ADMINISTRATIVE
CASE.
NONETHELESS, BY DECREEING THAT PETITIONERS CRIMINAL COMPLAINT IS

PREMATURE, BOTH THE COURT OF APPEALS AND RESPONDENT SECRETARY
HAD IMPLIEDLY ADMITTED THE EXISTENCE OF SUFFICIENT PROBABLE CAUSE
AGAINST PRIVATE RESPONDENTS FOR THE CRIME CHARGED.17
It is relevant at this juncture to mention the outcome of the action for specific
performance and damages that San Miguel Properties instituted in the HLURB
simultaneously with its filing of the complaint for violation of Presidential Decree No.
957. On January 25, 2002, the HLURB Arbiter ruled that the HLURB was inclined to
suspend the proceedings until the SEC resolved the issue of Atty. Orendains authority
to enter into the transactions in BF Homes behalf, because the final resolution by the
SEC was a logical antecedent to the determination of the issue involved in the
complaint before the HLURB. Upon appeal, the HLURB Board of Commissioners
(HLURB Board), citing the doctrine of primary jurisdiction, affirmed the HLURB
Arbiters decision, holding that although no prejudicial question could arise, strictly
speaking, if one case was civil and the other administrative, it nonetheless opted to
suspend its action on the cases pending the final outcome of the administrative
proceeding in the interest of good order.18
Not content with the outcome, San Miguel Properties appealed to the Office of the
President (OP), arguing that the HLURB erred in suspending the proceedings. On
January 27, 2004, the OP reversed the HLURB Boards ruling, holding thusly:
Page 322 of 378

The basic complaint in this case is one for specific performance under Section 25 of the
Presidential Decree (PD) 957 "The Subdivision and Condominium Buyers Protective."
As early as August 1987, the Supreme Court already recognized the authority of the
HLURB, as successor agency of the National Housing Authority (NHA), to regulate,
pursuant to PD 957, in relation to PD 1344, the real estate trade, with exclusive original
jurisdiction to hear and decide cases "involving specific performance of contractual and
statutory obligation filed by buyers of subdivision lots against the owner, developer,
dealer, broker or salesman," the HLURB, in the exercise of its adjudicatory powers and
functions, "must interpret and apply contracts, determine the rights of the parties under
these contracts and award[s] damages whenever appropriate."
Given its clear statutory mandate, the HLURBs decision to await for some forum to
decide if ever one is forthcoming the issue on the authority of Orendain to dispose of
subject lots before it peremptorily resolves the basic complaint is unwarranted, the
issues thereon having been joined and the respective position papers and the evidence
of the parties having been submitted. To us, it behooved the HLURB to adjudicate, with
the usual dispatch, the right and obligation of the parties in line with its own
appreciation of the obtaining facts and applicable law. To borrow from Mabubha
Textile Mills Corporation vs. Ongpin, it does not have to rely on the finding of others to
discharge this adjudicatory functions.19
After its motion for reconsideration was denied, BF Homes appealed to the CA (C.A.-
G.R. SP No. 83631), raising as issues: (a) whether or not the HLURB had the jurisdiction
to decide with finality the question of Atty. Orendains authority to enter into the
transaction with San Miguel Properties in BF Homes behalf, and rule on the rights and
obligations of the parties to the contract; and (b) whether or not the HLURB properly
suspended the proceedings until the SEC resolved with finality the matter regarding
such authority of Atty. Orendain.
The CA promulgated its decision in C.A.-G.R. SP No. 83631,20 decreeing that the
HLURB, not the SEC, had jurisdiction over San Miguel Properties complaint. It
affirmed the OPs decision and ordered the remand of the case to the HLURB for
further proceedings on the ground that the case involved matters within the HLURBs
competence and expertise pursuant to the doctrine of primary jurisdiction, viz:
[T]he High Court has consistently ruled that the NHA or the HLURB has jurisdiction
over complaints arising from contracts between the subdivision developer and the lot
buyer or those aimed at compelling the subdivision developer to comply with its
contractual and statutory obligations.
Hence, the HLURB should take jurisdiction over respondents complaint because it
pertains to matters within the HLURBs competence and expertise. The proceedings
before the HLURB should not be suspended.
While We sustain the Office of the President, the case must be remanded to the HLURB.
This is in recognition of the doctrine of primary jurisdiction. The fairest and most
equitable course to take under the circumstances is to remand the case to the HLURB
for the proper presentation of evidence.21
Did the Secretary of Justice commit grave abuse of discretion in upholding the dismissal
of San Miguel Properties criminal complaint for violation of Presidential Decree No.
957 for lack of probable cause and for reason of a prejudicial question?
Page 323 of 378

The question boils down to whether the HLURB administrative case brought to compel
the delivery of the TCTs could be a reason to suspend the proceedings on the criminal
complaint for the violation of Section 25 of Presidential Decree No. 957 on the ground of
a prejudicial question.
Ruling of the Court
1.
Action for specific performance, even if pending in the HLURB, an administrative

agency, raises a prejudicial question BF Homes posture that the administrative case for
specific performance in the HLURB posed a prejudicial question that must first be
determined before the criminal case for violation of Section 25 of Presidential Decree
No. 957 could be resolved is correct.
A prejudicial question is understood in law to be that which arises in a case the

resolution of which is a logical antecedent of the issue involved in the criminal case, and
the cognizance of which pertains to another tribunal. It is determinative of the criminal
case, but the jurisdiction to try and resolve it is lodged in another court or tribunal. It is
based on a fact distinct and separate from the crime but is so intimately connected with
the crime that it determines the guilt or innocence of the accused.22 The rationale behind
the principle of prejudicial question is to avoid conflicting decisions.23 The essential
elements of a prejudicial question are provided in Section 7, Rule 111 of the Rules of
Court, to wit: (a) the previously instituted civil action involves an issue similar or
intimately related to the issue raised in the subsequent criminal action, and (b) the
resolution of such issue determines whether or not the criminal action may proceed.
The concept of a prejudicial question involves a civil action and a criminal case. Yet,
contrary to San Miguel Properties submission that there could be no prejudicial
question to speak of because no civil action where the prejudicial question arose was
pending, the action for specific performance in the HLURB raises a prejudicial question
that sufficed to suspend the proceedings determining the charge for the criminal
violation of Section 2524 of Presidential Decree No. 957. This is true simply because the
action for specific performance was an action civil in nature but could not be instituted
elsewhere except in the HLURB, whose jurisdiction over the action was exclusive and
original.25
The determination of whether the proceedings ought to be suspended because of a

prejudicial question rested on whether the facts and issues raised in the pleadings in the
specific performance case were so related with the issues raised in the criminal
complaint for the violation of Presidential Decree No. 957, such that the resolution of
the issues in the former would be determinative of the question of guilt in the criminal
case. An examination of the nature of the two cases involved is thus necessary.
An action for specific performance is the remedy to demand the exact performance of a
contract in the specific form in which it was made, or according to the precise terms
agreed upon by a party bound to fulfill it.26 Evidently, before the remedy of specific
performance is availed of, there must first be a breach of the contract. 27 The remedy has
its roots in Article 1191 of the Civil Code, which reads:
Page 324 of 378

Article 1191. The power to rescind obligations is implied in reciprocal ones, in case one
of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfillment, if the latter should become impossible. x x x
(Emphasis supplied)
Accordingly, the injured party may choose between specific performance or rescission
with damages. As presently worded, Article 1191 speaks of the remedy of rescission in
reciprocal obligations within the context of Article 1124 of the former Civil Code which
used the term resolution. The remedy of resolution applied only to reciprocal
obligations, such that a partys breach of the contract equated to a tacit resolutory
condition that entitled the injured party to rescission. The present article, as in the
former one, contemplates alternative remedies for the injured party who is granted the
option to pursue, as principal actions, either the rescission or the specific performance
of the obligation, with payment of damages in either case.28
On the other hand, Presidential Decree No. 957 is a law that regulates the sale of
subdivision lots and condominiums in view of the increasing number of incidents
wherein "real estate subdivision owners, developers, operators, and/or sellers have
reneged on their representations and obligations to provide and maintain properly" the
basic requirements and amenities, as well as of reports of alarming magnitude of
swindling and fraudulent manipulations perpetrated by unscrupulous subdivision and
condominium sellers and operators,29 such as failure to deliver titles to the buyers or
titles free from liens and encumbrances. Presidential Decree No. 957 authorizes the
suspension and revocation of the registration and license of the real estate subdivision
owners, developers, operators, and/or sellers in certain instances, as well as provides
the procedure to be observed in such instances; it prescribes administrative fines and
other penalties in case of violation of, or non-compliance with its provisions.
Conformably with the foregoing, the action for specific performance in the HLURB
would determine whether or not San Miguel Properties was legally entitled to demand
the delivery of the remaining 20 TCTs, while the criminal action would decide whether
or not BF Homes directors and officers were criminally liable for withholding the 20
TCTs. The resolution of the former must obviously precede that of the latter, for should
the HLURB hold San Miguel Properties to be not entitled to the delivery of the 20 TCTs
because Atty. Orendain did not have the authority to represent BF Homes in the sale
due to his receivership having been terminated by the SEC, the basis for the criminal
liability for the violation of Section 25 of Presidential Decree No. 957 would evaporate,
thereby negating the need to proceed with the criminal case.
Worthy to note at this juncture is that a prejudicial question need not conclusively
resolve the guilt or innocence of the accused. It is enough for the prejudicial question to
simply test the sufficiency of the allegations in the information in order to sustain the
further prosecution of the criminal case. A party who raises a prejudicial question is
deemed to have hypothetically admitted that all the essential elements of the crime
have been adequately alleged in the information, considering that the Prosecution has
not yet presented a single piece of evidence on the indictment or may not have rested its
case. A challenge to the allegations in the information on the ground of prejudicial
question is in effect a question on the merits of the criminal charge through a non-
criminal suit.30
Page 325 of 378

2.
Doctrine of primary jurisdiction is applicable
That the action for specific performance was an administrative case pending in the
HLURB, instead of in a court of law, was of no consequence at all. As earlier mentioned,
the action for specific performance, although civil in nature, could be brought only in
the HLURB. This situation conforms to the doctrine of primary jurisdiction. There has
been of late a proliferation of administrative agencies, mostly regulatory in function. It
is in favor of these agencies that the doctrine of primary jurisdiction is frequently
invoked, not to defeat the resort to the judicial adjudication of controversies but to rely
on the expertise, specialized skills, and knowledge of such agencies in their resolution.
The Court has observed that one thrust of the proliferation is that the interpretation of
contracts and the determination of private rights under contracts are no longer a
uniquely judicial function exercisable only by the regular courts.31
The doctrine of primary jurisdiction has been increasingly called into play on matters
demanding the special competence of administrative agencies even if such matters are
at the same time within the jurisdiction of the courts. A case that requires for its
determination the expertise, specialized skills, and knowledge of some administrative
board or commission because it involves technical matters or intricate questions of fact,
relief must first be obtained in an appropriate administrative proceeding before a
remedy will be supplied by the courts although the matter comes within the jurisdiction
of the courts. The application of the doctrine does not call for the dismissal of the case in
the court but only for its suspension until after the matters within the competence of the
administrative body are threshed out and determined.32
To accord with the doctrine of primary jurisdiction, the courts cannot and will not
determine a controversy involving a question within the competence of an
administrative tribunal, the controversy having been so placed within the special
competence of the administrative tribunal under a regulatory scheme. In that instance,
the judicial process is suspended pending referral to the administrative body for its
view on the matter in dispute. Consequently, if the courts cannot resolve a question that
is within the legal competence of an administrative body prior to the resolution of that
question by the latter, especially where the question demands the exercise of sound
administrative discretion requiring the special knowledge, experience, and services of
the administrative agency to ascertain technical and intricate matters of fact, and a
uniformity of ruling is essential to comply with the purposes of the regulatory statute
administered, suspension or dismissal of the action is proper.33
3.
Other submissions of petitioner are unwarranted
It is not tenable for San Miguel Properties to argue that the character of a violation of
Section 25 of Presidential Decree No. 957 as malum prohibitum, by which criminal
liability attached to BF Homes directors and officers by the mere failure to deliver the
TCTs, already rendered the suspension unsustainable.34 The mere fact that an act or
omission was malum prohibitum did not do away with the initiative inherent in every
court to avoid an absurd result by means of rendering a reasonable interpretation and
application of the procedural law. Indeed, the procedural law must always be given a
reasonable construction to preclude absurdity in its application.35 Hence, a literal
Page 326 of 378

application of the principle governing prejudicial questions is to be eschewed if such

application would produce unjust and absurd results or unreasonable consequences.
San Miguel Properties further submits that respondents could not validly raise the
prejudicial question as a reason to suspend the criminal proceedings because
respondents had not themselves initiated either the action for specific performance or
the criminal action. It contends that the defense of a prejudicial question arising from
the filing of a related case could only be raised by the party who filed or initiated said
related case.
The submission is unfounded. The rule on prejudicial question makes no distinction as

to who is allowed to raise the defense. Ubi lex non distinguit nec nos distinguere
debemos. When the law makes no distinction, we ought not to distinguish.36
WHEREFORE, the Court AFFIRMS the decision promulgated on February 24, 2004 by
the Court of Appeals in CA-G.R. SP NO. 73008; and ORDERS petitioner to pay the costs
of suit.
G.R. No. 158150 September 10, 2014
AGRIEX CO., LTD., Petitioner, vs. HON. TITUS B. VILLANUEVA, Commissioner,

Bureau of Customs (now replaced by HON. ANTONIO M. BERNARDO), and HON.
BILLY C. BIBIT, Collector of Customs, Port of Subic (now replaced by HON.
EMELITO VILLARUZ), Respondents.
DECISION
The Court affirms the exclusive jurisdiction of the Bureau of Customs over seizure cases
within the Subic Freeport Zone.
The Case
This appeal by petition for review on certiorari is brought by Agriex Co., Ltd. to reverse
the decision promulgated on November 18, 2002 in CA-G .R. CV No. 67593,1 whereby
the Court of Appeals (CA) dismissed its petition for certiorari and prohibition to nullify
and set aside the Notice of Sale dated October 18, 2001 issued by respondent Billy C.
Bibit as the Collector of Customs in the Port of Subic.
Antecedents
On July 19, 2001, the petitioner, a foreign corporation whose principal office was in
Bangkok, Thailand, entered into a contract of sale with PT. Gloria Mitra Niagatama
International of Surabaya, Indonesia (PT. Gloria Mitra) for 180,000 bags (or 9,000 metric
tons) of Thai white rice.2 Later on, it entered into another contract of sale with R&C
Agro Trade of Cebu City (R&C Agro Trade) for 20,000 bags of Thai white rice. On July
27, 2001, it chartered the vessel MV Hung Yen to transport the 200,000 bags of Thai
white rice to the Subic Free Port for transshipment to their designated consignees in the
Fiji Islands and Indonesia (for the 180,000 bags), and in Cebu City (for the 20,000
bags).3 The MV Hung Yen left Bangkok, Thailand on August 15, 2001 and arrived at the
Subic Free Port on August 20, 2001 with the inward foreign manifest indicating the final
destinations of the shipment. However, the Sea Port Department of the Subic Bay
Metropolitan Authority (SBMA) allowed the vessel to berth only 22 days later, or on
September 11, 2001. SBMA advised the vessel agent to secure from the National Food
Page 327 of 378

Authority (NFA) an amendment of the import permit issued in favor of R&C Agro
Trade to change the discharging port from the Port of Cebu to the Port of Subic.
Due to the delay in the berthing and unloading of the cargo from the vessel, the
petitioner, through its agent in Subic, applied for a vessel exit clearance to allow the MV
Hung Yen to sail for the Labuan Free Port in Malaysia. On August 24, 2001, the Bureau
of Customs issued a Clearance of Vessel to a Foreign Port, granting the petitioners
request to allow the MV Hung Yen and cargo to exit for Malaysia.4 Despite the issuance
of the clearance, the MV Hung Yen did not set sail for the Labuan Free Port on August
26, 2001.
On September 10, 2001, the petitioner requested permission from the Bureau of
Customs to unload the entire shipment of 200,000 bags of Thai white rice because the
MV Hung Yen must return to Vietnam.5 Upon the recommendation of Atty. James F.
Enriquez and Atty. Clemente P. Heraldo, as indicated in their After Mission Report
dated September 4, 2001,6 respondent Commissioner Titus B. Villanueva issued his 1st
Indorsement on September 11, 2001 directing respondent Collector of Customs Billy C.
Bibit to issue a Warrant of Seizure and Detention (WSD) against the 20,000 bags of Thai
white rice consigned to R&C Agro Trade.7
Accordingly, Collector Bibit issued WSD No. 2001-13 dated September 12, 2001 against
the 20,000 bags of Thai white rice consigned to R&C Agro Trade notwithstanding that
no bag of rice had yet been unloaded from the vessel.8
After the unloading, transfer and storage of the rice shipment at SBMAs warehouse,
Collector Bibit issued amended WSDs on September 27, 2001 to cover the MV Hung
Yen and the remaining 180,000 bags of Thai white rice intended for transshipment.9
On October 4, 2001, the petitioner filed with the Bureau of Customs in the Port of Subic
an Urgent Motion to Quash Warrant of Seizure, inclusive of WSD No. 2001-13 (20,000
bags consigned to R&C Agro Trade), WSD No. 2001-13A (MV Hung Yen) and WSD No.
2001-13B (180,000 bags for transshipment).10
On October 26, 2001, Collector Bibit quashed WSD No. 2001-13A over the MV Hung
Yen on the ground thatthe vessel was not chartered or leased.11
Pending hearing of the seizure proceedings vis--vis the rice shipments, Collector Bibit
issued a Notice of Sale on October 18, 2001, setting therein the auction sale of the
200,000 bags of Thai white rice on November 22, 2001 and November 23, 2001.12
The petitioner filed a Manifestation and Urgent Motion for Reconsideration on October
19, 2001, but Collector Bibit did not act on the motion.13
Consequently, the petitioner instituted the petition for certiorariand prohibition in the
CA on November 12,2001 (with prayer for the issuance of a temporary restraining order
and/or writ of injunction), alleging grave abuse of discretion on the part of the
respondents for issuing the October 18, 2001 Notice of Sale notwithstanding thatthey
had no jurisdiction over the 180,000 bags of Thai white rice intended for transshipment
to other countries.14
Accordingly, Commissioner Villanueva issued his memorandum dated November 19,

2001 directing Collector Bibit not to proceed with the scheduled auction of the 180,000
bags ofThai white rice until further orders from his office.15
Page 328 of 378

On November 22, 2001, the CA issued a temporary restraining order enjoining the
respondents to desistfrom holding the scheduled public auction.16
The respondents did not file their Comment vis--vis the petition for certiorari and
prohibition. Instead, they filed a Manifestation and Motion dated December 3, 2001,
whereby they prayed for the dismissal of the petition on the ground of mootness due to
Commissioner Villanuevas November 19, 2001 memorandum.17
In the resolution promulgated on April 2, 2002,18 the CA denied the respondents

Manifestation and Motion dated December 3, 2001. Meanwhile, on November 14, 2001,
Collector Bibit denied the motion for the quashal of the warrant of seizure issued
against the rice shipments, and ordered their forfeiture in favor of the Government.19
The petitioner appealed the November 14, 2001 ruling by Collector Bibit to
Commissioner Villanueva,20 who resolved the appeal through the Consolidated Order
of February 4, 2002, disposing thusly:
WHEREFORE, the ORDER Appealed from is hereby MODIFIED, granting the Motion
for Settlement under S.I. No. 2001-13 and accordingly ORDER the release ofthe 20,000
bags of Thai rice to claimants, R&C AGRO TRADE or to its duly authorized
representative, upon payment of the settlement value of EIGHT MILLION FOUR
HUNDRED THOUSAND PESOS (Php8,400,000.00) and AFFIRMING the FORFEITURE
under S.I. No. 2001-13-B of the 180,000 bags of Thai rice consigned to different non-
existing consignees in Indonesia and the denial of ownership by B.I. Naidu and Sons
Ltd. of Fiji Island.
Let copies of this Order be furnished to all parties and offices concerned for information
and guidance.
SO ORDERED.21
On February 20, 2002, the petitioner filed in the CA its Comment on the respondents
Manifestation and Motion dated December 3, 2001, arguing that the issue concerning
the October 18, 2001 Notice of Sale had not been rendered moot and academicbut
merely suspended; that it would move for the reconsideration of the February 4, 2002
Consolidated Order of Commissioner Villanueva; and that shouldits motion for
reconsideration be denied, it would elevate the issues relative to the injunctive relief to
the Court of Tax Appeals (CTA) by petition for certiorari.22
On April 2, 2002, the CA denied the respondents Manifestation and Motion dated
December 3, 2001.23
On July 22, 2002, Commissioner Antonio M. Bernardo, who had meanwhile succeeded
Commissioner Villanueva, released the 2nd Indorsement directing the sale of the
180,000 bags of Thai white rice at public auction.24Accordingly, District Collector Felipe
Bartolome issued a Notice of Sale scheduling the public auction on July 29, 2002 and
July 30, 2002.25 The public auction was reset to August 5, 2002 and August 6, 2002,
however, following the CAs promulgation of its resolution on July 29, 2002 granting
the petitioners motion for the issuance of a writ of preliminary injunction.26
Eventually, the auction sale went onas scheduled on August 5, 2002 and August 6, 2002,
and the proceeds amounting to P116,640,000.00 were deposited in the Land Bank of the
Page 329 of 378

Philippines, Subic Branch, under Bureau of Customs Trust Fund II Account No.
1572100800.
Judgment of the CA
On November 18, 2002, the CA rendered its assailed judgment on the petition for
certiorariand prohibition, viz:
Although it is true that the Port of Subic is a free zone, being a portion of the Subic
Special Economic Zone, and as such, it shall be operated and managed as a separate
customs territory ensuring free flow or movement of goods and capital within, into and
exported out of the Subic Special Economic Zone under Republic Act No. 2779 (sic),
particularly Section 12 thereof, yet, when probable cause is shown that the foreign
goods are considered as contraband or smuggled goods, the Commissioner of Customs
has the primary jurisdiction to have the goods seized through the issuance of a warrant
of seizure and detention order, which is the situation obtaining in this instant case
because when public respondent Collector Billy C. Bibit as District Collector of
Customs, Port of Subic, issued an amended warrant of seizure and detention order S.I.
No. 2001-13-B, dated September 27, 2001 to include in the seizure proceeding the subject
180,000 bags ofrice, it was done due to the information supplied by the Directorate
General of Customs and Excise Directorate of Prevention and Investigation of the
Ministry of Finance of the Republic of Indonesia and the information obtained from the
Director for Enforcement of the Fiji Revenue and Customs Authorities of Fiji Island
Customs Service, that the alleged consignees in Indonesia are not actually existing and
that B.I. Naidu and Sons, Ltd. of Fiji Island is not engaged in the importation of rice.
In accordance with Section 2535 of the Tariff and Customs Code, as amended, since the
government has already complied with the two (2) conditions set forth therein, the
burden of proof now lies upon the complainant, who in this case is the petitioner, to
prove otherwise.
Moreover, contrary to the contention of the petitioner that it was denied due process of
law when the amended Warrant of Seizure and Detention Order S.I. No. 2002-13B dated
September 27, 2001 was issued, because it was done without giving them an
opportunity to be heard and explain their side, suffice it to say that "the essence of due
process is simply to be heard or as applied to administrative proceedings, to explain
ones side or an opportunity to seek reconsideration of an action or ruling complained
of " (National Police Commission v. Bernabe, 332 SCRA 74) and "due process does not
necessarilyrequire conducting an actual hearing but simply giving the party concerned
due notice and affording an opportunity or right to be heard" (Ramoran v. Jardine CMG
Life Insurance Company, Inc.) which opportunity was given to the petitioner since it
was able to file an UrgentMotion to Quash Warrant of Seizure dated October 1, 2001
and Manifestation and Urgent Motion for Reconsideration dated October 19, 2001
which were all denied in a decision dated November 14, 2001 by the Collector of
Customs and instead ordered the forfeiture of the subject bags of rice in favor of the
government.
Furthermore, on appeal to the Commissioner of Customs of the Order forfeiting the

180,000 bags of Thai rice seized under S.I. No. 2001-13B, the same was affirmed, per
Consolidated Order dated February 4, 2002.
Consequently, it is not correct as claimed by the petitioner that the notice (auction) sale
dated October 18, 2001, as well as, the subsequent notices of auction sale are invalid
Page 330 of 378
because they were issued pursuant to a valid Warrant of Seizure and Detention Order
S.I. No. 2001-13B, dated September 27, 2001.
Finally, since the jurisdiction to determine the validity or regularity of the seizure and
forfeiture proceedings is lodged or vested on the Collector of Customs and then, to the
Commissioner of Customs, which has already been done in this case before the actual
conduct of the auction sale of the subject 180,000 bags of rice, the next move that
petitioner should have done is to appeal the Consolidated Order dated February 4, 2002
to the Court of Tax Appeals and afterward, if unsatisfied, to this Court, by filing a
petition for reviewunder Rule 43 of the 1997 Rules of Civil Procedure, as amended.
WHEREFORE, foregoing premises considered, this petition, being filed prematurely, is

DENIED. SO ORDERED.27
The petitioner moved for reconsideration, but the CA denied the motion on May 8,
2003.28 Issues
In its petition for review, the petitioner contends that:
1. THE COURT OF APPEALS ERRED IN NOT DECLARING THE SEIZURE

PROCEEDINGS NULL AND VOID FOR LACK OF JURISDICTION OVER
PETITIONERS RICE SHIPMENT.
2. THE COURT OF APPEALS ERRED IN NOT DECLARING THE

RESPONDENTS TO HAVE GRAVELY ABUSED THEIR DISCRETION IN THE
SALE OF PETITIONERS RICE SHIPMENT.
3. THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONERS

REMEDY IS AN APPEAL TO THE COURT OF TAX APPEALS.29
We note that a few days after the petitioner instituted the certiorari proceedings in the
CA on November12, 2001, Commissioner Villanueva countermanded Collector Bibits
October 18, 2001 Notice of Sale through his November 19, 2001 memorandum.
Thereupon, the October 18, 2001 Notice of Sale could no longer be enforced, thereby
rendering the resolution of the validity of the October 18, 2001 Notice of Sale moot and
academic. A moot and academic case is one thatceases to present a justiciable
controversy by virtue of supervening events, so that a declaration thereon would be of
no practical use or value.30
As matters stand, WSD No. 2001-13A issued against the MV Hung Yen was quashed by
the October 26, 2001 order of Collector Bibit; while WSD No. 2001-13 issued against the
20,000 bags of rice consigned to R&C Agro Trade had been effectively lifted by
Commissioner Villanuevas Consolidated Order dated February 4, 2002 following R&C
Agro Trades payment of the settlement value of P8,400,000.00.
The pending seizure proceedings under WSD No. 2001-13B of the 180,000 bags of rice
remained, and became the basis for the issuance of the subsequent notice of sale by
Collector Bartolome. Consequently, the controversy on the jurisdiction of the Bureau of
Customs over the seizure and forfeiture of goods and articles entering the free port area
lingers and requires the Courts intervention.
Ruling
Page 331 of 378

The Subic Special Economic Zone, or the Subic Bay Freeport, was established pursuant
to Section 12 of Republic Act No. 7227 (The Bases Conversion and Development Act of
1992), to be operated and managed as a special customs territory. On the other hand,
the Subic Bay Metropolitan Authority (SBMA) was created under Section 13 of RA No.
7227 to serve "as an operating and implementing arm of the Conversion Authority"
within the SBF.
The concept of a Freeport as a separate customs territory was described during Senator
Enriles interpellations during the sponsorship of the bill that later on became RA No.
7227, to wit:
Senator Enrile: Mr. President, I think we are talking here of sovereign concepts, not
territorial concepts. The concept that we are supposed to craft here is to carve out a
portion of our terrestrial domain as well as our adjacent waters and say tothe world:
"Well, you can set up your factories in this area that weare circumscribing, and bringing
your equipment and bringing your goods, you are not subject to any taxes and duties
because you are not within the customs jurisdiction of the Republic of the Philippines,
whether you store the goods or only for purposes of transshipment or whether you
make theminto finished products again to be reexported to other lands."
xxxx
My understanding of a "free port" is, we are in effect carving out a part of our territory
and make it as if it were foreign territory for purposes of our customs laws, and that
people can come, bring their goods, store them there and bring them out again, as long
as they do not come into the domestic commerce of the Republic.
We do not really care whether these goods are stored here. The only thing that we care
is for our people to have an employment because of the entry of these goods that are
being discharged, warehoused and reloaded into the ships so that theycan be exported.
That will generate employment for us. For as long as that is done, we are saying, in
effect, that we have the least contact with our tariff and customs laws and our tax laws.
Therefore, we consider these goods as outside of the customs jurisdiction of the
Republic of the Philippines as yet, until we draw them from this territory and bring
them inside our domesticcommerce. In which case, they have to pass through our
customs gate. I thought we are carving out this entire area and convert it into this kind
of concept.31
On the basis of the concept, the petitioner claims that the Collector of Customs had no
jurisdiction to issue WSD No. 2001-13B and the October 18, 2001 Notice of Sale
concerning the 180,000 bags of Thai white rice, which had entered the SBF only for
transshipment to other countries.32 It insists that the auction sale of the 180,000 bags was
null and void for failing to comply with Executive Order No. 272, which required
presidential approval when the amount to be generated from the sale was at least P50
Million;33 that the sale disregarded the memorandum of agreement between the Bureau
of Customs and the NFA;34 that the rice was sold at P785.00 per 50-kilo bag instead
of P1,100.00, the price established by the Bureau of Agricultural Statistics;35 and that no
notice of auction sale was sent to the NFA or its accredited dealers.36
In contrast, the respondents soughtthe dismissal of the petition on the ground of lack of
jurisdiction, maintaining that an appeal to the Court of Tax Appeals (CTA) was the
Page 332 of 378

proper remedy to assail the decision of the Commissioner of Customs, which the
petitioner itself expressly recognized in its February 20, 2002 Comment vis--vis their
Manifestation and Motion dated December 3, 2001; and that because the petitioner did
not appeal to the CTA within the prescribed period,the February 4, 2002 Consolidated
Order of Commissioner Villanueva became final and executory, and could no longer be
the subject of review in the present proceedings.37
The Court declares that the Collector of Customs was authorized to institute seizure
proceedings and to issue WSDs in the Subic Bay Freeport, subject to the review by the
Commissioner of Customs. Accordingly, the proper remedy to question the order
orresolution of the Commissioner of Customs was an appeal to the CTA, not to the CA.
Although RA No. 7227 is silent as to the person or entity vested with the authority to
seize and forfeit or detain goods and articles entering the Subic Bay Freeport, the
implementing rules and regulations (IRR) of RA No. 7227 contained the following
provisions, to wit:
Sec. 11. Responsibilities of the SBMA. Other than the powers and functions prescribed
in Section 10 of these Rules, the SBMA shall have the following responsibilities:
xxxx
f. Consistent with the Constitution, the SBMA shall have the following powers to
enforce the law and these Rules in the SBF:
xxxx
(4) to seize articles, substances, merchandise and records considered to be in violation of

the law and these Rules, and to provide for their return to the enterprise or person from
whom they were seized, or their forfeiture to the SBMA; x x x
B. Transactions with the Customs Territory
xxxx
Sec. 52. Seizure of Foreign Articles. Foreign articles withdrawn transported or taken in
commercialquantities from the SBF to the Customs Territory without payment of duties
and taxes, shall be subject to seizure and forfeiture proceedings pursuant to the
pertinent provisions of the Tariff and Customs Code and the National Internal Revenue
Code of the Philippines, without prejudice toany criminal and/or administrative
actions that may be instituted against the person/persons liable/responsible therefor.
C. Taxes and Fiscal Obligations
xxxx
Sec. 60. Search, Arrest, and Seizure by Customs Officials. Persons, baggage, vehicles
and cargo entering or leaving the SBF are subject to search by Customs officials as a
condition to enter or leave the SBF. Customs officials are authorized to examine any
merchandise held by the SBF Enterprises during regular business hours.
Customs officers may seize any article found during a Customs search upon entering or
leaving the SBF to be in violation of any provision of the customs laws for which a
Page 333 of 378

seizure is authorized, and such seizure shall be disposed ofaccording to the customs
laws. Articles which are prohibited or excluded from the SBF under the rules and
regulations of the SBMA which are found by the Customs officials during an audit,
examination or check within the SBF may be seized by them and turned over to the
SBMA for disposition.
The SBMA may secure the assistance of and/or coordinate with Customs officers to
arrest persons in the SBF for violations of the customs laws for which arrest is
authorized concerning articles in the Customs Territory destined to the SBF or articles
which have been removed from the SBF to the Customs Territory. (Bold underscoring
supplied for emphasis)
Customs Administrative Order No. 4-93 (CAO 4-93), also known as the Rules and
Regulations for Customs Operations in the Subic Special Economic and Freeport Zone,
similarly provides the following:
CHAPTER II. GENERAL PROVISIONS
xxxx
B. AUDIT, SEARCH, SEIZURE AND ARREST IN ZONE
xxxx
3. SEIZURE
Any prohibited or excluded articles found upon search, or through any examination,
audit or check of articles in the Zone by Customs may be seized by Customs for
violations of Tariff and Customs Code of the Philippines as amended and disposed of in
accordance with law.38
Under these statutory provisions, both the SBMA and the Bureau of Customs have the
power to seize and forfeit goods or articles entering the Subic Bay Freeport, except that
SBMAsauthority to seize and forfeit goods or articles entering the Subic Bay Freeport
has been limited only to cases involving violations of RA No. 7227 or its IRR. There is
no question therefore, that the authority of the Bureau of Customs is larger in scope
because it covers cases concerning violations of the customs laws.
The authority of the Bureau of Customs to seize and forfeit goods and articles entering
the Subic Bay Freeport does not contravene the nature of the Subic Bay Freeport as a
separatecustoms authority. Indeed, the investors can generally and freely engage in any
kind of business as well as import into and export out goods with minimum
interference from the Government.39 The Court has thus observed in Executive
Secretary v. Southwing Heavy Industries, Inc.40:
The Freeport was designed to ensure free flow or movement of goods and capital
within a portion of the Philippine territory inorder to attract investors to invest their
capitalin a business climate with the least governmental intervention. The concept of
this zone was explained by Senator Guingona in this wise:
Senator Guingona. Mr. President,the special economic zone is successful in many

places, particularly Hong Kong, which is a free port. The difference between a special
economic zone and an industrial estate is simply expansive in the sense that the
Page 334 of 378

commercial activities, including the establishment of banks, services, financial

institutions, agro-industrial activities, maybe agriculture to a certain extent.
This delineates the activities that would have the least of government intervention, and
the running of the affairs of the special economic zone would be run principally by the
investors themselves, similar to a housing subdivision, where the subdivision owners
elect their representatives to run the affairs of the subdivision, to set the policies, to set
the guidelines.
We would like to see Subic area converted into a little Hong Kong, Mr. President, where
there is a hub of free port and free entry, free duties and activities to a maximum spur
generation of investment and jobs.
While the investor is reluctant to come in the Philippines, as a rule, because of red tape
and perceived delays, we envision this special economic zone to be an area where there
will be minimum government interference.
The initial outlay may not only come from the Government or the Authority as
envisioned here, but from them themselves, because they would be encouraged to
invest not only for the land but also for the buildings and factories. As long as they are
convinced that in such an area they can do business and reap reasonable profits, then
many from other parts, both local and foreign, would invest, Mr. President.
Yet, the treatment of the Subic Bay Freeport as a separate customs territory cannot
completely divest the Government of its right to intervene in the operations and
management of the Subic Bay Freeport, especially when patent violations of the
customs and tax laws are discovered. After all, Section 602 of the Tariff and Customs
Code vests exclusive original jurisdiction in the Bureau of Customs over seizure and
forfeiture cases in the enforcement of the tariff and customs laws.
In this case, an examination of the shipment by the customs officials pursuant to

Mission Order No. 06-2001 initially revealed no cause to hold the release of the 180,000
bags of rice. In their September 4, 2001 After Mission Report, Atty. Enriquez and Atty.
Heraldo pertinently stated:
FINDINGS:
Prescinding from the foregoing factual environment, we find no reason to hold the
departure of the 180,000 bags of rice and the vessel unless we could establish the falsity
ofthe transhipment manifest of this shipment, e.g. the alleged ultimate consignees are
non-existing entities or if they are existing, that they did not order for the shipment
thereof. x x x
xxxx
RECOMMENDATION:
xxxx
With respect to the 180,000 bags of rice allegedly for transshipment, we should
expeditethe verification of the ultimate consignees. Should they really exist and in fact
ordered this shipment, we should allow the transshipment thereof of let it remain on
board the subject vessel which will transport the same, per advise of the shipping agent,
Page 335 of 378

to the Free Port of Labuan Malaysia, its next foreign fort pursuant to the clearance to be
issued therefor in order to allow the lawful departure of the vessel. Conversely, if after
verification, the contrary is found, we should amend the Warrant to include the latter
portion of the shipment in question for having been imported contraryto law or at least
an attempt at importation in violation of law. x x x41
However, further investigation led to the discoverythat the consignees of the 180,000
bags of rice in Indonesia were non-existent, and the consignee in the Fiji Islands denied
being involved in the importation of rice. These findings were summarizedin
Commissioner Villanuevas Consolidated Order, to wit:
x x x The information supplied by the Directorate General of Customs and Excise

Directorate of Prevention and Investigation of the Ministry of Finance of the Republic of
Indonesia, and the information supplied by the Director for Enforcement of the Fiji
Revenue and Customs Authorities of Fiji Island Customs Service, that the alleged
consignees in Indonesia are not actually existing and that B.I. Naidu and Sons Ltd. Of
Fiji Island is not engaged in the importation of rice to be a solid ground to hold the
remaining shipment of 180,000 bagsof rice forfeited as charged. Moreover it should be
stressed thatduring the hearing on the Motion to Quash the WSD issued against the
carrying vessel, the witness who is the General Manager of Overseas Vietnam Shipping
testified that that prefix BKK/PLP on the Bills of Lading stands for
Bangkok/Philippines. Stated differently, if indeed the 180,000 bags of rice were for
transhipment to Indonesia and Fiji Island, then why they were prefixed like the 20,000
bags of rice covered by B/L No. BKK/PLP-01? The said Bills of Lading should have
been prefixed as BKK/IND for those shipments bound for Indonesia and BKK/FJI for
those bound for Fiji Island or in any similar manner. Likewise, the TSN would bearus
out that the witness for the vessel also confirmed during his testimony that there were
alterations made on the Mates Receipt of the cargo which were used as the basis in the
preparation of the questionable Bills of Lading.42
The findings constituted sufficientprobable cause, as required by Section 2535 of the

Tariff and Customs Code,43that violations of the customs laws, particularly Section
102(k) and Section 2530, (a), (f) and (l), par. 3, 4, and 5 of the Tariff and Customs
Code,44 had been committed. For that reason, the institution of the seizure proceedings
and the issuance of WSD No. 2001-13B by the Collector ofCustoms were well within the
jurisdiction of the Bureau of Customs.
In Subic Bay Metropolitan Authority v. Rodriguez,45 the Court has already recognized
the exclusive jurisdiction of the Bureau of Customs and its officials over seizure cases
although the articles were within the Freeport zone, holding:
Petitioner alleges that the RTC of Olongapo City has no jurisdiction over the action for
injunction and damages filed by respondents on 11 June 2002 as said action is within
the exclusive original jurisdiction of the BOC pursuant to Section 602 ofRepublic Act
No. 1937, otherwise known as the "Tariff and Customs Code of the Philippines," as
amended. Section 602 provides, thus:
Sec. 602. Functions of the Bureau.- The general duties, powers and jurisdiction of the
bureau shall include:
xxxx
Page 336 of 378

g. Exercise exclusive original jurisdiction over seizure and forfeiture cases under the
tariff and customs laws.
Petitioner contends that the imported 2,000 bags of rice were in the actual physical
control and possession of the BOC as early as 25 October 2001, by virtue of the BOC
Subic Port Hold Order of even date, and of the BOC Warrant of Seizure and Detention
dated 22 May 2002. As such, the BOC had acquired exclusive original jurisdiction over
the subject shipment, to the exclusion of the RTC.
We agree with petitioner.
It is well settled that the Collector of Customs has exclusive jurisdiction over seizure
and forfeiture proceedings, and regular courts cannot interfere with his exercise thereof
or stifle or put it at naught. The Collector of Customs sitting in seizure and forfeiture
proceedings has exclusive jurisdiction to hear and determine all questionstouching on
the seizure and forfeiture of dutiable goods. Regional trial courts are devoid of any
competence to pass upon the validity or regularity of seizure and forfeiture proceedings
conducted by the BOC and to enjoin or otherwise interfere with these proceedings.
Regional trial courts are precluded from assuming cognizance over such matters even
through petitions for certiorari, prohibition or mandamus.
Verily, the rule is that fromthe moment imported goods are actually in the possession
orcontrol of the Customs authorities, even if no warrant for seizure or detention had
previously been issued by the Collector of Customs in connection with the seizure and
forfeiture proceedings, the BOC acquires exclusive jurisdiction over such imported
goods for the purpose of enforcing the customs laws, subject to appeal to the Court of
Tax Appeals whose decisions are appealable to this Court. As we have clarified in
Commissioner of Customs v. Makasiar, the rule that RTCs have no review powers
oversuch proceedings is anchored upon the policy of placing no unnecessary hindrance
on the government's drive, not only to prevent smuggling and other frauds upon
Customs, but more importantly, to render effective and efficient the collection of import
and export duties due the State, which enables the government to carry out the
functions it has been instituted to perform.46
The issuance of the October 18, 2001Notice of Sale was merely an incident of the seizure
proceedings commenced by the Collector of Customs. Consequently, the correctness of
its issuance was necessarily subsumed to the determination of the propriety of the
seizure proceedings, a matter that was within the exclusive jurisdiction ofthe Bureau of
Customs.1awp++i1 In that context, the proper recourse of the petitioner from the
February 4, 2002 Consolidated Order of Commissioner Villanueva, which reviewed the
November 14, 2001 action of Collector Bibit,47 was an appeal in due course to the CTA,
in accordance with Section 7(4) of RA No. 1125, as amended,48in relation to Section 2402
of the Tariff and Customs Code,49 within 30 days after the receipt of the order.50Without
the appeal having been timely filed in the CTA, the February 4, 2002 Consolidated
Order became final and executory.
decision promulgated on November 18, 2002 in CA-G.R. CV No. 67593; and ORDERS
the petitioner to pay the costs of suit.
G.R. No. 156684 April 6, 2011
Page 337 of 378

SPOUSES ANTONIO and FE YUSAY, Petitioners, vs. COURT OF APPEALS, CITY

MAYOR and CITY COUNCIL OF MANDALUYONG CITY, Respondents.
RESOLUTION
The petitioners appeal the adverse decision promulgated on October 18, 2002 1 and
resolution promulgated on January 17, 2003,2 whereby the Court of Appeals (CA)
reversed and set aside the order issued in their favor on February 19, 2002 by the
Regional Trial Court, Branch 214, in Mandaluyong City (RTC).3 Thereby, the CA upheld
Resolution No. 552, Series of 1997, adopted by the City of Mandaluyong (City)
authorizing its then City Mayor to take the necessary legal steps for the expropriation of
the parcel of land registered in the names of the petitioners.
We affirm the CA.
Antecedents
The petitioners owned a parcel of land with an area of 1,044 square meters situated
between Nueve de Febrero Street and Fernandez Street in Barangay Mauway,
Mandaluyong City. Half of their land they used as their residence, and the rest they
rented out to nine other families. Allegedly, the land was their only property and only
source of income.
On October 2, 1997, the Sangguniang Panglungsod of Mandaluyong City adopted

Resolution No. 552, Series of 1997, to authorize then City Mayor Benjamin S. Abalos, Sr.
to take the necessary legal steps for the expropriation of the land of the petitioners for
the purpose of developing it for low cost housing for the less privileged but deserving
city inhabitants. The resolution reads as follows:
RESOLUTION NO. 552, S-19974
RESOLUTION AUTHORIZING HON. BENJAMIN S. ABALOS TO TAKE THE

NECESSARY LEGAL STEPS FOR THE EXPROPRIATION OF A PARCEL OF LAND
SITUATED ALONG DR. JOSE FERNANDEZ STREET, BARANGAY MAUWAY, CITY
OF MANDALUYONG, OWNED BY MR. ANTONIO YUSAY
WHEREAS, there is a parcel of land situated along Dr. Jose Fernandez Street, Barangay
Mauway, City of Mandaluyong, owned and registered in the name of MR. ANTONIO
YUSAY;
WHEREAS, this piece of land have been occupied for about ten (10) years by many
financially hard-up families which the City Government of Mandaluyong desires,
among other things, to provide modest and decent dwelling;
WHEREAS, the said families have already negotiated to acquire this land but was
refused by the above-named owner in total disregard to the City Governments effort of
providing land for the landless;
WHEREAS, the expropriation of said land would certainly benefit public interest, let
alone, a step towards the implementation of social justice and urban land reform in this
City;
Page 338 of 378

WHEREAS, under the present situation, the City Council deems it necessary to
authorize Hon. Mayor BENJAMIN S. ABALOS to institute expropriation proceedings to
achieve the noble purpose of the City Government of Mandaluyong.
NOW, THEREFORE, upon motion duly seconded, the City Council of Mandaluyong, in
session assembled, RESOLVED, as it hereby RESOLVES, to authorize, as it is hereby
authorizing, Hon. Mayor BENJAMIN S. ABALOS, to institute expropriation
proceedings against the above-named registered owner of that parcel of land situated
along Dr. Jose Fernandez Street, Barangay Mauway, City of Mandaluyong, (f)or the
purpose of developing it to a low-cost housing project for the less privileged but
deserving constituents of this City.
ADOPTED on this 2nd day of October 1997 at the City of Mandaluyong.
Sgd. Adventor R. Delos Santos

Acting Sanggunian Secretary
Attested: Approved:
Sgd. Roberto J. Francisco Sgd. Benjamin S. Abalos

City Councilor & Acting City Mayor Presiding Officer
Notwithstanding that the enactment of Resolution No. 552 was but the initial step in the
Citys exercise of its power of eminent domain granted under Section 19 of the Local
Government Code of 1991, the petitioners became alarmed, and filed a petition for
certiorari and prohibition in the RTC, praying for the annulment of Resolution No. 552
due to its being unconstitutional, confiscatory, improper, and without force and effect.
The City countered that Resolution No. 552 was a mere authorization given to the City
Mayor to initiate the legal steps towards expropriation, which included making a
definite offer to purchase the property of the petitioners; hence, the suit of the
petitioners was premature.
On January 31, 2001, the RTC ruled in favor of the City and dismissed the petition for
lack of merit, opining that certiorari did not lie against a legislative act of the City
Government, because the special civil action of certiorari was only available to assail
judicial or quasi-judicial acts done without or in excess of jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction; that the special civil
action of prohibition did not also lie under the circumstances considering that the act of
passing the resolution was not a judicial, or quasi-judicial, or ministerial act; and that
notwithstanding the issuance of Resolution No. 552, the City had yet to commit acts of
encroachment, excess, or usurpation, or had yet to act without or in excess of
jurisdiction or with grave abuse of discretion amounting lack or in excess of jurisdiction.
However, on February 19, 2002, the RTC, acting upon the petitioners motion for
reconsideration, set aside its decision and declared that Resolution No. 552 was null and
void. The RTC held that the petition was not premature because the passage of
Resolution No. 552 would already pave the way for the City to deprive the petitioners
and their heirs of their only property; that there was no due process in the passage of
Resolution No. 552 because the petitioners had not been invited to the subsequent
Page 339 of 378

hearings on the resolution to enable them to ventilate their opposition; and that the
purpose for the expropriation was not for public use and the expropriation would not
benefit the greater number of inhabitants.
Aggrieved, the City appealed to the CA.
In its decision promulgated on October 18, 2002, the CA concluded that the reversal of
the January 31, 2001 decision by the RTC was not justified because Resolution No. 552
deserved to be accorded the benefit of the presumption of regularity and validity absent
any sufficient showing to the contrary; that notice to the petitioners (Spouses Yusay) of
the succeeding hearings conducted by the City was not a part of due process, for it was
enough that their views had been consulted and that they had been given the full
opportunity to voice their protest; that to rule otherwise would be to give every affected
resident effective veto powers in law-making by a local government unit; and that a
public hearing, although necessary at times, was not indispensable and merely aided in
law-making.
The CA disposed as follows:
WHEREFORE, premises considered, the questioned order of the Regional Trial Court,
Branch 214, Mandaluyong City dated February 19, 2002 in SCA Case No. 15-MD, which
declared Resolution No. 552, Series of 1997 of the City of Mandaluyong null and void, is
hereby REVERSED and SET ASIDE. No costs.
SO ORDERED.5
The petitioners moved for reconsideration, but the CA denied their motion. Thus, they
appeal to the Court, posing the following issues, namely:
1. Can the validity of Resolution No. 552 be assailed even before its
implementation?
2. Must a citizen await the takeover and possession of his property by the local
government before he can go to court to nullify an unjust expropriation?
Before resolving these issues, however, the Court considers it necessary to first
determine whether or not the action for certiorari and prohibition commenced by the
petitioners in the RTC was a proper recourse of the petitioners.
Ruling
We deny the petition for review, and find that certiorari and prohibition were not
available to the petitioners under the circumstances. Thus, we sustain, albeit upon
different grounds, the result announced by the CA, and declare that the RTC gravely
erred in giving due course to the petition for certiorari and prohibition.
1. Certiorari does not lie to assail the issuance of a resolution by the Sanggunian
Panglungsod
The special civil action for certiorari is governed by Rule 65 of the 1997 Rules of Civil
Procedure, whose Section 1 provides:
Page 340 of 378

Section 1. Petition for certiorari. When any tribunal, board or officer exercising judicial
or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or
with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is
no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified petition in the proper court, alleging the
facts with certainty and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental reliefs as
law and justice may require.
xxx
For certiorari to prosper, therefore, the petitioner must allege and establish the
concurrence of the following requisites, namely:
(a) The writ is directed against a tribunal, board, or officer exercising judicial or
quasi-judicial functions;
(b) Such tribunal, board, or officer has acted without or in excess of jurisdiction,
or with grave abuse of discretion amounting to lack or excess of jurisdiction; and
(c) There is no appeal or any plain, speedy, and adequate remedy in the ordinary
course of law.6
It is further emphasized that a petition for certiorari seeks solely to correct defects in
jurisdiction,7 and does not correct just any error or mistake committed by a court,
board, or officer exercising judicial or quasi-judicial functions unless such court, board,
or officer thereby acts without jurisdiction or in excess of jurisdiction or with such grave
abuse of discretion amounting to lack of jurisdiction.8
The first requisite is that the respondent tribunal, board, or officer must be exercising
judicial or quasi-judicial functions. Judicial function, according to Bouvier,9 is the
exercise of the judicial faculty or office; it also means the capacity to act in a specific way
which appertains to the judicial power, as one of the powers of government. "The term,"
Bouvier continues,10 "is used to describe generally those modes of action which
appertain to the judiciary as a department of organized government, and through and
by means of which it accomplishes its purpose and exercises its peculiar powers."
Based on the foregoing, certiorari did not lie against the Sangguniang Panglungsod,
which was not a part of the Judiciary settling an actual controversy involving legally
demandable and enforceable rights when it adopted Resolution No. 552, but a
legislative and policy-making body declaring its sentiment or opinion.
Nor did the Sangguniang Panglungsod abuse its discretion in adopting Resolution No.
552. To demonstrate the absence of abuse of discretion, it is well to differentiate
between a resolution and an ordinance. The first is upon a specific matter of a
temporary nature while the latter is a law that is permanent in character.11 No rights can
be conferred by and be inferred from a resolution, which is nothing but an embodiment
of what the lawmaking body has to say in the light of attendant circumstances. In
simply expressing its sentiment or opinion through the resolution, therefore, the
Sangguniang Panglungsod in no way abused its discretion, least of all gravely, for its
expression of sentiment or opinion was a constitutionally protected right.
Page 341 of 378

Moreover, Republic Act No. 7160 (The Local Government Code) required the City to
pass an ordinance, not adopt a resolution, for the purpose of initiating an expropriation
proceeding. In this regard, Section 19 of The Local Government Code clearly provides,
viz:
Section 19. Eminent Domain. A local government unit may, through its chief executive
and acting pursuant to an ordinance, exercise the power of eminent domain for public
use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of
just compensation, pursuant to the provisions of the Constitution and pertinent laws:
Provided, however, That the power of eminent domain may not be exercised unless a
valid and definite offer has been previously made to the owner, and such offer was not
accepted: Provided, further, That the local government unit may immediately take
possession of the property upon the filing of the expropriation proceedings and upon
making a deposit with the proper court of at least fifteen percent (15%) of the fair
market value of the property based on the current tax declaration of the property to be
expropriated: Provided, finally, That, the amount to be paid for the expropriated
property shall be determined by the proper court, based on the fair market value at the
time of the taking of the property.
A resolution like Resolution No. 552 that merely expresses the sentiment of the
Sangguniang Panglungsod is not sufficient for the purpose of initiating an
expropriation proceeding. Indeed, in Municipality of Paraaque v. V.M. Realty
Corporation,12 a case in which the Municipality of Paraaque based its complaint for
expropriation on a resolution, not an ordinance, the Court ruled so:
The power of eminent domain is lodged in the legislative branch of government, which
may delegate the exercise thereof to LGUs, other public entities and public utilities. An
LGU may therefore exercise the power to expropriate private property only when
authorized by Congress and subject to the latters control and restraints, imposed
"through the law conferring the power or in other legislations." In this case, Section 19
of RA 7160, which delegates to LGUs the power of eminent domain, also lays down the
parameters for its exercise. It provides as follows:
"Section 19. Eminent Domain. A local government unit may, through its chief executive
and acting pursuant to an ordinance, exercise the power of eminent domain for public
use, or purpose, or welfare for the benefit of the poor and the landless, upon payment of
just compensation, pursuant to the provisions of the Constitution and pertinent laws:
Provided, however, That the power of eminent domain may not be exercised unless a
valid and definite offer has been previously made to the owner, and such offer was not
accepted: Provided, further, That the local government unit may immediately take
possession of the property upon the filing of the expropriation proceedings and upon
making a deposit with the proper court of at least fifteen percent (15%) of the fair
market value of the property based on the current tax declaration of the property to be
expropriated: Provided, finally, That, the amount to be paid for the expropriated
property shall be determined by the proper court, based on the fair market value at the
time of the taking of the property." (Emphasis supplied)
Thus, the following essential requisites must concur before an LGU can exercise the
power of eminent domain:
1. An ordinance is enacted by the local legislative council authorizing the local

chief executive, in behalf of the LGU, to exercise the power of eminent domain or
pursue expropriation proceedings over a particular private property.
Page 342 of 378
2. The power of eminent domain is exercised for public use, purpose or welfare,
or for the benefit of the poor and the landless.
3. There is payment of just compensation, as required under Section 9 Article III

of the Constitution and other pertinent laws.
4. A valid and definite offer has been previously made to the owner of the
property sought to be expropriated, but said offer was not accepted.
In the case at bar, the local chief executive sought to exercise the power of eminent
domain pursuant to a resolution of the municipal council. Thus, there was no
compliance with the first requisite that the mayor be authorized through an ordinance.
Petitioner cites Camarines Sur vs. Court of Appeals to show that a resolution may
suffice to support the exercise of eminent domain by an LGU. This case, however, is not
in point because the applicable law at that time was BP 337, the previous Local
Government Code, which had provided that a mere resolution would enable an LGU to
exercise eminent domain. In contrast, RA 7160, the present Local Government Code
which was already in force when the Complaint for expropriation was filed, explicitly
required an ordinance for this purpose.
We are not convinced by petitioners insistence that the terms "resolution" and
"ordinance" are synonymous. A municipal ordinance is different from a resolution. An
ordinance is a law, but a resolution is merely a declaration of the sentiment or opinion
of a lawmaking body on a specific matter. An ordinance possesses a general and
permanent character, but a resolution is temporary in nature. Additionally, the two are
enacted differently -- a third reading is necessary for an ordinance, but not for a
resolution, unless decided otherwise by a majority of all the Sanggunian members.
If Congress intended to allow LGUs to exercise eminent domain through a mere

resolution, it would have simply adopted the language of the previous Local
Government Code. But Congress did not. In a clear divergence from the previous Local
Government Code, Section 19 of RA 7160 categorically requires that the local chief
executive act pursuant to an ordinance. Indeed, "[l]egislative intent is determined
principally from the language of a statute. Where the language of a statute is clear and
unambiguous, the law is applied according to its express terms, and interpretation
would be resorted to only where a literal interpretation would be either impossible or
absurd or would lead to an injustice." In the instant case, there is no reason to depart
from this rule, since the law requiring an ordinance is not at all impossible, absurd, or
unjust.
Moreover, the power of eminent domain necessarily involves a derogation of a

fundamental or private right of the people. Accordingly, the manifest change in the
legislative language from "resolution" under BP 337 to "ordinance" under RA 7160
demands a strict construction. "No species of property is held by individuals with
greater tenacity, and is guarded by the Constitution and laws more sedulously, than the
right to the freehold of inhabitants. When the legislature interferes with that right and,
for greater public purposes, appropriates the land of an individual without his consent,
the plain meaning of the law should not be enlarged by doubtful interpretation."
xxx
Page 343 of 378

In its Brief filed before Respondent Court, petitioner argues that its Sangguniang Bayan
passed an ordinance on October 11, 1994 which reiterated its Resolution No. 93-35,
Series of 1993, and ratified all the acts of its mayor regarding the subject expropriation.
This argument is bereft of merit. In the first place, petitioner merely alleged the
existence of such an ordinance, but it did not present any certified true copy thereof. In
the second place, petitioner did not raise this point before this Court. In fact, it was
mentioned by private respondent, and only in passing. In any event, this allegation
does not cure the inherent defect of petitioners Complaint for expropriation filed on
September 23, 1993. It is hornbook doctrine that:
" x x x in a motion to dismiss based on the ground that the complaint fails to state a
cause of action, the question submitted before the court for determination is the
sufficiency of the allegations in the complaint itself. Whether those allegations are true
or not is beside the point, for their truth is hypothetically admitted by the motion. The
issue rather is: admitting them to be true, may the court render a valid judgment in
accordance with the prayer of the complaint?"
The fact that there is no cause of action is evident from the face of the Complaint for
expropriation which was based on a mere resolution. The absence of an ordinance
authorizing the same is equivalent to lack of cause of action. Consequently, the Court of
Appeals committed no reversible error in affirming the trial courts Decision which
dismissed the expropriation suit.13 (Emphasis supplied)
In view of the absence of the proper expropriation ordinance authorizing and providing
for the expropriation, the petition for certiorari filed in the RTC was dismissible for lack
of cause of action.
2. Prohibition does not lie against expropriation
The special civil action for prohibition is governed also by Section 2 of Rule 65 of the
1997 Rules of Civil Procedure, which states:
Section 2. Petition for prohibition. When the proceedings of any tribunal,

corporation, board, officer or person, whether exercising judicial, quasi-judicial or
ministerial functions, are without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or
any other plain, speedy, and adequate remedy in the ordinary course of law, a person
aggrieved thereby may file a verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered commanding the respondent to desist
from further proceedings in the action or matter specified therein, or otherwise granting
such incidental reliefs as law and justice may require.
xxx
The function of prohibition is to prevent the unlawful and oppressive exercise of legal
authority and to provide for a fair and orderly administration of justice. 14 The writ of
prohibition is directed against proceedings that are done without or in excess of
jurisdiction, or with grave abuse of discretion, there being no appeal or other plain,
speedy and adequate remedy in the ordinary course of law.15 For grave abuse of
discretion to be a ground for prohibition, the petitioner must first demonstrate that the
tribunal, corporation, board, officer, or person, whether exercising judicial, quasi-
judicial or ministerial functions, has exercised its or his power in an arbitrary or
Page 344 of 378

despotic manner, by reason of passion or personal hostility, which must be so patent

and gross as would amount to an evasion, or to a virtual refusal to perform the duty
enjoined or to act in contemplation of law.16 On the other hand, the term excess of
jurisdiction signifies that the court, board, or officer has jurisdiction over a case but has
transcended such jurisdiction or acted without any authority.17
The petitioner must further allege in the petition and establish facts to show that any
other existing remedy is not speedy or adequate.18 A remedy is plain, speedy and
adequate if it will promptly relieve the petitioner from the injurious effects of that
judgment and the acts of the tribunal or inferior court.19
The rule and relevant jurisprudence indicate that prohibition was not available to the
petitioners as a remedy against the adoption of Resolution No. 552, for the Sangguniang
Panglungsod, by such adoption, was not exercising judicial, quasi-judicial or ministerial
functions, but only expressing its collective sentiment or opinion.
Verily, there can be no prohibition against a procedure whereby the immediate

possession of the land under expropriation proceedings may be taken, provided always
that due provision is made to secure the prompt adjudication and payment of just
compensation to the owner. 20 This bar against prohibition comes from the nature of the
power of eminent domain as necessitating the taking of private land intended for public
use,21 and the interest of the affected landowner is thus made subordinate to the power
of the State. Once the State decides to exercise its power of eminent domain, the power
of judicial review becomes limited in scope, and the courts will be left to determine the
appropriate amount of just compensation to be paid to the affected landowners. Only
when the landowners are not given their just compensation for the taking of their
property or when there has been no agreement on the amount of just compensation
may the remedy of prohibition become available.
Here, however, the remedy of prohibition was not called for, considering that only a
resolution expressing the desire of the Sangguniang Panglungsod to expropriate the
petitioners property was issued. As of then, it was premature for the petitioners to
mount any judicial challenge, for the
power of eminent domain could be exercised by the City only through the filing of a
verified complaint in the proper court.22 Before the City as the expropriating authority
filed such verified complaint, no expropriation proceeding could be said to exist. Until
then, the petitioners as the owners could not also be deprived of their property under
the power of eminent domain.23
WHEREFORE, we affirm the decision promulgated on October 18, 2002 in CA-G.R. SP

No. 70618.
Costs to be paid by the petitioners.
G.R. No. 203302 April 11, 2013
MAYOR EMMANUEL L. MALIKSI, Petitioner, vs. COMMISSION ON ELECTIONS

AND HOMER T. SAQUILAVAN, Respondents.
RESOLUTION
Page 345 of 378

The Court hereby resolves the Extremely Urgent Motion for Reconsideration tiled by
petitioner Emmanuel L. Maliksi against the Court's decision promulgated on March 12,
2013, dismissing his petition for certiorari assailing the resolution dated September 14,
2012 of the Commission on Elections (COMELEC) En Bane that sustained the
declaration of respondent Homer T. Saquilayan as the duly elected Mayor of Imus,
Cavite.
For clarity, we briefly restate the factual antecedents.
During the 2010 Elections, the Municipal Board of Canvassers proclaimed Saquilayan
the winner for the position of Mayor of Imus, Cavite. Maliksi, the candidate who
garnered the second highest number of votes, brought an election protest in the
Regional Trial Court (RTC) in Imus, Cavite alleging that there were irregularities in the
counting of votes in 209 clustered precincts. Subsequently, the RTC held a revision of
the votes, and, based on the results of the revision, declared Maliksi as the duly elected
Mayor of Imus commanding Saquilayan to cease and desist from performing the
functions of said office. Saquilayan appealed to the COMELEC. In the meanwhile, the
RTC granted Maliksis motion for execution pending appeal, and Maliksi was then
installed as Mayor.
In resolving the appeal, the COMELEC First Division, without giving notice to the
parties, decided to recount the ballots through the use of the printouts of the ballot
images from the CF cards. Thus, it issued an order dated March 28, 2012 requiring
Saquilayan to deposit the amount necessary to defray the expenses for the decryption
and printing of the ballot images. Later, it issued another order dated April 17, 2012 for
Saquilayan to augment his cash deposit.
On August 15, 2012, the First Division issued a resolution nullifying the RTCs decision
and declaring Saquilayan as the duly elected Mayor.1
Maliksi filed a motion for reconsideration, alleging that he had been denied his right to
due process because he had not been notified of the decryption proceedings. He argued
that the resort to the printouts of the ballot images, which were secondary evidence,
had been unwarranted because there was no proof that the integrity of the paper ballots
had not been preserved.
On September 14, 2012, the COMELEC En Banc resolved to deny Maliksis motion for
reconsideration.2
Maliksi then came to the Court via petition for certiorari, reiterating his objections to the
decryption, printing, and examination of the ballot images without prior notice to him,
and to the use of the printouts of the ballot images in the recount proceedings
conducted by the First Division.
In the decision promulgated on March 12, 2013, the Court, by a vote of 8-7, dismissed
Maliksis petition for certiorari. The Court concluded that Maliksi had not been denied
due process because: (a) he had received notices of the decryption, printing, and
examination of the ballot images by the First Division referring to the orders of the
First Division directing Saquilayan to post and augment the cash deposits for the
decryption and printing of the ballot images; and (b) he had been able to raise his
objections to the decryption in his motion for reconsideration. The Court then
pronounced that the First Division did not abuse its discretion in deciding to use the
ballot images instead of the paper ballots, explaining that the printouts of the ballot
Page 346 of 378

images were not secondary images, but considered original documents with the same
evidentiary value as the official ballots under the Rule on Electronic Evidence; and that
the First Divisions finding that the ballots and the ballot boxes had been tampered had
been fully established by the large number of cases of double-shading discovered
during the revision.
In his Extremely Urgent Motion for Reconsideration, Maliksi raises the following
arguments, to wit:
I.
WITH ALL DUE RESPECT, THIS HONORABLE SUPREME COURT EN BANC

GRAVELY ERRED IN DISMISSING THE INSTANT PETITION DESPITE A CLEAR
VIOLATION OF PETITIONERS CONSTITUTIONAL RIGHT TO DUE PROCESS OF
LAW CONSIDERING THAT DECRYPTION, PRINTING AND EXAMINATION OF
THE DIGITAL IMAGES OF THE BALLOTS, WHICH IS THE BASIS FOR THE
ASSAILED 14 SEPTEMBER 2012 RESOLUTION OF THE PUBLIC RESPONDENT,
WHICH IN TURN AFFIRMED THE 15 AUGUST 2012 RESOLUTION OF THE
COMELEC FIRST DIVISION, WERE DONE INCONSPICUOUSLY UPON A MOTU
PROPRIO DIRECTIVE OF THE COMELEC FIRST DIVISION SANS ANY NOTICE TO
THE PETITIONER, AND FOR THE FIRST TIME ON APPEAL.
II.
WITH ALL DUE RESPECT, THIS HONORABLE SUPREME COURT EN BANC

GRAVELY ERRED IN UPHOLDING THE COMELEC FIRST DIVISIONS RULING TO
DISPENSE WITH THE PHYSICAL BALLOTS AND RESORT TO THEIR DIGITAL
IMAGES NOTWITHSTANDING THE FACT THAT THE BALLOTS ARE THE BEST
AND MOST CONCLUSIVE EVIDENCE OF THE VOTERS WILL, AND THAT
BALLOT IMAGES CAN BE RESORTED TO ONLY IF THE OFFICIAL BALLOTS ARE
LOST OR THEIR INTEGRITY WAS COMPROMISED AS DETERMINED BY THE
RECOUNT/REVISION COMMITTEE, CIRCUMSTANCES WHICH ARE WANTING
IN THIS CASE, AND IN FACT THE INTEGRITY OF THE BALLOT BOXES AND ITS
CONTENTS WAS PRESERVED AND THE ISSUE OF TAMPERING WAS ONLY
BELATEDLY RAISED BY THE PRIVATE RESPONDENT AFTER THE REVISION
RESULTS SHOWED THAT HE LOST.
III.
WITH ALL DUE RESPECT, IT IS THE HUMBLE SUBMISSION OF THE PETITIONER-

MOVANT THAT THE 12 MARCH 2013 RESOLUTION ISSUED BY THE HONORABLE
SUPREME COURT EN BANC IS NULL AND VOID AB INITIO AND THEREFORE OF
NO FORCE AND EFFECT, FOR HAVING BEEN PROMULGATED DESPITE THE
ABSENCE OF HONORABLE SUPREME COURT JUSTICE JOSE PORTUGAL PEREZ
AT THE TIME OF THE DELIBERATION AND VOTING ON THE 12 MARCH 2013
RESOLUTION IN THE INSTANT CASE.3
Maliksi insists: (a) that he had the right to be notified of every incident of the
proceedings and to be present at every stage thereof; (b) that he was deprived of such
rights when he was not informed of the decryption, printing, and examination of the
ballot images by the First Division; (c) that the March 28, 2012 and April 17, 2012 orders
of the First Division did not sufficiently give him notice inasmuch as the orders did not
state the date, time, and venue of the decryption and printing of the ballot images; and
Page 347 of 378

(d) that he was thus completely deprived of the opportunity to participate in the
decryption proceedings.
Maliksi contends that the First Divisions motu proprio directive for the decryption,
printing, and examination of the ballot images was highly irregular. In this regard, he
asserts: (a) that the decryption, printing, and examination should have taken place
during the revision before the trial court and after the revision committee had
determined that the integrity of the official ballots had not been preserved; (b) that the
trial court did not make such determination; (c) that, in fact, Saquilayan did not allege
or present any proof in the RTC to show that the ballots or the ballot boxes had been
tampered, and had, in fact, actively participated in the revision proceedings; (d) that the
First Division should not have entertained the allegation of ballot tampering belatedly
raised on appeal; (e) that the First Division should have limited itself to reviewing the
evidence on record; and (f) that the First Division did not even explain how it had
arrived at the conclusion that the integrity of the ballots had not been preserved.
Maliksi submits that the decision promulgated on March 12, 2013 is null and void for
having been promulgated despite the absence from the deliberations and lack of
signature of Justice Jose Portugal Perez.
Ruling
The Court grants Maliksis Extremely Urgent Motion for Reconsideration, and reverses
the decision promulgated on March 12, 2013 on the ground that the First Division of the
COMELEC denied to him the right to due process by failing to give due notice on the
decryption and printing of the ballot images. Consequently, the Court annuls the
recount proceedings conducted by the First Division with the use of the printouts of the
ballot images.
It bears stressing at the outset that the First Division should not have conducted the
assailed recount proceedings because it was then exercising appellate jurisdiction as to
which no existing rule of procedure allowed it to conduct a recount in the first instance.
The recount proceedings authorized under Section 6, Rule 15 of COMELEC Resolution
No. 8804, as amended, are to be conducted by the COMELEC Divisions only in the
exercise of their exclusive original jurisdiction over all election protests involving
elective regional (the autonomous regions), provincial and city officials.4
As we see it, the First Division arbitrarily arrogated unto itself the conduct of the
recount proceedings, contrary to the regular procedure of remanding the protest to the
RTC and directing the reconstitution of the Revision Committee for the decryption and
printing of the picture images and the revision of the ballots on the basis thereof. Quite
unexpectedly, the COMELEC En Banc upheld the First Divisions unwarranted
deviation from the standard procedures by invoking the COMELECs power to "take
such measures as the Presiding Commissioner may deem proper," and even citing the
Courts minute resolution in Alliance of Barangay Concerns (ABC) Party-List v.
Commission on Elections5 to the effect that the "COMELEC has the power to adopt
procedures that will ensure the speedy resolution of its cases. The Court will not
interfere with its exercise of this prerogative so long as the parties are amply heard on
their opposing claims."
Based on the pronouncement in Alliance of Barangay Concerns (ABC) v. Commission

on Elections, the power of the COMELEC to adopt procedures that will ensure the
speedy resolution of its cases should still be exercised only after giving to all the parties
Page 348 of 378
the opportunity to be heard on their opposing claims. The parties right to be heard
upon adversarial issues and matters is never to be waived or sacrificed, or to be treated
so lightly because of the possibility of the substantial prejudice to be thereby caused to
the parties, or to any of them. Thus, the COMELEC En Banc should not have upheld the
First Divisions deviation from the regular procedure in the guise of speedily resolving
the election protest, in view of its failure to provide the parties with notice of its
proceedings and an opportunity to be heard, the most basic requirements of due
process.
I. Due process requirements
The picture images of the ballots are electronic documents that are regarded as the
equivalents of the original official ballots themselves.6 In Vinzons-Chato v. House of
Representatives Electoral Tribunal,7 the Court held that "the picture images of the
ballots, as scanned and recorded by the PCOS, are likewise official ballots that
faithfully capture in electronic form the votes cast by the voter, as defined by Section
2(3) of R.A. No. 9369. As such, the printouts thereof are the functional equivalent of the
paper ballots filled out by the voters and, thus, may be used for purposes of revision of
votes in an electoral protest."
That the two documentsthe official ballot and its picture imageare considered
"original documents" simply means that both of them are given equal probative weight.
In short, when either is presented as evidence, one is not considered as weightier than
the other.
But this juridical reality does not authorize the courts, the COMELEC, and the
Electoral Tribunals to quickly and unilaterally resort to the printouts of the picture
images of the ballots in the proceedings had before them without notice to the
parties. Despite the equal probative weight accorded to the official ballots and the
printouts of their picture images, the rules for the revision of ballots adopted for
their respective proceedings still consider the official ballots to be the primary or
best evidence of the voters will. In that regard, the picture images of the ballots are
to be used only when it is first shown that the official ballots are lost or their
integrity has been compromised.
For instance, the aforesaid Section 6, Rule 15 of COMELEC Resolution No. 8804 (In Re:
Comelec Rules of Procedure on Disputes In An Automated Election System in Connection with
the May 10, 2010 Elections), as amended by COMELEC Resolution No. 9164, itself
requires that "the Recount Committee determines that the integrity of the ballots has
been violated or has not been preserved, or are wet and otherwise in such a condition
that (the ballots) cannot be recounted" before the printing of the image of the ballots
should be made, to wit:
xxxx
(g) Only when the Recount Committee, through its chairman, determines that the
integrity of the ballots has been preserved or that no signs of tampering of the ballots
are present, will the recount proceed. In case there are signs that the ballots contained
therein are tampered, compromised, wet or are otherwise in such a condition that it
could not be recounted, the Recount Committee shall follow paragraph (l) of this rule.
xxxx
Page 349 of 378

(l) In the event the Recount Committee determines that the integrity of the ballots has
that it cannot be recounted, the Chairman of the Committee shall request from the
Election Records and Statistics Department (ERSD), the printing of the image of the
ballots of the subject precinct stored in the CF card used in the May 10, 2010 elections in
the presence of the parties. Printing of the ballot images shall proceed only upon prior
authentication and certification by a duly authorized personnel of the Election Records
and Statistics Department (ERSD) that the data or the images to be printed are genuine
and not substitutes. (Emphases supplied.)
xxxx
Section 6, Rule 10 (Conduct of Revision) of the 2010 Rules of Procedure for Municipal
Election Contests, which governs the proceedings in the Regional Trial Courts
exercising original jurisdiction over election protests, provides:
xxxx
(m) In the event that the revision committee determines that the integrity of the ballots
and the ballot box have not been preserved, as when proof of tampering or substitution
exists, it shall proceed to instruct the printing of the picture image of the ballots stored
in the data storage device for the precinct. The court shall provide a non-partisan
technical person who shall conduct the necessary authentication process to ensure that
the data or image stored is genuine and not a substitute. Only after this determination
can the printed picture image be used for the recount. (Emphases supplied.)
xxxx
A similar procedure is found in the 2010 Rules of the Presidential Electoral Tribunal, to
wit:
Rule 43. Conduct of the revision. The revision of votes shall be done through the use
of appropriate PCOS machines or manually and visually, as the Tribunal may
determine, and according to the following procedures:
xxxx
(q) In the event that the RC determines that the integrity of the ballots and the ballot box
was not preserved, as when there is proof of tampering or substitution, it shall proceed
to instruct the printing of the picture image of the ballots of the subject precinct stored
in the data storage device for the same precinct. The Tribunal may avail itself of the
assistance of the COMELEC for the service of a non-partisan technical person who shall
conduct the necessary authentication process to ensure that the data or images stored
are genuine and not merely substitutes. It is only upon such determination that the
printed picture image can be used for the revision of votes. (Emphases supplied.)
xxxx
Also, the House of Representative Electoral Tribunals Guidelines on the Revision of

Ballots requires a preliminary hearing to be held for the purpose of determining
whether the integrity of the ballots and ballot boxes used in the May 10, 2010 elections
was not preserved, as when there is proof of tampering or substitutions, to wit:
Page 350 of 378

Section 10. Revision of Ballots
xxxx
(d) When it has been shown, in a preliminary hearing set by the parties or by the
Tribunal, that the integrity of the ballots and ballot boxes used in the May 10, 2010
elections was not preserved, as when there is proof of tampering or substitutions, the
Tribunal shall direct the printing of the picture images of the ballots of the subject
precinct stored in the data storage device for the same precinct. The Tribunal shall
provide a non-partisan technical person who shall conduct the necessary authentication
process to ensure that the data or image stored is genuine and not a substitute. It is only
upon such determination that the printed picture image can be used for the revision.
(As amended per Resolution of February 10, 2011; Emphases supplied.)
xxxx
All the foregoing rules on revision of ballots stipulate that the printing of the picture
images of the ballots may be resorted to only after the proper Revision/Recount
Committee has first determined that the integrity of the ballots and the ballot boxes was
not preserved.
The foregoing rules further require that the decryption of the images stored in the CF
cards and the printing of the decrypted images take place during the revision or recount
proceedings. There is a good reason for thus fixing where and by whom the decryption
and the printing should be conducted. It is during the revision or recount conducted by
the Revision/Recount Committee when the parties are allowed to be represented, with
their representatives witnessing the proceedings and timely raising their objections in
the course of the proceedings. Moreover, whenever the Revision/Recount Committee
makes any determination that the ballots have been tampered and have become
unreliable, the parties are immediately made aware of such determination.
When, as in the present case, it was not the Revision/Recount Committee or the RTC
exercising original jurisdiction over the protest that made the finding that the ballots
had been tampered, but the First Division in the exercise of its appellate jurisdiction, the
parties should have been given a formal notice thereof.
Maliksi was not immediately made aware of that crucial finding because the First
Division did not even issue any written resolution stating its reasons for ordering the
printing of the picture images. The parties were formally notified that the First Division
had found that the ballots had been tampered only when they received the resolution of
August 15, 2012, whereby the First Division nullified the decision of the RTC and
declared Saquilayan as the duly elected Mayor. Even so, the resolution of the First
Division to that effect was unusually mute about the factual bases for the finding of
ballot box tampering, and did not also particularize how and why the First Division
was concluding that the integrity of the ballots had been compromised. All that the First
Division declared as justification was a simple generalization of the same being
apparent from the allegations of ballot and ballot box tampering and upon inspection of
the ballot boxes, viz:
xxxx
The Commission (First Division) took into consideration the allegations of ballot and
ballot box tampering and upon inspecting the ballot boxes, it is apparent that the
Page 351 of 378

integrity of the ballots had been compromised so, to be able to best determine the true
will of the electorate, we decided to go over the digital image of the appealed
ballots.8 (Emphasis supplied)
xxxx
It was the COMELEC En Bancs assailed resolution of September 14, 2012 that later on
provided the explanation to justify the First Divisions resort to the picture images of
the ballots, by observing that the "unprecedented number of double-votes" exclusively
affecting the position of Mayor and the votes for Saquilayan had led to the belief that
the ballots had been tampered. However, that explanation by the COMELEC En Banc
did not cure the First Divisions lapse and did not erase the irregularity that had already
invalidated the First Divisions proceedings.
In his dissenting opinion, Justice Antonio T. Carpio advances the view that the
COMELECs finding of ballot tampering was a mere surplusage because there was
actually no need for such finding before the ballots digital counterparts could be used.
He cites Section 3, Rule 16 of COMELEC Resolution No. 8804, as amended by
Resolution No. 9164, which states:
Section 3. Printing of Ballot Images. - In case the parties deem it necessary, they may file
a motion to be approved by the Division of the Commission requesting for the printing
of ballot images in addition to those mentioned in the second paragraph of item (e).
Parties concerned shall provide the necessary materials in the printing of images such
as but not limited to copying papers, toners and printers. Parties may also secure, upon
prior approval by the Division of the Commission, a soft copy of the ballot images
contained in a secured/hashed disc on the condition that the ballot images be first
printed, at the expense of the requesting party, and that the printed copies be signed by
the parties respective revisors or representatives and by an ERSD IT-capable
representative and deposited with the Commission.
The Over-all chairman shall coordinate with the Director IV, Election Records and
Statistics Department (ERSD), for the printing of images. Said director shall in turn
designate a personnel who will be responsible in the printing of ballot images.
Justice Carpio posits that when a party files a motion for the printing of the ballots that
he or she deems necessary, there is actually no need for a finding of tampering of the
ballots or the ballot boxes before the COMELEC Division may grant the motion. He
states that a determination by the parties that the printing is necessary under Section 3
is a ground separate from Section 6(e), which in turn pertinently states that:
Section 6. Conduct of the Recount
xxxx
(e) Before the opening of the ballot box, the Recount Committee shall note its condition
as well as that of the locks or locking mechanism and record the condition in the
recount report. From its observation, the Recount Committee must also make a
determination as to whether the integrity of the ballot box has been preserved.
In the event that there are signs of tampering or if the ballot box appears to have been
compromised, the Recount Committee shall still proceed to open the ballot box and
Page 352 of 378

make a physical inventory of the contents thereof. The committee shall, however, record
its general observation of the ballots and other documents found in the ballot box.
The application of Section 3 to this case is inappropriate, considering that the First
Division did not in any way suggest in its decision dated August 15, 2010 that it was
resolving Saquilayans motion to print the ballot images. Instead, the First Division
made therein a finding of tampering, thus:
The COMELEC (First Division) took into consideration the allegations of ballot and
ballot box tampering and upon inspecting the ballot boxes, it is apparent that the
integrity of the ballots had been compromised so, to be able to best determine the true
will of the electorate, we decided to go over the digital images of the appealed ballots.
Even the COMELEC En Banc did not indicate in its decision dated September 14, 2012
that the First Division merely resolved Saquilayans motion for the printing of the ballot
images; instead, it reinforced the First Divisions finding that there was tampering of the
ballots. The non-mention of Saquilayans motion was a clear indication of the
COMELECs intention to act motu proprio; and also revealed its interpretation of its
very own rules, that there must be justifiable reason, i.e. tampering, before the ballot
images could be resorted to.
The application of Section 3 would only highlight the First Divisions denial of Maliksis
right to due process. For, if the First Division was really only acting on a motion to
allow the printing of the ballot images, there was a greater reason for the First Division
to have given the parties notice of its ruling thereon. But, as herein noted, the First
Division did not issue such ruling.
To interpret Section 3 as granting to any one of the parties the right to move for the
printing of the ballot images should such party deem it necessary, and the COMELEC
may grant such motion, is contrary to its clear wording. Section 3 explicitly states: "in
case the parties deem it necessary, they may file a motion." The provision really
envisions a situation in which both parties have agreed that the ballot images should be
printed. Should only one of the parties move for the printing of the ballot images, it is
not Section 3 that applies but Section 6(e), which then requires a finding that the
integrity of the ballots has been compromised.
The disregard of Maliksis right to be informed of the decision to print the picture
images of the ballots and to conduct the recount proceedings during the appellate stage
cannot be brushed aside by the invocation of the fact that Maliksi was able to file, after
all, a motion for reconsideration. To be exact, the motion for reconsideration was
actually directed against the entire resolution of the First Division, while Maliksis claim
of due process violation is directed only against the First Divisions recount proceedings
that resulted in the prejudicial result rendered against him. Notably, the First Division
did not issue any order directing the recount. Without the written order, Maliksi was
deprived of the chance to seek any reconsideration or even to assail the irregularly-held
recount through a seasonable petition for certiorari in this Court. In that context, he had
no real opportunity to assail the conduct of the recount proceedings.
The service of the First Division orders requiring Saquilayan to post and augment the
cash deposits for the printing of the picture images did not sufficiently give Maliksi
notice of the First Divisions decision to print the picture images. The said orders did
not meet the requirements of due process because they did not specifically inform
Maliksi that the ballots had been found to be tampered. Nor did the orders offer the
Page 353 of 378
factual bases for the finding of tampering. Hence, to leave for Maliksi to surmise on the
factual bases for finding the need to print the picture images still violated the principles
of fair play, because the responsibility and the obligation to lay down the factual bases
and to inform Maliksi as the party to be potentially prejudiced thereby firmly rested on
the shoulders of the First Division.
Moreover, due process of law does not only require notice of the decryption, printing,
and recount proceedings to the parties, but also demands an opportunity to be present
at such proceedings or to be represented therein. Maliksi correctly contends that the
orders of the First Division simply required Saquilayan to post and augment his cash
deposit. The orders did not state the time, date, and venue of the decryption and
recount proceedings. Clearly, the First Division had no intention of giving the parties
the opportunity to witness its proceedings.
Mendoza v. Commission on Elections9 instructs that notice to the parties and their
participation are required during the adversarial aspects of the proceedings. In that
case, after the revision of the ballots and after the election protest case was submitted
for decision, the ballots and ballot boxes were transferred to the Senate Electoral
Tribunal (SET) in connection with a protest case pending in the SET. Mendoza later
learned that the COMELEC, with the permission of the SET, had meanwhile conducted
proceedings within the SETs premises. Mendoza then claimed that his right to due
process was violated because he had not been given notice by the COMELEC that it
would be conducting further proceedings within the SET premises. The Court did not
sustain his claim, however, and pointed out:
After consideration of the respondents Comments and the petitioners petition and
Reply, we hold that the contested proceedings at the SET ("contested proceedings") are
no longer part of the adversarial aspects of the election contest that would require
notice of hearing and the participation of the parties. As the COMELEC stated in its
Comment and without any contrary or disputing claim in the petitioners Reply:
"However, contrary to the claim of petitioner, public respondent in the appreciation of

the contested ballots in EPC No. 2007-44 simultaneously with the SET in SET Case No.
001-07 is not conducting "further proceedings" requiring notice to the parties. There is
no revision or correction of the ballots because EPC No. 2007-04 was already submitted
for resolution. Public respondent, in coordinating with the SET, is simply resolving the
submitted protest case before it. The parties necessarily take no part in said
deliberation, which require utmost secrecy. Needless to state, the actual decision-
making process is supposed to be conducted only by the designated members of the
Second Division of the public respondent in strict confidentiality."
In other words, what took place at the SET were the internal deliberations of the
COMELEC, as a quasi-judicial body, in the course of appreciating the evidence
presented and deciding the provincial election contest on the merits. These
deliberations are no different from judicial deliberations which are considered
confidential and privileged. We find it significant that the private respondents
Comment fully supported the COMELECs position and disavowed any participation
in the contested proceeding the petitioner complained about. The petitioner, on the
other hand, has not shown that the private respondent was ever present in any
proceeding at the SET relating to the provincial election contest.
To conclude, the rights to notice and to be heard are not material considerations in the
COMELECs handling of the Bulacan provincial election contest after the transfer of the
Page 354 of 378
ballot boxes to the SET; no proceedings at the instance of one party or of COMELEC has
been conducted at the SET that would require notice and hearing because of the
possibility of prejudice to the other party. The COMELEC is under no legal obligation to
notify either party of the steps it is taking in the course of deliberating on the merits of
the provincial election contest. In the context of our standard of review for the petition,
we see no grave abuse of discretion amounting to lack or excess of jurisdiction
committed by the COMELEC in its deliberation on the Bulacan election contest and the
appreciation of ballots this deliberation entailed.10 (Emphasis supplied.)
Here, the First Division denominated the proceedings it had conducted as an

"appreciation of ballots" like in Mendoza. But unlike in Mendoza, the proceedings
conducted by the First Division were adversarial, in that the proceedings included the
decryption and printing of the picture images of the ballots and the recount of the votes
were to be based on the printouts of the picture images. The First Division did not
simply review the findings of the RTC and the Revision Committee, but actually
conducted its own recount proceedings using the printouts of the picture image of the
ballots. As such, the First Division was bound to notify the parties to enable them to
participate in the proceedings.
Significantly, Section 6(l), Rule 15 of COMELEC Resolution No, 8804, as amended by

COMELEC Resolution No. 9164, requires the parties presence during the printing of
the images of the ballots, thus:
xxxx
(l) In the event the Recount Committee determines that the integrity of the ballots has
that it cannot be recounted, the Chairman of the Committee shall request from the
Election Records and Statistics Department (ERSD), the printing of the image of the
ballots of the subject precinct stored in the CF card used in the May 10, 2010 elections in
the presence of the parties. Printing of the ballot images shall proceed only upon prior
authentication and certification by a duly authorized personnel of the Election Records
and Statistics Department (ERSD) that the data or the images to be printed are genuine
and not substitutes.
xxxx
We should not ignore that the parties participation during the revision and recount
proceedings would not benefit only the parties, but was as vital and significant for the
COMELEC as well, for only by their participation would the COMELECs proceedings
attain credibility as to the result. The parties presence would have ensured that the
requisite procedures have been followed, including the required authentication and
certification that the images to be printed are genuine. In this regard, the COMELEC
was less than candid, and was even cavalier in its conduct of the decryption and
printing of the picture images of the ballots and the recount proceedings. The
COMELEC was merely content with listing the guidelines that the First Division had
followed in the appreciation of the ballots and the results of the recount. In short, there
was vagueness as to what rule had been followed in the decryption and printing
proceeding.
II. Remand to the COMELEC
Page 355 of 378

We are mindful of the urgent need to speedily resolve the election protest because the
term of the position involved is about to end. Thus, we overlook pro hac vice the lack of
factual basis for the COMELECs decision to use the digital images of the ballots and
sustain its decision thereon. Although a remand of the election protest to the RTC
would have been the appropriate procedure, we direct the COMELEC En Banc instead
to conduct the decryption and printing of the digital images of the ballots and to hold
recount proceedings, with due notice to all the parties and opportunity for them to be
present and to participate during such proceedings. Nothing less serves the ideal
objective safeguarded by the Constitution.
In the absence of particular rules to govern its proceedings in accordance with this
disposition, the COMELEC is urged to follow and observe Rule 15 of COMELEC
Resolution No. 8804, as amended by COMELEC Resolution No. 9164.
The Court, by this resolution, does not intend to validate the victory of any of the
parties in the 2010 Elections. That is not the concern of the Court as yet. The Court
simply does not want to countenance a denial of the fundamental right to due process, a
cornerstone of our legal system.11 After all, it is the Courts primary duty to protect the
basic rights of the people vis--vis government actions, thus:
It cannot be denied that most government actions are inspired with noble intentions, all
geared towards the betterment of the nation and its people. But then again, it is
important to remember this ethical principle: "The end does not justify the means." No
matter how noble and worthy of admiration the purpose of an act, but if the means to
be employed in accomplishing it is simply irreconcilable with constitutional parameters,
then it cannot still be allowed. The Court cannot just turn a blind eye and simply let it
pass. It will continue to uphold the Constitution and its enshrined principles.12
WHEREFORE, the Court PARTIALLY GRANTS the Extremely Urgent Motion for
Reconsideration of petitioner Emmanuel Maliksi; REVERSES the Court's decision
promulgated on March 12, 2013; and DIRECTS the Commission on Elections En Bane to
conduct proceedings for the decryption of the picture images of the ballots involved in
the protest after due authentication, and for the recount of ballots by using the printouts
of the ballot images, with notice to and in the presence of the parties or their
representatives in accordance with the procedure laid down by Rule 15 of COMELEC
Resolution No. 8804, as amended by Resolution No. 9164.
G.R. No. 163767 March 10, 2014
REPUBLIC OF THE PHILIPPINES, represented by THE DIRECTOR OF

LANDS, Petitioner, vs. ROSARIO DE GUZMAN VDA. DE JOSON, Respondent.
DECISION
This case concerns the discharge of the burden of proof by the applicant in proceedings
for the registration of land under Section 14 (1) and (2) of Presidential Decree No. 1529
(Property Registration Decree).
The Republic appeals the adverse decision promulgated on January 30, 2004,1 whereby
the Court of Appeals (CA) affirmed the judgment rendered on August 10, 1981 by the
erstwhile Court of First Instance (CFI) of Bulacan (now the Regional Trial Court) in
Registration Case No. 3446-M granting the application of the respondent for the
Page 356 of 378

registration of her title covering a parcel of land situated in San Isidro, Paombong,
Bulacan.2
The respondent filed her application for land registration in the CFI in Bulacan. 3 The
jurisdictional requirements were met when the notice of initial hearing was published
in the Official Gazette for two successive weeks,4 as evidenced by a certification of
publication.5 The notice of initial hearing was also posted by the Provincial Sheriff of
Bulacan in a conspicuous place in the municipal building of Paombong, Bulacan as well
as on the property itself.6On June 2, 1977, at the initial hearing of the application, Fiscal
Liberato L. Reyes interposed an opposition in behalf of the Director of Lands and the
Bureau of Public Works. Upon motion by the respondent and without objection from
Fiscal Reyes, the CFI commissioned the Acting Deputy Clerk of Court to receive
evidence in the presence of Fiscal Reyes.7
The records show that the land subject of the application was a riceland with an area of
12,342 square meters known as Lot 2633, Cad-297, Paombong, Bulacan, and covered by
plan Ap-03-001603;8 that the riceland had been originally owned and possessed by one
Mamerto Dionisio since 1907;9 that on May 13, 1926, Dionisio, by way of a deed of
sale,10 had sold the land to Romualda Jacinto; that upon the death of Romualda Jacinto,
her sister Maria Jacinto (mother of the respondent) had inherited the land; that upon the
death of Maria Jacinto in 1963, the respondent had herself inherited the land, owning
and possessing it openly, publicly, uninterruptedly, adversely against the whole world,
and in the concept of owner since then; that the land had been declared in her name for
taxation purposes; and that the taxes due thereon had been paid, as shown in Official
Receipt No. H-7100234.11
In their opposition filed by Fiscal Reyes,12 the Director of Lands and the Director of
Forest Development averred that whatever legal and possessory rights the respondent
had acquired by reason of any Spanish government grants had been lost, abandoned or
forfeited for failure to occupy and possess the land for at least 30 years immediately
preceding the filing of the application;13 and that the land applied for, being actually a
portion of the Labangan Channel operated by the Pampanga River Control System,
could not be subject of appropriation or land registration.14
The Office of the Solicitor General (OSG) also filed in behalf of the Government an
opposition to the application,15insisting that the land was within the unclassified region
of Paombong, Bulacan, as indicated in BF Map LC No. 637 dated March 1, 1927; that
areas within the unclassified region were denominated as forest lands and thus fell
under the exclusive jurisdiction, control and authority of the Bureau of Forest
Development (BFD);16 and that the CFI did not acquire jurisdiction over the application
considering that: (1) the land was beyond the commerce of man; (2) the payment of
taxes vested no title or ownership in the declarant or taxpayer.17
Ruling ofthe CFI
On August 10, 1981, the CFI rendered its decision,18 ordering the registration of the land
in favor of the respondent on the ground that she had sufficiently established her open,
public, continuous, and adverse possession in the concept of an owner for more than 30
years, to wit:
Since it has been established that the applicants and her predecessors-in-interest have
been in the open, public, continuous, and adverse possession of the said parcel of land
in the concept of an owner for more than thirty (30) years, that it, since 1926 up to the
Page 357 of 378
present time, applicant therefore is entitled to the registration thereof under the
provisions od Act No. 496, in relation to Commonwealth Act No. 141 as amended by
Republic Act No. 6236 and other existing laws.
WHEREFORE, confirming the order of general default issued in this case, the Court
hereby orders the registration of this parcel of land Lot 2633, Cad 297. Case 5,
Paombong Cadastre[)] described in plan Ap-03-001603 (Exhibit D, page 7 of records)
and in the technical description (Exhibit F, page 5 of records) in favor of Rosario de
Guzman Vda de Joson, of legal age, Filipino, widow and resident of Malolos, Bulacan.
After the decision shall have become final, let the corresponding decree be issued,
SO ORDERED19.
The Republic, through the OSG, appealed to the CA, contending that the trial court had
erred in granting the application for registration despite the land not being the subject
of land registration due to its being part of the unclassified region denominated as
forest land of Paombong, Bulacan.20
Judgment of the CA
On January 30, 2004, the CA promulgated its assailed judgment,21 affirming the decision
of the trial court upon the following ratiocination:
The foregoing documentary and testimonial evidence stood unrebutted and

uncontroverted by the oppositor-appellant and they should serve as proof of the
paucity of the claim of the applicant-appellee over the subject property.
Upon the other hand, oppositor-appellant, in a lackluster fashion, advanced pro forma
theories and arguments in its Opposition which naturally failed to merit any
consideration from the court a quo and also from this Court. The indorsement from the
Bureau of Forest Development, San Fernando, Pampanga to the effect that the subject
area is within the unclassified region of Paombong, Bulacan does not warrant any
evidentiary weight since the same had never been formally offered as evidence by the
oppositor-appellant. All the other allegations in the Opposition field (sic) by the
oppositor-appellant failed to persuade this Court as to the veracity thereof considering
that no evidence was ever presented to prove the said allegations.
Such being the case, this Court is not inclined to have the positive proofs of her
registrable rights over the subject property adduced by the applicant-appellee be
defeated by the bare and unsubstantiated allegations of the oppositor-appellant.
WHEREFORE, PREMISES CONSIDERED, the assailed Decision is hereby AFFIRMED

IN TOTO.
SO ORDERED.22
Hence, the Republic appeals by petition for review on certiorari.
Issue
(1) WHETHER OR NOT THE LAND SUBJECT OF THE APPLICATION FOR

REGISTRATION IS SUSCEPTIBLE OF PRIVATE ACQUISITION; and
Page 358 of 378

(2) WHETHER OR NOT THE TRIAL COURT, AS WELL AS THE COURT OF

APPEALS, ERRED IN GRANTING THE APPLICATION FOR
REGISTRATION. 23
Ruling
The appeal is impressed with merit.
Section 14 (1) and (2) of the Property Registration Decree state:
Section 14. Who may apply. The following persons may file in the proper [Regional
Trial Court] an application for registration of title to land, whether personally or
through their duly authorized representatives:
(1) Those who by themselves or through their predecessors-in-interest have been

in open, continuous, exclusive and notorious possession and occupation of
alienable and disposable lands of the public domain under a bona fide claim of
ownership since June 12, 1945, or earlier.
(2) Those who have acquired ownership of private lands by prescription under
the provision of existing laws.
xxxx
Section 14(1) deals with possession and occupation in the concept of an owner while
Section 14(2) involves prescription as a mode of acquiring ownership. In Heirs of Mario
Malabanan v. Republic,24 the Court set the guidelines concerning land registration
proceedings brought under these provisions of the Property Registration Decree in
order provide clarity to the application and scope of said provisions.
The respondent sought to have the land registered in her name by alleging that she and
her predecessors-in-interest had been in open, peaceful, continuous, uninterrupted and
adverse possession of the land in the concept of owner since time immemorial.
However, the Republic counters that the land was public land; and that it could not be
acquired by prescription. The determination of the issue hinges on whether or not the
land was public; if so, whether the respondent satisfactorily proved that the land had
already been declared as alienable and disposable land of the public domain; and that
she and her predecessors-in-interest had been in open, peaceful, continuous,
uninterrupted and adverse possession of the land in the concept of owner since June 12,
1945, or earlier.
In Republic vs. Tsai,25 the Court summarizes the amendments that have shaped the
current phraseology of Section 14(1), to wit:
Through the years, Section 48(b) of the CA 141 has been amended several times. The
Court of Appeals failed to consider the amendment introduced by PD 1073. In Republic
v. Doldol, the Court provided a summary of these amendments:
The original Section 48(b) of C.A. No.141 provided for possession and occupation of
lands of the public domain since July 26, 1894. This was superseded by R.A. No. 1942,
which provided for a simple thirty-year prescriptive period of occupation by an
applicant for judicial confirmation of imperfect title. The same, however, has already
Page 359 of 378

been amended by Presidential Decree No. 1073, approved on January 25, 1977. As
amended, Section 48(b) now reads:
(b) Those who by themselves or through their predecessors in interest have been in
open, continuous, exclusive, and notorious possession and occupation of agricultural
lands of the public domain, under a bona fide claim of acquisition of ownership, since
June 12, 1945, or earlier, immediately preceding the filing of the application for
confirmation of title, except when prevented by war or force majeure. These shall be
conclusively presumed to have performed all the conditions essential to a Government
grant and shall be entitled to a certificate of title under the provisions of this chapter.
(Emphasis supplied)
As the law now stands, a mere showing of possession and occupation for 30 years or
more is not sufficient. Therefore, since the effectivity of PD 1073 on 25 January 1977, it
must now be shown that possession and occupation of the piece of land by the
applicant, by himself or through his predecessors-in-interest, started on 12 June 1945 or
earlier. This provision is in total conformity with Section 14(1) of PD 1529.26
Under Section 14(1), therefore, the respondent had to prove that: (1) the land formed
part of the alienable and disposable land of the public domain; and (2) she, by herself or
through her predecessors-in-interest, had been in open, continuous, exclusive, and
notorious possession and occupation of the subject land under a bona fide claim of
ownership from June 12, 1945, or earlier.27 It is the applicant who carries the burden of
proving that the two requisites have been met. Failure to do so warrants the dismissal
of the application.
The respondent unquestionably complied with the second requisite by virtue of her
having been in open, continuous, exclusive and notorious possession and occupation of
the land since June 12, 1945, or earlier. She testified on how the land had been passed on
to her from her predecessors-in-interest; and tendered documentary evidence like: (1)
the Deed of Sale evidencing the transfer of the property from Mamerto Dionisio to
Romualda Jacinto in 1926;28 (2) Tax Declaration No. 4547 showing that she had declared
the property for taxation purposes in 1976;29 and (3) Official Receipt No. H-7100234
indicating that she had been paying taxes on the land since 1977.30 The CFI found her
possession of the land and that of her predecessors-in-interest to have been open,
public, continuous, and adverse in the concept of an owner since 1926 until the present
time, or for more than 30 years, entitling her to the registration under the provisions of
Act No. 496, in relation to Commonwealth Act No. 141, as amended by Republic Act
No. 6236 and other existing laws.31 On its part, the CA ruled that the documentary and
testimonial evidence stood unrebutted and uncontroverted by the Republic.32
Nonetheless, what is left wanting is the fact that the respondent did not discharge her
burden to prove the classification of the land as demanded by the first requisite. She did
not present evidence of the land, albeit public, having been declared alienable and
disposable by the State. During trial, she testified that the land was not within any
military or naval reservation, and Frisco Domingo, her other witness, corroborated her.
Although the Republic countered that the verification made by the Bureau of Forest
Development showed that the land was within the unclassified region of Paombong,
Bulacan as per BF Map LC No. 637 dated March 1, 1927,33 such showing was based on
the 1st Indorsement dated July 22, 1977 issued by the Bureau of Forest
Development,34which the CA did not accord any evidentiary weight to for failure of the
Republic to formally offer it in evidence. Still, Fiscal Reyes, in the opposition he filed in
Page 360 of 378

behalf of the Government, argued that the land was a portion of the Labangan Channel
operated by the Pampanga River Control System, and could not be the subject of
appropriation or land registration. Thus, the respondent as the applicant remained
burdened with proving her compliance with the first requisite.
Belatedly realizing her failure to prove the alienable and disposable classification of the
land, the petitioner attached as Annex A to her appellees brief35 the certification dated
March 8, 2000 issued by the Department of Environment and Natural Resources
Community Environment and Natural Resources Office (DENR-CENRO),36viz:
THIS IS TO CERTIFY that the parcel of land described on lot 2633 located at San Isidro,
Paombong, Bulacan as shown in the sketch plan surveyed by Geodetic Engineer Carlos
G. Reyes falls within the Alienable or Disposable Land Project No. 19 of Paombong,
Bulacan per Land Classification Map No. 2934 certified on October 15, 1980.
However, in its resolution of July 31, 2000,37 the CA denied her motion to admit the
appellees brief, and expunged the appellees brief from the records. Seeing another
opportunity to make the certification a part of the records, she attached it as Annex A of
her comment here.38 Yet, that attempt to insert would not do her any good because only
evidence that was offered at the trial could be considered by the Court.
Even had the respondents effort to insert the certification been successful, the same
would nonetheless be vain and ineffectual. In Menguito v. Republic,39 the Court
pronounced that a survey conducted by a geodetic engineer that included a certification
on the classification of the land as alienable and disposable was not sufficient to
overcome the presumption that the land still formed part of the inalienable public
domain, to wit:
To prove that the land in question formed part of the alienable and disposable lands of
the public domain, petitioners relied on the printed words which read: "This survey
plan is inside Alienable and Disposable Land Area, Project No. 27-B as per L.C. Map
No. 2623, certified by the Bureau of Forestry on January 3, 1968," appearing on Exhibit
"E" (Survey Plan No. Swo-13-000227).
This proof is not sufficient. Section 2, Article XII of the 1987 Constitution, provides: "All
lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all
forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and
other natural resources are owned by the State. x x x." (Emphasis supplied.)
For the original registration of title, the applicant (petitioners in this case) must
overcome the presumption that the land sought to be registered forms part of the public
domain. Unless public land is shown to have been reclassified or alienated to a private
person by the State, it remains part of the inalienable public domain. Indeed,
"occupation thereof in the concept of owner, no matter how long, cannot ripen into
ownership and be registered as a title." To overcome such presumption,
incontrovertible evidence must be shown by the applicant. Absent such evidence, the
land sought to be registered remains inalienable.
In the present case, petitioners cite a surveyor-geodetic engineers notation in Exhibit

"E" indicating that the survey was inside alienable and disposable land. Such notation
does not constitute a positive government act validly changing the classification of the
land in question. Verily, a mere surveyor has no authority to reclassify lands of the
Page 361 of 378

public domain. By relying solely on the said surveyors assertion, petitioners have not
sufficiently proven that the land in question has been declared alienable.40
We reiterate the standing doctrine that land of the public domain, to be the subject of
appropriation, must be declared alienable and disposable either by the President or the
Secretary of the DENR. In Republic v. T.A.N. Properties, Inc.,41 we explicitly ruled:
The applicant for land registration must prove that the DENR Secretary had approved
the land classification and released the land of the public domain as alienable and
disposable, and that the land subject of the application for registration falls within the
approved area per verification through survey by the PENRO or CENRO. In addition,
the applicant for land registration must present a copy of the original classification
approved by the DENR Secretary and certified as a true copy by the legal custodian of
the official records. These facts must be established to prove that the land is alienable
and disposable.42
This doctrine unavoidably means that the mere certification issued by the CENRO or
PENRO did not suffice to support the application for registration, because the applicant
must also submit a copy of the original classification of the land as alienable and
disposable as approved by the DENR Secretary and certified as a true copy by the legal
custodian of the official records. As the Court said in Republic v. Bantigue Point
Development Corporation:43
The Regalian doctrine dictates that all lands of the public domain belong to the State.
The applicant for land registration has the burden of overcoming the presumption of
State ownership by establishing through incontrovertible evidence that the land sought
to be registered is alienable or disposable based on a positive act of the government. We
held in Republic v. T.A.N. Properties, Inc. that a CENRO certification is insufficient to
prove the alienable and disposable character of the land sought to be registered. The
applicant must also show sufficient proof that the DENR Secretary has approved the
land classification and released the land in question as alienable and disposable.
Thus, the present rule is that an application for original registration must be
accompanied by (1) a CENRO or PENRO Certification; and (2) a copy of the original
classification approved by the DENR Secretary and certified as a true copy by the legal
custodian of the official records.
Here, respondent Corporation only presented a CENRO certification in support of its

application. Clearly, this falls short of the requirements for original registration.44
Yet, even assuming that the DENR-CENRO certification alone would have sufficed, the
respondents application would still be denied considering that the reclassification of
the land as alienable or disposable came only after the filing of the application in court
in 1976. The certification itself indicated that the land was reclassified as alienable or
disposable only on October 15, 1980. The consequence of this is fittingly discussed in
Heirs of Mario Malabanan v. Republic, to wit:
We noted in Naguit that it should be distinguished from Bracewell v. Court of Appeals

since in the latter, the application for registration had been filed before the land was
declared alienable or disposable. The dissent though pronounces Bracewell as the better
rule between the two. Yet two years after Bracewell, its ponente, the esteemed Justice
Consuelo Ynares-Santiago, penned the ruling in Republic v. Ceniza, which involved a
claim of possession that extended back to 1927 over a public domain land that was
Page 362 of 378

declared alienable and disposable only in 1980. Ceniza cited Bracewell, quoted
extensively from it, and following the mindset of the dissent, the attempt at registration
in Ceniza should have failed. Not so.
To prove that the land subject of an application for registration is alienable, an applicant
must establish the existence of a positive act of the government such as a presidential
proclamation or an executive order; an administrative action; investigation reports of
Bureau of Lands investigators; and a legislative act or a statute.
In this case, private respondents presented a certification dated November 25, 1994,
issued by Eduardo M. Inting, the Community Environment and Natural Resources
Officer in the Department of Environment and Natural Resources Office in Cebu City,
stating that the lots involved were "found to be within the alienable and disposable (sic)
Block-I, Land Classification Project No. 32-A, per map 2962 4-I555 dated December 9,
1980." This is sufficient evidence to show the real character of the land subject of private
respondents application. Further, the certification enjoys a presumption of regularity in
the absence of contradictory evidence, which is true in this case. Worth noting also was
the observation of the Court of Appeals stating that:
[n]o opposition was filed by the Bureaus of Lands and Forestry to contest the
application of appellees on the ground that the property still forms part of the public
domain. Nor is there any showing that the lots in question are forestal land...."
Thus, while the Court of Appeals erred in ruling that mere possession of public land for
the period required by law would entitle its occupant to a confirmation of imperfect
title, it did not err in ruling in favor of private respondents as far as the first
requirement in Section 48(b) of the Public Land Act is concerned, for they were able to
overcome the burden of proving the alienability of the land subject of their application.
As correctly found by the Court of Appeals, private respondents were able to prove
their open, continuous, exclusive and notorious possession of the subject land even
before the year 1927. As a rule, we are bound by the factual findings of the Court of
Appeals. Although there are exceptions, petitioner did not show that this is one of
them."
Why did the Court in Ceniza, through the same eminent member who authored
Bracewell, sanction the registration under Section 48(b) of public domain lands declared
alienable or disposable thirty-five (35) years and 180 days after 12 June 1945? The telling
difference is that in Ceniza, the application for registration was filed nearly six (6) years
after the land had been declared alienable or disposable, while in Bracewell, the
application was filed nine (9) years before the land was declared alienable or
disposable. That crucial difference was also stressed in Naguit to contradistinguish it
from Bracewell, a difference which the dissent seeks to belittle.45(citations omitted)
On the other hand, under Section 14(2), ownership of private lands acquired through
prescription may be registered in the owners name. Did the respondent then acquire
the land through prescription considering that her possession and occupation of the
land by her and her predecessors-in-interest could be traced back to as early as in 1926,
and that the nature of their possession and occupation was that of a bona fide claim of
ownership for over 30 years?
Clearly, the respondent did not. Again, Heirs of Mario Malabanan v. Republic is
enlightening, to wit:
Page 363 of 378

It is clear that property of public dominion, which generally includes property

belonging to the State, cannot be the object of prescription or, indeed, be subject of the
commerce of man. Lands of the public domain, whether declared alienable and
disposable or not, are property of public dominion and thus insusceptible to acquisition
by prescription.
Let us now explore the effects under the Civil Code of a declaration by the President or
any duly authorized government officer of alienability and disposability of lands of the
public domain. Would such lands so declared alienable and disposable be converted,
under the Civil Code, from property of the public dominion into patrimonial property?
After all, by connotative definition, alienable and disposable lands may be the object of
the commerce of man; Article 1113 provides that all things within the commerce of man
are susceptible to prescription; and the same provision further provides that
patrimonial property of the State may be acquired by prescription.
Nonetheless, Article 422 of the Civil Code states that "[p]roperty of public dominion,
when no longer intended for public use or for public service, shall form part of the
patrimonial property of the State." It is this provision that controls how public
dominion property may be converted into patrimonial property susceptible to
acquisition by prescription. After all, Article 420 (2) makes clear that those property
"which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth" are public dominion
property. For as long as the property belongs to the State, although already classified as
alienable or disposable, it remains property of the public dominion if when it is
"intended for some public service or for the development of the national wealth".
Accordingly, there must be an express declaration by the State that the public dominion
property is no longer intended for public service or the development of the national
wealth or that the property has been converted into patrimonial. Without such express
declaration, the property, even if classified as alienable or disposable, remains property
of the public dominion, pursuant to Article 420(2), and thus incapable of acquisition by
prescription. It is only when such alienable and disposable lands are expressly declared
by the State to be no longer intended for public service or for the development of the
national wealth that the period of acquisitive prescription can begin to run. Such
declaration shall be in the form of a law duly enacted by Congress or a Presidential
Proclamation in cases where the President is duly authorized by law.
It is comprehensible with ease that this reading of Section 14(2) of the Property
Registration Decree limits its scope and reach and thus affects the registrability even of
lands already declared alienable and disposable to the detriment of the bona fide
possessors or occupants claiming title to the lands. Yet this interpretation is in accord
with the Regalian doctrine and its concomitant assumption that all lands owned by the
State, although declared alienable or disposable, remain as such and ought to be used
only by the Government.
Recourse does not lie with this Court in the matter. The duty of the Court is to apply
the Constitution and the laws in accordance with their language and intent. The remedy
is to change the law, which is the province of the legislative branch. Congress can very
well be entreated to amend Section 14(2) of the Property Registration Decree and
pertinent provisions of the Civil Code to liberalize the requirements for judicial
confirmation of imperfect or incomplete titles.46
Page 364 of 378

The period of possession prior to the reclassification of the land as alienable and
disposable land of the public domain is not considered in reckoning the prescriptive
period in favor of the possessor. As pointedly clarified also in Heirs of Mario
Malabanan v. Republic:47
Should public domain lands become patrimonial because they are declared as such in a
duly enacted law or duly promulgated proclamation that they are no longer intended
for public service or for the development of the national wealth, would the period of
possession prior to the conversion of such public dominion into patrimonial be
reckoned in counting the prescriptive period in favor of the possessors? We rule in the
negative.
The limitation imposed by Article 1113 dissuades us from ruling that the period of
possession before the public domain land becomes patrimonial may be counted for the
purpose of completing the prescriptive period. Possession of public dominion property
before it becomes patrimonial cannot be the object of prescription according to the Civil
Code. As the application for registration under Section 14(2) falls wholly within the
framework of prescription under the Civil Code, there is no way that possession during
the time that the land was still classified as public dominion property can be counted to
meet the requisites of acquisitive prescription and justify registration.48
In other words, the period of possession prior to the reclassification of the land, no
matter how long, was irrelevant because prescription did not operate against the State
before then.
WHEREFORE, the Court REVERSES and SETS ASIDE the decision of the Court of
Appeals promulgated on January 30, 2004; DISMISSES the application for land
registration of respondent Rosario de Guzman Vda. De Joson respecting Lot 2633, Cad-
297 with a total area of 12,342 square meters, more or less, situated in San Isidro,
Paombong, Bulacan; and DIRECTS the respondent to pay the costs of suit.
G.R. No. 196418 February 10, 2015
TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY

(TESDA), Petitioner, vs. THE COMMISSION ON AUDIT; CHAIRMAN REYNALDO
A. VILLAR; COMMISSIONER JUANITO G. ESPINO, JR.; and COMMISSIONER
EVELYN R. SAN BUENA VENTURA, Respondents.
DECISION
Being assailed is the March 23, 2010 decision issued in COA Decision No. 2010-
039,1 whereby the Commission on Audit (COA) affirmed the findings of the COA Legal
and Adjudication Office (LAO) as regards the issuance of Audit Observation
Memorandum (AOM) No. 04-005 (101) dated January 26, 20042 disallowing the
payment by petitioner Technical Education and Skills Development Authority (TESDA)
of the healthcare maintenance allowance of P5,000.00 to covered TESDA employees for
the year 2003.
Antecedents
The TESDA, an instrumentality of the Government established under Republic Act No.
7796, is an attached agency of the Department of Labor and Employment (DOLE). In
view of the inadequate policy on basic health and safety conditions of work experienced
Page 365 of 378

by government personnel, then DOLE Secretary Patricia Sto. Tomas issued

Administrative Order (AO) No. 430, series of 2003, authorizing the payment of
healthcare maintenance allowance of P5,000.00 to all officials and employees of the
DOLE, including its bureaus and attached agencies.3 AO No. 430 was purportedly
based on Civil Service Commission (CSC) Memorandum Circular (MC) No. 33, series of
1997,4 and Section 34 of the General Provisions of the 2003 General Appropriations Act.5
Upon post-audit, COA State Auditor IV Rosemarie A. Valenzuela issued AOM No. 04-
005 on January 26,2004, and later endorsed the matter to the COA Director of the LAO-
National for appropriate legal action. AOM No. 04-005 stated in part:
2. The basis of payment made by management was CSC Memorandum Circular

No. 33 series of 1997 and Section 34 of the General Provisions of the 2003 General
Appropriations Act (GAA). Following these provisions, the Department of Labor
and Employment issued DOLE Administrative Order No 430, series of 2003
authorizing payment of said medical allowance to all its personnel including
those of its bureau and attached agencies at P5,000.00 each and pro rata
equivalent for those employees who have less than four (4) months continuous
service.
3. CSC Director Imelda Laceras of Region VII, in her letter to DOLE Region VII
Auditor, Ms. Damiana Pelino, informed the latter that there are no existing
guidelines authorizing the grant of Health Care Maintenance Allowance and
medical Allowance to all government officials and employees. In the absence
therefore of specific legal authority, payment of said benefit cannot be allowed
under existing rules. Hence, DOLE Administrative Order No. 430, series of 2003
is clearly without legal basis.6
Atty. Rebecca Mislang, Officer In-Charge of the COA LAO-National, subsequently

issued Notice of Disallowance (ND) No. 2006-015 dated May 26, 2006,7 addressed to
then TESDA Director General Augusto Syjuco, indicating that the payment of the
allowance had no legal basis, it being contrary to Republic Act No. 6758 (Salary
Standardization Law of 1989). ND No. 2006-015 identified the following persons as
liable for the disallowance, namely:
1. Dante V. Liban, Director General, for allowing the payment of said allowance;
2. Sonia Lipio, Chief, HRMO, for having direct supervision over the transaction;
3. Raul K. Tanchico, OIC, Asst. Director OCSA, for approving the transaction;
4. Cariza A. Dacuma, Chief Accountant, for certifying to the completeness and

propriety of the transaction; and
5. All TESDA officials and employees per attached payroll as recipients.8
The TESDA filed an appeal before the COA Commission Proper,9 assailing the
disallowance by the LAO-National.
However, the COA Commission Proper promulgated the now assailed decision dated
March 23, 2010,10 denying the appeal for lack of merit.
Hence, this petition.
Page 366 of 378

Issues
The TESDA insists that: RESPONDENTS ACTED WITH GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING
THE ASSAILED DECISION DISALLOWING THE PETITIONERS PAYMENT OF
HEALTH CARE MAINTENANCE ALLOWANCE TO ITS MAIN OFFICE
EMPLOYEES.
RESPONDENTS GRAVELY ERRED IN HOLDING THE AUTHORIZING OFFICERS

OF PETITIONER PERSONALLY LIABLE FOR THE TOTAL DISALLOWED PAYMENT
IN THE AMOUNT OF TWO MILLION TWO HUNDRED SEVEN THOUSAND PESOS
(P2,207,000.00).11
The TESDA maintains that there was sufficient legal basis for the release of the
healthcare maintenance allowance of P5,000.00 to its employees; that such payment was
only in compliance with the DOLE directive issued pursuant to MC No. 33 to afford all
government employees a health program that would include hospitalization services
and/or annual mental, medical-physical examinations; and that such payment was also
based on the authority granted by the 2003 GAA on the giving of personnel benefits to
be charged against the corresponding fund from which basic salaries were drawn.
In contrast, the COA explains that MC No. 33 referred to the institutionalization of a

health care program in the Government, and did not suggest the payment of direct
allowances to the employees of the Government; that the TESDA should not have relied
on the provisions of the GAA because the same were not self-executory; and that, as
such, the healthcare maintenance allowance lacked statutory basis and must be
disallowed.
Otherwise put, did the COA commit grave abuse of discretion in issuing ND No. 2006-
015 pursuant to AOM No. 04-005?
Ruling of the Court
To better appreciate the dispute between the parties, a review of the legal antecedents is
in order.
On December 18, 1997, the CSC issued Resolution No. 97-4684 to provide an adequate
policy on basic health and safety conditions of work in the Government. The resolution
relevantly provides:
NOW THEREFORE, the Commission resolved, as it hereby resolves to mandate the

following policies as a way of reinventing the workplace of public sector employees:
1. All government offices shall provide the following:
a. Health Program for Health program for

Government employees shall include any
Employees or all of the following:
Page 367 of 378

1. Hospitalization services
2. Annual mental, medical-

physical examinations
Subsequently, the CSC issued MC No. 33, which was a reiteration of Resolution No. 97-
4684, concerning the policy on the working conditions at the workplace. In its pertinent
part, MC No. 33 provides thus:12
The Civil Service Commission, in partnership and in consultation with the Council of
Personnel Officers and Human Resource Management Officers, recognizes the need to
institutionalize viable programs to improve working conditions in the government.
Pursuant to Resolution No. 97-4684 dated December 18, 1997, the CSC promulgates and
adopts the following policies:
1. All government offices shall provide the following:
a. Health Program for Health program for

Government employees shall include any
Employees or all of the following:
1. Hospitalization services
2. Annual mental, medical-

physical examinations
On the basis of the issuances by the CSC, the DOLE issued AO No 430 to authorize the
release of the challenged healthcare maintenance allowance of P5,000.00 to all eligible
DOLE employees, including the TESDAs workforce, to wit:
In the interest of the service and in recognition of the DOLE officials and employees
efforts to further improve delivery of services to clients and of the need to enhance the
quality of their worklife, a Healthcare Maintenance Allowance of Five Thousand Pesos
(P5,000.00) is hereby authorized to all DOLE employees entitled to such benefit
pursuant to CSC Memorandum Circular No. 33, S. 1997 and Section 34 of the General
Provisions of the 2003 General Appropriations Act (GAA), subject to the following
guidelines:13
In the context of the foregoing, we uphold the disallowance by the COA of the payment
of the P5,000.00 as healthcare maintenance allowance. The COA did not act without or
in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction because it properly exercised its powers and discretion in disallowing the
payment of the P5,000.00 as healthcare maintenance allowance.
The COA is endowed with latitude to determine, prevent, and disallow irregular,
unnecessary, excessive, extravagant, or unconscionable expenditures of government
funds. It has the power to ascertain whether public funds were utilized for the purpose
for which they had been intended by law. The Constitution has made the COA "the
guardian of public funds, vesting it with broad powers over all accounts pertaining to
government revenue and expenditures and the uses of public funds and property,
Page 368 of 378

including the exclusive authority to define the scope of its audit and examination,
establish the techniques and methods for such review, and promulgate accounting and
auditing rules and regulations."14 Thus, the COA is generally accorded complete
discretion in the exercise of its constitutional duty and responsibility to examine and
audit expenditures of public funds, particularly those which are perceptibly beyond
what is sanctioned by law.
Verily, the Court has sustained the decisions of administrative authorities like the COA
as a matter of general policy, not only on the basis of the doctrine of separation of
powers but also upon the recognition that such administrative authorities held the
expertise as to the laws they are entrusted to enforce.15 The Court has accorded not only
respect but also finality to their findings especially when their decisions are not tainted
with unfairness or arbitrariness that would amount to grave abuse of discretion. 16 Only
when the COA acted without or in excess of jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, may this Court entertain and
grant a petition for certiorari brought to assail its actions.17 However, we find no grave
abuse of discretion on the part of the COA in issuing the assailed decision.
MC No. 33 dealt with a healthcare program for government employees. A program is

ordinarily understood as a system in place that will draw the desired benefits over a
period of time. Its dictionary meaning includes "a plan of procedure: a schedule or
system under which action may be taken toward a desired goal."18 Ostensibly, MC No.
33 did not intend the health care program to be a single activity or endowment to
achieve a fleeting goal, for it rightfully concerned the institutionalization of a system of
healthcare for government employees. A careful perusal of MC No. 33 and its precursor
reveals the unequivocal intent to afford government employees a sustainable health
care program instead of an intermittent healthcare provision. MC No. 33 delineated the
policy framework for working conditions at the workplace, which, aside from the
health care program, included adequate office ventilation and lighting, clean and
adequate restroom facilities, potable drinking water, first aid kit and facilities, and
hazard insurance. The irrefutable attributes of such framework were perpetuity and
sustainability.
The TESDA posits that giving the health care maintenance allowance of P5,000.00 was
valid because MC No. 33 did not exclude other types of health-related services that
were helpful in the furtherance of the government offices health program; and that the
payment of the health care maintenance allowance was a very practical compliance
with MC No. 33 because such payment would allow a measure of flexibility on the part
of the employee to choose the physician who would undertake the examination of the
employee.
The position of the TESDA is untenable.
MC No. 33 and its precursor were worded in a plain and straightforward manner to the
effect that the "(h)ealth program for employees shall include any or all of the following:
1) Hospitalization services, and 2) Annual mental, medical-physical examinations."
Whatever latitude was afforded to a government agency extended only to the
determination of which services to include in the program, not to the choice of an
alternative to such health program or to authorizing the conversion of the benefits into
cash. The giving of health care maintenance allowance of P5,000.00 to the TESDAs
employees was not among any of the hospitalization services or examinations listed in
the circular.
Page 369 of 378

The TESDA also relied on Section 34 of the GAA for 2003 (Republic Act No. 9206), viz:
Section 34. Funding of Personnel Benefits. The personnel benefits costs of government
officials and employees shall be charged against the funds from which their
compensations are paid. All authorized supplemental or additional compensation,
fringe benefits and other personal services costs of officials and employees whose
salaries are drawn from special accounts or special funds, such as salary increases, step
increment for length of service, incentive and service fees, commutation of vacation and
sick leaves, retirement and life insurance premiums, compensation insurance
premiums, health insurance premiums, Home Development Mutual Fund (HDMF)
contributions, hospitalization and medical benefits, scholarship and educational
benefits, training and seminar expenses, all kinds of allowances, whether commutable
or reimbursable, in cash or in kind, and other personnel benefits and privileges
authorized by law, including the payment of retirement gratuities, separation pay and
terminal leave benefits, shall similarly be charged against the corresponding fund from
which their basic salaries are drawn and in no case shall such personnel benefits costs
be charged against the General Fund of the National Government. Officials and
employees on detail with other offices, including the representatives and support
personnel of auditing units assigned to serve other offices or agencies, shall be paid
their salaries, emoluments, allowances and the foregoing supplemental compensation,
fringe benefits and other personal services costs from the appropriations of their parent
agencies, and in no case shall such be charged against the appropriations of the agencies
where they are assigned or detailed, except when authorized by law. (Bold
The reliance is misplaced. Section 34 only reiterated the rule that the personnel benefits
costs of government officials and employees should be charged against the funds from
which their compensations are paid. The provision was neither a source of right nor an
authority to hastily fund any or all personnel benefits without the appropriation being
made by law.
It bears reminding that pursuant to Article VI Section 29 (1) of the 1987 Constitution, no
money shall be paid out of the Treasury except in pursuance of an appropriation made
by law. Hence, the GAA should be purposeful, deliberate, and precise in its contents
and stipulations. Also, the COA was correct when it held that the provisions of the
GAA were not self-executory. This meant that the execution of the GAA was still
subject to a program of expenditure to be approved by the President, and such
approved program of expenditure was the basis for the release of funds. For that
matter, Section 34, Chapter 5, Book VI of the Administrative Code (Executive Order No.
292) states that
Section 34. Program of Expenditure - The Secretary of Budget shall recommend to the
President the years program of expenditure for each agency of the government on the
basis of authorized appropriations. The approved expenditure program shall constitute
the basis for fund release during the fiscal period, subject to such policies, rules and
regulations as may be approved by the President.
The rules on National Government Budgeting as prescribed by the Administrative

Code are not idle or empty exercises. The mere approval by Congress of the GAA does
not instantly make the funds available for spending by the Executive Department. The
funds authorized for disbursement under the GAA are usually still to be collected
during the fiscal year. The revenue collections of the Government, mainly from taxes,
Page 370 of 378

may fall short of the approved budget, as has been the normal occurrence almost every
year.19 Hence, it is important that the release of funds be duly authorized, identified, or
sanctioned to avert putting the legitimate programs, projects, and activities of the
Government in fiscal jeopardy.
Section 5 of Presidential Decree No. 1597 (Further Rationalizing the System of

Compensation and Position Classification in the National Government) states that the
authority to approve the grant of allowances, honoraria, and other fringe benefits to
government employees, regardless of whether such endowment is payable by their
respective offices or by other agencies of the Government, is vested in the
President.20 As such, the precipitous release and payment of the healthcare maintenance
allowance benefits without any authorization from the Office of the President is without
basis and should be rightfully disallowed.
The Court agrees with the COA decision in holding that the recipients of the healthcare
maintenance allowance benefits who received the allowance of P5,000.00 in good faith
need not refund the sum received. The recipients accepted the benefits honestly
believing that they were receiving what they were entitled to under the law. Similarly,
the Court holds that the TESDA officials who granted the allowance to the covered
personnel acted in good faith in the honest belief that there was lawful basis for such
grant. In view of these considerations, the Court declares that the disallowed benefits
approved and received in good faith need not be reimbursed to the Government. This
finds support in the consistent pronouncements of the Court, such as that issued in De
Jesus v. Commission on Audit,21 to wit:
Nevertheless, our pronouncement in Blaquera v. Alcala supports petitioners position

on the refund of the benefits they received. In Blaquera, the officials and employees of
several government departments and agencies were paid incentive benefits which the
COA disallowed on the ground that Administrative Order No. 29 dated 19 January 1993
prohibited payment of these benefits. While the Court sustained the COA on the
disallowance, it nevertheless declared that:
Considering, however, that all the parties here acted in good faith, we cannot
countenance the refund of subject incentive benefits for the year 1992, which amounts
the petitioners have already received. Indeed, no indicia of bad faith can be detected
under the attendant facts and circumstances. The officials and chiefs of offices
concerned disbursed such incentive benefits in the honest belief that the amounts given
were due to the recipients and the latter accepted the same with gratitude, confident
that they richly deserve such benefits.
This ruling in Blaquera applies to the instant case. Petitioners here received the
additional allowances and bonuses in good faith under the honest belief that LWUA
Board Resolution No. 313 authorized such payment. At the time petitioners received the
additional allowances and bonuses, the Court had not yet decided Baybay Water
District, Petitioners had no knowledge that such payment was without legal basis.
Thus, being in good faith, petitioners need not refund the allowances and bonuses they
received but disallowed by the COA.
WHEREFORE, we DISMISS the petition for certiorari; and AFFIRM Decision No. 2010-
039 dated March 23, 2010 of the Commission on Audit subject to the MODIFICATION
that all the officials of the petitioner who approved and all the employees of the
petitioner who received the healthcare maintenance allowance of P5,000.00 need not
refund the same.
Page 371 of 378
G.R. No. 164408 March 24, 2014
REPUBLIC OF THE PHILIPPINES, Petitioner, vs. ZURBARAN REALTY AND

DEVELOPMENT CORPORATION, Respondent.
DECISION
An application for original registration of land of the public domain under Section 14(2)
of Presidential Decree (PD) No. 1529 must show not only that the land has previously
been declared alienable and disposable, but also that the land has been declared
patrimonial property of the State at the onset of the 30-year or 10-year period of
possession and occupation required under the law on acquisitive prescription. Once
again, the Court applies this rule-as clarified in Heirs of Mario Malabanan v. Republic1
in reviewing the decision promulgated on June 10, 2004,2 whereby the Court of Appeals
(CA) granted the petitioner's application for registration of land.
Antecedents
On May 28, 1993, respondent Zurbaran Realty and Development Corporation filed in
the Regional Trial Court (RTC) in San Pedro, Laguna an application for original
registration covering a 1,520 square meter parcel of land situated in Barrio Banlic,
Municipality of Cabuyao, Province of Laguna, denominated as Lot 8017-A of
Subdivision Plan CSD-04-006985-D, Cad. 455-D, Cabuyao Cadastre,3 alleging that it had
purchased the land on March 9, 1992 from Jane de Castro Abalos, married to Jose
Abalos, for P300,000.00; that the land was declared for taxation purposes in the name of
its predecessor-in-interest under Tax Declaration No. 22711; that there was no mortgage
or encumbrance of any kind affecting the land, nor was there any other person or entity
having any interest thereon, legal or equitable, adverse to that of the applicant; and that
the applicant and its predecessors-in-interest had been in open, continuous and
exclusive possession and occupation of the land in the concept of an owner.
Attached to the application were several documents, namely: (1) tracing cloth plan as
approved by the Land Management Division of the Department of Environment and
Natural Resources (DENR); (2) blue print copies of the tracing cloth plan; (3) copies of
the technical description; (4) copies of Tax Declaration No. 2711; and (5) copies of the
Deed of Sale dated March 9, 1992.
The Republic, represented by the Director of Lands, opposed the application, arguing
that the applicant and its predecessors-in-interest had not been in open, continuous,
exclusive and notorious possession and occupation of the land since June 12, 1945; that
the muniments of title and tax declaration presented did not constitute competent and
sufficient evidence of a bona fide acquisition of the land; and that the land was a
portion of the public domain, and, therefore, was not subject to private appropriation.4
The RTC directed the Land Management Bureau, Manila; the Community Environment
and Natural Resources Office (CENRO) of Los Baos, Laguna; and the Land
Management Sector and Forest Management Bureau, Manila, to submit a status report
on the land, particularly, on whether the land was covered by a land patent, whether it
was subject of a previously approved isolated survey, and whether it was within a
forest zone.5
In his memorandum to the DENR, Region IV (Lands Forestry Sector), and the
Provincial Prosecutor of Laguna, a copy of which was furnished the trial court, CENRO
Page 372 of 378

Officer Arnulfo Hernandez stated that the land had been "verified to be within the
Alienable and Disposable land under Land Classification Project No. 23-A of Cabuyao,
Laguna, certified and declared as such pursuant to the provisions of Presidential Decree
No. 705, as amended, under Forestry Administrative Order No. A-1627 dated
September 28, 1981 per BFD Map LC-3004." Attached to the memorandum was the
inspection report declaring that "the area is surrounded with concrete fence, three (3)
buildings for employees residence;" that the land was acquired through sale before the
filing of the application; that the applicant and its predecessors-in-interest had been in
"continuous, open and peaceful occupation" of the land, and that "no forestry interest is
adversely affected."6
CENRO Land Management Inspector/Investigator Rodolfo S. Gonzales reported that:

(1) the land was covered by a survey plan approved by the Regional Land
Director/Land Registration Authority on May 25, 1988 pursuant to PD No. 239 dated
July 9, 1975; (2) it consisted of 22,773 square meters and was located in Barangay Banlic,
Cabuyao, Laguna; (3) the area was entirely within the alienable and disposable area; (4)
it had never been forfeited in favor of the government for non-payment of taxes, and
had not been confiscated in connection with any civil or criminal cases; (5) it was not
within a previously patented property as certified to by the Register of Deeds, Calamba,
Laguna; and (6) there was no public land application filed for it by the applicant or any
other persons as per verification from the records unit of his office. The report further
stated that a verification at the Office of the Municipal Assessor showed that: (1) the
land was declared for the first time in 1960 under Tax Declaration No. 6712 in the name
of Enrique Hemedez with an area of 23,073 square meters; (2) it was now covered by
Tax Declaration No. 2253 issued in the name of the respondent; (3) the real property
taxes had been paid since 1968; and (4) it had not been earmarked for public or quasi-
public purposes per information from the District Engineer.
After inspection, it was also found that (1) the land was residential; (2) the respondent
was in the actual occupation and possession of the land; and (3) the land did not
encroach upon an established watershed, riverbank/bed protection, creek, right-of-way
or park site or any area devoted to general use or devoted to public service.7
A certification was issued by the Records Management Division of the Land

Management Bureau stating that it had no record of any kind of public land
applications/land patents covering the parcel of land subject of the application.8
The respondent presented Gloria P. Noel, its Vice President and Treasurer, who
testified that the respondent had purchased the land from Jane de Castro Abalos on
March 9, 1992 for P300,000.00; that the land had been declared for taxation purposes in
the name of Abalos under Tax Declaration No. 22711; that after the sale, a new Tax
Declaration had been issued in the name of the respondent, who had meanwhile taken
possession of the land by building a fence around it and introducing improvements
thereon; that the respondent had paid the real property taxes thereon since its
acquisition; that the respondents possession had been continuous, open and public;
and that the land was free from any lien or encumbrance; and that there was no adverse
claimant to the land.9
Engr. Edilberto Tamis attested that he was familiar with the land because it was a
portion of Lot No. 8017 of Subdivision Plan Cad-455-D of the Cabuyao Cadastre, owned
by Corazon Tapalla who had acquired it from the Hemedez family; that Tapalla had
Page 373 of 378

sold a portion of Lot No. 8017 to Abalos and the remaining portion to him; and that he
had witnessed the sale of the land to the respondent.10
The respondents final witness was Armando Espela who declared that he was a retired
land overseer residing in Barangay Banlic from birth; that he was familiar with the land
which was part of a bigger parcel of land owned by the Hemedez family; that his father,
Toribio Espela, with his assistance, and one Francisco Capacio worked on the land since
1960; that the entire landholding had originally been sugarland, but was later on
subdivided, sold, and resold until it ceased to be agricultural land; that, in 1982, the
land was sold to Corazon Tapalla who hired him as the overseer; that as the overseer,
he fenced and cleared the area; that he was allowed to use the grassy portion for
grazing purposes; that in 1987, Tapalla sold part of the land to Abalos and the
remaining portion to Engr. Tamis; that he continued to oversee the land for the new
owners; that Abalos then sold her portion to the respondent in 1992; that since then, the
respondent took possession of the land, and he then ceased to be the overseer; that the
possession by the Hemedez family and its successors-in-interest was open, continuous,
public and under claim of ownership; and that he did not know any person who
claimed ownership of the land other than those he and his father served as overseers.11
Decision of the RTC
On May 12, 1997, the RTC rendered its decision, holding that the respondent and its
predecessors-in-interest had been in open, public, peaceful, continuous, exclusive and
adverse possession and occupation of the land under a bona fide claim of ownership
even prior to 1960 and, accordingly, granted the application for registration, viz:
WHEREFORE, taking into consideration the evidence submitted by the applicant, this
Court hereby orders the confirmation and registration of title of the land described as
Lot 8017-A of subdivision plan Csd-04-006985-D, being a portion of Lot 8017 of
subdivision plan Cad-455-D, Cabuyao Cadastre situated at Barangay Banlic, Cabuyao,
Laguna with an area of 1,520 square meters to be entered under the name of the
applicant Zurbaran Realty and Development Corporation, a corporation organized and
existing under the laws of the Philippines with office address at 33 M. Viola St., San
Francisco del Monte, Quezon City by the Land Registration Authority. After the
decision shall become final, let an order for the issuance of a decree of title be issued in
favor of said applicant.
SO ORDERED.12
Judgment of the CA
The Republic appealed, arguing that the issue of whether the applicant and its
predecessors-in-interest had possessed the land within the required length of time
could not be determined because there was no evidence as to when the land had been
declared alienable and disposable.
On June 10, 2004, the CA promulgated its judgment affirming the RTC, and concluded
that the reports made by the concerned government agencies and the testimonies of
those familiar with the land in question had buttressed the court a quos conclusion that
the respondent and its predecessors-in-interest had been in open, public, peaceful,
continuous, exclusive, and adverse possession and occupation of the land under a bona
fide claim of ownership even prior to 1960.13
Page 374 of 378

Issue
Hence, the Republic appeals the adverse judgment of the CA upon the following
ground:
THE COURT OF APPEALS GRAVELY ERRED ON A QUESTION OF LAW WHEN IT

AFFIRMED THE TRIAL COURTS GRANT OF THE APPLICATION FOR ORIGINAL
REGISTRATION DESPITE THE ABSENCE OF EVIDENCE THAT RESPONDENT AND
ITS PREDECESSORS-IN-INTEREST HAVE COMPLIED WITH THE PERIOD OF
POSSESSION AND OCCUPATION REQUIRED BY LAW.14
The Republic contends that the respondent did not establish the time when the land
covered by the application for registration became alienable and disposable;15 that such
detail was crucial because the possession of the respondent and its predecessors-in-
interest, for the purpose of determining whether it acquired the property by
prescription, should be reckoned from the time when the land was declared alienable
and disposable; and that prior to the declaration of the land of the public domain as
alienable and disposable, it was not susceptible to private ownership, and any
possession or occupation at such time could not be counted as part of the period of
possession required under the law on prescription.16
The respondent counters that whether it established when the property was declared
alienable and disposable and whether it complied with the 30-year required period of
possession should not be entertained anymore by the Court because: (a) these issues
had not been raised in the trial court and were being raised for the first time on appeal;
and (b) factual findings of the trial court, especially when affirmed by the CA, were
binding and conclusive on this Court. At any rate, the respondent insists that it had
been in open, public, peaceful, continuous, and adverse possession of the property for
the prescribed period of 30 years as evidenced by the fact that the property had been
declared for taxation purposes in 1960 in the name of its predecessors-in-interest, and
that such possession had the effect of converting the land into private property and
vesting ownership upon the respondent.17
In reply, the Republic asserts that it duly opposed the respondents application for
registration; that it was only able to ascertain the errors committed by the trial court
after the latter rendered its decision; and that the burden of proof in land registration
cases rested on the applicant who must prove its ownership of the property being
registered. The Republic maintains that the Court had the authority to review and
reverse the factual findings of the lower courts when the conclusion reached was not
supported by the evidence on record, as in this case.18
Ruling
The petition for review is meritorious.
Section 14 of P.D. No. 1529 enumerates those who may file an application for
registration of land based on possession and occupation of a land of the public domain,
thus:
Section 14. Who may apply. The following persons may file in the proper Court of First
Instance an application for registration of title to land, whether personally or through
their duly authorized representatives:
Page 375 of 378

(1) Those who by themselves or through their predecessors-in-interest have been

in open, continuous, exclusive and notorious possession and occupation of
alienable and disposable lands of the public domain under a bona fide claim of
ownership since June 12, 1945, or earlier.
(2) Those who have acquired ownership of private lands by prescription under
the provision of existing laws.
xxxx
An application for registration under Section14(1) of P.D. No. 1529 must establish the
following requisites, namely: (a) the land is alienable and disposable property of the
public domain; (b) the applicant and its predecessors in interest have been in open,
continuous, exclusive and notorious possession and occupation of the land under a
bona fide claim of ownership; and (c) the applicant and its predecessors-in-interest have
possessed and occupied the land since June 12, 1945, or earlier. The Court has clarified
in Malabanan19 that under Section14(1), it is not necessary that the land must have been
declared alienable and disposable as of June 12, 1945, or earlier, because the law simply
requires the property sought to be registered to be alienable and disposable at the time
the application for registration of title is filed. The Court has explained that a contrary
interpretation would absurdly limit the application of the provision "to the point of
virtual inutility."
The foregoing interpretation highlights the distinction between a registration

proceeding filed under Section 14(1) of P.D. No. 1529 and one filed under Section 14(2)
of P.D. No. 1529. According to Malabanan:
Section 14(1) mandates registration on the basis of possession, while Section 14(2)
entitles registration on the basis of prescription. Registration under Section 14(1) is
extended under the aegis of the Property Registration Decree and the Public Land Act
while registration under Section 14(2) is made available both by the Property
Registration Decree and the Civil Code.20
In other words, registration under Section 14(1) of P.D. No. 1529 is based on possession
and occupation of the alienable and disposable land of the public domain since June 12,
1945 or earlier, without regard to whether the land was susceptible to private
ownership at that time. The applicant needs only to show that the land had already
been declared alienable and disposable at any time prior to the filing of the application
for registration.
On the other hand, an application under Section 14(2) of P.D. No. 1529 is based on
acquisitive prescription and must comply with the law on prescription as provided by
the Civil Code. In that regard, only the patrimonial property of the State may be
acquired by prescription pursuant to the Civil Code.21 For acquisitive prescription to set
in, therefore, the land being possessed and occupied must already be classified or
declared as patrimonial property of the State. Otherwise, no length of possession would
vest any right in the possessor if the property has remained land of the public
dominion. Malabanan stresses that even if the land is later converted to patrimonial
property of the State, possession of it prior to such conversion will not be counted to
meet the requisites of acquisitive prescription.22 Thus, registration under Section 14(2)
of P.D. No. 1529 requires that the land had already been converted to patrimonial
property of the State at the onset of the period of possession required by the law on
prescription.
Page 376 of 378
An application for registration based on Section 14(2) of P.D. No. 1529 must, therefore,
establish the following requisites, to wit: (a) the land is an alienable and disposable, and
patrimonial property of the public domain; (b) the applicant and its predecessors-in-
interest have been in possession of the land for at least 10 years, in good faith and with
just title, or for at least 30 years, regardless of good faith or just title; and (c) the land
had already been converted to or declared as patrimonial property of the State at the
beginning of the said 10-year or 30-year period of possession.
To properly appreciate the respondents case, we must ascertain under what provision
its application for registration was filed. If the application was filed under Section 14(1)
of P.D. No. 1529, the determination of the particular date when the property was
declared alienable and disposable would be unnecessary, inasmuch as proof showing
that the land had already been classified as such at the time the application was filed
would be enough. If the application was filed under Section 14(2) of P.D. No. 1529, the
determination of the issue would not be crucial for, as earlier clarified, it was not the
declaration of the land as alienable and disposable that would make it susceptible to
private ownership by acquisitive prescription. Malabanan expounds thereon, thus
Would such lands so declared alienable and disposable be converted, under the Civil
Code, from property of the public dominion into patrimonial property? After all, by
connotative definition, alienable and disposable lands may be the object of the
commerce of man; Article 1113 provides that all things within the commerce of man are
susceptible to prescription; and the same provision further provides that patrimonial
property of the State may be acquired by prescription.
Nonetheless, Article 422 of the Civil Code states that "[p]roperty of public dominion,
when no longer intended for public use or for public service, shall form part of the
patrimonial property of the State." It is this provision that controls how public
dominion property may be converted into patrimonial property susceptible to
acquisition by prescription. After all, Article 420 (2) makes clear that those property
"which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth" are public dominion
property. For as long as the property belongs to the State, although already classified as
alienable or disposable, it remains property of the public dominion if when it is
"intended for some public service or for the development of the national wealth."
Accordingly, there must be an express declaration by the State that the public dominion
property is no longer intended for public service or the development of the national
wealth or that the property has been converted into patrimonial. Without such express
declaration, the property, even if classified as alienable or disposable, remains property
of the public dominion, pursuant to Article 420(2), and thus incapable of acquisition by
prescription. It is only when such alienable and disposable lands are expressly declared
by the State to be no longer intended for public service or for the development of the
national wealth that the period of acquisitive prescription can begin to run. Such
declaration shall be in the form of a law duly enacted by Congress or a Presidential
Proclamation in cases where the President is duly authorized by law.23
The respondents application does not enlighten as to whether it was filed under
Section 14(1) or Section 14(2) of P.D. No. 1529. The application alleged that the
respondent and its predecessors-in-interest had been in open, continuous and exclusive
possession and occupation of the property in the concept of an owner, but did not state
when possession and occupation commenced and the duration of such possession. At
any rate, the evidence presented by the respondent and its averments in the other
Page 377 of 378

pleadings reveal that the application for registration was filed based on Section 14(2),
not Section 14(1) of P.D. No. 1529. The respondent did not make any allegation in its
application that it had been in possession of the property since June 12, 1945, or earlier,
nor did it present any evidence to establish such fact.
With the application of the respondent having been filed under Section 14(2) of P.D. No.
1529, the crucial query is whether the land subject of the application had already been
converted to patrimonial property of the State. In short, has the land been declared by
law as no longer intended for public service or the development of the national wealth?
The respondent may perhaps object to a determination of this issue by the Court for the
same reason that it objects to the determination of whether it established when the land
was declared alienable and disposable, that is, the issue was not raised in and resolved
and by the trial court. But the objection would be futile because the issue was actually
raised in the trial court, as borne out by the Republic's allegation in its opposition to the
application to the effect "that the land is a portion of the public domain not subject to
prescription." In any case, the interest of justice dictates the consideration and resolution
of an issue that is relevant to another that was specifically raised. The rule that only
theories raised in the initial proceedings may be taken up by a party on appeal refers
only to independent, not concomitant, matters to support or oppose the cause of
action.24
Here, there is no evidence showing that the land in question was within an area
expressly declared by law either to be the patrimonial property of the State, or to be no
longer intended for public service or the development of the national wealth. The Court
is left with no alternative but to deny the respondent's application for registration.
WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and
SETS ASIDE the decision promulgated on June 10, 2004; and DISMISSES the
respondent's application for original registration of Lot 8017-A of Subdivision Plan
CSD-04-006985-D, Cad. 455-D, of the Cabuyao Cadastre.
Page 378 of 378

CA Justices Accused of Defying SC Ruling on Seafarer's Death Benefits Case

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CA Justices Accused of Defying SC Ruling on Seafarer's Death Benefits Case

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BERSAMIN, J.

A.M. No. RTJ-15-2426 June 16, 2015

OFFICE OF THE COURT ADMINISTRATION, Complainant, vs. JUDGE

Under ordinary circumstances, I would have no objection to imposing the supreme

The first is that respondent Judge had apparently no intention to misappropriate or

The safekeeping of collected funds is essential to the goal of an orderly administration

Thusly, in Arganosa-Maniego v. Salinas, respondent Rogelio Salinas, albeit found liable

IN VIEW OF THE FOREGOING CIRCUMSTANCES, I respectfully submit that

A.M. No. CA-13-51-J July 2, 2013

RE: LETTER COMPLAINT OF MERLITA B. FABIANA AGAINST PRESIDING

Complainant Merlita B. Fabiana, Marlons surviving spouse, hereby accuses Court of

The relevant antecedents follow.

US $82,500.00 death benefits to complainant Merlita B. Fabiana;

US $16,500.00 to complainant Jomari Paul B. Fabiana;

US $331.00 guaranteed overtime pay;

P7,574.00 actual damages;

P100,000.00 for moral damages;

P1,000,000.00 exemplary damages;

Ten percent (10%) attorneys fees computed on the total awards.2

WHEREFORE, foregoing premises considered, the appeal is MODIFIED in the sense

C.A.-G.R. SP No. 109699 entitled Magsaysay Maritime Corporation, Eduardo Manese,

WHEREFORE, premises considered, the petition is partly GRANTED. Accordingly, the

The petitioners motion for preliminary mandatory injunction is deemed resolved by

WHEREFORE, in view of the foregoing premises, we hereby DENY the aforementioned

The complaint lacks merit.

In administrative proceedings, the burden of substantiating the charges falls on the

Moreover, in Re: Verified Complaint of Engr. Oscar L. Ongjoco, Chairman of the

To be clear, although we do not shirk from the responsibility of imposing discipline on

Even as we dismiss the administrative charge, we deem it necessary to observe further,

Section 3. Consolidation of Cases. When related cases are assigned to different

WHEREFORE, the Court DISMISSES the administrative complaint against Presiding

G.R. No. 171672 February 2, 2015

MARIETA DE CASTRO, Petitioner, vs. PEOPLE OF THE PHILIPPINES, Respondent.

(d) Despite demand, she did not pay the bank.2

Judgment of the RTC

Ruling of the Court

The appeal lacks merit.

Nonetheless, there is a need to clarify the penalties imposable.

The petitioner shall pay the costs of suit.

G.R. No. 184762 February 25, 2015

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. DOMINGO GALLANO y

ACTS CONTRARY TO LAW.4

The facts presented by the Prosecution were summed up thusly:

Decision of the RTC

WHEREFORE, PREMISES CONSIDERED, this Court finds accused DOMINGO

Accordingly, this Court sentences accused, DOMINGO GALLANO y JARANILLA, to

The RTC found AAA's testimony as credible, observing as follows:

Though a child, [AAA], demonstrated to this Court her capacity of observation,

Anent Gallano's alibi, the RTC stated:

THE COURT A QUO GRAVELY ERRED IN FINDING THE ACCUSED-APPELLANT

GRANTING ARGUENDO THAT ACCUSED-APPELLANT WAS GUILTY OF RAPING

People v. Pruna32 states the controlling guidelines in evaluating evidence presented to

2. In the absence of a certificate of live birth, similar authentic documents such as

a. If the victim is alleged to be below 3 years of age and what is sought to

b. If the victim is alleged to be below 7 years of age and what is sought to

c. If the victim is alleged to be below 12 years of age and what is sought to

4. In the absence of a certificate of live birth, authentic document, or the

The testimonies relevant to AAA's age were given as follows:

We answer in the negative.

The modification of Gallano's civil liabilities is another consequence of the Prosecution's

G.R. No. 213847 August 18, 2015

JUAN PONCE ENRILE, Petitioner, vs. SANDIGANBAYAN (THIRD DIVISION),