SPECIAL CIVIL ACTIONS

INTERPLEADER
G.R. No. L-23851 March 26, 1976
WACK WACK GOLF & COUNTRY CLUB, INC., plaintiff-appellant,
vs.
LEE E. WON alias RAMON LEE and BIENVENIDO A. TAN, defendants-appellees.
Leonardo Abola for appellant.
Alfonso V. Agcaoli & Ramon A. Barcelona for appellee Lee E. Won.
Bienvenido A. Tan in his own behalf.

CASTRO, C.J.:
This is an appeal from the order of the Court of First Instance of Rizal, in civil case 7656, dismissing the
plaintiff-appellant's complaint of interpleader upon the grounds of failure to state a cause of action and res
judicata.
In its amended and supplemental complaint of October 23, 1963, the Wack Wack Golf & Country Club, Inc., a
non-stock, civic and athletic corporation duly organized under the laws of the Philippines, with principal office
in Mandaluyong, Rizal (hereinafter referred to as the Corporation), alleged, for its first cause of action, that the
defendant Lee E. Won claims ownership of its membership fee certificate 201, by virtue of the decision
rendered in civil case 26044 of the CFI of Manila, entitled "Lee E. Won alias Ramon Lee vs. Wack Wack Golf &
Country Club, Inc." and also by virtue of membership fee certificate 201-serial no. 1478 issued on October 17,
1963 by Ponciano B. Jacinto, deputy clerk of court of the said CFI of Manila, for and in behalf of the president
and the secretary of the Corporation and of the People's Bank & Trust Company as transfer agent of the said
Corporation, pursuant to the order of September 23, 1963 in the said case; that the defendant Bienvenido A.
Tan, on the other hand, claims to be lawful owner of its aforesaid membership fee certificate 201 by virtue of
membership fee certificate 201-serial no. 1199 issued to him on July 24, 1950 pursuant to an assignment made
in his favor by "Swan, Culbertson and Fritz," the original owner and holder of membership fee certificate 201;
that under its articles of incorporation and by-laws the Corporation is authorized to issue a maximum of 400
membership fee certificates to persons duly elected or admitted to proprietary membership, all of which have
been issued as early as December 1939; that it claims no interest whatsoever in the said membership fee
certificate 201; that it has no means of determining who of the two defendants is the lawful owner thereof; that
it is without power to issue two separate certificates for the same membership fee certificate 201, or to issue
another membership fee certificate to the defendant Lee, without violating its articles of incorporation and bylaws; and that the membership fee certificate 201-serial no. 1199 held by the defendant Tan and the membership
fee certificate 201-serial No. 1478 issued to the defendant Lee proceed from the same membership fee
certificate 201, originally issued in the name of "Swan, Culbertson and Fritz".

For its second cause of action. it alleged that the membership fee certificate 201-serial no. 1478 issued by the
deputy clerk of court of court of the CFI of Manila in behalf of the Corporation is null and void because issued
in violation of its by-laws, which require the surrender and cancellation of the outstanding membership fee
certificate 201 before issuance may be made to the transferee of a new certificate duly signed by its president
and secretary, aside from the fact that the decision of the CFI of Manila in civil case 26044 is not binding upon
the defendant Tan, holder of membership fee certificate 201-serial no. 1199; that Tan is made a party because of
his refusal to join it in this action or bring a separate action to protect his rights despite the fact that he has a
legal and beneficial interest in the subject matter of this litigation; and that he is made a part so that complete
relief may be accorded herein.
The Corporation prayed that (a) an order be issued requiring Lee and Tan to interplead and litigate their
conflicting claims; and (b) judgment. be rendered, after hearing, declaring who of the two is the lawful owner of
membership fee certificate 201, and ordering the surrender and cancellation of membership fee certificate 201serial no. 1478 issued in the name of Lee.
In separate motions the defendants moved to dismiss the complaint upon the grounds of res judicata, failure of
the complaint to state a cause of action, and bar by prescription. 1 These motions were duly opposed by the
Corporation. Finding the grounds of bar by prior judgment and failure to state a cause of action well taken, the
trial court dismissed the complaint, with costs against the Corporation.
In this appeal, the Corporation contends that the court a quo erred (1) in finding that the allegations in its
amended and supplemental complaint do not constitute a valid ground for an action of interpleader, and in
holding that "the principal motive for the present action is to reopen the Manila Case and collaterally attack the
decision of the said Court"; (2) in finding that the decision in civil case 26044 of the CFI of Manila constitutes
res judicata and bars its present action; and (3) in dismissing its action instead of compelling the appellees to
interplead and litigate between themselves their respective claims.
The Corporations position may be stated elsewise as follows: The trial court erred in dismissing the complaint,
instead of compelling the appellees to interplead because there actually are conflicting claims between the latter
with respect to the ownership of membership fee certificate 201, and, as there is not Identity of parties, of
subject-matter, and of cause of action, between civil case 26044 of the CFI of Manila and the present action, the
complaint should not have been dismissed upon the ground of res judicata.
On the other hand, the appellees argue that the trial court properly dismissed the complaint, because, having the
effect of reopening civil case 26044, the present action is barred by res judicata.
Although res judicata or bar by a prior judgment was the principal ground availed of by the appellees in moving
for the dismissal of the complaint and upon which the trial court actually dismissed the complaint, the
determinative issue, as can be gleaned from the pleadings of the parties, relates to the propriety and timeliness
of the remedy of interpleader.
The action of interpleader, under section 120 of the Code of Civil Procedure, 2 is a remedy whereby a person
who has personal property in his possession, or an obligation to render wholly or partially, without claiming any
right to either, comes to court and asks that the persons who claim the said personal property or who consider
themselves entitled to demand compliance with the obligation, be required to litigate among themselves in order
to determine finally who is entitled to tone or the one thing. The remedy is afforded to protect a person not

against double liability but against double vexation in respect of one liability. 3 The procedure under the Rules
of Court 4 is the same as that under the Code of Civil Procedure, 5 except that under the former the remedy of
interpleader is available regardless of the nature of the subject-matter of the controversy, whereas under the
latter an interpleader suit is proper only if the subject-matter of the controversy is personal property or relates to
the performance of an obligation.
There is no question that the subject matter of the present controversy, i.e., the membership fee certificate 201,
is proper for an interpleader suit. What is here disputed is the propriety and timeliness of the remedy in the light
of the facts and circumstances obtaining.
A stakeholder 6 should use reasonable diligence to hale the contending claimants to court. 7 He need not await
actual institution of independent suits against him before filing a bill of interpleader. 8 He should file an action
of interpleader within a reasonable time after a dispute has arisen without waiting to be sued by either of the
contending claimants. 9 Otherwise, he may be barred by laches 10 or undue delay. 11 But where he acts with
reasonable diligence in view of the environmental circumstances, the remedy is not barred. 12
Has the Corporation in this case acted with diligence, in view of all the circumstances, such that it may properly
invoke the remedy of interpleader? We do not think so. It was aware of the conflicting claims of the appellees
with respect to the membership fee certificate 201 long before it filed the present interpleader suit. It had been
recognizing Tan as the lawful owner thereof. It was sued by Lee who also claimed the same membership fee
certificate. Yet it did not interplead Tan. It preferred to proceed with the litigation (civil case 26044) and to
defend itself therein. As a matter of fact, final judgment was rendered against it and said judgment has already
been executed. It is not therefore too late for it to invoke the remedy of interpleader.
It has been held that a stakeholder's action of interpleader is too late when filed after judgment has been
rendered against him in favor of one of the contending claimants, 13 especially where he had notice of the
conflicting claims prior to the rendition of the judgment and neglected the opportunity to implead the adverse
claimants in the suit where judgment was entered. This must be so, because once judgment is obtained against
him by one claimant he becomes liable to the latter. 14 In once case, 15 it was declared:
The record here discloses that long before the rendition of the judgment in favor of relators
against the Hanover Fire Insurance Company the latter had notice of the adverse claim of South
to the proceeds of the policy. No reason is shown why the Insurance Company did not implead
South in the former suit and have the conflicting claims there determined. The Insurance
Company elected not to do so and that suit proceeded to a final judgment in favor of relators. The
Company thereby became independently liable to relators. It was then too late for such company
to invoke the remedy of interpleader
The Corporation has not shown any justifiable reason why it did not file an application for interpleader in civil
case 26044 to compel the appellees herein to litigate between themselves their conflicting claims of ownership.
It was only after adverse final judgment was rendered against it that the remedy of interpleader was invoked by
it. By then it was too late, because to he entitled to this remedy the applicant must be able to show that lie has
not been made independently liable to any of the claimants. And since the Corporation is already liable to Lee
under a final judgment, the present interpleader suit is clearly improper and unavailing.

It is the general rule that before a person will be deemed to be in a position to ask for an order of
intrepleader, he must be prepared to show, among other prerequisites, that he has not become
independently liable to any of the claimants. 25 Tex. Jur. p. 52, Sec. 3; 30 Am. Jur. p. 218,
Section 8.
It is also the general rule that a bill of interpleader comes too late when it is filed after judgment
has been rendered in favor of one of the claimants of the fund, this being especially true when
the holder of the funds had notice of the conflicting claims prior to the rendition of the judgment
and had an opportunity to implead the adverse claimants in the suit in which the judgment was
rendered. United Procedures Pipe Line Co. v. Britton, Tex. Civ. App. 264 S.W. 176; Nash v.
McCullum, Tex. Civ. 74 S.W. 2d 1046; 30 Am. Jur. p. 223, Sec. 11; 25 Tex. Jur. p. 56, Sec. 5; 108
A.L.R., note 5, p. 275. 16
Indeed, if a stakeholder defends a suit filed by one of the adverse claimants and allows said suit to proceed to
final judgment against him, he cannot later on have that part of the litigation repeated in an interpleader suit. In
the case at hand, the Corporation allowed civil case 26044 to proceed to final judgment. And it offered no
satisfactory explanation for its failure to implead Tan in the same litigation. In this factual situation, it is clear
that this interpleader suit cannot prosper because it was filed much too late.
If a stakeholder defends a suit by one claimant and allows it to proceed so far as a judgment
against him without filing a bill of interpleader, it then becomes too late for him to do so. Union
Bank v. Kerr, 2 Md. Ch. 460; Home Life Ins. Co. v. Gaulk, 86 Md. 385, 390, 38 A. 901; Gonia v.
O'Brien, 223 Mass. 177, 111 N.E. 787. It is one o the main offices of a bill of interpleader to
restrain a separate proceeding at law by claimant so as to avoid the resulting partial judgment;
and if the stakeholder acquiesces in one claimant's trying out his claim and establishing it at law,
he cannot then have that part of the litigation repeated in an interpleader suit. 4 Pomeroy's Eq.
Juris. No. 162; Mitfor's Eq. Pleading (Tyler's Ed.) 147 and 236; Langdell's Summary of Eq.
Pleading, No. 162' De Zouche v. Garrizon, 140 Pa. 430, 21 A/450. 17
It is the general rule that a bill of interpleader comes too late when application therefore is
delayed until after judgment has been rendered in favor of one of the claimants of the fund, and
that this is especially true where the holder of the fund had notice of the conflicting claims prior
to the rendition of such judgment and an opportunity to implead the adverse claimants in the suit
in which such judgment was rendered. (See notes and cases cited 36 Am. Dec. 703, Am. St. Rep.
598, also 5 Pomeroy's Eq. Juris. Sec. 41.)
The evidence in the opinion of the majority shows beyond dispute that the appellant permitted
the Parker county suit to proceed to judgment in favor of Britton with full notice of the adverse
claims of the defendants in the present suit other than the assignees of the judgment (the bank
and Mrs. Pabb) and no excuse is shown why he did not implead them in the suit. 18
To now permit the Corporation to bring Lee to court after the latter's successful establishment of his rights in
civil case 26044 to the membership fee certificate 201, is to increase instead of to diminish the number of suits,
which is one of the purposes of an action of interpleader, with the possibility that the latter would lose the
benefits of the favorable judgment. This cannot be done because having elected to take its chances of success in

said civil case 26044, with full knowledge of all the fact, the Corporation must submit to the consequences of
defeat.
The act providing for the proceeding has nothing to say touching the right of one, after
contesting a claim of one of the claimants to final judgment unsuccessfully, to involve the
successful litigant in litigation anew by bringing an interpleader action. The question seems to be
one of first impression here, but, in other jurisdictions, from which the substance of the act was
apparently taken, the rule prevails that the action cannot be resorted to after an unsuccessful trial
against one of the claimants.
It is well settled, both by reasons and authority, that one who asks the interposition of a court of
equity to compel others, claiming property in his hands, to interplead, must do so before putting
them to the test of trials at law. Yarborough v. Thompson, 3 Smedes & M. 291 (41 Am. Dec.
626); Gornish v. Tanner, 1 You. & Jer. 333; Haseltine v. Brickery, 16 Grat. (Va.) 116. The remedy
by interpleader is afforded to protect the party from the annoyance and hazard of two or more
actions touching the same property or demand; but one who, with knowledge of all the facts,
neglects to avail himself of the relief, or elects to take the chances for success in the actions at
law, ought to submit to the consequences of defeat. To permit an unsuccessful defendant to
compel the successful plaintiffs to interplead, is to increase instead of to diminish the number of
suits; to put upon the shoulders of others the burden which he asks may be taken from his
own. ....'
It is urged, however, that the American Surety Company of New York was not in position to file
an interpleader until it had tested the claim of relatrix to final judgment, and that, failing to meet
with success, it promptly filed the interpleader. The reason why, it urges, it was not in such
position until then is that had it succeeded before this court in sustaining its construction of the
bond and the law governing the bond, it would not have been called upon to file an interpleader,
since there would have been sufficient funds in its hands to have satisfied all lawful claimants. It
may be observed, however, that the surety company was acquainted with all of the facts, and
hence that it simply took its chances of meeting with success by its own construction of the bond
and the law. Having failed to sustain it, it cannot now force relatrix into litigation anew with
others, involving most likely a repetition of what has been decided, or force her to accept a pro
rata part of a fund, which is far from benefits of the judgment. 19
Besides, a successful litigant cannot later be impleaded by his defeated adversary in an interpleader suit and
compelled to prove his claim anew against other adverse claimants, as that would in effect be a collateral attack
upon the judgment.
The jurisprudence of this state and the common law states is well-settled that a claimant who has
been put to test of a trial by a surety, and has establish his claim, may not be impleaded later by
the surety in an interpleader suit, and compelled to prove his claim again with other adverse
claimants. American Surety Company of New York v. Brim, 175 La. 959, 144 So. 727; American
Surety Company of New York v. Brim (In Re Lyong Lumber Company), 176 La. 867, 147 So. 18;
Dugas v. N.Y. Casualty Co., 181 La. 322, 159 So. 572; 15 Ruling Case Law, 228; 33 Corpus
Juris, 477; 4 Pomeroy's Jurisprudence, 1023; Royal Neighbors of America v. Lowary (D.C.) 46
F2d 565; Brackett v. Graves, 30 App. Div. 162, 51 N.Y.S. 895; De Zouche v. Garrison, 140 Pa.

430, 21 A. 450, 451; Manufacturer's Finance Co. v. W.I. Jones Co. 141 Ga., 519, 81 S.E. 1033;
Hancock Mutual Life Ins. Co. v. Lawder, 22 R.I. 416, 84 A. 383.
There can be no doubt that relator's claim has been finally and definitely established, because
that matter was passed upon by three courts in definitive judgments. The only remaining item is
the value of the use of the land during the time that relator occupied it. The case was remanded
solely and only for the purpose of determining the amount of that credit. In all other aspects the
judgment is final. 20
It is generally held by the cases it is the office of interpleader to protect a party, not against
double liability, but against double vexation on account of one liability. Gonia v. O'Brien, 223
Mass. 177, 111 N.E. 787. And so it is said that it is too late for the remedy of interpleader if the
party seeking this relef has contested the claim of one of the parties and suffered judgment to be
taken.
In United P.P.I. Co. v. Britton (Tex. Civ. App.) 264 S.W. 576. 578, it was said: 'It is the general
rule that a bill of interpleader comes too late when application therefor is delayed until after
judgment has been rendered in favor of one of the claimants of the fund, and this is especially
true where the holder of the fund had notice of the conflicting claims prior to the rendition of
such judgment and an opportunity to implead the adverse claimants in the suit in which such
judgment was rendered. See notes and cases cited 35 Am. Dec. 703; 91 An. St. Rep. 598; also 5
Pomeroy's Equity Jurisprudence No. 41.'
The principle thus stated has been recognized in many cases in other jurisdictions, among which
may be cited American Surety Co. v. O'Brien, 223 Mass. 177, 111 N.E. 787; Phillips v. Taylor,
148 Md. 157, 129 A. 18; Moore v. Hill, 59 Ga. 760, 761; Yearborough v. Thompson, 3 Smedes &
M. (11 Miss.) 291, 41 Am. Dec. 626. See, also, 33 C.J. p. 447, No. 30; Nash v. McCullum, (Tex.
Civ. App.) 74 S.W. 2d 1042, 1047.
It would seem that this rule should logically follow since, after the recovery of judgment, the
interpleading of the judgment creditor is in effect a collateral attack upon the judgment. 21
In fine, the instant interpleader suit cannot prosper because the Corporation had already been made
independently liable in civil case 26044 and, therefore, its present application for interpleader would in effect be
a collateral attack upon the final judgment in the said civil case; the appellee Lee had already established his
rights to membership fee certificate 201 in the aforesaid civil case and, therefore, this interpleader suit would
compel him to establish his rights anew, and thereby increase instead of diminish litigations, which is one of the
purposes of an interpleader suit, with the possiblity that the benefits of the final judgment in the said civil case
might eventually be taken away from him; and because the Corporation allowed itself to be sued to final
judgment in the said case, its action of interpleader was filed inexcusably late, for which reason it is barred by
laches or unreasonable delay.
ACCORDINGLY, the order of May 28, 1964, dismissing the complaint, is affirmed, at appellant's cost.
Teehankee, Makasiar, Antonio, Esguerra, Muoz Palma, Aquino and Concepcion, Jr., JJ., concur.

Barredo and Martin, JJ., took no part.

Fernando, J., is on leave.
G.R. No. 73794 September 19, 1988
ETERNAL GARDENS MEMORIAL PARKS CORPORATION, petitioner,
vs.
FIRST SPECIAL CASES DIVISION INTERMEDIATE APPELLATE COURT and NORTH
PHILIPPINE UNION MISSION OF THE SEVENTH-DAY ADVENTISTS, respondents.

PARAS, J.:
This is a special civil action for certiorari, prohibition and mandamus seeking to set aside the two resolutions of
public respondent First Special Cases Division of the then Intermediate Appellate Court in AC-G.R. No. 04869
entitled "North Philippine Union Mission of the Seventh Day Adventists versus Hon. Antonia CorpusMacandog, Presiding Judge, Branch CXX, Regional Trial Court, Caloocan City and Eternal Gardens Memorial
Park Corporation, (a) dated September 5, 1985 (Rollo, pp. 21-25) reconsidering its Decision 1 of February 27,
1985 (Rollo, pp. 38-48) and ordering petitioner to deposit whatever amounts due from it under the Land
Development Agreement, and (b) dated February 13, 1986 (Rollo, p. 27) denying for lack of merit petitioner's
motion for reconsideration.
Petitioner Eternal Gardens Memorial Parks Corporation and private respondent North Philippine Union Mission
Corporation of the Seventh Day Adventists (MISSION for short) are corporations duly organized and existing
under and by virtue of the laws of the Republic of the Philippines.
They executed a Land Development Agreement (Rollo, pp. 179-182) on October 6, 1976 whereby the former
undertook to introduce and construct at its own expense and responsibility necessary improvements on the
property owned by private respondent into a memorial park to be subdivided into and sold as memorial plot
lots, at a stipulated area and price per lot. Out of the proceeds from the sale, private respondent is entitled to
receive 40% of the net gross collection from the project to be remitted monthly by petitioner to private
respondent through a designated depositary trustee bank. On the same date private respondent executed in
petitioner's favor a Deed of Absolute Sale with Mortgage (Rollo, pp. 183-186) on the lots with titles involved in
the land development project. The deed was supplemented by a Sale of Real Property with Mortgage and
Special Conditions dated October 28, 1978 (Rollo, pp. 189-194 The amounts totalling about P984,110.82 paid
by petitioner were to be considered as part of the 40% due private respondent under the Land Development
Agreement. All went well until Maysilo Estate asserted its claim of ownership over the parcel of land in
question. Confronted with such conflicting claims, petitioner as plaintiff filed a complaint for interpleader
(Rollo, pp. 169-179) against private respondent MISSION and Maysilo Estate, docketed as Special Court Case
No. C-9556 of the then CFI of Rizal, Branch XII, Caloocan, alleging among others, that in view of the
conflicting claims of ownership of the defendants (herein private respondent and Maysilo Estate) over the
properties subject matter of the contracts, over which plaintiff corporation (herein petitioner) has no claim of
ownership except as a purchaser thereof, and to protect the interests of plaintiff corporation which has no
interest in the subject matter of the dispute and is willing to pay whoever is entitled or declared to be the owners

of said properties, the defendants should be required to interplead and litigate their several claims between
themselves (Rollo, p. 177).
An order was issued by the presiding judge 2 requiring defendants to interplead on October 22, 1981. MISSION
filed a motion to dismiss dated November 10, 1981 for lack of cause of action but also presented an answer
dated November 12, 1981. The motion to dismiss was denied in an Order dated January 12, 1982. The heirs of
Maysilo Estate filed their own answer dated November 11, 1981 and an amended answer dated October 20,
1983 thru the estate's special receiver. The heirs of Pedro Banon filed an "Answer in Intervention with Special
and Affirmative Defenses" dated October 24, 1983, while Lilia B. Sevilla and husband Jose Seelin filed their
"Answer in Cross-claim" dated October 31, 1983 (Rollo, p. 30). The heirs of Sofia O'Farrel y Patino, et al. filed
their Answer in Intervention dated November 10, 1983.
However, earlier on November 21, 1982, private respondent presented a motion for the placing on judicial
deposit the amounts due and unpaid from petitioner. Acting on such motion, the trial court 3 denied judicial
deposit in its order dated February 13, 1984, the decretal portion of which reads:
PREMISES CONSIDERED, all or the full amount the plaintiff, Eternal Gardens Memorial Parks
Corporation have already paid the North Philippine Union Mission Corporation of the Seventh
Day Adventist is hereby ordered to deposit the same to this Court within thirty (30) days from
receipt of this order considering that real or true owner of the subject properties in question, due
hearing of this court has yet to be undergone in order to decide as to who is the true owner which
is a prejudicial question. Hence the motion dated November 21, 1983 of the NPUM for the
Eternal Gardens Corporation to deposit the balance due and unpaid is hereby ordered denied and
the opposition thereto dated December 19, 1983 is hereby ordered granted.
The contract between the Eternal Gardens Corporation and the North Philippine Union Mission
dated October 16, 1976 is ordered and declared ineffective as of today, February 13, 1984
because the subject matter of the sale is not existing between the contracting parties until after
the question of ownership is resolved by this court. The court will order the revival of the
contract if the North Philippine Union Mission will win.
If not, the declared winner among the intervenors will be the party to enter into a contract of sale
with the plaintiff as aforementioned. (Rollo, p. 66).
Another order dated October 26, 1984 was issued amending the February 13, 1984 order and setting aside the
order for private respondent's deposit of the amounts it had previously received from petitioner, thus:
WHEREFORE IN VIEW OF ALL THE FOREGOING CONSIDERATIONS the order of
February 13, 1984, is hereby ordered amended, reconsidered and modified by this same Court as
follows:
(a) The order directing the NORTH PHILIPPINE UNION MISSION CORPORATION OF
SEVENTH-DAY ADVENTISTS to deposit the amounts it received under the implementation of
the LAND DEVELOPMENT AGREEMENT which is not questioned by the plaintiff, Eternal
Gardens, is hereby ordered set aside for the reason that the titles to ownership, the North
Philippine Union Mission Corporation of Seventh Day Adventists on the lots subject matter of

the aforesaid agreement is not established invalid, and the alleged titles of intervenors are not
proven yet by competent evidence;
(b) The motion to require Eternal Gardens to deposit the balance under the Land Development
Agreement is likewise hereby ordered denied considering the fact the aforesaid plaintiff had not
denied its obligations under the aforesaid contract; and
(c) The trial or hearing is hereby ordered as scheduled to proceed on November 29, 1984 and on
December 6, 1984 at 8:30 in the morning per order of this Court dated October 4, 1984 in order
to determine the alleged claims of ownership by the intervenors and all claims and allegations of
each party to the instant" case will be considered and decided carefully by this court on just and
meritorious grounds. (Rollo, p. 39)
Said Orders were assailed twice in the Intermediate Appellate Court (Court of Appeals) and in the Supreme
Court as follows:
In G.R. No. 73569 it appeared that on January 11, 1985, MISSION filed a motion to dismiss the Interpleader
and the claims of the Maysilo Estate and the Intervenors and to order the Eternal Gardens to comply with its
Land Management with MISSION.
On January 28, 1985, the trial court passed a resolution, the dispositive portion of which reads:
WHEREFORE, premises considered, this Court, after a lengthy, careful judicious study and
perusal of all the stand of each and everyone of all the parties participating in this case, hereby
orders the dismissal of the interpleader, and the interventions filed by the intervenors, heirs of
Pedro Banon, heirs of O'Farrel, heirs of Rivera, heirs of Maria del Concepcion Vidal,
consolidated with the Maysilo Estate as represented by receiver Arturo Salientes the heirs of
Vicente Singson Encarnacion, and Lilia Sevilla Seeling
This Court likewise orders the plaintiff, Eternal Gardens Memorial Parks Corporation to comply
with the Land Development Agreement dated October 6, 1978, it entered into with the North
Philippine Union Mission Corporation of the Seventh-Day Adventists. (Rollo. p. 68)
The heirs of the Maysilo Estate moved for reconsideration of the aforementioned order of dismissal, the hearing
of which was requested to be set on February, 28, 1985. However, the trial judge, on February 14, 1985 issued
the following orders:
Considering Motions for Reconsideration filed, the Court resolves that the same be GRANTED
and instead of a hearing of the said motions on February 20, 1985, at 8:30 a.m., a hearing on the
merits shall be held. (Rollo, p. 68)
In spite of the February 14, 1985 order, MISSION filed on March 6, 1985 a motion for Writ of Execution of the
resolution of January 28, 1985. This was denied on June 25, 1985. The said court further set the case for pretrial and trial on July 18, 1985.

It was elevated on certiorari and mandamus to the Intermediate Appellate Court (Court of Appeals), docketed as
AC-G.R. Sp No. 06696 "North Philippine Union Mission of the Seventh Day Adventists, vs. Hon. Antonia
Corpus-Macandog Presiding Judge, Branch CXX, Regional Trial Court, Caloocan City, Eternal Gardens
Memorial Parks Corporation, and Heirs of Vicente Singson Encarnacion It was raffled to the Second Special
Division. MISSION assailed the February 14, 1985 and June 25, 1985 orders as violative of due process and
attended by grave abuse of discretion amounting to lack of jurisdiction. The petition was however dismissed in
the decision of said Appellate Court, promulgated on December 4, 1985, the dispositive portion of which reads:
WHEREFORE, for want of merit the petition for certiorari and mandamus under consideration
cannot be given due course and is accordingly, DISMISSED, without any pronouncement, as to
costs. The restraining order embodied in Our Resolution of July 31, 1985, is hereby lifted.
(Rollo, G.R. No. 73569 p. 232)
The private respondent challenged the above decision in the Supreme Court in G.R. No. 73569. In its resolution
dated June 11, 1986, the Supreme Court denied the petition for review on certiorari for lack of merit, as follows:
G.R. No. 73569 (North Philippine Union Mission Corporation of the Seventh Day Adventists vs.
Intermediate Appellate Court, et al.) considering the allegations, issues, and arguments adduced
in the petition for review on certiorari, the Court Resolved to DENY the same for lack of merit.
(Ibid p. 263)
Said resolution has become final and executory on July 16, 1986. (Ibid p. 269)
Earlier in 1983, the heirs of the late spouses Vicente Singson Encarnacion and Lucila Conde filed Civil Case
No. C-11836 for quieting of title with Branch CXXII, Regional Trial Court, Caloocan City, where petitioner and
private respondent were named as defendants.
Said case is still pending in the lower Court.
In the case at bar, G.R. No. 73794, MISSION, herein private respondent filed a petition for certiorari with the
then Intermediate Appellate Court docketed as AC-G.R. No. 04869 praying that the aforementioned Orders of
February 13, 1984 and October 26, 1984 of the Regional Trial Court be set aside and that an order be issued to
deposit in court or in a depositor trustee bank of any and all payments, plus interest thereon, due the private
respondent MISSION under the Land Development Agreement, said amounts deposited to be paid to whomever
may be found later to be entitled thereto, with costs. (Rollo, G.R. No. 73794 p. 38)
The Intermediate Appelate Court, acting through its First Special Cases Division 4 dismissed the petition in its
decision on February 27, 1985 (Rollo, pp. 38-48). In its Resolution 5 promulgated on September 5, 1985, the
Court however, reversed its decision, thus:
WHEREFORE, the Court reconsiders its decision of February 27, 1986, and sets aside the
questioned portions of the respondent Court's orders of February 13 and October 26, 1984. The
private respondent is hereby ordered to deposit whatever amounts are due from it under the Land
Development Agreement of October 6, 1976 with a reputable bank to be designated by the
respondent court to be the depository trustee of the said amounts to be paid to whoever shall be
found entitled thereto. No costs. (Rollo, p. 25)

Eternal Gardens moved for a reconsideration of the above decision but it was denied for lack of merit in a
resolution promulgated on February 13, 1986, which states:
The private respondent Eternal Gardens Memorial Park Corporation's Motion for
Reconsideration of the Court's resolution promulgated September 5, 1985 requiring it "to deposit
whatever amounts are due from it under the Land Development Agreement of October 6,
1976 ...," which was strongly opposed by the petitioner North Philippine Union Mission of the
Seventh Day Adventists, is hereby denied for lack of merit, reiterating as it does, the very same
issues and arguments that were passed upon and considered by the Court in the very same
resolution sought to be reconsidered. (Rollo, p. 27)
Hence, this petition. On July 8,1987, the Third Division of this Court issued the following resolution:
... the court RESOLVED to give due course to this petition and require the parties to file
memoranda.
In the meantime, to avoid possible wastage of funds, the Court RESOLVED to require the
private respondent 6 to DEPOSIT its accruing installments within ten (10) days from notice with
a reputable commercial bank in a savings deposit account, in the name of the Supreme Court of
the Philippines, with the details to be reported or manifested to this Court within ten (10) days
from the time the deposit/deposits are made, such deposits not to be withdrawn without authority
from this Court. (Rollo, p. 162)
Petitioner's Memorandum With Prayer for the Deferment of Time to Make Deposit (Rollo, p. 218-236) was
filed on July 14, 1987. Its prayer was granted for a period of ten (10) days for the purpose, in the resolution of
July 29, 1987 (Rollo, p. 238). Private respondent filed its Opposition to Deferment of Time to Make Deposit
(Rollo, pp. 239-253) on July 24, 1987 to which petitioner filed its Reply to Opposition on August 4, 1987
(Rollo, pp. 256-267). Both were noted by the Court in its resolution dated September 7, 1987 (Rollo, p. 270).
On August 25, 1987, private respondent filed its Rejoinder to Petitioner's Reply to Opposition (Rollo, pp. 271292).
Petitioner filed its Supplemental Memorandum with Reply to Opposition (To Deferment of time to Make
Deposit) on August 31, 1987 (Rollo, pp. 294-313) and a Sur-rejoinder on September 1, 1987 (Rollo, pp. 304315).
The main issues in this case are:
I
Whether or not respondent Court of Appeals abused its discretion amounting to lack of
jurisdiction in reconsidering its resolution of February 27, 1985 and in requiring instead in the
resolution of September 5, 1985, that petitioner Eternal Gardens deposit whatever amounts are
due from it under the Land Development Agreement with a reputable bank to be designated by
the respondent court.
II

Whether or not the dismissal of AC-G.R. SP No. 06696 (North Philippine Union Mission of the
Seventh Day Adventists vs. Hon. Macandog, et al.) by the Second Special Cases Division of the
IAC which was affirmed by the Supreme Court in G.R. No. 73569 constitutes a basis for the
dismissal of the case at bar on the ground of res adjudicata.
I
There is no question that courts have inherent power to amend their judgments, to make them conformable to
the law applicable provided that said judgments have not yet attained finality (Villanueva v. Court of First
Instance of Oriental Mindoro, Pinamalayan Branch II, 119 SCRA 288 [1982]). In fact, motions for
reconsideration are allowed to convince the courts that their rulings are erroneous and improper Siy v. Court of
Appeals, 138 SCRA 543-544 [1985]; Guerra Enterprises Co., Inc. v. CFI of Lanao del Sur (32 SCRA 317
[1970]) and in so doing, said courts are given sufficient opportunity to correct their errors.
In the case at bar, a careful analysis of the records will show that petitioner admitted among others in its
complaint in Interpleader that it is still obligated to pay certain amounts to private respondent; that it claims no
interest in such amounts due and is willing to pay whoever is declared entitled to said amounts. Such
admissions in the complaint were reaffirmed in open court before the Court of Appeals as stated in the latter
court's resolution dated September 5, 1985 in A.C. G.R. No. 04869 which states:
The private respondent (MEMORIAL) then reaffirms before the Court its original position that it
is a disinterested party with respect to the property now the subject of the interpleader case ...
In the light of the willingness, expressly made before the court, affirming the complaint filed
below, that the private respondent (MEMORIAL) will pay whatever is due on the Land
Development Agreement to the rightful owner/owners, there is no reason why the amount due on
subject agreement has not been placed in the custody of the Court. (Rollo, p. 227).
Under the circumstances, there appears to be no plausible reason for petitioner's objections to the deposit of the
amounts in litigation after having asked for the assistance of the lower court by filing a complaint for
interpleader where the deposit of aforesaid amounts is not only required by the nature of the action but is a
contractual obligation of the petitioner under the Land Development Program (Rollo, p. 252).
As correctly observed by the Court of Appeals, the essence of an interpleader, aside from the disavowal of
interest in the property in litigation on the part of the petitioner, is the deposit of the property or funds in
controversy with the court. it is a rule founded on justice and equity: "that the plaintiff may not continue to
benefit from the property or funds in litigation during the pendency of the suit at the expense of whoever will
ultimately be decided as entitled thereto." (Rollo, p. 24).
The case at bar was elevated to the Court of Appeals on certiorari with prohibitory and mandatory injunction.
Said appellate court found that more than twenty million pesos are involved; so that on interest alone for
savings or time deposit would be considerable, now accruing in favor of the Eternal Gardens. Finding that such
is violative of the very essence of the complaint for interpleader as it clearly runs against the interest of justice
in this case, the Court of Appeals cannot be faulted for finding that the lower court committed a grave abuse of
discretion which requires correction by the requirement that a deposit of said amounts should be made to a bank
approved by the Court. (Rollo, p.-25)

Petitioner would now compound the issue by its obvious turn-about, presently claiming in its memorandum that
there is a novation of contract so that the amounts due under the Land Development Agreement were allegedly
extinguished, and the requirement to make a deposit of said amounts in a depositary bank should be held in
abeyance until after the conflicting claims of ownership now on trial before Branch CXXII RTC-Caloocan City,
has finally been resolved.
All these notwithstanding, the need for the deposit in question has been established, riot only in the lower courts
and in the Court of Appeals but also in the Supreme Court where such deposit was required in "the resolution of
July 8, 1987 to avoid wastage of funds.
II
The claim that this case should be barred by res judicata is even more untenable.
The requisite of res judicata are: (1) the presence of a final former judgment; (2) the former judgment was
rendered by a court having jurisdiction over the subject matter and the parties; (3) the former judgment is a
judgment on the merits; and (4) there is between the first and the second action identity of parties, of subject
matter, and of causes of action Arguson v. Miclat 135 SCRA 678 [1985]; Carandang v. Venturanza, 133 SCRA
344 [1984]).
There is no argument against the rule that parties should not be permitted to litigate the same issue more than
once and when a right or fact has been judicially tried and determined by a court of competent jurisdiction, so
long as it remains unreversed, it should be conclusive upon the parties and those in privity with them in law or
estate (Sy Kao v. Court of Appeals, 132 SCRA 302 [1984]).
But a careful review of the records shows that there is no judgment on the merits in G.R. No. 73569 and in the
case at bar, G.R. No. 73794; both of which deal on mere incidents arising therefrom.
In G.R. No 73569, the issue raised is the propriety of the grant of the motion for reconsideration without a
hearing thereon and the denial of the motion for execution, while in the case at bar, what is assailed is the
propriety of the order of respondent appellant court that petitioner Eternal Gardens should deposit whatever
amounts are due from it under the Land Development Agreement with a reputable bank to be designated by the
Court. In fact, there is a pending trial on the merits in the trial court which the petitioner insists is a prejudicial
question which should first be resolved. Moreover, while there may be Identity of parties and of subject matter,
the Land Development Contract, there is no Identity of issues as clearly shown by the petitions filed.
PREMISES CONSIDERED, (a) the petition is DISMISSED for lack of merit; (b) this case (together with all the
claims of the intervenors on the merits) is REMANDED to the lower court for further proceedings; and (c) the
resolution of the Third Division of this Court of July 8, 1987 requiring the deposit by the petitioner (see
footnote No. 6) of the amounts contested in a depositary bank STANDS (the Motion for Reconsideration thereof
being hereby DENIED for reasons already discussed) until after the decision on the merits shall have become
final and executory.
SO ORDERED.

SUBHASH C. PASRICHA and

JOSEPHINE A. PASRICHA,

G.R. No. 136409

Petitioners,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus QUISUMBING,*
AUSTRIA-MARTINEZ,
CHICO-NAZARIO, and
NACHURA, JJ.
.
DON LUIS DISON REALTY, INC.,
Respondent.
Promulgated:

March 14, 2008

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

DECISION

NACHURA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the
Decision1[1] of the Court of Appeals (CA) dated May 26, 1998 and its Resolution 2[2] dated December 10, 1998
in CA-G.R. SP No. 37739 dismissing the petition filed by petitioners Josephine and Subhash Pasricha.

The facts of the case, as culled from the records, are as follows:
Respondent Don Luis Dison Realty, Inc. and petitioners executed two Contracts of Lease 3[3] whereby
the former, as lessor, agreed to lease to the latter Units 22, 24, 32, 33, 34, 35, 36, 37 and 38 of the San Luis
Building, located at 1006 M.Y. Orosa cor. T.M. Kalaw Streets, Ermita, Manila. Petitioners, in turn, agreed to
pay monthly rentals, as follows:

For Rooms 32/35:

From March 1, 1991 to August 31, 1991 P5,000.00/P10,000.00
From September 1, 1991 to February 29, 1992 P5,500.00/P11,000.00
From March 1, 1992 to February 28, 1993 P6,050.00/P12,100.00
From March 1, 1993 to February 28, 1994 P6,655.00/P13,310.00
From March 1, 1994 to February 28, 1995 P7,320.50/P14,641.00
From March 1, 1995 to February 28, 1996 P8,052.55/P16,105.10
From March 1, 1996 to February 29, 1997 P8,857.81/P17,715.61
From March 1, 1997 to February 28, 1998 P9,743.59/P19,487.17
From March 1, 1998 to February 28, 1999 P10,717.95/P21,435.89
From March 1, 1999 to February 28, 2000 P11,789.75/P23,579.484[4]
For Rooms 22 and 24:
Effective July 1, 1992 P10,000.00 with an increment of 10% every two years.5[5]
For Rooms 33 and 34:

1
2
3
4
5

Effective April 1, 1992 P5,000.00 with an increment of 10% every two years.6[6]
For Rooms 36, 37 and 38:
Effective when tenants vacate said premises P10,000.00 with an increment of 10% every two
years.7[7]

Petitioners were, likewise, required to pay for the cost of electric consumption, water bills and the use of
telephone cables.8[8]

The lease of Rooms 36, 37 and 38 did not materialize leaving only Rooms 22, 24, 32, 33, 34 and 35 as subjects
of the lease contracts.9[9] While the contracts were in effect, petitioners dealt with Francis Pacheco (Pacheco),
then General Manager of private respondent. Thereafter, Pacheco was replaced by Roswinda Bautista (Ms.
Bautista).10[10] Petitioners religiously paid the monthly rentals until May 1992. 11[11] After that, however,

6
7
8
9
10
11

despite repeated demands, petitioners continuously refused to pay the stipulated rent. Consequently, respondent
was constrained to refer the matter to its lawyer who, in turn, made a final demand on petitioners for the
payment of the accrued rentals amounting to P916,585.58.12[12] Because petitioners still refused to comply, a
complaint for ejectment was filed by private respondent through its representative, Ms. Bautista, before the
Metropolitan Trial Court (MeTC) of Manila.13[13] The case was raffled to Branch XIX and was docketed as
Civil Case No. 143058-CV.

Petitioners admitted their failure to pay the stipulated rent for the leased premises starting July until November
1992, but claimed that such refusal was justified because of the internal squabble in respondent company as to
the person authorized to receive payment.14[14] To further justify their non-payment of rent, petitioners alleged
that they were prevented from using the units (rooms) subject matter of the lease contract, except Room 35.
Petitioners eventually paid their monthly rent for December 1992 in the amount of P30,000.00, and claimed that
respondent waived its right to collect the rents for the months of July to November 1992 since petitioners were
prevented from using Rooms 22, 24, 32, 33, and 34. 15[15] However, they again withheld payment of rents
starting January 1993 because of respondents refusal to turn over Rooms 36, 37 and 38. 16[16] To show good
faith and willingness to pay the rents, petitioners alleged that they prepared the check vouchers for their
monthly rentals from January 1993 to January 1994. 17[17]

Petitioners further averred in their Amended

Answer18[18] that the complaint for ejectment was prematurely filed, as the controversy was not referred to the
barangay for conciliation.

12
13
14
15
16
17
18

For failure of the parties to reach an amicable settlement, the pre-trial conference was terminated. Thereafter,
they submitted their respective position papers.

On November 24, 1994, the MeTC rendered a Decision dismissing the complaint for ejectment. 19[19] It
considered petitioners non-payment of rentals as unjustified. The court held that mere willingness to pay the
rent did not amount to payment of the obligation; petitioners should have deposited their payment in the name
of respondent company. On the matter of possession of the subject premises, the court did not give credence to
petitioners claim that private respondent failed to turn over possession of the premises. The court, however,
dismissed the complaint because of Ms. Bautistas alleged lack of authority to sue on behalf of the corporation.

Deciding the case on appeal, the Regional Trial Court (RTC) of Manila, Branch 1, in Civil Case No. 94-72515,
reversed and set aside the MeTC Decision in this wise:

WHEREFORE, the appealed decision is hereby reversed and set aside and another one is
rendered ordering defendants-appellees and all persons claiming rights under them, as follows:
(1)

to vacate the leased premised (sic) and restore possession thereof to plaintiffappellant;
(2) to pay plaintiff-appellant the sum of P967,915.80 representing the accrued rents in
arrears as of November 1993, and the rents on the leased premises for the succeeding
months in the amounts stated in paragraph 5 of the complaint until fully paid; and
(3)
to pay an additional sum equivalent to 25% of the rent accounts as and for
attorneys fees plus the costs of this suit.

SO ORDERED.20[20]

The court adopted the MeTCs finding on petitioners unjustified refusal to pay the rent, which is a valid ground
for ejectment. It, however, faulted the MeTC in dismissing the case on the ground of lack of capacity to sue.
Instead, it upheld Ms. Bautistas authority to represent respondent notwithstanding the absence of a board

19
20

resolution to that effect, since her authority was implied from her power as a general manager/treasurer of the
company.21[21]

Aggrieved, petitioners elevated the matter to the Court of Appeals in a petition for review on certiorari.22[22]
On March 18, 1998, petitioners filed an Omnibus Motion23[23] to cite Ms. Bautista for contempt; to strike down
the MeTC and RTC Decisions as legal nullities; and to conduct hearings and ocular inspections or delegate the
reception of evidence. Without resolving the aforesaid motion, on May 26, 1998, the CA affirmed 24[24] the
RTC Decision but deleted the award of attorneys fees.25[25]

Petitioners moved for the reconsideration of the aforesaid decision. 26[26] Thereafter, they filed several
motions asking the Honorable Justice Ruben T. Reyes to inhibit from further proceeding with the case allegedly
because of his close association with Ms. Bautistas uncle-in-law.27[27]

In a Resolution28[28] dated December 10, 1998, the CA denied the motions for lack of merit. The appellate
court considered said motions as repetitive of their previous arguments, irrelevant and obviously dilatory.29[29]
As to the motion for inhibition of the Honorable Justice Reyes, the same was denied, as the appellate court

21
22
23
24
25
26
27
28
29

justice stressed that the decision and the resolution were not affected by extraneous matters. 30[30] Lastly, the
appellate court granted respondents motion for execution and directed the RTC to issue a new writ of execution
of its decision, with the exception of the award of attorneys fees which the CA deleted.31[31]

Petitioners now come before this Court in this petition for review on certiorari raising the following issues:

I.
Whether this ejectment suit should be dismissed and whether petitioners are entitled to
damages for the unauthorized and malicious filing by Rosario (sic) Bautista of this ejectment
case, it being clear that [Roswinda] whether as general manager or by virtue of her subsequent
designation by the Board of Directors as the corporations attorney-in-fact had no legal
capacity to institute the ejectment suit, independently of whether Director Pacanas Order
setting aside the SEC revocation Order is a mere scrap of paper.
II.
Whether the RTCs and the Honorable Court of Appeals failure and refusal to resolve the
most fundamental factual issues in the instant ejectment case render said decisions void on their
face by reason of the complete abdication by the RTC and the Honorable Justice Ruben Reyes
of their constitutional duty not only to clearly and distinctly state the facts and the law on
which a decision is based but also to resolve the decisive factual issues in any given case.
III.
Whether the (1) failure and refusal of Honorable Justice Ruben Reyes to inhibit himself,
despite his admission by reason of his silence of petitioners accusation that the said Justice
enjoyed a $7,000.00 scholarship
grant courtesy of the uncle-in-law of respondent
corporations purported general manager and (2), worse, his act of ruling against the
petitioners and in favor of the respondent corporation constitute an unconstitutional
deprivation of petitioners property without due process of law.32[32]

30
31
32

In addition to Ms. Bautistas lack of capacity to sue, petitioners insist that respondent company has no standing
to sue as a juridical person in view of the suspension and eventual revocation of its certificate of registration. 33
[33] They likewise question the factual findings of the court on the bases of their ejectment from the subject
premises. Specifically, they fault the appellate court for not finding that: 1) their non-payment of rentals was
justified; 2) they were deprived of possession of all the units subject of the lease contract except Room 35; and
3) respondent violated the terms of the contract by its continued refusal to turn over possession of Rooms 36, 37
and 38. Petitioners further prayed that a Temporary Restraining Order (TRO) be issued enjoining the CA from
enforcing its Resolution directing the issuance of a Writ of Execution. Thus, in a Resolution 34[34] dated
January 18, 1999, this Court directed the parties to maintain the status quo effective immediately until further
orders.

The petition lacks merit.

We uphold the capacity of respondent company to institute the ejectment case. Although the Securities
and Exchange Commission (SEC) suspended and eventually revoked respondents certificate of registration on
February 16, 1995, records show that it instituted the action for ejectment on December 15, 1993. Accordingly,
when the case was commenced, its registration was not yet revoked.35[35] Besides, as correctly held by the
appellate court, the SEC later set aside its earlier orders of suspension and revocation of respondents certificate,
rendering the issue moot and academic.36[36]

We likewise affirm Ms. Bautistas capacity to sue on behalf of the company despite lack of proof of authority to
so represent it. A corporation has no powers except those expressly conferred on it by the Corporation Code and
those that are implied from or are incidental to its existence. In turn, a corporation exercises said powers
through its board of directors and/or its duly authorized officers and agents. Physical acts, like the signing of
documents, can be performed only by natural persons duly authorized for the purpose by corporate by-laws or
33
34
35
36

by a specific act of the board of directors. 37[37] Thus, any person suing on behalf of the corporation should
present proof of such authority. Although Ms. Bautista initially failed to show that she had the capacity to sign
the verification and institute the ejectment case on behalf of the company, when confronted with such question,
she immediately presented the Secretarys Certificate38[38] confirming her authority to represent the company.

There is ample jurisprudence holding that subsequent and substantial compliance may call for the
relaxation of the rules of procedure in the interest of justice. 39[39]

In Novelty Phils., Inc. v. Court of Appeals, 40

[40] the Court faulted the appellate court for dismissing a petition solely on petitioners failure to timely submit
proof of authority to sue on behalf of the corporation. In Pfizer, Inc. v. Galan,41[41] we upheld the sufficiency
of a petition verified by an employment specialist despite the total absence of a board resolution authorizing her
to act for and on behalf of the corporation. Lastly, in China Banking Corporation v. Mondragon International
Philippines, Inc,42[42] we relaxed the rules of procedure because the corporation ratified the managers status
as an authorized signatory. In all of the above cases, we brushed aside technicalities in the interest of justice.
This is not to say that we disregard the requirement of prior authority to act in the name of a corporation. The
relaxation of the rules applies only to highly meritorious cases, and when there is substantial compliance. While
it is true that rules of procedure are intended to promote rather than frustrate the ends of justice, and while the
swift unclogging of court dockets is a laudable objective, we should not insist on strict adherence to the rules at
the expense of substantial justice.43[43] Technical and procedural rules are intended to help secure, not
suppress, the cause of justice; and a deviation from the rigid enforcement of the rules may be allowed to attain
that prime objective, for, after all, the dispensation of justice is the core reason for the existence of courts.44[44]
37
38
39
40
41
42
43
44

As to the denial of the motion to inhibit Justice Reyes, we find the same to be in order. First, the motion to
inhibit came after the appellate court rendered the assailed decision, that is, after Justice Reyes had already
rendered his opinion on the merits of the case. It is settled that a motion to inhibit shall be denied if filed after a
member of the court had already given an opinion on the merits of the case, the rationale being that a litigant
cannot be permitted to speculate on the action of the court x x x (only to) raise an objection of this sort after the
decision has been rendered.45[45] Second, it is settled that mere suspicion that a judge is partial to one of the
parties is not enough; there should be evidence to substantiate the suspicion. Bias and prejudice cannot be
presumed, especially when weighed against a judges sacred pledge under his oath of office to administer justice
without regard for any person and to do right equally to the poor and the rich. There must be a showing of bias
and prejudice stemming from an extrajudicial source, resulting in an opinion on the merits based on something
other than what the judge learned from his participation in the case. 46[46] We would like to reiterate, at this
point, the policy of the Court not to tolerate acts of litigants who, for just about any conceivable reason, seek to
disqualify a judge (or justice) for their own purpose, under a plea of bias, hostility, prejudice or prejudgment. 47
[47]

We now come to the more substantive issue of whether or not the petitioners may be validly ejected from the
leased premises.

Unlawful detainer cases are summary in nature. In such cases, the elements to be proved and resolved
are the fact of lease and the expiration or violation of its terms. 48[48] Specifically, the essential requisites of
unlawful detainer are: 1) the fact of lease by virtue of a contract, express or implied; 2) the expiration or
termination of the possessors right to hold possession; 3) withholding by the lessee of possession of the land or
building after the expiration or termination of the right to possess; 4) letter of demand upon lessee to pay the

45
46
47
48

rental or comply with the terms of the lease and vacate the premises; and 5) the filing of the action within one
year from the date of the last demand received by the defendant.49[49]

It is undisputed that petitioners and respondent entered into two separate contracts of lease involving nine (9)
rooms of the San Luis Building. Records, likewise, show that respondent repeatedly demanded that petitioners
vacate the premises, but the latter refused to heed the demand; thus, they remained in possession of the
premises. The only contentious issue is whether there was indeed a violation of the terms of the contract: on the
part of petitioners, whether they failed to pay the stipulated rent without justifiable cause; while on the part of
respondent, whether it prevented petitioners from occupying the leased premises except Room 35.

This issue involves questions of fact, the resolution of which requires the evaluation of the evidence
presented. The MeTC, the RTC and the CA all found that petitioners failed to perform their obligation to pay
the stipulated rent. It is settled doctrine that in a civil case, the conclusions of fact of the trial court, especially
when affirmed by the Court of Appeals, are final and conclusive, and cannot be reviewed on appeal by the
Supreme Court.50[50] Albeit the rule admits of exceptions, not one of them obtains in this case.51[51]

To settle this issue once and for all, we deem it proper to assess the array of factual findings supporting the
courts conclusion.

The evidence of petitioners non-payment of the stipulated rent is overwhelming. Petitioners, however,
claim that such non-payment is justified by the following: 1) the refusal of respondent to allow petitioners to use
the leased properties, except room 35; 2) respondents refusal to turn over Rooms 36, 37 and 38; and 3)
respondents refusal to accept payment tendered by petitioners.

49
50
51

Petitioners justifications are belied by the evidence on record. As correctly held by the CA, petitioners
communications to respondent prior to the filing of the complaint never mentioned their alleged inability to use
the rooms.52[52] What they pointed out in their letters is that they did not know to whom payment should be
made, whether to Ms. Bautista or to Pacheco. 53[53] In their July 26 and October 30, 1993 letters, petitioners
only questioned the method of computing their electric billings without, however, raising a complaint about
their failure to use the rooms.54[54]

Although petitioners stated in their December 30, 1993 letter that

respondent failed to fulfill its part of the contract, 55[55] nowhere did they specifically refer to their inability to
use the leased rooms. Besides, at that time, they were already in default on their rentals for more than a year.

If it were true that they were allowed to use only one of the nine (9) rooms subject of the contract of
lease, and considering that the rooms were intended for a business purpose, we cannot understand why they did
not specifically assert their right. If we believe petitioners contention that they had been prevented from using
the rooms for more than a year before the complaint for ejectment was filed, they should have demanded
specific performance from the lessor and commenced an action in court. With the execution of the contract,
petitioners were already in a position to exercise their right to the use and enjoyment of the property according
to the terms of the lease contract. 56[56] As borne out by the records, the fact is that respondent turned over to
petitioners the keys to the leased premises and petitioners, in fact, renovated the rooms. Thus, they were placed
in possession of the premises and they had the right to the use and enjoyment of the same. They, likewise, had
the right to resist any act of intrusion into their peaceful possession of the property, even as against the lessor
itself. Yet, they did not lift a finger to protect their right if, indeed, there was a violation of the contract by the
lessor.

What was, instead, clearly established by the evidence was petitioners non-payment of rentals because
ostensibly they did not know to whom payment should be made. However, this did not justify their failure to
52
53
54
55
56

pay, because if such were the case, they were not without any remedy. They should have availed of the
provisions of the Civil Code of the Philippines on the consignation of payment and of the Rules of Court on
interpleader.

Article 1256 of the Civil Code provides:

Article 1256. If the creditor to whom tender of payment has been made refuses without
just cause to accept it, the debtor shall be released from responsibility by the consignation of the
thing or sum due.
Consignation alone shall produce the same effect in the following cases:
xxxx
(4) When two or more persons claim the same right to collect;
x x x x.

Consignation shall be made by depositing the things due at the disposal of a judicial authority, before whom the
tender of payment shall be proved in a proper case, and the announcement of the consignation in other cases. 57
[57]

In the instant case, consignation alone would have produced the effect of payment of the rentals. The
rationale for consignation is to avoid the performance of an obligation becoming more onerous to the debtor by
reason of causes not imputable to him. 58[58] Petitioners claim that they made a written tender of payment and
actually prepared vouchers for their monthly rentals. But that was insufficient to constitute a valid tender of
payment. Even assuming that it was valid tender, still, it would not constitute payment for want of consignation
of the amount. Well-settled is the rule that tender of payment must be accompanied by consignation in order
that the effects of payment may be produced.59[59]
57
58
59

Moreover, Section 1, Rule 62 of the Rules of Court provides:

Section 1. When interpleader proper. Whenever conflicting claims upon the same
subject matter are or may be made against a person who claims no interest whatever in the
subject matter, or an interest which in whole or in part is not disputed by the claimants, he may
bring an action against the conflicting claimants to compel them to interplead and litigate their
several claims among themselves.

Otherwise stated, an action for interpleader is proper when the lessee does not know to whom payment
of rentals should be made due to conflicting claims on the property (or on the right to collect). 60[60] The
remedy is afforded not to protect a person against double liability but to protect him against double vexation in
respect of one liability.61[61]

Notably, instead of availing of the above remedies, petitioners opted to refrain from making payments.

Neither can petitioners validly invoke the non-delivery of Rooms 36, 37 and 38 as a justification for nonpayment of rentals. Although the two contracts embraced the lease of nine (9) rooms, the terms of the contracts
- with their particular reference to specific rooms and the monthly rental for each - easily raise the inference that
the parties intended the lease of each room separate from that of the others. There is nothing in the contract
which would lead to the conclusion that the lease of one or more rooms was to be made dependent upon the
lease of all the nine (9) rooms. Accordingly, the use of each room by the lessee gave rise to the corresponding
obligation to pay the monthly rental for the same. Notably, respondent demanded payment of rentals only for
the rooms actually delivered to, and used by, petitioners.

It may also be mentioned that the contract specifically provides that the lease of Rooms 36, 37 and 38
was to take effect only when the tenants thereof would vacate the premises. Absent a clear showing that the
60
61

previous tenants had vacated the premises, respondent had no obligation to deliver possession of the subject
rooms to petitioners. Thus, petitioners cannot use the non-delivery of Rooms 36, 37 and 38 as an excuse for
their failure to pay the rentals due on the other rooms they occupied.

In light of the foregoing disquisition, respondent has every right to exercise his right to eject the erring
lessees. The parties contracts of lease contain identical provisions, to wit:

In case of default by the LESSEE in the payment of rental on the fifth (5 th) day of each month,
the amount owing shall as penalty bear interest at the rate of FOUR percent (4%) per month, to
be paid, without prejudice to the right of the LESSOR to terminate his contract, enter the
premises, and/or eject the LESSEE as hereinafter set forth;62[62]

Moreover, Article 167363[63] of the Civil Code gives the lessor the right to judicially eject the lessees in case of
non-payment of the monthly rentals. A contract of lease is a consensual, bilateral, onerous and commutative
contract by which the owner temporarily grants the use of his property to another, who undertakes to pay the
rent therefor.64[64] For failure to pay the rent, petitioners have no right to remain in the leased premises.

WHEREFORE, premises considered, the petition is DENIED and the Status Quo Order dated January 18,
1999 is hereby LIFTED. The Decision of the Court of Appeals dated May 26, 1998 and its Resolution dated
December 10, 1998 in CA-G.R. SP No. 37739 are AFFIRMED.

SO ORDERED.
G.R. Nos. 154470-71

62
63
64

September 24, 2012

BANK OF COMMERCE, Petitioner,

vs.
PLANTERS DEVELOPMENT BANK and BANGKO SENTRAL NG PILIPINAS, Respondent.
x-----------------------x
G.R. Nos. 154589-90
BANGKO SENTRAL NG PILIPINAS, Petitioner,
vs.
PLANTERS DEVELOPMENT BANK, Respondent.
DECISION
BRION, J.:
Before the Court are two consolidated petitions for review on certiorari under Rule 45,1 on pure questions of
law, filed by the petitioners Bank of Commerce (BOC) and the Bangko Sentral ng Pilipinas (BSP). They assail
the January 10, 2002 and July 23, 2002 Orders (assailed orders) of the Regional Trial Court (RTC) of Makati
City, Branch 143, in Civil Case Nos. 94-3233 and 94-3254. These orders dismissed (i) the petition filed by the
Planters Development Bank (PDB), (ii) the "counterclaim" filed by the BOC, and (iii) the countercomplaint/cross-claim for interpleader filed bythe BSP; and denied the BOCs and the BSPs motions for
reconsideration.
THE ANTECEDENTS
The Central Bank bills
I. First set of CB bills
The Rizal Commercial Banking Corporation (RCBC) was the registered owner of seven Central Bank (CB)
bills with a total face value of P 70 million, issued on January 2, 1994 and would mature on January 2, 1995.2
As evidenced by a "Detached Assignment" dated April 8, 1994,3 the RCBC sold these CB bills to the BOC.4 As
evidenced by another "Detached Assignment"5 of even date, the BOC, in turn, sold these CB bills to the PDB.6
The BOC delivered the Detached Assignments to the PDB.7
On April 15, 1994 (April 15 transaction), the PDB, in turn, sold to the BOC Treasury Bills worth P 70 million,
with maturity date of June 29, 1994, as evidenced by a Trading Order8 and a Confirmation of Sale.9 However,
instead of delivering the Treasury Bills, the PDB delivered the seven CB bills to the BOC, as evidenced by a
PDB Security Delivery Receipt, bearing a "note: ** substitution in lieu of 06-29-94" referring to the Treasury
Bills.10 Nevertheless, the PDB retained possession of the Detached Assignments. It is basically the nature of this
April 15 transaction that the PDB and the BOC cannot agree on.
The transfer of the first set of seven CB bills
i. CB bill nos. 45351-53
On April 20, 1994, according to the BOC, it "sold back"11 to the PDB three of the seven CB bills. In turn, the
PDB transferred these three CB bills to Bancapital Development Corporation (Bancap). On April 25, 1994, the
BOC bought the three CB bills from Bancap so, ultimately, the BOC reacquired these three CB bills,12
particularly described as follows:

Serial No.:

2BB XM 045351
2BB XM 045352
2BB XM 045353

Quantity:

Three (3)

Denomination:

Php 10 million

Total Face Value:

Php 30 million

ii. CB bill nos. 45347-50

On April 20, 1994, the BOC sold the remaining four (4) CB bills to Capital One Equities Corporation13 which
transferred them to All-Asia Capital and Trust Corporation (All Asia). On September 30, 1994, All Asia further
transferred the four CB bills back to the RCBC.14
On November 16, 1994, the RCBC sold back to All Asia one of these 4 CB bills. When the BSP refused to
release the amount of this CB bill on maturity, the BOC purchased from All Asia this lone CB bill,15 particularly
described as follows:16
Serial No.:

2BB XM 045348

Quantity:

One (1)

Denomination:

Php 10 million

Total Face Value:

Php 10 million

As the registered owner of the remaining three CB bills, the RCBC sold them to IVI Capital and Insular Savings
Bank. Again, when the BSP refused to release the amount of this CB bill on maturity, the RCBC paid back its
transferees, reacquired these three CB bills and sold them to the BOC ultimately, the BOC acquired these
three CB bills.
All in all, the BOC acquired the first set of seven CB bills.
II. Second set of CB bills
On April 19, 1994, the RCBC, as registered owner, (i) sold two CB bills with a total face value of P 20 million
to the PDB and (ii) delivered to the PDB the corresponding Detached Assignment.17 The two CB bills were
particularly described as follows:
Serial No.:

BB XM 045373
BB XM 045374

Issue date:

January 3, 1994

Maturity date:

January 2, 1995

Denomination:

Php 10 million

Total Face value:

Php 20 million

On even date, the PDB delivered to Bancap the two CB bills18 (April 19 transaction). In turn, Bancap sold the
CB bills to Al-Amanah Islamic Investment Bank of the Philippines, which in turn sold it to the BOC.19

PDBs move against the transfer of

the first and second sets of CB bills
On June 30, 1994, upon learning of the transfers involving the CB bills, the PDB informed20 the Officer-inCharge of the BSPs Government Securities Department,21 Lagrimas Nuqui, of the PDBs claim over these CB
bills, based on the Detached Assignments in its possession. The PDB requested the BSP22 to record its claim in
the BSPs books, explaining that its non-possession of the CB bills is "on account of imperfect negotiations
thereof and/or subsequent setoff or transfer."23
Nuqui denied the request, invoking Section 8 of CB Circular No. 28 (Regulations Governing Open Market
Operations, Stabilization of the Securities Market, Issue, Servicing and Redemption of the Public Debt)24 which
requires the presentation of the bond before a registered bond may be transferred on the books of the BSP.25
In a July 25, 1994 letter, the PDB clarified to Nuqui that it was not "asking for the transfer of the CB Bills.
rather it intends to put the BSP on formal notice that whoever is in possession of said bills is not a holder in due
course," and, therefore the BSP should not make payment upon the presentation of the CB bills on maturity.26
Nuqui responded that the BSP was "not in a position at that point in time to determine who is and who is not the
holder in due course since it is not privy to all acts and time involving the transfers or negotiation" of the CB
bills. Nuqui added that the BSPs action shall be governed by CB Circular No. 28, as amended.27
On November 17, 1994, the PDB also asked BSP Deputy Governor Edgardo Zialcita that (i) a notation in the
BSPs books be made against the transfer, exchange, or payment of the bonds and the payment of interest
thereon; and (ii) the presenter of the bonds upon maturity be required to submit proof as a holder in due course
(of the first set of CB bills). The PDB relied on Section 10 (d) 4 of CB Circular No. 28.28 This provision reads:
(4) Assignments effected by fraud Where the assignment of a registered bond is secured by fraudulent
representations, the Central Bank can grant no relief if the assignment has been honored without notice of fraud.
Otherwise, the Central Bank, upon receipt of notice that the assignment is claimed to have been secured by
fraudulent representations, or payment of the bond the payment of interest thereon, and when the bond is
presented, will call upon the owner and the person presenting the bond to substantiate their respective claims.If
it then appears that the person presenting the bond stands in the position of bonafide holder for value, the
Central Bank, after giving the owner an opportunity to assert his claim, will pass the bond for transfer, exchange
or payments, as the case may be, without further question.
In a December 29, 1994 letter, Nuqui again denied the request, reiterating the BSPs previous stand.
In light of these BSP responses and the impending maturity of the CB bills, the PDB filed29 with the RTC two
separate petitions for Mandamus, Prohibition and Injunction with prayer for Preliminary Injunction and
Temporary Restraining Order, docketed as Civil Case No. 94-3233 (covering the first set of CB bills) and Civil
Case 94-3254 (covering the second set of CB bills) against Nuqui, the BSP and the RCBC.30
The PDB essentially claims that in both the April 15 transaction (involving the first set of CB bills) and the
April 19 transaction (involving the second set of CB bills), there was no intent on its part to transfer title of the
CB bills, as shown by its non-issuance of a detached assignment in favor of the BOC and Bancap, respectively.
The PDB particularly alleges that it merely "warehoused"31 the first set of CB bills with the BOC, as security
collateral.
On December 28, 1994, the RTC temporarily enjoined Nuqui and the BSP from paying the face value of the CB
bills on maturity.32 On January 10, 1995, the PDB filed an Amended Petition, additionally impleading the BOC
and All Asia.33 In a January 13, 1995 Order, the cases were consolidated.34 On January 17, 1995, the RTC
granted the PDBs application for a writ of preliminary prohibitory injunction.35 In both petitions, the PDB
identically prayed:

WHEREFORE, it is respectfully prayed x x x that, after due notice and hearing, the Writs of Mandamus,
Prohibition and Injunction, be issued; (i) commanding the BSP and Nuqui, or whoever may take her place (a) to record forthwith in the books of BSP the claim of x x x PDB on the [two sets of] CB Bills in accordance
with Section 10 (d) (4) of revised C.B. Circular No. 28; and
(b) also pursuant thereto, when the bills are presented on maturity date for payment, to call (i) x x x PDB, (ii) x
x x RCBC x x x, (iii) x x x BOC x x x, and (iv) x x x ALL-ASIA x x x; or whoever will present the [first and
second sets of] CB Bills for payment, to submit proof as to who stands as the holder in due course of said bills,
and, thereafter, act accordingly;
and (ii) ordering the BSP and Nuqui to pay jointly and severally to x x x PDB the following:
(a) the sum of P 100,000.00, as and for exemplary damages;
(b) the sum of at least P 500,000.00, or such amount as shall be proved at the trial, as and for attorneys
fees;
(c) the legal rate of interest from the filing of this Petition until full payment of the sums mentioned in
this Petition; and
(d) the costs of suit.36
After the petitions were filed, the BOC acquired/reacquired all the nine CB bills the first and second sets of
CB bills (collectively, subject CB bills).
Defenses of the BSP and of the BOC37
The BOC filed its Answer, praying for the dismissal of the petition. It argued that the PDB has no cause of
action against it since the PDB is no longer the owner of the CB bills. Contrary to the PDBs "warehousing
theory,"38 the BOC asserted that the (i) April 15 transaction and the (ii) April 19 transaction covering both sets
of CB bills - were valid contracts of sale, followed by a transfer of title (i) to the BOC (in the April 15
transaction) upon the PDBs delivery of the 1st set of CB bills in substitution of the Treasury Bills the PDB
originally intended to sell, and (ii) to Bancap (in the April 19 transaction) upon the PDBs delivery of the 2nd
set of CB bills to Bancap, likewise by way of substitution.
The BOC adds that Section 10 (d) 4 of CB Circular No. 28 cannot apply to the PDBs case because (i) the PDB
is not in possession of the CB bills and (ii) the BOC acquired these bills from the PDB, as to the 1st set of CB
bills, and from Bancap, as to the 2nd set of CB bills, in good faith and for value. The BOC also asserted a
compulsory counterclaim for damages and attorneys fees.
On the other hand, the BSP countered that the PDB cannot invoke Section 10 (d) 4 of CB Circular No. 28
because this section applies only to an "owner" and a "person presenting the bond," of which the PDB is neither.
The PDB has not presented to the BSP any assignment of the subject CB bills, duly recorded in the BSPs
books, in its favor to clothe it with the status of an "owner."39 According to the BSP
Section 10 d. (4) applies only to a registered bond which is assigned. And the issuance of CB Bills x x x are
required to be recorded/registered in BSPs books. In this regard, Section 4 a. (1) of CB Circular 28 provides
that registered bonds "may be transferred only by an assignment thereon duly executed by the registered owner
or his duly authorized representative x x x and duly recorded on the books of the Central Bank."

xxxx
The alleged assignment of subject CB Bills in PDBs favor is not recorded/registered in BSPs books.40
(underscoring supplied)
Consequently, when Nuqui and the BSP refused the PDBs request (to record its claim), they were merely
performing their duties in accordance with CB Circular No. 28.
Alternatively, the BSP asked that an interpleader suit be allowed between and among the claimants to the
subject CB bills on the position that while it is able and willing to pay the subject CB bills face value, it is duty
bound to ensure that payment is made to the rightful owner. The BSP prayed that judgment be rendered:
a. Ordering the dismissal of the PDBs petition for lack of merit;
b. Determining which between/among [PDB] and the other claimants is/are lawfully entitled to the
ownership of the subject CB bills and the proceeds thereof;
c. x x x;
d. Ordering PDB to pay BSP and Nuqui such actual/compensatory and exemplary damages as the
RTC may deem warranted; and
e. Ordering PDB to pay Nuqui moral damages and to pay the costs of the suit.41
Subsequent events
The PDB agreed with the BSPs alternative response for an interpleader
4. PDB agrees that the various claimants should now interplead and substantiate their respective claims on the
subject CB bills. However, the total face value of the subject CB bills should be deposited in escrow with a
private bank to be disposed of only upon order of the RTC.42
Accordingly, on June 9, 199543 and August 4, 1995,44 the BOC and the PDB entered into two separate Escrow
Agreements.45 The first agreement covered the first set of CB bills, while the second agreement covered the
second set of CB bills. The parties agreed to jointly collect from the BSP the maturity proceeds of these CB bills
and to deposit said amount in escrow, "pending final determination by Court judgment, or amicable settlement
as to who shall be eventually entitled thereto."46 The BOC and the PDB filed a Joint Motion,47 submitting these
Escrow Agreements for court approval. The RTC gave its approval to the parties Joint Motion.48 Accordingly,
the BSP released the maturity proceeds of the CB bills by crediting the Demand Deposit Account of the PDB
and of the BOC with 50% each of the maturity proceeds of the amount in escrow.49
In view of the BOCs acquisition of all the CB bills, All Asia50 moved to be dropped as a respondent (with the
PDBs conformity51), which the RTC granted.52 The RCBC subsequently followed suit.53
In light of the developments, on May 4, 1998, the RTC required the parties to manifest their intention regarding
the case and to inform the court of any amicable settlement; "otherwise, th[e] case shall be dismissed for lack of
interest."54 Complying with the RTCs order, the BOC moved (i) that the case be set for pre-trial and (ii) for
further proceeding to resolve the remaining issues between the BOC and the PDB, particularly on "who has a
better right over the subject CB bills."55 The PDB joined the BOC in its motion.56

On September 28, 2000, the RTC granted the BSPs motion to interplead and, accordingly, required the BOC to
amend its Answer and for the conflicting claimants to comment thereon.57 In October 2000, the BOC filed its
Amended Consolidated Answer with Compulsory Counterclaim, reiterating its earlier arguments asserting
ownership over the subject CB bills.58
In the alternative, the BOC added that even assuming that there was no effective transfer of the nine CB bills
ultimately to the BOC, the PDB remains obligated to deliver to the BOC, as buyer in the April 15 transaction
and ultimate successor-in-interest of the buyer (Bancap) in the April 19 transaction, either the original subjects
of the sales or the value thereof, plus whatever income that may have been earned during the pendency of the
case.59
That BOC prayed:
1. To declare BOC as the rightful owner of the nine (9) CB bills and as the party entitled to the proceeds
thereof as well as all income earned pursuant to the two (2) Escrow Agreements entered into by BOC
and PDB.
2. In the alternative, ordering PDB to deliver the original subject of the sales transactions or the value
thereof and whatever income earned by way of interest at prevailing rate.
Without any opposition or objection from the PDB, on February 23, 2001, the RTC admitted60 the BOCs
Amended Consolidated Answer with Compulsory Counterclaims.
In May 2001, the PDB filed an Omnibus Motion,61 questioning the RTCs jurisdiction over the BOCs
"additional counterclaims." The PDB argues that its petitions pray for the BSP (not the RTC) to determine who
among the conflicting claimants to the CB bills stands in the position of the bona fide holder for value. The RTC
cannot entertain the BOCs counterclaim, regardless of its nature, because it is the BSP which has jurisdiction to
determine who is entitled to receive the proceeds of the CB bills.
The BOC opposed62 the PDBs Omnibus Motion. The PDB filed its Reply.63
In a January 10, 2002 Order, the RTC dismissed the PDBs petition, the BOCs counterclaim and the BSPs
counter-complaint/cross-claim for interpleader, holding that under CB Circular No. 28, it has no jurisdiction (i)
over the BOCs "counterclaims" and (ii) to resolve the issue of ownership of the CB bills.64 With the denial of
their separate motions for Reconsideration,65 the BOC and the BSP separately filed the present petitions for
review on certiorari.66
THE BOCS and THE BSPS PETITIONS
The BOC argues that the present cases do not fall within the limited provision of Section 10 (d) 4 of CB
Circular No. 28, which contemplates only of three situations: first, where the fraudulent assignment is not
coupled with a notice to the BSP, it can grant no relief; second, where the fraudulent assignment is coupled with
a notice of fraud to the BSP, it will make a notation against the assignment and require the owner and the holder
to substantiate their claims; and third, where the case does not fall on either of the first two situations, the BSP
will have to await action on the assignment pending settlement of the case, whether by agreement or by court
order.
The PDBs case cannot fall under the first two situations. With particular regard to the second situation, CB
Circular No. 28 requires that the conflict must be between an "owner" and a "holder," for the BSP to exercise its
limited jurisdiction to resolve conflicting claims; and the word "owner" here refers to the registered owner
giving notice of the fraud to the BSP. The PDB, however, is not the registered owner nor is it in possession
(holder) of the CB bills.67 Consequently, the PDBs case can only falls under the third situation which leaves the

RTC, as a court of general jurisdiction, with the authority to resolve the issue of ownership of a registered bond
(the CB bills) not falling in either of the first two situations.
The BOC asserts that the policy consideration supportive of its interpretation of CB Circular No. 28 is to have a
reliable system to protect the registered owner; should he file a notice with the BSP about a fraudulent
assignment of certain CB bills, the BSP simply has to look at its books to determine who is the owner of the CB
bills fraudulently assigned. Since it is only the registered owner who complied with the BSPs requirement of
recording an assignment in the BSPs books, then "the protective mantle of administrative proceedings" should
necessarily benefit him only, without extending the same benefit to those who chose to ignore the Circulars
requirement, like the PDB.68
Assuming arguendo that the PDBs case falls under the second situation i.e., the BSP has jurisdiction to
resolve the issue of ownership of the CB bills the more recent CB Circular No. 769-80 (Rules and Regulations
Governing Central Bank Certificates of Indebtedness) already superseded CB Circular No. 28, and, in
particular, effectively amended Section 10 (d) 4 of CB Circular No. 28. The pertinent provisions of CB Circular
No. 769-80 read:
Assignment Affected by Fraud. Any assignment for transfer of ownership of registered certificate obtained
through fraudulent representation if honored by the Central Bank or any of its authorized service agencies shall
not make the Central Bank or agency liable therefore unless it has previous formal notice of the fraud. The
Central Bank, upon notice under oath that the assignment was secured through fraudulent means, shall
immediately issue and circularize a "stop order" against the transfer, exchange, redemption of the Certificate
including the payment of interest coupons. The Central Bank or service agency concerned shall continue to
withhold action on the certificate until such time that the conflicting claims have been finally settled either by
amicable settlement between the parties or by order of the Court.
Unlike CB Circular No. 28, CB Circular No. 769-80 limited the BSPs authority to the mere issuance and
circularization of a "stop order" against the transfer, exchange and redemption upon sworn notice of a
fraudulent assignment. Under this Circular, the BSP shall only continue to withhold action until the dispute is
ended by an amicable settlement or by judicial determination. Given the more passive stance of the BSP the
very agency tasked to enforce the circulars involved - under CB Circular No. 769-80, the RTCs dismissal of the
BOCs counterclaims is palpably erroneous.
Lastly, since Nuquis office (Government Securities Department) had already been abolished,69 it can no longer
adjudicate the dispute under the second situation covered by CB Circular No. 28. The abolition of Nuquis
office is not only consistent with the BSPs Charter but, more importantly, with CB Circular No. 769-80, which
removed the BSPs adjudicative authority over fraudulent assignments.
THE PDBS COMMENT
The PDB claims that jurisdiction is determined by the allegations in the complaint/petition and not by the
defenses set up in the answer.70 In filing the petition with the RTC, the PDB merely seeks to compel the BSP to
determine, pursuant to CB Circular No. 28, the party legally entitled to the proceeds of the subject CB bills,
which, as the PDB alleged, have been transferred through fraudulent representations an allegation which
properly recognized the BSPs jurisdiction to resolve conflicting claims of ownership over the CB bills.
The PDB adds that under the doctrine of primary jurisdiction, courts should refrain from determining a
controversy involving a question whose resolution demands the exercise of sound administrative discretion. In
the present case, the BSPs special knowledge and experience in resolving disputes on securities, whose
assignment and trading are governed by the BSPs rules, should be upheld.

The PDB counters that the BOCs tri-fold interpretation of Section 10 (d) 4 of CB Circular No. 28 sanctions
split jurisdiction which is not favored;but even this tri-fold interpretation which, in the second situation, limits
the meaning of the "owner" to the registered owner is flawed. Section 10 (d) 4 aims to protect not just the
registered owner but anyone who has been deprived of his bond by fraudulent representation in order to deter
fraud in the secondary trading of government securities.
The PDB asserts that the existence of CB Circular No. 769-80 or the abolition of Nuquis office does not result
in depriving the BSP of its jurisdiction: first, CB Circular No. 769-80 expressly provides that CB Circular No.
28 shall have suppletory application to CB Circular No. 769-80; and second, the BSP can always designate an
office to resolve the PDBs claim over the CB bills.
Lastly, the PDB argues that even assuming that the RTC has jurisdiction to resolve the issue of ownership of the
CB bills, the RTC has not acquired jurisdiction over the BOCs so-called "compulsory" counterclaims (which in
truth is merely "permissive") because of the BOCs failure to pay the appropriate docket fees. These
counterclaims should, therefore, be dismissed and expunged from the record.
THE COURTS RULING
We grant the petitions.
At the outset, we note that the parties have not raised the validity of either CB Circular No. 28 or CB Circular
No. 769-80 as an issue. What the parties largely contest is the applicable circular in case of an allegedly
fraudulently assigned CB bill. The applicable circular, in turn, is determinative of the proper remedy available
to the PDB and/or the BOC as claimants to the proceeds of the subject CB bills.
Indisputably, at the time the PDB supposedly invoked the jurisdiction of the BSP in 1994 (by requesting for the
annotation of its claim over the subject CB bills in the BSPs books), CB Circular No. 769-80 has long been in
effect. Therefore, the parties respective interpretations of the provision of Section 10 (d) 4 of CB Circular No.
28 do not have any significance unless it is first established that that Circular governs the resolution of their
conflicting claims of ownership. This conclusion is important, given the supposed repeal or modification of
Section 10 (d) 4 of CB Circular No. 28 by the following provisions of CB Circular No. 769-80:
ARTICLE XI
SUPPLEMENTAL RULES
Section 1. Central Bank Circular No. 28 The provisions of Central Bank Circular No. 28 shall have suppletory
application to matters not specially covered by these Rules.
ARTICLE XII
EFFECTIVITY
Effectivity The rules and regulations herein prescribed shall take effect upon approval by the Monetary Board,
Central Bank of the Philippines, and all circulars, memoranda, or office orders inconsistent herewith are
revoked or modified accordingly. (Emphases added)
We agree with the PDB that in view of CB Circular No. 28s suppletory application, an attempt to harmonize
the apparently conflicting provisions is a prerequisite before one may possibly conclude that an amendment or a
repeal exists.71 Interestingly, however, even the PDB itself failed to submit an interpretation based on its own
position of harmonization.
The repealing clause of CB Circular No. 769-80 obviously did not expressly repeal CB Circular No. 28; in fact,
it even provided for the suppletory application of CB Circular No. 28 on "matters not specially covered by" CB

Circular No. 769-80. While no express repeal exists, the intent of CB Circular No. 769-80 to operate as an
implied repeal,72 or at least to amend earlier CB circulars, is supported by its text "revoking" or "modif[ying"
"all circulars" which are inconsistent with its terms.
At the outset, we stress that none of the parties disputes that the subject CB bills fall within the category of a
certificate or evidence of indebtedness and that these were issued by the Central Bank, now the BSP. Thus, even
without resorting to statutory construction aids, matters involving the subject CB bills should necessarily be
governed by CB Circular No. 769-80. Even granting, however, that reliance on CB Circular No. 769-80 alone is
not enough, we find that CB Circular No. 769-80 impliedly repeals CB Circular No. 28.
An implied repeal transpires when a substantial conflict exists between the new and the prior laws. In the
absence of an express repeal, a subsequent law cannot be construed as repealing a prior law unless an
irreconcilable inconsistency and repugnancy exist in the terms of the new and the old laws.73 Repeal by
implication is not favored, unless manifestly intended by the legislature, or unless it is convincingly and
unambiguously demonstrated, that the laws or orders are clearly repugnant and patently inconsistent with one
another so that they cannot co-exist; the legislature is presumed to know the existing law and would express a
repeal if one is intended.74
There are two instances of implied repeal. One takes place when the provisions in the two acts on the same
subject matter are irreconcilably contradictory, in which case, the later act, to the extent of the conflict,
constitutes an implied repeal of the earlier one. The other occurs when the later act covers the whole subject of
the earlier one and is clearly intended as a substitute; thus, it will operate to repeal the earlier law.75
A general reading of the two circulars shows that the second instance of implied repeal is present in this case.
CB Circular No. 28, entitled "Regulations Governing Open Market Operations, Stabilization of Securities
Market, Issue, Servicing and Redemption of Public Debt," is a regulation governing the servicing and
redemption of public debt, including the issue, inscription, registration, transfer, payment and replacement of
bonds and securities representing the public debt.76 On the other hand, CB Circular No. 769-80, entitled "Rules
and Regulations Governing Central Bank Certificate of Indebtedness," is the governing regulation on matters77
(i) involving certificate of indebtedness78 issued by the Central Bank itself and (ii) which are similarly covered
by CB Circular No. 28.
The CB Monetary Board issued CB Circular No. 28 to regulate the servicing and redemption of public debt,
pursuant to Section 124 (now Section 119 of Republic Act R.A. No. 7653) of the old Central Bank law79 which
provides that "the servicing and redemption of the public debt shall also be effected through the Bangko
Sentral." However, even as R.A. No. 7653 continued to recognize this role by the BSP, the law required a phaseout of all fiscal agency functions by the BSP, including Section 119 of R.A. No. 7653.
In other words, even if CB Circular No. 28 applies broadly to both government-issued bonds and securities and
Central Bank-issued evidence of indebtedness, given the present state of law, CB Circular No. 28 and CB
Circular No. 769-80 now operate on the same subject Central Bank-issued evidence of indebtedness. Under
Section 1, Article XI of CB Circular No. 769-80, the continued relevance and application of CB Circular No. 28
would depend on the need to supplement any deficiency or silence in CB Circular No. 769-80 on a particular
matter.
In the present case, both CB Circular No. 28 and CB Circular No. 769-80 provide the BSP with a course of
action in case of an allegedly fraudulently assigned certificate of indebtedness. Under CB Circular No. 28, in
case of fraudulent assignments, the BSP would have to "call upon the owner and the person presenting the bond
to substantiate their respective claims" and, from there, determine who has a better right over the registered
bond. On the other hand, under CB Circular No. 769-80, the BSP shall merely "issue and circularize a stop
order against the transfer, exchange, redemption of the [registered] certificate" without any adjudicative
function (which is the precise root of the present controversy). As the two circulars stand, the patent

irreconcilability of these two provisions does not require elaboration. Section 5, Article V of CB Circular No.
769-80 inescapably repealed Section 10 (d) 4 of CB Circular No. 28.
The issue of BSPs jurisdiction, lay hidden
On that note, the Court could have written finis to the present controversy by simply sustaining the BSPs
hands-off approach to the PDBs problem under CB Circular No. 769-80. However, the jurisdictional provision
of CB Circular No. 769-80 itself, in relation to CB Circular No. 28, on the matter of fraudulent assignment, has
given rise to a question of jurisdiction - the core question of law involved in these petitions - which the Court
cannot just treat sub-silencio.
Broadly speaking, jurisdiction is the legal power or authority to hear and determine a cause.80 In the exercise of
judicial or quasi-judicial power, it refers to the authority of a court to hear and decide a case.81 In the context of
these petitions, we hark back to the basic principles governing the question of jurisdiction over the subject
matter.
First, jurisdiction over the subject matter is determined only by the Constitution and by law.82 As a matter of
substantive law, procedural rules alone can confer no jurisdiction to courts or administrative agencies.83 In fact,
an administrative agency, acting in its quasi-judicial capacity, is a tribunal of limited jurisdiction and, as such,
could wield only such powers that are specifically granted to it by the enabling statutes. In contrast, an RTC is a
court of general jurisdiction, i.e., it has jurisdiction over cases whose subject matter does not fall within the
exclusive original jurisdiction of any court, tribunal or body exercising judicial or quasi-judicial functions.84
Second, jurisdiction over the subject matter is determined not by the pleas set up by the defendant in his
answer85 but by the allegations in the complaint,86 irrespective of whether the plaintiff is entitled to favorable
judgment on the basis of his assertions.87 The reason is that the complaint is supposed to contain a concise
statement of the ultimate facts constituting the plaintiff's causes of action.88
Third, jurisdiction is determined by the law in force at the time of the filing of the complaint.89
Parenthetically, the Court observes that none of the parties ever raised the issue of whether the BSP can simply
disown its jurisdiction, assuming it has, by the simple expedient of promulgating a new circular (specially
applicable to a certificate of indebtedness issued by the BSP itself), inconsistent with an old circular, assertive of
its limited jurisdiction over ownership issues arising from fraudulent assignments of a certificate of
indebtedness. The PDB, in particular, relied solely and heavily on CB Circular No. 28.
In light of the above principles pointing to jurisdiction as a matter of substantive law, the provisions of the law
itself that gave CB Circular 769-80 its life and jurisdiction must be examined.
The Philippine Central Bank
On January 3, 1949, Congress created the Central Bank of the Philippines (Central Bank) as a corporate body
with the primary objective of (i) maintaining the internal and external monetary stability in the Philippines; and
(ii) preserving the international value and the convertibility of the peso.90 In line with these broad objectives, the
Central Bank was empowered to issue rules and regulations "necessary for the effective discharge of the
responsibilities and exercise of the powers assigned to the Monetary Board and to the Central Bank."91
Specifically, the Central Bank is authorized to organize (other) departments for the efficient conduct of its
business and whose powers and duties "shall be determined by the Monetary Board, within the authority
granted to the Board and the Central Bank"92 under its original charter.
With the 1973 Constitution, the then Central Bank was constitutionally made as the countrys central monetary
authority until such time that Congress93 shall have established a central bank. The 1987 Constitution continued

to recognize this function of the then Central Bank until Congress, pursuant to the Constitution, created a new
central monetary authority which later came to be known as the Bangko Sentral ng Pilipinas.
Under the New Central Bank Act (R.A. No. 7653),94 the BSP is given the responsibility of providing policy
directions in the areas of money, banking and credit; it is given, too, the primary objective of maintaining price
stability, conducive to a balanced and sustainable growth of the economy, and of promoting and maintaining
monetary stability and convertibility of the peso.95
The Constitution expressly grants the BSP, as the countrys central monetary authority, the power of supervision
over the operation of banks, while leaving with Congress the authority to define the BSPs regulatory powers
over the operations of finance companies and other institutions performing similar functions. Under R.A. No.
7653, the BSPs powers and functions include (i) supervision over the operation of banks; (ii) regulation of
operations of finance companies and non-bank financial institutions performing quasi banking functions; (iii)
sole power and authority to issue currency within the Philippine territory; (iv) engaging in foreign exchange
transactions; (v) making rediscounts, discounts, loans and advances to banking and other financial institutions to
influence the volume of credit consistent with the objective of achieving price stability; (vi) engaging in open
market operations; and (vii) acting as banker and financial advisor of the government.1wphi1
On the BSPs power of supervision over the operation of banks, Section 4 of R.A. No. 8791 (The General
Banking Law of 2000) elaborates as follows:
CHAPTER II
AUTHORITY OF THE BANGKO SENTRAL
SECTION 4. Supervisory Powers. The operations and activities of banks shall be subject to supervision of
the Bangko Sentral. "Supervision" shall include the following:
4.1. The issuance of rules of conduct or the establishment of standards of operation for uniform
application to all institutions or functions covered, taking into consideration the distinctive character of
the operations of institutions and the substantive similarities of specific functions to which such rules,
modes or standards are to be applied;
4.2. The conduct of examination to determine compliance with laws and regulations if the circumstances
so warrant as determined by the Monetary Board;
4.3. Overseeing to ascertain that laws and regulations are complied with;
4.4. Regular investigation which shall not be oftener than once a year from the last date of examination
to determine whether an institution is conducting its business on a safe or sound basis: Provided, That
the deficiencies/irregularities found by or discovered by an audit shall be immediately addressed;
4.5. Inquiring into the solvency and liquidity of the institution (2-D); or
4.6. Enforcing prompt corrective action. (n)
The Bangko Sentral shall also have supervision over the operations of and exercise regulatory powers over
quasi-banks, trust entities and other financial institutions which under special laws are subject to Bangko Sentral
supervision. (2-Ca)
For the purposes of this Act, "quasi-banks" shall refer to entities engaged in the borrowing of funds through the
issuance, endorsement or assignment with recourse or acceptance of deposit substitutes as defined in Section 95

of Republic Act No. 7653 (hereafter the "New Central Bank Act") for purposes of relending or purchasing of
receivables and other obligations. [emphasis ours]
While this provision empowers the BSP to oversee the operations and activities of banks to "ascertain that laws
and regulations are complied with," the existence of the BSPs jurisdiction in the present dispute cannot rely on
this provision. The fact remains that the BSP already made known to the PDB its unfavorable position on the
latters claim of fraudulent assignment due to the latters own failure to comply96 with existing regulations:
In this connection, Section 10 (b) 2 also requires that a "Detached assignment will be recognized or accepted
only upon previous notice to the Central Bank x x x." In fact, in a memo dated September 23, 1991 xxx then CB
Governor Jose L. Cuisia advised all banks (including PDB) xxx as follows:
In view recurring incidents ostensibly disregarding certain provisions of CB circular No. 28 (as amended)
covering assignments of registered bonds, all banks and all concerned are enjoined to observe strictly the
pertinent provisions of said CB Circular as hereunder quoted:
xxxx
Under Section 10.b. (2)
x x x Detached assignment will be recognized or accepted only upon previous notice to the Central Bank and its
use is authorized only under the following circumstances:
(a) x x x
(b) x x x
(c) assignments of treasury notes and certificates of indebtedness in registered form which are not
provided at the back thereof with assignment form.
(d) Assignment of securities which have changed ownership several times.
(e) x x x
Non-compliance herewith will constitute a basis for non-action or withholding of action on redemption/payment
of interest coupons/transfer transactions or denominational exchange that may be directly affected thereby.
[Boldfacing supplied]
Again, the books of the BSP do not show that the supposed assignment of subject CB Bills was ever recorded in
the BSPs books. [Boldfacing supplied]
However, the PDB faults the BSP for not recording the assignment of the CB bills in the PDBs favor despite
the fact that the PDB already requested the BSP to record its assignment in the BSPs books as early as June 30,
1994.97
The PDBs claim is not accurate. What the PDB requested the BSP on that date was not the recording of the
assignment of the CB bills in its favor but the annotation of its claim over the CB bills at the time when (i) it
was no longer in possession of the CB bills, having been transferred from one entity to another and (ii) all it has
are the detached assignments, which the PDB has not shown to be compliant with Section 10 (b) 2 abovequoted. Obviously, the PDB cannot insist that the BSP take cognizance of its plaint when the basis of the BSPs

refusal under existing regulation, which the PDB is bound to observe, is the PDBs own failure to comply
therewith.
True, the BSP exercises supervisory powers (and regulatory powers) over banks (and quasi banks). The issue
presented before the Court, however, does not concern the BSPs supervisory power over banks as this power is
understood under the General Banking Law. In fact, there is nothing in the PDBs petition (even including the
letters it sent to the BSP) that would support the BSPs jurisdiction outside of CB Circular No. 28, under its
power of supervision, over conflicting claims to the proceeds of the CB bills.
BSP has quasi-judicial powers over a
class of cases which does not include
the adjudication of ownership of the
CB bills in question
In United Coconut Planters Bank v. E. Ganzon, Inc.,98 the Court considered the BSP as an administrative
agency,99 exercising quasi-judicial functions through its Monetary Board. It held:
A quasi-judicial agency or body is an organ of government other than a court and other than a legislature, which
affects the rights of private parties through either adjudication or rule-making. The very definition of an
administrative agency includes its being vested with quasi-judicial powers. The ever increasing variety of
powers and functions given to administrative agencies recognizes the need for the active intervention of
administrative agencies in matters calling for technical knowledge and speed in countless controversies which
cannot possibly be handled by regular courts. A "quasi-judicial function" is a term which applies to the action,
discretion, etc., of public administrative officers or bodies, who are required to investigate facts, or ascertain the
existence of facts, hold hearings, and draw conclusions from them, as a basis for their official action and to
exercise discretion of a judicial nature.
Undoubtedly, the BSP Monetary Board is a quasi-judicial agency exercising quasi-judicial powers or functions.
As aptly observed by the Court of Appeals, the BSP Monetary Board is an independent central monetary
authority and a body corporate with fiscal and administrative autonomy, mandated to provide policy directions
in the areas of money, banking and credit. It has power to issue subpoena, to sue for contempt those refusing to
obey the subpoena without justifiable reason, to administer oaths and compel presentation of books, records and
others, needed in its examination, to impose fines and other sanctions and to issue cease and desist order.
Section 37 of Republic Act No. 7653, in particular, explicitly provides that the BSP Monetary Board shall
exercise its discretion in determining whether administrative sanctions should be imposed on banks and quasibanks, which necessarily implies that the BSP Monetary Board must conduct some form of investigation or
hearing regarding the same. [citations omitted]
The BSP is not simply a corporate entity but qualifies as an administrative agency created, pursuant to
constitutional mandate,100 to carry out a particular governmental function.101 To be able to perform its role as
central monetary authority, the Constitution granted it fiscal and administrative autonomy. In general,
administrative agencies exercise powers and/or functions which may be characterized as administrative,
investigatory, regulatory, quasi-legislative, or quasi-judicial, or a mix of these five, as may be conferred by the
Constitution or by statute.102
While the very nature of an administrative agency and the raison d'tre for its creation103 and proliferation
dictate a grant of quasi-judicial power to it, the matters over which it may exercise this power must find
sufficient anchorage on its enabling law, either by express provision or by necessary implication. Once found,
the quasi-judicial power partakes of the nature of a limited and special jurisdiction, that is, to hear and
determine a class of cases within its peculiar competence and expertise. In other words, the provisions of the
enabling statute are the yardsticks by which the Court would measure the quantum of quasi-judicial powers an
administrative agency may exercise, as defined in the enabling act of such agency.104

Scattered provisions in R.A. No. 7653 and R.A. No. 8791, inter alia, exist, conferring jurisdiction on the BSP on
certain matters.105 For instance, under the situations contemplated under Section 36, par. 2106 (where a bank or
quasi bank persists in carrying on its business in an unlawful or unsafe manner) and Section 37107 (where the
bank or its officers willfully violate the banks charter or by-laws, or the rules and regulations issued by the
Monetary Board) of R.A. No. 7653, the BSP may place an entity under receivership and/or liquidation or
impose administrative sanctions upon the entity or its officers or directors.
Among its several functions under R.A. No. 7653, the BSP is authorized to engage in open market operations
and thereby "issue, place, buy and sell freely negotiable evidences of indebtedness of the Bangko Sentral" in the
following manner.
SEC. 90. Principles of Open Market Operations. The open market purchases and sales of securities by the
Bangko Sentral shall be made exclusively in accordance with its primary objective of achieving price stability.
xxxx
SEC. 92. Issue and Negotiation of Bangko Sentral Obligations. In order to provide the Bangko Sentral with
effective instruments for open market operations, the Bangko Sentral may, subject to such rules and regulations
as the Monetary Board may prescribe and in accordance with the principles stated in Section 90 of this Act,
issue, place, buy and sell freely negotiable evidences of indebtedness of the Bangko Sentral: Provided, That
issuance of such certificates of indebtedness shall be made only in cases of extraordinary movement in price
levels. Said evidences of indebtedness may be issued directly against the international reserve of the Bangko
Sentral or against the securities which it has acquired under the provisions of Section 91 of this Act, or may be
issued without relation to specific types of assets of the Bangko Sentral.
The Monetary Board shall determine the interest rates, maturities and other characteristics of said obligations of
the Bangko Sentral, and may, if it deems it advisable, denominate the obligations in gold or foreign currencies.
Subject to the principles stated in Section 90 of this Act, the evidences of indebtedness of the Bangko Sentral to
which this section refers may be acquired by the Bangko Sentral before their maturity, either through purchases
in the open market or through redemptions at par and by lot if the Bangko Sentral has reserved the right to make
such redemptions. The evidences of indebtedness acquired or redeemed by the Bangko Sentral shall not be
included among its assets, and shall be immediately retired and cancelled.108 (italics supplied; emphases ours)
The primary objective of the BSP is to maintain price stability.109 The BSP has a number of monetary policy
instruments at its disposal to promote price stability. To increase or reduce liquidity in the financial system, the
BSP uses open market operations, among others.110 Open market operation is a monetary tool where the BSP
publicly buys or sells government securities111 from (or to) banks and financial institutions in order to expand or
contract the supply of money. By controlling the money supply, the BSP is able to exert some influence on the
prices of goods and services and achieve its inflation objectives.112
Once the issue and/or sale of a security is made, the BSP would necessarily make a determination, in
accordance with its own rules, of the entity entitled to receive the proceeds of the security upon its maturity.
This determination by the BSP is an exercise of its administrative powers113 under the law as an incident to its
power to prescribe rules and regulations governing open market operations to achieve the "primary objective of
achieving price stability."114 As a matter of necessity, too, the same rules and regulations facilitate transaction
with the BSP by providing for an orderly manner of, among others, issuing, transferring, exchanging and paying
securities representing public debt.
Significantly, when competing claims of ownership over the proceeds of the securities it has issued are brought
before it, the law has not given the BSP the quasi-judicial power to resolve these competing claims as part of its
power to engage in open market operations. Nothing in the BSPs charter confers on the BSP the jurisdiction or

authority to determine this kind of claims, arising out of a subsequent transfer or assignment of evidence of
indebtedness a matter that appropriately falls within the competence of courts of general jurisdiction. That the
statute withholds this power from the BSP is only consistent with the fundamental reasons for the creation of a
Philippine central bank, that is, to lay down stable monetary policy and exercise bank supervisory functions.
Thus, the BSPs assumption of jurisdiction over competing claims cannot find even a stretched-out justification
under its corporate powers "to do and perform any and all things that may be necessary or proper to carry out
the purposes" of R.A. No. 7653. 115
To reiterate, open market operation is a monetary policy instrument that the BSP employs, among others, to
regulate the supply of money in the economy to influence the timing, cost and availability of money and credit,
as well as other financial factors, for the purpose of stabilizing the price level.116 What the law grants the BSP is
a continuing role to shape and carry out the countrys monetary policy not the authority to adjudicate
competing claims of ownership over the securities it has issued since this authority would not fall under the
BSPs purposes under its charter.
While R.A. No. 7653117 empowers the BSP to conduct administrative hearings and render judgment for or
against an entity under its supervisory and regulatory powers and even authorizes the BSP Governor to "render
decisions, or rulings x x x on matters regarding application or enforcement of laws pertaining to institutions
supervised by the BSP and laws pertaining to quasi-banks, as well as regulations, policies or instructions issued
by the Monetary Board," it is precisely the text of the BSPs own regulation (whose validity is not here raised as
an issue) that points to the BSPs limited role in case of an allegedly fraudulent assignment to simply (i) issuing
and circularizing a "stop order" against the transfer, exchange, redemption of the certificate of indebtedness,
including the payment of interest coupons, and (ii) withholding action on the certificate.
A similar conclusion can be drawn from the BSPs administrative adjudicatory power in cases of "willful failure
or refusal to comply with, or violation of, any banking law or any order, instruction or regulation issued by the
Monetary Board, or any order, instruction or ruling by the Governor."118 The non-compliance with the pertinent
requirements under CB Circular No. 28, as amended, deprives a party from any right to demand payment from
the BSP.
In other words, the grant of quasi-judicial authority to the BSP cannot possibly extend to situations which do not
call for the exercise by the BSP of its supervisory or regulatory functions over entities within its jurisdiction.119
The fact alone that the parties involved are banking institutions does not necessarily call for the exercise by the
BSP of its quasi-judicial powers under the law.120
The doctrine of primary jurisdiction
argues against BSPs purported
authority to adjudicate ownership
issues over the disputed CB bills
Given the preceding discussions, even the PDBs invocation of the doctrine of primary jurisdiction is misplaced.
In the exercise of its plenary legislative power, Congress may create administrative agencies endowed with
quasi-legislative and quasi-judicial powers. Necessarily, Congress likewise defines the limits of an agencys
jurisdiction in the same manner as it defines the jurisdiction of courts.121 As a result, it may happen that either a
court or an administrative agency has exclusive jurisdiction over a specific matter or both have concurrent
jurisdiction on the same. It may happen, too, that courts and agencies may willingly relinquish adjudicatory
power that is rightfully theirs in favor of the other. One of the instances when a court may properly defer to the
adjudicatory authority of an agency is the applicability of the doctrine of primary jurisdiction.122
As early as 1954, the Court applied the doctrine of primary jurisdiction under the following terms:

6. In the fifties, the Court taking cognizance of the move to vest jurisdiction in administrative commissions and
boards the power to resolve specialized disputes xxx ruled that Congress in requiring the Industrial Court's
intervention in the resolution of labor-management controversies xxx meant such jurisdiction to be exclusive,
although it did not so expressly state in the law. The Court held that under the "sense-making and expeditious
doctrine of primary jurisdiction ... the courts cannot or will not determine a controversy involving a question
which is within the jurisdiction of an administrative tribunal, where the question demands the exercise of sound
administrative discretion requiring the special knowledge, experience, and services of the administrative
tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply
with the purposes of the regulatory statute administered."123 (emphasis ours)
In Industrial Enterprises, Inc. v. Court of Appeals,124 the Court ruled that while an action for rescission of a
contract between coal developers appears to be an action cognizable by regular courts, the trial court remains to
be without jurisdiction to entertain the suit since the contract sought to be rescinded is "inextricably tied up with
the right to develop coal-bearing lands and the determination of whether or not the reversion of the coal
operating contract over the subject coal blocks to [the plaintiff] would be in line with the countrys national
program and objective on coal-development and over-all coal-supply-demand balance." It then applied the
doctrine of primary jurisdiction
In recent years, it has been the jurisprudential trend to apply the doctrine of primary jurisdiction in many cases
involving matters that demand the special competence of administrative agencies. It may occur that the Court
has jurisdiction to take cognizance of a particular case, which means that the matter involved is also judicial in
character. However, if the case is such that its determination requires the expertise, specialized skills and
knowledge of the proper administrative bodies because technical matters or intricate questions of facts are
involved, then relief must first be obtained in an administrative proceeding before a remedy will be supplied by
the courts even though the matter is within the proper jurisdiction of a court. This is the doctrine of primary
jurisdiction. It applies "where a claim is originally cognizable in the courts, and comes into play whenever
enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed
within the special competence of an administrative body."
Clearly, the doctrine of primary jurisdiction finds application in this case since the question of what coal areas
should be exploited and developed and which entity should be granted coal operating contracts over said areas
involves a technical determination by the Bureau of Energy Development as the administrative agency in
possession of the specialized expertise to act on the matter. The Trial Court does not have the competence to
decide matters concerning activities relative to the exploration, exploitation, development and extraction of
mineral resources like coal. These issues preclude an initial judicial determination. [emphases ours]
The absence of any express or implied statutory power to adjudicate conflicting claims of ownership or
entitlement to the proceeds of its certificates of indebtedness finds complement in the similar absence of any
technical matter that would call for the BSPs special expertise or competence.125 In fact, what the PDBs
petitions bear out is essentially the nature of the transaction it had with the subsequent transferees of the subject
CB bills (BOC and Bancap) and not any matter more appropriate for special determination by the BSP or any
administrative agency.
In a similar vein, it is well-settled that the interpretation given to a rule or regulation by those charged with its
execution is entitled to the greatest weight by the courts construing such rule or regulation.126 While there are
exceptions127 to this rule, the PDB has not convinced us that a departure is warranted in this case. Given the
non-applicability of the doctrine of primary jurisdiction, the BSPs own position, in light of Circular No. 76980, deserves respect from the Court.
Ordinarily, cases involving the application of doctrine of primary jurisdiction are initiated by an action invoking
the jurisdiction of a court or administrative agency to resolve the substantive legal conflict between the parties.
In this sense, the present case is quite unique since the courts jurisdiction was, originally, invoked to compel an

administrative agency (the BSP) to resolve the legal conflict of ownership over the CB bills - instead of
obtaining a judicial determination of the same dispute.
The remedy of interpleader
Based on the unique factual premise of the present case, the RTC acted correctly in initially assuming
jurisdiction over the PDBs petition for mandamus, prohibition and injunction.128 While the RTC agreed (albeit
erroneously) with the PDBs view (that the BSP has jurisdiction), it, however, dismissed not only the BOCs/the
BSPs counterclaims but the PDBs petition itself as well, on the ground that it lacks jurisdiction.
This is plain error.
Not only the parties themselves, but more so the courts, are bound by the rule on non-waiver of jurisdiction.129
believes that jurisdiction over the BOCs counterclaims and the BSPs counterclaim/crossclaim for interpleader
calls for the application of the doctrine of primary jurisdiction, the allowance of the PDBs petition even
becomes imperative because courts may raise the issue of primary jurisdiction sua sponte.130
Of the three possible options available to the RTC, the adoption of either of these two would lead the trial court
into serious legal error: first, if it granted the PDBs petition, its decision would have to be set aside on appeal
because the BSP has no jurisdiction as previously discussed; and second when it dismissed the PDBs petitions
and the BOCs counterclaims on the ground that it lacks jurisdiction, the trial court seriously erred because
precisely, the resolution of the conflicting claims over the CB bills falls within its general jurisdiction.
Without emasculating its jurisdiction, the RTC could have properly dismissed the PDBs petition but on the
ground that mandamus does not lie against the BSP; but even this correct alternative is no longer plausible since
the BSP, as a respondent below, already properly brought before the RTC the remaining conflicting claims over
the subject CB bills by way of a counterclaim/crossclaim for interpleader. Section 1, Rule 62 of the Rules of
Court provides when an interpleader is proper:
SECTION 1. When interpleader proper. Whenever conflicting claims upon the same subject matter are or may
be made against a person who claims no interest whatever in the subject matter, or an interest which in whole or
in part is not disputed by the claimants, he may bring an action against the conflicting claimants to compel them
to interplead and litigate their several claims among themselves.
The remedy of an action of interpleader131 is designed to protect a person against double vexation in respect of a
single liability.7 It requires, as an indispensable requisite, that conflicting claims upon the same subject matter
are or may be made against the stakeholder (the possessor of the subject matter) who claims no interest
whatever in the subject matter or an interest which in whole or in part is not disputed by the claimants.132
Through this remedy, the stakeholder can join all competing claimants in a single proceeding to determine
conflicting claims without exposing the stakeholder to the possibility of having to pay more than once on a
single liability.133
When the court orders that the claimants litigate among themselves, in reality a new action arises,134 where the
claims of the interpleaders themselves are brought to the fore, the stakeholder as plaintiff is relegated merely to
the role of initiating the suit. In short, the remedy of interpleader, when proper, merely provides an avenue for
the conflicting claims on the same subject matter to be threshed out in an action. Section 2 of Rule 62 provides:
SEC. 2. Order. Upon the filing of the complaint, the court shall issue an order requiring the conflicting
claimants to interplead with one another. If the interests of justice so require, the court may direct in such order
that the subject matter be paid or delivered to the court.

This is precisely what the RTC did by granting the BSPs motion to interplead. The PDB itself "agreed that the
various claimants should now interplead." Thus, the PDB and the BOC subsequently entered into two separate
escrow agreements, covering the CB bills, and submitted them to the RTC for approval.
In granting the BSPs motion, the RTC acted on the correct premise that it has jurisdiction to resolve the parties
conflicting claims over the CB bills - consistent with the rules and the parties conduct - and accordingly
required the BOC to amend its answer and for the PDB to comment thereon. Suddenly, however, the PDB made
an about-face and questioned the jurisdiction of the RTC. Swayed by the PDBs argument, the RTC dismissed
even the PDBs petition - which means that it did not actually compel the BSP to resolve the BOCs and the
PDBs claims.
Without the motion to interplead and the order granting it, the RTC could only dismiss the PDBs petition since
it is the RTC which has jurisdiction to resolve the parties conflicting claims not the BSP. Given that the
motion to interplead has been actually filed, the RTC could not have really granted the relief originally sought
in the PDBs petition since the RTCs order granting the BSPs motion to interplead - to which the PDB in fact
acquiesced into - effectively resulted in the dismissal of the PDBs petition. This is not altered by the fact that
the PDB additionally prayed in its petition for damages, attorneys fees and costs of suit "against the public
respondents" because the grant of the order to interplead effectively sustained the propriety of the BSPs resort
to this procedural device.
Interpleader
1. as a special civil action
What is quite unique in this case is that the BSP did not initiate the interpleader suit through an original
complaint but through its Answer. This circumstance becomes understandable if it is considered that insofar as
the BSP is concerned, the PDB does not possess any right to have its claim recorded in the BSPs books;
consequently, the PDB cannot properly be considered even as a potential claimant to the proceeds of the CB
bills upon maturity. Thus, the interpleader was only an alternative position, made only in the BSPs Answer.135
The remedy of interpleader, as a special civil action, is primarily governed by the specific provisions in Rule 62
of the Rules of Court and secondarily by the provisions applicable to ordinary civil actions.136 Indeed, Rule 62
does not expressly authorize the filing of a complaint-in-interpleader as part of, although separate and
independent from, the answer. Similarly, Section 5, Rule 6, in relation to Section 1, Rule 9 of the Rules of
Court137 does not include a complaint-in-interpleader as a claim,138 a form of defense,139 or as an objection that a
defendant may be allowed to put up in his answer or in a motion to dismiss. This does not mean, however, that
the BSPs "counter-complaint/cross-claim for interpleader" runs counter to general procedures.
Apart from a pleading,140 the rules141 allow a party to seek an affirmative relief from the court through the
procedural device of a motion. While captioned "Answer with counter complaint/cross-claim for interpleader,"
the RTC understood this as in the nature of a motion,142 seeking relief which essentially consists in an order for
the conflicting claimants to litigate with each other so that "payment is made to the rightful or legitimate
owner"143 of the subject CB bills.
The rules define a "civil action" as "one by which a party sues another for the enforcement or protection of a
right, or the prevention or redress of a wrong." Interpleader may be considered as a stakeholders remedy to
prevent a wrong, that is, from making payment to one not entitled to it, thereby rendering itself vulnerable to
lawsuit/s from those legally entitled to payment.
Interpleader is a civil action made special by the existence of particular rules to govern the uniqueness of its
application and operation. Under Section 2, Rule 6 of the Rules of Court, governing ordinary civil actions, a
partys claim is asserted "in a complaint, counterclaim, cross-claim, third (fourth, etc.)-party complaint, or

complaint-in-intervention." In an interpleader suit, however, a claim is not required to be contained in any of

these pleadings but in the answer-(of the conflicting claimants)-in-interpleader. This claim is different from the
counter-claim (or cross-claim, third party-complaint) which is separately allowed under Section 5, par. 2 of Rule
62.
2. the payment of docket fees covering BOCs counterclaim
The PDB argues that, even assuming that the RTC has jurisdiction over the issue of ownership of the CB bills,
the BOCs failure to pay the appropriate docket fees prevents the RTC from acquiring jurisdiction over the
BOCs "counterclaims."
We disagree with the PDB.
To reiterate and recall, the order granting the "PDBs motion to interplead," already resulted in the dismissal of
the PDBs petition. The same order required the BOC to amend its answer and for the conflicting claimants to
comment, presumably to conform to the nature of an answer-in interpleader. Perhaps, by reason of the BOCs
denomination of its claim as a "compulsory counterclaim" and the PDBs failure to fully appreciate the RTCs
order granting the "BSPs motion for interpleader" (with the PDBs conformity), the PDB mistakenly treated the
BOCs claim as a "permissive counterclaim" which necessitates the payment of docket fees.
As the preceding discussions would show, however, the BOCs "claim" - i.e., its assertion of ownership over the
CB bills is in reality just that, a "claim" against the stakeholder and not as a "counterclaim,"144 whether
compulsory145 or permissive. It is only the BOCs alternative prayer (for the PDB to deliver to the BOC, as the
buyer in the April 15 transaction and the ultimate successor-in-interest of the buyer in the April 19 transaction,
either the original subjects of the sales or the value thereof plus whatever income that may have been earned
pendente lite) and its prayer for damages that are obviously compulsory counterclaims against the PDB and,
therefore, does not require payment of docket fees.146
The PDB takes a contrary position through its insistence that a compulsory counterclaim should be one where
the presence of third parties, of whom the court cannot acquire jurisdiction, is not required. It reasons out that
since the RCBC and All Asia (the intervening holders of the CB bills) have already been dropped from the case,
then the BOCs counterclaim must only be permissive in nature and the BOC should have paid the correct
docket fees.
We see no reason to belabor this claim. Even if we gloss over the PDBs own conformity to the dropping of
these entities as parties, the BOC correctly argues that a remedy is provided under the Rules. Section 12, Rule 6
of the Rules of Court reads:
SEC. 12. Bringing new parties. When the presence of parties other than those to the original action is required
for the granting of complete relief in the determination of a counterclaim or cross-claim, the court shall order
them to be brought in as defendants, if jurisdiction over them can be obtained.
Even then, the strict characterization of the BOCs counterclaim is no longer material in disposing of the PDBs
argument based on non-payment of docket fees.
When an action is filed in court, the complaint must be accompanied by the payment of the requisite docket and
filing fees by the party seeking affirmative relief from the court. It is the filing of the complaint or appropriate
initiatory pleading, accompanied by the payment of the prescribed docket fee, that vests a trial court with
jurisdiction over the claim or the nature of the action.147 However, the non-payment of the docket fee at the time
of filing does not automatically cause the dismissal of the case, so long as the fee is paid within the applicable
prescriptive or reglementary period, especially when the claimant demonstrates a willingness to abide by the
rules prescribing such payment.148

In the present case, considering the lack of a clear guideline on the payment of docket fee by the claimants in an
interpleader suit, compounded by the unusual manner in which the interpleader suit was initiated and the
circumstances surrounding it, we surely cannot deduce from the BOCs mere failure to specify in its prayer the
total amount of the CB bills it lays claim to (or the value of the subjects of the sales in the April 15 and April 19
transactions, in its alternative prayer) an intention to defraud the government that would warrant the dismissal
of its claim.149
At any rate, regardless of the nature of the BOCs "counterclaims," for purposes of payment of filing fees, both
the BOC and the PDB, properly as defendants-in-interpleader, must be assessed the payment of the correct
docket fee arising from their respective claims. The seminal case of Sun Insurance Office, Ltd. v. Judge
Asuncion150 provides us guidance in the payment of docket fees, to wit:
1. x x x Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the
court may allow payment of the fee within a reasonable time but in no case beyond the applicable
prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which
shall not be considered filed until and unless the filing fee prescribed therefor is paid. The court may
also allow payment of said fee within a reasonable time but also in no case beyond its applicable
prescriptive or reglementary period. [underscoring ours]
This must be the rule considering that Section 7, Rule 62 of which reads:
SEC. 7. Docket and other lawful fees, costs and litigation expenses as liens. The docket and other lawful fees
paid by the party who filed a complaint under this Rule, as well as the costs and litigation expenses, shall
constitute a lien or charge upon the subject matter of the action, unless the court shall order otherwise.
only pertain to the docket and lawful fees to be paid by the one who initiated the interpleader suit, and who,
under the Rules, actually "claims no interest whatever in the subject matter." By constituting a lien on the
subject matter of the action, Section 7 in effect only aims to actually compensate the complainant-ininterpleader, who happens to be the stakeholder unfortunate enough to get caught in a legal crossfire between
two or more conflicting claimants, for the faultless trouble it found itself into. Since the defendants-ininterpleader are actually the ones who make a claim - only that it was extraordinarily done through the
procedural device of interpleader - then to them devolves the duty to pay the docket fees prescribed under Rule
141 of the Rules of Court, as amended.151
The importance of paying the correct amount of docket fee cannot be overemphasized:
The matter of payment of docket fees is not a mere triviality. These fees are necessary to defray court expenses
in the handling of cases. Consequently, in order to avoid tremendous losses to the judiciary, and to the
government as well, the payment of docket fees cannot be made dependent on the outcome of the case, except
when the claimant is a pauper-litigant.152
WHEREFORE, premises considered the consolidated PETITIONS are GRANTED. The Planters Development
Bank is hereby REQUIRED to file with the Regional Trial Court its comment or answer-in-interpleader to Bank
of Commerces Amended Consolidated Answer with Compulsory Counterclaim, as previously ordered by the
Regional Trial Court. The Regional Trial Court of Makati City, Branch 143, is hereby ORDERED to assess the
docket fees due from Planters Development Bank and Bank of Commerce and order their payment, and to
resolve with DELIBERATE DISPATCH the parties conflicting claims of ownership over the proceeds of the
Central Bank bills.

The Clerk of Court of the Regional Trial Court of Makati City, Branch 143, or his duly authorized
representative is hereby ORDERED to assess and collect the appropriate amount of docket fees separately due
the Bank of Commerce and Planters Development Bank as conflicting claimants in Bangko Sentral ng Pilipinas
interpleader suit, in accordance with this decision.
SO ORDERED.
DECLARATORY RELIEF AND SIMILAR REMEDIES
EUFEMIA ALMEDA and

G.R. No. 150806

ROMEL ALMEDA,
Petitioners,

Present:

YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
- versus -

CORONA,*
NACHURA, and
REYES, JJ.

BATHALA MARKETING
INDUSTRIES, INC.,

Promulgated:

Respondent.
January 28, 2008

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

DECISION

NACHURA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, of the Decision65[1] of
the Court of Appeals (CA), dated September 3, 2001, in CA-G.R. CV No. 67784, and its Resolution 66[2] dated
November 19, 2001. The assailed Decision affirmed with modification the Decision 67[3] of the Regional Trial
Court (RTC), Makati City, Branch 136, dated May 9, 2000 in Civil Case No. 98-411.
Sometime in May 1997, respondent Bathala Marketing Industries, Inc., as lessee, represented by its president
Ramon H. Garcia, renewed its Contract of Lease 68[4] with Ponciano L. Almeda (Ponciano), as lessor, husband
of petitioner Eufemia and father of petitioner Romel Almeda. Under the said contract, Ponciano agreed to lease
a portion of the Almeda Compound, located at 2208 Pasong Tamo Street, Makati City, consisting of 7,348.25
square meters, for a monthly rental of P1,107,348.69, for a term of four (4) years from May 1, 1997 unless
sooner terminated as provided in the contract.69[5] The contract of lease contained the following pertinent
provisions which gave rise to the instant case:

65
66
67
68
69

SIXTH It is expressly understood by the parties hereto that the rental rate stipulated is based
on the present rate of assessment on the property, and that in case the assessment should
hereafter be increased or any new tax, charge or burden be imposed by authorities on the lot and
building where the leased premises are located, LESSEE shall pay, when the rental herein
provided becomes due, the additional rental or charge corresponding to the portion hereby
leased; provided, however, that in the event that the present assessment or tax on said property
should be reduced, LESSEE shall be entitled to reduction in the stipulated rental, likewise in
proportion to the portion leased by him;
SEVENTH In case an extraordinary inflation or devaluation of Philippine Currency
should supervene, the value of Philippine peso at the time of the establishment of the obligation
shall be the basis of payment;70[6]

During the effectivity of the contract, Ponciano died. Thereafter, respondent dealt with petitioners. In a
letter71[7] dated December 29, 1997, petitioners advised respondent that the former shall assess and collect
Value Added Tax (VAT) on its monthly rentals. In response, respondent contended that VAT may not be
imposed as the rentals fixed in the contract of lease were supposed to include the VAT therein, considering that
their contract was executed on May 1, 1997 when the VAT law had long been in effect.72[8]

On January 26, 1998, respondent received another letter from petitioners informing the former that its
monthly rental should be increased by 73% pursuant to condition No. 7 of the contract and Article 1250 of the
Civil Code. Respondent opposed petitioners demand and insisted that there was no extraordinary inflation to
warrant the application of Article 1250 in light of the pronouncement of this Court in various cases.73[9]

Respondent refused to pay the VAT and adjusted rentals as demanded by petitioners but continued to pay
the stipulated amount set forth in their contract.

70
71
72
73

On February 18, 1998, respondent instituted an action for declaratory relief for purposes of determining
the correct interpretation of condition Nos. 6 and 7 of the lease contract to prevent damage and prejudice. 74[10]
The case was docketed as Civil Case No. 98-411 before the RTC of Makati.

On March 10, 1998, petitioners in turn filed an action for ejectment, rescission and damages against
respondent for failure of the latter to vacate the premises after the demand made by the former. 75[11] Before
respondent could file an answer, petitioners filed a Notice of Dismissal. 76[12] They subsequently refiled the
complaint before the Metropolitan Trial Court of Makati; the case was raffled to Branch 139 and was docketed
as Civil Case No. 53596.

Petitioners later moved for the dismissal of the declaratory relief case for being an improper remedy
considering that respondent was already in breach of the obligation and that the case would not end the
litigation and settle the rights of the parties. The trial court, however, was not persuaded, and consequently,
denied the motion.

After trial on the merits, on May 9, 2000, the RTC ruled in favor of respondent and against petitioners.
The pertinent portion of the decision reads:

WHEREFORE, premises considered, this Court renders judgment on the case as follows:
1) declaring that plaintiff is not liable for the payment of Value-Added Tax (VAT) of 10%
of the rent for [the] use of the leased premises;
2) declaring that plaintiff is not liable for the payment of any rental adjustment, there
being no [extraordinary] inflation or devaluation, as provided in the Seventh Condition of the
lease contract, to justify the same;

74
75
76

3) holding defendants liable to plaintiff for the total amount of P1,119,102.19, said
amount representing payments erroneously made by plaintiff as VAT charges and rental
adjustment for the months of January, February and March, 1999; and
4) holding defendants liable to plaintiff for the amount of P1,107,348.69, said amount
representing the balance of plaintiffs rental deposit still with defendants.
SO ORDERED.77[13]

The trial court denied petitioners their right to pass on to respondent the burden of paying the VAT since it was
not a new tax that would call for the application of the sixth clause of the contract. The court, likewise, denied
their right to collect the demanded increase in rental, there being no extraordinary inflation or devaluation as
provided for in the seventh clause of the contract. Because of the payment made by respondent of the rental
adjustment demanded by petitioners, the court ordered the restitution by the latter to the former of the amounts
paid, notwithstanding the well-established rule that in an action for declaratory relief, other than a declaration of
rights and obligations, affirmative reliefs are not sought by or awarded to the parties.
Petitioners elevated the aforesaid case to the Court of Appeals which affirmed with modification the
RTC decision. The fallo reads:

WHEREFORE, premises considered, the present appeal is DISMISSED and the appealed
decision in Civil Case No. 98-411 is hereby AFFIRMED with MODIFICATION in that the order
for the return of the balance of the rental deposits and of the amounts representing the 10% VAT
and rental adjustment, is hereby DELETED.
No pronouncement as to costs.
SO ORDERED.78[14]

The appellate court agreed with the conclusions of law and the application of the decisional rules on the matter
made by the RTC. However, it found that the trial court exceeded its jurisdiction in granting affirmative relief
to the respondent, particularly the restitution of its excess payment.

77
78

Petitioners now come before this Court raising the following issues:

I.
WHETHER OR NOT ARTICLE 1250 OF THE NEW CIVIL CODE IS APPLICABLE TO THE
CASE AT BAR.
II.
WHETHER OR NOT THE DOCTRINE ENUNCIATED IN FILIPINO PIPE AND FOUNDRY
CORP. VS. NAWASA CASE, 161 SCRA 32 AND COMPANION CASES ARE (sic)
APPLICABLE IN THE CASE AT BAR.
III.
WHETHER OR NOT IN NOT APPLYING THE DOCTRINE IN THE CASE OF DEL
ROSARIO VS. THE SHELL COMPANY OF THE PHILIPPINES, 164 SCRA 562, THE
HONORABLE COURT OF APPEALS SERIOUSLY ERRED ON A QUESTION OF LAW.
IV.
WHETHER OR NOT THE FINDING OF THE HONORABLE COURT OF APPEALS THAT
RESPONDENT IS NOT LIABLE TO PAY THE 10% VALUE ADDED TAX IS IN
ACCORDANCE WITH THE MANDATE OF RA 7716.

V.
WHETHER OR NOT DECLARATORY RELIEF IS PROPER SINCE PLAINTIFF-APPELLEE
WAS IN BREACH WHEN THE PETITION FOR DECLARATORY RELIEF WAS FILED
BEFORE THE TRIAL COURT.

In fine, the issues for our resolution are as follows: 1) whether the action for declaratory relief is proper;
2) whether respondent is liable to pay 10% VAT pursuant to Republic Act (RA) 7716; and 3) whether the
amount of rentals due the petitioners should be adjusted by reason of extraordinary inflation or devaluation.

Declaratory relief is defined as an action by any person interested in a deed, will, contract or other
written instrument, executive order or resolution, to determine any question of construction or validity arising
from the instrument, executive order or regulation, or statute, and for a declaration of his rights and duties
thereunder. The only issue that may be raised in such a petition is the question of construction or validity of
provisions in an instrument or statute. Corollary is the general rule that such an action must be justified, as no
other adequate relief or remedy is available under the circumstances. 79[15]

Decisional law enumerates the requisites of an action for declaratory relief, as follows: 1) the subject
matter of the controversy must be a deed, will, contract or other written instrument, statute, executive order or
regulation, or ordinance; 2) the terms of said documents and the validity thereof are doubtful and require judicial
construction; 3) there must have been no breach of the documents in question; 4) there must be an actual
justiciable controversy or the ripening seeds of one between persons whose interests are adverse; 5) the issue
must be ripe for judicial determination; and 6) adequate relief is not available through other means or other
forms of action or proceeding.80[16]
It is beyond cavil that the foregoing requisites are present in the instant case, except that petitioners insist
that respondent was already in breach of the contract when the petition was filed.

79
80

We do not agree.

After petitioners demanded payment of adjusted rentals and in the months that followed, respondent
complied with the terms and conditions set forth in their contract of lease by paying the rentals stipulated
therein. Respondent religiously fulfilled its obligations to petitioners even during the pendency of the present
suit. There is no showing that respondent committed an act constituting a breach of the subject contract of
lease. Thus, respondent is not barred from instituting before the trial court the petition for declaratory relief.

Petitioners claim that the instant petition is not proper because a separate action for rescission, ejectment
and damages had been commenced before another court; thus, the construction of the subject contractual
provisions should be ventilated in the same forum.

We are not convinced.

It is true that in Panganiban v. Pilipinas Shell Petroleum Corporation81[17] we held that the petition for
declaratory relief should be dismissed in view of the pendency of a separate action for unlawful detainer.
However, we cannot apply the same ruling to the instant case. In Panganiban, the unlawful detainer case had
already been resolved by the trial court before the dismissal of the declaratory relief case; and it was petitioner
in that case who insisted that the action for declaratory relief be preferred over the action for unlawful detainer.
Conversely, in the case at bench, the trial court had not yet resolved the rescission/ejectment case during the
pendency of the declaratory relief petition. In fact, the trial court, where the rescission case was on appeal, itself
initiated the suspension of the proceedings pending the resolution of the action for declaratory relief.

We are not unmindful of the doctrine enunciated in Teodoro, Jr. v. Mirasol82[18] where the declaratory relief
action was dismissed because the issue therein could be threshed out in the unlawful detainer suit. Yet, again, in
81
82

that case, there was already a breach of contract at the time of the filing of the declaratory relief petition. This
dissimilar factual milieu proscribes the Court from applying Teodoro to the instant case.

Given all these attendant circumstances, the Court is disposed to entertain the instant declaratory relief action
instead of dismissing it, notwithstanding the pendency of the ejectment/rescission case before the trial court.
The resolution of the present petition would write finis to the parties dispute, as it would settle once and for all
the question of the proper interpretation of the two contractual stipulations subject of this controversy.

Now, on the substantive law issues.

Petitioners repeatedly made a demand on respondent for the payment of VAT and for rental adjustment
allegedly brought about by extraordinary inflation or devaluation. Both the trial court and the appellate court
found no merit in petitioners claim. We see no reason to depart from such findings.

As to the liability of respondent for the payment of VAT, we cite with approval the ratiocination of the
appellate court, viz.:

Clearly, the person primarily liable for the payment of VAT is the lessor who may choose
to pass it on to the lessee or absorb the same. Beginning January 1, 1996, the lease of real
property in the ordinary course of business, whether for commercial or residential use, when the
gross annual receipts exceed P500,000.00, is subject to 10% VAT. Notwithstanding the
mandatory payment of the 10% VAT by the lessor, the actual shifting of the said tax burden upon
the lessee is clearly optional on the part of the lessor, under the terms of the statute. The word
may in the statute, generally speaking, denotes that it is directory in nature. It is generally
permissive only and operates to confer discretion. In this case, despite the applicability of the
rule under Sec. 99 of the NIRC, as amended by R.A. 7716, granting the lessor the option to pass
on to the lessee the 10% VAT, to existing contracts of lease as of January 1, 1996, the original
lessor, Ponciano L. Almeda did not charge the lessee-appellee the 10% VAT nor provided for its
additional imposition when they renewed the contract of lease in May 1997. More significantly,
said lessor did not actually collect a 10% VAT on the monthly rental due from the lessee-appellee
after the execution of the May 1997 contract of lease. The inevitable implication is that the

lessor intended not to avail of the option granted him by law to shift the 10% VAT upon the
lessee-appellee. x x x.83[19]

In short, petitioners are estopped from shifting to respondent the burden of paying the VAT.

Petitioners reliance on the sixth condition of the contract is, likewise, unavailing. This provision clearly
states that respondent can only be held liable for new taxes imposed after the effectivity of the contract of lease,
that is, after May 1997, and only if they pertain to the lot and the building where the leased premises are located.
Considering that RA 7716 took effect in 1994, the VAT cannot be considered as a new tax in May 1997, as to
fall within the coverage of the sixth stipulation.

Neither can petitioners legitimately demand rental adjustment because of extraordinary inflation or devaluation.

Petitioners contend that Article 1250 of the Civil Code does not apply to this case because the contract
stipulation speaks of extraordinary inflation or devaluation while the Code speaks of extraordinary inflation or
deflation. They insist that the doctrine pronounced in Del Rosario v. The Shell Company, Phils. Limited84[20]
should apply.

Essential to contract construction is the ascertainment of the intention of the contracting parties, and such
determination must take into account the contemporaneous and subsequent acts of the parties. This intention,
once ascertained, is deemed an integral part of the contract.85[21]

83
84
85

While, indeed, condition No. 7 of the contract speaks of extraordinary inflation or devaluation as compared to
Article 1250s extraordinary inflation or deflation, we find that when the parties used the term devaluation,
they really did not intend to depart from Article 1250 of the Civil Code. Condition No. 7 of the contract should,
thus, be read in harmony with the Civil Code provision.

That this is the intention of the parties is evident from petitioners letter 86[22] dated January 26, 1998,
where, in demanding rental adjustment ostensibly based on condition No. 7, petitioners made explicit reference
to Article 1250 of the Civil Code, even quoting the law verbatim. Thus, the application of Del Rosario is not
warranted. Rather, jurisprudential rules on the application of Article 1250 should be considered.

Article 1250 of the Civil Code states:

In case an extraordinary inflation or deflation of the currency stipulated should

supervene, the value of the currency at the time of the establishment of the obligation shall be the
basis of payment, unless there is an agreement to the contrary.

Inflation has been defined as the sharp increase of money or credit, or both, without a corresponding
increase in business transaction. There is inflation when there is an increase in the volume of money and credit
relative to available goods, resulting in a substantial and continuing rise in the general price level. 87[23] In a
number of cases, this Court had provided a discourse on what constitutes extraordinary inflation, thus:

[E]xtraordinary inflation exists when there is a decrease or increase in the purchasing power of
the Philippine currency which is unusual or beyond the common fluctuation in the value of said
currency, and such increase or decrease could not have been reasonably foreseen or was
manifestly beyond the contemplation of the parties at the time of the establishment of the
obligation.88[24]

86
87

The factual circumstances obtaining in the present case do not make out a case of extraordinary inflation or
devaluation as would justify the application of Article 1250 of the Civil Code. We would like to stress that the
erosion of the value of the Philippine peso in the past three or four decades, starting in the mid-sixties, is
characteristic of most currencies. And while the Court may take judicial notice of the decline in the purchasing
power of the Philippine currency in that span of time, such downward trend of the peso cannot be considered as
the extraordinary phenomenon contemplated by Article 1250 of the Civil Code. Furthermore, absent an official
pronouncement or declaration by competent authorities of the existence of extraordinary inflation during a given
period, the effects of extraordinary inflation are not to be applied. 89[25]

WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals in CAG.R. CV No. 67784, dated September 3, 2001, and its Resolution dated November 19, 2001, are AFFIRMED.

SO ORDERED.

REPUBLIC OF THE PHILIPPINES,

G.R. No. 154380

Petitioner,

Present:

Davide, Jr., C.J.,

- versus -

(Chairman),
Quisumbing,

88
89

Ynares-Santiago,
Carpio, and
Azcuna, JJ.
CIPRIANO ORBECIDO III,
Respondent.

Promulgated:
October 5, 2005

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

DECISION
QUISUMBING, J.:
Given a valid marriage between two Filipino citizens, where one party is later naturalized as a foreign
citizen and obtains a valid divorce decree capacitating him or her to remarry, can the Filipino spouse likewise
remarry under Philippine law?
Before us is a case of first impression that behooves the Court to make a definite ruling on this
apparently novel question, presented as a pure question of law.
In this petition for review, the Solicitor General assails the Decision[1] dated May 15, 2002, of the
Regional Trial Court of Molave, Zamboanga del Sur, Branch 23 and its Resolution[2] dated July 4, 2002
denying the motion for reconsideration. The court a quo had declared that herein respondent Cipriano Orbecido
III is capacitated to remarry. The fallo of the impugned Decision reads:
WHEREFORE, by virtue of the provision of the second paragraph of Art. 26 of the
Family Code and by reason of the divorce decree obtained against him by his American wife, the
petitioner is given the capacity to remarry under the Philippine Law.
IT IS SO ORDERED.[3]

The factual antecedents, as narrated by the trial court, are as follows.

On May 24, 1981, Cipriano Orbecido III married Lady Myros M. Villanueva at the United Church of
Christ in the Philippines in Lam-an, Ozamis City. Their marriage was blessed with a son and a daughter,
Kristoffer Simbortriz V. Orbecido and Lady Kimberly V. Orbecido.
In 1986, Ciprianos wife left for the United States bringing along their son Kristoffer. A few years later,
Cipriano discovered that his wife had been naturalized as an American citizen.
Sometime in 2000, Cipriano learned from his son that his wife had obtained a divorce decree and then
married a certain Innocent Stanley. She, Stanley and her child by him currently live at 5566 A. Walnut Grove
Avenue, San Gabriel, California.
Cipriano thereafter filed with the trial court a petition for authority to remarry invoking Paragraph 2 of
Article 26 of the Family Code. No opposition was filed. Finding merit in the petition, the court granted the
same. The Republic, herein petitioner, through the Office of the Solicitor General (OSG), sought
reconsideration but it was denied.
In this petition, the OSG raises a pure question of law:
WHETHER OR NOT RESPONDENT CAN REMARRY UNDER ARTICLE 26 OF THE
FAMILY CODE[4]
The OSG contends that Paragraph 2 of Article 26 of the Family Code is not applicable to the instant case
because it only applies to a valid mixed marriage; that is, a marriage celebrated between a Filipino citizen and
an alien. The proper remedy, according to the OSG, is to file a petition for annulment or for legal separation.
[5] Furthermore, the OSG argues there is no law that governs respondents situation. The OSG posits that this
is a matter of legislation and not of judicial determination.[6]

For his part, respondent admits that Article 26 is not directly applicable to his case but insists that when
his naturalized alien wife obtained a divorce decree which capacitated her to remarry, he is likewise capacitated
by operation of law pursuant to Section 12, Article II of the Constitution.[7]
At the outset, we note that the petition for authority to remarry filed before the trial court actually
constituted a petition for declaratory relief. In this connection, Section 1, Rule 63 of the Rules of Court
provides:
RULE 63
DECLARATORY RELIEF AND SIMILAR REMEDIES

Section 1. Who may file petitionAny person interested under a deed, will, contract or
other written instrument, or whose rights are affected by a statute, executive order or regulation,
ordinance, or 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.
...
The requisites of a petition for declaratory relief are: (1) there must be a justiciable controversy; (2) the
controversy must be between persons whose interests are adverse; (3) that the party seeking the relief has a legal
interest in the controversy; and (4) that the issue is ripe for judicial determination.[8]
This case concerns the applicability of Paragraph 2 of Article 26 to a marriage between two Filipino
citizens where one later acquired alien citizenship, obtained a divorce decree, and remarried while in the U.S.A.
The interests of the parties are also adverse, as petitioner representing the State asserts its duty to protect the
institution of marriage while respondent, a private citizen, insists on a declaration of his capacity to remarry.
Respondent, praying for relief, has legal interest in the controversy. The issue raised is also ripe for judicial
determination inasmuch as when respondent remarries, litigation ensues and puts into question the validity of
his second marriage.

Coming now to the substantive issue, does Paragraph 2 of Article 26 of the Family Code apply to the case
of respondent? Necessarily, we must dwell on how this provision had come about in the first place, and what
was the intent of the legislators in its enactment?

Brief Historical Background

On July 6, 1987, then President Corazon Aquino signed into law Executive Order No. 209, otherwise
known as the Family Code, which took effect on August 3, 1988. Article 26 thereof states:
All marriages solemnized outside the Philippines in accordance with the laws in force in
the country where they were solemnized, and valid there as such, shall also be valid in this
country, except those prohibited under Articles 35, 37, and 38.
On July 17, 1987, shortly after the signing of the original Family Code, Executive Order No. 227 was
likewise signed into law, amending Articles 26, 36, and 39 of the Family Code. A second paragraph was added
to Article 26. As so amended, it now provides:
ART. 26. All marriages solemnized outside the Philippines in accordance with the laws
in force in the country where they were solemnized, and valid there as such, shall also be valid in
this country, except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a
divorce is thereafter validly obtained abroad by the alien spouse capacitating him or her to
remarry, the Filipino spouse shall have capacity to remarry under Philippine law. (Emphasis
supplied)
On its face, the foregoing provision does not appear to govern the situation presented by the case at
hand. It seems to apply only to cases where at the time of the celebration of the marriage, the parties are a
Filipino citizen and a foreigner. The instant case is one where at the time the marriage was solemnized, the
parties were two Filipino citizens, but later on, the wife was naturalized as an American citizen and
subsequently obtained a divorce granting her capacity to remarry, and indeed she remarried an American citizen
while residing in the U.S.A.

Noteworthy, in the Report of the Public Hearings[9] on the Family Code, the Catholic Bishops
Conference of the Philippines (CBCP) registered the following objections to Paragraph 2 of Article 26:
1.

The rule is discriminatory. It discriminates against those whose spouses are

Filipinos who divorce them abroad. These spouses who are divorced will not be able to
re-marry, while the spouses of foreigners who validly divorce them abroad can.

2.

This is the beginning of the recognition of the validity of divorce even for Filipino
citizens. For those whose foreign spouses validly divorce them abroad will also be
considered to be validly divorced here and can re-marry. We propose that this be deleted
and made into law only after more widespread consultation. (Emphasis supplied.)
Legislative Intent

Records of the proceedings of the Family Code deliberations showed that the intent of Paragraph 2 of
Article 26, according to Judge Alicia Sempio-Diy, a member of the Civil Code Revision Committee, is to avoid
the absurd situation where the Filipino spouse remains married to the alien spouse who, after obtaining a
divorce, is no longer married to the Filipino spouse.
Interestingly, Paragraph 2 of Article 26 traces its origin to the 1985 case of Van Dorn v. Romillo, Jr.[10]
The Van Dorn case involved a marriage between a Filipino citizen and a foreigner. The Court held therein that a
divorce decree validly obtained by the alien spouse is valid in the Philippines, and consequently, the Filipino
spouse is capacitated to remarry under Philippine law.
Does the same principle apply to a case where at the time of the celebration of the marriage, the parties
were Filipino citizens, but later on, one of them obtains a foreign citizenship by naturalization?
The jurisprudential answer lies latent in the 1998 case of Quita v. Court of Appeals.[11] In Quita, the
parties were, as in this case, Filipino citizens when they got married. The wife became a naturalized American
citizen in 1954 and obtained a divorce in the same year. The Court therein hinted, by way of obiter dictum, that
a Filipino divorced by his naturalized foreign spouse is no longer married under Philippine law and can thus
remarry.

Thus, taking into consideration the legislative intent and applying the rule of reason, we hold that
Paragraph 2 of Article 26 should be interpreted to include cases involving parties who, at the time of the
celebration of the marriage were Filipino citizens, but later on, one of them becomes naturalized as a foreign
citizen and obtains a divorce decree. The Filipino spouse should likewise be allowed to remarry as if the other
party were a foreigner at the time of the solemnization of the marriage. To rule otherwise would be to sanction
absurdity and injustice. Where the interpretation of a statute according to its exact and literal import would lead
to mischievous results or contravene the clear purpose of the legislature, it should be construed according to its
spirit and reason, disregarding as far as necessary the letter of the law. A statute may therefore be extended to
cases not within the literal meaning of its terms, so long as they come within its spirit or intent.[12]
If we are to give meaning to the legislative intent to avoid the absurd situation where the Filipino spouse
remains married to the alien spouse who, after obtaining a divorce is no longer married to the Filipino spouse,
then the instant case must be deemed as coming within the contemplation of Paragraph 2 of Article 26.
In view of the foregoing, we state the twin elements for the application of Paragraph 2 of Article 26 as
follows:
1.

There is a valid marriage that has been celebrated between a Filipino citizen and a
foreigner; and

2.

A valid divorce is obtained abroad by the alien spouse capacitating him or her to
remarry.

The reckoning point is not the citizenship of the parties at the time of the celebration of the marriage, but
their citizenship at the time a valid divorce is obtained abroad by the alien spouse capacitating the latter to
remarry.
In this case, when Ciprianos wife was naturalized as an American citizen, there was still a valid
marriage that has been celebrated between her and Cipriano. As fate would have it, the naturalized alien wife
subsequently obtained a valid divorce capacitating her to remarry. Clearly, the twin requisites for the

application of Paragraph 2 of Article 26 are both present in this case. Thus Cipriano, the divorced Filipino
spouse, should be allowed to remarry.
We are also unable to sustain the OSGs theory that the proper remedy of the Filipino spouse is to file
either a petition for annulment or a petition for legal separation. Annulment would be a long and tedious
process, and in this particular case, not even feasible, considering that the marriage of the parties appears to
have all the badges of validity. On the other hand, legal separation would not be a sufficient remedy for it
would not sever the marriage tie; hence, the legally separated Filipino spouse would still remain married to the
naturalized alien spouse.
However, we note that the records are bereft of competent evidence duly submitted by respondent
concerning the divorce decree and the naturalization of respondents wife. It is settled rule that one who alleges
a fact has the burden of proving it and mere allegation is not evidence.[13]
Accordingly, for his plea to prosper, respondent herein must prove his allegation that his wife was
naturalized as an American citizen. Likewise, before a foreign divorce decree can be recognized by our own
courts, the party pleading it must prove the divorce as a fact and demonstrate its conformity to the foreign law
allowing it.[14] Such foreign law must also be proved as our courts cannot take judicial notice of foreign laws.
Like any other fact, such laws must be alleged and proved.[15] Furthermore, respondent must also show that
the divorce decree allows his former wife to remarry as specifically required in Article 26. Otherwise, there
would be no evidence sufficient to declare that he is capacitated to enter into another marriage.
Nevertheless, we are unanimous in our holding that Paragraph 2 of Article 26 of the Family Code (E.O.
No. 209, as amended by E.O. No. 227), should be interpreted to allow a Filipino citizen, who has been divorced
by a spouse who had acquired foreign citizenship and remarried, also to remarry. However, considering that in
the present petition there is no sufficient evidence submitted and on record, we are unable to declare, based on
respondents bare allegations that his wife, who was naturalized as an American citizen, had obtained a divorce

decree and had remarried an American, that respondent is now capacitated to remarry. Such declaration could
only be made properly upon respondents submission of the aforecited evidence in his favor.
ACCORDINGLY, the petition by the Republic of the Philippines is GRANTED. The assailed Decision
dated May 15, 2002, and Resolution dated July 4, 2002, of the Regional Trial Court of Molave, Zamboanga del
Sur, Branch 23, are hereby SET ASIDE.
No pronouncement as to costs.
SO ORDERED.

G.R. No. 181303

CARMEN
DANAO
MALANA,
MARIA DANAO ACORDA, EVELYN
DANAO,
FERMINA
DANAO,
LETICIA DANAO and LEONORA
DANAO, the last two are represented
herein by their Attorney-in-Fact,
MARIA DANAO ACORDA,
Petitioners,

Present:

YNARES-SANTIAGO, J.,
Chairperson,
CHICO-NAZARIO,

- versus -

VELASCO, JR.,
NACHURA, and
PERALTA, JJ.

BENIGNO TAPPA, JERRY REYNA,

SATURNINO
CAMBRI
and
SPOUSES FRANCISCO AND MARIA
LIGUTAN,
Respondents.

Promulgated:

September 17, 2009

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

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Certiorari under Rule 65 of the Rules of Court, assailing the Orders90[1] dated 4
May 2007, 30 May 2007, and 31 October 2007, rendered by Branch 3 of the Regional Trial Court (RTC) of
Tuguegarao City, which dismissed, for lack of jurisdiction, the Complaint of petitioners Carmen Danao Malana,
Leticia Danao, Maria Danao Accorda, Evelyn Danao, Fermina Danao, and Leonora Danao, against respondents
Benigno Tappa, Jerry Reyna, Saturnino Cambri, Francisco Ligutan and Maria Ligutan, in Civil Case No. 6868.

Petitioners filed before the RTC their Complaint for Reivindicacion, Quieting of Title, and Damages 91[2]
against respondents on 27 March 2007, docketed as Civil Case No. 6868. Petitioners alleged in their Complaint

90
91

that they are the owners of a parcel of land covered by Transfer Certificate of Title (TCT) No. T-127937 92[3]
situated in Tuguegarao City, Cagayan (subject property).

Petitioners inherited the subject property from

Anastacio Danao (Anastacio), who died intestate.93[4] During the lifetime of Anastacio, he had allowed
Consuelo Pauig (Consuelo), who was married to Joaquin Boncad, to build on and occupy the southern portion
of the subject property. Anastacio and Consuelo agreed that the latter would vacate the said land at any time
that Anastacio and his heirs might need it.94[5]

Petitioners claimed that respondents, Consuelos family members, 95[6] continued to occupy the subject
property even after her death, already building their residences thereon using permanent materials. Petitioners
also learned that respondents were claiming ownership over the subject property. Averring that they already
needed it, petitioners demanded that respondents vacate the same. Respondents, however, refused to heed
petitioners demand.96[7]

Petitioners referred their land dispute with respondents to the Lupong Tagapamayapa of Barangay
Annafunan West for conciliation. During the conciliation proceedings, respondents asserted that they owned the
subject property and presented documents ostensibly supporting their claim of ownership.

According to petitioners, respondents documents were highly dubious, falsified, and incapable of
proving the latters claim of ownership over the subject property; nevertheless, they created a cloud upon
petitioners title to the property. Thus, petitioners were compelled to file before the RTC a Complaint to remove
such cloud from their title.97[8] Petitioners additionally sought in their Complaint an award against respondents
for actual damages, in the amount of P50,000.00, resulting from the latters baseless claim over the subject
92
93
94
95
96
97

property that did not actually belong to them, in violation of Article 19 of the Civil Code on Human Relations. 98
[9] Petitioners likewise prayed for an award against respondents for exemplary damages, in the amount of
P50,000.00, since the latter had acted in bad faith and resorted to unlawful means to establish their claim over
the subject property. Finally, petitioners asked to recover from respondents P50,000.00 as attorneys fees,
because the latters refusal to vacate the property constrained petitioners to engage the services of a lawyer. 99
[10]

Before respondents could file their answer, the RTC issued an Order dated 4 May 2007 dismissing
petitioners Complaint on the ground of lack of jurisdiction. The RTC referred to Republic Act No. 7691, 100[11]
amending Batas Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act of 1980, which vests
the RTC with jurisdiction over real actions, where the assessed value of the property involved exceeds
P20,000.00. It found that the subject property had a value of less than P20,000.00; hence, petitioners action to
recover the same was outside the jurisdiction of the RTC. The RTC decreed in its 4 May 2007 Order that:

The Court has no jurisdiction over the action, it being a real action involving a real
property with assessed value less than P20,000.00 and hereby dismisses the same without
prejudice.101[12]

Petitioners filed a Motion for Reconsideration of the aforementioned RTC Order dismissing their
Complaint. They argued that their principal cause of action was for quieting of title; the accion reivindicacion
was included merely to enable them to seek complete relief from respondents. Petitioners Complaint should

98
99
100
101

not have been dismissed, since Section 1, Rule 63 of the Rules of Court 102[13] states that an action to quiet title
falls under the jurisdiction of the RTC.103[14]

In an Order dated 30 May 2007, the RTC denied petitioners Motion for Reconsideration. It reasoned
that an action to quiet title is a real action. Pursuant to Republic Act No. 7691, it is the Municipal Trial Court
(MTC) that exercises exclusive jurisdiction over real actions where the assessed value of real property does not
exceed P20,000.00. Since the assessed value of subject property per Tax Declaration No, 02-48386 was
P410.00, the real action involving the same was outside the jurisdiction of the RTC.104[15]

Petitioners filed another pleading, simply designated as Motion, in which they prayed that the RTC
Orders dated 4 May 2007 and 30 May 2007, dismissing their Complaint, be set aside. They reiterated their
earlier argument that Section 1, Rule 63 of the Rules of Court states that an action to quiet title falls under the
exclusive jurisdiction of the RTC. They also contended that there was no obstacle to their joining the two
causes of action, i.e., quieting of title and reivindicacion, in a single Complaint, citing Rumarate v.
Hernandez.105[16] And even if the two causes of action could not be joined, petitioners maintained that the
misjoinder of said causes of action was not a ground for the dismissal of their Complaint.106[17]

The RTC issued an Order dated 31 October 2007 denying petitioners Motion. It clarified that their
Complaint was dismissed, not on the ground of misjoinder of causes of action, but for lack of jurisdiction. The
RTC dissected Section 1, Rule 63 of the Rules of Court, which provides:

102
103
104
105
106

Section 1. Who may file petition. Any person interested under a deed, will, contract or
other written instrument, or 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.

The RTC differentiated between the first and the second paragraphs of Section 1, Rule 63 of the Rules of
Court. The first paragraph refers to an action for declaratory relief, which should be brought before the RTC.
The second paragraph, however, refers to a different set of remedies, which includes an action to quiet title to
real property. The second paragraph must be read in relation to Republic Act No. 7691, which vests the MTC
with jurisdiction over real actions, where the assessed value of the real property involved does not exceed
P50,000.00 in Metro Manila and P20,000.00 in all other places.107[18] The dispositive part of the 31 October
2007 Order of the RTC reads:

This Court maintains that an action to quiet title is a real action. [Herein petitioners] do
not dispute the assessed value of the property at P410.00 under Tax Declaration No. 02-48386.
Hence, it has no jurisdiction over the action.

In view of the foregoing considerations, the Motion is hereby denied.108[19]

Hence, the present Petition, where petitioners raise the sole issue of:

107
108

WHETHER OR NOT THE RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF

DISCRETION IN DISMISSING THE COMPLAINT OF THE PETITIONERS MOTU
PROPRIO.109[20]

Petitioners statement of the issue is misleading. It would seem that they are only challenging the fact
that their Complaint was dismissed by the RTC motu proprio. Based on the facts and arguments set forth in the
instant Petition, however, the Court determines that the fundamental issue for its resolution is whether the RTC
committed grave abuse of discretion in dismissing petitioners Complaint for lack of jurisdiction.

The Court rules in the negative.

An action for declaratory relief should be filed by a person interested under a deed, a will, a contract or
other written instrument, and whose rights are affected by a statute, an executive order, a regulation or an
ordinance. The relief sought under this remedy includes the interpretation and determination of the validity of
the written instrument and the judicial declaration of the parties rights or duties thereunder.110[21]

Petitions for declaratory relief are governed by Rule 63 of the Rules of Court. The RTC correctly made
a distinction between the first and the second paragraphs of Section 1, Rule 63 of the Rules of Court.

109
110

The first paragraph of Section 1, Rule 63 of the Rules of Court, describes the general circumstances in
which a person may file a petition for declaratory relief, to wit:

Any person interested under a deed, will, contract or other written instrument, or 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. (Emphasis ours.)

As the afore-quoted provision states, a petition for declaratory relief under the first paragraph of Section
1, Rule 63 may be brought before the appropriate RTC.

Section 1, Rule 63 of the Rules of Court further provides in its second paragraph that:

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 ours.)

The second paragraph of Section 1, Rule 63 of the Rules of Court specifically refers to (1) an action for
the reformation of an instrument, recognized under Articles 1359 to 1369 of the Civil Code; (2) an action to
quiet title, authorized by Articles 476 to 481 of the Civil Code; and (3) an action to consolidate ownership
required by Article 1607 of the Civil Code in a sale with a right to repurchase. These three remedies are
considered similar to declaratory relief because they also result in the adjudication of the legal rights of the
litigants, often without the need of execution to carry the judgment into effect.111[22]

111

To determine which court has jurisdiction over the actions identified in the second paragraph of Section
1, Rule 63 of the Rules of Court, said provision must be read together with those of the Judiciary
Reorganization Act of 1980, as amended.

It is important to note that Section 1, Rule 63 of the Rules of Court does not categorically require that an
action to quiet title be filed before the RTC. It repeatedly uses the word may that an action for quieting of
title may be brought under [the] Rule on petitions for declaratory relief, and a person desiring to file a petition
for declaratory relief may x x x bring an action in the appropriate Regional Trial Court. The use of the word
may in a statute denotes that the provision is merely permissive and indicates a mere possibility, an
opportunity or an option.112[23]

In contrast, the mandatory provision of the Judiciary Reorganization Act of 1980, as amended, uses the
word shall and explicitly requires the MTC to exercise exclusive original jurisdiction over all civil actions
which involve title to or possession of real property where the assessed value does not exceed P20,000.00, thus:

Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in Civil Cases.Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts shall exercise:

xxxx
(3) Exclusive original jurisdiction in all civil actions which involve title to, possession of,
real property, or any interest therein where the assessed value of the property or interest therein
does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where
such assessed value does not exceeds Fifty thousand pesos (P50,000.00) exclusive of interest,
damages of whatever kind, attorneys fees, litigation expenses and costs: x x x (Emphasis ours.)

112

As found by the RTC, the assessed value of the subject property as stated in Tax Declaration No. 0248386 is only P410.00; therefore, petitioners Complaint involving title to and possession of the said property is
within the exclusive original jurisdiction of the MTC, not the RTC.

Furthermore, an action for declaratory relief presupposes that there has been no actual breach of the
instruments involved or of rights arising thereunder.113[24] 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 only 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.114[25]

Where the law or contract has already been contravened prior to the filing of an action for declaratory
relief, the courts can no longer assume jurisdiction over the action. In other words, a court has no more
jurisdiction over an action for declaratory relief if its subject has already been infringed or transgressed before
the institution of the action.115[26]

In the present case, petitioners Complaint for quieting of title was filed after petitioners already
demanded and respondents refused to vacate the subject property. In fact, said Complaint was filed only
subsequent to the latters express claim of ownership over the subject property before the Lupong
Tagapamayapa, in direct challenge to petitioners title.

Since petitioners averred in the Complaint that they had already been deprived of the possession of their
property, the proper remedy for them is the filing of an accion publiciana or an accion reivindicatoria, not a
113
114
115

case for declaratory relief. An accion publiciana is a suit for the recovery of possession, filed one year after the
occurrence of the cause of action or from the unlawful withholding of possession of the realty. An accion
reivindicatoria is a suit that has for its object ones recovery of possession over the real property as owner. 116
[27]

Petitioners Complaint contained sufficient allegations for an accion reivindicatoria. Jurisdiction over
such an action would depend on the value of the property involved. Given that the subject property herein is
valued only at P410.00, then the MTC, not the RTC, has jurisdiction over an action to recover the same. The
RTC, therefore, did not commit grave abuse of discretion in dismissing, without prejudice, petitioners
Complaint in Civil Case No. 6868 for lack of jurisdiction.

As for the RTC dismissing petitioners Complaint motu proprio, the following pronouncements of the
Court in Laresma v. Abellana117[28] proves instructive:

It is axiomatic that the nature of an action and the jurisdiction of a tribunal are determined
by the material allegations of the complaint and the law at the time the action was commenced.
Jurisdiction of the tribunal over the subject matter or nature of an action is conferred only by law
and not by the consent or waiver upon a court which, otherwise, would have no jurisdiction over
the subject matter or nature of an action. Lack of jurisdiction of the court over an action or the
subject matter of an action cannot be cured by the silence, acquiescence, or even by express
consent of the parties. If the court has no jurisdiction over the nature of an action, it may
dismiss the same ex mero motu or motu proprio. x x x. (Emphasis supplied.)

Since the RTC, in dismissing petitioners Complaint, acted in complete accord with law and
jurisprudence, it cannot be said to have done so with grave abuse of discretion amounting to lack or excess of
jurisdiction. An act of a court or tribunal may only be considered to have been committed in grave abuse of
discretion when the same was performed in a capricious or whimsical exercise of judgment, which is equivalent
116
117

to lack of jurisdiction. 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 a duty enjoined by law or to act at all in contemplation of law, as
where the power is exercised in an arbitrary and despotic manner by reason of passion or personal hostility. 118
[29] No such circumstances exist herein as to justify the issuance of a writ of certiorari.

IN VIEW OF THE FOREGOING, the instant Petition is DISMISSED. The Orders dated 4 May
2007, 30 May 2007 and 31 October 2007 of the Regional Trial Court of Tuguegarao City, Branch 3, dismissing
the Complaint in Civil Case No. 6868, without prejudice, are AFFIRMED. The Regional Trial Court is
ordered to REMAND the records of this case to the Municipal Trial Court or the court of proper jurisdiction for
proper disposition. Costs against the petitioners.

SO ORDERED.
G.R. No. 202242

April 16, 2013

FRANCISCO I. CHAVEZ, Petitioner,

vs.
JUDICIALAND BAR COUNCIL, SEN. FRANCIS JOSEPH G. ESCUDERO and REP. NIEL C. TUPAS,
JR., Respondents.
RESOLUTION
MENDOZA, J.:
This resolves the Motion for Reconsideration1 filed by the Office of the Solicitor General (OSG) on behalf of
the respondents, Senator Francis Joseph G. Escudero and Congressman Niel C. Tupas, Jr. (respondents), duly
opposed2 by the petitioner, former Solicitor General Francisco I. Chavez (petitioner).
By way of recapitulation, the present action stemmed from the unexpected departure of former Chief Justice
Renato C. Corona on May 29, 2012, and the nomination of petitioner, as his potential successor. In his initiatory
pleading, petitioner asked the Court to determine 1] whether the first paragraph of Section 8, Article VIII of the
1987 Constitution allows more than one (1) member of Congress to sit in the JBC; and 2] if the practice of
having two (2) representatives from each House of Congress with one (1) vote each is sanctioned by the
Constitution.
On July 17, 2012, the Court handed down the assailed subject decision, disposing the same in the following
manner:
118

WHEREFORE, the petition is GRANTED. The current numerical composition of the Judicial and Bar Council
is declared UNCONSTITUTIONAL. The Judicial and Bar Council is hereby enjoined to reconstitute itself so
that only one (1) member of Congress will sit as a representative in its proceedings, in accordance with Section
8(1), Article VIII of the 1987 Constitution.
This disposition is immediately executory.
SO ORDERED.
On July 31, 2012, following respondents motion for reconsideration and with due regard to Senate Resolution
Nos. 111,3 112,4 113,5 and 114,6 the Court set the subject motion for oral arguments on August 2, 2012.7 On
August 3, 2012, the Court discussed the merits of the arguments and agreed, in the meantime, to suspend the
effects of the second paragraph of the dispositive portion of the July 17, 2012 Decision which decreed that it
was immediately executory. The decretal portion of the August 3, 2012 Resolution8 reads:
WHEREFORE, the parties are hereby directed to submit their respective MEMORANDA within ten (10) days
from notice. Until further orders, the Court hereby SUSPENDS the effect of the second paragraph of the
dispositive portion of the Courts July 17, 2012 Decision, which reads: "This disposition is immediately
executory."9
Pursuant to the same resolution, petitioner and respondents filed their respective memoranda.10
Brief Statement of the Antecedents
In this disposition, it bears reiterating that from the birth of the Philippine Republic, the exercise of appointing
members of the Judiciary has always been the exclusive prerogative of the executive and legislative branches of
the government. Like their progenitor of American origins, both the Malolos Constitution11 and the 1935
Constitution12 vested the power to appoint the members of the Judiciary in the President, subject to confirmation
by the Commission on Appointments. It was during these times that the country became witness to the
deplorable practice of aspirants seeking confirmation of their appointment in the Judiciary to ingratiate
themselves with the members of the legislative body.13
Then, under the 1973 Constitution,14 with the fusion of the executive and legislative powers in one body, the
appointment of judges and justices ceased to be subject of scrutiny by another body. The power became
exclusive and absolute to the Executive, subject only to the condition that the appointees must have all the
qualifications and none of the disqualifications.
Prompted by the clamor to rid the process of appointments to the Judiciary of the evils of political pressure and
partisan activities,15 the members of the Constitutional Commission saw it wise to create a separate, competent
and independent body to recommend nominees to the President.
Thus, it conceived of a body, representative of all the stakeholders in the judicial appointment process, and
called it the Judicial and Bar Council (JBC). The Framers carefully worded Section 8, Article VIII of the 1987
Constitution in this wise:

Section 8. (1) A Judicial and Bar Council is hereby created under the supervision of the Supreme Court
composed of the Chief Justice as ex officio Chairman, the Secretary of Justice, and a representative of the
Congress as ex officio Members, a representative of the Integrated Bar, a professor of law, a retired Member of
the Supreme Court, and a representative of the private sector.
From the moment of the creation of the JBC, Congress designated one (1) representative to sit in the JBC to act
as one of the ex-officio members.16 Pursuant to the constitutional provision that Congress is entitled to one (1)
representative, each House sent a representative to the JBC, not together, but alternately or by rotation.
In 1994, the seven-member composition of the JBC was substantially altered.1wphi1 An eighth member was
added to the JBC as the two (2) representatives from Congress began sitting simultaneously in the JBC, with
each having one-half (1/2) of a vote.17
In 2001, the JBC En Banc decided to allow the representatives from the Senate and the House of
Representatives one full vote each.18 It has been the situation since then.
Grounds relied upon by Respondents
Through the subject motion, respondents pray that the Court reconsider its decision and dismiss the petition on
the following grounds: 1] that allowing only one representative from Congress in the JBC would lead to
absurdity considering its bicameral nature; 2] that the failure of the Framers to make the proper adjustment
when there was a shift from unilateralism to bicameralism was a plain oversight; 3] that two representatives
from Congress would not subvert the intention of the Framers to insulate the JBC from political partisanship;
and 4] that the rationale of the Court in declaring a seven-member composition would provide a solution should
there be a stalemate is not exactly correct.
While the Court may find some sense in the reasoning in amplification of the third and fourth grounds listed by
respondents, still, it finds itself unable to reverse the assailed decision on the principal issues covered by the
first and second grounds for lack of merit. Significantly, the conclusion arrived at, with respect to the first and
second grounds, carries greater bearing in the final resolution of this case.
As these two issues are interrelated, the Court shall discuss them jointly.
Ruling of the Court
The Constitution evinces the direct action of the Filipino people by which the fundamental powers of
government are established, limited and defined and by which those powers are distributed among the several
departments for their safe and useful exercise for the benefit of the body politic.19 The Framers reposed their
wisdom and vision on one suprema lex to be the ultimate expression of the principles and the framework upon
which government and society were to operate. Thus, in the interpretation of the constitutional provisions, the
Court firmly relies on the basic postulate that the Framers mean what they say. The language used in the
Constitution must be taken to have been deliberately chosen for a definite purpose. Every word employed in the
Constitution must be interpreted to exude its deliberate intent which must be maintained inviolate against
disobedience and defiance. What the Constitution clearly says, according to its text, compels acceptance and
bars modification even by the branch tasked to interpret it.

For this reason, the Court cannot accede to the argument of plain oversight in order to justify constitutional
construction. As stated in the July 17, 2012 Decision, in opting to use the singular letter "a" to describe
"representative of Congress," the Filipino people through the Framers intended that Congress be entitled to only
one (1) seat in the JBC. Had the intention been otherwise, the Constitution could have, in no uncertain terms, so
provided, as can be read in its other provisions.
A reading of the 1987 Constitution would reveal that several provisions were indeed adjusted as to be in tune
with the shift to bicameralism. One example is Section 4, Article VII, which provides that a tie in the
presidential election shall be broken "by a majority of all the Members of both Houses of the Congress, voting
separately."20 Another is Section 8 thereof which requires the nominee to replace the Vice-President to be
confirmed "by a majority of all the Members of both Houses of the Congress, voting separately."21 Similarly,
under Section 18, the proclamation of martial law or the suspension of the privilege of the writ of habeas corpus
may be revoked or continued by the Congress, voting separately, by a vote of at least a majority of all its
Members."22 In all these provisions, the bicameral nature of Congress was recognized and, clearly, the
corresponding adjustments were made as to how a matter would be handled and voted upon by its two Houses.
Thus, to say that the Framers simply failed to adjust Section 8, Article VIII, by sheer inadvertence, to their
decision to shift to a bicameral form of the legislature, is not persuasive enough. Respondents cannot just lean
on plain oversight to justify a conclusion favorable to them. It is very clear that the Framers were not keen on
adjusting the provision on congressional representation in the JBC because it was not in the exercise of its
primary function to legislate. JBC was created to support the executive power to appoint, and Congress, as
one whole body, was merely assigned a contributory non-legislative function.
The underlying reason for such a limited participation can easily be discerned. Congress has two (2) Houses.
The need to recognize the existence and the role of each House is essential considering that the Constitution
employs precise language in laying down the functions which particular House plays, regardless of whether the
two Houses consummate an official act by voting jointly or separately. Whether in the exercise of its
legislative23 or its non-legislative functions such as inter alia, the power of appropriation,24 the declaration of an
existence of a state of war,25 canvassing of electoral returns for the President and Vice-President,26 and
impeachment,27 the dichotomy of each House must be acknowledged and recognized considering the interplay
between these two Houses. In all these instances, each House is constitutionally granted with powers and
functions peculiar to its nature and with keen consideration to 1) its relationship with the other chamber; and 2)
in consonance with the principle of checks and balances, as to the other branches of government.
In checkered contrast, there is essentially no interaction between the two Houses in their participation in the
JBC. No mechanism is required between the Senate and the House of Representatives in the screening and
nomination of judicial officers. Rather, in the creation of the JBC, the Framers arrived at a unique system by
adding to the four (4) regular members, three (3) representatives from the major branches of government - the
Chief Justice as ex-officio Chairman (representing the Judicial Department), the Secretary of Justice
(representing the Executive Department), and a representative of the Congress (representing the Legislative
Department). The total is seven (7), not eight. In so providing, the Framers simply gave recognition to the
Legislature, not because it was in the interest of a certain constituency, but in reverence to it as a major branch
of government.
On this score, a Member of Congress, Hon. Simeon A. Datumanong, from the Second District of Maguindanao,
submitted his well-considered position28 to then Chief Justice Reynato S. Puno:

I humbly reiterate my position that there should be only one representative of Congress in the JBC in
accordance with Article VIII, Section 8 (1) of the 1987 Constitution x x x.
The aforesaid provision is clear and unambiguous and does not need any further interpretation. Perhaps, it is apt
to mention that the oft-repeated doctrine that "construction and interpretation come only after it has been
demonstrated that application is impossible or inadequate without them."
Further, to allow Congress to have two representatives in the Council, with one vote each, is to negate the
principle of equality among the three branches of government which is enshrined in the Constitution.
In view of the foregoing, I vote for the proposition that the Council should adopt the rule of single
representation of Congress in the JBC in order to respect and give the right meaning to the above-quoted
provision of the Constitution. (Emphases and underscoring supplied)
On March 14, 2007, then Associate Justice Leonardo A. Quisumbing, also a JBC Consultant, submitted to the
Chief Justice and ex-officio JBC Chairman his opinion,29 which reads:
8. Two things can be gleaned from the excerpts and citations above: the creation of the JBC is intended to
curtail the influence of politics in Congress in the appointment of judges, and the understanding is that seven (7)
persons will compose the JBC. As such, the interpretation of two votes for Congress runs counter to the
intendment of the framers. Such interpretation actually gives Congress more influence in the appointment of
judges. Also, two votes for Congress would increase the number of JBC members to eight, which could lead to
voting deadlock by reason of even-numbered membership, and a clear violation of 7 enumerated members in
the Constitution. (Emphases and underscoring supplied)
In an undated position paper,30 then Secretary of Justice Agnes VST Devanadera opined:
As can be gleaned from the above constitutional provision, the JBC is composed of seven (7) representatives
coming from different sectors. From the enumeration it is patent that each category of members pertained to a
single individual only. Thus, while we do not lose sight of the bicameral nature of our legislative department, it
is beyond dispute that Art. VIII, Section 8 (1) of the 1987 Constitution is explicit and specific that "Congress"
shall have only "xxx a representative." Thus, two (2) representatives from Congress would increase the number
of JBC members to eight (8), a number beyond what the Constitution has contemplated. (Emphases and
underscoring supplied)
In this regard, the scholarly dissection on the matter by retired Justice Consuelo Ynares-Santiago, a former JBC
consultant, is worth reiterating.31 Thus:
A perusal of the records of the Constitutional Commission reveals that the composition of the JBC reflects the
Commissions desire "to have in the Council a representation for the major elements of the community." xxx
The ex-officio members of the Council consist of representatives from the three main branches of government
while the regular members are composed of various stakeholders in the judiciary. The unmistakeable tenor of
Article VIII, Section 8(1) was to treat each ex-officio member as representing one co-equal branch of
government. xxx Thus, the JBC was designed to have seven voting members with the three ex-officio members
having equal say in the choice of judicial nominees.

xxx
No parallelism can be drawn between the representative of Congress in the JBC and the exercise by Congress of
its legislative powers under Article VI and constituent powers under Article XVII of the Constitution. Congress,
in relation to the executive and judicial branches of government, is constitutionally treated as another co-equal
branch in the matter of its representative in the JBC. On the other hand, the exercise of legislative and
constituent powers requires the Senate and the House of Representatives to coordinate and act as distinct bodies
in furtherance of Congress role under our constitutional scheme. While the latter justifies and, in fact,
necessitates the separateness of the two Houses of Congress as they relate inter se, no such dichotomy need be
made when Congress interacts with the other two co-equal branches of government.
It is more in keeping with the co-equal nature of the three governmental branches to assign the same weight to
considerations that any of its representatives may have regarding aspiring nominees to the judiciary. The
representatives of the Senate and the House of Representatives act as such for one branch and should not have
any more quantitative influence as the other branches in the exercise of prerogatives evenly bestowed upon the
three. Sound reason and principle of equality among the three branches support this conclusion. [Emphases and
underscoring supplied]
The argument that a senator cannot represent a member of the House of Representatives in the JBC and viceversa is, thus, misplaced. In the JBC, any member of Congress, whether from the Senate or the House of
Representatives, is constitutionally empowered to represent the entire Congress. It may be a constricted
constitutional authority, but it is not an absurdity.
From this score stems the conclusion that the lone representative of Congress is entitled to one full vote. This
pronouncement effectively disallows the scheme of splitting the said vote into half (1/2), between two
representatives of Congress. Not only can this unsanctioned practice cause disorder in the voting process, it is
clearly against the essence of what the Constitution authorized. After all, basic and reasonable is the rule that
what cannot be legally done directly cannot be done indirectly. To permit or tolerate the splitting of one vote
into two or more is clearly a constitutional circumvention that cannot be countenanced by the Court. Succinctly
put, when the Constitution envisioned one member of Congress sitting in the JBC, it is sensible to presume that
this representation carries with him one full vote.
It is also an error for respondents to argue that the President, in effect, has more influence over the JBC simply
because all of the regular members of the JBC are his appointees. The principle of checks and balances is still
safeguarded because the appointment of all the regular members of the JBC is subject to a stringent process of
confirmation by the Commission on Appointments, which is composed of members of Congress.
Respondents contention that the current irregular composition of the JBC should be accepted, simply because it
was only questioned for the first time through the present action, deserves scant consideration. Well-settled is
the rule that acts done in violation of the Constitution no matter how frequent, usual or notorious cannot
develop or gain acceptance under the doctrine of estoppel or laches, because once an act is considered as an
infringement of the Constitution it is void from the very beginning and cannot be the source of any power or
authority.
It would not be amiss to point out, however, that as a general rule, an unconstitutional act is not a law; it confers
no rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not been

passed at all. This rule, however, is not absolute. Under the doctrine of operative facts, actions previous to the
declaration of unconstitutionality are legally recognized. They are not nullified. This is essential in the interest
of fair play. To reiterate the doctrine enunciated in Planters Products, Inc. v. Fertiphil Corporation:32
The doctrine of operative fact, as an exception to the general rule, only applies as a matter of equity and fair
play. It nullifies the effects of an unconstitutional law by recognizing that the existence of a statute prior to a
determination of unconstitutionality is an operative fact and may have consequences which cannot always be
ignored. The past cannot always be erased by a new judicial declaration. The doctrine is applicable when a
declaration of unconstitutionality will impose an undue burden on those who have relied on the invalid law.
Thus, it was applied to a criminal case when a declaration of unconstitutionality would put the accused in
double jeopardy or would put in limbo the acts done by a municipality in reliance upon a law creating it.33
Under the circumstances, the Court finds the exception applicable in this case and holds that notwithstanding its
finding of unconstitutionality in the current composition of the JBC, all its prior official actions are nonetheless
valid.
Considering that the Court is duty bound to protect the Constitution which was ratified by the direct action of
the Filipino people, it cannot correct what respondents perceive as a mistake in its mandate. Neither can the
Court, in the exercise of its power to interpret the spirit of the Constitution, read into the law something that is
contrary to its express provisions and justify the same as correcting a perceived inadvertence. To do so would
otherwise sanction the Court action of making amendment to the Constitution through a judicial
pronouncement.
In other words, the Court cannot supply the legislative omission. According to the rule of casus omissus "a case
omitted is to be held as intentionally omitted."34 "The principle proceeds from a reasonable certainty that a
particular person, object or thing has been omitted from a legislative enumeration."35 Pursuant to this, "the Court
cannot under its power of interpretation supply the omission even though the omission may have resulted from
inadvertence or because the case in question was not foreseen or contemplated."36 "The Court cannot supply
what it thinks the legislature would have supplied had its attention been called to the omission, as that would be
judicial legislation."37
Stated differently, the Court has no power to add another member by judicial construction.
The call for judicial activism fails to stir the sensibilities of the Court tasked to guard the Constitution against
usurpation. The Court remains steadfast in confining its powers in the sphere granted by the Constitution itself.
Judicial activism should never be allowed to become judicial exuberance.38 In cases like this, no amount of
practical logic or convenience can convince the Court to perform either an excision or an insertion that will
change the manifest intent of the Framers. To broaden the scope of congressional representation in the JBC is
tantamount to the inclusion of a subject matter which was not included in the provision as enacted. True to its
constitutional mandate, the Court cannot craft and tailor constitutional provisions in order to accommodate all
of situations no matter how ideal or reasonable the proposed solution may sound. To the exercise of this
intrusion, the Court declines.
WHEREFORE, the Motion for Reconsideration filed by respondents is hereby DENIED.

The suspension of the effects of the second paragraph of the dispositive portion of the July 17, 2012 Decision of
the Court, which reads, "This disposition is immediately executory," is hereby LIFTED.
SO ORDERED.
G.R. No. 181359

August 5, 2013

SPOUSES CLEMENCIO C. SABITSANA, JR. and MA. ROSARIO M. SABITSANA, Petitioners,

vs.
JUANITO F. MUERTEGUI, represented by his Attorney-in-Fact DOMINGO A. MUERTEGUI, JR.,
Respondent.
DECISION
DEL CASTILLO, J.:
A lawyer may not, for his own personal interest and benefit, gamble on his client's word, believing it at one time
and disbelieving it the next. He owes his client his undivided loyalty.
Assailed in this Petition for Review on Certiorari1 are the January 25, 2007 Decision2 of the Court of Appeals
(CA) which denied the appeal in CA-G.R. CV No. 79250, and its January 11, 2008 Resolution3 denying
petitioners Motion for Reconsideration.4
Factual Antecedents
On September 2, 1981, Alberto Garcia (Garcia) executed an unnotarized Deed of Sale5 in favor of respondent
Juanito Muertegui6 (Juanito) over a 7,500-square meter parcel of unregistered land (the lot) located in Dalutan
Island, Talahid, Almeira, Biliran, Leyte del Norte covered by Tax Declaration (TD) No. 1996 issued in 1985 in
Garcias name.7
Juanitos father Domingo Muertegui, Sr. (Domingo Sr.) and brother Domingo Jr. took actual possession of the
lot and planted thereon coconut and ipil-ipil trees. They also paid the real property taxes on the lot for the years
1980 up to 1998.
On October 17, 1991, Garcia sold the lot to the Muertegui family lawyer, petitioner Atty. Clemencio C.
Sabitsana, Jr. (Atty. Sabitsana), through a notarized deed of absolute sale.8 The sale was registered with the
Register of Deeds on February 6, 1992.9 TD No. 1996 was cancelled and a new one, TD No. 5327,10 was issued
in Atty. Sabitsanas name. Although Domingo Jr. and Sr. paid the real estate taxes, Atty. Sabitsana also paid real
property taxes in 1992, 1993, and 1999. In 1996, he introduced concrete improvements on the property, which
shortly thereafter were destroyed by a typhoon.
When Domingo Sr. passed away, his heirs applied for registration and coverage of the lot under the Public Land
Act or Commonwealth Act No. 141. Atty. Sabitsana, in a letter11 dated August 24, 1998 addressed to the
Department of Environment and Natural Resources CENRO/PENRO office in Naval, Biliran, opposed the
application, claiming that he was the true owner of the lot. He asked that the application for registration be held
in abeyance until the issue of conflicting ownership has been resolved.

On April 11, 2000, Juanito, through his attorney-in-fact Domingo Jr., filed Civil Case No. B-109712 for quieting
of title and preliminary injunction, against herein petitioners Atty. Sabitsana and his wife, Rosario, claiming that
they bought the lot in bad faith and are exercising acts of possession and ownership over the same, which acts
thus constitute a cloud over his title. The Complaint13 prayed, among others, that the Sabitsana Deed of Sale, the
August 24, 1998 letter, and TD No. 5327 be declared null and void and of no effect; that petitioners be ordered
to respect and recognize Juanitos title over the lot; and that moral and exemplary damages, attorneys fees, and
litigation expenses be awarded to him.
In their Answer with Counterclaim,14 petitioners asserted mainly that the sale to Juanito is null and void absent
the marital consent of Garcias wife, Soledad Corto (Soledad); that they acquired the property in good faith and
for value; and that the Complaint is barred by prescription and laches. They likewise insisted that the Regional
Trial Court (RTC) of Naval, Biliran did not have jurisdiction over the case, which involved title to or interest in
a parcel of land the assessed value of which is merely P1,230.00.
The evidence and testimonies of the respondents witnesses during trial reveal that petitioner Atty. Sabitsana
was the Muertegui familys lawyer at the time Garcia sold the lot to Juanito, and that as such, he was consulted
by the family before the sale was executed; that after the sale to Juanito, Domingo Sr. entered into actual,
public, adverse and continuous possession of the lot, and planted the same to coconut and ipil-ipil; and that after
Domingo Sr.s death, his wife Caseldita, succeeded him in the possession and exercise of rights over the lot.
On the other hand, Atty. Sabitsana testified that before purchasing the lot, he was told by a member of the
Muertegui family, Carmen Muertegui Davies (Carmen), that the Muertegui family had bought the lot, but she
could not show the document of sale; that he then conducted an investigation with the offices of the municipal
and provincial assessors; that he failed to find any document, record, or other proof of the sale by Garcia to
Juanito, and instead discovered that the lot was still in the name of Garcia; that given the foregoing revelations,
he concluded that the Muerteguis were merely bluffing, and that they probably did not want him to buy the
property because they were interested in buying it for themselves considering that it was adjacent to a lot which
they owned; that he then proceeded to purchase the lot from Garcia; that after purchasing the lot, he wrote
Caseldita in October 1991 to inform her of the sale; that he then took possession of the lot and gathered ipil-ipil
for firewood and harvested coconuts and calamansi from the lot; and that he constructed a rip-rap on the
property sometime in 1996 and 1997.
Ruling of the Regional Trial Court
On October 28, 2002, the trial court issued its Decision15 which decrees as follows:
WHEREFORE, in view of the foregoing considerations, this Court finds in favor of the plaintiff and against the
defendants, hereby declaring the Deed of Sale dated 2 September 1981 as valid and preferred while the Deed of
Absolute Sale dated 17 October 1991 and Tax Declaration No. 5327 in the name of Atty. Clemencio C.
Sabitsana, Jr. are VOID and of no legal effect.
The Provincial Assessor and the Municipal Assessor of Naval are directed to cancel Tax Declaration No. 5327
as void and done in bad faith.
Further, Atty. Clemencio C. Sabitsana, Jr. is ordered to pay plaintiff Juanito Muertigui, represented by his
attorney-in-fact Domingo Muertigui, Jr. the amounts of:

a) P30,000.00 as attorneys fees;

b) P10,000.00 as litigation expenses; and
c) Costs.
SO ORDERED.16
The trial court held that petitioners are not buyers in good faith. Petitioner Atty. Sabitsana was the Muertegui
familys lawyer, and was informed beforehand by Carmen that her family had purchased the lot; thus, he knew
of the sale to Juanito. After conducting an investigation, he found out that the sale was not registered. With this
information in mind, Atty. Sabitsana went on to purchase the same lot and raced to register the sale ahead of the
Muerteguis, expecting that his purchase and prior registration would prevail over that of his clients, the
Muerteguis. Applying Article 1544 of the Civil Code,17 the trial court declared that even though petitioners were
first to register their sale, the same was not done in good faith. And because petitioners registration was not in
good faith, preference should be given to the sale in favor of Juanito, as he was the first to take possession of the
lot in good faith, and the sale to petitioners must be declared null and void for it casts a cloud upon the
Muertegui title.
Petitioners filed a Motion for Reconsideration18 but the trial court denied19 the same.
Ruling of the Court of Appeals
Petitioners appealed to the CA20 asserting that the sale to Juanito was null and void for lack of marital consent;
that the sale to them is valid; that the lower court erred in applying Article 1544 of the Civil Code; that the
Complaint should have been barred by prescription, laches and estoppel; that respondent had no cause of action;
that respondent was not entitled to an award of attorneys fees and litigation expenses; and that they should be
the ones awarded attorneys fees and litigation expenses.
The CA, through its questioned January 25, 2007 Decision,21 denied the appeal and affirmed the trial courts
Decision in toto. It held that even though the lot admittedly was conjugal property, the absence of Soledads
signature and consent to the deed did not render the sale to Juanito absolutely null and void, but merely
voidable. Since Garcia and his wife were married prior to the effectivity of the Family Code, Article 173 of the
Civil Code22 should apply; and under the said provision, the disposition of conjugal property without the wifes
consent is not void, but merely voidable. In the absence of a decree annulling the deed of sale in favor of
Juanito, the same remains valid.
The CA added that the fact that the Deed of Sale in favor of Juanito was not notarized could not affect its
validity. As against the notarized deed of sale in favor of petitioners, the CA held that the sale in favor of Juanito
still prevails. Applying Article 1544 of the Civil Code, the CA said that the determining factor is petitioners
good faith, or the lack of it. It held that even though petitioners were first to register the sale in their favor, they
did not do so in good faith, for they already knew beforehand of Garcias prior sale to Juanito. By virtue of Atty.
Sabitsanas professional and confidential relationship with the Muertegui family, petitioners came to know
about the prior sale to the Muerteguis and the latters possession of the lot, and yet they pushed through with the
second sale. Far from acting in good faith, petitioner Atty. Sabitsana used his legal knowledge to take advantage
of his clients by registering his purchase ahead of them.

Finally, the CA declared that Juanito, as the rightful owner of the lot, possessed the requisite cause of action to
institute the suit for quieting of title and obtain judgment in his favor, and is entitled as well to an award for
attorneys fees and litigation expenses, which the trial court correctly held to be just and equitable under the
circumstances.
The dispositive portion of the CA Decision reads:
WHEREFORE, premises considered, the instant appeal is DENIED and the Decision dated October 28, 2002 of
the Regional Trial Court, 8th Judicial Region, Branch 16, Naval, Biliran, is hereby AFFIRMED. Costs against
defendants-appellants.
SO ORDERED.23
Issues
Petitioners now raise the following issues for resolution:
I. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE REGIONAL TRIAL COURT
DID NOT HAVE JURISDICTION OVER THE CASE IN VIEW OF THE FACT THAT THE
ASSESSED VALUE OF THE SUBJECT LAND WAS ONLY P1,230.00 (AND STATED MARKET
VALUE OF ONLY P3,450.00).
II. THE COURT OF APPEALS ERRED IN APPLYING ART. 1544 OF THE CIVIL CODE INSTEAD
OF THE PROPERTY REGISTRATION DECREE (P.D. NO. 1529) CONSIDERING THAT THE
SUBJECT LAND WAS UNREGISTERED.
III. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COMPLAINT WAS
ALREADY BARRED [BY] LACHES AND THE STATUTE OF LIMITATIONS.
IV. THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE REGIONAL
TRIAL COURT ORDERING THE PETITIONERS TO PAY ATTORNEYS FEES AND LITIGATION
EXPENSES TO THE RESPONDENT.24
Petitioners Arguments
Petitioners assert that the RTC of Naval, Biliran did not have jurisdiction over the case. They argue that since
the assessed value of the lot was a mere P1,230.00, jurisdiction over the case lies with the first level courts,
pursuant to Republic Act No. 7691,25 which expanded their exclusive original jurisdiction to include "all civil
actions which involve title to, or possession of, real property, or any interest therein where the assessed value of
the property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro
Manila, where such assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest,
damages of whatever kind, attorneys fees, litigation expenses and costs."26 Petitioners thus conclude that the
Decision in Civil Case No. B-1097 is null and void for lack of jurisdiction.
Petitioners next insist that the lot, being unregistered land, is beyond the coverage of Article 1544 of the Civil
Code, and instead, the provisions of Presidential Decree (PD) No. 1529 should apply. This being the case, the

Deed of Sale in favor of Juanito is valid only as between him and the seller Garcia, pursuant to Section 113 of
PD 1529;27 it cannot affect petitioners who are not parties thereto.
On the issue of estoppel, laches and prescription, petitioners insist that from the time they informed the
Muerteguis in writing about their purchase of the lot, or in October 1991, the latter did not notify them of their
prior purchase of the lot, nor did respondent interpose any objection to the sale in their favor. It was only in
1998 that Domingo Jr. showed to petitioners the unnotarized deed of sale. According to petitioners, this sevenyear period of silence and inaction on the Muerteguis part should be taken against them and construed as
neglect on their part to assert their rights for an unreasonable length of time. As such, their action to quiet title
should be deemed barred by laches and estoppel.
Lastly, petitioners take exception to the award of attorneys fees and litigation expenses, claiming that since
there was no bad faith on their part, such award may not be considered just and equitable under the
circumstances. Still, an award of attorneys fees should remain the exception rather than the rule; and in
awarding the same, there must have been an express finding of facts and law justifying such award, a
requirement that is absent in this case.
Petitioners thus pray for the reversal of the questioned CA Decision and Resolution; the dismissal of the
Complaint in Civil Case No. B-1097; the deletion of the award of attorneys fees and litigation expenses in
respondents favor; and a declaration that they are the true and rightful owners of the lot.
Respondents Arguments
Respondent, on the other hand, counters that a suit for quieting of title is one whose subject matter is incapable
of pecuniary estimation, and thus falls within the jurisdiction of the RTC. He likewise insists that Article 1544
applies to the case because there is a clear case of double sale of the same property to different buyers, and the
bottom line thereof lies in petitioners lack of good faith in entering into the subsequent sale. On the issue of
laches/estoppel, respondent echoes the CAs view that he was persistent in the exercise of his rights over the lot,
having previously filed a complaint for recovery of the lot, which unfortunately was dismissed based on
technicality.
On the issue of attorneys fees and litigation expenses, respondent finds refuge in Article 2208 of the Civil
Code,28 citing three instances which fortify the award in his favor petitioners acts compelled him to litigate
and incur expenses to protect his interests; their gross and evident bad faith in refusing to recognize his
ownership and possession over the lot; and the justness and equitableness of his case.
Our Ruling
The Petition must be denied.
The Regional Trial Court has jurisdiction over the suit for quieting of title.
On the question of jurisdiction, it is clear under the Rules that an action for quieting of title may be instituted in
the RTCs, regardless of the assessed value of the real property in dispute. Under Rule 63 of the Rules of Court,29
an action to quiet title to real property or remove clouds therefrom may be brought in the appropriate RTC.

It must be remembered that the suit for quieting of title was prompted by petitioners August 24, 1998 letteropposition to respondents application for registration. Thus, in order to prevent30 a cloud from being cast upon
his application for a title, respondent filed Civil Case No. B-1097 to obtain a declaration of his rights. In this
sense, the action is one for declaratory relief, which properly falls within the jurisdiction of the RTC pursuant to
Rule 63 of the Rules.
Article 1544 of the Civil Code does not apply to sales involving unregistered land.
Both the trial court and the CA are, however, wrong in applying Article 1544 of the Civil Code. Both courts
seem to have forgotten that the provision does not apply to sales involving unregistered land. Suffice it to state
that the issue of the buyers good or bad faith is relevant only where the subject of the sale is registered land,
and the purchaser is buying the same from the registered owner whose title to the land is clean. In such case, the
purchaser who relies on the clean title of the registered owner is protected if he is a purchaser in good faith for
value.31
Act No. 3344 applies to sale of unregistered lands.
What applies in this case is Act No. 3344,32 as amended, which provides for the system of recording of
transactions over unregistered real estate. Act No. 3344 expressly declares that any registration made shall be
without prejudice to a third party with a better right. The question to be resolved therefore is: who between
petitioners and respondent has a better right to the disputed lot?
Respondent has a better right to the lot.
The sale to respondent Juanito was executed on September 2, 1981 via an unnotarized deed of sale, while the
sale to petitioners was made via a notarized document only on October 17, 1991, or ten years thereafter. Thus,
Juanito who was the first buyer has a better right to the lot, while the subsequent sale to petitioners is null and
void, because when it was made, the seller Garcia was no longer the owner of the lot. Nemo dat quod non habet.
The fact that the sale to Juanito was not notarized does not alter anything, since the sale between him and
Garcia remains valid nonetheless. Notarization, or the requirement of a public document under the Civil Code,33
is only for convenience, and not for validity or enforceability.34 And because it remained valid as between
Juanito and Garcia, the latter no longer had the right to sell the lot to petitioners, for his ownership thereof had
ceased.
Nor can petitioners registration of their purchase have any effect on Juanitos rights. The mere registration of a
sale in ones favor does not give him any right over the land if the vendor was no longer the owner of the land,
having previously sold the same to another even if the earlier sale was unrecorded.35 Neither could it validate
the purchase thereof by petitioners, which is null and void. Registration does not vest title; it is merely the
evidence of such title. Our land registration laws do not give the holder any better title than what he actually
has.36
Specifically, we held in Radiowealth Finance Co. v. Palileo37 that:
Under Act No. 3344, registration of instruments affecting unregistered lands is without prejudice to a third
party with a better right. The aforequoted phrase has been held by this Court to mean that the mere registration

of a sale in ones favor does not give him any right over the land if the vendor was not anymore the owner of the
land having previously sold the same to somebody else even if the earlier sale was unrecorded.
Petitioners defense of prescription, laches and estoppel are unavailing since their claim is based on a null and
void deed of sale. The fact that the Muerteguis failed to interpose any objection to the sale in petitioners favor
does not change anything, nor could it give rise to a right in their favor; their purchase remains void and
ineffective as far as the Muerteguis are concerned.
The award of attorneys fees and litigation expenses is proper because of petitioners bad faith.
Petitioners actual and prior knowledge of the first sale to Juanito makes them purchasers in bad faith. It also
appears that petitioner Atty. Sabitsana was remiss in his duties as counsel to the Muertegui family. Instead of
advising the Muerteguis to register their purchase as soon as possible to forestall any legal complications that
accompany unregistered sales of real property, he did exactly the opposite: taking advantage of the situation and
the information he gathered from his inquiries and investigation, he bought the very same lot and immediately
caused the registration thereof ahead of his clients, thinking that his purchase and prior registration would
prevail. The Court cannot tolerate this mercenary attitude. Instead of protecting his clients interest, Atty.
Sabitsana practically preyed on him.
Petitioner Atty. Sabitsana took advantage of confidential information disclosed to him by his client, using the
same to defeat him and beat him to the draw, so to speak. He rushed the sale and registration thereof ahead of
his client. He may not be afforded the excuse that he nonetheless proceeded to buy the lot because he believed
or assumed that the Muerteguis were simply bluffing when Carmen told him that they had already bought the
same; this is too convenient an excuse to be believed. As the Muertegui family lawyer, he had no right to take a
position, using information disclosed to him in confidence by his client, that would place him in possible
conflict with his duty. He may not, for his own personal interest and benefit, gamble on his clients word,
believing it at one time and disbelieving it the next. He owed the Muerteguis his undivided loyalty. He had the
duty to protect the client, at all hazards and costs even to himself.38
Petitioner Atty. Sabitsana is enjoined to "look at any representation situation from the point of view that there
are possible conflicts, and further to think in terms of impaired loyalty, that is, to evaluate if his representation
in any way will impair his loyalty to a client."39
Moreover, as the Muertegui familys lawyer, Atty. Sabitsana was under obligation to safeguard his client's
property, and not jeopardize it. Such is his duty as an attorney, and pursuant to his general agency.40
Even granting that Atty. Sabitsana has ceased to act as the Muertegui family's lawyer, he still owed them his
loyalty.1wphi1 The termination of attorney-client relation provides no justification for a lawyer to represent an
interest adverse to or in conflict with that of the former client on a matter involving confidential information
which the lawyer acquired when he was counsel. The client's confidence once reposed should not be divested by
mere expiration of professional employment.41 This is underscored by the fact that Atty. Sabitsana obtained
information from Carmen which he used to his advantage and to the detriment of his client.
from the foregoing disquisition, it can be seen that petitioners are guilty of bad faith in pursuing the sale of the
lot despite being apprised of the prior sale in respondent's favor. Moreover, petitioner Atty. Sabitsana has
exhibited a lack of loyalty toward his clients, the Muerteguis, and by his acts, jeopardized their interests instead

of protecting them. Over and above the trial court's and the CA's findings, this provides further justification for
the award of attorney's fees, litigation expenses and costs in favor of the respondent.
Thus said, judgment must be rendered in favor of respondent to prevent the petitioners' void sale from casting a
cloud upon his valid title.
WHEREFORE, premises considered, the Petition is DENIED. The January 25, 2007 Decision and the January
11, 2008 Resolution of the Court of Appeals in CA-G.R. CV No. 79250 are AFFIRMED. Costs against
petitioners.
SO ORDERED.
G.R. No. 204603

September 24, 2013

REPUBLIC OF THE G.R. No. 204603 PHILIPPINES, represented by THE EXECUTIVE SECRETARY,
THE SECRETARY OF JUSTICE, THE SECRETARY OF FOREIGN AFFAIRS, THE SECRETARY OF
NATIONALDEFENSE, THE SECRETARY OF THE INTERIOR AND LOCAL GOVERNMENT THE
SECRETARY OF FINANCE, THE NATIONAL SECURITY ADVISER, THE SECRETARY OF
BUDGET AND MANAGEMENT THE TREASURER OF THE PHILIPPINES, THE CHIEF OF STAFF
OF THE ARMED FORCES OF THE PHILIPPINES, and THE CHIEFOF THE PHILIPPINE
NATIONAL POLICE, Petitioners,
vs.
HERMINIO HARRY ROQUE, MORO CHRISTIAN PEOPLE'S ALLIANCE, FR. JOE DIZON,
RODINIE SORIANO, STEPHANIE ABIERA, MARIA LOURDES ALCAIN, VOLTAIRE ALFEREZ,
CZARINA MAYALTEZ, SHERYL BALOT, RENIZZA BATACAN, EDAN MARRI CAETE, LEANA
CARAMOAN, ALDWIN CAMANCE, RENE DELORINO, PAULYN MAY DUMAN, RODRIGO
FAJARDO III, ANNAMARIE GO, ANNA ARMINDA JIMENEZ, MARY ANN LEE,LUISA
MANALAYSAY, MIGUEL MUSNGI, MICHAEL OCAMPO, NORMAN ROLAND OCANA III,
WILLIAM RAGAMAT, MARICAR RAMOS, CHERRY LOU REYES, MELISSA ANN SICAT,
CRISTINE MAE TABING, VANESSA TORNO, and HON. JUDGE ELEUTERIO L. BATHAN, as
Presiding Judge of Regional Trial Court, Quezon City, Branch 92, Respondents.
RESOLUTION
PERLAS-BERNABE, J.:
Assailed in this petition for certiorari1 are the April 23, 20122 and July 31, 20123 Orders of the Regional Trial
Court of Quezon City, Branch 92(RTC) in Special Civil Action (SCA) No. Q-07-60778, denying petitioners
motion to dismiss (subject motion to dismiss) based on the following grounds: (a) that the Court had yet to pass
upon the constitutionality of Republic Act No. (RA) 9372,4 otherwise known as the "Human Security Act of
2007," in the consolidated cases of Southern Hemisphere Engagement Network, Inc. v. Anti-Terrorism Council5
(Southern Hemisphere); and (b) that private respondents petition for declaratory relief was proper.
The Facts

On July 17, 2007, private respondents filed a Petition6 for declaratory relief before the RTC, assailing the
constitutionality of the following sections of RA 9372: (a) Section 3,7 for being void for vagueness;8 (b) Section
7,9 for violating the right to privacy of communication and due process and the privileged nature of priestpenitent relationships;10 (c)Section 18,11 for violating due process, the prohibition against ex post facto laws or
bills of attainder, the Universal Declaration of Human Rights, and the International Covenant on Civil and
Political Rights, as well as for contradicting Article 12512 of the Revised Penal Code, as amended;13 (d) Section
26,14 for violating the right to travel;15 and (e) Section 27,16 for violating the prohibition against unreasonable
searches and seizures.17
Petitioners moved to suspend the proceedings,18 averring that certain petitions (SC petitions) raising the issue of
RA 9372s constitutionality have been lodged before the Court.19 The said motion was granted in an Order dated
October 19, 2007.20
On October 5, 2010, the Court promulgated its Decision21 in the Southern Hemisphere cases and thereby
dismissed the SC petitions.
On February 27, 2012, petitioners filed the subject motion to dismiss,22 contending that private respondents
failed to satisfy the requisites for declaratory relief. Likewise, they averred that the constitutionality of RA 9372
had already been upheld by the Court in the Southern Hemisphere cases.
In their Comment/Opposition,23 private respondents countered that: (a) the Court did not resolve the issue of RA
9372s constitutionality in Southern Hemisphere as the SC petitions were dismissed based purely on technical
grounds; and (b) the requisites for declaratory relief were met.
The RTC Ruling
On April 23, 2012, the RTC issued an Order24 which denied the subject motion to dismiss, finding that the Court
did not pass upon the constitutionality of RA 9372 and that private respondents petition for declaratory relief
was properly filed.
Petitioners moved for reconsideration25 which was, however, denied by the RTC in an Order dated July 31,
2012.26 The RTC observed that private respondents have personal and substantial interests in the case and that it
would be illogical to await the adverse consequences of the aforesaid laws implementation considering that the
case is of paramount impact to the Filipino people.27
Hence, the instant petition.
The Issues Before the Court
The present controversy revolves around the issue of whether or not the RTC gravely abused its discretion when
it denied the subject motion to dismiss.
Asserting the affirmative, petitioners argue that private respondents failed to satisfy the requirements for
declaratory relief and that the Court had already sustained with finality the constitutionality of RA 9372.

On the contrary, private respondents maintain that the requirements for declaratory relief have been satisfied
and that the Court has yet to resolve the constitutionality of RA 9372, negating any grave abuse of discretion on
the RTCs part.
The Courts Ruling
The petition is meritorious.
An act of a court or tribunal can only be considered as with grave abuse of discretion when such act is done in a
capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction.28 It is well-settled that the
abuse of discretion to be qualified as "grave" must be so patent or gross as to constitute an evasion of a positive
duty or a virtual refusal to perform the duty or to act at all in contemplation of law.29 In this relation, case law
states that not every error in the proceedings, or every erroneous conclusion of law or fact, constitutes grave
abuse of discretion.30 The degree of gravity, as above-described, must be met.
Applying these principles, the Court observes that while no grave abuse of discretion could be ascribed on the
part of the RTC when it found that the Court did not pass upon the constitutionality of RA 9372 in the Southern
Hemisphere cases, it, however, exceeded its jurisdiction when it ruled that private respondents petition had met
all the requisites for an action for declaratory relief. Consequently, its denial of the subject motion to dismiss
was altogether improper.
To elucidate, it is clear that the Court, in Southern Hemisphere, did not make any definitive ruling on the
constitutionality of RA 9372. The certiorari petitions in those consolidated cases were dismissed based solely on
procedural grounds, namely: (a) the remedy of certiorari was improper;31 (b) petitioners therein lack locus
standi;32 and (c) petitioners therein failed to present an actual case or controversy.33 Therefore, there was no
grave abuse of discretion.
The same conclusion cannot, however, be reached with regard to the RTCs ruling on the sufficiency of private
respondents petition for declaratory relief.
Case law states that the following are the requisites for an action for declaratory relief:
first , the subject matter of the controversy must be a deed, will, contract or other written instrument, statute,
executive order or regulation, or ordinance; second , the terms of said documents and the validity thereof are
doubtful and require judicial construction; third , there must have been no breach of the documents in question;
fourth , there must be an actual justiciable controversy or the "ripening seeds" of one between persons whose
interests are adverse; fifth , the issue must be ripe for judicial determination; and sixth , adequate relief is not
available through other means or other forms of action or proceeding.34
Based on a judicious review of the records, the Court observes that while the first,35 second,36 and third37
requirements appear to exist in this case, the fourth, fifth, and sixth requirements, however, remain wanting.
As to the fourth requisite, there is serious doubt that an actual justiciable controversy or the "ripening seeds" of
one exists in this case.

Pertinently, a justiciable controversy refers to an existing case or controversy that is appropriate or ripe for
judicial determination, not one that is conjectural or merely anticipatory.38 Corollary thereto, by "ripening seeds"
it is meant, not that sufficient accrued facts may be dispensed with, but that a dispute may be tried at its
inception before it has accumulated the asperity, distemper, animosity, passion, and violence of a full blown
battle that looms ahead. The concept describes a state of facts indicating imminent and inevitable litigation
provided that the issue is not settled and stabilized by tranquilizing declaration.39
A perusal of private respondents petition for declaratory relief would show that they have failed to demonstrate
how they are left to sustain or are in immediate danger to sustain some direct injury as a result of the
enforcement of the assailed provisions of RA 9372. Not far removed from the factual milieu in the Southern
Hemisphere cases, private respondents only assert general interests as citizens, and taxpayers and infractions
which the government could prospectively commit if the enforcement of the said law would remain
untrammeled. As their petition would disclose, private respondents fear of prosecution was solely based on
remarks of certain government officials which were addressed to the general public.40 They, however, failed to
show how these remarks tended towards any prosecutorial or governmental action geared towards the
implementation of RA 9372 against them. In other words, there was no particular, real or imminent threat to any
of them. As held in Southern Hemisphere:
Without any justiciable controversy, the petitions have become pleas for declaratory relief, over which the Court
has no original jurisdiction. Then again, declaratory actions characterized by "double contingency," where both
the activity the petitioners intend to undertake and the anticipated reaction to it of a public official are merely
theorized, lie beyond judicial review for lack of ripeness.1wphi1
The possibility of abuse in the implementation of RA 9372does not avail to take the present petitions out of the
realm of the surreal and merely imagined. Such possibility is not peculiar to RA 9372 since the exercise of any
power granted by law may be abused. Allegations of abuse must be anchored on real events before courts may
step in to settle actual controversies involving rights which are legally demandable and enforceable.41 (Emphasis
supplied; citations omitted)
Thus, in the same light that the Court dismissed the SC petitions in the Southern Hemisphere cases on the basis
of, among others, lack of actual justiciable controversy (or the ripening seeds of one), the RTC should have
dismissed private respondents petition for declaratory relief all the same.
It is well to note that private respondents also lack the required locus standi to mount their constitutional
challenge against the implementation of the above-stated provisions of RA 9372 since they have not shown any
direct and personal interest in the case.42 While it has been previously held that transcendental public
importance dispenses with the requirement that the petitioner has experienced or is in actual danger of suffering
direct and personal injury,43 it must be stressed that cases involving the constitutionality of penal legislation
belong to an altogether different genus of constitutional litigation.44 Towards this end, compelling State and
societal interests in the proscription of harmful conduct necessitate a closer judicial scrutiny of locus standi,45 as
in this case. To rule otherwise, would be to corrupt the settled doctrine of locus standi, as every worthy cause is
an interest shared by the general public.46
As to the fifth requisite for an action for declaratory relief, neither can it be inferred that the controversy at hand
is ripe for adjudication since the possibility of abuse, based on the above-discussed allegations in private
respondents petition, remain highly-speculative and merely theorized.1wphi1 It is well-settled that a question

is ripe for adjudication when the act being challenged has had a direct adverse effect on the individual
challenging it.47 This private respondents failed to demonstrate in the case at bar.
Finally, as regards the sixth requisite, the Court finds it irrelevant to proceed with a discussion on the
availability of adequate reliefs since no impending threat or injury to the private respondents exists in the first
place.
All told, in view of the absence of the fourth and fifth requisites for an action for declaratory relief, as well as
the irrelevance of the sixth requisite, private respondents petition for declaratory relief should have been
dismissed. Thus, by giving due course to the same, it cannot be gainsaid that the RTC gravely abused its
discretion.
WHEREFORE, the petition is GRANTED. Accordingly, the April23, 2012 and July 31, 2012 Orders of the
Regional Trial Court of Quezon City, Branch 92 in SCA No. Q-07-60778 are REVERSED and SET ASIDE and
the petition for declaratory relief before the said court is hereby DISMISSED.
SO ORDERED.

SOUTHERN
HEMISPHERE G.R. No. 178552
ENGAGEMENT
NETWORK,
INC., on behalf of the South-South
Network (SSN) for Non-State
Armed Group Engagement, and
ATTY. SOLIMAN M. SANTOS,
Present:
JR.,
Petitioners,
CORONA, C.J.,
CARPIO,
- versus -

CARPIO MORALES,
VELASCO, JR.,
NACHURA,

ANTI-TERRORISM
COUNCIL,
THE EXECUTIVE SECRETARY,
THE SECRETARY OF JUSTICE,
THE SECRETARY OF FOREIGN
AFFAIRS, THE SECRETARY OF
NATIONAL
DEFENSE,
THE

LEONARDO-DE CASTRO,
BRION,
PERALTA,

SECRETARY OF THE INTERIOR

AND LOCAL GOVERNMENT,
THE SECRETARY OF FINANCE,
THE NATIONAL SECURITY
ADVISER, THE CHIEF OF STAFF
OF THE ARMED FORCES OF
THE PHILIPPINES, AND THE
CHIEF OF THE PHILIPPINE
NATIONAL POLICE,
Respondents.

BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA, and
SERENO, JJ.

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

KILUSANG MAYO UNO (KMU),

represented by its Chairperson
Elmer
Labog,
NATIONAL
FEDERATION
OF
LABOR
UNIONS-KILUSANG MAYO UNO
(NAFLU-KMU), represented by its
National President Joselito V.
Ustarez and Secretary General
Antonio C. Pascual, and CENTER
FOR TRADE UNION AND
HUMAN RIGHTS, represented by
its Executive Director Daisy Arago,
Petitioners,

- versus -

Promulgated:

October 5, 2010
HON. EDUARDO ERMITA, in his
capacity as Executive Secretary,
NORBERTO GONZALES, in his
capacity as Acting Secretary of
National Defense, HON. RAUL
GONZALES, in his capacity as
Secretary
of
Justice,
HON.
RONALDO PUNO, in his capacity
as Secretary of the Interior and
Local
Government,
GEN.
HERMOGENES ESPERON, in his
capacity as AFP Chief of Staff, and
DIRECTOR GENERAL OSCAR
CALDERON, in his capacity as
PNP Chief of Staff,
Respondents.

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

G.R. No. 178554

BAGONG
ALYANSANG
MAKABAYAN
(BAYAN),
GENERAL ALLIANCE BINDING
WOMEN
FOR
REFORMS,
INTEGRITY,
EQUALITY,
LEADERSHIP AND ACTION
(GABRIELA),
KILUSANG
MAGBUBUKID NG PILIPINAS
(KMP),
MOVEMENT
OF
CONCERNED CITIZENS FOR
CIVIL LIBERTIES (MCCCL),
CONFEDERATION FOR UNITY,
RECOGNITION
AND
ADVANCEMENT
OF
GOVERNMENT
EMPLOYEES
(COURAGE), KALIPUNAN NG
DAMAYANG
MAHIHIRAP
(KADAMAY), SOLIDARITY OF
CAVITE WORKERS, LEAGUE
OF FILIPINO STUDENTS (LFS),
ANAKBAYAN,
PAMBANSANG
LAKAS
NG
KILUSANG
MAMAMALAKAYA
(PAMALAKAYA), ALLIANCE OF
CONCERNED TEACHERS (ACT),
MIGRANTE,
HEALTH
ALLIANCE FOR DEMOCRACY
(HEAD), AGHAM, TEOFISTO
GUINGONA,
JR.,
DR.
BIENVENIDO
LUMBERA,

RENATO CONSTANTINO, JR.,

SISTER
MARY
JOHN
MANANSAN
OSB,
DEAN
CONSUELO
PAZ,
ATTY.
JOSEFINA LICHAUCO, COL.
GERRY
CUNANAN
(ret.),
CARLITOS
SIGUION-REYNA,
DR. CAROLINA PAGADUANARAULLO, RENATO REYES,
DANILO
RAMOS,
EMERENCIANA DE
LESUS,
RITA BAUA, REY CLARO
CASAMBRE,
Petitioners,

- versus -

GLORIA
MACAPAGALARROYO, in her capacity as
President
and
Commander-inChief, EXECUTIVE SECRETARY
EDUARDO
ERMITA,
DEPARTMENT OF JUSTICE
SECRETARY RAUL GONZALES,
DEPARTMENT OF FOREIGN
AFFAIRS
SECRETARY
ALBERTO
ROMULO,
DEPARTMENT OF NATIONAL

DEFENSE ACTING SECRETARY

NORBERTO
GONZALES,
DEPARTMENT OF INTERIOR
AND LOCAL GOVERNMENT
SECRETARY RONALDO PUNO.
DEPARTMENT OF FINANCE
SECRETARY
MARGARITO
TEVES, NATIONAL SECURITY
ADVISER
NORBERTO
GONZALES, THE NATIONAL
INTELLIGENCE
COORDINATING
AGENCY

G.R. No. 178581

(NICA),
THE
NATIONAL
BUREAU OF INVESTIGATION
(NBI),
THE
BUREAU
OF
IMMIGRATION, THE OFFICE
OF CIVIL DEFENSE, THE
INTELLIGENCE SERVICE OF
THE ARMED FORCES OF THE
PHILIPPINES
(ISAFP),
THE
ANTI-MONEY
LAUNDERING

COUNCIL
(AMLC),
THE
PHILIPPINE
CENTER
ON
TRANSNATIONAL CRIME, THE
CHIEF OF THE PHILIPPINE
NATIONAL
POLICE
GEN.
OSCAR CALDERON, THE PNP,
including its intelligence and
investigative elements, AFP CHIEF
GEN. HERMOGENES ESPERON,

Respondents.
x ------------------------------------ x
KARAPATAN, ALLIANCE FOR
THE
ADVANCEMENT
OF
PEOPLES RIGHTS, represented
herein by Dr. Edelina de la Paz, and
representing
the
following
organizations:
HUSTISYA,

represented
by
Evangeline
Hernandez and also on her own
behalf;
DESAPARECIDOS,
represented
by
Mary
Guy
Portajada and also on her own
behalf, SAMAHAN NG MGA EXDETAINEES
LABAN
SA
DETENSYON AT PARA SA
AMNESTIYA
(SELDA),
represented by Donato Continente
and also on his own behalf,

ECUMENICAL
MOVEMENT
FOR JUSTICE AND PEACE
(EMJP), represented by Bishop
Elmer M. Bolocon, UCCP, and
PROMOTION
OF
CHURCH
PEOPLES
RESPONSE,
represented by Fr. Gilbert Sabado,
OCARM,

Petitioners,

- versus -

GLORIA
MACAPAGALARROYO, in her capacity as
President
and
Commander-inChief,
EXECUTIVE
SECRETARTY
EDUARDO
ERMITA, DEPARTMENT OF
JUSTICE SECRETARY RAUL
GONZALEZ, DEPARTMENT OF

FOREIGN AFFAIRS SECRETARY

ALBERTO
ROMULO,
DEPARTMENT OF NATIONAL
DEFENSE ACTING SECRETARY
NORBERTO
GONZALES,
DEPARTMENT OF INTERIOR
AND LOCAL GOVERNMENT
SECRETARY RONALDO PUNO,
DEPARTMENT OF FINANCE
SECRETARY
MARGARITO
TEVES, NATIONAL SECURITY

ADVISER
NORBERTO
GONZALES, THE NATIONAL
INTELLIGENCE
COORDINATING
AGENCY
(NICA),
THE
NATIONAL
BUREAU OF INVESTIGATION
(NBI),
THE
BUREAU
OF
IMMIGRATION, THE OFFICE
OF CIVIL DEFENSE, THE
INTELLIGENCE SERVICE OF

THE ARMED FORCES OF THE

PHILIPPINES
(ISAFP),
THE
ANTI-MONEY
LAUNDERING
COUNCIL
(AMLC),
THE
PHILIPPINE
CENTER
ON
TRANSNATIONAL CRIME, THE
CHIEF OF THE PHILIPPINE
NATIONAL
POLICE
GEN.
OSCAR CALDERON, THE PNP,
including its intelligence and
investigative elements, AFP CHIEF

GEN. HERMOGENES ESPERON,

Respondents.

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

THE INTEGRATED BAR OF THE

PHILIPPINES (IBP), represented
by Atty. Feliciano M. Bautista,
COUNSELS FOR THE DEFENSE
OF LIBERTY (CODAL), SEN.
MA. ANA CONSUELO A.S.
MADRIGAL
and
FORMER
SENATORS SERGIO OSMEA III
and WIGBERTO E. TAADA,

Petitioners,

- versus -

EXECUTIVE
SECRETARY
EDUARDO ERMITA AND THE
MEMBERS OF THE ANTITERRORISM COUNCIL (ATC),
Respondents.

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

BAGONG
ALYANSANG
MAKABAYAN-SOUTHERN
TAGALOG
(BAYAN-ST),
GABRIELA-ST, KATIPUNAN NG
MGA
SAMAHYANG
MAGSASAKA-TIMOG

KATAGALUGAN (KASAMA-TK),
MOVEMENT OF CONCERNED
CITIZENS
FOR
CIVIL
LIBERTIES (MCCCL), PEOPLES
MARTYRS,
ANAKBAYAN-ST,
PAMALAKAYA-ST,
CONFEDERATION FOR UNITY,
RECOGNITION
AND
ADVANCEMENT
OF
GOVERNMENT
EMPLOYEES
(COURAGE-ST), PAGKAKAISAT

UGNAYAN
NG
MGA
MAGBUBUKID SA LAGUNA
(PUMALAG), SAMAHAN NG
MGA MAMAMAYAN SA TABING
RILES (SMTR-ST), LEAGUE OF
FILIPINO STUDENTS (LFS),
BAYAN MUNA-ST, KONGRESO
NG MGA MAGBUBUKID PARA
SA REPORMANG AGRARYO
KOMPRA, BIGKIS AT LAKAS

NG MGA KATUTUBO SA TIMOG

KATAGALUGAN
(BALATIK),
SAMAHAN AT UGNAYAN NG
MGA
MAGSASAKANG
KABABAIHAN
SA
TIMOG
KATAGALUGAN (SUMAMAKATK), STARTER, LOSOS RURAL
POOR ORGANIZATION FOR
PROGRESS
&
EQUALITY,
CHRISTIAN NIO LAJARA,
TEODORO REYES, FRANCESCA

B. TOLENTINO, JANNETTE E.
BARRIENTOS,
OSCAR
T.
LAPIDA,
JR.,
DELFIN
DE
CLARO, SALLY P. ASTRERA,
ARNEL SEGUNE BELTRAN,
Petitioners,

- versus -

GLORIA
MACAPAGALARROYO, in her capacity as
President
and
Commander-in-

Chief, EXECUTIVE SECRETARY

EDUARDO
ERMITA,
DEPARTMENT OF JUSTICE
SECRETARY RAUL GONZALEZ,
DEPARTMENT OF FOREIGN
AFFAIRS
SECRETARY
ALBERTO
ROMULO,
DEPARTMENT OF NATIONAL
DEFENSE ACTING SECRETARY
NORBERTO
GONZALES,

G.R. No. 178890

DEPARTMENT OF INTERIOR
AND LOCAL GOVERNMEN T
SECRETARY RONALDO PUNO,
DEPARTMENT OF FINCANCE
SECRETARY
MARGARITO
TEVES, NATIONAL SECURITY
ADVISER
NORBERTO
GONZALES, THE NATIONAL
INTELLIGENCE
COORDINATING
AGENCY
(NICA),
THE
NATIONAL

BUREAU OF INVESTIGATION
(NBI),
THE
BUREAU
OF
IMMIGRATION, THE OFFICE
OF CIVIL DEFENSE, THE
INTELLIGENCE SERVICE OF
THE ARMED FORCES OF THE
PHILIPPINES
(ISAFP),
THE
ANTI-MONEY
LAUNDERING
COUNCIL
(AMLC),
THE
PHILIPPINE
CENTER
ON

TRANSNATIONAL CRIME, THE

CHIEF OF THE PHILIPPINE
NATIONAL
POLICE
GEN.
OSCAR CALDERON, THE PNP,
including its intelligence and
investigative elements, AFP CHIEF
GEN. HERMOGENES ESPERON,
Respondents.

G.R. No. 179157

G.R. No. 179461

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

DECISION

CARPIO MORALES, J.:

Before the Court are six petitions challenging the constitutionality of Republic Act No. 9372 (RA 9372), An
Act to Secure the State and Protect our People from Terrorism, otherwise known as the Human Security Act of
2007,119[1] signed into law on March 6, 2007.

Following the effectivity of RA 9372 on July 15, 2007, 120[2] petitioner Southern Hemisphere
Engagement Network, Inc., a non-government organization, and Atty. Soliman Santos, Jr., a concerned citizen,
taxpayer and lawyer, filed a petition for certiorari and prohibition on July 16, 2007 docketed as G.R. No.
178552. On even date, petitioners Kilusang Mayo Uno (KMU), National Federation of Labor Unions-Kilusang
Mayo Uno (NAFLU-KMU), and Center for Trade Union and Human Rights (CTUHR), represented by their
respective officers121[3] who are also bringing the action in their capacity as citizens, filed a petition for
certiorari and prohibition docketed as G.R. No. 178554.

The following day, July 17, 2007, organizations Bagong Alyansang Makabayan (BAYAN), General Alliance
Binding Women for Reforms, Integrity, Equality, Leadership and Action (GABRIELA), Kilusang Magbubukid
ng Pilipinas (KMP), Movement of Concerned Citizens for Civil Liberties (MCCCL), Confederation for Unity,
119
120
121

Recognition and Advancement of Government Employees (COURAGE), Kalipunan ng Damayang Mahihirap

(KADAMAY), Solidarity of Cavite Workers (SCW), League of Filipino Students (LFS), Anakbayan,
Pambansang Lakas ng Kilusang Mamamalakaya (PAMALAKAYA), Alliance of Concerned Teachers (ACT),
Migrante, Health Alliance for Democracy (HEAD), and Agham, represented by their respective officers, 122[4]
and joined by concerned citizens and taxpayers Teofisto Guingona, Jr., Dr. Bienvenido Lumbera, Renato
Constantino, Jr., Sister Mary John Manansan, OSB, Dean Consuelo Paz, Atty. Josefina Lichauco, Retired Col.
Gerry Cunanan, Carlitos Siguion-Reyna, Dr. Carolina Pagaduan-Araullo, Renato Reyes, Danilo Ramos,
Emerenciana de Jesus, Rita Baua and Rey Claro Casambre filed a petition for certiorari and prohibition
docketed as G.R. No. 178581.

On August 6, 2007, Karapatan and its alliance member organizations Hustisya, Desaparecidos, Samahan
ng mga Ex-Detainees Laban sa Detensyon at para sa Amnestiya (SELDA), Ecumenical Movement for Justice
and Peace (EMJP), and Promotion of Church Peoples Response (PCPR), which were represented by their
respective officers123[5] who are also bringing action on their own behalf, filed a petition for certiorari and
prohibition docketed as G.R. No. 178890.

On August 29, 2007, the Integrated Bar of the Philippines (IBP), Counsels for the Defense of Liberty
(CODAL),124[6] Senator Ma. Ana Consuelo A.S. Madrigal, Sergio Osmea III, and Wigberto E. Taada filed a
petition for certiorari and prohibition docketed as G.R. No. 179157.

Bagong Alyansang Makabayan-Southern Tagalog (BAYAN-ST), other regional chapters and organizations
mostly based in the Southern Tagalog Region,125[7] and individuals126[8] followed suit by filing on September
122
123
124
125
126

19, 2007 a petition for certiorari and prohibition docketed as G.R. No. 179461 that replicates the allegations
raised in the BAYAN petition in G.R. No. 178581.

Impleaded as respondents in the various petitions are the Anti-Terrorism Council 127[9] composed of, at the time
of the filing of the petitions, Executive Secretary Eduardo Ermita as Chairperson, Justice Secretary Raul
Gonzales as Vice Chairperson, and Foreign Affairs Secretary Alberto Romulo, Acting Defense Secretary and
National Security Adviser Norberto Gonzales, Interior and Local Government Secretary Ronaldo Puno, and
Finance Secretary Margarito Teves as members. All the petitions, except that of the IBP, also impleaded Armed
Forces of the Philippines (AFP) Chief of Staff Gen. Hermogenes Esperon and Philippine National Police (PNP)
Chief Gen. Oscar Calderon.

The Karapatan, BAYAN and BAYAN-ST petitions likewise impleaded President Gloria Macapagal-Arroyo and
the support agencies for the Anti-Terrorism Council like the National Intelligence Coordinating Agency,
National Bureau of Investigation, Bureau of Immigration, Office of Civil Defense, Intelligence Service of the
AFP, Anti-Money Laundering Center, Philippine Center on Transnational Crime, and the PNP intelligence and
investigative elements.

The petitions fail.

Petitioners resort to certiorari is improper

Preliminarily, certiorari does not lie against respondents who do not exercise judicial or quasi-judicial
functions. Section 1, Rule 65 of the Rules of Court is clear:

127

Section 1. Petition for certiorari.When any tribunal, board or officer exercising

judicial or quasi-judicial functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved thereby may file a verified petition in the proper
court, alleging the facts with certainty and praying that judgment be rendered annulling or
modifying the proceedings of such tribunal, board or officer, and granting such incidental
reliefs as law and justice may require. (Emphasis and underscoring supplied)

Parenthetically, petitioners do not even allege with any modicum of particularity how respondents acted without
or in excess of their respective jurisdictions, or with grave abuse of discretion amounting to lack or excess of
jurisdiction.

The impropriety of certiorari as a remedy aside, the petitions fail just the same.

In constitutional litigations, the power of judicial review is limited by four exacting requisites, viz: (a)
there must be an actual case or controversy; (b) petitioners must possess locus standi; (c) the question of
constitutionality must be raised at the earliest opportunity; and (d) the issue of constitutionality must be the lis
mota of the case.128[10]

In the present case, the dismal absence of the first two requisites, which are the most essential, renders the
discussion of the last two superfluous.

Petitioners lack locus standi

128

Locus standi or legal standing requires a personal stake in the outcome of the controversy as to assure
that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends
for illumination of difficult constitutional questions.129[11]

Anak Mindanao Party-List Group v. The Executive Secretary130[12] summarized the rule on locus standi, thus:

Locus standi or legal standing has been defined as a personal and substantial interest in a case
such that the party has sustained or will sustain direct injury as a result of the governmental act
that is being challenged. The gist of the question on standing is whether a party alleges such
personal stake in the outcome of the controversy as to assure that concrete adverseness which
sharpens the presentation of issues upon which the court depends for illumination of difficult
constitutional questions.
[A] party who assails the constitutionality of a statute must have a direct and personal
interest. It must show not only that the law or any governmental act is invalid, but also that it
sustained or is in immediate danger of sustaining some direct injury as a result of its
enforcement, and not merely that it suffers thereby in some indefinite way. It must show that it
has been or is about to be denied some right or privilege to which it is lawfully entitled or that it
is about to be subjected to some burdens or penalties by reason of the statute or act complained
of.
For a concerned party to be allowed to raise a constitutional question, it must show that
(1) it has personally suffered some actual or threatened injury as a result of the allegedly
illegal conduct of the government, (2) the injury is fairly traceable to the challenged action, and
(3) the injury is likely to be redressed by a favorable action. (emphasis and underscoring
supplied.)

Petitioner-organizations assert locus standi on the basis of being suspected communist fronts by the
government, especially the military; whereas individual petitioners invariably invoke the transcendental
importance doctrine and their status as citizens and taxpayers.

129
130

While Chavez v. PCGG131[13] holds that transcendental public importance dispenses with the
requirement that petitioner has experienced or is in actual danger of suffering direct and personal injury, cases
involving the constitutionality of penal legislation belong to an altogether different genus of constitutional
litigation. Compelling State and societal interests in the proscription of harmful conduct, as will later be
elucidated, necessitate a closer judicial scrutiny of locus standi.

Petitioners have not presented any personal stake in the outcome of the controversy. None of them faces any
charge under RA 9372.

KARAPATAN, Hustisya, Desaparecidos, SELDA, EMJP and PCR, petitioners in G.R. No. 178890,
allege that they have been subjected to close security surveillance by state security forces, their members
followed by suspicious persons and vehicles with dark windshields, and their offices monitored by men
with military build. They likewise claim that they have been branded as enemies of the [S]tate.132[14]

Even conceding such gratuitous allegations, the Office of the Solicitor General (OSG) correctly points out that
petitioners have yet to show any connection between the purported surveillance and the implementation of
RA 9372.

BAYAN, GABRIELA, KMP, MCCCL, COURAGE, KADAMAY, SCW, LFS, Anakbayan,

PAMALAKAYA, ACT, Migrante, HEAD and Agham, petitioner-organizations in G.R. No. 178581, would
like the Court to take judicial notice of respondents alleged action of tagging them as militant organizations
fronting for the Communist Party of the Philippines (CPP) and its armed wing, the National Peoples Army
(NPA). The tagging, according to petitioners, is tantamount to the effects of proscription without following the

131
132

procedure under the law.133[15] The petition of BAYAN-ST, et al. in G.R. No. 179461 pleads the same
allegations.

The Court cannot take judicial notice of the alleged tagging of petitioners.

Generally speaking, matters of judicial notice have three material requisites: (1) the
matter must be one of common and general knowledge; (2) it must be well and
authoritatively settled and not doubtful or uncertain; and (3) it must be known to be within
the limits of the jurisdiction of the court. The principal guide in determining what facts may be
assumed to be judicially known is that of notoriety. Hence, it can be said that judicial notice is
limited to facts evidenced by public records and facts of general notoriety. Moreover, a judicially
noticed fact must be one not subject to a reasonable dispute in that it is either: (1) generally
known within the territorial jurisdiction of the trial court; or (2) capable of accurate and ready
determination by resorting to sources whose accuracy cannot reasonably be questionable.
Things of common knowledge, of which courts take judicial matters coming to the
knowledge of men generally in the course of the ordinary experiences of life, or they may be
matters which are generally accepted by mankind as true and are capable of ready and
unquestioned demonstration. Thus, facts which are universally known, and which may be found
in encyclopedias, dictionaries or other publications, are judicially noticed, provided, they are of
such universal notoriety and so generally understood that they may be regarded as forming part
of the common knowledge of every person. As the common knowledge of man ranges far and
wide, a wide variety of particular facts have been judicially noticed as being matters of common
knowledge. But a court cannot take judicial notice of any fact which, in part, is dependent
on the existence or non-existence of a fact of which the court has no constructive
knowledge.134[16] (emphasis and underscoring supplied.)

No ground was properly established by petitioners for the taking of judicial notice. Petitioners apprehension is
insufficient to substantiate their plea. That no specific charge or proscription under RA 9372 has been filed
against them, three years after its effectivity, belies any claim of imminence of their perceived threat emanating
from the so-called tagging.

133
134

The same is true with petitioners KMU, NAFLU and CTUHR in G.R. No. 178554, who merely harp as well on
their supposed link to the CPP and NPA. They fail to particularize how the implementation of specific
provisions of RA 9372 would result in direct injury to their organization and members.

While in our jurisdiction there is still no judicially declared terrorist organization, the United States of
America135[17] (US) and the European Union136[18] (EU) have both classified the CPP, NPA and Abu Sayyaf
Group as foreign terrorist organizations. The Court takes note of the joint statement of Executive Secretary
Eduardo Ermita and Justice Secretary Raul Gonzales that the Arroyo Administration would adopt the US and
EU classification of the CPP and NPA as terrorist organizations. 137[19] Such statement notwithstanding, there
is yet to be filed before the courts an application to declare the CPP and NPA organizations as domestic
terrorist or outlawed organizations under RA 9372. Again, RA 9372 has been in effect for three years now.
From July 2007 up to the present, petitioner-organizations have conducted their activities fully and freely
without any threat of, much less an actual, prosecution or proscription under RA 9372.

Parenthetically, the Fourteenth Congress, in a resolution initiated by Party-list Representatives Saturnino

Ocampo, Teodoro Casio, Rafael Mariano and Luzviminda Ilagan,138[20] urged the government to resume peace
negotiations with the NDF by removing the impediments thereto, one of which is the adoption of designation of
the CPP and NPA by the US and EU as foreign terrorist organizations.

Considering the policy statement of the

Aquino Administration139[21] of resuming peace talks with the NDF, the government is not imminently disposed
to ask for the judicial proscription of the CPP-NPA consortium and its allied organizations.

135
136
137
138
139

More important, there are other parties not before the Court with direct and specific interests in the questions
being raised.140[22] Of recent development is the filing of the first case for proscription under Section 17141[23]
of RA 9372 by the Department of Justice before the Basilan Regional Trial Court against the Abu Sayyaf
Group.142[24] Petitioner-organizations do not in the least allege any link to the Abu Sayyaf Group.

Some petitioners attempt, in vain though, to show the imminence of a prosecution under RA 9372 by alluding to
past rebellion charges against them.

In Ladlad v. Velasco,143[25] the Court ordered the dismissal of rebellion charges filed in 2006 against
then Party-List Representatives Crispin Beltran and Rafael Mariano of Anakpawis, Liza Maza of GABRIELA,
and Joel Virador, Teodoro Casio and Saturnino Ocampo of Bayan Muna.

Also named in the dismissed

rebellion charges were petitioners Rey Claro Casambre, Carolina Pagaduan-Araullo, Renato Reyes, Rita Baua,
Emerencia de Jesus and Danilo Ramos; and accused of being front organizations for the Communist movement
were petitioner-organizations KMU, BAYAN, GABRIELA, PAMALAKAYA, KMP, KADAMAY, LFS and
COURAGE.144[26]

The dismissed rebellion charges, however, do not save the day for petitioners. For one, those charges were filed
in 2006, prior to the enactment of RA 9372, and dismissed by this Court. For another, rebellion is defined and
punished under the Revised Penal Code. Prosecution for rebellion is not made more imminent by the enactment
of RA 9372, nor does the enactment thereof make it easier to charge a person with rebellion, its elements not
having been altered.

140
141
142
143
144

Conversely, previously filed but dismissed rebellion charges bear no relation to prospective charges
under RA 9372. It cannot be overemphasized that three years after the enactment of RA 9372, none of
petitioners has been charged.

Petitioners IBP and CODAL in G.R. No. 179157 base their claim of locus standi on their sworn duty to
uphold the Constitution. The IBP zeroes in on Section 21 of RA 9372 directing it to render assistance to those
arrested or detained under the law.

The mere invocation of the duty to preserve the rule of law does not, however, suffice to clothe the IBP
or any of its members with standing.145[27] The IBP failed to sufficiently demonstrate how its mandate under
the assailed statute revolts against its constitutional rights and duties. Moreover, both the IBP and CODAL have
not pointed to even a single arrest or detention effected under RA 9372.

Former Senator Ma. Ana Consuelo Madrigal, who claims to have been the subject of political surveillance,
also lacks locus standi.

Prescinding from the veracity, let alone legal basis, of the claim of political

surveillance, the Court finds that she has not shown even the slightest threat of being charged under RA 9372.
Similarly lacking in locus standi are former Senator Wigberto Taada and Senator Sergio Osmea III, who
cite their being respectively a human rights advocate and an oppositor to the passage of RA 9372. Outside these
gratuitous statements, no concrete injury to them has been pinpointed.

Petitioners Southern Hemisphere Engagement Network and Atty. Soliman Santos Jr. in G.R. No.
178552 also conveniently state that the issues they raise are of transcendental importance, which must be
settled early and are of far-reaching implications, without mention of any specific provision of RA 9372
under which they have been charged, or may be charged. Mere invocation of human rights advocacy has
nowhere been held sufficient to clothe litigants with locus standi.

Petitioners must show an actual, or

immediate danger of sustaining, direct injury as a result of the laws enforcement. To rule otherwise would be to
corrupt the settled doctrine of locus standi, as every worthy cause is an interest shared by the general public.

145

Neither can locus standi be conferred upon individual petitioners as taxpayers and citizens. A taxpayer
suit is proper only when there is an exercise of the spending or taxing power of Congress, 146[28] whereas citizen
standing must rest on direct and personal interest in the proceeding.147[29]

RA 9372 is a penal statute and does not even provide for any appropriation from Congress for its
implementation, while none of the individual petitioner-citizens has alleged any direct and personal interest in
the implementation of the law.

It bears to stress that generalized interests, albeit accompanied by the assertion of a public right, do not
establish locus standi. Evidence of a direct and personal interest is key.

Petitioners fail to present an actual case or controversy

By constitutional fiat, judicial power operates only when there is an actual case or controversy.

Section 1. The judicial power shall be vested in one Supreme Court and in such lower
courts as may be established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine whether or
not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of the Government. 148[30] (emphasis and underscoring
supplied.)

146
147
148

As early as Angara v. Electoral Commission,149[31] the Court ruled that the power of judicial review is limited
to actual cases or controversies to be exercised after full opportunity of argument by the parties. Any attempt at
abstraction could only lead to dialectics and barren legal questions and to sterile conclusions unrelated to
actualities.

An actual case or controversy means an existing case or controversy that is appropriate or ripe for
determination, not conjectural or anticipatory, lest the decision of the court would amount to an advisory
opinion.150[32]

Information Technology Foundation of the Philippines v. COMELEC151[33] cannot be more emphatic:

[C]ourts do not sit to adjudicate mere academic questions to satisfy scholarly

interest, however intellectually challenging. The controversy must be justiciabledefinite
and concrete, touching on the legal relations of parties having adverse legal interests. In other
words, the pleadings must show an active antagonistic assertion of a legal right, on the
one hand, and a denial thereof on the other hand; that is, it must concern a real and not
merely a theoretical question or issue. There ought to be an actual and substantial
controversy admitting of specific relief through a decree conclusive in nature, as
distinguished from an opinion advising what the law would be upon a hypothetical state of
facts. (Emphasis and underscoring supplied)

Thus, a petition to declare unconstitutional a law converting the Municipality of Makati into a Highly
Urbanized City was held to be premature as it was tacked on uncertain, contingent events. 152[34] Similarly, a
petition that fails to allege that an application for a license to operate a radio or television station has been
149
150
151
152

denied or granted by the authorities does not present a justiciable controversy, and merely wheedles the Court to
rule on a hypothetical problem.153[35]

The Court dismissed the petition in Philippine Press Institute v. Commission on Elections 154[36] for failure to
cite any specific affirmative action of the Commission on Elections to implement the assailed resolution. It
refused, in Abbas v. Commission on Elections,155[37] to rule on the religious freedom claim of the therein
petitioners based merely on a perceived potential conflict between the provisions of the Muslim Code and those
of the national law, there being no actual controversy between real litigants.

The list of cases denying claims resting on purely hypothetical or anticipatory grounds goes on ad infinitum.

153
154
155

The Court is not unaware that a reasonable certainty of the occurrence of a perceived threat to any
constitutional interestsuffices to provide a basis for mounting a constitutional challenge. This, however, is
qualified by the requirement that there must be sufficient facts to enable the Court to intelligently adjudicate
the issues.156[38]

Very recently, the US Supreme Court, in Holder v. Humanitarian Law Project,157[39] allowed the preenforcement review of a criminal statute, challenged on vagueness grounds, since plaintiffs faced a credible
threat of prosecution and should not be required to await and undergo a criminal prosecution as the sole
means of seeking relief.158[40] The plaintiffs therein filed an action before a federal court to assail the
constitutionality of the material support statute, 18 U.S.C. 2339B (a) (1), 159[41] proscribing the provision of
material support to organizations declared by the Secretary of State as foreign terrorist organizations. They
claimed that they intended to provide support for the humanitarian and political activities of two such
organizations.

Prevailing American jurisprudence allows an adjudication on the merits when an anticipatory petition clearly
shows that the challenged prohibition forbids the conduct or activity that a petitioner seeks to do, as there
would then be a justiciable controversy.160[42]

Unlike the plaintiffs in Holder, however, herein petitioners have failed to show that the challenged provisions of
RA 9372 forbid constitutionally protected conduct or activity that they seek to do. No demonstrable threat has
been established, much less a real and existing one.

156
157
158
159
160

Petitioners obscure allegations of sporadic surveillance and supposedly being tagged as

communist fronts in no way approximate a credible threat of prosecution. From these allegations, the
Court is being lured to render an advisory opinion, which is not its function.161[43]

Without any justiciable controversy, the petitions have become pleas for declaratory relief, over which the Court
has no original jurisdiction. Then again, declaratory actions characterized by double contingency, where both
the activity the petitioners intend to undertake and the anticipated reaction to it of a public official are merely
theorized, lie beyond judicial review for lack of ripeness.162[44]

The possibility of abuse in the implementation of RA 9372 does not avail to take the present petitions out of the
realm of the surreal and merely imagined. Such possibility is not peculiar to RA 9372 since the exercise of any
power granted by law may be abused.163[45] Allegations of abuse must be anchored on real events before courts
may step in to settle actual controversies involving rights which are legally demandable and enforceable.

A facial invalidation of a statute is allowed only in free speech cases,

wherein certain rules of constitutional litigation are rightly excepted

Petitioners assail for being intrinsically vague and impermissibly broad the definition of the crime of
terrorism164[46] under RA 9372 in that terms like widespread and extraordinary fear and panic among the

161
162
163
164

populace and coerce the government to give in to an unlawful demand are nebulous, leaving law
enforcement agencies with no standard to measure the prohibited acts.

Respondents, through the OSG, counter that the doctrines of void-for-vagueness and overbreadth find no
application in the present case since these doctrines apply only to free speech cases; and that RA 9372 regulates
conduct, not speech.

For a jurisprudentially guided understanding of these doctrines, it is imperative to outline the schools of
thought on whether the void-for-vagueness and overbreadth doctrines are equally applicable grounds to assail a
penal statute.

Respondents interpret recent jurisprudence as slanting toward the idea of limiting the application of the
two doctrines to free speech cases. They particularly cite Romualdez v. Hon. Sandiganbayan165[47] and Estrada
v. Sandiganbayan.166[48]

The Court clarifies.

At issue in Romualdez v. Sandiganbayan was whether the word intervene in Section 5 167[49] of the
Anti-Graft and Corrupt Practices Act was intrinsically vague and impermissibly broad. The Court stated that
the overbreadth and the vagueness doctrines have special application only to free-speech cases, and are not

165
166
167

appropriate for testing the validity of penal statutes. 168[50] It added that, at any rate, the challenged provision,
under which the therein petitioner was charged, is not vague.169[51]

While in the subsequent case of Romualdez v. Commission on Elections,170[52] the Court stated that a facial
invalidation of criminal statutes is not appropriate, it nonetheless proceeded to conduct a vagueness analysis,
and concluded that the therein subject election offense171[53] under the Voters Registration Act of 1996, with
which the therein petitioners were charged, is couched in precise language.172[54]

The two Romualdez cases rely heavily on the Separate Opinion173[55] of Justice Vicente V. Mendoza in the
Estrada case, where the Court found the Anti-Plunder Law (Republic Act No. 7080) clear and free from
ambiguity respecting the definition of the crime of plunder.

The position taken by Justice Mendoza in Estrada relates these two doctrines to the concept of a facial
invalidation as opposed to an as-applied challenge. He basically postulated that allegations that a penal
statute is vague and overbroad do not justify a facial review of its validity. The pertinent portion of the
Concurring Opinion of Justice Mendoza, which was quoted at length in the main Estrada decision, reads:

A facial challenge is allowed to be made to a vague statute and to one which is overbroad
because of possible "chilling effect" upon protected speech. The theory is that "[w]hen statutes
regulate or proscribe speech and no readily apparent construction suggests itself as a vehicle for
rehabilitating the statutes in a single prosecution, the transcendent value to all society of
168
169
170
171
172
173

constitutionally protected expression is deemed to justify allowing attacks on overly broad statutes
with no requirement that the person making the attack demonstrate that his own conduct could not
be regulated by a statute drawn with narrow specificity." The possible harm to society in
permitting some unprotected speech to go unpunished is outweighed by the possibility that the
protected speech of others may be deterred and perceived grievances left to fester because of
possible inhibitory effects of overly broad statutes.
This rationale does not apply to penal statutes. Criminal statutes have general in terrorem
effect resulting from their very existence, and, if facial challenge is allowed for this reason alone,
the State may well be prevented from enacting laws against socially harmful conduct. In the area
of criminal law, the law cannot take chances as in the area of free speech.
The overbreadth and vagueness doctrines then have special application only to free
speech cases. They are inapt for testing the validity of penal statutes. As the U.S. Supreme Court
put it, in an opinion by Chief Justice Rehnquist, "we have not recognized an 'overbreadth' doctrine
outside the limited context of the First Amendment." In Broadrick v. Oklahoma, the Court ruled
that "claims of facial overbreadth have been entertained in cases involving statutes which, by their
terms, seek to regulate only spoken words" and, again, that "overbreadth claims, if entertained at
all, have been curtailed when invoked against ordinary criminal laws that are sought to be applied
to protected conduct." For this reason, it has been held that "a facial challenge to a legislative act
is the most difficult challenge to mount successfully, since the challenger must establish that no set
of circumstances exists under which the Act would be valid." As for the vagueness doctrine, it is
said that a litigant may challenge a statute on its face only if it is vague in all its possible
applications. "A plaintiff who engages in some conduct that is clearly proscribed cannot complain
of the vagueness of the law as applied to the conduct of others."
In sum, the doctrines of strict scrutiny, overbreadth, and vagueness are analytical tools
developed for testing "on their faces" statutes in free speech cases or, as they are called in
American law, First Amendment cases. They cannot be made to do service when what is
involved is a criminal statute. With respect to such statute, the established rule is that "one to
whom application of a statute is constitutional will not be heard to attack the statute on the ground
that impliedly it might also be taken as applying to other persons or other situations in which its
application might be unconstitutional." As has been pointed out, "vagueness challenges in the
First Amendment context, like overbreadth challenges typically produce facial invalidation, while
statutes found vague as a matter of due process typically are invalidated [only] 'as applied' to a
particular defendant." Consequently, there is no basis for petitioner's claim that this Court
review the Anti-Plunder Law on its face and in its entirety.
Indeed, "on its face" invalidation of statutes results in striking them down entirely on the
ground that they might be applied to parties not before the Court whose activities are
constitutionally protected. It constitutes a departure from the case and controversy requirement of
the Constitution and permits decisions to be made without concrete factual settings and in sterile
abstract contexts. But, as the U.S. Supreme Court pointed out in Younger v. Harris
[T]he task of analyzing a proposed statute, pinpointing its deficiencies, and
requiring correction of these deficiencies before the statute is put into effect, is
rarely if ever an appropriate task for the judiciary. The combination of the relative
remoteness of the controversy, the impact on the legislative process of the relief
sought, and above all the speculative and amorphous nature of the required line-byline analysis of detailed statutes, . . . ordinarily results in a kind of case that is
wholly unsatisfactory for deciding constitutional questions, whichever way they
might be decided.

For these reasons, "on its face" invalidation of statutes has been described as "manifestly
strong medicine," to be employed "sparingly and only as a last resort," and is generally disfavored.
In determining the constitutionality of a statute, therefore, its provisions which are alleged to have
been violated in a case must be examined in the light of the conduct with which the defendant is
charged.174[56] (Underscoring supplied.)

The confusion apparently stems from the interlocking relation of the overbreadth and vagueness doctrines as
grounds for a facial or as-applied challenge against a penal statute (under a claim of violation of due process of
law) or a speech regulation (under a claim of abridgement of the freedom of speech and cognate rights).

To be sure, the doctrine of vagueness and the doctrine of overbreadth do not operate on the same plane.

A statute or act suffers from the defect of vagueness when it lacks comprehensible standards that men of
common intelligence must necessarily guess at its meaning and differ as to its application. It is repugnant to the
Constitution in two respects: (1) it violates due process for failure to accord persons, especially the parties
targeted by it, fair notice of the conduct to avoid; and (2) it leaves law enforcers unbridled discretion in carrying
out its provisions and becomes an arbitrary flexing of the Government muscle.175[57] The overbreadth doctrine,
meanwhile, decrees that a governmental purpose to control or prevent activities constitutionally subject to state
regulations may not be achieved by means which sweep unnecessarily broadly and thereby invade the area of
protected freedoms.176[58]

174
175
176

As distinguished from the vagueness doctrine, the overbreadth doctrine assumes that individuals will understand
what a statute prohibits and will accordingly refrain from that behavior, even though some of it is protected. 177
[59]

A facial challenge is likewise different from an as-applied challenge.

Distinguished from an as-applied challenge which considers only extant facts affecting real litigants, a
facial invalidation is an examination of the entire law, pinpointing its flaws and defects, not only on the basis
of its actual operation to the parties, but also on the assumption or prediction that its very existence may cause
others not before the court to refrain from constitutionally protected speech or activities.178[60]

Justice Mendoza accurately phrased the subtitle 179[61] in his concurring opinion that the vagueness and
overbreadth doctrines, as grounds for a facial challenge, are not applicable to penal laws. A litigant cannot
thus successfully mount a facial challenge against a criminal statute on either vagueness or overbreadth
grounds.

The allowance of a facial challenge in free speech cases is justified by the aim to avert the chilling effect on
protected speech, the exercise of which should not at all times be abridged. 180[62]

As reflected earlier, this

rationale is inapplicable to plain penal statutes that generally bear an in terrorem effect in deterring socially
harmful conduct. In fact, the legislature may even forbid and penalize acts formerly considered innocent and
lawful, so long as it refrains from diminishing or dissuading the exercise of constitutionally protected rights. 181
[63]
177
178
179
180
181

The Court reiterated that there are critical limitations by which a criminal statute may be challenged and
underscored that an on-its-face invalidation of penal statutes x x x may not be allowed.182[64]

[T]he rule established in our jurisdiction is, only statutes on free speech, religious freedom, and
other fundamental rights may be facially challenged. Under no case may ordinary penal
statutes be subjected to a facial challenge. The rationale is obvious. If a facial challenge to a
penal statute is permitted, the prosecution of crimes may be hampered. No prosecution would be
possible. A strong criticism against employing a facial challenge in the case of penal statutes, if
the same is allowed, would effectively go against the grain of the doctrinal requirement of an
existing and concrete controversy before judicial power may be appropriately exercised. A facial
challenge against a penal statute is, at best, amorphous and speculative. It would, essentially, force
the court to consider third parties who are not before it. As I have said in my opposition to the
allowance of a facial challenge to attack penal statutes, such a test will impair the States ability to
deal with crime. If warranted, there would be nothing that can hinder an accused from defeating
the States power to prosecute on a mere showing that, as applied to third parties, the penal statute
is vague or overbroad, notwithstanding that the law is clear as applied to him. 183[65] (Emphasis
and underscoring supplied)

It is settled, on the other hand, that the application of the overbreadth doctrine is limited to a facial kind of
challenge and, owing to the given rationale of a facial challenge, applicable only to free speech cases.

By its nature, the overbreadth doctrine has to necessarily apply a facial type of invalidation in order to
plot areas of protected speech, inevitably almost always under situations not before the court, that are
impermissibly swept by the substantially overbroad regulation. Otherwise stated, a statute cannot be properly
analyzed for being substantially overbroad if the court confines itself only to facts as applied to the litigants.

The most distinctive feature of the overbreadth technique is that it marks an exception to
some of the usual rules of constitutional litigation. Ordinarily, a particular litigant claims that a
statute is unconstitutional as applied to him or her; if the litigant prevails, the courts carve away
182
183

the unconstitutional aspects of the law by invalidating its improper applications on a case to case
basis. Moreover, challengers to a law are not permitted to raise the rights of third parties and can
only assert their own interests. In overbreadth analysis, those rules give way; challenges are
permitted to raise the rights of third parties; and the court invalidates the entire statute "on its
face," not merely "as applied for" so that the overbroad law becomes unenforceable until a
properly authorized court construes it more narrowly. The factor that motivates courts to depart
from the normal adjudicatory rules is the concern with the "chilling;" deterrent effect of the
overbroad statute on third parties not courageous enough to bring suit. The Court assumes that an
overbroad laws "very existence may cause others not before the court to refrain from
constitutionally protected speech or expression." An overbreadth ruling is designed to remove that
deterrent effect on the speech of those third parties.184[66] (Emphasis in the original omitted;
underscoring supplied.)

In restricting the overbreadth doctrine to free speech claims, the Court, in at least two cases, 185[67] observed that
the US Supreme Court has not recognized an overbreadth doctrine outside the limited context of the First
Amendment,186[68] and that claims of facial overbreadth have been entertained in cases involving statutes
which, by their terms, seek to regulate only spoken words.187[69] In Virginia v. Hicks,188[70] it was held that
rarely, if ever, will an overbreadth challenge succeed against a law or regulation that is not specifically
addressed to speech or speech-related conduct.

Attacks on overly broad statutes are justified by the

transcendent value to all society of constitutionally protected expression.189[71]

Since a penal statute may only be assailed for being vague as applied to
petitioners, a limited vagueness analysis of the definition of terrorism in
RA 9372 is legally impermissible absent an actual or imminent charge
against them

184
185
186
187
188
189

While Estrada did not apply the overbreadth doctrine, it did not preclude the operation of the vagueness test on
the Anti-Plunder Law as applied to the therein petitioner, finding, however, that there was no basis to review the
law on its face and in its entirety. 190[72] It stressed that statutes found vague as a matter of due process
typically are invalidated only 'as applied' to a particular defendant.191[73]

American jurisprudence192[74] instructs that vagueness challenges that do not involve the First Amendment
must be examined in light of the specific facts of the case at hand and not with regard to the statute's facial
validity.

For more than 125 years, the US Supreme Court has evaluated defendants claims that criminal statutes are
unconstitutionally vague, developing a doctrine hailed as among the most important guarantees of liberty
under law.193[75]

In this jurisdiction, the void-for-vagueness doctrine asserted under the due process clause has been utilized in
examining the constitutionality of criminal statutes. In at least three cases, 194[76] the Court brought the doctrine
into play in analyzing an ordinance penalizing the non-payment of municipal tax on fishponds, the crime of
illegal recruitment punishable under Article 132(b) of the Labor Code, and the vagrancy provision under Article
202 (2) of the Revised Penal Code. Notably, the petitioners in these three cases, similar to those in the two
Romualdez and Estrada cases, were actually charged with the therein assailed penal statute, unlike in the
present case.

190
191
192
193
194

There is no merit in the claim that RA 9372 regulates speech so as

to permit a facial analysis of its validity

From the definition of the crime of terrorism in the earlier cited Section 3 of RA 9372, the following
elements may be culled: (1) the offender commits an act punishable under any of the cited provisions of the
Revised Penal Code, or under any of the enumerated special penal laws; (2) the commission of the predicate
crime sows and creates a condition of widespread and extraordinary fear and panic among the populace; and (3)
the offender is actuated by the desire to coerce the government to give in to an unlawful demand.

In insisting on a facial challenge on the invocation that the law penalizes speech, petitioners contend that
the element of unlawful demand in the definition of terrorism 195[77] must necessarily be transmitted through
some form of expression protected by the free speech clause.

The argument does not persuade. What the law seeks to penalize is conduct, not speech.

Before a charge for terrorism may be filed under RA 9372, there must first be a predicate crime actually
committed to trigger the operation of the key qualifying phrases in the other elements of the crime, including
the coercion of the government to accede to an unlawful demand. Given the presence of the first element,
any attempt at singling out or highlighting the communicative component of the prohibition cannot recategorize
the unprotected conduct into a protected speech.

Petitioners notion on the transmission of message is entirely inaccurate, as it unduly focuses on just one
particle of an element of the crime. Almost every commission of a crime entails some mincing of words on the
part of the offender like in declaring to launch overt criminal acts against a victim, in haggling on the amount of
ransom or conditions, or in negotiating a deceitful transaction. An analogy in one U.S. case 196[78] illustrated
that the fact that the prohibition on discrimination in hiring on the basis of race will require an employer to take
195

down a sign reading White Applicants Only hardly means that the law should be analyzed as one regulating
speech rather than conduct.

Utterances not elemental but inevitably incidental to the doing of the criminal conduct alter neither the
intent of the law to punish socially harmful conduct nor the essence of the whole act as conduct and not
speech. This holds true a fortiori in the present case where the expression figures only as an inevitable incident
of making the element of coercion perceptible.

[I]t is true that the agreements and course of conduct here were as in most instances
brought about through speaking or writing. But it has never been deemed an abridgement of
freedom of speech or press to make a course of conduct illegal merely because the conduct was, in
part, initiated, evidenced, or carried out by means of language, either spoken, written, or printed.
Such an expansive interpretation of the constitutional guaranties of speech and press would make
it practically impossible ever to enforce laws against agreements in restraint of trade as well as
many other agreements and conspiracies deemed injurious to society.197[79] (italics and
underscoring supplied)

Certain kinds of speech have been treated as unprotected conduct, because they merely evidence a prohibited
conduct.198[80] Since speech is not involved here, the Court cannot heed the call for a facial analysis.

IN FINE, Estrada and the other cited authorities engaged in a vagueness analysis of the therein subject penal
statute as applied to the therein petitioners inasmuch as they were actually charged with the pertinent crimes
challenged on vagueness grounds. The Court in said cases, however, found no basis to review the assailed
penal statute on its face and in its entirety.

196
197
198

In Holder, on the other hand, the US Supreme Court allowed the pre-enforcement review of a criminal
statute, challenged on vagueness grounds, since the therein plaintiffs faced a credible threat of prosecution
and should not be required to await and undergo a criminal prosecution as the sole means of seeking relief.

As earlier reflected, petitioners have established neither an actual charge nor a credible threat of
prosecution under RA 9372. Even a limited vagueness analysis of the assailed definition of terrorism is thus
legally impermissible.

The Court reminds litigants that judicial power neither contemplates speculative

counseling on a statutes future effect on hypothetical scenarios nor allows the courts to be used as an extension
of a failed legislative lobbying in Congress.

WHEREFORE, the petitions are DISMISSED.

SO ORDERED.
REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
G.R. No. 206987

September 10, 2013

ALLIANCE FOR NATIONALISM AND DEMOCRACY (ANAD), Petitioner,

vs.
COMMISSION ON ELECTIONS, Respondent.
DECISION
PEREZ, J.:
Before the Court is a Petition for Certiorari with Urgent Prayer for the Issuance of a Temporary Restraining
Order and Writ of Mandamus, seeking to compel the Commission on Elections (COMELEC) to canvass the
votes cast for petitioner Alliance for Nationalism and Democracy (ANAD) in the recently held 2013 Party-List
Elections.
On 7 November 2012, the COMELEC En Banc promulgated a Resolution canceling petitioners Certificate of
Registration and/or Accreditation on three grounds, to wit:1
I.

Petitioner ANAD does not belong to, or come within the ambit of, the marginalized and
underrepresented sectors enumerated in Section 5 of R.A. No. 7941 and espoused in the cases of Ang
Bagong Bayani-OFW Labor Party v. Commission on Elections and Ang Ladlad LGBT Party v.
Commission on Elections.
II.
There is no proof showing that nominees Arthur J. Tariman and Julius D. Labandria are actually
nominated by ANAD itself. The Certificate of Nomination, subscribed and sworn to by Mr. Domingo
M.Balang, shows that ANAD submitted only the names of Pastor Montero Alcover, Jr., Baltaire Q.
Balangauan and Atty. Pedro Leslie B. Salva. It necessarily follows, that having only three (3) nominees,
ANAD failed to comply with the procedural requirements set forth in Section 4, Rule 3 of Resolution
No. 9366.
III.
ANAD failed to submit its Statement of Contributions and Expenditures for the 2007 National and Local
Elections as required by Section 14 of Republic Act No. 7166 ("R.A. No. 7166").
ANAD went before this Court challenging the above-mentioned resolution. In Atong Paglaum, Inc. v.
Comelec,2 the Court remanded the case to the COMELEC for re-evaluation in accordance with the parameters
prescribed in the aforesaid decision.
In the assailed Resolution dated 11 May 2013,3 the COMELEC affirmed the cancellation of petitioners
Certificate of Registration and/or Accreditation and disqualified it from participating in the 2013 Elections. The
COMELEC held that while ANAD can be classified as a sectoral party lacking in well-defined political
constituencies, its disqualification still subsists for violation of election laws and regulations, particularly for its
failure to submit at least five nominees, and for its failure to submit its Statement of Contributions and
Expenditures for the 2007 Elections.
Hence, the present petition raising the issues of whether or not the COMELEC gravely abused its discretion in
promulgating the assailed Resolution without the benefit of a summary evidentiary hearing mandated by the due
process clause, and whether or not the COMELEC erred in finding that petitioner submitted only three
nominees and that it failed to submit its Statement of Contributions and Expenditures in the 2007Elections.4
We dismiss the petition.
The only question that may be raised in a petition for certiorari under Section 2, Rule 64 of the Rules of Court is
whether or not the COMELEC acted with grave abuse of discretion amounting to lack or excess of jurisdiction.
For a petition for certiorari to prosper, there must be a clear showing of caprice and arbitrariness in the exercise
of discretion.5
"Grave abuse of discretion," under Rule 65, has a specific meaning. It is the arbitrary or despotic exercise of
power due to passion, prejudice or personal hostility; or the whimsical, arbitrary, or capricious exercise of
power that amounts to an evasion or a refusal to perform a positive duty enjoined by law or to act at all in

contemplation of law. For an act to be struck down as having been done with grave abuse of discretion, the
abuse of discretion must be patent and gross.6
ANAD claims that the COMELEC gravely abused its discretion when it promulgated the assailed Resolution
without giving ANAD the benefit of a summary evidentiary hearing, thus violating its right to due process. It is
to be noted, however, that ANAD was already afforded a summary hearing on23 August 2013, during which
Mr. Domingo M. Balang, ANADs president, authenticated documents and answered questions from the
members of the COMELEC pertinent to ANADs qualifications.7
ANAD, nonetheless, insists that the COMELEC should have called for another summary hearing after this
Court remanded the case to the COMELEC for re-evaluation in accordance with the parameters laid down in
Atong Paglaum, Inc. v. Comelec . This is a superfluity.
ANAD was already given the opportunity to prove its qualifications during the summary hearing of 23 August
2012, during which ANAD submitted documents and other pieces of evidence to establish said qualifications. In
re-evaluating ANADs qualifications in accordance with the parameters laid down in Atong Paglaum, Inc. v.
COMELEC , the COMELEC need not have called another summary hearing. The Comelec could, as in fact it
did,8 readily resort to documents and other pieces of evidence previously submitted by petitioners in reappraising ANADs qualifications. After all, it can be presumed that the qualifications, or lack thereof, which
were established during the summary hearing of 23 August2012 continued until election day and even there
after.
As to ANADs averment that the COMELEC erred in finding that it violated election laws and regulations, we
hold that the COMELEC, being a specialized agency tasked with the supervision of elections all over the
country, its factual findings, conclusions, rulings and decisions rendered on matters falling within its
competence shall not be interfered with by this Court in the absence of grave abuse of discretion or any
jurisdictional infirmity or error of law.9
As found by the COMELEC, ANAD, for unknown reasons, submitted only three nominees instead of five, in
violation of Sec. 8 of R.A. No. 7941( An Act Providing for the Election of Party-List Representatives through
the Party-List System, and Appropriating Funds Therefor).10 Such factual finding of the COMELEC was based
on the Certificate of Nomination presented and marked by petitioner during the 22 and 23 August 2012summary
hearings.11
Compliance with Section 8 of R.A. No. 7941 is essential as the said provision is a safeguard against
arbitrariness.1wphi1 Section 8 of R.A. No. 7941rids a party-list organization of the prerogative to substitute
and replace its nominees, or even to switch the order of the nominees, after submission of the list to the
COMELEC.
In Lokin, Jr. v. Comelec,12 the Court discussed the importance of Sec.8 of R.A. No. 7941 in this wise:
The prohibition is not arbitrary or capricious; neither is it without reason on the part of lawmakers. The
COMELEC can rightly presume from the submission of the list that the list reflects the true will of the party-list
organization. The COMELEC will not concern itself with whether or not the list contains the real intended
nominees of the party-list organization, but will only determine whether the nominees pass all the requirements
prescribed by the law and whether or not the nominees possess all the qualifications and none of the

disqualifications. Thereafter, the names of the nominees will be published in newspapers of general circulation.
Although the people vote for the party-list organization itself in a party-list system of election, not for the
individual nominees, they still have the right to know who the nominees of any particular party-list organization
are. The publication of the list of the party-list nominees in newspapers of general circulation serves that right of
the people, enabling the voters to make intelligent and informed choices. In contrast, allowing the party-list
organization to change its nominees through withdrawal of their nominations, or to alter the order of the
nominations after the submission of the list of nominees circumvents the voters demand for transparency. The
lawmakers exclusion of such arbitrary withdrawal has eliminated the possibility of such circumvention.
Moreover, the COMELEC also noted ANADs failure to submit a proper Statement of Contributions and
Expenditures for the 2007 Elections, in violation of COMELEC Resolution No. 9476, viz:
Rule 8, Sec. 3. Form and contents of statements. The statement required in next preceding section shall be in
writing, subscribed and sworn to by the candidate or by the treasurer of the party. It shall set forth in detail the
following:
a. The amount of contribution, the date of receipt, and the full name, profession, business, taxpayer
identification number (TIN) and exact home and business address of the person or entity from whom the
contribution was received; (See Schedule of Contributions Received, Annex "G")
b. The amount of every expenditure, the date thereof, the full name and exact address of the person or
entity to whom payment was made, and the purpose of the expenditure; (See Schedule of Expenditures,
Annex "H")
A Summary Report of Lawful Expenditure categorized according to the list specified above shall be
submitted by the candidate or party treasurer within thirty (30) days after the day of the election. The
prescribed form for this Summary Report is hereby attached to these Rules as Annex "H-1."
c. Any unpaid obligation, its nature and amount, the full name and exact home and business address of
the person or entity to whom said obligation is owing; and (See Schedule of Unpaid Obligations, Annex
"I")
d. If the candidate or treasurer of the party has received no contribution, made no expenditure, or has no
pending obligation, the statement shall reflect such fact;
e. And such other information that the Commission may require.
The prescribed form for the Statement of Election Contributions and Expenses is attached to these Rules as
Annex "F." The Schedules of Contributions and Expenditures (Annexes "G" and "H", respectively) should be
supported and accompanied by certified true copies of official receipts, invoices and other similar documents.
An incomplete statement, or a statement that does not contain all the required information and attachments, or
does not conform to the prescribed form, shall be considered as not filed and shall subject the candidate or party
treasurer to the penalties prescribed by law.

As found by the COMELEC, ANAD failed to comply with the above-mentioned requirements as the exhibits
submitted by ANAD consisted mainly of a list of total contributions from other persons, a list of official receipts
and amounts without corresponding receipts, and a list of expenditures based on order slips and donations
without distinction as to whether the amounts listed were advanced subject to reimbursement or donated.13 This
factual finding was neither contested nor rebutted by ANAD.
We herein take the opportunity to reiterate the well-established principle that the rule that factual findings of
administrative bodies will not be disturbed by the courts of justice except when there is absolutely no evidence
or no substantial evidence in support of such findings should be applied with greater force when it concerns the
COMELEC, as the framers of the Constitution intended to place the COMELEC created and explicitly made
independent by the Constitution itself on a level higher than statutory administrative organs. The COMELEC
has broad powers to ascertain the true results of the election by means available to it. For the attainment of that
end, it is not strictly bound by the rules of evidence.14
As empowered by law, the COMELEC may motu proprio cancel, after due notice and hearing, the registration
of any party-list organization if it violates or fails to comply with laws, rules or regulations relating to
elections.15 Thus, we find no grave abuse of discretion on the part of the COMELEC when it issued the assailed
Resolution dated 11 May 2013.
In any event, the official tally results of the COMELEC show that ANAD garnered 200,972 votes.16 As such,
even if petitioner is declared qualified and the votes cast for it are canvassed, statistics show that it will still fail
to qualify for a seat in the House of Representatives.
WHEREFORE, premises considered, the Court Resolves to DISMISS the Petition, finding no grave abuse of
discretion on the part of the Commission on Elections.
SO ORDERED.
CERTIORARI, PROHIBITION AND MANDAMUS
CERTIORARI
G.R. No. 192685

July 31, 2013

OSCAR R. AMPIL, Petitioner,

vs.
THE HON. OFFICE OF THE OMBUDSMAN, POLICARPIO L. ESPENESIN, Registrar, Register of
Deeds, Pasig City, FRANCIS SERRANO, YVONNE S. YUCHENGCO, and GEMA O. CHENG,
Respondents.
x-----------------------x
G.R. No. 199115

OSCAR R. AMPIL, Petitioner,

vs.
POLICARPIO L. ESPENESIN, Respondent.
DECISION
PEREZ, J.:
No less than the Constitution maps out the wide grant of investigatory powers to the Ombudsman.1 Hand in
hand with this bestowal, the Ombudsman is mandated to investigate and prosecute, for and in behalf of the
people, criminal and administrative offenses committed by government officers and employees, as well as
private persons in conspiracy with the former.2 There can be no equivocation about this power-and-duty
function of the Ombudsman.
Before us are consolidated petitions separately filed by Oscar R. Ampil (Ampil): (1) one is for certiorari under
Rule 65 of the Rules of Court docketed as G.R. No. 192685; and (2) the other is for review on certiorari under
Rule 45 of the Rules of Court docketed as G.R. No. 199115.
Challenged in the petition for certiorari is the Resolution3 of the Ombudsman in OMB-C-C-07-0444-J,
dismissing the criminal complaint filed by Ampil against respondents Policarpio L. Espenesin (Espenesin),
Francis Serrano (Serrano), Yvonne S. Yuchengco (Yuchengco) and Gema O. Cheng (Cheng), and the Order4
denying Ampils motion for reconsideration thereof. Ampils complaint charged respondents with Falsification
of Public Documents under Article 171(6) of the Revised Penal Code and violation of Sections 3(a) and (e) of
Republic Act No. 3019, The Anti-Graft and Corrupt Practices Act, as amended.
The appeal by certiorari, on the other hand, assails the Decision of the Court of Appeals in CA G.R. SP No.
113171, which affirmed the Order dated 13 July 2009 of the Ombudsman in OMB-C-A-07-0474-J on the
administrative aspect of the mentioned criminal complaint for Falsification and violation of Republic Act No.
3019 against the Registrar of Deeds, respondent Espenesin. Initially, the Ombudsman issued a Decision dated
30 April 2008, finding Espenesin guilty of Simple Misconduct and meting on Espenesin the penalty of one (1)
month suspension. On motion for reconsideration of Ampil, the Ombudsman favored Espenesins arguments in
his Opposition, and recalled the one-month suspension the Ombudsman had imposed on the latter.
These consolidated cases arose from the following facts.
On 9 November 1995, ASB Realty Corporation (ASB) and Malayan Insurance Company (MICO) entered into a
Joint Project Development Agreement (JPDA) for the construction of a condominium building to be known as
"The Malayan Tower." Under the JPDA, MICO shall provide the real property located at the heart of the Ortigas
Business District, Pasig City, while ASB would construct, and shoulder the cost of construction and
development of the condominium building.
A year thereafter, on 20 November 1996, MICO and ASB entered into another contract, with MICO selling to
ASB the land it was contributing under the JPDA. Under the Contract to Sell, ownership of the land will vest on
ASB only upon full payment of the purchase price.

Sometime in 2000, ASB, as part of the ASB Group of Companies, filed a Petition for Rehabilitation with Prayer
for Suspension of Actions and Proceedings before the Securities and Exchange Commission (SEC). As a result,
the SEC issued a sixty (60) day Suspension Order (a) suspending all actions for claims against the ASB Group
of Companies pending or still to be filed with any court, office, board, body, or tribunal; (b) enjoining the ASB
Group of Companies from disposing of their properties in any manner, except in the ordinary course of
business, and from paying their liabilities outstanding as of the date of the filing of the petition; and (c)
appointing Atty. Monico V. Jacob as interim receiver of the ASB Group of Companies.5 Subsequently, the SEC,
over the objections of creditors, approved the Rehabilitation Plan submitted by the ASB Group of Companies,
thus:
PREMISES CONSIDERED, the objections to the rehabilitation plan raised by the creditors are hereby
considered unreasonable.
Accordingly, the Rehabilitation Plan submitted by petitioners is hereby APPROVED, except those pertaining to
Mr. Roxas advances, and the ASB-Malayan Towers. Finally, Interim Receiver Mr. Fortunato Cruz is appointed
as Rehabilitation Receiver.6 (Emphasis supplied).
Because of the obvious financial difficulties, ASB was unable to perform its obligations to MICO under the
JPDA and the Contract to Sell. Thus, on 30 April 2002, MICO and ASB executed their Third contract, a
Memorandum of Agreement (MOA),7 allowing MICO to assume the entire responsibility for the development
and completion of The Malayan Tower. At the time of the execution of the MOA, ASB had already paid MICO
P427,231,952.32 out of the P640,847,928.48 purchase price of the realty.8
The MOA specifies the entitlement of both ASB and MICO to net saleable areas of The Malayan Tower
representing their investments. It provides, in pertinent part:
Section 4. Distribution and Disposition of Units. (a) As a return of its capital investment in the Project, each
party shall be entitled to such portion of all the net saleable area of the Building that their respective
contributions to the Project bear to the actual construction cost. As of the date of the execution hereof, and on
the basis of the total costs incurred to date in relation to the Remaining Construction Costs (as defined in
Section 9(a) hereof), the parties shall respectively be entitled to the following (which entitlement shall be
conditioned on, and subject to, adjustments as provided in sub-paragraph (b) of Section 4 in the event that the
actual remaining cost of construction exceeds the Remaining Construction Cost):
(i) MICO the net saleable area particularly described in Schedule 2 hereof.
(ii) ASB the following net saleable area:
(A) the net saleable area which ASB had pre-sold for an aggregate purchase price of
P640,085,267.30 as set forth in Schedule 1 (including all paid and unpaid proceeds of
said presales);
(B) the net saleable area particularly described in Schedule 3 hereof which shall be
delivered to ASB upon completion of the Project; and,

(C) provided that the actual remaining construction costs do not exceed the Remaining
Construction Cost, the net saleable area particularly described in Schedule 4 hereof which
shall be delivered to ASB upon completion of the Project and determination of its actual
construction costs. If the actual remaining construction costs exceed the Remaining
Construction Cost, sub-paragraph (b) of this Section 4 shall apply.
(b) In the event that the actual remaining construction costs exceed the Remaining Construction Cost as
represented and warranted by ASB to MICO under Section 9(a) hereof, and MICO pays for such excess,
the pro-rata sharing in the net saleable area of the Building, as provided in sub-paragraph (a) of this
Section 4 shall be adjusted accordingly. In such event, MICO shall be entitled to such net saleable area
in Schedule 4 that corresponds to the excess of the actual remaining cost over the Remaining
Construction Cost.
(c) To ensure the viability of the Project, the parties agree on a single pricing system, which MICO shall
have the exclusive right to fix and periodically adjust based on prevailing market conditions in
consultation with, but without need of consent of, ASB, for each partys primary sale or other disposition
of its share in the net saleable area of the Building. In accordance with the immediately preceding
provision, MICO hereby adopts the selling prices set forth in Schedule 5 hereof. Each party or its
officers, employees, agents or representatives shall not sell or otherwise dispose any share of said party
in the net saleable area of the Building below the prices fixed by MICO in accordance with this Section
4 (c). MICO shall have the exclusive right to adopt financing and discounting schemes to enhance
marketing and sales of units in the Project and such right of MICO shall not be restricted or otherwise
limited by the foregoing single pricing system provision.
(d) Each party shall bear the profits earned and losses incurred as well as any and all taxes and other
expenses in connection with the allocation or sale of, or other transaction relating to, the units allotted to
each party.9
On 11 March 2005, Condominium Certificates of Title (CCTs) for 38 units10 and the allotted parking spaces
were issued in the name of ASB. On even date but prior to its release, another set of CCTs covering the same
subject units but with MICO as registered owner thereof, was signed by Espenesin in his capacity as Registrar
of Deeds of Pasig City. Notably, Espenesin had likewise signed the CCTs which were originally issued in ASBs
name.
On 2 April 2006, counsel for ASB wrote Espenesin calling his attention to the supposed amendment in the
CCTs which he had originally issued in ASBs name.11 Counsel for ASB demanded that Espenesin effect in the
second set of CCTs, the registration of the subject units in The Malayan Tower back to ASBs name.
On 17 May 2006, Espenesin replied and explained, thus:
The registration of the Malayan-ASB Realty transaction, from its inception up to the issuance of titles, were all
handled by respondent Atty. Francis Serrano. He therefore appeared and we have considered him the legitimate
representative of both parties (sic). His representation, we gathered, covers the interest of both MICO and ASB
in as far as the titling of the condominium units are concerned.

Sometime ago Serrano requested that condominium titles over specified units be issued in consonance with the
sharing in the joint venture MOA. Titles were correspondingly issued as per request, some in the name of MICO
and some in the name of ASB. Before its release to the parties, Atty. Serrano came back and requested that some
titles issued in the name of ASB be changed to MICO because allegedly there was error in the issuance.
Believing it was a simple error and on representation of the person we came to know and considered the
representative of both parties, we erased the name ASB Realty Corporation on those specified titles and placed
instead the name Malayan Insurance Company.
To our mind, the purpose was not to transfer ownership but merely to rectify an error committed in the issuance
of titles. And since they were well within our capacity to do, the titles not having been released yet to its owner,
we did what we believed was a simple act of rectifying a simple mistake.12
After learning of the amendment in the CCTs issued in ASBs name, Ampil, on 23 January 2007, wrote
respondents Yuchengco and Cheng, President and Chief Financial Officer of MICO, respectively, introducing
himself as an unsecured creditor of ASB Holdings, Inc., one of the corporations forming part of the ASB Group
of Companies.13 Ampil averred that MICO had illegally registered in its name the subject units at The Malayan
Tower which were reserved for ASB under the MOA, and actually, already registered in ASBs name with the
Register of Deeds of Pasig City. Ampil pointed out that the "condominium units should have benefited him and
other unsecured creditors of ASB because the latter had categorically informed them previously that the same
would be contributed to the Asset Pool created under the Rehabilitation Plan of the ASB Group of Companies."
Ultimately, Ampil demanded that Yuchengco and Cheng rectify the resulting error in the CCTs, and facilitate the
registration of the subject units back to ASBs name.
Respondents paid no heed to ASBs and Ampils demands.
As previously adverted to, Ampil charged respondents with Falsification of Public Documents under Article
171(6) of the Revised Penal Code and violation of Sections 3(a) and (e) of Republic Act No. 3019 before the
Office of the Ombudsman, alleging the following:
1. Respondents, in conspiracy, erased the name of ASB, and intercalated and substituted the name of
MICO under the entry of registered owner in the questioned CCTs covering the subject units of The
Malayan Tower;
2. The alterations were done without the necessary order from the proper court, in direct violation of
Section 10814 of Presidential Decree No. 1529;
3. Respondents violated Article 171(6) of the Revised Penal Code by:
3.1 Altering the CCTs which are public documents;
3.2 Effecting the alterations on genuine documents;
3.3 Changing the meaning of the CCTs with MICO now appearing as registered owner of the
subject units in Malayan Tower; and

3.4 Effectively, making the documents speak something false when ASB is the true owner of the
subject units, and not MICO.
4. Ampil, as unsecured creditor of ASB, was unjustly prejudiced by the felonious acts of respondents;
5. Respondents violated Sections 3(a) and (e) of Republic Act No. 3019:
5.1 Respondent Espenesin, as Registrar of the Pasig City Registry of Deeds, committed an
offense in connection with his official duties by allowing himself to be persuaded, induced or
influenced by respondent Serrano into altering the questioned CCTs; and
5.2 The actions of respondent Espenesin demonstrate manifest partiality, evident bad faith
and/or, at the least, gross inexcusable negligence.
6. Respondents Yuchengco and Cheng, being responsible officers of MICO, as principals by inducement
and conspirators of Espenesin and Serrano, are likewise liable for falsification of the CCTs and violation
of Sections 3(a) and (e) of Republic Act No. 3019.15
As required by the Ombudsman, respondents filed their counter-affidavits: Espenesin and Serrano filed
individually, while Yuchengco and Cheng filed jointly. Respondents respective counter-affidavits uniformly
denied petitioners charges and explicated as follows:
Respondent Espenesin countered, among others, (i) that their intention was only to cause the necessary
rectification on certain errors made on the CCTs in issue; (ii) that since the CCTs were not yet issued and
released to the parties, it is still within his authority, as part of the registration process, to make the necessary
amendments or corrections thereon; (iii) that no court order would be necessary to effect such changes, the
CCTs still being within the control of the Register of Deeds and have not yet been released to the respective
owners; (iv) that the amendments were made not for the purpose of falsifying the CCTs in issue but to make the
same reflect and declare the truth; and (v) that he merely made the corrections in accordance with the
representations of respondent Serrano who he believed to be guarding and representing both the interests of
MICO and ASB.
Respondent Serrano, on the other hand, argued: (i) that the units in issue are not yet owned by ASB; (ii) that
these units were specifically segregated and reserved for MICO in order to answer for any excess in the
estimated cost that it will expend in the completion of the Malayan Tower; (iii) that ASB is only entitled to these
reserved units only after the Malayan Tower is completed and that the units are not utilized to cover for the
increase in the cost expended by MICO pursuant to Section 4(c) of the MOA; (iv) that the Malayan Tower was
still incomplete at the time when the alterations were made on the CCT, hence, the claim of ownership of ASB
over the reserved units is premature and totally baseless; (v) that prior to the fulfillment of the resolutory
condition, that is, after the completion of the Malayan Tower and there remains a balance in the Remaining
Construction Cost, the units still rightfully belongs to MICO; and (vi) that the alteration was made merely for
the purpose of correcting an error.
Respondents Cheng and Yuchengco, while adopting the foregoing arguments of Espenesin and Serrano, further
averred that: (i) Ampil has no legal personality to file this suit, he being merely an unsecured creditor of ASB
whose interest was not definitively shown to have been damaged by the subject controversy; (ii) that their

participation as respondents and alleged co-conspirators of Serrano and Espenesin was not clearly shown and
defined in the complaint; (iii) the CCTs issued in the name of ASB have not yet been entered in the Registration
Book at the time when the alterations were effected, hence, the same could still be made subject of appropriate
amendments; (iv) that the CCTs in issue named in favor of ASB were mere drafts and cannot legally be
considered documents within the strict definition of the law; (v) that court order authorizing to amend a title is
necessary only if the deed or document sought to be registered has already been entered in the registration book;
and (vi) that MICO is the duly registered owner of the land on which Malayan Tower stands and ASB was
merely referred to as the developer.16
Thereafter, the Ombudsman issued the assailed Resolution in G.R. No. 192685 dismissing Ampils complaint.
For the Ombudsman, the resolution of whether respondents falsified the CCTs must be prefaced by a
determination of who, between MICO and ASB, is the rightful owner of the subject units. The Ombudsman held
that it had no authority to interpret the provisions of the MOA and, thus, refrained from resolving the
preliminary question of ownership. Given the foregoing, the Ombudsman was hard pressed to make a
categorical finding that the CCTs were altered to speak something false. In short, the Ombudsman did not have
probable cause to indict respondents for falsification of the CCTs because the last element of the crime, i.e., that
the change made the document speak something false, had not been established.
Significantly, the Ombudsman did not dispose of whether probable cause exists to indict respondents for
violation of Sections 3(a) and (e) of Republic Act No. 3019.
Ampil filed a Motion for Reconsideration. However, in yet another setback, the Ombudsman denied Ampils
motion and affirmed the dismissal of his complaint.
On the administrative litigation front and as previously narrated, the Ombudsman found Espenesin liable for
Simple Misconduct. However, on motion for reconsideration of Ampil praying for a finding of guilt against
Espenesin for Grave Misconduct and Dishonesty, the Ombudsman reconsidered its earlier resolution and
recalled the one-month suspension meted on Espenesin.
Thereafter, Ampil filed a petition for review under Rule 43 of the Rules of Court before the appellate court. And
as already stated, the appellate court affirmed the Ombudsmans resolution absolving Espenesin of not just
Grave Misconduct and Dishonesty, but also of Simple Misconduct.
Hence, this dual recourse by Ampil: first, alleging grave abuse of discretion in the Ombudsmans failure to find
probable cause to indict respondents for Falsification of Public Documents under Article 171(6) of the Revised
Penal Code, and for their commission of corrupt practices under
Sections 3(a) and (e) of Republic Act No. 3019; and second, raising grievous error of the Court of Appeals in
affirming the Ombudsmans absolution of Espenesin from administrative liability.
To obviate confusion, we shall dispose of the first issue, i.e., whether probable cause exists to indict respondents
for Falsification of Public Documents under Article 171(6) of the Revised Penal Code and for their commission
of corrupt practices under Sections 3(a) and (e) of Republic Act No. 3019.
Despite the Ombudsmans categorical dismissal of his complaint, Ampil is adamant on the existence of probable
cause to bring respondents to trial for falsification of the CCTs, and for violation of Sections 3(a) and (e) of

Republic Act No. 3019. In fact, he argues that Espenesin has been held administratively liable by the
Ombudsman for altering the CCTs. At the time of the filing of G.R. No. 192685, the Ombudsman had not yet
reversed its previous resolution finding Espenesin liable for simple misconduct. He insists that the admission by
respondents Espenesin and Serrano that they altered the CCTs should foreclose all questions on all respondents
(Espenesins, Serranos, Yuchengcos and Chengs) liability for falsification and their commission of corrupt
practices, under the Revised Penal Code and Republic Act No. 3019, respectively. In all, Ampil maintains that
the Ombudsmans absolution of respondents is tainted with grave abuse of discretion.
G.R. No. 192685 is partially impressed with merit. Accordingly, we find grave abuse of discretion in the
Ombudsmans incomplete disposition of Ampils complaint.
That the Ombudsman is a constitutional officer duty bound to "investigate on its own, or on complaint by any
person, any act or omission of any public official, employee, office or agency, when such act or omission
appears to be illegal, unjust, improper, or inefficient"17 brooks no objection. The Ombudsmans conduct of
preliminary investigation is both power and duty. Thus, the Ombudsman and his Deputies, are constitutionalized
as protectors of the people, who "shall act promptly on complaints filed in any form or manner against public
officials or employees of the government x x x, and shall, x x x notify the complainants of the action taken and
the result thereof."18
The raison d'tre for its creation and endowment of broad investigative authority is to insulate the Office of the
Ombudsman from the long tentacles of officialdom that are able to penetrate judges and fiscals offices, and
others involved in the prosecution of erring public officials, and through the execution of official pressure and
influence, quash, delay, or dismiss investigations into malfeasances and misfeasances committed by public
officers.19
Plainly, the Ombudsman has "full discretion," based on the attendant facts and circumstances, to determine the
existence of probable cause or the lack thereof.20 On this score, we have consistently hewed to the policy of
non-interference with the Ombudsmans exercise of its constitutionally mandated powers.21 The Ombudsmans
finding to proceed or desist in the prosecution of a criminal case can only be assailed through certiorari
proceedings before this Court on the ground that such determination is tainted with grave abuse of discretion
which contemplates an abuse so grave and so patent equivalent to lack or excess of jurisdiction.22
However, on several occasions, we have interfered with the Ombudsmans discretion in determining probable
cause:
(a) To afford protection to the constitutional rights of the accused;
(b) When necessary for the orderly administration of justice or to avoid oppression or multiplicity of
actions;
(c) When there is a prejudicial question which is sub judice;
(d) When the acts of the officer are without or in excess of authority;
(e) Where the prosecution is under an invalid law, ordinance or regulation;

(f) When double jeopardy is clearly apparent;

(g) Where the court has no jurisdiction over the offense;
(h) Where it is a case of persecution rather than prosecution;
(i) Where the charges are manifestly false and motivated by the lust for vengeance.23 (Emphasis
supplied).
The fourth circumstance is present in G.R. No. 192685.
While we agree with the Ombudsmans disquisition that there is no probable cause to indict respondents for
Falsification of Public Documents under Article 171(6) of the Revised Penal Code, we are puzzled why the
Ombudsman completely glossed over Ampils charge that respondents committed prohibited acts listed in
Sections 3(a) and (e) of Republic Act No. 3019. Nowhere in the Resolution or in the Order denying
reconsideration thereof did the Ombudsman tackle and resolve the issue of whether respondents violated the
particular provisions of Republic Act No. 3019.
Curiously, the Ombudsman docketed Ampils complaint-affidavit as one "for: Falsification of Public
Documents and Violation of Sections 3(a) and (e) of Republic Act No. 3019, as amended."24 The Ombudsman
even prefaced the Resolution, thus: "this has reference to the complaint filed by Oscar Ampil on 17 September
2007 against respondents, for Falsification of Public Documents and Violation of Sections 3, paragraphs (a) and
(e) of Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, as amended."25
The Ombudsmans silence on the component anti-graft charges is pointed up by the specific allegations in
Ampils complaint-affidavit that:
18. The acts of ATTY. ESPENESIN and his co-conspirators are clear violations of Section 3 paragraph (a)
and/or (e) of Republic Act No. 3019 otherwise known as the Anti-Graft and Corrupt Practices Act x x x;
xxxx
19. On the basis of the evidence x x x and the admissions of the conspirators themselves, ATTY. ESPENESIN is
liable under both pars. (a) and (e) thereof or either of the two. By maliciously and feloniously altering the
subject CCTs (sic), contrary to law and to the prejudice of ASB and Ampil, ATTY. ESPENESIN committed an
offense in connection with his official duties and he admitted having done so in conspiracy with his corespondents. x x x ATTY. ESPENESIN allowed himself to be persuaded, induced or influenced into committing
such violation or offense which is the substance of par. (a) of RA 3019;
20. In committing such unauthorized and unlawful alterations on the subject CCTs (sic), ATTY. ESPENESIN
caused undue injury to ASB and to AMPIL as an unsecured creditor, who is ultimately one of the beneficiaries
of said CCT from the ASSET POOL created by the SEC, and gave MICO unwarranted benefits, advantage or
preference in the discharge of his official duties as Register of Deeds of Pasig City. Such acts were admitted by
ATTY. ESPENESIN in his letter to ASB x x x. Such acts, taken together with his admission, indubitably show
ATTY. ESPENESINs manifest partiality, evident bad faith and/or, at the least, his gross inexcusable negligence
in doing the same;

21. ATTY. ESPENESIN is liable under Section 3 pars. (a) and/or (e) of RA 3019, as well as under Article 171
par. 6 of the RPC. ATTY. SERRANO, YVONNE S. YUCHENGCO and (sic) GEMMA O. CHENG are also
liable for violation of the said provisions of law in conspiracy with ATTY. ESPENESIN, the latter as a principal
via direct participation, ATTY. SERRANO, as principal by inducement and YUCHENGCO and CHENG, also
by inducement, who being responsible officers of MICO ultimately benefited from said unlawful act.26 and the
pith of the Resolution which carefully and meticulously dissected the presence of the first three definitive
elements of the crime of falsification under Article 171(6) of the Revised Penal Code:
The first three definitive elements of the crime, albeit present, are defeated by the absence of the fourth.
The respondents readily admitted that an alteration was indeed made on the CCTs in issue allegedly for the
purpose of correcting a mistake in the name of the registered owner of the condominium units involved. Said
alteration had obviously changed the tenor of the CCTs considering that ASB, the initially named owner, was
changed into MICO. The first and third elements are undeniably present.
Anent the second element, the respondents argued that the CCTs in issue were mere drafts and are not legally
considered "genuine documents" within the strict definition of the law. Albeit the contention is partially true, no
proof has been shown to prove that the CCTs issued in favor of ASB were mere drafts.
The CCTs of ASB are obviously complete. If we are to compare it with the appearance and contents of the
CCTs issued in favor of MICO, one will notice no definitive difference between the two except that one set was
named in favor of ASB and the other set, in favor of MICO. Nothing is shown that will clearly prove that the
former were mere drafts and the latter are the final copies. As far as the appearance of the CCTs of ASB is
concerned, all appear to be complete and genuine. Proof to the contrary must be shown to prove otherwise.
Delivery of the titles to the named owners is not a pre-requisite before all these CCTs can be legally categorized
as genuine documents. The fact that the same had already been signed by respondent Espenesin in his capacity
as Registrar of Deeds of Pasig City and the notations imprinted thereon appeared to have been entered on March
11, 2005 at 11:55 a.m. at the Registry Books of Pasig City, the CCTs in issue are bound to be treated as genuine
documents drafted and signed in the regular performance of duties of the officer whose signature appears
thereon.27
On the whole, the Ombudsmans discussion was straightforward and categorical, and ultimately established that
Espenesin, at the urging of Serrano, altered the CCTs issued in ASBs name resulting in these CCTs ostensibly
declaring MICO as registered owner of the subject units at The Malayan Tower.
Despite the admission by Espenesin that he had altered the CCTs and the Ombudsmans findings thereon, the
Ombudsman abruptly dismissed Ampils complaint-affidavit, resolving only one of the charges contained
therein with nary a link regarding the other charge of violation of Sections 3(a) and (e) of Republic Act No.
3019. Indeed, as found by the Ombudsman, the 4th element of the crime of Falsification of Public Documents is
lacking, as the actual ownership of the subject units at The Malayan Tower has yet to be resolved. Nonetheless,
this circumstance does not detract from, much less diminish, Ampils charge, and the evidence pointing to the
possible commission, of offenses under Sections 3(a) and (e) of the Anti-Graft and Corrupt Practices Act.
Sections 3(a) and (e) of Republic Act No. 3019 reads:

Section 3. Corrupt practices of public officers. In addition to acts or omissions of public officers already
penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby
declared to be unlawful:
(a) Persuading, inducing or influencing another public officer to perform an act constituting a violation of rules
and regulations duly promulgated by competent authority or an offense in connection with the official duties of
the latter, or allowing himself to be persuaded, induced, or influenced to commit such violation or offense.
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 elements of Section 3(a) of Republic Act No. 3019 are:
(1) the offender is a public officer;
(2) the offender persuades, induces, or influences another public officer to perform an act or the offender
allows himself to be persuaded, induced, or influenced to commit an act;
(3) the act performed by the other public officer or committed by the offender constitutes a violation of
rules and regulations duly promulgated by competent authority or an offense in connection with the
official duty of the latter. (Emphasis supplied).
Whereas, paragraph (e) of the same section lists the following elements:
(1) the offender is a public officer;
(2) the act was done in the discharge of the public officers official, administrative or judicial functions;
(3) the act was done through manifest partiality, evident bad faith, or gross inexcusable negligence; and
(4) the public officer caused any undue injury to any party, including the Government, or gave any
unwarranted benefits, advantage or preference.28
As Registrar of the Registry of Deeds of Pasig City, Espenesin is tasked, among others, to review deeds and
other documents for conformance with the legal requirements of registration.29 Section 10 of Presidential
Decree No. 1529, Amending and Codifying the Laws Relative to Registration of Property and for Other
Purposes provides:
Section 10. General functions of Registers of Deeds. The office of the Register of Deeds constitutes a public
repository of records of instruments affecting registered or unregistered lands and chattel mortgages in the
province or city wherein such office is situated.

It shall be the duty of the Register of Deeds to immediately register an instrument presented for registration
dealing with real or personal property which complies with all the requisites for registration. He shall see to it
that said instrument bears the proper documentary and science stamps and that the same are properly cancelled.
If the instrument is not registerable, he shall forthwith deny registration thereof and inform the presentor of such
denial in writing, stating the ground or reason therefore, and advising him of his right to appeal by consulta in
accordance with Section 117 of the Decree.
Most importantly, a Registrar of the Registry of Deeds is charged with knowledge of Presidential Decree No.
1529, specifically Sections 5730 and 108.31
In the instant case, the elements of the offenses under Sections 3(a) and (e) of Republic Act No. 3019,
juxtaposed against the functions of a Registrar of the Registry of Deeds establish a prima facie graft case against
Espenesin and Serrano only. Under Section 3(a) of Republic Act No. 3019, there is a prima facie case that
Espenesin, at the urging of Serrano, allowed himself to be persuaded to alter the CCTs originally issued in
ASBs name, against the procedure provided by law for the issuance of CCTs and registration of property. In
addition, under Section 3(e) of the same law, there is likewise a prima facie case that Espenesin, through gross
inexcusable negligence, by simply relying on the fact that all throughout the transaction to register the subject
units at The Malayan Tower he liaised with Serrano, gave MICO an unwarranted benefit, advantage or
preference in the registration of the subject units.
In Sison v. People of the Philippines, we expounded on Section 3(e) of Republic Act No. 3019:
The third element of Section 3 (e) of RA 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 RA 3019 is enough to convict.
Explaining what "partiality," "bad faith" and "gross negligence" mean, we held:
"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 willfully 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."
In the instant case, petitioner was grossly negligent in all the purchases that were made under his watch.
Petitioners admission that the canvass sheets sent out by de Jesus to the suppliers already contained his
signatures because he pre-signed these forms only proved his utter disregard of the consequences of his actions.
Petitioner also admitted that he knew the provisions of RA 7160 on personal canvass but he did not follow the
law because he was merely following the practice of his predecessors. This was an admission of a mindless
disregard for the law in a tradition of illegality. This is totally unacceptable, considering that as municipal
mayor, petitioner ought to implement the law to the letter. As local chief executive, he should have been the first
to follow the law and see to it that it was followed by his constituency. Sadly, however, he was the first to break
it.

Petitioner should have complied with the requirements laid down by RA 7160 on personal canvass, no matter
how strict they may have been. Dura lex sed lex. The law is difficult but it is the law. These requirements are
not empty words but were specifically crafted to ensure transparency in the acquisition of government supplies,
especially since no public bidding is involved in personal canvass. Truly, the requirement that the canvass and
awarding of supplies be made by a collegial body assures the general public that despotic, irregular or unlawful
transactions do not occur. It also guarantees that no personal preference is given to any supplier and that the
government is given the best possible price for its procurements.
The fourth element is likewise present. While it is true that the prosecution was not able to prove any undue
injury to the government as a result of the purchases, it should be noted that there are two ways by which
Section 3(e) of RA 3019 may be violatedthe first, by causing undue injury to any party, including the
government, or the second, by giving any private party any unwarranted benefit, advantage or preference.
Although neither mode constitutes a distinct offense, an accused may be charged under either mode or both. 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.
Aside from the allegation of undue injury to the government, petitioner was also charged with having given
unwarranted benefit, advantage or preference to private suppliers. Under the second mode, damage is not
required.
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.
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. Petitioner did just that. The
fact that he repeatedly failed to follow the requirements of RA 7160 on personal canvass proves that
unwarranted benefit, advantage or preference was given to the winning suppliers. These suppliers were awarded
the procurement contract without the benefit of a fair system in determining the best possible price for the
government. The private suppliers, which were all personally chosen by respondent, were able to profit from the
transactions without showing proof that their prices were the most beneficial to the government. For that,
petitioner must now face the consequences of his acts.32 (Emphasis supplied).
We stress that the Ombudsman did not find probable cause to indict respondents for falsification simply because
the Ombudsman could not categorically declare that the alteration made the CCT speak falsely as the ownership
of the subject units at The Malayan Tower had yet to be determined. However, its initial factual findings on the
administrative complaint categorically declared, thus:
x x x Espenesin justified his action by asseverating that since the CCTs were still under the possession and
control of the Register of Deeds and have not yet been distributed to the owners, amendments can still be made
thereon.
It is worthy to note that the CCTs of ASB, at the time when the amendment was made, were obviously
complete. From its face, we can infer that all have attained the character of a binding public document. The
signature of Espenesin is already affixed thereon, and on its face, it was explicitly declared that the titles have

already been entered in the Registration Book of the Register of Deeds of Pasig City on March 11, 2005 at
11:55 a.m. Allegations to the contrary must be convincingly and positively proven, otherwise, the presumption
holds that the CCTs issued in the name of ASB were regular and the contents thereon binding.
Stated in a different light, delivery of the titles to the named owners is not a pre-requisite before all these CCTs
can be legally categorized as genuine documents. The fact that the same had already been signed by x x x
Espenesin in his capacity as Register of Deeds of Pasig City and the notations imprinted thereon appeared to
have been entered on March 11, 2005 at 11:55 a.m. at the Registry Books of Pasig City, the CCTs in issue are
bound to be treated as genuine documents drafted and signed in the regular performance of duties of the officer
whose signature appears thereon. The law has made it so clear that it is the entry of the title in the Registration
Book that controls the discretion of the Register of Deeds to effect the necessary amendments and not the actual
delivery of the titles to the named owners.
This being the case, strict compliance with the mandates of Section 108 of P.D. 1529 is strictly called for. The
provision is clear that upon entry of a certificate of title (which definitely includes Condominium Certificate of
Title) attested to by the Register of Deeds, no amendment shall be effected thereon except upon lawful order of
the court.
In the instant case, it became obvious that after the CCTs of ASB were entered in the Registration Book on
March 11, 2005 at exactly 11:55 a.m., the notations thereon were thereafter amended by Espenesin when Atty.
Serrano purportedly informed him of the alleged error inscribed therein. The proper remedy that should have
been undertaken by Espenesin soon after he was informed of the error is to either initiate the appropriate
petition himself or to suggest to the parties to the MOA to file said petition in court for the amendment of the
CCTs. An amendment by way of a shortcut is not allowed after entry of the title in the Registration Book.
xxxx
If the Regional Trial Court sitting as a land registration court is not legally authorized to determine the
respective rights of the parties to the MOA when deciding on the petition for amendment and cancellation of
title, all the more with the Registrar of Deeds who is legally not empowered to make such determination and to
cause an automatic amendment of entries in the Registration Book on the basis of his unauthorized
determination.
Espenesins liability is grounded on the untimely and unauthorized amendment of the CCTs in issue. This is
regardless of whether the amendment had made the CCTs speak of either a lie or the truth. What defines his
error is his inability to comply with the proper procedure set by law.33 (Emphasis supplied).
We likewise stress that the determination of probable cause does not require certainty of guilt for a crime. As the
term itself implies, probable cause is concerned merely with probability and not absolute or even moral
certainty;34 it is merely based on opinion and reasonable belief.35 It is sufficient that based on the preliminary
investigation conducted, it is believed that the act or omission complained of constitutes the offense charged.
Well-settled in jurisprudence, as in Raro v. Sandiganbayan,36 that:
x x x Probable cause has been 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.37

Probable cause is a reasonable ground for presuming that a matter is or may be well-founded on such state of
facts in the prosecutor's mind as would lead a person of ordinary caution and prudence to believe or entertain
an honest or strong suspicion that it is so.38
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.39
A finding of probable cause does not require an inquiry into whether there is sufficient evidence to procure a
conviction. It is enough that it is believed that the act or omission complained of constitutes the offense charged.
Precisely, there is a trial for the reception of evidence of the prosecution in support of the charge.40
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.41 (Emphasis and italics supplied).
In this instance, Espenesin explains and categorically admits that he altered, nay corrected, 38 certificates of
title which we again reproduce for easy reference:
Sometime ago Serrano requested that condominium titles over specified units be issued in consonance with the
sharing in the joint venture MOA. Titles were correspondingly issued as per request, some in the name of MICO
and some in the name of ASB. Before its release to the parties, Atty. Serrano came back and requested that some
titles issued in the name of ASB be changed to MICO because allegedly there was error in the issuance.
Believing it was a simple error and on representation of the person we came to know and considered the
representative of both parties, we erased the name ASB Realty Corporation on those specified titles and placed
instead the name Malayan Insurance Company.
To our mind, the purpose was not to transfer ownership but merely to rectify an error committed in the issuance
of titles. And since they were well within our capacity to do, the titles not having been released yet to its owner,
we did what we believed was a simple act of rectifying a simple mistake.42
The letter of Espenesin itself underscores the existence of a prima facie case of gross negligence:
1. Serrano transacted the registration of the units in The Malayan Tower with the Office of the Register
of Deeds, Pasig City;
2. Serrano had previously presented a joint venture agreement, the MOA, which Espenesin followed in
the initial preparation and issuance of the titles;
3. Before some CCTs initially issued in ASBs name were released, Serrano returned and requested that
some titles issued in the name of ASB be changed to MICO because those titles were supposedly
erroneously registered to ASB; and

4. Just on Serranos utterance and declaration which Espenesin readily believed because he considered
Serrano the representative of both parties, and without any other documentation to base the amendment
on, Espenesin erased the name of ASB on those specified titles and replaced it with the name of MICO.
Espenesin, a Registrar of Deeds, relied on Serranos word alone that a supposed error has been committed. Even
if ownership of the units covered by the amended CCTs has not been categorically declared as ASBs given the
ongoing dispute between the parties, the MOA which Espenesin had previously referred to, allocates those units
to ASB:
Section 4. Distribution and Disposition of Units. (a) As a return of its capital investment in the Project, each
party shall be entitled to such portion of all the net saleable area of the Building that their respective
contributions to the Project bear to the actual construction cost. As of the date of the execution hereof, and on
the basis of the total costs incurred to date in relation to the Remaining Construction Costs (as defined in
Section 9(a) hereof), the parties shall respectively be entitled to the following (which entitlement shall be
conditioned on, and subject to, adjustments as provided in sub-paragraph (b) of Section 4 in the event that the
actual remaining cost of construction exceeds the Remaining Construction Cost):
(i) MICO the net saleable area particularly described in Schedule 2 hereof.
(ii) ASB the following net saleable area:
(A) the net saleable area which ASB had pre-sold for an aggregate purchase price of P640,085,267.30 as
set forth in Schedule 1 (including all paid and unpaid proceeds of said pre-sales);
(B) the net saleable area particularly described in Schedule 3 hereof which shall be delivered to ASB
upon completion of the Project; and,
(C) provided that the actual remaining construction costs do not exceed the Remaining Construction
Cost, the net saleable area particularly described in Schedule 4 hereof which shall be delivered to ASB
upon completion of the Project and determination of its actual construction costs. If the actual remaining
construction costs exceed the Remaining Construction Cost, sub-paragraph (b) of this Section 4 shall
apply.43
The MOA even recognizes and specifies that:
E. ASB has pre-sold a number of condominium units in the Project to certain buyers as set forth in Schedule 1
hereof, and in order to protect the interests of these buyers and preserve the interest in the Project, the goodwill
and business reputation of Malayan, Malayan has proposed to complete the Project, and ASB has accepted such
proposal, subject to the terms and conditions contained herein, including the contribution to the Project (a) by
Malayan of the Lot and (b) by ASB of its interest as buyer under the Contract to Sell.
xxxx
Section 3. Recognition of ASBs Investment. The parties confirm that as of the date hereof, ASB invested in the
Project an amount equivalent to its entitlement to the net saleable area of the Building under Section 4 below,
including ASBs interest as buyer under the Contract to Sell.44

One fact deserves emphasis. The ownership of the condominium units remains in dispute and, by necessary
inference, does not lie as well in MICO. By his baseless reliance on Serranos word and representation,
Espenesin allowed MICO to gain an unwarranted advantage and benefit in the titling of the 38 units in The
Malayan Tower.
That a prima facie case for gross negligence amounting to violation of Sections 3(a) and (e) of Republic Act No.
3019 exists is amply supported by the fact that Espenesin disregarded the well-established practice necessitating
submission of required documents for registration of property in the Philippines:
Documents Required for Registration of Real Property with the Register of Deeds:
1. Common Requirements
o Original copy of the Deed or Instrument (Original Copy + 2 duplicate copies)If the original copy
cannot be produced, the duplicate original or certified true copy shall be presented accompanied with a
sworn affidavit executed by the interested party why the original copy cannot be presented.
o Owners copy of the Certificate of Title or Co-owners copy if one has been issued. (Original Copy + 2
duplicate copies)
o Latest Tax Declaration if the property is an unregistered land. (Original Copy + 2 duplicate copies)
2. Specific Requirements
1. Deed of Sale/Transfer
xxxx
For Corporation
1. Secretarys Certificate or Board Resolution to Sell or Purchase (Original Copy + Duplicate
Copy)
2. Articles of Incorporation (for transferee corporation) (1 Certified Copy of the Original)
3. Certificate of the Securities and Exchange Commission (SEC) that the Articles of
Incorporation had been registered . (1 Certified Copy of the Original)
4. For Condominium or Condominium Certificate of Transfer, affidavit/certificate of the
Condominium Corporation that the sale/transfer does not violate the 60-40 rule.(Original Copy +
1 Duplicate Copy)
5. Subsequent transfer of CCT requires Certificate of the Condominium Management. (Original
Copy)
6. Sale by a Corporation Sole, court order is required.(Original copy of the Court Order)

Additional Requirements
xxxx
11. Condominium Projects
Master Deed (Original Copy + 1 Duplicate Copy)
Declaration of Restriction (Original Copy + 1 Duplicate Copy)
Diagrammatic Floor Plan (Original Copy + 1 Duplicate Copy)
If the Condominium Certificate of Title is issued for the first time in the name of the registered owner,
require the following:
o Certificate of Registration with the Housing and Land Use Regulatory Board (Original Copy +
1 Duplicate Copy)
o Development Permit (Original Copy + 1 Duplicate Copy)
o License to Sell (Original Copy + 1 Duplicate Copy)45
Espenesin, by his own explanation, relied on nothing more than Serrano, who he "came to know and considered
as representative of both parties," and Serranos interpretation of the MOA that Serrano had brought with him.
On the whole, there is sufficient ground to engender a well-founded belief that respondents Espenesin and
Serrano committed prohibited acts listed in Sections 3(a) and (e) of Republic Act No. 3019.
As regards Yuchengco and Cheng, apart from Ampils general assertions that the two, as officers of MICO,
benefited from the alteration of the CCTs, there is a dearth of evidence pointing to their collective responsibility
therefor. While the fact of alteration was admitted by respondents and was affirmed in the Ombudsmans
finding of fact, there is nothing that directly links Yuchengco and Cheng to the act.
We are aware that the calibration of evidence to assess whether a prima facie graft case exists against
respondents is a question of fact. We have consistently held that the Supreme Court is not a trier of facts, more
so in the consideration of the extraordinary writ of certiorari where neither questions of fact nor law are
entertained, but only questions of lack or excess of jurisdiction or grave abuse of discretion.46 In this case,
however, certiorari will lie, given that the Ombudsman made no finding at all on respondents possible liability
for violation of Sections 3(a) and (e) of Republic Act No. 3019.
We hasten to reiterate that we are only dealing herein with the preliminary investigation aspect of this case. We
do not adjudge respondents guilt or the lack thereof. The assertions of Espenesin and Serrano on the formers
good faith in effecting the alteration and the pending arbitration case before the Construction Industry
Arbitration Commission involving the correct division of MICOs and ASBs net saleable areas in The Malayan
Tower are matters of defense which they should raise during trial of the criminal case.

As regards the administrative liability of Espenesin, the basic principle in the law of public officers is the threefold liability rule, which states that the wrongful acts or omissions of a public officer, Espenesin in these cases,
may give rise to civil, criminal and administrative liability. An action for each can proceed independently of the
others.47
On this point, we find that the appellate court erred when it affirmed the Ombudsmans last ruling that
Espenesin is not administratively liable.
Misconduct is a transgression of some established and definite rule of action, more particularly, unlawful
behavior or gross negligence by a public officer.48
In Grave Misconduct, as distinguished from Simple Misconduct, the elements of corruption, clear intent to
violate the law or flagrant disregard of established rules, must be manifest49 and established by substantial
evidence. Grave Misconduct necessarily includes the lesser offense of Simple Misconduct.50 Thus, a person
charged with Grave Misconduct may be held liable for Simple Misconduct if the misconduct does not involve
any of the elements to qualify the misconduct as grave.51
In (G.R. No. 199115), the elements particular to Grave Misconduct are, by the Ombudsmans own finding,
present. Corruption, as an element of Grave Misconduct, consists in the act of an official or fiduciary person
who unlawfully and wrongfully uses his station or character to procure some benefit for himself or for another
person, contrary to duty and the rights of others.52 This has already been demonstrated as discussed above. And,
there is here a manifest disregard for established rules on land registration by a Register of Deeds himself. As he
himself admits in his letter, Espenesin erased the name of ASB on the specified CCTs because he believed that
Serranos request for the re-issuance thereof in MICOs name constituted simple error.
Section 108 of Presidential Decree No. 1529 provides:
Section 108. Amendment and alteration of certificates. No erasure, alteration, or amendment shall be made upon
the registration book after the entry of a certificate of title or of a memorandum thereon and the attestation of
the same be Register of Deeds, except by order of the proper Court of First Instance. A registered owner of other
person having an interest in registered property, or, in proper cases, the Register of Deeds with the approval of
the Commissioner of Land Registration, may apply by petition to the court upon the ground that the registered
interests of any description, whether vested, contingent, expectant or inchoate appearing on the certificate, have
terminated and ceased; or that new interest not appearing upon the certificate have arisen or been created; or
that an omission or error was made in entering a certificate or any memorandum thereon, or, on any duplicate
certificate; or that the same or any person on the certificate has been changed; or that the registered owner has
married, or, if registered as married, that the marriage has been terminated and no right or interests of heirs or
creditors will thereby be affected; or that a corporation which owned registered land and has been dissolved has
not convened the same within three years after its dissolution; or upon any other reasonable ground; and the
court may hear and determine the petition after notice to all parties in interest, and may order the entry or
cancellation of a new certificate, the entry or cancellation of a memorandum upon a certificate, or grant any
other relief upon such terms and conditions, requiring security or bond if necessary, as it may consider proper;
Provided, however, That this section shall not be construed to give the court authority to reopen the judgment or
decree of registration, and that nothing shall be done or ordered by the court which shall impair the title or other
interest of a purchaser holding a certificate for value and in good faith, or his heirs and assigns, without his or

their written consent. Where the owner's duplicate certificate is not presented, a similar petition may be filed as
provided in the preceding section.
The foregoing clearly speaks of a court order prior to any erasure, alteration or amendment upon a certificate of
title.
In reversing its prior ruling, the Ombudsman cavalierly dismisses the fact of Espenesin already signing the
CCTs issued in ASBs name as "only a part of the issuance process because the final step in the titling procedure
is indeed the release of the certificate of title."53 The Ombudsman further ruled:
Considering that prior to the release of titles, Espenesin merely rectified what was represented to this office as
error in the preparation of typing or the certificates, hence, it is wrong to subject him to an administrative
sanction. This is bolstered by the fact that, at the time of release (and perhaps even up to the present time), there
was no final determination yet from the land registration court as to who has a better right to the property in
question.54 (Emphasis supplied).
This statement of the Ombudsman is virtually a declaration of Espenesins misconduct. It highlights Espenesins
awareness and knowledge that ASB and MICO are two different and separate entities, albeit having entered into
a joint venture for the building of "The Malayan Tower."
As Registrar of Deeds, Espenesin was duty bound to inquire and ascertain the reason for Serranos new
instruction on those specific set of CCTs and not just heed Serranos bidding. He heads the Office of Register of
Deeds which is constituted by law as "a public repository of records of instruments affecting registered or
unregistered lands x x x in the province or city wherein such office is situated." He should not have so easily
taken Serranos word that the amendment Serrano sought was to correct simple and innocuous error. Espenesin
could have then easily asked, as he is obliged to, for a contract or an authenticated writing to ascertain which
units and parking slots were really allotted for ASB and MICO. His actions would then be based on what is
documented and not merely by a lame claim of bona fides mistake.
Moreover, Espenesin was previously presented a MOA, and consulted this same MOA, in the initial preparation
and issuance of the 38 CCTs in ASBs name. Certainly, a Registrar of Deeds who is required by law to be a
member of the legal profession,55 possesses common sense and prudence to ask for documents on which to base
his corrections. Reliance on the mere word of even the point person for the transaction, smacks of gross
negligence when all transactions with the Office of the Register of Deeds, involving as it does registration of
property, ought to be properly recorded and documented.
That the Office of the Register of Deeds requires documentation in the registration of property, whether as an
original or a subsequent registration, brooks no argument. Again, and it cannot be overlooked that, Espenesin
initially referred to a MOA albeit Serrano worked on the registration transaction for both ASB and MICO.
Subsequently, Serrano returns, bearing ostensible authority to transact even for ASB, and Espenesin fails to ask
for documentation for the correction Serrano sought to be made, and simply relies on Serranos word.
We are baffled by the Registrar of Deeds failure to require documentation which would serve as his basis for
the correction. The amendment sought by Serrano was not a mere clerical change of registered name; it was a
substantial one, changing ownership of 38 units in The Malayan Tower from one entity, ASB, to another, MICO.

Even just at Serranos initial request for correction of the CCTs, a red flag should have gone up for a Registrar
of Deeds.1wphi1
Espenesin splits hairs when he claims that it is "in the Registration Book where the prohibition to erase, alter, or
amend, without court order, applies." We disagree with Espenesin. Chapter IV on Certificate of Title of
Presidential Decree No. 1529,56 specifically Sections 40, 42 and 43 belie the claim of Espenesin:
Section 40. Entry of Original Certificate of Title. Upon receipt by the Register of Deeds of the original and
duplicate copies of the original certificate of title the same shall be entered in his record book and shall be
numbered, dated, signed and sealed by the Register of Deeds with the seal of his office. Said certificate of title
shall take effect upon the date of entry thereof. The Register of Deeds shall forthwith send notice by mail to the
registered owner that his owner's duplicate is ready for delivery to him upon payment of legal fees.
Section 42. Registration Books. The original copy of the original certificate of title shall be filed in the Registry
of Deeds. The same shall be bound in consecutive order together with similar certificates of title and shall
constitute the registration book for titled properties.
Section 43. Transfer Certificate of Title. The subsequent certificate of title that may be issued by the Register of
Deeds pursuant to any voluntary or involuntary instrument relating to the same land shall be in like form,
entitled "Transfer Certificate of Title", and likewise issued in duplicate. The certificate shall show the number of
the next previous certificate covering the same land and also the fact that it was originally registered, giving the
record number, the number of the original certificate of title, and the volume and page of the registration book
in which the latter is found.
Recording or entry of the titles, whether an original or a subsequent transfer certificate of title in the record, is
simultaneous with the signing by the Register of Deeds. The signature on the certificate by the Registrar of
Deeds is accompanied by the dating, numbering and sealing of the certificate. All these are part of a single
registration process. Where there has been a completed entry in the Record Book, as in this case where the
Ombudsman found that "the signature of Espenesin is already affixed on the CCTs, and on its face, it was
explicitly declared that the titles have already been entered in the Registration Book of the Register of Deeds of
Pasig City on March 11, 2005 at 11:55 a.m.," the Register of Deeds can no longer tamper with entries, specially
the very name of the titleholder. The law says that the certificate of title shall take effect upon the date of entry
thereof.
To further drive home the point, as Registrar of Deeds, Espenesin knew full well that "there is no final
determination yet from the land registration court as to who has a better right to the property in question."
Espenesins attempt to minimize the significance of a Registrar of Deeds signature on a CCT only aggravates
the lack of prudence in his action. The change in the titleholder in the CCTs from ASB to MICO was an official
documentation of a change of ownership. It definitely cannot be characterized as simple error.
Grave misconduct, of which Espenesin has been charged, consists in a public officers deliberate violation of a
rule of law or standard of behavior. It is regarded as grave when the elements of corruption, clear intent to
violate the law, or flagrant disregard of established rules are present.57 In particular, corruption as an element of
grave misconduct consists in the officials unlawful and wrongful use of his station or character to procure some
benefit for himself or for another person, contrary to duty and the rights of others.58

In sum, the actions of Espenesin clearly demonstrate a disregard of well-known legal rules.59 The penalty for
Grave Misconduct is dismissalfrom service with the accessory penalties of forfeiture of retirement benefits,
cancellation of eligibility, and perpetual disqualification from reemployment in the government service,
including government-owned or controlled corporation.60
WHEREFORE, the petition in G.R. No. 192685 is PARTIALLY GRANTED. The Resolution of the
Ombudsman dated 30 April 2008 in OMB-C-C-07-0444-J is REVERSED and SET ASIDE. The Ombudsman is
hereby directed to file the necessary Information for violation of Sections 3(a) and (e) of Republic Act No. 3019
against public respondent Policarpio L. Espenesin and private respondent Francis Serrano.
The petition in G.R. No. 199115 is GRANTED. The Decision of the Court of Appeals dated 28 September 2011
in CA-G.R. SP No. 113171 and the Order dated 13 July 2009 of the Ombudsman in OMB-C-A-07-0474-J are
REVERSED and SET ASIDE. Respondent Policarpio L. Espenesin is GUlLTY of Grave Misconduct and we,
thus, impose the penalty of DIMISSAL from service. However, due to his retirement from the service, we order
forfeiture of all his retirement pay and benefits.
SO ORDERED.
G.R. No. 200804

January 22, 2014

A.L. ANG NETWORK, INC., Petitioner,

vs.
EMMA MONDEJAR, accompanied by her husband, EFREN MONDEJAR, Respondent.
RESOLUTION
PERLAS-BERNABE, J.:
This is a direct recourse1 to the Court from the Decision2 dated November 23, 2011and Order3 dated February
16, 2012 of the Regional Trial Court of Bacolod City, Branch 45 (RTC) in RTC Case No. 11-13833 which
dismissed, on the ground of improper remedy, petitioner A.L. Ang Network, Inc.'s (petitioner) petition for
certiorari from the Decision4 dated June 10, 2011 of the Municipal Trial Court in Cities of Bacolod City, Branch
4 (MTCC) in Civil Case No. SCC-1436, a small claims case for sum of money against respondent Emma
Mondejar (respondent).
The Facts
On March 23, 2011, petitioner filed a complaint5 for sum of money under the Rule of Procedure for Small
Claims Cases6 before the MTCC, seeking to collect from respondent the amount of P23,111.71 which
represented her unpaid water bills for the period June 1, 2002 to September 30, 2005.7
Petitioner claimed that it was duly authorized to supply water to and collect payment therefor from the
homeowners of Regent Pearl Subdivision, one of whom is respondent who owns and occupies Lot 8, Block 3 of
said subdivision. From June 1, 2002 until September 30, 2005, respondent and her family consumed a total of
1,150 cubic meters (cu. m.) of water, which upon application of the agreed rate of P113.00 for every 10 cu. m.
of water, plus an additional charge of P11.60 for every additional cu. m. of water, amounted to P28,580.09.8

However, respondent only paid the amount of P5,468.38, thus, leaving a balance of P23,111.71 which was left
unpaid despite petitioners repeated demands.9
In defense, respondent contended that since April 1998 up to February 2003, she religiously paid petitioner the
agreed monthly flat rate of P75.00 for her water consumption. Notwithstanding their agreement that the same
would be adjusted only upon prior notice to the homeowners, petitioner unilaterally charged her unreasonable
and excessive adjustments (at the average of 40 cu. m. of water per month or 1.3 cu. m. of water a day) far
above the average daily water consumption for a household of only 3 persons. She also questioned the propriety
and/or basis of the aforesaid P23,111.71 claim.10
In the interim, petitioner disconnected respondents water line for not paying the adjusted water charges since
March 2003 up to August 2005.11
The MTCC Ruling
On June 10, 2011, the MTCC rendered a Decision12 holding that since petitioner was issued a Certificate of
Public Convenience (CPC)13 by the National Water Resources Board (NWRB) only on August 7, 2003, then, it
can only charge respondent the agreed flat rate of P75.00 per month prior thereto or the sum of P1,050.00 for
the period June 1, 2002 to August 7, 2003. Thus, given that respondent had made total payments equivalent to
P1,685.99 for the same period, she should be considered to have fully paid petitioner.14
The MTCC disregarded petitioners reliance on the Housing and Land Use Regulatory Boards (HLURB)
Decision15 dated August 17, 2000 in HLURB Case No. REM C6-00-001 entitled Nollie B. Apura, et al. v.
Dona Carmen I Subdivision, et al., as source of its authority to impose new water consumption rates for water
consumed from June 1, 2002 to August 7, 2003 in the absence of proof (a) that petitioner complied with the
directive to inform the HLURB of the result of its consultation with the concerned homeowners as regards the
rates to be charged, and (b) that the HLURB approved of the same.16
Moreover, the MTCC noted that petitioner failed to submit evidence showing (a) the exact date when it actually
began imposing the NWRB approved rates; and (b) that the parties had a formal agreement containing the terms
and conditions thereof, without which it cannot establish with certainty respondents obligation.17 Accordingly,
it ruled that the earlier agreed rate of P75.00 per month should still be the basis for respondents water
consumption charges for the period August 8, 2003 to September 30, 2005.18 Based on petitioners
computation, respondent had only paid P300.00 of her P1,500.00 obligation for said period. Thus, it ordered
respondent to pay petitioner the balance thereof, equivalent to P1,200.00 with legal interest at the rate of 6% per
annum from date of receipt of the extrajudicial demand on October 14, 2010 until fully paid.19
Aggrieved, petitioner filed a petition for certiorari20 under Rule 65 of the Rules of Court before the RTC,
ascribing grave abuse of discretion on the part of the MTCC in finding that it (petitioner) failed to establish with
certainty respondents obligation, and in not ordering the latter to pay the full amount sought to be collected.
The RTC Ruling
On November 23, 2011, the RTC issued a Decision21 dismissing the petition for certiorari, finding that the said
petition was only filed to circumvent the non-appealable nature of small claims cases as provided under Section
2322 of the Rule of Procedure on Small Claims Cases. To this end, the RTC ruled that it cannot supplant the

decision of the MTCC with another decision directing respondent to pay petitioner a bigger sum than that which
has been awarded.
Petitioner moved for reconsideration23 but was denied in an Order24 dated February 16, 2012, hence, the
instant petition.
The Issue Before the Court
The sole issue in this case is whether or not the RTC erred in dismissing petitioners recourse under Rule 65 of
the Rules of Court assailing the propriety of the MTCC Decision in the subject small claims case.
The Courts Ruling
The petition is meritorious.
Section 23 of the Rule of Procedure for Small Claims Cases states that:
SEC. 23. Decision. After the hearing, the court shall render its decision on the same day, based on the facts
established by the evidence (Form 13-SCC). The decision shall immediately be entered by the Clerk of Court in
the court docket for civil cases and a copy thereof forthwith served on the parties.
The decision shall be final and unappealable.
Considering the final nature of a small claims case decision under the above-stated rule, the remedy of appeal is
not allowed, and the prevailing party may, thus, immediately move for its execution.25 Nevertheless, the
proscription on appeals in small claims cases, similar to other proceedings where appeal is not an available
remedy,26 does not preclude the aggrieved party from filing a petition for certiorari under Rule 65 of the Rules
of Court. This general rule has been enunciated in the case of Okada v. Security Pacific Assurance
Corporation,27 wherein it was held that:
In a long line of cases, the Court has consistently ruled that "the extraordinary writ of certiorari is always
available where there is no appeal or any other plain, speedy and adequate remedy in the ordinary course of
law." In Jaca v. Davao Lumber Co., the Court ruled:
x x x Although Section 1, Rule 65 of the Rules of Court provides that the special civil action of certiorari may
only be invoked when "there is no appeal, nor any plain, speedy and adequate remedy in the course of law," this
rule is not without exception. The availability of the ordinary course of appeal does not constitute sufficient
ground to prevent a party from making use of the extraordinary remedy of certiorari where appeal is not an
adequate remedy or equally beneficial, speedy and sufficient. It is the inadequacy not the mere absence of
all other legal remedies and the danger of failure of justice without the writ that usually determines the propriety
of certiorari.
This ruling was reiterated in Conti v. Court of Appeals:
Truly, an essential requisite for the availability of the extraordinary remedies under the Rules is an absence of an
appeal nor any "plain, speedy and adequate remedy" in the ordinary course of law, one which has been so
defined as a "remedy which (would) equally (be) beneficial, speedy and sufficient not merely a remedy which at

some time in the future will bring about a revival of the judgment x x x complained of in the certiorari
proceeding, but a remedy which will promptly relieve the petitioner from the injurious effects of that judgment
and the acts of the inferior court or tribunal" concerned. x x x (Emphasis supplied)
In this relation, it may not be amiss to placate the RTCs apprehension that respondents recourse before it (was
only filed to circumvent the non-appealable nature of [small claims cases], because it asks [the court] to
supplant the decision of the lower [c]ourt with another decision directing the private respondent to pay the
petitioner a bigger sum than what has been awarded."28 Verily, a petition for certiorari, unlike an appeal, is an
original action29 designed to correct only errors of jurisdiction and not of judgment. Owing to its nature, it is
therefore incumbent upon petitioner to establish that jurisdictional errors tainted the MTCC Decision. The RTC,
in turn, could either grant or dismiss the petition based on an evaluation of whether or not the MTCC gravely
abused its discretion by capriciously, whimsically, or arbitrarily disregarding evidence that is material to the
controversy.30
In view of the foregoing, the Court thus finds that petitioner correctly availed of the remedy of certiorari to
assail the propriety of the MTCC Decision in the subject small claims case, contrary to the RTCs ruling.
Likewise, the Court finds that petitioner filed the said petition before the proper forum (i.e., the RTC).1wphi1
To be sure, the Court, the Court of Appeals and the Regional Trial Courts have concurrent jurisdiction to issue a
writ of certiorari.31 Such concurrence of jurisdiction, however, does not give a party unbridled freedom to
choose the venue of his action lest he ran afoul of the doctrine of hierarchy of courts. Instead, a becoming
regard for judicial hierarchy dictates that petitions for the issuance of writs of certiorari against first level courts
should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals, before
resort may be had before the Court.32 This procedure is also in consonance with Section 4, Rule 65 of the Rules
of Court.33
Hence, considering that small claims cases are exclusively within the jurisdiction of the Metropolitan Trial
Courts, Municipal Trial Courts in Cities, Municipal Trial Courts, and Municipal Circuit Trial Courts,34
certiorari petitions assailing its dispositions should be filed before their corresponding Regional Trial Courts.
This petitioner complied with when it instituted its petition for certiorari before the RTC which, as previously
mentioned, has jurisdiction over the same. In fine, the RTC erred in dismissing the said petition on the ground
that it was an improper remedy, and, as such, RTC Case No. 11-13833 must be reinstated and remanded thereto
for its proper disposition.
WHEREFORE, the petition is GRANTED. The Decision dated November 23, 2011 and Resolution dated
February 16, 2012 of the Regional Trial Court of Bacolod City, Branch 45 are REVERSED and SET ASIDE.
RTC Case No. 11-13833 is hereby REINSTATED and the court a quo is ordered to resolve the same with
dispatch.
SO ORDERED.
G.R. No. 190566, December 11, 2013
MARK JEROME S. MAGLALANG, Petitioners, v.PHILIPPINE AMUSEMENT AND
GAMINGCORPORATION (PAGCOR), AS REPRESENTED BY ITS INCUMBENTCHAIRMAN
EFRAIM GENUINO, Respondent.

DECISION
VILLARAMA, JR., J.:

Before this Court is a petition1 for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, seeking the reversal of the Resolution2 dated September 30, 2009 issued by the Court of Appeals
(CA) in CA-G.R. SP No. 110048, which outrightly dismissed the petition for certiorari filed by herein petitioner
Mark Jerome S. Maglalang (petitioner). Also assailed is the appellate courts Resolution3 dated November 26,
2009 which denied petitioners motion for reconsideration.
The facts follow.
Petitioner was a teller at the Casino Filipino, Angeles City Branch, Angeles City, which was operated by
respondent Philippine Amusement and Gaming Corporation (PAGCOR), a government-owned or controlled
corporation existing by virtue of Presidential Decree (P.D.) No. 1869.4
Petitioner alleged that in the afternoon of December 13, 2008, while he was performing his functions as teller, a
lady customer identified later as one Cecilia Nakasato5 (Cecilia) approached him in his booth and handed to him
an undetermined amount of cash consisting of mixed P1,000.00 and P500.00 bills. There were 45 P1,000.00 and
ten P500.00 bills for the total amount of P50,000.00. Following casino procedure, petitioner laid the bills on the
spreading board. However, he erroneously spread the bills into only four clusters instead of five clusters worth
P10,000.00 per cluster. He then placed markers for P10,000.00 each cluster of cash and declared the total
amount of P40,000.00 to Cecilia. Perplexed, Cecilia asked petitioner why the latter only dished out P40,000.00.
She then pointed to the first cluster of bills and requested petitioner to check the first cluster which she observed
to be thicker than the others. Petitioner performed a recount and found that the said cluster contained20 pieces
of P1,000.00 bills. Petitioner apologized to Cecilia and rectified the error by declaring the full and correct
amount handed to him by the latter. Petitioner, however, averred that Cecilia accused him of trying to
shortchange her and that petitioner tried to deliberately fool her of her money. Petitioner tried to explain, but
Cecilia allegedly continued to berate and curse him. To ease the tension, petitioner was asked to take a break.
After ten minutes, petitioner returned to his booth. However, Cecilia allegedly showed up and continued to
berate petitioner. As a result, the two of them were invited to the casinos Internal Security Office in order to air
their respective sides. Thereafter, petitioner was required to file an Incident Report which he submitted on the
same day of the incident.6
On January 8, 2009, petitioner received a Memorandum7issued by the casinos Branch Manager, Alexander
Ozaeta, informing him that he was being charged with Discourtesy towards a casino customer and directing him
to explain within 72 hours upon receipt of the memorandum why he should not be sanctioned or dismissed.
Incompliance therewith, petitioner submitted a letter-explanation8 dated January 10, 2009.
On March 31, 2009, petitioner received another Memorandum9dated March 19, 2009, stating that the Board of
Directors of PAGCOR found him guilty of Discourtesy towards a casino customer and imposed on him a 30day suspension for this first offense. Aggrieved, on April 2, 2009, petitioner filed a Motion for Reconsideration10
seeking a reversal of the boards decision and further prayed in the alternative that if he is indeed found guilty as
charged, the penalty be only a reprimand as it is the appropriate penalty. During the pendency of said motion,
petitioner also filed a Motion for Production11 dated April 20, 2009, praying that he be furnished with copies of
documents relative to the case including the recommendation of the investigating committee and the
Decision/Resolution of the Board supposedly containing the latters factual findings. In a letter-reply12 dated
June 2, 2009, one Atty. Carlos R. Bautista, Jr. who did not indicate his authority therein to represent PAGCOR,
denied the said motion. Petitioner received said letter-reply on June 17, 2009.

Subsequently, on June 18, 2009, PAGCOR issued a Memorandum13 dated June 18, 2009 practically reiterating
the contents of its March 19, 2009 Memorandum. Attached therewith is another Memorandum14 dated June 8,
2009 issued by PAGCORs Assistant Vice President for Human Resource and Development, Atty. Lizette F.
Mortel, informing petitioner that the Board of Directors in its meeting on May 13, 2009 resolved to deny his
appeal for reconsideration for lack of merit. Petitioner received said memoranda on the same date of June 18,
2009.
On August 17, 2009, petitioner filed a petition15 for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure, as amended,before the CA,averring that there is no evidence, much less factual and legal basis to
support the finding of guilt against him. Moreover, petitioner ascribed grave abuse of discretion amounting to
lack or excess of jurisdiction to the acts of PAGCOR in adjudging him guilty of the charge, in failing to observe
the proper procedure in the rendition of its decision and in imposing the harsh penalty of a 30-day suspension.
Justifying his recourse to the CA, petitioner explained that he did not appeal to the Civil Service Commission
(CSC) because the penalty imposed on him was only a 30-day suspension which is not within the CSCs
appellate jurisdiction. He also claimed that discourtesy in the performance of official duties is classified as a
light offense which is punishable only by reprimand.
In its assailed Resolution16 dated September 30, 2009, the CA outrightly dismissed the petition for certiorari for
being premature as petitioner failed to exhaust administrative remedies before seeking recourse from the
CA.Invoking Section 2(1), Article IX-B of the 1987 Constitution,17 the CA held that the CSC has jurisdiction
over issues involving the employer-employee relationship in all branches, subdivisions, instrumentalities and
agencies of the Government, including government-owned or controlled corporations with original charters
such as PAGCOR. Petitioner filed his Motion for Reconsideration18 which the CA denied in the assailed
Resolution19 dated November 26, 2009. In denying the said motion, the CA relied on this Courts ruling in Duty
Free Philippines v. Mojica20 citing Philippine Amusement and Gaming Corp. v. CA,21 where this Court held as
follows:
It is now settled that, conformably to Article IX-B, Section 2(1), [of the 1987 Constitution] government-owned
or controlled corporations shall be considered part of the Civil Service only if they have original charters, as
distinguished from those created under general law.
PAGCOR belongs to the Civil Service because it was created directly by PD 1869 on July 11, 1983.
Consequently, controversies concerning the relations of the employee with the management of PAGCOR should
come under the jurisdiction of the Merit System Protection Board and the Civil Service Commission,
conformably to the Administrative Code of 1987.
Section 16(2) of the said Code vest[s] in the Merit System Protection Board the power inter alia to:
a) Hear and decide on appeal administrative cases involving officials and employees of the Civil Service. Its
decision shall be final except those involving dismissal or separation from the service which may be appealed to
the Commission.
Hence, this petitionwhere petitioner argues that the CA committed grave and substantial error of judgment
1. IN OUTRIGHTLY DISMISSING THE PETITION FOR CERTIORARI FILED BY PETITIONER AND
IN DENYING THE LATTERS MOTION FOR RECONSIDERATION[;]
2. IN RULING THAT THE CIVIL SERVICE COMMISSION HAS APPELLATE JURISDICTION OVER
THE SUSPENSION OF THE PETITIONER DESPITE THE FACT THAT THE PENALTY
INVOLVED IS NOT MORE THAN THIRTY (30) DAYS[;]
3. IN RESOLVING THE PETITION FOR CERTIORARI FILED BY PETITIONER IN A MANNER
WHICH IS UTTERLY CONTRARY TO LAW AND JURISPRUDENCE[;]

4. IN UNJUSTIFIABLY REFUSING TO RENDER A DECISION AS TO THE PROPRIETY OR

VALIDITY OF THE SUSPENSION OF THE PETITIONER BY THE RESPONDENT[;]
5. IN UNDULY REFUSING TO RENDER A DECISION DECLARING THAT THE ASSAILED
DECISIONS/RESOLUTIONS OF THE RESPONDENT ARE NOT SUPPORTED BY THE
EVIDENCE ON RECORD[; AND]
6. IN UNJUSTIFIABLY REFUSING TO RENDER A DECISION DECLARING THAT THE ASSAILED
DECISIONS/RESOLUTIONS OF RESPONDENT WERE ISSUED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION.22
Petitioner claims that the CA clearly overlooked the applicable laws and jurisprudence that provide that when
the penalty involved in an administrative case is suspension for not more than 30 days, the CSC has no appellate
jurisdiction over the said administrative case. As authority, petitioner invokes our ruling in Geronga v. Hon.
Varela23 which cited Section 47,24 Chapter 1, Subtitle A, Title I, Book V of Executive Order (E.O.) No. 292
otherwise known as The Administrative Code of 1987. Said Section 47 provides that the CSC may entertain
appeals only, among others, from a penalty of suspension of more than 30 days. Petitioner asserts that his case,
involving a 30-day suspension penalty, is not appealable to the CSC. Thus, he submits that his case was
properly brought before the CA via a petition for certiorari.25
On the other hand, PAGCOR alleges that petitioner intentionally omitted relevant matters in his statement of
facts. PAGCOR essentially claims that petitioner refused to apologize to Cecilia; that he treated Cecilias
complaint with arrogance; and that before taking the aforementioned 10-minute break, petitioner slammed the
cash to the counter window in giving it back to the customer. PAGCOR argues that the instant petition raises
questions of fact which are not reviewable in a petition for review on certiorari. PAGCOR maintains that the
CAs ruling was in accordance with law and jurisprudence. Moreover, PAGCOR counters that petitioners
remedy of appeal is limited as Section 37 of the Revised Uniform Rules on Administrative Cases in the Civil
Service provides that a decision rendered by heads of agencies whereby a penalty of suspension for not more
than 30 days is imposed shall be final and executory. PAGCOR opines that such intent of limiting appeals over
such minor offenses is elucidated in the Concurring Opinion of former Chief Justice Reynato S. Puno in CSC v.
Dacoycoy26and based on the basic premise that appeal is merely a statutory privilege. Lastly, PAGCOR submits
that the 30-day suspension meted on petitioner is justified under its own Code of Discipline.27
Prescinding from the foregoing, the sole question for resolution is: Was the CA correct in outrightly dismissing
the petition for certiorari filed before it on the ground of non-exhaustion of administrative remedies?
We resolve the question in the negative.
Our ruling in Public Hearing Committee of the Laguna Lake Development Authority v. SM Prime Holdings,
Inc.28 on the doctrine of exhaustion of administrative remedies is instructive, to wit:
Under the doctrine of exhaustion of administrative remedies, before a party is allowed to seek the intervention
of the court, he or she should have availed himself or herself of all the means of administrative processes
afforded him or her. Hence, if resort to a remedy within the administrative machinery can still be made by
giving the administrative officer concerned every opportunity to decide on a matter that comes within his or her
jurisdiction, then such remedy should be exhausted first before the courts judicial power can be sought. The
premature invocation of the intervention of the court is fatal to ones cause of action. The doctrine of exhaustion
of administrative remedies is based on practical and legal reasons. The availment of administrative remedy
entails lesser expenses and provides for a speedier disposition of controversies. Furthermore, the courts of
justice, for reasons of comity and convenience, will shy away from a dispute until the system of administrative
redress has been completed and complied with, so as to give the administrative agency concerned every
opportunity to correct its error and dispose of the case.

However, the doctrine of exhaustion of administrative remedies is not absolute as it admits of the following
exceptions:
(1) when there is a violation of due process; (2) when the issue involved is purely a legal question; (3) when the
administrative action is patently illegal amounting to lack or excess of jurisdiction; (4) when there is estoppel on
the part of the administrative agency concerned; (5) when there is irreparable injury; (6) when the respondent is
a department secretary whose acts as an alter ego of the President bears the implied and assumed approval of
the latter; (7) when to require exhaustion of administrative remedies would be unreasonable; (8) when it would
amount to a nullification of a claim; (9) when the subject matter is a private land in land case proceedings; (10)
when the rule does not provide a plain, speedy and adequate remedy, and (11) when there are circumstances
indicating the urgency of judicial intervention, and unreasonable delay would greatly prejudice the complainant;
(12) where no administrative review is provided by law; (13) where the rule of qualified political agency
applies and (14) where the issue of non-exhaustion of administrative remedies has been rendered moot.29
The case before us falls squarely under exception number 12 since the law per se provides no administrative
review for administrative cases whereby an employee like petitioner is covered by Civil Service law, rules and
regulations and penalized with a suspension for not more than 30 days.
Section 37 (a) and (b) of P.D. No. 807, otherwise known as the Civil Service Decree of the Philippines, provides
for the unavailability of any appeal:
Section 37. Disciplinary Jurisdiction.
(a) The Commission shall decide upon appeal all administrative disciplinary cases involving the
imposition of a penalty of suspension for more than thirty days, or fine in an amount exceeding thirty days
salary, demotion in rank or salary or transfer, removal or dismissal from Office. A complaint may be filed
directly with the Commission by a private citizen against a government official or employee in which case it
may hear and decide the case or it may deputize any department or agency or official or group of officials to
conduct the investigation. The results of the investigation shall be submitted to the Commission with
recommendation as to the penalty to be imposed or other action to be taken.
(b) The heads of departments, agencies and instrumentalities, provinces, cities and municipalities shall
have jurisdiction to investigate and decide matters involving disciplinary action against officers and
employees under their jurisdiction. Their decisions shall be final in case the penalty imposed is suspension
for not more than thirty days or fine in an amount not exceeding thirty days salary. In case the decision
rendered by a bureau or office head is appealable to the Commission, the same may be initially appealed to
the department and finally to the Commission and pending appeal, the same shall be executory except when the
penalty is removal, in which case the same shall be executory only after confirmation by the department head.
(Emphasis supplied.)
Similar provisions are reiterated in the aforequoted Section 4730of E.O. No. 292 essentially providing that cases
of this sort are not appealable to the CSC.
Correlatively, we are not unaware of the Concurring Opinion of then Chief Justice Puno in CSC v. Dacoycoy,31
where he opined, to wit:
In truth, the doctrine barring appeal is not categorically sanctioned by the Civil Service Law. For what the law
declares as final are decisions of heads of agencies involving suspension for not more than thirty (30) days or
fine in an amount not exceeding thirty (30) days salary. But there is a clear policy reason for declaring these
decisions final. These decisions involve minor offenses. They are numerous for they are the usual offenses
committed by government officials and employees. To allow their multiple level appeal will doubtless
overburden the quasi-judicial machinery of our administrative system and defeat the expectation of fast and
efficient action from these administrative agencies. Nepotism, however, is not a petty offense. Its deleterious
effect on government cannot be over-emphasized. And it is a stubborn evil. The objective should be to eliminate
nepotic acts, hence, erroneous decisions allowing nepotism cannot be given immunity from review, especially
judicial review. It is thus non sequitur to contend that since some decisions exonerating public officials from

minor offenses can not be appealed, ergo, even a decision acquitting a government official from a major offense
like nepotism cannot also be appealed.
Nevertheless, decisions of administrative agencies which are declared final and unappealable by law are still
subject to judicial review. In Republic of the Phils. v. Francisco,32 we held:
Since the decision of the Ombudsman suspending respondents for one (1) month is final and unappealable,
it follows that the CA had no appellate jurisdiction to review, rectify or reverse the same. The Ombudsman was
not estopped from asserting in this Court that the CA had no appellate jurisdiction to review and reverse the
decision of the Ombudsman via petition for review under Rule 43 of the Rules of Court. This is not to say that
decisions of the Ombudsman cannot be questioned. Decisions of administrative or quasi-administrative
agencies which are declared by law final and unappealable are subject to judicial review if they fail the
test of arbitrariness, or upon proof of gross abuse of discretion, fraud or error of law. When such
administrative or quasi-judicial bodies grossly misappreciate evidence of such nature as to compel a contrary
conclusion, the Court will not hesitate to reverse the factual findings. Thus, the decision of the Ombudsman
may be reviewed, modified or reversed via petition for certiorari under Rule 65 of the Rules of Court, on a
finding that it had no jurisdiction over the complaint, or of grave abuse of discretion amounting to excess
or lack of jurisdiction.
It bears stressing that the judicial recourse petitioner availed of in this case before the CA is a special civil
action for certioraria scribing grave abuse of discretion, amounting to lack or excess of jurisdiction on the part
of PAGCOR, not an appeal. Suffice it to state that an appeal and a special civil action such as certiorari under
Rule 65 are entirely distinct and separate from each other. One cannot file petition for certiorari under Rule 65
of the Rules where appeal is available, even if the ground availed of is grave abuse of discretion. A special civil
action for certiorari under Rule 65 lies only when there is no appeal, or plain, speedy and adequate remedy in
the ordinary course of law. Certiorari cannot be allowed when a party to a case fails to appeal a judgment
despite the availability of that remedy, as the same should not be a substitute for the lost remedy of appeal. The
remedies of appeal and certiorari are mutually exclusive and not alternative or successive.33
In sum, there being no appeal or any plain, speedy, and adequate remedy in the ordinary course of law in view
of petitioners allegation that PAGCOR has acted without or in excess of jurisdiction, or with grave abuse of
discretion amounting to lack or excess of jurisdiction, the CAs outright dismissal of the petition for certiorarion
the basis of non-exhaustion of administrative remedies is bereft of any legal standing and should therefore be
set aside.
Finally, as a rule, a petition for certiorari under Rule 65 is valid only when the question involved is an error of
jurisdiction, or when there is grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
the court or tribunals exercising quasi-judicial functions. Hence, courts exercising certiorari jurisdiction should
refrain from reviewing factual assessments of the respondent court or agency. Occasionally, however, they are
constrained to wade into factual matters when the evidence on record does not support those factual findings; or
when too much is concluded, inferred or deduced from the bare or incomplete facts appearing on record.34
Considering the circumstances and since this Court is not a trier of facts,35 remand of this case to the CA for its
judicious resolution is in order.
WHEREFORE, the petition is PARTLY GRANTED. The Resolutions dated September 30, 2009 and
November 26, 2009 of the Court of Appeals in CA-G.R. SP No. 110048 are hereby REVERSED and SET
ASIDE. The instant case is REMANDED to the Court of Appeals for further proceedings.
No pronouncement as to costs.chanRoblesvirtualLawlibrary
SO ORDERED.
G.R. No. 208290

December 11, 2013

PEOPLE OF THE PHILIPPINES, Petitioner,

vs.
THE HONORABLE JUANITO C. CASTANEDA, JR., HONORABLE CAESAR A. CASANOVA,
HONORABLE CIELITO N. MINDARO-GRULLA, AS ASSOCIATE JUSTICES OF THE SPECIAL
SECOND DIVISION, COURT OF TAX APPEALS; and MYRNA M. GARCIA AND CUSTODIO
MENDOZA VESTIDAS, JR., Respondents.
RESOLUTION
PER CURIAM:
This is a petition for certiorari under Rule 65 of the Rules of Court seeking to review the March 26, 20131 and
May 15, 20132 Resolutions of the Court of Tax Appeals (CTA) in CTA Crim. Case No. 0-285, ordering the
dismissal of the case against the private respondents for violation of Section 36023 in relation to Sections 2503
and 2530 (f) (i) and 1, (3) (4) and (5) of the Tariff and Customs Codeof the Philippines, as amended, on the
ground of insufficiency of evidence.
The antecedentsas culled from the records:
Private respondents Myrna M. Garcia (Garcia) and Custodio Mendoza Vestidas, Jr.(VestidasJr.)were charged
before the CTA under an Information which reads:
That on or about November 5, 2011, or prior or subsequent thereto, in the City of Manila, Philippines, and
within the jurisdiction of this Honorable Court, the above-named accused Myrna M. Garcia and Custodio
Mendoza Vestidas, Jr. as owner/proprietress and broker of Plinth Enterprise respectively, conspiring and
confederating with each other, with intent to defraud the government, did then and there willfully, unlawfully
and fraudulently import into the Port of Manila, 858 cartons of 17,160 pieces of Anti-Virus Software Kaspersky
Internet Security Premium 2012, subject to customs duties,by misdeclaration under Import Entry No. C-181011
and Bill of Lading No. PFCMAN1715, filed with the Bureau of Customs (BOC),covering One Forty Footer
(1x40) container van shipment bearing No. KKFU7195683 which was falsely declared to contain 40
pallets/1,690 cartons of CD kit cleaner and plastic CD case, said imported items having customs duties
amounting to Three Million Three Hundred Forty One Thousand Two Hundred Forty Five Pesos (Php
3,341,245) of which only the amount of One Hundred Thousand Three Hundred Sixty Two Pesos (Php100,362)
was paid, in violation of the above-captioned law, and to the prejudice and damage of the Government in the
amount of Three Million Two Hundred Forty Thousand Eight Hundred Eighty Three Pesos (Php3,240,883).4
In a hearing held on August 1, 2012, Garcia and VestidasJr.pleaded "Not Guilty" to the aforementioned charge.
Thereafter, a preliminary conference was held on September 5, 2012 followed by thepre-trial on September 13,
2012. Both the prosecution and the defense agreed to adopt the joint stipulations of facts and issues entered in
the course of the preliminary conference.
Thereafter, trial ensued.
The prosecution presented a number of witnesses whoessentially observed5 the physical examination of
Container Van No. KKFU 7195638 conducted6 by the Bureau of Customs (BOC) and explained7 the process of

electronic filing under the Electronic to Mobile (E2M) Customs Systems of the BOC and the alleged
misdeclared goods therein.
Subsequent to the presentation of witnesses, the prosecution filed its Formal Offer of Evidence on December
10, 2012.
On January 15, 2013, Garcia and Vestidas, Jr. filed their Omnibus Motion to File Demurrer to Evidence with
Leave of Court to Cancel Hearing Scheduled on January 21, 2013,whichwas grantedby the CTA. Thereafter,
they filed theDemurrer to Evidence, dated January 13, 2012, claimingthat the prosecution failed to prove their
guilt beyond reasonable doubt for the following reasons:
a)The pieces of documentary evidence submitted by the prosecution were inadmissible incourt;
b)The object evidence consisting of the allegedly misdeclared goods were not presented as evidence; and
c)None of the witnesses for the prosecution made a positive identification of the two accused as the ones
responsible for the supposed misdeclaration.
Despite opposition, the CTA dismissed the caseagainst Garcia and Vestidas Jr.in its March 26, 2013 Resolution,
for failure of the prosecution to establish theirguilt beyond reasonable doubt.
According to the CTA, "no proof whatsoever was presented by the prosecution showing that the certified true
copies of the public documents offered in evidence against both accused were in fact issued by thelegal
custodians."8 It cited Section 26, Rule 132 of the Revised Rules of Court, whichprovidesthat"when the original
of a document is a public record, it should not generally be removed from the office or place in which it is
kept."9 As stated in Section 7, Rule 130,10 its contents may be proven using secondary evidence and such
evidence may pertain to the certified true copy of the original document issued by the public officer in custody
thereof.Hence, the CTA wrotethat the certified true copiesof the public documents offered in evidence should
have been presented in court.
Anent its offer of private documents,11 the prosecution likewise failed to comply with Section 27, Rule 132 of
the Rules of Court, which reads, "[a]n authorized public record of a private document may be proved by the
original record, or by a copy thereof, attested by the legal custodian of the record, with an appropriate certificate
that such officer has the custody." Considering that the private documents were submitted and filed with the
BOC, the same became part of public records. Again, the records show that the prosecution failed to present the
certified true copies of thedocuments.
The CTA noted that,in its Opposition to the Demurrer,the prosecution even admitted that none of their witnesses
ever positively identified the accused in open court and that the alleged misdeclared goods were not
competently and properly identified in court by any of the prosecution witnesses.
The prosecution filed its motion for reconsideration, but it was deniedby the CTAin its May 15, 2013
Resolution, stressing, among others, that to grant it would place the accused in double jeopardy.12

On July 24, 2013, the Run After the Smugglers (RATS) Group, Revenue Collection Monitoring Group
(RCMG), as counsel for the BOC, received a copy of the July 15, 2013 Resolution of the CTA ordering the
entry of judgment in the case.
Hence,this petition for certiorari, ascribing grave abuse of discretion on the part of theCTA when in ruled that:
1) the pieces of documentary evidence submitted by the prosecution were inadmissible in evidence; 2) the
object evidence consisting of the alleged misdeclared goods were not presented as evidence; and 3) the
witnesses failed to positively identifythe accused as responsible forthe misdeclaration of goods.
The Court agrees with the disposition of the CTA.
At the outset, it should be noted that the petition was filed beyond the reglementary periodfor the filingthereof
under Rule 65. The petition itself statedthat a copy of the May 15, 2013 Resolution was received by the BOC
two (2) days after its promulgation, or on May 17, 2013. Nonetheless, the RATS was only alerted by the
developments in the case on July 24, 2013, when Atty. Danilo M. Campos Jr. (Atty. Campos) received the July
15, 2013 Resolution of the CTA ordering the entry of judgment in the case, considering that no appeal was taken
by any of the parties. According toAtty. Campos, it was only on that occasion when he discovered the May 15,
2013 Resolution of the CTA.Thus, it was prayed that the petitionbe given due course despite its late filing.
This belated filing cannot be countenanced by the Court.
Section 4, Rule 65 of the 1997 Rules of Civil Procedureis explicit in stating thatcertiorarishould be instituted
within a period of 60 days from notice of the judgment, orderor resolution sought to be assailed. The 60-day
period is inextendible to avoid any unreasonable delay that would violate the constitutional rights of parties to a
speedy disposition of their case.13 While there are recognized exceptions14 to such strict observance, there
should be an effort on the part of the party invoking liberality to advance a reasonable or meritorious
explanation for his/her failure to comply with the rules.15
In the case at bench, no convincing justification for the belated filing of the petition was advanced to warrant
the relaxation of the Rules.Notably, the records show that the petition was filedonly on August 12, 2013, or
almost a month late from the due date which fell on July 16, 2013. To excuse this grave procedural lapse will
not only be unfairto the other party, but it will also sanction a seeming rudimentary attempt to circumvent
standing rules of procedure. Suffice it to say, the reasons proffered by the petitioner do not carry even a tinge of
merit that would deserve leniency.
The late filing of the petition was borne out of the petitioners failure to monitor incoming court processes that
neededto be addressed by the office. Clearly, this is an admission of inefficiency, if not lack of zeal, on the part
of an office tasked toeffectively curb smuggling activities which rob the government of millions of revenue
every year.
The display of patent violations of even the elementary rules leads the Court to suspectthat the case against
Garcia and Vestidas Jr. was doomed by designfrom the start. The failure to present the certified true copies of
documentary evidence; the failure to competently and properly identify the misdeclared goods; the failure to
identify the accused in court; and,worse, the failure to file this petition on time challenging a judgment of
acquittal, are tell-tale signs ofa reluctantand subduedattitude in pursuing the case. This stance taken by the
lawyers in government service rouses the Courts vigilance against inefficiency in the administration of justice.

Verily, the lawyersrepresenting the offices under the executive branchshould be reminded that theystill remain
as officers of the courtfrom whom a high sense of competence and fervor is expected. The Courtwill not close
its eyes to this sense of apathy in RATS lawyers, lest the governments goal of revenue enhancement continues
to suffer the blows of smuggling and similar activities.
Even the error committed by the RATS in filing a motion for reconsideration with the CTA displays gross
ignorance as to the effects of an acquittal in a criminal case and the constitutional proscription on double
jeopardy. Had the RATS been eager and keen in prosecuting the respondents, it would have, in the first place,
presented its evidence with the CTA in strict compliance with the Rules.
In any case, even if the Court decides to suspend the rules and permit this recourse, the end result would remain
the same. While a judgment of acquittal in a criminal case may be assailed in a petition for certiorari under Rule
65 of the Rules of Court,it must be shown that there was grave abuse of discretion amounting to lack or excess
of jurisdiction or a denial of due process.In this case, a perusal of the challenged resolutions ofthe CTAdoes not
disclose any indication of grave abuse of discretion on its partor denial of due process.The records are replete
with indicators that the petitioner actively participated during the trial and, in fact, presented its offer of
evidence and opposed the demurrer.
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.16 Here, the subject resolutions
of the CTA have been issued in accordance with the rules on evidence and existing jurisprudence.
On a final note, the Court deems it proper to remind the lawyers in the Bureau of Customs that the canons
embodied in the Code of Professional Responsibility equally apply to lawyers in government service in the
discharge of their official tasks. 17 Thus, RA TS lawyers should exert every effort and consider it their duty to
assist in the speedy and efficient administration of justice.18
WHEREFORE, the petition is DISMISSED and the assailed March 26, 2013 and May 15, 2013 Resolutions of
the Court of Tax Appeals are AFFIRMED.
The Office of the Ombudsman is hereby ordered to conduct an investigation for possible criminal or
administrative offenses committed by the Run After the Smugglers (RA TS) Group, Revenue Collection
Monitoring Group (RCMG), Bureau of Customs, relative to the filing and handling of the subject complaint for
violations of the Tariff and Customs Code of the Philippines.
Let copies of this resolution be furnished the Office of the President, the Secretary of Finance, the Collector of
Customs, and the Office of the Ombudsman for their guidance and appropriate action.
SO ORDERED.
G.R. No. 110280 October 12, 1993
UNIVERSITY OF THE PHILIPPINES BOARD OF REGENTS and DR. OLIVIA C. CAOILI in her
capacity as Secretary of the Board, petitioners,

vs.
HON. ELSIE LIGOT-TELAN in her capacity as Presiding Judge of Branch 87, Regional Trial Court of
Quezon City and RAMON P. NADAL, respondents.
U.P. Office of Legal Services for petitioners.
Bonifacio A. Alentajon for private respondent.

ROMERO, J.:
In an effort to make the University of the Philippines (U.P.) truly the university of the people, the U.P.
administration conceptualized and implemented the socialized scheme of tuition fee payments through the
Socialized Tuition Fee and Assistance Program (STFAP), popularly known as the "Iskolar ng Bayan" program.
Spawned by the public clamor to overcome what was perceived as the sharpening elitist profile of the U.P
studentry, the STFAP aspired to expand the coverage of government educational subsidies so as to include the
deserving in the lower rungs of the socio-economic ladder.
After broad consultations with the various university constituencies by U.P. President Jose V. Abueva, the U.P.
Board of Regents issued on April 28, 1988 a Resolution establishing the STFAP. A year later, it was granted
official recognition when the Congress of the Philippines allocated a portion of the National Budget for the
implementation of the program.
In the interest of democratizing admission to the State University, all students are entitled to apply for STFAP
benefits which include reduction in fees, living and book subsidies and student assistantships which give
undergraduate students the opportunity to earn P12.00 per hour by working for the University.
Applicants are required to accomplish a questionnaire where, among others, they state the amount and source of
the annual income of the family, their real and personal properties and special circumstances from which the
University may evaluate their financial status and need on the basis of which they are categorized into brackets.
At the end the application form, the student applicant, as well as his parent, signs a sworn statement, as follows:
Statement of the Student
I hereby certify, upon my honor, that all the data and information which I have furnished are
accurate and complete. I understand that any willful misinformation and/or withholding of
information will automatically disqualify me from receiving any financial assistance or subsidy,
and may serve as ground for my expulsion from the University. Furthermore, is such
misinformation and/or withholding of information on my part is discovered after I have been
awarded tuition scholarship or any form of financial assistance, I will be required to reimburse
all financial benefits plus the legal rate of interest prevailing at the time of the reimbursement
without prejudice to the filing of charges against me. (Emphasis supplied for emphasis)
Moreover, I understand that the University may send a fact-finding team to visit my
home/residence to verify the veracity of the information provided in this application and I will

give my utmost cooperation in this regard. I also understand that my refusal to cooperate with the
fact-finding team may mean suspension of withdrawal of STFAP benefits and privileges.

Student's Signature
Statement of the Applicant's Parent or Guardian
I hereby certify to the truthfulness and completeness of the information which my
son/daughter/dependent has furnished in this application together with all the documents
attached. I further recognize that in signing this application form, I share with my
son/daughter/dependent the responsibility for the truthfulness and completeness of the
information supplied herein. (Emphasis supplied for emphasis)
Moreover, I understand that the University may send a fact-finding team to visit my
home/residence to verify the information provided in this application and I will give my utmost
cooperation in this regard. I also understand that my refusal to cooperate with the fact-finding
team may mean suspension or withdrawal of STFAP benefits and privileges of my
son/daughter/dependent.

Parent's/Legal Guardian's/Spouse's Signature 1

From the early stages of its implementation, measures were adopted to safeguard the integrity of the program.
One such precautionary measure was the inclusion as one of the punishable acts under Section 2 (a) of the Rules
and Regulations on Student Conduct and Discipline of the University the deliberate falsification or
suppression/withholding of any material information required in the application form.
To further insure the integrity of the program, a random sampling scheme of verification of data indicated in a
student's application form is undertaken. Among those who applied for STFAP benefits for School Year 1989-90
was Ramon P. Nadal, a student enrolled in the College of Law.
On March 14, 1991, a team composed of Arsenio L. Dona and Jose Carlo Manalo conducted a home
investigation at the residence of Nadal at 31 Twinpeaks Drive, Blue Ridge, Quezon City.
Ms. Cristeta Packing, Nadal's aunt, was interviewed and the team submitted a home visit report. Consolacion
Urbino, Scholarship Affairs Officer II, found discrepancies between the report and Nadal's application form.
Forthwith, she and Bella M. Villanueva, head of the Office of Scholarships and Student Services, presented the
matter to the Diliman Committee on Scholarships and Financial Assistance. 2
In compliance with the said Committee's directive, Bella Villanueva wrote Nadal informing him that the
investigation showed that he had failed to declare, not only the fact that he had been maintaining a 1977 Corolla
car which was owned by his brother but also the income of his mother who was supporting his brothers Antonio
and Federico. Nadal was likewise informed that the Diliman Committee had reclassified him to Bracket 9 (from
Bracket 4), retroactive to June 1989, unless he could submit "proofs to the contrary." Nadal was required "to
pay back the equivalent amount of full school fees" with "interest based on current commercial rates." Failure to

settle his account would mean the suspension of his registration privileges and the withholding of clearance and
transcript of records. He was also warned that his case might be referred to the Student Disciplinary Tribunal for
further investigation. 3
On July 12, 1991, Nadal issued a certification stating, among other things, that his mother migrated to the
United States in 1981 but because her residency status had not yet been legalized, she had not been able to find
a "stable, regular, well-paying employment." He also stated that his mother, jointly with his brother Virgilio,
was shouldering the expenses of the college education of his two younger brothers. 4
Noting further discrepancies between Nadal's application form and the certification, the U.P. charged Nadal
before the Student Disciplinary Tribunal (SDT) on August 23, 1991 with the following:
That respondent RAMON P. NADAL (UP Student No. 83-11640), a student of the College of
Law, UP System, Diliman, Quezon City, and STFAP (ISKOLAR NG BAYAN) recipient
(Bracket 4 for SY 1989-1990; Bracket 5 for SY 1990-1991) in his applications for STFAP
(ISKOLAR NG BAYAN) benefits which he filed for schoolyear 1989-1990, and schoolyear
1990-1991, with the Office of Scholarship and Student Services (formerly Scholarship and
Financial Assistance Service) voluntarily and willfully withheld and did not declare the
following:
(a) That he has and maintains a car (Toyota Corolla, Model 1977); and
(b) The income of his mother (Natividad Packing Nadal) in the U.S.A., in support
of the studies of his brothers Antonio and Federico,
which acts of willfully withholding information is tantamount to acts of dishonesty in relation to
his studies, in violation of paragraph (a), Section 2, of the Rules and Regulations on Student
Conduct and Discipline, as amended. (Approved by the B.O.R. at its 876th meeting on 02
September 1976, amended at the 923rd B.O.R. meeting on 31 January 1980, and further
amended at its 1017th B.O.R. meeting on 08 December 1988). 5
On October 27, 1992, after hearing, the SDT 6 rendered a decision in SDT Case No. 91-026 exculpating Nadal
of the charge of deliberately withholding in his STFAP application form information that he was maintaining a
Toyota Corolla car, but finding him guilty of "wilfully and deliberately withholding information about the
income of his mother, who is living abroad, in support of the studies of his brothers Antonio and Federico, 7
which is tantamount to acts of dishonesty in relation to his studies in violation of paragraph [a], Section 2 of the
Rules [now covered by paragraph (i), Section 2 of the Rules, as amended 25 June 1992]." As such, the SDT
imposed upon Nadal the penalty of expulsion from the University and required him to reimburse all STFAP
benefits he had received but if he does not voluntarily make reimbursement, it shall be "effected by the
University thru outside legal action." 8
The SDT decision was thereafter automatically elevated to the Executive Committee of U.P. Diliman for review
pursuant to Sec. 20 of the U.P. Rules on Student Conduct and Discipline. On November 26, 1992, the Executive
Committee, voting 13:4, affirmed the decision of the SDT; whereupon, Nadal appealed to the Board of Regents
(BOR). The appeal was included in the agenda of the BOR meeting on January 25, 1993. 9

On January 18, 1993, upon her assumption to the Chairmanship of the Senate Committee on Education, thereby
making her automatically a member of the BOR, Senator Leticia Ramos-Shahani wrote the BOR a letter
expressing her view that, after a close review of Nadal s case by her legal staff, "it is only fair and just to find
Mr. Nadal's appeal meritorious and his arguments worthy of belief. Consequently, he should be allowed to
graduate and take the bar examinations this year." 10
At its January 25, 1993 meeting, the BOR affirmed the decision of the SDT but because "the Board was willing
to grant a degree of compassion to the appellant in view of the alleged status and predicament of the mother as
an immigrant 'TNT' in the United States," the penalty was modified "from Expulsion to One Year- Suspension,
effective immediately, plus reimbursement of all benefits received from the STFAP, with legal interest." The
BOR also decided against giving Nadal, a certification of good moral character. 11
Nadal forthwith filed a motion for reconsideration of the BOR decision, allegedly against the advice of his
counsel. 12 The motion was placed on the agenda of the February 25, 1993 meeting of the BOR. A day before
said date, Senator Shahani wrote the BOR another letter requesting that deliberation on Nadal's case be deferred
until such time as she could attend a BOR meeting.
On March 15, 1993, the U.P. filed an opposition to Nadal's motion for reconsideration. Thereafter, the BOR held
a special meeting to accommodate the request of Regent Shahani with Nadal's case as the sole item on its
agenda. Again, Nadal's motion for reconsideration was included in the March 23, 1993 agenda but in view of
the absence of Senator Shahani, the decision thereon was deferred.
At the special meeting of the BOR on March 28, 1993 at the Board Room of the Manila Polo Club in Forbes
Park, Makati, Regent Antonio T. Carpio raised the "material importance" of verifying the truth of Nadal's claim
that earlier, he was a beneficiary of a scholarship and financial aid from the Ateneo de Manila University
(AdeMU). Learning that the "certification issued by the AdeMU that it had not given Nadal financial aid while
he was a student there was made through a telephone call," Regent Carpio declared that there was as yet "no
direct evidence in the records to substantiate the charge." According to Carpio, if it should be disclosed that
Nadal Falsely stated that he received such financial aid, it would be a clear case of gross and material
misrepresentation that would even warrant the penalty of expulsion. Hence, he cast a conditional vote that
would depend on the verification of Nadal's claim on the matter.
U.P. President and concurrently Regent Jose V. Abueva countered by stating that "a decision should not be
anchored solely on one piece of information which he considered irrelevant, and which would ignore the whole
pattern of the respondent's dishonesty and deception from 1989 which had been established in the investigation
and the reviews." He added that "the respondent's eligibility for his AdeMU high school scholarship and
financial assistance from 1979 to 1983 does not in any way establish that he is 'not guilty as charged' before the
SDT," since the formal charges against him do not include withholding of information regarding scholarship
grants received from other schools.
At the said March 28, 1993 special meeting, the Board decided to go into executive session where the following
transpired:
The Chairman of the Board, together with the President, directed the Secretary to reflect in the
minutes of the meeting the following decisions of the Board in executive session, with only the
Board members present.

A vote was held by secret ballot on whether Ramon P. Nadal was guilty or not guilty as charged
of willful withholding of information in relation to his application for Socialized Tuition and
Financial Assistance Program (STFAP) benefits which he filed for Schoolyears 1989-1990 and
1990-1991 which is tantamount to act of dishonesty in relation to his studies, in violation of
paragraph (a), Section 2 of the Rules and Regulations on Student Conduct and Discipline, as
amended.
The Chairman gave the following results of the Board action during the Executive Session: four
(4) voted guilty; three (3) voted not guilty; and three (3) gave conditional votes, pending
verification with Father Raymond Holscher of Ateneo de Manila University of Ramon P. Nadal's
statement in his STFAP application that he was granted scholarship while he was in high school.
Should Ateneo confirm that Nadal had not received financial assistance, then the conditional
votes would be considered as guilty, and if otherwise, then not guilty. The Chairman requested
the President to make the verification as soon as possible the next day. In answer to a query, the
Chairman clarified that once the information was received from Ateneo, there would be no need
for another meeting to validate the decision.
The President reiterated his objections to the casting of conditional votes.
The Chairman himself did not vote. 13
In the morning of March 29, 1993, the AdeMU issued a certification to the effect that Nadal was indeed a
recipient of a scholarship grant from 1979 to 1983. That evening, the BOR met again at a special meeting at the
Westin Philippine Plaza Hotel. According to Regent Carpio, in executive session, the BOR found Nadal "guilty"
as the members voted as follows: six members guilty, three members not guilty, and three members
abstained. 14 Consequently, the BOR imposed on Nadal the penalties of suspension for one (1) year effective
March 29, 1993, non-issuance of any certificate of good moral character during the suspension and/or as long as
Nadal has not reimbursed the STFAP benefits he had received with 12% interest per annum from march 30,
1993 and non-issuance of his transcript of records until he has settled his financial obligations with the
university. 15
On March 30, 1993, Nadal wrote President Abueva a handwritten letter stating that "after learning of the latest
decision" of the BOR, he had been "intensely concentrating on (his) job so that (he) can earn enough to pay for
(his) financial obligations to the University." Alleging that he was "now letting nature take its course," Nadal
begged President Abueva not to issue any press release regarding the case. 16
However, on April 22, 1993, Nadal filed with the Regional Trial Court of Quezon City a petition for mandamus
with preliminary injunction and prayer for a temporary restraining order against President Abueva, the BOR,
Oscar M. Alfonso, Cesar A. Buenaventura, Armand V. Fabella and Olivia C. Caoili. The petition prayed:
After trial on the merits, judgment be rendered as follows:
a. Making the preliminary injunction permanent;

b. Ordering respondents 'to uphold and implement their decision rendered on 28 March 1993,
exonerating petitioner from all the charges against him, and accordingly dismissing SDT No. 91026;
c. Ordering respondents jointly and severally to pay petitioner litigation expenses of at least
P150,000.00.
Other just and equitable reliefs are likewise prayed for. 17
The motion for the issuance of a temporary restraining order and the writ of preliminary injunction was
immediately set for hearing. At the May 10, 1993 hearing, the lower court declared that the only issue to be
resolved was "whether or not the respondents in Civil Case No. 93-15665 violated (Nadal's) right to due process
when it rendered a decision finding Nadal guilty of the charges against him" during the March 29, 1993
meeting. After the respondents had presented their first witness, Dr. Olivia C. Caoili, the lower court asked
respondents' counsel whether they were amenable to maintaining the status quo. Said counsel replied in the
negative, asserting the University's prerogative to discipline students found guilty of violating its rules of
discipline. 18
On the same day, the lower court 19 issued the following Order:
The parties were heard on their respective positions on the incident (application for preliminary
injunction and prayer for temporary restraining order and opposition thereto). For lack of
material time set this for continuation on May 17 and 18, 1993 both at 2:30 p.m.
In the meantime, in order that the proceedings of this case may not be rendered moot and
academic, the respondents herein, namely: Jose V. Abueva, President of the University of the
Philippines and Vice-Chairman of the U.P. Board of Regents, Oscar M. Alfonso, Cesar A.
Buenaventura and Armand V. Fabella, members of the U.P. Board of Regents, Olivia C. Caoili,
the officers, agents, representatives, and all persons acting in their behalf, are hereby temporarily
restrained from implementing their decision rendered on March 29, 1993 in Administrative SDT
Case No. 91-026 entitled University of the Philippines vs. Ramon P. Nadal, as reflected in the
Minutes of the 1062nd meeting of the Board of Regents, U.P. held at the Romblon Room, Westin
Phil. Plaza, Manila, until further order from this Court.
SO ORDERED.
Thereafter, Nadal presented as witnesses Regents Emerenciana Y. Arcellana, Ariel P. Tanangonan, Leticia R.
Shahani and Antonio T. Carpio. The University, on the other hand, presented Dr. Olivia Caoili and Nadal
himself as a hostile witness. On May 29, 1993, the lower court issued the following Order:
The petitioner complains that he was not afforded due process when, after the Board Meeting on
SDT Case No. 91-026 on March 28, 1993 that resulted in a decision of "NOT GUILTY" in his
favor, the Chairman of the U.P. Board of Regents, without notice to the herein petitioner, called
another meeting the following day to deliberate on his (the Chairman's) MOTION FOR
RECONSIDERATION, which this time resulted in a decision of "GUILTY." While he main issue
of violation of due process raised in the petition pends trial and resolution, the petitioner prays

for the issuance of a writ of preliminary injunction prohibiting the respondents from further
proceeding with SDT Case No. 21-026 and from suspending the petitioner for one year.
It is a basic requirement in the issuance of the preliminary injunctive writ that there must be a
right to be protected. As the issue in the case at bar is due process in the March 29 Board
meeting, there is, indeed, a right to be protected for, in administrative proceedings, a respondent's
right to due process exists not only at the early stages but also at the final stage thereof.
With the circulation to the members of the Board of Regents, as well as to other UP personnel, of
the Minutes of the March 29, 1993 meeting, even after this case had already been filed, the Court
is convinced that there now exists a threat to the petitioner (respondent in SDT Case No, 91-026)
that the decision of the Board of Regents finally finding him guilty of willfully withholding
information material to his application for Socialized Tuition and Financial Assistance Program
(STFAP) benefits, will be implemented at any time, especially during the enrollment period, and
this implementation would work injustice to the petitioner as it would delay him in finishing his
course, and, consequently, in getting a decent and good paying job. The injury thus caused would
be irreparable.
"Damages are irreparable within the meaning of the rule where there is no
standard by which their amount can be measured with reasonable accuracy.
Where the damage is susceptible of mathematical computation, it is not
irreparable." (Social Security Commission v. Bayona, et al., G.R. No. L-13555,
May 30, 1962).
IN VIEW OF THE FOREGOING, and so as not to render moot the issues in the instant
proceedings, let a writ of preliminary injunction be issued restraining the respondents, their
officers, agent(s), representatives, and all persons acting in their behalf, from further proceeding
with SDT Case No. 91-026, and from suspending petitioner, upon the latter's filing a bond in the
amount of P3,000.00.
IT IS SO ORDERED. 20
Dispensing with the filing of a motion for reconsideration, the petitioners filed the instant petition for certiorari
and prohibition with prayer for the issuance of an injunction or temporary restraining order, raising the
following issues: whether or not Nadal was denied due process in the administrative disciplinary proceedings
against him, and, whether or not the respondent judge gravely abused her discretion in issuing the May 29, 1993
writ of preliminary injunction thereby preventing the BOR from implementing the suspension penalty it had
imposed on Nadal.
Before proceeding with the discussion of the merits of the instant petition, we shall confront a threshold issue
raised by private respondent, namely, that Dr. Caoili, not having been authorized by the Board of Regents as a
collegial body to file the instant petition, and Dr. Abueva, who verified the petition, not being the "Board of
Regents" nor "the University of the Philippines," they are not real parties in interest who should file the same. 21
A real party in interest is one "who stands to be benefited or injured by the judgment or the party entitled to the
avails of the suit. 'Interest' within the meaning of the rule means material interest, an interest in issue and to be

affected by the decree, as distinguished from mere interest in the question involved, or a mere incidental
interest." 22 Undoubtedly, the U.P. Board of Regents has an interest to protect inasmuch as what is in issue here
is its power to impose disciplinary action against a student who violated the Rules and Regulations on Student
Conduct and Discipline by withholding information in connection with his application for STFAP benefits,
which information, if disclosed, would have sufficed to disqualify him from receiving the financial assistance he
sought. Such dishonesty, if left unpunished, would have the effect of subverting a commendable program into
which the University officials had devoted much time and expended precious resources, from the
conceptualization to the implementation stage, to rationalize the socialized scheme of tuition fee payments in
order that more students may benefit from the public funds allocated to the State University.
Having specifically named Drs. Abueva and Caoili as respondents in the petition for mandamus that he filed
below, Nadal is now estopped from questioning their personality to file the instant petition. 23 Moreover, under
Sec. 7 of the U.P. Charter (Act 1870) and Sec. 11 of the University Code "all process" against the BOR shall be
served on "the president or secretary thereof'." It is in accordance with these legal provisions that Dr. Caoili is
named as a petitioner. Necessarily, Dr. Abueva, the University President and member of the BOR, has to verify
the petition. It is not mandatory, however, that each and every member of the BOR be named petitioners. As the
Court has time and again held, an action may be entertained, notwithstanding the failure to include an
indispensable party where it appears that the naming of the party would be but a formality. 24
No longer novel, as this is not a case of first impression, is the issue on the right of an academic institution to
refuse admission to a student arising from the imposition upon him of an administrative disciplinary sanction. In
our recent decision in Ateneo de Manila University v. Hon. Ignacio M. Capulong, 25 wherein certain law
students were dismissed for hazing resulting in the death of another, we held that the matter of admission of
students is within the ambit of academic freedom and therefore, beyond the province of the courts to decide.
Certain fundamental principles bear stressing.
One of the arguments of Nadal in his petition for mandamus below was that he was denied due process. To
clarify, the so-called lack of due process referred only to the March 29, 1993 meeting of the BOR. As stated by
respondent's counsel: "What was conceded by undersigned counsel was that Nadal was afforded due process
from the start of the administrative proceeding up to the meeting of the Board of Regents on March 28, 1993." 26
With respect to the March 29, 1993 meeting, respondent considers the same as "unquestionably void for lack of
due process" inasmuch as he was not sent a notice of said meeting. Counsel cites the ruling in Non v. Dames II
27
that imposition of sanctions on students requires "observance of procedural due process," 28 the phrase
obviously referring to the sending of notice of the meeting.
Attention is drawn to the disparate factual environments obtaining in Non v. Dames II and in the instant case. In
the former case, the students were refused admission for having led or participated in student mass actions
against the school, thereby posing a collision between constitutionally cherished rights freedom of
expression and academic freedom. In the case at bar, Nadal was suspended for having breached the University's
disciplinary rules. In the Non case, the Court ruled that the students were not afforded due process for even the
refusal to re-enroll them appeared to have been a mere afterthought on part of the school administrators. Here,
Nadal does not dispute the fact that his right to due process was held inviolate until the BOR decided to meet on
March 29, 1993 with his case as the sole item on the agenda.

In any event it is gross error to equate due process in the instant case with the sending of notice of the March 29,
1993 BOR meeting to respondent. University rules do not require the attendance in BOR meetings of
individuals whose cases are included as items on the agenda of the Board. This is not exclusive of students
whose disciplinary cases have been appealed to the Board of Regents as the final review body. At no time did
respondent complain of lack of notice given to him to attend any of the regular and special BOR meetings
where his case was up for deliberation. He would make an exception of the March 29, 1993 meeting for it was
"supposed to reconsider the decision made on March 28, 1993 exonerating respondent Nadal from all
administrative charges against him." 29
Regent Antonio T. Carpio, in his testimony before the lower court on May 25, 1993 admitted that there was no
final verdict at the March 28, 1993 meeting in view of the conditional votes resulting from his assertion that he
was "not morally convinced that there was sufficient evidence to make a finding of guilty against Nadal because
there was no direct evidence that his mother received income from the United States and this income was sent
to the Philippines to support the studies of the children." 30 Two regents shared the view of Regent Carpio, with
the following result: four voted guilty, three, not guilty, and three cast conditional votes. The BOR agreed that,
upon the suggestion of Regent Carpio, they would still verify from the AdeMU about Nadal's alleged
scholarship as a student in said institution. Consequently, no definitive decision was arrived at by the BOR on
March 28, 1993, Much less was a verdict of exoneration handed down as averred by respondent.
Regent Carpio testified, with respect to the March 29, 1993 meeting where all twelve members of the BOR
were present, that all of them participated in the voting held to reconsider the previous day's decision. He stated
"I remember Regent Arcellana questioning the voting again on the ground that there was already a final
decision, but there was a vote taken on whether a motion for reconsideration can be decided by the board, and a
majority of the board ruled that the matter can be reconsidered again upon motion of the chairman." 31
At said meeting, six (6) regents voted to find respondent guilty, three (3) voted that he was not guilty and three
(3) abstained. As succinctly announced by Regent Carpio, the final decision was that which was rendered on
March 29, 1993 as "no other decision was made by the Board with respect to the same issue." 32
Counsel for Nadal charged before the lower court that his client was "not given due process in the March 29
meeting because the ground upon which he was again convicted was not the same as the original charge." 33
Obviously, he was referring to the basis of the conditional votes on March 28, i.e., whether or not Nadal was
telling the truth when he claimed that he received a scholarship grant from the AdeMU. However, Regent
Carpio himself testified that the charge considered was "exactly the same charge" of withholding information on
the income of Nadal's mother. 34 It should be stressed that the reason why Regent Carpio requested a verification
of Nadal's claim that he was a scholar at the AdeMU was that Regent Carpio was not "morally convinced" yet
as to the guilt of Nadal. In other words, he sought additional insights into the character of Nadal through the
information that would be obtained from the AdeMU.
In this regard, we find such information to be irrelevant and a mere superfluity. In his July, 12, 1991
certification aforementioned, Nadal admitted, although inconsistently, that his mother was a "TNT" who could
not find a "stable, regular, well-paying employment" but that she was supporting the education of his brothers
with the help of another son. To our mind, this constitutes sufficient admission that Nadal withheld information
on the income, however measly and irregular, of his mother. Unlike in criminal cases which require proof
beyond reasonable doubt as basis for a judgment, in administrative or quasi-judicial proceedings, only
substantial evidence is required, that which means more than a mere scintilla or relevant evidence as a

reasonable mind might accept as adequate to support a conclusion, even if other minds equally reasonable might
conceivably opine otherwise. 35 In light of the foregoing circumstances, we find that Nadal has been sufficiently
proven to have violated his undertaking to divulge all information needed when he applied for the benefits of
the STFAP.
Let it not be forgotten that respondent aspires to join the ranks of the professionals who would uphold truth at
all costs so that justice may prevail. The sentinels who stand guard at the portals leading to the hallowed
Temples of Justice cannot be overzealous in admitting only those who are intellectually and morally fit. In those
who exhibit duplicity in their student days, one spots the shady character who is bound to sow the seeds of
chicanery in the practice of his profession.
Having reached his senior year, respondent is presumably aware that the bedrock axiom, Canon I, Rule 1.01 of
the Code of Professional Responsibility states: "A lawyer shall not engage in unlawful, dishonest, immoral or
deceitful conduct." Further on, Canon 7, Rule 7.01 provides: "A lawyer shall be answerable for knowingly
making a false statement or suppressing a material fact in connection with his application for admission to the
bar." (Emphasis supplied for emphasis)
Surely, it is not too early to warn entrants to the noble profession of law that honesty and integrity are
requirements no less weighty than hurdling the Bar examinations. This is the reason why a certification of good
moral character is one of the documents that must be submitted in applying to take said examination. In fact, a
charge of immoral or deceitful conduct on the part of an applicant, when proved, is a ground for disqualifying
him.
To revert to the instant case, inasmuch as it has been shown sufficiently that respondent has committed an act of
dishonesty in withholding vital information in connection with his application for STFAP benefits, all in blatant
violation of the Rules and Regulations on Student Conduct and Discipline of petitioner University, the latter's
inherent power and authority to impose disciplinary sanction may be invoked and rightfully exercised.
As a Bohemian proverb puts it: "A school without discipline is like a mill without water." Insofar as the water
turns the mill, so does the school's disciplinary power assure its right to survive and continue operating. In more
relevant terms, through its power to impose disciplinary sanctions, an educational institution is able to exercise
its academic freedom which is, in the case at bar, the right to suspend and refuse admission to a student who has
subverted its authority in the implementation of the critically important STFAP.
At the risk of being repetitious, the matter of admission to a University is encompassed by the right of academic
freedom. In Garcia v. The Faculty Admission Committee, Loyola School of Theology 36 the Court stated that a
school or college which is possessed of the right of academic freedom "decides for itself its aims and objectives
and how best to attain them. It is free from outside coercion or interference save possibly when the overriding
public welfare calls for some restraint. It has a wide sphere of autonomy certainly extending to the choice of
students." Elucidating, in Ateneo de Manila University v. Hon. Ignacio M. Capulong, 37 the Court further
expounded:
Since Garcia v. Loyola School of Theology, we have consistently upheld the salutary proposition
that admission to an institution of higher learning is discretionary upon a school, the same being
a privilege on the part of the student rather than a right. While under the Education Act of 1982,
students have a right "to freely choose their field of study, subject to existing curricula and to

continue their course therein up to graduation," such right is subject, as all rights are, to the
established academic and disciplinary standards laid down by the academic institution.
For private schools have the right to establish reasonable rules and regulations for the admission,
discipline and promotion of students. This right . . . extends as well to parents . . . as parents are
under a social and moral (if not legal) obligation, individually and collectively, to assist and
cooperate with the schools.
Such rules are "incident to the very object of incorporation and indispensable to the successful
management of the college. The rules may include those governing student discipline." Going a
step further, the establishment of rules governing university-student relations, particularly those
pertaining to student discipline, may be regarded as vital, if not merely to the smooth and
efficient operation of the institution, but to its very survival.
Within memory of the current generation is the eruption of militancy in the academic groves as
collectively, the students demanded and plucked for themselves from the panoply of academic
freedom their own rights encapsulized under the rubric of "right to education" forgetting that, in
Hohfeldian terms, they have a concomitant duty, that is, their duty to learn under the rules laid
down by the school. (Emphasis supplied.)
On the second issue presented for adjudication, the Court finds that the lower court gravely abused its discretion
in issuing the writ of preliminary injunction of May 29, 1993. The issuance of the said writ was based on the
lower court's finding that the implementation of the disciplinary sanction of suspension on Nadal "would work
injustice to the petitioner as it would delay him in finishing his course, and consequently, in getting a decent and
good paying job." Sadly, such a ruling considers only the situation of Nadal without taking into account the
circumstances clearly of his own making, which led him into such a predicament. More importantly, it has
completely disregarded the overriding issue of academic freedom which provides more than ample justification
for the imposition of a disciplinary sanction upon an erring student of an institution of higher learning.
From the foregoing arguments, it is clear that the lower court should have restrained itself from assuming
jurisdiction over the petition filed by Nadal. Mandamus is never issued in doubtful cases, a showing of a clear
and certain right on the part of the petitioner being required. 38 It is of no avail against an official or government
agency whose duty requires the exercise of discretion or judgment. 39
Hence, by issuing the writ of preliminary injunction, the lower court dared to tread upon legally forbidden
grounds. For, by virtue of the writ, the University's exercise of academic freedom was peremptorily curtailed.
Moreover, the door was flung wide open for Nadal to do exactly what the decision of the BOR prohibited him
from doing and that is, to violate the suspension order by enrolling for the first semester of 1993-1994. It must
have been with consternation that the University officials helplessly watching him complete his academic
requirements for taking the Bar. 40 In the event that he be allowed to continue with his studies he would, in
effect render moot and academic the disciplinary sanction of suspension legally imposed upon him by the
BOR's final decision of March 29, 1993. What is to prevent other aspirants for STFAP scholarships from
misleading the University authorities by misrepresenting certain facts or as in instant case, withholding vital
information and stating downright falsehoods, in their application forms with impunity? Not only would this
undermine the authority of the U.P. to discipline its students who violated the rules and regulations of the
institution but, more importantly, subvert the very concept and lofty intent to give financial assistance to poor

but deserving students through the STFAP which, incidentally, has not ceased refining and modifying it's
operations.
WHEREFORE, the instant petition is GRANTED and the lower court is hereby ordered to DISMISS the
petition for mandamus.
SO ORDERED.
G.R. No. 70484 January 29, 1988
ROMAN C. TUASON and REMEDIOS V. TUASON, by attorney-in-fact Trinidad S. Viado, petitioners,
vs.
REGISTER OF DEEDS, CALOOCAN City, MINISTRY OF JUSTICE, and the NATIONAL
TREASURER, respondents. TOMASA BARTOLOME, in her own behalf and in behalf of the other
members of the "Consuelo Heights Homeowners Association," petitioners-intervenors.
Orlando A. Rayos for petitioners-intervenors.
The Solicitor General for respondents.

NARVASA, J.:
A more despotic, capricious, oppressive and unjustifiable exercise of government power than that manifested in
this case can scarcely be found in the sordid annals of the martial law regime. Relief to the victims must be as it
is hereby extended by the grant to them of the extraordinary writ of certiorari and prohibition condemning as
unconstitutional, and annulling and perpetually enjoining the acts complained of.
Petitioner spouses, the Tuasons, were retired public school teachers. On April 6, 1965, with funds pooled from
their retirement benefits and savings, they bought from Carmel Farms, Inc. (hereafter simply, Carmel) a piece of
land measuring about 8,756 square meters, in the latter's subdivision in Barrio Makatipo, Caloocan City. In
virtue of this sale, Carmel's Torrens title (No. 64007) over the lot was cancelled and a new one (No. 8314)
issued in the name of the Tuasons. The Tuasons took possession of their property.
Some eight (8) years thereafter, the Tuasons' travails began. They woke up one morning to discover that by
presidential flat, they were no longer the owners of the land they had purchased with their hard-earned money,
and that their land and the other lots in the subdivision had been "declared open for disposition and sale to the
members of the Malacanang Homeowners Association, Inc., the present bona fide occupants thereof."
On September 14, 1973-a year almost to the day after the declaration of martial law Mr. Ferdinand Marcos, then
president of the country, invoking his emergency powers, issued Presidential Decree No. 293 with immediate
effect. The decree invalidated inter alia the title of the Tuasons' vendor, Carmel, which had earlier purchased
from the Government the land it had subsequently subdivided into several lots for sale to the public (the
Tuasons being among the buyers). The land bought by Carmel was part of the Tala Estate (one of the so-called

"Friar Lands"). Carmel had bought the land under Act No. 1120 and C.A. No. 32, as amended. Under these
statutes:
1) a bona fide settler or occupant was allowed to purchase (if he did not wish to lease) the portion occupied by
him at the price fixed by the Government, in cash or on installment; the interested buyer was given a certificate
of sale, which was regarded as an agreement by him to pay the purchase price in the and at the interest
specified, the acceptance of such certificate making the occupant a debtor of the government;
2) until the price was fully paid however, title was reserved in the Government, and any sale or encumbrance
made by the purchaser prior to such full payment was explicitly declared to 'be invalid as against the
Government ... and ... in all respects subordinate to its prior claim;"
3) in the event of default by a purchaser to pay any installment of purchase money and interest thereon, the
Chief of the Bureau of Public Lands (now Director of Lands) had the duty at once to protect the Government
from loss by bringing suit to obtain judicial authority to enforce the Government's lien on the "and by selling it
in the same manner as for foreclosure of mortgages, the purchaser at such sale being deemed to acquire a good
and indefeasible title, and the proceeds of the sale being applied to the payment of the costs of the court and all
installments due or to become due; and
4) in the event of completion of payment, the Government transferred title to the land to the purchaser "by
proper instrument of conveyance," the certificate of title over the land to issue and become effective in the
manner provided by the Land Registration Act. 1
Said Presidential Decree No. 293 made the finding 2 that Carmel had failed to complete payment of the price. It
adjudged that
... according to the records of the Bureau of Lands, neither the original purchasers nor their
subsequent transferees have made full payment of all installments of the purchase money and
interest on the lots claimed by the Carmel Farms, Inc., including those on which the dwellings of
the members of said Association 3 stand. Hence, title to said land has remained with the
Government, and the land now occupied by the members of said association has never ceased to
form part of the property of the Republic of the Philippines, any and all acts affecting said land
and purporting to segregate it from the said property of the Republic of the Philippines being
therefore null and void ab initio as against the law and public policy.
Upon this adjudgment, Mr. Marcos invalidated the titles of Carmel Farms, Inc. and all those derived therefrom,
and declared as aforestated "the members of the Malacanang Homeowners Association, Inc. the present bona
fide occupants" of the lots which, in consequence, thereby became open to them for "disposition and sale ...
pursuant to Commonwealth Act No. 32, as amended." 4
It seems to have completely escaped Mr. Marcos' attention that his decree contained contradictory declarations.
While acknowledging on the one hand that the lots in the Carmel Subdivision were occupied by the buyers
thereof, and in fact the latter's dwellings stood thereon, he states on the other that the "members of the
Malacanang Homeowners Association, Inc. (are) the present bona fide occupants" of all said lots. The latter
averment is not only essentially inconsistent with the former but is both a physical and legal fallacy. Well
known is the rule of physics that two objects cannot occupy the same space at the same time. And the absurdity

of the subsumed proposition is self-evident for persons not in possession of land, who probably have not even
set foot thereon, cannot be deemed "occupants" thereof, much less "bona fide" occupants.
But this notwithstanding, and upon the factual premise already indicated, Mr. Marcos disposed of the land of the
petitioner spouses and others similarly situated as they, in the following imperious manner:
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of
the powers vested in me by the Constitution as Commander-in-Chief of all the Armed Forces of
the Philippines, and pursuant to Proclamation 1081, dated September 21, 1972, and General
Order No. 1, dated September 22, 1972, do hereby order and decree that any and all sales
contracts between the government and the original purchasers, are hereby cancelled, and those
between the latter and the subsequent transferees, and any and all transfers thereafter, covering
lots 979, 981, 982, 985, 988, 989, 990, 991 new, 1226, 1228, 1230, and 980-C-2 (LRC PSD1730), all of Tala Estate, Caloocan City, are hereby declared invalid and null and void ab initio as
against the Government; that Transfer Certificates of Title Nos. 62603, 62604, 62605, covering
lots 1, 2 and 3, PCS-4383, all in the name of Carmel Farms, Inc., which are a consolidation and
subdivision survey of the lots hereinbefore enumerated, are declared invalid and considered
cancelled as against the Government; and that said lots are declared open for disposition and sale
to the members of the Malacanang Homeowners Association, Inc., the present bona fide
occupants thereof, pursuant to Commonwealth Act No. 32, as amended.
On the strength of this presidential decree, the Register of Deeds of Caloocan City caused the inscription on the
Tuasons' title, TCT No. 8314, of the following:
MEMORANDUM. Pursuant to Presidential Decree No. 293, this certificate of title is declared
invalid and null and void ab initio and considered cancelled as against the Government and the
property described herein is declared open for disposition and sale to the members of the
Malacanang Homeowners Association, Inc.
The Tuason Spouses thereupon filed with this Court a petition for certiorari assailing the Marcos decree as an
arbitrary measure which deprived them of their property in favor of a selected group, in violation not only of the
constitutional provisions on due process and eminent domain 5 but also of the provisions of the Land
Registration Act on the indefeasibility of Torrens titles; 6 and they prayed that the Register of Deeds be directed
to cancel the derogatory inscription on their title and restore its efficacy, or in the alternative, that they be
compensated for the loss from the Assurance Fund.
Mr. Marcos' Solicitor General sought to sustain the decree. In his comment on the petition, 7 he questioned the
propriety of the remedy of certiorari resorted to by the petitioners, it not appearing that the public respondents
were being sued as judicial or quasi-judicial officers who had acted without or in excess of their jurisdiction, or
with grave abuse of discretion. He opined that the petitioner spouses had no cause to complain of unjust
deprivation of property because in legal contemplation 8 they had never become owners thereof because of nonpayment of the purchase price by their predecessor-in-interest; and the decree was justifiable under the social
justice clause of the Constitution and the police power, being in response to the pressing housing need of the
employees of the Office of the President who were left homeless and landless after they were asked to vacate
Malacanang Park where they had theretofore been residing. He expressed the view, too, that petitioner spouses
were not entitled to recover anything from the Assurance Fund.

Petitions for intervention have of late been filed by sixty-four (64) persons, members of the "Consuelo Heights
Homeowners Association" headed by Tomasa Bartolome, on the claim that they, too, had been divested of their
lands by the same Presidential Decree No. 293, adopting as their own the allegations and prayer embodied in
the Tuasons' petition.
The procedural issue is quite easily disposed of. It is true that the extraodinary writ of certiorari 9 may properly
issue to nullify only judicial or quasi-judicial acts, unlike the writ of prohibition which may be directed against
acts either judicial or ministerial. Section 1, Rule 65 of the Rules of Court deals with the writ of certiorari in
relation to "any tribunal, board or officer exercising judicial functions, while Section 2 of the same Rule treats
of the writ of prohibition in relation to "proceedings of any tribunal, corporation, board, or person ... exercising
functions judicial or ministerial." But the petition will be shown upon analysis to be in reality directed against
an unlawful exercise of judicial power.
The decree reveals that Mr. Marcos exercised an obviously judicial function. He made a determination of facts,
and applied the law to those facts, declaring what the legal rights of the parties were in the premises. These acts
essentially constitute a judicial function, 10 or an exercise of jurisdiction which is the power and authority to
hear or try and decide or determine a cause. 11 He adjudged it to be an established fact that neither the original
purchasers nor their subsequent transferees have made full payment of all installments of the purchase money
and interest on the lots claimed by Carmel Farms, Inc., including those on which the dwellings of the members
of ... (the) Association (of homeowners) stand." And applying the law to that situation, he made the adjudication
that "title to said land has remained with the Government, and the land now occupied by the members of said
association has never ceased to form part of the property of the Republic of the Philippines," and that 'any and
all acts affecting said land and purporting to segregate it from the said property of the Republic ... (were) null
and void ab initio as against the law and public policy.
These acts may thus be properly struck down by the writ of certiorari, because done by an officer in the
performance of what in essence is a judicial function, if it be shown that the acts were done without or in excess
of jurisdiction, or with grave abuse of discretion. Since Mr. Marcos was never vested with judicial power, such
power, as everyone knows, being vested in the Supreme Court and such inferior courts as may be established by
law 12 the judicial acts done by him were in the circumstances indisputably perpetrated without jurisdiction.
The acts were completely alien to his office as chief executive, and utterly beyond the permissible scope of the
legislative power that he had assumed as head of the martial law regime.
Moreover, he had assumed to exercise power i.e. determined the relevant facts and applied the law thereto
without a trial at which all interested parties were accorded the opportunity to adduce evidence to furnish the
basis for a determination of the facts material to the controversy. He made the finding ostensibly on the basis of
"the records of the Bureau of Lands." Prescinding from the fact that there is no indication whatever the nature
and reliability of these records and that they are in no sense conclusive, it is undeniable that the petitioner
Tuasons (and the petitioners in intervention) were never confronted with those records and afforded a chance to
dispute their trustworthiness and present countervailing evidence. This is yet another fatal defect. The
adjudication was patently and grossly violative of the right to due process to which the petitioners are entitled in
virtue of the Constitution. Mr. Marcos, in other words, not only arrogated unto himself a power never granted to
him by the Constitution or the laws but had in addition exercised it unconstitutionally.
In any event, this Court has it in its power to treat the petition for certiorari as one for prohibition if the
averments of the former sufficiently made out a case for the latter. 13 Considered in this wise, it will also appear

that an executive officer had acted without jurisdiction exercised judicial power not granted to him by the
Constitution or the laws and had furthermore performed the act in violation of the constitutional rights of the
parties thereby affected. The Court will grant such relief as may be proper and efficacious in the premises even
if not specifically sought or set out in the prayer of the appropriate pleading, the permissible relief being
determined after all not by the prayer but by the basic averments of the parties' pleadings. 14
There is no dispute about the fact that title to the land purchased by Carmel was actually issued to it by the
Government. This of course gives rise to the strong presumption that official duty has been regularly performed,
15
that official duty being in this case the ascertainment by the Chief of the Bureau of Public Lands of the
fulfillment of the condition prescribed by law for such issuance, i.e., the payment in full of the price, together
with all accrued interest. Against this presumption there is no evidence. It must hence be accorded full sway in
these proceedings. Furthermore, the title having been duly issued to Carmel, it became "effective in the manner
provided in section one hundred and twenty-two of the Land Registration Act." 16
It may well be the fact that Carmel really did fail to make full payment of the price of the land purchased by it
from the Government pursuant to the provisions of Act 1120. This is a possibility that cannot be totally
discounted. If this be the fact, the Government may bring suit to recover the unpaid installments and interest,
invalidate any sale or encumbrance involving the land subject of the sale, and enforce the lien of the
Government against the land by selling the same in the manner provided by Act Numbered One Hundred and
Ninety for the foreclosure of mortgages. 17 This it can do despite the lapse of a considerable period of time.
Prescription does not lie against the Government. But until and unless such a suit is brought and results in a
judgment favorable to the Government, the acquisition of title by Carmel and the purchases by the petitioners
and the petitioners-intervenors from it of portions of the land covered by its original title must be respected. At
any rate, the eventuation of that contingency will not and cannot in any manner affect this Court's conclusion,
herein affirmed, of the unconstitutionality and invalidity of Presidential Decree No. 293, and the absolute lack
of any right to the land or any portion thereof on the part of the members of the so-called "Malacanang
Homeowners Association, Inc." The decree was not as claimed a licit instance of the application of social justice
principles or the exercise of police power. It was in truth a disguised, vile stratagem deliberately resorted to
favor a few individuals, in callous and disdainful disregard of the rights of others. It was in reality a taking of
private property without due process and without compensation whatever, from persons relying on the
indefeasibility of their titles in accordance with and as explicitly guaranteed by law.
One last word, respecting the petitioners in intervention, Their petition to intervene substantially fulfilled the
requirements laid down for a class suit 18 and was consequently given due course by the Court. They are
therefore covered by this judgment.
WHEREFORE, Presidential Decree No. 293 is declared to be unconstitutional and void ab initio in all its parts.
The public respondents are commanded to cancel the inscription on the titles of the petitioners and the
petitioners in intervention of the memorandum declaring their titles null and void and declaring the property
therein respectively described open for disposition and sale to the members of the Malacanang Homeowners
Association, Inc. to do whatever else is needful to restore the titles to full effect and efficacy; and henceforth to
refrain, cease and desist from implementing any provision or part of said Presidential Decree No. 293. No
pronouncement as to costs.
Yap, Fernan, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Gancayco, Padilla, Bidin, Sarmiento and Cortes
JJ., concur.

PROHIBITION
G.R. No. 191424

August 7, 2013

ALFEO D. VIVAS, ON HIS BEHALF AND ON BEHALF OF THE SHAREHOLDERS OF

EUROCREDIT COMMUNITY BANK, PETITIONER,
vs.
THE MONETARY BOARD OF THE BANGKO SENTRAL NG PILIPINAS AND THE PHILIPPINE
DEPOSIT INSURANCE CORPORATION, RESPONDENTS.
DECISION
MENDOZA, J.:
This is a petition for prohibition with prayer for the issuance of a status quo ante order or writ of preliminary
injunction ordering the respondents to desist from closing EuroCredit Community Bank, Incorporated (ECBI)
and from pursuing the receivership thereof. The petition likewise prays that the management and operation of
ECBI be restored to its Board of Directors (BOD) and its officers.
The Facts
The Rural Bank of Faire, Incorporated (RBFI) was a duly registered rural banking institution with principal
office in Centro Sur, Sto. Nio, Cagayan. Record shows that the corporate life of RBFI expired on May 31,
2005.1 Notwithstanding, petitioner Alfeo D. Vivas (Vivas) and his principals acquired the controlling interest in
RBFI sometime in January 2006. At the initiative of Vivas and the new management team, an internal audit was
conducted on RBFI and results thereof highlighted the dismal operation of the rural bank. In view of those
findings, certain measures calculated to revitalize the bank were allegedly introduced.2 On December 8, 2006,
the Bangko Sentral ng Pilipinas (BSP) issued the Certificate of Authority extending the corporate life of RBFI
for another fifty (50) years. The BSP also approved the change of its corporate name to EuroCredit Community
Bank, Incorporated, as well as the increase in the number of the members of its BOD, from five (5) to eleven
(11).3
Pursuant to Section 28 of Republic Act (R.A.) No. 7653, otherwise known as The New Central Bank Act, the
Integrated Supervision Department II (ISD II) of the BSP conducted a general examination on ECBI with the
cut-off date of December 31, 2007. Shortly after the completion of the general examination, an exit conference
was held on March 27, 2008 at the BSP during which the BSP officials and examiners apprised Vivas, the
Chairman and President of ECBI, as well as the other bank officers and members of its BOD, of the advance
findings noted during the said examination. The ECBI submitted its comments on BSPs consolidated findings
and risk asset classification through a letter, dated April 8, 2008.4
Sometime in April 2008, the examiners from the Department of Loans and Credit of the BSP arrived at the
ECBI and cancelled the rediscounting line of the bank. Vivas appealed the cancellation to BSP.5 Thereafter, the
Monetary Board (MB) issued Resolution No. 1255, dated September 25, 2008, placing ECBI under Prompt
Corrective Action (PCA) framework because of the following serious findings and supervisory concerns noted
during the general examination: 1] negative capital of ?14.674 million and capital adequacy ratio of negative
18.42%; 2] CAMEL (Capital Asset Management Earnings Liquidity) composite rating of "2" with a

Management component rating of "1"; and 3] serious supervisory concerns particularly on activities deemed
unsafe or unsound.6 Vivas claimed that the BSP took the above courses of action due to the joint influence
exerted by a certain hostile shareholder and a former BSP examiner.7
Through its letter, dated September 30, 2008, the BSP furnished ECBI with a copy of the Report of Examination
(ROE) as of December 31, 2007. In addition, the BSP directed the banks BOD and senior management to: 1]
infuse fresh capital of ?22.643 million; 2] book the amount of ?28.563 million representing unbooked valuation
reserves on classified loans and other risks assets on or before October 31, 2008; and 3] take appropriate action
necessary to address the violations/exceptions noted in the examination.8
Vivas moved for a reconsideration of Resolution No. 1255 on the grounds of non-observance of due process and
arbitrariness. The ISD II, on several instances, had invited the BOD of ECBI to discuss matters pertaining to the
placement of the bank under PCA framework and other supervisory concerns before making the appropriate
recommendations to the MB. The proposed meeting, however, did not materialize due to postponements sought
by Vivas.9
In its letter, dated February 20, 2009, the BSP directed ECBI to explain why it transferred the majority shares of
RBFI without securing the prior approval of the MB in apparent violation of Subsection X126.2 of the Manual
of Regulation for Banks (MORB).10 Still in another letter,11 dated March 31, 2009, the ISD II required ECBI to
explain why it did not obtain the prior approval of the BSP anent the establishment and operation of the banks
sub-offices.
Also, the scheduled March 31, 2009 general examination of the books, records and general condition of ECBI
with the cut-off date of December 31, 2008, did not push through. According to Vivas, ECBI asked for the
deferment of the examination pending resolution of its appeal before the MB. Vivas believed that he was being
treated unfairly because the letter of authority to examine allegedly contained a clause which pertained to the
Anti-Money Laundering Law and the Bank Secrecy Act.12
The MB, on the other hand, posited that ECBI unjustly refused to allow the BSP examiners from examining and
inspecting its books and records, in violation of Sections 25 and 34 of R.A. No. 7653. In its letter,13 dated May
8, 2009, the BSP informed ECBI that it was already due for another annual examination and that the pendency
of its appeal before the MB would not prevent the BSP from conducting another one as mandated by Section 28
of R.A. No. 7653.
In view of ECBIs refusal to comply with the required examination, the MB issued Resolution No. 726,14 dated
May 14, 2009, imposing monetary penalty/fine on ECBI, and referred the matter to the Office of the Special
Investigation (OSI) for the filing of appropriate legal action. The BSP also wrote a letter,15 dated May 26, 2009,
advising ECBI to comply with MB Resolution No. 771, which essentially required the bank to follow its
directives. On May 28, 2009, the ISD II reiterated its demand upon the ECBI BOD to allow the BSP examiners
to conduct a general examination on June 3, 2009.16
In its June 2, 2009 Letter-Reply,17 ECBI asked for another deferment of the examination due to the pendency of
certain unresolved issues subject of its appeal before the MB, and because Vivas was then out of the country.
The ISD II denied ECBIs request and ordered the general examination to proceed as previously scheduled.18

Thereafter, the MB issued Resolution No. 823,19 dated June 4, 2009, approving the issuance of a cease and
desist order against ECBI, which enjoined it from pursuing certain acts and transactions that were considered
unsafe or unsound banking practices, and from doing such other acts or transactions constituting fraud or might
result in the dissipation of its assets.
On June 10, 2009, the OSI filed with the Department of Justice (DOJ) a complaint for Estafa Through
Falsification of Commercial Documents against certain officials and employees of ECBI. Meanwhile, the MB
issued Resolution No. 1164,20 dated August 13, 2009, denying the appeal of ECBI from Resolution No. 1255
which placed it under PCA framework. On November 18, 2009, the general examination of the books and
records of ECBI with the cut-off date of September 30, 2009, was commenced and ended in December 2009.
Later, the BSP officials and examiners met with the representatives of ECBI, including Vivas, and discussed
their findings.21 On December 7, 2009, the ISD II reminded ECBI of the non-submission of its financial audit
reports for the years 2007 and 2008 with a warning that failure to submit those reports and the written
explanation for such omission shall result in the imposition of a monetary penalty.22 In a letter, dated February 1,
2010, the ISD II informed ECBI of MB Resolution No. 1548 which denied its request for reconsideration of
Resolution No. 726.
On March 4, 2010, the MB issued Resolution No. 27623 placing ECBI under receivership in accordance with the
recommendation of the ISD II which reads:
On the basis of the examination findings as of 30 September 2009 as reported by the Integrated Supervision
Department (ISD) II, in its memorandum dated 17 February 2010, which findings showed that the Eurocredit
Community Bank, Inc. a Rural Bank (Eurocredit Bank) (a) is unable to pay its liabilities as they become due
in the ordinary course of business; (b) has insufficient realizable assets to meet liabilities; (c) cannot continue in
business without involving probable losses to its depositors and creditors; and (d) has willfully violated a cease
and desist order of the Monetary Board for acts or transactions which are considered unsafe and unsound
banking practices and other acts or transactions constituting fraud or dissipation of the assets of the institution,
and considering the failure of the Board of Directors/management of Eurocredit Bank to restore the banks
financial health and viability despite considerable time given to address the banks financial problems, and that
the bank had been accorded due process, the Board, in accordance with Section 30 of Republic Act No. 7653
(The New Central Bank Act), approved the recommendation of ISD II as follows:
To prohibit the Eurocredit Bank from doing business in the Philippines and to place its assets and affairs under
receivership; and
To designate the Philippine Deposit Insurance Corporation as Receiver of the bank.
Assailing MB Resolution No. 276, Vivas filed this petition for prohibition before this Court, ascribing grave
abuse of discretion to the MB for prohibiting ECBI from continuing its banking business and for placing it
under receivership. The petitioner presents the following
ARGUMENTS:
(a)

It is grave abuse of discretion amounting to loss of jurisdiction to apply the general law embodied in Section 30
of the New Central Bank Act as opposed to the specific law embodied in Sections 11 and 14 of the Rural Banks
Act of 1992.
(b)
Even if it assumed that Section 30 of the New Central Bank Act is applicable, it is still the gravest abuse of
discretion amounting to lack or excess of jurisdiction to execute the law with manifest arbitrariness, abuse of
discretion, and bad faith, violation of constitutional rights and to further execute a mandate well in excess of its
parameters.
(c)
The power delegated in favor of the Bangko Sentral ng Pilipinas to place rural banks under receiverships is
unconstitutional for being a diminution or invasion of the powers of the Supreme Court, in violation of Section
2, Article VIII of the Philippine Constitution.24
Vivas submits that the respondents committed grave abuse of discretion when they erroneously applied Section
30 of R.A. No. 7653, instead of Sections 11 and 14 of the Rural Bank Act of 1992 or R.A. No. 7353. He argues
that despite the deficiencies, inadequacies and oversights in the conduct of the affairs of ECBI, it has not
committed any financial fraud and, hence, its placement under receivership was unwarranted and improper. He
posits that, instead, the BSP should have taken over the management of ECBI and extended loans to the
financially distrained bank pursuant to Sections 11 and 14 of R.A. No. 7353 because the BSPs power is limited
only to supervision and management take-over of banks.
He contends that the implementation of the questioned resolution was tainted with arbitrariness and bad faith,
stressing that ECBI was placed under receivership without due and prior hearing in violation of his and the
banks right to due process. He adds that respondent PDIC actually closed ECBI even in the absence of any
directive to this effect. Lastly, Vivas assails the constitutionality of Section 30 of R.A. No. 7653 claiming that
said provision vested upon the BSP the unbridled power to close and place under receivership a hapless rural
bank instead of aiding its financial needs. He is of the view that such power goes way beyond its constitutional
limitation and has transformed the BSP to a sovereign in its own "kingdom of banks."25
The Courts Ruling
The petition must fail.
Vivas Availed of the Wrong Remedy
To begin with, Vivas availed of the wrong remedy. The MB issued Resolution No. 276, dated March 4, 2010, in
the exercise of its power under R.A. No. 7653. Under Section 30 thereof, any act of the MB placing a bank
under conservatorship, receivership or liquidation may not be restrained or set aside except on a petition for
certiorari. Pertinent portions of R.A. 7653 read:
Section 30.

x x x x.
The actions of the Monetary Board taken under this section or under Section 29 of this Act shall be final and
executory, and may not be restrained or set aside by the court except on petition for certiorari on the ground that
the action taken was in excess of jurisdiction or with such grave abuse of discretion as to amount to lack or
excess of jurisdiction. The petition for certiorari may only be filed by the stockholders of record representing
the majority of the capital stock within ten (10) days from receipt by the board of directors of the institution of
the order directing receivership, liquidation or conservatorship.
x x x x. [Emphases supplied]
Prohibition is already unavailing
Granting that a petition for prohibition is allowed, it is already an ineffective remedy under the circumstances
obtaining. Prohibition or a "writ of prohibition" is that process by which a superior court prevents inferior
courts, tribunals, officers, or persons from usurping or exercising a jurisdiction with which they have not been
vested by law, and confines them to the exercise of those powers legally conferred. Its office is to restrain
subordinate courts, tribunals or persons from exercising jurisdiction over matters not within its cognizance or
exceeding its jurisdiction in matters of which it has cognizance.26 In our jurisdiction, the rule on prohibition is
enshrined in Section 2, Rule 65 of the Rules on Civil Procedure, to wit:
Sec. 2. Petition for prohibition - When the proceedings of any tribunal, corporation, board, officer or person,
whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal
or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may
file a verified petition in the proper court, alleging the facts with certainty and praying that the judgment be
rendered commanding the respondent to desist from further proceedings in the action or matter specified
therein, or otherwise granting such incidental reliefs as the law and justice require.
x x x x.
Indeed, prohibition is a preventive remedy seeking that a judgment be rendered which would direct the
defendant to desist from continuing with the commission of an act perceived to be illegal.27 As a rule, the proper
function of a writ of prohibition is to prevent the doing of an act which is about to be done. It is not intended to
provide a remedy for acts already accomplished.28
Though couched in imprecise terms, this petition for prohibition apparently seeks to prevent the acts of closing
of ECBI and placing it under receivership. Resolution No. 276, however, had already been issued by the MB
and the closure of ECBI and its placement under receivership by the PDIC were already accomplished.
Apparently, the remedy of prohibition is no longer appropriate. Settled is the rule that prohibition does not lie to
restrain an act that is already a fait accompli.29
The Petition Should Have Been Filed in the CA
Even if treated as a petition for certiorari, the petition should have been filed with the CA. Section 4 of Rule 65
reads:

Section 4. When and where petition filed. The petition shall be filed not later than sixty (60) days from
notice of the judgment, order or resolution. In case a motion for reconsideration or new trial is timely filed,
whether such motion is required or not, the sixty (60) day period shall be counted from notice of the denial of
said motion.
The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a lower court or of a
corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the territorial area
as defined by the Supreme Court. It may also be filed in the Court of Appeals whether or not the same is in aid
of its appellate jurisdiction, or in the Sandiganbayan if it is in aid of its appellate jurisdiction. If it involves the
acts or omissions of a quasi-judicial agency, unless otherwise provided by law or these Rules, the petition shall
be filed in and cognizable only by the Court of Appeals. [Emphases supplied]
That the MB is a quasi-judicial agency was already settled and reiterated in the case of Bank of Commerce v.
Planters Development Bank And Bangko Sentral Ng Pilipinas.30
Doctrine of Hierarchy of Courts
Even in the absence of such provision, the petition is also dismissible because it simply ignored the doctrine of
hierarchy of courts. True, the Court, the CA and the RTC have original concurrent jurisdiction to issue writs of
certiorari, prohibition and mandamus. The concurrence of jurisdiction, however, does not grant the party
seeking any of the extraordinary writs the absolute freedom to file a petition in any court of his choice. The
petitioner has not advanced any special or important reason which would allow a direct resort to this Court.
Under the Rules of Court, a party may directly appeal to this Court only on pure questions of law.31 In the case
at bench, there are certainly factual issues as Vivas is questioning the findings of the investigating team.
Strict observance of the policy of judicial hierarchy demands that where the issuance of the extraordinary writs
is also within the competence of the CA or the RTC, the special action for the obtainment of such writ must be
presented to either court. As a rule, the Court will not entertain direct resort to it unless the redress desired
cannot be obtained in the appropriate lower courts; or where exceptional and compelling circumstances, such as
cases of national interest and with serious implications, justify the availment of the extraordinary remedy of writ
of certiorari, prohibition, or mandamus calling for the exercise of its primary jurisdiction.32 The judicial policy
must be observed to prevent an imposition on the precious time and attention of the Court.
The MB Committed No Grave Abuse of Discretion
In any event, no grave abuse of discretion can be attributed to the MB for the issuance of the assailed
Resolution No. 276.
Vivas insists that the circumstances of the case warrant the application of Section 11 of R.A. No. 7353, which
provides:
Sec. 11. The power to supervise the operation of any rural bank by the Monetary Board as herein indicated shall
consist in placing limits to the maximum credit allowed to any individual borrower; in prescribing the interest
rate, in determining the loan period and loan procedures, in indicating the manner in which technical assistance
shall be extended to rural banks, in imposing a uniform accounting system and manner of keeping the accounts
and records of rural banks; in instituting periodic surveys of loan and lending procedures, audits, test-check of

cash and other transactions of the rural banks; in conducting training courses for personnel of rural banks; and,
in general, in supervising the business operations of the rural banks.
The Central Bank shall have the power to enforce the laws, orders, instructions, rules and regulations
promulgated by the Monetary Board, applicable to rural banks; to require rural banks, their directors, officers
and agents to conduct and manage the affairs of the rural banks in a lawful and orderly manner; and, upon proof
that the rural bank or its Board of Directors, or officers are conducting and managing the affairs of the bank in a
manner contrary to laws, orders, instructions, rules and regulations promulgated by the Monetary Board or in a
manner substantially prejudicial to the interest of the Government, depositors or creditors, to take over the
management of such bank when specifically authorized to do so by the Monetary Board after due hearing
process until a new board of directors and officers are elected and qualified without prejudice to the prosecution
of the persons responsible for such violations under the provisions of Sections 32, 33 and 34 of Republic Act
No. 265, as amended.
x x x x.
The thrust of Vivas argument is that ECBI did not commit any financial fraud and, hence, its placement under
receivership was unwarranted and improper. He asserts that, instead, the BSP should have taken over the
management of ECBI and extended loans to the financially distrained bank pursuant to Sections 11 and 14 of
R.A. No. 7353 because the BSPs power is limited only to supervision and management take-over of banks, and
not receivership.
Vivas argues that implementation of the questioned resolution was tainted with arbitrariness and bad faith,
stressing that ECBI was placed under receivership without due and prior hearing, invoking Section 11 of R.A.
No. 7353 which states that the BSP may take over the management of a rural bank after due hearing.33 He adds
that because R.A. No. 7353 is a special law, the same should prevail over R.A. No. 7653 which is a general law.
The Court has taken this into account, but it appears from all over the records that ECBI was given every
opportunity to be heard and improve on its financial standing. The records disclose that BSP officials and
examiners met with the representatives of ECBI, including Vivas, and discussed their findings.34 There were
also reminders that ECBI submit its financial audit reports for the years 2007 and 2008 with a warning that
failure to submit them and a written explanation of such omission shall result in the imposition of a monetary
penalty.35 More importantly, ECBI was heard on its motion for reconsideration. For failure of ECBI to comply,
the MB came out with Resolution No. 1548 denying its request for reconsideration of Resolution No. 726.
Having been heard on its motion for reconsideration, ECBI cannot claim that it was deprived of its right under
the Rural Bank Act.
Close Now, Hear Later
At any rate, if circumstances warrant it, the MB may forbid a bank from doing business and place it under
receivership without prior notice and hearing. Section 30 of R.A. No. 7653 provides, viz:
Sec. 30. Proceedings in Receivership and Liquidation. Whenever, upon report of the head of the supervising
or examining department, the Monetary Board finds that a bank or quasi-bank:

(a) is unable to pay its liabilities as they become due in the ordinary course of business: Provided, That
this shall not include inability to pay caused by extraordinary demands induced by financial panic in the
banking community;
(b) has insufficient realizable assets, as determined by the Bangko Sentral, to meet its liabilities; or
(c) cannot continue in business without involving probable losses to its depositors or creditors; or
(d) has wilfully violated a cease and desist order under Section 37 that has become final, involving acts
or transactions which amount to fraud or a dissipation of the assets of the institution; in which cases, the
Monetary Board may summarily and without need for prior hearing forbid the institution from doing
business in the Philippines and designate the Philippine Deposit Insurance Corporation as receiver of the
banking institution. [Emphases supplied.]
x x x x.
Accordingly, there is no conflict which would call for the application of the doctrine that a special law should
prevail over a general law. It must be emphasized that R.A .No. 7653 is a later law and under said act, the power
of the MB over banks, including rural banks, was increased and expanded. The Court, in several cases, upheld
the power of the MB to take over banks without need for prior hearing. It is not necessary inasmuch as the law
entrusts to the MB the appreciation and determination of whether any or all of the statutory grounds for the
closure and receivership of the erring bank are present. The MB, under R.A. No. 7653, has been invested with
more power of closure and placement of a bank under receivership for insolvency or illiquidity, or because the
banks continuance in business would probably result in the loss to depositors or creditors. In the case of
Bangko Sentral Ng Pilipinas Monetary Board v. Hon. Antonio-Valenzuela,36 the Court reiterated the doctrine of
"close now, hear later," stating that it was justified as a measure for the protection of the public interest. Thus:
The "close now, hear later" doctrine has already been justified as a measure for the protection of the public
interest. Swift action is called for on the part of the BSP when it finds that a bank is in dire straits. Unless
adequate and determined efforts are taken by the government against distressed and mismanaged banks, public
faith in the banking system is certain to deteriorate to the prejudice of the national economy itself, not to
mention the losses suffered by the bank depositors, creditors, and stockholders, who all deserve the protection
of the government.37 [Emphasis supplied]
In Rural Bank of Buhi, Inc. v. Court of Appeals,38 the Court also wrote that
x x x due process does not necessarily require a prior hearing; a hearing or an opportunity to be heard may be
subsequent to the closure. One can just imagine the dire consequences of a prior hearing: bank runs would be
the order of the day, resulting in panic and hysteria. In the process, fortunes may be wiped out and
disillusionment will run the gamut of the entire banking community.39
The doctrine is founded on practical and legal considerations to obviate unwarranted dissipation of the banks
assets and as a valid exercise of police power to protect the depositors, creditors, stockholders, and the general
public.40 Swift, adequate and determined actions must be taken against financially distressed and mismanaged
banks by government agencies lest the public faith in the banking system deteriorate to the prejudice of the
national economy.

Accordingly, the MB can immediately implement its resolution prohibiting a banking institution to do business
in the Philippines and, thereafter, appoint the PDIC as receiver. The procedure for the involuntary closure of a
bank is summary and expeditious in nature. Such action of the MB shall be final and executory, but may be later
subjected to a judicial scrutiny via a petition for certiorari to be filed by the stockholders of record of the bank
representing a majority of the capital stock. Obviously, this procedure is designed to protect the interest of all
concerned, that is, the depositors, creditors and stockholders, the bank itself and the general public. The
protection afforded public interest warrants the exercise of a summary closure.
In the case at bench, the ISD II submitted its memorandum, dated February 17, 2010, containing the findings
noted during the general examination conducted on ECBI with the cut-off date of September 30, 2009. The
memorandum underscored the inability of ECBI to pay its liabilities as they would fall due in the usual course
of its business, its liabilities being in excess of the assets held. Also, it was noted that ECBIs continued banking
operation would most probably result in the incurrence of additional losses to the prejudice of its depositors and
creditors. On top of these, it was found that ECBI had willfully violated the cease-and-desist order of the MB
issued in its June 24, 2009 Resolution, and had disregarded the BSP rules and directives. For said reasons, the
MB was forced to issue the assailed Resolution No. 276 placing ECBI under receivership. In addition, the MB
stressed that it accorded ECBI ample time and opportunity to address its monetary problem and to restore and
improve its financial health and viability but it failed to do so.
In light of the circumstances obtaining in this case, the application of the corrective measures enunciated in
Section 30 of R.A. No. 7653 was proper and justified. Management take-over under Section 11 of R.A. No.
7353 was no longer feasible considering the financial quagmire that engulfed ECBI showing serious conditions
of insolvency and illiquidity. Besides, placing ECBI under receivership would effectively put a stop to the
further draining of its assets.
No Undue Delegation of Legislative Power
Lastly, the petitioner challenges the constitutionality of Section 30 of R.A. No. 7653, as the legislature granted
the MB a broad and unrestrained power to close and place a financially troubled bank under receivership. He
claims that the said provision was an undue delegation of legislative power. The contention deserves scant
consideration.
Preliminarily, Vivas attempt to assail the constitutionality of Section 30 of R.A. No. 7653 constitutes collateral
attack on the said provision of law. Nothing is more settled than the rule that the constitutionality of a statute
cannot be collaterally attacked as constitutionality issues must be pleaded directly and not collaterally.41 A
collateral attack on a presumably valid law is not permissible. Unless a law or rule is annulled in a direct
proceeding, the legal presumption of its validity stands.42
Be that as it may, there is no violation of the non-delegation of legislative power.1wphi1 The rationale for the
constitutional proscription is that "legislative discretion as to the substantive contents of the law cannot be
delegated. What can be delegated is the discretion to determine how the law may be enforced, not what the law
shall be. The ascertainment of the latter subject is a prerogative of the legislature. This prerogative cannot be
abdicated or surrendered by the legislature to the delegate."43
"There are two accepted tests to determine whether or not there is a valid delegation of legislative power, viz,
the completeness test and the sufficient standard test. Under the first test, the law must be complete in all its

terms and conditions when it leaves the legislature such that when it reaches the delegate the only thing he will
have to do is enforce it. Under the sufficient standard test, there must be adequate guidelines or stations in the
law to map out the boundaries of the delegate's authority and prevent the delegation from running riot. Both
tests are intended to prevent a total transference of legislative authority to the delegate, who is not allowed to
step into the shoes of the legislature and exercise a power essentially legislative."44
In this case, under the two tests, there was no undue delegation of legislative authority in the issuance of R.A.
No. 7653. To address the growing concerns in the banking industry, the legislature has sufficiently empowered
the MB to effectively monitor and supervise banks and financial institutions and, if circumstances warrant, to
forbid them to do business, to take over their management or to place them under receivership. The legislature
has clearly spelled out the reasonable parameters of the power entrusted to the MB and assigned to it only the
manner of enforcing said power. In other words, the MB was given a wide discretion and latitude only as to how
the law should be implemented in order to attain its objective of protecting the interest of the public, the
banking industry and the economy.
WHEREFORE, the petition for prohibition is DENIED.
SO ORDERED.
G.R. No. 186613

August 27, 2013

ROSENDO R. CORALES, IN HIS OFFICIAL CAPACITY AS MUNICIPAL MAYOR OF

NAGCARLAN, LAGUNA, AND DR. RODOLFO R. ANGELES, IN HIS OFFICIAL CAPACITY AS
MUNICIPAL ADMINISTRATOR OF NAGCARLAN, LAGUNA, PETITIONERS,
vs.
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE COMMISSION ON AUDIT, AS
REPRESENTED BY PROVINCIAL STATE AUDITOR OF LAGUNA MAXIMO L. ANDAL,
RESPONDENT.
DECISION
PEREZ, J.:
This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to nullify the Decision1 and
Resolution2 dated 15 September 2008 and 20 February 2009, respectively, of the Court of Appeals in CA-G.R.
SP No. 101296 and, in effect, to reinstate the Petition for Prohibition and Mandamus3 filed by herein petitioners
Rosendo R. Corales (Corales) and Dr. Rodolfo R. Angeles (Dr. Angeles) with the Regional Trial Court (RTC) of
San Pablo City, Laguna. The assailed Decision annulled and set aside the Order4 dated 17 May 2007 of Branch
32, and the Order5 dated 5 September 2007 of Branch 29, both of the RTC of San Pablo City, Laguna in Civil
Case No. SP-6370 (07), which respectively denied herein respondent Republic of the Philippines (Republic)
Motion to Dismiss petitioners Petition for Prohibition and the subsequent Motion for Reconsideration thereof.
The Court of Appeals thereby ordered the dismissal of petitioners Petition for Prohibition with the court a quo.
The questioned Resolution, on the other hand, denied for lack of merit petitioners Motion for Reconsideration
of the assailed Decision.
The antecedents, as culled from the records, are as follows:
Petitioner Corales was the duly elected Municipal Mayor of Nagcarlan, Laguna for three (3) consecutive terms,
i.e., the 1998, 2001 and 2004 elections. In his first term as local chief executive, petitioner Corales appointed

petitioner Dr. Angeles to the position of Municipal Administrator, whose appointment was unanimously
approved by the Sangguniang Bayan of Nagcarlan, Laguna (Sangguniang Bayan) per Resolution No. 98-646
dated 22 July 1998. During his second and third terms as municipal mayor, petitioner Corales renewed the
appointment of petitioner Dr. Angeles. But, on these times, the Sangguniang Bayan per Resolution No. 20010787 dated 12 July 2001 and 26 subsequent Resolutions, disapproved petitioner Dr. Angeles appointment on the
ground of nepotism, as well as the latters purported unfitness and unsatisfactory performance. Even so,
petitioner Dr. Angeles continued to discharge the functions and duties of a Municipal Administrator for which
he received an annual salary of P210,012.00.8
Following an audit on various local disbursements, Maximo Andal (Andal), the Provincial State Auditor of
Laguna, issued an Audit Observation Memorandum (AOM) No. 2006-007-1009 dated 6 October 2006 addressed
to petitioner Corales who was asked to comment/reply. The aforesaid AOM, in sum, states that: 1) petitioner Dr.
Angeles appointment as Municipal Administrator (during the second and third terms of petitioner Corales) was
without legal basis for having been repeatedly denied confirmation by the Sangguniang Bayan; 2) petitioner Dr.
Angeles can be considered, however, as a de facto officer entitled to the emoluments of the office for the actual
services rendered; 3) nonetheless, it is not the Municipality of Nagcarlan that should be made liable to pay for
petitioner Dr. Angeles salary; instead, it is petitioner Corales, being the appointing authority, as explicitly
provided for in Article 169(I) of the Rules and Regulations Implementing the Local Government Code of
1991,10 as well as Section 5, Rule IV of the Omnibus Rules of Appointments and Other Personnel Actions;11 4) a
post audit of payrolls pertaining to the payment of salaries, allowances and other incentives of petitioner Dr.
Angeles from 15 July 2001 up to 31 May 200612 partially amounted to P1,282,829.99; and 5) in view thereof, it
is recommended that an appropriate Notice of Disallowance be issued for the payment of salary expenses
incurred without legal basis by the Municipality of Nagcarlan in the aforestated amount.13
Instead of submitting his comment/reply thereon, petitioner Corales, together with petitioner Dr. Angeles, opted
to file a Petition for Prohibition and Mandamus against Andal and the then members of the Sangguniang Bayan
before the RTC of San Pablo City, Laguna, docketed as Civil Case No. SP-6370 (07) and originally raffled to
Branch 32. Petitioners sought, by way of prohibition, to require the Office of the Provincial Auditor, through
Andal, to recall its AOM and to eventually desist from collecting reimbursement from petitioner Corales for the
salaries paid to and received by petitioner Dr. Angeles for the latters services as Municipal Administrator.
Petitioners similarly sought, by way of mandamus, to compel the then members of the Sangguniang Bayan, as a
collegial body, to recall its Resolutions denying confirmation to petitioner Dr. Angeles appointment as
Municipal Administrator and in their stead to confirm the validity and legitimacy of such appointment.14
In its turn, the Office of the Solicitor General (OSG), on Andals behalf, who was impleaded in his official
capacity, filed a Motion to Dismiss petitioners Petition for Prohibition and Mandamus grounded on lack of
cause of action, prematurity and non-exhaustion of administrative remedies. It was specifically contended
therein that: (1) the issuance of the AOM was merely an initiatory step in the administrative investigation of the
Commission on Audit (COA) to allow petitioner Corales to controvert the findings and conclusions of the
Sangguniang Bayan in its Resolution No. 2001-078, as well as those of then Secretary Jose D. Lina, Jr. in
Department of Interior and Local Government (DILG) Opinion No. 124 s. 2002; (2) it was only after the
completion of the said investigation that a resolution will be issued as regards the propriety of the disbursements
made by the Municipality of Nagcarlan in the form of salaries paid to petitioner Dr. Angeles during his tenure as
Municipal Administrator; and (3) instead of resorting to judicial action, petitioner Corales should have first
responded to the AOM and, in the event of an adverse decision against him, elevate the matter for review to a
higher authorities in the COA.15 With these, petitioners petition should be dismissed, as petitioner Corales has
no cause of action against Andal - his resort to judicial intervention is premature and he even failed to avail
himself of, much less exhaust, the administrative remedies available to him.16
In its Order dated 17 May 2007, the trial court denied the said Motion to Dismiss on the ground that Andal was
merely a nominal party.17 The subsequent motion for its reconsideration was also denied in another Order dated
5 September 2007.18

Respondent Republic, as represented by COA, as represented by Andal, consequently filed a Petition for
Certiorari with the Court of Appeals ascribing grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the trial court in rendering the Orders dated 17 May 2007 and 5 September 2007, as it
unjustly denied respondents right to actively prosecute the case through a mere declaration that it was a
nominal party despite a clear showing that the Petition for Prohibition referred to the respondent as a real party
in interest.19
On 15 September 2008, the Court of Appeals rendered its now assailed Decision granting respondents Petition
for Certiorari, thereby annulling and setting aside the RTC Orders dated 17 May 2007 and 5 September 2007
and, accordingly, dismissing petitioners Petition for Prohibition with the court a quo.20 The Court of Appeals
justified its decision in the following manner:
x x x We agree with the OSGs contention that the [herein respondent Republic], herein represented by the COA
and specifically by Andal in the latters capacity as Provincial State Auditor of Laguna, is not merely a nominal
party to the petition for prohibition. x x x. That the [respondent] naturally has an interest in the
disposition/disbursement of said public funds as well as in the recovery thereof should the ongoing investigative
audit confirm the illegality thereof cannot be gainsaid. Rather than a mere nominal party, therefore, the
[respondent] is an indispensable party to the petition for prohibition and may thus seek its dismissal, given that
under the attendant facts there is a yet no actual case or controversy calling for [therein] respondent courts
exercise of its judicial power.
Judicial review cannot be exercised in vacuo. Thus, as a condition precedent for the exercise of judicial inquiry,
there must be an actual case or controversy, which exists when there is a conflict of legal rights or an assertion
of opposite legal claims, which can be resolved on the basis of existing law and jurisprudence. x x x. An actual
case or controversy thus means an existing case or controversy that is appropriate or ripe for judicial
determination, not conjectural or anticipatory, lest the decision of the court would amount to an advisory
opinion.
[Herein petitioners] x x x have failed to show the existence of an actual case or controversy that would
necessitate judicial inquiry through a petition for prohibition. As the OSG aptly observed, the issuance of the
AOM is just an initiatory step in the investigative audit being then conducted by Andal[,] as Provincial State
Auditor of Laguna to determine the propriety of the disbursements made by the Municipal Government of
Nagcarlan. While Andal may have stated an opinion in the AOM that [herein petitioner] Corales should
reimburse the government treasury for the salaries paid to [herein petitioner Dr. Angeles] in light of the repeated
disapproval and/or rejection of the latters appointment by the Sangguniang [Bayan] of Nagcarlan, there is no
showing whatsoever of any affirmative action taken by Andal to enforce such audit observation. What Andal
did, as the AOM unmistakably shows, was to merely request [petitioner] Corales to submit a reply/comment to
the audit observation and in the process afford the latter an opportunity to controvert not only Andals opinion
on salary reimbursement but the other statements therein expressed by the other members of the audit team.
In the absence moreover of a showing that [petitioners], particularly [petitioner] Corales, sustained actual or
imminent injury by reason of the issuance of the AOM, there is no reason to allow the continuance of the
petition for prohibition which was, after all, manifestly conjectural or anticipatory, filed for a speculative
purpose and upon the hypothetical assumption that [petitioner] Corales would be eventually compelled to
reimburse the amounts paid as [petitioner Dr. Angeles] salaries should the audit investigation confirm the
irregularity of such disbursements. This Court will not engage in such speculative guesswork and neither should
respondent court x x x.21 (Emphasis and italics supplied).
Disgruntled, petitioners moved for its reconsideration but it was denied for lack of merit in a Resolution dated
20 February 2009.
Hence, this petition.

In their Memorandum, petitioners raise the following issues:

I.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A PALPABLY ERRONEOUS
RESOLUTION OF A SUBSTANTIAL QUESTION OF LAW WHEN IT ORDERED THE DISMISSAL OF
PETITIONERS SUIT FOR PROHIBITION.
II.
WHETHER OR NOT THE COURT OF APPEALS ACTED UNJUSTLY AND INJUDICIOUSLY WHEN IT
HELD THAT THE FACTS AND CIRCUMSTANCES SURROUNDING THE SUIT FOR PROHIBITION IS
NOT YET RIPE FOR JUDICIAL DETERMINATION.
III.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR IN
THE INTERPRETATION AND RESOLUTION OF A PIVOTAL LEGAL ISSUE WHEN IT CONCLUDED
THAT THERE IS NO ACTUAL DISPUTE OR CONCRETE CONTROVERSY WHICH MAY BE THE
PROPER SUBJECT MATTER OF A SUIT FOR PROHIBITION.
IV.
WHETHER OR NOT THE COURT OF APPEALS UNJUSTIFIABLY TRANSGRESSED AND TRAMPLED
UPON A CATEGORICAL JURISPRUDENTIAL DOCTRINE WHEN IT TOOK COGNIZANCE OF AND
FAVORABLY RESOLVED THE [HEREIN RESPONDENTS] PETITION FOR CERTIORARI, IN BLATANT
VIOLATION OF THE RULE LAID DOWN IN THE APROPOS CASE OF CHINA ROAD AND BRIDGE
CORPORATION [V.] COURT OF APPEALS (348 SCRA 401).
V.
WHETHER OR NOT THE COURT OF APPEALS OVERSTEPPED AND WENT BEYOND THE
BOUNDARIES OF ITS LEGITIMATE DISCRETION WHEN IT DEVIATED AND VEERED AWAY FROM
THE PRINCIPAL ISSUES OF THE CASE, INSTEAD OF PRONOUNCING THAT PETITIONERS HAVE A
VALID, PERFECT AND LEGITIMATE CAUSE OF ACTION FOR PROHIBITION.22 (Italics supplied).
The Petition is bereft of merit.
The issues will be discussed in seriatim.
The first three issues concern the ripeness or prematurity of the Petition for Prohibition assailing the AOM
issued by Andal to petitioner Corales. Petitioners argue that from the tenor of the AOM it is clear that petitioner
Corales is being adjudged liable and personally accountable to pay or to reimburse, in his private capacity, the
salaries paid to and received by petitioner Dr. Angeles for the latters services as Municipal Administrator, as his
appointment thereto was considered invalid for lack of necessary confirmation from the Sangguniang Bayan. It
is further argued that contrary to the claim of respondent Republic that such AOM is a mere initiatory step in the
course of an investigative auditing process, the wordings thereof unmistakably reveal that the same is a
categorical disposition and enforcement measure requiring petitioner Corales to reimburse the money disbursed
by the Municipality of Nagcarlan to pay petitioner Dr. Angeles salaries as Municipal Administrator. Such AOM
is a firm, clear and affirmative official action on the part of the Provincial State Auditor to hold petitioner
Corales liable for reimbursement; thus, to require the latter to still comment or controvert the findings thereon is

a mere frivolous and useless formality. Since the requirement for petitioner Corales to pay and reimburse the
salaries of petitioner Dr. Angeles is actual, direct and forthcoming, the same may be the proper subject of an
action for prohibition. Otherwise stated, such imposition of liability for reimbursement against petitioner
Corales presents a concrete justiciable controversy and an actual dispute of legal rights.
Petitioners contention is unavailing.
To begin with, this Court deems it proper to quote the significant portions of the questioned AOM, to wit:
FOR :

Hon. ROSENDO R. CORALES

Municipal Mayor
Nagcarlan, Laguna

FROM :

Mr. MAXIMO L. ANDAL

State Auditor IV
Audit Team Leader

May we have your comment/reply on the following audit observation. Please return the duplicate within fifteen
(15) days upon receipt by filling up the space provided for with your comments.
AUDIT OBSERVATION
The appointment of [herein petitioner Dr.
Angeles] as Municipal Administrator was
repeatedly denied not confirmed/
concurred by Sangguniang Bayan hence,
the validity of the appointment as per
opinion/rulings by the then Secretary Jose
D. Lina, Jr. of the DILG in opinion No.
124 s.2002 was without legal basis.
DILG Opinion No. 124 s[.]2002 states that
the continued discharge of powers by
[petitioner Dr. Angeles] as Municipal
Administrator appears to have no legal
basis. A person may assume public office
once his appointment is already effective.
The Supreme Court in one case (Atty. David
B. Corpuz [v.] Court of Appeals, et al[.],
G.R. No. 123989, 26 January 1998) held
that where the assent or confirmation of
some other office or body is required, the
appointment may be complete only when
such assent or confirmation is obtained.
Until the process is completed, the appointee
can claim no vested right in the office nor
invoke security of tenure. Since the
appointment of a Municipal Administrator
requires sanggunian concurrence (Section
443 (d), RA 7160) and considering that the

MANAGEMENT COMMENT

appointment never became effective. As

such, his assumption and continued holding
of the office of the Municipal Administrator
find no legal basis.
However, [petitioner Dr. Angeles] may
claim salary for the services he has actually
rendered. As held in one case (Civil
Liberties Union [v.] Executive Secretary,
194 SCRA 317), a de facto officer is entitled
to emoluments of the office for the actual
services rendered. Here, [petitioner Dr.
Angeles] can be considered as a de facto
officer. x x x, as held in the Corpuz case
cited above, the Supreme Court ruled that a
public official who assumed office under an
incomplete appointment is merely a de facto
officer for the duration of his occupancy of
the office for the reason that he assumed
office under color of a known appointment
which is void by a reason of some defect or
irregularity in its exercise.
It is worthy to emphasize along that line that
while [petitioner Dr. Angeles] may be
entitled to the salary as a de facto officer, the
municipality cannot be made liable to pay
his salaries. Instructive on this point is
Article 169 (I) of the Rules and Regulations
Implementing the Local Government Code
of 1991 which explicitly provides, thus:
"The appointing authority shall be liable for
the payment of salary of the appointee for
actual services rendered if the appointment
is disapproved because the appointing
authority issued it in willful violation of
applicable laws, rules and regulations
thereby making the appointment unlawful."
Corollary, Section 5 of Rule IV of the
Omnibus Rules of Appointments and Other
Personnel Actions provides, thus:
"The services rendered by any person who
was required to assume the duties and
responsibilities of any position without
appointment having been issued by the
appointing authority shall not be credited
nor recognized by the Commission and shall

be the personal accountability of the person

who made him assume office.
Hence, [herein petitioner Corales] shall pay
the salaries of [petitioner Dr. Angeles] for
the services the latter has actually rendered.
xxx

xxx

xxx

Clearly, the appointment of [petitioner Dr.

Angeles] per se was bereft of legal basis in
view of the absence of the concurrence of
the legislative body thus payment of his
salaries from the funds of the Municipality
for actual services rendered remained
unlawful.
Further, in paragraph 4 of the letter of Mr.
Allan Poe M. Carmona, Director II of the
CSC dated [1 December 2004] to Mr. Ruben
C. Pagaspas, OIC, Regional Cluster
Director, COA, Cluster III, Sub-Cluster VI
stated that [petitioner Dr. Angeles] cannot be
appointed to Municipal Administrator
without the concurrence of the Sangguniang
Bayan as provided under RA 7160.
Post audit of payrolls pertaining to the
payment of salaries, allowances and other
incentives of [petitioner Dr. Angeles] as
Municipal Administrator for the period from
[15 July 2001] up to [31 May 2006]
excluding the period from [1 November
2001] to [31 December 2001], [16 March
2002] to [15 May 2002], [1-31 August
2002], [16-30 June 2003], [1-31 December
2003], [1-31 September 2004] and [1 June
2006] to [30 September 2006] were partially
amounted to P1,282,829.99. x x x.
Issuance of Notice of Disallowance was
suggested by Atty. Eden T. Rafanan,
Regional Cluster Director for [L]egal and
Adjudication Office in her 2nd Indorsement
dated [3 July 2006].
In view hereof, it is recommended that
appropriate Notice of Disallowance be
issued for the payment of the salary
expenses incurred without legal basis by the

municipality in the amount mentioned in the

above paragraph.23 (Emphasis, italics and
underscoring supplied).

As can be gleaned therefrom, petitioner Corales was simply required to submit his comment/reply on the
observations stated in the AOM. As so keenly observed by the Court of Appeals, any mention in the AOM that
petitioner Corales shall reimburse the salaries paid to petitioner Dr. Angeles in light of the repeated disapproval
or rejection by the Sangguniang Bayan of his appointment as Municipal Administrator was merely an initial
opinion, not conclusive, as there was no showing that Andal had taken any affirmative action thereafter to
compel petitioner Corales to make the necessary reimbursement. Otherwise stated, it has not been shown that
Andal carried out or enforced what was stated in the AOM. On the contrary, petitioner Corales was given an
opportunity to refute the findings and observations in the AOM by requesting him to comment/reply thereto, but
he never did. More so, even though the AOM already contained a recommendation for the issuance of a Notice
of Disallowance of the payment of salary expenses, the records are bereft of any evidence to show that a Notice
of Disallowance has, in fact, been issued. Concomitantly, the AOM did not contain any recommendation to the
effect that petitioner Corales would be held personally liable for the amount that would be disallowed. It is,
therefore, incongruous to conclude that the said AOM is tantamount to a directive requiring petitioner Corales
to reimburse the salaries paid to and received by petitioner Dr. Angeles during the latters stint as Municipal
Administrator after his appointment thereto was held invalid for want of conformity from the Sangguniang
Bayan.
In relation thereto, as aptly observed by the OSG, to which the Court of Appeals conformed, the issuance of the
AOM is just an initiatory step in the investigative audit being conducted by Andal as Provincial State Auditor to
determine the propriety of the disbursements made by the Municipal Government of Laguna. That the issuance
of an AOM can be regarded as just an initiatory step in the investigative audit is evident from COA
Memorandum No. 2002-053 dated 26 August 2002.24 A perusal of COA Memorandum No. 2002-053,
particularly Roman Numeral III, Letter A, paragraphs 1 to 5 and 9, reveals that any finding or observation by
the Auditor stated in the AOM is not yet conclusive, as the comment/justification25 of the head of office or his
duly authorized representative is still necessary before the Auditor can make any conclusion. The Auditor may
give due course or find the comment/justification to be without merit but in either case, the Auditor shall clearly
state the reason for the conclusion reached and recommendation made. Subsequent thereto, the Auditor shall
transmit the AOM, together with the comment or justification of the Auditee and the formers recommendation
to the Director, Legal and Adjudication Office (DLAO), for the sector concerned in Metro Manila and/or the
Regional Legal and Adjudication Cluster Director (RLACD) in the case of regions. The transmittal shall be
coursed through the Cluster Director concerned and the Regional Cluster Director, as the case may be, for their
own comment and recommendation. The DLAO for the sector concerned in the Central Office and the RLACD
shall make the necessary evaluation of the records transmitted with the AOM. When, on the basis thereof, he
finds that the transaction should be suspended or disallowed, he will then issue the corresponding Notice of
Suspension (NS), Notice of Disallowance (ND) or Notice of Charge (NC), as the case may be, furnishing a copy
thereof to the Cluster Director. Otherwise, the Director may dispatch a team to conduct further investigation
work to justify the contemplated action. If after in-depth investigation, the DLAO for each sector in Metro
Manila and the RLACD for the regions find that the issuance of the NS, ND, and NC is warranted, he shall
issue the same and transmit such NS, ND or NC, as the case may be, to the agency head and other persons
found liable therefor.
From the foregoing, it is beyond doubt that the issuance of an AOM is, indeed, an initial step in the conduct of
an investigative audit considering that after its issuance there are still several steps to be conducted before a
final conclusion can be made or before the proper action can be had against the Auditee. There is, therefore, no
basis for petitioner Corales claim that his comment thereon would be a mere formality. Further, even though the

AOM issued to petitioner Corales already contained a recommendation for the issuance of a Notice of
Disallowance, still, it cannot be argued that his comment/reply to the AOM would be a futile act since no Notice
of Disallowance was yet issued. Again, the records are bereft of any evidence showing that Andal has already
taken any affirmative action against petitioner Corales after the issuance of the AOM.
Viewed in this light, this Court can hardly see any actual case or controversy to warrant the exercise of its
power of judicial review. Settled is the rule that for the courts to exercise the power of judicial review, the
following must be extant: (1) there must be an actual case calling for the exercise of judicial power; (2) the
question must be ripe for adjudication; and (3) the person challenging must have the "standing." An actual case
or controversy involves a conflict of legal rights, an assertion of opposite legal claims, susceptible of judicial
resolution as distinguished from a mere hypothetical or abstract difference or dispute. There must be a
contrariety of legal rights that can be interpreted and enforced on the basis of existing law and jurisprudence.
Closely related thereto is that the question must be ripe for adjudication. A question is considered ripe for
adjudication when the act being challenged has had a direct adverse effect on the individual challenging it. The
third requisite is legal standing or locus standi, which has been defined as a personal or substantial interest in
the case such that the party has sustained or will sustain direct injury as a result of the governmental act that is
being challenged, alleging more than a generalized grievance. The gist of the question of standing is whether a
party alleges "such personal stake in the outcome of the controversy as to assure that concrete adverseness
which sharpens the presentation of issues upon which the court depends for illumination of difficult
constitutional questions." Unless a person is injuriously affected in any of his constitutional rights by the
operation of statute or ordinance, he has no standing.26
The requisites of actual case and ripeness are absent in the present case. To repeat, the AOM issued by Andal
merely requested petitioner Corales to comment/reply thereto.1awp++i1 Truly, the AOM already contained a
recommendation to issue a Notice of Disallowance; however, no Notice of Disallowance was yet issued. More
so, there was no evidence to show that Andal had already enforced against petitioner Corales the contents of the
AOM. Similarly, there was no clear showing that petitioners, particularly petitioner Corales, would sustain
actual or imminent injury by reason of the issuance of the AOM. The action taken by the petitioners to assail the
AOM was, indeed, premature and based entirely on surmises, conjectures and speculations that petitioner
Corales would eventually be compelled to reimburse petitioner Dr. Angeles salaries, should the audit
investigation confirm the irregularity of such disbursements. Further, as correctly pointed out by respondent
Republic in its Memorandum, what petitioners actually assail is Andals authority to request them to file the
desired comment/reply to the AOM, which is beyond the scope of the action for prohibition, as such request is
neither an actionable wrong nor constitutive of an act perceived to be illegal. Andal, being the Provincial State
Auditor, is clothed with the authority to audit petitioners disbursements, conduct an investigation thereon and
render a final finding and recommendation thereafter. Hence, it is beyond question that in relation to his audit
investigation function, Andal can validly and legally require petitioners to submit comment/reply to the AOM,
which the latter cannot pre-empt by prematurely seeking judicial intervention, like filing an action for
prohibition.
Moreover, prohibition, being a preventive remedy to seek a judgment ordering the defendant to desist from
continuing with the commission of an act perceived to be illegal, may only be resorted to when there is "no
appeal or any other plain, speedy, and adequate remedy in the ordinary course of law."27
In this case, petitioners insist that it is no longer necessary to exhaust administrative remedies considering that
there is no appeal or any other plain, speedy and appropriate remedial measure to assail the imposition under the
AOM aside from an action for prohibition.
This Court finds the said contention plain self-deception.
As previously stated, petitioners action for prohibition was premature. The audit investigative process was still
in its initial phase. There was yet no Notice of Disallowance issued. And, even granting that the AOM issued to

petitioner Corales is already equivalent to an order, decision or resolution of the Auditor or that such AOM is
already tantamount to a directive for petitioner Corales to reimburse the salaries paid to petitioner Dr. Angeles,
still, the action for prohibition is premature since there are still many administrative remedies available to
petitioners to contest the said AOM. Section 1, Rule V of the 1997 Revised Rules of Procedure of the COA,
provides: "[a]n aggrieved party may appeal from an order or decision or ruling rendered by the Auditor
embodied in a report, memorandum, letter, notice of disallowances and charges, Certificate of Settlement and
Balances, to the Director who has jurisdiction over the agency under audit." From the final order or decision of
the Director, an aggrieved party may appeal to the Commission proper.28 It is the decision or resolution of the
Commission proper which can be appealed to this Court.29
Clearly, petitioners have all the remedies available to them at the administrative level but they failed to exhaust
the same and instead, immediately sought judicial intervention. Otherwise stated, the auditing process has just
begun but the petitioners already thwarted the same by immediately filing a Petition for Prohibition. In Fua, Jr.
v. COA,30 citing Sison v. Tablang,31 this Court declared that the general rule is that before a party may seek the
intervention of the court, he should first avail himself of all the means afforded him by administrative processes.
The issues which administrative agencies are authorized to decide should not be summarily taken from them
and submitted to the court without first giving such administrative agency the opportunity to dispose of the
same after due deliberation. Also, in The Special Audit Team, Commission on Audit v. Court of Appeals and
Government Service Insurance System,32 this Court has extensively pronounced that:
If resort to a remedy within the administrative machinery can still be made by giving the administrative officer
concerned every opportunity to decide on a matter that comes within his or her jurisdiction, then such remedy
should be exhausted first before the courts judicial power can be sought. The premature invocation of the
intervention of the court is fatal to ones cause of action. The doctrine of exhaustion of administrative remedies
is based on practical and legal reasons. The availment of administrative remedy entails lesser expenses and
provides for a speedier disposition of controversies. Furthermore, the courts of justice, for reasons of comity
and convenience, will shy away from a dispute until the system of administrative redress has been completed
and complied with, so as to give the administrative agency concerned every opportunity to correct its error and
dispose of the case. x x x.
Moreover, courts have accorded respect for the specialized ability of other agencies of government to deal with
the issues within their respective specializations prior to any court intervention. The Court has reasoned thus:
We have consistently declared that the doctrine of exhaustion of administrative remedies is a cornerstone of our
judicial system. The thrust of the rule is that courts must allow administrative agencies to carry out their
functions and discharge their responsibilities within the specialized areas of their respective competence. The
rationale for this doctrine is obvious. It entails lesser expenses and provides for the speedier resolution of
controversies. Comity and convenience also impel courts of justice to shy away from a dispute until the system
of administrative redress has been completed.
The 1987 Constitution created the constitutional commissions as independent constitutional bodies, tasked with
specific roles in the system of governance that require expertise in certain fields. For COA, this role involves:
The power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts
of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government,
or any of its subdivisions, agencies, instrumentalities, including government-owned and controlled corporations
with original charter. x x x.
As one of the three (3) independent constitutional commissions, COA has been empowered to define the scope
of its audit and examination and to establish the techniques and methods required therefor; and to promulgate
accounting and auditing rules and regulations, including those for the prevention and disallowance of irregular,

unnecessary, excessive, extravagant or unconscionable expenditures or uses of government funds and

properties.
Thus, in the light of this constitutionally delegated task, the courts must exercise caution when intervening with
disputes involving these independent bodies, for the general rule is that before a party may seek the intervention
of the court, he should first avail of all the means afforded him by administrative processes. The issues which
administrative agencies are authorized to decide should not be summarily taken from them and submitted to a
court without first giving such administrative agency the opportunity to dispose of the same after due
deliberation.33 (Emphasis supplied).
In their futile attempt to convince this Court to rule in their favor, petitioners aver that by filing a Motion to
Dismiss on the ground of lack of cause of action, respondent Republic, in essence, admitted all the material
averments and narration of facts stated in the Petition for Prohibition and Mandamus. As such, there is no longer
any question of fact to speak of and what remains is a pure question of law. The judgment, therefore, of the trial
court denying the Motion to Dismiss is no longer subject to any appeal or review by the Court of Appeals.
Instead, it is already appealable and reviewable by this Court under Rule 45 of the Rules of Court, where only
pure questions of law may be raised and dealt with. This is in line with the pronouncement in China Road and
Bridge Corporation v. Court of Appeals34 (China Road Case). The Court of Appeals should have dismissed
respondent Republics Petition for Certiorari under Rule 65 of the Rules of Court for being an improper and
inappropriate mode of review.
Petitioners above argument is misplaced.
China Road Case is not at all applicable in the case at bench. Therein, the Motion to Dismiss the Complaint was
granted. As the order granting the motion to dismiss was a final, as distinguished from an interlocutory order,
the proper remedy was an appeal in due course.35 Thus, this Court in China Road Case held that:
x x x Applying the test to the instant case, it is clear that private respondent raises pure questions of law which
are not proper in an ordinary appeal under Rule 41, but should be raised by way of a petition for review on
certiorari under Rule 45.1wphi1
We agree with private respondent that in a motion to dismiss due to failure to state a cause of action, the trial
court can consider all the pleadings filed, including annexes, motions and the evidence on record. However in
so doing, the trial court does not rule on the truth or falsity of such documents. It merely includes such
documents in the hypothetical admission. Any review of a finding of lack of cause of action based on these
documents would not involve a calibration of the probative value of such pieces of evidence but would only
limit itself to the inquiry of whether the law was properly applied given the facts and these supporting
documents. Therefore, what would inevitably arise from such a review are pure questions of law, and not
questions of fact.36 (Emphasis supplied).
In the case at bench, however, the Motion to Dismiss was denied. It is well-entrenched that an order denying a
motion to dismiss is an interlocutory order which neither terminates nor finally disposes of a case as it leaves
something to be done by the court before the case is finally decided on the merits.37 Therefore, contrary to the
claim of petitioners, the denial of a Motion to Dismiss is not appealable, not even via Rule 45 of the Rules of
Court. The only remedy for the denial of the Motion to Dismiss is a special civil action for certiorari showing
that such denial was made with grave abuse of discretion.38
Taking into consideration all the foregoing, this Court finds no reversible error on the part of the Court of
Appeals in reversing the Orders of the court a quo and consequently dismissing petitioners Petition for
Prohibition filed thereat.1wphi1

WHEREFORE, premises considered, the Decision and Resolution dated 15 September 2008 and 20 February
2009, respectively, of the Court of Appeals in CA-G.R. SP No. 101296 are hereby AFFIRMED. Costs against
petitioners.
SO ORDERED.
G.R. No. 164966

June 8, 2007

ROLANDO TAN, ELENA TAN and LAMBERTO TAN, petitioners,

vs.
THE HONORABLE COURT OF APPEALS, HON. HERMES B. MONTERO, in his capacity as
Assistant Provincial Prosecutor, and the PEOPLE OF THE PHILIPPINES, respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari assailing the November 24, 2003 Decision1 of the Court of Appeals in
CA-G.R. SP No. 74450 dismissing the petition for prohibition and injunction, which sought to enjoin the
Presiding Judge of the Regional Trial Court of Cebu City, Branch 5, from further proceeding with Crim. Case
Nos. 64381, 64383, 64385, 64386 and 64387; and the July 14, 2004 Resolution2 denying petitioners motion for
reconsideration.
In a Letter-Complaint dated June 26, 2002, James L. King (King) charged Roderick Lim-Go, Lucy Go, Nelson
Go, John Doe and Peter Doe with violation of Batas Pambansa Bilang 22 (B.P. 22) and Estafa involving two
checks both dated June 21, 2002, to wit: (1) United Overseas Bank Philippines (UOB) Check No. 00082597 in
the amount of P20 Million; and (2) UOB Check No. 00082599 in the amount of P7.9 Million.
Subsequently or on July 10, 2002, King filed a Supplemental Complaint-Affidavit involving five additional
checks, to wit: (1) UOB Check No. 0000082596 dated June 21, 2002 in the amount of P7 Million; (2) UOB
Check No. 0000082598 dated June 21, 2002 in the amount of P26.68 Million; (3) UOB Check No. 0000082434
dated June 23, 2002 in the amount of P2.6 Million; (4) UOB Check No. 0000082495 dated June 24, 2002 in the
amount of P7 Million; and (5) UOB Check No. 0000082494 dated June 24, 2002 in the amount of P18 Million.
The complaints were docketed as I.S. Nos. 02-5997-5999-F, 02-0827-B, 02-0827-C, 02-0827-D, 02-0827-E and
02-0827-F, respectively.
On August 1, 2002, King filed a Second Supplemental Complaint-Affidavit for Estafa impleading Grace TanGo, and herein petitioners Rolando Tan, Elena Tan, and Lamberto Tan, as additional respondents.
King averred that in February 2002, the spouses Roderick Lim Go and Grace Tan-Go (spouses Go) proposed to
him a business transaction wherein the spouses Go would borrow cash from King in exchange for which
Roderick Go would issue postdated checks corresponding to the amount borrowed plus interest. Roderick Gos
parents, Go Tong Go and Lucy Go, and brother, Nelson Go, assured King that whatever checks Roderick Go
would issue would be funded on their due dates and that the checking account at the United Overseas Bank,
Carbon Branch, Cebu City is their joint account. King agreed to the business proposal. Thereafter, Roderick Go
started issuing checks, inclusive of interest, in exchange for the cash given by King. The checks when presented

for encashment were initially honored by the drawee bank; consequently, King reposed his trust and confidence
in spouses Go.
On March 22, 2002, the spouses Go, together with herein petitioners Rolando Tan (father of Grace Tan-Go),
Elena Tan (mother of Grace Tan-Go), asked P100 Million from King allegedly for the renovation of their movie
houses in Butuan City. However, King could only accommodate P40 Million, in exchange for which, Roderick
Go issued several checks to King in the amount of P61.28 Million, inclusive of the interest for three months.
At first, the checks issued by Go were honored by the drawee bank when presented. However, on June 24,
2002, when several of the checks he issued were about to fall due, Roderick Go requested King for a meeting.
While at the agreed meeting place, Roderick Go allegedly attacked King with a box cutter and told him that all
the checks that he issued would be dishonored and for this reason he had to injure, kidnap and kill him. This
incident is the subject of a separate criminal case. Thereafter, all the checks dated June 21, 23 and 24, 2002
issued by Roderick Go were dishonored for having been drawn against insufficient funds. Despite repeated
demands, no payment was made; hence, King filed a complaint for violation of BP Blg. 22 and Estafa.
All the accused, except Roderick Go, submitted their counter-affidavits. In their Joint Counter-Affidavit3 dated
August 8, 2002, petitioners denied meeting King on March 22, 2002; that only Roderick Go could be held liable
for the bouncing checks considering that he alone issued the same; that Kings first supplemental complaintaffidavit contradicted his second supplemental complaint-affidavit. In the first supplemental complaint-affidavit,
Roderick Go, Lucy Go, Nelson Go, John Doe and Peter Doe were made respondents as co-conspirators relative
to the issuance of the bouncing checks, while in the second supplemental complaint-affidavit, petitioners were
made co-conspirators over the same checks but under totally different circumstances. Thus, petitioners claim
that the criminal cases filed against them were an afterthought and prayed that the same be dismissed.
The preliminary investigation of the subject criminal cases was initially assigned to 1st Assistant Provincial
Prosecutor/Officer-in-Charge Cesar Tajanlangit who voluntarily inhibited himself. On October 10, 2002, then
Secretary of Justice Hernando B. Perez issued Department Order (D.O.) No. 369,4 designating public
respondent 3rd Assistant Provincial Prosecutor Hermes Montero (Montero) to continue with the preliminary
investigation of these cases, and, if the evidence warranted, to file the appropriate informations in court.
In a Joint Resolution5 dated November 8, 2002, public respondent Montero found probable cause for the
following crimes:
WHEREFORE, in the light of the foregoing, the following criminal Informations shall be filed against:
(1) Roderick L. Go, alias Edu Ting, for violation of B.P. 22 on seven (7) counts;
(2) Roderick L. Go, Grace Tan-Go, Go Tong Go, Lucy Go and Nelson Go, for estafa on two (2) counts anent (a)
UOB Check No. 00082597 dated June 21, 2002 in the amount of P20,000,000.00; and (b) UOB Check No.
00082599 dated June 21, 2002 in the amount of P7,800,000.00;
(3) Roderick L. Go, Grace Tan-Go, Go Tong Go, Lucy Go, Nelson Go, [petitioners] Rolando Tan, Elena Tan
and Lamberto Tan, for estafa on five (5) counts anent (c) UOB Check No. 0000082596 dated June 21, 2002, in
the amount of P7,000,000.00, (d) UOB Check No. 0000082598 dated June 21, 2002, in the amount of
P26,680,000.00, (e) UOB Check No. 0000082434 dated June 23, 2002, in the amount of P2,600,000.00, (f)

UOB Check No. 0000082495 dated June 24, 2002, in the amount of P7,000,000.00, and (g) UOB Check No.
0000082494 dated June 24, 2002, in the amount of P18,000,000.00.6
On November 11, 2002, five informations for estafa under Article 315, 2(a) of the Revised Penal Code were
filed against Roderick L. Go, Grace Tan-Go, Go Tong Go, Lucy Go, Nelson Go, and herein petitioners,
docketed as Criminal Case Nos. CBU- 64381, 64383, 64385, 64386, and 64387 and raffled to the Regional Trial
Court, Branch 5 of Cebu City. From the above-quoted adverse Resolution of public respondent Montero, only
Roderick Go and Grace Tan-Go separately appealed to the Secretary of Justice.
On November 18, 2002, before any warrant of arrest could be issued, petitioners posted bail. The following day
or on November 19, 2002, they were arraigned and pleaded not guilty.
On December 17, 2002, petitioners filed a Petition for Prohibition and Injunction with Preliminary Injunction
and Prayer for Temporary Restraining Order7 before the Court of Appeals. They sought to restrain the trial court
from proceeding with the subject criminal cases against them and prayed that the same be dismissed.
On November 24, 2003, the Court of Appeals issued the assailed Decision dismissing the petition for lack of
merit. It found that (1) petitioners failed to avail themselves of other plain, speedy and adequate remedies to
challenge the public prosecutors finding of probable cause; (2) the petition failed to establish that it falls under
any of the exceptions to the general rule that the court will not issue writs of prohibition or injunction,
preliminary or final, to enjoin or restrain a criminal prosecution; (3) public respondent Montero was duly
authorized by the Secretary of Justice to conduct the preliminary investigation and, if the evidence so warranted,
to file the corresponding informations relative to the subject criminal cases; (4) petitioners failed to prove that
public respondents acted with grave abuse of discretion; and (5) petitioners claims contesting the public
prosecutors finding of probable cause are matters of defense that should be threshed out during the trial of the
criminal cases and not through the extraordinary remedy of prohibition.
After their motion for reconsideration was denied, petitioners interposed the instant petition raising nine issues8
revolving around the factual and legal bases of the finding of probable cause for estafa against them as well as
the authority of public respondent Montero to file the subject criminal cases with the trial court.
At the outset, it must be stressed that petitioners are asking us to review the Decision of the Court of Appeals
which dismissed their petition for prohibition. Therefore, the principal issue is whether resort to the
extraordinary remedy of prohibition was proper.
We rule in the negative.
Basic is the rule that the writ of prohibition is an extraordinary remedy to prevent the unlawful and oppressive
exercise of legal authority and to provide for a fair and orderly administration of justice.9 It is available only
when there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law, and when the
proceedings are done without or in excess of jurisdiction or with grave abuse of discretion. The petitioner must
allege in his petition and establish facts to show that any other existing remedy is not speedy or adequate.10 A
remedy is plain, speedy and adequate if it will promptly relieve the petitioner from the injurious effects of that
judgment and the acts of the tribunal or inferior court.11 Further, the writ will not lie to correct errors of
judgment but only errors of jurisdiction. As long as the tribunal acts within its jurisdiction, any alleged errors
committed in the exercise of its discretion will amount to nothing more than mere errors of judgment which are

correctible by a timely appeal.12 In determining whether a tribunal acted in grave abuse of discretion, mere
abuse of discretion is not enough. There must be grave abuse of discretion as where the tribunal exercised its
power in an arbitrary or despotic manner, by reason of passion or personal hostility, and it must be so patent or
gross as would amount to an evasion, or virtual refusal to perform the duty enjoined, or to act in contemplation
of law.13
In the case at bar, petitioners contend that there was no appeal or other plain, speedy or adequate remedy
available in the ordinary course of law because they were prevented by the trial court from appealing public
respondent Monteros Joint Resolution dated November 8, 2002 which found, among others, probable cause for
estafa against them. They claim that the trial court "forced arraigned" them on November 19, 2002. This was
allegedly done in order to prevent them from appealing the Joint Resolution dated November 8, 2002 to the
Secretary of Justice as a consequence of paragraph 2, section 7 of DOJ Circular No. 7014 ("2000 National
Prosecution Service Rule on Appeal") which provides in part that "[i]f an information has been filed in court
pursuant to the appealed resolution, the petition shall not be given due course if the accused has already been
arraigned x x x."
We are not persuaded.
Petitioners admit15 that they received a copy of the Joint Resolution dated November 8, 2002 as early as
November 13, 2002. However, from the time they received the copy of the aforesaid Resolution to the time they
were arraigned on November 19, 2002, petitioners did not take steps to move for reconsideration, or appeal the
aforesaid Resolution to the Secretary of Justice. More importantly, the Court of Appeals observed that there is
no evidence on record to support petitioners claim that they were "forced arraigned." In fact, the arraignment of
petitioners proceeded without objections on the part of petitioners or their counsel.16 Absent proof of force or
intimidation, the trial judge enjoys the presumption of regularity in the performance of his functions.17 We also
note that petitioners other co-accused, Roderick Lim Go and Grace Tan-Go, were able to timely appeal the
Joint Resolution dated November 8, 2002 to the Secretary of Justice while petitioners failed to appeal the same
before their arraignment.
In fine, the arguments raised in their petition for prohibition ineluctably shows that petitioners are principally
questioning the factual and legal bases of the finding of probable cause against them. This is but a veiled
attempt to litigate issues which should have been timely appealed to the Secretary of Justice via a petition for
review. However, petitioners, through their own fault, failed to avail themselves of this remedy. Countless times
we have ruled that the extraordinary remedy of certiorari or prohibition is not a substitute for a lost appeal.18
This case is no different.
There is another equally important reason why the instant petition should be denied outright. After the Court of
Appeals issued the assailed Decision dated November 24, 2003 which dismissed petitioners petition for
prohibition, several supervening events took place.
As earlier noted, petitioners failed to appeal from the Joint Resolution dated November 8, 2002 issued by public
respondent Montero which found, among others, probable cause against them for estafa. Only co-accused Grace
Tan-Go and Roderick Go separately and timely appealed to the Secretary of Justice. Then Secretary of Justice
Simeon A. Datumanong subsequently issued a Resolution19 dated December 23, 2003 granting Grace Tan-Gos
petition for review. The aforesaid Resolution was, likewise, favorable to petitioners cause and ordered, among
others, the withdrawal of the informations for estafa against them:

WHEREFORE, the assailed Joint Resolution is hereby SET ASIDE and, conformably with Department Order
No. 473, dated December 8, 2003, which recalls and supersedes Department Order No. 369 previously
authorizing Provincial Prosecutor Cezar Tajanlangit to conduct the preliminary investigation and prosecution of
the foregoing cases, the City Prosecutor of Cebu, is hereby directed to
(1) To withdraw the informations filed in Court against all the respondents for Estafa.
(2) To file the corresponding Informations in Court against RODERICK LIM GO only, for violations of BP 22
on eight (8) counts and proceed with the prosecution thereof; and
(3) To submit to this Office, within ten (10) days from receipt of this Resolution, the appropriate action or
actions taken.
SO ORDERED.20
When King moved for reconsideration of the above Resolution, petitioners participated in the proceedings
before the Secretary of Justice by opposing the same together with Grace Tan-Go.21 In a Resolution22 dated
February 11, 2004, then Acting Secretary of Justice Merceditas N. Guitierrez granted Kings motion for
reconsideration and reinstated public respondent Monteros Joint Resolution dated November 8, 2002. Grace
Tan-Go then filed a motion for reconsideration which was joined by petitioners through their motion for leave
to join the motion for reconsideration.23 However, Acting Secretary Guiterrez denied the same in a Resolution
dated August 18, 2004. Thereafter, Grace Tan-Go filed a motion to resolve the second ground raised in her
motion for reconsideration. In a Resolution24 dated December 17, 2004, Secretary of Justice Raul M. Gonzalez
reversed and set aside the February 11, 2004 and August 18, 2004 Resolutions of Acting Secretary Gutierrez,
and reinstated former Secretary Datumanongs Resolution dated December 23, 2003. Consequently, a motion to
withdraw informations25 was filed by the prosecution before the trial court.
By participating in the proceedings before the Secretary of Justice, petitioners have actively litigated the issues
regarding the factual and legal bases of the finding of probable cause against them as well as the authority of
public respondent Montero to file the subject criminal informations. This is clearly borne by the tenor of the
Resolution dated December 17, 2004 issued by the Secretary of Justice. Yet, these issues are exactly the same
issues being raised by petitioners before this Court through the instant petition which is separate and distinct
from the proceedings before the Secretary of Justice whose aforesaid Resolution is not the one before us for
review. To reiterate, what is before us for review is the Decision of the Court of Appeals which dismissed the
petition for prohibition filed by petitioners to restrain the trial court from proceeding with the criminal cases
against them.
In effect, by taking these two distinct courses of actions, petitioners have pursued the same or related causes,
prayed for the same or substantially the same reliefs, and, in the process, have created the possibility of
conflicting decisions being rendered by the different fora upon the same issues which is precisely the evil that
the rule on forum-shopping seeks to prevent.26 Doubtless, they have engaged in a form of forum-shopping.
Their attempt to trifle with the courts and abuse their processes must not be countenanced. As a consequence of
petitioners violation of the rule against forum-shopping and in order to preserve the laudable objectives of the
rule against forum-shopping, the dismissal of the petition for prohibition should be upheld.27

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated November 24, 2003 in
CA-G.R. SP No. 74450 dismissing petitioners petition for prohibition, and the Resolution dated July 14, 2004
denying reconsideration thereof, are AFFIRMED.
Costs against petitioners.
SO ORDERED.
MANDAMUS
G.R. Nos. 174813-15

March 17, 2009

NILO HIPOS, SR. REPRESENTING DARRYL HIPOS, BENJAMIN CORSIO REPRESENTING

JAYCEE CORSIO, and ERLINDA VILLARUEL REPRESENTING ARTHUR VILLARUEL,
Petitioners,
vs.
HONORABLE RTC JUDGE TEODORO A. BAY, Presiding Judge, RTC, Hall of Justice, Quezon City,
Branch 86, Respondent.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Mandamus under Rule 65 of the Rules of Court seeking a reversal of the Order dated 2
October 2006 of respondent Judge Teodoro A. Bay of Branch 86 of the Regional Trial Court (RTC) of Quezon
City, which denied the Motion to Withdraw Informations of the Office of the City Prosecutor of Quezon City.
The facts of the case are as follows.
On 15 December 2003, two Informations for the crime of rape and one Information for the crime of acts of
lasciviousness were filed against petitioners Darryl Hipos, Jaycee Corsio, Arthur Villaruel and two others
before Branch 86 of the Regional Trial Court of Quezon City, acting as a Family Court, presided by respondent
Judge Bay. The cases were docketed as Criminal Cases No. Q-03-123284, No. Q-03-123285 and No. Q-03123286. The Informations were signed by Assistant City Prosecutor Ronald C. Torralba.
On 23 February 2004, private complainants AAA1 and BBB filed a Motion for Reinvestigation asking Judge
Bay to order the City Prosecutor of Quezon City to study if the proper Informations had been filed against
petitioners and their co-accused. Judge Bay granted the Motion and ordered a reinvestigation of the cases.
On 19 May 2004, petitioners filed their Joint Memorandum to Dismiss the Case[s] before the City Prosecutor.
They claimed that there was no probable cause to hold them liable for the crimes charged.
On 10 August 2004, the Office of the City Prosecutor issued a Resolution on the reinvestigation affirming the
Informations filed against petitioners and their co-accused in Criminal Cases No. Q-03-123284-86. The
Resolution was signed by Assistant City Prosecutor Raniel S. Cruz and approved by City Prosecutor Claro A.
Arellano.

On 3 March 2006, 2nd Assistant City Prosecutor Lamberto C. de Vera, treating the Joint Memorandum to
Dismiss the Case as an appeal of the 10 August 2004 Resolution, reversed the Resolution dated 10 August 2004,
holding that there was lack of probable cause. On the same date, the City Prosecutor filed a Motion to Withdraw
Informations before Judge Bay.
On 2 October 2006, Judge Bay denied the Motion to Withdraw Informations in an Order of even date.
Without moving for a reconsideration of the above assailed Order, petitioners filed the present Petition for
Mandamus, bringing forth this lone issue for our consideration:
CAN THE HON. SUPREME COURT COMPEL RESPONDENT JUDGE BAY TO DISMISS THE CASE
THROUGH A WRIT OF MANDAMUS BY VIRTUE OF THE RESOLUTION OF THE OFFICE OF THE
CITY PROSECUTOR OF QUEZON CITY FINDING NO PROBABLE CAUSE AGAINST THE ACCUSED
AND SUBSEQUENTLY FILING A MOTION TO WITHDRAW INFORMATION? 2
Mandamus is an extraordinary writ commanding a tribunal, corporation, board, officer or person, immediately
or at some other specified time, to do the act required to be done, when the respondent unlawfully neglects the
performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station; or
when the respondent excludes another from the use and enjoyment of a right or office to which the latter is
entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law.3
As an extraordinary writ, the remedy of mandamus lies only to compel an officer to perform a ministerial duty,
not a discretionary one; mandamus will not issue to control the exercise of discretion by a public officer where
the law imposes upon him the duty to exercise his judgment in reference to any manner in which he is required
to act, because it is his judgment that is to be exercised and not that of the court.4
In the case at bar, the act which petitioners pray that we compel the trial court to do is to grant the Office of the
City Prosecutors Motion for Withdrawal of Informations against petitioners. In effect, petitioners seek to curb
Judge Bays exercise of judicial discretion.
There is indeed an exception to the rule that matters involving judgment and discretion are beyond the reach of
a writ of mandamus, for such writ may be issued to compel action in those matters, when refused.5 However,
mandamus is never available to direct the exercise of judgment or discretion in a particular way or the retraction
or reversal of an action already taken in the exercise of either.6 In other words, while a judge refusing to act on a
Motion to Withdraw Informations can be compelled by mandamus to act on the same, he cannot be compelled
to act in a certain way, i.e., to grant or deny such Motion. In the case at bar, Judge Bay did not refuse to act on
the Motion to Withdraw Informations; he had already acted on it by denying the same. Accordingly, mandamus
is not available anymore. If petitioners believed that Judge Bay committed grave abuse of discretion in the
issuance of such Order denying the Motion to Withdraw Informations, the proper remedy of petitioners should
have been to file a Petition for Certiorari against the assailed Order of Judge Bay.
Petitioners counter that the above conclusion, which has been argued by the Solicitor General, is contrary to a
ruling of this Court, which allegedly states that the proper remedy in such cases is a Petition for Mandamus and
not Certiorari. Petitioners cite the following excerpt from our ruling in Sanchez v. Demetriou7:

The appreciation of the evidence involves the use of discretion on the part of the prosecutor, and we do not find
in the case at bar a clear showing by the petitioner of a grave abuse of such discretion.
The decision of the prosecutor may be reversed or modified by the Secretary of Justice or in special cases by the
President of the Philippines. But even this Court cannot order the prosecution of a person against whom the
prosecutor does not find sufficient evidence to support at least a prima facie case. The courts try and absolve or
convict the accused but as a rule have no part in the initial decision to prosecute him.
The possible exception is where there is an unmistakable showing of grave abuse of discretion that will justify a
judicial intrusion into the precincts of the executive. But in such a case the proper remedy to call for such
exception is a petition for mandamus, not certiorari or prohibition.8 (Emphases supplied.)
Petitioners have taken the above passage way out of its context. In the case of Sanchez, Calauan Mayor Antonio
Sanchez brought a Petition for Certiorari before this Court, challenging the order of the respondent Judge
therein denying his motion to quash the Information filed against him and six other persons for alleged rape and
homicide. One of the arguments of Mayor Sanchez was that there was discrimination against him because of the
non-inclusion of two other persons in the Information. We held that even this Court cannot order the prosecution
of a person against whom the prosecutor does not find sufficient evidence to support at least a prima facie case.
However, if there was an unmistakable showing of grave abuse of discretion on the part of the prosecutors in
that case, Mayor Sanchez should have filed a Petition for Mandamus to compel the filing of charges against said
two other persons.
In the case at bar, the Petition for Mandamus is directed not against the prosecution, but against the trial court,
seeking to compel the trial court to grant the Motion to Withdraw Informations by the City Prosecutors Office.
The prosecution has already filed a case against petitioners. Recently, in Santos v. Orda, Jr.,9 we reiterated the
doctrine we established in the leading case of Crespo v. Mogul,10 that once a criminal complaint or an
information is filed in court, any disposition or dismissal of the case or acquittal or conviction of the accused
rests within the jurisdiction, competence, and discretion of the trial court. Thus, we held:
In Crespo v. Mogul, the Court held that once a criminal complaint or information is filed in court, any
disposition of the case or dismissal or acquittal or conviction of the accused rests within the exclusive
jurisdiction, competence, and discretion of the trial court. The trial court is the best and sole judge on what to do
with the case before it. A motion to dismiss the case filed by the public prosecutor should be addressed to the
court who has the option to grant or deny the same. Contrary to the contention of the petitioner, the rule applies
to a motion to withdraw the Information or to dismiss the case even before or after arraignment of the accused.
The only qualification is that the action of the court must not impair the substantial rights of the accused or the
right of the People or the private complainant to due process of law. When the trial court grants a motion of the
public prosecutor to dismiss the case, or to quash the Information, or to withdraw the Information in compliance
with the directive of the Secretary of Justice, or to deny the said motion, it does so not out of subservience to or
defiance of the directive of the Secretary of Justice but in sound exercise of its judicial prerogative.
Petitioners also claim that since Judge Bay granted a Motion for Reinvestigation, he should have "deferred to
the Resolution of Asst. City Prosecutor De Vera withdrawing the case."11 Petitioners cite the following portion
of our Decision in People v. Montesa, Jr.12:

In the instant case, the respondent Judge granted the motion for reinvestigation and directed the Office of the
Provincial Prosecutor of Bulacan to conduct the reinvestigation. The former was, therefore, deemed to have
deferred to the authority of the prosecution arm of the Government to consider the so-called new relevant and
material evidence and determine whether the information it had filed should stand.13
Like what was done to our ruling in Sanchez, petitioners took specific statements from our Decision, carefully
cutting off the portions which would expose the real import of our pronouncements. The Petition for Certiorari
in Montesa, Jr. was directed against a judge who, after granting the Petition for Reinvestigation filed by the
accused, proceeded nonetheless to arraign the accused; and, shortly thereafter, the judge decided to dismiss the
case on the basis of a Resolution of the Assistant Provincial Prosecutor recommending the dismissal of the case.
The dismissal of the case in Montesa, Jr. was done despite the disapproval of the Assistant Provincial
Prosecutors Resolution by the Provincial Prosecutor (annotated in the same Resolution), and despite the fact
that the reinvestigation the latter ordered was still ongoing, since the Resolution of the Assistant Provincial
Prosecutor had not yet attained finality. We held that the judge should have waited for the conclusion of the
Petition for Reinvestigation he ordered, before acting on whether or not the case should be dismissed for lack of
probable cause, and before proceeding with the arraignment. Thus, the continuation of the above paragraph of
our Decision in Montesa, Jr. reads:
Having done so, it behooved the respondent Judge to wait for a final resolution of the incident. In Marcelo vs.
Court of Appeals, this Court ruled:
Accordingly, we rule that the trial court in a criminal case which takes cognizance of an accused's motion for
review of the resolution of the investigating prosecutor or for reinvestigation and defers the arraignment until
resolution of the said motion must act on the resolution reversing the investigating prosecutor's finding or on a
motion to dismiss based thereon only upon proof that such resolution is already final in that no appeal was taken
thereon to the Department of Justice.
The resolution of Assistant Provincial Prosecutor Rutor recommending the dismissal of the case never became
final, for it was not approved by the Provincial Prosecutor. On the contrary, the latter disapproved it. As a
consequence, the final resolution with respect to the reinvestigation is that of the Provincial Prosecutor, for
under Section 4, Rule 112 of the Rules of Court, no complaint or information may be filed or dismissed by an
investigating fiscal without the prior written authority or approval of the provincial or city fiscal or chief state
prosecutor. Also, under Section l(d) of R.A. No. 5180, as amended by P.D. No. 77 and P.D. No. 911.14
As can be clearly seen, the statement quoted by petitioners from Montesa, Jr. is not meant to establish a doctrine
that the judge should just follow the determination by the prosecutor of whether or not there is probable cause.
On the contrary, Montesa, Jr. states:
The rule is settled that once a criminal complaint or information is filed in court, any disposition thereof, such
as its dismissal or the conviction or acquittal of the accused, rests in the sound discretion of the court. While the
prosecutor retains the discretion and control of the prosecution of the case, he cannot impose his opinion on the
court. The court is the best and sole judge on what to do with the case. Accordingly, a motion to dismiss the case
filed by the prosecutor before or after the arraignment, or after a reinvestigation, or upon instructions of the
Secretary of Justice who reviewed the records upon reinvestigation, should be addressed to the discretion of the
court. The action of the court must not, however, impair the substantial rights of the accused or the right of the
People to due process of law.15

In a seemingly desperate attempt on the part of petitioners counsel, he tries to convince us that a judge is
allowed to deny a Motion to Withdraw Informations from the prosecution only when there is grave abuse of
discretion on the part of the prosecutors moving for such withdrawal; and that, where there is no grave abuse of
discretion on the part of the prosecutors, the denial of the Motion to Withdraw Informations is void. Petitioners
counsel states in the Memorandum:
6.10. Furthermore, the ORDER dated October 2, 2006 of the Respondent Judge BAY consisting of 9 pages
which was attached to the URGENT PETITION did not point out any iota of grave abuse of discretion
committed by Asst. City Prosecutor De Vera in issuing his Resolution in favor of the sons of the Petitioners.
Hence, the ORDER issued by RJBAY is NULL and VOID in view of the recent ruling of the Hon. Supreme
Court in Ledesma vs. Court of Appeals, G.R. No. 113216, September 5, 1997, 86 SCAD 695, 278 SCRA 657
which states that:
"In the absence of a finding of grave abuse of discretion, the courts bare denial of a motion to withdraw
information pursuant to the Secretarys resolution is void." (Underscoring ours).
6.11. It is therefore respectfully submitted that the Hon. Supreme Court disregard the argument of the OSG
because of its falsity.16
This statement of petitioners counsel is utterly misleading. There is no such statement in our Decision in
Ledesma.17 The excerpt from Ledesma, which appears to have a resemblance to the statement allegedly quoted
from said case, provides:
No Grave Abuse of Discretion in the Resolution of the Secretary of Justice
In the light of recent holdings in Marcelo and Martinez; and considering that the issue of the correctness of the
justice secretary's resolution has been amply threshed out in petitioner's letter, the information, the resolution of
the secretary of justice, the motion to dismiss, and even the exhaustive discussion in the motion for
reconsideration - all of which were submitted to the court - the trial judge committed grave abuse of discretion
when it denied the motion to withdraw the information, based solely on his bare and ambiguous reliance on
Crespo. The trial court's order is inconsistent with our repetitive calls for an independent and competent
assessment of the issue(s) presented in the motion to dismiss. The trial judge was tasked to evaluate the
secretary's recommendation finding the absence of probable cause to hold petitioner criminally liable for libel.
He failed to do so. He merely ruled to proceed with the trial without stating his reasons for disregarding the
secretary's recommendation.18 (Emphasis supplied.)
It very much appears that the counsel of petitioners is purposely misleading this Court, in violation of Rule
10.02 of the Code of Professional Responsibility, which provides:
Rule 10.02 A lawyer shall not knowingly misquote or misrepresent the contents of a paper, the language or the
argument of opposing counsel, or the text of a decision or authority, or knowingly cite as law a provision
already rendered inoperative by repel or amendment, or assert as a fact that which has not been proved.
Counsels use of block quotation and quotation marks signifies that he intends to make it appear that the
passages are the exact words of the Court. Furthermore, putting the words "Underscoring ours" after the text

implies that, except for the underscoring, the text is a faithful reproduction of the original. Accordingly, we are
ordering Atty. Procopio S. Beltran, Jr. to show cause why he should not be disciplined as a member of the Bar.
To clarify, we never stated in Ledesma that a judge is allowed to deny a Motion to Withdraw Information from
the prosecution only when there is grave abuse of discretion on the part of the prosecutors moving for such
withdrawal. Neither did we rule therein that where there is no grave abuse of discretion on the part of the
prosecutors, the denial of the Motion to Withdraw Information is void. What we held therein is that a trial judge
commits grave abuse of discretion if he denies a Motion to Withdraw Information without an independent and
complete assessment of the issues presented in such Motion. Thus, the opening paragraph of Ledesma states:
When confronted with a motion to withdraw an information on the ground of lack of probable cause based on a
resolution of the secretary of justice, the bounden duty of the trial court is to make an independent assessment of
the merits of such motion. Having acquired jurisdiction over the case, the trial court is not bound by such
resolution but is required to evaluate it before proceeding further with the trial. While the secretary's ruling is
persuasive, it is not binding on courts. A trial court, however, commits reversible error or even grave abuse of
discretion if it refuses/neglects to evaluate such recommendation and simply insists on proceeding with the trial
on the mere pretext of having already acquired jurisdiction over the criminal action.19 (Emphases
supplied.)1avvphi1.zw+
Petitioners also try to capitalize on the fact that the dispositive portion of the assailed Order apparently states
that there was no probable cause against petitioners:
WHEREFORE, finding no probable cause against the herein accused for the crimes of rapes and acts of
lasciviousness, the motion to withdraw informations is DENIED.
Let the case be set for arraignment and pre-trial on October 24, 2006 at 8:30 oclock in the morning.20
(Underscoring ours.)
Thus, petitioners claim that since even the respondent judge himself found no probable cause against them, the
Motion to Withdraw Informations by the Office of the City Prosecutor should be granted.21
Even a cursory reading of the assailed Order, however, clearly shows that the insertion of the word "no" in the
above dispositive portion was a mere clerical error. The assailed Order states in full:
After a careful study of the sworn statements of the complainants and the resolution dated March 3, 2006 of 2nd
Assistant City Prosecutor Lamberto C. de Vera, the Court finds that there was probable cause against the herein
accused. The actuations of the complainants after the alleged rapes and acts of lasciviousness cannot be the
basis of dismissal or withdrawal of the herein cases. Failure to shout or offer tenatious resistance did not make
voluntary the complainants submission to the criminal acts of the accused (People v. Velasquez, 377 SCRA
214, 2002). The complainants affidavits indicate that the accused helped one another in committing the acts
complained of. Considering that the attackers were not strangers but their trusted classmates who enticed them
to go to the house where they were molested, the complainants cannot be expected to react forcefully or
violently in protecting themselves from the unexpected turn of events. Considering also that both complainants
were fifteen (15) years of age and considered children under our laws, the ruling of the Supreme Court in
People v. Malones, G.R. Nos. 124388-90, March 11, 2004 becomes very relevant. The Supreme Court ruled as
follows:

Rape victims, especially child victims, should not be expected to act the way mature individuals would when
placed in such a situation. It is not proper to judge the actions of children who have undergone traumatic
experience by the norms of behavior expected from adults under similar circumstances. The range of emotions
shown by rape victim is yet to be captured even by calculus. It is, thus, unrealistic to expect uniform reactions
from rape victims (People v. Malones, G.R. Nos. 124388-90, March 11, 2004).
The Court finds no need to discuss in detail the alleged actuations of the complainants after the alleged rapes
and acts of lasciviousness. The alleged actuations are evidentiary in nature and should be evaluated after full
blown trial on the merits. This is necessary to avoid a suspicion of prejudgment against the accused.22
As can be seen, the body of the assailed Order not only plainly stated that the court found probable cause
against the petitioners, but likewise provided an adequate discussion of the reasons for such finding. Indeed, the
general rule is that where there is a conflict between the dispositive portion or the fallo and the body of the
decision, the fallo controls. However, where the inevitable conclusion from the body of the decision is so clear
as to show that there was a mistake in the dispositive portion, the body of the decision will prevail.23
In sum, petitioners resort to a Petition for Mandamus to compel the trial judge to grant their Motion to
Withdraw Informations is improper. While mandamus is available to compel action on matters involving
judgment and discretion when refused, it is never available to direct the exercise of judgment or discretion in a
particular way or the retraction or reversal of an action already taken in the exercise of either.24 The trial court,
when confronted with a Motion to Withdraw an Information on the ground of lack of probable cause, is not
bound by the resolution of the prosecuting arm of the government, but is required to make an independent
assessment of the merits of such motion, a requirement satisfied by the respondent judge in the case at bar.25
Finally, if only to appease petitioners who came to this Court seeking a review of the finding of probable cause
by the trial court, we nevertheless carefully reviewed the records of the case. After going through the same, we
find that we are in agreement with the trial court that there is indeed probable cause against the petitioners
sufficient to hold them for trial. We decided to omit a detailed discussion of the merits of the case, as we are not
unmindful of the undue influence that might result should this Court do so, even if such discussion is only
intended to focus on the finding of probable cause.
WHEREFORE, the instant Petition for Mandamus is DISMISSED. Let the records of this case be remanded to
the Regional Trial Court of Quezon City for the resumption of the proceedings therein. The Regional Trial
Court is directed to act on the case with dispatch.
Atty. Procopio S. Beltran, Jr. is ORDERED to SHOW CAUSE why he should not be disciplined as a member of
the Bar for his disquieting conduct as herein discussed.
SO ORDERED.
G.R. No. 161735

September 25, 2007

EX-C1C JIMMY B. SANCHEZ and EX-C2C SALVADOR A. METEORO, Petitioners,

vs.
ROBERTO T. LASTIMOSO, in his capacity as DIRECTOR GENERAL OF THE PHILIPPINE
NATIONAL POLICE, Respondent.

DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the June 18,
2003 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 68989 and the January 15, 2004 Resolution3
denying the motion for reconsideration thereof.
In 1989, petitioner Sanchez, a constable in the Philippine Constabulary (PC), was discharged from the service
for allegedly losing his service firearm. Petitioner Meteoro, also a constable, was likewise discharged from the
service in 1990 for being absent without leave. On appeal, they were both cleared of all charges. They then
applied for reinstatement but their applications were not acted upon even up to the integration of the PC into the
Philippine National Police (PNP).4
On January 27, 1998, the National Police Commission (NAPOLCOM) issued Resolution No. 98-037
considering as absorbed into the police force, among others, those who had been discharged by virtue of
pending administrative or criminal cases but who were later acquitted or had their cases dismissed, and who
subsequently filed petitions for reinstatement that were not acted upon by the PNP.5 Then, on April 3, 1998,
NAPOLCOM
issued Resolution No. 98-105 affirming and confirming the absorption into the PNP, effective on January 27,
1998, of the 126 ex-PC constables named in the list submitted by Director Edgar C. Galvante of the PNP
Directorate for Personnel and Records Management (DPRM).6 Petitioners Sanchez and Meteoro are in numbers
90 and 122, respectively, of the Galvante list.7
Subsequently, on May 28, 1998, NAPOLCOM Commissioner Rogelio A. Pureza issued a Memorandum to then
Chief of the PNP Santiago Alino for the issuance of absorption orders to the 45 PC constables included in the
initial batch of those covered by the PNP Board Resolutions.8 Petitioner Sanchez is in number 45 of that list.9
As no absorption order had yet been issued by the Chief of the PNP, the constables in the list requested the
assistance of the Secretary of the Department of Interior and Local Government (DILG). On July 29, 1998, the
Office of the Secretary of the DILG sent a memorandum to respondent Roberto T. Lastimoso, then the Chief of
the PNP, endorsing the constables entreaties and requesting for a feedback thereon.10
Without any response from the Chief of the PNP, and their pleas for the issuance of the absorption orders still
unacted upon, petitioners instituted, on September 30, 1998, a petition for mandamus docketed as Civil Case
No. Q-98-35659 in the Regional Trial Court (RTC) of Quezon City.11
During the pendency of the said petition, NAPOLCOM issued Resolution No. 99-061 on April 19, 1999
recalling the earlier Resolution No. 98-105.12 The recall was based on the Commissions finding that the list
submitted by Galvante was not actually of the constables whose applications for absorption were indorsed for
approval, but of those whose applications were still to be reviewed, evaluated and disposed of. In other words,
the 126 named in the list were still to be interviewed and their applications to be deliberated upon by the PNP
Special Committee.13

On November 15, 2001, however, the RTC rendered its Decision14 in the mandamus case declaring as void ab
initio NAPOLCOM Resolution No. 99-061 and ruling in favor of the petitioners. The dispositive portion of the
Decision reads:
Accordingly, therefore, the petition is hereby granted. The Director-General of the Philippine National Police is
hereby directed to immediately issue absorption orders to the petitioners.
Resolution No. 99-061 is declared void ab initio.
IT IS SO ORDERED.15
On appeal, the CA, in the assailed June 18, 2003 Decision,16 reversed the ruling of the trial court and ruled that a
writ of mandamus could not be issued because petitioners had not established with distinct clarity their right to
be absorbed into the PNP. The CA disposed of the appeal as follows:
WHEREFORE, the appeal is GRANTED. The decision of the trial court dated November 15, 2001 is hereby
REVERSED and SET ASIDE.
SO ORDERED.17
The appellate court later denied petitioners motion for reconsideration in the likewise assailed January 15, 2004
Resolution.18
Aggrieved, petitioners brought the case before us via a petition for review on certiorari, raising for our
disposition the following issues:
I
WHETHER OR NOT PETITIONERS HAVE A CLEAR LEGAL RIGHT TO BE ABSORBED IN THE
PHILIPPINE NATIONAL POLICE.
II.
WHETHER OR NOT RESOLUTION NO. 99-061 IS VOID FOR BEING VIOLATIVE OF THE
PROVISIONS OF R.A. 7965 AND ITS IMPLEMENTING RESOLUTIONS NO. 98-037 AND 98-105.
III.
WHETHER OR NOT PETITIONERS HAVE A CAUSE OF ACTION FOR MANDAMUS TO
COMPEL THE RESPONDENT TO ABSORB THE PETITIONERS IN THE PHILIPPINE NATIONAL
POLICE.19
The petition has no merit.
We have repeatedly stressed in our prior decisions that the remedy of mandamus is employed only to compel
the performance, when refused, of a ministerial duty, but not to require anyone to fulfill a discretionary one. The
issuance of the writ is simply a command to exercise a power already possessed and to perform a duty already

imposed.20 In Manila International Airport Authority v. Rivera Village Lessee Homeowners Association, Inc.,21
we emphasized, through the erudite and eloquent ponencia of Justice Dante O. Tinga, that the writ can be issued
only when the applicants legal right to the performance of a particular act sought to be compelled is clear and
complete, one which is indubitably granted by law or is inferable as a matter of law, thus:
In order that a writ of mandamus may aptly issue, it is essential that, on the one hand, petitioner has a clear legal
right to the claim that is sought and that, on the other hand, respondent has an imperative duty to perform that
which is demanded of him. Mandamus will not issue to enforce a right, or to compel compliance with a duty,
which is questionable or over which a substantial doubt exists. The principal function of the writ of mandamus
is to command and to expedite, not to inquire and to adjudicate. Thus, it is neither the office nor the aim of the
writ to secure a legal right but to implement that which is already established. Unless the right to relief sought is
unclouded, mandamus will not issue.22
Viewed in light of the said guideposts, the PNP Chiefs issuance of the orders for the absorption of herein
petitioners in the police force is not compellable by a writ of mandamus precisely because the same does not
involve a performance of a ministerial duty. Let it be noted that petitioners were discharged from the PC
service, subsequently cleared of the charges against them, applied for reinstatement but their applications were
not acted upon until the integration of the PC into the PNP in 1990 when R.A. No. 697523 was enacted. Thus,
we no longer speak of the reinstatement of the petitioners to the service because the Philippine Constabulary no
longer exists, but of their employment in the PNP which is, as we held in Gloria v. De Guzman,24 technically an
issuance of a new appointment. The power to appoint is essentially discretionary to be performed by the officer
in which it is vested according to his best lights, the only condition being that the appointee should possess the
qualifications required by law.25 Consequently, it cannot be the subject of an application for a writ of
mandamus.26
Furthermore, the petitioners do not have a clear legal right over the issuance of the absorption orders.1wphi1
They cannot claim the right to be issued an appointment based on the NAPOLCOM issuances, specifically
Resolution Nos. 98-037 and 98-105. Suffice it to state that R.A. No. 6975 clearly provides that the power to
appoint PNP personnel with the rank of "Police Officer I" to "Senior Police Officer IV" to which petitioners
may be appointed27 is vested in the PNP regional director or in the Chief of the PNP as the case may be, and not
in the NAPOLCOM, thus:
Section 31. Appointment of PNP Officers and Members.The appointment of the officers and members of the
PNP shall be effected in the following manner:
(a) Police Officer I to Senior Police Officer IV.Appointed by the PNP regional director for regional personnel
or by the Chief of the PNP for the national headquarters personnel and attested by the Civil Service
Commission.
x x x28
Even if, for the sake of argument, petitioners can derive a right from NAPOLCOM Resolution Nos. 98-037 and
98-105, still their right collapses and their mandamus petition becomes moot with the issuance by NAPOLCOM
of Resolution No. 99-061 recalling the approval of their absorption. The trial court should then have
immediately dismissed the mandamus petition when the OSG submitted a copy of Resolution No. 99-061
because well-settled is the rule that courts will not resolve a moot question.29

Also improper is the trial courts declaration that NAPOLCOM Resolution No. 99-061 is void ab initio. In the
petition filed below, only the Chief of the PNP is impleaded as the party-defendant.30 NAPOLCOM was never
impleaded. As it was the latter, a separate entity, which had issued Resolution No. 99-061, NAPOLCOM was an
indispensable party over which the trial court should have acquired jurisdiction. Since it was not impleaded,
NAPOLCOM remains a stranger to the case, and strangers are not bound by the judgment rendered by the
court.31 The absence of an indispensable party renders all subsequent actions of the court null and void for want
of authority to act, not only as to the absent parties but even as to those present.32
WHEREFORE, premises considered, the petition is DENIED. The June 18, 2003 Decision and the January 15,
2004 Resolution of the Court of Appeals in CA-G.R. SP No. 68989 are AFFIRMED.
SO ORDERED.
G.R. No. 156052

March 7, 2007

SOCIAL JUSTICE SOCIETY (SJS), VLADIMIR ALARIQUE T. CABIGAO, and BONIFACIO S.

TUMBOKON, Petitioners,
vs.
HON. JOSE L. ATIENZA, JR., in his capacity as Mayor of the City of Manila, Respondent.
DECISION
CORONA, J.:
In this original petition for mandamus,1 petitioners Social Justice Society (SJS), Vladimir Alarique T. Cabigao
and Bonifacio S. Tumbokon seek to compel respondent Hon. Jose L. Atienza, Jr., mayor of the City of Manila,
to enforce Ordinance No. 8027.
The antecedents are as follows.
On November 20, 2001, the Sangguniang Panlungsod of Manila enacted Ordinance No. 8027.2 Respondent
mayor approved the ordinance on November 28, 2001.3 It became effective on December 28, 2001, after its
publication.4
Ordinance No. 8027 was enacted pursuant to the police power delegated to local government units, a principle
described as the power inherent in a government to enact laws, within constitutional limits, to promote the
order, safety, health, morals and general welfare of the society.5 This is evident from Sections 1 and 3 thereof
which state:
SECTION 1. For the purpose of promoting sound urban planning and ensuring health, public safety, and general
welfare of the residents of Pandacan and Sta. Ana as well as its adjoining areas, the land use of [those] portions
of land bounded by the Pasig River in the north, PNR Railroad Track in the east, Beata St. in the south,
Palumpong St. in the southwest, and Estero de Pancacan in the west[,] PNR Railroad in the northwest area,
Estero de Pandacan in the [n]ortheast, Pasig River in the southeast and Dr. M.L. Carreon in the southwest. The
area of Punta, Sta. Ana bounded by the Pasig River, Marcelino Obrero St., Mayo 28 St., and F. Manalo Street,
are hereby reclassified from Industrial II to Commercial I.

xxx xxx xxx

SEC. 3. Owners or operators of industries and other businesses, the operation of which are no longer permitted
under Section 1 hereof, are hereby given a period of six (6) months from the date of effectivity of this
Ordinance within which to cease and desist from the operation of businesses which are hereby in consequence,
disallowed.
Ordinance No. 8027 reclassified the area described therein from industrial to commercial and directed the
owners and operators of businesses disallowed under Section 1 to cease and desist from operating their
businesses within six months from the date of effectivity of the ordinance. Among the businesses situated in the
area are the so-called "Pandacan Terminals" of the oil companies Caltex (Philippines), Inc., Petron Corporation
and Pilipinas Shell Petroleum Corporation.
However, on June 26, 2002, the City of Manila and the Department of Energy (DOE) entered into a
memorandum of understanding (MOU)6 with the oil companies in which they agreed that "the scaling down of
the Pandacan Terminals [was] the most viable and practicable option." Under the MOU, the oil companies
agreed to perform the following:
Section 1. - Consistent with the objectives stated above, the OIL COMPANIES shall, upon signing of this
MOU, undertake a program to scale down the Pandacan Terminals which shall include, among others, the
immediate removal/decommissioning process of TWENTY EIGHT (28) tanks starting with the LPG spheres
and the commencing of works for the creation of safety buffer and green zones surrounding the Pandacan
Terminals. xxx
Section 2. Consistent with the scale-down program mentioned above, the OIL COMPANIES shall establish
joint operations and management, including the operation of common, integrated and/or shared facilities,
consistent with international and domestic technical, safety, environmental and economic considerations and
standards. Consequently, the joint operations of the OIL COMPANIES in the Pandacan Terminals shall be
limited to the common and integrated areas/facilities. A separate agreement covering the commercial and
operational terms and conditions of the joint operations, shall be entered into by the OIL COMPANIES.
Section 3. - The development and maintenance of the safety and green buffer zones mentioned therein, which
shall be taken from the properties of the OIL COMPANIES and not from the surrounding communities, shall be
the sole responsibility of the OIL COMPANIES.
The City of Manila and the DOE, on the other hand, committed to do the following:
Section 1. - The City Mayor shall endorse to the City Council this MOU for its appropriate action with the view
of implementing the spirit and intent thereof.
Section 2. - The City Mayor and the DOE shall, consistent with the spirit and intent of this MOU, enable the
OIL COMPANIES to continuously operate in compliance with legal requirements, within the limited area
resulting from the joint operations and the scale down program.
Section 3. - The DOE and the City Mayor shall monitor the OIL COMPANIES compliance with the provisions
of this MOU.

Section 4. - The CITY OF MANILA and the national government shall protect the safety buffer and green
zones and shall exert all efforts at preventing future occupation or encroachment into these areas by illegal
settlers and other unauthorized parties.
The Sangguniang Panlungsod ratified the MOU in Resolution No. 97.7 In the same resolution, the Sanggunian
declared that the MOU was effective only for a period of six months starting July 25, 2002.8 Thereafter, on
January 30, 2003, the Sanggunian adopted Resolution No. 139 extending the validity of Resolution No. 97 to
April 30, 2003 and authorizing Mayor Atienza to issue special business permits to the oil companies. Resolution
No. 13, s. 2003 also called for a reassessment of the ordinance.10
Meanwhile, petitioners filed this original action for mandamus on December 4, 2002 praying that Mayor
Atienza be compelled to enforce Ordinance No. 8027 and order the immediate removal of the terminals of the
oil companies.11
The issues raised by petitioners are as follows:
1. whether respondent has the mandatory legal duty to enforce Ordinance No. 8027 and order the
removal of the Pandacan Terminals, and
2. whether the June 26, 2002 MOU and the resolutions ratifying it can amend or repeal Ordinance No.
8027.12
Petitioners contend that respondent has the mandatory legal duty, under Section 455 (b) (2) of the Local
Government Code (RA 7160),13 to enforce Ordinance No. 8027 and order the removal of the Pandacan
Terminals of the oil companies. Instead, he has allowed them to stay.
Respondents defense is that Ordinance No. 8027 has been superseded by the MOU and the resolutions.14
However, he also confusingly argues that the ordinance and MOU are not inconsistent with each other and that
the latter has not amended the former. He insists that the ordinance remains valid and in full force and effect and
that the MOU did not in any way prevent him from enforcing and implementing it. He maintains that the MOU
should be considered as a mere guideline for its full implementation.15
Under Rule 65, Section 316 of the Rules of Court, a petition for mandamus may be filed when any tribunal,
corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically
enjoins as a duty resulting from an office, trust or station. Mandamus is an extraordinary writ that is employed
to compel the performance, when refused, of a ministerial duty that is already imposed on the respondent and
there is no other plain, speedy and adequate remedy in the ordinary course of law. The petitioner should have a
well-defined, clear and certain legal right to the performance of the act and it must be the clear and imperative
duty of respondent to do the act required to be done.17
Mandamus will not issue to enforce a right, or to compel compliance with a duty, which is questionable or over
which a substantial doubt exists. The principal function of the writ of mandamus is to command and to expedite,
not to inquire and to adjudicate; thus, it is neither the office nor the aim of the writ to secure a legal right but to
implement that which is already established. Unless the right to the relief sought is unclouded, mandamus will
not issue.18

To support the assertion that petitioners have a clear legal right to the enforcement of the ordinance, petitioner
SJS states that it is a political party registered with the Commission on Elections and has its offices in Manila. It
claims to have many members who are residents of Manila. The other petitioners, Cabigao and Tumbokon, are
allegedly residents of Manila.
We need not belabor this point. We have ruled in previous cases that when a mandamus proceeding concerns a
public right and its object is to compel a public duty, the people who are interested in the execution of the laws
are regarded as the real parties in interest and they need not show any specific interest.19 Besides, as residents of
Manila, petitioners have a direct interest in the enforcement of the citys ordinances. Respondent never
questioned the right of petitioners to institute this proceeding.
On the other hand, the Local Government Code imposes upon respondent the duty, as city mayor, to "enforce all
laws and ordinances relative to the governance of the city.">20 One of these is Ordinance No. 8027. As the chief
executive of the city, he has the duty to enforce Ordinance No. 8027 as long as it has not been repealed by the
Sanggunian or annulled by the courts.21 He has no other choice. It is his ministerial duty to do so. In Dimaporo v. Mitra, Jr.,22 we stated the reason for this:
These officers cannot refuse to perform their duty on the ground of an alleged invalidity of the statute imposing the duty. The reason for this is obvious. It might seriously hinder the transaction
of public business if these officers were to be permitted in all cases to question the constitutionality of statutes and ordinances imposing duties upon them and which have not judicially been
declared unconstitutional. Officers of the government from the highest to the lowest are creatures of the law and are bound to obey it.23

The question now is whether the MOU entered into by respondent with the oil companies and the subsequent resolutions passed by the Sanggunian have made the respondents duty to enforce
Ordinance No. 8027 doubtful, unclear or uncertain. This is also connected to the second issue raised by petitioners, that is, whether the MOU and Resolution Nos. 97, s. 2002 and 13, s. 2003 of
the Sanggunian can amend or repeal Ordinance No. 8027.

We need not resolve this issue. Assuming that the terms of the MOU were inconsistent with Ordinance No. 8027, the resolutions which ratified it and made it binding on the City of Manila
expressly gave it full force and effect only until April 30, 2003. Thus, at present, there is nothing that legally hinders respondent from enforcing Ordinance No. 8027.24

Ordinance No. 8027 was enacted right after the Philippines, along with the rest of the world, witnessed the horror of the September 11, 2001 attack on the Twin Towers of the World Trade
Center in New York City. The objective of the ordinance is to protect the residents of Manila from the catastrophic devastation that will surely occur in case of a terrorist attack25 on the
Pandacan Terminals. No reason exists why such a protective measure should be delayed.

WHEREFORE, the petition is hereby GRANTED. Respondent Hon. Jose L. Atienza, Jr., as mayor of the City of Manila, is directed to immediately enforce Ordinance No. 8027.

SO ORDERED.

G.R. No. 193462

February 4, 2014

DENNIS A.B. FUNA, Petitioner,

vs.
MANILA ECONOMIC AND CULTURAL OFFICE and the COMMISSION ON AUDIT, Respondents.
DECISION
PEREZ, J.:
This is a petition for mandamus1 to compel:

1.) the Commission on Audit (COA) to audit and examine the funds of the Manila Economic and
Cultural Office (MECO), and
2.) the MECO to submit to such audit and examination.
The antecedents:
Prelude
The aftermath of the Chinese civil war2 left the country of China with two (2) governments in a stalemate
espousing competing assertions of sovereignty.3 On one hand is the communist Peoples Republic of China
(PROC) which controls the mainland territories, and on the other hand is the nationalist Republic of China
(ROC) which controls the island of Taiwan. For a better part of the past century, both the PROC and ROC
adhered to a policy of "One China" i.e., the view that there is only one legitimate government in China, but
differed in their respective interpretation as to which that government is.4
With the existence of two governments having conflicting claims of sovereignty over one country, came the
question as to which of the two is deserving of recognition as that countrys legitimate government. Even after
its relocation to Taiwan, the ROC used to enjoy diplomatic recognition from a majority of the worlds states,
partly due to being a founding member of the United Nations (UN).5 The number of states partial to the
PROCs version of the One China policy, however, gradually increased in the 1960s and 70s, most notably after
the UN General Assembly adopted the monumental Resolution 2758 in 1971.6 Since then, almost all of the
states that had erstwhile recognized the ROC as the legitimate government of China, terminated their official
relations with the said government, in favor of establishing diplomatic relations with the PROC.7 The
Philippines is one of such states.
The Philippines formally ended its official diplomatic relations with the government in Taiwan on 9 June 1975,
when the country and the PROC expressed mutual recognition thru the Joint Communiqu of the Government
of the Republic of the Philippines and the Government of the Peoples Republic of China (Joint Communiqu).8
Under the Joint Communiqu, the Philippines categorically stated its adherence to the One China policy of the
PROC. The pertinent portion of the Joint Communiqu reads:9
The Philippine Government recognizes the Government of the Peoples Republic of China as the sole legal
government of China, fully understands and respects the position of the Chinese Government that there is but
one China and that Taiwan is an integral part of Chinese territory, and decides to remove all its official
representations from Taiwan within one month from the date of signature of this communiqu. (Emphasis
supplied)
The Philippines commitment to the One China policy of the PROC, however, did not preclude the country from
keeping unofficial relations with Taiwan on a "people-to-people" basis.10 Maintaining ties with Taiwan that is
permissible by the terms of the Joint Communiqu, however, necessarily required the Philippines, and Taiwan,
to course any such relations thru offices outside of the official or governmental organs.

Hence, despite ending their diplomatic ties, the people of Taiwan and of the Philippines maintained an unofficial
relationship facilitated by the offices of the Taipei Economic and Cultural Office, for the former, and the
MECO, for the latter.11
The MECO12 was organized on 16 December 1997 as a non-stock, non-profit corporation under Batas
Pambansa Blg. 68 or the Corporation Code.13 The purposes underlying the incorporation of MECO, as stated in
its articles of incorporation,14 are as follows:
1. To establish and develop the commercial and industrial interests of Filipino nationals here and abroad,
and assist on all measures designed to promote and maintain the trade relations of the country with the
citizens of other foreign countries;
2. To receive and accept grants and subsidies that are reasonably necessary in carrying out the corporate
purposes provided they are not subject to conditions defeatist for or incompatible with said purpose;
3. To acquire by purchase, lease or by any gratuitous title real and personal properties as may be
necessary for the use and need of the corporation, and to dispose of the same in like manner when they
are no longer needed or useful; and
4. To do and perform any and all acts which are deemed reasonably necessary to carry out the purposes.
(Emphasis supplied)
From the moment it was incorporated, the MECO became the corporate entity "entrusted" by the Philippine
government with the responsibility of fostering "friendly" and "unofficial" relations with the people of Taiwan,
particularly in the areas of trade, economic cooperation, investment, cultural, scientific and educational
exchanges.15 To enable it to carry out such responsibility, the MECO was "authorized" by the government to
perform certain "consular and other functions" that relates to the promotion, protection and facilitation of
Philippine interests in Taiwan.16
At present, it is the MECO that oversees the rights and interests of Overseas Filipino Workers (OFWs) in
Taiwan; promotes the Philippines as a tourist and investment destination for the Taiwanese; and facilitates the
travel of Filipinos and Taiwanese from Taiwan to the Philippines, and vice versa.17
Facts Leading to the Mandamus Petition
On 23 August 2010, petitioner sent a letter18 to the COA requesting for a "copy of the latest financial and audit
report" of the MECO invoking, for that purpose, his "constitutional right to information on matters of public
concern." The petitioner made the request on the belief that the MECO, being under the "operational
supervision" of the Department of Trade and Industry (DTI), is a government owned and controlled corporation
(GOCC) and thus subject to the audit jurisdiction of the COA.19
Petitioners letter was received by COA Assistant Commissioner Jaime P. Naranjo, the following day.
On 25 August 2010, Assistant Commissioner Naranjo issued a memorandum20 referring the petitioners request
to COA Assistant Commissioner Emma M. Espina for "further disposition." In this memorandum, however,

Assistant Commissioner Naranjo revealed that the MECO was "not among the agencies audited by any of the
three Clusters of the Corporate Government Sector."21
On 7 September 2010, petitioner learned about the 25 August 2010 memorandum and its contents.
Mandamus Petition
Taking the 25 August 2010 memorandum as an admission that the COA had never audited and examined the
accounts of the MECO, the petitioner filed the instant petition for mandamus on 8 September 2010. Petitioner
filed the suit in his capacities as "taxpayer, concerned citizen, a member of the Philippine Bar and law book
author."22 He impleaded both the COA and the MECO.
Petitioner posits that by failing to audit the accounts of the MECO, the COA is neglecting its duty under Section
2(1), Article IX-D of the Constitution to audit the accounts of an otherwise bona fide GOCC or government
instrumentality. It is the adamant claim of the petitioner that the MECO is a GOCC without an original charter
or, at least, a government instrumentality, the funds of which partake the nature of public funds.23
According to petitioner, the MECO possesses all the essential characteristics of a GOCC and an instrumentality
under the Executive Order No. (EO) 292, s. 1987 or the Administrative Code: it is a non-stock corporation
vested with governmental functions relating to public needs; it is controlled by the government thru a board of
directors appointed by the President of the Philippines; and while not integrated within the executive
departmental framework, it is nonetheless under the operational and policy supervision of the DTI.24 As
petitioner substantiates:
1. The MECO is vested with government functions. It performs functions that are equivalent to those of
an embassy or a consulate of the Philippine government.25 A reading of the authorized functions of the
MECO as found in EO No. 15, s. 2001, reveals that they are substantially the same functions performed
by the Department of Foreign Affairs (DFA), through its diplomatic and consular missions, per the
Administrative Code.26
2. The MECO is controlled by the government. It is the President of the Philippines that actually
appoints the directors of the MECO, albeit indirectly, by way of "desire letters" addressed to the
MECOs board of directors.27 An illustration of this exercise is the assumption by Mr. Antonio Basilio
as chairman of the board of directors of the MECO in 2001, which was accomplished when former
President Gloria Macapagal-Arroyo, through a memorandum28 dated 20 February 2001, expressed her
"desire" to the board of directors of the MECO for the election of Mr. Basilio as chairman.29
3. The MECO is under the operational and policy supervision of the DTI. The MECO was placed under
the operational supervision of the DTI by EO No. 328, s. of 2004, and again under the policy
supervision of the same department by EO No. 426, s. 2005.30
To further bolster his position that the accounts of the MECO ought to be audited by the COA, the petitioner
calls attention to the practice, allegedly prevailing in the United States of America, wherein the American
Institute in Taiwan (AIT)the counterpart entity of the MECO in the United Statesis supposedly audited by
that countrys Comptroller General.31 Petitioner claims that this practice had been confirmed in a decision of

the United States Court of Appeals for the District of Columbia Circuit, in the case of Wood, Jr., ex rel. United
States of America v. The American Institute in Taiwan, et al.32
The Position of the MECO
The MECO prays for the dismissal of the mandamus petition on procedural and substantial grounds.
On procedure, the MECO argues that the mandamus petition was prematurely filed.33
The MECO posits that a cause of action for mandamus to compel the performance of a ministerial duty required
by law only ripens once there has been a refusal by the tribunal, board or officer concerned to perform such a
duty.34 The MECO claims that there was, in this case, no such refusal either on its part or on the COAs because
the petitioner never made any demand for it to submit to an audit by the COA or for the COA to perform such
an audit, prior to filing the instant mandamus petition.35 The MECO further points out that the only "demand"
that the petitioner made was his request to the COA for a copy of the MECOs latest financial and audit report
which request was not even finally disposed of by the time the instant petition was filed.36
On the petitions merits, the MECO denies the petitioners claim that it is a GOCC or a government
instrumentality.37 While performing public functions, the MECO maintains that it is not owned or controlled by
the government, and its funds are private funds.38 The MECO explains:
1. It is not owned or controlled by the government. Contrary to the allegations of the petitioner, the
President of the Philippines does not appoint its board of directors.39 The "desire letter" that the
President transmits is merely recommendatory and not binding on the corporation.40 As a corporation
organized under the Corporation Code, matters relating to the election of its directors and officers, as
well as its membership, are governed by the appropriate provisions of the said code, its articles of
incorporation and its by-laws.41 Thus, it is the directors who elect the corporations officers; the
members who elect the directors; and the directors who admit the members by way of a unanimous
resolution. All of its officers, directors, and members are private individuals and are not government
officials.42
2. The government merely has policy supervision over it. Policy supervision is a lesser form of
supervision wherein the governments oversight is limited only to ensuring that the corporations
activities are in tune with the countrys commitments under the One China policy of the PROC.43 The
day-to-day operations of the corporation, however, remain to be controlled by its duly elected board of
directors.44
The MECO emphasizes that categorizing it as a GOCC or a government instrumentality can potentially violate
the countrys commitment to the One China policy of the PROC.45 Thus, the MECO cautions against applying
to the present mandamus petition the pronouncement in the Wood decision regarding the alleged auditability of
the AIT in the United States.46
The Position of the COA
The COA, on the other hand, advances that the mandamus petition ought to be dismissed on procedural grounds
and on the ground of mootness.

The COA argues that the mandamus petition suffers from the following procedural defects:
1. The petitioner lacks locus standi to bring the suit. The COA claims that the petitioner has not shown,
at least in a concrete manner, that he had been aggrieved or prejudiced by its failure to audit the accounts
of the MECO.47
2. The petition was filed in violation of the doctrine of hierarchy of courts. The COA faults the filing of
the instant mandamus petition directly with this Court, when such petition could have very well been
presented, at the first instance, before the Court of Appeals or any Regional Trial Court.48 The COA
claims that the petitioner was not able to provide compelling reasons to justify a direct resort to the
Supreme Court.49
At any rate, the COA argues that the instant petition already became moot when COA Chairperson Maria Gracia
M. Pulido-Tan (Pulido-Tan) issued Office Order No. 2011-69850 on 6 October 2011.51 The COA notes that
under Office Order No. 2011-698, Chairperson Pulido-Tan already directed a team of auditors to proceed to
Taiwan, specifically for the purpose of auditing the accounts of, among other government agencies based
therein, the MECO.52
In conceding that it has audit jurisdiction over the accounts of the MECO, however, the COA clarifies that it
does not consider the former as a GOCC or a government instrumentality. On the contrary, the COA maintains
that the MECO is a non-governmental entity.53
The COA argues that, despite being a non-governmental entity, the MECO may still be audited with respect to
the "verification fees" for overseas employment documents that it collects from Taiwanese employers on behalf
of the DOLE.54 The COA claims that, under Joint Circular No. 3-99,55 the MECO is mandated to remit to the
Department of Labor and Employment (DOLE) a portion of such "verification fees."56 The COA, therefore,
classifies the MECO as a non-governmental entity "required to pay xxx government share" subject to a partial
audit of its accounts under Section 26 of the Presidential Decree No. 1445 or the State Audit Code of the
Philippines (Audit Code).57
OUR RULING
We grant the petition in part. We declare that the MECO is a non-governmental entity. However, under existing
laws, the accounts of the MECO pertaining to the "verification fees" it collects on behalf of the DOLE as well
as the fees it was authorized to collect under Section 2(6) of EO No. 15, s. 2001, are subject to the audit
jurisdiction of the COA. Such fees pertain to the government and should be audited by the COA.
I
We begin with the preliminary issues.
Mootness of Petition
The first preliminary issue relates to the alleged mootness of the instant mandamus petition, occasioned by the
COAs issuance of Office Order No. 2011-698. The COA claims that by issuing Office Order No. 2011-698, it

had already conceded its jurisdiction over the accounts of the MECO and so fulfilled the objective of the instant
petition.58 The COA thus urges that the instant petition be dismissed for being moot and academic.59
We decline to dismiss the mandamus petition on the ground of mootness.
A case is deemed moot and academic when, by reason of the occurrence of a supervening event, it ceases to
present any justiciable controversy.60 Since they lack an actual controversy otherwise cognizable by courts,
moot cases are, as a rule, dismissible.61
The rule that requires dismissal of moot cases, however, is not absolute. It is subject to exceptions. In David v.
Macapagal-Arroyo,62 this Court comprehensively captured these exceptions scattered throughout our
jurisprudence:
The "moot and academic" principle is not a magical formula that can automatically dissuade the courts in
resolving a case. Courts will decide cases, otherwise moot and academic, if: first, there is a grave violation of
the Constitution;63 second, the exceptional character of the situation and the paramount public interest is
involved;64 third, when constitutional issue raised requires formulation of controlling principles to guide the
bench, the bar, and the public;65 and fourth, the case is capable of repetition yet evading review.66
In this case, We find that the issuance by the COA of Office Order No. 2011-698 indeed qualifies as a
supervening event that effectively renders moot and academic the main prayer of the instant mandamus petition.
A writ of mandamus to compel the COA to audit the accounts of the MECO would certainly be a mere
superfluity, when the former had already obliged itself to do the same.
Be that as it may, this Court refrains from dismissing outright the petition. We believe that the mandamus
petition was able to craft substantial issues presupposing the commission of a grave violation of the Constitution
and involving paramount public interest, which need to be resolved nonetheless:
First. The petition makes a serious allegation that the COA had been remiss in its constitutional or legal duty to
audit and examine the accounts of an otherwise auditable entity in the MECO.
Second. There is paramount public interest in the resolution of the issue concerning the failure of the COA to
audit the accounts of the MECO. The propriety or impropriety of such a refusal is determinative of whether the
COA was able to faithfully fulfill its constitutional role as the guardian of the public treasury, in which any
citizen has an interest.
Third. There is also paramount public interest in the resolution of the issue regarding the legal status of the
MECO; a novelty insofar as our jurisprudence is concerned. We find that the status of the MECOwhether it
may be considered as a government agency or nothas a direct bearing on the countrys commitment to the
One China policy of the PROC.67
An allegation as serious as a violation of a constitutional or legal duty, coupled with the pressing public interest
in the resolution of all related issues, prompts this Court to pursue a definitive ruling thereon, if not for the
proper guidance of the government or agency concerned, then for the formulation of controlling principles for
the education of the bench, bar and the public in general.68 For this purpose, the Court invokes its symbolic
function.69

If the foregoing reasons are not enough to convince, We still add another:
Assuming that the allegations of neglect on the part of the COA were true, Office Order No. 2011-698 does not
offer the strongest certainty that they would not be replicated in the future. In the first place, Office Order No.
2011-698 did not state any legal justification as to why, after decades of not auditing the accounts of the MECO,
the COA suddenly decided to do so. Neither does it state any determination regarding the true status of the
MECO. The justifications provided by the COA, in fact, only appears in the memorandum70 it submitted to this
Court for purposes of this case.
Thus, the inclusion of the MECO in Office Order No. 2011-698 appears to be entirely dependent upon the
judgment of the incumbent chairperson of the COA; susceptible of being undone, with or without reason, by her
or even her successor. Hence, the case now before this Court is dangerously capable of being repeated yet
evading review.
Verily, this Court should not dismiss the mandamus petition on the ground of mootness.
Standing of Petitioner
The second preliminary issue is concerned with the standing of the petitioner to file the instant mandamus
petition. The COA claims that petitioner has none, for the latter was not able to concretely establish that he had
been aggrieved or prejudiced by its failure to audit the accounts of the MECO.71
Related to the issue of lack of standing is the MECOs contention that petitioner has no cause of action to file
the instant mandamus petition. The MECO faults petitioner for not making any demand for it to submit to an
audit by the COA or for the COA to perform such an audit, prior to filing the instant petition.72
We sustain petitioners standing, as a concerned citizen, to file the instant petition.
The rules regarding legal standing in bringing public suits, or locus standi, are already well-defined in our case
law. Again, We cite David, which summarizes jurisprudence on this point:73
By way of summary, the following rules may be culled from the cases decided by this Court.1a\^/phi1
Taxpayers, voters, concerned citizens, and legislators may be accorded standing to sue, provided that the
following requirements are met:
(1) the cases involve constitutional issues;
(2) for taxpayers, there must be a claim of illegal disbursement of public funds or that the tax measure is
unconstitutional;
(3) for voters, there must be a showing of obvious interest in the validity of the election law in question;
(4) for concerned citizens, there must be a showing that the issues raised are of transcendental
importance which must be settled early; and
(5) for legislators, there must be a claim that the official action complained of infringes upon their
prerogatives as legislators.

We rule that the instant petition raises issues of transcendental importance, involved as they are with the
performance of a constitutional duty, allegedly neglected, by the COA. Hence, We hold that the petitioner, as a
concerned citizen, has the requisite legal standing to file the instant mandamus petition.
To be sure, petitioner does not need to make any prior demand on the MECO or the COA in order to maintain
the instant petition. The duty of the COA sought to be compelled by mandamus, emanates from the Constitution
and law, which explicitly require, or "demand," that it perform the said duty. To the mind of this Court,
petitioner already established his cause of action against the COA when he alleged that the COA had neglected
its duty in violation of the Constitution and the law.
Principle of Hierarchy of Courts
The last preliminary issue is concerned with the petitions non-observance of the principle of hierarchy of
courts. The COA assails the filing of the instant mandamus petition directly with this Court, when such petition
could have very well been presented, at the first instance, before the Court of Appeals or any Regional Trial
Court.74 The COA claims that the petitioner was not able to provide compelling reasons to justify a direct resort
to the Supreme Court.75
In view of the transcendental importance of the issues raised in the mandamus petition, as earlier mentioned,
this Court waives this last procedural issue in favor of a resolution on the merits.76
II
To the merits of this petition, then.
The single most crucial question asked by this case is whether the COA is, under prevailing law, mandated to
audit the accounts of the MECO. Conversely, are the accounts of the MECO subject to the audit jurisdiction of
the COA?
Law, of course, identifies which accounts of what entities are subject to the audit jurisdiction of the COA.
Under Section 2(1) of Article IX-D of the Constitution,77 the COA was vested with the "power, authority and
duty" to "examine, audit and settle" the "accounts" of the following entities:
1. The government, or any of its subdivisions, agencies and instrumentalities;
2. GOCCs with original charters;
3. GOCCs without original charters;
4. Constitutional bodies, commissions and offices that have been granted fiscal autonomy under the
Constitution; and
5. Non-governmental entities receiving subsidy or equity, directly or indirectly, from or through the
government, which are required by law or the granting institution to submit to the COA for audit as a
condition of subsidy or equity.78

The term "accounts" mentioned in the subject constitutional provision pertains to the "revenue," "receipts,"
"expenditures" and "uses of funds and property" of the foregoing entities.79
Complementing the constitutional power of the COA to audit accounts of "non-governmental entities receiving
subsidy or equity xxx from or through the government" is Section 29(1)80 of the Audit Code, which grants the
COA visitorial authority over the following non-governmental entities:
1. Non-governmental entities "subsidized by the government";
2. Non-governmental entities "required to pay levy or government share";
3. Non-governmental entities that have "received counterpart funds from the government"; and
4. Non-governmental entities "partly funded by donations through the government."
Section 29(1) of the Audit Code, however, limits the audit of the foregoing non-governmental entities only to
"funds xxx coming from or through the government."81 This section of the Audit Code is, in turn, substantially
reproduced in Section 14(1), Book V of the Administrative Code.82
In addition to the foregoing, the Administrative Code also empowers the COA to examine and audit "the books,
records and accounts" of public utilities "in connection with the fixing of rates of every nature, or in relation to
the proceedings of the proper regulatory agencies, for purposes of determining franchise tax."83
Both petitioner and the COA claim that the accounts of the MECO are within the audit jurisdiction of the COA,
but vary on the extent of the audit and on what type of auditable entity the MECO is. The petitioner posits that
all accounts of the MECO are auditable as the latter is a bona fide GOCC or government instrumentality.84 On
the other hand, the COA argues that only the accounts of the MECO that pertain to the "verification fees" it
collects on behalf of the DOLE are auditable because the former is merely a non-governmental entity "required
to pay xxx government share" per the Audit Code.85
We examine both contentions.
The MECO Is Not a GOCC or
Government Instrumentality
We start with the petitioners contention.
Petitioner claims that the accounts of the MECO ought to be audited by the COA because the former is a GOCC
or government instrumentality. Petitioner points out that the MECO is a non-stock corporation "vested with
governmental functions relating to public needs"; it is "controlled by the government thru a board of directors
appointed by the President of the Philippines"; and it operates "outside of the departmental framework," subject
only to the "operational and policy supervision of the DTI."86 The MECO thus possesses, petitioner argues, the
essential characteristics of a bona fide GOCC and government instrumentality.87
We take exception to petitioners characterization of the MECO as a GOCC or government instrumentality. The
MECO is not a GOCC or government instrumentality.

Government instrumentalities are agencies of the national government that, by reason of some "special function
or jurisdiction" they perform or exercise, are allotted "operational autonomy" and are "not integrated within the
department framework."88 Subsumed under the rubric "government instrumentality" are the following
entities:89
1. regulatory agencies,
2. chartered institutions,
3. government corporate entities or government instrumentalities with corporate powers (GCE/GICP),90
and
4. GOCCs
The Administrative Code defines a GOCC:91
(13) Government-owned or controlled corporation refers to any agency organized as a stock or non-stock
corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and
owned by the Government directly or through its instrumentalities either wholly, or, where applicable as in the
case of stock corporations, to the extent of at least fifty-one (51) per cent of its capital stock: x x x.
The above definition is, in turn, replicated in the more recent Republic Act No. 10149 or the GOCC Governance
Act of 2011, to wit:92
(o) Government-Owned or -Controlled Corporation (GOCC) refers to any agency organized as a stock or nonstock corporation, vested with functions relating to public needs whether governmental or proprietary in nature,
and owned by the Government of the Republic of the Philippines directly or through its instrumentalities either
wholly or, where applicable as in the case of stock corporations, to the extent of at least a majority of its
outstanding capital stock: x x x.
GOCCs, therefore, are "stock or non-stock" corporations "vested with functions relating to public needs" that
are "owned by the Government directly or through its instrumentalities."93 By definition, three attributes thus
make an entity a GOCC: first, its organization as stock or non-stock corporation;94 second, the public character
of its function; and third, government ownership over the same.
Possession of all three attributes is necessary to deem an entity a GOCC.
In this case, there is not much dispute that the MECO possesses the first and second attributes. It is the third
attribute, which the MECO lacks.
The MECO Is Organized as a Non-Stock Corporation
The organization of the MECO as a non-stock corporation cannot at all be denied. Records disclose that the
MECO was incorporated as a non-stock corporation under the Corporation Code on 16 December 1977.95 The
incorporators of the MECO were Simeon R. Roxas, Florencio C. Guzon, Manuel K. Dayrit, Pio K. Luz and
Eduardo B. Ledesma, who also served as the corporations original members and directors.96

The purposes for which the MECO was organized also establishes its non-profit character, to wit:97
1. To establish and develop the commercial and industrial interests of Filipino nationals here and abroad
and assist on all measures designed to promote and maintain the trade relations of the country with the
citizens of other foreign countries;
2. To receive and accept grants and subsidies that are reasonably necessary in carrying out the corporate
purposes provided they are not subject to conditions defeatist for or incompatible with said purpose;
3. To acquire by purchase, lease or by any gratuitous title real and personal properties as may be
necessary for the use and need of the corporation, and in like manner when they are
4. To do and perform any and all acts which are deemed reasonably necessary to carry out the purposes.
(Emphasis supplied)
The purposes for which the MECO was organized are somewhat analogous to those of a trade, business or
industry chamber,98 but only on a much larger scale i.e., instead of furthering the interests of a particular line of
business or industry within a local sphere, the MECO seeks to promote the general interests of the Filipino
people in a foreign land.
Finally, it is not disputed that none of the income derived by the MECO is distributable as dividends to any of
its members, directors or officers.
Verily, the MECO is organized as a non-stock corporation.
The MECO Performs Functions with a Public Aspect.
The public character of the functions vested in the MECO cannot be doubted either. Indeed, to a certain degree,
the functions of the MECO can even be said to partake of the nature of governmental functions. As earlier
intimated, it is the MECO that, on behalf of the people of the Philippines, currently facilitates unofficial
relations with the people in Taiwan.
Consistent with its corporate purposes, the MECO was "authorized" by the Philippine government to perform
certain "consular and other functions" relating to the promotion, protection and facilitation of Philippine
interests in Taiwan.99 The full extent of such authorized functions are presently detailed in Sections 1 and 2 of
EO No. 15, s. 2001:
SECTION 1. Consistent with its corporate purposes and subject to the conditions stated in Section 3 hereof,
MECO is hereby authorized to assist in the performance of the following functions:
1. Formulation and implementation of a program to attract and promote investments from Taiwan to
Philippine industries and businesses, especially in manufacturing, tourism, construction and other
preferred areas of investments;
2. Promotion of the export of Philippine products and Filipino manpower services, including Philippine
management services, to Taiwan;

3. Negotiation and/or assistance in the negotiation and conclusion of agreements or other arrangements
concerning trade, investment, economic cooperation, technology transfer, banking and finance,
scientific, cultural, educational and other modes of cooperative endeavors between the Philippines and
Taiwan, on a people-to-people basis, in accordance with established rules and regulations;
4. Reporting on, and identification of, employment and business opportunities in Taiwan for the
promotion of Philippine exports, manpower and management services, and tourism;
5. Dissemination in Taiwan of information on the Philippines, especially in the fields of trade, tourism,
labor, economic cooperation, and cultural, educational and scientific endeavors;
6. Conduct of periodic assessment of market conditions in Taiwan, including submission of trade
statistics and commercial reports for use of Philippine industries and businesses; and
7. Facilitation, fostering and cultivation of cultural, sports, social, and educational exchanges between
the peoples of the Philippines and Taiwan.
SECTION 2. In addition to the above-mentioned authority and subject to the conditions stated in Section 3
hereof, MECO, through its branch offices in Taiwan, is hereby authorized to perform the following functions:
1. Issuance of temporary visitors visas and transit and crew list visas, and such other visa services as
may be authorized by the Department of Foreign Affairs;
2. Issuance, renewal, extension or amendment of passports of Filipino citizens in accordance with
existing regulations, and provision of such other passport services as may be required under the
circumstances;
3. Certification or affirmation of the authenticity of documents submitted for authentication;
4. Providing translation services;
5. Assistance and protection to Filipino nationals and other legal/juridical persons working or residing in
Taiwan, including making representations to the extent allowed by local and international law on their
behalf before civil and juridical authorities of Taiwan; and
6. Collection of reasonable fees on the first four (4) functions enumerated above to defray the cost of its
operations.
A perusal of the above functions of the MECO reveals its uncanny similarity to some of the functions typically
performed by the DFA itself, through the latters diplomatic and consular missions.100 The functions of the
MECO, in other words, are of the kind that would otherwise be performed by the Philippines own diplomatic
and consular organs, if not only for the governments acquiescence that they instead be exercised by the MECO.
Evidently, the functions vested in the MECO are impressed with a public aspect.
The MECO Is Not Owned or Controlled by the Government Organization as a non-stock corporation and the
mere performance of functions with a public aspect, however, are not by themselves sufficient to consider the

MECO as a GOCC. In order to qualify as a GOCC, a corporation must also, if not more importantly, be owned
by the government.
The government owns a stock or non-stock corporation if it has controlling interest in the corporation. In a stock
corporation, the controlling interest of the government is assured by its ownership of at least fifty-one percent
(51%) of the corporate capital stock.101 In a non-stock corporation, like the MECO, jurisprudence teaches that
the controlling interest of the government is affirmed when "at least majority of the members are government
officials holding such membership by appointment or designation"102 or there is otherwise "substantial
participation of the government in the selection" of the corporations governing board.103
In this case, the petitioner argues that the government has controlling interest in the MECO because it is the
President of the Philippines that indirectly appoints the directors of the corporation.104 The petitioner claims
that the President appoints directors of the MECO thru "desire letters" addressed to the corporations board.105
As evidence, the petitioner cites the assumption of one Mr. Antonio Basilio as chairman of the board of
directors of the MECO in 2001, which was allegedly accomplished when former President Macapagal-Arroyo,
through a memorandum dated 20 February 2001, expressed her "desire" to the board of directors of the MECO
for the election of Mr. Basilio as chairman.106
The MECO, however, counters that the "desire letters" that the President transmits are merely recommendatory
and not binding on it.107 The MECO maintains that, as a corporation organized under the Corporation Code,
matters relating to the election of its directors and officers, as well as its membership, are ultimately governed
by the appropriate provisions of the said code, its articles of incorporation and its by-laws.108
As between the contrasting arguments, We find the contention of the MECO to be the one more consistent with
the law.
The fact of the incorporation of the MECO under the Corporation Code is key. The MECO was correct in
postulating that, as a corporation organized under the Corporation Code, it is governed by the appropriate
provisions of the said code, its articles of incorporation and its by-laws. In this case, it is the by-laws109 of the
MECO that stipulates that its directors are elected by its members; its officers are elected by its directors; and its
members, other than the original incorporators, are admitted by way of a unanimous board resolution, to wit:
SECTION II. MEMBERSHIP
Article 2. Members shall be classified as (a) Regular and (b) Honorary.
(a) Regular members shall consist of the original incorporators and such other members who, upon
application for membership, are unanimously admitted by the Board of Directors.
(b) Honorary member A person of distinction in business who as sympathizer of the objectives of the
corporation, is invited by the Board to be an honorary member.
SECTION III. BOARD OF DIRECTORS
Article 3. At the first meeting of the regular members, they shall organize and constitute themselves as a Board
composed of five (5) members, including its Chairman, each of whom as to serve until such time as his own

successor shall have been elected by the regular members in an election called for the purpose. The number of
members of the Board shall be increased to seven (7) when circumstances so warrant and by means of a
majority vote of the Board members and appropriate application to and approval by the Securities and Exchange
Commission. Unless otherwise provided herein or by law, a majority vote of all Board members present shall be
necessary to carry out all Board resolutions.
During the same meeting, the Board shall also elect its own officers, including the designation of the principal
officer who shall be the Chairman. In line with this, the Chairman shall also carry the title Chief Executive
Officer. The officer who shall head the branch or office for the agency that may be established abroad shall have
the title of Director and Resident Representative. He will also be the Vice-Chairman. All other members of the
Board shall have the title of Director.
xxxx
SECTION IV. EXECUTIVE COMMITTEE
Article 5. There shall be established an Executive Committee composed of at least three (3) members of the
Board. The members of the Executive Committee shall be elected by the members of the Board among
themselves.
xxxx
SECTION VI. OFFICERS: DUTIES, COMPENSATION
Article 8. The officers of the corporation shall consist of a Chairman of the Board, Vice-Chairman, Chief
Finance Officer, and a Secretary. Except for the Secretary, who is appointed by the Chairman of the Board,
other officers and employees of the corporation shall be appointed by the Board.
The Deputy Representative and other officials and employees of a branch office or agency abroad are appointed
solely by the Vice Chairman and Resident Representative concerned. All such appointments however are
subject to ratification by the Board.
It is significant to note that none of the original incorporators of the MECO were shown to be government
officials at the time of the corporations organization. Indeed, none of the members, officers or board of
directors of the MECO, from its incorporation up to the present day, were established as government appointees
or public officers designated by reason of their office. There is, in fact, no law or executive order that authorizes
such an appointment or designation. Hence, from a strictly legal perspective, it appears that the presidential
"desire letters" pointed out by petitionerif such letters even exist outside of the case of Mr. Basilioare, no
matter how strong its persuasive effect may be, merely recommendatory.
The MECO Is Not a Government Instrumentality; It Is a Sui Generis Entity.
The categorical exclusion of the MECO from a GOCC makes it easier to exclude the same from any other class
of government instrumentality. The other government instrumentalities i.e., the regulatory agencies, chartered
institutions and GCE/GICP are all, by explicit or implicit definition, creatures of the law.110 The MECO cannot

be any other instrumentality because it was, as mentioned earlier, merely incorporated under the Corporation
Code.
Hence, unless its legality is questioned, and in this case it was not, the fact that the MECO is operating under
the policy supervision of the DTI is no longer a relevant issue to be reckoned with for purposes of this case.
For whatever it is worth, however, and without justifying anything, it is easy enough for this Court to
understand the rationale, or necessity even, of the executive branch placing the MECO under the policy
supervision of one of its agencies.
It is evident, from the peculiar circumstances surrounding its incorporation, that the MECO was not intended to
operate as any other ordinary corporation. And it is not. Despite its private origins, and perhaps deliberately so,
the MECO was "entrusted"111 by the government with the "delicate and precarious"112 responsibility of
pursuing "unofficial"113 relations with the people of a foreign land whose government the Philippines is bound
not to recognize. The intricacy involved in such undertaking is the possibility that, at any given time in fulfilling
the purposes for which it was incorporated, the MECO may find itself engaged in dealings or activities that can
directly contradict the Philippines commitment to the One China policy of the PROC. Such a scenario can only
truly be avoided if the executive department exercises some form of oversight, no matter how limited, over the
operations of this otherwise private entity.
Indeed, from hindsight, it is clear that the MECO is uniquely situated as compared with other private
corporations. From its over-reaching corporate objectives, its special duty and authority to exercise certain
consular functions, up to the oversight by the executive department over its operationsall the while
maintaining its legal status as a non-governmental entitythe MECO is, for all intents and purposes, sui
generis.
Certain Accounts of the MECO May
Be Audited By the COA.
We now come to the COAs contention.
The COA argues that, despite being a non-governmental entity, the MECO may still be audited with respect to
the "verification fees" for overseas employment documents that the latter collects from Taiwanese employers on
behalf of the DOLE.114 The COA claims that, under Joint Circular No. 3-99, the MECO is mandated to remit
to the national government a portion of such "verification fees."115 The COA, therefore, classifies the MECO
as a non-governmental entity "required to pay xxx government share" per the Audit Code.116
We agree that the accounts of the MECO pertaining to its collection of "verification fees" is subject to the audit
jurisdiction of the COA. However, We digress from the view that such accounts are the only ones that ought to
be audited by the COA. Upon careful evaluation of the information made available by the records vis--vis the
spirit and the letter of the laws and executive issuances applicable, We find that the accounts of the MECO
pertaining to the fees it was authorized to collect under Section 2(6) of EO No. 15, s. 2001, are likewise subject
to the audit jurisdiction of the COA.
Verification Fees Collected by the MECO

In its comment,117 the MECO admitted that roughly 9% of its income is derived from its share in the
"verification fees" for overseas employment documents it collects on behalf of the DOLE.
The "verification fees" mentioned here refers to the "service fee for the verification of overseas employment
contracts, recruitment agreement or special powers of attorney" that the DOLE was authorized to collect under
Section 7 of EO No. 1022,118 which was issued by President Ferdinand E. Marcos on 1 May 1985. These fees
are supposed to be collected by the DOLE from the foreign employers of OFWs and are intended to be used for
"the promotion of overseas employment and for welfare services to Filipino workers within the area of
jurisdiction of [concerned] foreign missions under the administration of the [DOLE]."119
Joint Circular 3-99 was issued by the DOLE, DFA, the Department of Budget Management, the Department of
Finance and the COA in an effort to implement Section 7 of Executive Order No. 1022.120 Thus, under Joint
Circular 3-99, the following officials have been tasked to be the "Verification Fee Collecting Officer" on behalf
of the DOLE:121
1. The labor attach or duly authorized overseas labor officer at a given foreign post, as duly designated
by the DOLE Secretary;
2. In foreign posts where there is no labor attach or duly authorized overseas labor officer, the finance
officer or collecting officer of the DFA duly deputized by the DOLE Secretary as approved by the DFA
Secretary;
3. In the absence of such finance officer or collecting officer, the alternate duly designated by the head
of the foreign post.
Since the Philippines does not maintain an official post in Taiwan, however, the DOLE entered into a "series" of
Memorandum of Agreements with the MECO, which made the latter the formers collecting agent with respect
to the "verification fees" that may be due from Taiwanese employers of OFWs.122 Under the 27 February 2004
Memorandum of Agreement between DOLE and the MECO, the "verification fees" to be collected by the latter
are to be allocated as follows: (a) US$ 10 to be retained by the MECO as administrative fee, (b) US $10 to be
remitted to the DOLE, and (c) US$ 10 to be constituted as a common fund of the MECO and DOLE.123
Evidently, the entire "verification fees" being collected by the MECO are receivables of the DOLE.124 Such
receipts pertain to the DOLE by virtue of Section 7 of EO No. 1022.
Consular Fees Collected by the MECO
Aside from the DOLE "verification fees," however, the MECO also collects "consular fees," or fees it collects
from the exercise of its delegated consular functions.
The authority behind "consular fees" is Section 2(6) of EO No. 15, s. 2001. The said section authorizes the
MECO to collect "reasonable fees" for its performance of the following consular functions:
1. Issuance of temporary visitors visas and transit and crew list visas, and such other visa services as
may be authorized by the DFA;

2. Issuance, renewal, extension or amendment of passports of Filipino citizens in accordance with

existing regulations, and provision of such other passport services as may be required under the
circumstances;
3. Certification or affirmation of the authenticity of documents submitted for authentication; and
4. Providing translation services.
Evidently, and just like the peculiarity that attends the DOLE "verification fees," there is no consular office for
the collection of the "consular fees." Thus, the authority for the MECO to collect the "reasonable fees," vested
unto it by the executive order.
The "consular fees," although held and expended by the MECO by virtue of EO No. 15, s. 2001, are, without
question, derived from the exercise by the MECO of consular functionsfunctions it performs by and only
through special authority from the government. There was never any doubt that the visas, passports and other
documents that the MECO issues pursuant to its authorized functions still emanate from the Philippine
government itself.
Such fees, therefore, are received by the MECO to be used strictly for the purpose set out under EO No. 15, s.
2001. They must be reasonable as the authorization requires. It is the government that has ultimate control over
the disposition of the "consular fees," which control the government did exercise when it provided in Section
2(6) of EO No. 15, s. 2001 that such funds may be kept by the MECO "to defray the cost of its operations."
The Accounts of the MECO Pertaining to the Verification Fees and Consular Fees May Be Audited by the COA.
Section 14(1), Book V of the Administrative Code authorizes the COA to audit accounts of non-governmental
entities "required to pay xxx or have government share" but only with respect to "funds xxx coming from or
through the government." This provision of law perfectly fits the MECO:
First. The MECO receives the "verification fees" by reason of being the collection agent of the DOLEa
government agency. Out of its collections, the MECO is required, by agreement, to remit a portion thereof to the
DOLE. Hence, the MECO is accountable to the government for its collections of such "verification fees" and,
for that purpose, may be audited by the COA.
Second. Like the "verification fees," the "consular fees" are also received by the MECO through the
government, having been derived from the exercise of consular functions entrusted to the MECO by the
government. Hence, the MECO remains accountable to the government for its collections of "consular fees"
and, for that purpose, may be audited by the COA.
Tersely put, the 27 February 2008 Memorandum of Agreement between the DOLE and the MECO and Section
2(6) of EO No. 15, s. 2001, vis--vis, respectively, the "verification fees" and the "consular fees," grant and at
the same time limit the authority of the MECO to collect such fees. That grant and limit require the audit by the
COA of the collections thereby generated.
Conclusion

The MECO is not a GOCC or government instrumentality. It is a sui generis private entity especially entrusted
by the government with the facilitation of unofficial relations with the people in Taiwan without jeopardizing
the countrys faithful commitment to the One China policy of the PROC. However, despite its nongovernmental character, the MECO handles government funds in the form of the "verification fees" it collects
on behalf of the DOLE and the "consular fees" it collects under Section 2(6) of EO No. 15, s. 2001. Hence,
under existing laws, the accounts of the MECO pertaining to its collection of such "verification fees" and
"consular fees" should be audited by the COA.
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The Manila Economic and
Cultural Office is hereby declared a non-governmental entity. However, the accounts of the Manila Economic
and Cultural Office pertaining to: the verification fees contemplated by Section 7 of Executive Order No. 1022
issued 1 May 1985, that the former collects on behalf of the Department of Labor and Employment, and the fees
it was authorized to collect under Section 2(6) of Executive Order No. 15 issued 16 May 2001, are subject to the
audit jurisdiction of the COA.
No costs.
SO ORDERED.
QUO WARRANTO
G.R. No. 131977 February 4, 1999
PEDRO MENDOZA, petitioner,
vs.
RAY ALLAS and GODOFREDO OLORES, respondents.

PUNO, J.:
Before us, petitioner prays for the execution of the decision of the trial court 1 granting his petition for quo
warranto which ordered his reinstatement as Director III, Customs Intelligence and Investigation Service, and
the payment of his back salaries and benefits.
Petitioner Pedro Mendoza joined the Bureau of Customs in 1972. He held the positions of Port Security Chief
from March 1972 to August 1972, Deputy Commissioner of Customs from August 1972 to September 1975,
Acting Commissioner of Customs from September 1975 to April 1977 and Customs Operations Chief I from
October 1987 to February 1988. 2 On March 1, 1988, he was appointed Customs Service Chief of the Customs
Intelligence and Investigation Service (CIIS). In 1989, the position of Customs Service Chief was reclassified
by the Civil Service as "Director III" in accordance with Republic Act No. 6758 and National Compensation
Circular No. 50. Petitioner's position was thus categorized as "Director III, CIIS" and he discharged the function
and duties of said office.
On April 22, 1993, petitioner was temporarily designated as Acting District Collector, Collection District X,
Cagayan de Oro City. In his place, respondent Ray Allas was appointed as "Acting Director III" of the CIIS.

Despite petitioner's new assignment as Acting District Collector, however, he continued to receive the salary
and benefits of the position of Director III.
In September 1994, petitioner received a letter from Deputy Customs Commissioner Cesar Z. Dario, informing
him of his termination from the Bureau of Customs, in view of respondent Allas' appointment as Director III by
President Fidel V. Ramos. The pertinent portion of the letter reads:
Effective March 4, 1994, Mr. Ray Allas was appointed Director III by President Fidel V. Ramos
and as a consequence, [petitioner's] services were terminated without prejudice to [his] claim for
all government benefits due [him].
Attached to the letter was the appointment of respondent Ray Allas as "Director III, CIIS, Bureau of
Customs, vice Pedro Mendoza."
Petitioner wrote the Customs Commissioner demanding his reinstatement with full back wages and without loss
of seniority rights. No reply was made.
On December 2, 1994, petitioner filed a petition for quo warranto against respondent Allas before the Regional
Trial Court, Paranaque, Branch 258. 3 The case was tried and on September 11, 1995, a decision was rendered
granting the petition. The court found that petitioner was illegally terminated from office without due process of
law and in violation of his security of tenure, and that as he was deemed not to have vacated his office, the
appointment of respondent Allas to the same office was void ab initio. The court ordered the ouster of
respondent Allas from the position of Director III, and at the same time directed the reinstatement of petitioner
to the same position with payment of full back salaries and other benefits appurtenant thereto.
Respondent Allas appealed to the Court of Appeals. On February 8, 1996, while the case was pending before
said court, respondent Allas was promoted by President Ramos to the position of Deputy Commissioner of
Customs for Assessment and Operations. As a consequence of this promotion, Petitioner moved to dismiss
respondent's appeal as having been rendered moot and academic. The Court of Appeals granted the motion and
dismissed the case accordingly. The order of dismissal became final and entry of judgment was made on March
19, 1996. 4
On May 9, 1996, petitioner filed with the court a quo a Motion for Execution of its decision. On July 24, 1996,
the court denied the motion on the ground that the contested position vacated by respondent Allas was now
being occupied by respondent Godofredo Olores who was not a party to the quo warranto petition. 5
Petitioner filed a special civil action for certiorari and mandamus with the Court of Appeals questioning the
order of the trial court. 6 On November 27, 1997, the Court of Appeals dismissed the petition. 7 Hence, this
recourse.
Petitioner claims that:
The Court of Appeals grossly erred in holding that a writ of execution may no longer be issued,
considering that respondent Olores who was not a party to the case now occupies the subject
position. 8

The instant petition arose from a special civil action for quo warranto under Rule 66 of the Revised Rules of
Court. Quo warranto is a demand made by the state upon some individual or corporation to show by what right
they exercise some franchise or privilege appertaining to the state which, according to the Constitution and laws
of the land, they cannot legally exercise except by virtue of a grant or authority from the state. 9 In other words,
a petition for quo warranto is a proceeding to determine the right of a person to the use or exercise of a
franchise or office and to oust the holder from its enjoyment, if his claim is not well-founded, or if he has
forfeited his right to enjoy the privilege. 10 The action may be commenced for the Government by the Solicitor
General or the fiscal 11 against individuals who usurp a public office, against a public officer whose acts
constitute a ground for the forfeiture of his office, and against an association which acts as a corporation without
being legally incorporated. 12 The action may also be instituted by an individual in his own name who claims to
be entitled to the public office or position usurped or unlawfully held or exercised by another. 13
Where the action is filed by a private person, he must prove that he is entitled to the controverted position,
otherwise respondent has a right to the undisturbed possession of the office. 14 If the court finds for the
respondent, the judgment should simply state that the respondent is entitled to the office. 15 If, however, the
court finds for the petitioner and declares the respondent guilty of usurping, intruding into, or unlawfully
holding or exercising the office, judgment may be rendered as follows:
Sec. 10. Judgment where usurpation found. When the defendant is found guilty of usurping,
intruding into, or unlawfully holding or exercising an office, position, right, privilege, or
franchise, judgment shall be rendered that such defendant be ousted and altogether excluded
therefrom, and that the plaintiff or relator, as the case may be, recover his costs. Such further
judgment may be rendered determining the respective rights in and to the office, position, right,
privilege, or franchise of all the parties to the action as justice requires.
If it is found that the respondent or defendant is usurping or intruding into the office, or unlawfully
holding the same, the court may order:
(1) The ouster and exclusion of the defendant from office;
(2) The recovery of costs by plaintiff or relator;
(3) The determination of the respective rights in and to the office, position, right, privilege or
franchise of all the parties to the action as justice requires. 16
The character of the judgment to be rendered in quo warranto rests to some extent in the discretion of the court
and on the relief sought. 17 In the case at bar, petitioner prayed for the following relief:
WHEREFORE, it is respectfully prayed that respondent be ousted and altogether excluded from
the position of Director III, Customs Intelligence and Investigation Service of the Bureau of
Customs, and petitioner be seated to the position as the one legally appointed and entitled
thereto.
Other reliefs, just or equitable in the premises, are likewise prayed for. 18
In granting the petition, the trial court ordered that:

WHEREFORE, viewed in the light of the foregoing, judgment is hereby rendered granting this
petition for quo warranto by:
1. Ousting and excluding respondent Ray Allas from the position of Director III,
Customs Intelligence and Investigation Service of the Bureau of Customs; and
2. Reinstating petitioner Pedro C. Mendoza, Jr. to the position of Director III,
Customs Intelligence and Investigation Service of the Bureau of Customs with
full back wages and other monetary benefits appurtenant thereto from the time
they were withheld until reinstated. 19
The trial court found that respondent Allas usurped the position of "Director III, Chief of the Customs
Intelligence and Investigation Service." Consequently, the court ordered that respondent Allas be ousted from
the contested position and that petitioner be reinstated in his stead. Although petitioner did not specifically pray
for his back salaries, the court ordered that he be paid his "full back wages and other monetary benefits"
appurtenant to the contested position "from the time they were withheld until reinstated."
The decision of the trial court had long become final and executory, and petitioner prays for its execution. He
alleges that he should have been reinstated despite respondent Olores' appointment because the subject position
was never vacant to begin with. Petitioner's removal was illegal and he was deemed never to have vacated his
office when respondent Allas was appointed to the same. Respondent Allas' appointment was null and void and
this nullity allegedly extends to respondent Olores, his successor-in-interest. 20
Ordinarily, a judgment against a public officer in regard to a public right binds his successor in office. This rule,
however, is not applicable in quo warranto cases. 21 A judgment in quo warranto does not bind the respondent's
successor in office, even though such successor may trace his title to the same source. This follows from the
nature of the writ of quo warranto itself. It is never directed to an officer as such, but always against the person
to determine whether he is constitutionally and legally authorized to perform any act in, or exercise any
function of the office to which he lays claim. 22 In the case at bar, the petition for quo warranto was filed by
petitioner solely against respondent Allas. What was threshed out before the trial court was the qualification and
right of petitioner to the contested position as against respondent Ray Allas, not against Godofredo Olores. The
Court of Appeals did not err in denying execution of the trial court's decision.
Petitioner has apprised this Court that he reached the compulsory retirement age of sixty-five (65) years on
November 13, 1997. Reinstatement not being possible, petitioner now prays for the payment of his back salaries
and other benefits from the time he was illegally dismissed until finality of the trial court's decision. 23
Respondent Allas cannot be held personally liable for petitioner's back salaries and benefits. He was merely
appointed to the subject position by the President of the Philippines in the exercise of his constitutional power
as Chief Executive. Neither can the Bureau of Customs be compelled to pay the said back salaries and benefits
of petitioner. The Bureau of Customs was not a party to the petition for quo warranto. 24
IN VIEW WHEREOF, the petition is denied and the decision of the Court of Appeals in CA-G.R. SP No. 41801
is affirmed.
SO ORDERED.

G.R. No. 168696

February 28, 2006

MA. LUTGARDA P. CALLEJA, JOAQUIN M. CALLEJA, JR., JADELSON PETER P. CALLEJA, MA.
JESSICA T. FLORES, MERCIE C. TIPONES and PERFECTO NIXON C. TABORA, Petitioners,
vs.
JOSE PIERRE A. PANDAY, AUGUSTO R. PANDAY and MA. THELNA P. MALLARI, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
This resolves the petition for review on certiorari assailing the Order1 of the Regional Trial Court of San Jose,
Camarines Sur, Branch 58 (RTC-Br. 58) issued on July 13, 2005.
The antecedent facts are as follows.
On May 16, 2005, respondents filed a petition with the Regional Trial Court of San Jose, Camarines Sur for quo
warranto with Damages and Prayer for Mandatory and Prohibitory Injunction, Damages and Issuance of
Temporary Restraining Order against herein petitioners. Respondents alleged that from 1985 up to the filing of
the petition with the trial court, they had been members of the board of directors and officers of St. John
Hospital, Incorporated, but sometime in May 2005, petitioners, who are also among the incorporators and
stockholders of said corporation, forcibly and with the aid of armed men usurped the powers which supposedly
belonged to Respondents.
On May 24, 2005, RTC-Br. 58 issued an Order transferring the case to the Regional Trial Court in Naga City.
According to RTC-Br. 58, since the verified petition showed petitioners therein (herein respondents) to be
residents of Naga City, then pursuant to Section 7, Rule 66 of the 1997 Rules of Civil Procedure, the action for
quo warranto should be brought in the Regional Trial Court exercising jurisdiction over the territorial area
where the respondents or any of the respondents resides. However, the Executive Judge of RTC, Naga City
refused to receive the case folder of the subject case for quo warranto, stating that improper venue is not a
ground for transferring a quo warranto case to another administrative jurisdiction.
The RTC-Br. 58 then proceeded to issue and serve summons on herein petitioners (respondents below).
Petitioner Tabora filed his Answer dated June 8, 2005, raising therein the affirmative defenses of (1) improper
venue, (2) lack of jurisdiction, and (3) wrong remedy of quo warranto. Thereafter, the other petitioners also
filed their Answer, also raising the same affirmative defenses. All the parties were then required to submit their
respective memoranda.
On July 13, 2005, RTC-Br. 58 issued the assailed Order, the pertinent portions of which read as follows:
It is undisputed that the plaintiffs cause of action involves controversies arising out of intra-corporate relations,
between and among stockholders, members or associates of the St. John Hospital Inc. which originally under
PD 902-A approved on March 11, 1976 is within the original and exclusive jurisdiction of the Securities and
Exchange Commission to try and decide in addition to its regulatory and adjudicated functions (Section 5, PD
902-A). Upon the advent of RA 8799 approved on July 19, 2000, otherwise known as the Securities and
Regulation Code, the Commissions jurisdiction over all cases enumerated in Section 5, Presidential Decree
902-A were transferred ["]to the Court of general jurisdiction or the appropriate Regional Trial Court with a
proviso that the "Supreme Court in the exercise of its authority may designate the Regional Trial Court branches
that shall exercise jurisdiction over these cases." Pursuant to this mandate of RA 8799, the Supreme Court in the
exercise of said mandated authority, promulgated on November 21, 2000, A.M. No. 00-11-03-SC which took
effect 15 December 2000 designated certain branches of the Regional Trial Court to try and decide Securities
and Exchange Commission Cases arising within their respective territorial jurisdiction with respect to the

National Capital Region and within the respective provinces in the First to Twelve Judicial Region. Accordingly,
in the Province of Camarines Sur, (Naga City) RTC Branch 23 presided by the Hon. Pablo M. Paqueo, Jr. was
designated as "special court" (Section 1, A.M. No. 00-11-03-SC).
Subsequently, on January 23, 2001, supplemental Administrative Circular No. 8-01 which took effect on March
1, 2001 was issued by the Supreme Court which directed that "all SEC cases originally assigned or transmitted
to the regular Regional Trial Court shall be transferred to branches of the Regional Trial Court specially
designated to hear such cases in accordance with A.M. No. 00-11-03-SC.
On March 13, 2001, A.M. No. 01-2-04 SC was promulgated and took effect on April 1, 2001.
From the foregoing discussion and historical background relative to the venue and jurisdiction to try and decide
cases originally enumerated in Section 5 of PD 902-A and later under Section 5.2 of RA 8799, it is evident that
the clear intent of the circular is to bestow the juridiction "to try and decide these cases to the "special courts"
created under A.M. No. 00-11-03-SC. . . .
Under Section 8, of the Interim Rules, [a] Motion to Dismiss is among the prohibited pleadings. On the
otherhand, the Supreme Court under Administrative Order 8-01 has directed the transfer from the regular courts
to the branches of the Regional Trial Courts specially designated to try and decide intra-corporate dispute.
In the light of the above-noted observations and discussion, the Motion to Dismiss is DENIED pursuant to the
Interim Rules of Procedure for Intra-Corporate Controversies (A.M. No. 01-2-04-SC) which mandates that
motion to dismiss is a prohibited pleading (Section 8) and in consonance with Administrative Order 8-01 of the
Supreme Court dated March 1, 2001, this case is hereby ordered remanded to the Regional Trial Court Branch
23, Naga City which under A.M. No. 00-11-03-SC has been designated as special court to try and decide intracorporate controversies under R.A. 8799.
The scheduled hearing on the prayer for temporary restraining order and preliminary injunction set on July 18,
2005 is hereby cancelled.
For reasons of comity the issue of whether Quo Warranto is the proper remedy is better left to the court of
competent jurisdiction to rule upon.
SO ORDERED. 2
Petitioners no longer moved for reconsideration of the foregoing Order and, instead, immediately elevated the
case to this Court via a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure.
The petition raises the following issues:
I
WHETHER A BRANCH OF THE REGIONAL TRIAL COURT WHICH HAS NO JURISDICTION
TO TRY AND DECIDE A CASE HAS AUTHORITY TO REMAND THE SAME TO ANOTHER COEQUAL COURT IN ORDER TO CURE THE DEFECTS ON VENUE AND JURISDICTION
II
WHETHER OR NOT ADMINISTRATIVE CIRCULAR NO. 8-01 DATED JANUARY 23, 2001
WHICH TOOK EFFECT ON MARCH 1, 2001 MAY BE APPLIED IN THE PRESENT CASE WHICH
WAS FILED ON MAY 16, 2005. 3

In their Comment, respondents argue that the present petition should be denied due course and dismissed on the
grounds that (1) an appeal under Rule 45 is inappropriate in this case because the Order dated July 13, 2005 is
merely an interlocutory order and not a final order as contemplated under Rule 45 of the 1997 Rules of Civil
Procedure; (2) a petition for review on certiorari under Rule 45 is the wrong remedy under A.M. No. 04-9-07SC, which provides that "all decisions and final orders in cases falling under the Interim Rules of Corporate
Rehabilitation and the Interim Rules of Procedure Governing Intra-Corporate Controversies under Republic Act
No. 8799 shall be appealable to the Court of Appeals through a petition for review under Rule 43 of the Rules of
Court;" and (3) the petition was intended merely to delay the proceedings in the trial court because when the
case was transferred to Branch 21 of the Regional Trial Court, said court granted petitioners motion to hold the
proceedings in view of the present petition pending before this Court.
Subsequently, petitioners also filed an Urgent Motion to Restore Status Quo Ante, alleging that on January 12,
2006, respondent Jose Pierre Panday, with the aid of 14 armed men, assaulted the premises of St. John Hospital
in Naga City, taking away the daily hospital collections estimated at P400,000.00.
The Court notes that, indeed, petitioners chose the wrong remedy to assail the Order of July 13, 2005. It is
hornbook principle that Rule 45 of the 1997 Rules of Civil Procedure governs appeals from judgments or final
orders.4 The Order dated July 13, 2005 is basically a denial of herein petitioners prayer in their Answer for the
dismissal of respondents case against them. As a consequence of the trial courts refusal to dismiss the case, it
then directed the transfer of the case to another branch of the Regional Trial Court that had been designated as a
special court to hear cases formerly cognizable by the SEC. Verily, the order was merely interlocutory as it does
not dispose of the case completely, but leaves something more to be done on its merits. Such being the case, the
assailed Order cannot ordinarily be reviewed through a petition under Rule 45. As we held in Tolentino v.
Natanauan, 5 to wit:
In the case of Bangko Silangan Development Bank vs. Court of Appeals, the Court reiterated the well-settled
rule that:
. . . an order denying a motion to dismiss is merely interlocutory and therefore not appealable, nor can it be the
subject of a petition for review on certiorari. Such order may only be reviewed in the ordinary course of law by
an appeal from the judgment after trial. The ordinary procedure to be followed in that event is to file an answer,
go to trial, and if the decision is adverse, reiterate the issue on appeal from the final judgment.6
It appears, however, that the longer this case remains unresolved, the greater chance there is for more violence
between the parties to erupt. In Philippine Airlines v. Spouses Kurangking,7 the Court proceeded to give due
course to a case despite the wrong remedy resorted to by the petitioner therein, stating thus:
While a petition for review on certiorari under Rule 45 would ordinarily be inappropriate to assail an
interlocutory order, in the interest, however, of arresting the perpetuation of an apparent error committed below
that could only serve to unnecessarily burden the parties, the Court has resolved to ignore the technical flaw
and, also, to treat the petition, there being no other plain, speedy and adequate remedy, as a special civil action
for certiorari. Not much, after all, can be gained if the Court were to refrain from now making a pronouncement
on an issue so basic as that submitted by the parties.8
In this case, the basic issue of which court has jurisdiction over cases previously cognizable by the SEC under
Section 5, Presidential Decree No. 902-A (P.D. No. 902-A), and the propensity of the parties to resort to
violence behoove the Court to look beyond petitioners technical lapse of filing a petition for review on
certiorari instead of filing a petition for certiorari under Rule 65 with the proper court. Thus, the Court shall
proceed to resolve the case on its merits.
It should be noted that allegations in a complaint for quo warranto that certain persons usurped the offices,
powers and functions of duly elected members of the board, trustees and/or officers make out a case for an

intra-corporate controversy.9 Prior to the enactment of R.A. No. 8799, the Court, adopting Justice Jose Y. Ferias
view, declared in Unilongo v. Court of Appeals 10 that Section 1, Rule 66 of the 1997 Rules of Civil Procedure is
"limited to actions of quo warranto against persons who usurp a public office, position or franchise; public
officers who forfeit their office; and associations which act as corporations without being legally incorporated,"
while "[a]ctions of quo warranto against corporations, or against persons who usurp an office in a corporation,
fall under the jurisdiction of the Securities and Exchange Commission and are governed by its rules. (P.D. No.
902-A as amended)."11
However, R.A. No. 8799 was passed and Section 5.2 thereof provides as follows:
5.2. The Commissions jurisdiction over all cases enumerated under Section 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. xxx
Therefore, actions of quo warranto against persons who usurp an office in a corporation, which were formerly
cognizable by the Securities and Exchange Commission under PD 902-A, have been transferred to the courts of
general jurisdiction. But, this does not change the fact that Rule 66 of the 1997 Rules of Civil Procedure does
not apply to quo warranto cases against persons who usurp an office in a private corporation. Presently, Section
1(a) of Rule 66 reads thus:
Section 1. Action by Government against individuals. An action for the usurpation of a public office, position
or franchise may be commenced by a verified petition brought in the name of the Republic of the Philippines
against
(a) A person who usurps, intrudes into, or unlawfully holds or exercises a public office, position or franchise;
xxxx
As explained in the Unilongo12 case, Section 1(a) of Rule 66 of the present Rules no longer contains the phrase
"or an office in a corporation created by authority of law" which was found in the old Rules. Clearly, the present
Rule 66 only applies to actions of quo warranto against persons who usurp a public office, position or franchise;
public officers who forfeit their office; and associations which act as corporations without being legally
incorporated despite the passage of R.A. No. 8799. It is, therefore, The Interim Rules of Procedure Governing
Intra-Corporate Controversies Under R.A. No. 8799 (hereinafter the Interim Rules) which applies to the petition
for quo warranto filed by respondents before the trial court since what is being questioned is the authority of
herein petitioners to assume the office and act as the board of directors and officers of St. John Hospital,
Incorporated.
The Interim Rules provide thus:
Section 1. (a) Cases covered. These Rules shall govern the procedure to be observed in civil cases
involving the following:
xxxx
(2) Controversies arising out of intra-corporate, partnership, or association relations, between and
among stockholders, members, or associates, and between, any or all of them and the corporation,
partnership, or association of which they are stockholders, members, or associates, respectively;
(3) Controversies in the election or appointment of directors, trustees, officers, or managers of
corporations, partnerships, or associations;

xxxx
SEC. 5. Venue. All actions covered by these Rules shall be commenced and tried in the Regional Trial
Court which has jurisdiction over the principal office of the corporation, partnership, or association
concerned. xxx (Emphasis ours)
Pursuant to Section 5.2 of R.A. No. 8799, the Supreme Court promulgated A.M. No. 00-11-03-SC (effective
December 15, 2000) designating certain branches of the Regional Trial Courts to try and decide cases formerly
cognizable by the Securities and Exchange Commission. For the Fifth Judicial Region, this Court designated the
following branches of the Regional Trial Court, to wit:
Camarines Sur (Naga City)
Albay (Legaspi City)
Sorsogon (Sorsogon)

Branch 23, Judge Pablo M. Paqueo, Jr.

Branch 4, Judge Gregorio A. Consulta
Branch 52, Judge Honesto A. Villamor

Subsequently, the Court promulgated A.M. No. 03-03-03-SC, effective July 1, 2003, which provides that:
1. The Regional Courts previously designated as SEC Courts through the: (a) Resolutions of this
Court dated 21 November 2000, 4 July 2001, 12 November 2002, and 9 July 2002, all issued in A.M.
No. 00-11-03-SC, (b) Resolution dated 27 August 2001 in A.M. No. 01-5-298-RTC; and (c) Resolution
dated 8 July 2002 in A.M. No. 01-12-656-RTC are hereby DESIGNATED and shall be CALLED as
Special Commercial Courts to try and decide cases involving violations of Intellectual Property
Rights which fall within their jurisdiction and those cases formerly cognizable by the Securities and
Exchange Commission;
xxxx
4. The Special Commercial Courts shall have jurisdiction over cases arising within their respective
territorial jurisdiction with respect to the National Capital Judicial Region and within the respective
provinces with respect to the First to Twelfth Judicial Regions. Thus, cases shall be filed in the Office
of the Clerk of Court in the official station of the designated Special Commercial Court; (Emphasis
ours)
The next question then is, which branch of the Regional Trial Court has jurisdiction over the present action for
quo warrato? Section 5 of the Interim Rules provides that the petition should be commenced and tried in the
Regional Trial Court that has jurisdiction over the principal office of the corporation. It is undisputed that the
principal office of the corporation is situated at Goa, Camarines Sur. Thus, pursuant to A.M. No. 00-11-03-SC
and A.M. No. 03-03-03-SC, it is the Regional Trial Court designated as Special Commercial Courts in
Camarines Sur which shall have jurisdiction over the petition for quo warranto filed by herein Respondents.
Evidently, the RTC-Br. 58 in San Jose, Camarines Sur is bereft of jurisdiction over respondents petition for quo
warranto. Based on the allegations in the petition, the case was clearly one involving an intra-corporate dispute.
The trial court should have been aware that under R.A. No. 8799 and the aforementioned administrative
issuances of this Court, RTC-Br. 58 was never designated as a Special Commercial Court; hence, it was never
vested with jurisdiction over cases previously cognizable by the SEC.
Such being the case, RTC-Br. 58 did not have the requisite authority or power to order the transfer of the case to
another branch of the Regional Trial Court. The only action that RTC-Br. 58 could take on the matter was to
dismiss the petition for lack of jurisdiction. In HLC Construction and Development Corp. v. Emily Homes
Subdivision Homeowners Association,13 the Court held that the trial court, having no jurisdiction over the

subject matter of the complaint, should dismiss the same so the issues therein could be expeditiously heard and
resolved by the tribunal which was clothed with jurisdiction.
Note, further, that respondents petition for quo warranto was filed as late as 2005. A.M. No. 03-03-03-SC took
effect as early as July 1, 2003 and it was clearly provided therein that such petitions shall be filed in the Office
of the Clerk of Court in the official station of the designated Special Commercial Court. Since the official
station of the designated Special Commercial Court for Camarines Sur is the Regional Trial Court in Naga City,
respondents should have filed their petition with said court. A.M. No. 00-11-03-SC having been in effect for
four years and A.M. No. 03-03-03-SC having been in effect for almost two years by the time respondents filed
their petition, there is no cogent reason why respondents were not aware of the appropriate court where their
petition should be filed.
The ratiocination of RTC-Br.58 that Administrative Circular No. 08-2001 authorized said trial court to order the
transfer of respondents petition to the Regional Trial Court of Naga City is specious because as of the time of
filing of the petition, A.M. No. 03-03-03-SC, which clearly stated that cases formerly cognizable by the SEC
should be filed with the Office of the Clerk of Court in the official station of the designated Special
Commercial Court, had been in effect for almost two years. Thus, the filing of the petition with the Regional
Trial Court of San Jose, Camarines Sur, which had no jurisdiction over those kinds of actions, was clearly
erroneous.
WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED. The Order of the Regional Trial
Court of San Jose, Camarines Sur dated July 13, 2005 is SET ASIDE for being NULL and VOID. The petition
for quo warranto in Civil Case No. T-1007 (now re-docketed as SEC Case No. RTC 2005-0001), entitled "Jose
Pierre A. Panday, et al. v. Sps. Joaquin M. Calleja, Jr., et al." is ordered DISMISSED.
SO ORDERED.
G.R. Nos. 179431-32

June 22, 2010

LUIS K. LOKIN, JR., as the second nominee of CITIZENS BATTLE AGAINST CORRUPTION
(CIBAC), Petitioner,
vs.
COMMISSION ON ELECTIONS and the HOUSE OF REPRESENTATIVES, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 180443
LUIS K. LOKIN, JR., Petitioner,
vs.
COMMISSION ON ELECTIONS (COMELEC), EMMANUEL JOEL J. VILLANUEVA, CINCHONA
C. GONZALES and ARMI JANE R. BORJE, Respondents.
DECISION
BERSAMIN, J.:
The principal question posed in these consolidated special civil actions for certiorari and mandamus is whether
the Commission on Elections (COMELEC) can issue implementing rules and regulations (IRRs) that provide a

ground for the substitution of a party-list nominee not written in Republic Act (R.A.) No. 7941,1 otherwise
known as the Party-List System Act, the law that the COMELEC thereby implements.
Common Antecedents
The Citizens Battle Against Corruption (CIBAC) was one of the organized groups duly registered under the
party-list system of representation that manifested their intent to participate in the May 14, 2007 synchronized
national and local elections. Together with its manifestation of intent to participate,2 CIBAC, through its
president, Emmanuel Joel J. Villanueva, submitted a list of five nominees from which its representatives would
be chosen should CIBAC obtain the required number of qualifying votes. The nominees, in the order that their
names appeared in the certificate of nomination dated March 29, 2007,3 were: (1) Emmanuel Joel J. Villanueva;
(2) herein petitioner Luis K. Lokin, Jr.; (3) Cinchona C. Cruz-Gonzales; (4) Sherwin Tugna; and (5) Emil L.
Galang. The nominees certificates of acceptance were attached to the certificate of nomination filed by CIBAC.
The list of nominees was later published in two newspapers of general circulation, The Philippine Star News4
(sic) and The Philippine Daily Inquirer.5
Prior to the elections, however, CIBAC, still through Villanueva, filed a certificate of nomination, substitution
and amendment of the list of nominees dated May 7, 2007,6 whereby it withdrew the nominations of Lokin,
Tugna and Galang and substituted Armi Jane R. Borje as one of the nominees. The amended list of nominees of
CIBAC thus included: (1) Villanueva, (2) Cruz-Gonzales, and (3) Borje.
Following the close of the polls, or on June 20, 2007, Villanueva sent a letter to COMELEC Chairperson
Benjamin Abalos,7 transmitting therewith the signed petitions of more than 81% of the CIBAC members, in
order to confirm the withdrawal of the nomination of Lokin, Tugna and Galang and the substitution of Borje. In
their petitions, the members of CIBAC averred that Lokin and Tugna were not among the nominees presented
and proclaimed by CIBAC in its proclamation rally held in May 2007; and that Galang had signified his desire
to focus on his family life.
On June 26, 2007, CIBAC, supposedly through its counsel, filed with the COMELEC en banc sitting as the
National Board of Canvassers a motion seeking the proclamation of Lokin as its second nominee.8 The right of
CIBAC to a second seat as well as the right of Lokin to be thus proclaimed were purportedly based on PartyList Canvass Report No. 26, which showed CIBAC to have garnered a grand total of 744,674 votes. Using all
relevant formulas, the motion asserted that CIBAC was clearly entitled to a second seat and Lokin to a
proclamation.
The motion was opposed by Villanueva and Cruz-Gonzales.
Notwithstanding Villanuevas filing of the certificate of nomination, substitution and amendment of the list of
nominees and the petitions of more than 81% of CIBAC members, the COMELEC failed to act on the matter,
prompting Villanueva to file a petition to confirm the certificate of nomination, substitution and amendment of
the list of nominees of CIBAC on June 28, 2007.9
On July 6, 2007, the COMELEC issued Resolution No. 8219,10 whereby it resolved to set the matter pertaining
to the validity of the withdrawal of the nominations of Lokin, Tugna and Galang and the substitution of Borje
for proper disposition and hearing. The case was docketed as E.M. No. 07-054.

In the meantime, the COMELEC en banc, sitting as the National Board of Canvassers, issued National Board of
Canvassers (NBC) Resolution No. 07-60 dated July 9, 200711 to partially proclaim the following parties,
organizations and coalitions participating under the Party-List System as having won in the May 14, 2007
elections, namely: Buhay Hayaan Yumabong, Bayan Muna, CIBAC, Gabriela Women's Party, Association of
Philippine Electric Cooperatives, Advocacy for Teacher Empowerment Through Action, Cooperation and
Harmony Towards Educational Reforms, Inc., Akbayan! Citizen's Action Party, Alagad, Luzon Farmers Party,
Cooperative-Natco Network Party, Anak Pawis, Alliance of Rural Concerns and Abono; and to defer the
proclamation of the nominees of the parties, organizations and coalitions with pending disputes until final
resolution of their respective cases.
The COMELEC en banc issued another resolution, NBC Resolution No. 07-72 dated July 18, 2007,12
proclaiming Buhay Hayaan Yumabong as entitled to 2 additional seats and Bayan Muna, CIBAC, Gabriela
Women's Party, and Association of Philippine Electric Cooperatives to an additional seat each; and holding in
abeyance the proclamation of the nominees of said parties, organizations and coalitions with pending disputes
until the final resolution of their respective cases.
With the formal declaration that CIBAC was entitled to an additional seat, Ricardo de los Santos, purportedly as
secretary general of CIBAC, informed Roberto P. Nazareno, Secretary General of the House of Representatives,
of the promulgation of NBC Resolution No. 07-72 and requested that Lokin be formally sworn in by Speaker
Jose de Venecia, Jr. to enable him to assume office. Nazareno replied, however, that the request of Delos Santos
could not be granted because COMELEC Law Director Alioden D. Dalaig had notified him of the pendency of
E.M. 07-054.
On September 14, 2007, the COMELEC en banc resolved E.M. No. 07-05413 thuswise:
WHEREFORE, considering the above discussion, the Commission hereby approves the withdrawal of the
nomination of Atty. Luis K. Lokin, Sherwin N. Tugna and Emil Galang as second, third and fourth nominees
respectively and the substitution thereby with Atty. Cinchona C. Cruz-Gonzales as second nominee and Atty.
Armi Jane R. Borje as third nominee for the party list CIBAC. The new order of CIBAC's nominees therefore
shall be:
1. Emmanuel Joel J. Villanueva
2. Cinchona C. Cruz-Gonzales
3. Armi Jane R. Borje
SO ORDERED.
The COMELEC en banc explained that the actions of Villanueva in his capacity as the president of CIBAC
were presumed to be within the scope of his authority as such; that the president was charged by Section 1 of
Article IV of the CIBAC By-Laws to oversee and direct the corporate activities, which included the act of
submitting the party's manifestation of intent to participate in the May 14, 2007 elections as well as its
certificate of nominees; that from all indications, Villanueva as the president of CIBAC had always been
provided the leeway to act as the party's representative and that his actions had always been considered as valid;
that the act of withdrawal, although done without any written Board approval, was accomplished with the

Boards acquiescence or at least understanding; and that the intent of the party should be given paramount
consideration in the selection of the nominees.
As a result, the COMELEC en banc proclaimed Cruz-Gonzales as the official second nominee of CIBAC.14
Cruz-Gonzales took her oath of office
as a Party-List Representative of CIBAC on September 17, 2007.15
Precs of the Consolidated Cases
In G.R. No. 179431 and G.R. No. 179432, Lokin seeks through mandamus to compel respondent COMELEC to
proclaim him as the official second nominee of CIBAC.
In G.R. No. 180443, Lokin assails Section 13 of Resolution No. 7804 promulgated on January 12, 2007;16 and
the resolution dated September 14, 2007 issued in E.M. No. 07-054 (approving CIBACs withdrawal of the
nominations of Lokin, Tugna and Galang as CIBACs second, third and fourth nominees, respectively, and the
substitution by Cruz-Gonzales and Borje in their stead, based on the right of CIBAC to change its nominees
under Section 13 of Resolution No. 7804).17 He alleges that Section 13 of Resolution No. 7804 expanded
Section 8 of R.A. No. 7941.18 the law that the COMELEC seeks to thereby implement.
In its comment, the COMELEC asserts that a petition for certiorari is an inappropriate recourse in law due to the
proclamation of Cruz-Gonzales as Representative and her assumption of that office; that Lokins proper
recourse was an electoral protest filed in the House of Representatives Electoral Tribunal (HRET); and that,
therefore, the Court has no jurisdiction over the matter being raised by Lokin.
For its part, CIBAC posits that Lokin is guilty of forum shopping for filing a petition for mandamus and a
petition for certiorari, considering that both petitions ultimately seek to have him proclaimed as the second
nominee of CIBAC.
Issues
The issues are the following:
(a) Whether or not the Court has jurisdiction over the controversy;
(b) Whether or not Lokin is guilty of forum shopping;
(c) Whether or not Section 13 of Resolution No. 7804 is unconstitutional and violates the Party-List
System Act; and
(d) Whether or not the COMELEC committed grave abuse of discretion amounting to lack or excess of
jurisdiction in approving the withdrawal of the nominees of CIBAC and allowing the amendment of the
list of nominees of CIBAC without any basis in fact or law and after the close of the polls, and in ruling
on matters that were intra-corporate in nature.
Ruling

The petitions are granted.

A
The Court has jurisdiction over the case
The COMELEC posits that once the proclamation of the winning party-list organization has been done and its
nominee has assumed office, any question relating to the election, returns and qualifications of the candidates to
the House of Representatives falls under the jurisdiction of the HRET pursuant to Section 17, Article VI of the
1987 Constitution. Thus, Lokin should raise the question he poses herein either in an election protest or in a
special civil action for quo warranto in the HRET, not in a special civil action for certiorari in this Court.
We do not agree.
An election protest proposes to oust the winning candidate from office. It is strictly a contest between the
defeated and the winning candidates, based on the grounds of electoral frauds and irregularities, to determine
who between them has actually obtained the majority of the legal votes cast and is entitled to hold the office. It
can only be filed by a candidate who has duly filed a certificate of candidacy and has been voted for in the
preceding elections.
A special civil action for quo warranto refers to questions of disloyalty to the State, or of ineligibility of the
winning candidate. The objective of the action is to unseat the ineligible person from the office, but not to install
the petitioner in his place. Any voter may initiate the action, which is, strictly speaking, not a contest where the
parties strive for supremacy because the petitioner will not be seated even if the respondent may be unseated.
The controversy involving Lokin is neither an election protest nor an action for quo warranto, for it concerns a
very peculiar situation in which Lokin is seeking to be seated as the second nominee of CIBAC. Although an
election protest may properly be available to one party-list organization seeking to unseat another party-list
organization to determine which between the defeated and the winning party-list organizations actually obtained
the majority of the legal votes, Lokins case is not one in which a nominee of a particular party-list organization
thereby wants to unseat another nominee of the same party-list organization. Neither does an action for quo
warranto lie, considering that the case does not involve the ineligibility and disloyalty of Cruz-Gonzales to the
Republic of the Philippines, or some other cause of disqualification for her.
Lokin has correctly brought this special civil action for certiorari against the COMELEC to seek the review of
the September 14, 2007 resolution of the COMELEC in accordance with Section 7 of Article IX-A of the 1987
Constitution, notwithstanding the oath and assumption of office by Cruz-Gonzales. The constitutional mandate
is now implemented by Rule 64 of the 1997 Rules of Civil Procedure, which provides for the review of the
judgments, final orders or resolutions of the COMELEC and the Commission on Audit. As Rule 64 states, the
mode of review is by a petition for certiorari in accordance with Rule 65 to be filed in the Supreme Court within
a limited period of 30 days. Undoubtedly, the Court has original and exclusive jurisdiction over Lokins
petitions for certiorari and for mandamus against the COMELEC.
B
Petitioner is not guilty of forum shopping

Forum shopping consists of the filing of multiple suits involving the same parties for the same cause of action,
either simultaneously or successively, for the purpose of obtaining a favorable judgment. Thus, forum shopping
may arise: (a) whenever as a result of an adverse decision in one forum, a party seeks a favorable decision
(other than by appeal or certiorari) in another; or (b) if, after having filed a petition in the Supreme Court, a
party files another petition in the Court of Appeals, because he thereby deliberately splits appeals "in the hope
that even as one case in which a particular remedy is sought is dismissed, another case (offering a similar
remedy) would still be open"; or (c) where a party attempts to obtain a writ of preliminary injunction from a
court after failing to obtain the writ from another court.19
What is truly important to consider in determining whether forum shopping exists or not is the vexation caused
to the courts and the litigants by a party who accesses different courts and administrative agencies to rule on the
same or related causes or to grant the same or substantially the same reliefs, in the process creating the
possibility of conflicting decisions being rendered by the different fora upon the same issue.20
The filing of identical petitions in different courts is prohibited, because such act constitutes forum shopping, a
malpractice that is proscribed and condemned as trifling with the courts and as abusing their processes. Forum
shopping is an improper conduct that degrades the administration of justice.21
Nonetheless, the mere filing of several cases based on the same incident does not necessarily constitute forum
shopping. The test is whether the several actions filed involve the same transactions and the same essential facts
and circumstances.22 The actions must also raise identical causes of action, subject matter, and issues.23 Elsewise
stated, forum shopping exists where the elements of litis pendentia are present, or where a final judgment in one
case will amount to res judicata in the other.24
Lokin has filed the petition for mandamus to compel the COMELEC to proclaim him as the second nominee of
CIBAC upon the issuance of NBC Resolution No. 07-72 (announcing CIBACs entitlement to an additional seat
in the House of Representatives), and to strike down the provision in NBC Resolution No. 07-60 and NBC
Resolution No. 07-72 holding in abeyance "all proclamation of the nominees of concerned parties, organizations
and coalitions with pending disputes shall likewise be held in abeyance until final resolution of their respective
cases." He has insisted that the COMELEC had the ministerial duty to proclaim him due to his being CIBACs
second nominee; and that the COMELEC had no authority to exercise discretion and to suspend or defer the
proclamation of winning party-list organizations with pending disputes.
On the other hand, Lokin has resorted to the petition for certiorari to assail the September 14, 2007 resolution of
the COMELEC (approving the withdrawal of the nomination of Lokin, Tugna and Galang and the substitution
by Cruz-Gonzales as the second nominee and Borje as the third nominee); and to challenge the validity of
Section 13 of Resolution No. 7804, the COMELECs basis for allowing CIBACs withdrawal of Lokins
nomination.
Applying the test for forum shopping, the consecutive filing of the action for certiorari and the action for
mandamus did not violate the rule against forum shopping even if the actions involved the same parties, because
they were based on different causes of action and the reliefs they sought were different.
C
Invalidity of Section 13 of Resolution No. 7804

The legislative power of the Government is vested exclusively in the Legislature in accordance with the
doctrine of separation of powers. As a general rule, the Legislature cannot surrender or abdicate its legislative
power, for doing so will be unconstitutional. Although the power to make laws cannot be delegated by the
Legislature to any other authority, a power that is not legislative in character may be delegated.25
Under certain circumstances, the Legislature can delegate to executive officers and administrative boards the
authority to adopt and promulgate IRRs. To render such delegation lawful, the Legislature must declare the
policy of the law and fix the legal principles that are to control in given cases. The Legislature should set a
definite or primary standard to guide those empowered to execute the law. For as long as the policy is laid down
and a proper standard is established by statute, there can be no unconstitutional delegation of legislative power
when the Legislature leaves to selected instrumentalities the duty of making subordinate rules within the
prescribed limits, although there is conferred upon the executive officer or administrative board a large measure
of discretion. There is a distinction between the delegation of power to make a law and the conferment of an
authority or a discretion to be exercised under and in pursuance of the law, for the power to make laws
necessarily involves a discretion as to what it shall be.26
The authority to make IRRs in order to carry out an express legislative purpose, or to effect the operation and
enforcement of a law is not a power exclusively legislative in character, but is rather administrative in nature.
The rules and regulations adopted and promulgated must not, however, subvert or be contrary to existing
statutes. The function of promulgating IRRs may be legitimately exercised only for the purpose of carrying out
the provisions of a law. The power of administrative agencies is confined to implementing the law or putting it
into effect. Corollary to this is that administrative regulation cannot extend the law and amend a legislative
enactment. It is axiomatic that the clear letter of the law is controlling and cannot be amended by a mere
administrative rule issued for its implementation. Indeed, administrative or executive acts shall be valid only
when they are not contrary to the laws or the Constitution.27
To be valid, therefore, the administrative IRRs must comply with the following requisites to be valid:28
1. Its promulgation must be authorized by the Legislature;
2. It must be within the scope of the authority given by the Legislature;
3. It must be promulgated in accordance with the prescribed procedure; and
4. It must be reasonable.
The COMELEC is constitutionally mandated to enforce and administer all laws and regulations relative to the
conduct of an election, a plebiscite, an initiative, a referendum, and a recall.29 In addition to the powers and
functions conferred upon it by the Constitution, the COMELEC is also charged to promulgate IRRs
implementing the provisions of the Omnibus Election Code or other laws that the COMELEC enforces and
administers.30
The COMELEC issued Resolution No. 7804 pursuant to its powers under the Constitution, Batas Pambansa
Blg. 881, and the Party-List System Act.31 Hence, the COMELEC met the first requisite.

The COMELEC also met the third requisite. There is no question that Resolution No. 7804 underwent the
procedural necessities of publication and dissemination in accordance with the procedure prescribed in the
resolution itself.
Whether Section 13 of Resolution No. 7804 was valid or not is thus to be tested on the basis of whether the
second and fourth requisites were met. It is in this respect that the challenge of Lokin against Section 13
succeeds.
As earlier said, the delegated authority must be properly exercised. This simply means that the resulting IRRs
must not be ultra vires as to be issued beyond the limits of the authority conferred. It is basic that an
administrative agency cannot amend an act of Congress,32 for administrative IRRs are solely intended to carry
out, not to supplant or to modify, the law. The administrative agency issuing the IRRs may not enlarge, alter, or
restrict the provisions of the law it administers and enforces, and cannot engraft additional non-contradictory
requirements not contemplated by the Legislature.33
Section 8 of R.A. No. 7941 reads:
Section 8. Nomination of Party-List Representatives.-Each registered party, organization or coalition shall
submit to the COMELEC not later that forty-five (45) days before the election a list of names, not less than five
(5), from which party-list representatives shall be chosen in case it obtains the required number of votes.
A person may be nominated in one (1) list only. Only persons who have given their consent in writing may be
named in the list. The list shall not include any candidate of any elective office or a person who has lost his bid
for an elective office in the immediately preceding election. No change of names or alteration of the order of
nominees shall be allowed after the same shall have been submitted to the COMELEC except in cases where the
nominee dies, or withdraws in writing his nomination, becomes incapacitated in which case the name of the
substitute nominee shall be placed last in the list. Incumbent sectoral representatives in the House of
Representatives who are nominated in the party-list system shall not be considered resigned.
The provision is daylight clear. The Legislature thereby deprived the party-list organization of the right to
change its nominees or to alter the order of nominees once the list is submitted to the COMELEC, except when:
(a) the nominee dies; (b) the nominee withdraws in writing his nomination; or (c) the nominee becomes
incapacitated. The provision must be read literally because its language is plain and free from ambiguity, and
expresses a single, definite, and sensible meaning. Such meaning is conclusively presumed to be the meaning
that the Legislature has intended to convey. Even where the courts should be convinced that the Legislature
really intended some other meaning, and even where the literal interpretation should defeat the very purposes of
the enactment, the explicit declaration of the Legislature is still the law, from which the courts must not depart.34
When the law speaks in clear and categorical language, there is no reason for interpretation or construction, but
only for application.35 Accordingly, an administrative agency tasked to implement a statute may not construe it
by expanding its meaning where its provisions are clear and unambiguous.36
The legislative intent to deprive the party-list organization of the right to change the nominees or to alter the
order of the nominees was also expressed during the deliberations of the Congress, viz:
MR. LAGMAN: And again on Section 5, on the nomination of party list representatives, I do not see any
provision here which prohibits or for that matter allows the nominating party to change the nominees or to alter

the order of prioritization of names of nominees. Is the implication correct that at any time after submission the
names could still be changed or the listing altered?
MR. ABUEG: Mr. Speaker, that is a good issue brought out by the distinguished Gentleman from Albay and
perhaps a perfecting amendment may be introduced therein. The sponsoring committee will gladly consider the
same.
MR. LAGMAN: In other words, what I would like to see is that after the list is submitted to the COMELEC
officially, no more changes should be made in the names or in the order of listing.
MR. ABUEG: Mr. Speaker, there may be a situation wherein the name of a particular nominee has been
submitted to the Commission on Elections but before election day the nominee changed his political party
affiliation. The nominee is therefore no longer qualified to be included in the party list and the political party
has a perfect right to change the name of that nominee who changed his political party affiliation.
MR. LAGMAN: Yes of course. In that particular case, the change can be effected but will be the exception
rather than the rule. Another exception most probably is the nominee dies, then there has to be a change but any
change for that matter should always be at the last part of the list so that the prioritization made by the party will
not be adversely affected.37
The usage of "No" in Section 8 "No change of names or alteration of the order of nominees shall be allowed
after the same shall have been submitted to the COMELEC except in cases where the nominee dies, or
withdraws in writing his nomination, or becomes incapacitated, in which case the name of the substitute
nominee shall be placed last in the list" renders Section 8 a negative law, and is indicative of the legislative
intent to make the statute mandatory. Prohibitive or negative words can rarely, if ever, be directory, for there is
but one way to obey the command "thou shall not," and that is to completely refrain from doing the forbidden
act,38 subject to certain exceptions stated in the law itself, like in this case.
Section 8 does not unduly deprive the party-list organization of its right to choose its nominees, but merely
divests it of the right to change its nominees or to alter the order in the list of its nominees names after
submission of the list to the COMELEC.
The prohibition is not arbitrary or capricious; neither is it without reason on the part of lawmakers. The
COMELEC can rightly presume from the submission of the list that the list reflects the true will of the party-list
organization. The COMELEC will not concern itself with whether or not the list contains the real intended
nominees of the party-list organization, but will only determine whether the nominees pass all the requirements
prescribed by the law and whether or not the nominees possess all the qualifications and none of the
disqualifications. Thereafter, the names of the nominees will be published in newspapers of general circulation.
Although the people vote for the party-list organization itself in a party-list system of election, not for the
individual nominees, they still have the right to know who the nominees of any particular party-list organization
are. The publication of the list of the party-list nominees in newspapers of general circulation serves that right of
the people, enabling the voters to make intelligent and informed choices. In contrast, allowing the party-list
organization to change its nominees through withdrawal of their nominations, or to alter the order of the
nominations after the submission of the list of nominees circumvents the voters demand for transparency. The
lawmakers exclusion of such arbitrary withdrawal has eliminated the possibility of such circumvention.

D
Exceptions in Section 8 of R.A. 7941 are exclusive
Section 8 of R.A. No. 7941 enumerates only three instances in which the party-list organization can substitute
another person in place of the nominee whose name has been submitted to the COMELEC, namely: (a) when
the nominee dies; (b) when the nominee withdraws in writing his nomination; and (c) when the nominee
becomes incapacitated.
The enumeration is exclusive, for, necessarily, the general rule applies to all cases not falling under any of the
three exceptions.
When the statute itself enumerates the exceptions to the application of the general rule, the exceptions are
strictly but reasonably construed. The exceptions extend only as far as their language fairly warrants, and all
doubts should be resolved in favor of the general provision rather than the exceptions. Where the general rule is
established by a statute with exceptions, none but the enacting authority can curtail the former. Not even the
courts may add to the latter by implication, and it is a rule that an express exception excludes all others,
although it is always proper in determining the applicability of the rule to inquire whether, in a particular case, it
accords with reason and justice.391avvphi1
The appropriate and natural office of the exception is to exempt something from the scope of the general words
of a statute, which is otherwise within the scope and meaning of such general words. Consequently, the
existence of an exception in a statute clarifies the intent that the statute shall apply to all cases not excepted.
Exceptions are subject to the rule of strict construction; hence, any doubt will be resolved in favor of the general
provision and against the exception. Indeed, the liberal construction of a statute will seem to require in many
circumstances that the exception, by which the operation of the statute is limited or abridged, should receive a
restricted construction.
E
Section 13 of Resolution No. 7804 expanded
the exceptions under Section 8 of R.A. No. 7941
Section 13 of Resolution No. 7804 states:
Section 13. Substitution of nominees. A party-list nominee may be substituted only when he dies, or his
nomination is withdrawn by the party, or he becomes incapacitated to continue as such, or he withdraws
his acceptance to a nomination. In any of these cases, the name of the substitute nominee shall be placed last
in the list of nominees.
No substitution shall be allowed by reason of withdrawal after the polls.
Unlike Section 8 of R.A. No. 7941, the foregoing regulation provides four instances, the fourth being when the
"nomination is withdrawn by the party."
Lokin insists that the COMELEC gravely abused its discretion in expanding to four the three statutory grounds
for substituting a nominee.

We agree with Lokin.

The COMELEC, despite its role as the implementing arm of the Government in the enforcement and
administration of all laws and regulations relative to the conduct of an election,40 has neither the authority nor
the license to expand, extend, or add anything to the law it seeks to implement thereby. The IRRs the
COMELEC issues for that purpose should always accord with the law to be implemented, and should not
override, supplant, or modify the law. It is basic that the IRRs should remain consistent with the law they intend
to carry out.41
Indeed, administrative IRRs adopted by a particular department of the Government under legislative authority
must be in harmony with the provisions of the law, and should be for the sole purpose of carrying the laws
general provisions into effect. The law itself cannot be expanded by such IRRs, because an administrative
agency cannot amend an act of Congress.42
The COMELEC explains that Section 13 of Resolution No. 7804 has added nothing to Section 8 of R.A. No.
7941,43 because it has merely reworded and rephrased the statutory provisions phraseology.
The explanation does not persuade.
To reword means to alter the wording of or to restate in other words; to rephrase is to phrase anew or in a new
form.44 Both terms signify that the meaning of the original word or phrase is not altered.
However, the COMELEC did not merely reword or rephrase the text of Section 8 of R.A. No. 7941, because it
established an entirely new ground not found in the text of the provision. The new ground granted to the partylist organization the unilateral right to withdraw its nomination already submitted to the COMELEC, which
Section 8 of R.A. No. 7941 did not allow to be done. Neither was the grant of the unilateral right contemplated
by the drafters of the law, who precisely denied the right to withdraw the nomination (as the quoted record of
the deliberations of the House of Representatives has indicated). The grant thus conflicted with the statutory
intent to save the nominee from falling under the whim of the party-list organization once his name has been
submitted to the COMELEC, and to spare the electorate from the capriciousness of the party-list organizations.
We further note that the new ground would not secure the object of R.A. No. 7941 of developing and
guaranteeing a full, free and open party-list electoral system. The success of the system could only be ensured
by avoiding any arbitrariness on the part of the party-list organizations, by seeing to the transparency of the
system, and by guaranteeing that the electorate would be afforded the chance of making intelligent and
informed choices of their party-list representatives.
The insertion of the new ground was invalid. An axiom in administrative law postulates that administrative
authorities should not act arbitrarily and capriciously in the issuance of their IRRs, but must ensure that their
IRRs are reasonable and fairly adapted to secure the end in view. If the IRRs are shown to bear no reasonable
relation to the purposes for which they were authorized to be issued, they must be held to be invalid and should
be struck down.45
F
Effect of partial nullity of Section 13 of Resolution No. 7804

An IRR adopted pursuant to the law is itself law.46 In case of conflict between the law and the IRR, the law
prevails. There can be no question that an IRR or any of its parts not adopted pursuant to the law is no law at all
and has neither the force nor the effect of law.47 The invalid rule, regulation, or part thereof cannot be a valid
source of any right, obligation, or power.
Considering that Section 13 of Resolution No. 7804 to the extent that it allows the party-list organization to
withdraw its nomination already submitted to the COMELEC was invalid, CIBACs withdrawal of its
nomination of Lokin and the others and its substitution of them with new nominees were also invalid and
ineffectual. It is clear enough that any substitution of Lokin and the others could only be for any of the grounds
expressly stated in Section 8 of R.A. No. 7941. Resultantly, the COMELECs approval of CIBACs petition of
withdrawal of the nominations and its recognition of CIBACs substitution, both through its assailed September
14, 2007 resolution, should be struck down for lack of legal basis. Thereby, the COMELEC acted without
jurisdiction, having relied on the invalidly issued Section 13 of Resolution No. 7804 to support its action.
WHEREFORE, we grant the petitions for certiorari and mandamus.
We declare Section 13 of Resolution No. 7804 invalid and of no effect to the extent that it authorizes a party-list
organization to withdraw its nomination of a nominee once it has submitted the nomination to the Commission
on Elections.
Accordingly, we annul and set aside:
(a) The resolution dated September 14, 2007 issued in E. M. No. 07-054 approving Citizens Battle
Against Corruptions withdrawal of the nominations of Luis K. Lokin, Jr., Sherwin N. Tugna, and Emil
Galang as its second, third, and fourth nominees, respectively, and ordering their substitution by
Cinchona C. Cruz-Gonzales as second nominee and Armi Jane R. Borje as third nominee; and
(b) The proclamation by the Commission on Elections of Cinchona C. Cruz-Gonzales as a Party-List
Representative representing Citizens Battle Against Corruption in the House of Representatives.
We order the Commission on Elections to forthwith proclaim petitioner Luis K. Lokin, Jr. as a Party-List
Representative representing Citizens Battle Against Corruption in the House of Representatives.
We make no pronouncements on costs of suit.
SO ORDERED.
G.R. No. 195229

October 9, 2012

EFREN RACEL ARA TEA, Petitioner,

vs.
COMMISSiON ON ELECTIONS and ESTELA D. ANTlPOLO, Respondents.
DECISION
CARPIO, J.:

The Case
This is a special civil action for certiorari1 seeking to review and nullify the Resolution2 dated 2 February 2011
and the Order3 dated 12 January 2011 of the Commission on Elections (COMELEC) En Banc in Dra. Sigrid S.
Rodolfo v. Romeo D. Lonzanida, docketed as SPA No. 09-158 (DC). The petition asserts that the COMELEC
issued the Resolution and Order with grave abuse of discretion amounting to lack or excess of jurisdiction.
The Facts
Romeo D. Lonzanida (Lonzanida) and Estela D. Antipolo (Antipolo) were candidates for Mayor of San
Antonio, Zambales in the May 2010 National and Local Elections. Lonzanida filed his certificate of candidacy
on 1 December 2009.4 On 8 December 2009, Dra. Sigrid S. Rodolfo (Rodolfo) filed a petition under Section 78
of the Omnibus Election Code to disqualify Lonzanida and to deny due course or to cancel Lonzanidas
certificate of candidacy on the ground that Lonzanida was elected, and had served, as mayor of San Antonio,
Zambales for four (4) consecutive terms immediately prior to the term for the May 2010 elections. Rodolfo
asserted that Lonzanida made a false material representation in his certificate of candidacy when Lonzanida
certified under oath that he was eligible for the office he sought election. Section 8, Article X of the 1987
Constitution5 and Section 43(b) of the Local Government Code6 both prohibit a local elective official from
being elected and serving for more than three consecutive terms for the same position.
The COMELEC Second Division rendered a Resolution7 on 18 February 2010 cancelling Lonzanidas
certificate of candidacy. Pertinent portions of the 18 February 2010 Resolution read:
Respondent Lonzanida never denied having held the office of mayor of San Antonio, Zambales for more than
nine consecutive years. Instead he raised arguments to forestall or dismiss the petition on the grounds other than
the main issue itself. We find such arguments as wanting. Respondent Lonzanida, for holding the office of
mayor for more than three consecutive terms, went against the three-term limit rule; therefore, he could not be
allowed to run anew in the 2010 elections. It is time to infuse new blood in the political arena of San Antonio.
WHEREFORE, premises considered, the instant petition is hereby GRANTED. The Certificate of Candidacy of
Respondent Romeo D. Lonzanida for the position of mayor in the municipality of San Antonio, Zambales is
hereby CANCELLED. His name is hereby ordered STRICKEN OFF the list of Official Candidates for the
position of Mayor of San Antonio, Zambales in May 10, 2010 elections.
SO ORDERED.8
Lonzanidas motion for reconsideration before the COMELEC En Banc remained pending during the May 2010
elections. Lonzanida and Efren Racel Aratea (Aratea) garnered the highest number of votes and were
respectively proclaimed Mayor and Vice-Mayor.
Aratea took his oath of office as Acting Mayor before Regional Trial Court (RTC) Judge Raymond C. Viray of
Branch 75, Olongapo City on 5 July 2010.9 On the same date, Aratea wrote the Department of Interior and
Local Government (DILG) and requested for an opinion on whether, as Vice-Mayor, he was legally required to
assume the Office of the Mayor in view of Lonzanidas disqualification. DILG Legal Opinion No. 117, S.
201010 stated that Lonzanida was disqualified to hold office by reason of his criminal conviction. As a
consequence of Lonzanidas disqualification, the Office of the Mayor was deemed permanently vacant. Thus,

Aratea should assume the Office of the Mayor in an acting capacity without prejudice to the COMELECs
resolution of Lonzanidas motion for reconsideration. In another letter dated 6 August 2010, Aratea requested
the DILG to allow him to take the oath of office as Mayor of San Antonio, Zambales. In his response dated 24
August 2010, then Secretary Jesse M. Robredo allowed Aratea to take an oath of office as "the permanent
Municipal Mayor of San Antonio, Zambales without prejudice however to the outcome of the cases pending
before the [COMELEC]."11
On 11 August 2010, the COMELEC En Banc issued a Resolution12 disqualifying Lonzanida from running for
Mayor in the May 2010 elections. The COMELEC En Bancs resolution was based on two grounds: first,
Lonzanida had been elected and had served as Mayor for more than three consecutive terms without
interruption; and second, Lonzanida had been convicted by final judgment of ten (10) counts of falsification
under the Revised Penal Code. Lonzanida was sentenced for each count of falsification to imprisonment of four
(4) years and one (1) day of prisin correccional as minimum, to eight (8) years and one (1) day of prisin
mayor as maximum. The judgment of conviction became final on 23 October 2009 in the Decision of this Court
in Lonzanida v. People,13 before Lonzanida filed his certificate of candidacy on 1 December 2009. Pertinent
portions of the 11 August 2010 Resolution read:
Prescinding from the foregoing premises, Lonzanida, for having served as Mayor of San Antonio, Zambales for
more than three (3) consecutive terms and for having been convicted by a final judgment of a crime punishable
by more than one (1) year of imprisonment, is clearly disqualified to run for the same position in the May 2010
Elections.
WHEREFORE, in view of the foregoing, the Motion for Reconsideration is hereby DENIED.
SO ORDERED.14
On 25 August 2010, Antipolo filed a Motion for Leave to Intervene and to Admit Attached Petition-inIntervention.15 She claimed her right to be proclaimed as Mayor of San Antonio, Zambales because Lonzanida
ceased to be a candidate when the COMELEC Second Division, through its 18 February 2010 Resolution,
ordered the cancellation of his certificate of candidacy and the striking out of his name from the list of official
candidates for the position of Mayor of San Antonio, Zambales in the May 2010 elections.
In his Comment filed on 26 January 2011, Aratea asserted that Antipolo, as the candidate who received the
second highest number of votes, could not be proclaimed as the winning candidate. Since Lonzanidas
disqualification was not yet final during election day, the votes cast in his favor could not be declared stray.
Lonzanidas subsequent disqualification resulted in a permanent vacancy in the Office of Mayor, and Aratea, as
the duly-elected Vice-Mayor, was mandated by Section 4416 of the Local Government Code to succeed as
Mayor.
The COMELECs Rulings
The COMELEC En Banc issued an Order dated 12 January 2011, stating:
Acting on the "Motion for Leave to Intervene and to Admit Attached Petition-in-Intervention" filed by Estela D.
Antipolo (Antipolo) and pursuant to the power of this Commission to suspend its Rules or any portion thereof in
the interest of justice, this Commission hereby RESOLVES to:

1. GRANT the aforesaid Motion;

2. ADMIT the Petition-in-Intervention filed by Antipolo;
3. REQUIRE the Respondent, ROMEO DUMLAO LONZANIDA, as well as EFREN RACEL ARATEA,
proclaimed Vice-Mayor of San Antonio, Zambales, to file their respective Comments on the Petition-inIntervention within a non-extendible period of five (5) days from receipt thereof;
4. SET the above-mentioned Petition-in-Intervention for hearing on January 26, 2011 at 10:00 a.m. COMELEC
Session Hall, 8th Floor, Palacio del Gobernador, Intramuros, Manila.
WHEREFORE, furnish copies hereof the parties for their information and compliance.
SO ORDERED.17
In its Resolution dated 2 February 2011, the COMELEC En Banc no longer considered Lonzanidas
qualification as an issue: "It is beyond cavil that Lonzanida is not eligible to hold and discharge the functions of
the Office of the Mayor of San Antonio, Zambales. The sole issue to be resolved at this juncture is how to fill
the vacancy resulting from Lonzanidas disqualification."18 The Resolution further stated:
We cannot sustain the submission of Oppositor Aratea that Intervenor Antipolo could never be proclaimed as
the duly elected Mayor of Antipolo [sic] for being a second placer in the elections. The teachings in the cases of
Codilla vs. De Venecia and Nazareno and Domino vs. COMELEC, et al., while they remain sound
jurisprudence find no application in the case at bar. What sets this case apart from the cited jurisprudence is that
the notoriety of Lonzanidas disqualification and ineligibility to hold public office is established both in fact and
in law on election day itself. Hence, Lonzanidas name, as already ordered by the Commission on February 18,
2010 should have been stricken off from the list of official candidates for Mayor of San Antonio, Zambales.
WHEREFORE, in view of the foregoing, the Commission hereby:
1. Declares NULL and VOID the proclamation of respondent ROMEO D. LONZANIDA;
2. GRANTS the Petition for Intervention of Estela D. Antipolo;
3. Orders the immediate CONSTITUTION of a Special Municipal Board of Canvassers to PROCLAIM
Intervenor Estela D. Antipolo as the duly elected Mayor of San Antonio, Zambales;
4. Orders Vice-Mayor Efren Racel Aratea to cease and desist from discharging the functions of the Office of the
Mayor, and to cause a peaceful turn-over of the said office to Antipolo upon her proclamation; and
5. Orders the Office of the Executive Director as well as the Regional Election Director of Region III to cause
the implementation of this Resolution and disseminate it to the Department of Interior and Local Government.
SO ORDERED.19
Aratea filed the present petition on 9 February 2011.

The Issues
The manner of filling up the permanent vacancy in the Office of the Mayor of San Antonio, Zambales is
dependent upon the determination of Lonzanidas removal. Whether Lonzanida was disqualified under Section
68 of the Omnibus Election Code, or made a false material representation under Section 78 of the same Code
that resulted in his certificate of candidacy being void ab initio, is determinative of whether Aratea or
Antipolo is the rightful occupant to the Office of the Mayor of San Antonio, Zambales.
The dissenting opinions reverse the COMELECs 2 February 2011 Resolution and 12 January 2011 Order. They
hold that Aratea, the duly elected Vice-Mayor of San Antonio, Zambales, should be declared Mayor pursuant to
the Local Government Codes rule on succession.
The dissenting opinions make three grave errors: first, they ignore prevailing jurisprudence that a false
representation in the certificate of candidacy as to eligibility in the number of terms elected and served is a
material fact that is a ground for a petition to cancel a certificate of candidacy under Section 78; second, they
ignore that a false representation as to eligibility to run for public office due to the fact that the candidate suffers
from perpetual special disqualification is a material fact that is a ground for a petition to cancel a certificate of
candidacy under Section 78; and third, they resort to a strained statutory construction to conclude that the
violation of the three-term limit rule cannot be a ground for cancellation of a certificate of candidacy under
Section 78, even when it is clear and plain that violation of the three-term limit rule is an ineligibility affecting
the qualification of a candidate to elective office.
The dissenting opinions tread on dangerous ground when they assert that a candidates eligibility to the office he
seeks election must be strictly construed to refer only to the details, i.e., age, citizenship, or residency, among
others, which the law requires him to state in his COC, and which he must swear under oath to possess. The
dissenting opinions choose to view a false certification of a candidates eligibility on the three-term limit rule
not as a ground for false material representation under Section 78 but as a ground for disqualification under
Section 68 of the same Code. This is clearly contrary to well-established jurisprudence.
The Courts Ruling
We hold that Antipolo, the alleged "second placer," should be proclaimed Mayor because Lonzanidas
certificate of candidacy was void ab initio. In short, Lonzanida was never a candidate at all. All votes for
Lonzanida were stray votes. Thus, Antipolo, the only qualified candidate, actually garnered the highest number
of votes for the position of Mayor.
Qualifications and Disqualifications
Section 65 of the Omnibus Election Code points to the Local Government Code for the qualifications of
elective local officials. Paragraphs (a) and (c) of Section 39 and Section 40 of the Local Government Code
provide in pertinent part:
Sec. 39. Qualifications. (a) An elective local official must be a citizen of the Philippines; a registered voter in
the barangay, municipality, city or province x x x; a resident therein for at least one (1) year immediately
preceding the day of the election; and able to read and write Filipino or any other local language or dialect.

xxxx
(c) Candidates for the position of mayor or vice-mayor of independent component cities, component cities, or
municipalities must be at least twenty-one (21) years of age on election day.
xxxx
Sec. 40. Disqualifications. - The following persons are disqualified from running for any elective local position:
(a) Those sentenced by final judgment for an offense involving moral turpitude or for an offense
punishable by one (1) year or more of imprisonment, within two (2) years after serving sentence;
(b) Those removed from office as a result of an administrative case;
(c) Those convicted by final judgment for violating the oath of allegiance to the Republic;
(d) Those with dual citizenship;
(e) Fugitives from justice in criminal or non-political cases here or abroad;
(f) Permanent residents in a foreign country or those who have acquired the right to reside abroad and continue
to avail of the same right after the effectivity of this Code; and
(g) The insane or feeble-minded. (Emphasis supplied)
Section 12 of the Omnibus Election Code provides:
Sec. 12. Disqualification. Any person who has been declared by competent authority insane or incompetent,
or has been sentenced by final judgment for subversion, insurrection, rebellion or for any offense for which
he was sentenced to a penalty of more than eighteen months or for a crime involving moral turpitude,
shall be disqualified to be a candidate and to hold any office, unless he has been given plenary pardon or
granted amnesty.
The disqualifications to be a candidate herein provided shall be deemed removed upon the declaration by
competent authority that said insanity or incompetence had been removed or after the expiration of a period of
five years from his service of sentence, unless within the same period he again becomes disqualified. (Emphasis
supplied)
The grounds for disqualification for a petition under Section 68 of the Omnibus Election Code are specifically
enumerated:
Sec. 68. Disqualifications. Any candidate who, in an action or protest in which he is a party is declared by
final decision by a competent court guilty of, or found by the Commission of having (a) given money or other
material consideration to influence, induce or corrupt the voters or public officials performing electoral
functions; (b) committed acts of terrorism to enhance his candidacy; (c) spent in his election campaign an
amount in excess of that allowed by this Code; (d) solicited, received or made any contribution prohibited
under Sections 89, 95, 96, 97 and 104; (e) violated any of Sections 80, 83, 85, 86 and 261, paragraphs d, e,

k, v, and cc, subparagraph 6, shall be disqualified from continuing as a candidate, or if he has been elected,
from holding the office. Any person who is a permanent resident of or an immigrant to a foreign country shall
not be qualified to run for any elective office under this Code, unless said person has waived his status as
permanent resident or immigrant of a foreign country in accordance with the residence requirement provided for
in the election laws. (Emphasis supplied)
A petition for disqualification under Section 68 clearly refers to "the commission of prohibited acts and
possession of a permanent resident status in a foreign country."20 All the offenses mentioned in Section 68
refer to election offenses under the Omnibus Election Code, not to violations of other penal laws. There is
absolutely nothing in the language of Section 68 that would justify including violation of the three-term limit
rule, or conviction by final judgment of the crime of falsification under the Revised Penal Code, as one of the
grounds or offenses covered under Section 68. In Codilla, Sr. v. de Venecia,21 this Court ruled:
[T]he jurisdiction of the COMELEC to disqualify candidates is limited to those enumerated in Section 68 of the
Omnibus Election Code. All other election offenses are beyond the ambit of COMELEC jurisdiction. They are
criminal and not administrative in nature. x x x
Clearly, the violation by Lonzanida of the three-term limit rule, or his conviction by final judgment of the crime
of falsification under the Revised Penal Code, does not constitute a ground for a petition under Section 68.
False Material Representation
Section 78 of the Omnibus Election Code states that a certificate of candidacy may be denied or cancelled when
there is false material representation of the contents of the certificate of candidacy:
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 the 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.
(Emphasis supplied)
Section 74 of the Omnibus Election Code details the contents of the certificate of candidacy:
Sec. 74. Contents of certificate of candidacy. The certificate of candidacy shall state that the person filing
it is announcing his candidacy for the office stated therein and that he is eligible for said office; if for Member
of the Batasang Pambansa, the province, including its component cities, highly urbanized city or district or
sector which he seeks to represent; the political party to which he belongs; civil status; his date of birth;
residence; his post office address for all election purposes; his profession or occupation; that he will support and
defend the Constitution of the Philippines and will maintain true faith and allegiance thereto; that he will obey
the laws, legal orders, and decrees promulgated by the duly constituted authorities; that he is not a permanent
resident or immigrant to a foreign country; that the obligation imposed by his oath is assumed voluntarily,
without mental reservation or purpose of evasion; and that the facts stated in the certificate of candidacy are true
to the best of his knowledge.
x x x x (Emphasis supplied)

A candidate for mayor in the 2010 local elections was thus required to provide 12 items of information in the
certificate of candidacy:22 name; nickname or stage name; gender; age; place of birth; political party that
nominated the candidate; civil status; residence/address; profession or occupation; post office address for
election purposes; locality of which the candidate is a registered voter; and period of residence in the
Philippines before 10 May 2010. The candidate also certifies four statements: a statement that the candidate is a
natural born or naturalized Filipino citizen; a statement that the candidate is not a permanent resident of, or
immigrant to, a foreign country; a statement that the candidate is eligible for the office he seeks election;
and a statement of the candidates allegiance to the Constitution of the Republic of the Philippines.23 The
certificate of candidacy should also be under oath, and filed within the period prescribed by law.
The conviction of Lonzanida by final judgment, with the penalty of prisin mayor, disqualifies him
perpetually from holding any public office, or from being elected to any public office. This perpetual
disqualification took effect upon the finality of the judgment of conviction, before Lonzanida filed his
certificate of candidacy. The pertinent provisions of the Revised Penal Code are as follows:
Art. 27. Reclusion perpetua. x x x
Prisin mayor and temporary disqualification. The duration of the penalties of prisin mayor and
temporary disqualification shall be from six years and one day to twelve years, except when the penalty
of disqualification is imposed as an accessory penalty, in which case, it shall be that of the principal
penalty.
xxxx
Art. 30. Effects of the penalties of perpetual or temporary absolute disqualification. The penalties of
perpetual or temporary absolute disqualification for public office shall produce the following effects:
1. The deprivation of the public offices and employments which the offender may have held, even if
conferred by popular election.
2. The deprivation of the right to vote in any election for any popular elective office or to be elected to
such office.
3. The disqualification for the offices or public employments and for the exercise of any of the rights
mentioned.
In case of temporary disqualification, such disqualification as is comprised in paragraphs 2 and 3 of this article
shall last during the term of the sentence.
4. The loss of all rights to retirement pay or other pension for any office formerly held.
Art. 31. Effects of the penalties of perpetual or temporary special disqualification. The penalties of
perpetual or temporary special disqualification for public office, profession or calling shall produce the
following effects:
1. The deprivation of the office, employment, profession or calling affected.

2. The disqualification for holding similar offices or employments either perpetually or during the term of the
sentence, according to the extent of such disqualification.
Art. 32. Effects of the penalties of perpetual or temporary special disqualification for the exercise of the right of
suffrage. The perpetual or temporary special disqualification for the exercise of the right of suffrage
shall deprive the offender perpetually or during the term of the sentence, according to the nature of said
penalty, of the right to vote in any popular election for any public office or to be elected to such office.
Moreover, the offender shall not be permitted to hold any public office during the period of his
disqualification.
Art. 42. Prisin mayor Its accessory penalties. The penalty of prision mayor shall carry with it that of
temporary absolute disqualification and that of perpetual special disqualification from the right of suffrage
which the offender shall suffer although pardoned as to the principal penalty, unless the same shall have been
expressly remitted in the pardon. (Emphasis supplied)
The penalty of prisin mayor automatically carries with it, by operation of law,24 the accessory penalties of
temporary absolute disqualification and perpetual special disqualification. Under Article 30 of the Revised
Penal Code, temporary absolute disqualification produces the effect of "deprivation of the right to vote in any
election for any popular elective office or to be elected to such office. The duration of temporary absolute
disqualification is the same as that of the principal penalty of prisin mayor. On the other hand, under Article 32
of the Revised Penal Code, perpetual special disqualification means that "the offender shall not be
permitted to hold any public office during the period of his disqualification, which is perpetually. Both
temporary absolute disqualification and perpetual special disqualification constitute ineligibilities to hold
elective public office. A person suffering from these ineligibilities is ineligible to run for elective public
office, and commits a false material representation if he states in his certificate of candidacy that he is
eligible to so run.
In Lacuna v. Abes (Lacuna),25 the Court, speaking through Justice J.B.L. Reyes, explained the import of the
accessory penalty of perpetual special disqualification:
On the first defense of respondent-appellee Abes, it must be remembered that appellees conviction of a crime
penalized with prision mayor which carried the accessory penalties of temporary absolute disqualification and
perpetual special disqualification from the right of suffrage (Article 42, Revised Penal Code); and Section 99 of
the Revised Election Code disqualifies a person from voting if he had been sentenced by final judgment to
suffer one year or more of imprisonment.
The accessory penalty of temporary absolute disqualification disqualifies the convict for public office and for
the right to vote, such disqualification to last only during the term of the sentence (Article 27, paragraph 3, &
Article 30, Revised Penal Code) that, in the case of Abes, would have expired on 13 October 1961.
But this does not hold true with respect to the other accessory penalty of perpetual special disqualification for
the exercise of the right of suffrage. This accessory penalty deprives the convict of the right to vote or to be
elected to or hold public office perpetually, as distinguished from temporary special disqualification, which lasts
during the term of the sentence. Article 32, Revised Penal Code, provides:

Art. 32. Effects of the penalties of perpetual or temporary special disqualification for the exercise of the right of
suffrage. The perpetual or temporary special disqualification for the exercise of the right of suffrage shall
deprive the offender perpetually or during the term of the sentence, according to the nature of said penalty, of
the right to vote in any popular election for any public office or to be elected to such office. Moreover, the
offender shall not be permitted to hold any public office during the period of disqualification.
The word "perpetually" and the phrase "during the term of the sentence" should be applied distributively to their
respective antecedents; thus, the word "perpetually" refers to the perpetual kind of special disqualification,
while the phrase "during the term of the sentence" refers to the temporary special disqualification. The duration
between the perpetual and the temporary (both special) are necessarily different because the provision, instead
of merging their durations into one period, states that such duration is "according to the nature of said penalty"
which means according to whether the penalty is the perpetual or the temporary special disqualification.
(Emphasis supplied)
Clearly, Lacuna instructs that the accessory penalty of perpetual special disqualification "deprives the convict
of the right to vote or to be elected to or hold public office perpetually.
The accessory penalty of perpetual special disqualification takes effect immediately once the judgment of
conviction becomes final. The effectivity of this accessory penalty does not depend on the duration of the
principal penalty, or on whether the convict serves his jail sentence or not. The last sentence of Article 32 states
that "the offender shall not be permitted to hold any public office during the period of his [perpetual special]
disqualification." Once the judgment of conviction becomes final, it is immediately executory. Any public office
that the convict may be holding at the time of his conviction becomes vacant upon finality of the judgment, and
the convict becomes ineligible to run for any elective public office perpetually. In the case of Lonzanida,
he became ineligible perpetually to hold, or to run for, any elective public office from the time the judgment
of conviction against him became final. The judgment of conviction was promulgated on 20 July 2009 and
became final on 23 October 2009, before Lonzanida filed his certificate of candidacy on 1 December 2009 . 26
Perpetual special disqualification is a ground for a petition under Section 78 of the Omnibus Election Code
because this accessory penalty is an ineligibility, which means that the convict is not eligible to run for public
office, contrary to the statement that Section 74 requires him to state under oath in his certificate of candidacy.
As this Court held in Fermin v. Commission on Elections,27 the false material representation may refer to
"qualifications or eligibility. One who suffers from perpetual special disqualification is ineligible to run for
public office. If a person suffering from perpetual special disqualification files a certificate of candidacy stating
under oath that "he is eligible to run for (public) office," as expressly required under Section 74, then he
clearly makes a false material representation that is a ground for a petition under Section 78. As this Court
explained in Fermin:
Lest it be misunderstood, the denial of due course to or the cancellation of the CoC is not based on the lack of
qualifications but on a finding that the candidate made a material representation that is false, which may relate
to the qualifications required of the public office he/she is running for. It is noted that the candidate states
in his/her CoC that he/she is eligible for the office he/she seeks. Section 78 of the OEC, therefore, is to be
read in relation to the constitutional and statutory provisions on qualifications or eligibility for public
office. If the candidate subsequently states a material representation in the CoC that is false, the
COMELEC, following the law, is empowered to deny due course to or cancel such certificate. Indeed, the
Court has already likened a proceeding under Section 78 to a quo warranto proceeding under Section 253 of the

OEC since they both deal with the eligibility or qualification of a candidate, with the distinction mainly in the
fact that a "Section 78" petition is filed before proclamation, while a petition for quo warranto is filed after
proclamation of the winning candidate.28 (Emphasis supplied)
Latasa, Rivera and Ong:
The Three-Term Limit Rule as a Ground for Ineligibility
Section 74 requires the candidate to certify that he is eligible for the public office he seeks election. Thus,
Section 74 states that "the certificate of candidacy shall state that the person filing x x x is eligible for said
office. The three-term limit rule, enacted to prevent the establishment of political dynasties and to enhance the
electorates freedom of choice,29 is found both in the Constitution30 and the law.31 After being elected and
serving for three consecutive terms, an elective local official cannot seek immediate reelection for the same
office in the next regular election32 because he is ineligible. One who has an ineligibility to run for elective
public office is not "eligible for [the] office." As used in Section 74, the word "eligible"33 means having the right
to run for elective public office, that is, having all the qualifications and none of the ineligibilities to run for the
public office.
In Latasa v. Commission on Elections,34 petitioner Arsenio Latasa was elected mayor of the Municipality of
Digos, Davao del Sur in 1992, 1995, and 1998. The Municipality of Digos was converted into the City of Digos
during Latasas third term. Latasa filed his certificate of candidacy for city mayor for the 2001 elections. Romeo
Sunga, Latasas opponent, filed before the COMELEC a "petition to deny due course, cancel certificate of
candidacy and/or disqualification" under Section 78 on the ground that Latasa falsely represented in his
certificate of candidacy that he is eligible to run as mayor of Digos City. Latasa argued that he did not make any
false representation. In his certificate of candidacy, Latasa inserted a footnote after the phrase "I am eligible"
and indicated "*Having served three (3) term[s] as municipal mayor and now running for the first time as city
mayor." The COMELEC First Division cancelled Latasas certificate of candidacy for violation of the threeterm limit rule but not for false material representation. This Court affirmed the COMELEC En Bancs denial of
Latasas motion for reconsideration.
We cancelled Marino Morales certificate of candidacy in Rivera III v. Commission on Elections (Rivera).35 We
held that Morales exceeded the maximum three-term limit, having been elected and served as Mayor of
Mabalacat for four consecutive terms (1995 to 1998, 1998 to 2001, 2001 to 2004, and 2004 to 2007). We
declared him ineligible as a candidate for the same position for the 2007 to 2010 term. Although we did not
explicitly rule that Morales violation of the three-term limit rule constituted false material representation, we
nonetheless granted the petition to cancel Morales certificate of candidacy under Section 78. We also affirmed
the cancellation of Francis Ongs certificate of candidacy in Ong v. Alegre,36 where the "petition to disqualify,
deny due course and cancel" Ongs certificate of candidacy under Section 78 was predicated on the violation of
the three-term limit rule.
Loong, Fermin and Munder:
When Possession of a Disqualifying Condition
is Not a Ground for a Petition for Disqualification

It is obvious from a reading of the laws and jurisprudence that there is an overlap in the grounds for eligibility
and ineligibility vis--vis qualifications and disqualifications. For example, a candidate may represent that he is
a resident of a particular Philippine locality37 when he is actually a permanent resident of another country.38 In
cases of such overlap, the petitioner should not be constrained in his choice of remedy when the Omnibus
Election Code explicitly makes available multiple remedies.39 Section 78 allows the filing of a petition to deny
due course or to cancel a certificate of candidacy before the election, while Section 253 allows the filing of a
petition for quo warranto after the election. Despite the overlap of the grounds, one should not confuse a
petition for disqualification using grounds enumerated in Section 68 with a petition to deny due course or to
cancel a certificate of candidacy under Section 78.
The distinction between a petition under Section 68 and a petition under Section 78 was discussed in Loong v.
Commission on Elections40 with respect to the applicable prescriptive period. Respondent Nur Hussein
Ututalum filed a petition under Section 78 to disqualify petitioner Benjamin Loong for the office of Regional
Vice-Governor of the Autonomous Government of Muslim Mindanao for false representation as to his age. The
petition was filed 16 days after the election, and clearly beyond the prescribed 25 day period from the last day
of filing certificates of candidacy. This Court ruled that Ututalums petition was one based on false
representation under Section 78, and not for disqualification under Section 68. Hence, the 25-day prescriptive
period provided in Section 78 should be strictly applied. We recognized the possible gap in the law:
It is true that the discovery of false representation as to material facts required to be stated in a certificate of
candidacy, under Section 74 of the Code, may be made only after the lapse of the 25-day period prescribed by
Section 78 of the Code, through no fault of the person who discovers such misrepresentations and who would
want the disqualification of the candidate committing the misrepresentations. It would seem, therefore, that
there could indeed be a gap between the time of the discovery of the misrepresentation, (when the discovery is
made after the 25-day period under Sec. 78 of the Code has lapsed) and the time when the proclamation of the
results of the election is made. During this so-called "gap" the would-be petitioner (who would seek the
disqualification of the candidate) is left with nothing to do except to wait for the proclamation of the results, so
that he could avail of a remedy against the misrepresenting candidate, that is, by filing a petition for quo
warranto against him. Respondent Commission sees this "gap" in what it calls a procedural gap which,
according to it, is unnecessary and should be remedied.
At the same time, it can not be denied that it is the purpose and intent of the legislative branch of the
government to fix a definite time within which petitions of protests related to eligibility of candidates for
elective offices must be filed, as seen in Sections 78 and 253 of the Code. Respondent Commission may have
seen the need to remedy this so-called procedural gap", but it is not for it to prescribe what the law does not
provide, its function not being legislative. The question of whether the time to file these petitions or protests is
too short or ineffective is one for the Legislature to decide and remedy.41
In Fermin v. Commission on Elections,42 the issue of a candidates possession of the required one-year residency
requirement was raised in a petition for disqualification under Section 68 instead of a petition to deny due
course or to cancel a certificate of candidacy under Section 78. Despite the question of the one-year residency
being a proper ground under Section 78, Dilangalen, the petitioner before the COMELEC in Fermin, relied on
Section 5(C)(1) and 5(C)(3)(a)(4) of COMELEC Resolution No. 780043 and filed the petition under Section 68.
In Fermin, we ruled that "a COMELEC rule or resolution cannot supplant or vary legislative enactments that
distinguish the grounds for disqualification from those of ineligibility, and the appropriate proceedings to
raise the said grounds."44 A petition for disqualification can only be premised on a ground specified in Section

12 or 68 of the Omnibus Election Code or Section 40 of the Local Government Code. Thus, a petition
questioning a candidates possession of the required one-year residency requirement, as distinguished from
permanent residency or immigrant status in a foreign country, should be filed under Section 78, and a petition
under Section 68 is the wrong remedy.
In Munder v. Commission on Elections,45 petitioner Alfais Munder filed a certificate of candidacy for Mayor of
Bubong, Lanao del Sur on 26 November 2009. Respondent Atty. Tago Sarip filed a petition for Munders
disqualification on 13 April 2010. Sarip claimed that Munder misrepresented that he was a registered voter of
Bubong, Lanao del Sur, and that he was eligible to register as a voter in 2003 even though he was not yet 18
years of age at the time of the voters registration. Moreover, Munders certificate of candidacy was not
accomplished in full as he failed to indicate his precinct and did not affix his thumb-mark. The COMELEC
Second Division dismissed Sarips petition and declared that his grounds are not grounds for disqualification
under Section 68 but for denial or cancellation of Munders certificate of candidacy under Section 78. Sarips
petition was filed out of time as he had only 25 days after the filing of Munders certificate of candidacy, or
until 21 December 2009, within which to file his petition.
The COMELEC En Banc, however, disqualified Munder. In reversing the COMELEC Second Division, the
COMELEC En Banc did not rule on the propriety of Sarips remedy but focused on the question of whether
Munder was a registered voter of Bubong, Lanao del Sur. This Court reinstated the COMELEC Second
Divisions resolution. This Court ruled that the ground raised in the petition, lack of registration as voter in the
locality where he was running as a candidate, is inappropriate for a petition for disqualification. We further
declared that with our ruling in Fermin, we had already rejected the claim that lack of substantive qualifications
of a candidate is a ground for a petition for disqualification under Section 68. The only substantive qualification
the absence of which is a ground for a petition under Section 68 is the candidates permanent residency or
immigrant status in a foreign country.
The dissenting opinions place the violation of the three-term limit rule as a disqualification under Section 68 as
the violation allegedly is "a status, circumstance or condition which bars him from running for public office
despite the possession of all the qualifications under Section 39 of the [Local Government Code]." In so holding
the dissenting opinions write in the law what is not found in the law. Section 68 is explicit as to the proper
grounds for disqualification under said Section. The grounds for filing a petition for disqualification under
Section 68 are specifically enumerated in said Section. However, contrary to the specific enumeration in Section
68 and contrary to prevailing jurisprudence, the dissenting opinions add to the enumerated grounds the violation
of the three-term limit rule and falsification under the Revised Penal Code, which are obviously not found in the
enumeration in Section 68.
The dissenting opinions equate Lonzanidas possession of a disqualifying condition (violation of the three-term
limit rule) with the grounds for disqualification under Section 68. Section 68 is explicit as to the proper grounds
for disqualification: the commission of specific prohibited acts under the Omnibus Election Code and
possession of a permanent residency or immigrant status in a foreign country. Any other false representation
regarding a material fact should be filed under Section 78, specifically under the candidates certification of his
eligibility. In rejecting a violation of the three-term limit as a condition for eligibility, the dissenting opinions
resort to judicial legislation, ignoring the verba legis doctrine and well-established jurisprudence on this very
issue.

In a certificate of candidacy, the candidate is asked to certify under oath his eligibility, and thus qualification, to
the office he seeks election. Even though the certificate of candidacy does not specifically ask the candidate for
the number of terms elected and served in an elective position, such fact is material in determining a candidates
eligibility, and thus qualification for the office. Election to and service of the same local elective position for
three consecutive terms renders a candidate ineligible from running for the same position in the succeeding
elections. Lonzanida misrepresented his eligibility because he knew full well that he had been elected, and had
served, as mayor of San Antonio, Zambales for more than three consecutive terms yet he still certified that he
was eligible to run for mayor for the next succeeding term. Thus, Lonzanidas representation that he was
eligible for the office that he sought election constitutes false material representation as to his qualification or
eligibility for the office.
Legal Duty of COMELEC
to Enforce Perpetual Special Disqualification
Even without a petition under Section 78 of the Omnibus Election Code, the COMELEC is under a legal duty to
cancel the certificate of candidacy of anyone suffering from perpetual special disqualification to run for public
office by virtue of a final judgment of conviction. The final judgment of conviction is judicial notice to the
COMELEC of the disqualification of the convict from running for public office. The law itself bars the convict
from running for public office, and the disqualification is part of the final judgment of conviction. The final
judgment of the court is addressed not only to the Executive branch, but also to other government agencies
tasked to implement the final judgment under the law.
Whether or not the COMELEC is expressly mentioned in the judgment to implement the disqualification, it is
assumed that the portion of the final judgment on disqualification to run for elective public office is addressed
to the COMELEC because under the Constitution the COMELEC is duty bound to "enforce and administer all
laws and regulations relative to the conduct of an election."46 The disqualification of a convict to run for elective
public office under the Revised Penal Code, as affirmed by final judgment of a competent court, is part of the
enforcement and administration of "all the laws" relating to the conduct of elections.
Effect of a Void Certificate of Candidacy
A cancelled certificate of candidacy void ab initio cannot give rise to a valid candidacy, and much less to valid
votes.47 We quote from the COMELECs 2 February 2011 Resolution with approval:
As early as February 18, 2010, the Commission speaking through the Second Division had already ordered the
cancellation of Lonzanidas certificate of candidacy, and had stricken off his name in the list of official
candidates for the mayoralty post of San Antonio, Zambales. Thereafter, the Commission En Banc in its
resolution dated August 11, 2010 unanimously affirmed the resolution disqualifying Lonzanida. Our findings
were likewise sustained by the Supreme Court no less. The disqualification of Lonzanida is not simply anchored
on one ground. On the contrary, it was emphasized in our En Banc resolution that Lonzanidas disqualification
is two-pronged: first, he violated the constitutional fiat on the three-term limit; and second, as early as
December 1, 2009, he is known to have been convicted by final judgment for ten (10) counts of Falsification
under Article 171 of the Revised Penal Code. In other words, on election day, respondent Lonzanidas
disqualification is notoriously known in fact and in law. Ergo, since respondent Lonzanida was never a
candidate for the position of Mayor [of] San Antonio, Zambales, the votes cast for him should be considered
stray votes. Consequently, Intervenor Antipolo, who remains as the sole qualified candidate for the mayoralty

post and obtained the highest number of votes, should now be proclaimed as the duly elected Mayor of San
Antonio, Zambales.48 (Boldfacing and underscoring in the original; italicization supplied)
Lonzanida's certificate of candidacy was cancelled because he was ineligible or not qualified to run for
Mayor.1wphi1 Whether his certificate of candidacy is cancelled before or after the elections is immaterial
because the cancellation on such ground means he was never a candidate from the very beginning, his
certificate of candidacy being void ab initio. There was only one qualified candidate for Mayor in the May 201
0 elections - Anti polo, who therefore received the highest number of votes.
WHEREFORE, the petition is DISMISSED. The Resolution dated 2 February 2011 and the Order dated 12
January 2011 of the COMELEC En Bane in SPA No. 09-158 (DC) are AFFIRMED. The COMELEC En Bane
is DIRECTED to constitute a Special Municipal Board of Canvassers to proclaim Estela D. Antipolo as the
duly elected Mayor of San Antonio, Zambales. Petitioner Efren Racel Aratea is ORDERED to cease and desist
from discharging the functions of the Office of the Mayor of San Antonio, Zambales.
SO ORDERED.
G.R. No. 194994

April 16, 2013

EMMANUEL A. DE CASTRO, Petitioner,

vs.
EMERSON S. CARLOS, Respondent.
DECISION
SERENO, CJ.:
Before us is a Petition for the issuance of a writ of quo warranto under Rule 66 filed by Emmanuel A. de Castro
(petitioner) seeking to oust respondent Emerson S. Carlos (respondent) from the position of assistant general
manager for operations (AGMO) of the Metropolitan Manila Development Authority (MMDA).
On 29 July 2009, then President Gloria Macapagal Arroyo appointed petitioner as AGM0.1 His appointment was
concurred in by the members of the Metro Manila Council in MMDA Resolution No. 09-10, Series of 2009.2 He
took his oath on 17 August 2009 before then Chairperson Bayani F. Fernando.3
Meanwhile, on 29 July 2010, Executive Secretary Paquito Ochoa issued Office of the President (OP)
Memorandum Circular No. 2, Series of 2010, amending OP Memorandum Circular No. 1, Series of 2010.
OP Memorandum Circular No. 2 states:
2. All non-Career Executive Service Officials (non-CESO) occupying Career Executive Service (CES) positions
in all agencies of the executive branch shall remain in office and continue to perform their duties and discharge
their responsibility until October 31, 2010 or until their resignations have been accepted and/or until their
respective replacements have been appointed or designated, whichever comes first, unless they are reappointed
in the meantime.4

On 30 July 2010, Atty. Francis N. Tolentino, chairperson of the MMDA, issued Office Order No. 106,5
designating Corazon B. Cruz as officer-in-charge (OIC) of the Office of the AGMO. Petitioner was then
reassigned to the Legal and Legislative Affairs Office, Office of the General Manager. The service vehicle and
the office space previously assigned to him were withdrawn and assigned to other employees.
Subsequently, on 2 November 2010, Chairperson Tolentino designated respondent as OIC of the Office of the
AGMO by virtue of Memorandum Order No. 24,6 which in turn cited OP Memorandum Circular No. 2 as basis.
Thereafter, the name of petitioner was stricken off the MMDA payroll, and he was no longer paid his salary
beginning November 2010.
Petitioner sought a clarification7 from the Career Executive Service Board (CESB) as to the proper
classification of the position of AGMO. In her reply,8 Executive Director Maria Anthonette Allones (Executive
Director Allones), CESO I, stated that the position of AGMO had not yet been classified and could not be
considered as belonging to the Career Executive Service (CES). She further stated that a perusal of the
appointment papers of petitioner showed that he was not holding a coterminous position. In sum, she said, he
was not covered by OP Memorandum Circular Nos. 1 and 2.
Petitioner was later offered the position of Director IV of MMDA Public Health and Safety Services and/or
MMDA consultant. He turned down the offer, claiming that it was a demotion in rank.
Demanding payment of his salary and reinstatement in the monthly payroll,9 petitioner sent a letter on 5
December 2010 to Edenison Faisan, assistant general manager (AGM) for Finance and Administration; and
Lydia Domingo, Director III, Administrative Services. For his failure to obtain an action or a response from
MMDA, he then made a formal demand for his reinstatement as AGMO through a letter addressed to the Office
of the President on 17 December 2010.10
However, on 4 January 2011, President Benigno S. Aquino III (President Aquino) appointed respondent as the
new AGMO of the MMDA.11 On 10 January 2011, the latter took his oath of office.
Hence, the instant Petition.
The Office of the Solicitor General (OSG), representing respondent, filed its Comment on 19 August 2011.12
However, upon motion of petitioner, it was disqualified from representing respondent. Thus, a private law firm13
entered an appearance as counsel for respondent and adopted the Comment filed by the OSG.14
Petitioner filed his Reply on 17 November 2011.
ISSUES
Petitioner raises the following issues15 for the consideration of this Court:
(1) Whether respondent Emerson S. Carlos was validly appointed by President Aquino to the position of AGMO
of the MMDA;
(2) Whether petitioner Emmanuel A. de Castro is entitled to the position of AGMO; and

(3) Whether or not respondent should pay petitioner the salaries and financial benefits he received during his
illegal tenure as AGMO of the MMDA.
THE COURTS RULING
Petitioner contends that Section 2(3), Article IX(B) of the 1987 Constitution guarantees the security of tenure of
employees in the civil service. He further argues that his appointment as AGMO is not covered by OP
Memorandum Circular No. 2, since it is not a CES position as determined by the CESB.
On the other hand, respondent posits that the AGMO position belongs to the CES; thus, in order to have security
of tenure, petitioner, must be a Career Executive Service official (CESO). Respondent maintains that the
function of an AGM is executive and managerial in nature. Thus, considering that petitioner is a non-CESO
occupying a CES position, he is covered by OP Memorandum Circular Nos. 1 and 2. Respondent likewise
raises the issue of procedural infirmity in the direct recourse to the Supreme Court by petitioner, who thereby
failed to adhere to the doctrine of hierarchy of courts.
Hierarchy of Courts
As to the procedural issue, petitioner submits that a direct recourse to this Court is warranted by the urgent
demands of public interest, particularly the veritable need for stability in the civil service and the protection of
the rights of civil servants. Moreover, considering that no other than the President of the Philippines is the
appointing authority, petitioner doubts if a trial court judge or an appellate court justice, with a prospect of
promotion in the judiciary would be willing to go against a presidential appointment.
Although Section 5(1) of Article VIII of the 1987 Constitution explicitly provides that the Supreme Court has
original jurisdiction over petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus, the
jurisdiction of this Court is not exclusive but is concurrent with that of the Court of Appeals and regional trial
court and does not give petitioner unrestricted freedom of choice of court forum.16 The hierarchy of courts must
be strictly observed.
Settled is the rule that "the Supreme Court is a court of last resort and must so remain if it is to satisfactorily
perform the functions assigned to it by the fundamental charter and immemorial tradition."17 A disregard of the
doctrine of hierarchy of courts warrants, as a rule, the outright dismissal of a petition.18
A direct invocation of this Courts jurisdiction is allowed only when there are special and important reasons that
are clearly and specifically set forth in a petition.19 The rationale behind this policy arises from the necessity of
preventing (1) inordinate demands upon the time and attention of the Court, which is better devoted to those
matters within its exclusive jurisdiction; and (2) further overcrowding of the Courts docket.20
In this case, petitioner justified his act of directly filing with this Court only when he filed his Reply and after
respondent had already raised the procedural infirmity that may cause the outright dismissal of the present
Petition. Petitioner likewise cites stability in the civil service and protection of the rights of civil servants as
rationale for disregarding the hierarchy of courts.

Petitioners excuses are not special and important circumstances that would allow a direct recourse to this
Court. More so, mere speculation and doubt to the exercise of judicial discretion of the lower courts are not and
cannot be valid justifications to hurdle the hierarchy of courts. Thus, the Petition must be dismissed.
Nature of the AGMO Position
Even assuming that petitioners direct resort to this Court is permissible, the Petition must still be dismissed for
lack of merit.
"A petition for quo warranto is a proceeding to determine the right of a person to use or exercise a franchise or
an office and to oust the holder from the enjoyment, thereof, if the claim is not well-founded, or if his right to
enjoy the privilege has been forfeited."21 Where the action is filed by a private person, in his own name, he must
prove that he is entitled to the controverted position, otherwise, respondent has a right to the undisturbed
possession of the office.22
The controversy arose from the issuance of OP Memorandum Circular Nos. 1 and 2, which applies to all nonCESOs occupying CES positions in all agencies of the executive branch. Petitioner, being a non-CESO, avers
that he is not covered by these OP memoranda considering that the AGMO of the MMDA is a non-CES
position.
In order to settle the controversy, there is a need to determine the nature of the contentious position of AGMO
of the MMDA.
Career vs. non-career
Section 4 of Republic Act No. (R.A.) 7924,23 otherwise known as the MMDA Charter, specifically created the
position of AGMO. It reads as follows:
Sec. 4 Metro Manila Council. x x x.
xxxx
The Council shall be headed by a Chairman, who shall be appointed by the President and who shall continue to
hold office at the discretion of the appointing authority. He shall be vested with the rank, rights, privileges,
disqualifications, and prohibitions of a Cabinet member.
The Chairman shall be assisted by a General Manager, an Assistant General Manager for Finance and
Administration, an Assistant General Manager for Planning and an Assistant General Manager for Operations,
all of whom shall be appointed by the President with the consent and concurrence of the majority of the
Council, subject to civil service laws and regulations. They shall enjoy security of tenure and may be removed
for cause in accordance with law. (Emphasis supplied)
Executive Order No. (E.O.) 292, otherwise known as The Revised Administrative Code of 1987, provides for
two classifications of positions in the civil service: career and non-career.24
Career service is characterized by the existence of security of tenure,25 as contradistinguished from non-career
service whose tenure is coterminous with that of the appointing authority; or subject to the latters pleasure; or

limited to a period specified by law or to the duration of a particular project for which purpose the appointment
was made.26
Applying the foregoing distinction to the instant case, this Court finds that an AGMO holds a career position,
considering that the MMDA Charter specifically provides that AGMs enjoy security of tenure the core
characteristic of a career service, as distinguished from a non-career service position.
CES vs. non-CES
Career service includes the following:
(1) Open Career positions for appointment to which prior qualification in an appropriate examination is
required;
(2) Closed Career positions which are scientific, or highly technical in nature; these include the faculty and
academic staff of state colleges and universities, and scientific and technical positions in scientific or research
institutions which shall establish and maintain their own merit systems;
(3) Positions in the Career Executive Service; namely, Undersecretary, Assistant Secretary, Bureau Director,
Assistant Bureau Director, Regional Director, Assistant Regional Director, Chief of Department Service and
other officers of equivalent rank as may be identified by the Career Executive Service Board, all of whom are
appointed by the President;
(4) Career officers, other than those in the Career Executive Service, who are appointed by the President, such
as the Foreign Service Officers in the Department of Foreign Affairs;
(5) Commissioned officers and enlisted men of the Armed Forces which shall maintain a separate merit system;
(6) Personnel of government-owned or controlled corporations, whether performing governmental or
proprietary functions, who do not fall under the non-career service; and
(7) Permanent laborers, whether skilled, semi-skilled, or unskilled.27 (Emphasis supplied)
In Civil Service Commission v. Court of Appeals and PCSO,28 the Court clarified the positions covered by the
CES:
Thus, from the long line of cases cited above, in order for a position to be covered by the CES, two elements
must concur. First, the position must either be (1) a position enumerated under Book V, Title I, Subsection A,
Chapter 2, Section 7(3) of the Administrative Code of 1987, i.e., Undersecretary, Assistant Secretary, Bureau
Director, Assistant Bureau Director, Regional Director, Assistant Regional Director, Chief of Department
Service, or (2) a position of equal rank as those enumerated, and identified by the Career Executive Service
Board to be such position of equal rank. Second, the holder of the position must be a presidential appointee.
Failing in any of these requirements, a position cannot be considered as one covered by the third-level or CES.
(Emphasis supplied)
In sum, there are two elements required for a position to be considered as CES:

1) The position is among those enumerated under Book V, Title I, Subtitle A, Chapter 2, Section 7(3) of the
Administrative Code of 1987 OR a position of equal rank as those enumerated and identified by the CESB to be
such position of equal rank; AND
2) The holder of the position is a presidential appointee. Records show that in reply29 to Chairperson Tolentinos
query on whether the positions of general manager and AGM of the MMDA are covered by the CES,30 the
CESB thru Executive Director Allones categorically stated that these positions are not among those covered
by the CES.
Upon petitioners separate inquiry on the matter,31 the CESB similarly responded that the AGMOs position
could not be considered as belonging to the CES.32 Additionally, Executive Director Allones said that petitioner
was not covered by OP Memorandum Circular Nos. 1 and 2, to wit:
A cursory perusal of your appointment papers would show that it does not bear any indication that you are
holding a coterminous appointment. Neither your position as AGMO can be considered as created in excess of
the authorized staffing pattern since RA 7924, the law that created the MMDA clearly provided for such
position. As further stated above, your position will not fall under paragraph No. 2 of OP MC 1 because it is not
yet considered as belonging to the CES. Hence, we posit that you are not covered by OP MC 1 and 2.33
However, contrary to Executive Director Allones statement, the CESB, through Resolution No. 799 already
declared certain positions meeting the criteria set therein as embraced within the CES.
It is worthy of note that CESB Resolution No. 799 was issued on 19 May 2009, even prior to petitioners
appointment on 29 July 2009. Moreover, as early as 31 May 1994, the above classification was already
embodied in CSC Resolution No. 34-2925, circularized in CSC Memorandum Circular 21, Series of 1994.
Resolution No. 799 classified the following positions as falling within the coverage of the CES:
a. The Career Executive Service includes the positions of Undersecretary, Assistant Secretary, Bureau director,
Assistant Bureau Director, regional Director (department-wide and bureau-wide), Assistant Regional Director
(department-wide and bureau-wide), and Chief of Department Service;
b. Unless provided otherwise, all other managerial or executive positions in the government, including
government-owned or controlled corporations with original charters are embraced within the CES provided that
they meet the following criteria:
i.) The position is a career position;
ii.) The position is above division chief level; and,
iii.) The duties and responsibilities of the position require performance of executive and managerial functions.
Without a doubt, the AGMO position is not one of those enumerated in the above-cited paragraph(a) but it
clearly falls under paragraph(b) considering that it belongs to a government-owned and controlled corporation
with an original charter. The nature of AGMO is clear from the provisions of the MMDA Charter.

First, we have already determined that an AGMO is a career position that enjoys security of tenure by virtue of
the MMDA Charter.
Second, it is undisputed that the position of AGMO is above the division chief level, which is equivalent to the
rank of assistant secretary with Salary Grade 29.34
Third, a perusal of the MMDA Charter readily reveals that the duties and responsibilities of the position require
the performance of executive and managerial functions.
Section 12.4, Rule IV of the Rules and Regulations Implementing R.A. 7924 provides the powers, functions,
duties and responsibilities of an AGMO, as follows:
12.4 Assistant General Manager for Operations
The Assistant General Manager for Operations shall perform the following functions:
a. Establish a mechanism for coordinating and operationalizing the delivery of metro-wide basic services;
b. Maintain a monitoring system for the effective evaluation of the implementation of approved policies, plans
and programs for the development of Metropolitan Manila;
c. Mobilize the participation of local government units, executive departments or agencies of the national
government, and the private sector in the delivery of metro-wide services; and
d. Operate a central radio communication system.
He shall perform such other duties as are incidental or related to the above functions or as may be assigned from
time to time.
An AGMO performs functions that are managerial in character; exercises management over people, resource,
and/or policy; and assumes functions like planning, organizing, directing, coordinating, controlling, and
overseeing the activities of MMDA. The position requires the application of managerial or supervisory skills
necessary to carry out duties and responsibilities involving functional guidance, leadership, and supervision.
For the foregoing reasons, the position of AGMO is within the coverage of the CES.
In relation thereto, positions in the career service, for which appointments require examinations, are grouped
into three major levels:35
Sec. 8. Classes of positions in the Career Service. (1) Classes of positions in the career service appointment
to which requires examinations shall be grouped into three major levels as follows:
(a) The first level shall include clerical, trades, crafts and custodial service positions which involve nonprofessional or sub-professional work in a non-supervisory or supervisory capacity requiring less than four
years of collegiate studies;

(b) The second level shall include professional, technical, and scientific positions which involve professional,
technical or scientific work in a non-supervisory or supervisory capacity requiring at least four years of college
work up to Division Chief levels; and
(c) The third level shall cover positions in the Career Executive Service. (Emphasis supplied)
Entrance to different levels requires corresponding civil service eligibilities.36 Those at the third level (CES
positions) require career service executive eligibility (CSEE) as a requirement for permanent appointment.37
Evidently, an AGMO should possess all the qualifications required by third-level career service within the CES.
In this case, petitioner does not have the required eligibility. Therefore, we find that his appointment to the
position of AGMO was merely temporary.
Amores v. Civil Service Commission38 is instructive as to the nature of temporary appointments in the CES. The
Court held therein that an appointee cannot hold a position in a permanent capacity without the required CES
eligibility:
We begin with the precept, firmly established by law and jurisprudence that a permanent appointment in the
civil service is issued to a person who has met the requirements of the position to which the appointment is
made in accordance with law and the rules issued pursuant thereto. An appointment is permanent where the
appointee meets all the requirements for the position to which he is being appointed, including the appropriate
eligibility prescribed, and it is temporary where the appointee meets all the requirements for the position except
only the appropriate civil service eligibility.
xxxx
With particular reference to positions in the career executive service (CES), the requisite civil service eligibility
is acquired upon passing the CES examinations administered by the CES Board and the subsequent conferment
of such eligibility upon passing the examinations. Once a person acquires eligibility, he either earns the status of
a permanent appointee to the CES position to which he has previously been appointed, or he becomes qualified
for a permanent appointment to that position provided only that he also possesses all the other qualifications for
the position. Verily, it is clear that the possession of the required CES eligibility is that which will make an
appointment in the career executive service a permanent one. Petitioner does not possess such eligibility,
however, it cannot be said that his appointment to the position was permanent.
Indeed, the law permits, on many occasions, the appointment of non-CES eligibles to CES positions in the
government in the absence of appropriate eligibles and when there is necessity in the interest of public service
to fill vacancies in the government. But in all such cases, the appointment is at best merely temporary as it is
said to be conditioned on the subsequent obtention of the required CES eligibility. This rule, according to De
Leon v. Court of Appeals, Dimayuga v. Benedicto, Caringal v. Philippine Charity Sweepstakes Office, and
Achacoso v. Macaraig, is invariable even though the given appointment may have been designated as permanent
by the appointing authority.
xxxx

Security of tenure in the career executive service, which presupposes a permanent appointment, takes place
upon passing the CES examinations administered by the CES Board x x x.
Petitioner undisputedly lacked CES eligibility. Thus, he did not hold the position of AGMO in a permanent
capacity or acquire security of tenure in that position. Otherwise stated, his appointment was temporary and
"co-terminus with the appointing authority."39 In Carillo v. CA,40 this Court ruled that "one who holds a
temporary appointment has no fixed tenure of office; his employment can be terminated at the pleasure of the
appointing power, there being no need to show that the termination is for cause." Therefore, we find no
violation of security of tenure when petitioner was replaced by respondent upon the latters appointment to the
position of AGMO by President Aquino.
Even granting for the sake of argument that the position of AGMO is yet to be classified by the CESB,
petitioners appointment is still deemed coterminous pursuant to CESB Resolution No. 945 issued on 14 June
2011, which reads:
WHEREAS, on November 23, 2010, the Supreme Court in the case of PCSO v. CSC, G.R. NO. 185766 and
G.R. No. 185767 limited the coverage of positions belonging to the CES to positions requiring Presidential
appointments.
WHEREAS, in the same vein, CES positions have now become synonymous to third level positions by virtue of
the said ruling.
WHEREFORE, foregoing premises considered, the Board RESOLVES, as it is hereby RESOLVED, to issue the
following guidelines to clarify the policy on the coverage of CES and its classification:
1. For career service positions requiring Presidential appointments expressly enumerated under Section 7(3),
Chapter 2, Subtitle A, Title 1, Book V of the Administrative Code of 1987 namely:
Undersecretary, Assistant Secretary, Bureau Director, Assistant Bureau Director, Regional Director, Assistant
Regional Director, and Chief of Department Service, no classification of position is necessary to place them
under the coverage of the CES, except if they belong to Project Offices, in which case a position classification is
required, in consultation with the Department of Budget and Management (DBM).
2. For positions requiring Presidential appointments other than those enumerated above, a classification of
positions is necessary which shall be conducted by the Board, upon request of the head of office of the
government department/agency concerned, to place them under the coverage of the CES provided they comply
with the following criteria:
i.) The position is a career position;
ii.) The position is above division chief level; and,
iii.)The duties and responsibilities of the position require the performance of executive and managerial
functions.

All appointments to positions which have not been previously classified as part of the CES would be deemed
co-terminus with the appointing authority. (Emphasis supplied)
Therefore, considering that petitioner is an appointee of then President Arroyo whose term ended on 30 June
2010, petitioners term of office was also deemed terminated upon the assumption of President Aquino.
Likewise, it is inconsequential that petitioner was allegedly replaced by another non-CESO eligible. In a quo
warranto proceeding, the person suing must show that he has a clear right to the office allegedly held unlawfully
by another. Absent a showing of that right, the lack of qualification or eligibility of the supposed usurper is
immaterial.41
All the foregoing considered, the petition merits an outright dismissal for disregarding the hierarchy of courts
and petitioners lack of cause of action against respondent for failure to sufficiently show that he has
undisturbed rights to the position of AGMO of the MMDA.
WHEREFORE, premises considered, the Petition is DENIED.
SO ORDERED.
EXPROPRIATION
G.R. No. 142304

June 20, 2001

CITY OF MANILA, petitioner,

vs.
OSCAR, FELICITAS, JOSE, BENJAMIN, ESTELITA, LEONORA AND ADELAIDA, ALL
SURNAMED SERRANO, respondents.
Mendoza, J.:
This is a petition for review on certiorari of the decision, dated November 16, 1999, and resolution, dated
February 23, 2000, of the Court of Appeals reversing the order, dated December 15, 1998, of the Regional Trial
Court, Branch 16, Manila and perpetually enjoining it from proceeding with the petitioner's complaint for
eminent domain in Civil Case No. 94-72282.
The facts are as follows:
On December 21, 1993, the City Council of Manila enacted the Ordinance No. 7833, authorizing the
expropriation of certain properties in Manila 's First District in Tondo, covered by TCT Nos. 70869, 105201,
105202, and 138273 of the Register of Deeds of Manila, which are to be sold and distributed to qualified
occupants pursuant to the Land Use Development Program of the City of Manila.
One of the properties sought to be expropriated, denominated as Lot 1-C, consists of 343.10 square meters. It is
covered by TCT No. 138272 which was derived from TCT No. 70869 issued in the name of Feliza De Guia.1
After her death, the estate of Feliza De Guia was settled among her heirs by virtue of a compromise agreement,
which was duly approved by the Regional Trial Court, Branch 53, Manila in its decision, dated May 8, 1986.2 In

1989, Alberto De Guia, one of the heirs of Feliza De Guia, died, as a result of which his estate, consisting of his
share in the properties left by his mother, was partitioned among his heirs. Lot 1-C was assigned to Edgardo De
Guia, one of the heirs of Alberto De Guia.3 On April 15, 1994, Edgardo De Guia was issued TCT No. 215593,
covering Lot 1-C.4 On July 29, 1994, the said property was transferred to Lee Kuan Hui, in whose name TCT
No. 217018 was issued.5
The property was subsequently sold on January 24,1996 to Demetria De Guia to whom TCT No. 226048 was
issued.6
On September 26, 1997, petitioner City of Manila filed an amended complaint for expropriation, docketed as
Civil Case No. 94-72282, with the Regional Trial Court, Branch 16, Manila, against the supposed owners of the
lots covered by TCT Nos. 70869 (including Lot 1-C), 105201, 105202 and 138273, which included herein
respondents Oscar, Felicitas, Jose, Benjamin, Estelita, Leonora, Adelaida, all surnamed are Serrano.7 On
November 12, 1997, respondents filed a consolidated answer, in which they alleged that their mother, the late
Demetria De Guia, had acquired Lot l-C from Lee Kian Hui; that they had been the bona fide occupants of the
said parcel of land for more than 40 years; that the expropriation of Lot l-C would result in their disclosure, it
being the only residential land left to them by their deceased mother; and that the said lot was exempt from
expropriation because dividing the said parcel of land among them would entitle each of them to only about 50
square meters of land. Respondents, therefore, prayed that judgment be rendered declaring Lot l-C exempt from
expropriation and ordering the cancellation of the notice annotated on the back of TCT No. 226048,8 regarding
the pendency of Civil Case No. 94-72282. for eminent domain filed by petitioner.9
Upon motion by petitioner, the trial court issued an order, dated October 9, 1998, directing petitioner to deposit
the amount of Pl,825,241.00 equivalent to the assessed value of the properties.10 After petitioner had made the
deposit, the trial court issued another order, dated December 15, 1998, directing the issuance of a writ of
possession in favor of petitioner.ll
Respondents filed a petition for certiorari with the Court of Appeals, alleging that the expropriation of Lot l-C
would render respondents, who are actual occupants thereof, landless; that Lot l-C is exempt from expropriation
because R.A. No. 7279 provides that properties consisting of residential lands not exceeding 300 square meters
in highly urbanized cities are exempt from expropriations; that respondents would only receive around 49
square meters each after the partition of Lot l-C which consists of only 343.10 square meters; and that R.A. No.
7279 was not meant to deprive an owner of the entire residential land but only that in excess of 300 square
meters.12
On November 16, 1999, the Court of Appeals rendered a decision holding that Lot l-C is not exempt from
expropriation because it undeniably exceeds 300 square meters which is no longer considered a small property
within the framework of R.A. No. 7279. However, it held that in accordance with the ruling in Filstream
International Inc. v. Court of Appeals,13 the other modes of acquisition of lands enumerated in 9-10 of the law
must first be tried by the city government before it can resort to expropriation. As petitioner failed to show that
it had done so, the Court of Appeals gave judgment for respondents and enjoined petitioner from expropriating
Lot 1-C. The dispositive portion of its decision reads:
WHEREFORE, in view of all the foregoing, the instant petition is hereby GIVEN DUE COURSE and
accordingly GRANTED. The Order, dated December 15, 1998, denying petitioner's motion for
reconsideration issued by the respondent Regional Trial Court of Manila, Branch 16, in Civil Case No.

94-72282 is hereby REVERSED and SET ASIDE. Let a writ of injunction issue perpetually enjoining
the same respondent court from proceeding with the complaint for eminent domain in Civil Case No.
94-72282,14
In its resolution, dated February 23, 2000, the Court of Appeals likewise denied two motions for reconsideration
filed by petitioner.l5 Hence this petition. Petitioner contends that the Court of Appeals erred in -1) Giving due course to the petition of the Serranos under Rule 65 notwithstanding its own declaration
of the impropriety of the resort to the writ and filing thereof with the wrong appellate court;
2) Concluding that the Order of October 9, 1998 which authorizes the immediate entry of the City as the
expropriating agency into the property sough to be expropriated upon the deposit of the provisionally
fixed fair market value thereof as tantamount to condemnation of the property without prior showing of
compliance with the acquisition of other lands enumerated in Sec. 9 of R.A. 7279 ergo a violation of due
process of the Serranos by the doctrinaire application of FILSTREAM ruling and corrollarily,
3) In prohibiting permanently, by writ of injunction, the trial court from proceeding with a complaint for
expropriation of the City in Civil Case No. 94-72282.16
We will deal with these contentions in the order they are presented.
First. Petitioner contends that the respondents' remedy against the order of the trial court granting a writ of
possession was not to file a petition for certiorari under Rule 65 but a petition for review under Rule 45 which
should have been filed in the Supreme Court.17
This contention has no merit. A petition for review under Rule 45 is a mode of appeal. Accordingly, it could not
have been resorted to by the respondents inasmuch as the order of the trial court granting a writ of possession
was merely interlocutory from which no appeal could be taken. Rule 45, 1 of the 1997 Rules for Civil
Procedure applies only to final judgments or orders of the Court of Appeals, the Sandiganbayan, and the
Regional Trial Court. On the other hand, a petition for certiorari is the suitable remedy in view of Rule 65, 1
which provides:
When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in
excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of
law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with
certainly and praying that judgment be rendered annulling or modifying the proceedings of such
tribunal, board or officer, and granting such incidental reliefs as laws and justice may require.
Respondents' petition before the Court of Appeals alleged that the trial court had acted without or in excess of
its jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction in issuing the order, dated
December 15, 1998, resolving that Lot 1-C is not exempt from expropriation and ordering the issuance of the
writ of possession in favor of petitioner.18
Second. Petitioner faults the Court of Appeals for deciding issues not raised in the trial court, specifically the
question of whether or not there was compliance with 9 and 10 of RA. No. 7279. It argues that the sole

defense set up by respondents in their petition before the Court of Appeals was that their property was exempted
from expropriation because it comes within the purview of a "small property" as defined by R.A. No. 7279 .
Accordingly, the Court of Appeals should not have applied the doctrine laid down by this Court in the
Filstream19 case as such issue was not raised by respondents in their petition before the Court of Appeals.
This contention likewise has no merit. In their petition before the Court of Appeals, respondents raised the
following issues:
1. Whether or not the subject Lot 1-C with an area of 343.10 square meters covered by T.C.T. No.
226048 in the name of petitioners' mother, the late Demetria [De Guia] Serrano, may be lawfully
expropriated "for the public purpose of providing landless occupants thereof homelots of their own
under the "land-for-the landless program of respondent City of Manila."
2. Whether or not the expropriation of the said Lot l-C by respondent City of Manila violates the equal
protection clause of the Constitution, since petitioners, with the exemption of petitioner Oscar G.
Serranno, who are likewise landless are actual occupants hereof.
3. Whether or not Lot 1-C is or may be exempted from expropriation pursuant to R.A. 7279, otherwise
known as the Urban Development and Housing Act of 1992.20
It is clear that respondents raised in issue the propriety of the expropriation of their property in connection with
RA. No. 7279. Although what was discussed at length in their petition before the Court of Appeals was whether
or not the said property could be considered a small property within the purview of the exemption under the
said law, the other provisions of the said law concerning expropriation proceedings need also be looked into to
address the first issue raised by the respondents and to determine whether or not expropriation of Lot 1-C was
proper under the circumstances. The Court of Appeals properly considered relevant provisions of R A. No.7279
to determine the issues raised by respondents. Whether or not it correctly applied the doctrine laid down in
Filstream in resolving the issues raised by respondents, however, is a different matter altogether, and this brings
us to the next point.
Third. Petitioner contends that the Court of Appeals erroneously presumed that Lot 1-C has been ordered
condemned in its favor when the fact is that the order of the trial court, dated December 15, 1998, merely
authorized the issuance of a writ of possession and petitioner's entry into the property pursuant to Rule 67, 2.
At that stage, it was premature to determine whether the requirements of RA. No. 7279, 9 - 10 have been
complied with since no evidentiary hearing had yet been conducted by the trial court.21
This contention is well taken. Rule 67, 2 provides:
Upon the filing of the complaint or at any time thereafter and after due notice to the defendant, the
plaintiff shall have the right to take or enter upon possession of the real property involved if he deposits
with the authorized government depository an amount equivalent to the assessed value of the property
for purposes of taxation to be held by such bank subject to the orders of the court. Such deposit shall be
in money, unless in lieu thereof the court authorizes the deposit of a certificate of deposit of a
government bank of the Republic of the Philippines payable on demand to the authorized government
depositary.

If personal property is involved, its value shall be provisionally ascertained and the amount to be
deposited shall be fixed by the court.
After such deposit is made the court shall order the sheriff or other proper officer to forthwith place the
plaintiff in possession of the property involved and promptly submit a report thereof to the court with
service of copies to the parties.
Thus, a writ of execution may be issued by a court upon the filing by the government of a complaint for
expropriation sufficient in form and substance and upon deposit made by the government of the amount
equivalent to the assessed value of the property subject to expropriation. Upon compliance with these
requirements, the issuance of the writ of possession becomes ministerial.22 In this case, these requirements were
satisfied and, therefore, it became the ministerial duty of the court to issue the writ of possession.
The Court of Appeals, however, ruled that petitioner failed to comply with the requirements laid down in 9 10 of RA. No. 7279 and reiterated in Filstream ruling. This is error. The ruling in the Filstream was necessitated
because an order of condemnation had already been issued by the trial court in that case. Thus, the judgment in
that case had already become final. In this case, the trial court has not gone beyond the issuance of a writ of
possession. Hearing is still to be held to determine whether or not petitioner indeed complied with the
requirements provided in RA. No. 7279. It is, therefore, premature at this stage of the proceedings to find that
petitioner resorted expropriation without first trying the other modes of acquisition enumerated in 10 of the
law.
RA. No 7279 in pertinent parts provide:
SEC. 9. Priorities in the Acquisition of Land Lands for socialized housing shall be acquired in the
following order:
(a) Those owned by the Government or any of its subdivisions, instrumentalities, or agencies, including
government owned and controlled corporations and their subsidiaries;
(b) Alienable lands of the public domain;
(c) Unregistered or abandoned and idle lands;
(d) Those within the declares Areas or Priority Development, Zone Improvement Program sites, and
Slum Improvement and Resettlement Programs sites which have not yet been acquired;
(e) Bagong Lipunan Improvement and Sites and Services or BLISS sites which have not yet been
acquired, and;
(f) Privately-owned lands.
Where on-site development is found more practicable and advantageously to the beneficiaries, the
priorities mentioned in this section shall not apply. The local government units shall give budgetary
priority on-site development of government lands.

SEC. 10. Modes of Lands Acquisition. -- The modes of acquiring lands for purposes of this Act shall
include, amount others, community mortgage, land swapping, land assembly or consolidation, land
banking, donation to the Government, joint-venture agreement, negotiated purchase, and expropriation:
Provided, however; That expropriation shall be resorted to only when other modes of acquisition have
been exhausted: Provided, further; That were expropriation is resorted to, parcels of land owned by
small property owners shall be exempted for purposes of this Act: Provided finally, That abandoned
property, as herein defined, shall be reverted and escheated to the State in a proceeding analogous to the
procedure laid down in Rule 91 of the Rules of Court.
For the purpose of socialized housing, government-owned and foreclosed properties shall be acquired by
the local government units, or by the National Housing Authority primarily through negotiated purchase:
Provided, That qualified beneficiaries who are actual occupants of the lands shall be given the right of
first refusal.
Whether petitioner has complied with these provisions requires the presentation of evidence, although in its
amended complaint petitioner did allege that it had complied with the requirements.23 The determination of this
question must await that hearing on the complaint for expropriation, particularly the hearing for the
condemnation of the properties sought to be expropriated. Expropriation proceedings consist of two stages: first,
condemnation of the property after it is determined that its acquisition will be for a public purpose or public use
and, second, the determination of just compensation to be paid for the taking of the private property to be made
by the court with the assistance of not more than three commissioners.24
WHEREFORE, the decision, dated November 16,1999, and resolution, dated February 23, 2000, of the Court of
Appeals are REVERSED and the order of the trial court, dated December 15,1998, is REINSTATED. This case
is REMANDED to the trial court to further proceedings.1wphi1.nt
SO ORDERED.
G.R. No. 106804

August 12, 2004

NATIONAL POWER CORPORATION, petitioner,

vs.
COURT OF APPEALS and ANTONINO POBRE, respondents.

DECISION

CARPIO, J.:
The Case
Before us is a petition for review1 of the 30 March 1992 Decision2 and 14 August 1992 Resolution of the Court
of Appeals in CA-G.R. CV No. 16930. The Court of Appeals affirmed the Decision3 of the Regional Trial Court,
Branch 17, Tabaco, Albay in Civil Case No. T-552.

The Antecedents
Petitioner National Power Corporation ("NPC") is a public corporation created to generate geothermal,
hydroelectric, nuclear and other power and to transmit electric power nationwide.4 NPC is authorized by law to
acquire property and exercise the right of eminent domain.
Private respondent Antonino Pobre ("Pobre") is the owner of a 68,969 square-meter land ("Property") located in
Barangay Bano, Municipality of Tiwi, Albay. The Property is covered by TCT No. 4067 and Subdivision Plan
11-9709.
In 1963, Pobre began developing the Property as a resort-subdivision, which he named as "Tiwi Hot Springs
Resort Subdivision." On 12 January 1966, the then Court of First Instance of Albay approved the subdivision
plan of the Property. The Register of Deeds thus cancelled TCT No. 4067 and issued independent titles for the
approved lots. In 1969, Pobre started advertising and selling the lots.
On 4 August 1965, the Commission on Volcanology certified that thermal mineral water and steam were present
beneath the Property. The Commission on Volcanology found the thermal mineral water and steam suitable for
domestic use and potentially for commercial or industrial use.
NPC then became involved with Pobre's Property in three instances.
First was on 18 February 1972 when Pobre leased to NPC for one year eleven lots from the approved
subdivision plan.
Second was sometime in 1977, the first time that NPC filed its expropriation case against Pobre to acquire an
8,311.60 square-meter portion of the Property.5 On 23 October 1979, the trial court ordered the expropriation of
the lots upon NPC's payment of P25 per square meter or a total amount of P207,790. NPC began drilling
operations and construction of steam wells. While this first expropriation case was pending, NPC dumped waste
materials beyond the site agreed upon by NPC with Pobre. The dumping of waste materials altered the
topography of some portions of the Property. NPC did not act on Pobre's complaints and NPC continued with its
dumping.
Third was on 1 September 1979, when NPC filed its second expropriation case against Pobre to acquire an
additional 5,554 square meters of the Property. This is the subject of this petition. NPC needed the lot for the
construction and maintenance of Naglagbong Well Site F-20, pursuant to Proclamation No. 7396 and Republic
Act No. 5092.7 NPC immediately deposited P5,546.36 with the Philippine National Bank. The deposit
represented 10% of the total market value of the lots covered by the second expropriation. On 6 September
1979, NPC entered the 5,554 square-meter lot upon the trial court's issuance of a writ of possession to NPC.
On 10 December 1984, Pobre filed a motion to dismiss the second complaint for expropriation. Pobre claimed
that NPC damaged his Property. Pobre prayed for just compensation of all the lots affected by NPC's actions
and for the payment of damages.
On 2 January 1985, NPC filed a motion to dismiss the second expropriation case on the ground that NPC had
found an alternative site and that NPC had already abandoned in 1981 the project within the Property due to
Pobre's opposition.
On 8 January 1985, the trial court granted NPC's motion to dismiss but the trial court allowed Pobre to adduce
evidence on his claim for damages. The trial court admitted Pobre's exhibits on the damages because NPC failed
to object.

On 30 August 1985, the trial court ordered the case submitted for decision since NPC failed to appear to present
its evidence. The trial court denied NPC's motion to reconsider the submission of the case for decision.
NPC filed a petition for certiorari8 with the then Intermediate Appellate Court, questioning the 30 August 1985
Order of the trial court. On 12 February 1987, the Intermediate Appellate Court dismissed NPC's petition but
directed the lower court to rule on NPC's objections to Pobre's documentary exhibits.
On 27 March 1987, the trial court admitted all of Pobre's exhibits and upheld its Order dated 30 August 1985.
The trial court considered the case submitted for decision.
On 29 April 1987, the trial court issued its Decision in favor of Pobre. The dispositive portion of the decision
reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the defendant and against
the plaintiff, ordering the plaintiff to pay unto the defendant:
(1) The sum of THREE MILLION FOUR HUNDRED FORTY EIGHT THOUSAND FOUR
HUNDRED FIFTY (P3,448,450.00) PESOS which is the fair market value of the subdivision of
defendant with an area of sixty eight thousand nine hundred sixty nine (68,969) square meters,
plus legal rate of interest per annum from September 6, 1979 until the whole amount is paid, and
upon payment thereof by the plaintiff the defendant is hereby ordered to execute the necessary
Deed of Conveyance or Absolute Sale of the property in favor of the plaintiff;
(2) The sum of ONE HUNDRED FIFTY THOUSAND (P150,000.00) PESOS for and as
attorney's fees.
Costs against the plaintiff.
SO ORDERED.9
On 13 July 1987, NPC filed its motion for reconsideration of the decision. On 30 October 1987, the trial court
issued its Order denying NPC's motion for reconsideration.
NPC appealed to the Court of Appeals. On 30 March 1992, the Court of Appeals upheld the decision of the trial
court but deleted the award of attorney's fees. The dispositive portion of the decision reads:
WHEREFORE, by reason of the foregoing, the Decision appealed from is AFFIRMED with the
modification that the award of attorney's fees is deleted. No pronouncement as to costs.
SO ORDERED.10
The Court of Appeals denied NPC's motion for reconsideration in a Resolution dated 14 August 1992.
The Ruling of the Trial Court
In its 69-page decision, the trial court recounted in great detail the scale and scope of the damage NPC inflicted
on the Property that Pobre had developed into a resort-subdivision. Pobre's Property suffered "permanent
injury" because of the noise, water, air and land pollution generated by NPC's geothermal plants. The
construction and operation of the geothermal plants drastically changed the topography of the Property making
it no longer viable as a resort-subdivision. The chemicals emitted by the geothermal plants damaged the natural
resources in the Property and endangered the lives of the residents.

NPC did not only take the 8,311.60 square-meter portion of the Property, but also the remaining area of the
68,969 square-meter Property. NPC had rendered Pobre's entire Property useless as a resort-subdivision. The
Property has become useful only to NPC. NPC must therefore take Pobre's entire Property and pay for it.
The trial court found the following badges of NPC's bad faith: (1) NPC allowed five years to pass before it
moved for the dismissal of the second expropriation case; (2) NPC did not act on Pobre's plea for NPC to
eliminate or at least reduce the damage to the Property; and (3) NPC singled out Pobre's Property for piecemeal
expropriation when NPC could have expropriated other properties which were not affected in their entirety by
NPC's operation.
The trial court found the just compensation to be P50 per square meter or a total of P3,448,450 for Pobre's
68,969 square-meter Property. NPC failed to contest this valuation. Since NPC was in bad faith and it employed
dilatory tactics to prolong this case, the trial court imposed legal interest on the P3,448,450 from 6 September
1979 until full payment. The trial court awarded Pobre attorney's fees of P150,000.
The Ruling of the Court of Appeals
The Court of Appeals affirmed the decision of the trial court. However, the appellate court deleted the award of
attorney's fees because Pobre did not properly plead for it.
The Issues
NPC claims that the Court of Appeals committed the following errors that warrant reversal of the appellate
court's decision:
1. In not annulling the appealed Decision for having been rendered by the trial court with grave abuse of
discretion and without jurisdiction;
2. In holding that NPC had "taken" the entire Property of Pobre;
3. Assuming arguendo that there was "taking" of the entire Property, in not excluding from the Property
the 8,311.60 square-meter portion NPC had previously expropriated and paid for;
4. In holding that the amount of just compensation fixed by the trial court at P3,448,450.00 with interest
from September 6, 1979 until fully paid, is just and fair;
5. In not holding that the just compensation should be fixed at P25.00 per square meter only as what
NPC and Pobre had previously mutually agreed upon; and
6. In not totally setting aside the appealed Decision of the trial court.11
Procedural Issues
NPC, represented by the Office of the Solicitor General, insists that at the time that it moved for the dismissal of
its complaint, Pobre had yet to serve an answer or a motion for summary judgment on NPC. Thus, NPC as
plaintiff had the right to move for the automatic dismissal of its complaint. NPC relies on Section 1, Rule 17 of
the 1964 Rules of Court, the Rules then in effect. NPC argues that the dismissal of the complaint should have
carried with it the dismissal of the entire case including Pobre's counterclaim.
NPC's belated attack on Pobre's claim for damages must fail. The trial court's reservation of Pobre's right to
recover damages in the same case is already beyond review. The 8 January 1985 Order of the trial court attained

finality when NPC failed to move for its reconsideration within the 15-day reglementary period. NPC opposed
the order only on 27 May 1985 or more than four months from the issuance of the order.
We cannot fault the Court of Appeals for not considering NPC's objections against the subsistence of Pobre's
claim for damages. NPC neither included this issue in its assignment of errors nor discussed it in its appellant's
brief. NPC also failed to question the trial court's 8 January 1985 Order in the petition for certiorari12 it had
earlier filed with the Court of Appeals. It is only before this Court that NPC now vigorously assails the
preservation of Pobre's claim for damages. Clearly, NPC's opposition to the existence of Pobre's claim for
damages is a mere afterthought. Rules of fair play, justice and due process dictate that parties cannot raise an
issue for the first time on appeal.13
We must correct NPC's claim that it filed the notice of dismissal just "shortly" after it had filed the complaint for
expropriation. While NPC had intimated several times to the trial court its desire to dismiss the expropriation
case it filed on 5 September 1979,14 it was only on 2 January 1985 that NPC filed its notice of dismissal.15 It
took NPC more than five years to actually file the notice of dismissal. Five years is definitely not a short period
of time. NPC obviously dilly-dallied in filing its notice of dismissal while NPC meanwhile burdened Pobre's
property rights.
Even a timely opposition against Pobre's claim for damages would not yield a favorable ruling for NPC. It is not
Section 1, Rule 17 of the 1964 Rules of Court that is applicable to this case but Rule 67 of the same Rules, as
well as jurisprudence on expropriation cases. Rule 17 referred to dismissal of civil actions in general while Rule
67 specifically governed eminent domain cases.
Eminent domain is the authority and right of the state, as sovereign, to take private property for public use upon
observance of due process of law and payment of just compensation.16 The power of eminent domain may be
validly delegated to the local governments, other public entities and public utilities17 such as NPC.
Expropriation is the procedure for enforcing the right of eminent domain.18 "Eminent Domain" was the former
title of Rule 67 of the 1964 Rules of Court. In the 1997 Rules of Civil Procedure, which took effect on 1 July
1997, the prescribed method of expropriation is still found in Rule 67, but its title is now "Expropriation."
Section 1, Rule 17 of the 1964 Rules of Court provided the exception to the general rule that the dismissal of the
complaint is addressed to the sound discretion of the court.19 For as long as all of the elements of Section 1,
Rule 17 were present the dismissal of the complaint rested exclusively on the plaintiff's will.20 The defending
party and even the courts were powerless to prevent the dismissal.21 The courts could only accept and record the
dismissal.22
A plain reading of Section 1, Rule 17 of the 1964 Rules of Court makes it obvious that this rule was not
intended to supplement Rule 67 of the same Rules. Section 1, Rule 17 of the 1964 Rules of Court, provided
that:
SECTION 1. Dismissal by the plaintiff. An action may be dismissed by the plaintiff without order of
court by filing a notice of dismissal at any time before service of the answer or of a motion for summary
judgment. Unless otherwise stated in the notice, the dismissal is without prejudice, except that a notice
operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in a
competent court an action based on or including the same claim. A class suit shall not be dismissed or
compromised without approval of the court.
While Section 1, Rule 17 spoke of the "service of answer or summary judgment," the Rules then did not require
the filing of an answer or summary judgment in eminent domain cases.23 In lieu of an answer, Section 3 of Rule
67 required the defendant to file a single motion to dismiss where he should present all of his objections and
defenses to the taking of his property for the purpose specified in the complaint.24 In short, in expropriation
cases under Section 3 of Rule 67, the motion to dismiss took the place of the answer.

The records show that Pobre had already filed and served on NPC his "motion to dismiss/answer"25 even before
NPC filed its own motion to dismiss. NPC filed its notice of dismissal of the complaint on 2 January 1985.
However, as early as 10 December 1984, Pobre had already filed with the trial court and served on NPC his
"motion to dismiss/answer." A certain Divina Cerela received Pobre's pleading on behalf of NPC.26
Unfortunately for NPC, even Section 1, Rule 17 of the 1964 Rules of Court could not save its cause.
NPC is in no position to invoke Section 1, Rule 17 of the 1964 Rules of Court. A plaintiff loses his right under
this rule to move for the immediate dismissal of the complaint once the defendant had served on the plaintiff the
answer or a motion for summary judgment before the plaintiff could file his notice of dismissal of the
complaint.27 Pobre's "motion to dismiss/answer," filed and served way ahead of NPC's motion to dismiss, takes
the case out of Section 1, Rule 17 assuming the same applies.
In expropriation cases, there is no such thing as the plaintiff's matter of right to dismiss the complaint precisely
because the landowner may have already suffered damages at the start of the taking. The plaintiff's right in
expropriation cases to dismiss the complaint has always been subject to court approval and to certain
conditions.28 The exceptional right that Section 1, Rule 17 of the 1964 Rules of Court conferred on the plaintiff
must be understood to have applied only to other civil actions. The 1997 Rules of Civil Procedure abrogated this
exceptional right.29
The power of eminent domain is subject to limitations. A landowner cannot be deprived of his right over his
land until expropriation proceedings are instituted in court.30 The court must then see to it that the taking is for
public use, there is payment of just compensation and there is due process of law.31
If the propriety of the taking of private property through eminent domain is subject to judicial scrutiny, the
dismissal of the complaint must also pass judicial inquiry because private rights may have suffered in the
meantime. The dismissal, withdrawal or abandonment of the expropriation case cannot be made arbitrarily. If it
appears to the court that the expropriation is not for some public use,32 then it becomes the duty of the court to
dismiss the action.33 However, when the defendant claims that his land suffered damage because of the
expropriation, the dismissal of the action should not foreclose the defendant's right to have his damages
ascertained either in the same case or in a separate action.34
Thus, NPC's theory that the dismissal of its complaint carried with it the dismissal of Pobre's claim for damages
is baseless. There is nothing in Rule 67 of the 1964 Rules of Court that provided for the dismissal of the
defendant's claim for damages, upon the dismissal of the expropriation case. Case law holds that in the event of
dismissal of the expropriation case, the claim for damages may be made either in a separate or in the same
action, for all damages occasioned by the institution of the expropriation case.35 The dismissal of the complaint
can be made under certain conditions, such as the reservation of the defendant's right to recover damages either
in the same or in another action.36 The trial court in this case reserved Pobre's right to prove his claim in the
same case, a reservation that has become final due to NPC's own fault.
Factual Findings of the Trial and Appellate Courts Bind the Court
The trial and appellate courts held that even before the first expropriation case, Pobre had already established
his Property as a resort-subdivision. NPC had wrought so much damage to the Property that NPC had made the
Property uninhabitable as a resort-subdivision. NPC's facilities such as steam wells, nag wells, power plants,
power lines, and canals had hemmed in Pobre's Property. NPC's operations of its geothermal project also posed
a risk to lives and properties.
We uphold the factual findings of the trial and appellate courts. Questions of facts are beyond the pale of Rule
45 of the Rules of Court as a petition for review may only raise questions of law.37 Moreover, factual findings of
the trial court, particularly when affirmed by the Court of Appeals, are generally binding on this Court.38 We
thus find no reason to set aside the two courts' factual findings.

NPC points out that it did not take Pobre's 68,969 square-meter Property. NPC argues that assuming that it is
liable for damages, the 8,311.60 square-meter portion that it had successfully expropriated and fully paid for
should have been excluded from the 68,969 square-meter Property that Pobre claims NPC had damaged.
We are not persuaded.
In its 30 October 1987 Order denying NPC's motion for reconsideration, the trial court pointed out that the
Property originally had a total area of 141,300 square meters.39 Pobre converted the Property into a resortsubdivision and sold lots to the public. What remained of the lots are the 68,969 square meters of land.40 Pobre
no longer claimed damages for the other lots that he had before the expropriation.
Pobre identified in court the lots forming the 68,969 square-meter Property. NPC had the opportunity to object
to the identification of the lots.41 NPC, however, failed to do so. Thus, we do not disturb the trial and appellate
courts' finding on the total land area NPC had damaged.
NPC must Pay Just Compensation for the Entire Property
Ordinarily, the dismissal of the expropriation case restores possession of the expropriated land to the
landowner.42 However, when possession of the land cannot be turned over to the landowner because it is neither
convenient nor feasible anymore to do so, the only remedy available to the aggrieved landowner is to demand
payment of just compensation.43
In this case, we agree with the trial and appellate courts that it is no longer possible and practical to restore
possession of the Property to Pobre. The Property is no longer habitable as a resort-subdivision. The Property is
worthless to Pobre and is now useful only to NPC. Pobre has completely lost the Property as if NPC had
physically taken over the entire 68,969 square-meter Property.
In United States v. Causby,44 the U.S. Supreme Court ruled that when private property is rendered uninhabitable
by an entity with the power to exercise eminent domain, the taking is deemed complete. Such taking is thus
compensable.
In this jurisdiction, the Court has ruled that if the government takes property without expropriation and devotes
the property to public use, after many years the property owner may demand payment of just compensation.45
This principle is in accord with the constitutional mandate that private property shall not be taken for public use
without just compensation.46
In the recent case of National Housing Authority v. Heirs of Isidro Guivelondo,47 the Court compelled the
National Housing Authority ("NHA") to pay just compensation to the landowners even after the NHA had
already abandoned the expropriation case. The Court pointed out that a government agency could not initiate
expropriation proceedings, seize a person's property, and then just decide not to proceed with the expropriation.
Such a complete turn-around is arbitrary and capricious and was condemned by the Court in the strongest
possible terms. NHA was held liable to the landowners for the prejudice that they had suffered.
In this case, NPC appropriated Pobre's Property without resort to expropriation proceedings. NPC dismissed its
own complaint for the second expropriation. At no point did NPC institute expropriation proceedings for the
lots outside the 5,554 square-meter portion subject of the second expropriation. The only issues that the trial
court had to settle were the amount of just compensation and damages that NPC had to pay Pobre.
This case ceased to be an action for expropriation when NPC dismissed its complaint for expropriation. Since
this case has been reduced to a simple case of recovery of damages, the provisions of the Rules of Court on the
ascertainment of the just compensation to be paid were no longer applicable. A trial before commissioners, for
instance, was dispensable.

We have held that the usual procedure in the determination of just compensation is waived when the
government itself initially violates procedural requirements.48 NPC's taking of Pobre's property without filing
the appropriate expropriation proceedings and paying him just compensation is a transgression of procedural
due process.
From the beginning, NPC should have initiated expropriation proceedings for Pobre's entire 68,969 squaremeter Property. NPC did not. Instead, NPC embarked on a piecemeal expropriation of the Property. Even as the
second expropriation case was still pending, NPC was well aware of the damage that it had unleashed on the
entire Property. NPC, however, remained impervious to Pobre's repeated demands for NPC to abate the damage
that it had wrought on his Property.
NPC moved for the dismissal of the complaint for the second expropriation on the ground that it had found an
alternative site and there was stiff opposition from Pobre.49 NPC abandoned the second expropriation case five
years after it had already deprived the Property virtually of all its value. NPC has demonstrated its utter
disregard for Pobre's property rights.
Thus, it would now be futile to compel NPC to institute expropriation proceedings to determine the just
compensation for Pobre's 68,969 square-meter Property. Pobre must be spared any further delay in his pursuit to
receive just compensation from NPC.
Just compensation is the fair and full equivalent of the loss.50 The trial and appellate courts endeavored to meet
this standard. The P50 per square meter valuation of the 68,969 square-meter Property is reasonable considering
that the Property was already an established resort-subdivision. NPC has itself to blame for not contesting the
valuation before the trial court. Based on the P50 per square meter valuation, the total amount of just
compensation that NPC must pay Pobre is P3,448,450.
The landowner is entitled to legal interest on the price of the land from the time of the taking up to the time of
full payment by the government.51 In accord with jurisprudence, we fix the legal interest at six per cent (6%) per
annum.52 The legal interest should accrue from 6 September 1979, the date when the trial court issued the writ
of possession to NPC, up to the time that NPC fully pays Pobre.53
NPC's abuse of its eminent domain authority is appalling. However, we cannot award moral damages because
Pobre did not assert his right to it.54 We also cannot award attorney's fees in Pobre's favor since he did not
appeal from the decision of the Court of Appeals denying recovery of attorney's fees.55
Nonetheless, we find it proper to award P50,000 in temperate damages to Pobre. The court may award
temperate or moderate damages, which are more than nominal but less than compensatory damages, if the court
finds that a party has suffered some pecuniary loss but its amount cannot be proved with certainty from the
nature of the case.56 As the trial and appellate courts noted, Pobre's resort-subdivision was no longer just a
dream because Pobre had already established the resort-subdivision and the prospect for it was initially
encouraging. That is, until NPC permanently damaged Pobre's Property. NPC did not just destroy the property.
NPC dashed Pobre's hope of seeing his Property achieve its full potential as a resort-subdivision.
The lesson in this case must not be lost on entities with eminent domain authority. Such entities cannot trifle
with a citizen's property rights. The power of eminent domain is an extraordinary power they must wield with
circumspection and utmost regard for procedural requirements. Thus, we hold NPC liable for exemplary
damages of P100,000. Exemplary damages or corrective damages are imposed, by way of example or correction
for the public good, in addition to the moral, temperate, liquidated or compensatory damages.57
WHEREFORE, we DENY the petition for lack of merit. The appealed Decision of the Court of Appeals dated
30 March 1992 in CA-G.R. CV No. 16930 is AFFIRMED with MODIFICATION. National Power Corporation
is ordered to pay Antonino Pobre P3,448,450 as just compensation for the 68,969 square-meter Property at P50

per square meter. National Power Corporation is directed to pay legal interest at 6% per annum on the amount
adjudged from 6 September 1979 until fully paid. Upon National Power Corporation's payment of the full
amount, Antonino Pobre is ordered to execute a Deed of Conveyance of the Property in National Power
Corporation's favor. National Power Corporation is further ordered to pay temperate and exemplary damages of
P50,000 and P100,000, respectively. No costs.
SO ORDERED.
G.R. No. 160656

June 15, 2007

REPUBLIC OF THE PHILIPPINES (Department of Public Works and Highways), petitioner,

vs.
ISMAEL ANDAYA, respondent.
DECISION
QUISUMBING, J.:
This is a petition for review of the Decision1 dated October 30, 2003 of the Court of Appeals in CA-G.R. CV
No. 65066 affirming with modification the Decision2 of the Regional Trial Court of Butuan City, Branch 33 in
Civil Case No. 4378, for enforcement of easement of right-of-way (or eminent domain).
Respondent Ismael Andaya is the registered owner of two parcels of land in Bading, Butuan City. His
ownership is evidenced by Transfer Certificates of Title Nos. RT-10225 and RT-10646. These properties are
subject to a 60-meter wide perpetual easement for public highways, irrigation ditches, aqueducts, and other
similar works of the government or public enterprise, at no cost to the government, except only the value of the
improvements existing thereon that may be affected.
Petitioner Republic of the Philippines (Republic) negotiated with Andaya to enforce the 60-meter easement of
right-of-way. The easement was for concrete levees and floodwalls for Phase 1, Stage 1 of the Lower Agusan
Development Project. The parties, however, failed to reach an agreement.
On December 13, 1995, the Republic instituted an action before the Regional Trial Court of Butuan City to
enforce the easement of right-of-way or eminent domain. The trial court issued a writ of possession on April 26,
1996.3 It also constituted a Board of Commissioners (Board) to determine the just compensation. Eventually, the
trial court issued an Order of Expropriation upon payment of just compensation.4 Later, the Board reported that
there was a discrepancy in the description of the property sought to be expropriated. The Republic thus
amended its complaint, reducing the 60-meter easement to 10 meters, or an equivalent of 701 square meters.
On December 10, 1998, the Board reported that the project would affect a total of 10,380 square meters of
Andayas properties, 4,443 square meters of which will be for the 60-meter easement. The Board also reported
that the easement would diminish the value of the remaining 5,937 square meters. As a result, it recommended
the payment of consequential damages amounting to P2,820,430 for the remaining area.5
Andaya objected to the report because although the Republic reduced the easement to 10 meters or an
equivalent of 701 square meters, the Board still granted it 4,443 square meters. He contended that the

consequential damages should be based on the remaining area of 9,679 square meters. Thus, the just
compensation should be P11,373,405. The Republic did not file any comment, opposition, nor objection.
After considering the Boards report, the trial court decreed on April 29, 1999, as follows:
WHEREFORE, in the light of the foregoing, the Court decides as follows:
a) That the plaintiff is legally entitled to its inherent right of expropriation to, viz.: 1) the lot now known as lot
3291-B-1-A, portion of lot 3291-B-1, (LRC) Psd-255693, covered by TCT No. RT-10225, with an area of 288
sq. m.; and 2) the lot now known as lot 3293-F-5-B-1, portion of lot 3293-F-5-B (LRC) Psd-230236, covered by
TCT No. RT-10646, with an area of 413 sq. m., both of the Butuan City Registry of Deeds, it being shown that
it is for public use and purpose --- free of charge by reason of the statutory lien of easement of right-of-way
imposed on defendants titles;
b) That however, the plaintiff is obligated to pay defendant the sum of TWO MILLION EIGHT HUNDRED
TWENTY THOUSAND FOUR HUNDRED THIRTY (P2,820,430.00) PESOS as fair and reasonable severance
damages;
c) To pay members of the Board of Commissioners, thus: for the chairman --- TWENTY THOUSAND
(P20,000.00) PESOS and the two (2) members at FIFTEEN THOUSAND (P15,000.00) PESOS each;
d) To pay defendants counsel FIFTY THOUSAND (P50,000.00) PESOS as Attorneys fees; and finally,
e) That the Registry of Deeds of Butuan City is also directed to effect the issuance of Transfer Certificate of
Titles for the aforementioned two (2) lots in the name of the Republic of the Philippines, following the technical
description as appearing in pages 6, 7, and 8 of the Commissioners Report.
NO COSTS.
IT IS SO ORDERED.6
Both parties appealed to the Court of Appeals. The Republic contested the awards of severance damages and
attorneys fees while Andaya demanded just compensation for his entire property minus the easement. Andaya
alleged that the easement would prevent ingress and egress to his property and turn it into a catch basin for the
floodwaters coming from the Agusan River. As a result, his entire property would be rendered unusable and
uninhabitable. He thus demanded P11,373,405 as just compensation based on the total compensable area of
9,679 square meters.
The Court of Appeals modified the trial courts decision by imposing a 6% interest on the consequential
damages from the date of the writ of possession or the actual taking, and by deleting the attorneys fees.
Hence, the instant petition. Simply put, the sole issue for resolution may be stated thus: Is the Republic liable
for just compensation if in enforcing the legal easement of right-of-way on a property, the remaining area would
be rendered unusable and uninhabitable?
It is undisputed that there is a legal easement of right-of-way in favor of the Republic. Andayas transfer
certificates of title7 contained the reservation that the lands covered thereby are subject to the provisions of the

Land Registration Act8 and the Public Land Act.9 Section 11210 of the Public Land Act provides that lands
granted by patent shall be subject to a right-of-way not exceeding 60 meters in width for public highways,
irrigation ditches, aqueducts, and other similar works of the government or any public enterprise, free of charge,
except only for the value of the improvements existing thereon that may be affected. In view of this, the Court
of Appeals declared that all the Republic needs to do is to enforce such right without having to initiate
expropriation proceedings and without having to pay any just compensation.11 Hence, the Republic may
appropriate the 701 square meters necessary for the construction of the floodwalls without paying for it.
We are, however, unable to sustain the Republics argument that it is not liable to pay consequential damages if
in enforcing the legal easement on Andayas property, the remaining area would be rendered unusable and
uninhabitable. "Taking," in the exercise of the power of eminent domain, occurs not only when the government
actually deprives or dispossesses the property owner of his property or of its ordinary use, but also when there is
a practical destruction or material impairment of the value of his property.12 Using this standard, there was
undoubtedly a taking of the remaining area of Andayas property. True, no burden was imposed thereon and
Andaya still retained title and possession of the property. But, as correctly observed by the Board and affirmed
by the courts a quo, the nature and the effect of the floodwalls would deprive Andaya of the normal use of the
remaining areas. It would prevent ingress and egress to the property and turn it into a catch basin for the
floodwaters coming from the Agusan River.
For this reason, in our view, Andaya is entitled to payment of just compensation, which must be neither more
nor less than the monetary equivalent of the land.13 One of the basic principles enshrined in our Constitution is
that no person shall be deprived of his private property without due process of law; and in expropriation cases,
an essential element of due process is that there must be just compensation whenever private property is taken
for public use. Noteworthy, Section 9, Article III of our Constitution mandates that private property shall not be
taken for public use without just compensation.14
Finally, we affirm the findings of the Court of Appeals and the trial court that just compensation should be paid
only for 5,937 square meters of the total area of 10,380 square meters. Admittedly, the Republic needs only a
10-meter easement or an equivalent of 701 square meters. Yet, it is also settled that it is legally entitled to a 60meter wide easement or an equivalent of 4,443 square meters. Clearly, although the Republic will use only 701
square meters, it should not be liable for the 3,742 square meters, which constitute the difference between this
area of 701 square meters and the 4,443 square meters to which it is fully entitled to use as easement, free of
charge except for damages to affected existing improvements, if any, under Section 112 of the Public Land Act.
In effect, without such damages alleged and proved, the Republic is liable for just compensation of only the
remaining areas consisting of 5,937 square meters, with interest thereon at the legal rate of 6% per annum from
the date of the writ of possession or the actual taking until full payment is made. For the purpose of determining
the final just compensation, the case is remanded to the trial court. Said court is ordered to make the
determination of just compensation payable to respondent Andaya with deliberate dispatch.
WHEREFORE, the Decision of the Court of Appeals dated October 30, 2003 in CA-G.R. CV No. 65066,
modifying the Decision of the Regional Trial Court of Butuan City, Branch 33 in Civil Case No. 4378, is
AFFIRMED with MODIFICATION as herein set forth.

The case is hereby REMANDED to the Regional Trial Court of Butuan City, Branch 33 for the determination
of the final just compensation of the compensable area consisting of 5,937 square meters, with interest thereon
at the legal rate of 6% per annum from the date of the writ of possession or actual taking until fully paid.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 169914

April 18, 2008

ASIA'S EMERGING DRAGON CORPORATION, petitioner,

vs.
DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, SECRETARY LEANDRO R.
MENDOZA and MANILA INTERNATIONAL AIRPORT AUTHORITY, respondents.
x ----------------------------------------- x
G.R. No. 174166

April 18, 2008

REPUBLIC OF THE PHILIPPINES, represented by the DEPARTMENT OF TRANSPORTATION AND

COMMUNICATIONS and MANILA INTERNATIONAL AIRPORT AUTHORITY, petitioner,
vs.
HON. COURT OF APPEALS and SALACNIB BATERINA, respondents.
DECISION
CHICO-NAZARIO, J.:
This Court is still continuously besieged by Petitions arising from the awarding of the Ninoy Aquino
International Airport International Passenger Terminal III (NAIA IPT III) Project to the Philippine International
Air Terminals Co., Inc. (PIATCO), despite the promulgation by this Court of Decisions and Resolutions in two
cases, Agan, Jr. v. Philippine International Air Terminals Co., Inc.1 and Republic v. Gingoyon,2 which already
resolved the more basic and immediate issues arising from the said award. The sheer magnitude of the project,
the substantial cost of its building, the expected high profits from its operations, and its remarkable impact on
the Philippine economy, consequently raised significant interest in the project from various quarters.
Once more, two new Petitions concerning the NAIA IPT III Project are before this Court. It is only appropriate,
however, that the Court first recounts its factual and legal findings in Agan and Gingoyon to ascertain that its
ruling in the Petitions at bar shall be consistent and in accordance therewith.
Agan, Jr. v. Philippine International Air Terminals Co., Inc. (G.R. Nos. 155001, 155547, and 155661)
Already established and incontrovertible are the following facts in Agan:
In August 1989, the [Department of Trade and Communications (DOTC)] engaged the services of
Aeroport de Paris (ADP) to conduct a comprehensive study of the Ninoy Aquino International Airport
(NAIA) and determine whether the present airport can cope with the traffic development up to the year
2010. The study consisted of two parts: first, traffic forecasts, capacity of existing facilities, NAIA future
requirements, proposed master plans and development plans; and second, presentation of the preliminary
design of the passenger terminal building. The ADP submitted a Draft Final Report to the DOTC in
December 1989.

Some time in 1993, six business leaders consisting of John Gokongwei, Andrew Gotianun, Henry Sy,
Sr., Lucio Tan, George Ty and Alfonso Yuchengco met with then President Fidel V. Ramos to explore the
possibility of investing in the construction and operation of a new international airport terminal. To
signify their commitment to pursue the project, they formed the Asia's Emerging Dragon Corp. (AEDC)
which was registered with the Securities and Exchange Commission (SEC) on September 15, 1993.
On October 5, 1994, AEDC submitted an unsolicited proposal to the Government through the DOTC/
[Manila International Airport Authority (MIAA)] for the development of NAIA International Passenger
Terminal III (NAIA IPT III) under a build-operate-and-transfer arrangement pursuant to RA 6957 as
amended by RA 7718 (BOT Law).
On December 2, 1994, the DOTC issued Dept. Order No. 94-832 constituting the Prequalification Bids
and Awards Committee (PBAC) for the implementation of the NAIA IPT III project.
On March 27, 1995, then DOTC Secretary Jose Garcia endorsed the proposal of AEDC to the National
Economic and Development Authority (NEDA). A revised proposal, however, was forwarded by the
DOTC to NEDA on December 13, 1995. On January 5, 1996, the NEDA Investment Coordinating
Council (NEDA ICC) - Technical Board favorably endorsed the project to the ICC - Cabinet Committee
which approved the same, subject to certain conditions, on January 19, 1996. On February 13, 1996, the
NEDA passed Board Resolution No. 2 which approved the NAIA IPT III project.
On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily newspapers of an
invitation for competitive or comparative proposals on AEDC's unsolicited proposal, in accordance with
Sec. 4-A of RA 6957, as amended. The alternative bidders were required to submit three (3) sealed
envelopes on or before 5:00 p.m. of September 20, 1996. The first envelope should contain the
Prequalification Documents, the second envelope the Technical Proposal, and the third envelope the
Financial Proposal of the proponent.
On June 20, 1996, PBAC Bulletin No. 1 was issued, postponing the availment of the Bid Documents
and the submission of the comparative bid proposals. Interested firms were permitted to obtain the
Request for Proposal Documents beginning June 28, 1996, upon submission of a written application and
payment of a non-refundable fee of P50,000.00 (US$2,000).
The Bid Documents issued by the PBAC provided among others that the proponent must have adequate
capability to sustain the financing requirement for the detailed engineering, design, construction,
operation, and maintenance phases of the project. The proponent would be evaluated based on its ability
to provide a minimum amount of equity to the project, and its capacity to secure external financing for
the project.
On July 23, 1996, the PBAC issued PBAC Bulletin No. 2 inviting all bidders to a pre-bid conference on
July 29, 1996.
On August 16, 1996, the PBAC issued PBAC Bulletin No. 3 amending the Bid Documents. The
following amendments were made on the Bid Documents:
a. Aside from the fixed Annual Guaranteed Payment, the proponent shall include in its financial
proposal an additional percentage of gross revenue share of the Government, as follows:

i.

First 5 years

5.0%

ii.

Next 10 years

7.5%

iii.

Next 10 years

10.0%

b. The amount of the fixed Annual Guaranteed Payment shall be subject of the price challenge.
Proponent may offer an Annual Guaranteed Payment which need not be of equal amount, but
payment of which shall start upon site possession.
c. The project proponent must have adequate capability to sustain the financing requirement 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 availability of the project proponent and/or the consortium to provide the
minimum amount of equity for the project; and
ii. a letter testimonial from reputable banks attesting that the project proponent and/or the
members of the consortium are banking with them, that the project proponent and/or the
members are of good financial standing, and have adequate resources.
d. The basis for the prequalification shall be the proponent's compliance with the minimum
technical and financial requirements provided in the Bid Documents and the [Implementing
Rules and Regulations (IRR)] of the BOT Law. The minimum amount of equity shall be 30% of
the Project Cost.
e. Amendments to the draft Concession Agreement shall be issued from time to time. Said
amendments shall only cover items that would not materially affect the preparation of the
proponent's proposal.
On August 29, 1996, the Second Pre-Bid Conference was held where certain clarifications were made.
Upon the request of prospective bidder People's Air Cargo & Warehousing Co., Inc (Paircargo), the
PBAC warranted that based on Sec. 11.6, Rule 11 of the Implementing Rules and Regulations of the
BOT Law, only the proposed Annual Guaranteed Payment submitted by the challengers would be
revealed to AEDC, and that the challengers' technical and financial proposals would remain confidential.
The PBAC also clarified that the list of revenue sources contained in Annex 4.2a of the Bid Documents
was merely indicative and that other revenue sources may be included by the proponent, subject to
approval by DOTC/MIAA. Furthermore, the PBAC clarified that only those fees and charges
denominated as Public Utility Fees would be subject to regulation, and those charges which would be
actually deemed Public Utility Fees could still be revised, depending on the outcome of PBAC's query
on the matter with the Department of Justice.
In September 1996, the PBAC issued Bid Bulletin No. 5, entitled "Answers to the Queries of
PAIRCARGO as Per Letter Dated September 3 and 10, 1996." Paircargo's queries and the PBAC's
responses were as follows:
1. It is difficult for Paircargo and Associates to meet the required minimum equity requirement
as prescribed in Section 8.3.4 of the Bid Documents considering that the capitalization of each
member company is so structured to meet the requirements and needs of their current respective

business undertaking/activities. In order to comply with this equity requirement, Paircargo is

requesting PBAC to just allow each member of (sic) corporation of the Joint Venture to just
execute an agreement that embodies a commitment to infuse the required capital in case the
project is awarded to the Joint Venture instead of increasing each corporation's current
authorized capital stock just for prequalification purposes.
In prequalification, the agency is interested in one's financial capability at the time of
prequalification, not future or potential capability.
A commitment to put up equity once awarded the project is not enough to establish that "present"
financial capability. However, total financial capability of all member companies of the
Consortium, to be established by submitting the respective companies' audited financial
statements, shall be acceptable.
2. At present, Paircargo is negotiating with banks and other institutions for the extension of a
Performance Security to the joint venture in the event that the Concessions Agreement (sic) is
awarded to them. However, Paircargo is being required to submit a copy of the draft concession
as one of the documentary requirements. Therefore, Paircargo is requesting that they'd (sic) be
furnished copy of the approved negotiated agreement between the PBAC and the AEDC at the
soonest possible time.
A copy of the draft Concession Agreement is included in the Bid Documents. Any material
changes would be made known to prospective challengers through bid bulletins. However, a final
version will be issued before the award of contract.
The PBAC also stated that it would require AEDC to sign Supplement C of the Bid Documents
(Acceptance of Criteria and Waiver of Rights to Enjoin Project) and to submit the same with the
required Bid Security.
On September 20, 1996, the consortium composed of People's Air Cargo and Warehousing Co., Inc.
(Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and Security Bank Corp. (Security Bank)
(collectively, Paircargo Consortium) submitted their competitive proposal to the PBAC. On September
23, 1996, the PBAC opened the first envelope containing the prequalification documents of the
Paircargo Consortium. On the following day, September 24, 1996, the PBAC prequalified the Paircargo
Consortium.
On September 26, 1996, AEDC informed the PBAC in writing of its reservations as regards the
Paircargo Consortium, which include:
a. The lack of corporate approvals and financial capability of PAIRCARGO;
b. The lack of corporate approvals and financial capability of PAGS;
c. The prohibition imposed by RA 337, as amended (the General Banking Act) on the amount
that Security Bank could legally invest in the project;
d. The inclusion of Siemens as a contractor of the PAIRCARGO Joint Venture, for
prequalification purposes; and
e. The appointment of Lufthansa as the facility operator, in view of the Philippine requirement in
the operation of a public utility.

The PBAC gave its reply on October 2, 1996, informing AEDC that it had considered the issues raised
by the latter, and that based on the documents submitted by Paircargo and the established
prequalification criteria, the PBAC had found that the challenger, Paircargo, had prequalified to
undertake the project. The Secretary of the DOTC approved the finding of the PBAC.
The PBAC then proceeded with the opening of the second envelope of the Paircargo Consortium which
contained its Technical Proposal.
On October 3, 1996, AEDC reiterated its objections, particularly with respect to Paircargo's financial
capability, in view of the restrictions imposed by Section 21-B of the General Banking Act and Sections
1380 and 1381 of the Manual Regulations for Banks and Other Financial Intermediaries. On October 7,
1996, AEDC again manifested its objections and requested that it be furnished with excerpts of the
PBAC meeting and the accompanying technical evaluation report where each of the issues they raised
were addressed.
On October 16, 1996, the PBAC opened the third envelope submitted by AEDC and the Paircargo
Consortium containing their respective financial proposals. Both proponents offered to build the NAIA
Passenger Terminal III for at least $350 million at no cost to the government and to pay the government:
5% share in gross revenues for the first five years of operation, 7.5% share in gross revenues for the next
ten years of operation, and 10% share in gross revenues for the last ten years of operation, in accordance
with the Bid Documents. However, in addition to the foregoing, AEDC offered to pay the government a
total of P135 million as guaranteed payment for 27 years while Paircargo Consortium offered to pay the
government a total of P17.75 billion for the same period.
Thus, the PBAC formally informed AEDC that it had accepted the price proposal submitted by the
Paircargo Consortium, and gave AEDC 30 working days or until November 28, 1996 within which to
match the said bid, otherwise, the project would be awarded to Paircargo.
As AEDC failed to match the proposal within the 30-day period, then DOTC Secretary Amado
Lagdameo, on December 11, 1996, issued a notice to Paircargo Consortium regarding AEDC's failure to
match the proposal.
On February 27, 1997, Paircargo Consortium incorporated into Philippine International Airport
Terminals Co., Inc. (PIATCO).
AEDC subsequently protested the alleged undue preference given to PIATCO and reiterated its
objections as regards the prequalification of PIATCO.
On April 11, 1997, the DOTC submitted the concession agreement for the second-pass approval of the
NEDA-ICC.
On April 16, 1997, AEDC filed with the Regional Trial Court of Pasig a Petition for Declaration of
Nullity of the Proceedings, Mandamus and Injunction against the Secretary of the DOTC, the Chairman
of the PBAC, the voting members of the PBAC and Pantaleon D. Alvarez, in his capacity as Chairman
of the PBAC Technical Committee.
xxxx
On July 9, 1997, the DOTC issued the notice of award for the project to PIATCO.
On July 12, 1997, the Government, through then DOTC Secretary Arturo T. Enrile, and PIATCO,
through its President, Henry T. Go, signed the "Concession Agreement for the Build-Operate-and-

Transfer Arrangement of the Ninoy Aquino International Airport Passenger Terminal III" (1997
Concession Agreement). x x x.
On November 26, 1998, the Government and PIATCO signed an Amended and Restated Concession
Agreement (ARCA). x x x.
Subsequently, the Government and PIATCO signed three Supplements to the ARCA. The First
Supplement was signed on August 27, 1999; the Second Supplement on September 4, 2000; and the
Third Supplement on June 22, 2001 (collectively, Supplements).
xxxx
Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA Terminals I
and II, had existing concession contracts with various service providers to offer international airline
airport services, such as in-flight catering, passenger handling, ramp and ground support, aircraft
maintenance and provisions, cargo handling and warehousing, and other services, to several
international airlines at the NAIA. x x x.
On September 17, 2002, the workers of the international airline service providers, claiming that they
stand to lose their employment upon the implementation of the questioned agreements, filed before this
Court a petition for prohibition to enjoin the enforcement of said agreements.
On October 15, 2002, the service providers, joining the cause of the petitioning workers, filed a motion
for intervention and a petition-in-intervention.
On October 24, 2002, Congressmen Salacnib Baterina, Clavel Martinez and Constantino Jaraula filed a
similar petition with this Court.
On November 6, 2002, several employees of the MIAA likewise filed a petition assailing the legality of
the various agreements.
On December 11, 2002, another group of Congressmen, Hon. Jacinto V. Paras, Rafael P. Nantes,
Eduardo C. Zialcita, Willie B. Villarama, Prospero C. Nograles, Prospero A. Pichay, Jr., Harlin Cast
Abayon and Benasing O. Macaranbon, moved to intervene in the case as Respondents-Intervenors. They
filed their Comment-In-Intervention defending the validity of the assailed agreements and praying for
the dismissal of the petitions.
During the pendency of the case before this Court, President Gloria Macapagal Arroyo, on November
29, 2002, in her speech at the 2002 Golden Shell Export Awards at Malacaang Palace, stated that she
will not "honor (PIATCO) contracts which the Executive Branch's legal offices have concluded (as) null
and void."3
The Court first dispensed with the procedural issues raised in Agan, ruling that (a) the MIAA service providers
and its employees, petitioners in G.R. Nos. 155001 and 155661, had the requisite standing since they had a
direct and substantial interest to protect by reason of the implementation of the PIATCO Contracts which would
affect their source of livelihood;4 and (b) the members of the House of Representatives, petitioners in G.R. No.
155547, were granted standing in view of the serious legal questions involved and their impact on public
interest.5
As to the merits of the Petitions in Agan, the Court concluded that:

In sum, this Court rules that in view of the absence of the requisite financial capacity of the Paircargo
Consortium, predecessor of respondent PIATCO, the award by the PBAC of the contract for the
construction, operation and maintenance of the NAIA IPT III is null and void. Further, considering that
the 1997 Concession Agreement contains material and substantial amendments, which amendments had
the effect of converting the 1997 Concession Agreement into an entirely different agreement from the
contract bidded upon, the 1997 Concession Agreement is similarly null and void for being contrary to
public policy. The provisions under Sections 4.04(b) and (c) in relation to Section 1.06 of the 1997
Concession Agreement and Section 4.04(c) in relation to Section 1.06 of the ARCA, which constitute a
direct government guarantee expressly prohibited by, among others, the BOT Law and its Implementing
Rules and Regulations are also null and void. The Supplements, being accessory contracts to the ARCA,
are likewise null and void.6
Hence, the fallo of the Court's Decision in Agan reads:
WHEREFORE, the 1997 Concession Agreement, the Amended and Restated Concession Agreement
and the Supplements thereto are set aside for being null and void.7
In a Resolution8 dated 21 January 2004, the Court denied with finality the Motions for Reconsideration of its 5
May 2003 Decision in Agan filed by therein respondents PIATCO and Congressmen Paras, et al., and
respondents-intervenors.9 Significantly, the Court declared in the same Resolution that:
This Court, however, is not unmindful of the reality that the structures comprising the NAIA IPT III
facility are almost complete and that funds have been spent by PIATCO in their construction. For the
government to take over the said facility, it has to compensate respondent PIATCO as builder of the
said structures. The compensation must be just and in accordance with law and equity for the
government can not unjustly enrich itself at the expense of PIATCO and its investors.10 (Emphasis ours.)
It is these afore-quoted pronouncements that gave rise to the Petition in Gingoyon.
Republic v. Gingoyon (G.R. No. 166429)
According to the statement of facts in Gingoyon:
After the promulgation of the rulings in Agan, the NAIA 3 facilities have remained in the possession of
PIATCO, despite the avowed intent of the Government to put the airport terminal into immediate
operation. The Government and PIATCO conducted several rounds of negotiation regarding the NAIA 3
facilities. It also appears that arbitral proceedings were commenced before the International Chamber of
Commerce International Court of Arbitration and the International Centre for the Settlement of
Investment Disputes, although the Government has raised jurisdictional questions before those two
bodies.
Then, on 21 December 2004, the Government filed a Complaint for expropriation with the Pasay City
Regional Trial Court (RTC), together with an Application for Special Raffle seeking the immediate
holding of a special raffle. The Government sought upon the filing of the complaint the issuance of a
writ of possession authorizing it to take immediate possession and control over the NAIA 3 facilities.
The Government also declared that it had deposited the amount of P3,002,125,000.00 (3 Billion) in Cash
with the Land Bank of the Philippines, representing the NAIA 3 terminal's assessed value for taxation
purposes.
The case was raffled to Branch 117 of the Pasay City RTC, presided by respondent judge Hon. Henrick
F. Gingoyon (Hon. Gingoyon). On the same day that the Complaint was filed, the RTC issued an Order
directing the issuance of a writ of possession to the Government, authorizing it to "take or enter upon the

possession" of the NAIA 3 facilities. Citing the case of City of Manila v. Serrano, the RTC noted that it
had the ministerial duty to issue the writ of possession upon the filing of a complaint for expropriation
sufficient in form and substance, and upon deposit made by the government of the amount equivalent to
the assessed value of the property subject to expropriation. The RTC found these requisites present,
particularly noting that "[t]he case record shows that [the Government has] deposited the assessed value
of the [NAIA 3 facilities] in the Land Bank of the Philippines, an authorized depositary, as shown by the
certification attached to their complaint." Also on the same day, the RTC issued a Writ of Possession.
According to PIATCO, the Government was able to take possession over the NAIA 3 facilities
immediately after the Writ of Possession was issued.
However, on 4 January 2005, the RTC issued another Order designed to supplement its 21 December
2004 Order and the Writ of Possession. In the 4 January 2005 Order, now assailed in the present
petition, the RTC noted that its earlier issuance of its writ of possession was pursuant to Section 2, Rule
67 of the 1997 Rules of Civil Procedure. However, it was observed that Republic Act No. 8974 (Rep.
Act No. 8974), otherwise known as "An Act to Facilitate the Acquisition of Right-of-Way, Site or
Location for National Government Infrastructure Projects and For Other Purposes" and its Implementing
Rules and Regulations (Implementing Rules) had amended Rule 67 in many respects.
There are at least two crucial differences between the respective procedures under Rep. Act No. 8974
and Rule 67. Under the statute, the Government is required to make immediate payment to the property
owner upon the filing of the complaint to be entitled to a writ of possession, whereas in Rule 67, the
Government is required only to make an initial deposit with an authorized government depositary.
Moreover, Rule 67 prescribes that the initial deposit be equivalent to the assessed value of the property
for purposes of taxation, unlike Rep. Act No. 8974 which provides, as the relevant standard for initial
compensation, the market value of the property as stated in the tax declaration or the current relevant
zonal valuation of the Bureau of Internal Revenue (BIR), whichever is higher, and the value of the
improvements and/or structures using the replacement cost method.
Accordingly, on the basis of Sections 4 and 7 of Rep. Act No. 8974 and Section 10 of the Implementing
Rules, the RTC made key qualifications to its earlier issuances. First, it directed the Land Bank of the
Philippines, Baclaran Branch (LBP-Baclaran), to immediately release the amount of US$62,343,175.77
to PIATCO, an amount which the RTC characterized as that which the Government "specifically made
available for the purpose of this expropriation;" and such amount to be deducted from the amount of just
compensation due PIATCO as eventually determined by the RTC. Second, the Government was directed
to submit to the RTC a Certificate of Availability of Funds signed by authorized officials to cover the
payment of just compensation. Third, the Government was directed "to maintain, preserve and
safeguard" the NAIA 3 facilities or "perform such as acts or activities in preparation for their direct
operation" of the airport terminal, pending expropriation proceedings and full payment of just
compensation. However, the Government was prohibited "from performing acts of ownership like
awarding concessions or leasing any part of [NAIA 3] to other parties."
The very next day after the issuance of the assailed 4 January 2005 Order, the Government filed an
Urgent Motion for Reconsideration, which was set for hearing on 10 January 2005. On 7 January 2005,
the RTC issued another Order, the second now assailed before this Court, which appointed three (3)
Commissioners to ascertain the amount of just compensation for the NAIA 3 Complex. That same day,
the Government filed a Motion for Inhibition of Hon. Gingoyon.
The RTC heard the Urgent Motion for Reconsideration and Motion for Inhibition on 10 January 2005.
On the same day, it denied these motions in an Omnibus Order dated 10 January 2005. This is the third
Order now assailed before this Court. Nonetheless, while the Omnibus Order affirmed the earlier
dispositions in the 4 January 2005 Order, it excepted from affirmance "the superfluous part of the Order
prohibiting the plaintiffs from awarding concessions or leasing any part of [NAIA 3] to other parties."

Thus, the present Petition for Certiorari and Prohibition under Rule 65 was filed on 13 January 2005.
The petition prayed for the nullification of the RTC orders dated 4 January 2005, 7 January 2005, and 10
January 2005, and for the inhibition of Hon. Gingoyon from taking further action on the expropriation
case. A concurrent prayer for the issuance of a temporary restraining order and preliminary injunction
was granted by this Court in a Resolution dated 14 January 2005.11
The Court resolved the Petition of the Republic of the Philippines and Manila International Airport Authority in
Gingoyon in this wise:
In conclusion, the Court summarizes its rulings as follows:
(1) The 2004 Resolution in Agan sets the base requirement that has to be observed before the
Government may take over the NAIA 3, that there must be payment to PIATCO of just compensation in
accordance with law and equity. Any ruling in the present expropriation case must be conformable to the
dictates of the Court as pronounced in the Agan cases.
(2) Rep. Act No. 8974 applies in this case, particularly insofar as it requires the immediate payment by
the Government of at least the proffered value of the NAIA 3 facilities to PIATCO and provides certain
valuation standards or methods for the determination of just compensation.
(3) Applying Rep. Act No. 8974, the implementation of Writ of Possession in favor of the Government
over NAIA 3 is held in abeyance until PIATCO is directly paid the amount of P3 Billion, representing
the proffered value of NAIA 3 under Section 4(c) of the law.
(4) Applying Rep. Act No. 8974, the Government is authorized to start the implementation of the NAIA
3 Airport terminal project by performing the acts that are essential to the operation of the NAIA 3 as an
international airport terminal upon the effectivity of the Writ of Possession, subject to the conditions
above-stated. As prescribed by the Court, such authority encompasses "the repair, reconditioning and
improvement of the complex, maintenance of the existing facilities and equipment, installation of new
facilities and equipment, provision of services and facilities pertaining to the facilitation of air traffic and
transport, and other services that are integral to a modern-day international airport."
5) The RTC is mandated to complete its determination of the just compensation within sixty (60) days
from finality of this Decision. In doing so, the RTC is obliged to comply with the standards set under
Rep. Act No. 8974 and its Implementing Rules. Considering that the NAIA 3 consists of structures and
improvements, the valuation thereof shall be determined using the replacements cost method, as
prescribed under Section 10 of the Implementing Rules.
(6) There was no grave abuse of discretion attending the RTC Order appointing the commissioners for
the purpose of determining just compensation. The provisions on commissioners under Rule 67 shall
apply insofar as they are not inconsistent with Rep. Act No. 8974, its Implementing Rules, or the rulings
of the Court in Agan.
(7) The Government shall pay the just compensation fixed in the decision of the trial court to PIATCO
immediately upon the finality of the said decision.
(8) There is no basis for the Court to direct the inhibition of Hon. Gingoyon.
All told, the Court finds no grave abuse of discretion on the part of the RTC to warrant the nullification
of the questioned orders. Nonetheless, portions of these orders should be modified to conform with law
and the pronouncements made by the Court herein.12

The decretal portion of the Court's Decision in Gingoyon thus reads:

WHEREFORE, the Petition is GRANTED in PART with respect to the orders dated 4 January 2005 and
10 January 2005 of the lower court. Said orders are AFFIRMED with the following MODIFICATIONS:
1) The implementation of the Writ of Possession dated 21 December 2004 is HELD IN ABEYANCE,
pending payment by petitioners to PIATCO of the amount of Three Billion Two Million One Hundred
Twenty Five Thousand Pesos (P3,002,125,000.00), representing the proffered value of the NAIA 3
facilities;
2) Petitioners, upon the effectivity of the Writ of Possession, are authorized [to] start the implementation
of the Ninoy Aquino International Airport Pasenger Terminal III project by performing the acts that are
essential to the operation of the said International Airport Passenger Terminal project;
3) RTC Branch 117 is hereby directed, within sixty (60) days from finality of this Decision, to determine
the just compensation to be paid to PIATCO by the Government.
The Order dated 7 January 2005 is AFFIRMED in all respects subject to the qualification that the parties
are given ten (10) days from finality of this Decision to file, if they so choose, objections to the
appointment of the commissioners decreed therein.
The Temporary Restraining Order dated 14 January 2005 is hereby LIFTED.
No pronouncement as to costs.13
Motions for Partial Reconsideration of the foregoing Decision were filed by therein petitioners Republic and
MIAA, as well as the three other parties who sought to intervene, namely, Asakihosan Corporation, Takenaka
Corporation, and Congressman Baterina.
In a Resolution dated 1 February 2006, this Court denied with finality the Motion for Partial Reconsideration of
therein petitioners and remained faithful to its assailed Decision based on the following ratiocination:
Admittedly, the 2004 Resolution in Agan could be construed as mandating the full payment of the final
amount of just compensation before the Government may be permitted to take over the NAIA 3.
However, the Decision ultimately rejected such a construction, acknowledging the public good that
would result from the immediate operation of the NAIA 3. Instead, the Decision adopted an
interpretation which is in consonance with Rep. Act No. 8974 and with equitable standards as well, that
allowed the Government to take possession of the NAIA 3 after payment of the proffered value of the
facilities to PIATCO. Such a reading is substantially compliant with the pronouncement in the 2004
Agan Resolution, and is in accord with law and equity. In contrast, the Government's position, hewing to
the strict application of Rule 67, would permit the Government to acquire possession over the NAIA 3
and implement its operation without having to pay PIATCO a single centavo, a situation that is
obviously unfair. Whatever animosity the Government may have towards PIATCO does not acquit it
from settling its obligations to the latter, particularly those which had already been previously affirmed
by this Court.14
The Court, in the same Resolution, denied all the three motions for intervention of Asakihosan Corporation,
Takenaka Corporation, and Congressman Baterina, and ruled as follows:
We now turn to the three (3) motions for intervention all of which were filed after the promulgation of
the Court's Decision. All three (3) motions must be denied. Under Section 2, Rule 19 of the 1997 Rules
of Civil Procedure the motion to intervene may be filed at any time before rendition of judgment by the

court. Since this case originated from an original action filed before this Court, the appropriate time to
file the motions-in-intervention in this case if ever was before and not after resolution of this case. To
allow intervention at this juncture would be highly irregular. It is extremely improbable that the movants
were unaware of the pendency of the present case before the Court, and indeed none of them allege such
lack of knowledge.
Takenaka and Asahikosan rely on Mago v. Court of Appeals wherein the Court took the extraordinary
step of allowing the motion for intervention even after the challenged order of the trial court had already
become final. Yet it was apparent in Mago that the movants therein were not impleaded despite being
indispensable parties, and had not even known of the existence of the case before the trial court, and the
effect of the final order was to deprive the movants of their land. In this case, neither Takenaka nor
Asahikosan stand to be dispossessed by reason of the Court's Decision. There is no palpable due process
violation that would militate the suspension of the procedural rule.
Moreover, the requisite legal interest required of a party-in-intervention has not been established so as to
warrant the extra-ordinary step of allowing intervention at this late stage. As earlier noted, the claims of
Takenaka and Asahikosan have not been judicially proved or conclusively established as fact by any trier
of facts in this jurisdiction. Certainly, they could not be considered as indispensable parties to the
petition for certiorari. In the case of Representative Baterina, he invokes his prerogative as legislator to
curtail the disbursement without appropriation of public funds to compensate PIATCO, as well as that as
a taxpayer, as the basis of his legal standing to intervene. However, it should be noted that the amount
which the Court directed to be paid by the Government to PIATCO was derived from the money
deposited by the Manila International Airport Authority, an agency which enjoys corporate autonomy
and possesses a legal personality separate and distinct from those of the National Government and
agencies thereof whose budgets have to be approved by Congress.
It is also observed that the interests of the movants-in-intervention may be duly litigated in proceedings
which are extant before lower courts. There is no compelling reason to disregard the established rules
and permit the interventions belatedly filed after the promulgation of the Court's Decision.15
Asia's Emerging Dragon Corporation v. Department of Transportation and Communications and Manila
International Airport Authority (G.R. No. 169914)
Banking on this Court's declaration in Agan that the award of the NAIA IPT III Project to PIATCO is null and
void, Asia's Emerging Dragon Corporation (AEDC) filed before this Court the present Petition for Mandamus
and Prohibition (with Application for Temporary Restraining Order), praying of this Court that:
(1) After due hearing, judgment be rendered commanding the Respondents, their officers, agents,
successors, representatives or persons or entities acting on their behalf, to formally award the NAIAAPT [sic] III PROJECT to Petitioner AEDC and to execute and formalize with Petitioner AEDC the
approved Draft Concession Agreement embodying the agreed terms and conditions for the operation of
the NAIA-IPT III Project and directing Respondents to cease and desist from awarding the NAIA-IPT
Project to third parties or negotiating into any concession contract with third parties.
(2) Pending resolution on the merits, a Temporary Restraining Order be issued enjoining Respondents,
their officers, agents, successors or representatives or persons or entities acting on their behalf from
negotiating, re-bidding, awarding or otherwise entering into any concession contract with PIATCO and
other third parties for the operation of the NAIA-IPT III Project.
Other relief and remedies, just and equitable under the premises, are likewise prayed for.16
AEDC bases its Petition on the following grounds:

I. PETITIONER AEDC, BEING THE RECOGNIZED AND UNCHALLENGED ORIGINAL

PROPONENT, HAS THE EXCLUSIVE, CLEAR AND VESTED STATUTORY RIGHT TO THE
AWARD OF THE NAIA-IPT III PROJECT;
II. RESPONDENTS HAVE A STATUTORY DUTY TO PROTECT PETITIONER AEDC AS THE
UNCHALLENGED ORIGINAL PROPONENT AS A RESULT OF THE SUPREME COURT'S
NULLIFICATION OF THE AWARD OF THE NAIA-IPT III PROJECT TO PIATCO[; and]
III. RESPONDENTS HAVE NO LEGAL BASIS OR AUTHORITY TO TAKE OVER THE NAIA-IPT
III PROJECT, TO THE EXCLUSION OF PETITIONER AEDC, OR TO AWARD THE PROJECT TO
THIRD PARTIES.17
At the crux of the Petition of AEDC is its claim that, being the recognized and unchallenged original proponent
of the NAIA IPT III Project, it has the exclusive, clear, and vested statutory right to the award thereof. However,
the Petition of AEDC should be dismissed for lack of merit, being as it is, substantially and procedurally flawed.
SUBSTANTIVE INFIRMITY
A petition for mandamus is governed by Section 3 of Rule 65 of the Rules of Civil Procedure, which reads
SEC. 3. Petition for mandamus. When any tribunal, corporation, board, officer or person unlawfully
neglects the performance of an act which the law specifically enjoins as a duty resulting from an office,
trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office to which
such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of
law, the person aggrieved thereby may file a verified petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered commanding the respondent, immediately or some
other time to be specified by the court, to do the act required to be done to protect the rights of the
petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the
respondent.
It is well-established in our jurisprudence that only specific legal rights are enforceable by mandamus, that the
right sought to be enforced must be certain and clear, and that the writ will not issue in cases where the right is
doubtful. Just as fundamental is the principle governing the issuance of mandamus that the duties to be
performed must be such as are clearly and peremptorily enjoined by law or by reason of official station.18
A rule long familiar is that mandamus never issues in doubtful cases. It requires a showing of a complete and
clear legal right in the petitioner to the performance of ministerial acts. In varying language, the principle
echoed and reechoed is that legal rights may be enforced by mandamus only if those rights are well-defined,
clear and certain. Otherwise, the mandamus petition must be dismissed.19
The right that AEDC is seeking to enforce is supposedly enjoined by Section 4-A of Republic Act No. 6957,20 as
amended by Republic Act No. 7718, on unsolicited proposals, which provides
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 involve 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 the price within
thirty (30) working days.

In furtherance of the afore-quoted provision, the Implementing Rules and Regulations (IRR) of Republic Act
No. 6957, as amended by Republic Act No. 7718, devoted the entire Rule 10 to Unsolicited Proposals, pertinent
portions of which are reproduced below
Sec. 10.1. Requisites for Unsolicited Proposals. Any Agency/LGU may accept unsolicited proposals
on a negotiated basis provided that all the following conditions are met:
a. the project involves a new concept or technology and/or is not part of the list of priority projects;
b. no direct government guarantee, subsidy or equity is required; and
c. the Agency/LGU concerned 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. In the event that another project proponent submits a
price proposal lower than that submitted by the original proponent, the latter shall have the right to
match said price proposal within thirty (30) working days. Should the original proponent fail to match
the lower price proposal submitted within the specified period, the contract shall be awarded to the
tenderer of the lowest price. On the other hand, if the original project proponent matches the submitted
lowest price within the specified period, he shall be immediately be awarded the project.
xxxx
Sec. 10.6. Evaluation of Unsolicited Proposals. The Agency/LGU is tasked with the initial evaluation
of the proposal. The Agency/LGU shall: 1) appraise the merits of the project; 2) evaluate the
qualification of the proponent; and 3) assess the appropriateness of the contractual arrangement and
reasonableness of the risk allocation. The Agency/LGU is given sixty (60) days to evaluate the proposal
from the date of submission of the complete proposal. Within this 60-day period, the Agency/LGU, shall
advise the proponent in writing whether it accepts or rejects the proposal. Acceptance means
commitment of the Agency/LGU to pursue the project and recognition of the proponent as the
"original proponent." At this point, the Agency/LGU will no longer entertain other similar
proposals until the solicitation of comparative proposals. The implementation of the project,
however, is still contingent primarily on the approval of the appropriate approving authorities consistent
with Section 2.7 of these IRR, the agreement between the original proponent and the Agency/LGU of
the contract terms, and the approval of the contract by the [Investment Coordination Committee (ICC)]
or Local Sanggunian.
xxxx
Sec. 10.9. Negotiation With the Original Proponent. Immediately after ICC/Local Sanggunian's
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 ICC's 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.

xxxx
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 (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.
Sec. 10.12. Posting of Bid Bond by Original Proponent. The original proponent shall be required at the
date of the first date of the publication of the invitation for comparative proposals to submit a bid bond
equal to the amount and in the form required of the challengers.
Sec. 10.13. Simultaneous Qualification of the Original Proponent. The Agency/LGU shall qualify the
original proponent based on the provisions of Rule 5 hereof, within thirty (30) days from start of
negotiation. For consistency, the evaluation criteria used for qualifying the original proponent should be
the same criteria used for qualifying the original proponent should be the criteria used in the Terms of
Reference for the challengers.
xxxx
Sec. 10.16. Disclosure of the Price Proposal. The disclosure of the price proposal of the original
proponent in the Tender Documents will be left to the discretion of the Agency/LGU. However, if it was
not disclosed in the Tender Documents, the original proponent's price proposal should be revealed upon
the opening of the financial proposals of the challengers. The right of the original proponent to match
the best proposal within thirty (30) working days starts upon official notification by the
Agency/LGU of the most advantageous financial proposal. (Emphasis ours.)
In her sponsorship speech on Senate Bill No. 1586 (the precursor of Republic Act No. 7718), then Senator (now
President of the Republic of the Philippines) Gloria Macapagal-Arroyo explained the reason behind the
proposed amendment that would later become Section 4-A of Republic Act No. 6957, as amended by Republic
Act No. 7718:
The object of the amendment is to protect proponents which have already incurred costs in the
conceptual design and in the preparation of the proposal, and which may have adopted an imaginative
method of construction or innovative concept for the proposal. The amendment also aims to harness the
ingenuity of the private sector to come up with solutions to the country's infrastructure problems.21
It is irrefragable that Section 4-A of Republic Act No. 6957, as amended by Republic Act No. 7718, and Section
10 of its IRR, accord certain rights or privileges to the original proponent of an unsolicited proposal for an
infrastructure project. They are meant to encourage private sector initiative in conceptualizing infrastructure
projects that would benefit the public. Nevertheless, none of these rights or privileges would justify the
automatic award of the NAIA IPT III Project to AEDC after its previous award to PIATCO was declared null
and void by this Court in Agan.
The rights or privileges of an original proponent of an unsolicited proposal for an infrastructure project are
never meant to be absolute. Otherwise, the original proponent can hold the Government hostage and secure the
award of the infrastructure project based solely on the fact that it was the first to submit a proposal. The
absurdity of such a situation becomes even more apparent when considering that the proposal is unsolicited by

the Government. The rights or privileges of an original proponent depends on compliance with the procedure
and conditions explicitly provided by the statutes and their IRR.
An unsolicited proposal is subject to evaluation, after which, the government agency or local government unit
(LGU) concerned may accept or reject the proposal outright.
Under Section 10.6 of the IRR, the "acceptance" of the unsolicited proposal by the agency/LGU is limited to the
"commitment of the [a]gency/LGU to pursue the project and recognition of the proponent as the 'original
proponent.'" Upon acceptance then of the unsolicited proposal, the original proponent is recognized as such but
no award is yet made to it. The commitment of the agency/LGU upon acceptance of the unsolicited proposal is
to the pursuit of the project, regardless of to whom it shall subsequently award the same. The acceptance of
the unsolicited proposal only precludes the agency/LGU from entertaining other similar proposals until the
solicitation of comparative proposals.
Consistent in both the statutes and the IRR is the requirement that invitations be published for comparative or
competitive proposals. Therefore, it is mandatory that a public bidding be held before the awarding of the
project. The negotiations between the agency/LGU and the original proponent, as provided in Section 10.9 of
the IRR, is for the sole purpose of coming up with draft agreements, which shall be used in the Terms of
Reference (TOR) for the solicitation of comparative proposals. Even at this point, there is no definite
commitment made to the original proponent as to the awarding of the project. In fact, the same IRR provision
even gives the concerned agency/LGU, in case of unresolvable differences during the negotiations, the option to
reject the original proponent's proposal and just bid out the project.
Generally, in the course of processing an unsolicited proposal, the original proponent is treated in much the
same way as all other prospective bidders for the proposed infrastructure project. It is required to reformat and
resubmit its proposal in accordance with the requirements of the TOR.22 It must submit a bid bond equal to the
amount and in the form required of the challengers.23 Its qualification shall be evaluated by the concerned
agency/LGU, using evaluation criteria in accordance with Rule 524 of the IRR, and which shall be the same
criteria to be used in the TOR for the challengers.25 These requirements ensure that the public bidding under
Rule 10 of IRR on Unsolicited Proposals still remain in accord with the three principles in public bidding,
which are: the offer to the public, an opportunity for competition, and a basis for exact comparison of bids.26
The special rights or privileges of an original proponent thus come into play only when there are other proposals
submitted during the public bidding of the infrastructure project. As can be gleaned from the plain language of
the statutes and the IRR, the original proponent has: (1) the right to match the lowest or most advantageous
proposal within 30 working days from notice thereof, and (2) in the event that the original proponent is able to
match the lowest or most advantageous proposal submitted, then it has the right to be awarded the project. The
second right or privilege is contingent upon the actual exercise by the original proponent of the first right or
privilege. Before the project could be awarded to the original proponent, he must have been able to match the
lowest or most advantageous proposal within the prescribed period. Hence, when the original proponent is able
to timely match the lowest or most advantageous proposal, with all things being equal, it shall enjoy preference
in the awarding of the infrastructure project.
This is the extent of the protection that Legislature intended to afford the original proponent, as supported by the
exchange between Senators Neptali Gonzales and Sergio Osmea during the Second Reading of Senate Bill No.
1586:
Senator Gonzales:
xxxx

The concept being that in case of an unsolicited proposal and nonetheless public bidding has been held,
then [the original proponent] shall, in effect, be granted what is the equivalent of the right of first
refusal by offering a bid which shall equal or better the bid of the winning bidder within a period
of, let us say, 30 days from the date of bidding.
Senator Osmea:
xxxx
To capture the tenor of the proposal of the distinguished Gentleman, a subsequent paragraph has to be
added which says, "IF THERE IS A COMPETITIVE PROPOSAL, THE ORIGINAL
PROPONENT SHALL HAVE THE RIGHT TO EQUAL THE TERMS AND CONDITIONS OF
THE COMPETITIVE PROPOSAL."
In other words, if there is nobody who will submit a competitive proposal, then nothing is lost.
Everybody knows it, and it is open and transparent. But if somebody comes in with another proposal
and because it was the idea of the original proponent that proponent now has the right to equal the
terms of the original proposal.
SENATOR GONZALES:
That is the idea, Mr. President. Because it seems to me that it is utterly unfair for one who has conceived
an idea or a concept, spent and invested in feasibility studies, in the drawing of plans and specifications,
and the project is submitted to a public bidding, then somebody will win on the basis of plans and
specifications and concepts conceived by the original proponent. He should at least be given the right
to submit an equalizing bid. x x x.27 (Emphasis ours.)
As already found by this Court in the narration of facts in Agan, AEDC failed to match the more advantageous
proposal submitted by PIATCO by the time the 30-day working period expired on 28 November 1996;28 and,
without exercising its right to match the most advantageous proposal, it cannot now lay claim to the award of
the project.
The bidding process as to the NAIA IPT III Project was already over after the award thereof to PIATCO, even if
eventually, the said award was nullified and voided. The nullification of the award to PIATCO did not revive the
proposal nor re-open the bidding. AEDC cannot insist that this Court turn back the hands of time and award the
NAIA IPT III Project to it, as if the bid of PIATCO never existed and the award of the project to PIATCO did
not take place. Such is a simplistic approach to a very complex problem that is the NAIA IPT III Project.
In his separate opinion in Agan, former Chief Justice Artemio V. Panganiban noted that "[T]here was effectively
no public bidding to speak of, the entire bidding process having been flawed and tainted from the very outset,
therefore, the award of the concession to Paircargo's successor Piatco was void, and the Concession Agreement
executed with the latter was likewise void ab initio. x x x.29" (Emphasis ours.) In consideration of such a
declaration that the entire bidding process was flawed and tainted from the very beginning, then, it would be
senseless to re-open the same to determine to whom the project should have been properly awarded to. The
process and all proposals and bids submitted in participation thereof, and not just PIATCO's, were placed in
doubt, and it would be foolhardy for the Government to rely on them again. At the very least, it may be declared
that there was a failure of public bidding.30
In addition, PIATCO is already close to finishing the building of the structures comprising NAIA IPT III,31 a
fact that this Court cannot simply ignore. The NAIA IPT III Project was proposed, subjected to bidding, and
awarded as a build-operate-transfer (BOT) project. A BOT project is defined as

A contractual arrangement whereby the project proponent undertakes the construction, including
financing, of a given infrastructure facility, and the operation and maintenance thereof. The project
proponent operates the facility over a fixed term during which it is allowed to charge facility users
appropriate tolls, fees, rentals, and charges not exceeding those proposed in its bid or as negotiated and
incorporated in the contract to enable the project proponent to recover its investment, and operating and
maintenance expenses in the project. The project proponent transfers the facility to the government
agency or local government unit concerned at the end of the fixed term that shall not exceed fifty (50)
years. This shall include a supply-and-operate situation which is a contractual arrangement whereby the
supplier of equipment and machinery for a given infrastructure facility, if the interest of the Government
so requires, operates the facility providing in the process technology transfer and training to Filipino
nationals.32 (Emphasis ours.)
The original proposal of AEDC is for a BOT project, in which it undertook to build, operate, and transfer to the
Government the NAIA IPT III facilities. This is clearly no longer applicable or practicable under the existing
circumstances. It is undeniable that the physical structures comprising the NAIA IPT III Project are already
substantially built, and there is almost nothing left for AEDC to construct. Hence, the project could no longer be
awarded to AEDC based on the theory of legal impossibility of performance.
Neither can this Court revert to the original proposal of AEDC and award to it only the unexecuted components
of the NAIA IPT III Project. Whoever shall assume the obligation to operate and maintain NAIA IPT III and to
subsequently transfer the same to the Government (in case the operation is not assumed by the Government
itself) shall have to do so on terms and conditions that would necessarily be different from the original proposal
of AEDC. It will no longer include any undertaking to build or construct the structures. An amendment of the
proposal of AEDC to address the present circumstances is out of the question since such an amendment would
be substantive and tantamount to an entirely new proposal, which must again be subjected to competitive
bidding.
AEDC's offer to reimburse the Government the amount it shall pay to PIATCO for the NAIA IPT III Project
facilities, as shall be determined in the ongoing expropriation proceedings before the RTC of Pasay City, cannot
restore AEDC to its status and rights as the project proponent. It must be stressed that the law requires the
project proponent to undertake the construction of the project, including financing; financing, thus, is but a
component of the construction of the structures and not the entirety thereof.
Moreover, this "reimbursement arrangement" may even result in the unjust enrichment of AEDC. In its original
proposal, AEDC offered to construct the NAIA IPT III facilities for $350 million or P9 billion at that time. In
exchange, AEDC would share a certain percentage of the gross revenues with, and pay a guaranteed annual
income to the Government upon operation of the NAIA IPT III. In Gingoyon, the proferred value of the NAIA
IPT III facilities was already determined to be P3 billion. It seems improbable at this point that the balance of
the value of said facilities for which the Government is still obligated to pay PIATCO shall reach or exceed P6
billion. There is thus the possibility that the Government shall be required to pay PIATCO an amount less than
P9 billion. If AEDC is to reimburse the Government only for the said amount, then it shall acquire the NAIA
IPT III facilities for a price less than its original proposal of P9 billion. Yet, per the other terms of its original
proposal, it may still recoup a capital investment of P9 billion plus a reasonable rate of return of investment. A
change in the agreed value of the NAIA IPT III facilities already built cannot be done without a corresponding
amendment in the other terms of the original proposal as regards profit sharing and length of operation;
otherwise, AEDC will be unjustly enriched at the expense of the Government.
Again, as aptly stated by former Chief Justice Panganiban, in his separate opinion in Agan:
If the PIATCO contracts are junked altogether as I think they should be, should not AEDC automatically
be considered the winning bidder and therefore allowed to operate the facility? My answer is a stone-

cold 'No.' AEDC never won the bidding, never signed any contract, and never built any facility. Why
should it be allowed to automatically step in and benefit from the greed of another?33
The claim of AEDC to the award of the NAIA IPT III Project, after the award thereof to PIATCO was set aside
for being null and void, grounded solely on its being the original proponent of the project, is specious and an
apparent stretch in the interpretation of Section 4-A of Republic Act No. 6957, as amended by Republic Act No.
7718, and Rule 10 of the IRR.
In all, just as AEDC has no legal right to the NAIA IPT III Project, corollarily, it has no legal right over the
NAIA IPT III facility. AEDC does not own the NAIA IPT III facility, which this Court already recognized in
Gingoyon as owned by PIATCO; nor does AEDC own the land on which NAIA IPT III stands, which is
undisputedly owned by the Republic through the Bases Conversion Development Authority (BCDA). AEDC
did not fund any portion of the construction of NAIA IPT III, which was entirely funded by PIATCO. AEDC
also does not have any kind of lien over NAIA IPT III or any kind of legal entitlement to occupy the facility or
the land on which it stands. Therefore, nothing that the Government has done or will do in relation to the project
could possibly prejudice or injure AEDC. AEDC then does not possess any legal personality to interfere with or
restrain the activities of the Government as regards NAIA IPT III. Neither does it have the legal personality to
demand that the Government deliver or sell to it the NAIA IPT III facility despite the express willingness of
AEDC to reimburse the Government the proferred amount it had paid PIATCO and complete NAIA IPT III
facility at its own cost.
AEDC invokes the Memorandum of Agreement, purportedly executed between the DOTC and AEDC on 26
February 1996, following the approval of the NAIA IPT III Project by the National Economic Development
Authority Board in a Resolution dated 13 February 1996, which provided for the following commitments by the
parties:
a. commitment of Respondent DOTC to target mid 1996 as the time frame for the formal award of the
project and commencement of site preparation and construction activities with the view of a partial
opening of the Terminal by the first quarter of 1998;
b. commitment of Respondent DOTC to pursue the project envisioned in the unsolicited proposal and
commence and conclude as soon as possible negotiations with Petitioner AEDC on the BOT contract;
c. commitment of Respondent DOTC to make appropriate arrangements through which the formal
award of the project can be affected[;]
d. commitment of Petitioner AEDC to a fast track approach to project implementation and to commence
negotiations with its financial partners, investors and creditors;
e. commitment of Respondent DOTC and Petitioner AEDC to fast track evaluation of competitive
proposals, screening and eliminating nuisance comparative bids;34
It is important to note, however, that the document attached as Annex "E" to the Petition of AEDC is a "certified
photocopy of records on file." This Court cannot give much weight to said document considering that its
existence and due execution have not been established. It is not notarized, so it does not enjoy the presumption
of regularity of a public document. It is not even witnessed by anyone. It is not certified true by its supposed
signatories, Secretary Jesus B. Garcia, Jr. for DOTC and Chairman Henry Sy, Sr. for AEDC, or by any
government agency having its custody. It is certified as a photocopy of records on file by an Atty. Cecilia L.
Pesayco, the Corporate Secretary, of an unidentified corporation.
Even assuming for the sake of argument, that the said Memorandum of Agreement, is in existence and duly
executed, it does little to support the claim of AEDC to the award of the NAIA IPT III Project. The

commitments undertaken by the DOTC and AEDC in the Memorandum of Agreement may be simply
summarized as a commitment to comply with the procedure and requirements provided in Rules 10 and 11 of
the IRR. It bears no commitment on the part of the DOTC to award the NAIA IPT III Project to AEDC. On the
contrary, the document includes express stipulations that negate any such government obligation. Thus, in the
first clause,35 the DOTC affirmed its commitment to pursue, implement and complete the NAIA IPT III Project
on or before 1998, noticeably without mentioning that such commitment was to pursue the project specifically
with AEDC. Likewise, in the second clause,36 it was emphasized that the DOTC shall pursue the project under
Rules 10 and 11 of the IRR of Republic Act No. 6957, as amended by Republic Act No. 7718. And most
significantly, the tenth clause of the same document provided:
10. Nothing in this Memorandum of Understanding shall be understood, interpreted or construed as
permitting, allowing or authorizing the circumvention of, or non-compliance with, or as waiving, the
provisions of, and requirements and procedures under, existing laws, rules and regulations.37
AEDC further decries that:
24. In carrying out its commitments under the DOTC-AEDC MOU, Petitioner AEDC undertook the
following activities, incurring in the process tremendous costs and expenses.
a. pre-qualified 46 design and contractor firms to assist in the NAIA-IPT III Project;
b. appointed a consortium of six (6) local banks as its financial advisor in June 1996;
c. hired the services of GAIA South, Inc. to prepare the Project Description Report and to obtain the
Environmental Clearance Certificate (ECC) for the NAIA-IPT III Project;
d. coordinated with the Airline Operators Association, Bases Conversion Development Authority,
Philippine Air Force, Bureau of Customs, Bureau of Immigration, relative to their particular
requirements regarding the NAIA-IPT III [P]roject; and
e. negotiated and entered into firm commitments with Ital Thai, Marubeni Corporation and Mitsui
Corporation as equity partners.38
While the Court may concede that AEDC, as the original proponent, already expended resources in its
preparation and negotiation of its unsolicited proposal, the mere fact thereof does not entitle it to the instant
award of the NAIA IPT III Project. AEDC was aware that the said project would have to undergo public
bidding, and there existed the possibility that another proponent may submit a more advantageous bid which it
cannot match; in which case, the project shall be awarded to the other proponent and AEDC would then have no
means to recover the costs and expenses it already incurred on its unsolicited proposal. It was a given business
risk that AEDC knowingly undertook.
Additionally, the very defect upon which this Court nullified the award of the NAIA IPT III Project to PIATCO
similarly taints the unsolicited proposal of AEDC. This Court found Paircargo Consortium financially
disqualified after striking down as incorrect the PBAC's assessment of the consortium's financial capability.
According to the Court's ratio in Agan:
As the minimum project cost was estimated to be US$350,000,000.00 or roughly P9,183,650,000.00, the
Paircargo Consortium had to show to the satisfaction of the PBAC that it had the ability to provide the
minimum equity for the project in the amount of at least P2,755,095,000.00.
xxxx

Thus, the maximum amount that Security Bank could validly invest in the Paircargo Consortium is only
P528,525,656.55, representing 15% of its entire net worth. The total net worth therefore of the Paircargo
Consortium, after considering the maximum amounts that may be validly invested by each of its
members is P558,384,871.55 or only 6.08% of the project cost, an amount substantially less than the
prescribed minimum equity investment required for the project in the amount of P2,755,095,000.00 or
30% of the project cost.
The purpose of pre-qualification in any public bidding is to determine, at the earliest opportunity, the
ability of the bidder to undertake the project. Thus, with respect to the bidder's financial capacity at the
pre-qualification stage, the law requires the government agency to examine and determine the ability of
the bidder to fund the entire cost of the project by considering the maximum amounts that each
bidder may invest in the project at the time of pre-qualification.
xxxx
Thus, if the maximum amount of equity that a bidder may invest in the project at the time the bids
are submitted falls short of the minimum amounts required to be put up by the bidder, said bidder
should be properly disqualified. Considering that at the pre-qualification stage, the maximum amounts
which the Paircargo Consortium may invest in the project fell short of the minimum amounts prescribed
by the PBAC, we hold that Paircargo Consortium was not a qualified bidder. Thus the award of the
contract by the PBAC to the Paircargo Consortium, a disqualified bidder, is null and void.39
Pursuant to the above-quoted ruling, AEDC, like the Paircargo Consortium, would not be financially qualified
to undertake the NAIA IPT III Project. Based on AEDC's own submissions to the Government, it had then a
paid-in capital of only P150,000,000.00,40 which was less than the P558,384,871.55 that Paircargo Consortium
was capable of investing in the NAIA IPT III Project, and even far less that what this Court prescribed as the
minimum equity investment required for the project in the amount of P2,755,095,000.00 or 30% of the project
cost. AEDC had not sufficiently demonstrated that it would have been financially qualified to undertake the
project at the time of submission of the bids.
Instead, AEDC took pains to present to this Court that allowing it to take over and operate NAIA IPT III at
present would be beneficial to the Government. This Court must point out, however, that AEDC is precisely
making a new proposal befitting the current status of the NAIA IPT III Project, contrary to its own argument
that it is merely invoking its original BOT proposal. And it is not for this Court to evaluate AEDC's new
proposal and assess whether it would truly be most beneficial for the Government, for the same is an executive
function rather than judicial, for which the statutes and regulations have sufficiently provided standards and
procedures for evaluation.
It can even be said that if the award of the NAIA IPT III Project was merely a matter of choosing between
PIATCO and AEDC (which it is not), there could be no doubt that PIATCO is more qualified to operate the
structure that PIATCO itself built and PIATCO's offer of P17.75 Billion in annual guaranteed payments to the
Government is far better that AEDC's offer of P135 Million.
Hence, AEDC is not entitled to a writ of mandamus, there being no specific, certain, and clear legal right to be
enforced, nor duty to be performed that is clearly and peremptorily enjoined by law or by reason of official
station.
PROCEDURAL LAPSES
In addition to the substantive weaknesses of the Petition of AEDC, the said Petition also suffers from procedural
defects.

AEDC revived its hope to acquire the NAIA IPT III Project when this Court promulgated its Decision in Agan
on 5 May 2003. The said Decision became final and executory on 17 February 2004 upon the denial by this
Court of the Motion for Leave to File Second Motion for Reconsideration submitted by PIATCO. It is this
Decision that declared the award of the NAIA IPT III Project to PIATCO as null and void; without the same,
then the award of the NAIA IPT III Project to PIATCO would still subsist and other persons would remain
precluded from acquiring rights thereto, including AEDC. Irrefutably, the present claim of AEDC is rooted in
the Decision of this Court in Agan. However, AEDC filed the Petition at bar only 20 months after the
promulgation of the Decision in Agan on 5 May 2003.
It must be emphasized that under Sections 2 and 3, Rule 65 of the revised Rules of Civil Procedure, petitions for
prohibition and mandamus, such as in the instant case, can only be resorted to when there is no other plain,
speedy and adequate remedy for the party in the ordinary course of law.
In Cruz v. Court of Appeals,41 this Court elucidates that
Although Rule 65 does not specify any period for the filing of a petition for certiorari and mandamus, it
must, nevertheless, be filed within a reasonable time. In certiorari cases, the definitive rule now is that
such reasonable time is within three months from the commission of the complained act. The same rule
should apply to mandamus cases.
The unreasonable delay in the filing of the petitioner's mandamus suit unerringly negates any claim that
the application for the said extraordinary remedy was the most expeditious and speedy available to the
petitioner. (Emphasis ours.)
As the revised Rules now stand, a petition for certiorari may be filed within 60 days from notice of the
judgment, order or resolution sought to be assailed.42 Reasonable time for filing a petition for mandamus should
likewise be for the same period. The filing by the AEDC of its petition for mandamus 20 months after its
supposed right to the project arose is evidently beyond reasonable time and negates any claim that the said
petition for the extraordinary writ was the most expeditious and speedy remedy available to AEDC.
AEDC contends that the "reasonable time" within which it should have filed its petition should be reckoned
only from 21 September 2005, the date when AEDC received the letter from the Office of the Solicitor General
refusing to recognize the rights of AEDC to provide the available funds for the completion of the NAIA IPT III
Project and to reimburse the costs of the structures already built by PIATCO. It has been unmistakable that even
long before said letter especially when the Government instituted with the RTC of Pasay City expropriation
proceedings for the NAIA IPT III on 21 December 2004 that the Government would not recognize any right
that AEDC purportedly had over the NAIA IPT III Project and that the Government is intent on taking over and
operating the NAIA IPT III itself.
Another strong argument against the AEDC's Petition is that it is already barred by res judicata.
In Agan,43 it was noted that on 16 April 1997, the AEDC instituted before the RTC of Pasig City Civil Case No.
66213, a Petition for the Declaration of Nullity of the Proceedings, Mandamus and Injunction, against the
DOTC Secretary and the PBAC Chairman and members.
In Civil Case No. 66213, AEDC prayed for:
i) the nullification of the proceedings before the DOTC-PBAC, including its decision to qualify
Paircargo Consortium and to deny Petitioner AEDC's access to Paircargo Consortium's technical and
financial bid documents;

ii) the protection of Petitioner AEDC's right to match considering the void challenge bid of the Paircargo
Consortium and the denial by DOTC-PBAC of access to information vital to the effective exercise of its
right to match;
iii) the declaration of the absence of any other qualified proponent submitting a competitive bid in an
unsolicited proposal.44
Despite the pendency of Civil Case No. 66213, the DOTC issued the notice of award for the NAIA IPT III
Project to PIATCO on 9 July 1997. The DOTC and PIATCO also executed on 12 July 1997 the 1997
Concession Agreement. AEDC then alleges that:
k) On September 3, 1998, then Pres. Joseph Ejercito Estrada convened a meeting with the members of
the Board of Petitioner AEDC to convey his "desire" for the dismissal of the mandamus case filed by
Petition AEDC and in fact urged AEDC to immediately withdraw said case.
l) The President's direct intervention in the disposition of this mandamus case was a clear imposition that
Petitioner AEDC had not choice but to accept. To do otherwise was to take a confrontational stance
against the most powerful man in the country then under the risk of catching his ire, which could have
led to untold consequences upon the business interests of the stakeholders in AEDC. Thus, Petitioner
AEDC was constrained to agree to the signing of a Joint Motion to Dismiss and to the filing of the same
in court.
m) Unbeknownst to AEDC at that time was that simultaneous with the signing of the July 12, 1997
Concession Agreement, the DOTC and PIATCO executed a secret side agreement grossly prejudicial
and detrimental to the interest of Government. It stipulated that in the event that the Civil Case filed by
AEDC on April 16, 1997 is not resolved in a manner favorable to the Government, PIATCO shall be
entitled to full reimbursement for all costs and expenses it incurred in order to obtain the NAIA IPT III
BOT project in an amount not less than One Hundred Eighty Million Pesos (Php 180,000,000.00). This
was apparently the reason why the President was determined to have AEDC's case dismissed
immediately.
n) On February 9, 1999, after the Amended and Restated Concession Agreement (hereinafter referred to
as "ARCA") was signed without Petitioner AEDC's knowledge, Petitioner AEDC signed a Joint Motion
to Dismiss upon the representation of the DOTC that it would provide AEDC with a copy of the 1997
Concession Agreement. x x x.45
On 30 April 1999, the RTC of Pasig City issued an Order dismissing with prejudice Civil Case No. 66213
upon the execution by the parties of a Joint Motion to Dismiss. According to the Joint Motion to Dismiss
The parties, assisted by their respective counsel, respectfully state:
1. Philippine International Air Terminals Company, Inc. ("PIATCO") and the respondents have
submitted to petitioner, through the Office of the Executive Secretary, Malacaang, a copy of the
Concession Agreement which they executed for the construction and operation of the Ninoy Aquino
International Airport International Passenger Terminal III Project ("NAIA IPT III Project), which
petitioner requested.
2. Consequently, the parties have decided to amicably settle the instant case and jointly move for the
dismissal thereof without any of the parties admitting liability or conceding to the position taken by the
other in the instant case.

3. Petitioner, on the other hand, and the respondents, on the other hand, hereby release and forever
discharge each other from any and all liabilities, direct or indirect, whether criminal or civil, which
arose in connection with the instant case.
4. The parties agree to bear the costs, attorney's fees and other expenses they respectively incurred in
connection with the instant case. (Emphasis ours.)
AEDC, however, invokes the purported pressure exerted upon it by then President Joseph E. Estrada, the
alleged fraud committed by the DOTC, and paragraph 2 in the afore-quoted Joint Motion to Dismiss to justify
the non-application of the doctrine of res judicata to its present Petition.
The elements of res judicata, in its concept as a bar by former judgment, are as follows: (1) the former
judgment or order must be final; (2) it must be a judgment or order on the merits, that is, it was rendered after a
consideration of the evidence or stipulations submitted by the parties at the trial of the case; (3) it must have
been rendered by a court having jurisdiction over the subject matter and the parties; and (4) there must be,
between the first and second actions, identity of parties, of subject matter and of cause of action.46 All of the
elements are present herein so as to bar the present Petition.
First, the Order of the RTC of Pasig City, dismissing Civil Case No. 66213, was issued on 30 April 1999. The
Joint Motion to Dismiss, deemed a compromise agreement, once approved by the court is immediately
executory and not appealable.47
Second, the Order of the RTC of Pasig City dismissing Civil Case No. 66213 pursuant to the Joint Motion to
Dismiss filed by the parties constitutes a judgment on the merits.
The Joint Motion to Dismiss stated that the parties were willing to settle the case amicably and, consequently,
moved for the dismissal thereof. It also contained a provision in which the parties the AEDC, on one hand,
and the DOTC Secretary and PBAC, on the other released and forever discharged each other from any and all
liabilities, whether criminal or civil, arising in connection with the case. It is undisputable that the parties
entered into a compromise agreement, defined as "a contract whereby the parties, by making reciprocal
concessions, avoid a litigation or put an end to one already commenced.48" Essentially, it is a contract perfected
by mere consent, the latter being manifested by the meeting of the offer and the acceptance upon the thing and
the cause which are to constitute the contract. Once an agreement is stamped with judicial approval, it becomes
more than a mere contract binding upon the parties; having the sanction of the court and entered as its
determination of the controversy, it has the force and effect of any other judgment.49 Article 2037 of the Civil
Code explicitly provides that a compromise has upon the parties the effect and authority of res judicata.
Because of the compromise agreement among the parties, there was accordingly a judicial settlement of the
controversy, and the Order, dated 30 April 1999, of the RTC of Pasig City was no less a judgment on the merits
which may be annulled only upon the ground of extrinsic fraud.50 Thus, the RTC of Pasig City, in the same
Order, correctly granted the dismissal of Civil Case No. 66213 with prejudice.
A scrutiny of the Joint Motion to Dismiss submitted to the RTC of Pasig City would reveal that the parties
agreed to discharge one another from any and all liabilities, whether criminal or civil, arising from the case,
after AEDC was furnished with a copy of the 1997 Concession Agreement between the DOTC and PIATCO.
This complete waiver was the reciprocal concession of the parties that puts to an end the present litigation,
without any residual right in the parties to litigate the same in the future. Logically also, there was no more need
for the parties to admit to any liability considering that they already agreed to absolutely discharge each other
therefrom, without necessarily conceding to the other's position. For AEDC, it was a declaration that even if it
was not conceding to the Government's position, it was nonetheless waiving any legal entitlement it might have
to sue the Government on account of the NAIA IPT III Project. Conversely, for the Government, it was an
avowal that even if it was not accepting AEDC's stance, it was all the same relinquishing its right to file any suit

against AEDC in connection with the same project. That none of the parties admitted liability or conceded its
position is without bearing on the validity or binding effect of the compromise agreement, considering that these
were not essential to the said compromise.
Third, there is no question as to the jurisdiction of the RTC of Pasig City over the subject matter and parties in
Civil Case No. 66213. The RTC can exercise original jurisdiction over cases involving the issuance of writs of
certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction.51 To recall, the Petition of
AEDC before the RTC of Pasig City was for the declaration of nullity of proceedings, mandamus and
injunction. The RTC of Pasig City likewise had jurisdiction over the parties, with the voluntary submission by
AEDC and proper service of summons on the DOTC Secretary and the PBAC Chairman and members.
Lastly, there is, between Civil Case No. 66213 before the RTC of Pasig City and the Petition now pending
before this Court, an identity of parties, of subject matter, and of causes of action.
There is an identity of parties. In both petitions, the AEDC is the petitioner. The respondents in Civil Case No.
66213 are the DOTC Secretary and the PBAC Chairman and members. The respondents in the instant Petition
are the DOTC, the DOTC Secretary, and the Manila International Airport Authority (MIAA). While it may be
conceded that MIAA was not a respondent and did not participate in Civil Case No. 66213, it may be
considered a successor-in-interest of the PBAC. When Civil Case No. 66213 was initiated, PBAC was then in
charge of the NAIA IPT III Project, and had the authority to evaluate the bids and award the project to the one
offering the lowest or most advantageous bid. Since the bidding is already over, and the structures comprising
NAIA IPT III are now built, then MIAA has taken charge thereof. Furthermore, it is clear that it has been the
intention of the AEDC to name as respondents in their two Petitions the government agency/ies and official/s
who, at the moment each Petition was filed, had authority over the NAIA IPT III Project.
There is an identity of subject matter because the two Petitions involve none other than the award and
implementation of the NAIA IPT III Project.
There is an identity of cause of action because, in both Petitions, AEDC is asserting the violation of its right to
the award of the NAIA IPT III Project as the original proponent in the absence of any other qualified bidders. As
early as in Civil Case No. 66213, AEDC already sought a declaration by the court of the absence of any other
qualified proponent submitting a competitive bid for the NAIA IPT III Project, which, ultimately, would result
in the award of the said project to it.
AEDC attempts to evade the effects of its compromise agreement by alleging that it was compelled to enter into
such an agreement when former President Joseph E. Estrada asserted his influence and intervened in Civil Case
No. 66213. This allegation deserves scant consideration. Without any proof that such events did take place, such
statements remain mere allegations that cannot be given weight. One who alleges any defect or the lack of a
valid consent to a contract must establish the same by full, clear and convincing evidence, not merely by
preponderance thereof.52 And, even assuming arguendo, that the consent of AEDC to the compromise
agreement was indeed vitiated, then President Estrada was removed from office in January 2001. AEDC filed
the present Petition only on 20 October 2005. The four-year prescriptive period, within which an action to annul
a voidable contract may be brought, had already expired.53
The AEDC further claims that the DOTC committed fraud when, without AEDC's knowledge, the DOTC
entered into an Amended and Restated Concession Agreement (ARCA) with PIATCO. The fraud on the part of
the DOTC purportedly also vitiated AEDC's consent to the compromise agreement. It is true that a judicial
compromise may be set aside if fraud vitiated the consent of a party thereof; and that the extrinsic fraud, which
nullifies a compromise, likewise invalidates the decision approving it.54 However, once again, AEDC's
allegations of fraud are unsubstantiated. There is no proof that the DOTC and PIATCO willfully and
deliberately suppressed and kept the information on the execution of the ARCA from AEDC. The burden of
proving that there indeed was fraud lies with the party making such allegation. Each party must prove his own

affirmative allegations. The burden of proof lies on the party who would be defeated if no evidence were given
on either side. In this jurisdiction, fraud is never presumed.55
Moreover, a judicial compromise may be rescinded or set aside on the ground of fraud in accordance with Rule
38 of the Rules on Civil Procedure on petition for relief from judgment. Section 3 thereof prescribes the periods
within which the petition for relief must be filed:
SEC. 3. Time for filing petition; contents and verification. A petition provided for in either of the
preceding sections of this Rule must be verified, filed within sixty (60) days after the petitioner learns of
the judgment, final order or other proceeding to be set aside, and not more than six (6) months after such
judgment or final order was entered, or such proceeding was taken, and must be accompanied with
affidavits showing the fraud, accident, mistake or excusable negligence relied upon, and the facts
constituting the petitioner's good and substantial cause of action or defense, as the case may be.
According to this Court's ruling in Argana v. Republic,56 as applied to a judgment based on compromise, both
the 60-day and six-month reglementary periods within which to file a petition for relief should be reckoned
from the date when the decision approving the compromise agreement was rendered because such judgment is
considered immediately executory and entered on the date that it was approved by the court. In the present case,
the Order of the RTC of Pasig City granting the Joint Motion to Dismiss filed by the parties in Civil Case No.
66213 was issued on 30 April 1999, yet AEDC only spoke of the alleged fraud which vitiated its consent thereto
in its Petition before this Court filed on 20 October 2005, more than six years later.
It is obvious that the assertion by AEDC of its vitiated consent to the Joint Motion to Dismiss Civil Case No.
66213 is nothing more than an after-thought and a desperate attempt to escape the legal implications thereof,
including the barring of its present Petition on the ground of res judicata.
It is also irrelevant to the legal position of AEDC that the Government asserted in Agan that the award of the
NAIA IPT III Project to PIATCO was void. That the Government eventually took such a position, which this
Court subsequently upheld, does not affect AEDC's commitments and obligations under its judicially-approved
compromise agreement in Civil Case No. 66213, which AEDC signed willingly, knowingly, and ably assisted
by legal counsel.
In addition, it cannot be said that there has been a fundamental change in the Government's position since Civil
Case No. 66213, contrary to the allegation of AEDC. The Government then espoused that AEDC is not entitled
to the award of the NAIA IPT III Project. The Government still maintains the exact same position presently.
That the Government eventually reversed its position on the validity of its award of the project to PIATCO is
not inconsistent with its position that neither should AEDC be awarded the project.
For the foregoing substantive and procedural reasons, the instant Petition of AEDC should be dismissed.
Republic of the Philippines v. Court of Appeals and Baterina (G.R. No. 174166)
As mentioned in Gingoyon, expropriation proceedings for the NAIA IPT III was instituted by the Government
with the RTC of Pasay City, docketed as Case No. 04-0876CFM. Congressman Baterina, together with other
members of the House of Representatives, sought intervention in Case No. 04-0876CFM by filing a Petition for
Prohibition in Intervention (with Application for Temporary Restraining Order and Writ of Preliminary
Injunction). Baterina, et al. believe that the Government need not file expropriation proceedings to gain
possession of NAIA IPT III and that PIATCO is not entitled to payment of just compensation, arguing thus
A) Respondent PIATCO does not own Terminal III because BOT Contracts do not vest ownership in
PIATCO. As such, neither PIATCO nor FRAPORT are entitled to compensation.

B) Articles 448, ET SEQ., of the New Civil Code, as regards builders in good faith/bad faith, do not
apply to PIATCO's Construction of Terminal III.
C) Article 1412(2) of the New Civil Code allows the Government to demand the return of what it has
given without any obligation to comply with its promise.
D) The payment of compensation to PIATCO is unconstitutional, violative of the Build-OperateTransfer Law, and violates the Civil Code and other laws. 57
On 27 October 2005, the RTC of Pasay City issued an Order admitting the Petition in Intervention of Baterina,
et al., as well as the Complaint in Intervention of Manuel L. Fortes, Jr. and the Answer in Intervention of Gina
B. Alnas, et al. The Republic sought reconsideration of the 27 October 2005 Order of the RTC of Pasay City,
which, in an Omnibus Order dated 13 December 2005, was denied by the RTC of Pasay City as regards the
intervention of Baterina, et al. and Fortes, but granted as to the intervention of Alnas, et al. On 22 March 2006,
Baterina, et al. filed with the RTC of Pasay City a Motion to Declare in Default and/or Motion for Summary
Judgment considering that the Republic and PIATCO failed to file an answer or any responsive pleading to their
Petition for Prohibition in Intervention.
In the meantime, on 19 December 2005, the Court's Decision in Gingoyon was promulgated. Baterina also filed
a Motion for Intervention in said case and sought reconsideration of the Decision therein. However, his Motion
for Intervention was denied by this Court in a Resolution dated 1 February 2006.
On 27 March 2006, the RTC of Pasay City issued an Order and Writ of Execution, the dispositive portion of
which reads
WHEREFORE, let a writ of execution be issued in this case directing the Sheriff of this court to
immediately implement the Order dated January 4, 2005 and January 10, 2005, as affirmed by the
Decision of the Supreme Court in G.R. No. 166429 in the above-entitled case dated December 19, 2005,
in the following manner:
1. Ordering the General Manager, the Senior Assistant General Manager and the Vice President of
Finance of the Manila International Airport Authority (MIAA) to immediately withdraw the amount of
P3,002,125,000.00 from the above-mentioned Certificates of US Dollar Time Deposits with the Land
Bank of the Philippines, Baclaran Branch;
2. Ordering the Branch Manager, Land Bank of the Philippines, Baclaran Branch to immediately release
the sum of P3,002,125,000.00 to PIATCO;
Return of Service of the Writs shall be made by the Sheriff of this court immediately thereafter;58
The RTC of Pasay City, in an Order, dated 15 June 2006, denied the Motions for Reconsideration of its Order
and Writ of Execution filed by the Government and Fortes. Baterina, meanwhile, went before the Court of
Appeals via a Petition for Certiorari and Prohibition (With Urgent Prayer for the Issuance of a Temporary
Restraining Order and Writ of Preliminary Injunction), docketed as CA-G.R. No. 95539, assailing the issuance,
in grave abuse of discretion, by the RTC of Pasay City of its Orders dated 27 March 2006 and 15 June 2006 and
Writ of Execution dated 27 March 2006.
During the pendency of CA-G.R. No. 95539 with the Court of Appeals, the RTC of Pasay City issued an Order,
dated 7 August 2006, denying the Urgent Manifestation and Motion filed by the Republic in which it relayed
willingness to comply with the Order and Writ of Execution dated 27 March 2006, provided that the trial court
shall issue an Order expressly authorizing the Republic to award concessions and lease portions of the NAIA
IPT III to potential users. The following day, on 8 August 2006, the RTC of Pasay City issued an Order denying

the intervention of Baterina, et al. and Fortes in Case No. 04-0876CFM. In a third Order, dated 9 August 2006,
the RTC of Pasay City directed PIATCO to receive the amount of P3,002,125,000.00 from the Land Bank of the
Philippines, Baclaran Branch.
By 24 August 2006, the Republic was all set to comply with the 9 August 2006 Order of the RTC of Pasay City.
Hence, the representatives of the Republic and PIATCO met before the RTC of Pasay City for the supposed
payment by the former to the latter of the proferred amount. However, on the same day, the Court of Appeals, in
CA G.R. No. 95539, issued a Temporary Restraining Order (TRO) enjoining, among other things, the RTC of
Pasay City from implementing the questioned Orders, dated 27 March 2006 and 15 June 2006, or "from
otherwise causing payment and from further proceeding with the determination of just compensation in the
expropriation case involved herein, until such time that petitioner's motion to declare in default and motion for
partial summary judgment shall have been resolved by the trial court; or it is clarified that PIATCO
categorically disputes the proferred value for NAIA Terminal 3." The TRO was to be effective for 30 days. Two
days later, on 26 August 2006, the Republic filed with the Court of Appeals an Urgent Motion to Lift Temporary
Restraining Order, which the appellate court scheduled for hearing on 5 September 2006.
While the Urgent Motion to lift the TRO was still pending with the Court of Appeals, the Republic already filed
the present Petition for Certiorari and Prohibition With Urgent Application for a Temporary Restraining Order
and/or Writ of Preliminary Injunction, attributing to the Court of Appeals grave abuse of discretion in granting
the TRO and seeking a writ of prohibition against the Court of Appeals to enjoin it from giving due course to
Baterina's Petition in CA-G.R. No. 95539. The Republic thus raises before this Court the following arguments:
I
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO
AN EXCESS OR LACK OF JURISDICTION WHEN IT GRANTED THE TEMPORARY
RESTRAINING ORDER.
A. THIS HONORABLE COURT'S DECISION IN GINGOYON CONSTITUTES THE "LAW
OF THE CASE".
B. THE TRO IS IN DIRECT CONTRAVENTION OF THIS COURT'S DECISION WICH HAD
ATTAINED FINALITY.
II
THE REPUBLIC IS SUFFERING IRREPARABLE DAMAGE.
III
THE COURT OF APPEALS MUST BE PROHIBITED FROM GIVING DUE COURSE TO A
PETITION THAT IS DEFECTIVE IN FORM AND SUBSTANCE.
A. PRIVATE RESPONDENT HAS NO LEGAL STANDING.
1. THIS HONORABLE COURT HAS RULED THAT PRIVATE RESPONDENT HAS
NO LEGAL STANDING.
2. PRIVATE RESPONDENT HAS LOST HIS STANDING AS AN INTERVENOR.

B. PRIVATE RESPONDENT FAILED TO DEMONSTRATE THAT HE IS ENTITLED TO

THE INJUNCTIVE RELIEFS PRAYED FOR.
C. THE BOND POSTED IS INSUFFICIENT.
IV
GRANTING ARGUENDO THAT PRIVATE RESPONDENT'S PETITION IS SUFFICIENT IN FORM
AND SUBSTANCE, THE SAME HAS BECOME MOOT AND ACADEMIC.
A. THE MOTION TO DECLARE IN DEFAULT AND/OR MOTION FOR PARTIAL
SUMMARY JUDGMENT HAS ALREADY BEEN RESOLVED.
B. PIATCO HAS CATEGORICALLY DISPUTED THE PROFFERED VALUE FOR NAIA
TERMINAL III.59
The Republic prays of this Court that:
(a) Pending the determination of the merits of this petition, a temporary restraining order and/or a writ of
preliminary injunction be ISSUED restraining the Court of Appeals from implementing the writ of
preliminary injunction in CA-G.R. SP No. 95539 and proceeding in said case such as hearing it on
September 5, 2006. After both parties have been heard, the preliminary injunction be MADE
PERMANENT;
(b) The Resolution date 24 August 2006 of the Court of Appeals be SET ASIDE; and
(c) CA-G.R. SP No. 95539 be ORDERED DISMISSED.
Other just and equitable reliefs are likewise prayed for.60
On 4 September 2006, the Republic filed a Manifestation and Motion to Withdraw Urgent Motion to Lift
Temporary Restraining Order with the Court of Appeals stating, among other things, that it had decided to
withdraw the said Motion as it had opted to avail of other options and remedies. Despite the Motion to
Withdraw filed by the Government, the Court of Appeals issued a Resolution, dated 8 September 2006, lifting
the TRO it issued, on the basis of the following
In view of the pronouncement of the Supreme Court in the Gingoyon case upholding the right of
PIATCO to be paid the proferred value in the amount of P3,002,125,000.00 prior to the implementation
of the writ of possession issued by the trial court on December 21, 2004 over the NAIA Passenger
Terminal III, and directing the determination of just compensation, there is no practical and logical
reason to maintain the effects of the Temporary Restraining Order contained in our Resolution dated
August 24, 2006. Thus, We cannot continue restraining what has been mandated in a final and executory
decision of the Supreme Court.
WHEREFORE, Our Resolution dated 24 August 2006 be SET ASIDE. Consequently, the Motion to
Withdraw the Motion to Lift the Temporary Restraining Order is rendered moot and academic.61
There being no more legal impediment, the Republic tendered on 11 September 2006 Land Bank check in the
amount of P3,002,125,000.00 representing the proferred value of NAIA IPT III, which was received by a duly
authorized representative of PIATCO.

On 27 December 2006, the Court of Appeals rendered a Decision in CA G.R. No. 95539 dismissing Baterina's
Petition.
The latest developments before the Court of Appeals and the RTC of Pasay City render the present Petition of
the Republic moot.
Nonetheless, Baterina, as the private respondent in the instant Petition, presented his own prayer that a
judgment be rendered as follows:
A. For this Honorable Court, in the exercise of its judicial discretion to relax procedural rules consistent
with Metropolitan Traffic Command v. Gonong and deem that justice would be better served if all legal
issues involved in the expropriation case and in Baterina are resolved in this case once and for all, to
DECLARE that:
i. TERMINAL 3, as a matter of law, is public property and thus not a proper object of eminent
domain proceedings; and
ii. PIATCO, as a matter of law, is merely the builder of TERMINAL 3 and, as such, it may file a
claim for recovery on quantum meruit with the Commission on Audi[t] for determination of the
amount thereof, if any.
B. To DIRECT the Regional Trial Court of Pasay City, Branch 117 to dismiss the expropriation case;
C. To DISMISS the instant Petition and DENY The Republic's application for TRO and/or writ of
preliminary injunction for lack of merit;
D. To DECLARE that the P3 Billion (representing the proferred value of TERMINAL 3) paid to
PIATCO on 11 September 2006 as funds held in trust by PIATCO for the benefit of the Republic and
subject to the outcome of the proceedings for the determination of recovery on quantum meruit due to
PIATCO, if any.
E. To DIRECT the Solicitor General to disclose the evidence it has gathered on corruption, bribery,
fraud, bad faith, etc., to this Honorable Court and the Commission on Audit, and to DECLARE such
evidence to be admissible in any proceeding for the determination of any compensation due to PIATCO,
if any.
[F]. In the alternative, to:
i. SET ASIDE the trial court's Order dated 08 August 2006 denying Private Respondent's motion
for intervention in the expropriation case, and
ii. Should this Honorable Court lend credence to the argument of the Solicitor General in its
Comment dated 20 April 2006 that "there are issues as to material fact that require presentation
of evidence", to REMAND the resolution of the legal issues raised by Private Respondent to the
trial court consistent with this Honorable Court's holding in the Gingoyon Resolution that "the
interests of the movants-in-intervention [meaning Takenaka, Asahikosan, and herein Private
Respondent] may be duly litigated in proceedings which are extant before the lower courts."62
In essence, Baterina is opposing the expropriation proceedings on the ground that NAIA IPT III is already
public property. Hence, PIATCO is not entitled to just compensation for NAIA IPT III. He is asking the Court to
make a definitive ruling on this matter considering that it was not settled in either Agan or Gingoyon.

We disagree. Contrary to Baterina's stance, PIATCO's entitlement to just and equitable consideration for its
construction of NAIA IPT III and the propriety of the Republic's resort to expropriation proceedings were
already recognized and upheld by this Court in Agan and Gingoyon.
The Court's Decisions in both Agan and Gingoyon had attained finality, the former on 17 February 2004 and the
latter on 17 March 2006.
This Court already made an unequivocal pronouncement in its Resolution dated 21 January 2004 in Agan that
for the Government of the Republic to take over the NAIA IPT III facility, it has to compensate PIATCO as a
builder of the structures; and that "[t]he compensation must be just and in accordance with law and equity for
the government cannot unjustly enrich itself at the expense of PIATCO and its investors."63 As between the
Republic and PIATCO, the judgment on the need to compensate PIATCO before the Government may take over
NAIA IPT III is already conclusive and beyond question.
Hence, in Gingoyon, this Court declared that:
This pronouncement contains the fundamental premises which permeate this decision of the Court.
Indeed, Agan, final and executory as it is, stands as governing law in this case, and any disposition of the
present petition must conform to the conditions laid down by the Court in its 2004 Resolution.
xxxx
The pronouncement in the 2004 Resolution is especially significant to this case in two aspects,
namely: (i) that PIATCO must receive payment of just compensation determined in accordance
with law and equity; and (ii) that the government is barred from taking over NAIA 3 until such
just compensation is paid. The parties cannot be allowed to evade the directives laid down by this
Court through any mode of judicial action, such as the complaint for eminent domain.
It cannot be denied though that the Court in the 2004 Resolution prescribed mandatory guidelines which
the Government must observe before it could acquire the NAIA 3 facilities. Thus, the actions of
respondent judge under review, as well as the arguments of the parties must, to merit affirmation, pass
the threshold test of whether such propositions are in accord with the 2004 Resolution.64
The Court then, in Gingoyon, directly addressed the issue on the appropriateness of the Republic's resort to
expropriation proceedings:
The Government has chosen to resort to expropriation, a remedy available under the law, which
has the added benefit of an integrated process for the determination of just compensation and the
payment thereof to PIATCO. We appreciate that the case at bar is a highly unusual case, whereby the
Government seeks to expropriate a building complex constructed on land which the State already owns.
There is an inherent illogic in the resort to eminent domain on property already owned by the State. At
first blush, since the State already owns the property on which NAIA 3 stands, the proper remedy should
be akin to an action for ejectment.
However, the reason for the resort by the Government to expropriation proceedings is
understandable in this case. The 2004 Resolution, in requiring the payment of just compensation prior
to the takeover by the Government of NAIA 3, effectively precluded it from acquiring possession or
ownership of the NAIA 3 through the unilateral exercise of its rights as the owner of the ground on
which the facilities stood. Thus, as things stood after the 2004 Resolution, the right of the Government
to take over the NAIA 3 terminal was preconditioned by lawful order on the payment of just
compensation to PIATCO as builder of the structures.

xxxx
The right of eminent domain extends to personal and real property, and the NAIA 3 structures, adhered
as they are to the soil, are considered as real property. The public purpose for the expropriation is also
beyond dispute. It should also be noted that Section 1 of Rule 67 (on Expropriation) recognizes the
possibility that the property sought to be expropriated may be titled in the name of the Republic of
the Philippines, although occupied by private individuals, and in such case an averment to that effect
should be made in the complaint. The instant expropriation complaint did aver that the NAIA 3 complex
"stands on a parcel of land owned by the Bases Conversion Development Authority, another agency of
[the Republic of the Philippines]."
Admittedly, eminent domain is not the sole judicial recourse by which the Government may have
acquired the NAIA 3 facilities while satisfying the requisites in the 2004 Resolution. Eminent domain
though may be the most effective, as well as the speediest means by which such goals may be
accomplished. Not only does it enable immediate possession after satisfaction of the requisites under
the law, it also has a built-in procedure through which just compensation may be ascertained. Thus, there
should be no question as to the propriety of eminent domain proceedings in this case.
Still, in applying the laws and rules on expropriation in the case at bar, we are impelled to apply or
construe these rules in accordance with the Court's prescriptions in the 2004 Resolution to achieve the
end effect that the Government may validly take over the NAIA 3 facilities. Insofar as this case is
concerned, the 2004 Resolution is effective not only as a legal precedent, but as the source of rights and
prescriptions that must be guaranteed, if not enforced, in the resolution of this petition. Otherwise, the
integrity and efficacy of the rulings of this Court will be severely diminished.65 (Emphasis ours.)
The Court, also in Gingoyon, categorically recognized PIATCO's ownership over the structures it had built in
NAIA IPT III, to wit:
There can be no doubt that PIATCO has ownership rights over the facilities which it had financed
and constructed. The 2004 Resolution squarely recognized that right when it mandated the payment of
just compensation to PIATCO prior to the takeover by the Government of NAIA 3. The fact that the
Government resorted to eminent domain proceedings in the first place is a concession on its part of
PIATCO's ownership. Indeed, if no such right is recognized, then there should be no impediment for the
Government to seize control of NAIA 3 through ordinary ejectment proceedings.
xxxx
Thus, the property subject of expropriation, the NAIA 3 facilities, are real property owned by
PIATCO. x x x (Emphasis ours.)66
It was further settled in Gingoyon that the expropriation proceedings shall be held in accordance with Republic
Act No. 8974,67 thus:
Unlike in the case of Rule 67, the application of Rep. Act No. 8974 will not contravene the 2004
Resolution, which requires the payment of just compensation before any takeover of the NAIA 3
facilities by the Government. The 2004 Resolution does not particularize the extent such payment must
be effected before the takeover, but it unquestionably requires at least some degree of payment to the
private property owner before a writ of possession may issue. The utilization of Rep. Act No. 8974
guarantees compliance with this bare minimum requirement, as it assures the private property owner the
payment of, at the very least, the proffered value of the property to be seized. Such payment of the
proffered value to the owner, followed by the issuance of the writ of possession in favor of the

Government, is precisely the schematic under Rep. Act No. 8974, one which facially complies with the
prescription laid down in the 2004 Resolution.
And finally, as to the determination of the amount due PIATCO, this Court ruled in Gingoyon that:
Under Rep. Act No. 8974, the Government is required to "immediately pay" the owner of the property
the amount equivalent to the sum of (1) one hundred percent (100%) of the value of the property based
on the current relevant zonal valuation of the [BIR]; and (2) the value of the improvements and/or
structures as determined under Section 7. As stated above, the BIR zonal valuation cannot apply in this
case, thus the amount subject to immediate payment should be limited to "the value of the improvements
and/or structures as determined under Section 7," with Section 7 referring to the "implementing rules
and regulations for the equitable valuation of the improvements and/or structures on the land." Under the
present implementing rules in place, the valuation of the improvements/structures are to be based using
"the replacement cost method." However, the replacement cost is only one of the factors to be
considered in determining the just compensation.
In addition to Rep. Act No. 8974, the 2004 Resolution in Agan also mandated that the payment of just
compensation should be in accordance with equity as well. Thus, in ascertaining the ultimate amount
of just compensation, the duty of the trial court is to ensure that such amount conforms not only to the
law, such as Rep. Act No. 8974, but to principles of equity as well.
Admittedly, there is no way, at least for the present, to immediately ascertain the value of the
improvements and structures since such valuation is a matter for factual determination. Yet Rep. Act No.
8974 permits an expedited means by which the Government can immediately take possession of the
property without having to await precise determination of the valuation. Section 4(c) of Rep. Act No.
8974 states that "in case the completion of a government infrastructure project is of utmost urgency and
importance, and there is no existing valuation of the area concerned, the implementing agency shall
immediately pay the owner of the property its proferred value, taking into consideration the standards
prescribed in Section 5 [of the law]." The "proffered value" may strike as a highly subjective standard
based solely on the intuition of the government, but Rep. Act No. 8974 does provide relevant standards
by which "proffered value" should be based, as well as the certainty of judicial determination of the
propriety of the proffered value.
In filing the complaint for expropriation, the Government alleged to have deposited the amount of P3
Billion earmarked for expropriation, representing the assessed value of the property. The making of the
deposit, including the determination of the amount of the deposit, was undertaken under the erroneous
notion that Rule 67, and not Rep. Act No. 8974, is the applicable law. Still, as regards the amount, the
Court sees no impediment to recognize this sum of P3 Billion as the proffered value under Section 4(b)
of Rep. Act No. 8974. After all, in the initial determination of the proffered value, the Government is not
strictly required to adhere to any predetermined standards, although its proffered value may later be
subjected to judicial review using the standards enumerated under Section 5 of Rep. Act No. 8974.68
Gingoyon constitutes as the law of the case for the expropriation proceedings, docketed as Case No. 040876CFM, before the RTC of Pasay City. Law of the case has been defined in the following manner
By "law of the case" is meant that "whatever is once irrevocably established as the controlling legal rule
or decision between the same parties in the same case continues to be the law of the case" so long as the
"facts on which such decision was predicated continue to be the facts of the case before the court" (21
C.J.S. 330). And once the decision becomes final, it is binding on all inferior courts and hence beyond
their power and authority to alter or modify (Kabigting vs. Acting Director of Prisons, G.R. L-15548,
October 30, 1962).69

A ruling rendered on the first appeal, constitutes the law of the case, and, even if erroneous, it may no longer be
disturbed or modified since it has become final long ago.70
The extensive excerpts from Gingoyon demonstrate and emphasize that the Court had already adjudged the
issues raised by Baterina, which he either conveniently overlooked or stubbornly refused to accept.
The general rule precluding the relitigation of material facts or questions which were in issue and adjudicated in
former action are commonly applied to all matters essentially connected with the subject matter of the litigation.
Thus, it extends to questions necessarily involved in an issue, and necessarily adjudicated, or necessarily
implied in the final judgment, although no specific finding may have been made in reference thereto, and
although such matters were directly referred to in the pleadings and were not actually or formally presented.
Under this rule, if the record of the former trial shows that the judgment could not have been rendered without
deciding the particular matter, it will be considered as having settled that matter as to all future actions between
the parties and if a judgment necessarily presupposes certain premises, they are as conclusive as the judgment
itself. Reasons for the rule are that a judgment is an adjudication on all the matters which are essential to
support it, and that every proposition assumed or decided by the court leading up to the final conclusion and
upon which such conclusion is based is as effectually passed upon as the ultimate question which is finally
solved.71
Since the issues Baterina wishes to raise as an intervenor in Case No. 04-0876CFM were already settled with
finality in both Agan and Gingoyon, then there is no point in still allowing his intervention. His Petition-inIntervention would only be a relitigation of matters that had been previously adjudicated by no less than the
Highest Court of the land. And, in no manner can the RTC of Pasay City in Case No. 04-0876CFM grant the
reliefs he prayed for without departing from or running afoul of the final and executory Decisions of this Court
in Agan and Gingoyon.
While it is true that when this Court, in a Resolution dated 1 February 2006, dismissed the Motions for
Intervention in Gingoyon, including that of Baterina, it also observed that the interests of the movants-inintervention may be duly litigated in proceedings which are extant before the lower courts. This does not mean,
however, that the said movants-in-interest were assured of being allowed as intervenors or that the reliefs they
sought as such shall be granted by the trial courts. The fate of their intervention still rests on their interest or
legal standing in the case and the merits of their arguments.
WHEREFORE, in view of the foregoing:
a. The Petition in G.R. No. 169914 is hereby DISMISSED for lack of merit; and
b. The Petition in G.R. No. 174166 is hereby likewise DISMISSED for being moot and academic.
No costs.
SO ORDERED.
G.R. No. 189239

November 24, 2010

SPOUSES LETICIA & JOSE ERVIN ABAD, SPS. ROSARIO AND ERWIN COLLANTES, SPS.
RICARDO AND FELITA ANN, SPS. ELSIE AND ROGER LAS PIAS, LINDA LAYDA, RESTITUTO
MARIANO, SPS. ARNOLD AND MIRIAM MERCINES, SPS. LUCITA AND WENCESLAO A.
RAPACON, SPS. ROMEO AND EMILYN HULLEZA, LUZ MIPANTAO, SPS. HELEN AND
ANTHONY TEVES, MARLENE TUAZON, SPS. ZALDO AND MIA SALES, SPS. JOSEFINA AND

JOEL YBERA, SPS. LINDA AND JESSIE CABATUAN, SPS. WILMA AND MARIO ANDRADA, SPS.
RAYMUNDO AND ARSENIA LELIS, FREDY AND SUSANA PILONEO, Petitioners,
vs.
FIL-HOMES REALTY and DEVELOPMENT CORPORATION and MAGDIWANG REALTY
CORPORATION, Respondents.
DECISION
CARPIO MORALES, J.:
Fil-Homes Realty and Development Corporation and Magdiwang Realty Corporation (respondents), co-owners
of two lots situated in Sucat, Paraaque City and covered by Transfer Certificates of Title Nos. 21712 and
21713, filed a complaint for unlawful detainer on May 7, 2003 against above-named petitioners before the
Paraaque Metropolitan Trial Court (MeTC).
Respondents alleged that petitioners, through tolerance, had occupied the subject lots since 1980 but ignored
their repeated demands to vacate them.
Petitioners countered that there is no possession by tolerance for they have been in adverse, continuous and
uninterrupted possession of the lots for more than 30 years; and that respondents predecessor-in-interest,
Pilipinas Development Corporation, had no title to the lots. In any event, they contend that the question of
ownership must first be settled before the issue of possession may be resolved.
During the pendency of the case or on June 30, 2004, the City of Paraaque filed expropriation proceedings
covering the lots before the Regional Trial Court of Paraaque with the intention of establishing a socialized
housing project therein for distribution to the occupants including petitioners. A writ of possession was
consequently issued and a Certificate of Turn-over given to the City.
Branch 77 of the MeTC, by Decision of March 3, 2008, rendered judgment in the unlawful detainer case against
petitioners, disposing as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants Leticia and
Ervin Abad et. als. ordering the latter and all persons claiming rights under them to VACATE and
SURRENDER possession of the premises (Lots covered by TCT NOS. (71065) 21712 and (71066) 21713
otherwise known as Purok I Silverio Compound, Barangay San Isidro, Paraaque City to plaintiff and to PAY
the said plaintiff as follows:
1. The reasonable compensation in the amount of P20,000.00 a month commencing November 20, 2002
and every month thereafter until the defendants shall have finally vacated the premises and surrender
peaceful possession thereof to the plaintiff;
2. P20,000.00 as and for attorneys fees, and finally
3. Costs of suit.
SO ORDERED.1 (emphasis in the original)

The MeTC held that as no payment had been made to respondents for the lots, they still maintain ownership
thereon. It added that petitioners cannot claim a better right by virtue of the issuance of a Writ of Possession for
the project beneficiaries have yet to be named.
On appeal, the Regional Trial Court (RTC), by Decision of September 4, 2008,2 reversed the MeTC decision
and dismissed respondents complaint in this wise:
x x x The court a quo ruled that the case filed by plaintiffs (respondents herein) is unlawful detainer as shown
by the allegations of the Complaint. The ruling of the court a quo is not accurate. It is not the allegations of the
Complaint that finally determine whether a case is unlawful detainer, rather it is the evidence in the case.
Unlawful detainer requires the significant element of "tolerance". Tolerance of the occupation of the property
must be present right from the start of the defendants possession. The phrase "from the start of defendants
possession" is significant. When there is no "tolerance" right from the start of the possession sought to be
recovered, the case of unlawful detainer will not prosper.3 (emphasis in the original; underscoring supplied)
The RTC went on to rule that the issuance of a writ of possession in favor of the City bars the continuation of
the unlawful detainer proceedings, and since the judgment had already been rendered in the expropriation
proceedings which effectively turned over the lots to the City, the MeTC has no jurisdiction to "disregard
the . . . final judgment and writ of possession" due to non-payment of just compensation:
The Writ of Possession shows that possession over the properties subject of this case had already been given to
the City of Paraaque since January 19, 2006 after they were expropriated. It is serious error for the court a
quo to rule in the unlawful detainer case that Magdiwang Realty Corporation and Fil-Homes Realty and
Development Corporation could still be given possession of the properties which were already
expropriated in favor of the City of Paraaque.
There is also another serious lapse in the ruling of the court a quo that the case for expropriation in the Regional
Trial Court would not bar, suspend or abate the ejectment proceedings. The court a quo had failed to consider
the fact that the case for expropriation was already decided by the Regional Trial Court, Branch 196 way back
in the year 2006 or 2 years before the court a quo rendered its judgment in the unlawful detainer case in the year
2008. In fact, there was already a Writ of Possession way back in the year 1996 (sic) issued in the expropriation
case by the Regional Trial Court, Branch 196. The court a quo has no valid reason to disregard the said
final judgment and the writ of possession already issued by the Regional Trial Court in favor of the City
of Paraaque and against Magdiwang Realty Corporation and Fil-Homes Realty Development
Corporation and make another judgment concerning possession of the subject properties contrary to the
final judgment of the Regional Trial Court, Branch 196.4 (emphasis in the original)
Before the Court of Appeals where respondents filed a petition for review, they maintained that respondents
"act of allowing several years to pass without requiring [them] to vacate nor filing an ejectment case against
them amounts to acquiescence or tolerance of their possession."5
By Decision of May 27, 2009,6 the appellate court, noting that petitioners did not present evidence to rebut
respondents allegation of possession by tolerance, and considering petitioners admission that they commenced
occupation of the property without the permission of the previous owner Pilipinas Development Corporation

 as indicium of tolerance by respondents predecessor-in-interest, ruled in favor of respondents. Held the

appellate court:
Where the defendants entry upon the land was with plaintiffs tolerance from the date and fact of entry,
unlawful detainer proceedings may be instituted within one year from the demand on him to vacate upon
demand. The status of such defendant is analogous to that of a tenant or lessee, the term of whose lease, has
expired but whose occupancy is continued by the tolerance of the lessor. The same rule applies where the
defendant purchased the house of the former lessee, who was already in arrears in the payment of rentals, and
thereafter occupied the premises without a new lease contract with the landowner.7
Respecting the issuance of a writ of possession in the expropriation proceedings, the appellate court, citing
Republic v. Gingoyon,8 held the same does not signify the completion of the expropriation proceedings. Thus it
disposed:
WHEREFORE, premises considered, the instant Petition is GRANTED. The assailed Decision of the Court a
quo is REVOKED and SET ASIDE. The Decision of the Metropolitan Trial Court dated March 3, 2008 is
hereby REINSTATED with MODIFICATION [by] deleting the award for attorneys fees.
SO ORDERED. (underscoring supplied)
Petitioners motion for reconsideration was denied by Resolution dated August 26, 2009, hence, the filing of the
present petition for review.
The petition fails.
In the exercise of the power of eminent domain, the State expropriates private property for public use upon
payment of just compensation. A socialized housing project falls within the ambit of public use as it is in
furtherance of the constitutional provisions on social justice.9
As a general rule, ejectment proceedings, due to its summary nature, are not suspended or their resolution held
in abeyance despite the pendency of a civil action regarding ownership.
Section 1 of Commonwealth Act No. 53810 enlightens, however:
Section 1. When the Government seeks to acquire, through purchase or expropriation proceedings, lands
belonging to any estate or chaplaincy (cappellania), any action for ejectment against the tenants occupying said
lands shall be automatically suspended, for such time as may be required by the expropriation proceedings or
the necessary negotiations for the purchase of the lands, in which latter case, the period of suspension shall not
exceed one year.
To avail himself of the benefits of the suspension, the tenants shall pay to the landowner the current rents as
they become due or deposit the same with the court where the action for ejectment has been instituted.
(emphasis and underscoring supplied)
Petitioners did not comply with any of the acts mentioned in the law to avail of the benefits of the suspension.
They nevertheless posit that since the lots are the subject of expropriation proceedings, respondents can no

longer assert a better right of possession; and that the City Ordinance authorizing the initiation of expropriation
proceedings designated them as beneficiaries of the lots, hence, they are entitled to continue staying there.
Petitioners position does not lie.
The exercise of expropriation by a local government unit is covered by Section 19 of the Local Government
Code (LGC):
SEC. 19. Eminent Domain. A local government unit may, through its chief executive and acting pursuant to an
ordinance, exercise the power of eminent domain for public use, or purpose, or welfare for the benefit of the
poor and the landless, upon payment of just compensation, pursuant to the provisions of the Constitution and
pertinent laws: Provided, however, That the power of eminent domain may not be exercised unless a valid and
definite offer has been previously made to the owner, and such offer was not accepted: Provided, further, That
the local government unit may immediately take possession of the property upon the filing of the expropriation
proceedings and upon making a deposit with the proper court of at least fifteen percent (15%) of the fair market
value of the property based on the current tax declaration of the property to be expropriated: Provided, finally,
That the amount to be paid for the expropriated property shall be determined by the proper court, based on the
fair market value of the property.
Lintag v. National Power Corporation11 clearly outlines the stages of expropriation, viz:
Expropriation of lands consists of two stages:
The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent
domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if
not of dismissal of the action, "of condemnation declaring that the plaintiff has a lawful right to take the
property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of
just compensation to be determined as of the date of the filing of the complaint x x x.
The second phase of the eminent domain action is concerned with the determination by the court of "the just
compensation for the property sought to be taken." This is done by the court with the assistance of not more
than three (3) commissioners x x x .lavvphi1
It is only upon the completion of these two stages that expropriation is said to have been completed. The
process is not complete until payment of just compensation. Accordingly, the issuance of the writ of possession
in this case does not write finis to the expropriation proceedings. To effectuate the transfer of ownership, it is
necessary for the NPC to pay the property owners the final just compensation.12 (emphasis and underscoring
supplied)
In the present case, the mere issuance of a writ of possession in the expropriation proceedings did not transfer
ownership of the lots in favor of the City. Such issuance was only the first stage in expropriation. There is even
no evidence that judicial deposit had been made in favor of respondents prior to the Citys possession of the
lots, contrary to Section 19 of the LGC.

Respecting petitioners claim that they have been named beneficiaries of the lots, the city ordinance authorizing
the initiation of expropriation proceedings does not state so.13 Petitioners cannot thus claim any right over the
lots on the basis of the ordinance.
Even if the lots are eventually transferred to the City, it is non sequitur for petitioners to claim that they are
automatically entitled to be beneficiaries thereof. For certain requirements must be met and complied with
before they can be considered to be beneficiaries.
In another vein, petitioners posit that respondents failed to prove that their possession is by mere tolerance. This
too fails. Apropos is the ruling in Calubayan v. Pascual:14
In allowing several years to pass without requiring the occupant to vacate the premises nor filing an action to
eject him, plaintiffs have acquiesced to defendants possession and use of the premises. It has been held that a
person who occupies the land of another at the latters tolerance or permission, without any contract between
them, is necessarily bound by an implied promise that he will vacate upon demand, failing which a summary
action for ejectment is the proper remedy against them. The status of the defendant is analogous to that of a
lessee or tenant whose term of lease has expired but whose occupancy continued by tolerance of the owner. In
such a case, the unlawful deprivation or withholding of possession is to be counted from the date of the demand
to vacate. (emphasis and underscoring supplied)
Respondents bought the lots from Pilipinas Development Corporation in 1983. They stepped into the shoes of
the seller with respect to its relationship with petitioners. Even if early on respondents made no demand or filed
no action against petitioners to eject them from the lots, they thereby merely maintained the status quo
allowed petitioners possession by tolerance.
WHEREFORE, the petition for review is DENIED.
G.R. No. 193936

December 11, 2013

NATIONAL POWER CORPORATION, Petitioner,

vs.
YCLA SUGAR DEVELOPMENT CORPORATION, Respondent.
DECISION
REYES, J.:
Before this Court is a petition for review on certiorari1under Rule 45 of the Rules of Court seeking to annul and
set aside the Decision2 dated September 23, 2010 of the Court of Appeals (CA) in CA-G.R. CV No. 86508,
which affirmed with modification the Decision3 dated May 12, 2005 of the Regional Trial Court (RTC) of
Calapan City, Oriental Mindoro, Branch 40, in Civil Case No. R-4600.
The Facts

Petitioner National Power Corporation (NPC) is a government owned and controlled corporation created for the
purpose of undertaking the development of hydroelectric power throughout the Philippines. NPC is thus
authorized to exercise the power of eminent domain to carry out the said purpose.4
Respondent YCLA Sugar Development Corporation (YCLA) is the registered owner of three parcels of land
situated in Puerto Galera, Oriental Mindoro, covered by Transfer Certificates of Title Nos. T-5209, T-21280 and
T-78583.
In order to complete its 69 KV Calapan-Mamburao Island Grid Project in Puerto Galera, Oriental Mindoro,
NPC had to construct transmission lines that would traverse several private properties, including the said parcels
of land owned by YCLA.
Accordingly, on December 2, 1997, NPC filed a Complaint5 for expropriation with the RTC against YCLA and
several other individuals. The NPC sought the expropriation of a portion of the parcels of land owned by the
said defendants for the acquisition of an easement of right-of-way over areas that would be affected by the
construction of transmission lines. The portion of YCLAs properties that would be affected by the construction
of NPCs transmission lines has an aggregate area of 5,846 square meters.
YCLA filed its Answer6 dated July 9, 1998, alleging that the Complaint should be dismissed outright due to
NPCs failure to allege the public use for the intended expropriation of its properties.
On April 30, 1999, the parties moved, inter alia, for the constitution of a Board of Commissioners to be
appointed by the RTC to determine the reasonable amount of just compensation to be paid by the NPC. Thus, on
even date, the RTC issued an order terminating the pre-trial conference and directing the constitution of a Board
of Commissioners, which would submit a report and recommendation as to the reasonable amount of just
compensation for the properties sought to be expropriated.
Meanwhile, on June 4, 1999, the RTC, acting on NPCs urgent ex- parte motion, issued a writ of possession
placing NPC in possession of the properties sought to be expropriated.
On May 2, 2001, the Board of Commissioners submitted its Report,7 which fixed the amount of just
compensation of the subject properties at P500.00 per sq m. YCLA objected to the amount recommended by the
Board of Commissioners, claiming that the amount of just compensation should be fixed at P900.00 per sq m
considering the improvements in their properties.
On October 19, 2001, the RTC issued an Order directing YCLA to submit its written manifestation, together
with supporting documents, on its position on the proper valuation of the subject properties. NPC was likewise
given 15 days to comment thereon. Trial on the determination of the reasonable amount of just compensation
ensued thereafter.
Consequently, YCLA filed a motion asking the RTC to direct the Board of Commissioners to conduct an ocular
inspection over the subject properties and, thereafter, amend/revise the Board of Commissioners Report dated
May 2, 2001. YCLAs motion was granted by the RTC on July 25, 2003.
Meanwhile, on November 25, 2002, the RTC rendered a Partial Decision as regards the amount of just
compensation that would be paid by the NPC to the other defendants.

On September 15, 2003, the Board of Commissioners submitted its second Report,8 which fixed the just
compensation of the subject properties at P1,000.00 per sq m. The Board of Commissioners Report dated
September 15, 2003, in part, reads:
The undersigned secured from the office of the Provincial Assessor the actual appraised value per square meter
x x x of the Agricultural Land subject matter of the case which is [P11.50] per square meter[.] [H]owever, the
prevailing market value is Five Hundred Pesos ([P]500.00) to One Thousand Five Hundred Pesos ([P]1,500.00)
per square meters x x x, per actual sale and opinion value of reliable persons x x x.
In view thereof, the undersigned is submitting this report to the Honorable Court that the amount of One
Thousand Pesos ([P]1,000.00) per square meter should be the basis in the computation of the price per square
meter of the land subject matter of the instant case, justified by its location on [a] strategic place and the
consequential damages to the whole properties of the defendants because the plaintiff occupied the front portion
along the highway.9
On May 12, 2005, the RTC rendered a Decision,10 which adopted the report and recommendation of the Board
of Commissioners, viz:
ACCORDINGLY, judgment is hereby rendered directing the plaintiff National Power Corporation to pay herein
defendant YCLA the total amount of [P]5,786,000.00 representing the value of the expropriated lands owned by
the said defendant and its 26 molave trees which were cut down to make way for the plaintiff[s] project, with
legal interest from the time the plaintiff had actually took possession of the subject properties on 19 April 1999
until full payment has been made.
SO ORDERED.11
The RTC pointed out that the Board of Commissioners Report dated May 2, 2001, which recommended that
the amount of just compensation be fixed at P500.00 per sq m, was arrived at without conducting an ocular
inspection of the subject properties. That, upon YCLAs request, the Board of Commissioners subsequently
conducted an ocular inspection of the subject properties, which prompted them to revise their earlier
recommendation.
Unperturbed, NPC appealed the RTC Decision dated May 12, 2005 to the CA, alleging that the RTC erred in
relying on the recommendation of the Board of Commissioners as regards the amount of just compensation.
NPC claimed that the amount of P1,000.00 per sq m recommended by the Board of Commissioners as the
reasonable amount of just compensation, which was adopted by the RTC, is too excessive considering that the
subject properties were barren and undeveloped agricultural lands at the time it instituted the action for
expropriation.
On September 23, 2010, the CA rendered the Decision12 which affirmed with modification the RTC Decision
dated May 12, 2005, thus:
WHEREFORE, the assailed Decision is AFFIRMED with the MODIFICATION only in so far as the value
of just compensation for the property involved is concerned. Resultantly, the herein appellant is ordered to
pay YCLA Sugar Development Corporation the award of [P]900.00 per square meter, as and by way of just
compensation for the expropriated property. Costs against the herein appellant.

SO ORDERED.13
The CA held that the RTCs determination of the amount of just compensation was reasonable notwithstanding
that it was merely based on the Report submitted by the Board of Commissioners. The RTC pointed out that
there was no showing that the said Report was tainted with irregularity, fraud or bias. Nevertheless, the CA
modified the award rendered by the RTC, by fixing the amount of just compensation to P900.00 per sq m
instead of P1,000.00 per sq m, since YCLA only sought an award of P900.00 per sq m as just compensation for
the subject properties in the proceedings before the RTC.
The Issue
Essentially, the issue presented to the Court for resolution is whether the RTC and the CA had sufficient basis in
arriving at the questioned amount of just compensation of the subject properties.
The NPC posits that the Board of Commissioners Report dated September 15, 2003 lacks factual basis; that
both the RTC and the CA erred in giving credence to the Report dated September 15, 2003 as to the
recommended amount of just compensation for the subject properties. NPC maintains that the amount of
P900.00 per sq m that was fixed by the CA as just compensation is excessive considering that the subject
properties were barren and undeveloped agricultural lands at the time it filed the complaint for expropriation.
Thus, NPC prayed that the Court fix the amount of just compensation for the subject properties at P500.00 per
sq m pursuant to the Board of Commissioners Report dated May 2, 2001.
On the other hand, YCLA contends that the RTC and the CA aptly relied on the Board of Commissioners
Report dated September 15, 2003, pointing out that the Board of Commissioners was in the best position to
determine the amount of just compensation considering that its members undertook intensive ocular inspection
of the subject properties.
The Courts Ruling
The petition is partly meritorious.
In expropriation proceedings, just compensation is defined as the full and fair equivalent of the property taken
from its owner by the expropriator. The measure is not the takers gain, but the owners loss. The word "just" is
used to intensify the meaning of the word "compensation" and to convey thereby the idea that the equivalent to
be rendered for the property to be taken shall be real, substantial, full and ample. The constitutional limitation of
"just compensation" is considered to be a sum equivalent to the market value of the property, broadly defined as
the price fixed by the seller in open market in the usual and ordinary course of legal action and competition; or
the fair value of the property; as between one who receives and one who desires to sell it, fixed at the time of
the actual taking by the government.14
It is settled that the amount of just compensation is to be ascertained as of the time of the taking, which usually
coincides with the commencement of the expropriation proceedings. Where the institution of the action
precedes entry into the property, the amount of just compensation is to be ascertained as of the time of the filing
of the complaint.15

In this case, in arriving at the amount of just compensation, both the RTC and the CA relied heavily on the
Board of Commissioners Report dated September 15, 2003, which, in turn, was arrived at after conducting an
ocular inspection of the subject properties on August 27, 2003. However, the Board of Commissioners
recommendation as to the amount of just compensation was based on the prevailing market value of the subject
properties in 2003. What escaped the attention of the lower courts is that the prevailing market value of the
subject properties in 2003 cannot be used to determine the amount of just compensation considering that the
Complaint for expropriation was filed by NPC on December 2, 1997.
Further, the Court notes that the Board of Commissioners, in its Report dated September 15, 2003, merely
alleged that its members arrived at the amount of P1,000.00 per sq m as just compensation for the subject
properties based on actual sales, presumably of surrounding parcels of land, and on the opinion of "reliable
persons" that were interviewed. However, the Report dated September 15, 2003 is not supported by any
corroborative documents such as sworn declarations of the "reliable persons" that were supposedly interviewed.
The Court has consistently ruled that just compensation cannot be arrived at arbitrarily; several factors must be
considered such as, but not limited to, acquisition cost, current market value of like properties, tax value of the
condemned property, its size, shape, and location. But before these factors can be considered and given weight,
the same must be supported by documentary evidence.16 The amount of just compensation could only be
attained by using reliable and actual data as bases for fixing the value of the condemned property. A
commissioners report of land prices which is not based on any documentary evidence is manifestly hearsay and
should be disregarded by the court.17
Under the Rules of Court, any evidence whether oral or documentary is hearsay if its probative value is not
based on the personal knowledge of the witness, but on that of some other person who is not on the witness
stand.18
A commissioners report of land prices is considered as evidence in the determination of the amount of just
compensation due the land owner in expropriation cases. The recommended amount of just compensation
contained in the commissioners report of land prices, in turn, is based on various factors such as the fair market
value of the property, the value of like properties. Thus, it becomes imperative that the commissioners report of
land prices be supported by pertinent documents, which impelled the commissioners to arrive at the
recommended amount for the condemned properties, to aid the court in its determination of the amount of just
compensation. Otherwise, the commissioners report becomes hearsay and should thus not be considered by the
court.
The trial court, in expropriation cases, may accept or reject, whether in whole or in part, the report submitted by
the Board of Commissioners, which is merely advisory and recommendatory in character. It may also recommit
the report or set aside the same and appoint new commissioners.19 In this case, the lower courts gave full faith
and credence to the Board of Commissioners' Report dated September 15, 2003 notwithstanding that it was not
supported by any documentary evidence.
Considering that the legal basis for the determination of just compensation for the subject properties is
insufficient, the respective Decisions of the RTC and the CA should be set aside.
Nevertheless, the Court cannot fix the amount of just compensation for the subject properties at P500.00 per sq
m pursuant to the Board of Commissioners' Report dated May 2, 2001. The said Report suffers from the same

infirmity as the Report dated September 15, 2003 - it is unsupported by any documentary evidence and its
recommendation as regards the amount of just compensation are based on the prevailing market value of the
subject properties in 2001.
WHEREFORE, in consideration of the foregoing disquisitions, the instant petition is PARTIALLY
GRANTED. The Decision dated September 23, 2010 of the Court of Appeals in CA-G.R. CV No. 86508 and
the Decision dated May 12, 2005 of the Regional Trial Court of Calapan City, Oriental Mindoro, Branch 40, in
Civil Case No. R-4600 are hereby SET ASIDE. This case is remanded to the trial court for the proper
determination of just compensation, in conformity with this Decision.
SO ORDERED.
FORECLOSURE OF REAL ESTATE MORTGAGE
G.R. No. 198800

December 11, 2013

JOSE T. RAMIREZ, Petitioner,

vs.
THE MANILA BANKING CORPORATION, Respondent.
DECISION
VILLARAMA, JR., J.:
We have consistently held that unless the parties stipulate, personal notice to the mortgagor in extrajudicial
foreclosure proceedings is not necessary because Section 31 of Act No. 31352 only requires the posting of the
notice of sale in three public places and the publication of that notice in a newspaper of general circulation.3
Before us is a petition for review on certiorari under Rule 45 of the Decision4 dated November 26, 2010 and
Resolution5 dated September 28, 2011 of the Court of Appeals (CA) in CA-G.R. CV No. 80616.
The facts of the case are as follows:
Petitioner Jose T. Ramirez mortgaged two parcels of land located at Bayanbayanan, Marikina City and covered
by Transfer Certificate of Title (TCT) Nos. N-107226 and N-230337 in favor of respondent The Manila
Banking Corporation to secure his P265,000 loan. The real estate mortgage provides that all correspondence
relative to the mortgage including notifications of extrajudicial actions shall be sent to petitioner Ramirez at his
given address, to wit:
N) All correspondence relative to this MORTGAGE, including demand letters, summons, subpoenas or
notifications of any judicial or extrajudicial actions shall be sent to the MORTGAGOR at the address given
above or at the address that may hereafter be given in writing by the MORTGAGOR to the MORTGAGEE, and
the mere act of sending any correspondence by mail or by personal delivery to the said address shall be valid
and effective notice to the MORTGAGOR for all legal purposes and the fact that any communication is not
actually received by the MORTGAGOR, or that it has been returned unclaimed to the MORTGAGEE, or that

no person was found at the address given, or that the address is fictitious or cannot be located, shall not excuse
or relieve the MORTGAGOR from the effects of such notice.8
Respondent filed a request for extrajudicial foreclosure of real estate mortgage9 before Atty. Hipolito Saez on
the ground that Ramirez failed to pay his loan despite demands. During the auction sale on September 8, 1994,
respondent was the only bidder for the mortgaged properties.10 Thereafter, a certificate of sale11 was issued in
its favor as the highest bidder.
In 2000, respondent demanded that Ramirez vacate the properties.12
Ramirez sued respondent for annulment of sale and prayed that the certificate of sale be annulled on the ground,
among others, that paragraph N of the real estate mortgage was violated for he was not notified of the
foreclosure and auction sale.13
In its answer, respondent claimed that the foreclosure proceedings were valid.
The trial court ruled that the extrajudicial foreclosure proceedings were null and void and the certificate of sale
is invalid. The fallo of the Decision14 dated June 30, 2003 of the Regional Trial Court, Branch 193, Marikina
City, in Civil Case No. 2001-701-MK reads:
Premises considered, judgment is hereby rendered in favor of the plaintiff [Ramirez] and against the defendant
[bank], whose counterclaim is hereby dismissed, declaring the Certificate of Sale of the properties covered by
TCT Nos. N-10722 and N-23033, as null and void and ordering the defendant [bank] to pay the following:
1) One Hundred Thousand (P100,000.00) Pesos as moral damages;
2) Fifty Thousand (P50,000.00) Pesos as exemplary damages;
3) Fifty Thousand (P50,000.00) Pesos as Attorneys fees; and
4) Costs of suit.
SO ORDERED.15
The CA reversed the trial courts decision and ruled that absence of personal notice of foreclosure to Ramirez as
required by paragraph N of the real estate mortgage is not a ground to set aside the foreclosure sale.16 The fallo
of the assailed CA Decision reads:
WHEREFORE, the appealed decision dated June 30, 2003 of the Regional Trial Court of Marikina, Branch
193 is hereby REVERSED and SET ASIDE, and a new one is entered AFFIRMING the validity of the
Certificate of Sale of the properties covering TCT Nos. N-10722 and N-23033.
SO ORDERED.17
Ramirezs motion for reconsideration was denied in the assailed CA Resolution.
Hence, this petition raising a lone issue:

What is the legal effect of violating paragraph N of the deed of mortgage which requires personal notice
to the petitioner-mortgagor by the respondent-mortgagee bank?18
Ramirez insists that the auction sale as well as the certificate of sale issued to respondent are null and void since
no notice of the foreclosure and sale by public auction was personally given to him in violation of paragraph N
of the real estate mortgage which requires personal notice to him of said extrajudicial foreclosure.19
In its comment, respondent counters that under Section 3 of Act No. 3135, no personal notice to the mortgagor
is required in case of a foreclosure sale. The bank claims that paragraph N of the real estate mortgage does not
impose an additional obligation to it to provide personal notice to the mortgagor Ramirez.20
We agree with Ramirez and grant his petition.
The CA erred in ruling that absence of notice of extrajudicial foreclosure sale to Ramirez as required by
paragraph N of the real estate mortgage will not invalidate the extrajudicial foreclosure sale. We rule that when
respondent failed to send the notice of extrajudicial foreclosure sale to Ramirez, it committed a contractual
breach of said paragraph N sufficient to render the extrajudicial foreclosure sale on September 8, 1994 null and
void. Thus, we reverse the assailed CA Decision and Resolution.
In Carlos Lim, et al. v. Development Bank of the Philippines,21 we held that unless the parties stipulate,
personal notice to the mortgagor in extrajudicial foreclosure proceedings is not necessary because Section 3 of
Act No. 3135 only requires the posting of the notice of sale in three public places and the publication of that
notice in a newspaper of general circulation. In this case, the parties stipulated in paragraph N of the real estate
mortgage that all correspondence relative to the mortgage including notifications of extrajudicial actions shall
be sent to mortgagor Ramirez at his given address. Respondent had no choice but to comply with this
contractual provision it has entered into with Ramirez. The contract is the law between them. Hence, we cannot
agree with the bank that paragraph N of the real estate mortgage does not impose an additional obligation upon
it to provide personal notice of the extrajudicial foreclosure sale to the mortgagor Ramirez.
As we explained in Metropolitan Bank v. Wong,22 the banks violation of paragraph N of the real estate
mortgage is sufficient to invalidate the extrajudicial foreclosure sale:
[A] contract is the law between the parties and absent any showing that its provisions are wholly or in part
contrary to law, morals, good customs, public order, or public policy, it shall be enforced to the letter by the
courts. Section 3, Act No. 3135 reads:
"Sec. 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least three public
places of the municipality or city where the property is situated, and if such property is worth more than four
hundred pesos, such notice shall also be published once a week for at least three consecutive weeks in a
newspaper of general circulation in the municipality and city."
The Act only requires (1) the posting of notices of sale in three public places, and (2) the publication of the
same in a newspaper of general circulation. Personal notice to the mortgagor is not necessary. Nevertheless, the
parties to the mortgage contract are not precluded from exacting additional requirements. In this case, petitioner
and respondent in entering into a contract of real estate mortgage, agreed inter alia:

"all correspondence relative to this mortgage, including demand letters, summonses, subpoenas, or notifications
of any judicial or extra-judicial action shall be sent to the MORTGAGOR."
Precisely, the purpose of the foregoing stipulation is to apprise respondent of any action which petitioner might
take on the subject property, thus according him the opportunity to safeguard his rights. When petitioner failed
to send the notice of foreclosure sale to respondent, he committed a contractual breach sufficient to render the
foreclosure sale on November 23, 1981 null and void.
We reiterated the Wong ruling in Global Holiday Ownership Corporation v. Metropolitan Bank and Trust
Company23 and recently, in Carlos Lim, et al. v. Development Bank of the Philippines.24 Notably, all these
cases involved provisions similar to paragraph N of the real estate mortgage in this case.
On another matter, we note that the trial court awarded moral and exemplary damages, attorneys fees and costs
of suit to Ramirez. In granting said monetary awards, the trial court noted that if the bank followed strictly the
procedure in the extrajudicial foreclosure of the real estate mortgage and had not filed prematurely an unlawful
detainer case against Ramirez, he would not have been forced to litigate and incur expenses.25
We delete aforesaid monetary awards, except the award of costs of suit. Nothing supports the trial courts award
of moral damages. There was no testimony of any physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury26 suffered by
Ramirez. The award of moral damages must be anchored on a clear showing that Ramirez actually experienced
mental anguish, besmirched reputation, sleepless nights, wounded feelings or similar injury.27 Ramirezs
testimony28 is also wanting as to the moral damages he suffered.
Similarly, no exemplary damages can be awarded since there is no basis for the award of moral damages and
there is no award of temperate, liquidated or compensatory damages.29 Exemplary damages are imposed by
way of example for the public good, in addition to moral, temperate, liquidated or compensatory damages.30
We likewise delete the trial courts award of attorneys fees since the trial court failed to state in the body of its
decision the factual or legal reasons for said award.31
Indeed, even the instant petition32 does not offer any supporting fact or argument for us to affirm the award of
moral and exemplary damages and attorneys fees.
However, we agree, with the trial courts award of costs of suit to Ramirez. Costs shall be allowed to the
prevailing party as a matter of course unless otherwise provided in the Rules of Court.33 These costs Ramirez
may recover are those stated in Section 10, Rule 142 of the Rules of Court.34 For instance, Ramirez may
recover the lawful fees he paid in docketing his action for annulment of sale before the trial court. We add
thereto the amount of P3,530 or the amount of docket and lawful fees paid by Ramirez for filing this petition
before this Court.35 We deleted the award of moral and exemplary damages; hence, the restriction under
Section 7, Rule 142 of the Rules of Court36 would have prevented Ramirez to recover any cost of suit. But we
certify, in accordance with said Section 7, that Ramirezs action for annulment of sale involved a substantial and
important right such that he is entitled to an award of costs of suit. Needless to stress, the purpose of paragraph
N of the real estate mortgage is to apprise the mortgagor, Ramirez, of any action that the mortgagee-bank might
take on the subject properties, thus according him the opportunity to safeguard his rights. 37

WHEREFORE, we GRANT the petition, REVERSE and SET ASIDE the Decision dated November 26, 2010
and Resolution dated September 28, 2011 of the Court of Appeals in CA-G.R. CV No. 80616. The extrajudicial
foreclosure proceedings and auction sale conducted by Atty. Hipolito Safiez on September 8, 1994 and the
Certificate of Sale over the mortgaged properties covered by TCT Nos. N-10722 and N-23033, issued in favor
of respondent The Manila Banking Corporation, are hereby DECLARED NULL and VOID.
Costs against respondent The Manila Banking Corporation.
SO ORDERED.
G.R. No. 184045

January 22, 2014

SPOUSES NICASIO C. MARQUEZ AND ANITA J. MARQUEZ, Petitioners,

vs.
SPOUSES CARLITO ALINDOG AND CARMEN ALINDOG, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated February 29, 2008 and Resolution3
dated August 6, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 97744 finding no grave abuse of
discretion on the part of the Regional Trial Court of Tagaytay City, Branch 18 (RTC) in issuing the Orders dated
November 14, 20054 and January 17, 2007[[5 ]] in SCA No. TG-05-2521. Based on these orders, a writ of
preliminary injunction was issued against petitioners-spouses Nicasio C. Marquez and Anita J. Marquez (Sps.
Marquez), enjoining them from taking possession of the property subject of this case despite the consolidation
of their title over the same.
The Facts
Records show that sometime in June 1998, petitioner Anita J. Marquez (Anita) extended a loan in the amount of
P500,000.00 to a certain Benjamin Gutierrez (Gutierrez). As security therefor, Gutierrez executed a Deed of
Real Estate Mortgage6 dated June 16, 1998 over a parcel of land located in Tagaytay City with an area of 660
square meters, more or less, covered by Transfer Certificate of Title (TCT) No. T-134437 (subject property),
registered under the name of Benjamin A. Gutierrez, married to Liwanag Camerin (Sps. Gutiererez). The
mortgage was duly annotated on the dorsal portion of TCT No. T-13443, which Sps. Marquez had verified as
clean prior to the mortgage.8
Since Gutierrez defaulted in the payment of his loan obligation, Anita sought the extra-judicial foreclosure of
the subject property. At the public auction sale held on January 19, 2000, Anita emerged as the highest bidder
for the amount of P1,171,000.00.9 Upon Gutierrezs failure to redeem the same property within the prescribed
period therefor, title was consolidated under TCT No. T-4193910 on November 5, 2001 (in the name of Anita J.
Marquez, married to Nicasio C. Marquez) which, however, bore an annotation of adverse claim11 dated March
2, 2000 in the names of respondents-spouses Carlito and Carmen Alindog (Sps. Alindog). Said annotation was
copied from an earlier annotation on TCT No. T-13443 made only after the subject propertys mortgage to Sps.
Marquez.

Subsequently, or on March 21, 2000, Sps. Alindog filed a civil case for annulment of real estate mortgage and
certificate of sale with prayer for damages against Sps. Marquez and a certain Agripina Gonzales (Gonzales)
before the RTC, docketed as Civil Case No. TG-1966 (annulment case). In their complaint,12 Sps. Alindog
alleged that they purchased13 the subject property from Gutierrez way back in September 1989, but were
unable to secure a certificate of title in their names because Gonzales to whom they have entrusted said task
had deceived them in that they were assured that the said certificate was already being processed when such was
not the case.14 Eventually, they found out that the property had already been mortgaged to Sps. Marquez, and
that when they tried to contact Gonzales for an explanation, she could no longer be found. Separately, Sps.
Alindog averred that when the mortgage was executed in favor of Sps. Marquez, Gutierrez was already dead.15
In their defense,16 Sps. Marquez disputed Sps. Alindogs ownership over the subject property, arguing that the
purported sale in the latters favor was never registered and therefore, not binding upon them. Further, they
insisted that their certificate of title, TCT No. T-41939, was already indefeasible, and cannot be attacked
collaterally.
Meanwhile, on March 16, 2005, Anita filed an ex-parte petition for the issuance of a writ of possession17 (exparte petition) before the RTC, docketed as LRC Case No. TG-05-1068, claiming that the same is ministerial on
the courts part following the consolidation of her and her husbands title over the subject property. Impleaded
in said petition are Sps. Gutierrez, including all persons claiming rights under them.
The RTC Rulings and Subsequent Proceedings
In an Order18 dated August 1, 2005, the RTC granted Anitas ex-parte petition and thereby directed the issuance
of a writ of possession in her favor. Consequently, a notice to vacate19 dated September 23, 2005 was issued by
Acting Sheriff Teodorico V. Cosare (Sheriff Cosare) against Sps. Gutierrez and all persons claiming rights under
them. Sps. Alindog were served with a copy of the said notice to vacate on September 27, 2005.20
Claiming that they would suffer irreparable injury if the implementation of the writ of possession in favor of
Sps. Marquez would be left unrestrained, Sps. Alindog sought the issuance of a temporary restraining order
(TRO) and/or writ of preliminary injunction with prayer for damages,21 in a separate case docketed as SCA No.
TG-05-252122 (injunction case) which was raffled to the same court.
While it appears that the RTC issued a 72-hour TRO on September 29, 2005 in Sps. Alindogs favor, records
nonetheless show that said order was not extended to a full 20-day TRO.23 To this end, the Sheriffs Return24
dated November 14, 2005 shows that Sheriff Cosare was able to implement the writ of possession on November
11, 2005, turning over the possession of the subject property to Sps. Marquez.
After further proceedings on the injunction case, the RTC, through an Order25 dated November 14, 2005,
issued a writ of preliminary injunction enjoining Sps. Marquez from taking possession of the subject property
until after the controversy has been fully resolved on the merits. The said issuance was based on the RTCs
appreciation of the initial evidence adduced by Sps. Alindog, concluding that they appear to have a right to be
protected. Thus, notwithstanding the consolidation of Sps. Marquezs title over the subject property, the RTC
granted Sps. Alindogs prayer for injunctive relief, holding that any further dispossession on their part would
cause them irreparable injury.26

Aggrieved, Sps. Marquez moved for reconsideration,27 essentially pointing out that, as the confirmed and
registered owners of the subject property, they are entitled to its possession as a matter of right. They argued
that pursuant to Sections 728 and 829 of Act No. 3135,30 as amended by Act No. 4118,31 the RTC was legally
bound to place them in possession of the subject property pending resolution of the annulment case. Further, it
is their position that the purpose for the issuance of the injunctive writ i.e., to restrain the implementation of
the writ of possession had already been rendered moot and academic by its actual enforcement in the interim.
For their part, Sps. Alindog filed a Motion for Approval of Cash Bond and to Regain Possession32 of the
subject property.
In an Order33 dated January 17, 2007, the RTC denied the motion of Sps. Marquez, while granted that of Sps.
Alindog. Unperturbed, Sps. Marquez elevated the case to the CA on certiorari.34
The CA Ruling
In a Decision35 dated February 29, 2008, the CA denied Sps. Marquezs petition as it found no grave abuse of
discretion on the RTCs part when it issued the injunctive writ that enjoined Sps. Marquez from taking
possession of the subject property. It observed that Sps. Alindog had indeed "adduced prima facie proof of their
right to possess the subject property"36 while the annulment case was pending, adding that the latters "right to
remain in possession"37 proceeds from the fact of the subject propertys earlier sale to them. Thus, while Sps.
Marquez concededly had a right to possess the subject property on account of the consolidation of the title in
their names, the CA nonetheless found no fault on the part of the RTC for "proceeding with caution"38 in
weighing the conflicting claims of the parties and subsequently issuing the writ of preliminary injunction in Sps.
Alindogs favor.
Dissatisfied, Sps. Marquez moved for reconsideration39 which was, however, denied in a Resolution40 dated
August 6, 2008, hence, this petition.
The Issue Before the Court
The essential issue in this case is whether or not the CA erred in finding no grave abuse of discretion on the part
of the RTC when it issued the injunctive writ which enjoined Sps. Marquez from taking possession of the
subject property.
The Courts Ruling
The petition is meritorious.
It is an established rule that the purchaser in an extra-judicial foreclosure sale is entitled to the possession of the
property and can demand that he be placed in possession of the same either during (with bond) or after the
expiration (without bond) of the redemption period therefor. To this end, the Court, in China Banking Corp. v.
Sps. Lozada41 (China Banking Corp.), citing several cases on the matter, explained that a writ of possession
duly applied for by said purchaser should issue as a matter of course, and thus, merely constitutes a ministerial
duty on the part of the court, viz.:42

The procedure for extrajudicial foreclosure of real estate mortgage is governed by Act No. 3135, as amended.
The purchaser at the public auction sale of an extrajudicially foreclosed real property may seek possession
thereof in accordance with Section 7 of Act No. 3135, as amended, which provides:
SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance
of the province or place where the property or any part thereof is situated, to give him possession thereof during
the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve
months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or
without complying with the requirements of this Act. Such petition shall be made under oath and filed in form
or an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special
proceedings in the case of property registered under the Mortgage Law or under section one hundred and
ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly
registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk
of court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one
hundred and fourteen of Act Numbered Four hundred and ninety six as amended by Act Numbered Twentyeight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue
addressed to the sheriff of the province in which the property is situated, who shall execute said order
immediately.
The Court expounded on the application of the foregoing provision in De Gracia v. San Jose, thus:
As may be seen, the law expressly authorizes the purchaser to petition for a writ of possession during the
redemption period by filing an ex parte motion under oath for that purpose in the corresponding registration or
cadastral proceeding in the case of property with Torrens title; and upon the filing of such motion and the
approval of the corresponding bond, the law also in express terms directs the court to issue the order for a writ
of possession. Under the legal provisions above copied, the order for a writ of possession issues as a matter of
course upon the filing of the proper motion and the approval of the corresponding bond. No discretion is left to
the court. And any question regarding the regularity and validity of the sale (and the consequent cancellation of
the writ) is left to be determined in a subsequent proceeding as outlined in section 8. Such question is not to be
raised as a justification for opposing the issuance of the writ of possession, since, under the Act, the proceeding
for this is ex parte.
Strictly, Section 7 of Act No. 3135, as amended, refers to a situation wherein the purchaser seeks possession of
the foreclosed property during the 12-month period for redemption. Upon the purchasers filing of the ex parte
petition and posting of the appropriate bond, the RTC shall, as a matter of course, order the issuance of the writ
of possession in the purchasers favor.
In IFC Service Leasing and Acceptance Corporation v. Nera, the Court reasoned that if under Section 7 of Act
No. 3135, as amended, the RTC has the power during the period of redemption to issue a writ of possession on
the ex parte application of the purchaser, there is no reason why it should not also have the same power after the
expiration of the redemption period, especially where a new title has already been issued in the name of the
purchaser. Hence, the procedure under Section 7 of Act No. 3135, as amended, may be availed of by a purchaser
seeking possession of the foreclosed property he bought at the public auction sale after the redemption period
has expired without redemption having been made.
xxxx

It is thus settled that the buyer in a foreclosure sale becomes the absolute owner of the property purchased if it is
not redeemed during the period of one year after the registration of the sale. As such, he is entitled to the
possession of the said property and can demand it at any time following the consolidation of ownership in his
name and the issuance to him of a new transfer certificate of title. The buyer can in fact demand possession of
the land even during the redemption period except that he has to post a bond in accordance with Section 7 of
Act No. 3135, as amended. No such bond is required after the redemption period if the property is not
redeemed. Possession of the land then becomes an absolute right of the purchaser as confirmed owner. Upon
proper application and proof of title, the issuance of the writ of possession becomes a ministerial duty of the
court. (Emphases and underscoring supplied; citations and emphases in the original omitted)
In the case of Spouses Espiridion v. CA,43 the Court expounded on the ministerial nature of the foregoing
issuance as follows:44
The issuance of a writ of possession to a purchaser in a public auction is a ministerial act.1wphi1 After the
consolidation of title in the buyers name for failure of the mortgagor to redeem the property, the writ of
possession becomes a matter of right. Its issuance to a purchaser in an extrajudicial foreclosure sale is merely a
ministerial function. The trial court has no discretion on this matter. Hence, any talk of discretion in connection
with such issuance is misplaced.
A clear line demarcates a discretionary act from a ministerial one. Thus:
The distinction between a ministerial and discretionary act is well delineated. A purely ministerial act or duty is
one which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to the
mandate of a legal authority, without regard to or the exercise of his own judgment upon the propriety or
impropriety of the act done. If the law imposes a duty upon a public officer and gives him the right to decide
how or when the duty shall be performed, such duty is discretionary and not ministerial. The duty is ministerial
only when the discharge of the same requires neither the exercise of official discretion or judgment.
Clearly, the use of discretion and the performance of a ministerial act are mutually exclusive. (Emphases and
underscoring supplied; citations omitted)
The ministerial issuance of a writ of possession in favor of the purchaser in an extra-judicial foreclosure sale,
however, admits of an exception. Section 33,45 Rule 39 of the Rules of Court (Rules) pertinently provides that
the possession of the mortgaged property may be awarded to a purchaser in an extra-judicial foreclosure unless
a third party is actually holding the property by adverse title or right. In the recent case of Rural Bank of Sta.
Barbara (Iloilo), Inc. v. Centeno,46 citing the case of China Banking Corp., the Court illumined that "the phrase
a third party who is actually holding the property adversely to the judgment obligor contemplates a situation in
which a third party holds the property by adverse title or right, such as that of a co-owner, tenant or
usufructuary. The co-owner, agricultural tenant, and usufructuary possess the property in their own right, and
they are not merely the successor or transferee of the right of possession of another co-owner or the owner of
the property. Notably, the property should not only be possessed by a third party, but also held by the third party
adversely to the judgment obligor."47 In other words, as mentioned in Villanueva v. Cherdan Lending Investors
Corporation,48 the third person must therefore claim a right superior to that of the original mortgagor.
In this case, it is clear that the issuance of a writ of possession in favor of Sps. Marquez, who had already
consolidated their title over the extra-judicially foreclosed property, is merely ministerial in nature. The general

rule as herein stated and not the exception found under Section 33, Rule 39 of the Rules should apply since
Sps. Alindog hinged their claim over the subject property on their purported purchase of the same from its
previous owner, i.e., Sps. Gutierrez (with Gutierrez being the original mortgagor). Accordingly, it cannot be
seriously doubted that Sps. Alindog are only the latters (Sps. Gutierrez) successors-in-interest who do not have
a right superior to them.
That said, the RTC therefore gravely abused its discretion when it issued the injunctive writ which enjoined Sps.
Marquez from taking possession of the subject property. To be sure, grave abuse of discretion arises when a
lower court or tribunal patently violates the Constitution, the law or existing jurisprudence.49 Here, while the
RTC had initially issued a writ of possession in favor of Sps. Marquez, it defied existing jurisprudence when it
effectively rescinded the said writ by subsequently granting Sps. Alindog's prayer for injunctive relief. The
RTC's finding anent the initial evidence adduced by Sps. Alindog constitutes improper basis to justify the
issuance of the writ of preliminary injunction in their favor since, in the first place, it had no authority to
exercise any discretion in this respect. Jurisprudence is clear on the matter: without the exception under Section
33, Rule 39 of the Rules availing, the issuance of a writ of possession in favor of the purchaser of an extrajudicially foreclosed property - such as Sps.
Marquez in this case - should come as a matter of course, and, in such regard, constitutes only a ministerial duty
on the part of the court. Besides, it was improper for the RTC to have issued a writ of preliminary injunction
since the act sought to be enjoined, i.e., the implementation of the writ of possession, had already been
accomplished in the interim and thus, rendered the matter moot. Case law instructs that injunction would not lie
where the acts sought to be enjoined had already become fait accompli (meaning, an accomplished or
consummated act).50 Hence, since the consummation of the act sought to be restrained had rendered Sps.
Alindog's injunction petition moot, the issuance of the said injunctive writ was altogether improper.
All told, by acting averse to well-settled jurisprudential rules and resultantly depriving Sps. Marquez of their
right of possession over the subject property, the Court therefore concludes that the RTC gravely abused its
discretion in this case. In effect, the CA's contrary ruling thereto is hereby reversed and set aside, which
consequentially leads to the nullification of the writ of preliminary injunction issued by the RTC in favor of Sps.
Alindog, and the reinstatement of the writ of possession issued by the same court in favor of Sps. Marquez. It
must, however, be noted that these pronouncements are without prejudice to any separate action which Sps.
Alindog may file in order to recover ownership of the subject property.
WHEREFORE, the petition is GRANTED. The Decision dated February 29, 2008 and Resolution dated August
6, 2008 of the Court of Appeals in CA-G.R. SP No. 97744, as well as the Orders dated November 14, 2005 and
January 17, 2007 of the Regional Trial Court of Tagaytay City, Branch 18 in SCA No. TG-05-2521 are hereby
REVERSED and SET ASIDE. Accordingly, the writ of preliminary injunction in SCA No. TG-05-2521 is
NULLIFIED, while the Writ of Possession in LRC Case No. TG-05-1068 is REINSTATED.
SO ORDERED.
G.R. No. 148448

August 17, 2004

RUSTICO A. ARDIENTE and ASUNCION PALOMARDIENTE, petitioners,

vs.

PROVINCIAL SHERIFF, REGISTER OF DEEDS OF QUEZON and PENINSULA DEVELOPMENT

BANK, respondents.

DECISION

CARPIO MORALES, J.:

In mid-November 1979, the spouses Rustico Ardiente and Asuncion Paloma, together with their son Angel P.
Ardiente and the latters wife Gliceria Ardiente, obtained a loan in the amount of P100,000.00 from the
Peninsula Development Bank (the bank) at its main office at Lucena City, to be amortized in six years, on
account of which they executed a November 15, 1979 Promissory Note1 in the same amount.
To secure the payment of the loan, the Ardientes executed in favor of the bank a Real Estate Mortgage2 on
November 14, 1979 over a parcel of land situated at Mabutag, Cawa, Buenavista, Quezon and covered by
Transfer Certificate of Title (TCT) No. 29478, and three (3) parcels of land situated at Cadlit, Guinayangan,
Quezon and covered by Original Certificate of Title (OCT) No. 0-5961.
Out of the proceeds of the loan, the Ardientes purchased a mini bus costing P81,875.00.
After the bus was in operation for several months, it met an accident in August 1980 as result of which it
sustained heavy damages and rendered the Ardientes unable to meet their obligation to the bank. As the
Ardientes were later granted by the bank an additional loan of P46,000 for which they executed an October 29,
1981 Promissory Note,3 the Real Estate Mortgage was amended.
Demands for the payment of their obligation to the bank notwithstanding, the Ardientes failed to settle the same.
The bank thus extra-judicially foreclosed the mortgage and the parcels of land covered thereby were sold at
public auction to the bank which was the highest bidder.
The bank later notified the Ardientes by letter of February 24, 19844 that they had one (1) year from November
11, 1983 or up to November 11, 1984 to redeem the foreclosed mortgage.
Two days before the period to redeem the foreclosed mortgage expired or on November 9, 1984, the spouses
Rustico and Suncion Ardiente filed before the Regional Trial Court (RTC) of Quezon at Gumaca a complaint,
denominated as Petition,5 against the bank, the provincial Sheriff of Quezon, and the Register of deeds of
Quezon, for Annulment of Auction Sale with Preliminary Injunction and Damages, anchored to two grounds as
reflected in paragraph 16 of the Complaint:
16. On two (2) legal grounds, therefore, namely, (a) that it was the defendant, not herein petitioners, who
had violated the Real Estate Mortgage and Amended Real Estate Mortgage, and (b) that the requisite of
notifying the mortgagors of the intended extra-judicial foreclosure sale was not duly complied
with the FORECLOSURE SALE should be annulled, which had supposedly taken place on
November 11, 1983 in the Office of the Provincial Sheriff situated in the courthouse building, National
Trial Court, Lucena City wherein the alleged highest bidder was the defendant for the satisfaction of
petitioners alleged indebtedness of P247,279.14;6 (Underscoring in the original; emphasis supplied)

As the following allegation in paragraph 15 of the Complaint shows, the Ardiente spouses capitalized on the
alleged lack of notice to them of the "judicial foreclosure auction sale."
15. And, the unkindest cut of all came up when, without first having been duly notified of an intended
extra-judicial foreclosure auction sale, petitioners received a letter from the defendant, under date of
February 24, 1984, informing them that "the one (1) year period within which to exercise their right to
redeem the foreclosed properties commenced to run on November 11, 1983 to November 11, 1984" (a
Xerox copy of which is hereto attached as Annex "A" and made an integral part hereof).7 (Underscoring
supplied)
On the above-quoted allegations in paragraphs 15 and 16 of the Complaint, the bank, in its Answer with
Counterclaim, alleged:
xxx
15) Answering respondent admits the allegations contained in paragraph 15 of the petition, with the
explanations and qualifications, that petitioners were duly notified of the extra-judicial foreclosure and
public auction sale. There was sufficient notice and publication served to all concern[ed] of said public
auction sale of the properties offered as collaterals.8 (Underscoring supplied)
(16) Answering respondent specifically denies the allegations contained in paragraph [16] of the
petition. The truth of the matter is that the petitioners have violated the terms and conditions of Real
Estate Mortgage, Amended Real Estate Mortgage and that respondent has complied with the requisites
of Art. 3135 as amended in relation to the application [for] extra-judicial proceeding of collaterals."9
(Underscoring supplied)
To the Answer the spouses Ardiente filed a Reply and Answer to Counterclaim.10
The Complaint was later amended11 whereby the spouses Ardiente alleged that, among other things, the
purchase price of the mortgaged parcels of land was so "grossly and greatly inadequate," hence, the foreclosure
sale should be annulled; by reason of the unlawful foreclosure of the real estate mortgage, they suffered
damages; and to protect their interests, they filed a formal request with the Register of Deeds to cause a notice
of lis pendens.
In compliance with the directive of Branch 61 of the Gumaca RTC, the parties submitted their respective
memoranda.
In their memorandum, the defendants bank et al. proffered the following pertinent argument on the Ardiente
spouses claim that they were not previously notified of the foreclosure:
[I]t is maintained that there was notice, coupled with a publication of Notice of Public Auction Sale in a
newspaper of general circulations (sic) supported by publishers affidavit attached to the record in the
Office of the Provincial Sheriff of Quezon at Calauag, Quezon. Personal notice was sent to the
plaintiffs. However, said requirements in the extra-judicial foreclosure is dispensed with, in accordance
with the decision of the Supreme Court in the case of --BONNEVIE V. COURT OF APPEALS, 125 SCRA 122 (1983)
In extra-judicial foreclosure, Act No. 3135 personal notice on the mortgagor is not necessary.
Section 3 thereof reads:

Sec. 3 Notice shall be given by posting notices of the sale for not less than twenty (20) days in
at least three (3) public places of the municipality or city where the property is situated, and if
such property is worth more than P400.00, such notice shall also be published once a week for at
least 3 consecutive weeks in a newspaper of general circulation in the municipality or city.
Such phrase "once a week for at least 3 consecutive weeks", as interpreted in "BASA vs. MERCADO"
(61 Phil. 632) does not mean that the notice should be published for 3 full weeks.12 (Emphasis and
underscoring supplied)
By Decision of August 12, 1994,13 the trial court, noting the absence of documentary evidence showing strict
compliance with the statutory requirements on publication of notice of extra-judicial foreclosure of mortgage,
declared the extra-judicial foreclosure and the sale of the mortgaged properties null and void. Thus, the trial
court discoursed:
Respondent Bank maintained that it filed an extra-judicial foreclosure with the Provincial Sheriff of
Quezon. After due notice and publication, these properties were sold at Public Auction Sale where a
corresponding Certificate of Sale (Exh. 5) was issued in its name dated November 11, 1983, as the sole
bidder (Memorandum for the Defendants, p.4). On page 7 of said Memorandum, it contended that there
was notice, coupled with a publication of Notice of Public Auction Sale in a newspaper of general
circulation supported by publishers affidavit attached to the record in the Office of the Provincial
Sheriff of Quezon at Calauag, Quezon. Personal notice was sent to petitioners. (Record, pp. 358 & 361,
Memorandum For the Defendants, pages 4 & 7). Despite these allegations on record, no documentary
exhibits of such publication of notice of public auction sale in a newspaper of general circulations
supported by publishers affidavit were ever submitted by respondent Bank. Considering that
petitioners are clearly attacking the validity of the public auction sale for which respondent Bank was
the sole bidder, said documentary exhibits should have been presented in court and not merely
alleged to be attached to the record in the Office of the Provincial Sheriff of Quezon at Calauag,
Quezon. The clear fact remains that these documents were not submitted to form part of the records of
this case. No such proof of publication exists in the records. In the case of Tambunting vs. Court of
Appeals (167 SCRA 17), the Hon. Supreme Court stressed that "failure to present proof of posting and
publication rebuts the presumption of compliance with official duty". To show compliance, the
published notices and certificate of posting by the sheriff of the notice of sale on November 11, 1983
should have been presented.
Therefore, in the absence of convincing proof that the statutory provisions governing publication of
notice of mortgage foreclosure sales have been strictly complied with, this Court has no other
recourse except to declare as null and void the sale in favor of judgment creditor, made by respondent
Sheriff on November 12, 1983, awarding the properties in question to respondent Bank, and for which,
the titles in the name of petitioner-spouses were already cancelled and registered in its name. This Court
also finds that petitioners are entitled to and deserving the reliefs prayed for.14 (Emphasis and
underscoring supplied),
Accordingly, the trial court disposed as follows:
WHEREFORE, judgment is hereby rendered, in favor of petitioners, and against the respondents, as
follows:
(1) Declaring as null and void the extrajudicial foreclosure and sale conducted by respondent Provincial
Sheriff of Quezon;
(2) Declaring as null and void all transactions/proceedings held subsequent thereto such as the execution
of the final deed of sale and issuance of title to and in the name of respondent Bank;

(3) Ordering the respondent Register of Deeds of Quezon to re-issue a new Transfer Certificate of Title
to and in the name of petitioners in lieu of the former titles which had been deemed cancelled by virtue
of the issuance of the titles which had been deemed cancelled by virtue of the issuance of the titles
which had been issued in favor of respondent Corporation; and
(4) Ordering all respondents, jointly and severally, to pay unto herein petitioners, the sum of P15,000,
for attorneys fees and litigation expenses of P10,000.
Costs against defendants.
SO ORDERED.15
The Defendants bank et al. thus appealed to the Court of Appeals upon the following assigned errors:
[I.]
THE LOWER COURT ERRED IN FINDING AND CONCLUDING THAT THERE WAS ABSENCE
OF CONVINCING PROOF THAT THE STATUTORY PROVISIONS GOVERNING PUBLICATION
OF NOTICE OF MORTGAGE FORECLOSURE SALE HAVE BEEN STRICTLY COMPLIED WITH.
[II.]
THE COURT A QUO ERRED IN DECLARING NULLAND VOID THE EXTRAJUDICIAL
FORECLOSURE AND SALE CONDUCTED BY RESPONDENT PROVINCIAL SHERIFF OF
QUEZON, AND ALL TRANSACTIONS/PROCEEDINGS HELD SUBSEQUENT THERETO SUCH
AS THE EXECUTION OF THE FINAL DEED OF SALE AND ISSUANCE OF TITLE TO AND IN
THE NAME OF RESPONDENT BANK.
[III.]
THE LOWER COURT ERRED IN ORDERING THE RRESPONDENT REGISTER OF DEEDS OF
QUEZON TO REISSUE A NEW TRANSFER CERTIFICATE OF TITLE TO AND IN THE NAME OF
PETITIONERS IN LIEU OF THE FORMER TITLES WHICH HAD BEEN DEEMED CANCELLED
BY VIRTUE OF THE ISSUANCE OF THE TITLES WHICH HAD BEEN ISSUED IN FAVOR OF
RESPONDENT CORPORATION.
[IV.]
THE TRIAL COURT ERRED IN AWARDING TO PLAINTIFFS-APPELLEES ATTORNEYS FEES
ABD LITIGATION EXPENSES.16 (Underscoring supplied)
By Decision of January 29, 2001,17 the Court of Appeals reversed the decision of the trial court after finding the
argument of the defendant-appellants bank et al. that the lack of required notice and publication of the extrajudicial foreclosure of mortgage was not averred in the complaint, hence, cannot be the basis of an adverse
judgment. Explaining its reversal of the decision, the Court of Appeals held:
It is axiomatic that the complaint should inform the defendant of all the material facts on which the
plaintiff relies to support his demand; it should state the theory of a cause of action which forms the
bases of the plaintiffs claim of liability. The office, purpose or function of the complaint is to inform the
defendant clearly and definitely of the claims made against him so that he may be prepared to meet the
issues at the trial. Otherwise stated, if the wrong or omission of the defendant is not alleged in the

complaint, then the defendant would be precluded from presenting evidence to refute the imputation of
such wrong or present justification for the alleged omission. In this case, even perfunctory reading of the
Petition and the Amended Petition, readily reveals the absence of any averment relating to the
required posting and publication of the notice of foreclosure sale. Understandably then, the
defendant-appellant Bank saw no need to present the Sheriffs Certification of Posting and the
newspaper where the notice was published as well as the publishers affidavit. Clearly, the presumption
that the Provincial Sheriff of Quezon has discharged his official duty in a regular manner and that the
defendant-appellant Bank complied with the requirements under the law will suffice. And while it may
be true that the Supreme Court said, in the case of Tambunting v. Court of Appeals and relied upon
by the trial court, that the presumption of compliance with official duty is rebutted by the failure
to present proof of posting and publication of the notice of sale, such may be applied only when
these omissions are alleged and raised by the party in the complaint.
The result would have been different if evidence of these issues were raised during the trial of the case
with the acquiescence of the parties. Then, the rule on the amendment of the petition to conform to or
authorize presentation of evidence may be applied, thus:
Sec. 5. Amendment to conform to or authorize presentation of evidence. When issues not raised in the
pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects
as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to
cause them to conform to the evidence and to raise these issues may be made upon motion of any party
at any time, even after judgments but failure to amend does not affect the result of the trial of these
issues. x x x
As earlier stated however, the issue of lack of posting and publication was not even discussed nor even
touched in the testimony of plaintiff-appellee Rustico Ardiente. His testimony is limited only to his
receipt of a letter from the bank that their properties have been foreclosed and that they have one year to
redeem the same. The plaintiffs-appellees only imputed to the defendant-appellant Bank its omission to
give them personal notice of the foreclosure sale. However, it is jurisprudentially settled that personal
notice to the mortgagor in extrajudicial foreclosure proceedings is not necessary. Hence, lack of personal
notice to the mortgagors is not a ground to set aside the foreclosure sale. Ergo, the trial court erred in
declaring the foreclosure null and void based on a ground not raised in the pleadings nor tried before it.18
(Underscoring in the original; emphasis supplied)
Hence, the present petition for review filed by the Ardiente spouses proferring the following:
REASONS WARRANTING REVIEW
I.
RESPON[ENT] COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT SINCE THE
PETITIONERS IN THEIR PETITION AND IN THEIR AMENDED PETITION DID NOT MENTION
THE ABSENCE OF THE REQUIRED POSTING AND PUBLICATION OF THE NOTICE OF
FORECLOSURE SALE, THERE IS NO NEED FOR THE DEFENDANT APPELLANT BANK TO
PRESENT THE SHERIFF CERTIFICATION OF POSTING AND THE NEWSPAPER WHERE THE
NOTICE WAS PUBLISHED AS WELL AS THE PUBLISHERS AFFIDAVIT TO PROVE THE
VALIDITY OF THE FORECLOSURE SALE.
II.
RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE TRIAL
COURTS DECISION AND DISMISSING PETITIONERS COMPLAINT.

III.
RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN NOT AWARDING ATTORNEYS
FEES AND LITIGATION EXPENSES TO THE PLAINTIFFS-APPELLEES. 19
The spouses Ardientes (hereinafter referred to as petitioners) argue that paragraph 15 of their Complaint and
paragraph 16 of the Amended Complaint show that they were "attacking the validity of the extra-judicial sale";
that the impleading of the sheriff demonstrates that they are "questioning the validity and legality of his
performance of officially duty"; that the bank was sufficiently informed of their "cause of action, theory of their
case and relief being sought" as shown by the banks allegations in paragraphs 15 and 16 of its Answer; and that
in fact in the banks Special and Affirmative Defenses, particularly paragraph 25 thereof which reads:
25) That answering respondent as well as the Office of Provincial Sheriff fully compl[ied] [with] the
requirements of law under Act 3135 as amended, more specifically with regards to notices of the public
auction sale as well as the extra-judicial foreclosure application in accordance with the law.20,
an issue was tendered, the nature of which affirmative defense-answer called for the presentation of evidence,
they citing Benavides v. Alabastro,21 but the bank did not present "proof of proper compliance with Act 3135,
"AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR
ANNEXED TO REAL ESTATE MORTAGES,: as to posting and publication of notices of public auction sale.
The Court is not persuaded.
With respect to petitioners paragraphs 15 and 16 allegations in their Complaint, clearly, they were questioning
the validity of the extra-judicial foreclosure of the mortgage on the basis of lack of notice to them as
mortgagors.
It is settled that personal notice to the mortgagor in extra-judicial foreclosure proceedings is not necessary,
hence, not a ground to set aside the foreclosure sale.22
With respect to petitioners argument that the bank, in paragraph 25 of its Answer, in fact put in issue its
compliance with the requirements of Act 3135, "more specifically with regards to the notices of the public
auction sale as well as the extra-judicial application in accordance with law," to thus call for the presentation of
evidence, they citing again Benavides,23 the same fails.
Benavides bears on the rendition of judgment on the pleadings. It holds that where the defendants answer
tenders an issue, as where it does not only deny the material allegations of the complaint but also sets up
certain special and affirmative defenses, the nature of such answer calls for presentation of evidence, hence, it is
error to render a judgment on the pleadings thereon without such evidence.
No doubt, it is a well-settled rule that statutory provisions governing publication of notice of mortgage
foreclosure sales must be strictly complied with, and that even slight deviations therefrom will invalidate the
notice and the sale at least voidable.24
Despite petitioners non-allegation of lack of publication of notice of foreclosure in their Complaint, the bank
pleaded in its Answer (1) "that petitioners were duly notified of the extrajudicial foreclosure and public auction
sale" and "[t]here was sufficient notice and publication served to all concern[ed] of said public auction sale,"
and (2) that it and the Office of the provincial Sheriff "fully compl[ied] with the requirements of law under Act
3135, more specifically with regard to notices of the public auction as well as the extra-judicial foreclosure in
accordance with law."

Yet petitioners never refuted in their Reply and Answer to Counterclaim such defense of the bank nor presented
evidence before the trial court to disprove the same.
In fact, in its Comment on petitioners Formal Offer of Evidence before the trial court, the bank, passing on
Exhibit "D" its letter to petitioners advising them that they had one year from November 11, 1993 to exercise
their right of redemption, stated that said exhibit was admitted "with the qualification as to the purpose to the
effect that said extra-judicial foreclosure was filed in accordance with law and that all requirements of said law
were complied with and that plaintiffs were duly notified of said proceedings."25
Despite the banks repeated claim that the statutory requirements governing extra-judicial foreclosure had been
complied with, the banks plea of lack of publication of notice of foreclosure was not raised by petitioners either
in the Amended Complaint or in the Reply and Answer to Counterclaim. It was not also raised during the trial as
the entire transcripts of the stenographic notes of the proceedings before the trial court show. Nor even in their
memorandum filed before the trial court, petitioners having merely assailed the lack of "personal" notification
to them of any "intended" extrajudicial foreclosure and the "grossly and greatly inadequate" purchase price of
the lands.
As the appellate court thus held, the issue of lack of publication of notice cannot be raised for the first time on
appeal.
In the Tambunting case cited by petitioners to support their thesis that failure to strictly comply with statutory
requirements governing publication of notice of mortgage foreclosure sales renders the sale at least voidable,
the therein mortgagors, in their complaint for annulment of mortgage and damages, sought to enjoin the extrajudicial foreclosure of mortgage. During the pendency of the case, the extra-judicial foreclosure pushed thru just
the same. The mortgaged property was sold at public auction to the mortgagees, and the property was eventually
sold to the Tambunting Realty. The mortgagors thereupon filed a Supplemental Complaint impleading the realty
firm, the provincial sheriff as the officer responsible for holding the foreclosure, and the Register of Deeds for
the subsequent transfer of the property "despite alleged non-compliance with the requirements of Act 3135, Sec.
3 (as amended by Act 4118) on posting and publication of the notice of foreclosure sale." In other words, the
lack of publication was raised in issue by the mortgagors in their Supplemental Complaint.
In the case of Go v. Court of Appeals,26 as in the present case, despite the fact that the mortgagees pleaded as a
defense in their Answer the "receipt of the notice of the sale which was published in a newspaper of general
circulation, the issue of lack of publication of the notice of foreclosure was never raised in issue by the
mortgagors.
In disposing of the issue of lack of publication of the notice of foreclosure of mortgage which was raised for the
first time on appeal, this Court in Go held:
Indeed, as correctly held by the respondent Court, the issue of lack of publication of the notice of
foreclosure of the mortgage was raised only on appeal. Petitioner does not represent that he directly
attacked in his complaint in Civil Case No. 8920 the validity of the foreclosure because of such lack of
notice. His own Statement of the Facts and of the Case in the instant petition makes no reference to such
lack o notice as one, or even just as a basis for any, of his causes of action in the complaint. He sought
the cancellation of the contract of mortgage because he allegedly never received the amounts indicated
in the promissory notes. Of course, nullity of the mortgage due to absence of consideration is leagues
apart form the nullity of the foreclosure of a mortgage because of non-publication of the notice of
foreclosure.
Additionally, petitioner presented no evidence before the trial court to prove the absence of publication
of the notice despite the fact that private respondents, in their Answer, squarely pleaded as a defense
the foreclosure sale and petitioners receipt of the "notice of the sale which was published in a

newspaper of general circulation." That the lack of publication of the notice of foreclosure was never
raised in issue by petitioner and that it is not within the issues framed by the parties in the trial court are
then too obvious. (Emphasis and underscoring supplied)27
WHEREFORE, there being no reversible error in the assailed decision, the petition is hereby DISMISSED.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 187973

January 20, 2014

LZK HOLDINGS and DEVELOPMENT CORPORATION, Petitioner,

vs.
PLANTERS DEVELOPMENT BANK, Respondent.
RESOLUTION
REYES, J.:
This resolves the appeal filed by petitioner LZK Holdings and Development Corporation (LZK Holdings)
assailing the Decision1 dated January 27, 2009 of the Court of Appeals (CA) in CA-G.R. S.P. No. 103267
affirming the Order2 dated April 8, 2008 of the Regional Trial Court (RTC) of San Fernando City (San
Fernando), La Union, Branch 66, which issued a writ of possession in favor of respondent Planters
Development Bank (Planters Bank).
The facts are not disputed.
LZK Holdings obtained a P40,000,000.00 loan from Planters Bank on December 16, 1996 and secured the same
with a Real Estate Mortgage over its lot located in La Union. The lot measures 589 square meters and is covered
by Transfer Certificate of Title No. T-45337.
On September 21, 1998, the lot was sold at a public auction after Planters Bank extrajudicially foreclosed the
real estate mortgage thereon due to LZK Holdings' failure to pay its loan. Planters Bank emerged as the highest
bidder during the auction sale and its certificate of sale was registered on March 16, 1999.
On April 5, 1999, LZK Holdings filed before the RTC of Makati City, Branch 150, a complaint for annulment
of extra judicial foreclosure, mortgage contract, promissory note and damages. LZK Holdings also prayed for
the issuance of a temporary restraining order (TRO) or writ of preliminary injunction to enjoin the consolidation
of title over the lot by Planters Bank.
On December 27, 1999, Planters Bank filed an ex-parte motion for the issuance of a writ of possession with the
RTC-San Fernando.
On March 13, 2000 or three (3) days before the expiration of LZK Holdings' redemption period, the RTCMakati issued a TRO effective for 20 days enjoining Planters Bank from consolidating its title over the property.

On April 3, 2000, the RTC-Makati ordered the issuance of a writ of preliminary injunction for the same
purpose3 but the writ was issued only on June 20, 2000 upon LZK Holdings' posting of a P40,000.00 bond.
In the meantime, Planters Bank succeeded in consolidating its ownership over the property on April 24, 2000.
However, the proceedings for its ex-parte motion for the issuance of a writ of possession was suspended by the
RTC-San Fernando in an Order dated May 11, 2000 in view of the TRO and writ of preliminary injunction
issued by the RTC-Makati. Planters Bank moved for reconsideration but its motion was denied by the RTC-San
Fernando in an Order dated September 1, 2000.4
Meanwhile, upon motion of LZK Holdings, the RTC-Makati declared as null and void the consolidated title of
Planters Bank in an Order5 dated June 2, 2000. Such ruling was affirmed by the CA in a Decision6 dated
February 26, 2004 in CA-G.R. SP No. 59327. When the matter reached the Court via G.R. No. 164563, we
sustained the CA's judgment in our Resolution7 dated September 13, 2004.
Planters Bank also appealed the May 11, 2000 Order of the RTC-San Fernando which held in abeyance the
resolution of its ex parte motion for the issuance of a writ of possession. This time, Planters Bank was
victorious. The CA granted the appeal and annulled the assailed order of the RTC-San Fernando. Aggrieved,
LZK Holdings sought recourse with the Court in a petition for review docketed as G.R. No. 167998.8 In Our
Decision dated April 27, 2007, we affirmed the CA's ruling and decreed that Planters Bank may apply for and is
entitled to a writ of possession as the purchaser of the property in the foreclosure sale, viz:
"A writ of possession is a writ of execution employed to enforce a judgment to recover the possession of land. It
commands the sheriff to enter the land and give possession of it to the person entitled under the judgment. It
may be issued in case of an extrajudicial foreclosure of a real estate mortgage under Section 7 of Act No. 3135,
as amended by Act No. 4118.
Under said provision, the writ of possession may be issued to the purchaser in a foreclosure sale either within
the one-year redemption period upon the filing of a bond, or after the lapse of the redemption period, without
need of a bond.
We have consistently held that the duty of the trial court to grant a writ of possession is ministerial. Such writ
issues as a matter of course upon the filing of the proper motion and the approval of the corresponding bond. No
discretion is left to the trial court. Any question regarding the regularity and validity of the sale, as well as the
consequent cancellation of the writ, is to be determined in a subsequent proceeding as outlined in Section 8 of
Act No. 3135. Such question cannot be raised to oppose the issuance of the writ, since the proceeding is ex
parte. The recourse is available even before the expiration of the redemption period provided by law and the
Rules of Court.
To emphasize the writ's ministerial character, we have in previous cases disallowed injunction to prohibit its
issuance, just as we have held that issuance of the same may not be stayed by a pending action for annulment of
mortgage or the foreclosure itself.
xxxx
x x x [Planters Bank], as the purchaser in the foreclosure sale, may apply for a writ of possession during the
redemption period. In fact, it did apply for a writ on December 27, 1999, well within the redemption period. The

San Fernando RTC, given its ministerial duty to issue the writ, therefore, should have acted on the ex parte
petition. The injunction order is of no moment because it should be understood to have merely stayed the
consolidation of title. As previously stated, an injunction is not allowed to prohibit the issuance of a writ of
possession. Neither does the pending case for annulment of foreclosure sale, mortgage contract, promissory
notes and damages stay the issuance of said writ.
Lastly, the trial on the merits has not even started. Until the foreclosure sale of the property in question is
annulled by a court of competent jurisdiction, petitioner is bereft of valid title and of the right to prevent the
issuance of a writ of possession to [Planters Bank]. Until then, it is the trial court's ministerial function to grant
the possessory writ to [Planters Bank]. "9 (Citations omitted)
Armed with the above ruling, Planters Bank filed before the RTC-San Fernando a motion to set ex-parte hearing
for the issuance of a writ of possession. LZK Holdings opposed the motion. In an Order dated April 2, 2008, the
RTC-San Fernando denied the opposition and set the hearing on April 14, 2008. On April 8, 2008, the RTC-San
Fernando issued another Order10 declaring the scheduled hearing moot and academic and granting Planter
Bank's ex-parte motion for the issuance of a writ of possession which was filed as early as December 27, 1999.
The decretal portion of the order reads:
WHEREFORE, premises considered, the pet1t10n is hereby granted, hence the order setting the case for exparte hearing on April 14, 2008 is rendered moot and academic by this order. Let [a] Writ of Possession issue in
favor of Planters Development Bank and the Deputy Sheriff of this Court is hereby directed to place Planters
Development Bank or any of its authorized representatives in possession of the subject parcel of land, together
with all the improvements existing thereon, covered by TCT- 45337 of the Register of Deeds for the province of
La Union against LZK HOLDINGS AND DEVELOPMENT CORPORATION (referred to as LZK) including
all other persons/occupants who are claiming rights under them and who are depriving [Planters Bank] of its
right to possess the above-described property upon the filing of bond by (Planters Bank] in the amount of two
million pesos (Php2,000,000.00).
SO ORDERED.11
In its herein assailed Decision12 dated January 27, 2009, the CA affirmed the foregoing ruling and dismissed
LZK Holdings' petition for certiorari docketed as CA-G.R. SP No. 103267. The CA likewise denied LZK
Holdings' motion for reconsideration in its Resolution13 dated May 12, 2009.
LZK Holdings then filed a motion before the Court for a 30-day extension within which to file a petition for
review reckoned from the date of its receipt of the resolution granting such extension. In our Resolution dated
July 15, 2009 we granted the motion but we ordered that the 30-day extended period shall be counted from the
expiration of the original reglementary period.14 As such, LZK Holdings had until July 23, 2009 to file its
petition and not August 24, 2009 or the date when the petition was actually filed.
In our Resolution dated August 26, 2009, we denied the petition for being filed beyond the extended period
pursuant to Section 5(a), Rule 56 of the Rules of Court and for lack of reversible error in the assailed judgment
of the CA.15 LZK Holdings moved for reconsideration16 explaining that it was able to obtain a copy of the
Court's July 15, 2009 Resolution on July 29, 2009 when Lourdes Z. Korshak, LZK Holdings' Chief Executive
Officer, went to the Office of the Clerk of Court of the Third Division and that she still had to confront and get

the case records from the company's previous counsel and then look for a substitute lawyer. LZK Holdings also
claimed that the writ of possession issued to Planters Bank should be annulled for the following reasons, to wit:
(a) with the cancellation of Planters Bank's consolidated title, LZK Holdings remain to be the registered
owner of the property and as such, the former had no right to apply for a writ of possession pursuant to
PNB v. Sanao Marketing Corporation,17 which held that right of possession is based on the ownership
of the subject property by the applicant;
(b) LZK Holdings was deprived of due process because the RTC did not conduct a hearing on Planter
Bank's motion for the issuance of a writ of possession;
(c) the P.2,000,000.00 bond posted by LZK Holdings does not conform with Section 7 of Act No. 3135
which mandates that the bond amount shall be equivalent to "twelve (12) months use of the subject
property" which in this case amounted to P.7,801,4 72.28 at the time the writ was issued.
In a Resolution18 dated October 13, 2010 the Court took a liberal stance on the late filing of LZK Holdings'
petition for review. Accordingly, its motion for reconsideration was granted and the petition for review
reinstated.
However, after a re-examination of the substantive merits of the petition, the Court finds and stands by its initial
determination that the CA committed no reversible error in affirming the issuance of a writ of possession by the
R TC in favor of Planters Bank.
Under the principle of conclusiveness of judgment, the right of Planter's Bank to a writ of possession as
adjudged in G.R. No. 167998 is binding and conclusive on the parties.
The doctrine of res judicata by conclusiveness of judgment postulates that "when a right or fact has been
judicially tried and determined by a court of competent jurisdiction, or when an opportunity for such trial has
been given, the judgment of the court, as long as it remains unreversed, should be conclusive upon the parties
and those in privity with them."19
All the elements of the doctrine are present in this case. The final judgment in G.R. No. 167998 was rendered
by the Court pursuant to its jurisdiction over the review of decisions and rulings of the CA. It was a judgment
on the merits of Planters Banks's right to apply for and be issued a writ of possession. Lastly, the parties in G.R.
No. 167998 are the same parties involved in the present case.20
Hence, LZK Holdings can no longer question Planter Bank's right to a writ of possession over the subject
property because the doctrine of conclusiveness of judgment bars the relitigation of such particular issue.
Moreover, the authority relied upon by LZK Holdings defeats rather than support its position. The ruling in
PNB21 echoes the very same rationale of the judgment in G.R. No. 167998 that is - the purchaser in foreclosure
sale may take possession of the property even before the expiration of the redemption period by filing an ex
parte motion for such purpose and upon posting of the necessary bond.22

The pronouncement in PNB that right of possession is based on the ownership of the subject property by the
applicant pertains to applications for writ of possession after the expiration of the redemption period, a situation
not contemplated within the facts of the present case.
We cannot also uphold the contentions of LZK Holdings that the RTC, in issuing the writ of possession,
transgressed Act No. 3135.23
No hearing is required prior to the issuance of a writ of possession. This is clear from the following
disquisitions in Espinoza v. United Overseas Bank Phils.24 which reiterates the settled rules on writs of
possession, to wit:
The proceeding in a petition for a writ of possession is ex parte and summary in nature.1wphi1 It is a judicial
proceeding brought for the benefit of one party only and without notice by the court to any person adverse of
interest. It is a proceeding wherein relief is granted without giving the person against whom the relief is sought
an opportunity to be heard.
By its very nature, an ex parte petition for issuance of a writ of possession is a non-litigious proceeding. It is a
judicial proceeding for the enforcement of one's right of possession as purchaser in a foreclosure sale. It is not
an ordinary suit filed in court, by which one party sues another for the enforcement of a wrong or protection of a
right, or the prevention or redress of a wrong.25 (Citations omitted)
Given the ex-parte nature of the proceedings for a writ of possession, the R TC did not err in cancelling the
previously scheduled hearing and in granting Planters Bank's motion without affording notice to LZK Holdings
or allowing it to participate.
Anent the correct amount of surety bond, it is well to emphasize that our task in an appeal by petition for review
on certiorari is limited, as a jurisdictional matter, to reviewing errors of law that might have been committed by
the CA.26 The allegations of incorrect computation of the surety bond involve factual matters within the
competence of the trial court to address as this Court is not a trier of facts. The RTC found the amount of
P2,000,000.00 to be sufficiently equivalent to the use of the property for a period of twelve (12) months. We are
bound by such factual finding especially considering the affirmation accorded it by the CA.
In fine, the decision of the CA is in accordance with the law and jurisprudence on the matter. It correctly
sustained the Order of the RTC in issuing a writ of possession in favor of Planters Bank.
WHEREFORE, premises considered, the petition is hereby DENIED. The Decision dated January 27, 2009 of
the Court of Appeals in CA-G.R. S.P. No. 103267 is AFFIRMED.
SO ORDERED.
G.R. No. 195540

March 13, 2013

GOLDENWAY MERCHANDISING CORPORATION, Petitioner,

vs.
EQUITABLE PCI BANK, Respondent.

DECISION
VILLARAMA, JR., J.:
Before the Court is a petition for review on certiorari which seeks to reverse and set aside the Decision1 dated
November 19, 2010 and Resolution2 dated January 31, 2011 of the Court of Appeals (CA) in CA-G.R. CV No.
91120. The CA affirmed the Decision3 dated January 8, 2007 of the Regional Trial Court (RTC) of- Valenzuela
City, Branch 171 dismissing the complaint in Civil Case No. 295-V -01.
The facts are undisputed.
On November 29, 1985, Goldenway Merchandising Corporation (petitioner) executed a Real Estate Mortgage
in favor of Equitable PCI Bank (respondent) over its real properties situated in Valenzuela, Bulacan (now
Valenzuela City) and covered by Transfer Certificate of Title (TCT) Nos. T-152630, T-151655 and T-214528 of
the Registry of Deeds for the Province of Bulacan. The mortgage secured the Two Million Pesos
(P2,000,000.00) loan granted by respondent to petitioner and was duly registered.4
As petitioner failed to settle its loan obligation, respondent extrajudicially foreclosed the mortgage on
December 13, 2000. During the public auction, the mortgaged properties were sold for P3,500,000.00 to
respondent. Accordingly, a Certificate of Sale was issued to respondent on January 26, 2001. On February 16,
2001, the Certificate of Sale was registered and inscribed on TCT Nos. T-152630, T-151655 and T-214528.5
In a letter dated March 8, 2001, petitioners counsel offered to redeem the foreclosed properties by tendering a
check in the amount of P3,500,000.00. On March 12, 2001, petitioners counsel met with respondents counsel
reiterating petitioners intention to exercise the right of redemption.6 However, petitioner was told that such
redemption is no longer possible because the certificate of sale had already been registered. Petitioner also
verified with the Registry of Deeds that title to the foreclosed properties had already been consolidated in favor
of respondent and that new certificates of title were issued in the name of respondent on March 9, 2001.
On December 7, 2001, petitioner filed a complaint7 for specific performance and damages against the
respondent, asserting that it is the one-year period of redemption under Act No. 3135 which should apply and
not the shorter redemption period provided in Republic Act (R.A.) No. 8791. Petitioner argued that applying
Section 47 of R.A. 8791 to the real estate mortgage executed in 1985 would result in the impairment of
obligation of contracts and violation of the equal protection clause under the Constitution. Additionally,
petitioner faulted the respondent for allegedly failing to furnish it and the Office of the Clerk of Court, RTC of
Valenzuela City with a Statement of Account as directed in the Certificate of Sale, due to which petitioner was
not apprised of the assessment and fees incurred by respondent, thus depriving petitioner of the opportunity to
exercise its right of redemption prior to the registration of the certificate of sale.
In its Answer with Counterclaim,8 respondent pointed out that petitioner cannot claim that it was unaware of the
redemption price which is clearly provided in Section 47 of R.A. No. 8791, and that petitioner had all the
opportune time to redeem the foreclosed properties from the time it received the letter of demand and the notice
of sale before the registration of the certificate of sale. As to the check payment tendered by petitioner,
respondent said that even assuming arguendo such redemption was timely made, it was not for the amount as
required by law.

On January 8, 2007, the trial court rendered its decision dismissing the complaint as well as the counterclaim. It
noted that the issue of constitutionality of Sec. 47 of R.A. No. 8791 was never raised by the petitioner during
the pre-trial and the trial. Aside from the fact that petitioners attempt to redeem was already late, there was no
valid redemption made because Atty. Judy Ann Abat-Vera who talked to Atty. Joseph E. Mabilog of the Legal
Division of respondent bank, was not properly authorized by petitioners Board of Directors to transact for and
in its behalf; it was only a certain Chan Guan Pue, the alleged President of petitioner corporation, who gave
instruction to Atty. Abat-Vera to redeem the foreclosed properties.9
Aggrieved, petitioner appealed to the CA which affirmed the trial courts decision. According to the CA,
petitioner failed to justify why Section 47 of R.A. No. 8791 should be declared unconstitutional. Furthermore,
the appellate court concluded that a reading of Section 47 plainly reveals the intention to shorten the period of
redemption for juridical persons and that the foreclosure of the mortgaged properties in this case when R.A. No.
8791 was already in effect clearly falls within the purview of the said provision.10
Petitioners motion for reconsideration was likewise denied by the CA.
In the present petition, it is contended that Section 47 of R.A. No. 8791 is inapplicable considering that the
contracting parties expressly and categorically agreed that the foreclosure of the real estate mortgage shall be in
accordance with Act No. 3135. Citing Co v. Philippine National Bank11 petitioner contended that the right of
redemption is part and parcel of the Deed of Real Estate Mortgage itself and attaches thereto upon its execution,
a vested right flowing out of and made dependent upon the law governing the contract of mortgage and not on
the mortgagees act of extrajudicially foreclosing the mortgaged properties. This Court thus held in said case
that "Under the terms of the mortgage contract, the terms and conditions under which redemption may be
exercised are deemed part and parcel thereof whether the same be merely conventional or imposed by law."
Petitioner then argues that applying Section 47 of R.A. No. 8791 to the present case would be a substantial
impairment of its vested right of redemption under the real estate mortgage contract. Such impairment would be
violative of the constitutional proscription against impairment of obligations of contract, a patent derogation of
petitioners vested right and clearly changes the intention of the contracting parties. Moreover, citing this
Courts ruling in Rural Bank of Davao City, Inc. v. Court of Appeals12 where it was held that "Section 119
prevails over statutes which provide for a shorter period of redemption in extrajudicial foreclosure sales", and in
Sulit
v. Court of Appeals,13 petitioner stresses that it has always been the policy of this Court to aid rather than defeat
the mortgagors right to redeem his property.
Petitioner further argues that since R.A. No. 8791 does not provide for its retroactive application, courts
therefore cannot retroactively apply its provisions to contracts executed and consummated before its effectivity.
Also, since R.A. 8791 is a general law pertaining to the banking industry while Act No. 3135 is a special law
specifically governing real estate mortgage and foreclosure, under the rules of statutory construction that in case
of conflict a special law prevails over a general law regardless of the dates of enactment of both laws, Act No.
3135 clearly should prevail on the redemption period to be applied in this case.
The constitutional issue having been squarely raised in the pleadings filed in the trial and appellate courts, we
shall proceed to resolve the same.

The law governing cases of extrajudicial foreclosure of mortgage is Act No. 3135,14 as amended by Act No.
4118. Section 6 thereof provides:
SEC. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to, the
debtor, his successors-in-interest or any judicial creditor or judgment creditor of said debtor, or any person
having a lien on the property subsequent to the mortgage or deed of
trust under which the property is sold, may redeem the same at any time within the term of one year from and
after the date of the sale; and such redemption shall be governed by the provisions of sections four hundred and
sixty-four to four hundred and sixty-six, inclusive, of the Code of
Civil Procedure,15 in so far as these are not inconsistent with the provisions of this Act.
The one-year period of redemption is counted from the date of the registration of the certificate of sale. In this
case, the parties provided in their real estate mortgage contract that upon petitioners default and the latters
entire loan obligation becoming due, respondent may immediately foreclose the mortgage judicially in
accordance with the Rules of Court, or extrajudicially in accordance with Act No. 3135, as amended.
However, Section 47 of R.A. No. 8791 otherwise known as "The General Banking Law of 2000" which took
effect on June 13, 2000, amended Act No. 3135. Said provision reads:
SECTION 47. Foreclosure of Real Estate Mortgage. In the event of foreclosure, whether judicially or
extrajudicially, of any mortgage on real estate which is security for any loan or other credit accommodation
granted, the mortgagor or debtor whose real property has been sold for the full or partial payment of his
obligation shall have the right within one year after the sale of the real estate, to redeem the property by paying
the amount due under the mortgage deed, with interest thereon at the rate specified in the mortgage, and all the
costs and expenses incurred by the bank or institution from the sale and custody of said property less the income
derived therefrom. However, the purchaser at the auction sale concerned whether in a judicial or extrajudicial
foreclosure shall have the right to enter upon and take possession of such property immediately after the date of
the confirmation of the auction sale and administer the same in accordance with law. Any petition in court to
enjoin or restrain the conduct of foreclosure proceedings instituted pursuant to this provision shall be given due
course only upon the filing by the petitioner of a bond in an amount fixed by the court conditioned that he will
pay all the damages which the bank may suffer by the enjoining or the restraint of the foreclosure proceeding.
Notwithstanding Act 3135, juridical persons whose property is being sold pursuant to an extrajudicial
foreclosure, shall have the right to redeem the property in accordance with this provision until, but not after, the
registration of the certificate of foreclosure sale with the applicable Register of Deeds which in no case shall be
more than three (3) months after foreclosure, whichever is earlier. Owners of property that has been sold in a
foreclosure sale prior to the effectivity of this Act shall retain their redemption rights until their expiration.
(Emphasis supplied.)
Under the new law, an exception is thus made in the case of juridical persons which are allowed to exercise the
right of redemption only "until, but not after, the registration of the certificate of foreclosure sale" and in no case
more than three (3) months after foreclosure, whichever comes first.16

May the foregoing amendment be validly applied in this case when the real estate mortgage contract was
executed in 1985 and the mortgage foreclosed when R.A. No. 8791 was already in effect?
We answer in the affirmative.
When confronted with a constitutional question, it is elementary that every court must approach it with grave
care and considerable caution bearing in mind that every statute is presumed valid and every reasonable doubt
should be resolved in favor of its constitutionality.17 For a law to be nullified, it must be shown that there is a
clear and unequivocal breach of the Constitution. The ground for nullity must be clear and beyond reasonable
doubt.18 Indeed, those who petition this Court to declare a law, or parts thereof, unconstitutional must clearly
establish the basis therefor. Otherwise, the petition must fail.19
Petitioners contention that Section 47 of R.A. 8791 violates the constitutional proscription against impairment
of the obligation of contract has no basis.
The purpose of the non-impairment clause of the Constitution20 is to safeguard the integrity of contracts against
unwarranted interference by the State. As a rule, contracts should not be tampered with by subsequent laws that
would change or modify the rights and obligations of the parties.21 Impairment is anything that diminishes the
efficacy of the contract. There is an impairment if a subsequent law changes the terms of a contract between the
parties, imposes new conditions, dispenses with those agreed upon or withdraws remedies for the enforcement
of the rights of the parties.22
Section 47 did not divest juridical persons of the right to redeem their foreclosed properties but only modified
the time for the exercise of such right by reducing the one-year period originally provided in Act No. 3135. The
new redemption period commences from the date of foreclosure sale, and expires upon registration of the
certificate of sale or three months after foreclosure, whichever is earlier. There is likewise no retroactive
application of the new redemption period because Section 47 exempts from its operation those properties
foreclosed prior to its effectivity and whose owners shall retain their redemption rights under Act No. 3135.
Petitioners claim that Section 47 infringes the equal protection clause as it discriminates mortgagors/property
owners who are juridical persons is equally bereft of merit.
The equal protection clause is directed principally against undue favor and individual or class privilege.1wphi1
It is not intended to prohibit legislation which is limited to the object to which it is directed or by the territory in
which it is to operate. It does not require absolute equality, but merely that all persons be treated alike under like
conditions both as to privileges conferred and liabilities imposed.23 Equal protection permits of reasonable
classification.24 We have ruled that one class may be treated differently from another where the groupings are
based on reasonable and real distinctions.25 If classification is germane to the purpose of the law, concerns all
members of the class, and applies equally to present and future conditions, the classification does not violate the
equal protection guarantee.26
We agree with the CA that the legislature clearly intended to shorten the period of redemption for juridical
persons whose properties were foreclosed and sold in accordance with the provisions of Act No. 3135.27
The difference in the treatment of juridical persons and natural persons was based on the nature of the properties
foreclosed whether these are used as residence, for which the more liberal one-year redemption period is

retained, or used for industrial or commercial purposes, in which case a shorter term is deemed necessary to
reduce the period of uncertainty in the ownership of property and enable mortgagee-banks to dispose sooner of
these acquired assets. It must be underscored that the General Banking Law of 2000, crafted in the aftermath of
the 1997 Southeast Asian financial crisis, sought to reform the General Banking Act of 1949 by fashioning a
legal framework for maintaining a safe and sound banking system.28 In this context, the amendment introduced
by Section 47 embodied one of such safe and sound practices aimed at ensuring the solvency and liquidity of
our banks.1wphi1 It cannot therefore be disputed that the said provision amending the redemption period in
Act 3135 was based on a reasonable classification and germane to the purpose of the law.
This legitimate public interest pursued by the legislature further enfeebles petitioners impairment of contract
theory.
The right of redemption being statutory, it must be exercised in the manner prescribed by the statute,29 and
within the prescribed time limit, to make it effective. Furthermore, as with other individual rights to contract
and to property, it has to give way to police power exercised for public welfare.30 The concept of police power is
well-established in this jurisdiction. It has been defined as the "state authority to enact legislation that may
interfere with personal liberty or property in order to promote the general welfare." Its scope, ever-expanding to
meet the exigencies of the times, even to anticipate the future where it could be done, provides enough room for
an efficient and flexible response to conditions and circumstances thus assuming the greatest benefits.31
The freedom to contract is not absolute; all contracts and all rights are subject to the police power of the State
and not only may regulations which affect them be established by the State, but all such regulations must be
subject to change from time to time, as the general well-being of the community may require, or as the
circumstances may change, or as experience may demonstrate the necessity.32 Settled is the rule that the nonimpairment clause of the Constitution must yield to the loftier purposes targeted by the Government. The right
granted by this provision must submit to the demands and necessities of the States power of regulation.33 Such
authority to regulate businesses extends to the banking industry which, as this Court has time and again
emphasized, is undeniably imbued with public interest.34
Having ruled that the assailed Section 47 of R.A. No. 8791 is constitutional, we find no reversible error
committed by the CA in holding that petitioner can no longer exercise the right of redemption over its
foreclosed properties after the certificate of sale in favor of respondent had been registered.
WHEREFORE, the petition for review on certiorari is DENIED for lack of merit. The Decision dated
November 19, 2010 and Resolution dated January 31, 2011 of the Court of Appeals in CA-G.R. CV No. 91120
are hereby AFFIRMED.
With costs against the petitioner.
SO ORDERED.
PARTITION
G.R. No. 168970

January 15, 2010

CELESTINO BALUS, Petitioner,

vs.
SATURNINO BALUS and LEONARDA BALUS VDA. DE CALUNOD, Respondents.
DECISION
PERALTA, J.:
Assailed in the present petition for review on certiorari under Rule 45 of the Rules of Court is the Decision1 of
the Court of Appeals (CA) dated May 31, 2005 in CA-G.R. CV No. 58041 which set aside the February 7, 1997
Decision of the Regional Trial Court (RTC) of Lanao del Norte, Branch 4 in Civil Case No. 3263.
The facts of the case are as follows:
Herein petitioner and respondents are the children of the spouses Rufo and Sebastiana Balus. Sebastiana died on
September 6, 1978, while Rufo died on July 6, 1984.
On January 3, 1979, Rufo mortgaged a parcel of land, which he owns, as security for a loan he obtained from
the Rural Bank of Maigo, Lanao del Norte (Bank). The said property was originally covered by Original
Certificate of Title No. P-439(788) and more particularly described as follows:
A parcel of land with all the improvements thereon, containing an area of 3.0740 hectares, more or less, situated
in the Barrio of Lagundang, Bunawan, Iligan City, and bounded as follows: Bounded on the NE., along line 1-2,
by Lot 5122, Csd-292; along line 2-12, by Dodiongan River; along line 12-13 by Lot 4649, Csd-292; and along
line 12-1, by Lot 4661, Csd-292. x x x 2
Rufo failed to pay his loan. As a result, the mortgaged property was foreclosed and was subsequently sold to the
Bank as the sole bidder at a public auction held for that purpose. On November 20, 1981, a Certificate of Sale3
was executed by the sheriff in favor of the Bank. The property was not redeemed within the period allowed by
law. More than two years after the auction, or on January 25, 1984, the sheriff executed a Definite Deed of Sale4
in the Bank's favor. Thereafter, a new title was issued in the name of the Bank.
On October 10, 1989, herein petitioner and respondents executed an Extrajudicial Settlement of Estate5
adjudicating to each of them a specific one-third portion of the subject property consisting of 10,246 square
meters. The Extrajudicial Settlement also contained provisions wherein the parties admitted knowledge of the
fact that their father mortgaged the subject property to the Bank and that they intended to redeem the same at
the soonest possible time.
Three years after the execution of the Extrajudicial Settlement, herein respondents bought the subject property
from the Bank. On October 12, 1992, a Deed of Sale of Registered Land6 was executed by the Bank in favor of
respondents. Subsequently, Transfer Certificate of Title (TCT) No. T-39,484(a.f.)7 was issued in the name of
respondents. Meanwhile, petitioner continued possession of the subject lot.
On June 27, 1995, respondents filed a Complaint8 for Recovery of Possession and Damages against petitioner,
contending that they had already informed petitioner of the fact that they were the new owners of the disputed

property, but the petitioner still refused to surrender possession of the same to them. Respondents claimed that
they had exhausted all remedies for the amicable settlement of the case, but to no avail.
On February 7, 1997, the RTC rendered a Decision9 disposing as follows:
WHEREFORE, judgment is hereby rendered, ordering the plaintiffs to execute a Deed of Sale in favor of the
defendant, the one-third share of the property in question, presently possessed by him, and described in the deed
of partition, as follows:
A one-third portion of Transfer Certificate of Title No. T-39,484 (a.f.), formerly Original Certificate of Title No.
P-788, now in the name of Saturnino Balus and Leonarda B. Vda. de Calunod, situated at Lagundang, Bunawan,
Iligan City, bounded on the North by Lot 5122; East by shares of Saturnino Balus and Leonarda Balus-Calunod;
South by Lot 4649, Dodiongan River; West by Lot 4661, consisting of 10,246 square meters, including
improvements thereon.
and dismissing all other claims of the parties.
The amount of P6,733.33 consigned by the defendant with the Clerk of Court is hereby ordered delivered to the
plaintiffs, as purchase price of the one-third portion of the land in question.
Plaintiffs are ordered to pay the costs.
SO ORDERED.10
The RTC held that the right of petitioner to purchase from the respondents his share in the disputed property
was recognized by the provisions of the Extrajudicial Settlement of Estate, which the parties had executed
before the respondents bought the subject lot from the Bank.
Aggrieved by the Decision of the RTC, herein respondents filed an appeal with the CA.
On May 31, 2005, the CA promulgated the presently assailed Decision, reversing and setting aside the Decision
of the RTC and ordering petitioner to immediately surrender possession of the subject property to the
respondents. The CA ruled that when petitioner and respondents did not redeem the subject property within the
redemption period and allowed the consolidation of ownership and the issuance of a new title in the name of the
Bank, their co-ownership was extinguished.
Hence, the instant petition raising a sole issue, to wit:
WHETHER OR NOT CO-OWNERSHIP AMONG THE PETITIONER AND THE RESPONDENTS OVER
THE PROPERTY PERSISTED/CONTINUED TO EXIST (EVEN AFTER THE TRANSFER OF TITLE TO
THE BANK) BY VIRTUE OF THE PARTIES' AGREEMENT PRIOR TO THE REPURCHASE THEREOF
BY THE RESPONDENTS; THUS, WARRANTING THE PETITIONER'S ACT OF ENFORCING THE
AGREEMENT BY REIMBURSING THE RESPONDENTS OF HIS (PETITIONER'S) JUST SHARE OF THE
REPURCHASE PRICE.11

The main issue raised by petitioner is whether co-ownership by him and respondents over the subject property
persisted even after the lot was purchased by the Bank and title thereto transferred to its name, and even after it
was eventually bought back by the respondents from the Bank.
Petitioner insists that despite respondents' full knowledge of the fact that the title over the disputed property was
already in the name of the Bank, they still proceeded to execute the subject Extrajudicial Settlement, having in
mind the intention of purchasing back the property together with petitioner and of continuing their coownership thereof.
Petitioner posits that the subject Extrajudicial Settlement is, in and by itself, a contract between him and
respondents, because it contains a provision whereby the parties agreed to continue their co-ownership of the
subject property by "redeeming" or "repurchasing" the same from the Bank. This agreement, petitioner
contends, is the law between the parties and, as such, binds the respondents. As a result, petitioner asserts that
respondents' act of buying the disputed property from the Bank without notifying him inures to his benefit as to
give him the right to claim his rightful portion of the property, comprising 1/3 thereof, by reimbursing
respondents the equivalent 1/3 of the sum they paid to the Bank.
The Court is not persuaded.
Petitioner and respondents are arguing on the wrong premise that, at the time of the execution of the
Extrajudicial Settlement, the subject property formed part of the estate of their deceased father to which they
may lay claim as his heirs.
At the outset, it bears to emphasize that there is no dispute with respect to the fact that the subject property was
exclusively owned by petitioner and respondents' father, Rufo, at the time that it was mortgaged in 1979. This
was stipulated by the parties during the hearing conducted by the trial court on October 28, 1996.12 Evidence
shows that a Definite Deed of Sale13 was issued in favor of the Bank on January 25, 1984, after the period of
redemption expired. There is neither any dispute that a new title was issued in the Bank's name before Rufo died
on July 6, 1984. Hence, there is no question that the Bank acquired exclusive ownership of the contested lot
during the lifetime of Rufo.
The rights to a person's succession are transmitted from the moment of his death.14 In addition, the inheritance
of a person consists of the property and transmissible rights and obligations existing at the time of his death, as
well as those which have accrued thereto since the opening of the succession.15 In the present case, since Rufo
lost ownership of the subject property during his lifetime, it only follows that at the time of his death, the
disputed parcel of land no longer formed part of his estate to which his heirs may lay claim. Stated differently,
petitioner and respondents never inherited the subject lot from their father.
Petitioner and respondents, therefore, were wrong in assuming that they became co-owners of the subject lot.
Thus, any issue arising from the supposed right of petitioner as co-owner of the contested parcel of land is
negated by the fact that, in the eyes of the law, the disputed lot did not pass into the hands of petitioner and
respondents as compulsory heirs of Rufo at any given point in time.
The foregoing notwithstanding, the Court finds a necessity for a complete determination of the issues raised in
the instant case to look into petitioner's argument that the Extrajudicial Settlement is an independent contract

which gives him the right to enforce his right to claim a portion of the disputed lot bought by
respondents.1avvphi1
It is true that under Article 1315 of the Civil Code of the Philippines, contracts are perfected by mere consent;
and from that moment, the parties are bound not only to the fulfillment of what has been expressly stipulated
but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and
law.
Article 1306 of the same Code also provides that the contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided these are not contrary to law, morals, good
customs, public order or public policy.
In the present case, however, there is nothing in the subject Extrajudicial Settlement to indicate any express
stipulation for petitioner and respondents to continue with their supposed co-ownership of the contested lot.
On the contrary, a plain reading of the provisions of the Extrajudicial Settlement would not, in any way, support
petitioner's contention that it was his and his sibling's intention to buy the subject property from the Bank and
continue what they believed to be co-ownership thereof. It is a cardinal rule in the interpretation of contracts
that the intention of the parties shall be accorded primordial consideration.16 It is the duty of the courts to place a
practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and
the purpose which it is intended to serve.17 Such intention is determined from the express terms of their
agreement, as well as their contemporaneous and subsequent acts.18 Absurd and illogical interpretations should
also be avoided.19
For petitioner to claim that the Extrajudicial Settlement is an agreement between him and his siblings to
continue what they thought was their ownership of the subject property, even after the same had been bought by
the Bank, is stretching the interpretation of the said Extrajudicial Settlement too far.
In the first place, as earlier discussed, there is no co-ownership to talk about and no property to partition, as the
disputed lot never formed part of the estate of their deceased father.
Moreover, petitioner's asseveration of his and respondents' intention of continuing with their supposed coownership is negated by no less than his assertions in the present petition that on several occasions he had the
chance to purchase the subject property back, but he refused to do so. In fact, he claims that after the Bank
acquired the disputed lot, it offered to re-sell the same to him but he ignored such offer. How then can petitioner
now claim that it was also his intention to purchase the subject property from the Bank, when he admitted that
he refused the Bank's offer to re-sell the subject property to him?
In addition, it appears from the recitals in the Extrajudicial Settlement that, at the time of the execution thereof,
the parties were not yet aware that the subject property was already exclusively owned by the Bank.
Nonetheless, the lack of knowledge on the part of petitioner and respondents that the mortgage was already
foreclosed and title to the property was already transferred to the Bank does not give them the right or the
authority to unilaterally declare themselves as co-owners of the disputed property; otherwise, the disposition of
the case would be made to depend on the belief and conviction of the party-litigants and not on the evidence
adduced and the law and jurisprudence applicable thereto.

Furthermore, petitioner's contention that he and his siblings intended to continue their supposed co-ownership
of the subject property contradicts the provisions of the subject Extrajudicial Settlement where they clearly
manifested their intention of having the subject property divided or partitioned by assigning to each of the
petitioner and respondents a specific 1/3 portion of the same. Partition calls for the segregation and conveyance
of a determinate portion of the property owned in common. It seeks a severance of the individual interests of
each co-owner, vesting in each of them a sole estate in a specific property and giving each one a right to enjoy
his estate without supervision or interference from the other.20 In other words, the purpose of partition is to put
an end to co-ownership,21 an objective which negates petitioner's claims in the present case.
WHEREFORE, the instant petition is DENIED. The assailed Decision of the Court of Appeals, dated May 31,
2005 in CA-G.R. CV No. 58041, is AFFIRMED.
SO ORDERED
G.R. No. 161746

September 1, 2010

EUGENIO FELICIANO, substituted by his wife CEFERINA DE PALMA- FELICIANO, ANGELINA

DE LEON, representing the heirs of ESTEBAN FELICIANO, TRINIDAD VALIENTE, AND BASILIA
TRINIDAD, represented by her son DOMINADOR T. FELICIANO, Petitioners,
vs.
PEDRO CANOZA, DELIA FELICIANO, ROSAURO FELICIANO, ELSA FELICIANO AND
PONCIANO FELICIANO, Respondents.
DECISION
VILLARAMA, JR., J.:
Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, seeking to annul and set aside the Decision1 dated June 26, 2003 and Resolution2 dated January 15,
2004 of the Court of Appeals (CA) in CA-G.R. CV No. 61888. The CA had reversed the Decision3 dated August
3, 1998 of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 11, in Civil Case No. 819-M-93 and
dismissed petitioners complaint on the ground of prescription.
The facts are as follows:
When Antonio Feliciano passed away on May 20, 1930, he left behind his only property, a parcel of land
located at Bunga4 Mayor, Bustos, Bulacan. The land had an area of 1,125 square meters and was evidenced by
Tax Declaration No. 14025 in his name. On March 28, 1972, Leona, Maria, Pedro and Salina, all surnamed
Feliciano, declared themselves to be the only surviving heirs of Antonio Feliciano, with the exception of Salina.
They executed an extrajudicial settlement of Antonio Felicianos estate6 and appropriated among themselves the
said parcel of land, to the exclusion of the heirs of Esteban Feliciano and Doroteo Feliciano, deceased children
of Antonio Feliciano. On even date, Leona, Maria, Pedro and Salina executed a deed of absolute sale or
Kasulatan sa Ganap Na Bilihan over the property in favor of the late Jacinto Feliciano (Pedros portion), Felisa
Feliciano (Salinas portion) and Pedro Canoza (Leona and Marias portions).7

During his lifetime, Jacinto Feliciano applied for a free patent over the portion of land he bought, declaring that
the same was a public land, first occupied and cultivated by Pedro Feliciano.8 Jacinto was issued Free Patent
No. (IV-4) 012293 on November 28, 19779 and the same was forwarded to the Register of Deeds of Malolos,
Bulacan, but unfortunately, it was burned on March 7, 1987. Pedro Canoza, for his part, also applied for a free
patent over the portion of land which he bought, claiming that the same was public land, first occupied and
cultivated by Leona and Maria Feliciano.10 He was issued Free Patent No. (IV-4) 012292, now covered by
Original Certificate of Title (OCT) No. P-364,11 on February 23, 1979.
On October 18, 1993, Eugenio Feliciano and Angelina Feliciano-de Leon, surviving heirs of the late Esteban
Feliciano, and Trinidad Feliciano-Valiente and Basilia Feliciano-Trinidad, surviving children of the late Doroteo
Feliciano, filed a complaint12 against Salina Feliciano, Felisa Feliciano, Pedro Canoza and the heirs of the late
Jacinto Feliciano, namely Delia, Rosauro, Elsa, Nardo and Ponciano, all surnamed Feliciano, for the
Declaration of Nullity of Documents and Title, Recovery of Real Property and Damages. They alleged that the
settlement of the estate and sale were done without their participation and consent as heirs of Esteban and
Doroteo. Likewise, they averred that the ancestral home of the Felicianos is erected on the subject property and
that they have occupied the same since birth. Canoza and Jacinto falsely declared that the property was not
occupied, so their titles to the property should be declared null and void on the ground that they have made false
statements in their respective applications for free patent.
On November 4, 1993, before an Answer could be filed, the petitioners amended their complaint to include the
allegation that they sought to recover the shares of their fathers, Esteban and Doroteo, which they could have
acquired as heirs of Antonio Feliciano.13
In their Answer,14 respondent Pedro Canoza and his spouse, respondent Delia Feliciano, alleged that they were
buyers in good faith and for value. They likewise contended that assuming that there was preterition of legal
heirs, they never took part in it. As affirmative defenses, they alleged that the complaint failed to state a cause of
action; the lower court had no jurisdiction as the subject of the case were free patents and therefore prior
exhaustion of administrative remedies was required; the case was prematurely filed; no effort was exerted
towards a settlement; plaintiffs right has prescribed; Eugenio Feliciano was a mere squatter who should be
ordered to vacate; the deed of sale was validly, genuinely and duly executed; Eugenio and Angelina were guilty
of misleading the court because there were other heirs who were indispensable parties but who were not
included; and Presidential Decree No. 1508 or the Revised Katarungang Pambarangay Law was not resorted to
by plaintiffs.
Respondents Rosauro Feliciano, Elsa Feliciano and Ponciano Feliciano likewise filed an Answer15 containing
the same allegations and defenses as respondents Pedro Canoza and Delia Feliciano. The other defendants,
Salina Feliciano, Felisa Feliciano and Nardo Feliciano were declared in default.
On August 3, 1998, the trial court rendered a Decision, the dispositive portion of which reads as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants, as follows:
1. Declaring the extra-judicial settlement of estate of Antonio Feliciano null and void;
2. Declaring the sale of the property in question to Pedro Canoza, Felisa Feliciano and Jacinto Feliciano
null and void;

3. Declaring the original certificate of Title No. 364 in the name of Pedro Canoza and the certificates of
titles in the name of defendants over Lot 1874-Cad-344, Bustos Cadastre (Tax Declaration No. 1402) as
null and void;
4. Ordering defendants to reconvey ownership and possession of said property to plaintiffs subject to a
just and equitable partition thereof by and between all interested parties.
No pronouncement as to cost.
SO ORDERED.16
The trial court explained that by operation of law, the plaintiffs (herein petitioners) have as much right as Leona,
Maria, Pedro and Salina Feliciano to inherit the property in question, and they cannot be deprived of their right
unless by disinheritance for causes set forth in the law. When Leona Feliciano, Pedro Feliciano, Maria Feliciano
and Salina Feliciano appropriated the disputed lot solely to themselves through the extrajudicial settlement of
estate, they committed a fraudulent act. To the extent that Doroteo and Esteban were deprived of their rightful
share, the said out-of-court settlement was annullable, said the trial court. The trial court also declared that
Pedro Canoza was not a buyer in good faith of Leona and Marias shares. Records show that Pedro Canozas
live-in partner, Delia Feliciano, was a relative of the petitioners and the other defendants; thus, he could be
reasonably charged with the knowledge of petitioners status vis--vis the subject property. The acquisition by
Canoza and Jacinto Feliciano of free patent titles over portions of the contested lot also did not legitimize their
ownership thereof, as they acquired no greater rights over the property than their predecessors-in-interest,
having merely stepped into their shoes.17
Aggrieved, respondents appealed to the CA with the following assignment of errors:
I. THE LOWER COURT COMMITTED A REVERSIBLE ERROR IN ADMITTING IN EVIDENCE THE
EXTRA-JUDICIAL SETTLEMENT OF ESTATE OF ANTONIO FELICIANO (EXHIBIT "B")[;]
II. THE LOWER COURT COMMITTED A REVERSIBLE ERROR IN DECLARING AS NULL AND VOID
THE EXTRA-JUDICIAL SETTLEMENT OF ESTATE OF ANTONIO FELICIANO (EXHIBIT "B")[;]
III. THE LOWER COURT COMMITTED A REVERSIBLE ERROR IN DECLARING AS NULL AND VOID
THE DEED OF SALE (EXHIBIT "C") IN FAVOR OF JACINTO FELICIANO, FELISA FELICIANO AND
PEDRO CANOZA[;]
IV. THE LOWER COURT COMMITTED A REVERSIBLE ERROR IN DECLARING O.C.T. NO. 364 IN
THE NAME OF PEDRO CANOZA AND CERTIFICATES OF TITLE OF DEFENDANTS AS NULL AND
VOID[; AND]
V. THE LOWER COURT COMMITTED A REVERSIBLE ERROR IN ORDERING DEFENDANTS TO
RECONVEY OWNERSHIP AND POSSESSION OF THE SUBJECT PROPERTY TO PLAINTIFFS
SUBJECT TO A JUST AND EQUITABLE PARTITION THEREOF BY AND BETWEEN ALL INTERESTED
PARTIES.18

On June 26, 2003, the appellate court rendered the assailed Decision reversing the trial courts decision. The CA
held,
WHEREFORE, premises considered, the appeal is hereby GRANTED. Accordingly, the Decision dated August
3, 1998 of the Regional Trial Court, Branch 11 (XI), Malolos, Bulacan in Civil Case No. 819-M-93 is hereby
REVERSED AND SET ASIDE and plaintiffs-appellees complaint is ordered DISMISSED for being timebarred.
SO ORDERED.19
The CA ruled that prescription had set in, citing the case of Pedrosa v. Court of Appeals,20 which held that the
applicable prescriptive period to annul a deed of extrajudicial settlement is four (4) years from the discovery of
the fraud. It reasoned that when petitioners filed the instant complaint for the annulment of the extrajudicial
settlement of Antonio Felicianos estate, more than four (4) years had elapsed from the issuance of the free
patents. As regards the portion claimed by the late Jacinto Feliciano, sixteen (16) years had elapsed from the
time the free patent was issued to him before petitioners filed the complaint, while in the case of Canoza,
fourteen (14) years had elapsed from the issuance of the free patent in Canozas favor. Hence, according to the
CA, the action for the annulment of the documents had prescribed.
Petitioners filed a motion for reconsideration of the aforesaid Decision but it was denied by the CA in the
Resolution dated January 15, 2004 for lack of merit.
Hence, this petition.
The grounds relied upon by the petitioners are the following:
A. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN GRANTING THE APPEAL
BY ORDERING THE DISMISSAL OF THE COMPLAINT ON GROUND OF PRESCRIPTION OF
ACTION, DESPITE THE FACT THAT THE ISSUE OF PRESCRIPTION OF ACTION HAS NOT
BEEN RAISED ON APPEAL AS AN ISSUE, NOR ASSIGNED AS AN ERROR, NOR DEFINED IN
THE PRE-TRIAL ORDER AS AMONG THE ISSUES TO BE RESOLVED;
B. ASSUMING THAT PRESCRIPTION OF ACTION MAY BE TAKEN AS A GROUND FOR
DISMISSING THE COMPLAINT EVEN IF NOT RAISED ON APPEAL, NOR ASSIGNED AS
AMONG THE ERRORS COMMITTED, THE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR IN HOLDING THAT THE ACTION PRESCRIBES IN FOUR YEARS, OR IN NOT
HOLDING THAT THE ACTION IS IMPRESCRIPTIBLE;
C. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT AFFIRMING THE
DECISION OF THE TRIAL COURT.21
Essentially, the issue for our resolution is whether the CA erred in reversing the trial courts decision.
Petitioners allege that the CA gravely erred in granting the appeal and in dismissing the complaint on the ground
of prescription of action because that issue was never raised on appeal, nor defined as one (1) of the issues
outlined and limited in the pre-trial order.

We do not agree.
While respondents have not assigned the defense of prescription in their appeal before the CA, they raised such
defense in their December 1, 1993 Answer as one (1) of their affirmative defenses.22 In their brief before the
CA, respondents specifically prayed for the reliefs mentioned in their respective answers before the trial court.
Thus, by reference, they are deemed to have adopted the defense of prescription, and could not properly be said
to have waived the defense of prescription.
Moreover, Rule 9, Section 1 of the 1997 Rules of Civil Procedure, as amended, provides that when it appears
from the pleadings or the evidence on record that the action is already barred by the statute of limitations, the
court shall dismiss the claim. Thus, in Gicano v. Gegato,23 we held:
We have ruled that trial courts have authority and discretion to dismiss an action on the ground of prescription
when the parties pleadings or other facts on record show it to be indeed time-barred x x x; and it may do so on
the basis of a motion to dismiss, or an answer which sets up such ground as an affirmative defense; or even if
the ground is alleged after judgment on the merits, as in a motion for reconsideration; or even if the defense has
not been asserted at all, as where no statement thereof is found in the pleadings, or where a defendant has been
declared in default. What is essential only, to repeat, is that the facts demonstrating the lapse of the prescriptive
period, be otherwise sufficiently and satisfactorily apparent on the record: either in the averments of the
plaintiffs complaint, or otherwise established by the evidence. (Underscoring supplied.)
But did the CA nonetheless commit error when it held that the applicable prescriptive period is four (4) years?
Petitioners argue that the CA erroneously treated the action they filed at the trial court as one (1) for annulment
of the extrajudicial settlement and applied the four (4)-year prescriptive period in dismissing the same. They
contend that the action they filed was one (1) for Declaration of Nullity of Documents and Titles, Recovery of
Real Property and Damages, and as such, their action was imprescriptible pursuant to Article 141024 of the Civil
Code.
Respondents, for their part, maintain that the CA did not err in holding that the deed of extrajudicial partition
executed without including some of the heirs, who had no knowledge of the partition and did not consent
thereto, is merely fraudulent and not void. They stress that the action to rescind the partition based on fraud
prescribes in four (4) years counted from the date of registration, which is constructive notice to the whole
world.
We affirm the ruling of the CA. As the records show, the heirs of Doroteo and Esteban did not participate in the
extrajudicial partition executed by Salina with the other compulsory heirs, Leona, Maria and Pedro. Undeniably,
the said deed was fraudulently obtained as it deprived the known heirs of Doroteo and Esteban of their shares in
the estate. A deed of extrajudicial partition executed without including some of the heirs, who had no
knowledge of and consent to the same, is fraudulent and vicious.25 Hence, an action to set it aside on the ground
of fraud could be instituted. Such action for the annulment of the said partition, however, must be brought
within four (4) years from the discovery of the fraud.1avvphi1
In Gerona v. De Guzman,26 respondents therein executed a deed of extrajudicial settlement declaring themselves
to be the sole heirs of the late Marcelo de Guzman. They secured new transfer certificates of title in their own

names, thereby excluding the petitioners therein from the estate of the deceased. The petitioners brought an
action for the annulment of the said deed upon the ground that the same is tainted with fraud. The Court held,
Inasmuch as petitioners seek to annul the aforementioned deed of "extra-judicial settlement" upon the
ground of fraud in the execution thereof, the action therefor may be filed within four (4) years from the
discovery of the fraud (Mauricio v. Villanueva, L-11072, September 24, 1959). Such discovery is deemed to
have taken place, in the case at bar, on June 25, 1948, when said instrument was filed with the Register of
Deeds and new certificates of title were issued in the name of respondents exclusively, for the registration of the
deed of extra-judicial settlement constitute constructive notice to the whole world.27 (Emphasis and
underscoring supplied.)
Evidently, the applicable prescriptive period to institute the action to annul the deed of extrajudicial settlement
was four (4) years counted from the discovery of fraud as held in the case of Gerona v. De Guzman.28 However,
the records show that petitioners complaint was filed only on October 18, 1993, or almost sixteen (16) years
after Jacinto Feliciano was issued Free Patent No. (IV-4) 012293 on November 28, 1977, and almost fourteen
(14) years from the time Pedro Canoza was issued OCT No. P-364 on November 28, 1979. As petitioners are
deemed to have obtained constructive notice of the fraud upon the registration of the Free Patent, they clearly
failed to institute the present civil action within the allowable period. The same result obtains even if their
complaint is treated as one (1) essentially for reconveyance as more than ten (10) years have passed since
petitioners cause of action accrued. The CA committed no error in dismissing their complaint.
WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated June 26, 2003 and
Resolution dated January 15, 2004, of the Court of Appeals in CA-G.R. CV No. 61888 are AFFIRMED.
With costs against petitioners.
SO ORDERED.
G.R. No. 183852

October 20, 2010

CARMELA BROBIO MANGAHAS, Petitioner,

vs.
EUFROCINA A. BROBIO, Respondent.
RESOLUTION
NACHURA, J.:
This petition for review on certiorari seeks to set aside the Court of Appeals (CA) Decision1 dated February 21,
2008, which dismissed petitioners action to enforce payment of a promissory note issued by respondent, and
Resolution2 dated July 9, 2008, which denied petitioners motion for reconsideration.
The case arose from the following facts:

On January 10, 2002, Pacifico S. Brobio (Pacifico) died intestate, leaving three parcels of land. He was survived
by his wife, respondent Eufrocina A. Brobio, and four legitimate and three illegitimate children; petitioner
Carmela Brobio Mangahas is one of the illegitimate children.
On May 12, 2002, the heirs of the deceased executed a Deed of Extrajudicial Settlement of Estate of the Late
Pacifico Brobio with Waiver. In the Deed, petitioner and Pacificos other children, in consideration of their love
and affection for respondent and the sum of P150,000.00, waived and ceded their respective shares over the
three parcels of land in favor of respondent. According to petitioner, respondent promised to give her an
additional amount for her share in her fathers estate. Thus, after the signing of the Deed, petitioner demanded
from respondent the promised additional amount, but respondent refused to pay, claiming that she had no more
money.3
A year later, while processing her tax obligations with the Bureau of Internal Revenue (BIR), respondent was
required to submit an original copy of the Deed. Left with no more original copy of the Deed, respondent
summoned petitioner to her office on May 31, 2003 and asked her to countersign a copy of the Deed. Petitioner
refused to countersign the document, demanding that respondent first give her the additional amount that she
promised. Considering the value of the three parcels of land (which she claimed to be worth P20M), petitioner
asked for P1M, but respondent begged her to lower the amount. Petitioner agreed to lower it to P600,000.00.
Because respondent did not have the money at that time and petitioner refused to countersign the Deed without
any assurance that the amount would be paid, respondent executed a promissory note. Petitioner agreed to sign
the Deed when respondent signed the promissory note which read
31 May 2003
This is to promise that I will give a Financial Assistance to CARMELA B. MANGAHAS the amount of
P600,000.00 Six Hundred Thousand only on June 15, 2003.
(SGD)
EUFROCINA A. BROBIO4
When the promissory note fell due, respondent failed and refused to pay despite demand. Petitioner made
several more demands upon respondent but the latter kept on insisting that she had no money.
On January 28, 2004, petitioner filed a Complaint for Specific Performance with Damages5 against respondent,
alleging in part
2. That plaintiff and defendant are legal heirs of the deceased, Pacifico S. Brobio[,] who died intestate
and leaving without a will, on January 10, 2002, but leaving several real and personal properties (bank
deposits), and some of which were the subject of the extra-judicial settlement among them, compulsory
heirs of the deceased, Pacifico Brobio. x x x.
3. That in consideration of the said waiver of the plaintiff over the listed properties in the extra-judicial
settlement, plaintiff received the sum of P150,000.00, and the defendant executed a "Promissory Note"
on June 15, 2003, further committing herself to give plaintiff a financial assistance in the amount of
P600,000.00. x x x.

4. That on its due date, June 15, 2003, defendant failed to make good of her promise of delivering to the
plaintiff the sum of P600,000.00 pursuant to her "Promissory Note" dated May 31, 2003, and despite
repeated demands, defendant had maliciously and capriciously refused to deliver to the plaintiff the
amount [of] P600,000.00, and the last of which demands was on October 29, 2003. x x x.6
In her Answer with Compulsory Counterclaim,7 respondent admitted that she signed the promissory note but
claimed that she was forced to do so. She also claimed that the undertaking was not supported by any
consideration. More specifically, she contended that
10. Defendant was practically held "hostage" by the demand of the plaintiff. At that time, defendant was
so much pressured and was in [a] hurry to submit the documents to the Bureau of Internal Revenue
because of the deadline set and for fear of possible penalty if not complied with. Defendant pleaded
understanding but plaintiff was adamant. Her hand could only move in exchange for 1 million pesos.
11. Defendant, out of pressure and confused disposition, was constrained to make a promissory note in a
reduced amount in favor of the plaintiff. The circumstances in the execution of the promissory note were
obviously attended by involuntariness and the same was issued without consideration at all or for illegal
consideration.8
On May 15, 2006, the Regional Trial Court (RTC) rendered a decision in favor of petitioner. The RTC found
that the alleged "pressure and confused disposition" experienced by respondent and the circumstances that led to
the execution of the promissory note do not constitute undue influence as would vitiate respondents consent
thereto. On the contrary, the RTC observed that
It is clear from all the foregoing that it is the defendant who took improper advantage of the plaintiffs trust and
confidence in her by resorting to a worthless written promise, which she was intent on reneging. On the other
hand, plaintiff did not perform an unlawful conduct when she insisted on a written commitment from the
defendant, as embodied in the promissory note in question, before affixing her signature that was asked of her
by the defendant because, as already mentioned, that was the only opportunity available to her or which
suddenly and unexpectedly presented itself to her in order to press her demand upon the defendant to satisfy the
correct amount of consideration due to her. In other words, as the defendant had repeatedly rebuffed her plea for
additional consideration by claiming lack of money, it is only natural for the plaintiff to seize the unexpected
opportunity that suddenly presented itself in order to compel the defendant to give to her [what is] due [her].
And by executing the promissory note which the defendant had no intention of honoring, as testified to by her,
the defendant clearly acted in bad faith and took advantage of the trust and confidence that plaintiff had reposed
in her.9
The RTC also brushed aside respondents claim that the promissory note was not supported by valuable
consideration. The court maintained that the promissory note was an additional consideration for the waiver of
petitioners share in the three properties in favor of respondent. Its conclusion was bolstered by the fact that the
promissory note was executed after negotiation and haggling between the parties. The dispositive portion of the
RTC decision reads:
WHEREFORE, judgment is hereby rendered as follows:

1. Ordering the defendant to pay to plaintiff the sum of Six Hundred Thousand Pesos (P600,000.00)
which she committed to pay to plaintiff under the promissory note in question, plus interest thereon at
the rate of 12% per annum computed from the date of the filing of the complaint;
2. Ordering the defendant to pay to plaintiff the sum of P50,000.00 as attorneys fees; and
3. Ordering the defendant to pay to plaintiff the costs of this suit.
SO ORDERED.10
On February 21, 2008, the CA reversed the RTC decision and dismissed the complaint.11 The CA found that
there was a complete absence of consideration in the execution of the promissory note, which made it inexistent
and without any legal force and effect. The court noted that "financial assistance" was not the real reason why
respondent executed the promissory note, but only to secure petitioners signature. The CA held that the waiver
of petitioners share in the three properties, as expressed in the deed of extrajudicial settlement, may not be
considered as the consideration of the promissory note, considering that petitioner signed the Deed way back in
2002 and she had already received the consideration of P150,000.00 for signing the same. The CA went on to
hold that if petitioner disagreed with the amount she received, then she should have filed an action for partition.
Further, the CA found that intimidation attended the signing of the promissory note. Respondent needed the
Deed countersigned by petitioner in order to comply with a BIR requirement; and, with petitioners refusal to
sign the said document, respondent was forced to sign the promissory note to assure petitioner that the money
promised to her would be paid.
Petitioner moved for the reconsideration of the CA Decision. In a Resolution dated July 9, 2008, the CA denied
petitioners motion.12
In this petition for review, petitioner raises the following issues:
1. The Honorable Court of Appeals erred in the appreciation of the facts of this case when it found that
intimidation attended the execution of the promissory note subject of this case.
2. The Honorable Court of Appeals erred when it found that the promissory note was without
consideration.
3. The Honorable Court of Appeals erred when it stated that petitioner should have filed [an action] for
partition instead of a case for specific performance.13
The petition is meritorious.
Contracts are voidable where consent thereto is given through mistake, violence, intimidation, undue influence,
or fraud. In determining whether consent is vitiated by any of these circumstances, courts are given a wide
latitude in weighing the facts or circumstances in a given case and in deciding in favor of what they believe
actually occurred, considering the age, physical infirmity, intelligence, relationship, and conduct of the parties at
the time of the execution of the contract and subsequent thereto, irrespective of whether the contract is in a
public or private writing.14

Nowhere is it alleged that mistake, violence, fraud, or intimidation attended the execution of the promissory
note. Still, respondent insists that she was "forced" into signing the promissory note because petitioner would
not sign the document required by the BIR. In one case, the Court in characterizing a similar argument by
respondents therein held that such allegation is tantamount to saying that the other party exerted undue
influence upon them. However, the Court said that the fact that respondents were "forced" to sign the
documents does not amount to vitiated consent.15
There is undue influence when a person takes improper advantage of his power over the will of another,
depriving the latter of a reasonable freedom of choice.16 For undue influence to be present, the influence exerted
must have so overpowered or subjugated the mind of a contracting party as to destroy his free agency, making
him express the will of another rather than his own.17
Respondent may have desperately needed petitioners signature on the Deed, but there is no showing that she
was deprived of free agency when she signed the promissory note. Being forced into a situation does not
amount to vitiated consent where it is not shown that the party is deprived of free will and choice. Respondent
still had a choice: she could have refused to execute the promissory note and resorted to judicial means to obtain
petitioners signature. Instead, respondent chose to execute the promissory note to obtain petitioners signature,
thereby agreeing to pay the amount demanded by petitioner.
The fact that respondent may have felt compelled, under the circumstances, to execute the promissory note will
not negate the voluntariness of the act. As rightly observed by the trial court, the execution of the promissory
note in the amount of P600,000.00 was, in fact, the product of a negotiation between the parties. Respondent
herself testified that she bargained with petitioner to lower the amount:
ATTY. VILLEGAS:
Q And is it not that there was even a bargaining from P1-M to P600,000.00 before you prepare[d] and
[sign[ed] that promissory note marked as Exhibit "C"?
A Yes, sir.
Q And in fact, you were the one [who] personally wrote the amount of P600,000.00 only as indicated in
the said promissory note?
A Yes, sir.
COURT:
Q So, just to clarify. Carmela was asking an additional amount of P1-M for her to sign this document but
you negotiated with her and asked that it be lowered to P600,000.00 to which she agreed, is that correct?
A Yes, Your Honor. Napilitan na po ako.
Q But you negotiated and asked for its reduction from P1-M to P600,000.00?
A Yes, Your Honor.18

Contrary to the CAs findings, the situation did not amount to intimidation that vitiated consent.1awphil There is
intimidation when one of the contracting parties is compelled to give his consent by a reasonable and wellgrounded fear of an imminent and grave evil upon his person or property, or upon the person or property of his
spouse, descendants, or ascendants.19 Certainly, the payment of penalties for delayed payment of taxes would
not qualify as a "reasonable and well-grounded fear of an imminent and grave evil."
We join the RTC in holding that courts will not set aside contracts merely because solicitation, importunity,
argument, persuasion, or appeal to affection was used to obtain the consent of the other party. Influence
obtained by persuasion or argument or by appeal to affection is not prohibited either in law or morals and is not
obnoxious even in courts of equity.20
On the issue that the promissory note is void for not being supported by a consideration, we likewise disagree
with the CA.
A contract is presumed to be supported by cause or consideration.21 The presumption that a contract has
sufficient consideration cannot be overthrown by a mere assertion that it has no consideration. To overcome the
presumption, the alleged lack of consideration must be shown by preponderance of evidence.22 The burden to
prove lack of consideration rests upon whoever alleges it, which, in the present case, is respondent.
Respondent failed to prove that the promissory note was not supported by any consideration. From her
testimony and her assertions in the pleadings, it is clear that the promissory note was issued for a cause or
consideration, which, at the very least, was petitioners signature on the document.1avvphi1
It may very well be argued that if such was the consideration, it was inadequate. Nonetheless, even if the
consideration is inadequate, the contract would not be invalidated, unless there has been fraud, mistake, or
undue influence.23 As previously stated, none of these grounds had been proven present in this case.
The foregoing discussion renders the final issue insignificant. Be that as it may, we would like to state that the
remedy suggested by the CA is not the proper one under the circumstances. An action for partition implies that
the property is still owned in common.24 Considering that the heirs had already executed a deed of extrajudicial
settlement and waived their shares in favor of respondent, the properties are no longer under a state of coownership; there is nothing more to be partitioned, as ownership had already been merged in one person.
WHEREFORE, premises considered, the CA Decision dated February 21, 2008 and its Resolution dated July 9,
2008 are REVERSED and SET ASIDE. The RTC decision dated May 15, 2006 is REINSTATED.
SO ORDERED.
FORCIBLE ENTRY AND UNLAWFUL DETAINER
Cant find suarez vs. Emboy jr. 718 scra 677 march 12, 2014

A.M. No. P-12-3069

January 20, 2014

ATTY. VIRGILIO P. ALCONERA, Complainant,

vs.
ALFREDO T. PALLANAN, Respondent.
DECISION
VELASCO, JR., J.:
Before Us is an administrative complaint for Grave Misconduct and Making Untruthful Statements filed by
Atty. Virgilio P. Alconera against Alfredo Pallanan, Sheriff IV, assigned at the Regional Trial Court (RTC),
Branch 36 in General Santos City.
The antecedent facts are as follows:
Complainant was the counsel for Morito Rafols, the defendant in Civil Case No. 5967-2, an unlawful detainer
case entitled Cua Beng a.k.a. Manuel Sy and Ka Kieng v. Morita Rafols, et al., filed before the Municipal Trial
Court in Cities (MTCC), Branch 2 in General Santos City, South Cotabato. After trial, the MTCC ruled against
Rafols and his co-defendants in a Judgment1dated March 12, 2009, disposing as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant MORITO
RAFOLS, his privies, assigns, heirs, transferee, sublessee. co-Jessee or agents if any to vacate from the subject
lots and deliver possession thereof to the plaintiffs and for defendant to pay back rentals of P5,000.00 per month
from June 2008 and every succeeding months thereafter until he vacate the premises and to jointly and
severally, together with all other defendants, pay attorney's fees in the amount of P20,000.00 with the other
defendants and costs of litigation.
SO ORDERED.
Therefrom, Rafols, through complainant Alconera, appealed the case to the RTC, Branch 36, docketed as Civil
Case No. 675. Pending appeal, the court issued an Order dated February 18, 2011 granting Cua Bengs motion
for execution she filed in Civil Case No. 5967-2, the unlawful detainer case. Alconera sought reconsideration
but the motion was denied through another Order2 dated March 14, 2011.
On March 17, 2011, a troubled Evelyn Rafols, Rafols daughter-in-law, called up Alconera, who at that time was
in Manila, to report that the sheriff, respondent Pallanan, was about to implement the adverted writ of execution.
Evelyn Rafols informed Alconera that respondent sheriff arrived along with the lawyer of the opposing party
and 30 other men to enforce the writ. Respondent sheriff then allegedly demanded payment of PhP 720,000 to

settle Rafols obligation to which the latter protested on the ground that the amount is too exorbitant when they
have been religiously depositing monthly rentals in court to satisfy the judgment.
After explaining the matter to Alconera, Evelyn Rafols passed her phone to respondent sheriff. Over the phone,
a verbal disagreement between the two ensued. Alconera claims that he has a pending motion for
reconsideration on the issuance of the writ of execution, but the respondent said that the motion has already
been denied. And since no Temporary Restraining Order (TRO) has been issued enjoining the implementation,
respondent claimed that he is legally mandated to perform his ministerial duty of enforcing the writ.
Complainant countered that he has not yet received a copy of the denial of the motion, rendering the execution
premature and, at the same time, preventing him from securing a TRO from the higher courts. Nevertheless,
respondent still pushed through with the execution of the judgment.
On March 18, 2011, complainant returned to General Santos City and, at his law office, found a copy of the
Order denying his Motion for Reconsideration, which was only served that very same day. The RTC ruled that
there was no pending Motion to Approve Supersedeas Bond filed with it. Instead, what was filed not with the
RTC but with the MTCC was a "NOTICE OF APPEAL and MOTION TO APPROVE PROPERTY
SUPERSEDEAS BOND," which was not granted.
That afternoon, Alconera went to RTC Br. 36 with his daughter to confront respondent sheriff. The face-off
escalated into a heated argument caught on video. It was complainants daughter, Shyla Mae Zapanta, who is
coincidentally his office clerk, who filmed the incident and transcribed the dialogue during the altercation. As
hereunder translated in English, the exchanges went:
ATTY. ALCONERA: Pag hatod nimo didto sa demolition order, kabalo ka na wala pa ko kadawat ug denial?
(When you served the demolition order, you know that I did not yet receive a copy of the denial order?)
SHERIFF PALLANAN: Denial sa unsa, motion? (Denial of what, motion?)
ATTY. ALCONERA: Oo. (Yes.)
SHERIFF PALLANAN: Attorney, ang motion inyoha nang kuan diri sa korte, and akoa sa writ ko. As long as
the sheriff did not receive a TRO or any order from the court restraining him to implement the writ, I have to
go. So in case, just in case, na may resolution si judge na ireconsider and iyang order after they declare, ideliver
na sa area kung asa gi-execute so the sheriff will move out. (Attorney, the motion, that is your what do you
call this, here in court. Mine is the writ. As long as the sheriff did not receive a TRO or any order from the court
restraining him to implement the writ, I have to go. So in case, just in case, the judge reconsiders his order, they
will declare, deliver it to the area where the writ if executed so the sheriff will move out.)
ATTY. ALCONERA: Mo execute diay ka? Dili diay ka mangutana kung duna pa bay motion for recon ani? (So
you will execute? You will not inquire whether a motion for reconsideration has been filed?)
SHERIFF PALLANAN: Bisag may motion for recon na, Attorney, I have to go gyud. (Even if there is a motion
for reconsideration, I really have to go.)
ATTY. ALCONERA: Uy, di man na ingon ana, uy! Ana imong natun-an as sheriff?

SHERIFF PALLANAN: Oo mao na sya. Mao na sya sa akoa ha, mao na sya. (Yes, that is it. That is it to me
ha, that is it.)
ATTY. ALCONERA: Kita ra ta sa Supreme Court ani. (Let us see each other in the Supreme Court.)
SHERIFF PALLANAN: (unintelligible) Ang imoha anaimong motion ana and imong motion ana,
delaying tactic. (Your motion is a delaying tactic.)
ATTY. ALCONERA: Ah, sige lang, atubang lang ta sa Supreme Court. (Ok, lets just see each other in the
Supreme Court.)
SHERIFF PALLANAN: Oo, atubangon nako ko na siya, pero mag-review pud ka.
ATTY. ALCONERA: Unsay mag-review? (What review?)
SHERIFF PALLANAN: Motion nang imoha, Dong. (Yours is motion, Dong.) ("Dong" is equivalent to the
Filipino term "Totoy"; if used by one to address someone older than him, it is an insult.)
ATTY. ALCONERA: Naunsa man ka, Dong. (What happened to you, Dong?)
SHERIFF PALLANAN: Motion na imoha Dapat diri ka mag file, dili ka didto mag-file. Ayaw ko awaya.
(Yours is motion. You should file it here, you do not file it there. Dont quarrel with me.)
ATTY. ALCONERA: Lahi imong tono sa akoa sa telepono Dong ba. (You were rude in the telephone, Dong.)
SHERIFF PALLANAN: Oo, kay lain man pud ka mag sulti. Ang imong venue kay diri, dili sa area. (Yes,
because you also talked bad, your venue is here in court, not in the area.)
ATTY. ALCONERA: Ingon nako sa imo nakadawat ka ba.. nakadawat ba ug (I was just asking you whether
you received)
SHERIFF PALLANAN: Dili nako na concern. (That is not my concern.)
ATTY. ALCONERA: O, ngano nag ingon man ka nga "Ayaw ko diktahe, Attorney?" (Why did you say, "Dont
dictate on me, Attorney?")
SHERIFF PALLANAN: Yes, do not dictate me. Kay abogado ka, sheriff ko. Lahi tag venue. Trabaho akoa,
magtrabaho pud ka. (Yes, do not dictate me. Because you are a lawyer, and I am a sheriff. I do my job, you do
yours.)
ATTY. ALCONERA: Bastos kaayo ka manulti ba. (You are very rude!)
SHERIFF PALLANAN: Ikaw ang bastos! (You are the one who is rude!)
ATTY. ALCONERA: Magkita ta sa Supreme Court. (I will see you in the Supreme Court.)

SHERIFF PALLANAN: Magkita ta, eh! Ikaw lang akong hadlukan nga wala man ka sa area. (As you wish, I
am not afraid of you, you were not in the area.)
ATTY. ALCONERA: Unsa nang inyong style diri, Kempeta? (What is your style here, Kempetai?)
SHERIFF PALLANAN: Dili man! Na may order. Why cant you accept? (No! There is an order. Why cant you
accept?)
ATTY. ALCONERA: Naay proseso, Dong. Mao ning proseso: ang MR, proseso ang MR. (There is a process,
Dong. This is the process: MR.)
SHERIFF PALLANAN: Oo, proseso pud na ang akong pagimplement. Naay writ. (Yes, my implementing the
writ is also a process. There is a writ.)
ATTY. ALCONERA: Nabuang, ka Dong? (What is going on with you, Dong?)
SHERIFF PALLANAN: Ka dugay na nimo nga abogado, wala ka kabalo! (You have been a lawyer for a long
time now, yet you do not know!)
ATTY. ALCONERA: Dugay na bitaw. Ikaw bago ka lang na sheriff. (Yes, I have been a lawyer for a long time
now, you, you are new in your job as sheriff).
SHERIFF PALLANAN: Pero kabalo ko. (But I know.)
ATTY. ALCONERA: Susmaryosep!
SHERIFF PALLANAN: O, di ba? Wala sa padugayay. Naa sa kahibalo. (Isnt that true? It is not the length of
time one has spent on his job. It is the knowledge that one possesses.)
ATTY. ALCONERA: Tanawa imong pagka sheriff, Dong. (Know you job as a sheriff, Dong.)
SHERIFF PALLANAN: Tanawa pud imong pagka abogado kung sakto. Pilde! Sige mo pangulekta didto ibayad
sa imo! (Know your job also as a lawyer, see if you are correct. Loser! You [and the Rafols] are always
collecting [from the other defendants] so your fees can be paid!)
ATTY. ALCONERA: Ngano wala man lagi nimo kuhaa ang mga butang didto, Dong? (Why did you not bring
with you the things that you had gathered, Dong.)
SHERIFF PALLANAN: Oo, kay hulaton ta ka pag demotion. (Yes, because I will wait for you on demotion
day.)
ATTY. ALCONERA: Nahadlok ka, Dong. (You were afraid, Dong.)
SHERIFF PALLANAN: Wala ko nahadlok, Doy. Sa demotion adto didto, Attorney. Sulayi ko! Sulayan nato
imong pagkaabogado! (Im not afraid of you, Doy. On demotion day, you go there, Attorney. You try me! Let us
see how good a lawyer you are.) ("Doy" is the same as "Dong.")

ATTY. ALCONERA: March 22 pa ang hearing sa imong abogado, Dong. (The hearing of the motion of your
lawyer, is on March 22 yet, Dong.)
SHERIFF PALLANAN: Asus, Pinobre na imong style, Attorney. Bulok! (Your style is that of an impoverished
lawyer, Attorney. Dullard!)
It is against the foregoing backdrop of events that Alconera filed a Complaint-Affidavit3 against the respondent
sheriff for grave misconduct before this Court on April 6, 2011. The case was referred to the Office of the Court
Administrator (OCA) and was docketed as AM No. 11-3634-P. As directed by the OCA, respondent filed his
comment.4 In it, he averred that the duty of a court sheriff in enforcing a writ of execution is ministerial, and
without a TRO enjoining it, a sheriff is duty bound to implement it.
On July 14, 2011, respondent filed his own Affidavit of Complaint5 against herein complainant for Grave
Misconduct and for violating the Code of Ethics. Respondent alleged that during the enforcement of the writ, a
second phone conversation took place. Complainant allegedly called up Evelyn Rafols who put him on
loudspeaker for the respondent to hear his words. Alconera then allegedly made a threat that there will be
bloodshed if respondents party pushes through with the implementation of the writ. Respondent likewise
claimed that complainant berated him at his office on March 18, 2011 and that the incident was orchestrated by
the complainant. His (respondent sheriffs) complaint affidavit avers:
6. GRAVE MISCONDUCT OF ATTY. VIRGILIO ALCONERA The planned attack happened in our office on
March 18, 2011 in the afternoon, after lunch, in the presence of his lady companion (believed to [be] his
daughter), who is so delighted in taking videos. He is so angry and at rage as if he is the boss in our office,
yelling and nagging at me with NO RESPECT as a nomad. THE ONLY PERSON AROUND WAS ME, THE
GIRL HE BROUGHT THERE (who is taking videos), AND THE NAGGING ATTY. VIRGILIO ALCONERA
(JUST THREE OF US), while pointing his finger into his MOTION for Reconsideration that he is holding [sic]
almost an inch to my face. Saying "KITA NIMO NI, KITA NIMO NI?" NA INSULTO KO NIMO NGANO
WALA KA NI PATOO NAKO PAYLAN TAKA UG KASO HULATA SA SUPREME COURT! (DO YOU SEE
THIS? DO YOU SEE THIS? YOU INSULTED ME WHY DID YOU NOT FOLLOW MY ORDER I WILL
FILE CHARGES AGAINST YOU WAIT FOR IT IN THE SUPREME COURT!) HE wants me to shiver in
scare and expect me to beg. No, GO I said. I ALWAYS REPEATED THE WORDS "WHERE IS YOUR T.R.O.
Just present it." Because he is too loud, Mrs. Nenita Paredes, our stenographer, ARRIVED and middle on us our
arguments. On the mid part of the arguments, he recorded the events; he and his companion, cohort in designing
the plan of the attack, orchestrated it. ITS AN ASSAULT TO THE OFFICER OF THE LAW. He told me
SHERIFF KA LANG WALA KAY NABAL AN. NGANON NADAWAT MAN KA DIRI BOGO KA. (YOU
ARE JUST A SHERIFF. WHAT DO YOU KNOW? WHY ARE YOU ADMITTED HERE YOU DUMB, WHO
TAUGHT YOU THAT?) Ana mo diri IPINATAY! KINSA NAG TUDLO SA IMOHA ANA. While he almost
struck his motion papers into my face, I was caught unaware.
In view of respondents counter-charge, Alconera supplemented his affidavit-complaint6 to include a charge
against the former for False Testimony. Complainant belied the claims of respondent sheriff, and showed that
the respondents allegations can nowhere be seen in the transcript of the altercation.
On March 2, 2012, this Court, upon the OCAs recommendation, resolved to re-docket Alconeras complaint as
a regular administrative case with docket No. A.M. No. P-12-3069 and referred the same to the Executive Judge

of the Regional Trial Court, General Santos City, South Cotabato, for investigation, report, and
recommendation.
After due proceedings, the investigating judge submitted a report, styled as Order7 dated August 6, 2013, with
the following recommendation:
Based on the findings and evaluation, the herein Executive Judge hereby recommends the respondent Sheriff be
ADMONISHED. The respondent must be reminded that as a Court Employee, he must exercise utmost patience
and humility in the performance of his duties amidst all the pressures and personal attacks against his person
because he carried with him the image of the entire judiciary.
SO ORDERED.
The Executive Judge adopted the transcript of the altercation as appearing in the affidavit of Shyla Mae Zapanta
and based his recommendation mainly thereon.
The Issues
The main issue in this case is whether or not respondent can be held administratively liable for grave
misconduct and false testimony. In fine, the controversy stems from the propriety of the implementation of the
writ of execution, and the altercation between complainant and respondent. While the investigating judge made
a recommendation based on how respondent conducted himself as an officer of the court in the afternoon of
March 18, 2013, there was no discussion regarding the propriety of the implementation of the writ, which is the
main issue in the case for grave misconduct. It then behooves this Court to sift through the arguments and
records to rule on this point.
The Courts Ruling
Grave Misconduct
Misconduct has been defined as "a transgression of some established and definite rule of action, more
particularly, unlawful behavior or gross negligence by a public officer." 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,
all of which must be established by substantial evidence, and must necessarily be manifest in a charge of grave
misconduct.8 In this case, complainant imputes grave misconduct on the respondent for the following acts:
1. For enforcing the writ despite the fact that complainant has yet to receive the copy of the order
denying his motion for reconsideration on the issuance of the writ of execution;
2. For allegedly leaking to the opposing counsel the issuance of the order denying the motion for
reconsideration;
3. For allegedly demanding P720,000 from Rafols for a P165,000.00 obligation; and
4. For allegedly being arrogant and disrespectful.

Complainant admits that there is no TRO enjoining the enforcement of the writ, nor allegation in his pleadings
that a motion to quash the writ of execution was ever filed. However, complainant asserts that respondent
committed grave misconduct when the latter implemented the writ prior to serving the complainant a copy of
the order denying the motion for reconsideration. According to complainant, said motion stayed the execution,
and the writ could not have been validly executed without first informing the parties concerned of the motions
denial.
We rule against complainant on this point.
It must be borne in mind that the case at bar traces its roots to an unlawful detainer case wherein the MTCC
ruled against Rafols, complainants client. In ejectment cases, the rulings of the courts are immediately
executory and can only be stayed via compliance with Section 19, Rule 70 of the Rules of Court, to wit:
Section 19. Immediate execution of judgment; how to stay same. If judgment is rendered against the
defendant, execution shall issue immediately upon motion, unless an appeal has been perfected and the
defendant to stay execution files a sufficient supersedeas bond, approved by the Municipal Trial Court and
executed in favor of the plaintiff to pay the rents, damages, and costs accruing down to the time of the judgment
appealed from, and unless, during the pendency of the appeal, he deposits with the appellate court the amount of
rent due from time to time under the contract, if any, as determined by the judgment of the Municipal Trial
Court. In the absence of a contract, he shall deposit with the Regional Trial Court the reasonable value of the
use and occupation of the premises for the preceding month or period at the rate determined by the judgment of
the lower court on or before the tenth day of each succeeding month or period. The supersedeas bond shall be
transmitted by the Municipal Trial Court, with the other papers, to the clerk of the Regional Trial Court to which
the action is appealed.
Clearly then under said Sec. 19, Rule 70, a judgment on a forcible entry and detainer action is made
immediately executory to avoid further injustice to a lawful possessor. The defendant in such a case may have
such judgment stayed only by (a) perfecting an appeal; (b) filing a supersedeas bond; and (c) making a periodic
deposit of the rental or reasonable compensation for the use and occupancy of the property during the pendency
of the appeal.9 The failure of the defendant to comply with any of these conditions is a ground for the outright
execution of the judgment, the duty of the court in this respect being ministerial and imperative. Hence, if the
defendant-appellant has perfected the appeal but failed to file a supersedeas bond, the immediate execution of
the judgment would automatically follow. Conversely, the filing of a supersedeas bond will not stay the
execution of the judgment if the appeal is not perfected. Necessarily then, the supersedeas bond should be filed
within the period for the perfection of the appeal.10
In the case at bar, complainant lost his clients case and appealed to the RTC. His client has also been
periodically depositing rental with the court for the use of the property pending appeal. However, as ruled by
the RTC, the bond filed did not meet the legal requirements because first and foremost, the bond posted was a
property bond, not cash nor surety. Furthermore, Rafols did not own the property he posted as bond and besides,
it was also not issued in favour of the plaintiff in the ejectment case. Because of the non-compliance with the
requirements under the above-quoted rule, the execution of the judgment was not effectively stayed. The only
exceptions to non-compliance are the existence of fraud, accident, mistake or excusable negligence which
prevented the defendant from posting the supersedeas bond or making the monthly deposit, or the occurrence of
supervening events which brought about a material change in the situation of the parties and which would make

the execution inequitable.11 But whether or not these obtain in the case at bar is an issue best left to the court
that issued the writ of execution.
Given the above circumstances, there was no legal impediment preventing respondent sheriff from performing
his responsibility of enforcing the writ of execution. Since Rafols failed to comply with the requirements under
the Rules, Cua Beng who prevailed in the unlawful detainer case is entitled as a matter of right to the immediate
execution of the courts judgment both as to the restoration of possession and the payment of the accrued rentals
or compensation for the use and occupation of the premises.12
Well-settled is that the sheriffs duty in the execution of a writ is purely ministerial; he is to execute the order of
the court strictly to the letter. He has no discretion whether to execute the judgment or not. When the writ is
placed in his hands, it is his duty, in the absence of any instructions to the contrary, to proceed with reasonable
celerity and promptness to implement it in accordance with its mandate. It is only by doing so could he ensure
that the order is executed without undue delay.13 This holds especially true herein where the nature of the case
requires immediate execution. Absent a TRO, an order of quashal, or compliance with Sec. 19, Rule 70 of the
Rules of Court, respondent sheriff has no alternative but to enforce the writ.
Immediacy of the execution, however, does not mean instant execution. The sheriff must comply with the Rules
of Court in executing a writ. Any act deviating from the procedure laid down in the Rules of Court is a
misconduct and warrants disciplinary action. In this case, Sec. 10(c), Rule 39 of the Rules prescribes the
procedure in the implementation of the writ. It provides:
Section 10. Execution of judgments for specific act.
xxxx
(c) Delivery or restitution of real property. The officer shall demand of the person against whom the
judgment for the delivery or restitution of real property is rendered and all persons claiming rights under him to
peaceably vacate the property within three (3) working days, and restore possession thereof to the judgment
obligee, otherwise, the officer shall oust all such persons therefrom with the assistance, if necessary, of
appropriate peace officers, and employing such means as may be reasonably necessary to retake possession, and
place the judgment obligee in possession of such property. Any costs, damages, rents or profits awarded by the
judgment shall be satisfied in the same manner as a judgment for money.
Based on this provision, enforcement in ejectment cases requires the sheriff to give notice of such writ and to
demand from defendant to vacate the property within three days. Only after such period can the sheriff enforce
the writ by the bodily removal of the defendant in the ejectment case and his personal belongings.14 Even in
cases wherein decisions are immediately executory, the required three-day notice cannot be dispensed with. A
sheriff who enforces the writ without the required notice or before the expiry of the three-day period is running
afoul with the Rules.15
In the present controversy, the Order denying the motion for reconsideration was allegedly served, according to
the respondent, on the same day the writ was executed on March 17, 2011. Complainant, however, avers that his
office was only able to receive the denial the day after the execution or on March 18, 2011. At first blush, one
might hastily conclude that the three-day notice rule was apparently not observed. This Court, however, is not
prepared to make such a finding. We are mindful of the possibility that a demand to vacate has already been

given when complainant and Rafols were first served the Order granting the issuance of a writ of execution,
before the motion for reconsideration was filed. More importantly, complainant failed to allege con-compliance
with Sec. 10(c) of Rule 39.
Thus far, no deviation from the Rules has been properly ascribed to respondent.1wphi1 As an officer of the
court, he is accorded the presumption of regularity in the performance of his duties. The burden was on
complainant to adduce evidence that would prove the respondents culpability, if any. Without evidence of any
departure from well established rules, any unlawful behaviour, or any gross negligence on his part, the
presumption remains applicable and respondent cannot be held administratively liable for the offense of grave
misconduct.
Discourtesy in the Performance of Official Duties
The foregoing notwithstanding, the Court adopts in part the recommendation of the investigating judge that
respondent should nonetheless be penalized for discourtesy in the performance of his official duties.
As a public officer and a trustee for the public, it is the ever existing responsibility of respondent to demonstrate
courtesy and civility in his official actuations with the public.16 In Court Personnel of the Office of the Clerk of
Court of the Regional Trial Court San Carlos City v. Llamas,17 this Court has held that:
Public service requires integrity and discipline. For this reason, public servants must exhibit at all times the
highest sense of honesty and dedication to duty. By the very nature of their duties and responsibilities, they must
faithfully adhere to, hold sacred and render inviolate the constitutional principle that a public office is a public
trust; that all public officers and employees must at all times be accountable to the people, serve them with
utmost responsibility, integrity, loyalty and efficiency.
xxxx
At all times, employees of the judiciary are expected to accord respect to the person and the rights of another,
even a co-employee. Their every act and word should be characterized by prudence, restraint, courtesy and
dignity. Government service is people-oriented; high-strung and belligerent behavior has no place therein.
Rude and hostile behavior often translates a personal conflict into a potent pollutant of an otherwise peaceful
work environment; ultimately, it affects the quality of service that the office renders to the public. Letting
personal hatred affect public performance is a violation of the principle enshrined in the Code of Conduct and
Ethical Standards for Public Officials and Employees, a principle that demands that public interest be upheld
over personal ones.
Improper behavior especially during office hours exhibits not only a paucity of professionalism at the
workplace, but also great disrespect for the court itself. Such demeanor is a failure of circumspection demanded
of every public official and employee. Thus, the Court looks "with great disfavor upon any display of animosity
by any court employee" and exhorts every court personnel to act with strict propriety and proper decorum to
earn public trust for the judiciary. Colleagues in the judiciary, including those occupying the lowliest position,
are entitled to basic courtesy and respect.

In discharging its constitutional duty of supervising lower courts and their personnel, this Court cannot ignore
the fact that the judiciary is composed essentially of human beings who have differing personalities, outlooks
and attitudes; and who are naturally vulnerable to human weaknesses. Nevertheless, the Code of Judicial Ethics
mandates that court personnel must not only be, but also be perceived to be, free from any impropriety -- with
respect not only to their duties in the judicial branch, but also to their behavior anywhere else.
Based on the transcript of the altercation, it is readily apparent that respondent has indeed been remiss in this
duty of observing courtesy in serving the public. He should have exercised restraint in dealing with the
complainant instead of allowing the quarrel to escalate into a hostile encounter. The balm of a clean conscience
should have been sufficient to relieve any hurt or harm respondent felt from complainant's criticisms in the
performance of his duties. On the contrary, respondent's demeanour tarnished the image not only of his office
but that of the judiciary as a whole, exposing him to disciplinary measure.
Making Untruthful Statements
Lastly, the charge of making untruthful statements must also fail. While the statements mentioned in
respondent's complaint-affidavit were not reflected in the transcript submitted by the complainant, this actuality
is not conclusive evidence that such event did not take place. As claimed by respondent, complainant's clerk
was only able to record a part of the argument. We cannot then discount the probability that there is more to the
argument than what was caught on video and there remains the possibility that what respondent narrated and
what complainant recorded both actually transpired.
WHEREFORE, respondent Alfredo T. Pallanan is ADMONISHED and WARNED to be always courteous in
dealing with the public in the performance of official duties. A repetition of the same or similar acts will be dealt
with more severely.
SO ORDERED.
G.R. No. 189248

February 5, 2014

TEODORO S. TEODORO (Deceased), Substituted by his heirs/sons NELSON TEODORO and

ROLANDO TEODORO, Petitioners,
vs.
DANILO ESPINO, ROSARIO SANTIAGO, JULIANA CASTILLO, PAULINA LITAO, RAQUEL
RODRIGUEZ, RUFINA DELA CRUZ, and LEONILA CRUZ, Respondents.
DECISION
PEREZ, J.:
We here have what appears to be a cut and dried case for ejectment which has, nonetheless, resulted in three
conflicting and varying decisions of the lower courts. We exercise judicial restraint: we simply delineate the
possessory rights of the warring parties and refrain from ruling on these squabbling heirs' respective claims of
ownership.

This petition for review on certiorari under Rule 45 of the Rules of Court assails the Decision1 of the Court of
Appeals in CA-G.R. SP No. 99805 which reversed and set aside the Decision2 of the Regional Trial Court
(RTC) Branch 81, Malolos, Bulacan in Civil Case No. 634-M-06 which, in turn, vacated and set aside the
Decision3 of the Municipal Trial Court (MTC), Bulacan, Bulacan in Civil Case No. 1240. The case is for
Forcible Entry filed by the predecessor-in-interest of petitioners Nelson and Rolando Teodoro, heirs of Teodoro
S. Teodoro (Teodoro Teodoro), against respondents Danilo Espino, Rosario Santiago, Juliana Castillo, Paulina
Litao, Raquel Rodriguez, Rufina dela Cruz and Leonila Cruz, a squabble for physical possession of a portion of
a real property, the ownership of which is traceable to Genaro Teodoro (Genaro).
The subject property is a portion within Cadastral Lot No. 2476 with a total area of 248 square meters, covered
by Tax Declaration No. 99-05003-0246, registered in the name of Genaro, long deceased ascendant of all the
parties. The subject property pertains to the vacant lot where the old ancestral house of Genaro stood until its
demolition in June 2004, at the instance of Teodoro Teodoro.
Genaro had five children: Santiago; Maria, from whom respondents descended and trace their claim of
ownership and right of possession; Petra, Mariano, Teodoro Teodoros father; and Ana. Genaro and his children
are all deceased.
Respondents respective parents are first cousins of Teodoro Teodoro. All parties are collateral relatives of Petra
Teodoro: Teodoro Teodoro is her nephew while respondents are her grandnephews and grandnieces,
descendants of Petras sister, Maria Teodoro.
Of all Genaros children, only Petra occupied the subject property, living at the ancestral house. Genaros other
children, specifically Santiago, Maria and Mariano were bequeathed, and stayed at, a different property within
the same locality, still from the estate of their father.
After Petras death, her purported will, a holographic will, was probated in Special Proceedings No. 1615-M
before RTC, Branch 8, Malolos, Bulacan, which Decision on the wills extrinsic validity has become final and
executory.4 In the will, Petra, asserting ownership, devised the subject property to Teodoro Teodoro.
Teodoro Teodoro effected the demolition of the ancestral house, intending to use the subject property for other
purposes.
Soon thereafter, respondents, who resided at portions of Lot No. 2476 that surround the subject property on
which the ancestral house previously stood, erected a fence on the surrounding portion, barricaded its frontage,
and put up a sign thereat, effectively dispossessing Teodoro Teodoro of the property bequeathed to him by Petra.
After Teodoro Teodoros demand for respondents to vacate the subject property went unheeded, he filed the
complaint for forcible entry against respondents, alleging the following in pertinent part:
3. [Teodoro Teodoro] is a nephew of the deceased Petra Teodoro vda. De Salonga x x x who executed a
holographic will designating him therein as administrator of her estate and likewise devised in his favor a parcel
of land located in Purok 2, Bambang, Bulacan, Bulacan and the ancestral house built therein. Other properties
of Petra Teodoro were bequeathed in favor of other named heirs. x x x.

4. Aforementioned parcel of land with the ancestral house was in turn inherited by the decedent Petra Teodoro
from her father Genaro Teodoro who also gave separate properties to his four other children, who are all dead,
namely, Santiago who has eight (8) children, Maria who has six (6) children, Ana who has no child and Mariano
who has eight (8) children including herein [Teodoro Teodoro] as the eldest;
5. It is of common knowledge in the locality that the subject property where the ancestral house stood was given
by Genaro Teodoro to [his] daughter Petra Teodoro to the exclusion of all others. Petra Teodoro lived in that
property all her life. x x x.
xxxx
7. This subject property is declared for taxation purposes in the name of [Teodoro Teodoros] grandfather,
Genaro Teodoro as shown by the hereto attached photocopy of Tax Declaration of Real Property No. 99-050030246 for the year 2000 which is marked as Annex "F";
xxxx
10. [Subject property] having been given to [Teodoro Teodoro] as a devisee in the approved will of Petra
Teodoro, it became his absolute property to the exclusion of all others;
11. Sometime in July 2004, [Teodoro Teodoro] as the absolute owner and possessor thereof, decided to
demolish the already dilapidated ancestral house in the subject property to clear the same for other available
uses/purposes. x x x.
12. By means of force and intimidation, [Teodoro Teodoro] was ousted likewise prevented by [respondents]
from entering the subject property. [Respondents] have also onverted/appropriated for themselves the exclusive
use of the subject property into their own parking lot and other personal use, to the exclusion and damage of
[Teodoro Teodoro];5 (Emphasis supplied).
In their Answer, respondents asserted their own ownership and possession of the subject property, countering
that:
5. It is worth to mention that [respondents] Danilo Espino and Rosario Santiago are residing thereat for more
than fifty (50) years, while [respondents] Paulina Litao and Rufina dela Cruz are resident of the subject place
for more than sixty (60) years, most of them residing thereat since birth, at the time that their grandmother
Maria Teodoro is still living and residing thereat.
6. Thus, when siblings Maria Teodoro (grandmother of [respondents]), Petra (to whom the subject property was
inherited) and Mariano (father of [Teodoro Teodoro]) died, the heirs, who include [respondents] and [Teodoro
Teodoro] extrajudicially, among themselves, partitioned the property left by their ascendants, which are still in
the name of the siblings father Genaro Teodoro. [Respondents], since they are already residing in the subject
property and had built their respective houses therein, had with them the said subject [property]. x x x.
7. [Respondents], through their authorized representative, [respondent] Rosario Santiago, in the exercise of their
act of ownership of the subject lot paid for its real property taxes. x x x.

8. x x x [Teodoro Teodoro] deliberately failed to consider and mention in his complaint that there was already a
decision rendered by court, declaring the subject property as part of the property left by Petra Teodoro to her
legitimate heirs, which include among others [respondents].
9. That however, due to [respondents] failure as substituted heirs to execute the order, dated May 18, 1994, a
Motion for the Revival of Judgment was filed and heard before Branch 10 of the Regional Trial Court of
Bulacan. The Honorable Court x x x resolved x x x the extent of the allowance and admission to probate the
holographic will of the late Petra Teodoro, where a Certificate of Allowance dated February 14, 1990 was
subsequently issued, as its Decision dated June 29, 1989 became final and executory, affect the revival of
judgment.
xxxx
13. While it is true that the dilapidated ancestral house in the subject property was demolished; however, the
said act, as suggested by [Teodoro Teodoro] was allowed by [respondents] (who had their respective houses
built in the same lot where the same is constructed) in order to have the same be partitioned among themselves.
As [Teodoro Teodoro] was constantly complaining that the property left to him and his siblings is less than the
subject property given to the [respondents] in area, they agreed verbally that if the ancestral house will be
demolished, a surveyor would be at ease in surveying the same and determine if indeed the area is more than
that allotted to [Teodoro Teodoro], which in that case, as per agreement, the excess, if any will suffice the lack
in area of [Teodoro Teodoro]. It was however found out that the area of the subject property was less than the
area that should be allocated and apportioned as shares of [respondents], hence they [intimated] the same to
[Teodoro Teodoro], who got mad and threaten[ed] to get the subject property from them.
14. The putting of signs "No Trespassing" posted at the frontage of the subject property is an allowable act by
owners, residing thereat to protect their property against intruders, hence there is nothing wrong for
[respondents] to put the same. x x x.
15. There is no truth, as what [Teodoro Teodoro] claimed in paragraph 12 of his complaint that he was ousted
and prevented from entering the subject property by [respondents], because in the first place he could not be
ousted thereat, as he is not in possession of the said property.6 (Emphasis theirs).
After trial, the MTC dismissed the complaint, ruling on the issue of ownership and ultimately resolving the
issue of who between Teodoro Teodoro and respondents had a better right to possess the subject property:
x x x [Teodoro Teodoros] claim of ownership over the subject lot stemmed from the approved and duly
probated Holographic Will of Petra Teodoro. Although it its undisputed that Petra Teodoro was in actual
possession of the subject lot prior to her demise and that she left a Holographic Will wherein the subject lot was
bequeathed to [Teodoro Teodoro], the probate of her last will has not finally settled the question of ownership
over the subject lot. Clearly, the subject lot still forms part of the estate of the late Genaro Teodoro. In the
absence of an actual and approved partition plan among his heirs, the subject lot remains part of the Genaro
Teodoros estate. Since his children Santiago, Maria, Petra, Maraino and Ana are all deceased, their children or
grandchildren by right of representation have the right to inherit from their ancestor.
xxxx

A person who claims that he has a better right to real property must prove his ownership of the same x x x.
Clearly, [Teodoro Teodoro] has failed to prove his ownership over the property or that of his devisee Petra
Teodoro. Thus, the court is convinced that the possession of [respondents] over the subject lot should not be
disturbed, until and unless the question of ownership over the same shall have been finally resolved before the
appropriate court.
xxxx
WHEREFORE, judgment is hereby rendered dismissing the complaint and the counterclaim interposed in
relation thereto, without pronouncement as to costs.7
The RTC, in its appellate jurisdiction over forcible entry cases, acting on Teodoro Teodoros appeal, adopted the
factual findings of the MTC, but reversed the ruling, ruled in favor of Teodoro Teodoro and ordered the
ejectment of respondents from the subject property. It pithily ruled, thus:
But the bottom line for resolution in this case is who has the prior physical possession of the subject parcel. x x
x.
The late Petra Teodoros share to the inheritance of his father Genaro is admittedly the old ancestral house and
the lot over which it stands. x x x.
[Teodoro Teodoro] claims right to possession only over said portion (now the vacant space x x x not the entire
lot 2476 until he was displaced therefrom by the [respondents] through force). [Teodoro Teodoro] does not
contest the perimeter area of Lot 2476 where [respondents] are residing. He has acknowledged in clear terms
that the rest of the area of Lot 2476 is occupied by [respondents]. The assailed decision recognized that Petra
Teodoro was in actual possession of the lot prior to her death. It is [Teodoro Teodoros] argument that Petra
Teodoro, tacked [from by Teodoro Teodoro], has had prior physical possession of the controverted portion of lot
2476. He went on arguing that regardless of whether or not the duly probated will completely settled the issue
of partition of the remaining estate of Genaro Teodoro, he has the prior actual and physical possession of the
vacant space where the old ancestral house formerly stands, passed on to him by the late Petra Teodoro, a fact
[respondents] deny. [Respondents] even belied that they have ousted and restrained [Teodoro Teodoro] from
entering the subject property.
Said pretension is however negated by evidence showing the barricaded vacant space or disputed area
consisting of 120 square meters, more or less (approximate width of lot is 7.55 meters, approximate length is
17.9 meters with indented portion measuring 1.5 meters deep x x x), where the cemented portion of the flooring
of the bakery near the national road lease by [respondents] is still existing x x x and over which he exercised
control and constructive possession. x x x.
xxxx
[Teodoro Teodoro] anchors on the other hand his claim on the Holographic Will of Petra Teodoro dated May 1,
1973 x x x duly probated and approved in a Decision x x x dated June 19, 1989 of Branch 8 of this Court in SP
Proceeding No. 1615-M, which Decision has become final and executory as of February 14, 1990 x x x
bequeathing the disputed portion of Lot 2476 and the old ancestral house thereon to him, the letters of
administration issued to him by Branch 8 of this Court x x x, the Project of Partition submitted to the said court

x x x plus his possession of the vacant area or disputed portion of [L]ot 2476. [Respondents] has stressed that he
is not contesting the rest of [L]ot 2476 occupied by the houses of [respondents].
Analyzing the facts of the case, the lower [court] concluded that the subject parcel is a part of the estate of the
late Genaro Teodoro and in the absence of an approved partition among the heirs, remains a community
property over which the legal heirs of Genaro Teodoro have the right to inherit. All therefore are entitled to
exercise the right of dominion including the right of possession.
This Court disagrees with the said ruling applying the plethora of cases decisive of the issue and consistent with
the established jurisprudence that the lower court cannot dispose with finality the issue of ownership-such issue
being inutile in an ejectment suit except to throw light on the question of possession.
Given the foregoing, [Teodoro Teodoro] has established a valid claim to institute the eviction suit against
[respondents] over the disputed area or vacant portion of Lot 2476 and for him to be restored therein.
xxxx
WHEREFORE, premises considered, finding reversible error on the appealed judgment, the same is hereby
VACATED and SET ASIDE and a new one is entered as follows:
1. Ordering that [Teodoro Teodoro] be restored in the lawful possession of the disputed area of Lot 2476
and for the eviction therefore of [respondents] on said portion; and
2. [Respondents] to pay the costs of the suit.8
With the reversal of the MTCs ruling, respondents then appealed the RTCs decision to the Court of Appeals.
The appellate court reversed the RTC, likewise dismissed the complaint as the MTC had done, but did not reach
the same result as that of the inferior court. It specifically ruled that Teodoro Teodoro:
(1) never had physical possession of the subject property, not having lived there at anytime, whether
while Petra was alive nor after her death;
(2) did not adduce evidence before the lower courts on proof of payment of any real property tax on the
disputed vacant lot, portion of Lot No. 2476, or to the whole of Lot No. 2476;
(3) did not solely or unilaterally cause the demolition of the ancestral house such a fact equating to his
exclusive ownership of the subject property and complete control and dominion over it; and
(4) cannot tack his alleged possession of the subject property to that of Petra Teodoro simply by virtue of
the latters holographic will, leading to the issue of ownership which is insignificant in forcible entry
cases.
In all, the appellate court found that Teodoro Teodoro (substituted by his heirs Nelson and Rolando Teodoro at
that juncture) "failed to discharge the burden of proof that he had prior actual physical possession of the subject
[property] before it was barricaded by [respondents] to warrant the institution of the forcible entry suit." The
appellate court disposed of the case, thus:

WHEREFORE, premises considered, the assailed Decision [dated] 28 February 2007 and Resolution dated 26
June 2007 of the Regional Trial Court of Malolos, Bulacan, Branch 81 are hereby REVERSED and SET
ASIDE, and the instant case is DISMISSED for lack of merit.9
Hence, this appeal by certiorari filed by the heirs of Teodoro Teodoro raising the following errors in the
appellate courts dismissal of the complaint:
1. The Honorable Court of Appeals failed to take notice of relevant facts such as petitioner Teodoros
exercise of possessory rights over the subject property, among others, which if properly considered, will
justify a different conclusion.
2. The Honorable Court of Appeals misappreciated undisputed facts such as the respondents fencing of
the vacant area cleared by petitioner Teodoro and their barricading of the frontage thereof, among others,
that deprived petitioner Teodoro his possessory rights over the vacant area.
3. The findings of the Honorable Court of Appeals are grounded entirely on speculation, surmises or
conjectures.
4. There is grave abuse of discretion in the appreciation of facts in the assailed Decision.10
The assigned errors define the issue for our resolution which is whether or not the act of respondents in
barricading the frontage of the portion of Lot No. 2476 on which stood the ancestral house occupied by Petra
amounted to Teodoro Teodoros unlawful dispossession thereof through the forcible entry of respondents.
The ground rules in forcible entry cases:11
(1) One employs force, intimidation, threat, strategy or stealth to deprive another of physical possession
of real property.
(2) Plaintiff (Teodoro Teodoro) must allege and prove prior physical possession of the property in
litigation until deprived thereof by the defendant (herein respondents). This requirement implies that the
possession of the disputed land by the latter was unlawful from the beginning.
(3) The sole question for resolution hinges on the physical or material possession (possession de facto)
of the property. Neither a claim of juridical possession (possession de jure) nor an averment of
ownership by the defendant can, at the outset, preclude the court from taking cognizance of the case.
(4) Ejectment cases proceed independently of any claim of ownership, and the plaintiff needs merely to
prove prior possession de facto and undue deprivation thereof. In this case, both parties assert prior and
exclusive physical possession in the concept of owner12 acquired through succession13 from the same
decedent, their aunt and grand aunt, respectively, Petra. In turn, Petra inherited the property from her
father Genaro, in whose name the subject property is still registered.
Teodoro Teodoros assertion of physical possession comprises mainly of his claimed ownership of the subject
property acquired through testate succession, or via the holographic will of Petra.14 Teodoro Teodoro then

points, as an exercise of his ownership and incident of his physical possession of the subject property, to his act
of demolition of the ancestral house.
On the other hand, respondents assert possession likewise by virtue of ownership manifested in their residence
at Lot No. 2476 spanning more than five (5) decades, reckoned even from the time Maria, respondents
grandmother and sister of Petra, was alive and resided thereat.15
Respondents trace their possession from the extrajudicial partition of the commingled properties of the siblings
Maria, respondents direct ascendant, Petra and Mariano, father of Teodoro Teodoro, progeny and heirs of
Genaro.16 According to respondents, from the partition, the heirs of all three Genaro children possessed and
occupied their respective shares: respondents received Lot No. 2476 which encompasses herein subject
property, while Teodoro Teodoro and his siblings received a different property, "a 667 residential lot at
Bambang, Bulacan, Bulacan."
Also, respondents aver that, through respondent Rosario Santiago, they paid for Lot No. 2476s realty taxes.
Respondents counter that the subject property was not solely bequeathed to Teodoro Teodoro as it is part of
Petras estate for disposition to her legitimate heirs, including herein respondents. Lastly, on Teodoro Teodoros
claim that he had solely effected the demolition of the ancestral house, respondents contend that they had
allowed the demolition upon the understanding that the parties would then completely partition the subject
property, as that portion is centrally located in Lot No. 2476 where the respondents actually reside.
Given both parties respective claims of ownership over the subject property via succession from their
ascendants Maria, Petra and Mariano Teodoro, who are all compulsory heirs of Genaro in whose name the
subject property is still registered, the MTC ruled that respondents cannot be disturbed in their possession of the
subject property "until and unless the question of ownership over the same [is] finally resolved before the
appropriate court."
In contrast, the RTC, without categorically resolving the issue of ownership of Lot No. 2476, ruled that on the
portion of Lot No. 2476 where the ancestral house used to stand, Teodoro did establish his prior physical
possession over the subject property resulting in his right to institute the ejectment suit against respondents.
Significantly, the RTC confirmed respondents physical possession of, and residency at, Lot No. 2476.
There would yet be another turn of events. The appellate court, albeit refusing to touch and rule on the issue of
ownership, declared that there lacked conclusive evidence of Teodoro Teodoros prior actual physical
possession over the subject property. Thus, the appellate court dismissed
Teodoro Teodoros complaint for lack of merit.
We are now asked for a final ruling.
We grant the petition. We reverse the decision of the Court of Appeals and restore the decision of the RTC on
the appeal reversing the MTC.
We affirm the finding of fact by the RTC which is decisive of the issue that has remained unresolved inspite of a
summary procedure and two appellate reviews of the forcible entry case filed by Teodoro Teodoro. The RTC
said:

Analyzing the facts of the case, the lower [court] concluded that the subject parcel is a part of the estate of the
late Genaro Teodoro and in the absence of an approved partition among the heirs, remains a community
property over which the legal heirs of Genaro Teodoro have the right to inherit. All therefore are entitled to
exercise the right of dominion including the right of possession.17 (Emphasis supplied).
The RTCs comment that it "disagrees with the said ruling" only meant that "the lower court cannot dispose
with finality the issue of ownership" since such ownership issue is "inutile in an ejectment suit except to throw
light on the question of possession."18 And so the RTC ruled that Teodoro Teodoro should be restored in the
lawful possession of the disputed area of Lot No. 2476 in light of the finding of the MTC that the subject lot
still forms part of the estate of the late Genaro Teodoro. It is from this same fact that the MTC reached the
contrary conclusion that Teodoro Teodoros complaint should be dismissed because he has "failed to prove his
ownership."19
In the sense that Teodoro Teodoro has not proven exclusive ownership, the MTC was right.1wphi1 But
exclusive ownership of Lot No. 2476 or a portion thereof is not in this case required of Teodoro Teodoro for
him to be entitled to possession. Co-ownership, the finding of both the MTC at first instance and by the RTC on
appeal, is sufficient. The pertinent provisions of the Civil Code state:
Art. 484. There is co-ownership whenever the ownership of an undivided thing or right belongs to different
persons.
Art. 1078. When there are two or more heirs, the whole estate of the decedent is, before its partition, owned in
common by such heirs, subject to the payment of debts of the deceased.
Certainly, and as found by the trial courts, the whole of Lot No. 2476 including the portion now litigated is,
owing to the fact that it has remained registered in the name of Genaro who is the common ancestor of both
parties herein, co-owned property. All, or both Teodoro Teodoro and respondents are entitled to exercise the
right of possession as co-owners.
Neither party can exclude the other from possession. Although the property remains unpartitioned, the
respondents in fact possess specific areas. Teodoro Teodoro can likewise point to a specific area, which is that
which was possessed by Petra. Teodoro Teodoro cannot be dispossessed of such area, not only by virtue of
Petra's bequeathal in his favor but also because of his own right of possession that comes from his co-ownership
of the property. As the RTC concluded, petitioners, as heirs substituting Teodoro
Teodoro in this suit, should be restored in the lawful possession of the disputed area.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 99805 is
REVERSED and SET ASIDE and the Decision of the Regional Trial Court in Civil Case No. 634-M-06 is
REINSTATED. No pronouncement as to costs.
SO ORDERED.
A.M. No. MTJ-05-1580
October 6, 2010
[Formerly OCA IPI No. 04-1608-MTJ]

LOURDES B. FERRER and PROSPERIDAD M. ARANDEZ, Complainants,

vs.
JUDGE ROMEO A. RABACA, Metropolitan Trial Court, Branch 25, Manila, Respondent.
DECISION
BERSAMIN, J.:
This administrative case charges Hon. Romeo A. Rabaca, then the Presiding Judge of Branch 25 of the
Metropolitan Trial Court of Manila (MeTC), with ignorance of the law, disregard of the law, dereliction of duty,
knowingly rendering an unjust interlocutory order, and violation of the Code of Conduct for Government
Officials.
The complainants were the President and the Executive Director of the plaintiff in Civil Case No. 176394-CV
of the MeTC, an ejectment suit entitled Young Womens Christian Association, Inc. v. Conrado Cano. After
trial, Civil Case No. 176394-CV was decided on June 22, 2004 by respondent Judge,1 who disposed as follows:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the
defendant ordering the latter as follows:
(a) to vacate the premises located at Ground Floor, YMCA, 1144 Gen. Luna St., Ermita, Manila; and
surrender possession thereof to plaintiff;
(b) to pay plaintiff the sum of Php45,211.80 representing his arrears in rentals from February 2003 to
July 2003 at Php7,535.30 a month plus the further sum of Php7,535.30 a month as reasonable value for
the continued use and occupation of the premises starting August 2003 until the same is finally vacated
and possession thereof is turn-over to plaintiff;
(c) to pay the plaintiff the sum of Php20,000 as attorneys fees; and
(d) to pay the costs of suit.
SO ORDERED.
On July 12, 2004, the plaintiffs counsel filed a motion for immediate execution, praying that a writ of
execution be issued "for the immediate execution of the aforesaid Judgment." The plaintiff cited Section 19,
Rule 70 of the Rules of Court as basis for its motion.2
In his order dated July 14, 2004, however, respondent Judge denied the motion for immediate execution,3
stating:
A Notice of Appeal dated July 9, 2004, having been seasonably filed by counsel for the defendant, let the
records of the above-captioned case be, as it is hereby ordered, elevated to the Regional Trial Court of Manila
for appropriate proceedings and disposition.
In view thereof, no more action shall be taken on the Motion for Execution dated July 8, 2004 filed by the
plaintiff thru counsel.

SO ORDERED.
According to the complainants, their counsel talked with respondent Judge about the matter. Allegedly,
respondent Judge told their counsel that "if you think the court is wrong, file a motion for reconsideration."
With that, the plaintiff filed a motion for reconsideration, which respondent Judge nonetheless denied in his
order dated July 28, 2004,4 thuswise:
Considering that the Court has already given due course to the appeal of the defendant which was perfected
within the reglementary period, no more action will be taken on the Motion for Reconsideration dated July 19,
2004 filed by the plaintiff thru counsel.
The Branch Clerk of Court is hereby directed to immediately forward the records of this case to the Regional
Trial Court, Manila.
SO ORDERED.
The complainants averred that respondent Judges denial of their motions had rendered their victory inutile, and
had unfairly deprived the plaintiff of the possession of the premises. They further averred that respondent
Judges refusal to perform an act mandated by the Rules of Court had given undue advantage to the defendant to
the plaintiffs damage and prejudice.
The Court required respondent Judge to comment on the administrative complaint against him.
In his comment dated September 16, 2004,5 respondent Judge denied the charges. He explained that he had
honestly thought that his court had lost jurisdiction over the case pursuant to the provision of Section 9, Rule 41
of the Rules of Court (which provides that "in appeals by notice of appeal, the court loses jurisdiction over the
case upon the perfection of the appeals filed in due time and the expiration of the time to appeal of the other
parties") once he had given due course to the defendants notice of appeal. He claimed that he had issued the
orders in good faith and with no malice after a fair and impartial evaluation of the facts, applicable rules, and
jurisprudence; and that if he had thereby committed lapses in the issuance of the orders, his doing so should be
considered as error of judgment on his part.
He lastly insisted that he did not know personally the parties in Civil Case No. 176394-CV, and had absolutely
no reason to give undue favor or advantage to the defendant; that the complainants did not submit evidence to
show that the orders had been issued for a consideration, material or otherwise, or that his issuance of the orders
had been motivated by ill-will or bad faith.
In their reply dated September 22, 2004,6 the complainants contended that respondent Judge exhibited his
ignorance of the law and procedure in relying on Section 9, Rule 41 of the Rules of Court which referred to
appeals from the Regional Trial Court; that Rule 40, which contained provisions on appeal from the Municipal
Trial Courts to the Regional Trial Courts, and which provided in its Section 4 that the perfection of the appeal
and the effect of such perfection should be governed by the provisions of Section 9 of Rule 41, concerned
appeals by notice of appeal in general; and that instead, the applicable rule should be Section 19, Rule 70 of the
Rules of Court.

The complainants pointed out that respondent Judge apparently did not know that appeal in forcible entry and
detainer cases was not perfected by the mere filing of a notice of appeal (as in ordinary actions) but by filing of
a notice of appeal and a sufficient supersedeas bond approved by the trial judge executed to the plaintiff to pay
the rents, damages and costs accruing down to the time of the judgment appealed from. They asserted that
respondent Judges invocation of good faith and error of judgment did not absolve him of liability, because he
had grossly neglected his duties mandated by law by failing and refusing to act on their motion for immediate
execution and motion for reconsideration and by giving due course to the appeal despite no supersedeas bond
having been filed and approved by the trial court.
In his memorandum dated January 13, 2005,7 then Court Administrator Presbitero J. Velasco, Jr., now Associate
Justice of the Court, recommended that the administrative complaint against respondent Judge be re-docketed as
a regular administrative matter; and that respondent Judge be fined in the amount of P5,000.00 with warning
that a repetition of the same or similar act would be dealt with more severely, based on an evaluation of the
charges, as follows:
EVALUATION: We agree with the complainants that respondent erred when he did not act on complainants
motion for immediate execution.
Section 19, Rule 70 of the 1997 Revised Rules on Civil Procedure provides:
"SEC. 19. If judgment is rendered against the defendant, execution shall issue immediately upon motion, unless
an appeal has been perfected and the defendant to stay execution files a supersedeas bond, approved by the
Municipal Trial Court and executed in favor of the plaintiff to pay the rents, damages, and costs accruing down
to the time of the judgment appealed from, and unless, during the pendency of the appeal, he deposits with the
appellate court the amount of rent due from time to time under the contract, if any, as determined by the
judgment of the Municipal Trial Court. XXXX XXXX XXXX."
It is clear from the foregoing that the perfection of an appeal by itself is not sufficient to stay the execution of
the judgment in an ejectment case. The losing party should likewise file a supersedeas bond executed in favor of
the plaintiff to answer for rents, damages and costs, and, if the judgment of the court requires it, he should
likewise deposit the amount of the rent before the appellate court from the time during the pendency of the
appeal. Otherwise, execution becomes ministerial and imperative. (Philippine Holding Corporation vs.
Valenzuela, 104 SCRA 401 as cited in Hualam Construction and Development Corporation vs. Court of
Appeals, 214 SCRA 612, 626).
In the case at bar, defendant seasonably filed his Notice of Appeal dated 9 July 2004 on 13 July 2004; he
however failed to file any supersedeas bond. Prior to the filing of such notice of appeal, more specifically on 12
July 2004, complainants have already filed their Motion for Execution dated 8 July 2004. Instead of acting on
the Motion for Execution, respondent Judge Rabaca gave due course to the appeal in an Order dated 14 July
2004 and directed his Branch Clerk of Court to elevate the records of the case to the Regional Trial Court
(RTC). The Branch Clerk of Court however failed to forward the records to the RTC. This fact is clear from
Judge Rabacas Order dated 28 July 2004 wherein he directed the Branch Clerk of Court to forward the records
of the case to the Manila Regional Trial Court immediately.
From the foregoing, it is clear that when the complainant moved for the immediate execution of Judge Rabacas
decision, the latter still had jurisdiction over the case. He therefore clearly erred when he refused to act on the

Motion for Execution. The relevant question that we should resolve however is whether such error is an error of
judgment or an error amounting to incompetence that calls for administrative discipline.
Judge Rabaca claims that he refused to act on the complainants Motion for execution because he honestly
thought that when he gave due course to the defendants appeal which was seasonably filed, and ordered the
elevation of the records to the appellate court, his court already lost jurisdiction over the case.. In making his
ruling, respondent asserts he relied on the provisions of Section 9, Rule 41 of the Rules of Court. This provision
reads as follows:
In appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection of the appeals filed
in due time and the expiration of the time to appeal of the other parties.
He likewise allegedly relied on the ruling of the Court in Administrative Matter OCA IPI No. 03-1513-MTJ:
Susana Joaquin Vda. De Agregado vs. Judge Thelma Bunyi-Medina, MeTJ wherein the Court said thatRespondent Judge is correct in saying that she had lost jurisdiction to entertain the motion for execution after
the perfection of the appeal and after she issued an order to transmit the records of the case to the appellate
court for review.
The facts of the case against Judge Bunyi-Medina are however different from those prevailing in the instant
case. In the Medina case, the fifteen (15) day period within which to perfect the appeal had already lapsed
before the complainant therein moved for the execution of the execution judgment. Clearly therefore, appeal
had already been perfected. In the instant case, although the defendant had filed his appeal, the period to appeal
had not yet lapsed since the plaintiff still had his own period to appeal from the judgment and such period had
not yet lapsed. The provision relied upon by judge Rabaca, more specifically, Section 9, Rule 41 of the Rules of
Court, clearly states that, "In appeals by notice of appeal, the court loses jurisdiction over the case upon
perfection of the appeals filed on due time and the expiration of the time to appeal of the other parties."
Moreover and more importantly, the herein complainants filed their Motion for Execution even before the
defendant had filed his Notice of Appeal. Such motion was therefore still well within the jurisdiction of the
lower court.
It is basic rule in ejectment cases that the execution of judgment in favor of the plaintiff is a matter of right and
mandatory. This has been the consistent ruling of the Court in a number of cases involving the same issue posed
before the respondent judge. Respondent Judge is expected to know this and his justification of erroneous
application of the law, although mitigating, could not exculpate him from liability.
We agree with and adopt the evaluation of the Court Administrator.
Indeed, respondent Judge should have granted the plaintiffs motion for immediate execution considering that
the defendant did not file the sufficient supersedeas bond despite having appealed. Granting the plaintiffs
motion for immediate execution became his ministerial duty upon the defendants failure to file the sufficient
supersedeas bond. Section 19, Rule 70, of the Rules of Court clearly imposes such duty, viz:
Section 19. Immediate execution of judgment; how to stay same. If judgment is rendered against the
defendant, execution shall issue immediately upon motion, unless an appeal has been perfected and the
defendant to stay execution files a sufficient supersedeas bond, approved by the Municipal Trial Court and

executed in favor of the plaintiff to pay the rents, damages, and costs accruing down to the time of the judgment
appealed from, and unless, during the pendency of the appeal, he deposits with the appellate court the amount of
rent due from time to time under the contract, if any, as determined by the judgment of the Municipal Trial
Court. In the absence of a contract, he shall deposit with the Regional Trial Court the reasonable value of the
use and occupation of the premises for the preceding month or period at the rate determined by the judgment of
the lower court on or before the tenth day of each succeeding month or period. The supersedeas bond shall be
transmitted by the Municipal Trial Court, with the other papers, to the clerk of the Regional Trial Court to which
the action is appealed.
xxx
Respondent Judges excuse, that he had lost jurisdiction over the case by virtue of the defendants appeal, was
unacceptable in light of the clear and explicit text of the aforequoted rule. To begin with, the perfection of the
appeal by the defendant did not forbid the favorable action on the plaintiffs motion for immediate execution.
The execution of the decision could not be stayed by the mere taking of the appeal. Only the filing of the
sufficient supersedeas bond and the deposit with the appellate court of the amount of rent due from time to time,
coupled with the perfection of the appeal, could stay the execution. Secondly, he could not also credibly justify
his omission to act according to the provision by claiming good faith or honest belief, or by asserting lack of
malice or bad faith.1avvphil A rule as clear and explicit as Section 19 could not be misread or misapplied, but
should be implemented without evasion or hesitation. To us, good faith, or honest belief, or lack of malice, or
lack of bad faith justifies a non-compliance only when there is an as-yet unsettled doubt on the meaning or
applicability of a rule or legal provision. It was not so herein. And, thirdly, given that his court, being vested
with original exclusive jurisdiction over cases similar to Civil Case No. 176394-CV, had been assigned many
such cases, he was not a trial judge bereft of the pertinent prior experience to act on the issue of immediate
execution, a fact that further exposed the abject inanity of his excuses.
We agree with the complainants insistence, therefore, that respondent Judges omission to apply Section 19 was
inexcusable. He had ignored the urging to follow the clear and explicit provision of the rule made in the
plaintiffs motion for immediate execution. Had he any genuine doubt about his authority to grant the motion
for immediate execution, as he would have us believe, he could have easily and correctly resolved the doubt by
a resort to the Rules of Court, which he well knew was the repository of the guidelines he was seeking for his
judicial action. Neither was it relevant that he did not know any of the parties, or that he did not corruptly favor
the defendant by his omission. His mere failure to perform a duty enjoined by the Rules of Court sufficed to
render him administratively accountable.
This case is an opportune occasion to remind judges of the first level courts to adhere always to the mandate
under Section 19, Rule 70, of the Rules of Court to issue writs of execution upon motion of the plaintiffs in
actions for forcible entry or unlawful detainer when the defendant has appealed but has not filed a sufficient
supersedeas bond. The summary nature of the special civil action under Rule 70 and the purpose underlying the
mandate for an immediate execution, which is to prevent the plaintiffs from being further deprived of their
rightful possession, should always be borne in mind.
The recommended penalty of P5,000.00 with warning that a repetition of the same or similar act would be dealt
with more severely is also correct. The Court Administrator rationalized the recommendation of the penalty
thuswise:

Under A.M. No. 01-8-10-SC, Gross Ignorance of the Law or Procedure is classified as serious offense for
which the imposable penalty ranges from a fine to dismissal. However, we find respondents acts not ingrained
with malice or bad faith. It is a matter of public policy that in the absence of fraud, dishonesty or corrupt
motive, the acts of a judge in his judicial capacity are not subject to disciplinary action even though such acts
are erroneous. In Domingo vs. Judge Pagayatan, A.M. No. RTJ-03-1751, 10 June 2003, the penalty of fine in
the amount of five thousand pesos was deemed sufficient where it was held that respondents lack of malice or
bad faith frees him from administrative liability but not for gross ignorance of the law.
We concur with the rationalization of the Court Administrator. Verily, even if respondent Judges omission
would have easily amounted to gross
ignorance of the law and procedure, a serious offense under Section 8,8 Rule 140, of the Rules of Court, as
amended, the fact that the complainants did not establish that malice or bad faith impelled his omission to act,
or that fraud, dishonesty, or a corrupt motive attended his omission to act demands a downgrading of the
liability. In the absence of any showing that he had been held guilty of any other administrative offense,9 and
without our attention being called to other circumstances that might demonstrate respondent Judges dark
motives for his inaction, we should find and consider the recommended penalty of P5,000.00 with warning that
a repetition of the same or similar act would be dealt with more severely to be commensurate to the offense.10
WHEREFORE, we find respondent JUDGE ROMEO A. RABACA, Presiding Judge of Branch 25,
Metropolitan Trial Court, in Manila guilty of ignorance of the law and procedure, and, accordingly, impose
upon him a fine of P5,000.00 with warning that a repetition of the same or similar act would be dealt with more
severely.
SO ORDERED.
G.R. No. 170916

April 27, 2007

CGR CORPORATION herein represented by its President ALBERTO RAMOS, III, HERMAN M.
BENEDICTO and ALBERTO R. BENEDICTO, Petitioners,
vs.
ERNESTO L. TREYES, JR., Respondent
DECISION
CARPIO MORALES, J.:
Assailed via petition for review are issuances of the Regional Trial Court (RTC), Branch 43, Bacolod City, in
Civil Case No. 04-12284, to wit: Order1 dated August 26, 2005 which dismissed petitioners complaint for
damages on the ground of prematurity, and Order2 dated January 2, 2006 which denied petitioners motion for
reconsideration.
In issue is one of law whether a complainant in a forcible entry case can file an independent action for
damages arising after the act of dispossession had occurred.

CGR Corporation, Herman M. Benedicto and Alberto R. Benedicto (petitioners) claimed to have occupied
37.3033 hectares of public land in Barangay Bulanon, Sagay City, Negros Occidental even before the notarized
separate Fishpond Lease Agreement Nos. 5674,3 56944 and 56955 in their respective favor were approved in
October 2000 by the Secretary of Agriculture for a period of twenty-five (25) years or until December 31, 2024.
On November 18, 2000, Ernesto L. Treyes, Jr. (respondent) allegedly forcibly and unlawfully entered the leased
properties and once inside barricaded the entrance to the fishponds, set up a barbed wire fence along the road
going to petitioners fishponds, and harvested several tons of milkfish, fry and fingerlings owned by petitioners.
On November 22, 2000, petitioners promptly filed with the Municipal Trial Court (MTC) in Sagay City separate
complaints for Forcible Entry With Temporary Restraining Order And/Or Preliminary Injunction And Damages,
docketed as Civil Case Nos. 1331,6 13327 and 1333,8 against Ernesto M. Treyes, Sr. and respondent.
In a separate move, petitioners filed in March 2004 with the Bacolod RTC a complaint for damages against
respondent, docketed as Civil Case No, 04-12284, alleging, inter alia,
xxxx
V
That prior to the issuance of the fishpond lease agreement in favor of the plaintiffs, they had already
been in open and continuous possession of the same parcel of land;
VI
As lessee and in possession of the above[-]described fishpond, plaintiffs have continuously occupied,
cultivated and developed the said fishpond and since then, had been regularly harvesting milkfish,
shrimps, mud crabs and other produce of the fishponds;1a\^/phi1.net
VII
That the yearly income of the fishpond of the plaintiff corporation is at least P300,000.00 more or less,
while the yearly income of the fishpond of plaintiff Herman Benedicto, Sr. is at least P100,000.00 more
or less, and the yearly income of the fishpond of plaintiff Alberto Benedicto is at least P100,000.00 more
or less;
VIII
That sometime last November 18, 2000 or thereabout, defendant Ernesto L. Treyes, Jr. and his armed
men and with the help of the blue guards from the Negros Veterans Security Agency forcibly and
unlawfully entered the fishponds of the plaintiffs and once inside barricaded the entrance of the fishpond
and set up barb wire fence along the road going to plaintiffs fishpond and harvested the milkfish and
carted away several tons of milkfish owned by the plaintiffs;
IX

That on succeeding days, defendants men continued their forage on the fishponds of the plaintiffs by
carting and taking away the remaining full grown milkfish, fry and fingerlings and other marine
products in the fishponds. NOT ONLY THAT, even the chapel built by plaintiff CGR Corporation was
ransacked and destroyed and the materials taken away by defendants men. Religious icons were also
stolen and as an extreme act of sacrilege, even decapitated the heads of some of these icons;
xxxx
XIII
That the unlawful, forcible and illegal intrusion/destruction of defendant Ernesto Treyes, Jr. and his men
on the fishpond leased and possessed by the plaintiffs is without any authority of law and in violation of
Article 539 of the New Civil Code which states:
"Art. 539. Every possessor has a right to be respected in his possession; and should he be disturbed therein he
shall be protected in or restored to said possession by the means established by the laws and rules of the Court."9
(Underscoring supplied) and praying for the following reliefs:
1) Ordering the defendant to pay plaintiff CGR Corporation the sum of at least P900,000.00 and to
plaintiffs Herman and Alberto Benedicto, the sum of at least P300,000.00 each by way of actual
damages and such other amounts as proved during the trial;
2) Ordering the defendant to pay the plaintiffs the sum of P100,000.00 each as moral damages;
3) Ordering the defendant to pay the plaintiffs the sum of P100,000.00 each as exemplary damages;
4) Ordering the defendant to pay the plaintiffs the sum of P200,000.00 as attorneys fees, and to
reimburse plaintiffs with all such sums paid to their counsel by way of appearance fees.10 (Underscoring
supplied)
Respondent filed a Motion to Dismiss11 petitioners complaint for damages on three grounds litis pendentia,
res judicata and forum shopping.
By the assailed Order12 of August 26, 2005, Branch 43 of the Bacolod RTC dismissed petitioners complaint on
the ground of prematurity, it holding that a complaint for damages may only be maintained "after a final
determination on the forcible entry cases has been made."
Hence, the present petition for review.
The only issue is whether, during the pendency of their separate complaints for forcible entry, petitioners can
independently institute and maintain an action for damages which they claim arose from incidents occurring
after the dispossession by respondent of the premises.
Petitioners meet the issue in the affirmative. Respondents assert otherwise.
The petition is impressed with merit.

Section 17, Rule 70 of the Rules of Court provides:

SEC. 17. Judgment. If after trial the court finds that the allegations of the complaint are true, it shall render
judgment in favor of the plaintiff for the restitution of the premises, the sum justly due as arrears of rent or as
reasonable compensation for the use and occupation of the premises, attorneys fees and costs. If it finds that
said allegations are not true, it shall render judgment for the defendant to recover his costs. If a counterclaim is
established, the court shall render judgment for the sum found in arrears from either party and award costs as
justice requires. (Emphasis supplied)
The recoverable damages in forcible entry and detainer cases thus refer to "rents" or "the reasonable
compensation for the use and occupation of the premises" or "fair rental value of the property" and attorneys
fees and costs.13
The 2006 case of Dumo v. Espinas14 reiterates the long-established rule that the only form of damages that may
be recovered in an action for forcible entry is the fair rental value or the reasonable compensation for the use
and occupation of the property:
Lastly, we agree with the CA and the RTC that there is no basis for the MTC to award actual, moral, and
exemplary damages in view of the settled rule that in ejectment cases, the only damage that can be recovered is
the fair rental value or the reasonable compensation for the use and occupation of the property. Considering that
the only issue raised in ejectment is that of rightful possession, damages which could be recovered are those
which the plaintiff could have sustained as a mere possessor, or those caused by the loss of the use and
occupation of the property, and not the damages which he may have suffered but which have no direct relation
to his loss of material possession. x x x15 (Emphasis, underscoring and italics supplied; citations omitted)
Other damages must thus be claimed in an ordinary action.16
In asserting the negative of the issue, respondent cites the 1999 case of Progressive Development Corporation,
Inc. v. Court of Appeals.17 In this case, Progressive Development Corporation, Inc. (Progressive), as lessor,
repossessed the leased premises from the lessee allegedly pursuant to their contract of lease whereby it was
authorized to do so if the lessee failed to pay monthly rentals. The lessee filed a case for forcible entry with
damages against Progressive before the Metropolitan Trial Court (MeTC) of Quezon City. During the pendency
of the case, the lessee filed an action for damages before the RTC, drawing Progressive to file a motion to
dismiss based on litis pendentia. The RTC denied the motion.
On appeal by Progressive, the Court of Appeals sustained the RTC order denying the motion to dismiss.
Progressive brought the case to this Court. Citing Section 1, Rule 70 of the Rules of Court, this Court reversed
the lower courts ruling, it holding that "all cases for forcible entry or unlawful detainer shall be filed before the
Municipal Trial Court which shall include not only the plea for restoration of possession but also all claims for
damages and costs therefrom." In other words, this Court held that "no claim for damages arising out of forcible
entry or unlawful detainer may be filed separately and independently of the claim for restoration of
possession."18 (Underscoring supplied)
In thus ruling, this Court in Progressive made a comparative study of the therein two complaints, thus:

A comparative study of the two (2) complaints filed by private respondent against petitioner before the two (2)
trial courts shows that not only are the elements of res adjudicata present, at least insofar as the claim for actual
and compensatory damages is concerned, but also that the claim for damagesmoral and exemplary in addition
to actual and compensatoryconstitutes splitting a single cause of action. Since this runs counter to the rule
against multiplicity of suits, the dismissal of the second action becomes imperative.
The complaint for forcible entry contains the following pertinent allegations
2.01 On 02 January 1989, plaintiff entered into a contract of lease with defendant PDC over a property
designated as Ground Floor, Seafood Market (hereinafter "Subject Premises") situated at the corner of EDSA
corner MacArthur Street, Araneta Center, Cubao, Quezon City, for a period of ten (10) years from 02 January
1989 to 30 April 1998.
2.02 Immediately after having acquired actual physical possession of the Subject Premises, plaintiff established
and now operates thereon the now famous Seafood Market Restaurant. Since then, plaintiff had been in actual,
continuous, and peaceful physical possession of the Subject Premises until 31 October 1992.
xxxx
3.02 Plaintiff, being the lessee of the Subject Premises, is entitled to the peaceful occupation and enjoyment of
the Subject Premises to the exclusion of all others, including defendants herein.
3.03 Defendants resort to strong arms tactics to forcibly wrest possession of the Subject Premises from plaintiff
and maintain possession thereof through the use of force, threat, strategy and intimidation by the use of superior
number of men and arms amounts to the taking of the law into their own hands.
3.04 Thus, defendants act of unlawfully evicting out plaintiff from the Subject Premises it is leasing from
defendant PDC and depriving it of possession thereof through the use of force, threat, strategy and intimidation
should be condemned and declared illegal for being contrary to public order and policy.
3.05 Consequently, defendants should be enjoined from continuing with their illegal acts and be ordered to
vacate the Subject Premises and restore possession thereof, together with its contents to plaintiff.
xxxx
4.07 Considering that defendants act of forcibly grabbing possession of the Subject Premises from plaintiff is
illegal and null and void, defendant should be adjudged liable to plaintiff for all the aforedescribed damages
which plaintiff incurred as a result thereof.
The amended complaint for damages filed by private respondent alleges basically the same factual
circumstances and issues as bases for the relief prayed for, to wit:
4. On May 28, 1991, plaintiff and defendant PDC entered into a Contract of Lease for a period of ten years or
from January 2, 1989 up to April 30, 1998 over a property designated as Ground Floor, Seafood Market
(hereinafter referred to as Subject Premises) situated at the corner of EDSA corner McArthur Street, Araneta
Center, Cubao, Quezon City. A copy of the lease contract is attached hereto as Annex "A."

5. Immediately thereafter, plaintiff took over actual physical possession of Subject Premises, and established
thereon the now famous "Seafood Market Restaurant."
xxxx
7. On October 31, 1992 at around 8:30 p.m., defendant PDC, without the benefit of any writ of possession or
any lawful court order and with the aid of approximately forty (40) armed security guards and policemen under
the supervision of defendant Tejam, forcibly entered the subject premises through force, intimidation, threats
and stealth and relying on brute force and in a thunderboltish manner and against plaintiffs will,
unceremoniously drew away all of plaintiffs men out of the subject premises, thereby depriving herein plaintiff
of its actual, physical and natural possession of the subject premises. The illegal high-handed manner of gestapo
like take-over by defendants of subject premises is more particularly described as follows: x x x x
8. To date, defendants continue to illegally possess and hold the Subject Premises, including all the multimillion improvements, fixtures and equipment therein owned by plaintiff, all to the damage and prejudice of
plaintiff. The actuations of defendants constitute an unlawful appropriation, seizure and taking of property
against the will and consent of plaintiff. Worse, defendants are threatening to sell at public auction and without
the consent, of plaintiff and without lawful authority, the multi-million fixtures and equipment of plaintiff and at
prices way below the market value thereof. Plaintiff hereby attaches as Annex "B" the letter from defendants
dated August 6, 1993 addressed to plaintiff, informing the latter that the former intends to sell at an auction on
August 19, 1993 at 2:00 p.m. properties of the plaintiff presently in defendants possession.
xxxx
12. Defendants unlawful takeover of the premises constitutes a violation of its obligation under Art. 1654 of the
New Civil Code requiring the lessor to maintain the lessee in peaceful and adequate enjoyment of the lease for
the entire duration of the contract. Hence, plaintiff has filed the present suit for the recovery of damages under
Art. 1659 of the New Civil Code x x x x19 (Emphasis in the original; underscoring supplied)
Analyzing the two complaints, this Court, still in Progressive, observed:
Restated in its bare essentials, the forcible entry case has one cause of action, namely, the alleged unlawful entry
by petitioner into the leased premises out of which three (3) reliefs (denominated by private respondent as its
causes of action) arose: (a) the restoration by the lessor (petitioner herein) of the possession of the leased
premises to the lessee, (b) the claim for actual damages due to the losses suffered by private respondent such as
the deterioration of perishable foodstuffs stored inside the premises and the deprivation of the use of the
premises causing loss of expected profits; and, (c) the claim for attorneys fees and costs of suit.
On the other hand, the complaint for damages prays for a monetary award consisting of (a) moral damages of
P500,000.00 and exemplary damages of another P500,000.00; (b) actual damages of P20,000.00 and
compensatory damages of P1,000,000.00 representing unrealized profits; and, (c) P200,000.00 for attorneys
fees and costs, all based on the alleged forcible takeover of the leased premises by petitioner. Since actual and
compensatory damages were already prayed for in the forcible entry case before the MeTC, it is obvious that
this cannot be relitigated in the damage suit before the RTC by reason of res adjudicata.

The other claims for moral and exemplary damages cannot also succeed considering that these sprung from the
main incident being heard before the MeTC. x x x20 (Italics in the original; Emphasis and underscoring
supplied)
It bears noting, however, that as reflected in the earlier-quoted allegations in the complaint for damages of
herein petitioners, their claim for damages have no direct relation to their loss of possession of the premises. It
had to do with respondents alleged harvesting and carting away several tons of milkfish and other marine
products in their fishponds, ransacking and destroying of a chapel built by petitioner CGR Corporation, and
stealing religious icons and even decapitating the heads of some of them, after the act of dispossession had
occurred.
Surely, one of the elements of litis pendentia - that the identity between the pending actions, with respect to the
parties, rights asserted and reliefs prayed for, is such that any judgment rendered on one action will, regardless
of which is successful, amount to res judicata in the action under consideration - is not present, hence, it may
not be invoked to dismiss petitioners complaint for damages.21
Res judicata may not apply because the court in a forcible entry case has no jurisdiction over claims for
damages other than the use and occupation of the premises and attorneys fees.22
Neither may forum-shopping justify a dismissal of the complaint for damages, the elements of litis pendentia
not being present, or where a final judgment in the forcible entry case will not amount to res judicata in the
former.23
Petitioners filing of an independent action for damages other than those sustained as a result of their
dispossession or those caused by the loss of their use and occupation of their properties could not thus be
considered as splitting of a cause of action.
WHEREFORE, the Orders dated August 26, 2005 and January 2, 2006 issued by the Regional Trial Court,
Branch 43, Bacolod City, in Civil Case No. 04-12284 are REVERSED and SET ASIDE.
The Regional Trial Court, Branch 43, Bacolod City, is directed to REINSTATE Civil Case No. 04-12284 to its
docket and to conduct proceedings thereon with dispatch.
SO ORDERED.
CONTEMPT
G.R. No. 129521 September 7, 1999
SECURITIES AND EXCHANGE COMMISSION CHAIRMAN PERFECTO R. YASAY, JR.,
ASSOCIATE COMMISSIONERS FE ELOISA C. GLORIA, EDIJER MARTINEZ and ROSALINDA U.
CASIGURAN, petitioners,
vs.
MANUEL D. RECTO, PELAGIO T. RICALDE and CESAR P. MANALAYSAY, respondents.

PARDO, J.:
The case before the Court is an appeal from a decision of the Court of Appeals 1 setting aside the order of the
Securities and Exchange Commission
(SEC) 2 declaring respondents guilty of contempt for disobeying a temporary restraining order issued to
respondents to desist from holding a stockholders meeting of the Interport Resources Corporation.
The facts are as follows:
On June 28, 1996, SEC Chairman Yasay upon request of certain stockholders of Interport Resources
Corporation, directed respondent Ricalde to submit to the SEC a list of stockholders and to set a definite time
and place for the validation of proxies and nominations for directors of the firm.
On the same date, June 28, 1996, the SEC issued a temporary restraining order (TRO) enjoining the Interport
Resources Corporation from holding the July 9, 1996 scheduled annual meeting of the stockholders.
Notwithstanding the SEC's TRO, the stockholders proceeded with the meeting on July 9, 1996, presided over by
respondent Manalaysay.
On July 10, 1996, the SEC declared the stockholders meeting of Interport Resources Corporation held on July 9,
1996, null and void and directed respondents to appear before the SEC on July 15, 1996, at 3:00 p.m., to show
cause why no disciplinary action should be taken against them or why they should not be cited in contempt.
At the hearing on July 15, 1996, respondent Manalaysay questioned the validity of the TRO as well as the
contempt proceedings in light of the TRO issued by the Court of Appeals restraining the SEC from enforcing its
TRO. 3
After the hearing, on July 15, 1996, the SEC issued an order stating:
xxx xxx xxx
VIEWED in this light Atty. Cesar Manalaysay, Manuel D. Recto and Atty. Pelagio T. Ricalde are
hereby DECLARED GUILTY OF CONTEMPT and are correspondingly ORDERED to pay a
fine of TEN THOUSAND (P10,000.00) Pesos each upon finality of this Order for willfully
disobeying and disregarding the July 8, 1996 Order of this Commission. Atty. Cesar Manalaysay
is likewise BARRED from practicing his law profession before this commission for a period of
sixty (60) days from date hereof and Mr. Recto and Atty. Ricalde are, by this ORDER, prohibited
and barred from acting as President/Chairman and Secretary respectively of Interport Resources,
Inc. within the same period. This Order shall be immediately executory unless otherwise
restrained by a court of competent jurisdiction.
SO ORDERED.
EDSA, Greenhills, Mandaluyong City.
(s/t) PERFECTO R. YASAY, JR.

Chairman
(s/t) FE ELOISA C. GLORIA
Associate Commissioner
(s/t) EDIJER A. MARTINEZ
Associate Commissioner 4
In due time, respondents appealed from the aforesaid order to the Court of Appeals.
After due proceedings, on April 14, 1997, the Court of Appeals promulgated its decision reversing and setting
aside the SEC order declaring respondents guilty of contempt. The dispositive portion reads:
WHEREFORE, premises considered, respondents' Order dated July 15, 1996, is hereby
REVERSED and SET ASIDE.
The cash bond of P50,000.00 may be withdrawn by petitioners.
SO ORDERED.
(s/t) ARTEMIO G. TUQUERO
Associate Justice
(s/t) ARTEMON D. LUNA
Associate Justice
(s/t) HECTOR L. HOFILEA
Associate Justice 5
On May 2, 1997, petitioners filed a motion for reconsideration of the decision. However, on June 11, 1997, the
Court of Appeals denied the motion.
Hence, this appeal.
On September 10, 1997, the Court required respondents to comment on the petition within ten (10) days from
notice. 6 On October 7, 1997, respondents filed their comment. 7 In the main, respondents submit that contempt
is criminal in character and their exoneration from a charge of contempt amounts to an acquittal from which an
appeal would not lie. 8
At issue in this petition is whether or not the Court of Appeals erred, as a matter of law, in setting aside the
order of the SEC finding respondents guilty of contempt for disobeying its temporary restraining order to desist

from holding the annual stockholders meeting of the Interport Resources Corporation scheduled on July 9,
1996.
We agree with respondents that the charge of contempt partakes of the nature of a criminal offense. 9 The
exoneration of the contemner from the charge amounts to an acquittal from which an appeal would not lie.
A distinction is made between a civil and criminal contempt. Civil contempt is the failure to do something
ordered by a court to be done for the benefit of a party. A criminal contempt is any conduct directed against the
authority or dignity of the court. 10
Petitioners argue that the contempt committed by respondents was civil in nature, as the temporary restraining
order the SEC issued was for the benefit of a party to a case. The contention is untenable.
"Civil contempt proceedings are generally held to be remedial and civil in their nature; that is, they are
proceedings for the enforcement of some duty, and essentially a remedy for coercing a person to do the thing
required." 11 "In general, civil contempt proceedings should be instituted by an aggrieved party, or his successor,
or someone who has a pecuniary interest in the right to be protected." 12 If the contempt is initiated by the court
or tribunal exercising the power to punish a given contempt, it is criminal in nature, and the proceedings are to
be conducted in accordance with the principles and rules applicable to criminal cases. The State is the real
prosecutor. 13
"The real character of the proceedings in contempt cases is to be determined by the relief sought or by the
dominant purpose. The proceedings are to be regarded as criminal when the purpose is primarily punishment,
and civil when the purpose is primarily compensatory or remedial." 14
"But whether the first or the second, contempt is still a criminal proceeding in which acquittal, for instance, is a
bar to a second prosecution. The distinction is for the purpose only of determining the character of punishment
to be administered." 15
In this case, the contempt is not civil in nature, but criminal, imposed to vindicate the dignity and power of the
Commission; hence, as in criminal proceedings, an appeal would not lie from the order of dismissal of, or an
exoneration from, a charge of contempt." 16
At any rate, the SEC order directing respondents to show cause why they should not be cited in contempt was
highly improper. The Court of Appeals issued on July 8, 1996, a temporary restraining order against the order of
the SEC of June 28, 1996 directing the Interport Resources Corporation to desist from holding the stockholders'
meeting on July 9, 1996. Contrary to the view of petitioners, the effect of the temporary restraining order of the
Court of Appeals directing the SEC to desist from enforcing its own TRO was to allow such meeting to proceed
as scheduled. More, the Court of Appeals in its final decision nullified the SEC's order. 17 Hence, there was no
willful disobedience to a lawful order of the SEC. Respondents were not guilty of contempt.
While the SEC is vested with the power to punish for contempt, 18 the salutary rule is that the power to punish
for contempt must be exercised on the preservative, not vindictive principle, 19 and on the corrective and not
retaliatory idea of punishment. 20 The courts and other tribunals vested with the power of contempt must
exercise the power to punish for contempt for purposes that are impersonal, because that power is intended as a
safeguard not for the judges as persons but for the functions that they exercise. 21

In this case, the SEC issued the citation for contempt sua sponte. There was no charge filed by a private party
aggrieved by the acts of respondents. Strictly speaking, there was no disobedience to the SEC's temporary
restraining order. The Court of Appeals enjoined that order. Consequently, respondents' act in proceeding with
the scheduled stock-holders' meeting was not contumacious as there was no willful disobedience to an order of
the SEC. 22 The disobedience which the law punishes as constructive contempt implies willfulness. For, at
bottom, contempt is a willful disregard or disobedience. 23
The SEC was rather hasty in asserting its power to punish for contempt. The chairman and commissioners of the
SEC must exercise the power of contempt judiciously and sparingly with utmost self-restraint. 24
Finally, the penalty imposed exceeded those authorized in the powers of the SEC 25 in relation to the 1964
Revised Rules of Court as amended. 26 If the contempt was committed against a superior court or judge, the
accused may be fined not exceeding thirty thousand pesos (P30,000.00) or imprisoned not more than six (6)
months, or both. The SEC suspended respondent Manalaysay from the practice of law in the SEC, a power
vested exclusively in the Supreme Court. 27
WHEREFORE, the Court hereby DENIES the petition for review on certiorari and AFFIRMS the decision of
the Court of Appeals in GA-G.R. SP No. 41400, promulgated on April 14, 1997.1wphi1.nt
No costs.
SO ORDERED.
A.M. No. RTJ-03-1771
May 27, 2004
(Formerly A.M. OCA-IPI No. 99-842-RTJ)
SALVADOR SISON, complainant,
vs.
JUDGE JOSE F. CAOIBES, JR., Presiding Judge, and TEODORO S. ALVAREZ, Sheriff IV, Regional
Trial Court, Las Pias City, Branch 253, respondents,
DECISION
CALLEJO, SR., J.:
The instant administrative complaint arose when Salvador Sison, a Metropolitan Manila Development Authority
(MMDA) traffic enforcer, filed a verified Complaint1 dated October 12, 1999, charging Judge Jose F. Caoibes,
Jr. and Sheriff Teodoro Alvarez of the Regional Trial Court of Las Pias City, Branch 253, with grave abuse of
authority.
In turn, the complaint stemmed from an Order2 dated September 15, 1999 in Criminal Case No. 99-0023 which
the respondent judge issued, requiring the complainant to appear before him to explain a traffic incident
involving his son and the complainant. The said Order reads, thus:
Per information from the authorized driver of the Presiding Judge of this Court on September 8, 1999, at
about 3:00 oclock in the afternoon of said date, said authorized driver, while on board the official car of

the undersigned on an official errand was flagged by the accused along the Epifanio delos Santos
Avenue while he was positioning the car he was driving to the right lane as he was then to make a right
turn; that after he stopped, he was told by the accused that swerving to the right lane was prohibited
when it appeared that the sign therefore was still far off and not readily visible to the naked eye; that
nonetheless, he introduced himself as the authorized driver of the undersigned, his son in fact, and
showed to the accused the calling card of the undersigned with a notation in (sic) the dorsal portion
thereof introducing the bearer of the card and requesting for assistance from law enforcers, and
accordingly begged that he be allowed to proceed on his way considering that there was no danger to
limb, life and property occasioned by his alleged traffic violation; that notwithstanding such introduction
and plea, the accused confiscated the drivers license of the authorized driver, even bragging in the
process that he did the same to somebody who introduced himself as a lawyer the day before.
The aforementioned actuation of the accused, if true, is not only indicative of his arrogance and
deliberate disregard of the usual respect, courtesy and accommodation accorded to a court of law and/or
its representative but is one constitutive of indirect contempt under Section 3, paragraphs (c) and (d) of
Rule 71 of the Rules of Court, specially considering that the authorized driver of the Presiding Judge of
this Court was then on official errand.
WHEREFORE, within a non-extendible period of twenty-four (24) hours from receipt hereof, the
accused is ordered to show cause why he should not be cited as in contempt of court and dealt with
accordingly. The Branch Sheriff of this Court is authorized and ordered to serve a copy of this Order
upon the accused immediately and to make a return of his proceedings thereon. After receipt of this
Order, the accused is ordered to personally file his comment in Court, within the period allowed him
herein.
SO ORDERED.4
Because of the complainants failure to appear before the respondent judge as directed, the latter, after verifying
that the said order was duly served on the complainant, issued another Order5 dated September 22, 1999 for the
complainants arrest and commitment, and for the latter to appear for hearing before his sala on September 29,
1999. The respondent sheriff then served the order on the complainant. On the scheduled hearing, the
complainant appeared and executed an affidavit6 admitting to the court that he made a mistake and that it was
all a misunderstanding. The respondent judge, thereafter, lifted the September 22, 1999 Order.7
In his complaint, the complainant alleged inter alia the following:
6. That on September 28, 1999, at around 6:00 P.M., the undersigned complainant was greatly surprised
when respondent TEODORO ALVAREZ came and arrested him without any warrant of arrest, only on
orders of the respondent Judge, and he was ordered to board a motor vehicle and was brought to the
respondent Judge in Las Pias City who ordered him detained in the Las Pias City Jail. When he was
arrested, he was not able to call his family to inform them where he was because he failed to return
home in the evening;
7. That the next day, September 29, 1999, respondent Teodoro Alvarez informed him that there will be a
hearing of his indirect contempt charge before the sala of the respondent Judge in Las Pias City.
During the hearing, the complainant was made to admit by the respondent Judge that he made a mistake

in apprehending his driver-son[,] conscious that he committed the gravest abuse of his authority, and
perhaps in anticipation of the legal action the undersigned complainant may take against him after he is
discharged from detention. Thus, after the complainant admitted his mistakes under duress, and upon
appeal by his counsel assuring the respondent Judge that the same incident may not be repeated, the
complainant was ordered discharged from detention at around 3:30 P.M. on September 29, 1999;
8. That the undersigned complainant did not know of any offense he had committed, except for his
issuing a traffic violation receipt to the driver-son of the respondent Judge which he is tasked by law to
do so for those found violating traffic rules and regulations;
9. That if the act of issuing a traffic violation receipt for a traffic violation within the city limits of
Mandaluyong City by the complainant is considered by the respondents as an offense, then complainant
should be tried for the said offense in Mandaluyong City, and not in Las Pias City where the respondent
judge has no jurisdiction;
10. That to the ordinary and lowly understanding of the undersigned complainant, the acts of
respondents in arresting him without any warrant of arrest before a charge of indirect contempt is heard
constitute the gravest ABUSE OF AUTHORITY ever committed by the respondents; and
11. That the manner the respondents are administering justice in Las Pias City is despotic and barbaric
in the sense that they take the law into their own hands without due regard for the rights of the others.8
The complainant, thus, prayed that the respondents be summarily dismissed from the service.
In his comment, the respondent judge vehemently denied the accusations against him, contending that he was
merely preserving the dignity and honor due to the courts of law. The respondent narrated that on September 8,
1999, he ordered his son, Jose R. Caoibes III, to go to the Pasig City Regional Trial Court to secure certain
records. While on his way there, he was flagged down by the complainant for an alleged traffic violation.
Caoibes III explained to the complainant that he was on an errand for his father, the respondent judge, to which
the complainant reportedly uttered, "Walang Judge, Judge Caoibes sa akin; kahapon nga, abogado ang hinuli
ko."
The respondent judge also alleged that he initiated the complaint for contempt pursuant to the following
provisions of the Revised Rules of Court: a) Section 3(d) and Section 4 of Rule 71; b) Section 5(c) of Rule 135;
and, c) the last paragraph of Section 3 of Rule 71.
According to the respondent judge, the complainants allegation that he failed to contact any relative is belied
by the fact that during the hearing of September 29, 1999, the complainant was assisted by Atty. Eduardo P.
Flores of the MMDA, as evidenced by the transcript of stenographic notes9 taken during the proceedings. The
respondent prayed that the instant complaint be dismissed for lack of legal or factual basis.
For his part, the respondent sheriff admitted that he personally served copies of the respondent judges orders on
the complainant, but averred that he was merely performing his duties as deputy sheriff of the court. As such, he
did not commit grave abuse of authority in the performance of his functions.10

Thereafter, the complainant executed a Sinumpaang Salaysay ng Pagbawi ng Reklamo dated November 26,
2002, where he indicated that he was no longer interested in pursuing the administrative complaint against the
respondent judge. The complainant recanted his earlier claim, averring that the respondent judges son did not in
fact enter a one-way street and that he was standing by the September 29, 1999 Affidavit he executed during the
hearing. He then requested that his complaint be duly withdrawn.11
Pursuant to the recommendation12 of the Court Administrator, the Court, in a Resolution13 dated April 2, 2003,
resolved to (a) dismiss the instant administrative complaint against Sheriff Teodoro Alvarez for lack of merit;
and (b) refer the matter against respondent Judge Caoibes, Jr. to the Presiding Justice of the Court of Appeals
for raffle among the Associate Justices of the Court, and for investigation, report and recommendation. The case
was, thereafter, raffled to Associate Justice Lucas P. Bersamin. The Investigating Justice, thereafter, submitted
his Sealed Report dated February 26, 2004.
According to the Investigating Justice, although the complainant never appeared to prove the charges against
the respondent judge, the facts averred in the complaint appear to be substantially correct and true. Thus, the
respondent judge abused his authority to charge and punish any person for indirect contempt under Rule 71 of
the Rules of Civil Procedure.14 The Investigating Justice recommended that the respondent be admonished and
warned, pursuant to Section 10(1), Rule 140 of the Rules of Court, and Section 11(c) of the same rule.
The respondent judge anchors the justification of his acts against the complainant on Section 3, Rule 71 of the
Rules of Civil Procedure, viz:
Sec. 3. Indirect contempt to be punished after charge and hearing. After a charge in writing has been
filed, and an opportunity given to the respondent to comment thereon within such period as may be fixed
by the court and to be heard by himself or counsel, a person guilty of any of the following acts may be
punished for indirect contempt:
(a) Misbehavior of an officer of a court in the performance of his official duties or in his official
transactions;
(b) Disobedience of or resistance to a lawful writ, process, order, or judgment of a court,
including the act of a person who, after being dispossessed or ejected from any real property by
the judgment or process of any court of competent jurisdiction, enters or attempts or induces
another to enter into or upon such real property, for the purpose of executing acts of ownership or
possession, or in any manner disturbs the possession given to the person adjudged to be entitled
thereto;
(c) Any abuse of or any unlawful interference with the processes or proceedings of a court not
constituting direct contempt under section 1 of this Rule;
(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the
administration of justice;
(e) Assuming to be an attorney or an officer of a court, and acting as such without authority;
(f) Failure to obey a subpoena duly served;

(g) The rescue, or attempted rescue, of a person or property in the custody of an officer by virtue
of an order or process of a court held by him.
But nothing in this section shall be so construed as to prevent the court from issuing process to bring the
respondent into court, or from holding him in custody pending such proceedings.
Thus, the power to declare a person in contempt of court and in dealing with him accordingly is an inherent
power lodged in courts of justice, to be used as a means to protect and preserve the dignity of the court, the
solemnity of the proceedings therein, and the administration of justice from callous misbehavior, offensive
personalities, and contumacious refusal to comply with court orders.15 Indeed, the power of contempt is power
assumed by a court or judge to coerce cooperation and punish disobedience, disrespect or interference with the
courts orderly process by exacting summary punishment. The contempt power was given to the courts in trust
for the public, by tradition and necessity, in as much as respect for the courts, which are ordained to administer
the laws which are necessary to the good order of society, is as necessary as respect for the laws themselves.16
And, as in all other powers of the court, the contempt power, however plenary it may seem, must be exercised
judiciously and sparingly.17 A judge should never allow himself to be moved by pride, prejudice, passion, or
pettiness in the performance of his duties.18
At first blush, it would seem that the respondent judge was justified in holding the complainant for contempt,
due to the latters refusal to comply with the judges Order of September 15, 1999. However, it is not lost upon
this Court that the complainant was not a party to any of the cases pending before the RTC, Branch 253. What
triggered the contempt charge was, in fact, the traffic violation incident involving the respondent judges son.
Furthermore, the record shows that when the complainant filed his reply to the charge as required by the
respondent judge, the same was refused by some staff member in the latters sala.19
In Cortes v. Bangalan,20 we held that a judge may not hold a party in contempt of court for expressing concern
on the judges impartiality through a motion for voluntary inhibition, even if the latter may have felt insulted
therein. The Court also declared, thus:
[W]hile the power to punish in contempt is inherent in all courts so as to preserve order in judicial
proceedings and to uphold due administration of justice, judges, however, should exercise their
contempt powers judiciously and sparingly, with utmost restraint, and with the end in view of utilizing
their contempt powers for correction and preservation not for retaliation and vindication.21
We agree with the Investigating Justice when he opined that the respondent judge should have refrained from
ordering the arrest and detention of the complainant, since the incident involved his own son, and the matter
was very personal to him. The fact that the respondent judge insisted that the complainant personally file his
comment in court gives rise to doubts as to the motive behind it; as the Investigating Justice puts it, the
requirement of personal filing was deliberately inserted so that the respondent could confront and harass the
complainant.22
We also agree with the following ruminations of Justice Bersamin:
[T]he respondent judge obviously resented the refusal of Sison to let off Caoibes III from the traffic
violation apprehension. The refusal of Sison was apparently aggravated by the sons reporting to the

father that Sison had supposedly made the remarks of Walang judge, judge Caoibes sa akin; Kahapon
nga, abogado ang hinuli ko.
...
The respondent Judge was not justified to so consider the act and remarks of Sison as thereby displaying
arrogance towards and deliberate disregard of the usual respect, courtesy and accommodation due to a
court of law and its representative. First of all, the refusal of Sison and the supposed remarks should not
cause resentment on the part of the respondent Judge (whom Sison most likely did not yet know at the
time) because he knew, as a public official himself, that Sison was only doing his duty of enforcing
evenly the particular traffic regulation against swerving into a one-way street from the wrong direction,
regardless of the office or position of the violators father. Secondly, the respondent Judge should have
had the circumspection expected of him as a judge to realize that the remarks of Sison were invited by
Caoibes IIIs attempt to bluffhis way out of the apprehension because he was the son of an RTC judge.
Hence, the respondent Judge would have no grounds to cite Sison for contempt of court. And, thirdly,
the respondent Judge and his son should have challenged the issuance of the traffic violation receipt
pursuant to the pertinent rules if they did not agree with the basis of the apprehension and also
administratively charged Sison for any unwarranted act committed. Since neither was done by them, but,
on the contrary, both ultimately accepted the validity of the apprehension, as borne out by the retrieval
of the drivers license after September 29, 1999 by paying the fines corresponding to the traffic
violation, then it follows that the respondent Judge had the consciousness that his son was at fault,
instead of Sison.
[T]he respondent Judge claimed at the hearing that his son "was at that time working with (sic) me as
my personal driver;" and that his errand was to secure some papers from the Regional Trial Court in
Pasig City involved in a "personal case" which the respondent Judge had "filed against a bank for
specific performance and damages, and since I just suffered a mild stroke at that time, specifically on
June 10, 1999, and the incident took place (sic) September, I could not at that time personally go to
Pasig to secure the documents I needed for the next hearing of the case so I had to send my son."
The foregoing renders clear that the respondent Judge had no legitimate basis by which to consider
Sisons apprehension of his son as indirect contempt. As indicated earlier, the act complained against
must be any of those specified in Sec. 3, Rule 71, 1997 Rules of Civil Procedure; otherwise, there is no
contempt of court, which requires that the person obstructed should be performing a duty connected with
judicial functions. As such, the respondent Judge acted oppressively and vindictively.
Parenthetically, it is odd that the respondent Judge would even propose herein that Caoibes III, already
25 years at the time of the apprehension, was serving his father as the latters personal driver, albeit not
officially employed in the Judiciary. Most likely, therefore, Caoibes III might not be doing anything for
his father at the time of his apprehension but was in the place for his own purposes.23
The act of a judge in citing a person in contempt of court in a manner which smacks of retaliation, as in the case
at bar, is appalling and violative of Rule 2.01 of the Code of Judicial Conduct which mandates that "a judge
should so behave at all times to promote public confidence in the integrity and impartiality of the judiciary."24
The very delicate function of administering justice demands that a judge should conduct himself at all times in a
manner which would reasonably merit the respect and confidence of the people, for he is the visible

representation of the law.25 The irresponsible or improper conduct of judges erodes public confidence in the
judiciary; as such, a judge must avoid all impropriety and the appearance thereof.26
We do not agree, however, that the respondent judge should be merely reprimanded for his actuations. The
Court has not been blind to the improper use by judges of the erstwhile inherent power of contempt which, in
fine, amounts to grave abuse of authority. The penalty imposed by the Court in such cases ranges from a fine of
P2,500;27 one months salary;28 suspension from the service without pay for a period of three months;29 and even
the ultimate penalty of dismissal from the service.30
Furthermore, we take judicial notice that the respondent judge was previously sanctioned by the Court for
violating Canon 2 of the Code of Judicial Conduct, where he was meted a fine of P20,000.31 He was found
guilty of serious impropriety unbecoming a judge, for delivering fistic blows on a complainant judge. To our
mind, the instant case falls under "similar conduct," which the Court avowed would be dealt with more severely
if repeated, and of which the respondent was duly warned. The respondent was, likewise, found guilty of gross
ignorance of procedural law and unreasonable delay in the issuance of an order of execution, where he was
meted a fine of P30,000;32 and delay in resolving a motion to dismiss in a civil case pending before his sala
where he was, likewise, fined P40,000.33
WHEREFORE, the Court finds respondent Judge Jose F. Caoibes, Jr., Regional Trial Court of Las Pias City,
Branch 253, GUILTY of serious impropriety unbecoming a judge for violating Canon 2 of the Code of Judicial
Conduct, and is hereby DISMISSED from the service with forfeiture of all retirement benefits except accrued
leave credits, with prejudice to re-employment in any branch of the government or any of its instrumentalities
including government-owned and controlled corporations.
This decision is immediately executory. The respondent is ORDERED to cease and desist from discharging the
functions of his Office. Let a copy of this Decision be entered in the respondents personnel records.
SO ORDERED.
G.R. No. 150949

June 21, 2007

JUDGE DOLORES L. ESPAOL,* Presiding Judge, Regional Trial Court, Branch 90, Dasmarias,
Cavite, petitioner,
vs.
ATTY. BENJAMIN S. FORMOSO and SPOUSES BENITO SEE and MARLY SEE, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a Petition for Review on Certiorari assailing the Decision1 dated September 12, 2001 and
Resolution dated November 15, 2001 of the Court of Appeals in CA-G.R. SP No. 65652.
The facts are:

On April 15, 1994, Sharcons Builders Philippines, Inc. (Sharcons) bought from Evanswinda Morales a piece of
land consisting of 33,130 square meters in Paliparan, Dasmarias, Cavite. The property is covered by Transfer
Certificate of Title (TCT) No. T-278479 issued in her name by the Register of Deeds of Trece Martires City.
Thus, TCT No. T-278479 in Evanswindas name was cancelled and in lieu thereof, TCT No. T-511462 was
issued in the name of Sharcons. However, when the latters workers tried to fence and take possession of the lot,
they were prevented by the caretaker of spouses Joseph and Enriqueta Mapua. The caretaker claimed that
spouses Mapua are the owners of the land. Sharcons verified the status of the title and found that TCT No. T107163 was indeed registered in the names of spouses Mapua as early as July 13, 1979.
On January 25, 2000, Sharcons filed with the Regional Trial Court (RTC), Branch 90, Dasmarias, Cavite a
complaint for quieting of title, docketed as Civil Case No. 2035-00. Impleaded as defendants were spouses
Mapua, Evanswinda Morales, and the Register of Deeds of Trece Martires City.
In their answer, spouses Mapua alleged, among others, that all the documents relied upon by Sharcons are
spurious and falsified.
In the course of the proceedings, or on July 9, 2001, Judge Dolores L. Espaol, petitioner, issued an Order
stating that Benito See and Marly See, president and treasurer, respectively, of Sharcons, and its counsel, Atty.
Benjamin Formoso, respondents, have used a spurious certificate of title and tax declaration when it (Sharcons)
filed with the RTC its complaint for quieting of title. Consequently, petitioner declared respondents guilty of
direct contempt of court and ordered their confinement for ten (10) days in the municipal jail of Dasmarias,
Cavite.
Petitioners Order is partly reproduced as follows:
From the foregoing circumstances, this Court is of the view and so holds that the instant case is a callous
and blatant imposition of lies, falsehoods, deceptions, and fraudulent manipulations, through the
extensive use of falsified documents by the plaintiff corporation and its former counsel, Atty. Benjamin
S. Formoso, defendant Evanswinda C. Morales and even the Geodetic Engineer who connived with this
private group on one hand, and some officials and employees of the government agencies responsible
for the processing and issuance of spurious or falsified titles, on the other. Unless these fraudulent
operations are put to a complete and drastic halt, the Courts are at the mercy of these unscrupulous
people for their own personal gain.
Using the presumption that whoever is in possession and user of falsified document is the forger thereof
(Gamido v. Court of Appeals, 25 SCRA 101 [1995]), let the appropriate falsification charges be filed
against Benito See and Marly See together with Evanswinda C. Morales. Thus, let a copy of this Order
be forwarded to the National Bureau of Investigation and the Department of Justice for their appropriate
action. As regards Atty. Benjamin S. Formoso, let a copy of this Order be forwarded to the Bar
Confidants Office, Supreme Court. Manila.
Further, Benito See and Marly See, President and Treasurer of Sharcons Builders Phils. Inc.,
respectively, and Atty. Benjamin S. Formoso, counsel for Sharcons until March 13, 2001, are declared
and held in contempt for foisting falsehoods and using falsified and spurious documents in the pursuit of
their nefarious activities pursuant to the instant case filed before this Court. Let the corresponding

Warrants of Arrest be issued against the aforesaid respondents who should serve ten (10) days of
detention at the Dasmarias Municipal Jail, Cavite.
Likewise, the title issued to Sharcons Builders Philippines, Inc., under TCT No. T-511462 allegedly
issued on November 11, 1994, being spurious, is hereby cancelled, it having been derived from another
spurious title with TCT No. T-278479 allegedly issued to Evanswinda C. Morales on December 29,
1989. The Declaration of Real Property No. 4736 is likewise hereby cancelled for being spurious. Let a
copy of this Order be forwarded to the Registry of Deeds for its implementation with respect to the two
(2) titles for cancellation and to the Assessors Office of the Municipality of Dasmarias, Cavite, to
stave off the proliferation of these spurious instruments.
WHEREFORE, in view of the foregoing, the instant case is DISMISSED WITH PREJUDICE, whereas,
the private defendants counterclaims, which need further substantiation, are likewise dismissed.
However, the said private defendants are not precluded from pursuing their rightful course(s) of action
in the interest of justice.
SO ORDERED.
Petitioner stated that in determining the merits of Sharcons' complaint for quieting of title, she "stumbled" upon
Civil Case No. 623-92 for cancellation of title and damages filed with the RTC, Branch 20, Imus, Cavite,
presided by then Judge Lucenito N. Tagle.2 Petitioner then took judicial notice of the judges Decision declaring
that Sharcons' TCT and other supporting documents are falsified and that respondents are responsible therefor.
On July 12, 2001, petitioner issued warrants of arrest against respondents. They were confined in the municipal
jail of Dasmarias, Cavite. That same day, respondents filed a motion for bail and a motion to lift the order of
arrest. But they were denied outright by petitioner.
Respondents then filed with the Court of Appeals a petition for a writ of habeas corpus, docketed as CA-G.R.
SP No. 65652. On July 19, 2001, the Court of Appeals granted the petition.
On September 12, 2001, the Court of Appeals promulgated its Decision, the dispositive portion of which reads:
IN THE LIGHT OF ALL THE FOREGOING, finding the instant petition to be meritorious, the same is
hereby GRANTED. Respondent judges July 9, 2001 Order, insofar as it declared herein petitioners in
direct contempt and ordered their incarceration for ten (10) days, as well as the Warrant of Arrest, dated
July 12, 2001, and the Order of Commitment, dated July 13, 2001, which the respondent judge issued
against the persons of the herein petitioners, are hereby NULLIFIED and SET ASIDE.
SO ORDERED.
The Court of Appeals ruled that Judge Espaol erred in taking cognizance of the Decision rendered by then
Judge Tagle in Civil Case No. 623-92 since it was not offered in evidence in Civil Case No. 2035-00 for
quieting of title. Moreover, as the direct contempt of court is criminal in nature, petitioner should have
conducted a hearing. Thus, she could have determined whether respondents are guilty as charged.

Petitioner filed a motion for reconsideration but the Court of Appeals denied the same in its Resolution of
November 15, 2001.
Hence, this petition.
The basic question before us is whether petitioner erred in ruling that respondents are guilty of direct contempt
of court for using falsified documents when Sharcons filed its complaint for quieting of title.
The early case of In re Jones3 defined contempt of court as "some act or conduct which tends to interfere with
the business of the court, by a refusal to obey some lawful order of the court, or some act of disrespect to the
dignity of the court which in some way tends to interfere with or hamper the orderly proceedings of the court
and thus lessens the general efficiency of the same." It has also been described as "a defiance of the authority,
justice or dignity of the court; such conduct as tends to bring the authority and administration of the law into
disrespect or to interfere with or prejudice parties litigants or their witnesses during litigation."4 Simply put, it is
despising of the authority, justice, or dignity of the court.5
The offense of contempt traces its origin to that time in England when all courts in the realm were but divisions
of the Curia Regia, the supreme court of the monarch, and to scandalize a court was an affront to the sovereign.6
This concept was adopted by the Americans and brought to our shores with modifications. In this jurisdiction,
it is now recognized that courts have the inherent power to punish for contempt on the ground that
respect for the courts guarantees the very stability of the judicial institution.7 Such stability is essential to
the preservation of order in judicial proceedings, to the enforcement of judgments, orders, and mandates of the
courts, and, consequently, to the very administration of justice.8
Rule 71 of the 1997 Rules of Civil Procedure, as amended, provides:
SEC. 1. Direct contempt punished summarily. A person guilty of misbehavior in the presence of or so
near a court as to obstruct or interrupt the proceedings before the same, including disrespect toward the
court, offensive personalities toward others, or refusal to be sworn or to answer as a witness, or to
subscribe an affidavit or deposition when lawfully required to do so, may be summarily adjudged in
contempt by such court and punished by a fine not exceeding two thousand pesos or imprisonment not
exceeding ten (10) days, or both, if it be a Regional Trial Court or a court of equivalent or higher rank,
or by a fine not exceeding two hundred pesos or imprisonment, not exceeding one (1) day, or both, if it
be a lower court.
In Narcida v. Bowen,9 this Court characterized direct contempt as one done "in the presence of or so near the
court or judge as to obstruct the administration of justice." It is a contumacious act done facie curiae and may
be punished summarily without hearing.10 In other words, one may be summarily adjudged in direct contempt at
the very moment or at the very instance of the commission of the act of contumely.
Section 3, Rule 71 of the same Rules states:
SEC. 3. Indirect contempt to be punished after charge and hearing. After a charge in writing has been
filed and an opportunity given to the respondent to comment thereon within such period as may be fixed
by the court and to be heard by himself or by counsel, a person guilty of any of the following acts may
be punished for indirect contempt:

(a) Misbehavior of an officer of court in the performance of his official duties or in his official
transactions;
(b) Disobedience of or resistance to a lawful writ, process, order, or judgment of a court, including the
act of a person who, after being dispossessed or ejected from any real property by the judgment or
process of any court of competent jurisdiction, enters or attempts or induces another to enter into or
upon such real property, for the purpose of executing acts of ownership or possession, or in any manner
disturbs the possession given to the person adjudged to be entitled thereto;
(c) Any abuse of or any unlawful interference with the processes or proceedings of a court not
constituting direct contempt under Section 1 of this Rule;
(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the
administration of justice;
(e) Assuming to be an attorney or an officer of a court and acting as such without authority;
(f) Failure to obey a subpoena duly served;
(g) The rescue, or attempted rescue, of a person or property in the custody of an officer by virtue of an
order or process of a court held by him.
But nothing in this section shall be so construed as to prevent the court from issuing process to bring the
respondent into court, or from holding him in custody pending such proceedings.
Indirect or constructive contempt, in turn, is one perpetrated outside of the sitting of the court and may include
misbehavior of an officer of a court in the performance of his official duties or in his official transactions,
disobedience of or resistance to a lawful writ, process, order, judgment, or command of a court, or injunction
granted by a court or a judge, any abuse or any unlawful interference with the process or proceedings of a court
not constituting direct contempt, or any improper conduct tending directly or indirectly to impede, obstruct or
degrade the administration of justice.11
We agree with petitioner that the use of falsified and forged documents is a contumacious act. However, it
constitutes indirect contempt not direct contempt. Pursuant to the above provision, such act is an improper
conduct which degrades the administration of justice. In Santos v. Court of First Instance of Cebu, Branch VI,12
we ruled that the imputed use of a falsified document, more so where the falsity of the document is not apparent
on its face, merely constitutes indirect contempt, and as such is subject to such defenses as the accused may
raise in the proper proceedings. Thus, following Section 3, Rule 71, a contemner may be punished only after a
charge in writing has been filed, and an opportunity has been given to the accused to be heard by himself and
counsel.13 Moreover, settled is the rule that a contempt proceeding is not a civil action, but a separate proceeding
of a criminal nature in which the court exercises limited jurisdiction.14 Thus, the modes of procedure and the
rules of evidence in contempt proceedings are assimilated as far as practicable to those adapted to criminal
prosecutions.15 Perforce, petitioner judge erred in declaring summarily that respondents are guilty of direct
contempt and ordering their incarceration. She should have conducted a hearing with notice to respondents.

Petitioner, in convicting respondents for direct contempt of court, took judicial notice of the Decision in Civil
Case No. 623-92, assigned to another RTC branch, presided by then Judge Tagle. Section 1, Rule 129 of the
Revised Rules of Court provides:
SEC. 1. Judicial notice, when mandatory. A court shall take judicial notice, without the introduction of
evidence, of the existence and territorial extent of states, their political history, forms of government,
and symbols of nationality, the law of nations, the admiralty and maritime courts of the world and their
seals, the political constitution and history of the Philippines, the official acts of the legislative,
executive and judicial departments of the Philippines, the laws of nature, the measure of time, and the
geographical divisions.
In Gener v. De Leon,16 we held that courts are not authorized to take judicial notice of the contents of records of
other cases even when such cases have been tried or pending in the same court. Hence, we reiterate that
petitioner took judicial notice of the Decision rendered by another RTC branch and on the basis thereof,
concluded that respondents used falsified documents (such as land title and tax declaration) when Sharcons
filed its complaint for quieting. Verily, the Court of Appeals did not err in ruling that respondents are not guilty
of direct contempt of court.
Meanwhile, the instant petition challenging the Decision of the Court of Appeals granting the writ of habeas
corpus in favor of respondents has become moot. We recall that respondents were released after posting the
required bail as ordered by the Court of Appeals. A writ of habeas corpus will not lie on behalf of a person who
is not actually restrained of his liberty. And a person discharged on bail is not restrained of his liberty as to be
entitled to a writ of habeas corpus.17
WHEREFORE, we DENY the petition. The challenged Decision and Resolution of the Court of Appeals in
CA-G.R. SP No. 65652 are AFFIRMED. No costs.
SO ORDERED.
G.R. No. 205956

February 12, 2014

P/SUPT. HANSEL M. MARANTAN, Petitioner,

vs.
ATTY. JOSE MANUEL DIOKNO and MONIQUE CU-UNJIENG LA'O, Respondents.
RESOLUTION
MENDOZA, J.:
Before the Court is a petition to cite respondents in contempt of Court.
Petitioner P/Supt. Hansel M. Marantan (Marantan) is the respondent in G.R. No. 199462,1 a petition filed on
December 6, 2011, but already dismissed although the disposition is not yet final. Respondent Monique CuUnjieng La'O (La O) is one of the petitioners in the said case, while respondent Atty. Jose Manuel Diokno
(Atty. Diokno) is her counsel therein.

G.R. No. 199462 relates to Criminal Case Nos. 146413-PSG, 146414-PSG and 146415-PSG, entitled "People
of the Philippines v. P/SINSP Hansel M. Marantan, et al.," pending before the Regional Trial Court of Pasig
City, Branch 265 (RTC), where Marantan and his co-accused are charged with homicide. The criminal cases
involve an incident which transpired on November 7, 2005, where Anton Cu-Unjieng (son of respondent LaO),
Francis Xavier Manzano, and Brian Anthony Dulay, were shot and killed by police officers in front of the AIC
Gold Tower at Ortigas Center, which incident was captured by a television crew from UNTV 37 (Ortigas
incident).
In G.R. No. 199462, LaO, together with the other petitioners, prayed, among others, that the resolution of the
Office of the Ombudsman downgrading the charges from murder to homicide be annulled and set aside; that the
corresponding informations for homicide be withdrawn; and that charges for murder be filed.
In the meantime, on January 6, 2013, a shooting incident occurred in Barangay Lumutan, Municipality of
Atimonan, Province of Quezon, where Marantan was the ground commander in a police-military team, which
resulted in the death of thirteen (13) men (Atimonan incident). This encounter, according to Marantan, elicited
much negative publicity for him.
Marantan alleges that, riding on the unpopularity of the Atimonan incident, LaO and her counsel, Atty. Diokno,
and one Ernesto Manzano, organized and conducted a televised/radio broadcasted press conference. During the
press conference, they maliciously made intemperate and unreasonable comments on the conduct of the Court
in handling G.R. No. 199462, as well as contumacious comments on the merits of the criminal cases before the
RTC, branding Marantan and his co-accused guilty of murder in the Ortigas incident.
On January 29, 2013, this interview was featured in "TV Patrol," an ABS-CBN news program. Marantan
quotes2 a portion of the interview, as follows:
Atty. Diokno
So ang lumabas din sa video that the actual raw footage of the UNTV is very long. Ang nangyari, you see the
police officers may nilalagay sila sa loob ng sasakyan ng victims na parang pinapalabas nila that there was a
shootout pero ang nangyari na yon e tapos na, patay na.
Ernesto Manzano
Kung sinasabi nilang carnapper dapat huliin nilang buhay yong mga mahal naming sa buhay and kinasuhan
pero ang ginawa nila, sila mismo na ang nagbigay ng hatol.
Monique Cu-Unjieng Lao
Sinasabi nila na may kinarnap siya, tinutukan ng baril, hindi magagawa yong kasi kilala ko siya, anak ko yon e
x x x he is already so arrogant because they protected him all these years. They let him get away with it. So
even now, so confident of what he did, I mean confident of murdering so many innocent individuals.
Atty. Diokno

Despite the overwhelming evidence, however, Supt. Marantan and company have never been disciplined,
suspended or jailed for their participation in the Ortigas rubout, instead they were commended by their superiors
and some like Marantan were even promoted to our consternation and disgust. Ang problema po e hangang
ngayon, we filed a Petition in the Supreme Court December 6, 2011, humihingi po kami noon ng Temporary
Restraining Order, etc. hangang ngayon wala pa pong action ang Supreme Court yong charge kung tama ba
yong pag charge ng homicide lamang e subalit kitang kita naman na they were killed indiscriminately and
maliciously.
Atty. Diokno
Eight years have passed since our love ones were murdered, but the policemen who killed them led by Supt.
Hansel Marantan the same man who is involved in the Atimonan killings still roam free and remain
unpunished. Mr. President, while we are just humble citizens, we firmly believe that police rub-out will not stop
until you personally intervene.
Ernesto Manzano
Up to this date, we are still praying for justice.
Monique Cu-Unjieng Lao
Ilalaban namin ito no matter what it takes, we have the evidence with us, I mean everything shows that they
were murdered.
(Emphasis supplied by petitioner)
Marantan submits that the respondents violated the sub judice rule, making them liable for indirect contempt
under Section 3(d) of Rule 71 of the Rules of Court, for their contemptuous statements and improper conduct
tending directly or indirectly to impede, obstruct or degrade the administration of justice. He argues that their
pronouncements and malicious comments delved not only on the supposed inaction of the Court in resolving the
petitions filed, but also on the merits of the criminal cases before the RTC and prematurely concluded that he
and his co-accused are guilty of murder. It is Marantas position that the press conference was organized by the
respondents for the sole purpose of influencing the decision of the Court in the petition filed before it and the
outcome of the criminal cases before the RTC by drawing an ostensible parallelism between the Ortigas incident
and the Atimonan incident.
The respondents, in their Comment,3 argue that there was no violation of the sub judice rule as their statements
were legitimate expressions of their desires, hopes and opinions which were taken out of context and did not
actually impede, obstruct or degrade the administration of justice in a concrete way; that no criminal intent was
shown as the utterances were not on their face actionable being a fair comment of a matter of public interest and
concern; and that this petition is intended to stifle legitimate speech.
The petition must fail.

The sub judice rule restricts comments and disclosures pertaining to the judicial proceedings in order to avoid
prejudging the issue, influencing the court, or obstructing the administration of justice. A violation of this rule
may render one liable for indirect contempt under Sec. 3(d), Rule 71 of the Rules of Court,4 which reads:
Section 3. Indirect contempt to be punished after charge and hearing. x x x a person guilty of any of the
following acts may be punished for indirect contempt:
xxx
(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the administration of
justice[.]
The proceedings for punishment of indirect contempt are criminal in nature.5 This form of contempt is conduct
that is directed against the dignity and authority of the court or a judge acting judicially; it is an act obstructing
the administration of justice which tends to bring the court into disrepute or disrespect. Intent is a necessary
element in criminal contempt, and no one can be punished for a criminal contempt unless the evidence makes it
clear that he intended to commit it.6
For a comment to be considered as contempt of court "it must really appear" that such does impede, interfere
with and embarrass the administration of justice.7 What is, thus, sought to be protected is the all-important duty
of the court to administer justice in the decision of a pending case.8 The specific rationale for the sub judice rule
is that courts, in the decision of issues of fact and law should be immune from every extraneous influence; that
facts should be decided upon evidence produced in court; and that the determination of such facts should be
uninfluenced by bias, prejudice or sympathies.91wphi1
The power of contempt is inherent in all courts in order to allow them to conduct their business unhampered by
publications and comments which tend to impair the impartiality of their decisions or otherwise obstruct the
administration of justice. As important as the maintenance of freedom of speech, is the maintenance of the
independence of the Judiciary. The "clear and present danger" rule may serve as an aid in determining the
proper constitutional boundary between these two rights.10
The "clear and present danger" rule means that the evil consequence of the comment must be "extremely serious
and the degree of imminence extremely high" before an utterance can be punished. There must exist a clear and
present danger that the utterance will harm the administration of justice. Freedom of speech should not be
impaired through the exercise of the power of contempt of court unless there is no doubt that the utterances in
question make a serious and imminent threat to the administration of justice. It must constitute an imminent, not
merely a likely, threat.11
The contemptuous statements made by the respondents allegedly relate to the merits of the case, particularly the
guilt of petitioner, and the conduct of the Court as to its failure to decide G.R. No. 199462.
As to the merits, the comments seem to be what the respondents claim to be an expression of their opinion that
their loved ones were murdered by Marantan. This is merely a reiteration of their position in G.R. No. 199462,
which precisely calls the Court to upgrade the charges from homicide to murder. The Court detects no malice on
the face of the said statements. The mere restatement of their argument in their petition cannot actually, or does
not even tend to, influence the Court.

As to the conduct of the Court, a review of the respondents' comments reveals that they were simply stating that
it had not yet resolved their petition. There was no complaint, express or implied, that an inordinate amount of
time had passed since the petition was filed without any action from the Court. There appears no attack or insult
on the dignity of the Court either.
"A public utterance or publication is not to be denied the constitutional protection of freedom of speech and
press merely because it concerns a judicial proceeding still pending in the cou1is, upon the theory that in such a
case, it must necessarily tend to obstruct the orderly and fair administration of justice."12 By no stretch of the
imagination could the respondents' comments pose a serious and imminent threat to the administration of
justice. No criminal intent to impede, obstruct, or degrade the administration of justice can be inferred from the
comments of the respondents.
Freedom of public comment should, in borderline instances, weigh heavily against a possible tendency to
influence pending cases.13 The power to punish for contempt, being drastic and extraordinary in its nature,
should not be resorted to unless necessary in the interest of justice.14 In the present case, such necessity is
wanting.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.
G.R. No. 182738

February 24, 2014

CAPITOL HILLS GOLF & COUNTRY CLUB, INC. and PABLO B. ROMAN, JR., Petitioners,
vs.
MANUEL O. SANCHEZ, Respondent.
DECISION
PERALTA, J.:
Before Us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the March 13, 2008
Decision1 and April 28, 2008 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 100911, which
affirmed the September 3, 2007 Resolution3 of the Quezon City Regional Trial Court (RTC), Branch 226.
The relevant facts are as follows:
On July 1, 2002, respondent Manuel O. Sanchez (respondent), a stockholder of petitioner Capitol Hills Golf &
Country Club, Inc. (Corporation) filed a petition for the nullification of the annual meeting of stockholders of
May 21, 2002 and the special meeting of stockholders of April 23, 2002.4 Petitioners, along with their codefendants, filed an Answer with Counterclaims5 and, thereafter, a Motion for Preliminary Hearing of
Defendants Affirmative Defenses,6 which was denied on August 9, 20027 by Hon. Apolinario D. Bruselas, Jr.,
then Presiding Judge of the RTC of Quezon City, Branch 93, now a member of the Court of Appeals.
On August 12, 2002, respondent filed a Motion for Production and Inspection of Documents, which the court
granted in an Order dated September 10, 2002 directing, thus:

On motion of the plaintiff, without objection from the defendants, and pursuant to Rule 3 of the Interim Rules
of Procedure Governing Intra-Corporate Controversies, in relation to Rule 27 of the 1997 Rules of Civil
Procedure, the defendants are ordered to produce and make available for inspection and photocopying by the
plaintiff the following documents:
1. The list of stockholders of record as of March 2002;
2. All proxies, whether validated or not, which have been received by the defendants;
3. The specimen signatures of all stockholders as contained in the Stock and Transfer Book or on the
stub of the stock certificate; and
4. The tape recording of the stockholders meeting on April 23, 2002 and May 21, 2002.
The production, inspection and photocopying must be undertaken in the office premises of defendant
corporation within reasonable business hours of a business day before the pre-trial with costs to be shouldered
by the plaintiff.
SO ORDERED.8
Petitioners filed a motion for reconsideration9 (MR) of the August 9, 2002 Order, which denied their motion for
preliminary hearing. Subsequently, they filed a Supplement to Defendants Motion for Reconsideration,10
attaching therewith an alleged certification issued by the National Printing Office to support their contention of
lack of cause of action on the grounds, among others, that the Securities and Exchange Commission (SEC)
Memorandum Circular No. 5, Series of 1996, as amended, has not been duly published in accordance with law
and jurisprudence. Pending resolution of the MR, petitioners filed on January 21, 2003 a Motion for Deferment
of Implementation of the September 10, 2002 Order.11
For his part, respondent, on October 7, 2002, filed an Omnibus Motion to immediately allow him to inspect and
photocopy the documents and to compel petitioners to deposit with the court the documents subject of the
September 10, 2002 Order.
On December 9, 2002, then Presiding Judge Bruselas issued an Order12 denying petitioners MR of the Order
dated August 9, 2002 and considered respondents omnibus motion as a reiteration of his earlier motion for
inspection and production of documents; thus, the immediate implementation of the September 10, 2002 Order
was simultaneously ordered.
Petitioners elevated the case to the CA via a petition for certiorari assailing the Orders dated August 9, 2002 and
December 9, 2002. However, the CA denied the same in its Decision dated June 29, 2004. Petitioners MR was
likewise denied on November 3, 2004. A petition for review was filed before this Court, but We denied it per
Resolution dated January 10, 2005.
In the meantime, respondent sought to enforce the September 10, 2002 Order. The supposed inspection on
September 30, 2002 was not held per the trial courts Order dated September 27, 2002.13 The January 22, 2003
inspection also did not push through after petitioners and their co-defendants again moved for its deferment.14
When the court eventually denied their motion on June 16, 2003, respondent set the inspection to August 1,

2003.15 On said date, however, Atty. Matias V. Defensor, then Corporate Secretary of the Corporation, was
alleged to be out of town and petitioner Pablo B. Roman, Jr. (Roman) purported to have shown no willingness
to comply with the directive.16 The matter was reported to the trial court, which merely noted respondents
Report and Manifestation.17 On November 3, 2003, respondent moved for the issuance of an order for
immediate implementation of the September 10, 2002 Order, as reiterated in the Order dated June 16, 2003, but
the court denied the same in its May 24, 2004 Order.18 Respondents motion for issuance of writ of execution
suffered the same fate when the trial court denied it on February 10, 2005.19
When this Court settled petitioners challenge to the Orders dated August 9, 2002 and December 9, 2002,
respondent filed a Manifestation with Omnibus Motion for Clarification and to Resolve Plaintiffs Pending
Motion for the Issuance of a Writ of Execution and to Set the Case for Pre-Trial Conference.20 Acting thereon,
Judge Ramon Paul L. Hernando, likewise now a member of the Court of Appeals, who took over Branch 93
after the appointment of Judge Bruselas to the CA, issued the July 10, 2006 Order,21 which directed the
immediate execution of the September 10, 2002 Order, and set the case for pre-trial.
On February 9, 2007, Judge Hernando issued an Order22 inhibiting himself from handling the case in view of
his "close friendship relation" with petitioners counsel and ordering the transmittal of the records of the case to
the Office of the Clerk of Court for re-raffle to another sala. The case was subsequently re-raffled to RTC
Branch 90 presided by Judge Reynaldo B. Daway, who likewise voluntarily recused himself from the case per
Order23 dated July 13, 2007. Finally, on July 30, 2007, the case was re-raffled to RTC Branch 226 presided by
Judge Leah S. Domingo Regala.24
On November 28, 2006, the parties agreed to defer the pre-trial conference until the actual conduct of the
inspection of records/documents on December 12, 2006.25 Before said date, however, petitioners and their codefendants moved to hold the inspection to January 11, 2007, which the court granted.26
During the January 11, 2007 inspection, the only document produced by the Acting Corporate Secretary, Atty.
Antonio V. Meriz, and one of the staff, Malou Santos, was the Stock and Transfer Book of the Corporation.
They alleged that they could not find from the corporate records the copies of the proxies submitted by the
stockholders, including the tape recordings taken during the stockholders meetings, and that they needed more
time to locate and find the list of stockholders as of March 2002, which was in the bodega of the Corporation.27
This prompted respondent to file a Manifestation with Omnibus Motion praying that an order be issued in
accordance with Section 3, Paragraphs (a) to (d) of Rule 29 of the Rules of Court (Rules), in relation to Section
4, Rule 3 of the Interim Rules of Procedure Governing Intra-Corporate Controversies under Republic Act No.
8799 (Interim Rules).
On September 3, 2007, the trial court issued a Resolution, the concluding portion of which ordered:
In order to give both the plaintiff and defendants one last chance to comply with the order dated September 10,
2002, this Court reiterates the said order:
"On motion of the plaintiff, without objection from the defendants, and pursuant to Rule 3 of the Interim Rules
of Procedure Governing Intra-Corporate Controversies[,] in relation to Rule 27 of the 1997 Rule[s] of Civil
Procedure, the defendants are ordered to produce and make available for inspection and photocopying by the
plaintiff the following documents:

1. The list of stockholders of record as of March 2002;

2. All proxies, whether validated or not, which have been received by the defendants;
3. The specimen signatures of all stockholders as contained in the Stock and Transfer Book or on the
stub of the stock certificate; and
4. The tape recording of the stockholders meeting on April 23, 2002 and May 21, 2002.
The production, inspection and photocopying must be undertaken in the office premises of defendant
corporation within reasonable business hours of a business day before the pre-trial with costs to be shouldered
by the plaintiff.
SO ORDERED."
This Court orders the defendants to strictly comply with this order. Failure of the defendants to comply with all
the requirements of the order dated September 10, 2002 will result in this court citing all the defendants in
contempt of court. This Court shall order defendants solidarily to pay a fine of P10,000.00 for every day of
delay to comply with the order of September 10, 2002 until the defendants shall have fully and completely
complied with the said order.
Further sanctions shall be meted upon defendants should the Court find that defendants have been in bad faith in
complying with the order of September 10, 2002 despite the order of this Court.
Both plaintiff and counsel, as well as defendants and counsel, are therefore ordered to meet on November 13,
2007 at the corporate offices of defendant firm between 9:00 a.m. to 4:00 p.m. so that faithful compliance with
the order of September 10, 2002 may be done, otherwise, this Court shall allow the plaintiff to present evidence
to prove their prayer in their Manifestation with Omnibus Motion filed on January 31, 2007 and issue a
resolution based on the same accordingly.
SO ORDERED.28
Petitioners questioned the aforesaid Resolution via Petition for Certiorari (With Application for Temporary
Restraining Order and/or Writ of Preliminary Injunction).29 In resolving the petition, the CA ruled that there is
no indication that the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction.
According to the appellate court, the September 3, 2007 Resolution was issued pursuant to Section 3,30 Rule 3
of the Interim Rules, with the suppletory application of Section 1,31 Rule 27 of the Rules. It noted that, except
for the sanctions contained therein, the assailed Resolution merely reiterated the September 10, 2002 Order of
Judge Bruselas, which petitioners did not dispute in accordance with Section 2,32 Rule 3 of the Interim Rules or
via petition for certiorari. The CA further held that petitioners were not denied due process as they were able to
move for a reconsideration of the September 10, 2002 Order, but not opted to file the same with respect to the
September 3, 2007 Resolution.
Anent the argument against the threatened imposition of sanction for contempt of court and the possible
payment of a hefty fine, the CA opined that the case of Dee v. Securities and Exchange Commission33 cited by
petitioners is inapplicable, since the September 3, 2007 Resolution merely warned petitioners that they would

be cited for contempt and be fined if they fail to comply with the courts directive. Moreover, it said that the
penalty contained in the September 3, 2007 Resolution is in accord with Section 4,34 Rule 3 of the Interim
Rules, in relation to Section 3,35 Rule 29 of the Rules.
Petitioners moved to reconsider the CA Decision, but it was denied.36
Before Us, petitioners contend that the "threatened imminent action" by the RTC to penalize them sua sponte or
without regard to the guideline laid down by the Court in Engr. Torcende v. Judge Sardido37 is not proper and
calls for the exercise of Our power of supervision over the lower courts. Likewise, citing Panaligan v. Judge
Ibay,38 among others, they claim that the threatened citation for contempt is not in line with the policy that
there should be wilfullness or that the contumacious act be done deliberately in disregard of the authority of the
court.
We deny.
A person guilty of disobedience of or resistance to a lawful order of a court39 or commits any improper conduct
tending, directly or indirectly, to impede, obstruct, or degrade the administration of justice40 may be punished
for indirect contempt. In particular, Section 4, Rule 3 of the Interim Rules states that, in addition to a possible
treatment of a party as non-suited or as in default, the sanctions prescribed in the Rules for failure to avail of, or
refusal to comply with, the modes of discovery shall apply. Under Section 3, Rule 29 of the Rules, if a party or
an officer or managing agent of a party refuses to obey an order to produce any document or other things for
inspection, copying, or photographing or to permit it to be done, the court may make such orders as are just. The
enumeration of options given to the court under Section 3, Rule 29 of the Rules is not exclusive, as shown by
the phrase "among others." Thus, in Republic v. Sandiganbayan,41 We said:
To ensure that availment of the modes of discovery is otherwise untrammeled and efficacious, the law imposes
serious sanctions on the party who refuses to make discovery, such as dismissing the action or proceeding or
part thereof, or rendering judgment by default against the disobedient party; contempt of court, or arrest of the
party or agent of the party; payment of the amount of reasonable expenses incurred in obtaining a court order to
compel discovery; taking the matters inquired into as established in accordance with the claim of the party
seeking discovery; refusal to allow the disobedient party support or oppose designated claims or defenses;
striking out pleadings or parts thereof; staying further proceedings.42
If adjudged guilty of indirect contempt, the respondent who committed it against a Regional Trial Court or a
court of equivalent or higher rank may be punished with a fine not exceeding thirty thousand pesos, or
imprisonment not exceeding six (6) months, or both.43 In this case, the threatened sanction of possibly ordering
petitioners to solidarily pay a fine of P10,000.00 for every day of delay in complying with the September 10,
2002 Order is well within the allowable range of penalty.
As far as the proceedings for indirect contempt is concerned, the case of Baculi v. Judge Belen44 is instructive:
x x x Under the Rules of Court, there are two ways of initiating indirect contempt proceedings: (1) motu proprio
by the court; or (2) by a verified petition.
In the Matter of the Contempt Orders against Lt. Gen. Jose M. Calimlim and Atty. Domingo A. Doctor, Jr.
(Calimlim) clarified the procedure prescribed for indirect contempt proceedings. We held in that case:

In contempt proceedings, the prescribed procedure must be followed. Sections 3 and 4, Rule 71 of the Rules of
Court provide the procedure to be followed in case of indirect contempt. First, there must be an order requiring
the respondent to show cause why he should not be cited for contempt. Second, the respondent must be given
the opportunity to comment on the charge against him. Third, there must be a hearing and the court must
investigate the charge and consider respondents answer. Finally, only if found guilty will respondent be
punished accordingly. (Citations omitted.)
As to the second mode of initiating indirect contempt proceedings, that is, through a verified petition, the rule is
already settled in Regalado v. Go:
In cases where the court did not initiate the contempt charge, the Rules prescribe that a verified petition which
has complied with the requirements of initiatory pleadings as outlined in the heretofore quoted provision of
second paragraph, Section 4, Rule 71 of the Rules of Court, must be filed.
The Rules itself is explicit on this point:
In all other cases, charges for indirect contempt shall be commenced by a verified petition with supporting
particulars and certified true copies of documents or papers involved therein, and upon full compliance with the
requirements for filing initiatory pleadings for civil actions in the court concerned. If the contempt charges arose
out of or are related to a principal action pending in the court, the petition for contempt shall allege that fact but
said petition shall be docketed, heard and decided separately, unless the court in its discretion orders the
consolidation of the contempt charge and the principal action for joint hearing and decision. (Emphasis added.)
Thus, where there is a verified petition to cite someone in contempt of court, courts have the duty to ensure that
all the requirements for filing initiatory pleadings have been complied with. It behooves them too to docket the
petition, and to hear and decide it separately from the main case, unless the presiding judge orders the
consolidation of the contempt proceedings and the main action.
But in indirect contempt proceedings initiated motu proprio by the court, the above rules, as clarified in
Regalado, do not necessarily apply. First, since the court itself motu proprio initiates the proceedings, there can
be no verified petition to speak of. Instead, the court has the duty to inform the respondent in writing, in
accordance with his or her right to due process. This formal charge is done by the court in the form of an Order
requiring the respondent to explain why he or she should not be cited in contempt of court.
In Calimlim, the Judge issued an Order requiring the petitioners to explain their failure to bring the accused
before the RTC for his scheduled arraignment. We held in that case that such Order was not yet sufficient to
initiate the contempt proceedings because it did not yet amount to a show-cause order directing the petitioners
to explain why they should not be cited in contempt. The formal charge has to be specific enough to inform the
person, against whom contempt proceedings are being conducted, that he or she must explain to the court;
otherwise, he or she will be cited in contempt. The Order must express this in clear and unambiguous language.
xxxx
Second, when the court issues motu proprio a show-cause order, the duty of the court (1) to docket and (2) to
hear and decide the case separately from the main case does not arise, much less to exercise the discretion to

order the consolidation of the cases. There is no petition from any party to be docketed, heard and decided
separately from the main case precisely because it is the show-cause order that initiated the proceedings.
What remains in any case, whether the proceedings are initiated by a verified petition or by the court motu
proprio, is the duty of the court to ensure that the proceedings are conducted respecting the right to due process
of the party being cited in contempt. In both modes of initiating indirect contempt proceedings, if the court
deems that the answer to the contempt charge is satisfactory, the proceedings end. The court must conduct a
hearing, and the court must consider the respondents answer. Only if found guilty will the respondent be
punished accordingly.
xxxx
In contempt proceedings, the respondent must be given the right to defend himself or herself and have a day in
court a basic requirement of due process. This is especially so in indirect contempt proceedings, as the court
cannot decide them summarily pursuant to the Rules of Court. As We have stated in Calimlim, in indirect
contempt proceedings, the respondent must be given the opportunity to comment on the charge against him or
her, and there must be a hearing, and the court must investigate the charge and consider the respondents
answer.45
In this case, the proceedings for indirect contempt have not been initiated.1wphi1 To the Courts mind, the
September 3, 2007 Resolution could be treated as a mere reiteration of the September 10, 2002 Order. It is not
yet a "judgment or final order of a court in a case of indirect contempt" as contemplated under the Rules. The
penalty mentioned therein only serves as a reminder to caution petitioners of the consequence of possible nonobservance of the long-overdue order to produce and make available for inspection and photocopying of the
requested records/documents. In case of another failure or refusal to comply with the directive, the court or
respondent could formally initiate the indirect contempt proceedings pursuant to the mandatory requirements of
the Rules and existing jurisprudence.
Even if We are to treat the September 3, 2007 Resolution as a "judgment or final order of a court in a case of
indirect contempt," this would still not work to petitioners advantage. Section 11, Rule 71 of the Rules of Court
lays down the proper remedy from a judgment in indirect contempt proceedings. It states:
Sec. 11. Review of judgment or final order; bond for stay.The judgment or final order of a court in a case of
indirect contempt may be appealed to the proper court as in criminal cases. But execution of the judgment or
final order shall not be suspended until a bond is filed by the person adjudged in contempt, in an amount fixed
by the court from which the appeal is taken, conditioned that if the appeal be decided against him he will abide
by and perform the judgment or final order.
The recourse provided for in the above-mentioned provision is clear enough: the person adjudged in indirect
contempt must file an appeal under Rule 41 (Appeal from the Regional Trial Courts) and post a bond for its
suspension pendente lite.46 Obviously, these were not done in this case. Instead, petitioners filed a petition for
certiorari under Rule 65 of the Rules and did not post the required bond, effectively making the September 3,
2007 Resolution final and executory.

WHEREFORE, premises considered, the instant Petition is DENIED. The March 13, 2008 Decision and April
28, 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 100911, which affirmed the September 3, 2007
Resolution of the Quezon City Regional Trial Court, Branch 226, are AFFIRMED.
SO ORDERED.