SMART COMMUNICATIONS, INC., G.R. No.

148132
Petitioner,

- versus -

REGINA M. ASTORGA,
Respondent.
x---------------------------------------------------x
SMART COMMUNICATIONS, INC., G.R. No. 151079
Petitioner,

- versus -

REGINA M. ASTORGA,
Respondent.
x---------------------------------------------------x
REGINA M. ASTORGA,
Petitioner, G.R. No. 151372

Present:

- versus - YNARES-SANTIAGO, J.,

Chairperson,
AUSTRIA-MARTINEZ,
CORONA,*
NACHURA, and
REYES, JJ.
SMART COMMUNICATIONS, INC. and ANN MARGARET V.
SANTIAGO, Promulgated:
Respondents.
____________________

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

For the resolution of the Court are three consolidated petitions for review on certiorari under Rule 45 of the Rules of Court. G.R. No. 148132 assails the February 28, 2000 Decision[1] and the May 7, 2001 Resolution[2] of the Court
of Appeals (CA) in CA-G.R. SP. No. 53831. G.R. Nos. 151079 and 151372 question the June 11, 2001 Decision [3]and the December 18, 2001 Resolution[4] in CA-G.R. SP. No. 57065.
 Regina M. Astorga (Astorga) was employed by respondent Smart Communications, Incorporated (SMART) on May 8, 1997 as District Sales Manager of the Corporate Sales Marketing Group/ Fixed Services Division
(CSMG/FSD). She was receiving a monthly salary of P33,650.00. As District Sales Manager, Astorga enjoyed additional benefits, namely, annual performance incentive equivalent to 30% of her annual gross salary, a group life and
hospitalization insurance coverage, and a car plan in the amount of P455,000.00.[5]

In February 1998, SMART launched an organizational realignment to achieve more efficient operations. This was made known to the employees on February 27, 1998.[6]Part of the reorganization was the outsourcing of the
marketing and sales force. Thus, SMART entered into a joint venture agreement with NTT of Japan, and formed SMART-NTT Multimedia, Incorporated (SNMI). Since SNMI was formed to do the sales and marketing work, SMART
abolished the CSMG/FSD, Astorgas division.

To soften the blow of the realignment, SNMI agreed to absorb the CSMG personnel who would be recommended by SMART. SMART then conducted a performance evaluation of CSMG personnel and those who garnered the
highest ratings were favorably recommended to SNMI. Astorga landed last in the performance evaluation, thus, she was not recommended by SMART. SMART, nonetheless, offered her a supervisory position in the Customer Care
Department, but she refused the offer because the position carried lower salary rank and rate.

Despite the abolition of the CSMG/FSD, Astorga continued reporting for work. But on March 3, 1998, SMART issued a memorandum advising Astorga of the termination of her employment on ground of redundancy, effective April
3, 1998. Astorga received it on March 16, 1998.[7]

The termination of her employment prompted Astorga to file a Complaint [8] for illegal dismissal, non-payment of salaries and other benefits with prayer for moral and exemplary damages against SMART and Ann Margaret V.
Santiago (Santiago). She claimed that abolishing CSMG and, consequently, terminating her employment was illegal for it violated her right to security of tenure. She also posited that it was illegal for an employer, like SMART, to contract
out services which will displace the employees, especially if the contractor is an in-house agency. [9]

SMART responded that there was valid termination. It argued that Astorga was dismissed by reason of redundancy, which is an authorized cause for termination of employment, and the dismissal was effected in accordance with
the requirements of the Labor Code. The redundancy of Astorgas position was the result of the abolition of CSMG and the creation of a specialized and more technically equipped SNMI, which is a valid and legitimate exercise of
management prerogative.[10]

In the meantime, on May 18, 1998, SMART sent a letter to Astorga demanding that she pay the current market value of the Honda Civic Sedan which was given to her under the companys car plan program, or to surrender the
same to the company for proper disposition.[11] Astorga, however, failed and refused to do either, thus prompting SMART to file a suit for replevin with the Regional Trial Court of Makati (RTC) on August 10, 1998. The case was docketed as
Civil Case No. 98-1936 and was raffled to Branch 57. [12]

Astorga moved to dismiss the complaint on grounds of (i) lack of jurisdiction; (ii) failure to state a cause of action; (iii) litis pendentia; and (iv) forum-shopping. Astorga posited that the regular courts have no jurisdiction over the
complaint because the subject thereof pertains to a benefit arising from an employment contract; hence, jurisdiction over the same is vested in the labor tribunal and not in regular courts. [13]

Pending resolution of Astorgas motion to dismiss the replevin case, the Labor Arbiter rendered a Decision [14] dated August 20, 1998, declaring Astorgas dismissal from employment illegal. While recognizing SMARTs right to
abolish any of its departments, the Labor Arbiter held that such right should be exercised in good faith and for causes beyond its control. The Arbiter found the abolition of CSMG done neither in good faith nor for causes beyond the control
of SMART, but a ploy to terminate Astorgas employment. The Arbiter also ruled that contracting out the functions performed by Astorga to an in-house agency like SNMI was illegal, citing Section 7(e), Rule VIII-A of the Rules Implementing
the Labor Code.
Accordingly, the Labor Arbiter ordered:

WHEREFORE, judgment is hereby rendered declaring the dismissal of [Astorga] to be illegal and unjust. [SMART and Santiago] are hereby ordered to:

1. Reinstate [Astorga] to [her] former position or to a substantially equivalent position, without loss of seniority rights and other privileges, with full backwages, inclusive of allowances and other benefits from the
time of [her] dismissal to the date of reinstatement, which computed as of this date, are as follows:

(a) Astorga

BACKWAGES; (P33,650.00 x 4 months) = P134,600.00

UNPAID SALARIES (February 15, 1998-
 April 3, 1998
February 15-28, 1998 = P 16,823.00
March 1-31, [1998] = P 33,650.00
April 1-3, 1998 = P 3,882.69
CAR MAINTENANCE ALLOWANCE
(P2,000.00 x 4) = P 8,000.00
FUEL ALLOWANCE (300 liters/mo. x
4 mos. at P12.04/liter) = P 14,457.83
TOTAL = P211,415.52

xxxx

3. Jointly and severally pay moral damages in the amount of P500,000.00 x x x and exemplary damages in the amount of P300,000.00. x x x

4. Jointly and severally pay 10% of the amount due as attorneys fees.

SO ORDERED.[15]

Subsequently, on March 29, 1999, the RTC issued an Order[16] denying Astorgas motion to dismiss the replevin case. In so ruling, the RTC ratiocinated that:

Assessing the [submission] of the parties, the Court finds no merit in the motion to dismiss.

As correctly pointed out, this case is to enforce a right of possession over a company car assigned to the defendant under a car plan privilege arrangement. The car is registered in the name of the
plaintiff. Recovery thereof via replevin suit is allowed by Rule 60 of the 1997 Rules of Civil Procedure, which is undoubtedly within the jurisdiction of the Regional Trial Court.

In the Complaint, plaintiff claims to be the owner of the company car and despite demand, defendant refused to return said car. This is clearly sufficient statement of plaintiffs cause of action.

Neither is there forum shopping. The element of litis penden[t]ia does not appear to exist because the judgment in the labor dispute will not constitute res judicata to bar the filing of this case.

WHEREFORE, the Motion to Dismiss is hereby denied for lack of merit.

SO ORDERED.[17]

Astorga filed a motion for reconsideration, but the RTC denied it on June 18, 1999.[18]

Astorga elevated the denial of her motion via certiorari to the CA, which, in its February 28, 2000 Decision, [19] reversed the RTC ruling. Granting the petition and, consequently, dismissing the replevin case, the CA held that the
case is intertwined with Astorgas complaint for illegal dismissal; thus, it is the labor tribunal that has rightful jurisdiction over the complaint. SMARTs motion for reconsideration having been denied, [20] it elevated the case to this Court, now
docketed as G.R. No. 148132.

Meanwhile, SMART also appealed the unfavorable ruling of the Labor Arbiter in the illegal dismissal case to the National Labor Relations Commission (NLRC). In its September 27, 1999 Decision,[21] the NLRC sustained Astorgas
dismissal. Reversing the Labor Arbiter, the NLRC declared the abolition of CSMG and the creation of SNMI to do the sales and marketing services for SMART a valid organizational action. It overruled the Labor Arbiters ruling that SNMI is
an in-house agency, holding that it lacked legal basis. It also declared that contracting, subcontracting and streamlining of operations for the purpose of increasing efficiency are allowed under the law. The NLRC further found erroneous the
Labor Arbiters disquisition that redundancy to be valid must be impelled by economic reasons, and upheld the redundancy measures undertaken by SMART.
 The NLRC disposed, thus:

WHEREFORE, the Decision of the Labor Arbiter is hereby reversed and set aside. [Astorga] is further ordered to immediately return the company vehicle assigned to her. [Smart and Santiago] are hereby
ordered to pay the final wages of [Astorga] after [she] had submitted the required supporting papers therefor.

SO ORDERED.[22]

Astorga filed a motion for reconsideration, but the NLRC denied it on December 21, 1999.[23]

Astorga then went to the CA via certiorari. On June 11, 2001, the CA rendered a Decision [24] affirming with modification the resolutions of the NLRC. In gist, the CA agreed with the NLRC that the reorganization undertaken by
SMART resulting in the abolition of CSMG was a legitimate exercise of management prerogative. It rejected Astorgas posturing that her non-absorption into SNMI was tainted with bad faith. However, the CA found that SMART failed to
comply with the mandatory one-month notice prior to the intended termination. Accordingly, the CA imposed a penalty equivalent to Astorgas one-month salary for this non-compliance. The CA also set aside the NLRCs order for the return
of the company vehicle holding that this issue is not essentially a labor concern, but is civil in nature, and thus, within the competence of the regular court to decide. It added that the matter had not been fully ventilated before the NLRC, but
in the regular court.

Astorga filed a motion for reconsideration, while SMART sought partial reconsideration, of the Decision. On December 18, 2001, the CA resolved the motions, viz.:

WHEREFORE, [Astorgas] motion for reconsideration is hereby PARTIALLY GRANTED. [Smart] is hereby ordered to pay [Astorga] her backwages from 15 February 1998 to 06 November 1998. [Smarts] motion for
reconsideration is outrightly DENIED.

SO ORDERED.[25]

Astorga and SMART came to us with their respective petitions for review assailing the CA ruling, docketed as G.R Nos. 151079 and 151372. On February 27, 2002, this Court ordered the consolidation of these petitions with G.R.
No. 148132.[26]

In her Memorandum, Astorga argues:

THE COURT OF APPEALS ERRED IN UPHOLDING THE VALIDITY OF ASTORGAS DISMISSAL DESPITE THE FACT THAT HER DISMISSAL WAS EFFECTED IN CLEAR VIOLATION OF THE CONSTITUTIONAL
RIGHT TO SECURITY OF TENURE, CONSIDERING THAT THERE WAS NO GENUINE GROUND FOR HER DISMISSAL.

II

SMARTS REFUSAL TO REINSTATE ASTORGA DURING THE PENDENCY OF THE APPEAL AS REQUIRED BY ARTICLE 223 OF THE LABOR CODE, ENTITLES ASTORGA TO HER SALARIES DURING THE
PENDENCY OF THE APPEAL.

III

THE COURT OF APPEALS WAS CORRECT IN HOLDING THAT THE REGIONAL TRIAL COURT HAS NO JURISDICTION OVER THE COMPLAINT FOR RECOVERY OF A CAR WHICH ASTORGA ACQUIRED AS
PART OF HER EMPLOYEE (sic) BENEFIT.[27]

On the other hand, Smart in its Memoranda raises the following issues:
 I

WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH APPLICABLE DECISION OF THE HONORABLE
SUPREME COURT AND HAS SO FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF SUPERVISION WHEN IT
RULED THAT SMART DID NOT COMPLY WITH THE NOTICE REQUIREMENTS PRIOR TO TERMINATING ASTORGA ON THE GROUND OF REDUNDANCY.

II

WHETHER THE NOTICES GIVEN BY SMART TO ASTORGA AND THE DEPARTMENT OF LABOR AND EMPLOYMENT ARE SUBSTANTIAL COMPLIANCE WITH THE NOTICE REQUIREMENTS BEFORE
TERMINATION.

III

WHETHER THE RULE ENUNCIATED IN SERRANO VS. NATIONAL LABOR RELATIONS COMMISSION FINDS APPLICATION IN THE CASE AT BAR CONSIDERING THAT IN THE SERRANO CASE THERE WAS
ABSOLUTELY NO NOTICE AT ALL.[28]

IV

WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH APPLICABLE DECISION[S] OF THE
HONORABLE SUPREME COURT AND HAS SO FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF
SUPERVISION WHEN IT RULED THAT THE REGIONAL TRIAL COURT DOES NOT HAVE JURISDICTION OVER THE COMPLAINT FOR REPLEVIN FILED BY SMART TO RECOVER ITS OWN COMPANY
VEHICLE FROM A FORMER EMPLOYEE WHO WAS LEGALLY DISMISSED.

WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED TO APPRECIATE THAT THE SUBJECT OF THE REPLEVIN CASE IS NOT THE ENFORCEMENT OF A CAR PLAN PRIVILEGE BUT SIMPLY THE
RECOVERY OF A COMPANY CAR.

VI

WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED TO APPRECIATE THAT ASTORGA CAN NO LONGER BE CONSIDERED AS AN EMPLOYEE OF SMART UNDER THE LABOR CODE. [29]

The Court shall first deal with the propriety of dismissing the replevin case filed with the RTC of Makati City allegedly for lack of jurisdiction, which is the issue raised in G.R. No. 148132.

Replevin is an action whereby the owner or person entitled to repossession of goods or chattels may recover those goods or chattels from one who has wrongfully distrained or taken, or who wrongfully detains such goods or
chattels. It is designed to permit one having right to possession to recover property in specie from one who has wrongfully taken or detained the property. [30] The term may refer either to the action itself, for the recovery of personalty, or to
the provisional remedy traditionally associated with it, by which possession of the property may be obtained by the plaintiff and retained during the pendency of the action. [31]

That the action commenced by SMART against Astorga in the RTC of Makati City was one for replevin hardly admits of doubt.

In reversing the RTC ruling and consequently dismissing the case for lack of jurisdiction, the CA made the following disquisition, viz.:
 [I]t is plain to see that the vehicle was issued to [Astorga] by [Smart] as part of the employment package. We doubt that [SMART] would extend [to Astorga] the same car plan privilege were it not for her
employment as district sales manager of the company. Furthermore, there is no civil contract for a loan between [Astorga] and [Smart]. Consequently, We find that the car plan privilege is a benefit arising out of
employer-employee relationship. Thus, the claim for such falls squarely within the original and exclusive jurisdiction of the labor arbiters and the NLRC. [32]

We do not agree. Contrary to the CAs ratiocination, the RTC rightfully assumed jurisdiction over the suit and acted well within its discretion in denying Astorgas motion to dismiss. SMARTs demand for payment of the market value
of the car or, in the alternative, the surrender of the car, is not a labor, but a civil, dispute. It involves the relationship of debtor and creditor rather than employee-employer relations. [33] As such, the dispute falls within the jurisdiction of the
regular courts.

In Basaya, Jr. v. Militante,[34] this Court, in upholding the jurisdiction of the RTC over the replevin suit, explained:

Replevin is a possessory action, the gist of which is the right of possession in the plaintiff. The primary relief sought therein is the return of the property in specie wrongfully detained by another person. It is an ordinary
statutory proceeding to adjudicate rights to the title or possession of personal property. The question of whether or not a party has the right of possession over the property involved and if so, whether or not the adverse
party has wrongfully taken and detained said property as to require its return to plaintiff, is outside the pale of competence of a labor tribunal and beyond the field of specialization of Labor Arbiters.

xxxx

The labor dispute involved is not intertwined with the issue in the Replevin Case. The respective issues raised in each forum can be resolved independently on the other. In fact in 18 November 1986, the
NLRC in the case before it had issued an Injunctive Writ enjoining the petitioners from blocking the free ingress and egress to the Vessel and ordering the petitioners to disembark and vacate. That aspect of the
controversy is properly settled under the Labor Code. So also with petitioners right to picket. But the determination of the question of who has the better right to take possession of the Vessel and whether petitioners can
deprive the Charterer, as the legal possessor of the Vessel, of that right to possess in addressed to the competence of Civil Courts.

In thus ruling, this Court is not sanctioning split jurisdiction but defining avenues of jurisdiction as laid down by pertinent laws.

The CA, therefore, committed reversible error when it overturned the RTC ruling and ordered the dismissal of the replevin case for lack of jurisdiction.

Having resolved that issue, we proceed to rule on the validity of Astorgas dismissal.

Astorga was terminated due to redundancy, which is one of the authorized causes for the dismissal of an employee. The nature of redundancy as an authorized cause for dismissal is explained in the leading case of Wiltshire File
Co., Inc. v. National Labor Relations Commission,[35] viz:

x x x redundancy in an employers personnel force necessarily or even ordinarily refers to duplication of work. That no other person was holding the same position that private respondent held prior to termination of his
services does not show that his position had not become redundant. Indeed, in any well organized business enterprise, it would be surprising to find duplication of work and two (2) or more people doing the work of one
person. We believe that redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly
put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a
particular product line or service activity previously manufactured or undertaken by the enterprise.

The characterization of an employees services as superfluous or no longer necessary and, therefore, properly terminable, is an exercise of business judgment on the part of the employer. The wisdom and soundness of such
characterization or decision is not subject to discretionary review provided, of course, that a violation of law or arbitrary or malicious action is not shown. [36]

Astorga claims that the termination of her employment was illegal and tainted with bad faith. She asserts that the reorganization was done in order to get rid of her. But except for her barefaced allegation, no convincing evidence
was offered to prove it. This Court finds it extremely difficult to believe that SMART would enter into a joint venture agreement with NTT, form SNMI and abolish CSMG/FSD simply for the sole purpose of easing out a particular employee,
such as Astorga. Moreover, Astorga never denied that SMART offered her a supervisory position in the Customer Care Department, but she refused the offer because the position carried a lower salary rank and rate. If indeed SMART
simply wanted to get rid of her, it would not have offered her a position in any department in the enterprise.
 Astorga also states that the justification advanced by SMART is not true because there was no compelling economic reason for redundancy. But contrary to her claim, an employer is not precluded from adopting a new policy
conducive to a more economical and effective management even if it is not experiencing economic reverses. Neither does the law require that the employer should suffer financial losses before he can terminate the services of the
employee on the ground of redundancy. [37]

We agree with the CA that the organizational realignment introduced by SMART, which culminated in the abolition of CSMG/FSD and termination of Astorgas employment was an honest effort to make SMARTs sales and
marketing departments more efficient and competitive. As the CA had taken pains to elucidate:

x x x a careful and assiduous review of the records will yield no other conclusion than that the reorganization undertaken by SMART is for no purpose other than its declared objective as a labor and cost savings
device. Indeed, this Court finds no fault in SMARTs decision to outsource the corporate sales market to SNMI in order to attain greater productivity. [Astorga] belonged to the Sales Marketing Group under the Fixed
Services Division (CSMG/FSD), a distinct sales force of SMART in charge of selling SMARTs telecommunications services to the corporate market. SMART, to ensure it can respond quickly, efficiently and flexibly to its
customers requirement, abolished CSMG/FSD and shortly thereafter assigned its functions to newly-created SNMI Multimedia Incorporated, a joint venture company of SMART and NTT of Japan, for the reason that
CSMG/FSD does not have the necessary technical expertise required for the value added services. By transferring the duties of CSMG/FSD to SNMI, SMART has created a more competent and specialized
organization to perform the work required for corporate accounts. It is also relieved SMART of all administrative costs management, time and money-needed in maintaining the CSMG/FSD. The determination to
outsource the duties of the CSMG/FSD to SNMI was, to Our mind, a sound business judgment based on relevant criteria and is therefore a legitimate exercise of management prerogative.

Indeed, out of our concern for those lesser circumstanced in life, this Court has inclined towards the worker and upheld his cause in most of his conflicts with his employer.This favored treatment is consonant with the social justice
policy of the Constitution. But while tilting the scales of justice in favor of workers, the fundamental law also guarantees the right of the employer to reasonable returns for his investment. [38] In this light, we must acknowledge the prerogative
of the employer to adopt such measures as will promote greater efficiency, reduce overhead costs and enhance prospects of economic gains, albeit always within the framework of existing laws. Accordingly, we sustain the reorganization
and redundancy program undertaken by SMART.

However, as aptly found by the CA, SMART failed to comply with the mandated one (1) month notice prior to termination. The record is clear that Astorga received the notice of termination only on March 16, 1998[39] or less than a
month prior to its effectivity on April 3, 1998. Likewise, the Department of Labor and Employment was notified of the redundancy program only on March 6, 1998.[40]

Article 283 of the Labor Code clearly provides:

Art. 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
Ministry of Labor and Employment at least one (1) month before the intended date thereof x x x.

SMARTs assertion that Astorga cannot complain of lack of notice because the organizational realignment was made known to all the employees as early as February 1998 fails to persuade. Astorgas actual knowledge of the
reorganization cannot replace the formal and written notice required by the law. In the written notice, the employees are informed of the specific date of the termination, at least a month prior to the effectivity of such termination, to give
them sufficient time to find other suitable employment or to make whatever arrangements are needed to cushion the impact of termination. In this case, notwithstanding Astorgas knowledge of the reorganization, she remained uncertain
about the status of her employment until SMART gave her formal notice of termination. But such notice was received by Astorga barely two (2) weeks before the effective date of termination, a period very much shorter than that required by
law.

Be that as it may, this procedural infirmity would not render the termination of Astorgas employment illegal. The validity of termination can exist independently of the procedural infirmity of the dismissal. [41] In DAP Corporation v.
[42]
CA, we found the dismissal of the employees therein valid and for authorized cause even if the employer failed to comply with the notice requirement under Article 283 of the Labor Code. This Court upheld the dismissal, but held the
employer liable for non-compliance with the procedural requirements.

The CA, therefore, committed no reversible error in sustaining Astorgas dismissal and at the same time, awarding indemnity for violation of Astorga's statutory rights.

However, we find the need to modify, by increasing, the indemnity awarded by the CA to Astorga, as a sanction on SMART for non-compliance with the one-month mandatory notice requirement, in light of our ruling in Jaka Food
Processing Corporation v. Pacot,[43] viz.:
 [I]f the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be temperedbecause the dismissal
process was, in effect, initiated by an act imputable to the employee, and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction
should be stiffer because the dismissal process was initiated by the employers exercise of his management prerogative.

We deem it proper to increase the amount of the penalty on SMART to P50,000.00.

As provided in Article 283 of the Labor Code, Astorga is, likewise, entitled to separation pay equivalent to at least one (1) month salary or to at least one (1) months pay for every year of service, whichever is higher. The records
show that Astorgas length of service is less than a year. She is, therefore, also entitled to separation pay equivalent to one (1) month pay.

Finally, we note that Astorga claimed non-payment of wages from February 15, 1998. This assertion was never rebutted by SMART in the proceedings a quo. No proof of payment was presented by SMART to disprove the
allegation. It is settled that in labor cases, the burden of proving payment of monetary claims rests on the employer. [44]SMART failed to discharge the onus probandi. Accordingly, it must be held liable for Astorgas salary from February 15,
1998 until the effective date of her termination, on April 3, 1998.

However, the award of backwages to Astorga by the CA should be deleted for lack of basis. Backwages is a relief given to an illegally dismissed employee. Thus, before backwages may be granted, there must be a finding of
unjust or illegal dismissal from work. [45] The Labor Arbiter ruled that Astorga was illegally dismissed. But on appeal, the NLRC reversed the Labor Arbiters ruling and categorically declared Astorgas dismissal valid. This ruling was affirmed
by the CA in its assailed Decision. Since Astorgas dismissal is for an authorized cause, she is not entitled to backwages. The CAs award of backwages is totally inconsistent with its finding of valid dismissal.

WHEREFORE, the petition of SMART docketed as G.R. No. 148132 is GRANTED. The February 28, 2000 Decision and the May 7, 2001 Resolution of the Court of Appeals in CA-G.R. SP. No. 53831 are SET
ASIDE. The Regional Trial Court of Makati City, Branch 57 is DIRECTED to proceed with the trial of Civil Case No. 98-1936 and render its Decision with reasonable dispatch.

On the other hand, the petitions of SMART and Astorga docketed as G.R. Nos. 151079 and 151372 are DENIED. The June 11, 2001 Decision and the December 18, 2001 Resolution in CA-G.R. SP. No. 57065,
are AFFIRMED with MODIFICATION. Astorga is declared validly dismissed. However, SMART is ordered to pay Astorga P50,000.00 as indemnity for its non-compliance with procedural due process, her separation pay equivalent to one
(1) month pay, and her salary from February 15, 1998 until the effective date of her termination on April 3, 1998. The award of backwages is DELETED for lack of basis.

SO ORDERED.

G.R. No. 181293, February 23, 2015

ANA THERESIA RISA HONTIVEROS-BARAQUEL, DANIEL L. EDRALIN, VICTOR M. GONZALES, SR., JOSE APOLLO R. ADO, RENE D. SORIANO, ALLIANCE OF PROGRESSIVE LABOR, BUKLURAN NG MANGGAGAWANG
PILIPINO, LAHING PILIPINO MULTI-PURPOSE TRANSPORT SERVICE COOPERATIVE, PNCC SKYWAY CORPORATION EMPLOYEES UNION (PSCEU), AND PNCC TRAFFIC MANAGEMENT & SECURITY DEPARTMENT
WORKERS ORGANIZATION (PTMSDWO), Petitioners, v. TOLL REGULATORY BOARD, THE SECRETARY OF THE DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS (DOTC), PNCC SKYWAY CORPORATION,
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, SKYWAY O & M CORPORATION, AND CITRA METRO MANILA TOLLWAYS CORP., Respondents.

DECISION

SERENO, C.J.:

This is an original petition for certiorari and prohibition under Rule 65 of the Rules of Court, with a prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order, seeking the annulment of the following:

1. The Amendment to the Supplemental Toll Operation Agreement executed on 18 July 2007 between the Republic of the Philippines, the Philippine National Construction Corporation, and Citra Metro Manila Tollways
Corporation;ChanRoblesVirtualawlibrary

2. The Memorandum dated 20 July 2007 of the Secretary of Transportation and Communications, approving the Amendment to the Supplemental Toll Operation Agreement;ChanRoblesVirtualawlibrary
 3. The Memorandum of Agreement executed on 21 December 2007 between the Philippine National Construction Corporation, PNCC Skyway Corporation, and Citra Metro Manila Tollways Corporation; and

4. The Toll Operation Certificate issued by the Toll Regulatory Board on 28 December 2007 in favor of Skyway O & M Corporation.

The annulment of the above is sought for being unconstitutional, contrary to law, and grossly disadvantageous to the government. Petitioners also seek to prohibit Skyway O & M Corporation from assuming operations and maintenance
responsibilities over the Skyway toll facilities.chanroblesvirtuallawlibrary

ANTECEDENT FACTS

The Toll Regulatory Board (TRB) was created on 31 March 1977 by Presidential Decree No. (P.D.) 1112 1 in order to supervise and regulate, on behalf of the government, the collection of toll fees and the operation of toll facilities by the
private sector.

On the same date, P.D. 1113 2 was issued granting to the Construction and Development Corporation of the Philippines (now Philippine National Construction Corporation or PNCC) the right, privilege, and authority to construct, operate,
and maintain toll facilities in the North and South Luzon Toll Expressways for a period of 30 years starting 1 May 1977.

TRB and PNCC later entered into a Toll Operation Agreement, 3 which prescribed the operating conditions of the right granted to PNCC under P.D. 1113.

P.D. 1113 was amended by P.D. 1894,4 which granted PNCC the right, privilege, and authority to construct, maintain, and operate the North Luzon, South Luzon and Metro Manila Expressways, together with the toll facilities appurtenant
thereto. The term of 30 years provided under P. D. 1113 starting from 1 May 1977 remained the same for the North and the South Luzon Expressways, while the franchise granted for the Metro Manila Expressway (MME) provided a term of
30 years commencing from the date of completion of the project.

On 22 September 1993, PNCC entered into an agreement 5 with PT Citra Lamtoro Gung Persada (CITRA), a limited liability company organized and established under the laws of the Republic of Indonesia, whereby the latter committed to
provide PNCC with a pre-feasibility study on the proposed MME project. The agreement was supplemented 6 on 14 February 1994 with a related undertaking on the part of CITRA. CITRA was to provide a preliminary feasibility study on the
Metro Manila Skyways (MMS) project, a system of elevated roadway networks passing through the heart of the Metropolitan Manila area. In order to accelerate the actual implementation of both the MME and the MMS projects, PNCC and
CITRA entered into a second agreement.7 Through that agreement, CITRA committed to finance and undertake the preparation, updating, and revalidation of previous studies on the construction, operation, and maintenance of the projects.

As a result of the feasibility and related studies, PNCC and CITRA submitted, through the TRB, a Joint Investment Proposal (JIP) to the Republic of the Philippines. 8 The JIP embodied the implementation schedule for the financing, design
and construction of the MMS in three stages: the South Metro Manila Skyway, the North Metro Manila Skyway, and the Central Metro Manila Skyway. 9cralawred

The TRB reviewed, evaluated and approved the JIP, particularly as it related to Stage 1, Phases 1 and 2; and Stage 2, Phase 1 of the South Metro Manila Skyway.

On 30 August 1995, PNCC and CITRA entered into a Business and Joint Venture Agreement 10 and created the Citra Metro Manila Tollways Corporation (CMMTC). CMMTC was a joint venture corporation organized under Philippine laws to
serve as a channel through which CITRA shall participate in the construction and development of the project.

On 27 November 1995, the Republic of the Philippines through the TRB as Grantor, CMMTC as Investor, and PNCC as Operator executed a Supplemental Toll Operation Agreement (STOA) 11covering Stage 1, Phases 1 and 2; and
Stage 2, Phase 1 of the South Metro Manila Skyway. Under the STOA, the design and construction of the project roads became the primary and exclusive privilege and responsibility of CMMTC. The operation and maintenance of the
project roads became the primary and exclusive privilege and responsibility of the PNCC Skyway Corporation (PSC), a wholly owned subsidiary of PNCC, which undertook and performed the latters obligations under the STOA.

CMMTC completed the design and construction of Stage 1 of the South Metro Manila Skyway, which was operated and maintained by PSC. 12cralawred

On 18 July 2007, the Republic of the Philippines, through the TRB, CMMTC, and PNCC executed the assailed Amendment to the Supplemental Toll Operation Agreement (ASTOA). 13 The ASTOA incorporated the amendments, revisions,
and modifications necessary to cover the design and construction of Stage 2 of the South Metro Manila Skyway. Also under the ASTOA, Skyway O & M Corporation (SOMCO) replaced PSC in performing the operations and maintenance of
Stage 1 of the South Metro Manila Skyway.

Pursuant to the authority granted to him under Executive Order No. (E.O.) 497 14 dated 24 January 2006, Department of Transportation and Communications (DOTC) Secretary Leandro Mendoza approved the ASTOA through the
challenged Memorandum dated 20 July 2007.15cralawred

On 21 December 2007, PNCC, PSC, and CMMTC entered into the assailed Memorandum of Agreement (MOA) 16 providing for the successful and seamless assumption by SOMCO of the operations and maintenance of Stage 1 of the
South Metro Manila Skyway. Under the MOA, PSC received the amount of ?320 million which was used for the settlement of its liabilities arising from the consequent retrenchment or separation of its affected employees.

The TRB issued the challenged Toll Operation Certificate (TOC) 17 to SOMCO on 28 December 2007, authorizing the latter to operate and maintain Stage 1 of the South Metro Manila Skyway effective 10:00 p.m. on 31 December 2007.

Meanwhile, on 28 December 2007, petitioner PNCC Traffic Management and Security Department Workers Organization (PTMSDWO) filed a Notice of Strike against PSC on the ground of unfair labor practice, specifically union
busting.18 The Secretary of Labor and Employment 19 assumed jurisdiction over the dispute in an Order dated 31 December 2007 and set the initial hearing of the case on 2 January 2008. 20cralawred

On 3 January 2008, petitioners PTMSDWO and PNCC Skyway Corporation Employees Union (PSCEU) filed before the Regional Trial Court of Paraaque City, Branch 258 (RTC), a complaint against respondents TRB, PNCC, PSC,
CMMTC, and SOMCO. The complaint was for injunction and prohibition with a prayer for a writ of preliminary injunction and/or a temporary restraining order, and sought to prohibit the implementation of the ASTOA and the MOA, as well as
the assumption of the toll operations by SOMCO. 21 Petitioners PSCEU and PTMSDWO also sought the subsequent nullification of the ASTOA and the MOA for being contrary to law and for being grossly disadvantageous to the
government.22 They later filed an Amended Complaint 23 dated 8 January 2008, additionally praying that PSC be allowed to continue the toll operations. With the exception of TRB, all defendants therein filed their Opposition.

On 23 January 2008, the RTC issued an Order 24 denying the prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction. According to the RTC, petitioners were seeking to enjoin a national government
infrastructure project. Under Republic Act No. (R.A.) 8975, 25 lower courts are prohibited from issuing a temporary restraining order or preliminary injunction against the government or any person or entity acting under the governments
direction to restrain the execution, implementation, or operation of any such contract or project. Furthermore, the RTC ruled that it could no longer issue a temporary restraining order or preliminary injunction, considering that the act
sought to be restrained had already been consummated. 26 The ASTOA, the MOA, and the assumption of the toll operations by SOMCO took effect at 10:00 p.m. on 31 December 2007, while petitioners PSCEU and PTMSDWO sought to
prohibit their implementation only on 3 January 2008.

In view of its denial of the ancillary prayer, the RTC required defendants to file their respective Answers to the Amended Complaint. 27cralawred

On 28 January 2008, petitioners PSCEU and PTMSDWO filed a Notice of Dismissal with Urgent Ex-Parte Motion for the Issuance of Order Confirming the Dismissal, 28 considering that no Answers had yet been filed. On the basis thereof,
the RTC dismissed the case without prejudice on 29 January 2008. 29cralawred

On 4 February 2008, petitioners filed the instant Petition 30 before this Court. On 13 February 2008, we required respondents to comment on the same. 31cralawred

Meanwhile, defendants PNCC32 and PSC33 filed their respective Motions for Partial Reconsideration of the Order of the RTC dismissing the case without prejudice. Both argued that the RTC should have dismissed the case with prejudice.
They pointed out that petitioners PSCEU and PTMSDWO had acted in bad faith by filing the complaint before the RTC, despite the pendency of a labor case over which the Secretary of Labor and Employment had assumed jurisdiction.
Defendant CMMTC joined PNCC and PSC in moving for a partial reconsideration of the RTC Order. 34cralawred

The RTC denied the Motions for Partial Reconsideration in an Order dated 13 June 2008. 35cralawred

Before this Court, SOMCO,36 PSC,37 PNCC,38 CMMTC,39 and TRB40 filed their respective Comments on the Petition.

THE PARTIES POSITIONS

Petitioners argue that the franchise for toll operations was exclusively vested by P.D. 1113 in PNCC, which exercised the powers under its franchise through PSC in accordance with the STOA. By agreeing to the arrangement whereby
SOMCO would replace PSC in the toll operations and management, PNCC seriously breached the terms and conditions of its undertaking under the franchise and effectively abdicated its rights and privileges in favor of SOMCO.

Furthermore, the TOC granted to SOMCO was highly irregular and contrary to law, because 1) it did not indicate the conditions that shall be imposed on SOMCO as provided under P.D. 1112; 41 2) none of the requirements on public
bidding, negotiations, or even publication was complied with before the issuance of the TOC to SOMCO; 3) applying the stricter grandfather rule, SOMCO does not qualify as a facility operator as defined under R.A. 6957, 42 as amended
by R.A. 7718;43 and 4) there were no public notices and hearings conducted wherein all legitimate issues and concerns about the transfer of the toll operations would have been properly ventilated.

Petitioners also claim that the approval by the DOTC Secretary of the ASTOA could not take the place of the presidential approval required under P.D. 1113 44 and P.D. 189445 concerning the franchise granted to PNCC.
Finally, petitioners claim that the assumption of the toll operations by SOMCO was grossly disadvantageous to the government, because 1) for a measly capital investment of P2.5 million, SOMCO stands to earn P400 million in gross
revenues based on official and historical records; 2) with its measly capital, SOMCO would not be able to cover the direct overhead for personal services in the amount of P226 million as borne out by Commission on Audit reports; 3) the
net revenue from toll operations would go to private shareholders of SOMCO, whereas all earnings of PSC when it was still in charge of the toll operations went to PNCC the mother company whose earnings, as an acquired-asset
corporation, formed part of the public treasury; 4) the new arrangement would result in the poor delivery of toll services by SOMCO, which had no proven track record; 5) PSC received only P320 million as settlement for the transfer of toll
operations to SOMCO.

All respondents counter that petitioners do not have the requisite legal standing to file the petition. According to respondents, petitioner Hontiveros-Baraquel filed the instant petition as a legislator in her capacity as party-list representative
of Akbayan. As such, she was only allowed to sue to question the validity of any official action when it infringed on her prerogative as a legislator. 46Presently, she has cited no such prerogative, power, or privilege that is adversely affected
by the assailed acts.47cralawred

While suing as citizens, the individual petitioners have not shown any personal or substantial interest in the case indicating that they sustained or will sustain direct injury as a result of the implementation of the assailed acts. 48 The
maintenance of the suit by petitioners as taxpayers has no merit either because the assailed acts do not involve the disbursement of public funds. 49 Finally, the bringing of the suit by petitioners as peoples organizations does not
automatically confer legal standing, especially since petitioner-organizations do not even allege that they represent their members, 50 nor do they cite any particular constitutional provision that has been violated or disregarded by the
assailed acts.51 In fact, the suit raises only issues of contract law, and none of the petitioners is a party or is privy to the assailed agreements and issuances. 52cralawred

Respondents also argue that petitioners violate the hierarchy of courts. In particular, it is alleged that while lower courts are prohibited from issuing temporary restraining orders or preliminary injunctions against national government projects
under R.A. 8975, the law does not preclude them from assuming jurisdiction over complaints that seek the nullification of a national government project as ultimate relief. 53cralawred

As a final procedural challenge to the petition, respondents aver that petitioners are guilty of forum shopping. When petitioners filed the instant petition, the case before the RTC seeking similar reliefs was still pending, as respondents
PNCC, PSC and CMMTC had moved for the partial reconsideration of the RTCs Order of dismissal within the reglementary period. 54 Furthermore, the instant case and the one before the RTC were filed while petitioners labor grievances
seeking similar reliefs were also being heard before the Department of Labor and Employment. 55cralawred

On the merits of the arguments in the petition, respondents argue that nothing in the ASTOA, the approval thereof by the DOTC Secretary, the MOA, or the TOC was violative of the Constitution.

It is argued that the authority to operate a public utility can be granted by administrative agencies when authorized by law. 56 Under P.D. 1112, the TRB is empowered to grant authority and enter into contracts for the construction, operation,
and maintenance of a toll facility, 57 such as the ASTOA in this case. Also, the ASTOA was an amendment, not to the legislative franchise of PNCC, but to the STOA previously executed between the Republic of the Philippines through the
TRB, PNCC, and CMMTC.58 In fact, PNCCs franchise was never sold, transferred, or otherwise assigned to SOMCO 59in the same way that PSCs previous assumption of the operation and maintenance of the South Metro Manila Skyway
did not amount to a sale, transfer or assignment of PNCCs franchise. 60cralawred

There can be no valid objection to the approval of the ASTOA by the DOTC Secretary, because he was authorized by the President to do so by virtue of E.O. 497. 61 Also, the phrase subject to the approval of the President of the
Philippines in P.D. 1112 and 1113 does not in any way mean that the presidential approval must be obtained prior to the execution of a contract, or that the approval be made personally by the President. 62 The presidential approval may be
obtained under the doctrine of qualified political agency. 63cralawred

Respondents argue that there is no merit in the claim that the TOC granted to SOMCO was highly irregular and contrary to law. First, the TOC clearly states that the toll operation and maintenance by SOMCO shall be regulated by the
Republic of the Philippines in accordance with P.D. 1112, the STOA, the toll operations and maintenance rules and regulations, and lawful orders, instructions, and conditions that may be imposed from time to time. 64 Second, there is no
need to comply with the public bidding and negotiation requirements, because the South Metro Manila Skyway is an ongoing project, not a new one. 65 Furthermore, the STOA, which was the basis for the ASTOA, was concluded way before
the effectivity of R.A. 918466 in 2003.67cralawred

Third, SOMCO is a Filipino corporation with substantial 72% Filipino ownership. 68 Fourth, the law requires prior notice and hearing only in an administrative bodys exercise of quasi-judicial functions. 69 In this case, the transfer of the toll
operations and maintenance to SOMCO was a contractual arrangement entered into in accordance with law. 70cralawred

Finally, the assumption of the toll operation and maintenance by SOMCO is not disadvantageous to the government. Petitioners belittle the P2.5 million capitalization of SOMCO, considering that PSCs capitalization at the time it was
incorporated was merely P500,000.71cralawred

Respondents claim that under the ASTOA, PNCC shall get a direct share in the toll revenues without any corollary obligation, unlike the arrangement in the STOA whereby PNCCs 10% share in the toll revenues was intended primarily for
the toll operation and maintenance by PSC. 72cralawred

Finally, respondents assert that there is no reason to fear that the assumption by SOMCO would result in poor delivery of toll services. CITRA and the other shareholders of SOMCO are entities with experience and proven track record in
toll operations.73 Also, SOMCO hired or absorbed more than 300 PSC employees, 74 who brought with them their work expertise and experience.chanroblesvirtuallawlibrary

ISSUES

The instant case shall be resolved on the basis of the following issues:

Procedural:

I. Whether petitioners have standing;

II. Whether petitioners are guilty of forum-shopping;

Substantive:

III. Whether the TRB has the power to grant authority to operate a toll facility;

IV. Whether the TOC issued to SOMCO was valid;

V. Whether the approval of the ASTOA by the DOTC Secretary was valid; and

VI. Whether the assumption of toll operations by SOMCO is disadvantageous to the government.

Our Ruling

I
Not all petitioners have
personality to sue.

Standing is a constitutional law concept allowing suits to be brought not necessarily by parties personally injured by the operation of a law or official action, but by concerned citizens, taxpayers, or voters who sue in the public
interest.75 Determining the standing of concerned citizens, taxpayers, or voters requires a partial consideration of the substantive merit of the constitutional question, 76 or at least a preliminary estimate thereof. 77cralawred

In this case, petitioners raise the power of Congress to grant franchises as a constitutional question. They allege that the execution of the ASTOA and the MOA, the approval of the ASTOA by the DOTC Secretary and the issuance of the
TOC infringed on the constitutional power of Congress, which has the sole authority to grant franchises for the operation of public utilities.

This Court has had a few occasions to rule that a franchise from Congress is not required before each and every public utility may operate. 78 Unless there is a law that specifically requires a franchise for the operation of a public utility,
particular agencies in the executive branch may issue authorizations and licenses for the operation of certain classes of public utilities. 79 In the instant case, there is no law that states that a legislative franchise is necessary for the
operation of toll facilities.

In PAL v. Civil Aeronautics Board,80 this Court enunciated:chanRoblesvirtualLawlibrary

Congress has granted certain administrative agencies the power to grant licenses for, or to authorize the operation of certain public utilities. With the growing complexity of modern life, the multiplication of the subjects of governmental
regulation, and the increased difficulty of administering the laws, there is a constantly growing tendency towards the delegation of greater powers by the legislature, and towards the approval of the practice by the courts. It is generally
recognized that a franchise may be derived indirectly from the state through a duly designated agency, and to this extent, the power to grant franchises has frequently been delegated, even to agencies other than those of a legislative
nature. In pursuance of this, it has been held that privileges conferred by grant by local authorities as agents for the state constitute as much a legislative franchise as though the grant had been made by an act of the
Legislature.81cralawlawlibrary

It is thus clear that Congress does not have the sole authority to grant franchises for the operation of public utilities. Considering the foregoing, we find that the petition raises no issue of constitutional import. More particularly, no legislative
prerogative, power, or privilege has been impaired. Hence, legislators have no standing to file the instant petition, for they are only allowed to sue to question the validity of any official action when it infringes on their prerogatives as
members of Congress.82Standing is accorded to them only if there is an unmistakable showing that the challenged official act affects or impairs their rights and prerogatives as legislators. 83cralawred

In line with our ruling in Kilosbayan, Inc. v. Morato,84 the rule concerning a real party in interest which is applicable to private litigation rather than the liberal rule on standing, should be applied to petitioners.

A real party in interest is one who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. 85 Ones interest must be personal and not one based on a desire to vindicate the constitutional right
of some third and unrelated party.86 The purposes of the rule are to prevent the prosecution of actions by persons without any right or title to or interest in the case; to require that the actual party entitled to legal relief be the one to
prosecute the action; to avoid a multiplicity of suits; and to discourage litigation and keep it within certain bounds, pursuant to sound public policy. 87cralawred

At bottom, what is being questioned in the petition is the relinquishment by PSC of the toll operations in favor of SOMCO, effectively leading to the cessation of the formers business. In this case, we find that among petitioners, the only
real parties in interest are the labor unions PSCEU and PTMSDWO.

PSCEU and PTMSDWO filed the petition not as a representative suit on behalf of their members who are rank-and-file employees of PSC, but as peoples organizations invested with a public duty to defend the rule of law. 88 PSCEU and
PTMSDWO cite Kilosbayan v. Ermita89 as authority to support their standing to file the instant suit.

It is well to point out that the Court, in Ermita, accorded standing to peoples organizations to file the suit, because the matter involved therein was the qualification of a person to be appointed as a member of this Court an issue of utmost
and far-reaching constitutional importance. 90 As discussed, the instant petition raises no genuine constitutional issues.

Nevertheless, for a different reason, we accord standing to PSCEU and PTMSDWO to file the instant suit. With the transfer of toll operations to SOMCO and the resulting cessation of PSCs business comes the retrenchment and
separation of all its employees. The existence of petitioner labor unions would terminate with the dissolution of its employer and the separation of its members. This is why the petition also prays that this Court issue an order that would
smoothly preserve the toll operations services of respondent PNCC and/or respondent PSC under its legislative franchise. 91 We have recognized that the right of self-preservation is inherent in every labor union or any organization for that
matter.92 Thus, PSCEU and PTMSDWO, as real parties in interest, have the personality to question the assumption of the toll operations by SOMCO.

II
PSCEU and PTMSDWO are not
guilty of forum-shopping.

Forum shopping refers to the act of availing of several remedies in different courts and/or administrative agencies, either simultaneously or successively, when these remedies are substantially founded on the same material facts and
circumstances and raise basically the same issues either pending in or already resolved by some other court or administrative agency. 93 What is pivotal in determining whether forum shopping exists is the vexation caused to the courts and
litigants and the possibility of conflicting decisions being rendered by different courts and/or administrative agencies upon the same issues. 94cralawred

The elements of forum shopping are as follows: a) identity of parties or at least such parties that represent the same interests in both actions; b) identity of rights asserted and the relief prayed for, the relief founded on the same facts; and
c) identity of the two preceding particulars, such that any judgment rendered in one action will amount to res judicata in the other. 95cralawred

Respondents argue that petitioners PSCEU and PTMSDWO committed forum shopping by filing the complaint for injunction and prohibition before the RTC during the pendency of NCMB-NCR-NS-12-188-07 entitled In Re: Labor Dispute
at PNCC Skyway Corporation. It was a case they also filed, over which the Secretary of Labor and Employment has assumed jurisdiction.

The case involves a Notice of Strike filed against PSC on the ground of unfair labor practice. While the specific act in question is not specified, the prohibited acts constituting unfair labor practice 96essentially relate to violations concerning
the workers right to self-organization. 97 When compared with the complaint filed with the RTC for injunction and prohibition seeking to prohibit the implementation of the ASTOA and the MOA, as well as the assumption of the toll operations
by SOMCO for being unconstitutional, contrary to law and disadvantageous to the government, it is easily discernible that there is no identity of rights asserted and relief prayed for. These cases are distinct and dissimilar in their nature and
character.

For the sake of argument, let us assume that, in order to hurt the unions, PSC feigned a cessation of business that led to the retrenchment and separation of all employees. That is an unfair labor practice. In that complaint, the unions
cannot be expected to ask for, or the Secretary of Labor and Employment to grant, the annulment of the ASTOA and the MOA and the continuation of toll operations by PSC. The Secretary would only focus on the legality of the
retrenchment and separation, and on the presence or absence of bad faith in PSCs cessation of business. On the other hand, the complaint before the RTC would require it to focus on the legality of the ASTOA, the MOA and the transfer
of toll operations. Ultimately, even if the Secretary of Labor and Employment makes a finding of unfair labor practice, this determination would not amount to res judicata as regards the case before the RTC.

We also reject the claim of respondents that petitioners PSCEU and PTMSDWO committed forum shopping by filing the instant petition before this Court while the motion for partial reconsideration of the RTCs Order of dismissal without
prejudice was still pending. Section 1, Rule 17 of the Rules of Court states:chanRoblesvirtualLawlibrary

SECTION 1. Dismissal upon notice by plaintiff. A complaint may be dismissed by the plaintiff by filing a notice of dismissal at any time before service of the answer or of a motion for summary judgment. Upon such notice being filed, the
court shall issue an order confirming the dismissal. Unless otherwise stated in the notice, the dismissal is without prejudice, except that a notice operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed
in a competent court an action based on or including the same claim.cralawlawlibrary

In this case, petitioners PSCEU and PTMSDWO had filed a notice of dismissal of the complaint before the RTC on 28 January 2008, before respondents filed their Answers. The following day, the RTC issued an order confirming the
dismissal. Under the above-cited rule, this confirmation is the only qualification imposed on the right of a party to dismiss the action before the adverse party files an answer. 98 In this case, the dismissal of the action therefore became
effective upon that confirmation by the RTC despite the subsequent filing of the motions for partial reconsideration.

Thus, when the instant petition was filed on 4 February 2008, the complaint before the RTC was no longer pending. The complaint was dismissed without prejudice by virtue of the notice of dismissal filed by petitioners PSCEU and
PTMSDWO. Consequently, there was not even any need for petitioners to mention the prior filing and dismissal of the complaint in the certificate of non-forum shopping in the instant petition, 99 but they did so anyway.100cralawred

Parenthetically, in their motions for partial reconsideration, respondents PNCC and PSC insisted that the dismissal should have been with prejudice, because petitioners allegedly acted in bad faith in filing the notice of dismissal, were guilty
of forum shopping, and did not notify respondents of their intention to file a notice of dismissal. With regard to the first and the third allegation, petitioners may ask for dismissal at any time before the filing of the answer as a matter of right,
even if the notice cites the most ridiculous of grounds for dismissal. 101 As to the second, we have already ruled that there was no forum shopping as regards the successive filings of the labor case and the complaint before the
RTC.chanroblesvirtuallawlibrary

III
TRB has the power to grant
authority to operate a toll facility.

This matter has already been settled by the Court in Francisco, Jr. v. TRB, 102 which ruled thus:chanRoblesvirtualLawlibrary

It is abundantly clear that Sections 3 (a) and (e) of P.D. 1112 in relation to Section 4 of P.D. 1894 have invested the TRB with sufficient power to grant a qualified person or entity with authority to construct, maintain, and operate a toll facility
and to issue the corresponding toll operating permit or TOC.

Sections 3 (a) and (e) of P.D. 1112 and Section 4 of P.D. 1894 amply provide the power to grant authority to operate toll facilities:chanRoblesvirtualLawlibrary

Section 3. Powers and Duties of the Board. The Board shall have in addition to its general powers of administration the following powers and duties:

(a) Subject to the approval of the President of the Philippines, to enter into contracts in behalf of the Republic of the Philippines with persons, natural or juridical, for the construction, operation and maintenance of toll facilities such as but
not limited to national highways, roads, bridges, and public thoroughfares. Said contract shall be open to citizens of the Philippines and/or to corporations or associations qualified under the Constitution and authorized by law to engage in
toll operations;ChanRoblesVirtualawlibrary

x x x x
(e) To grant authority to operate a toll facility and to issue therefore the necessary Toll Operation Certificate subject to such conditions as shall be imposed by the Board including inter alia the following:

(1) That the Operator shall desist from collecting toll upon the expiration of the Toll Operation Certificate.
(2) That the entire facility operated as a toll system including all operation and maintenance equipment directly related thereto shall be turned over to the government immediately upon the expiration of the Toll Operation Certificate.
(3) That the toll operator shall not lease, transfer, grant the usufruct of, sell or assign the rights or privileges acquired under the Toll Operation Certificate to any person, firm, company, corporation or other commercial or legal entity,
nor merge with any other company or corporation organized for the same purpose, without the prior approval of the President of the Philippines. In the event of any valid transfer of the Toll Operation Certificate, the Transferee
shall be subject to all the conditions, terms, restrictions and limitations of this Decree as fully and completely and to the same extent as if the Toll Operation Certificate has been granted to the same person, firm, company,
corporation or other commercial or legal entity.
(4) That in time of war, rebellion, public peril, emergency, calamity, disaster or disturbance of peace and order, the President of the Philippines may cause the total or partial closing of the toll facility or order to take over thereof by
the Government without prejudice to the payment of just compensation.
(5) That no guarantee, Certificate of Indebtedness, collateral, securities, or bonds shall be issued by any government agency or government-owned or controlled corporation on any financing program of the toll operator in
connection with his undertaking under the Toll Operation Certificate.
(6) The Toll Operation Certificate may be amended, modified or revoked whenever the public interest so requires.
(a) The Board shall promulgate rules and regulations governing the procedures for the grant of Toll Certificates. The rights and privileges of a grantee under a Toll Operation Certificate shall be defined by the Board.
(b) To issue rules and regulations to carry out the purposes of this Decree.

SECTION 4. The Toll Regulatory Board is hereby given jurisdiction and supervision over the GRANTEE with respect to the Expressways, the toll facilities necessarily appurtenant thereto and, subject to the provisions of Section 8 and 9
hereof, the toll that the GRANTEE will charge the users thereof.
By explicit provision of law, the TRB was given the power to grant administrative franchise for toll facility projects. 103 (Emphases supplied)cralawlawlibrary

We cannot abide by the contention of petitioners that the franchise for toll operations was exclusively vested in PNCC, which effectively breached its franchise when it transferred the toll operations to SOMCO. First, there is nothing in P.D.
1113 or P.D. 1894 that states that the franchise granted to PNCC is to the exclusion of all others.

Second, if we were to go by the theory of petitioners, it is only the operation and maintenance of the toll facilities that is vested with PNCC. This interpretation is contrary to the wording of P.D. 1113 and P.D. 1894 granting PNCC the right,
privilege and authority to construct, operate and maintain the North Luzon, South Luzon and Metro Manila Expressways and their toll facilities.

It appears that petitioners have confused the franchise granted under P.D. 1113 and P.D. 1894 with particular provisions in the STOA. To clarify, the operation and maintenance of the project roads were the primary and exclusive privilege
and responsibility of PNCC through PSC under the STOA. On the other hand, the design and construction of the project roads were the primary and exclusive privilege and responsibility of CMMTC. However, with the execution of the
ASTOA, the parties agreed that SOMCO shall replace PSC in undertaking the operations and maintenance of the project roads. Thus, the exclusivity clause was a matter of agreement between the parties, which amended it in a later
contract; it was not a matter provided under the law.

Third, aside from having been granted the power to grant administrative franchises for toll facility projects, TRB is also empowered to modify, amend, and impose additional conditions on the franchise of PNCC in an appropriate contract,
particularly when public interest calls for it. This is provided under Section 3 of P.D. 1113 and Section 6 of P.D. 1894, to wit:chanRoblesvirtualLawlibrary

SECTION 3. This franchise is granted subject to such conditions as may be imposed by the [Toll Regulatory] Board in an appropriate contract to be executed for this purpose, and with the understanding and upon the condition that it shall
be subject to amendment, alteration or repeal when public interest so requires.chanrobleslaw

x x x

SECTION 6. This franchise is granted subject to such conditions, consistent with the provisions of this Decree, as may be imposed by the Toll Regulatory Board in the Toll Operation Agreement and such other modifications or amendments
that may be made thereto, and with the understanding and upon the condition that it shall be subject to amendment or alteration when public interest so dictates.cralawlawlibrary

Section 6 of P.D. 1894 specifically mentions the Toll Operation Agreement. The STOA was one such modification or amendment of the franchise of PNCC. So was the ASTOA, which further modified the franchise. PNCC cannot be said to
have breached its franchise when it transferred the toll operations to SOMCO. PNCC remained the franchise holder for the construction, operation, and maintenance of the project roads; it only opted to partner with investors in the exercise
of its franchise leading to the organization of companies such as PSC and SOMCO.
Again, considering that PNCC was granted the right, privilege, and authority to construct, operate, and maintain the North Luzon, South Luzon, and Metro Manila Expressways and their toll facilities, we have not heard petitioners decrying
the breach by PNCC of its franchise when it agreed to make CMMTC responsible for the design and construction of the project roads under the STOA.

IV
The TOC issued to SOMCO was not irregular.

Petitioners argue that the conditions provided under Section 3(e) of P.D. 1112 104 were not imposed on SOMCO, because these do not appear on the face of the TOC. Petitioners are mistaken.

The TOC, as a grant of authority from the government, is subject to the latters control insofar as the grant affects or concerns the public. 105 Like all other franchises or licenses issued by the government, the TOC is issued subject to terms,
conditions, and limitations under existing laws and agreements. This rule especially holds true in this instance since the TRB has the power to issue the necessary Toll Operation Certificate subject to such conditions as shall be imposed
by the Board including inter alia those specified under Section 3(e) of P.D. 1112. Thus, impliedly written into every TOC are the conditions prescribed therein.

In any case, part of the TOC issued to SOMCO reads:chanRoblesvirtualLawlibrary

Pursuant to Section 3(e) of Presidential Decree No. 1112 or the Toll Operation Decree, Skyway O & M Corporation is hereby given authority to operate and maintain Stage 1 of the South Metro Manila Skyway effective as of 10:00 p.m. of
31 December 2007.

This authorization is issued upon the clear understanding that the operation and maintenance of Stage 1 of the South Metro Manila Skyway as a toll facility and the collection of toll fees shall be closely supervised and regulated by the
Grantor, by and through the Board of Directors, in accordance with the terms and conditions set forth in the STOA, as amended, the rules and regulations duly promulgated by the Grantor for toll road operations and maintenance, as well
as the lawful orders, instructions and conditions which the Grantor, through the TRB, may impose from time to time in view of the public nature of the facility.cralawlawlibrary

As regards the allegation that none of the requirements for public bidding was observed before the TOC was issued to SOMCO, this matter was also squarely answered by the Court in Francisco, Jr. v. TRB,106 to
wit:chanRoblesvirtualLawlibrary

Where, in the instant case, a franchisee undertakes the tollway projects of construction, rehabilitation and expansion of the tollways under its franchise, there is no need for a public bidding. In pursuing the projects with the vast resource
requirements, the franchisee can partner with other investors, which it may choose in the exercise of its management prerogatives. In this case, no public bidding is required upon the franchisee in choosing its partners as such process was
done in the exercise of management prerogatives and in pursuit of its right of delectus personae. Thus, the subject tollway projects were undertaken by companies, which are the product of the joint ventures between PNCC and its chosen
partners.107cralawlawlibrary

Under the STOA in this case, PNCC partnered with CMMTC in Stages 1 and 2 of the South Metro Manila Skyway. The STOA gave birth to PSC, which was put in charge of the operation and maintenance of the project roads. The ASTOA
had to be executed for Stage 2 to accommodate changes and modifications in the original design. The ASTOA then brought forth the incorporation of SOMCO to replace PSC in the operations and maintenance of Stage 1 of the South
Metro Manila Skyway. Clearly, no public bidding was necessary because PNCC, the franchisee, merely exercised its management prerogative when it decided to undertake the construction, operation, and maintenance of the project roads
through companies which are products of joint ventures with chosen partners.

Petitioners also insist that SOMCO is not qualified to operate a toll facility, because it does not meet the nationality requirement for a corporation when scrutinized under the grandfather rule. Other than advancing this argument, however,
petitioners have not shown how SOMCO fails to meet the nationality requirement for a public utility operator. Petitioners only aver in their petition that 40% of SOMCO is owned by CMMTC, a foreign company, while the rest is owned by the
following: a) Toll Road Operation and Maintenance Venture Corporation (TROMVC), almost 40% of which is owned by a Singaporean company; b) Assetvalues Holding Company, Inc. (AHCI), of which almost 40% is Dutch-owned; and c)
Metro Strategic Infrastructure Holdings, Inc. (MSIHI), 40% of which is owned by Metro Pacific Corporation, whose ownership or nationality was not specified. 108cralawred

Section 11, Article XII of the Constitution provides that [n]o franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations
organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens x x x. Clearly, under the Constitution, a corporation at least 60% of whose capital is owned by Filipinos is of Philippine
nationality. Considering this constitutional provision, petitioners silence on the ownership of the remaining 60% of the corporations cited is very telling.

In order to rebut petitioners allegations, respondents readily present matrices showing the itemization of percentage ownerships of the subscribed capital stock of SOMCO, as well as that of TROMVC, AHCI, and MSIHI. Respondents
attempt to show that all these corporations are of Philippine nationality, with 60% of their capital stock owned by Filipino citizens. We need not reproduce the itemization here. Suffice it to say that in their Consolidated Reply, 109 petitioners
did not refute the unanimous claim of respondents. It is axiomatic that one who alleges a fact has the burden of proving it. On this matter, we find that petitioners have failed to prove their allegation that SOMCO is not qualified to operate a
toll facility for failure to meet the nationality requirement under the Constitution.

Finally, no public notices and hearings were necessary prior to the issuance of the TOC to SOMCO. For the same reason that a public bidding is not necessary, PNCC cannot be required to call for public hearings concerning matters within
its prerogative. At any rate, we have studied P.D. 1112 and the Implementing Rules and Regulations Authorizing the Establishment of Toll Facilities and found no provision requiring the issuance of public notices and the conduct of public
hearings prior to the issuance of a TOC.chanroblesvirtuallawlibrary

V
Approval of the ASTOA by the
DOTC Secretary was approval by
the President.

The doctrine of qualified political agency declares that, save in matters on which the Constitution or the circumstances require the President to act personally, executive and administrative functions are exercised through executive
departments headed by cabinet secretaries, whose acts are presumptively the acts of the President unless disapproved by the latter. 110 As explained in Villena v. Executive Secretary,111 this doctrine is rooted in the
Constitution:chanRoblesvirtualLawlibrary

x x x With reference to the Executive Department of the government, there is one purpose which is crystal-clear and is readily visible without the projection of judicial searchlight, and that is, the establishment of a single, not plural,
Executive. The first section of Article VII of the Constitution, dealing with the Executive Department, begins with the enunciation of the principle that The executive power shall be vested in a President of the Philippines. This means that
the President of the Philippines is the Executive of the Government of the Philippines, and no other. The heads of the executive departments occupy political positions and hold office in an advisory capacity, and, in the language of Thomas
Jefferson, should be of the President's bosom confidence, and, in the language of Attorney-General Cushing, are subject to the direction of the President. Without minimizing the importance of the heads of the various departments, their
personality is in reality but the projection of that of the President. Stated otherwise, and as forcibly characterized by Chief Justice Taft of the Supreme Court of the United States, each head of a department is, and must be, the Presidents
alter ego in the matters of that department where the President is required by law to exercise authority. Secretaries of departments, of course, exercise certain powers under the law but the law cannot impair or in any way affect the
constitutional power of control and direction of the President. As a matter of executive policy, they may be granted departmental autonomy as to certain matters but this is by mere concession of the executive, in the absence of valid
legislation in the particular field. If the President, then, is the authority in the Executive Department, he assumes the corresponding responsibility. The head of a department is a man of his confidence; he controls and directs his acts; he
appoints him and can remove him at pleasure; he is the executive, not any of his secretaries. 112 x x x (Citations omitted)cralawlawlibrary

Applying the doctrine of qualified political agency, we have ruled that the Secretary of Environment and Natural Resources can validly order the transfer of a regional office by virtue of the power of the President to reorganize the national
government.113 In Constantino v. Cuisia,114 the Court upheld the authority of the Secretary of Finance to execute debt-relief contracts. The authority emanates from the power of the President to contract foreign loans under Section 20,
Article VII of the Constitution. In Angeles v. Gaite,115 the Court ruled that there can be no issue with regard to the Presidents act of limiting his power to review decisions and orders of the Secretary of Justice, especially since the decision or
order was issued by the secretary, the Presidents own alter ego. 116cralawred

There can be no question that the act of the secretary is the act of the President, unless repudiated by the latter. In this case, approval of the ASTOA by the DOTC Secretary had the same effect as approval by the President. The same
would be true even without the issuance of E.O. 497, in which the President, on 24 January 2006, specifically delegated to the DOTC Secretary the authority to approve contracts entered into by the TRB.

Petitioners are unimpressed. They cite Section 8 of P.D. 1113 and Section 13 of P.D. 1894 as follows:chanRoblesvirtualLawlibrary

SECTION 8. The GRANTEE shall not lease, transfer, grant the usufruct of, sell or assign this franchise nor the rights or privileges acquired hereby, to any person, firm, company, corporation or other commercial or legal entity, nor merge
with any other company or corporation without the prior approval of the President of the Philippines. In the event that this franchise is sold, transferred or assigned, the transferee shall be subject to all the conditions, terms, restrictions
and limitations of this Decree as fully and completely and to the same extents as if the franchise has been granted to the same person, firm, company, corporation or other commercial or legal entity. (Emphasis supplied)

SECTION 13. The GRANTEE shall not lease, transfer, grant the usufruct of, sell or assign this franchise nor the rights or privileges required hereby, to any person, firm, company, corporation or other legal entity, nor merge with any other
company or corporation without the prior approval of the President of the Philippines.

In the event that this franchise is sold, transferred or assigned, the transferee shall be subject to all the conditions, terms, restrictions and limitations of this Decree as fully and completely and to the same extent as if the franchise has been
granted to the said person, firm, company, corporation or other legal entity. (Emphasis supplied)
cralawlawlibrary
Petitioners insist that based on the above provisions, it is the President who should give personal approval considering that the power to grant franchises was exclusively vested in Congress. Hence, to allow the DOTC Secretary to exercise
the power of approval would supposedly dilute that legislative prerogative.

The argument of petitioners is founded on the assumption that PNCC in some way leased, transferred, granted the usufruct of, sold, or assigned to SOMCO its franchise or the rights or privileges PNCC had acquired by it. Here lies the
error in petitioners stand. First, as discussed above, the power to grant franchises or issue authorizations for the operation of a public utility is not exclusively exercised by Congress. Second, except where the situation falls within that
special class that demands the exclusive and personal exercise by the President of constitutionally vested power, 117 the President acts through alter egos whose acts are as if the Chief Executives own.

Third, no lease, transfer, grant of usufruct, sale, or assignment of franchise by PNCC or its merger with another company ever took place.

The creation of the TRB and the grant of franchise to PNCC were made in the light of the recognition on the part of the government that the private sector had to be involved as an alternative source of financing for the pursuance of
national infrastructure projects. As the franchise holder for the construction, maintenance and operation of infrastructure toll facilities, PNCC was equipped with the right and privilege, but not necessarily the means, to undertake the project.
This is where joint ventures with private investors become necessary.

A joint venture is an association of companies jointly undertaking a commercial endeavor, with all of them contributing assets and sharing risks, profits, and losses. 118 It is hardly distinguishable from a partnership considering that their
elements are similar and, thus, generally governed by the law on partnership. 119cralawred

In joint ventures with investor companies, PNCC contributes the franchise it possesses, while the partner contributes the financing both necessary for the construction, maintenance, and operation of the toll facilities. PNCC did not
thereby lease, transfer, grant the usufruct of, sell, or assign its franchise or other rights or privileges. This remains true even though the partnership acquires a distinct and separate personality from that of the joint venturers or leads to the
formation of a new company that is the product of such joint venture, such as PSC and SOMCO in this case.

Hence, when we say that the approval by the DOTC Secretary in this case was approval by the President, it was not in connection with the franchise of PNCC, as required under Section 8 of P.D. 1113 and Section 13 of P.D. 1894. Rather,
the approval was in connection with the powers of the TRB to enter into contracts on behalf of the government as provided under Section 3(a) of P.D. 1112, which states:chanRoblesvirtualLawlibrary

SECTION 3. Powers and Duties of the Board. The Board shall have in addition to its general powers of administration the following powers and duties:

(a) Subject to the approval of the President of the Philippines, to enter into contracts in behalf of the Republic of the Philippines with persons, natural or juridical, for the construction, operation and maintenance of toll facilities such as
but not limited to national highways, roads, bridges, and public thoroughfares. Said contract shall be open to citizens of the Philippines and/or to corporations or associations qualified under the Constitution and authorized by law to engage
in toll operations; (Emphasis supplied)
cralawlawlibrary

VI
Petitioners have not shown that the
transfer of toll operations to SOMCO was
grossly disadvantageous to the government.

In support of their contention that the transfer of toll operations from PSC to SOMCO was grossly disadvantageous to the government, petitioners belittle the initial capital investment, private ownership, and track record of SOMCO.

When one uses the term grossly disadvantageous to the government, the allegations in support thereof must reflect the meaning accorded to the phrase. Gross means glaring, reprehensible, culpable, flagrant, and shocking. 120 It
requires that the mere allegation shows that the disadvantage on the part of the government is unmistakable, obvious, and certain.

In this case, we find that the allegations of petitioners are nothing more than speculations, apprehensions, and suppositions. They speculate that with its measly capital investment, SOMCO would not be able to cover the overhead
expenses for personal services alone. They fear that the revenue from toll operations would go to private pockets in exchange for a small settlement amount to be given to PSC. Given that SOMCO has no proven track record, petitioners
deduce that its assumption of the toll operations would lead to poor delivery of toll services to the public.

The aim in the establishment of toll facilities is to draw from private resources the financing of government infrastructure projects. Naturally, these private investors would want to receive reasonable return on their investments. Thus, the
collection of toll fees for the use of public improvements has been authorized, subject to supervision and regulation by the national government. 121 As regards the P320 million settlement given to PSC, the amount was to be used principally
for the payment of its liabilities of PSC arising from the retrenchment of its employees. We note that under the MOA, the residual assets of PSC shall still be offered for sale to CMMTC, subject to valuation. 122 Thus, it would be inaccurate to
say that PSC would receive only P320 million for the entire arrangement.

It is quite understandable that SOMCO does not yet have a proven track record in toll operations, considering that it was only the ASTOA and the MOA that gave birth to it. We are not prepared to rule that this lack of track record would
result in poor delivery of toll services, especially because most of the former employees of PSC have been rehired by SOMCO, an allegation of respondents that was never refuted by petitioners. Neither are we prepared to take the amount
of SOMCOs initial capital investment against it, as it is considerably higher than ?500,000, the authorized capital stock of PSC as of 2002. 123cralawred

A FINAL NOTE

R.A. 8975 prohibits lower courts from issuing any temporary restraining order, preliminary injunction, or preliminary mandatory injunction against the government or any of its subdivisions, officials or any person or entity, whether public or
private, acting under the governments direction to restrain, prohibit or compel acts related to the implementation and completion of government infrastructure projects.

The rationale for the law is easily discernible. Injunctions and restraining orders tend to derail the expeditious and efficient implementation and completion of government infrastructure projects; increase construction, maintenance and
repair costs; and delay the enjoyment of the social and economic benefits therefrom. Thus, unless the matter is of extreme urgency involving a constitutional issue, judges of lower courts who shall issue injunctive writs or restraining orders
in violation of the law shall be administratively liable.

The law is clear that what is prohibited is merely the issuance of provisional orders enjoining the implementation of a national government project. R.A. 8975 does not bar lower courts from assuming jurisdiction over complaints that seek
the nullification or implementation of a national government infrastructure project as ultimate relief. 124cralawred

There is no question that the ultimate prayer in the instant case is the nullification of a national government project considering that the ASTOA involved the design and construction of Stage 2 of the South Metro Manila Skyway, as well as
the operation and maintenance of Stage 1 thereof. The prayer is grounded on the contracts alleged unconstitutionality, violation of the law, and gross disadvantage to the government. Such principal action and relief were within the
jurisdiction of the RTC, which acted correctly when it ordered respondents to file their respective answers to the complaint, even while it denied the prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order
in observance of R.A. 8975.

It was therefore error on the part of petitioners to come directly before this Court for the sole reason that the lower courts will not be able to grant the prayer for the issuance of a writ of preliminary injunction and/or temporary restraining
order to enjoin the assumption of toll operations by SOMCO. The error even takes on a whole new meaning, because SOMCO assumed responsibility for the operations and maintenance of the South Metro Manila Skyway at 10:00 p.m. on
31 December 2007. On the other hand, the complaint before the RTC seeking to enjoin the assumption by SOMCO was filed only on 3 January 2008, while the instant petition was filed on 4 February 2008.

As we held in Aznar Brothers Realty, Inc. v. CA, 125 injunction does not lie when the act sought to be enjoined has already become a fait accompli or an accomplished or consummated act.

Parties must observe the hierarchy of courts before seeking relief from this Court. Observance thereof minimizes the imposition on the already limited time of this Court and prevents delay, intended or otherwise, in the adjudication of
cases.126 We do not appreciate the litigants practice of directly seeking recourse before this Court, relying on the gravitas of a personality yet making serious claims without the proof to support them.

WHEREFORE, the petition is DISMISSED. The prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order is DENIED.

SO ORDERED.cralawlawlibrary
G.R. No. 174996 December 3, 2014

BRO. BERNARD OCA, FSC, BRO. DENNIS MAGBANUA, FSC, MRS. CIRILA MOJICA, MRS. JOSEFINA PASCUAL AND ST. FRANCIS SCHOOL OF GENERAL TRIAS, CAVITE, INC., Petitioner,
vs.
LAURITA CUSTODIO, Respondent.

DECISION
LEONARDO-DE CASTRO, J.:

Before this Court is a petition for review under Rule 45 of the 1997 Rules of Civil Procedure assailing the Decision 1dated September 16, 2005 as well as the Resolution 2 dated October 9, 2006 of the Court of Appeals in CA-G.R. SP No.
79791, entitled "Bro. Bernard Oca, FSC, Bro. Dennis Magbanua, FSC, Mrs. Cirila Mojica, Mrs. Josefina Pascual and St. Francis School of General Trias, Cavite, Inc. v. Hon. Norbert J. Quisumbing, Jr., in his capacity as Presiding Judge,
Regional Trial Court, Branch 21, Imus, Cavite, and Mrs. Laurita Custodio". Through said rulings, the appellate court dismissed the petition for certiorari under Rule 65 with application for the issuance of a temporary restraining order and/or
writ of preliminary injunction against the Orders dated August 5, 2003, 3 August 21, 20034 and October 8, 20035 issued by Branch 21 of the Regional Trial Court (RTC) of Imus, Cavite in SEC Case No. 024-02, entitled "Laurita Custodio,
plaintiff, versus Bro. Bernard Oca, Bro. Dennis Magbanua, Mrs. Cirila Mojica, Mrs. Josefina Pascual, and St. Francis School, defendants."

The factual backdrop of the case

The facts of this case, as narrated in the assailed September 16, 2005 Decision of the Court of Appeals, are as follows:

On July 9, 1973, petitioner St. Francis School of General Trias Cavite, Inc. (School) was organized and established as a non-stock and non-profit educational institution. The organization and establishment of the school was accomplished
through the assistance of the La Salle Brothers without any formal agreement with the School. Thus, the incorporators of the School consist of the following persons: private respondent Custodio, petitioner Cirila Mojica (Mojica), petitioner
Josefina Pascual (Pascual), Rev. Msgr. Feliz Perez, Bro. Vernon Poore, FSC. The five original incorporators served as the Schools Members and Board of Trustees until the deaths of Bro. Poore and Msgr. Perez.

On September 8, 1988, to formalize the relationship between the De La Salle Greenhills (DLSG) and the School, a Memorandum of Agreement (MOA) was executed. This agreement permitted DLSG to exercise supervisory powers over
the Schools academic affairs. Pursuant to the terms of the MOA, DLSG appointed supervisors who sit in the meetings of the Board of Trustees without any voting rights. The first such supervisor was Bro. Victor Franco. Later on, Bro.
Franco also became a member of the Board of Trustees and President of the School. Then, on September 8, 1998, petitioner Bro. Bernard Oca joined Bro. Franco as DLSG supervisor. In a while, Bro. Oca also served as a member of the
Board of Trustees and President of the School. Bro. Dennis Magbanua also joined Bro. Franco and Bro. Oca as DLSG supervisor and also as a Treasurer of the School.

Petitioners declare that the membership of the DLSG Brothers in the Board of Trustee[s] as its officers was valid since an election was conducted to that effect.

On the other hand, Custodio challenges the validity of the membership of the DLSG Brothers and their purported election as officers of the School. The legality of the membership and election of the DLSG Brothers is the main issue of the
case in the lower court.

Custodio alleges that sometime in 1992, Bro. Franco was invited by Mrs. Mojica to act as President of the School. This is because there was only the Tres Marias (referring to the original incorporators, Pascual, Mojica and Custodio) who
[were] left tomanage the affairs of the school. Bro. Franco accepted the invitation. However, while Bro. Franco acted as President and presided over meetingsof the Tres Marias, he never participated in the operation of the School and
never exercised voting rights.

Custodio further alleges that on September 8, 1998, during one of the informal meetings held at the School, Bro. Franco unilaterally declared the said meeting as the Board of Trustees Meeting and at the same time an Annual Meeting of
the Members of the Corporation. During the meeting, Bro. Franco declared that the corporation is composed of the Tres Marias and their husbands, Dr. Castaneda and himself (Bro. Franco) as members. On the other hand, the Board of
Trustees was declared to be composed of Bro. Oca, the Tres Marias and himself (Bro. Franco).

According to Custodio, when Bro. Franco eventually left and became inactive in the School, Bro. Oca assumed his position as President and Chairman of the Board of Trustees, without being formally admitted as member of the School and
without the benefit of an actual election. Custodio further states that on December 6, 2000, Bro. Magbanua was introduced to the original incorporators for the first time. Automatically, he was declared as Member of the School and at the
same time, Treasurer by Bro. Oca, also without any formal admission into the corporate membership and without the benefit of an actual election.

Custodio alleges that clearly the composition of the membership of the School had no basis there being no formal admission as members nor election as officers.
It appears that the legality of the membership and assumption as officers of the DLSG Brothers was questioned by Custodio following a disagreement regarding a proposed MOA that would replace the existing MOA with the DLSG
Brothers and her removal as Curriculum Administrator through the Board of Trustee[s].

Under the proposed MOA, DLSG will supervise and control not only the academic affairs of the School but also the matters of the finance, administration and operations of the latter. Custodio vigorously opposed the proposed MOA.
Consequently, unable to convince Custodio and the academic populace to accept the MOA, the DLSG brothers withdrew [their] academic support from the School. A day after the rejection of the proposed MOA, Mojica and Pascual retired
as Administrators for Finance and Physical Resource Development (PRD), respectively. However, they maintained their positions as Members and Trustees of the School.

Custodio contends that while Pascual and Mojica remained to be Members and Trustees of the School, upon retirement, they stopped reporting for work. Mr. Al Mojica, son of Mrs. Mojica, who was then the school cashier, also stopped
reporting for work. Thus, Custodio avers that being the only remaining Administrator, she served as the Over-all Director of the School. Being the Over-all Director, Custodio made appointments to fill in the vacuum created by the sudden
retirement of Pascual and Mojica. Hence, she appointed Mr. Joseph Custodio as OIC both for Finance and PRD and [Ms. Herminia] Reynante as Cashier.

Upon the appointment of Joseph Custodio and Reynante, a special meeting was called by Bro. Oca in which the petitioners alleged that the prior organizational structure was restored, and the retirement of Pascual and Mojica disapproved
by proper corporate action. It was agreed to in the meeting that the school was going to revert to the three-man co-equal structure with Pascual as PRD head, Mojica as Finance head and Custodio as Curriculum Administrator.

In the same meeting, petitioners alleged that Custodio admitted to having opened an account with the Luzon Development Bank in her own name for the alleged purpose of depositing funds for and in behalf of the School. Petitioners
alleged that a directive was issued for the immediate closing of this account. Still, Custodio refused to close such account.

Subsequently, on January 31, 2002, Mojica and Pascual formally resigned from their administrative posts. As such as a replacement, Atty. Eleuterio A. Pascual and Mr. Florante N. Mojica[,] Jr. were appointed by the Board of Trustees as
PRD Administrator and Finance Administrator respectively.

According to petitioners, due to the repeated refusal of Custodio to close the account she opened in her own name with the Luzon Development Bank, the Board of Trustees, in a meeting held on March 7, 2002, approved a resolution to file
a case against the latter. Consequently, the Board of Trustees also approved resolutions to the effect that Custodio, Mr. Joseph Custodio and Reynante be stopped from performing their functions in the School.

On June 7, 2002, Custodio filed a Complaint in the RTC of Trece Martirez City, questioning the legality of the Board of the School. The case was docketed as Civil Case No. TMCV-0033-02, entitled Laurita Custodio v. Bro. Bernard Oca, et
al. Custodio prayed for the issuance of a temporary restraining order and/or writ of preliminary injunction for the purpose of preventing Bro. Oca as President of the corporation, from calling a special membership meeting to remove
Custodio as Member of the School and the Board of Trustees. The case was dismissed on July 4, 2002. 6

Summary of the legal proceedings involved

in the present controversy

On July 8, 2002, the Board of Trustees of St. Francis School resolved to remove respondent Laurita Custodio as a member of the Board of Trustees and as a member of the Corporation pursuant to Sections 28 and 91 of the Corporation
Code as indicated in Resolution No. 011-2002.7

Subsequently, respondent was issued a Memorandum dated July 23, 2002 and signed by petitioner Bro. Bernard Oca, in his capacity as Chairman of the Board of Trustees, wherein she was informed of her immediate removal as
Curriculum Administrator of St. Francis School on the grounds of willful breach of trust and loss of confidence and for failure to explain the charges against her despite notice from the Board of Trustees. 8

In reaction to her removal, respondent filed with the trial court, on October 3, 2002, a Complaint with Prayer for the Issuance of a Preliminary Injunction against petitioners again assailing the legality of the membership of the Board of
Trustees of St. Francis School.9
During the submission of pleadings, respondent filed a Manifestation and Motion. She alleged that on October 8, 2002, her son,Joseph Custodio, was being prevented from entering the premises of the school. Also, respondent alleges that
a meeting with the parents of the Schools students was convened wherein the parents were informed that she had been removed as Member of the corporation and the Board of Trustees, and as Curriculum Administrator. As such,
petitioners directed the parents to give all payments regarding matriculation and other fees to the corporate treasurer. 10

On October 14, 2002, respondent filed another Motion for Clarification asking the trial court toissue an order as to whom the matriculation fees should be paid pending the hearing of the complaint and the earlier Manifestation and Motion. 11

Acting on the motions filed by respondent, the trial court in an Order dated October 21, 2002, appointed Herminia Reynante (Reynante) as cashier of the school and required all parties to turn over all money previously collected with
respect to matriculation fees and other related collectibles of the school to the latter. 12

At this point, it should be noted that petitioners Cirila Mojica and Josefina Pascual put up another school called the Academy of St. John with the same structure as petitioner St. Francis School. This fact was testified to by petitioners
counsel Atty. Armando Fojas during the preliminary hearings on the main case. 13

On October 30, 2002, petitioners filed a Motion for Reconsideration seeking to set aside the October 21, 2002 Order of the trial court. Petitioners aver that had they been given an opportunity to be heard and to present evidence to oppose
the appointment ofReynante, proof would have been adduced to demonstrate the latters lackof moral integrity to act as court appointed cashier. 14

Subsequently, on February 19, 2003, petitioners filed a Manifestation informing the trial court that in compliance with its October 21, 2002 Order, they took steps to turn over the amount of P397,127.64, representing collections from
matriculation fees, but the same was not accepted by the court appointed cashier, Reynante, who preferred to receive the amount in cash. 15

On February 26, 2003, respondent filed her Comment in which she averred that contrary to petitioners claim, petitioners had not complied with the October 21, 2002 Order for failure to include in their accounting, the funds allegedly in
Special Savings Deposit No. 239 and Special Savings Deposit No. 459 or the retirement fund for the teachers of the School, amounts paid by the canteen concessionaire, and amounts paid to three resigned teachers. 16

In an Order17 dated March 24, 2003, the trial court acted upon petitioners February 19, 2003 Manifestation and respondents February 26, 2003 Comment. The text of the said March 24, 2003 Order is reproduced herein:

This treats of the defendants explanation, manifestation and plaintiffs comment thereto.

A perusal of the allegations of the defendants pleadings shows that they merely turned-over a managers check in the amount of P397,127.64 representing money collected from the students from October 2002 to December 2002. The
Order of October 21, 2002 directed plaintiff and defendants, as well as Mr. Al Mojica to turn over to Ms. Herminia Reynante all money previously collected and to submit a report on what have been collected, how much, from whom and the
dates collected.

Defendants and Mr. Al Mojica are hereby directed, within ten days from receipt hereof, to submit a reportand to turn-over to Ms. Herminia Reynante all money collected by them, more particularly:

1. P4,339,607.54 deposited in the Special Savings Deposit No. 239 (Rural Bank of General Trias, Inc.);

2. P5,639,856.11 deposited in Special Savings Deposit No. 459 (Rural Bank of General Trias, Inc.);

3. P92,970.00 representing amount paid by the school canteen;

4. Other fees collected from January 2003 to February 19, 2003;

5. Accounting on how and how muchdefendants are paying Ms. Daisy Romero and three (3) other teachers who already resigned. 18
On April 18, 2003, petitioners filed a Manifestation, Observation, Compliance, Exception and Motion to the March 24, 2003 Order of the trial court which contests the inclusion of specific funds to be turned over to Reynante. 19

In the first questioned Order20 dated August 5, 2003, the lower court denied the Manifestation and Motion of petitioners and reiterated its order for petitioners to turn over the items enumerated in its March 24, 2003 Order.

Subsequently, in the second questioned Order 21 dated August 21, 2003, the trial court, acting favorably on private respondents October 9, 2002 Manifestation and Motion ruled: WHEREFORE, in view of the foregoing, the motion is
granted. Accordingly, a status quoorder is hereby issued wherein the plaintiff is hereby allowed to continue discharging her functions as school director and curriculum administrator as well as those who are presently and actually
discharging functions as school officer to continue performing their duties until the application for the issuance of a temporary restraining order is resolved. 22

On September 1, 2003, petitioners filed a Motion for Clarification of the August 5, 2003 Order. 23

In an Order24 dated October 8, 2003, the court ruled, to wit:

WHEREFORE, in view of the foregoing, the defendants are hereby ordered to comply with the mandate contained in the order[s] dated March 24 and August 5, 2003.

Defendants are further directed toinform the court of the total amount of the funds deposited reserved for teachers retirement, and in what bank and under what account the same is deposited. 25

Dissatisfied with the rulings made by the trial court, petitioners filed with the Court of Appeals a petition for certiorari under Rule 65 with application for the issuance of a temporary restraining order and/or writ of preliminary injunction to
nullify, for having been issued with grave abuse of discretion amounting to lack or in excess of jurisdiction, the Orders dated August 5, 2003, August 21, 2003 and October 8, 2003 that were issued by the trial court.

However, the Court of Appeals frustrated petitioners move through the issuance of the assailed September 16, 2005 Decision which dismissed outright petitioners special civil action for certiorari. Petitioners moved for reconsideration but
this was also thwarted by the Court of Appeals in the assailed October 9,2006 Resolution.

Thus, petitioners filed the instant petition and submitted the following issues for consideration in their Memorandum 26 dated October 3, 2007:

A.

WHETHER OR NOT THE COURT OF APPEALS, CONTRARY TO LAW AND JURISPRUDENCE, COMMITTED REVERSIBLE ERROR IN RULING THAT THE TRIAL COURT HAD NOT DEPRIVED PETITIONERS OF DUE PROCESS IN
ISSUING ITS ORDERS OF 5 AUGUST 2003, 21 AUGUST 2003 AND 8 OCTOBER 2003.

B.

WHETHER OR NOT THE COURT OF APPEALS, CONTRARY TO LAW AND JURISPRUDENCE, COMMITTED REVERSIBLE ERROR IN RULING THAT THE TRIAL COURT DID NOT GRAVELY ABUSE ITS DISCRETION IN
DISREGARDING THE PROVISIONS OF THE INTERIM RULES OF PROCEDURE FOR INTRACORPORATE CONTROVERSIES PERTAINING TO THE ISSUANCE OF A STATUS QUOORDER AND THE REQUIREMENTS THEREOF. 27

On the other hand, respondent puts forward the following arguments in her Memorandum 28 dated October 9, 2007:

THE HONORABLE COURT OFAPPEALS WAS CORRECT WHEN IT RULED THAT THE TRIAL COURT (RTC Br. 21) HAD NOT DEPRIVED PETITIONERS OF DUE PROCESS IN ISSUING ITS ORDERS OF 5 AUGUST 2003, 21
AUGUST 2003 AND 8 OCTOBER 2003.

THE HONORABLE COURT OFAPPEALS WAS CORRECT WHEN IT RULED THAT THE TRIAL COURT (RTC Br. 21) DID NOT COMMIT GRAVE ABUSE OF DISCRETION WHEN IT ISSUED A STATUS QUOORDER. 29
In fine, the sole issue in this case is whether or not the trial court committed grave abuse of discretion inissuing the assailed Orders dated August 5, 2003, August 21, 2003 and October 8, 2003.

Petitioners argue that the Court of Appeals, in its assailed September 16, 2005 Decision, failed to consider that no adequate proceedings had been accorded to the petitioners by the trial court for the exercise of its right to be heard on the
matters subject of the questioned Orders. Furthermore, petitioners point out that the Court of Appeals erroneously gave its imprimatur to the trial courts issuance of the assailed Status Quo Order dated August 21, 2003 without first
requiring and accepting from respondent the requisite bond that is required under the Interim Rules of Procedure for Intra-Corporate Controversies.

On the other hand, respondent maintains that the manner of the issuance of the assailed Orders of the trial court did not violate the due process rights of petitioners. Respondent also claims that a valid ground for the issuance of the
assailed Status Quo Order dated August 21, 2003 did exist and that the alleged failure of the trial court to require the posting of a bond prior to the issuance of a status quoorder was mooted by the assailed Order dated October 8, 2003
which required respondent and Reynante to file a bond in the amount of P300,000.00 each.

We find the petition to be partly meritorious.

In the case of Garcia v. Executive Secretary,30 we reiterated what grave abuse of discretion means in this jurisdiction, to wit:

Grave abuse of discretion means such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. Mere abuse of discretion is not enough. It must be grave abuse of discretion, as when the power is exercised in
an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation
of law.

With regard to the right to due process, we have emphasized in jurisprudence that while it is true that the right to due process safeguards the opportunity to be heard and to submit any evidence one may have in support of his claim or
defense, the Court has time and again held that where the opportunity to be heard, either through verbal arguments or pleadings, is accorded, and the party can "present its side" or defend its "interest in due course," there is no denial of
due process because what the law proscribes is the lack of opportunity to be heard. 31

In the case at bar, we find that petitioners were not denied due process by the trial court when it issued the assailed Orders dated August 5, 2003, August 21, 2003 and October 8, 2003. The records would show that petitioners were given
the opportunity to ventilate their arguments through pleadings and that the same pleadings were acknowledged in the text of the questioned rulings. Thus, petitioners cannot claim grave abuse of discretion on the part of the trial court on
the basis of denial of due process.

However, with respect to the assailed Status Quo Order dated August 21, 2003, we find that the trial court has failed to comply with the pertinent procedural rules regarding the issuance of a status quo order.

Jurisprudence tells us that a status quo order is merely intended to maintain the last, actual, peaceable and uncontested state of things which preceded the controversy. It further states that, unlike a temporary restraining order or a
preliminary injunction, a status quo order is more in the nature of a cease and desist order, since it neither directs the doing or undoing of acts as in the case of prohibitory or mandatory injunctive relief. 32

Pertinently, the manner of the issuance of a status quoorder in an intra-corporate suit such asthe case at bar is governed by Section 1, Rule 10 of the Interim Rules of Procedure for Intra-Corporate Controversies which reads:

SECTION 1. Provisional remedies. - A party may apply for any of the provisional remedies provided in the Rules of Court as may be available for the purposes. However, no temporary restraining order or status quo order shall be issued
save in exceptional cases and only after hearing the parties and the posting of a bond.

In the case before us, the trial courts August 21, 2003 Status Quo Order conflicted with the rules and jurisprudence in the following manner:
First, the directive to reinstate respondent to her former position as school director and curriculum administrator is a command directing the undoing of an act already consummated which is the exclusive province of prohibitory or
mandatory injunctive relief and not of a status quo order which is limited only to maintaining the last, actual, peaceable and uncontested state of things which immediately preceded the controversy. It must be remembered that
respondentwas already removed as trustee, member of the corporation and curriculum administrator by the Board of Trustees of St. Francis School of General Trias, Cavite, Inc. months prior to her filing of the present case in the trial court.

Second, the trial courts omission of not requiring respondent to file a bond before the issuance of the Status Quo Order dated August 21, 2003 is in contravention with the express instruction of Section 1, Rule 10 of the Interim Rules of
Procedure for Intra-Corporate Controversies. Even the subsequent order to post a bond as indicated in the assailed October 8, 2003 Order did not cure this defect because a careful reading of the nature and purpose of the bond would
reveal that it was meant by the trial court as security solely for the teachers retirement fund, the possession of which was given by the trial court to respondent and Reynante. 1wphi1 It was never intended and can never be considered as
the requisite security, in compliance with the express directive of procedural law, for the assailed Status Quo Order dated August 21, 2003. In any event, there is nothing on record to indicate that respondent had complied with the posting
of the bond as directed in the October 8, 2003 Order except for the respondents unsubstantiated claim to the contrary as asserted in her Memorandum. 33

Third, it is settled in jurisprudence that an application for a status quo order which in fact seeks injunctive relief must comply with Section 4, Rule 58 of the Rules of Court: i.e., the application must be verified aside from the posting of the
requisite bond.34 In the present case, the Manifestation and Motion, through which respondent applied for injunctive relief or in the alternative a status quo order, was merely signed by her counsel and was unverified.

In conclusion, we rule that no grave abuse of discretion was present in the issuance of the assailed August 5, 2003 and October 8, 2003 Orders of the trial court. However, we find that the issuance of the assailed August 21, 2003 Status
Quo Order was unwarranted for non-compliance with the rules. Therefore, the said status quo order must be set aside.

At this point, the Court finds it apropos to note that the Status Quo Order on its face states that the same is effective until the application for the issuance of a temporary restraining order is resolved. However, respondent's prayer for a
temporary restraining order or a writ of preliminary injunction in her Complaint still appears to be pending before the trial court. For this reason, the Court deems it necessary to direct the trial court to resolve the same at the soonest
possible time.

WHEREFORE, premises considered, the petition is PARTLY GRANTED. The assailed Decision dated September 16, 2005 and the Resolution dated October 9, 2006 of the Court of Appeals in CA-G.R. SP No. 79791 are hereby
AFFIRMED in part insofar as they upheld the assailed August 5, 2003 and October 8, 2003 Orders of the trial court. They are REVERSED with respect to the assailed August 21, 2003 Status Quo Order which is hereby SET ASIDE for
having been issued with grave abuse of discretion. The trial court is further DIRECTED to resolve respondent's application for injunctive relief with dispatch. SO ORDERED.

G.R. No. 189571 January 21, 2015

THE HONORABLE MONETARY BOARD and GAIL U. FULE, Director, Supervision and Examination Department II, and BANGKO SENTRAL NG PILIPINAS, Petitioners,
vs.
PHILIPPINE VETERANS BANK, Respondent.

DECISION

PERALTA, J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the Decision 1 dated June 15, 2009 and Order 2 dated August 25, 2009 of the Regional Trial Court (RTC) of Makati City in
Civil Case No. 07-271.

The factual antecedents follow.

Respondent established a pension loan product for bona fide veterans or their surviving spouses, as well as salary loan product for teachers and low-salaried employees pursuant to its mandate under Republic Act (RA) Nos. 3518 3 and
71694 to provide financial assistance to veterans and teachers.

As its clientele usually do not have real estate or security to cover their pension or salary loan, other than their continuing good health and/or employment, respondent devised a program by charging a premium in the form of a higher fee
known as Credit Redemption Fund(CRF) from said borrowers. Resultantly, Special Trust Funds were established by respondent for the pension loans of the veteran-borrowers, salary loans of teachers and low-salaried employees. These
trust funds were, in turn, managed by respondents Trust and Investment Department, with respondent as beneficiary. The fees charged against the borrowers were credited to the respective trust funds, which would beused to fully pay the
outstanding obligation of the borrowers in case of death.

On April 30, 2002, an examination was conducted by the Supervision and Examination Department (SED) II of the Bangko Sentral ng Pilipinas (BSP). It found, among other things, that respondents collection of premiums from the
proceeds of various salary and pension loans of borrowers to guarantee payment of outstanding loans violated Section 54 of RA No. 8791 5 which states that banks shall not directly engage in insurance business as insurer.

Subsequently, respondent wrote a letter to petitioners justifying the existence of the CRF.

In a letter dated March 17, 2003, the BSP notified respondent about the Insurance Commissions opinion that the CRF is a form of insurance. Thus, respondent was requested to discontinue the collection of said fees.

On February 24, 2004, respondent complied with the BSPs directive and discontinued the collection of fees for CRF.

On September 16, 2005, petitioners issued Monetary Board (MB) Resolution No. 1139 directing respondents Trust and Investment Department to return to the borrowers all the balances of the CRF in the amount of P144,713,224.54 as of
August31, 2004, and to preserve the records of borrowers who were deducted CRFs from their loan proceeds pending resolution or ruling of the Office of the General Counsel of the BSP. Thus, respondent requested reconsideration of said
MB Resolution. However, the same was denied ina letter dated December 5, 2006.

Accordingly, respondent filed a Petition for Declaratory Relief with the RTC of Makati City.

In response, petitioners filed a Motion to Dismiss alleging that the petition for declaratory relief cannot prosper due to respondents prior breach of Section 54 of RA No. 8791.

In an Order6 dated September 24, 2007, the RTC dismissed respondents petition for declaratory relief and held as follows:

Upon a thorough analysis of the allegations of the petition and the documents attached thereto as annexes,the arguments of both parties in support of their respective position on the incident up for resolution, the Court finds that an
ordinary civil action or other else but certainly not the present action for declaratory relief, is the proper remedy.

Clearly, as gleaned from the verydocuments attached to the petition, and as correctly pointed out by the [petitioners], [respondent], as found by the BSP examiners and confirmed by the Monetary Board, violated Section 54 of RA No. 8791,
subject matter of the instant case, by engaging in an insurance activity which is prohibited by such law. To be precise, the law so provides thus: "SEC. 54. Prohibition to Act as Insurer. A bank shall not directly engaged (sic) in the business
as the insurer."

Hence, the issue of whether or not petitioner violated the foregoing law can only be fittingly resolved thru an ordinaryaction. For which reason, the Court has no recourse but to put an end to this case.

In view of the foregoing, the Court deems it unnecessary to tackle the other grounds relied upon by [petitioners] in their motion to dismiss.
WHEREFORE, for reasons afore-stated, the petition is hereby DISMISSED.

SO ORDERED.

Almost a year later, respondent filed a Motion to Admit its Motion for Reconsideration against said order alleging that it did not receive a copy thereof until September 3, 2008.

Petitioners opposed said motion on the ground that per Certification of the Philippine Postal Office, an official copy of the RTCs Order was duly served and received by respondent on October 17, 2007.

Despite the foregoing, the RTC allowed respondents motion for reconsideration and required petitioners to file their answer.

In a Decision dated June 15, 2009,the RTC of Makati City granted respondents petition for declaratory relief disposing as follows:

WHEREFORE, premises considered, it is hereby DECLARED that [respondent], when it collected additional fees known as "Credit Redemption Fund (CRF)" from its loan borrowers was not directly engaged in insurance business as
insurer; hence, it did not violate Sec. 54, R.A. 8791, otherwise known as the "General Banking Law of 2000."

The Monetary Board Resolution No. 1139 dated August 26, 2005 is hereby DECLARED null and void.

SO ORDERED.7

Petitioners filed a motion for reconsideration against said decision, but the same was denied in anOrder dated August 25, 2009.

Hence, the present petition wherein petitioners raise the following grounds to support their petition:

I.

THE COURT A QUOGRIEVOUSLY ERRED IN TAKING COGNIZANCE OF THE PETITION FOR DECLARATORY RELIEF DESPITE:

(i) THE FINALITY OF THE BSP MB RESOLUTION: (a) DECLARING RESPONDENT VETERANS BANKS CRF SCHEME AS VIOLATIVE OF SECTION 54 OF RA 8791; and (b) DIRECTING RESPONDENT TO
RETURN THE ILLEGAL PROCEEDS THEREOF TO ITS BORROWERS; and

(ii) THE BLATANT IMPROPRIETY OF RESORTING TO SUCH PETITION FOR DECLARATORY RELIEF, CONSIDERING RESPONDENT VETERANS BANKS PRIOR BREACH OF THE MONETARY BOARD
RESOLUTION SUBJECT THEREOF [ASSUMING ARGUENDO THAT THE SUBJECT BSP RESOLUTION HASNOT BECOME FINAL];

II.

THE COURT A QUOS ORDER, DISMISSING THE PETITION FOR DECLARATORY RELIEF HAS LONG BECOME FINAL AND EXECUTORY AND MAY NO LONGER BE DISTURBED.

III.

PETITIONERS FINDING,THAT RESPONDENT VETERANS BANK IS ENGAGED IN "INSURANCE BUSINESS," IS IN ACCORD WITH LAW. 8

In essence, the issue is whether or not the petition for declaratory relief is proper.
We rule in the negative.

Section 1, Rule 63 of the Rules of Court governs petitions for declaratory relief, viz.:

SECTION 1. Who may file petition. Any person interested under a deed, will, contract or other written instrument, whose rights are affected by a statute, executive order or regulation, ordinance, or any other governmental regulation may,
before breach or violation thereof, bring an action in the appropriate Regional Trial Court to determine any question of construction or validity arising, and for a declaration of his rights or duties, thereunder.

Declaratory relief is defined as an action by any person interested in a deed, will, contract or other written instrument, executive order or resolution, to determine any question of construction or validity arising from the instrument, executive
order or regulation, or statute; and for a declaration of his rights and duties thereunder. The only issue that may be raised in such a petition is the question of construction or validity of provisions in an instrument or statute. 9 Ergo, the Court,
in CJH Development Corporation v. Bureau of Internal Revenue, 10 held that in the same manner that court decisions cannot be the proper subjects of a petition for declaratory relief, decisions of quasijudicial agencies cannot be subjects of
a petition for declaratory relief for the simple reason that if a party is not agreeable to a decision either on questions of law or of fact, it may avail of the various remedies provided by the Rules of Court.

In view of the foregoing, the decision of the BSP Monetary Board cannot be a proper subject matter for a petition for declaratory relief since it was issued by the BSP Monetary Board inthe exercise of its quasi-judicial powers or functions.

The authority of the petitioners to issue the questioned MB Resolution emanated from its powers under Section 37 11 of RA No. 765312 and Section 6613 of RA No. 879114 to impose, at its discretion, administrative sanctions, upon any bank
for violation of any banking law.

The nature of the BSP Monetary Board as a quasi-judicial agency, and the character of its determination of whether or not appropriate sanctions may be imposed upon erring banks, as anexercise of quasi-judicial function, have been
recognized by this Court in the case of United Coconut Planters Bank v. E. Ganzon, Inc., 15 to wit:

A perusal of Section 9(3) of Batas Pambansa Blg. 129, as amended, and Section 1, Rule 43 of the 1997 Rules of Civil Procedure reveals that the BSP Monetary Board is not included among the quasi judicial agencies explicitly named
therein, whose final judgments, orders, resolutions or awards are appealableto the Court of Appeals. Such omission, however, does not necessarily mean that the Court of Appeals has no appellate jurisdiction over the judgments, orders,
resolutions, or awards of the BSP Monetary Board.

It bears stressing that Section 9(3) of Batas Pambansa Blg. 129, as amended, on the appellate jurisdiction of the Court of Appeals, generally refers to quasi-judicial agencies, instrumentalities, boards or commissions. The use of the word
"including" in the said provision, prior to the naming of several quasi-judicial agencies, necessarily conveys the very idea of non-exclusivity of the enumeration. The principle of expressio unius est exclusio alterius does not apply where
other circumstances indicate that the enumeration was not intended to be exclusive, or where the enumeration is by way of example only.

Similarly, Section 1, Rule 43 of the 1997 Revised Rules of Civil Procedure merely mentions several quasi-judicial agencies without exclusivity in the phraseology. The enumeration of the agencies therein mentioned is not exclusive. The
introductory phrase "[a]mong these agencies are" preceding the enumeration of specific quasi-judicial agencies only highlights the fact that the list is not meant to be exclusive or conclusive. Further, the overture stresses and acknowledges
the existence of other quasi-judicial agencies not included inthe enumeration but should be deemed included.

A quasi-judicial agency or body isan organ of government other than a court and other thana legislature, which affects the rights of private parties through either adjudication or rule-making. The very definition of an administrative agency
includes itsbeing vested with quasi-judicial powers. The ever increasing variety of powers and functions given to administrative agencies recognizes the need for the active intervention of administrative agencies in matters calling for
technical knowledge and speed in countless controversies which cannot possibly be handled by regular courts. A "quasi-judicial function" is a term which applies to the action, discretion, etc. of public administrative officers or bodies, who
are required to investigate facts, or ascertain the existence of facts, hold hearings, and draw conclusions from them, as a basis for their official action and to exercise discretion of a judicial nature.

Undoubtedly, the BSP Monetary Board is a quasi-,judicial agency exercising quasi-,judicial powers or functions.1wphi1 As aptly observed by the Court of Appeals, the BSP Monetary Board is an independent central monetary authority and
a body corporate with fiscal and administrative autonomy, mandated to provide policy directions in the areas of money, banking, and credit. It has the power to issue subpoena, to sue for contempt those refusing to obey the subpoena
without justifiable reason, to administer oaths and compel presentation of books, records and others, needed in its examination, to impose fines and other sanctions and to issue cease and desist order. Section 37 of Republic Act No. 7653,
in particular, explicitly provides that the BSP Monetary Board shall exercise its discretion in determining whether administrative sanctions should be imposed on banks and quasi-banks, which necessarily implies that the BSP Monetary
Board must conduct some form of investigation or hearing regarding the same. 16

A priori, having established that the BSP Monetary Board is indeed a quasi-judicial body exercising quasi-judicial functions, then its decision in MB Resolution No. 1139 cannot be the proper subject of declaratory relief.
Lastly, also worth noting is the fact that the court a quo's Order dated September 24, 2007, which dismissed respondent's petition for declaratory relief, had long become final and executory.

To recall, said Order was duly served on and received by respondent on October 1 7, 2007, as evidenced by the Ce1iification issued by the Philippine Postal Corporation. Almost a year later, however, or on October 15, 2008, respondent
moved for reconsideration of the court a quo's Order of dismissal, claiming it received a copy of said Order only on September 3, 2008. Thus, respondent's self-serving claim should not have prevailed over the Certification issued by the
Philippine Postal Corporation. It was error for the trial court to ente1iain it for the second time despite the lapse of almost a year before respondent filed its motion for reconsideration against said Order.

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The Decision dated June 15, 2009 and Order dated August 25, 2009 of the Regional Trial Court of Makati City in Civil Case No. 07-271 are REVERSED and
SET ASIDE. The Order dated September 24, 2007 of the Regional Trial Court ofMakati City is hereby REINSTATED.

SO ORDERED.
G.R. No. 195615 April 21, 2014

BANK OF COMMERCE, Petitioner,

vs.
RADIO PHILIPPINES NETWORK, INC., INTERCONTINENTAL BROADCASTING CORPORATION, and BANAHA W BROADCASTING CORPORATION, THRU BOARD OF ADMINISTRATOR, and SHERIFF BIENVENIDO S. REYES,
JR., Sheriff, Regional Trial Court of Quezon City, Branch 98, Respondents.

DECISION

ABAD, J.:

In late 2001 the Traders Royal Bank (TRB) proposed to sell to petitioner Bank of Commerce (Bancommerce) for P10.4 billion its banking business consisting of specified assets and liabilities. Bancommerce agreed subject to prior Bangko
Sentral ng Pilipinas' (BSP's) approval of their Purchase and Assumption (P & A) Agreement. On November 8, 2001 the BSP approved that agreement subject to the condition that Bancommerce and TRB would set up an escrow fund of
PSO million with another bank to cover TRB liabilities for contingent claims that may subsequently be adjudged against it, which liabilities were excluded from the purchase.

Specifically, the BSP Monetary Board Min. No. 58 (MB Res. 58) decided as follows:

1. To approve the revised terms sheet as finalized on September 21, 2001 granting certain incentives pursuant to Circular No. 237, series of 2000 to serve as a basis for the final Purchase and Assumption (P & A) Agreement between the
Bank of Commerce (BOC) and Traders Royal Bank (TRB); subject to inclusion of the following provision in the P & A:

The parties to the P & A had considered other potential liabilities against TRB, and to address these claims, the parties have agreed to set up an escrow fund amounting to Fifty Million Pesos ( P50,000,000.00) in cash to be invested in
government securities to answer for any such claim that shall be judicially established, which fund shall be kept for 15 years in the trust department of any other bank acceptable to the BSP. Any deviation therefrom shall require prior
approval from the Monetary Board.

xxxx

Following the above approval, on November 9, 2001 Bancommerce entered into a P & A Agreement with TRB and acquired its specified assets and liabilities, excluding liabilities arising from judicial actions which were to be covered by the
BSP-mandated escrow of P50 million.

To comply with the BSP mandate, on December 6, 2001 TRB placed P50 million in escrow with Metropolitan Bank and Trust Co. (Metrobank) to answer for those claims and liabilities that were excluded from the P & A Agreement and
remained with TRB. Accordingly, the BSP finally approved such agreement on July 3, 2002.

Shortly after or on October 10, 2002, acting in G.R. 138510, Traders Royal Bank v. Radio Philippines Network (RPN), Inc., this Court ordered TRB to pay respondents RPN, Intercontinental Broadcasting Corporation, and Banahaw
Broadcasting Corporation (collectively, RPN, et al.) actual damages of P9,790,716.87 plus 12% legal interest and some amounts. Based on this decision, RPN, et al.filed a motion for execution against TRB before the Regional Trial Court
(RTC) of Quezon City. But rather than pursue a levy in execution of the corresponding amounts on escrow with Metrobank, RPN, et al. filed a Supplemental Motion for Execution 1 where they described TRB as "now Bank of Commerce"
based on the assumption that TRB had been merged into Bancommerce.
On February 20, 2004, having learned of the supplemental application for execution, Bancommerce filed its Special Appearance with Opposition to the same 2 questioning the jurisdiction of the RTC over Bancommerce and denying that
there was a merger between TRB and Bancommerce. On August 15, 2005 the RTC issued an Order 3granting and issuing the writ of execution to cover any and all assets of TRB, "including those subject of the merger/consolidation in the
guise of a Purchase and Sale Agreement with Bank of Commerce, and/or against the Escrow Fund established by TRB and Bank of Commerce with the Metropolitan Bank and Trust Company."

This prompted Bancommerce to file a petition for certiorari with the Court of Appeals (CA) in CA-G.R. SP 91258 assailing the RTCs Order. On December 8, 2009 the CA 4 denied the petition. The CA pointed out that the Decision of the RTC
was clear in that Bancommerce was not being made to answer for the liabilities of TRB, but rather the assets or properties of TRB under its possession and custody. 5

In the same Decision, the CA modified the Decision of the RTC by deleting the phrase that the P & A Agreement between TRB and Bancommerce is a farce or "a mere tool to effectuate a merger and/or consolidation between TRB and
BANCOM." The CA Decision partly reads:

xxxx

We are not prepared though, unlike the respondent Judge, to declare the PSA between TRB and BANCOM as a farce or "a mere tool to effectuate a merger and/or consolidation" of the parties to the PSA. There is just a dearth of
conclusive evidence to support such a finding, at least at this point. Consequently, the statement in the dispositive portion of the assailed August 15, 2005 Order referring to a merger/consolidation between TRB and BANCOM is deleted. 6

xxxx

WHEREFORE, the herein consolidated Petitions are DENIED. The assailed Orders dated August 15, 2005 and February 22, 2006 of the respondent Judge, are AFFIRMED with the MODIFICATION that the pronouncement of respondent
Judge in the August 15, 2005 Order that the PSA between TRB and BANCOM is a farce or "a mere tool to effectuate a merger and/or consolidation between TRB and BANCOM" is DELETED.

SO ORDERED.7

On January 8, 2010 RPN, et al. filed with the RTC a motion to cause the issuance of an alias writ of execution against Bancommerce based on the CA Decision. The RTC granted 8 the motion on February 19, 2010 on the premise that the
CA Decision allowed it to execute on the assets that Bancommerce acquired from TRB under their P & A Agreement.

On March 10, 2010 Bancommerce sought reconsideration of the RTC Order considering that the December 8,2009 CA Decision actually declared that no merger existed between TRB and Bancommerce. But, since the RTC had already
issued the alias writ on March 9, 2010 Bancommerce filed on March 16, 2010 a motion to quash the same, followed by supplemental Motion 9 on April 29, 2010.

On August 18, 2010 the RTC issued the assailed Order 10 denying Bancommerce pleas and, among others, directing the release to the Sheriff of Bancommerces "garnished monies and shares of stock or their monetary equivalent" and for
the sheriff to pay 25% of the amount "to the respondents counsel representing his attorneys fees and P200,000.00 representing his appearance fees and litigation expenses" and the balance to be paid to the respondents after deducting
court dues.

Aggrieved, Bancommerce immediately elevated the RTC Order to the CA via a petition for certiorari under Rule 65 to assail the Orders dated February 19, 2010 and August 18, 2010. On November 26, 2010 the CA 11 dismissed the petition
outright for the supposed failure of Bancommerce to file a motion for reconsideration of the assailed order. The CA denied Bancommerces motion for reconsideration on February 9, 2011, prompting it to come to this Court.

The issues this case presents are:

1. Whether or not the CA gravely erred in holding that Bancommerce had no valid excuse in failing to file the required motion for reconsideration of the assailed RTC Order before coming to the CA; and

2. Whether or not the CA gravely erred in failing to rule that the RTCs Order of execution against Bancommerce was a nullity because the CA Decision of December 8, 2009 in CA-G.R. SP 91258 held that TRB had not been
merged into Bancommerce as to make the latter liable for TRBs judgment debts.
Direct filing of the petition for
certiorari by Bancommerce

Section 1, Rule 65 of the Rules of Court provides that a petition for certiorari may only be filed when there is no plain, speedy, and adequate remedy in the course of law. Since a motion for reconsideration is generally regarded as a plain,
speedy, and adequate remedy, the failure to first take recourse to is usually regarded as fatal omission.

But Bancommerce invoked certain recognized exceptions to the rule. 12 It had to forego the filing of the required motion for reconsideration of the assailed RTC Order because a) there was an urgent necessity for the CA to resolve the
questions it raised and any further delay would prejudice its interests; b) under the circumstances, a motion for reconsideration would have been useless; c) Bancommerce had been deprived of its right to due process when the RTC issued
the challenged order ex parte, depriving it of an opportunity to object; and d) the issues raised were purely of law.

In this case, the records amply show that Bancommerces action fell within the recognized exceptions to the need to file a motion for reconsideration before filing a petition for certiorari.

First. The filing of a motion for reconsideration would be redundant since actually the RTCs August 18, 2010 Order amounts to a denial of Bancommerce motion for reconsideration of the February 19, 2010 Order which granted the
application for the issuance of the alias writ.

Significantly, the alias writ of execution itself, the quashal of which was sought by Bancommerce two times (via a motion to quash the writ and a supplemental motion to quash the writ) derived its existence from the RTCs February 19,
2010 Order. Another motion for reconsideration would have been superfluous. The RTC had not budge on those issues in the preceding incidents. There was no point in repeatedly asking it to reconsider.

Second. An urgent necessity for the immediate resolution of the case by the CA existed because any further delay would have greatly prejudiced Bancommerce. The Sheriff had been resolute and relentless in trying to execute the
judgment and dispose of the levied assets of Bancommerce. Indeed, on April 22, 2010 the Sheriff started garnishing Bancommerces deposits in other banks, including those in Banco de Oro-Salcedo-Legaspi Branch and in the Bank of the
Philippine Islands Ayala Paseo Branch.

Further, the Sheriff forcibly levied on Bancommerces Lipa Branch cash on hand amounting to P1,520,000.00 and deposited the same with the Landbank. He also seized the banks computers, printers, and monitors, causing the temporary
cessation of its banking operations in that branch and putting the bank in an unwarranted danger of a run. Clearly, Bancommerce had valid justifications for skipping the technical requirement of a motion for reconsideration.

Merger and De Facto Merger

Merger is a re-organization of two or more corporations that results in their consolidating into a single corporation, which is one of the constituent corporations, one disappearing or dissolving and the other surviving. To put it another way,
merger is the absorption of one or more corporations by another existing corporation, which retains its identity and takes over the rights, privileges, franchises, properties, claims, liabilities and obligations of the absorbed corporation(s). The
absorbing corporation continues its existence while the life or lives of the other corporation(s) is or are terminated. 13

The Corporation Code requires the following steps for merger or consolidation:

(1) The board of each corporation draws up a plan of merger or consolidation. Such plan must include any amendment, if necessary, to the articles of incorporation of the surviving corporation, or in case of consolidation, all the
statements required in the articles of incorporation of a corporation.

(2) Submission of plan to stockholders or members of each corporation for approval. A meeting must be called and at least two (2) weeks notice must be sent to all stockholders or members, personally or by registered mail. A
summary of the plan must be attached to the notice. Vote of two-thirds of the members or of stockholders representing two thirds of the outstanding capital stock will be needed. Appraisal rights, when proper, must be respected.

(3) Execution of the formal agreement, referred to as the articles of merger o[r] consolidation, by the corporate officers of each constituent corporation. These take the place of the articles of incorporation of the consolidated
corporation, or amend the articles of incorporation of the surviving corporation.

(4) Submission of said articles of merger or consolidation to the SEC for approval.
 (5) If necessary, the SEC shall set a hearing, notifying all corporations concerned at least two weeks before.

(6) Issuance of certificate of merger or consolidation. 14

Indubitably, it is clear that no merger took place between Bancommerce and TRB as the requirements and procedures for a merger were absent. A merger does not become effective upon the mere agreement of the constituent
corporations.15 All the requirements specified in the law must be complied with in order for merger to take effect. Section 79 of the Corporation Code further provides that the merger shall be effective only upon the issuance by the
Securities and Exchange Commission (SEC) of a certificate of merger.

Here, Bancommerce and TRB remained separate corporations with distinct corporate personalities. What happened is that TRB sold and Bancommerce purchased identified recorded assets of TRB in consideration of Bancommerces
assumption of identified recorded liabilities of TRB including booked contingent accounts. There is no law that prohibits this kind of transaction especially when it is done openly and with appropriate government approval. Indeed, the
dissenting opinions of Justices Jose Catral Mendoza and Marvic Mario Victor F. Leonen are of the same opinion. In strict sense, no merger or consolidation took place as the records do not show any plan or articles of merger or
consolidation. More importantly, the SEC did not issue any certificate of merger or consolidation.

The dissenting opinion of Justice Mendoza finds, however, that a "de facto" merger existed between TRB and Bancommerce considering that (1) the P & A Agreement between them involved substantially all the assets and liabilities of
TRB; (2) in an Ex Parte Petition for Issuance of Writ of Possession filed in a case, Bancommerce qualified TRB, the petitioner, with the words "now known as Bancommerce;" and (3) the BSP issued a Circular Letter (series of 2002)
advising all banks and non-bank financial intermediaries that the banking activities and transaction of TRB and Bancommerce were consolidated and that the latter continued the operations of the former.

The idea of a de facto merger came about because, prior to the present Corporation Code, no law authorized the merger or consolidation of Philippine Corporations, except insurance companies, railway corporations, and public
utilities.16 And, except in the case of insurance corporations, no procedure existed for bringing about a merger. 17Still, the Supreme Court held in Reyes v. Blouse, 18 that authority to merge or consolidate can be derived from Section 28
(now Section 40) of the former Corporation Law which provides, among others, that a corporation may "sell, exchange, lease or otherwise dispose of all or substantially all of its property and assets" if the board of directors is so authorized
by the affirmative vote of the stockholders holding at least two-thirds of the voting power. The words "or otherwise dispose of," according to the Supreme Court, is very broad and in a sense, covers a merger or consolidation.

But the facts in Reyes show that the Board of Directors of the Corporation being dissolved clearly intended to be merged into the other corporations. Said this Court:

It is apparent that the purpose of the resolution is not to dissolve the [company] but merely to transfer its assets to a new corporation in exchange for its corporation stock. This intent is clearly deducible from the provision that the [company]
will not be dissolved but will continue existing until its stockholders decide to dissolve the same. This comes squarely within the purview of Section 28 of the corporation law which provides, among others, that a corporation may sell,
exchange, lease, or otherwise dispose of all its property and assets, including its good will, upon such terms and conditions as its Board of Directors may deem expedient when authorized by the affirmative vote of the shareholders holding
at least 2/3 of the voting power. [The phrase] "or otherwise dispose of" is very broad and in a sense covers a merger or consolidation." 19

In his book, Philippine Corporate Law,20 Dean Cesar Villanueva explained that under the Corporation Code, "a de facto merger can be pursued by one corporation acquiring all or substantially all of the properties of another corporation in
exchange of shares of stock of the acquiring corporation. The acquiring corporation would end up with the business enterprise of the target corporation; whereas, the target corporation would end up with basically its only remaining assets
being the shares of stock of the acquiring corporation." (Emphasis supplied)

No de facto merger took place in the present case simply because the TRB owners did not get in exchange for the banks assets and liabilities an equivalent value in Bancommerce shares of stock. Bancommerce and TRB agreed with
BSP approval to exclude from the sale the TRBs contingent judicial liabilities, including those owing to RPN, et al. 21

The Bureau of Internal Revenue (BIR) treated the transaction between the two banks purely as a sale of specified assets and liabilities when it rendered its opinion 22 on the tax consequences of the transaction given that there is a
difference in tax treatment between a sale and a merger or consolidation.

Indubitably, since the transaction between TRB and Bancommerce was neither a merger nor a de facto merger but a mere "sale of assets with assumption of liabilities," the next question before the Court is whether or not the RTC could
regard Bancommerce as RPN, et al.s judgment debtor.
It is pointed out that under common law, 23 if one corporation sells or otherwise transfers all its assets to another corporation, the latter is not liable for the debts and liabilities of the transferor if it has acted in good faith and has paid
adequate consideration for the assets, except: (1) where the purchaser expressly or impliedly agrees to assume such debts; (2) where the transaction amounts to a consolidation or merger of the corporations; (3) where the purchasing
corporation is merely a continuation of the selling corporation; and (4) where the transaction is entered into fraudulently in order to escape liability for such debts. 24

But, in the first place, common law has no application in this jurisdiction where existing statutes governing the situation are in place. Secondly, none of the cited exceptions apply to this case.

1. Bancommerce agreed to assume those liabilities of TRB that are specified in their P & A Agreement. That agreement specifically excluded TRBs contingent liabilities that the latter might have arising from pending litigations in court,
including the claims of respondent RPN, et al.

The pertinent provision of the P & A provides:

Article II
CONSIDERATION: ASSUMPTION OF LIABILITIES

In consideration of the sale of identified recorded assets and properties covered by this Agreement, BANCOMMERCE shall assume identified recorded TRBs liabilities including booked contingent liabilities as listed and referred to in its
Consolidated Statement of Condition as of August 31, 2001, in the total amount of PESOS: TEN BILLION FOUR HUNDRED ONE MILLION FOUR HUNDRED THIRTY SIX THOUSAND ( P10,410,436,000.00), provided that the liabilities so
assumed shall not include:

xxxx

2. Items in litigation, both actual and prospective, against TRB which include but not limited to the following:

2.1 Claims of sugar planters for alleged under valuation of sugar export sales x x x;

2.2 Claims of the Republic of the Philippines for peso-denominated certificates supposed to have been placed by the Marcos family with TRB;

2.3 Other liabilities not included in said Consolidated Statement of Condition; and

2.4 Liabilities accruing after the effectivity date of this Agreement that were not incurred in the ordinary course of business. 25 (Underscoring supplied)

2. As already pointed out above, the sale did not amount to merger or de facto merger of Bancommerce and TRB since the elements required of both were not present.

3. The evidence in this case fails to show that Bancommerce was a mere continuation of TRB. TRB retained its separate and distinct identity after the purchase. Although it subsequently changed its name to Traders Royal Holdings, Inc.
such change did not result in its dissolution. "The changing of the name of a corporation is no more than creation of a corporation than the changing of the name of a natural person is the begetting of a natural person. The act, in both
cases, would seem to be what the language which we use to designate it importsa change of name and not a change of being." 26As such, Bancommerce and TRB remained separate corporations.

4. To protect contingent claims, the BSP directed Bancommerce and TRB to put up P50 million in escrow with another bank. It was the BSP, not Bancommerce that fixed the amount of the escrow. Consequently, it cannot be said that the
latter bank acted in bad faith with respect to the excluded liabilities. They did not enter into the P & A Agreement to enable TRB to escape from its liability to creditors with pending court cases.

Further, even without the escrow, TRB continued to be liable to its creditors although under its new name. Parenthetically, the P & A Agreement shows that Bancommerce acquired greater amount of TRB liabilities than assets. Article II of
the P & A Agreement shows that Bancommerce assumed total liabilities of P10,401,436,000.00 while it received total assets of only P10,262,154,000.00. This proves the arms length quality of the transaction.
The dissenting opinion of Justice Mendoza cites certain instances indicating the existence of a de facto merger in this case. One of these is the fact that the P & A Agreement involved substantially all the assets and liabilities of TRB. But
while this is true, such fact alone would not prove the existence of a de facto merger because a corporation "does not really lose its juridical entity" 27 on account of such sale. Actually, the law allows a corporation to "sell, lease, exchange,
mortgage, pledge or otherwise dispose of all or substantially all of its properties and assets including its goodwill" to another corporation. 28 This is not merger because it recognizes the separate existence of the two corporations that
transact the sale.

The dissenting opinion of Justice Mendoza claims that another proof of a de facto merger is that in a case, Bancommerce qualified TRB in its Ex Parte Petition for Issuance of Writ of Possession with the words "now known as
Bancommerce." But paragraph 3 of the Ex Parte Petition shows the context in which such qualification was made. It reads: 29

3. On November 09, 2001, Bank of Commerce and Traders Royal Bank executed and signed a Purchase and Sale Agreement. The account of the mortgagor was among those acquired under the agreement. Photocopy of the agreement
is hereto attached as Annex "A."

It is thus clear that the phrase "now known as Bank of Commerce" used in the petition served only to indicate that Bancommerce is now the former property owners creditor that filed the petition for writ of possession as a result of the P &
A Agreement. It does not indicate a merger.

Lastly, the dissenting opinion of Justice Mendoza cited the Circular Letter (series of 2002) issued by the BSP advising all banks and non-bank financial intermediaries that the banking activities and transaction of TRB and Bancommerce
were consolidated and that the latter continued the operations of the former as an indication of a de facto merger. The Circular Letter 30 reads:

CIRCULAR LETTER
(series of 2002)

TO: ALL BANK AND NON-BANK

FINANCIAL INTERMEDIARIES

The Securities and Exchange Commission approved on August 15, 2002 the Amendment of the Articles of Incorporation and By-Laws of Traders Royal Bank on the deletion of the term "banks" and "banking" from the corporate name and
purpose, pursuant to the purchase of assets and assumption of liabilities of Traders Royal Bank by Bank of Commerce. Accordingly, the bank franchise of Traders Royal Bank has been automatically revoked and Traders Royal Bank has
ceased to operate as a banking entity.

Effective July 3, 2002, the banking activities and transactions of Bank of Commerce and Traders Royal Bank have been consolidated and the former has carried their operations since then.

For your information and guidance.

(Sgd.)

ALBERTO V. REYES
Deputy Governor

Indeed, what was "consolidated" per the above letter was the banking activities and transactions of Bancommerce and TRB, not their corporate existence. The BSP did not remotely suggest a merger of the two corporations. What controls
the relationship between those corporations cannot be the BSP letter circular, which had been issued without their participation, but the terms of their P & A Agreement that the BSP approved through its Monetary Board.

Also, in a letter dated November 2,2005 Atty. Juan De Zuiga, Jr., Assistant Governor and General Counsel of the BSP, clarified to the RTC the use of the word "merger" in their January 29, 2003 letter. According to him, the word "merger"
was used "in a very loose sense x x x and merely repeated, for convenience" the term used by the RTC. 31 It further stated that "Atty. Villanueva did not issue any legal pronouncement in the said letter, which is merely transmittal in nature.
Thus it cannot, by any stretch of construction, be considered as binding on the BSP. What is binding to the BSP is MB Res. 58 referring to the aforementioned transaction between TRB and Bancommerce as a purchase and assumption
agreement."32
Since there had been no merger, Bancommerce cannot be considered as TRBs successor-in-interest and against which the Courts Decision of October 10, 2002 in G.R. 138510 may been forced. Bancommerce did not hold the former
TRBs assets in trust for it as to subject them to garnishment for the satisfaction of the latters liabilities to RPN, et al. Bancommerce bought and acquired those assets and thus, became their absolute owner.

The CA Decision in
CA-G.R. SP 91258

According to the dissenting opinion of Justice Mendoza, the CA Decision dated December 8, 2009 did not reverse the RTCs Order causing the issuance of a writ of execution against Bancommerce to enforce the judgment against TRB. It
also argues that the CA did not find grave abuse of discretion on the RTCs part when it issued its August 15, 2005 Order granting the issuance of a writ of execution. In fact, it affirmed that order. 1wphi1 Moreover, it argued that the CAs
modification of the RTC Order merely deleted an opinion there expressed and not reversed such order.

But it should be the substance of the CAs modification of the RTC Order that should control, not some technical flaws that are taken out of context. Clearly, the RTCs basis for holding Bancommerce liable to TRB was its finding that TRB
had been merged into Bancommerce, making the latter liable for TRBs debts to RPN, et al. The CA clearly annulled such finding in its December 8, 2009 Decision in CA-G.R. SP 91258, thus:

WHEREFORE, the herein consolidated Petitions are DENIED. The assailed Orders dated August 15, 2005 and February 22, 2006 of the respondent Judge, are AFFIRMED with the MODIFICATION that the pronouncement of respondent
Judge in the August 15, 2005 Order that the PSA between TRB and BANCOM is a farce or "a mere tool to effectuate a merger and/or consolidation between TRB and BANCOM" is DELETED.

SO ORDERED.33

Thus, the CA was careful in its decision to restrict the enforcement of the writ of execution only to "TRBs properties found in Bancommerces possession." Indeed, the CA clearly said in its decision that it was not Bancommerce that the
RTC Order was being made to answer for TRBs judgment credit but "the assets/properties of TRB in the hands of BANCOM." The CA then went on to state that it is not prepared, unlike the RTC, to declare the P & A Agreement but a farce
or a "mere tool to effectuate a merger and/or consolidation." Thus, the CA deleted the RTCs reliance on such supposed merger or consolidation between the two as a basis for its questioned order.

The enforcement, therefore, of the decision in the main case should not include the assets and properties that Bancommerce acquired from TRB. These have ceased to be assets and properties of TRB under the terms of the BSP-
approved P & A Agreement between them. They are not TRB assets and properties in the possession of Bancommerce. To make them so would be an unwarranted departure from the CAs Decision in CA-G.R. SP 91258.

WHEREFORE, the petition is GRANTED. The assailed Resolution of November 26, 2010 and the Resolution of February 9, 2011 of the Court of Appeals both in CA-G.R. SP 116704 are REVERSED and SET ASIDE. Accordingly, the
assailed Orders dated February 19, 2010 and August 18, 2010, the Alias Writ of Execution dated March 9, 2010, all issued by the Regional Trial Court and all orders, notices of garnishment/levy, or notices of sale and any other action
emanating from the Orders dated February 19, 2010 and August 18, 2010 in Civil Case Q-89-3580 are ANNULLED and SET ASIDE. The Temporary Restraining Order issued by this Court on April 13, 2011 is hereby made PERMANENT.

SO ORDERED.

G.R. No. 195272, January 14, 2015

BANK OF THE PHILIPPINE ISLANDS (FORMERLY PRUDENTIAL BANK), Petitioner, v. SPOUSES DAVID M. CASTRO AND CONSUELO B. CASTRO, Respondents.

DECISION

PEREZ, J.:

For resolution is the petition for review on certiorari assailing the Decision1 dated 26 November 2009 of the Court of Appeals, Special Sixth Division in CA-G.R. CV No. 88870 and the Resolution 2 dated 14 January 2011 of the Court of
Appeals, Second Division denying the motion for reconsideration, which reversed and set aside the judgment 3 rendered by the Regional Trial Court of Quezon City, Branch 97 (RTC) dismissing the complaint for Declaration of Nullity of
Sheriffs Certificate of Sale and Damages against Prudential Bank.

The Complaint has its origins from the two loans contracted by respondent Spouses David M. Castro (David) 4 and Consuelo B. Castro (Consuelo) from Prudential Bank in the amounts of P100,000.00 and P55,000.00 in July and August
1987. The first loans maturity date was on 18 January 1988 while the second loan had a maturity date of 23 February 1988. The P100,000.00 loan was secured by a Real Estate Mortgage (REM) over petitioners' property located in
Quezon City and covered by Transfer Certificate of Title (TCT) No. 364277 while the P55,000.00 loan was secured by another REM over two parcels of land located in Alaminos, Laguna covered by TCT Nos. T-2225 and T-2226, registered
in the name of Davids mother, Guellerma Malabanan.

The loans remained unpaid as of 30 April 1996 and the balances ballooned to P290,205.05 on the P100,000.00 loan and P96,870.20 on the P55,000.00 loan. Prudential Bank, through counsel, filed two separate petitions for foreclosure of
the mortgage. In their first petition, Prudential Bank admitted that through inadvertence, the photocopies of the first two pages of the REM covering the properties in Laguna were mixed and attached to the photocopies of the last two
pages of the REM covering the Quezon City property. 5 Thus, in the Notice of Sheriffs Sale, the name Guellerma Malabanan rep. by her AIF David M. Castro appeared as mortgagor while the amount of mortgaged indebtedness is
P96,870.20. The real property described therein however is the Quezon City property.

On 26 August 1996, the Quezon City property was sold at a public auction in favor of Prudential Bank whose winning bid was P396,000.00.

In their Complaint, Spouses Castro alleged that the extrajudicial foreclosure and sale of the Quezon City property is null and void for lack of notice and publication of the extrajudicial foreclosure sale. Spouses Castro proffered that the
property foreclosed is not one of the properties covered by the REM executed by Guellerma Malabanan which was the basis of the Notice of Sheriffs Sale which was posted and published. Spouses Castro prayed for the declaration of the
Sheriffs Certificate of Sale as null and void and for award of damages. 6chanRoblesvirtualLawlibrary

In their Answer, Prudential Bank asserted that Spouses Castro were fully aware that the Quezon City property was to be foreclosed considering that the obligation secured by it remained unpaid as of the date of the foreclosure sale.
Prudential Bank cited a clerical and harmless inadvertence in the preparation of the petition for extrajudicial foreclosure but nonetheless, it claimed that Spouses Castro, having been notified of the scheduled foreclosure of the mortgage of
the Quezon City property, should have noticed the inadvertence and alerted the sheriff. Their failure to do so, Prudential Bank added, clearly amounted to laches. 7chanRoblesvirtualLawlibrary

The issue before the RTC was whether Prudential Bank legally complied with the jurisdictional requirement of due notice prior to the extrajudicial sale of the property in question. The trial court ruled in favor of Prudential Bank and
dismissed the complaint. It found that:chanroblesvirtuallawlibrary

x x x there was no substantial defect on the published and posted notice of Sheriffs sale. The public had been sufficiently informed of the identity of the property to be sold, identity of the mortgagor-borrower whose unpaid loan is secured
by the mortgage and the identity of the mortgagee. The notice did not render plaintiffs themselves uninformed of the nature of the property to be sold. 8

The trial court further held that the objective of notice was attained since there was sufficient publicity of the sale through newspaper publication and that there was no showing that the property was sold for a price far below its value, an
intimation of collusion between the sheriff who conducted the sale and the bank. 9chanRoblesvirtualLawlibrary

On appeal, the Court of Appeals reversed the ruling of the trial court. The appellate court stressed the importance of notice in a foreclosure sale and ruled that failure to advertise a mortgage foreclosure sale in compliance with statutory
requirements constitutes a jurisdictional defect invalidating the sale. 10chanRoblesvirtualLawlibrary

Prudential Bank filed a motion for reconsideration. In a Resolution dated 14 January 2011, the Court of Appeals, Second Division, expounded on the previous Decision. The appellate court clarified that the erroneous designation of
Guellerma Malabanan as mortgagor, instead of David, did not affect the validity of the notice. With respect to the amount of the mortgaged indebtedness however, the appellate court noted that the discrepancy vis-a-vis the actual amount
owed by Spouses Castro is so huge that it can hardly be considered immaterial. The appellate court opined that declaring a small amount of indebtedness in the petition for extrajudicial foreclosure and in the notice of sheriffs sale would
effectively depreciate the value of the property. The appellate court then concluded that statutory provisions governing publication of notice of mortgage foreclosure sales must be strictly complied with and that even slight deviations will
invalidate the notice.11chanRoblesvirtualLawlibrary

Petitioner Bank of the Philippine Islands (BPI), being the successor-in-interest of Prudential Bank, by virtue of the merger of the two banking institutions with BPI as the surviving entity, filed the instant petition for review defending the ruling
of the trial court and reiterating that the published Notice of Sheriffs Sale would show that the subject of the sale, the Quezon City property, was sufficiently and properly described and identified. Petitioner refuted the appellate courts
finding that by indicating a lower amount of indebtedness, the notice depreciated the value of the property subject of sale. Petitioner cited Olizon v. Court of Appeals,12 wherein the court declared that immaterial errors and mistakes cannot
affect the sufficiency of the notice. Petitioner reiterated Prudential Banks right to foreclose the mortgage constituted over the Quezon City property because the loan secured by the mortgage had not been paid when it fell due and
remained so when the mortgage was scheduled for foreclosure. 13chanRoblesvirtualLawlibrary
In her Comment, Consuelo points out as glaringly erroneous the Notice of Sheriffs Sale which named the mortgagor as Guellerma Malabanan and the mortgage indebtedness as P96,870.20. Consuelo avers that the properties, the
foreclosure of which Prudential Bank appears to seek in its petition, were situated in Laguna, thus, the Sheriff of Quezon City had no jurisdiction to issue a Notice for Sale of said property. Consuelo insists that even if the property was sold
for more than the mortgage indebtedness, such would not render the sale valid because public policy is involved in the need for strict compliance with the requirements of notice in extrajudicial foreclosures of mortgage. It was posited that
a lesser amount of indebtedness as stated in the notice would mislead a potential bidder in public auction and subject the value of the property to risk of unwarranted diminution. Finally, Consuelo counters that petitioners reliance on
Olizon is misplaced because the alleged failure of notice in said case lay in the fact that the notice was published in a newspaper in lieu of being posted. Consuelo argues that in this case the property itself was misidentified in the petition
for foreclosure.14chanRoblesvirtualLawlibrary

The submissions of the parties indicate the basic issue to be whether the errors in the Notice of Sheriffs Sale invalidate the notice and render the sale and the certificate of such sale void.

We find merit in the petition.

At the outset, it bears emphasis that foreclosure proceedings have in their favor the presumption of regularity and the party who seeks to challenge the proceedings has the burden of evidence to rebut the same. 15 In this case, respondent
failed to prove that Prudential Bank has not complied with the notice requirement of the law.

Sections 2, 3, and 4 of Act No. 3135 laid down the procedure regarding foreclosure sale:chanroblesvirtuallawlibrary

Sec. 2. Said sale cannot be made legally outside of the province in which the property sold is situated; and in case the place within said province in which the sale is to be made is subject to stipulation, such sale shall be made in said place
or in the municipal building of the municipality in which the property or part thereof is situated.

Sec. 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least three public places of the municipality or city where the property is situated, and if such property is worth more than four hundred pesos,
such notice shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city.

Sec. 4. The sale shall be made at public auction, between the hours of nine in the morning and four in the afternoon; and shall be under the direction of the sheriff of the province, the justice or auxiliary justice of the peace of the
municipality in which such sale has to be made, or a notary public of said municipality, who shall be entitled to collect a fee of five pesos each day of actual work performed, in addition to his expenses.

In Philippine National Bank v. Maraya, Jr.,16 we elucidated that one of the most important requirements of Act No. 3135 is that the notice of the time and place of sale shall be given. If the sheriff acts without notice, or at a time and place
other than that designated in the notice, the sheriff acts without warrant of law. 17 In this case, the property sold in the public auction is located in Quezon City and the foreclosure sale proceeded as scheduled at 10:00 oclock in the morning
on 26 August 1996 at the Hall of Justice in Quezon City with Prudential Bank as the winning bidder, registering the highest bid of P396,000.00.

In Century Savings Bank v. Samonte18 citing Olizon v. Court of Appeals,19 the Court reiterated the purpose of the rule on notice, to wit:chanroblesvirtuallawlibrary

The object of a notice of sale is to inform the public of the nature and condition of the property to be sold, and of the time, place and terms of the sale. Notices are given for the purpose of securing bidders and to prevent a sacrifice of the
property. If these objects are attained, immaterial errors and mistakes will not affect the sufficiency of the notice; but if mistakes or omissions occur in the notices of sale, which are calculated to deter or mislead bidders, to depreciate the
value of the property, or to prevent it from bringing a fair price, such mistakes or omissions will be fatal to the validity of the notice, and also to the sale made pursuant thereto. 20

The mistakes and omissions referred to in the above-cited ruling which would invalidate notice pertain to those which: 1) are calculated to deter or mislead bidders, 2) to depreciate the value of the property, or 3) to prevent it from bringing a
fair price.

In this case, the Notice of Sheriffs Sale21 states:chanroblesvirtuallawlibrary

NOTICE OF SHERIFFS SALE

Upon extra-judicial petition for sale under Act 3135, as amended by Act 4118, filed Prudential Bank, mortgage[e]/s, against Guellerma Malabanan rep. by her AIF David M. Castro mortgagor/s, with residence and postal address at Sta.
Rosa, Alaminos, Laguna to satisfy the mortgaged indebtedness, which as of July 1996 amounts to NINETY SIX THOUSAND EIGHT HUNDRED SEVENTY PESOS & 20/100 (P96,870.20) excluding penalties[,] charges, attorneys fees and
all the legal fees and expenses for the foreclosure and sale, the Ex-Officio Sheriff of Quezon City or her duly authorized Deputy, will sell at PUBLIC AUCTION to the highest bidder FOR CASH and in Philippine Currency, on the 26th day of
AUGUST, 1996, at 10:00 oclock in the morning, or soon thereafter, infront of the main entrance of the Hall of Justice (beside the Quezon City Hall) Elliptical Road, Diliman, Quezon City, the following described real estate property, together
with all the improvements existing thereon to wit:chanroblesvirtuallawlibrary

TRANSFER CERTIFICATE OF TITLE

NO. 364277
Registry of Deeds Quezon City

A parcel of land (Lot 5-B of the subd. Plan (LRC) Psd-339863, approved as a nonsubdn. project, being a portion of Lot 5, Blk. 1, (LRC) Psd-45612, LRC Rec. No. 5975), situated in the Dist. of Tandang Sora, Quezon City. Bounded on the
NE., points 4 to 1 by Road Lot 1 (LRC) Psd-45612; on the SE., points 1 to 2 by Lot 5-C; on the SW., points 2-3 by Lot 5-A, both of the subdn. plan; and on the NW., points 3-4 by Lot 371- New Psd- 36060. x x x x containing an area of ONE
HUDNRED (100) SQUARE METERS, more or less.
Prospective bidders or buyers are hereby enjoined to investigate for themselves the title of the said real estate property and the encumbrances thereon, if any there be.

With jurisprudence as the measure, the errors pointed out by respondents appear to be harmless. The evils that can result from an erroneous notice did not arise. There was no intention to mislead, as the errors in fact did not mislead the
bidders as shown by the fact that the winning registered bid of P396,000.00 is over and above the real amount of indebtedness of P209,205.05. As correctly observed by the trial court, the amount mentioned in the notice did not indicate a
collusion between the sheriff who conducted the sale and the respondent bank. Notably, the mentioned amount of P96,870.20 refers to the mortgage indebtedness not the value of the property. Equally notable is the announcement in the
notice that the amount excludes penalties, charges, attorneys fees and all legal fees and expenses for the foreclosure and sale.

As regards the designation of Guellerma Malabanan as the mortgagor, we agree with the reference made by the Court of Appeals to the case of Langkaan Realty Devt Inc. v. UCPB which ruled that the erroneous designation of an entity
as the mortgagor does not invalidate the notice of sale. 22chanRoblesvirtualLawlibrary

The notice rule was complied with when the Notice of Sheriffs Sale was published in Philippine Recorder, a national newspaper of general circulation once a week for three consecutive weeks or on 29 July, 5 and 12 August 1996. As a
matter of fact, the foreclosure procedure undertaken by Prudential Bank was supported by the following documents: Affidavit of Publication, 23 Notice of Sheriffs Sale,24 Sheriffs Certificate of Sale,25 Affidavit of Posting,26 and Minutes of the
Auction Sale.27 Indubitably, these documents evidenced the regular and lawful conduct of the foreclosure proceedings.

There is much significance in the fact that David admitted on the witness stand that he knew that there was an application for foreclosure on their Quezon City property but the REM used as basis of the foreclosure covered the Laguna
properties. Upon learning this information, he should have registered his objection or sought clarification from the sheriffs office. Instead, he let the public auction run its course and belatedly objected to the sale.

For failure to overcome the burden of showing that the foreclosure proceedings is tainted with irregularity, the Certificate of Sale should be upheld.chanrobleslaw

WHEREFORE, the petition is GRANTED. The 26 November 2009 Decision and 14 January 2011 Resolution of the Court of Appeals in CA-G.R. CV No. 88870 is REVERSED and SET ASIDE. The 24 January 2007 Decision of the
Regional Trial Court of Quezon City, Branch 97 in Civil Case No. Q-97-32018 is REINSTATED.

SO ORDERED.

EVA FLOYD and RODOLFO CALIXTRO, G.R. No. 169047

Petitioners,
Present:

QUISUMBING, J., Chairperson,

CARPIO MORALES,

- versus - TINGA,
 VELASCO, JR., and

BRION, JJ.

BENJAMIN GONZALES, ATILANO NANQUIL, LINDA Promulgated:

NISPEROS, LILIAN NISPEROS, SALVADOR NISPEROS &
VIRGILIO CONSTANTINO,

Respondents. November 3, 2008

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

QUISUMBING, J.:

This petition for review on certiorari seeks to reverse the Decision [1] dated July 12, 2005 of the Court of Appeals in CA-G.R. CV No. 81618. Said Decision affirmed with modification the Decision [2] of the Regional Trial Court (RTC),
Branch 45, San Fernando City, Pampanga in SP. Civil Action No. 234-0-91, dismissing the complaint for injunction which sought to prevent the demolition of petitioners houses built on the land claimed by respondents
Linda Nisperos, Lilian Nisperos and Salvador Nisperos.

The facts, as culled from the records, are as follows.

Petitioners Eva Floyd and Rodolfo Calixtro are occupants of a lot in Jolo Street, Tabacuhan Road, Sta. Rita, Olongapo City. Floyd started occupying the said lot in 1986 while Calixtro started doing so in 1988. The lot forms part of
a 1,337.50-square meter property which was the subject of a complaint [3] for forcible entry filed by respondents Lilian Nisperos, Linda Nisperos and Salvador Nisperos, through their attorney-in-fact Virgilio Constantino,
against Clemente Abarnas. The complaint, filed on September 25, 1984, charged Abarnas of constructing a house on the subject land in July 1984 through stealth and strategy. The Nisperoses claimed ownership and prior possession of
the land by succession, alleging that their father, Igmedio Nisperos, occupied and tilled it from 1950 to 1982.

On February 10, 1986, the Municipal Trial Court in Cities of Olongapo City dismissed the ejectment complaint. On appeal however, the Olongapo City RTC on January 20, 1987 reversed the dismissal of the complaint and ordered
Abarnas to remove any improvements introduced on the land and surrender possession thereof to the Nisperoses. [4]

On July 8, 1987, the Court of Appeals affirmed the Olongapo City RTCs Decision.[5] When the appellate courts decision attained finality, the Olongapo City RTC issued an Alias Writ of Execution [6] on April 3, 1991 and an Alias Writ
of Special Demolition[7] on April 4, 1991. A Notice to Vacate[8] was likewise issued on April 23, 1991.

In June 1991, when respondents Sheriffs Benjamin Gonzales and Atilano Nanquil went to the subject land to implement the writs, they found that petitioners and Fe Ongsotto were also occupying the property. To prevent the demolition,
petitioners and Ongsotto filed a complaint[9] for injunction, SP. Civil Action No. 234-0-91, before the RTC of Olongapo City.

On February 5, 1992, the RTC of Olongapo City issued a Writ of Preliminary Injunction. [10] It observed that petitioners do not appear to be mere trespassers, squatters or Abarnas agents; and that the respondent sheriffs exceeded
their authority granted by the writs of execution and demolition, considering that they were only directed against Abarnas. [11]
 The complaint was transferred to the RTC of San Fernando City by virtue of Supreme Court A.M. No. 00-11-523-RTC, following a judicial audit.

On August 8, 2003, the RTC of San Fernando City, dismissed the injunction complaint. It considered petitioners as occupants in bad faith and squatters on the lots, making the judgment in the ejectment case binding on
them. The court recognized the Nisperoses prior possession and claim over the lots which started in 1950 with their father, Igmedio. The RTC noted that Floyd and Calixtro admitted that they started occupying the premises only in 1986
and 1988, respectively. It also concluded that petitioners impliedly admitted that the lots are part of the Nisperoses property because instead of claiming the opposite, they attempted to prove that they had a better right thereto. It also
ordered petitioners to pay private respondents moral damages and attorneys fees. [12]

Petitioners and Ongsotto, separately, appealed the judgment in the injunction case before the Court of Appeals.

On July 12, 2005, the appellate court ruled against petitioners, thus:

WHEREFORE, upon the premises, the appealed Decision is AFFIRMED with the MODIFICATION that the awards of moral damages and attorneys fees are DELETED.

SO ORDERED.[13]

The Court of Appeals held that petitioners have not shown a clear and unmistakable right to be protected, and found that they occupied the land during the pendency of the ejectment case, thereby taking advantage of such
conflict.[14]

On August 22, 2005, Ongsotto, alone, filed a Motion for Reconsideration. [15] On September 21, 2005, Floyd and Calixtro filed the instant petition. [16] On February 15, 2006, the Court of Appeals deferred ruling on Ongsottos motion
in view of this petition.[17]

Before us, petitioners raise the following assignment of errors:

I.

THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION IN CIVIL CASE NO. 234-0-91 HOLDING THAT THE PETITIONERS ARE BOUND BY THE DECISION IN CIVIL CASE NO. 139-0-86
ALTHOUGH THEY WERE NOT IMPLEADED AS PARTY DEFENDANTS THEREIN.

II.

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE PETITIONERS ARE NOT ENTITLED TO A WRIT OF INJUNCTION ALTHOUGH THE PROPERTY THEY ARE IN POSSESSION OF IS
OWNED AND TITLED IN THE NAME OF ANOTHER PERSON.

III.

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE LAND SUBJECT OF CIVIL CASE NO. 139-0-86 INCLUDES THE LOTS BEING OCCUPIED AND POSSESSED BY THE PETITIONERS. [18]

Simply stated, the issues are as follows: Are petitioners bound by the decision in the ejectment case? Are they entitled to an injunctive writ to prevent the demolition of their houses? Who has a better right of possession over the
land where their houses are erected?

Petitioners aver that only Abarnas was ordered by the Olongapo City RTC to surrender possession of the land and remove any construction thereon, and that they are not trespassers, squatters, or Abarnas relatives, successors-
in-interest, or privies. They further contend that judgments in ejectment cases are in personam. Thus, even assuming that they are occupying the premises subject of the ejectment case, the judgment cannot be enforced against them as
they were not made parties to it. Petitioners likewise point to several pieces of documentary evidence which allegedly show that the Nisperoses are not the true owners of the lots on which the houses sought to be demolished stand, since
said lots are registered in the name of one Rodrigo C. Domingo, Jr. They further argue that there is no factual basis for the appellate courts finding that they impliedly admitted that the lots they are occupying form part of the property
claimed by the Nisperoses.[19]

The Nisperoses on the other hand state that petitioners were not impleaded as defendants in the ejectment case as the latter were not yet on the premises or hid themselves during the pendency of the case until the time the
latter were served with a notice to vacate on December 21, 1988. They claim that petitioners connived with Abarnas and his wife Angelina, and insist that petitioners are privies of the Abarnases. They accuse petitioners of bad faith in
applying for a Miscellaneous Sales Application and for belatedly securing other documents, which were self-serving. Lastly, they aver that the genuineness of the documents presented by petitioners and the ownership of the lots mentioned
in it can only be determined in a full-blown trial. [20]

An ejectment suit is an action in personam wherein judgment is binding only upon parties properly impleaded and given an opportunity to be heard. [21] Petitioners were not made party-defendants by the Nisperoses. Hence, they
can be bound by said judgment in the ejectment suit, even if they were not impleaded as defendants, only if they are shown to be (a) trespassers, squatters or agents of the defendant fraudulently occupying the property to frustrate the
judgment; (b) guests or other occupants of the premises with the permission of the defendant; (c) transferees pendente lite; (d) sub-lessees; (e) co-lessees; or (f) members of the family, relatives and other privies of the defendant. [22] In
such cases, court hearing is a must to determine the character of such possession. If the execution court finds that they are mere successors-in-interest, guests, or agents of the defendant, the order of execution shall be enforced against
them.[23]

In the forcible entry case, petitioners had not been given their day in court to present their side to prove their alleged bona fide possession. Neither was a court hearing held to prove that they are mere successors-in-interest,
guests, or agents of defendant Abarnas when the ejectment judgment was sought to be enforced against them. Thus, they cannot be bound by the decision in the ejectment case.

We now go to the second issue.

A writ of preliminary injunction may only be issued upon a clear showing that there exists a right to be protected and that the action sought to be enjoined is violative of that right. [24] From the foregoing discussion, it is clear that
petitioners have a right to be protected against the summary demolition of their houses. Hence, the RTC correctly issued a writ of preliminary injunction. However, whether the injunction should be made permanent is another matter.

The determination as to whether petitioners are entitled to a permanent injunction rests on the issue of who between petitioners and respondents have a better right of possession over the land on which the houses sought to be
demolished stand.

It is relevant to point out that in the pre-trial conference before the Olongapo City RTC the parties agreed on the following issues for resolution:

(1) Whether or not the plaintiffs were mere trespassers in the property in question or do they have title over the premises in question.

(2) Whether or not the plaintiffs can be ejected or their house demolished erected on the land in question inasmuch as they are not parties in the case of Linda Nisperos, et al. versus Rodolfo Calixtro and
Fe Ongsotto, Civil Case No. 139-0-86.

(3) Whether or not the spaces which plaintiffs houses are erected are owned by plaintiffs. [25]

Clearly, apart from the matter of enjoining the execution against petitioners of the judgment in Civil Case No. 139-0-86, the issue of who between the petitioners and respondents are entitled to possession of, as a consequence of
title over, the land where the formers houses are erected was also squarely raised and fully tried before the lower courts. During trial, petitioners fully ventilated their claim / right to possession of the subject land. Sec. 5, Rule 10 of the
Rules of Court states that [w]hen 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. Under the circumstances, it is
just and proper to resolve the issue of possession over the subject land. To rule otherwise and require respondents to file another case for ejectment, or institute supplemental proceedings in Civil Case No. 139-0-86, against petitioners
would not be in accord with justice and would only entail more unnecessary expenses and contribute to the clogged court dockets.
 Both the RTC and the Court of Appeals categorically found that respondents have the better right to possession of the land. The RTC ruled that [petitioners] claim of possession that started in 1988 must yield to that of the
Nisperoses who trace their possession of the property to that of their predecessor-in-interest, their father Igmedio who began occupying the property in 1950. [26] The Court of Appeals, for its part, ruled that:

[Petitioner] Floyd occupied the property only in 1986; [petitioner] Calixtro occupied the property in 1988 while admitting that the property was owned by I. Hauseco Subd. Appellant Ongsotto likewise occupied the
property in 1988 and expressed that she derived her alleged title from a waiver and quitclaim executed by Angelina Abarnas, the wife of Clemente Abarnas, defendant in the ejectment case. Thus, she is considered as
the latters successor-in-interest, bound by the judgment in the ejectment case which is conclusive between the parties and their successors-in-interest. The MSAs [Miscellaneous Sales Applications] and unapproved
survey plans presented by Floyd and Ongsotto are self-serving and of little evidentiary value.

In sum, the [petitioners] have not proved a clear and unmistakable right to the possession of the property. On the other hand, Nisperos better right was established by final judgment in Civil Case No. 139-0-86. [27]

We find no cogent reason to overturn the consistent findings of both the RTC and the Court of Appeals that, as against petitioners, the Nisperoses are entitled to possession of the subject land where the petitioners houses are
erected. Applicable to the instant case, which is an offshoot of an ejectment case and which also in part partakes of an ejectment case, is the following pronouncement of the Court on the matter of ejectment and possession in Pajuyo v.
Court of Appeals:[28]

The only question that the courts must resolve in ejectment proceedings iswho is entitled to the physical possession of the premises, that is, to the possession de facto and not to the possession de jure. It
does not even matter if a partys title to the property is questionable, or when both parties intruded into public land and their applications to own the land have yet to be approved by the proper government
agency. Regardless of the actual condition of the title to the property, the party in peaceable quiet possession shall not be thrown out by a strong hand, violence or terror. Neither is the unlawful withholding of property
allowed. Courts will always uphold respect for prior possession.

Thus, a party who can prove prior possession can recover such possession even against the owner himself. Whatever may be the character of his possession, if he has in his favor prior possession in time, he
has the security that entitles him to remain on the property until a person with a better right lawfully ejects him. To repeat, the only issue that the court has to settle in an ejectment suit is the right to physical possession.
[29]

Petitioners Floyd and Calixtro, in SP. Civil Action No. 234-0-91 admitted having possessed the subject land only in 1986 and 1988 respectively. These cannot prevail over the Nisperoses possession through their father Igmedio
that started in 1950. Since the Nisperoses have proven prior possession in time, they indeed have a better right to the possession of the land. Hence, petitioners must relinquish possession of the land to the Nisperoses and accordingly
remove their houses which are built on the subject land.

WHEREFORE, the Decision dated July 12, 2005 of the Court of Appeals in CA-G.R. CV No. 81618 is AFFIRMED with MODIFICATION. Petitioners are ORDERED to SURRENDER to the respondents Linda, Lilian and
Salvador Nisperos the possession of the land in dispute and REMOVE the improvements that they introduced thereon.

Costs against petitioners.

SO ORDERED.
 G.R. No. 156995, January 12, 2015

RUBEN MANALANG, CARLOS MANALANG, CONCEPCION GONZALES AND LUIS MANALANG, Petitioners, v. BIENVENIDO AND MERCEDES BACANI, Respondents.

DECISION

BERSAMIN, J.:

In the exercise of its appellate jurisdiction, the Regional Trial Court (RTC) shall decide the appeal of the judgment of the Municipal Trial Court (MTC) in unlawful detainer or forcible entry cases on the basis of the entire record of the
proceedings had in the court of origin and such memoranda and/or briefs as may be required by the RTC. There is no trial de novo of the case.cralawred

The Case

The petitioners assail the decision promulgated on October 18, 2002 in CA-G.R. SP No. 68419, 1whereby the Court of Appeals (CA) reversed and set aside the decision of the RTC, Branch 49, in Guagua, Pampanga, and reinstated the
judgment rendered on August 31, 2000 by the MTC of Guagua, Pampanga dismissing their complaint for unlawful detainer and the respondents counterclaim. They also hereby assail the resolution promulgated on January 24, 2003
denying their motion for reconsideration.2chanRoblesvirtualLawlibrary

Antecedents

Petitioners Ruben Manalang, Amado Manalang, Carlos Manalang, Concepcion M. Gonzales, Ladislao Manalang and Luis Manalang were the co-owners of Lot No 4236 with an area of 914 square meters of the Guagua Cadastre, and
declared for taxation purposes in the name of Tomasa B. Garcia. The land was covered by approved survey plan Ap-03-004154. Adjacent to Lot 4236 was the respondents Lot No. 4235 covered by Original Certificate of Title (OCT) No. N-
216701. In 1997, the petitioners caused the relocation and verification survey of Lot 4236 and the adjoining lots, and the result showed that the respondents had encroached on Lot No. 4236 to the extent of 405 square meters. A
preliminary relocation survey conducted by the Lands Management Section of the Department of Environment and Natural Resources (DENR) confirmed the result on the encroachment. When the respondents refused to vacate the
encroached portion and to surrender peaceful possession thereof despite demands, the petitioners commenced this action for unlawful detainer on April 21, 1997 in the MTC of Guagua (Civil Case No. 3309), and the case was assigned to
Branch 2 of that court. 3chanRoblesvirtualLawlibrary

On September 17, 1998, the MTC (Branch 2) dismissed Civil Case No. 3309 for lack of jurisdiction based on its finding that the action involved an essentially boundary dispute that should be properly resolved in an accion reivindicatoria.4 It
stated that the complaint did not aver any contract, whether express or implied, between the petitioners and the respondents that qualified the case as one for unlawful detainer; and that there was also no showing that the respondents
were in possession of the disputed area by the mere tolerance of the petitioners due to the latter having become aware of the encroachment only after the relocation survey held in 1997.

On appeal, however, the RTC reversed the MTC (Branch 2), and remanded the case for further proceedings, 5 holding that because there was an apparent withholding of possession of the property and the action was brought within one
year from such withholding of possession the proper action was ejectment which was within the jurisdiction of the MTC; and that the case was not a boundary dispute that could be resolved in an accion reinvidicatoria, considering that it
involved a sizeable area of property and not a mere transferring of boundary. 6chanRoblesvirtualLawlibrary

Upon remand, the MTC, Branch 1,7 ultimately dismissed the complaint and counterclaim for lack of merit through the decision rendered on August 31, 2000, 8 ruling that the petitioners failed to adduce clear and convincing evidence showing
that the respondents had encroached on their property and had been occupying and possessing property outside the metes and bounds described in Bienvenido Bacanis OCT No. N-216701; that the preponderance of evidence was in
favor of the respondents right of possession; and that the respondents counterclaim for damages should also be dismissed, there being no showing that the complaint had been filed in gross and evident bad
faith.9chanRoblesvirtualLawlibrary

Once more, the petitioners appealed to the RTC.

At that point, the RTC ordered the petitioners to conduct a relocation survey to determine their allegation of encroachment, and also heard the testimony of the surveyor, Engr. Emmanuel Limpin, then Acting Chief of the Survey Section of
the CENR- DENR.

On September 19, 2001,10 the RTC rendered its judgment whereby it reversed and set aside the MTCs decision of August 31, 2000, observing that the respondents had encroached on the petitioners property based on the court-ordered
relocation survey, the reports by Engr. Limpin, and his testimony; 11 that the respondents could not rely on their OCT No. N-216701, considering that although their title covered only 481 square meters, the relocation survey revealed that
they had occupied also 560 square meters of the petitioners Lot No. 4236; 12 that the petitioners did not substantiate their claims for reasonable compensation, attorneys fees and litigation expenses; and that, nevertheless, after it had been
established that the respondents had encroached upon and used a portion of the petitioners property, the latter were entitled to P1,000.00/month as reasonable compensation from the filing of the complaint up to time that the respondents
actually vacated the encroached property, plus P20,000.00 attorneys fees. 13chanRoblesvirtualLawlibrary

The respondents moved for reconsideration, but the RTC denied their motion for its lack of merit. 14chanRoblesvirtualLawlibrary

The respondents appealed.

On October 18, 2002, the CA promulgated its assailed decision, 15viz:chanroblesvirtuallawlibrary

WHEREFORE, the appealed RTC decision is hereby REVERSED and SET ASIDE, and the decisions of the MTC of Guagua, Pampanga, Branches 1 and 2, are REINSTATED.

No pronouncement as to costs.

SO ORDERED.

The CA concluded that the RTC, by ordering the relocation and verification survey in aid of its appellate jurisdiction upon motion of the petitioners and over the objection of the respondents, and making a determination of whether there
was an encroachment based on such survey and testimony of the surveyor, had acted as a trial court in complete disregard of the second paragraph of Section 18, Rule 70 of the Rules of Court. It declared such action by the RTC as
unwarranted because it amounted to the reopening of the trial, which was not allowed under Section 13(3) Rule 70 of the Rules of Court. It observed that the relocation and verification survey was inconclusive inasmuch as the surveyor
had himself admitted that he could not determine which of the three survey plans he had used was correct without a full-blown trial.

The CA held that considering that the petitioners complaint for unlawful detainer did not set forth when and how the respondents had entered the land in question and constructed their houses thereon, jurisdiction did not vest in the MTC to
try and decide the case; that the complaint, if at all, made out a case for either accion reivindicatoria or accion publiciana, either of which fell within the original jurisdiction of the RTC; and that the RTCs reliance on Benitez v. Court of
Appeals16 and Calubayan v. Ferrer17 was misplaced, because the controlling ruling was that in Sarmiento v. Court of Appeals,18 in which the complaint was markedly similar to that filed in the case.

The petitioners sought reconsideration, but the CA denied their motion for its lack of merit in the resolution of January 24, 2003. 19chanRoblesvirtualLawlibrary

Issues

Hence, this appeal.

The petitioners contend that the RTC had authority to receive additional evidence on appeal in an ejectment case because it was not absolutely confined to the records of the trial in resolving the appeal; that the respondents were estopped
from assailing the relocation and verification survey ordered by the RTC because they had actively participated in the survey and had even cross-examined Engr. Limpin, the surveyor tasked to conduct the survey; 20 that Engr. Limpins
testimony must be given credence, honoring the well-entrenched principle of regularity in the performance of official functions; 21 that the RTC did not conduct a trial de novo by ordering the relocation and verification survey and hearing the
testimony of the surveyor; that the desirability of the relocation and verification survey had always been part of the proceedings even before the case was appealed to the RTC; 22 that, in any case, the peculiar events that transpired justified
the RTCs order to conduct a relocation and verification survey; 23 that the case, because it involved encroachment into anothers property, qualified as an ejectment case that was within the jurisdiction of the MTC; and that the respondents
were barred by laches for never questioning the RTCs February 11, 1999 ruling on the issue of jurisdiction. 24chanRoblesvirtualLawlibrary
In contrast, the respondents assail the relocation and verification survey ordered by the RTC as immaterial, because (a) it could not vest a right of possession or ownership; (b) the petitioners were mere claimants, not the owners of the
property; (c) the petitioner had never been in possession of the area in question; and (d) cadastral surveys were not reliable. Hence, they maintain that whether or not the relocation and verification survey was considered would not alter the
outcome of the case.25chanRoblesvirtualLawlibrary

Ruling of the Court

The appeal has no merit.

To start with, the RTC, in an appeal of the judgment in an ejectment case, shall not conduct a rehearing or trial de novo.26 In this connection, Section 18, Rule 70 of the Rules of Court clearly provides:chanroblesvirtuallawlibrary

Sec. 18. Judgment conclusive only on possession; not conclusive in actions involving title or ownership. x x x.

x x x x

The judgment or final order shall be appealable to the appropriate Regional Trial Court which shall decide the same on the basis of the entire record of the proceedings had in the court of origin and such memoranda
and/or briefs as may be submitted by the parties or required by the Regional Trial Court. (7a)

Hence, the RTC violated the foregoing rule by ordering the conduct of the relocation and verification survey in aid of its appellate jurisdiction and by hearing the testimony of the surveyor, for its doing so was tantamount to its holding of a
trial de novo. The violation was accented by the fact that the RTC ultimately decided the appeal based on the survey and the surveyors testimony instead of the record of the proceedings had in the court of origin.

Secondly, on whether or not Civil Case No. 3309 was an ejectment case within the original and exclusive jurisdiction of the MTC, decisive are the allegations of the complaint. Accordingly, the pertinent allegations of the petitioners
complaint follow:chanroblesvirtuallawlibrary

2. Plaintiffs are co-owners of land known as Lot no. 4236 of the Guagua cadastre. Plaintiffs inherited the said parcel of residential land from Tomasa B. Garcia-Manalang who is the absolute owner of the said property and the same is
declared for taxation purposes in her name under Tax Declaration No. 07014906, a copy of which is hereto attached as Annex A;

3. Lot No. 4236 is covered by an approved plan, Plan Ap-03-004154 (a copy made Annex B) and it consists of 914 square meters;

4. Adjacent to plaintiffs [p]roperty is Lot No. 4235 of the Guagua Cadastre and covered by approved plan As-03-00533 (copy made Annex C) which is being claimed by defendants and is the subject matter of Cadastral Case No. N-229 of
the Regional Trial Court of Guagua, Branch 53 where a decision (copy made Annex D) was rendered by said court on August 28, 1996 confirming the title over said lot in favor of defendant Bienvenido Bacani. The said decision is now
final and executory

5. On February 23, 1997, plaintiffs caused the relocation and verification survey of cadastral Not No. 4236 of the Guagua Cadastre belonging to plaintiff and the adjoining lots, particularly Lot No. 4235 being claimed by defendants;

6. The relocation and verification survey conducted by Engr. Rufo R. Rivera, a duly licensed Geodetic Engineer per plan (copy made Annex F) revealed that defendants had encroached an area of 405 square meters of the parcel of land
belonging to plaintiffs. In fact, the whole or part of the houses of the said defendants have been erected in said encroached portion;

7. Sometime in June of 1997, plaintiffs through plaintiff Concepcion Gonzales lodged a complaint before the Barangay Council of San Juan, Guagua, Pampanga against defendants regarding the encroached portion. A preliminary
relocation survey was conducted by the Lands Management Sector of the DENR and it was found that indeed, defendants encroached into the parcel of land belonging to plaintiffs. This finding was confirmed by the approved plan Ap-03-
004154;

8. Since defendants refused to vacate the premises and surrender the peaceful possession thereof to plaintiff, the Barangay Captain of San Juan, Guagua, Pampanga issued a certification to file action (copy made Annex G) dated March
4, 1997 to enable the plaintiff to file the appropriate action in court;

9. On March 10, 1997, plaintiffs sent a formal demand letter (copy made Annex H) to defendants to vacate the premises and to pay reasonable compensation for the use of the said encroached portion;
10. Despite receipt of said demand letter per registry return cards attached to the letter, defendants failed and refused to vacate the encroached portion and surrender the peaceful possession thereof to plaintiffs;

11. Plaintiffs are entitled to a reasonable compensation in the amount of P 3,000.00 from defendants for the illegal use and occupation of their property by defendants;

12. By reason of the unjust refusal of defendants to vacate the premises and pay reasonable compensation to plaintiffs, the latter were constrained to engage the services of counsel for P30,00.00 plus P1,000.00 per appearance and incur
litigation expenses in the amount of P10,000.00.27

Given the foregoing allegations, the case should be dismissed without prejudice to the filing of a non-summary action like accion reivindicatoria. In our view, the CA correctly held that a boundary dispute must be resolved in the context
of accion reivindicatoria, not an ejectment case. The boundary dispute is not about possession, but encroachment, that is, whether the property claimed by the defendant formed part of the plaintiffs property. A boundary dispute cannot be
settled summarily under Rule 70 of the Rules of Court, the proceedings under which are limited to unlawful detainer and forcible entry. In unlawful detainer, the defendant unlawfully withholds the possession of the premises upon the
expiration or termination of his right to hold such possession under any contract, express or implied. The defendants possession was lawful at the beginning, becoming unlawful only because of the expiration or termination of his right of
possession. In forcible entry, the possession of the defendant is illegal from the very beginning, and the issue centers on which between the plaintiff and the defendant had the prior possession de facto.

Thirdly, the MTC dismissed the action because it did not have jurisdiction over the case. The dismissal was correct. It is fundamental that the allegations of the complaint and the character of the relief sought by the complaint determine the
nature of the action and the court that has jurisdiction over the action. 28 To be clear, unlawful detainer is an action filed by a lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld
after the expiration or termination of the right to hold possession by virtue of any contract, express or implied. 29 To vest in the MTC the jurisdiction to effect the ejectment from the land of the respondents as the occupants in unlawful
detainer, therefore, the complaint should embody such a statement of facts clearly showing the attributes of unlawful detainer. 30 However, the allegations of the petitioners complaint did not show that they had permitted or tolerated the
occupation of the portion of their property by the respondents; or how the respondents entry had been effected, or how and when the dispossession by the respondents had started. All that the petitioners alleged was the respondents
illegal use and occupation of the property. As such, the action was not unlawful detainer.

Lastly, the conclusion by the MTC that the petitioners failed to show by clear and convincing evidence that the respondents had encroached on the petitioners property was also warranted. In contrast, the only basis for the RTCs decision
was the result of the relocation and verification survey as attested to by the surveyor, but that basis should be disallowed for the reasons earlier mentioned. Under the circumstances, the reinstatement of the ruling of the MTC by the CA
was in accord with the evidence.chanrobleslaw

WHEREFORE, the Court AFFIRMS the decision promulgated on October 18, 2002; and ORDERS the petitioners to pay the costs of suit.

SO ORDERED.