QUEZON CITY and THE CITY G.R. No.

166408
TREASURER OF QUEZON CITY, Under Section 31, Article 13 of the Quezon City Revenue Code of 1993,[3] a franchise tax was
Petitioners, imposed on businesses operating within its jurisdiction. The provision states:
Present:
YNARES-SANTIAGO, J., Section 31. Imposition of Tax. Any provision of special laws or grant of tax
Chairperson, exemption to the contrary notwithstanding, any person, corporation, partnership or
- versus - AUSTRIA-MARTINEZ, association enjoying a franchise whether issued by the national government or local
CHICO-NAZARIO, government and, doing business in Quezon City, shall pay a franchise tax at the rate
NACHURA, and of ten percent (10%) of one percent (1%) for 1993-1994, twenty percent (20%) of
REYES, JJ. one percent (1%) for 1995, and thirty percent (30%) of one percent (1%) for 1996
and the succeeding years thereafter, of gross receipts and sales derived from the
operation of the business in Quezon City during the preceding calendar year.
ABS-CBN BROADCASTING Promulgated:
CORPORATION, On May 3, 1995, ABS-CBN was granted the franchise to install and operate radio and
Respondent. October 6, 2008 television broadcasting stations in the Philippines under R.A. No. 7966.[4] Section 8 of R.A. No. 7966
provides the tax liabilities of ABS-CBN which reads:
x--------------------------------------------------x
Section 8. Tax Provisions. The grantee, its successors or assigns, shall be
DECISION liable to pay the same taxes on their real estate, buildings and personal property,
exclusive of this franchise, as other persons or corporations are now hereafter may
be required by law to pay. In addition thereto, the grantee, its successors or
REYES, R.T., J.: assigns, shall pay a franchise tax equivalent to three percent (3%) of all gross
receipts of the radio/television business transacted under this franchise by the
grantee, its successors or assigns, and the said percentage tax shall be in lieu of all
CLAIMS for tax exemption must be based on language in law too plain to be mistaken. It cannot be taxes on this franchise or earnings thereof; Provided that the grantee, its
made out of inference or implication. successors or assigns shall continue to be liable for income taxes under Title II of the
National Internal Revenue Code pursuant to Section 2 of Executive No. 72 unless
The principle is relevant in this petition for review on certiorari of the Decision[1] of the Court of the latter enactment is amended or repealed, in which case the amendment or
Appeals (CA) and that[2] of the Regional Trial Court (RTC) ordering the refund and declaring invalid the repeal shall be applicable thereto. (Emphasis added)
imposition and collection of local franchise tax by the City Treasurer of Quezon City on ABS-
CBN Broadcasting Corporation (ABS-CBN). ABS-CBN had been paying local franchise tax imposed by Quezon City. However, in view of
the above provision in R.A. No. 9766 that it shall pay a franchise tax x x x in lieu of all taxes, the
The Facts corporation developed the opinion that it is not liable to pay the local franchise tax imposed
by Quezon City. Consequently, ABS-CBN paid under protest the local franchise tax imposed
Petitioner City Government of Quezon City is a local government unit duly organized and existing by by Quezon City on the dates, in the amounts and under the official receipts as follows:
virtue of Republic Act (R.A.) No. 537, otherwise known as the Revised Charter of Quezon
City. Petitioner City Treasurer of Quezon City is primarily responsible for the imposition and collection O.R. No. Date Amount Paid
of taxes within the territorial jurisdiction of Quezon City. 2464274 07-18-95 P 1,489,977.28
2484651 10-20-95 1,489,977.28 Quezon City argued that the in lieu of all taxes provision in R.A. No. 9766 could not have
2536134 1-22-96 2,880,975.65 been intended to prevail over a constitutional mandate which ensures the viability and self-
8354906 1-23-97 8,621,470.83 sufficiency of local government units. Further, that taxes collectible by and payable to the local
0048756 1-23-97 2,731,135.81 government were distinct from taxes collectible by and payable to the national government,
0067352 4-03-97 2,731,135.81 considering that the Constitution specifically declared that the taxes imposed by local government
[5]
Total P19,944,672.66 units shall accrue exclusively to the local governments. Lastly, the City contended that the exemption
claimed by ABS-CBN under R.A. No. 7966 was withdrawn by Congress when the Local Government
[8]
On January 29, 1997, ABS-CBN filed a written claim for refund for local franchise tax paid to Quezon Code (LGC) was passed. Section 193 of the LGC provides:
City for 1996 and for the first quarter of 1997 in the total amount of Fourteen Million Two Hundred
Thirty-Three Thousand Five Hundred Eighty-Two and 29/100 centavos (P14,233,582.29) broken down Section 193. Withdrawal of Tax Exemption Privileges. Unless otherwise
as follows: provided in this Code, tax exemptions or incentives granted to, or presently
enjoyed by all persons, whether natural or juridical, including government-owned
O.R. No Date Amount Paid or -controlled corporations, except local water districts, cooperatives duly
2536134 1-22-96 P 2,880,975.65 registered under R.A. 6938, non-stock and non-profit hospitals and educational
8354906 1-23-97 8,621,470.83 institutions, are hereby withdrawn upon the effectivity of this Code. (Emphasis
0048756 1-23-97 2,731,135.81 added)
Total P14,233,582.29[6]
On August 13, 1997, ABS-CBN filed a supplemental complaint adding to its claim for refund the local
franchise tax paid for the third quarter of 1997 in the amount of Two Million Seven Hundred Thirty-
In a letter dated March 3, 1997 to the Quezon City Treasurer, ABS-CBN reiterated its claim for refund One Thousand One Hundred Thirty-Five and 81/100 centavos (P2,731,135.81) and of other amounts
of local franchise taxes paid. of local franchise tax as may have been and will be paid by ABS-CBN until the resolution of the case.

On June 25, 1997, for failure to obtain any response from the Quezon City Treasurer, ABS- Quezon City insisted that the claim for refund must fail because of the absence of a prior written
CBN filed a complaint before the RTC in Quezon City seeking the declaration of nullity of the claim for it.
imposition of local franchise tax by the City Government of Quezon City for being unconstitutional. It
likewise prayed for the refund of local franchise tax in the amount of Nineteen Million Nine Hundred RTC and CA Dispositions
Forty-Four Thousand Six Hundred Seventy-Two and 66/100 centavos (P19,944,672.66) broken down
as follows: On January 20, 1999, the RTC rendered judgment declaring as invalid the imposition on and collection
from ABS-CBN of local franchise tax paid pursuant to Quezon City Ordinance No. SP-91, S-93, after
O.R. No. Date Amount Paid the enactment of R.A. No. 7966, and ordered the refund of all payments made. The dispositive
2464274 7-18-95 P 1,489,977.28 portion of the RTC decision reads:
2484651 10-20-95 1,489,977.28
2536134 1-22-96 2,880,975.65 WHEREFORE, judgment is hereby rendered declaring the imposition on
8354906 1-23-97 8,621,470.83 and collection from plaintiff ABS-CBN BROADCASTING CORPORATION of local
0048756 1-23-97 2,731,135.81 franchise taxes pursuant to Quezon City Ordinance No. SP-91, S-93 after the
0067352 4-03-97 2,731,135.81 enactment of Republic Act No. 7966 to be invalid, and, accordingly, the Court
[7]
Total P19,944,672.66 hereby orders the defendants to refund all its payments made after the effectivity
of its legislative franchise on May 3, 1995.
 SO ORDERED.[9]
In its decision, the RTC ruled that the in lieu of all taxes provision contained in Section 8 of R.A. No.
7966 absolutely excused ABS-CBN from the payment of local franchise tax imposed under Quezon
City Ordinance No. SP-91, S-93. The intent of the legislature to excuse ABS-CBN from payment of local
franchise tax could be discerned from the usage of the in lieu of all taxes provision and from the
absence of any qualification except income taxes. Had Congress intended to exclude taxes imposed
from the exemption, it would have expressly mentioned so in a fashion similar to the proviso on
income taxes.
The RTC also based its ruling on the 1990 case of Province of Misamis Oriental v. Cagayan Electric
[10]
Power and Light Company, Inc. (CEPALCO). In said case, the exemption of respondent electric
company CEPALCO from payment of provincial franchise tax was upheld on the ground that the
franchise of CEPALCO was a special law, while the Local Tax Code, on which the provincial ordinance
imposing the local franchise tax was based, was a general law. Further, it was held that whenever
there is a conflict between two laws, one special and particular and the other general, the special law
must be taken as intended to constitute an exception to the general act.
The RTC noted that the legislative franchise of ABS-CBN was granted years after the
effectivity of the LGC. Thus, it was unavoidable to conclude that Section 8 of R.A. No. 7966 was an
exception since the legislature ought to be presumed to have enacted it with the knowledge and
[11]
awareness of the existence and prior enactment of Section 137 of the LGC.
In addition, the RTC, again citing the case of Province of Misamis Oriental v. Cagayan Electric Power
and Light Company, Inc. (CEPALCO),[12] ruled that the imposition of the local franchise tax was an
impairment of ABS-CBNs contract with the government. The imposition of another franchise on the
corporation by the local authority would constitute an impairment of the formers charter, which is in
the nature of a private contract between it and the government.
As to the amounts to be refunded, the RTC rejected Quezon Citys position that a written claim for
refund pursuant to Section 196 of the LGC was a condition sine qua non before filing the case in
court. The RTC ruled that although Fourteen Million Two Hundred Thirty-Three Thousand Five
Hundred Eighty-Two and 29/100 centavos (P14,233,582.29) was the only amount stated in the letter
to the Quezon City Treasurer claiming refund, ABS-CBN should nonetheless be also refunded of all
payments made after the effectivity of R.A. No. 7966. The inaction of the City Treasurer on the claim
for refund of ABS-CBN legally rendered any further claims for refund on the part of plaintiff absurd
and futile in relation to the succeeding payments.
The City of Quezon and its Treasurer filed a motion for reconsideration which was subsequently
denied by the RTC. Thus, appeal was made to the CA. On September 1, 2004, the CA dismissed the
petition of Quezon City and its Treasurer. According to the appellate court, the issues raised were
purely legal questions cognizable only by the Supreme Court. The CA ratiocinated:
For another, the issues which appellants submit for this Courts
consideration are more of legal query necessitating a legal opinion rather than a call
for adjudication on the matter in dispute.
xxxx
The first issue has earlier been categorized in Province of Misamis Oriental
v. Cagayan Electric and Power Co., Inc. to be a legal one. There is no more argument
to this.
The next issue although it may need the reexamination of the pertinent
provisions of the local franchise and the legislative franchise given to appellee, also
needs no evaluation of facts. It suffices that there may be a conflict which may need
to be reconciled, without regard to the factual backdrop of the case.
The last issue deals with a legal question, because whether or not there is
a prior written claim for refund is no longer in dispute. Rather, the question
revolves on whether the said requirement may be dispensed with, which obviously
is not a factual issue.[13]
On September 23, 2004, petitioner moved for reconsideration. The motion was, however, denied by
the CA in its Resolution dated December 16, 2004. Hence, the present recourse.
Issues
Petitioner submits the following issues for resolution:
I.
Whether or not the phrase in lieu of all taxes indicated in the franchise of the
respondent appellee (Section 8 of RA 7966) serves to exempt it from the payment
of the local franchise tax imposed by the petitioners-appellants.
 II.
Whether or not the petitioners-appellants raised factual and legal issues before the
[14]
Honorable Court of Appeals.
Our Ruling
The second issue, being procedural in nature, shall be dealt with immediately. But there are other
resultant issues linked to the first.
I. The dismissal by the CA of petitioners appeal is in order because it raised purely legal
issues, namely:
1) Whether appellee, whose franchise expressly provides that its payment of
franchise tax shall be in lieu of all taxes in this franchise or earnings thereof, is
absolutely excused from paying the franchise tax imposed by appellants;
2) Whether appellants imposition of local franchise tax is a violation of appellees
legislative franchise; and
3) Whether one can do away with the requirement on prior written claim for
refund.[15]
Obviously, these are purely legal questions, cognizable by this Court, to the exclusion of all other
courts. There is a question of law when the doubt or difference arises as to what the law is pertaining
to a certain state of facts.[16]
Section 2, Rule 50 of the Rules of Court provides that an appeal taken to the CA under Rule
41 raising only questions of law is erroneous and shall be dismissed, issues of pure law not being
[17]
within its jurisdiction. Consequently, the dismissal by the CA of petitioners appeal was in order.
In the recent case of Sevilleno v. Carilo,[18] this Court ruled that the dismissal of the appeal of
petitioner was valid, considering the issues raised there were pure questions of law, viz.:
Petitioners interposed an appeal to the Court of Appeals but it was dismissed for
being the wrong mode of appeal. The appellate court held that since the issue being
raised is whether the RTChas jurisdiction over the subject matter of the case, which
is a question of law, the appeal should have been elevated to the Supreme Court
under Rule 45 of the 1997 Rules of Civil Procedure, as amended. Section 2, Rule 41
of the same Rules which governs appeals from judgments and final orders of
the RTC to the Court of Appeals, provides:
SEC. 2. Modes of appeal.
(a) Ordinary appeal. The appeal to the Court of Appeals in cases
decided by the Regional Trial Court in the exercise of its
original jurisdiction shall be taken by
filing a notice of appeal with the court which rendered the
judgment or final order appealed from and serving a copy
thereof upon the adverse party. No record on appeal shall
be required except in special proceedings and other cases of
multiple or separate appeals where the law or these Rules so
require. In such cases, the record on appeal shall be filed and
served in like manner.
(b) Petition for review. The appeal to the Court of Appeals in cases
decided by the Regional Trial Court in the exercise of its
appellate jurisdiction shall be by petition for review in
accordance with Rule 42.
(c) Appeal by certiorari. In all cases where only questions of law
are raised or involved, the appeal shall be to the Supreme
Court by petition for review on certiorari in accordance with
Rule 45.
In Macawili Gold Mining and Development Co., Inc. v. Court of Appeals, we
summarized the rule on appeals as follows:
(1) In all cases decided by the RTC in the exercise of its original
jurisdiction, appeal may be made to the Court of Appeals by
mere notice of appeal where the appellant raises questions
of fact or mixed questions of fact and law;
(2) In all cases decided by the RTC in the exercise of its original
jurisdiction where the appellant raises only questions of law,
the appeal must be taken to the Supreme Court on a petition
for review on certiorari under Rule 45;

(3) All appeals from judgments rendered by the RTC in the
exercise of its appellate jurisdiction, regardless of whether
the appellant raises questions of fact, questions of law, or
mixed questions of fact and law, shall be brought to the
Court of Appeals by filing a petition for review under Rule
42.
It is not disputed that the issue brought by petitioners to the Court of
Appeals involves the jurisdiction of the RTC over the subject matter of the case. We
have a long standing rule that a courts jurisdiction over the subject matter of an
action is conferred only by the Constitution or by statute. Otherwise put,
jurisdiction of a court over the subject matter of the action is a matter of
law. Consequently, issues which deal with the jurisdiction of a court over the
subject matter of a case are pure questions of law. As petitioners appeal solely
involves a question of law, they should have directly taken their appeal to this Court
by filing a petition for review on certiorari under Rule 45, not an ordinary appeal
with the Court of Appeals under Rule 41. Clearly, the appellate court did not err in
holding that petitioners pursued the wrong mode of appeal.
Indeed, the Court of Appeals did not err in dismissing petitioners
appeal. Section 2, Rule 50 of the same Rules provides that an appeal from
the RTC to the Court of Appeals raising only questions of law shall be dismissed; and
that an appeal erroneously taken to the Court of Appeals shall be dismissed
outright, x x x.[19] (Emphasis added)
However, to serve the demands of substantial justice and equity, the Court opts to relax
procedural rules and rule upon on the merits of the case. In Ong Lim Sing Jr. v. FEB Leasing and
[20]
Finance Corporation, this Court stated:
Courts have the prerogative to relax procedural rules of even the most mandatory
character, mindful of the duty to reconcile both the need to speedily put an end to
litigation and the parties right to due process. In numerous cases, this
Court has allowed liberal construction of the rules when to do so would serve the
demands of substantial justice and equity. In Aguam v. Court of Appeals, the Court
explained:
The court has the discretion to dismiss or not to dismiss
an appellants appeal. It is a power conferred on the court, not a
duty. The discretion must be a sound one, to be exercised in
accordance with the tenets of justice and fair play, having in mind
the circumstances obtaining in each case. Technicalities, however,
must be avoided. The law abhors technicalities that impede the
cause of justice. The courts primary duty is to render or dispense
justice. A litigation is not a game of technicalities. Lawsuits unlike
duels are not to be won by a rapiers thrust. Technicality, when it
deserts its proper office as an aid to justice and becomes its great
hindrance and chief enemy, deserves scant consideration from
courts. Litigations must be decided on their merits and not on
technicality. Every party litigant must be afforded the amplest
opportunity for the proper and just determination of his cause,
free from the unacceptable plea of technicalities. Thus, dismissal
of appeals purely on technical grounds is frowned upon where the
policy of the court is to encourage hearings of appeals on their
merits and the rules of procedure ought not to be applied in a
very rigid, technical sense; rules of procedure are used only to
help secure, not override substantial justice. It is a far better and
more prudent course of action for the court to excuse a technical
lapse and afford the parties a review of the case on appeal to
attain the ends of justice rather than dispose of the case on
technicality and cause a grave injustice to the parties, giving a
false impression of speedy disposal of cases while actually
resulting in more delay, if not a miscarriage of justice. [21]
II. The in lieu of all taxes provision in its franchise does not exempt ABS-CBN from payment
of local franchise tax.
A. The present controversy essentially boils down to a dispute between the inherent taxing power of
Congress and the delegated authority to tax of local governments under the 1987 Constitution and
effected under the LGC of 1991.
The power of the local government of Quezon City to impose franchise tax is based on Section 151 in
relation to Section 137 of the LGC, to wit:

Section 137. Franchise Tax. Notwithstanding any exemption granted by any
law or other special law, the province may impose a tax on businesses enjoying a
franchise, at the rate not exceeding fifty percent (50%) of one percent (1%) of the
gross annual receipts for the preceding calendar year based on the incoming
receipt, or realized within its territorial jurisdiction. x x x
xxxx
Section 151. Scope of Taxing Powers. Except as otherwise provided in this
Code, the city may levy the taxes, fees and charges which the province or
municipality may impose: Provided, however, That the taxes, fees and charges
levied and collected by highly urbanized and component cities shall accrue to them
and distributed in accordance with the provisions of this Code.
The rates of taxes that the city may levy may exceed the maximum rates
allowed for the province or municipality by not more than fifty percent (50%)
except the rates of professional and amusement taxes. (Emphasis supplied)
Such taxing power by the local government, however, is limited in the sense that Congress
can enact legislation granting exemptions. This principle was upheld in City Government of Quezon
City, et al. v. Bayan Telecommunications, Inc.[22] Said this Court:
This thus raises the question of whether or not the Citys Revenue Code
pursuant to which the city treasurer of Quezon City levied real property taxes
against Bayantels real properties located within the City effectively withdrew the
tax exemption enjoyed by Bayantel under its franchise, as amended.
Bayantel answers the poser in the negative arguing that once again it is
only liable to pay the same taxes, as any other persons or corporations on all its real
or personal properties, exclusive of its franchise.
Bayantels posture is well-taken. While the system of local government
taxation has changed with the onset of the 1987 Constitution, the power of local
government units to tax is still limited. As we explained in Mactan Cebu
International Airport Authority:
The power to tax is primarily vested in the Congress;
however, in our jurisdiction, it may be exercised by local
legislative bodies, no longer merely be virtue of a valid delegation
as before, but pursuant to direct authority conferred by Section 5,
Article X of the Constitution. Under the latter, the exercise of the
power may be subject to such guidelines and limitations as the
Congress may provide which, however, must be consistent with
the basic policy of local autonomy. x x x
Clearly then, while a new slant on the subject of local taxation now prevails
in the sense that the former doctrine of local government units delegated power to
tax had been effectively modified with Article X, Section 5 of the 1987 Constitution
now in place, the basic doctrine on local taxation remains essentially the same. For
as the Court stressed in Mactan, the power to tax is [still] primarily vested in the
Congress.
This new perspective is best articulated by Fr. Joaquin G. Bernas, S.J.,
himself a Commissioner of the 1986 Constitutional Commission which crafted the
1987 Constitution, thus:
What is the effect of Section 5 on the fiscal position of
municipal corporations? Section 5 does not change the doctrine
that municipal corporations do not possess inherent powers of
taxation. What it does is to confer municipal corporations a
general power to levy taxes and otherwise create sources of
revenue. They no longer have to wait for a statutory grant of
these powers. The power of the legislative authority relative to
the fiscal powers of local governments has been reduced to the
authority to impose limitations on municipal powers. Moreover,
these limitations must be consistent with the basic policy of local
autonomy. The important legal effect of Section 5 is thus to
reverse the principle that doubts are resolved against municipal
corporations. Henceforth, in interpreting statutory provisions on
municipal fiscal powers, doubts will be resolved in favor of
municipal corporations. It is understood, however, that taxes
imposed by local government must be for a public purpose,
uniform within a locality, must not be confiscatory, and must be
within the jurisdiction of the local unit to pass.
 In net effect, the controversy presently before the Court involves, at
bottom, a clash between the inherent taxing power of the legislature, which
necessarily includes the power to exempt, and the local governments delegated
power to tax under the aegis of the 1987 Constitution.
Now to go back to the Quezon City Revenue Code which imposed real
estate taxes on all real properties within the citys territory and removed
exemptions theretofore previously granted to, or presently enjoyed by all persons,
whether natural or juridical [x x x] there can really be no dispute that the power of
the Quezon City Government to tax is limited by Section 232 of the LGC which
expressly provides that a province or city or municipality within the Metropolitan
Manila Area may levy an annual ad valorem tax on real property such as land,
building, machinery, and other improvement not hereinafter specifically
exempted. Under this law, the Legislature highlighted its power to thereafter
exempt certain realties from the taxing power of local government units. An
interpretation denying Congress such power to exempt would reduce the phrase
not hereinafter specifically exempted as a pure jargon, without meaning
whatsoever. Needless to state, such absurd situation is unacceptable.
For sure, in Philippine Long Distance Telephone Company, Inc. (PLDT) vs.
City of Davao, this Court has upheld the power of Congress to grant exemptions
over the power of local government units to impose taxes. There, the Court wrote:
Indeed, the grant of taxing powers to local government
units under the Constitution and the LGC does not affect the
power of Congress to grant exemptions to certain persons,
pursuant to a declared national policy. The legal effect of the
constitutional grant to local governments simply means that in
interpreting statutory provisions on municipal taxing powers,
doubts must be resolved in favor of municipal
corporations.[23] (Emphasis supplied)
In the case under review, the Philippine Congress enacted R.A. No. 7966 on March 30, 1995,
subsequent to the effectivity of the LGC on January 1, 1992. Under it, ABS-CBNwas granted the
franchise to install and operate radio and television broadcasting stations in the Philippines. Likewise,
Section 8 imposed on ABS-CBN the duty of paying 3% franchise tax. It bears stressing, however, that
payment of the percentage franchise tax shall be in lieu of all taxes on the said franchise. [24]
Congress has the inherent power to tax, which includes the power to grant tax exemptions. On the
other hand, the power of Quezon City to tax is prescribed by Section 151 in relation to Section 137 of
the LGC which expressly provides that notwithstanding any exemption granted by any law or other
special law, the City may impose a franchise tax. It must be noted that Section 137 of the LGC does
not prohibit grant of future exemptions. As earlier discussed, this Court in City Government of Quezon
[25]
City v. Bayan Telecommunications, Inc. sustained the power of Congress to grant tax exemptions
over and above the power of the local governments delegated power to tax.
B. The more pertinent issue now to consider is whether or not by passing R.A. No. 7966,
which contains the in lieu of all taxes provision, Congress intended to exemptABS-CBN from local
franchise tax.
Petitioners argue that the in lieu of all taxes provision in ABS-CBNs franchise does not expressly
exempt it from payment of local franchise tax. They contend that a tax exemption cannot be created
by mere implication and that one who claims tax exemptions must be able to justify his claim by
clearest grant of organic law or statute.
Taxes are what civilized people pay for civilized society. They are the lifeblood of the
nation. Thus, statutes granting tax exemptions are construed stricissimi juris against the taxpayer and
liberally in favor of the taxing authority. A claim of tax exemption must be clearly shown and based
on language in law too plain to be mistaken. Otherwise stated, taxation is the rule, exemption is the
[26]
exception. The burden of proof rests upon the party claiming the exemption to prove that it is in
fact covered by the exemption so claimed.[27]
The basis for the rule on strict construction to statutory provisions granting tax exemptions
or deductions is to minimize differential treatment and foster impartiality, fairness and equality of
treatment among taxpayers.[28] He who claims an exemption from his share of common burden must
justify his claim that the legislature intended to exempt him by unmistakable terms. For exemptions
from taxation are not favored in law, nor are they presumed. They must be expressed in the clearest
and most unambiguous language and not left to mere implications. It has been held that exemptions
are never presumed, the burden is on the claimant to establish clearly his right to exemption and
cannot be made out of inference or implications but must be laid beyond reasonable doubt. In other
words, since taxation is the rule and exemption the exception, the intention to make an exemption
ought to be expressed in clear and unambiguous terms.[29]
 Section 8 of R.A. No. 7966 imposes on ABS-CBN a franchise tax equivalent to three (3)
percent of all gross receipts of the radio/television business transacted under the franchise and the
franchise tax shall be in lieu of all taxes on the franchise or earnings thereof.
The in lieu of all taxes provision in the franchise of ABS-CBN does not expressly provide what
kind of taxes ABS-CBN is exempted from. It is not clear whether the exemption would include both
local, whether municipal, city or provincial, and national tax. What is clear is that ABS-CBN shall be
liable to pay three (3) percent franchise tax and income taxes under Title II of the NIRC. But whether
the in lieu of all taxes provision would include exemption from local tax is not unequivocal.
As adverted to earlier, the right to exemption from local franchise tax must be clearly
established and cannot be made out of inference or implications but must be laid beyond reasonable
doubt. Verily, the uncertainty in the in lieu of all taxes provision should be construed against ABS-
CBN. ABS-CBN has the burden to prove that it is in fact covered by the exemption so claimed. ABS-
CBN miserably failed in this regard.
ABS-CBN cites the cases Carcar Electric & Ice Plant v. Collector of Internal Revenue,[30] Manila
Railroad v. Rafferty,[31] Philippine Railway Co. v. Collector of Internal Revenue,[32] and Visayan Electric
Co. v. David[33] to support its claim that that the in lieu of all taxes clause includes exemption from all
taxes.
However, a review of the foregoing case law reveals that the grantees respective franchises
expressly exempt them from municipal and provincial taxes. Said the Court inManila Railroad v.
Rafferty:[34]
On the 7th day of July 1906, by an Act of the Philippine Legislature, a
special charter was granted to the Manila Railroad Company. Subsection 12 of
Section 1 of said Act (No. 1510) provides that:
In consideration of the premises and of the granting of
this concession or franchise, there shall be paid by the grantee to
the Philippine Government, annually, for the period of thirty (30)
years from the date hereof, an amount equal to one-half (1/2) of
one per cent of the gross earnings of the grantee in respect of the
lines covered hereby for the preceding year; after said period of
thirty (30) years, and for the fifty (50) years thereafter, the
amount so to be paid annually shall be an amount equal to one
and one-half (1) per cent of such gross earnings for the preceding
year; and after such period of eighty (80) years, the percentage
and amount so to be paid annually by the grantee shall be fixed
by the Philippine Government.
Such annual payments, when promptly and fully made by
the grantee, shall be in lieu of all taxes of every name and nature
municipal, provincial or central upon its capital stock, franchises,
right of way, earnings, and all other property owned or operated
by the grantee under this concession or
[35]
franchise. (Underscoring supplied)
In the case under review, ABS-CBNs franchise did not embody an exemption similar to those
in Carcar, Manila Railroad, Philippine Railway, and Visayan Electric. Too, the franchise failed to
specify the taxing authority from whose jurisdiction the taxing power is withheld, whether municipal,
provincial, or national. In fine, since ABS-CBNfailed to justify its claim for exemption from local
franchise tax, by a grant expressed in terms too plain to be mistaken its claim for exemption for local
franchise tax must fail.
C. The in lieu of all taxes clause in the franchise of ABS-CBN has become functus officio with
the abolition of the franchise tax on broadcasting companies with yearly gross receipts exceeding Ten
Million Pesos.
In its decision dated January 20, 1999, the RTC held that pursuant to the in lieu of all taxes
provision contained in Section 8 of R.A. No. 7966, ABS-CBN is exempt from the payment of the local
franchise tax. The RTC further pronounced that ABS-CBN shall instead be liable to pay a franchise tax
of 3% of all gross receipts in lieu of all other taxes.
On this score, the RTC ruling is flawed. In keeping with the laws that have been passed since
the grant of ABS-CBNs franchise, the corporation should now be subject to VAT, instead of the 3%
franchise tax.
At the time of the enactment of its franchise on May 3, 1995, ABS-CBN was subject to 3%
franchise tax under Section 117(b) of the 1977 National Internal Revenue Code (NIRC), as
amended, viz.:
 SECTION 117. Tax on franchises. Any provision of general or special laws to
the contrary notwithstanding, there shall be levied, assessed and collected in
respect to all franchise, upon the gross receipts from the business covered by the
law granting the franchise, a tax in accordance with the schedule prescribed
hereunder:
(a) On electric utilities, city gas, and water supplies Two (2%)
percent
(b) On telephone and/or telegraph systems, radio and/or
broadcasting stations Three (3%) percent
(c) On other franchises Five (5%) percent. (Emphasis supplied)
On January 1, 1996, R.A. No. 7716, otherwise known as the Expanded Value Added Tax
[36]
Law, took effect and subjected to VAT those services rendered by radio and/or broadcasting
stations. Section 3 of R.A. No. 7716 provides:
Section 3. Section 102 of the National Internal Revenue Code, as amended
is hereby further amended to read as follows:
SEC. 102. Value-added tax on sale of services and use or
lease of properties. (a) Rate and base of tax. There shall be levied,
assessed and collected, as value-added tax equivalent to 10% of
gross receipts derived from the sale or exchange of services,
including the use or lease of properties.
The phrase sale or exchange of services means the
performance of all kinds of services in the Philippines, for others
for a fee, remuneration or consideration, including those
performed or rendered by construction and service contractors; x
x x services of franchise grantees of telephone and telegraph,
radio and television broadcasting and all other franchise
grantees except those under Section 117 of this Code; x x
x (Emphasis supplied)
Notably, under the same law, telephone and/or telegraph systems, broadcasting stations
and other franchise grantees were omitted from the list of entities subject to franchise tax. The
impression was that these entities were subject to 10% VAT but not to franchise tax. Only the
franchise tax on electric, gas and water utilities remained. Section 12 of R.A. No. 7716 provides:
Section 12. Section 117 of the National Internal Revenue Code, as
amended, is hereby further amended to read as follows:
SEC. 117. Tax on Franchises. Any provision of general or
special law to the contrary notwithstanding there shall be levied,
assessed and collected in respect to all franchises on electric, gas
and water utilities a tax of two percent (2%) on the gross
receipts derived from the business covered by the law granting
the franchise. (Emphasis added)
Subsequently, R.A. No. 8241[37] took effect on January 1, 1997[38] containing more
amendments to the NIRC. Radio and/or television companies whose annual gross receipts do not
exceed P10,000,000.00 were granted the option to choose between paying 3% national franchise tax
or 10% VAT. Section 9 of R.A. No. 8241 provides:
SECTION 9. Section 12 of Republic Act No. 7716 is hereby amended to read
as follows:
Sec. 12. Section 117 of the National Internal Revenue
Code, as amended, is hereby further amended to read as follows:
Sec. 117. Tax on franchise. Any provision of general or
special law to the contrary, notwithstanding, there shall be levied,
assessed and collected in respect to allfranchises on radio
and/or television broadcasting companies whose annual gross
receipts of the preceding year does not exceed Ten million
pesos (P10,000,000.00), subject to Section 107(d) of this Code, a
tax of three percent (3%) and on electric, gas and water utilities, a
tax of two percent (2%) on the gross receipts derived from the
business covered by the law granting the franchise: Provided,
however, That radio and television broadcasting companies
referred to in this section, shall have an option to be registered as
a value-added tax payer and pay the tax due thereon: Provided,
further, That once the option is exercised, it shall not be
revoked. (Emphasis supplied)
On the other hand, radio and/or television companies with yearly gross
receipts exceeding P10,000,000.00 were subject to 10% VAT, pursuant to Section 102 of the NIRC.
 WHEREFORE, the petition is GRANTED and the appealed Decision REVERSED AND SET ASIDE. The
On January 1, 1998, R.A. No. 8424[39] was passed confirming the 10% VAT liability of radio and/or petition in the trial court for refund of local franchise tax isDISMISSED.
television companies with yearly gross receipts exceeding P10,000,000.00.
SO ORDERED.
R.A. No. 9337 was subsequently enacted and became effective on July 1, 2005. The said law further
amended the NIRC by increasing the rate of VAT to 12%. The effectivity of the imposition of the 12%
VAT was later moved from January 1, 2006 to February 1, 2006. ESMERALDO C. ROMULLO, G.R. No. 180687
PEDRO MANGUNDAYAO,
In consonance with the above survey of pertinent laws on the matter, ABS-CBN is subject to MAXIMO ANES, ELVIRA BONZA, Present:
the payment of VAT. It does not have the option to choose between the payment of franchise tax or ROBERTO BELARMINO,
VAT since it is a broadcasting company with yearly gross receipts exceeding Ten Million Pesos TELESPORO GARCIA, BETH VELASCO, JR., J.,
*

(P10,000,000.00). ZAIDA GIMENEZ, NACHURA,

**

CELSO LIBRANDO, MICHAEL Acting Chairperson,

VAT is a percentage tax imposed on any person whether or not a franchise grantee, who in DELA CRUZ, and ROBERTO PERALTA,
the course of trade or business, sells, barters, exchanges, leases, goods or properties, renders ARAWAG, MENDOZA, and
services. It is also levied on every importation of goods whether or not in the course of trade or Petitioners,
***
SERENO, JJ.
business. The tax base of the VAT is limited only to the value added to such goods, properties, or
services by the seller, transferor or lessor. Further, the VAT is an indirect tax and can be passed on to - versus -
the buyer.
SAMAHANG
MAGKAKAPITBAHAY Promulgated:
NG BAYANIHAN COMPOUND
The franchise tax, on the other hand, is a percentage tax imposed only on franchise HOMEOWNERS ASSOCIATION, October 6, 2010
holders. It is imposed under Section 119 of the Tax Code and is a direct liability of the franchise INC., represented by its
grantee. President, PAQUITO QUITALIG,
Respondent.
The clause in lieu of all taxes does not pertain to VAT or any other tax. It cannot apply when
what is paid is a tax other than a franchise tax. Since the franchise tax on the broadcasting companies
with yearly gross receipts exceeding ten million pesos has been abolished, the in lieu of all taxes
clause has now become functus officio, rendered inoperative.
x------------------------------------------------------------------------------------x
In sum, ABS-CBNs claims for exemption must fail on twin grounds. First, the in lieu of all
taxes clause in its franchise failed to specify the taxes the company is sought to be exempted from. DECISION
Neither did it particularize the jurisdiction from which the taxing power is withheld. Second, the
clause has become functus officio because as the law now stands, ABS-CBN is no longer subject to a NACHURA, J.:
franchise tax. It is now liable for VAT.
 [1]
Before this Court is a Petition for Certiorari under Rule 65 of the Rules of Civil Procedure,
seeking the reversal of the Court of Appeals (CA) Decision [2] dated August 22, 2007.
Culled from the records, the facts, as narrated by the CA, are as follows:
In its Complaint, respondent [Samahang Magkakapitbahay ng Bayanihan
Compound Homeowners Association, Inc., represented by its President, Paquito
Quitalig] alleged that since it was qualified to avail of the benefits under the
Community Mortgage Program of the government, it secured a loan from the
National Home Mortgage Finance Corporation Development Fund (NHMFCDF) for
the purchase of a land known as Bayanihan Compound located in Santan Street,
Parang, Marikina. Said land would thereafter be distributed to
members/beneficiaries of the respondent under its housing program. After the sale
was consummated, two Transfer Certificates of Title were issued in the name of the
respondent and the land was distributed in portions to respondents
members/beneficiaries. However, despite demand, petitioners [Esmeraldo C.
Romullo, Pedro Mangundayao, Maximo Anes, Elvira Bonza, Roberto Belarmino,
Telesporo Garcia, Beth Zaida Gimenez, Celso Librando, Michael dela Cruz, and
Roberto Arawag] refused to pay their monthly dues and legal fees as well as the
deposits and amortizations for their respective lot allocations. Resultantly,
respondent approved a Resolution expelling the petitioners as its members and
disqualifying them as beneficiaries of the housing project and in another Resolution,
also approved the substitution of petitioners by qualified members/beneficiaries in
accordance with the Rules and Regulations Implementing the Community Mortgage
Program.
Despite notice of disqualification, petitioners continued to occupy the lots
alloted to them and refused to execute a waiver of their lot allotments. The matter
was referred to the barangay for conciliation but still no settlement was
reached. Thus, final and formal demands were made by respondent on each of the
petitioners to vacate and surrender peacefully [the] possession and control of their
lots. Still, petitioners refused and failed to comply. Ultimately, respondent sought
the eviction of the petitioners based on the provisions of the Implementing
Corporate Circular of the NHMFCDF on Community Mortgage Program under RA
[No.] 7279, specifically Sections 8.5.4 and 12.3.5 by filing an ejectment case against
the petitioners praying that they vacate the premises and pay the sum of
PhP3,000.00 as reasonable compensation until such time that they vacate the lots
in question.
In their Answer with Compulsory Counterclaim, petitioners alleged that
respondent neither informed them of the status of the housing project and its
scheduled meetings, nor were they notified of respondents registration with the
Home Insurance Guaranty Corporation (HIGC), wherein some of them were
excluded in the master list of members/beneficiaries. Petitioners further argued
that the board resolutions expelling them as members and disqualifying them as
beneficiaries of the respondents housing project were null and void as the terms of
office of the members of the Board of Directors who passed the said resolutions had
already expired at the time the meeting was held. Moreover, they maintained that
the case should have been suspended due to a prejudicial question brought about
by the filing of another suit by some of them with the Housing and Land Use
Regulatory Board (HLURB) entitled Esmeraldo C. Romul[l]o, et al. v. Paquito Quitalig,
et al. As counterclaims, petitioners sought awards of moral and exemplary damages
as well as litigation expenses.
In its Decision, the M[e]TC gave more weight to the arguments raised by the
petitioners and the Complaint was dismissed without prejudice for alleged lack of
jurisdiction in view of the pending case before the HLURB involving the same parties
and issues. Petitioners counterclaims were likewise dismissed for lack of merit.
However, this judgment was reversed by the RTC on appeal. The dispositive portion
of the RTCs Decision reads:
WHEREFORE, foregoing premises considered, the
appealed Decision of
the Metropolitan Trial Court of Marikina City, Branch 75 in Civil
Case No. 04-7591 is hereby REVERSED. The plaintiff-appellant is
hereby declared the lawful possessor of the premises in question
and judgment is hereby rendered against the defendants-
appellees, as follows:
1. Ordering the defendants-appellees and all persons
claiming rights and interest under them to vacate
the lots they are occupying located at Bayanihan
Compound, Santan Street, Parang, Marikina City and
surrender peaceful possession thereof unto the
plaintiff-appellant;
 2. Ordering the defendants-appellees to pay plaintiff-
appellant the amount of P1,000.00 each per month
as reasonable compensation for the use of the lots
they occupy starting February 19, 2004, until such
time that possession thereof is restored to the
plaintiff-appellant;
3. Ordering the defendants-appellees to pay the
amount of P20,000.00, as and by way of attorneys
fees plus costs of the suit.
[3]
SO ORDERED.
Aggrieved, petitioners went to the CA with a prayer for the issuance of a temporary
restraining order and/or writ of preliminary injunction, claiming that the Regional Trial Court (RTC)
erred in not affirming the dismissal of the complaint by the Metropolitan Trial Court (MeTC) for lack
of jurisdiction.
On August 22, 2007, the CA ruled in favor of respondent. The CA held that the complaint
filed by respondent against petitioners contained assertions that clearly established a cause of action
for unlawful detainer which was well within the jurisdiction of the MeTC. Undaunted, petitioners and
their counsel filed two separate Motions for Reconsideration which the CA both denied in its
Resolution[4]dated November 22, 2007 for lack of merit.
Hence, this petition. Petitioners assign the following as issues:
I. WHETHER OR NOT THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN
HOLDING THAT THE LOWER COURT HAD JURISDICTION TO TRY THE INSTANT CASE;
AND
II. WHETHER OR NOT THE HON. COURT OF APPEALS ERRED IN NOT SUSTAINING
PETITIONERS' ARGUMENT THAT THE RULING OF THE RTC MUST BE SET ASIDE DUE
TO THE PENDENCY OF A CASE BEFORE THE HLURB INVOLVING THE SAME PARTIES
AND ISSUES.[5]
At the outset, petitioners manifest that the Housing and Land Use Regulatory Board (HLURB)
case is on appeal before the Office of the President (OP). [6] Petitioners asseverate that the CA
arrogated unto itself, as the RTC did, the task of resolving the issue on the legality and propriety of
petitioners' alleged disqualification as members/beneficiaries of respondent despite the fact that the
determination of such issue is necessarily intertwined with the issue of whether or not a case of
ejectment would prosper against petitioners. Petitioners opine that the CA is devoid of competence
to decide on the following issues, namely: i) whether or not the corporate officers who passed the
board resolution expelling/disqualifying petitioners from their membership with respondent acted
within their authority; and (ii) whether or not the disqualification was valid and legal. It is petitioners
position that these issues could have been best resolved by the HLURB and/or the Home Insurance
Guaranty Corporation, considering the administrative agencies' expertise on the matter and
considering the pendency of petitioners case against respondent before these bodies. Invoking the
[7]
same ruling in Quiambao v. Hon. Osorio, petitioners claim that the more prudent course in this case
is to hold the ejectment proceedings in abeyance until after the determination of the administrative
case because of the intimate correlation between the two proceedings, stemming from the fact that
petitioners' ejectment from the property depends primarily on the resolution of the administrative
case.[8]
On the other hand, respondent asserts that the complaint filed before the MeTC contains
ample allegations for the latter to exercise jurisdiction over the case in accordance with the rules and
prevailing jurisprudence. Respondent also claims that the issue involves questions of fact which were
adequately passed upon by both the RTC and the CA when they made the finding that petitioners
failed to perform their obligation under the Community Mortgage Program by refusing to pay their
monthly dues, deposits, and amortizations for their allotted portions over the community property.
Respondent insists that the factual findings of both the RTC and the CA must not only be accorded
respect but also finality. Moreover, respondent stands by the ruling of the RTC and the CA that there
exist no issues of litis pendentia and prejudicial question in this case since the HLURB case and the
ejectment proceedings do not involve the same issues nor pray for the same reliefs. [9] Finally,
respondent manifests that the HLURB case filed by petitioners was already dismissed, which the OP
[10]
affirmed on appeal. Thus, any matter related thereto has become moot and academic. Respondent
submits that this case is a simple ejectment case which is well within the MeTC's jurisdiction.
The petition is bereft of merit.
A party desiring to appeal by certiorari from a judgment, final order, or resolution of the CA,
as in this case, may file before this Court a verified petition for review on certiorari under Rule 45 of
the Rules of Civil Procedure within 15 days from notice of the judgment, final order, or resolution
appealed from. Petitioners, instead of a petition for review on certiorari under Rule 45, filed with this
Court the instant petition for certiorari under Rule 65, an improper remedy. By availing of a wrong or
[11]
inappropriate mode of appeal, the petition merits outright dismissal.
Even on the merits, the petition must fail.
Settled is the rule that jurisdiction in ejectment cases is determined by the allegations
pleaded in the complaint. It cannot be made to depend on the defenses set up in the answer or
pleadings filed by the defendant. Neither can it be made to depend on the exclusive characterization
of the case by one of the parties. The test for determining the sufficiency of those allegations is
whether, admitting the facts alleged, the court can render a valid judgment in accordance with the
prayer of the plaintiff.
[12]
An action for forcible entry or unlawful detainer is governed by Rule 70 of the Rules of Court,
Section 1 of which provides:
SECTION 1. Who may institute proceedings, and when. Subject to the
provisions of the next succeeding section, a person deprived of the possession of
any land or building by force, intimidation, threat, strategy, or stealth, or 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, or the legal
representatives or assigns of any such lessor, vendor, vendee, or other person, may,
at any time within one (1) year after such unlawful deprivation or withholding of
possession, bring an action in the proper Municipal Trial Court against the person or
persons unlawfully withholding or depriving of possession, or any person or persons
claiming under them, for the restitution of such possession, together with damages
and costs.
Unlawful detainer is an action to recover possession of real property from one who illegally
withholds possession after the expiration or termination of his right to hold possession under any
contract, express or implied. The possession of the defendant in unlawful detainer is originally legal
but became illegal due to the expiration or termination of the right to possess. An unlawful detainer
proceeding is summary in nature, jurisdiction of which lies with the proper municipal trial court or
metropolitan trial court. The action must be brought within one year from the date of last demand;
and the issue in said case is the right to physical possession. [13]
Based on the foregoing, we have held that a complaint sufficiently alleges a cause of action for
unlawful detainer if it recites the following:
(1) initially, possession of property by the defendant was by contract with
or by tolerance of the plaintiff;
(2) eventually, such possession became illegal upon notice by plaintiff to
defendant of the termination of the latter's right of possession;
(3) thereafter, the defendant remained in possession of the property and
deprived the plaintiff of the enjoyment thereof; and
(4) within one year from the last demand on defendant to vacate the
property, the plaintiff instituted the complaint for ejectment. [14]
In this case, respondent's allegations in the complaint clearly make a case for unlawful detainer,
essential to confer jurisdiction on the MeTC over the subject matter. Thus, we accord respect to the
CA's findings, to wit:
A review of the Complaint readily reveals that land titles were issued in the
name of the respondent after it purchased the land referred to as the Bayanihan
Compound through the Community Mortgage Program (CMP) of the National Home
Mortgage Finance Corporation. The lots allocated to the petitioners formed part of
the Bayanihan Compound which they received as members/beneficiaries of the
respondent. However, their refusal to pay the monthly amortizations despite
demands resulted in their expulsion as members and loss of recognition as
beneficiaries of the lots in question. Even when the case was referred to the
barangay, no settlement was reached. Petitioners likewise did not conform to
respondents demand to vacate the premises and return its possession. As such,
respondent sought to recover possession of the said lots by filing a case for
ejectment within a year after final demand.[15]
 WHEREFORE, the instant petition is DISMISSED, and the Court of Appeals Decision dated
Moreover, this Court rejects the contention of petitioners that the RTC and the CA erred in August 22, 2007 is AFFIRMED. No costs.
not dismissing the complaint of respondent on the ground of litis pendentia, in view of the pendency
of the HLURB case.
SO ORDERED.
The requisites of litis pendentia are the following: (a) identity of parties, or at least such as
representing the same interests in both actions; (b) identity of rights asserted and relief prayed for,
the relief being founded on the same facts; and (c) identity of the two cases such that judgment in G.R. No. 181598 March 6, 2013
[16]
one, regardless of which party is successful, would amount to res judicata in the other.
OFFICE OF THE OMBUDSMAN, Petitioner,
vs.
The causes of action and, logically, the issues in the two cases, are clearly different, each
ARNEL A. BERNARDO, ATTORNEY V, BUREAU OF INTERNAL REVENUE (BIR), Respondent.
requiring divergent adjudication. In short, while there is identity of parties, there are different issues,
causes of action, and reliefs prayed for between them. Contrary to petitioners posture, not all the
DECISION
elements of litis pendentia are present.

LEONARDO-DE CASTRO, J.:

Appropos is the CA's ruling:
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure of the
Decision1 dated January 23, 2007, as well as the Resolution 2 dated January 7, 2008 of the Court of
The suit filed with the HLURB involves: (1) the reinstatement of the
Appeals in CA-G.R. SP No. 86062, entitled "ARNEL A. BERNARDO, Attorney V, Bureau of Internal
petitioners as members of the respondent, which was their community association;
Revenue (BIR) vs. HON. OMBUDSMAN SIMEON V MARCELO, FACT-FINDING AND INTELLIGENCE
(2) a call for regular annual meetings; (3) elections for board of directors; ([4]) an
BUREAU (FFIB)- Office of the Ombudsman, and HON. GUILLERMO L. PARAYNO, JR., in his capacity as
accounting of funds; and ([5]) the annulment of the board resolutions which 3
Commissioner of the Bureau of Internal Revenue," which reversed and set aside the Decision dated
expelled them as members and disqualified them to be beneficiaries of the housing
July 6, 2004 issued by petitioner Office of the Ombudsman (the Ombudsman) in OMB-C-A-03-0531-K
program. On the other hand, the ejectment case has in issue the better right of the
(LSC), entitled "Fact-Finding and Intelligence Bureau (FFIB), Represented by Atty. Ma. Elena A. Roxas
petitioners or of the respondent to the physical possession of the lots occupied by
v. Arne! A. Bernardo, Attorney V, Bureau of Internal Revenue (BIR)."
petitioners. Clearly, therefore, no identity of the rights asserted and the reliefs
prayed for exist in both cases.[17]
These are the facts of this case, as summed by the Court of Appeals:

In sum, we find no grave abuse of discretion, amounting to lack or excess of jurisdiction, on
the part of the CA, which would warrant the reversal and/or modification of the assailed Decision.
Respondent Arne! A. Bernardo was hired by the Bureau of Internal Revenue (BIR) on September 3,
1979 and therein rendered continuous and uninterrupted service until his promotion to his present
position as Attorney V with Salary Grade of 25 and assigned as Technical Assistant at the Office of the
Deputy Commissioner of Internal Revenue Criminal Prosecution Group. Primarily, the respondent
derived his income from his employment with the BIR.
On various dates in 1979 up to 2001 respondent acquired various properties and had business
interests in BP Realty Corporation which was registered in 1988, and in Rinas Boutique and Gift Shop-
Gels Gift Center where his wife is the owner/proprietress. He and his family also made several
foreign travels during the period 1995 to 2002. However, petitioners SALN for the years 1993 up to
2001 did not disclose any business interest and/or financial connection, but showed a steady increase
of his net worth.
Based on the foregoing, respondent was administratively and civilly charged with acquiring
unexplained wealth by the FFIB (hereafter, the "OMBUDSMAN"). Accordingly, on November 12, 2003
the OMBUDSMAN filed the appropriate administrative action against the respondent for Violation of
Section 8 of Republic Act No. 3019, in relation to Republic Act No. 1379. This case was docketed as
OMB-C-A-03-0531-K (LSC) entitled "Fact-Finding and Intelligence Bureau (FFIB), Represented by Atty.
Ma. Elena A. Roxas versus Arnel A. Bernardo, Attorney V, Bureau of Internal Revenue (BIR)".
In its Complaint, the OMBUDSMAN alleged that the respondent is an incorporator and director of BP
Realty Corporation as shown by its Articles of Incorporation dated October 15, 1998 and that his wife,
Ma. Lourdes I. Bernardo is the owner/proprietress of Rinas Boutiques and Gift Shop-Gels Gift Center
as may be shown by Business Permits for CY 1999-2003. On various dates in 1979 up to 2001 the
respondent purchased parcels of residential and agricultural land, the purchase prices and costs of
which were manifestly out of proportion or not commensurate to his and his wifes lawful incomes,
allowances, savings or declared assets. He and his family also made several foreign travels during the
period 1995 to 2002. The respondents cash on hand and net worth also consistently increased.
However, respondents SALN for the years 1993 up to 2001 did not disclose any business interest
and/or financial connection.
The evidence for the Ombudsman consists of the CERTIFICATION (dated July 7, 2003) of the annual
salary compensation and allowances received by the respondent from 1998 to 2002; Articles of
Incorporation and By-Laws of BP Realty Corporation which shows that the respondent is one of the
incorporators of the said corporation; Business Permits of Rinas Boutiques and Gift Shop; Certificate
of Corporate Filing/Information dated June 24, 2003 issued by the Securities and Exchange
Commission (SEC) which shows that BP Realty Corporation is registered with the (SEC) on November
4, 1988 and is on active status and that said corporation failed to file the General Information Sheet
for 1990-2003 as well as its Financial Statement from 1989 to 2002; SALNs for the years 1993 to 2001;
Transfer Certificate of Title (TCT) Nos. 166204, 244954, 191636, CLOA-T-9835, CLOA-T-9834, T-
118783; Declaration of Real Property No. D-105-03089, D-105-05849; Deed of Absolute Sale dated
October 23, 1997 over a parcel of land covered by TCT No. RT-57064 (T-113488) of the Registry of
Deeds of Bulacan; Deed of Absolute Sale dated May 27, 1985 over a parcel of land covered by TCT No.
151157 of the Registry of Deeds Manila; Deed of Absolute Sale dated August 10, 1999 over a parcel of
land covered by TCT No. 190651 of the Registry of Deeds of Manila; Certification dated June 3, 2003
issued by the Bureau of Immigration which shows the travel records from January 1995 to May 31,
2003 of the respondent, his wife, Ma. Lourdes I. Bernardo, and his children Lorina I. Bernardo and
Adrian
I. Bernardo, Angeline I. Bernado, and Aldrin I. Bernardo; and Certification dated June 3, 2003 which
shows the travel records of the respondents wife, Ma. Lourdes I. Bernardo from January 1995 to May
31, 2003.
The Ombudsman thus sought that the respondent be adjudged guilty of acquiring unexplained wealth
and be dismissed from the service, as well as the forfeiture of his properties.
In his Counter-Affidavit dated January 30, 2004 the respondent (respondent below) averred that: he
is engaged in various legitimate businesses; he had divested his interest and/or shares from BP Realty
Corporation as may be shown by a Deed of Assignment dated November 28, 1988, and that its
certificate of registration had been revoked as may be shown by the Certificate of Corporate
Filing/Information issued by the Securities and Exchange Commission on September 29, 2003 for
being inactive pursuant to Presidential Decree No. 902-A; he religiously paid corresponding internal
revenue taxes from income of the business disclosed in his SALN, as may be shown by his Income Tax
Returns covering the period 1998, 1999, 2000, and 2001; on his earnings derived not purely from
compensation income, but also from legitimate business as well as business interest or financial
connection to Rinas Boutique and Gift Shop/Gels Gift Center managed by his wife as shown by
business permits for Rinas Boutique and Gift Shop, he stated that he disclosed in his SALNs filed
during the period 1993 to 2001 under "B. Personal and Other Properties" the following:
"Merchandise Inventory", "Building Improvement", "Store Equipment" and "Depreciation" accounts;
on the respondents non-declaration of an agricultural land purchased in Bulacan in 1995, the
respondent points out that the agricultural land declared in his SALNs for 1995 to 2001 appeared to
refer to only one (1) parcel although in truth and in fact, the acquisition covered two (2) parcels of
land awarded to him under the Comprehensive Agrarian Reform Program of the government,
covered by TCT No. CLOA-T9834 (consisting of 8,969 sq.m.) and TCT No. 9835 (consisting of 20,004
sq.m.) both registered on November 27, 1995 with the Registry of Deeds of Bulacan. The reason for
this is because he honestly believed that it was sufficient to declare the two (2) lots as one, with the
total cost indicated in his SALN, since the two parcels were acquired at the same time in 1995;
respondent had availed of Tax Amnesty under the following laws: Executive Order No. 41 dated
August 22, 1986 (for the years 1981 to 1985), PD No. 213 dated June 16, 1973 (for the years 1969 to
 4
1972), PD No. 631 dated January 6, 1975, and PD No. 1840 dated December 31, 1980. (Citations
omitted.)
From its appreciation of the aforementioned evidence, the Ombudsman rendered a Decision dated
April 21, 2004 which expressed its conclusion that respondent had acquired unexplained wealth
during his tenure as a government employee. The dispositive portion of said ruling is reproduced
here:
WHEREFORE, PREMISES CONSIDERED:
1. Respondent ARNEL A. BERNARDO is hereby found GUILTY of Dishonesty, in accordance
with the provision of Section 8 of Republic Act No. 3019, in relation to Republic Act No. 1379,
for which the penalty of DISMISSAL FROM THE SERVICE, with cancellation of eligibility,
forfeiture of retirement benefits, and perpetual disqualification for reemployment in the
government service, is hereby recommended pursuant to Sections 53 and 58, Rule IV of the
Uniform Rules on Administrative Cases in the Civil Service.
2. That the Honorable Commissioner of the Bureau of Internal Revenue be furnished a copy
of the Resolution, for the implementation of this administrative penalty in accordance with
law, with the request to inform this Office of the action taken hereon.
3. Finally, it is respectfully recommended that copies of the case records be referred to the
Fact Finding and Intelligence Bureau, this Office for the preparation and filing of the
appropriate complaint pursuant to Section 2 of Republic Act No. 1379. 5
In explanation of its guilty verdict, the Ombudsman essentially opined that the value of respondents
acquired properties, the costs of his and his familys foreign trips abroad, and the increasing net
worth indicated in his Statements of Assets, Liabilities and Net Worth (SALNs) for the years 1993 to
2001 were manifestly disproportionate to his salary and allowances. The Ombudsman also decreed
that there was no proof of respondents claim of other lawful income nor was there any evidence
that the purported donation he received in the amount of P8,000,000.00 was lawful. Thus, the
Ombudsman concluded that respondents properties were illegally acquired based on a finding that
the evidence presented by the latter allegedly failed to rebut the presumption provided for by law.
Respondent elevated the case to the Court of Appeals which, in turn, rendered the assailed January
23, 2007 Decision, overturning the Ombudsmans finding of administrative guilt on the part of
respondent. The dispositive portion of the Court of Appeals Decision states:
WHEREFORE, reversible error having been committed by the Ombudsman, the instant petition is
hereby GRANTED and its Decision dated April 21, 2004 as well as the Order dated July 22, 2004 are
6
both REVERSED and SET ASIDE.
The Ombudsman moved for reconsideration but the same was denied by the Court of Appeals in the
assailed January 7, 2008 Resolution.
Thus, the Ombudsman filed the present petition with the following issues submitted for
consideration:
I.
CONTRARY TO THE RULING OF THE COURT OF APPEALS, THE FINDING OF GUILT AGAINST
THE RESPONDENT WAS SUPPORTED BY MORE THAN SUBSTANTIAL EVIDENCE THAT
SUFFICIENTLY ESTABLISHED THE FACT THAT HE HAS COMMITTED DISHONESTY AND SHOULD
BE HELD LIABLE: (A) FOR FAILURE TO DISCLOSE HIS BUSINESS INTERESTS, (B) FOR HAVING
ACCUMULATED PROPERTIES WORTH MORE THAN HIS LAWFUL MEANS TO ACQUIRE, (C) FOR
HIS FAILURE TO DISCLOSE SUCH PROPERTIES IN HIS STATEMENT OF ASSETS, LIABILITIES AND
NETWORTH (SALN), AND (D) FOR FAILING TO DISCLOSE IN HIS SALNs HIS AND HIS SPOUSES
FINANCIAL AND BUSINESS TRANSACTIONS.
II.
AS CONSISTENTLY HELD BY THE SUPREME COURT, THE FINDINGS OF THE OFFICE OF THE
OMBUDSMAN DESERVE GREAT WEIGHT, AND MUST BE ACCORDED FULL RESPECT AND
CREDIT.7
The Ombudsman argues that there are factual and legal bases to uphold its findings, particularly as to
the administrative liability for Dishonesty of respondent. It further asserts that the findings of fact of
an administrative agency akin to itself must be respected, as long as such findings are supported by
substantial evidence, even if such evidence might not be overwhelming or preponderant.
The petition is without merit.
Administrative proceedings are governed by the "substantial evidence rule." Otherwise stated, a
finding of guilt in an administrative case would have to be sustained for as long as it is supported by
substantial evidence that the respondent has committed acts stated in the complaint. Substantial
evidence is more than a mere scintilla of evidence. It means such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion, even if other minds equally reasonable might
8
conceivably opine otherwise.
As a general rule, only questions of law may be raised in a petition for review on certiorari because
9
the Court is not a trier of facts. When supported by substantial evidence, the findings of fact of the
Court of Appeals are conclusive and binding on the parties and are not reviewable by this Court,
unless the case falls under any of the following recognized exceptions: (1) when the conclusion is a
finding grounded entirely on speculation, surmises and conjectures; (2) when the inference made is
manifestly mistaken, absurd or impossible; (3) when there is a grave abuse of discretion; (4) when the
judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6)
when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee; (7) when the findings are contrary to
those of the trial court; (8) when the findings of fact are conclusions without citation of specific
evidence on which they are based; (9) when the findings set forth in the petition as well as in the
petitioners main and reply briefs are not disputed by the respondents; and (10) when the findings of
fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by
evidence on record.10
The issue of whether or not there is substantial evidence to hold respondent liable for the charge of
Dishonesty is one of fact, which is not generally subject to review by this Court. Nonetheless, a review
of the facts of the instant case is warranted considering that the findings of fact of the Ombudsman
and the Court of Appeals were not in harmony with each other.
The Ombudsman applied against the respondent the prima facie presumption laid down in Section 2
of Republic Act No. 1379, which states that:
Section 2. Filing of petition. Whenever any public officer or employee has acquired during his
incumbency an amount of property which is manifestly out of proportion to his salary as such public
officer or employee and to his other lawful income and the income from legitimately acquired
property, said property shall be presumed prima facie to have been unlawfully acquired. x x x.
(Emphasis supplied.)
Nevertheless, the presumption in the aforementioned provision is merely prima facie or disputable.
As held in one case, "a disputable presumption has been defined as a species of evidence that may be
accepted and acted on where there is no other evidence to uphold the contention for which it stands,
11
or one which may be overcome by other evidence."
Unsurprisingly, Section 5 of the same statute requires any court, before which the petition for
forfeiture is filed, to set public hearings during which the public officer or employee may be given
ample opportunity to explain to the satisfaction of the court how he had acquired the property in
question, to wit:
Section 5. Hearing. The court shall set a date for a hearing, which may be open to the public, and
during which the respondent shall be given ample opportunity to explain, to the satisfaction of the
court, how he has acquired the property in question.
Respondent appears to have been given sufficient opportunity by the Ombudsman to rebut the prima
facie presumption applied against him which is that his properties were illegally acquired, however,
as the instant case illustrated, the Ombudsman and the Court of Appeals came to differing
conclusions with regard to respondents evidence.
A careful perusal of the records of this case has convinced this Court that although respondent had
acquired properties, cash on hand and in bank, and had gone on foreign travels with his family, the
aggregate cost of which appear to be not in proportion to the combined salaries of the respondent
and of his wife, it had been sufficiently shown that such assets and expenses were financed through
respondents, and his wifes, other lawful business income and assets, and for which they have paid
the corresponding taxes thereon.
Anent the Ombudsmans charge that respondents 1985 purchase of real property could not be
supported by his salaries for the period 1980 to 1985, the Court of Appeals noted in respondents
favor his availment of tax amnesty for the taxable years 1981 to 1985 under Executive Order No. 41
dated August 22, 1986. To our mind, this circumstance sufficiently showed that respondent had
income other than his salaries for the relevant period prior to his purchase of the aforementioned
property. Indeed, it is significant to point out that only respondents SALNs for the periods 1993 to
2001 were presented in evidence by the Ombudsman. Interestingly, Assistant Ombudsman Pelagio S.
Apostol, who was among the signatories to the Ombudsmans Decision dismissing respondent from
the service, wrote and appended a comment to the said Decision recommending, among others, that
the FFIB "secure additional Statements of Assets, Liabilities and Networth starting from the first day
of government service to establish the true opening net worth of the respondent."12 To be sure, this
is a tacit admission that the evidence on record failed to present an accurate picture of all the lawful
sources of income of respondent prior to his 1993 SALN.
As for the other charges of unexplained acquisitions/expenses made by the Ombudsman against
respondent, we quote with approval the detailed discussion made by the Court of Appeals, speaking
through then Court of Appeals Associate Justice Bienvenido L. Reyes (who is now a member of this
Court), in the assailed January 23, 2007 Decision:
For the year 1989, We find that the respondent had satisfactorily explained how he was able to
acquire a residential land in Quezon City covered by Tax Declaration Nos. D-105-02089 and D-105-
05849 for P235,420.00 despite the fact that his declared income for the year 1989 only amounts
to P43,140.00. As pointed out by the respondent, the lot covered by Tax Declaration No. D-105-
03089, and the property improvement thereon covered by Tax Declaration No. D-105-05849, was
awarded to the respondent by the GSIS for P235,420.00 pursuant to a housing program for BIR
employees, subject to a monthly salary deduction of P2,001.00 since June 1990. This was also secured
by the respondents GSIS Insurance Policy and a Real Estate Mortgage on the same property as shown
by loan documents.
Anent the Ombudsmans claim that the respondent had failed to justify the increase in his "cash on
hand and in bank", and to substantiate his claim that the reason for the increase thereon was due to
a cash donation of P8,000,000.00 made in favor of the respondent in the year 2001. The Ombudsman
points out that the respondents SALN for the year 2000 showed a total networth of P12,734,083.60
while his "cash on hand and in bank" is P3,921,061.80. Then for the year 2001, the respondents SALN
showed a total networth of P21,085,296.95 while his "cash on hand and in bank" is P10,431,897.45.
We are convinced that the respondent had substantiated his claim that the reason for the increase in
his "cash on hand and in bank" was due to a cash donation of P8,000,000.00 made in his favor in the
year 2001. The respondent had voluntarily made such disclosure in his SALN as required by the law.
The Deed of Donation October 8, 2001 is, indeed, a credible proof that such donation was lawful,
there being no showing of its illegality. As correctly noted by the respondent, there was no legal
requirement to attach the Deed of Donation or to disclose the identity of the donor, nor to append to
the SALN evidence of payment of the imposable tax due as Sec 99 (b) of RA No. 8424 or the Tax
Reform Act of 1997, imposes the tax liability arising from the gratuitous act upon the donor, not upon
the donee.
For the year 1999, the Ombudsman noted that the respondent acquired a residential land in Manila
for P1,000,000.00, and this is covered by TCT No. 244854 issued by the Register of Deeds of Manila,
despite the fact that his "cash on hand and in bank" had decreased in the amount of P565,823.10,
such amount together with his income for the year 1999 in the sum of only P230,628.00 are not
sufficient to justify the purchase of the residential land. Even with the reported net income from
Rinas Boutique and Gift Shop/Gels Gift Center for 1999 amounting to only P63,857.65, the purchase
still could not be justified. For his part, the respondent insists that this property was acquired by him
and his wife from the latters parents. According to the respondent, his SALN for 1999 shows that his
"cash on hand and in bank" was P3,653,079.85, which is adequate to justify this purchase. To support
his contention, the respondent submitted documentary evidence consisting of the following:
a. Annual Income Tax Return for 1999
b. Financial Documents:
b.1 Audited Report
b.2 Balance Sheet
b.3 Income Statement
b.4 Rental Income Statements
b.5 Employers Certificate of Compensation Payment/Tax Withheld
b.6 Monthly Agents Commission/ Withholding Tax Report
b.7 Certificate of Creditable Tax Withheld at Source issued by the Philippine Charity
Sweepstakes Office
b.8 Official Receipt issued by the Traders Royal Bank as proof of payment of
income Tax Liability in the amount of P159,974.65
We are convinced that the respondent had justified his purchase of the residential land in 1999
for P1,000,000.00. In his SALN for 1999, the respondent had declared a networth of P12,447,700.75
and cash on hand and in bank in the amount of P3,653,079.85. His aggregate tax payment
of P159,974.65 would indeed negate the Ombudsmans claim that his additional income derived from
his wifes business amounted to only P63,857.65, and this is bolstered by the fact that in the
respondents annual income tax return for 1999 he reported a taxable business income
of P425,904.50 while his wife reported a taxable business income of P63,857.65. We also note that
the respondent had also derived income from lottery business as may be shown by Annexes "5-I" to
"5-R" of his Counter-Affidavit. Although such exhibits are in the name of his (respondent) brother
Alberto A. Bernardo, the latter had already assigned to him the operation of two (2) lotto
outlets/terminals located in Sta. Mesa, Manila and in Quezon City on June 9, 1998 as shown by the
Deed of Assignment. These exhibits also negate the Ombudsmans claim that "(A)s regards the
respondents claim of other income (rental, lottery, other income) no proof of the same was
presented."
For the year 1990, the Ombudsman alleged that the respondent acquired a residential land in Manila
for P230,000.00, covered by TCT No. 244854 issued by the Register of Deeds of Manila, despite the
fact that his declared income for the year 1990 only amounts to P57,432.00. In defense, the
respondent said that this acquisition was truthfully disclosed in his SALN, and that he had the capacity
to make this purchase as he was engaged in lawful business, deriving lawful income. The Ombudsman
in its Decision stated that in 1995, the respondent acquired a residential land located in Quezon City
for P4,150,000.00 and an agricultural land in Bulacan worth P500,000.00. The respondent indicated in
his SALN for the year 1995 as one of his liabilities, "notes payable" in the amount of P4,000,000.00
which the Ombudsman presumed to have been used by the respondent in buying the said properties.
The Ombudsman noted, however, that the respondents loan payable had decreased
by P2,000,000.00 in 1996, but his "cash on hand and in bank" had increased from P3,861,077.05
to P4,701,709.95. The Ombudsman emphasizes that while the respondent had paid out cash in the
amount of P2,000,000.00, his cash on hand and in bank did not decrease, but even increased
by P1,600,072.90 which means that he had earned a total amount of P3,600,072.90 for the year 1996
alone. respondents building improvements likewise increased from P143,420.00 to P902,860.00.
However, his annual income for 1996 amounted only to P177,428.00. The respondent however draws
attention to his SALN for the year 1995 which shows that he was financially capable of purchasing
property valued at P4,150,000.00 as he had a cash disposable balance of P12,323,731.75 and net
worth of P6,471,782.95. The Ombudsman also makes much of the fact of the respondents and his
familys trips abroad in the years 1995, 1996, and 1997, pointing out that the respondents lawful
income for the years 1995 (P157,000.00), 1996 (P177,408.00), and 1997 (P224,988.00) cannot
support such travels. But this is denied by the respondent, saying that his Cash on Hand and In Bank
(Cash Flow Analysis) for the years 1995 to 2001, his Income Tax Returns for the years 1995-1996-
1997, and his networth including disposable income was more than sufficient to justify his property
acquisitions and foreign travels for the covered period.
In an attempt to present a clear outline of his financial capacity, the respondent presented a
comparative Cash Flow Analysis which he had embodied in his counter-affidavit. The evidence for
herein respondent as attached to his Counter-Affidavit consists of the Deed of Assignment dated
November 28, 1988 to show that the respondent had absolutely transferred and conveyed his rights
and interests over BP Realty Corporation to Noble Bambina B. Perez; Certificate of Corporate
Filing/Information dated June 24, 2003 issued by the SEC which shows that BP Realty Corporations
Certificate of Registration was revoked on September 29, 2003; a copy of the Sales Invoice of Rinas
Boutique and Gift Shop-Gels Gift Center; Annual Income Tax Return of the respondent for the years
1998 to 2001 with Reports of Independent Certified Public Accountants To Accompany Philippine
Income Tax Return; Amended SALN for the year 1995; and Revenue Special Order dated May 5, 2003.
His income tax returns clearly show that he had been paying taxes not only for compensation income,
but for business incomes, as well. In fact, a big chunk thereof was derived from rental incomes of the
respondent.
Notably, the Ombudsman appeared to have heavily relied solely on the respondent SALNs for the
years 1993 to 2001. We do not understand why no evidence was presented to show the respondent
beginning net worth from the first day of his employment with the government as declared in the
SALNs filed by him. His beginning net worth must be considered for purposes of determining
whether his disposable income was more than sufficient to justify his property acquisitions and
foreign travels for the covered period, and whether he possesses the financial capability to acquire or
purchase properties as reported in his SALNs. Such net worth of the respondent as declared in the
statement filed by him from the first day of his employment with the government shall be considered
as his true new worth as of such date, for purposes of determining his capacity for future property
acquisitions during his tenure as a public officer. Any unexplained increase in his net worth thereafter
may then fall within the ambit of the presumption provided by Republic Act No. 1379.13 (Citations
omitted.)
As regards to the Ombudsmans contention that respondent should be administratively held liable for
Dishonesty for also failing to truthfully declare in his SALNs the business interests and financial
connections that are attributable to himself, his spouse, and unmarried children below 18 years of
age living in his household, we hold that, absent a clear showing of intent to conceal such relevant
information in his SALN, administrative liability cannot attach.
An examination of his SALNs during the period 1993 to 2001 would reveal that, although respondent
indicated the words "Not Applicable" to the SALN question "Do you have any business interest and
other financial connections including those of your spouse and unmarried children below 18 years
living in your household?," he likewise declared under the enumeration entitled "B. Personal and
Other Properties" personal properties consisting of "Merchandise Inventory," "Building
Improvement," "Store Equipment," and "Depreciation" which clearly indicate his engagement in
lawful businesses since the said items have nothing to do with compensation income.
Furthermore, respondent clearly indicated on the face of his 1999 and 2000 SALNs that his spouse is a
"businesswoman" which manifested his intent to divulge and not to conceal the business interests of
his wife. In fact, this Court had previously ruled in another case that the indication of the wife as a
"businesswoman" leads to the inference that said person has business interests:
Neither can petitioners failure to answer the question, "Do you have any business interest and other
financial connections including those of your spouse and unmarried children living in your house
hold?" be tantamount to gross misconduct or dishonesty. On the front page of petitioners 2002
SALN, it is already clearly stated that his wife is a businesswoman, and it can be logically deduced that
she had business interests. Such a statement of his wifes occupation would be inconsistent with the
intention to conceal his and his wifes business interests. That petitioner and/or his wife had business
interests is thus readily apparent on the face of the SALN; it is just that the missing particulars may be
14
subject of an inquiry or investigation. (Emphasis supplied.)
15
In Office of the Ombudsman v. Valencia, we elaborated on the nature and effects of an
administrative charge of Dishonesty as follows:
Dishonesty is incurred when an individual intentionally makes a false statement of any material fact,
practicing or attempting to practice any deception or fraud in order to secure his examination,
registration, appointment, or promotion. It is understood to imply the disposition to lie, cheat,
deceive, or defraud; untrustworthiness; lack of integrity; lack of honesty, probity or integrity in
principle; lack of fairness and straightforwardness; the disposition to defraud, deceive or betray. It is
a malevolent act that puts serious doubt upon ones ability to perform his duties with the integrity
and uprightness demanded of a public officer or employee. Like the offense of Unexplained Wealth,
Section 52(A)(1), Rule IV of the Revised Uniform Rules on Administrative Cases in Civil Service treats
Dishonesty as a grave offense, the penalty of which is dismissal from the service at the first infraction.
(Citations omitted.)
On the other hand, we had, on occasion, defined Negligence as the omission of the diligence which is
required by the nature of the obligation and corresponds with the circumstances of the persons, of
the time, and of the place. In the case of public officials, there is negligence when there is a breach of
duty or failure to perform the obligation, and there is gross negligence when a breach of duty is
flagrant and palpable.16
Given the fact that respondent was able to successfully overcome the onus of demonstrating that he
does not possess any unexplained wealth and that the omissions in his SALNs did not betray any
sense of bad faith or the intent to mislead or deceive on his part considering that his SALNs actually
disclose the extent of his and his wifes assets and business interests, we are inclined to adjudge that
respondent is merely culpable of Simple Negligence instead of the more serious charge of Dishonesty.
This Court had previously passed upon a similar infraction committed by another public official in
Pleyto v. Philippine National Police Criminal Investigation and Detection Group (PNP-CIDG)17 and
ruled that suspension without pay, not removal from office, is the appropriate penalty therefor:
It also rules that while petitioner may be guilty of negligence in accomplishing his SALN, he did not
commit gross misconduct or dishonesty, for there is no substantial evidence of his intent to deceive
the authorities and conceal his other sources of income or any of the real properties in his and his
wifes names. Hence, the imposition of the penalty of removal or dismissal from public service and all
other accessory penalties on petitioner is indeed too harsh. Nevertheless, petitioner failed to pay
attention to the details and proper form of his SALN, resulting in the imprecision of the property
descriptions and inaccuracy of certain information, for which suspension from office for a period of
six months, without pay, would have been appropriate penalty. (Citation omitted.)
Prescinding from our analysis of the facts and circumstances attending this case, we are inclined to
impose the same penalty on herein respondent.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision dated
January 23, 2007 of the Court of Appeals is hereby AFFIRMED with the MODIFICATION that
respondent Arnel A. Bernardo is found GUILTY of simple negligence in accomplishing his Statements
of Assets, Liabilities and Net Worth (SALN), and as a penalty therefor, it is ORDERED that he be
SUSPENDED from office for a period of six (6) months without pay.
SO ORDERED.
G.R. No. 179181, November 18, 2013
ROMAN CATHOLIC ARCHBISHOP OF MANILA, Petitioners, v. CRESENCIA STA. TERESA RAMOS,
ASSISTED BY HER HUSBAND, PONCIANO FRANCISCO, Respondent.
DECISION
BRION, J.:
 1 14
We resolve in this petition for review on certiorari under Rule 45 of the Rules of Court the challenge
to the April 10, 2007 decision2 and the August 9, 2007 resolution3 of the Court of Appeals (CA) in CA-
4
G.R. CV No. 84646. This CA decision affirmed, with modification, the January 17, 2005 decision of
the Regional Trial Court, Branch 156 of Pasig City (RTC), in LRC Case No. N-5811 that denied the
application for confirmation and registration of title filed by the petitioner, Roman Catholic
Archbishop of Manila (RCAM).
The Factual Antecedents
At the core of the controversy in the present petition are two parcels of land - Lot 1 with an area of
34 square meters and Lot 2 with an area of 760 square meters - covered by amended Plan PSU-
5
223919 (property), both located in what used to be Barrio Bagumbayan, Taguig, Rizal.
On September 15, 1966, the RCAM filed before the RTC, (then Court of First Instance of Rizal, Branch
6
11), acting as a land registration court, an application for registration of title (application) of
property, pursuant to Commonwealth Act (C.A.) No. 141 (the Public Land Act).7 On October 4, 1974,
the RCAM amended its application8 by reducing Lot 2 to 760 square meters (from 1,832 square
meters).
In its amended application, the RCAM claimed that it owned the property; that it acquired the
property during the Spanish time; and that since then, it has been in open, public, continuous and
peaceful possession of it in the concept of an owner. It added that to the best of its knowledge and
belief, no mortgage or encumbrance of any kind affects the property, and that no person has any
claim, legal or equitable, on the property.
The RCAM attached the following documents to support its application: amended plan Psu-223919;
technical description of Lots 1 and 2; 9 surveyors certificate; 10 and Tax Declaration No. 9551 issued on
September 6, 1966.11
On May 22, 1992, the Republic of the Philippines (Republic), through the Director of Lands, filed an
opposition12 to the application. The Republic claimed that the property is part of the public domain
and cannot be subject to private appropriation.
On August 18, 1992, respondent Cresencia Sta. Teresa Ramos, through her husband Ponciano
Francisco, filed her opposition 13 to the RCAMs application. She alleged that the property formed
part of the entire property that her family owns and has continuously possessed and occupied from
the time of her grandparents, during the Spanish time, up to the present.
Cresencia submitted the following documents, among others, to support her requested
confirmation of imperfect title:chanRoblesvirtualLawlibrary
1.) the death certificates of Cipriano Sta. Teresa and Eulogia Sta. Teresa Vda. de Ramos (Cresencias
parents);
2.) her marriage certificate;
3.) their childrens birth certificates;
4.) certificates of ownership covering two bancas;
5.) photographs of these two bancas with her youngest child while standing on the property and
showing the location of the RCAMs church relative to the location of the property;
6.) photographs of a pile of gravel and sand (allegedly for their gravel and sand business) on the
property;
7.) photographs of the RCAMs bahay ni Maria standing on the property;
8.) a photograph of the plaque awarded to Ponciano by ESSO Standard Philippines as sole dealer of
its gasoline products in Bagumbayan, Taguig, Rizal;
9.) a photograph of their La Compania Refreshment Store standing on their titled lot adjacent to
the property;
10.) a photograph of the certificate of dealership given to Ponciano by a Tobacco company for his
dealership in Bagumbayan, Taguig, Rizal; and
11.) the registration certificate for their familys sheet manufacturing business situated in
Bagumbayan, Taguig,15 Rizal.
The RCAM presented in evidence the following documents, in addition to those already on
record:16tax declarations issued in its name in 1948, 1973, 1981, 1990, 1993, and 1999; 17 the certified
true copy of Original Certificate of Title No. 0082 covering the lot in the name of Garcia, which adjoins
the property on the south; and the affidavit of Garcia confirming the RCAMs ownership of the
property.18 It likewise submitted several testimonial evidence to corroborate its ownership and claim
of possession of the property.
The ruling of the RTC
In its decision of January 17, 2005,19 the RTC denied the RCAMs application for registration of
title. The RTC held that the RCAM failed to prove actual possession and ownership of the property
applied for. The RTC pointed out that the RCAMs only overt act on the property that could be
regarded as evidence of actual possession was its construction of the bahay ni Maria in 1991. Even
this act, according to the RTC, did not sufficiently satisfy the actual possession requirement of the law
as the RCAM did not show how and in what manner it possessed the property prior to 1991. The
RCAMs tax declarations were also inconclusive since they failed to prove actual possession.

In contrast, the numerous businesses allegedly conducted by Cresencia and her family on the
property, the various pieces of documentary evidence that she presented, and the testimony of the
RCAMs own witnesses convinced the RTC that she and her family actually possessed the property in
the manner and for the period required by law.
This notwithstanding, the RTC refused to order the issuance of the title in Cresencias name. The RTC
held that Cresencia failed to include in her opposition a prayer for issuance of title.
The RCAM assailed the RTCs decision before the CA.
The CA ruling
20
In its April 10, 2007 decision, the CA affirmed with modification the RTCs January 17, 2005
ruling. The CA confirmed Cresencias incomplete and imperfect title to the property, subject to her
compliance with the requisites for registration of title.
The CA agreed with the RTC that the totality of the evidence on record unquestionably showed that
Cresencia was the actual possessor and occupant, in the concept of an owner, of the disputed
property. The CA held that Cresencias use of the property since the Spanish time (through her
predecessors-in-interest), as confirmed by the RCAMs witnesses, clearly demonstrated her dominion
over the property. Thus, while she failed to register the property in her name or declare it for
taxation purposes as pointed out by the RCAM, the CA did not consider this non-declaration
significant to defeat her claim. To the CA, Cresencia merely tolerated the RCAMs temporary use of
the property for lack of any urgent need for it and only acted to protect her right when the RCAM
applied for registration in its name. Thus, the CA declared that Cresencia correctly waited until her
possession was disturbed before she took action to vindicate her right.
The CA similarly disregarded the additional tax declarations that the RCAM presented in support of its
application. The CA pointed out that these documents hardly proved the RCAMs alleged ownership
of or right to possess the property as it failed to prove actual possession. Lastly, the CA held that it
was bound by the findings of facts and the conclusions arrived at by the RTC as they were amply
supported by the evidence.
The RCAM filed the present petition after the CA denied its motion for
reconsideration.21chanroblesvirtualawlibrary
Assignment of Errors
22
The RCAM argues before us that the CA erred and gravely abused its discretion in:
1. confirming the incomplete and imperfect title of the oppositor when the magnitude of the
parties evidence shows that the oppositors merely had pretended possession that could not
ripen into ownership;
2. failing to consider that the RCAM had continuous, open and notorious possession of the
property in the concept of an owner for a period of thirty (30) years prior to the filing of the
application; and
3. confirming the oppositors incomplete and imperfect title despite her failure to comply with
the substantial and procedural requirements of the Public Land Act.
The Issue
In sum, the core issue for our resolution is who - between the RCAM and Cresencia - is entitled to the
benefits of C.A. No. 141 and Presidential Decree (P.D.) No. 1529 for confirmation and registration of
imperfect title.
The Courts Ruling
Preliminary considerations: nature
of the issues; factual-issue-bar rule
In her comment,23 Cresencia primarily points out that the present petition essentially questions the
CAs appreciation of the evidence and the credibility of the witnesses who attested to her actual,
public and notorious possession of the property. She argues that these are questions of fact that are
not proper for a Rule 45 petition. In addition, the findings of the RTC were well supported by the
evidence, had been affirmed by the CA, and are thus binding on this Court.
We are not entirely convinced of the merits of what Cresencia pointed out.
The settled rule is that the jurisdiction of this Court over petitions for review on certiorari is limited to
the review of questions of law and not of fact. A question of law exists when the doubt or
controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when
the issue does not call for an examination of the probative value of the evidence presented, the truth
or falsehood of the facts being admitted. A question of fact exists when a doubt or difference arises
as to the truth or falsehood of facts or when the query invites calibration of the whole evidence x x x
24
as well as their relation to each other and to the whole, and the probability of the situation.
An examination of the RCAMs issues shows that the claimed errors indeed primarily question the
sufficiency of the evidence supporting the lower courts conclusion that Cresencia, and not the RCAM,
had been in possession of the property in the manner and for the period required by law. When the
presented question centers on the sufficiency of the evidence, it is a question of fact25 and is barred
in a Rule 45 petition.
Nevertheless, jurisprudence recognizes certain exceptions to the settled rule. When the lower courts
grossly misunderstood the facts and circumstances that, when correctly appreciated, would warrant
26
a different conclusion, a review of the lower courts findings may be made. This, in our view, is the
exact situation in the case as our discussions below will show.
Moreover, the RCAM also questions the propriety of the CAs confirmation of Cresencias title over
the property although she was not the applicant and was merely the oppositor in the present
confirmation and registration proceedings. Stated in question form - was the CA justified under the
law and jurisprudence in its confirmation of the oppositors title over the property? This, in part, is a
question of law as it concerns the correct application of law or jurisprudence to recognized facts.
Hence, we find it imperative to resolve the petition on the merits.
Requirements for confirmation and
registration of imperfect and
incomplete title under C.A. No. 141
and P.D. No. 1529
C.A. No. 141 governs the classification and disposition of lands of the public domain. Section 11 of
C.A. No. 141 provides, as one of the modes of disposing public lands that are suitable for agriculture,
the confirmation of imperfect or incomplete titles. Section 48, on the other hand, enumerates
those who are considered to have acquired an imperfect or incomplete title over public lands and,
therefore, entitled to confirmation and registration under the Land Registration Act.
The RCAM did not specify the particular provision of C.A. No. 141 under which it anchored its
application for confirmation and registration of title. Nevertheless, the allegations in its application
and amended application readily show that it based its claim of imperfect title under Section 48(b) of
C.A. No. 141. As amended by P.D. No. 1073 on January 25, 1977, Section 48(b) of C.A. No. 141
currently provides:chanRoblesvirtualLawlibrary
Section 48. The following described citizens of the Philippines, occupying lands of the public domain
or claiming to own any such lands or an interest therein, but whose titles have not been perfected or
completed, may apply to the Court of First Instance [now Regional Trial Court] of the province where
the land is located for confirmation of their claims and the issuance of a certificate of title therefor,
under the Land Registration Act, to wit:chanRoblesvirtualLawlibrary
x x xx
(b) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and occupation of agricultural lands of the public
domain, under a bona fideclaim of acquisition or ownership, since June 12, 1945, or earlier,
immediately preceding the filing of the application for confirmation of title except when prevented by
war or force majeure. These shall be conclusively presumed to have performed all the conditions
essential to a Government grant and shall be entitled to a certificate of title under the provisions of
this chapter. [emphases and italics ours]
Prior to the amendment introduced by P.D. No. 1073, Section 48(b) of C.A. No. 141, then operated
under the Republic Act (R.A.) No. 1942 (June 22, 1957) amendment which
reads:chanRoblesvirtualLawlibrary
(b) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of agricultural lands of the public
domain, under a bona fideclaim of acquisition or ownership, for at least thirty years, immediately
preceding the filing of the application for confirmation of title except when prevented by war or force
majeure. These shall be conclusively presumed to have performed all the conditions essential to a
Government grant and shall be entitled to a certificate of title under the provisions of this chapter.
[emphases and italics ours]
Since the RCAM filed its application on September 15, 1966 and its amended application on October
4, 1974, Section 48(b) of C.A. No. 141, as amended by R.A. No. 1942 (which then required possession
of thirty years), governs.
In relation to C.A. No. 141, Section 14 of Presidential Decree (P.D.) No. 1529 or the Property
Registration Decree specifies those who are qualified to register their incomplete title over an
alienable and disposable public land under the Torrens system. P.D. No. 1529, which was approved
on June 11, 1978, superseded and codified all laws relative to the registration of property.
The pertinent portion of Section 14 of P.D. No. 1529 reads:chanRoblesvirtualLawlibrary
Section 14. Who may apply. The following persons may file in the proper Court of First Instance
[now Regional Trial Court] an application for registration of title to land, whether personally or
through their duly authorized representatives:
(1) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of alienable and disposable lands of
the public domain under a bona fide claim of ownership since June 12, 1945, or earlier. [italics ours]
Under these legal parameters, applicants in a judicial confirmation of imperfect title may register
their titles upon a showing that they or their predecessors-in-interest have been in open, continuous,
exclusive, and notorious possession and occupation of alienable and disposable lands of the public
domain, under a bona fide claim of acquisition or ownership, 27 since June 12, 1945, or earlier (or for
at least 30 years in the case of the RCAM) immediately preceding the filing of the application for
confirmation of title. The burden of proof in these cases rests on the applicants who must
demonstrate clear, positive and convincing evidence that: (1) the property subject of their application
is alienable and disposable land of the public domain; and (2) their alleged possession and occupation
of the property were of the length and of the character required by law.28ChanRoblesVirtualawlibrary
On the issue of whether the RCAM is
entitled to the benefits of C.A. No.
141 and P.D. No. 1529
Reiterating its position before the RTC and the CA, the RCAM now argues that it actually,
continuously, openly and notoriously possessed the property since time immemorial. It points out
that its tax declarations covering the property, while not conclusive evidence of ownership, are proof
of its claim of title and constitute as sufficient basis for inferring possession.
For her part, Cresencia counters that the RCAM failed to discharge its burden of proving possession in
the concept of an owner. She argues that the testimonies of the RCAMs witnesses were replete with
inconsistencies and betray the weakness of its claimed possession. Cresencia adds that at most, the
RCAMs possession was by her mere tolerance which, no matter how long, can never ripen into
ownership. She also points out that the RCAMs tax declarations are insufficient proof of possession
as they are not, by themselves, conclusive evidence of ownership.
We do not see any merit in the RCAMs contentions.
The RTC and the CA, as it affirmed the RTC, dismissed the RCAMs application for its failure to comply
with the second requirement possession of the property in the manner and for the period required
by law.
We find no reason to disturb the RTC and the CA findings on this point. They had carefully analyzed
and weighed each piece of the RCAMs evidence to support its application and had extensively
explained in their respective decisions why they could not give weight to these pieces of
evidence. Hence, we affirm their denial of the RCAMs application. For greater certainty, we
expound on the reasons below.
a. The RCAM failed to prove possession of
the property in the manner and for
the period required by law
The possession contemplated by Section 48(b) of C.A. No. 141 is actual, not fictional or
constructive. In Carlos v. Republic of the Philippines,29 the Court explained the character of the
required possession, as follows:chanRoblesvirtualLawlibrary
The law speaks of possession and occupation. Since these words are separated by the conjunction
and, the clear intention of the law is not to make one synonymous with the other. Possession is
broader than occupation because it includes constructive possession. When, therefore, the law adds
the word occupation, it seeks to delimit the all-encompassing effect of constructive
possession. Taken together with the words open, continuous, exclusive and notorious, the word
occupation serves to highlight the fact that for an applicant to qualify, his possession must not be a
mere fiction. Actual possession of a land consists in the manifestation of acts of dominion over it of
such a nature as a party would naturally exercise over his own property.
Accordingly, to prove its compliance with Section 48(b)s possession requirement, the RCAM had to
show that it performed specific overt acts in the character an owner would naturally exercise over his
own property. Proof of actual possession of the property at the time of the filing of the
application is required because the phrase adverse, continuous, open, public, and in concept of
owner, the RCAM used to describe its alleged possession, is a conclusion of law, 30 not an allegation
of fact. Possession is open when it is patent, visible, apparent [and] notorious x x x continuous when
uninterrupted, unbroken and not intermittent or occasional; exclusive when [the possession is
characterized by acts manifesting] exclusive dominion over the land and an appropriation of it to [the
applicants] own use and benefit; and notorious when it is so conspicuous that it is generally known
and talked of by the public or the people in the neighborhood. 31
Very noticeably, the RCAM failed to show or point to any specific act characterizing its claimed
possession in the manner described above. The various documents that it submitted, as well as the
bare assertions it made and those of its witnesses, that it had been in open, continuous, exclusive and
notorious possession of the property, hardly constitute the well-nigh incontrovertible evidence
32
required in cases of this nature. We elaborate below on these points.
First, the tax declarations issued in the RCAMs name in 1948, 1966, 1977, 1984, 1990, 1993 and 1999
did not in any way prove the character of its possession over the property. Note that the settled rule
is that tax declarations are not conclusive evidence of ownership or of the right to possess land when
33
not supported by any other evidence showing actual, public and adverse possession. The
declaration for taxation purposes of property in the names of applicants for registration or of their
predecessors-in-interest may constitute collaborating evidence only when coupled with other acts of
possession and ownership; 34 standing alone, it is inconclusive.
This rule applies even more strongly in this case since the RCAMs payments of taxes due on the
property were inconsistent and random. Interestingly, while the RCAM asserts that it had been in
possession of the property since the Spanish time, the earliest tax declaration that it could present
was that issued in 1948. Also, when it filed its application in 1966 and its amended application in
1974, the RCAM presented only two tax declarations (issued in 1948 and 1966) covering the
property. And since then, up to the issuance of the January 17, 2005 decision of the RTC, the RCAM
presented only five other tax declarations those issued in 1977, 1984, 1990, 1993 and 1999. The
case of Tan v. Republic35 teaches us that this type of intermittent and sporadic assertion of alleged
ownership does not prove open, continuous, exclusive and notorious possession and occupation.
Second, even if we were to consider the RCAMs tax declarations as basis for inferring
possession,36the RCAM still failed to prove actual possession of the property for the required
duration. As already noted, the earliest tax declaration that it presented was for 1948. We are in fact
inclined to believe that the RCAM first declared the property in its name only in 1948 as this tax
declaration does not appear to have cancelled any previously-issued tax declaration. Thus, when it
filed its application in 1966, it was in possession of the property for only eighteen years, counted
from 1948. Even if we were to count the possession period from the filing of its amended application
in 1974, its alleged possession (which was only for twenty-six years counted from 1948) would still be
short of the thirty-year period required by Section 48(b) of C.A. No. 141, as amended by R.A. No.
1942. The situation would be worse if we were to consider the amendment introduced by P.D. No.
1073 to Section 48(b) where, for the RCAMs claimed possession of the property to give rise to an
imperfect title, this possession should have commenced on June 12, 1945 or earlier.
Third, the amended plan Psu-223919, technical description for Lots 1 and 2, and surveyors certificate
37
only prove the identity of the property that the RCAM sought to register in its name. While these
documents plot the location, the area and the boundaries of the property, they hardly prove that the
RCAM actually possessed the property in the concept of an owner for the required duration. In fact,
the RCAM seemed to be uncertain of the exact area it allegedly possesses and over which it claims
ownership. The total area that the RCAM applied for, as stated in its amended application and the
amended survey plan, was 794 square meters (34 square meters for Lot 1 and 760 square meters for
Lot 2). Yet, in its various tax declarations issued even after it filed its amended application, the total
area declared under its name was still 1,832 square meters. Notably, the area stated in its 1948 tax
declaration was only 132.30 square meters, while the area stated in the subsequently issued tax
declaration (1966) was 1,832 square meters. Significantly, the RCAM did not account for or provide
sufficient explanation for this increase in the area; thus, it appeared uncertain on the specific area
claimed.
Fourth, the RCAM did not build any permanent structure or any other improvement that clearly
announces its claim of ownership over the property. Neither did it account for any act of occupation,
development, maintenance or cultivation for the duration of time it was allegedly in possession of it.
The bahay ni Maria where the RCAM conducts its fiesta-related and Lenten activities could hardly
satisfy the possession requirement of C.A. No. 141. As found out by the CA, this structure was
constructed only in 1991 and not at the time of, or prior to, the filing of its application in 1966.
Last, the RCAMs testimonial evidence hardly supplemented the inherent inadequacy of its
documentary evidence. While apparently confirming the RCAMs claim, the testimonies were
undoubtedly hearsay and were not based on personal knowledge of the circumstances surrounding
the RCAMs claimed actual, continuous, exclusive and notorious possession.
b. The RCAM failed to prove that the
property is alienable and disposable land
of the public domain
Most importantly, we find the RCAMs evidence to be insufficient since it failed to comply with the
first and most basic requirement proof of the alienable and disposable character of the
property. Surprisingly, no finding or pronouncement referring to this requirement was ever made in
the decisions of the RTC and the CA.
To prove that the property is alienable and disposable, the RCAM was bound to establish the
existence of a positive act of the government such as a presidential proclamation or an executive
order; an administrative action; investigation reports of Bureau of Lands investigators; and a
38
legislative act or a statute. It could have also secured a certification from the government that the
39
property applied for was alienable and disposable. Our review of the records shows that this
evidence is fatally absent and we are in fact disappointed to note that both the RTC and the CA
appeared to have simply assumed that the property was alienable and disposable.
We cannot tolerate this kind of approach for two basic reasons. One, in this jurisdiction, all lands
belong to the State regardless of their classification. 40 This rule, more commonly known as the
Regalian doctrine, applies with equal force even to private unregistered lands, unless the contrary is
satisfactorily shown. Second, unless the date when the property became alienable and disposable is
specifically identified, any determination on the RCAMs compliance with the second requirement is
rendered useless as any alleged period of possession prior to the date the property became alienable
and disposable can never be counted in its favor as any period of possession and occupation of public
lands in the concept of owner, no matter how long, can never ripen into ownership.41
On this ground alone, the RTC could have outrightly denied the RCAMs application.
On the CAs authority to confirm the title of
the oppositor in land registration proceedings
The RCAM next argues that the CAs act of confirming Cresencias title over the property is contrary
to law and jurisprudence. The RCAM points out that it filed the application for registration of title
under the provisions of C.A. No. 141 or alternatively under P.D. No. 1529; both statutes dictate
several substantive and procedural requirements that must first be complied with before title to the
property is confirmed and registered. In affirming Cresencias title without any evidence showing her
compliance with these requirements, it claims that the CA, in effect, made Cresencia the applicant
entitled to the benefits of the land registration proceedings that it initiated before the lower court.
We differ with this view.
Section 29 of P.D. No. 1529 gives the court the authority to confirm the title of either the applicant or
the oppositor in a land registration proceeding depending on the conclusion that the evidence calls
for. Specifically, Section 29 provides that the court x x x after considering the evidence x x x finds
that the applicant or the oppositor has sufficient title proper for registration, judgment shall be
rendered confirming the title of the applicant, or the oppositor, to the land x x x. (emphases and
italics ours)
Thus, contrary to the RCAMs contention, the CA has the authority to confirm the title of Cresencia, as
the oppositor, over the property. This, of course, is subject to Cresencias satisfaction of the
evidentiary requirement of P.D. No. 1529, in relation with C.A. No. 141 in support of her own claim of
imperfect title over the property.
The issue of whether Cresencia is entitled to the
benefits of C.A. No. 141 and P.D. No. 1529
The RCAM lastly argues that the evidence belies Cresencias claim of continuous, open and notorious
possession since the Spanish time. The RCAM points out that, first, Cresencia failed to declare for
taxation purposes the property in her name, thus effectively indicating that she did not believe
herself to be its owner. Second, Cresencia did not have the property surveyed in her name so that
she could assert her claim over it and show its metes and bounds. Third, Cresencia did not register
the property in her name although she previously registered the adjoining lot in her name. Fourth,
Cresencia did not construct any permanent structure on the property and no traces of the businesses
allegedly conducted by her and by her family on it could be seen at the time it filed its
application. And fifth, Cresencia did not perform any act of dominion that, by the established
jurisprudential definition, could be sufficiently considered as actual possession
We agree with the RCAM on most of these points.
While we uphold the CAs authority to confirm the title of the oppositor in a confirmation and
registration proceedings, we cannot agree, however, with the conclusion the CA reached on the
nature of Cresencias possession of the property.
Under the same legal parameters we used to affirm the RTCs denial of the RCAMs application, we
also find insufficient the evidence that Cresencia presented to prove her claimed possession of the
property in the manner and for the period required by C.A. No. 141. Like the RCAM, Cresencia was
bound to adduce evidence that irrefutably proves her compliance with the requirements for
confirmation of title. To our mind, she also failed to discharge this burden of proof; thus, the CA erred
when it affirmed the contrary findings of the RTC and confirmed Cresencias title over the property.
We arrive at this conclusion for the reasons outlined below.
First, the various pieces of documentary evidence that Cresencia presented to support her own claim
of imperfect title hardly proved her alleged actual possession of the property. Specifically, the
certificates of marriage, birth and death did not particularly state that each of these certified
events, i.e., marriage, birth and death, in fact transpired on the claimed property; at best, the
certificates proved the occurrence of these events in Bagumbayan, Taguig, Rizal and on the stated
dates, respectively.
Similarly, the certificate of ownership of two bancas in the name of Ponciano, the registration
certificate for their familys sheet manufacturing business, the photograph of the certificate of
dealership in the name of Ponciano given by a tobacco company, and the photograph of the plaque
awarded to Ponciano by ESSO Standard Philippines as sole dealer of its gasoline products did not
prove that Cresencia and her family conducted these businesses on the disputed property
itself. Rather, they simply showed that at one point in time, Cresencia and her family conducted
these businesses in Bagumbayan, Taguig, Rizal. In fact, Cresencias claim that they conducted their
gasoline dealership business on the property is belied by the testimony of a witness who stated that
the gas station was located north (or the other side) of Cresencias titled lot and not on the
42
property.
The presence on the property, as shown by photographs, of Cresencias daughter, of the
two bancasowned by her family, and of the pile of gravel and sand they allegedly used in their gravel
and sand business also hardly count as acts of occupation, development or maintenance that could
have been sufficient as proof of actual possession. The presence of these objects and of Cresencias
daughter on the property was obviously transient and impermanent; at most, they proved that
Cresencia and her family used the property for a certain period of time, albeit, briefly and
temporarily.
Finally, the records show that the La Compania Refreshment Store business (that they allegedly
conducted on the property) actually stood on their titled lot adjoining the property.
Second, while Cresencia registered in her name the adjoining lot (which they had been occupying at
the time the RCAM filed its application and where their La Compania Refreshment Store stood), she
never had the property registered in her name. Neither did Cresencia or her predecessors-in-interest
declare the property for taxation purposes nor had the property surveyed in their names to properly
identify it and to specifically determine its metes and bounds. The declaration for taxation purposes
of property in their names would have at least served as proof that she or her predecessors-in-
interest had a claim over the property43 that could be labeled as possession if coupled with proof of
actual possession.
Finally, the testimonies of Ponciano and Florencia Francisco Mariano (Cresencias daughter) on the
nature and duration of their familys alleged possession of the property, other than being self-serving,
were mere general statements and could not have constituted the factual evidence of possession
that the law requires. They also failed to point out specific acts of dominion or ownership that were
performed on the property by the parents of Cresencia, their predecessors-in-interest. They likewise
failed to present any evidence that could have corroborated their alleged possession of the property
from the time of their grandfather, Cipriano, who acquired the property from its previous owner,
Petrona Sta. Teresa. Interestingly, other than Ponciano and Florencia, none of the witnesses on
record seemed to have known that Cresencia owns or at least claims ownership of the property.
At any rate, even if we were to consider these pieces of evidence to be sufficient, which we do not,
confirmation and registration of title over the property in Cresencias name was still improper in the
absence of competent and persuasive evidence on record proving that the property is alienable and
disposable.
For all these reasons, we find that the CA erred when it affirmed the RTCs ruling on this matter and
confirmed Cresencias imperfect title to the property.
WHEREFORE, in light of these considerations, we hereby DENY the petition. We AFFIRM with
MODIFICATION the decision dated April 10, 2007 and the resolution dated August 9, 2007 of the
Court of Appeals in CA-G.R. CV No. 84646 to the extent described below:
1. We AFFIRM the decision of the Court of Appeals as it affirmed the January 17, 2005 decision
of the Regional Trial Court of Pasig City, Branch 156, in LRC Case No. N-5811 that DENIED the
application for confirmation and registration of title filed by the petitioner, Roman Catholic
Archbishop of Manila; and
2. We REVERSE and SET ASIDE the confirmation made by the Court of Appeals of the title over
the property in the name of respondent Cresencia Sta. Teresa Ramos for lack of sufficient
evidentiary basis.
Costs against the petitioner.chanRoblesvirtualLawlibrary
SO ORDERED.
Carpio, (Chairperson), Del Castillo, Perez, and Perlas-Bernabe, JJ., concur.