@lendelacruz 1
Republic of the Philippines On February 14, 2001, the HRD imposed on Caragdag the
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 164939 June 6, 2011
SAMAHAN NG MGA MANGGAGAWA SA HYATT
(SAMASAH-NUWHRAIN), Petitioner,
vs.
HON. VOLUNTARY ARBITRATOR BUENAVENTURA
C. MAGSALIN and HOTEL ENTERPRISES OF THE
PHILIPPINES, INC., Respondents.
x-----------------------x
G.R. No. 172303
SAMAHAN NG MGA MANGGAGAWA SA HYATT
(SAMASAH-NUWHRAIN), Petitioner,
vs.
HOTEL ENTERPRISES OF THE PHILIPPINES, INC.,
Respondent.
DECISION
VILLARAMA, JR., J.:
Before this Court are two consolidated petitions filed by
petitioner Samahan ng mga Manggagawa sa Hyatt-
NUWHRAIN-APL under Rule 45 of the 1997 Rules of Civil
Procedure, as amended. The first petition, docketed as G.R.
No. 164939, assails the Resolutions dated October 3, 20031
and August 13, 20042 of the Court of Appeals (CA) in CA-
G.R. SP No. 78364, which dismissed petitioners petition for
review at the CA for being the wrong remedy. The second
petition, docketed as G.R. No. 172303, assails the Decision 3
dated December 16, 2005 and Resolution4 dated April 12,
2006 of the CA in CA-G.R. SP No. 77478, modifying the
judgment of the Voluntary Arbitrator in NCMB-NCR-CRN-
07-008-01.
The antecedent facts are as follows:
Petitioner Samahan ng mga Manggagawa sa Hyatt-
NUWHRAIN-APL is a duly registered union and the
certified bargaining representative of the rank-and-file
employees of Hyatt Regency Manila, a five-star hotel owned
and operated by respondent Hotel Enterprises of the
Philippines, Inc. On January 31, 2001, Hyatts General
Manager, David C. Pacey, issued a Memorandum5 informing
all hotel employees that hotel security have been instructed
to conduct a thorough bag inspection and body frisking in
every entrance and exit of the hotel. He enjoined employees
to comply therewith. Copies of the Memorandum were
furnished petitioner.
On February 3, 2001, Angelito Caragdag, a waiter at the
hotels Cafe Al Fresco restaurant and a director of the union,
refused to be frisked by the security personnel. The incident
was reported to the hotels Human Resources Department
(HRD), which issued a Memorandum6 to Caragdag on
February 5, 2001, requiring him to explain in writing within
forty-eight (48) hours from notice why no disciplinary action
should be taken against him. The following day, on February
6, 2001, Caragdag again refused to be frisked by the security
personnel. Thus, on February 8, 2001, the HRD issued
another Memorandum7 requiring him to explain.
penalty of reprimand for the February 3, 2001 incident, which
was considered a first offense, and suspended him for three
days for the February 6, 2001 incident, which was considered
as a second offense.8 Both penalties were in accordance with
the hotels Code of Discipline.
Subsequently, on February 22, 2001, when Mike Moral, the
manager of Hyatts Cafe Al Fresco and Caragdags
immediate superior, was about to counsel two staff members,
Larry Lacambacal and Allan Alvaro, at the training room,
Caragdag suddenly opened the door and yelled at the two
with an enraged look. In a disturbing voice he said, "Ang
titigas talaga ng ulo nyo. Sinabi ko na sa inyo na huwag
kayong makikipagusap sa management habang ongoing pa
ang kaso!" (You are very stubborn. I told you not to speak to
management while the case is ongoing!) Moral asked
Caragdag what the problem was and informed him that he
was simply talking to his staff. Moral also told Caragdag that
he did not have the right to interrupt and intimidate him
during his counseling session with his staff.
On February 23, 2001, Moral issued a Memorandum9
requiring Caragdag to explain his actions in the training
room. Caragdag submitted his written explanation on
February 25, 200110 narrating that he was informed by
someone that Lacambacal and Alvaro were requesting for his
assistance because Moral had invited them to the training
room. Believing that he should advise the two that they
should be accompanied by a union officer to any inquisition,
he went to the training room. However, before he could enter
the door, Moral blocked him. Thus, he told Lacambacal and
Alvaro that they should be assisted by a union representative
before giving any statement to management. Caragdag also
prayed that Moral be investigated for harassing union
officers and union members.
On February 28, 2001, Moral found the explanations
unsatisfactory. In a Memorandum11 issued on the same date,
Moral held Caragdag liable for Offenses Subject to
Disciplinary Action (OSDA) 3.01 of the hotels Code of
Discipline, i.e., "threatening, intimidating, coercing, and
provoking to a fight your superior for reasons directly
connected with his discharge of official duty." Thus,
Caragdag was imposed the penalty of seven days suspension
in accordance with the hotels Code of Discipline.
Still later, on March 2, 2001, Caragdag committed another
infraction. At 9:35 a.m. on the said date, Caragdag left his
work assignment during official hours without prior
permission from his Department Head. He was required to
submit an explanation, but the explanation12 he submitted
was found unsatisfactory. On March 17, 2001, Moral found
Caragdag liable for violating OSDA 3.07, i.e., "leaving work
assignment during official working hours without prior
permission from the department head or immediate
superior," and suspended him for three days.13
Because of the succession of infractions he committed, the
HRD also required Caragdag to explain on May 11, 2001 why
the hotels OSDA 4.32 (Committing offenses which are
penalized with three [3] suspensions during a 12-month
period) should not be enforced against him.14 An
investigation board was formed after receipt of Caragdags
written explanation, and the matter was set for hearing on
May 19, 2001. However, despite notice of the scheduled
hearing, both Caragdag and the Union President failed to
attend. Thereafter, the investigating board resolved on the
said date to dismiss Caragdag for violation of OSDA 4.32.15
Caragdag appealed but the investigating board affirmed its
resolution after hearing on May 24, 2001.
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On June 1, 2001, the hotel, through Atty. Juancho A. Baltazar,
sent Caragdag a Notice of Dismissal,16 the pertinent portion
of which reads:
Based on the findings of the Investigation Board dated May
19, 2001 which was approved by the General Manager Mr.
David Pacey on the same day and which did not merit any
reversal or modification after the hearing on your appeal on
May 24, 2001, the penalty of DISMISSAL is therefore affirmed
to take effect on June 1, 2001.
Caragdags dismissal was questioned by petitioner, and the
dispute was referred to voluntary arbitration upon
agreement of the parties. On May 6, 2002, the Voluntary
Arbitrator rendered a decision,17 the dispositive portion of
which reads:
WHEREFORE, premises considered, this Arbiter rules that
the three separate suspensions of Mr. Caragdag are valid, his
dismissal is legal and OSDA 4.32 of Hyatts Code of
Discipline is reasonable.
However, for humanitarian considerations, Hyatt is hereby
ordered to grant financial assistance to Mr. Caragdag in the
amount of One Hundred Thousand Pesos (PhP100,000.00).
In finding the three separate suspensions of Caragdag valid,
the Voluntary Arbitrator reasoned that the union officers and
members had no right to breach company rules and
regulations on security and employee discipline on the basis
of certain suspicions against management and an ongoing
CBA negotiation standoff. The Voluntary Arbitrator also
found that when Caragdag advised Lacambacal and Alvaro
not to give any statement, he threatened and intimidated his
superior while the latter was performing his duties.
Moreover, there is no reason why he did not arrange his time-
off with the Department Head concerned. Thus, Caragdag
was validly dismissed pursuant to OSDA 4.32 of Hyatts
Code of Discipline, which states that an employee who
commits three different acts of misconduct within a twelve
(12)-month period commits serious misconduct.
Petitioner sought reconsideration of the decision while
respondent filed a motion for partial reconsideration.
However, the Voluntary Arbitrator denied both motions on
May 26, 2003.18
On August 1, 2003, petitioner assailed the decision of the
Voluntary Arbitrator before the CA in a petition for certiorari
which was docketed as CA-G.R. SP No. 78364.19 As
mentioned at the outset, the CA dismissed the petition
outright for being the wrong remedy. The CA explained:
Rule 43, Section 5 of the 1997 Rules of Civil Procedure
explicitly provides that the proper mode of appeal from
judgments, final orders or resolution of voluntary arbitrators
is through a Petition for Review which should be filed within
fifteen (15) days from the receipt of notice of judgment, order
or resolution of the voluntary arbitrator.
Considering that petitioner intends this petition to be a
Petition for Certiorari, the Court hereby resolves to dismiss
the petition outright for being an improper mode of appeal.
Even if this Court treats the instant petition as a Petition for
Review, still the Court has no alternative but to dismiss the
same for having been filed out of time. As admitted by the
petitioner it received the Order dated 26 May 2003 denying
their motion for reconsideration on 02 June 2003. The fifteen
(15) day period within which to appeal through a Petition for
2
Review is until June 17, 2003. The petitioner filed the present
petition on August 1, 2003, way beyond the reglementary
period provided for by the Rules.20
Petitioner duly filed a motion for reconsideration of the
dismissal, but the motion was denied by the CA. Thus,
petitioner filed before this Court a petition for review on
certiorari which was docketed as G.R. No. 164939.
In the meantime, on June 30, 2003, respondent also filed a
petition for review21 with the CA on the ground that the
Voluntary Arbitrator committed a grievous error in
awarding financial assistance to Caragdag despite his finding
that the dismissal due to serious misconduct was valid. On
December 16, 2005, the CA promulgated a decision in CA-
G.R. SP. No. 77478 as follows:
WHEREFORE, the Decision dated May 6, 2002 of Voluntary
Arbitrator Buenaventura C. Magsalin is AFFIRMED with
MODIFICATION by DELETING the award of financial
assistance in the amount of P100,000.00 to Angelito
Caragdag.
SO ORDERED.22
In deleting the award of financial assistance to Caragdag, the
CA cited the case of Philippine Commercial International
Bank v. Abad,23 which held that the grant of separation pay
or other financial assistance to an employee dismissed for just
cause is based on equity and is a measure of social justice,
awarded to an employee who has been validly dismissed if
the dismissal was not due to serious misconduct or causes
that reflected adversely on the moral character of the
employee. In this case, the CA agreed with the findings of the
Voluntary Arbitrator that Caragdag was validly dismissed
due to serious misconduct. Accordingly, financial assistance
should not have been awarded to Caragdag. The CA also
noted that it is the employers prerogative to prescribe
reasonable rules and regulations necessary or proper for the
conduct of its business or concern, to provide certain
disciplinary measures to implement said rules and to ensure
compliance therewith.
Petitioner sought reconsideration of the decision, but the CA
denied the motion for lack of merit. Hence, petitioner filed
before us a petition for review on certiorari docketed as G.R.
No. 172303.
Considering that G.R. Nos. 164939 and 172303 have the same
origin, involve the same parties, and raise interrelated issues,
the petitions were consolidated.
Petitioner raises the following issues:
In G.R. No. 164939
THE COURT OF APPEALS ERRED IN DISMISSING
OUTRIGHT THE PETITION FOR CERTIORARI ON THE
GROUND THAT THE SAME IS AN IMPROPER MODE OF
APPEAL.24
In G.R. No. 172303
THE COURT OF APPEALS ERRED IN DELETING THE
AWARD OF FINANCIAL ASSISTANCE IN THE AMOUNT
OF P100,000.00 TO ANGELITO CARAGDAG.25
The issues for our resolution are thus two-fold: first, whether
the CA erred in dismissing outright the petition for certiorari
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filed before it on the ground that the same is an improper
mode of appeal; and second, whether the CA erred in
deleting the award of financial assistance in the amount of
P100,000.00 to Caragdag.
On the first issue, petitioner argues that because decisions
rendered by voluntary arbitrators are issued under Title VII-
A of the Labor Code, they are not covered by Rule 43 of the
1997 Rules of Civil Procedure, as amended, by express
provision of Section 2 thereof. Section 2, petitioner points out,
expressly provides that Rule 43 "shall not apply to judgments
or final orders issued under the Labor Code of the
Philippines." Hence, a petition for certiorari under Rule 65 is
the proper remedy for questioning the decision of the
Voluntary Arbitrator, and petitioner having availed of such
remedy, the CA erred in declaring that the petition was filed
out of time since the petition was filed within the sixty (60)-
day reglementary period.
On the other hand, respondent maintains that the CA acted
correctly in dismissing the petition for certiorari for being the
wrong mode of appeal. It stresses that Section 1 of Rule 43
clearly states that it is the governing rule with regard to
appeals from awards, judgments, final orders or resolutions
of voluntary arbitrators. Respondent contends that the
voluntary arbitrators authorized by law include the
voluntary arbitrators appointed and accredited under the
Labor Code, as they are considered as included in the term
"quasi-judicial instrumentalities."
Petitioners arguments fail to persuade.
In the case of Samahan ng mga Manggagawa sa Hyatt-
NUWHRAIN-APL v. Bacungan,26 we repeated the well-
settled rule that a decision or award of a voluntary arbitrator
is appealable to the CA via petition for review under Rule 43.
We held that:
The question on the proper recourse to assail a decision of a
voluntary arbitrator has already been settled in Luzon
Development Bank v. Association of Luzon Development
Bank Employees, where the Court held that the decision or
award of the voluntary arbitrator or panel of arbitrators
should likewise be appealable to the Court of Appeals, in line
with the procedure outlined in Revised Administrative
Circular No. 1-95 (now embodied in Rule 43 of the 1997 Rules
of Civil Procedure), just like those of the quasi-judicial
agencies, boards and commissions enumerated therein, and
consistent with the original purpose to provide a uniform
procedure for the appellate review of adjudications of all
quasi-judicial entities.
Subsequently, in Alcantara, Jr. v. Court of Appeals, and
Nippon Paint Employees Union-Olalia v. Court of Appeals,
the Court reiterated the aforequoted ruling. In Alcantara, the
Court held that notwithstanding Section 2 of Rule 43, the
ruling in Luzon Development Bank still stands. The Court
explained, thus:
"The provisions may be new to the Rules of Court but it is far
from being a new law. Section 2, Rules 42 of the 1997 Rules
of Civil Procedure, as presently worded, is nothing more but
a reiteration of the exception to the exclusive appellate
jurisdiction of the Court of Appeals, as provided for in
Section 9, Batas Pambansa Blg. 129, as amended by Republic
Act No. 7902:
(3) Exclusive appellate jurisdiction over all final judgments,
decisions, resolutions, orders or awards of Regional Trial
Courts and quasi-judicial agencies, instrumentalities, boards
3
or commissions, including the Securities and Exchange
Commission, the Employees Compensation Commission
and the Civil Service Commission, except those falling within
the appellate jurisdiction of the Supreme Court in accordance
with the Constitution, the Labor Code of the Philippines
under Presidential Decree No. 442, as amended, the
provisions of this Act and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of
Section 17 of the Judiciary Act of 1948.
"The Court took into account this exception in Luzon
Development Bank but, nevertheless, held that the decisions
of voluntary arbitrators issued pursuant to the Labor Code
do not come within its ambit x x x"
Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of
Civil Procedure, as amended, provide:
SECTION 1. Scope. - This Rule shall apply to appeals from
judgments or final orders of the Court of Tax Appeals and
from awards, judgments, final orders or resolutions of or
authorized by any quasi-judicial agency in the exercise of its
quasi-judicial functions. Among these agencies are the x x x,
and voluntary arbitrators authorized by law.
xxxx
SEC. 3. Where to appeal. - An appeal under this Rule may be
taken to the Court of Appeals within the period and in the
manner therein provided, whether the appeal involves
questions of fact, of law, or mixed questions of fact and law.
SEC. 4. Period of appeal. - The appeal shall be taken within
fifteen (15) days from notice of the award, judgment, final
order or resolution, or from the date of its last publication, if
publication is required by law for its effectivity, or of the
denial of petitioners motion for new trial or reconsideration
duly filed in accordance with the governing law of the court
or agency a quo. x x x. (Emphasis supplied.)
Hence, upon receipt on May 26, 2003 of the Voluntary
Arbitrators Resolution denying petitioners motion for
reconsideration, petitioner should have filed with the CA,
within the fifteen (15)-day reglementary period, a petition for
review, not a petition for certiorari.
Petitioner insists on a liberal interpretation of the rules but
we find no cogent reason in this case to deviate from the
general rule. Verily, rules of procedure exist for a noble
purpose, and to disregard such rules in the guise of liberal
construction would be to defeat such purpose. Procedural
rules are not to be disdained as mere technicalities. They may
not be ignored to suit the convenience of a party. Adjective
law ensures the effective enforcement of substantive rights
through the orderly and speedy administration of justice.
Rules are not intended to hamper litigants or complicate
litigation. But they help provide for a vital system of justice
where suitors may be heard following judicial procedure and
in the correct forum. Public order and our system of justice
are well served by a conscientious observance by the parties
of the procedural rules.27
On the second issue, petitioner argues that Caragdag is
entitled to financial assistance in the amount of P100,000 on
humanitarian considerations. Petitioner stresses that
Caragdags infractions were due to his being a union officer
and his acts did not show moral depravity. Petitioner also
adds that, while it is true that the award of financial
assistance is given only for dismissals due to causes specified
under Articles 283 and 284 of the Labor Code, as amended,
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this Court has, by way of exception, allowed the grant of
financial assistance to an employee dismissed for just causes
based on equity.
Respondent on the other hand, asserts that the CA correctly
deleted the award of financial assistance erroneously granted
to Caragdag considering that he was found guilty of serious
misconduct and other acts adversely reflecting on his moral
character. Respondent stresses that Caragdags willful
defiance of the hotels security policy, disrespect and
intimidation of a superior, and unjustifiable desertion of his
work assignment during working hours without permission,
patently show his serious and gross misconduct as well as
amoral character.28
Again, petitioners arguments lack merit.
The grant of separation pay or some other financial assistance
to an employee dismissed for just causes is based on equity.29
In Phil. Long Distance Telephone Co. v. NLRC,30 we ruled
that severance compensation, or whatever name it is called,
on the ground of social justice shall be allowed only when the
cause of the dismissal is other than serious misconduct or for
causes which reflect adversely on the employees moral
character. The Court succinctly discussed the propriety of the
grant of separation pay in this wise:
We hold that henceforth separation pay shall be allowed as a
measure of social justice only in those instances where the
employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character. Where
the reason for the valid dismissal is, for example, habitual
intoxication or an offense involving moral turpitude, like
theft or illicit sexual relations with a fellow worker, the
employer may not be required to give the dismissed
employee separation pay, or financial assistance, or whatever
other name it is called, on the ground of social justice.
A contrary rule would, as the petitioner correctly argues,
have the effect, of rewarding rather than punishing the erring
employee for his offense. And we do not agree that the
punishment is his dismissal only and that the separation pay
has nothing to do with the wrong he has committed. Of
course it has. Indeed, if the employee who steals from the
company is granted separation pay even as he is validly
dismissed, it is not unlikely that he will commit a similar
offense in his next employment because he thinks he can
expect a like leniency if he is again found out. This kind of
misplaced compassion is not going to do labor in general any
good as it will encourage the infiltration of its ranks by those
who do not deserve the protection and concern of the
Constitution.
The policy of social justice is not intended to countenance
wrongdoing simply because it is committed by the
underprivileged. At best it may mitigate the penalty but it
certainly will not condone the offense. Compassion for the
poor is an imperative of every humane society but only when
the recipient is not a rascal claiming an undeserved privilege.
Social justice cannot be permitted to be refuge of scoundrels
any more than can equity be an impediment to the
punishment of the guilty. Those who invoke social justice
may do so only if their hands are clean and their motives
blameless and not simply because they happen to be poor.
This great policy of our Constitution is not meant for the
protection of those who have proved they are not worthy of
it, like the workers who have tainted the cause of labor with
the blemishes of their own character.31
Here, Caragdags dismissal was due to several instances of
willful disobedience to the reasonable rules and regulations
4
prescribed by his employer. The Voluntary Arbitrator
pointed out that according to the hotels Code of Discipline,
an employee who commits three different acts of misconduct
within a twelve (12)-month period commits serious
misconduct. He stressed that Caragdags infractions were not
even spread in a period of twelve (12) months, but rather in
a period of a little over a month. Records show the various
violations of the hotels rules and regulations were
committed by Caragdag. He was suspended for violating the
hotel policy on bag inspection and body frisking. He was
likewise suspended for threatening and intimidating a
superior while the latter was counseling his staff. He was
again suspended for leaving his work assignment without
permission. Evidently, Caragdags acts constitute serious
misconduct.1wphi1
In Piedad v. Lanao del Norte Electric Cooperative, Inc.,32 we
ruled that a series of irregularities when put together may
constitute serious misconduct, which under Article 282 of the
Labor Code, as amended, is a just cause for dismissal.
Caragdags dismissal being due to serious misconduct, it
follows that he should not be entitled to financial assistance.
To rule otherwise would be to reward him for the grave
misconduct he committed. We must emphasize that social
justice is extended only to those who deserve its
compassion.33
WHEREFORE, the petitions for review on certiorari are
DENIED. The October 3, 2003 and August 13, 2004 Court of
Appeals Resolutions in CA-G.R. SP No. 78364, as well as the
Court of Appeals December 16, 2005 Decision and April 12,
2006 Resolution in CA-G.R. SP No. 77478, are AFFIRMED
and UPHELD.
With costs against the petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G. R. No. 154061 January 25, 2012
PANAY RAILWAYS INC., Petitioner,
vs.
HEVA MANAGEMENT and DEVELOPMENT
CORPORATION, PAMPLONA AGRO-INDUSTRIAL
CORPORATION, and SPOUSES CANDELARIA DAYOT
and EDMUNDO DAYOT, Respondents.
DECISION
SERENO, J.:
The present Petition stems from the dismissal by the Regional
Trial Court (RTC) of Iloilo City of a Notice of Appeal for
petitioners failure to pay the corresponding docket fees.
The facts are as follows:
On 20 April 1982, petitioner Panay Railways Inc., a
government-owned and controlled corporation, executed a
Real Estate Mortgage Contract covering several parcels of
lands, including Lot No. 6153, in favor of Traders Royal Bank
(TRB) to secure P 20 million worth of loan and credit
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accommodations. Petitioner excluded certain portions of Lot
No. 6153: that already sold to Shell Co., Inc. referred to as
6153-B, a road referred to as 6153-C, and a squatter area
known as 6153-D.1
Petitioner failed to pay its obligations to TRB, prompting the
bank to extra-judicially foreclose the mortgaged properties
including Lot No. 6153. On 20 January 1986, a Certificate of
Sale was issued in favor of the bank as the highest bidder and
purchaser. Consequently, the sale of Lot No. 6153 was
registered with the Register of Deeds on 28 January 1986 and
annotated at the back of the transfer certificates of title (TCT)
covering the mortgaged properties.
Thereafter, TRB caused the consolidation of the title in its
name on the basis of a Deed of Sale and an Affidavit of
Consolidation after petitioner failed to exercise the right to
redeem the properties. The corresponding TCTs were
subsequently issued in the name of the bank.
On 12 February 1990, TRB filed a Petition for Writ of
Possession against petitioner. During the proceedings,
petitioner, through its duly authorized manager and officer-
in-charge and with the assistance of counsel, filed a
Manifestation and Motion to Withdraw Motion for
Suspension of the Petition for the issuance of a writ of
possession.2 The pertinent portions of the Manifestation and
Motion state:
3. That after going over the records of this case and
the case of Traders Royal Bank vs. Panay Railway,
Inc., Civil Case No. 18280, PRI is irrevocably
withdrawing its Motion for Suspension referred to
in paragraph 1 above, and its Motion for
Reconsideration referred in paragraph 2 above and
will accept and abide by the September 21, 1990
Order denying the Motion For Suspension;
4. That PRI recognizes and acknowledges
petitioner (TRB) to be the registered owner of Lot
1-A; Lot 3834; Lot 6153; Lot 6158; Lot 6159, and Lot
5 covered by TCT No. T-84233; T-84234; T-84235; T-
84236; T-84237, T-84238 and T-45724 respectively,
free of liens and encumbrances, except that
portion sold to Shell Co. found in Lot 5. That
Petitioner (TRB) as registered owner is entitled to
peaceful ownership and immediate physical
possession of said real properties.
5. That PRI further acknowledges that the
Provincial Sheriff validly foreclosed the Real
Estate Mortgage erected by PRI due to failure to
pay the loan of P 20,000,000.00. That TRB was the
purchaser of these lots mentioned in paragraph 4
above at Sheriffs Auction Sale as evidenced by the
Certificate of Sale dated January 20, 1986 and the
Certificates of Titles issued to Petitioner;
6. That PRI further manifests that it has no past,
present or future opposition to the grant of the
Writ of Possession to TRB over the parcels of land
mentioned in paragraph 4 above and subject of
this Petition and even assuming "arguendo" that it
has, PRI irrevocably waives the same. That PRI
will even assist TRB in securing possession of said
properties as witness against squatters, illegal
occupants, and all other possible claimants;
7. That upon execution hereof, PRI voluntarily
surrenders physical possession and control of the
premises of these lots to TRB, its successors or its
5
assigns, together with all the buildings,
warehouses, offices, and all other permanent
improvements constructed thereon and will attest
to the title and possession of petitioner over said
real properties. (Emphasis supplied)
TCT No. T-84235 mentioned in the quoted portion above is
Lot No. 6153, which is under dispute.
It was only in 1994 that petitioner realized that the
extrajudicial foreclosure included some excluded properties
in the mortgage contract. Thus, on 19 August 1994, it filed a
Complaint for Partial Annulment of Contract to Sell and
Deed of Absolute Sale with Addendum; Cancellation of Title
No. T-89624; and Declaration of Ownership of Real Property
with Reconveyance plus Damages.3
It then filed an Amended Complaint4 on 1 January 1995 and
again filed a Second Amended Complaint5 on 8 December
1995.
Meanwhile, respondents filed their respective Motions to
Dismiss on these grounds: (1) petitioner had no legal capacity
to sue; (2) there was a waiver, an abandonment and an
extinguishment of petitioners claim or demand; (3)
petitioner failed to state a cause of action; and (4) an
indispensable party, namely TRB, was not impleaded.
On 18 July 1997, the RTC issued an Order6 granting the
Motion to Dismiss of respondents. It held that the
Manifestation and Motion filed by petitioner was a judicial
admission of TRBs ownership of the disputed properties.
The trial court pointed out that the Manifestation was
executed by petitioners duly authorized representative with
the assistance of counsel. This admission thus operated as a
waiver barring petitioner from claiming otherwise.
On 11 August 1997, petitioner filed a Notice of Appeal
without paying the necessary docket fees. Immediately
thereafter, respondents filed a Motion to Dismiss Appeal on
the ground of nonpayment of docket fees.
In its Opposition,7 petitioner alleged that its counsel was not
yet familiar with the revisions of the Rules of Court that
became effective only on 1 July 1997. Its representative was
likewise not informed by the court personnel that docket fees
needed to be paid upon the filing of the Notice of Appeal.
Furthermore, it contended that the requirement for the
payment of docket fees was not mandatory. It therefore
asked the RTC for a liberal interpretation of the procedural
rules on appeals.
On 29 September 1997, the RTC issued an Order8 dismissing
the appeal citing Sec. 4 of Rule 419 of the Revised Rules of
Court.
Petitioner thereafter moved for a reconsideration of the
Order10 alleging that the trial court lost jurisdiction over the
case after the former had filed the Notice of Appeal.
Petitioner also alleged that the court erred in failing to relax
procedural rules for the sake of substantial justice.
On 25 November 1997, the RTC denied the Motion.11
On 28 January 1998, petitioner filed with the Court of
Appeals (CA) a Petition for Certiorari and Mandamus under
Rule 65 alleging that the RTC had no jurisdiction to dismiss
the Notice of Appeal, and that the trial court had acted with
grave abuse of discretion when it strictly applied procedural
rules.
 @lendelacruz
On 29 November 2000, the CA rendered its Decision12 on the
Petition. It held that while the failure of petitioner to pay the
docket and other lawful fees within the reglementary period
was a ground for the dismissal of the appeal pursuant to Sec.
1 of Rule 50 of the Revised Rules of Court, the jurisdiction to
do so belonged to the CA and not the trial court. Thus,
appellate court ruled that the RTC committed grave abuse of
discretion in dismissing the appeal and set aside the latters
assailed Order dated 29 September 1997.
Thereafter, respondents filed their respective Motions for
Reconsideration.
It appears that prior to the promulgation of the CAs
Decision, this Court issued Administrative Matter (A.M.) No.
00-2-10-SC which took effect on 1 May 2000, amending Rule
4, Sec. 7 and Sec. 13 of Rule 41 of the 1997 Revised Rules of
Court. The circular expressly provided that trial courts may,
motu proprio or upon motion, dismiss an appeal for being
filed out of time or for nonpayment of docket and other
lawful fees within the reglementary period. Subsequently,
Circular No. 48-200013 was issued on 29 August 2000 and was
addressed to all lower courts.
By virtue of the amendment to Sec. 41, the CA upheld the
questioned Orders of the trial court by issuing the assailed
Amended Decision14 in the present Petition granting
respondents Motion for Reconsideration.
The CAs action prompted petitioner to file a Motion for
Reconsideration alleging that SC Circular No. 48-2000 should
not be given retroactive effect. It also alleged that the CA
should consider the case as exceptionally meritorious.
Petitioners counsel, Atty. Rexes V. Alejano, explained that he
was yet to familiarize himself with the Revised Rules of
Court, which became effective a little over a month before he
filed the Notice of Appeal. He was thus not aware that the
nonpayment of docket fees might lead to the dismissal of the
case.
On 30 May 2002, the CA issued the assailed Resolution 15
denying petitioners Motion for Reconsideration.
Hence, this Petition.
Petitioner alleges that the CA erred in sustaining the RTCs
dismissal of the Notice of Appeal. Petitioner contends that
the CA had exclusive jurisdiction to dismiss the Notice of
Appeal at the time of filing. Alternatively, petitioner argues
that while the appeal was dismissible for failure to pay
docket fees, substantial justice demands that procedural rules
be relaxed in this case.
The Petition has no merit.
Statutes and rules regulating the procedure of courts are
considered applicable to actions pending and unresolved at
the time of their passage. Procedural laws and rules are
retroactive in that sense and to that extent. The effect of
procedural statutes and rules on the rights of a litigant may
not preclude their retroactive application to pending actions.
This retroactive application does not violate any right of a
person adversely affected. Neither is it constitutionally
objectionable. The reason is that, as a general rule, no vested
right may attach to or arise from procedural laws and rules.
It has been held that "a person has no vested right in any
particular remedy, and a litigant cannot insist on the
application to the trial of his case, whether civil or criminal,
of any other than the existing rules of procedure."16 More so
when, as in this case, petitioner admits that it was not able to
6
pay the docket fees on time. Clearly, there were no
substantive rights to speak of when the RTC dismissed the
Notice of Appeal.
The argument that the CA had the exclusive jurisdiction to
dismiss the appeal has no merit.1wphi1 When this Court
accordingly amended Sec. 13 of Rule 41 through A.M. No. 00-
2-10-SC, the RTCs dismissal of the action may be considered
to have had the imprimatur of the Court. Thus, the CA
committed no reversible error when it sustained the
dismissal of the appeal, taking note of its directive on the
matter prior to the promulgation of its Decision.
As early as 1932, in Lazaro v. Endencia,17 we have held that
the payment of the full amount of the docket fees is an
indispensable step for the perfection of an appeal. The Court
acquires jurisdiction over any case only upon the payment of
the prescribed docket fees.18
Moreover, the right to appeal is not a natural right and is not
part of due process. It is merely a statutory privilege, which
may be exercised only in accordance with the law.19
We have repeatedly stated that the term "substantial justice"
is not a magic wand that would automatically compel this
Court to suspend procedural rules. Procedural rules are not
to be belittled or dismissed simply because their non-
observance may result in prejudice to a partys substantive
rights. Like all other rules, they are required to be followed,
except only for the most persuasive of reasons when they
may be relaxed to relieve litigants of an injustice not
commensurate with the degree of their thoughtlessness in
not complying with the procedure prescribed.20
We cannot consider counsels failure to familiarize himself
with the Revised Rules of Court as a persuasive reason to
relax the application of the Rules. It is well-settled that the
negligence of counsel binds the client. This principle is based
on the rule that any act performed by lawyers within the
scope of their general or implied authority is regarded as an
act of the client. Consequently, the mistake or negligence of
the counsel of petitioner may result in the rendition of an
unfavorable judgment against it.21
WHEREFORE, in view of the foregoing, the Petition is
DENIED for lack of merit.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 158239 January 25, 2012
PRISCILLA ALMA JOSE, Petitioner,
vs.
RAMON C. JAVELLANA, ET AL., Respondents.
DECISION
BERSAMIN, J.:
The denial of a motion for reconsideration of an order
granting the defending partys motion to dismiss is not an
interlocutory but a final order because it puts an end to the
particular matter involved, or settles definitely the matter
 @lendelacruz
therein disposed of, as to leave nothing for the trial court to
do other than to execute the order.1 Accordingly, the claiming
party has a fresh period of 15 days from notice of the denial
within which to appeal the denial.2
Antecedents
On September 8, 1979, Margarita Marquez Alma Jose
(Margarita) sold for consideration of P160,000.00 to
respondent Ramon Javellana by deed of conditional sale two
parcels of land with areas of 3,675 and 20,936 square meters
located in Barangay Mallis, Guiguinto, Bulacan. They agreed
that Javellana would pay P80,000.00 upon the execution of
the deed and the balance of P80,000.00 upon the registration
of the parcels of land under the Torrens System (the
registration being undertaken by Margarita within a
reasonable period of time); and that should Margarita
become incapacitated, her son and attorney-in-fact, Juvenal
M. Alma Jose (Juvenal), and her daughter, petitioner Priscilla
M. Alma Jose, would receive the payment of the balance and
proceed with the application for registration.3
After Margarita died and with Juvenal having predeceased
Margarita without issue, the vendors undertaking fell on the
shoulders of Priscilla, being Margaritas sole surviving heir.
However, Priscilla did not comply with the undertaking to
cause the registration of the properties under the Torrens
System, and, instead, began to improve the properties by
dumping filling materials therein with the intention of
converting the parcels of land into a residential or industrial
subdivision.4 Faced with Priscillas refusal to comply,
Javellana commenced on February 10, 1997 an action for
specific performance, injunction, and damages against her in
the Regional Trial Court in Malolos, Bulacan (RTC), docketed
as Civil Case No. 79-M-97 entitled Ramon C. Javellana,
represented by Atty. Guillermo G. Blanco v. Priscilla Alma
Jose.
In Civil Case No. 79-M-97, Javellana averred that upon the
execution of the deed of conditional sale, he had paid the
initial amount of P80,000.00 and had taken possession of the
parcels of land; that he had paid the balance of the purchase
price to Juvenal on different dates upon Juvenals
representation that Margarita had needed funds for the
expenses of registration and payment of real estate tax; and
that in 1996, Priscilla had called to inquire about the
mortgage constituted on the parcels of land; and that he had
told her then that the parcels of land had not been mortgaged
but had been sold to him.5
Javellana prayed for the issuance of a temporary restraining
order or writ of preliminary injunction to restrain Priscilla
from dumping filling materials in the parcels of land; and
that Priscilla be ordered to institute registration proceedings
and then to execute a final deed of sale in his favor.6
Priscilla filed a motion to dismiss, stating that the complaint
was already barred by prescription; and that the complaint
did not state a cause of action.7
The RTC initially denied Priscillas motion to dismiss on
February 4, 1998.8 However, upon her motion for
reconsideration, the RTC reversed itself on June 24, 1999 and
granted the motion to dismiss, opining that Javellana had no
cause of action against her due to her not being bound to
comply with the terms of the deed of conditional sale for not
being a party thereto; that there was no evidence showing the
payment of the balance; that he had never demanded the
registration of the land from Margarita or Juvenal, or brought
a suit for specific performance against Margarita or Juvenal;
and that his claim of paying the balance was not credible. 9
7
Javellana moved for reconsideration, contending that the
presentation of evidence of full payment was not necessary
at that stage of the proceedings; and that in resolving a
motion to dismiss on the ground of failure to state a cause of
action, the facts alleged in the complaint were hypothetically
admitted and only the allegations in the complaint should be
considered in resolving the motion.10 Nonetheless, he
attached to the motion for reconsideration the receipts
showing the payments made to Juvenal.11 Moreover, he
maintained that Priscilla could no longer succeed to any
rights respecting the parcels of land because he had
meanwhile acquired absolute ownership of them; and that
the only thing that she, as sole heir, had inherited from
Margarita was the obligation to register them under the
Torrens System.12
On June 21, 2000, the RTC denied the motion for
reconsideration for lack of any reason to disturb the order of
June 24, 1999.13
Accordingly, Javellana filed a notice of appeal from the June
21, 2000 order,14 which the RTC gave due course to, and the
records were elevated to the Court of Appeals (CA).
In his appeal (C.A.-G.R. CV No. 68259), Javellana submitted
the following as errors of the RTC,15 to wit:
I
THE TRIAL COURT GRIEVOUSLY ERRED IN
NOT CONSIDERING THE FACT THAT
PLAINTIFF-APELLANT HAD LONG COMPLIED
WITH THE FULL PAYMENT OF THE
CONSIDERATION OF THE SALE OF THE
SUBJECT PROPERTY AND HAD IMMEDIATELY
TAKEN ACTUAL AND PHYSICAL POSSESSION
OF SAID PROPERTY UPON THE SIGNING OF
THE CONDITIONAL DEED OF SALE;
II
THE TRIAL COURT OBVIOUSLY ERRED IN
MAKING TWO CONFLICTING
INTERPRETATIONS OF THE PROVISION OF
THE CIVIL [CODE], PARTICULARLY ARTICLE
1911, IN THE LIGHT OF THE TERMS OF THE
CONDITIONAL DEED OF SALE;
III
THE TRIAL COURT ERRED IN HOLDING THAT
DEFENDANT-APPELLEE BEING NOT A PARTY
TO THE CONDITIONAL DEED OF SALE
EXECUTED BY HER MOTHER IN FAVOR OF
PLAINTFF-
APPELLANT IS NOT BOUND THEREBY AND
CAN NOT BE COMPELLED TO DO THE ACT
REQUIRED IN THE SAID DEED OF
CONDITIONAL SALE;
IV
THE TRIAL COURT ERRED IN DISMISSING THE
AMENDED COMPLAINT WITHOUT HEARING
THE CASE ON THE MERITS.
 @lendelacruz
Priscilla countered that the June 21, 2000 order was not
appealable; that the appeal was not perfected on time; and
that Javellana was guilty of forum shopping.16
It appears that pending the appeal, Javellana also filed a
petition for certiorari in the CA to assail the June 24, 1999 and
June 21, 2000 orders dismissing his complaint (C.A.-G.R. SP
No. 60455). On August 6, 2001, however, the CA dismissed
the petition for certiorari,17 finding that the RTC did not
commit grave abuse of discretion in issuing the orders, and
holding that it only committed, at most, an error of judgment
correctible by appeal in issuing the challenged orders.
On November 20, 2002, the CA promulgated its decision in
C.A.-G.R. CV No. 68259,18 reversing and setting aside the
dismissal of Civil Case No. 79-M-97, and remanding the
records to the RTC "for further proceedings in accordance
with law."19 The CA explained that the complaint sufficiently
stated a cause of action; that Priscilla, as sole heir, succeeded
to the rights and obligations of Margarita with respect to the
parcels of land; that Margaritas undertaking under the
contract was not a purely personal obligation but was
transmissible to Priscilla, who was consequently bound to
comply with the obligation; that the action had not yet
prescribed due to its being actually one for quieting of title
that was imprescriptible brought by Javellana who had
actual possession of the properties; and that based on the
complaint, Javellana had been in actual possession since
1979, and the cloud on his title had come about only when
Priscilla had started dumping filling materials on the
premises.20
On May 9, 2003, the CA denied the motion for
reconsideration, 21 stating that it decided to give due course
to the appeal even if filed out of time because Javellana had
no intention to delay the proceedings, as in fact he did not
even seek an extension of time to file his appellants brief; that
current jurisprudence afforded litigants the amplest
opportunity to present their cases free from the constraints of
technicalities, such that even if an appeal was filed out of
time, the appellate court was given the discretion to
nonetheless allow the appeal for justifiable reasons.
Issues
Priscilla then brought this appeal, averring that the CA
thereby erred in not outrightly dismissing Javellanas appeal
because: (a) the June 21, 2000 RTC order was not appealable;
(b) the notice of appeal had been filed belatedly by three
days; and (c) Javellana was guilty of forum shopping for
filing in the CA a petition for certiorari to assail the orders of
the RTC that were the subject matter of his appeal pending in
the CA. She posited that, even if the CAs decision to
entertain the appeal was affirmed, the RTCs dismissal of the
complaint should nonetheless be upheld because the
complaint stated no cause of action, and the action had
already prescribed.
On his part, Javellana countered that the errors being
assigned by Priscilla involved questions of fact not proper for
the Court to review through petition for review on certiorari;
that the June 21, 2000 RTC order, being a final order, was
appealable; that his appeal was perfected on time; and that
he was not guilty of forum shopping because at the time he
filed the
petition for certiorari the CA had not yet rendered a decision
in C.A.-G.R.
8
CV No. 68259, and because the issue of ownership raised in
C.A.-G.R. CV No. 68259 was different from the issue of grave
abuse of discretion raised in C.A.-G.R. SP No. 60455.
Ruling
The petition for review has no merit.
I
Denial of the motion for reconsideration of the
order of dismissal was a final order and appealable
Priscilla submits that the order of June 21, 2000 was not the
proper subject of an appeal considering that Section 1 of Rule
41 of the Rules of Court provides that no appeal may be taken
from an order denying a motion for reconsideration.
Priscillas submission is erroneous and cannot be sustained.
First of all, the denial of Javellanas motion for
reconsideration left nothing more to be done by the RTC
because it confirmed the dismissal of Civil Case No. 79-M-97.
It was clearly a final order, not an interlocutory one. The
Court has distinguished between final and interlocutory
orders in Pahila-Garrido v. Tortogo,22 thuswise:
The distinction between a final order and an interlocutory
order is well known. The first disposes of the subject matter
in its entirety or terminates a particular proceeding or action,
leaving nothing more to be done except to enforce by
execution what the court has determined, but the latter does
not completely dispose of the case but leaves something else
to be decided upon. An interlocutory order deals with
preliminary matters and the trial on the merits is yet to be
held and the judgment rendered. The test to ascertain
whether or not an order or a judgment is
interlocutory or final is: does the order or judgment leave
something to be done in the trial court with respect to the
merits of the case? If it does, the order or judgment is
interlocutory; otherwise, it is final.
And, secondly, whether an order is final or interlocutory
determines whether appeal is the correct remedy or not. A
final order is appealable, to accord with the final judgment
rule enunciated in Section 1, Rule 41 of the Rules of Court to
the effect that "appeal may be taken from a judgment or final
order that completely disposes of the case, or of a particular
matter therein when declared by these Rules to be
appealable;"23 but the remedy from an interlocutory one is
not an appeal but a special civil action for certiorari. The
explanation for the differentiation of remedies given in
Pahila-Garrido v. Tortogo is apt:
xxx The reason for disallowing an appeal from an
interlocutory order is to avoid multiplicity of appeals in a
single action, which necessarily suspends the hearing and
decision on the merits of the action during the pendency of
the appeals. Permitting multiple appeals will necessarily
delay the trial on the merits of the case for a considerable
length of time, and will compel the adverse party to incur
unnecessary expenses, for one of the parties may interpose as
many appeals as there are incidental questions raised by him
and as there are interlocutory orders rendered or issued by
the lower court. An interlocutory order may be the subject of
an appeal, but only after a judgment has been rendered, with
the ground for appealing the order being included in the
appeal of the judgment itself.
 @lendelacruz
The remedy against an interlocutory order not subject of an
appeal is an appropriate special civil action under Rule 65,
provided that the interlocutory order is rendered without or
in excess of jurisdiction or with grave abuse of discretion.
Then is certiorari under Rule 65 allowed to be resorted to.
Indeed, the Court has held that an appeal from an order
denying a motion for reconsideration of a final order or
judgment is effectively an appeal from the final order or
judgment itself; and has expressly clarified that the
prohibition against appealing an order denying a motion for
reconsideration referred only to a denial of a motion for
reconsideration of an interlocutory order.24
II
Appeal was made on time pursuant to Neypes v. CA
Priscilla insists that Javellana filed his notice of appeal out of
time. She points out that he received a copy of the June 24,
1999 order on July 9, 1999, and filed his motion for
reconsideration on July 21, 1999 (or after the lapse of 12 days);
that the RTC denied his motion for reconsideration through
the order of June 21, 2000, a copy of which he received on July
13, 2000; that he had only three days from July 13, 2000, or
until July 16, 2000, within which to perfect an appeal; and that
having filed his notice of appeal on July 19, 2000, his appeal
should have been dismissed for being tardy by three days
beyond the expiration of the reglementary period.
Section 3 of Rule 41 of the Rules of Court provides:
Section 3. Period of ordinary appeal. The appeal shall be
taken within fifteen (15) days from notice of the judgment or
final order appealed from. Where a record on appeal is
required, the appellant shall file a notice of appeal and a
record on appeal within thirty (30) days from notice of the
judgment or final order.
The period of appeal shall be interrupted by a timely motion
for new trial or reconsideration. No motion for extension of
time to file a motion for new trial or reconsideration shall be
allowed. (n)
Under the rule, Javellana had only the balance of three days
from July 13, 2000, or until July 16, 2000, within which to
perfect an appeal due to the timely filing of his motion for
reconsideration interrupting the running of the period of
appeal. As such, his filing of the notice of appeal only on July
19, 2000 did not perfect his appeal on time, as Priscilla insists.
The seemingly correct insistence of Priscilla cannot be
upheld, however, considering that the Court meanwhile
adopted the fresh period rule in Neypes v. Court of
Appeals,25 by which an aggrieved party desirous of
appealing an adverse judgment or final order is allowed a
fresh period of 15 days within which to file the notice of
appeal in the RTC reckoned from receipt of the order denying
a motion for a new trial or motion for reconsideration, to wit:
The Supreme Court may promulgate procedural rules in all
courts. It has the sole prerogative to amend, repeal or even
establish new rules for a more simplified and inexpensive
process, and the speedy disposition of cases. In the rules
governing appeals to it and to the Court of Appeals,
particularly Rules 42, 43 and 45, the Court allows extensions
of time, based on justifiable and compelling reasons, for
parties to file their appeals. These extensions may consist of
15 days or more.
9
To standardize the appeal periods provided in the Rules and
to afford litigants fair opportunity to appeal their cases, the
Court deems it practical to allow a fresh period of 15 days
within which to file the notice of appeal in the Regional Trial
Court, counted from receipt of the order dismissing a motion
for a new trial or motion for reconsideration.
Henceforth, this "fresh period rule" shall also apply to Rule
40 governing appeals from the Municipal Trial Courts to the
Regional Trial Courts; Rule 42 on petitions for review from
the Regional Trial Courts to the Court of Appeals; Rule 43 on
appeals from quasi-judicial agencies to the Court of Appeals
and Rule 45 governing appeals by certiorari to the Supreme
Court. The new rule aims to regiment or make the appeal
period uniform, to be counted from receipt of the order
denying the motion for new trial, motion for reconsideration
(whether full or partial) or any final order or resolution.26
The fresh period rule may be applied to this case, for the
Court has already retroactively extended the fresh period
rule to "actions pending and undetermined at the time of
their passage and this will not violate any right of a person
who may feel that he is adversely affected, inasmuch as there
are no vested rights in rules of procedure."27 According to De
los Santos v. Vda. de Mangubat:28
Procedural law refers to the adjective law which prescribes
rules and forms of procedure in order that courts may be able
to administer justice. Procedural laws do not come within the
legal conception of a retroactive law, or the general rule
against the retroactive operation of statues they may be
given retroactive effect on actions pending and
undetermined at the time of their passage and this will not
violate any right of a person who may feel that he is adversely
affected, insomuch as there are no vested rights in rules of
procedure.
The "fresh period rule" is a procedural law as it prescribes a
fresh period of 15 days within which an appeal may be made
in the event that the motion for reconsideration is denied by
the lower court. Following the rule on retroactivity of
procedural laws, the "fresh period rule" should be applied to
pending actions, such as the present case.
Also, to deny herein petitioners the benefit of the "fresh
period rule" will amount to injustice, if not absurdity, since
the subject notice of judgment and final order were issued
two years later or in the year 2000, as compared to the notice
of judgment and final order in Neypes which were issued in
1998. It will be incongruous and illogical that parties
receiving notices of judgment and final orders issued in the
year 1998 will enjoy the benefit of the "fresh period rule"
while those later rulings of the lower courts such as in the
instant case, will not.29
Consequently, we rule that Javellanas notice of appeal was
timely filed pursuant to the fresh period rule.
III
No forum shopping was committed
Priscilla claims that Javellana engaged in forum shopping by
filing a notice of appeal and a petition for certiorari against
the same orders. As earlier noted, he denies that his doing so
violated the policy against forum shopping.
The Court expounded on the nature and purpose of forum
shopping in In Re: Reconstitution of Transfer Certificates of
Title Nos. 303168 and 303169 and Issuance of Owners
 @lendelacruz
Duplicate Certificates of Title In Lieu of Those Lost, Rolando
Edward G. Lim, Petitioner:30
Forum shopping is the act of a party litigant against whom
an adverse judgment has been rendered in one forum seeking
and possibly getting a favorable opinion in another forum,
other than by appeal or the special civil action of certiorari, or
the institution of two or more actions or proceedings
grounded on the same cause or supposition that one or the
other court would make a favorable disposition. Forum
shopping happens when, in the two or more pending cases,
there is identity of parties, identity of rights or causes of
action, and identity of reliefs sought. Where the elements of
litis pendentia are present, and where a final judgment in one
case will amount to res judicata in the other, there is forum
shopping. For litis pendentia to be a ground for the dismissal
of an action, there must be: (a) identity of the parties or at
least such as to represent the same interest in both actions; (b)
identity of rights asserted and relief prayed for, the relief
being founded on the same acts; and (c) the identity in the
two cases should be such that the judgment which may be
rendered in one would, regardless of which party is
successful, amount to res judicata in the other.
For forum shopping to exist, both actions must involve the
same transaction, same essential facts and circumstances and
must raise identical causes of action, subject matter and
issues. Clearly, it does not exist where different orders were
questioned, two distinct causes of action and issues were
raised, and two objectives were sought.
Should Javellanas present appeal now be held barred by his
filing of the petition for certiorari in the CA when his appeal
in that court was yet pending?
We are aware that in Young v. Sy,31 in which the petitioner
filed a notice of appeal to elevate the orders concerning the
dismissal of her case due to non-suit to the CA and a petition
for certiorari in the CA assailing the same orders four months
later, the Court ruled that the successive filings of the notice
of appeal and the petition for certiorari to attain the same
objective of nullifying the trial courts dismissal orders
constituted forum shopping that warranted the dismissal of
both cases. The Court said:
Ineluctably, the petitioner, by filing an ordinary appeal and a
petition for certiorari with the CA, engaged in forum
shopping. When the petitioner commenced the appeal, only
four months had elapsed prior to her filing with the CA the
Petition for Certiorari under Rule 65 and which eventually
came up to this Court by way of the instant Petition (re: Non-
Suit). The elements of litis pendentia are present between the
two suits. As the CA, through its Thirteenth Division,
correctly noted, both suits are founded on exactly the same
facts and refer to the same subject matterthe RTC Orders
which dismissed Civil Case No. SP-5703 (2000) for
failure to prosecute. In both cases, the petitioner is seeking
the reversal of the RTC orders.1wphi1 The parties, the rights
asserted, the issues professed, and the reliefs prayed for, are
all the same. It is evident that the judgment of one forum may
amount to res judicata in the other.
xxxx
The remedies of appeal and certiorari under Rule 65 are
mutually exclusive and not alternative or cumulative. This is
a firm judicial policy. The petitioner cannot hedge her case by
wagering two or more appeals, and, in the event that the
ordinary appeal lags significantly behind the others, she
10
cannot post facto validate this circumstance as a
demonstration that the ordinary appeal had not been speedy
or adequate enough, in order to justify the recourse to Rule
65. This practice, if adopted, would sanction the filing of
multiple suits in multiple fora, where each one, as the
petitioner couches it, becomes a "precautionary measure" for
the rest, thereby increasing the chances of a favorable
decision. This is the very evil that the proscription on forum
shopping seeks to put right. In Guaranteed Hotels, Inc. v.
Baltao, the Court stated that the grave evil sought to be
avoided by the rule against forum shopping is the rendition
by two competent tribunals of two separate and
contradictory decisions. Unscrupulous party litigants, taking
advantage of a variety of competent tribunals, may
repeatedly try their luck in several different fora until a
favorable result is reached. To avoid the resultant confusion,
the Court adheres strictly to the rules against forum
shopping, and any violation of these rules results in the
dismissal of the case.32
The same result was reached in Zosa v. Estrella,33 which
likewise involved the successive filing of a notice of appeal
and a petition for certiorari to challenge the same orders, with
the Court upholding the CAs dismissals of the appeal and
the petition for certiorari through separate decisions.
Yet, the outcome in Young v. Sy and Zosa v. Estrella is unjust
here even if the orders of the RTC being challenged through
appeal and the petition for certiorari were the same. The
unjustness exists because the appeal and the petition for
certiorari actually sought different objectives. In his appeal in
C.A.-G.R. CV No. 68259, Javellana aimed to undo the RTCs
erroneous dismissal of Civil Case No. 79-M-97 to clear the
way for his judicial demand for specific performance to be
tried and determined in due course by the RTC; but his
petition for certiorari had the ostensible objective "to prevent
(Priscilla) from developing the subject property and from
proceeding with the ejectment case until his appeal is finally
resolved," as the CA explicitly determined in its decision in
C.A.-G.R. SP No. 60455.34
Nor were the dangers that the adoption of the judicial policy
against forum shopping designed to prevent or to eliminate
attendant. The first danger, i.e., the multiplicity of suits upon
one and the same cause of action, would not materialize
considering that the appeal was a continuity of Civil Case No.
79-M-97, whereas C.A.-G.R. SP No. 60455 dealt with an
independent ground of alleged grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the
RTC. The second danger, i.e., the unethical malpractice of
shopping for a friendly court or judge to ensure a favorable
ruling or judgment after not getting it in the appeal, would
not arise because the CA had not yet decided C.A.-G.R. CV
No. 68259 as of the filing of the petition for certiorari.
Instead, we see the situation of resorting to two inconsistent
remedial approaches to be the result of the tactical
misjudgment by Javellanas counsel on the efficacy of the
appeal to stave off his caretakers eviction from the parcels of
land and to prevent the development of them into a
residential or commercial subdivision pending the appeal. In
the petition for certiorari, Javellana explicitly averred that his
appeal was "inadequate and not speedy to prevent private
respondent Alma Jose and her transferee/assignee xxx from
developing and disposing of the subject property to other
parties to the total deprivation of petitioners rights of
possession and ownership over the subject property," and
that the dismissal by the RTC had "emboldened private
respondents to fully develop the property and for respondent
Alma Jose to file an ejectment case against petitioners
overseer xxx."35 Thereby, it became far-fetched that Javellana
 @lendelacruz
brought the petition for certiorari in violation of the policy
against forum shopping.
WHEREFORE, the Court DENIES the petition for review on
certiorari; AFFIRMS the decision promulgated on November
20, 2002; and ORDERS the petitioner to pay the costs of suit.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
EN BANC
G.R. No. 141524 September 14, 2005
DOMINGO NEYPES, LUZ FAUSTINO, ROGELIO
FAUSTINO, LOLITO VICTORIANO, JACOB OBANIA
AND DOMINGO CABACUNGAN, Petitioners,
vs.
HON. COURT OF APPEALS, HEIRS OF BERNARDO
DEL MUNDO, namely: FE, CORAZON, JOSEFA,
SALVADOR and CARMEN, all surnamed DEL MUNDO,
LAND BANK OF THE PHILIPPINES AND HON.
ANTONIO N. ROSALES, Presiding Judge, Branch 43,
Regional Trial Court, Roxas, Oriental Mindoro,
Respondent.
DECISION
CORONA, J.:
Petitioners Domingo Neypes, Luz Faustino, Rogelio
Faustino, Lolito Victoriano, Jacob Obania and Domingo
Cabacungan filed an action for annulment of judgment and
titles of land and/or reconveyance and/or reversion with
preliminary injunction before the Regional Trial Court,
Branch 43, of Roxas, Oriental Mindoro, against the Bureau of
Forest Development, Bureau of Lands, Land Bank of the
Philippines and the heirs of Bernardo del Mundo, namely, Fe,
Corazon, Josefa, Salvador and Carmen.
In the course of the proceedings, the parties (both petitioners
and respondents) filed various motions with the trial court.
Among these were: (1) the motion filed by petitioners to
declare the respondent heirs, the Bureau of Lands and the
Bureau of Forest Development in default and (2) the motions
to dismiss filed by the respondent heirs and the Land Bank
of the Philippines, respectively.
In an order dated May 16, 1997, the trial court, presided by
public respondent Judge Antonio N. Rosales, resolved the
foregoing motions as follows: (1) the petitioners motion to
declare respondents Bureau of Lands and Bureau of Forest
Development in default was granted for their failure to file
an answer, but denied as against the respondent heirs of del
Mundo because the substituted service of summons on them
was improper; (2) the Land Banks motion to dismiss for lack
of cause of action was denied because there were
hypothetical admissions and matters that could be
determined only after trial, and (3) the motion to dismiss filed
by respondent heirs of del Mundo, based on prescription,
was also denied because there were factual matters that could
be determined only after trial.1
The respondent heirs filed a motion for reconsideration of the
order denying their motion to dismiss on the ground that the
trial court could very well resolve the issue of prescription
from the bare allegations of the complaint itself without
waiting for the trial proper.
11
In an order2 dated February 12, 1998, the trial court dismissed
petitioners complaint on the ground that the action had
already prescribed. Petitioners allegedly received a copy of
the order of dismissal on March 3, 1998 and, on the 15th day
thereafter or on March 18, 1998, filed a motion for
reconsideration. On July 1, 1998, the trial court issued another
order dismissing the motion for reconsideration3 which
petitioners received on July 22, 1998. Five days later, on July
27, 1998, petitioners filed a notice of appeal4 and paid the
appeal fees on August 3, 1998.
On August 4, 1998, the court a quo denied the notice of appeal,
holding that it was filed eight days late.5 This was received
by petitioners on July 31, 1998. Petitioners filed a motion for
reconsideration but this too was denied in an order dated
September 3, 1998.6
Via a petition for certiorari and mandamus under Rule 65 of
the 1997 Rules of Civil Procedure, petitioners assailed the
dismissal of the notice of appeal before the Court of Appeals.
In the appellate court, petitioners claimed that they had
seasonably filed their notice of appeal. They argued that the
15-day reglementary period to appeal started to run only on
July 22, 1998 since this was the day they received the final
order of the trial court denying their motion for
reconsideration. When they filed their notice of appeal on
July 27, 1998, only five days had elapsed and they were well
within the reglementary period for appeal.7
On September 16, 1999, the Court of Appeals (CA) dismissed
the petition. It ruled that the 15-day period to appeal should
have been reckoned from March 3, 1998 or the day they
received the February 12, 1998 order dismissing their
complaint. According to the appellate court, the order was
the "final order" appealable under the Rules. It held further:
Perforce the petitioners tardy appeal was correctly
dismissed for the (P)erfection of an appeal within the
reglementary period and in the manner prescribed by law is
jurisdictional and non-compliance with such legal
requirement is fatal and effectively renders the judgment
final and executory.8
Petitioners filed a motion for reconsideration of the
aforementioned decision. This was denied by the Court of
Appeals on January 6, 2000.
In this present petition for review under Rule 45 of the Rules,
petitioners ascribe the following errors allegedly committed
by the appellate court:
I
THE HONORABLE COURT OF APPEALS ERRED IN
DISMISSING THE PETITIONERS PETITION FOR
CERTIORARI AND MANDAMUS AND IN AFFIRMING
THE ORDER OF THE HON. JUDGE ANTONIO N.
ROSALES WHICH DISMISSED THE PETITIONERS
APPEAL IN CIVIL CASE NO. C-36 OF THE REGIONAL
TRIAL COURT, BRANCH 43, ROXAS, ORIENTAL
MINDORO, EVEN AFTER THE PETITIONERS HAD PAID
THE APPEAL DOCKET FEES.
II
THE HONORABLE COURT OF APPEALS LIKEWISE
ERRED IN RULING AND AFFIRMING THE DECISION OR
ORDER OF THE RESPONDENT HON. ANTONIO M.
ROSALES THAT PETITIONERS APPEAL WAS FILED OUT
 @lendelacruz
OF TIME WHEN PETITIONERS RECEIVED THE LAST OR
FINAL ORDER OF THE COURT ON JULY 22, 1998 AND
FILED THEIR NOTICE OF APPEAL ON JULY 27, 1998 AND
PAID THE APPEAL DOCKET FEE ON AUGUST 3, 1998.
III
THE HONORABLE COURT OF APPEALS FURTHER
ERRED IN RULING THAT THE WORDS "FINAL ORDER"
IN SECTION 3, RULE 41, OF THE 1997 RULES OF CIVIL
PROCEDURE WILL REFER TO THE [FIRST] ORDER OF
RESPONDENT JUDGE HON. ANTONIO M. MORALES
DATED FEBRUARY 12, 1998 INSTEAD OF THE LAST AND
FINAL ORDER DATED JULY 1, 1998 COPY OF WHICH
WAS RECEIVED BY PETITIONERS THROUGH COUNSEL
ON JULY 22, 1998.
IV.
THE HONORABLE COURT OF APPEALS FINALLY
ERRED IN FINDING THAT THE DECISION IN THE CASE
OF DENSO, INC. V. IAC, 148 SCRA 280, IS APPLICABLE IN
THE INSTANT CASE THEREBY IGNORING THE
PECULIAR FACTS AND CIRCUMSTANCES OF THIS
CASE AND THE FACT THAT THE SAID DECISION WAS
RENDERED PRIOR TO THE ENACTMENT OF THE 1997
RULES OF CIVIL PROCEDURE.9
The foregoing issues essentially revolve around the period
within which petitioners should have filed their notice of
appeal.
First and foremost, the right to appeal is neither a natural
right nor a part of due process. It is merely a statutory
privilege and may be exercised only in the manner and in
accordance with the provisions of law. Thus, one who seeks
to avail of the right to appeal must comply with the
requirements of the Rules. Failure to do so often leads to the
loss of the right to appeal.10 The period to appeal is fixed by
both statute and procedural rules. BP 129,11 as amended,
provides:
Sec. 39. Appeals. The period for appeal from final orders,
resolutions, awards, judgments, or decisions of any court in
all these cases shall be fifteen (15) days counted from the
notice of the final order, resolution, award, judgment, or
decision appealed from. Provided, however, that in habeas
corpus cases, the period for appeal shall be (48) forty-eight
hours from the notice of judgment appealed from. x x x
Rule 41, Section 3 of the 1997 Rules of Civil Procedure states:
SEC. 3. Period of ordinary appeal. The appeal shall be
taken within fifteen (15) days from the notice of the
judgment or final order appealed from. Where a record on
appeal is required, the appellant shall file a notice of appeal
and a record on appeal within thirty (30) days from the notice
of judgment or final order.
The period to appeal shall be interrupted by a timely motion
for new trial or reconsideration. No motion for extension of
time to file a motion for new trial or reconsideration shall be
allowed. (emphasis supplied)
Based on the foregoing, an appeal should be taken within 15
days from the notice of judgment or final order appealed
from. A final judgment or order is one that finally disposes
of a case, leaving nothing more for the court to do with
respect to it. It is an adjudication on the merits which,
considering the evidence presented at the trial, declares
12
categorically what the rights and obligations of the parties
are; or it may be an order or judgment that dismisses an
action.12
As already mentioned, petitioners argue that the order of July
1, 1998 denying their motion for reconsideration should be
construed as the "final order," not the February 12, 1998 order
which dismissed their complaint. Since they received their
copy of the denial of their motion for reconsideration only on
July 22, 1998, the 15-day reglementary period to appeal had
not yet lapsed when they filed their notice of appeal on July
27, 1998.
What therefore should be deemed as the "final order," receipt
of which triggers the start of the 15-day reglementary period
to appeal the February 12, 1998 order dismissing the
complaint or the July 1, 1998 order dismissing the MR?
In the recent case of Quelnan v. VHF Philippines, Inc.,13 the trial
court declared petitioner Quelnan non-suited and
accordingly dismissed his complaint. Upon receipt of the
order of dismissal, he filed an omnibus motion to set it aside.
When the omnibus motion was filed, 12 days of the 15-day
period to appeal the order had lapsed. He later on received
another order, this time dismissing his omnibus motion. He
then filed his notice of appeal. But this was likewise
dismissed for having been filed out of time.
The court a quo ruled that petitioner should have appealed
within 15 days after the dismissal of his complaint since this
was the final order that was appealable under the Rules. We
reversed the trial court and declared that it was the denial of
the motion for reconsideration of an order of dismissal of a
complaint which constituted the final order as it was what
ended the issues raised there.
This pronouncement was reiterated in the more recent case
of Apuyan v. Haldeman et al.14 where we again considered the
order denying petitioner Apuyans motion for
reconsideration as the final order which finally disposed of
the issues involved in the case.
Based on the aforementioned cases, we sustain petitioners
view that the order dated July 1, 1998 denying their motion for
reconsideration was the final order contemplated in the Rules.
We now come to the next question: if July 1, 1998 was the
start of the 15-day reglementary period to appeal, did
petitioners in fact file their notice of appeal on time?
Under Rule 41, Section 3, petitioners had 15 days from notice
of judgment or final order to appeal the decision of the trial
court. On the 15th day of the original appeal period (March
18, 1998), petitioners did not file a notice of appeal but instead
opted to file a motion for reconsideration. According to the
trial court, the MR only interrupted the running of the 15-day
appeal period.15 It ruled that petitioners, having filed their
MR on the last day of the 15-day reglementary period to
appeal, had only one (1) day left to file the notice of appeal
upon receipt of the notice of denial of their MR. Petitioners,
however, argue that they were entitled under the Rules to a
fresh period of 15 days from receipt of the "final order" or the order
dismissing their motion for reconsideration.
In Quelnan and Apuyan, both petitioners filed a motion for
reconsideration of the decision of the trial court. We ruled
there that they only had the remaining time of the 15-day
appeal period to file the notice of appeal. We consistently
applied this rule in similar cases,16 premised on the long-
settled doctrine that the perfection of an appeal in the manner
 @lendelacruz
and within the period permitted by law is not only
mandatory but also jurisdictional.17 The rule is also founded
on deep-seated considerations of public policy and sound
practice that, at risk of occasional error, the judgments and
awards of courts must become final at some definite time
fixed by law.18
Prior to the passage of BP 129, Rule 41, Section 3 of the 1964
Revised Rules of Court read:
Sec. 3. How appeal is taken. Appeal maybe taken by
serving upon the adverse party and filing with the trial
court within thirty (30) days from notice of order or
judgment, a notice of appeal, an appeal bond, and a record
on appeal. The time during which a motion to set aside the
judgment or order or for new trial has been pending shall be
deducted, unless such motion fails to satisfy the
requirements of Rule 37.
But where such motion has been filed during office hours of
the last day of the period herein provided, the appeal must
be perfected within the day following that in which the party
appealing received notice of the denial of said motion.19
(emphasis supplied)
According to the foregoing provision, the appeal period
previously consisted of 30 days. BP 129, however, reduced
this appeal period to 15 days. In the deliberations of the
Committee on Judicial Reorganization20 that drafted BP 129,
the raison d etre behind the amendment was to shorten the
period of appeal21 and enhance the efficiency and
dispensation of justice. We have since required strict
observance of this reglementary period of appeal. Seldom
have we condoned late filing of notices of appeal,22 and only
in very exceptional instances to better serve the ends of
justice.
In National Waterworks and Sewerage Authority and Authority v.
Municipality of Libmanan,23 however, we declared that appeal
is an essential part of our judicial system and the rules of
procedure should not be applied rigidly. This Court has on
occasion advised the lower courts to be cautious about not
depriving a party of the right to appeal and that every party
litigant should be afforded the amplest opportunity for the
proper and just disposition of his cause, free from the
constraint of technicalities.
In de la Rosa v. Court of Appeals,24 we stated that, as a rule,
periods which require litigants to do certain acts must be
followed unless, under exceptional circumstances, a delay in
the filing of an appeal may be excused on grounds of
substantial justice. There, we condoned the delay incurred by
the appealing party due to strong considerations of fairness
and justice.
In setting aside technical infirmities and thereby giving due
course to tardy appeals, we have not been oblivious to or
unmindful of the extraordinary situations that merit liberal
application of the Rules. In those situations where
technicalities were dispensed with, our decisions were not
meant to undermine the force and effectivity of the periods
set by law. But we hasten to add that in those rare cases
where procedural rules were not stringently applied, there
always existed a clear need to prevent the commission of a
grave injustice. Our judicial system and the courts have
always tried to maintain a healthy balance between the strict
enforcement of procedural laws and the guarantee that every
litigant be given the full opportunity for the just and proper
disposition of his cause.25
13
The Supreme Court may promulgate procedural rules in all
courts.26 It has the sole prerogative to amend, repeal or even
establish new rules for a more simplified and inexpensive
process, and the speedy disposition of cases. In the rules
governing appeals to it and to the Court of Appeals,
particularly Rules 42,27 4328 and 45,29 the Court allows
extensions of time, based on justifiable and compelling
reasons, for parties to file their appeals. These extensions may
consist of 15 days or more.
To standardize the appeal periods provided in the Rules and
to afford litigants fair opportunity to appeal their cases, the
Court deems it practical to allow a fresh period of 15 days
within which to file the notice of appeal in the Regional Trial
Court, counted from receipt of the order dismissing a motion
for a new trial or motion for reconsideration. 30
Henceforth, this "fresh period rule" shall also apply to Rule
40 governing appeals from the Municipal Trial Courts to the
Regional Trial Courts; Rule 42 on petitions for review from
the Regional Trial Courts to the Court of Appeals; Rule 43 on
appeals from quasi-judicial agencies31 to the Court of
Appeals and Rule 45 governing appeals by certiorari to the
Supreme Court.32 The new rule aims to regiment or make the
appeal period uniform, to be counted from receipt of the
order denying the motion for new trial, motion for
reconsideration (whether full or partial) or any final order or
resolution.
We thus hold that petitioners seasonably filed their notice of
appeal within the fresh period of 15 days, counted from July
22, 1998 (the date of receipt of notice denying their motion for
reconsideration). This pronouncement is not inconsistent
with Rule 41, Section 3 of the Rules which states that the
appeal shall be taken within 15 days from notice of judgment
or final order appealed from. The use of the disjunctive word
"or" signifies disassociation and independence of one thing
from another. It should, as a rule, be construed in the sense
in which it ordinarily implies.33 Hence, the use of "or" in the
above provision supposes that the notice of appeal may be
filed within 15 days from the notice of judgment or within 15
days from notice of the "final order," which we already
determined to refer to the July 1, 1998 order denying the
motion for a new trial or reconsideration.
Neither does this new rule run counter to the spirit of Section
39 of BP 129 which shortened the appeal period from 30 days
to 15 days to hasten the disposition of cases. The original
period of appeal (in this case March 3-18, 1998) remains and
the requirement for strict compliance still applies. The fresh
period of 15 days becomes significant only when a party opts to file
a motion for new trial or motion for reconsideration. In this
manner, the trial court which rendered the assailed decision
is given another opportunity to review the case and, in the
process, minimize and/or rectify any error of judgment.
While we aim to resolve cases with dispatch and to have
judgments of courts become final at some definite time, we
likewise aspire to deliver justice fairly.
In this case, the new period of 15 days eradicates the
confusion as to when the 15-day appeal period should be
counted from receipt of notice of judgment (March 3, 1998)
or from receipt of notice of "final order" appealed from (July
22, 1998).
To recapitulate, a party litigant may either file his notice of
appeal within 15 days from receipt of the Regional Trial
Courts decision or file it within 15 days from receipt of the
order (the "final order") denying his motion for new trial or
motion for reconsideration. Obviously, the new 15-day
period may be availed of only if either motion is filed;
 @lendelacruz
otherwise, the decision becomes final and executory after the
lapse of the original appeal period provided in Rule 41,
Section 3.
Petitioners here filed their notice of appeal on July 27, 1998 or
five days from receipt of the order denying their motion for
reconsideration on July 22, 1998. Hence, the notice of appeal
was well within the fresh appeal period of 15 days, as already
discussed.34
We deem it unnecessary to discuss the applicability of Denso
(Philippines), Inc. v. IAC35 since the Court of Appeals never
even referred to it in its assailed decision.
WHEREFORE, the petition is hereby GRANTED and the
assailed decision of the Court of Appeals REVERSED and
SET ASIDE. Accordingly, let the records of this case be
remanded to the Court of Appeals for further proceedings.
No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-286 March 29, 1946
FREDESVINDO S. ALVERO, petitioner,
vs.
M.L. DE LA ROSA, Judge of First Instance of Manila,
JOSE R. VICTORIANO, and MARGARITA VILLARICA,
respondents..
DE JOYA, J.:
This is an original petition for certiorari filed in this court.
The record shows that, on June 25, 1945, respondent Jose R.
Victoriano had filed a complaint, in the Court of First
Instance of the City of Manila, against petitioner Fredesvindo
S. Alvero and one Margarita Villarica, alleging two causes of
action, to wit, (1) to declare in force the contract of sale, made
on October 1, 1940, between said Jose R. Victoriano and
Margarita Villarica, of two (2) parcels of land in the Manotoc
subdivision, Balintawak, in the barrio of Calaanan,
municipality of Caloocan, Province of Rizal, with a combined
area of 480 square meters, which land was subsequently sold
by said Villarica, in favor of petitioner Fredesvindo S. Alvero,
on December 31, 1944, for the sum of P100,000 in Japanese
military notes; and (2) to declare said subsequent sale null
and void.
On July 7, 1945, Margarita Villarica filed an answer to said
complaint, expressly admitting having sold said land to
Fresdesvindo S. Alvero, for P100,000, in December, 1944, due
to the imperative necessity of raising funds with which to
provide for herself and family, and that she did not
remember the previous sale; at the same time, offering to
repurchase said land from Fredesvindo S. Alvero in the sum
of P5,000, but that the latter refused to accept the offer.
On July 13, 1945, Fredesvindo S. Alvero, in answering said
complaint, denied the allegations made therein, and claimed
exclusive ownership of the land in question, and at the same
time set up a counterclaim and crossclaim in his answer,
14
demanding from Jose R. Victoriano a P200-monthly rent on
said property, beginning from February, 1945, plus P2,000 as
damages.
On July 21, 1945, Jose R. Victoriano filed an answer to said
counterclaim, denying Fredesvindo S. Alvero's alleged
ownership over said land, and the other allegations
contained in Alvero's answer.
After the trial of the case before the Hon. Mariano L. de la
Rosa, Judge of the Court of First Instance of the City of
Manila, one of the respondents in this case, on November 16,
1945, said respondent judge rendered his decision, in which
it was declared that the two (2) parcels of land in question,
with a combined area of 480 square meters had been sold by
Margarita Villarica to Jose R. Victoriano, since October 1,
1940, for the sum of P6,000, on the condition that the
purchaser should make a down payment of P1,700, and a
monthly payment of P76.86 in 120 equal monthly
installments; that Jose R. Victoriano continued making said
monthly payments until December, 1941, but that owing to
the war-time conditions then existing, Margarita Villarica
agreed verbally to suspend such payments until the
restoration of peace; that immediately after said sale of said
land to him, Jose R. Victoriano took possession thereof and
made improvements thereon to the amount of P800, and
continued occupying said property until December, 1944,
when he abandoned the same to go to evacuation places, but
returned thereto in February, 1945; that Margarita Villarica,
having forgotten the sale of said land to Jose R. Victoriano,
sold the same for P100,000 in Japanese military notes, on
December 31, 1944, to Fredesvindo S. Alvero, but afterwards
offered to repurchase said property from him, for the sum of
P8,000 in genuine Philippine currency, after liberation; that
Fredesvindo S. Alvero presented the deed of sale, executed
in his favor, to the Register of Deeds of the City of Manila, on
January 3, 1945, and took possession of said property in
December, 1944, but afterwards found Jose R. Victoriano in
the premises in February, 1945; that in the contract of sale
executed by Margarita Villarica, in favor of Jose R.
Victoriano, it was agreed that, upon failure of the purchaser
to make payments of three (3) successive mothly
installments, the vendor would be free to sell the property
again, forfeiting the payments made, except in the case of
force majeure; that there was really a verbal agreement
between Margarita Villarica and Jose Victoriano, made in
February, 1942, for the suspension of the payment of the
monthly installments until the restoration of peace; and that
although Jose R. Victoriano had presented the deed of sale,
executed in his favor, to the Register of Deeds, in Pasig, Rizal,
like Fredesvindo S. Alvero, he had also failed to secure the
transfer of title to his name. And considering that Jose R.
Victoriano's document was older than that of Fredesvindo S.
Alvero, and that he had taken possession of said property,
since October 1, 1940, the respondent judge rendered his
decision in favor of Jose R. Victoriano, adjudging to him the
title over the property in question, including all the
improvements existing thereon, and dismissed the
counterclaim.
On November 28, 1945, Fredesvindo S. Alvero was notified
of said decision; and on December 27, 1945, he filed a petition
for reconsideration and new trial, which was denied on
January 3, 1946; and of said order he was notified on January
7, 1946.
On January 8, 1946, Fredesvindo S. Alvero filed his notice of
appeal and record on appeal simultaneously in the lower
court, without filing the P60-appeal bond.
 @lendelacruz
On January 14, 1946, Jose R. Victoriano filed a petition to
dismiss the appeal, and at the same time, asked for the
execution of the judgment.
On January 15, 1946, Fredesvindo S. Alvero filed an
opposition to said motion to dismiss, alleging that on the
very same day, January 15, 1946, said appeal bond for P60
had been actually filed, and allege as an excuse, for not filing
the said appeal bond, in due time, the illness of his lawyer's
wife, who died on January 10, 1946, and buried the following
day.
On January 17, 1946, the respondent judge, Hon. Mariano L.
de la Rosa, ordered the dismissal of the appeal, declaring
that, although the notice of appeal and record on appeal had
been filed in due time, the P60-appeal bond was filed too late.
On January 23, 1946, Fredesvindo S. Alvero filed a petition
for the reconsideration of the said order dated January 17,
1946, dismissing his appeal; and said petition for
reconsideration was denied on January 29, 1946. Hence, this
petition for certiorari.
On February 11, 1946, the respondents filed their answer to
the petition for certiorari, alleging (1) that said petition is
defective in form as well as in substance; (2) that there has
been no excusable negligence, on the part of the petitioner, or
grave abuse of discretion on the part of the respondent judge,
in the instant case.
As already stated, the decision rendered by the respondent
judge, Hon. Mariano L. de la Rosa, was dated November 16,
1945, of which counsel for Fredesvindo S. Alvero was
notified on November 28, 1945; that his motion for
reconsideration and new trial was filed on December 27,
1945, and denied on January 3, 1946, and that said counsel for
Alvero was notified of said order on January 7, 1946; and that
he filed his notice of appeal and record on appeal the
following day, to wit, January 8, 1946, and that the P60-
appeal bond was filed only on January 15, 1946.
According to the computation erroneously made by the
court, the last day for filing and perfecting the appeal, in this
case, was January 8, 1946, or which date, Fredesvindo S.
Alvero should have filed his (1) notice of appeal, (2) record
on appeal, and (3) appeal bond. But the P60-appeal bond was
filed only on January 15, 1946.
Failure to perfect the appeal, within the time prescribed by
the rules of court, will cause the judgment to become final,
and the certification of the record on appeal thereafter,
cannot restore the jurisdiction which has been lost. (Roman
Catholic Bishop of Tuguegarao vs. Director of Lands, 34 Phil.,
623; Estate of Cordoba and Zarate vs. Alabado, 34 Phil., 920;
and Bermudez vs. Director of Lands, 36 Phil., 774.)
The period within which the record on appeal and appeal
bond should be perfected and filed may, however, be
extended by order of the court, upon application made, prior
to the expiration of the original period. (Layda vs. Legaspi, 39
Phil., 83.)
Rules of courts, promulgated by authority of law, have the
force and effect of law; and rules of court prescribing the time
within which certain acts must be done, or certain
proceedings taken, are considered absolutely indispensable
to the prevention of needless delays and to the orderly and
speedy discharge of judicial business. (Shioji vs. Harvey, 43
Phil., 333.)
15
Strict compliance with the rules of court has been held
mandatory and imperative, so that failure to pay the docket
fee in the Supreme Court, within the period fixed for that
purpose, will cause the dismissal of the appeal. (Salaveria vs.
Albindo, 39Phil., 922.) In the same manner, on failure of the
appellant in a civil case to serve his brief, within the time
prescribed by said rules, on motion of the appellee and notice
to the appellant, or on its own motion, the court may dismiss
the appeal. (Shioji vs. Harvey, 43 Phil., 333.)
Counsel for the petitioner Fredesvindo Alvero alleges as an
excuse, for his failure to perfect and file his appeal, in due
time, the illness of his wife, which ended in her death on
January 10, 1946, and by which he was greatly affected.
How little, indeed, does one realize that in life he lives in the
midst of death; and that every that passes in a step nearer
towards eternity. Yet, notwithstanding the inexorable laws of
human destiny, every mortal fears death, and such fear is
worse than death itself. That is perhaps the reason why those
feeling its approach, in their last moments, want to be
surrounded by the ones dearest to their heart, to hear from
them words of tenderness and eternal truth, and thus receive
as balm their love and the cheering influence of the
traditional faith, and the consolation of religious hope.
The virtuous and loving wife is the peculiar gift of heaven,
and Mother is the name for God in the innocent lips and
hearts of adoring children. "She looketh well to the ways of
her household, and eateth not the bread of idleness." "And
her daughters arise up and call her blessed." And when she
dies in the bosom of God, her children find solace in the
contemplation of her eternal bliss, as mirrored in her tranquil
beauty.
It is not, therefore, difficult to understand the state of mind
of the attorney, and his intense devotion and ardent affection
towards his dying wife.
Unfortunately, counsel for petitioner has created a difficult
situation. In his motion for reconsideration and new trial,
dated December 27, 1945, he did not point out specifically the
findings or conclusions in the judgment, are not supported
by the evidence or which are contrary to law, making express
reference to the pertinent evidence or legal provisions, as
expressly required by Rule 37, section 2, paragraph (c) of the
Rules of Court. Motions of that kind have been considered as
motions pro forma intended merely to delay the proceeding,
and, as such, they cannot and will not interrupt or suspend
the period of time for the perfection of the appeal. (Valdez vs.
Jugo, 74 Phil., 49, and Reyes vs. Court of Appeals and
Bautista, 74 Phil., 235.) Hence, the period for perfecting
herein petitioner's appeal commenced from November 28,
1945, when he was notified of the judgment rendered in the
case, and expired on December 28, 1945; and, therefore, his
notice of appeal and record on appeal filed on January 8,
1946, were filed out of time, and much more so his appeal
bond, which was only filed on January 15, 1946.
It is futile to speak of hospitals, doctors and nurses to minister
alone to the needs of the sick and the dying, who are dearest
to us, for our reasoning powers are of little avail when sorrow
or despair rages within.
But human laws are inflexible and no personal consideration
should stand in the way of performing a legal duty.
The attorney for petitioner Fredesvindo S. Alvero could have
asked for an extension of time, within which to file and
perfect his appeal, in the court below; but he had failed to do
 @lendelacruz
so, and he must bear the consequences of his act. A strict
observance of the rules of court, which have been considered
indispensable to the prevention of needless delays and to the
orderly and speedy dispatch of judicial business, is an
imperative necessity.
It may not be amiss to state in this connection that no
irreparable damage has been caused to the petitioner
Fredesvindo S. Alvero, as Margarita Villarica, the vendor to
the two, of the land in question, has shown readiness to
repair the damage done.
No showing having been made that there had been merely
excusable negligece, on the part of the attorney for petitioner
Fredesvindo S. Alvero, and that there had been gave abuse of
sound judicial discretion, on the part of the respondent judge,
the petition for certiorari filed in this case, is, therefore, hereby
dismissed, without costs. So ordered.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 180291 July 27, 2010
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS)
and WINSTON F. GARCIA, in his capacity as
PRESIDENT and GENERAL MANAGER of the GSIS,
Petitioners,
vs.
DINNAH VILLAVIZA, ELIZABETH DUQUE,
ADRONICO A. ECHAVEZ, RODEL RUBIO, ROWENA
THERESE B. GRACIA, PILAR LAYCO, and ANTONIO
JOSE LEGARDA, Respondents.
DECISION
MENDOZA, J.:
This is a Petition for Review on Certiorari under Rule 45 of
the Rules of Court seeking to reverse and set aside the August
31, 2007 Decision1 of the Court of Appeals (CA), in CA-G.R.
SP No. 98952, dismissing the petition for certiorari of
Government Service Insurance System (GSIS) assailing the
Civil Service Commission's Resolution No. 062177.
THE FACTS:
Petitioner Winston Garcia (PGM Garcia), as President and
General Manager of the GSIS, filed separate formal charges
against respondents Dinnah Villaviza, Elizabeth Duque,
Adronico A. Echavez, Rodel Rubio, Rowena Therese B.
Gracia, Pilar Layco, and Antonio Jose Legarda for Grave
Misconduct and/or Conduct Prejudicial to the Best Interest
of the Service pursuant to the Rules of Procedure in
Administrative Investigation (RPAI) of GSIS Employees and
Officials, III, D, (1, c, f) in relation to Section 52A (3), (20), Rule
IV, of the Uniform Rules on Administrative Cases in the Civil
Service (URACCS), in accordance with Book V of the
Administrative Code of 1987, committed as follows:
That on 27 May 2005, respondent, wearing red shirt together
with some employees, marched to or appeared
simultaneously at or just outside the office of the
Investigation Unit in a mass demonstration/rally of protest
and support for Messrs. Mario Molina and Albert Velasco,
the latter having surreptitiously entered the GSIS premises;
16
xxx xxx xxx
That some of these employees badmouthed the security
guards and the GSIS management and defiantly raised
clenched fists led by Atty. Velasco who was barred by
Hearing Officer Marvin R. Gatpayat in an Order dated 24
May 2005 from appearing as counsel for Atty. Molina
pursuant to Section 7 (b) (2) of R.A. 6713 otherwise known as
the Code of Conduct and Ethical Standards for Public
Officials and Employees;
That respondent, together with other employees in utter
contempt of CSC Resolution No. 021316, dated 11 October
2002, otherwise known as Omnibus Rules on Prohibited
Concerted Mass Actions in the Public Sector caused alarm
and heightened some employees and disrupted the work at
the Investigation Unit during office hours.2
This episode was earlier reported to PGM Garcia, through an
office memorandum dated May 31, 2005, by the Manager of
the GSIS Security Department (GSIS-SD), Dennis Nagtalon.
On the same day, the Manager of the GSIS Investigation Unit
(GSIS-IU), Atty. Lutgardo Barbo, issued a memorandum to
each of the seven (7) respondents requiring them to explain
in writing and under oath within three (3) days why they
should not be administratively dealt with.3
Respondents Duque, Echavez, Rubio, Gracia, Layco, and
Legarda, together with two others, submitted a letter-
explanation to Atty. Barbo dated June 6, 2005. Denying that
there was a planned mass action, the respondents explained
that their act of going to the office of the GSIS-IU was a
spontaneous reaction after learning that their former union
president was there. Aside from some of them wanting to
show their support, they were interested in that hearing as it
might also affect them. For her part, respondent Villaviza
submitted a separate letter explaining that she had a
scheduled pre-hearing at the GSIS-IU that day and that she
had informed her immediate supervisor about it, attaching a
copy of the order of pre-hearing. These letters were not under
oath.4
PGM Garcia then filed the above-mentioned formal charges
for Grave Misconduct and/or Conduct Prejudicial to the Best
Interest of the Service against each of the respondents, all
dated June 4, 2005. Respondents were again directed to
submit their written answers under oath within three (3)
days from receipt thereof.5 None was filed.
On June 29, 2005, PGM Garcia issued separate but similarly
worded decisions finding all seven (7) respondents guilty of
the charges and meting out the penalty of one (1) year
suspension plus the accessory penalties appurtenant thereto.
On appeal, the Civil Service Commission (CSC) found the
respondents guilty of the lesser offense of Violation of
Reasonable Office Rules and Regulations and reduced the
penalty to reprimand. The CSC ruled that respondents were
not denied their right to due process but there was no
substantial evidence to hold them guilty of Conduct
Prejudicial to the Best Interest of the Service. Instead,
x x x. The actuation of the appellants in going to the IU,
wearing red shirts, to witness a public hearing cannot be
considered as constitutive of such offense. Appellants'
(respondents herein) assembly at the said office to express
support to Velasco, their Union President, who pledged to
defend them against any oppression by the GSIS
management, can be considered as an exercise of their
 @lendelacruz
freedom of expression, a constitutionally guaranteed right. 6
xxx
PGM Garcia sought reconsideration but was denied. Thus,
PGM Garcia went to the Court of Appeals via a Petition for
Review under Rule 43 of the Rules on Civil Procedure.7 The
CA upheld the CSC in this wise:
The Civil Service Commission is correct when it found that
the act sought to be punished hardly falls within the
definition of a prohibited concerted activity or mass action.
The petitioners failed to prove that the supposed concerted
activity of the respondents resulted in work stoppage and
caused prejudice to the public service. Only about twenty
(20) out of more than a hundred employees at the main office,
joined the activity sought to be punished. These employees,
now respondents in this case, were assigned at different
offices of the petitioner GSIS. Hence, despite the belated
claim of the petitioners that the act complained of had created
substantial disturbance inside the petitioner GSIS' premises
during office hours, there is nothing in the record that could
support the claim that the operational capacity of petitioner
GSIS was affected or reduced to substantial percentage when
respondents gathered at the Investigation Unit. Despite the
hazy claim of the petitioners that the gathering was intended
to force the Investigation Unit and petitioner GSIS to be
lenient in the handling of Atty. Molina's case and allow Atty.
Velasco to represent Atty. Molina in his administrative case
before petitioner GSIS, there is likewise no concrete and
convincing evidence to prove that the gathering was made to
demand or force concessions, economic or otherwise from
the GSIS management or from the government. In fact, in the
separate formal charges filed against the respondents,
petitioners clearly alleged that respondents "marched to or
appeared simultaneously at or just outside the office of the
Investigation Unit in a mass demonstration/rally of protest
and support for Mssrs. Mario Molina and Albert Velasco, the
latter surreptitiously entered the GSIS premises." Thus,
petitioners are aware at the outset that the only apparent
intention of the respondents in going to the IU was to show
support to Atty. Mario Molina and Albert Velasco, their
union officers. The belated assertion that the intention of the
respondents in going to the IU was to disrupt the operation
and pressure the GSIS administration to be lenient with Atty.
Mario Molina and Albert Velasco, is only an afterthought.8
Not in conformity, PGM Garcia is now before us via this
Petition for Review presenting the following:
STATEMENT OF THE ISSUES
I petitioners argue that there being no answers, the allegations
WHETHER AN ADMINISTRATIVE TRIBUNAL MAY
APPLY SUPPLETORILY THE PROVISIONS OF THE RULES
OF COURT ON THE EFFECT OF FAILURE TO DENY THE
ALLEGATIONS IN THE COMPLAINT AND FAILURE TO
FILE ANSWER, WHERE THE RESPONDENTS IN THE
ADMINISTRATIVE PROCEEDINGS DID NOT FILE ANY
RESPONSIVE PLEADING TO THE FORMAL CHARGES
AGAINST THEM.
II
WHETHER THE RULE THAT ADMINISTRATIVE DUE
PROCESS CANNOT BE EQUATED WITH DUE PROCESS
IN JUDICIAL SENSE AUTHORIZES AN
ADMINISTRATIVE TRIBUNAL TO CONSIDER IN
EVIDENCE AND GIVE FULL PROBATIVE VALUE TO
17
UNNOTARIZED LETTERS THAT DID NOT FORM PART
OF THE CASE RECORD.
III
WHETHER A DECISION THAT MAKES CONCLUSIONS
OF FACTS BASED ON EVIDENCE ON RECORD BUT
MAKES A CONCLUSION OF LAW BASED ON THE
ALLEGATIONS OF A DOCUMENT THAT NEVER
FORMED PART OF THE CASE RECORDS IS VALID.
IV
WHETHER FURTHER PROOF OF SUSBTANTIAL
REDUCTION OF THE OPERATIONAL CAPACITY OF AN
AGENCY, DUE TO UNRULY MASS GATHERING OF
GOVERNMENT EMPLOYEES INSIDE OFFICE PREMISES
AND WITHIN OFFICE HOURS, IS REQUIRED TO HOLD
THE SAID EMPLOYEES LIABLE FOR CONDUCT
PREJUDICIAL TO THE BEST INTEREST OF THE SERVICE
PURSUANT TO CSC RESOLUTION NO. 021316.
V
WHETHER AN UNRULY MASS GATHERING OF
TWENTY EMPLOYEES, LASTING FOR MORE THAN AN
HOUR DURING OFFICE HOURS, INSIDE OFFICE
PREMISES AND WITHIN A UNIT TASKED TO HEAR AN
ADMINISTRATIVE CASE, TO PROTEST THE
PROHIBITION AGAINST THE APPEARANCE OF THEIR
LEADER AS COUNSEL IN THE SAID ADMINISTRATIVE
CASE, FALLS WITHIN THE PURVIEW OF THE
CONSTITUTIONAL GUARANTEE TO FREEDOM OF
EXPRESSION AND PEACEFUL ASSEMBLY.
VI
WHETHER THE CONCERTED ABANDONMENT OF
EMPLOYEES OF THEIR POSTS FOR MORE THAN AN
HOUR TO HOLD AN UNRULY PROTEST INSIDE OFFICE
PREMISES ONLY CONSTITUTES THE ADMINISTRATIVE
OFFENSE OF VIOLATION OF REASONABLE OFFICE
RULES AND REGULATIONS.9
The Court finds no merit in the petition.
Petitioners primarily question the probative value accorded
to respondents' letters of explanation in response to the
memorandum of the GSIS-IU Manager. The respondents
never filed their answers to the formal charges. The
in the formal charges that they filed should have been
deemed admitted pursuant to Section 11, Rule 8 of the Rules
of Court which provides:
SECTION 11. Allegations not specifically denied deemed
admitted.- Material averment in the complaint, other than
those as to the amount of liquidated damages, shall be
deemed admitted when not specifically denied. Allegations
of usury in a complaint to recover usurious interest are
deemed admitted if not denied specifically and under oath.
According to the petitioners, this rule is applicable to the case
at bench pursuant to Rule 1, Section 4 of the Rules of Court
which reads:
SECTION 4. In what cases not applicable. - These Rules shall not
apply to election cases, land registration, cadastral,
naturalization and insolvency proceedings, and other cases
 @lendelacruz
not herein provided for, except by analogy or in a suppletory
character and whenever practicable and convenient.
(underscoring supplied)
The Court does not subscribe to the argument of the
petitioners. Petitioners' own rules, Rule XI, Section 4 of the
GSIS' Amended Policy and Procedural Guidelines No. 178-
04, specifically provides:
If the respondent fails to file his Answer within five (5)
working days from receipt of the Formal Charge for the
supporting evidence, when requested, he shall be considered
to have waived his right to file an answer and the PGM or the
Board of Trustees, in proper cases, shall render judgment, as
may be warranted by the facts and evidence submitted by the
prosecution.
A perusal of said section readily discloses that the failure of
a respondent to file an answer merely translates to a waiver
of "his right to file an answer." There is nothing in the rule
that says that the charges are deemed admitted. It has not
done away with the burden of the complainant to prove the
charges with clear and convincing evidence.
It is true that Section 4 of the Rules of Court provides that the
rules can be applied in a "suppletory character." Suppletory
is defined as "supplying deficiencies."10 It means that the
provisions in the Rules of Court will be made to apply only
where there is an insufficiency in the applicable rule. There
is, however, no such deficiency as the rules of the GSIS are
explicit in case of failure to file the required answer. What is
clearly stated there is that GSIS may "render judgment as may
be warranted by the facts and evidence submitted by the
prosecution."
Even granting that Rule 8, Section 11 of the Rules of Court
finds application in this case, petitioners must remember that
there remain averments that are not deemed admitted by the
failure to deny the same. Among them are immaterial
allegations and incorrect conclusions drawn from facts set
out in the complaint.11 Thus, even if respondents failed to file
their answer, it does not mean that all averments found in the
complaint will be considered as true and correct in their
entirety, and that the forthcoming decision will be rendered
in favor of the petitioners. We must not forget that even in
administrative proceedings, it is still the complainant, or in
this case the petitioners, who have the burden of proving,
with substantial evidence, the allegations in the complaint or
in the formal charges.12
A perusal of the decisions of the CA and of the CSC will
reveal that the case was resolved against petitioners based,
not on the absence of respondents' evidence, but on the
weakness of that of the petitioners. Thus, the CA wrote:
Petitioners correctly submitted the administrative cases for
resolution without the respondents' respective answer to the
separate formal charges in accordance with Section 4, Rule XI
of the RPAI. Being in full control of the administrative
proceeding and having effectively prevented respondents
from further submitting their responsive answer and
evidence for the defense, petitioners were in the most
advantageous position to prove the merit of their allegations
in the formal charges. When petitioner Winston Garcia
issued those similarly worded decisions in the administrative
cases against the respondents, it is presumed that all
evidence in their favor were duly submitted and justly
considered independent of the weakness of respondent's
evidence in view of the principle that ''the burden of proof
belongs to the one who alleges and not the one who denies."13
18
On the merits, what needs to be resolved in the case at bench
is the question of whether or not there was a violation of
Section 5 of CSC Resolution No. 02-1316. Stated differently,
whether or not respondents' actions on May 27, 2005
amounted to a "prohibited concerted activity or mass action."
Pertinently, the said provision states:
Section 5. As used in this Omnibus Rules, the phrase
''prohibited concerted activity or mass action'' shall be
understood to refer to any collective activity undertaken by
government employees, by themselves or through their
employees organizations, with intent of effecting work
stoppage or service disruption in order to realize their
demands of force concession, economic or otherwise, from
their respective agencies or the government. It shall include
mass leaves, walkouts, pickets and acts of similar nature.
(underscoring supplied)
In this case, CSC found that the acts of respondents in going
to the GSIS-IU office wearing red shirts to witness a public
hearing do not amount to a concerted activity or mass action
proscribed above. CSC even added that their actuations can
be deemed an exercise of their constitutional right to freedom
of expression. The CA found no cogent reason to deviate
therefrom.
As defined in Section 5 of CSC Resolution No. 02-1316 which
serves to regulate the political rights of those in the
government service, the concerted activity or mass action
proscribed must be coupled with the "intent of effecting work
stoppage or service disruption in order to realize their
demands of force concession." Wearing similarly colored
shirts, attending a public hearing at the GSIS-IU office,
bringing with them recording gadgets, clenching their fists,
some even badmouthing the guards and PGM Garcia, are
acts not constitutive of an (i) intent to effect work stoppage
or service disruption and (ii) for the purpose of realizing their
demands of force concession.
Precisely, the limitations or qualifications found in Section 5
of CSC Resolution No. 02-1316 are there to temper and focus
the application of such prohibition. Not all collective activity
or mass undertaking of government employees is prohibited.
Otherwise, we would be totally depriving our brothers and
sisters in the government service of their constitutional right
to freedom of expression.
Government workers, whatever their ranks, have as much
right as any person in the land to voice out their protests
against what they believe to be a violation of their rights and
interests. Civil Service does not deprive them of their
freedom of expression. It would be unfair to hold that by
joining the government service, the members thereof have
renounced or waived this basic liberty. This freedom can be
reasonably regulated only but can never be taken away.
A review of PGM Garcia's formal charges against the
respondents reveals that he himself was not even certain
whether the respondents and the rest of the twenty or so GSIS
employees who were at the GSIS-IU office that fateful day
marched there or just simply appeared there
simultaneously.14 Thus, the petitioners were not even sure if
the spontaneous act of each of the twenty or so GSIS
employees on May 27, 2005 was a concerted one. The report
of Manager Nagtalon of the GSIS-SD which was the basis for
PGM Garcia's formal charges reflected such uncertainty.
Thus,
Of these red shirt protesters, only Mr. Molina has official
business at the Investigation Unit during this time. The rest
abandoned their post and duties for the duration of this
 @lendelacruz
incident which lasted until 10:55 A.M. It was also observed
that the protesters, some of whom raised their clenched left
fists, carefully planned this illegal action as evident in their
behavior of arrogance, defiance and provocation, the
presence of various recording gadgets such as VCRs, voice
recorders and digital cameras, the bad mouthing of the
security guards and the PGM, the uniformity in their attire
and the collusion regarding the anomalous entry of Mr.
Albert Velasco to the premises as reported earlier.15
The said report of Nagtalon contained only bare facts. It did
not show respondents' unified intent to effect disruption or
stoppage in their work. It also failed to show that their
purpose was to demand a force concession.
In the recent case of GSIS v. Kapisanan ng mga Manggagawa
sa GSIS,16 the Court upheld the position of petitioner GSIS
because its employees, numbering between 300 and 800 each
day, staged a walkout and participated in a mass protest or
demonstration outside the GSIS for four straight days. We
cannot say the same for the 20 or so employees in this case.
To equate their wearing of red shirts and going to the GSIS-
IU office for just over an hour with that four-day mass action
in Kapisanan ng mga Manggagawa sa GSIS case and to punish
them in the same manner would most certainly be unfair and
unjust.
Recent analogous decisions in the United States, while
recognizing the government's right as an employer to lay
down certain standards of conduct, tend to lean towards a
broad definition of "public concern speech" which is
protected by their First Amendment. One such case is that of
Scott v. Meters.17 In said case, the New York Transit
Authority (NYTA), responsible for operation of New York
City's mass transit service, issued a rule prohibiting
employees from wearing badges or buttons on their
uniforms. A number of union members wore union buttons
promoting their opposition to a collective bargaining
agreement. Consequently, the NYTA tried to enforce its rule
and threatened to subject these union members to discipline.
The court, though recognizing the government's right to
impose reasonable restrictions, held that the NYTA's rule
was "unconstitutionally overboard."
In another case, Communication Workers of America v. Ector
County Hospital District,18 it was held that,
A county hospital employee's wearing of a "Union Yes" lapel
pin during a union organization drive constituted speech on
a matter of public concern, and the county's proffered interest
in enforcing the anti-adornment provision of its dress code
was outweighed by the employee's interest in exercising his
First Amendment speech and associational rights by wearing
a pro-union lapel button.19
Thus, respondents' freedom of speech and of expression
remains intact, and CSC's Resolution No. 02-1316 defining
what a prohibited concerted activity or mass action has only
tempered or regulated these rights. Measured against that
definition, respondents' actuations did not amount to a
prohibited concerted activity or mass action. The CSC and
the CA were both correct in arriving at said conclusion.
WHEREFORE, the assailed August 31, 2007 Decision of the
Court of Appeals as well as its October 16, 2007 Resolution in
CA G.R. SP No. 98952 are hereby AFFIRMED.
SO ORDERED.
G.R. No. 135080 November 28, 2007
19
ORLANDO L. SALVADOR, for and in behalf of the
Presidential Ad Hoc Fact-Finding Committee on Behest
Loans, Petitioner,
vs.
PLACIDO L. MAPA, JR., RAFAEL A. SISON, ROLANDO
M. ZOSA, CESAR C. ZALAMEA, BENJAMIN BAROT,
CASIMIRO TANEDO, J.V. DE OCAMPO, ALICIA L.
REYES, BIENVENIDO R. TANTOCO, JR., BIENVENIDO
R. TANTOCO, SR., FRANCIS B. BANES, ERNESTO M.
CARINGAL, ROMEO V. JACINTO, and MANUEL D.
TANGLAO, Respondents.
DECISION
NACHURA, J.:
The Presidential Ad Hoc Fact-Finding Committee on Behest
Loans, (the Committee), through Atty. Orlando L. Salvador
(Atty. Salvador), filed this Petition for Review on Certiorari
seeking to nullify the October 9, 1997 Resolution1 of the Office
of the Ombudsman in OMB-0-96-2428, dismissing the
criminal complaint against respondents on ground of
prescription, and the July 27, 1998 Order2 denying
petitioners motion for reconsideration.
On October 8, 1992 then President Fidel V. Ramos issued
Administrative Order No. 13 creating the Presidential Ad
Hoc Fact-Finding Committee on Behest Loans, which reads:
WHEREAS, Sec. 28, Article II of the 1987 Constitution
provides that "Subject to reasonable conditions prescribed by
law, the State adopts and implements a policy of full public
disclosure of all its transactions involving public interest";
WHEREAS, Sec. 15, Article XI of the 1987 Constitution
provides that "The right of the state to recover properties
unlawfully acquired by public officials or employees, from
them or from their nominees or transferees, shall not be
barred by prescription, laches or estoppel";
WHEREAS, there have been allegations of loans, guarantees,
and other forms of financial accommodations granted,
directly or indirectly, by government-owned and controlled
bank or financial institutions, at the behest, command, or
urging by previous government officials to the disadvantage
and detriment of the Philippines government and the
Filipino people;
ACCORDINGLY, an "Ad-Hoc FACT FINDING
COMMITTEE ON BEHEST LOANS" is hereby created to be
composed of the following:
Chairman of the Presidential
Commission on Good Government - Chairman
The Solicitor General - Vice-Chairman
Representative from the
Office of the Executive Secretary - Member
Representative from the
Department of Finance - Member
Representative from the
Department of Justice - Member
Representative from the
Development Bank of the Philippines - Member
 @lendelacruz
Representative from the
Philippine National Bank - Member
Representative from the
Asset Privatization Trust - Member
Government Corporate Counsel - Member
Representative from the
Philippine Export and Foreign
Loan Guarantee Corporation - Member
The Ad Hoc Committee shall perform the following
functions:
1. Inventory all behest loans; identify the lenders
and borrowers, including the principal officers and
stockholders of the borrowing firms, as well as the
persons responsible for granting the loans or who
influenced the grant thereof;
2. Identify the borrowers who were granted
"friendly waivers," as well as the government
officials who granted these waivers; determine the
validity of these waivers;
3. Determine the courses of action that the
government should take to recover those loans, and
to recommend appropriate actions to the Office of
the President within sixty (60) days from the date
hereof.
The Committee is hereby empowered to call upon any
department, bureau, office, agency, instrumentality or
corporation of the government, or any officer or employee
thereof, for such assistance as it may need in the discharge of
its functions.3
By Memorandum Order No. 61 dated November 9, 1992, the
functions of the Committee were subsequently expanded,
viz.:
WHEREAS, among the underlying purposes for the creation
of the Ad Hoc Fact-Finding Committee on Behest Loans is to
facilitate the collection and recovery of defaulted loans owing
government-owned and controlled banking and/or
financing institutions;
WHEREAS, this end may be better served by broadening the
scope of the fact-finding mission of the Committee to include
all non-performing loans which shall embrace behest and
non-behest loans;
NOW THEREFORE, I, FIDEL V. RAMOS, President of the
Republic of the Philippines, by virtue of the power vested in
me by law, do hereby order:
Sec. 1. The Ad Hoc Fact-Finding Committee on Behest Loans
shall include in its investigation, inventory, and study, all
non-performing loans which shall embrace both behest and
non-behest loans:
The following criteria may be utilized as a frame of reference
in determining a behest loan:
1. It is under-collateralized;
20
2. The borrower corporation is undercapitalized;
3. Direct or indirect endorsement by high
government officials like presence of marginal
notes;
4. Stockholders, officers or agents of the borrower
corporation are identified as cronies;
5. Deviation of use of loan proceeds from the
purpose intended;
6. Use of corporate layering;
7. Non-feasibility of the project for which financing
is being sought; and
8. Extraordinary speed in which the loan release
was made.
Moreover, a behest loan may be distinguished from a non-
behest loan in that while both may involve civil liability for
non-payment or non-recovery, the former may likewise
entail criminal liability.4
Several loan accounts were referred to the Committee for
investigation, including the loan transactions between Metals
Exploration Asia, Inc. (MEA), now Philippine Eagle Mines,
Inc. (PEMI) and the Development Bank of the Philippines
(DBP).
After examining and studying the documents relative to the
loan transactions, the Committee determined that they bore
the characteristics of behest loans, as defined under
Memorandum Order No. 61 because the stockholders and
officers of PEMI were known cronies of then President
Ferdinand Marcos; the loan was under-collateralized; and
PEMI was undercapitalized at the time the loan was granted.
Specifically, the investigation revealed that in 1978, PEMI
applied for a foreign currency loan and bank investment on
its preferred shares with DBP. The loan application was
approved on April 25, 1979 per Board Resolution (B/R) No.
1297, but the loan was never released because PEMI failed to
comply with the conditions imposed by DBP. To
accommodate PEMI, DBP subsequently adopted B/R No.
2315 dated June 1980, amending B/R No. 1297, authorizing
the release of PEMIs foreign currency loan proceeds, and
even increasing the same. Per B/R No. 95 dated October 16,
1980, PEMI was granted a foreign currency loan of
$19,680,267.00 or P146,601,979.00, and it was released despite
non-compliance with the conditions imposed by DBP. The
Committee claimed that the loan had no sufficient collaterals
and PEMI had no sufficient capital at that time because its
acquired assets were only valued at P72,045,700.00, and its
paid up capital was only P46,488,834.00.
Consequently, Atty. Orlando L. Salvador, Consultant of the
Fact-Finding Committee, and representing the Presidential
Commission on Good Government (PCGG), filed with the
Office of the Ombudsman (Ombudsman) a sworn complaint
for violation of Sections 3(e) and (g) of Republic Act No. 3019,
or the Anti-Graft and Corrupt Practices Act, against the
respondents Placido I. Mapa, Jr., Rafael A. Sison; Rolando M.
Zosa; Cesar C. Zalamea; Benjamin Barot, Casimiro Tanedo,
J.V. de Ocampo, Bienvenido R. Tantoco, Jr., Francis B. Banes,
Ernesto M. Caringal, Romeo V. Jacinto, Manuel D. Tanglao
and Alicia Ll. Reyes.5
 @lendelacruz
After considering the Committees allegation, the
Ombudsman handed down the assailed Resolution,6
dismissing the complaint. The Ombudsman conceded that
there was ground to proceed with the conduct of preliminary
investigation. Nonetheless, it dismissed the complaint
holding that the offenses charged had already prescribed,
viz.:
[W]hile apparently, PEMI was undercapitalized at the time
the subject loans were entered into; the financial
accommodations were undercollateralized at the time they
were granted; the stockholders and officers of the borrower
corporation are identified cronies of then President Marcos;
and the release of the said loans was made despite non-
compliance by PEMI of the conditions attached therewith,
which consequently give a semblance that the subject Foreign
Currency Loans are indeed Behest Loans, the prosecution of
the offenses charged cannot, at this point, prosper on
grounds of prescription.
It bears to stress that Section 11 of R.A. No. 3019 as originally
enacted, provides that the prescriptive period for violations
of the said Act (R.A. 3019) is ten (10) years. Subsequently, BP
195, enacted on March 16, 1982, amended the period of
prescription from ten (10) years to fifteen (15) years
Moreover as enunciated in [the] case of People vs.
Sandiganbayan, 211 SCRA 241, the computation of the
prescriptive period of a crime violating a special law like R.A.
3019 is governed by Act No. 3326 which provides, thus:
xxxx
Section 2. Prescription shall begin to run from the day of the
commission of the violation of law, and if the same be not
known at the time, from the discovery thereof and the
institution of the judicial proceedings for its investigation
and punishment.
The prescription shall be interrupted when the proceedings
are instituted against the guilty person, and shall begin to run
again if the proceedings are dismissed for reasons not
constituting jeopardy.
Corollary thereto, the Supreme Court in the case of People vs.
Dinsay, C.A. 40 O.G. 12th Supp., 50, ruled that when there is
nothing which was concealed or needed to be discovered
because the entire series of transactions were by public
instruments, the period of prescription commenced to run
from the date the said instrument were executed.
The aforesaid principle was further elucidated in the cases of
People vs. Sandiganbayan, 211 SCRA 241, 1992, and People
vs. Villalon, 192 SCRA 521, 1990, where the Supreme Court
pronounced that when the transactions are contained in
public documents and the execution thereof gave rise to
unlawful acts, the violation of the law commences therefrom.
Thus, the reckoning period for purposes of prescription shall
begin to run from the time the public instruments came into
existence.
In the case at bar, the subject financial accommodations were
entered into by virtue of public documents (e.g., notarized
contracts, board resolutions, approved letter-request) during
the period of 1978 to 1981 and for purposes of computing the
prescriptive period, the aforementioned principles in the
Dinsay, Villalon and Sandiganbayan cases will apply.
Records show that the complaint was referred and filed with
this Office on October 4, 1996 or after the lapse of more than
fifteen (15) years from the violation of the law. [Deductibly]
21
therefore, the offenses charged had already prescribed or
forever barred by Statute of Limitations.
It bears mention that the acts complained of were committed
before the issuance of BP 195 on March 2, 1982. Hence, the
prescriptive period in the instant case is ten (10) years as
provided in the (sic) Section 11 of R.A. 3019, as originally
enacted.
Equally important to stress is that the subject financial
transactions between 1978 and 1981 transpired at the time
when there was yet no Presidential Order or Directive
naming, classifying or categorizing them as Behest or Non-
Behest Loans.
To reiterate, the Presidential Ad Hoc Committee on Behest
Loans was created on October 8, 1992 under Administrative
Order No. 13. Subsequently, Memorandum Order No. 61,
dated November 9, 1992, was issued defining the criteria to
be utilized as a frame of reference in determining behest
loans. Accordingly, if these Orders are to be considered the
bases of charging respondents for alleged offenses
committed, they become ex-post facto laws which are
proscribed by the Constitution. The Supreme Court in the
case of People v. Sandiganbayan, supra, citing Wilensky V.
Fields, Fla, 267 So 2dl, 5, held that "an ex-post facto law is
defined as a law which provides for infliction of punishment
upon a person for an act done which when it was committed,
was innocent."7
Thus, the Ombudsman disposed:
WHEREFORE, premises considered, it is hereby respectfully
recommended that the instant case be DISMISSED.
SO RESOLVED.8
The Committee filed a Motion for Reconsideration, but the
Ombudsman denied it on July 27, 1998.
Hence, this petition positing these issues:
A. WHETHER OR NOT THE CRIME DEFINED BY
SEC. 3(e) AND (g) OF R.A. 3019 HAS ALREADY
PRESCRIBED AT THE TIME THE PETITIONER
FILED ITS COMPLAINT.
B. WHETHER OR NOT ADMINISTRATIVE
ORDER NO. 13 AND MEMORANDUM ORDER
NO. 61 ARE EX-POST FACTO LAW[S].9
The Court shall deal first with the procedural issue.
Commenting on the petition, Tantoco, Reyes, Mapa, Zalamea
and Caringal argued that the petition suffers from a
procedural infirmity which warrants its dismissal. They
claimed that the PCGG availed of the wrong remedy in
elevating the case to this Court.
Indeed, what was filed before this Court is a petition
captioned as Petition for Review on Certiorari. We have
ruled, time and again, that a petition for review on certiorari
is not the proper mode by which resolutions of the
Ombudsman in preliminary investigations of criminal cases
are reviewed by this Court. The remedy from the adverse
resolution of the Ombudsman is a petition for certiorari
under Rule 65,10 not a petition for review on certiorari under
Rule 45.
 @lendelacruz
However, though captioned as a Petition for Review on
Certiorari, we will treat this petition as one filed under Rule
65 since a reading of its contents reveals that petitioner
imputes grave abuse of discretion to the Ombudsman for
dismissing the complaint. The averments in the complaint,
not the nomenclature given by the parties, determine the
nature of the action.11 In previous rulings, we have treated
differently labeled actions as special civil actions for
certiorari under Rule 65 for reasons such as justice, equity,
and fair play.12
Having resolved the procedural issue, we proceed to the
merits of the case.
As the Committee puts it, the issues to be resolved are: (i)
whether or not the offenses subject of its criminal complaint
have prescribed, and (ii) whether Administrative Order No.
13 and Memorandum Order No. 61 are ex post facto laws.
The issue of prescription has long been settled by this Court
in Presidential Ad Hoc Fact-Finding Committee on Behest
Loans v. Desierto,13 thus:
[I]t is well-nigh impossible for the State, the aggrieved party,
to have known the violations of R.A. No. 3019 at the time the
questioned transactions were made because, as alleged, the
public officials concerned connived or conspired with the
"beneficiaries of the loans." Thus, we agree with the
COMMITTEE that the prescriptive period for the offenses
with which the respondents in OMB-0-96-0968 were charged
should be computed from the discovery of the commission
thereof and not from the day of such commission.14
The ruling was reiterated in Presidential Ad Hoc Fact-
Finding Committee on Behest Loans v. Ombudsman
Desierto,15 wherein the Court explained:
In cases involving violations of R.A. No. 3019 committed
prior to the February 1986 EDSA Revolution that ousted
President Ferdinand E. Marcos, we ruled that the
government as the aggrieved party could not have known of
the violations at the time the questioned transactions were
made. Moreover, no person would have dared to question
the legality of those transactions. Thus, the counting of the
prescriptive period commenced from the date of discovery of
the offense in 1992 after an exhaustive investigation by the
Presidential Ad Hoc Committee on Behest Loans.16
This is now a well-settled doctrine which the Court has
applied in subsequent cases involving the PCGG and the
Ombudsman.17
Since the prescriptive period commenced to run on the date
of the discovery of the offenses, and since discovery could
not have been made earlier than October 8, 1992, the date
when the Committee was created, the criminal offenses
allegedly committed by the respondents had not yet
prescribed when the complaint was filed on October 4, 1996.
Even the Ombudsman, in its Manifestation & Motion (In Lieu
of Comment),18 conceded that the prescriptive period
commenced from the date the Committee discovered the
crime, and not from the date the loan documents were
registered with the Register of Deeds. As a matter of fact, it
requested that the record of the case be referred back to the
Ombudsman for a proper evaluation of its merit.
Likewise, we cannot sustain the Ombudsmans declaration
that Administrative Order No. 13 and Memorandum Order
No. 61 violate the prohibition against ex post facto laws for
22
ostensibly inflicting punishment upon a person for an act
done prior to their issuance and which was innocent when
done.
The constitutionality of laws is presumed. To justify
nullification of a law, there must be a clear and unequivocal
breach of the Constitution, not a doubtful or arguable
implication; a law shall not be declared invalid unless the
conflict with the Constitution is clear beyond reasonable
doubt. The presumption is always in favor of
constitutionality. To doubt is to sustain.19 Even this Court
does not decide a question of constitutional dimension,
unless that question is properly raised and presented in an
appropriate case and is necessary to a determination of the
case, i.e., the issue of constitutionality must be the very lis
mota presented.201wphi1
Furthermore, in Estarija v. Ranada,21 where the petitioner
raised the issue of constitutionality of Republic Act No. 6770
in his motion for reconsideration of the Ombudsmans
decision, we had occasion to state that the Ombudsman had
no jurisdiction to entertain questions on the constitutionality
of a law. The Ombudsman, therefore, acted in excess of its
jurisdiction in declaring unconstitutional the subject
administrative and memorandum orders.
In any event, we hold that Administrative Order No. 13 and
Memorandum Order No. 61 are not ex post facto laws.
An ex post facto law has been defined as one (a) which
makes an action done before the passing of the law and
which was innocent when done criminal, and punishes such
action; or (b) which aggravates a crime or makes it greater
than it was when committed; or (c) which changes the
punishment and inflicts a greater punishment than the law
annexed to the crime when it was committed; or (d) which
alters the legal rules of evidence and receives less or different
testimony than the law required at the time of the
commission of the offense in order to convict the defendant.22
This Court added two (2) more to the list, namely: (e) that
which assumes to regulate civil rights and remedies only but
in effect imposes a penalty or deprivation of a right which
when done was lawful; or (f) that which deprives a person
accused of a crime of some lawful protection to which he has
become entitled, such as the protection of a former conviction
or acquittal, or a proclamation of amnesty.23
The constitutional doctrine that outlaws an ex post facto law
generally prohibits the retrospectivity of penal laws. Penal
laws are those acts of the legislature which prohibit certain
acts and establish penalties for their violations; or those that
define crimes, treat of their nature, and provide for their
punishment.24 The subject administrative and memorandum
orders clearly do not come within the shadow of this
definition. Administrative Order No. 13 creates the
Presidential Ad Hoc Fact-Finding Committee on Behest
Loans, and provides for its composition and functions. It
does not mete out penalty for the act of granting behest loans.
Memorandum Order No. 61 merely provides a frame of
reference for determining behest loans. Not being penal laws,
Administrative Order No. 13 and Memorandum Order No.
61 cannot be characterized as ex post facto laws. There is,
therefore, no basis for the Ombudsman to rule that the
subject administrative and memorandum orders are ex post
facto.
One final note. Respondents Mapa and Zalamea, in their
respective comments, moved for the dismissal of the case
against them. Mapa claims that he was granted transactional
immunity from all PCGG-initiated cases,25 while Zalamea
denied participation in the approval of the subject loans. 26
 @lendelacruz
The arguments advanced by Mapa and Zalamea are matters
of defense which should be raised in their respective counter-
affidavits. Since the Ombudsman erroneously dismissed the
complaint on ground of prescription, respondents respective
defenses were never passed upon during the preliminary
investigation. Thus, the complaint should be referred back to
the Ombudsman for proper evaluation of its merit.
WHEREFORE, the petition is GRANTED. The assailed
Resolution and Order of the Office of Ombudsman in OMB-
0-96-2428, are SET ASIDE. The Office of the Ombudsman is
directed to conduct with dispatch an evaluation of the merits
of the complaint against the herein respondents.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 189314 June 15, 2011
MIGUEL DELA PENA BARAIRO, Petitioner,
vs.
OFFICE OF THE PRESIDENT and MST MARINE
SERVICES (PHILS.), INC. Respondent.
DECISION
CARPIO MORALES, J.:
Miguel Barairo (petitioner) was hired1 on June 29, 2004 by
respondent MST Marine Services (Phils.) Inc., (MST) for its
principal, TSM International, Ltd., as Chief Mate of the vessel
Maritina, for a contract period of six months. He boarded the
vessel and discharged his duties on July 23, 2004, but was
relieved2 on August 28, 2004 ostensibly for transfer to another
vessel, Solar. Petitioner thus disembarked in Manila on
August 29, 2004.
Petitioner was later to claim that he was not paid the
promised "stand-by fee" in lieu of salary that he was to
receive while awaiting transfer to another vessel as in fact the
transfer never materialized.
On October 20, 2004, petitioner signed a new Contract of
Employment3 for a six-month deployment as Chief Mate in a
newly-built Japanese vessel, M/T Haruna. He was paid a
one-month "standby fee" in connection with the Maritina
contract.
Petitioner boarded the M/T Haruna on October 31, 2004 but
he disembarked a week later as MST claimed that his
boarding of M/T Haruna was a "sea trial" which, MST
maintains, was priorly made known to him on a "stand-by"
fee. MST soon informed petitioner that he would be
redeployed to the M/T Haruna on November 30, 2004, but
petitioner refused, prompting MST to file a complaint4 for
breach of contract against him before the Philippine Overseas
Employment Administration (POEA).
Petitioner claimed, however, that he was placed on "forced
vacation" when he was made to disembark from the M/T
Haruna, and that not wanting to experience a repetition of
the previous "termination" of his employment aboard the
Maritina, he refused to be redeployed to the M/T Haruna.
23
By Order5 of April 5, 2006, then POEA Administrator
Rosalinda D. Baldoz penalized petitioner with one year
suspension from overseas deployment upon a finding that
his refusal to complete his contract aboard the M/T Haruna
constituted a breach thereof.
On appeal by petitioner, the Secretary of Labor, by Order 6 of
September 22, 2006, noting that it was petitioners first
offense, modified the POEA Order by shortening the period
of suspension from one year to six months.
The Office of the President (OP), by Decision7 of November
26, 2007, dismissed petitioners appeal for lack of jurisdiction,
citing National Federation of Labor v. Laguesma.8
The OP held that appeals to it in labor cases, except those
involving national interest, have been eliminated.
Petitioners motion for partial reconsideration was denied by
Resolution9 of June 26, 2009, hence, the present petition.
Following settled jurisprudence, the proper remedy to
question the decisions or orders of the Secretary of Labor is
via Petition for Certiorari under Rule 65, not via an appeal to
the OP. For appeals to the OP in labor cases have indeed been
eliminated, except those involving national interest over
which the President may assume jurisdiction. The rationale
behind this development is mirrored in the OPs Resolution
of June 26, 2009 the pertinent portion of which reads:
. . . [T] he assailed DOLEs Orders were both issued by
Undersecretary Danilo P. Cruz under the authority of the
DOLE Secretary who is the alter ego of the President. Under
the "Doctrine of Qualified Political Agency," a corollary rule
to the control powers of the President, all executive and
administrative organizations are adjuncts of the Executive
Department, the heads of the various executive departments
are assistants and agents of the Chief Executive, and, except
in cases where the Chief Executive is required by
Constitution or law to act in person or the exigencies of the
situation demand that he act personally, the multifarious
executive and administrative functions of the Chief
Executive are performed by and through the executive
departments, and the acts of the Secretaries of such
departments, performed and promulgated in the regular
course of business are, unless disapproved or reprobated by
the Chief Executive presumptively the acts of the Chief
Executive.10 (emphasis and underscoring supplied)
It cannot be gainsaid that petitioners case does not involve
national interest.
Petitioners appeal of the Secretary of Labors Decision to the
Office of the President did not toll the running of the period,
hence, the assailed Decisions of the Secretary of Labor are
deemed to have attained finality.
Although appeal is an essential part of our judicial process, it
has been held, time and again, that the right thereto is not a
natural right or a part of due process but is merely a statutory
privilege. Thus, the perfection of an appeal in the manner and
within the period prescribed by law is not only mandatory
but also jurisdictional and failure of a party to conform to the
rules regarding appeal will render the judgment final and
executory. Once a decision attains finality, it becomes the law
of the case irrespective of whether the decision is erroneous
or not and no court - not even the Supreme Court - has the
power to revise, review, change or alter the same. The basic
rule of finality of judgment is grounded on the fundamental
principle of public policy and sound practice that, at the risk
of occasional error, the judgment of courts and the award of
 @lendelacruz
quasi-judicial agencies must become final at some definite
date fixed by law.11 (underscoring in the original, emphasis
supplied)1avvphi1
At all events, on the merits, the petition just the same fails.
As found by the POEA Administrator and the Secretary of
Labor, through Undersecretary Danilo P. Cruz, petitioners
refusal to board the M/T Haruna on November 30, 2004
constituted unjustified breach of his contract of employment
under Section 1 (A-2) Rule II, Part VI [sic] of the POEA
Seabased Rules and Regulations.12 That petitioner believed
that respondent company violated his rights when the period
of his earlier Maritina contract was not followed and his
"stand-by fees" were not fully paid did not justify his refusal
to abide by the valid and existing Haruna contract requiring
him to serve aboard M/T Haruna. For, as noted in the
assailed DOLE Order, "if petitioners rights has been violated
as he claims, he has various remedies under the contract
which he did not avail of."
Parenthetically, the Undersecretary of Labor declared that
"the real reason [petitioner] refused to re-join Haruna on
November 30, 2004, is that he left the Philippines on
November 29, 2004 to join MT Adriatiki, a vessel of another
manning agency," which declaration petitioner has not
refuted.
WHEREFORE, the petition is DENIED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 135715 April 13, 2011
PRESIDENTIAL AD HOC FACT- FINDING
COMMITTEE ON BEHEST LOANS, represented by
MAGDANGAL B. ELMA, PCGG CHAIRMAN AND
ORLANDO C. SALVADOR AS CONSULTANT OF THE
TECHNICAL WORKING GROUP OF THE AD-HOC
COMMITTEE, Petitioners,
vs.
HONORABLE ANIANO A. DESIERTO AS
OMBUDSMAN, PANFILO O. DOMINGO, CONRADO S.
REYES, ENRIQUE M. HERBOZA, MOHAMMAD ALI
DIMAPORO, ABDULLAH DIMAPORO AND AMER
DIANALAN, Respondents.
DECISION
PEREZ, J.:
This petition for review on certiorari1 is one among the 17
cases filed before us by the Presidential Ad Hoc Fact-Finding
Committee on Behest Loans, charging public respondent
Ombudsman Aniano A. Desierto (Ombudsman) for grave
abuse of discretion, when, on the ground of prescription and
insufficiency of evidence, he dismissed all of these cases then
pending before him, including this case in OMB-0-97-1718.
The Facts
Respondents Mohammad Ali Dimaporo, Abdullah
Dimaporo, and Amer Dianalan, were stockholders and
24
officers of the Mindanao Coconut Oil Mills (MINCOCO), a
domestic corporation established in 1974,2 while respondents
Panfilo O. Domingo, Conrado S. Reyes, Enrique M. Herboza,
and Ricardo Sunga, were then officers of the National
Investment and Development Corporation (NIDC).
On 10 May 1976, MINCOCO applied for a Guarantee Loan
Accommodation with the NIDC for the amount of
approximately P30,400,000.00, which the NIDCs Board of
Directors approved on 23 June 1976.
The guarantee loan was, however, both undercapitalized and
under-collateralized because MINCOCOs paid capital then
was only P7,000,000.00 and its assets worth is P7,000,000.00.
This notwithstanding, MINCOCO further obtained
additional Guarantee Loan Accommodations from NIDC in
the amount of P13,647,600.00 and P7,000,000.00, 3
respectively.
When MINCOCOs mortgage liens were about to be
foreclosed by the government banks due its outstanding
obligations, Eduardo Cojuangco issued a memorandum
dated 18 July 1983, bearing the late President Ferdinand E.
Marcos (President Marcos) marginal note, disallowing the
foreclosure of MINCOCOs properties.4 The government
banks were not able to recover any amount from MINCOCO
and President Marcos marginal note was construed by the
NIDC to have effectively released MINCOCO, including its
owners, from all of its financial liabilities.5
The above mentioned transactions, were, however,
discovered only in 1992 after then President Fidel V. Ramos
(President Ramos), in an effort to recover the ill-gotten
wealth of the late President Marcos, his family, and cronies,
issued Administrative Order No. 136 creating the Presidential
Ad Hoc Fact-Finding Committee on Behest Loans (the
Committee), with the Chairman of the Philippine
Commission on Good Government (PCGG) as the
Committees head. The Committee was directed, inter alia, to
inventory all behest loans, and identify the lenders and
borrowers, including the principal officers and stockholders
of the borrowing firms, as well as the persons responsible for
the granting of loans or who influenced the grant thereof. 7
Subsequently, then President Ramos issued Memorandum
Order No. 618 outlining the criteria which may be utilized as
a frame of reference in determining a behest loan, viz:
a. It is under-collateralized;
b. The borrower corporation is undercapitalized;
c. Direct or indirect endorsement by high
government officials like presence of marginal note;
d. Stockholders, officers or agents of the borrower
corporation are identified as cronies;
e. Deviation of use of loan proceeds from the
purpose intended;
f. Use of corporate layering;
g. Non-feasibility of the project for which financing
is being sought;
h. Extraordinary speed in which the loan release
was made.
 @lendelacruz
The Committee found that twenty-one (21) corporations,
including MINCOCO, obtained behest loans. It claimed that
the fact that MINCOCO was under-collateralized and
undercapitalized; that its officers were identified as cronies;
that the late President Marcos had marginal note, effectively
waiving the governments right to foreclose MINCOCOs
mortgage liens; and, that the Guarantee Loan
Accommodation were approved in an extraordinary speed of
one month, bore badges of behest loans.
Subsequently, the Committee filed with the Ombudsman a
sworn complaint against MINCOCOs Officers and NIDCs
Board of Directors for violation of Section 3(e) and (g) of
Republic Act No. 3019,9 as amended.
By Resolution dated 9 July 1998, the Ombudsman motu
prorio dismissed the complaint on the grounds that, first,
there was insufficient evidence to warrant the indictment of
the persons charged; and, second, the alleged offenses had
prescribed.10 The Ombudsman explained:
Being undercapitalized, standing alone is meaningless. The
approval of the loans/guarantees was still based on sound
lending practice, otherwise, MINCOCO would have been
disqualified from obtaining the same. If MINCOCOs equity
was more than the amount of the loans, there was no need
for it to obtain the latter.
Anent the claim that Mohammad Ali Dimaporo was a crony
of the late President Marcos, no evidence was adduced to
prove the same, hence, remains a bare allegation. x x x.
On the issue that the notation by President Marcos in the
Memorandum of July 18, 1983 is a behest order, suffice it to
state that these marginal notes, if they meant endorsement as
defined under Memorandum Order No. 61, endorsed the
recommendation regarding the mortgage liens of the
government banks of the Mothballed Coconut Oil Mills and
not the approval/grant of the loans/guarantees in 1976. It is
in effect approved the release of the liabilities of the former
owners of coconut oil mills, one of which was MINCOCO,
but not the acquisition of the said loans/guarantees.
The take over of MINCOCO by UNICOM without the
consent of NIDC is not a characteristic of a behest loan. It is a
mere violation of procedures that does not warrant a criminal
action.
xxxx
For the perpetration of the acts being complained of, the
respondents are charged of violations of Sections 3(e) and (g)
of Republic Act No. 3019. The instant case however will no
longer prosper for the offenses have already prescribed.
Be it remembered that MINCOCO applied for and was
granted loans/guarantees way back in 1976. Thus, these acts
are governed by the law in force at the time of their
commission, which is the old R.A. No. 3019 before its
amendment by Batas Pambansa Blg. 195 in March 1982.
Offenses perpetrated prior to the enactment of this latter law
prescribed ten (10) years later. And since the case was filed
against the herein respondents only in September 1997, the
offenses have long prescribed in 1986.
Prescription commenced to run in 1976 when the assailed
transaction happened. x x x.11
Hence, this petition for review on certiorari under Rule 45 of
the Rules of Court.12
25
The petitioner argued that the right of the State to recover
behest loans as ill-gotten wealth is imprescriptible under
Section 15, Article XI of the 1987 Constitution;13 and,
assuming that the period to file criminal charges herefore is
subject to prescription, the prescriptive period should be
counted from the time of discovery of behest loans or
sometime in 1992 when the Committee was constituted.14
The Ombudsman, in his Comment, countered that his office
has the discretionary power during preliminary
investigation to determine the sufficiency of evidence for
indictment;15 that it is beyond the ambit of the Court to
review this exercise of discretion;16 that Section 15, Article XI
of the 1987 Constitution applies only to civil suits and not to
criminal proceedings;17 and, that the crime under which the
respondents herein were charged had already prescribed. 18
Private respondents Panfilo O. Domingo and Enrique M.
Herboza, filed their respective Comments mainly reiterating
the Ombudsmans contentions. The other respondents did
not file their Comments, and, thus, considered to have
waived their chance thereto.
The Courts Ruling
The remedy from an adverse resolution of the Ombudsman
is a petition for certiorari under Rule 65 of the Rules of Court;
what was filed with the Court, however, was a petition for
review on certiorari under Rule 45. Nevertheless, the Court
will treat this petition as one filed under Rule 65 since a
reading of its contents shows that the Committee imputes
grave abuse of discretion to the Ombudsman for dismissing
the complaint.19 This was how we also treated the previous
cases marred by the same procedural lapse, the latest of
which is the 2009 Presidential Ad-Hoc Fact Finding
Committee on Behest Loans v. Desierto (G.R. No. 135703). 20
At the core of the controversy is the Ombudsmans
Resolution holding that prescription had already set-in
effectively barring the institution of charges against the
private respondents. The Ombudsman claimed that the
alleged behest loans, transpired in 1976,21 and, thus, the
complaint filed after more than two decades from the
commission thereof or on 8 October 1997, was well beyond
the 10-year prescriptive period provided for under the old
Republic Act No. 3019.22
In resolving the issue of prescription, the following shall be
considered: (1) the period of prescription for the offense
charged; (2) the time the period of prescription started to run;
and (3) the time the prescriptive period was interrupted.23
At the outset, the provision found in Section 15, Article XI of
the 1987 Constitution that "the right of the State to recover
properties unlawfully acquired by public officials or
employees, from them or from their nominees or transferees,
shall not be barred by prescription, laches or estoppels," has
already been settled in Presidential Ad Hoc Fact-Finding
Committee on Behest Loans v. Desierto (G.R. No. 130140), 24
where the Court held that the above cited constitutional
provision "applies only to civil actions for recovery of ill-
gotten wealth, and not to criminal cases."25
The period of prescription for the crime charged in this
petition, committed in 1976 and prior to the amendment of
Republic Act No. 3019, is ten (10) years.
Section 1126 of Republic Act No. 3019 as amended by Batas
Pambansa Blg. 195, provides that the offenses committed
under Republic Act No. 3019 shall prescribe in fifteen (15)
 @lendelacruz
years; prior to this amendment, however, under the old
Republic Act No. 3019, this prescriptive period was only ten
(10) years. In People v. Pacificador,27 the Court held that the
longer prescriptive period of 15-years does not apply in
crimes committed prior to the effectivity of Batas Pambansa
Blg. 195, which was approved on 16 March 1982, because, not
being favorable to the accused, it cannot be given retroactive
effect. Considering that the alleged crime was committed in
1976, and in line with the Courts ruling in Pacificador, the
prescription period should be ten (10) years.
Prescription of crime shall begin to run from the day of its
commission, and if the same be not known at the time, from
the discovery thereof and the institution of judicial
proceedings for its investigation and punishment.
While we sustain the Ombudsmans contention that the
prescriptive period for the crime charged herein is 10 years
and not 15 years, we are not persuaded that in this specific
case, the prescriptive period began to run in 1976, when the
loans were transacted.
The time as to when the prescriptive period starts to run for
crimes committed under Republic Act No. 3019, a special
law, is covered by Act No. 3326,28 Section 2 of which provides
that:
Section 2. Prescription shall begin to run from the day of the
commission of the violation of the law, and if the same be not
known at the time, from the discovery thereof and the
institution of judicial proceedings for its investigation and
punishment.
The prescription shall be interrupted when proceedings are
instituted against the guilty person, and shall begin to run
again if the proceedings are dismissed for reasons not
constituting double jeopardy.
Generally, the prescriptive period shall commence to run on
the day the crime is committed. That an aggrieved person
"entitled to an action has no knowledge of his right to sue or
of the facts out of which his right arises," does not prevent the
running of the prescriptive period.29 An exception to this rule
is the "blameless ignorance" doctrine, incorporated in Section
2 of Act No. 3326. Under this doctrine, "the statute of
limitations runs only upon discovery of the fact of the
invasion of a right which will support a cause of action. In
other words, the courts would decline to apply the statute of
limitations where the plaintiff does not know or has no
reasonable means of knowing the existence of a cause of
action."30 It was in this accord that the Court confronted the
question on the running of the prescriptive period in People
v. Duque31 which became the cornerstone of our 1999
Decision in Presidential Ad Hoc Fact-Finding Committee on
Behest Loans v. Desierto (G.R. No. 130149),32 and the
subsequent cases33 which Ombudsman Desierto dismissed,
emphatically, on the ground of prescription too. Thus, we
held in a catena of cases,34 that if the violation of the special
law was not known at the time of its commission, the
prescription begins to run only from the discovery thereof,
i.e., discovery of the unlawful nature of the constitutive act
or acts.
Corollary, it is safe to conclude that the prescriptive period
for the crime which is the subject herein, commenced from
the date of its discovery in 1992 after the Committee made an
exhaustive investigation.35 When the complaint was filed in
1997, only five years have elapsed, and, hence, prescription
has not yet set in. The rationale for this was succinctly
discussed in the 1999 Presidential Ad Hoc Fact-Finding
Committee on Behest Loans,36 that "it was well-high
26
impossible for the State, the aggrieved party, to have known
these crimes committed prior to the 1986 EDSA Revolution,
because of the alleged connivance and conspiracy among
involved public officials and the beneficiaries of the loans."37
In yet another pronouncement, in the 2001 Presidential Ad
Hoc Fact-Finding Committee on Behest Loans v. Desierto
(G.R. No. 130817),38 the Court held that during the Marcos
regime, no person would have dared to question the legality
of these transactions.
While the Ombudsman has the full discretion to determine
whether a criminal case is to be filed, the Court is not
precluded from reviewing the Ombudsmans action when
there is a grave abuse of discretion.
True, the Ombudsman is a constitutionally created body with
constitutionally mandated independence. Despite this,
however, the Ombudsman comes within the purview of the
Courts power of judicial review39 a peculiar concept of
Philippine Ombudsman, embodied in Article VIII, Section 1
of the 1987 Constitution40 which serves as a safety net
against its capricious and arbitrary acts.41 Thus, in Garcia-
Rueda v. Pascasio,42 the Court held that "while the
Ombudsman has the full discretion to determine whether or
not a criminal case is to be filed, the Court is not precluded
from reviewing the Ombudsmans action when there is grave
abuse of discretion."43 This is because, "while the
Ombudsman enjoys, as it must, complete independence, it
cannot and must not lose track of the law, which it is bound
to uphold and obey."44
After reviewing the cases records, the Court finds that the
present petition calls for the exercise of its power of judicial
review.
Private respondents are charged with violation of Section 3(e)
and (g) of Republic Act No. 3019 which states:
Section 3. Corrupt practices of public officers. - In addition to acts
or omissions of public officers already penalized by existing
law, the following shall constitute corrupt practices of any
public officer and are hereby declared to be unlawful:
xxxx
(e) Causing any undue injury to any party, including the
Government, or giving any private party any unwarranted
benefits, advantage or preference in the discharge of his
official administrative or judicial functions through manifest
partiality, evident bad faith or gross inexcusable negligence.
This provision shall apply to officers and employees of
offices or government corporations charged with the grant of
licenses or permits or other concessions.
xxxx
(g) Entering, on behalf of the Government, into any contract
or transaction manifestly and grossly disadvantageous to the
same, whether or not the public officer profited or will profit
thereby.
From the 1999 landmark case of Presidential Ad Hoc Fact-
Finding Committee on Behest Loans v. Desierto (G.R. No.
130140),45 to the 2008 Presidential Ad Hoc Fact-Finding
Committee on Behest Loans v. Tabasondra (G.R. No.
133756),46 and to the 2009 Presidential Ad Hoc Fact-Finding
Committee on Behest Loans v. Desierto (G.R. No. 135703), 47
the same issues confronted the Court as the one presented in
the present petition, in that the Ombudsman similarly
 @lendelacruz
dismissed these cases not only on the ground of prescription
but also for insufficiency of evidence.48
Interestingly, the facts in Tabasondra49 are squarely on all
fours as the present case. Tabasondra,50 involved Coco-
Complex Philippines, Inc., (CCPI), a domestic corporation
primarily incorporated for the manufacture of coconut oil.51
CCPI applied for Guarantee Loan Accommodation thru the
National Investment Development Corporation amounting
to P9,277,080.00, allegedly for the purchase of an oil mill to
be supplied by Krupp Germany. The NIDC Board approved
the loan in 1969,52 notwithstanding the fact that CCPI was
undercapitalized with only P2,111,000.00 paid-up capital,53
and under-collateralized with only P495,300.00 assets.54
Thus, with the NIDCs Guarantee Loan Accommodation, the
Philippine National Bank (PNB) granted the loan. Still, with
NIDCs guarantee, CCPI obtained additional loans from PNB
in 1972, which, as of 1992, ballooned to P205,889,545.76.
When the Committee filed criminal complaints against the
CCPIs Officers and PNBs Board of Directors for violation of
Section 3(e) and (g) of Republic Act No. 3019, the
Ombudsman dismissed the complaint on the ground of
prescription. For this, the Committee charged the
Ombudsman for grave abuse of discretion, but pending its
resolution before us, the Ombudsman, taking cue from the
Courts 1999 ruling in G.R. No. 130140,55 motu proprio
reinvestigated the complaint it earlier dismissed (and was
still pending before us), only to dismiss it anew, in a
Resolution dated 16 October 2000, opining that NIDCs
Board of Directors, who approved the loans in favor of CCPI,
should have been the ones indicted.56 Subsequently, the
Court dismissed Tabasondra for being moot and academic.
Similarly, in the present petition, MINCOCO was also
granted by NIDC a Guarantee Loan Accommodation
amounting initially to P30.4 million pesos, despite its being
undercapitalized and under-collateralized.57
As the Ombudsman admitted, when MINCOCOs mortgage
liens were about to be foreclosed by the government banks,
the late President Marcos intervened and through a marginal
note, in connivance with the NIDCs officers, waived the
liabilities of its owners to the detriment of the government.58
It behooves the Court that while the Ombudsman admitted
this fact, it saw nothing wrong in President Marcos
intervention, and the involvement therein of the NIDCs
officers. This intervention alone, by no less than the highest
official of the land, waiving a multi-million peso liability of a
private corporation, should have alarmed the Ombudsman.
It surprises us that while the Ombudsman dismissed
Tabasondra for not impleading therein the NIDCs Board of
Directors, now that they (NIDCs Board of Directors) have
been impleaded, the Ombudsman still dismissed the
complaint, allegedly for insufficiency of evidence.59
Applying mutatis mutandis G.R. No. 13375660 in this petition,
it is apparent that there can be liability for violation of Section
3(e) and (g) of Republic Act No. 3019.
Violation of Section 3(e)61 of Republic Act No. 3019 requires
that there be injury caused by giving unwarranted benefits,
advantages or preferences to private parties who conspire
with public officers. In contrast, Section 3(g)62 does not
require the giving of unwarranted benefits, advantages or
preferences to private parties, its core element being the
engagement in a transaction or contract that is grossly and
manifestly disadvantageous to the government.
27
The waiver of MINCOCOs multi-peso loan should have
been enough basis in finding that probably Section 3(e) of
Republic Act No. 3019 was violated and the fact that NIDC
extended a loan guarantee to MINCOCO, despite its being
undercapitalized and under-collateralized, should have also
been enough ground in finding probable cause for violation
of Section 3(g) of the above-cited law.
More importantly, the finding of the Committee that
MINCOCO obtained behest loans because of the following
circumstances: MINCOCO was under-collateralized and
undercapitalized; its officers were identified as cronies;
President Marcos had marginal note, effectively waiving the
governments right to foreclose MINCOCOs mortgage liens;
and, NIDC approved MINCOCOs Guarantee Loan
Accommodation in an extraordinary speed of one month,
should have been accorded a proper modicum of respect by
the Ombudsman.
Considering the membership of the Committee
representatives from the Department of Finance, The
Philippine National Bank, the Asset Privatization Trust, the
Philippine Export and Foreign Loan Guarantee Corporation
and even the Development Bank of the Philippines its
recommendation should be given great weight. No doubt,
the members of the Committee are experts in the field of
banking. On account of their special knowledge and
expertise, they are in a better position to determine whether
standard banking practices are followed in the approval of
the loan/guarantee or what would generally constitute as
adequate security for a given loan.631avvphi1
The duty of the Ombudsman in the conduct of a preliminary
investigation is to establish whether there exists probable
cause to file information in court against the accused.64 A
finding of probable cause needs only to rest on evidence
showing that more likely than not, the accused committed
the crime.65 Considering the quantum of evidence needed to
support a finding of probable cause, the Court holds that the
Ombudsman gravely abused its discretion when it dismissed
the complaint against herein respondents.
Preliminary investigation is not the occasion for the full and
exhaustive display of the parties evidence.66 It is for the
presentation of such evidence only as may engender a well
founded belief that an offense has been committed and that
the accused is probably guilty thereof.67 The validity and
merits of a partys accusation or defense, as well as
admissibility of testimonies and evidence, are better
ventilated during the trial proper.68
In conclusion, the offenses ascribed to respondents "involve
behest loans which bled white the economy of the country,
one of the excesses of the authoritarian regime that led to the
EDSA revolution, a serious evil that the 1987 Constitution
aimed to extirpate."69 It involves nothing less than the interest
of the people whose transgressed rights are supposed to be
vindicated by their protector the Ombudsman.70 As
protector of the people, the Ombudsman should be pro-
active in making use of its vast arsenal of powers to "bring
the lamp of scrutiny to otherwise dark places even over the
resistance of those who would draw the blinds."71
The criminal liability of Conrado S. Reyes is hereby
extinguished in accordance with Article 89(1)72 of the Revised
Penal Code as confirmed by his death certificate.73 With
respect to respondents Panfilo O. Domingo and Mohammad
Ali Dimaporo, the facts of their deaths have to be confirmed
to determine the application to them of the same provision.
 @lendelacruz
WHEREFORE, the petition is GRANTED. The Ombudsman
is hereby ORDERED to:
1. DISMISS the complaint against deceased
respondent Conrado S. Reyes;
2. REQUIRE the counsels of respondents Panfilo O.
Domingo and Mohammad Ali Dimaporo to submit
proof of their deaths; and
3. FILE with the Sandiganbayan the necessary
Information against respondents Abdullah
Dimaporo, Amer Dianalan, Enrique M. Herboza,
and Ricardo Sunga.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 187256 February 23, 2011
CONSTANCIO F. MENDOZA and SANGGUNIANG
BARANGAY OF BALATASAN, BULALACAO,
ORIENTAL MINDORO, Petitioners,
vs.
MAYOR ENRILO VILLAS and BRGY. KAGAWAD
LIWANAG HERATO and MARLON DE CASTRO,
Manager, Pinamalayan Branch, Land Bank of the
Philippines, Respondents.
RESOLUTION
VELASCO, JR., J.:
Before this Court is a Petition dated April 7, 2009 1 filed by
Constancio F. Mendoza and Sangguniang Barangay of
Balatasan, Bulalacao, Oriental Mindoro. In the Petition, it is
prayed that the Court: (1) set aside the Order dated February
2, 20092 of the Regional Trial Court (RTC), Branch 43 in
Roxas, Oriental Mindoro and its Order dated March 17, 20093
denying petitioners motion for reconsideration of the Order
dated February 2, 2009; and (2) direct the RTC to continue
with the proceedings in Special Civil Action No. 08-10
entitled Constancio Mendoza v. Mayor Enrilo Villas.
The factual antecedents of the case are as follows:
In the 2007 barangay elections, Mendoza obtained the highest
votes for the position of Punong Barangay of Barangay
Balatasan, Bulalacao, Oriental Mindoro, while respondent
Liwanag Herato obtained the highest number of votes for the
position of Barangay Kagawad. Notably, Mayor Enrilo Villas
was the incumbent Mayor of Bulalacao, Oriental Mindoro at
the time of the barangay elections.4
After the elections, the Commission on Elections
(COMELEC) proclaimed Mendoza as the duly-elected
Punong Barangay of Balatasan. Thus, the losing candidate,
Thomas Pajanel, filed a petition for quo warranto with the
Municipal Trial Court (MTC) of Mansalay-Bulalacao which
was docketed as Election Case No. 407-B. The MTC issued a
Decision dated February 23, 2008, disqualifying Mendoza
and declaring that Herato was entitled to succeed him as
Punong Barangay with Herato garnering the highest number
28
of votes as a Barangay Kagawad. Mendoza appealed the
MTC Decision to the COMELEC.
On February 28, 2008, Villas administered the Oath of Office
to Herato.5 Then, Villas issued Memorandum No. 2008-03-
010 dated March 3, 2008,6 directing all department heads of
the Municipal Government to act only on documents signed
or authorized by Herato.
Meanwhile, Mendoza sought the advice of the Department
of the Interior and Local Government (DILG) as to who
should exercise the powers of Punong Barangay of Balatasan
given the prevailing controversy.
In a letter dated April 11, 2008,7 DILG Undersecretary
Austere A. Panadero responded to Mendozas inquiry
informing Villas that Mendoza should occupy the post of
Punong Barangay as there was no Writ of Execution Pending
Appeal of the MTC Decision dated February 23, 2008.
Nevertheless, the Bulalacao Municipal Administrator,
Edezer Aceron, by the authority of Villas, issued a letter
dated April 23, 20088 to respondent Marlon de Castro,
Manager, Pinamalayan Branch, Land Bank of the Philippines
(LBP), requesting that transactions entered into by Mendoza
in behalf of Barangay Bulalacao should not be honored. In the
same letter, Aceron dismissed the DILG letter dated April 11,
2008, saying that it is merely advisory and not binding on the
municipal government of Bulalacao and the LBP.
In response, de Castro issued Villas and Mendoza a letter
dated April 24, 2008,9 advising both parties that the LBP shall
not honor any transaction with regard the accounts of
Barangay Balatasan.
Thereafter, petitioners filed a Petition dated May 5, 2008 for
Mandamus with Damages and Prayer for the Writ of
Preliminary Mandatory Injunction, docketed as Special Civil
Action No. 08-10 pending with the Regional Trial Court,
Branch 43 in Roxas, Oriental Mindoro. Petitioners prayed
that the LBP be directed to release the funds of Barangay
Balatasan to them in order to render necessary, basic public
services to the inhabitants of the barangay.
Thus, Villas and Herato filed an Answer dated May 16, 2008
interposing the following affirmative defenses: (1) that the
petition for mandamus was defective, being directed against
two or more different entities and requiring to perform
different acts; and (2) that Mendoza does not have any clear
and legal right for the writ of mandamus.
On the other hand, the LBP also filed its Answer dated June
5, 2008, stating that its decision of withholding the barangay
funds was a mere act of prudence given the controversy
surrounding the true Punong Barangay of Balatasan while
manifesting that it will release the funds to whom the Court
directs it to.
Thereafter, Villas and Herato filed a Motion to Dismiss dated
November 7, 2008. In the Motion, a copy of the COMELEC
Resolution dated September 8, 2008 in COMELEC Case No.
SPA-07-243-BRGY was attached. This case originated from a
disqualification case against Mendoza filed with the
COMELEC by Senen Familara before the conduct of the 2007
barangay elections. In the Resolution, the COMELEC
disqualified Mendoza as a candidate for Punong Barangay of
Barangay Balatasan in the 2007 barangay elections for having
already served three (3) consecutive terms for the same
position. In response, Mendoza presented a Certification
dated February 27, 200910 from the COMELEC which stated
 @lendelacruz
that COMELEC Case No. SPA-07-243-BRGY is still pending
with the Commission.
In an attempt to clarify the issues on the matter, Mendoza
again sought the opinion of the DILG regarding the
controversy. Thus, the DILG issued another letter,
denominated as DILG Opinion No. 5, Series of 2009 dated
January 2009,11 reiterating its stance that the MTC Decision
dated February 23, 2008 has not yet become final and
executory.
Nevertheless, the RTC issued the assailed order dated
February 2, 2009 dismissing the petition on the strength of
the COMELEC Resolution dated September 8, 2008
disqualifying Mendoza from running in the 2007 elections.
As stated, petitioners motion for reconsideration of the
Order dated February 2, 2009 was denied in an Order dated
March 17, 2009.
From such orders the petitioners went directly to this Court.
The instant petition is a direct recourse to this Court from the
assailed orders of the RTC. Notably, petitioners did not cite
the rule under the Rules of Court by which the petition was
filed. If the petition is to be treated as a petition filed under
Rule 65 of the Rules of Court, the petition must be dismissed
outright for having been filed prematurely.
In Chamber of Real Estate and Builders Associations, Inc.
(CREBA) v. Secretary of Agrarian Reform,12 a petition for
certiorari filed under Rule 65 was dismissed for having been
filed directly with the Court, violating the principle of
hierarchy of courts, to wit:
Primarily, although this Court, the Court of Appeals and the
Regional Trial Courts have concurrent jurisdiction to issue
writs of certiorari, prohibition, mandamus, quo warranto,
habeas corpus and injunction, such concurrence does not
give the petitioner unrestricted freedom of choice of court
forum. In Heirs of Bertuldo Hinog v. Melicor, citing People
v. Cuaresma, this Court made the following
pronouncements:
This Courts original jurisdiction to issue writs of certiorari is
not exclusive. It is shared by this Court with Regional Trial
Courts and with the Court of Appeals. This concurrence of
jurisdiction is not, however, to be taken as according to
parties seeking any of the writs an absolute, unrestrained
freedom of choice of the court to which application therefor
will be directed. There is after all a hierarchy of courts. That
hierarchy is determinative of the venue of appeals, and also
serves as a general determinant of the appropriate forum for
petitions for the extraordinary writs. A becoming regard for
that judicial hierarchy most certainly indicates that petitions
for the issuance of extraordinary writs against first level
("inferior") courts should be filed with the Regional Trial
Court, and those against the latter, with the Court of Appeals.
A direct invocation of the Supreme Courts original
jurisdiction to issue these writs should be allowed only when
there are special and important reasons therefor, clearly and
specifically set out in the petition. This is [an] established
policy. It is a policy necessary to prevent inordinate demands
upon the Courts time and attention which are better devoted
to those matters within its exclusive jurisdiction, and to
prevent further over-crowding of the Courts docket.
(Emphasis supplied.)
Similarly, there are no special and important reasons that
petitioners cite to justify their direct recourse to this Court
under Rule 65.
29
On the other hand, direct recourse to this Court has been
allowed for petitions filed under Rule 45 when only
questions of law are raised, as in this case. Thus, the Court
ruled in Barcenas v. Tomas:13
Section 1 of Rule 45 clearly states that the following may be
appealed to the Supreme Court through a petition for review
by certiorari: 1) judgments; 2) final orders; or 3) resolutions
of the Court of Appeals, the Sandiganbayan, the Regional
Trial Court or similar courts, whenever authorized by law.
The appeal must involve only questions of law, not of fact.
This Court has, time and time again, pointed out that it is not
a trier of facts; and that, save for a few exceptional instances,
its function is not to analyze or weigh all over again the
factual findings of the lower courts. There is a question of law
when doubts or differences arise as to what law pertains to a
certain state of facts, and a question of fact when the doubt
pertains to the truth or falsity of alleged facts.
Under the principle of the hierarchy of courts, decisions, final
orders or resolutions of an MTC should be appealed to the
RTC exercising territorial jurisdiction over the former. On the
other hand, RTC judgments, final orders or resolutions are
appealable to the CA through either of the following: an
ordinary appeal if the case was originally decided by the
RTC; or a petition for review under Rule 42, if the case was
decided under the RTC's appellate jurisdiction.
Nonetheless, a direct recourse to this Court can be taken for
a review of the decisions, final orders or resolutions of the
RTC, but only on questions of law. Under Section 5 of Article
VIII of the Constitution, the Supreme Court has the power to
(2) Review, revise, reverse, modify, or affirm on appeal or
certiorari as the law or the Rules of Court may provide, final
judgments and orders of lower courts in:
xxxx
(e) All cases in which only an error or question of law is
involved.
This kind of direct appeal to this Court of RTC judgments,
final orders or resolutions is provided for in Section 2(c) of
Rule 41, which reads:
SEC. 2. Modes of appeal.
xxxx
(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.
Procedurally then, petitioners could have appealed the RTC
Decision affirming the MTC (1) to this Court on questions of
law only; or (2) if there are factual questions involved, to the
CA -- as they in fact did. Unfortunately for petitioners, the
CA properly dismissed their petition for review because of
serious procedural defects. This action foreclosed their only
available avenue for the review of the factual findings of the
RTC. (Emphasis supplied.)
Thus, the Court shall exercise liberality and consider the
instant petition as one filed under Rule 45. In Artistica
Ceramica, Inc. v. Ciudad Del Carmen Homeowners
Association, Inc.,14 citing Republic v. Court of Appeals,15 the
 @lendelacruz
Court noted that it has the discretion to determine whether a
petition was filed under Rule 45 or 65 of the Rules of Court:
Admittedly, this Court, in accordance with the liberal spirit
pervading the Rules of Court and in the interest of justice, has
the discretion to treat a petition for certiorari as having been
filed under Rule 45, especially if filed within the
reglementary period for filing a petition for review.lawphi1
Nevertheless, even providing that the petition was not filed
prematurely, it must still be dismissed for having become
moot and academic.
In Gunsi, Sr. v. Commissioners, The Commission on
Elections,16 the Court defined a moot and academic case as
follows:
A moot and academic case is one that ceases to present a
justiciable controversy by virtue of supervening events, so
that a declaration thereon would be of no practical value. As
a rule, courts decline jurisdiction over such case, or dismiss it
on ground of mootness.
With the conduct of the 2010 barangay elections, a
supervening event has transpired that has rendered this case
moot and academic and subject to dismissal. This is because,
as stated in Fernandez v. Commission on Elections,17
"whatever judgment is reached, the same can no longer have
any practical legal effect or, in the nature of things, can no
longer be enforced." Mendozas term of office has expired
with the conduct of last years local elections. As such, Special
Civil Action No. 08-10, where the assailed Orders were
issued, can no longer prosper. Mendoza no longer has any
legal standing to further pursue the case, rendering the
instant petition moot and academic.
WHEREFORE, the Petition is DENIED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 187107 January 31, 2012
UNITED CLAIMANTS ASSOCIATION OF NEA
(UNICAN), represented by its representative
BIENVENIDO R. LEAL, in his official capacity as its
President and in his own individual capacity, EDUARDO
R. LACSON, ORENCIO F. VENIDA, JR., THELMA V.
OGENA, BOBBY M. CARANTO, MARILOU B. DE
JESUS, EDNA G. RAA, and ZENAIDA P. OLIQUINO,
in their own capacities and in behalf of all those similarly
situated officials and employees of the National
Electrification Administration, Petitioners,
vs.
NATIONAL ELECTRIFICATION ADMINISTRATION
(NEA), NEA BOARD OF ADMINISTRATORS (NEA
BOARD), ANGELO T. REYES as Chairman of the NEA
Board of Administrators, EDITHA S. BUENO, Ex-Officio
Member and NEA Administrator, and WILFRED L.
BILLENA, JOSPEPH D. KHONGHUN, and FR. JOSE
VICTOR E. LOBRIGO, Members, NEA Board,
Respondents.
DECISION
30
VELASCO, JR., J.:
The Case
This is an original action for Injunction to restrain and/or
prevent the implementation of Resolution Nos. 46 and 59,
dated July 10, 2003 and September 3, 2003, respectively,
otherwise known as the National Electrification
Administration (NEA) Termination Pay Plan, issued by
respondent NEA Board of Administrators (NEA Board).
The Facts
Petitioners are former employees of NEA who were
terminated from their employment with the implementation
of the assailed resolutions.
Respondent NEA is a government-owned and/or controlled
corporation created in accordance with Presidential Decree
No. (PD) 269 issued on August 6, 1973. Under PD 269, Section
5(a)(5), the NEA Board is empowered to organize or
reorganize NEAs staffing structure, as follows:
Section 5. National Electrification Administration; Board of
Administrators; Administrator.
(a) For the purpose of administering the provisions of this
Decree, there is hereby established a public corporation to be
known as the National Electrification Administration. All of
the powers of the corporation shall be vested in and exercised
by a Board of Administrators, which shall be composed of a
Chairman and four (4) members, one of whom shall be the
Administrator as ex-officio member. The Chairman and the
three other members shall be appointed by the President of
the Philippines to serve for a term of six years. x x x
xxxx
The Board shall, without limiting the generality of the
foregoing, have the following specific powers and duties.
1. To implement the provisions and purposes of this Decree;
xxxx
5. To establish policies and guidelines for employment on the
basis of merit, technical competence and moral character,
and, upon the recommendation of the Administrator to
organize or reorganize NEAs staffing structure, to fix the
salaries of personnel and to define their powers and duties.
(Emphasis supplied.)
Thereafter, in order to enhance and accelerate the
electrification of the whole country, including the
privatization of the National Power Corporation, Republic
Act No. (RA) 9136, otherwise known as the Electric Power
Industry Reform Act of 2001 (EPIRA Law), was enacted,
taking effect on June 26, 2001. The law imposed upon NEA
additional mandates in relation to the promotion of the role
of rural electric cooperatives to achieve national
electrification. Correlatively, Sec. 3 of the law provides:
Section 3. Scope. - This Act shall provide a framework for the
restructuring of the electric power industry, including the
privatization of the assets of NPC, the transition to the
desired competitive structure, and the definition of the
responsibilities of the various government agencies and
private entities. (Emphasis supplied.)
 @lendelacruz
Sec. 77 of RA 9136 also provides:
Section 77. Implementing Rules and Regulations. - The DOE
shall, in consultation with the electric power industry
participants and end-users, promulgate the Implementing
Rules and Regulations (IRR) of this Act within six (6) months
from the effectivity of this Act, subject to the approval by the
Power Commission.
Thus, the Rules and Regulations to implement RA 9136 were
issued on February 27, 2002. Under Sec. 3(b)(ii), Rule 33 of the
Rules and Regulations, all the NEA employees and officers
are considered terminated and the 965 plantilla positions of
NEA vacant, to wit:
Section 3. Separation and Other Benefits.
(a) x x x
(b) The following shall govern the application of Section 3(a)
of this Rule:
xxxx
(ii) With respect to NEA officials and employees, they shall
be considered legally terminated and shall be entitled to the
benefits or separation pay provided in Section 3(a) herein
when a restructuring of NEA is implemented pursuant to a
law enacted by Congress or pursuant to Section 5(a)(5) of
Presidential Decree No. 269. (Emphasis supplied.)
Meanwhile, on August 28, 2002, former President Gloria
Macapagal- Arroyo issued Executive Order No. 119 directing
the NEA Board to submit a reorganization plan. Thus, the
NEA Board issued the assailed resolutions.
On September 17, 2003, the Department of Budget and
Management approved the NEA Termination Pay Plan.
Thereafter, the NEA implemented an early retirement
program denominated as the "Early Leavers Program,"
giving incentives to those who availed of it and left NEA
before the effectivity of the reorganization plan. The other
employees of NEA were terminated effective December 31,
2003.
Hence, We have this petition.
The Issues
Petitioners raise the following issues:
1. The NEA Board has no power to terminate all the
NEA employees;
2. Executive Order No. 119 did not grant the NEA
Board the power to terminate all NEA employees;
and
3. Resolution Nos. 46 and 59 were carried out in bad
faith.
On the other hand, respondents argue in their Comment
dated August 20, 2009 that:
1. The Court has no jurisdiction over the petition;
31
2. Injunction is improper in this case given that the
assailed resolutions of the NEA Board have long
been implemented; and
3. The assailed NEA Board resolutions were issued
in good faith.
The Courts Ruling
This petition must be dismissed.
The procedural issues raised by respondents shall first be
discussed.
This Court Has Jurisdiction over the Case
Respondents essentially argue that petitioners violated the
principle of hierarchy of courts, pursuant to which the instant
petition should have been filed with the Regional Trial Court
first rather than with this Court directly.
We explained the principle of hierarchy of courts in Mendoza
v. Villas,1 stating:
In Chamber of Real Estate and Builders Associations, Inc.
(CREBA) v. Secretary of Agrarian Reform, a petition for
certiorari filed under Rule 65 was dismissed for having been
filed directly with the Court, violating the principle of
hierarchy of courts, to wit:
Primarily, although this Court, the Court of Appeals and the
Regional Trial Courts have concurrent jurisdiction to issue
writs of certiorari, prohibition, mandamus, quo warranto,
habeas corpus and injunction, such concurrence does not
give the petitioner unrestricted freedom of choice of court
forum. In Heirs of Bertuldo Hinog v. Melicor, citing People
v. Cuaresma, this Court made the following
pronouncements:
This Courts original jurisdiction to issue writs of certiorari is
not exclusive. It is shared by this Court with Regional Trial
Courts and with the Court of Appeals. This concurrence of
jurisdiction is not, however, to be taken as according to
parties seeking any of the writs an absolute, unrestrained
freedom of choice of the court to which application therefor
will be directed. There is after all a hierarchy of courts. That
hierarchy is determinative of the venue of appeals, and also
serves as a general determinant of the appropriate forum for
petitions for the extraordinary writs. A becoming regard for
that judicial hierarchy most certainly indicates that petitions
for the issuance of extraordinary writs against first level
("inferior") courts should be filed with the Regional Trial
Court, and those against the latter, with the Court of Appeals.
A direct invocation of the Supreme Courts original
jurisdiction to issue these writs should be allowed only when
there are special and important reasons therefor, clearly and
specifically set out in the petition. This is [an] established
policy. It is a policy necessary to prevent inordinate demands
upon the Courts time and attention which are better devoted
to those matters within its exclusive jurisdiction, and to
prevent further over-crowding of the Courts docket.
(Emphasis supplied.)
Evidently, the instant petition should have been filed with
the RTC. However, as an exception to this general rule, the
principle of hierarchy of courts may be set aside for special
and important reasons. Such reason exists in the instant case
involving as it does the employment of the entire plantilla of
NEA, more than 700 employees all told, who were effectively
 @lendelacruz
dismissed from employment in one swift stroke. This to the
mind of the Court entails its attention.
Moreover, the Court has made a similar ruling in National
Power Corporation Drivers and Mechanics Association
(NPC-DAMA) v. National Power Corporation (NPC).2 In
that case, the NPC-DAMA also filed a petition for injunction
directly with this Court assailing NPC Board Resolution Nos.
2002-124 and 2002-125, both dated November 18, 2002,
directing the termination of all employees of the NPC on
January 31, 2003. Despite such apparent disregard of the
principle of hierarchy of courts, the petition was given due
course. We perceive no compelling reason to treat the instant
case differently.
The Remedy of Injunction Is still Available
Respondents allege that the remedy of injunction is no longer
available to petitioners inasmuch as the assailed NEA Board
resolutions have long been implemented.
Taking respondents above posture as an argument on the
untenability of the petition on the ground of mootness,
petitioners contend that the principle of mootness is subject
to exceptions, such as when the case is of transcendental
importance.
In Funa v. Executive Secretary,3 the Court passed upon the
seeming moot issue of the appointment of Maria Elena H.
Bautista (Bautista) as Officer-in-Charge (OIC) of the
Maritime Industry Authority (MARINA) while concurrently
serving as Undersecretary of the Department of
Transportation and Communications. There, even though
Bautista later on was appointed as Administrator of
MARINA, the Court ruled that the case was an exception to
the principle of mootness and that the remedy of injunction
was still available, explaining thus:
A moot and academic case is one that ceases to present a
justiciable controversy by virtue of supervening events, so
that a declaration thereon would be of no practical use or
value. Generally, courts decline jurisdiction over such case or
dismiss it on ground of mootness. However, as we held in
Public Interest Center, Inc. v. Elma, supervening events,
whether intended or accidental, cannot prevent the Court
from rendering a decision if there is a grave violation of the
Constitution. Even in cases where supervening events had
made the cases moot, this Court did not hesitate to resolve
the legal or constitutional issues raised to formulate
controlling principles to guide the bench, bar, and public.
As a rule, the writ of prohibition will not lie to enjoin acts
already done. However, as an exception to the rule on
mootness, courts will decide a question otherwise moot if it
is capable of repetition yet evading review. (Emphasis
supplied.)
Similarly, in the instant case, while the assailed resolutions of
the NEA Board may have long been implemented, such acts
of the NEA Board may well be repeated by other government
agencies in the reorganization of their offices. Petitioners
have not lost their remedy of injunction.
The Power to Reorganize Includes the Power to Terminate
The meat of the controversy in the instant case is the issue of
whether the NEA Board had the power to pass Resolution
Nos. 46 and 59 terminating all of its employees.
This must be answered in the affirmative.
32
Under Rule 33, Section 3(b)(ii) of the Implementing Rules and
Regulations of the EPIRA Law, all NEA employees shall be
considered legally terminated with the implementation of a
reorganization program pursuant to a law enacted by
Congress or pursuant to Sec. 5(a)(5) of PD 269 through which
the reorganization was carried out, viz:
Section 5. National Electrification Administration; Board of
Administrators; Administrator.
(a) For the purpose of administering the provisions of this
Decree, there is hereby established a public corporation to be
known as the National Electrification Administration. x x x
xxxx
The Board shall, without limiting the generality of the
foregoing, have the following specific powers and duties.
xxxx
5. To establish policies and guidelines for employment on the
basis of merit, technical competence and moral character,
and, upon the recommendation of the Administrator to
organize or reorganize NEAs staffing structure, to fix the
salaries of personnel and to define their powers and duties.
(Emphasis supplied.)
Thus, petitioners argue that the power granted unto the NEA
Board to organize or reorganize does not include the power
to terminate employees but only to reduce NEAs manpower
complement.
Such contention is erroneous.
In Betoy v. The Board of Directors, National Power
Corporation,4 the Court upheld the dismissal of all the
employees of the NPC pursuant to the EPIRA Law. In ruling
that the power of reorganization includes the power of
removal, the Court explained:
[R]eorganization involves the reduction of personnel,
consolidation of offices, or abolition thereof by reason of
economy or redundancy of functions. It could result in the
loss of ones position through removal or abolition of an
office. However, for a reorganization for the purpose of
economy or to make the bureaucracy more efficient to be
valid, it must pass the test of good faith; otherwise, it is void
ab initio. (Emphasis supplied.)
Evidently, the termination of all the employees of NEA was
within the NEA Boards powers and may not successfully be
impugned absent proof of bad faith.
Petitioners Failed to Prove that the NEA Board Acted in Bad
Faith
Next, petitioners challenge the reorganization claiming bad
faith on the part of the NEA Board.
Congress itself laid down the indicators of bad faith in the
reorganization of government offices in Sec. 2 of RA 6656, an
Act to Protect the Security of Tenure of Civil Service Officers
and Employees in the Implementation of Government
Reorganization, to wit:
Section 2. No officer or employee in the career service shall
be removed except for a valid cause and after due notice and
hearing. A valid cause for removal exists when, pursuant to
 @lendelacruz
a bona fide reorganization, a position has been abolished or
rendered redundant or there is a need to merge, divide, or
consolidate positions in order to meet the exigencies of the
service, or other lawful causes allowed by the Civil Service
Law. The existence of any or some of the following
circumstances may be considered as evidence of bad faith in
the removals made as a result of reorganization, giving rise
to a claim for reinstatement or reappointment by an
aggrieved party:
(a) Where there is a significant increase in the
number of positions in the new staffing pattern of
the department or agency concerned;
(b) Where an office is abolished and other
performing substantially the same functions is
created;
(c) Where incumbents are replaced by those less
qualified in terms of status of appointment,
performance and merit;
(d) Where there is a reclassification of offices in the
department or agency concerned and the
reclassified offices perform substantially the same
function as the original offices;
(e) Where the removal violates the order of
separation provided in Section 3 hereof. (Emphasis
supplied.)
It must be noted that the burden of proving bad faith rests on
the one alleging it. As the Court ruled in Culili v. Eastern
Telecommunications, Inc.,5 "According to jurisprudence,
basic is the principle that good faith is presumed and he who
alleges bad faith has the duty to prove the same. " Moreover,
in Spouses Palada v. Solidbank Corporation,6 the Court
stated, "Allegations of bad faith and fraud must be proved by
clear and convincing evidence."
Here, petitioners have failed to discharge such burden of
proof.
In alleging bad faith, petitioners cite RA 6656, particularly its
Sec. 2, subparagraphs (b) and (c).1wphi1 Petitioners have the
burden to show that: (1) the abolished offices were replaced
by substantially the same units performing the same
functions; and (2) incumbents are replaced by less qualified
personnel.
Petitioners failed to prove such facts. Mere allegations
without hard evidence cannot be considered as clear and
convincing proof.
Next, petitioners state that the NEA Board should not have
abolished all the offices of NEA and instead made a selective
termination of its employees while retaining the other
employees.
Petitioners argue that for the reorganization to be valid, it is
necessary to only abolish the offices or terminate the
employees that would not be retained and the retention of
the employees that were tasked to carry out the continuing
mandate of NEA. Petitioners argue in their Memorandum
dated July 27, 2010:
A valid reorganization, pursued in good faith, would have
resulted to: (1) the abolition of old positions in the NEAs
table of organization that pertain to the granting of franchises
33
and rate fixing functions as these were all abolished by
Congress (2) the creation of new positions that pertain to the
additional mandates of the EPIRA Law and (3) maintaining
the old positions that were not affected by the EPIRA Law.
The Court already had the occasion to pass upon the validity
of the similar reorganization in the NPC. In the aforecited
case of Betoy,7 the Court upheld the policy of the Executive
to terminate all the employees of the office before rehiring
those necessary for its operation. We ruled in Betoy that such
policy is not tainted with bad faith:
It is undisputed that NPC was in financial distress and the
solution found by Congress was to pursue a policy towards
its privatization. The privatization of NPC necessarily
demanded the restructuring of its operations. To carry out
the purpose, there was a need to terminate employees and re-
hire some depending on the manpower requirements of the
privatized companies. The privatization and restructuring of
the NPC was, therefore, done in good faith as its primary
purpose was for economy and to make the bureaucracy more
efficient. (Emphasis supplied.)
Evidently, the fact that the NEA Board resorted to
terminating all the incumbent employees of NPC and, later
on, rehiring some of them, cannot, on that ground alone,
vitiate the bona fides of the reorganization.
WHEREFORE, the instant petition is hereby DISMISSED.
Resolution Nos. 46 and 59, dated July 10, 2003 and September
3, 2003, respectively, issued by the NEA Board of Directors
are hereby UPHELD.
No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 190710 June 6, 2011
JESSE U. LUCAS, Petitioner,
vs.
JESUS S. LUCAS, Respondent.
DECISION
NACHURA, J.:
Is a prima facie showing necessary before a court can issue a
DNA testing order? In this petition for review on certiorari,
we address this question to guide the Bench and the Bar in
dealing with a relatively new evidentiary tool. Assailed in
this petition are the Court of Appeals (CA) Decision1 dated
September 25, 2009 and Resolution dated December 17, 2009.
The antecedents of the case are, as follows:
On July 26, 2007, petitioner, Jesse U. Lucas, filed a Petition to
Establish Illegitimate Filiation (with Motion for the
Submission of Parties to DNA Testing)2 before the Regional
Trial Court (RTC), Branch 72, Valenzuela City. Petitioner
narrated that, sometime in 1967, his mother, Elsie Uy (Elsie),
migrated to Manila from Davao and stayed with a certain
"Ate Belen (Belen)" who worked in a prominent nightspot in
 @lendelacruz
Manila. Elsie would oftentimes accompany Belen to work.
On one occasion, Elsie got acquainted with respondent, Jesus
S. Lucas, at Belens workplace, and an intimate relationship
developed between the two. Elsie eventually got pregnant
and, on March 11, 1969, she gave birth to petitioner, Jesse U.
Lucas. The name of petitioners father was not stated in
petitioners certificate of live birth. However, Elsie later on
told petitioner that his father is respondent. On August 1,
1969, petitioner was baptized at San Isidro Parish, Taft
Avenue, Pasay City. Respondent allegedly extended
financial support to Elsie and petitioner for a period of about
two years. When the relationship of Elsie and respondent
ended, Elsie refused to accept respondents offer of support
and decided to raise petitioner on her own. While petitioner
was growing up, Elsie made several attempts to introduce
petitioner to respondent, but all attempts were in vain.
Attached to the petition were the following: (a) petitioners
certificate of live birth; (b) petitioners baptismal certificate;
(c) petitioners college diploma, showing that he graduated
from Saint Louis University in Baguio City with a degree in
Psychology; (d) his Certificate of Graduation from the same
school; (e) Certificate of Recognition from the University of
the Philippines, College of Music; and (f) clippings of several
articles from different newspapers about petitioner, as a
musical prodigy.
Respondent was not served with a copy of the petition.
Nonetheless, respondent learned of the petition to establish
filiation. His counsel therefore went to the trial court on
August 29, 2007 and obtained a copy of the petition.
Petitioner filed with the RTC a Very Urgent Motion to Try
and Hear the Case. Hence, on September 3, 2007, the RTC,
finding the petition to be sufficient in form and substance,
issued the Order3 setting the case for hearing and urging
anyone who has any objection to the petition to file his
opposition. The court also directed that the Order be
published once a week for three consecutive weeks in any
newspaper of general circulation in the Philippines, and that
the Solicitor General be furnished with copies of the Order
and the petition in order that he may appear and represent
the State in the case.
On September 4, 2007, unaware of the issuance of the
September 3, 2007 Order, respondent filed a Special
Appearance and Comment. He manifested inter alia that: (1)
he did not receive the summons and a copy of the petition;
(2) the petition was adversarial in nature and therefore
summons should be served on him as respondent; (3) should
the court agree that summons was required, he was waiving
service of summons and making a voluntary appearance; and
(4) notice by publication of the petition and the hearing was
improper because of the confidentiality of the subject matter.4
On September 14, 2007, respondent also filed a Manifestation
and Comment on Petitioners Very Urgent Motion to Try and
Hear the Case. Respondent reiterated that the petition for
recognition is adversarial in nature; hence, he should be
served with summons.
After learning of the September 3, 2007 Order, respondent
filed a motion for reconsideration.5 Respondent averred that
the petition was not in due form and substance because
petitioner could not have personally known the matters that
were alleged therein. He argued that DNA testing cannot be
had on the basis of a mere allegation pointing to respondent
as petitioners father. Moreover, jurisprudence is still
unsettled on the acceptability of DNA evidence.
34
On July 30, 2008, the RTC, acting on respondents motion for
reconsideration, issued an Order6 dismissing the case. The
court remarked that, based on the case of Herrera v. Alba, 7
there are four significant procedural aspects of a traditional
paternity action which the parties have to face: a prima facie
case, affirmative defenses, presumption of legitimacy, and
physical resemblance between the putative father and the
child. The court opined that petitioner must first establish
these four procedural aspects before he can present evidence
of paternity and filiation, which may include incriminating
acts or scientific evidence like blood group test and DNA test
results. The court observed that the petition did not show
that these procedural aspects were present. Petitioner failed
to establish a prima facie case considering that (a) his mother
did not personally declare that she had sexual relations with
respondent, and petitioners statement as to what his mother
told him about his father was clearly hearsay; (b) the
certificate of live birth was not signed by respondent; and (c)
although petitioner used the surname of respondent, there
was no allegation that he was treated as the child of
respondent by the latter or his family. The court opined that,
having failed to establish a prima facie case, respondent had
no obligation to present any affirmative defenses. The
dispositive portion of the said Order therefore reads:
WHEREFORE, for failure of the petitioner to establish
compliance with the four procedural aspects of a traditional
paternity action in his petition, his motion for the submission
of parties to DNA testing to establish paternity and filiation
is hereby denied. This case is DISMISSED without prejudice.
SO ORDERED.8
Petitioner seasonably filed a motion for reconsideration to
the Order dated July 30, 2008, which the RTC resolved in his
favor. Thus, on October 20, 2008, it issued the Order9 setting
aside the courts previous order, thus:
WHEREFORE, in view of the foregoing, the Order dated July
30, 2008 is hereby reconsidered and set aside.
Let the Petition (with Motion for the Submission of Parties to
DNA Testing) be set for hearing on January 22, 2009 at 8:30
in the morning.
xxxx
SO ORDERED.10
This time, the RTC held that the ruling on the grounds relied
upon by petitioner for filing the petition is premature
considering that a full-blown trial has not yet taken place.
The court stressed that the petition was sufficient in form and
substance. It was verified, it included a certification against
forum shopping, and it contained a plain, concise, and direct
statement of the ultimate facts on which petitioner relies on
for his claim, in accordance with Section 1, Rule 8 of the Rules
of Court. The court remarked that the allegation that the
statements in the petition were not of petitioners personal
knowledge is a matter of evidence. The court also dismissed
respondents arguments that there is no basis for the taking
of DNA test, and that jurisprudence is still unsettled on the
acceptability of DNA evidence. It noted that the new Rule on
DNA Evidence11 allows the conduct of DNA testing, whether
at the courts instance or upon application of any person who
has legal interest in the matter in litigation.
Respondent filed a Motion for Reconsideration of Order
dated October 20, 2008 and for Dismissal of Petition,12
reiterating that (a) the petition was not in due form and
 @lendelacruz 35

substance as no defendant was named in the title, and all the DNA test for compulsory recognition case opens wide the
basic allegations were hearsay; and (b) there was no prima opportunities for extortionist to prey on victims who have no
facie case, which made the petition susceptible to dismissal. stomach for scandal.15

The RTC denied the motion in the Order dated January 19, Petitioner moved for reconsideration. On December 17, 2009,
2009, and rescheduled the hearing.13 the CA denied the motion for lack of merit.16

Aggrieved, respondent filed a petition for certiorari with the In this petition for review on certiorari, petitioner raises the
CA, questioning the Orders dated October 20, 2008 and following issues:
January 19, 2009.
I.
On September 25, 2009, the CA decided the petition for
certiorari in favor of respondent, thus: WHETHER OR NOT THE COURT OF APPEALS
ERRED WHEN IT RESOLVED THE ISSUE OF
WHEREFORE, the instant petition for certiorari is hereby LACK OF JURISDICTION OVER THE PERSON OF
GRANTED for being meritorious. The assailed Orders dated HEREIN RESPONDENT ALBEIT THE SAME WAS
October 20, 2008 and January 19, 2009 both issued by the NEVER RAISED IN THE PETITION FOR
Regional Trial Court, Branch 172 of Valenzuela City in SP. CERTIORARI.
Proceeding Case No. 30-V-07 are REVERSED and SET
ASIDE. Accordingly, the case docketed as SP. Proceeding I.A
Case No. 30-V-07 is DISMISSED.14
WHETHER OR NOT THE COURT OF
The CA held that the RTC did not acquire jurisdiction over APPEALS ERRED WHEN IT RULED
the person of respondent, as no summons had been served THAT JURISDICTION WAS NOT
on him. Respondents special appearance could not be ACQUIRED OVER THE PERSON OF THE
considered as voluntary appearance because it was filed only RESPONDENT.
for the purpose of questioning the jurisdiction of the court
over respondent. Although respondent likewise questioned
I.B
the courts jurisdiction over the subject matter of the petition,
the same is not equivalent to a waiver of his right to object to
the jurisdiction of the court over his person. WHETHER OR NOT THE COURT OF
APPEALS ERRED WHEN IT FAILED TO
REALIZE THAT THE RESPONDENT
The CA remarked that petitioner filed the petition to
HAD ALREADY SUBMITTED
establish illegitimate filiation, specifically seeking a DNA
VOLUNTARILY TO THE JURISDICTION
testing order to abbreviate the proceedings. It noted that
OF THE COURT A QUO.
petitioner failed to show that the four significant procedural
aspects of a traditional paternity action had been met. The CA
further held that a DNA testing should not be allowed when I.C
the petitioner has failed to establish a prima facie case, thus:
WHETHER OR NOT THE COURT OF
While the tenor [of Section 4, Rule on DNA Evidence] APPEALS ERRED WHEN IT
appears to be absolute, the rule could not really have been ESSENTIALLY RULED THAT THE TITLE
intended to trample on the substantive rights of the parties. OF A PLEADING, RATHER THAN ITS
It could have not meant to be an instrument to promote BODY, IS CONTROLLING.
disorder, harassment, or extortion. It could have not been
intended to legalize unwarranted expedition to fish for II.
evidence. Such will be the situation in this particular case if a
court may at any time order the taking of a DNA test. If the WHETHER OR NOT THE COURT OF APPEALS
DNA test in compulsory recognition cases is immediately ERRED WHEN IT ORDERED THE DISMISSAL OF
available to the petitioner/complainant without requiring THE PETITION BY REASON OF THE MOTION
first the presentation of corroborative proof, then a dire and (FILED BY THE PETITIONER BEFORE THE
absurd rule would result. Such will encourage and promote COURT A QUO) FOR THE CONDUCT OF DNA
harassment and extortion. TESTING.

xxxx II.A

At the risk of being repetitious, the Court would like to stress WHETHER OR NOT THE COURT OF APPEALS
that it sees the danger of allowing an absolute DNA testing ERRED WHEN IT ESSENTIALLY RULED THAT
to a compulsory recognition test even if the DNA TESTING CAN ONLY BE ORDERED AFTER
plaintiff/petitioner failed to establish prima facie proof. x x x THE PETITIONER ESTABLISHES PRIMA FACIE
If at anytime, motu proprio and without pre-conditions, the PROOF OF FILIATION.
court can indeed order the taking of DNA test in compulsory
recognition cases, then the prominent and well-to-do
III.
members of our society will be easy prey for opportunists
and extortionists. For no cause at all, or even for [sic] casual
sexual indiscretions in their younger years could be used as WHETHER OR NOT THE COURT OF APPEALS
a means to harass them. Unscrupulous women, unsure of the ERRED WITH ITS MISPLACED RELIANCE ON
paternity of their children may just be taking the chances-just THE CASE OF HERRERA VS. ALBA,
in case-by pointing to a sexual partner in a long past one-time
encounter. Indeed an absolute and unconditional taking of
 @lendelacruz
ESPECIALLY AS REGARDS THE FOUR
SIGNIFICANT PROCEDURAL ASPECTS OF A
TRADITIONAL PATERNITY ACTION.17
Petitioner contends that respondent never raised as issue in
his petition for certiorari the courts lack of jurisdiction over
his person. Hence, the CA had no legal basis to discuss the
same, because issues not raised are deemed waived or
abandoned. At any rate, respondent had already voluntarily
submitted to the jurisdiction of the trial court by his filing of
several motions asking for affirmative relief, such as the (a)
Motion for Reconsideration of the Order dated September 3,
2007; (b) Ex Parte Motion to Resolve Motion for
Reconsideration of the Order dated November 6, 2007; and
(c) Motion for Reconsideration of the Order dated October 20,
2008 and for Dismissal of Petition. Petitioner points out that
respondent even expressly admitted that he has waived his
right to summons in his Manifestation and Comment on
Petitioners Very Urgent Motion to Try and Hear the Case.
Hence, the issue is already moot and academic.
Petitioner argues that the case was adversarial in nature.
Although the caption of the petition does not state
respondents name, the body of the petition clearly indicates
his name and his known address. He maintains that the body
of the petition is controlling and not the caption.
Finally, petitioner asserts that the motion for DNA testing
should not be a reason for the dismissal of the petition since
it is not a legal ground for the dismissal of cases. If the CA
entertained any doubt as to the propriety of DNA testing, it
should have simply denied the motion.18 Petitioner points
out that Section 4 of the Rule on DNA Evidence does not
require that there must be a prior proof of filiation before
DNA testing can be ordered. He adds that the CA
erroneously relied on the four significant procedural aspects
of a paternity case, as enunciated in Herrera v. Alba.19
Petitioner avers that these procedural aspects are not
applicable at this point of the proceedings because they are
matters of evidence that should be taken up during the trial.20
In his Comment, respondent supports the CAs ruling on
most issues raised in the petition for certiorari and merely
reiterates his previous arguments. However, on the issue of
lack of jurisdiction, respondent counters that, contrary to
petitioners assertion, he raised the issue before the CA in
relation to his claim that the petition was not in due form and
substance. Respondent denies that he waived his right to the
service of summons. He insists that the alleged waiver and
voluntary appearance was conditional upon a finding by the
court that summons is indeed required. He avers that the
assertion of affirmative defenses, aside from lack of
jurisdiction over the person of the defendant, cannot be
considered as waiver of the defense of lack of jurisdiction
over such person.
The petition is meritorious.
Primarily, we emphasize that the assailed Orders of the trial
court were orders denying respondents motion to dismiss
the petition for illegitimate filiation. An order denying a
motion to dismiss is an interlocutory order which neither
terminates nor finally disposes of a case, as it leaves
something to be done by the court before the case is finally
decided on the merits. As such, the general rule is that the
denial of a motion to dismiss cannot be questioned in a
special civil action for certiorari, which is a remedy designed
to correct errors of jurisdiction and not errors of judgment.
Neither can a denial of a motion to dismiss be the subject of
an appeal unless and until a final judgment or order is
rendered. In a number of cases, the court has granted the
36
extraordinary remedy of certiorari on the denial of the
motion to dismiss but only when it has been tainted with
grave abuse of discretion amounting to lack or excess of
jurisdiction.21 In the present case, we discern no grave abuse
of discretion on the part of the trial court in denying the
motion to dismiss.
The grounds for dismissal relied upon by respondent were
(a) the courts lack of jurisdiction over his person due to the
absence of summons, and (b) defect in the form and
substance of the petition to establish illegitimate filiation,
which is equivalent to failure to state a cause of action.
We need not belabor the issues on whether lack of
jurisdiction was raised before the CA, whether the court
acquired jurisdiction over the person of respondent, or
whether respondent waived his right to the service of
summons. We find that the primordial issue here is actually
whether it was necessary, in the first place, to serve summons
on respondent for the court to acquire jurisdiction over the
case. In other words, was the service of summons
jurisdictional? The answer to this question depends on the
nature of petitioners action, that is, whether it is an action in
personam, in rem, or quasi in rem.
An action in personam is lodged against a person based on
personal liability; an action in rem is directed against the
thing itself instead of the person; while an action quasi in rem
names a person as defendant, but its object is to subject that
person's interest in a property to a corresponding lien or
obligation. A petition directed against the "thing" itself or the
res, which concerns the status of a person, like a petition for
adoption, annulment of marriage, or correction of entries in
the birth certificate, is an action in rem.22
In an action in personam, jurisdiction over the person of the
defendant is necessary for the court to validly try and decide
the case. In a proceeding in rem or quasi in rem, jurisdiction
over the person of the defendant is not a prerequisite to
confer jurisdiction on the court, provided that the latter has
jurisdiction over the res. Jurisdiction over the res is acquired
either (a) by the seizure of the property under legal process,
whereby it is brought into actual custody of the law, or (b) as
a result of the institution of legal proceedings, in which the
power of the court is recognized and made effective. 23
The herein petition to establish illegitimate filiation is an
action in rem. By the simple filing of the petition to establish
illegitimate filiation before the RTC, which undoubtedly had
jurisdiction over the subject matter of the petition, the latter
thereby acquired jurisdiction over the case. An in rem
proceeding is validated essentially through publication.
Publication is notice to the whole world that the proceeding
has for its object to bar indefinitely all who might be minded
to make an objection of any sort to the right sought to be
established.24 Through publication, all interested parties are
deemed notified of the petition.
If at all, service of summons or notice is made to the
defendant, it is not for the purpose of vesting the court with
jurisdiction, but merely for satisfying the due process
requirements.25 This is but proper in order to afford the
person concerned the opportunity to protect his interest if he
so chooses.26 Hence, failure to serve summons will not
deprive the court of its jurisdiction to try and decide the case.
In such a case, the lack of summons may be excused where it
is determined that the adverse party had, in fact, the
opportunity to file his opposition, as in this case. We find that
the due process requirement with respect to respondent has
been satisfied, considering that he has participated in the
 @lendelacruz
proceedings in this case and he has the opportunity to file his
opposition to the petition to establish filiation.
To address respondents contention that the petition should
have been adversarial in form, we further hold that the herein
petition to establish filiation was sufficient in form. It was
indeed adversarial in nature despite its caption which lacked
the name of a defendant, the failure to implead respondent
as defendant, and the non-service of summons upon
respondent. A proceeding is adversarial where the party
seeking relief has given legal warning to the other party and
afforded the latter an opportunity to contest it.27 In this
petitionclassified as an action in remthe notice
requirement for an adversarial proceeding was likewise
satisfied by the publication of the petition and the giving of
notice to the Solicitor General, as directed by the trial court.
The petition to establish filiation is sufficient in substance. It
satisfies Section 1, Rule 8 of the Rules of Court, which
requires the complaint to contain a plain, concise, and direct
statement of the ultimate facts upon which the plaintiff bases
his claim. A fact is essential if it cannot be stricken out
without leaving the statement of the cause of action
inadequate.28 A complaint states a cause of action when it
contains the following elements: (1) the legal right of plaintiff,
(2) the correlative obligation of the defendant, and (3) the act
or omission of the defendant in violation of said legal right.29
The petition sufficiently states the ultimate facts relied upon
by petitioner to establish his filiation to respondent.
Respondent, however, contends that the allegations in the
petition were hearsay as they were not of petitioners
personal knowledge. Such matter is clearly a matter of
evidence that cannot be determined at this point but only
during the trial when petitioner presents his evidence.
In a motion to dismiss a complaint based on lack of cause of
action, the question submitted to the court for determination
is the sufficiency of the allegations made in the complaint to
constitute a cause of action and not whether those allegations
of fact are true, for said motion must hypothetically admit the
truth of the facts alleged in the complaint.30
The inquiry is confined to the four corners of the complaint,
and no other.31 The test of the sufficiency of the facts alleged
in the complaint is whether or not, admitting the facts
alleged, the court could render a valid judgment upon the
same in accordance with the prayer of the complaint.32
If the allegations of the complaint are sufficient in form and
substance but their veracity and correctness are assailed, it is
incumbent upon the court to deny the motion to dismiss and
require the defendant to answer and go to trial to prove his
defense. The veracity of the assertions of the parties can be
ascertained at the trial of the case on the merits.33
The statement in Herrera v. Alba34 that there are four
significant procedural aspects in a traditional paternity case
which parties have to face has been widely misunderstood
and misapplied in this case. A party is confronted by these
so-called procedural aspects during trial, when the parties
have presented their respective evidence. They are matters of
evidence that cannot be determined at this initial stage of the
proceedings, when only the petition to establish filiation has
been filed. The CAs observation that petitioner failed to
establish a prima facie casethe first procedural aspect in a
paternity caseis therefore misplaced. A prima facie case is
built by a partys evidence and not by mere allegations in the
initiatory pleading.
37
Clearly then, it was also not the opportune time to discuss the
lack of a prima facie case vis--vis the motion for DNA testing
since no evidence has, as yet, been presented by petitioner.
More essentially, it is premature to discuss whether, under
the circumstances, a DNA testing order is warranted
considering that no such order has yet been issued by the trial
court. In fact, the latter has just set the said case for hearing.
At any rate, the CAs view that it would be dangerous to
allow a DNA testing without corroborative proof is well
taken and deserves the Courts attention. In light of this
observation, we find that there is a need to supplement the
Rule on DNA Evidence to aid the courts in resolving motions
for DNA testing order, particularly in paternity and other
filiation cases. We, thus, address the question of whether a
prima facie showing is necessary before a court can issue a
DNA testing order.
The Rule on DNA Evidence was enacted to guide the Bench
and the Bar for the introduction and use of DNA evidence in
the judicial system. It provides the "prescribed parameters on
the requisite elements for reliability and validity (i.e., the
proper procedures, protocols, necessary laboratory reports,
etc.), the possible sources of error, the available objections to
the admission of DNA test results as evidence as well as the
probative value of DNA evidence." It seeks "to ensure that
the evidence gathered, using various methods of DNA
analysis, is utilized effectively and properly, [and] shall not
be misused and/or abused and, more importantly, shall
continue to ensure that DNA analysis serves justice and
protects, rather than prejudice the public."35
Not surprisingly, Section 4 of the Rule on DNA Evidence
merely provides for conditions that are aimed to safeguard
the accuracy and integrity of the DNA testing. Section 4
states:
SEC. 4. Application for DNA Testing Order. The appropriate
court may, at any time, either motu proprio or on application
of any person who has a legal interest in the matter in
litigation, order a DNA testing. Such order shall issue after
due hearing and notice to the parties upon a showing of the
following:
(a) A biological sample exists that is relevant to the
case;
(b) The biological sample: (i) was not previously
subjected to the type of DNA testing now requested;
or (ii) was previously subjected to DNA testing, but
the results may require confirmation for good
reasons;
(c) The DNA testing uses a scientifically valid
technique;
(d) The DNA testing has the scientific potential to
produce new information that is relevant to the
proper resolution of the case; and
(e) The existence of other factors, if any, which the
court may consider as potentially affecting the
accuracy or integrity of the DNA testing.
This Rule shall not preclude a DNA testing, without need of
a prior court order, at the behest of any party, including law
enforcement agencies, before a suit or proceeding is
commenced.
 @lendelacruz
This does not mean, however, that a DNA testing order will
be issued as a matter of right if, during the hearing, the said
conditions are established.
In some states, to warrant the issuance of the DNA testing
order, there must be a show cause hearing wherein the
applicant must first present sufficient evidence to establish a
prima facie case or a reasonable possibility of paternity or
"good cause" for the holding of the test. 36 In these states, a
court order for blood testing is considered a "search," which,
under their Constitutions (as in ours), must be preceded by a
finding of probable cause in order to be valid. Hence, the
requirement of a prima facie case, or reasonable possibility,
was imposed in civil actions as a counterpart of a finding of
probable cause. The Supreme Court of Louisiana eloquently
explained
Although a paternity action is civil, not criminal, the
constitutional prohibition against unreasonable searches and
seizures is still applicable, and a proper showing of sufficient
justification under the particular factual circumstances of the
case must be made before a court may order a compulsory
blood test. Courts in various jurisdictions have differed
regarding the kind of procedures which are required, but
those jurisdictions have almost universally found that a
preliminary showing must be made before a court can
constitutionally order compulsory blood testing in paternity
cases. We agree, and find that, as a preliminary matter, before
the court may issue an order for compulsory blood testing,
the moving party must show that there is a reasonable
possibility of paternity. As explained hereafter, in cases in
which paternity is contested and a party to the action refuses
to voluntarily undergo a blood test, a show cause hearing
must be held in which the court can determine whether there
is sufficient evidence to establish a prima facie case which
warrants issuance of a court order for blood
testing.371avvphi1
The same condition precedent should be applied in our
jurisdiction to protect the putative father from mere
harassment suits. Thus, during the hearing on the motion for
DNA testing, the petitioner must present prima facie
evidence or establish a reasonable possibility of paternity.
Notwithstanding these, it should be stressed that the
issuance of a DNA testing order remains discretionary upon
the court. The court may, for example, consider whether
there is absolute necessity for the DNA testing. If there is
already preponderance of evidence to establish paternity and
the DNA test result would only be corroborative, the court
may, in its discretion, disallow a DNA testing.
WHEREFORE, premises considered, the petition is
GRANTED. The Court of Appeals Decision dated September
25, 2009 and Resolution dated December 17, 2009 are
REVERSED and SET ASIDE. The Orders dated October 20,
2008 and January 19, 2009 of the Regional Trial Court of
Valenzuela City are AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 167807 December 6, 2011
38
MANOLITO AGRA, EDMUNDO P. AGUILAR, IMELDA
I. AMERICA, EVELYN R. CONCEPCION, DIOSDADO
A. CORSIGA, PERCIVAL G. CRISOSTOMO, CESAR E.
FAELDON, MA. REGINA C. FILOTEO, ZARINA O.
HIPOLITO, JANICE F. MABILOG, ROBERTO
MARTINEZ, JONATHAN MENDROS, NORMAN
MIRASOL, EDRICK V. MOZO, LORENZO A.
PENOLIAR, LOURDES QUINTERO, GLORIA GUDELIA
SAMBO, DEMOSTHENES V. ERENO, RHONEIL
LIBUNAO, ILUGEN P. MABANSAG, JOSEPHINE
MAGBOO, MADELEINE ANN B. BAUTISTA, ULYSSES
C. BIBON, ANGELINA RAMOS, EDUARDO M.
SUMAYOD, DOMINGO TAMAYO, HERACLEA M.
AFABLE, ANNA LISSA CREENCIA, CHONA O. DELA
CRUZ, MERCY NANETTE C. IBOY, JEAN A. LUPANGO,
MARIE DELA O. NA-OBRE, PERLA LUZ OCAMPO,
ROUCHELLEJANE PAYURAN, ABIGAIL E.
PORMENTO, THERESITA A. RIVERA, MILAGROS
ROBLES, JOSEPHINE ROSILLO, ARSENIA M.
SACDALAN, PRECILA TUBIO, IRENE H. VIRAY,
WILFREDO O. BUCSIT, BONIFACIO DAVID, ROSARIO
P. DIZON, EXEQUIEL EVALE, JR., RONALD M.
MANALO, HENRIETTA A. MARAMOT, FELICISIMO U.
PULA, JONAS F. SALVADOR, ERNESTO SILVANO, JR.,
ENRICO G. VELGADO, FEDERICO VILLAR, JR.,
ARNEL C. ABEN, ABDULMALIK BACARAMAN,
VIRGINIA BORJA, ANTONIO CARANDANG, JR.,
RINA RIEL DOLINA, MANOLITO FAJARDO, ARVIN B.
GARDUQUE, CAYETANO JUAREZ, MA. SHERYL
LABONETE, HERCONIDA T. LAZARO, MARITESS
MARTINEZ, AURELIO L. MENDOZA, ARNEL M.
NOGOT, GERARDO G. POMOY, DENCIO RAMOS,
CORAZON TAGUDIN, ANAFEL B. TIO, AGATONA S.
ZALATAR, MARGIE EULALIA CALMA, RENEE D.
MELLA, ARLIQUIN AMERICA, DEANNA B. AYSON,
GERALDINE J. CALICA, CHESTER FERNANDEZ,
LUISA I. HERNANDEZ, CYNTHIA E. LISONDRA,
ALONA S. LLVATA, CLAIRE P. QUETUA, ROSEMARIE
S. QUINTOS, RUTH S. RAMIREZ, LINO VERMUDO,
JR., ROLANDO R. APOLONIO, CELIA I. ACCAD, MA.
ALMA AYOS, PAMELA CASTILLO, ARNOLD DUPA,
LAURENCE FELICIANO, LEANDRO P. LIBRANDO,
MARILOU B. LOPEZ, AMELITA P. LUCERO,
ESTERBELLE T. SIBALA, JONA ANDAL, ANDRES
RATIO, MA. THERESA Q. MALLANO, DANILO P.
LIGUA, JOY ABOGADO, VIRGINIA C. STA. ANA,
ALBERNARD BAUTISTA, JUBANE DE PEDRO, PAUL
DINDO C. DELA CRUZ, ALEJO B. INCISO, SHERWIN
MAADA, JESUS T. OBIDOS, JOEL B. ARELLANO,
ALFREDO CABRERA, MARY LYNN E. GELLOR, JOHN
JOSEPH M. MAGTULOY, MICHELLE MONTEMAYOR,
RHINA ANGUE, NORBERTO BAYAGA, JR., JUSTINO
CALVEZ, EDWIN CONCEPCION, ALAN JOSEPH IBE,
CESAR JACINTO, JOSERITA MADRID, IRENE
MARTIN, GINA T. QUINDO, RENATO SUBIJANO,
NIELMA E. VERZOSA, ALL NATIONAL
ELECTRIFICATION ADMINISTRATION EMPLOYEES,
REPRESENTED BY REGINA FILOTEO, Petitioners,
vs.
COMMISSION ON AUDIT, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
This is a special civil action via certiorari under Rule 65 in
relation to Rule 64 of the 1997 Revised Rules of Civil
Procedure from the Decision1 of the Commission on Audit
(COA) No. 2003-134 dated October 9, 2003, which denied the
grant of rice allowance to employees of the National
Electrification Administration (NEA) who were hired after
June 30, 1989 (petitioners) and COAs Resolution2 No. 2005-
 @lendelacruz
010 dated February 24, 2005, which likewise denied
petitioners Motion for Reconsideration.
On July 1, 1989, Republic Act No. 6758 (the Compensation
and Position Classification Act of 1989) took effect, Section 12
of which provides:
Sec. 12. Consolidation of Allowances and Compensation.
All allowances, except for representation and transportation
allowances; clothing and laundry allowances; subsistence
allowance of marine officers and crew on board government
vessels and hospital personnel; hazard pay; allowances of
foreign service personnel stationed abroad; and such other
additional compensation not otherwise specified herein as
may be determined by the DBM, shall be deemed included in
the standardized salary rates herein prescribed. Such other
additional compensation, whether in cash or in kind, being
received by incumbents only as of July 1, 1989 not integrated
into the standardized salary rates shall continue to be
authorized.
Existing additional compensation of any national
government official or employee paid from local funds of a
local government unit shall be absorbed into the basic salary
of said official or employee and shall be paid by the National
Government. (Emphasis ours.)
Pursuant to its authority to implement Republic Act No. 6758
under Section 23 thereof, the Department of Budget and
Management (DBM) on October 2, 1989 issued Corporate
Compensation Circular No. 10 (DBM-CCC No. 10), otherwise
known as the "Implementing Rules and Regulations of R.A.
No. 6758." Paragraph 5.5 of DBM-CCC No. 10 reads:
5.5 The following allowances/fringe benefits
authorized to GOCCs/GFIs pursuant to the
aforementioned issuances are not likewise to be
integrated into the basic salary and allowed to be
continued only for incumbents of positions as of
June 30, 1989 who are authorized and actually
receiving said allowances/benefits as of said date,
at the same terms and conditions prescribed in said
issuances[:]
5.5.1 Rice Subsidy;
5.5.2 Sugar Subsidy;
5.5.3 Death Benefits other than those
granted by the GSIS;
5.5.4 Medical/dental/optical
allowances/benefits;
5.5.5 Childrens Allowance;
5.5.6 Special Duty Pay/Allowance;
5.5.7 Meal Subsidy;
5.5.8 Longevity Pay; and
5.5.9 Tellers Allowance. (Emphasis
added.)
A group of NEA employees who were hired after October 31,
19893 claimed that they did not receive meal, rice, and
childrens allowances. Thus, on July 23, 1999, they filed a
special civil action for mandamus against NEA and its Board
39
of Administrators before the Regional Trial Court (RTC),
Branch 88, Quezon City, docketed as SP. Civil Action No. Q-
99-38275, alleging violation of their right to the equal
protection clause under the Constitution.
On December 15, 1999, the RTC rendered its Decision 4 in
their favor, disposing of the case in the following manner:
WHEREFORE, foregoing considered, the petition is hereby
GRANTED directing the respondent NEA, its Board of
Administrators to forthwith settle the claims of the
petitioners and other employees similarly situated and
extend to them the benefits and allowances to which they are
entitled but which until now they have been deprived of as
enumerated under Section 5 of DBM CCC No. 10 and their
inclusion in the Provident Funds Membership, retroactive
from the date of their appointments up to the present or until
their separation from the service.5
At the instance of the complainants, the Branch Clerk of
Court of RTC Branch 88, Quezon City, Lily D. Labarda,
issued a CERTIFICATION6 dated January 24, 2000, which
states:
This is to certify that the Decision dated December 16, 1999 7
of the above-entitled case which reads the dispositive
portion:
xxxx
is now final and executory.
This certification [is] issued upon the request of Ms. Blesilda
B. Aguilar for whatever legal purpose/s it may serve. 8
Afterwards, the Presiding Judge of RTC Branch 88, Quezon
City issued a Writ of Execution9 in SP. Civil Action No. Q-99-
38275 on February 22, 2000.10 Thereafter, the RTC issued a
Notice of Garnishment against the funds of NEA with
Development Bank of the Philippines (DBP) to the extent of
P16,581,429.00.11
NEA questioned before the Court of Appeals the Orders of
the lower court, and the case was docketed as CA-G.R. SP No.
62919. On July 4, 2002, the Court of Appeals rendered a
Decision12 declaring null and void the December 11, 2000
Resolution as well as the January 8, 2001 Order of the RTC,
and ordering the implementation of a writ of execution
against the funds of NEA. Thus, NEA filed a Petition for
Review on Certiorari with this Court, docketed as G.R. No.
154200. Meanwhile, the RTC held in abeyance the execution
of its December 15, 1999 Decision pending resolution of this
Court of the review on certiorari in National Electrification
Administration v. Morales.13
On July 24, 2007, this Court reversed and set aside the Court
of Appeals decision and described the subsequent events
relating to the case in this manner14 :
Meanwhile, in a letter dated June 28, 2000, former DBM
Secretary Benjamin E. Diokno informed NEA Administrator
Conrado M. Estrella III of the denial of the NEA request for a
supplemental budget on the ground that the claims under
R.A. No. 6758 which the RTC had ordered to be settled
cannot be paid because Morales, et al. are not "incumbents of
positions as of July 1, 1989 who are actually receiving and
enjoying such benefits."
 @lendelacruz
Moreover, in an Indorsement dated March 23, 2000, the
Commission on Audit (COA) advised NEA against making
further payments in settlement of the claims of Morales, et al.
Apparently, COA had already passed upon claims similar
to those of Morales, et al. in its earlier "Decision No. 95-074"
dated January 25, 1995. Portions of the Indorsement read as
follows:
This Office concurs with the above view. The court may have
exceeded its jurisdiction when it entertained the petition for
the entitlement of the after-hired employees which had
already been passed upon by this Commission in COA
Decision No. 95-074 dated January 25, 1995. There, it was
held that: "the adverse action of this Commission sustaining
the disallowance made by the Auditor, NEA, on the payment
of fringe benefits granted to NEA employees hired from July
1, 1989 to October 31, 1989 is hereby reconsidered.
Accordingly, subject disallowance is lifted."
Thus, employees hired after the extended date of October 31,
1989, pursuant to the above COA decision cannot defy that
decision by filing a petition for mandamus in the lower court.
Presidential Decree No. 1445 and the 1987 Constitution
prescribe that the only mode for appeal from decisions of this
Commission is on certiorari to the Supreme Court in the
manner provided by law and the Rules of Court. Clearly, the
lower court had no jurisdiction when it entertained the
subject case of mandamus. And void decisions of the lower
court can never attain finality, much less be executed.
Moreover, COA was not made a party thereto, hence, it
cannot be compelled to allow the payment of claims on the
basis of the questioned decision.
PREMISES CONSIDERED, the auditor of NEA should post-
audit the disbursement vouchers on the bases of this
Commission's decision particularly the above-cited COA
Decision No. 94-074 [sic] and existing rules and regulations,
as if there is no decision of the court in the subject special civil
action for mandamus. At the same time, management should
be informed of the intention of this Office to question the
validity of the court decision before the Supreme Court
through the Office of the Solicitor General.
Parenthetically, the records at hand do not indicate when
Morales, et al. were appointed. Even the December [15], 1999
RTC Decision is vague for it merely states that they were
appointed after June 30, 1989, which could mean that they
were appointed either before the cut-off date of October 31,
1989 or after. Thus, there is not enough basis for this Court to
determine that the foregoing COA Decision No. 95-074
adversely affects Morales, et al.. Moreover, the records do not
show whether COA actually questioned the December 16,
1999 RTC Decision before this Court.15
The Court ruled that respondents therein could not proceed
against the funds of NEA "because the December [15], 1999
RTC Decision sought to be satisfied is not a judgment for a
specific sum of money susceptible of execution by
garnishment; it is a special judgment requiring petitioners to
settle the claims of respondents in accordance with existing
regulations of the COA."16 The Court further held as follows:
In its plain text, the December [15], 1999 RTC Decision merely
directs petitioners to "settle the claims of [respondents] and
other employees similarly situated." It does not require
petitioners to pay a certain sum of money to respondents. The
judgment is only for the performance of an act other than the
payment of money, implementation of which is governed by
Section 11, Rule 39 of the Rules of Court, which provides:
40
Section 11. Execution of special judgments. - When a judgment
requires the performance of any act other than those
mentioned in the two preceding sections, a certified copy of
the judgment shall be attached to the writ of execution and
shall be served by the officer upon the party against whom
the same is rendered, or upon any other person required
thereby, or by law, to obey the same, and such party or
person may be punished for contempt if he disobeys such
judgment.
xxxx
Garnishment is proper only when the judgment to be
enforced is one for payment of a sum of money.
The RTC exceeded the scope of its judgment when, in its
February 22, 2000 Writ of Execution, it directed petitioners to
"extend to [respondents] the benefits and allowances to
which they are entitled but which until now they have been
deprived of as enumerated under Sec. 5 of DBM CCC No. 10
and x x x to cause their inclusion in the Provident Fund
Membership." Worse, it countenanced the issuance of a
notice of garnishment against the funds of petitioners with
DBP to the extent of P16,581,429.00 even when no such
amount was awarded in its December 16, 1999 Decision.
However, in its subsequent Orders dated May 17, 2000 and
January 8, 2001, the RTC attempted to set matters right by
directing the parties to now await the outcome of the legal
processes for the settlement of respondents claims.
That is only right.
Without question, petitioner NEA is a GOCC -- a juridical
personality separate and distinct from the government, with
capacity to sue and be sued. As such GOCC, petitioner NEA
cannot evade execution; its funds may be garnished or levied
upon in satisfaction of a judgment rendered against it.
However, before execution may proceed against it, a claim
for payment of the judgment award must first be filed with
the COA.
Under Commonwealth Act No. 327, as amended by Section
26 of P.D. No. 1445, it is the COA which has primary
jurisdiction to examine, audit and settle "all debts and claims
of any sort" due from or owing the Government or any of its
subdivisions, agencies and instrumentalities, including
government-owned or controlled corporations and their
subsidiaries. With respect to money claims arising from the
implementation of R.A. No. 6758, their allowance or
disallowance is for COA to decide, subject only to the remedy
of appeal by petition for certiorari to this Court.
All told, the RTC acted prudently in halting implementation
of the writ of execution to allow the parties recourse to the
processes of the COA. It may be that the tenor of the March
23, 2000 Indorsement issued by COA already spells doom for
respondents claims; but it is not for this Court to preempt the
action of the COA on the post-audit to be conducted by it per
its Indorsement dated March 23, 2000.
In fine, it was grave error for the CA to reverse the RTC and
direct immediate implementation of the writ of execution
through garnishment of the funds of petitioners,
WHEREFORE, the petition is GRANTED. The July 4, 2002
Decision of the Court of Appeals is REVERSED and SET
ASIDE. The Resolution dated December 11, 2000 and Order
dated January 8, 2001 of the Regional Trial Court, Branch 88,
 @lendelacruz
Quezon City in Special Civil Action No. Q-99-38275 are
REINSTATED.17
Meantime, the Civil Service Commission issued Resolution
No. 001295 dated June 1, 200118 and interpreted Section 12 of
Republic Act No. 6758 in this manner:
Material to the resolution of this instant request is Section 12
of SSL x x x.
xxxx
The Commission, x x x is of the view that this provision of
law does not imply that such other additional compensation
not integrated into the salary rates shall not be received by
employees appointed after July 1, 1989. The word "only"
before the phrase "as of July 1, 1989" does not refer to
incumbents but qualifies what additional compensation can
be continued together with the qualifying words "not
integrated into the standardized rates shall continue to be
authorized." The correct interpretation therefore is that,
additional compensation being received by employees not
integrated into the standardized rates as of July 1, 1989 shall
continue to be authorized and received/enjoyed by said
employees, whether or not said employee was appointed
prior to or after July 1, 1989.
A different interpretation will result in the creation of two
classes of employees, i.e., one class receiving less pay than
another class for substantially equal work. Said
interpretation will violate Section 2 of the SSL which
provides, thus:
xxxx
Additionally, this interpretation will also violate the
constitutional precept that no person shall be denied the
equal protection of law (Section 1, Article III of the 1987
Constitution). Applying this precept the Supreme Court
declared that "equal protection of the law is against unde
favor on an individual or class (Tiu vs. Court of Appeals, GR
No. 127410, January 20, 1999).19
The Office of the Government Corporate Counsel (OGCC), in
response to the request of then NEA Administrator Manuel
Luis S. Sanchez, issued on August 14, 2001 its Opinion No.
157, s. 200120 declaring that the RTC decision, not having
been appealed, had become the law of the case which must
now be applied. The pertinent portion of such opinion reads:
HON. MANUEL LUIS S. SANCHEZ
Administrator
National Electrification Administration
NEA Road, Diliman, Quezon City
Re: Request for legal opinion on the propriety and
applicability to NEA employees hired after July 1, 1989 of
OGCC Opinion NO. 086, s. 2001
xxxx
Pursuant to law, subject Decision became final and executory
fifteen (15) days after its rendition, there being no appeal or
motion for reconsideration filed in the interim, as certified to
by Atty. Lily D. Labarda, Branch 88, Quezon City, on January
24, 2000.
The foregoing considered, this Office therefore cannot opine
otherwise save to uphold the supremacy and finality of the
41
aforequoted Decision of the Court on the matter. Its
judgment is now res judicata, hence, the controlling legal
rule, as far as Petitioners NEA employees are concerned, is
that they must be extended the benefits and allowances "to
which they are entitled but which until now they have been
deprived of as enumerated under Section 5 of DBM CCC No.
101 x x x, retroactive from the date of their appointments up
to the present or until their separation from the service." This
is the law of the case which must now be applied. At any rate,
we have stated in OGCC Opinion No. 086, S. 2001 that even
employees hired after July 1, 1989 may receive the subject
benefits provided there is determination by the DBM that the
same have not been actually integrated into their basic
salaries.
Hence, your query is therefore answered in the affirmative.21
Pursuant to the above opinion in its favor, the NEA Board of
Administrators issued Resolution No. 29 on August 9, 200122
approving the entitlement to rice, medical, children, meal,
and other related allowances to NEA employees hired after
October 31, 1989,23 and the payment of these benefits,
chargeable to its Personnel Services Savings. This resolution
was the outcome of the meeting of the NEA Board of
Administrators on the same date, and reads:
RESOLUTION NO. 29
xxxx
RESOLVED THEREFORE TO APPROVE, as it hereby
approves, the entitlement to rice, medical, children, meal and
other related allowances of NEA employees hired after
October 31, 1989 and payment of these benefits;
RESOLVED FURTHER TO CONFIRM, as it hereby confirms,
the initial appropriation and payment of One Million Six
Hundred Forty Six Thousand One Hundred Twenty Seven
Pesos and Thirty Centavos (P1,646,127.30) for this purpose
chargeable against the Personnel Services Savings.24
Thus, NEA granted the questioned allowances to its
employees who were not receiving these
benefits/allowances, including rice allowance amounting to
P1,865,811.84 covering the period January to August 2001. 25
However, the resident auditor of COA, Carmelita M.
Agullana (Agullana), did not allow the payment of rice
allowance for the period January to August 2001 to NEA
employees who were not incumbents as of June 30, 1989,
under Notice of Disallowance26 No. 2001-004-101 dated
September 6, 2001. Agullana indicated the "Facts and/or
Reasons for Disallowance" as follows:
Payment of Rice Allowance for the period January, 2001 to
August, 2001 to employees who were not incumbents as of
June 30, 1989 not allowed pursuant to RA #6758 as
implemented by Corporate Compensation Circular No. 10
prescribing the Rules and Regulations for the
Implementation of the Revised Compensation and Position
Classification System for Government-Owned and/or
Controlled Corporations (GOCCs) and Financial Institutions
(GFIs) specifically Sections 5.4 and 5.5 thereof. x x x.27
NEA, through then Acting Administrator Francisco G. Silva,
and assisted by counsel, appealed Agullanas disallowance
to the COA on September 27, 2001,28 arguing that the
disallowance had no basis in law and in fact, and that the
subject disbursement was anchored on a court decision that
had become final and executory.
 @lendelacruz
The COA denied the appeal from the disallowance in a
Decision29 dated October 9, 2003 (Decision No. 2003-134). The
COA stated that:
The Director of x x x Corporate Audit Office II recommended
the affirmance of the subject disallowance contending that
Section 12 of Republic Act (RA) No. 6758 (Salary
Standardization Law) x x x remains applicable on the matter
since Department of Budget and Management-Corporate
Compensation Circular No. 10, s. 1989 (DBM-CCC No. 10)
was declared ineffective by the Supreme Court in the case of
De Jesus, et al. vs. COA, et al. (G.R. No. 109023, August 13,
1998) due to its non-publication in the Official Gazette or in a
newspaper of general circulation. She pointed out that the
alleged discriminatory effect and violation of the policy to
provide equal pay for substantially equal work in the above-
quoted provision have been sufficiently considered in
Philippine Ports Authority vs. COA, 214 SCRA 653 and later
confirmed in Philippine International Trading Corporation
vs. COA, G.R. No. 132593, June 25, 1999, wherein the
Supreme Court ruled that:
"x x x we must mention that this Court has confirmed in
Philippine Ports Authority vs. Commission on Audit the
legislative intent to protect incumbents who are receiving
salaries and allowances over and above those authorized by
RA 6758 to continue to receive the same even after RA 6758
took effect. In reserving the benefit to incumbents, the
legislature has manifested its intent to gradually phase out
this privilege without upsetting the policy of non-diminution
of pay and consistent with the rule that laws should only be
applied prospectively in the spirit of fair play."
She also conformed to the OGCC Opinion No. 52, s. 1999
dated March 22, 1999, edifying the implication of the De Jesus
Case which enunciated thusly:
"Notwithstanding the ruling in the De Jesus Case, the
applicable law is still Section 12 of R.A. No. 6758 which
allows additional compensation being received by
incumbents as of July 1, 1989 not integrated into the standard
rates to continue. The recent nullification of DBM-CCC No.
10 applies favorably only to those incumbent employees
(hired prior to July 1, 1989) and does not in any way change
the position or situation of those employees hired after the
cut-off date. With the issuance of R.A. 6758, employees hired
after July 1, 1989 must follow the revised and unified
compensation and position classification system in the
government, for which the DBM was directed to establish
and administer and which shall be applied for all
government entities.
xxxx
The new hirees having accepted their employment, aware of
such a condition that they are not entitled to additional
benefits and allowances, they would be estopped from
complaining."
Moreover, the Director noted that when the rice allowance to
the claimants was granted in the year 2001, the DBM had
already published CCC No. 10.
Anent the contention that the subject decision of the RTC has
become the law of the case which must be applied, she
stressed that the said doctrine is one of the policies only and
will be disregarded when compelling circumstances call for
a redetermination of the point of law. As cited in Blacks Law
Dictionary, 6th Edition, 1990, "the doctrine is merely a rule of
procedure and does not go to the power of the court, and will
42
not be adhered to where its application will result in unjust
decision."
xxxx
PREMISES CONSIDERED, the instant appeal is hereby
DENIED and the disallowance in the total amount of
P1,865,811.84 is accordingly affirmed.30
NEA filed a Motion for Reconsideration of the said Decision,
but this was denied in COA Decision No. 2005-01031 dated
February 24, 2005, the pertinent portions of which read:
After a careful re-evaluation, this Commission finds herein
motion devoid of merit, the issues raised therein being a mere
reiteration of the previous arguments of the movant in his
appeal and which were already considered and passed upon
by this Commission in the assailed decision.
WHEREFORE, there being no new and material evidence
adduced as would warrant a reversal or modification of the
decision herein sought to be reconsidered, the instant motion
for reconsideration has to be, as it is hereby, denied with
finality.32
Thus, petitioners came to this Court questioning the COAs
decision and resolution on the disallowance of their rice
subsidy.
Petitioners claim that the COAs reliance on DBM-CCC No.
10 is totally misplaced, alleging that this interpretation had
been "squarely debunked" by the Supreme Court in a number
of cases, including Cruz v. Commission on Audit.33
Furthermore, petitioners claim that in a similar case
involving Opinion No. 086, s. 2001 of the OGCC, it wrote: "[It]
is our considered opinion that employees of COA, whether
appointed before or after July 1, 1989, are entitled to the
benefits enumerated under Section 5.5 of DBM-CCC No. 10 x
x x."34
We quote portions of Opinion No. 086, s. 2001 of the OGCC
below:
Please be informed that our Office had previously rendered
legal opinions involving the same issue upon the request of
some of our client corporations similarly situated. In our
Opinion No. 55, Series of 2000, we stated:
"At the outset we would like to clarify that the amount of the
standardized salary vis--vis the pre-SSL salary (plus
allowance) is not conclusively determinant of whether or not
a certain allowance is deemed integrated into the former.
Section 12 of R.A. 6758 expressly provides:
xxxx
The law is thus clear. The general rule is that all allowances
are deemed included in the standardized rates set forth in
R.A. 6758. This is consistent with the primary intent of the
Act to eliminate wage inequities. The law, however, admits
of certain exceptions and as stated in the second sentence of
the aforecited provision, such other additional compensation
in cash or in kind not integrated into the standardized rates
being received by incumbents as of July 1, 1989 shall continue
to be authorized. It is our view, however, that a government
agency, in this case NDC, does not have discretion to
determine what allowances received by incumbent
employees prior to SSL are deemed included or integrated in
the standardized rates. It is the DBM which has the mandate
 @lendelacruz
and authority under the SSL to determine what additional
compensation shall be integrated and it is precisely why it
issued NCC No. 10."
The foregoing opinion is consistent with our Opinion No. 52,
Series of 1999, wherein we opined:
"x x x Nonetheless, as Section 12 of RA 6758 expressly
provides that such additional compensation, whether in cash
or in kind, being received by incumbent employees as of July
1, 1989 not integrated to the standardized salary rates as may
be determined by the DBM shall continue to be authorized,
the question becomes a matter of fact, on whether or not the
aforementioned allowances have been integrated into the
salaries of employees."35 (Emphases in the quoted text.)
Petitioners claim that "the Civil Service Commission, the
Office of the Government Corporate Counsel and the highest
court of the land, the Supreme Court, chose not to distinguish
the entitlement of benefits to those hired before and after
October 31, 1989 (or in this case, July [1], 1989)," while "the
COA sweepingly does so by just a wave of the hand."36 To
support this claim, petitioners erroneously cite Javier v.
Philippine Ports Authority, CA-G.R. No. 67937, March 12,
2002, as a decision by this Court, but said decision was
rendered by the Court of Appeals.
Petitioners argue that assuming that they are not entitled to
the rice allowance in question, they should not be required to
refund the amounts received, on grounds of fairness and
equity. In connection with this, petitioners allege as follows:
Prior to December 31, 2003, NEA consists of 720 employees
more or less who received the rice allowance. Upon [the]
restructuring of NEA in December 2003, all NEA employees
were legally terminated. Out of 720 employees, only 320
employees are now left with to operate NEA. Most of the (sic)
them are rehired while minority of them are newly hired.
Thus, the refund of P1,865,811.84, shall be shouldered by
those who remained as NEA employees. Secondly, those
who received the said rice allowance accepted it in good faith
believing that they are entitled to it as a matter of law.37
In its Comment38 dated September 21, 2005, COAs lone
argument is that "[t]he assailed COA decision is not tainted
with grave abuse of discretion. The disallowance of payment
for the rice [subsidy] by the COA is in accord with the law
and the rules." COA maintains that the law on the matter,
Section 12 of Republic Act No. 6758, is clear, as its last
sentence provides reservation of certain allowances to
incumbents. COA argues in this wise:
The Supreme Court in Philippine Ports Authority vs.
Commission on Audit confirmed the legislative intent to
protect incumbents who are receiving salaries and/or
allowances over and above those authorized by R.A. 6758 to
continue to receive the same even after the law took effect. In
reserving the benefit to incumbents, the legislature has
manifested its intent to gradually phase out this privilege
without upsetting the policy of non-diminution of pay and
consistent with the rule that laws should only be applied
prospectively in the spirit of fairness and justice.
Thus, pursuant to its authority under Section 23 of R.A. No.
6758, the DBM x x x issued on October 2, 1989, DBM-CCC
No. 10. Section 5.5 of DBM-CCC No. 10 enumerated the
various allowances/fringe benefits authorized to
GOCCs/GFIs which are not to be integrated into the basic
salary and allowed to be continued only for incumbents of
positions as of June 30, 1989 who are authorized and actually
43
receiving said allowances/benefits as of said date. Among
these was the rice subsidy/allowance.
Hence, in light of the effectivity of DBM-CCC No. 10 on
March 16, 1999 following its reissuance (in its entirety on
February 15, 1999) and publication in the Official Gazette on
March 1, 1999, the disallowance by the COA of the rice
allowance for the period beginning January 2001 up to
August 2001 is not tainted with grave abuse of discretion but
in accord with the law and the rules.39
Petitioners, in their Reply,40 anchor their petition on their
allegation that the RTC Decision had already become final
and executory, could no longer be disturbed, and must be
respected by the parties. To support their claim, they cite
Arcenas v. Court of Appeals41 wherein this Court held:
For, it is a fundamental rule that when a final judgment
becomes executory, it thereby becomes immutable and
unalterable. The judgment may no longer be modified in any
respect, even if the modification is meant to correct what is
perceived to be an erroneous conclusion of fact or law, and
regardless of whether the modification is attempted to be
made by the court rendering it or by the highest Court of the
land. The only recognized exceptions are the correction of
clerical errors or the making of so-called nunc pro tunc entries
which cause no prejudice to any party, and, of course, where
the judgment is void. Any amendment or alteration which
substantially affects a final and executory judgment is null
and void for lack of jurisdiction, including the entire
proceedings held for that purpose.42 (Emphasis ours.)
Petitioners likewise cite Panado v. Court of Appeals 43
wherein the Court held that "[i]t is axiomatic that final and
executory judgments can no longer be attacked by any of the
parties or be modified, directly or indirectly, even by the
highest court of the land."44 From the foregoing
jurisprudence, petitioners conclude that the acts of COA in
disallowing the claims and ordering refund of benefits
already received clearly constitute grave abuse of discretion
amounting to lack of jurisdiction inasmuch as said acts
frustrated the final and executory decision of the trial court.
The pivotal issues as determined by the COA are:
1. Whether or not the immutability of final decision
doctrine must prevail over the exclusive jurisdiction
of [the COA] to audit and settle disbursements of
funds; and
2. Whether or not the NEA employees hired after
June 30, 1989 are entitled to rice allowance.45
The COA resolved these issues in this manner:
As to the first issue, the immutability rule applies only when
the decision is promulgated by a court possessed of
jurisdiction to hear and decide the case. Undoubtedly, the
petition in the guise of a case for mandamus is a money claim
falling within the original and exclusive jurisdiction of this
Commission. Noting the propensity of the lower courts in
taking cognizance of cases filed by claimants in violation of
such primary jurisdiction, the Supreme Court issued
Administrative Circular 10-2000 dated October 23, 2000
enjoining judges of lower courts to exercise caution in order
to prevent "possible circumvention of the rules and
procedures of the Commission on Audit" and reiterating the
basic rule that: "All money claims against the Government
must be filed with the Commission on Audit which shall act
upon it within sixty days. Rejection of the claim will
 @lendelacruz
authorize the claimant to elevate the matter to the Supreme
Court on certiorari and in effect sue the State thereby."
Under the doctrine of primary jurisdiction, when an
administrative body is clothed with original and exclusive
jurisdiction, courts are utterly without power and authority
to exercise concurrently such jurisdiction. Accordingly, all
the proceedings of the court in violation of that doctrine and
all orders and decisions reached thereby are null and void. It
will be noted in the cited Supreme Court Circular that money
claims are cognizable by the COA and its decision is
appealable only to the Supreme Court. The lower courts have
nothing to do with such genus of transactions.
Anent the issue of entitlement to rice allowance by
employees hired after June 30, 1989, this Commission is left
with no option but to affirm the disallowance in the face of
the explicit provisions of DBM-CCC No. 10. After its
publication on March 9, 1999 in the Official Gazette, rice
allowance was allowed only for incumbents as of July 1, 1989.
Obviously, there is no violation of the equal protection clause
as cited in the PITC case, supra, because whatever increments
the incumbents are enjoying over those of non-incumbents
are transitory, for the same law provides that such difference
shall be deducted from the salary increase the former should
receive under Section 17. Thus, the equalization or
standardization of what the two categories of employees will
be receiving in terms of benefits is ensured.
PREMISES CONSIDERED, the instant appeal is hereby
DENIED and the disallowance in the total amount of
P1,865,811.84 is accordingly affirmed.46
We agree with the findings of the COA.
In National Electrification Administration v. Morales, the
order of garnishment against the NEA funds to implement
the RTC Decision was in issue, and we said that the COA had
exclusive jurisdiction to decide on the allowance or
disallowance of money claims arising from the
implementation of Republic Act No. 6758. We observed
therein that "the RTC acted prudently in halting
implementation of the writ of execution to allow the parties
recourse to the processes of the COA."47 In fact, we even
stated there that "it is not for this Court to preempt the action
of the COA on the post-audit to be conducted by it per its
Indorsement dated March 23, 2000."48
We find that the COA had ruled in accordance with law and
jurisprudence, and we see no reason to reverse its decision.
Section 5.5 of DBM-CCC No. 10 is clear that rice subsidy is
one of the benefits that will be granted to employees of
GOCCs49 or GFIs50 only if they are "incumbents" as of July 1,
1989. We reproduce the first paragraph of Section 5.5 below:
5.5 The following allowances/fringe benefits authorized to
GOCCs/GFIs pursuant to the aforementioned issuances are
not likewise to be integrated into the basic salary and allowed
to be continued only for incumbents of positions as of June
30, 1989 who are authorized and actually receiving said
allowances/benefits as of said date, at the same terms and
conditions prescribed in said issuances[:]
5.5.1 Rice Subsidy; x x x.51
We have defined an incumbent as "a person who is in present
possession of an office; one who is legally authorized to
discharge the duties of an office."52 There is no question that
petitioners were not incumbents as of June 30, 1989. We have
44
likewise characterized NEA as a GOCC in National
Electrification Administration v. Morales. Thus, Section 5.5
quoted above, issued pursuant to the authority given to the
DBM under Section 12 of Republic Act No. 6758, was
correctly applied by the COA.
We find our pronouncements in Philippine National Bank v.
Palma53 to be applicable and conclusive on this issue now
before us:
During these tough economic times, this Court understands,
and in fact sympathizes with, the plight of ordinary
government employees. Whenever legally possible, it has
bent over backwards to protect labor and favor it with
additional economic advantages. In the present case,
however, the Salary Standardization Law clearly provides
that the claimed benefits shall continue to be granted only to
employees who were "incumbents" as of July 1, 1989. Hence,
much to its regret, the Court has no authority to reinvent or
modify the law to extend those benefits even to employees
hired after that date.1awphil
xxxx
Stare Decisis
The doctrine "stare decisis et non quieta movere (Stand by the
decisions and disturb not what is settled)" is firmly
entrenched in our jurisprudence. Once this Court has laid
down a principle of law as applicable to a certain state of
facts, it would adhere to that principle and apply it to all
future cases in which the facts are substantially the same as
in the earlier controversy.
The precise interpretation and application of the assailed
provisions of RA 6758, namely those in Section 12, have long
been established in Philippine Ports Authority v. COA. The
essential pronouncements in that case have further been
fortified by Manila International Airport Authority v. COA,
Philippine International Trading Corporation v. COA, and Social
Security System v. COA.
This Court has consistently held in those cases that
allowances or fringe benefits, whether or not integrated into
the standardized salaries prescribed by RA 6758, should
continue to be enjoyed by employees who (1) were
incumbents and (2) were receiving those benefits as of July 1,
1989.
In Philippine Ports Authority v. COA, the x x x Court said that
the intention of the framers of that law was to phase out
certain allowances and privileges gradually, without
upsetting the principle of non-diminution of pay. The
intention of Section 12 to protect incumbents who were
already receiving those allowances on July 1, 1989, when RA
6758 took effect was emphasized thus:
"An incumbent is a person who is in present possession of an
office.
"The consequential outcome, under sections 12 and 17, is that
if the incumbent resigns or is promoted to a higher position,
his successor is no longer entitled to his predecessors RATA
privilege x x x or to the transition allowance."
Finally, to explain what July 1, 1989 pertained to, we held in
the same case as follows:
 @lendelacruz
"x x x. The date July 1, 1989 becomes crucial only to determine
that as of said date, the officer was an incumbent and was
receiving the RATA, for purposes of entitling him to its
continued grant. x x x."
In Philippine International Trading Corporation v. COA, this
Court confirmed the legislative intention in this wise:
"x x x [T]here was no intention on the part of the legislature
to revoke existing benefits being enjoyed by incumbents of
government positions at the time of the passage of RA 6758
by virtue of Sections 12 and 17 thereof. x x x."
The Court stressed that in reserving the benefits to
incumbents alone, the legislatures intention was not only to
adhere to the policy of non-diminution of pay, but also to be
consistent with the prospective application of laws and the
spirit of fairness and justice.
xxxx
In consonance with stare decisis, there should be no more
misgivings about the proper application of Section 12. In the
present case, the payment of benefits to employees hired after
July 1, 1989, was properly withheld, because the law clearly
mandated that those benefits should be reserved only to
incumbents who were already enjoying them before its
enactment. Withholding them from the others ensured that
the compensation of the incumbents would not be
diminished in the course of the latters continued
employment with the government agency.54 (Emphasis ours,
citations omitted.)1avvphi1
As petitioners were hired after June 30, 1989, the COA was
correct in disallowing the grant of the benefit to them, as they
were clearly not entitled to it. As quoted above, we have
repeatedly held that under Section 12 of Republic Act No.
6758, the only requirements for the continuous grant of
allowances and fringe benefits on top of the standardized
salary rates for employees of GOCCs and GFIs are as follows:
(1) the employee must be an incumbent as of July 1, 1989; and
(2) the allowance or benefit was not consolidated in the
standardized salary rate as prescribed by Republic Act No.
6758.55
We hereby reiterate our ruling in Philippine National Bank v.
Palma as regards Section 12 of Republic Act No. 6758, as
follows:
In sum, we rule thus:
1. Under Section 12 of RA 6758, additional
compensation already being received by the
employees of petitioner, but not integrated into the
standardized salary rates -- enumerated in Section
5.5 of DBM-CC[C] No. 10, like "rice subsidy, sugar
subsidy, death benefits other than those granted by
the GSIS," and so on -- shall continue to be given.
2. However, the continuation of the grant shall be
available only to those "incumbents" already
receiving it on July 1, 1989.
3. Thus, in PPA v. COA, this Court held that PPA
employees already receiving the RATA granted by
LOI No. 97 should continue to receive them,
provided they were already "incumbents" on or
before July 1, 1989.
45
4. PITC v. COA held that in enacting RA 6758,
Congress was adhering to the policy of non-
diminution of existing pay. Hence, if a benefit was
not yet existing when the law took effect on July 1,
1989, there was nothing to continue and no basis for
applying the policy.
5. Neither would Cruz v. COA be applicable. In
those cases, the COA arbitrarily set a specific date,
October 31, 1989; RA 6758 had not made a
distinction between those hired before and those
after that date. In the present case, the law itself set
July 1, 1989, as the date when employees should be
"incumbents," because that was when RA 6758 took
effect. It was not an arbitrarily chosen date; there
was sufficient reason for setting it as the cutoff
point.56
Notwithstanding our ruling above, however, we take up as
another matter the refund ordered by the COA on the rice
subsidy that petitioners had already received. As regards the
refund, we rule in favor of petitioners and will not require
them to return the amounts anymore.
This is because, to begin with, the officials and administrators
of NEA themselves had believed that their employees were
entitled to the allowances, and this was covered by
Resolution No. 29 of the NEA Board of Administrators. The
petitioners thus received in good faith the rice subsidy
together with other allowances provided in said Resolution.
For reasons of equity and fairness, therefore, and considering
their long wait for this matter to be resolved with finality, we
will no longer require a refund from these public servants.
Our pronouncements on refund in De Jesus v. Commission
on Audit,57 wherein we cited Blaquera v. Hon. Alcala,58 are
applicable:
Considering, however, that all the parties here acted in good
faith, we cannot countenance the refund of subject incentive
benefits for the year 1992, which amounts the petitioners
have already received. Indeed, no indicia of bad faith can be
detected under the attendant facts and circumstances. The
officials and chiefs of offices concerned disbursed such
incentive benefits in the honest belief that the amounts given
were due to the recipients and the latter accepted the same
with gratitude, confident that they richly deserve such
benefits.
This ruling in Blaquera applies to the instant case. Petitioners
here received the additional allowances and bonuses in good
faith under the honest belief that LWUA Board Resolution
No. 313 authorized such payment. At the time petitioners
received the additional allowances and bonuses, the Court
had not yet decided Baybay Water District. Petitioners had no
knowledge that such payment was without legal basis. Thus,
being in good faith, petitioners need not refund the
allowances and bonuses they received but disallowed by the
COA.59 (Emphasis supplied.)
As in the cases above quoted, we cannot countenance the
refund of the rice subsidies given to petitioners by NEA for
the period January to August 2001 at this late time, especially
since they were given by the government agency to its
employees in good faith.
WHEREFORE, premises considered, the petition is hereby
PARTIALLY GRANTED. COA Decision No. 2003-134 dated
October 9, 2003 and COA Resolution No. 2005-010 dated
February 24, 2005 are hereby AFFIRMED with the
 @lendelacruz
CLARIFICATION that the petitioners shall no longer be
required to refund the rice subsidies for the period January
to August 2001, which they had received from NEA but were
later disallowed by the COA.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-21450 April 15, 1968
SERAFIN TIJAM, ET AL., plaintiffs-appellees,
vs.
MAGDALENO SIBONGHANOY alias GAVINO
SIBONGHANOY and LUCIA BAGUIO, defendants,
MANILA SURETY AND FIDELITY CO., INC. (CEBU
BRANCH) bonding company and defendant-appellant.
DIZON, J.:
On July 19, 1948 barely one month after the effectivity of
Republic Act No. 296 known as the Judiciary Act of 1948
the spouses Serafin Tijam and Felicitas Tagalog commenced
Civil Case No. R-660 in the Court of First Instance of Cebu
against the spouses Magdaleno Sibonghanoy and Lucia
Baguio to recover from them the sum of P1,908.00, with legal
interest thereon from the date of the filing of the complaint
until the whole obligation is paid, plus costs. As prayed for
in the complaint, a writ of attachment was issued by the court
against defendants' properties, but the same was soon
dissolved upon the filing of a counter-bond by defendants
and the Manila Surety and Fidelity Co., Inc. hereinafter
referred to as the Surety, on the 31st of the same month.
After being duly served with summons the defendants filed
their answer in which, after making some admissions and
denials of the material averments of the complaint, they
interposed a counterclaim. This counterclaim was answered
by the plaintiffs.
After trial upon the issues thus joined, the Court rendered
judgment in favor of the plaintiffs and, after the same had
become final and executory, upon motion of the latter, the
Court issued a writ of execution against the defendants. The
writ having been returned unsatisfied, the plaintiffs moved
for the issuance of a writ of execution against the Surety's
bond (Rec. on Appeal, pp. 46-49), against which the Surety
filed a written opposition (Id. pp. 49) upon two grounds,
namely, (1) Failure to prosecute and (2) Absence of a demand
upon the Surety for the payment of the amount due under
the judgment. Upon these grounds the Surety prayed the
Court not only to deny the motion for execution against its
counter-bond but also the following affirmative relief : "to
relieve the herein bonding company of its liability, if any,
under the bond in question" (Id. p. 54) The Court denied this
motion on the ground solely that no previous demand had
been made on the Surety for the satisfaction of the judgment.
Thereafter the necessary demand was made, and upon
failure of the Surety to satisfy the judgment, the plaintiffs
filed a second motion for execution against the counterbond.
On the date set for the hearing thereon, the Court, upon
motion of the Surety's counsel, granted the latter a period of
five days within which to answer the motion. Upon its failure
to file such answer, the Court granted the motion for
execution and the corresponding writ was issued.
46
Subsequently, the Surety moved to quash the writ on the
ground that the same was issued without the required
summary hearing provided for in Section 17 of Rule 59 of the
Rules of Court. As the Court denied the motion, the Surety
appealed to the Court of Appeals from such order of denial
and from the one denying its motion for reconsideration (Id.
p. 97). Its record on appeal was then printed as required by
the Rules, and in due time it filed its brief raising therein no
other question but the ones covered by the following
assignment of errors:
I. That the Honorable Court a quo erred in issuing its
order dated November 2, 1957, by holding the
incident as submitted for resolution, without a
summary hearing and compliance with the other
mandatory requirements provided for in Section 17,
Rule 59 of the Rules of Court.
II. That the Honorable Court a quo erred in ordering
the issuance of execution against the herein bonding
company-appellant.
III. That the Honorable Court a quo erred in denying
the motion to quash the writ of execution filed by
the herein bonding company-appellant as well as its
subsequent motion for reconsideration, and/or in
not quashing or setting aside the writ of execution.
Not one of the assignment of errors it is obvious raises
the question of lack of jurisdiction, neither directly nor
indirectly.
Although the appellees failed to file their brief, the Court of
Appeals, on December 11, 1962, decided the case affirming
the orders appealed from.
On January 8, 1963 five days after the Surety received
notice of the decision, it filed a motion asking for extension
of time within which to file a motion for reconsideration. The
Court of Appeals granted the motion in its resolution of
January 10 of the same year. Two days later the Surety filed
a pleading entitled MOTION TO DISMISS, alleging
substantially that appellees action was filed in the Court of
First Instance of Cebu on July 19, 1948 for the recovery of the
sum of P1,908.00 only; that a month before that date Republic
Act No. 296, otherwise known as the Judiciary Act of 1948,
had already become effective, Section 88 of which placed
within the original exclusive jurisdiction of inferior courts all
civil actions where the value of the subject-matter or the
amount of the demand does not exceed P2,000.00, exclusive
of interest and costs; that the Court of First Instance therefore
had no jurisdiction to try and decide the case. Upon these
premises the Surety's motion prayed the Court of Appeals to
set aside its decision and to dismiss the case. By resolution of
January 16, 1963 the Court of Appeals required the appellees
to answer the motion to dismiss, but they failed to do so.
Whereupon, on May 20 of the same year, the Court resolved
to set aside its decision and to certify the case to Us. The
pertinent portions of its resolution read as follows:
It would indeed appear from the record that the
action at bar, which is a suit for collection of money
in the sum of exactly P1,908.00 exclusive of interest,
was originally instituted in the Court of First
Instance of Cebu on July 19, 1948. But about a month
prior to the filing of the complaint, more specifically
on June 17, 1948, the Judiciary Act of 1948 took
effect, depriving the Court of First Instance of
original jurisdiction over cases in which the
demand, exclusive of interest, is not more than
P2,000.00. (Secs. 44[c] and 86[b], R.A. No. 296.)
 @lendelacruz
We believe, therefore, that the point raised in
appellant's motion is an important one which merits
serious consideration. As stated, the complaint was
filed on July 19, 1948. This case therefore has been
pending now for almost 15 years, and throughout
the entire proceeding appellant never raised the
question of jurisdiction until after receipt of this
Court's adverse decision.
There are three cases decided by the Honorable
Supreme Court which may be worthy of
consideration in connection with this case, namely:
Tyson Tan, et al. vs. Filipinas Compaia de Seguros,
et al., G.R. No. L-10096, March 23, 1956; Pindangan
Agricultural Co., Inc. vs. Jose P. Dans, etc., et al.,
G.R. No. L-14591, September 26, 1962; and Alfredo
Montelibano, et al. vs. Bacolod-Murcia Milling Co.,
Inc., G.R. No. L-15092, September 29, 1962, wherein
the Honorable Supreme Court frowned upon the
'undesirable practice' of appellants submitting their
case for decision and then accepting the judgment,
if favorable, but attacking it for lack of jurisdiction
when adverse.
Considering, however, that the Supreme Court has
the "exclusive" appellate jurisdiction over "all cases
in which the jurisdiction of any inferior court is in
issue" (See. 1, Par. 3[3], Judiciary Act of 1948, as
amended), we have no choice but to certify, as we
hereby do certify, this case to the Supreme
Court.1wph1.t
ACCORDINGLY, pursuant to Section 31 of the
Judiciary Act of 1948 as amended, let the record of
this case be forwarded to the Supreme Court.
It is an undisputed fact that the action commenced by
appellees in the Court of First Instance of Cebu against the
Sibonghanoy spouses was for the recovery of the sum of
P1,908.00 only an amount within the original exclusive
jurisdiction of inferior courts in accordance with the
provisions of the Judiciary Act of 1948 which had taken effect
about a month prior to the date when the action was
commenced. True also is the rule that jurisdiction over the
subject matter is conferred upon the courts exclusively by
law, and as the lack of it affects the very authority of the court
to take cognizance of the case, the objection may be raised at
any stage of the proceedings. However, considering the facts
and circumstances of the present case which shall
forthwith be set forth We are of the opinion that the Surety
is now barred by laches from invoking this plea at this late
hour for the purpose of annuling everything done heretofore
in the case with its active participation.
As already stated, the action was commenced in the Court of
First Instance of Cebu on July 19, 1948, that is, almost fifteen
years before the Surety filed its motion to dismiss on January
12, 1963 raising the question of lack of jurisdiction for the first
time.
It must be remembered that although the action, originally,
was exclusively against the Sibonghanoy spouses the Surety
became a quasi-party therein since July 31, 1948 when it filed
a counter-bond for the dissolution of the writ of attachment
issued by the court of origin (Record on Appeal, pp. 15-19).
Since then, it acquired certain rights and assumed specific
obligations in connection with the pending case, in
accordance with sections 12 and 17, Rule 57, Rules of Court
(Bautista vs. Joaquin, 46 Phil. 885; Kimpang & Co. vs. Javier,
65 Phil. 170).
47
Upon the filing of the first motion for execution against the
counter-bond the Surety not only filed a written opposition
thereto praying for its denial but also asked for an additional
affirmative relief that it be relieved of its liability under the
counter-bond upon the grounds relied upon in support of its
opposition lack of jurisdiction of the court a quo not being
one of them.
Then, at the hearing on the second motion for execution
against the counter-bond, the Surety appeared, through
counsel, to ask for time within which to file an answer or
opposition thereto. This motion was granted, but instead of
such answer or opposition, the Surety filed the motion to
dismiss mentioned heretofore.
A party may be estopped or barred from raising a question
in different ways and for different reasons. Thus we speak of
estoppel in pais, or estoppel by deed or by record, and of
estoppel by laches.
Laches, in a general sense is failure or neglect, for an
unreasonable and unexplained length of time, to do that
which, by exercising due diligence, could or should have
been done earlier; it is negligence or omission to assert a right
within a reasonable time, warranting a presumption that the
party entitled to assert it either has abandoned it or declined
to assert it.
The doctrine of laches or of "stale demands" is based upon
grounds of public policy which requires, for the peace of
society, the discouragement of stale claims and, unlike the
statute of limitations, is not a mere question of time but is
principally a question of the inequity or unfairness of
permitting a right or claim to be enforced or asserted.
It has been held that a party can not invoke the jurisdiction of
a court to sure affirmative relief against his opponent and,
after obtaining or failing to obtain such relief, repudiate or
question that same jurisdiction (Dean vs. Dean, 136 Or. 694,
86 A.L.R. 79). In the case just cited, by way of explaining the
rule, it was further said that the question whether the court
had jurisdiction either of the subject-matter of the action or of
the parties was not important in such cases because the party
is barred from such conduct not because the judgment or order
of the court is valid and conclusive as an adjudication, but for the
reason that such a practice can not be tolerated obviously for
reasons of public policy.
Furthermore, it has also been held that after voluntarily
submitting a cause and encountering an adverse decision on
the merits, it is too late for the loser to question the
jurisdiction or power of the court (Pease vs. Rathbun-Jones
etc., 243 U.S. 273, 61 L. Ed. 715, 37 S. Ct. 283; St. Louis etc. vs.
McBride, 141 U.S. 127, 35 L. Ed. 659). And in Littleton vs.
Burgess, 16 Wyo. 58, the Court said that it is not right for a
party who has affirmed and invoked the jurisdiction of a
court in a particular matter to secure an affirmative relief, to
afterwards deny that same jurisdiction to escape a penalty.
Upon this same principle is what We said in the three cases
mentioned in the resolution of the Court of Appeals of May
20, 1963 (supra) to the effect that we frown upon the
"undesirable practice" of a party submitting his case for
decision and then accepting the judgment, only if favorable,
and attacking it for lack of jurisdiction, when adverse as
well as in Pindagan etc. vs. Dans, et al., G.R. L-14591,
September 26, 1962; Montelibano, et al., vs. Bacolod-Murcia
Milling Co., Inc., G.R. L-15092; Young Men Labor Union etc. vs.
The Court of Industrial Relation et al., G.R. L-20307, Feb. 26,
1965, and Mejia vs. Lucas, 100 Phil. p. 277.
 @lendelacruz
The facts of this case show that from the time the Surety
became a quasi-party on July 31, 1948, it could have raised
the question of the lack of jurisdiction of the Court of First
Instance of Cebu to take cognizance of the present action by
reason of the sum of money involved which, according to the
law then in force, was within the original exclusive
jurisdiction of inferior courts. It failed to do so. Instead, at
several stages of the proceedings in the court a quo as well as
in the Court of Appeals, it invoked the jurisdiction of said
courts to obtain affirmative relief and submitted its case for a
final adjudication on the merits. It was only after an adverse
decision was rendered by the Court of Appeals that it finally
woke up to raise the question of jurisdiction. Were we to
sanction such conduct on its part, We would in effect be
declaring as useless all the proceedings had in the present
case since it was commenced on July 19, 1948 and compel the
judgment creditors to go up their Calvary once more. The
inequity and unfairness of this is not only patent but
revolting.
Coming now to the merits of the appeal: after going over the
entire record, We have become persuaded that We can do
nothing better than to quote in toto, with approval, the
decision rendered by the Court of Appeals on December 11,
1962 as follows:
In Civil Case No. R-660 of the Court of First Instance
of Cebu, which was a suit for collection of a sum of
money, a writ of attachment was issued against
defendants' properties. The attachment, however,
was subsequently discharged under Section 12 of
Rule 59 upon the filing by defendants of a bond
subscribed by Manila Surety & Fidelity Co., Inc.
After trial, judgment was rendered in favor of
plaintiffs.
The writ of execution against defendants having
been returned totally unsatisfied, plaintiffs moved,
under Section 17 of Rule 59, for issuance of writ of
execution against Manila Surety & Fidelity Co., Inc.
to enforce the obligation of the bond. But the motion
was, upon the surety's opposition, denied on the
ground that there was "no showing that a demand
had been made, by the plaintiffs to the bonding
company for payment of the amount due under the
judgment" (Record on Appeal, p. 60).
Hence, plaintiffs made the necessary demand upon
the surety for satisfaction of the judgment, and upon
the latter's failure to pay the amount due, plaintiffs
again filed a motion dated October 31, 1957, for
issuance of writ of execution against the surety, with
notice of hearing on November 2, 1957. On October
31, 1957, the surety received copy of said motion
and notice of hearing.
It appears that when the motion was called on
November 2, 1957, the surety's counsel asked that
he be given time within which to answer the
motion, and so an order was issued in open court,
as follows:1wph1.t in the formal manner in which ordinary actions are
As prayed for, Atty. Jose P. Soberano, Jr.,
counsel for the Manila Surety & Fidelity
Co., Inc., Cebu Branch, is given until
Wednesday, November 6, 1957, to file his
answer to the motion for the issuance of a
writ of execution dated October 30, 1957 of
the plaintiffs, after which this incident shall be
deemed submitted for resolution.
48
SO ORDERED.
Given in open court, this 2nd day of
November, 1957, at Cebu City,
Philippines.
(Sgd.) JOSE M. MENDOZA
Judge
(Record on Appeal, pp.
64-65, emphasis ours)
Since the surety's counsel failed to file any answer
or objection within the period given him, the court,
on December 7, 1957, issued an order granting
plaintiffs' motion for execution against the surety;
and on December 12, 1957, the corresponding writ
of execution was issued.
On December 24, 1957, the surety filed a motion to
quash the writ of execution on the ground that the
same was "issued without the requirements of
Section 17, Rule 59 of the Rules of Court having been
complied with," more specifically, that the same
was issued without the required "summary
hearing". This motion was denied by order of
February 10, 1958.
On February 25, 1958, the surety filed a motion for
reconsideration of the above-stated order of denial;
which motion was likewise denied by order of
March 26, 1958.
From the above-stated orders of February 10, 1958
and March 26, 1958 denying the surety's motion
to quash the writ of execution and motion for
reconsideration, respectively the surety has
interposed the appeal on hand.
The surety insists that the lower court should have
granted its motion to quash the writ of execution
because the same was issued without the summary
hearing required by Section 17 of Rule 59, which
reads;
"Sec. 17. When execution returned unsatisfied,
recovery had upon bond. If the execution
be returned unsatisfied in whole or in part,
the surety or sureties on any bond given
pursuant to the provisions of this role to
secure the payment of the judgment shall
become finally charged on such bond, and
bound to pay to the plaintiff upon demand
the amount due under the judgment,
which amount may be recovered from
such surety or sureties after notice and
summary hearing in the same action."
(Emphasis ours)
Summary hearing is "not intended to be carried on
prosecuted" (83 C.J.S. 792). It is, rather, a procedure
by which a question is resolved "with dispatch, with
the least possible delay, and in preference to
ordinary legal and regular judicial proceedings"
(Ibid, p. 790). What is essential is that "the defendant
is notified or summoned to appear and is given an
opportunity to hear what is urged upon him, and to
interpose a defense, after which follows an
adjudication of the rights of the parties" (Ibid., pp.
 @lendelacruz
793-794); and as to the extent and latitude of the
hearing, the same will naturally lie upon the
discretion of the court, depending upon the
attending circumstances and the nature of the
incident up for consideration.
In the case at bar, the surety had been notified of the
plaintiffs' motion for execution and of the date when
the same would be submitted for consideration. In
fact, the surety's counsel was present in court when
the motion was called, and it was upon his request
that the court a quo gave him a period of four days
within which to file an answer. Yet he allowed that
period to lapse without filing an answer or
objection. The surety cannot now, therefore,
complain that it was deprived of its day in court.
It is argued that the surety's counsel did not file an
answer to the motion "for the simple reason that all
its defenses can be set up during the hearing of the
motion even if the same are not reduced to writing"
(Appellant's brief, p. 4). There is obviously no merit
in this pretense because, as stated above, the record
will show that when the motion was called, what
the surety's counsel did was to ask that he be
allowed and given time to file an answer. Moreover,
it was stated in the order given in open court upon
request of the surety's counsel that after the four-
day period within which to file an answer, "the
incident shall be deemed submitted for resolution";
and counsel apparently agreed, as the order was
issued upon his instance and he interposed no
objection thereto.
It is also urged that although according to Section 17
of Rule 59, supra, there is no need for a separate
action, there must, however, be a separate judgment
against the surety in order to hold it liable on the
bond (Appellant's Brief, p. 15). Not so, in our
opinion. A bond filed for discharge of attachment is,
per Section 12 of Rule 59, "to secure the payment to
the plaintiff of any judgment he may recover in the
action," and stands "in place of the property so
released". Hence, after the judgment for the plaintiff
has become executory and the execution is
"returned unsatisfied" (Sec. 17, Rule 59), as in this
case, the liability of the bond automatically attaches
and, in failure of the surety to satisfy the judgment
against the defendant despite demand therefor, writ
of execution may issue against the surety to enforce
the obligation of the bond.
UPON ALL THE FOREGOING, the orders appealed from are
hereby affirmed, with costs against the appellant Manila
Surety and Fidelity Company, Inc.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G. R. No. 162322 March 14, 2012
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
BANTIGUE POINT DEVELOPMENT CORPORATION,
Respondent.
DECISION
49
SERENO, J.:
This Rule 45 Petition requires this Court to address the issue
of the proper scope of the delegated jurisdiction of municipal
trial courts in land registration cases. Petitioner Republic of
the Philippines (Republic) assails the Decision of the Court of
Appeals (CA)1 in CA-G.R. CV No. 70349, which affirmed the
Decision of the Municipal Trial Court (MTC) of San Juan,
Batangas2 in LRC Case No. N-98-20, LRA Record No. 68329,
granting respondent Bantigue Point Development
Corporations (Corporation) application for original
registration of a parcel of land. Since only questions of law
have been raised, petitioner need not have filed a Motion for
Reconsideration of the assailed CA Decision before filing this
Petition for Review.
The Facts
On 17 July 1997, respondent Bantigue Point Development
Corporation filed with the Regional Trial Court (RTC) of
Rosario, Batangas an application for original registration of
title over a parcel of land with an assessed value of 4,330,
1,920 and 8,670, or a total assessed value of 14,920 for the
entire property, more particularly described as Lot 8060 of
Cad 453-D, San Juan Cadastre, with an area of more or less
10,732 square meters, located at Barangay Barualte, San Juan,
Batangas. 3
On 18 July 1997, the RTC issued an Order setting the case for
initial hearing on 22 October 1997.4 On 7 August 1997, it
issued a second Order setting the initial hearing on 4
November 1997.5
Petitioner Republic filed its Opposition to the application for
registration on 8 January 1998 while the records were still
with the RTC.6
On 31 March 1998, the RTC Clerk of Court transmitted motu
proprio the records of the case to the MTC of San Juan,
because the assessed value of the property was allegedly less
than 100,000.7
Thereafter, the MTC entered an Order of General Default8
and commenced with the reception of evidence.9 Among the
documents presented by respondent in support of its
application are Tax Declarations,10 a Deed of Absolute Sale in
its favor,11 and a Certification from the Department of
Environment and Natural Resources (DENR) Community
Environment and Natural Resources Office (CENRO) of
Batangas City that the lot in question is within the alienable
and disposable zone.12 Thereafter, it awarded the land to
respondent Corporation.13
Acting on an appeal filed by the Republic,14 the CA ruled that
since the former had actively participated in the proceedings
before the lower court, but failed to raise the jurisdictional
challenge therein, petitioner is thereby estopped from
questioning the jurisdiction of the lower court on appeal. 15
The CA further found that respondent Corporation had
sufficiently established the latters registrable title over the
subject property after having proven open, continuous,
exclusive and notorious possession and occupation of the
subject land by itself and its predecessors-in-interest even
before the outbreak of World War II.16
Dissatisfied with the CAs ruling, petitioner Republic filed
this instant Rule 45 Petition and raised the following
arguments in support of its appeal:
I.
 @lendelacruz
THE REPUBLIC CANNOT BE ESTOPPED FROM
QUESTIONING THE JURISDICTION OF THE
MUNICIPAL TRIAL COURT OVER THE
APPLICATION FOR ORIGINAL REGISTRATION
OF LAND TITLE EVEN FOR THE FIRST TIME ON
APPEAL
II.
THE MUNICIPAL TRIAL COURT FAILED TO
ACQUIRE JURISDICTION OVER THE
APPLICATION FOR ORIGINAL REGISTRATION
OF LAND TITLE.17
The Courts Ruling
We uphold the jurisdiction of the MTC, but remand the case
to the court a quo for further proceedings in order to
determine if the property in question forms part of the
alienable and disposable land of the public domain.
I First, petitioner argued that the lower court failed to acquire
The Republic is not estopped from raising the issue of
jurisdiction in this case.
At the outset, we rule that petitioner Republic is not estopped
from questioning the jurisdiction of the lower court, even if
the former raised the jurisdictional question only on appeal.
The rule is settled that lack of jurisdiction over the subject
matter may be raised at any stage of the proceedings.18
Jurisdiction over the subject matter is conferred only by the
Constitution or the law.19 It cannot be acquired through a
waiver or enlarged by the omission of the parties or conferred
by the acquiescence of the court.20 Consequently, questions
of jurisdiction may be cognizable even if raised for the first
time on appeal.21
The ruling of the Court of Appeals that "a party may be
estopped from raising such [jurisdictional] question if he has
actively taken part in the very proceeding which he
questions, belatedly objecting to the courts jurisdiction in the
event that the judgment or order subsequently rendered is
adverse to him"22 is based on the doctrine of estoppel by
laches. We are aware of that doctrine first enunciated by this
Court in Tijam v. Sibonghanoy.23 In Tijam, the party-litigant
actively participated in the proceedings before the lower
court and filed pleadings therein. Only 15 years thereafter,
and after receiving an adverse Decision on the merits from
the appellate court, did the party-litigant question the lower
courts jurisdiction. Considering the unique facts in that case,
we held that estoppel by laches had already precluded the
party-litigant from raising the question of lack of jurisdiction
on appeal. In Figueroa v. People,24 we cautioned that Tijam
must be construed as an exception to the general rule and
applied only in the most exceptional cases whose factual
milieu is similar to that in the latter case.
The facts are starkly different in this case, making the
exceptional rule in Tijam inapplicable. Here, petitioner
Republic filed its Opposition to the application for
registration when the records were still with the RTC.25 At
that point, petitioner could not have questioned the
delegated jurisdiction of the MTC, simply because the case
was not yet with that court. When the records were
transferred to the MTC, petitioner neither filed pleadings nor
requested affirmative relief from that court. On appeal,
petitioner immediately raised the jurisdictional question in
its Brief.26 Clearly, the exceptional doctrine of estoppel by
laches is inapplicable to the instant appeal.
50
Laches has been defined as the "failure or neglect, for an
unreasonable and unexplained length of time, to do that
which, by exercising due diligence, could or should have
been done earlier; it is negligence or omission to assert a right
within a reasonable time, warranting the presumption that
the party entitled to assert it either has abandoned or
declined to assert it."27 In this case, petitioner Republic has
not displayed such unreasonable failure or neglect that
would lead us to conclude that it has abandoned or declined
to assert its right to question the lower court's jurisdiction.
II
The Municipal Trial Court properly acquired jurisdiction
over the case.
In assailing the jurisdiction of the lower courts, petitioner
Republic raised two points of contention: (a) the period for
setting the date and hour of the initial hearing; and (b) the
value of the land to be registered.
jurisdiction over the application, because the RTC set the date
and hour of the initial hearing beyond the 90-day period
provided under the Property Registration Decree.28
We disagree.
The Property Registration Decree provides:
Sec. 23. Notice of initial hearing, publication, etc. - The court
shall, within five days from filing of the application, issue an
order setting the date and hour of the initial hearing which
shall not be earlier than forty-five days nor later than ninety
days from the date of the order. x x x.
In this case, the application for original registration was filed
on 17 July 1997.29 On 18 July 1997, or a day after the filing of
the application, the RTC immediately issued an Order setting
the case for initial hearing on 22 October 1997, which was 96
days from the Order.30 While the date set by the RTC was
beyond the 90-day period provided for in Section 23, this fact
did not affect the jurisdiction of the trial court. In Republic v.
Manna Properties, Inc.,31 petitioner Republic therein
contended that there was failure to comply with the
jurisdictional requirements for original registration, because
there were 125 days between the Order setting the date of the
initial hearing and the initial hearing itself. We ruled that the
lapse of time between the issuance of the Order setting the
date of initial hearing and the date of the initial hearing itself
was not fatal to the application. Thus, we held:
x x x [A] party to an action has no control over the
Administrator or the Clerk of Court acting as a land court; he
has no right to meddle unduly with the business of such
official in the performance of his duties. A party cannot
intervene in matters within the exclusive power of the trial
court. No fault is attributable to such party if the trial court
errs on matters within its sole power. It is unfair to punish an
applicant for an act or omission over which the applicant has
neither responsibility nor control, especially if the applicant
has complied with all the requirements of the law.32
Indeed, it would be the height of injustice to penalize
respondent Corporation by dismissing its application for
registration on account of events beyond its control.
Moreover, since the RTC issued a second Order on 7 August
1997 setting the initial hearing on 4 November 1997,33 within
the 90-day period provided by law, petitioner Republic
 @lendelacruz
argued that the jurisdictional defect was still not cured, as the
second Order was issued more than five days from the filing
of the application, again contrary to the prescribed period
under the Property Registration Decree.34
Petitioner is incorrect.
The RTCs failure to issue the Order setting the date and hour
of the initial hearing within five days from the filing of the
application for registration, as provided in the Property
Registration Decree, did not affect the courts its jurisdiction.
Observance of the five-day period was merely directory, and
failure to issue the Order within that period did not deprive
the RTC of its jurisdiction over the case. To rule that
compliance with the five-day period is mandatory would
make jurisdiction over the subject matter dependent upon
the trial court. Jurisdiction over the subject matter is
conferred only by the Constitution or the law.35 It cannot be
contingent upon the action or inaction of the court.
This does not mean that courts may disregard the statutory
periods with impunity. We cannot assume that the law
deliberately meant the provision "to become meaningless
and to be treated as a dead letter."36 However, the records of
this case do not show such blatant disregard for the law. In
fact, the RTC immediately set the case for initial hearing a
day after the filing of the application for registration,37 except
that it had to issue a second Order because the initial hearing
had been set beyond the 90-day period provided by law.
Second, petitioner contended38 that since the selling price of
the property based on the Deed of Sale annexed to
respondents application for original registration was
160,000,39 the MTC did not have jurisdiction over the case.
Under Section 34 of the Judiciary Reorganization Act, as
amended,40 the MTCs delegated jurisdiction to try cadastral
and land registration cases is limited to lands, the value of
which should not exceed 100,000.
We are not persuaded.
The delegated jurisdiction of the MTC over cadastral and
land registration cases is indeed set forth in the Judiciary
Reorganization Act, which provides:
Sec. 34. Delegated Jurisdiction in Cadastral and Land Registration
Cases. - Metropolitan Trial Courts, Municipal Trial Courts,
and Municipal Circuit Trial Courts may be assigned by the
Supreme Court to hear and determine cadastral or land
registration cases covering lots where there is no controversy
or opposition, or contested lots where the value of which
does not exceed One hundred thousand pesos (100,000.00),
such value to be ascertained by the affidavit of the claimant
or by agreement of the respective claimants if there are more
than one, or from the corresponding tax declaration of the
real property. Their decision in these cases shall be
appealable in the same manner as decisions of the Regional
Trial Courts. (As amended by R.A. No. 7691) (Emphasis
supplied.)
Thus, the MTC has delegated jurisdiction in cadastral and
land registration cases in two instances: first, where there is
no controversy or opposition; or, second, over contested lots,
the value of which does not exceed 100,000.
The case at bar does not fall under the first instance, because
petitioner opposed respondent Corporations application for
registration on 8 January 1998.41
51
However, the MTC had jurisdiction under the second
instance, because the value of the lot in this case does not
exceed 100,000.
Contrary to petitioners contention, the value of the land
should not be determined with reference to its selling price.
Rather, Section 34 of the Judiciary Reorganization Act
provides that the value of the property sought to be
registered may be ascertained in three ways: first, by the
affidavit of the claimant; second, by agreement of the
respective claimants, if there are more than one; or, third,
from the corresponding tax declaration of the real property.42
In this case, the value of the property cannot be determined
using the first method, because the records are bereft of any
affidavit executed by respondent as to the value of the
property. Likewise, valuation cannot be done through the
second method, because this method finds application only
where there are multiple claimants who agree on and make
a joint submission as to the value of the property. Here, only
respondent Bantigue Point Development Corporation claims
the property.
The value of the property must therefore be ascertained with
reference to the corresponding Tax Declarations submitted
by respondent Corporation together with its application for
registration. From the records, we find that the assessed
value of the property is 4,330, 1,920 and 8,670, or a total
assessed value of 14,920 for the entire property.43 Based on
these Tax Declarations, it is evident that the total value of the
land in question does not exceed 100,000. Clearly, the MTC
may exercise its delegated jurisdiction under the Judiciary
Reorganization Act, as amended.
III
A certification from the CENRO is not sufficient proof that
the property in question is alienable and disposable land of
the public domain.
Even as we affirm the propriety of the MTCs exercise of its
delegated jurisdiction, we find that the lower court erred in
granting respondent Corporations application for original
registration in the absence of sufficient proof that the
property in question was alienable and disposable land of the
public domain.
The Regalian doctrine dictates that all lands of the public
domain belong to the State.44 The applicant for land
registration has the burden of overcoming the presumption
of State ownership by establishing through incontrovertible
evidence that the land sought to be registered is alienable or
disposable based on a positive act of the government.45 We
held in Republic v. T.A.N. Properties, Inc. that a CENRO
certification is insufficient to prove the alienable and
disposable character of the land sought to be registered.46 The
applicant must also show sufficient proof that the DENR
Secretary has approved the land classification and released
the land in question as alienable and disposable.47
Thus, the present rule is that an application for original
registration must be accompanied by (1) a CENRO or
PENRO48 Certification; and (2) a copy of the original
classification approved by the DENR Secretary and certified
as a true copy by the legal custodian of the official records.49
Here, respondent Corporation only presented a CENRO
certification in support of its application.50 Clearly, this falls
short of the requirements for original registration.1wphi1
 @lendelacruz
We therefore remand this case to the court a quo for reception
of further evidence to prove that the property in question
forms part of the alienable and disposable land of the public
domain. If respondent Bantigue Point Development
Corporation presents a certified true copy of the original
classification approved by the DENR Secretary, the
application for original registration should be granted. If it
fails to present sufficient proof that the land in question is
alienable and disposable based on a positive act of the
government, the application should be denied.
WHEREFORE, premises considered, the instant Petition for
Review is DENIED. Let this case be REMANDED to the
Municipal Trial Court of San Juan, Batangas, for reception of
evidence to prove that the property sought to be registered is
alienable and disposable land of the public domain.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 75919 May 7, 1987
MANCHESTER DEVELOPMENT CORPORATION, ET
AL., petitioners,
vs.
COURT OF APPEALS, CITY LAND DEVELOPMENT
CORPORATION, STEPHEN ROXAS, ANDREW
LUISON, GRACE LUISON and JOSE DE MAISIP,
respondents.
RESOLUTION
GANCAYCO, J.:
Acting on the motion for reconsideration of the resolution of
the Second Division of January 28,1987 and another motion
to refer the case to and to be heard in oral argument by the
Court En Banc filed by petitioners, the motion to refer the case
to the Court en banc is granted but the motion to set the case
for oral argument is denied.
Petitioners in support of their contention that the filing fee
must be assessed on the basis of the amended complaint cite
the case of Magaspi vs. Ramolete. 1 They contend that the
Court of Appeals erred in that the filing fee should be levied
by considering the amount of damages sought in the original
complaint.
The environmental facts of said case differ from the present
in that
1. The Magaspi case was an action for recovery of ownership
and possession of a parcel of land with damages. 2 While the
present case is an action for torts and damages and specific
performance with prayer for temporary restraining order,
etc. 3
2. In the Magaspi case, the prayer in the complaint seeks not
only the annulment of title of the defendant to the property,
the declaration of ownership and delivery of possession
thereof to plaintiffs but also asks for the payment of actual
moral, exemplary damages and attorney's fees arising
therefrom in the amounts specified therein. 4 However, in the
present case, the prayer is for the issuance of a writ of
52
preliminary prohibitory injunction during the pendency of
the action against the defendants' announced forfeiture of the
sum of P3 Million paid by the plaintiffs for the property in
question, to attach such property of defendants that maybe
sufficient to satisfy any judgment that maybe rendered, and
after hearing, to order defendants to execute a contract of
purchase and sale of the subject property and annul
defendants' illegal forfeiture of the money of plaintiff,
ordering defendants jointly and severally to pay plaintiff
actual, compensatory and exemplary damages as well as 25%
of said amounts as maybe proved during the trial as
attorney's fees and declaring the tender of payment of the
purchase price of plaintiff valid and producing the effect of
payment and to make the injunction permanent. The amount
of damages sought is not specified in the prayer although the
body of the complaint alleges the total amount of over P78
Million as damages suffered by plaintiff. 5
3. Upon the filing of the complaint there was an honest
difference of opinion as to the nature of the action in the
Magaspi case. The complaint was considered as primarily an
action for recovery of ownership and possession of a parcel
of land. The damages stated were treated as merely to the
main cause of action. Thus, the docket fee of only P60.00 and
P10.00 for the sheriff's fee were paid. 6
In the present case there can be no such honest difference of
opinion. As maybe gleaned from the allegations of the
complaint as well as the designation thereof, it is both an
action for damages and specific performance. The docket fee
paid upon filing of complaint in the amount only of P410.00
by considering the action to be merely one for specific
performance where the amount involved is not capable of
pecuniary estimation is obviously erroneous. Although the
total amount of damages sought is not stated in the prayer of
the complaint yet it is spelled out in the body of the complaint
totalling in the amount of P78,750,000.00 which should be the
basis of assessment of the filing fee.
4. When this under-re assessment of the filing fee in this case
was brought to the attention of this Court together with
similar other cases an investigation was immediately ordered
by the Court. Meanwhile plaintiff through another counsel
with leave of court filed an amended complaint on
September 12, 1985 for the inclusion of Philips Wire and
Cable Corporation as co-plaintiff and by emanating any
mention of the amount of damages in the body of the
complaint. The prayer in the original complaint was
maintained. After this Court issued an order on October 15,
1985 ordering the re- assessment of the docket fee in the
present case and other cases that were investigated, on
November 12, 1985 the trial court directed plaintiffs to rectify
the amended complaint by stating the amounts which they
are asking for. It was only then that plaintiffs specified the
amount of damages in the body of the complaint in the
reduced amount of P10,000,000.00. 7 Still no amount of
damages were specified in the prayer. Said amended
complaint was admitted.
On the other hand, in the Magaspi case, the trial court
ordered the plaintiffs to pay the amount of P3,104.00 as filing
fee covering the damages alleged in the original complaint as
it did not consider the damages to be merely an or incidental
to the action for recovery of ownership and possession of real
property. 8 An amended complaint was filed by plaintiff with
leave of court to include the government of the Republic as
defendant and reducing the amount of damages, and
attorney's fees prayed for to P100,000.00. Said amended
complaint was also admitted. 9
 @lendelacruz
In the Magaspi case, the action was considered not only one
for recovery of ownership but also for damages, so that the
filing fee for the damages should be the basis of assessment.
Although the payment of the docketing fee of P60.00 was
found to be insufficient, nevertheless, it was held that since
the payment was the result of an "honest difference of
opinion as to the correct amount to be paid as docket fee" the
court "had acquired jurisdiction over the case and the
proceedings thereafter had were proper and regular." 10
Hence, as the amended complaint superseded the original
complaint, the allegations of damages in the amended
complaint should be the basis of the computation of the filing
fee. 11
In the present case no such honest difference of opinion was
possible as the allegations of the complaint, the designation
and the prayer show clearly that it is an action for damages
and specific performance. The docketing fee should be
assessed by considering the amount of damages as alleged in
the original complaint.
As reiterated in the Magaspi case the rule is well-settled "that
a case is deemed filed only upon payment of the docket fee
regardless of the actual date of filing in court . 12 Thus, in the
present case the trial court did not acquire jurisdiction over
the case by the payment of only P410.00 as docket fee. Neither
can the amendment of the complaint thereby vest jurisdiction
upon the Court. 13 For an legal purposes there is no such
original complaint that was duly filed which could be
amended. Consequently, the order admitting the amended
complaint and all subsequent proceedings and actions taken
by the trial court are null and void.
The Court of Appeals therefore, aptly ruled in the present
case that the basis of assessment of the docket fee should be
the amount of damages sought in the original complaint and
not in the amended complaint.
The Court cannot close this case without making the
observation that it frowns at the practice of counsel who filed
the original complaint in this case of omitting any
specification of the amount of damages in the prayer
although the amount of over P78 million is alleged in the
body of the complaint. This is clearly intended for no other
purpose than to evade the payment of the correct filing fees
if not to mislead the docket clerk in the assessment of the
filing fee. This fraudulent practice was compounded when,
even as this Court had taken cognizance of the anomaly and
ordered an investigation, petitioner through another counsel
filed an amended complaint, deleting all mention of the
amount of damages being asked for in the body of the
complaint. It was only when in obedience to the order of this
Court of October 18, 1985, the trial court directed that the
amount of damages be specified in the amended complaint,
that petitioners' counsel wrote the damages sought in the
much reduced amount of P10,000,000.00 in the body of the
complaint but not in the prayer thereof. The design to avoid
payment of the required docket fee is obvious.
The Court serves warning that it will take drastic action upon
a repetition of this unethical practice.
To put a stop to this irregularity, henceforth all complaints,
petitions, answers and other similar pleadings should specify
the amount of damages being prayed for not only in the body
of the pleading but also in the prayer, and said damages shall
be considered in the assessment of the filing fees in any case.
Any pleading that fails to comply with this requirement shall
not bib accepted nor admitted, or shall otherwise be
expunged from the record.
53
The Court acquires jurisdiction over any case only upon the
payment of the prescribed docket fee. An amendment of the
complaint or similar pleading will not thereby vest
jurisdiction in the Court, much less the payment of the docket
fee based on the amounts sought in the amended pleading.
The ruling in the Magaspi case 14 in so far as it is inconsistent
with this pronouncement is overturned and reversed.
WHEREFORE, the motion for reconsideration is denied for
lack of merit.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. Nos. 79937-38 February 13, 1989
SUN INSURANCE OFFICE, LTD., (SIOL), E.B. PHILIPPS
and D.J. WARBY, petitioners,
vs.
HON. MAXIMIANO C. ASUNCION, Presiding Judge,
Branch 104, Regional Trial Court, Quezon City and
MANUEL CHUA UY PO TIONG, respondents.
GANCAYCO, J.:
Again the Court is asked to resolve the issue of whether or
not a court acquires jurisdiction over a case when the correct
and proper docket fee has not been paid.
On February 28, 1984, petitioner Sun Insurance Office, Ltd.
(SIOL for brevity) filed a complaint with the Regional Trial
Court of Makati, Metro Manila for the consignation of a
premium refund on a fire insurance policy with a prayer for
the judicial declaration of its nullity against private
respondent Manuel Uy Po Tiong. Private respondent as
declared in default for failure to file the required answer
within the reglementary period.
On the other hand, on March 28, 1984, private respondent
filed a complaint in the Regional Trial Court of Quezon City
for the refund of premiums and the issuance of a writ of
preliminary attachment which was docketed as Civil Case
No. Q-41177, initially against petitioner SIOL, and thereafter
including E.B. Philipps and D.J. Warby as additional
defendants. The complaint sought, among others, the
payment of actual, compensatory, moral, exemplary and
liquidated damages, attorney's fees, expenses of litigation
and costs of the suit. Although the prayer in the complaint
did not quantify the amount of damages sought said amount
may be inferred from the body of the complaint to be about
Fifty Million Pesos (P50,000,000.00).
Only the amount of P210.00 was paid by private respondent
as docket fee which prompted petitioners' counsel to raise his
objection. Said objection was disregarded by respondent
Judge Jose P. Castro who was then presiding over said case.
Upon the order of this Court, the records of said case together
with twenty-two other cases assigned to different branches
of the Regional Trial Court of Quezon City which were under
investigation for under-assessment of docket fees were
transmitted to this Court. The Court thereafter returned the
said records to the trial court with the directive that they be
re-raffled to the other judges in Quezon City, to the exclusion
of Judge Castro. Civil Case No. Q-41177 was re-raffled to
Branch 104, a sala which was then vacant.
 @lendelacruz
On October 15, 1985, the Court en banc issued a Resolution in
Administrative Case No. 85-10-8752-RTC directing the
judges in said cases to reassess the docket fees and that in
case of deficiency, to order its payment. The Resolution also
requires all clerks of court to issue certificates of re-
assessment of docket fees. All litigants were likewise
required to specify in their pleadings the amount sought to
be recovered in their complaints.
On December 16, 1985, Judge Antonio P. Solano, to whose
sala Civil Case No. Q-41177 was temporarily assigned,
issuedan order to the Clerk of Court instructing him to issue
a certificate of assessment of the docket fee paid by private
respondent and, in case of deficiency, to include the same in
said certificate.
On January 7, 1984, to forestall a default, a cautionary answer
was filed by petitioners. On August 30,1984, an amended
complaint was filed by private respondent including the two
additional defendants aforestated.
Judge Maximiano C. Asuncion, to whom Civil Case No.
Q41177 was thereafter assigned, after his assumption into
office on January 16, 1986, issued a Supplemental Order
requiring the parties in the case to comment on the Clerk of
Court's letter-report signifying her difficulty in complying
with the Resolution of this Court of October 15, 1985 since the
pleadings filed by private respondent did not indicate the
exact amount sought to be recovered. On January 23, 1986,
private respondent filed a "Compliance" and a "Re-Amended
Complaint" stating therein a claim of "not less than
Pl0,000,000. 00 as actual compensatory damages" in the
prayer. In the body of the said second amended complaint
however, private respondent alleges actual and
compensatory damages and attorney's fees in the total
amount of about P44,601,623.70.
On January 24, 1986, Judge Asuncion issued another Order
admitting the second amended complaint and stating therein
that the same constituted proper compliance with the
Resolution of this Court and that a copy thereof should be
furnished the Clerk of Court for the reassessment of the
docket fees. The reassessment by the Clerk of Court based on
private respondent's claim of "not less than P10,000,000.00 as
actual and compensatory damages" amounted to P39,786.00
as docket fee. This was subsequently paid by private
respondent.
Petitioners then filed a petition for certiorari with the Court
of Appeals questioning the said order of Judie Asuncion
dated January 24, 1986.
On April 24, 1986, private respondent filed a supplemental
complaint alleging an additional claim of P20,000,000.00 as
d.qmages so the total claim amounts to about P64,601,623.70.
On October 16, 1986, or some seven months after filing the
supplemental complaint, the private respondent paid the
additional docket fee of P80,396.00. 1
On August 13, 1987, the Court of Appeals rendered a
decision ruling, among others, as follows:
WHEREFORE, judgment is hereby
rendered:
1. Denying due course to the petition in
CA-G.R. SP No. 1, 09715 insofar as it seeks
annulment of the order
54
(a) denying petitioners' motion to dismiss
the complaint, as amended, and
(b) granting the writ of preliminary
attachment, but giving due course to the
portion thereof questioning the
reassessment of the docketing fee, and
requiring the Honorable respondent Court
to reassess the docketing fee to be paid by
private respondent on the basis of the
amount of P25,401,707.00. 2
Hence, the instant petition.
During the pendency of this petition and in conformity with
the said judgment of respondent court, private respondent
paid the additional docket fee of P62,432.90 on April 28, 1988.
3
The main thrust of the petition is that the Court of Appeals
erred in not finding that the lower court did not acquire
jurisdiction over Civil Case No. Q-41177 on the ground of
nonpayment of the correct and proper docket fee. Petitioners
allege that while it may be true that private respondent had
paid the amount of P182,824.90 as docket fee as herein-above
related, and considering that the total amount sought to be
recovered in the amended and supplemental complaint is
P64,601,623.70 the docket fee that should be paid by private
respondent is P257,810.49, more or less. Not having paid the
same, petitioners contend that the complaint should be
dismissed and all incidents arising therefrom should be
annulled. In support of their theory, petitioners cite the latest
ruling of the Court in Manchester Development Corporation vs.
CA, 4 as follows:
The Court acquires jurisdiction over any
case only upon the payment of the
prescribed docket fee. An amendment of
the complaint or similar pleading will not
thereby vest jurisdiction in the Court,
much less the payment of the docket fee
based on the amounts sought in the
amended pleading. The ruling in the
Magaspi Case in so far as it is inconsistent
with this pronouncement is overturned
and reversed.
On the other hand, private respondent claims that the ruling
in Manchester cannot apply retroactively to Civil Case No.
Q41177 for at the time said civil case was filed in court there
was no such Manchester ruling as yet. Further, private
respondent avers that what is applicable is the ruling of this
Court in Magaspi v. Ramolete, 5 wherein this Court held that
the trial court acquired jurisdiction over the case even if the
docket fee paid was insufficient.
The contention that Manchester cannot apply retroactively to
this case is untenable. Statutes regulating the procedure of
the courts will be construed as applicable to actions pending
and undetermined at the time of their passage. Procedural
laws are retrospective in that sense and to that extent. 6
In Lazaro vs. Endencia and Andres, 7 this Court held that the
payment of the full amount of the docket fee is an
indispensable step for the perfection of an appeal. In a
forcible entry and detainer case before the justice of the peace
court of Manaoag, Pangasinan, after notice of a judgment
dismissing the case, the plaintiff filed a notice of appeal with
said court but he deposited only P8.00 for the docket fee,
instead of P16.00 as required, within the reglementary period
 @lendelacruz
of appeal of five (5) days after receiving notice of judgment.
Plaintiff deposited the additional P8.00 to complete the
amount of the docket fee only fourteen (14) days later. On the
basis of these facts, this court held that the Court of First
Instance did notacquire jurisdiction to hear and determine
the appeal as the appeal was not thereby perfected.
In Lee vs. Republic, 8 the petitioner filed a verified declaration
of intention to become a Filipino citizen by sending it through
registered mail to the Office of the Solicitor General in 1953
but the required filing fee was paid only in 1956, barely 5V2
months prior to the filing of the petition for citizenship. This
Court ruled that the declaration was not filed in accordance
with the legal requirement that such declaration should be
filed at least one year before the filing of the petition for
citizenship. Citing Lazaro, this Court concluded that the filing
of petitioner's declaration of intention on October 23, 1953
produced no legal effect until the required filing fee was paid
on May 23, 1956.
In Malimit vs. Degamo, 9 the same principles enunciated in
Lazaro and Lee were applied. It was an original petition for
quo warranto contesting the right to office of proclaimed
candidates which was mailed, addressed to the clerk of the
Court of First Instance, within the one-week period after the
proclamation as provided therefor by law. 10 However, the
required docket fees were paid only after the expiration of
said period. Consequently, this Court held that the date of
such payment must be deemed to be the real date of filing of
aforesaid petition and not the date when it was mailed.
Again, in Garica vs, Vasquez, 11 this Court reiterated the rule
that the docket fee must be paid before a court will act on a
petition or complaint. However, we also held that said rule is
not applicable when petitioner seeks the probate of several
wills of the same decedent as he is not required to file a
separate action for each will but instead he may have other
wills probated in the same special proceeding then pending
before the same court.
Then in Magaspi, 12 this Court reiterated the ruling in Malimit
and Lee that a case is deemed filed only upon payment of the
docket fee regardless of the actual date of its filing in court.
Said case involved a complaint for recovery of ownership
and possession of a parcel of land with damages filed in the
Court of First Instance of Cebu. Upon the payment of P60.00
for the docket fee and P10.00 for the sheriffs fee, the
complaint was docketed as Civil Case No. R-11882. The
prayer of the complaint sought that the Transfer Certificate
of Title issued in the name of the defendant be declared as
null and void. It was also prayed that plaintiff be declared as
owner thereof to whom the proper title should be issued, and
that defendant be made to pay monthly rentals of P3,500.00
from June 2, 1948 up to the time the property is delivered to
plaintiff, P500,000.00 as moral damages, attorney's fees in the
amount of P250,000.00, the costs of the action and exemplary
damages in the amount of P500,000.00.
The defendant then filed a motion to compel the plaintiff to
pay the correct amount of the docket fee to which an
opposition was filed by the plaintiff alleging that the action
was for the recovery of a parcel of land so the docket fee must
be based on its assessed value and that the amount of P60.00
was the correct docketing fee. The trial court ordered the
plaintiff to pay P3,104.00 as filing fee.
The plaintiff then filed a motion to admit the amended
complaint to include the Republic as the defendant. In the
prayer of the amended complaint the exemplary damages
earlier sought was eliminated. The amended prayer merely
sought moral damages as the court may determine,
55
attorney's fees of P100,000.00 and the costs of the action. The
defendant filed an opposition to the amended complaint. The
opposition notwithstanding, the amended complaint was
admitted by the trial court. The trial court reiterated its order
for the payment of the additional docket fee which plaintiff
assailed and then challenged before this Court. Plaintiff
alleged that he paid the total docket fee in the amount of
P60.00 and that if he has to pay the additional fee it must be
based on the amended complaint.
The question posed, therefore, was whether or not the
plaintiff may be considered to have filed the case even if the
docketing fee paid was not sufficient. In Magaspi, We
reiterated the rule that the case was deemed filed only upon
the payment of the correct amount for the docket fee
regardless of the actual date of the filing of the complaint;
that there was an honest difference of opinion as to the
correct amount to be paid as docket fee in that as the action
appears to be one for the recovery of property the docket fee
of P60.00 was correct; and that as the action is also one, for
damages, We upheld the assessment of the additional docket
fee based on the damages alleged in the amended complaint
as against the assessment of the trial court which was based
on the damages alleged in the original complaint.
However, as aforecited, this Court overturned Magaspi in
Manchester. Manchester involves an action for torts and
damages and specific performance with a prayer for the
issuance of a temporary restraining order, etc. The prayer in
said case is for the issuance of a writ of preliminary
prohibitory injunction during the pendency of the action
against the defendants' announced forfeiture of the sum of P3
Million paid by the plaintiffs for the property in question, the
attachment of such property of defendants that may be
sufficient to satisfy any judgment that may be rendered, and,
after hearing, the issuance of an order requiring defendants
to execute a contract of purchase and sale of the subject
property and annul defendants' illegal forfeiture of the
money of plaintiff. It was also prayed that the defendants be
made to pay the plaintiff jointly and severally, actual,
compensatory and exemplary damages as well as 25% of said
amounts as may be proved during the trial for attorney's fees.
The plaintiff also asked the trial court to declare the tender of
payment of the purchase price of plaintiff valid and sufficient
for purposes of payment, and to make the injunction
permanent. The amount of damages sought is not specified
in the prayer although the body of the complaint alleges the
total amount of over P78 Millon allegedly suffered by
plaintiff.
Upon the filing of the complaint, the plaintiff paid the
amount of only P410.00 for the docket fee based on the nature
of the action for specific performance where the amount
involved is not capable of pecuniary estimation. However, it
was obvious from the allegations of the complaint as well as
its designation that the action was one for damages and
specific performance. Thus, this court held the plaintiff must
be assessed the correct docket fee computed against the
amount of damages of about P78 Million, although the same
was not spelled out in the prayer of the complaint.
Meanwhile, plaintiff through another counsel, with leave of
court, filed an amended complaint on September 12, 1985 by
the inclusion of another co-plaintiff and eliminating any
mention of the amount of damages in the body of the
complaint. The prayer in the original complaint was
maintained.
On October 15, 1985, this Court ordered the re-assessment of
the docket fee in the said case and other cases that were
investigated. On November 12, 1985, the trial court directed
 @lendelacruz
the plaintiff to rectify the amended complaint by stating the
amounts which they were asking for. This plaintiff did as
instructed. In the body of the complaint the amount of
damages alleged was reduced to P10,000,000.00 but still no
amount of damages was specified in the prayer. Said
amended complaint was admitted.
Applying the principle in Magaspi that "the case is deemed
filed only upon payment of the docket fee regardless of the
actual date of filing in court," this Court held that the trial
court did not acquire jurisdiction over the case by payment
of only P410.00 for the docket fee. Neither can the
amendment of the complaint thereby vest jurisdiction upon
the Court. For all legal purposes there was no such original
complaint duly filed which could be amended.
Consequently, the order admitting the amended complaint
and all subsequent proceedings and actions taken by the trial
court were declared null and void. 13
The present case, as above discussed, is among the several
cases of under-assessment of docket fee which were
investigated by this Court together with Manchester. The facts
and circumstances of this case are similar to Manchester. In
the body of the original complaint, the total amount of
damages sought amounted to about P50 Million. In the
prayer, the amount of damages asked for was not stated. The
action was for the refund of the premium and the issuance of
the writ of preliminary attachment with damages. The
amount of only P210.00 was paid for the docket fee. On
January 23, 1986, private respondent filed an amended
complaint wherein in the prayer it is asked that he be
awarded no less than P10,000,000.00 as actual and exemplary
damages but in the body of the complaint the amount of his
pecuniary claim is approximately P44,601,623.70. Said
amended complaint was admitted and the private
respondent was reassessed the additional docket fee of
P39,786.00 based on his prayer of not less than P10,000,000.00
in damages, which he paid.
On April 24, 1986, private respondent filed a supplemental
complaint alleging an additional claim of P20,000,000.00 in
damages so that his total claim is approximately
P64,601,620.70. On October 16, 1986, private respondent paid
an additional docket fee of P80,396.00. After the
promulgation of the decision of the respondent court on
August 31, 1987 wherein private respondent was ordered to
be reassessed for additional docket fee, and during the
pendency of this petition, and after the promulgation of
Manchester, on April 28, 1988, private respondent paid an
additional docket fee of P62,132.92. Although private
respondent appears to have paid a total amount of
P182,824.90 for the docket fee considering the total amount
of his claim in the amended and supplemental complaint
amounting to about P64,601,620.70, petitioner insists that
private respondent must pay a docket fee of P257,810.49.
The principle in Manchester could very well be applied in the
present case. The pattern and the intent to defraud the
government of the docket fee due it is obvious not only in the
filing of the original complaint but also in the filing of the
second amended complaint.
However, in Manchester, petitioner did not pay any
additional docket fee until] the case was decided by this
Court on May 7, 1987. Thus, in Manchester, due to the fraud
committed on the government, this Court held that the court
a quo did not acquire jurisdiction over the case and that the
amended complaint could not have been admitted inasmuch
as the original complaint was null and void.
56
In the present case, a more liberal interpretation of the rules
is called for considering that, unlike Manchester, private
respondent demonstrated his willingness to abide by the
rules by paying the additional docket fees as required. The
promulgation of the decision in Manchester must have had
that sobering influence on private respondent who thus paid
the additional docket fee as ordered by the respondent court.
It triggered his change of stance by manifesting his
willingness to pay such additional docket fee as may be
ordered.
Nevertheless, petitioners contend that the docket fee that was
paid is still insufficient considering the total amount of the
claim. This is a matter which the clerk of court of the lower
court and/or his duly authorized docket clerk or clerk in-
charge should determine and, thereafter, if any amount is
found due, he must require the private respondent to pay the
same.
Thus, the Court rules as follows:
1. It is not simply the filing of the complaint or appropriate
initiatory pleading, but the payment of the prescribed docket
fee, that vests a trial court with jurisdiction over the subject
matter or nature of the action. Where the filing of the
initiatory pleading is not accompanied by payment of the
docket fee, the court may allow payment of the fee within a
reasonable time but in no case beyond the applicable
prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third
party claims and similar pleadings, which shall not be
considered filed until and unless the filing fee prescribed
therefor is paid. The court may also allow payment of said
fee within a reasonable time but also in no case beyond its
applicable prescriptive or reglementary period.
3. Where the trial court acquires jurisdiction over a claim by
the filing of the appropriate pleading and payment of the
prescribed filing fee but, subsequently, the judgment awards
a claim not specified in the pleading, or if specified the same
has been left for determination by the court, the additional
filing fee therefor shall constitute a lien on the judgment. It
shall be the responsibility of the Clerk of Court or his duly
authorized deputy to enforce said lien and assess and collect
the additional fee.
WHEREFORE, the petition is DISMISSED for lack of merit.
The Clerk of Court of the court a quo is hereby instructed to
reassess and determine the additional filing fee that should
be paid by private respondent considering the total amount
of the claim sought in the original complaint and the
supplemental complaint as may be gleaned from the
allegations and the prayer thereof and to require private
respondent to pay the deficiency, if any, without
pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. Nos. 88075-77 December 20, 1989
MAXIMO TACAY, PONCIANO PANES and ANTONIA
NOEL, petitioners,
vs.
 @lendelacruz
REGIONAL TRIAL COURT OF TAGUM Davao del
Norte, Branches 1 and 2, Presided by Hon. Marcial
Fernandez and Hon. Jesus Matas, respectively, PATSITA
GAMUTAN, Clerk of Court, and GODOFREDO PINEDA,
respondents.
RESOLUTION
NARVASA, J.:
In the Regional Trial Court at Tagum, Davao del Norte, 1
three
(3) actions for recovery of possession (acciones publicianas 2
) were separately instituted by Godofredo Pineda against
three (3) defendants, docketed as follows:
1) vs. Antonia Noel Civil Case No. 2209
2) vs. Ponciano Panes Civil Case No. 2210
3) vs. Maximo Tacay Civil Case No. 2211.
Civil Cases Numbered 2209 and 2211 were raffled to Branch
I of the Trial Court, presided over by Judge Marcial
Hernandez. Civil No. 2210 was assigned to Branch 2,
presided over by Judge Jesus Matas.
The complaints 3 all alleged the same essential facts (1)
Pineda was the owner of a parcel of land measuring 790
square meters, his ownership being evidenced by TCT No. T-
46560; (2) the previous owner had allowed the defendants to
occupy portions of the land by mere tolerance; (3) having
himself need to use the property, Pineda had made demands
on the defendants to vacate the property and pay reasonable
rentals therefor, but these demands had been refused; and (4)
the last demand had been made more than a year prior to the
commencement of suit. The complaints prayed for the same
reliefs, to wit:
1) that plaintiff be declared owner of the
areas occupied by the defendants;
2) that defendants and their "privies and
allies" be ordered to vacate and deliver the
portions of the land usurped by them;
3) that each defendant be ordered to pay:
1 ) P 2,000 as monthly rents from February,
1987;
2 ) Actual damages, as proven;
3 ) Moral and nominal damages as the
Honorable Court may fix ;
4) P30,000.00, "as attorney's fees, and
representation fees of P5,000.00 per day of
appearance;" 4
and
4) that he (Pineda) be granted such "further
relief and remedies ... just and equitable in
the premises.
57
The prayer of each complaint contained a handwritten
notation (evidently made by plaintiff's counsel) reading,
"P5,000.00 as and for," immediately above the typewritten
words, "Actual damages, as proven," the intention
apparently being to make the entire phrase read, " P5,000.00
as and for actual damages as proven. 5
Motions to dismiss were filed in behalf of each of the
defendants by common counsel . 6 Every motion alleged that
the Trial Court had not acquired jurisdiction of the case
. . . for the reason that the ... complaint
violates the mandatory and clear provision
of Circular No. 7 of the ... Supreme Court
dated March 24,1988, by failing to specify
all the amounts of damages which plaintiff
is claiming from defendant;" and
. . . for ... failure (of the complaint) to even
allege the basic requirement as to the
assessed value of the subject lot in dispute.
Judge Matas denied the motion to dismiss filed in Civil Case
No. 2210 but ordered the expunction of the "allegations in
paragraph 11 of the ... complaint regarding moral as well as
nominal damages . 7 On motion of defendant Panes, Judge
Matas later ordered the striking out, too, of the "handwritten
amount of 'P5,000. 00 as and for.' including the typewritten
words 'actual damages as proven' ... in sub-paragraph b of
paragraph 4 in the conclusion and prayer of the complaint ..."
8
The motions to dismiss submitted in Civil Cases Numbered
2211 and 2209 were also denied in separate orders
promulgated by Judge Marcial Fernandez. 9 His Order in
Case No. 2209 dated March 15, 1989 (a) declared that since
the "action at bar is for Reivindicatoria, Damages and
Attorney's fees ... (d)efinitely this Court has the exclusive
jurisdiction," (b) that the claims for actual, moral and nominal
damages "are only one aspect of the cause of action," and (c)
because of absence of specification of the amounts claimed as
moral, nominal and actual damages, they should be
"expunged from the records."
Ascribing grave abuse of discretion to both Judges Matas and
Fernandez in the rendition of the Orders above described, the
defendants in all three (3) actions have filed with this Court
a "Joint Petition" for certiorari, prohibition and mandamus,
with prayer for temporary restraining order and/or writ of
preliminary prohibitory injunction," praying essentially that
said orders be annulled and respondent judges directed to
dismiss all the complaints "without prejudice to private
respondent Pineda's re-filing a similar complaint that
complies with Circular No. 7." The joint petition (a) re-
asserted the proposition that because the complaints had
failed to state the amounts being claimed as actual, moral and
nominal damages, the Trial Courts a quo had not acquired
jurisdiction over the three (3) actions in question-indeed, the
respondent Clerk of Court should not have accepted the
complaints which initiated said suits, and (b) it was not
proper merely to expunge the claims for damages and allow
"the so-called cause of action for "reivindicatoria" remain for
trial" by itself. 10
The joint petition should be, as it is hereby, dismissed.
It should be dismissed for failure to comply with this Court's
Circular No. 1-88 (effective January 1, 1989). The copies of the
challenged Orders thereto attached 11 were not certified by
the proper Clerk of Court or his duly authorized
 @lendelacruz
representative. Certification was made by the petitioners'
counsel, which is not allowed.
The petition should be dismissed, too, for another equally
important reason. It fails to demonstrate any grave abuse of
discretion on the part of the respondent Judges in rendering
the Orders complained of or, for that matter, the existence of
any proper cause for the issuance of the writ of mandamus.
On the contrary, the orders appear to have correctly applied
the law to the admitted facts.
It is true that the complaints do not state the amounts being
claimed as actual, moral and nominal damages. It is also true,
however, that the actions are not basically for the recovery of
sums of money. They are principally for recovery of
possession of real property, in the nature of an accion
publiciana. Determinative of the court's jurisdiction in this
type of actions is the nature thereof, not the amount of the
damages allegedly arising from or connected with the issue
of title or possession, and regardless of the value of the
property. Quite obviously, an action for recovery of
possession of real property (such as an accion plenaria de
possesion) or the title thereof, 12 or for partition or
condemnation of, or the foreclosure of a mortgage on, said
real property 13 - in other words, a real action-may be
commenced and prosecuted without an accompanying claim
for actual, moral, nominal or exemplary damages; and such
an action would fall within the exclusive, original jurisdiction
of the Regional Trial Court.
Batas Pambansa Bilang 129 provides that Regional Trial
Courts shall exercise exclusive original jurisdiction inter alia
over "all civil actions which involve the title to, or possession
of, real property, or any interest therein, except actions for
forcible entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is conferred upon
Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts." 14 The rule applies regardless
of the value of the real property involved, whether it be
worth more than P20,000.00 or not, infra. The rule also
applies even where the complaint involving realty also prays
for an award of damages; the amount of those damages
would be immaterial to the question of the Court's
jurisdiction. The rule is unlike that in other cases e.g., actions
simply for recovery of money or of personal property, 15 or
actions in admiralty and maritime jurisdiction 16 in which the
amount claimed, 17 or the value of the personal property, is
determinative of jurisdiction; i.e., the value of the personal
property or the amount claimed should exceed twenty
thousand pesos (P20,000.00) in order to be cognizable by the
Regional Trial Court.
Circular No. 7 of this Court, dated March 24, 1988, cannot
thus be invoked, as the petitioner does, as authority for the
dismissal of the actions at bar. That circular, avowedly
inspired by the doctrine laid down in Manchester Development
Corporation v. Court of appeals, 149 SCRA 562 (May 7, 1987),
has but limited application to said actions, as shall presently
be discussed. Moreover, the rules therein laid down have
since been clarified and amplified by the Court's subsequent
decision in Sun Insurance Office, Ltd. (SIOL) v. Asuncion, et al.,
G.R. Nos. 79937-38, February 13, 1989.
Circular No. 7 was aimed at the practice of certain parties
who omit from the prayer of their complaints "any
specification of the amount of damages," the omission being
"clearly intended for no other purposes than to evade the
payment of the correct filing fees if not to mislead the docket
clerk, in the assessment of the filing fee." The following rules
were therefore set down:
58
1. All complaints, petitions, answers, and similar pleadings
should specify the amount of damages being prayed for not
only in the body of the pleading but also in the prayer, and
said damages shall be considered in the assessment of the
filing fees in any case.
2. Any pleading that fails to comply with this requirement
shall not be accepted nor admitted, or shall otherwise be
expunged from the record.
3. The Court acquires jurisdiction over any case only upon
the payment of the prescribed docket fee. An amendment of
the complaint or similar pleading will not thereby vest
jurisdiction in the Court, much less the payment of the docket
fee based on the amount sought in the amended pleading.
The clarificatory and additional rules laid down in Sun
Insurance Office, Ltd. v. Asuncion, supra, read as follows:
1. It is not simply the filing of the complaint or appropriate
initiatory pleading, but (also) the payment of the prescribed
docket fee that vests a trial court with jurisdiction over the
subject-matter or nature of the action. Where the filing of the
initiatory pleading is not accompanied by payment of the
docket fee, the court may allow payment of the fee within a
reasonable time but in no case beyond the applicable
prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third-
party claims and similar pleadings, which shall not be
considered filed until and unless the filing fee prescribed
therefor is paid. The court may also allow payment of said
fee within a reasonable time but also in no case beyond its
applicable prescriptive or reglementary period.
3. Where the trial court acquires jurisdiction over a claim by
the filing of the appropriate pleading and payment of the
prescribed filing fee but, subsequently, the judgment awards
a claim not specified in the pleading, or if specified, the same
has been left for determination by the court, the additional
filing fee therefor shall constitute a lien on the judgment. It
shall be the responsibility of the Clerk of Court or his duly
authorized deputy to enforce said lien and assess and collect
the additional fee.
As will be noted, the requirement in Circular No. 7 that
complaints, petitions, answers, and similar pleadings should
specify the amount of damages being prayed for not only in
the body of the pleading but also in the prayer, has not been
altered. What has been revised is the rule that subsequent
"amendment of the complaint or similar pleading will not
thereby vest jurisdiction in the Court, much less the payment
of the docket fee based on the amount sought in the amended
pleading," the trial court now being authorized to allow
payment of the fee within a reasonable time but in no case
beyond the applicable prescriptive or reglementary period.
Moreover, a new rule has been added, governing awards of
claims not specified in the pleading - i.e., damages arising
after the filing of the complaint or similar pleading-as to
which the additional filing fee therefor shall constitute a lien
on the judgment.
Now, under the Rules of Court, docket or filing fees are
assessed on the basis of the "sum claimed," on the one hand,
or the "value of the property in litigation or the value of the
estate," on the other. 18 There are, in other words, as already
above intimated, actions or proceedings involving real
property, in which the value of the property is immaterial to
the court's jurisdiction, account thereof being taken merely
for assessment of the legal fees; and there are actions or
 @lendelacruz
proceedings, involving personal property or the recovery of
money and/or damages, in which the value of the property
or the amount of the demand is decisive of the trial court's
competence (aside from being the basis for fixing the
corresponding docket fees). 19
Where the action is purely for the recovery of money or
damages, the docket fees are assessed on the basis of the
aggregate amount claimed, exclusive only of interests and
costs. In this case, the complaint or similar pleading should,
according to Circular No. 7 of this Court, "specify the amount
of damages being prayed for not only in the body of the
pleading but also in the prayer, and said damages shall be
considered in the assessment of the filing fees in any case."
Two situations may arise. One is where the complaint or
similar pleading sets out a claim purely for money or
damages and there is no precise statement of the amounts
being claimed. In this event the rule is that the pleading will
"not be accepted nor admitted, or shall otherwise be
expunged from the record." In other words, the complaint or
pleading may be dismissed, or the claims as to which the
amounts are unspecified may be expunged, although as
aforestated the Court may, on motion, permit amendment of
the complaint and payment of the fees provided the claim has
not in the meantime become time-barred. The other is where
the pleading does specify the amount of every claim, but the
fees paid are insufficient; and here again, the rule now is that
the court may allow a reasonable time for the payment of the
prescribed fees, or the balance thereof, and upon such
payment, the defect is cured and the court may properly take
cognizance of the action, unless in the meantime prescription
has set in and consequently barred the right of action.
Where the action involves real property and a related claim
for damages as well, the legal fees shall be assessed on the
basis of both (a) the value of the property and (b) the total
amount of related damages sought. The Court acquires
jurisdiction over the action if the filing of the initiatory
pleading is accompanied by the payment of the requisite fees,
or, if the fees are not paid at the time of the filing of the
pleading, as of the time of full payment of the fees within
such reasonable time as the court may grant, unless, of
course, prescription has set in the meantime. But where-as in
the case at bar-the fees prescribed for an action involving real
property have been paid, but the amounts of certain of the
related damages (actual, moral and nominal) being
demanded are unspecified, the action may not be dismissed.
The Court undeniably has jurisdiction over the action
involving the real property, acquiring it upon the filing of the
complaint or similar pleading and payment of the prescribed
fee. And it is not divested of that authority by the
circumstance that it may not have acquired jurisdiction over
the accompanying claims for damages because of lack of
specification thereof. What should be done is simply to
expunge those claims for damages as to which no amounts
are stated, which is what the respondent Courts did, or allow,
on motion, a reasonable time for the amendment of the
complaints so as to allege the precise amount of each item of
damages and accept payment of the requisite fees therefor
within the relevant prescriptive period.
WHEREFORE, the petition is DISMISSED, without
pronouncement as to costs.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
59
G.R. No. 149227 December 11, 2003
LA SALETTE COLLEGE, Represented by Its President,
FR. ROMEO GONZALES, MS; and JESUS T. BAYAUA,
Dean of Student Services, petitioners,
vs.
VICTOR C. PILOTIN, respondent
DECISION
PANGANIBAN, J.:
An appeal is not perfected by the mere filing of a Notice of
Appeal that has been served on the adverse party. The docket
fees must likewise be paid within the reglementary period.
Petitioners have failed to show why they merit an exception
to these stringent rules.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules
of Court, seeking to set aside the November 16, 20002 and the
June 22, 2001 Resolutions3 of the Court of Appeals (CA) in
CA-GR CV UDK No. 0236C. The November 16, 2000
Resolution disposed as follows:
"In view of the foregoing, Appellees Motion for
Reconsideration is GRANTED. The Resolution, dated March
14, 2000, is hereby RECALLED and SET ASIDE and the
appeal is hereby DISMISSED."4
The June 22, 2001 Resolution denied reconsideration.
The Facts
The facts of the case are narrated by the trial court5 as follows:
"[Respondent] is a bonafide student of [petitioner] College
dating back [to] the school year 1988-1989 taking up the
degree of Bachelor of Science in Commerce. In the enrollment
period for the second semester held on October 22 to
November 5, 1993, [respondent] was denied re-enrollment,
despite repeated pleas by x x x himself and by other
interested parties and his lawyer.
"On November 16, 1993, he filed his complaint and asked for
the issuance of a writ of preliminary mandatory injunction to
compel [petitioner college to] re-admit him. On December 28,
1993, an order was issued directing [petitioner college] to
admit [respondent] for the second semester but still
[petitioner college] refused to re-admit [respondent], despite
implementation of said order and the pleas of [respondent]
thru his counsel so that he could catch up with the bulk of the
school days of the semester and could graduate.
"Because of the adamant refusal of [respondent] school in re-
admitting him and his defiance to the order and because the
period of the second semester [was] already about to close,
[respondent] amended his complaint and concentrate[d] on
damages, hence, this case.
"On the other hand, the [petitioner college] alleged that it
opened its enrollment period for the second semester of
school year 1993-1994 on 11 October 1993 up to 22 October,
1993 to 05 November, 1993. However, classes for the second
semester of that school year commenced on 25 October, 1993.
During these periods for enrolment, [respondent] never
enrolled with the x x x College and neither did he accomplish
the basic requirements for enrolment. However, on 05
 @lendelacruz
November, 1993, the x x x College was in receipt of a letter
from Atty. Quirino L. Pilotin dated on that same date
requesting for a reconsideration of an alleged decision
denying enrolment to the [respondent]. Upon receipt of the
said letter, it was endorsed to [Respondent] Bayaua who in
turn wrote Atty. Pilotin explaining among others that was
not denied enrolment but rather [the] latter did not enroll
with the said College. Considering, however, that the x x x
College started its regular classes on 25 October, 1993, in the
event [respondent] was able to enroll on 6 November, 1993,
he would have then exceeded the required absences for his
supposed enrolled subjects.
"Since plaintiff failed to enrol on the last day for enrolment,
there is no reason why the x x x College should relax its rules
to accommodate [respondent]. The x x x College merely
imposed its disciplining authority when it sets dates for the
period to enrol and the matter of admission of students is
within the ambit of academic freedom and beyond the
province of the Courts to decide."6
On November 17, 1998, the trial court rendered judgment in
favor of respondent.7 Petitioners received the Decision on
November 26, 1998. On the same date, they filed a Notice of
Appeal, which the RTC approved on December 2, 1998.
Respondent moved for a reconsideration thereof on the
ground of petitioners failure to pay the docket fees within
the reglementary period. The trial court, however, denied the
Motion in its April 23, 1999 Order.8
Ruling of the Court of Appeals
In its November 29, 1999 Resolution, the CA dismissed the
appeal of petitioners for their failure to pay "the required
docketing fee within the period for filing an appeal."9 But,
upon their motion, the CA granted, in a Resolution dated
March 14, 2000, reconsideration of their appeal, which it
reinstated "in the interest of substantial justice and
considering that [petitioners] already paid the docket fees." 10
Respondent moved for a reconsideration on March 29, 2000.
After reexamining the records of the case, the CA, in the
challenged November 16, 2000 Resolution, dismissed the
appeal filed by petitioners, because "the docket fees were
only paid after one (1) year and eleven (11) months from the
filing of the notice of appeal."11 It deemed it imperative to
reverse the March 14, 2000 Resolution "to conform with the
law and long settled jurisprudence"12 on the matter. Thus, in
the June 22, 2001 Resolution, it denied their Motion for
Reconsideration.
Hence, this Petition.13
Issues
Petitioners submit the following issues for our consideration:
"1. Whether or not the appeal was seasonably filed;
"2. With all due respect, the Court of Appeals did
not have the authority to dismiss the appeal."14
In the main, the case revolves around the timeliness of the
payment of the docket fees.
The Courts Ruling
The Petition has no merit.
60
Sole Issue:
Timeliness of Payment of
Appellate Court Docket Fees
The payment of docket fees is not a trivial matter. These fees
are necessary to defray court expenses in the handling of
cases.15 For this reason, and to secure a just and speedy
disposition of every action and proceeding,16 the Rules on
Civil Procedure17 mandates the payment of docket and other
lawful fees within the prescribed period.1awp++i1
Otherwise, the jurisdiction of the proper court to handle a
case is adversely affected.18
The above rule applies squarely to this case, in which the
judgment issued by the RTC, in the exercise of its original
jurisdiction, was elevated to the CA for review. Rule 41 of the
Rules on Civil Procedure provides the essential requirements
for making such an appeal, as follows:
"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. x x x.
"x x x xxx xxx
"SEC. 3. Period of ordinary appeal. The appeal shall be taken
within fifteen (15) days from notice of the judgment or final
order appealed from. x x x.
"SEC. 4. Appellate court docket and other lawful fees. Within the
period for taking an appeal, the appellant shall pay to the
clerk of court which rendered the judgment or final order
appealed from, the full amount of the appellate court docket
and other lawful fees. Proof of payment of said fees shall be
transmitted to the appellate court together with the original
record or the record on appeal.
"SEC. 9. Perfection of appeal; effect thereof. A partys appeal
by notice of appeal is deemed perfected as to him upon the
filing of the notice of appeal in due time.
"x x x x x x x x x.
"In appeals by notice of appeal, the court loses jurisdiction
over the case upon the perfection of the appeals filed in due
time and the expiration of the time to appeal of the other
parties.
"x x x x x x x x x."
Accordingly, in order to perfect an appeal from a decision
rendered by the RTC in the exercise of its original
jurisdiction, the following requirements must be complied
with. First, within 15 days, a notice of appeal must be filed
with the court that rendered the judgment or final order
sought to be appealed; second, such notice must be served on
the adverse party; and third, within the same 15-day period,
the full amount of appellate court docket and other legal fees
must be paid to the clerk of the court that rendered the
judgment or final order.
It should be noted that full payment of the appellate docket
fees within the prescribed period is mandatory,19 even
 @lendelacruz
jurisdictional,20 for the perfection of the appeal. Otherwise,
the appellate court would not be able to act on the subject
matter of the action,21 and the decision or final order sought
to be appealed from would become final and executory.22
In the present case, petitioners insist that they seasonably
paid the docket fees. After resolving thrice the timeliness of
the payment of the docket fees, the CA finally found that
these had been paid one (1) year and 11 days from the filing
of their notice of appeal.
To recapitulate, on November 26, 1998, petitioners received
the November 17, 1998 RTC Decision. Consequently, they
had 15 days to file their Notice of Appeal. They did so on
November 26, 1998, but failed to pay the docket fees. A
review of the records shows that they paid these only on July
8, 1999,23 or after almost seven (7) months from the mandated
last day for payment, which was December 11, 1998. Clearly,
the November 17, 1998 RTC Decision, which petitioners
sought to appeal, had long become final and executory.
Relaxation of the Rule on
Nonpayment of Docket Fees
Notwithstanding the mandatory nature of the requirement of
payment of appellate docket fees, we also recognize that its
strict application is qualified by the following: first, failure to
pay those fees within the reglementary period allows only
discretionary, not automatic, dismissal; second, such power
should be used by the court in conjunction with its exercise
of sound discretion in accordance with the tenets of justice
and fair play, as well as with a great deal of circumspection
in consideration of all attendant circumstances.24
In Mactan Cebu International Airport Authority v. Mangubat,25
the payment of the docket fees was delayed by six (6) days,
but the late payment was accepted, because the party showed
willingness to abide by the Rules by immediately paying
those fees. Yambao v. Court of Appeals26 saw us again relaxing
the Rules when we declared therein that "the appellate court
may extend the time for the payment of the docket fees if
appellant is able to show that there is a justifiable reason for
x x x the failure to pay the correct amount of docket fees
within the prescribed period, like fraud, accident, mistake,
excusable negligence, or a similar supervening casualty,
without fault on the part of the appellant."27
In the present case, petitioners have not shown any
satisfactory reason to warrant the relaxation of the Rules. In
fact, the manner in which they presented their case before us
leaves too much to be desired. Indeed, we are almost tempted
to say that they tried to mislead -- nay, deceive -- this Court
as well as the appellate court.
The present case calls for the adjudication of whether
petitioners paid the docket fees on time. Hence, it is essential
that they specify the exact dates when they filed their notice
of appeal and paid the corresponding docket fees. But
nowhere in their pleadings did they do so. All they said was
that the appeal had been seasonably filed.
In accordance with the requisites for the perfection of an
appeal as enumerated earlier, petitioners should have (1)
filed a notice of appeal with the RTC of Santiago, Isabela,
within 15 days from the issuance of the trial court Decision
being appealed; (2) paid the docket fees within the same
period; and (3) served the notice to the adverse party.
True, petitioners filed their Notice of Appeal within the
prescribed period, but they paid the docket fees only seven
61
(7) months thereafter. They adamantly insisted on page 6 of
their Petition28 that "the appeal was seasonably filed," but
later said that the "the appeal fee was paid immediately after
23 April 1999 when the court a quo denied the respondents
motion for reconsideration and approved the appeal. x x x.
With the foregoing therefore, the notice of appeal was
seasonably filed with the payment of docket fees on time." 29
They admitted, though, that because of the "excusable
negligence or mistake" of their counsel, the official receipts
for the Notice of Appeal had not been attached. They
reasoned that they had failed to transmit the proof of
payment of the docket fees to the CA, because such
"provision of civil procedure was relatively new x x x at that
time."30 At any event, respondent denies being served such
notice.31
Assuming arguendo that the period of appeal was
interrupted by respondents motion for reconsideration of
the RTCs approval of petitioners notice of appeal, the
required docket fees for the latter were still not paid on time.
From November 23, 1998, when petitioners filed their Notice
of Appeal, until April 23, 1999, when the trial court approved
it with finality, they made no effort to pay those fees. It took
them more than two (2) months to "immediately pay" the
docket fees after being informed of the April 23, 1999 Order
denying respondents motion for reconsideration of the RTC
Order approving petitioners Notice of Appeal. This lapse of
time hardly reflected sincere willingness to abide by the
Rules, especially when respondent had raised the very issue
of nonpayment of docket fees as early as December 28, 1998.
On this point, petitioners counsel is reminded of the role that
lawyers play in the dispensation of justice. Bayas v.
Sandiganbayan32 held thus:
"Lawyers are not merely representatives of the parties but,
first and foremost, officers of the court. As such, one of their
duties -- assisting in the speedy and efficient administration
of justice -- is more significant than that of [the cause of] their
client, rightly or wrongly. x x x. We stress that candor in all
dealings is the very essence of membership in the legal
profession. Lawyers are obliged to observe rules of
procedure in good faith, not to misuse them to defeat the
ends of justice."33
We stress that the payment of docket fees is not a mere
technicality of law or procedure, but an essential requirement
for the perfection of an appeal.34 Without such payment, the
appellate court does not acquire jurisdiction over the subject
matter of the action, and the decision or final order sought to
be appealed from becomes final and executory.35 As laid
down in Barangay 24 of Legazpi City v. Imperial:36
"The right to appeal is not a natural right or a part of due
process. It is purely a statutory privilege, and may be
exercised only in the manner and in accordance with the
provisions of the law. Well-rooted is the principle that
perfection of an appeal within the statutory or reglementary
period is not only mandatory but also jurisdictional and
failure to do so renders the questioned decision final and
executory, and deprives the appellate court of jurisdiction to
alter the final judgment much less to entertain the appeal."37
WHEREFORE, the Petition is hereby DENIED and the
assailed Resolutions AFFIRMED. Costs against petitioners.
SO ORDERED.
 @lendelacruz 62

Republic of the Philippines

4. Moral damages .. 50,000.00
SUPREME COURT
Manila 5. Exemplary damages 25,000.00

THIRD DIVISION 6. Litigation expenses . 15,000.00

7. Attorneys fees 25,000.00

G.R. No. 116121 July 18, 2011
P
Or a total of
THE HEIRS OF THE LATE RUBEN REINOSO, SR., 250,000.00
represented by Ruben Reinoso Jr., Petitioners,
vs.
COURT OF APPEALS, PONCIANO TAPALES, JOSE For damages to property:
GUBALLA, and FILWRITERS GUARANTY
ASSURANCE CORPORATION,** Respondent. In favor of defendant Ponciano Tapales and against
defendant Jose Guballa:
DECISION
1. Actual damages for repair is already
MENDOZA, J.: awarded to defendant-cross-claimant
Ponciano Tapales by Br. 9, RTC-Malolos,
Before the Court is a petition for review assailing the May 20, Bulacan (Vide: Exh. 1-G-Tapales); hence,
1994 Decision1 and June 30, 1994 Resolution2 of the Court of cannot recover twice.
Appeals (CA), in CA-G.R. CV No. 19395, which set aside the
March 22, 1988 Decision of the Regional Trial Court, Branch 2. Compensatory damages (earnings at P
8, Manila (RTC) for non-payment of docket fees. The 150.00 per day) and for two (2) months
dispositive portion of the CA decision reads: jeepney stayed at the repair P
shop. 9,000.00
IN VIEW OF ALL THE FOREGOING, the decision appealed 3. Moral damages ... 10,000.00
from is SET ASIDE and REVERSED and the complaint in this
case is ordered DISMISSED. 4. Exemplary damages . 10,000.00

No costs pronouncement. 5. Attorneys fees 15,000.00

P
SO ORDERED. or a total of
44,000.00

The complaint for damages arose from the collision of a

passenger jeepney and a truck at around 7:00 oclock in the
evening of June 14, 1979 along E. Rodriguez Avenue, Quezon
City. As a result, a passenger of the jeepney, Ruben Reinoso,
Sr. (Reinoso), was killed. The passenger jeepney was owned by
Ponciano Tapales (Tapales) and driven by Alejandro Santos
(Santos), while the truck was owned by Jose Guballa (Guballa)
and driven by Mariano Geronimo (Geronimo).
On November 7, 1979, the heirs of Reinoso (petitioners) filed
a complaint for damages against Tapales and Guballa. In
turn, Guballa filed a third party complaint against Filwriters
Guaranty Assurance Corporation (FGAC) under Policy
Number OV-09527.
On March 22, 1988, the RTC rendered a decision in favor of
the petitioners and against Guballa. The decision in part,
reads:
Under the 3rd party complaint against 3rd party defendant
Filwriters Guaranty Assurance Corporation, the Court
hereby renders judgment in favor of said 3rd party plaintiff
by way of 3rd party liability under policy No. OV-09527 in
the amount of P 50,000.00 undertaking plus P 10,000.00 as
and for attorneys fees.
For all the foregoing, it is the well considered view of the
Court that plaintiffs, defendant Ponciano Tapales and 3rd
Party plaintiff Jose Guballa established their claims as
specified above, respectively. Totality of evidence
preponderance in their favor.
JUDGMENT
WHEREFORE, in view of the foregoing, judgment is hereby
rendered as follows:

In favor of herein plaintiffs and against defendant Jose In favor of plaintiffs for the death of Ruben Reinoso,
Guballa: Sr.P 250,000.00;

In favor of defendant Ponciano Tapales due to damage of his

P
passenger jeepney . P 44,000.00;
1. For the death of Ruben Reinoso, Sr. 30,000.00

2. Loss of earnings (monthly income at the time of In favor of defendant Jose Guballa under Policy No. OV-
death (P 2,000.00 Court used P 1,000.00 only per 09527 P 60,000.00;
month (or P 12,000.00 only per year) & victim then
being 55 at death had ten (10) years life All the specified accounts with 6% legal rate of interest per
expectancy 120,000.00 annum from date of complaint until fully paid (Reformina vs.
Tomol, 139 SCRA 260; and finally;
3. Mortuary, Medical & funeral expenses and all
incidental expenses in the wake in serving those
who condoled 15,000.00 Costs of suit.
 @lendelacruz
SO ORDERED.3
On appeal, the CA, in its Decision dated May 20, 1994, set
aside and reversed the RTC decision and dismissed the
complaint on the ground of non-payment of docket fees
pursuant to the doctrine laid down in Manchester v. CA.4 In
addition, the CA ruled that since prescription had set in,
petitioners could no longer pay the required docket fees.5
Petitioners filed a motion for reconsideration of the CA
decision but it was denied in a resolution dated June 30,
1994.6 Hence, this appeal, anchored on the following
GROUNDS:
A. The Court of Appeals MISAPPLIED THE
RULING of the Supreme Court in the case of
Manchester Corporation vs. Court of Appeals to this
case.
B. The issue on the specification of the damages
appearing in the prayer of the Complaint was
NEVER PLACED IN ISSUE BY ANY OF THE
PARTIES IN THE COURT OF ORIGIN
(REGIONAL TRIAL COURT) NOR IN THE
COURT OF APPEALS.
C. The issues of the case revolve around the more
substantial issue as to the negligence of the private
respondents and their culpability to petitioners."7
The petitioners argue that the ruling in Manchester should not
have been applied retroactively in this case, since it was filed
prior to the promulgation of the Manchester decision in 1987.
They plead that though this Court stated that failure to state
the correct amount of damages would lead to the dismissal
of the complaint, said doctrine should be applied
prospectively.
Moreover, the petitioners assert that at the time of the filing
of the complaint in 1979, they were not certain of the amount
of damages they were entitled to, because the amount of the
lost income would still be finally determined in the course of
the trial of the case. They claim that the jurisdiction of the trial
court remains even if there was failure to pay the correct
filing fee as long as the correct amount would be paid
subsequently.
Finally, the petitioners stress that the alleged defect was
never put in issue either in the RTC or in the CA.
The Court finds merit in the petition.
The rule is that payment in full of the docket fees within the
prescribed period is mandatory.8 In Manchester v. Court of
Appeals,9 it was held that a court acquires jurisdiction over
any case only upon the payment of the prescribed docket fee.
The strict application of this rule was, however, relaxed two
(2) years after in the case of Sun Insurance Office, Ltd. v.
Asuncion,10 wherein the Court decreed that where the
initiatory pleading is not accompanied by the payment of the
docket fee, the court may allow payment of the fee within a
reasonable period of time, but in no case beyond the
applicable prescriptive or reglementary period. This ruling
was made on the premise that the plaintiff had demonstrated
his willingness to abide by the rules by paying the additional
docket fees required.11 Thus, in the more recent case of United
Overseas Bank v. Ros,12 the Court explained that where the
party does not deliberately intend to defraud the court in
payment of docket fees, and manifests its willingness to abide
63
by the rules by paying additional docket fees when required
by the court, the liberal doctrine enunciated in Sun Insurance
Office, Ltd., and not the strict regulations set in Manchester,
will apply. It has been on record that the Court, in several
instances, allowed the relaxation of the rule on non-payment
of docket fees in order to afford the parties the opportunity
to fully ventilate their cases on the merits. In the case of La
Salette College v. Pilotin,13 the Court stated:
Notwithstanding the mandatory nature of the requirement of
payment of appellate docket fees, we also recognize that its
strict application is qualified by the following: first, failure to
pay those fees within the reglementary period allows only
discretionary, not automatic, dismissal; second, such power
should be used by the court in conjunction with its exercise
of sound discretion in accordance with the tenets of justice
and fair play, as well as with a great deal of circumspection
in consideration of all attendant circumstances.14
While there is a crying need to unclog court dockets on the
one hand, there is, on the other, a greater demand for
resolving genuine disputes fairly and equitably,15 for it is far
better to dispose of a case on the merit which is a primordial
end, rather than on a technicality that may result in injustice.
In this case, it cannot be denied that the case was litigated
before the RTC and said trial court had already rendered a
decision. While it was at that level, the matter of non-
payment of docket fees was never an issue. It was only the
CA which motu propio dismissed the case for said reason.
Considering the foregoing, there is a need to suspend the
strict application of the rules so that the petitioners would be
able to fully and finally prosecute their claim on the merits at
the appellate level rather than fail to secure justice on a
technicality, for, indeed, the general objective of procedure is
to facilitate the application of justice to the rival claims of
contending parties, bearing always in mind that procedure is
not to hinder but to promote the administration of justice.16
The Court also takes into account the fact that the case was
filed before the Manchester ruling came out. Even if said
ruling could be applied retroactively, liberality should be
accorded to the petitioners in view of the recency then of the
ruling. Leniency because of recency was applied to the cases
of Far Eastern Shipping Company v. Court of Appeals17 and
Spouses Jimmy and Patri Chan v. RTC of Zamboanga.18 In the
case of Mactan Cebu International Airport Authority v.
Mangubat (Mactan),19 it was stated that the "intent of the
Court is clear to afford litigants full opportunity to comply
with the new rules and to temper enforcement of sanctions in
view of the recency of the changes introduced by the new
rules." In Mactan, the Office of the Solicitor General (OSG)
also failed to pay the correct docket fees on time.
We held in another case:
x x x It bears stressing that the rules of procedure are merely
tools designed to facilitate the attainment of justice. They
were conceived and promulgated to effectively aid the court
in the dispensation of justice. Courts are not slaves to or
robots of technical rules, shorn of judicial discretion. In
rendering justice, courts have always been, as they ought to
be, conscientiously guided by the norm that, on the balance,
technicalities take a backseat against substantive rights, and
not the other way around. Thus, if the application of the
Rules would tend to frustrate rather than promote justice, it
is always within the power of the Court to suspend the Rules,
or except a particular case from its operation.20
 @lendelacruz
The petitioners, however, are liable for the difference
between the actual fees paid and the correct payable docket
fees to be assessed by the clerk of court which shall constitute
a lien on the judgment pursuant to Section 2 of Rule 141
which provides:
SEC. 2. Fees in lien. Where the court in its final judgment
awards a claim not alleged, or a relief different from, or more
than that claimed in the pleading, the party concerned shall
pay the additional fees which shall constitute a lien on the
judgment in satisfaction of said lien. The clerk of court shall
assess and collect the corresponding fees.
As the Court has taken the position that it would be grossly
unjust if petitioners claim would be dismissed on a strict
application of the Manchester doctrine, the appropriate
action, under ordinary circumstances, would be for the Court
to remand the case to the CA. Considering, however, that the
case at bench has been pending for more than 30 years and
the records thereof are already before this Court, a remand of
the case to the CA would only unnecessarily prolong its
resolution. In the higher interest of substantial justice and to
spare the parties from further delay, the Court will resolve
the case on the merits.
The facts are beyond dispute. Reinoso, the jeepney passenger,
died as a result of the collision of a jeepney and a truck on June
14, 1979 at around 7:00 oclock in the evening along E.
Rodriguez Avenue, Quezon City. It was established that the
primary cause of the injury or damage was the negligence of
the truck driver who was driving it at a very fast pace. Based
on the sketch and spot report of the police authorities and the
narration of the jeepney driver and his passengers, the
collision was brought about because the truck driver
suddenly swerved to, and encroached on, the left side
portion of the road in an attempt to avoid a wooden
barricade, hitting the passenger jeepney as a consequence. The
analysis of the RTC appears in its decision as follows:
Perusal and careful analysis of evidence adduced as well as
proper consideration of all the circumstances and factors
bearing on the issue as to who is responsible for the instant
vehicular mishap convince and persuade this Court that
preponderance of proof is in favor of plaintiffs and defendant
Ponciano Tapales. The greater mass of evidence spread on
the records and its influence support plaintiffs plaint
including that of defendant Tapales.
The Land Transportation and Traffic Rule (R.A. No. 4136),
reads as follows:
"Sec. 37. Driving on right side of highway. Unless a
different course of action is required in the interest of the
safety and the security of life, person or property, or because
of unreasonable difficulty of operation in compliance
therewith, every person operating a motor vehicle or an
animal drawn vehicle on highway shall pass to the right
when meeting persons or vehicles coming toward him, and
to the left when overtaking persons or vehicles going the
same direction, and when turning to the left in going from
one highway to another, every vehicle shall be conducted to
the right of the center of the intersection of the highway."
Having in mind the foregoing provision of law, this Court is
convinced of the veracity of the version of the passenger
jeepney driver Alejandro Santos, (plaintiffs and Tapales
witness) that while running on lane No. 4 westward bound
towards Ortigas Avenue at between 30-40 kms. per hour (63-
64 tsn, Jan. 6, 1984) the "sand & gravel" truck from the
opposite direction driven by Mariano Geronimo, the
headlights of which the former had seen while still at a
64
distance of about 30-40 meters from the wooden barricade
astride lanes 1 and 2, upon reaching said wooden block
suddenly swerved to the left into lanes 3 and 4 at high speed
"napakabilis po ng dating ng truck." (29 tsn, Sept. 26, 1985) in
the process hitting them (Jeepney passenger) at the left side
up to where the reserve tire was in an oblique manner
"pahilis" (57 tsn, Sept. 26, 1985). The jeepney after it was
bumped by the truck due to the strong impact was thrown
"resting on its right side while the left side was on top of the
Bangketa (side walk)". The passengers of the jeepney and its
driver were injured including two passengers who died. The
left side of the jeepney suffered considerable damage as seen
in the picture (Exhs. 4 & 5-Tapales, pages 331-332, records)
taken while at the repair shop.
The Court is convinced of the narration of Santos to the effect
that the "gravel & sand" truck was running in high speed on
the good portion of E. Rodriguez Avenue (lane 1 & 2) before
the wooden barricade and (having in mind that it had just
delivered its load at the Corinthian Gardens) so that when
suddenly confronted with the wooden obstacle before it had
to avoid the same in a manner of a reflex reaction or knee-
jerk response by forthwith swerving to his left into the right
lanes (lanes 3 & 4). At the time of the bumping, the jeepney
was running on its right lane No. 4 and even during the
moments before said bumping, moving at moderate speed
thereon since lane No. 3 was then somewhat rough because
being repaired also according to Mondalia who has no reason
to prevaricate being herself one of those seriously injured.
The narration of Santos and Mondalia are convincing and
consistent in depicting the true facts of the case untainted by
vacillation and therefore, worthy to be relied upon. Their
story is forfeited and confirmed by the sketch drawn by the
investigating officer Pfc. F. Amaba, Traffic Division, NPD,
Quezon City who rushed to the scene of the mishap (Vide:
Resolution of Asst fiscal Elizabeth B. Reyes marked as Exhs.
7, 7-A, 7-B-Tapales, pp. 166-168, records; the Certified Copy
found on pages 598-600, ibid, with the attached police sketch
of Pfc. Amaba, marked as Exh. 8-Tapales on page 169, ibid;
certified copy of which is on page 594, ibid) indicating the
fact that the bumping indeed occurred at lane No. 4 and
showing how the gavel & sand truck is positioned in
relation to the jeepney. The said police sketch having been
made right after the accident is a piece of evidence worthy to
be relied upon showing the true facts of the bumping-
occurrence. The rule that official duty had been performed
(Sec.5(m), R-131, and also Sec. 38, R-a30, Rev. Rules of Court)
there being no evidence adduced and made of record to the
contrary is that said circumstance involving the two
vehicles had been the result of an official investigation and
must be taken as true by this Court.211awphi1
While ending up on the opposite lane is not conclusive proof
of fault in automobile collisions,22 the position of the two
vehicles, as depicted in the sketch of the police officers,
clearly shows that it was the truck that hit the jeepney. The
evidentiary records disclosed that the truck was speeding
along E. Rodriguez, heading towards Santolan Street, while
the passenger jeepney was coming from the opposite
direction. When the truck reached a certain point near the
Meralco Post No. J9-450, the front portion of the truck hit the
left middle side portion of the passenger jeepney, causing
damage to both vehicles and injuries to the driver and
passengers of the jeepney. The truck driver should have been
more careful, because, at that time, a portion of E. Rodriguez
Avenue was under repair and a wooden barricade was
placed in the middle thereof.
The Court likewise sustains the finding of the RTC that the
truck owner, Guballa, failed to rebut the presumption of
negligence in the hiring and supervision of his employee.
 @lendelacruz
Article 2176, in relation to Article 2180 of the Civil Code,
provides:
Art. 2176. Whoever by act or omission causes damage to
another, there being fault or negligence is obliged to pay for
the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a
quasi-delict and is governed by the provisions of this
Chapter.
xxxx
Art. 2180. The obligation imposed by Art. 2176 is demandable
not only for ones own acts or omissions but also for those of
persons for whom one is responsible.
xxxx
Employers shall be liable for the damage caused by their
employees and household helpers acting within the scope of
their assigned tasks even though the former are not engaged
in any business or industry.
xxxx
The responsibility treated of in this article shall cease when
the persons herein mentioned prove that they observed all
the diligence of a good father of a family to prevent damage.
Whenever an employees negligence causes damage or injury
to another, there instantly arises a presumption juris tantum
that the employer failed to exercise diligentissimi patris families
in the selection or supervision of his employee.23 Thus, in the
selection of prospective employees, employers are required
to examine them as to their qualification, experience and
service record. With respect to the supervision of employees,
employers must formulate standard operating procedures,
monitor their implementation, and impose disciplinary
measures for breaches thereof. These facts must be shown by
concrete proof, including documentary evidence.24 Thus, the
RTC committed no error in finding that the evidence
presented by respondent Guballa was wanting. It ruled:
x x x. As expected, defendant Jose Guballa, attempted to
overthrow this presumption of negligence by showing that
he had exercised the due diligence required of him by seeing
to it that the driver must check the vital parts of the vehicle
he is assigned to before he leaves the compound like the oil,
water, brakes, gasoline, horn (9 tsn, July 17, 1986); and that
Geronimo had been driving for him sometime in 1976 until
the collision in litigation came about (5-6 tsn, ibid); that
whenever his trucks gets out of the compound to make
deliveries, it is always accompanied with two (2) helpers (16-
17 tsn, ibid). This was all which he considered as selection
and supervision in compliance with the law to free himself
from any responsibility. This Court then cannot consider the
foregoing as equivalent to an exercise of all the care of a good
father of a family in the selection and supervision of his
driver Mariano Geronimo."25
WHEREFORE, the petition is GRANTED. The May 20, 1994
Decision and June 30, 1994 Resolution of the Court of
Appeals are REVERSED and SET ASIDE and the March 22,
1988 Decision of the Regional Trial Court, Branch 8, Manila,
is REINSTATED.
SO ORDERED.
65
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 176339 January 10, 2011
DO-ALL METALS INDUSTRIES, INC., SPS. DOMINGO
LIM and LELY KUNG LIM, Petitioners,
vs.
SECURITY BANK CORP., TITOLAIDO E.
PAYONGAYONG, EVYLENE C. SISON, PHIL.
INDUSTRIAL SECURITY AGENCY CORP. and GIL
SILOS, Respondents.
DECISION
ABAD, J.:
This case is about the propriety of awarding damages based
on claims embodied in the plaintiffs supplemental
complaint filed without prior payment of the corresponding
filing fees.
The Facts and the Case
From 1996 to 1997, Dragon Lady Industries, Inc., owned by
petitioner spouses Domingo Lim and Lely Kung Lim (the
Lims) took out loans from respondent Security Bank
Corporation (the Bank) that totaled P92,454,776.45. Unable to
pay the loans on time, the Lims assigned some of their real
properties to the Bank to secure the same, including a
building and the lot on which it stands (the property), located
at M. de Leon St., Santolan, Pasig City.1
In 1998 the Bank offered to lease the property to the Lims
through petitioner Do-All Metals Industries, Inc. (DMI)
primarily for business although the Lims were to use part of
the property as their residence. DMI and the Bank executed
a two-year lease contract from October 1, 1998 to September
30, 2000 but the Bank retained the right to pre-terminate the
lease. The contract also provided that, should the Bank
decide to sell the property, DMI shall have the right of first
refusal.
On December 3, 1999, before the lease was up, the Bank gave
notice to DMI that it was pre-terminating the lease on
December 31, 1999. Wanting to exercise its right of first
refusal, DMI tried to negotiate with the Bank the terms of its
purchase. DMI offered to pay the Bank P8 million for the
property but the latter rejected the offer, suggesting P15
million instead. DMI made a second offer of P10 million but
the Bank declined the same.
While the negotiations were on going, the Lims claimed that
they continued to use the property in their business. But the
Bank posted at the place private security guards from
Philippine Industrial Security Agency (PISA). The Lims also
claimed that on several occasions in 2000, the guards, on
instructions of the Bank representatives Titolaido
Payongayong and Evylene Sison, padlocked the entrances to
the place and barred the Lims as well as DMIs employees
from entering the property. One of the guards even pointed
his gun at one employee and shots were fired. Because of this,
DMI was unable to close several projects and contracts with
prospective clients. Further, the Lims alleged that they were
unable to retrieve assorted furniture, equipment, and
personal items left at the property.
 @lendelacruz 66

The Lims eventually filed a complaint with the Regional Trial
Court (RTC) of Pasig City for damages with prayer for the
issuance of a temporary restraining order (TRO) or
preliminary injunction against the Bank and its co-
defendants Payongayong, Sison, PISA, and Gil Silos.2
Answering the complaint, the Bank pointed out that the lease
contract allowed it to sell the property at any time provided
only that it gave DMI the right of first refusal. DMI had seven
days from notice to exercise its option. On September 10, 1999
the Bank gave notice to DMI that it intended to sell the
property to a third party. DMI asked for an extension of its
option to buy and the Bank granted it. But the parties could
not agree on a purchase price. The Bank required DMI to
vacate and turnover the property but it failed to do so. As a
result, the Banks buyer backed-out of the sale. Despite what
happened, the Bank and DMI continued negotiations for the
purchase of the leased premises but they came to no
agreement.
well as the counterclaims.5 DMI and the Lims filed a motion
for reconsideration but the CA denied the same, hence this
petition.
The Issues Presented
The issues presented in this case are:
1. Whether or not the RTC acquired jurisdiction to
hear and adjudicate plaintiffs supplemental
complaint against the Bank considering their failure
to pay the filing fees on the amounts of damages
they claim in it;
2. Whether or not the Bank is liable for the
intimidation and harassment committed against
DMI and its representatives; and

The Bank denied, on the other hand, that its guards harassed 3. Whether or not the Bank is liable to DMI and the
DMI and the Lims. To protect its property, the Bank began Lims for the machineries, equipment, and other
posting guards at the building even before it leased the same properties they allegedly lost after they were barred
to DMI. Indeed, this arrangement benefited both parties. The from the property.
Bank alleged that in October of 2000, when the parties could
not come to an agreement regarding the purchase of the The Courts Rulings
property, DMI vacated the same and peacefully turned over
possession to the Bank.
One. On the issue of jurisdiction, respondent Bank argues
that plaintiffs failure to pay the filing fees on their
The Bank offered no objection to the issuance of a TRO since supplemental complaint is fatal to their action.
it claimed that it never prevented DMI or its employees from
entering or leaving the building. For this reason, the RTC
But what the plaintiffs failed to pay was merely the filing fees
directed the Bank to allow DMI and the Lims to enter the
for their Supplemental Complaint. The RTC acquired
building and get the things they left there. The latter claimed,
jurisdiction over plaintiffs action from the moment they filed
however, that on entering the building, they were unable to
their original complaint accompanied by the payment of the
find the movable properties they left there. In a supplemental
filing fees due on the same. The plaintiffs non-payment of
complaint, DMI and the Lims alleged that the Bank
the additional filing fees due on their additional claims did
surreptitiously took such properties, resulting in additional
not divest the RTC of the jurisdiction it already had over the
actual damages to them of over P27 million.
case.6

The RTC set the pre-trial in the case for December 4, 2001. On
Two. As to the claim that Banks representatives and retained
that date, however, counsel for the Bank moved to reset the
guards harassed and intimidated DMIs employees and the
proceeding. The court denied the motion and allowed DMI
Lims, the RTC found ample proof of such wrongdoings and
and the Lims to present their evidence ex parte. The court
accordingly awarded damages to the plaintiffs. But the CA
eventually reconsidered its order but only after the plaintiffs
disagreed, discounting the testimony of the police officers
had already presented their evidence and were about to rest
regarding their investigations of the incidents since such
their case. The RTC declined to recall the plaintiffs witnesses
officers were not present when they happened. The CA may
for cross- examination but allowed the Bank to present its
be correct in a way but the plaintiffs presented eyewitnesses
evidence.3 This prompted the Bank to seek relief from the
who testified out of personal knowledge. The police officers
Court of Appeals (CA) and eventually from this Court but to
testified merely to point out that there had been trouble at the
no avail.4
place and their investigations yielded their findings.

During its turn at the trial, the Bank got to present only
The Bank belittles the testimonies of the petitioners
defendant Payongayong, a bank officer. For repeatedly
witnesses for having been presented ex parte before the clerk
canceling the hearings and incurring delays, the RTC
of court. But the ex parte hearing, having been properly
declared the Bank to have forfeited its right to present
authorized, cannot be assailed as less credible. It was the
additional evidence and deemed the case submitted for
Banks fault that it was unable to attend the hearing. It cannot
decision.
profit from its lack of diligence.

On September 30, 2004 the RTC rendered a decision in favor

of DMI and the Lims. It ordered the Bank to pay the plaintiffs
P27,974,564.00 as actual damages, P500,000.00 as moral
damages, P500,000 as exemplary damages, and P100,000.00
as attorneys fees. But the court absolved defendants
Payongayong, Sison, Silos and PISA of any liability.
The Bank moved for reconsideration of the decision,
questioning among other things the RTCs authority to grant
damages considering plaintiffs failure to pay the filing fees
on their supplemental complaint. The RTC denied the
motion. On appeal to the CA, the latter found for the Bank,
reversed the RTC decision, and dismissed the complaint as
Domingo Lim and some employees of DMI testified
regarding the Bank guards unmitigated use of their superior
strength and firepower. Their testimonies were never
refuted. Police Inspector Priscillo dela Paz testified that he
responded to several complaints regarding shooting
incidents at the leased premises and on one occasion, he
found Domingo Lim was locked in the building. When he
asked why Lim had been locked in, a Bank representative
told him that they had instructions to prevent anyone from
taking any property out of the premises. It was only after
Dela Paz talked to the Bank representative that they let Lim
out.7
 @lendelacruz
Payongayong, the Banks sole witness, denied charges of
harassment against the Banks representatives and the
guards. But his denial came merely from reports relayed to
him. They were not based on personal knowledge.1avvphil
While the lease may have already lapsed, the Bank had no
business harassing and intimidating the Lims and their
employees. The RTC was therefore correct in adjudging
moral damages, exemplary damages, and attorneys fees
against the Bank for the acts of their representatives and
building guards.
Three. As to the damages that plaintiffs claim under their
supplemental complaint, their stand is that the RTC
committed no error in admitting the complaint even if they
had not paid the filing fees due on it since such fees
constituted a lien anyway on the judgment award. But this
after-judgment lien, which implies that payment depends on
a successful execution of the judgment, applies to cases
where the filing fees were incorrectly assessed or paid or
where the court has discretion to fix the amount of the
award.8 None of these circumstances obtain in this case.
Here, the supplemental complaint specified from the
beginning the actual damages that the plaintiffs sought
against the Bank. Still plaintiffs paid no filing fees on the
same. And, while petitioners claim that they were willing to
pay the additional fees, they gave no reason for their
omission nor offered to pay the same. They merely said that
they did not yet pay the fees because the RTC had not
assessed them for it. But a supplemental complaint is like any
complaint and the rule is that the filing fees due on a
complaint need to be paid upon its filing.9 The rules do not
require the court to make special assessments in cases of
supplemental complaints.
To aggravate plaintiffs omission, although the Bank brought
up the question of their failure to pay additional filing fees in
its motion for reconsideration, plaintiffs made no effort to
make at least a late payment before the case could be
submitted for decision, assuming of course that the
prescription of their action had not then set it in. Clearly,
plaintiffs have no excuse for their continuous failure to pay
the fees they owed the court. Consequently, the trial court
should have treated their Supplemental Complaint as not
filed.
Plaintiffs of course point out that the Bank itself raised the
issue of non-payment of additional filing fees only after the
RTC had rendered its decision in the case. The implication is
that the Bank should be deemed to have waived its objection
to such omission. But it is not for a party to the case or even
for the trial court to waive the payment of the additional
filing fees due on the supplemental complaint. Only the
Supreme Court can grant exemptions to the payment of the
fees due the courts and these exemptions are embodied in its
rules.
Besides, as correctly pointed out by the CA, plaintiffs had the
burden of proving that the movable properties in question
had remained in the premises and that the bank was
responsible for their loss. The only evidence offered to prove
the loss was Domingo Lims testimony and some undated
and unsigned inventories. These were self-serving and
uncorroborated.
WHEREFORE, the Court PARTIALLY GRANTS the petition
and REINSTATES with modification the decision of the
Regional Trial Court of Pasig City in Civil Case 68184. The
Court DIRECTS respondent Security Bank Corporation to
pay petitioners DMI and spouses Domingo and Lely Kung
67
Lim damages in the following amounts: P500,000.00 as moral
damages, P500,000.00 as exemplary damages, and
P100,000.00 for attorneys fees. The Court DELETES the
award of actual damages of P27,974,564.00.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 125138 March 2, 1999
NICHOLAS Y. CERVANTES, petitioner,
vs.
COURT OF APPEALS AND THE PHILIPPINE AIR
LINES, INC., respondent.
PURISMA, J.:
This Petition for Review on certiorari assails the 25 July 1995
decision of the Court of Appeals 1 in CA GR CV No. 41407,
entitled "Nicholas Y. Cervantes vs. Philippine Air Lines Inc.",
affirming in toto the judgment of the trial court dismissing
petitioner's complaint for damages.
On March 27, 1989, the private respondent, Philippines Air
Lines, Inc. (PAL), issued to the herein petitioner, Nicholas
Cervantes (Cervantes), a round trip plane ticket for Manila-
Honolulu-Los Angeles-Honolulu-Manila, which ticket
expressly provided an expiry of date of one year from
issuance, i.e., until March 27, 1990. The issuance of the said
plane ticket was in compliance with a Compromise
Agreement entered into between the contending parties in
two previous suits, docketed as Civil Case Nos. 3392 and
3451 before the Regional Trial Court in Surigao City. 2
On March 23, 1990, four days before the expiry date of subject
ticket, the petitioner used it. Upon his arrival in Los Angeles
on the same day, he immediately booked his Los Angeles-
Manila return ticket with the PAL office, and it was
confirmed for the April 2, 1990 flight.
Upon learning that the same PAL plane would make a stop-
over in San Francisco, and considering that he would be there
on April 2, 1990, petitioner made arrangements with PAL for
him to board the flight In San Francisco instead of boarding
in Las Angeles.
On April 2, 1990, when the petitioner checked in at the PAL
counter in San Francisco, he was not allowed to board. The
PAL personnel concerned marked the following notation on
his ticket: "TICKET NOT ACCEPTED DUE EXPIRATION OF
VALIDITY."
Aggrieved, petitioner Cervantes filed a Complaint for
Damages, for breach of contract of carriage docketed as Civil
Case No. 3807 before Branch 32 of the Regional Trial Court of
Surigao del Norte in Surigao City. But the said complaint was
dismissed for lack of merit. 3
On September 20, 1993, petitioner interposed an appeal to the
Court of Appeals, which came out with a Decision, on July
25, 1995, upholding the dismissal of the case.
 @lendelacruz
On May 22, 1996, petitioner came to this Court via the
Petition for Review under consideration.
The issues raised for resolution are: (1) Whether or not the act
of the PAL agents in confirming subject ticket extended the
period of validity of petitioner's ticket; (2) Whether or not the
defense of lack of authority was correctly ruled upon; and (3)
Whether or not the denial of the award for damages was
proper.
To rule on the first issue, there is a need to quote the findings
below. As a rule, conclusions and findings of fact arrived at
by the trial court are entitled to great weight on appeal and
should not be disturbed unless for strong and cogent reasons.
4 Philippines (TSN, Testimony of Nicholas
The facts of the case as found by the lower court 5 are, as
follows:
The plane ticket itself (Exhibit A for
plaintiff; Exhibit 1 for defendant) provides
that it is not valid after March 27, 1990.
(Exhibit 1-F). It is also stipulated in
paragraph 8 of the Conditions of Contract
(Exhibit 1, page 2) as follows:
8. This ticket is good for
carriage for one year from
date of issue, except as
otherwise provided in
this ticket, in carrier's
tariffs, conditions of
carriage, or related
regulations. The fare for
carriage hereunder is
subject to change prior
to commencement of
carriage. Carrier may
refuse transportation if
the applicable fare has
not been paid. 6
The question on the validity of subject ticket can be resolved
in light of the ruling in the case of Lufthansa vs. Court of
Appeals. 7 In the said case, the Tolentinos were issued first
class tickets on April 3, 1982, which will be valid until April
10, 1983. On June 10, 1982, they changed their
accommodations to economy class but the replacement
tickets still contained the same restriction. On May 7, 1983,
Tolentino requested that subject tickets be extended, which
request was refused by the petitioner on the ground that the
said tickets had already expired. The non-extension of their
tickets prompted the Tolentinos to bring a complaint for
breach of contract of carriage against the petitioner. In ruling
against the award of damages, the Court held that the "ticket
constitute the contract between the parties. It is axiomatic
that when the terms are clear and leave no doubt as to the
intention of the contracting parties, contracts are to be
interpreted according to their literal meaning."
In his effort to evade this inevitable conclusion, petitioner
theorized that the confirmation by the PAL's agents in Los
Angeles and San Francisco changed the compromise
agreement between the parties.
As aptly by the appellate court:
. . . on March 23, 1990, he was aware of the risk that
his ticket could expire, as it did, before he returned
68
to the Philippines.' (pp. 320-321, Original Records)
8
The question is: "Did these two (2) employees, in
effect, extend the validity or lifetime of the ticket in
question? The answer is in the negative. Both had
no authority to do so. Appellant knew this from
the very start when he called up the Legal
Department of appellee in the Philippines before
he left for the United States of America. He had
first hand knowledge that the ticket in question
would expire on March 27, 1990 and that to secure
an extension, he would have to file a written
request for extension at the PAL's office in the
Cervantes, August 2, 1991, pp. 20-23). Despite this
knowledge, appellant persisted to use the ticket in
question." 9
From the aforestated facts, it can be gleaned that the
petitioner was fully aware that there was a need to send a
letter to the legal counsel of PAL for the extension of the
period of validity of his ticket.
Since the PAL agents are not privy to the said Agreement and
petitioner knew that a written request to the legal counsel of
PAL was necessary, he cannot use what the PAL agents did
to his advantage. The said agents, according to the Court of
Appeals, 10 acted without authority when they confirmed the
flights of the petitioner.
Under Article 1989 11 of the New Civil Code, the acts an agent
beyond the scope of his authority do not bind the principal,
unless the latter ratifies the same expressly or impliedly.
Furthermore, when the third person (herein petitioner)
knows that the agent was acting beyond his power or
authority, the principal cannot be held liable for the acts of
the agent. If the said third person is aware of such limits of
authority, he is to blame, and is not entitled to recover
damages from the agent, unless the latter undertook to secure
the principal's ratification. 12
Anent the second issue, petitioner's stance that the defense of
lack of authority on the part of the PAL employees was
deemed waived under Rule 9, Section 2 of the Revised Rules
of Court, is unsustainable. Thereunder, failure of a party to
put up defenses in their answer or in a motion to dismiss is a
waiver thereof.
Petitioner stresses that the alleged lack of authority of the
PAL employees was neither raised in the answer nor in the
motion to dismiss. But records show that the question of
whether there was authority on the part of the PAL
employees was acted upon by the trial court when Nicholas
Cervantes was presented as a witness and the depositions of
the PAL employees, Georgina M. Reyes and Ruth Villanueva,
were presented.
The admission by Cervantes that he was told by PAL's legal
counsel that he had to submit a letter requesting for an
extension of the validity of subject tickets was tantamount to
knowledge on his part that the PAL employees had no
authority to extend the validity of subject tickets and only
PAL's legal counsel was authorized to do so.
However, notwithstanding PAL's failure to raise the defense
of lack of authority of the said PAL agents in its answer or in
a motion to dismiss, the omission was cured since the said
issue was litigated upon, as shown by the testimony of the
 @lendelacruz
petitioner in the course of trial. Rule 10, Section 5 of the 1997
Rules of Civil Procedure provides:
Sec. 5. Amendment to conform, or
authorize presentation of evidence.
When issues not raised by the pleadings
are tried with express or implied consent
of the parties, as if they had been raised in
the pleadings. Such amendment of the
pleadings as may be necessary to cause
them to conform to the evidence and to
raise these issues may be made upon
motion of any party at any time, even after
judgment; but failure to amend does not
affect the result of the trial of these issues.
...
Thus, "when evidence is presented by one party, with the
express or implied consent of the adverse party, as to issues
not alleged in the pleadings, judgment may be rendered
validly as regards the said issue, which shall be treated as if
they have been raised in the pleadings. There is implied
consent to the evidence thus presented when the adverse
party fails to object thereto." 13
Re: the third issue, an award of damages is improper because
petitioner failed to show that PAL acted in bad faith in
refusing to allow him to board its plane in San Francisco.
In awarding moral damages for breach of contract of
carriage, the breach must be wanton and deliberately
injurious or the one responsible acted fraudulently or with
malice or bad faith. 14 Petitioner knew there was a strong
possibility that he could not use the subject ticket, so much so
that he bought a back-up ticket to ensure his departure.
Should there be a finding of bad faith, we are of the opinion
that it should be on the petitioner. What the employees of
PAL did was one of simple negligence. No injury resulted on
the part of petitioner because he had a back-up ticket should
PAL refuse to accommodate him with the use of subject
ticket.
Neither can the claim for exemplary damages be upheld.
Such kind of damages is imposed by way of example or
correction for the public good, and the existence of bad faith
is established. The wrongful act must be accompanied by bad
faith, and an award of damages would be allowed only if the
guilty party acted in a wanton, fraudulent, reckless or
malevolent manner. 15 Here, there is no showing that PAL
acted in such a manner. An award for attorney's fees is also
improper.
WHEREFORE, the Petition is DENIED and the decision of
the Court of Appeals dated July 25, 1995 AFFIRMED in toto.
No pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 164703 May 4, 2010
69
ALLAN C. GO, doing business under the name and style
"ACG Express Liner," Petitioner,
vs.
MORTIMER F. CORDERO, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 164747
MORTIMER F. CORDERO, Petitioner,
vs.
ALLAN C. GO, doing business under the name and style
"ACG Express Liner," FELIPE M. LANDICHO and
VINCENT D. TECSON, Respondents.
DECISION
VILLARAMA, JR., J.:
For review is the Decision1 dated March 16, 2004 as modified
by the Resolution2 dated July 22, 2004 of the Court of Appeals
(CA) in CA-G.R. CV No. 69113, which affirmed with
modifications the Decision3 dated May 31, 2000 of the
Regional Trial Court (RTC) of Quezon City, Branch 85 in
Civil Case No. 98-35332.
The factual antecedents:
Sometime in 1996, Mortimer F. Cordero, Vice-President of
Pamana Marketing Corporation (Pamana), ventured into the
business of marketing inter-island passenger vessels. After
contacting various overseas fast ferry manufacturers from all
over the world, he came to meet Tony Robinson, an
Australian national based in Brisbane, Australia, who is the
Managing Director of Aluminium Fast Ferries Australia
(AFFA).
Between June and August 1997, Robinson signed documents
appointing Cordero as the exclusive distributor of AFFA
catamaran and other fast ferry vessels in the Philippines. As
such exclusive distributor, Cordero offered for sale to
prospective buyers the 25-meter Aluminium Passenger
catamaran known as the SEACAT 25.4
After negotiations with Felipe Landicho and Vincent Tecson,
lawyers of Allan C. Go who is the owner/operator of ACG
Express Liner of Cebu City, a single proprietorship, Cordero
was able to close a deal for the purchase of two (2) SEACAT
25 as evidenced by the Memorandum of Agreement dated
August 7, 1997.5 Accordingly, the parties executed
Shipbuilding Contract No. 7825 for one (1) high-speed
catamaran (SEACAT 25) for the price of US$1,465,512.00.6 Per
agreement between Robinson and Cordero, the latter shall
receive commissions totalling US$328,742.00, or 22.43% of the
purchase price, from the sale of each vessel.7
Cordero made two (2) trips to the AFFA Shipyard in
Brisbane, Australia, and on one (1) occasion even
accompanied Go and his family and Landicho, to monitor the
progress of the building of the vessel. He shouldered all the
expenses for airfare, food, hotel accommodations,
transportation and entertainment during these trips. He also
spent for long distance telephone calls to communicate
regularly with Robinson, Go, Tecson and Landicho.
However, Cordero later discovered that Go was dealing
directly with Robinson when he was informed by Dennis
Padua of Wartsila Philippines that Go was canvassing for a
second catamaran engine from their company which
 @lendelacruz
provided the ship engine for the first SEACAT 25. Padua told
Cordero that Go instructed him to fax the requested
quotation of the second engine to the Park Royal Hotel in
Brisbane where Go was then staying. Cordero tried to contact
Go and Landicho to confirm the matter but they were
nowhere to be found, while Robinson refused to answer his
calls. Cordero immediately flew to Brisbane to clarify matters
with Robinson, only to find out that Go and Landicho were
already there in Brisbane negotiating for the sale of the
second SEACAT 25. Despite repeated follow-up calls, no
explanation was given by Robinson, Go, Landicho and
Tecson who even made Cordero believe there would be no
further sale between AFFA and ACG Express Liner.
In a handwritten letter dated June 24, 1998, Cordero informed
Go that such act of dealing directly with Robinson violated
his exclusive distributorship and demanded that they respect
the same, without prejudice to legal action against him and
Robinson should they fail to heed the same.8 Corderos
lawyer, Atty. Ernesto A. Tabujara, Jr. of ACCRA law firm,
also wrote ACG Express Liner assailing the fraudulent
actuations and misrepresentations committed by Go in
connivance with his lawyers (Landicho and Tecson) in
breach of Corderos exclusive distributorship appointment.9
Having been apprised of Corderos demand letter, Thyne &
Macartney, the lawyer of AFFA and Robinson, faxed a letter
to ACCRA law firm asserting that the appointment of
Cordero as AFFAs distributor was for the purpose of one (1)
transaction only, that is, the purchase of a high-speed
catamaran vessel by ACG Express Liner in August 1997. The
letter further stated that Cordero was offered the exclusive
distributorship, the terms of which were contained in a draft
agreement which Cordero allegedly failed to return to AFFA
within a reasonable time, and which offer is already being
revoked by AFFA.10
As to the response of Go, Landicho and Tecson to his demand
letter, Cordero testified before the trial court that on the same
day, Landicho, acting on behalf of Go, talked to him over the
telephone and offered to amicably settle their dispute. Tecson
and Landicho offered to convince Go to honor his exclusive
distributorship with AFFA and to purchase all vessels for
ACG Express Liner through him for the next three (3) years.
In an effort to amicably settle the matter, Landicho, acting in
behalf of Go, set up a meeting with Cordero on June 29, 1998
between 9:30 p.m. to 10:30 p.m. at the Mactan Island Resort
Hotel lobby. On said date, however, only Landicho and
Tecson came and no reason was given for Gos absence.
Tecson and Landicho proposed that they will convince Go to
pay him US$1,500,000.00 on the condition that they will get a
cut of 20%. And so it was agreed between him, Landicho and
Tecson that the latter would give him a weekly status report
and that the matter will be settled in three (3) to four (4)
weeks and neither party will file an action against each other
until a final report on the proposed settlement. No such
report was made by either Tecson or Landicho who, it turned
out, had no intention to do so and were just buying time as
the catamaran vessel was due to arrive from Australia.
Cordero then filed a complaint with the Bureau of Customs
(BOC) to prohibit the entry of SEACAT 25 from Australia
based on misdeclaration and undervaluation. Consequently,
an Alert Order was issued by Acting BOC Commissioner
Nelson Tan for the vessel which in fact arrived on July 17,
1998. Cordero claimed that Go and Robinson had conspired
to undervalue the vessel by around US$500,000.00.11
On August 21, 1998, Cordero instituted Civil Case No. 98-
35332 seeking to hold Robinson, Go, Tecson and Landicho
liable jointly and solidarily for conniving and conspiring
together in violating his exclusive distributorship in bad faith
70
and wanton disregard of his rights, thus depriving him of his
due commissions (balance of unpaid commission from the
sale of the first vessel in the amount of US$31,522.01 and
unpaid commission for the sale of the second vessel in the
amount of US$328,742.00) and causing him actual, moral and
exemplary damages, including P800,000.00 representing
expenses for airplane travel to Australia, telecommunications
bills and entertainment, on account of AFFAs untimely
cancellation of the exclusive distributorship agreement.
Cordero also prayed for the award of moral and exemplary
damages, as well as attorneys fees and litigation expenses.12
Robinson filed a motion to dismiss grounded on lack of
jurisdiction over his person and failure to state a cause of
action, asserting that there was no act committed in violation
of the distributorship agreement. Said motion was denied by
the trial court on December 20, 1999. Robinson was likewise
declared in default for failure to file his answer within the
period granted by the trial court.13 As for Go and Tecson,
their motion to dismiss based on failure to state a cause of
action was likewise denied by the trial court on February 26,
1999.14 Subsequently, they filed their Answer denying that
they have anything to do with the termination by AFFA of
Corderos authority as exclusive distributor in the
Philippines. On the contrary, they averred it was Cordero
who stopped communicating with Go in connection with the
purchase of the first vessel from AFFA and was not doing his
part in making progress status reports and airing the clients
grievances to his principal, AFFA, such that Go engaged the
services of Landicho to fly to Australia and attend to the
documents needed for shipment of the vessel to the
Philippines. As to the inquiry for the Philippine price for a
Wartsila ship engine for AFFAs other on-going vessel
construction, this was merely requested by Robinson but
which Cordero misinterpreted as indication that Go was
buying a second vessel. Moreover, Landicho and Tecson had
no transaction whatsoever with Cordero who had no
document to show any such shipbuilding contract. As to the
supposed meeting to settle their dispute, this was due to the
malicious demand of Cordero to be given US$3,000,000 as
otherwise he will expose in the media the alleged
undervaluation of the vessel with the BOC. In any case,
Cordero no longer had cause of action for his commission for
the sale of the second vessel under the memorandum of
agreement dated August 7, 1997 considering the termination
of his authority by AFFAs lawyers on June 26, 1998. 15
Pre-trial was reset twice to afford the parties opportunity to
reach a settlement. However, on motion filed by Cordero
through counsel, the trial court reconsidered the resetting of
the pre-trial to another date for the third time as requested by
Go, Tecson and Landicho, in view of the latters failure to
appear at the pre-trial conference on January 7, 2000 despite
due notice. The trial court further confirmed that said
defendants misled the trial court in moving for continuance
during the pre-trial conference held on December 10, 1999,
purportedly to go abroad for the holiday season when in
truth a Hold-Departure Order had been issued against
them.16 Accordingly, plaintiff Cordero was allowed to
present his evidence ex parte.
Corderos testimony regarding his transaction with
defendants Go, Landicho and Tecson, and the latters offer of
settlement, was corroborated by his counsel who also took
the witness stand. Further, documentary evidence including
photographs taken of the June 29, 1998 meeting with
Landicho, Tecson and Atty. Tabujara at Shangri-las Mactan
Island Resort, photographs taken in Brisbane showing
Cordero, Go with his family, Robinson and Landicho, and
also various documents, communications, vouchers and
bank transmittals were presented to prove that: (1) Cordero
was properly authorized and actually transacted in behalf of
 @lendelacruz
AFFA as exclusive distributor in the Philippines; (2) Cordero
spent considerable sums of money in pursuance of the
contract with Go and ACG Express Liner; and (3) AFFA
through Robinson paid Cordero his commissions from each
scheduled payment made by Go for the first SEACAT 25
purchased from AFFA pursuant to Shipbuilding Contract
No. 7825.17
On May 31, 2000, the trial court rendered its decision, the
dispositive portion of which reads as follows:
WHEREFORE, PREMISES CONSIDERED, judgment is
hereby rendered in favor of Plaintiff and against defendants
Allan C. Go, Tony Robinson, Felipe Landicho, and Vincent
Tecson. As prayed for, defendants are hereby ordered to pay
Plaintiff jointly and solidarily, the following:
1. On the First Cause of Action, the sum total of
SIXTEEN MILLION TWO HUNDRED NINETY
ONE THOUSAND THREE HUNDRED FIFTY
TWO AND FORTY THREE CENTAVOS
(P16,291,352.43) as actual damages with legal
interest from 25 June 1998 until fully paid;
2. On the Second Cause of Action, the sum of ONE
MILLION PESOS (P1,000,000.00) as moral damages;
3. On the Third Cause of Action, the sum of ONE
MILLION PESOS (P1,000,000.00) as exemplary
damages; and
4. On the Fourth Cause of Action, the sum of ONE
MILLION PESOS (P1,000,000.00) as attorneys fees;
Costs against the defendants.
SO ORDERED.18
Go, Robinson, Landicho and Tecson filed a motion for new
trial, claiming that they have been unduly prejudiced by the
negligence of their counsel who was allegedly unaware that
the pre-trial conference on January 28, 2000 did not push
through for the reason that Cordero was then allowed to
present his evidence ex-parte, as he had assumed that the
said ex-parte hearing was being conducted only against
Robinson who was earlier declared in default.19 In its Order
dated July 28, 2000, the trial court denied the motion for new
trial.20 In the same order, Corderos motion for execution
pending appeal was granted. Defendants moved to
reconsider the said order insofar as it granted the motion for
execution pending appeal.21 On August 8, 2000, they filed a
notice of appeal.22
On August 18, 2000, the trial court denied the motion for
reconsideration and on August 21, 2000, the writ of execution
pending appeal was issued.23 Meanwhile, the notice of
appeal was denied for failure to pay the appellate court
docket fee within the prescribed period.24 Defendants filed a
motion for reconsideration and to transmit the case records
to the CA.25
On September 29, 2000, the CA issued a temporary
restraining order at the instance of defendants in the
certiorari case they filed with said court docketed as CA-G.R.
SP No. 60354 questioning the execution orders issued by the
trial court. Consequently, as requested by the defendants, the
trial court recalled and set aside its November 6, 2000 Order
granting the ex-parte motion for release of garnished funds,
cancelled the scheduled public auction sale of levied real
properties, and denied the ex-parte Motion for Break-Open
71
Order and Ex-Parte Motion for Encashment of Check filed by
Cordero.26 On November 29, 2000, the trial court
reconsidered its Order dated August 21, 2000 denying due
course to the notice of appeal and forthwith directed the
transmittal of the records to the CA.27
On January 29, 2001, the CA rendered judgment granting the
petition for certiorari in CA-G.R. SP No. 60354 and setting
aside the trial courts orders of execution pending appeal.
Cordero appealed the said judgment in a petition for review
filed with this Court which was eventually denied under our
Decision dated September 17, 2002.28
On March 16, 2004, the CA in CA-G.R. CV No. 69113 affirmed
the trial court (1) in allowing Cordero to present his evidence
ex-parte after the unjustified failure of appellants (Go, Tecson
and Landicho) to appear at the pre-trial conference despite
due notice; (2) in finding that it was Cordero and not Pamana
who was appointed by AFFA as the exclusive distributor in
the Philippines of its SEACAT 25 and other fast ferry vessels,
which is not limited to the sale of one (1) such catamaran to
Go on August 7, 1997; and (3) in finding that Cordero is
entitled to a commission per vessel sold for AFFA through
his efforts in the amount equivalent to 22.43% of the price of
each vessel or US$328,742.00, and with payments of
US$297,219.91 having been made to Cordero, there remained
a balance of US$31,522.09 still due to him. The CA sustained
the trial court in ruling that Cordero is entitled to damages
for the breach of his exclusive distributorship agreement
with AFFA. However, it held that Cordero is entitled only to
commission for the sale of the first catamaran obtained
through his efforts with the remaining unpaid sum of
US$31,522.09 or P1,355,449.90 (on the basis of
US$1.00=P43.00 rate) with interest at 6% per annum from the
time of the filing of the complaint until the same is fully paid.
As to the P800,000.00 representing expenses incurred by
Cordero for transportation, phone bills, entertainment, food
and lodging, the CA declared there was no basis for such
award, the same being the logical and necessary
consequences of the exclusive distributorship agreement
which are normal in the field of sales and distribution, and
the expenditures having redounded to the benefit of the
distributor (Cordero).
On the amounts awarded by the trial court as moral and
exemplary damages, as well as attorneys fees, the CA
reduced the same to P500,000.00, P300,000.00 and P50,000.00,
respectively. Appellants were held solidarily liable pursuant
to the provisions of Article 1207 in relation to Articles 19, 20,
21 and 22 of the New Civil Code. The CA further ruled that
no error was committed by the trial court in denying their
motion for new trial, which said court found to be pro forma
and did not raise any substantial matter as to warrant the
conduct of another trial.
By Resolution dated July 22, 2004, the CA denied the motions
for reconsideration respectively filed by the appellants and
appellee, and affirmed the Decision dated March 16, 2004
with the sole modification that the legal interest of 6% per
annum shall start to run from June 24, 1998 until the finality
of the decision, and the rate of 12% interest per annum shall
apply once the decision becomes final and executory until the
judgment has been satisfied.
The case before us is a consolidation of the petitions for
review under Rule 45 separately filed by Go (G.R. No.
164703) and Cordero (G.R. No. 164747) in which petitioners
raised the following arguments:
G.R. No. 164703
 @lendelacruz
(Petitioner Go)
I. THE HONORABLE COURT OF APPEALS
DISREGARDED THE RULES OF COURT AND PERTINENT
JURISPRUDENCE AND ACTED WITH GRAVE ABUSE OF
DISCRETION IN NOT RULING THAT THE RESPONDENT
IS NOT THE REAL PARTY-IN-INTEREST AND IN NOT
DISMISSING THE INSTANT CASE ON THE GROUND OF
LACK OF CAUSE OF ACTION;
II. THE HONORABLE COURT OF APPEALS IGNORED
THE LAW AND JURISPRUDENCE AND ACTED WITH
GRAVE ABUSE OF DISCRETION IN HOLDING HEREIN
PETITIONER RESPONSIBLE FOR THE BREACH IN THE
ALLEGED EXCLUSIVE DISTRIBUTORSHIP AGREEMENT
WITH ALUMINIUM FAST FERRIES AUSTRALIA;
III. THE HONORABLE APPELLATE COURT MISAPPLIED
THE LAW AND ACTED WITH GRAVE ABUSE OF
DISCRETION IN FINDING PETITIONER LIABLE IN
SOLIDUM WITH THE CO-DEFENDANTS WITH RESPECT
TO THE CLAIMS OF RESPONDENT;
IV. THE HONORABLE COURT OF APPEALS MISAPPLIED
LAW AND JURISPRUDENCE AND GRAVELY ABUSED
ITS DISCRETION WHEN IT FOUND PETITIONER LIABLE
FOR UNPAID COMMISSIONS, DAMAGES, ATTORNEYS
FEES, AND LITIGATION EXPENSES; and
V. THE HONORABLE APPELLATE COURT ACTED
CONTRARY TO LAW AND JURISPRUDENCE AND
GRAVELY ABUSED ITS DISCRETION WHEN IT
EFFECTIVELY DEPRIVED HEREIN PETITIONER OF HIS
RIGHT TO DUE PROCESS BY AFFIRMING THE LOWER
COURTS DENIAL OF PETITIONERS MOTION FOR NEW
TRIAL.29
G.R. No. 164747
(Petitioner Cordero)
I.
THE COURT OF APPEALS ERRED IN NOT SUSTAINING
THE JUDGMENT OF THE TRIAL COURT AWARDING
PETITIONER ACTUAL DAMAGES FOR HIS
COMMISSION FOR THE SALE OF THE SECOND VESSEL,
SINCE THERE IS SUFFICIENT EVIDENCE ON RECORD
WHICH PROVES THAT THERE WAS A SECOND SALE OF
A VESSEL.
A. THE MEMORANDUM OF AGREEMENT DATED 7
AUGUST 1997 PROVIDES THAT RESPONDENT GO WAS
CONTRACTUALLY BOUND TO BUY TWO (2) VESSELS
FROM AFFA.
B. RESPONDENT GOS POSITION PAPER AND
COUNTER-AFFIDAVIT/POSITION PAPER THAT WERE
FILED BEFORE THE BUREAU OF CUSTOMS, ADMITS
UNDER OATH THAT HE HAD INDEED PURCHASED A
SECOND VESSEL FROM AFFA.
C. RESPONDENTS ADMITTED IN THEIR PRE-TRIAL
BRIEF THAT THEY HAD PURCHASED A SECOND
VESSEL.
II.
72
THE COURT OF APPEALS ERRED IN RULING THAT
PETITIONER IS NOT ENTITLED TO HIS COMMISSIONS
FOR THE PURCHASE OF A SECOND VESSEL, SINCE IT
WAS PETITIONERS EFFORTS WHICH ACTUALLY
FACILITATED AND SET-UP THE TRANSACTION FOR
RESPONDENTS.
III.
THE COURT OF APPEALS ERRED IN NOT IMPOSING
THE PROPER LEGAL INTEREST RATE ON
RESPONDENTS UNPAID OBLIGATION WHICH
SHOULD BE TWELVE PERCENT (12%) FROM THE TIME
OF THE BREACH OF THE OBLIGATION.
IV.
THE COURT OF APPEALS ERRED IN NOT SUSTAINING
THE ORIGINAL AMOUNT OF CONSEQUENTIAL
DAMAGES AWARDED TO PETITIONER BY THE TRIAL
COURT CONSIDERING THE BAD FAITH AND
FRAUDULENT CONDUCT OF RESPONDENTS IN
MISAPPROPRIATING THE MONEY OF PETITIONER.30
The controversy boils down to two (2) main issues: (1)
whether petitioner Cordero has the legal personality to sue
the respondents for breach of contract; and (2) whether the
respondents may be held liable for damages to Cordero for
his unpaid commissions and termination of his exclusive
distributorship appointment by the principal, AFFA.
I. Real Party-in-Interest
First, on the issue of whether the case had been filed by the
real party-in-interest as required by Section 2, Rule 3 of the
Rules of Court, which defines such party as the one (1) to be
benefited or injured by the judgment in the suit, or the party
entitled to the avails of the suit. The purposes of this
provision are: 1) to prevent the prosecution of actions by
persons without any right, title or interest in the case; 2) to
require that the actual party entitled to legal relief be the one
to prosecute the action; 3) to avoid a multiplicity of suits; and
4) to discourage litigation and keep it within certain bounds,
pursuant to sound public policy.31 A case is dismissible for
lack of personality to sue upon proof that the plaintiff is not
the real party-in-interest, hence grounded on failure to state
a cause of action.32
On this issue, we agree with the CA in ruling that it was
Cordero and not Pamana who is the exclusive distributor of
AFFA in the Philippines as shown by the Certification dated
June 1, 1997 issued by Tony Robinson.33 Petitioner Go
mentions the following documents also signed by
respondent Robinson which state that "Pamana Marketing
Corporation represented by Mr. Mortimer F. Cordero" was
actually the exclusive distributor: (1) letter dated 1 June
199734; (2) certification dated 5 August 199735; and (3) letter
dated 5 August 1997 addressed to petitioner Cordero
concerning "commissions to be paid to Pamana Marketing
Corporation."36 Such apparent inconsistency in naming
AFFAs exclusive distributor in the Philippines is of no
moment. For all intents and purposes, Robinson and AFFA
dealt only with Cordero who alone made decisions in the
performance of the exclusive distributorship, as with other
clients to whom he had similarly offered AFFAs fast ferry
vessels. Moreover, the stipulated commissions from each
progress payments made by Go were directly paid by
Robinson to Cordero.37 Respondents Landicho and Tecson
were only too aware of Corderos authority as the person
who was appointed and acted as exclusive distributor of
 @lendelacruz
AFFA, which can be gleaned from their act of immediately
furnishing him with copies of bank transmittals everytime
Go remits payment to Robinson, who in turn transfers a
portion of funds received to the bank account of Cordero in
the Philippines as his commission. Out of these partial
payments of his commission, Cordero would still give
Landicho and Tecson their respective "commission," or "cuts"
from his own commission. Respondents Landicho and
Tecson failed to refute the evidence submitted by Cordero
consisting of receipts signed by them. Said amounts were
apart from the earlier expenses shouldered by Cordero for
Landichos airline tickets, transportation, food and hotel
accommodations for the trip to Australia.38
Moreover, petitioner Go, Landicho and Tecson never raised
petitioner Corderos lack of personality to sue on behalf of
Pamana,39 and did so only before the CA when they
contended that it is Pamana and not Cordero, who was
appointed and acted as exclusive distributor for AFFA.40 It
was Robinson who argued in support of his motion to
dismiss that as far as said defendant is concerned, the real
party plaintiff appears to be Pamana, against the real party
defendant which is AFFA.41 As already mentioned, the trial
court denied the motion to dismiss filed by Robinson.
We find no error committed by the trial court in overruling
Robinsons objection over the improper resort to summons
by publication upon a foreign national like him and in an
action in personam, notwithstanding that he raised it in a
special appearance specifically raising the issue of lack of
jurisdiction over his person. Courts acquire jurisdiction over
the plaintiffs upon the filing of the complaint, while
jurisdiction over the defendants in a civil case is acquired
either through the service of summons upon them in the
manner required by law or through their voluntary
appearance in court and their submission to its authority.42 A
party who makes a special appearance in court challenging
the jurisdiction of said court based on the ground of invalid
service of summons is not deemed to have submitted himself
to the jurisdiction of the court.43
In this case, however, although the Motion to Dismiss filed
by Robinson specifically stated as one (1) of the grounds the
lack of "personal jurisdiction," it must be noted that he had
earlier filed a Motion for Time to file an appropriate
responsive pleading even beyond the time provided in the
summons by publication.44 Such motion did not state that it
was a conditional appearance entered to question the
regularity of the service of summons, but an appearance
submitting to the jurisdiction of the court by acknowledging
the summons by publication issued by the court and praying
for additional time to file a responsive pleading.
Consequently, Robinson having acknowledged the
summons by publication and also having invoked the
jurisdiction of the trial court to secure affirmative relief in his
motion for additional time, he effectively submitted
voluntarily to the trial courts jurisdiction. He is now
estopped from asserting otherwise, even before this Court.45
II. Breach of Exclusive Distributorship, Contractual
Interference and Respondents Liability for Damages
In Yu v. Court of Appeals,46 this Court ruled that the right to
perform an exclusive distributorship agreement and to reap
the profits resulting from such performance are proprietary
rights which a party may protect. Thus, injunction is the
appropriate remedy to prevent a wrongful interference with
contracts by strangers to such contracts where the legal
remedy is insufficient and the resulting injury is irreparable.
In that case, the former dealer of the same goods purchased
the merchandise from the manufacturer in England through
73
a trading firm in West Germany and sold these in the
Philippines. We held that the rights granted to the petitioner
under the exclusive distributorship agreement may not be
diminished nor rendered illusory by the expedient act of
utilizing or interposing a person or firm to obtain goods for
which the exclusive distributorship was conceptualized, at
the expense of the sole authorized distributor.47
In the case at bar, it was established that petitioner Cordero
was not paid the balance of his commission by respondent
Robinson. From the time petitioner Go and respondent
Landicho directly dealt with respondent Robinson in
Brisbane, and ceased communicating through petitioner
Cordero as the exclusive distributor of AFFA in the
Philippines, Cordero was no longer informed of payments
remitted to AFFA in Brisbane. In other words, Cordero had
clearly been cut off from the transaction until the arrival of
the first SEACAT 25 which was sold through his efforts.
When Cordero complained to Go, Robinson, Landicho and
Tecson about their acts prejudicial to his rights and
demanded that they respect his exclusive distributorship, Go
simply let his lawyers led by Landicho and Tecson handle the
matter and tried to settle it by promising to pay a certain
amount and to purchase high-speed catamarans through
Cordero. However, Cordero was not paid anything and
worse, AFFA through its lawyer in Australia even terminated
his exclusive dealership insisting that his services were
engaged for only one (1) transaction, that is, the purchase of
the first SEACAT 25 in August 1997.
Petitioner Go argues that unlike in Yu v. Court of Appeals 48
there is no conclusive proof adduced by petitioner Cordero
that they actually purchased a second SEACAT 25 directly
from AFFA and hence there was no violation of the exclusive
distributorship agreement. Further, he contends that the CA
gravely abused its discretion in holding them solidarily liable
to Cordero, relying on Articles 1207, 19 and 21 of the Civil
Code despite absence of evidence, documentary or
testimonial, showing that they conspired to defeat the very
purpose of the exclusive distributorship agreement.49
We find that contrary to the claims of petitioner Cordero,
there was indeed no sufficient evidence that respondents
actually purchased a second SEACAT 25 directly from AFFA.
But this circumstance will not absolve respondents from
liability for invading Corderos rights under the exclusive
distributorship. Respondents clearly acted in bad faith in
bypassing Cordero as they completed the remaining
payments to AFFA without advising him and furnishing him
with copies of the bank transmittals as they previously did,
and directly dealt with AFFA through Robinson regarding
arrangements for the arrival of the first SEACAT 25 in Manila
and negotiations for the purchase of the second vessel
pursuant to the Memorandum of Agreement which Cordero
signed in behalf of AFFA. As a result of respondents
actuations, Cordero incurred losses as he was not paid the
balance of his commission from the sale of the first vessel and
his exclusive distributorship revoked by AFFA.
Petitioner Go contends that the trial and appellate courts
erred in holding them solidarily liable for Corderos unpaid
commission, which is the sole obligation of the principal
AFFA. It was Robinson on behalf of AFFA who, in the letter
dated August 5, 1997 addressed to Cordero, undertook to
pay commission payments to Pamana on a staggered
progress payment plan in the form of percentage of the
commission per payment. AFFA explicitly committed that it
will, "upon receipt of progress payments, pay to Pamana
their full commission by telegraphic transfer to an account
nominated by Pamana within one to two days of [AFFA]
receiving such payments."50 Petitioner Go further maintains
 @lendelacruz
that he had not in any way violated or caused the termination
of the exclusive distributorship agreement between Cordero
and AFFA; he had also paid in full the first and only vessel
he purchased from AFFA.51
While it is true that a third person cannot possibly be sued
for breach of contract because only parties can breach
contractual provisions, a contracting party may sue a third
person not for breach but for inducing another to commit
such breach.
Article 1314 of the Civil Code provides:
Art. 1314. Any third person who induces another to violate
his contract shall be liable for damages to the other
contracting party.
The elements of tort interference are: (1) existence of a valid
contract; (2) knowledge on the part of the third person of the
existence of a contract; and (3) interference of the third person
is without legal justification.52
The presence of the first and second elements is not disputed.
Through the letters issued by Robinson attesting that
Cordero is the exclusive distributor of AFFA in the
Philippines, respondents were clearly aware of the contract
between Cordero and AFFA represented by Robinson. In
fact, evidence on record showed that respondents initially
dealt with and recognized Cordero as such exclusive dealer
of AFFA high-speed catamaran vessels in the Philippines. In
that capacity as exclusive distributor, petitioner Go entered
into the Memorandum of Agreement and Shipbuilding
Contract No. 7825 with Cordero in behalf of AFFA.
As to the third element, our ruling in the case of So Ping Bun
v. Court of Appeals53 is instructive, to wit:
A duty which the law of torts is concerned with is respect for
the property of others, and a cause of action ex delicto may
be predicated upon an unlawful interference by one person
of the enjoyment by the other of his private property. This
may pertain to a situation where a third person induces a
party to renege on or violate his undertaking under a
contract. In the case before us, petitioners Trendsetter
Marketing asked DCCSI to execute lease contracts in its
favor, and as a result petitioner deprived respondent
corporation of the latters property right. Clearly, and as
correctly viewed by the appellate court, the three elements of
tort interference above-mentioned are present in the instant
case.
Authorities debate on whether interference may be justified
where the defendant acts for the sole purpose of furthering
his own financial or economic interest. One view is that, as a
general rule, justification for interfering with the business
relations of another exists where the actors motive is to
benefit himself. Such justification does not exist where his
sole motive is to cause harm to the other. Added to this, some
authorities believe that it is not necessary that the interferers
interest outweigh that of the party whose rights are invaded,
and that an individual acts under an economic interest that is
substantial, not merely de minimis, such that wrongful and
malicious motives are negatived, for he acts in self-
protection. Moreover, justification for protecting ones
financial position should not be made to depend on a
comparison of his economic interest in the subject matter
with that of others. It is sufficient if the impetus of his conduct
lies in a proper business interest rather than in wrongful
motives.
74
As early as Gilchrist vs. Cuddy, we held that where there was
no malice in the interference of a contract, and the impulse
behind ones conduct lies in a proper business interest rather
than in wrongful motives, a party cannot be a malicious
interferer. Where the alleged interferer is financially
interested, and such interest motivates his conduct, it cannot
be said that he is an officious or malicious intermeddler.
In the instant case, it is clear that petitioner So Ping Bun
prevailed upon DCCSI to lease the warehouse to his
enterprise at the expense of respondent corporation. Though
petitioner took interest in the property of respondent
corporation and benefited from it, nothing on record imputes
deliberate wrongful motives or malice in him.
xxx
While we do not encourage tort interferers seeking their
economic interest to intrude into existing contracts at the
expense of others, however, we find that the conduct herein
complained of did not transcend the limits forbidding an
obligatory award for damages in the absence of any malice.
The business desire is there to make some gain to the
detriment of the contracting parties. Lack of malice, however,
precludes damages. But it does not relieve petitioner of the
legal liability for entering into contracts and causing breach
of existing ones. The respondent appellate court correctly
confirmed the permanent injunction and nullification of the
lease contracts between DCCSI and Trendsetter Marketing,
without awarding damages. The injunction saved the
respondents from further damage or injury caused by
petitioners interference.54 [emphasis supplied.]
Malice connotes ill will or spite, and speaks not in response
to duty. It implies an intention to do ulterior and unjustifiable
harm. Malice is bad faith or bad motive.55 In the case of Lagon
v. Court of Appeals,56 we held that to sustain a case for
tortuous interference, the defendant must have acted with
malice or must have been driven by purely impure reasons
to injure the plaintiff; in other words, his act of interference
cannot be justified. We further explained that the word
"induce" refers to situations where a person causes another to
choose one course of conduct by persuasion or intimidation.
As to the allegation of private respondent in said case that
petitioner induced the heirs of the late Bai Tonina Sepi to sell
the property to petitioner despite an alleged renewal of the
original lease contract with the deceased landowner, we
ruled as follows:
Assuming ex gratia argumenti that petitioner knew of the
contract, such knowledge alone was not sufficient to make
him liable for tortuous interference. x x x
Furthermore, the records do not support the allegation of
private respondent that petitioner induced the heirs of Bai
Tonina Sepi to sell the property to him. The word "induce"
refers to situations where a person causes another to choose
one course of conduct by persuasion or intimidation. The
records show that the decision of the heirs of the late Bai
Tonina Sepi to sell the property was completely of their own
volition and that petitioner did absolutely nothing to
influence their judgment. Private respondent himself did not
proffer any evidence to support his claim. In short, even
assuming that private respondent was able to prove the
renewal of his lease contract with Bai Tonina Sepi, the fact
was that he was unable to prove malice or bad faith on the
part of petitioner in purchasing the property. Therefore, the
claim of tortuous interference was never established.57
In their Answer, respondents denied having anything to do
with the unpaid balance of the commission due to Cordero
 @lendelacruz
and the eventual termination of his exclusive distributorship
by AFFA. They gave a different version of the events that
transpired following the signing of Shipbuilding Contract
No. 7825. According to them, several builder-competitors
still entered the picture after the said contract for the
purchase of one (1) SEACAT 25 was sent to Brisbane in July
1997 for authentication, adding that the contract was to be
effective on August 7, 1997, the time when their funds was to
become available. Go admitted he called the attention of
AFFA if it can compete with the prices of other builders, and
upon mutual agreement, AFFA agreed to give them a
discounted price under the following terms and conditions:
(1) that the contract price be lowered; (2) that Go will obtain
another vessel; (3) that to secure compliance of such
conditions, Go must make an advance payment for the
building of the second vessel; and (4) that the payment
scheme formerly agreed upon as stipulated in the first
contract shall still be the basis and used as the guiding factor
in remitting money for the building of the first vessel. This
led to the signing of another contract superseding the first
one (1), still to be dated 07 August 1997. Attached to the
answer were photocopies of the second contract stating a
lower purchase price (US$1,150,000.00) and facsimile
transmission of AFFA to Go confirming the transaction.58
As to the cessation of communication with Cordero, Go
averred it was Cordero who was nowhere to be contacted at
the time the shipbuilding progress did not turn good as
promised, and it was always Landicho and Tecson who, after
several attempts, were able to locate him only to obtain
unsatisfactory reports such that it was Go who would still
call up Robinson regarding any progress status report,
lacking documents for MARINA, etc., and go to Australia for
ocular inspection. Hence, in May 1998 on the scheduled
launching of the ship in Australia, Go engaged the services
of Landicho who went to Australia to see to it that all
documents needed for the shipment of the vessel to the
Philippines would be in order. It was also during this time
that Robinsons request for inquiry on the Philippine price of
a Wartsila engine for AFFAs then on-going vessel
construction, was misinterpreted by Cordero as indicating
that Go was buying a second vessel.59
We find these allegations unconvincing and a mere
afterthought as these were the very same averments
contained in the Position Paper for the Importer dated
October 9, 1998, which was submitted by Go on behalf of
ACG Express Liner in connection with the complaint-
affidavit filed by Cordero before the BOC-SGS Appeals
Committee relative to the shipment valuation of the first
SEACAT 25 purchased from AFFA.60 It appears that the
purported second contract superseding the original
Shipbuilding Contract No. 7825 and stating a lower price of
US$1,150,000.00 (not US$1,465,512.00) was only presented
before the BOC to show that the vessel imported into the
Philippines was not undervalued by almost US$500,000.00.
Cordero vehemently denied there was such modification of
the contract and accused respondents of resorting to falsified
documents, including the facsimile transmission of AFFA
supposedly confirming the said sale for only
US$1,150,000.00. Incidentally, another document filed in said
BOC case, the Counter-Affidavit/Position Paper for the
Importer dated November 16, 1998,61 states in paragraph 8
under the Antecedent facts thereof, that --
8. As elsewhere stated, the total remittances made by herein
Importer to AFFA does not alone represent the purchase
price for Seacat 25. It includes advance payment for the
acquisition of another vessel as part of the deal due to the
discounted price.62
75
which even gives credence to the claim of Cordero that
respondents negotiated for the sale of the second vessel and
that the nonpayment of the remaining two (2) instalments of
his commission for the sale of the first SEACAT 25 was a
result of Go and Landichos directly dealing with Robinson,
obviously to obtain a lower price for the second vessel at the
expense of Cordero.
The act of Go, Landicho and Tecson in inducing Robinson
and AFFA to enter into another contract directly with ACG
Express Liner to obtain a lower price for the second vessel
resulted in AFFAs breach of its contractual obligation to pay
in full the commission due to Cordero and unceremonious
termination of Corderos appointment as exclusive
distributor. Following our pronouncement in Gilchrist v.
Cuddy (supra), such act may not be deemed malicious if
impelled by a proper business interest rather than in
wrongful motives. The attendant circumstances, however,
demonstrated that respondents transgressed the bounds of
permissible financial interest to benefit themselves at the
expense of Cordero. Respondents furtively went directly to
Robinson after Cordero had worked hard to close the deal for
them to purchase from AFFA two (2) SEACAT 25, closely
monitored the progress of building the first vessel sold,
attended to their concerns and spent no measly sum for the
trip to Australia with Go, Landicho and Gos family
members. But what is appalling is the fact that even as Go,
Landicho and Tecson secretly negotiated with Robinson for
the purchase of a second vessel, Landicho and Tecson
continued to demand and receive from Cordero their
"commission" or "cut" from Corderos earned commission
from the sale of the first SEACAT 25.
Cordero was practically excluded from the transaction when
Go, Robinson, Tecson and Landicho suddenly ceased
communicating with him, without giving him any
explanation. While there was nothing objectionable in
negotiating for a lower price in the second purchase of
SEACAT 25, which is not prohibited by the Memorandum of
Agreement, Go, Robinson, Tecson and Landicho clearly
connived not only in ensuring that Cordero would have no
participation in the contract for sale of the second SEACAT
25, but also that Cordero would not be paid the balance of his
commission from the sale of the first SEACAT 25. This,
despite their knowledge that it was commission already
earned by and due to Cordero. Thus, the trial and appellate
courts correctly ruled that the actuations of Go, Robinson,
Tecson and Landicho were without legal justification and
intended solely to prejudice Cordero.
The existence of malice, ill will or bad faith is a factual matter.
As a rule, findings of fact of the trial court, when affirmed by
the appellate court, are conclusive on this Court.63 We see no
compelling reason to reverse the findings of the RTC and the
CA that respondents acted in bad faith and in utter disregard
of the rights of Cordero under the exclusive distributorship
agreement.
The failure of Robinson, Go, Tecson and Landico to act with
fairness, honesty and good faith in securing better terms for
the purchase of high-speed catamarans from AFFA, to the
prejudice of Cordero as the duly appointed exclusive
distributor, is further proscribed by Article 19 of the Civil
Code:
Art. 19. Every person must, in the exercise of his rights and
in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.
As we have expounded in another case:
 @lendelacruz
Elsewhere, we explained that when "a right is exercised in a
manner which does not conform with the norms enshrined
in Article 19 and results in damage to another, a legal wrong
is thereby committed for which the wrongdoer must be
responsible." The object of this article, therefore, is to set
certain standards which must be observed not only in the
exercise of ones rights but also in the performance of ones
duties. These standards are the following: act with justice,
give everyone his due and observe honesty and good faith.
Its antithesis, necessarily, is any act evincing bad faith or
intent to injure. Its elements are the following: (1) There is a
legal right or duty; (2) which is exercised in bad faith; (3) for
the sole intent of prejudicing or injuring another. When
Article 19 is violated, an action for damages is proper under
Articles 20 or 21 of the Civil Code. Article 20 pertains to
damages arising from a violation of law x x x. Article 21, on
the other hand, states:
Art. 21. Any person who willfully causes loss or injury to
another in a manner that is contrary to morals, good customs
or public policy shall compensate the latter for the damage.
Article 21 refers to acts contra bonus mores and has the
following elements: (1) There is an act which is legal; (2) but
which is contrary to morals, good custom, public order, or
public policy; and (3) it is done with intent to injure.
A common theme runs through Articles 19 and 21, and that
is, the act complained of must be intentional.64
Petitioner Gos argument that he, Landicho and Tecson
cannot be held liable solidarily with Robinson for actual,
moral and exemplary damages, as well as attorneys fees
awarded to Cordero since no law or contract provided for
solidary obligation in these cases, is equally bereft of merit.
Conformably with Article 2194 of the Civil Code, the
responsibility of two or more persons who are liable for the
quasi-delict is solidary.65 In Lafarge Cement Philippines, Inc.
v. Continental Cement Corporation,66 we held:
[O]bligations arising from tort are, by their nature, always
solidary. We have assiduously maintained this legal
principle as early as 1912 in Worcester v. Ocampo, in which
we held:
x x x The difficulty in the contention of the appellants is that
they fail to recognize that the basis of the present action is
tort. They fail to recognize the universal doctrine that each
joint tort feasor is not only individually liable for the tort in
which he participates, but is also jointly liable with his tort
feasors. x x x
It may be stated as a general rule that joint tort feasors are all
the persons who command, instigate, promote, encourage,
advise, countenance, cooperate in, aid or abet the
commission of a tort, or who approve of it after it is done, if
done for their benefit. They are each liable as principals, to
the same extent and in the same manner as if they had
performed the wrongful act themselves. x x x
Joint tort feasors are jointly and severally liable for the tort
which they commit.1avvphi1 The persons injured may sue all
of them or any number less than all. Each is liable for the
whole damages caused by all, and all together are jointly
liable for the whole damage. It is no defense for one sued
alone, that the others who participated in the wrongful act
are not joined with him as defendants; nor is it any excuse for
him that his participation in the tort was insignificant as
compared to that of the others. x x x
76
Joint tort feasors are not liable pro rata. The damages can not
be apportioned among them, except among themselves. They
cannot insist upon an apportionment, for the purpose of each
paying an aliquot part. They are jointly and severally liable
for the whole amount. x x x
A payment in full for the damage done, by one of the joint
tort feasors, of course satisfies any claim which might exist
against the others. There can be but satisfaction. The release
of one of the joint tort feasors by agreement generally
operates to discharge all. x x x
Of course, the court during trial may find that some of the
alleged tort feasors are liable and that others are not liable.
The courts may release some for lack of evidence while
condemning others of the alleged tort feasors. And this is true
even though they are charged jointly and severally.67
[emphasis supplied.]
The rule is that the defendant found guilty of interference
with contractual relations cannot be held liable for more than
the amount for which the party who was inducted to break
the contract can be held liable.68 Respondents Go, Landicho
and Tecson were therefore correctly held liable for the
balance of petitioner Corderos commission from the sale of
the first SEACAT 25, in the amount of US$31,522.09 or its
peso equivalent, which AFFA/Robinson did not pay in
violation of the exclusive distributorship agreement, with
interest at the rate of 6% per annum from June 24, 1998 until
the same is fully paid.
Respondents having acted in bad faith, moral damages may
be recovered under Article 2219 of the Civil Code.69 On the
other hand, the requirements of an award of exemplary
damages are: (1) they may be imposed by way of example in
addition to compensatory damages, and only after the
claimants right to them has been established; (2) that they
cannot be recovered as a matter of right, their determination
depending upon the amount of compensatory damages that
may be awarded to the claimant; and (3) the act must be
accompanied by bad faith or done in a wanton, fraudulent,
oppressive or malevolent manner.70 The award of exemplary
damages is thus in order. However, we find the sums
awarded by the trial court as moral and exemplary damages
as reduced by the CA, still excessive under the circumstances.
Moral damages are meant to compensate and alleviate the
physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar injuries unjustly caused.
Although incapable of pecuniary estimation, the amount
must somehow be proportional to and in approximation of
the suffering inflicted. Moral damages are not punitive in
nature and were never intended to enrich the claimant at the
expense of the defendant. There is no hard-and-fast rule in
determining what would be a fair and reasonable amount of
moral damages, since each case must be governed by its own
peculiar facts. Trial courts are given discretion in
determining the amount, with the limitation that it "should
not be palpably and scandalously excessive." Indeed, it must
be commensurate to the loss or injury suffered.71
We believe that the amounts of P300,000.00 and P200,000.00
as moral and exemplary damages, respectively, would be
sufficient and reasonable. Because exemplary damages are
awarded, attorneys fees may also be awarded in consonance
with Article 2208 (1).72 We affirm the appellate courts award
of attorneys fees in the amount of P50,000.00.
WHEREFORE, the petitions are DENIED. The Decision
dated March 16, 2004 as modified by the Resolution dated
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July 22, 2004 of the Court of Appeals in CA-G.R. CV No.
69113 are hereby AFFIRMED with MODIFICATION in that
the awards of moral and exemplary damages are hereby
reduced to P300,000.00 and P200,000.00, respectively.
With costs against the petitioner in G.R. No. 164703.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-4313 March 20, 1951
PEDRO P. VILLA, petitioner,
vs.
FIDEL IBAEZ, Judge of the Court of First Instance of
Manila, EUGENIO ANGELES, City Fiscal, ABELARDO
SUBIDO, Chief, Division of Investigation, Office of the
Manila, respondents.
TUASON, J.:
Attorney Abelardo Subido, chief of the division of
investigation in the office of the mayor of the City of Manila,
was appointed by the then Secretary of Justice, Honorable
Ricardo Nepomuceno, as special counsel to assist the City
Fiscal of Manila in the cases of city government officials or
employees he had investigated; and in pursuance of that
appointment, he subscribed, swore to and presented an
information against Pedro P. Villa, the present petitioner, for
falsification of a payroll of the division of veterinary service,
Manila health department. Attorney Subido's authority to
file information was thereafter challenged by the accused but
was sustained by His Honor, Judge Fidel Ibaez. Hence this
petition for certiorari, which is in reality a petition for
prohibition and will be so regarded.
Chief ground of attack, the resolution of which will dispose
of the others and to which this opinion will therefore be
confined, has to do with Attorney Subido's legal
qualifications for the appointment in question under section
1686 of the Revised Administrative Code, as amended by
Section 4 of Commonwealth Act No. 144, which reads as
follows:
SEC. 189. Additional counsel to assist fiscal. The
Secretary of Justice may appoint any lawyer, being
either a subordinate from his office or a competent
person not in the public service, temporarily to
assist a fiscal or prosecuting attorney in the
discharge of his duties, and with the same authority
therein as might be exercised by the Attorney
General or Solicitor General.
Appointments by the Secretary of Justice in virtue of the
foregoing provisions of the Revised Administrative Code, as
amended, were upheld in Lo Cham vs. Ocampo et al.,1 44
Official Gazette, 458, and Go Cam et al., vs. Gatmaitan et al., (47
Official Gazette, 5092)2. But in those cases, the appointees
were officials or employees in one or another of the bureaus
or offices under the Department of Justice, and were rightly
considered subordinates in the office of the Secretary of
Justice within the meaning of section 1686, ante.
77
The case at bar does not come within the rationale of the
above decisions. Attorney Subido is a regular officer or
employee in the Department of Interior, more particularly in
the City Mayor's office. For this reason he belongs to the class
of persons disqualified for appointment to the post of special
counsel.
That to be eligible as special counsel to aid a fiscal the
appointee must be either an employee or officer in the
Department of Justice is so manifest from a bare reading of
section 1686 of the Revised Administrative Code as to
preclude construction. And the limitation of the range of
choice in the appointment or designation is not without
reason.
The obvious reason is to have appointed only lawyers over
whom the Secretary of Justice can exercise exclusive and
absolute power of supervision. An appointee from a branch
of the government outside the Department of Justice would
owe obedience to, and be subject to orders by, mutually
independent superiors having, possibly, antagonistic
interests. Referring particularly to the case at hand for
illustration, Attorney Subido could be recalled or his time
and attention be required elsewhere by the Secretary of
Interior or the City Mayor while he was discharging his
duties as public prosecutor, and the Secretary of Justice
would be helpless to stop such recall or interference. An
eventually or state of affairs so undesirable, not to say
detrimental to the public service and specially the
administration of justice, the legislature wisely intended to
avoid.
The defendant had pleaded to the information before he filed
a motion to quash, and it is contended that by his plea he
waived all objections to the information. The contention is
correct as far as formal objections to the pleading are
concerned. But by clear implication it not by express
provision of section 10 of Rule 113 of the Rules of Court, and
by a long line of uniform decisions, questions of want of
jurisdiction may be raised at any stage of the proceeding.
Now, the objection to the respondent's actuations goes to the
very foundations of jurisdiction. It is a valid information
signed by a competent officer which, among other requisites,
confers jurisdiction on the court over the person of the
accused and the subject matter of the accusation. In
consonance with this view, an infirmity of the nature noted
in the information can not be cured by silence, acquiescence,
or even by express consent.
The petition will therefore be granted and the respondent
judge ordered to desist from proceeding with criminal case
No. 11963 upon the information filed by Attorney Abelardo
Subido, without costs.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 149588 September 29, 2009
FRANCISCO R. LLAMAS and CARMELITA C. LLAMAS,
Petitioners,
vs.
THE HONORABLE COURT OF APPEALS, BRANCH 66
OF THE REGIONAL TRIAL COURT IN MAKATI CITY
and THE PEOPLE OF THE PHILIPPINES, Respondents.
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DECISION
NACHURA, J.:
In this petition captioned as "Annulment of Judgment and
Certiorari, with Preliminary Injunction," petitioners assail, on
the ground of lack of jurisdiction, the trial courts decision
convicting them of "other form of swindling" penalized by
Article 316, paragraph 2, of the Revised Penal Code (RPC).
The antecedent facts and proceedings that led to the filing of
the instant petition are pertinently narrated as follows:
On August 16, 1984, petitioners were charged before the
Regional Trial Court (RTC) of Makati with, as aforesaid, the
crime of "other forms of swindling" in the Information,1
docketed as Criminal Case No. 11787, which reads:
That on or about the 20th day of November, 1978, in the
municipality of Paraaque, Metro Manila, Philippines and
within the jurisdiction of this Honorable Court, the above-
named accused, conspiring and confederating together and
mutually helping and aiding one another, well knowing that
their parcel of land known as Lot No. 11, Block No. 6 of the
Subdivision Plan (LRC) Psd 67036, Cadastral Survey of
Paraaque, LRC Record No. N-26926, Case No. 4869, situated
at Barrio San Dionisio, Municipality of Paraaque, Metro
Manila, was mortgaged to the Rural Bank of Imus, did then
and there willfully, unlawfully and feloniously sell said
property to one Conrado P. Avila, falsely representing the
same to be free from all liens and encumbrances whatsoever,
and said Conrado P. Avila bought the aforementioned
property for the sum of P12,895.00 which was paid to the
accused, to the damage and prejudice of said Conrado P.
Avila in the aforementioned amount of P12,895.00.
Contrary to law.2
After trial on the merits, the RTC rendered its Decision 3 on
June 30, 1994, finding petitioners guilty beyond reasonable
doubt of the crime charged and sentencing them to suffer the
penalty of imprisonment for two months and to pay the fine
of P18,085.00 each.
On appeal, the Court of Appeals, in its February 19, 1999
Decision4 in CA-G.R. CR No. 18270, affirmed the decision of
the trial court. In its December 22, 1999 Resolution,5 the
appellate court further denied petitioners motion for
reconsideration.
Assailing the aforesaid issuances of the appellate court,
petitioners filed before this Court, on February 11, 2000, their
petition for review, docketed as G.R. No. 141208.6 The Court,
however, on March 13, 2000, denied the same for petitioners
failure to state the material dates. Since it subsequently
denied petitioners motion for reconsideration on June 28,
2000,7 the judgment of conviction became final and
executory.
With the consequent issuance by the trial court of the April
19, 2001 Warrant of Arrest,8 the police arrested, on April 27,
2001, petitioner Carmelita C. Llamas for her to serve her 2-
month jail term. The police, nevertheless, failed to arrest
petitioner Francisco R. Llamas because he was nowhere to be
found.9
On July 16, 2001, petitioner Francisco moved for the lifting or
recall of the warrant of arrest, raising for the first time the
issue that the trial court had no jurisdiction over the offense
charged.10
78
There being no action taken by the trial court on the said
motion, petitioners instituted, on September 13, 2001, the
instant proceedings for the annulment of the trial and the
appellate courts decisions.
The Court initially dismissed on technical grounds the
petition in the September 24, 2001 Resolution,11 but reinstated
the same, on motion for reconsideration, in the October 22,
2001 Resolution.12
After a thorough evaluation of petitioners arguments vis--
vis the applicable law and jurisprudence, the Court denies
the petition.
In People v. Bitanga,13 the Court explained that the remedy
of annulment of judgment cannot be availed of in criminal
cases, thus
Section 1, Rule 47 of the Rules of Court, limits the scope of
the remedy of annulment of judgment to the following:
Section 1. Coverage. This Rule shall govern the annulment
by the Court of Appeals of judgments or final orders and
resolutions in civil actions of Regional Trial Courts for which
the ordinary remedies of new trial, appeal, petition for relief
or other appropriate remedies are no longer available
through no fault of the petitioner.a1f
The remedy cannot be resorted to when the RTC judgment
being questioned was rendered in a criminal case. The 2000
Revised Rules of Criminal Procedure itself does not permit
such recourse, for it excluded Rule 47 from the enumeration
of the provisions of the 1997 Revised Rules of Civil Procedure
which have suppletory application to criminal cases. Section
18, Rule 124 thereof, provides:
Sec. 18. Application of certain rules in civil procedure to criminal
cases. The provisions of Rules 42, 44 to 46 and 48 to 56
relating to procedure in the Court of Appeals and in the
Supreme Court in original and appealed civil cases shall be
applied to criminal cases insofar as they are applicable and
not inconsistent with the provisions of this Rule.
There is no basis in law or the rules, therefore, to extend the
scope of Rule 47 to criminal cases. As we explained in
Macalalag v. Ombudsman, when there is no law or rule
providing for this remedy, recourse to it cannot be allowed x
x x.14
Here, petitioners are invoking the remedy under Rule 47 to
assail a decision in a criminal case. Following Bitanga, this
Court cannot allow such recourse, there being no basis in law
or in the rules.
In substance, the petition must likewise fail. The trial court
which rendered the assailed decision had jurisdiction over
the criminal case.
Jurisdiction being a matter of substantive law, the established
rule is that the statute in force at the time of the
commencement of the action determines the jurisdiction of
the court.15 In this case, at the time of the filing of the
information, the applicable law was Batas Pambansa Bilang
129,16 approved on August 14, 1981, which pertinently
provides:
Section 20. Jurisdiction in criminal cases. Regional Trial
Courts shall exercise exclusive original jurisdiction in all
criminal cases not within the exclusive jurisdiction of any
 @lendelacruz
court, tribunal or body, except those now falling under the
exclusive and concurrent jurisdiction of the Sandiganbayan
which shall hereafter be exclusively taken cognizance of by
the latter.
xxxx
Section 32. Jurisdiction of Metropolitan Trial Courts, Municipal
Trial Courts and Municipal Circuit Trial Courts in criminal cases.
Except in cases falling within the exclusive original
jurisdiction of Regional Trial Courts and of the
Sandiganbayan, the Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts shall
exercise:
(1) Exclusive original jurisdiction over all violations
of city or municipal ordinances committed within
their respective territorial jurisdiction; and
(2) Exclusive original jurisdiction over all offenses
punishable with imprisonment of not exceeding
four years and two months, or a fine of not more
than four thousand pesos, or both such fine and
imprisonment, regardless of other imposable
accessory or other penalties, including the civil
liability arising from such offenses or predicated
thereon, irrespective of kind, nature, value, or
amount thereof: Provided, however, That in
offenses involving damage to property through
criminal negligence they shall have exclusive
original jurisdiction where the imposable fine does
not exceed twenty thousand pesos.
Article 316(2) of the RPC, the provision which penalizes the
crime charged in the information, provides that
Article 316. Other forms of swindling.The penalty of
arresto mayor in its minimum and medium periods and a
fine of not less than the value of the damage caused and not
more than three times such value, shall be imposed upon:
xxxx
2. Any person who, knowing that real property is
encumbered, shall dispose of the same, although such
encumbrance be not recorded.
The penalty for the crime charged in this case is arresto
mayor in its minimum and medium periods, which has a
duration of 1 month and 1 day to 4 months, and a fine of not
less than the value of the damage caused and not more than
three times such value. Here, as alleged in the information,
the value of the damage caused, or the imposable fine, is
P12,895.00. Clearly, from a reading of the information, the
jurisdiction over the criminal case was with the RTC and not
the Metropolitan Trial Court (MeTC). The MeTC could not
have acquired jurisdiction over the criminal action because at
the time of the filing of the information, its jurisdiction was
limited to offenses punishable with a fine of not more than
P4,000.00.17
WHEREFORE, premises considered, the petition is DENIED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
79
THIRD DIVISION
G.R. No. 167471 February 5, 2007
GLICERIA SARMIENTO, Petitioner,
vs.
EMERITA ZARATAN, Respondent.
DECISION
CHICO-NAZARIO, J.:
This petition for Review on Certiorari under Rule 45 of the
Rules of Court seeks to nullify the Court of Appeals Decision1
in CA-G.R. SP No. 79001 entitled, "Emerita Zaratan v. Hon.
Ramon A. Cruz, as Presiding Judge of RTC, Quezon City,
Branch 223, and Gliceria Sarmiento," dated 17 August 2004,
which reversed and set side the Orders dated 19 June 2003
and 31 July 2003 of the Regional Trial Court (RTC) of Quezon
City in Civil Case No. Q-03-49437, dismissing respondents
appeal for failure to file the memorandum within the period
provided for by law.
On 2 September 2002, petitioner Gliceria Sarmiento filed an
ejectment case2 against respondent Emerita Zaratan, in the
Metropolitan Trial Court (MeTC) of Quezon City, Branch 36,
docketed as Civil Case No. 29109.
On 31 March 2003, the MeTC rendered a decision in favor of
petitioner, the dispositive portion of which reads:
WHEREFORE, the Court finds that plaintiff has sufficiently
established her causes against the defendant and hereby
order the defendant and all persons claiming rights under
her:
1. to pay plaintiff the monthly rentals of P3,500.00
for the said premises from August 1, 2002 until
defendant vacates the premises;
2. to pay plaintiff the sum of P20,000.00 plus
P1,500.00 per appearance of counsel in court, as and
for attorneys fees; and
to pay the cost of suit.3
Respondent filed her notice of appeal.4 Thereafter, the case
was raffled to the RTC of Quezon City, Branch 223, docketed
as Civil Case No. Q-03-49437.
In the Notice of Appealed Case,5 the RTC directed
respondent to submit her memorandum in accordance with
the provisions of Section 7(b) of Rule 40 of the Rules of Court
and petitioner to file a reply memorandum within 15 days
from receipt.
Respondents counsel having received the notice on 19 May
2003, he had until 3 June 2003 within which to file the
requisite memorandum. But on 3 June 2003, he filed a Motion
for Extension of Time of five days due to his failure to finish
the draft of the said Memorandum. He cited as reasons for
the delay of filing his illness for one week, lack of staff to do
the work due to storm and flood compounded by the
grounding of the computers because the wirings got wet.6
But the motion remained unacted.
 @lendelacruz
On 9 June 2003, respondent filed her Memorandum. On 19
June 2003, the RTC dismissed the appeal as follows:
Record shows that defendant-appellant received the Notice
of Appealed Case, through counsel, on May 19, 2003
(Registry Return Receipt dated May 12, 2003, Record, back of
p. 298). Thus, under Section 7(b), Rule 40 of the 1997 Rules of
Civil Procedure, she had fifteen (15) days or until June 3, 2003
within which to submit a memorandum on appeal. As
further appears on record, however, the required
Memorandum was filed by defendant-appellant only on June
9, 2003 (Record, p. 623), or six (6) days beyond the expiration
of the aforesaid fifteen day period.
It should be stressed that while the rules should be liberally
construed, the provisions on reglemenatry periods are
strictly applied as they are "deemed indispensable to the
prevention of needless delays and necessary to the orderly
and speedy discharge of judicial business" (Legaspi-Santos
vs. Court of Appeals, G.R. No. 60577, October 11, 1983) and
strict compliance therewith is mandatory and imperative
(FJR Garments Industries vs. Court of Appeals, G.R. No. L-
49329, June 29, 1984). The same is true with respect to the
rules on the manner and periods for perfecting appeals
(Gutierrez vs. Court of Appeals, L-25972, November 26,
1968).
Premises considered, the instant appeal is hereby
DISMISSED. This renders academic defendant-appellants
application for a writ of preliminary injunction.7 1awphi1.net
On the basis of the above-quoted Order, petitioner filed a
Motion for Immediate Execution,8 while respondent moved
for the Reconsideration.9 Both motions were denied by the
RTC on 31 July 2003. The Order in part reads:
In the main, defendant-appellants Motion for
Reconsideration is premised on the argument that she filed a
timely "Motion for Extension of Time To File Memorandum,"
dated and filed on June 3, 2003, but that her motion was not
acted upon by this Court. She adds that her appeal
memorandum was filed well within the period sought by her
in her "Motion for Extension of Time to File Memorandum"
so that her appeal should not have been dismissed.
The argument is without merit. This Court did not take
cognizance of defendant-appellants "Motion for Extension
of Time to File Memorandum," and rightly so, because it did
not contain a notice of hearing as required by Sections 4 and
5, Rule 15 of the Rules of Court, an omission for which it
could offer no explanation. As declared in the case of Gozon,
et al. v. court of Appeals (G.R. No. 105781, June 17, 1993);
xxx
It is well-entrenched in this jurisdiction that a motion does
not meet the requirements of Sections 4 and 5 of Rule 15 of
the Rules of Court is considered a worthless piece of paper
which the clerk has no right to receive, and the court has no
authority to act upon.
xxx
Moreover, parties and counsel should not assume that courts
are bound to grant the time they pray for. A motion that is
not acted upon in due time is deemed denied (Orosa vs.
Court of Appeals, 261 SCRA 376 [1996]). Thus, defendant-
appellants appeal was properly dismissed on account of her
failure to file an appeal memorandum within the fifteen (15)
80
day period provided under Section 7(b), Rule 40 of the 1997
Rules of Civil Procedure.
With regard to the "Motion for Immediate Execution," dated
June 23, 2003, filed by plaintiff-appellee, the rule is explicit
that the execution of a judgment in an ejectment case, must
be sought with the inferior court which rendered the same.
The appellate court which affirms a decision brought before
it on appeal cannot decree its execution in the guise of an
execution of the affirming decision. The only exception is
when said appellate court grants an execution pending
appeal, which is not the case herein (City of Manila vs. Court
of Appeals, 204 SCRA 362; Sy vs. Romero, 214 SCRA 187). 10
Petitioner moved for reconsideration of the said Order, while
respondent sought clarification on whether the 31 July 2003
Order dismissing the appeal was anchored on Section (b),
Rule 40 or Section 7(c) of the same Rule.
On 27 August 2003, the RTC reconsidered its previous Order
by granting petitioners motion for Immediate Execution, but
denied respondents Motion for Clarification, in this wise:
Section 21, Rule 70 of the Rules of Court provides that "the
judgment of the Regional Trial Court against the defendant
shall be immediately executory, without prejudice to a
further appeal that may be taken therefrom. Pursuant to this
Rule and taking into account the arguments of the plaintiff in
her "Urgent Motion for Reconsideration," the Court is
inclined to grant the same. As further correctly argued by the
plaintiff, through counsel, during the hearing on her motion
on August 15, 2003, the cases of City of Manila v. Court of
Appeals (204 SCRA 362) and Sy vs. Romero (214 SCRA 187)
cited in the July 31, 2003 Order refer to ejectment cases which
has (sic) been decided with finality and hence, inapplicable
to this case where a further appeal is still available to the
defendant. It should likewise be noted that while the
Supreme Court ruled in these cases that execution of a
judgment in an ejectment case must be sought with the
inferior court which rendered the same, it likewise provided
that for an exception to this rule, that is, in cases where the
appellate court grants an execution pending appeal, as the
case herein.
With regard to defendants Motion for Clarification,
contained in her Opposition, the Court notes that the issues
raised therein have already been squarely dealt with in the
July 31, 2003 Order. The same must, therefore, be denied. 11
Aggrieved, respondent filed a Petition for Certiorari in the
Court of Appeals, which was granted in a decision dated 17
August 2004. The appellate court nullified and set aside the
19 June 2003 and 31 July 2003 Orders of the RTC and ordered
the reinstatement of respondents appeal. Consequently,
respondents appeal memorandum was admitted and the
case remanded to the RTC for further proceedings.12
Petitioner filed a motion for reconsideration13 on 13
September 2004, followed by a Motion for Inhibition14 of the
members of the Eighth Division of the Court of Appeals on
20 September 2004. Both motions were denied for lack of
merit on 10 March 2005.15
Hence, this appeal by petitioner posing the following
issues,16 thus:
1. Whether respondents petition for certiorari
should have been dismissed in the first place;
 @lendelacruz
2. Whether the trial court committed grave abuse of
discretion in denying respondents motion for
extension;
3. Whether it is Section 19 of Rule 7 that applies, and
not Section 21; and
4. Whether the Court of Appeals Justices should
have inhibited themselves from further proceeding
with the subject case.
Stated otherwise, the main issue for resolution is whether the
Court of Appeals committed a reversible error of law in
granting the Writ of Certiorari. In granting the petition, the
Court of Appeals ruled that the RTC erred in dismissing
respondents appeal for failure to file the required
Memorandum within the period provided by law and in
granting petitioners Motion for Immediate Execution of the
MeTC decision.
Before resolving the substantive issues raised by petitioner,
the Court will first address the procedural infirmities
ascribed by petitioner. Petitioner assails the correctness and
propriety of the remedy resorted to by respondent by filing a
Petition for Certiorari in the Court of Appeals. According to
petitioner, certiorari is not appropriate and unavailing as the
proper remedy is an appeal.
It must be noted that respondents appeal in the RTC was
dismissed for failure to file the required memorandum
within the period allowed by law, as the Motion for
Extension of Time to file Memorandum was not acted upon
for failure to attach a notice of hearing. From the said
dismissal, respondent filed a Petition for Certiorari in the
Court of Appeals.
Respondent correctly filed said petition pursuant to Section
41 of the Rules of Court, which provides:
Section 1. Subject of appeal. An appeal may be taken from a
judgment or final order that completely disposes of the case,
or of a particular matter therein when declared by these Rules
to be appealable.
No appeal may be taken:
xxxx
(d) An order disallowing or dismissing an appeal;
xxxx
In all the above instances where the judgment or final order
is not appealable, the aggrieved party may file an appropriate
civil action under Rule 65. (Underscoring supplied.)
Petitioner also contends that the Petition for Certiorari filed
in the Court of Appeals should be dismissed as the
certification of non-forum shopping was defective. The
verification in part reads:
I, EMERITA ZARATAN, of legal age, after having been duly
sworn to, according to law, depose and say:
That I, Emerita Zaratan is one of the respondent (sic) in the
above entitled case, hereby declare, that I have caused the
preparation and filing of the foregoing Comment on the
Petition; that I have read all the allegations therein, which are
true and correct to the best of my own knowledge.
81
That as respondent, I further certify that I have not
commenced any other action or proceeding involving the
same issues in the foregoing Petition in the Court of Appeals,
the Supreme Court, or different Divisions thereof,
respectively, or any tribunal, or agency; and should it be
known that a similar action or proceeding has been filed or is
pending in any of the abovementioned Courts or different
Divisions thereof, the petitioner shall notify the Honorable
Court to which this certification is filed, within five (5) days
from such notice. (Underscoring ours.)
Petitioner avers that respondent by stating in the above-
quoted certification that she was the respondent, while in
truth she was the petitioner and by stating that respondent
caused the preparation of the comment on the petition,
instead of the petition itself, indicate that respondent did not
understand what she was signing. The defect of the
verification all renders the petition in the Court of Appeals
without legal effect and constitutes ground for its dismissal.
The contention is baseless.
The purpose of requiring a verification is to secure an
assurance that the allegations of the petition have been made
in good faith, or are true and correct, not merely speculative.
This requirement is simply a condition affecting the form of
pleadings and non-compliance therewith does not
necessarily render it fatally defective.17 Perusal of the
verification in question shows there was sufficient
compliance with the requirements of the Rules and the
alleged defects are not so material as to justify the dismissal
of the petition in the Court of Appeals. The defects are mere
typographical errors. There appears to be no intention to
circumvent the need for proper verification and certification,
which are intended to assure the truthfulness and correctness
of the allegations in the petition and to discourage forum
shopping.18
Now, the substantial issues.
Corollary to the dismissal of the appeal by the RTC is the
question of whether the lack of notice of hearing in the
Motion for Extension of Time to file Memorandum on
Appeal is fatal, such that the filing of the motion is a
worthless piece of paper.
Petitioner avers that, because of the failure of respondent to
include a Notice of Hearing in her Motion for Extension of
Time to file Memorandum on Appeal in the RTC, the latters
motion is a worthless piece of paper with no legal effect.
It is not disputed that respondent perfected her appeal on 4
April 2003 with the filing of her Notice of Appeal and
payment of the required docket fees. However, before the
expiration of time to file the Memorandum, she filed a
Motion for Extension of Time seeking an additional period of
five days within which to file her Memorandum, which
motion lacked the Notice of Hearing required by Section 4,
Rule 15 of the 1997 Rules of Court which provides:
SEC. 4. Hearing of Motion. - Except for motions which the
court may act upon without prejudicing the rights of the
adverse party, every written motion shall be set for hearing
by the applicant.
Every written motion required to be heard and the notice of
the hearing thereof shall be served in such a manner as to
ensure its receipt by the other party at least three (3) days
before the date of hearing, unless the court for good cause
sets the hearing on shorter notice.
 @lendelacruz
As may be gleaned above and as held time and again, the
notice requirement in a motion is mandatory. As a rule, a
motion without a Notice of Hearing is considered pro forma
and does not affect the reglementary period for the appeal or
the filing of the requisite pleading.19
As a general rule, notice of motion is required where a party
has a right to resist the relief sought by the motion and
principles of natural justice demand that his right be not
affected without an opportunity to be heard.20 The three-day
notice required by law is intended not for the benefit of the
movant but to avoid surprises upon the adverse party and to
give the latter time to study and meet the arguments of the
motion.21 Principles of natural justice demand that the right
of a party should not be affected without giving it an
opportunity to be heard.22
The test is the presence of the opportunity to be heard, as well
as to have time to study the motion and meaningfully oppose
or controvert the grounds upon which it is based.23
Considering the circumstances of the present case, we believe
that procedural due process was substantially complied
with.
There are, indeed, reasons which would warrant the
suspension of the Rules: (a) the existence of special or
compelling circumstances, b) the merits of the case, (c) a
cause not entirely attributable to the fault or negligence of the
party favored by the suspension of rules, (d) a lack of any
showing that the review sought is merely frivolous and
dilatory, and (e) the other party will not be unjustly
prejudiced thereby.24 Elements or circumstances (c), (d) and
(e) exist in the present case.
The suspension of the Rules is warranted in this case. The
motion in question does not affect the substantive rights of
petitioner as it merely seeks to extend the period to file
Memorandum. The required extension was due to
respondents counsels illness, lack of staff to do the work due
to storm and flood, compounded by the grounding of the
computers. There is no claim likewise that said motion was
interposed to delay the appeal.25 As it appears, respondent
sought extension prior to the expiration of the time to do so
and the memorandum was subsequently filed within the
requested extended period. Under the circumstances,
substantial justice requires that we go into the merits of the
case to resolve the issue of who is entitled to the possession
of the land in question.
Further, it has been held that a "motion for extension of time
x x x is not a litigated motion where notice to the adverse
party is necessary to afford the latter an opportunity to resist
the application, but an ex parte motion made to the court in
behalf of one or the other of the parties to the action, in the
absence and usually without the knowledge of the other
party or parties." As a general rule, notice of motion is
required where a party has a right to resist the relief sought
by the motion and principles of natural justice demand that
his rights be not affected without an opportunity to be heard.
It has been said that "ex parte motions are frequently
permissible in procedural matters, and also in situations and
under circumstances of emergency; and an exception to a
rule requiring notice is sometimes made where notice or the
resulting delay might tend to defeat the objective of the
motion."26
It is well to remember that this Court, in not a few cases, has
consistently held that cases shall be determined on the merits,
after full opportunity to all parties for ventilation of their
causes and defense, rather than on technicality or some
procedural imperfections. In so doing, the ends of justice
82
would be better served.27 Furthermore, this Court
emphasized its policy that technical rules should accede to
the demands of substantial justice because there is no vested
right in technicalities. Litigations, should, as much as
possible, be decided on their merits and not on technicality.
Dismissal of appeals purely on technical grounds is frowned
upon, and the rules of procedure ought not to be applied in a
very rigid, technical sense, for they are adopted to help
secure, not override, substantial justice, and thereby defeat
their very aims. As has been the constant rulings of this
Court, every party-litigant should be afforded the amplest
opportunity for the proper and just disposition of his cause,
free from constraints of technicalities.28 Indeed, rules of
procedure are mere tools designed to expedite the resolution
of cases and other matters pending in court. A strict and rigid
application of the rules that would result in technicalities that
tend to frustrate rather than promote justice must be
avoided.29
The visible emerging trend is to afford every party-litigant
the amplest opportunity for the proper and just
determination of his cause, free from constraints and
technicalities.
Parenthetically, it must be noted also that when the appeal
was dismissed on 19 June 2003, the memorandum was
already filed in court on 9 June 2003.
On the issue of immediate execution of judgment.
The applicable provision is Section 19, Rule 70 of the Rules of
Court, which reads:
SEC. 19. Immediate Execution of judgment; how to stay the
same.- If judgment is rendered against the defendant,
execution shall issue immediately upon motion, unless an
appeal has been perfected and the defendant to stay
execution files a sufficient supersedeas bond, approved by
the Municipal Trial Court and executed in favor of the
plaintiff to pay the rents, damages, and costs accruing down
to the time of the judgment appealed from, and unless,
during the pendency of the appeal, he deposits with the
appellate court the amount of rent due from time to time
under the contract, if any, as determined by the judgment of
the Municipal Trial Court. x x x.
To stay the immediate execution of judgment in ejectment
proceedings, Section 19 requires that the defendant-appellant
must (a) perfect his appeal, (b) file a supersedeas bond, and
(c) periodically deposit the rentals falling due during the
pendency of the appeal.
As correctly observed by the Court of Appeals, execution
pending appeal was premature as respondent had already
filed a supersedeas bond and the monthly rental for the
current month of the premises in question.30
The invocation of petitioner of the provisions of Section 21,
Rule 70 of the Rules of Court, which runs:
Sec. 21. Immediate execution on appeal to Court of Appeals
or Supreme Court.- The judgment of the Regional Trial Court
against the defendant shall be immediately executory,
without prejudice to a further appeal that may be taken
therefrom.
to justify the issuance of the writ of execution pending appeal
in this case is misplaced.
 @lendelacruz
A closer examination of the above-quoted provision reveals
that said provision applies to decision of the RTC rendered
in its appellate jurisdiction, affirming the decision of the
MeTC. In the case at bar, the RTC order was an order
dismissing respondents appeal based on technicality. It did
not resolve substantive matters delving on the merits of the
parties claim in the ejectment case. Thus, the case brought to
the Court of Appeals was the dismissal of the appeal for
failure to file the required memorandum within the period
provided by law, and not on the merits of the ejectment case.
Lastly, petitioner posited the view that the Court of Appeals
justices should have inhibited themselves because of bias and
partiality for deciding the case within eight months and for
being very selective in discussing the issues.
We reject the proposition.
Inhibition must be for just and valid causes. The mere
imputation of bias and partiality is not enough ground for
judges to inhibit, especially when the charge is without basis.
This Court has to be shown acts or conduct clearly indicative
of arbitrariness or prejudice before it can brand them with the
stigma of bias and partiality.31 This Court has invariably held
that for bias and prejudice to be considered valid reasons for
the voluntary inhibition of judges, mere suspicion is not
enough. Bare allegations of their partiality will not suffice "in
the absence of clear and convincing evidence to overcome the
presumption that the judge will undertake his noble role to
dispense justice according to law and evidence and without
fear and favor."32
There is no factual support to petitioners charge of bias and
partiality. A perusal of the records of the case fails to reveal
that any bias or prejudice motivated the Court of Appeals in
granting respondents petition. Neither did this Court find
any questionable or suspicious circumstances leading to the
issuance of the questioned decision, as suggested by
petitioner.
The fact alone that the Court of Appeals decided the case
within eight months does not in any way indicate bias and
partiality against petitioner. It is within the constitutional
mandate to decide the case within 12 months.33
As to petitioners allegation that the Court of Appeals was
selective in choosing what issues to resolve, it bears to stress
again that "a judges appreciation or misappreciation of the
sufficiency of evidence x x x adduced by the parties, x x x,
without proof of malice on the part of respondent judge, is
not sufficient to show bias and partiality."34 We also
emphasized that "repeated rulings against a litigant, no
matter how erroneously, vigorously and consistently
expressed, do not amount to bias and prejudice which can be
bases for the disqualification of a judge."35
IN ALL, petitioner utterly failed to show that the appellate
court erred in issuing the assailed decision. On the contrary,
it acted prudently in accordance with law and jurisprudence.
WHEREFORE, the instant petition is hereby DENIED for lack
of merit. The Decision dated 17 August 2004 and the
Resolution dated 10 March 2005 of the Court of Appeals in
CA-G.R. SP No. 79001 are hereby AFFIRMED. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
83
SECOND DIVISION
G.R. No. 164668 February 14, 2005
ASIAN SPIRIT AIRLINES (AIRLINE EMPLOYEES
COOPERATIVE), petitioner,
vs.
SPOUSES BENJAMIN AND ANNE MARIE BAUTISTA,
KARL BAUTISTA and GLORIA POMERA, respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari of the Resolution1 of
the Court of Appeals (CA) dismissing the appeal of the
petitioner herein in CA-G.R. CV No. 79317 and its resolution
in the same case denying the petitioners motion for
reconsideration of its first resolution.
The Antecedents
The Spouses Benjamin and Anna Marie Bautista filed a
complaint, in behalf of their son Karl Bautista and Gloria
Pomera, against the Asian Spirit Airlines in the Regional Trial
Court of Pasig City for breach of contract and damages. After
trial, the court rendered a decision on March 24, 2003 in favor
of the plaintiffs and against the defendant. The fallo of the
decision reads:
WHEREFORE, judgment is hereby rendered IN FAVOR OF
THE PLAINTIFFS and AGAINST THE DEFENDANT
ordering the latter to pay the former:
1. P5,000.00 as temperate damages;
2. P200,000.00 as moral damages;
3. P150,000.00 as exemplary damages;
4. P50,000.00 as attorneys fees;
5. P18,371.25 as litigation expenses.
Defendants counterclaim is DISMISSED.2
Its motion for the reconsideration of the decision having been
denied by the trial court,3 the defendant appealed. The
appeal was docketed as CA-G.R. CV No. 79317. On
December 10, 2003, the appellate court directed the
defendant-appellant to file its brief as appellant within forty-
five (45) days from notice thereof.4 The defendant-appellant
received its copy of the resolution on December 17, 2003.
Thus, it had until January 31, 2004 within which to file its
brief. However, the defendant-appellant failed to file its
appellants brief. On March 3, 2004, the plaintiffs-appellees
filed a Manifestation and Motion5 for the dismissal of the
appeal of the defendant-appellant for its failure to file its
brief.
On March 10, 2004, the defendant-appellant filed an
unverified Motion to Admit Attached Appellants Brief.6 The
plaintiffs-appellees opposed the motion.7 On April 23, 2004,
the CA issued a Resolution8 denying the motion of the
defendant-appellant and granting the motion of the
plaintiffs-appellees, and ordered the appeal of the defendant-
appellant dismissed. The defendant-appellant filed a motion
for the reconsideration of the said resolution but on July 16,
 @lendelacruz
2004, the appellate court denied the said motion for lack of
merit.9
The defendant-appellant, now the petitioner, filed a petition
for review on certiorari with this Court assailing the
resolutions of the CA and asserting that:
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN STRICTLY APPLYING THE PROVISIONS OF
THE RULES OF COURT ON DISMISSAL OF APPEAL TO
HEREIN PETITIONERS APPEAL WHICH IS CONTRARY
TO THE MANDATED PRECEPT OF LIBERAL
CONSTRUCTION EXPLICITLY PROVIDED FOR IN THE
RULES AND SANCTIONED BY JURISPRUDENTIAL
PRONOUNCEMENTS OF THIS HONORABLE SUPREME
COURT, AND CONSIDERING THAT PETITIONERS
APPEAL BELOW IS BASED AND FOUNDED ON VERY
MERITORIOUS GROUNDS THE DENIAL OF WHICH
WILL DEFINITELY RESULT TO PREJUDICE TO
PETITIONERS SUBSTANTIAL RIGHTS AND DENIAL TO
IT OF ITS RIGHT TO DUE PROCESS.10
The petitioner avers that the late filing of its brief did not
cause material injury or prejudice to the respondents and the
issues raised by it in its brief require an examination of the
evidence on record.
The petitioner prays that we set aside the assailed resolution
of the CA and order the appellate court to reinstate its appeal
for further proceedings. In their comment on the petition, the
respondents submit that:
The Court of Appeals was evidently not satisfied with the
explanation by the petitioner. Its action in this regard is not
subject to review, for the Supreme Court cannot interfere
with the discretion of the Court of Appeals.
It is necessary to impress upon litigants and their lawyers the
necessity of a strict compliance with the periods for
performing certain acts incident to the appeal and the
transgressions thereof, as a rule, would not be tolerated;
otherwise, those periods could be evaded by subterfuges
and manufactured excuses and would ultimately become
inutile. (Don Lino Gutierrez & Sons, Inc. vs. CA, G.R. No. L-
39124, Nov. 15, 1974).
This Honorable Court will be setting a bad example if it
accepts the excuse of the Petitioners counsel that he
instructed his secretary to file the motion for extension who,
in turn, forgot to file it. Logic dictates that the Secretary
cannot release the request without the lawyers signature but
still the basic and simple prudence to follow it up by counsel
leaves much to be desired. Every lawyer may soon adopt this
reasoning to justify non-filing of the brief on time.11
The petition has no merit.
Under Section 1(e), Rule 50 of the Rules of Court, as
amended, an appeal may be dismissed by the CA on its own
motion or that of the appellee for failure of the appellant to
file its brief within the time provided by Section 7, Rule 44 of
the said Rules. The petitioner had until January 31, 2004
within which to file its brief but failed to do so. It was only
on March 10, 2004, after receipt of respondents motion filed
on March 3, 2004, praying for the dismissal of the petitioners
appeal for its failure to file its brief, that the petitioner filed
its brief appended to an unverified motion to admit the said
brief. The only excuse of the petitioner for its failure to file its
brief was the claim of its counsel in the said Motion for Leave
to Admit, thus:
84
1. The filing of the Appellants Brief is due on January 31,
2004. The notice from the Honorable Court was received on
December 17, 2003 and because of the holiday season at that
time, the undersigned counsel gave instruction to his
Secretary to file the usual Motion for Time asking for forty-
five (45) days from January 31, 2004 or until March 16, 2004.
2. The undersigned started to prepare the Appellants Brief
bearing in mind the new deadline.
3. It was only when the undersigned received the
Manifestation of plaintiffs on March 5, 2004 that he inquired
with his secretary if the Manifestation of counsel is true and
she readily admitted that she failed to prepare and file the
Motion for Time.12
The excuse contrived by the petitioners counsel is totally
unacceptable. We note that the motion of the petitioner is
unverified. Neither did the petitioner bother appending to its
motion an affidavit of its counsels secretary containing
his/her explanation why he/she failed to file the said motion
for extension if there was such a motion in the first place. The
petitioner did not even bother appending to its Motion to
Admit its motion for extension to file brief which its counsels
secretary allegedly failed to file in the CA. Blaming its
counsels unidentified secretary for its abject failure to file its
brief is a common practice for negligent lawyers to cover up
for their own negligence, incompetence, indolence, and
ineptitude. Such excuse is the most hackneyed and habitual
subterfuge employed by litigants who fail to observe the
procedural requirements prescribed by the Rules of Court.13
It bears stressing that it is the duty of counsel to adopt and
strictly maintain a system that insures that all pleadings
should be filed and duly served within the period therefor
and, if he fails to do so, the negligence of his secretary or clerk
to file such pleading is imputable to the said counsel.14
We agree with the petitioners contention that the rules of
procedure may be relaxed for the most persuasive reasons.
But as this Court held in Galang v. Court of Appeals:15
Procedural rules are not to be belittled or dismissed simply
because their non-observance may have resulted in prejudice
to a partys substantive rights. Like all rules, they are
required to be followed except only for the most persuasive
of reasons when they may be relaxed to relieve a litigant of
an injustice not commensurate with the degree of his
thoughtlessness in not complying with the procedure
prescribed.16
In an avuncular case,17 we emphasized that:
Procedural rules are tools designed to facilitate the
adjudication of cases. Courts and litigants alike are, thus,
enjoined to abide strictly by the rules. And while the Court,
in some instances, allows a relaxation in the application of the
rules, this, we stress, was never intended to forge a bastion
for erring litigants to violate the rules with impunity. The
liberality in the interpretation and application of the rules
applies only in proper cases and under justifiable causes and
circumstances. While it is true that litigation is not a game of
technicalities, it is equally true that every case must be
prosecuted in accordance with the prescribed procedure to
insure an orderly and speedy administration of justice. The
instant case is no exception to this rule.
In the present case, we find no cogent reason to exempt the
petitioner from the effects of its failure to comply with the
Rules of Court.
 @lendelacruz
The right to appeal is a statutory right and the party who
seeks to avail of the same must comply with the requirements
of the Rules. Failing to do so, the right to appeal is lost. More
so, as in this case, where petitioner not only neglected to file
its brief within the stipulated time but also failed to seek an
extension of time for a cogent ground before the expiration
of the time sought to be extended.18
In not a few instances, the Court relaxed the rigid application
of the rules of procedure to afford the parties the opportunity
to fully ventilate their cases on the merits. This is in line with
the time-honored principle that cases should be decided only
after giving all parties the chance to argue their causes and
defenses. Technicality and procedural imperfection should,
thus, not serve as basis of decisions. In that way, the ends of
justice would be better served.19 For, indeed, the general
objective of procedure is to facilitate the application of justice
to the rival claims of contending parties, bearing always in
mind that procedure is not to hinder but to promote the
administration of justice.20 In this case, however, such
liberality in the application of rules of procedure may not
be invoked if it will result in the wanton disregard of the
rules or cause needless delay in the administration of
justice. It is equally settled that, save for the most persuasive
of reasons, strict compliance is enjoined to facilitate the
orderly administration of justice.21
IN LIGHT OF ALL THE FOREGOING, the petition is
DENIED
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 154366 November 17, 2010
CEBU BIONIC BUILDERS SUPPLY, INC. and LYDIA
SIA, Petitioners,
vs.
DEVELOPMENT BANK OF THE PHILIPPINES, JOSE TO
CHIP, PATRICIO YAP and ROGER BALILA,
Respondents.
DECISION
LEONARDO DE CASTRO, J.:
This Petition for Review on Certiorari1 under Rule 45 of the
Rules of Court assails the Resolution2 dated February 5, 2002
and the Amended Decision3 dated July 5, 2002 of the Court
of Appeals in CA-G.R. CV No. 57216. In the Resolution dated
February 5, 2002, the Court of Appeals admitted the Motion
for Reconsideration4 of herein respondents Development
Bank of the Philippines (DBP), Jose To Chip, Patricio Yap and
Roger Balila, notwithstanding the fact that the same was filed
more than six months beyond the reglementary period. Said
motion prayed for the reversal of the Court of Appeals
Decision5 dated February 14, 2001, which affirmed the
Decision6 dated April 25, 1997 of the Regional Trial Court
(RTC) of Cebu, Branch 8, in Civil Case No. CEB-10104 that
ruled in favor of petitioners. In the Amended Decision of July
5, 2002, the Court of Appeals reversed its previous Decision
dated February 14, 2001 and dismissed the petitioners
complaint for lack of merit.
The facts leading to the instant petition are as follows:
85
On June 2, 1981, the spouses Rudy R. Robles, Jr. and Elizabeth
R. Robles entered into a mortgage contract7 with DBP in
order to secure a loan from the said bank in the amount of
P500,000.00. The properties mortgaged were a parcel of land
situated in Tabunoc, Talisay, Cebu, which was then covered
by Transfer Certificate of Title (TCT) No. T- 47783 of the
Register of Deeds of Cebu, together with all the existing
improvements, and the commercial building to be
constructed thereon8 (subject properties). Upon completion,
the commercial building was named the State Theatre
Building.
On October 28, 1981, Rudy Robles executed a contract of lease
in favor of petitioner Cebu Bionic Builders Supply, Inc. (Cebu
Bionic), a domestic corporation engaged in the construction
business, as well as the sale of hardware materials. The
contract pertinently provides:
CONTRACT OF LEASE
KNOW ALL MEN BY THESE PRESENTS:
This Lease Contract made and entered into, by and between:
RUDY ROBLES, JR., Filipino, of legal age, married and
resident of 173 Maria Cristina Ext., Cebu City, hereinafter
referred to as the LESSOR,
- and -
CEBU BIONIC BUILDER SUPPLY, represented by LYDIA
SIA, Filipino, of legal age, married and with address at 240
Magallanes St., Cebu City hereinafter known as the LESSEE;
WITNESSETH:
The LESSOR is the owner of a commercial building along
Tabunok, Talisay, Cebu, known as the State Theatre Building.
The LESSOR agrees to lease unto the LESSEE and the LESSEE
accepts the lease from the LESSOR, a portion of the ground
floor thereof, consisting of one (1) unit/store space under the
following terms and conditions:
1. The LESSEE shall pay a monthly rental
of One Thousand (P1,000.00) Pesos,
Philippine Currency. The rental is payable
in advance within the first five (5) days of
the month, without need of demand;
2. That the term of this agreement shall
start on November 1, 1981 and shall
terminate on the last day of every month
thereafter; provided however that this
contract shall be automatically renewed on
a month to month basis if no notice, in
writing, is sent to the other party to
terminate this agreement after fifteen (15)
days from receipt of said notice;
xxxx
9. Should the LESSOR decide to sell the
property during the term of this lease
contract or immediately after the
expiration of the lease, the LESSEE shall
have the first option to buy and shall
match offers from outside parties.9
(Emphases ours.)
 @lendelacruz
The above contract was not registered by the parties thereto
with the Registry of Deeds of Cebu.
Subsequently, the spouses Robles failed to settle their loan
obligation with DBP. The latter was, thus, prompted to effect
extrajudicial foreclosure on the subject properties.10 On
February 6, 1987, DBP was the lone bidder in the foreclosure
sale and thereby acquired ownership of the mortgaged
subject properties.11 On October 13, 1988, a final Deed of
Sale12 was issued in favor of DBP.
Meanwhile, on June 18, 1987, DBP sent a letter to Bonifacio
Sia, the husband of petitioner Lydia Sia who was then
President of Cebu Bionic, notifying the latter of DBPs
acquisition of the State Theatre Building. Said letter reads:
June 18, 1987
Mr. Bonifacio Sia
Bionic Builders Inc.
State Theatre Bldg.
Tabunok, Talisay, Cebu
Sir:
This refers to the commercial space you are occupying in the
acquired property of the Bank, formerly owned by Rudy
Robles, Jr.
Please be informed that said property has been acquired
through foreclosure on February 6, 1987. Considering
thereat, we require you to remit the rental due for June 1987.
If you wish to continue on leasing the property, we request
you to come to the Bank for the execution of a Contract of
Lease, the salient conditions of which are as follows:
1. The lease will be on month to month
basis, for a maximum period of one (1)
year;
2. Deposit equivalent to two (2) months
rental and advance of one (1) month rental,
and the remaining amount for one year
period (equivalent to 9 months rental)
shall be secured by either surety bond,
cash bond or assigned time deposit;
3. That in case there is a better offer or if the
property will be subject of a purchase
offer, within the term, the lessor is given an
option of first refusal, otherwise he has to
vacate the premises within thirty (30) days
from date of notice.
We consider, temporarily, the current monthly rental based
on the six-month receipts, which we require you to submit,
until such time when we will fix the amount accordingly.
If the contract of lease is not executed within thirty (30) days
from date hereof, it is construed that you are not interested
in leasing the premises and will vacate within the said period.
Please be guided accordingly.
Truly yours,
86
(SGD)LUCILO S. REVILLAS
Branch Head13 (Emphases ours.)
On July 7, 1987, the counsel of Bonifacio Sia replied to the
above letter, to wit:
July 7, 1987
Mr. Lucilo S. Revillas
Branch Head
Development Bank of the Philippines
Dear Mr. Revillas,
This has reference to your letter of 18 June 1987 which you
sent to my client, Mr. Bonifacio Sia of Cebu Bionic Builders
Supply the lessee of a commercial space of the State Theatre
Bldg., located at Tabunok, Talisay, Cebu.
My client is amenable to the terms contained in your letter
except the following:
1. In lieu of item no. 2 thereof, my client
will deposit with your bank the amount of
P10,000.00, as assigned time deposit;
2. The 30 days notice you mentioned in
your letter, (3), is too short. My client is
requesting for at least 60 days notice.
I sincerely hope that you will give due course to this request.
Thank you.
Truly yours,
(SGD) ANASTACIO T. MUNTUERTO, JR.14
Thereafter, on November 14, 1989, a Certificate of Time
Deposit15 for P11,395.64 was issued in the name of Bonifacio
Sia and the same was allegedly remitted to DBP as advance
rental deposit.
For reasons unclear, however, no written contract of lease
was executed between DBP and Cebu Bionic.
In the meantime, subsequent to the acquisition of the subject
properties, DBP offered the same for sale along with its other
assets. Pursuant thereto, DBP published a series of
invitations to bid on such properties, which were scheduled
on January 19, 1989,16 February 23, 1989,17 April 13, 1989,18
and November 15, 1990.19 As no interested bidder came
forward, DBP publicized an Invitation on Negotiated
Sale/Offer, the relevant terms and conditions of which
stated:
INVITATION ON NEGOTIATED SALE/OFFER
The DEVELOPMENT BANK OF THE PHILIPPINES, Cebu
Branch, will receive SEALED NEGOTIATED
OFFERS/PURCHASE PROPOSALS tendered at its Branch
Office, DBP Building, Osmea Boulevard, Cebu City for the
sale of its acquired assets mentioned hereinunder within the
"15-Day-Acceptance-Period" starting from NOVEMBER 19,
1990 up to 12:00 oclock noon of DECEMBER 3, 1990. Sealed
offers submitted shall be opened by the Committee on
Negotiated Offers at exactly 2:00 oclock in the afternoon of
 @lendelacruz
the last day of the acceptance period in order to determine
the highest and/or most advantageous offer.
Item Description/Location
No.
xxxx
II Commercial land, Lot No. 3681-C-3, having anpurchase
situated in Tabunok, Talisay, Cebu and covered furnished
(DBP), including the commercial building thereon.
xxxx
A pre-numbered Acknowledgment Receipt duly signed by
at least two (2) of the Committee members shall be issued
to the offeror acknowledging receipt of such offer.
Negotiated offers may be made in CASH or TERMS, the
former requiring a deposit of 10% and the latter 20% of the
starting price, either in the form of cash or
cashiers/managers check to be enclosed in the sealed
offer.
xxxx
Interested negotiated offerors are requested to see Atty.
Apolinar K. Panal, Jr., Acquired Asset in Charge (Tel. No. 9-
63-25), in order to secure copies of the Letter-Offer form and
Negotiated Sale Rules and Procedures.
NOTE: If no offer is received during the above stated
acceptance period, the properties described above shall be
sold to the first offeror who submits an acceptable proposal
on a "First-Come-First-Served" basis.
City of Cebu, Philippines, November 16, 1990.
(SGD.) TIMOTEO P. OLARTE
Branch Head20 (Emphases ours.)
In the morning of December 3, 1990, the last day for the
acceptance of negotiated offers, petitioners submitted
through their representative, Judy Garces, a letter-offer form,
offering to purchase the subject properties for P1,840,000.00.
Attached to the letter-offer was a copy of the Negotiated Sale
Rules and Procedures issued by DBP and a managers check
for the amount of P184,000.00, representing 10% of the
offered purchase price. This offer of petitioners was not
accepted by DBP, however, as the corresponding deposit
therefor was allegedly insufficient.
After the lapse of the above-mentioned 15-day acceptance
period, petitioners did not submit any other offer/proposal
to purchase the subject properties.1avvphi1
On December 17, 1990, respondents To Chip, Yap and Balila
presented their letter-offer21 to purchase the subject
properties on a cash basis for P1,838,100.00. Said offer was
accompanied by a downpayment of 10% of the offered
purchase price, amounting to P183,810.00. On even date, DBP
acknowledged the receipt of and accepted their offer. On
December 28, 1990, respondents To Chip, Yap and Balila paid
the balance of the purchase price and DBP issued a Deed of
Sale22 over the subject properties in their favor.
On January 11, 1991, the counsel of respondents To Chip, Yap
and Balila sent a letter23 addressed to the proprietor of Cebu
Bionic, informing the latter of the transfer of ownership of the
subject properties. Cebu Bionic was ordered to vacate the
87
premises within thirty (30) days from receipt of the letter and
directed to pay the rentals from January 1, 1991 until the end
of the said 30-day period.
Starting
The counsel of Cebu Bionic
Price replied that his client received
24
the above letter on January 11, 1991. He stated that he has
instructed Cebu Bionic to verify first the ownership of the
subject properties since it had the preferential right to
area of 396
the sq. m., He
same. P1,838,100.00
likewise requested that he be
by TCT No. T-65199
a copy of the deed of sale executed by DBP in favor
of respondents To Chip, Yap and Balila.
On February 15, 1991, respondent To Chip wrote a letter25 to
the counsel of Cebu Bionic, insisting that he and his co-
respondents Yap and Balila urgently needed the subject
properties to pursue their business plans. He also reiterated
their demand for Cebu Bionic to vacate the premises.
Shortly thereafter, on February 27, 1991, the counsel of
respondents To Chip, Yap and Balila sent its final demand
letter26 to Cebu Bionic, warning the latter to vacate the subject
properties within seven (7) days from receipt of the letter,
otherwise, a case for ejectment with damages will be filed
against it.27
Despite the foregoing notice, Cebu Bionic still paid28 to DBP,
on March 22, 1991, the amount of P5,000.00 as monthly
rentals on the unit of the State Theatre Building it was
occupying for period of November 1990 to March 1991.
On April 10, 1991, petitioners filed against respondents DBP,
To Chip, Yap and Balila a complaint29 for specific
performance, cancellation of deed of sale with damages,
injunction with a prayer for the issuance of a writ of
preliminary injunction.30 The complaint was docketed as
Civil Case No. CEB-10104 in the RTC.
Petitioners alleged, inter alia, that Cebu Bionic was the lessee
and occupant of a commercial space in the State Theatre
Building from October 1981 up to the time of the filing of the
complaint. During the latter part of 1990, DBP advertised for
sale the State Theatre Building and the commercial lot on
which the same was situated. In the prior invitation to bid,
the bidding was scheduled on November 15, 1990; while in
the next, under the 15-day acceptance period, the submission
of proposals was to be made from November 19, 1990 up to
12:00 noon of December 3, 1990. Petitioners claimed that, at
about 10:00 a.m. on December 3, 1990, they duly submitted to
Atty. Apolinar Panal, Jr., Chief of the Acquired Assets of
DBP, the following documents, namely:
6.1 Letter-offer form, offering to purchase the
property advertised, for the price of P1,840,000,
which was higher than the starting price of
P1,838,100.00 on cash basis. x x x;
6.2 Negotiated Sale Rules and Procedures, duly
signed by plaintiff, x x x;
6.3 Managers check for the amount of P184,000
representing 10% of the deposit dated December 3,
1990 and issued by Allied Banking Corp. in favor of
the Development Bank of the Philippines. x x x.31
(Emphasis ours.)
Petitioners asserted that the above documents were initially
accepted but later returned. DBP allegedly advised
petitioners that "there was no urgent need for the same x x x,
considering that the property will necessarily be sold to
[Cebu Bionic] for the reasons that there was no other
 @lendelacruz
interested party and that [Cebu Bionic] was a preferred party
being the lessee and present occupant of the property subject
of the lease[.]"32 Petitioners then related that, without their
knowledge, DBP sold the subject properties to respondents
To Chip, Yap and Balila. The sale was claimed to be
simulated and fictitious, as DBP still received rentals from
petitioners until March 1991. By acquiring the subject
properties, petitioners contended that DBP was deemed to
have assumed the contract of lease executed between them
and Rudy Robles. As such, DBP was bound by the provision
of the lease contract, which stated that:
9. Should the Lessor decide to sell the property during the
term of this lease contract or immediately after the expiration
of the lease, the Lessee shall have the first option to buy and
shall match offers from outside parties.33
Petitioners sought the rescission of the contract of sale
between DBP and respondents To Chip, Yap and Balila.
Petitioners also prayed for the issuance of a writ of
preliminary injunction, restraining respondents To Chip, Yap
and Balila from registering the Deed of Sale in the latters
favor and from undertaking the ejectment of petitioners from
the subject properties. Likewise, petitioners entreated that
DBP be ordered to execute a deed of sale covering the subject
properties in their name and to pay damages and attorneys
fees.
In its answer,34 DBP denied the existence of a contract of lease
between itself and petitioners. DBP countered that the letter-
offer of petitioners was actually not accepted as their offer to
purchase was on a term basis, which therefore required a 20%
deposit. The 10% deposit accompanying the petitioners
letter-offer was declared insufficient. DBP stated that the
letter-offer form was not completely filled out as the "Term"
and "Mode of Payment" fields were left blank. DBP then
informed petitioner Lydia Sia of the inadequacy of her offer.
After ascertaining that there was no other offeror as of that
time, Lydia Sia allegedly summoned back her representative
who did not leave a copy of the letter-offer and the attached
documents. DBP maintained that petitioners documents did
not show that the same were received and approved by any
approving authority of the bank. The letter-offer attached to
the complaint, which indicated that the mode of payment
was on a cash basis, was allegedly not the document shown
to DBP. In addition, DBP argued that there was no
assumption of the lease contract between Rudy Robles and
petitioners since it acquired the subject properties through
the involuntary mode of extrajudicial foreclosure and its
request to petitioners to sign a new lease contract was simply
ignored. DBP, therefore, insisted that petitioners occupancy
of the unit in the State Theatre Building was merely upon its
acquiescence. The petitioners payment of rentals on March
22, 1991 was supposedly made in bad faith as they were
made to a mere teller who had no knowledge of the sale of
the subject properties to respondents To Chip, Yap and
Balila. DBP, thus, prayed for the dismissal of the complaint
and, by way of counterclaim, asked that petitioners be
ordered to pay damages and attorneys fees.
Respondents To Chip, Yap and Balila no longer filed a
separate answer, adopting instead the answer of DBP.35
In an Order36 dated July 31, 1991, the RTC granted the prayer
of petitioners for the issuance of a writ of preliminary
injunction.37
On April 25, 1997, the RTC rendered judgment in Civil Case
No. CEB-10104, finding meritorious the complaint of the
petitioners. Explained the trial court:
88
It is a fact on record that [petitioners] complied with the
requirements of deposit and advance rental as conditions for
constitution of lease between the parties. [Petitioners] in
complying with the requirements, issued a time deposit in
the amount of P11,395.64 and remitted faithfully its monthly
rentals until April, 1991, which monthly rental was no longer
accepted by the DBP. Although there was no formal written
contract executed between [respondent] DBP and the
[petitioners], it is very clear that DBP opted to continue the
old and previous contract including the terms thereon by
accepting the requirements contained in paragraph 2 of its
letter dated June 18, 1987. It is also a fact on record that under
the lease contract continued by the DBP on the [petitioners],
it is provided in paragraph 9 thereof that the lessee shall have
the first option to buy and shall match offers from outside
parties. And yet, [respondent] DBP never gave [petitioners]
the first option to buy or to match offers from outside
parties, more specifically [respondents] To Chip, Balila and
Yap. It is also a fact on record that [respondent] DBP in its
letter dated June 18, 1987 to [petitioners] wrote in paragraph
3 thereof, "that in case there is better offer or if a property will
be subject of purchase offer, within the term, the lessee is
given the option of first refusal, otherwise, he has to vacate
the premises within thirty (30) days". Yet, [respondent] DBP
never informed [petitioners] that there was an interested
party to buy the property, meaning, [respondents To Chip,
Yap and Balila], thus depriving [petitioners] of the
opportunity of first refusal promised to them in its letter
dated June 18, 1987. x x x.38 (Emphases ours.)
As regards the offer of petitioners to purchase the subject
properties from DBP, the RTC gave more credence to the
petitioners version of the facts, to wit:
It is also a fact on record that when [respondent] DBP offered
the property for negotiated sale under the 15-day acceptance
period[, which] ended at noon of December 3, 1991, [Cebu
Bionic] submitted its offer, complete with [the required
documents.] x x x.
xxxx
These requirements, however, were unceremoniously
returned by [respondent] bank with the assurance that since
there was no other bidder of the said property, there was no
urgency for the same and that [Cebu Bionic] also, in all
events, is entitled to first option being the present lessee.
The declaration of Atty. Panal to the effect that Cebu Bionic
wanted to buy the property on installment terms, such that
the deposit of P184,000.00 was insufficient being only 10% of
the offer, could not be given much credence as it is refuted by
Exh. "H" which is the negotiated offer to purchase form
under the 15-day acceptance period accomplished by
[petitioners] which shows clearly the written word "Cash"
after the printed words "Term" and "Mode of Payment",
Exhibit "J", the Managers check issued by Allied Banking
Corporation dated December 3, 1990 in the amount of
P184,000.00 representing 10% of the offer showing the mode
of payment is for cash; Exhibit "K" which is the application
for Managers check in the amount of P184,000.00 dated
December 3, 1990 showing the beneficiary as DBP. If it is true
that the offer of [petitioners] was for installment payments,
then in the ordinary course of human behavior, it would
not have wasted effort in securing a Managers check in the
amount of P184,000.00 which was insufficient for 20%
deposit as required for installment payments. More
credible is the explanation [given by] witness Judy Garces
when she said that DBP through Atty. Panal returned the
documents submitted by her, saying that there was no
urgency for the same as there was no other bidder of [the
said] property and that Cebu Bionic was entitled to a first
 @lendelacruz
option to buy being the present lessee. In the letter also of
[respondent] bank dated June 18, 1987, it is important to note
that aside from requiring Cebu Bionic to comply with certain
requirements of time deposit and advance rental, as
condition for constitution of lease between the parties and
which was complied by Cebu Bionic[,] said letter further
states in paragraph 3 thereof that "in case there is [a] better
offer or if the property will be subject of a purchase offer,
within the term, the lessee is given the option of first refusal,
otherwise, he has to vacate the premises within thirty days".
In answer to the Courts question, however, Atty. Panal
admitted that he did not tell [petitioners] that there was
another party who was willing to purchase the property, in
violation of [petitioners] right of first refusal.39 (Emphasis
ours.)
Likewise, the RTC found that respondents To Chip, Yap and
Balila were aware of the lease contract involving the subject
properties before they purchased the same from DBP. Thus:
[Respondent] Jose To Chip lamely pretends ignorance that
[petitioners] are lessees of the property, subject matter of this
case. He states that he and his partners, the other
[respondents], were given assurances by Atty. Panal of the
DBP that [Lydia Sia] is not a lessee, although he knew that
[petitioners] were presently occupying the property and that
it was possessed by [petitioners] even before it was owned by
the DBP. x x x.
xxxx
[Respondent] Roger Balila, in his testimony, likewise
pretended ignorance that he knew that [Lydia Sia] was a
lessee of the property. x x x.
xxxx
Upon further questioning by the Court, he admitted that
[Lydia Sia] was not possessing the building freely; that she
was a lessee of Rudy Robles, the former owner, but cleverly
insisted in disowning knowledge that [Lydia Sia] was a
lessee, denying knowledge that [Lydia Sia] was paying
rentals to [respondent] bank. His pretended ignorance x x x
was a way of evading [Cebu Bionics] right of first priority to
buy the property under the contract of lease. x x x The Court
is convinced that [respondents To Chip, Yap and Balila]
knew that [Cebu Bionic] was the present lessee of the
property before they bought the same from [respondent]
bank. Common observation, knowledge and experience
dictates that as a prudent businessman, it was but natural
that he ask Lydia Sia what her status was in occupying the
property when he went to talk to her, that he ask her if she
was a lessee. But he said, all he asked her was whether she
was interested to buy the property. x x x.40
The trial court, therefore, concluded that:
From the foregoing facts on record, it is thus clear that
[petitioner] Cebu Bionic is the present lessee of the property,
the lease contract having been continued by [respondent]
DBP when it received rental payments up to March of 1991
as well as the advance rental for one year represented by the
assigned time deposit which is still in [respondent] banks
possession. The provision, therefore, in the lease contract, on
the right of first option to buy and the right of first refusal
contained in [respondent] banks letter dated June 18, 1987,
are still subsisting and binding up to the present, not only on
[respondent] bank but also on [respondents To Chip, Yap
and Balila]. x x x.
89
xxxx
WHEREFORE, THE FOREGOING PREMISES
CONSIDERED, judgment is hereby rendered:
(1) Rescinding the Deed of Sale dated December 28,
1990 between [respondent] Development Bank of
the Philippines and [respondents] Roger Balila, Jose
To Chip and Patricio Yap;
(2) Ordering the [respondent] Development Bank of
the Philippines to execute a Deed of Sale over the
property, subject matter of this case upon payment
by [petitioners] of the whole consideration involved
and to complete all acts or documents necessary to
have the title over said property transferred to the
name of [petitioners];
(3) Costs against [respondents].41
DBP forthwith filed a Notice of Appeal.42 Respondents To
Chip, Yap and Balila filed a Motion for Reconsideration 43 of
the above decision, but the RTC denied the same in an
Order44 dated July 4, 1997. Said respondents then filed their
Notice of Appeal.45
On February 14, 2001, the Court of Appeals promulgated its
Decision,46 pronouncing that:
We find nothing erroneous with the judgment rendered by
the trial court. Perforce, We sustain it and dismiss the
[respondents] submission.
The RTC determined, upon evidence on record after a careful
evaluation of the witnesses and their testimonies during the
trial that indeed [petitioners] right of first option was
violated and thus, rescission of the sale made by DBP to
[respondents To Chip, Yap and Balila] are in order.
xxxx
Apparently, DBP accepted [the documents submitted by
petitioners] and thereafter, through Atty. Panal (of DBP),
returned all of it to the [petitioners] "with the assurance that
since there was no other bidder of the said property, there
was no urgency for the same and that [Cebu Bionic] also, in
all events, is entitled to first option being the present lessee.
[DBP] maintains that the return of the documents [submitted
by petitioners] was in order since the [petitioners] offered to
buy the property in question on installment basis requiring a
higher 20% deposit. This, however, was correctly rejected by
the trial court[.] x x x
The binding effect of the lease agreement upon the
[respondents To Chip, Yap and Balila] must be sustained
since from existing jurisprudence cited by the lower court, it
was determined during trial that:
"... [respondents To Chip, Yap and Balila] knew that [Cebu
Bionic] was the present lessee of the property before they
bought the same from [respondent] bank. Common
observation, knowledge and experience dictates that as a
prudent businessman, it was but natural that he ask Lydia
Sia what her status was in occupying the property when he
went to talk to her, that he ask her if she was a lessee. But
he said, all he asked her was whether she was interested to
buy the property. x x x.
 @lendelacruz
Moreover, We find that the submissions presented by the
[respondents] in their respective briefs argue against
questions of facts as found and determined by the lower
court. The respondents contentions consist of crude attempts
to question the assessment and evaluation of testimonies and
other evidence gathered by the trial court.
It must be remembered that findings of fact as determined by
the trial court are entitled to great weight and respect from
appellate courts and should not be disturbed on appeal
unless for [strong] and cogent reasons. These findings
generally, so long as supported by evidence on record, are
not to be disturbed unless there are some facts or evidence
which the trial court has misappreciated or overlooked, and
which if considered would have altered the results of the
entire case. Sad to say for the [respondents], We see no reason
to depart from this well-settled legal principle.
WHEREFORE, in view of the foregoing, the judgment of the
Regional Trial Court of Cebu City, Branch 8, in Civil Case
No. 10104 is hereby AFFIRMED in toto.47
On October 1, 2001, petitioners filed a Motion for Issuance of
Entry of Judgment.48 Petitioners stressed that, based on the
records of the case, respondents were served a copy of the
Court of Appeals Decision dated February 14, 2001 sometime
on March 7, 2001. However, petitioners discovered that
respondents have not filed any motion for reconsideration of
the said decision within the reglementary period therefor,
nor was there any petition for certiorari or appeal filed before
the Supreme Court.
In response to the above motion, respondents To Chip, Yap
and Balila filed on October 8, 2001 a Motion to Admit Motion
for Reconsideration.49 Atty. Francis M. Zosa, the counsel for
respondents To Chip, Yap and Balila, explained that he sent
copies of the motion for reconsideration to petitioners and
DBP via personal delivery. On the other hand, the copies of
the motion to be filed with the Court of Appeals were
purportedly sent to Mr. Domingo Tan, a friend of Atty. Zosa
in Quezon City, who agreed to file the same personally with
the appellate court in Manila. When Atty. Zosa inquired if
the motion for reconsideration was accordingly filed, Mr. Tan
allegedly answered in the affirmative. To his surprise, Atty.
Zosa received a copy of petitioners Motion for Issuance of
Entry of Judgment. Atty. Zosa, thus, attributed the failure of
his clients to file a motion for reconsideration on the mistake,
excusable negligence and/or fraud committed by Mr. Tan.
In the assailed Resolution dated February 5, 2002, the Court
of Appeals granted the motion of respondents To Chip, Yap
and Balila and admitted the motion for reconsideration
attached therewith "in the higher interest of substantial
justice."50
On July 5, 2002, the Court of Appeals reversed its original
Decision dated February 14, 2001, reasoning thus:
After a judicious review and reevaluation of the evidence and
facts on record, we are convinced that DBP had terminated
the Robles lease contract. From its letter of June 18, 1987, DBP
had expressly notified [petitioners] that "(I)f they wish to
continue on leasing the property x x x" "to come to the Bank
for the execution of a Contract of Lease, the salient conditions
of which are as follows:
1. The lease will be on a month to month basis for
a maximum period of one (1) year;
90
2. Deposit equivalent to two (2) months rental and
advance of one (1) month rental, and the
remaining amount for one year (equivalent to 9
months rental) shall be secured by either surety
bond, cash bond or assigned time deposit;
3. That in case there is a better offer or if the
property will be subject of a purchase offer, within
the term, the lessor is given an option of first
refusal, otherwise he has to vacate the premises
within thirty (30) days from date of notice.
We consider, temporarily, the current monthly rental based
on the six-month receipts, which we require you to submit,
until such time when we will fix the amount accordingly."
Evidently, except for the remittance of the monthly rentals up
to March 1991, the conditions imposed by DBP have never
been complied with. [Petitioners] did not go to the Bank to
sign any new written contract of lease with DBP. [Petitioners]
also did not put up a surety bond nor cash bond nor assign a
time deposit to secure the payment of rental for nine (9)
months, although the [petitioners] opened a time deposit but
did not assign it to DBP.
But even with the remittance and acceptance of the deposit
made by [petitioners] equivalent to two (2) months rental and
advance of one (1) month rental it does not necessarily follow
that DBP opted to continue with the Robles lease. This is
because the Robles contract provides:
"That the term of the agreement shall start on November 1,
1981 and shall terminate on the last day of every month
thereafter, provided however, that this contract shall be
automatically renewed on a month to month basis if no
notice in writing is sent to the other party to determine to
terminate this agreement after fifteen (15) days from the
receipt of said notice."
Here, a notice was sent to [petitioners] on June 18, 1987,
informing them that if they "wish to continue on leasing the
property, we request you to come to the Bank for the
execution of a Contract of Lease x x x."
[Petitioners] failed to enter into the contract of lease required
by DBP for it to continue occupying the leased premises.
Because of [petitioners] failure to comply with the
conditions embodied in the 18 June 1987 letter, it cannot be
said that [petitioners] entered into a new contract with DBP
where they were given the first option to buy the leased
property and to match offers from outside parties.
xxxx
Be that as it may, DBP continued to accept the monthly
rentals based on the old Robles contract despite the fact that
the [petitioners] failed to enter into a written lease contract
with it. Corollarily, the relations between the parties is now
governed by Article 1670 of the New Civil Code, thus:
"Art. 1670. If at the end of contract the lessee should continue
enjoying the thing leased for fifteen days with the
acquiescence of the lessor, and unless a notice to the contrary
by either party has previously been given, it is understood
that there is an implied new lease, not for the period of the
original contract, but for the time established in Articles 1682
and 1687. The other terms of the original contract shall be
revived."
 @lendelacruz 91

xxxx WHETHER OR NOT THE HON. COURT

OF APPEALS ERRED IN DECLARING
x x x [T]he acceptance by DBP of the monthly rentals does not THAT PETITIONERS DID NOT ENTER
mean that the terms of the Robles contract were revived. In INTO CONTRACT WITH RESPONDENT
the case of Dizon vs. Court of Appeals, the Supreme Court DBP CONTINUING THE TERMS OF THE
declared that: ROBLES CONTRACT

"The other terms of the original contract of lease which are III
revived in the implied new lease under Article 1670 of the
New Civil Code are only those terms which are germane to WHETHER OR NOT THE HON. COURT
the lessees right [of] continued enjoyment of the property OF APPEALS ERRED WHEN IT
leased an implied new lease does not ipso facto carry with DECLARED THAT THE
it any implied revival of any option to purchase the leased CONTINUATION BY RESPONDENT
premises." DBP OF THE LEASE CONTRACT DID
NOT CONTAIN THE RIGHT OF FIRST
In view of the foregoing, it is clear that [petitioners] had no REFUSAL
right to file a case for rescission of the deed of sale executed
by DBP in favor of [respondents To Chip, Yap and Balila] IV
because said deed of sale did not violate their alleged first
option to buy or match offers from outside parties which is WHETHER OR NOT THE HON. COURT
legally non-existent and which was not impliedly renewed OF APPEALS ERRED WHEN IT
under Article 1670 of the Civil Code. DECLARED THAT THE LEASE
CONTRACT IS GOVERNED BY ART.
WHEREFORE, premises considered, the 14 February 2001 1670 OF THE NEW CIVIL CODE
Decision is hereby RECONSIDERED and another one is
issued REVERSING the 25 April 1997 Decision of the V
Regional Trial Court, Branch 8, Cebu City in Civil Case No.
CEB-10104 and the complaint of [petitioners] is DISMISSED
WHETHER OR NOT THE HON. COURT
for lack of merit.51
OF APPEALS ERRED WHEN IT FAILED
TO RECOGNIZE PETITIONERS RIGHT
Without seeking a reconsideration of the above decision, OF FIRST REFUSAL TO WHICH
petitioners filed the instant petition. In their Comment, RESPONDENTS WERE BOUND
respondents opposed the petition on both procedural and
substantive grounds.
VI

In petitioners Memorandum, they summarized the issues to

WHETHER OR NOT THE HON. COURT
be resolved in the present case as follows:
OF APPEALS ERRED WHEN IT FAILED
TO DECLARE THAT RESPONDENT DBP
A) PRELIMINARY ISSUES: HAD VIOLATED PETITIONERS RIGHTS

I VII

WHETHER OR NOT THE WHETHER OR NOT THE HON. COURT

VERIFICATION (AND CERTIFICATION
OF NON-FORUM SHOPPING) IN THE
INSTANT PETITION WAS PROPER AND
VALID DESPITE ITS BEING SIGNED BY
ONLY ONE OF THE TWO PETITIONERS.
II
WHETHER OR NOT ONLY QUESTIONS
OF LAW AND NOT OF FACT CAN BE
RAISED IN THE INSTANT PETITION
BEFORE THIS HON. SUPREME COURT.
OF APPEALS ERRED IN REVERSING ITS
OWN JUDGMENT AND DISMISSING
PETITIONERS CLAIM FOR
RESCISSION52
We shall first resolve the preliminary issues.
Respondents To Chip, Yap and Balila argue that the instant
petition should be dismissed outright as the verification and
certification of non-forum shopping was executed only by
petitioner Lydia Sia in her personal capacity, without the
participation of Cebu Bionic.

B) MAIN AND PRINCIPAL ISSUES IN THE INSTANT The Court is not persuaded.
PETITION:
Except for the powers which are expressly conferred on it by
I the Corporation Code and those that are implied by or are
incidental to its existence, a corporation has no powers. It
WHETHER OR NOT THE HON. COURT exercises its powers through its board of directors and/or its
OF APPEALS ERRED IN ADMITTING duly authorized officers and agents. Thus, its power to sue
RESPONDENTS MOTION FOR and be sued in any court is lodged with the board of directors
RECONSIDERATION DESPITE ITS that exercises its corporate powers.53 Physical acts, like the
BEING FILED OUT OF TIME signing of documents, can be performed only by natural
persons duly authorized for the purpose by corporate by-
II laws or by a specific act of the board of directors.54
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In this case, respondents To Chip, Yap and Balila obviously
overlooked the Secretarys Certificate55 attached to the
instant petition, which was executed by the Corporate
Secretary of Cebu Bionic. Unequivocally stated therein was
the fact that the Board of Directors of Cebu Bionic held a
special meeting on July 26, 2002 and they thereby approved
a Resolution authorizing Lydia Sia to elevate the present case
to this Court in behalf of Cebu Bionic, to wit:
Whereas, the board appointed LYDIA I. SIA to act and in
behalf of the corporation to file the CERTIORARI with the
Supreme Court in relations to the decision of the Court of
Appeals dated July 5, 2002 which reversed its own judgment
earlier promulgated on February 14, 2001 entitled CEBU
BIONIC BUILDERS SUPPLY, INC. and LYDIA SIA,
(Petitioners- Appellants) versus THE DEVELOPMENT
BANK OF THE PHILIPPINES, JOSE TO CHIP, PATRICIO
YAP and ROGER BALILA (Respondents- Appelles),
docketed CA-G.R. NO. 57216.
Whereas, on mass unanimously motion of all members of
directors present hereby approved the appointment of
LYDIA I. SIA to act and sign all papers in connection of CA-
G.R. NO. 57216.
Resolved and it is hereby resolve to appoint and authorized
LYDIA I. SIA to sign and file with the SUPREME COURT in
connection to decision of the Court of Appeals as above
mention.56
Respondents To Chip, Yap and Balila next argue that the
instant petition raises questions of fact, which are not
allowed in a petition for review on certiorari. They, therefore,
submit that the factual findings of the Court of Appeals are
binding on this Court.
Section 1, Rule 45 of the Rules of Court categorically states
that the petition filed thereunder shall raise only questions of
law, which must be distinctly set forth. A question of law
arises when there is doubt as to what the law is on a certain
state of facts, while there is a question of fact when the doubt
arises as to the truth or falsity of the alleged facts. For a
question to be one of law, the same must not involve an
examination of the probative value of the evidence presented
by the litigants or any of them. The resolution of the issue
must rest solely on what the law provides on the given set of
circumstances. Once it is clear that the issue invites a review
of the evidence presented, the question posed is one of fact.57
The above rule, however, admits of certain exceptions,58 one
of which is when the findings of the Court of Appeals are
contrary to those of the trial court. As will be discussed
further, this exception is attendant in the case at bar.
We now determine the principal issues put forward by
petitioners.
First off, petitioners fault the Court of Appeals for admitting
the Motion for Reconsideration of its Decision dated
February 14, 2001, which was filed by respondents To Chip,
Yap and Balila more than six months after receipt of the said
decision. The motion was eventually granted and the Court
of Appeals issued its assailed Amended Decision, ruling in
favor of respondents.
Indeed, the appellate courts Decision dated February 14,
2001 would have ordinarily attained finality for failure of
respondents to seasonably file their Motion for
Reconsideration thereon. However, we agree with the Court
of Appeals that the higher interest of substantial justice will
92
be better served if respondents procedural lapse will be
excused.
Verily, we had occasion to apply this liberality in the
application of procedural rules in Barnes v. Padilla 59 where
we aptly declared that
The failure of the petitioner to file his motion for
reconsideration within the period fixed by law renders the
decision final and executory. Such failure carries with it the
result that no court can exercise appellate jurisdiction to
review the case. Phrased elsewise, a final and executory
judgment can no longer be attacked by any of the parties or
be modified, directly or indirectly, even by the highest court
of the land.
However, this Court has relaxed this rule in order to serve
substantial justice considering (a) matters of life, liberty,
honor or property, (b) the existence of special or compelling
circumstances, (c) the merits of the case, (d) a cause not
entirely attributable to the fault or negligence of the party
favored by the suspension of the rules, (e) a lack of any
showing that the review sought is merely frivolous and
dilatory, and (f) the other party will not be unjustly
prejudiced thereby.60
In this case, what are involved are the property rights of the
parties given that, ultimately, the fundamental issue to be
determined is who among the petitioners and respondents
To Chip, Yap and Balila has the better right to purchase the
subject properties. More importantly, the merits of the case
sufficiently called for the suspension of the rules in order to
settle conclusively the rights and obligations of the parties
herein.
In essence, the questions that must be resolved are: 1)
whether or not there was a contract of lease between
petitioners and DBP; 2) if in the affirmative, whether or not
this contract contained a right of first refusal in favor of
petitioners; and 3) whether or not respondents To Chip, Yap
and Balila are likewise bound by such right of first refusal.
Petitioners contend that there was a contract of lease between
them and DBP, considering that they had been allowed to
occupy the premises of the subject property from 1987 up to
1991 and DBP received their rental payments corresponding
to the said period. Petitioners claim that DBP were aware of
their lease on the subject property when the latter foreclosed
the same and the acquisition of the subject properties
through foreclosure did not terminate the lease. Petitioners
subscribe to the ruling of the RTC that even if there was no
written contract of lease, DBP chose to continue the existing
contract of lease between petitioners and Rudy Robles by
accepting the requirements set down by DBP on the letter
dated June 18, 1987. Petitioners likewise posit that the
contract of lease between them and Rudy Robles never
expired, inasmuch as the contract did not have a definite term
and none of the parties thereto terminated the same. In view
of the continuation of the lease contract between petitioners
and Rudy Robles, petitioners submit that Article 1670 of the
Civil Code on implied lease is not applicable on the instant
case.
We are not persuaded.
In Uy v. Land Bank of the Philippines,61 the Court held that
"[i]n respect of the lease on the foreclosed property, the buyer
at the foreclosure sale merely succeeds to the rights and
obligations of the pledgor-mortgagor subject to the
provisions of Article 1676 of the Civil Code on its possible
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termination. This article provides that [t]he purchaser of a
piece of land which is under a lease that is not recorded in the
Registry of Property may terminate the lease, save when
there is a stipulation to the contrary in the contract of sale, or
when the purchaser knows of the existence of the lease. In
short, the buyer at the foreclosure sale, as a rule, may
terminate an unregistered lease except when it knows of the
existence of the lease."
In the instant case, the lease contract between petitioners and
Rudy Robles was not registered.62 During trial, DBP denied
having any knowledge of the said lease contract.63 It asserted
that the lease was merely presumed in view of the existence
of tenants in the subject property.64 Nevertheless, DBP
recognized and acknowledged this lease contract in its letter
dated June 18, 1987, which was addressed to Bonifacio Sia,
then President of Cebu Bionic. DBP even required Sia to pay
the monthly rental for the month of June 1987, thereby
exercising the right of the previous lessor, Rudy Robles, to
collect the rental payments from the lessee. In the same letter,
DBP extended an offer to Cebu Bionic to continue the lease
on the subject property, outlining the provisions of the
proposed contract and specifically instructing the latter to
come to the bank for the execution of the same. DBP likewise
gave Cebu Bionic a 30-day period within which to act on the
said contract execution. Should Cebu Bionic fail to do so, it
would be deemed uninterested in continuing with the lease.
In that eventuality, the letter states that Cebu Bionic should
vacate the premises within the said period.
Instead of acceding to the terms of the aforementioned letter,
the counsel of Cebu Bionic sent a counter-offer to DBP dated
July 7, 1987, suggesting a different mode of payment for the
rentals and requesting for a 60-day period within which time
the parties will execute a new contract of lease.
The parties, however, failed to execute a written contract of
lease. Petitioners put the blame on DBP, asserting that no
contract was signed because DBP did not prepare it for them.
DBP, on the other hand, counters that it was petitioners who
did not positively act on the conditions for the execution of
the lease contract. In view of the counter-offer of petitioners,
DBP and respondents To Chip, Yap and Balila argue that
there was no meeting of minds between DBP and petitioners,
which would have given rise to a new contract of lease.
The Court rules that, indeed, no new contract of lease was
ever perfected between petitioners and DBP.
In Metropolitan Manila Development Authority v. JANCOM
Environmental Corporation,65 we emphasized that:
Under Article 1305 of the Civil Code, "[a] contract is a
meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to
render some service." A contract undergoes three distinct
stages preparation or negotiation, its perfection, and
finally, its consummation. Negotiation begins from the time
the prospective contracting parties manifest their interest in
the contract and ends at the moment of agreement of the
parties. The perfection or birth of the contract takes place
when the parties agree upon the essential elements of the
contract. The last stage is the consummation of the contract
wherein the parties fulfill or perform the terms agreed upon
in the contract, culminating in the extinguishment thereof
(Bugatti vs. CA, 343 SCRA 335 [2000]). Article 1315 of the Civil
Code, provides that a contract is perfected by mere consent.
Consent, on the other hand, is manifested by the meeting of
the offer and the acceptance upon the thing and the cause
which are to constitute the contract (See Article 1319, Civil
Code). x x x.66
93
In the case at bar, there was no concurrence of offer and
acceptance vis--vis the terms of the proposed lease
agreement. In fact, after the reply of petitioners counsel
dated July 7, 1987, there was no indication that the parties
undertook any other action to pursue the execution of the
intended lease contract. Petitioners even admitted that they
merely waited for DBP to present the contract to them,
despite being instructed to come to the bank for the execution
of the same.67
Contrary to the ruling of the RTC, the Court is also not
convinced that DBP opted to continue the existing lease
contract between petitioners and Rudy Robles.
The findings of the RTC that DBP supposedly accepted the
requirements the latter set forth in its letter dated June 18,
1987 is not well taken. To recapitulate, the third paragraph of
the letter reads: If you wish to continue on leasing the
property, we request you to come to the Bank for the
execution of a Contract of Lease, the salient conditions of
which are as follows:
1. The lease will be on month to month basis, for a
maximum period of one (1) year;
2. Deposit equivalent to two (2) months rental and
advance of one (1) month rental, and the remaining
amount for one year period (equivalent to 9 months
rental) shall be secured by either surety bond, cash
bond or assigned time deposit;
3. That in case there is a better offer or if the property
will be subject of a purchase offer, within the term,
the lessor is given an option of first refusal,
otherwise he has to vacate the premises within
thirty (30) days from date of notice.68
The so-called "requirements" enumerated in the above
paragraph are not really requirements to be complied with
by the petitioners for the execution of the proposed lease
contract, as apparently considered by the RTC and the
petitioners. A close reading of the letter reveals that the items
enumerated therein were in fact the salient terms and
conditions of the proposed contract of lease, which the DBP
and the petitioners were to execute if the latter were so
willing. Also, the Certificate of Time Deposit in the amount
of P11,395.64, which was allegedly paid to DBP as advance
rental deposit pursuant to the said requirements, was not
even clearly established as such since it was neither secured
by a security bond or a cash bond, nor was it assigned to DBP.
The contention that the lease contract between petitioners
and Rudy Robles did not expire, given that it did not have a
definite term and the parties thereto failed to terminate the
same, deserves scant consideration. To recall, the second
paragraph of the terms and conditions of the contract of lease
between petitioners and Rudy Robles reads:
2. That the term of this agreement shall start on November 1,
1981 and shall terminate on the last day of every month
thereafter; provided however that this contract shall be
automatically renewed on a month to month basis if no
notice, in writing, is sent to the other party to terminate this
agreement after fifteen (15) days from receipt of said notice.69
(Emphases ours.)
Crystal clear from the above provision is that the lease is on
a month-to-month basis. Relevantly, the well-entrenched
principle is that a lease from month-to-month is with a
definite period and expires at the end of each month upon
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the demand to vacate by the lessor.70 As held by the Court of
Appeals in the assailed Amended Decision, the above-
mentioned lease contract was duly terminated by DBP by
virtue of its letter dated June 18, 1987. We reiterate that the
letter explicitly directed the petitioners to come to the office
of the DBP if they wished to enter into a new lease agreement
with the said bank. Otherwise, if no contract of lease was
executed within 30 days from the date of the letter,
petitioners were to be considered uninterested in entering
into a new contract and were thereby ordered to vacate the
property. As no new contract was in fact executed between
petitioners and DBP within the 30-day period, the directive
to vacate, thus, took effect. DBPs letter dated June 18, 1987,
therefore, constituted the written notice that was required to
terminate the lease agreement between petitioners and Rudy
Robles. From then on, the petitioners continued possession
of the subject property could be deemed to be without the
consent of DBP.
Thusly, petitioners assertion that Article 1670 of the Civil
Code is not applicable to the instant case is correct. The
reason, however, is not that the existing contract was
continued by DBP, but because the lease was terminated by
DBP, which termination was accompanied by a demand to
petitioners to vacate the premises of the subject property.
Article 1670 states that "[i]f at the end of the contract the
lessee should continue enjoying the thing leased for fifteen
days with the acquiescence of the lessor, and unless a notice
to the contrary by either party has previously been given, it
is understood that there is an implied new lease, not for the
period of the original contract, but for the time established in
Articles 1682 and 1687. The other terms of the original
contract shall be revived." In view of the order to vacate
embodied in the letter of DBP dated June 18, 1987 in the event
that no new lease contract is entered into, the petitioners
continued possession of the subject properties was without
the acquiescence of DBP, thereby negating the constitution of
an implied lease.
purchase is revived in an implied lease under Article 1670, to
wit:
"[T]he other terms of the original contract" which are revived
in the implied new lease under Article 1670 are only those
terms which are germane to the lessees right of continued
enjoyment of the property leased. This is a reasonable
construction of the provision, which is based on the
presumption that when the lessor allows the lessee to
continue enjoying possession of the property for fifteen days
after the expiration of the contract he is willing that such
enjoyment shall be for the entire period corresponding to the
rent which is customarily paid in this case up to the end of
the month because the rent was paid monthly. Necessarily, if
the presumed will of the parties refers to the enjoyment of
possession the presumption covers the other terms of the
contract related to such possession, such as the amount of
rental, the date when it must be paid, the care of the property,
the responsibility for repairs, etc. But no such presumption
may be indulged in with respect to special agreements which
by nature are foreign to the right of occupancy or enjoyment
inherent in a contract of lease.73
DBP cannot, therefore, be accused of violating the rights of
petitioners when it offered the subject properties for sale, and
eventually sold the same to respondents To Chip, Yap and
Balila, without first notifying petitioners. Neither were the
said respondents bound by any right of first refusal in favor
of petitioners. Consequently, the sale of the subject properties
to respondents was valid. Petitioners claim for rescission
was properly dismissed.
WHEREFORE, the Petition for Review on Certiorari under
Rule 45 of the Rules of Court is DENIED. The Resolution
dated February 5, 2002 and the Amended Decision dated July
5, 2002 of the Court of Appeals in CA-G.R. CV No. 57216 are
hereby AFFIRMED. No costs.
SO ORDERED.

Contrary to the ruling of the RTC, DBPs acceptance of

petitioners rental payments of P5,000.00 for the period of
November 1990 to March 1991 did not likewise give rise to
an implied lease between petitioners and DBP. In Tagbilaran
Integrated Settlers Association (TISA) Incorporated v. Court
of Appeals,71 we held that "the subsequent acceptance by the
lessor of rental payments does not, absent any circumstance
that may dictate a contrary conclusion, legitimize the
unlawful character of their possession." In the present case,
the petitioners rental payments to DBP were made in lump
sum on March 22, 1991. Significantly, said payments were
remitted only after petitioners were notified of the sale of the
subject properties to respondents To Chip, Yap and Balila
and after the petitioners were given a final demand to vacate
the properties. These facts substantially weaken, if not
controvert, the finding of the RTC and the argument of
petitioners that the latter were faithfully remitting their rental
payments to DBP until the year 1991.

Thus, having determined that the petitioners and DBP

neither executed a new lease agreement, nor entered into an
implied lease contract, it follows that petitioners claim of
entitlement to a right of first refusal has no leg to stand on.
Furthermore, even if we were to grant, for the sake of
argument, that an implied lease was constituted between
petitioners and the DBP, the right of first refusal that was
contained in the prior lease contract with Rudy Robles was
not renewed therewith. This is in accordance with the ruling
in Dizon v. Magsaysay,72 which involved the issue of
whether a provision regarding a preferential right to