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PEOPLE OF THE PHILIPPINES vs. JAY LORENA y LABAG G.R. No. 184954 January 10, 2011

FACTS: On February 9, 2003, Iris Mae Cleofe (Iris), a civilian informant, came to the Pasacao Police Station to report appellants alleged drug trafficking activities. Acting on said information Task Force Ubash, a unit charged with monitoring drug trafficking activities in the area, decided to go with Iris and conduct surveillance upon appellant. After their surveillance yielded a positive result, Task Force Ubash coordinated by phone with the PDEA for the conduct of the buy-bust operation. Iris arrived and immediately proceeded with the transaction and handed over the marked P500-bill to appellant who was then sitting down. While handing over the money, appellant handed over a plastic sachet containing white crystalline substance to Iris. At that point, the police arrested appellant and handcuffed him. Ayen recovered from appellants pocket the P500-bill while Iris turned over the sachet of shabu. Then they brought appellant to the police station where he was detained. The sachet containing white crystalline substance was thereafter personally submitted to the Provincial Crime Laboratory, where it was tested. There, the specimen likewise tested positive for Methamphetamine Hydrochloride. RTC convicted him. CA also convicted him ISSUE: Whether the accused is guilty of the crime eventhough the prosecution failed to prove the buy-bust teams compliance with the provisions of section 21, R.A. no. 9165. HELD: No. Considering the illegal drugs unique characteristic rendering it indistinct, not readily identifiable and easily open to tampering, alteration or substitution either by accident or otherwise, there is a need to comply strictly with procedure in its seizure and custody. Section 21, paragraph 1, Article II of R.A. No. 9165 provides such procedure: (1) The apprehending team having initial custody and control of the drugs shall, immediately after seizure and confiscation, physically inventory and photograph the same in the presence of the accused or the person/s from whom such items were confiscated and/or seized, or his/her representative or counsel, a representative from the media and the Department of Justice (DOJ), and any elected public official who shall be required to sign the copies of the inventory and be given a copy thereof. Evident from the records of this case, however, is the fact that the members of the buy-bust team did not comply with the procedure laid down in Section 21 of R.A. No. 9165. Nothing in the testimony of the Commander of Task Force Ubash, would show that the procedure was complied with. He even admitted that he has not seen the inventory of the confiscated drugs allegedly prepared by the police officers. Nonetheless, People v. Pringas teaches that non-compliance by the apprehending/buy-bust team with Section 21 is not necessarily fatal. Its non-compliance will not automatically render an accuseds arrest illegal or the items seized/confiscated from him inadmissible. What is of utmost importance is the preservation of the integrity and the evidentiary value of the seized items, as the same would be utilized in the determination of the guilt or innocence of the accused. But for the saving clause to apply, it is important that the prosecution should explain the reasons behind the procedural lapses and that the integrity and evidentiary value of the evidence seized had been preserved. It must be shown that the illegal drug presented in court is the very same specimen seized from the accused. This function is performed by the chain of custody requirement to erase all doubts as to the identity of the seized drugs by establishing its movement from the accused, to the police, to the forensic chemist and finally to the court. Given the lapses committed by the apprehending officers, the saving clause cannot apply to the case at bar. Not only did the prosecution fail to offer any justifiable ground why the procedure required by law was not complied with, it was also unable to establish the chain of custody of the shabu allegedly taken from appellant. The obvious gaps in the chain of custody created a reasonable doubt as to whether the specimen seized from appellant was the same specimen brought to the crime laboratories and eventually offered in court as evidence. Without adequate proof of the corpus delicti, appellants conviction cannot stand. As a result of the irregularities and lapses in the chain of custody requirement, the presumption of regularity in the performance of official duties cannot be used against appellant. The presumption, in other words, obtains only where nothing in the records is suggestive of the fact that the law enforcers involved deviated from the standard conduct of official duty as provided for in the law. Otherwise, where the official act in question is irregular on its face, an adverse presumption arises as a matter of course.

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PEOPLE OF THE PHILIPPINES vs. TERESITA TESSIE LAOGO G.R. No. 176264 January 10, 2011

FACTS: Susan invited several individuals including six of the seven complainants to her house in Bulacan to celebrate the town fiesta. Appellant was among the several guests in Susans house during the said occasion. According to Teodulo dela Cruz, during the fiesta, Gary Bustillos introduced him to Susan as somebody who could help him find work abroad. Susan told him he can apply as assistant cook and can work in Guam, USA. Upon Susans instruction, Teodulo filled up an application form and gave her P3,000.00 after the latter promised to process his application to work abroad. On May 22, 2000, Susan accompanied Teodulo to appellants travel agency office in Ermita where he paid an additional P15,000.00 for his placement fee. A receipt bearing the logo and name of Laogo Travel Consultancy was issued to him signed by Susan. Months later, when Susans promise to send him abroad remained unfulfilled, Teodulo, along with several other applicants, went to appellants office and to Susans house to follow up their application, but the two always told them that their visas have yet to be released. The same happened with the other complainants. Warrants of arrest were issued against Susan and appellant. When arraigned, appellant pleaded not guilty. Susan, meanwhile, remained at large. During the trial, appellant denied any participation in the illegal activities undertaken by Susan. She insisted that Susan was not in any way connected with her travel agency and that she confronted the latter when she came to know of Susans recruitment activities. Appellant claimed that she even had to rename her travel agency to Renz Consultancy and Employment Services to avoid being associated with Susans recruitment activities.

ISSUE: Whether the accused is guilty of the crime of large scale illegal recruitment

HELD: Yes. Recruitment and placement refers to the act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not. When a person or entity, in any manner, offers or promises for a fee employment to two or more persons, that person or entity shall be deemed engaged in recruitment and placement. Article 38(a) of the Labor Code, as amended, specifies that recruitment activities undertaken by non-licensees or non-holders of authority are deemed illegal and punishable by law. And when the illegal recruitment is committed against three or more persons, individually or as a group, then it is deemed committed in large scale and carries with it stiffer penalties as the same is deemed a form of economic sabotage.But to prove illegal recruitment, it must be shown that the accused, without being duly authorized by law, gave complainants the distinct impression that he had the power or ability to send them abroad for work, such that the latter were convinced to part with their money in order to be employed. It is important that there must at least be a promise or offer of an employment from the person posing as a recruiter, whether locally or abroad. Here, both the trial court and the CA found that all the complainants were promised to be sent abroad by Susan and herein appellant as cooks and assistant cooks. The follow up transactions between appellant and her victims were done inside the said travel agency. Moreover, all the receipts issued to the victims bear the name and logo of Laogo Travel Consultancy, with two of the said receipts personally signed by appellant herself. Indubitably, appellant and her coaccused acting together made complainants believe that they were transacting with a legitimate recruitment agency and that Laogo Travel Consultancy had the authority to recruit them and send them abroad for work when in truth and in fact it had none as certified by the POEA. Appellants contention that she had to change the name of her travel agency to disassociate herself with Susans recruitment activities is too lame to deserve serious consideration. The appellants act of closing Laogo Travel Consultancy and establishing a new one under her husbands name as just an afterthought, a belated decision which cannot undo the damage suffered by the private offended parties. It could indeed hardly be construed as a simple reaction of an innocent person, as it in fact smacks of a desperate attempt of a guilty individual to escape liability or to confuse and dishearten her victims.

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ROSALINO L. MARABLE vs. MYRNA F. MARABLE G.R. No. 178741 January 17, 2011

FACTS: Petitioner and respondent met in 1967 while studying at Arellano University. Petitioner courted respondent and they eventually became sweethearts even though petitioner already had a girl friend. Petitioner and respondent eloped and were married in civil rites at Tanay, Rizal. A church wedding followed and their marriage was blessed with five children. As the years went by, however, their marriage turned sour. Verbal and physical quarrels became common occurrences. Longing for peace, love and affection, petitioner developed a relationship with another woman. Respondent learned about the affair, and petitioner promptly terminated it. Petitioner left the family home and stayed with his sister in Antipolo City. He gave up all the properties which he and respondent had accumulated during their marriage in favor of respondent and their children. On October 8, 2001, petitioner decided to sever his marital bonds. He filed a petition for declaration of nullity of his marriage to respondent on the ground of his psychological incapacity to perform the essential responsibilities of marital life. He alleged that his misery and loneliness as a child lingered as he experienced a void in his relationship with his own family. In support of his petition, he presented a psychological report stating that petitioner is suffering from Antisocial Personality Disorder, characterized by a pervasive pattern of social deviancy, rebelliousness, impulsivity, selfcenteredness, deceitfulness and lack of remorse. The report also revealed that petitioners personality disorder is rooted in deep feelings of rejection starting from the family to peers, and that his experiences have made him so self-absorbed for needed attention. The reports conclusion is that petitioner is psychologically incapacitated to perform his marital obligations. RTC rendered a decision annulling petitioners marriage to respondent on the ground of petitioners psychological incapacity. CA reversed the RTC decision stating that the circumstances related by petitioner are insufficient to establish the existence of petitioners psychological incapacity. The CA noted that Dr. Tayag, the clinical psychologist, did not fully explain the root cause of the disorder nor did she give a concrete explanation as to how she arrived at a conclusion as to its gravity or permanence. The appellate court emphasized that the root cause of petitioners psychological incapacity must be medically or clinically identified, sufficiently proven by experts and clearly explained in the decision. In addition, the incapacity must be proven to be existing at the time of the celebration of the marriage and shown to be medically or clinically permanent or incurable. It must also be grave enough to bring about the disability of the petitioner to assume the essential obligations of marriage. ISSUE: Whether the petitioner is psychologically incapable of performing his marital obligations HELD: No. Article 36 of the Family Code, as amended, provides: Art. 36. A marriage contracted by any party who, at the time of the celebration, was psychologically incapacitated to comply with the essential marital obligations of marriage, shall likewise be void even if such incapacity becomes manifest only after its solemnization. The term psychological incapacity to be a ground for the nullity of marriage under Article 36 of the Family Code, refers to a serious psychological illness afflicting a party even before the celebration of the marriage. These are the disorders that result in the utter insensitivity or inability of the afflicted party to give meaning and significance to the marriage he or she has contracted. Psychological incapacity must refer to no less than a mental (not physical) incapacity that causes a party to be truly incognitive of the basic marital covenants that concomitantly must be assumed and discharged by the parties to the marriage. In the instant case, petitioner completely relied on the psychological examination conducted by Dr. Tayag on him to establish his psychological incapacity. The result of the examination and the findings of Dr. Tayag however, are insufficient to establish petitioner's psychological incapacity. The appellate court correctly ruled that the report of Dr. Tayag failed to explain the root cause of petitioners alleged psychological incapacity. The evaluation of Dr. Tayag merely made a general conclusion that petitioner is suffering from an Anti-social Personality Disorder but there was no factual basis stated for the finding that petitioner is a socially deviant person, rebellious, impulsive, self-centered and deceitful. More importantly, there was no established link between petitioners acts to his alleged psychological incapacity. It is indispensable that the evidence must show a link, medical or the like, between the acts that manifest psychological incapacity and the psychological disorder itself. The totality of the evidence presented is insufficient to establish petitioners psychological incapacity to fulfill his essential marital obligations.

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HEIRS OF RAMON C. GAITE, CYNTHIA GOROSTIZA GAITE and RHOGEN BUILDERS vs. THE PLAZA, INC. and FGU INSURANCE CORPORATION G.R. No. 177685 January 26, 2011

FACTS: On July 16, 1980, The Plaza, Inc. (The Plaza), a corporation engaged in the restaurant business through its President Reyes, entered into a contract with Rhogen Builders (Rhogen), represented by Ramon C. Gaite, for the construction of a restaurant building in Greenbelt, Makati for the price of P7,600,000.00. Gaite and FGU Insurance Corporation (FGU) executed a surety bond in the amount of P1,155,000.00 in favor of The Plaza. On July 28, 1980, The Plaza paid P1,155,000.00 as down payment to Gaite. Thereafter, Rhogen commenced construction of the restaurant building. In a letter dated September 10, 1980, the Acting Building Official of the Municipality of Makati, ordered Gaite to cease and desist from continuing with the construction of the building for violation of Sections 301 and 302 of the National Building Code (P.D. 1096) and its implementing rules and regulations. The letter was referred to The Plazas Project Manager. The building permit for the construction of the restaurant was revoked for non-compliance with the provisions of the National Building Code and for the additional temporary construction without permit. On September 19, 1980, the Project Manager (Tayzon) stated that actual jobsite assessment showed that the finished works fall short of Rhogens claimed percentage of accomplishment and Rhogen was entitled to only P32,684.16 and not P260,649.91 being demanded by Rhogen. Gaite informed The Plaza that he is terminating their contract based on the Contractors Right to Stop Work or Terminate Contracts as provided for in the General Conditions of the Contract. In his letter, Gaite accused Reyes of not cooperating with Rhogen in solving the problem concerning the revocation of the building permits. Additionally, Gaite demanded the payment of P63,058.50 from The Plaza representing the work that has already been completed by Rhogen. The Plaza, through Reyes, countered that it will hold Gaite and Rhogen fully responsible for failure to comply with the terms of the contract and to deliver the finished structure on the stipulated date. Reyes argued that the down payment made by The Plaza was more than enough to cover Rhogens expenses. On March 3, 1981, The Plaza notified Gaite that it could no longer credit any payment to Rhogen for the work it had completed because the evaluation of the extent, condition, and cost of work done revealed that in addition to the violations committed during the construction of the building, the structure was not in accordance with plans approved. Hence, The Plaza demanded the reimbursement of the down payment, the cost of uprooting or removal of the defective structures, the value of owner-furnished materials, and payment of liquidated damages. They filed for breach of contract, sum of money and damages and likewise filed for nullification of the project development contract.

ISSUE: Whether the respondents can correctly claim damages for breach of contract

HELD: Yes. The construction contract between Rhogen and The Plaza provides for reciprocal obligations whereby the latters obligation to pay the contract price or progress billing is conditioned on the formers performance of its undertaking to complete the works within the stipulated period and in accordance with approved plans and other specifications by the owner. Pursuant to its contractual obligation, The Plaza furnished materials and paid the agreed down payment. It also exercised the option of furnishing and delivering construction materials at the jobsite. Petitioners may not justify Rhogens termination of the contract upon grounds of non-payment of progress billing and uncooperative attitude of respondent The Plaza and its employees in rectifying the violations which were the basis for issuance of the stoppage order. Having breached the contractual obligation it had expressly assumed, Rhogen was already at fault. Respondent on the other hand, was justified in withholding payment on Rhogens first progress billing, on account of the stoppage order and additionally due to disappearance of owner-furnished materials at the jobsite. In failing to have the stoppage and revocation orders lifted or recalled, Rhogen should take full responsibility in accordance with its contractual undertaking. Petitioners cannot also claim that the contractor be paid for the work already accomplished under the principle of quantum meruit. Rhogen failed to finish even a substantial portion of the works due to the stoppage order. Rhogen was also found to have executed the works not in accordance with the approved plans or failed to seek prior approval of the Municipal Engineer. Article 1167 of the Civil Code is explicit that if a person obliged to do something fails to do it, the same shall be executed at his cost.

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PEOPLE OF THE PHILIPPINES vs. SEVILLANO DELOS REYES y LANTICAN G.R. No. 181039 January 31, 2011

FACTS: On October 16, 2002, the Los Baos Police Station received a tip from an informant that appellant was selling shabu. Thus, the police conducted a buy-bust operation. SPO1 Palisoc, the designated poseur-buyer, proceeded to enter appellants house. He handed over the marked money to appellant while the latter in return gave him an aluminum foil containing white crystalline substance. As pre-arranged signal, SPO1 Palisoc held the hands of appellant. He recovered the marked money. With the assistance of barangay officials, they entered appellants house and recovered five plastic sachets of shabu on top of the bed. Therafter, appellant was brought to the police station where he was detained. As to the seized folded strips of aluminum foil containing white crystalline substance they marked them and then turned over to PO2 Cabaluna who submitted the same for testing to the Philippine National Police Crime Laboratory.The results were positive for the presence of methamphetamine hydrochloride or shabu. RTC rendered judgment acquitting appellant for illegal possession of dangerous drugs but finding him guilty as for illegal sale of dangerous drugs. CA affirmed the decision.

ISSUE: Whether the accused can be held guilty for violation of the Dangerous Drugs Act despite the non-compliance with the procedure laid down in the said law

HELD: In a prosecution for illegal sale of a prohibited drug under Section 5 of R.A. No. 9165, the prosecution must prove the following elements: (1) the identity of the buyer and the seller, the object, and the consideration; and (2) the delivery of the thing sold and the payment therefor. All these require evidence that the sale transaction transpired, coupled with the presentation in court of the corpus delicti, i.e., the body or substance of the crime that establishes that a crime has actually been committed, as shown by presenting the object of the illegal transaction. Evident however from the records of the case is the fact that the members of the buy-bust team did not comply with the procedure laid down in Section 21 of R.A. No. 9165. Although there were elected public officials from the barangay who were present during the buy-bust operation, nothing in the testimony, nor in the facts stipulated by the parties shows that there was physical inventory of the seized items or that there was photographing thereof in the presence of appellant, his representative or counsel, a representative of media and the Department of Justice, as required by Section 21 of R.A. No. 9165. People v. Pringas teaches that non-compliance by the apprehending/buy-bust team with Section 21 is not fatal. . But what is of utmost importance is the preservation of the integrity and the evidentiary value of the seized items, as the same would be utilized in the determination of the guilt or innocence of the accused. This function in buy-bust operations is performed by the chain of custody requirement which ensures that doubts concerning the identity of the evidence are removed. Hence, it is fatal for the prosecution to fail to prove that the specimen submitted for laboratory examination was the same one allegedly seized from the accused. Here, the first link in the chain of custody starts with SPO1 Palisoc to whom appellant allegedly handed over the shabu contained in an aluminum foil. The second link is when SPO1 Palisoc marked the aluminum foil with SLD, then turned them over to PO2 Cabaluna. The third link is when PO2 Cabaluna delivered the specimen to the PNP Crime Laboratory. Records show and parties stipulated that it was received by one PO1 Golfo, Jr. The continuity of the chain, however, becomes unclear after the evidence reached the hands of PO1 Golfo, Jr. as the next part of the chain established by the prosecution already relates to the examination conducted by P/Insp. Huelgas, the forensic chemist. The records are bereft of any proof from whom P/Insp. Huelgas received the specimen she examined and where it was kept for safekeeping after the examination was conducted up to the time it was presented in court. Said gaps in the chain cannot be disregarded or overlooked by this Court. With crucial portions of the chain of custody not clearly accounted for, reasonable doubt is created as to the origins of the shabu presented in court. The presumption of regularity in the performance of official duties cannot be availed of in this case to supply the missing links as the presumption is effectively negated by to the buy-bust teams failure to comply with Section 21 of R.A. No. 9165 and to show that the integrity of the corpus delicti has been preserved. As a general rule, the testimonies of the police officers who apprehended the accused are accorded full faith and credit because of the presumption that they have performed their duties regularly. But when the performance of their duties is tainted with failure to comply with the procedure and guidelines prescribed, the presumption is effectively destroyed.

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DEVELOPMENT BANK OF THE PHILIPPINES vs. BEN P. MEDRANO and PRIVATIZATION MANAGEMENT OFFICE [PMO] G.R. No. 167004 February 7, 2011

FACTS: Petitioner DBP sought to consolidate its ownership in Paragon. Paragon Executive Committee Chairman Jose B. de Ocampo instructed Medrano, as President and General Manager of Paragon, to contact or sound off the minority stockholders and to convince them to sell their shares to DBP. Medrano testified that all, including himself, agreed to sell, and all took steps to have their shares surrendered to DBP for payment. The Board of Directors of DBP approved the sale under DBP Resolution No. 4270 subject to the following terms and conditions: (1) that prior to the implementation of the approval, 57,596 shares of Paragons stock issued to the stockholders concerned shall first be surrendered to the DBP; (2) that all the parties concerned shall give their written conformity to the arrangement; and (3) that the transaction shall be implemented within forty-five (45) days from the date of approval; otherwise, the same shall be deemed canceled. Medrano then indorsed and delivered to DBP all his shares. DBP accepted said shares and took over Paragon. DBP also offered Medrano a commission of if the latter could persuade all the other Paragon minority stockholders to sell their shares but Medrano was able to convince only two stockholders, thus, his commission was reduced. Thereafter, Medrano demanded that DBP pay the value of his shares, which he had already turned over, and his commission. When DBP did not heed his demand, Medrano filed a complaint for specific performance and damages against DBP. DBP filed an Answer arguing that there was no perfected contract of sale as the three conditions in DBP Resolution No. 4270 were not fulfilled. Likewise, certain minority stockholders owning 17,635 shares refused to sell their shares. Hence, DBP exercised its right to cancel the sale under Resolution No. 4270.

ISSUE: I. Whether there was a perfected contract of sale II. Whether Medrano is entitled to the payment of his shares

HELD: I. No. As a rule, a contract is perfected upon the meeting of the minds of the two parties. Under Article 1475 of the Civil Code, a contract of sale is perfected the moment there is a meeting of the minds on the thing which is the object of the contract and on the price. In the present case, Medranos offer to sell the shares of the minority stockholders at the price of 65% of the par value was not absolutely and unconditionally accepted by DBP. DBP imposed several conditions to its acceptance and it is clear that Medrano indeed tried in good faith to comply with the conditions given by DBP but unfortunately failed to do so. Hence, there was no birth of a perfected contract of sale between the parties. II. Yes. DBPs argument that since there is no perfected contract of sale, DBP should not be ordered to pay Medrano any amount is untenable. The factual scenario of this case took place over thirty (30) years ago. Medrano had turned over and delivered his own shares of stock to DBP in his attempt to comply with the conditions given by DBP. DBP then accepted the shares of stock as partial fulfillment of the conditions that it imposed on Medrano. However, after the lapse of some time and after it became clear that Medrano would not be able to comply with the conditions, DBP decided to retain Medranos shares of stock without paying Medrano. After the realization that DBP would in fact not pay him for his shares of stock, Medrano was constrained to file a suit to enforce his rights. In civil law, DBPs act of keeping the shares delivered by Medrano without paying for them constitutes unjust enrichment. Article 22 of the Civil Code provides that *e+very person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him. It was not proper for DBP to hold on to Medranos shares of stock after it became obvious that he will not be able to comply with the conditions for the contract of sale. From that point onwards, the prudent and fair thing to do for DBP was to return Medranos shares because DBP had no just or legal ground to retain them. Since DBP decided to hold on to Medranos shares without just cause, they should pay the latter for the value of his shares.

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ROSALIO S. GALEOS vs. PEOPLE OF THE PHILIPPINES PAULINO S. ONG vs. PEOPLE OF THE PHILIPPINES February 9, 2011 G.R. Nos. 174730-37 G.R. Nos. 174845-52

FACTS: Ong was appointed Officer-in-Charge (OIC)-Mayor of the Municipality of Naga, Cebu. He was elected Mayor of the same municipality until 1998. Ong extended permanent appointments to Galeos and Federico T. Rivera in the Office of the Municipal Engineer. Prior to their permanent appointment, Galeos and Rivera were casual employees of the municipal government. In their individual SALN for 1993, Galeos answered No to the question: To the best of your knowledge, are you related within the fourth degree of consanguinity or of affinity to anyone working in the government? while Rivera indicated n/a on the space for the list of the names of relatives referred to in the said query. The boxes for Yes and No to the said query were left in blank by Galeos in his 1994 and 1995 SALN. Rivera in his 1995 SALN answered No to the question on relatives in government. In their 1996 SALN, both Galeos and Rivera also did not fill up the boxes indicating their answers to the same query. Ongs signature appears in all the foregoing documents as the person who administered the oath when Galeos and Rivera executed the foregoing documents. The members of the Sangguniang Bayan of Naga, Cebu filed a letter-complaint before the Office of the Ombudsman against Ong, Galeos and Rivera for dishonesty, nepotism, violation of the Code of Conduct and Ethical Standards for Public Officials and Employees and Anti-Graft and Corrupt Practices Act, and for the crime of falsification of public documents. Both Galeos and Rivera testified that they only provided the entries in their SALN but did not personally fill up the forms as these were already filled up by people in the municipal hall when they signed them. Rivera also testified that he was not aware that his wife was a close relative of the Municipal Mayor because when he asked her, the latter told him that Ong was a distant relative of hers. On the part of Ong, he testified that he did not know that he and Galeos are relatives, as in fact there are several persons with the surname Galeos in the municipality. Galeos argues that he did not make untruthful or false statements in his SALN since a statement requires a positive averment and thus silence or non-disclosure cannot be considered one. And even if they are considered statements, Galeos contends that they were not made in a narration of facts and the least they could be considered are conclusions of law. He also argues that the prosecution failed to adduce any evidence to support the finding that he was aware of their relationship at the time of the execution of the SALN. With the presence of good faith, Galeos avers that the fourth element of the crime the perversion of truth in the narration of facts was made with the wrongful intent of injuring a third person is missing. Ong similarly argues that the subject SALN do not contain any untruthful statements containing a narration of facts and that there was no wrongful intent of injuring a third person at the time of the execution of the documents. He contends that he cannot be held liable for falsification for merely administering the oath in a document since it is not among the legal obligations of an officer administering the oath to certify the truthfulness and/or veracity of the contents of the document. Neither can he be made liable for falsification regarding the letter-certification he issued since there was no evidence adduced that it was made to support Riveras appointment.

ISSUES: Whether the defendants are liable for the crime of falsification of public documents.

HELD: YES. The elements of falsification of public documents are as follows: (a) the offender makes in a public document untruthful statements in a narration of facts; (b) he has a legal obligation to disclose the truth of the facts narrated by him; and (c) the facts narrated by him are absolutely false. In addition, it must also be proven that the public officer or employee had taken advantage of his official position in making the falsification. In falsification of public document, the offender is considered to have taken advantage of his official position when (1) he has the duty to make or prepare or otherwise to intervene in the preparation of a document; or (2) he has the official custody of the document which he falsifies.

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A conclusion of law is a determination by a judge or ruling authority regarding the law that applies in a particular case. It is opposed to a finding of fact, which interprets the factual circumstances to which the law is to be applied. A narration of facts is merely an account or description of the particulars of an event or occurrence. In this case, the required disclosure or identification of relatives within the fourth civil degree of consanguinity or affinity in the SALN involves merely a description of such relationship; it does not call for an application of law in a particular set of facts. The question of whether or not persons are related to each other by consanguinity or affinity within the fourth degree is one of fact. Contrary to petitioners assertion, statements concerning relationship may be proved as to its truth or falsity, and thus do not amount to expression of opinion. When a government employee is required to disclose his relatives in the government service, such information elicited therefore qualifies as a narration of facts contemplated under Article 171 (4) of the Revised Penal Code, as amended. Further, it bears to stress that the untruthful statements on relationship have no relevance to the employees eligibility for the position but pertains rather to prohibition or restriction imposed by law on the appointing power. Since petitioner Galeos answered No to the question in his 1993 SALN if he has relatives in the government service within the fourth degree of consanguinity, he made an untruthful statement therein as in fact he was related to Ong, who was then the municipal mayor, within the fourth degree of consanguinity, he and Ong being first cousins. As to his 1994, 1995 and 1996 SALN, Galeos left in blank the boxes for the answer to the similar query. In Dela Cruz v. Mudlong, it was held that one is guilty of falsification in the accomplishment of his information and personal data sheet if he withholds material facts which would have affected the approval of his appointment and/or promotion to a government position. By withholding information on his relative/s in the government service as required in the SALN, Galeos was guilty of falsification considering that the disclosure of such relationship with then Municipal Mayor Ong would have resulted in the disapproval of his permanent appointment pursuant to Article 168 (j) (Appointments), Rule XXII of the Rules and Regulations Implementing the Local Government Code of 1991 (R.A. No. 7160) The second element is likewise present. Legal obligation means that there is a law requiring the disclosure of the truth of the facts narrated. Permanent employees employed by local government units are required to file the following: (a) sworn statement of assets, liabilities and net worth (SALN); (b) lists of relatives within the fourth civil degree of consanguinity or affinity in government service; (c) financial and business interests; and (d) personal data sheets as required by law. A similar requirement is imposed by Section 8 (B) of Republic Act No. 6713 otherwise known as the Code of Conduct and Ethical Standards for Public Officials and Employees. Conspiracy need not be shown by direct proof of an agreement of the parties to commit the crime, as it can be inferred from the acts of the accused which clearly manifest a concurrence of wills, a common intent or design to commit a crime. In this case, Ong administered the oaths to Galeos and Rivera in the subject SALN not just once, but three times, a clear manifestation that he concurred with the making of the untruthful statement therein concerning relatives in the government service.

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VICENTE YU CHANG AND SOLEDAD YU CHANG vs. REPUBLIC OF THE PHILIPPINES G.R. No. 171726 February 23, 2011

FACTS: On March 22, 1949, petitioners father, L. Yu Chang and the Municipality of Pili, Camarines Sur executed an Agreement to Exchange Real Property wherein the former transferred to the Municipality of Pili his residential lot in Pili, Camarines Sur, in exchange for a piece of land located in San Juan, Pili. Thereafter, L. Yu Chang and his family took possession of the property thus obtained and erected a residential house and a gasoline station thereon. He also declared the property in his name under a Tax Declaration and paid the real property taxes thereon. When L. Yu Chang died, his wife, Donata Sta. Ana and his seven children inherited the property and succeeded in the possession of the property. A Deed of Transfer and Renunciation of their rights over the property was executed by L. Yu Chang's five children in favor of herein petitioners. Petitioners also declared the lots in their names for taxation purposes and paid the real property taxes thereon. Petitioner Soledad Yu Chang filed a petition for registration of title over the aforementioned lots under the Property Registration Decree. In their petition, they declared that they are the co-owners of the subject lots; that they and their predecessors-in-interest have been in actual, physical, material, exclusive, open, occupation and possession of the above described parcels of land for more than 100 years; and that allegedly, they have continuously, peacefully, and adversely possessed the property in the concept of owners. Hence, they are entitled to confirmation of ownership and issuance and registration of title in their names. The Republic, through the Office of the Solicitor General (OSG), filed an Opposition to the application, alleging, inter alia, that: (1) neither the applicants nor their predecessors-in-interest have been in open, continuous, exclusive and notorious possession of the land since June 12, 1945 or prior thereto; (2) the muniments of title, tax declarations and tax receipts do not constitute competent and sufficient evidence of a bona fide acquisition of the land; and (3) that the parcels of land applied for are portions of the public domain and are not subject to private appropriation. RTC granted the petition. CA reversed RTCs decision and dismissed petitioners application for registration. ISSUE: Whether the petitioners application for registration should be granted HELD: Court denies the petition for lack of merit. Section 48(b) of the Public Land Act, as amended by P.D. 1073, under which petitioners application was filed, provides: The following described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Regional Trial Court of the province or city where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Property Registration Decree, to wit: x x x x (b) Those who by themselves or through their predecessors-in-interest have been in the open, continuous, exclusive, and notorious possession and occupation of alienable and disposable agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, since June 12, 1945, except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter. In the instant case, petitioners did not adduce any evidence to the effect that the lots subject of their application are alienable and disposable land of the public domain. Instead, petitioners contend that the subject properties could no longer be considered and classified as forest land since there are building structures, residential houses and even government buildings existing and standing on the area. This is hardly the proof required under the law. As clarified in Heirs of Jose Amunategui v. Director of Forestry, a forested area classified as forest land of the public domain does not lose such classification simply because loggers or settlers may have stripped it of its forest cover. Unless and until the land classified as forest land is released in an official proclamation to that effect so that it may form part of the disposable agricultural lands of the public domain, the rules on confirmation of imperfect title do not apply. Petitioners possession of the subject forest land prior to the date when it was classified as alienable and disposable is inconsequential and should be excluded from the computation of the period of possession. It is well settled that possession of forest land, prior to its classification as alienable and disposable land, is ineffective since such possession may not be considered as possession in the concept of owner. The adverse possession which can be the basis of a grant of title in confirmation of imperfect title cases cannot commence until after forest land has been declared and alienable.

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SUPREME TRANSLINER, INC., MOISES C. ALVAREZ and PAULITA S. ALVAREZ vs. BPI FAMILY SAVINGS BANK, INC., G.R. No. 165617 BPI FAMILY SAVINGS BANK, INC vs. SUPREME TRANSLINER, INC., MOISES C. ALVAREZ and PAULITA S. ALVAREZ, G.R. No. 165837 February 25, 2011

FACTS: Supreme Transliner, Inc. represented by its Managing Director, Moises C. Alvarez, and Paulita S. Alvarez, obtained a loan in the amount of P9,853,000.00 from BPI Family Savings Bank in the name of Moises C. Alvarez and Paulita S. Alvarez, as collateral. For non-payment of the loan, the mortgage was extrajudicially foreclosed and the property was sold to the bank as the highest bidder in the public auction conducted by the Office of the Provincial Sheriff of Lucena City. A Certificate of Sale was issued in favor of the bank and the same was registered. Before the expiration of the one-year redemption period, the mortgagors notified the bank of their intention to redeem the property. The mortgagors requested for the elimination of liquidated damages and reduction of attorneys fees and interest but the bank refused. The mortgagors redeemed the property by paying the sum of P15,704,249.12. A Certificate of Redemption was issued by the bank. The mortgagors filed a complaint against the bank to recover the allegedly unlawful and excessive charges totaling P5,331,237.77, with prayer for damages and attorneys fees. In its Answer with Special and Affirmative Defenses and Counterclaim, the bank asserted that the redemption price reflecting the stipulated interest, charges and/or expenses, is valid, legal and in accordance with documents duly signed by the mortgagors. The bank further contended that the claims are deemed waived and the mortgagors are already estopped from questioning the terms and conditions of their contract. The trial court held that plaintiffs-mortgagors are bound by the terms of the mortgage loan documents which clearly provided for the payment of the following interest, charges and expenses. According to the trial court, plaintiffsmortgagors are estopped from questioning the correctness of the redemption price as they had freely and voluntarily signed the letter-agreement prepared by the defendant bank, and along with Orient Bank expressed their conformity to the terms and conditions therein. The CA reversed the trial courts decision. It ruled that attorneys fees and liquidated damages were already included in the bid price of P10,372,711.35 as per the recitals in the Certificate of Sale that said amount was paid to the foreclosing mortgagee to satisfy not only the principal loan but also interest and penalty charges, cost of publication and expenses of the foreclosure proceedings. These penalty charges consist of 15% attorneys fees and 15% liquidated damages which the bank imposes as penalty in cases of violation of the terms of the mortgage deed. The total redemption price thus should only be P12,592,435.72 and the bank should return the amount of P3,111,813.40 representing attorneys fees and liquidated damages. The appellate court further stated that the mortgagors cannot be deemed estopped to question the propriety of the charges because from the very start they had repeatedly questioned the imposition of attorneys fees and liquidated damages and were merely constrained to pay the demanded redemption price for fear that the redemption period will expire without them redeeming their property.

ISSUES: I. Whether the foreclosing mortgagee should pay capital gains tax upon execution of the certificate of sale. II. Whether the computation of the redemption price is correct.

HELD: I. No. There is no legal basis for the inclusion of this charge in the redemption price. Under the Property Registration Decree, if no right of redemption exists, the certificate of title of the mortgagor shall be cancelled, and a new certificate issued in the name of the purchaser. But where the right of redemption exists, the certificate of title of the mortgagor shall not be cancelled, but the certificate of sale and the order confirming the sale shall be registered by brief memorandum thereof made by the Register of Deeds upon the certificate of title. In the event the property is redeemed, the certificate or deed of redemption shall be filed with the Register of Deeds, and a brief memorandum thereof shall be made by the Register of Deeds on the certificate of title. It is therefore clear that in foreclosure sale, there is no actual transfer of the mortgaged real property until after the expiration of the one-year redemption period as provided in Act No. 3135 and title thereto is consolidated in the name of

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the mortgagee in case of non-redemption. In the interim, the mortgagor is given the option whether or not to redeem the real property. The issuance of the Certificate of Sale does not by itself transfer ownership. RR No. 4-99 SEC. 3. CAPITAL GAINS TAX. (1) In case the mortgagor exercises his right of redemption within one year from the issuance of the certificate of sale, no capital gains tax shall be imposed because no capital gains has been derived by the mortgagor and no sale or transfer of real property was realized. x x x SEC. 4. DOCUMENTARY STAMP TAX. (1) In case the mortgagor exercises his right of redemption, the transaction shall only be subject to the P15.00 documentary stamp tax imposed under Sec. 188 of the Tax Code of 1997 because no land or realty was sold or transferred for a consideration. Considering that herein petitioners-mortgagors exercised their right of redemption before the expiration of the statutory one-year period, petitioner bank is not liable to pay the capital gains tax due on the extrajudicial foreclosure sale. There was no actual transfer of title from the owners-mortgagors to the foreclosing bank. Hence, the inclusion of the said charge in the total redemption price was unwarranted and the corresponding amount paid by the petitioners-mortgagors should be returned to them. BPI Family Savings Bank, Inc. therefore should return the amounts representing capital gains and documentary stamp taxes as reflected in the Statement of Account To Redeem, to petitioners Supreme Transliner, Inc., Moises C. Alvarez and Paulita Alvarez, and to retain only the sum provided in RR No. 4-99 as documentary stamps tax due on the foreclosure sale.

II. Yes. Section 78 of Republic Act No. 337, otherwise known as the General Banking Act, governs in cases where the mortgagee is a bank.: SEC. 78. x x x In the event of foreclosure, whether judicially or extrajudicially, of any mortgage on real estate which is security for any loan granted before the passage of this Act or under the provisions of this Act, the mortgagor or debtor whose real property has been sold at public auction, judicially or extrajudicially, for the full or partial payment of an obligation to any bank, banking or credit institution, within the purview of this Act shall have the right, within one year after the sale of the real estate as a result of the foreclosure of the respective mortgage, to redeem the property by paying the amount fixed by the court in the order of execution, or the amount due under the mortgage deed, as the case may be, with interest thereon at the rate specified in the mortgage, and all the costs, and judicial and other expenses incurred by the bank or institution concerned by reason of the execution and sale and as a result of the custody of said property less the income received from the property. x x x x Under the Mortgage Loan Agreement, petitioners-mortgagors undertook to pay the attorneys fees and the costs of registration and foreclosure. The following contract terms would show that the said items are separate and distinct from the bid price which represents only the outstanding loan balance with stipulated interest thereon. As correctly found by the trial court, that attorneys fees and liquidated damages were not yet included in the bid price of P10,372,711.35 is clearly shown by the Statement of Account prepared by the petitioner bank and given to petitionersmortgagors. On the other hand, the Mortgage Loan Agreement indicated that asset acquired expenses were to be added to the redemption price as part of costs and other expenses incurred by the mortgagee bank in connection with the foreclosure sale. Petitioner BPI Family Savings Bank, Inc. is therefore entitled to the attorneys fees and liquidated damages included in the total redemption price paid by Supreme Transliner, Inc., Moises C. Alvarez and Paulita Alvarez.

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LAND BANK OF THE PHILIPPINES v. DEPARTMENT OF AGRARIAN REFORM and METRACO TELEHYGIENIC SERVICES CORPORATION G.R. No. 171840 FACTS: Metraco Tele-Hygienic Services Corporation (METRACO) voluntarily offered to sell agricultural lands under the provisions of Republic Act (R.A.) No. 6657 or the Comprehensive Agrarian Reform Law (CARL) of 1988. The said land is fully irrigated by the National Irrigation Administration (NIA) and planted with rice. Land Bank of the Philippines (LBP) rejected METRACOs price assessment and thus METRACO went to the Department of Agrarian Reform (DAR) for determination of just compensation. The DAR denied LBPs basis of valuation and ruled that the guidelines issued under DAR Administrative Order (AO) No. 5, series of 1998 and findings of the ocular inspection should be followed. Moreover, the Special Agrarian Court (SAC) recomputed the compensation fixed by LBP based on the selling price of palay per kilogram, certified by the National Food Authority (NFA) and adding to the computation a portion consisting of a drainage canal and a road, as these are indispensable part of the entire landholding which the farmer will necessarily use. March 4, 2011

ISSUE: Whether a LBPs valuation of the land is considered as just compensation pursuant to DAR policy regulations

HELD: Petition PARTIALLY GRANTED. The taking of private lands under the Agrarian Reform Program partakes of the nature of an expropriation proceeding. The LBPs valuation of lands covered by CARL is considered only as an initial determination, which is not conclusive, as it is the RTC, sitting as SAC, that should make the final determination of just compensation. As declared in Land Bank of the Philippines v. Celada, DAR was tasked to issue the rules and regulations to carry out the details of Section 17 of R.A. No. 6657. It can be safely presumed that the fluctuations in the selling price of palay were already taken into consideration since only the average of these available prices within the 12 months prior to the receipt of the claim folder (CF), will be used in computing the Capitalized Net Income (CNI). Hence, the SAC and CA clearly erred in completely disregarding the data provided by the MARO simply because it contained a notation that the figures indicated for two months (October and November 2000) were not normal due to typhoons. On the exclusion of the NIA irrigation canal and road, that said portions do not form part of the compensable area. It is true that Item II F of DAR AO No. 5 provides that those improvements introduced by the government, farmerbeneficiaries and other third parties, shall not be paid. However, as correctly ruled by the CA, what is being compensated is not the cost or value of the improvements introduced by the government but the value of the whole land taken under R.A. 6657. This does not mean that those portions are being separately valued as claimed by LBP. Thus, LBPs valuation was sufficiently substantiated and in accordance with Section 17 of R.A. No. 6657 and DAR AO No. 5, series of 1998, except that the portions of the landholdings occupied by the NIA water system and road should also be included in the total compensable area.

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REPUBLIC OF THE PHILIPPINES vs. TEODORO P. RIZALVO, JR. G.R. No. 172011 March 7, 2011

FACTS: Respondent Teodoro P. Rizalvo, Jr. filed an application for the registration of a parcel of land. Respondent alleged that he is the owner of the subject parcel of land, that he obtained title over the land by virtue of a Deed of Transfer dated December 31, 1962, and that he is currently in possession of the land. In support of his claim, he presented, among others, Tax Declaration for the year 1994 in his name, and Proof of Payment of real property taxes beginning in 1952 up to the time of filing of the application. The Office of the Solicitor General (OSG) filed an Opposition alleging that neither respondent nor his predecessors-ininterest had been in open, continuous, exclusive and notorious possession and occupation of the subject property since June 12, 1945 or earlier and that the tax declarations and tax payment receipts did not constitute competent and sufficient evidence of ownership. The OSG also asserted that the subject property was a portion of public domain belonging to the Republic of the Philippines and hence not subject to private acquisition. At the trial, respondent testified that he acquired the subject property by purchase from his mother, Bibiana P. Rizalvo, as evidenced by a Deed of Transfer dated December 31, 1962. He also testified that he was in adverse, open, exclusive and notorious possession of the subject property; that no one was questioning his ownership over the land; and that he was the one paying the real property tax thereon. He also stated that he was the one who had the property surveyed; that no one opposed the survey. Further, he stated that he was not aware of any person or entity which questioned his mothers ownership and possession of the subject property. Respondents mother, Bibiana P. Rizalvo stated that she purchased the lot from Eufrecina Navarro, as evidenced by the Absolute Deed of Sale dated July 8, 1952. She confirmed that before she sold the property to her son, she was the absolute owner of the subject property and was in possession thereof, without anyone questioning her status as owner. She further stated that she was the one paying for the real property taxes at that time and that she even installed improvements on the subject property.

ISSUE: Whether respondent is entitled to the registration of the property in his name.

HELD: No. Existing law and jurisprudence provides that an applicant for judicial confirmation of imperfect title must prove compliance with the Property Registration Decree. Under Section 14 (1), applicants for registration of title must sufficiently establish first, that the subject land forms part of the disposable and alienable lands of the public domain; second, that the applicant and his predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of the same; and third, that it is under a bona fide claim of ownership since June 12, 1945, or earlier. The first requirement was satisfied in this case. The certification and report submitted by the CENRO of San Fernando City, La Union, states that the entire land area in question is within the alienable and disposable zone, certified as such since January 21, 1987. Respondent has likewise met the second requirement as to ownership and possession. The MTC and the CA both agreed that respondent has presented sufficient testimonial and documentary evidence to show that he and his predecessors-in-interest were in open, continuous, exclusive and notorious possession and occupation of the land in question. However, the third requirement, that respondent and his predecessors-in-interest be in open, continuous, exclusive and notorious possession and occupation of the subject property since June 12, 1945 or earlier, has not been satisfied. Respondent only managed to present oral and documentary evidence of his and his mothers ownership and possession of the land since 1958. An applicant may be allowed to register land by means of prescription which is one of the modes of acquiring ownership and that properties classified as alienable public land may be converted into private property by reason of open, continuous and exclusive possession of at least thirty years. On this basis, respondent would have been eligible for application for registration because his claim of ownership and possession over the subject property even exceeds thirty (30) years. However, it is jurisprudentially clear that the thirty (30)-year period only begins from the moment the State expressly declares that the public dominion property is no longer intended for public service or the development of the national wealth or that the property has been converted into patrimonial. In the case at bar, there is no evidence

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indicating any express declaration by the state that the subject land is no longer intended for public service or the development of the national wealth. Thus, there appears no basis for the application of the thirty (30)-year prescriptive period.

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FERNANDO V. GONZALEZ vs. COMMISSION ON ELECTIONS, RENO G. LIM, STEPHEN C. BICHARA and THE SPECIAL BOARD OF CANVASSERS G.R. No. 192856 March 8, 2011

FACTS: Petitioner Fernando V. Gonzalez and private respondent Reno G. Lim both filed certificates of candidacy for the position of Representative of the 3rd congressional district of the Province of Albay. Lim was the incumbent congressman while Gonzalez was former Governor of Albay. On March 30, 2010, a Petition for Disqualification and Cancellation of Certificate of Candidacy (COC) was filed by Stephen Bichara on the ground that Gonzalez is a Spanish national, being the legitimate child of a Spanish father and a Filipino mother, and that he failed to elect Philippine citizenship upon reaching the age of majority. It was further alleged that Gonzalezs late registration of his certificate of birth with the Civil Registry, even if accompanied by an affidavit of election of Philippine citizenship, was not done within a reasonable time as it was in fact registered 45 years after Gonzalez reached the age of majority. In his Answer, Gonzalez denied having willfully made false and misleading statement in his COC regarding his citizenship and pointed out that Bichara had filed the wrong petition under Section 68 of the Omnibus Election Code (OEC) to question his eligibility as a candidate. Gonzalez also argued that the petition which should have been correctly filed under Section 78 of the OEC was filed out of time. He asserted that he is a Filipino citizen as his Alien Certificate of Registration was issued during his minority. However, he took an Oath of Allegiance to the Republic of the Philippines before the Justice of the Peace in Ligao, Albay on his 21st birthday. Gonzalez contended that he is deemed a natural-born Filipino citizen under the 1987 Constitution which includes in the definition of natural-born citizens *t+hose born before January 17, 1973, of Filipino mothers, who elect Philippine citizenship upon reaching the age of majority. The Second Division of COMELEC granted the petition for the disqualification of Gonzalez. Lim petitioned the Provincial Board of Canvassers (PBOC) to consider the votes cast for Gonzalez as stray or not counted and/or suspend his proclamation, citing the Second Divisions resolution disqualifying Gonzalez as a candidate. The PBOC, however, dismissed the petition stating that the period for filing of a motion for reconsideration of the COMELEC resolution has not yet lapsed, and hence the same is not yet final and executory. Based on the results of the counting and canvassing of votes, Gonzalez emerged as the winner. PBOC officially proclaimed Gonzalez as the duly elected Representative of the 3rd district of Albay. Gonzalez took his oath of office on the same day. Bichara filed a Very Urgent Motion to Suspend the Effects of the Proclamation of Fernando V. Gonzalez. Lim filed a Motion for Leave to Intervene as Petitioner stating that being a candidate for the same position, he has legal interest in the success of the petition. Gonzalez filed a motion for reconsideration.

ISSUES: I. Whether the petition was timely filed II. Whether Gonzalez was validly proclaimed as the duly elected Representative of the 3rd District of Albay III. Whether the COMELEC had lost jurisdiction over the issue of Gonzalezs citizenship.

HELD: I. No. The only instance where a petition questioning the qualifications of a candidate for elective office can be filed before election is when the petition is filed under Section 78 of the OEC. SEC. 78. Petition to deny due course to or cancel a certificate of candidacy. -- A verified petition seeking to deny due course or to cancel a certificate of candidacy may be filed by any person exclusively on the ground that any material representation contained therein as required under Section 74 hereof is false. The petition may be filed at any time not later than twenty-five days from the time of the filing of the certificate of candidacy and shall be decided, after due notice and hearing, not later than fifteen days before the election. The petition is based on the allegation that Gonzalez was not a natural-born Filipino which was filed before the elections, is in the nature of a petition filed under Section 78. The recitals in the petition in said case, however, state that it was filed pursuant to Section 4 (b) of COMELEC Resolution No. 8696 and Section 68 of the OEC to disqualify a candidate for lack of qualifications or possessing some grounds for disqualification. The COMELEC treated the petition as one filed both

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for disqualification and cancellation of COC, with the effect that Section 68, in relation to Section 3, Rule 25 of the COMELEC Rules of Procedure, is applicable insofar as determining the period for filing the petition. Section 3, Rule 25 which allows the filing of the petition at any time after the last day for the filing of certificates of candidacy but not later than the date of proclamation, is merely a procedural rule issued by respondent Commission which, although a constitutional body, has no legislative powers. Thus, it can not supersede Section 78 of the Omnibus Election Code which is a legislative enactment. The contention of COMELEC citing Section 6 and 7 of Rep. Act No. 6646, a petition to deny due course to or cancel a certificate of candidacy may be filed even beyond the 25-day period prescribed by Section 78 of the Code, as long as it is filed within a reasonable time from the discovery of the ineligibility is also without merit. It will be noted that nothing in Sections 6 or 7 modifies or alters the 25-day period prescribed by Section 78 of the Code for filing the appropriate action to cancel a certificate of candidacy on account of any false represent-ation made therein. On the contrary, said Section 7 affirms and reiterates Section 78 of the Code. Nowhere in Sections 6 and 7 of Rep. Act No. 6646 is mention made of the period within which these disqualification cases may be filed. Since the petition sought to cancel the COC filed by Gonzalez and disqualify him as a candidate on the ground of false representation as to his citizenship, the same should have been filed within twenty-five days from the filing of the COC, pursuant to Section 78 of the OEC. Gonzales filed his COC on December 1, 2009. Clearly, the petition for disqualification and cancellation of COC filed by Lim on March 30, 2010 was filed out of time. The COMELEC therefore erred in giving due course to the petition.

II. Yes. Petitioners motion for reconsideration of the May 8, 2010 resolution of the Second Division having been timely filed, the said resolution had not become final and executory. Considering that at the time of the proclamation of Gonzalez who garnered the highest number of votes for the position of Representative in the 3rd district of Albay, the said Division Resolution declaring Gonzalez disqualified as a candidate for the said position was not yet final, he had at that point in time remained qualified. Therefore, his proclamation on May 12, 2010 by the PBOC was valid or legal. Moreover, the May 8, 2010 resolution cannot as yet be implemented for not having attained finality.

III. Yes. Under Article VI, Section 17 of the 1987 Constitution, the HRET is the sole judge of all contests relating to the election, returns, and qualifications of the members of the House of Representatives. It has long been settled that pursuant to Section 6 of R.A. No. 6646, a final judgment before the election is required for the votes of a disqualified candidate to be considered stray. In the absence of any final judgment of disqualification against Gonzalez, the votes cast in his favor cannot be considered stray. After proclamation, taking of oath and assumption of office by Gonzalez, jurisdiction over the matter of his qualifications, as well as questions regarding the conduct of election and contested returns were transferred to the HRET as the constitutional body created to pass upon the same. The Court thus does not concur with the COMELECs flawed assertion of jurisdiction premised on its power to suspend the effects of proclamation in cases involving disqualification of candidates based on commission of prohibited acts and election offenses. As we held in Limkaichong, any allegations as to the invalidity of the proclamation will not prevent the HRET from assuming jurisdiction over all matters essential to a members qualification to sit in the House of Representatives.

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CANDELARIO L. VERZOSA, JR. vs. GUILLERMO N. CARAGUE, RAUL C. FLORES, CELSO D. GANGAN, SOFRONIO B. URSAL and COMMISSION ON AUDIT G.R. No. 157838 March 8, 2011

FACTS: The Cooperative Development Authority (CDA) purchased from Tetra Corporation (Tetra) a total of forty-six (46) units of computer equipment and peripherals in the total amount of P2,285,279.00. Tetra was chosen from among three qualified bidders (Tetra, Microcircuits and Columbia). In the technical evaluation of the units to be supplied by the qualified bidders, CDA engaged the services of the Development Academy of the Philippines-Technical Evaluation Committee (DAP-TEC). The bidding was conducted in accordance with the Approved Guidelines and Procedures of Public Bidding for Information Technology (IT) Resources and Memorandum Order No. 237. Petitioner who was then the Executive Director of the CDA approved the purchase. The Resident Auditor sought the assistance of the Technical Services Office (TSO), COA in the determination of the reasonableness of the prices of the purchased computers. In its reply-letter, the TSO found that the purchased computers were overpriced/excessive by a total of P881,819.00. Respondent COA issued the assailed decision affirming the disallowance. It held that whether or not the product is branded is irrelevant in the determination of the reasonableness of the price since the brand was not stated in the Call for Bids nor in the Purchase Order. Further, COA declared that CDA should not have awarded the contract to Tetra but to the other competing bidders, whose bid is more advantageous to the government. It noted that Microcircuits offered the lowest bid of P1,123,315.00 for the US brand said to be more durable than the Korean brand supplied by Tetra. CDA also should have been entitled to volume discount considering the number of units it procured from Tetra. Lastly, COA emphasized that the requirements and specifications of the end-user are of prime consideration and the other added features of the equipment, if not specified or needed by the end-user, should not be taken into account in determining the purchase price. The conduct of public bidding should be made objectively with the end in view of purchasing quality equipment as needed at the least cost to the government. ISSUE: I. Whether the purchases made by CDA to Tetra should be allowed II. Whether petitioner, as Executive Director of CDA shoul be liable HELD: I. No. Records showed that while the respondents found nothing wrong per se with the criteria adopted by the CDA in the overall evaluation of the bids, the technical aspect was seriously questioned. The final technical evaluation report was apparently manipulated to favor Tetra, which offered a Korean-made brand as against Microcircuits which offered a USmade brand said to be more durable, at a lower price. The letter signed by Ms. Mesina in behalf of DAP Vice-President Austere A. Panadero informed petitioner that based on their evaluation in compliance with the grading system specified by CDA, the DAP found the units of Tetra as best suited to the needs of CDA. Upon investigation, respondents discovered that there was an earlier report which actually stated a contrary finding (Tetra units emerged as the most inferior in quality) but the representative from CDA (Rey Evangelista) came to the DAP-CITD and gave further instructions on penalty points for deviation in hardware specifications, resulting in a modified 2nd report in which Tetra was already indicated to have the highest ranking. The price per item of the PC units, laptop and UPS were overpriced by almost 50%. Findings of quasi-judicial agencies, such as the COA, which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but at times even finality if such findings are supported by substantial evidence. It is only upon a clear showing that the COA acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction that this Court will set aside its decisions or final orders. There is no such arbitrariness or grave abuse on the part of the COA when it disallowed in audit the amount representing the overprice in the payment by CDA for the purchased computer units and peripherals, its findings are well-supported by the evidence on record. II. With respect to the liability of petitioner, the COAs ruling that he is personally and solidarily liable for the disallowed amount is correct. The doctrine of separate personality of a corporation finds no application because CDA is not a private entity but a government agency. Moreover, respondents satisfactorily established that petitioner acted in bad faith when he prevailed upon the DAP-TEC to modify the initial result of the technical evaluation of the computers by imposing an irrelevant grading system that was intended to favor one of the bidders, after the bids had been opened.

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PEOPLE OF THE PHILIPPINES v. BAIDA SALAK Y BANGKULAS G.R. No. 181249 March 14, 2011

FACTS: The Regional Trial Court (RTC) found Baida Salak y Bangkulas guilty of illegal sale of regulated drugs in violation of Republic Act (R.A.) No. 6425 or the Dangerous Drugs Act of 1972, as amended by R.A. No. 7659. On appeal, the Court of Appeals (CA) affirmed the decision. Hence, Salak filed this petition, asserting that the prosecution failed to establish the integrity of the shabu confiscated from her and presented in court. She points out that the National Bureau of Investigation Special Task Force (NBI-STF) team did not comply with the requirement that a physical inventory and photograph of the confiscated drugs be taken. Neither did the prosecution present the buy-bust money. These shortcomings, according to her, create reasonable doubt.

ISSUE: Whether the shortcomings in handling of evidence will not be sufficient to comply with the quantum of evidence required by law for conviction

HELD: Petition DENIED. As held in People v. Gonzaga, a violation of the regulation is a matter strictly between the Dangerous Drugs Board and the arresting officers and is totally irrelevant to the prosecution of the criminal case since the commission of the crime of illegal sale of a prohibited drug is considered consummated once the sale or transaction is established. Moreover, noncompliance with the said regulation is not fatal to the prosecution as it does not render appellants arrest illegal or the seized items inadmissible in evidence. A thorough review of the records of this case shows that despite the NBI-STFs non-compliance with said regulation, the integrity and evidentiary value of the confiscated drugs was nonetheless preserved. It is also worthy to note that Salak never alleged that the drugs presented during the trial have been tampered with. Neither did Salak challenge the admissibility of the seized items when these were formally offered as evidence. It was only during appeal that Salak raised the issue of non-compliance with the said regulation. Settled is the rule that objections to the admissibility of evidence cannot be raised for the first time on appeal.

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BETTY LACBAYAN v. BAYANI S. SAMOY, JR. G.R. No. 165427 March 21, 2011

FACTS: Bayani S. Samoy, Jr., despite being married, managed to cohabit and have a child with Betty Lacbayan. During their cohabitation, Samoy and Lacbayan established a man power services and acquired five parcels of land. When they separated, they decided to terminate the business and execute a Partition Agreement. However, Lacbayan wanted additional demands and filed for judicial partition in the Regional Trial Court (RTC) in Quezon City. Samoy, however denied Lacbayans claim of cohabitation and said that the properties were acquired out of his own personal funds without any contribution from Lacbayan. To add, it was alleged that the said properties were registered in Samoy and Lacbayans name to exclude and to prevent the possible dissipation of the said properties from Lacbayans property regime with his wife.

ISSUES: I. Whether an action for partition precludes a settlement on the issue of ownership II. Whether the Torrens title over the disputed properties can be collaterally attacked.

HELD: I. An action for partition does not preclude a settlement on the issue of ownership As held in Municipality of Bian v. Garcia, the determination as to the existence of co ownership is necessary in the resolution of an action for partition. Thus, the first phase of a partition and/or accounting suit is taken up with the determination of whether or not a co-ownership in fact exists, and a partition is proper. While it is true that the complaint involved here is one for partition, the same is premised on the existence or nonexistence of co-ownership between the parties. Lacbayan insists she is a co-owner pro indiviso of the five real estate properties based on the transfer certificates of title (TCTs) covering the subject properties. Samoy maintains otherwise. Indubitably, therefore, until and unless this issue of co-ownership is definitely and finally resolved, it would be premature to effect a partition of the disputed properties. More importantly, the complaint will not even lie if Lacbayan, does not even have any rightful interest over the subject properties. II. A Torrens certificate of title cannot be collaterally attacked A Torrens certificate of title cannot be collaterally attacked, but that rule is not material to the case at bar. What cannot be collaterally attacked is the certificate of title and not the title itself. The certificate referred to is that document issued by the Register of Deeds known as the TCT. In contrast, the title referred to by law means ownership which is, more often than not, represented by that document. Lacbayan confuses title with the certificate of title. Title as a concept of ownership should not be confused with the certificate of title as evidence of such ownership although both are interchangeably used. Ownership is different from a certificate of title, the latter only serving as the best proof of ownership over a piece of land. The certificate cannot always be considered as conclusive evidence of ownership. Needless to say, registration does not vest ownership over a property, but may be the best evidence thereof.

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FILIPINA SAMSON v. JULIETA RESTRIVERA G.R. No. 178454 March 28, 2011

FACTS: Filipina Samson, a department head of the Population Commission in Cavite, agreed to help Julita Restrivera to locate a lot. For such purpose, Restrivera handed Samson P50, 000.00 to cover initial expenses, however Samson failed to accomplish the task for the land is a government property. When Samson failed to return the P50, 000, Retrievera filed an administrative complaint for grave misconduct or conduct unbecoming a public officer against Samson. The Ombudsman found Samson guilty of violating Section 4(b) of R.A. No. 6713 on professionalism and suspended her from office for six months without pay. Upon motion for reconsideration, the Ombudsman reduced the penalty to three months suspension without pay. The Court of Appeals (CA) on appeal affirmed the Ombudsmans Order.

ISSUE: Whether Samson is guilty of grave misconduct, which is a ground for disciplinary action under R.A. No. 6713

HELD: Petition GRANTED. Section 4(b) of R.A. No. 6713: Public officials shall endeavor to discourage wrong perceptions of their roles as dispensers or peddlers of undue patronage The misconduct is grave if it involves any of the additional elements of corruption, willful intent to violate the law or to disregard established rules, which must be proved by substantial evidence. Otherwise, the misconduct is only simple. In this case, Restrivera failed to prove Samsons violation of an established and definite rule of action or unlawful behavior or gross negligence, and any of the aggravating elements of corruption, willful intent to violate a law or to disregard established rules. In fact, Restrivera could merely point to Samsons alleged failure to observe the mandate that public office is a public trust when Samson allegedly meddled in an affair that belongs to another agency and received an amount for undelivered work. In the context of Section 4 (A) (b) of R.A. No. 6713, a public official or employee should avoid any appearance of impropriety affecting the integrity of government services. On the other hand, Samsons belated attempt to return the amount was intended to avoid possible sanctions and impelled solely by the filing of the estafa case against her.

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ESTATE OF PASTOR M. SAMSON vs. MERCEDES R. SUSANO and NORBERTO R. SUSANO JULIAN C. CHAN vs. MERCEDES R. SUSANO and NORBERTO R. SUSANO May 30, 2011 G.R. No. 179024

G.R. No. 179086

FACTS: Pastor M. Samson (Pastor) owned a 1.0138-hectare parcel of land. Pastor was approached by his friend Macario Susano (Macario) who asked for permission to occupy a portion of Lot to build a house for his family. Pastor acceded to Macarios request. Macario and his family occupied 620 square meters of Lot and devoted the rest of the land to palay cultivation. Herein respondents insist that while no agricultural leasehold contract was executed by Pastor and Macario, Macario religiously paid cavans of palay per agricultural year to Pastor. Pastor sold portions of the lot without Macarios knowledge and consent. The last buyer of a portion of the lot was Chan. Respondents filed an action for maintenance of peaceful possession with prayer for the issuance of a restraining order/preliminary injunction and for the redemption of the subject landholding against Pastor and Chan before the Department of Agrarian Reform Adjudication Board. Specifically, the complaint prayed for the inclusion of the portion of said landholding within the Coverage of the Operation Land Transfer (OLT) Program under The Tenant Emancipation Decree. They also asked that an emancipation patent be issued in their favor. Pastor filed a Motion to Dismiss alleging that the property is not agricultural land but a residential lot. Pastor maintained that no tenancy relationship was established between him and herein respondents because Macarios occupancy, as well as that of respondents, was only by mere tolerance.

ISSUE: Whether Macario is a de jure tenant in the subject landholding entitled to security of tenure

HELD: No. Agricultural Tenancy Act of the Philippines, defines a tenant as a person who, himself and with the aid available from within his immediate farm household, cultivates the land belonging to, or possessed by, another, with the latters consent for purposes of production, sharing the produce with the landholder under the share tenancy system, or paying the landholder a price certain or ascertainable in produce or in money or both, under a leasehold tenancy system. For a tenancy relationship to exist between the parties, the following essential elements must be shown: (1) the parties are the landowner and the tenant; (2) the subject matter is agricultural land; (3) there is consent between the parties; (4) the purpose is agricultural production; (5) there is personal cultivation by the tenant; and (6) there is sharing of the harvests between the parties. The presence of all of these elements must be proved by substantial evidence. It has been repeatedly held that occupancy and cultivation of an agricultural land will not ipso facto make one a de jure tenant. Independent and concrete evidence is necessary to prove personal cultivation, sharing of harvest, or consent of the landowner. Substantial evidence necessary to establish the fact of sharing cannot be satisfied by a mere scintilla of evidence; there must be concrete evidence on record adequate to prove the element of sharing. To prove sharing of harvests, a receipt or any other credible evidence must be presented, because self-serving statements are inadequate. Tenancy relationship cannot be presumed; the elements for its existence are explicit in law and cannot be done away with by conjectures. Leasehold relationship is not brought about by the mere congruence of facts but, being a legal relationship, the mutual will of the parties to that relationship should be primordial. For implied tenancy to arise it is necessary that all the essential requisites of tenancy must be present. The affidavits executed by three of respondents neighbors are insufficient to establish a finding of tenancy relationship between Pastor and Macario. As correctly observed by the estate of Pastor Samson, the affiants did not provide details based on their personal knowledge as to how the crop-sharing agreement was implemented, how much was given by Macario to Pastor, when and where the payments were made, or whether they have at any instance witnessed Pastor receive his share of the harvest from Macario. Such failure is fatal to respondents claim particularly since the respondents have the burden of proving their affirmative allegation of tenancy. In fine, the conclusions of the RARAD, DARAB and the CA respecting the existence of tenancy relationship between Pastor and Macario are not supported by substantial evidence on record.

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GEORGE MILLER vs. SECRETARY HERNANDO B. PEREZ, in his capacity as Secretary of the Department of Justice AND GIOVAN BERNARDINO G.R. No. 165412 May 30, 2011

FACTS: Petitioner George Miller is a British national and an inmate at the Maximum Security Compound of the New Bilibid Prison (NBP) in Muntinlupa City. While serving as Acting Secretary General of the Inmates Crusade Against Drugs (ICAD) based at NBP, petitioner wrote two confidential letters addressed to then NBP Superintendent Col. Gregorio Agalo-os containing a detailed report of the alleged irregularities and drug trading activities of respondent Bernardino and Rodolfo Bernardo (Bernardo). On January 6, 1999, Petitioner was hit at the back of his head. Quirante and Ceballos admitted their participation in the attack on petitioner. They admitted being approached by Aprid and Bernardino to engage their services and offered an amount of P1,500.00 to kill Miller which they accpeted. Quirante admitted treacherously hitting Miller at the back of his head with a piece of wood but for failing to get him with one blow, he had to flee. On the other hand, Ceballos admitted as the lookout and was asked by Miller the identity of his assailant right after he was clubbed. Prosecutor Leopoldo Macinas issued his Memorandum addressed to the City Prosecutor finding probable cause against Quirante, Ceballos and Toledo in conspiracy with Bernardino, Aprid and Bernardo, for the crime of attempted murder. Prosecutor Macinas was convinced that the detailed account given by Quirante, Ceballos and Toledo were executed freely and voluntarily, and found no reason why they would incriminate their co-inmates other than the truth of the statements in their affidavits. On the other hand, the defenses proffered by Bernardo and Bernardino are evidentiary matters which can be best passed upon after a full-blown trial. Bernardino filed a petition for review with the Department of Justice (DOJ) arguing that there was no sufficient evidence presented to support a claim of conspiracy, which was based merely on conflicting testimonies or affidavits in a language foreign to the affiants. Secretary of Justice Hernando B. Perez, issued his Resolution finding merit in the petition therefore excluding Bernardino from the criminal case.

ISSUE: Whether the Secretary of the Department of Justice was correct in declaring that there was no probable cause against respondent Bernardino

HELD: No. Probable cause is defined as the existence of such facts and circumstances as would excite the belief in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted. The Court considers it sound judicial policy to refrain from interfering in the conduct of preliminary investigations and to leave the Department of Justice ample latitude of discretion in the determination of what constitutes sufficient evidence to establish probable cause for the prosecution of supposed offenders. However, this Court may ultimately resolve the existence or non-existence of probable cause by examining the records of the preliminary investigation when necessary for the orderly administration of justice. Confronted with evidence clearly showing prima facie that respondent Bernardino was among those involved in the crime committed against petitioner, Prosecutor Macinas was correct in finding probable cause, upon reinvestigation, to include respondent Bernardino along with Bernardo, Aprid, Quirante, Ceballos and Toledo as those who will be formally charged with attempted murder and recommending the filing of an amended information for this purpose. In modifying the said amended information by dropping the name of respondent Bernardino, Secretary Perez gravely abused his discretion, his conclusion that the new affidavits were mere afterthought being contrary to the facts on record. Besides, the Secretarys act of absolving respondent Bernardino arbitrarily ignored the consistent and categorical declarations of Quirante, Ceballos and Toledo that respondent Bernardino together with Bernardo and Aprid instigated, planned and ordered the attack on petitioner, harping solely on their belated execution of affidavits even if such delay have been satisfactorily explained. Where the Secretary of Justice dismissed the complaint against the respondent despite sufficient evidence to support a finding of probable cause, such clearly constitutes grave error, thus warranting a reversal.

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RIMANDO A. GANNAPAO vs. CIVIL SERVICE COMMISSION (CSC), THE CHIEF OF PHILIPPINE NATIONAL POLICE, THE SECRETARY OF DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT, ARIEL G. RONQUILLO, J. WALDEMAR V. VALMORES, JOSE F. ERESTAIN, JR., and KARINA CONSTANTINO-DAVID, ALL NAMED INDIVIDUALS IN THEIR CAPACITY AS OFFICERS OF THE CSC, RICARDO BARIEN, INOCENCIO M. NAVALLO, LIGAYA M. GANDO, LEA MOLLEDA, FE R. VETONIO, PRIMO V. BABIANO, PATIGA J., JOSE TAEZA, G. DELOS SANTOS, LOSBAES, W., AVE PEDIGLORIO and CRESENCIA ROQUE G.R. No. 180141 May 31, 2011

FACTS: On December 22, 1995, respondents Ricardo Barien, Inocencio M. Navallo, Ligaya M. Gando, Lea Molleda, Fe R. Vetonio, Primo V. Babiano, Patiga J., Jose Taeza, G. Delos Santos, Losbaes, W., Ave Pediglorio and Cresencia Roque (Barien, et al.) who are stockholders and board members of United Workers Transport Corp. (UWTC), filed a verified complaint before the PNP Inspectorate Division at Camp Crame, charging petitioner with Grave Misconduct and Moonlighting with Urgent Prayer for Preventive Suspension and Disarming. Barien, et al. are former drivers, conductors, mechanics and clerks of the defunct Metro Manila Transit Corporation (MMTC). In April 1995, UWTC started operating MMTCs buses which it acquired under a conditional sale with right of repossession. At about the same time, petitioner was allegedly employed by Atty. Roy G. Gironella, the general manager appointed by the Board of Directors of UWTC, as his personal bodyguard with compensation coming from UWTC. In October 1995, Barien, et al. representing the majority stockholders of UWTC sued Atty. Gironella and five other members of the UWTC Board of Directors for gross mismanagement. Barien, et al. further alleged that upon orders of Atty. Gironella, the buses regularly driven by them and other stockholders/drivers/workers were confiscated by a task force composed of former drivers, conductors and mechanics led by petitioner. Armed with deadly weapons such as guns and knives, petitioner and his group intimidated and harassed the regular bus drivers and conductors, and took over the buses. Petitioner is not authorized to use his firearm or his authority as police officer to act as bodyguard of Atty. Gironella and to intimidate and coerce the drivers/stockholders and the bus passengers. Barien, et al. thus prayed for the preventive suspension of petitioner, the confiscation of his firearm and his termination after due hearing. The complaint passed a pre-charge investigation with The Inspector General, Internal Affairs Office (TIG-IAO) of the PNP, and petitioner filed his Answer[5] on January 12, 1996. Petitioner specifically denied the allegations of the complaint and averred that he was never employed by Atty. Gironella as bodyguard. Instead, it was his twin brother, Reynaldo Gannapao, who worked as messenger at UWTC. In an undated Memorandum,[6] Chief Service Inspectorate Police Superintendent Atty. Joselito Azarcon Casugbo recommended the dismissal of the complaint, citing the affidavit of desistance allegedly executed by Avelino Pediglorio. Subsequently, National Police Commission (NAPOLCOM) Memorandum Circular No. 96-010[7] dated July 31, 1996, was issued, and a summary hearing on the complaint was conducted by the Office of the Legal Service, PNP National Headquarters in accordance with the newly promulgated rules. The case was docketed as Adm. Case No. 09-97. On January 30, 1997, Atty. Eduardo Sierra of the Office of the Director General, PNP, issued a subpoena to petitioner requiring him to appear at the hearing of Adm. Case No. 09-97 before the Office of the Legal Service in Camp Crame.[8] Petitioner moved to dismiss the complaint on the ground of res judicata, citing the earlier dismissal of the complaint against him by Chief Service Inspectorate Casugbo.[9] However, PNP Chief Recaredo A. Sarmiento II denied the motion to dismiss. On November 26, 1997, PNP Chief Sarmiento rendered his Decision,[10] as follows: WHEREFORE, premises considered, this Headquarters finds respondent SPO1 RIMANDO A. GANNAPAO GUILTY of the charge of serious irregularities in the performance of duties, thus, he is hereby sentenced to suffer the penalty of three (3) months suspension from the police service without pay. SO ORDERED.[11] Petitioners motion for reconsideration was likewise denied under the Resolution*12+ dated April 14, 1998 of Police Director General Santiago L. Alio. Petitioner elevated the case to the NAPOLCOM National Appellate Board. His appeal, however, was dismissed in a Resolution dated December 29, 1999.[13] Aggrieved, petitioner brought his case to the Department of Interior and Local Government (DILG). In an Order[14] dated July 18, 2000, DILG Secretary Alfredo Lim denied petitioners appeal and affirmed his suspension for three months. Petitioner then appealed to the CSC claiming that he had been denied due process in the proceedings before the Office of the Legal Service. He also sought to set aside the penalty of three months suspension. On April 3, 2002, the CSC issued Resolution No. 020487 dismissing petitioners appeal but modifying his penalty of three months suspension to dismissal. The CSC noted that the only evidence submitted by petitioner during the investigation of the case is the picture of his alleged twin brother, Reynaldo and said that the best evidence would have

25
been the birth certificate or any document or the presentation of the person himself, which would verify the existence and employment in UWTC of such person. As to the assertion of petitioner that the complaint has no more basis since some of the complainants (Cresencia Roque, Primo V. Babiano and Avelino Pediglorio) have filed affidavits of desistance with the PNP, the CSC pointed out that these affidavits were submitted after the PNP Chief had rendered his decision and attached to petitioners motion for reconsideration of said decision. More importantly, the withdrawal of the complaint does not result in its outright dismissal nor discharge the person complained of from any administrative liability. The CSC ruled that petitioners act of serving as bodyguard of Atty. Gironella and harassing the bus drivers of UWTC is so grave as to warrant the penalty of dismissal. The dispositive portion of the CSC resolution reads: WHEREFORE, the appeal of Rimando A. Gannapao is hereby DISMISSED. However, the Order dated February 26, 2001 of then DILG Secretary Alfredo S. Lim affirming the suspension of Gannapao for a period of three (3) months is modified to dismissal from the service.[15] Petitioner thus filed with the CA a Petition for Review with an Urgent Motion for Issuance of Temporary Restraining Order and/or Preliminary Injunction. The CA issued a TRO on September 4, 2002[16] and a writ of preliminary injunction on January 14, 2003.[17] In a petition for certiorari filed with this Court, the CSC questioned the validity of the CAs issuance of the writ of preliminary injunction, arguing that the injunctive relief violates the Administrative Code and the CSC rules which state that administrative disciplinary penalties shall be immediately executory, notwithstanding the pendency of an appeal. By Decision[18] dated November 17, 2005, we sustained the CA ruling and found no grave abuse of discretion in the issuance of the preliminary injunction. The CA, however, dissolved the writ in its Decision dated April 27, 2007 affirming CSC Resolution No. 020487. The CA ruled that petitioner cannot claim denial of due process since he was given ample opportunity to present his side. According to the CA, where the opportunity to be heard, either through oral arguments or pleadings, is accorded, and the party could present its side or defend its interest in due course, there is no denial of procedural due process. Thus, the CA decreed: WHEREFORE, premises considered, the instant petition is DENIED. The assailed Resolution No. 020487 dated 3 April 2002 of the Civil Service Commission is hereby AFFIRMED. Accordingly, the Preliminary Injunction issued on 14 January 2003 enjoining the Civil Service Commission from implementing the assailed Resolution is DISSOLVED. SO ORDERED.[19] On October 10, 2007, the CA denied petitioners motion for reconsideration. Hence, this petition. Petitioner contends that he was denied due process in the proceedings before the Office of the Legal Service of the PNP since no notice and summons were issued for him to answer the charges and no hearing was conducted. He claims that his dismissal was not proper and legal as there was no introduction and presentation of evidence against him and he was not given the opportunity to defend his side. Also, petitioner assails the penalty of dismissal imposed upon him by the CSC, alleging that it was improperly imposed considering the mitigating circumstance of his length of service (14 years at the time the decision of the PNP Director General was rendered[20]). On the other hand, the Office of the Solicitor General (OSG), representing public respondent CSC, maintains that petitioner was not denied due process. The OSG points out that petitioner answered the complaint during the pre-charge investigation and when the case was heard at the Office of the Legal Service, petitioner was given the opportunity to answer the charges or to submit his supplemental answer or counter-affidavit, but he instead moved for the dismissal of the case. Atty. Sierra, the hearing officer of the Office of the Legal Service, also issued a subpoena for petitioner to appear on February 10, 1997, but he failed to appear on the said date. Moreover, petitioners culpability was proven by substantial evidence through the documentary evidence consisting of individual sworn statements from all the complainants, the police blotter of the incident involving Atty. Gironella and the UWTC drivers and conductors which also established that petitioner was present thereat and his firearm identified, and the photocopies of documents signed by Atty. Gironella showing payments to petitioner as security personnel. In addition, a document changing the name of the payee to Reynaldo instead of Rimando also signed by Atty. Gironella was presented to prove that petitioners claim that it was really his twin brother who was employed at UWTC is just an alibi. Lastly, the OSG is of the view that the penalty of dismissal was correctly imposed on petitioner, stressing that his act of serving as bodyguard of Atty. Gironella and harassing the bus drivers of UWTC is a grave offense. The Court is tasked to resolve the following issues: (1) whether petitioner was denied due process, and (2) whether the CA correctly affirmed the CSC decision modifying the penalty of petitioner from three months suspension to dismissal from the service. The petition must fail. Time and again, we have held that the essence of due process is simply an opportunity to be heard or, as applied to administrative proceedings, an opportunity to explain ones side or an opportunity to seek a reconsideration of the action or ruling complained of.[21] In the application of the principle of due process, what is sought to be safeguarded is not

26
lack of previous notice but the denial of the opportunity to be heard.[22] As long as a party was given the opportunity to defend his interests in due course, he was not denied due process.[23] Reviewing the records, we find that petitioner was afforded due process during the proceedings before the Office of the Legal Service of the PNP. The pertinent provisions of NAPOLCOM Memorandum Circular No. 96-010 prescribe the following procedure: xxxx D. Pre-Charge Investigation SECTION 1. Procedure. 4.01 Within three (3) days from the receipt of the complaint, the Command/Unit Inspector, upon directive from the Disciplinary Authority concerned, shall conduct a preliminary inquiry/pre-charge investigation wherein both the complainant and the respondent and their witnesses, if any shall be summoned to appear. x x x After the inquiry, the Command/Unit Inspector shall submit to the Disciplinary Authority concerned his Report of Investigation, together with his recommendation x x x: xxxx E. Summary Hearing SECTION 1. Notification of Charges/Complaint Order to Answer. 5.01 After it has been determined from the results of the pre-charge investigation that the complaint is a proper subject of summary hearing, the respondent PNP member shall be furnished with a copy of the complaint or charges filed against him to include copies of affidavits of witnesses and other documents submitted by the complainant should there be any, and he shall be directed to submit an answer within five (5) days from receipt of the complaint, attaching therewith pertinent documents or evidence in support of his defense. xxxx As records bear out, petitioner was adequately apprised of the charges filed against him and he submitted his answer to the complaint while the case was still under a pre-charge investigation. When the Office of the Legal Service conducted a summary hearing on the complaint, petitioner was again duly notified of the proceedings and was given an opportunity to explain his side. Extant on the records, particularly in the Resolution[24] dated April 14, 1998 issued by Police Director General Santiago L. Alio, was the manner in which the summary hearing before the Office of the Legal Service was conducted. We quote the relevant portions thereof: Having elevated this case to the Summary Dismissal Authority of the C,(sic) PNP through the Office of the Legal Service, a hearing was set by P/SInsp. Eduardo T[.] SIERRA, the Hearing Officer, on January 29, 1997, at 2:00 p.m., but respondent failed to appear (LS-3); per Memo of the Director, HSS, respondent was no longer assigned at HSS (LS-4). On February 10, 1997, respondent appeared for hearing without counsel after the subpoena was served at his home address (LS-5). During the clarificatory questions propounded by the Hearing Officer, respondent reiterated that it was his twin brother who was the bodyguard of Atty. Gironella and not him; he also mentioned that this case was already dismissed by Atty. Joselito Azarcon-CASUGBO; since the records show no evidence of said dismissal, respondent was asked by the Hearing Officer that he may submit a supplemental answer or counter-affidavit until February 17, 1997, or he may adapt (sic) his answer to complaint he filed with TIG, IIAO and submit the case for decision. Nonetheless, he was given copies of the complaint and affidavits of complainants in case he wants to submit a supplemental answer or counter-affidavit. On February 17, 1997, the deadline for respondent to file a supplemental answer or counter-affidavit, he did not appear, hence the Hearing Officer considered the case submitted for decision. On February 18, 1997, at about 2:00 p.m., however, respondent showed up and submitted not a supplemental Answer or counter-affidavit but a Motion to be Furnished Official Copy of the Complaint/Information and its Annexes and to (sic) Respondent to Answer within Fifteen (15) Days from Receipt (LS-6). As prayed for, the Motion was granted. xxxx On March 6, 1997, respondent submitted not a supplemental answer or counter-affidavit, but a Motion to Dismiss (LS-11) upon the ground that this case was already dismissed by Atty. Joselito Azarcon-CASUGB[O]. The Hearing Officer clarified to respondent (who always appeared without counsel) that the Motion to Dismiss was deemed submitted for resolution, and in the event that the said Motion to Dismiss was denied, this case was likewise submitted for decision.[25] (Additional italics supplied.) Petitioners claim that he did not file an answer since no subpoena was issued to him thus deserves scant consideration. Petitioner had ample opportunity to present his side during the hearing and he was even advised by the hearing officer that he may file a supplemental answer or a counter affidavit until February 17, 1997 or he may adopt his answer filed with the TIG-IAO. Instead, petitioner filed a motion to dismiss, reiterating the ground of res judicata, based

27
on his own assertion that the case against him had already been heard, tried and finally terminated. Petitioner, however, did not present proof of such dismissal. Indeed, he could not have presented such proof because, as correctly pointed out by the OSG, the undated memorandum of Atty. Casugbo, the hearing official who conducted the preliminary inquiry/precharge investigation, was merely recommendatory. Atty. Casugbos report and recommendation was not approved by the PNP Director General, the disciplinary authority to whom such report of investigation is submitted, pursuant to Section (D) 4.01 of Memorandum Circular No. 96-010. Consequently, when the Office of the Legal Service of the PNP found the complaint to be a proper subject of a summary hearing, and a further investigation was conducted pursuant to the rules, the recommendation to dismiss was deemed not adopted or carried out. Having been given a reasonable opportunity to answer the complaint against him, petitioner cannot now claim that he was deprived of due process.[26] Petitioners assertion that the complainants/witnesses against him have not been cross-examined by him, is likewise bereft of merit. While the right to cross-examine is a vital element of procedural due process, the right does not necessarily require an actual cross examination but merely an opportunity to exercise this right if desired by the party entitled to it.[27] In this case, while Memorandum Circular No. 96-010 provides that the sworn statements of witnesses shall take the place of oral testimony but shall be subject to cross-examination, petitioner missed this opportunity precisely because he did not appear at the deadline for the filing of his supplemental answer or counter-affidavit, and accordingly the hearing officer considered the case submitted for decision. And even with the grant of his subsequent motion to be furnished with copy of complaint and its annexes, he still failed to file a supplemental answer or counteraffidavit and instead filed a motion to dismiss reiterating the previous recommendation for dismissal made by Atty. Casugbo. Moreover, after the PNP Director General rendered his decision, petitioner filed a motion for reconsideration which was denied. He was also able to appeal from the decision of the PNP Director General to the DILG Secretary, and eventually to the CSC. We have held that the fact that a party filed motions for reconsideration and appeals with the tribunals below, in which she presented her arguments and through which she could have proffered her evidence, if any, negates her claim that she was denied opportunity to be heard.[28] As to the second issue, we hold that the CA did not err in affirming the CSC ruling which modified the penalty imposed by the PNP Director General as affirmed by the DILG Secretary, from three months suspension to dismissal. Under Memorandum Circular No. 93-024 (Guidelines in the Application of Penalties in Police Administrative Cases), the following acts of any member of the PNP are considered Grave Offenses: xxxx C. The following are Grave Offenses: xxxx Serious Irregularities in the Performance of Duties. This is incurred by any member of the PNP who shall: xxxx c. act as bodyguard or security guard for the person or property of any public official, or private person unless approved by the proper authorities concerned; x x x x (Emphasis ours.) The CSC found that petitioner indeed worked for Atty. Gironella as the latters bodyguard -- at least during the relevant period, from April 1995 up to December 1995 when Barien, et al. filed their verified complaint before the Inspectorate Division on the basis of the following: 1) Certification of the San Jose Del Monte Police Station and the police blotter entries Nos. 6050-95 and 6051-95 dated November 22, 1995 as certified by SPO2 Rafael delos Reyes; 2) 3) 4) A document reflecting the payment made to SPO1 Rimando Gannapao as security signed by Atty. Gironella; A document changing the name of the payee to Reynaldo instead of Rimando signed by Atty. Gironella; and Affidavits of Primo Babiano, Ricardo Barien, Cresencia Roque and Jocelyn Evangelista.[29]

On the other hand, petitioner presented the Certification[30] dated January 2, 1996 by Atty. Gironella stating that petitioner was not an employee of UWTC. This piece of evidence is unreliable, and at best, self-serving. Petitioner reiterates that it was his twin brother Reynaldo whom Barien, et al. encountered during the incident when their buses were confiscated by armed men in October 1995. He submitted a photograph of his twin brother but this was not given credence by the CSC. Before the CA, petitioner also attached a photograph of himself together with his alleged twin brother Reynaldo, as well as birth certificates issued by the Local Civil Registrar of Salcedo, Ilocos Sur stating their similar dates of birth and parents, and the affidavit of Reynaldo Gannapao.[31] However, there was no certification issued by UWTC that Reynaldo Gannapao was indeed employed therein for the period relevant to this case, nor any document evidencing receipt of his wages or salary from UWTC. Also, the police blotter entries[32] dated October 13, 1995 and

28
November 22, 1995 tend to support the claim of Barien, et al. that Atty. Gironella threatened them when they complained of his mismanagement of company funds and that in this conflict, petitioner had used his firearm and authority as police officer to lead in the taking of the MMTC buses from UWTC drivers and conductors. Thus, even assuming that petitioner in fact had a twin brother by the name of Reynaldo, Barien, et al. in their sworn statements categorically pointed to him, not his twin brother, as the one leading the armed group sent by Atty. Gironella to confiscate their buses and acted as bodyguard of Atty. Gironella. Barien, et al. positively identified him as the police officer with officially issued firearm who actively assisted Atty. Gironella and committed acts of harassment which were narrated in the verified complaint and sworn statements executed by respondents Primo Babiano, Ricardo C. Barien, Cresencia Roque and Jocelyn Evangelista. Consequently, no error was committed by the CSC in giving more weight to the positive declarations of Barien, et al. than the denials of petitioner. In his motion for reconsideration of the decision rendered by PNP Director General Sarmiento, petitioner attached the alleged affidavits of desistance executed by Babiano, Roque and Avelino Pediglorio. Director Alio, however, in denying the motion found these insignificant and not credible considering that Babianos signature in the April 12, 1996 retraction[33] was starkly different from his original January 2, 1996 sworn statement[34] while the supposed affidavit of desistance of Roque[35] dated October 14, 1997 should have already been alleged or submitted by him before Director General Sarmiento rendered his decision on November 26, 1997.[36] The CSC, on appeal, likewise gave scant weight to the alleged retraction of some of the respondents. It noted that respondents Inocencio M. Navallo, Ligaya Gando, Lea Molleda, Fe R. Vetonio, Jose Taeza, among others did not desist from pursuing the case. Before the CA, petitioner submitted a joint affidavit of desistance dated August 7, 2002 allegedly signed by Navallo, Vetonio, Gando, Patiga, Taeza and G. delos Santos.[37] Nonetheless, the CSC, citing Section 10, Rule II of the Uniform Rules on Administrative Cases in the Civil Service,[38] held that the withdrawal of the complaint does not result in its outright dismissal nor discharge the person complained of from any administrative liability. Where there is obvious truth or merit to the allegation in the complaint or where there is documentary evidence that would tend to prove the guilt of the person complained of, the same should be given due course.*39+ We find no error in the CSCs appreciation of the foregoing evidence adduced by the petitioner. Section 6, Article XVI of the Constitution provides that the State shall establish and maintain one police force which shall be civilian in character. Consequently, the PNP falls under the civil service pursuant to Section 2(1), Article IX-B, also of the Constitution.[40] Section 91 of the DILG Act of 1990 expressly declared that the Civil Service Law and its implementing rules and regulations shall apply to all personnel of the Department. As a rule, administrative agencies factual findings that are affirmed by the Court of Appeals are conclusive on the parties and not reviewable by this Court,[41] except only for very compelling reasons.[42] Where the findings of the administrative body are amply supported by substantial evidence, such findings are accorded not only respect but also finality, and are binding on this Court. It is not for the reviewing court to weigh the conflicting evidence, determine the credibility of witnesses, or otherwise substitute its own judgment for that of the administrative agency on the sufficiency of evidence.[43] We find no cogent reason to deviate from the general rule in this case. As mentioned, acting as private bodyguard without approval of the proper authorities is classified as a grave offense. Memorandum Circular No. 93-024 (Guidelines in the Application of Penalties in Police Administrative Cases)[44] provides for the following schedule of penalties: SEC. 2. Schedule of Penalties. - The penalties for light, less grave, and grave offenses shall be made in accordance with the following schedule: xxxx C. For Grave Offenses: a. b. c. Maximum suspension imposable (minimum period); Forced Resignation/Demotion of not more than one (1) rank (medium period); Dismissal (maximum period).

xxxx SEC. 4. Qualifying Circumstances. In the determination of the penalties to be imposed, mitigating and aggravating circumstances attendant to the commission of the offense shall be considered: The following are mitigating circumstances: a. b. c. physical illness good faith length of service in the government

29
d. analogous circumstances.

xxxx In refusing to be swayed by petitioners argument that his fourteen (14) years of service in government with no record of previous administrative offense should have mitigated his liability, the CSC held: The Commission finds the act of Gannapao of serving as a bodyguard of UTWC General Manager Atty. Gironella and harassing the bus drivers of the said agency so grave that the decision of then DILG Secretary Alfredo S. Lim, affirming his suspension from the service for three (3) months is modified to dismissal from the service. In the case of University of the Philippines vs. Civil Service Commission, et al., G.R. No. 89454 dated April 20, 1992, the Supreme Court held, as follows: We do not agree that private respondents length of service and the fact that it was her first offense shall be taken into account. Respondent Commission failed to consider that private respondent committed not only one act, but a series of acts which were deliberately committed over a number of years while respondent was in the service. These acts were of the gravest character which strikes at the very integrity and prestige of the University. It must be emphasized that the PNP, as an institution, was organized to ensure accountability and uprightness in the exercise of police discretion as well as to achieve efficiency and effectiveness of its members and units in the performance of their functions thus, its leadership would be well within its right to cleanse itself of wrongdoers.[45] Public respondent CSC did not err in not considering length of service as a mitigating circumstance and in imposing the maximum penalty of dismissal on the petitioner. Length of service as a factor in determining the imposable penalty in administrative cases is a double-edged sword.[46] Despite the language of Section 4 of Memorandum Circular No. 93024, length of service is not always a mitigating circumstance in every case of commission of an administrative offense by a public officer or employee. Length of service is an alternative circumstance which can mitigate or possibly even aggravate the penalty, depending on the circumstances of the case. Section 53, Rule IV of the Revised Uniform Rules on Administrative Cases in the Civil Service, grants the disciplining authority the discretion to consider mitigating circumstances in the imposition of the proper penalty.[47] Said rule provides thus: SEC. 53. Extenuating, Mitigating, Aggravating, or Alternative Circumstances. In the determination of the penalties to be imposed, mitigating, aggravating and alternative circumstances attendant to the commission of the offense shall be considered. The following circumstances shall be appreciated: a. b. c. d. e. f. g. h. i. j. k. Physical illness Good faith Taking undue advantage of official position Taking undue advantage of subordinate Undue disclosure of confidential information Use of government property in the commission of the offense Habituality Offense is committed during office hours and within the premises of the office or building Employment of fraudulent means to commit or conceal the offense Length of service in the government Education, or

l. Other analogous circumstances (Emphasis ours.)

In University of the Philippines v. Civil Service Commission,[48] cited by CSC, we did not consider length of service in favor of the private respondent; instead, we took it against said respondent because her length of service, among other things, helped her in the commission of the offense.

30
Where the government employee concerned took advantage of long years of service and position in public office, length of service may not be considered in lowering the penalty. This Court has invariably taken this circumstance against the respondent public officer or employee in administrative cases involving serious offenses, even if it was the first time said public officer or employee was administratively charged. Thus, we held in Civil Service Commission v. Cortez[49]: Petitioner CSC is correct that length of service should be taken against the respondent. Length of service is not a magic word that, once invoked, will automatically be considered as a mitigating circumstance in favor of the party invoking it. Length of service can either be a mitigating or aggravating circumstance depending on the factual milieu of each case. Length of service, in other words, is an alternative circumstance. That this is so is clear in Section 53 of the Uniform Rules on Administrative Cases in the Civil Service, which amended the Omnibus Civil Service Rules and Regulations dated 27 December 1991. x x x xxxx Moreover, a review of jurisprudence shows that, although in most cases length of service is considered in favor of the respondent, it is not considered where the offense committed is found to be serious. x x x xxxx x x x we cannot also consider length of service in favor of the respondent because of the gravity of the offense she committed and the fact that it was her length of service in the CSC which helped her in the commission of the offense. xxxx x x x it is clear from the ruling of the CSC that respondents act irreparably tarnished the integrity of the CSC. x x x xxxx The gravity of the offense committed is also the reason why we cannot consider the first offense circumstance invoked by respondent. In several cases, we imposed the heavier penalty of dismissal or a fine of more than P20,000, considering the gravity of the offense committed, even if the offense charged was respondents first offense. Thus, in the present case, even though the offense respondent was found guilty of was her first offense, the gravity thereof outweighs the fact that it was her first offense.[50] (Emphasis ours.) Petitioner contends that this case should be distinguished from University of the Philippines v. Civil Service Commission*51+ because he was not committing any crime assuming he served a bodyguard, was not in uniform or in the performance of duty there being no such allegation in the complaint, and was not deceiving or cheating anybody. Even the ruling in Civil Service Commission v. Cortez[52] is not applicable since the respondent therein committed acts of dishonesty. We are not persuaded. As already pointed out, Serious Irregularities in the Performance of Duties, like those offenses (e.g., Grave Misconduct, Dishonesty and Conduct Prejudicial to the Best Interest of the Service) enumerated under Section 52 (A) of the Civil Service Law, is a grave offense. Grave offenses have the most deleterious effects on government service. By acting as a private bodyguard without approval by the proper authorities for several months, petitioner reneged on his primary duties to the community in the maintenance of peace and order and public safety. Such mercenary tendencies undermine the effectivity and integrity of a national police force committed to provide protection and assistance to citizens in times of danger and emergency. But what is worse, petitioner allowed himself to be used in perpetrating violence and intimidation upon ordinary workers embroiled in a legal conflict with management. Petitioner apparently failed to grasp the gravity of his transgression which, not only impacts negatively on the image of the PNP, but also reflects the depravity of his character. Under the circumstances, the Court cannot consider in his favor his fourteen (14) years in the police service and his being a first time offender. The CSC thus correctly imposed on him the maximum penalty of dismissal. Pursuant to Section 6 of Memorandum Circular No. 93-024, the penalty of dismissal, which results in the separation of the respondent from the service, shall carry with it the cancellation of eligibility, forfeiture of leave credits and retirement benefits, and the disqualification from reemployment in the police service. WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated April 27, 2007 and Resolution dated October 10, 2007 of the Court of Appeals in CA-G.R. SP No. 70605 are hereby AFFIRMED. With costs against the petitioner. SO ORDERED.

31

EN BANC

ISABELO L. GALANG, Petitioner, - versus -

LAND BANK OF THE PHILIPPINES, Respondent.

G.R. No. 175276 x- - - - - - - - - - - - - - - - - - - - - - - - - - -x

LAND BANK OF THE PHILIPPINES, Petitioner, - versus -

ISABELO L. GALANG, Respondent.

G.R. No. 175282 Promulgated:

May 31, 2011

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION VILLARAMA, JR., J.: These are two consolidated petitions for review on certiorari[1] filed by Isabelo L. Galang and Land Bank of the Philippines (Land Bank) to assail the Decision[2] dated May 25, 2006 and Resolution[3] dated October 25, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 91910. The CA had reversed and set aside Resolution Nos. 040894[4] and 051256*5+ of the Civil Service Commission (CSC) denying Galangs Motion for Issuance of Writ of Execution*6+ and motion for reconsideration. The facts of the case are undisputed. On June 20, 1988, Isabelo L. Galang, the Branch Manager of Land Bank Baliuag, Bulacan was charged with Dishonesty, Misconduct, Conduct Prejudicial to the Best Interest of the Service, Gross Neglect of Duty, Violation of Rules and Regulations, and Receiving for Personal Use a Fee, Gift or Other Valuable Thing in the Course of Official Duties or in Connection Therewith when such Fee is Given by Any Person in the Hope or Expectation of Receiving a Favor or Better Treatment than that Accorded Other Persons or Committing Acts Punishable Under the Anti-Graft Laws. The case was docketed as Administrative Case No. 88-002.[7]

32
Allegedly, Galang demanded money from four borrowers of the bank, namely, Ceferino Manahan, Gregorio Modelo, Sotero Santos and Feliza de Vera, in return for a reduction of interest rates and condonation of penalty charges on their overdue loans. The complaint further accuses Galang of making unauthorized disbursements for the repair of the company car. Along with Galang, the borrowers also charged Conrado Ocampo, a Project Analyst in the same branch, for his alleged participation in soliciting money from them. On November 3, 1989, the Hearing Officer of Land Bank issued a Joint Resolution dismissing both charges for insufficiency of evidence. This was later reversed by Land Banks General Counsel, Corazon P. Del Rosario, who recommended Galang and Ocampos dismissal to the Board of Directors. On April 26, 1990, the Board of Directors issued Resolution No. 90-043[8] which approved Del Rosarios recommendation but modified the penalty to forced resignation with forfeiture of all benefits. Aggrieved, Galang and Ocampo appealed to the Merit Systems Protection Board (MSPB). In a Decision[9] dated March 8, 1991, the MSPB sustained the penalty imposed upon Galang and Ocampo but found them liable only for Dishonesty, Grave Misconduct, Conduct Prejudicial to the Best Interest of the Service, and Receiving for Personal Use a Fee, Gift or Other Valuable Thing in the Course of Official Duties or in Connection Therewith when such Fee is Given by Any Person in the Hope of Receiving a Favor or Better Treatment than that Accorded Other Persons. The MSPB, however, absolved Galang of the charges of Gross Neglect of Duty and Violation of Rules and Regulations. Galang and Ocampo filed a motion for reconsideration, which was denied in a Decision[10] dated June 11, 1991. Before the CSC, Galang and Ocampos appeal was dismissed for lack of merit through Resolution No. 93-1001[11] dated March 12, 1993. Their motion for reconsideration was likewise denied in Resolution No. 93-3812.[12] Galang alone filed a petition for certiorari[13] with the Supreme Court alleging grave abuse of discretion committed by the CSC. In a Resolution[14] dated June 20, 1995, the Court referred the matter to the CA pursuant to Revised Administrative Circular No. 1-95.[15] On November 21, 1996, the CA rendered a Decision[16] in CA-G.R. SP No. 37791 nullifying Resolution Nos. 93-1001 and 93-3812. The appellate court excluded the affidavits of the complainants as inadmissible in evidence for lack of crossexamination. Without them, it found no substantial evidence to hold Galang administratively liable. Subsequently, Galang filed a Motion for Clarification and/or Reconsideration[17] with a prayer for the CA to order his reinstatement and the payment of his back wages, bonuses and other fringe benefits reckoned from the date of his dismissal. Land Bank, likewise, moved for reconsideration. In a Resolution*18+ dated September 5, 1997, the CA granted Galangs motion and directed Land Bank to reinstate him and to pay him back salaries not exceeding five years. Land Bank received notice of said resolution on September 15, 1997, but filed no appeal. Consequently, Galang filed a Motion to Effect Entry of Judgment.[19] On November 14, 1997, Land Bank filed before this Court a Petition for Certiorari[20] which was docketed as G.R. No. 131186. In a Resolution[21] dated January 17, 2001, this Court dismissed the petition. This Court concluded that Land Banks petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended, was merely an afterthought considering that it failed to file a petition for review on certiorari under Rule 45 of said Rule. The bank moved for reconsideration but was denied. Thus, on August 7, 2001, this Court issued an Entry of Judgment.[22] In the meantime, Galang was reinstated in the payroll on August 16, 2001. However, on December 14, 2001, Galang wrote Land Banks President, Margarito Teves, complaining that he has yet to receive Personnel Economic Relief Allowance (PERA), Representation and Travel Allowance (RATA), Meal Allowance and Rice Subsidy. He claimed that since this Court found Land Banks petition for certiorari to be a mere afterthought, he should have been reinstated on October 1, 1997 after the fifteen (15)-day period to appeal the Resolution dated September 5, 1997 had lapsed. Galang also insisted that his back salaries be computed based on the current salary rate prescribed for his previous position.[23] In a letter[24] dated February 8, 2002, Land Bank expressed its willingness to pay Galang Meal Allowance and Rice Subsidy. It, however, refused to include PERA and RATA as part of his back salaries for 1990 to 1995; the former, because it was authorized to be paid to LBP employees only in 1997 and the latter, because he was unable to discharge the functions of his office. Land Bank further explained that Galang could not be reinstated, or his back wages paid from October 1, 1997 since there was yet no final and executory decision of the court then. The bank maintained that his salaries were computed correctly, based on the prevailing rate for the period when he was unable to work in accordance with the Courts ruling in Bangalisan v. Court of Appeals.*25+ On June 7, 2002, Galang filed a Motion for Clarification[26] with this Court to settle the following issues: 9.1 Whether Respondent is entitled to Meal and Rice Allowances, Representation and Travel Allowance and Housing Allowance, and the basis thereof; 9.2 Whether the payment of Provident Fund is limited to five (5) years only;

33
9.3 The basis for computing the 5-year backwages; 9.4 Whether Respondent should have been reinstated since October 1, 1997.[27] On July 24, 2002, this Court issued a Resolution*28+ which noted without action Galangs motion for clarification in view of the Entry of Judgment[29] on August 7, 2001. On May 15, 2003, Galang filed a Motion for Issuance of Writ of Execution[30] with the CSC to enforce the November 21, 1996 Decision of the CA in CA-G.R. SP No. 37791, which ordered his reinstatement and the payment of his backwages for five years. The Commission denied said motion in Resolution No. 040894 dated August 9, 2004. Galang moved for reconsideration, but his motion was denied in Resolution No. 05-1256 dated September 13, 2005. The CSC held that execution will not lie because Land Bank had complied with the appellate courts decision. On November 5, 2005, Galang filed a Petition for Review[31] under Rule 43 with the CA. In the assailed Decision dated May 25, 2006, the appellate court granted said petition and declared Galang entitled to PERA, RATA and other benefits attached to his position. However, it upheld his reinstatement on August 16, 2001 and sustained the computation of his back wages based on the prevailing rate at the time of his dismissal. The motions for reconsideration respectively filed by Galang and Land Bank were likewise denied by the appellate court in its Resolution dated October 25, 2006. Hence, on December 8, 2006, Galang filed a petition for review on certiorari with this Court raising the following issues: I. THE HONORABLE COURT ERRED IN NOT RULING THAT THE COMPUTATION OF PETITIONERS BACKWAGES SHOULD BE BASED ON HIS CURRENT SALARY LEVEL; AND II. THE HONORABLE COURT ERRED IN NOT RULING THAT PETITIONER IS ENTITLED TO REINSTATEMENT AS EARLY AS 01 OCTOBER 1997.[32] For its part, Land Bank filed a petition for review on certiorari on December 22, 2006 based on the following assignment of errors: I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS HAS COMMITTED A GRAVE AND REVERSIBLE ERROR WHEN IT RULED THAT [PERSONNEL] ECONOMIC RELIEF ALLOWANCE (PERA) AND REPRESENTATION AND [TRANSPORTATION] ALLOWANCE (RATA) SHOULD BE INCLUDED IN THE PAYMENT OF RESPONDENTS BACKWAGES. II. WHETHER OR NOT THE HONORABLE COURT OF APPEALS HAS LIKEWISE COMMITTED GRAVE AND REVERSIBLE ERROR WHEN IT HELD THAT RESPONDENT GALANG IS STILL ENTITLED TO THE PAYMENT OF MEAL ALLOWANCE AND RICE SUBSIDY.[33] In order to resolve these twin petitions, the Court must address the following questions: (1) When should Galang be reinstated? (2) What should be the basis of computing his back salaries? and (3) Is he entitled to PERA, RATA, Meal Allowance and Rice Subsidy? Citing the case of Cristobal v. Melchor,[34] Galang contends that his back wages should be computed based on the rate of his salary at reinstatement. He argues that since Land Bank availed of the wrong remedy, his reinstatement should be reckoned from October 1, 1997 or after the reglementary period to appeal had lapsed. Land Bank, on the other hand, disputes Galangs demand for PERA and RATA. It reasons that since the five-year period for which Galang shall receive back salaries is from July 1990 to June 1995, he is not entitled to PERA, a benefit which employees of the Land Bank started receiving only in 1997. As to RATA, Land Bank maintains that the nature of such benefit precludes Galang from claiming it since he did not incur expenses for representation and transportation while he was not allowed to work. Finally, it claims that it had already paid Galangs Rice Subsidy and Meal Allowance. We find the petition partly meritorious. The Omnibus Rules Implementing Book V of Executive Order No. 292[35] and Other Pertinent Civil Service Laws define reinstatement as the issuance of an appointment to a person who has been previously appointed to a position in

34
the career service and who has, through no delinquency or misconduct, been separated therefrom, or to the restoration of one who has been exonerated of the administrative charges filed against him. In the present case, Galang was absolved of the administrative charges against him in the CA Decision dated November 21, 1996. Upon motion, the appellate court issued the Resolution dated September 5, 1997, which ordered his reinstatement and the payment of his back salaries for five years. It is settled that an illegally terminated civil service employee is entitled to back salaries limited only to a maximum period of five years, and not full back salaries from his illegal termination up to his reinstatement.*36+ Hence, in Galangs case, he is entitled to back salaries from July 1990 to June 1995. This is not disputed by the parties. Rather, the uncertainty centers on when he should be reinstated. The records show that Galang was reinstated in Land Bankss payroll on August 16, 2001. He argues, however, that he should be reinstated on October 1, 1997, after the fifteen (15)-day period to appeal the Resolution dated September 5, 1997 had lapsed. Galangs position on the effective date of his reinstatement is correct. Well-entrenched is that a judgment or order becomes final upon the lapse of the period to appeal, without an appeal being perfected or a motion for reconsideration being filed.[37] In this case, Land Bank received notice of the CA Resolution dated September 5, 1997 on September 15, 1997. Thus, it had fifteen (15) days from September 15, 1997, or until September 30, 1997 to file an appeal. Yet, Land Bank did not do so. Instead, it filed a petition for certiorari with this Court on November 14, 1997. However, an original action for certiorari is an independent action and is neither a continuation nor a part of the trial resulting in the judgment complained of. It does not interrupt the course of the original action if there was no writ of injunction, even if in connection with a pending case in a lower court.[38] Section 7, Rule 65 on certiorari provides: SEC. 7. Expediting proceedings; injunctive relief. The court in which the petition is filed may issue orders expediting the proceedings, and it may also grant a temporary restraining order or a writ of preliminary injunction for the preservation of the rights of the parties pending such proceedings. The petition shall not interrupt the course of the principal case unless a temporary restraining order or a writ of preliminary injunction has been issued against public respondent from further proceeding in the case. (Emphasis supplied.) Clearly, the petition for certiorari filed by Land Bank in G.R. No. 131186 did not suspend the running of the prescriptive period to appeal. Besides, no temporary restraining order or writ of preliminary injunction was issued in its favor that could effectively toll the running of the prescriptive period. It is true that there are instances where, even if there is no writ of preliminary injunction or temporary restraining order issued by a higher court, it would be proper for a lower court or court of origin to suspend its proceedings on the precept of judicial courtesy. The principle of judicial courtesy, however, remains to be the exception rather than the rule.[39] Unfortunately for Land Bank, this is not a proper case for the operation of the said principle. Land Banks failure to interpose an appeal within fifteen (15) days from its receipt on September 15, 1997 of the Resolution dated September 5, 1997, rendered the same final and executory on October 1, 1997. Galangs reinstatement therefore must be reckoned, not from August 16, 2001 but from October 1, 1997. This entitles him to receive back wages as well from the date when he should have been reinstated on October 1, 1997 to August 15, 2001, one day before he was actually reinstated. Concomitant with reinstatement is the payment of back salaries. Section 59(e) of the Uniform Rules on Administrative Cases in the Civil Service on the effect of exoneration on certain penalties provides that in case the penalty imposed is dismissal, he shall immediately be reinstated without loss of seniority rights with payment of back salaries. It was enunciated in Philippine Amusement and Gaming Corporation v. Salas[40] that: When an official or employee was illegally dismissed and his reinstatement has later been ordered, for all legal purposes he is considered as not having left his office. Therefore, he is entitled to all the rights and privileges that accrue to him by virtue of the office he held. In this case, the second issue for resolution pertains to the base figure to be used in computing Galangs back salaries. Galang invokes the 1980 case of Cristobal v. Melchor[41] as authority in saying that the computation of his back wages should be based on his salary at reinstatement. However, we find Galangs reliance on said case misplaced. In Cristobal v. Melchor, Jose C. Cristobal was reinstated as an Assistant in the Office of the President, a position different from his position as Private Secretary I which he held when he was terminated. Upon being reinstated, he was paid the salary corresponding to that of a Private Secretary I at the rate when he was wrongfully dismissed fifteen (15) years back. The Court ruled therein that Cristobal must be given a position and compensation commensurate and

35
comparable to that which he held, taking into account the increases in salary during the fifteen (15)-year period preceding his reinstatement. To stress this point, the Court fixed his compensation at the rate prevailing at the time of his reinstatement inclusive of allowances, benefits and increases in salary. Moreover, it ordered the respondents therein to pay Cristobal the differential between the current rate of the salary, for a position commensurate to a Private Secretary I, and the old rate from the time he reported for duty*42+ that is, from the time he was reinstated. Clearly, what was in issue in Cristobal v. Melchor was the rate of Cristobals compensation upon his reinstatement, not the rate of his back salaries. In fact, he did not dispute the payment of his back salaries for five years computed at the rate when he was dismissed.[43] The controlling rule on the rate at which back salaries shall be paid was laid down by the Court as early as 1977 in the case of Balquidra v. CFI of Capiz, Branch II.[44] In said case, the Court awarded back salaries to the petitioner therein at the rate last received by him or his original salary*45+ for five years without qualification and deduction. This means that the illegally dismissed government employee shall be paid back salaries at the rate he was receiving when he was terminated unqualified by salary increases and without deduction from earnings received elsewhere during the period of his illegal dismissal. We have invariably held so in Gementiza v. Court of Appeals,[46] Ginson v. Municipality of Murcia, et al.,[47] Gabriel v. Domingo,[48] and Del Castillo v. Civil Service Commission.[49] We find no reason to depart from the said rule in the instant case. Be that as it may, we cannot apply the foregoing rule in the computation of Galangs back salaries from October 1, 1997 to August 15, 2001. His back salaries for such period represent recompense for the earnings he failed to realize because he was belatedly reinstated. Following this Courts pronouncement in Cristobal v. Melchor, Galangs back salaries for October 1, 1997 to August 15, 2001 should be computed at the rate prevailing at the proper date of his reinstatement on October 1, 1997, inclusive of allowances, benefits and increases in salary prior to reinstatement. Apart from back salaries, Galang demands payment of RATA, PERA, Meal Allowance and Rice Subsidy from Land Bank. Back wages represent the compensation that should have been earned but were not collected because of the unjust dismissal.*50+ This includes other monetary benefits*51+ attached to the employees salary following the principle that an illegally dismissed government employee who is later reinstated is entitled to all the rights and privileges that accrue to him by virtue of the office he held. Pertinent to this case, Republic Act (R.A.) No. 6758,[52] otherwise known as the Compensation and Position Classification Act of 1989, was enacted on July 1, 1989 to integrate certain benefits received by government official and employees into their salaries. Section 12 of said Act 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 the 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. Section 17 of the Act, however, exempts incumbent government officials and employees from the operation of Section 12, thus: SEC. 17. Salaries of Incumbents. - Incumbents of positions presently receiving salaries and additional compensation/fringe benefits including those absorbed from local government units and other emoluments, the aggregate of which exceeds the standardized salary rate as herein prescribed, shall continue to receive such excess compensation, which shall be referred to as transition allowance. The transition allowance shall be reduced by the amount of salary adjustment that the incumbent shall receive in the future. The transition allowance referred to herein shall be treated as part of the basic salary for purposes of computing retirement pay, year-end bonus and other similar benefits. xxxx Being an incumbent at the time, Galang would have continued to receive RATA, Meal Allowance and Rice Subsidy, separate from his salary, had he not been illegally dismissed from service. Representation and Transportation Allowance or RATA is a fringe benefit distinct from salary. Unlike salary which is paid for services rendered, RATA belongs to a basket of allowances to defray expenses deemed unavoidable in the discharge of office. Hence, it is paid only to certain officials who, by the nature of their offices, incur representation and

36
transportation expenses.[53] The Department of Budget and Management (DBM) Manual on Position Classification and Compensation discusses the nature of the RATA and qualifies the entitlement of reinstated government employees thereto in certain fiscal years: The pertinent general provisions of the General Appropriations Acts (GAAs) prior to FY 1993 and in the FY 1999 GAA provided that the officials listed therein and those of equivalent ranks as may be determined by the Department of Budget and Management (DBM) are to be granted monthly commutable RATA. Hence, prior to FY 1993 and in FY 1999, RATA were allowances attached to the position. The pertinent provisions of the FYs 1993 to 1998 GAAs and in the FY 2000 GAA provided that the officials listed therein and those of equivalent ranks as may be determined by the DBM while in the actual performance of their respective functions are to be granted monthly commutable RATA. This provision was reiterated in the pertinent general provisions of the subsequent GAAs. Hence, in FYs 1993 to 1998 and beginning FY 2000 and up to the present, the actual performance of an officials duties and responsibilities was a pre-requisite to the grant of RATA. The rationale behind the qualifying phrase, while in the actual performance of their respective functions, is to provide the official concerned with additional funds to meet necessary expenses incidental to and connected with the exercise or the discharge of the functions of the office. Thus, if the official is out of office, whether voluntary or involuntary, the official does not and is not supposed to incur expenses. There being no expenses incurred, there is nothing to reimburse. Since RATA are privileges or benefits in the form of reimbursement of expenses, they are not salaries or part of basic salaries. Forfeiture or non-grant of the RATA does not constitute diminution in pay. RATA may be spent in variable amounts per work day depending on the situation. Entitlement thereto should not be proportionate to the number of work days in a month, inclusive of regular and special holidays falling on work days. (Emphasis supplied.) For emphasis, the five-year period covered in the computation of Galangs back salaries and other benefits is from July 1990 to June 1995. Also, he shall receive back salaries and other benefits for the period during which he should have been reinstated from October 1, 1997 to August 15, 2001. Since the General Appropriations Act (GAA) for 1993 to 1998 and in the year 2000 onwards require the actual performance of duty as a condition for the grant of RATA, Galang shall not receive RATA in those years but shall be entitled to RATA only from July 1990 to December 1992 and in the year 1999. On the other hand, Personnel Economic Relief Allowance (PERA) is a P500 monthly allowance authorized under the pertinent general provision in the annual GAA. It is granted to augment the pay of government employees due to the rising cost of living. On February 12, 1997, Congress enacted R.A. No. 8250[54] (GAA for CY 1997), which granted PERA to all government employees and officials as a replacement of the Cost of Living Allowance (COLA).[55] This explains why Land Bank employees began receiving PERA only in 1997 because prior to 1997, said benefit was called by another name, COLA. Hence, Land Bank is still liable to pay the monthly PERA to Galang. In his Motion for Issuance of Writ of Execution, Galang acknowledges receipt of Rice Allowance, which was monetized based on the value of a sack of rice within the period from July 1990 to June 1995.*56+ Still, he claims Rice Subsidy for the succeeding years. Considering, however, that Galang is entitled to back wages only from July 1990 to June 1995 and from October 1, 1997 to August 15, 2001, his claim for Rice Subsidy for the intervening years has no legal basis. As to Meal Allowance, Land Bank concedes Galangs entitlement thereto, albeit, it claims that it had already paid the same. Jurisprudence dictates that the burden of proving payment of monetary claims rests on the employer. The rationale for this rule was explained in G & M Philippines, Inc. v. Cuambot[57]: x x x [O]ne who pleads payment has the burden of proving it. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents - which will show that overtime, differentials, service incentive leave, and other claims of workers have been paid - are not in the possession of the worker but in the custody and absolute control of the employer. Thus, the burden of showing with legal certainty that the obligation has been discharged with payment falls on the debtor, in accordance with the rule that one who pleads payment has the burden of proving it. x x x[58] To prove payment of Galangs meal allowance for 1988 and July 1990 to 1995 in the amount of P34,860.00, Land Bank annexed Disbursement Order No. 02-02-0170[59] dated February 8, 2002 to its Comment[60] in CA-G.R. SP No. 91910. However, said disbursement order lacks the signature of Galang as recipient. Verily, we cannot take such document as conclusive proof that Galang has been paid his meal allowance. Taking into account our determination that Galang ought to be reinstated earlier, Land Bank shall likewise be liable to pay his Meal Allowance from October 1, 1997 to August 15, 2001. WHEREFORE, the Decision dated May 25, 2006 and Resolution dated October 25, 2006 of the Court of Appeals in CAG.R. SP No. 91910 are AFFIRMED WITH MODIFICATIONS. Land Bank of the Philippines is ordered to pay Isabelo L. Galang: (a) back salaries for five (5) years from the time of his unlawful dismissal in July 1990 to June 1995 at the rate last received by him without qualification and deduction; (b) back salaries from the proper date of his reinstatement on October 1,

37
1997 until August 15, 2001, at the rate prevailing on October 1, 1997 inclusive of increases in salary; (c) Cost of Living Allowance (COLA) from July 1990 to June 1995; (d) Personnel Economic Relief Allowance (PERA) from October 1, 1997 to August 15, 2001; (e) Representation and Transportation Allowance (RATA) from July 1990 to December 1992 and for the year 1999; (f) Meal Allowance in the amount of P34,860.00; and (g) Meal Allowance and Rice Subsidy for October 1, 1997 to August 15, 2001. No pronouncement as to costs. SO ORDERED.

38

THIRD DIVISION

MARCELO G. GANADEN, OSCAR B. MINA, JOSE M. BAUTISTA AND ERNESTO H. NARCISO, JR., Petitioners,

- versus G.R. Nos. 170500 & 170510-11

THE HONORABLE COURT OF APPEALS, NATIONAL TRANSMISSION COMMISSION (TRANSCO), ALIPIO NOOL, FERMIN P. LANAG, SR., EUSEBIO B. COLLADO, JOSE S. TEJANO, NECIMIO A. ABUZO, ELISEO P. MARTINEZ AND PERFECTO LAZARO, Respondents.

Promulgated:

June 1, 2011

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

DECISION

VILLARAMA, JR., J.:

Petitioners Marcelo G. Ganaden, Oscar B. Mina, Jose M. Bautista and Ernesto H. Narciso, Jr., pray in their present petition for certiorari that the October 11, 2005, October 28, 2005 and November 23, 2005 Resolutions[1] of the Court of Appeals (CA) in CA-G.R. SP No. 90280-82 be set aside supposedly for having been issued with grave abuse of discretion amounting to lack of or in excess of jurisdiction. Petitioners raise the sole issue of whether administrative decisions of the Office of the Ombudsman imposing the penalties of dismissal and one-year suspension from office are immediately executory pending appeal. The facts are as follows. On September 30, 2002, the Office of the Ombudsman promulgated its Decisions[2] in OMB-L-A-02-0068-B (involving the charge of dishonesty and misconduct), OMB-L-A-02-0069-B (involving the charge of dishonesty and acts inimical to public service), and OMB-L-A-02-0070-B (likewise involving the charge of dishonesty and acts inimical to public service). In OMBL-A-02-0068-B and OMB-L-A-02-0070-B, the Ombudsman found petitioners Ganaden, Bautista and Narciso liable for dishonesty and imposed upon them the penalty of one-year suspension while in OMB-L-A-02-0069-B, the Ombudsman found petitioners Ganaden and Mina liable for dishonesty and imposed on them the penalty of one-year suspension. Petitioners filed motions for reconsideration, but the Office of the Ombudsman, in three Orders[3] all dated April 8, 2005, not only denied their motions for reconsideration, but it also modified the penalties imposed in OMB-L-A-02-0069-B and OMB-L-A-02-0070-B. Instead of the penalty of one-year suspension it originally imposed, the Ombudsman increased the penalty to dismissal from the service as to petitioner Ganaden in OMB-L-A-02-0069-B and as to petitioners Ganaden, Bautista and Narciso in OMB-L-A-02-0070-B. The penalty of one-year suspension as to petitioner Mina was, however, maintained. Aggrieved, petitioners filed separate petitions for review before the CA to question the three Decisions, as well as the Orders denying their motions for reconsideration. On September 8, 2005, the CA ordered the consolidation of all three petitions.[4]

39
Meanwhile, on February 28, 2003 petitioners availed of the early retirement program from the NPC. At the time the three Decisions and three orders of the Ombudsman came to their attention, they were already employed at the National Transmission Commission (TRANSCO). Hence, on September 19, 2005, the Office of the Ombudsman issued a 1st Indorsement[5] referring to respondent Alan T. Ortiz, President and Chief Executive Officer of TRANSCO, the three Decisions dated September 30, 2002 as well as the three Orders dated April 8, 2005. In the 1st Indorsement, the Office of the Ombudsman requested from TRANSCO the issuance of Orders for Dismissal from the service of petitioners Ganaden, Bautista and Narciso and the issuance of an Order of Suspension from Service for one-year against petitioner Mina. In compliance with the aforesaid 1st Indorsement, respondent Ortiz issued Orders of Dismissal[6] against petitioners Ganaden, Bautista, and Narciso, and an Order of Suspension[7] for one-year against petitioner Mina on October 12, 2005. Aggrieved again, petitioners filed with the CA a verified petition[8] to cite respondent Ortiz in contempt for issuing the orders of dismissal and suspension. Petitioners claimed that by virtue of their appeal to the CA and a Resolution[9] of the CA granting their verified motion to amend their petition to include TRANSCO as public respondent, the execution of the three Decisions, as modified by the three Orders of the Ombudsman, was automatically stayed even without a restraining order. Thus, respondent Ortizs issuance of orders of dismissal and suspension was an outright violation of the authority of the CA amounting to contempt. On October 28, 2005, the CA issued a Resolution*10+ denying petitioners motion to cite respondent Ortiz in contempt of court. The CA clarified that the October 11, 2005 Resolution allowing the inclusion of TRANSCO as public respondent did not carry with it the relief of automatic stay of execution. The petitioners filed a motion for reconsideration, but their motion was denied by the CA in a Resolution dated November 23, 2005.[11] Thus, petitioners now come to this Court via a petition for certiorari to annul the October 11, 2005, October 28, 2005 and November 23, 2005 Resolutions of the CA and to enjoin the enforcement of the 1st Indorsement of the Office of the Ombudsman. According to them, jurisprudence provides that the execution of a decision of the Office of the Ombudsman is automatically stayed upon filing of an appeal and is stayed throughout the pendency of the appeal. We dismiss the petition for utter lack of merit. Petitioners rely heavily on the cases of Lopez v. Court of Appeals[12] and Lapid v. Court of Appeals[13] where the Court held, in essence, that a decision of the Office of the Ombudsman in administrative cases is stayed as a matter of right during the pendency of an appeal. The Lapid and Lopez cases, however, were decided in 2000 and 2002 respectively. Since then, there have been amendments to the Rules of Procedure of the Office of the Ombudsman. At present, Section 7, Rule III of the Rules of Procedure of the Office of the Ombudsman, as amended by Administrative Order No. 17, dated September 15, 2003, provides: SECTION 7. Finality and Execution of Decision.Where the respondent is absolved of the charge, and in case of conviction where the penalty imposed is public censure or reprimand, suspension of not more than one month, or a fine equivalent to one month salary, the decision shall be final, executory and unappealable. In all other cases, the decision may be appealed to the Court of Appeals on a verified petition for review under the requirements and conditions set forth in Rule 43 of the Rules of Court, within fifteen (15) days from receipt of the written Notice of the Decision or Order denying the Motion for Reconsideration. An appeal shall not stop the decision from being executory. In case the penalty is suspension or removal and the respondent wins such appeal, he shall be considered as having been under preventive suspension and shall be paid the salary and such other emoluments that he did not receive by reason of the suspension or removal. A decision of the Office of the Ombudsman in administrative cases shall be executed as a matter of course. The Office of the Ombudsman shall ensure that the decision shall be strictly enforced and properly implemented. The refusal or failure by any officer without just cause to comply with an order of the Office of the Ombudsman to remove, suspend, demote, fine, or censure shall be a ground for disciplinary action against said officer. (Emphasis supplied.)

Under this provision, a respondent who is found administratively liable by the Office of the Ombudsman and is slapped with a penalty of suspension of more than one month from service has the right to file an appeal with the CA under Rule 43 of the 1997 Rules of Civil Procedure, as amended. But although a respondent is given the right to appeal, the act of filing an appeal does not stay the execution of the decision of the Office of the Ombudsman. Such has been the consistent ruling of this Court since our decision in In the Matter to Declare in Contempt of Court Hon. Simeon A. Datumanong, Secretary of DPWH[14] which overturned the rulings in the Lopez and Lapid cases.

40
In the recent case of Office of the Ombudsman v. Court of Appeals and Barriga,[15] a January 2011 case, the Court reiterated the rule as follows:

The provision in the Rules of Procedure of the Office of the Ombudsman is clear that an appeal by a public official from a decision meted out by the Ombudsman shall not stop the decision from being executory. In Office of the Ombudsman v. Court of Appeals and Macabulos,[16] we held that decisions of the Ombudsman are immediately executory even pending appeal in the CA. As explained by this Court in the case of In the Matter to Declare in Contempt of Court Hon. Simeon A. Datumanong, Secretary of DPWH,[17] this provision in the rules of the Ombudsman is similar to that provided under Section 47 of the Uniform Rules on Administrative Cases in the Civil Service. (Emphasis supplied.) In fine, the execution of the April 8, 2005 Orders of the Ombudsman finding petitioners administratively liable and imposing the penalty of dismissal from service against petitioners Ganaden, Bautista, and Narciso, and suspension for one year on petitioner Mina were not stayed by the filing of an appeal with the CA. Accordingly, the Resolutions of the CA dated October 11, 2005, October 28, 2005 and November 23, 2005 were all in order. Grave abuse of discretion is defined as capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion and hostility.[18] The subject Resolutions having been issued in accordance with law and existing jurisprudence, no grave abuse of discretion could be ascribed to the appellate court. WHEREFORE, the petition for certiorari is DISMISSED. The October 11, 2005, October 28, 2005, and November 23, 2005 Resolutions of the Court of Appeals in CA-G.R. SP Nos. 90280-82 are AFFIRMED. The Temporary Restraining Order issued by this Court on December 14, 2005 is hereby LIFTED and SET ASIDE. With costs against petitioners. SO ORDERED.

41

THIRD DIVISION

MARCELO G. GANADEN, OSCAR B. MINA, JOSE M. BAUTISTA AND ERNESTO H. NARCISO, JR. Petitioners, - versus G.R. Nos. 169359-61 HONORABLE OFFICE OF THE OMBUDSMAN AND ROBERT K. HUMIWAT, Respondents. Promulgated:

June 1, 2011 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.:

Before us is the petition for certiorari of petitioners Marcelo G. Ganaden, Oscar B. Mina, Jose M. Bautista and Ernesto H. Narciso, Jr. praying for the annulment of the May 22, 2003 Joint Resolution[1] of the Office of the Ombudsman in OMB-LC-02-0923-I to OMB-L-C-02-0926-I, as well as the August 21, 2003 and April 26, 2005 Orders[2] in OMB-L-C-02-0926-I and the July 7, 2005 Joint Order[3] in OMB-L-C-02-0923-I to OMB-L-C-02-0926-I, finding probable cause to indict them for violation of Republic Act (R.A.) No. 3019 or the Anti-Graft and Corrupt Practices Act.

The facts that initiated the present controversy were summarized in the assailed Joint Resolution as follows: A group of employees[4] of the National [P]ower Corp. [NPC], District IV (Cagayan Valley Area) filed a complaint against MARCELO GANADEN, NPC-Area Manager, OSCAR B. MINA, Employee, NPC-Substation, JOSEPHINE V. ATAL, Cashier, NPCSubstation, JOSE M. BAUTISTA, ERNESTO H. NARCISO, JR. and VIRGILIO M. RIMANDO for allegedly committing the following: 1. Printing and sale of raffle tickets using NPC Resources under the direction of Mr. GANADEN by making it appear to be the project of Cagayan Valley Area Employees Association but without consultation with the NPC-District IV employees and the required permit from appropriate agencies. The employees, security guards and janitors were given tickets ranging from P200 to P1,000.00 with the instruction that [the tickets were] considered sold. However, the tickets were not drawn nor the monies collectedreturned. 2. By making it appear that the assembly, erection, mounting of beams, gantry towers and steel towers at the 230 KV and 69 KV switchyard at Tuguegarao substation was thru Pakyaw Labor *contract for piece of work+ done by the linemen of Tuguegarao substation as shown in their daily [t]ime record. In fact, based [o]n the Security In and Out Logbook and Security Attendance Sheet, there was no entry of [the alleged contractors] Mr. DE GRACIA nor JOJO MATEO for the period March 29, 1999 to April 22, 1999, the period the pakyaw work [was supposedly done]. 3. Mr. GANADEN influenced a certain PERFECTO D. LAZARO, husband of the proprietress of REMY D. LAZARO Builders and Construction Supplier to agree that the volume of soil to be removed and hauled from the 230 KV switchyard of Tuguegarao substation be increased from the actual volume of about 5 cubic meters to 253 cubic meters with the excess payment be given to him (GANADEN). 4. On Dec*ember+ 14 and 23, 2000, Mr. GANADENS personal car with plate *n]o. TDF 366 refueled at Solano Caltex but [it was made to appear that the gas was] loaded to an NPC vehicle.

42
5. Mr. GANADEN, also reassigned employees from one province to another by virtue of his Office Order No. AO-99-418. However, said order was based on a fictitious and unapproved Table of Organization which was not approved by the higher management. 6. Purchase and withdrawal of tires in CY 2000 purposely to replace the tires of NPC service vehicle with Plate [No.] SEW 454, his service vehicle, but said tires were installed to his personal Nissan Pick-up car with Plate [No.] ADL 157. 7. Withdrawal and delivery of ceramic tiles in CY 2000 from SANTIAGO Substation to his house at Fairview, Quezon City which was undergoing renovation.[5] Petitioners defended themselves through their counter-affidavits, basically offering explanations and clarifications to the alleged acts and denying having committed any illegality. On May 22, 2003, the Office of the Deputy Ombudsman for Luzon issued the assailed Joint Resolution.[6] In said Joint Resolution, the Ombudsman found the charge that petitioners used NPC resources for printing and selling raffle tickets devoid of merit. Also, the charge that petitioner Ganaden misappropriated NPC resources (gasoline, tires and ceramic tiles) for his personal benefit were found to be unsupported by evidence. However, on the other charges, the Deputy Ombudsman for Luzon found probable cause to charge petitioners with violation of the Anti-Graft and Corrupt Practices Act. The dispositive portion of the Joint Resolution reads: WHEREFORE, premises considered, it is hereby recommended that respondents GANADEN, NARCISO and BAUTISTA be charged with Violation of Sec. 3 (e) of R.A. 3019. Likewise, GANADEN and MINA should also be charged with Violation of Sec. 3 (b) of R.A. 3019 before the proper court. However, as to other respondents, finding no sufficient evidence to include them in the information, case is hereby DISMISSED. SO RESOLVED.[7] Petitioners sought reconsideration of the resolution but their motion was denied in an Order[8] dated August 21, 2003. They subsequently filed a motion for reinvestigation and reopening but said motion was also denied in an Order[9] dated April 26, 2005. Undaunted, petitioners filed a second motion for reconsideration, which, however, was likewise denied by the Ombudsman for lack of merit in an Order[10] dated July 7, 2005. Meanwhile, considering the denial by the Ombudsman of petitioners motion for reconsideration on August 21, 2003, the Regional Trial Court, Branch III, of Tuguegarao City issued an Order*11+ on July 11, 2005 setting petitioners arraignment for September 16, 2005 at 8:30 in the morning. On September 7, 2005, petitioners filed with this Court the present petition for certiorari with prayer for the issuance of a temporary restraining order and writ of preliminary injunction.[12] Petitioners pray that the Court annul the May 22, 2003 Joint Resolution, the August 21, 2003 and April 26, 2005 Orders and the July 7, 2005 Joint Order of the Office of the Ombudsman and order the dismissal of the criminal complaints against them for lack of merit. Petitioners argue that the complaints filed against them are purely intended for harassment and done in retaliation to the reorganization petitioner Ganaden did in 1999 when he was still the NPC Area Manager in District IV-Cagayan Valley Area. They believe that the complaint is a part of a bigger persecution plan against them, pointing out that it is just one of more than thirty-four (34) pending complaints filed against them in different courts, prosecution offices, and administrative agencies.[13] Petitioners state that the complaint only relies on self-serving testimonies of persons who are motivated by vengeance and ill will. Petitioners aver that the Office of the Ombudsman blatantly disregarded the December 5, 2001 Comprehensive Internal Audit Report which would show that the complaints filed lack factual and legal basis. Also, petitioners point out that the Ombudsman disregarded several affidavits of workers who performed the actual hauling of soil to prove that actual hauling was indeed done. Petitioners contend that by reason of these evidentiary oversights, the Office of the Ombudsman acted with grave abuse of discretion amounting to lack or excess of jurisdiction.[14] Petitioners further question the Ombudsmans finding of conspiracy among them.*15+ They argue that the findings of the Ombudsman are mere conclusions of law unsupported by any evidence that petitioner Ganaden acted in unison with other petitioners in perpetuating the alleged crime. Petitioners insist that the elements of conspiracy are simply inexistent. Essentially, the question for our resolution is whether the Office of the Ombudsman acted with grave abuse of discretion amounting to lack or excess of jurisdiction in issuing its May 22, 2003 Joint Resolution finding probable cause to indict petitioners for alleged violation of R.A. No. 3019 or the Anti-Graft and Corrupt Practices Act. The petition is bereft of merit.

43
We hold that the Office of the Ombudsman did not act with grave abuse of discretion amounting to lack or excess of jurisdiction in finding probable cause to hold petitioners for trial for alleged violation of R.A. No. 3019. Jurisprudence has established rules on the determination of probable cause. In Galario v. Office of the Ombudsman (Mindanao),[16] the Court held: [A] finding of probable cause needs only to rest on evidence showing that more likely than not a crime has been committed and there is enough reason to believe that it was committed by the accused. It need not be based on clear and convincing evidence of guilt, neither on evidence establishing absolute certainty of guilt. A finding of probable cause merely binds over the suspect to stand trial. It is not a pronouncement of guilt. The term does not mean actual and positive cause nor does it import absolute certainty. It is merely based on opinion and reasonable belief. x x x. Probable cause does not require an inquiry into whether there is sufficient evidence to procure a conviction. (Italics in the original.) In the case at bar, the Office of the Ombudsman found sufficient reason to believe that a violation of R.A. No. 3019 has been committed and that the petitioners are probably guilty thereof. The investigation resulted in several affidavits[17] that indicate possible involvement of the petitioners in the alleged violation. Statements to the effect that the assembly, erection, mounting of beams, gantry towers and steel towers at the 230 KV switchyard of the Tuguegarao substation were done by the NPC employees themselves and not by any contractor verify and strengthen the accusations in the complaint. Further, the alleged contractor himself Randy M. De Gracia, executed a sworn statement[18] that he was requested to sign a price proposal for the supply of pakyaw labor for the assembly, erection, mounting of beams, steel posts at the 230 KV switchyard of the Tuguegarao substation, and that he did not actually perform the aforementioned work but he was instructed by Engr. Narciso, Jr. in July 1999 to get his check from the cashier of NPC and to encash it and give the proceeds to Engr. Narciso, Jr. On the charge of taking part in the payment for services rendered by the Rema D. Lazaro Builders and Construction Supplies, Perfecto Lazaro stated under oath that sometime in the middle of August 1999, petitioner Ganaden through petitioner Mina, offered to give him a project, which was the removal and transit hauling of excess soil from the 230 KV switchyard of the Tuguegarao substation for as long as he will give petitioner Ganaden the excess payment for the actual work to be done. He also stated that in October 1999, he was made to sign the related disbursement voucher and to issue an Official Receipt to make it appear that the entire work claimed to be done was indeed performed.[19] All these allegations in the complaint coupled with the statements of several key witnesses, among others, all point towards some kind of irregularity in the performance of public works. Based on the assessment of the Office of the Ombudsman, there is sufficient reason to believe that a violation of R.A. No. 3019 has been committed. Also, based on the evidence presented, there is sufficient reason to believe that the accused public officials are probably guilty of the violation. On the contention of the petitioners that the Office of the Ombudsman failed to consider some relevant evidence, specifically the December 5, 2001 Comprehensive Internal Audit Report and affidavit of workers, that would show that the complaint lacks factual and legal ground, we find that these are matters of defense more properly raised during trial. The same is true for their allegation that conspiracy does not exist. We have held that the absence (or presence) of any conspiracy among the accused is evidentiary in nature and is a matter of defense, the truth of which can be best passed upon after a full-blown trial on the merits.[20] It is worth stressing that the Ombudsmans finding of probable cause does not touch on the issue of guilt or innocence of the accused. It is not the function of the Office of the Ombudsman to rule on such issue. All that the Office of the Ombudsman did was to weigh the evidence presented together with the counter-allegations of the accused and determine if there was enough reason to believe that a crime has been committed and that the accused are probably guilty thereof. In this light, we find no compelling reason to disturb the findings of the Office of the Ombudsman. On the assertion of grave abuse of discretion amounting to lack or excess of jurisdiction, we are guided by previous pronouncements of this Court regarding this matter. In Vergara v. Ombudsman,[21] the Court ruled:

We reiterate the rule that courts do not interfere in the Ombudsmans exercise of discretion in determining probable cause unless there are compelling reasons. The Ombudsmans finding of probable cause, or lack of it, is entitled to great respect absent a showing of grave abuse of discretion. Besides, to justify the issuance of the writ of certiorari on the ground of abuse of discretion, the abuse must be grave, as when the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and it must be so patent as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined, or to act at all, in contemplation of law, as to be equivalent to having acted without jurisdiction.

44
Grave abuse of discretion is defined as capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. Mere abuse of discretion is not enough. It must be grave abuse of discretion as when the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.[22] In the case at bar, the Office of the Ombudsman properly conducted the investigation and received evidence on the allegations and counter-allegations. The Office of the Ombudsman diligently sifted through all the relevant and pertinent allegations, statements of witnesses, defenses raised by the accused officials, and audit reports. Based on the submitted data and information, it made a determination of probable cause. There is no showing of any capricious, whimsical and arbitrary action or inaction on the part of the Office of the Ombudsman. In the questioned May 22, 2003 Joint Resolution, the Office of the Ombudsman carefully considered all the evidence submitted to it when it cleared petitioners of other wrongdoings being attributed to them. The Office of the Ombudsman dismissed the charge that petitioners used NPC resources to print and sell raffle tickets for being devoid of merit. Likewise, the charge that petitioner Ganaden misappropriated NPC resources (gasoline, tires and ceramic tiles) for his personal use was dismissed for lack of supporting evidence. Such findings show that the Office of the Ombudsman carefully weighed the evidence presented and properly discarded baseless and unsupported allegations. The assailed action of the Office of the Ombudsman is therefore well within its jurisdiction and mandate.

WHEREFORE, the petition for certiorari is DISMISSED. With costs against petitioners. SO ORDERED.

45

THIRD DIVISION

MAJORITY STOCKHOLDERS OF RUBY INDUSTRIAL CORPORATION, Petitioners, - versus -

MIGUEL LIM, in his personal capacity as Stockholder of Ruby Industrial Corporation and representing the MINORITY STOCKHOLDERS OF RUBY INDUSTRIAL CORPORATION and the MANAGEMENT COMMITTEE OF RUBY INDUSTRIAL CORPORATION, Respondents.

G.R. No. 165887

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

CHINA BANKING CORPORATION, Petitioner,

- versus -

MIGUEL LIM, in his personal capacity as a stockholder of Ruby Industrial Corporation and representing the MINORITY STOCKHOLDERS OF RUBY INDUSTRIAL CORPORATION, Respondents.

G.R. No. 165929

Promulgated:

June 6, 2011 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.: This case is brought to us on appeal for the fourth time, involving the same parties and interests litigating on issues arising from rehabilitation proceedings initiated by Ruby Industrial Corporation wayback in 1983. Following is the factual backdrop of the present controversy, as culled from the records and facts set forth in the ponencia of Chief Justice Reynato S. Puno in Ruby Industrial Corporation v. Court of Appeals.[1]

46
The Antecedents Ruby Industrial Corporation (RUBY) is a domestic corporation engaged in glass manufacturing. Reeling from severe liquidity problems beginning in 1980, RUBY filed on December 13, 1983 a petition for suspension of payments with the Securities and Exchange Commission (SEC) docketed as SEC Case No. 2556. On December 20, 1983, the SEC issued an order declaring RUBY under suspension of payments and enjoining the disposition of its properties pending hearing of the petition, except insofar as necessary in its ordinary operations, and making payments outside of the necessary or legitimate expenses of its business. On August 10, 1984, the SEC Hearing Panel created the management committee (MANCOM) for RUBY, composed of representatives from Allied Leasing and Finance Corporation (ALFC), Philippine Bank of Communications (PBCOM), China Banking Corporation (China Bank), Pilipinas Shell Petroleum Corporation (Pilipinas Shell), and RUBY represented by Mr. Yu Kim Giang. The MANCOM was tasked to perform the following functions: (1) undertake the management of RUBY; (2) take custody and control over all existing assets and liabilities of RUBY; (3) evaluate RUBYs existing assets and liabilities, earnings and operations; (4) determine the best way to salvage and protect the interest of its investors and creditors; and (5) study, review and evaluate the proposed rehabilitation plan for RUBY. Subsequently, two (2) rehabilitation plans were submitted to the SEC: the BENHAR/RUBY Rehabilitation Plan of the majority stockholders led by Yu Kim Giang, and the Alternative Plan of the minority stockholders represented by Miguel Lim (Lim). Under the BENHAR/RUBY Plan, Benhar International, Inc. (BENHAR) -- a domestic corporation engaged in the importation and sale of vehicle spare parts which is wholly owned by the Yu family and headed by Henry Yu, who is also a director and majority stockholder of RUBY -- shall lend its P60 million credit line in China Bank to RUBY, payable within ten (10) years. Moreover, BENHAR shall purchase the credits of RUBYs creditors and mortgage RUBYs properties to obtain credit facilities for RUBY. Upon approval of the rehabilitation plan, BENHAR shall control and manage RUBYs operations. For its service, BENHAR shall receive a management fee equivalent to 7.5% of RUBYs net sales. The BENHAR/RUBY Plan was opposed by 40% of the stockholders, including Lim, a minority shareholder of RUBY. ALFC, the biggest unsecured creditor of RUBY and chairman of the management committee, also objected to the plan as it would transfer RUBYs assets beyond the reach and to the prejudice of its unsecured creditors. On the other hand, the Alternative Plan of RUBYs minority stockholders proposed to: (1) pay all RUBYs creditors without securing any bank loan; (2) run and operate RUBY without charging management fees; (3) buy-out the majority shares or sell their shares to the majority stockholders; (4) rehabilitate RUBYs two plants; and (5) secure a loan at 25% interest, as against the 28% interest charged in the loan under the BENHAR/RUBY Plan. Both plans were endorsed by the SEC to the MANCOM for evaluation. On October 28, 1988, the SEC Hearing Panel approved the BENHAR/RUBY Plan. The minority stockholders thru Lim appealed to the SEC En Banc which, in its November 15, 1988 Order, enjoined the implementation of the BENHAR/RUBY Plan. On December 20, 1988 after the expiration of the temporary restraining order (TRO), the SEC En Banc granted the writ of preliminary injunction against the enforcement of the BENHAR/RUBY Plan. BENHAR, Henry Yu, RUBY and Yu Kim Giang questioned the issuance of the writ in their petition filed in the Court of Appeals (CA), docketed as CA-G.R. SP No. 16798. The CA denied their appeal.[2] Upon elevation to this Court (G.R. No. L-88311), we issued a minute resolution dated February 28, 1990 denying the petition and upholding the injunction against the implementation of the BENHAR/RUBY Plan. Meanwhile, BENHAR paid off Far East Bank & Trust Company (FEBTC), one of RUBYs secured creditors. By May 30, 1988, FEBTC had already executed a deed of assignment of credit and mortgage rights in favor of BENHAR. BENHAR likewise paid the other secured creditors who, in turn, assigned their rights in favor of BENHAR. These acts were done by BENHAR despite the SECs TRO and injunction and even before the SEC Hearing Panel approved the BENHAR/RUBY Plan on October 28, 1988. ALFC and Miguel Lim moved to nullify the deeds of assignment executed in favor of BENHAR and cite the parties thereto in contempt for willful violation of the December 20, 1983 SEC order enjoining RUBY from disposing its properties and making payments pending the hearing of its petition for suspension of payments. They also charged that in paying off FEBTCs credits, FEBTC was given undue preference over the other creditors of RUBY. Acting on the motions, the SEC Hearing Panel nullified the deeds of assignment executed by RUBYs creditors in favor of BENHAR and declared the parties thereto guilty of indirect contempt. BENHAR and RUBY appealed to the SEC En Banc which denied their appeal. BENHAR and RUBY joined by Henry Yu and Yu Kim Giang appealed to the CA (CA-G.R. SP No. 18310). By Decision[3] dated August 29, 1990, the CA affirmed the SEC ruling nullifying the deeds of assignment. The CA also declared its decision final and executory as to RUBY and Yu Kim Giang for their failure to file their pleadings within the reglementary period. By Resolution dated August 26, 1991 in G.R. No. 96675,*4+ this Court affirmed the CAs decision. Earlier, on May 29, 1990, after the SEC En Banc enjoined the implementation of BENHAR/RUBY Plan, RUBY filed with the SEC En Banc an ex parte petition to create a new management committee and to approve its revised rehabilitation plan (Revised BENHAR/RUBY Plan). Under the revised plan, BENHAR shall receive P34.068 million of the P60.437 Million credit

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facility to be extended to RUBY, as reimbursement for BENHARs payment to some of RUBYs creditors. The SEC En Banc directed RUBY to submit its revised rehabilitation plan to its creditors for comment and approval while the petition for the creation of a new management committee was remanded for further proceedings to the SEC Hearing Panel. The Alternative Plan of RUBYs minority stockholders was also forwarded to the hearing panel for evaluation. On April 26, 1991, over ninety percent (90%) of RUBYs creditors objected to the Revised BENHAR/RUBY Plan and the creation of a new management committee. Instead, they endorsed the minority stockholders Alternative Plan. At the hearing of the petition for the creation of a new management committee, three (3) members of the original management committee (Lim, ALFC and Pilipinas Shell) opposed the Revised BENHAR/RUBY Plan on grounds that: (1) it would legitimize the entry of BENHAR, a total stranger, to RUBY as BENHAR would become the biggest creditor of RUBY; (2) it would put RUBYs assets beyond the reach of the unsecured creditors and the minority stockholders; and (3) it was not approved by RUBYs stockholders in a meeting called for the purpose. Notwithstanding the objections of 90% of RUBYs creditors and three members of the MANCOM, the SEC Hearing Panel approved on September 18, 1991 the Revised BENHAR/RUBY Plan and dissolved the existing management committee. It also created a new management committee and appointed BENHAR as one of its members. In addition to the powers originally conferred to the management committee under Presidential Decree (P.D.) No. 902-A, the new management committee was tasked to oversee the implementation by the Board of Directors of the revised rehabilitation plan for RUBY. The original management committee (MANCOM), Lim and ALFC appealed to the SEC En Banc which affirmed the approval of the Revised BENHAR/RUBY Plan and the creation of a new management committee on July 30, 1993. To ensure that the management of RUBY will not be controlled by any group, the SEC appointed SEC lawyers Ruben C. Ladia and Teresita R. Siao as additional members of the new management committee. Further, it declared that BENHARs membership in the new management committee is subject to the condition that BENHAR will extend its credit facilities to RUBY without using the latters assets as security or collateral. Lim, ALFC and MANCOM moved for reconsideration while RUBY and BENHAR asked the SEC to reconsider the portion of its Order prohibiting BENHAR from utilizing RUBYs assets as collateral. On October 15, 1993, the SEC denied the motion of Lim, ALFC and the original management committee but granted RUBY and BENHARs motion and allowed BENHAR to use RUBYs assets as collateral for loans, subject to the approval of the majority of all the members of the new management committee. Lim, ALFC and MANCOM appealed to the CA (CA-G.R. SP Nos. 32404, 32469 & 32483) which by Decision*5+ dated March 31, 1995 set aside the SECs approval of the Revised BENHAR/RUBY Plan and remanded the case to the SEC for further proceedings. The CA ruled that the revised plan circumvented its earlier decision (CA-G.R. SP No. 18310) nullifying the deeds of assignment executed by RUBYs creditors in favor of BENHAR. Since under the revised plan, BENHAR was to receive P34.068 Million of the P60.437 Million credit facility to be extended to RUBY, as settlement for its advance payment to RUBYs seven (7) secured creditors, such payments made by BENHAR under the void Deeds of Assignment, in effect were recognized as payable to BENHAR under the revised plan. The motion for reconsideration filed by BENHAR and RUBY was likewise denied by the CA.[6] Undaunted, RUBY and BENHAR filed a petition for review in this Court (G.R. Nos. 124185-87 entitled Ruby Industrial Corporation v. Court of Appeals) alleging that the CA gravely abused its discretion in substituting its judgment for that of the SEC, and in allowing Lim, ALFC and MANCOM to file separate petitions prepared by lawyers representing themselves as belonging to different firms. By Decision*7+ dated January 20, 1998, we sustained the CAs ruling that the Revised BENHAR/RUBY Plan contained provisions which circumvented its final decision in CA-G.R. SP No. 18310, nullifying the deeds of assignment of credits and mortgages executed by RUBYs creditors in favor of BENHAR, as well as this Courts Resolution in G.R. No. 96675, affirming the said CAs decision. We thus held: Specifically, the Revised BENHAR/RUBY Plan considered as valid the advance payments made by BENHAR in favor of some of RUBYs creditors. The nullity of BENHARs unauthorized dealings with RUBYs creditors is settled. The deeds of assignment between BENHAR and RUBYs creditors had been categorically declared void by the SEC Hearing Panel in two (2) orders issued on January 12, 1989 and March 15, 1989. x x x xxxx These orders were upheld by the SEC en banc and the Court of Appeals. In CA-G.R. SP No. 18310, the Court of Appeals ruled as follows: x x x xxx xxx

1) x x x when the Deed of Assignment was executed on May 30, 1988 by and between Ruby Industrial Corp., Benhar International, Inc., and FEBTC, the Rehabilitation Plan proposed by petitioner Ruby Industrial Corp. for Benhar International, Inc. to assume all petitioners obligation has not been approved by the SEC. The Rehabilitation Plan was not approved until October 28, 1988. There was a willful and blatant violation of the SEC order dated December 20, 1983 on the part of petitioner Ruby Industrial Corp., represented by Yu Kim Giang, by Benhar International, Inc., represented by Henry Yu and by FEBTC.

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2) The magnitude and coverage of the transactions involved were such that Yu Kim Giang and the other signatories cannot feign ignorance or pretend lack of knowledge thereto in view of the fact that they were all signatories to the transaction and privy to all the negotiations leading to the questioned transactions. In executing the Deeds of Assignment, the petitioners totally disregarded the mandate contained in the SEC order not to dispose the properties of Ruby Industrial Corp. in any manner whatsoever pending the approval of the Rehabilitation Plan and rendered illusory the SEC efforts to rehabilitate the petitioner corporation to the best interests of all the creditors. 3) The assignments were made without prior approval of the Management Committee created by the SEC in an Order dated August 10, 1984. Under Sec. 6, par. d, sub. par. (2) of P.D. 902-A as amended by P.D. 1799, the Management Committee, rehabilitation receiver, board or body shall have the power to take custody and control over all existing assets of such entities under management notwithstanding any provision of law, articles of incorporation or by-law to the contrary. The SEC therefore has the power and authority, through a Management Committee composed of petitioners creditors or through itself directly, to declare all assignment of assets of the petitioner Corporation declared under suspension of payments, null and void, and to conserve the same in order to effect a fair, equitable and meaningful rehabilitation of the insolvent corporation. 4) x x x. The acts for which petitioners were held in indirect contempt by the SEC arose from the failure or willful refusal by petitioners to obey the lawful order of the SEC not to dispose of any of its properties in any manner whatsoever without authority or approval of the SEC. The execution of the Deeds of Assignment tend to defeat or obstruct the administration of justice. Such acts are offenses against the SEC because they are calculated to embarrass, hinder and obstruct the tribunal in the administration of justice or lessen its authority. x x x Even the SEC en banc, in its July 30, 1993 Order affirming the approval of the Revised BENHAR/RUBY Plan, has acknowledged the invalidity of the subject deeds of assignment. However, to justify its approval of the plan and the appointment of BENHAR to the new management committee, it gave the lame excuse that BENHAR became RUBYs creditor for having paid RUBYs debts. x x x xxxx For its part, the Court of Appeals noted that the approved Revised BENHAR/RUBY Plan gave undue preference to BENHAR. The records, indeed, show that BENHARs offer to lend its credit facility in favor of RUBY is conditioned upon the payment of the amount it advanced to RUBYs creditors, x x x xxxx In fact, BENHAR shall receive P34.068 Million out of the P60.437 Million credit facility to be extended to RUBY for the latters rehabilitation. Rehabilitation contemplates a continuance of corporate life and activities in an effort to restore and reinstate the corporation to its former position of successful operation and solvency. When a distressed company is placed under rehabilitation, the appointment of a management committee follows to avoid collusion between the previous management and creditors it might favor, to the prejudice of the other creditors. All assets of a corporation under rehabilitation receivership are held in trust for the equal benefit of all creditors to preclude one from obtaining an advantage or preference over another by the expediency of attachment, execution or otherwise. As between the creditors, the key phrase is equality in equity. Once the corporation threatened by bankruptcy is taken over by a receiver, all the creditors ought to stand on equal footing. Not any one of them should be paid ahead of the others. This is precisely the reason for suspending all pending claims against the corporation under receivership.[8] (Additional emphasis supplied.) Aside from the undue preference that would have been given to BENHAR under the Revised BENHAR/RUBY Plan, we also found RUBYs dealing with BENHAR highly irregular and its proposed financing scheme more costly and ultimately prejudicial to RUBY. Thus: Parenthetically, BENHAR is a domestic corporation engaged in importing and selling vehicle spare parts with an authorized capital stock of thirty million pesos. Yet, it offered to lend its credit facility in the amount of sixty to eighty million pesos to RUBY. It is to be noted that BENHAR is not a lending or financing corporation and lending its credit facilities, worth more than double its authorized capitalization, is not one of the powers granted to it under its Articles of Incorporation. Significantly, Henry Yu, a director and a majority stockholder of RUBY is, at the same time, a stockholder of BENHAR, a corporation owned and controlled by his family. These circumstances render the deals between BENHAR and RUBY highly irregular. xxxx Moreover, when RUBY initiated its petition for suspension of payments with the SEC, BENHAR was not listed as one of RUBYs creditors. BENHAR is a total stranger to RUBY. If at all, BENHAR only served as a conduit of RUBY. As aptly stated in the challenged Court of Appeals decision:

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Benhars role in the Revised Benhar/Ruby Plan, as envisioned by the majority stockholders, is to contract the loan for Ruby and, serving the role of a financier, relend the same to Ruby. Benhar is merely extending its credit line facility with China Bank, under which the bank agrees to advance funds to the company should the need arise. This is unlikely a loan in which the entire amount is made available to the borrower so that it can be used and programmed for the benefit of the companys financial and operational needs. Thus, it is actually China Bank which will be the source of the funds to be relent to Ruby. Benhar will not shell out a single centavo of its own funds. It is the assets of Ruby which will be mortgaged in favor of Benhar. Benhars participation will only make the rehabilitation plan more costly and, because of the mortgage of its (Rubys) assets to a new creditor, will create a situation which is worse than the present. x x x We need not say more.[9] (Additional emphasis supplied.) After the finality of the above decision, the SEC set the case for further proceedings.[10] On March 14, 2000, Bank of the Philippine Islands (BPI), one of RUBYs secured creditors, filed a Motion to Vacate Suspension Order[11] on grounds that there is no existing management committee and that no decision has been rendered in the case for more than 16 years already, which is beyond the period mandated by Sec. 3-8 of the Rules of Procedure on Corporate Recovery. RUBY filed its opposition,[12] asserting that the MANCOM never relinquished its status as the duly appointed management committee as it resisted the orders of the second and third management committees subsequently created, which have been nullified by the CA and later this Court. As to the applicability of the cited rule under the Rules on Corporate Recovery, RUBY pointed out that this case was filed long before the effectivity of said rules. It also pointed out that the undue delay in the approval of the rehabilitation plan being due to the numerous appeals taken by the minority stockholders and MANCOM to the CA and this Court, from the SEC approval of the BENHAR/RUBY Plan. Since there have already been steps taken to finally settle RUBYs obligations with its creditors, it was contended that the application of the mandatory period under the cited provision would cause prejudice and injustice to RUBY. It appears that even earlier during the pendency of the appeals in the CA, BENHAR and RUBY have performed other acts in pursuance of the BENHAR/RUBY Plan approved by the SEC. On September 1, 1996, Lim received a Notice of Stockholders Meeting scheduled on September 3, 1996 signed by a certain Mr. Edgardo M. Magtalas, the Designated Secretary of RUBY and stating the matters to be taken up in said meeting, which include the extension of RUBYs corporate term for another twenty-five (25) years and election of Directors.[13] At the scheduled stockholders meeting of September 3, 1996, Lim together with other minority stockholders, appeared in order to put on record their objections on the validity of holding thereof and the matters to be taken therein. Specifically, they questioned the percentage of stockholders present in the meeting which the majority claimed stood at 74.75% of the outstanding capital stock of RUBY. The aforesaid stockholders meeting was the subject of the Motion to Cite For Contempt[14] and Supplement to Motion to Cite For Contempt[15] filed by Lim before the CA where their petitions for review (CA-G.R. Nos. 32404, 32469 and 32483) were then pending. Lim argued that the majority stockholders claimed to have increased their shares to 74.75% by subscribing to the unissued shares of the authorized capital stock (ACS). Lim pointed out that such move of the majority was in implementation of the BENHAR/RUBY Plan which calls for capital infusion of P11.814 Million representing the unissued and unsubscribed portion of the present ACS of P23.7 Million, and the Revised BENHAR/RUBY Plan which proposed an additional subscription of P30 Million. Since the implementation of both majority plans have been enjoined by the SEC and CA, the calling of the special stockholders meeting by the majority stockholders clearly violated the said injunction orders. This circumstance certainly affects the determination of quorum, the voting requirements for corporate term extension, as well as the election of Directors pursuant to the July 30, 1993 Order and October 15, 1993 Resolution of the SEC enjoining not only the implementation of the revised plan but also the doing of any act that may render the appeal from the approval of the said plan moot and academic. The aforementioned capital infusion was taken up by RUBYs board of directors in a special meeting*16+ held on October 2, 1991 following the issuance by the SEC of its Order dated September 18, 1991[17] approving the Revised BENHAR/RUBY Plan and creating a new management committee to oversee its implementation. During the said meeting, the board asserted its authority and resolved to take over the management of RUBYs funds, properties and records and to demand an accounting from the MANCOM which was ordered dissolved by the SEC. The board thus resolved that: The corporation be authorized to issue out of the unissued portion of the authorized capital stocks of the corporation in the form of common stocks 11.8134.00 [Million] after comparing this with the audited financial statement prepared by SGV as of December 31, 1982, to be subscribed and paid in full by the present stockholders in proportion to their present stockholding in the corporation on staggered basis starting October 28, December 27 then February 28 and April 28 as the last installment date at 25% for each period. It was also moved and seconded that should any of the stockholders fail to exercise their rights to buy the number of shares they are qualified to buy by making the first installment payment of 25% on or before October 13, 1991, then the other stockholders may buy the same and that only when none of the present stockholders are interested in the shares may there be a resort to selling them by public auction.[18] As reflected in the Minutes of the special board meeting, a representative of the absent directors (Tan Chai, Tomas Lim, Miguel Lim and Yok Lim) came to submit their letter addressed to the Chairman suggesting that said meeting be deferred until the September 18, 1991 SEC Order becomes final and executory. The directors present nevertheless proceeded with the meeting upon their belief that neither appeal nor motion for reconsideration can stay the SEC order.[19]

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The resolution to extend RUBYs corporate term, which was to expire on January 2, 1997, was approved during the September 3, 1996 stockholders meeting, as recommended by the board of directors composed of Henry Yu (Chairman), James Yu, David Yukimteng, Harry L. Yu, Yu Kim Giang, Mary L. Yu and Vivian L. Yu. The board certified that said resolution was approved by stockholders representing two-thirds (2/3) of RUBYs outstanding capital stock.*20+ Per Certification*21+ dated August 31, 1995 issued by Yu Kim Giang as Executive Vice-President of RUBY, the majority stockholders own 74.75% of RUBYs outstanding capital stock as of October 27, 1991. The Amended Articles of Incorporation was filed with the SEC on September 24, 1996.[22] On March 17, 2000, Lim filed a Motion[23] informing the SEC of acts being performed by BENHAR and RUBY through directors who were illegally elected, despite the pendency of the appeal before this Court questioning the SEC approval of the BENHAR/RUBY Plan and creation of a new management committee, and after this Court had denied their motion for reconsideration of the January 20, 1998 decision in G.R. Nos. 124185-87. Lim reiterated that before the matter of extension of corporate life can be passed upon by the stockholders, it is necessary to determine the percentage ownership of the outstanding shares of the corporation. The majority stockholders claimed that they have increased their shareholdings from 59.828% to 74.75% as a result of the illegal and invalid stockholders meeting on September 3, 1996. The additional subscription of shares cannot be done as it implements the BENHAR/RUBY Plan against which an existing injunction is still effective based on the SEC Order dated January 6, 1989, and which was struck down under the final decision of this Court in G.R. Nos. 124185-87. Hence, the implementation of the new percentage stockholdings of the majority stockholders and the calling of stockholders meeting and the subsequent resolution approving the extension of corporate life of RUBY for another twenty-five (25) years, were all done in violation of the decisions of the CA and this Court, and without compliance with the legal requirements under the Corporation Code. There being no valid extension of corporate term, RUBYs corporate life had legally ceased. Consequently, Lim moved that the SEC: (1) declare as null and void the infusion of additional capital made by the majority stockholders and restore the capital structure of RUBY to its original structure prior to the time injunction was issued; and (2) declare as null and void the resolution of the majority stockholders extending the corporate life of RUBY for another twenty-five (25) years. The MANCOM concurred with Lim and made a similar manifestation/comment[24] regarding the irregular and invalid capital infusion and extension of RUBYs corporate term approved by stockholders representing only 60% of RUBYs outstanding capital stock. It further stated that the foregoing acts were perpetrated by the majority stockholders without even consulting the MANCOM, which technically stepped into the shoes of RUBYs board of directors. Since RUBY was still under a state of suspension of payment at the time the special stockholders meeting was called, all corporate acts should have been made in consultation and close coordination with the MANCOM. Lim likewise filed an Opposition*25+ to BPIs Motion to Vacate Suspension Order, asserting that the management committee originally created by the SEC continues to control the corporate affairs and properties of RUBY. He also contended that the SEC Rules of Procedure on Corporate Recovery cannot apply in this case which was filed long before the effectivity of said rules. On the other hand, RUBY filed its Opposition[26] to the Motion filed by Lim denying the allegation of Lim that RUBYs corporate existence had ceased. RUBY claimed that due notice were given to all stockholders of the October 2, 1991 special meeting in which the infusion of additional capital was discussed. It further contended that the CA decision setting aside the SEC orders approving the Revised BENHAR/RUBY Plan, which was subsequently affirmed by this Court on January 20, 1998, did not nullify the resolution of RUBYs board of directors to issue the previously unissued shares. The amendment of its articles of incorporation on the extension of RUBYs corporate term was duly submitted with and approved by the SEC as per the Certification dated September 24, 1996. The MANCOM also filed its Opposition*27+ to BPIs Motion to Vacate Suspension Order, stating that it has continuously performed its primary function of preserving the assets of RUBY and undertaken the management of RUBYs day-to-day affairs. It expressed belief that between chaotic foreclosure proceedings and collection suits that would be triggered by the vacation of the suspension order and an orderly settlement of creditors claims before the SEC, the latter path is the more prudent and logical course of action. On April 28, 2000, it submitted to the court copies of the minutes of meetings held from January 18, 1999 to December 1, 1999 in pursuance of its mandate to preserve the assets and administer the business affairs of RUBY.[28] On August 23, 2000, China Bank filed a Manifestation[29] echoing the contentions of BPI that as there is no existing management committee and no rehabilitation plan approved even after the 240-day period, warrants the application of Sec. 4-9 of the SEC Rules of Procedure on Corporate Recovery such that the petition is deemed ipso facto denied and dismissed. China Bank lamented that the length of time that has lapsed, as well as the parties actuations, completely betrays a genuine attempt to rehabilitate RUBYs moribund operations all to the dismay, damage and prejudice of RUBYs creditors. It stressed that the proceedings cannot be prolonged nor used as a ploy to defer indefinitely the payment of long overdue obligations of RUBY to its creditors. With the case having been ipso facto dismissed, there is no need of further action from the parties or an order from the SEC. Consequently, RUBYs creditors may now take whatever legal action they may deem appropriate to protect their rights including, but not limited to extrajudicial foreclosure. On September 11, 2000, the SEC granted Lims request for the issuance of subpoena duces tecum/ad testificandum to Ms. Jocelyn Sta. Ana of BPI for the latter to testify and bring all documents and records pertaining to RUBY.[30] Earlier, Lim moved for a hearing to verify the information that China Bank and BPI had separately executed deeds of assignment in favor of Greener Investment Corporation, a company owned by Yu Kim Giang, one of RUBYs majority stockholders.*31+

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Said hearing, however, did not push through in view of RUBYs proposal for a compromise agreement.*32+ Lim submitted his comments on the Proposed Compromise Agreement, but there was no response from RUBY and the majority stockholders.[33] The minority stockholders likewise served a copy of the revised Compromise Agreement to the majority stockholders.[34] Lim moved that the case be assigned to a new Panel of Hearing Officers and the majority stockholders be made to declare in a hearing whether they accept the counterproposals of the minority in their draft Amicable Settlement in order that the case can proceed immediately to liquidation.[35] On January 25, 2001, the MANCOM filed with the SEC its Resolution unanimously adopted on January 19, 2001 affirming that: (1) MANCOM was never informed nor advised of the supposed capital infusion by the majority stockholders in October 1991 and it never actually received any such additional subscription nor signed any document attesting to or authorizing the said increase of RUBYs capital stock or the extension of its corporate life; (2) MANCOM continuously recognizes the 60%-40% ratio of shareholding profile between the majority and minority stockholders, with the majority having 59.828% while the minority holds 40.172% shareholding; (3) as there was no valid increase in the shareholding of the majority and consequently no valid extension of corporate term, the liquidation of RUBY is thus in order; (4) to date, the majority stockholders or Yu Kim Giang have not complied with the December 22, 1989 SEC order for them to turn over the cash including bank deposits, all other financial records and documents of RUBY including transfer certificates of title over its real properties, and render an accounting of all the money received by RUBY; and (5) pursuant to this Courts ruling in G.R. No. 96675 dated August 26, 1991, the previous deeds of assignment made in favor of BENHAR by Florence Damon, Philippine Bank of Communications, Philippine Commercial International Bank, Philippine Trust Company, PCI Leasing and Finance, Inc. and FEBTC, having been earlier declared void by the SEC Hearing Panel, and the CA decision in CA-G.R. SP No. 18310 affirmed by this Court have no legal effect and are deemed void.[36] On the other hand, Lim filed a Supplement (to Manifestation and Motion dated January 18, 2001)[37] reiterating his pending motion filed on March 15, 2000 for the SEC to implement this Courts January 20, 1998 Decision in G.R. Nos. 124185-87 which states in part that *t+he SEC therefore has the power and authority, directly to declare all assignment of assets of the petitioner Corporation declared under suspension of payments, null and void, and to conserve the same in order to effect a fair, equitable and meaningful rehabilitation of the insolvent corporation. Lim contended that the SEC retains jurisdiction over pending suspension of payment/rehabilitation cases filed as of June 30, 2000 until these are finally disposed, pursuant to Sec. 5.2 of the Securities Regulation Code (Republic Act [R.A.] No. 8799). Considering that the Management Committee is intact, the majority stockholders cannot act in an illegal manner with regard to RUBYs assets. He thus concluded that the continued disobedience of the majority stockholders to the orders and decisions of the SEC and CA, as affirmed by this Court, have certainly rendered any additional assignments, such as the Deeds of Assignment executed by BPI and China Bank with BENHAR, Henry Yu or conduits of the majority stockholders, null and void. The MANCOM manifested that it is adopting in toto the Manifestation and Motion dated January 18, 2001 filed by Lim. It also moved for the SEC to conduct further proceedings as directed by this Court. Considering that there is no chance at all for the proposed rehabilitation of RUBY in light of strict implementation by government authorities of environmental laws particularly on pollution control, and MANCOMs assent to effect a liquidation, the MANCOM asserted that a hearing should focus on the eventual liquidation of RUBY. It added that a dismissal under the circumstances would be tantamount to a perceived shirking by the SEC of its mandate to afford all creditors ample opportunity to recover on their respective financial exposure with RUBY.[38] On May 15, 2001, the MANCOM submitted copies of minutes of meetings held from April 13, 2000 to December 29, 2000.[39] On September 20, 2001, the SEC issued an Order directing the Management Committee to submit a detailed report not mere minutes of meetings -- on the status of the rehabilitation process and financial condition of RUBY, which should contain a statement on the feasibility of the rehabilitation plan.[40] The MANCOM complied with the said order on February 15, 2002.[41] The majority stockholders and RUBY moved to dismiss the petition and strike from the records the Compliance/Report. MANCOM filed its omnibus opposition to the said motions. There was further exchange of pleadings by the parties on the matter of whether the SEC should already dismiss the petition of RUBY as prayed for by the majority stockholders and RUBY, or proceed with supervised liquidation of RUBY as proposed by the MANCOM and minority stockholders. The SECs Ruling On September 18, 2002, the SEC issued its Order[42] denying the petition for suspension of payments, as follows: WHEREFORE, in view of the foregoing, the Commission hereby resolves to terminate the proceedings and DENY the instant petition. Accordingly, pursuant to Sec. 5-5 of the SECs Rules of Procedure on Corporate Recovery, which provides: Discharge of the Management Committee -- The Management Committee shall be discharged and dissolved under the following circumstances:

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a. Whenever the Commission, on motion or motu prop[r]io, has determined that the necessity for the Management Committee no longer exists; b. Upon the appointment of a liquidator under these Rules; c. By agreement of the parties; d. Upon termination of the proceedings. Upon its discharge and dissolution, the Management Committee shall submit its final report and render an accounting of its management within such reasonable time as the Commission may allow. the Management Committee is hereby DISSOLVED. It is likewise ordered to: (1) Make an inventory of the assets, funds and properties of the petitioner; (2) Turn-over the aforementioned assets, funds and properties to the proper party(ies); (3) Render an accounting of its management; and (4) Submit its Final Report to the Commission. The MANCOM is ordered to comply with the foregoing within a non-extendible period of thirty (30) days from receipt of this Order. Relative to any compensation owing to the MANCOM, it is left to the determination of the parties concerned. No pronouncement as to costs. SO ORDERED.[43] The SEC declared that since its order declaring RUBY under a state of suspension of payments was issued on December 20, 1983, the 180-day period provided in Sec. 4-9 of the Rules of Procedure on Corporate Recovery had long lapsed. Being a remedial rule, said provision can be applied retroactively in this case. The SEC also overruled the objections raised by the minority stockholders regarding the questionable issuance of shares of stock by the majority stockholders and extension of RUBYs corporate term, citing the presumption of regularity in the act of a government entity which obtains upon the SECs approval of RUBYs amendment of articles of incorporation. It pointed out that Lim raised the issue only in the year 2000. Moreover, the SEC found that notwithstanding his allegations of fraud, Lim never proved the illegality of the additional infusion of the capitalization by RUBY so as to warrant a finding that there was indeed an unlawful act.[44] Lim, in his personal capacity and in representation of the minority stockholders of RUBY, filed a petition for review with prayer for a temporary restraining order and/or writ of preliminary injunction before the CA (CA-G.R. SP No. 73195) assailing the SEC order dismissing the petition and dissolving the MANCOM. Ruling of the CA On May 26, 2004, the CA rendered its Decision,[45] the dispositive portion of which states: WHEREFORE, the Questioned Order dated 18 September 2002 issued by the Securities and Exchange Commission in SEC Case No. 2556 entitled In the Matter of the Petition for Suspension of Payments, Ruby Industrial Corporation, Petitioner, is hereby SET ASIDE, and consequently: (1) the infusion of additional capital made by the majority stockholders be declared null and void and restoring the capital structure of Ruby to its original structure prior to the time the injunction was issued, that is, majority stockholders 59.828% and the minority stockholders 40.172% of the authorized capital stock of Ruby Industrial Corporation. (2) the resolution of the majority stockholders, who represents only 59.828% of the outstanding capital stock of Ruby, extending the corporate life of Ruby for another twenty-five (25) years which was made during the supposed stockholders meeting held on 03 September 1996 be declared null and void; (3) implementing the invalidation of any and all illegal assignments of credit/purchase of credits and the cancellation of mortgages connected therewith made by the creditors of Ruby Industrial Corporation during the effectivity of the suspension of payments order including that of China Bank and BPI and to deliver to MANCOM or the Liquidator all the original of the Deeds of Assignments and the registered titles thereto and any other documents related thereto; and order their unwinding and requiring the majority stockholders to account for all illegal assignments (amounts, dates, interests, etc. and present the original documents supporting the same); and (4) ordering the Securities and Exchange Commission to supervise the liquidation of Ruby Industrial Corporation after the foregoing steps shall have been undertaken. SO ORDERED.[46]

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According to the CA, the SEC erred in not finding that the October 2, 1991 meeting held by RUBYs board of directors was illegal because the MANCOM was neither involved nor consulted in the resolution approving the issuance of additional shares of RUBY. The CA further noted that the October 2, 1991 board meeting was conducted on the basis of the September 18, 1991 order of the SEC Hearing Panel approving the Revised BENHAR/RUBY Plan, which plan was set aside under this Courts January 20, 1998 Decision in G.R. Nos. 124185-87. The CA pointed out that records confirmed the proposed infusion of additional capital for RUBYs rehabilitation, approved during said meeting, as implementing the Revised BENHAR/RUBY Plan. Necessarily then, such capital infusion is covered by the final injunction against the implementation of the revised plan. It must be recalled that this Court affirmed the CAs ruling that the revised plan not only recognized the void deeds of assignments entered into with some of RUBYs creditors in violation of the CAs decision in CA-G.R. SP No. 18310, but also maintained a financing scheme which will just make the rehabilitation plan more costly and create a worse situation for RUBY. On the supposed delay of the minority stockholders in raising the issue of the validity of the infusion of additional capital effected by the board of directors, the CA held that laches is inapplicable in this case. It noted that Lim sought relief while the case is still pending before the SEC. If ever there was delay, the same is not fatal to the cause of the minority stockholders. The CA likewise faulted the SEC in relying on the presumption of regularity on the matter of the extension of RUBYs corporate term through the filing of amended articles of incorporation. In doing so, the CA totally disregarded the evidence which rebutted said presumption, as demonstrated by Lim: (1) it was the board of directors and not the stockholders which conducted the meeting without the approval of the MANCOM; (2) there was no written waivers of the minority stockholders pre-emptive rights and thus it was irregular to merely notify them of the board of directors meeting and ask them to exercise their option; (3) there was an existing permanent injunction against any additional capital infusion on the BENHAR/RUBY Plan, while the CA and this Court both rejected the Revised BENHAR/RUBY Plan; (4) there was no General Information Sheet reports made to the SEC on the alleged capital infusion, as per certification by the SEC; (5) the Certification stating the present percentage of majority shareholding, dated December 21, 1993 and signed by Yu Kim Giang -- which was not sworn to before a Notary Public -- was supposedly filed in 1996 with the SEC but it does not bear a stamped date of receipt, and was only attached in a 2000 motion long after the October 1991 board meeting; (6) said Certification was contradicted by the SEC list of all stockholders of RUBY, in which the majority remained at 59.828% and the minority shareholding at 40.172% as of October 27, 1991; (7) certain receipts for the amount of P1.7 million was presented by the majority stockholders only in the year 2000, long after Lim questioned the inclusion of extension of corporate term in the Notice of Meeting when Lim filed before the CA a motion to cite for contempt (CAG.R. Nos. 32404, 32469 and 32483); and (8) this Courts decisions in the cases elevated to it had recognized the 40% stockholding of the minority. Upon the foregoing grounds, the CA said that the SEC should have invalidated the resolution extending the corporate term of RUBY for another twenty-five (25) years. With the expiration of the RUBYs corporate term, the CA ruled that it was error for the SEC in not commencing liquidation proceedings. As to the dismissal of RUBYs petition for suspension of payments, the CA held that the SEC erred when it retroactively applied Sec. 4-9 of the Rules of Procedure on Corporate Recovery. Such retroactive application of procedural rules admits of exceptions, as when it would impair vested rights or cause injustice. In this case, the CA emphasized that the two decisions of this Court still have to be implemented by the SEC, but to date the SEC has failed to unwound the illegal assignments and order the assignees to surrender the Deeds of Assignment to the MANCOM. On the issue of violation of the rule against forum shopping, the CA held that this is not applicable because the parties in CA-G.R. SP No. 73169 (filed by MANCOM) and CA-G.R. SP No. 73195 (filed by Lim) are not the same and they do not have the same interest. This issue was in fact already resolved in G.R. Nos. 124185-87 wherein this Court, citing Ramos, Sr. v. Court of Appeals[47] declared that private respondents Lim, the unsecured creditors (ALFC) and MANCOM cannot be considered to have engaged in forum shopping in filing separate petitions with the CA as each have distinct rights to protect. The CA also found that the belated submission of the special power of attorney executed by the other minority stockholders representing 40.172% of RUBYs ownership has no bearing to the continuation of the petition filed with the appellate court. Moreover, since the petition is in the nature of a derivative suit, Lim clearly can file the same not only in representation of the minority stockholders but also in behalf of the corporation itself which is the real party in interest. Thus, notwithstanding that Lims ownership in RUBY comprises only 1.4% of the outstanding capital stock, as claimed by the majority stockholders, his petition may not be dismissed on this ground. The Consolidated Petitions From the Decision of the CA, China Bank and the Majority Stockholder joined by RUBY, filed separate petitions before this Court. In G.R. No. 165887, petitioners Majority Stockholders and RUBY raised the following grounds for the reversal of the assailed decision and the reinstatement of the SECs September 18, 2002 Order: First Reason

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THE COURT OF APPEALS ERRED AND WHEN IT DID, IT ACTED CONTRARY TO LAW AND PRECEDENTS WHEN IT GAVE DUE COURSE TO, AND, THEREAFTER, SUSTAINED, A FORMALLY AND SUBSTANTIALLY DEFECTIVE PETITION FOR REVIEW. Second Reason THE COURT OF APPEALS ERRED AND WHEN IT DID, IT ACTED IN A MANNER AT WAR WITH ORDERLY PROCEDURE AND APPLICABLE JURISPRUDENCE WHEN IT REVERSED THE ORDER OF DISMISSAL OF THE SECURITIES AND EXCHANGE COMMISSION AND SUBSTITUTED ITS JUDGMENT FOR THAT OF THE LATTER IN THE DETERMINATION OF ISSUES WELL WITHIN THE EXPERTISE OF THE COMMISSION. Third Reason THE COURT OF APPEALS ERRED AND WHEN IT DID, IT ACTED IN GRAVE ABUSE OF ITS DISCRETION AND, IN FACT, IN EXCESS OR LACK OF JURISDICTION -- WHEN IT SUSTAINED COLLATERAL ATTACKS OF FINAL ADJUDICATIONS OF THE SECURITIES AND EXCHANGE COMMISSION.[48] On the other hand, petitioner China Bank in G.R. No. 165929 puts forth the argument that the principle of stare decisis cannot be given effect in this case considering the prevailing factual circumstances, as to do so would result in manifest injustice. It contends that the reason for the declaration of nullity of the Deed of Assignment pronounced more than a decade ago, has become legally inefficacious by its obsolescence. The creditors of RUBY have the right to recover their credit. But when the CA ordered the nullification of China Banks Deed of Assignment in favor of Greener Investment Corporation, it practically dashed its last hope for ever recovering its credit. China Bank is of the view that the CA overstretched the import of this Courts January 20, 1998 decision in G.R. Nos. 124185-87 when the SEC was ordered to conduct further proceedings, as to include the unwinding of the alleged illegal assignment of credits. The rehabilitation of RUBY, if it still may be capable of, is not made dependent on the unwinding by the SEC of the illegal assignments, as the same concerns only the issue of who shall now become the creditors of RUBY, and does not alter the fact that RUBY has hefty loan obligations and it has not enough cash flow to pay for the same. Deploring the principal parties penchant for prolonged litigation resulting considerably in irreversible losses to RUBY, China Bank maintains that from the report submitted by the MANCOM to the SEC, it can be clearly seen that no attempt at rehabilitation whatsoever had been pursued. Given the current situation, China Bank prays that the CA Decision be reversed and its Deed of Assignment in favor of Greener Investment Corporation be recognized and given full legal effect. In fine, main issues to be resolved are: (1) whether private respondents MANCOM and Lim engaged in forum shopping when they filed separate petitions before the CA assailing the September 18, 2002 SEC Order; (2) whether the defects in the certification of non-forum shopping submitted by Lim warrant the dismissal of his petition before the CA; (3) whether the CA was correct in reversing the SECs order dismissing the petition for suspension of payment. Our Ruling The petitions have no merit. On the charge of forum shopping, we have already ruled on the matter in G.R. Nos. 124185-87. Thus: We hold that private respondents are not guilty of forum-shopping. In Ramos, Sr. v. Court of Appeals, we ruled: The private respondents can be considered to have engaged in forum shopping if all of them, acting as one group, filed identical special civil actions in the Court of Appeals and in this Court. There must be identity of parties or interests represented, rights asserted and relief sought in different tribunals. In the case at bar, two groups of private respondents appear to have acted independently of each other when they sought relief from the appellate court. Both groups sought relief from the same tribunal. It would not matter even if there are several divisions in the Court of Appeals. The adverse party can always ask for the consolidation of the two cases. x x x In the case at bar, private respondents represent different groups with different interests the minority stockholders group, represented by private respondent Lim; the unsecured creditors group, Allied Leasing & Finance Corporation; and the old management group. Each group has distinct rights to protect. In line with our ruling in Ramos, the cases filed by private respondents should be consolidated. In fact, BENHAR and RUBY did just that in their urgent motions filed on December 1, 1993 and December 6, 1993, respectively, they prayed for the consolidation of the cases before the Court of Appeals.[49] In the present case, no consolidation of CA-G.R. SP Nos. 73169 (filed by MANCOM) which was earlier assigned to the Thirteenth Division and CA-G.R. SP No. 73195 (filed by Lim) decided by the Second Division, took place. In their Comment filed before CA-G.R. SP No. 73169, the Majority Stockholders and RUBY (private respondents therein) prayed for the dismissal of said case arguing that MANCOM, of which Lim is a member, circumvented the proscription against forum shopping. The CAs Thirteenth Division, however, disagreed with private respondents and granted the motion to withdraw petition filed by MANCOM which manifested that the Second Division in CA-G.R. SP No. 73195 by Decision

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dated May 26, 2004 had granted the reliefs similar to those prayed for in their petition, said decision being binding on MANCOM which was also impleaded in said case (CA-G.R. SP No. 73195). The Thirteenth Division also cited our pronouncement in G.R. Nos. 124185-87 to the effect that there was no violation on the rule on forum shopping because MANCOM and Lim or the minority shareholders of RUBY represent different interests.[50] As to the alleged defects in the certificate of non-forum shopping submitted by Lim, we find no error committed by the CA in holding that the belated submission of a special power of attorney executed in Lims favor by the minority stockholders has no bearing to the continuation of the case as supported by ample jurisprudence. To appreciate the liberal stance adopted by the CA, one must take into account the previous history of the petitions for review before the CA involving the SEC September 18, 2002 Order. It was actually the third time that Lim and/or MANCOM have challenged certain acts perpetrated by the majority stockholders which are prejudicial to RUBY, such as the execution of deeds of assignment during the effectivity of the suspension order in pursuit of two rehabilitation plans submitted by them together with BENHAR. The assignment of RUBYs credits to BENHAR gave the secured creditors undue advantage over RUBYs prime properties and put these assets beyond the reach of the unsecured creditors. Each time they go to court, Lim and MANCOM essentially advance the interest of the corporation itself. They have consistently taken the position that RUBYs assets should be preserved for the equal benefit of all its creditors, and vigorously resisted any attempt of the controlling stockholders to favor any or some of its creditors by entering into questionable deals or financing schemes under two BENHAR/RUBY Plans. Viewed in this light, the CA was therefore correct in recognizing Lims right to institute a stockholders action in which the real party in interest is the corporation itself. A derivative action is a suit by a shareholder to enforce a corporate cause of action.[51] It is a remedy designed by equity and has been the principal defense of the minority shareholders against abuses by the majority.[52] For this purpose, it is enough that a member or a minority of stockholders file a derivative suit for and in behalf of a corporation.[53] An individual stockholder is permitted to institute a derivative suit on behalf of the corporation wherein he holds stock in order to protect or vindicate corporate rights, whenever officials of the corporation refuse to sue or are the ones to be sued or hold the control of the corporation. In such actions, the suing stockholder is regarded as the nominal party, with the corporation as the party in interest.[54] Now, on the third and substantive issue concerning the SECs dismissal of RUBYs petition for suspension of payment. The SEC based its action on Sec. 4-9 of the Rules of Procedure on Corporate Recovery,[55] which provides: SEC. 4-9. Period of Suspension Order. The suspension order shall be effective for a period of sixty (60) days from the date of its issuance. The order shall be automatically vacated upon the lapse of the sixty-day period unless extended by the Commission. Upon motion, the Commission may grant an extension thereof for a period of not more than sixty (60) days in each application if the Commission is satisfied that the debtor and its officers have been acting in good faith and with due diligence, and that the debtor would likely be able to make a viable rehabilitation plan. After the lapse of one hundred and eighty (180) days from the issuance of the suspension order, no extension of the said order shall be granted by the Commission if opposed in writing by a majority of any class of creditors. The Commission may grant an extension beyond one hundred eighty (180) days only if it appears by convincing evidence that there is a good chance for the successful rehabilitation of the debtor and the opposition thereto by the creditor appears manifestly unreasonable. In any event, the petition is deemed ipso facto denied and dismissed if no Rehabilitation Plan was approved by the Commission upon the lapse of the order or the last extension thereof. In such case, the debtor shall come under the dissolution and liquidation proceedings of Rule V of these Rules. (Emphasis supplied.) According to the SEC, even if the 180 days maximum period of suspension order is counted from the finality of this Courts decision in G.R. Nos. 124185-87 in December 1998, still this case had gone beyond the period mandated in the Rules for a corporation under suspension of payment to have a rehabilitation plan approved by the Commission. While it is true that the Rules of Procedure on Corporate Recovery authorizes the dismissal of a petition for suspension of payment where there is no rehabilitation plan approved within the maximum period of the suspension order, it must be recalled that there was in fact not one, but two rehabilitation plans (BENHAR/RUBY Plan and Revised BENHAR/RUBY Plan) submitted by the majority stockholders which were approved by the SEC. The implementation of the first plan was enjoined when it was seriously challenged in the courts by the minority stockholders through Lim. The second revised plan superseded the first plan, but eventually nullified by the CA and the CA decision declaring it void was affirmed by this Court in G.R. Nos. 124185-87. Given this factual milieu, the automatic application of the lifting of the suspension order as interpreted by the SEC in its September 18, 2002 Order would be unfair and highly prejudicial to the financially distressed corporation. Moreover, records reveal that the delay in the proceedings after the case was set for hearing following this Courts final judgment in G.R. Nos. 124185-87, was not due to any fault or neglect on the part of MANCOM or the minority stockholders. The idea propounded by the petitioners majority stockholders that this case is about a minority in a corporation holding hostage the majority indefinitely by simple assertion that the formers rights have been transgressed by the latter is, downright misleading.

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First, the SEC did not even mention in its September 18, 2002 Order that when this Court remanded to it the case for further proceedings, there remained only the Alternative Plan of RUBYs minority stockholders which had earlier been forwarded to the SEC Hearing Panel. With the CA Decision setting aside the SEC approval of the Revised BENHAR/RUBY Plan, as affirmed by this Court, it behooves on the SEC to recognize the fact that the Alternative Plan was endorsed by 90% of the RUBYs creditors who had objected to the Revised BENHAR/RUBY Plan. Yet, not a single step was taken by the SEC to address those findings and conclusions made by the CA and this Court on the highly disadvantageous and onerous provisions of the Revised BENHAR/RUBY Plan. Moreover, the SEC failed to act on motions filed by Lim and MANCOM to implement this Courts January 20, 1998 Decision in G.R. Nos. 124185-87, by declaring all deeds of assignment with BENHAR and/or the conduits of Henry Yu of no force and legal effect, which of course necessitates the surrender by the concerned creditors of those void deeds of assignment. Petitioner China Bank dismisses it as unnecessary and immaterial to the continued inability of RUBY to settle its long overdue debts. However, the CA said that the foregoing acts should have been done by the SEC for proper documentation and orderly settlement after proper accounting of the assignment transactions. The appellate court then concluded that dismissal of the petition under Sec. 4-9 of the Rules of Procedure on Corporate Recovery would impair the vested rights of the minority stockholders under this Courts decision invalidating the aforesaid deeds of assignment, thus: We agree with the observations of the petition that if the illegal assignments not having been unwound and the mortgages not canceled, the majority, their alter ego, and/or cohorts will claim to be secured creditors and freely collect extra-judicially the obligations covered by the illegal assignments. Ruby has very little money compared to the P200 Million probable liability to the illegal assignees as unilaterally stated by Ruby without audit (previously merely totaled to P34 Million in 1998 as stated in the revised rehabilitation plan). Foreclosure of the mortgages by the illegal assignees will follow; Ruby will lose all its prime properties; there will be no assets left for unsecured creditors; and there will be no residual P600 Million assets to divide.[56] Evidently, the minority stockholders and MANCOM had already foreseen the impossibility of implementing a viable rehabilitation plan if the illegal assignments made by its creditors with BENHAR and the majority stockholders, and subsequently, with conduits of RUBY or Henry Yu, are not properly unwound and those directors responsible for the void transactions not required to make a full accounting. Contrary to petitioner China Banks insinuation that the minority stockholders merely want to prolong the litigation to the great prejudice and damage to RUBYs creditors, MANCOM and Lim had determined and moved for SEC-supervised liquidation proceedings as the more prudent course of action for an orderly and equitable settlement of RUBYs liabilities. Records likewise revealed that the SEC chose to keep silent and failed to assist the MANCOM and minority stockholders in their efforts to demand compliance from the majority stockholders or Yu Kim Giang (who headed the first MANCOM) with the December 22, 1989 Order directing them to turn over the cash, financial records and documents of RUBY, including certificates of title over RUBYs real properties, and render an accounting of all moneys received and payments made by RUBY. On January 18, 2002, the MANCOM even filed a Motion[57] to require Yu Kim Giang to render report/accounting of RUBY from 1983 to the 1st quarter of 1990, stating that despite a commitment from Mr. Giang, he has seemingly delayed his compliance, hence frustrating the desire of MANCOM to submit a comprehensive and complete report for the whole period of 1983 up to the present. To underscore the importance of making the said records available for scrutiny of the SEC and MANCOM, Lim manifested before the SEC that-Indeed, the majority is actually unwilling (and not merely unable) to submit such records because these will show, among others: (1) The majority to minority ratio in the corporate ownership is 59.828% :40.172%; (2) The actual amounts of the bank loans paid off by Benhar International[,] Inc. and/or Henry Yu would be very low; (3) The illegal payment of the bank loans and illegal assignments of the mortgages to Benhar/Henry Yu are contrary to the Honorable Commissions Order of 20 December 1983 for suspension of payments; (4) The earnings of the corporation from 1983 to 1989 amounted to millions and cannot be accounted for by the majority and the first Mancom; (5) The money may have been spent to pay off some of the loans to the bank but Benhar and Henry Yu fraudulently claim credit therefor.[58] It must be noted that MANCOM had rejected the two rehabilitation plans proposed by BENHAR and the majority stockholders. In shifting the blame to the MANCOM and minority stockholders for the delay in the approval of a viable rehabilitation plan, the SEC apparently overlooked that from the time the SEC approved the Revised BENHAR/RUBY Plan and dissolved the MANCOM, the majority stockholders has denied MANCOM access to corporate papers, documents evidencing the amounts actually paid to creditor banks/assignors, financial statements and titles over RUBYs real properties. Although the SEC granted MANCOM and Lims request for a hearing and direct a representative from BPI to bring all documents relative to the assignment of RUBYs credit, said hearing did not materialize after the majority stockholders

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proposed a compromise agreement with the minority stockholders. But as it turned out, this development only caused further delay because the majority stockholders were unwilling to turn over documents, funds and properties in their possession, and would neither make a full accounting or disclosure of RUBYs transactions, especially the actual amounts paid and rates of interest on the loan assignments. In this state of things, the MANCOM and minority stockholders resolved that the more reasonable and practical option is to move for a SEC-supervised liquidation proceedings. The other ground invoked by Lim and MANCOM for the propriety of liquidation is the expiration of RUBYs corporate term. The SEC, however, held that the filing of the amendment of articles of incorporation by RUBY in 1996 complied with all the legal requisites and hence the presumption of regularity stands. Records show that the validity of the infusion of additional capital which resulted in the alleged increase in the shareholdings of petitioners majority stockholders in October 1991 was questioned by MANCOM and Lim even before the majority stockholders filed their motion to dismiss in the year 2000. A stock corporation is expressly granted the power to issue or sell stocks.[59] The power to issue shares of stock in a corporation is lodged in the board of directors and no stockholders meeting is required to consider it because additional issuances of shares of stock does not need approval of the stockholders.[60] What is only required is the board resolution approving the additional issuance of shares. The corporation shall also file the necessary application with the SEC to exempt these from the registration requirements under the Revised Securities Act (now the Securities Regulation Code). The new management committee created pursuant to SEC Order dated September 18, 1991 apparently had no participation in the October 2, 1991 board resolution approving the issuance of additional shares. The move was part of the boards assertion of control over the management in RUBY following the approval of the Revised BENHAR/RUBY Plan. The minority stockholders registered their objection during the said meeting by asking the board to defer action as the SEC September 18, 1991 Order was still on appeal with the SEC En Banc. When the SEC En Banc denied their appeal and motion for reconsideration under its July 30, 1993 and October 15, 1993 orders, Lim, MANCOM and ALFC filed petitions for review with the CA which set aside the said orders. As already mentioned, this Court affirmed the CA ruling in G.R. Nos. 124185-87. Contrary to the assertion of petitioners majority stockholders, our decision in G.R. Nos. 124185-87 nullified the deeds of assignment not solely on the ground of violation of the injunction orders issued by the SEC and CA. As earlier mentioned, we affirmed the CAs finding that the re-lending scheme under the Revised BENHAR/RUBY Plan will not only make rehabilitation more costly for RUBY, but also worsen its financial condition because of the mortgage of its assets to a new creditor. To better illumine this point, we quote from the CA decision in CA-G.R. SP Nos. 32404, 32469 and 32483 comparing the provisions of the rehabilitation proposals submitted by the majority stockholders (Revised BENHAR/RUBY Plan) and the minority stockholders (Alternative Plan): there is no need for Benhar to act as financier, as Ruby itself can very well secure such credit accommodation using its assets as collateral. Verily, Benhars pretext at magnanimity is deception of the highest order considering that: (1) as embodied in the heading Sources and Uses of Funds in the Revised Benhar/Ruby Plan, the P80-Million loan/credit facility to be extended by Benhar will be used to pay P60.437-Million loans of Ruby. Of the P60.437-Million, P34.068-Million will be paid to Benhar as payment for the amounts it paid in consideration of the nullified assignments; (2) The Deed of Assignment of Credit Facility will be executed by Benhar in favor of Ruby only upon payment of Ruby of such amount already advanced by Benhar, i.e. the P34.068-Million credit assigned to Benhar by the seven (7) secured creditors. The Revised Benhar/Ruby Plan, in fact, gives Benhar undue preference on the matter of repayment. Under the said plan, the creditors of Ruby will be paid in accordance with the following schedules: Secured Creditors China Banking Corp. BPI Philippine Orient P17.022M To be paid in cash with 12% interest p.a. Unsecured Creditors Allied Leasing Filcor Finance P 9.347M To be paid in cash interest-f[r]ee Benhar For having paid

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Ruby obligations to 7 creditors

P34.068M

To be paid in cash with interest charge Trade/Other Creditors P2.871M (p.a. for 3 years) Totalling P8.614M to be paid in 3- year installment, interest-free (Rollo, CA-G.R. SP No. 32404, p. 727) Needless to state, the foregoing payment schedules as embodied in the said plan which gives Benhar undue advantage over the other creditors goes against the very essence of rehabilitation, which requires that no creditor should be preferred over the other. Indeed, a comparison of the salient features of the Revised Benhar/Ruby Plan and the Alternative Plan will readily show just how stacked in favor of Benhar are the provisions of the former plan: Benhar/Ruby Plan Alternative Plan 1. Benhar plays a major role. It will be paid P34.068M out of P60.437 M total amount due to creditors but not explained as to how arrived at. 1. The original creditors are the ones recognized. The amount payable is lower because interests are not capitalized. 2. Benhar will not assign the credit facility of P80M unless the P34.068M above stated is paid. 2. Direct credit of P80M loan and will be borrowed from the bank(s) like Allied, UCPB, Metrobank or Equitable Bank or even China Bank. 3. The main assets are to be mortgaged to the creditor- assignor of Benhar and if the illegal assignments are recognized, then Benhar shall have to be recognized as mortgagee even when it is a disqualified creditor and/or mortgagee. 3. Mortgaged to bank(s) directly. 4. Start up cost P16,880 and based on 1988 figures and projections. 4. Plant B = P25,640 Year IV estimated P40. M Plant A = 22.40 Year V estimated P30. M 5. Rehabilitation only of Plant B. 5. Rehabilitation of both plants. 6. Recognition of Benhar re-lender/financier. 6. None 7. Because of the SEC Order he got an MC seat and and the Pilipinas Shell representative of trade creditors was retained. 7. Pilipinas Shell representative be retained.

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8. Credit facility is being assigned or re-lent by Benhar. 8. Credit facility directly to Ruby. 9. Authorized Benhar to mortgage assets of Ruby itself. Only remaining unencumbered asset is one (1) real property. Two (2) prime properties already encumbered to Assignor of Benhar. 9. None going to the minority but to actual lenders. 10. Capacity of only one (1) plant stated at 72% (overrated) 10. Capacity of two (2) plants progressive to 75% or 80% with purchase of new machines. 11. Projection figures based on May, 1990 forex exchange rate. Cost of importation and other local supplier currently cannot be met. 11. Minority RP can be updated at current foreign exchange rate. 12. Market and economic slow down not taken into consideration. 12. Taken into consideration so will upgrade to meet competition. 13. Discriminatory to creditors Benhar-capitalized with undisclosed rates of interest. 13. Not discriminatory.

14. Original Figures of illegally assigned loans from FEBTC, PCIB, PTC which totaled to P11,419,036.87 but now entered as P21,378,002.71. The interest is undisclosed and may have been capitalized. Figures for the other four (4) secured lenders not available individually. Total of seven (7) secured lenders given as P34.068 M. 14. Original figures will be used original figures plans 12% interest only. 15. Interest is 28% with Benhar as conduit. 15. Interest is 25% payable to the bank. This is still subject to current market rates to be negotiated by the minority. 16. Call on unissued shares for P11.814 M and if minority will take up their pre-emptive rights and dilute minority shareholdings. 15. Additional subscription of P16M within 6 months by the minority stockholders.

x x x x[61] Prior to the September 18, 1991 Order approving the Revised BENHAR/RUBY Plan and dissolving the MANCOM, majority of RUBYs creditors (90%) have already withdrawn their support to the revised plan and manifested that they were only lately informed about another plan submitted by the minority stockholders. Hence, these creditors wrote individual letters to the SEC Hearing Panel expressing their agreement with and endorsement of the Alternative Plan of the minority stockholders.[62] The Revised BENHAR/RUBY Plan had proposed the calling for subscription of unissued shares through a Board Resolution from the P11.814 million of the P23.7 million ACS in order to allow the long overdue program of the REHAB Program. RUBY will offer for subscription 118,140 shares of stocks at par value of P100 each to all stockholders on record, payable within 15 days, or within a reasonable period from SEC approval of the revised plan.[63] This was implemented by the October 2, 1991 meeting of the Board of Directors led by Yu Kim Giang. The minority directors claimed they were not notified of said board meeting. At any rate, the CA decision nullifying the Revised BENHAR/RUBY Plan was affirmed by this Court on January 20, 1998. Hence, the legitimate concerns of the minority stockholders and MANCOM who objected to the capital infusion which resulted in the dilution of their shareholdings, the expiration of RUBYs corporate term and the pending incidents on the void deeds of assignment of credit all these should have been duly considered and acted upon by the SEC when the case was remanded to it for further proceedings. With the final rejection of the courts of the Revised BENHAR/RUBY Plan, it was grave error for the SEC not to act decisively on the motions filed by the minority stockholders who have maintained that the issuance of additional shares did not help improve the situation of RUBY except to stifle the opposition coming from the MANCOM and minority stockholders by diluting the latters shareholdings. Worse, the SEC ignored the evidence adduced by the minority stockholders indicating that the correct amount of subscription of additional shares was not paid by the majority stockholders and that SEC official records still reflect the 60%-40% percentage of ownership of RUBY.

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The SEC remained indifferent to the reliefs sought by the minority stockholders, saying that the issue of the validity of the additional capital infusion was belatedly raised. Even assuming the October 2, 1991 board meeting indeed took place, the SEC did nothing to ascertain whether indeed, as the minority claimed: (1) the minority stockholders were not given notice as required and reasonable time to exercise their pre-emptive rights; and (2) the capital infusion was not for the purpose of rehabilitation but a mere ploy to divest the minority stockholders of their 40.172% shareholding and reduce it to a mere 25.25%. The foregoing matters, along with the persistent refusal of the majority stockholders, led by Yu Kim Giang, to give a full accounting of their transactions involving RUBYs credits and properties, were extensively argued by the minority stockholders in their opposition to the motions to dismiss/vacate suspension order filed by the majority stockholders and BPI, as follows: Their receipts only show supposed payment by the majority of a total of P1,759,150.00 out of the correct amount of P7,068,079.92.00 (sic) (59.828% of P11.814 million required capital infusion under the MRP and RRP) which should have been the amount paid by them under the RRP which requires full payment. Thus, they sought to attain a 74.75% equity from a 59.828% original equity by playing more tricks and stating that, under the general rule, they are supposedly allowed to pay-up only 25% of their subscription. Unfortunately for them, in a rehabilitation supervised by the SEC and with an existing Mancom, the general rule does not apply. What is stated in the rehabilitation plan must be strictly followed provided the rehabilitation plan has been finally approved. It must be remembered that in October 2 to 17, 1991, the amounts owed by Ruby to the banks who illegally assigned their loans/credit was stated at P34 Million. Operations needed another P20 Million plus. A capital infusion of P1,759,150.00 was so miniscule and clearly not for rehabilitation but was intended to deprive the minority of its blocking position and property rights since distribution after liquidation is based on the percentage of stockholdings. It is not only unfair, inequitable and not meaningful it is clearly dishonest. xxxx Assuming arguendo that the Board of Directors could act independently and this did not violate any injunction, if the capital infusion was actually made, the Board of Directors had the duty to report this to the Mancom because they would then fall under existing assets and would be part of the evaluation of the proposed RRP, necessary for management and in the overall plan of rehabilitation. Nothing of this kind happened and the belated proof cannot correct this situation. xxxx It is not true that there is benevolence on the part of the majority when they maneuvered the illegal assignments and paid the banks. The loan obligations remain as accounts payable of Ruby and have even been bloated to gigantic proportions and yet the SEC does not even ask them to account how much these obligations are now and the majority should have reported these to the Mancom, but the majority has not. These anomalous situations have been made to continue long enough and, we pray, should be addressed by the Honorable Commission. xxxx The SEC must understand that, being head of the first Mancom, YU KIM GIANG had the same obligation to render a report to the SEC as the present Mancom now. To single out the present Mancom to do this when a complete report cannot be made without these starting records is discriminatory, unfair and violates the rules of accountancy. For example, where is the report on the illegal assignments and mortgages complete with details? Where did the rentals for the period from 1983 to 1989 go? This amounted to millions. There are no reports on these. By not requiring the first Mancom to Report, the SEC is preventing the complete picture on the liabilities and finances of Ruby from being seen and is sheltering Ruby and the majority.[64] (Additional emphasis supplied.) Pre-emptive right under Sec. 39 of the Corporation Code refers to the right of a stockholder of a stock corporation to subscribe to all issues or disposition of shares of any class, in proportion to their respective shareholdings. The right may be restricted or denied under the articles of incorporation, and subject to certain exceptions and limitations. The stockholder must be given a reasonable time within which to exercise their preemptive rights. Upon the expiration of said period, any stockholder who has not exercised such right will be deemed to have waived it.[65] The validity of issuance of additional shares may be questioned if done in breach of trust by the controlling stockholders. Thus, even if the pre-emptive right does not exist, either because the issue comes within the exceptions in Section 39 or because it is denied or limited in the articles of incorporation, an issue of shares may still be objectionable if the directors acted in breach of trust and their primary purpose is to perpetuate or shift control of the corporation, or to freeze out the minority interest.[66] In this case, the following relevant observations should have signaled greater circumspection on the part of the SEC -- upon the third and last remand to it pursuant to our January 20, 1998 decision -- to demand transparency and accountability from the majority stockholders, in view of the illegal assignments and objectionable features of the Revised BENHAR/RUBY Plan, as found by the CA and as affirmed by this Court: There can be no gainsaying the well-established rule in corporate practice and procedure that the will of the majority shall govern in all matters within the limits of the act of incorporation and lawfully enacted by-laws not proscribed by law. It is,

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however, equally true that other stockholders are afforded the right to intervene especially during critical periods in the life of a corporation like reorganization, or in this case, suspension of payments, more so, when the majority seek to impose their will and through fraudulent means, attempt to siphon off Rubys valuable assets to the great prejudice of Ruby itself, as well as the minority stockholders and the unsecured creditors. Certainly, the minority stockholders and the unsecured creditors are given some measure of protection by the law from the abuses and impositions of the majority, more so in this case, considering the give-away signs of private respondents perfidy strewn all over the factual landscape. Indeed, equity cannot deprive the minority of a remedy against the abuses of the majority, and the present action has been instituted precisely for the purpose of protecting the true and legitimate interests of Ruby against the Majority Stockholders. On this score, the Supreme Court, has ruled that: Generally speaking, the voice of the majority of the stockholders is the law of the corporation, but there are exceptions to this rule. There must necessarily be a limit upon the power of the majority. Without such a limit the will of the majority will be absolute and irresistible and might easily degenerate into absolute tyranny. x x x*67+ (Additional emphasis supplied.) Lamentably, the SEC refused to heed the plea of the minority stockholders and MANCOM for the SEC to order RUBY to commence liquidation proceedings, which is allowed under Sec. 4-9 of the Rules on Corporate Recovery. Under the circumstances, liquidation was the only hope of the minority stockholders for effecting an orderly and equitable settlement of RUBYs obligations, and compelling the majority stockholders to account for all funds, properties and documents in their possession, and make full disclosure on the nullified credit assignments. Oblivious to these pending incidents so crucial to the protection of the interest of the majority of creditors and minority shareholders, the SEC simply stated that in the interim, RUBYs corporate term was validly extended, as if such extension would provide the solution to RUBYs myriad problems. Extension of corporate term requires the vote of 2/3 of the outstanding capital stock in a stockholders meeting called for the purpose.[68] The actual percentage of shareholdings in RUBY as of September 3, 1996 -- when the majority stockholders allegedly ratified the board resolution approving the extension of RUBYs corporate life to another 25 years was seriously disputed by the minority stockholders, and we find the evidence of compliance with the notice and quorum requirements submitted by the majority stockholders insufficient and doubtful. Consequently, the SEC had no basis for its ruling denying the motion of the minority stockholders to declare as without force and effect the extension of RUBYs corporate existence. Liquidation, or the settlement of the affairs of the corporation, consists of adjusting the debts and claims, that is, of collecting all that is due the corporation, the settlement and adjustment of claims against it and the payment of its just debts.[69] It involves the winding up of the affairs of the corporation, which means the collection of all assets, the payment of all its creditors, and the distribution of the remaining assets, if any, among the stockholders thereof in accordance with their contracts, or if there be no special contract, on the basis of their respective interests.[70] Section 122 of the Corporation Code, which is applicable to the present case, provides: SEC. 122. Corporate liquidation. -- Every corporation whose charter expires by its own limitation or is annulled by forfeiture or otherwise, or whose corporate existence for other purposes is terminated in any other manner, shall nevertheless be continued as a body corporate for three (3) years after the time when it would have been so dissolved, for the purpose of prosecuting and defending suits by or against it and enabling it to settle and close its affairs, to dispose of and convey its property and to distribute its assets, but not for the purpose of continuing the business for which it was established. At any time during said three (3) years, said corporation is authorized and empowered to convey all of its property to trustees for the benefit of stockholders, members, creditors, and other persons in interest. From and after any such conveyance by the corporation of its property in trust for the benefit of its stockholders, members, creditors and others in interest, all interests which the corporation had in the property terminates, the legal interest vests in the trustees, and the beneficial interest in the stockholders, members, creditors or other persons in interest. Upon winding up of the corporate affairs, any asset distributable to any creditor or stockholder or member who is unknown or cannot be found shall be escheated to the city or municipality where such assets are located. Except by decrease of capital stock and as otherwise allowed by this Code, no corporation shall distribute any of its assets or property except upon lawful dissolution and after payment of all its debts and liabilities. Since the corporate life of RUBY as stated in its articles of incorporation expired, without a valid extension having been effected, it was deemed dissolved by such expiration without need of further action on the part of the corporation or the State.[71] With greater reason then should liquidation ensue considering that the last paragraph of Sec. 4-9 of the Rules of Procedure on Corporate Recovery mandates the SEC to order the dissolution and liquidation proceedings under Rule VI. Sec. 6-1, Rule VI likewise authorizes the SEC on motion or motu proprio, or upon recommendation of the management committee, to order dissolution of the debtor corporation and the liquidation of its remaining assets, appointing a Liquidator for the purpose, if the continuance in business of the debtor is no longer feasible or profitable or no longer works to the best interest of the stockholders, parties-litigants, creditors, or the general public.

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It cannot be denied that with the current divisiveness, distrust and antagonism between the majority and minority stockholders, the long agony and extreme prejudice caused by numerous litigations to the creditors, and the bleak prospects for business recovery in the light of problems with the local government which are implementing more restrictions and anti-pollution measures that practically banned the operation of RUBYs glass plant liquidation becomes the only viable course for RUBY to stave off any further losses and dissipation of its assets. Liquidation would also ensure an orderly and equitable settlement of all creditors of RUBY, both secured and unsecured. The SECs utter disregard of the rights of the minority in applying the provisions of the Rules of Procedure on Corporate Recovery is inconsistent with the policy of liberal construction of the said rules to assist the parties in obtaining a just, expeditious and inexpensive settlement of cases.[72] Petitioners majority stockholders, however, assert that the findings and conclusions of the SEC on the matter of the dismissal of RUBYs petition are binding and conclusive upon the CA and this Court. They contend that reviewing courts are not supposed to substitute their judgment for those made by administrative bodies specifically clothed with authority to pass upon matters over which they have acquired expertise.[73] Given our foregoing findings clearly showing that the SEC acted arbitrarily and committed patent errors and grave abuse of discretion, this case falls under the exception to the general rule. As we held in Ruby Industrial Corporation v. Court of Appeals: The settled doctrine is that factual findings of an administrative agency are accorded respect and, at times, finality for they have acquired the expertise inasmuch as their jurisdiction is confined to specific matters. Nonetheless, these doctrines do not apply when the board or official has gone beyond his statutory authority, exercised unconstitutional powers or clearly acted arbitrarily and without regard to his duty or with grave abuse of discretion. In Leongson vs. Court of Appeals, we held: once the actuation of the administrative official or administrative board or agency is tainted by a failure to abide by the command of the law, then it is incumbent on the courts of justice to set matters right, with this Tribunal having the last say on the matter.*74+ Petitioners majority stockholders further insist that the minority stockholders were mistaken when they contended that the rehabilitation of RUBY is dependent on the unwinding by the SEC of the illegal assignments and mortgages. They assert that aside from the fact that the SEC had nothing to unwind because the alleged illegal assignments and mortgages were already declared null and void, the said assignments and mortgages will not affect the rehabilitation of Ruby; the same affecting only the issue of how, as to who will be its creditors. Such contention is untenable and contrary to our previous ruling in G.R. Nos. 124185-87. With the nullification of the deeds of assignments of credit executed by some of Rubys secured creditors in favor of BENHAR, it logically follows that the assignors or the original bank creditors remain as the creditors on record of RUBY. We have noted that BENHAR, which is controlled by the family of Henry Yu who is also a director and stockholder of RUBY, was not listed as one of RUBYs creditors at the time RUBY filed the petition for suspension of payment. Petitioners majority stockholders insinuation that RUBYs credits may have been assigned to third parties, if not referring to BENHAR or its conduits, implies two things: either the assignments declared void by this Courts January 20, 1998 decision continues to be recognized by the majority stockholders, in violation of the said decision, or other third parties in connivance with BENHAR and/or the controlling stockholders had subsequently entered the picture, without approval of the SEC and while the SEC December 20, 1983 Order enjoining the disposition of RUBYs properties was in force. The majority stockholders eagerness to have the suspension order lifted or vacated by the SEC without any order for its liquidation evinces a total disregard of the mandate of Sec. 4-9 of the Rules of Procedure on Corporate Recovery, and their obvious lack of any intent to render an accounting of all funds, properties and details of the unlawful assignment transactions to the prejudice of RUBY, minority stockholders and the majority of RUBYs creditors. The majority stockholders and BENHARs conduits must not be allowed to evade the duty to make such full disclosure and account any money due to RUBY to enable the latter to effect a fair, orderly and equitable settlement of all its obligations, as well as distribution of any remaining assets after paying all its debtors. In fine, no error was committed by the CA when it set aside the September 18, 2002 Order of the SEC and declared the nullity of the acts of majority stockholders in implementing capital infusion through issuance of additional shares in October 1991, the board resolution approving the extension of RUBYs corporate term for another 25 years, and any illegal assignment of credit executed by RUBYs creditors in favor of third parties and/or conduits of the controlling stockholders. The CA likewise correctly ordered the delivery of all documents relative to the said assignment of credits to the MANCOM or the Liquidator, the unwinding of these void deeds of assignment, and their full accounting by the majority stockholders. The petitioners majority stockholders and China Bank cannot be permitted to raise any issue again regarding the validity of any assignment of credit made during the effectivity of the suspension order and before the finality of the September 18, 2002 Order lifting the same. While China Bank is not precluded from questioning the validity of the December 20, 1983 suspension order on the basis of res judicata, it is, however, barred from doing so by the principle of law of the case. We have held that when the validity of an interlocutory order has already been passed upon on appeal, the Decision of the Court on appeal becomes the law of the case between the same parties. Law of the case has been defined as the opinion delivered on a former appeal. More specifically, it means that whatever is once irrevocably established as the controlling legal rule of decision between the same parties in the same case continues to be the law of

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the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court.*75+ The unwinding process of all such illegal assignment of RUBYs credits is critical and necessary, in keeping with good faith and as a matter of fairness and justice to all parties affected, particularly the unsecured creditors who stands to suffer most if left with nothing of the assets of RUBY, and the minority stockholders who waged legal battles to defend the interest of RUBY and protect the rights of the minority from the abuses of the controlling stockholders. As correctly stated by the CA: Liquidation is imperative because the unsecured creditor must negotiate the amount of the imputable interest rate on its long unpaid credit, the decision on which assets are to be sold to liquidate the illegally assigned credits must be made, the other secured credits and the trade credits must be determined, and most importantly, the restoration of the 40.172% minority percentage of ownership must be done.[76] However, we do not agree that it is the SEC which has the authority to supervise RUBYs liquidation. In the case of Union Bank of the Philippines v. Concepcion,[77] the Court is presented with the issue of whether the SEC had jurisdiction to proceed with insolvency proceedings after it was shown that the debtor corporation can no longer be rehabilitated. We held that although jurisdiction over a petition to declare a corporation in a state of insolvency strictly lies with regular courts, the SEC possessed ample power under P.D. No. 902-A, as amended, to declare a corporation insolvent as an incident of and in continuation of its already acquired jurisdiction over the petition to be declared in a state of suspension of payments in the two instances provided in Sec. 5 (d)[78] thereof. Subsequently, in Consuelo Metal Corporation v. Planters Development Bank[79] the Court was again confronted with the same issue. The original petition filed by the debtor corporation was for suspension of payment, rehabilitation and appointment of a rehabilitation receiver or management committee. Finding the petition sufficient in form and substance, the SEC issued an order suspending immediately all actions for claims against the petitioner pending before any court, tribunal or body until further orders from the court. It also created a management committee to undertake petitioners rehabilitation. Four years later, upon the management committees recommendation, the SEC issued an omnibus order directing the dissolution and liquidation of the petitioner, and that the proceedings on and implementation of the order of liquidation be commenced at the Regional Trial Court to which the case was transferred. However, the trial court refused to act on the motion filed by the petitioner who requested for the issuance of a TRO against the extrajudicial foreclosure initiated by one of its creditors. The trial court ruled that since the SEC had already terminated and decided on the merits the petition for suspension of payment, the trial court no longer had legal basis to act on petitioners motion. It likewise denied the motion for reconsideration stating that petition for suspension of payment could not be converted into a petition for dissolution and liquidation because they covered different subject matters and were governed by different rules. Petitioners remedy thus was to file a new petition for dissolution and liquidation either with the SEC or the trial court. When the case was elevated to the CA, the petition was dismissed affirming that under Sec. 121 of the Corporation Code, the SEC had jurisdiction to hear the petition for dissolution and liquidation. On motion for reconsideration, the CA remanded the case to the SEC for proceedings under Sec. 121 of the Corporation Code. The CA denied the motion for reconsideration filed by the respondent creditor, who then filed a petition for review with this Court. We ruled that the SEC observed the correct procedure under the present law, in cases where it merely retained jurisdiction over pending cases for suspension of payments/rehabilitation, thus: Republic Act No. 8799 (RA 8799) transferred to the appropriate regional trial courts the SECs jurisdiction defined under Section 5(d) of Presidential Decree No. 902-A. Section 5.2 of RA 8799 provides:

The Commissions jurisdiction over all cases enumerated under Sec. 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over these cases. The Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final resolution which should be resolved within one (1) year from the enactment of this Code. The Commission shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed. (Emphasis supplied) The SEC assumed jurisdiction over CMCs petition for suspension of payment and issued a suspension order on 2 April 1996 after it found CMCs petition to be sufficient in form and substance. While CMCs petition was still pending with the SEC as of 30 June 2000, it was finally disposed of on 29 November 2000 when the SEC issued its Omnibus Order directing the dissolution of CMC and the transfer of the liquidation proceedings before the appropriate trial court. The SEC finally disposed of CMCs petition for suspension of payment when it determined that CMC could no longer be successfully rehabilitated.

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However, the SECs jurisdiction does not extend to the liquidation of a corporation. While the SEC has jurisdiction to order the dissolution of a corporation, jurisdiction over the liquidation of the corporation now pertains to the appropriate regional trial courts. This is the reason why the SEC, in its 29 November 2000 Omnibus Order, directed that the proceedings on and implementation of the order of liquidation be commenced at the Regional Trial Court to which this case shall be transferred. This is the correct procedure because the liquidation of a corporation requires the settlement of claims for and against the corporation, which clearly falls under the jurisdiction of the regular courts. The trial court is in the best position to convene all the creditors of the corporation, ascertain their claims, and determine their preferences.[80] (Additional emphasis supplied.) In view of the foregoing, the SEC should now be directed to transfer this case to the proper RTC which shall supervise the liquidation proceedings under Sec. 122 of the Corporation Code. Under Sec. 6 (d) of P.D. 902-A, the SEC is empowered, on the basis of the findings and recommendations of the management committee or rehabilitation receiver, or on its own findings, to determine that the continuance in business of a debtor corporation under suspension of payment or rehabilitation would not be feasible or profitable nor work to the best interest of the stockholders, partieslitigants, creditors, or the general public, order the dissolution of such corporation and its remaining assets liquidated accordingly. As mentioned earlier, the procedure is governed by Rule VI of the SEC Rules of Procedure on Corporate Recovery. However, R.A. No. 10142[81] otherwise known as the Financial Rehabilitation and Insolvency Act (FRIA) of 2010, now provides for court proceedings in the rehabilitation or liquidation of debtors, both juridical and natural persons, in a manner that will ensure or maintain certainty and predictability in commercial affairs, preserve and maximize the value of the assets of these debtors, recognize creditor rights and respect priority of claims, and ensure equitable treatment of creditors who are similarly situated. Considering that this case was still pending when the new law took effect last year, the RTC to which this case will be transferred shall be guided by Sec. 146 of said law, which states: SEC. 146. Application to Pending Insolvency, Suspension of Payments and Rehabilitation Cases. This Act shall govern all petitions filed after it has taken effect. All further proceedings in insolvency, suspension of payments and rehabilitation cases then pending, except to the extent that in opinion of the court their application would not be feasible or would work injustice, in which event the procedures set forth in prior laws and regulations shall apply. WHEREFORE, the petitions for review on certiorari are DENIED. The Decision dated May 26, 2004 and Resolution dated November 4, 2004 of the Court of Appeals in CA-G.R. SP No. 73195 are hereby AFFIRMED with MODIFICATION in that the Securities and Exchange Commission is hereby ordered to TRANSFER SEC Case No. 2556 to the appropriate Regional Trial Court which is hereby DIRECTED to supervise the liquidation of Ruby Industrial Corporation under the provisions of R.A. No. 10142. With costs against the petitioners. SO ORDERED.

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THIRD DIVISION SAMAHAN NG MGA MANGGAGAWA SA HYATT (SAMASAH-NUWHRAIN), Petitioner, - versus -

HON. VOLUNTARY ARBITRATOR BUENAVENTURA C. MAGSALIN and HOTEL ENTERPRISES OF THE PHILIPPINES, INC., Respondents. x------------------------------------------x

SAMAHAN NG MGA MANGGAGAWA SA HYATT (SAMASAH-NUWHRAIN), Petitioner,

- versus -

HOTEL ENTERPRISES OF THE PHILIPPINES, INC., Respondent.

G.R. No. 164939 G.R. No. 172303

Promulgated:

June 6, 2011

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION VILLARAMA, JR., J.:

Before this Court are two consolidated petitions filed by petitioner Samahan ng mga Manggagawa sa Hyatt-NUWHRAINAPL 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, 2003[1] and August 13, 2004[2] 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 Resolution[4] 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:

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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 Memorandum[5] 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 Memorandum[6] to Caragdag on February 5, 2001, requiring him to explain in writing within fortyeight (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 Memorandum[7] requiring him to explain. On February 14, 2001, the HRD imposed on Caragdag the 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 Memorandum[9] requiring Caragdag to explain his actions in the training room. Caragdag submitted his written explanation on February 25, 2001[10] 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 Memorandum[11] 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 explanation[12] 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. 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.

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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 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 review[21] 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

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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 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 quasijudicial 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 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 quasijudicial 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

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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, 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 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

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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. 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.

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THIRD DIVISION

M.A. JIMENEZ ENTERPRISES, INC., represented by CESAR CALIMLIM and LAILA BALOIS, Petitioner,

- versus -

THE HONORABLE OMBUDSMAN, JESUS P. CAMMAYO, ARTURO SANTOS, MANUEL FACTORA, TEODORO BARROZO, MANUEL ROY, RONALD MANALILI and JOHN ULASSUS, Respondents.

G.R. No. 155307

Promulgated:

June 6, 2011 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.: Before us is a special civil action for certiorari and mandamus[1] praying that the Resolution[2] dated February 5, 2002 and Order[3] dated June 27, 2002 of the Ombudsman in OMB Case No. 0-01-0400 be nullified and a writ of mandamus be issued directing the Ombudsman to file informations against respondents for violation of Section 3(e) of Republic Act (R.A.) No. 3019 or the Anti-Graft and Corrupt Practices Act. The facts, as culled from the records, are as follows: On January 20, 1999, the Department of Public Works and Highways (DPWH) entered into a contract[4] for the proposed construction of the Baguio General Hospital and Medical Center (BGHMC) Building (Phase I) with Royson and Co., Inc. (Royson), represented by its President, respondent Manuel V. Roy. The contract was approved by DPWH Secretary Gregorio R. Vigilar on January 29, 1999, and construction ensued. On March 4, 1999, an excavation of sixty meters deep was made on the area under the control and supervision of the Project Director, Engr. Arturo M. Santos. Thinking that its property which was adjacent to the project site was under threat of erosion, petitioner, through its representative Carolina Jimenez, sent three letters[5] addressed to Royson asking that Royson hasten the construction of a retaining wall. Construction of a provisional slope protection measure in the construction and excavation area was then started. Unfortunately, on February 7, 2000, unusually heavy rains triggered the collapse of a portion of the slope protection, resulting in a landslide. Petitioner alleged that the landslide caused cracks in the house owned by it and prejudiced the structural integrity of the house. Thus, petitioner complained against the project before the Office of the Regional Director of the DPWH Cordillera Administrative Region (DPWH-CAR) and the Office of the City Mayor, which directed the Office of the City Engineer of Baguio City to conduct an investigation.

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On March 23, 2000, the DPWH-CAR engineers submitted a Memorandum[6] to the DPWH Regional Director which stated, among others that *t+he affected part of the lot (driveway) claimed by the complainant is actually part of the BGH property as shown on the attached lot plan. The City Engineer of Baguio, for its part, found the following: 1. That the construction being implemented by Royson and Co., Inc. is not covered by a building and excavation permit.

2. That the personnel of Royson & Co., Inc. alleged that no death resulted in the accident that happened on February 7, 2000 within their construction area.

3. That portion of Mr. & Mrs. Jimenez garage allegedly encroached inside the property of BGH.

4. That the retaining wall is located approximately 7.50 meters to the nearest building line of the complainant. This building is a two (2) storey structure with a footprint area excluding the garage of approximately 10 x 15 meters.

5. That cracks on their driveway approximately 5.65 m. away from the edge of the complainant*+s building measuring approximately 6.00 meters is observed. The garage floor level is approximately 4.50 meters above the partially completed 2nd level retaining wall.[7] Royson subsequently proceeded to build reinforced concrete slope protection, a grouted riprap, and a retaining wall for the compound. However, on June 8, 2000, when the reinforced concrete slope protection, grouted riprap, and retaining wall for the compound were already substantially completed, the retaining wall of the BGHMC Project collapsed. Asserting that its property was damaged as a result, petitioner, through its representatives, Cesar Calimlim and Laila Balois, filed an Affidavit-Complaint[8] against all respondents before the Office of the Ombudsman. Petitioner alleged that it is the owner of the land adjacent to the project site and that the said land was covered by TCT No. 31565. Before the incident, the land together with its improvements was valued at P25 million. However, according to petitioner, its property has now become virtually useless and danger-prone and can no longer be used profitably as the surrounding land has been eroded. Petitioner claimed that the damage to its property was due to respondents gross negligence, incompetence and/or malicious conduct because they failed to construct a perimeter fence in the excavations made for the expansion of the BGHMC despite the fact that petitioner had written Royson about the possibility of an erosion happening. Thus, petitioner charged all the respondents of causing undue injury to it in the discharge of their official and administrative functions through manifest partiality, evident bad faith and inexcusable negligence in the construction of the expansion project of the BGHMC and its retaining wall. Petitioner also averred in its affidavit-complaint that it filed a complaint for damages against the respondents before the Regional Trial Court of Quezon City, docketed as Civil Case No. Q-01-43224. Respondent Teodoro Barrozo, the former City Engineer of Baguio City, filed his Counter-Affidavit[9] denying any liability under R.A. No. 3019. He claimed that the project in question was not a public-work project of the City Government of Baguio but a project of the national government over which the Baguio City Engineer has no control and supervision. He maintained that the City Engineers Office was never negligent or remiss in its duty: when it found out that the project was without the necessary permits, it immediately required the manager of Royson and BGHMC to obtain permits. Respondent Jesus P. Cammayo, then Assistant Secretary of the DPWH, also submitted his Counter-Affidavit[10] denying that he was negligent in the performance of his duties and responsibilities. He also asserted that there was no basis for liability on his part because he had no participation whatsoever in the preparation, execution and approval of the contract and the project plans. The Contract for the Proposed Construction of the BGHMC (Phase I) was executed between DPWH, through Undersecretary Edmundo V. Mir, and Royson and was approved by DPWH Secretary Gregorio Vigilar. The BGHMC Project was a locally funded special project classified under Special Buildings, and as such, it was directly supervised by the Project Management Office for Special Buildings (PMO-SB) headed by the Project Director, Engr. Arturo Santos. It was also directly managed by Project Manager, Architect Angelito Damo, who was under the direct control and supervision of Engr. Santos. Although he supervises and/or controls the PMO-SB, Cammayo averred that he does not directly participate in the actual oversight of the construction of the BGHMC Project. Cammayo added that in any event, he did all he could do to prevent damage to petitioners property. He stressed that in the original plans for the project, there was no provision for the construction of any reinforced slope protection or retaining wall for the area adjacent to or near petitioners property. Thus, there was no obligation to construct such

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permanent protection measures. But recognizing the need for slope protection, he initiated the construction of provisional slope protection measures. A supplemental agreement providing for the addition of a reinforced concrete slope protection and grouted riprap, among others, was also executed on December 9, 1999 and implemented immediately. However, while the additional slope protection was being constructed, unusually heavy rains triggered the collapse of the portion of the slope protection within the Project Site near petitioners property line. DPWH immediately took action to prevent further erosion. He also maintained that when the reinforced concrete slope protection and the retaining wall of the BGHMC project collapsed on June 8, 2000, he immediately ordered respondent Engr. Santos to give him a complete report of the incident. His subordinates reported that the workers discovered a previously undetected pre-war tunnel which collapsed due to the heavy rains. This totally unforeseen and unfortunate event caused the slope protection to collapse and cause another landslide. Cammayo asserted that the cause of damage to petitioners property was force majeure beyond the control of the DPWH and not any negligence, bad faith or partiality on his part. Respondent Manuel Factora meanwhile claimed that he is the Medical Center Chief of the BGHMC and as such he had no participation whatsoever in the contract between the Republic of the Philippines through the DPWH and Royson. Being the Chief of the BGHMC, his concern is the proper and efficient operation and management of the hospital as well as the welfare of the patients brought to the hospital for treatment.[11] In a Resolution dated February 5, 2002, the Ombudsman dismissed the complaint after finding no probable cause to hold any of the respondents liable for violation of Section 3(e) of R.A. No. 3019. The Ombudsman found no evidence of manifest partiality, evident bad faith and gross inexcusable negligence on the part of the respondents in the construction of the BGHMC Building. Further, it noted that the damage was not within petitioners property but on a portion of BGHMCs property which petitioner merely encroached. On June 27, 2002, the Ombudsman denied petitioners motion for reconsideration. Not satisfied, petitioner filed the instant petition contending that the Ombudsman acted without jurisdiction or with grave abuse of discretion in issuing the assailed resolution and order. Petitioner contends that: A. THE UNCONTROVERTED FACTS PROVE THAT CONSTRUCTION AND EXCAVATION ON THE BGHMC EXPANSION PROJECT WERE UNDERTAKEN WITHOUT BUILDING AND EXCAVATION PERMITS, SLOPE AND SOIL ANALYSIS. B. THE COLLAPSE OF THE RETAINING WALL AND THE EVENTUAL DAMAGE TO THE PROPERTY ARE SUFFICIENT TO RAISE A PRESUMPTION OR PERMIT AN INFERENCE OF NEGLIGENCE ON THE PART OF THE RESPONDENTS. C. EFFORTS TO CONSTRUCT THE RETAINING WALL WERE DONE ONLY AFTER DAMAGE HAD BEEN CAUSED PETITIONERS PROPERTY.*12+ TO

The sole issue to be resolved is whether the Ombudsman acted with grave abuse of discretion amounting to lack or excess of jurisdiction in dismissing the complaint against all the respondents. Petitioner asserts that there is probable cause to charge respondents with violation of Section 3(e) of R.A. No. 3019. Petitioner insists that the collapse of the retaining wall was due to respondents gross inexcusable negligence in their respective duties because they failed to ensure that the necessary building and excavation permits have been secured before excavation commenced. Petitioner assails the finding of the Ombudsman that the collapse was due to unusually heavy rains and typhoon Feria and the pre-war tunnel that caved-in which were all beyond the scope of respondents authority. Petitioner argues that the occurrence of heavy rains at the time of construction should not be considered as force majeure as to exempt respondents from liability. It points out that there was no proof that the collapse was due to the rains, and that it had forewarned the respondents of the possibility of erosion occurring but they continued being negligent. The Ombudsman likewise committed grave abuse of discretion in holding that the property damaged was BGHMCs property based on the report of the DPWH-CAR engineers because said engineers were allegedly in no position to determine whether petitioner encroached on a portion of BGHMCs property. As to Cammayos protestations of good faith and due diligence in trying to protect petitioners property from damage, petitioner alleged that the effort to construct a retaining wall was done only after the two landslides. And although petitioner had attached a copy of the supplemental agreement to its complaint before the Ombudsman, petitioner contended that Cammayos allegation that he initiated the construction of provisional slope protection was also allegedly not proven. Respondents, for their part, maintained that the Ombudsman did not act with grave abuse of discretion when it dismissed the complaint against them. They further claim that the petitioner failed to establish that it suffered actual

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damage; that respondents DPWH and BGHMC officials gave unwarranted benefits, advantage or preference to any private party or even to the government; or that respondents acted with gross inexcusable negligence. Private respondent Roy meanwhile stressed that under Roysons contract with the DPWH, it had no obligation to secure the permits and that it was issued a Notice to Proceed prior to its construction of the BGHMC expansion project. We dismiss the petition. It is well-settled that the determination of probable cause against those in public office during a preliminary investigation is a function that belongs to the Ombudsman.[13] The Ombudsman is vested with the sole power to investigate and prosecute, motu proprio or upon the complaint of any person, any act or omission which appears to be illegal, unjust, improper, or inefficient.[14] It has the discretion to determine whether a criminal case, given its attendant facts and circumstances, should be filed or not.[15] As explained in Esquivel v. Ombudsman:[16] The Ombudsman is empowered to determine whether there exists reasonable ground to believe that a crime has been committed and that the accused is probably guilty thereof and, thereafter, to file the corresponding information with the appropriate courts. Settled is the rule that the Supreme Court will not ordinarily interfere with the Ombudsmans exercise of his investigatory and prosecutory powers without good and compelling reasons to indicate otherwise. Said exercise of powers is based upon his constitutional mandate and the courts will not interfere in its exercise. The rule is based not only upon respect for the investigatory and prosecutory powers granted by the Constitution to the Office of the Ombudsman, but upon practicality as well. Otherwise, innumerable petitions seeking dismissal of investigatory proceedings conducted by the Ombudsman will grievously hamper the functions of the office and the courts, in much the same way that courts will be swamped if they had to review the exercise of discretion on the part of public prosecutors each time they decided to file an information or dismiss a complaint by a private complainant. The Court respects the relative autonomy of the Ombudsman to investigate and prosecute, and refrains from interfering when the latter exercises such powers either directly or through the Deputy Ombudsman, except when there is grave abuse of discretion.*17+ Indeed, the Ombudsmans determination of probable cause may only be assailed through certiorari proceedings before this Court on the ground that such determination is tainted with grave abuse of discretion defined as such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. For there to be a finding of grave abuse of discretion, it must be shown that the discretionary power was exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and the abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act in contemplation of law.[18] Here, however, an assiduous examination of the records, as well as the assailed resolution and order of the Ombudsman dismissing the case against all the respondents for insufficiency of evidence, shows that the Ombudsman did not act with grave abuse of discretion. Respondents were charged with violation of Section 3(e) of R.A. No. 3019, the Anti-Graft and Corrupt Practices Act, which is committed as follows: SEC. 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. The following essential elements must therefore be present: (1) the accused must be a public officer discharging administrative, judicial or official functions; (2) the accused must have acted with manifest partiality, evident bad faith or gross inexcusable negligence; and (3) the action of the accused caused undue injury to any party, including the government, or gave any private party unwarranted benefits, advantage or preference in the discharge of the functions of the accused.[19] But as correctly noted by the Ombudsman, petitioner failed to point out specific evidence and concrete proof that respondents demonstrated manifest partiality or evident bad faith in the construction of the BGHMC and its retaining wall. There is manifest partiality when there is a clear, notorious, or plain inclination or predilection to favor one side or person rather than another.[20] Evident bad faith, on the other hand, connotes a manifest deliberate intent on the part of the accused to do wrong or cause damage.[21] It connotes not only bad judgment but also palpably and patently fraudulent and dishonest purpose to do moral obliquity or conscious wrongdoing for some perverse motive or ill will. [22] Petitioner has not shown that respondents were impelled by such motives in the performance of their official duties and functions. Neither did petitioner establish that respondents acted with gross inexcusable negligence. As found by the Ombudsman:

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Respondents adopted emergency slope protection at the onset of the BGHMC Project. The Supplemental Agreement provided reinforced concrete slope protection and grouted rip rap, installation of polyurethane sheets and hiring of structural design specialist x x x. In fact, as recommended by complainant's Architect Angelo Lazaro three hundred (300) RSB soil nails were installed on site. The collapse was due to heavy rains and typhoon Feria. This was followed by the discovery of a pre-war tunnel under which caved-in and collapsed also. The delay was beyond the control of respondents. There was the Open public bidding and the review of plans and structural design by the Bureau of Design. These factors were beyond the scope of authority of respondents. Conformably to the series of acts done by the respondents, we find no negligence or inexcusable negligence as claimed by complainants. The recommendation of complainants architect was even implemented and yet, due to force majeure, the collapse happened. The Report or Memorandum for DPWH-CAR dated March 23, 2000 attached to the complaint remain undisputed. It clearly states that the damage is NOT within complainants property. The affected part is actually a part of the BGHMC property as shown by the plan x x x and the Memorandum Report dated March 30, 2000 which states that the damage is 7.5 meters NEAREST the building line of complainant and that portion of Mr. & Mrs. Jimenez garage allegedly encroached inside the property of BGHMC x x x.[23] The foregoing findings of the Ombudsman are based on substantial evidence. As long as substantial evidence supports it, the Ombudsmans ruling will not be overturned. Evidently, the collapse of the retaining wall was not mainly attributable to respondents acts but due to a confluence of several factors, such as the unusually heavy rains during the start of the construction, discovery of a pre-war tunnel which collapsed, typhoon Feria and the fact that because the construction site was on a slope, there was always a possibility of a landslide happening in the area. These factors were beyond respondents control and contributed to soften the soil on the construction site which resulted in soil erosion and collapse of the retaining wall. As to petitioners allegation that respondents DPWH officials and Teodoro Barrozo, by their inaction, were grossly negligent in their official duties, such assertion is bereft of merit. For an action to constitute as gross inexcusable negligence, it is essential to prove that the breach of duty borders on malice and is characterized by flagrant, palpable and willful indifference to consequences insofar as other person may be affected.[24] Here, public respondents had not acted maliciously and with utter and willful indifference or disregard of other persons affected. In fact, by respondent Cammayos act of employing additional slope protection to prevent further landslides in the area, he could not be deemed to have acted with gross inexcusable negligence. In addition, the DPWH through its contractor installed polyurethane sheets for slope protection to the affected area in order to prevent further erosion. Soil nails consisting of steel bars and grouted cement motor was also installed. The project director immediately hired a structural design specialist to prepare plans for a new reinforced concrete retaining wall which will provide for permanent slope protection. Furthermore, as explained by respondents, the delay of the BGHMC administration in obtaining the permits was due to the need to submit documents from other offices which public respondents did not have control over. All these acts negate petitioners assertion that respondents are guilty of gross inexcusable negligence in the construction of the BGHMC expansion project. Gross inexcusable negligence does not signify mere omission of duties nor plainly the exercise of less than the standard degree of prudence. Rather, it refers to negligence characterized by the want of even the slightest care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally, with conscious indifference to consequences insofar as other persons may be affected.[25] Even if respondents failed to fully prevent the landslide which occurred at the construction site, they had exercised due diligence in order to forestall the occurrence of landslide on the area and to adjacent properties and hence, they cannot be deemed to have acted with gross inexcusable negligence. More importantly, petitioner failed to substantiate its claim that it suffered damages when its property lost lateral support by reason of the collapsed retaining wall. In the case of Santos v. People[26] cited in the case of Soriano v. Marcelo,[27+ the Court equated the concept of undue injury, in the context of Section 3(e) of the Anti-Graft and Corrupt Practices Act, with the civil law concept of actual damage. It is required that undue injury must be specified, quantified and proven to the point of moral certainty.[28] Speculative or incidental injury is not sufficient. The damages suffered cannot be based on flimsy and non-substantial evidence or upon speculation, conjecture or guesswork[29] but must depend on competent proof and on the best evidence obtainable regarding specific facts which could afford some basis for measuring compensatory or actual damage. The Memorandum of the Office of the City Engineer of Baguio City, which petitioner has not refuted, clearly stated that the retaining wall is located approximately 7.50 meters to the nearest building line of the complainant. x x x [T]he main structure of the complainant is evaluated to be outside the critical slip circle which is approximately 5.00 meters lateral distance from the retaining wall x x x. Absent any controverting evidence submitted by petitioner which would clearly prove actual damage of its property, the Ombudsman will not be faulted for relying on the said memorandum report. As to petitioners prayer for the issuance of a writ of mandamus, suffice to say that mandamus is similarly unavailing to petitioner for mandamus is employed to compel the performance of a ministerial, not a discretionary duty. In the performance of an official duty involving discretion, the corresponding official can only be directed by mandamus to act, but not to act one way or the other, except where there is grave abuse of discretion, manifest injustice, or palpable excess of authority.[30] WHEREFORE, the present petition for certiorari and mandamus is DENIED for lack of merit. The Resolution dated February 5, 2002 and Order dated June 27, 2002 of the Ombudsman in OMB Case No. 0-01-0400 are AFFIRMED.

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No costs. SO ORDERED.

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THIRD DIVISION

VIRGINIA M. GUADINES, Petitioner,

- versus G.R. No. 164891

SANDIGANBAYAN and PEOPLE OF THE PHILIPPINES, Respondents. Promulgated:

June 6, 2011 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

VILLARAMA, JR., J.: Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision[1] promulgated on April 30, 2004 and Resolution[2] dated August 20, 2004 of the Sandiganbayan convicting petitioner of violation of Section 3(e) of Republic Act (R.A.) No. 3019 or the Anti-Graft and Corrupt Practices Act. The factual antecedents: On August 25, 1992, the Provincial Treasurer of Quezon directed the Municipal Treasurer of Polillo, Quezon, Naime Ayuma, to conduct a public bidding for the materials to be used in the repair and construction of Navotas Bridge along Polillo-Burdeos provincial road at Barangay Sibulan. As a result of the bidding held on September 8, 1992, the contract was awarded to V.M. Guadines Construction Supply owned and managed by petitioner Virginia M. Guadines. On October 19, 1992, Purchaser Order No. 2019 was issued by the Provincial Government of Quezon for construction materials in the total price of P83,228.00. On November 13, 1992, the materials consisting of lumber (Macaasim hardwood cut by chainsaw) were stockpiled along the road about five meters away from the Navotas Bridge, and received by Bernie H. Azaula (Azaula).[3] Azaula was then Barangay Chairman of Poblacion, Polillo and Member of the Sangguniang Bayan being the President of the Association of Barangay Captains of Polillo.[4] On November 20, 1992, a team of Department of Environment and Natural Resources (DENR) officials/forest rangers from the Community and Environment Resources (CENR) Polillo Station led by Officer-in-Charge Herminio M. Salvosa confiscated seventy-three (73) pieces of Macaasim lumber (4,172 board feet valued at P41,172.00) which were stockpiled alongside the Polillo-Burdeos road at Barangay Sibulan, approximately five meters away from the Navotas Bridge. They measured the confiscated lumber using Marking Hatchet No. 1742 in which the number 1742 was 1/6 of an inch thick so that when you strike the lumber, the number 1742 will appear on the lumber. They also marked the lumber with the words DENR CONFISCATED using white paint. These forest products were confiscated in favor of the government pending submission of certain required documents. No person or entity was apprehended as owner/possessor of the lumber. Since Azaula volunteered to take custody as a public official in the locality, the CENR decided to turn over the seized lumber to him and required him to sign the Seizure Receipt.[5] On December 14, 1992, the Sangguniang Bayan of Polillo acting upon the petition of some 460 individuals, and after debating on whether to still wait for the DENR officials to ascertain the identity of the contractor involved in the illegally cut timber or to proceed with the construction of the bridge using the confiscated lumber, resolved to formally request the DENR Regional Director to donate the seized lumber so it can be used for the delayed repair and construction of the

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Navotas Bridge. The logs remained stockpiled near the said bridge, apparently abandoned by its owner.[6] Later however, the Sanggunian passed a resolution (Kapasiyahan Blg. 24, t. 1993) requesting the Department of Public Works and Highways (DPWH) through Provincial Engineer Abelardo Abrigo to send their personnel to work on the repair and construction of the Navotas Bridge in the earliest possible time.[7] Azaula was among those members of the Sanggunian who had opposed the proposal to request the DENR Regional Director for the donation of the confiscated lumber, insisting that the contractor (petitioner) be paid for said materials.[8] In his letter dated January 25, 1993 addressed to Engr. Bert Nierva of the Provincial Engineers Office (PEO), Polillo Mayor Rosendo H. Escara requested for assistance in the immediate construction of the Navotas Bridge, citing the approval of Kapasiyahan Blg. 24, t. 1993 by the Sangguniang Bayan. On January 28, 1993, Polillo Municipal Treasurer Naime Ayuma prepared the Inspection Report stating that the materials specified under Purchase Order No. 2019 were delivered by the contractor (V.M. Guadines Construction Supply) and *r+eceived in good order and condition. The Inspection Report was signed by both Ayuma and Mayor Escara.[9] By February 5, 1993, the repair and construction of Navotas Bridge was finished. Upon the request of Azaula, Disbursement Voucher 001-9302-957 was prepared, authorizing the Provincial Treasurer to pay V.M. Guadines Construction Supply the total amount of P83,228.00. On February 18, 1993, petitioner received from the Provincial Treasurers Office the amount of P83,228.00 as payment for the lumber and other materials she delivered for the repair and construction of Navotas Bridge.[10] In a Memorandum dated February 26, 1993, CENR Polillo Station OIC Salvosa reported to the CENRO of Real, Quezon that despite warnings from forest rangers, workers headed by Engr. Nierva of the PEO utilized the confiscated lumber in the construction of Navotas Bridge. Salvosa further informed the CENRO that while Engr. Nierva claimed to be acting on official instructions from the Provincial Governor, they were not furnished any copy of such directive or instruction.[11] Accordingly, Juan dela Cruz, CENRO of Real, Quezon, prepared a memorandum-report and forwarded the same to the DENR Region IV Executive Director with a request for a lawyer to be sent to their office to assist in the preparation and filing of appropriate charges against the custodian who is the Barangay Chairman of Poblacion, Polillo, Quezon. In a letter dated March 10, 1993, CENRO dela Cruz asked Azaula to explain why he should not be charged with estafa and malversation for disposing the confiscated lumber without legal authority or clearance from the DENR Secretary.[12] On May 5, 1993, the Provincial Auditor of Quezon directed Edgardo A. Mendoza, State Auditor II, to conduct an investigation regarding the payment made for confiscated lumber used in the repair and construction of Navotas Bridge. After inspecting the site and inventory of the lumber in the newly constructed bridge together with the Municipal Engineer, Mendoza confirmed that these materials were the same ones confiscated by the CENR personnel, differing only in length of the logs used. Mendoza concluded that there was no justification for the government to pay the purchase price of the lumber allegedly delivered by the contractor. Thus, in his final report submitted to the Provincial Auditor, Mendoza recommended that V.M. Guadines Construction be ordered to refund the amount paid by the provincial government and that administrative and criminal actions be filed against said contractor, as well as the public officials who participated in defrauding the government in the amount of P83,228.00 and for violation of the Anti-Graft and Corrupt Practices Act.[13] On November 15, 1994, a Notice of Disallowance was issued by the Commission on Audit (COA), Lucena City for the amount of P70,924.00. From the original amount of P83,228.00, they deducted the value of the common materials used such as nails and kawad. The difference represents the value of the confiscated lumber actually used in the construction of the bridge.[14] Subsequently, a complaint was filed before the Office of the Ombudsman by Sangguniang Bayan member May VerzoEstuita against petitioner, Ayuma, Azaula and Escara for violation of the Anti-Graft and Corrupt Practices Act (OMB 0-931388). On April 22, 1994, a Resolution[15] was issued by the Ombudsman recommending the filing of appropriate information against all the respondents for violation of Section 3(e) of R.A. No. 3019. The Ombudsman found to be without merit respondents denial that the lumber used in the construction of Navotas Bridge were the same lumber earlier confiscated by the CENR field personnel, noting that Azaula took cognizance of the said materials during the deliberations in the Sangguniang Bayan. Respondents were thus held liable for causing undue injury to the provincial government which was made to pay the amount of P83,228.00 for the confiscated lumber. The Information charging petitioner, Azaula, Escara and Ayuma with violation of Section 3(e) of R.A. No. 3019 (Criminal Case No. 20878) reads: That in or about February of 1993, or immediately prior or subsequent thereto, in Polillo, Quezon, and within the jurisdiction of this Honorable Court, accused Bernie H. Azaula, Rosendo N. Escara, Namie V. Ayuma, being the Barangay Captain, Municipal Mayor and Municipal Treasurer, respectively, of Polillo, Quezon, in the exercise of their administrative and/or official functions, with evident bad faith, conspiring and confederating with accused Virginia M. Guadinez, doing business under the V.M. Guadinez Construction Supply, did then and there wi[l]lfully and unlawfully cause undue injury and/or damage to the province of Quezon, by using in the construction of the Navotas Bridge in Sibulan, Polillo, Quezon, confiscated lumber consisting of 73 pieces with a volume of 4,172 board feet, valued at P11,172.00, more or less, and make it appear in a Disbursement Voucher, Delivery Receipt No. 0063, and Inspection Report dated January 28, 1993, that the lumber used in the construction of the Navotas Bridge were purchased from the V.M. Guadinez Construction Supply

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for P83,228.00, thus enabling accused Virginia Guadinez to receive the said purchase price, to the damage and prejudice of the Province of Quezon, in the aforementioned amount. CONTRARY TO LAW.[16] The aforenamed respondents filed motions for reconsideration and re-investigation with the Ombudsman. In his Order dated January 19, 1995, the Ombudsman recommended that the prosecution of petitioner, Azaula and Escara be continued while the complaint against Ayuma be dropped for insufficiency of evidence. Consequently, Ayuma was ordered excluded from the Information in Criminal Case No. 20878.[17] After trial, the Sandiganbayan rendered its decision convicting petitioner, Escara and Azaula of the crime charged, as follows: WHEREFORE, in view of all the foregoing, this Court finds accused BERNIE H. AZAULA, ROSENDO N. ESCARA AND VIRGINIA M. GUADINES GUILTY beyond reasonable doubt of violation of Section 3 (e) of R.A. No. 3019, and hereby sentences each of them to suffer the indeterminate penalty of imprisonment of six (6) years and one (1) month, as minimum, to ten (10) years, as maximum. They are also ordered to pay, jointly and severally, the costs of this suit. Accused Guadines, having unlawfully received the amount of P70,924.00, representing payment for the confiscated lumber, is hereby ordered to return the said amount to the Province of Quezon. SO ORDERED.[18] In their motion for reconsideration,[19] petitioner and Azaula maintained that the lumber delivered by V.M. Guadines Construction Supply were not the same lumber confiscated by the CENR. They argued that (1) the confiscated lumber does not match the specified size, quality and quantity of the materials needed for the bridge repair/construction project; (2) petitioner purchased the logs from third persons there being no sawmills in the locality, and it is but proper that she be paid for the materials she delivered; and (3) since the municipalities of Polillo and Burdeos have benefited from the repair and construction of the Navotas Bridge, the allegation that the Province of Quezon suffered damage and prejudice is erroneous. As to the Sandiganbayans reliance on the statements she made during the Sangguniang Bayan proceedings on December 14, 1992, petitioner vehemently denied making those statements and contended that to give them probative value would violate the rule on res inter alios acta. Petitioner further asserted that she acted in good faith, as in fact no Sangguniang Bayan member interposed an objection to the payment made in her favor. In its August 20, 2004 Resolution, the Sandiganbayan denied the motions for reconsideration filed by petitioner, Azaula and Escara. The Sandiganbayan noted that petitioner herself admitted in her direct testimony that the lumber she delivered were the ones used in the repair and construction of the Navotas Bridge. Even if the confiscated lumber were undersized, the pieces of lumber could have been bolted together to conform to the required length of 22 feet long. Testimonial evidence also clearly showed that the confiscated lumber were used in the construction of the bridge. As to petitioners contention that no damage or injury was caused to the provincial government, the Sandiganbayan held that after confiscation by the DENR, the subject lumber became the property of the National Government and consequently the Municipality of Polillo had no right to utilize the same without authority from the DENR. And since the lumber had already been confiscated, petitioner had no right to receive payment; hence, the payment made in her favor by the Province of Quezon did not produce any legal effect, pursuant to Article 1240*20+ of the Civil Code. Petitioners denial of the statements she made before the Sanggunian was likewise found to be without merit. The certified copy of the minutes taken during the December 14, 1992 session of the Sanggunian being a public document and an official record of the proceedings, is considered prima facie evidence of the facts stated therein. The presumption of regularity and authenticity of public official records had not been overcome and rebutted by the petitioner, there being no competent evidence to support her denial. Further, there was no violation of the res inter alios acta rule because the declarations and admissions made by the accused (petitioner) are being used against her and not against any other individual or third persons. Finally, petitioners claim of good faith was rejected by the Sandiganbayan stating that she clearly intentionally took advantage of the government when, despite her knowledge that the lumber delivered to the Province of Quezon was confiscated, she still accepted and received the purchase price paid by the provincial government.[21] Hence, this petition alleging that the Sandiganbayan gravely abused its discretion in finding that she acted in conspiracy with Azaula and Escara in defrauding the provincial government under their contract for purchase of construction materials. Petitioner reiterates her argument that the materials she delivered on November 13, 1992 were not the same lumber confiscated by the DENR field personnel on November 20, 1992. The delivered lumber having been left unguarded and unprotected along the national highway, some pieces thereof could have been stolen, which explains why there was a smaller number (73) of confiscated lumber than the actual quantity (99) delivered. In any case, petitioner asserts that the matter was not anymore her concern after she fulfilled her contractual obligation of delivering the specified quantity and quality of lumber. The fact that Ayuma had certified in his Inspection Report that the delivered lumber were received in good order and condition would only mean that there was no CONFISCATED marking found thereon. Ayuma need not have foreknowledge of the DENR confiscation to confirm such marking in the course of her physical inspection of the lumber delivered by petitioner.

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On the allegation of conspiracy, petitioner contends that evidence is wanting to support the prosecution case against her. A finding of guilt must not be based on speculation, such as the lumber she delivered were the ones confiscated later by the DENR. Indeed, the lumber left along the highway exposed it to possibilities which include substitution. Even if the materials used in the repair and construction of Navotas Bridge bore the DENR marking CONFISCATED, it cannot automatically mean that those were the same lumber delivered by petitioner, considering that Ayuma had inspected these pieces of lumber and did not see those markings. Moreover, what happened to the lumber after its delivery was no longer within the control of petitioner. Her only responsibility is to deliver the goods stated in the contract she entered with the local government. After receipt of the lumber in good order and condition by the provincial government through its officials which include Ayuma as the Municipal Treasurer, petitioner had already fulfilled her contractual obligation. It was but natural and proper that petitioner be compensated for the lumber she purchased from third persons. The provincial government suffered no damage or injury since the repair and construction of the Navotas Bridge was completed. And assuming for the sake of argument that her lumber were actually confiscated by the DENR, petitioner contends that what should have been filed against her was a case for violation of the Forestry Code and not the Anti-Graft and Corrupt Practices Act. The petition has no merit. Well-entrenched is the rule that factual findings of the Sandiganbayan are conclusive upon this Court except where: (1) the conclusion is a finding grounded entirely on speculation, surmise and conjectures; (2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on misapprehension of facts and the findings of fact of the Sandiganbayan are premised on the absence of evidence and are contradicted by the evidence on record.[22] Petitioner failed to establish any of the foregoing exceptional circumstances. On the contrary, the evidence on record clearly showed petitioners participation in the anomalous disbursement of government funds in favor of a private contractor for lumber which have been validly seized by CENR forest rangers. The inspection of deliveries and acceptance by the provincial government through Ayuma and Escara who certified in the Inspection Report that lumber delivered by petitioner were found to be in good order and condition relates only to the physical aspect and compliance with specifications as to quality, quantity and size of the materials. Said certification did not state whether the lumber delivered by petitioner have been cut or gathered in accordance with existing forestry laws, rules and regulations. Petitioner could have readily substantiated her defense by producing documents, such as permits and Certificate of Timber/Lumber Origin, allegedly secured by persons from whom she bought the lumber, or presenting as witnesses those workers who supposedly cut the trees and hauled the logs. But none of these were presented at the trial. Hence, the prosecution evidence showing the lumber delivered by petitioner to have been illegally cut and gathered, stands unrebutted. Petitioner was charged with violation of Section 3(e) of R.A. No. 3019, which provides: SEC. 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. (Emphasis supplied.) The essential elements of this crime are: (1) the accused are public officers or private persons charged in conspiracy with them; (2) said public officers commit the prohibited acts during the performance of their official duties or in relation to their public position; (3) they caused undue injury to any party, whether the government or a private party; (4) such injury is caused by giving unwarranted benefits, advantage or preference to such parties; and (5) the public officers have acted with manifest partiality, evident bad faith or gross inexcusable negligence.[23] We explained the foregoing elements in Santos v. People[24]: As may be noted, what contextually is punishable is the act of causing any undue injury to any party, or the giving to any private party of unwarranted benefits, advantage or preference in the discharge of the public officers functions. In Uy vs. Sandiganbayan, and again in Santiago vs. Garchitorena, the Court has made it abundantly clear that the use of the disjunctive word or connotes that either act of (a) causing any undue injury to any party, including the Government; and (b) giving any private party any unwarranted benefits, advantage or preference, qualifies as a violation of Section 3(e) of R.A. No. 3019, as amended. This is not to say, however, that each mode constitutes a distinct offense but that an accused may be proceeded against under either or both modes. xxxx The term undue injury in the context of Section 3 (e) of the Anti-Graft and Corrupt Practices Act punishing the act of causing undue injury to any party, has a meaning akin to that civil law concept of actual damage. The Court said so in Llorente vs. Sandiganbayan, thus:

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In jurisprudence, undue injury is consistently interpreted as actual damage. Undue has been defined as more than necessary, not proper, *or+ illegal; and injury as any wrong or damage done to another, either in his person, rights, reputation or property *; that is, the+ invasion of any legally protected interest of another. Actual damage, in the context of these definitions, is akin to that in civil law. (Emphasis supplied.) By accepting payment for delivery of lumber found to be without supporting documents as required by law, petitioner caused undue injury or damage to the provincial government which had no obligation to pay for confiscated lumber considered as government property. In fact, it is only the DENR Secretary or his representative who can dispose of such confiscated lumber in accordance with forestry laws and regulations, pursuant to Section 68-A of Presidential Decree (P.D.) No. 705 (otherwise known as the Forestry Code of the Philippines), as amended by Executive Order No. 277, which provides: SEC. 68-A. Administrative Authority of the Department Head or His Duly Authorized Representative to Order Confiscation. - In all cases of violations of this Code or other forest laws[,] rules and regulations, the Department Head or his duly authorized representative, may order the confiscation of any forest products illegally cut, gathered, removed, or possessed or abandoned, and all conveyances used either by land, water[,] or air in the commission of the offense and to dispose of the same in accordance with pertinent laws, regulations or policies on the matter. Petitioners contention that she should have been instead prosecuted for illegal cutting, gathering and possession of timber or other forest products under Section 68 of P.D. No. 705 ignores the fact that she never came out to claim ownership of the seized lumber until her appearance before the Sangguniang Bayan wherein she pleaded for consideration in the delayed bridge construction project after the DENR confiscated the lumber she delivered. Except for her bare denial, petitioner failed to refute the correctness of the statements she made as reflected in the official minutes of the Sanggunian session held on December 14, 1992, duly certified by the Municipal Secretary and signed by the Sanggunian Members present, to wit: Ang sumunod na binigyang pahintulot upang magbigay ng kanyang pahayag ay si Gng. Virginia Guadines, ang nagtatapat na Contractor ng tulay ng Barangay Sibulan, o tulay Nabotas ayon sa pagkilala ng DPWH. Ayon sa kanya siya bilang contractor ng nabanggit na proyekto ay nalulungkot sa pagkaabala nito dahilan nga sa nangyaring paghuli ng mga tauhan ng Forestry sa mga kahoy na gagamitin sa tulay. Nalaman din niya na bunga nito ay nagkakaroon ng parang pagpafactionfaction sa Sangguniang Bayan. Nais niyang ipagunita na ito ay isang public knowledge na siya ang nanalong bidder sa ginanap na public bidding na nasabing proyekto at nalalaman ng lahat na siya ay hindi makakapag-provide ng kahoy na gagamitin sa nasabing tulay. Nang mga panahong iyon nga ay kailangang magtungo siya sa Lucban, Quezon para sa pagkoku*m+pleto ng mga kailangang papeles sa nasabing kontrata, kayat siya ay nakisuyo ng taong mangangasiwa sa pagkuha ng kahoy. Ngayon na nangyari ang hindi inaasahan ay hinihiling niya na tayo ay magtulungan na maipatapos ang tulay na ito alang-alang sa kapakanan ng mga taong magdaraan sa nasabing tulay oras na ito ay matapos. Nalalaman niya na siya ay mayroong pagkukulang, ngunit hinihiling niya sa Sangguniang Bayan na bigyan na siya ng konsiderasyon sa pangyayaring ito , total ay pinapayagan na pala ngayon ang pagputol ng kahoy kung gagamitin sa mga government projects. Ang nabanggit na kautusan ay noon pa palang Nobyembre 1992 ipinalabas, kaya nga lamang ay hindi agad niya nalaman. Siya naman ay taos[-]puso ang pagtulong sa pamahalaang bayan ng Polillo at basta at nakabalita siya ng proyektong maaaring ang makikinabang ay ang ating bayan ay kanyang ginagawa kahit minsan nga ay nagdudukot bulsa siya para maiparating ito sa ating bayan.[25] We find no grave abuse of discretion on the part of the Sandiganbayan when it cited the pertinent portions of the minutes of the Sangguniang Bayan session of December 14, 1992, as evidence of petitioners statements concerning the lumber she delivered which were confiscated by the CENR for lack of requisite legal documents. These statements revealed that petitioner was fully aware of the confiscation of her lumber stockpiled along the Polillo-Burdeos provincial road, after she had delivered the same. We have previously underscored the importance of the minutes of formal proceedings when the court is confronted with conflicting claims of parties as to the truth and accuracy of the matters taken up therein. In De los Reyes v. Sandiganbayan, Third Division,[26] this Court held: Thus, the Court accords full recognition to the minutes as the official repository of what actually transpires in every proceeding. It has happened that the minutes may be corrected to reflect the true account of a proceeding, thus giving the Court more reason to accord them great weight for such subsequent corrections, if any, are made precisely to preserve the accuracy of the records. In light of the conflicting claims of the parties in the case at bar, the Court, without resorting to the minutes, will encounter difficulty in resolving the dispute at hand.[27] Apart from petitioners own statements, the Sandiganbayans finding that it was petitioners lumber which were later confiscated by CENR forest rangers and used in the bridge repair and construction, was satisfactorily established by the prosecutions documentary and testimonial evidence. As part of their official duties and following standard procedure, they prepared the Confiscation Report and Seizure Receipt, and testified in court detailing the incident. Two other witnesses corroborated their declaration that the confiscated lumber were actually used in the repair and construction of the Navotas Bridge. Johnny V. Abanica, a Construction Maintenance employee of the PEO, testified that sometime in February 1993, his supervisor, Engr. Felixberto Nierva, informed him that they were going to construct the Navotas Bridge. Upon arriving at the site, he noticed that the lumber they were going to use was marked confiscated. He then reminded Nierva that

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they might get into trouble because of it but Engr. Nierva told him that he already have an agreement with Azaula. Thereafter, he and his companions started demolishing the old bridge. He executed a Sinumpaang Salaysay on September 25, 1993 in connection with the confiscated lumber.[28] Salvosa who led the CENR team who seized the lumber, likewise testified that in February 1993, upon being verbally informed by their field personnel, Forest Rangers Odelon Azul, Arnel F. Simon and Edwin Hernandez, he went to the construction site. He saw for himself that the lumber used in the new bridge were marked with DENR CONFISCATED and hatchet number 1742. Thereafter, he prepared a Memorandum-Report addressed to the CENR of Real, Quezon informing the latter of utilization of confiscated lumber without prior approval of their office and despite repeated warnings from their forest rangers, which report was endorsed to the DENR Regional Director.[29] Dela Cruz, the CENRO of Real, Quezon, also testified that after receiving the Memorandum-Report of Salvosa, he informed the Regional Executive Director, DENR-Region IV about the matter with the recommendation that a legal officer be sent to Polillo to assist them in filing the proper complaint. He also wrote Azaula requiring him to explain but since Azaula did not respond to his letter, the case was referred to their legal division.[30] Lastly, COA Auditor Mendoza, who, along with the Municipal Engineer of Polillo, was tasked to investigate the purchase of the materials used in the repair and construction of the Navotas Bridge after the completion of the project, also confirmed that the lumber used bore the white paint marking DENR and contained hatchet numbers when they inspected the same from under the new wooden bridge. He prepared three reports explaining his findings. He then recommended to the Provincial Auditor that the money paid to the supplier be refunded to the government and that administrative and criminal actions be instituted against the supplier and the concerned public officials. Consequently, the COA disallowed the payment of the amount of P70,924.00, deducting from the original amount of P83,228.00 the amount paid for common materials such as kawad and nails. The lumber used in the new bridge consisted of 3,172 board feet while the volume of the confiscated lumber was around 4,000 board feet.[31] In support of her claim that the lumber she delivered were not those confiscated by the CENR personnel, petitioner presented as witness PO2 Reny I. Marasigan of the PNP Polillo Station. Marasigan testified that he issued a certification dated June 9, 2000 stating that the lumber confiscated near the Navotas Bridge in 1993 were deposited for safekeeping and are still intact at the back of their building. These rotting lumber on the ground were photographed by petitioner.[32] However, Marasigan failed to present proper documents evidencing the official transfer of custody of the seized lumber by the CENRO to their headquarters. In fact, Marasigan signed the Confiscation Report and Seizure Receipt as part of the apprehending team*33+ while it was Azaula who signed as the Receiving Officer.*34+ Moreover, prosecution witnesses Salvosa and his forest rangers, as well as Abanica and Mendoza, all categorically declared that the lumber confiscated near the Navotas Bridge on November 20, 1992 were used in the repair and construction of the bridge. As to petitioners contention that the subsequent confiscation of the lumber she delivered, even if true, was no longer her concern because she had already fulfilled her contractual undertaking to provide the lumber for the bridge repair and construction, the same is untenable. Basic is the rule that provisions of existing laws and regulations are read into and form an integral part of contracts, moreso in the case of government contracts. Verily, all contracts, including Government contracts, are subject to the police power of the State. Being an inherent attribute of sovereignty, such power is deemed incorporated into the laws of the land, which are part of all contracts, thereby qualifying the obligations arising therefrom.[35] Thus, it is an implied condition in the subject contract for the procurement of materials needed in the repair and construction of the Navotas Bridge that petitioner as private contractor would comply with pertinent forestry laws and regulations on the cutting and gathering of the lumber she undertook to supply the provincial government. Petitioners actual knowledge of the absence of supporting legal documents for the lumber she contracted to deliver to the provincial government -- which resulted in its confiscation by the CENR personnel -- belies her claim of good faith in receiving the payment for the said lumber. When the defendants by their acts aimed at the same object, one performing one part, and the other performing another part so as to complete it, with a view to the attainment of the same object, and their acts though apparently independent, were in fact concerted and cooperative, indicating closeness of personal association, concerted action and concurrence of sentiments, the court will be justified in concluding that said defendants were engaged in a conspiracy.[36] In this case, the finding of conspiracy was well-supported by evidence. Indeed, petitioners participation and cooperation was indispensable in defrauding the government of the amount paid for the said confiscated lumber. Without doubt, her acts in making delivery to Azaula instead of the provincial government or PEO, evading apprehension for the illegally cut logs and yet pursuing clearance for the release of the said products by appealing to the local sanggunian, and later accepting payment with the assistance of Azaula and Escara -- all clearly showed her complicity in the anomalous disbursement of provincial government funds allocated for the bridge repair/construction project. Consequently, the Sandiganbayan did not err in finding her guilty of violation of Section 3(e) of R.A. No. 3019 and ordering her to return the amount corresponding to the payment for the confiscated lumber used in the construction of the Navotas Bridge, the same materials delivered by the petitioner under her contract with the provincial government.

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The penalty for violation of Section 3(e) of R.A. No 3019 is imprisonment for not less than six years and one month nor more than fifteen years, and perpetual disqualification from public office.*37+ Under the Indeterminate Sentence Law, if the offense is punished by special law, as in the present case, an indeterminate penalty shall be imposed on the accused, the maximum term of which shall not exceed the maximum fixed by the law, and the minimum not less than the minimum prescribed therein.[38] In view of the attendant circumstances, we hold that the penalty imposed by the Sandiganbayan is in accord with law and jurisprudence. WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated April 30, 2004 and Resolution dated August 20, 2004 of the Sandiganbayan in Criminal Case No. 20878 are AFFIRMED. With costs against petitioner. SO ORDERED.

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DR. RUBI LI vs. SPOUSES REYNALDO and LINA SOLIMAN G.R. No. 165279 June 7, 2011

FACTS: The Solimans daughter, Angelica, underwent a biopsy of the mass located in her lower extremity at St. Lukes. Results showed she had a high-grade cancer oF the bone thus her right leg was amputated by Dr. Tamayo in order to remove the tumor. Chemotherapy was then suggested by Dr. Tamayo and referred Angelica to Dr. Rubi Li, a medical oncologist at SLMC. 11 days after chemo, she died. Cause of death as per PNP Crime Lab autopsy was hypovolemic shock secondary to multiple organ hemorrhages and Disseminated Intravascular Coagulation." However, the certificate of death issued by SLMC eventually stated that the cause of death: osteosarcoma (immediate cause), above knee amputation (antecedent cause), status post chemotherapy (underlying cause) The parents filed a damage suit against Dr. Li, Dr. Marbella, Mr. Ledesma, Dr. Arriete and SLMC and charged them with negligence and disregard of Angelicas safety, health and welfare by their careless administration of the chemo drugs, their failure to observe the essential precautions in detecting early the symptoms of fatal blood platelet decrease and stopping early on the chemotherapy, which bleeding led to the hypovolemic shock that caused her death. It was also specifically averred that the doctor assured the parents that Agelica would recover in view of 95% chance of healing with chemotherapy. Side effects, according to her, were just slight vomiting, hair loss and weakness. Dr. Li denied having been negligent and explained how the chemotherapy will affect not only the cancer cells but also the patients normal body parts, and said that even when a tumor is removed, there are still small lesions undetectable to the naked eye, and that she did not give the parents any assurance that chemotherapy will cure Angelicas cancer. ISSUE: Whether Dr. Li was negligent in not explaining all the possible side effects of the chemo therapy

HELD: NO. The type of lawsuit which has been called medical malpractice or, more appropriately, medical negligence, is that type of claim which a victim has available to him or her to redress a wrong committed by a medical professional which has caused bodily harm. In order to successfully pursue such a claim, a patient must prove that a health care provider, in most cases a physician, either failed to do something which a reasonably prudent health care provider would have done, or that he or she did something that a reasonably prudent provider would not have done; and that that failure or action caused injury to the patient. The physician is not expected to give the patient a short medical education, the disclosure rule only requires of him a reasonable explanation, which means generally informing the patient in nontechnical terms as to what is at stake; the therapy alternatives open to him, the goals expectably to be achieved, and the risks that may ensue from particular treatment or no treatment. As to the issue of demonstrating what risks are considered material necessitating disclosure, it was held that experts are unnecessary to a showing of the materiality of a risk to a patients decision on treatment, or to the reasonably, expectable effect of risk disclosure on the decision. Such unrevealed risk that should have been made known must further materialize, for otherwise the omission, however unpardonable, is without legal consequence. And, as in malpractice actions generally, there must be a causal relationship between the physicians failure to divulge and damage to the patient. There are 4 essential elements a plaintiff must prove in a malpractice action based upon the doctrine of informed consent: "(1) the physician had a duty to disclose material risks; (2) he failed to disclose or inadequately disclosed those risks; (3) as a direct and proximate result of the failure to disclose, the patient consented to treatment she otherwise would not have consented to; and (4) plaintiff was injured by the proposed treatment." The gravamen in an informed consent case requires the plaintiff to "point to significant undisclosed information relating to the treatment which would have altered her decision to undergo it In this case, there was adequate disclosure of material risks inherent in the chemotherapy procedure performed with the consent of Angelicas parents. The parents could not have been unaware in the course of initial treatment and amputation of Angelicas lower extremity that her immune system was already weak on account of the malignant tumor in her knees. When petitioner informed the Dr. Li beforehand of the side effects of chemotherapy which includes lowered counts of white and red blood cells, decrease in blood platelets, possible kidney or heart damage and skin darkening, there is reasonable expectation on the part of the doctor that the parents understood very well that the severity of these side effects will not be the same for all patients undergoing the procedure.

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SPECIAL THIRD DIVISION

HON. WALDO Q. FLORES, in his capacity as Senior Deputy Executive Secretary in the Office of the President, HON. ARTHUR P. AUTEA, in his capacity as Deputy Executive Secretary in the Office of the President, and the PRESIDENTIAL ANTI-GRAFT COMMISSION (PAGC), Petitioners,

- versus G.R. No. 170146

ATTY. ANTONIO F. MONTEMAYOR, Respondent.

Promulgated:

June 8, 2011 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

RESOLUTION

VILLARAMA, JR., J.: This resolves the motion for reconsideration of our Decision dated August 25, 2010 setting aside the October 19, 2005 Decision of the Court of Appeals and reinstating the Decision dated March 23, 2004 of the Office of the President in O.P. Case No. 03-1-581, which found the respondent administratively liable for failure to declare in his 2001 and 2002 Sworn Statement of Assets and Liabilities (SSAL) two expensive cars registered in his name, in violation of Section 7, Republic Act (R.A.) No. 3019 in relation to Section 8 (A) of R.A. No. 6713. The OP adopted the findings and recommendations of the Presidential Anti-Graft Commission (PAGC), including the imposition of the penalty of dismissal from service on respondent, with all accessory penalties. The motion is anchored on the following grounds: 1. Respondent was subjected to two (2) administrative/criminal Investigations equivalently resulting in violation of his constitutional right against double jeopardy. 2. Who to follow between conflicting decisions of two (2) government agencies involving the same facts and issues affecting the rights of the Respondent. 3. 4. Respondents constitutional right to due process was violated. Penalties prescribed by the Honorable Court is too harsh and severe on the alleged offense committed/omitted.[1]

On the first ground, the Court finds it bereft of merit. Respondent asserts that since the PAGC charge involving nondeclaration in his 2001 and 2002 SSAL was already the subject of investigation by the Ombudsman in OMB-C-C-04-0568LSC, along with the criminal complaint for unexplained wealth, the former can no longer be pursued without violating the rule on double jeopardy. Double jeopardy attaches only (1) upon a valid indictment, (2) before a competent court, (3) after arraignment, (4) when a valid plea has been entered, and (5) when the defendant was convicted or acquitted, or the case was dismissed or

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otherwise terminated without the express consent of the accused.[2] We have held that none of these requisites applies where the Ombudsman only conducted a preliminary investigation of the same criminal offense against the respondent public officer.[3] The dismissal of a case during preliminary investigation does not constitute double jeopardy, preliminary investigation not being part of the trial.[4] With respect to the second ground, respondent underscores the dismissal by the Ombudsman of the criminal and administrative complaints against him, including the charge subject of the proceedings before the PAGC and OP. It is argued that the Office of the Ombudsman as a constitutional body, pursuant to its mandate under R.A. No. 6770, has primary jurisdiction over cases cognizable by the Sandiganbayan, as against the PAGC which is not a constitutional body but a mere creation of the OP. Under said law, it is the Ombudsman who has disciplinary authority over all elective and appointive officials of the government, such as herein respondent. The argument is untenable. The same wrongful act committed by the public officer can subject him to civil, administrative and criminal liabilities. We held in Tecson v. Sandiganbayan[5]: [I]t is a basic principle of the law on public officers that a public official or employee is under a three-fold responsibility for violation of duty or for a wrongful act or omission. This simply means that a public officer may be held civilly, criminally, and administratively liable for a wrongful doing. Thus, if such violation or wrongful act results in damages to an individual, the public officer may be held civilly liable to reimburse the injured party. If the law violated attaches a penal sanction, the erring officer may be punished criminally. Finally, such violation may also lead to suspension, removal from office, or other administrative sanctions. This administrative liability is separate and distinct from the penal and civil liabilities. (Italics in the original.) Dismissal of a criminal action does not foreclose institution of an administrative proceeding against the same respondent, nor carry with it the relief from administrative liability.[6] Res judicata did not set in because there is no identity of causes of action. Moreover, the decision of the Ombudsman dismissing the criminal complaint cannot be considered a valid and final judgment. On the criminal complaint, the Ombudsman only had the power to investigate and file the appropriate case before the Sandiganbayan.[7] In the analogous case of Montemayor v. Bundalian,[8] this Court ruled: Lastly, we cannot sustain petitioners stance that the dismissal of similar charges against him before the Ombudsman rendered the administrative case against him before the PCAGC moot and academic. To be sure, the decision of the Ombudsman does not operate as res judicata in the PCAGC case subject of this review. The doctrine of res judicata applies only to judicial or quasi-judicial proceedings, not to the exercise of administrative powers. Petitioner was investigated by the Ombudsman for his possible criminal liability for the acquisition of the Burbank property in violation of the Anti-Graft and Corrupt Practices Act and the Revised Penal Code. For the same alleged misconduct, petitioner, as a presidential appointee, was investigated by the PCAGC by virtue of the administrative power and control of the President over him. As the PCAGCs investigation of petitioner was administrative in nature, the doctrine of res judicata finds no application in the case at bar. (Emphasis supplied.) Respondent argues that it is the Ombudsman who has primary jurisdiction over the administrative complaint filed against him. Notwithstanding the consolidation of the administrative offense (non-declaration in the SSAL) with the criminal complaints for unexplained wealth (Section 8 of R.A. No. 3019) and also for perjury (Article 183, Revised Penal Code, as amended) before the Office of the Ombudsman, respondents objection on jurisdictional grounds cannot be sustained. Section 12 of Article XI of the 1987 Constitution mandated the Ombudsman to act promptly on complaints filed in any form or manner against public officials or employees of the Government, or any subdivision, agency, instrumentality thereof, including government-owned or controlled corporations. Under Section 13, Article XI, the Ombudsman is empowered to conduct investigations on his own or upon complaint by any person when such act appears to be illegal, unjust, improper, or inefficient. He is also given broad powers to take the appropriate disciplinary actions against erring public officials and employees. The investigative authority of the Ombudsman is defined in Section 15 of R.A. No. 6770: SEC. 15. Powers, Functions and Duties. The Office of the Ombudsman shall have the following powers, functions and duties: (1) Investigate and prosecute on its own or on complaint by any person, any act or omission of any public officer or employee, office or agency, when such act or omission appears to be illegal, unjust, improper or inefficient. It has primary jurisdiction over cases cognizable by the Sandiganbayan and, in the exercise of this primary jurisdiction, it may take over, at any stage, from any investigatory agency of Government, the investigation of such cases; x x x x (Emphasis supplied.) Such jurisdiction over public officers and employees, however, is not exclusive.

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This power of investigation granted to the Ombudsman by the 1987 Constitution and The Ombudsman Act is not exclusive but is shared with other similarly authorized government agencies, such as the PCGG and judges of municipal trial courts and municipal circuit trial courts. The power to conduct preliminary investigation on charges against public employees and officials is likewise concurrently shared with the Department of Justice. Despite the passage of the Local Government Code in 1991, the Ombudsman retains concurrent jurisdiction with the Office of the President and the local Sanggunians to investigate complaints against local elective officials.[9] (Emphasis supplied.) Respondent who is a presidential appointee is under the disciplinary authority of the OP. Executive Order No. 12 dated April 16, 2001 created the PAGC which was granted the authority to investigate presidential and also non-presidential employees who may have acted in conspiracy or may have been involved with a presidential appointee or ranking officer mentioned x x x.*10+ On this score, we do not agree with respondent that the PAGC should have deferred to the Ombudsman instead of proceeding with the administrative complaint in view of the pendency of his petition for certiorari with the CA challenging the PAGCs jurisdiction. Jurisdiction is a matter of law. Jurisdiction once acquired is not lost upon the instance of the parties but continues until the case is terminated.[11] It may be recalled that at the time respondent was directed to submit his counter-affidavit under the Ombudsmans Order dated March 19, 2004, the PAGC investigation had long commenced and in fact, the PAGC issued an order directing respondent to file his counter-affidavit/verified answer as early as May 19, 2003. The rule is that initial acquisition of jurisdiction by a court of concurrent jurisdiction divests another of its own jurisdiction.[12] Having already taken cognizance of the complaint against the respondent involving non-declaration in his 2001 and 2002 SSAL, the PAGC thus retained jurisdiction over respondents administrative case notwithstanding the subsequent filing of a supplemental complaint before the Ombudsman charging him with the same violation. As to the third ground raised by respondent, we find no merit in his reiteration of the alleged gross violation of his right to due process. Records bear out that he was given several opportunities to answer the charge against him and present evidence on his defense, which he stubbornly ignored despite repeated warnings that his failure to submit the required answer/counter-affidavit and position paper with supporting evidence shall be construed as waiver on his part of the right to do so. The essence of due process in administrative proceedings is the opportunity to explain ones side or seek a reconsideration of the action or ruling complained of. As long as the parties are given the opportunity to be heard before judgment is rendered, the demands of due process are sufficiently met.[13] What is offensive to due process is the denial of the opportunity to be heard.[14] This Court has repeatedly stressed that parties who choose not to avail themselves of the opportunity to answer charges against them cannot complain of a denial of due process.[15] Having persisted in his refusal to file his pleadings and evidence before the PAGC, respondent cannot validly claim that his right to due process was violated. In his dissenting opinion, my esteemed colleague, Justice Lucas P. Bersamin, concurred with the CAs finding that respondents right to due process was violated by the unilateral investigation conducted by the PAGC which did not furnish the respondent with a copy of the prejudicial PAGC resolution. The dissent also agreed with the CAs observation that there was a rush on the part of the PAGC to find the respondent guilty of the charge. This was supposedly manifested in the issuance by the PAGC of its resolution even without taking into consideration any explanation and refutation of the charges that he might make, and even before the CA could finally resolve his suit to challenge the PAGCs jurisdiction to investigate him. On the other hand, the dissent proposed that the non-submission by respondent of his counter-affidavit or verified answer as directed by the PAGC should not be taken against him. Respondents refusal was not motivated by bad faith, considering his firm belief that PAGC did not have jurisdiction to administratively or disciplinarily investigate him. We do not share this view adopted by the dissent. Records reveal that on August 26, 2003, the CA already rendered a decision in CA-G.R. SP No. 77285 dismissing respondents petition challenging the jurisdiction of the PAGC. Respondents motion for reconsideration was likewise denied by the CA. Upon elevation to this Court via a petition for review on certiorari (G.R. No. 160443), the petition suffered the same fate. Under the First Divisions Resolution dated January 26, 2004, the petition was denied for failure of the petitioner (respondent) to show that the CA committed any reversible error in the assailed decision and resolution. Said resolution became final and executory on April 27, 2004. Thus, at the time respondent submitted his counteraffidavit before the Ombudsman on May 21, 2004, there was already a final resolution of his petition challenging the PAGCs investigative authority. On the other hand, the PAGC submitted to the OP its September 1, 2003 resolution finding respondent guilty as charged and recommending that he be dismissed from the service, after the expiration of the 60-day temporary restraining order issued on June 23, 2003 by the CA in CA-G.R. SP No. 77285. The OP rendered its Decision adopting the PAGCs findings and recommendation on March 23, 2004. As thus shown, a period of ten (10) months had elapsed from the time respondent was directed to file his counter-affidavit or verified answer to the administrative complaint filed against him, up to the rendition of the OPs decision. It cannot therefore be said that the PAGC and OP proceeded with undue haste in determining respondents administrative guilt.

88
Still on respondents repeated claim that he was denied due process, it must be noted that when respondent received a copy of the OP Decision dated March 23, 2004, his petition for review filed in this Court assailing the CAs dismissal of CAG.R. SP No. 77285 was already denied under Resolution dated January 26, 2004. However, despite the denial of his petition, respondent still refused to recognize PAGCs jurisdiction and continued to assail the same before the CA in CAG.R. SP No. 84254, a petition for review under Rule 43 from the OPs March 23, 2004 Decision and May 13, 2004 Resolution.[16] In any event, respondent was served with a copy of the OP Decision, was able to seek reconsideration of the said decision, and appeal the same to the CA. We also find nothing irregular in considering the investigation terminated and submitting the case for resolution based on available evidence upon failure of the respondent to file his counter-affidavit or answer despite giving him ample opportunity to do so. This is allowed by the Rules of Procedure of the PAGC. The PAGC is also not required to furnish the respondent and complainant copy of its resolution. The dissent of Justice Bersamin assails the OPs complete reliance on the PAGCs findings and recommendation which constituted a gross violation of administrative due process as set forth in Ang Tibay v. Court of Industrial Relations*17+. Among others, it is required that *T+he tribunal or any of its judges must act on its or his own independent consideration of the facts and the law of the controversy, and not simply accept the views of a subordinate in arriving at a decision. Justice Bersamin thus concludes that the OP should have itself reviewed and appreciated the evidence presented and independently considered the facts and the law of the controversy. It was also pointed out that the OPs statement that the respondents arguments in his Motion for Reconsideration With Motion For Leave To Admit Explanation/Refutation of Complaint were a mere reiteration of matters previously considered, was a patent untruth. We disagree. The OP decision, after quoting verbatim the findings and recommendation of the PAGC, adopted the same with a brief statement preceding the dispositive portion: After a circumspect study of the case, this Office fully agrees with the recommendation of PAGC and the legal premises as well as the factual findings that hold it together. Respondent failed to disclose in his 2001 and 2002 SSAL high-priced vehicles in breach of the prescription of the relevant provisions of RA No. 3019 in relation to RA No. 6713. He was, to be sure, afforded ample opportunity to explain his failure, but he opted to let the opportunity pass by.[18] The relevant consideration is not the brevity of the above disquisition adopting fully the findings and recommendation of the PAGC as the investigating authority. It is rather the fact that the OP is not a court but an administrative body determining the liability of respondent who was administratively charged, in the exercise of its disciplinary authority over presidential appointees. In Solid Homes, Inc. v. Laserna,[19] this Court ruled that the rights of parties in an administrative proceedings are not violated by the brevity of the decision rendered by the OP incorporating the findings and conclusions of the Housing and Land Use Regulatory Board (HLURB), for as long as the constitutional requirement of due process has been satisfied. Thus: It must be stated that Section 14, Article VIII of the 1987 Constitution need not apply to decisions rendered in administrative proceedings, as in the case a[t] bar. Said section applies only to decisions rendered in judicial proceedings. In fact, Article VIII is titled Judiciary, and all of its provisions have particular concern only with respect to the judicial branch of government. Certainly, it would be error to hold or even imply that decisions of executive departments or administrative agencies are oblige[d] to meet the requirements under Section 14, Article VIII. The rights of parties in administrative proceedings are not violated as long as the constitutional requirement of due process has been satisfied. In the landmark case of Ang Tibay v. CIR, we laid down the cardinal rights of parties in administrative proceedings, as follows: 1) 2) 3) 4) The right to a hearing, which includes the right to present ones case and submit evidence in support thereof. The tribunal must consider the evidence presented. The decision must have something to support itself. The evidence must be substantial.

5) The decision must be rendered on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected. 6) The tribunal or body or any of its judges must act on its or his own independent consideration of the law and facts of the controversy and not simply accept the views of a subordinate in arriving at a decision. 7) The board or body should, in all controversial question, render its decision in such a manner that the parties to the proceeding can know the various issues involved, and the reason for the decision rendered.

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As can be seen above, among these rights are the decision must be rendered on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected; and that the decision be rendered in such a manner that the parties to the proceedings can know the various issues involved, and the reasons for the decisions rendered. Note that there is no requirement in Ang Tibay that the decision must express clearly and distinctly the facts and the law on which it is based. For as long as the administrative decision is grounded on evidence, and expressed in a manner that sufficiently informs the parties of the factual and legal bases of the decision, the due process requirement is satisfied. At bar, the Office of the President apparently considered the Decision of HLURB as correct and sufficient, and said so in its own Decision. The brevity of the assailed Decision was not the product of willing concealment of its factual and legal bases. Such bases, the assailed Decision noted, were already contained in the HLURB decision, and the parties adversely affected need only refer to the HLURB Decision in order to be able to interpose an informed appeal or action for certiorari under Rule 65. xxxx Accordingly, based on close scrutiny of the Decision of the Office of the President, this Court rules that the said Decision of the Office of the President fully complied with both administrative due process and Section 14, Article VIII of the 1987 Philippine Constitution. The Office of the President did not violate petitioners right to due process when it rendered its one-page Decision. In the case at bar, it is safe to conclude that all the parties, including petitioner, were well-informed as to how the Decision of the Office of the President was arrived at, as well as the facts, the laws and the issues involved therein because the Office of the President attached to and made an integral part of its Decision the Decision of the HLURB Board of Commissioners, which it adopted by reference. If it were otherwise, the petitioner would not have been able to lodge an appeal before the Court of Appeals and make a presentation of its arguments before said court without knowing the facts and the issues involved in its case.[20] (Emphasis supplied.) Since respondent repeatedly refused to answer the administrative charge against him despite notice and warning by the PAGC, he submitted his evidence only after an adverse decision was rendered by the OP, attaching the same to his motion for reconsideration. That the OP denied the motion by sustaining the PAGCs findings without any separate discussion of respondents arguments and belatedly submitted evidence only meant that the OP found the same lacking in merit and insufficient to overturn its ruling on respondents administrative liability. On the fourth ground cited by the respondent, we maintain that the penalty of dismissal from the service is justified as no acceptable explanation was given for the non-declaration of the two expensive cars in his 2001 and 2002 SSAL. Pursuant to Section 11, paragraph (b) of R.A. No. 6713, any violation of the law proven in a proper administrative proceeding shall be sufficient cause for removal or dismissal of a public official or employee, even if no criminal prosecution is instituted against him. Respondents deliberate attempt to evade the mandatory disclosure of all assets acquired during the period covered was evident when he first claimed that the vehicles were lumped under the entry Machineries/Equipment or still mortgaged, and later averred that these were already sold by the end of the year covered and the proceeds already spent. Under this scheme, respondent would have acquired as many assets never to be declared at anytime. Such act erodes the function of requiring accuracy of entries in the SSAL which must be a true and detailed statement. It undermines the SSAL as the means to achieve the policy of accountability of all public officers and employees in the government through which the public are able to monitor movement in the fortune of a public official; *as+ a valid check and balance mechanism to verify undisclosed properties and wealth.*21+ IN VIEW OF THE FOREGOING, the motion for reconsideration is DENIED WITH FINALITY. Let entry of judgment be made in due course. SO ORDERED.

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THIRD DIVISION

PHIL-VILLE DEVELOPMENT AND HOUSING CORPORATION, Petitioner,

- versus -

MAXIMO BONIFACIO, CEFERINO R. BONIFACIO, APOLONIO B. TAN, BENITA B. CAINA, CRISPINA B. PASCUAL, ROSALIA B. DE GRACIA, TERESITA S. DORONIA, CHRISTINA GOCO AND ARSENIO C. BONIFACIO, in their capacity as the surviving heirs of the late ELEUTERIA RIVERA VDA. DE BONIFACIO, Respondents. G.R. No. 167391

Promulgated:

June 8, 2011 x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION VILLARAMA, JR., J.: This petition for review on certiorari[1] seeks to set aside the Decision[2] dated January 31, 2005 and Resolution[3] dated March 15, 2005 of the Court of Appeals in CA-G.R. SP No. 62211. The Court of Appeals dismissed the Complaint[4] for Quieting of Title and Damages filed by Phil-Ville Development and Housing Corporation (Phil-Ville) and denied its Motion for Reconsideration.[5] The factual antecedents, as culled from the records, are as follows. Phil-Ville Development and Housing Corporation is the registered owner of three parcels of land designated as Lots 1-G-1, 1-G-2 and 1-G-3 of the subdivision plan Psd-1-13-006209, located in Caloocan City, having a total area of 8,694 square meters and covered by Transfer Certificates of Title (TCT) Nos. 270921,[6] 270922[7] and 270923.[8] Prior to their subdivision, the lots were collectively designated as Lot 1-G of the subdivision plan Psd-2731 registered in the name of Phil-Ville under TCT No. T-148220.[9] Said parcels of land form part of Lot 23-A of the Maysilo Estate originally covered by Original Certificate of Title (OCT) No. 994[10] registered on May 3, 1917 in the name of Isabel Gil de Sola as the judicial administratrix of the estate of Gonzalo Tuason and thirty-one (31) others. Phil-Ville acquired the lots by purchase from N. Dela Merced and Sons, Inc. on July 24, 1984. Earlier, on September 27, 1961, a group composed of Eleuteria Rivera, Bartolome P. Rivera, Josefa R. Aquino, Gregorio R. Aquino, Pelagia R. Angeles, Modesta R. Angeles, Venancio R. Angeles, Felipe R. Angeles Fidela R. Angeles and Rosauro R. Aquino, claiming to be the heirs of Maria de la Concepcion Vidal, a co-owner to the extent of 1-189/1000% of the properties covered by OCT Nos. 982, 983, 984, 985 and 994 of the Hacienda Maysilo, filed a petition with the Court of First Instance (CFI) of Rizal in Land Registration Case No. 4557. They prayed for the substitution of their names on OCT No. 994 in place of Maria de la Concepcion Vidal. Said petition was granted by the CFI in an Order[11] dated May 25, 1962. Afterwards, the alleged heirs of Maria de la Concepcion Vidal filed a petition for the partition of the properties covered by OCT Nos. 982, 983, 984, 985 and 994. The case was docketed as Civil Case No. C-424 in the CFI of Rizal, Branch 12, Caloocan City. On December 29, 1965, the CFI granted the petition and appointed three commissioners to determine the most equitable division of the properties.[12] Said commissioners, however, failed to submit a recommendation.

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Thirty-one (31) years later, on May 22, 1996, Eleuteria Rivera filed a Supplemental Motion[13] in Civil Case No. C424, for the partition and segregation of portions of the properties covered by OCT No. 994. The Regional Trial Court (RTC), Branch 120, of Caloocan City, through Judge Jaime D. Discaya, to whom the case was transferred, granted said motion. In an Order[14] dated September 9, 1996, Judge Discaya directed the segregation of portions of Lots 23, 28-A-1 and 28-A-2 and ordered the Register of Deeds of Caloocan City to issue to Eleuteria Rivera new certificates of title over them. Three days later, the Register of Deeds of Caloocan, Yolanda O. Alfonso, issued to Eleuteria Rivera TCT No. C314537[15] covering a portion of Lot 23 with an area of 14,391.54 square meters. On December 12, 1996, the trial court issued another Order directing the acting Branch Clerk to issue a Certificate of Finality of the Order dated September 9, 1996. Thereafter, one Rosauro R. Aquino filed a petition for certiorari contesting said Order of December 12, 1996 and impugning the partial partition and adjudication to Eleuteria Rivera of Lots 23, 28-A-1 and 28-A-2 of the Maysilo Estate. The case was docketed as CA-G.R. SP No. 43034 at the Court of Appeals. Meanwhile, a writ of possession*16+ was issued in Eleuteria Riveras favor on December 26, 1996 upon the Order*17+ of Judge Discaya issued on the same date. Accordingly, Sheriff Cesar L. Cruz served a Notice to Vacate[18] dated January 2, 1997 upon Phil-Ville, requiring it to vacate Lots 23-A and 28. Bonifacio Shopping Center, Inc., which occupied Lot 28-A2, was also served a copy of the notice. Aggrieved, Bonifacio Shopping Center, Inc. filed a petition for certiorari and prohibition, docketed as CA-G.R. SP No. 43009, before the Court of Appeals. In a Decision[19] dated February 19, 1997, the appellate court set aside and declared as void the Order and Writ of Possession dated December 26, 1996 and the Notice to Vacate dated January 2, 1997. The appellate court explained that a party who has not been impleaded in a case cannot be bound by a writ of possession issued in connection therewith. Subsequently, on February 22, 1997, Eleuteria Rivera Vda. de Bonifacio died at the age of 96.[20] On April 23, 1997, the Secretary of Justice issued Department Order No. 137 creating a special committee to investigate the circumstances surrounding the issuance of OCT No. 994 and its derivative titles. On April 29, 1997, the Court of Appeals rendered a Decision[21] in CA-G.R. SP No. 43034 granting Rosauro R. Aquinos petition and setting aside the RTCs Order of September 9, 1996, which granted Eleuteria Riveras prayer for partition and adjudicated in her favor portions of Lots 23, 28-A-1 and 28-A-2 of the Maysilo Estate. The appellate court likewise set aside the Order and the Writ of Possession dated December 26, 1996. Nonetheless, on June 5, 1997, petitioner filed a complaint for quieting of title and damages against the surviving heirs of Eleuteria Rivera Vda. de Bonifacio (namely Maximo R. Bonifacio, Ceferino R. Bonifacio, Apolonia B. Tan, Benita B. Caina, Crispina B. Pascual, Rosalia B. de Gracia, Teresita S. Doronia, Christina B. Goco, Arsenio C. Bonifacio, Carmen B. Bernardino and Danilo C. Bonifacio) and the Register of Deeds of Caloocan City. The case was docketed as Civil Case No. C-507 in the RTC of Caloocan City, Branch 122. On October 7, 1997, then Senator Marcelo B. Fernan filed P.S. Resolution No. 1032 directing the Senate Committees on Justice and Human Rights and on Urban Planning, Housing and Resettlement to conduct a thorough investigation, in aid of legislation, of the irregularities surrounding the titling of the properties in the Maysilo Estate. In a Decision[22] dated March 24, 2000, the Caloocan RTC ordered the quieting of Phil-Villes titles over Lots 1-G-1, 1-G-2 and 1-G-3, declaring as valid TCT Nos. 270921, 270922 and 270923 in Phil-Villes name. The fallo of said Decision reads: WHEREFORE, and in view of the foregoing, judgment is hereby rendered as follows: 1. Ordering the quieting of title of the plaintiff over Lots 1-G-1, 1-G-2 and 1-G-3, all the subd. plan Psd-1-13-006209, being a portion of Lot 1-G, Psd-2731, LRC Rec. No. 4429, situated in Kalookan City, as owner thereof in fee simple and with full faith and credit; 2. Declaring Transfer Ce[r]tificates of Title Nos. 270921, 270922 and 270923 in the name of Phil-Ville Development and Housing Corporation over the foregoing parcels of land issued by the Registry of Deeds for Kalookan City, as valid and effective; 3. Declaring Transfer Certificate of Title No. C-314537 over Lot 23, being a portion of Maysilo Estate situated in Maysilo, Kalookan City, in the name of Eleuteria Rivera, issued by the Registry of Deeds for Kalookan City, as null and void and with no force and effect; 4. Ordering the private defendants to surrender to the Registry of Deeds for Kalookan City, thru this Court, the Owners Duplicate Certificate of said Transfer Certificate of Title No. C-314537 in the name of Eleuteria Rivera; 5. Directing the public defendant, Register of Deeds of Kalookan City to cancel both Transfer Certificate of Title Nos. C314537 in the name of Eleuteria Rivera on file with the Register of Deeds for Kalookan City, and the Owners Duplicate copy of Transfer Certificate of Title No. C-314537 being required to be surrendered by the private defendants; and

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6. Ordering the private defendants to pay plaintiff, jointly and severally, the sum of P10,000.00, as and by way of attorneys fees, plus the costs of suit. SO ORDERED.[23] In upholding Phil-Villes titles, the trial court adopted the conclusion in Senate Committee Report No. 1031*24+ dated May 25, 1998 that there is only one OCT No. 994, registered on May 3, 1917, and that OCT No. 994, purportedly registered on April 19, 1917 (from which Eleuteria Riveras title originated) does not exist. The trial court also found that it was physically impossible for respondents to be the heirs of Eleuteria Riveras grandmother, Maria de la Concepcion Vidal, one of the registered owners of OCT No. 994, because Maria de la Concepcion was born sometime in 1903, later than Eleuteria Rivera who was born in 1901.*25+ Lastly, the RTC pointed out that contrary to the contentions of Riveras heirs, there is no overlapping of titles inasmuch as Lot 23 lies far from Lot 23-A, where Phil-Villes lands are located. On April 13, 2000, Atty. K.V. Faylona, on behalf of respondents, addressed a letter[26] to the Branch Clerk of Court of the Caloocan City RTC requesting the complete address of Phil-Ville and its counsel. Supposedly, respondents counsels of record, Attys. Nicomedes Tolentino and Jerry D. Baares, had abandoned the defense but still kept the records of the case. Thus, the Notice of Appeal[27] on behalf of respondents was filed by Atty. Faylona while two of the heirs, Danilo Bonifacio and Carmen Bernardino, filed a separate Notice of Appeal[28] through their own counsel. The appeals were consolidated and docketed as CA-G.R. CV No. 66547. On April 17, 2000, respondents withdrew their appeal and instead filed before this Court a Petition for Review on Certiorari,[29] which was docketed as G.R. No. 142640. In a Resolution[30] dated September 25, 2000, the Court referred the petition to the Court of Appeals for adjudication on the merits since the case does not involve pure questions of law. Respondents moved for reconsideration of the Resolution, but the Court denied their motion. Thus, respondents petition was transferred to the Court of Appeals and docketed as CA-G.R. SP No. 62211. Meanwhile, on October 17, 2002, the Court of Appeals rendered a Decision[31] in CA-G.R. CV No. 66547, dismissing the appeal as regards Danilo Bonifacio and Carmen Bernardino. Yet, along with Danilo and Carmen, respondents moved for reconsideration on the contention that they are not bound by the judgment since they had withdrawn their appeal therein. The Court of Appeals denied said motion in a Resolution dated June 7, 2004. Danilo, Carmen and respondents elevated the case to the Supreme Court through a Petition for Review on Certiorari, which was docketed as G.R. No. 163397. Said petition, however, was denied by this Court in a Resolution dated September 8, 2004 for being filed out of time. Subsequently, on January 31, 2005, the Court of Appeals promulgated its assailed Decision in CA-G.R. SP No. 62211, setting aside the RTC judgment and dismissing Phil-Villes complaint. The appellate court held that the RTC had no jurisdiction to hear Phil-Villes complaint as it effectively seeks to annul the Order dated May 25, 1962 of the CFI in LRC No. 4557, which directed the substitution of the late Eleuteria Rivera and her co-heirs in place of Maria de la Concepcion Vidal as registered owners on OCT No. 994. The appellate court likewise affirmed the validity of OCT No. 994 registered on April 19, 1917 citing the Supreme Court Decisions in Metropolitan Waterworks and Sewerage Systems v. Court of Appeals[32] and Heirs of Luis J. Gonzaga v. Court of Appeals[33] as precedents. Phil-Ville sought reconsideration[34] of the decision, but the Court of Appeals denied its motion in the assailed Resolution dated March 15, 2005. Hence, this petition. Petitioner alleges that: I. THE HONORABLE COURT OF APPEALS (FORMER NINTH DIVISION) ACTED WITHOUT JURISDICTION ON THE PETITION FOR REVIEW OF RESPONDENTS MAXIMO BONIFACIO, ET AL. IN CA-G.R SP NO. 62211 BECAUSE OF THE EARLIER DISMISSAL OF THEIR APPEAL IN CA-G.R NO. 66547. II. THE HONORABLE COURT OF APPEALS (FORMER NINTH DIVISION) ACTED WITHOUT JURISDICTION ON THE PETITION FOR REVIEW FILED BY RESPONDENTS MAXIMO BONIFACIO, ET AL. IN CA-G.R. NO. SP 62211 WHICH DOES NOT RAISE PURE QUESTION[S] OF LAW OR ISSUE[S] OF JURISDICTION AND THEREFORE THE PROPER REMEDY AVAILABLE TO THEM IS ORDINARY APPEAL WHICH, AS STATED, HAD ALREADY BEEN DISMISSED IN CA-G.R. CV NO. 66547. III. THE HONORABLE COURT OF APPEALS (FORMER NINTH DIVISION) COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN HOLDING THAT THE TRIAL COURT HAS NO JURISDICTION ON THE COMPLAINT FOR QUIETING OF TITLE FILED BY PETITIONER PHIL-VILLE IN CIVIL CASE NO. C-507, OR IN THE ALTERNATIVE, IN FAILING TO DECLARE RESPONDENTS MAXIMO [BONIFACIO], ET AL. ALREADY IN ESTOPPEL TO RAISE THE SAID ISSUE OF JURISDICTION.[35]

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Condensed, petitioner puts in issue the following: (1) whether the Court of Appeals committed grave abuse of discretion in taking cognizance of respondents petition; and (2) whether the Court of Appeals committed grave abuse of discretion in declaring that the trial court had no jurisdiction over Civil Case No. C-507. Pertinently, however, the genuine issue in this case is whether TCT No. C-314537 in the name of Eleuteria Rivera constitutes a cloud over petitioners titles over portions of Lot 23-A of the Maysilo Estate. Petitioner argues mainly that the Court of Appeals acted without jurisdiction in resolving respondents petition for review since it had dismissed their appeal in CA-G.R. CV No. 66547 for failure to file brief. Petitioner also points out that respondents petition is defective because Maximo Bonifacio alone signed its verification and certification of non-forum shopping without proof that he was authorized to sign for the other respondents. It contends that the ruling in MWSS v. Court of Appeals and Heirs of Gonzaga v. Court of Appeals will not invalidate its titles because it is not a party to any of said cases. As well, petitioner invokes the finding in the joint investigation by the Senate and the Department of Justice (DOJ) that there is only one OCT No. 994, that is, the one registered on May 3, 1917. It maintains that the trial court had jurisdiction to hear its action since it is one for quieting of title and not for annulment of the CFI Order dated May 25, 1962. Conversely, respondents rely on MWSS v. Court of Appeals and Heirs of Gonzaga v. Court of Appeals that upheld the titles emanating from OCT No. 994 registered on April 19, 1917. Therefore, they insist that petitioner has no cause of action to seek the nullification of their title which is a derivative of said OCT. Respondents reiterate that since they had withdrawn their appeal in CA-G.R. CV No. 66547, the Court of Appeals decision therein applies only to Danilo Bonifacio and Carmen Bernardino. Lastly, they believe that petitioners action is one for annulment of judgment, which is foreign to the jurisdiction of the trial court. Petitioner argues in its first two assignments of errors that the Court of Appeals acted with grave abuse of discretion in entertaining respondents petition. However, said contention deserves scant consideration since the Court of Appeals, in CA-G.R. SP No. 62211, properly assumed jurisdiction over respondents case after the same was referred to it by this Court through our Resolution dated September 25, 2000. The issue raised by respondents, as petitioners in G.R. No. 142640, was purely a question of fact that is beyond the power of this Court to resolve. Essentially, respondents asked the Court to determine the ownership of the lots purportedly covered by petitioners titles. Neither do we find merit in petitioners contention that the dismissal of the appeal in CA-G.R. CV No. 66547 is binding on respondents. The appellate court itself recognized the withdrawal of appeal filed by respondents, thus: However, defendants Maximo R. Bonifacio, et al. withdrew their appeal so that the only appellants herein are defendants-appellants Danilo R. Bonifacio, et al.[36] So did the trial court err in taking cognizance of petitioners action for quieting of title contrary to respondents assertion that it is actually one for annulment of the CFI Order dated May 25, 1962? To this query, we rule in the negative. The nature of an action is determined by the material allegations of the complaint and the character of the relief sought by plaintiff, and the law in effect when the action was filed irrespective of whether he is entitled to all or only some of such relief.[37] In its complaint, petitioner alleges: 27. That said TCT No. C-314537 of the late Eleuteria Rivera, although apparently valid and effective, are in truth and in fact invalid and ineffective[;] 27.1. An examination of Decree No. 36455 issued on April 19, 1917 in LRC Case No. 4429 and also of OCT No. 994 which was issued pursuant thereto will show that Lot 23 covered by the said TCT No. C-3145[3]7 of the late Eleuteria Rivera is not one of the 34 parcels of land covered by said Decree No. 36455 and OCT 994; 27.2. That, as hereinbefore stated, the same TCT No. C-314537 of the late Eleuteria Rivera is a direct transfer from OCT No. 994 which was registered on April 19, 1917. The fact, however, is that there is only one OCT No. 994 which was issued pursuant to Decree No. 36455 in LRC Case No. 4429 and said OCT 994 was registered with the Register of Deeds of Rizal on May 3, 1917. The Office of the Register of Deeds of Caloocan City or of Malabon or of Pasig City has no record of any OCT No. 994 that was allegedly registered on April 19, 1917; 27.3. That said TCT No. C-314537 of the late Eleuteria Rivera could not cover Lot 23-A or any portion/s thereof because, as hereinbefore recited, the whole of Lot 23-A had been totally disposed of as early as July 24, 1923 and she and/or any of her alleged predecessors-in-interest is not among those named in the memorandum of encumbrances of OCT No. 994 as vendees or vendors of said Lot 23-A;[38] Ultimately, petitioner submits that a cloud exists over its titles because TCT No. C-314537 in the name of Eleuteria Rivera purports to cover the same parcels of land covered by petitioners TCT Nos. 270921, 270922 and 270923. It points out that what appears to be a valid and effective TCT No. C-314537 is, in truth, invalid because it covers Lot 23 which is not among those described in the OCT No. 994 on file with the Register of Deeds of Rizal and registered on May 3, 1917.

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Petitioner notes that the OCT No. 994 allegedly registered on April 19, 1917 and from which TCT No. C-314537 was derived, is not found in the records of the Register of Deeds. In other words, the action seeks the removal of a cloud from Phil-Villes title and/or the confirmation of its ownership over the disputed properties as the successor-in-interest of N. Dela Merced and Sons, Inc. Quieting of title is a common law remedy for the removal of any cloud upon, doubt, or uncertainty affecting title to real property. Whenever there is a cloud on title to real property or any interest in real property by reason of any instrument, record, claim, encumbrance, or proceeding that is apparently valid or effective, but is, in truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title. In such action, the competent court is tasked to determine the respective rights of the complainant and the other claimants, not only to place things in their proper places, and make the claimant, who has no rights to said immovable, respect and not disturb the one so entitled, but also for the benefit of both, so that whoever has the right will see every cloud of doubt over the property dissipated, and he can thereafter fearlessly introduce any desired improvements, as well as use, and even abuse the property.[39] In order that an action for quieting of title may prosper, two requisites must concur: (1) the plaintiff or complainant has a legal or equitable title or interest in the real property subject of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy.[40] As regards the first requisite, we find that petitioner was able to establish its title over the real properties subject of this action. Petitioner submitted in evidence the Deed of Absolute Sale[41] by which it acquired the subject property from N. Dela Merced and Sons, Inc., as well as copies of OCT No. 994 dated May 3, 1917 and all the derivative titles leading to the issuance of TCT Nos. 270921, 270922 and 270923 in petitioners name as follows: Title No. Registration Date Holder 8004 July 24, 1923 Vedasto Galino 8059 September 3, 1923 -ditto8160 October 24, 1923 -ditto8164 November 6, 1923 Juan Cruz Sanchez 8321 February 26, 1924 -ditto8734 September 11, 1924 Emilio Sanchez 12946 November 21, 1927

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-ditto28315 July 16, 1935 Eastern Syndicate Mining Co., Inc. 39163 November 18, 1939 Royal Lawrence Rutter 43559 July 26, 1941 Mapua Institute of Technology 18767 June 16, 1950 Sofia Nepomuceno 57541 March 13, 1958 Leona N. de Jesus, Pacifico Nepomuceno, Sofia Nepomuceno, Soledad Nepomuceno de Jesus 81679 December 15, 1960 Pacifico Nepomuceno, Sofia N. Jugo, Soledad N. de Jesus (81680) 17745 December 15, 1960 Pacifico Nepomuceno & Co. C-13794 April 21, 1978 Pacifico Nepomuceno & Co. Inc. C-14603 May 16, 1978 N. de La Merced & Sons, Inc. T-148220 April 22, 1987 Phil-Ville Development and Housing Corp.[42] Petitioner likewise presented the Proyecto de particion de la Hacienda de Maysilo[43] to prove that Lot 23-A, of which petitioners Lots 1-G-1, 1-G-2 and 1-G-3 form part, is among the 34 lots covered by OCT No. 994 registered on May 3, 1917. It produced tax receipts accompanied by a Certification[44] dated September 15, 1997 issued by the City Treasurer of Caloocan stating that Phil-Ville has been religiously paying realty taxes on the lots. Its documentary evidence also includes a Plan[45] prepared by the Chief of the Geodetic Surveys Division showing that Lot 23-A of the Maysilo Estate is remotely situated from Lot 23 portion of the Maysilo Estate. Petitioner ties these pieces of evidence to the finding in the DOJ Committee Report[46] dated August 28, 1997 and Senate Committee Report No. 1031 dated May 25, 1998 that, indeed, there is only one OCT No. 994, that is, the one registered on May 3, 1917.

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On the other hand, respondents have not adduced competent evidence to establish their title to the contested property or to dispute petitioners claim over the same. It must be noted that the RTC Order dated September 9, 1996 in Civil Case No. C-424, which resulted in the issuance of TCT No. C-314537 in the name of Eleuteria Rivera had long been set aside by the Court of Appeals in CA-G.R. SP No. 43034. Clearly, respondents claim anchored primarily on TCT No. C314537 lacks legal basis. Rather, they rely simply on the Courts pronouncement in MWSS v. Court of Appeals and Heirs of Gonzaga v. Court of Appeals that OCT No. 994 registered on May 3, 1917 and all titles emanating from it are void. The Supreme Court sustained said decisions in the case of Manotok Realty, Inc. v. CLT Realty Development Corporation[47] promulgated on November 29, 2005. In said case, the Court declared void the titles of the Manotoks and Aranetas which were derived from OCT No. 994 registered on May 3, 1917 consistent with its ruling in MWSS and Gonzaga. The Court disregarded the DOJ and Senate reports on the alleged anomalies surrounding the titling of the Maysilo Estate. However, on motion for reconsideration, the Court issued a Resolution[48] dated December 14, 2007 which created a Special Division of the Court of Appeals to hear the consolidated cases on remand. The Special Division was tasked to hear and receive evidence, conclude the proceedings and submit to the Court a report on its findings as well as recommend conclusions within three months from the finality of said Resolution. However, to guide the proceedings before the Special Division, the Court laid the following definitive conclusions: First, there is only one OCT 994. As it appears on the record, that mother title was received for transcription by the Register of Deeds on 3 May 1917, and that should be the date which should be reckoned as the date of registration of the title. It may also be acknowledged, as appears on the title, that OCT No. 994 resulted from the issuance of the decree of registration on [19] April 1917, although such date cannot be considered as the date of the title or the date when the title took effect. Second. Any title that traces its source to OCT No. 994 dated [19] April 1917 is void, for such mother title is inexistent. The fact that the Dimson and CLT titles made specific reference to an OCT No. 994 dated [19] April 1917 casts doubt on the validity of such titles since they refer to an inexistent OCT. This error alone is, in fact, sufficient to invalidate the Dimson and CLT claims over the subject property if singular reliance is placed by them on the dates appearing on their respective titles. Third. The decisions of this Court in MWSS v. Court of Appeals and Gonzaga v. Court of Appeals cannot apply to the cases at bar, especially in regard to their recognition of an OCT No. 994 dated 19 April 1917, a title which we now acknowledge as inexistent. Neither could the conclusions in MWSS [and] Gonzaga with respect to an OCT No. 994 dated 19 April 1917 bind any other case operating under the factual setting the same as or similar to that at bar.[49] (Emphasis supplied.) Eventually, on March 31, 2009, the Supreme Court issued a Resolution[50] reversing its Decision of November 29, 2005 and declaring certain titles in the names of Araneta and Manotok valid. In the course of discussing the flaws of Jose Dimsons title based on his alleged 25% share in the hereditary rights of Bartolome Rivera, Eleuteria Riveras co-petitioner in LRC No. 4557, the Court noted: However, the records of these cases would somehow negate the rights of Rivera to claim from Vidal. The Verification Report of the Land Registration Commission dated 3 August 1981 showed that Rivera was 65 years old on 17 May 1963 (as gathered from the records of Civil Case Nos. 4429 and 4496). It can thus be deduced that, if Rivera was already 65 years old in 1963, then he must have been born around 1898. On the other hand, Vidal was only nine (9) years in 1912; hence, she could have been born only on [1903]. This alone creates an unexplained anomalous, if not ridiculous, situation wherein Vidal, Riveras alleged grandmother, was seven (7) years younger than her alleged grandson. Serious doubts existed as to whether Rivera was in fact an heir of Vidal, for him to claim a share in the disputed portions of the Maysilo Estate.[51] The same is true in this case. The Death Certificate[52] of Eleuteria Rivera reveals that she was 96 years old when she died on February 22, 1997. That means that she must have been born in 1901. That makes Rivera two years older than her alleged grandmother Maria de la Concepcion Vidal who was born in 1903. Hence, it was physically impossible for Eleuteria Rivera to be an heir of Maria de la Concepcion Vidal. Moreover, the Partition Plan of the Maysilo Estate shows that Lot 23-A was awarded, not to Maria de la Concepcion Vidal, but to Isabel Tuason, Esperanza Tuason, Trinidad Jurado, Juan O Farrell and Angel O Farrell.*53+ What Vidal received as her share were Lot 6 and portions of Lots 10 and 17, all subject to the usufructuary right of her mother Mercedes Delgado. This was not at all disputed by respondents. On the other hand, Vedasto Galino, who was the holder of TCT No. 8004 registered on July 24, 1923 and to whom petitioner traces its titles, was among the successful petitioners in Civil Case No. 391 entitled Rosario Negrao, et al. v. Concepcion Vidal, et al., who sought the issuance of bills of sale in favor of the actual occupants of certain portions of the Maysilo Estate. Be that as it may, the second requisite in an action for quieting of title requires that the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy. Article 476 of the Civil Code provides:

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Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title. An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein. Thus, the cloud on title consists of: (1) any instrument, record, claim, encumbrance or proceeding; (2) which is apparently valid or effective; (3) but is in truth and in fact invalid, ineffective, voidable, or unenforceable; and (4) may be prejudicial to the title sought to be quieted. The fourth element is not present in the case at bar. While it is true that TCT No. C-314537 in the name of Eleuteria Rivera is an instrument that appeared to be valid but was subsequently shown to be invalid, it does not cover the same parcels of land that are described in petitioners titles. Foremost, Riveras title embraces a land measuring 14,391.54 square meters while petitioners lands has an aggregate area of only 8,694 square meters. On the one hand, it may be argued that petitioners land could be subsumed within Riveras 14,391.54-square meter property. Yet, a comparison of the technical descriptions of the parties titles negates an overlapping of their boundaries. The technical description of respondents TCT No. C-314537 reads: A parcel of land (Lot 23, being a portion of Maysilo Estate) situated in Maysilo, Caloocan, Metro Manila, Island of Luzon. Bounded on the NW., along line 1-2 by Blk. 2; on the SW., along line 2-3 by Jacinto Street, along lines 3-4-5 by Blk. 4; along line 5-6 by Bustan St., and San Diego St., on the S., along lines 6-7-8 by Blk. 13, all of Caloocan Cadastre; on the NE., along line 8-9 by Caloocan Cadastre; and on the N., along line 9-1 by Epifanio de los Santos Avenue. Beginning at a point marked 1 on plan, being S. 28 deg. 30E., 530.50 m. from MBM No. 1, Caloocan Cadastre; thence S. 07 deg. 20W., 34.00 m. to point 2; S. 17 deg. 10E., 12.00 m. to point 3; (0/illegible) S. 15 deg. 31E., 31.00 m. to point 4; S. 27 deg. 23E., 22.50 m. to point 5; S. 38 deg. 41E., 43.20 m. to point 6; S. 71 deg. 35E., 10.60 m. to point 7; N. 84 deg. 30E., 38.80 m. to point 8; N. 11 deg. 40W., 131.20 m. to point 9; N. 89 deg. 10W., 55.00 m. to the point of beginning; containing an area of FOURTEEN THOUSAND THREE HUNDRED NINETY ONE SQUARE METERS AND FIFTY FOUR SQUARE DECIMETERS (14,391.54). more or less. All points referred to are indicated on the plan and are marked on the ground by Old Ps. cyl. conc. mons. 15 x 60 cm.; bearings true;[54] (Emphasis supplied). On the other hand, the technical description of petitioners lands before they were subdivided under TCT No. T148220 is as follows: A parcel of land (Lot No. 1-G of the subdivision plan Psd-2731, being a portion of Lot 23-A, Maysilo Estate, GLRO Rec. No. 4429), situated in the Municipality of Caloocan, Province of Rizal. Bounded on the North., by Calle A. Samson; on the East., by properties of Gregoria de Jesus, Arcadio de Jesus and Felix de Jesus; on the South., by properties of Lucas Bustamante and Patricio Galauran; and on the West., by property of Patricio Galauran; and Lot No. 1-E of the subdivision plan. Beginning at a point marked 1 on plan, being N.69 deg. 27E., 1600.19 m. from BLLM No. 1, Mp. of Caloocan, more or less, thence S. 21 deg. 25E., 44.78 m. to point 2; thence S. 14 deg. 57E., 37.24 m. to point 3; thence S. 81 deg. 11W., 20.28 m. to point 4; thence S. 86 deg. 06W., 15.45 m. to point 5; thence N. 67 deg. 20W., 15.91 m. to point 6; thence N. 35 deg. 19W., 37.56 m. to point 7; thence N. 27 deg. 11W., 12.17 m. to point 8; thence N. 19 deg. 26W., 23.32 m. to point 9; thence N. 13 deg. 08W., 28.25 m. to point 10; thence S. 78 deg. 45W., 13.00 m. to point 11; thence N. 0 deg. 56E., 48.92 m. to point 12; thence N. 89 deg. 13E., 53.13 m. to point 13; thence S. 21 deg. 24E., 67.00 m. to the point of beginning; containing an area of EIGHT THOUSAND SIX HUNDRED NINETY FOUR (8,694) SQUARE METERS, more or less. All points referred to are indicated on the plan and are marked on the ground points 1,2,3 and 13 by Old PLS conc. mons. point 4,6,7,8 and 9 by Old PLS stone mons.; points 5 to 10 and old stakes points 11 and 12 by PLS conc. mons. bearings true, declination 1 deg. 08E., date of the original survey, Sept. 8-27, Oct. 4-21 and Nov. 17-18, 1911 and that of the subdivision survey, Oct. 14 and 15, 1927.[55] (Emphasis supplied). Such disparity in location is more vividly illustrated in the Plan prepared by Engr. Privadi J.G. Dalire, Chief of the Geodetic Surveys Division, showing the relative positions of Lots 23 and 23-A. As it appears on the Plan, the land covered by respondents TCT No. C-314537 lies far west of petitioners lands under TCT Nos. 270921, 270922 and 270923. Strictly speaking, therefore, the existence of TCT No. C-314537 is not prejudicial to petitioners titles insofar as it pertains to a different land. Significantly, an action to quiet title is characterized as a proceeding quasi in rem.[56] In an action quasi in rem, an individual is named a defendant and the purpose of the proceeding is to subject his interests to the obligation or loan burdening the property. Actions quasi in rem deal with the status, ownership or liability of a particular property but which are intended to operate on these questions only as between the particular parties to the proceedings and not to ascertain or cut off the rights or interests of all possible claimants. The judgment therein is binding only upon the parties who joined in the action.[57]

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Yet, petitioner was well aware that the lots encompassed by its titles are not the same as that covered by respondents title. In its complaint, Phil-Ville alleges: 27.4. That Lot 23, being a portion of Maysilo Estate, as described in said TCT No. C-314537 of the late Eleuteria Rivera when plotted using its tie line to MBM No. 1, Caloocan Cadastre is outside Lot 23-A of the Maysilo Estate. This must be so because Lot 23 is not [a] portion of Lot 23-A, Maysilo Estate.*58+ This brings petitioners action within the purview of Rule 63 of the Rules of Court on Declaratory Relief. Section 1 of Rule 63 provides: SECTION 1. Who may file petition.-Any person interested under a deed, will, contract or other written instrument, whose rights are affected by a statute, executive order or regulation, ordinance or any other governmental regulation may, before breach or violation thereof, bring an action in the appropriate Regional Trial Court to determine any question of construction or validity arising, and for a declaration of his rights or duties, thereunder. An action for the reformation of an instrument, to quiet title to real property or remove clouds therefrom, or to consolidate ownership under Article 1607 of the Civil Code, may be brought under this Rule. (Emphasis supplied). An action for declaratory relief presupposes that there has been no actual breach of the instruments involved or of the rights arising thereunder. Since the purpose of an action for declaratory relief is to secure an authoritative statement of the rights and obligations of the parties under a statute, deed, or contract for their guidance in the enforcement thereof, or compliance therewith, and not to settle issues arising from an alleged breach thereof, it may be entertained before the breach or violation of the statute, deed or contract to which it refers. A petition for declaratory relief gives a practical remedy for ending controversies that have not reached the state where another relief is immediately available; and supplies the need for a form of action that will set controversies at rest before they lead to a repudiation of obligations, an invasion of rights, and a commission of wrongs. In the present case, petitioner filed a complaint for quieting of title after it was served a notice to vacate but before it could be dispossessed of the subject properties. Notably, the Court of Appeals, in CA-G.R. SP No. 43034, had earlier set aside the Order which granted partial partition in favor of Eleuteria Rivera and the Writ of Possession issued pursuant thereto. And although petitioners complaint is captioned as Quieting of Title and Damages, all that petitioner prayed for, is for the court to uphold the validity of its titles as against that of respondents. This is consistent with the nature of the relief in an action for declaratory relief where the judgment in the case can be carried into effect without requiring the parties to pay damages or to perform any act.[59] Thus, while petitioner was not able to demonstrate that respondents TCT No. C-314537 in the name of Eleuteria Rivera constitutes a cloud over its title, it has nevertheless successfully established its ownership over the subject properties and the validity of its titles which entitles it to declaratory relief. WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated January 31, 2005 and Resolution dated March 15, 2005 of the Court of Appeals in CA-G.R. SP No. 62211 are SET ASIDE. The Decision dated March 24, 2000 of the Caloocan RTC in Civil Case No. C-507 is hereby REINSTATED and UPHELD. No pronouncement as to costs. SO ORDERED.

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THIRD DIVISION

THE PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

- versus -

MADS SALUDIN MANTAWIL, MAGID MAMANTA and ABDULLAH TOMONDOG, Accused-Appellants. G.R. No. 188319

Promulgated:

June 8, 2011 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.:

Before us is an appeal from the January 30, 2009 Decision[1] of the Court of Appeals (CA) in CA-G.R. CR.-H.C. No. 02627. The CA had affirmed the September 12, 2006 Decision[2] of the Regional Trial Court (RTC) of Manila, Branch 41, convicting appellants for violation of Section 15,[3] Article III of Republic Act (R.A.) No. 6425, otherwise known as The Dangerous Drugs Act of 1972, as amended.[4] The information against appellants reads: That on or about June 2, 1999, in the City of Manila, Philippines and within the jurisdiction of this Honorable Court, accused MADS SALUDIN MANTAWIL a.k.a. MADS ALI, MAGID MAMANTA and ABDULLAH TOMONDOG, conspiring, confederating and mutually helping one another, did then and there, wilfully, unlawfully and feloniously sell, deliver and give away to a poseur-buyer One Thousand Three Hundred Sixteen point five (1,316.5) grams of Methamphetamine Hydrochloride, commonly known as SHABU, a regulated drug, without authority of law or the corresponding license therefor. CONTRARY TO LAW.[5] At the trial, the prosecution presented as witnesses P/C Insp. Arthur V. Bisnar (Bisnar), SPO3 Rolando Sayson (Sayson), SPO1 Rodolfo Gonzales (Gonzales), and P/Insp. Ma. Luisa David. Their testimonies presented the following factual scenario: On June 2, 1999 at around 10:00 in the morning, the Presidential Anti-Organized Crime Task Force (PAOCTF) buy-bust operations team composed of P/Supt. John Lopez (Lopez), Bisnar, Sayson, Gonzales and other PAOCTF operatives, conducted a briefing to discuss a buy-bust operation with a confidential informant. The confidential informant revealed that he was able to confirm a drug deal with a drug dealer named Mads Ali for 1 kilos of shabu worth P900,000.00. The deal would be consummated at the Quirino Grandstand, Rizal Park, Manila near Museong Pambata between two to three oclock that afternoon.[6] Together with the confidential informant, the buy-bust team boarded four unmarked vehicles bearing confidential security plates of the PAOCTF and proceeded to the designated place, arriving thereat around 1:45 p.m. Bisnar was to act as the poseur-buyer, Sayson the arresting officer, and Gonzales the back-up poseur-buyer.[7]

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Around 2:00 p.m., a maroon Toyota FX Mega Taxi marked Margy with plate no. TVC 479 arrived at the Quirino Grandstand and parked two meters away from Bisnars car. Appellant Mads Saludin Mantawil (Mantawil) alighted from the FX taxi, approached Bisnars car, and greeted the confidential informant, who greeted Mantawil back and introduced Bisnar as the buyer of the shabu. Bisnar showed Mantawil the boodle money placed inside a Giordano paper bag and the latter went back to the FX taxi and left the place.[8] After thirty (30) minutes, Mantawil returned on board the same FX taxi. The FX taxi parked about five meters away from Bisnars car. Mantawil alighted and approached Bisnars car. He demanded to see the money. When Bisnar insisted on seeing the shabu first, Mantawil waved to his two companions who were inside the FX taxi. Magid Mamanta (Mamanta) and Abdullah Tomondog (Tomondog) alighted from the FX taxi and approached Bisnar.[9] Mamanta then handed a light blue Bench plastic bag to Bisnar through the car window. Inside the bag was a self-sealing transparent plastic bag containing white crystalline substance, which Bisnar suspected to be shabu. After seeing the contents of the plastic bag, Bisnar handed the boodle money to Mantawil and immediately made the pre-arranged signal for the arrest by switching on the hazard lights of his car. The PAOCTF team then rushed to Bisnars car and arrested the appellants.[10] After apprising appellants of their constitutional rights, the buy-bust team brought appellants separately to Camp Crame. Mamanta was transported by Gonzales while Sayson transported Tomondog. Bisnar, for his part, transported the confiscated shabu and Mantawil.[11] At Camp Crame, Sayson and Gonzales witnessed Bisnar mark the seized shabu.[12] Bisnar also filled up a corresponding Receipt for Property Seized dated June 2, 1999,[13] which appellants refused to sign. Bisnar and his team likewise executed a Joint Affidavit of Arrest[14] and prepared the Booking Sheet and Arrest Report of the appellants.[15] Thereafter, P/Supt. Lopez issued a request for laboratory examination of the confiscated shabu.[16] Gonzales delivered the request to the Philippine National Police (PNP) Crime Laboratory at 6:55 p.m.[17] with the confiscated shabu indicated to be contained in a self-sealing plastic bag marked AVB 06/02/99 and placed inside a light blue Bench plastic bag. A handwritten description was also placed on the laboratory report indicating that the shabu with the container weighed 1,325 grams.[18] At the PNP Crime Laboratory, P/Insp. Ma. Luisa David, Forensic Chemist I, conducted a quantitative and qualitative examination of the specimen. The Initial Laboratory Report, as well as the Final Report, showed that the white crystalline substance, weighing 1,316.5 grams, tested positive for methamphetamine hydrochloride or shabu.[19] On the other hand, the appellants, testifying on their own behalf, denied the charges and claimed that they were framedup by the policemen. They also presented two other witnesses, Teddy Ziganay (Ziganay) and Solaiman Casan (Casan), to corroborate their defense. The testimony of the other defense witness, Atty. Rowaisa M. Pandapatan, was dispensed with as the parties stipulated that Tomondog was indeed an FX taxi driver. Taken together, the defense witnesses testimonies present the following version of the incident: On June 2, 1999, while selling cigarettes at Globo de Oro, Quiapo, Manila, Mantawil was approached by two unidentified women who asked him to look for an FX taxi and accompany them to Luneta. As they offered to pay him P150.00 for the service, Mantawil agreed. The women, however, did not see the person they were supposed to meet in Luneta so they all returned to Quiapo. Mantawil then went back to selling cigarettes.[20] Around 1:30 in the afternoon, one of the women whom Mantawil accompanied earlier came back and asked him to rent an FX taxi and go with her to Quirino Grandstand. Mantawil approached Tomondog, an FX taxi driver who was at the terminal for public utility vehicles in Quiapo, and asked the latter to take him and his companion to Quirino Grandstand. Tomondog agreed for a fee of P250.00.[21] As they were about to leave the terminal, Mamanta, a sidewalk vendor, came and asked Tomondog to take him to San Andres Bukid. Tomondog acceded but he proceeded first to Quirino Grandstand.[22] At the Quirino Grandstand, Mantawil and the woman alighted from the FX taxi while Mamanta remained inside. Tomondog also alighted but only to pour water into the taxis radiator. Mantawil testified that he then saw the woman talk to two unidentified persons in a Honda Civic car. After that, appellants were surprised when several unidentified men in civilian clothes suddenly poked their guns at appellants and handcuffed them. They were brought to Camp Crame separately and tortured. They were detained there for a week before they were brought to the Department of Justice for inquest proceedings.[23] Ziganay, a cigarette vendor, corroborated Tomondog and Mamantas story. Ziganay testified that while he was resting near the Quirino Grandstand that afternoon on June 2, 1999, he saw an FX taxi containing three persons park near the Grandstand. The driver, Tomondog, alighted from the vehicle and poured water into the radiator. Then, armed men in civilian clothes approached and poked their guns at Tomondog and Mamanta. Tomondog and Mamanta were arrested by said men. At that time, Mamanta was the only remaining passenger on board the FX taxi.[24] The RTC found the appellants guilty beyond reasonable doubt of violating Section 15, Article III of R.A. No. 6425, as amended. The dispositive portion of the RTC decision reads:

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WHEREFORE, premises considered, judgment is hereby rendered finding the three accused, MADS SALUDIN MANTAWIL @ Mads Ali, MAGID MAMANTA and ABDULLAH TOMONDOG guilty beyond reasonable doubt of the crime of Violation of Section 15, Article III, Republic Act No. 6425 and sentence them to suffer the penalty of Reclusion Perpetua. SO ORDERED.[25] The RTC held that the version of the prosecution was a standard entrapment story. Thus, it gave credence to the narration of the incident by the prosecution witnesses, noting that they were officers of the law who enjoyed the presumption of regularity in the performance of their duties, absent any evidence to the contrary. As regards appellants defense, the trial court held that frame-up, like alibi, is generally considered with disfavor, for it is easy to concoct but difficult to disprove. The trial court noted that in admitting that they went to Quirino Grandstand twice, Mantawil corroborated the testimony of the prosecutions witnesses that appellants first arrived at the place to look at the money then left and returned with the shabu. The trial court noted that no credible reason was given by the appellants why they were at the Quirino Grandstand, Luneta at the time and date of the drug deal. No motive was also given by the appellants why the police officers would fabricate a grave offense against them if it was not true.[26] Aggrieved, appellants filed a notice of appeal to the CA.[27] In their brief, appellants faulted the RTC for giving weight and credence to the evidence of the prosecution and totally disregarding their defense. Appellants contended that the prosecution failed to prove the indispensable element of the corpus delicti since the arresting officers failed to mark the shabu immediately after the seizure, thus creating reasonable doubt as to whether the shabu presented in court were seized from them.[28] The CA, however, affirmed the decision of the RTC. The dispositive portion of the CA decision reads: WHEREFORE, premises considered, the assailed decision of the RTC of Manila City, Branch 41 dated September 12, 2006 is hereby AFFIRMED IN TOTO. SO ORDERED.[29] In affirming appellants conviction, the appellate court held that the prosecution was able to establish all the elements of the crime of illegal sale of shabu. Bisnar positively identified the seller as Mantawil who sold the drugs to him for P900,000.00. Appellants contention that the prosecution failed to establish an essential link in the chain of custody of the seized item was untenable. The CA noted that appellants were with the members of the PAOCTF when they were brought to Camp Crame and Bisnar had custody of the Bench plastic bag containing the shabu. Said shabu was immediately marked before it was given to the forensic chemist for chemical analysis. Absent any showing to the contrary, the members of the PAOCTF are presumed to have performed their duties regularly and faithfully. This is especially so since nothing in the records shows that the contents of the plastic bag were changed or the prosecutions witnesses perjured themselves.[30] Thus, the case is now before us for final review. Appellants raise the following assignment of errors: I. THE TRIAL COURT GRAVELY ERRED IN CONVICTING THE ACCUSED-APPELLANTS OF THE CRIME CHARGED BEYOND REASONABLE DOUBT. II. THE LOWER COURT GRAVELY ERRED IN GIVING WEIGHT AND FULL CREDENCE TO THE EVIDENCE OF THE PROSECUTION AND TOTALLY DISREGARDING THE DEFENSE OF THE ACCUSSED-APPELLANT.[31] Appellants posit that the prosecution utterly failed to prove the indispensable element of the corpus delicti of the crime. They point that the arresting officers did not immediately mark the seized item after its seizure and that the markings were admittedly made only in Camp Crame. Such failure, according to appellants, is sufficient to create reasonable doubt as the first link in the custodial chain was not established. Moreover, the arresting officers failed to comply with the procedure in the custody of the seized item suspected to be shabu. They failed to photograph and make a physical inventory of the seized item immediately in the presence of the appellants pursuant to Dangerous Drugs Board Regulation No. 3, Series of 1979 amending Board Regulation No. 7, Series of 1974.[32] The Office of the Solicitor General, on the other hand, argues that the chain of custody of the shabu was not broken. Appellants were with the arresting officers when they were brought to Camp Crame and Bisnar was holding the bag containing the shabu. Upon arrival in Camp Crame, Bisnar immediately marked the seized items before it was sent to the forensic chemist for chemical analysis. There was also no showing that the contents of the bag taken from appellants were substituted with shabu.[33]

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We affirm the verdict with respect to appellants Mantawil and Mamanta, but find reasonable doubt as to the guilt of Tomondog. In People v. Cervantes,[34] we explained: In every prosecution for illegal sale of dangerous drug, what is crucial is the identity of the buyer and seller, the object and its consideration, the delivery of the thing sold, and the payment for it. Implicit in these cases is first and foremost the identity and existence, coupled with the presentation to the court of the traded prohibited substance, this object evidence being an integral part of the corpus delicti of the crime of possession or selling of regulated/prohibited drug. There can be no such crime when nagging doubts persist on whether the specimen submitted for examination and presented in court was what was recovered from, or sold by, the accused. Essential, therefore, in appropriate cases is that the identity of the prohibited drug be established with moral certainty. x x x[35] The chain of custody requirement, set forth in Dangerous Drugs Board Regulation No. 3, Series of 1979,[36] performs this function in that it ensures that unnecessary doubts concerning the identity of the evidence are removed.[37] The said regulation reads: Subject: Amendment of Board Regulation No. 7, series of 1974, prescribing the procedure in the custody of seized prohibited and regulated drugs, instruments, apparatuses, and articles specially designed for the use thereof. xxxx SECTION 1. All prohibited and regulated drugs, instruments, apparatuses and articles specially designed for the use thereof when unlawfully used or found in the possession of any person not authorized to have control and disposition of the same, or when found secreted or abandoned, shall be seized or confiscated by any national, provincial or local law enforcement agency. Any apprehending team having initial custody and control of said drugs and[/or] paraphernalia, should immediately after seizure or confiscation, have the same physically inventoried and photographed in the presence of the accused, if there be any, and/or his representative, who shall be required to sign the copies of the inventory and be given a copy thereof. Thereafter the seized drugs and paraphernalia shall be immediately brought to a properly equipped government laboratory for a qualitative and quantitative examination. The apprehending team shall: (a) within forty-eight (48) hours from the seizure inform the Dangerous Drugs Board by telegram of said seizure, the nature and quantity thereof, and who has present custody of the same, and (b) submit to the Board a copy of the mission investigation report within fifteen (15) days from completion of the investigation.[38] In Malillin v. People,[39] we laid down the chain of custody requirements that must be met in proving that the seized drugs are the same ones presented in court: (1) testimony about every link in the chain, from the moment the item was picked up to the time it is offered into evidence; and (2) witnesses should describe the precautions taken to ensure that there had been no change in the condition of the item and no opportunity for someone not in the chain to have possession of the item. After a meticulous scrutiny of the records, we are satisfied that there is no broken chain in the custody of the confiscated shabu, contrary to appellants claim. After the arrest, the confiscated shabu remained with Bisnar inside his car as the team and the appellants travelled separately back to Camp Crame.[40] Aside from Bisnar, only two other persons were with him throughout the said travel, namely Mantawil and another PAOCTF operative.[41] Immediately upon their arrival at Camp Crame, Sayson and Gonzales saw Bisnar place his initials and the date of the arrest on the light blue Bench plastic bag and on the selfsealing transparent plastic bag.[42] A physical inventory of the confiscated items was also made by Bisnar at Camp Crame, as evidenced by the Receipt of Property Seized dated June 2, 1999.[43] Notably, appellants did not question the accuracy and validity of the said document. After conducting a physical inventory, Bisnar, accompanied by Gonzales, delivered the seized shabu to the PNP Crime Laboratory.[44] At the PNP Crime Laboratory, P/Insp. Ma. Luisa David received the seized shabu together with the laboratory request form. She testified that: Atty. Villacorta: Q A Q A When you examined, who received this specimen? I personally received the specimen, [S]ir. Why? Is it a procedure that you should be the one to receive that (sic)? I am the duty chemist (sic), [S+ir and it *was+ 7 oclock in the evening, *S+ir.

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Q A Q A Q You have no clerk at that time? I am the only one present at (sic) the laboratory, [S]ir. So, when this stuff was examined, you were the [only] one present? Yes, [S]ir. But prior to my examination, the requesting parties were present, [S]ir. Did you put that in your report?

A No, [S]ir. But they counter[-]sign[ed] on the page which I took. They [were] present when I weighed the specimen, [S]ir. xxxx Atty. Mancao: By the way, in your examination of this specimen, did you not ask for an assistance of another chemist? A Q A Q A Q A No, [S]ir. So that you can have a better result? No, [S]ir. Because we were already trained to perform such examination on our own, [S]ir. You want to tell this Honorable Court that you [were] the only one who conducted this examination and no other? Yes, [S]ir. That because of this examination, you believe that such (sic) contain metha[m]phetamine hydrochloride? Yes, [S]ir.[45]

Appellants anchor their argument on the PAOCTF teams failure to mark the confiscated shabu while they were still at the crime scene. This is, however, untenable. The buy-bust teams failure to immediately mark the seized drugs will not automatically impair the integrity of the chain of custody as long as the integrity and evidentiary value of the seized items have been preserved.[46] Moreover, we have explained in People v. Salak, While it appears that the buy-bust team failed to comply strictly with the procedure outlined above, the same does not overturn the presumption of regularity in the performance of their duty. A violation of the regulation is a matter strictly between the Dangerous Drugs Board and the arresting officers and is totally irrelevant to the prosecution of the criminal case since the commission of the crime of illegal sale of a prohibited drug is considered consummated once the sale or transaction is established and the prosecution thereof is not undermined by the arresting officers inability to conform to the regulations of the Dangerous Drugs Board. Further, the integrity of the evidence is presumed to be preserved, unless there is a showing of bad faith, ill will, or proof that the evidence has been tampered with.[47] It is worthy to note that appellants never alleged that the drugs presented during the trial have been tampered with. Neither did appellants challenge the admissibility of the seized items when these were formally offered as evidence. In the course of the trial, the seized shabu were duly marked, made the subject of examination and cross-examination, and eventually offered as evidence, yet at no instance did the appellants manifest or even hint that there were lapses in the safekeeping of the seized items as to affect their admissibility, integrity and evidentiary value. It was only during their appeal that appellants raised the issue of non-compliance with the said regulation. Settled is the rule that objections to the admissibility of evidence cannot be raised for the first time on appeal; when a party desires the court to reject the evidence offered, he must so state in the form of objection. Without such objection, he cannot raise the question for the first time on appeal.[48] However, as to Tomondog, the Court entertains nagging doubts as to his guilt considering that his participation to the transaction was not established. According to the three PAOCTF officers, Tomondog alighted from the FX taxi and went to Bisnars car after Mantawil motioned to him. The prosecution, however, offered no further evidence as to his participation in the illegal transaction. It was not shown that he acted as guard nor that he had possession of the shabu at anytime. Neither was it shown that Tomondog knew that the other appellants had shabu in their possession at that time. In fact, it was even made clear from the testimonies of the witnesses, and even in the stipulation of the parties, that Tomondog was a simple FX taxi driver. Hence, the fact that he alighted and approached Mantawil after the latter motioned to him could very well have been due to a mistaken belief that Mantawil motioned to him so he could get his P250 payment. Whatever the reason, his mere presence in the vicinity when the illegal transaction took place should not be taken as participation in a conspiracy to commit the crime. To be guilty as a conspirator, the accused needs to have

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done an overt act in pursuit of the crime indubitably showing a community of purpose and design.[49] Here, the prosecution presented no proof tending to show that Tomondog knew of the criminal intentions of the other appellants, much less that he adopted the same. WHEREFORE, the Decision dated January 30, 2009 of the Court of Appeals in CA-G.R. CR.-H.C. No. 02627 is MODIFIED. The Court AFFIRMS IN TOTO the judgment of conviction against appellants Mads Saludin Mantawil and Magid Mamanta, but ACQUITS appellant Abdullah Tomondog of the crime charged on the ground of reasonable doubt. Appellant Abdullah Tomondog is ordered immediately RELEASED from custody, unless he is being held for some other lawful cause. The Director of the Bureau of Corrections is ORDERED to implement this Decision forthwith and to INFORM this Court, within five (5) days from receipt hereof, of the date Abdullah Tomondog was actually released from confinement. With costs against appellants Mads Saludin Mantawil and Magid Mamanta. SO ORDERED.

105

THIRD DIVISION

MARK CLEMENTE y MARTINEZ @ EMMANUEL DINO, Petitioner,

- versus G.R. No. 194367

PEOPLE OF THE PHILIPPINES, Respondent.

Promulgated:

June 15, 2011 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, seeking to reverse the March 29, 2010 Decision[1] of the Court of Appeals (CA) which denied petitioner's appeal and affirmed the November 3, 2008 Judgment[2] of the Regional Trial Court (RTC) of Manila, Branch 7, convicting petitioner of illegal possession and use of false bank notes under Article 168[3] of the Revised Penal Code (RPC), as amended. Also assailed is the CA Resolution dated October 14, 2010[4] denying petitioner's motion for reconsideration.

Petitioner was charged before the RTC with violation of Article 168 of the RPC under an Information[5] which reads:

That on or about August 5, 2007, in the City of Manila, Philippines, the said accused, with intent to use, did then and there willfully, unlawfully, feloniously and knowingly have in his possession and under his custody and control twenty[-]four (24) pcs. *of+ P500.00 bill with Markings *+ IIB-1 to IIB-24, respectively and specifically enumerated, to wit:

SERIAL NO. PX626388 CC077337 CC077337 BR666774

PCS. 1 1 1 1

AMOUNT P500.00 500.00 500.00 500.00

SERIAL NO. CC077337 CC077337 CC077337 CC077337

PCS. 1

AMOUNT P500.00

1 500.00 1 500.00 1 500.00

106
CC077337 BB020523 PX626388 BR666774 PX626388 BR666774 UU710062 CC077337 1 1 1 1 1 1 1 1 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00 BR666774 BR666774 CC077337 WW164152 WW164152 BR666774 PX626388 PX626388 1 1 1 1 1 1 1 1 500.00 500.00 500.00 500.00 500.00 500.00 500.00 500.00

Which are false and falsified.

Contrary to law. Upon arraignment, petitioner entered a plea of not guilty. Trial thereafter ensued.

The version of the prosecution and the defense, as summarized by the CA, are as follows:[6]

The prosecution presented three (3) witnesses, namely: Jail Officer 1 (JO1) Michael Michelle Passilan, the Investigator of the Manila City Jail; JO1 Domingo David, Jr.; and Loida Marcega Cruz, the Assistant Manager of the Cash Department of the Bangko Sentral ng Pilipinas.

[Their testimonies established the following:]

Appellant is a detainee at the Manila City Jail. On August 7, 2007, at around 3:30 pm, an informant in the person of inmate Francis dela Cruz approached JO1s Domingo David, Jr. and Michael Passilan. The informant narrated that he received a counterfeit P500.00 bill from appellant with orders to buy a bottle of soft drink from the Manila City Jail Bakery. The bakery employee, however, recognized the bill as a fake and refused to accept the same. Consequently, JO1s David and Passilan, along with the informant, proceeded to appellant's cell for a surprise inspection. Pursuant to their agreement, the informant entered the cubicle first and found appellant therein, lying in bed. The informant returned to appellant the latter's P500.00 bill. The jail guards then entered the cell and announced a surprise inspection. JO1 Passilan frisked appellant and recovered a black wallet from his back pocket. Inside the wallet were twenty-three (23) pieces of P500.00, all of which were suspected to be counterfeit. They confiscated the same and marked them sequentially with IIB-2 to II-B24. They likewise marked the P500.00 bill that was returned by informant to appellant with IIB-1. Appellant was consequently arrested and brought out of his cell into the office of the Intelligence and Investigation Branch (IIB) of the Manila City jail for interrogation.

Meanwhile, the twenty-four (24) P500.00 bills confiscated from appellant were turned over to the Bangko Sentral ng Pilipinas for analysis. Pursuant to a Certification dated August 7, 2007, Acting Assistant Manager Loida Marcega Cruz of the Bangko Sentral ng Pilipinas examined and found the following bills as counterfeit, viz: one (1) P500.00 bill with Serial Number BB020523; six (6) P500.00 bills with Serial Number BR666774; nine (9) P500.00 bills with Serial Number CC077337; five (5) P500.00 bills with Serial Number PX626388; one (1) P500.00 bill with Serial Number UU710062; and two (2) P500.00 bills with Serial Number WW164152.

For the defense, appellant was the lone witness presented on the stand.

Appellant simply raised the defense of frame-up. He testified that in the afternoon of August 5, 2007, he was inside his room located at Dorm 1 of the Manila City Jail. At around 3:00 pm, JO1 Michael Passilan entered appellant's room while JO1 Domingo David, Jr. posted himself outside. Without any warning, JO1 Passilan frisked appellant and confiscated his

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wallet containing one (1) P1,000.00 bill. JO1s David and Passilan left immediately thereafter. Appellant was left with no other choice but to follow them in order to get back his wallet. Appellant followed the jail officers to the Intelligence Office of the Manila City Jail where he saw JO1 Passilan place the P500.00 bills inside the confiscated black wallet. Appellant was then told that the P500.00 bills were counterfeit and that he was being charged with illegal possession and use thereof. Appellant also added that JO1 Passilan bore a grudge against him. This was because appellant refused to extend a loan [to] JO1 Passilan because the latter cannot offer any collateral therefor. Since then, JO1 Passilan treated him severely, threatening him and, at times, putting him in isolation.

After trial, the RTC found petitioner guilty beyond reasonable doubt of the crime charged. The RTC gave credence to the prosecution's witnesses in finding that the counterfeit money were discovered in petitioner's possession during a surprise inspection, and that the possibility that the counterfeit money were planted to incriminate petitioner was almost nil considering the number of pieces involved.[7] The RTC also did not find that the jail officers were motivated by improper motive in arresting petitioner,[8] and applied in their favor the presumption of regularity in the performance of official duties considering the absence of contrary evidence. As to petitioners defense of frame-up, the RTC held that the purported frame-up allegedly staged by JO1 Passilan would not affect the prosecution's evidence since the testimony of JO1 David could stand by itself. The RTC likewise found that it was strange that petitioner did not remonstrate despite the fact that he was allegedly being framed.[9]

As to the elements of the crime, the RTC held that the fact that the P500.00 bills found in petitioners possession were forgeries was confirmed by the certification issued by the Cash Department of the Bangko Sentral ng Pilipinas, which was testified into by Acting Assistant Manager Loida A. Cruz.[10] The RTC also ruled that petitioner knew the bills were counterfeit as shown by his conduct during the surprise search and his possession of the bills. As to the element of intention to use the false bank notes, the RTC ruled that the fact that petitioner intended to use the bills was confirmed by the information received by the jail officers from another inmate.[11]

Aggrieved, petitioner sought reconsideration of the judgment. Petitioner argued that the evidence used against him was obtained in violation of his constitutional right against unreasonable searches and seizures. Petitioner also argued that the prosecution failed to prove his guilt beyond reasonable doubt because of the non-presentation of the informant-inmate, Francis dela Cruz, who could have corroborated the testimonies of the jail officers.

Unconvinced, the RTC denied petitioners motion for reconsideration. The RTC, however, only ruled that there was no violation of petitioners constitutional right against unreasonable searches and seizures because the seizure was done pursuant to a valid arrest for violation of Article 168 of the RPC. The trial court pointed out that prior to the search, a crime was committed and the criminal responsibility pointed to petitioner.[12]

On appeal before the CA, petitioner argued that the RTC erred in finding him guilty beyond reasonable doubt for violating Article 168 of the RPC. Petitioner contended that one of the elements of the crime which is intent to use the counterfeit bills was not established because the informant Francis dela Cruz did not take the witness stand.[13]

The CA, however, found the appeal unmeritorious and denied petitioners appeal.*14+ The appellate court found that the fact the petitioner was caught in possession of twenty-four (24) pieces of fake P500.00 bills already casts doubt on his allegation that he was merely framed by the jail guards. The CA agreed with the RTC that even without the testimony of JO1 Passilan, the testimony of JO1 David was already sufficient to establish petitioners guilt since petitioner did not impute any ill motive on the latter except to point out that JO1 David was JO1 Passilans friend.*15+

Regarding the element of intent to use, the CA found that there are several circumstances which, if taken together, lead to the logical conclusion that petitioner intended to use the counterfeit bills in his possession. The CA pointed out that jail officers were informed by inmate Francis dela Cruz that he received a fake P500.00 bill from petitioner who told him to buy soft drinks from the Manila City jail bakery. After Francis dela Cruz identified petitioner as the person who gave him the fake money, the jail officers conducted a surprise inspection. Said inspection yielded twenty-three (23) pieces of counterfeit P500.00 bills inside petitioner's black wallet, which was taken from his back pocket. The CA further held that the non-presentation of Francis dela Cruz would not affect the prosecution's case because even without his testimony, petitioners intent to use the counterfeit bills was established. The CA added that the matter of which witnesses to present is a matter best left to the discretion of the prosecution.[16]

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Petitioner sought reconsideration of the above ruling, but the CA denied petitioners motion for reconsideration in the assailed Resolution dated October 14, 2010.[17] Hence, the present appeal.

Petitioner raises the following assignment of errors, to wit:

I.

THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE REGIONAL TRIAL COURT, CONVICTING PETITIONER OF THE CRIME CHARGED, DESPITE THE FAILURE OF THE PROSECUTION TO PROVE AN ELEMENT OF THE OFFENSE.

II.

THE COURT OF APPEALS ERRED IN NOT EXCLUDING THE COUNTERFEIT BILLS SINCE THEY WERE DERIVED FROM UNREASONABLE SEARCH AND SEIZURE.[18]

The petition is meritorious.

Generally, the trial courts findings are accorded finality, unless there appears in the record some fact or circumstance of weight which the lower court has overlooked, misunderstood or misappreciated, and which, if properly considered, would alter the result of the case. The exception applies when it is established that the trial court has ignored, overlooked, misconstrued or misinterpreted cogent facts and circumstances which, if considered, will change the outcome of the case.[19] Here, the Court finds that the RTC and the CA had overlooked certain substantial facts of value to warrant a reversal of its factual assessments. While petitioner's denial is an intrinsically weak defense which must be buttressed by strong evidence of non-culpability to merit credence, said defense must be given credence in this case as the prosecution failed to meet its burden of proof.

Article 168 of the RPC, under which petitioner was charged, provides:

ART. 168. Illegal possession and use of false treasury or bank notes and other instruments of credit. Unless the act be one of those coming under the provisions of any of the preceding articles, any person who shall knowingly use or have in his possession, with intent to use any of the false or falsified instruments referred to in this section, shall suffer the penalty next lower in degree than that prescribed in said articles. [Emphasis supplied.]

The elements of the crime charged for violation of said law are: (1) that any treasury or bank note or certificate or other obligation and security payable to bearer, or any instrument payable to order or other document of credit not payable to bearer is forged or falsified by another person; (2) that the offender knows that any of the said instruments is forged or falsified; and (3) that he either used or possessed with intent to use any of such forged or falsified instruments.[20] As held in People v. Digoro, [21] possession of false treasury or bank notes alone, without anything more, is not a criminal offense. For it to constitute an offense under Article 168 of the RPC, the possession must be with intent to use said false treasury or bank notes.[22]

In this case, the prosecution failed to show that petitioner used the counterfeit money or that he intended to use the counterfeit bills. Francis dela Cruz, to whom petitioner supposedly gave the fake P500.00 bill to buy soft drinks, was not presented in court. According to the jail officers, they were only informed by Francis dela Cruz that petitioner asked the latter to buy soft drinks at the Manila City jail bakery using a fake P500.00 bill. In short, the jail officers did not have

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personal knowledge that petitioner asked Francis dela Cruz use the P500.00 bill.[23] Their account, however, is hearsay and not based on the personal knowledge.[24]

This Court, of course, is not unaware of its rulings that the matter of presentation of prosecution witnesses is not for the accused or, except in a limited sense, for the trial court to dictate. Discretion belongs to the city or provincial prosecutor as to how the prosecution should present its case.[25] However, in this case, the non-presentation of the informant as witness weakens the prosecution's evidence since he was the only one who had knowledge of the act which manifested petitioner's intent to use a counterfeit bill. The prosecution had every opportunity to present Francis dela Cruz as its witness, if in fact such person existed, but it did not present him. Hence, the trial court did not have before it evidence of an essential element of the crime. The twenty-three (23) pieces of counterfeit bills allegedly seized on petitioner is not sufficient to show intent, which is a state of mind, for there must be an overt act to manifest such intent.

WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated March 29, 2010 and Resolution dated October 14, 2010 of the Court of Appeals in CA-G.R. CR No. 32365 are REVERSED and SET-ASIDE. Petitioner Mark Clemente y Martinez alias Emmanuel Dino is hereby ACQUITTED of the crime of Illegal possession and use of false bank notes defined and penalized under Article 168 of the Revised Penal Code, as amended.

With costs de oficio.

SO ORDERED.

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THIRD DIVISION

TOP MANAGEMENT PROGRAMS CORPORATION, Petitioner,

- versus G.R. No. 150462

LUIS FAJARDO AND THE REGISTER OF DEEDS OF LAS PIAS CITY, Respondents.

Promulgated:

June 15, 2011 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION VILLARAMA, JR., J.: Before us is a petition for review on certiorari under Rule 45 seeking the reversal of the Decision[1] dated May 30, 2001 and Resolution[2] dated October 23, 2001 of the Court of Appeals (CA) in CA-G.R. CV No. 60712 which affirmed the Order[3] of the Regional Trial Court (RTC) of Las Pias City, Branch 275 in Civil Case No. 94-564 dismissing petitioners complaint for quieting of title and damages against private respondent. The factual antecedents: On December 31, 1964, Emilio Gregorio (Gregorio) filed an application for registration of title over Lots 1 to 4 of Plan Psu-204785 situated at Mag-asawang Mangga, Las Pias, Rizal, before the then Court of First Instance (CFI) of Rizal, Branch II (LRC Case No. N-5053, LRC Rec. No. N-27523). On January 4, 1966, said court issued an order declaring as abandoned the reserved oppositions of Jose T. Velasquez and Pablo Velasquez. Thereafter, the case proceeded to trial. Meanwhile, on July 29, 1965, Jose T. Velasquez (Velasquez) filed an application for registration of title over six lots denominated as Lots 7 and 9 of Psu-80886, Ap-5538, and Lots 1, 7, 9 and 11 of Psu-56007 Amd., Ap-11135, situated at Almanza, Las Pias, Rizal, in LRC Case No. N-5416, LRC Rec. No. N-28735, before the same court. On January 31, 1966, the CFI rendered a decision[4] in LRC Case No. N-5053 declaring Gregorio to be the absolute owner of Lots 1, 2, 3 and 4 described in Plan Psu-204785. On March 9, 1966, an order was issued by said court for the issuance of the decree of registration, stating that the January 31, 1966 had become final. On March 30, 1966, the same court promulgated a decision in LRC Case No. N-5416 adjudicating Lots 1, 7, 9 and 11 of Psu-56007-Amd, plan Ap-11135, and Lots 7 and 9 of Psu-80886 (Ap-5538) to Jose T. Velasquez. On May 3, 1966, said court ordered the issuance of a decree of registration in view of the finality of the March 30, 1966 decision. In the meantime, on July 25, 1966, the LRA called the attention of the Director of Lands regarding the overlapping of Lots 1, 7 and 11 of Psu-56007-Amd awarded to Velasquez, with Lots 1 to 4 of Psu-204785 adjudicated to Gregorio, and requested that portions of these lots that are not in conflict be segregated. On September 16, 1966, the LRA informed the CFI that Lots 1 and 7 of Psu-56007-Amd (Ap-11135) had been amended by the Bureau of Lands to exclude therefrom portions covered by Lot 2, Psu-64894, Psu-96904, and Lots 1 to 4, Psu-204785 of Gregorio.[5] On the basis of the LRA report, Velasquez petitioned the CFI to set aside the award earlier made in favor of Gregorio in LRC Case No. N-5035 on the ground of lack of jurisdiction and to give due course to his application over the said lots in LRC Case No. N-5416. On November 23, 1966, the CFI issued an Order in LRC Case Nos. N-5053 and N-5416 declaring that the application of Velasquez be given due course insofar as Lots 1 and 7 of Ap-11135 which are identical to Lots 1 to 4, Plan Psu-204785, and

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the January 31, 1966 decision in LRC Case No. N-5053 in favor of Gregorio respecting the same lots as null and void.[6] On December 6, 1966, Decree Nos. N-111862 to N-111865 and the corresponding certificates OCT Nos. 5677, 5678, 5679 and 5680 were issued in favor of Velasquez. On January 7, 1967, Gregorio appealed the November 23, 1966 decision of the CFI to the CA (CA-G.R. No. 40739-40R). On July 30, 1971, the CA rendered its Decision[7] reversing the CFI, as follows: WHEREFORE, the order appealed from is hereby reversed and, in lieu thereof, another is hereby rendered declaring null and void the Decision of the Court of First Instance of Rizal, dated March 30, 1966, in Land Registration Case No. N-5416, LRC Rec. No. N-28735, insofar as it adjudicates in favor of appellee Jose T. Velasquez Lots Nos. 1 and 7 of Plan Ap-11315; and directing that the Order of March 9, 1966 for the issuance of the decree in Land Registration Case No. N-5053, LRC Rec. No. N-27523, over Lots 1, 2, 3 and 4 of Plan Psu-204785, in the name of appellant Emilio Gregorio, be given due course. No costs. IT IS SO ORDERED.[8] Per entry of judgment issued by the CA, the above decision became final and executory on February 1, 1972.[9] It appears, however, that a petition for review had been filed by Velasquez with this Court, docketed as G.R. Nos. L-3423940 (Jose T. Velasquez v. Emilio Gregorio), which was given due course per Resolution dated March 7, 1972 of the Second Division. Eventually, this Court denied the petition under Resolution[10] dated February 8, 1984 stating that: We have carefully scrutinized the arguments of the parties stated in their respective briefs as well as the reasons adduced by the Court of Appeals to support its decision sought to be reviewed and We have Resolved to RECONSIDER the resolution of March 7, 1972, and enter instead another resolution DENYING the petition for lack of merit with COSTS against the petitioners.[11] The above resolution became final and executory on March 2, 1984 as per entry of judgment[12] issued by this Court. Prior to this however, on October 31, 1972, Decree No. N-141990 over Lots 1, 3 and 4 of Plan Psu-204785 were issued by the LRA and the corresponding OCT No. 9587 in the name of Gregorio, was subsequently issued on November 21, 1972.[13] Lots 1, 3 and 4, Plan Psu-204785 covered by OCT No. 9587 also became the subject of Civil Case No. 16977 of the CFI of Rizal. Gregorio sought the annulment of the deed of sale over the said lots in favor of Luciana Parami. The CFI dismissed the complaint of Gregorio in a decision rendered on May 8, 1974. Gregorio appealed to the CA (CA-G.R. No. 56015-R, entitled Emilio Gregorio v. Spouses Luciana and Corpus Parami and the Register of Deeds of Rizal) which reversed the CFI. In its decision dated February 7, 1978, the CA declared the aforesaid deed of sale null and void, and ordered the cancellation of certificate of title (No. 38433) in the name of the Paramis and issuance of an OCT in favor of Gregorio covering Lots 1, 3 and 4, Plan Pasu-204785. On November 20, 1979, the court in the same case issued an order declaring the children (Ana, Paz, Carmen, Remedios and Rolando, all surnamed Gregorio) of the deceased Emilio Gregorio as his compulsory heirs to substitute the said plaintiff.*14+ Pursuant to the said decision, OCT No. 9587 in the name of Emilio Gregorio was cancelled and a new certificate of title, TCT No. S-91911 in favor of his heirs was issued.[15] In a Report dated September 12, 1984, the LRA informed the CFI in LRC Case No. N-5416 that compliance with the July 30, 1971 CA decision in CA-G.R. No. 40739-40-R adjudicating Lots 1, 3 and 4 of Plan Psu-204785 in favor of Gregorio will result in duplication of titles over the said properties. The report further stated: 21. That based on the records of this Commission, Lots 1, 3 and 4 of plan Psu-204785 were already covered by TCT No. S91911 in the name of the Heirs of Emilio Gregorio with several annotations of encumbrances x x x; 22. That among those encumbrances are the deeds of sale executed by them in favor of Herminia Galman covering an undivided portion of aforesaid Lot 1, and of Everlita Talusan of the whole Lots 3 and 4 denominated as Entry No. 21079/S97421, and that the latter vendee E. Talusan had already acquire[d] TCT No. S-97421 over said two lots in her name also with several annotation of encumbrances x x x; 23. That as per our verification from the Registry of Deeds of Makati, corresponding titles were issued in the name of J.T. Velasquez denominated as OCT Nos. 5678, 5677, 5679 and 5680 x x x; 24. And that these certificates of title were all cancelled and assigned in favor of J.V. Development Corporation as per Entry Nos. 99377/T-195606, 195605, 195605 and 19505 all inscribed on July 27, 1967. WHEREFORE, these facts are respectfully brought to the attention of this Honorable Court with the recommendation: That Decree Nos. N-111862 to N-111865 issued on December 6, 1966 over Lots 1 to 4, Psu-204785, in favor of Jose T. Velasquez, as well as existing subsequent titles emanating from the same shall be declared null and void and ordered cancelled.[16]

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On April 9, 1984, the heirs of Emilio Gregorio filed an ex-parte motion for execution before the RTC of Pasig, Metro Manila, Branch 152 in LRC Case Nos. N-5053 and N-5416. On March 21, 1986, the RTC of Pasig issued the following Order[17]: Considering that the Resolution issued on February 8, 1984 by the Supreme Court in G.R. No. L-34239-40, entitled Jose T. Velasquez vs. Emilio Gregorio, denying the petition for review on certiorari of the judgment of the Court of Appeals in CA-G.R. No. 40739-40-R, had on March 2, 1984 become final and executory in favor of Emilio Gregorio, and considering further the recommendation contained in the Report dated September 12, 1984 of the Acting Commissioner of Land Registration thru Silverio G. Perez, Chief, Division of Original Registration, relative to LRC Case No. N-5053, LRC Record No. N-27523, wherein Emilio Gregorio is the applicant and in LRC Case No. N-5416, LRC Record No. N-28735, wherein Jose T. Velasquez is the applicant, which report is hereby approved, the Court declares as null and void Decree Nos. N-111862 to N-111865, inclusive, issued on December 6, 1966, covering Lots 1, 2, 3 and 4, Psu-204785 in favor of Jose T. Velasquez in LRC Case No. No. 5416 as well as all existing subsequent titles emanating therefrom, and any and all encumbrances constituted against said Lots 1, 2, 3 and 4, Psu-204785 and other acts of disposition affecting the same. WHEREFORE, the Register of Deeds of Pasay City is hereby directed to cancel Original Certificates of Title Nos. 5677, 5678, 5679 and 5680 issued in the name of Jose T. Velasquez and all titles and transactions emanating therefrom and which are annotated at the back of the said Certificates of Title, and to issue, in lieu thereof, new Certificates of Title in the name of the Heirs of Emilio Gregorio, after paying the prescribed fees therefor, pursuant to the Order for issuance of a decree dated March 9, 1966 in the LRC Case No. N-5053, Record No. N-27523. SO ORDERED.[18] On April 29, 1986, TCT Nos. 107727, 107728 and 107729 (covering Lot 1)[19] was issued by the Register of Deeds of Pasay City in the name of the Heirs of Emilio Gregorio. Subsequently, by virtue of a Partition Agreement with Herminia Galman, the property was subdivided into two lots between the heirs of Gregorio (Lot 1-A consisting of 20,000 sq. ms.) and Galman (Lot 1-B consisting of 27,536 sq. ms.). Consequently, TCT No. 107729 was cancelled and in lieu thereof TCT No. 4635 in the name of the heirs of Gregorio and TCT No. 4636 in the name of Herminia Galman, were issued by the Register of Deeds of Las Pias.[20] Undeniably, the duplication of titles over Lot 1, Psu-204785 with the issuance of TCT No. S-91911 (transfer from OCT No. 9587) and TCT No. 107729 and its derivative title, TCT No. 4635, both in the name of the same owners, gave rise to the present controversy. The Claim of Luis Fajardo (TCT No. 27380, now TCT No. T-34923) As earlier mentioned, Gregorio appealed the November 23, 1966 CFI decision in LRC Case Nos. N-5053 and N-5416 awarding Lots 1 to 4 of Psu-204785 in favor of Velasquez, docketed as CA-G.R. No. 40739-40-R. Sometime after this, he entered into an agreement with Tomas Trinidad (Trinidad) and Luis Fajardo (Fajardo) entitled Kasunduan na may Pambihirang Kapangyarihan. By virtue of this agreement, Fajardo would finance the cost of the litigation and in return he would be entitled to one-half of the subject property after deducting twenty per cent (20%) of the total land area as attorneys fees for Trinidad if the appeal is successful. After the CA rendered a favorable ruling on Gregorios appeal, Fajardo and Trinidad filed Civil Case No. 35305 before the RTC of Pasig, Branch 164 to enforce their agreement with Gregorio. On May 8, 1986, said court rendered judgment in their favor, as follows: WHEREFORE, premises considered, judgment is hereby rendered ordering herein defendants: (1) to convey to Atty. Tomas Trinidad as honorarium for his services an area of 14,684 sq.m. which is twenty percent (20%) of 72,424 sq.m. the total area of Lots 1, 2, 3 and 4; (2) to convey to Luis Fajardo an area of 29,369 sq.m. representing fifty percent (50%) of the remainder of the property after deducting the honorarium of Atty. Trinidad. (3) to pay the cost of suit and litigation expenses.

SO ORDERED.[21] The heirs of Gregorio appealed the above decision but their appeal was declared abandoned and dismissed by the CA. By virtue of an Entry of Judgment issued by the CA dated December 8, 1988, Trinidad and Fajardo filed a motion for the issuance of a writ of execution. However, the writ issued remained unsatisfied as per the Return filed by the Sheriff on April 10, 1989. On August 14, 1989, the court appointed Deputy Sheriff Marcial Estrellado to execute the deed of conveyance in favor of the plaintiffs.

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Deputy Sheriff Estrellado executed the Officers Deed of Conveyance[22] dated August 15, 1989 in favor of Trinidad and Fajardo. While the plaintiffs moved for the approval of the subdivision plan needed for the transfer and issuance of separate titles as per decision, the Register of Deeds of Las Pias wrote a letter-reply[23] to the Deputy Sheriff indicating that the deed of conveyance and Order of the Court dated August 14, 1989 entered as Entry No. 6503 and 6504 in their docket book could not be pursued because the subject property was already sold to other parties. In compliance with the order of the CFI, then Register of Deeds of Las Pias Alejandro R. Villanueva submitted an official report[24] stating that TCT No. S-91911, still existing in their records, should have been cancelled when TCT Nos. 107727, 107728 and 107729 were issued in compliance with the Order dated March 21, 1986 of the RTC of Pasig, and that such caused an anomalous situation of having two separate and distinct certificates of title covering the same parcels of land although in the name of the same registered owners. Villanueva opined that the issuance of TCT Nos. 107727, 107728 and 107729 covering Lots 1, 3 and 4 of Psu-204785, placed TCT No. S-91911, as deemed cancelled, inasmuch as the latter certificate of title covers one and the same parcels of land and hence TCT No. S-91911 should not anymore be subject of any transactions. The CFI initially withdrew its Order dated August 14, 1989 but eventually reinstated the same and ordered the Register of Deeds to annotate the Deed of Conveyance at the back of TCT No. S-91911 within 24 hours upon receipt of the order. Said directive was reiterated by the CFI on June 7, 1991. On June 26, 1991, the court authorized the subdivision of Lot 1, Psu-204785 and directed the Register of Deeds to issue separate titles in favor of plaintiffs Trinidad and Fajardo. Consequently, TCT No. T-27380[25] covering 29,369 sq. ms. portion of Lot 1, Psu-204785 in the name of Luis Fajardo was issued on December 12, 1991. On April 26, 1993, said TCT No. T-27380 was cancelled per Order[26] of the court dated March 13, 1992 and in lieu thereof, TCT No. T-34923[27] was issued, still in the name of Luis Fajardo and without any of the encumbrances carried over from TCT No. S-91911. The Claim of Top Management Programs Corporation (TCT No. T-8129) On September 24, 1991, herein petitioner Top Management Programs Corporation sought the annulment of the CFI orders in Civil Case No. 35305 reinstating the August 14, 1989 order and directing the issuance of new certificates of title in the name of Trinidad and Fajardo, on the ground of extrinsic fraud. Petitioner claimed that by virtue of a Deed of Absolute Sale[28] dated November 29, 1988 which was notarized on January 9, 1989, the heirs of Gregorio sold to it a parcel of land with an area of 20,000 sq. ms., located at Las Pias and identified as Lot 1-A Psd-293076, being a portion of Lot 1, Psu-204785 covered by TCT No. T-4635, and that on February 20, 1989, TCT No. T-8129[29] covering the said property was issued in its name. On November 28, 1991, the CA rendered its decision dismissing the petition for annulment (CA-G.R. SP No. 26100). It held that there existed no extrinsic fraud which would justify the annulment of the questioned orders. Petitioner sought the reversal of the CA ruling before this Court via a petition for certiorari. By Decision[30] dated May 28, 1993, this Court dismissed the petition and affirmed the CA judgment. On the issue raised by petitioner as to whether the CA erred in holding that petitioners claim of title to Lot 1-A should be served as third-party claim on the Deputy Sheriff who executed the Deed of Conveyance and caused its registration, or to vindicate the claim to the property through a separate independent action, the Court refrained from discussing the same since its resolution is inconsequential and would not alter in any way the outcome of the petition.[31] Civil Case No. 94-564 Thus, on February 10, 1994, petitioner filed before the RTC of Makati Civil Case No. 94-564 for Quieting of Title With Damages. Petitioner alleged that the issuance of TCT No. T-27380 in the name of Fajardo -- who obtained the same from the court in a case without the knowledge of petitioner who was not a party therein -- despite the existence of TCT No. T8129 in its name constitutes a cloud upon the title of petitioner. Petitioner claimed that it acquired the same property in good faith and for value from the original owners thereof. In his Answer, private respondent Fajardo asserted that it is the title of petitioner which originated from a void title. OCT No. 5678 from which TCT No. 4635 was derived, was in effect declared null and void under this Courts Resolution dated February 8, 1984 in G.R. No. L-34239-40 which dismissed petitioners appeal from the July 30, 1971 CA Decision in CA-G.R. No. 40739-40-R. The CA had nullified the CFI decision dated March 30, 1966 in LRC Case No. N-5416 insofar as it adjudicates the subject lots to Velasquez. After petitioners formal offer of evidence, private respondent filed a demurrer to evidence, which the trial court granted in its Order[32] dated June 8, 1998, as follows: WHEREFORE, premises considered, the case is hereby DISMISSED. No pronouncement as to costs. The Register of Deeds of Las Pias City is hereby ordered to cancel TCT No. T-8129 in the name of plaintiff Top Management Programs Corporation. SO ORDERED.[33]

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Petitioner appealed to the CA and on May 30, 2001 said court rendered the assailed Decision[34] affirming the trial courts dismissal of petitioners complaint. The CA held that petitioner cannot invoke the rule that the title which bears the earlier date should prevail in view of the infirmity in TCT No. 107729 which on its face shows that its origin was a title already voided by the appellate court. Petitioners motion for reconsideration was likewise denied by the CA. Hence, this petition alleging that the CA erred in (a) declaring TCT No. T-8129 as defective based on a mere clerical error despite acknowledgment of its issuance resulting from a final determination by this Court of the validity of Emilio Gregorios claim over the subject property, and (b) affirming the validity of private respondents TCT No. T-27380 despite the clear nullity of its mother title (OCT No. 9587) which was issued pending the appeal filed by Velasquez from the decision of the appellate court in CA-G.R. No. 40739-40-R to this Court. Petitioner reiterates that an error was made on the entries in TCT No. 107729. Instead of providing that said title, as well as TCT Nos. 107727 and 107728 issued in the name of the Heirs of Emilio Gregorio, emanated from the application for registration of Emilio Gregorio in LRC Case No. N-5053, LRC Rec. No. N-27523 pursuant to the Order of the RTC in LRC Case Nos. N-5416 and N-5053, the Register of Deeds of Pasay City annotated on the face of said titles that these were derived from Jose T. Velasquezs OCT No. 5678 under Decree No. N-111862. Petitioner laments that deplorable situation of the legitimate successor of the winning litigant holding a title wrongly annotated to have been derived from the voided title of the loser in the case. The winning party was then given a title registered as derived from the title he fought so hard to set aside. Moreover, there is no logic in the appellate courts conclusion that petitioners title traces its origin to a mother title already voided, when in fact it is undisputed that TCT No. 107729 was issued pursuant to the March 21, 1986 order of the RTC of Pasig in LRC Case Nos. N-5416 and N-5053 implementing the final and executory February 8, 1984 decision of this Court in G.R. Nos. L-34239-40 denying Velasquezs appeal. Petitioner further claims that it is a buyer in good faith who had no knowledge of any defect in the title of his predecessor-in-interest. It paid the purchase price and acquired its title long before it discovered the right to compensation of private respondent through the Officers Deed of Conveyance. Finally, petitioner argues that the issuance of OCT No. 9587 during the pendency of Velasquezs appeal to this Court renders said title null and void ab initio, citing the ruling in Director of Lands v. Reyes[35]. Since OCT No. 9587 is a nullity, it follows that its derivative title, private respondents TCT No. T-27380, is likewise a nullity. Private respondent counters that petitioners assertion of the existence of clerical errors in the annotations of the entries in TCT No. 8129 is, at the very least, an admission that said title is indeed defective. Obviously, petitioner may not file a petition to quiet its title and at the same time seek, in the same proceeding, the corrections of the entries therein. As to the issue of premature issuance of OCT No. 9587, private respondent points out that the decision in LRC Case No. N-5053 dated January 31, 1966 as a consequence of which Decree of Registration No. 141990 was issued, has already attained finality even before Velasquez sought the annulment of the award in favor of Emilio Gregorio utilizing the Report of the Commissioner of Land Registration dated September 16, 1966, to the effect, among others, that a portion of the land awarded in his favor overlapped with that adjudicated to Gregorio. Hence, the prohibition mentioned in the case of Director of Lands v. Reyes (supra) has no application to the case at bar, and therefore could not serve as basis to nullify OCT No. 9587, the mother title of TCT No. T-27380 in the name of private respondent. We deny the petition. Quieting of title is a common law remedy for the removal of any cloud, doubt, or uncertainty affecting title to real property. In an action for quieting of title, the plaintiffs must show not only that there is a cloud or contrary interest over the subject real property, but that they have a valid title to it.[36] The court is tasked to determine the respective rights of the complainant and the other claimants, not only to place things in their proper places, and to make the claimant, who has no rights to said immovable, respect and not disturb the one so entitled, but also for the benefit of both, so that whoever has the right will see every cloud of doubt over the property dissipated, and he can thereafter fearlessly introduce the improvements he may desire, as well as use, and even abuse the property as he deems fit.[37] Petitioner anchors its claim over the disputed lot on TCT No. T-8129 issued on February 20, 1989 which is a transfer from TCT No. 107729 in the name of the Heirs of Emilio Gregorio, from whom it bought the property in January 1989. On the other hand, private respondent acquired the same land by virtue of the Officers Deed of Conveyance dated August 15, 1989 executed in their favor pursuant to the final judgment in Civil Case No. 35305 of the RTC of Pasig, Branch 164 and was issued TCT No. T-27380 in his name on December12, 1991. In Degollacion v. Register of Deeds of Cavite[38] we held that if two certificates of title purport to include the same land, whether wholly or partly, the better approach is to trace the original certificates from which the certificates of title were derived. Citing our earlier ruling in Mathay v. Court of Appeals[39] we declared: x x x where two transfer certificates of title have been issued on different dates, to two different persons, for the same parcel of land even if both are presumed to be title holders in good faith, it does not necessarily follow that he who holds the earlier title should prevail. On the assumption that there was regularity in the registration leading to the eventual issuance of subject transfer certificates of title, the better approach is to trace the original certificates from which the certificates of title in dispute were derived. Should there be only one common original certificate of title, x x x, the

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transfer certificate issued on an earlier date along the line must prevail, absent any anomaly or irregularity tainting the process of registration.[40] From the recitals in the transfer certificates of title respectively held by petitioner and private respondent, as well as the records of the LRA, there appears not just one but two different original certificates. TCT No. T-8129 on its face shows that the land covered was originally registered as OCT No. 5678 under Decree No. N-111862 (Velasquez), while TCT No. T-27380 indicates the original registration as OCT No. 9587 under Decree No. N-141990 (Gregorio). Both the LRC and CA found TCT No. 107729 and its derivative titles TCT Nos. 4635 and T-8129 as void and inexistent since OCT No. 5678 in the name of Velasquez had been nullified under the order for execution of the final judgment in LRC Case Nos. N-5053 and N-5416 in which Gregorio prevailed. Consequently, the lower courts upheld the title of private respondent which alone can be traced to the original certificate in the name of Emilio Gregorio (OCT No. 9578). Petitioner, however, asserts that the entries in his TCT contain errors and insists that TCT Nos. 107729, 4635 and T8129 actually emanated from the application for registration of Emilio Gregorio in LRC Case No. N-5053, LRC Record No. N-27523 pursuant to the Order of the Regional Trial Court in LRC Case Nos. N-5053 and N-5416, as in fact TCT No. 107729 were issued along with TCT Nos. 107727 and 107728 covering two other lots also in the name of the Heirs of Emilio Gregorio by way of implementing the final judgment of said court in the case between Gregorio and Velasquez, as affirmed by the CA and this Court. We disagree. TCT No. 107729 in the name of the heirs of Emilio Gregorio issued on April 29, 1986, on its face showed badges of irregularity in its issuance. First, the technical description stated that it covers a portion of Lot 1, plan Psu-204785, LRC Case No. N-5416 instead of N-5053. Second, the decree number and date of issuance, as well as OCT number clearly indicate that the original decree pertained to Velasquez and not Gregorio. Third, the name of the registered owner in the original certificate is not Velasquez or Gregorio but Delta Motor Corp. And fourth, the certificate from which TCT No. 107729 was supposedly a transfer should have been the OCT (of Gregorio) and not those unfamiliar TCT numbers indicated therein. The annotations regarding the supposed original registration of TCT No. 107729 read as follows: IT IS FURTHER CERTIFIED that said land was originally registered on the 12th day of December in the year nineteen hundred and sixty-six in the Registration Book of the Office of the Register of Deeds of Rizal Volume A-69 page 78 as Original Certificate of Title No. 5678 pursuant to Decree No. N-111862 issued in L.R.C. _____________ Record No. N-28735 Case No. N-5416 in the name of Delta Motor Corp. . This certificate is a transfer from Transfer Certificate of Title No. 27737/A/T-145-A S-8722/T-41 which is cancelled by virtue hereof in so far as the above-described land is concerned.[41] (Emphasis supplied.) The foregoing errors are not mere typographical as petitioner claims, but serious discrepancies in the registration process. In fact, it is not far-fetched that the erroneous entries could have been intended to create the impression that TCT No. 107729 was a separate and distinct title from the previously issued TCT No. S-91911 even if they pertain to one and the same lot adjudicated to Emilio Gregorio. Such conclusion is reinforced by the unexplained inaction or failure of the heirs of Gregorio to rectify the alleged errors in their title before selling the property to petitioner. The heirs of Gregorio knew that their TCT No. S-91911 bore encumbrances in favor of third parties, notably the notice of pending litigation (Lis Pendens) involving the property covered by said title before the CFI of Pasig, Metro Manila in Civil Case No. 35305, which Trinidad caused to be annotated thereon. The issuance of a new certificate with exactly identical entries as that of TCT No. S-91911 (as to its original registration) would mean that the aforesaid annotations had to be carried over to such new certificate. Strangely, it is TCT No. 107729 which RD Alejandro R.Villanueva upheld in his February 5, 1989 Report notwithstanding its later issuance and the glaring errors in the entries of its original registration. It must be stressed that OCT No. 5677, 5678, 5679 and 5680 and its derivative titles were ordered cancelled precisely because they were issued pursuant to Decree Nos. N-111862 to N-111865 issued in LRC Case No. N-5416 in the name of Velasquez, who lost in the final judgment rendered in CA-G.R. No. 40739-40-R, and whose claim to the lots covered thereby were declared null and void. Logically, therefore, any new certificate of title to be issued to the heirs of Gregorio by virtue of the aforesaid final judgment adjudicating the land to Emilio Gregorio, could not possibly be a transfer or replacement of the aforesaid void OCTs in the name of Velasquez. But even granting that the subject entries in TCT No. 107729 were mere clerical errors and assuming arguendo that said certificate was issued to implement the final judgment in CA-G.R. No. 40739-40-R, such execution is tainted with infirmity. The March 21, 1986 order issued by the RTC of Pasig did not only cancel OCT No. 5678 (and other titles in the name of Velasquez covering the same lots adjudicated to Gregorio), it also ordered the issuance of new certificates of title in the name of the heirs of Emilio Gregorio despite having been informed by the LRA and the Register of Deeds that there was already issued OCT No. 9587 over the same lot in the name of Emilio Gregorio, which was replaced with TCT No. S-91911 in the name of the heirs of Emilio Gregorio following the decision rendered by the appellate court (CA-G.R. No. 56015-R) in another case filed by Gregorio against spouses Parami (Civil Case No. 16977). At this point, it serves well to emphasize that upon finality of judgment in land registration cases, the winning party does not file a motion for execution as in ordinary civil actions. Instead, he files a petition with the land registration court for the issuance of an order directing the Land Registration Authority to issue a decree of registration, a copy of which is then sent to the Register of Deeds for inscription in the registration book, and issuance of the original certificate of

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title.[42] The LRC upon the finality of the judgment adjudicating the land to an applicant shall, following the prescribed procedure, merely issues an order for the issuance of a decree of registration and the corresponding certificate of title in the name of such applicant.[43] In this case, the RTC of Pasig, cognizant of a previous decree of registration instead ordered the Register of Deeds to issue new certificates in favor of the heirs of Gregorio, erroneously declaring that such certificates are in lieu of OCT Nos. 5677, 5678, 5679 and 5680. Said court exceeded its authority when it ordered the issuance of transfer certificates in the name of the heirs of Gregorio despite the existence of TCT No. S-91911 already issued to them covering the sae parcel of land. This caused the duplication of titles held by the heirs of Gregorio over Lot 1. Thus, while there was only one decree and original certificate issued to the common predecessor-in-interest of petitioner and private respondent, Emilio Gregorio, the latters heirs were able to secure two transfer certificates covering the same land. Indeed it could not order the issuance of another OCT as it would result to duplication of titles or double titling.*44+ A land registration court has no jurisdiction to order the registration of land already decreed in the name of another in an earlier land registration case.[45] Issuance of another decree covering the same land is therefore null and void.[46] In the light of the LRA Report dated September 12, 1984 stating that compliance with the July 30, 1971 final judgment rendered by the CA which reversed the LRC decision and adjudicated Lots 1, 3 and 4 in favor of Emilio Gregorio, would result in duplication of titles, it was grave error for the RTC of Pasig to grant the motion for execution filed by the heirs of Emilio Gregorio who sought, -- in the guise of implementing the July 30, 1971 CA decision -- the issuance of new titles in their name notwithstanding the existence of OCT No. 9587 and TCT No. S-91911. Given such vital information, there exists a compelling need for the land registration court to ascertain the facts and address the likelihood of duplication of titles x x x, an eventuality that will undermine the Torrens system of land registration.*47+ Petitioner nonetheless assails OCT No. 9587 as null and void, having been issued when the adverse decision of the appellate court in CA-G.R. No. 40739-40-R was elevated by it to this Court. Following the doctrine in Director of Lands v. Reyes (supra), it is asserted that OCT No. 9587 should not have been issued because the decision in CA-G.R. No. 40739-40R was not yet final at the time, pending resolution by this Court of the appeal by Velasquez (G.R. No. L-34239-40). In Director of Lands v. Reyes (supra), this Court laid down the rule that execution pending appeal is not applicable in a land registration proceeding and the certificate of title thereby issued is null and void. In that case, the assignee of the original applicant applied for a motion for issuance of a decree of registration before the lower court pending the approval of the Record on Appeal. The motion was opposed by the Government which appealed the lower courts decision adjudicating the land to the said assignee. We thus ruled: Under the circumstances of this case, the failure of the appellants to serve a copy of their Notice of Appeal to the counsel for the adjudicatee Roman C. Tamayo is not fatal to the appeal because, admittedly, he was served with a copy of the original, as well as the Amended Record on Appeal in both of which the Notice of Appeal is embodied. Hence, such failure cannot impair the right of appeal. What is more, the appeal taken by the Government was from the entire decision, which is not severable. Thus, the appeal affects the whole decision. In any event, We rule that execution pending appeal is not applicable in a land registration proceeding. It is fraught with dangerous consequences. Innocent purchasers may be misled into purchasing real properties upon reliance on a judgment which may be reversed on appeal. A Torrens title issued on the basis of a judgment that is not final is a nullity, as it is violative of the explicit provisions of the Land Registration Act which requires that a decree shall be issued only after the decision adjudicating the title becomes final and executory, and it is on the basis of said decree that the Register of Deeds concerned issues the corresponding certificate of title. Consequently, the lower court acted without jurisdiction or exceeded its jurisdiction in ordering the issuance of a decree of registration despite the appeal timely taken from the entire decision a quo.[48] OCT No. 9587 on its face showed that its basis was Decree No. N-141990 issued on October 31, 1972 pursuant to the January 31, 1966 decision of the CFI in Land Reg. Case No. N-5053 and CA decision dated July 30, 1971. Per records of this Court, however, Velasquez had filed a petition for review of the CA decision. Be that as it may, the premature issuance of the decree in favor of Emilio Gregorio and the corresponding original certificate of title in his name did not affect his acquisition of title over the subject land considering that Velasquezs petition was eventually dismissed. Neither can petitioner, by reason alone of defective issuance of OCT No. 9587, claim a right over the subject land superior to that acquired by the private respondent. A reading of the annotations of encumbrances at the back of TCT No. T-27380 which were carried over from TCT No. S-91911 in the name of the Heirs of Gregorio, would show that during the pendency of Civil Case No. 35305 filed before the CFI of Rizal by private respondent and Trinidad, the latter caused the annotation of a Notice of Lis Pendens involving the same properties of the defendants therein, the heirs of Emilio Gregorio. The notice of lis pendens was registered as Entry No. 21398[49] on TCT No. S-91911.

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Lis pendens, which literally means pending suit, refers to the jurisdiction, power or control which a court acquires over property involved in a suit, pending the continuance of the action, and until final judgment. Founded upon public policy and necessity, lis pendens is intended to keep the properties in litigation within the power of the court until the litigation is terminated, and to prevent the defeat of the judgment or decree by subsequent alienation. Its notice is an announcement to the whole world that a particular property is in litigation and serves as a warning that one who acquires an interest over said property does so at his own risk or that he gambles on the result of the litigation over said property.[50] The filing of a notice of lis pendens has a two-fold effect: (1) to keep the subject matter of the litigation within the power of the court until the entry of the final judgment to prevent the defeat of the final judgment by successive alienations; and (2) to bind a purchaser, bona fide or not, of the land subject of the litigation to the judgment or decree that the court will promulgate subsequently.[51] Once a notice of lis pendens has been duly registered, any subsequent transaction affecting the land involved would have to be subject to the outcome of the litigation.[52] Petitioner being a mere transferee at the time the decision of the RTC of Pasig in Civil Case No. 35305 had become final and executory on December 6, 1988, it is bound by the said judgment which ordered the heirs of Emilio Gregorio to convey Lots 1, 2, 3 & 4, Psu-204875 in favor of private respondent and Trinidad. As such buyer of one of the lots to be conveyed to private respondent pursuant to the courts decree with notice that said properties are in litigation, petitioner merely stepped into the shoes of its vendors who lost in the case. Such vested right acquired by the private respondent under the final judgment in his favor may not be defeated by the subsequent issuance of another certificate of title to the heirs of Gregorio respecting the same parcel of land. For it is well-settled that being an involuntary transaction, entry of the notice of lis pendens in the primary entry book of the Register of Deeds is sufficient to constitute registration and such entry is notice to all persons of such claim.[53] It is to be noted that the notation of the lis pendens on the back of the owners duplicate is not mentioned for the purpose of constituting a constructive notice because usually such owners duplicate certificate is presented for the purpose of the annotation later, and sometimes not at all until *it is+ ordered by the court.*54+ Strictly speaking, the lis pendens annotation is not to be referred to as a part of the doctrine of notice; the purchaser pendente lite is affected, not by notice, but because the law does not allow litigating parties to give to others, pending the litigation, rights to the property in dispute so as to prejudice the opposite party. The doctrine rests upon public policy, not notice.*55+ Thus we have held that one who buys land where there is a pending notice of lis pendens cannot invoke the right of a purchaser in good faith; neither can he have acquired better rights than those of his predecessor in interest.[56] In view of the foregoing, we hold that the CA did not err in affirming the trial courts order dismissing petitioners complaint for quieting of title and ordering the cancellation of its TCT No. T-8129. WHEREFORE, the petition is DENIED. The Decision dated May 30, 2001 and Resolution dated October 23, 2001 of the Court of Appeals in CA-G.R. CV No. 60712 are AFFIRMED. With costs against the petitioner. SO ORDERED.

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THIRD DIVISION

HEIRS OF AGAPITO T. OLARTE AND ANGELA A. OLARTE, NAMELY NORMA OLARTE-DINEROS, ARMANDO A. OLARTE, YOLANDA OLARTE-MONTECER and RENATO A. OLARTE, Petitioners, G.R. No. 177995

- versus -

OFFICE OF THE PRESIDENT OF THE PHILIPPINES, NATIONAL HOUSING AUTHORITY (NHA), MARIANO M. PINEDA, AS GENERAL MANAGER, THE MANAGER, DISTRICT I, NCR, EDUARDO TIMBANG and DEMETRIO OCAMPO, Respondents.

Promulgated:

June 15, 2011 x --------------------------------------------------x DECISION VILLARAMA, JR., J.: Before us is a petition for review on certiorari seeking to set aside the February 23, 2007 Decision[1] and May 22, 2007 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP. No. 79163 which dismissed petitioners petition for certiorari. Subject of the instant case is a parcel of land denominated as Lot 12, Block 2 of the Tramo-Singalong Zonal Improvement Project (ZIP) located at 2131 F. Muoz St., San Andres, Malate, Manila. The property used to be owned by the Philippine National Railways (PNR), but was later turned over to the National Housing Authority (NHA). Petitioners, siblings Armando Olarte, Norma Olarte-Dineros, Yolanda Olarte-Montecer and Renato A. Olarte, claim that their parents, the late Agapito and Angela Olarte, started occupying the subject property in 1943 by virtue of a lease contract with the PNR and constructed thereon a two-storey residential house. Petitioners further allege that they were born and raised during their parents occupancy of the subject property. On November 3, 1965, the Board of Liquidators under the Office of the President (OP) awarded a Certificate of Priority to Agapito Olarte, to wit: Certificate of Priority TO WHOM IT MAY CONCERN: This is to certify that Agapito Olarte, Filipino, of legal age, single/married to Angela A. Olarte, has since 1945 continuously occupied a portion of Lot No. Parcel -7 situated in the City/Municipality of Singg., Malate, Province of Manila, and is therefore entitled to priority in the acquisition of said portion, subject to such rules and regulations as may hereafter be promulgated. The right acquired hereunder is non-transferable and any transfer thereof shall be null and void. Given under my hand at Manila, on this 3rd day of November, in the year of our Lord, one thousand nine hundred sixty(-)five.

DIOSDADO MACAPAGAL

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PRESIDENT OF THE PHILIPPINES

BY AUTHORITY OF THE PRESIDENT:

(Sgd.) RODOLFO P. HIZON CHAIRMAN-GENERAL MANAGER[3] Agapito and Angela thereafter passed away in 1981 and 1984, respectively. Petitioner Norma Olarte-Dineros was then designated as administratrix of the residential house and the subject parcel of land. In 1985, the two-storey residential house was declared in the name of Agapito for taxation purposes.[4] In the same year, petitioners leased out a portion of the residential house to respondents Eduardo Timbang and Demetrio Ocampo. Thereafter, Yolanda left for Saudi Arabia to work while Norma lived with her husband in Pangarap Village, Caloocan City.[5] In 1987, the NHA conducted a Census Tagging Operation in the area where the subject property is located. In 1988, Ocampo was judicially ejected from the premises by petitioners for nonpayment of rentals. On October 15, 1990, this Court in G.R. No. 95206 denied Ocampos petition for review of the CA decision which sustained the trial courts judgment ejecting Ocampo from the leased premises. On December 14, 1990, this Courts decision became final and executory.[6] What transpired thereafter is not extant from the records, but it appears that on April 30, 1997, the NHA issued a Resolution resolving a conflict of claims between petitioners and respondents Timbang and Ocampo over the subject property. The full text of the April 30, 1997 NHA Resolution reads:

Sirs/Mesdames: This has reference to your conflict of claims over Lot 12, Block 2, Tramo-Singalong Zip Project, Manila. Records show that: 1. Structure with Tag No. 497 was censused as owned by Norma Olarte[-]Dineros, an absentee structure owner. Said structure was rented out to the following: a. A certain Mr. Ilagan who has left the premises with no forwarding address. b. c. Eduardo Timbang who is still residing in the said structure. Demetrio Ocampo who was judicially ejected and left the rented unit in 1993.

2. The present occupants of the structure are: a. b. Norma Olarte who is the censused absentee structure owner. Eduardo Timbang who is a censused renter.

c. Armando Olarte brother of Norma Olarte who occupied the portion vacated by Mr. Ilagan in 1988 one year after the official closure of the census tagging operation [of] the project. d. Yolanda Olarte Montecer, sister of Norma Olarte who occupied in 1994 [a] portion vacated by Demetrio Ocampo.

3. In 1988, Norma Olarte[-]Dineros filed an ejectment case against Demetrio Ocampo who finally left the premises in 1993 by virtue of a court order. 4. The District Office recommended that the subject lot be awarded in favor of Armando Olarte and Eduardo Timbang per area of actual occupancy and that Demetrio Ocampo be qualified to apply for a generated lot or buy a structure within the project site. After judicious review and evaluation of the records of the case, we found that:

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1. Eduardo Timbang and Demetrio Ocampo are the only qualified beneficiaries of the subject lot for having been censused as renters therein. Norma Olarte[-]Dineros, Armando Olarte, and Yolanda Olarte Montecer, are all disqualified for not being census residents within the project site. 2. The decision of the court with regards to the ejectment case filed against Demetrio Ocampo treated only the possessory rights over the structure but not the determination of who is the rightful awardee/beneficiary of the lot. 3. The Court of Appeals as affirmed by the Supreme Court declared: until they (Olartes) are refunded the necessary and useful expenses for the residential house, they have a right to retain possession of it. In other words, the Olartes can only be entitled to reimbursement of their lawful expenses for the construction of the existing structure built on the controverted lot. 4. The departure of Demetrio Ocampo from the contested structure was not voluntary. He has no intention of leaving the premises were it not to the adverse decision of the court in which case he has no other recourse but to reside even outside the project area. In short, he cannot be punished for his involuntary act of looking shelter outside the project area. In view of the foregoing, you are advised that: 1. Eduardo Timbang and Demetrio Ocampo are to negotiate with Norma Olarte-Dineros for the voluntary sale of the structure of Ms. Dineros or voluntarily dismantle the same, in case of failure of negotiations within sixty (60) days upon receipt hereof; otherwise, this Authority shall cause the dismantling of the said structure. 2. Mr. Armando Olarte is not qualified for lot award as he was not included in the census or is not a bonafide resident as defined in the code of policies as he occupied the structure one year after the official closure of tagging operation in the project site. 3. Lot 12, Block 2, Tramo-Singalong ZIP Project is hereby awarded to Eduardo Timbang and Demetrio Ocampo in equal share. 4. This resolution is FINAL. Should the aggrieved parties opt to appeal, they have thirty (30) days from receipt hereof within which to file an appeal with the Office of the President, pursuant to Administrative Order No. 18, series of 1987.

Very Truly yours,

(Sgd) MARCIANO M. PINEDA General Manager[7] (Emphasis supplied.) The April 30, 1997 Resolution was received by petitioners on June 25, 1997. Twenty-six (26) days later, or on July 21, 1997, petitioners filed an Appeal and Memorandum on Appeal with the OP anchored on the following grounds: I. THE GENERAL MANAGER OF THE NATIONAL HOUSING AUTHORITY (NHA) COMMITTED A SERIOUS AND REVERSIBLE ERROR AND GRAVE ABUSE OF AUTHORITY IN RESOLVING THAT EDUARDO TIMBANG AND DEMETRIO OCAMPO ARE THE ONLY QUALIFIED BENEFICIARIES OF THE SUBJECT LOT FOR HAVING BEEN CENSUSED AS RENTERS OF THE LOT; AND IN AWARDING TO THEM LOT 12, BLOCK 2, TRAMO-SINGALONG ZIP PROJECT IN EQUAL SHARE.

II. THE GENERAL MANAGER OF THE NATIONAL HOUSING AUTHORITY (NHA), THE HONORABLE MARCIANO M. PINEDA, COMMITTED A SERIOUS [AND] REVERSIBLE ERROR IN RESOLVING FURTHER THAT NORMA OLARTE[-]DINEROS, ARMANDO OLARTE AND YOLANDA OLARTE MONTECER ARE ALL DISQUALIFIED FOR NOT BEING CENSUS RESIDENTS WITHIN THE PROJECT SITE AND THAT THE OLARTES CAN ONLY BE ENTITLED TO REIMBURSEMENT OF THEIR LAWFUL EXPENSES FOR THE CONSTRUCTION OF THE EXISTING STRUCTURE BUILT ON THE LOT.

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III. THAT THERE WAS A SERIOUS IRREGULARITY AND CORRUPTION IN THE CENSUS TAGGING OPERATIONS DELIBERATELY DESIGNED TO FAVOR THE RENTERS EDUARDO TIMBANG AND DEMETRIO OCAMPO AND TO DISQUALIFY THE PETITIONERS DESPITE THE FACT THAT THEY AND THEIR PREDECESSORS-IN-INTEREST HAVE BEEN IN CONTINUOUS, OPEN AND UNINTERRUPTED POSSESSION AND OCCUPANCY OF THE SAID LOT 12, BLOCK 2, TRAMO-SINGALONG ZIP PROJECT SINCE 1943 AND WERE EARLIER GIVEN PRIORITY RIGHTS TO ACQUIRE THE SAID PROPERTY.

IV. THAT THE PETITIONERS WERE DENIED DUE PROCESS OF LAW AND THEY ARE ABOUT TO LOSE THE RESIDENTIAL HOUSE WHICH IS THE ONLY PIECE OF PROPERTY AND THE RIGHTS TO LOT 12, BLOCK 2, TRAMO-SINGALONG ZIP PROJECT WHERE ALL OF THEM WERE BORN AND HAVE GROWN UP, WHICH THE PETITIONERS INHERITED FROM THEIR PARENTS, HENCE, SAID RESOLUTION IS NULL AND VOID.[8] On November 29, 2002, the OP, thru Deputy Executive Secretary Arthur P. Autea, issued a Resolution[9] dismissing petitioners appeal for being filed out of time and for lack of merit. The OP cited Section 2[10] of Presidential Decree (P.D.) No. 1344[11] which provides that an appeal from the decision of the NHA should be made within fifteen (15) days from receipt of the decision and that if an appeal was made and said decision is not reversed and/or amended within a period of thirty (30) days, the decision is deemed affirmed. The OP held that since more than thirty (30) days had lapsed since the appeal became ripe for decision and there was no reversal or amendment of the appealed ruling, the questioned award of the NHA is deemed affirmed. The OP further ruled that the appeal was filed out of time, noting that it took petitioners twenty-six (26) days to file it. The OP further ruled that findings of fact of administrative bodies will not be interfered with, in the absence of a grave abuse of discretion or unless the findings are not supported by substantial evidence. It held that petitioners failed to prove grave abuse of discretion on the part of the NHA and that the records show that the assailed ruling is supported by substantial evidence. Petitioners moved to reconsider the November 29, 2002 Resolution of the OP arguing that petitioners rightly relied on the statement of the NHA regarding the period for filing the appeal because the NHA was the entity specifically charged with deciding the parties rights and obligations to the subject land. They contend that there was no bad faith or any intention on their part to delay the disposition of the case; hence, the OP should have relaxed the rules on the matter of perfection of appeals. They likewise claim that the delay is not unreasonable since it was precipitated by a mistake of the NHA itself. Petitioners add that there was grave abuse of discretion on the NHAs part for completely disregarding the facts as laid down by petitioners, and for relying on its census tagging to favor respondents Timbang and Ocampo. By Resolution*12+ dated June 27, 2003, however, the OP denied petitioners motion for reconsideration. Thus, on September 15, 2003, petitioners filed a petition for certiorari with the CA assailing the OPs rulings.

In a Resolution[13] dated September 19, 2003, the CA dismissed the petition for certiorari outright on the grounds that the certification of non-forum shopping was signed by only two of the four petitioners and that they erroneously availed of the remedy of certiorari under Rule 65 instead of an appeal under Rule 43 of the 1997 Rules of Civil Procedure, as amended. Petitioners moved to reconsider the dismissal of their petition, but the same was denied by the CA in a Resolution[14] dated August 3, 2004. The case was thereafter elevated to this Court via a petition for review on certiorari, docketed as G.R. No. 165821. On June 21, 2005, this Court rendered a Decision[15] reversing and setting aside the September 19, 2003 and August 19, 2004 CA Resolutions and remanding the case to the CA for further proceedings. The Court ruled that the ends of justice would be better served if substantial issues are squarely addressed, especially since either side stands to lose a family home. However, since the issues involved are factual in nature, this Court ruled that such issues are best addressed to the CA, which has the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings. Upon remand, however, the CA again dismissed the petition sustaining the OPs ruling. Thus, petitioners again brought this case before this Court, raising the following arguments: I. THE SUPREME COURT HAS ALREADY SETTLED THE ISSUE OF WHO IS THE LAWFUL POSSESSOR OF THE DISPUTED LAND.

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THE CERTIFICATE OF PRIORITY IS *A+ RECOGNITION BY THE STATE OF PETITIONER*S+ POSSESSION OF THE DISPUTED PROPERTY. PRIVATE RESPONDENTS ARE MERE LESSEES OF PETITIONERS. II. PETITIONERS WERE DEPRIVED OF DUE PROCESS OF LAW.

III. THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE OFFICE OF THE PRESIDENT WHICH EARLIER DISMISSED THE APPEAL OF THE PETITIONERS FOR HAVING BEEN FILED OUT OF TIME. THE HONORABLE COURT HAS ALREADY RULED THAT A LIBERAL INTERPRETATION OF THE RULES MUST BE ACCORDED THE PETITIONERS SINCE IT IS THEIR FAMILY HOME THAT IS AT STAKE.[16] Petitioners argue that the issue of prior possession has already been passed upon and settled by this Court in its Decision dated October 15, 1990 in G.R. No. 95206. Thus, it is erroneous for the NHA to award the subject land to respondents on the ground that petitioners are not censused owners since petitioners by and through their predecessors in interest have been in actual, continuous, uninterrupted, open, public and adverse possession since 1943. They further contend that the Certificate of Priority awarded to their parents Agapito and Angela operated to grant them the right to purchase the said property as soon as it became open for acquisition by private individuals. Thus, the blind reliance of the OP on the NHA resolution on the tagging census operation effectively deprived petitioners of their lawful rights to the property without due process of law and invalidated altogether the Certificate of Priority earlier issued to their parents. Petitioners likewise argue that they were deprived due process of law as the tagging operations were conducted without prior notice to the owners or lawful occupants of the area. At the time of the tagging operations, petitioners Armando and Renato were in possession thereof. This, however, was conveniently ignored by the NHA when it concluded that Armando is not qualified for a lot award and is not a bona fide resident. Worse, petitioners contend that they were never informed nor given the opportunity to present or adduce evidence of their continued occupancy of the subject property by themselves and through their predecessors in interest. The NHA simply relied on the tagging operations. Petitioners also submit that the CA, in affirming the OPs decision, effectively denied them the opportunity to present completely their meritorious case on appeal. They point out that it is the NHA resolution itself which provided for a thirty (30)-day appeal period and petitioners, in their honest belief that they were granted said amount of time within which to file their appeal, cannot be faulted for having filed the appeal beyond the reglementary period mandated in P.D. No. 1344. They argue that while the government is usually not estopped by the mistake or error of its officials or agents, the rule does not afford a blanket or absolute immunity. Petitioners further contend that this Court has already ruled that a liberal interpretation of the rules must be accorded them since it is their family home that is at stake. The Office of the Solicitor General (OSG), for the NHA, on the other hand argues that though petitioners blame the NHA for their belated filing of the appeal when its resolution granted them a period of thirty (30) days within which to appeal to the OP, such does not change the fact that their appeal was filed beyond the reglementary period. The OSG submits that the OP aptly held that the error of the NHA, which did not take into account Section 2 of P.D. No. 1344 providing for the fifteen (15)-day period to appeal, cannot be invoked as a ground for estoppel. Also, petitioners have no one to blame but themselves for the belated filing of their appeal as ignorance of the law excuses no one from compliance therewith. The OSG likewise argues that a perusal of the records of the case would show that petitioners need not present evidence to establish their possession because although they allege to be owners, they are nonetheless disqualified from being beneficiaries of the land. As to Armando, even though he actually occupied the property, he did so one year after the official closure of the census tagging operation. As to Norma and Yolanda, they are disqualified for not being census residents. The OSG also contends that the Certificate of Priority cannot be considered title to the property. In fact, petitioners could be deemed to have abandoned whatever right they may have over the property by virtue of the Certificate of Priority when they stopped residing on the property as they were found by NHA as not census residents within the project area. Clearly therefore, there was basis for the NHA for holding Timbang and Ocampo as eligible beneficiaries. Essentially, the issues to be resolved in the instant case are: (1) Should petitioners be blamed for filing their appeal late because they relied on the erroneous pronouncement in the NHA resolution that they have thirty (30) days to file it instead of fifteen (15) days as mandated by law? and (2) Are petitioners disqualified to be awardees for Lot 12, Block 2, Tramo-Singalong ZIP, Manila? As to the first issue, we answer in the negative. Time and again, it has been held that the right to appeal is not a natural right or a part of due process, but merely a statutory privilege and may be exercised only in the manner and in accordance with the provisions of the law. The party who seeks to avail of the same must comply with the requirements of the rules, failing in which the right to appeal is lost.[17]

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In the instant case, the proximate cause of petitioners failure to comply with the rules, specifically that pertaining to the period within which to appeal, is the pronouncement in the appealed resolution itself that they have thirty (30) days contrary to what is prescribed in Section 2 of P.D. No. 1344, the applicable law in the case. We agree with petitioners that they cannot be blamed for honestly believing that they indeed had thirty (30) days considering it was the NHA itself which said so. Being the agency tasked to implement P.D. No. 1344, it is but plausible for petitioners to assume that what the NHA pronounced is the correct period within which they can file their appeal. However, as to the second issue, we rule in the affirmative. The Zonal Improvement Project or ZIP was adopted to strengthen further the efforts of the government to uplift the living conditions in the slums and blighted areas[18] in line with the spirit of the constitutional provision guaranteeing housing and a decent quality of life for every Filipino.[19] The ownership of land by the landless is the primary objective of the ZIP.[20] The Code of Policies embodied in NHA Circular No. 13 governed the implementation of the ZIP as to the classification and treatment of existing structures, the selection and qualification of intended beneficiaries, the disposition and award of fully developed lots in all ZIP zones within Metro Manila, and other related activities.[21] In the Declaration of Policy, it provides that the tagging of structures and the census of occupants shall be the primary basis for determining beneficiaries within ZIP Project sites.[22] Paragraph V, on the other hand, lays down the rules on beneficiary selection and lot allocation: V. BENEFICIARY SELECTION AND LOT ALLOCATION 1. The official ZIP census and tagging shall be the primary basis for determining potential program beneficiaries and structures or dwelling units in the project area. 2. 3. Issuance of ZIP tag number in no way constitutes a guarantee for ZIP lot allocation. Absentee censused households and all uncensused households are automatically disqualified from lot allocation.

4. Only those households included in the ZIP census and who, in addition, qualify under the provisions of the Code of Policies, are the beneficiaries of the Zonal Improvement Program. 5. 6. A qualified censused-household is entitled to only one residential lot within the ZIP project areas of Metro Manila. Documentation supporting lot allocation shall be made in the name of the qualified household head.

7. An Awards and Arbitration Committee (AAC) shall be set up in each ZIP project area to be composed of representative each from the Authority, the local government, the barangay and the community. The AAC shall determine lot allocation amongst qualified beneficiaries, arbitrate in matters of claims and disputes, and safeguard the rights of all residents in ZIP project areas by any legal means it may consider appropriate. All decisions of the AAC shall be subject to review and approval of the General Manager of the Authority, the local Mayors, and finally the Governor of the Metropolitan Manila Commission.[23] The declaration of policy in the Code of Policies stated that an absentee or uncensused structure owner was disqualified from owning a lot within the ZIP zones.[24] The Code of Policies shows the following persons to be automatically disqualified as beneficiaries of the project, namely: (1) Absentee censused household censused household that vacates a duly tagged structure or dwelling unit and leaves the project area for a continuous period for at least six months without written notice to the NHA and the local government unit; (2) Uncensused household household that is not registered in the official ZIP census; (3) Absentee structure owner any individual who owns a structure or dwelling unit in a ZIP project area and who has not occupied it prior to the official closure of the Census; and (4) Uncensused structure owner any person who owns a structure or dwelling unit not registered in the official ZIP census.[25] (Emphasis supplied.) Thus, in the award of the ZIP lot allocation, the primary bases for determining the potential program beneficiaries and structures or dwelling units in the project area were the official ZIP census and tagging conducted. It was, therefore, the primordial requisite that the intended beneficiary must be the occupant of the tagged structure at the time of the official ZIP census or at the closure thereof. Otherwise, the person was considered an absentee structure owner for being absent from his usual residence or domicile.[26] Here, at the time of the official ZIP census, the NHA found that Norma was an absentee structure owner and it was not petitioners but respondents Timbang and Ocampo and a certain Mr. Ilagan who were occupying the subject property. Armando on the other hand occupied the portion vacated by Mr. Ilagan in 1988 one year after the official closure of the census tagging operation while Yolanda occupied a portion vacated by Demetrio Ocampo in 1994 after the latter was

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judicially evicted in 1993. Though there was no mention as to Renato, petitioners in their pleadings admit that he was working in Novaliches and would only go to the subject property during weekends. Petitioners however dispute the NHA and census findings and allege that Armando and Renato never left the subject property, but we find no cogent reason to disturb the findings of the NHA. It is settled that the Court is not a trier of facts and accords great weight to the factual findings of lower courts or agencies whose function is to resolve factual matters. It is not for the Court to weigh evidence all over again. Moreover, findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect but finality when affirmed by the CA,[27] as in the case at bar. Evidently, all petitioners cannot qualify as beneficiaries because they were not the occupants of the subject property at the time of the census. They were living elsewhere at that crucial time. Undeniably, they were primarily using the subject property as a source of income by renting it out to third persons and not as their abode. Petitioners thus are not homeless persons which the ZIP intended to benefit. That petitioners were the descendants of the persons who built the residential house does not mean that the lot on which it stood would automatically be awarded to them. Petitioners cannot anchor their rights on the Certificate of Priority awarded to their parents. As correctly argued by the OSG, petitioners are deemed to have abandoned whatever right they may have over the property by virtue of the Certificate of Priority, when they chose not to reside on the subject property and found by NHA as not census residents within the project area. Neither can petitioners rely on this Courts final judgment sustaining Ocampos ejectment from the subject property. The only issue for resolution in an ejectment case is physical or material possession of the property involved, independent of any claim of ownership by any of the party litigants. An ejectment case is designed to restore, through summary proceedings, the physical possession of any land or building to one who has been illegally deprived of such possession, without prejudice to the settlement of the parties opposing claims of juridical possession in appropriate proceedings. Any ruling on the question of ownership is only provisional and made for the sole purpose of determining who is entitled to possession de facto.[28] Certainly, a judgment in an ejectment case could only resolve the question as to who has a better right to possess the subject property but definitely, it could not conclusively determine whether petitioners are entitled to the award under the ZIP or ascertain if respondents are disqualified beneficiaries.[29] We likewise disagree with petitioners argument that they were deprived due process since they were not notified of the census tagging operations in their area. It cannot be said that the census was conducted for one day only that petitioners could have just missed their opportunity to be considered as censused occupants. If in fact they actually live on the subject property and are really occupants thereof, there is no way that they will not be aware of the census tagging operations since all residents in the area were subjected to it. The fact that they allegedly knew nothing of the census tagging operations all the more bolsters the NHAs finding that petitioners are mere absentee structure owners and not occupants of the subject property. Similarly without merit is petitioners contention that they were deprived of due process of law. If petitioners were not able to present evidence to substantiate their claim, they only have themselves to blame and not the NHA or the Office of the President whom they believed to have ignored their claims and contentions. Nothing in the records show that petitioners invoked the jurisdiction of the Awards and Arbitration Committee (AAC) that was set up in their area to determine lot allocation amongst qualified beneficiaries, arbitrate in matters of claims and disputes, and safeguard the rights of all residents in the ZIP project area.[30] If at the first instance, they already went to the AAC, they could have easily proven their claims since it includes members from the barangay and the community who know them and could attest that they are indeed actual residents of the subject property. Petitioners, however, failed to avail of this remedy. In sum, while this Court finds that petitioners appeal to the OP should be considered timely filed, we find the same to be without merit. WHEREFORE, the petition for review on certiorari is DENIED. With costs against the petitioners. SO ORDERED.

125

FIRST DIVISION

BANGKO SENTRAL NG PILIPINAS, Petitioner, - versus ORIENT COMMERCIAL BANKING CORPORATION, JOSE C. GO, GEORGE C. GO, VICENTE C. GO, GOTESCO PROPERTIES, INC., GO TONG ELECTRICAL SUPPLY INC., EVER EMPORIUM, INC., EVER GOTESCO RESOURCES AND HOLDINGS INC., GOTESCO TYAN MING DEVELOPMENT INC., EVERCREST CEBU GOLF CLUB AND RESORTS, INC., NASUGBU RESORTS INC., GMCC UNITED DEVELOPMENT CORP., GULOD RESORT, INC., OK STAR, EVER PLAZA, INC. AND EVER ELECTRICAL MFG., INC., Respondents. G.R. No. 148483 Promulgated: June 29, 2011 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x RESOLUTION VILLARAMA, JR., J.: The present petition although captioned as one for certiorari is hereby treated as a petition for review on certiorari under Rule 45, with prayer for issuance of temporary restraining order and writ of preliminary injunction. It seeks to annul and set aside the June 11, 2001 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 60509. The CA nullified the writs of preliminary attachment issued by the Regional Trial Court (RTC) of Manila, Branch 12 in Civil Case No. 9995993 and ordered the dismissal of the amended complaint as against some of the named defendants. Briefly, the facts as set forth in the CA Decision: On February 13, 1998, herein respondent Orient Commercial Banking Corporation (OCBC) declared a bank holiday on account of its inability to pay all its obligations to depositors, creditors and petitioner Bangko Sentral ng Pilipinas (BSP). On March 17, 1998, OCBC filed a petition for rehabilitation with the Monetary Board. The bank was placed under receivership and the Philippine Deposit Insurance Corporation (PDIC) was designated as Receiver. Pursuant to the Monetary Boards Resolution No. 1427, PDIC took over all the assets, properties, obligations and operations of OCBC. Respondent Jose C. Go, the principal and biggest stockholder of OCBC, with his affiliate companies (respondent corporations), challenged the said action of the PDIC before the RTC of Manila, Branch 44 (Civil Case No. 98-91265). Said case was dismissed and the dismissal was appealed to the CA. During the pendency of Civil Case No. 98-91265, the Monetary Board adopted Resolution No. 602 dated May 7, 1999 directing the Receiver to proceed with the liquidation of OCBC. In June, 1999, the PDIC instituted Special Proceeding No. 99-94328 before the RTC of Manila, Branch 51 entitled In Re: Petition for Assistance in the Liquidation of Orient Commercial Banking Corporation, Philippine Deposit Insurance Corporation, Petitioner. On December 17, 1999, petitioner filed in the RTC of Manila (Branch 12) a complaint for sum of money with preliminary attachment (Civil Case No. 99-95993) against the respondents seeking to recover deficiency obligation owed by OCBC which then stood at P1,273,959,042.97 with interest at 8.894 % per annum, overdraft obligation of P1,028,000,000.00, attorneys fees and costs of suit. On January 14, 2000, the RTC of Manila, Branch 12 issued an Order[2] in Civil Case No. 99-95993 granting petitioners motion for preliminary attachment. On January 19, 2000, following the posting by petitioner of P50 million attachment bond issued by the Government Service Insurance System (GSIS), the corresponding writ was issued ordering the Deputy Sheriffs to attach the real and personal properties of respondents to the value of petitioners demand in the amount of P2,301,951,042.97, exclusive of interests and costs, as security for the said claim.[3] Respondents filed with the CA a petition for certiorari questioning the aforesaid orders (CA-G.R. SP No. 60509). They also filed a consolidated motion to dismiss Civil Case No. 99-95993, which the trial court denied.[4] On June 1, 2001, respondents filed an Urgent Motion to Resolve and/or to Issue a Temporary Restraining Order or a Writ of Preliminary Injunction. On June 11, 2001, the CA rendered the assailed decision dissolving the writ of attachment

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and ordering the RTC to desist from proceeding with Civil Case No. 99-95993 as against the respondents except Jose C. Go, Vicente C. Go and George C. Go. It appears, however, that a Manifestation with Motion to Admit Attached Opposition (to the Urgent Motion to Resolve and Issue a Temporary Restraining Order)[5] was filed by petitioner on June 6, 2001. On June 27, 2001, petitioner filed a Very Urgent Manifestation[6] stating that: (1) the June 11, 2001 decision had to await finality as it was rendered without requiring the petitioner to file its comment, and because the complaint was dismissed despite massive evidence presented before the trial court on the participation of respondents in the commission of fraud against BSP; (2) of the total outstanding amount of P2,301,959,042.97 being collected by petitioner from the respondents, only P200 million was garnished and it is doubtful if the taxpayers interest can be satisfied there being no assets that can be found in the name of respondents and no assets of OCBC were levied or garnished; and (3) petitioner had filed a Vigorous Opposition before the trial court as the respondents are prematurely implementing the CA decision, even as the petitioner still can elevate the case to this Court. On July 2, 2001, the CA recalled its June 11, 2001 decision and granted a ten-day period for petitioner to file its comment. The ponente likewise inhibited himself from the case.[7] On July 3, 2001, BSP filed the instant petition with the following prayer: WHEREFORE, it is respectfully prayed that this Honorable Court: 1. Give due course to this petition. 2. Upon its filing and, before the application for the issuance of a writ of preliminary injunction is heard, order the issuance of a temporary restraining order immediately restraining the respondents from proceeding in any manner with the enforcement of the assailed decision [dated] June 11, 2001 in CA-G.R. SP No. 60509 until this petition is resolved with finality. 3. After hearing the application, order the issuance of a writ of preliminary injunction restraining the respondents from proceeding in any manner with the enforcement of the assailed decision June 11, 2001 in CA-G.R. SP No. 60509 until the instant case shall have been adjudicated on its merits. 4. After hearing the instant case on its merits, order that the writ of preliminary injunction be made permanent, nullifying the assailed decision [dated] June 11, 2001 in CA-G.R. SP No. 60509 which is sought to be reviewed and directing the resumption of the proceedings in Civil Case No. 99-95993.[8] Respondents moved to dismiss the petition on grounds of forum shopping and submission of a defective certificate of non-forum shopping. Subsequently, petitioner filed an Omnibus Motion for clarification and for leave of court to admit comment on the motion to dismiss, to which the respondents filed their opposition. On February 22, 2002, respondents Comment was filed and petitioner filed its Reply on July 2, 2002. On January 31, 2003, respondents filed an Urgent Motion to Lift, Quash and Dissolve the Writ of Preliminary Attachment Against the Properties of the Respondents Except Orient Commercial Banking Corporation. Petitioner filed its comment on the said motion on May 5, 2003.[9] On January 5, 2004, petitioner filed a manifestation informing this Court that on December 16, 2003, the parties have agreed to settle their differences and executed a Compromise Agreement, which was approved by the RTC of Manila, Branch 12 on December 29, 2003. Attached to the said manifestation is the motion to approve judgment based on compromise agreement and the trial courts Order approving the same.*10+ Under the Compromise Agreement, the parties agreed to cause the dismissal of nineteen (19) pending civil cases in various courts, including the present case before this Court, CA-G.R. SP No. 60509 and Civil Case No. 95-95993, in consideration for the faithful compliance by the respondents of the agreed terms and conditions of payment of the total deficiency obligation of OCBC to petitioner amounting to Two Billion Nine Hundred Seventy-Four Million Nine Hundred Three Thousand Pesos (P2,974,903,000.00). Said outstanding indebtedness of OCBC is to be settled in the following manner: A. A downpayment shall be made by the defendants through the DACION of certain real estate properties more particularly described in Annex B hereof. a i) The parties shall execute separate DEEDS OF DACION over the real estate properties described in Annex B upon the execution of the Agreement; a ii) All Capital Gains Tax on the properties for DACION shall be payable by the defendants but Documentary Stamp Tax, Transfer Tax and all registration fees on the DACION shall for the account of plaintiff. B. The balance remaining after the DACION of the real estate properties shall be paid by the defendants within a period of ten (10) years but extendible for another five (5) years provided that the defendants shall religiously comply with the amortization schedule (Annex C hereof) for a continuous period of two (2) years from date of first amortization.

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b i) The foregoing outstanding balance shall be charged interest at 91-day T-bill rate upon execution of this Compromise Agreement repriced every three (3) months for a period of 10 years and payable monthly in arrears. C. Additional Properties for Execution

c i) To ensure payment of the monthly amortizations due under this Compromise Agreement, defendants Ever Crest Golf Club Resort, Inc. and Mega Heights, Inc. have agreed to have its real properties with improvements covered by TCT Nos. T-68963, T-68964, T-68966 and TDs ARPN-AA-17023-00582 and AA-17023-0058 shall be subject of existing writ of attachment to secure the faithful payment of the outstanding obligation herein mentioned, until such obligation shall have been fully paid by defendants to plaintiff. c ii) That all the corporate approvals for the execution of this Compromise Agreement by Ever Crest Golf Club Resort, Inc. and Mega Heights, Inc. consisting of stockholders resolution and Board of Directors approval have already been obtained at the time of the execution of this Agreement. c iii) Failure on the part of the defendants to fully settle their outstanding obligations and to comply with any of the terms of this Compromise Agreement shall entitle the plaintiff to immediately ask for a Writ of Execution against all assets of the Ever Crest Golf Club Resort, Inc. and Mega Heights, Inc. now or hereafter arising from the signing of this Compromise Agreement. xxxx III. FUNDS UNDER GARNISHMENT III i) The parties agreed that the existing funds under garnishment with Land Bank of the Philippines and PCI-Equitable Bank shall be subject of the following disposition: (a) 75% of the total garnished amounts shall be released to defendants net of reimbursement for the expenses incurred by plaintiff involving the prosecution of this case with RTC-Manila, Branch 12 prior to the execution date of this Compromise Agreement. (b) 25% of the total garnished amounts shall be paid and applied to defendants amortizations per Annex C.

III ii) Insofar as the garnishments on the rentals and all other income or revenues on the malls owned and operated by the defendants, the same shall continue to guarantee the stipulated amortization due from the defendants per the amortization schedule.[11] A compromise agreement intended to resolve a matter already under litigation is a judicial compromise. Having judicial mandate and entered as its determination of the controversy, such judicial compromise has the force and effect of a judgment. It transcends its identity as a mere contract between the parties, as it becomes a judgment that is subject to execution in accordance with the Rules of Court.[12] With the final settlement of the claims of petitioner against herein respondents, the issues raised in the present petition regarding the propriety of the issuance of writ of attachment by the trial court and the grave abuse of discretion allegedly committed by the appellate court in reversing the orders of the trial court, have now become moot and academic. 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.*13+ In such cases, there is no actual substantial relief to which petitioner would be entitled to and which would be negated by the dismissal of the petition.[14] WHEREFORE, the petition is DENIED for being moot and academic. The case is hereby REMANDED to the Regional Trial Court of Manila, Branch 12 for continuation of proceedings to implement the Compromise Agreement in Civil Case No. 99-95993 dated December 22, 2003 approved by said court on December 29, 2003. No costs. SO ORDERED.

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FIRST DIVISION

EFREN L. ALVAREZ, Petitioner,

- versus G.R. No. 192591

PEOPLE OF THE PHILIPPINES, Respondent. Promulgated:

June 29, 2011 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

VILLARAMA, JR., J.: Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, seeking to reverse and set aside the Decision[1] dated November 16, 2009 and Resolution[2] dated June 9, 2010 of the Sandiganbayans Fourth Division finding the petitioner guilty beyond reasonable doubt of violation of Section 3(e) of Republic Act (R.A.) No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act. Petitioner Efren L. Alvarez, at the time of the subject transaction, was the Mayor of the Municipality (now Science City) of Muoz, Nueva Ecija. In July 1995, the Sangguniang Bayan (SB) of Muoz under Resolution No. 136, S-95 invited Mr. Jess Garcia, President of the Australian-Professional, Inc. (API) in connection with the municipal governments plan to construct a four-storey shopping mall (Wag-wag Shopping Mall), a project included in its Multi-Development Plan. Subsequently, it approved the adoption of the project under the Build-Operate-Transfer (BOT) arrangement in the amount of P240 million, to be constructed on a 4,000-square-meter property of the municipal government which is located at the back of the Municipal Hall. API submitted its proposal on November 7, 1995.[3] On February 9, 1996, an Invitation for proposals to be submitted within thirty (30) days, was published in Pinoy tabloid. On April 12, 1996, the Pre-qualification, Bids and Awards Committee (PBAC) recommended the approval of the proposal submitted by the lone bidder, API. On April 15, 1996, the SB passed a resolution authorizing petitioner to enter into a Memorandum of Agreement (MOA) with API for the project. Consequently, on September 12, 1996, petitioner signed the MOA with API, represented by its President Jesus V. Garcia, for the construction of the Wag-Wag Shopping Mall under the BOT scheme whereby API undertook to finish the construction within 730 calendar days.[4] On February 14, 1997, the groundbreaking ceremony was held at the site once occupied by government structures which included the old Motor Pool, the old Health Center and a semi-concrete one-storey building that housed the Department of Agriculture, BIR Assessor, old Post Office, Commission on Elections and Department of Social Welfare and Development. These structures were demolished at the instance of petitioner to give way to the construction project. Thereafter, API proceeded with excavation on the area (3-meter deep) and a billboard was put up informing the public about the project and its contractor. However, no mall was constructed as API stopped work within just a few months. On August 10, 2006, petitioner was charged before the Sandiganbayan for violation of Section 3(e) of R.A. No. 3019 (SB-06-CRM-0389), under the following Information: That on or about 12 September 1996, and sometime prior or subsequent thereto, in the then Municipality (now Science City) of Muoz, Nueva Ecija, and within the jurisdiction of this Honorable Court, the above-named accused EFREN L. ALVAREZ, a high ranking public official, being then the Mayor of Muoz, Nueva Ecija, taking advantage of his official

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position and while in the discharge of his official or administrative functions, and committing the offense in relation to his office, acting with evident bad faith or gross inexcusable negligence or manifest partiality did then and there willfully, unlawfully and criminally give the Australian-Professional Incorporated (API) unwarranted benefits, advantage or preference, by awarding to the latter the contract for the construction of Wag-Wag Shopping Mall in the amount of Two Hundred Forty Million Pesos (Php 240,000,000.00) under a Buil[d]-Operate-Transfer Agreement, notwithstanding the fact that API was and is not a duly-licensed construction company as per records of the Philippine Construction Accreditation Board (PCAB), which construction license is a pre-requisite for API to engage in construction of works for the said municipal government and that API does not have the experience and financial qualifications to undertake such costly project among others, to the damage and prejudice of the public service. CONTRARY TO LAW.[5]

On September 22, 2006, petitioner was duly arraigned, pleading not guilty to the charge. At the trial, petitioner testified that during his term as Mayor of Muoz, the municipal government planned to borrow money from GSIS to finance the proposed Wag-Wag Shopping Mall project. He learned about API when then Vice-Mayor Romeo Ruiz and other SB members showed him a copy of publication/advertisement in the Manila Bulletin and Business Bulletin showing that API was then building similar BOT projects for construction of shopping malls in Lemery, Batangas (P150 million) and in Calamba, Laguna (P300 million). Because it will not entail government funds and is an alternative to availment of GSIS loan, petitioner appointed Vice-Mayor Ruiz and other SB members to study the matter. A resolution was subsequently passed by the SB inviting API for detailed information on their mall projects. Thereafter, the SB approved the construction of Wag-Wag Shopping Mall under BOT scheme, which was favorably endorsed by the Municipal Development Council. A public hearing was also conducted by Municipal Engineer Armando E. Miranda. On November 8, 1995, the municipal government received the unsolicited proposal of API for the construction of Wag-Wag Shopping Mall. For three weeks, an Invitation to Bid was published in the Pinoy tabloid. But it was the lone bidder, API, whose proposal was eventually recommended by the PBAC and approved by the SB.[6] Petitioner emphasized that not a single centavo was spent by the municipal government for the Wag-Wag Shopping Mall project. It was an unsolicited proposal under the BOT law. API was required to submit pre-qualification statements containing, among others, their accomplished projects. Eventually the SB passed a resolution authorizing him to enter into the MOA with API. The municipal government issued the notice of award to API on September 16, 1996 in which it required the contractor to post notices prior to the start of the project and to submit other requirements such as performance bond. However, API did not comply as its counsel, Atty. Lydia Y. Marciano said these are not required under the BOT law (R.A. No. 7718) since there will be no government undertaking, equity or subsidy in the project. After securing an environmental clearance certificate from DENR, the groundbreaking ceremony was held on February 1, 1997. API, as promised, paid P500,000.00 as disturbance or relocation fee considering that the municipal government has caused the demolition of old buildings at the site. A certification[7] of such payment was issued by City Treasurer Luzviminda P. De Leon and City Accountant June Franklyn A. Fernandez on February 5, 2007. The materials were then utilized for the construction of the new motor pool and new City Library. Thereafter, API began excavating an area of 30 x 30 meters (1,000 sq. ms.), about 3 meters deep. However, only the sales office was constructed. The project was not completed and API gave as excuse the 1997 financial crisis. They wrote a letter to Mr. Garcia reminding him of the 730days completion period but then he was nowhere to be found and did not answer the letter. Hence, the SB authorized him to file a case against API, and later also granted him authority to enter into a compromise agreement in Civil Case No. 161-SD 98). Their compromise agreement was approved but they could not find a copy anymore because the Regional Trial Court at Balok, Sto. Domingo, Nueva Ecija where the settlement was done, was burned down.[8] On cross-examination, petitioner claimed that had the municipal government then borrowed funds from the GSIS, they envisioned annual return of P5 million from a P40 million loan for a modest mall (but for an area of 4,000 square meters, the loan would have to be P80 million). For a period of 8 years, the municipality would have an income of P40 million and the GSIS can be paid. As to the contractors financial capability, it presented a credit line of P150 million to P250 million for Australian-Professionals Realty, Inc. (APRI). Petitioner clarified that API and APRI were one and the same entity having the same board of directors, but when asked if he verified this from the Securities and Exchange Commission (SEC), he answered in the negative. Petitioner asserted that it was the Vice-Mayor who is accountable for this project as he headed the working panel. As to whether API was a licensed contractor, he admitted that he did not verify this before awarding the BOT contract involving an infrastructure project. He insisted that the Wag-Wag Shopping Mall Project, being an unsolicited proposal under BOT law, is exempt from the pre-qualification requirement although they still conducted it. As far as he knows, the project proponent in this case is the Municipality of Muoz. However, petitioner admitted that he is not familiar with the BOT law. He also admitted that the Invitation published stated a shorter period of submission of proposal (30 days instead of 60 days provided under the BOT law) and that he just signed the said notice without consulting their legal counsel.[9] On November 16, 2009, the Sandiganbayan rendered judgment convicting the petitioner after finding that: (1) petitioner railroaded the project; (2) there was no competitive bidding; (3) the contractor was totally unqualified to undertake the project; and (4) the provisions of the BOT law and relevant rules and regulations were disregarded and not followed. The said court also found that the municipal government suffered damage and prejudice with the resulting loss of several of its buildings and offices, and having deployed its resources including equipment, personnel and financial outlay for fuel

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and repairs in the demolition of the said structures. Damage suffered by the municipal government was quantified at P4.8 million, or 2% of the total project cost of P240 million, representing the amount of liquidated damages due under the performance security had the same been posted by the contractor as required by law. As to the allegation of conspiracy, the Sandiganbayan held that such was adequately shown by the evidence, noting that this is one case where the Ombudsman should have included the entire Municipal Council in the information for the latter had conspired if not abetted all the actions of the petitioner in his dealings with API to the damage and prejudice of the municipality. The dispositive portion of the decision reads: ACCORDINGLY, accused Efren L. Alvarez is found guilty beyond reasonable doubt for [sic] violation of Section 3 (e) of Republic Act No. 3019 and is sentenced to suffer in prison the penalty of 6 years and 1 month to 10 years. He also has to suffer perpetual disqualification from holding any public office and to indemnify the City Government of Muoz (now Science), Nueva Ecija the amount of Four Million Eight Hundred Thousand Pesos (Php 4,800,000.00) less the Five Hundred Thousand Pesos (Php 500,000.00) API earlier paid the municipality as damages. Costs against the accused. SO ORDERED.[10] The Sandiganbayan likewise denied petitioners motion for reconsideration. It ruled that upon examination of Section 4-A of R.A. No. 6957 as amended by R.A. No. 7718, it was clear that petitioner, with manifest partiality and gross inexcusable negligence, failed to comply with the requirements and procedures for competitive bidding in unsolicited proposals. It also reiterated that API was a contractor and not a mere project proponent; hence, the license requirement applies to it. Petitioners defense that he merely executed the resolutions of the SB was also rejected because as Chief Executive of the Municipality of Muoz, it was his duty to protect the credits, rights and properties of the municipality and to exercise efficient, effective and economical governance for the general welfare of the municipality and its inhabitants under Section 444, R.A. No. 7160 (Local Government Code of 1991). Significant acts of the petitioner also showed that he opted to enter into the contract with API despite reckless disregard of the law. Hence, this petition raising the following issues: 1. Whether or not the Honorable Sandiganbayan failed to observe the requirement of proof beyond reasonable doubt in convicting the Accused-Petitioner; 2. Whether or not the Honorable Sandiganbayan failed to appreciate the legal intent of the BOT project;

3. Whether or not the Honorable Sandiganbayan utterly failed to appreciate that the BOT was a lawful project of the Sangguniang Bayan and not the project of the Mayor Accused-Petitioner herein; and 4. Whether or not the Honorable Sandiganbayan utterly failed to appreciate that there was no damage on the then Municipality of Muoz as contemplated by law, to warrant the conviction of the Accused-Petitioner.[11] We deny the petition. Petitioner was charged with violation of Section 3(e) of R.A. No. 3019. To be convicted under the said provision, the following elements must be established: 1. The accused must be a public officer discharging administrative, judicial or official functions; 2. He must have acted with manifest partiality, evident bad faith or inexcusable negligence; and 3. That his action caused any undue injury to any party, including the government, or giving any private party unwarranted benefits, advantage or preference in the discharge of his functions.[12] In this case, the information alleged that while being a public official and in the discharge of his official functions and taking advantage of such position, petitioner acting with evident bad faith or gross inexcusable negligence or manifest partiality unlawfully gave API unwarranted benefits, advantage or preference by awarding to it the contract for the construction of the Wag-Wag Shopping Mall under the BOT scheme despite the fact that it was not a licensed contractor and does not have the experience and financial qualifications to undertake such costly project, among others, to the damage and prejudice of the public service. Petitioner argues that he cannot be held liable under Section 3(e) of R.A. No. 3019 since the Municipality of Muoz did not disburse any money and the buildings demolished on the site of construction have been found to be a nuisance and declared structurally unsafe, as per notice issued by the Municipal Building Official. He points out that in fact, a demolition permit has been issued upon his application in behalf of the municipal government. API also paid P500,000.00 demolition/relocation fee. We disagree.

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This Court has clarified that the use of the disjunctive word or connotes that either act of (a) causing any undue injury to any party, including the Government; and (b) giving any private party any unwarranted benefits, advantage or preference, qualifies as a violation of Section 3(e) of R.A. No. 3019, as amended.*13+ The use of the disjunctive or connotes that the two modes need not be present at the same time. In other words, the presence of one would suffice for conviction.[14] As we explained in Bautista v. Sandiganbayan[15]: Indeed, Sec. 3, par. (e), RA 3019, as amended, provides as one of its elements that the public officer should have acted by causing any undue injury to any party, including the government, or by giving any private party unwarranted benefits, advantage or preference in the discharge of his functions. The use of the disjunctive term or connotes that either act qualifies as a violation of Sec. 3, par. (e), or as aptly held in Santiago, as two (2) different modes of committing the offense. This does not, however, indicate that each mode constitutes a distinct offense, but rather, that an accused may be charged under either mode or under both.[16] (Underscoring supplied.) The Court En Banc likewise held in Fonacier v. Sandiganbayan[17] that proof of the extent or quantum of damage is not essential. It is sufficient that the injury suffered or benefits received can be perceived to be substantial enough and not merely negligible.[18] Under the second mode of the crime defined in Section 3(e) of R.A. No. 3019 therefore, damage is not required. In order to be found guilty under the second mode, it suffices that the accused has given unjustified favor or benefit to another, in the exercise of his official, administrative or judicial functions.[19] The third element of Section 3(e) of R.A. No. 3019 may be committed in three ways, i.e., through manifest partiality, evident bad faith or gross inexcusable negligence. Proof of any of these three in connection with the prohibited acts mentioned in Section 3(e) of R.A. No. 3019 is enough to convict.*20+ Damage or injury caused by petitioners acts though alleged in the information, thus need not be proven for as long as the act of giving any private party unwarranted benefits, advantage or preference either through manifest partiality, evident bad faith or gross inexcusable negligence was satisfactorily established. Contrary to petitioners assertion, the prosecution was able to successfully demonstrate that he acted with manifest partiality and gross inexcusable negligence in awarding the BOT contract to an unlicensed and financially unqualified private entity. R.A. No. 6957 as amended by R.A. No. 7718, requires that a BOT project be awarded to the bidder who has satisfied the minimum requirements, and met the technical, financial, organizational and legal standards provided in the BOT Law. Section 5 of said law provides: SEC. 5. Public Bidding of Projects. - x x x In the case of a build-operate-and-transfer arrangement, the contract shall be awarded to the bidder who, having satisfied the minimum financial, technical, organizational and legal standards required by this Act, has submitted the lowest bid and most favorable terms for the project, based on the present value of its proposed tolls, fees, rentals and charges over a fixed term for the facility to be constructed, rehabilitated, operated and maintained according to the prescribed minimum design and performance standards, plans and specifications. x x x (Emphasis supplied.) Foremost of these minimum legal standards is the license accreditation of a contractor required under R.A. No. 4566 otherwise known as the Contractors License Law. The Philippine Licensing Board for Contractors created under said law is mandated to ensure that prospective contractors possess at least two years of experience in the construction industry, and knowledge of the building, safety, health and lien laws of the Republic of the Philippines and the rudimentary administrative principles of the contracting business which it deems necessary for the safety of the contracting business of the public.*21+ In fact, a contractor must show that he is licensed by the board before his bid will be considered.*22+ As a general rule therefore, the prospective contractor for government infrastructure projects must have been duly licensed as such pursuant to R.A. No. 4566. API not being a licensed contractor as per the Certification[23] issued by Philippine Contractors Accreditation Board (PCAB) board secretary Aaron C. Tablazon, is thus not qualified to participate in the bidding and much less be awarded the BOT project for the construction of Wag-Wag Shopping Mall. Petitioner claimed that there was compliance with the law saying that API was not a contractor but a mere project proponent, for which a license is not a requisite to undertake BOT projects. But the Sandiganbayan correctly rejected this theory as the clear terms of the MOA itself confirm that API itself undertook to construct the Wag-Wag Shopping Mall, thus: TERMS AND CONDITIONS I. THE PROJECT SITE 1. The FIRST PARTY [Municipality of Muoz] shall make available unto the SECOND PARTY a FOUR THOUSAND (4,000) SQUARE METERS lot located at Muoz, Nueva Ecija where the SECOND PARTY [API] shall build for the FIRST PARTY a commercial building in accordance with this Memorandum of Agreement, RA 6957 AND RA 7718 as well as RA 7160 otherwise known as the Local Government Code of 1991. II. PLANS AND SPECIFICATIONS

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1. The commercial building, to be known as the WAG-WAG SHOPPING MALL, shall be constructed by the SECOND PARTY strictly in accordance with plans, specifications, engineering and construction designs prepared by the SECOND PARTY and duly reviewed and approved by the FIRST PARTY. x x x xxxx III. CONSTRUCTION xxxx 3. The FIRST PARTY shall issue a written Notice to Proceed in favor of the SECOND PARTY. The SECOND PARTY, shall mobilize within 60 days from clearing of the site for official groundbreaking. 4. The SECOND PARTY hereby warrants that it shall finish the construction of the WAG-WAG SHOPPING MALL within SEVEN HUNDRED THIRTY (730) CALENDAR DAYS counted from the date of the official groundbreaking. xxxx 6. x x x Compliance with all existing laws, rules and regulations regarding the construction of the project shall be [the] responsibility of the SECOND PARTY itself to save and hold the FIRST PARTY harmless from any and all liabilities in respect thereto or arising from violations thereof. IV. BUILD-OPERATE-AND-TRANSFER SCHEME 1. The WAG-WAG SHOPPING MALL be constructed by the SECOND PARTY for the FIRST PARTY in accordance with this Memorandum of Agreement and with the Build-Operate-and-Transfer Scheme outlined RA 6957 and RA 7718. This Agreement is of course subject to the provisions of RA 7160 and other pertinent laws. x x x x[24] Section 2 of R.A. No. 6957 as amended by R.A. No. 7718, defined the terms Contractor and Project Proponent as follows: (k) Project Proponent - The private sector entity which shall have contractual responsibility for the project and which shall have an adequate financial base to implement said project consisting of equity and firm commitments from reputable financial institutions to provide, upon award, sufficient credit lines to cover the total estimated cost of the project. (l) Contractor - Any entity accredited under Philippine laws which may or may not be the project proponent and which shall undertake the actual construction and/or supply of equipment for the project. Aside from the clear language of the MOA, the attendant circumstances unmistakably showed that API is both the project proponent and contractor of the BOT project, as it was the one who submitted the proposal and bid to the SB, through its President executed the MOA with petitioner, deployed manpower and equipment for the clearing of the site, conducted groundbreaking, performed excavation and initial construction works, and took responsibility for the stoppage and noncompletion of the project when it entered into a compromise with the Municipality of Muoz. It is to be noted that even as project proponent, API failed to meet the minimum financial standard considering that it has no adequate financial base to implement the Wag-Wag Shopping Mall project. APIs paid-up capital was only P2.5 million, while its stand-by credit line issued by Brilliant Star Capital Lending Co., Inc. was only for the amount of P150 million, way below the P240 million total project cost. While APIs proposal passed through the pre-qualification stage, it failed to submit, except for the SEC registration certificate, a complete set of documents required for a BOT project, in accordance with the BOT Law Implementing Rules and Regulations (IRR): Sec. 5.4. Pre-qualification Requirements. - To pre-qualify, a project proponent must comply with the following requirements: a. Legal Requirements

i. For projects to be implemented under the BOT scheme whose operations require a public utility franchise, the project proponent and the facility operator must be a Filipino or, if a corporation, must be duly registered with the Securities and Exchange Commission (SEC) and owned up to at least sixty percent (60%) by Filipinos. xxxx v. If the contractor to be engaged by the project proponent to undertake the construction works of the project under bidding needs to be pre-identified as prescribed in the published Invitation to Pre-qualify and Bid and is a Filipino, it must be duly licensed and accredited by the Philippine Contractors Accreditation Board (PCAB). However, if the contractor is a foreigner, PCAB registration will not be required at pre-qualification stage, rather it will be one of the contract milestones.

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b. Experience or Track Record: The proponent-applicant must possess adequate experience in terms of the following: i. Firm Experience: By itself or through the member-firms in case of a joint venture/consortium or through a contractor(s) which the project proponent may have engaged for the project, the project proponent and/or its contractor(s) must have successfully undertaken a project(s) similar or related to the subject infrastructure/development project to be bid. The individual firms and/or their contractor(s) may individually specialize on any or several phases of the project(s). A joint venture/consortium proponent shall be evaluated based on the individual or collective experience of the member-firms of the joint venture/consortium and of the contractor(s) that it has engaged for the project. xxxx vi. Key Personnel Experience: The key personnel of the proponent and/or its contractor(s) must have sufficient experience in the relevant aspect of schemes similar or related to the subject project, as specified by the Agency/LGU. e. Financial Capability: The project proponent must have adequate capability to sustain the financing requirements for the detailed engineering design, construction and/or operation and maintenance phases of the project, as the case may be. For purposes of pre-qualification, this capability shall be measured in terms of: (i) proof of the ability of the project proponent and/or the consortium to provide a minimum amount of equity to the project measured in terms of the net worth of the company or in the case of joint ventures or consortia the combined net worth of members or a set-aside deposit equivalent to the minimum equity required, and (ii) a letter testimonial from reputable banks attesting that the project proponent and/or members of the consortium are banking with them, and that they are in good financial standing. The government Agency/LGU concerned shall determine on a project-to-project basis, and before pre-qualification, the minimum amount of equity needed. In addition, the Agency/LGU will inform the proponents of the minimum debt-equity ratio required by the monetary authority for projects to be financed by foreign loans. x x x x (Emphasis supplied.) We have held that the Implementing Rules provide for the unyielding standards the PBAC should apply to determine the financial capability of a bidder for pre-qualification purposes: (i) proof of the ability of the project proponent and/or the consortium to provide a minimum amount of equity to the project and (ii) a letter testimonial from reputable banks attesting that the project proponent and/or members of the consortium are banking with them, that they are in good financial standing, and that they have adequate resources. The evident intent of these standards is to protect the integrity and insure the viability of the project by seeing to it that the proponent has the financial capability to carry it out.[25] Unfortunately, none of these requirements was submitted by API during the pre-qualification stage. Petitioner assails the Sandiganbayan for allegedly failing to appreciate the legal intent of the BOT Law which allows contracts on a negotiated basis for unsolicited proposals like the Wag-Wag Shopping Mall project. It asserts that the procedure and requirements for bidding have been complied with when the Municipality of Muoz caused the publication of the invitation to submit comparative bids for the BOT project was published in Pinoy, a newspaper of general circulation for three consecutive weeks. Since no comparative bid/proposal was received within sixty (60) days, the BOT project was rightfully awarded to API, the original proponent. The contention fails. Unsolicited proposals refer to project proposals submitted by the private sector to undertake infrastructure or development projects which may be entered into by a government agency or local government unit.[26] Section 4-a of R.A. No. 6957 as amended by R.A. No. 7718 governs unsolicited proposals: SEC. 4-A. Unsolicited Proposals. -- Unsolicited proposals for projects may be accepted by any government agency or local government unit on a negotiated basis: Provided, That, all the following conditions are met: (1) such projects involved a new concept or technology and/or are not part of the list of priority projects, (2) no direct government guarantee, subsidy or equity is required, and (3) the government agency or local government unit has invited by publication, for three (3) consecutive weeks, in a newspaper of general circulation, comparative or competitive proposals, and no other proposal is received for a period of sixty (60) working days: Provided, further, That in the event another proponent submits a lower price proposal, the original proponent shall have the right to match that price within thirty (30) working days. We note that it was the SB which invited the API to provide information on the construction of a shopping mall project under the BOT scheme. It cannot be said thus that the development project originated from the proponent/contractor. Nonetheless, even if the proposal is deemed unsolicited, still the requirements of the law have not been complied with. The IRR specified the requirement of publication of the invitation for submission of proposals, as follows: SEC. 10.11. Invitation for Comparative Proposals. - The Agency/LGU shall publish the invitation for comparative or competitive proposals only after ICC/Local Sanggunian issues a no objection clearance of the draft contract. The invitation for comparative or competitive proposals should be published at least once every week for three (3) weeks in at least one

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(1) newspaper of general circulation. It shall indicate the time, which should not be earlier than the last date of publication, and place where tender/bidding documents could be obtained. It shall likewise explicitly specify a time of sixty (60) working days reckoned from the date of issuance of the tender/bidding documents upon which proposals shall be received. Beyond said deadline, no proposals shall be accepted. A pre-bid conference shall be conducted ten (10) working days after the issuance of the tender/bidding documents. (Emphasis supplied.) The above provision highlighted other violations in the bidding procedure for the subject BOT project. First, there was no prior approval by the Investment Coordinating Committee of the National Economic Development Authority (ICCNEDA) of the Wag-Wag Shopping Mall project. Under the BOT Law, local projects to be implemented by the local government units concerned costing above P200 million shall be submitted for confirmation to the ICC-NEDA.[27] Such requisite approval shall be applied for and should be secured by the head of the LGU prior to the call for bids for the project.[28] Second, the law requires publication in a newspaper of general circulation. To be a newspaper of general circulation, it is enough that it is published for the dissemination of local news and general information, that it has a bona fide subscription list of paying subscribers, and that it is published at regular intervals. Over and above all these, the newspaper must be available to the public in general, and not just to a select few chosen by the publisher.[29] Petitioner did not submit in evidence the affidavit of the publisher attesting to Pinoy tabloid as such newspaper of general circulation. And third, even assuming that Pinoy was indeed a newspaper of general circulation, the invitation published indicated a shorter period of submission of comparative proposals, only thirty (30) days instead of the prescribed sixty (60) days counted from the date of issuance of tender documents. There is likewise no showing that API complied with the submission of a complete proposal required under the IRR: SEC. 10.5 Submission of a Complete Proposal. - For a proposal to be considered by the Agency/LGU, the proponent has to submit a complete proposal which shall include a feasibility study, company profile as outlined in Annex A, and the basic contractual terms and conditions on the obligations of the proponent and the government. The Agency/LGU shall acknowledge receipt of the proposal and advice the proponent whether the proposal is complete or incomplete. If incomplete, it shall indicate what information is lacking or necessary. (Emphasis supplied.) As correctly pointed out by the Sandiganbayan, APIs proposal showed that it lacked the above requirements as it did not include a company profile and the basic contractual terms and conditions on the obligations of the proponent/contractor and the government. Had such company profile been required of API, the municipal government could have been apprised of the fact that said contractor/proponent had been in existence for only three months at that time and had not yet completed a project, although APRI, which actually undertook the Calamba and Lemery shopping centers also under BOT scheme, is allegedly the same entity as API which have the same set of incorporators and directors. But more important, the municipality could have realized earlier, on the basis of financial statements and experience in construction included in the company profile, that API could not possibly comply with the huge financial outlay for the Wag-Wag Shopping Mall project. It could have also noted the fact that the aforesaid BOT shopping centers in Lemery and Calamba being implemented by APRI at that time were not yet finished or completed. In any event, such existing BOT contract of APRI with another LGU neither justified non-compliance by API with the submission of a complete proposal for the Wag-Wag Shopping Mall project for a competent evaluation by the PBAC. Indeed, contrary to petitioners stance, the process of unsolicited proposals does involve public bidding where, in the end, the government is free to choose the bid or proposal most advantageous to it.*30+ Thus we held in Asias Emerging Dragon Corporation v. DOTC[31]: The protestation by AEDC of our characterization of the process on unsolicited proposal as public bidding is specious. We call attention to the following relevant sections of Rule 10 of the IRR specifically on Unsolicited Proposals: Sec. 10.9. Negotiation With the Original Proponent. - Immediately after ICC/Local Sanggunians clearance of the project, the Agency/LGU shall proceed with the in-depth negotiation of the project scope, implementation arrangements and concession agreement, all of which will be used in the Terms of Reference for the solicitation of comparative proposals. The Agency/LGU and the proponent are given ninety (90) days upon receipt of ICCs approval of the project to conclude negotiations. The Agency/LGU and the original proponent shall negotiate in good faith. However, should there be unresolvable differences during the negotiations, the Agency/LGU shall have the option to reject the proposal and bid out the project. On the other hand, if the negotiation is successfully concluded, the original proponent shall then be required to reformat and resubmit its proposal in accordance with the requirements of the Terms of Reference to facilitate comparison with the comparative proposals. The Agency/LGU shall validate the reformatted proposal if it meets the requirements of the TOR prior to the issuance of the invitation for comparative proposals. Sec. 10.10. Tender Documents. - The qualification and tender documents shall be prepared along the lines specified under Rules 4 and 5 hereof. The concession agreement that will be part of the tender documents will be considered final and non-negotiable by the challengers. Proprietary information shall, however, be respected, protected and treated with utmost confidentiality. As such, it shall not form part of the bidding/tender and related documents. xxxx

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After the concerned government agency or local government unit (LGU) has received, evaluated, and approved the pursuance of the project subject of the unsolicited proposal, the subsequent steps are fundamentally similar to the bidding process conducted for ordinary government projects. The three principles of public bidding are: the offer to the public, an opportunity for competition, and a basis for an exact comparison of bids, all of which are present in Sec. 10.9 to Sec. 10.16 of the IRR. First, the project is offered to the public through the publication of the invitation for comparative proposals. Second, the challengers are given the opportunity to compete for the project through the submission of their tender/bid documents. And third, the exact comparison of the bids is ensured by using the same requirements/qualifications/criteria for the original proponent and the challengers, to wit: the proposals of the original proponent and the challengers must all be in accordance with the requirements of the Terms of Reference (TOR) for the project; the original proponent and the challengers are required to post bid bonds equal in amount and form; and the qualifications of the original proponent and the challengers shall be evaluated by the concerned agency/LGU using the same evaluation criteria. (Additional emphasis supplied.) In this case, the only attempt made to comply with the bidding requirements is the publication of the invitation which, as already mentioned, was even defective. As noted by the Sandiganbayan, there was no in-depth negotiation as to the project scope, implementation and arrangements and concession agreement, which are supposed to be used in the Terms of Reference (TOR). Such TOR would have provided the interested competitors the basis for their proposed cost, and its absence in this case is an indication that any possible competing proposal was intentionally avoided or altogether eliminated. The essence of competition in public bidding is that the bidders are placed on equal footing.[32] In the award of government contracts, the law requires a competitive public bidding. This is reasonable because *a+ competitive public bidding aims to protect the public interest by giving the public the best possible advantages thru open competition. It is a mechanism that enables the government agency to avoid or preclude anomalies in the execution of public contracts.*33+ Despite APIs obvious lack of financial qualification and absence of basic terms and conditions in the submitted proposal, petitioner who chaired the PBAC, recommended the approval of APIs proposal just forty-five (45) days after the last publication of the invitation for comparative proposals, and subsequently requested the SB to pass a resolution authorizing him to enter into a MOA with API as the lone bidder for the project. It was only in the MOA that the details of the construction, terms and conditions of the parties obligations, were laid down at the time API was already awarded the project. Even the MOA provisions remain vague as to the parameters of the project, which the Sandiganbayan found as placing API at an arbitrary position where it can do as it pleases without being accountable to the municipality in any way whatsoever. True enough, when API failed to execute the construction works and abandoned the project, the municipality found itself at extreme disadvantage without recourse to a performance security that API likewise failed to submit. Petitioner as the local chief executive failed to ensure that API which was awarded the BOT contract, will submit such other requirements specified under the IRR: Sec. 11.7. Conditions for Approval of Contract. - The Head of Agency/LGU shall ensure that all of the following conditions have been complied with before approving the contract: a. Submission of the required performance security as prescribed under Section 12.7 hereof; b. Proof of sufficient equity from the investors and firm commitments from reputable financial institution to provide sufficient credit lines to cover the total estimated cost of the project; c. ICC clearance of the contract on a no-objection basis; Failure by the winning project proponent to submit the requirements prescribed under items a, b and c above within the time period specified by the concerned Agency/LGU in the Notice of Award or failure to execute the contract within the specified time shall result in the disqualification of the bidder, as well as the forfeiture of the bid security of the bidder. xxxx Sec. 12.7. Performance Guarantee for Construction Works. - To guarantee the faithful performance by the project proponent of its obligations under the contract including the prosecution of the construction works related to the project, the project proponent shall post in favor of the Agency/LGU concerned, within the time and under the terms prescribed under the project contract, a performance security in the form of cash, managers check, cashiers check, bank draft or guarantee confirmed by a local bank (in the case of foreign bidders bonded by a foreign bank), letter of credit issued by a reputable bank, surety bond callable on demand issued by the Government Service Insurance System (GSIS) or by surety or insurance companies duly accredited by the Office of the Insurance Commissioner, or a combination thereof, in accordance with the following schedules: a. Cash, managers check, cashiers check, irrevocable letter of credit, bank draft a minimum of two percent (2%) of the total Project Cost. b. Bank Guarantee a minimum of five percent (5%) of the total Project Cost.

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c. Surety Bond a minimum of ten percent (10%) of the total Project Cost. (Emphasis supplied.) In the Notice of Award dated September 16, 1996, petitioner directed API to submit the above requirements. However, APIs counsel, Atty. Lydia Y. Marciano, wrote in reply that such requirements do not apply because APIs project does not involve any government undertaking. API at that point should have been disqualified and its bid security forfeited, pursuant to Section 11.7 of the IRR. Yet, API was allowed to proceed with the execution of the project albeit only the site clearing, excavation and construction of a sales office were accomplished. Under the facts established, it is clear that petitioner gave unwarranted benefits, advantage or preference to API considering that said proponent/contractor was not financially and technically qualified for the BOT project awarded to it, and without complying with the requirements of bidding and contract approval for BOT projects under existing laws, rules and regulations. The word unwarranted means lacking adequate or official support; unjustified; unauthorized or without justification or adequate reason. Advantage means a more favorable or improved position or condition; benefit, profit or gain of any kind; benefit from some course of action. Preference signifies priority or higher evaluation or desirability; choice or estimation above another.[34] As to partiality, bad faith, and gross inexcusable negligence, we have explained the meaning of these terms, as follows: Partiality is synonymous with bias which excites a disposition to see and report matters as they are wished for rather than as they are. Bad faith does not simply connote bad judgment or negligence; it imputes a dishonest purpose or some moral obliquity and conscious doing of a wrong; a breach of sworn duty through some motive or intent or ill will; it partakes of the nature of fraud. Gross negligence has been so defined as negligence characterized by the want of even slight care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but wilfully and intentionally with a conscious indifference to consequences in so far as other persons may be affected. It is the omission of that care which even inattentive and thoughtless men never fail to take on their own property.*35+ We sustain and affirm the Sandiganbayan in holding that petitioner violated Section 3(e) of R.A. No. 3019, and that he cannot shield himself from criminal liability simply because the SB passed the necessary resolutions adopting the BOT project and authorizing him to enter into the MOA. We find no error or grave abuse in its ruling, which we herein quote: It is apparent that the unwarranted benefit in this case lies in the very fact that API was allowed to present its proposal without compliance of [sic] the requirements provided under the relevant laws and rules. To begin with, the municipal government never conducted a public bidding prior to the execution of the contract. The project was immediately awarded to the API without delay and without any rival proponents, when it was not qualified to participate in the first place. The legality and propriety of the agreement executed with the contractor is totally absent based on the testimonies of both the prosecution and the defense. This Court also considers these particular acts significant. First. From the testimony of then Vice-Mayor Ruiz, Jesus V. Garcia, the president of API, attended the SB session after paying a courtesy call to the Accused who was then the Mayor. Second. It was the Accused who signed and posted the Invitation to Bid (Exhibit N) giving proponents 30 days to submit their proposals. Third. The Accused is the head of the Pre-Qualification Bids and Awards Committee which according to him recommended the approval of APIs proposal. This was the reason he used in requesting authority from the SB to grant him the authority to contract with API. Fourth. The Accused requested the SB to give him authority to enter into an agreement with API through a resolution (Exhibit S)[.] Fifth. It was the Accused who invited the SB members to go to the Mayors office to witness the signing of the Memorandum of Agreement between the municipality and API.[36] As the local chief executive, petitioner is not only expected to know the proper procedure in the bidding and award of infrastructure contracts such as BOT projects, he is also duty bound to follow the same and his failure to discharge this duty constitutes gross and inexcusable negligence.[37] Petitioner further assails the Sandiganbayan in not considering the previous dismissal of the criminal complaint filed by Alberto Castaeda against petitioner also involving the Wag-Wag Shopping Mall project. The Sandiganbayan pointed out that said case (OMB-1-97-1885) was dismissed by the Office of the Deputy Ombudsman for Luzon on March 26, 1999 at the time the construction works were supposedly only temporarily stopped by API, while in this case it is already apparent that the latter abandoned the project and reneged on its obligation. We find nothing illegal in the reversal by the Ombudsman upon review of the September 9, 2002 resolution of the Office of the Deputy Ombudsman for Luzon which recommended the dismissal of the complaint-affidavit filed by Domiciano R. Laurena IV upon the ground that a similar criminal complaint filed by Castaeda had been dismissed in OMB-1-97-1885. The Office of the Ombudsman Chief Legal Counsel granted the petition for review filed by complainant Laurena IV and recommended that petitioner be indicted before the Sandiganbayan for violation of Section 3(e) of R.A. No. 3019. It pointed out that the dismissal of OMB-1-97-1885 was premised on the authority of a local legislature to accept unsolicited proposals and enter into a BOT project under R.A. No. 6957 as amended by R.A. No. 7718, and the lack of any showing of undue injury to the Municipality of Muoz as a result of the temporary work stoppage. However, the issue of lack of APIs construction license was never brought out in the earlier case while in the present case, the PCAB attested to the fact that API is not a licensed contractor and petitioners approval of APIs proposal is a clear badge of giving unwarranted benefit, preference or advantage through manifest partiality, evident bad faith, or at the very least,

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gross inexcusable negligence. The OMB found that petitioner could have easily discovered such fact with basic prudence considering that a P240-million infrastructure was involved, but apparently he threw all caution to the wind and relied solely on the self-serving representation of API that it possesses the requisite contractors license.*38+ This ruling of the OMB Chief Legal Counsel was affirmed upon review by the Special Prosecutor and approved by Ombudsman Merceditas N. Gutierrez on August 4, 2006.[39] It may be recalled that on motion of petitioner, the Ombudsman even conducted a reinvestigation of the case pursuant to the January 15, 2007 directive of the Sandiganbayan. In a memorandum[40] dated March 5, 2007, then Special Prosecutor Dennis M. Villa-Ignacio approved the finding of probable cause against the petitioner and the recommendation that the information already filed in this case, for which petitioner had already been arraigned, be maintained. Petitioner cannot claim denial of his right to due process, as he had been given ample opportunity to present evidence on his defense in the proceedings before the Ombudsman and Sandiganbayan. No grave abuse of discretion was committed by the Ombudsman in reversing the previous dismissal of a similar criminal complaint against the petitioner involving the anomalous award of the BOT contract to API. Indeed, the Ombudsman is not precluded from ordering another review of a complaint, for he or she may revoke, repeal or abrogate the acts or previous rulings of a predecessor in office. Thus we held in Trinidad v. Office of the Ombudsman[41]: Petitioners arguments that res judicata applies since the Office of the Ombudsman twice found no sufficient basis to indict him in similar cases earlier filed against him, and that the Agan cases cannot be a supervening event or evidence per se to warrant a reinvestigation on the same set of facts and circumstances do not lie. Res judicata is a doctrine of civil law and thus has no bearing on criminal proceedings. But even if petitioners argument were to be expanded to contemplate res judicata in prison grey or the criminal law concept of double jeopardy, this Court still finds it inapplicable to bar the reinvestigation conducted by the Office of the Ombudsman. For the dismissal of a case during preliminary investigation does not constitute double jeopardy, preliminary investigation not being part of the trial. Insisting that the case should be barred by the prior Joint Resolution of the Ombudsman, petitioner posits that repeated investigations are oppressive since he as respondent and other respondents would be made to suffer interminable prosecution since resolutions dismissing complaints would perpetually be subject to reopening at any time and by any party. Petitioner particularly points out that no new evidence was presented at the reinvestigation. Petitioners position fails to impress. The Ombudsman is not precluded from ordering another review of a complaint, for he or she may revoke, repeal or abrogate the acts or previous rulings of a predecessor in office. And Roxas v. Hon. Vasquez teaches that new matters or evidence are not prerequisites for a reinvestigation, which is simply a chance for the prosecutor, or in this case the Office of the Ombudsman, to review and re-evaluate its findings and the evidence already submitted. (Emphasis supplied.) As to the propriety of damages awarded by the Sandiganbayan, we find that the same is proper and justified. The term undue injury in the context of Section 3(e) of the Anti-Graft and Corrupt Practices Act punishing the act of causing undue injury to any party, has a meaning akin to that civil law concept of actual damage. Actual damage, in the context of these definitions, is akin to that in civil law.[42] Article 2199 of the Civil Code provides that except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by a party as he has duly proved. Liquidated damages, on the other hand, are those agreed upon by the parties to a contract, to be paid in case of a breach thereof.[43] For approved BOT contracts, it is mandatory that a performance security be posted by the contractor/proponent in favor of the LGU in the form of cash, managers check, cashiers check, irrevocable letter of credit or bank draft in the minimum amount of 2% of the total project cost.[44] In case the default occurred during the project construction stage, the LGU shall likewise forfeit the performance security of the erring project proponent/contractor.[45] The IRR thus provides: SEC. 12.13. Liquidated Damages. - Where the project proponent of a project fails to satisfactorily complete the work within the construction period prescribed in the contract, including any extension or grace period duly granted, and is thereby in default under the contract, the project proponent shall pay the Agency/LGU concerned liquidated damages, as may be agreed upon under the contract by the parties. The parties shall agree on the amount and schedule of payment of the liquidated damages. The performance security may be forfeited to answer for any liquidated damages due to the Agency/LGU. The amount of liquidated damages due for every calendar day of delay will be determined by the Agency/LGU. In no case however shall the delay exceed twenty percent (20%) of the approved construction time stipulated in the contract plus any time extension duly granted. In such an event the Agency/LGU concerned shall rescind the contract, forfeit the proponents performance security and proceed with the procedures prescribed under Section 12.19. b. Had the requirement of performance security been complied with, there is no dispute that the Municipality of Muoz would have been entitled to the forfeiture of performance security when API defaulted on its obligation to

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execute the construction contract, at the very least in an amount equivalent to 2% of the total project cost. Hence, said LGU is entitled to such damages which the law mandates to be incorporated in the BOT contract, the parties being at liberty only to stipulate the extent and amount thereof. To rule otherwise would mean a condonation of blatant disregard and violation of the provisions of the BOT law and its implementing rules and regulations which are designed to protect the public interest in transactions between government and private business entities. While petitioner claims to have entered into a compromise agreement as authorized by the SB and approved by the trial court, no evidence of such judicial compromise was submitted before the Sandiganbayan. WHEREFORE, the petition is DENIED. The Decision dated November 16, 2009 and Resolution dated June 9, 2010 of the Sandiganbayan in Criminal Case No. SB-06-CRM-0389 are AFFIRMED. With costs against the petitioner. SO ORDERED.