THIRD DIVISION

G HOLDINGS, INC.,

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the October 14, 2003 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No.
75322.
G.R. No. 160236

Petitioner,
Present:

- versus -

CARPIO MORALES, J.,*

CHICO-NAZARIO,**
Acting Chairperson,

NATIONAL MINES AND

NACHURA,

ALLIED WORKERS UNION

PERALTA, and

Local 103 (NAMAWU); SHERIFFS

ABAD,***JJ

RICHARD H. APROSTA and

ALBERTO MUNOZ, all acting
Sheriffs; DEPARTMENT OF
LABOR AND EMPLOYMENT,
Region VI, Bacolod District Office,Bacolod City,

Promulgated:

Respondents.
October 16, 2009

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

DECISION

NACHURA, J.:

The Facts

The petitioner, G Holdings, Inc. (GHI), is a domestic corporation primarily engaged in the
business of owning and holding shares of stock of different companies. [2] It was registered with
the Securities and Exchange Commission on August 3, 1992. Private respondent, National
Mines and Allied Workers Union Local 103 (NAMAWU), was the exclusive bargaining agent of
the rank and file employees of Maricalum Mining Corporation (MMC), [3] an entity operating a
copper mine and mill complex at Sipalay, Negros Occidental. [4]

MMC was incorporated by the Development Bank of the Philippines (DBP) and the Philippine
National Bank (PNB) on October 19, 1984, on account of their foreclosure of Marinduque
Mining and Industrial Corporations assets. MMC started its commercial operations in August
1985. Later, DBP and PNB transferred it to the National Government for disposition or
privatization because it had become a non-performing asset. [5]

On October 2, 1992, pursuant to a Purchase and Sale Agreement [6] executed between GHI
and Asset Privatization Trust (APT), the former bought ninety percent (90%) of MMCs shares
and financial claims.[7] These financial claims were converted into three Promissory
Notes[8] issued by MMC in favor of GHI totaling P500M and secured by mortgages over MMCs
properties. The notes, which were similarly worded except for their amounts, read as follows:

PROMISSORY NOTE

AMOUNT - Php114,715,360.00 [Php186,550,560.00 in the second

note, and Php248,734,080.00 in the
third note.]

MILLION, SEVEN HUNDRED FIFTEEN THOUSAND AND THREE HUNDRED SIXTY

(Php114,715,360.00) [PESOS ONE HUNDRED EIGHTY SIX MILLION FIVE HUNDRED
FIFTY THOUSAND FIFE HUNDRED AND SIXTY (Php186,550,560.00) in the second note,
and PESOS TWO HUNDRED FORTY EIGHT MILLION, SEVEN HUNDRED THIRTY FOUR
THOUSAND AND EIGHTY (Php248,734,080.00) in the third note], PHILIPPINE CURRENCY,
on or before October 2, 2002. Interest shall accrue on the amount of this Note at a rate per
annum equal to the interest of 90-day Treasury Bills prevailing on the Friday preceding the
maturity date of every calendar quarter.

As collateral security, MMC hereby establishes and constitutes in favor of G HOLDINGS,

INC., its successors and/or assigns:

1.
A mortgage over certain parcels of land, more particularly listed and described in
the Sheriffs Certificate of Sale dated September 7, 1984 issued by the Ex-Officio Provincial
Sheriff of Negros Occidental, Rolando V. Ramirez, with office at Bacolod City following the
auction sale conducted pursuant to the provisions of Act 3135, a copy of which certificate of
sale is hereto attached as Annex A and made an integral part hereof;

2.
A chattel mortgage over assets and personal properties more particularly listed
and described in the Sheriffs Certificate of Sale dated September 7, 1984 issued by the ExOfficio Provincial Sheriff of Negros Occidental, Rolando V. Ramirez, with office at Bacolod City
following the auction conducted pursuant to the provisions of Act 1508, a copy of which
Certificate of Sale is hereto attached as Annex B and made an integral part hereof.

3.
Mortgages over assets listed in APT Specific Catalogue GC-031 for MMC, a
copy of which Catalogue is hereby made an integral part hereof by way of reference, as well
as assets presently in use by MMC but which are not listed or included in paragraphs 1 and 2
above and shall include all assets that may hereinafter be acquired by MMC.

MAKATI, METRO MANILA, PHILIPPINES, October 2, 1992

MARICALUM MINING CORPORATION
For Value Received, MARICALUM MINING CORPORATION (MMC) with postal address at
4th Floor, Manila Memorial Park Bldg., 2283 Pasong Tamo Extension, Makati, Metro Manila,
Philippines, hereby promises to pay G HOLDINGS, INC., at its office at Phimco Compound, F.
Manalo Street, Punta, Sta. Ana, Manila, the amount of PESOS ONE HUNDRED FOURTEEN

(Maker)

x x x x[9]

Upon the signing of the Purchase and Sale Agreement and upon the full satisfaction of the
stipulated down payment, GHI immediately took physical possession of the mine site and its
facilities, and took full control of the management and operation of MMC. [10]

Almost four years thereafter, or on August 23, 1996, a labor dispute (refusal to bargain
collectively and unfair labor practice) arose between MMC and NAMAWU, with the latter
eventually filing with the National Conciliation and Mediation Board of Bacolod City a notice of
strike.[11] Then Labor Secretary, now Associate Justice of this Court, Leonardo A. Quisumbing,
later assumed jurisdiction over the dispute and ruled in favor of NAMAWU. In his July 30,
1997 Order in OS-AJ-10-96-014 (Quisumbing Order), Secretary Quisumbing declared that the
lay-off (of workers) implemented on May 7, 1996 and October 7, 1996 was illegal and that
MMC committed unfair labor practice. He then ordered the reinstatement of the laid-off
workers, with payment of full backwages and benefits, and directed the execution of a new
collective bargaining agreement (CBA) incorporating the terms and conditions of the previous
CBA providing for an annual increase in the workers daily wage. [12] In two separate
casesG.R. Nos. 133519 and 138996filed with this Court, we sustained the validity of the
Quisumbing Order, which became final and executory on January 26, 2000. [13]

On May 11, 2001, then Acting Department of Labor and Employment (DOLE) Secretary, now
also an Associate Justice of this Court, Arturo D. Brion, on motion of NAMAWU, directed the
issuance of a partial writ of execution (Brion Writ), and ordered the DOLE sheriffs to proceed
to the MMC premises for the execution of the same. [14]Much later, in 2006, this Court, in G.R.
Nos. 157696-97, entitled Maricalum Mining Corporation v. Brion and NAMAWU,[15] affirmed the
propriety of the issuance of the Brion Writ.

The Brion Writ was not fully satisfied because MMCs resident manager resisted its
enforcement.[16] On motion of NAMAWU, then DOLE Secretary Patricia A. Sto. Tomas ordered
the issuance of the July 18, 2002 Alias Writ of Execution and Break-Open Order (Sto. Tomas
Writ).[17] On October 11, 2002, the respondent acting sheriffs, the members of the union, and
several armed men implemented the Sto. Tomas Writ, and levied on the properties of MMC
located at its compound in Sipalay, Negros Occidental. [18]

On October 14, 2002, GHI filed with the Regional Trial Court (RTC) of Kabankalan City,
Negros Occidental, Special Civil Action (SCA) No. 1127 for Contempt with Prayer for the
Issuance of a Temporary Restraining Order (TRO) and Writ of Preliminary Injunction and to

Nullify the Sheriffs Levy on Properties.[19] GHI contended that the levied properties were the
subject of a Deed of Real Estate and Chattel Mortgage, dated September 5, 1996 [20] executed
by MMC in favor of GHI to secure the aforesaid P550M promissory notes; that this deed was
registered on February 24, 2000;[21] and that the mortgaged properties were already
extrajudicially foreclosed in July 2001 and sold to GHI as the highest bidder on December 3,
2001, as evidenced by the Certificate of Sale dated December 4, 2001. [22]

The trial court issued ex parte a TRO effective for 72 hours, and set the hearing on the
application for a writ of injunction.[23] On October 17, 2002, the trial court ordered the issuance
of a Writ of Injunction (issued on October 18, 2002) [24] enjoining the DOLE sheriffs from further
enforcing the Sto. Tomas Writ and from conducting any public sale of the levied-on properties,
subject to GHIs posting of a P5M bond.[25]

Resolving, among others, NAMAWUs separate motions for the reconsideration of the
injunction order and for the dismissal of the case, the RTC issued its December 4, 2002
Omnibus Order,[26] the dispositive portion of which reads:

WHEREFORE, premises considered, respondent NAMAWU Local 103s Motion for

Reconsideration dated October 23, 2002 for the reconsideration of the Order of this Court
directing the issuance of Writ of Injunction prayed for by petitioner and the Order dated
October 18, 2002 approving petitioners Injunction Bond in the amount of P5,000,000.00 is
hereby DENIED.

Respondents Motion to Dismiss as embodied in its Opposition to Extension of Temporary

Restraining Order and Issuance of Writ of Preliminary Injunction with Motion to Dismiss and
Suspend Period to File Answer dated October 15, 2002 is likewise DENIED.

Petitioners Urgent Motion for the return of the levied firearms is GRANTED. Pursuant thereto,
respondent sheriffs are ordered to return the levied firearms and handguns to the petitioner
provided the latter puts [up] a bond in the amount of P332,200.00.

Respondents lawyer, Atty. Jose Lapak, is strictly warned not to resort again to disrespectful
and contemptuous language in his pleadings, otherwise, the same shall be dealt with
accordingly.
The Issues
SO ORDERED.[27]

Aggrieved, NAMAWU filed with the CA a petition for certiorari under Rule 65, assailing the
October 17, 18 and December 4, 2002 orders of the RTC. [28]

Dissatisfied, GHI elevated the case to this Court via the instant petition for review
on certiorari, raising the following issues:

After due proceedings, on October 14, 2003, the appellate court rendered a Decision setting
aside the RTC issuances and directing the immediate execution of the Sto. Tomas Writ. The
CA ruled, among others, that the circumstances surrounding the execution of the September
5, 1996 Deed of Real Estate and Chattel Mortgage yielded the conclusion that the deed was
sham, fictitious and fraudulent; that it was executed two weeks after the labor dispute arose in
1996, but surprisingly, it was registered only on February 24, 2000, immediately after the
Court affirmed with finality the Quisumbing Order. The CA also found that the certificates of
title to MMCs real properties did not contain any annotation of a mortgage lien, and,
suspiciously, GHI did not intervene in the long drawn-out labor proceedings to protect its right
as a mortgagee of virtually all the properties of MMC. [29]

The CA further ruled that the subsequent foreclosure of the mortgage was irregular, effected
precisely to prevent the satisfaction of the judgment against MMC. It noted that the foreclosure
proceedings were initiated in July 2001, shortly after the issuance of the Brion Writ; and, more
importantly, the basis for the extrajudicial foreclosure was not the failure of MMC to pay the
mortgage debt, but its failure to satisfy any money judgment against it rendered by a court or
tribunal of competent jurisdiction, in favor of any person, firm or entity, without any legal
ground or reason.[30] Further, the CA pierced the veil of corporate fiction of the two
corporations.[31] The dispositive portion of the appellate courts decision reads:

WHETHER OR NOT, ASSUMING ARGUENDO THAT THE PERTINENT DECISION OR

ORDER IN THE SAID LABOR DISPUTE BETWEEN MMC AND NAMAWU MAY BE
ENFORCED AGAINST GHI, THERE IS ALREADY A FINAL DEETERMINATION BY THE
SUPREME COURT OF THE RIGHTS OF THE PARTIES IN SAID LABOR DISPUTE
CONSIDERING THE PENDENCY OF G.R. NOS. 157696-97.

WHETHER OR NOT GHI IS A PARTY TO THE LABOR DISPUTE BETWEEN NAMAWU AND
MMC.

II

III
WHEREFORE, in view of the foregoing considerations, the petition is GRANTED. The
October 17, 2002 and the December 4, 2002 Order of the RTC, Branch 61 of Kabankalan
City, Negros Occidental are hereby ANNULLED and SET ASIDE for having been issued in
excess or without authority. The Writ of Preliminary Injunction issued by the said court is lifted,
and the DOLE Sheriff is directed to immediately enforce the Writ of Execution issued by the
Department of Labor and Employment in the case In re: Labor Dispute in Maricalum Mining
Corporation docketed as OS-AJ-10-96-01 (NCMB-RB6-08-96). [32]

WHETHER OR NOT GHI IS THE ABSOLUTE OWNER OF THE PROPERTIES

UNLAWFULLY GARNISHED BY RESPONDENTS SHERIFFS.

IV

WHETHER OR NOT GHI CAN BE PREVENTED THROUGH THE ISSUANCE OF A

RESTRAINING ORDER OR INJUNCTION FROM TAKING POSSESSION OR BE
DISPOSSESSED OF ASSETS PURCHASED BY IT FROM APT.[33]

WHETHER OR NOT THE HONORABLE HENRY D. ARLES CORRECTLY ISSUED A WRIT

OF INJUNCTION AGAINST THE UNLAWFUL EXECUTIOIN ON GHIS PROPERTIES.
Stripped of non-essentials, the core issue is whether, given the factual circumstances
obtaining, the RTC properly issued the writ of injunction to prevent the enforcement of the Sto.
Tomas Writ. The resolution of this principal issue, however, will necessitate a ruling on the
following key and interrelated questions:
V
1.
WHETHER OR NOT THE VALIDITY OF THE DEED OF REAL AND CHATTEL MORTGAGE
OVER THE SUBJECT PROPERTIES BETWEEN MMC AND GHI MAY BE COLLATERALLY
ATTACKED.

VI

WHETHER OR NOT, ASSUMING ARGUENDO THAT THE VALIDITY OF THE SAID REAL
AND CHATTEL MORTGAGE MAY BE COLLATERALLY ATTACKED, THE SAID MORTGAGE
IS SHAM, FICTITIOUS AND FRAUDULENT.

VII

Whether the mortgage of the MMCs properties to GHI was a sham;

2. Whether there was an effective levy by the DOLE upon the MMCs real and personal
properties; and

3. Whether it was proper for the CA to pierce the veil of corporate fiction between MMC and
GHI.

Our Ruling

Before we delve into an extended discussion of the foregoing issues, it is essential to take
judicial cognizance of cases intimately linked to the present controversy which had earlier
been elevated to and decided by this Court.

WHETHER OR NOT GHI IS A DISTINCT AND SEPARATE CORPORATE ENTITY FROM

MMC.
Judicial Notice.

VIII

Judicial notice must be taken by this Court of its Decision in Maricalum Mining Corporation v.
Hon. Arturo D. Brion and NAMAWU,[34] in which we upheld the right of herein private
respondent, NAMAWU, to its labor claims. Upon the same principle of judicial notice, we

acknowledge our Decision in Republic of the Philippines, through its trustee, the Asset
Privatization Trust v. G Holdings, Inc.,[35] in which GHI was recognized as the rightful
purchaser of the shares of stocks of MMC, and thus, entitled to the delivery of the company
notes accompanying the said purchase. These company notes, consisting of three (3)
Promissory Notes, were part of the documents executed in 1992 in the privatization sale of
MMC by the Asset Privatization Trust (APT) to GHI. Each of these notes uniformly contains
stipulations establishing and constituting in favor of GHImortgages over MMCs real and
personal properties. The stipulations were subsequently formalized in a separate document
denominated Deed of Real Estate and Chattel Mortgage on September 5, 1996. Thereafter,
the Deed was registered on February 4, 2000.[36]

The mortgage
was not a sham.

Republic etc., v. G Holdings, Inc. acknowledged the existence of the Purchase and Sale
Agreement between the APT and the GHI, and recounts the facts attendant to that
transaction, as follows:

We find both decisions critically relevant to the instant dispute. In fact, they should have
guided the courts below in the disposition of the controversy at their respective levels.To
repeat, these decisions respectively confirm the right of NAMAWU to its labor claims [37] and
affirm the right of GHI to its financial and mortgage claims over the real and personal
properties of MMC, as will be explained below. The assailed CA decision apparently failed to
consider the impact of these two decisions on the case at bar. Thus, we find it timely to
reiterate that: courts have also taken judicial notice of previous cases to determine whether or
not the case pending is a moot one or whether or not a previous ruling is applicable to the
case under consideration.[38]

The series of negotiations between the petitioner Republic of the Philippines, through the APT
as its trustee, and G Holdings culminated in the execution of a purchase and sale agreement
on October 2, 1992. Under the agreement, the Republic undertook to sell and deliver 90% of
the entire issued and outstanding shares of MMC, as well as its company notes, to GHoldings
in consideration of the purchase price of P673,161,280. It also provided for a down payment
of P98,704,000 with the balance divided into four tranches payable in installment over a
period of ten years.[41]

However, the CA correctly assessed that the authority of the lower court to issue the
challenged writ of injunction depends on the validity of the third partys (GHIs) claim of
ownership over the property subject of the writ of execution issued by the labor
department. Accordingly, the main inquiry addressed by the CA decision was whether GHI
could be treated as a third party or a stranger to the labor dispute, whose properties were
beyond the reach of the Writ of Execution dated December 18, 2001. [39]

The company notes mentioned therein were actually the very same three (3) Promissory
Notes amounting to P550M, issued by MMC in favor of GHI. As already adverted to above,
these notes uniformly contained stipulations establishing and constituting mortgages over
MMCs real and personal properties.

In this light, all the more does it become imperative to take judicial notice of the two cases
aforesaid, as they provide the necessary perspective to determine whether GHI is such a
party with a valid ownership claim over the properties subject of the writ of
execution. In Juaban v. Espina,[40] we held that in some instances, courts have also taken
judicial notice of proceedings in other cases that are closely connected to the matter in
controversy. These cases may be so closely interwoven, or so clearly interdependent, as to
invoke a rule of judicial notice. The two cases that we have taken judicial notice of are of such
character, and our review of the instant case cannot stray from the findings and conclusions
therein.

Having recognized these crucial Court rulings, situating the facts in proper perspective, we
now proceed to resolve the questions identified above.

It may be remembered that APT acquired the MMC from the PNB and the DBP. Then, in
compliance with its mandate to privatize government assets, APT sold the aforesaid MMC
shares and notes to GHI. To repeat, this Court has recognized this Purchase and Sale
Agreement in Republic, etc., v. G Holdings, Inc.

The participation of the Government, through APT, in this transaction is significant. Because
the Government had actively negotiated and, eventually, executed the agreement, then the
transaction is imbued with an aura of official authority, giving rise to the presumption of
regularity in its execution. This presumption would cover all related transactional acts and
documents needed to consummate the privatization sale, inclusive of the Promissory Notes. It
is obvious, then, that the Government, through APT, consented to the establishment and
constitution of the mortgages on the assets of MMC in favor of GHI, as provided in the
notes. Accordingly, the notes (and the stipulations therein) enjoy the benefit of the same
presumption of regularity accorded to government actions. Given the Government consent
thereto, and clothed with the presumption of regularity, the mortgages cannot be characterized
as sham, fictitious or fraudulent.

Indeed, as mentioned above, the three (3) Promissory Notes, executed on October 2, 1992,
established and constituted in favor of GHI the following mortgages:

1. A mortgage over certain parcels of land, more particularly listed and described in the
Sheriffs Certificate of Sale dated September 7, 1984 issued by the Ex-Officio Provincial Sheriff
of Negros Occidental, Rolando V. Ramirez, with office at Bacolod City following the auction
sale conducted pursuant to the provisions of Act 3135, a copy of which certificate of sale is
hereto attached as Annex A and made an integral part hereof;

2.
A chattel mortgage over assets and personal properties more particularly listed
and described in the Sheriffs Certificate of Sale dated September 7, 1984 issued by the ExOfficio Provincial Sheriff of Negros Occidental, Rolando V. Ramirez, with office at Bacolod City
following the auction conducted pursuant to the provision of Act 1508, a copy of which
Certificate of Sale is hereto attached as Annex B and made an integral part hereof.

3. Mortgages over assets listed in APT Specific catalogue GC-031 for MMC, a copy of which
Catalogue is hereby made an integral part hereof by way of reference, as well as assets
presently in use by MMC but which are not listed or included in paragraphs 1 and 2 above and
shall include all assets that may hereinafter be acquired by MMC. [42]

It is difficult to conceive that these mortgages, already existing in 1992, almost four (4) years
before NAMAWU filed its notice of strike, were a fictitious arrangement intended to defraud
NAMAWU. After all, they were agreed upon long before the seeds of the labor dispute
germinated.

While it is true that the Deed of Real Estate and Chattel Mortgage was executed only on
September 5, 1996, it is beyond cavil that this formal document of mortgage was merely a
derivative of the original mortgage stipulations contained in the Promissory Notes of October
2, 1992. The execution of this Deed in 1996 does not detract from, but instead reinforces, the
manifest intention of the parties to establish and constitute the mortgages on MMCs real and
personal properties.

Apparently, the move to execute a formal document denominated as the Deed of Real Estate
and Chattel Mortgage came about after the decision of the RTC of Manila in Civil Case No.
95-76132 became final in mid-1996. This conclusion surfaces when we consider the genesis
of Civil Case No. 95-76132 and subsequent incidents thereto, as narrated in Republic, etc. v.
G Holdings, Inc., viz:

Subsequently, a disagreement on the matter of when installment payments should commence

arose between the parties. The Republic claimed that it should be on the seventh month from
the signing of the agreement while G Holdings insisted that it should begin seven months after
the fulfillment of the closing conditions.

Unable to settle the issue, G Holdings filed a complaint for specific performance and damages
with the Regional Trial Court of Manila, Branch 49, against the Republic to compel it to close
the sale in accordance with the purchase and sale agreement. The complaint was docketed
as Civil Case No. 95-76132.

During the pre-trial, the respective counsels of the parties manifested that the issue involved
in the case was one of law and submitted the case for decision. On June 11, 1996, the trial
court rendered its decision. It ruled in favor of G Holdings and held:

In line with the foregoing, this Court having been convinced that the Purchase and Sale
Agreement is indeed subject to the final closing conditions prescribed by Stipulation No. 5.02
and conformably to Rule 39, Section 10 of the Rules of Court, accordingly orders that the
Asset Privatization Trust execute the corresponding Document of Transfer of the subject
shares and financial notes and cause the actual delivery of subject shares and notes to G
Holdings, Inc., within a period of thirty (30) days from receipt of this Decision, and after G
Holdings Inc., shall have paid in full the entire balance, at its present value
of P241,702,122.86, computed pursuant to the prepayment provisions of the

Agreement. Plaintiff shall pay the balance simultaneously with the delivery of the Deed of
Transfer and actual delivery of the shares and notes.

1992 in the Promissory Notes, showing the clear intent of the parties to impose a lien upon
MMCs properties. Second, the mere filing of a notice of strike by NAMAWU did not, as yet,
vest in NAMAWU any definitive right that could be prejudiced by the execution of the
mortgage deed.

SO ORDERED.

The Solicitor General filed a notice of appeal on behalf of the Republic on June 28,
1996. Contrary to the rules of procedure, however, the notice of appeal was filed with the
Court of Appeals (CA), not with the trial court which rendered the judgment appealed from.

No other judicial remedy was resorted to until July 2, 1999 when the Republic, through the
APT, filed a petition for annulment of judgment with the CA. It claimed that the decision should
be annulled on the ground of abuse of discretion amounting to lack of jurisdiction on the part
of the trial court. x x x

Finding that the grounds necessary for the annulment of judgment were inexistent, the
appellate court dismissed the petition. x x x x[43]

With the RTC decision having become final owing to the failure of the Republic to perfect an
appeal, it may have become necessary to execute the Deed of Real Estate and Chattel
Mortgage on September 5, 1996, in order to enforce the trial courts decision of June 11,
1996. This appears to be the most plausible explanation for the execution of the Deed of Real
Estate and Chattel Mortgage only in September 1996. Even as the parties had already validly
constituted the mortgages in 1992, as explicitly provided in the Promissory Notes, a specific
deed of mortgage in a separate document may have been deemed necessary for registration
purposes. Obviously, this explanation is more logical and more sensible than the strained
conjecture that the mortgage was executed on September 5, 1996 only for the purpose of
defrauding NAMAWU.

It is undeniable that the Deed of Real Estate and Chattel Mortgage was formally documented
two weeks after NAMAWU filed its notice of strike against MMC on August 23, 1996. However,
this fact alone cannot give rise to an adverse inference for two reasons. First, as discussed
above, the mortgages had already been established and constituted as early as October 2,

The fact that MMCs obligation to GHI is not reflected in the formers financial statementsa
circumstance made capital of by NAMAWU in order to cast doubt on the validity of the
mortgage deedis of no moment. By itself, it does not provide a sufficient basis to invalidate
this public document. To say otherwise, and to invalidate the mortgage deed on this pretext,
would furnish MMC a convenient excuse to absolve itself of its mortgage obligations by
adopting the simple strategy of not including the obligations in its financial statements. It
would ignore our ruling in Republic, etc. v. G Holdings, Inc., which obliged APT to deliver the
MMC shares and financial notes to GHI. Besides, the failure of the mortgagor to record in its
financial statements its loan obligations is surely not an essential element for the validity of
mortgage agreements, nor will it independently affect the right of the mortgagee to foreclose.

Contrary to the CA decision, Tanongon v. Samson[44] is not on all fours with the instant
case. There are material differences between the two cases. At issue in Tanongon was a
third-party claim arising from a Deed of Absolute Sale executed between Olizon and
Tanongon on July 29, 1997, after the NLRC decision became final and executory on April 29,
1997. In the case at bar, what is involved is a loan with mortgage agreement executed on
October 2, 1992, well ahead of the unions notice of strike on August 23, 1996. No
presumption of regularity inheres in the deed of sale in Tanongon, while the participation of
APT in this case clothes the transaction in 1992 with such a presumption that has not been
successfully rebutted. In Tanongon, the conduct of a full-blown trial led to the findingduly
supported by evidencethat the voluntary sale of the assets of the judgment debtor was
made in bad faith. Here, no trial was held, owing to the motion to dismiss filed by NAMAWU,
and the CA failed to consider the factual findings made by this Court in Republic, etc. v. G
Holdings, Inc. Furthermore, in Tanongon, the claimant did not exercise his option to file a
separate action in court, thus allowing the NLRC Sheriff to levy on execution and to determine
the rights of third-party claimants.[45] In this case, a separate action was filed in the regular
courts by GHI, the third-party claimant. Finally, the questioned transaction in Tanongon was a
plain, voluntary transfer in the form of a sale executed by the judgment debtor in favor of a
dubious third-party, resulting in the inability of the judgment creditor to satisfy the
judgment. On the other hand, this case involves an involuntary transfer (foreclosure of
mortgage) arising from a loan obligation that well-existed long before the commencement of
the labor claims of the private respondent.

Three other circumstances have been put forward by the CA to support its conclusion that the
mortgage contract is a sham. First, the CA considered it highly suspect that the Deed of Real

Estate and Chattel Mortgage was registered only on February 4, 2000, three years after its
execution, and almost one month after the Supreme Court rendered its decision in the labor
dispute.[46] Equally suspicious, as far as the CA is concerned, is the fact that the mortgages
were foreclosed on July 31, 2001, after the DOLE had already issued a Partial Writ of
Execution on May 9, 2001.[47] To the appellate court, the timing of the registration of the
mortgage deed was too coincidental, while the date of the foreclosure signified that it was
effected precisely to prevent the satisfaction of the judgment awards. [48] Furthermore, the CA
found that the mortgage deed itself was executed without any consideration, because at the
time of its execution, all the assets of MMC had already been transferred to GHI. [49]

evidence. All that is necessary is to establish affirmatively that the conveyance is made in
good faith and for a sufficient and valuable consideration.

These circumstances provided the CA with sufficient justification to apply Article 1387 of the
Civil Code on presumed fraudulent transactions, and to declare that the mortgage deed was
void for being simulated and fictitious.[50]

The facts of the case so far show that the assignment contracts were executed in good
faith. The execution of the Assignment Agreement on March 20, 1997 and the Deed of
Assignment on December 8,1997 is not the alpha of this case. While the execution of these
assignment contracts almost coincided with the rendition on May 7, 1997 of the Partial
Judgment in Civil Case No. 96-80083 by the Manila RTC, however, there was no intention on
the part of petitioner to defeat Solidbanks claim. It bears reiterating that as early as November
4, 1992, Placer Dome had already bound itself under a Support and Standby Credit
Agreement to provide Marcopper with cash flow support for the payment to ADB of its
obligations. When Marcopper ceased operations on account of disastrous mine tailings spill
into the Boac River and ADB pressed for payment of the loan, Placer Dome agreed to have its
subsidiary, herein petitioner, pay ADB the amount of US$18,453,450.12.

We do not agree. We find this Courts ruling in MR Holdings, Ltd. v. Sheriff Bajar[51] pertinent
and instructive:

Article 1387 of the Civil Code of the Philippines provides:

Art. 1387. All contracts by virtue of which the debtor alienates property by gratuitous title are
presumed to have been entered into in fraud of creditors, when the donor did not reserve
sufficient property to pay all debts contracted before the donation.
Alienations by onerous title are also presumed fraudulent when made by persons against
whom some judgment has been rendered in any instance or some writ of attachment has
been issued. The decision or attachment need not refer to the property alienated, and need
not have been obtained by the party seeking rescission.
In addition to these presumptions, the design to defraud creditors may be proved in any other
manner recognized by law and of evidence.

This article presumes the existence of fraud made by a debtor. Thus, in the absence of
satisfactory evidence to the contrary, an alienation of a property will be held fraudulent if it is
made after a judgment has been rendered against the debtor making the alienation. This
presumption of fraud is not conclusive and may be rebutted by satisfactory and convincing

The Assignment Agreement and the Deed of Assignment were executed for valuable
considerations. Patent from the Assignment Agreement is the fact that petitioner assumed the
payment of US$18,453,450.12 to ADB in satisfaction of Marcoppers remaining debt as of
March 20, 1997. Solidbank cannot deny this fact considering that a substantial portion of the
said payment, in the sum of US$13,886,791.06, was remitted in favor of the Bank of Nova
Scotia, its major stockholder.

Thereupon, ADB and Marcopper executed, respectively, in favor of petitioner an Assignment

Agreement and a Deed of Assignment. Obviously, the assignment contracts were connected
with transactions that happened long before the rendition in 1997 of the Partial Judgment in
Civil Case No. 96-80083 by the Manila RTC. Those contracts cannot be viewed in isolation. If
we may add, it is highly inconceivable that ADB, a reputable international financial
organization, will connive with Marcopper to feign or simulate a contract in 1992 just to
defraud Solidbank for its claim four years thereafter. And it is equally incredible for petitioner to
be paying the huge sum of US$18,453,450.12 to ADB only for the purpose of defrauding
Solidbank of the sum of P52,970,756.89.
It is said that the test as to whether or not a conveyance is fraudulent is does it prejudice
the rights of creditors? We cannot see how Solidbanks right was prejudiced by the assignment
contracts considering that substantially all of Marcoppers properties were already covered by
the registered Deed of Real Estate and Chattel Mortgage executed by Marcopper in favor of
ADB as early as November 11, 1992. As such, Solidbank cannot assert a better right than
ADB, the latter being a preferred creditor. It is basic that mortgaged properties answer
primarily for the mortgaged credit, not for the judgment credit of the mortgagors unsecured
creditor. Considering that petitioner assumed Marcoppers debt to ADB, it follows that
Solidbanks right as judgment creditor over the subject properties must give way to that of the
former.[52]

From this ruling in MR Holdings, we can draw parallel conclusions. The execution of the
subsequent Deed of Real Estate and Chattel Mortgage on September 5, 1996 was simply the
formal documentation of what had already been agreed in the seminal transaction (the
Purchase and Sale Agreement) between APT and GHI. It should not be viewed in isolation,
apart from the original agreement of October 2, 1992. And it cannot be denied that this
original agreement was supported by an adequate consideration. The APT was even ordered
by the court to deliver the shares and financial notes of MMC in exchange for the payments
that GHI had made.

It was also about this time, in 1996, that NAMAWU filed a notice of strike to protest nonpayment of its rightful labor claims.[53] But, as already mentioned, the outcome of that labor
dispute was yet unascertainable at that time, and NAMAWU could only have hoped for, or
speculated about, a favorable ruling. To paraphrase MR Holdings, we cannot see how
NAMAWUs right was prejudiced by the Deed of Real Estate and Chattel Mortgage, or by its
delayed registration, when substantially all of the properties of MMC were already mortgaged
to GHI as early as October 2, 1992. Given this reality, the Court of Appeals had no basis to
conclude that this Deed of Real Estate and Chattel Mortgage, by reason of its late registration,
was a simulated or fictitious contract.

The importance of registration and its binding effect is stated in Section 51 of the Property
Registration Decree or Presidential Decree (P.D.) No. 1529, [54] which reads:
SECTION 51. Conveyance and other dealings by registered owner.An owner of registered
land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with
existing laws. He may use such forms, deeds, mortgages, leases or other voluntary
instrument as are sufficient in law. But no deed, mortgage, lease or other voluntary instrument,
except a will purporting to convey or effect registered land, shall take effect as a conveyance
or bind the land, but shall operate only as a contract between the parties and as evidence of
authority to the Registry of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third
persons are concerned, and in all cases under this Decree, the registration shall be made in
the Office of the Register of Deeds for the province or the city where the land lies. [55]

Under the Torrens system, registration is the operative act which gives validity to the transfer
or creates a lien upon the land. Further, entrenched in our jurisdiction is the doctrine that

registration in a public registry creates constructive notice to the whole world. [56] Thus, Section
51 of Act No. 496, as amended by Section 52 of P.D. No. 1529, provides:

SECTION 52. Constructive notice upon registration.Every conveyance, mortgage, lease, lien,
attachment, order, judgment, instrument or entry affecting registered land shall, if registered,
filed or entered in the Office of the Register of Deeds for the province or city where the land to
which it relates lies, be constructive notice to all persons from the time of such registering,
filing or entering.

But, there is nothing in Act No. 496, as amended by P.D. No. 1529, that imposes a period
within which to register annotations of conveyance, mortgage, lease, lien, attachment, order,
judgment, instrument or entry affecting registered land. If liens were not so registered, then it
shall operate only as a contract between the parties and as evidence of authority to the
Registry of Deeds to make registration. If registered, it shall be the operative act to convey or
affect the land insofar as third persons are concerned. The mere lapse of time from the
execution of the mortgage document to the moment of its registration does not affect the
rights of a mortgagee.

Neither will the circumstance of GHIs foreclosure of MMCs properties on July 31, 2001, or
after the DOLE had already issued a Partial Writ of Execution on May 9, 2001 against MMC,
support the conclusion of the CA that GHIs act of foreclosing on MMCs properties
was effected to prevent satisfaction of the judgment award. GHIs mortgage rights, constituted
in 1992, antedated the Partial Writ of Execution by nearly ten (10) years. GHIs resort to
foreclosure was a legitimate enforcement of a right to liquidate a bona fide debt. It was a
reasonable option open to a mortgagee which, not being a party to the labor dispute between
NAMAWU and MMC, stood to suffer a loss if it did not avail itself of the remedy of foreclosure.

The well-settled rule is that a mortgage lien is inseparable from the property mortgaged.
[57]
While it is true that GHIs foreclosure of MMCs mortgaged properties may have had the
effect to prevent satisfaction of the judgment award against the specific mortgaged property
that first answers for a mortgage obligation ahead of any subsequent creditors, that same
foreclosure does not necessarily translate to having been effected to prevent satisfaction of
the judgment award against MMC.

Likewise, we note the narration of subsequent facts contained in the Comment of the Office of
the Solicitor General. Therein, it is alleged that after the Partial Writ of Execution was issued
on May 9, 2001, a motion for reconsideration was filed by MMC; that the denial of the motion
was appealed to the CA; that when the appeal was dismissed by the CA on January 24, 2002,
it eventually became the subject of a review petition before this Court, docketed as G.R. No.
157696; and that G.R. No. 157696 was decided by this Court only on February 9, 2006.

This chronology of subsequent events shows that February 9, 2006 would have been the
earliest date for the unimpeded enforcement of the Partial Writ of Execution, as it was only
then that this Court resolved the issue. This happened four and a half years after July 31,
2001, the date when GHI foreclosed on the mortgaged properties. Thus, it is not accurate to
say that the foreclosure made on July 31, 2001 was effected [only] to prevent satisfaction of
the judgment award.

We also observe the error in the CAs finding that the 1996 Deed of Real Estate and Chattel
Mortgage was not supported by any consideration since at the time the deed was
executed, all the real and personal property of MMC had already been transferred in the
hands of G Holdings.[58] It should be remembered that the Purchase and Sale Agreement
between GHI and APT involved large amounts (P550M) and even spawned a subsequent
court action (Civil Case No. 95-76132, RTC of Manila). Yet, nowhere in the Agreement or in
the RTC decision is there any mention of real and personal properties of MMC being included
in the sale to GHI in 1992. These properties simply served as mortgaged collateral for the
1992 Promissory Notes.[59] The Purchase and Sale Agreement and the Promissory Notes
themselves are the best evidence that there was ample consideration for the mortgage.

Thus, we must reject the conclusion of the CA that the Deed of Real Estate and Chattel
Mortgage executed in 1996 was a simulated transaction.

On the issue of whether there

had been an effective levy upon
the properties of GHI.

The well-settled principle is that the rights of a mortgage creditor over the mortgaged
properties are superior to those of a subsequent attaching creditor. In Cabral v. Evangelista,
[60]
this Court declared that:

Defendants-appellants purchase of the mortgaged chattels at the public sheriff's sale and the
delivery of the chattels to them with a certificate of sale did not give them a superior right to
the chattels as against plaintiffs-mortgagees. Rule 39, Section 22 of the old Rules of Court
(now Rule 39, Section 25 of the Revised Rules), cited by appellants precisely provides that
the sale conveys to the purchaser all the right which the debtor had in such property on the
day the execution or attachment was levied. It has long been settled by this Court that The
right of those who so acquire said properties should not and can not be superior to that of the
creditor who has in his favor an instrument of mortgage executed with the formalities of the
law, in good faith, and without the least indication of fraud. This is all the more true in the
present case, because, when the plaintiff purchased the automobile in question on August 22,
1933, he knew, or at least, it is presumed that he knew, by the mere fact that the instrument of
mortgage, Exhibit 2, was registered in the office of the register of deeds of Manila, that said
automobile was subject to a mortgage lien. In purchasing it, with full knowledge that such
circumstances existed, it should be presumed that he did so, very much willing to respect the
lien existing thereon, since he should not have expected that with the purchase, he would
acquire a better right than that which the vendor then had. In another case between two
mortgagees, we held that As between the first and second mortgagees, therefore, the second
mortgagee has at most only the right to redeem, and even when the second mortgagee goes
through the formality of an extrajudicial foreclosure, the purchaser acquires no more than the
right of redemption from the first mortgagee. The superiority of the mortgagee's lien over that
of a subsequent judgment creditor is now expressly provided in Rule 39, Section 16 of the
Revised Rules of Court, which states with regard to the effect of levy on execution as to third
persons that The levy on execution shall create a lien in favor of the judgment creditor over
the right, title and interest of the judgment debtor in such property at the time of the levy,
subject to liens or encumbrances then existing.

Even in the matter of possession, mortgagees over chattel have superior, preferential and
paramount rights thereto, and the mortgagor has mere rights of redemption. [61]
Similar rules apply to cases of mortgaged real properties that are registered. Since the
properties were already mortgaged to GHI, the only interest remaining in the mortgagor was
its right to redeem said properties from the mortgage. The right of redemption was the only
leviable or attachable property right of the mortgagor in the mortgaged real properties. We
have held that

courts were already judicially aware of its existence since 1992. Thus, at that moment in time,
with the registration of the mortgage, either NAMAWU had no properties of MMC to attach
because the same had been previously foreclosed by GHI as mortgagee thereof; or by virtue
of the DOLEs levy to enforce NAMAWUs claims, the latters rights are subject to the notice of
the foreclosure on the subject properties by a prior mortgagees right. GHIs mortgage right had
already been registered by then, and it is basic that mortgaged properties answer primarily for
the mortgaged credit, not for the judgment credit of the mortgagors unsecured creditor. [68]
On the issue of piercing the

The main issue in this case is the nature of the lien of a judgment creditor, like the petitioner,
who has levied an attachment on the judgment debtor's (CMI) real properties which had been
mortgaged to a consortium of banks and were subsequently sold to a third party, Top Rate.

veil of corporate fiction.

The CA found that:

xxxx

The sheriff's levy on CMI's properties, under the writ of attachment obtained by the petitioner,
was actually a levy on the interest only of the judgment debtor CMI on those properties. Since
the properties were already mortgaged to the consortium of banks, the only interest remaining
in the mortgagor CMI was its right to redeem said properties from the mortgage. The right of
redemption was the only leviable or attachable property right of CMI in the mortgaged real
properties. The sheriff could not have attached the properties themselves, for they had
already been conveyed to the consortium of banks by mortgage (defined as a conditional
sale), so his levy must be understood to have attached only the mortgagor's remaining
interest in the mortgaged property the right to redeem it from the mortgage. [62]

Ordinarily, the interlocking of directors and officers in two different corporations is not a
conclusive indication that the corporations are one and the same for purposes of applying the
doctrine of piercing the veil of corporate fiction. However, when the legal fiction of the
separate corporate personality is abused, such as when the same is used for fraudulent or
wrongful ends, the courts have not hesitated to pierce the corporate veil (Francisco vs. Mejia,
362 SCRA 738). In the case at bar, the Deed of Real Estate and Chattel Mortgage was
entered into between MMC and G Holdings for the purpose of evading the satisfaction of the
legitimate claims of the petitioner against MMC. The notion of separate personality is clearly
being utilized by the two corporations to perpetuate the violation of a positive legal duty arising
from a final judgment to the prejudice of the petitioners right. [69]

xxxx
Settled jurisprudence[70] has it that

There appears in the record a factual contradiction relating to whether the foreclosure by GHI
on July 13, 2001[63] over some of the contested properties came ahead of the levy thereon, or
the reverse. NAMAWU claims that the levy on two trucks was effected on June 22, 2001,
[64]
which GHI disputes as a misstatement because the levy was attempted on July 18, 2002,
and not 2001[65] What is undisputed though is that the mortgage of GHI was registered on
February 4, 2000,[66] well ahead of any levy by NAMAWU. Prior registration of a lien creates a
preference, as the act of registration is the operative act that conveys and affects the land,
[67]
even against subsequent judgment creditors, such as respondent herein. Its registration of
the mortgage was not intended to defraud NAMAWU of its judgment claims, since even the

(A) corporation, upon coming into existence, is invested by law with a personality separate
and distinct from those persons composing it as well as from any other legal entity to which it
may be related. By this attribute, a stockholder may not, generally, be made to answer for acts
or liabilities of the said corporation, and vice versa. This separate and distinct personality is,
however, merely a fiction created by law for convenience and to promote the ends of justice.
For this reason, it may not be used or invoked for ends subversive to the policy and purpose
behind its creation or which could not have been intended by law to which it owes its
being. This is particularly true when the fiction is used to defeat public convenience, justify
wrong, protect fraud, defend crime, confuse legitimate legal or judicial issues, perpetrate

deception or otherwise circumvent the law. This is likewise true where the corporate entity is
being used as an alter ego, adjunct, or business conduit for the sole benefit of the
stockholders or of another corporate entity. In all these cases, the notion of corporate entity
will be pierced or disregarded with reference to the particular transaction involved.

Since the factual antecedents of this case do not warrant a finding that the mortgage and loan
agreements between MMC and GHI were simulated, then their separate personalities must be
recognized. To pierce the veil of corporate fiction would require that their personalities as
creditor and debtor be conjoined, resulting in a merger of the personalities of the creditor
(GHI) and the debtor (MMC) in one person, such that the debt of one to the other is thereby
extinguished. But the debt embodied in the 1992 Financial Notes has been established, and
even made subject of court litigation (Civil Case No. 95-76132, RTC Manila). This can only
mean that GHI and MMC have separate corporate personalities.

Given this jurisprudential principle and the factual circumstances obtaining in this case, we
now ask: Was the CA correct in piercing the veil of corporate identity of GHI and MMC?

In our disquisition above, we have shown that the CAs finding that there was a simulated
mortgage between GHI and MMC to justify a wrong or protect a fraud has struggled vainly to
find a foothold when confronted with the ruling of this Court in Republic v. G Holdings, Inc.
The negotiations between the GHI and the Government--through APT, dating back to 1992-culminating in the Purchase and Sale Agreement, cannot be depicted as a contrived
transaction. In fact, in the said Republic, etc., v. G Holdings, Inc., this Court adjudged that GHI
was entitled to its rightful claims not just to the shares of MMC itself, or just to the financial
notes that already contained the mortgage clauses over MMCs disputed assets, but also to
the delivery of those instruments. Certainly, we cannot impute to this Courts findings on the
case any badge of fraud. Thus, we reject the CAs conclusion that it was right to pierce the veil
of corporate fiction, because the foregoing circumstances belie such an
inference. Furthermore, we cannot ascribe to the Government, or the APT in particular, any
undue motive to participate in a transaction designed to perpetrate fraud.Accordingly, we
consider the CA interpretation unwarranted.

We also cannot agree that the presumption of fraud in Article 1387 of the Civil Code relative to
property conveyances, when there was already a judgment rendered or a writ of attachment
issued, authorizes piercing the veil of corporate identity in this case. We find that Article 1387
finds less application to an involuntary alienation such as the foreclosure of mortgage made
before any final judgment of a court. We thus hold that when the alienation is involuntary, and
the foreclosure is not fraudulent because the mortgage deed has been previously executed in
accordance with formalities of law, and the foreclosure is resorted to in order to liquidate
a bona fide debt, it is not the alienation by onerous title contemplated in Article 1387 of the
Civil Code wherein fraud is presumed.

Neither was MMC used merely as an alter ego, adjunct, or business conduit for the sole
benefit of GHI, to justify piercing the formers veil of corporate fiction so that the latter could be
held liable to claims of third-party judgment creditors, like NAMAWU. In this regard, we
find American jurisprudence persuasive. In a decision by the Supreme Court of New
York[71] bearing upon similar facts, the Court denied piercing the veil of corporate fiction to
favor a judgment creditor who sued the parent corporation of the debtor, alleging fraudulent
corporate asset-shifting effected after a prior final judgment. Under a factual background
largely resembling this case at bar, viz:

In this action, plaintiffs seek to recover the balance due under judgments they obtained
against Lake George Ventures Inc. (hereinafter LGV), a subsidiary of defendant that was
formed to develop the Top O the World resort community overlooking Lake George,
by piercing the corporate veil or upon the theory that LGV's transfer of certain assets
constituted fraudulent transfers under the Debtor and Creditor Law. We previously upheld
Supreme Court's denial of defendant's motion for summary judgment dismissing the
complaint (252 A.D.2d 609, 675 N.Y.S.2d 234) and the matter proceeded to a nonjury
trial. Supreme Court thereafter rendered judgment in favor of defendant upon its findings that,
although defendant dominated LGV, it did not use that domination to commit a fraud or wrong
on plaintiffs. Plaintiffs appealed.

The trial evidence showed that LGV was incorporated in November 1985. Defendant's
principal, Francesco Galesi, initially held 90% of the stock and all of the stock was ultimately
transferred to defendant. Initial project funding was provided through a $2.5 million loan from
Chemical Bank, secured by defendant's guarantee of repayment of the loan and completion of
the project. The loan proceeds were utilized to purchase the real property upon which the
project was to be established. Chemical Bank thereafter loaned an additional $3.5 million to

LGV, again guaranteed by defendant, and the two loans were consolidated into a
first mortgage loan of $6 million. In 1989, the loan was modified by splitting the loan into a
$1.9 term note on which defendant was primary obligor and a $4.1 million project note on
which LGV was the obligor and defendant was a guarantor.

Due to LGV's lack of success in marketing the project's townhouses and in order to protect
itself from the exercise of Chemical Bank's enforcement remedies, defendant was forced to
make monthly installments of principal and interest on LGV's behalf. Ultimately, defendant
purchased the project note from Chemical Bank for $3.1 million, paid the $1.5 million balance
on the term note and took an assignment of the first mortgage on the project's realty. After
LGV failed to make payments on the indebtedness over the course of the succeeding two
years, defendant brought an action to foreclose its mortgage. Ultimately, defendant obtained a
judgment of foreclosure and sale in the amount of $6,070,246.50. Defendant bid in the
property at the foreclosure sale and thereafter obtained a deficiency judgment in the amount
of $3,070,246.50.

Following the foreclosure sale, LGV transferred to defendant all of the shares of Top of the
World Water Company, a separate entity that had been organized to construct and operate
the water supply and delivery system for the project, in exchange for a $950,000 reduction in
the deficiency judgment.

the U.S. Supreme Court of New York held

Based on the foregoing, and accepting that defendant exercised complete domination and
control over LGV, we are at a loss as to how plaintiffs perceive themselves to have been
inequitably affected by defendant's foreclosure action against LGV, by LGV's divestiture of the
water company stock or the sports complex property, or by defendant's transfer to LGV of a
third party's uncollectible note, accomplished solely for tax purposes. It is undisputed that LGV
was, and for some period of time had been, unable to meet its obligations and, at the time of
the foreclosure sale, liens against its property exceeded the value of its assets by several
million dollars, even including the water company and sports complex at the values plaintiffs
would assign to them. In fact, even if plaintiffs' analysis were utilized to eliminate the entire $3

million deficiency judgment, the fact remains that subordinate mortgages totaling nearly an
additional $2 million have priority over plaintiffs' judgments.

As properly concluded by Supreme Court, absent a finding of any inequitable consequence to

plaintiffs, both causes of action pleaded in the amended complaint must fail. Fundamentally, a
party seeking to pierce the corporate veil must show complete domination and control of the
subsidiary by the parent and also that such domination was used to commit a fraud or wrong
against the plaintiff that resulted in the plaintiff's injury ( 252 A.D.2d 609, 610, 675 N.Y.S.2d
234, supra; see, Matter of Morris v. New York State Dept. of Taxation & Fin., 82 N.Y.2d 135,
141, 603 N.Y.S.2d 807, 623 N.E.2d 1157). Notably, [e]vidence of domination alone does not
suffice without an additional showing that it led to inequity, fraud or malfeasance (TNS
Holdings v. MKI Sec. Corp., 92 N.Y.2d 335, 339, 680 N.Y.S.2d 891, 703 N.E.2d 749).

xxxx

In reaching that conclusion, we specifically reject a number of plaintiffs' assertions, including

the entirely erroneous claims that our determination on the prior appeal (252 A.D.2d 609, 675
N.Y.S.2d 234, supra) set forth a roadmap for the proof required at trial and mandated a verdict
in favor of plaintiffs upon their production of evidence that supported the decision's listed facts.
To the contrary, our decision was predicated upon the existence of such evidence, absent
which we would have granted summary judgment in favor of defendant. We are equally
unpersuaded by plaintiffs' continued reliance upon defendant's December 1991 unilateral
conversion of its intercompany loans with LGV from debt to equity, which constituted nothing
more than a bookkeeping transaction and had no apparent effect on LGV's obligations to
defendant or defendant's right to foreclose on its mortgage.[72]

This doctrine is good law under Philippine jurisdiction.

In Concept Builders, Inc. v. National Labor Relations Commission,[73] we laid down the test in
determining the applicability of the doctrine of piercing the veil of corporate fiction, to wit:

1. Control, not mere majority or complete control, but complete domination, not only of
finances but of policy and business practice in respect to the transaction attacked so that the
corporate entity as to this transaction had at the time no separate mind, will or existence of its
own.

2. Such control must have been used by the defendant to commit fraud or wrong, to
perpetuate the violation of a statutory or other positive legal duty, or dishonest and, unjust act
in contravention of plaintiffs legal rights; and,

3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss
complained of.

xxxx

Time and again, we have reiterated that mere ownership by a single stockholder or by another
corporation of all or nearly all of the capital stock of a corporation is not, by itself, a sufficient
ground for disregarding a separate corporate personality.[74] It is basic that a corporation has a
personality separate and distinct from that composing it as well as from that of any other legal
entity to which it may be related. Clear and convincing evidence is needed to pierce the veil of
corporate fiction.[75]

In this case, the mere interlocking of directors and officers does not warrant piercing the
separate corporate personalities of MMC and GHI. Not only must there be a showing that
there was majority or complete control, but complete domination, not only of finances but of
policy and business practice in respect to the transaction attacked, so that the corporate entity
as to this transaction had at the time no separate mind, will or existence of its own. The
mortgage deed transaction attacked as a basis for piercing the corporate veil was a
transaction that was an offshoot, a derivative, of the mortgages earlier constituted in the
Promissory Notes dated October 2, 1992. But these Promissory Notes with mortgage were
executed by GHI with APT in the name of MMC, in a full privatization process. It appears that
if there was any control or domination exercised over MMC, it was APT, not GHI, that wielded
it. Neither can we conclude that the constitution of the loan nearly four (4) years prior to
NAMAWUs notice of strike could have been the proximate cause of the injury of NAMAWU for
having been deprived of MMCs corporate assets.

On the propriety of injunction

to prevent execution by the
NLRC on the properties
of third-party claimants

It is settled that a Regional Trial Court can validly issue a Temporary Restraining Order (TRO)
and, later, a writ of preliminary injunction to prevent enforcement of a writ of execution issued
by a labor tribunal on the basis of a third-partys claim of ownership over the properties levied
upon.[76] While, as a rule, no temporary or permanent injunction or restraining order in any
case involving or growing out of a labor dispute shall be issued by any court--where the writ of
execution issued by a labor tribunal is sought to be enforced upon the property of a stranger
to the labor dispute, even upon a mere prima facie showing of ownership of such claimant--a
separate action for injunctive relief against such levy may be maintained in court, since said
action neither involves nor grows out of a labor dispute insofar as the third party is concerned.
[77]
Instructively, National Mines and Allied Workers Union v. Vera[78]

Petitioners' reliance on the provision of Art. 254 of the New Labor Code (herein earlier quoted)
which prohibits injunctions or restraining orders in any case involving or growing out of a 'labor
dispute' is not well-taken. This has no application to the case at bar. Civil Case No. 2749 is
one which neither "involves" nor "grows out" of a labor dispute. What 'involves' or 'grows out'
of a labor dispute is the NLRC case between petitioners and the judgment debtor, Philippine
Iron Mines. The private respondents are not parties to the said NLRC case. Civil Case No.
2749 does not put in issue either the fact or validity of the proceeding in theNLRC case nor
the decision therein rendered, much less the writ of execution issued thereunder. It does not
seek to enjoin the execution of the decision against the properties of the judgment debtor.
What is sought to be tried in Civil Case No. 2749 is whether the NLRC's decision and writ of
execution, above mentioned, shall be permitted to be satisfied against properties of private
respondents, and not of the judgment debtor named in the NLRC decision and writ of
execution. Such a recourse is allowed under the provisions of Section 17, Rule 39 of the
Rules of Court.

To sustain petitioners' theory will inevitably lead to disastrous consequences and lend judicial
imprimatur to deprivation of property without due process of law. Simply because a writ of
execution was issued by the NLRC does not authorize the sheriff implementing the same to
levy on anybody's property. To deny the victim of the wrongful levy, the recourse such as that
availed of by the herein private respondents, under the pretext that no court of general
jurisdiction can interfere with the writ of execution issued in a labor dispute, will be sanctioning
a greater evil than that sought to be avoided by the Labor Code provision in question.
Certainly, that could not have been the intendment of the law creating the NLRC. For wellsettled is the rule that the power of a court to execute its judgment extends only over
properties unquestionably belonging to the judgment debtor.

Likewise, since the third-party claimant is not one of the parties to the action, he cannot,
strictly speaking, appeal from the order denying his claim, but he should file a separate
reivindicatory action against the execution creditor or the purchaser of the property after the
sale at public auction, or a complaint for damages against the bond filed by the judgment
creditor in favor of the sheriff.[79]

Officio Sheriff, RTC Branch 61, Kabankalan City on July 13, 2001, the fact that said Ex-Officio
Sheriff and the Clerk of Court issue a Notice of Foreclosure, Possession and Control over said
mortgaged properties on July 19, 2001 and the fact that a Sheriffs Certificate of Sale was
issued on December 3, 2001 are the basis of its conclusion. Unless said mortgage contract is
annulled or declared null and void, the presumption of regularity of transaction must be
considered and said document must be looked [upon] as valid.

Notably, the Office of the Solicitor General also aptly observed that when the respondent
maintained that the Deed of Real Estate and Chattel mortgage was entered into in fraud of
creditors, it thereby admitted that the mortgage was not void, but merely rescissible under
Article 1381(3) of the Civil Code; and, therefore, an independent action is needed to rescind
the contract of mortgage.[81] We, however, hold that such an independent action cannot now
be maintained, because the mortgage has been previously recognized to exist, with a valid
consideration, in Republic, etc., v. G Holdings, Inc.

A final word
A separate civil action for recovery of ownership of the property would not constitute
interference with the powers or processes of the labor tribunal which rendered the judgment to
execute upon the levied properties. The property levied upon being that of a stranger is not
subject to levy. Thus, a separate action for recovery, upon a claim andprima facie showing of
ownership by the petitioner, cannot be considered as interference. [80]
Upon the findings and conclusions we have reached above, petitioner is situated squarely as
such third-party claimant. The questioned restraining order of the lower court, as well as the
order granting preliminary injunction, does not constitute interference with the powers or
processes of the labor department. The registration of the mortgage document operated as
notice to all on the matter of the mortgagees prior claims. Official proceedings relative to the
foreclosure of the subject properties constituted a prima facie showing of ownership of such
claimant to support the issuance of injunctive reliefs.

The Court notes that the case filed with the lower court involves a principal action for
injunction to prohibit execution over properties belonging to a third party not impleaded in the
legal dispute between NAMAWU and MMC. We have observed, however, that the lower court
and the CA failed to take judicial notice of, or to consider, our Decisions inRepublic, etc., v. G
Holdings, Inc., and Maricalum Mining Corporation v. Brion and NAMAWU, in which we
respectively recognized the entitlement of GHI to the shares and the company notes of MMC
(under the Purchase and Sale Agreement), and the rights of NAMAWU to its labor claims. At
this stage, therefore, neither the lower court nor the CA, nor even this Court, can depart from
our findings in those two cases because of the doctrine of stare decisis.

As correctly held by the lower court:

From our discussion above, we now rule that the trial court, in issuing the questioned orders,
did not commit grave abuse of discretion, because its issuance was amply supported by
factual and legal bases.

The subject incidents for TRO and/or Writ of Injunction were summarily heard and in resolving
the same, the Court believes, that the petitioner has a clear and unmistakable right over the
levied properties. The existence of the subject Deed of Real Estate and Chattel Mortgage, the
fact that petitioner initiated a foreclosure of said properties before the Clerk of Court and Ex-

We are not unmindful, however, of the fact that the labor claims of NAMAWU, acknowledged
by this Court in Maricalum, still awaits final execution. As success fades from NAMAWUs
efforts to execute on the properties of MMC, which were validly foreclosed by GHI, we see
that NAMAWU always had, and may still have, ample supplemental remedies found in Rule

39 of the Rules of Court in order to protect its rights against MMC. These include the
examination of the judgment obligor when judgment is unsatisfied, [82] the examination of the
obligors of judgment obligors,[83] or even the resort to receivership.[84]

While, theoretically, this case is not ended by this decision, since the lower court is still to try
the case filed with it and decide it on the merits, the matter of whether the mortgage and
foreclosure of the assets that are the subject of said foreclosure is ended herein, for the third
and final time. So also is the consequential issue of the separate and distinct personalities of
GHI and MMC. Having resolved these principal issues with certainty, we
find no more need to remand the case to the lower court, only for the

purpose of resolving again the matter of whether GHI owns the properties that were the
subject of the latters foreclosure.

DECISION

NACHURA, J.:
WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals dated October
14, 2003 is SET ASIDE. The Omnibus Order dated December 4, 2002 of the Regional Trial
Court, Branch 61 of Kabankalan City, Negros Occidental is AFFIRMED. No costs.
SO ORDERED.

THIRD DIVISION

SPOUSES OMAR and MOSHIERA LATIP,

G.R. No. 177809

Challenged in this petition for review on certiorari is the Court of Appeals (CA) Decision in CAG.R. SP No. 89300:[1] (1) reversing the decision of the Regional Trial Court (RTC), Branch
274, Paraaque City in Civil Case No. 04-0052;[2] and (2) reinstating and affirming in toto the
decision of the Metropolitan Trial Court (MeTC), Branch 78, of the same city in Civil Case No.
2001-315.[3]

Petitioners,
Present:

CARPIO MORALES, J.,*

CHICO-NAZARIO,**
- versus -

The facts parleyed by the MeTC show that respondent Rosalie Chua (Rosalie) is the owner
of Roferxane Building, a commercial building, located at No. 158 Quirino
Avenue corner Redemptorist Road, Barangay Baclaran, Paraaque City.

Acting Chairperson,
NACHURA,
PERALTA, and
ABAD,*** JJ.

ROSALIE PALAA CHUA,

First, we sift through the varying facts found by the different lower courts.

Promulgated:

On July 6, 2001, Rosalie filed a complaint for unlawful detainer plus damages against
petitioners, Spouses Omar and Moshiera Latip (Spouses Latip). Rosalie attached to the
complaint a contract of lease over two cubicles in Roferxane Bldg., signed by Rosalie, as
lessor, and by Spouses Latip, as lessees thereof.

The contract of lease reads:

Respondent.
October 16, 2009

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

CONTRACT OF LEASE

KNOW ALL MEN BY THESE PRESENTS:

This Contract of Lease is entered into by and between:

ROSALIE PALAA CHUA, Filipino, of legal age, married with office at 2/F JOFERXAN
Building, F.B. Harrison St., Brgy. Baclaran, Paraaque City, and hereinafter referred to as the
LESSOR,

- and -

d. That the LESSEES shall not sub-let or make any alteration in the cubicles without a written
permission from the LESSOR. Provided, however, that at the termination of the Contract,
the lessee shall return the two cubicles in its original conditions at their expenses;

e. That the LESSEES agree to keep the cubicles in a safe and sanitary conditions, and shall
not keep any kinds of flammable or combustible materials.

OMAR LATIEF marriage to MOSHIERA LATIEF, also both Filipino, of legal age with address
at 24 Anahan St. RGV Homes Paraaque City, and hereinafter referred to as the LESSEES.

f. That in case the LESSEES fail to pay the monthly rental every time it falls due or violate any
of the above conditions shall be enough ground to terminate this Contract of
Lease.Provided, further, that, if the LESSEES pre-terminate this Contract they shall pay the
rentals for the unused month or period by way of liquidated damages in favor of the LESSOR.

WITNESSETH

3. That this Contract of Lease is for six (6) yrs. only starting from December _____, 1999 or up
to December ______, 2005.

1. That the LESSOR is the owner of the commercial building erected at the lot of the Toribio
G. Reyes Realty, Inc. situated at 158 Quirino Ave. corner Redemptorist Road, Barangay
Baclaran in Paraaque Ctiy;

IN WITNESS WHEREOF, the parties have hereunto affixed their hands this ___th day of
December, 1999 at City of Manila, Philippines.

2. That LESSOR hereby leases two (2) cubicles located at the 1 st & 2nd Floor, of said building
with an area of 56 square meters under the following terms and conditions, to wit:

(sgd.) (sgd.)
ROSALIE PALAA-CHUA MOSHIERA LATIEF
LESSORLESSEE

a. That the monthly rental of the two (2) cubicles in PESOS, SIXTY THOUSAND
(P60,000.00), Philippine Currency. However, due to unstable power of the peso LESSEES
agrees to a yearly increase of ten (10%) percent of the monthly rental;

(sgd.)
OMAR LATIEF

b. That any rental in-arrears shall be paid before the expiration of the contract to the LESSOR;

LESSEE

c. That LESSEES agree to pay their own water and electric consumptions in the said
premises;

SIGNED IN THE PRESENCE OF:

(sgd.) (sgd.)

1. Daisy C. Ramos 2. Ferdinand C. Chua

Republic of the Philippines)

A year after the commencement of the lease and with Spouses Latip already occupying the
leased cubicles, Rosalie, through counsel, sent the spouses a letter demanding payment of
back rentals and should they fail to do so, to vacate the leased cubicles. When Spouses Latip
did not heed Rosalies demand, she instituted the aforesaid complaint.

C i t y o f M a n i l a )s.s.

AC K N OW LE D GM ENT

BEFORE ME, a Notary Public for and in the City of Manila personally appeared the following
persons:

Rosalie P. Chua with CTC No. 05769706 at Paraaque City on 2/1/99; Moshiera Latief with
CTC No. 12885654 at Paraaque City on 11/11/99; Omar Latief with CTC No. 12885653
Paraaque City on Nov. 11, 1999.

In their Answer, Spouses Latip refuted Rosalies claims. They averred that the lease of the two
(2) cubicles had already been paid in full as evidenced by receipts showing payment to
Rosalie of the total amount of P2,570,000.00. The three (3) receipts, in Rosalies handwriting,
read:

1. I received the amount of P2,000,000.00 (two million pesos) from [O]mar Latip & Moshi[e]ra
Latip for the payment of 2 cubicles located at 158 Quirino Ave. corner Redemptorist Rd.[,]
Baclaran P[ara]aque City. ROFERLAND[5] Bldg. with the terms 6 yrs. Contract.

P2,000,000.00 ______(sgd.)______
CHECK # 3767924 Rosalie Chua

known to me and to me known to be the same persons who executed this instrument
consisting of two (2) pages duly signed by them and the two (2) instrumental witnesses and
acknowledged to me that the same is their free and voluntarily acts and deeds.

FAR EAST BANK

______(sgd.)______
IN FAITH AND TESTIMONY WHEREOF, I have hereunto affixed my hand and Notarial Seal
this ____th day of December, 1999 at the City of Manila, Philippines.

Ferdinand Chua

2. Received cash
P500,000.00
Doc. No. _____ ATTY. CALIXTRO B. RAMOS

From Moshiera Latip

Page No. _____ NOTARY PUBLIC

Book No. LXV Until December 31, 2000

(sgd.)

Series of 1999 PTR # 374145-1/11/99/-Mla.

12/10/99 Rosalie Chua

IBP # 00262-Life Member

[4]

Received by

3. Received cash

P70,000.00 from
Moshiera Latip

TWENTY THOUSAND PESOS (P20,000.00) as attorneys fees and TWO THOUSAND

PESOS (P2,000.00) per [Rosalies] appearance in Court as appearance fee and to PAY the
cost of this suit.

12-11-99
[Spouses Latips] counterclaim is hereby DISMISSED for lack of merit.
____(sgd.)___
Received by:[6]

SO ORDERED.[7]

Spouses Latip asseverated that sometime in October 1999, Rosalie offered for sale lease
rights over two (2) cubicles in Roferxane Bldg. Having in mind the brisk sale of goods during
the Christmas season, they readily accepted Rosalies offer to purchase lease rights in
Roferxane Bldg., which was still under construction at the time. According to Spouses Latip,
the immediate payment of P2,570,000.00 would be used to finish construction of the building
giving them first priority in the occupation of the finished cubicles.

In stark contrast, the RTC reversed the MeTC and ruled in favor of Spouses Latip. The RTC
did not give credence to the contract of lease, ruling that it was not notarized and, in all other
substantial aspects, incomplete. Further on this point, the RTC noted that the contract of lease
lacked: (1) the signature of Ferdinand Chua, Rosalies husband; (2) the signatures of Spouses
Latip on the first page thereof; (3) the specific dates for the term of the contract which only
stated that the lease is for six (6) y[ea]rs only starting from December 1999 or up to December
2005; (4) the exact date of execution of the document, albeit the month of December and year
1999 are indicated therein; and (5) the provision for payment of deposit or advance rental
which is supposedly uncommon in big commercial lease contracts.

Thereafter, in December 1999, as soon as two (2) cubicles were finished, Spouses Latip
occupied them without waiting for the completion of five (5) other stalls. Spouses Latip averred
that the contract of lease they signed had been novated by their purchase of lease rights of
the subject cubicles. Thus, they were surprised to receive a demand letter from Rosalies
counsel and the subsequent filing of a complaint against them.

The MeTC ruled in favor of Rosalie, viz.:

WHEREFORE, premises considered, the [Spouses Latip] and all persons claiming rights
under them are hereby ordered to VACATE the property subject of this case located at the
1stand 2nd floors of a Roferxane Building situated at No. 158 Quirino Avenue corner
Redemptorist Road, Barangay Baclaran, Paraaque City. The [Spouses Latip] are also ordered
to PAY [Rosalie] the amount of SEVEN HUNDRED TWENTY THOUSAND PESOS
(P720,000.00) as rent arrearages for the period of December 1999 to December 2000 and
thereafter to PAY [Rosalie] the amount of SEVENTY TWO THOUSAND PESOS (P72,000.00)
per month from January 2001 to December 2002, plus ten percent (10%) increase for each
and every succeeding years thereafter as stipulated in paragraph 2(a) of the Contract of
Lease x x x, until the [Spouses Latip] have completely vacated the leased premises subject of
this lease. Finally[,] the [Spouses Latip] are hereby ordered to PAY [Rosalie] the amount of

The RTC believed the claim of Spouses Latip that the contract of lease was modified and
supplemented; and the entire lease rentals for the two (2) cubicles for six (6) years had
already been paid by Spouses Latip in the amount of P2,570,000.00. As to Rosalies claim that
her receipt of P2,570,000.00 was simply goodwill payment by prospective lessees to their
lessor, and not payment for the purchase of lease rights, the RTC shot this down and pointed
out that, apart from her bare allegations, Rosalie did not adduce evidence to substantiate this
claim. On the whole, the RTC declared an existent lease between the parties for a period of
six (6) years, and already fully paid for by Spouses Latip. Thus, Spouses Latip could not be
ejected from the leased premises until expiration of the lease period.

The RTC disposed of the appeal, viz.:

WHEREFORE, all the foregoing considered, the appealed decision of the [MeTC] dated
January 13, 2004 is reversed as judgment is hereby rendered for the [Spouses Latip] and
against [Rosalie], ordering the latter to pay the former

Not surprisingly, Spouses Latip filed the present appeal.

(1) the sum of PhP1,000,000.00 as moral damages;

(2) the sum of PhP500,000.00 as exemplary damages;

The singular issue for our resolution is whether Spouses Latip should be ejected from the
leased cubicles.

(3) the sum of PhP250,000.00 plus PhP3,000.00 per court appearance as and for attorneys
fees; and

As previously adverted to, the CA, in ruling for Rosalie and upholding the ejectment of
Spouses Latip, took judicial notice of the alleged practice of prospective lessees in the
Baclaran area to pay goodwill money to the lessor.

(4)

We disagree.

costs of suit.

SO ORDERED.[8]

Sections 1 and 2 of Rule 129 of the Rules of Court declare when the taking of judicial notice is
mandatory or discretionary on the courts, thus:

In yet another turn of events, the CA, as previously mentioned, reversed the RTC and
reinstated the decision of the MeTC. The CA ruled that the contract of lease, albeit lacking the
signature of Ferdinand and not notarized, remained a complete and valid contract. As the
MeTC had, the CA likewise found that the alleged defects in the contract of lease did not
render the contract ineffective. On the issue of whether the amount of P2,570,000.00 merely
constituted payment of goodwill money, the CA took judicial notice of this common practice in
the area of Baclaran, especially around the Redemptorist Church. According to the appellate
court, this judicial notice was bolstered by the Joint Sworn Declaration of the stallholders at
Roferxane Bldg. that they all had paid goodwill money to Rosalie prior to occupying the stalls
thereat. Thus, ruling on Rosalies appeal, the CA disposed of the case:

SECTION 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.

WHEREFORE, in view of the foregoing, the Petition for Review is hereby GRANTED. The
assailed decision of RTC Paraaque City Branch 274 dated September 24, 2004 is hereby
REVERSED and SET ASIDE, and the January 13, 2004 decision of the MeTC is
REINSTATED and AFFIRMED en toto.

SO ORDERED.[9]

SEC. 2. Judicial notice, when discretionary. A court may take judicial notice of matters which
are of public knowledge, or are capable of unquestionable demonstration or ought to be
known to judges because of their judicial functions.

On this point, State Prosecutors v. Muro[10] is instructive:

I. The doctrine of judicial notice rests on the wisdom and discretion of the courts. The power to
take judicial notice is to be exercised by courts with caution; care must be taken that the
requisite notoriety exists; and every reasonable doubt on the subject should be promptly
resolved in the negative.

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.

To say that a court will take judicial notice of a fact is merely another way of saying that the
usual form of evidence will be dispensed with if knowledge of the fact can be otherwise
acquired. This is because the court assumes that the matter is so notorious that it will not be
disputed. But judicial notice is not judicial knowledge. The mere personal knowledge of the
judge is not the judicial knowledge of the court, and he is not authorized to make his individual
knowledge of a fact, not generally or professionally known, the basis of his action. Judicial
cognizance is taken only of those matters which are commonly known.

Things of common knowledge, of which courts take judicial notice, may be 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. [11]

We reiterated the requisite of notoriety for the taking of judicial notice in the recent case
of Expertravel & Tours, Inc. v. Court of Appeals, [12] which cited State Prosecutors:

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 notice, may be 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 such of 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.

From the foregoing provisions of law and our holdings thereon, it is apparent that the matter
which the appellate court took judicial notice of does not meet the requisite of notoriety. To
begin with, only the CA took judicial notice of this supposed practice to pay goodwill money to
the lessor in the Baclaran area. Neither the MeTC nor the RTC, with the former even ruling in
favor of Rosalie, found that the practice was of common knowledge or notoriously known.

We note that the RTC specifically ruled that Rosalie, apart from her bare allegation, adduced
no evidence to prove her claim that the amount of P2,570,000.00 simply constituted the
payment of goodwill money. Subsequently, Rosalie attached an annex to her petition for
review before the CA, containing a joint declaration under oath by other stallholders in
Roferxane Bldg. that they had paid goodwill money to Rosalie as their lessor. On this score,
we emphasize that the reason why our rules on evidence provide for matters that need not be
proved under Rule 129, specifically on judicial notice, is to dispense with the taking of the
usual form of evidence on a certain matter so notoriously known, it will not be disputed by the
parties.

However, in this case, the requisite of notoriety is belied by the necessity of attaching
documentary evidence, i.e., the Joint Affidavit of the stallholders, to Rosalies appeal before
the CA. In short, the alleged practice still had to be proven by Rosalie; contravening the title
itself of Rule 129 of the Rules of Court What need not be proved.

Apparently, only that particular division of the CA had knowledge of the practice to pay
goodwill money in the Baclaran area. As was held in State Prosecutors, justices and judges

alike ought to be reminded that the power to take judicial notice must be exercised with
caution and every reasonable doubt on the subject should be ample reason for the claim of
judicial notice to be promptly resolved in the negative.

Ultimately, on the issue of whether Spouses Latip ought to be ejected from the leased
cubicles, what remains in evidence is the documentary evidence signed by both parties the
contract of lease and the receipts evidencing payment of P2,570,000.00.

On the conflicting interpretations by the lower courts of the receipts amounting

to P2,570,000.00, we hold that the practice of payment of goodwill money in the Baclaran
area is an inadequate subject of judicial notice. Neither was Rosalie able to provide sufficient
evidence that, apart from the belatedly submitted Joint Affidavit of the stallholders of
Roferxane Bldg., the said amount was simply for the payment of goodwill money, and not
payment for advance rentals by Spouses Latip.

In interpreting the evidence before us, we are guided by the Civil Code provisions on
interpretation of contracts, to wit:
We need not be unduly detained by the issue of which documents were executed first or if
there was a novation of the contract of lease. As had been found by the RTC, the lease
contract and the receipts for the amount of P2,570,000.00 can be reconciled or harmonized.
The RTC declared:

Definitely, the parties entered into a lease agreement over two (2) cubicles of the 1 st and
2nd floors of Roferxane (Roferland) Building, a commercial building located at 158 Quirino
Avenue, corner Redemptorist Road, Baclaran, Paraaque City and belonging to [Rosalie]. The
lease agreement is for a term of six (6) years commencing in December 1999 up to December
2005. This agreement was embodied in a Contract of Lease x x x. The terms of this lease
contract, however, are modified or supplemented by another agreement between the parties
executed and or entered into in or about the time of execution of the lease contract, which
exact date of execution of the latter is unclear. [13]

We agree with the RTCs holding only up to that point. There exists a lease agreement
between the parties as set forth in the contract of lease which is a complete document. It need
not be signed by Ferdinand Chua as he likewise did not sign the other two receipts
for P500,000.00 and P70,000.00, respectively, which contained only the signature of Rosalie.
Besides, it is undisputed that Rosalie owns and leases the stalls in Roferxane Bldg.; thus,
doing away with the need for her husbands consent. The findings of the three lower courts
concur on this fact.

The contract of lease has a period of six (6) years commencing in December 1999. This fact is
again buttressed by Spouses Latips admission that they occupied the property forthwith in
December 1999, bearing in mind the brisk sales during the holiday season.

Art. 1371. In order to judge the intention of the contracting parties, their contemporaneous and
subsequent acts shall be principally considered.

Art. 1372. However general the terms of a contract may be, they shall not be understood to
comprehend things that are distinct and cases that are different from those which the parties
intended to agree.

Art. 1373. If some stipulation of any contract should admit of several meanings, it shall be
understood as bearing that import which is most adequate to render it effectual.

The RTC was already on the right track when it declared that the receipts for P2,570,000.00
modified or supplemented the contract of lease. However, it made a quantum leap when it
ruled that the amount was payment for rentals of the two (2) cubicles for the entire six-year
period. We cannot subscribe to this finding. To obviate confusion and for clarity, the contents
of the receipts, already set forth above, are again reproduced:

1. I received the amount of P2,000,000.00 (two million pesos) from [O]mar Latip & Moshi[e]ra
Latip for the payment of 2 cubicles located at 158 Quirino Ave. corner Redemptorist Rd.[,]
Baclaran P[ara]que City. ROFERLAND Bldg. with the terms 6 yrs. Contract.

P2,000,000.00 ______(sgd.)______
CHECK # 3767924 Rosalie Chua

FAR EAST BANK

monies should be considered as advanced rentals on the leased cubicles. This conclusion is
bolstered by the fact that Rosalie demanded payment of the lease rentals only in 2000, a full
year after the commencement of the lease.

______(sgd.)______
Ferdinand Chua

2. Received cash
P500,000.00

Finally, we note that the lease ended in 2005. Consequently, Spouses Latip can be ejected
from the leased premises. They are liable to Rosalie for unpaid rentals on the lease of the two
(2) cubicles in accordance with the stipulations on rentals in the Contract of Lease. However,
the amount of P2,570,000.00, covering advance rentals, must be deducted from this liability of
Spouses Latip to Rosalie.

From Moshiera Latip

(sgd.)
12/10/99 Rosalie Chua

WHEREFORE, premises considered, the petition is hereby GRANTED. The decision of the
Court of Appeals in CA-G.R. SP No. 89300 is REVERSED. The petitioners, spouses Omar
and Moshiera Latip, are liable to respondent Rosalie Chua for unpaid rentals minus the
amount of P2,570,000.00 already received by her as advance rentals. No costs.

Received by

3. Received cash
P70,000.00 from
Moshiera Latip
12-11-99

___(sgd.) ____
Received by:[14]

There is nothing on the receipts and on record that the payment and receipt of P2,570,000.00
referred to full payment of rentals for the whole period of the lease. All three receipts state
Rosalies receipt of cash in varying amounts. The first receipt for P2,000,000.00 did state
payment for two (2) cubicles, but this cannot mean full payment of rentals for the entire lease
period when there are no words to that effect. Further, two receipts were subsequently
executed pointing to the obvious fact that the P2,000,000.00 is not for full payment of rentals.
Thus, since the contract of lease remained operative, we find that Rosalies receipt of the

SO ORDERED.

THIRD DIVISION

CORINTHIAN GARDENS

Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Civil
Procedure seeking the reversal of the Court of Appeals (CA) Decision [2] datedJanuary 31,
2003 in CA-G.R. CV No. 43217, which reversed and set aside the Decision [3] of the Regional
Trial Court (RTC) of Quezon City, dated March 30, 1993.
G.R. No. 160795

ASSOCIATION, INC.,
Petitioner,

The Antecedents:
Present:

YNARES-SANTIAGO, J.,
- versus -

Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,

SPOUSES REYNALDO and

NACHURA, and

MARIA LUISA TANJANGCO, and SPOUSES FRANK and

REYES, JJ.

TERESITA CUASO,
Respondents.

Promulgated:

June 27, 2008

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

DECISION

NACHURA, J.:

Respondents-spouses Reynaldo and Maria Luisa Tanjangco (the Tanjangcos) own Lots 68
and 69 covered by Transfer Certificates of Title (TCT) No. 242245 [4] and 282961[5]respectively,
located at Corinthian Gardens Subdivision, Quezon City, which is managed by petitioner
Corinthian Gardens Association, Inc. (Corinthian). On the other hand, respondents-spouses
Frank and Teresita Cuaso (the Cuasos) own Lot 65 which is adjacent to the Tanjangcos lots.

Before the Cuasos constructed their house on Lot 65, a relocation survey was necessary. As
Geodetic Engineer Democrito De Dios (Engr. De Dios), operating under the business name
D.M. De Dios Realty and Surveying, conducted all the previous surveys for the subdivision's
developer, Corinthian referred Engr. De Dios to the Cuasos. Before, during and after the
construction of the said house, Corinthian conducted periodic ocular inspections in order to
determine compliance with the approved plans pursuant to the Manual of Rules and
Regulations of Corinthian.[6] Unfortunately, after the Cuasos constructed their house
employing the services of C.B. Paraz & Construction Co., Inc. (C.B. Paraz) as builder, their
perimeter fence encroached on the Tanjangcos Lot 69 by 87 square meters.

No amicable settlement was reached between the parties. Thus, the Tanjangcos demanded
that the Cuasos demolish the perimeter fence but the latter failed and refused, prompting the
Tanjangcos to file with the RTC a suit against the Cuasos for Recovery of Possession with
Damages.[7]

Eventually, the Cuasos filed a Third-Party Complaint[8] against Corinthian, C.B. Paraz and
Engr. De Dios. The Cuasos ascribed negligence to C.B. Paraz for its failure to ascertain the
proper specifications of their house, and to Engr. De Dios for his failure to undertake an
accurate relocation survey, thereby, exposing them to litigation. The Cuasos also faulted
Corinthian for approving their relocation survey and building plans without verifying their
accuracy and in making representations as to Engr. De Dios' integrity and competence. The
Cuasos alleged that had Corinthian exercised diligence in performing its duty, they would not
have been involved in a boundary dispute with the Tanjangcos. Thus, the Cuasos opined that
Corinthian should also be held answerable for any damages that they might incur as a result
of such construction.

On March 30, 1993, the RTC rendered a Decision in favor of the Tanjangcos. It ruled that the
Cuasos perimeter wall encroached on the land of the Tanjangos by 87 square meters. It,
however, ruled that the Cuasos were builders in good faith, and gave the Tanjangcos the
option to sell and the Cuasos the option to buy the encroaching portion of the land, at a price
to be agreed upon by the parties within sixty (60) days from receipt of the said Decision. In the
event that the Cuasos were unable and unwilling to purchase the said portion, the perimeter
wall should be demolished at the latters expense. The RTC also ordered the Cuasos to pay
monthly rentals of P2,000.00 commencing from the time of the filing of the complaint. The
RTC likewise held that C.B. Paraz was grossly negligent in not taking into account the correct
boundaries of Cuasos lot when it constructed the house. It, thus, ordered C.B. Paraz to pay
moral and exemplary damages as well as attorneys fees to the Tanjangcos and the
Cuasos. The third-party complaint against Corinthian and Engr. De Dios, on the other hand,
was dismissed for lack of cause of action.

The Tanjangcos filed a Motion for Reconsideration [9] of the said RTC Decision which the RTC,
however, denied in its Order[10] dated June 28, 1993.

Dissatisfied with the RTC ruling, the Tanjangcos, the Cuasos, and C.B. Paraz all appealed to
the CA.

On appeal, the CA reversed and set aside the RTC Decision. It held that the Cuasos acted in
bad faith in land-grabbing the 87 square meter-portion of Lot 69 as of April 5, 1989.
Correlatively, the CA allowed the Tanjangcos to exercise the rights granted under Articles 449,
450, 451 and 549 of the New Civil Code, which include the right to demand the demolition of
the offending perimeter wall after reimbursing the Cuasos the necessary expenses for the
preservation of the encroached area. The Cuasos were ordered to pay monthly rentals
of P10,000.00 for the use, enjoyment and occupancy of the lot from 1989 up to the time they

vacate the property considering the location and category of the same. They were, likewise,
ordered to pay the Tanjangcos P100,000.00, as moral damages, P50,000.00 as exemplary
damages, and P150,000.00 as attorneys fees. The CA also imposed six percent (6%) interest
per annum on all the awards. The Cuasos appeal against the Tanjangcos, on the other hand,
was dismissed for lack of merit. On the third-party complaints, Corinthian, C.B. Paraz and
Engr. De Dios were all found negligent in performing their respective duties and so they were
ordered to contribute five percent (5%) each, or a total of fifteen percent (15%) to all judgment
sums and amounts that the Cuasos shall eventually pay under the decision, also with interest
of six percent (6%) per annum.

Only Corinthian filed a Motion for Reconsideration [11] of the CA Decision within the 15-day
reglementary period. No motion for reconsideration was filed by the Cuasos, C.B. Paraz
and/or Engr. De Dios.

About six (6) months later, or on August 12, 2003, the Cuasos filed a
Comment/Manifestation[12] praying that they be allowed to adopt Corinthians Motion for
Reconsideration.

In its Resolution[13] dated November 14, 2003, the CA denied Corinthians Motion for
Reconsideration.

Hence, Corinthian filed the instant Petition for Review on Certiorari assailing the CA Decision
and Resolution, and impleading the Cuasos as one of the respondents being the third-party
plaintiffs in the RTC.

This Court gave due course to Corinthians petition and required the parties to submit their
respective memorandum.[14] In compliance, the Cuasos submitted their Memorandum[15] and
Supplement to Memorandum,[16] which were both noted by this Court in its Resolutions dated
January 10, 2005[17] and February 2, 2005, [18]respectively.

In the meantime, the Tanjangcos moved for partial entry of judgment of the CA Decision which
was granted by the CA in its Resolution[19] dated May 26, 2006, directing the issuance of an
Entry of Judgment and a Certification that its Decision dated January 31 2003 has become
final and executory with respect to the Cuasos, C.B. Paraz and Engr. De Dios for their failure
to file an appeal assailing the said Decision before this Court.

The Tanjangcos then moved for the execution of the judgment against the Cuasos, specifically
the demolition of the perimeter fence,[20] which was also granted by the RTC in its
Order[21] dated December 18, 2006.

execution, which would demolish the Cuasos perimeter fence, is manifestly prejudicial to their
interest. However, they possess no clear and unmistakable legal right that merits protection
through the writ of preliminary injunction.[27] Their right to maintain the said fence had been
declared inferior to the Tanjangcos right to the demolition of the fence, after the CA judgment
had become final and executory as to the Cuasos.

Other than the filing of an Opposition[22] and a Motion for Reconsideration[23] before the RTC,
the Cuasos prayed for the issuance of a temporary restraining order (TRO) and/or preliminary
injunction before this Court to enjoin the demolition of the perimeter fence. They averred that
the premature demolition of the alleged encroaching perimeter wall and other improvements
will cause grave and irreparable damage to them, because what is sought to be demolished is
part of their residence. They claimed that no amount of money will compensate for the
damage they stand to suffer should any demolition subsequently prove to be wrongful. They
argued that before any execution can be carried out, it is necessary to first determine whether
or not Corinthian was negligent in approving the building plan and whether or not it acted in
good faith in doing so. Such determination, according to the Cuasos, will in turn determine
whether or not they were in good faith in constructing the house. [24]

It bears stressing that the Cuasos failed to appeal the ruling of the CA. This failure to contest
the CA decision before this Court was fatal to their cause. It had the effect of an admission
that they indeed acted in bad faith, as they accepted the CA ruling. The decision of the CA,
therefore, became binding and final as to them. [28] As a matter of fact, the CA already issued a
partial entry of judgment against the Cuasos.

The Tanjangcos opposed the Cuasos' application for TRO. They countered that the only
pending matter with this Court is the appeal by Corinthian; hence, the implementation of the
January 31, 2003 Decision of the CA against the Cuasos will not preempt the outcome of the
said pending incidents. Also, any action taken by this Court on Corinthians petition would not
benefit the Cuasos for they did not appeal the adverse decision against them. Accordingly,
they cannot obtain affirmative relief from this Court by reason or on account of the appeal
taken by Corinthian. The appeal, they added, is personal to Corinthian. Finally, they argued
that the Cuasos are now estopped from questioning the enforcement of the CA Decision since
they issued a managers check to pay the money judgment. [25]

In this Court's Resolution dated July 18, 2007, we denied the Cuasos' application for TRO
and/or writ of preliminary injunction for lack of merit.
The denial was based on sound legal principles. It is axiomatic that to be entitled to the
injunctive writ, one must show that there exists a right to be protected which is directly
threatened by the act sought to be enjoined. Furthermore, there must be a showing that the
invasion of the right is material and substantial, that the right of complainant is clear and
unmistakable, and that there is an urgent and paramount necessity for the writ to issue in
order to prevent serious damage.[26]

In the Cuasos case, their right to injunctive relief had not been clearly and unmistakably
demonstrated. They failed to show proof that there is material and substantial invasion of their
right to warrant the issuance of an injunctive writ. Indeed, the enforcement of the writ of

An injunction to stay a final and executory decision is unavailing except only after a showing
that facts and circumstances exist which would render execution unjust or inequitable, or that
a change in the situation of the parties occurred. Here, no such exception exists as shown by
the facts earlier narrated.[29]

While it is true that this Court noted the Memorandum and Supplemental Memorandum filed
by the Cuasos, such notation was made only insofar as Corinthian made them respondents in
this petition. This Court cannot grant to the Cuasos any affirmative relief as they did not file a
petition questioning the CA ruling. Consequently, the Decision of the CA holding that the
Cuasos acted in bad faith and that the perimeter fence may now be demolished cannot be put
in issue by the Cuasos. It is a fundamental principle that a party who does not appeal, or file a
petition for certiorari, is not entitled to any affirmative relief.[30] An appellee who is not an
appellant may assign errors in his brief where his purpose is to maintain the judgment, but he
cannot seek modification or reversal of the judgment or claim affirmative relief unless he has
also appealed.[31] This applies to C.B. Paraz and Engr. De Dios who likewise failed to assail
the aforementioned CA Decision.

With this matter put to rest, we now go to the main issues raised by Corinthian, the sole
petitioner in this case, to wit:

a) Whether or not there is legal basis for the Court of Appeals to hold petitioner Corinthian
Gardens Association, Inc. liable to pay 5% of the judgment money to Sps. Tanjangco on
account of the encroachment made by Sps. Cuaso[; and]

b)
Whether or not the Court of Appeals has legal basis to increase unilaterally and without
proof the amount prayed for in the Complaint, i.e., P2,000.00, as reasonable compensation for
the use and enjoyment of the portion of the lot encroached upon, to P10,000.00.[32]

Corinthian claims that the approval of the building plan of the Cuasos was not tainted with
negligence as it did not approve the survey relocation plan but merely the architectural,
structural and sanitary plans for Cuasos' house; that the purpose of the said approval is not to
ensure that the house to be erected on a particular lot is constructed within its boundaries but
only to ensure compliance with the Manual of Rules and Regulations; that while Corinthian
conducts actual site inspections, the inspection and approval of the building plans are limited
to table inspection only; that the survey relocation plan was never submitted for Corinthian's
approval; that the acceptance of the builder's bond did not make Corinthian automatically
liable for the encroachment and for damages; and that Corinthian approved the building plan
with the good faith and due diligence required under the circumstances. It, thus, concludes
that it cannot be held liable to pay five

percent (5%) of the money judgment to the Tanjangcos on account of the encroachment made
by the Cuasos. Likewise, it finds no legal basis for the CA to unilaterally increase the amount
of the adjudged rent from P2,000.00 to P10,000.00 which was not prayed for by the
Tanjangcos in their complaint and in the absence of evidence adduced by the parties. [33]
On the other hand, the Tanjangcos stand by the ruling of the CA and opine that Corinthian was
negligent in approving the building plan of the Cuasos. They submit that Corinthian's claim
that it merely conducts table inspections of buildings further bolsters their argument that
Corinthian was negligent in conveniently and unilaterally restricting and limiting the coverage
of its approval, contrary to its own Manual of Rules and Regulations; that the acceptance of a
builder's bond does not automatically make Corinthian liable but the same affirms the fact that
a homeowner can hold it liable for the consequences of the approval of a building plan; and
that Corinthian, by regularly demanding and accepting membership dues, must be wary of its
responsibility to protect the rights and interests of its members. Lastly, the Tanjangcos contend
that a court can take judicial notice of the general increase in the rentals of real estate, as in
this case, where the CA considered the value of their lot in the posh-and-swank Corinthian
Gardens Subdivision and the fact that they were deprived of it for almost two decades. The
Tanjangcos pray that this Court sustain the ruling of the CA. [34]

The instant case is obviously one for tort, as governed by Article 2176 of the Civil Code, which
provides:

ART. 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called a quasi-delict and is governed by
the provisions of this Chapter.
In every tort case filed under this provision, plaintiff has to prove by a preponderance of
evidence: (1) the damages suffered by the plaintiff; (2) the fault or negligence of the defendant
or some other person for whose act he must respond; and (3) the connection of cause and
effect between the fault or negligence and the damages incurred. [35]

Undeniably, the perimeter fence of the Cuasos encroached on Lot 69 owned by the
Tanjangcos by 87 square meters as duly found by both the RTC and the CA in accordance
with the evidence on record. As a result, the Tanjangcos suffered damage in having been
deprived of the use of that portion of their lot encroached upon. Thus, the primordial issue to
be resolved in this case is whether Corinthian was negligent under the circumstances and, if
so, whether such negligence contributed to the injury suffered by the Tanjangcos.
A negligent act is an inadvertent act; it may be merely carelessly done from a lack of ordinary
prudence and may be one which creates a situation involving an unreasonable risk to another

because of the expectable action of the other, a third person, an animal, or a force of nature. A
negligent act is one from which an ordinary prudent person in the actor's position, in the same
or similar circumstances, would foresee such an appreciable risk of harm to others as to
cause him not to do the act or to do it in a more careful manner. [36]

The test to determine the existence of negligence in a particular case may be stated as
follows: Did the defendant in committing the alleged negligent act use that reasonable care
and caution which an ordinary person would have used in the same situation? If not, then he
is guilty of negligence. The law, in effect, adopts the standard supplied by the imaginary
conduct of the discreet paterfamilias in Roman law. The existence of negligence in a given
case is not determined by reference to the personal judgment of the actor in the situation
before him. The law considers what would be reckless, blameworthy, or negligent in a man of
ordinary intelligence and prudence, and determines liability according to that standard. [37]

By this test, we find Corinthian negligent.

While the issue of Corinthian's alleged negligence is factual in character, [38] a review by this
Court is proper because the CA's factual findings differ from those of the RTC's. [39] Thus, after
a meticulous review of the evidence on record, we hold that the CA committed no reversible
error when it deviated from the findings of fact of the RTC. The CA's findings and conclusions
are substantiated by the evidence on record and are more in accord with law and reason.
Indeed, it is clear that Corinthian failed to exercise the requisite diligence in insuring that the
Cuasos abide by its Manual of Rules and Regulations, thereby resulting in the encroachment
on the Tanjangcos property.
We agree with the CA when it aptly held:

Corinthian cannot and should not be allowed to justify or excuse its negligence by claiming
that its approval of the Cuasos building plans was only limited to a so-called table inspection;
and not actual site measurement. To accept some such postulate is to put a premium on
negligence. Corinthian was not organized solely for the defendants Cuasos. It is also the
subdivision of the plaintiffs-spouses Tanjangcos - and of all others who have their dwelling
units or abodes therein. Pertinently, its Manual of Rules and Regulations stipulates in Section
3 thereof (under the heading Construction), thus:

A. Rules and Regulations

No new construction can be started unless the building plans are approved by the
Association and the appropriate Builders cash bond and pre-construction fees are paid. The
Association will not allow the entry of construction materials and process identification cards
for workers if the above conditions are not complied with. Likewise, all renovations, repairs,
additions and improvements to a finished house except electrical wiring, will have to be
approved by the Association. Water service connection of a homeowner who undertakes
construction work without prior approval of the Association will be cut-off in addition to the
sanctions previously mentioned.

It goes without saying that this Manual of Rules and Regulations applies to all - or it does not
apply at all. To borrow a popular expression, what is sauce for the gander is sauce for the
goose - or ought to be. To put it matter-of-factly and bluntly, thus, its so-called table inspection
approval of the Cuasos building plans is no less of an approval, as approvals come and
go. And since it is an approval tainted with negligence, the necessary and inevitable
consequences which law and justice attach to such negligence must, as a matter of law and
justice, also necessarily attach to Corinthian.

on-going construction projects within the subdivision, is responsible in insuring compliance

with the approved plans, inclusive of the construction of perimeter walls, which in this case is
the subject of dispute between the Tanjangcos and the Cuasos. [41] It is not just or equitable to
relieve Corinthian of any liability when, by its very own rules, it imposes its authority over all its
members to the end that no new construction can be started unless the plans are approved by
the Association and the appropriate cash bond and pre-construction fees are paid. Moreover,
Corinthian can impose sanctions for violating these rules. Thus, the proposition that the
inspection is merely a table inspection and, therefore, should exempt Corinthian from liability,
is unacceptable. After all, if the supposed inspection is merely a table inspection and the
approval granted to every member is a mere formality, then the purpose of the rules would be
defeated. Compliance therewith would not be mandatory, and sanctions imposed for violations
could be disregarded. Corinthian's imprimatur on the construction of the Cuasos' perimeter
wall over the property of the Tanjangcos assured the Cuasos that everything was in order.

In sum, Corinthians failure to prevent the encroachment of the Cuasos perimeter wall into
Tanjangcos property despite the inspection conducted constitutes negligence and, at the very
least, contributed to the injury suffered by the Tanjangcos.

On the second issue, our ruling in Spouses Badillo v. Tayag[42] is instructive:

And then again third party defendant-appellee Corinthian Garden required the posting of a
builders cash bond (Exh. 5-Corinthian) from the defendants-appellants Cuasos and the thirdparty defendant C.B. Paraz Construction to secure the performance of their
undertaking. Surely, Corinthian does not imply that while it may take the benefits from the
Builders cash bond, it may, Pilate-like, wash its hands of any responsibility or liability that
would or might arise from the construction or building of the structure for which the cash bond
was in the first place posted. That is not only unjust and immoral, but downright unchristian
and iniquitous.

Under the same parity of reasoning, the payment by the appellants-Cuasos to the appellee
Corinthian of pre-construction and membership fees in the Association must necessarily entail
the creation of certain obligations on the part of Corinthian. For duties and responsibilities
always go hand in hand with rights and privileges. That is the law of life - and that is the law of
every civilized society. It is an axiom of equity that he who receives the benefits must share
the burdens.[40]

By its Manual of Rules and Regulations, it is reasonable to assume that Corinthian, through its
representative, in the approval of building plans, and in the conduct of periodic inspections of

Citing Sia v. Court of Appeals [272 SCRA 141, May 5, 1997], petitioners argue that the MTC
may take judicial notice of the reasonable rental or the general price increase of land in order
to determine the amount of rent that may be awarded to them. In that case, however, this
Court relied on the CA's factual findings, which were based on the evidence
presented before the trial court. In determining reasonable rent,

the RTC therein took account of the following factors: 1) the realty assessment of the land, 2)
the increase in realty taxes, and 3) the prevailing rate of rentals in the vicinity. Clearly, the trial
court relied, not on mere judicial notice, but on the evidence presented before it.

Indeed, courts may fix the reasonable amount of rent for the use and occupation of a disputed
property. However, petitioners herein erred in assuming that courts, in determining the amount
of rent, could simply rely on their own appreciation of land values without considering any
evidence. As we have said earlier, a court may fix the reasonable amount of rent, but it must
still base its action on the evidence adduced by the parties.

In Herrera v. Bollos [G.R. No. 138258, January 18, 2002], the trial court awarded rent to the
defendants in a forcible entry case. Reversing the RTC, this Court declared that the
reasonable amount of rent could be determined not by mere judicial notice, but by supporting
evidence:

x x x A court cannot take judicial notice of a factual matter in controversy. The court may take
judicial notice of matters of public knowledge, or which are capable of unquestionable
demonstration, or ought to be known to judges because of their judicial functions. Before
taking such judicial notice, the court must allow the parties to be heard thereon. Hence, there
can be no judicial notice on the rental value of the premises in question without supporting
evidence.

Truly, mere judicial notice is inadequate, because evidence is required for a court to determine
the proper rental value. But contrary to Corinthian's arguments, both the RTC and the CA
found that indeed rent was due the Tanjangcos because they were deprived of possession
and use of their property. This uniform factual finding of the RTC and the CA was based on the
evidence presented below. Moreover, in Spouses Catungal v. Hao,[43] we considered the
increase in the award of rentals as reasonable given the particular circumstances of each
case. We noted therein that the respondent denied the petitioners the benefits, including
rightful possession, of their property for almost a decade.

Similarly, in the instant case, the Tanjangcos were deprived of possession and use of their
property for more than two decades through no fault of their own. Thus, we find no cogent
reason to disturb the monthly rental fixed by the CA.

All told, the CA committed no reversible error.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals

is AFFIRMED. Costs against petitioner.

SO ORDERED.

FIRST DIVISION

TOSHIBA INFORMATION EQUIPMENT (PHILS.),

INC.,
Petitioner,

G.R. No. 157594

Present:

PUNO, C.J.,
Chairperson,
CARPIO MORALES,
- versus -

LEONARDO-DE CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.

COMMISSIONER OF INTERNAL REVENUE,

Promulgated:

Respondent.
March 9, 2010
x----------------------------------------------------x

DECISION

LEONARDO-DE CASTRO, J.:

In this Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court, petitioner
Toshiba Information Equipment (Philippines), Inc. (Toshiba) seeks the reversal and setting

aside of (1) the Decision[2] dated August 29, 2002 of the Court of Appeals in CA-G.R. SP No.
63047, which found that Toshiba was not entitled to the credit/refund of its unutilized input
Value-Added Tax (VAT) payments attributable to its export sales, because it was a tax-exempt
entity and its export sales were VAT-exempt transactions; and (2) the Resolution [3] dated
February 19, 2003 of the appellate court in the same case, which denied the Motion for
Reconsideration of Toshiba. The herein assailed judgment of the Court of Appeals reversed
and set aside the Decision[4] dated October 16, 2000 of the Court of Tax Appeals (CTA) in CTA
Case No. 5762 granting the claim for credit/refund of Toshiba in the amount of P1,385,282.08.

Toshiba is a domestic corporation principally engaged in the business of manufacturing

and exporting of electric machinery, equipment systems, accessories, parts, components,
materials and goods of all kinds, including those relating to office automation and information
technology and all types of computer hardware and software, such as but not limited to HDDCD-ROM and personal computer printed circuit board.[5] It is registered with the Philippine
Economic Zone Authority (PEZA) as an Economic Zone (ECOZONE) export enterprise in the
Laguna Technopark, Inc., as evidenced by Certificate of Registration No. 95-99 dated
September 27, 1995.[6] It is also registered with Regional District Office No. 57 of the Bureau
of Internal Revenue (BIR) in San Pedro, Laguna, as a VAT-taxpayer with Taxpayer
Identification No. (TIN) 004-739-137.[7]

In its VAT returns for the first and second quarters of 1997, [8] filed on April 14, 1997 and July
21, 1997, respectively, Toshiba declared input VAT payments on its domestic purchases of
taxable goods and services in the aggregate sum of P3,875,139.65,[9] with no zero-rated
sales. Toshiba subsequently submitted to the BIR on July 23, 1997 its amended VAT returns
for the first and second quarters of 1997,[10] reporting the same amount of input VAT payments
but, this time, with zero-rated sales totalingP7,494,677,000.00. [11]

On March 30, 1999, Toshiba filed with the One-Stop Shop Inter-Agency Tax Credit and Duty
Drawback Center of the Department of Finance (DOF One-Stop Shop) two separate
applications for tax credit/refund[12] of its unutilized input VAT payments for the first half of 1997
in the total amount of P3,685,446.73.[13]

The next day, on March 31, 1999, Toshiba likewise filed with the CTA a Petition for
Review[14] to toll the running of the two-year prescriptive period under Section 230 of the Tax
Code of 1977,[15] as amended.[16] In said Petition, docketed as CTA Case No. 5762, Toshiba
prayed that

[A]fter due hearing, judgment be rendered ordering [herein respondent Commissioner of

Internal Revenue (CIR)] to refund or issue to [Toshiba] a tax refund/tax credit certificate in the
amount of P3,875,139.65 representing unutilized input taxes paid on its purchase of taxable
goods and services for the period January 1 to June 30, 1997. [17]

1.
[Toshiba] is a duly registered value-added tax entity in accordance with Section 107 of
the Tax Code, as amended.

2.
[Toshiba] is subject to zero percent (0%) value-added tax on its export sales in
accordance with then Section 100(a)(2)(A) of the Tax Code, as amended.
The Commissioner of Internal Revenue (CIR) opposed the claim for tax refund/credit
of Toshiba, setting up the following special and affirmative defenses in his Answer [18]
3.
[Toshiba] filed its quarterly VAT returns for the first two quarters of 1997 within the
legally prescribed period.
5.
[Toshibas] alleged claim for refund/tax credit is subject to administrative routinary
investigation/examination by [CIRs] Bureau;
xxxx
6.
[Toshiba] failed miserably to show that the total amount of P3,875,139.65 claimed as
VAT input taxes, were erroneously or illegally collected, or that the same are properly
documented;

7.
Taxes paid and collected are presumed to have been made in accordance with law;
hence, not refundable;

8.
In an action for tax refund, the burden is on the taxpayer to establish its right to refund,
and failure to sustain the burden is fatal to the claim for refund;

9.
It is incumbent upon [Toshiba] to show that it has complied with the provisions of
Section 204 in relation to Section 229 of the Tax Code;

10.
Well-established is the rule that claims for refund/tax credit are construed in strictissimi
juris against the taxpayer as it partakes the nature of exemption from tax. [19]

Upon being advised by the CTA,[20] Toshiba and the CIR filed a Joint Stipulation of Facts and
Issues,[21] wherein the opposing parties agreed and admitted that

7.

[Toshiba] is subject to zero percent (0%) value-added tax on its export sales.

8.
[Toshiba] has duly filed the instant Petition for Review within the two-year prescriptive
period prescribed by then Section 230 of the Tax Code. [22]

In the same pleading, Toshiba and the CIR jointly submitted the following issues for
determination by the CTA

Whether or not [Toshiba] has incurred input taxes in the amount of P3,875,139.65 for the
period January 1 to June 30, 1997 which are directly attributable to its export sales[.]

Whether or not the input taxes incurred by [Toshiba] for the period January 1 to June 30, 1997
have not been carried over to the succeeding quarters[.]

Whether or not input taxes incurred by [Toshiba] for the first two quarters of 1997 have not
been offset against any output tax[.]

Whether or not input taxes incurred by [Toshiba] for the first two quarters of 1997 are properly
substantiated by official receipts and invoices.[23]

verification (Annex A)
P189,499.13
Amount
Refundable

During the trial before the CTA, Toshiba presented documentary evidence in support of its
claim for tax credit/refund, while the CIR did not present any evidence at all.

With both parties waiving the right to submit their respective memoranda, the CTA rendered its
Decision in CTA Case No. 5762 on October 16, 2000 favoring Toshiba. According to the CTA,
the CIR himself admitted that the export sales of Toshiba were subject to zero percent (0%)
VAT based on Section 100(a)(2)(A)(i) of the Tax Code of 1977, as amended. Toshiba could
then claim tax credit or refund of input VAT paid on its purchases of goods, properties, or
services, directly attributable to such zero-rated sales, in accordance with Section 4.102-2 of
Revenue Regulations No. 7-95. The CTA, though, reduced the amount to be credited or
refunded to Toshiba to P1,385,292.02.

The dispositive portion of the October 16, 2000 Decision of the CTA fully reads

WHEREFORE, [Toshibas] claim for refund of unutilized input VAT payments is

hereby GRANTED but in a reduced amount of P1,385,282.08 computed as follows:

1st Quarter

2nd Quarter

P2,300,164.65
P1,158,016.82 P227,265.26

P1,385,282.08

Respondent Commissioner of Internal Revenue is ORDERED to REFUND to

[Toshiba] or in the alternative, ISSUE a TAX CREDIT CERTIFICATE in the amount
of P1,385,282.08 representing unutilized input taxes paid by [Toshiba] on its purchases of
taxable goods and services for the period January 1 to June 30, 1997. [24]

Both Toshiba and the CIR sought reconsideration of the foregoing CTA Decision.

Toshiba asserted in its Motion for Reconsideration [25] that it had presented proper
substantiation for the P1,887,545.65 input VAT disallowed by the CTA.

The CIR, on the other hand, argued in his Motion for Reconsideration [26] that Toshiba was not
entitled to the credit/refund of its input VAT payments because as a PEZA-registered
ECOZONE export enterprise, Toshiba was not subject to VAT. The CIR invoked the following
statutory and regulatory provisions

Section 24 of Republic Act No. 7916[27]

P3,268,682.34 P416,764.39 P3,685,446.73

Less: 1) Input taxes not properly

supported by VAT invoices
and official receipts
a. Per SGVs verification
(Exh. I)

P1,887,545.65

Total

Amount of claimed input taxes filed

with the DOF One Stop Shop Center

P1,852,437.65 P 35,108.00

SECTION 24. Exemption from Taxes Under the National Internal Revenue Code.
Any provision of existing laws, rules and regulations to the contrary notwithstanding, no taxes,
local and national, shall be imposed on business establishments operating within the
ECOZONE. In lieu of paying taxes, five percent (5%) of the gross income earned by all
businesses and enterprises within the ECOZONE shall be remitted to the national
government. x x x.

P 242,491.45 P154,391.13 P 396,882.58

b. Per this courts further

Section 103(q) of the Tax Code of 1977, as amended

Sec. 103. Exempt transactions. The following shall be exempt from the value-added

On January 17, 2001, the CTA issued a Resolution [28] denying both Motions for
Reconsideration of Toshiba and the CIR.

tax:

xxxx

(q) Transactions which are exempt under special laws, except those granted under
Presidential Decree Nos. 66, 529, 972, 1491, and 1950, and non-electric cooperatives under
Republic Act No. 6938, or international agreements to which the Philippines is a signatory.

Section 4.103-1 of Revenue Regulations No. 7-95

SEC. 4.103-1. Exemptions. (A) In general. An exemption means that the sale of
goods or properties and/or services and the use or lease of properties is not subject to VAT
(output tax) and the seller is not allowed any tax credit on VAT (input tax) previously paid.

The person making the exempt sale of goods, properties or services shall not bill any output
tax to his customers because the said transaction is not subject to VAT. On the other hand, a
VAT-registered purchaser of VAT-exempt goods, properties or services which are exempt from
VAT is not entitled to any input tax on such purchase despite the issuance of a VAT invoice or
receipt.

The CIR contended that under Section 24 of Republic Act No. 7916, a special law, all
businesses and establishments within the ECOZONE were to remit to the government five
percent (5%) of their gross income earned within the zone, in lieu of all taxes, including
VAT. This placed Toshiba within the ambit of Section 103(q) of the Tax Code of 1977, as
amended, which exempted from VAT the transactions that were exempted under special
laws. Following Section 4.103-1(A) of Revenue Regulations No. 7-95, the VAT-exemption of
Toshiba meant that its sale of goods was not subject to output VAT and Toshiba as seller was
not allowed any tax credit on the input VAT it had previously paid.

The CTA took note that the pieces of evidence referred to by Toshiba in its Motion for
Reconsideration were insufficient substantiation, being mere schedules of input VAT payments
it had purportedly paid for the first and second quarters of 1997. While the CTA gives
credence to the report of its commissioned certified public accountant (CPA), it does not
render its decision based on the findings of the said CPA alone. The CTA has its own CPA
and the tax court itself conducts an investigation/examination of the documents
presented. The CTA stood by its earlier disallowance of the amount of P1,887,545.65 as tax
credit/refund because it was not supported by VAT invoices and/or official receipts.

The CTA refused to consider the argument that Toshiba was not entitled to a tax credit/refund
under Section 24 of Republic Act No. 7916 because it was only raised by the CIR for the first
time in his Motion for Reconsideration. Also, contrary to the assertions of the CIR, the CTA
held that Section 23, and not Section 24, of Republic Act No. 7916, applied to
Toshiba. According to Section 23 of Republic Act No. 7916

SECTION 23. Fiscal Incentives. Business establishments operating within the ECOZONES
shall be entitled to the fiscal incentives as provided for under Presidential Decree No. 66, the
law creating the Export Processing Zone Authority, or those provided under Book VI of
Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987.

Furthermore, tax credits for exporters using local materials as inputs shall enjoy the benefits
provided for in the Export Development Act of 1994.

Among the fiscal incentives granted to PEZA-registered enterprises by the Omnibus

Investments Code of 1987 was the income tax holiday, to wit

Art. 39. Incentives to Registered Enterprises. All registered enterprises shall be granted the
following incentives to the extent engaged in a preferred area of investment:

(a) Income Tax Holiday.

(1) For six (6) years from commercial operation for pioneer firms and four (4) years for nonpioneer firms, new registered firms shall be fully exempt from income taxes levied by the
national government. Subject to such guidelines as may be prescribed by the Board, the
income tax exemption will be extended for another year in each of the following cases:
(i) The project meets the prescribed ratio of capital equipment to number of workers set by the
Board;
(ii) Utilization of indigenous raw materials at rates set by the Board;
(iii) The net foreign exchange savings or earnings amount to at least US$500,000.00 annually
during the first three (3) years of operation.
The preceding paragraph notwithstanding, no registered pioneer firm may avail of this
incentive for a period exceeding eight (8) years.
(2) For a period of three (3) years from commercial operation, registered expanding firms shall
be entitled to an exemption from income taxes levied by the National Government
proportionate to their expansion under such terms and conditions as the Board may
determine: Provided, however, That during the period within which this incentive is availed of
by the expanding firm it shall not be entitled to additional deduction for incremental labor
expense.
(3) The provision of Article 7(14) notwithstanding, registered firms shall not be entitled to any
extension of this incentive.

The CTA pointed out that Toshiba availed itself of the income tax holiday under the Omnibus
Investments Code of 1987, so Toshiba was exempt only from income tax but not from other
taxes such as VAT. As a result, Toshiba was liable for output VAT on its export sales, but at
zero percent (0%) rate, and entitled to the credit/refund of the input VAT paid on its purchases
of goods and services relative to such zero-rated export sales.

Unsatisfied, the CIR filed a Petition for Review[29] with the Court of Appeals, docketed as CAG.R. SP No. 63047.

In its Decision dated August 29, 2002, the Court of Appeals granted the appeal of the CIR,
and reversed and set aside the Decision dated October 16, 2000 and the Resolution dated
January 17, 2001 of the CTA. The appellate court ruled that Toshiba was not entitled to the

refund of its alleged unused input VAT payments because it was a tax-exempt entity under
Section 24 of Republic Act No. 7916. As a PEZA-registered corporation, Toshiba was liable
for remitting to the national government the five percent (5%) preferential rate on its gross
income earned within the ECOZONE, in lieu of all other national and local taxes, including
VAT.

The Court of Appeals further adjudged that the export sales of Toshiba were VAT-exempt, not
zero-rated, transactions. The appellate court found that the Answer filed by the CIR in CTA
Case No. 5762 did not contain any admission that the export sales of Toshiba were zero-rated
transactions under Section 100(a)(2)(A) of the Tax Code of 1977, as amended. At the least,
what was admitted by the CIR in said Answer was that the Tax Code provisions cited in the
Petition for Review of Toshiba in CTA Case No. 5762 were correct. As to the Joint Stipulation
of Facts and Issues filed by the parties in CTA Case No. 5762, which stated that Toshiba was
subject to zero percent (0%) VAT on its export sales, the appellate court declared that the CIR
signed the said pleading through palpable mistake. This palpable mistake in the stipulation of
facts should not be taken against the CIR, for to do otherwise would result in suppressing the
truth through falsehood. In addition, the State could not be put in estoppel by the mistakes or
errors of its officials or agents.

Given that Toshiba was a tax-exempt entity under Republic Act No. 7916, a special law, the
Court of Appeals concluded that the export sales of Toshiba were VAT-exempt transactions
under Section 109(q) of the Tax Code of 1997, formerly Section 103(q) of the Tax Code of
1977. Therefore, Toshiba could not claim refund of its input VAT payments on its domestic
purchases of goods and services.

The Court of Appeals decreed at the end of its August 29, 2002 Decision

WHEREFORE, premises considered, the appealed decision of the Court of Tax Appeals in
CTA Case No. 5762, is hereby REVERSED and SET ASIDE, and a new one is hereby
rendered finding [Toshiba], being a tax exempt entity under R.A. No. 7916, not entitled to
refund the VAT payments made in its domestic purchases of goods and services. [30]

Toshiba filed a Motion for Reconsideration[31] of the aforementioned Decision, anchored on the
following arguments: (a) the CIR never raised as an issue before the CTA that Toshiba was
tax-exempt under Section 24 of Republic Act No. 7916; (b) Section 24 of Republic Act No.

7916, subjecting the gross income earned by a PEZA-registered enterprise within the
ECOZONE to a preferential rate of five percent (5%), in lieu of all taxes, did not apply to
Toshiba, which availed itself of the income tax holiday under Section 23 of the same statute;
(c) the conclusion of the CTA that the export sales of Toshiba were zero-rated was supported
by substantial evidence, other than the admission of the CIR in the Joint Stipulation of Facts
and Issues; and (d) the judgment of the CTA granting the refund of the input VAT payments
was supported by substantial evidence and should not have been set aside by the Court of
Appeals.

5.4
THE HONORABLE COURT OF APPEALS ERRED WHEN IT REVERSED THE
DECISION OF THE COURT OF TAX APPEALS GRANTING [TOSHIBAS] CLAIM FOR
REFUND[;][32]

and the following prayer

In a Resolution dated February 19, 2003, the Court of Appeals denied the Motion for
Reconsideration of Toshiba since the arguments presented therein were mere reiterations of
those already passed upon and found to be without merit by the appellate court in its earlier
Decision. The Court of Appeals, however, mentioned that it was incorrect for Toshiba to say
that the issue of the applicability of Section 24 of Republic Act No. 7916 was only raised for
the first time on appeal before the appellate court. The said issue was adequately raised by
the CIR in his Motion for Reconsideration before the CTA, and was even ruled upon by the tax
court.

Hence, Toshiba filed the instant Petition for Review with the following assignment of errors

5.1
THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT
[TOSHIBA], BEING A PEZA-REGISTERED ENTERPRISE, IS EXEMPT FROM VAT UNDER
SECTION 24 OF R.A. 7916, AND FURTHER HOLDING THAT [TOSHIBAS] EXPORT SALES
ARE EXEMPT TRANSACTIONS UNDER SECTION 109 OF THE TAX CODE.

5.2
THE HONORABLE COURT OF APPEALS ERRED WHEN IT FAILED TO DISMISS
OUTRIGHT AND GAVE DUE COURSE TO [CIRS] PETITION NOTWITHSTANDING [CIRS]
FAILURE TO ADEQUATELY RAISE IN ISSUE DURING THE TRIAL IN THE COURT OF TAX
APPEALS THE APPLICABILITY OF SECTION 24 OF R.A. 7916 TO [TOSHIBAS] CLAIM
FOR REFUND.

5.3
THE HONORABLE COURT OF APPEALS ERRED WHEN [IT] RULED THAT THE
COURT OF TAX APPEALS FINDINGS, WITH REGARD [TOSHIBAS] EXPORT SALES
BEING ZERO RATED SALES FOR VAT PURPOSES, WERE BASED MERELY ON THE
ADMISSIONS MADE BY [CIRS] COUNSEL AND NOT SUPPORTED BY SUBSTANTIAL
EVIDENCE.

WHEREFORE, premises considered, Petitioner TOSHIBA INFORMATION EQUIPMENT

(PHILS.), INC. most respectfully prays that the decision and resolution of the Honorable Court
of Appeals, reversing the decision of the CTA in CTA Case No. 5762, be set aside and further
prays that a new one be rendered AFFIRMING AND UPHOLDING the Decision of the CTA
promulgated on October 16, 2000 in CTA Case No. 5762.

Other reliefs, which the Honorable Court may deem just and equitable under the
circumstances, are likewise prayed for.[33]

The Petition is impressed with merit.

The CIR did not timely raise before the CTA the issues on the VAT-exemptions of Toshiba and
its export sales.

Upon the failure of the CIR to timely plead and prove before the CTA the defenses or
objections that Toshiba was VAT-exempt under Section 24 of Republic Act No. 7916, and that
its export sales were VAT-exempt transactions under Section 103(q) of the Tax Code of 1977,
as amended, the CIR is deemed to have waived the same.

During the pendency of CTA Case No. 5762, the proceedings before the CTA were governed
by the Rules of the Court of Tax Appeals,[34] while the Rules of Court were applied suppletorily.
[35]

Rule 9, Section 1 of the Rules of Court provides:

SECTION 1. Defenses and objections not pleaded. Defenses and objections not pleaded
either in a motion to dismiss or in the answer are deemed waived. However, when it appears
from the pleadings or the evidence on record that the court has no jurisdiction over the subject
matter, that there is another action pending between the same parties for the same cause, or
that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss
the claim.

The CIR did not argue straight away in his Answer in CTA Case No. 5762 that Toshiba had no
right to the credit/refund of its input VAT payments because the latter was VAT-exempt and its
export sales were VAT-exempt transactions. The Pre-Trial Brief[36] of the CIR was equally
bereft of such allegations or arguments. The CIR passed up the opportunity to prove the
supposed VAT-exemptions of Toshiba and its export sales when the CIR chose not to present
any evidence at all during the trial before the CTA. [37] He missed another opportunity to
present the said issues before the CTA when he waived the submission of a Memorandum.
[38]
The CIR had waited until the CTA already rendered its Decision dated October 16, 2000 in
CTA Case No. 5762, which granted the claim for credit/refund of Toshiba, before asserting in
his Motion for Reconsideration that Toshiba was VAT-exempt and its export sales were VATexempt transactions.

The CIR did not offer any explanation as to why he did not argue the VAT-exemptions of
Toshiba and its export sales before and during the trial held by the CTA, only doing so in his
Motion for Reconsideration of the adverse CTA judgment. Surely, said defenses or objections
were already available to the CIR when the CIR filed his Answer to the Petition for Review of
Toshiba in CTA Case No. 5762.

It is axiomatic in pleadings and practice that no new issue in a case can be raised in a
pleading which by due diligence could have been raised in previous pleadings. [39] The Court
cannot simply grant the plea of the CIR that the procedural rules be relaxed based on the
general averment of the interest of substantive justice. It should not be forgotten that the first
and fundamental concern of the rules of procedure is to secure a just determination of every
action.[40] Procedural rules are designed to facilitate the adjudication of cases. Courts and
litigants alike are enjoined to abide strictly by the rules. While in certain instances, the Court
allows a relaxation in the application of the rules, it never intends to forge a weapon for erring
litigants to violate the rules with impunity. The liberal interpretation and application of rules
apply only in proper cases of demonstrable merit and under justifiable causes and

circumstances. While it is true that litigation is not a game of technicalities, it is equally true
that every case must be prosecuted in accordance with the prescribed procedure to ensure an
orderly and speedy administration of justice. Party litigants and their counsel are well advised
to abide by, rather than flaunt, procedural rules for these rules illumine the path of the law and
rationalize the pursuit of justice.[41]

The CIR judicially admitted that Toshiba was VAT-registered and its export sales were subject
to VAT at zero percent (0%) rate.

More importantly, the arguments of the CIR that Toshiba was VAT-exempt and the latters
export sales were VAT-exempt transactions are inconsistent with the explicit admissions of the
CIR in the Joint Stipulation of Facts and Issues (Joint Stipulation) that Toshiba was a
registered VAT entity and that it was subject to zero percent (0%) VAT on its export sales.

The Joint Stipulation was executed and submitted by Toshiba and the CIR upon being advised
to do so by the CTA at the end of the pre-trial conference held on June 23, 1999. [42] The
approval of the Joint Stipulation by the CTA, in its Resolution [43] dated July 12, 1999, marked
the culmination of the pre-trial process in CTA Case No. 5762.

Pre-trial is an answer to the clarion call for the speedy disposition of cases. Although it was
discretionary under the 1940 Rules of Court, it was made mandatory under the 1964 Rules
and the subsequent amendments in 1997. It has been hailed as the most important
procedural innovation in Anglo-Saxon justice in the nineteenth century. [44]

The nature and purpose of a pre-trial have been laid down in Rule 18, Section 2 of the Rules
of Court:

SECTION 2. Nature and purpose. The pre-trial is mandatory. The court shall consider:

(a)
The possibility of an amicable settlement or of a submission to alternative modes of
dispute resolution;

(b)

The simplification of the issues;

(c)

The necessity or desirability of amendments to the pleadings;

(d)
The possibility of obtaining stipulations or admissions of facts and of documents to
avoid unnecessary proof;

percent (0%) value-added tax on its export sales in accordance with then Section 100(a)(2)(A)
of the Tax Code, as amended.[48] The CIR was bound by these admissions, which he could
not eventually contradict in his Motion for Reconsideration of the CTA Decision dated October
16, 2000, by arguing that Toshiba was actually a VAT-exempt entity and its export sales were
VAT-exempt transactions. Obviously, Toshiba could not have been subject to VAT and exempt
from VAT at the same time. Similarly, the export sales of Toshiba could not have been subject
to zero percent (0%) VATand exempt from VAT as well.

The CIR cannot escape the binding effect of his judicial admissions.
(e)

The limitation of the number of witnesses;

(f)

The advisability of a preliminary reference of issues to a commissioner;

(g)
The propriety of rendering judgment on the pleadings, or summary judgment, or of
dismissing the action should a valid ground therefor be found to exist;

(h)

The advisability or necessity of suspending the proceedings; and

(i)
Such other matters as may aid in the prompt disposition of the action. (Emphasis
ours.)

The admission having been made in a stipulation of facts at pre-trial by the parties, it must be
treated as a judicial admission.[45] Under Section 4, Rule 129 of the Rules of Court, a judicial
admission requires no proof. The admission may be contradicted only by a showing that it
was made through palpable mistake or that no such admission was made. The Court cannot
lightly set aside a judicial admission especially when the opposing party relied upon the same
and accordingly dispensed with further proof of the fact already admitted. An admission made
by a party in the course of the proceedings does not require proof. [46]

In the instant case, among the facts expressly admitted by the CIR and Toshiba in their CTAapproved Joint Stipulation are that Toshiba is a duly registered value-added tax entity in
accordance with Section 107 of the Tax Code, as amended[,] [47] that is subject to zero

The Court disagrees with the Court of Appeals when it ruled in its Decision dated August 29,
2002 that the CIR could not be bound by his admissions in the Joint Stipulation because (1)
the said admissions were made through palpable mistake [49] which, if countenanced, would
result in falsehood, unfairness and injustice;[50] and (2) the State could not be put in estoppel
by the mistakes of its officials or agents. This ruling of the Court of Appeals is rooted in its
conclusion that a palpable mistake had been committed by the CIR in the signing of the Joint
Stipulation. However, this Court finds no evidence of the commission of a mistake, much
more, of a palpable one.

The CIR does not deny that his counsel, Atty. Joselito F. Biazon, Revenue Attorney II of the
BIR, signed the Joint Stipulation, together with the counsel of Toshiba, Atty. Patricia B.
Bisda. Considering the presumption of regularity in the performance of official duty, [51] Atty.
Biazon is presumed to have read, studied, and understood the contents of the Joint
Stipulation before he signed the same. It rests on the CIR to present evidence to the
contrary.

Yet, the Court observes that the CIR himself never alleged in his Motion for Reconsideration
of the CTA Decision dated October 16, 2000, nor in his Petition for Review before the Court of
Appeals, that Atty. Biazon committed a mistake in signing the Joint Stipulation. Since the CIR
did not make such an allegation, neither did he present any proof in support thereof. The CIR
began to aver the existence of a palpable mistake only after the Court of Appeals made such
a declaration in its Decision dated August 29, 2002.

Despite the absence of allegation and evidence by the CIR, the Court of Appeals, on its own,
concluded that the admissions of the CIR in the Joint Stipulation were due to a palpable
mistake based on the following deduction

Scrutinizing the Answer filed by [the CIR], we rule that the Joint Stipulation of Facts and
Issues signed by [the CIR] was made through palpable mistake. Quoting paragraph 4 of its
Answer, [the CIR] states:

4. He ADMITS the allegations contained in paragraph 5 of the petition only insofar as the
cited provisions of Tax Code is concerned, but SPECIFICALLY DENIES the rest of the
allegations therein for being mere opinions, arguments or gratuitous assertions on the part of
[Toshiba] and/or because they are mere erroneous conclusions or interpretations of the
quoted law involved, the truth of the matter being those stated hereunder

Atty. Biazon, also signed the Joint Stipulation; and that absent evidence to the contrary, Atty.
Biazon is presumed to have signed the Joint Stipulation willingly and knowingly, in the regular
performance of his official duties. Additionally, the Joint Stipulation[53] of Toshiba and the CIR
was a more recent pleading than the Answer [54] of the CIR. It was submitted by the parties
after the pre-trial conference held by the CTA, and subsequently approved by the tax court. If
there was any discrepancy between the admissions of the CIR in his Answer and in the Joint
Stipulation, the more logical and reasonable explanation would be that the CIR changed his
mind or conceded some points to Toshiba during the pre-trial conference which immediately
preceded the execution of the Joint Stipulation. To automatically construe that the
discrepancy was the result of a palpable mistake is a wide leap which this Court is not
prepared to take without substantial basis.

The judicial admissions of the CIR in the Joint Stipulation are not intrinsically false, wrong, or
illegal, and are consistent with the ruling on the VAT treatment of PEZA-registered enterprises
in the previous Toshiba case.

x x x x

And paragraph 5 of the petition for review filed by [Toshiba] before the CTA states:

5. Petitioner is subject to zero percent (0%) value-added tax on its export sales in
accordance with then Section 100(a)(2)(A) of the Tax Code x x x.

x x x x

As we see it, nothing in said Answer did [the CIR] admit that the export sales of [Toshiba] were
indeed zero-rated transactions. At the least, what was admitted only by [the CIR] concerning
paragraph 4 of his Answer, is the fact that the provisions of the Tax Code, as cited by [Toshiba]
in its petition for review filed before the CTA were correct. [52]

The Court of Appeals provided no explanation as to why the admissions of the CIR in his
Answer in CTA Case No. 5762 deserved more weight and credence than those he made in
the Joint Stipulation. The appellate court failed to appreciate that the CIR, through counsel,

There is no basis for believing that to bind the CIR to his judicial admissions in the Joint
Stipulation that Toshiba was a VAT-registered entity and its export sales were zero-rated
VAT transactions would result in falsehood, unfairness and injustice. The judicial
admissions of the CIR are not intrinsically false, wrong, or illegal. On the contrary, they are
consistent with the ruling of this Court in a previous case involving the same
parties, Commissioner of Internal Revenue v. Toshiba Information Equipment (Phils.) Inc.
[55]
(Toshiba case), explaining the VAT treatment of PEZA-registered enterprises.

In the Toshiba case, Toshiba sought the refund of its unutilized input VAT on its purchase of
capital goods and services for the first and second quarters of 1996, based on Section 106(b)
of the Tax Code of 1977, as amended.[56] In the Petition at bar, Toshiba is claiming refund of
its unutilized input VAT on its local purchase of goods and services which are attributable to its
export sales for the first and second quarters of 1997, pursuant to Section 106(a), in relation
to Section 100(a)(1)(A)(i) of the Tax Code of 1977, as amended, which read

SEC. 106. Refunds or tax credits of creditable input tax. (a) Any VAT-registered person,
whose sales are zero-rated or effectively zero-rated, may, within two (2) years after the close
of the taxable quarter when the sales were made, apply for the issuance of a tax credit
certificate or refund of creditable input tax due or paid attributable to such sales, except
transitional input tax, to the extent that such input tax has not been applied against output
tax: Provided, however, That in the case of zero-rated sales under Section 100(a)(2)(A)(i),(ii)

and (b) and Section 102(b)(1) and (2), the acceptable foreign currency exchange proceeds
thereof has been duly accounted for in accordance with the regulations of the Bangko Sentral
ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or
effectively zero-rated sale and also in taxable or exempt sale of goods or properties of
services, and the amount of creditable input tax due or paid cannot be directly and entirely
attributed to any one of the transactions, it shall be allocated proportionately on the basis of
the volume sales.

It would seem that petitioner CIR failed to differentiate between VAT-exempt transactions from
VAT-exempt entities. In the case of Commissioner of Internal Revenue v. Seagate Technology
(Philippines), this Court already made such distinction

An exempt transaction, on the one hand, involves goods or services which, by their nature,
are specifically listed in and expressly exempted from the VAT under the Tax Code, without
regard to the tax status VAT-exempt or not of the party to the transaction

SEC. 100. Value-added tax on sale of goods or properties. (a) Rate and base of tax. x x x

xxxx

An exempt party, on the other hand, is a person or entity granted VAT exemption under the
Tax Code, a special law or an international agreement to which the Philippines is a signatory,
and by virtue of which its taxable transactions become exempt from VAT x x x. [57]

(2) The following sales by VAT-registered persons shall be subject to 0%:

(A)

Export sales. The term export sales means:

(i) The sale and actual shipment of goods from the Philippines to a foreign country,
irrespective of any shipping arrangement that may be agreed upon which may influence or
determine the transfer of ownership of the goods so exported and paid for in acceptable
foreign currency or its equivalent in goods or services, and accounted for in accordance with
the rules and regulations of the Bangko Sentral ng Pilipnas (BSP).

Despite the difference in the legal bases for the claims for credit/refund in the Toshiba
case and the case at bar, the CIR raised the very same defense or objection in both that
Toshiba and its transactions were VAT-exempt. Hence, the ruling of the Court in the former
case is relevant to the present case.

In effect, the CIR is opposing the claim for credit/refund of input VAT of Toshiba on two
grounds: (1) that Toshiba was a VAT-exempt entity; and (2) that its export sales were VATexempt transactions.

It is now a settled rule that based on the Cross Border Doctrine, PEZA-registered enterprises,
such as Toshiba, are VAT-exempt and no VAT can be passed on to them. The Court explained
in the Toshiba case that

PEZA-registered enterprise, which would necessarily be located within ECOZONES, are VATexempt entities, not because of Section 24 of Rep. Act No. 7916, as amended, which imposes
the five percent (5%) preferential tax rate on gross income of PEZA-registered enterprises, in
lieu of all taxes; but, rather, because of Section 8 of the same statute which establishes the
fiction that ECOZONES are foreign territory.

xxxx
At the outset, the Court establishes that there is a basic distinction in the VAT-exemption of a
person and the VAT-exemption of a transaction

The Philippine VAT system adheres to the Cross Border Doctrine, according to which, no VAT
shall be imposed to form part of the cost of goods destined for consumption outside of the
territorial border of the taxing authority. Hence, actual export of goods and services from the
Philippines to a foreign country must be free of VAT; while, those destined for use or
consumption within the Philippines shall be imposed with ten percent (10%) VAT.

Applying said doctrine to the sale of goods, properties, and services to and from the
ECOZONES, the BIR issued Revenue Memorandum Circular (RMC) No. 74-99, on 15
October 1999. Of particular interest to the present Petition is Section 3 thereof, which reads

legally entitled to the zero percent (0%) VAT. Accordingly, all sales of goods or property to
such enterprise made by a VAT registered supplier from the Customs Territory shall be treated
subject to 0% VAT, pursuant to Sec. 106(A)(2)(a)(5), NIRC, in relation to ART. 77(2) of the
Omnibus Investments Code, while all sales of services to the said enterprises, made by VAT
registered suppliers from the Customs Territory, shall be treated effectively subject to the 0%
VAT, pursuant to Section 108(B)(3), NIRC, in relation to the provisions of R.A. No. 7916 and
the Cross Border Doctrine of the VAT system.

SECTION 3. Tax Treatment of Sales Made by a VAT Registered Supplier from the Customs
Territory, to a PEZA Registered Enterprise.

(1) If the Buyer is a PEZA registered enterprise which is subject to the 5% special tax regime,
in lieu of all taxes, except real property tax, pursuant to R.A. No. 7916, as amended:

(a) Sale of goods (i.e., merchandise). This shall be treated as indirect export hence,
considered subject to zero percent (0%) VAT, pursuant to Sec. 106(A)(2)(a)(5), NIRC and Sec.
23 of R.A. No. 7916, in relation to ART. 77(2) of the Omnibus Investments Code.

(b) Sale of service. This shall be treated subject to zero percent (0%) VAT under the cross
border doctrine of the VAT System, pursuant to VAT Ruling No. 032-98 dated Nov. 5, 1998.

(2) If Buyer is a PEZA registered enterprise which is not embraced by the 5% special tax
regime, hence, subject to taxes under the NIRC, e.g., Service Establishments which are
subject to taxes under the NIRC rather than the 5% special tax regime:

(a) Sale of goods (i.e., merchandise). This shall be treated as indirect export hence,
considered subject to zero percent (0%) VAT, pursuant to Sec. 106(A)(2)(a)(5), NIRC and Sec.
23 of R.A. No. 7916 in relation to ART. 77(2) of the Omnibus Investments Code.

(b) Sale of Service. This shall be treated subject to zero percent (0%) VAT under the cross
border doctrine of the VAT System, pursuant to VAT Ruling No. 032-98 dated Nov. 5, 1998.

(3) In the final analysis, any sale of goods, property or services made by a VAT registered
supplier from the Customs Territory to any registered enterprise operating in the ecozone,
regardless of the class or type of the latters PEZA registration, is actually qualified and thus

This Circular shall serve as a sufficient basis to entitle such supplier of goods, property or
services to the benefit of the zero percent (0%) VAT for sales made to the aforementioned
ECOZONE enterprises and shall serve as sufficient compliance to the requirement for prior
approval of zero-rating imposed by Revenue Regulations No. 7-95 effective as of the date of
the issuance of this Circular.

Indubitably, no output VAT may be passed on to an ECOZONE enterprise since it is a VATexempt entity. x x x.[58]

The Court, nevertheless, noted in the Toshiba case that the rule which considers any sale by a
supplier from the Customs Territory to a PEZA-registered enterprise as export sale, which
should not be burdened by output VAT, was only clearly established on October 15, 1999,
upon the issuance by the BIR of RMC No. 74-99. Prior to October 15, 1999, whether a PEZAregistered enterprise was exempt or subject to VAT depended on the type of fiscal incentives
availed of by the said enterprise.[59] The old rule, then followed by the BIR, and recognized
and affirmed by the CTA, the Court of Appeals, and this Court, was described as follows

According to the old rule, Section 23 of Rep. Act No. 7916, as amended, gives the PEZAregistered enterprise the option to choose between two sets of fiscal incentives: (a) The five
percent (5%) preferential tax rate on its gross income under Rep. Act No. 7916, as amended;
and (b) the income tax holiday provided under Executive Order No. 226, otherwise known as
the Omnibus Investment Code of 1987, as amended.

The five percent (5%) preferential tax rate on gross income under Rep. Act No. 7916, as
amended, is in lieu of all taxes. Except for real property taxes, no other national or local tax
may be imposed on a PEZA-registered enterprise availing of this particular fiscal incentive, not
even an indirect tax like VAT.

Alternatively, Book VI of Exec. Order No. 226, as amended, grants income tax holiday to
registered pioneer and non-pioneer enterprises for six-year and four-year periods,
respectively. Those availing of this incentive are exempt only from income tax, but shall be
subject to all other taxes, including the ten percent (10%) VAT.

This old rule clearly did not take into consideration the Cross Border Doctrine essential to the
VAT system or the fiction of the ECOZONE as a foreign territory. It relied totally on the choice
of fiscal incentives of the PEZA-registered enterprise. Again, for emphasis, the old VAT rule
for PEZA-registered enterprises was based on their choice of fiscal incentives: (1) If the
PEZA-registered enterprise chose the five percent (5%) preferential tax on its gross income, in
lieu of all taxes, as provided by Rep. Act No. 7916, as amended, then it would be VAT-exempt;
(2) If the PEZA-registered enterprise availed of the income tax holiday under Exec. Order No.
226, as amended, it shall be subject to VAT at ten percent (10%). Such distinction was
abolished by RMC No. 74-99, which categorically declared that all sales of goods, properties,
and services made by a VAT-registered supplier from the Customs Territory to an ECOZONE
enterprise shall be subject to VAT, at zero percent (0%) rate, regardless of the latters type or
class of PEZA registration; and, thus, affirming the nature of a PEZA-registered or an
ECOZONE enterprise as a VAT-exempt entity.[60]

Sec. 4.102-2. Zero-rating. (a) In general. - A zero-rated sale by a VAT-registered person,

which is a taxable transaction for VAT purposes, shall not result in any output tax. However,
the input tax on his purchases of goods, properties or services related to such zero-rated sale
shall be available as tax credit or refund in accordance with these regulations.

The BIR, as late as July 15, 2003, when it issued RMC No. 42-2003, accepted applications for
credit/refund of input VAT on purchases prior to RMC No. 74-99, filed by PEZA-registered
enterprises which availed themselves of the income tax holiday. The BIR answered Question
Q-5(1) of RMC No. 42-2003 in this wise

Q-5:
Under Revenue Memorandum Circular (RMC) No. 74-99, purchases by PEZAregistered firms automatically qualify as zero-rated without seeking prior approval from the
BIR effective October 1999.
1)
Will the OSS-DOF Center still accept applications from PEZA-registered
claimants who were allegedly billed VAT by their suppliers before and during the effectivity of
the RMC by issuing VAT invoices/receipts?

xxxx
To recall, Toshiba is herein claiming the refund of unutilized input VAT payments on its local
purchases of goods and services attributable to its export sales for the first and second
quarters of 1997. Such export sales took place before October 15, 1999, when the old rule on
the VAT treatment of PEZA-registered enterprises still applied. Under this old rule, it was not
only possible, but even acceptable, for Toshiba, availing itself of the income tax holiday option
under Section 23 of Republic Act No. 7916, in relation to Section 39 of the Omnibus
Investments Code of 1987, to be subject to VAT, both indirectly (as purchaser to whom the
seller shifts the VAT burden) and directly (as seller whose sales were subject to VAT, either at
ten percent [10%] or zero percent [0%]).

A VAT-registered seller of goods and/or services who made zero-rated sales can claim tax
credit or refund of the input VAT paid on its purchases of goods, properties, or services
relative to such zero-rated sales, in accordance with Section 4.102-2 of Revenue Regulations
No. 7-95, which provides

A-5(1): If the PEZA-registered enterprise is paying the 5% preferential tax in lieu of all other
taxes, the said PEZA-registered taxpayer cannot claim TCC or refund for the VAT paid on
purchases. However, if the taxpayer is availing of the income tax holiday, it can claim VAT
credit provided:

a.

The taxpayer-claimant is VAT-registered;

b.
Purchases are evidenced by VAT invoices or receipts, whichever is applicable, with
shifted VAT to the purchaser prior to the implementation of RMC No. 74-99; and

c.
The supplier issues a sworn statement under penalties of perjury that it shifted the VAT
and declared the sales to the PEZA-registered purchaser as taxable sales in its VAT returns.

For invoices/receipts issued upon the effectivity of RMC No. 74-99, the claims for input VAT by
PEZA-registered companies, regardless of the type or class of PEZA-registration, should be
denied. (Emphases ours.)

Consequently, the CIR cannot herein insist that all PEZA-registered enterprises are VATexempt in every instance. RMC No. 42-2003 contains an express acknowledgement by the
BIR that prior to RMC No. 74-99, there were PEZA-registered enterprises liable for VAT and
entitled to credit/refund of input VAT paid under certain conditions.

This Court already rejected in the Toshiba case the argument that sale transactions of a
PEZA-registered enterprise were VAT-exempt under Section 103(q) of the Tax Code of 1977,
as amended, ratiocinating that

Section 103(q) of the Tax Code of 1977, as amended, relied upon by petitioner CIR, relates to
VAT-exempt transactions. These are transactions exempted from VAT by special laws or
international agreements to which the Philippines is a signatory. Since such transactions are
not subject to VAT, the sellers cannot pass on any output VAT to the purchasers of goods,
properties, or services, and they may not claim tax credit/refund of the input VAT they had paid
thereon.

Section 103(q) of the Tax Code of 1977, as amended, cannot apply to transactions of
respondent Toshiba because although the said section recognizes that transactions covered
by special laws may be exempt from VAT, the very same section provides that those falling
under Presidential Decree No. 66 are not. Presidential Decree No. 66, creating the Export
Processing Zone Authority (EPZA), is the precursor of Rep. Act No. 7916, as amended, under
which the EPZA evolved into the PEZA. Consequently, the exception of Presidential Decree
No. 66 from Section 103(q) of the Tax Code of 1977, as amended, extends likewise to Rep.
Act No. 7916, as amended.[61] (Emphasis ours.)

In light of the judicial admissions of Toshiba, the CTA correctly confined itself to the other
factual issues submitted for resolution by the parties.

In accord with the admitted facts that Toshiba was a VAT-registered entity and that its export
sales were zero-rated transactions the stated issues in the Joint Stipulation were limited to
other factual matters, particularly, on the compliance by Toshiba with the rest of the
requirements for credit/refund of input VAT on zero-rated transactions. Thus, during trial,
Toshiba concentrated on presenting evidence to establish that it incurred P3,875,139.65 of
input VAT for the first and second quarters of 1997 which were directly attributable to its export
sales; that said amount of input VAT were not carried over to the succeeding quarters; that
said amount of input VAT has not been applied or offset against any output VAT liability; and
that said amount of input VAT was properly substantiated by official receipts and invoices.

After what truly appears to be an exhaustive review of the evidence presented by Toshiba, the
CTA made the following findings

(1) The amended quarterly VAT returns of Toshiba for 1997 showed that it made no other
sales, except zero-rated export sales, for the entire year, in the sum ofP2,083,305,000.00 for
the first quarter and P5,411,372,000.00 for the second quarter. That being the case, all input
VAT allegedly incurred by Toshiba for the first two quarters of 1997, in the amount
of P3,875,139.65, was directly attributable to its zero-rated sales for the same period.

(2) Toshiba did carry-over the P3,875,139.65 input VAT it reportedly incurred during the first
two quarters of 1997 to succeeding quarters, until the first quarter of 1999. Despite the carryover of the subject input VAT of P3,875,139.65, the claim of Toshiba was not affected because
it later on deducted the said amount as VAT Refund/TCC Claimed from its total available
input VAT of P6,841,468.17 for the first quarter of 1999.

(3) Still, the CTA could not allow the credit/refund of the total input VAT of P3,875,139.65
being claimed by Toshiba because not all of said amount was actually incurred by the
company and duly substantiated by invoices and official receipts. From
the P3,875,139.65 claim, the CTA deducted the amounts of (a) P189,692.92, which was in
excess of the P3,685,446.23 input VAT Toshiba originally claimed in its application for
credit/refund filed with the DOF One-Stop Shop; (b) P396,882.58, which SGV & Co., the
commissioned CPA, disallowed for being improperly substantiated, i.e., supported only by
provisional acknowledgement receipts, or by documents other than official receipts, or not
supported by TIN or TIN VAT or by any document at all; (c) P1,887,545.65, which the CTA
itself verified as not being substantiated in accordance with Section 4.104-5 [62]of Revenue

Regulations No. 7-95, in relation to Sections 108 [63] and 238[64] of the Tax Code of 1977, as
amended; and (d) P15,736.42, which Toshiba already applied to its output VAT liability for the
fourth quarter of 1998.

(4) Ultimately, Toshiba was entitled to the credit/refund of unutilized input VAT payments
attributable to its zero-rated sales in the amounts of P1,158,016.82 andP227,265.26, for the
first and second quarters of 1997, respectively, or in the total amount
of P1,385,282.08.

Since the aforementioned findings of fact of the CTA are borne by substantial evidence on
record, unrefuted by the CIR, and untouched by the Court of Appeals, they are given utmost
respect by this Court.

The Court will not lightly set aside the conclusions reached by the CTA which, by the very
nature of its functions, is dedicated exclusively to the resolution of tax problems and has
accordingly developed an expertise on the subject unless there has been an abuse or
improvident exercise of authority.[65] In Barcelon, Roxas Securities, Inc. (now known as UBP
Securities, Inc.) v. Commissioner of Internal Revenue,[66] this Court more explicitly pronounced

Jurisprudence has consistently shown that this Court accords the findings of fact by the CTA
with the highest respect. In Sea-Land Service Inc. v. Court of Appeals [G.R. No. 122605, 30
April 2001, 357 SCRA 441, 445-446], this Court recognizes that the Court of Tax Appeals,
which by the very nature of its function is dedicated exclusively to the consideration of tax
problems, has necessarily developed an expertise on the subject, and its conclusions will not
be overturned unless there has been an abuse or improvident exercise of authority. Such
findings can only be disturbed on appeal if they are not supported by substantial evidence or
there is a showing of gross error or abuse on the part of the Tax Court. In the absence of any
clear and convincing proof to the contrary, this Court must presume that the CTA rendered a
decision which is valid in every respect.

WHEREFORE, the assailed Decision dated August 29, 2002 and the Resolution dated
February 19, 2003 of the Court of Appeals in CA-G.R. SP No. 63047 areREVERSED and SET
ASIDE, and the Decision dated October 16, 2000 of the Court of Tax Appeals in CTA Case
No. 5762 is REINSTATED. Respondent Commissioner of Internal Revenue

is ORDERED to REFUND or, in the alternative, to ISSUE a TAX CREDIT CERTIFICATE in

favor of petitioner Toshiba Information Equipment (Phils.), Inc. in the amount
of P1,385,282.08, representing the latters unutilized input VAT payments for the first and
second quarters of 1997. No pronouncement as to costs.

SO ORDERED.

For resolution are the Partial Motion for Reconsideration [1] filed by petitioner and the Motion for
Reconsideration[2] filed by respondents of the Decision[3] of the Court dated October 17, 2008.

SPECIAL THIRD DIVISION

JESUS CUENCO,

G.R. No. 174154

The factual background of the case is as follows:

Petitioner,
Present:

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

Petitioner leased from respondents the Talisay Tourist Sports Complex for the operation of a
cockpit. The lease was for a period of two (2) years, but was subsequently renewed for a
period of four (4) years. Compliant with the lease contract, petitioner gave respondents a
deposit equivalent to six (6) months rental, amounting to Five Hundred Thousand Pesos
(P500,000.00), to answer for whatever damages may be caused to the premises during the
period of the lease.

CARPIO,*
CHICO-NAZARIO,
NACHURA, and
BERSAMIN, JJ.**

TALISAY TOURIST SPORTS COMPLEX, INCORPORATED and

MATIAS B. AZNAR III,

Upon expiration of the lease contract on May 8, 1998, a public bidding was conducted. The
contract was awarded to a new lessee. Thus, petitioner demanded the return of the amount
deposited. However, petitioners four (4) demand letters remained unheeded. Thus, petitioner
filed a complaint for sum of money, damages and attorneys fees before the Regional Trial
Court (RTC) of Cebu City.
The trial court ruled in favor of petitioner and directed the respondents to return the full
amount of the deposit plus interest of three percent (3%) per month from August 18, 1998 until
full payment thereof. On appeal, the Court of Appeals (CA) reversed the decision of the trial
court. Hence, petitioner filed a petition for review on certiorari[4] before this Court.

Respondents.
Promulgated:

On October 17, 2008, the Court rendered a Decision, [5] the dispositive portion of which reads:
July 30, 2009

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

RESOLUTION

WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court of Appeals is
hereby REVERSED AND SET ASIDE. The Decision of the RTC in Civil Case No. CEB-22847
is hereby REINSTATED with the following modifications:

(1) Talisay Tourist Sports Complex, Inc. is solely liable to return the amount of the deposit after
deducting the amount of the two-months arrears in rentals; and

NACHURA, J.:
(2) The rate of legal interest to be paid is SIX PERCENT (6%) on the amount due computed
from October 21, 1998, and TWELVE PERCENT (12%) interest, thereon upon finality of this
decision until full payment thereof.

SO ORDERED.[6]

Unsatisfied, both parties moved for reconsideration. Petitioner moves for partial
reconsideration as he denies that he overstayed for two months in the leased premises. On
the other hand, respondents aver that the expenses they incurred for the repair of the cockpit
amounting to Twenty-four Thousand Nine Hundred Pesos (P24,900.00) should be deducted
from the amount of deposit that will be returned to petitioner. They also pray that the Court
reconsider its decision and issue a new one affirming the decision of the Court of Appeals.

The motions for reconsideration filed by the contending parties are substantially factual and
must be denied for lack of merit.

As a rule, the Supreme Court is not a trier of facts. In a petition for review on certiorari, it is
discretionary upon the Court whether it will look into the factual determinations of the lower
courts. However, due to the conflicting findings of the RTC and the CA, the Court took
exception and reviewed the records of the case to arrive at a judicious resolution of the
controversy, i.e., whether petitioner is entitled to the return of the amount of the deposit.

Borne out by the records of the case is the testimony of Ateniso Coronado that petitioner
continued to hold cockfights for two months beyond the expiration of the lease contract. Such
declaration was neither questioned nor denied by petitioner during the trial of the case in the
RTC and on appeal before the CA. Neither was it contested by petitioner in his
Memorandum[7] filed with this Court. Binding is the finding of the CA on the matter, viz.:

Witness Ateniso Coronado whose credibility has not been impeached, and whose testimony
has neither been overthrown by contradictory evidence, gave the most telltale factual
account. There is no gainsaying that the contract of lease between herein parties for the
occupation and use of the complex expired on May 8, 1998, but appellee [petitioner] did not
refute the pronouncement of witness that he (appellee) [petitioner] continued to hold
cockfights during the months of June and July despite knowledge that his lease would no
longer be renewed as evidenced by the very first letter he sent to appellants [respondents]
dated June 8, 1998, and albeit the non-objection of appellants [respondents] on his extended
stay. The assessment of rentals from appellee [petitoner] for two (2) extended months
therefore came as a necessary consequence pursuant to Articles 1670 and 1687 of the Civil

Code of the Philippines in relation to the contract of lease.The rental for the last month
immediately preceding the expiration of the contract is pegged at P97,916.67, hence the two
month extension requires a rent in the amount of P195,833.34.[8]

Well-settled is the rule that issues or grounds not raised below cannot be resolved on review
by the Supreme Court, for to allow the parties to raise new issues is antithetical to the sporting
idea of fair play, justice and due process. [9] Issues not raised during the trial cannot be raised
for the first time on appeal and more especially on motion for reconsideration. Litigation must
end at some point; once the case is finally adjudged, the parties must learn to accept victory
or defeat.

Furthermore, on June 27 2007, the Court required the parties to submit their memoranda, and
were apprised that no new issues may be raised; and the issues raised in the pleadings not
included in the memoranda shall be deemed waived or abandoned, per Supreme Court
Administrative Matter No. 99-2-04-SC.
As to the amount of repairs that respondents want to be credited in their favor, the RTC ruled,
as affirmed by the CA, that the new lessee underwrote the repairs and not the respondents.
[10]
Thus, there is no basis for respondents claim for reimbursement.

WHEREFORE, the Partial Motion for Reconsideration of Petitioner dated November 26, 2008
and the Motion for Reconsideration of Respondents dated November 25, 2008 of the Decision
of the Court dated October 17, 20078 are hereby DENIED.

SO ORDERED.

Movants-Intervenors.
FIRST DIVISION

SOCIAL JUSTICE SOCIETY G.R. No. 156052

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

(SJS), VLADIMIR ALARIQUE T.

CABIGAO and BONIFACIO S.
TUMBOKON,
Petitioners, Present:

PUNO, C.J., Chairperson,

DEPARTMENT OF ENERGY,
Movant-Intervenor. Promulgated:

February 13, 2008

SANDOVAL-GUTIERREZ,
- v e r s u s - CORONA,

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

AZCUNA and
LEONARDO-DE CASTRO, JJ.
RESOLUTION
HON. JOSE L. ATIENZA, JR.,
in his capacity as Mayor of the

CORONA, J.:

City of Manila,
Respondent.

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

CHEVRON PHILIPPINES INC.,

PETRON CORPORATION and
PILIPINAS SHELL PETROLEUM
CORPORATION,

After we promulgated our decision in this case on March 7, 2007, Chevron Philippines Inc.
(Chevron), Petron Corporation (Petron) and Pilipinas Shell Petroleum Corporation (Shell)
(collectively, the oil companies) and the Republic of the Philippines, represented by the
Department of Energy (DOE), filed their respective motions for leave to intervene and for
reconsideration of the decision.
Chevron[1] is engaged in the business of importing, distributing and marketing of petroleum
products in the Philippines while Shell and Petron are engaged in the business of
manufacturing, refining and likewise importing, distributing and marketing of petroleum
products in the Philippines.[2] The DOE is a governmental agency created under Republic Act
(RA) No. 7638[3] and tasked to prepare, integrate, coordinate, supervise and control all plans,

programs, projects and activities of the government relative to energy exploration,

development, utilization, distribution and conservation. [4]
The facts are restated briefly as follows:

Petitioners Social Justice Society, Vladimir Alarique T. Cabigao and Bonifacio S. Tumbokon, in
an original petition for mandamus under Rule 65 of the Rules of Court, sought to compel
respondent Hon. Jose L. Atienza, Jr., then mayor of the City of Manila, to enforce Ordinance
No. 8027. This ordinance was enacted by the Sangguniang Panlungsod of Manila on
November 20, 2001,[5] approved by respondent Mayor on November 28, 2001,[6] and became
effective on December 28, 2001 after publication. [7] Sections 1 and 3 thereof 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 Pandacan 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.

down of the Pandacan Terminals [was] the most viable and practicable option.
The Sangguniang Panlungsod ratified the MOU in Resolution No. 97.[9] In the same resolution,
the Sanggunian declared that the MOU was effective only for a period of six months starting
July 25, 2002.[10] Thereafter, on January 30, 2003, the Sanggunian adopted Resolution No.
13[11] extending the validity of Resolution No. 97 to April 30, 2003 and authorizing the mayor of
Manila to issue special business permits to the oil companies. [12]

This was the factual backdrop presented to the Court which became the basis of our March 7,
2007 decision. We ruled that respondent had the ministerial duty under the Local Government
Code (LGC) to enforce all laws and ordinances relative to the governance of the city,
[13]
including Ordinance No. 8027. We also held that we need not resolve the issue of whether
the MOU entered into by respondent with the oil companies and the subsequent resolutions
passed by the Sanggunian could amend or repeal Ordinance No. 8027 since the resolutions
which ratified the MOU and made it binding on the City of Manila expressly gave it full force
and effect only until April 30, 2003. We concluded that there was nothing that legally hindered
respondent from enforcing Ordinance No. 8027.

After we rendered our decision on March 7, 2007, the oil companies and DOE sought to
intervene and filed motions for reconsideration in intervention on March 12, 2007 and March
21, 2007 respectively. On April 11, 2007, we conducted the oral arguments in Baguio City to
hear petitioners, respondent and movants-intervenors oil companies and DOE.

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 the reclassification 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.

On June 26, 2002, the City of Manila and the Department of Energy (DOE) entered into a
memorandum of understanding (MOU)[8] with the oil companies. They agreed that the scaling

The oil companies called our attention to the fact that on April 25, 2003, Chevron had filed a
complaint against respondent and the City of Manila in the Regional Trial Court (RTC) of
Manila, Branch 39, for the annulment of Ordinance No. 8027 with application for writs of
preliminary prohibitory injunction and preliminary mandatory injunction. [14] The case was
docketed as civil case no. 03-106377. On the same day, Shell filed a petition for prohibition
and mandamus likewise assailing the validity of Ordinance No. 8027 and with application for
writs of preliminary prohibitory injunction and preliminary mandatory injunction. [15] This was
docketed as civil case no. 03-106380. Later on, these two cases were consolidated and the
RTC of Manila, Branch 39 issued an order dated May 19, 2003 granting the applications for
writs of preliminary prohibitory injunction and preliminary mandatory injunction:

WHEREFORE, upon the filing of a total bond of TWO MILLION (Php 2,000,000.00) PESOS,
let a Writ of Preliminary Prohibitory Injunction be issued ordering [respondent] and the City of
Manila, their officers, agents, representatives, successors, and any other persons assisting or
acting in their behalf, during the pendency of the case, to REFRAIN from taking steps to
enforce Ordinance No. 8027, and let a Writ of Preliminary Mandatory Injunction be issued

ordering [respondent] to issue [Chevron and Shell] the necessary Business Permits to operate
at the Pandacan Terminal.[16]

Petron likewise filed its own petition in the RTC of Manila, Branch 42, also attacking the
validity of Ordinance No. 8027 with prayer for the issuance of a writ of preliminary injunction
and/or temporary restraining order (TRO). This was docketed as civil case no. 03-106379. In
an order dated August 4, 2004, the RTC enjoined the parties to maintain the status quo. [17]
Thereafter, in 2006, the city council of Manila enacted Ordinance No. 8119, also known as the
Manila Comprehensive Land Use Plan and Zoning Ordinance of 2006. [18] This was approved
by respondent on June 16, 2006.[19]

During the oral arguments, the parties submitted to this Courts power to rule on the
constitutionality and validity of Ordinance No. 8027 despite the pendency of consolidated
cases involving this issue in the RTC.[27] The importance of settling this controversy as fully
and as expeditiously as possible was emphasized, considering its impact on public
interest. Thus, we will also dispose of this issue here. The parties were after all given ample
opportunity to present and argue their respective positions. By so doing, we will do away with
the delays concomitant with litigation and completely adjudicate an issue which will most likely
reach us anyway as the final arbiter of all legal disputes.

Before we resolve these issues, a brief review of the history of the Pandacan Terminals is
called for to put our discussion in the proper context.
Aggrieved anew, Chevron and Shell filed a complaint in the RTC of Manila, Branch 20, asking
for the nullification of Ordinance No. 8119.[20] This was docketed as civil case no. 06115334. Petron filed its own complaint on the same causes of action in the RTC of Manila,
Branch 41.[21] This was docketed as civil case no. 07-116700.[22] The court issued a TRO in
favor of Petron, enjoining the City of Manila and respondent from enforcing Ordinance No.
8119.[23]

Meanwhile, in civil case no. 03-106379, the parties filed a joint motion to withdraw complaint
and counterclaim on February 20, 2007.[24] In an order dated April 23, 2007, the joint motion
was granted and all the claims and counterclaims of the parties were withdrawn. [25]

Given these additional pieces of information, the following were submitted as issues for our
resolution:

1. whether movants-intervenors should be allowed to intervene in this case; [26]

2. whether the following are impediments to the execution of our March 7, 2007 decision:
(a)
Ordinance No. 8119, the enactment and existence of which were not previously
brought by the parties to the attention of the Court and
(b) writs of preliminary prohibitory injunction and preliminary mandatory injunction and
status quo order issued by the RTC of Manila, Branches 39 and 42 and
3. whether the implementation of Ordinance No. 8027 will unduly encroach upon the DOEs
powers and functions involving energy resources.

History Of The Pandacan

Oil Terminals

Pandacan (one of the districts of the City of Manila) is situated along the banks of the Pasig
river. At the turn of the twentieth century, Pandacan was unofficially designated as the
industrial center of Manila. The area, then largely uninhabited, was ideal for various emerging
industries as the nearby river facilitated the transportation of goods and products. In the
1920s, it was classified as an industrial zone.[28]Among its early industrial settlers were the oil
companies. Shell established its installation there on January 30, 1914. [29] Caltex (now
Chevron) followed suit in 1917 when the company began marketing its products in the
country.[30] In 1922, it built a warehouse depot which was later converted into a key distribution
terminal.[31] The corporate presence in the Philippines of Esso (Petrons predecessor) became
more keenly felt when it won a concession to build and operate a refinery in Bataan in 1957.
[32]
It then went on to operate a state-of-the-art lube oil blending plant in the Pandacan
Terminals where it manufactures lubes and greases.[33]

On December 8, 1941, the Second World War reached the shores of the Philippine
Islands. Although Manila was declared an open city, the Americans had no interest in
welcoming the Japanese. In fact, in their zealous attempt to fend off the Japanese Imperial
Army, the United States Army took control of the Pandacan Terminals and hastily made plans
to destroy the storage facilities to deprive the advancing Japanese Army of a valuable logistics

weapon.[34] The U.S. Army burned unused petroleum, causing a frightening conflagration.
Historian Nick Joaquin recounted the events as follows:

After the USAFFE evacuated the City late in December 1941, all army fuel storage dumps
were set on fire. The flames spread, enveloping the City in smoke, setting even the rivers
ablaze, endangering bridges and all riverside buildings. For one week longer, the open city
blazeda cloud of smoke by day, a pillar of fire by night. [35]

The fire consequently destroyed the Pandacan Terminals and rendered its network of depots
and service stations inoperative.[36]

After the war, the oil depots were reconstructed. Pandacan changed as Manila rebuilt
itself. The three major oil companies resumed the operation of their depots. [37] But the district
was no longer a sparsely populated industrial zone; it had evolved into a bustling,
hodgepodge community. Today, Pandacan has become a densely populated area inhabited by
about 84,000 people, majority of whom are urban poor who call it home. [38]Aside from
numerous industrial installations, there are also small businesses, churches, restaurants,
schools, daycare centers and residences situated there.[39] Malacaang Palace, the official
residence of the President of the Philippines and the seat of governmental power, is just two
kilometers away.[40] There is a private school near the Petron depot. Along the walls of the
Shell facility are shanties of informal settlers.[41] More than 15,000 students are enrolled in
elementary and high schools situated near these facilities. [42] A university with a student
population of about 25,000 is located directly across the depot on the banks of the Pasig river.

Intervention Of The Oil Companies And The DOE Should Be Allowed In The Interest of Justice

Intervention is a remedy by which a third party, not originally impleaded in the proceedings,
becomes a litigant therein to enable him, her or it to protect or preserve a right or interest
which may be affected by such proceedings.[50] The pertinent rules are Sections 1 and 2, Rule
19 of the Rules of Court:

SEC. 1. Who may intervene. A person who has a legal interest in the matter in litigation, or in
the success of either of the parties, or an interest against both, or is so situated as to be
adversely affected by a distribution or other disposition of property in the custody of the court
or of an officer thereof may, with leave of court, be allowed to intervene in the action. The
court shall consider whether or not the intervention will unduly delay or prejudice the
adjudication of the rights of the original parties, and whether or not the intervenors rights may
be fully protected in a separate proceeding.

SEC. 2. Time to intervene. The motion to intervene may be filed at any time before rendition of
judgment by the trial court. A copy of the pleading-in-intervention shall be attached to the
motion and served on the original parties.

Thus, the following are the requisites for intervention of a non-party:

[43]

(1) Legal interest

The 36-hectare Pandacan Terminals house the oil companies distribution terminals and depot
facilities.[44] The refineries of Chevron and Shell in Tabangao and Bauan, both in Batangas,
respectively, are connected to the Pandacan Terminals through a 114kilometer[45] underground pipeline system.[46] Petrons refinery in Limay, Bataan, on the other
hand, also services the depot.[47] The terminals store fuel and other petroleum products and
supply 95% of the fuel requirements of Metro Manila, [48] 50% of Luzons consumption and 35%
nationwide.[49] Fuel can also be transported through barges along the Pasig river or tank trucks
via the South Luzon Expressway.

We now discuss the first issue: whether movants-intervenors should be allowed to intervene in
this case.

(a) in the matter in controversy; or

(b) in the success of either of the parties; or
I against both parties; or
(d) person is so situated as to be adversely affected by a distribution or other disposition of
property in the custody of the court or of an officer thereof;

(2) Intervention will not unduly delay or prejudice the adjudication of rights of original parties;

(3) Intervenors rights may not be fully protected in a separate proceeding [51] and

(g)The motion to intervene may be filed at any time before rendition of judgment by the trial
court.

For both the oil companies and DOE, the last requirement is definitely absent. As a rule,
intervention is allowed before rendition of judgment as Section 2, Rule 19 expressly provides.
Both filed their separate motions after our decision was promulgated. In Republic of the
Philippines v. Gingoyon,[52] a recently decided case which was also an original action filed in
this Court, we declared that the appropriate time to file the motions-in-intervention was before
and not after resolution of the case.[53]

The Court, however, has recognized exceptions to Section 2, Rule 19 in the interest of
substantial justice:

The rule on intervention, like all other rules of procedure, is intended to make the powers of
the Court fully and completely available for justice. It is aimed to facilitate a comprehensive
adjudication of rival claims overriding technicalities on the timeliness of the filing thereof. [54]

We agree that the oil companies have a direct and immediate interest in the implementation of
Ordinance No. 8027. Their claim is that they will need to spend billions of pesos if they are
compelled to relocate their oil depots out of Manila. Considering that they admitted knowing
about this case from the time of its filing on December 4, 2002, they should have intervened
long before our March 7, 2007 decision to protect their interests. But they did not.[57] Neither
did they offer any worthy explanation to justify their late intervention.

Be that as it may, although their motion for intervention was not filed on time, we will allow it
because they raised and presented novel issues and arguments that were not considered by
the Court in its March 7, 2007 decision. After all, the allowance or disallowance of a motion to
intervene is addressed to the sound discretion of the court before which the case is pending.
[58]
Considering the compelling reasons favoring intervention, we do not think that this will
unduly delay or prejudice the adjudication of rights of the original parties. In fact, it will be
expedited since their intervention will enable us to rule on the constitutionality of Ordinance
No. 8027 instead of waiting for the RTCs decision.
The DOE, on the other hand, alleges that its interest in this case is also direct and immediate
as Ordinance No. 8027 encroaches upon its exclusive and national authority over matters
affecting the oil industry. It seeks to intervene in order to represent the interests of the
members of the public who stand to suffer if the Pandacan Terminals operations are
discontinued. We will tackle the issue of the alleged encroachment into DOEs domain later
on. Suffice it to say at this point that, for the purpose of hearing all sides and considering the
transcendental importance of this case, we will also allow DOEs intervention.

The oil companies assert that they have a legal interest in this case because the
implementation of Ordinance No. 8027 will directly affect their business and property rights. [55]

[T]he interest which entitles a person to intervene in a suit between other parties must be in
the matter in litigation and of such direct and immediate character that the intervenor will
either gain or lose by direct legal operation and effect of the judgment. Otherwise, if persons
not parties to the action were allowed to intervene, proceedings would become unnecessarily
complicated, expensive and interminable. And this would be against the policy of the law. The
words an interest in the subject means a direct interest in the cause of action as pleaded, one
that would put the intervenor in a legal position to litigate a fact alleged in the complaint
without the establishment of which plaintiff could not recover. [56]

The Injunctive Writs Are Not Impediments To The Enforcement Of Ordinance No. 8027

Under Rule 65, Section 3[59] 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.According to the oil companies, respondent did not unlawfully fail or neglect to enforce
Ordinance No. 8027 because he was lawfully prevented from doing so by virtue of the
injunctive writs and status quo order issued by the RTC of Manila, Branches 39 and 42.

First, we note that while Chevron and Shell still have in their favor the writs of preliminary
injunction and preliminary mandatory injunction, the status quo order in favor of Petron is no
longer in effect since the court granted the joint motion of the parties to withdraw the complaint
and counterclaim.[60]

Second, the original parties failed to inform the Court about these injunctive writs. Respondent
(who was also impleaded as a party in the RTC cases) defends himself by saying that he
informed the court of the pendency of the civil cases and that a TRO was issued by the RTC
in the consolidated cases filed by Chevron and Shell. It is true that had the oil companies only
intervened much earlier, the Court would not have been left in the dark about these facts.
Nevertheless, respondent should have updated the Court, by way of manifestation, on such a
relevant matter.

In his memorandum, respondent mentioned the issuance of a TRO. Under Section 5 of Rule
58 of the Rules of Court, a TRO issued by the RTC is effective only for a period of 20 days.
This is why, in our March 7, 2007 decision, we presumed with certainty that this had already
lapsed.[61] Respondent also mentioned the grant of injunctive writs in his rejoinder which the
Court, however, expunged for being a prohibited pleading. The parties and their counsels
were clearly remiss in their duties to this Court.

In resolving controversies, courts can only consider facts and issues pleaded by the parties.
[62]
Courts, as well as magistrates presiding over them are not omniscient. They can only act
on the facts and issues presented before them in appropriate pleadings. They may not even
substitute their own personal knowledge for evidence. Nor may they take notice of matters
except those expressly provided as subjects of mandatory judicial notice.

(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief
consists in restraining the commission or continuance of the act or acts complained of, or in
requiring the performance of an act or acts, either for a limited period or perpetually;

(b) That the commission, continuance or nonperformance of the act or acts complained of
during the litigation would probably work injustice to the applicant; or

(g)
IThat a party, court, agency or a person is doing, threatening, or is attempting to do,
or is procuring or suffering to be done, some act or acts probably in violation of the rights of
the applicant respecting the subject of the action or proceeding, and tending to render the
judgment ineffectual.

There are two requisites for the issuance of a preliminary injunction: (1) the right to be
protected exists prima facie and (2) the acts sought to be enjoined are violative of that right. It
must be proven that the violation sought to be prevented will cause an irreparable injustice.

The act sought to be restrained here was the enforcement of Ordinance No. 8027. It is a
settled rule that an ordinance enjoys the presumption of validity and, as such, cannot be
restrained by injunction.[63] Nevertheless, when the validity of the ordinance is assailed, the
courts are not precluded from issuing an injunctive writ against its enforcement. However, we
have declared that the issuance of said writ is proper only when:

We now proceed to the issue of whether the injunctive writs are legal impediments to the
enforcement of Ordinance No. 8027.

... the petitioner assailing the ordinance has made out a case of unconstitutionality strong
enough to overcome, in the mind of the judge, the presumption of validity, in addition to a
showing of a clear legal right to the remedy sought.... [64] (Emphasis supplied)

Section 3, Rule 58 of the Rules of Court enumerates the grounds for the issuance of a writ of
preliminary injunction:

Judge Reynaldo G. Ros, in his order dated May 19, 2003, stated his basis for issuing the
injunctive writs:

SEC. 3. Grounds for issuance of preliminary injunction. A preliminary injunction may be

granted when it is established:

The Court, in resolving whether or not a Writ of Preliminary Injunction or Preliminary

Mandatory Injunction should be issued, is guided by the following requirements: (1) a clear
legal right of the complainant; (2) a violation of that right; and (3) a permanent and urgent

necessity for the Writ to prevent serious damage. The Court believes that these requisites are
present in these cases.

There is no doubt that the plaintiff/petitioners have been legitimately operating their business
in the Pandacan Terminal for many years and they have made substantial capital investment
therein. Every year they were issued Business Permits by the City of Manila. Its operations
have not been declared illegal or contrary to law or morals. In fact, because of its vital
importance to the national economy, it was included in the Investment Priorities Plan as
mandated under the Downstream Oil Industry Deregulation Act of 1988 (R.A. 8479). As a
lawful business, the plaintiff/petitioners have a right, therefore, to continue their operation in
the Pandacan Terminal and the right to protect their investments. This is a clear and
unmistakable right of the plaintiff/petitioners.

The enactment, therefore, of City Ordinance No. 8027 passed by the City Council of Manila
reclassifying the area where the Pandacan Terminal is located from Industrial II to Commercial
I and requiring the plaintiff/petitioners to cease and desist from the operation of their business
has certainly violated the rights of the plaintiff/petitioners to continue their legitimate business
in the Pandacan Terminal and deprived them of their huge investments they put up
therein. Thus, before the Court, therefore, determines whether the Ordinance in question is
valid or not, a Writ of Preliminary Injunction and a Writ of Mandatory Injunction be issued to
prevent serious and irreparable damage to plaintiff/petitioners. [65]

Xxx

...[Courts] accord the presumption of constitutionality to legislative enactments, not only

because the legislature is presumed to abide by the Constitution but also because the
judiciary[,] in the determination of actual cases and controversies[,] must reflect the wisdom
and justice of the people as expressed through their representatives in the executive and
legislative departments of the government.[69]

The oil companies argue that this presumption must be set aside when the invalidity or
unreasonableness appears on the face of the ordinance itself. [70] We see no reason to set
aside the presumption. The ordinance, on its face, does not at all appear to be
unconstitutional. It reclassified the subject area from industrial to commercial. Prima facie, this
power is within the power of municipal corporations:

The power of municipal corporations to divide their territory into industrial, commercial and
residential zones is recognized in almost all jurisdictions inasmuch as it is derived from the
police power itself and is exercised for the protection and benefit of their inhabitants. [71]

Xxx
Nowhere in the judges discussion can we see that, in addition to a showing of a clear legal
right of Chevron and Shell to the remedy sought, he was convinced that they had made out a
case of unconstitutionality or invalidity strong enough to overcome the presumption of validity
of the ordinance. Statutes and ordinances are presumed valid unless and until the courts
declare the contrary in clear and unequivocal terms. [66] The mere fact that the ordinance is
alleged to be unconstitutional or invalid will not entitle a party to have its enforcement
enjoined.[67] The presumption is all in favor of validity. The reason for this is obvious:

The action of the elected representatives of the people cannot be lightly set aside. The
councilors must, in the very nature of things, be familiar with the necessities of their particular
municipality and with all the facts and circumstances which surround the subject and
necessitate action. The local legislative body, by enacting the ordinance, has in effect given
notice that the regulations are essential to the well being of the people . . . The Judiciary
should not lightly set aside legislative action when there is not a clear invasion of personal or
property rights under the guise of police regulation. [68]

There can be no doubt that the City of Manila has the power to divide its territory into
residential and industrial zones, and to prescribe that offensive and unwholesome trades and
occupations are to be established exclusively in the latter zone.

Xxx xxx xxx

Likewise, it cannot be denied that the City of Manila has the authority, derived from the police
power, of forbidding the appellant to continue the manufacture of toyo in the zone where it is
now situated, which has been declared residential....[72]

Courts will not invalidate an ordinance unless it clearly appears that it is unconstitutional.
There is no such showing here. Therefore, the injunctive writs issued in the Manila RTCs May
19, 2003 order had no leg to stand on.

We are aware that the issuance of these injunctive writs is not being assailed as tainted with
grave abuse of discretion. However, we are confronted with the question of whether these
writs issued by a lower court are impediments to the enforcement of Ordinance No. 8027
(which is the subject of the mandamus petition). As already discussed, we rule in the negative.

and to which it does not have access. The party asking the court to take judicial notice is
obligated to supply the court with the full text of the rules the party desires it to have notice of.
[75]
Counsel should take the initiative in requesting that a trial court take judicial notice of an
ordinance even where a statute requires courts to take judicial notice of local ordinances. [76]
The intent of a statute requiring a court to take judicial notice of a local ordinance is to remove
any discretion a court might have in determining whether or not to take notice of an ordinance.
Such a statute does not direct the court to act on its own in obtaining evidence for the record
and a party must make the ordinance available to the court for it to take notice. [77]

In its defense, respondent claimed that he did not inform the Court about the enactment of
Ordinance No. 8119 because he believed that it was different from Ordinance No. 8027 and
that the two were not inconsistent with each other. [78]
Ordinance No. 8027 Was Not Superseded By Ordinance No. 8119
In the same way that we deem the intervenors late intervention in this case unjustified, we find
the failure of respondent, who was an original party here, inexcusable.
The March 7, 2007 decision did not take into consideration the passage of Ordinance No.
8119 entitled An Ordinance Adopting the Manila Comprehensive Land Use Plan and Zoning
Regulations of 2006 and Providing for the Administration, Enforcement and Amendment
thereto which was approved by respondent on June 16, 2006. The simple reason was that the
Court was never informed about this ordinance.

While courts are required to take judicial notice of the laws enacted by Congress, the rule with
respect to local ordinances is different. Ordinances are not included in the enumeration of
matters covered by mandatory judicial notice under Section 1, Rule 129 of the Rules of Court.
[73]

The Rule On Judicial Admissions Is Not Applicable Against Respondent

The oil companies assert that respondent judicially admitted that Ordinance No. 8027 was
repealed by Ordinance No. 8119 in civil case no. 03-106379 (where Petron assailed the
constitutionality of Ordinance No. 8027) when the parties in their joint motion to withdraw
complaint and counterclaim stated that the issue ...has been rendered moot and academic by
virtue of the passage of [Ordinance No. 8119].[79] They contend that such admission worked as
an estoppel against the respondent.

Although, Section 50 of RA 409[74] provides that:

SEC. 50 Judicial notice of ordinances. - All courts sitting in the city shall take judicial notice of
the ordinances passed by the [Sangguniang Panglungsod].

This cannot be taken to mean that this Court, since it has its seat in the City of Manila, should
have taken steps to procure a copy of the ordinance on its own, relieving the party of any duty
to inform the Court about it.
Even where there is a statute that requires a court to take judicial notice of municipal
ordinances, a court is not required to take judicial notice of ordinances that are not before it

Respondent countered that this stipulation simply meant that Petron was recognizing the
validity and legality of Ordinance No. 8027 and that it had conceded the issue of said
ordinances constitutionality, opting instead to question the validity of Ordinance No. 8119.
[80]
The oil companies deny this and further argue that respondent, in his answer in civil case
no. 06-115334 (where Chevron and Shell are asking for the nullification of Ordinance No.
8119), expressly stated that Ordinance No. 8119 replaced Ordinance No. 8027: [81]

... Under Ordinance No. 8027, businesses whose uses are not in accord with the
reclassification were given six months to cease [their] operation. Ordinance No. 8119, which in
effect, replaced Ordinance [No.] 8027, merely took note of the time frame provided for in

Ordinance No. 8119.... Ordinance No. 8119 thus provided for an even longer term, that is[,]
seven years;[82] (Emphasis supplied)
Rule 129, Section 4 of the Rules of Court provides:

Section 4. Judicial admissions. An admission, verbal or written, made by a party in the

course of the proceedings in the same case, does not require proof. The admission may be
contradicted only by showing that it was made through palpable mistake or that no such
admission was made. (Emphasis supplied)

While it is true that a party making a judicial admission cannot subsequently take a position
contrary to or inconsistent with what was pleaded,[83] the aforestated rule is not applicable
here. Respondent made the statements regarding the ordinances in civil case nos. 03-106379
and 06-115334 which are not the same as this case before us. [84] To constitute a judicial
admission, the admission must be made in the same case in which it is offered.
Hence, respondent is not estopped from claiming that Ordinance No. 8119 did not supersede
Ordinance No. 8027. On the contrary, it is the oil companies which should be considered
estopped. They rely on the argument that Ordinance No. 8119 superseded Ordinance No.
8027 but, at the same time, also impugn its (8119s) validity. We frown on the adoption of
inconsistent positions and distrust any attempt at clever positioning under one or the other on
the basis of what appears advantageous at the moment. Parties cannot take vacillating or
contrary positions regarding the validity of a statute [85] or ordinance. Nonetheless, we will look
into the merits of the argument of implied repeal.

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. (Emphasis supplied)

Moreover, Ordinance No. 8119 provides for a phase-out of seven years:

SEC. 72. Existing Non-Conforming Uses and Buildings. - The lawful use of any building,
structure or land at the time of the adoption of this Ordinance may be continued, although
such use does not conform with the provision of the Ordinance, provided:

xxx xxx xxx

(g)

In case the non-conforming use is an industrial use:

xxx xxx xxx

Ordinance No. 8119 Did Not Impliedly Repeal Ordinance No. 8027

Both the oil companies and DOE argue that Ordinance No. 8119 repealed Ordinance No.
8027. They assert that although there was no express repeal[86] of Ordinance No. 8027,
Ordinance No. 8119 impliedly repealed it.

According to the oil companies, Ordinance No. 8119 reclassified the area covering the
Pandacan Terminals to High Density Residential/Mixed Use Zone (R-3/MXD) [87] whereas
Ordinance No. 8027 reclassified the same area from Industrial II to Commercial I:

d. The land use classified as non-conforming shall program the phase-out and relocation of
the non-conforming use within seven (7) years from the date of effectivity of this
Ordinance. (Emphasis supplied)

This is opposed to Ordinance No. 8027 which compels affected entities to vacate the area
within six months from the effectivity of the ordinance:

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. 8119 also designated the Pandacan oil depot area as a Planned Unit
Development/Overlay Zone (O-PUD):

SEC. 23. Use Regulations in Planned Unit Development/Overlay Zone (O-PUD). O-PUD
Zones are identified specific sites in the City of Manila wherein the project site is
comprehensively planned as an entity via unitary site plan which permits flexibility in planning/
design, building siting, complementarily of building types and land uses, usable open spaces
and the preservation of significant natural land features, pursuant to regulations specified for
each particular PUD. Enumerated below are identified PUD:

passage of Ordinance No. 8119.[89] He quotes an excerpt from the minutes of the July 27,
2004 session of the Sanggunian during the first reading of Ordinance No. 8119:
Member GARCIA: Your Honor, iyong patungkol po roon sa oil depot doon sa amin sa Sixth
District sa Pandacan, wala pong nakalagay eith sa ordinansa rito na taliwas o kakaiba roon sa
ordinansang ipinasa noong nakaraang Konseho, iyong Ordinance No. 8027. So kung ano po
ang nandirito sa ordinansa na ipinasa ninyo last time, iyon lang po ang ni-lift eithe at inilagay
eith. At eith eith ordinansang iyong naipasa ng huling Konseho, niri-classify [ninyo] from
Industrial II to Commercial C-1 ang area ng Pandacan kung nasaan ang oil depot. So ini-lift
lang po [eithe] iyong definition, density, at saka po yon pong ng noong ordinansa ninyo na siya
eith naming inilagay eith, iniba lang po naming iyong title. So wala po kaming binago na
taliwas o nailagay na taliwas doon sa ordinansang ipinasa ninyo, ni-lift lang po [eithe] from
Ordinance No. 8027.[90] (Emphasis supplied)

We agree with respondent.

xxx xxx xxx
Repeal by implication proceeds on the premise that where a statute of later date clearly
reveals the intention of the legislature to abrogate a prior act on the subject, that intention
must be given effect.[91]
6.

Pandacan Oil Depot Area

There are two kinds of implied repeal. The first is: where the provisions in the two acts on the
same subject matter are irreconcilably contradictory, the latter act, to the extent of the conflict,
constitutes an implied repeal of the earlier one.[92] The second is: if the later act covers the
whole subject of the earlier one and is clearly intended as a substitute, it will operate to repeal
the earlier law.[93] The oil companies argue that the situation here falls under the first category.

xxx xxx xxx

Enumerated below are the allowable uses:

1.

all uses allowed in all zones where it is located

2.
the [Land Use Intensity Control (LUIC)] under which zones are located shall, in
all instances be complied with
3.
the validity of the prescribed LUIC shall only be [superseded] by the
development controls and regulations specified for each PUD as provided for each PUD as
provided for by the masterplan of respective PUDs.[88] (Emphasis supplied)
Respondent claims that in passing Ordinance No. 8119, the Sanggunian did not intend to
repeal Ordinance No. 8027 but meant instead to carry over 8027s provisions to 8119 for the
purpose of making Ordinance No. 8027 applicable to the oil companies even after the

Implied repeals are not favored and will not be so declared unless the intent of the legislators
is manifest.[94] As statutes and ordinances are presumed to be passed only after careful
deliberation and with knowledge of all existing ones on the subject, it follows that, in passing a
law, the legislature did not intend to interfere with or abrogate a former law relating to the
same subject matter.[95] If the intent to repeal is not clear, the later act should be construed as
a continuation of, and not a substitute for, the earlier act. [96]

These standards are deeply enshrined in our jurisprudence. We disagree that, in enacting
Ordinance No. 8119, there was any indication of the legislative purpose to repeal Ordinance
No. 8027.[97] The excerpt quoted above is proof that there was never such an intent. While it is
true that both ordinances relate to the same subject matter, i.e. classification of the land use of

the area where Pandacan oil depot is located, if there is no intent to repeal the earlier
enactment, every effort at reasonable construction must be made to reconcile the ordinances
so that both can be given effect:

The fact that a later enactment may relate to the same subject matter as that of an earlier
statute is not of itself sufficient to cause an implied repeal of the prior act, since the new
statute may merely be cumulative or a continuation of the old one. What is necessary is a
manifest indication of legislative purpose to repeal. [98]

For the first kind of implied repeal, there must be an irreconcilable conflict between the two
ordinances. There is no conflict between the two ordinances. Ordinance No. 8027 reclassified
the Pandacan area from Industrial II to Commercial I. Ordinance No. 8119, in Section 23,
designated it as a Planned Unit Development/Overlay Zone (O-PUD). In its Annex C which
defined the zone boundaries,[99] the Pandacan area was shown to be within the High Density
Residential/Mixed Use Zone (R-3/MXD). These zone classifications in Ordinance No. 8119
are not inconsistent with the reclassification of the Pandacan area from Industrial to
Commercial in Ordinance No. 8027. The O-PUD classification merely made Pandacan a
project site ... comprehensively planned as an entity via unitary site plan which permits
flexibility in planning/design, building siting, complementarity of building types and land uses,
usable open spaces and the preservation of significant natural land features.... [100] Its
classification as R-3/MXD means that it should be used primarily for high-rise
housing/dwelling purposes and limited complementary/supplementary trade, services and
business activities.[101] There is no conflict since both ordinances actually have a common
objective, i.e., to shift the zoning classification from industrial to commercial (Ordinance No.
8027) or mixed residential/commercial (Ordinance No. 8119).
Moreover, it is a well-settled rule in statutory construction that a subsequent general law does
not repeal a prior special law on the same subject unless it clearly appears that the legislature
has intended by the latter general act to modify or repeal the earlier special law. Generalia
specialibus non derogant (a general law does not nullify a specific or special law). [102] This is
so even if the provisions of the general law are sufficiently comprehensive to include what was
set forth in the special act.[103] The special act and the general law must stand together, one as
the law of the particular subject and the other as the law of general application. [104] The special
law must be taken as intended to constitute an exception to, or a qualification of, the general
act or provision.[105]

The reason for this is that the legislature, in passing a law of special character, considers and
makes special provisions for the particular circumstances dealt with by the special law. This

being so, the legislature, by adopting a general law containing provisions repugnant to those
of the special law and without making any mention of its intention to amend or modify such
special law, cannot be deemed to have intended an amendment, repeal or modification of the
latter.[106]

Ordinance No. 8027 is a special law[107] since it deals specifically with a certain area described
therein (the Pandacan oil depot area) whereas Ordinance No. 8119 can be considered a
general law[108] as it covers the entire city of Manila.

The oil companies assert that even if Ordinance No. 8027 is a special law, the existence of an
all-encompassing repealing clause in Ordinance No. 8119 evinces an intent on the part of
the Sanggunian to repeal the earlier ordinance:

Sec. 84. Repealing Clause. All ordinances, rules, regulations in conflict with the provisions of
this Ordinance are hereby repealed; PROVIDED, That the rights that are vested upon the
effectivity of this Ordinance shall not be impaired.

They cited Hospicio de San Jose de Barili, Cebu City v. Department of Agrarian Reform:[109]

The presence of such general repealing clause in a later statute clearly indicates the
legislative intent to repeal all prior inconsistent laws on the subject matter, whether the prior
law is a general law or a special law... Without such a clause, a later general law will ordinarily
not repeal a prior special law on the same subject. But with such clause contained in the
subsequent general law, the prior special law will be deemed repealed, as the clause is a
clear legislative intent to bring about that result. [110]

This ruling in not applicable here. The repealing clause of Ordinance No. 8119 cannot be
taken to indicate the legislative intent to repeal all prior inconsistent laws on the subject
matter, including Ordinance No. 8027, a special enactment, since the aforequoted minutes (an
official record of the discussions in the Sanggunian) actually indicated the clear intent to
preserve the provisions of Ordinance No. 8027.

To summarize, the conflict between the two ordinances is more apparent than real. The two
ordinances can be reconciled. Ordinance No. 8027 is applicable to the area particularly
described therein whereas Ordinance No. 8119 is applicable to the entire City of Manila.

Mandamus Lies To Compel Respondent Mayor To Enforce Ordinance No. 8027

Having ruled that there is no impediment to the enforcement of Ordinance No. 8027, we now
proceed to make a definitive ruling on its constitutionality and validity.

The tests of a valid ordinance are well established. For an ordinance to be valid, it must not
only be within the corporate powers of the LGU to enact and be passed according to the
procedure prescribed by law, it must also conform to the following substantive requirements:
(1) must not contravene the Constitution or any statute; (2) must not be unfair or oppressive;
(3) must not be partial or discriminatory; (4) must not prohibit but may regulate trade; (5) must
be general and consistent with public policy and (6) must not be unreasonable. [115]

The oil companies insist that mandamus does not lie against respondent in consideration of
the separation of powers of the executive and judiciary. [111] This argument is
misplaced. Indeed,
The City of Manila Has The Power To Enact Ordinance No. 8027
[the] Courts will not interfere by mandamus proceedings with the legislative [or executive
departments] of the government in the legitimate exercise of its powers, except to enforce
mere ministerial acts required by law to be performed by some officer thereof. [112] (Emphasis
Supplied)
since this is the function of a writ of mandamus, which is the power to compel the
performance of an act which the law specifically enjoins as a duty resulting from office, trust or
station.[113]

They also argue that petitioners had a plain, speedy and adequate remedy to compel
respondent to enforce Ordinance No. 8027 which was to seek relief from the President of the
Philippines through the Secretary of the Department of Interior and Local Government (DILG)
by virtue of the Presidents power of supervision over local government units. Again, we
disagree. A party need not go first to the DILG in order to compel the enforcement of an
ordinance. This suggested process would be unreasonably long, tedious and consequently
injurious to the interests of the local government unit (LGU) and its constituents whose welfare
is sought to be protected. Besides, petitioners resort to an original action formandamus before
this Court is undeniably allowed by the Constitution. [114]

Ordinance No. 8027 Is Constitutional And Valid

Ordinance No. 8027 was passed by the Sangguniang Panlungsod of Manila in the exercise of
its police power. Police power is the plenary power vested in the legislature to make statutes
and ordinances to promote the health, morals, peace, education, good order or safety and
general welfare of the people.[116] This power flows from the recognition that salus populi est
suprema lex (the welfare of the people is the supreme law).[117] While police power rests
primarily with the national legislature, such power may be delegated. [118] Section 16 of the
LGC, known as the general welfare clause, encapsulates the delegated police power to local
governments:[119]

Section 16. General Welfare. Every local government unit shall exercise the powers
expressly granted, those necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective governance, and those which are
essential to the promotion of the general welfare. Within their respective territorial jurisdictions,
local government units shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the people to a
balanced ecology, encourage and support the development of appropriate and self-reliant
scientific and technological capabilities, improve public morals, enhance economic prosperity
and social justice, promote full employment among their residents, maintain peace and order,
and preserve the comfort and convenience of their inhabitants.

The Enactment Of Ordinance No. 8027 Is A Legitimate Exercise Of Police Power

LGUs like the City of Manila exercise police power through their respective legislative bodies,
in this case, the Sangguniang Panlungsod or the city council. Specifically, the Sanggunian can
enact ordinances for the general welfare of the city:

Section. 458. Powers, Duties, Functions and Compensation. (a) The sangguniang
panglungsod, as the legislative branch of the city, shall enact ordinances, approve resolutions
and appropriate funds for the general welfare of the city and its inhabitants pursuant to
Section 16 of this Code xxxx

This police power was also provided for in RA 409 or the Revised Charter of the City of
Manila:

Section 18. Legislative powers. The [City Council] shall have the following legislative powers:

As with the State, local governments may be considered as having properly exercised their
police power only if the following requisites are met: (1) the interests of the public generally, as
distinguished from those of a particular class, require its exercise and (2) the means employed
are reasonably necessary for the accomplishment of the purpose and not unduly oppressive
upon individuals. In short, there must be a concurrence of a lawful subject and a lawful
method.[122]
Ordinance No. 8027 was enacted for the purpose of promoting sound urban planning,
ensuring health, public safety and general welfare [123] of the residents of
Manila. The Sanggunian was impelled to take measures to protect the residents of Manila
from catastrophic devastation in case of a terrorist attack on the Pandacan
Terminals. Towards this objective, the Sanggunian reclassified the area defined in the
ordinance from industrial to commercial.

The following facts were found by the Committee on Housing, Resettlement and Urban
Development of the City of Manila which recommended the approval of the ordinance:

xxx xxx xxx

(1) the depot facilities contained 313.5 million liters of highly flammable and highly volatile
products which include petroleum gas, liquefied petroleum gas, aviation fuel, diesel, gasoline,
kerosene and fuel oil among others;

(g)
To enact all ordinances it may deem necessary and proper for the sanitation and
safety, the furtherance of the prosperity, and the promotion of the morality, peace, good order,
comfort, convenience, and general welfare of the city and its inhabitants, and such others as
may be necessary to carry into effect and discharge the powers and duties conferred by this
chapter xxxx[120]

(2) the depot is open to attack through land, water or air;

Specifically, the Sanggunian has the power to reclassify land within the jurisdiction of the city.
[121]

(3) it is situated in a densely populated place and near Malacaang Palace and
(4) in case of an explosion or conflagration in the depot, the fire could spread to the
neighboring communities.[124]

The ordinance was intended to safeguard the rights to life, security and safety of all the
inhabitants of Manila and not just of a particular class. [125] The depot is perceived, rightly or
wrongly, as a representation of western interests which means that it is a terrorist target. As
long as it there is such a target in their midst, the residents of Manila are not safe. It therefore
became necessary to remove these terminals to dissipate the threat. According to respondent:

Such a public need became apparent after the 9/11 incident which showed that what was
perceived to be impossible to happen, to the most powerful country in the world at that, is

actually possible. The destruction of property and the loss of thousands of lives on that fateful
day became the impetus for a public need. In the aftermath of the 9/11 tragedy, the threats of
terrorism continued [such] that it became imperative for governments to take measures to
combat their effects.[126]

Wide discretion is vested on the legislative authority to determine not only what the interests
of the public require but also what measures are necessary for the protection of such
interests.[127] Clearly, the Sanggunian was in the best position to determine the needs of its
constituents.

In the exercise of police power, property rights of individuals may be subjected to restraints
and burdens in order to fulfill the objectives of the government. [128] Otherwise stated, the
government may enact legislation that may interfere with personal liberty, property, lawful
businesses and occupations to promote the general welfare. [129] However, the
interference must be reasonable and not arbitrary. And to forestall arbitrariness, the methods
or means used to protect public health, morals, safety or welfare must have a reasonable
relation to the end in view.[130]

The means adopted by the Sanggunian was the enactment of a zoning ordinance which
reclassified the area where the depot is situated from industrial to commercial. A zoning
ordinance is defined as a local city or municipal legislation which logically arranges,
prescribes, defines and apportions a given political subdivision into specific land uses as
present and future projection of needs.[131] As a result of the zoning, the continued operation of
the businesses of the oil companies in their present location will no longer be permitted. The
power to establish zones for industrial, commercial and residential uses is derived from the
police power itself and is exercised for the protection and benefit of the residents of a locality.
[132]
Consequently, the enactment of Ordinance No. 8027 is within the power of
the Sangguniang Panlungsod of the City of Manila and any resulting burden on those affected
cannot be said to be unjust:

There can be no doubt that the City of Manila has the power to divide its territory into
residential and industrial zones, and to prescribe that offensive and unwholesome trades and
occupations are to be established exclusively in the latter zone.

The benefits to be derived by cities adopting such regulations (zoning) may be summarized as
follows: They attract a desirable and assure a permanent citizenship; they foster pride in and
attachment to the city; they promote happiness and contentment; they stabilize the use and
value of property and promote the peace, [tranquility], and good order of the city. We do not
hesitate to say that the attainment of these objects affords a legitimate field for the exercise of
the police power. He who owns property in such a district is not deprived of its use by such
regulations. He may use it for the purposes to which the section in which it is located is
dedicated. That he shall not be permitted to use it to the desecration of the community
constitutes no unreasonable or permanent hardship and results in no unjust burden.

Xxx xxx xxx

The 14th Amendment protects the citizen in his right to engage in any lawful business, but it
does not prevent legislation intended to regulate useful occupations which, because of their
nature or location, may prove injurious or offensive to the public. [133]

We entertain no doubt that Ordinance No. 8027 is a valid police power measure because
there is a concurrence of lawful subject and lawful method.

Ordinance No. 8027 Is Not Unfair, Oppressive Or Confiscatory Which Amounts To Taking
Without Compensation

According to the oil companies, Ordinance No. 8027 is unfair and oppressive as it does not
only regulate but also absolutely prohibits them from conducting operations in the City of
Manila. Respondent counters that this is not accurate since the ordinance merely prohibits the
oil companies from operating their businesses in the Pandacan area.

Indeed, the ordinance expressly delineated in its title and in Section 1 what it pertained
to. Therefore, the oil companies contention is not supported by the text of the
ordinance. Respondent succinctly stated that:

The oil companies are not forbidden to do business in the City of Manila. They may still very
well do so, except that their oil storage facilities are no longer allowed in the Pandacan
area. Certainly, there are other places in the City of Manila where they can conduct this

specific kind of business. Ordinance No. 8027 did not render the oil companies illegal. The
assailed ordinance affects the oil companies business only in so far as the Pandacan area is
concerned.[134]

The oil companies are not prohibited from doing business in other appropriate zones in
Manila. The City of Manila merely exercised its power to regulate the businesses and
industries in the zones it established:

As to the contention that the power to regulate does not include the power to prohibit, it will be
seen that the ordinance copied above does not prohibit the installation of motor engines within
the municipality of Cabanatuan but only within the zone therein fixed. If the municipal council
of Cabanatuan is authorized to establish said zone, it is also authorized to provide what kind
of engines may be installed therein. In banning the installation in said zone of all engines not
excepted in the ordinance, the municipal council of Cabanatuan did no more than regulate
their installation by means of zonification.[135]

Police power proceeds from the principle that every holder of property, however absolute and
unqualified may be his title, holds it under the implied liability that his use of it shall not be
injurious to the equal enjoyment of others having an equal right to the enjoyment of their
property, nor injurious to the right of the community. Rights of property, like all other social and
conventional rights, are subject to reasonable limitations in their enjoyment as shall prevent
them from being injurious, and to such reasonable restraints and regulations established by
law as the legislature, under the governing and controlling power vested in them by the
constitution, may think necessary and expedient.[139]

In the regulation of the use of the property, nobody else acquires the use or interest therein,
hence there is no compensable taking.[140] In this case, the properties of the oil companies and
other businesses situated in the affected area remain theirs. Only their use is restricted
although they can be applied to other profitable uses permitted in the commercial zone.

Ordinance No. 8027 Is Not

The oil companies aver that the ordinance is unfair and oppressive because they have
invested billions of pesos in the depot.[136] Its forced closure will result in huge losses in
income and tremendous costs in constructing new facilities.

Their contention has no merit. In the exercise of police power, there is a limitation on or
restriction of property interests to promote public welfare which involves no compensable
taking. Compensation is necessary only when the states power of eminent domain is
exercised. In eminent domain, property is appropriated and applied to some public purpose.
Property condemned under the exercise of police power, on the other hand, is noxious or
intended for a noxious or forbidden purpose and, consequently, is not compensable. [137] The
restriction imposed to protect lives, public health and safety from danger is not a taking. It is
merely the prohibition or abatement of a noxious use which interferes with paramount rights of
the public.
Property has not only an individual function, insofar as it has to provide for the needs of the
owner, but also a social function insofar as it has to provide for the needs of the other
members of society.[138] The principle is this:

Partial And Discriminatory

The oil companies take the position that the ordinance has discriminated against and singled
out the Pandacan Terminals despite the fact that the Pandacan area is congested with
buildings and residences that do not comply with the National Building Code, Fire Code and
Health and Sanitation Code.[141]

This issue should not detain us for long. An ordinance based on reasonable classification
does not violate the constitutional guaranty of the equal protection of the law. [142] The
requirements for a valid and reasonable classification are: (1) it must rest on substantial
distinctions; (2) it must be germane to the purpose of the law; (3) it must not be limited to
existing conditions only and (4) it must apply equally to all members of the same class. [143]

The law may treat and regulate one class differently from another class provided there are
real and substantial differences to distinguish one class from another. [144] Here, there is a
reasonable classification. We reiterate that what the ordinance seeks to prevent is a

catastrophic devastation that will result from a terrorist attack. Unlike the depot, the
surrounding community is not a high-value terrorist target. Any damage caused by fire or
explosion occurring in those areas would be nothing compared to the damage caused by a
fire or explosion in the depot itself. Accordingly, there is a substantial distinction. The
enactment of the ordinance which provides for the cessation of the operations of these
terminals removes the threat they pose. Therefore it is germane to the purpose of the
ordinance. The classification is not limited to the conditions existing when the ordinance was
enacted but to future conditions as well. Finally, the ordinance is applicable to all businesses
and industries in the area it delineated.
Ordinance No. 8027 is Not Inconsistent With RA 7638 And RA 8479

SECTION 7. Promotion of Fair Trade Practices. The Department of Trade and Industry
(DTI) and DOE shall take all measures to promote fair trade and prevent cartelization,
monopolies, combinations in restraint of trade, and any unfair competition in the Industry as
defined in Article 186 of the Revised Penal Code, and Articles 168 and 169 of Republic Act
No. 8293, otherwise known as the Intellectual Property Rights Law. The DOE shall continue
to encourage certain practices in the Industry which serve the public interest and are intended
to achieve efficiency and cost reduction, ensure continuous supply of petroleum products, and
enhance environmental protection. These practices may include borrow-and-loan agreements,
rationalized depot and manufacturing operations, hospitality agreements, joint tanker and
pipeline utilization, and joint actions on oil spill control and fire prevention. (Emphasis
supplied)
Respondent counters that DOEs regulatory power does not preclude LGUs from exercising
their police power.[153]

The oil companies and the DOE assert that Ordinance No. 8027 is unconstitutional because it
contravenes RA 7638 (DOE Act of 1992)[145]and RA 8479 (Downstream Oil Industry
Deregulation Law of 1998).[146] They argue that through RA 7638, the national legislature
declared it a policy of the state to ensure a continuous, adequate, and economic supply of
energy[147] and created the DOE to implement this policy. Thus, under Section 5 I, DOE is
empowered to establish and administer programs for the exploration, transportation,
marketing, distribution, utilization, conservation, stockpiling, and storage of energy
resources. Considering that the petroleum products contained in the Pandacan Terminals are
major and critical energy resources, they conclude that their administration, storage,
distribution and transport are of national interest and fall under DOEs primary and exclusive
jurisdiction.[148]

Indeed, ordinances should not contravene existing statutes enacted by Congress. The
rationale for this was clearly explained in Magtajas vs. Pryce Properties Corp., Inc.:[154]

They further assert that the terminals are necessary for the delivery of immediate and
adequate supply of oil to its recipients in the most economical way. [149] Local legislation such
as Ordinance No. 8027 (which effectively calls for the removal of these terminals) allegedly
frustrates the state policy of ensuring a continuous, adequate, and economic supply of energy
expressed in RA 7638, a national law.[150] Likewise, the ordinance thwarts the determination of
the DOE that the terminals operations should be merely scaled down and not discontinued.
[151]
They insist that this should not be allowed considering that it has a nationwide economic
impact and affects public interest transcending the territorial jurisdiction of the City of Manila.

Municipal corporations owe their origin to, and derive their powers and rights wholly from the
legislature. It breathes into them the breath of life, without which they cannot exist. As it
creates, so it may destroy. As it may destroy, it may abridge and control. Unless there is some
constitutional limitation on the right, the legislature might, by a single act, and if we can
suppose it capable of so great a folly and so great a wrong, sweep from existence all of the
municipal corporations in the State, and the corporation could not prevent it. We know of no
limitation on the right so far as to the corporation themselves are concerned. They are, so to
phrase it, the mere tenants at will of the legislature.

The rationale of the requirement that the ordinances should not contravene a statute is
obvious. Municipal governments are only agents of the national government. Local councils
exercise only delegated legislative powers conferred on them by Congress as the national
lawmaking body. The delegate cannot be superior to the principal or exercise powers higher
than those of the latter. It is a heresy to suggest that the local government units can undo the
acts of Congress, from which they have derived their power in the first place, and negate by
mere ordinance the mandate of the statute.

[152]

According to them, the DOEs supervision over the oil industry under RA 7638 was
subsequently underscored by RA 8479, particularly in Section 7 thereof:

This basic relationship between the national legislature and the local government units has not
been enfeebled by the new provisions in the Constitution strengthening the policy of local
autonomy. Without meaning to detract from that policy, we here confirm that Congress retains
control of the local government units although in significantly reduced degree now than under
our previous Constitutions. The power to create still includes the power to destroy. The power

to grant still includes the power to withhold or recall. True, there are certain notable
innovations in the Constitution, like the direct conferment on the local government units of the
power to tax, which cannot now be withdrawn by mere statute. By and large, however, the
national legislature is still the principal of the local government units, which cannot defy its will
or modify or violate it.[155]

The question now is whether Ordinance No. 8027 contravenes RA 7638 and RA 8479. It does
not.

Under Section 5 I of RA 7638, DOE was given the power to establish and administer
programs for the exploration, transportation, marketing, distribution, utilization, conservation,
stockpiling, and storage of energy resources. On the other hand, under Section 7 of RA 8749,
the DOE shall continue to encourage certain practices in the Industry which serve the public
interest and are intended to achieve efficiency and cost reduction, ensure continuous supply
of petroleum products. Nothing in these statutes prohibits the City of Manila from enacting
ordinances in the exercise of its police power.
The principle of local autonomy is enshrined in and zealously protected under the
Constitution. In Article II, Section 25 thereof, the people expressly adopted the following
policy:

Section 25. The State shall ensure the autonomy of local governments.

An entire article (Article X) of the Constitution has been devoted to guaranteeing and
promoting the autonomy of LGUs. The LGC was specially promulgated by Congress to ensure
the autonomy of local governments as mandated by the Constitution:

Sec. 2. Declaration of Policy. (a) It is hereby declared the policy of the State that the
territorial and political subdivisions of the State shall enjoy genuine and meaningful local

autonomy to enable them to attain their fullest development as self-reliant communities and
make them more effective partners in the attainment of national goals. Toward this end, the
State shall provide for a more responsive and accountable local government structure
instituted through a system of decentralization whereby local government units shall be given
more powers, authority, responsibilities, and resources. The process of decentralization shall
proceed from the National Government to the local government units. (Emphasis supplied)

We do not see how the laws relied upon by the oil companies and DOE stripped the City of
Manila of its power to enact ordinances in the exercise of its police power and to reclassify the
land uses within its jurisdiction. To guide us, we shall make a brief survey of our decisions
where the police power measure of the LGU clashed with national laws.
In Tan v. Perea,[156] the Court ruled that Ordinance No. 7 enacted by the municipality of
Daanbantayan, Cebu allowing the operation of three cockpits was invalid for violating PD 449
(or the Cockfighting Law of 1974) which permitted only one cockpit per municipality.

In Batangas CATV, Inc. v. Court of Appeals,[157] the Sangguniang Panlungsod of Batangas City
enacted Resolution No. 210 granting Batangas CATV, Inc. a permit to operate a cable
television (CATV) system in Batangas City. The Court held that the LGU did not have the
authority to grant franchises to operate a CATV system because it was the National
Telecommunications Commission (NTC) that had the power under EO Nos. 205 and 436 to
regulate CATV operations. EO 205 mandated the NTC to grant certificates of authority to
CATV operators while EO 436 vested on the NTC the power to regulate and supervise the
CATV industry.

In Lina, Jr. v. Pao,[158] we held that Kapasiyahan Bilang 508, Taon 1995 of the Sangguniang
Panlalawigan of Laguna could not be used as justification to prohibit lotto in the municipality of
San Pedro, Laguna because lotto was duly authorized by RA 1169, as amended by BP
42. This law granted a franchise to the Philippine Charity Sweepstakes Office and allowed it to
operate lotteries.

In Magtajas v. Pryce Properties Corp., Inc.,[159] the Sangguniang Panlungsod of Cagayan de

Oro City passed Ordinance Nos. 3353 and 3375-93 prohibiting the operation of casinos in the
city. We ruled that these ordinances were void for contravening PD 1869 or the charter of the
Philippine Amusements and Gaming Corporation which had the power to operate casinos.

The common dominator of all of these cases is that the national laws were clearly and
expressly in conflict with the ordinances/resolutions of the LGUs. The inconsistencies were so
patent that there was no room for doubt. This is not the case here.

The laws cited merely gave DOE general powers to establish and administer programs for the
exploration, transportation, marketing, distribution, utilization, conservation, stockpiling, and
storage of energy resources and to encourage certain practices in the [oil] industry which
serve the public interest and are intended to achieve efficiency and cost reduction, ensure
continuous supply of petroleum products. These powers can be exercised without
emasculating the LGUs of the powers granted them. When these ambiguous powers are
pitted against the unequivocal power of the LGU to enact police power and zoning ordinances
for the general welfare of its constituents, it is not difficult to rule in favor of the
latter. Considering that the powers of the DOE regarding the Pandacan Terminals are not
categorical, the doubt must be resolved in favor of the City of Manila:

SECTION 5. Rules of Interpretation. In the interpretation of the provisions of this Code, the
following rules shall apply:

(a) Any provision on a power of a local government unit shall be liberally interpreted in its
favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of
powers and of the lower local government unit. Any fair and reasonable doubt as to the
existence of the power shall be interpreted in favor of the local government unit concerned;

xxx xxx xxx

(g) IThe general welfare provisions in this Code shall be liberally interpreted to give more
powers to local government units in accelerating economic development and upgrading the
quality of life for the people in the community xxxx

The least we can do to ensure genuine and meaningful local autonomy is not to force an
interpretation that negates powers explicitly granted to local governments. To rule against the
power of LGUs to reclassify areas within their jurisdiction will subvert the principle of local
autonomy guaranteed by the Constitution.[160] As we have noted in earlier decisions, our
national officials should not only comply with the constitutional provisions on local autonomy
but should also appreciate the spirit and liberty upon which these provisions are based. [161]

The DOE Cannot Exercise The Power Of Control Over LGUs

Another reason that militates against the DOEs assertions is that Section 4 of Article X of the
Constitution confines the Presidents power over LGUs to one of general supervision:

SECTION 4. The President of the Philippines shall exercise general supervision over local
governments. Xxxx

Consequently, the Chief Executive or his or her alter egos, cannot exercise the power of
control over them.[162] Control and supervision are distinguished as follows:

[Supervision] means overseeing or the power or authority of an officer to see that subordinate
officers perform their duties. If the latter fail or neglect to fulfill them, the former may take such
action or step as prescribed by law to make them perform their duties. Control, on the other
hand, means the power of an officer to alter or modify or nullify or set aside what a
subordinate officer ha[s] done in the performance of his duties and to substitute the judgment
of the former for that of the latter.[163]
Supervisory power, when contrasted with control, is the power of mere oversight over an
inferior body; it does not include any restraining authority over such body. [164] It does not allow
the supervisor to annul the acts of the subordinate. [165] Here, what the DOE seeks to do is to
set aside an ordinance enacted by local officials, a power that not even its principal, the
President, has. This is because:
Under our present system of government, executive power is vested in the President. The
members of the Cabinet and other executive officials are merely alter egos. As such, they are
subject to the power of control of the President, at whose will and behest they can be removed
from office; or their actions and decisions changed, suspended or reversed. In contrast, the
heads of political subdivisions are elected by the people. Their sovereign powers emanate
from the electorate, to whom they are directly accountable. By constitutional fiat, they are
subject to the Presidents supervision only, not control, so long as their acts are exercised
within the sphere of their legitimate powers. By the same token, the President may not
withhold or alter any authority or power given them by the Constitution and the law. [166]

Thus, the President and his or her alter egos, the department heads, cannot interfere with the
activities of local governments, so long as they act within the scope of their
authority. Accordingly, the DOE cannot substitute its own discretion for the discretion
exercised by the sanggunian of the City of Manila. In local affairs, the wisdom of local officials
must prevail as long as they are acting within the parameters of the Constitution and the law.
[167]

Ordinance No. 8027 Is Not Invalid For Failure To Comply With RA 7924 And EO 72

The oil companies argue that zoning ordinances of LGUs are required to be submitted to the
Metropolitan Manila Development Authority (MMDA) for review and if found to be in
compliance with its metropolitan physical framework plan and regulations, it shall endorse the
same to the Housing and Land Use Regulatory Board (HLURB). Their basis is Section 3 (e) of
RA 7924:[168]

SECTION 3. Scope of MMDA Services. Metro-wide services under the jurisdiction of the
MMDA are those services which have metro-wide impact and transcend local political
boundaries or entail huge expenditures such that it would not be viable for said services to be
provided by the individual [LGUs] comprising Metropolitan Manila. These services shall
include:

Services. Within the context of the National Housing and Urban Development Framework, and
pursuant to the national standards, guidelines and regulations formulated by the Housing and
Land Use Regulatory Board [HLURB] on land use planning and zoning, the [MMDA] shall
prepare a metropolitan physical framework plan and regulations which shall complement and
translate the socio-economic development plan for Metro Manila into physical or spatial terms,
and provide the basis for the preparation, review, integration and implementation of local land
use plans and zoning, ordinance of cities and municipalities in the area.

Said framework plan and regulations shall contain, among others, planning and zoning
policies and procedures that shall be observed by local government units in the preparation of
their own plans and ordinances pursuant to Section 447 and 458 of RA 7160, as well as the
identification of sites and projects that are considered to be of national or metropolitan
significance.

Cities and municipalities shall prepare their respective land use plans and zoning ordinances
and submit the same for review and integration by the [MMDA] and indorsement to HLURB in
accordance with Executive Order No. 72 and other pertinent laws.

In the preparation of a Metropolitan Manila physical framework plan and regulations, the
[MMDA] shall coordinate with the Housing and Urban Development Coordinating Council,
HLURB, the National Housing Authority, Intramuros Administration, and all other agencies of
the national government which are concerned with land use and zoning, urban renewal and
shelter services. (Emphasis supplied)

xxx xxx xxx

(g)
Urban renewal, zoning, and land use planning, and shelter services which include
the formulation, adoption and implementation of policies, standards, rules and regulations,
programs and projects to rationalize and optimize urban land use and provide direction to
urban growth and expansion, the rehabilitation and development of slum and blighted areas,
the development of shelter and housing facilities and the provision of necessary social
services thereof. (Emphasis supplied)

They also claim that EO 72[169] provides that zoning ordinances of cities and municipalities of
Metro Manila are subject to review by the HLURB to ensure compliance with national
standards and guidelines. They cite Section 1, paragraphs I, (e), (f) and (g):
SECTION 1. Plan formulation or updating.

xxx xxx xxx

Reference was also made to Section 15 of its implementing rules:

Section 15. Linkages with HUDCC, HLURB, NHA, LGUs and Other National Government
Agencies Concerned on Urban Renewal, Zoning and Land Use Planning and Shelter

(g) Cities and municipalities of Metropolitan Manila shall continue to formulate or update
their respective comprehensive land use plans, in accordance with the land use planning and

zoning standards and guidelines prescribed by the HLURB pursuant to EO 392, S. of 1990,
and other pertinent national policies.

plan and approved by the HLURB to ensure that they conform with national guidelines and
policies.

Xxx xxx xxx

Moreover, even assuming that the MMDA review and HLURB ratification are necessary, the oil
companies did not present any evidence to show that these were not complied with. In
accordance with the presumption of validity in favor of an ordinance, its constitutionality or
legality should be upheld in the absence of proof showing that the procedure prescribed by
law was not observed. The burden of proof is on the oil companies which already had notice
that this Court was inclined to dispose of all the issues in this case. Yet aside from their bare
assertion, they did not present any certification from the MMDA or the HLURB nor did they
append these to their pleadings. Clearly, they failed to rebut the presumption of validity of
Ordinance No. 8027.[170]

(e) Pursuant to LOI 729, S. of 1978, EO 648, S. of 1981, and RA 7279, the comprehensive
land use plans of provinces, highly urbanized cities and independent component cities shall
be reviewed and ratified by the HLURB to ensure compliance with national standards and
guidelines.

(f) Pursuant to EO 392, S. of 1999, the comprehensive land use plans of cities and
municipalities of Metropolitan Manila shall be reviewed by the HLURB to ensure compliance
with national standards and guidelines.

(g) Said review shall be completed within three (3) months upon receipt thereof otherwise,
the same shall be deemed consistent with law, and, therefore, valid.(Emphasis supplied)

They argue that because Ordinance No. 8027 did not go through this review process, it is
invalid.

Conclusion

Essentially, the oil companies are fighting for their right to property. They allege that they
stand to lose billions of pesos if forced to relocate.However, based on the hierarchy of
constitutionally protected rights, the right to life enjoys precedence over the right to property.
[171]
The reason is obvious: life is irreplaceable, property is not. When the state or LGUs
exercise of police power clashes with a few individuals right to property, the former should
prevail.[172]

The argument is flawed.

RA 7942 does not give MMDA the authority to review land use plans and zoning ordinances of
cities and municipalities. This was only found in its implementing rules which made a
reference to EO 72. EO 72 expressly refers to comprehensive land use plans (CLUPs)
only. Ordinance No. 8027 is admittedly not a CLUP nor intended to be one. Instead, it is a
very specific ordinance which reclassified the land use of a defined area in order to prevent
the massive effects of a possible terrorist attack. It is Ordinance No. 8119 which was explicitly
formulated as the Manila [CLUP] and Zoning Ordinance of 2006. CLUPs are the ordinances
which should be submitted to the MMDA for integration in its metropolitan physical framework

Both law and jurisprudence support the constitutionality and validity of Ordinance No. 8027.
Without a doubt, there are no impediments to its enforcement and implementation. Any delay
is unfair to the inhabitants of the City of Manila and its leaders who have categorically
expressed their desire for the relocation of the terminals. Their power to chart and control their
own destiny and preserve their lives and safety should not be curtailed by the intervenors
warnings of doomsday scenarios and threats of economic disorder if the ordinance is
enforced.

Secondary to the legal reasons supporting the immediate implementation of Ordinance No.
8027 are the policy considerations which drove Manilas government to come up with such a
measure:

... [The] oil companies still were not able to allay the apprehensions of the city regarding the
security threat in the area in general. No specific action plan or security measures were
presented that would prevent a possible large-scale terrorist or malicious attack especially an
attack aimed at Malacaang. The measures that were installed were more directed towards
their internal security and did not include the prevention of an external attack even on a
bilateral level of cooperation between these companies and the police and military.

Just the same, this Court is not about to provoke a crisis by ordering the immediate relocation
of the Pandacan Terminals out of its present site. The enforcement of a decision of this Court,
specially one with far-reaching consequences, should always be within the bounds of reason,
in accordance with a comprehensive and well-coordinated plan, and within a time-frame that
complies with the letter and spirit of our resolution. To this end, the oil companies have no
choice but to obey the law.

A Warning To Petitioners Counsel

We draw the attention of the parties to a matter of grave concern to the legal profession.
Xxx xxx xxx
It is not enough for the city government to be told by these oil companies that they have the
most sophisticated fire-fighting equipments and have invested millions of pesos for these
equipments. The city government wants to be assured that its residents are safe at any time
from these installations, and in the three public hearings and in their position papers, not one
statement has been said that indeed the absolute safety of the residents from the hazards
posed by these installations is assured.[173]

Petitioners and their counsel, Atty. Samson Alcantara, submitted a four-page memorandum
that clearly contained either substance nor research. It is absolutely insulting to this Court.

We are also putting an end to the oil companies determination to prolong their stay in
Pandacan despite the objections of Manilas residents. As early as October 2001, the oil
companies signed a MOA with the DOE obliging themselves to:

It is indicative less of a personal shortcoming or contempt of this Court and more of a lawyers
sorry descent from a high sense of duty and responsibility. As a member of the bar and as an
officer of the court, a lawyer ought to be keenly aware that the chief safeguard of the body
politic is respect for the law and its magistrates.

... undertake a comprehensive and comparative study ... [which] shall include the preparation
of a Master Plan, whose aim is to determine the scope and timing of the feasible location of
the Pandacan oil terminals and all associated facilities and infrastructure including
government support essential for the relocation such as the necessary transportation
infrastructure, land and right of way acquisition, resettlement of displaced residents and
environmental and social acceptability which shall be based on mutual benefit of the Parties
and the public.[174]

Now that they are being compelled to discontinue their operations in the Pandacan Terminals,
they cannot feign unreadiness considering that they had years to prepare for this eventuality.

We have always tended towards judicial leniency, temperance and compassion to those who
suffer from a wrong perception of what the majesty of the law means. But for a member of the
bar, an officer of the court, to file in this Court a memorandum of such unacceptable quality is
an entirely different matter.

There is nothing more effective than the written word by which counsel can persuade this
Court of the righteousness of his cause. For if truth were self-evident, a memorandum would
be completely unnecessary and superfluous.

The inability of counsel to prepare a memorandum worthy of this Courts consideration is

an ejemplo malo to the legal profession as it betrays no genuine interest in the cause he
claims to espouse. Or did counsel think he can earn his moment of glory without the hard
work and dedication called for by his petition?
A Final Word

On Wednesday, January 23, 2008, a defective tanker containing 2,000 liters of gasoline and
14,000 liters of diesel exploded in the middle of the street a short distance from the exit gate
of the Pandacan Terminals, causing death, extensive damage and a frightening conflagration
in the vicinity of the incident. Need we say anthing about what will happen if it is the estimated
162 to 211 million liters[175] of petroleum products in the terminal complex which blow up?

WHEREFORE, the motions for leave to intervene of Chevron Philippines Inc., Petron
Corporation and Pilipinas Shell Petroleum Corporation, and the Republic of the Philippines,
represented by the Department of Energy, are hereby GRANTED. Their respective motions
for reconsideration are hereby DENIED. The Regional Trial Court, Manila, Branch 39
is ORDERED to DISMISS the consolidated cases of Civil Case No. 03-106377 and Civil Case
No. 03-106380.

We reiterate our order to respondent Mayor of the City of Manila to enforce Ordinance No.
8027. In coordination with the appropriate agencies and other parties involved, respondent
Mayor is hereby ordered to oversee the relocation and transfer of the Pandacan Terminals out
of its present site.

To ensure the orderly transfer, movement and relocation of assets and personnel, the
intervenors Chevron Philippines Inc., Petron Corporation and Pilipinas Shell Petroleum
Corporation shall, within a non-extendible period of ninety (90) days, submit to the Regional
Trial Court of Manila, Branch 39, the comprehensive plan and relocation schedule which have
allegedly been prepared. The presiding judge of Manila RTC, Branch 39 will monitor the strict
enforcement of this resolution.

Atty. Samson Alcantara is hereby ordered to explain within five (5) days from notice why he
should not be disciplined for his refusal, or inability, to file a memorandum worthy of the
consideration of this Court.
Treble costs against petitioners counsel, Atty. Samson Alcantara.

SO ORDERED.

SECOND DIVISION
THE PEOPLE OF THE PHILIPPINES, G.R. No. 181043
Appellee,
Present:
- versus MILLANO MUIT, PANCHO, JR., EDUARDO
HERMANO ALIAS BOBBY
REYES, ROLANDO DEQUILLO, Promulgated:
ROMEO PANCHO, and JOSEPH
FERRAER, October 8, 2008
Appellants.
x----------------------------------------------------------------------------------------x
DECISION
TINGA, J.:
Millano Muit y Munoz (Muit), Sergio Pancho y Cagumoc, Jr. (Pancho, Jr.),
Rolando Dequillo y Tampos (Dequillo),
Romeo Pancho (Romeo),
Eduardo
Eddie Hermanoalias
Bobby
Reyes
alias
Eddie
Reyes (Hermano), and Joseph Ferraer (Ferraer) were charged with kidnapping for ransom
with
homicide[1] and carnapping[2] in
two
separate informations.
Only Muit, Pancho Jr., Dequillo, Romeo, and Ferraer were arrested and stood trial.
However, Ferraer was discharged from the criminal cases by the Regional Trial Court (RTC)
and was utilized as a state witness. [3] All appellants pleaded not guilty during their
arraignments.
The facts as culled from the records are as follows:
In the afternoon of 11 November 1997, Orestes Julaton, (Julaton), a relative of Ferraer,
arrived at the latters house in Kaylaway, Nasugbu, Batangas with Sergio Pancho, Sr.
(Pancho, Sr.), Pancho, Jr., Dequillo and four other men on board a gray Mitsubishi car with
plate number PSV-818. Julaton introduced them to Ferraer and told the latter that Pancho,
Sr. is also their relative. Pancho, Sr. told Ferraer that they wanted to use his house as
a safehouse for their visitor. Ferraer was hesitant at first as he thought it was risky for him
and his family. Hermano told Ferraer not to worry because they are not killers; their line of
work is kidnap for ransom. Ferraer was assured that the money they will get would be shared

equally among them. Ferraer and Pancho, Sr. would guard their victim. Later, five other men
came and they were introduced to Ferraer as Muit, Morales, alias Tony, alias David and
alias Puri. They had dinner and chatted until midnight. That evening, Morales handed
to Ferraer for safekeeping a folded carton wrapped with masking tape contained in a big
paper bag, and a green backpack. Hermano told Ferraer that the package contained
guns. Ferraer brought the package inside his room; he inspected the contents before placing
them under the bed, and saw that the carton contained a shotgun and the green backpack,
an Ingram folding. Morales and Udon also showed him their .45 caliber guns tucked at their
waists.[4]
At one oclock in the afternoon of 24 November 1997, Ferraer saw Pancho, Jr.,
and Hermano with a companion, seated under the tree in front of his house. Pancho, Jr.
introduced their companion as Romeo. They informed Ferraer that the following day, they
would proceed with their plan. Romeo would be the informant since he is an insider and a
trusted general foreman of the victim. The next day, at nine oclock in the morning, Pancho,
Sr. arrived at Ferraers house alone and asked Ferraer if he was already informed of the
plan. Ferraer replied in the affirmative. Pancho, Sr. told him to wait for the groups return.
However, the group returned without the intended victim because the latter did not show up
at the construction site.[5] On 2 December 1997, the group received a call from Romeo
informing them that the victim was already at the construction site. Hermano, Morales, Udon,
Manuel, Bokbok,
and Muit commuted
to
the
construction
site
at
Barangay Darasa, Tanauan, Batangas. Pancho, Jr. was on board the Mitsubishi car as backup.
At around two oclock in the afternoon of the same date, 2 December 1997,
Roger Seraspe (Seraspe), the personal driver of the victim, drove a blue Pajero with plate
number UDL-746 carrying Engr. Ruth Roldan and the victim to visit the Flexopac project site
at Barangay Darasa, Tanauan, Batangas. At the site, Engr. Roldan and the victim alighted
from the Pajero and, along with Engr. Ed dela Cruz, toured the construction
site. Seraspe talked with Armand Chavez (Chavez), the warehouseman of ILO Construction,
while waiting for his boss.[6]
After the site inspection, the three engineers walked towards the direction of
the Pajero. Seraspe was surprised to see that the three engineers who stood together
suddenly lay prostrate on the ground. Seraspe and Chavez saw an unidentified man
standing near the three engineers. Three more armed men surrounded the Pajero. Two of
them approached Seraspe and Chavez. One of the armed men, Muit, poked a gun
at Seraspe and ordered him and Chavez to lay prostrate on the ground. [7] The assailants
dragged the victim towards the Pajero. They forced the victim to order Seraspe to give them
the keys to the Pajero. When the victim was already on board the Pajero, Seraspe heard one
of them say, Sarge, nandito na ang ating pakay.[8]
They then started the Pajero and drove away, passing through the Pag-asa Road gate. Two
more persons who were waiting at the Pag-asa road boarded the Pajero.[9]

At 2:30 that same afternoon, Lipa City Deputy Chief of Police, Supt. Arcadio Mission (Supt.
Mission) received a radio message from the Tanauan Police Station that a kidnapping was
ongoing and the kidnappers on board a Pajero with plate number UDL-746 were heading
towards Lipa City. Supt. Mission immediately ordered the police posted near
the Lipa City bus stop to put up a barricade. In the meantime, two teams were organized to
intercept the Pajero. They proceeded to the barricade.[10]
Right after Supt. Mission and the teams arrived at the barricade, the Pajero was spotted.
When policemen flagged down the Pajero, the driver stopped the vehicle. While two
policemen approached the Pajero, the driver and front passenger opened their car doors and
started firing at the policemen. At this point, all the policemen present at the scene fired
back. The cross-fire lasted for around four minutes. All the occupants of the Pajero, except
the driver and the front passenger who managed to escape, died. SPO1
RolandoCariaga apprehended one of the escapees who turned out to be Muit, the driver of
the Pajero, at Barangay San Carlos, Batangas, about 200 meters from the place of the
shootout.[11]
On the other hand, after the assailants carried their plan into action, Pancho, Jr.
proceeded to their agreed meeting place but did not find Hermanos group there. Pancho, Jr.
waited along the highway in front of the construction site. He thought that he had been left
behind when he did not see the group, so he left. When Pancho, Jr. returned
toFerraers house, he told Ferraer what happened to their operation. Worried that something
bad might have happened to the group, Pancho, Jr. went back and looked for the rest of his
group. Pancho, Jr. came back alone.
At around 5:30 in the morning of 3 December 1997, Ferraer saw Pancho, Sr.
and Pancho, Jr. watching the TV program Alas Singko y Medya. He joined them and saw on
the news the Pajero riddled with bullets. Pancho, Sr. and Pancho, Jr. left Ferraers house
at around 9:00 in the morning and they also left behind the Mitsubishi car they used. That
night, Ferraer saw on the news program TV Patrol a footage showing the cadavers of Udon,
Morales, Manuel, Bokbok and the victim, and the Pajero riddled with bullets. Ferraer also
saw Muit in handcuffs.
The prosecution presented Ignacio Ong, Sr., the father of the victim Engr.
Ignacio Ong, Jr.; Seraspe; Chavez; Dr. Anthony Llamas, the PNP Medico-Legal Officer who
conducted the autopsy; Supt. Mission, Ferraer, as the state witness; and
Atty. Narzal Mallare[12] (Atty. Mallare), the lawyer who assisted appellants Pancho, Jr.
and Dequillo in executing their respective sworn statements as witnesses. Their accounts
were corroborated by the prosecutions documentary evidence such as the extra judicial
confessions ofPancho, Jr. and Dequillo, which were executed with the assistance of
Atty. Mallare. Muit executed two extra judicial confessions: the first statement was dated 4
December 1997,in which he was assisted by Atty. Ernesto Vergara, and the second statement
was dated 7 December 1997 in which he was assisted by Atty. Solomon De Jesus and
witnessed
by
his
uncle, Bonifacio Muit (Bonifacio),
and
his
brother, Dominador Muit (Dominador). On the other hand, the defense presented
appellants Dequillo, Pancho, Jr., and Muit.

Dequillo, for his part, claimed that for the period of November to December 1997
he was working as a mason at Villanueva Construction in BF Homes. His work starts
at8:00 in the morning and ends at 5:00 in the afternoon. He stated that on 8 December 1997,
he was arrested by the CIDG at his house in Purok Sto. Domingo, Barangay Holy
Spirit, Quezon City. At the CIDG Detention Center, he was questioned about the guns used
in the kidnapping of the victim. He was allegedly tortured when he denied any knowledge
about the kidnapping and was forced to sign a statement without being allowed to read it.
Atty. Mallare only came in after he had already signed the statement. He denied any
participation in the crimes charged against him. [13]
Pancho, Jr. claimed that he was arrested on 7 December
1997 in Calbayog, Samar. He was first brought to the Calbayog City Police Station, and then
transferred to CampCrame. He alleged that the police tortured him and forced him to sign the
written confession of his participation in the crimes. He denied having participated in the
commission of the offenses charged against him.[14]
On the other hand, Muit claimed that on 2 December 1997 he was in Lipa City,
near the place of the shootout. He had just attended a gathering of the Rizalistas and was
waiting for his uncle Bonifacio when the police arrested him. He denied having any
knowledge of the crime. He denied knowing the people whose name appeared in his two
extra judicial confessions. He claimed that the names were supplied by the police and that
he was not assisted by counsel during the custodial investigation. [15]
In
a
decision[16] dated 22
November
2002, the RTC,
Branch
83
of Tanauan City, Batangas found Muit, Pancho, Jr., Dequillo, and Romeo guilty.[17] Only the
cases involving the charges of carnapping and kidnapping for ransom which resulted in the
death of the victim were automatically appealed to this Court.
The RTC held that mere denials and alibis of appellants cannot prevail over the
positive declarations of the prosecutions witnesses. It found the prosecutions witnesses more
credible than appellants, whose self-serving statements were obviously intended to exculpate
themselves from criminal liability. The RTC did not give credence to the claims of appellants
that their extra judicial confessions were procured through torture as these were belied by the
testimony of Atty. Mallare and appellants medical certificates which were issued during their
incarceration and after the execution of their statements. And the RTC noted that even without
appellants extra judicial confessions, there was still sufficient evidence on record to hold them
guilty.
In a resolution dated 17 January 2006, the Court referred the case to the Court of
Appeals for intermediate review.[18]
The Court of Appeals in a decision [19] dated 31 August 2007 affirmed the decision
of the RTC.[20] The appellate court held that the RTC was correct in convicting appellants for
kidnapping and carnapping. The prosecution was able to prove through Ferraer that
appellants conspired with one another in the planning and execution of their plan to kidnap

the victim. Moreover, appellants executed extra judicial confessions, duly assisted by their
counsels, detailing their participation in the kidnapping. As for Muit, other than his extra
judicial confession, he was also positively identified during the kidnapping by
eyewitnesses Seraspe and Chavez. Appellants filed their notices of appeal with the Court of
Appeals.
Before this Court, appellants opted not to file supplemental briefs, and instead
adopted the assignment of errors in their respective original briefs. [21] Taken together,
appellants claim that: (i) the RTC erred in finding them guilty beyond reasonable doubt of the
charges against them; (ii) the RTC erred in its finding that they acted in conspiracy in the
commission of the crimes charged against them; and (iii) the RTC erred in giving credence to
the extra-judicial confessions of Pancho, Jr. and Dequillo, and to the sworn statement and
testimony of Ferraer in convicting them.[22]
The appeals are bereft of merit.
The elements of the crime of kidnapping and serious illegal detention [23] are the following: (a)
the accused is a private individual; (b) the accused kidnaps or detains another, or in any
manner deprives the latter of his liberty; (c) the act of detention or kidnapping is illegal; and
(d) in the commission of the offense, any of the four circumstances mentioned in Article 267
is present. The essence of the crime of kidnapping is the actual deprivation of the victims
liberty, coupled with indubitable proof of intent of the accused to effect the same.[24] The
totality of the prosecutions evidence in this case established the commission of kidnapping
for ransom with homicide.
On the other hand, Republic Act No. 6539, or the Anti-Carnapping Act, as
amended, defines carnapping as the taking, with intent to gain, of a motor vehicle belonging
to another without the latters consent, or by means of violence against or intimidation of
persons, or by using force upon things. [25] The crime was committed in this case when the
victims Pajero was forcibly taken away from him contemporaneously with his kidnapping at
the construction site.
The kidnapping for ransom with homicide and the carnapping were established by
the direct testimony of Ferraer, Seraspe and Chavez. Ferraer testified on how the group
approached and convinced him to let them use his house to keep the victim they planned to
kidnap. They planned the crime in Ferraers house and waited for the call from Romeo to
inform them when the victim would be at the construction site. The group received a call from
Romeo on 2 December 1997 informing them that the victim was already at the construction
site, and so they went there to carry out their plan. At the construction site, as testified to
by Seraspe and Chavez, Muit and the other members of the group pointed their guns at the
victim and his companion and ordered them to lie prostrate on the ground. After getting the
keys to the Pajero from Seraspe, they forced the victim to board the vehicle with Muit driving
it. They immediately reported the kidnapping of the victim to the police and the kidnappers
were intercepted by the group led by Supt. Mission. Supt. Mission testified that the
kidnappers refused to surrender and engaged the police in a shoot out in which the victim
was among the casualties. Muit was one of the two persons who survived the shoot out, but
was apprehended by the police. Pancho, Jr. returned to the house of Ferraer alone when the

group did not arrive at their meeting place. Ferraer,Pancho, Jr., and Pancho, Sr. learned from
the news that the group engaged the police in a shoot out and most of them were killed, and
that Muit was arrested by the police.
After investigation, the police were able to apprehend appellants Pancho, Jr.,
Romeo, and Dequillo who all took part in the botched criminal conspiracy to kidnap the
victim. During the investigation, Pancho, Jr., Dequillo, and Muit, with the assistance of their
counsels and family members, executed extra judical confessions divulging their respective
roles in the planning and execution of the crimes.
Even though Pancho, Jr., Dequillo and Romeo did not participate in the actual
abduction of the victim, they should still be held liable, as the courts below did, because of
the existence of conspiracy. Conspiracy is a unity of purpose and intention in the commission
of a crime.[26] Where conspiracy is established, the precise modality or extent of participation
of each individual conspirator becomes secondary since the act of one is the act of all. [27] The
degree of actual participation in the commission of the crime is immaterial.
The conspiracy to kidnap the victim was proven through circumstantial evidence.
The group thoroughly planned the kidnapping in Ferraers house and patiently waited for the
day when the victim would be at the construction site. Then on 2 December 1997, the group
received a call from Romeo so they proceeded to the construction site and carried out their
plan.
All the appellants took active part in the criminal conspiracy and performed
different roles to consummate their common plan. The roles which Muit and his other
companions played in the actual abduction were described earlier. As for Dequillo, he was
the one who procured the guns used by the group. Pancho, Jr. served as the driver of the
back-up vehicle, and Romeo was the groups informant.
Section 4, Rule 133 of the Revised Rules of Evidence states that circumstantial
evidence is sufficient if: (a) there is more than one circumstance; (b) the facts from which the
inferences are derived are proven; and (c) the combination of all the circumstances is such
as to produce a conviction beyond reasonable doubt.
The extra judicial confessions of Pancho, Jr., Dequillo, and Muit strengthened the
case against them. There is nothing on record to support appellants claim that they were
coerced and tortured into executing their extra judicial confessions. One of the indicia
of voluntariness in the execution of appellants extra judicial statements is that each contains
many details and facts which the investigating officers could not have known and could not
have supplied, without the knowledge and information given by appellants. Moreover, the
appellants were assisted by their lawyers when they executed their statements.
Atty. Mallare testified that Pancho, Jr. and Dequillo executed their statements voluntarily and
affixed their signatures after he talked with them alone and informed them of their
constitutional rights.[28] Muit, on the other hand, was assisted by counsels in each instance
when he executed his two extra judicial confessions; his second statement was even
witnessed by his uncle, Bonifacio, and his brother, Dominador. Muit cannot just conveniently

disclaim any knowledge of the contents of his extra judicial confession. Nevertheless,
in Muits case, he was also positively identified by Seraspe and Chavez as the one who
pointed a gun at them during the kidnapping and ordered them to lay prostrate on the
ground.[29]
Appellants claims of torture are not supported by medical certificates from the
physical examinations done on them. [30] These claims of torture were mere afterthoughts as
they were raised for the first time during trial; appellants did not even inform their family
members who visited them while they were imprisoned about the alleged tortures.
[31]
Dequillo, for his part, also had the opportunity to complain of the alleged torture done to
him to the Department of Justice when he was brought there. [32] Claims of torture are easily
concocted, and cannot be given credence unless substantiated by competent and
independent corroborating evidence.[33]
The extra judicial confessions of Pancho, Jr., Dequillo, and Muit also strengthened
the prosecutions case against Romeo. The rule that an extra judicial confession is evidence
only against the person making it recognizes various exceptions. One such exception is where
several extra judicial statements had been made by several persons charged with an offense
and there could have been no collusion with reference to said several confessions, the fact that
the statements are in all material respects identical is confirmatory of the confession of the codefendants and is admissible against other persons implicated therein. They are also
admissible as circumstantial evidence against the person implicated therein to show the
probability of the latters actual participation in the commission of the crime and may likewise
serve as corroborative evidence if it is clearfrom other facts and circumstances that other
persons had participated in the perpetration of the crime charged and proved. These are
known as interlocking confessions.[34] Nonetheless, the RTC, in convicting Romeo, relied not
only on the aforesaid extra judicial statements but also on Ferraers testimony that Romeo was
introduced to him in his house as the informant when they were planning the kidnapping.
As for the penalty, the RTC did not err in imposing the penalty of death since the kidnapping
was committed for the purpose of extorting ransom from the victim or any other person. Neither
actual demand for nor payment of ransom is necessary for the consummation of the felony. It is
sufficient that the deprivation of liberty was for the purpose of extorting ransom even if none of
the four circumstances mentioned in Article 267 were present in its perpetration. [35] The death
of the victim as a result of the kidnapping only serves as a generic aggravating circumstance
for the rule is that when more than one qualifying circumstances are proven, the others must
be considered as generic aggravating circumstances.[36]
The imposition of death penalty is also proper in the carnapping of the victims Pajero because
it was committed by a band, which serves as a generic aggravating circumstance,
without any mitigating circumstance.[37] There is band whenever more than three armed
malefactors shall have acted together in the commission of the offense. [38] As
planned, Muit and three other armed men kidnapped the victim and drove away with the
latters Pajero while two more persons waiting near the Pag-asa road boarded the Pajero.

However, pursuant to Republic Act No. 9346 which prohibits the imposition of the
death penalty, the penalties imposed are commuted to reclusion perpetua with all its
accessory penalties and without eligibility for parole under Act No. 4103. [39]
As to damages, the RTC erred in awarding compensation for loss of earning
capacity. Pursuant to jurisprudence, the Court precludes an award for loss of earning
capacity without adequate proof as it partakes of the nature of actual damages.[40] The bare
testimony of the father of the deceased that, at the time of his death, the victim was earning
P5,000.00 per month as an engineer is not sufficient proof. [41] But pursuant to
the Courts ruling in People v. Abrazaldo[42] wherein we deemed it proper to award temperate
damages in the amount of P25,000.00 in cases where evidence confirms the heirs
entitlement to actual damages but the amount of actual damages cannot be determined
because of the absence of supporting and duly presented receipts, the Court
awards P25,000.00 temperate damages to the heirs of the victim in the present case.
The civil indemnity should be increased to P75,000.00.[43] The award of civil
indemnity may be granted without any need of proof other than the death of the victim. [44]In
line with jurisprudence, the moral damages should also be increased to P 500,000.00.[45]
Moreover, exemplary damages in the amount of P100,000.00 for the crime of kidnapping for
ransom with homicide[46] and P25,000.00 for the crime of carnapping should be awarded. The
law allows exemplary damages in criminal cases as part of the civil liability of the malefactors
when the crime is attended by one or more aggravating circumstances. [47]
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CR-HC No. 02044
which commuted the death penalties imposed in Criminal Case Nos. P-521 and P-607
to reclusion perpetua without eligibility for parole is AFFIRMED with the MODIFICATIONS that
the compensation for loss of earning capacity be deleted while the civil indemnity be
increased to P75,000.00 and the moral damages to P500,000.00, and that appellants shall
also pay the heirs of Ignacio Earl Ong, Jr. temperate damages ofP25,000.00 and exemplary
damages of P100,000.00 for the crime of kidnapping for ransom with homicide
and P25,000.00 for the crime of carnapping. Costs against appellants.
SO ORDERED.

FIRST DIVISION
[G.R. No. 133858. August 12, 2003]
PEOPLE OF THE PHILIPPINES, appellee, vs. HERMINIANO SATORRE @ EMIANO
SATORRE, appellant.
DECISION
YNARES-SANTIAGO, J.:
Appellant Herminiano Satorre alias Emiano Satorre was charged with Murder in an
information which reads:
That on or about the 25th day of May, 1997 at 2:00 oclock dawn, more or less, in Sitio Kamari,
Barangay Calidngan, Municipality of Carcar, Province of Cebu, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, with intent to kill, with the use
of .38 paltik revolver and by means of treachery and evident premeditation, did then and there
willfully, unlawfully and feloniously attack and shoot ROMERO PANTILGAN, hitting the latter
at the head which caused his instantaneous death.
CONTRARY TO LAW.[1]
On arraignment, appellant pleaded not guilty. Trial on the merits then ensued.
Gliceria Saraum, wife of the victim Romero Pantilgan, testified that at 2:00 a.m. of May
25, 1997, she and her two children were asleep inside the house of her parents at Tagaytay,
Calidngan, Carcar, Cebu. Her mother, Florida Saraum, was also in the house. Her husband,
Romero, went out to attend a fiesta. While she was asleep, she was awakened by a gunshot.
Gliceria got up and went out to the porch, where she found her dead husband lying on the
ground. Blood oozed out of a gunshot wound on his head.
Rufino Abayata, a barangay kagawad, testified that around 7:00 a.m. of May 25, 1997,
his fellow barangay kagawad, Pio Alvarado, fetched him from his house and, together, they
went to verify a report regarding a dead person on the porch of the Saraum residence. Upon
confirming the incident, they reported the matter to the Carcar Police. Rufino further narrated
that appellants father, Abraham Satorre, informed them that it was appellant who shot
Pantilgan. They looked for appellant in the house of his brother, Felix Satorre, at Dumlog,
Talisay, Cebu, but were told that he already left. Nevertheless, appellants brothers, Margarito
and Rosalio Satorre, went to Rufinos house and surrendered the gun which was allegedly
used in killing Pantilgan.

Flavio Gelle narrated that he accompanied appellant and his father, Abraham, to the
Barangay Captain of Can-asohan, Carcar, Cebu where appellant admitted killing Pantilgan.
Thereafter, appellant was detained.
Corroborating Gelles story, Cynthia Castaares, Barangay Captain of Can-asuhan,
Carcar, Cebu testified that Abraham Satorre and Gelle brought appellant to her residence
where he confessed having killed Pantilgan. Appellant allegedly informed her that he killed
Pantilgan because the latter struck him with a piece of wood. That same evening, she went to
the Carcar Police Station with appellant where she executed an affidavit. She further averred
that appellant voluntarily narrated that he killed Pantilgan with the use of a handgun which he
wrestled from his possession.
Dr. Plebia Villanueva, Municipal Health Officer of Carcar, Cebu certified that the cause
of Pantilgans death was gunshot wound.[2]
Bonifacio Ayag, NBI Ballistician, testified that the deformed bullet taken from Pantilgans
head wound was fired from the gun surrendered by appellants brothers to the Carcar Police. [3]
Denying the charges against him, appellant claimed that he was asleep inside his house
at the time of the incident. He alleged that Rufino Abayata had a grudge against him because
of an incident when he tied Rufinos cow to prevent it from eating the corn in his farm. He
denied having confessed to the killing of Pantilgan. He disclaimed ownership over
the paltik .38 revolver and stated that he could not even remember having surrendered a
firearm to Castaares.
Abraham Satorre corroborated appellants testimony. He denied having accompanied
appellant to Castaares house to surrender him.
Appellants brother, Rosalio Satorre, claimed that he never accompanied appellant to
Castaares house to surrender. His other brother, Felix, also testified that he never surrendered
any firearm to anybody.
After trial, the court a quo gave credence to the prosecutions evidence and rendered a
decision convicting appellant of Murder,[4] the dispositive portion of which reads:
WHEREFORE, IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, accused
Herminiano Satorre is found guilty beyond reasonable doubt of the crime of Murder and is
hereby imposed the penalty of RECLUSION PERPETUA, with accessory penalties of the law;
to indemnify the heirs of Romero Pantilgan in the sum of P50,000.00 and to pay the
costs. The accused is, however, credited in full during the whole period of his detention

provided he will signify in writing that he will abide by all the rules and regulations of the
penitentiary.

There is no question as to the admissibility of appellants alleged oral extrajudicial

confession. Indeed, as far as admissibility is concerned, Rule 130, Section 33 of the Rules of
Court makes no distinction whether the confession is judicial or extrajudicial.

SO ORDERED.
Appellant interposed this appeal, contending that the trial court erred: (1) in giving full
faith and credence to the testimonies of prosecution witnesses; (2) in proceeding with the trial
of the instant case amounting to lack of due process provided by law due to its denial of
accuseds motion for preliminary investigation or reinvestigation; and (3) in rejecting the
testimony of the defenses witnesses.
The appeal has merit.
In particular, appellant claims that his alleged confession or admission, which was
concocted by the Barangay Captain, is inadmissible in evidence for being hearsay and for
being obtained without a competent and independent counsel of his choice. In effect, the
quantum of evidence adduced by the prosecution was not sufficient to overcome the
constitutional presumption of innocence. The bare allegation that he confessed or admitted
killing Romero Pantilgan is not proof of guilt.
Rule 130, Section 26 of the Rules of Court defines an admission as an act, declaration
or omission of a party as to a relevant fact. A confession, on the other hand, under Section 33
of the same Rule is the declaration of an accused acknowledging his guilt of the offense
charged, or of any offense necessarily included therein. Both may be given in evidence
against the person admitting or confessing. On the whole, a confession, as distinguished from
an admission, is a declaration made at any time by a person, voluntarily and without
compulsion or inducement, stating or acknowledging that he had committed or participated in
the commission of a crime.[5]
Evidently, appellants alleged declaration owning up to the killing before the Barangay
Captain was a confession. Since the declaration was not put in writing and made out of court,
it is an oral extrajudicial confession.
The nexus that connects appellant to the killing was his alleged oral extrajudicial
confession given to Barangay Captain Cynthia Castaares and two barangay
kagawads. According to the trial court, their testimonies were positive and
convincing. Appellants retraction of his oral extrajudicial confession should not be given much
credence in the assessment of evidence.However, appellant disputes the admissibility and
sufficiency of the testimonial evidence offered to prove the alleged oral extrajudicial
confession.

The rationale for the admissibility of a confession is that if it is made freely and
voluntarily, a confession constitutes evidence of a high order since it is supported by the
strong presumption that no sane person or one of normal mind will deliberately and knowingly
confess himself to be the perpetrator of a crime, unless prompted by truth and conscience. [6]
Accordingly, the basic test for the validity of a confession is was it voluntarily and freely
made. The term voluntary means that the accused speaks of his free will and accord, without
inducement of any kind, and with a full and complete knowledge of the nature and
consequences of the confession, and when the speaking is so free from influences affecting
the will of the accused, at the time the confession was made, that it renders it admissible in
evidence against him.[7] Plainly, the admissibility of a confession in evidence hinges on its
voluntariness.
The voluntariness of a confession may be inferred from its language such that if, upon
its face, the confession exhibits no suspicious circumstances tending to cast doubt upon its
integrity, it being replete with details which could only be supplied by the accused reflecting
spontaneity and coherence, it may be considered voluntary. [8] The problem with appraising
voluntariness occurs when the confession is an oral extrajudicial confession because the
proof of voluntariness cannot be inferred from the testimony of a witness who allegedly heard
the confessant since there is no written proof that such confession was voluntarily
made. Neither can the confessant be appraised by the court since, precisely, it was made
outside the judicial proceeding. The problem posed therefore by an oral extrajudicial
confession is not only the admissibility of the testimony asserting or certifying that such
confession was indeed made, but more significantly whether it was made voluntarily.
On the question of whether a confession is made voluntarily, the age, character, and
circumstances prevailing at the time it was made must be considered. Much depends upon
the situation and surroundings of the accused. This is the position taken by the courts,
whatever the theory of exclusion of incriminating statements may be. The intelligence of the
accused or want of it must also be taken into account. It must be shown that the defendant
realized the import of his act.[9]
In the case at bar, appellant was a 19-year old farmer who did not even finish first
grade. Granting that he made the confession in the presence of Barangay Captain Castaares,
he may not have realized the full import of his confession and its consequences. This is not to
say that he is not capable of making the confession out of a desire to tell the truth if prompted
by his conscience. What we are saying is that due to the aforesaid personal circumstances of
appellant, the voluntariness of his alleged oral confession may not be definitively appraised
and evaluated.

At any rate, an extrajudicial confession forms but a prima facie case against the party by
whom it is made. Such confessions are not conclusive proof of that which they state; it may be
proved that they were uttered in ignorance, or levity, or mistake; and hence, they are, at best,
to be regarded as only cumulative proof which affords but a precarious support and on which,
when uncorroborated, a verdict cannot be permitted to rest. [10]

evidence may be sufficient corroboration of a confession. It is not necessary that the

supplementary evidence be entirely free from variance with the extrajudicial confession, or
that it show the place of offense or the defendants identity or criminal agency. All facts and
circumstances attending the particular offense charged are admissible to corroborate
extrajudicial confession.[18]

Main prosecution witness Castaares testified that after appellants alleged oral
confession, she brought the latter to the office of the police at the Municipal Hall of Carcar,
Cebu.[11] At the police station, Castaares was investigated, after which she executed her sworn
statement.[12] Also at the police station, appellant allegedly admitted before policemen that he
killed Pantilgan.[13] His statement was not taken nor was his confession reduced into
writing. This circumstance alone casts some doubt on the prosecutions account that appellant
freely and voluntarily confessed killing Pantilgan. It raises questions not only as to the
voluntariness of the alleged confession, but also on whether appellant indeed made an oral
confession.

Nonetheless, the fatal gun and the slug extracted from Pantilgans brain can not be
considered as corroborative evidence. While the slug embedded in Pantilgans brain came
from the fatal gun, the prosecution was not able to conclusively establish the ownership of the
gun other than the bare testimony of prosecution witnesses that appellants brothers
surrendered the gun to them. This was denied by appellant and his brothers and there was no
other proof linking the gun to him.

To be sure, a confession is not required to be in any particular form. It may be oral or

written, formal or informal in character. It may be recorded on video tape, sound motion
pictures, or tape.[14] However, while not required to be in writing to be admissible in evidence, it
is advisable, if not otherwise recorded by video tape or other means, to reduce the confession
to writing.This adds weight to the confession and helps convince the court that it was freely
and voluntarily made. If possible the confession, after being reduced to writing, should be read
to the defendant, have it read by defendant, have him sign it, and have it attested by
witnesses.[15]
The trial court gave credence to appellants oral extrajudicial confession relying on
jurisprudence which we find are not applicable. In the cases cited by the trial court, [16] the
convictions were based on circumstantial evidence in addition to the appellants confessions,
or the extrajudicial confessions were reduced to writing and were replete with details which
only appellants could have supplied. In the case at bar, however, there was no circumstantial
evidence to corroborate the extrajudicial confession of appellant. More importantly, the said
confession does not contain details which could have only been known to appellant.
Furthermore, the events alleged in the confession are inconsistent with the physical
evidence. According to Barangay Captain Castaares, appellant narrated to her that during the
struggle between him and the deceased, he fell to the ground after the latter hit him on the
head with a piece of wood. In the autopsy report, however, Dr. Plebia Villanueva found that
the entrance wound on the deceased was located at the top of the head or the crown,
indicating that the victim was probably lying down when he was shot. [17]

On the whole, it appears that the trial court simply based appellants conviction on the
testimonial evidence of prosecution witnesses that appellant orally owned up to the killing. We
cannot affirm appellants conviction on mere testimonial evidence, considering that the
voluntariness of said confession cannot be conclusively established because of appellants
personal circumstances and the failure of the police to reduce the alleged oral confession into
writing. The doubts surrounding the alleged oral confession, the conduct of the investigation
as well as the inapplicable jurisprudential precedents cited by the trial court do not lead to the
same moral certainty of appellants guilt.
To conclude, it must be stressed that in our criminal justice system, the overriding
consideration is not whether the court doubts the innocence of the accused, but whether it
entertains a reasonable doubt as to their guilt. Where there is no moral certainty as to their
guilt, they must be acquitted even though their innocence may be questionable. The
constitutional right to be presumed innocent until proven guilty can be overthrown only by
proof beyond reasonable doubt.[19] In fact, unless the prosecution discharges the burden of
proving the guilt of the accused beyond reasonable doubt, the latter need not even offer
evidence in his behalf.[20]
WHEREFORE, in view of the foregoing, the decision of the Regional Trial Court, Branch
18, Cebu City, convicting appellant Herminiano Satorre alias Emiano Satorre of Murder and
sentencing him to suffer the penalty of reclusion perpetua and to indemnify the heirs in the
amount of P50,000.00 as well as costs, is REVERSED and SET ASIDE. For lack of evidence
to establish guilt beyond reasonable doubt, appellant Herminiano Satorre alias Emiano
Satorre is ACQUITTED and is ordered immediately RELEASED from confinement, unless he
is lawfully held in custody for another cause.
SO ORDERED

Indeed, an extrajudicial confession will not support a conviction where it is

uncorroborated. There must be such corroboration that, when considered in connection with
confession, will show the guilt of accused beyond a reasonable doubt. Circumstantial

SECOND DIVISION
G.R. No. 191752, June 10, 2013
PEOPLE OF THE PHILIPPINES, Appellee, v. JOSE ARMANDO CERVANTES CACHUELA
AND BENJAMIN JULIAN CRUZ IBAEZ, Accused.
BENJAMIN JULIAN CRUZ IBAEZ, Accused-Appellant.
DECISION
BRION, J.:
We decide the appeal filed by appellants Jose Armando Cervantes Cachuela and Benjamin
Julian Cruz Ibaez assailing the August 7, 2009 decision 1 of the Court of Appeals (CA) in CAG.R. CR.-HC No. 03474. The CA decision affirmed with modification the July 14, 2008
decision2 of the Regional Trial Court (RTC), Branch 196, Paraaque City, finding the
appellants guilty beyond reasonable doubt of the special complex crime of robbery with
homicide, and sentencing them to suffer the penalty of reclusion perpetua.
The prosecutions evidence revealed that on July 23, 2004, Ibaez went to Weapons System
Corporation (WSC) on board an old car, and told Henessy Auron, WSCs Secretary and Sales
Representative, that he was the one who bought a gun barrel at the companys gun show in
SM Megamall. Ibaez inquired from Henessy about the schedule and the rates of WSCs firing
range and the amount of the membership fee of its gun club. He also asked the days when
there are many people in the firing range, and whether Henessy was WSCs only female
employee.3
At around 9:00 a.m. of July 26, 2004, Henessy arrived at WSC and rang the doorbell, but no
one opened the door. She went to the back of the office where the firing range was located,
and called Zaldy Gabao, another employee of WSC. Zaldy answered from inside the store but
Henessy did not understand what he said. Henessy returned to the front door and called
again. Zaldy replied that he could not open the door because his hands were tied. Henessy
called Raymundo Sian, the companys operations manager, and informed him that Zaldys
hands had been tied. After one hour, the police arrived; they opened the gate at the back
using acetylene. When Henessy and the police entered the premises, they saw that Zaldy had
been handcuffed to the vault. Zaldy informed the police that the companys gunsmith, Rex
Dorimon, was inside the firing range. The police entered the firing range, and saw the lifeless
body of Rex.4 Dr. Voltaire Nulud conducted an autopsy on the body of Rex, and found that the
victim suffered several gunshot wounds on the head, thorax and abdomen, caused by a .45
pistol.5
The National Bureau of Investigation (NBI) received an information from an asset that the
group of Cachuela was involved in the robbery of WSC and in the killing of one of its
employees; and that Cachuela had been looking for prospective buyers of firearms. The NBI

formed an entrapment team and proceeded to Bacoor, Cavite to execute the operation. Upon
their arrival, Melvin Nabilgas approached them and told them that he had been sent by
Cachuela and Ibaez to look for buyers of firearms. The police introduced themselves and told
Nabilgas that they were conducting an entrapment operation against the suspects of the
robbery at WSC. Nabilgas surrendered to the police, and gave the names of the other persons
involved in the crime.6
Thereafter, the asset contacted Cachuela and informed him that Nabilgas had already talked
to the buyers, and that they would like to see the firearms being sold. Cachuela set up a
meeting with the buyers at a gasoline station in Naic, Cavite. NBI Special Investigator Allan
Lino, Supervising Agent Jerry Abiera and the asset went to the agreed place. Cachuela came
and talked to them, and brought them inside his house where Cachuela showed them several
firearms. When the agents inquired from Cachuela whether the firearms had legal
documentation, the latter sensed that the meeting was a set-up. The NBI agents arrested
Cachuela before he could make any move. The agents recovered four (4) firearms 7 from
Cachuelas house, including a .9 mm Bernardelli with serial number T1102-03E000151. 8
The NBI conducted a follow-up operation on Ibaez whom the asset also contacted. Ibaez
directed the asset to bring the prospective buyers to his residence in Imus, Cavite. The NBI
agents went to Imus and there met Ibaez whom they saw inside a Nissan California car
bearing plate no. PMN 645. Lino, Abiera and the asset entered the car, and asked Ibaez
where the firearms were. Ibaez brought out two (2) firearms, and showed them to the agents.
The agents asked whether the guns had legal documentation; they then arrested Ibaez when
they sensed that he was already becoming suspicious. The agents recovered two guns from
Ibaez, viz.: a .45 Glock 30 with serial number FML 245 and a .45 Llama with serial number
04490Z.9
At the NBI Main Office, Zaldy pointed to the appellants, during a police line-up, as the persons
responsible for the robbery at WSC and for the killing of Rex. 10 Nabilgas also executed a
handwritten confession implicating the appellants and Zaldy in the crime. 11
The prosecution filed an Information12 for robbery with homicide before the RTC against the
appellants, Nabilgas and Zaldy, docketed as Criminal Case No. 04-0943. The accused all
pleaded not guilty on arraignment.13 Trial on the merits ensued thereafter. During trial, Zaldy
died.14
In its decision dated July 14, 2008, the RTC found the appellants guilty beyond reasonable
doubt of the special complex crime of robbery with homicide, and sentenced them to suffer the
penalty ofreclusion perpetua. It also ordered them to pay, jointly and severally, the heirs of
Rex P50,000.00 as civil indemnity and P50,000.00 as moral damages. The trial court likewise
ordered the appellants to pay Hector C. Rodriguez, Jr. 15 P1,563,300.00, representing the
value of the firearms and ammunitions stolen from WSC. Excepted from the conviction was
Nabilgas whom the RTC acquitted on ground of reasonable doubt.
The appellants filed an appeal with the CA, docketed as CA-G.R. CR.-HC No. 03474. In its

decision of August 7, 2009, the CA affirmed the RTC decision with the following modifications:
(a) the appellants were ordered to pay Arms Depot Philippines, Inc. the amount of
P1,093,947.50, representing the value of the stolen firearms and ammunitions from WSC, with
interest at the rate of 6% per annum from the date of the decision until fully paid; and (b) they
are likewise ordered to pay, jointly and severally, the heirs of Rex P45,000.00 as actual
damages with interest at the rate of 6% per annum from the date of the decision until fully
paid.
The CA held that the following pieces of circumstantial evidence showed that the appellants
robbed WSC and killed Rex during the course of this robbery: (1) Ibaez visited WSC two
days before the robbery and asked several questions from Henessy; (2) a robbery occurred at
WSC where 53 firearms and several ammunitions worth P1,563,300.00 had been stolen; (3)
among the firearms stolen were a .9 mm Bernardelli with serial number T1102-03E000151
and a .45 Glock 30 with serial number FML 245; (4) Rex, a gunsmith working in WSC, was
found dead at the firing range; (5) Rex sustained gunshot wounds on different parts of his
body; (6) Cachuela and Ibaez were caught trying to sell the .9 mm Bernardelli, with serial
number T1102-03E000151, and the .45 Glock 30, with serial number FML 245, respectively, in
separate entrapment operations; and (7) Cachuela and Ibanez were unable to explain how
they came into possession of the stolen firearms.
The CA ruled that the totality of these circumstances point to the appellants as the
perpetrators of the special complex crime of robbery with homicide. It disregarded the
appellants defenses of alibi, denial and frame-up for being self-serving. The CA likewise found
unmeritorious the appellants argument that the firearms confiscated from them were
inadmissible in evidence, pointing out that the seizures were the result of lawful entrapment
operations. It further held that the appellants failed to impute any ill or improper motive against
the police officers who conducted the entrapment operations.
Our Ruling
In this final review, we deny the appeal, and resolve to increase the amount for restitution by
the appellants to Arms Depot Philippines, Inc. from P1,093,947.50 to P1,481,000.00.
"A special complex crime of robbery with homicide takes place when a homicide is committed
either by reason, or on the occasion, of the robbery. To sustain a conviction for robbery with
homicide, the prosecution must prove the following elements: (1) the taking of personal
property belonging to another; (2) with intent to gain; (3) with the use of violence or
intimidation against a person; and (4) on the occasion or by reason of the robbery, the crime
of homicide, as used in its generic sense, was committed. A conviction requires certitude that
the robbery is the main purpose, and objective of the malefactor and the killing is merely
incidental to the robbery. The intent to rob must precede the taking of human life but the killing
may occur before, during or after the robbery."16
Admissibility of the out-of-court identification
and the extrajudicial confession

Lino testified that Zaldy identified the appellants as the persons involved in the robbery of
WSC and in the killing of Rex in a police line-up held at the NBI Main Office on Taft Avenue,
Manila. We note that Zaldy did not testify in court since he was brought to the National Center
for Mental Health, and subsequently died there during the trial. For this reason, we examine
with greater scrutiny Linos testimony regarding Zaldys alleged out-of-court identification.
People v. Algarme17 explains the procedure for out-of-court identification and the test to
determine its admissibility, as follows:
Out-of-court identification is conducted by the police in various ways. It is done thru showups where the suspect alone is brought face-to-face with the witness for identification. It is
done thru mug shots where photographs are shown to the witness to identify the suspect. It is
also done thru line-ups where a witness identifies the suspect from a group of persons lined
up for the purpose x x x In resolving the admissibility of and relying on out-of-court
identification of suspects, courts have adopted the totality of circumstances test where they
consider the following factors, viz.: (1) the witness' opportunity to view the criminal at the time
of the crime; (2) the witness' degree of attention at that time; (3) the accuracy of any prior
description, given by the witness; (4) the level of certainty demonstrated by the witness at the
identification; (5) the length of time between the crime and the identification; and, (6) the
suggestiveness of the identification procedure. [italics and emphasis supplied]
In the present case, Lino merely stated that Zaldy, during a police line-up, identified the
appellants as the persons involved in the robbery of WSC and in the killing of Rex. Lino did
not state when the line-up took place; how this line-up had been conducted; who were the
persons in the line-up with the appellants (if there were indeed other persons included in the
line-up); and whether the line-up was confined to persons of the same height and built as the
appellants. Lino likewise did not indicate who accompanied Zaldy before and during the lineup, and whether there had been the possibility of prior or contemporaneous improper
insinuations on Zaldy regarding the appearance of the appellants.
To our mind, Linos failure to state relevant details surrounding the police line-up is a glaring
omission that renders unreliable Zaldys out-of-court identification. No way exists for the courts
to evaluate the factors used in determining the admissibility and reliability of out-of-court
identifications, such as the level of certainty demonstrated by the witness at the identification;
the length of time between the crime and the identification; and the suggestiveness of the
identification procedure. The absence of an independent in-court identification by Zaldy
additionally justifies our strict treatment and assessment of Linos testimony.
The records also bear out that Nabilgas executed an extrajudicial confession 18 at the NBI Main
Office, where he implicated the appellants and Zaldy in the crime charged. During trial, he
repudiated this confession, and claimed that he had been tortured by the NBI agents, and that
he was forced to copy a previously prepared statement.
After a careful examination of the evidence on hand, we hold that Nabilgas extrajudicial
confession is inadmissible in evidence. The Court has consistently held that an extrajudicial
confession, to be admissible, must satisfy the following requirements: "(1) the confession must

be voluntary; (2) it must be made with the assistance of a competent and independent
counsel[,] preferably of the confessant's choice; (3) it must be express; and (4) it must be in
writing."19
We point out that Nabilgas was already under custodial investigation by the authorities when
he executed the alleged written confession. "A custodial investigation is understood x x x as x
x x any questioning initiated by law enforcement authorities after a person is taken into
custody or otherwise deprived of his freedom of action in any significant manner. x x x It
begins when there is no longer a general inquiry into an unsolved crime and the investigation
has started to focus on a particular person as a suspect, i.e., when the police investigator
starts interrogating or exacting a confession from the suspect in connection with an alleged
offense.20
In People v. Rapeza,21 we explained that the lawyer called to be present during custodial
investigations should, as far as reasonably possible, be the choice of the individual
undergoing questioning. If the lawyer is furnished by the police for the accused, it is important
that the lawyer should be competent, independent and prepared to fully safeguard the
constitutional rights of the accused, as distinguished from one who would merely be giving a
routine, peremptory and meaningless recital of the individual's constitutional rights.
After a close reading of the records, we rule that Nabilgas confession was not made with the
assistance of a competent and independent counsel. The services of Atty. Melita Go, the
lawyer who acted in Nabilgas behalf, were provided by the very same agency investigating
Nabilgas the NBI itself; she was assigned the task despite Nabilgas open declaration to the
agencys investigators that he already had a lawyer in the person of Atty. Donardo
Paglinawan. Atty. Paglinawan confirmed this fact when he stated that he was already
representing Nabilgas at the time his client made the alleged confession. Nabilgas also
testified that Atty. Go did not disclose that she was a lawyer when she was called to assist
him; she merely represented herself to be a mere witness to the confession. There was also
nothing in the records to show that Atty. Go ascertained whether Nabilgas confession was
made voluntarily, and whether he fully understood the nature and the consequence of his
extrajudicial confession and its impact on his constitutional rights.
To be sure, this is not the kind of assistance required of lawyers in a custodial investigation.
"An effective and vigilant counsel necessarily and logically requires that the lawyer be
present and [be] able to advise and assist his client from the time the confessant answers the
first question asked by the investigating officer until the signing of the extrajudicial
confession."22 In addition, the extrajudicial confession of Nabilgas was not corroborated by a
witness who was present at the time the written confession was made. We note in this regard
that the prosecution did not present Atty. Go at the witness stand despite hints made during
the early stages of the trial that she would be presented.
At any rate, Nabilgas extrajudicial confession is inadmissible in evidence against the
appellants in view of the res inter alios acta rule. This rule provides that the rights of a party
cannot be prejudiced by an act, declaration, or omission of another. Consequently, an
extrajudicial confession is binding only on the confessant and is not admissible against his or

her co-accused because it is considered as hearsay against them.

An exception to the res inter alios acta rule is an admission made by a conspirator under
Section 30, Rule 130 of the Rules of Court. This provision states that the act or declaration of
a conspirator relating to the conspiracy, and during its existence, may be given in evidence
against the co-conspirator after the conspiracy is shown by evidence other than such act or
declaration. Thus, in order that the admission of a conspirator may be received against his or
her co-conspirators, it is necessary that: (a) the conspiracy be first proved by evidence other
than the admission itself; (b) the admission relates to the common object; and (c) it has been
made while the declarant was engaged in carrying out the conspiracy. 23
This exception, however, does not apply in the present case since there was no other piece of
evidence presented, aside from the extrajudicial confession, to prove that Nabilgas conspired
with the appellants in committing the crime charged. Conspiracy cannot be presumed and
must be shown as distinctly and conclusively as the crime itself. Nabilgas, in fact, was
acquitted by the trial court due to insufficiency of evidence to prove his participation in the
crime.
Sufficiency of the proven circumstantial evidence
In view of the inadmissibility of Zaldys out-of-court identification and Nabilgas extrajudicial
confession, the prosecutions case rests purely on circumstantial evidence. Conviction can be
secured "on the basis of circumstantial evidence if the established circumstances constitute
an unbroken chain leading to [a] fair and reasonable conclusion proving that the accused is
the author of the crime to the exclusion of all others." 24 There can be conviction if the
prosecution can establish the appellants participation in the crime through credible and
sufficient circumstantial evidence that leads to the inescapable conclusion that the accused,
and none other, committed the imputed crime.25
"Circumstantial evidence consists of proof of collateral facts and circumstances from which
the main fact in issue may be inferred based on reason and common experience. Under
Section 4, Rule 133 of the Revised Rules of Court, circumstantial evidence is sufficient for
conviction if the following requisites concur: (a) there is more than one circumstance; (b) the
facts from which the inferences are derived have been established; and (c) the combination of
all the circumstances unavoidably leads to a finding of guilt beyond reasonable doubt. These
circumstances must be consistent with one another, and the only rational hypothesis that can
be drawn therefrom must be the guilt of the accused." 26
In our view, no doubt exists, based on the appellants' actions, that their primary objective was
to rob WSC, and that the killing of Rex was done on occasion, or by reason, of the
robbery: first, Ibaez went to WSC on July 23, 2004, and inquired from Henessy about the
schedule and the rates of the firing range, the amount of the membership fee of the
companys gun club, the days when there are many people in the firing range, and whether
she was the only female employee of the company;second, when Henessy arrived at WSC at
9:00 a.m. on July 26, 2004, Zaldy informed her that he cannot open the front door because his
hands were tied; third, Henessy called the companys operations manager and informed him

that Zaldy had been tied; fourth, the police saw Zaldy handcuffed to the vault when they
opened the back gate; fifth, the police saw the lifeless body of Rex lying on the floor with
several gunshot wounds when they entered the firing range; sixth, the operations manager
discovered that 53 guns and several ammunitions had been missing from the gun store,
including a .9 mm Bernardelli with serial number T1102-03E000151 and a .45 Glock 30 with
serial number FML 245; seventh, the NBI agents caught Cachuela trying to sell the .9 mm
Bernardelli with serial number T1102-03E000151 in an entrapment operation in Cavite; eighth,
the NBI agents caught Ibaez trying to sell the .45 Glock 30 with serial number FML 245 and
a .45 Llama with serial number 04490Z in a follow-up entrapment operation in Cavite; ninth,
Cachuela and Ibaez were unable to explain how they came into possession of the stolen
firearms; tenth, Police Inspector Armin Austria, the PNP Forensic Firearm Examiner, found
that the 98 pieces of .45 fired cartridge cases found at the crime scene were fired from the .45
Llama with serial number 04490Z recovered from Ibaez; 27 and finally, Dr. Nulud conducted
an autopsy on the body of Rex, and found that the victim suffered several gunshot wounds on
the head, thorax, and abdomen caused by a .45 pistol.

WSC.
To our mind, the fact that the cartridge bullet shells found at the firing range (where the lifeless
body of Rex had been discovered) matched with one of the guns recovered from Ibaez
during the entrapment operation clinches the case against the appellants insofar as
establishing the nexus between the robbery and the victims killing. Notably, the gunshot
wounds suffered by Rex also came from the same caliber of gun31 recovered from Ibaez. In
the final analysis, the prosecution sufficiently established the direct and intimate connection
between the robbery and the killing, and that the death of Rex had been committed by reason
or on the occasion of the robbery. When homicide is committed by reason or on the occasion
of a robbery, all those who took part as principals in the robbery would also be held liable as
principals of the single and indivisible felony of robbery with homicide, although they did not
actually take part in the killing, unless it clearly appears that they endeavored to prevent the
same.32
The penalty and the awarded civil indemnities

From these established circumstances, the overriding intention of the appellants cannot but be
to rob WSC; the killing of Rex was merely incidental to the robbery. "Intent to rob is an internal
act, but may be inferred from proof of violent unlawful taking of personal property."28 Rex was
killed to facilitate the robbery; he was also the person who would have been a witness to the
crime. In People v. De Leon,29 we held that "[h]omicide is said to have been committed by
reason or on the occasion of robbery if, for instance, it was committed (a) to facilitate the
robbery or the escape of the culprit; (b) to preserve the possession by the culprit of the loot;
(c) to prevent discovery of the commission of the robbery; or, (d) to eliminate witnesses in the
commission of the crime."
In this regard, we cannot overlook the fact that another WSC employee Zaldy was not
killed, but merely tied to the vault. The Court cannot second-guess on what could have been
behind the malefactors decision to spare Zaldys life, but we note that Zaldy became one of
the accused in this case after the Office of the City Prosecutor found probable cause to indict
him in the crime, as the robbery could have been the result of an "inside job." Unfortunately,
Zaldy was unable to testify during trial since the RTC ordered that he be brought to the
National Center for Mental Health for treatment. Accordingly, Nabilgas extrajudicial confession
(which we ruled to be inadmissible) was the only evidence linking Zaldy to the crime. For lack
of evidence, we cannot make any definite conclusion and can only speculate on Zaldys
involvement in the crime charged.
We find it worthy to stress that the appellants failed to overcome the disputable presumption
that "a person found in possession of a thing taken in the doing of a recent wrongful act is the
taker and the doer of the whole act[.]"30 To recall, Ibaez was at WSC two days before the
robbery, asking questions to the companys secretary. Several days after the robbery, the
appellants were caught trying to sell firearms that were reported stolen from WSC in separate
entrapment operations; they could not satisfactorily explain how and why these guns came to
their respective possession. The appellants likewise did not impute ill motive on the part of the
arresting officers that would impel the latter to fabricate evidence against them. These factors
lead to no other conclusion than that the appellants, to the exclusion of others, had robbed

Robbery with homicide is a single indivisible crime punishable with reclusion perpetua to
death under paragraph 1, Article 294 of the Revised Penal Code, as amended. We find that
the trial and appellate courts correctly sentenced the appellants to suffer the penalty
of reclusion perpetua only in the absence of any aggravating circumstance that attended the
commission of the crime.
We affirm the award of P50,000.00 civil indemnity and P50,000.00 moral damages to the heirs
of Rex, as these awards conform to prevailing jurisprudence on robbery with homicide when
the penalty imposed is only reclusion perpetua.33 We also affirm the award of P45,000.00 as
actual damages, as the prosecution successfully proved this amount through a receipt.
The CA ordered the appellants to restitute the amount of P1,093,947.50, representing of the
value of the stolen firearms and ammunitions. We, however, increase this amount to the total
amount of P1,481,000.00 as this is the value of the stolen items as proven by the evidence on
record.34
WHEREFORE, in light of all the foregoing, the decision of the Court of Appeals dated August
7, 2009 in CA-G.R. CR.-HC No. 03474 is AFFIRMED with the MODIFICATION that the
amount to be restituted by the appellants to Arms Depot Philippines, Inc. be increased from
P1,093,947.50 to P1,481,000.00.
SO ORDERED.
Del Castillo, Perez, Perlas-Bernabe, and Leonen,** JJ., concur.
Brion, J.,* (Acting Chairperson).

PEOPLE OF THE PHILIPPINES,

Plaintiff-Appellee,

G.R. No. 172468

Present:

feloniously, and deliberately set fire on a residential house located at No.

603 Sulucan St., Sampaloc, in said city, owned by ANGGE ARGUELLES,
by then and there pouring kerosene on a mattress placed in a room of
said house then occupied by the said accused and ignited it with a lighter,
knowing it to be occupied by one or more persons, thereby causing as a
consequence thereof, damage to the said house and adjacent houses in
the amount of more or less P2,000,000.00, to the damage and prejudice
of said owners in the aforesaid amount of P2,000,000.00, Philippine
Currency; that on the occasion and by reason of said fire, one RODOLFO
CABRERA, a resident/occupant of said house sustained burn injuries
which were the direct and immediate cause of his death.

PUNO, C.J.,
QUISUMBING,
YNARES-SANTIAGO,
CARPIO,
AUSTRIA-MARTINEZ,
- versus CORONA,*
CARPIO MORALES,
AZCUNA,
Contrary to law.
TINGA,
CHICO-NAZARIO,
The accused-appellant pleaded not guilty upon arraignment [4]. The pre-trial conference
VELASCO, JR.,
followed and the RTC issued a pre-trial order[5] which contained the stipulation of facts and
NACHURA,
issue of the parties as follows:
REYES,
JULIE VILLACORTA GIL
LEONARDO-DE CASTRO, and
In the pre-trial today, the parties stipulated that the residential house
(A. K. A. Julie Villasorca Gil),
BRION, JJ.
located at No. 603 Sulucan Street, Sampaloc, Manila, owned by Angge
Accused-Appellant.
Arguelles was burned and that the same resulted into the burning of other
Promulgated:
adjacent houses causing damage in the amount of more or less Two
Million (P2,000,000.00) and the death of a certain Rodolfo Cabrera.
October 15, 2008
-----------------------------------------------------------------------------------------------------------------------The issue to be resolved is whether the accused is the arsonist and / or
responsible for the said fire.
DECISION
After trial, the RTC rendered its assailed decision convicting the accused-appellant of the
LEONARDO-DE CASTRO, J.:
crime charged. According to the RTC, the prosecution had presented sufficient circumstantial
evidence, coupled with the written confession of the accused-appellant, to sustain her
Before the Court for automatic review is the Decision[1] dated February 10, 2006 of
conviction of the crime charged. The RTC admitted the oral and written confessions of the
the Court of Appeals (CA) in CA-G.R. HC CR No. 00253 which affirmed in
accused-appellant and found the prosecution witnesses more credible than the accusedtoto theDecision[2] dated January 23, 2003 of Branch 41 of the Regional Trial Court (RTC) of
appellant.
the City of Manila, convicting accused-appellant Julie V. Gil of the crime of Destructive Arson
with Homicide defined and penalized under Article 320 of the Revised Penal Code, as
The motion for reconsideration or new trial of the accused-appellant was denied in
amended, sentencing her to suffer the penalty of reclusion perpetua and ordering her to pay
the Order[6] dated April 3, 2003 of the RTC.
the heirs of the deceased victim Rodolfo Cabrera the amount of Fifty Thousand Pesos
(P50,000.00) as civil indemnity and Eighteen Thousand Nine Hundred Fifty Pesos
This case was directly elevated to this Court for mandatory review. In a Minute
(P18,950.00) Pesos for funeral and burial expenses. The accused-appellant and the plaintiffResolution[7] dated January 11, 2005, we referred this case to the CA for proper disposition
appellee adopted their respective briefs before the CA and both manifested to this Court that
conformably with the decision rendered in People v. Mateo.[8] On review, the CA rejected the
[3]
they no longer intend to file any supplemental brief.
assignments of error raised by the accused-appellant and affirmed her conviction of the crime
charged.
The Information charging accused-appellant reads:
A summary of the evidence adduced by the prosecution are quoted from the
That on or about March 1, 1998, in the City of Manila,
assailed decision of the CA as follows:
Philippines, the said accused, did then and there willfully, unlawfully,

William Lim, a Kagawad of Barangay 395, Zone 41 of the

4th District, Sampaloc, Manila, testified that on March 1, 1998 while eating
at their store located at 843 Quezon Boulevard, his former typist in the
barangay, Jonah, called him to tell that a woman wanted to surrender to a
barangay official. Jonah brought him to the woman who introduced herself
as Julie Gil. The latter appeared to be a lesbian, drunk and very
confused. She felt bothered by her conscience and admitted that she
burned her residence. He called up precinct 4 to report the incident, and
was told that there was indeed a fire that took place in the area. He
requested for a mobile and the accused was brought to fire station No. 4
where she forcibly took the pen from a policeman in order for her to put in
writing the actual incident. At first, Lim was hesitant thinking that her
testimony might not be admissible in court, but since the accused was
very insistent, she was allowed to reduce the incident in writing.
Ronnie Gallardo declared that he was present during the
incident. He and his mother occupied the room next to that of the
accused. On March 1, 1998 at around 12:30 p.m. while lying in bed inside
their room, he heard a thud (kalabog) coming from the room of the
accused. He also heard the accused crying. He went out of his room and
when he found the accused door open, he peeped through the door where
he noticed the latter standing. When she saw him, the accused pointed to
him the fire on her folding bed made of plastic with foam. At that time the
fire was getting bigger. She then told him xxx pabayaan mo na
iyan. Damay-damay na tayo. At hinatak na niya ako. They went out but he
tried to get back to get their belongings. He, however, failed to get
anything from their room because the entire house as well as the other
adjacent houses was already burning. With the help of their neighbors,
they tried to put off the fire which lasted for about two (2) hours, while the
accused remained standing, watching it. Since the incident he never saw
the accused until the latter appeared in court.
Rodolfo Lorenzo, a Kagawad of Barangay 457, Zone 45 which
covered the area of Sulucan Street, Sampaloc, Manila, met the accused
two (2) days before the incident at around 9:00 p.m. According to him,
somebody called for his help, informing that the accused was making
trouble. He immediately responded by proceeding to the house of the
accused at corner Sulucan and Earnshaw Streets, Sampaloc where he
saw the accused in front of her house. She was drunk, and there were two
(2) broken bottles of gin scattered along Earnshaw Street. He was told by
the accused mother that the accused broke the bottles because she had
problems with her live-in partner. He first swept the pieces of broken
bottles before approaching the accused and her mother, Aling Lita. The
accused told him that her live-in partner, Trining, wrote her two (2) breakup letters, which obviously she could not accept. He told the accused to
stay calm, but she refused to be pacified. She even told him xxx

manggugulo ako at manununog. He talked to the accused mother who

confirmed to him that she had problems with her live-in partner. Again, the
accused told him manununog daw po siya at damay-damay na lang daw
po lahat ng mga kapitbahay niya. To appease, he told her: Julie, baka
hindi mo alam ang gagawin mo magpakahinahon ka. Isipin mo muna ng
makasampung beses bago mo gawin ang iniisip mo, hindi basta bastang
kaso iyan. The accused just ignored him. He noticed, however, that her
eyes were red and she was gnashing her teeth. He then thought she was
on drugs. The following day at around 11:00 a.m., Rodolfo chanced upon
her near the basketball court. He tried to talk to her and convinced her not
to do anything bad, but again she ignored him. The next day, March 1,
1998 at around noon time, while talking with a neighbor in the basketball
court, his attention was called on the alleged fire that broke near the
squatters area. He proceeded to the place and saw Aling Lita outside her
house. He immediately looked for the accused whom he saw walking very
fast alongEarnshaw Street going towards Recto or Espaa. He tried to
chase her, but she was very fast. It would seem he was out of his mind as
she was even smiling when she saw the fire. She told, xxx damay-damay
na tayo diyan, huwag ninyo ng patayin ang sunog. When he felt that he
could no longer chase her, he stopped chasing her and instead helped put
off the fire as he was concerned with his constituents.
Unfortunately, Rodolfo did not give any statement before the
police after the incident.
It was SFO1 Redentor Alumno who investigated the fire
incident. Upon receipt of the alarm, his team proceeded to the crime
scene and conducted on the spot investigation. He talked to witnesses
particularly Amparo Cabrera and Ronnie Gallardo, who gave their
respective statements on the incident. At around 1:10 p.m. of the same
day, March 1, 1998, Barangay Kagawad William Lim turned-over to their
office the accused informing them that the latter voluntarily surrendered to
him (Lim). A letter written by the accused was also handed to him. After
conducting an investigation, SFO1 prepared a Crime Report in connection
with the incident. On March 2, 1998, the accused was subjected to
inquest.
SFO1 Alumno estimated the damage caused by the fire to be
P2 Million Pesos, more or less, as shown by the pictures he took after the
incident. There were more or less 15 to 20 houses destroyed, one (1) man
by the name of Rodolfo Cabrera died, and a certain Marites Cabrera was
injured.
Dr. Ma. Cristina B. Freyra of the Central Police District Crime
Laboratory examined the cadaver of victim Rodolfo E. Cabrera on April 8,
1998 at around 1000H upon request of the Office of the Barangay

Chairman of Barangay 411, Zone 42. Her examination shows that the
cause of the victims death was third degree burn of his entire body.
As a result of the untimely demise of victim Rodolfo Cabrera, his
surviving family suffered damages. According to his surviving
spouse, Anacleta Cabrera, during the wake of her husband, she spent
P3,175.00 for food. She also incurred expenses for his funeral and burial
amounting to P7,700.00 and P5,475.00, respectively. She also paid
P2,600 for the burial lot.
At the time of his death, Rodolfo Cabrera was living in the same
house with his common-law wife, Amparo Cabrera, for almost five (5)
years.
The written statement[9] executed by the accused-appellant admitting responsibility for
conflagration before Kagawad William Lim reads:
Volontary Statement of Julie Gil y Villacorta, 24 years old single, stell bed
worker, 1st year high scool 603 Sulucan St., Sampaloc, Manila, given to
Kagawad William Lim y Bedor, of legal age, Barangay 395 Zone 41,
Sampaloc, Manila, this 1 March 1998 on or about 1:10 P.M.
Ako po ay si Julie V. Gil ay bolontaryong sumuko kay Kagawad William
Lim sa salang Panununog sa inuupahang bahay ko sa No. 603 Sulucan
St., Sampaloc, kaninang mga bandang 12:00 ng tanghali. Sinunog ko po
ang tinitirhan ko dahil sa Pambabastos sa akin ng mga taong kamaganak
ng live in partner ko na si Trinidad Domingo 25 y old kaya ang ginawa ko
ay kinuha ko ang kalan di bomba at pagkatapos ibinuhos ko and laman
kerosene gas sa kutson perso bago ko sinindihan bumaba muna ako, at
saka ko sila sinabihan na lumabas na sila lahat sa iskinita dahil susunogin
ko na at damay damay na tayo at saka ako uli umakyat upang sindihan
ang lighter at saka uli ako bumaba at saka umalis, napadpad ako sa isang
barangay at kusang sumuko sa Kagawad William Lim. Nakokonsensya
ako kaya sinabi ko sa kanya ang aking nagawang kasalanan. Wala ako sa
sarili kong pagiisip ng sinunog ko ang aking tinitirhan dahil nakagamit po
ako ng shabo.
(Sgd.)
Julie Gil

Kagawad
(Sgd.) William B. Lim
March 1, 1998
On the other hand, the accused-appellant relied on her lone testimony in her
defense. While she admitted the authenticity of her above-quoted written confession, she
denied on the witness stand that she voluntarily wrote this confession. The accused-appellant
related her version of the fire incident which is quoted hereunder from the assailed decision of
the CA:
According to [accused-appellant], the fire resulted from her
defective gas stove which suddenly caught fire while she was boiling
water. When the stove caught fire, she got flustered and poured water on
the stove. To her surprise, the fire got bigger. Ronnie, who was also
renting a room next to her with his mother, came and they helped each
other to put off the fire. When their efforts seemed unsuccessful, she told
Ronnie: xxx hindi na natin kayang patayin ang apoy, baba na lang po kami
para humingi ng tulong. When they went out, people were already helping
each other to contain the fire. She then left the place passing through an
alley.
The accused averred that a day prior to the incident she was
very tired. She reported for work as a spring bed maker as early as 6:00
a.m. and went home 2:00 a.m. the following day,March 1, 1998. Again,
she woke up at 6:00 a.m. on the same day to report for work.
According to the accused, it was William Lim who took custody
of him for reasons unknown to her. Thereafter, they gave her a paper with
something written on it and they instructed her to copy the same in
another paper. Confused, she did what was told of her because they told
her that it would be good for her.
The accused-appellant[10] assails her conviction on the following grounds:
I
THE COURT A QUO GRAVELY ERRED IN FINDING THE
ACCUSED-APPELLANT GUILTY BEYOND REASONABLE DOUBT OF
THE CRIME OF ARSON WITH HOMICIDE BASED ON
CIRCUMSTANTIAL EVIDENCE.

CERTIFICATION

II

Ang salaysay na ito ay kusang isinalaysay sa akin ng isang babaeng

nangangalang Julie V. Gil at ito ay aking pipirmahan upang sa gayon ay
magamit sa kung anumang usapin.

THE COURT A QUO GRAVELY ERRED IN CONSIDERING AS

EVIDENCE THE ALLEGED EXTRAJUDICIAL CONFESSION OF THE
ACCUSED-APPELLANT.

The accused-appellant contends that the circumstantial evidence of the prosecution

failed to produce the required quantum of proof to hold her criminally liable for the charge. She
explained that prosecution witness Ronnie Gallardo saw her mattress already on fire but
never saw her deliberately burn her mattress. Ronnie Gallardo neither saw nor identified any
overt act which would suggest that the accused-appellant intentionally put her mattress on
fire. The accused-appellant claimed that Ronnie Gallardo might have gotten anxious after he
saw the raging fire and misunderstood her remark pabayaan mo na yan, damay-damay na
tayo when what she meant to say after all was pabayaan mo na yan, madadamay tayo. She
would not have pulled out Ronnie Gallardo from the burning house had her intention been to
cause injury to others. The accused-appellant also disputed the trial courts reliance on the
testimony of Kagawad Rodolfo Lorenzo that she intentionally burned her residential house
because of personal problems. She rhetorically questioned the credibility of the said
prosecution witness when, as a person in authority, he failed to report to the police his
supposed knowledge of what the accused-appellant was planning to do two days prior to the
fire that occurred in their neighborhood.
The accused-appellant also argues that her written confession is inadmissible in
evidence. She claims that she was not assisted by counsel at the time she executed the
same; and that she was merely led to believe, without apprising her of its legal significance,
that it would help her.
We find the arguments adduced by the accused-appellant untenable.
This Court agrees with the plaintiff-appellee [11] that the RTC has passed upon
enough circumstantial evidence to hold the accused-appellant guilty beyond reasonable doubt
of the crime charged. The plaintiff-appellee correctly cites the ruling in People v. Gallarde,
[12]
which distinguished the two types of positive identification of a perpetrator of a crime and
discussed their legal importance, thus:
Positive identification pertains essentially to proof of identity and
not per se to that of being an eyewitness to the very act of commission of
the crime. There are two types of positive identification. A witness may
identify a suspect or accused in a criminal case as the perpetrator of the
crime as an eyewitness to the very act of the commission of the
crime. This constitutes direct evidence. There may, however, be instances
where, although a witness may not have actually seen the very act of
commission of a crime, he may still be able to positively identify a suspect
or accused as the perpetrator of a crime as for instance when the latter is
the person or one of the persons last seen with the victim immediately
before and right after the commission of the crime. This is the second type
of positive identification, which forms part of circumstantial evidence,
which, when taken together with other pieces of evidence constituting an
unbroken chain, leads to the only fair and reasonable conclusion, which is
that the accused is the author of the crime to the exclusion of all others. If
the actual eyewitness are the only ones allowed to possibly positively
identify a suspect or accused to the exclusion of others, then nobody can

ever be convicted unless there is an eyewitness, because it is basic and

elementary that there can be no conviction until and unless an accused is
positively identified. Such a proposition is absolutely absurd, because it is
settled that direct evidence of the commission of a crime is not the only
matrix wherefrom a trial court may draw its conclusion and finding of
guilt. If resort to circumstantial evidence would not be allowed to prove
identity of the accused on the absence of direct evidence, then felons
would go free and the community would be denied proper
protection. [Emphasis supplied]
The circumstantial evidence of the prosecution consisted of the following: the
testimony of Kagawad Rodolfo Lorenzo about the behavior and remarks of the accusedappellant at the time she caused a public disturbance and threatened to cause chaos and
arson[13] and to drag her neighbors into this turmoil, [14] two days prior to the conflagration; the
testimony of Ronnie Gallardo that, when he saw the burning mattress in the room of the
accused-appellant, the latter said to him in the vernacular: Pabayaan mo na iyan. Damaydamay na tayo.;[15] the testimony of Kagawad Rodolfo Lorenzo that, at the time he tried to
chase the accused-appellant during the fire incident, he again heard her utter a nonchalant
remark: Damay-damay na tayo diyan, huwag ninyo nang patayin ang sunog.;[16] and the
testimony of Kagawad William Lim that the accused-appellant approached and admitted to
him immediately after the incident that she was the person responsible for the conflagration.
[17]
The aforementioned circumstantial evidence would constitute positive identification of the
accused-appellant as the perpetrator of the crime charged, to the exclusion of others. She
was the person who had the motive to commit the crime, and the series of events following
her threat to cause chaos and arson in her neighborhood -- the fire that started in her room,
and her actuations and remarks during, as well as immediately before and after the fire-sufficiently points to the accused-appellant as the author of the said crime.
We are not persuaded by the bare and uncorroborated allegation of the accusedappellant that the fire was accidental, and that she was arrested and forced
by KagawadWilliam Lim to copy the contents of her written confession from a piece of paper
handed to her by the said barangay official.
To quote a well-entrenched legal precept, the factual findings of the trial court, its
calibration of the testimonies of the witnesses and its assessment of their probative weight are
given high respect, if not conclusive effect, unless it ignored, misconstrued, misunderstood or
misinterpreted cogent facts and circumstances of substance, which, if considered, will alter
the outcome of the case and the said trial court is in the best position to ascertain and
measure the sincerity and spontaneity of witnesses through its actual observation of the
witnesses' manner of testifying, demeanor and behavior while in the witness box. [18]
In this case, the trial court found that the prosecution witnesses testified consistently
and truthfully. The chain of events before, during, and after the fire - - as narrated by the
prosecution witnesses - - established beyond reasonable doubt that the accused-appellant
committed the acts alleged in the information, which constituted the crime of arson with
homicide. The accused-appellant failed to show any misconstrued, misunderstood or

misinterpreted cogent facts and circumstances of substance that could alter the outcome of
the case. She also did not show any credible motive why the prosecution witnesses testified
against her. Thus, this Court finds conclusive the findings and observation of the trial court
that the testimonies of the prosecution witnesses were candid and trustworthy, and that the
testimony of the accused-appellant was not impressed with candor and honesty.
Regarding her extrajudicial confession, the plaintiff-appellee correctly adverted to
the ruling in People v. Andan[19] as to the admissibility of the verbal confession made by the
accused-appellant, which she made not only to Kagawad William Lim but also to Kagawad
Rodolfo Lorenzo while the fire was in progress. Moreover, as correctly held by the CA, even if
the written extra-judicial confession is disregarded, the evidence presented by the prosecution
is more than sufficient to prove the guilt of the accused-appellant beyond reasonable doubt.
WHEREFORE, in view of the foregoing, the Decision dated February 10, 2006 of the Court of
Appeals in CA-G.R. HC CR No. 00253 affirming the Decision dated January 23, 2003 of
Branch 41 of the RTC of Manila is hereby AFFIRMED. No costs.
SO ORDERED.

Decision[2] of the Regional Trial Court (RTC) of San Carlos City, Pangasinan, Branch 57,
finding Larry Erguiza (appellant) guilty of one count of rape and sentencing him to suffer the
penalty of reclusion perpetua.

THIRD DIVISION
PEOPLE OF THE PHILIPPINES,

G.R. No. 171348

Plaintiff-Appellee,

The Information, dated April 10, 2000, in Criminal Case No. SCC 3282 reads as
Present:

AUSTRIA-MARTINEZ,

That on or about 5:00 oclock in the afternoon of January 5, 2000, at the

back of the Bical Norte Elementary School, municipality of Bayambang,
province of Pangasinan, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, armed with a kitchen knife,
by means of force and intimidation, did then and there, willfully, unlawfully,
and feloniously have sexual intercourse with AAA [3], a minor of 13 years
old, against her will and consent and to her damage and prejudice. [4]

CHICO-NAZARIO, and

When arraigned, appellant pleaded not guilty.[5] Thereafter trial ensued.

PUNO,* C.J.
YNARES-SANTIAGO, J.,
- versus -

follows:

Chairperson,

REYES, JJ.

LARRY ERGUIZA,

Promulgated:

Accused-Appellant.

November 26, 2008

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

DECISION

AUSTRIA-MARTINEZ, J.:

The Court is confronted with another case of rape. The victim, a 13-year-old girl. And although
the Court may be moved by compassion and sympathy, the Court, as a court of law, is dutybound to apply the law. Basic is the rule that for conviction of a crime, the evidence required is
proof beyond reasonable doubt -- conviction with moral certainty.

For review before this Court is the November 18, 2005 Decision [1] of the Court of
Appeals (CA) in CA-G.R. CR H. C. No. 00763 which affirmed with modification the

The prosecution presented four witnesses, namely: private complainant (AAA), her mother
BBB and father CCC, and Dr. James Sison. The defense presented five witnesses, namely:
Joy Agbuya, Juanito Macaraeg, Juanita Angeles, Albina Erguiza, and appellant.
On November 27, 2000, the RTC found appellant guilty of the crime of rape,
the dispositive portion of which reads as follows:

In view whereof, the Court finds the accused LARRY C. ERGUIZA guilty
of RAPE under Article 266-a paragraph 1(a) in relation to Article 266-b of
R.A. 8353 and R.A. 7659 and sentences (sic) to suffer the penalty of
reclusion perpetua and to pay the offended party, AAA P50,000 as civil
indemnity, P50,000 as moral damages, P50,000 as exemplary damages,
to give support to AAA's offspring and to pay the costs.

SO ORDERED.[6]

On appeal, the CA aptly summarized the respective versions of the parties, based on the
evidence presented before the trial court, thus:

PROSECUTION'S VERSION:

Domingo, AAA finally revealed that she was raped by accused-appellant.

[14]

On January 5, 2000, at around 4:00 o'clock in the afternoon, AAA, a

thirteen-year old first year high school student, together with her friends,
siblings Joy and Ricky Agbuya, went to the mango orchard located at the
back of ZZZ Elementary School to gather fallen mangoes.[7] When they
were bound for home at around 5:00 o'clock in the afternoon, AAAs short
pants got hooked on the fence. AAA asked Joy and Ricky to wait for her
but they ran away and left her.[8]

While AAA was trying to unhook her short pants, Larry suddenly grabbed
and pulled her. Poking a knife at her neck, Larry threatened to hurt her if
she would make a noise.[9]

Accused-appellant dragged AAA towards a place where a tamarind tree

and other thorny plants grow. Then Larry removed his maong pants and
forced AAA to lie down on the grassy ground. Thereafter, he removed her
short pants and panty, mounted himself on top of her and inserted his
penis into her private parts and made push and pull movements. He
likewise raised AAAssando and mashed her breast. AAA felt pain when
accused-appellant entered her and she felt something sticky in her private
part after Larry made the push and pull movements. [10]

Larry told AAA not to tell anybody about the incident otherwise he would
kill her and all the members of her family and then he ran away. [11]

AAA lingered for a while at the place and kept crying. Having spent her
tears, she wore her panty and short pants and proceeded to the adjacent
store of her Aunt Beth who was asleep. After staying for some time at the
store, AAA decided to come (sic) home. Upon reaching home, she directly
went to bed. Fearing Larry's threat, AAA kept mum on the incident. [12]

On April 8, 2000, AAA, accompanied by her mother and uncle, went to the
police headquarters in YYY, Pangasinan to report the incident.[15] Then the
police brought her to YYY DistrictHospital[16] where Dr. James Sison,
Medical Officer III of said hospital conducted the examination on Michelle.
Dr. Sison made the following findings:

Q.
x x x No extragenital injuries
noted. Complete
healed hymenal laceration 11:00 o'clock. x x x. In layman's term,
Dr. Sison found no physical injury from the breast, the body except the
genital area wherein he found a significant laceration complete (sic)
healed over 11:00 o'clock.[17] Dr. Sison also testified that a single sexual
intercourse could make a woman pregnant.

BBB testified that her daughter AAA stopped going to school after she was
raped and that no amount of money could bring back the lost reputation of
her daughter.

CCC (AAA's father), testified that on May 2, 2000, the family of accusedappellant went to their house and initially offered P50,000 and later
P150,000; that in January 5, 2000, while they were repairing his house for
the wedding reception[18], Larry left at around 4:00 o'clock p.m.

DEFENSE'S VERSION

On April 7, 2000, BBB brought her daughter AAA to her grandmother

(BBB's mother), a hilot residing in XXX, Tarlac, to consult her on the
unusual palpitation on the mid-portion of AAA's throat and the absence of
her monthly period.[13] After examining AAA, her grandmother told BBB
that her daughter was pregnant.

On January 5, 2000, Larry Erguiza helped in the repair of CCC's[19] house

from 8:00 o'clock in the morning up to 5:00 o'clock in the afternoon. When
he reached home at around 5:00 pm, his mother Albina Erguiza instructed
him to fetch a hilot as his wife Josie was already experiencing labor pains.
He proceeded to fetch the hilot Juanita Angeles and stayed in their house
until his wife delivered a baby at around 3:00 o'clock in the morning
of January 6, 2000.[20]

BBB asked AAA who was the father of her unborn child but AAA refused to
talk. After much prodding, and in the presence of her Uncle, Rudy

Juanita Angeles corroborated Larry's testimony that he indeed fetched her

at around 5:10 pm on January 5, 2000 to attend to his wife who was

experiencing labor pains and who delivered a baby at about 3:00 a.m. of
January 6, 2000; and that Larry never left his wife's side until the latter
gave birth.

Hence, herein appeal.

In his appeal Brief,[25] appellant raises the following errors:

Albina, mother of the accused-appellant, testified that AAA is the daughter
of her balae Spouses CCC and BBB; that her son Larry, her husband and
two others left CCC and BBB's residence at about 5:00 o'clock in the
afternoon on January 5, 2000; that she went to Spouses CCC and BBB to
talk about the charge of rape against her son; that Spouses CCC and BBB
were asking forP1,000,000.00 which was later reduced to P250,000.00
and that she made a counter-offer of P5,000.00.[21]

Joy Agbuya testified that she and AAA were at the mango orchard
of Juanito Macaraeg on January 5, 2000; that she never left AAA when
her short pants got hooked; that they went together to the store of Auntie
Beth where they parted.[22]

1.

THE COURT A QUO GRAVLEY ERRED IN GIVING CREDENCE

TO THE INCREDIBLE, THUS UNBELIEVABLE TESTIMONY OF
PRIVATE COMPLAINANT AAA.

2.

THE COURT A QUO GRAVELY ERRED IN CONVICTING

ACCUSED APPELLANT OF THE CRIME OF RAPE DESPITE THE
FACT THAT THE PROSECTUION EVIDENCE FAILED TO
ESTABLISH HIS GUILT BEYOND REASONABLE DOUBT.

3.

THE COURT A QUO GRAVELY ERRED IN NOT APPRECIATING

ACCUSED-APPELLANT'S DEFENSE OF ALIBI CORROBORATED
BY THE WITNESSES PRESENTED BY THE DEFENSE.[26]

Juanito Macaraeg, the mango orchard caretaker, testified that the house
of Larry was a walking distance of about three minutes from the mango
orchard; that if one runs fast, it would only take a minute to reach his
house; and that he could not recall having seen Larry in the orchard.
[23]
(Emphasis supplied)

The appeal is meritorious. The prosecution's evidence does not pass the test of
moral certainty.

In its Decision dated November 18, 2005, the CA affirmed the decision of the RTC,
but modified the amount of the award of exemplary damages and costs as follows:

This Court has ruled that in the review of rape cases, the Court is guided by the following
precepts: (a) an accusation of rape can be made with facility, but it is more difficult for the
accused, though innocent, to disprove it; (b) the complainant's testimony must be scrutinized
with extreme caution since, by the very nature of the crime, only two persons are normally
involved; and (c) if the complainant's testimony is convincingly credible, the accused may be
convicted of the crime.[27]

WHEREFORE, in view of all the foregoing circumstances, the Decision of

the Regional Trial Court of San Carlos (Pangasinan), Branch 57
dated November 27, 2000 in Criminal Case No. SCC-3282
is AFFIRMED with MODIFICATION. Accused-appellant Larry Erguiza is
held GUILTY of Rape and is sentenced to suffer the penalty of
reclusion perpetua. He is ordered to pay the victim AAA P50,000.00 as
civil indemnity; P50,000.00 as moral damages, and P25,000.00 as
exemplary damages and to give support to AAAs offspring.

SO ORDERED.[24]

In the case at bar, the CA upheld the conclusion of the RTC in finding the complainant
credible, to wit:

The testimonies of victims who are young and of tender age, like AAA,
deserve full credence and should not be dismissed as mere fabrication
especially where they have absolutely no motive to testify against the
accused-appellant as in this case. Larry even admitted that AAA had no ill
motive for charging him with rape. The Supreme Court in
several cases, ruled that full credence is accorded the testimony of a rape
victim who has shown no ill motive to testify against the accused. This
being so, the trial court did not err in giving full credence to AAA's
testimony.[28]

This Court does not agree with the CA.

The Court is not unmindful of the general rule that findings of the trial court regarding
credibility of witnesses are accorded great respect and even finality on appeal. [29]However, this
principle does not preclude a reevaluation of the evidence to determine whether material facts
or circumstances have been overlooked or misinterpreted by the trial court. [30] In the past, this
Court has not hesitated to reverse a judgment of conviction, where there were strong
indications pointing to the possibility that the rape charge was false. [31]
Generally, when a woman, more so if she is a minor, says that she has been raped, she says
in effect all that is necessary to show that rape was committed. And so long as her testimony
meets the test of credibility and unless the same is controverted by competent physical and
testimonial evidence, the accused may be convicted on the basis thereof. [32]

After a judicious examination of the records of the case, the Court finds that there is
testimonial evidence that contradicts the findings of the RTC and CA on the basis of which no
conviction beyond reasonable doubt could arise. It is the unrebutted testimony of a credible
defense witness. The testimony of Joy Agbuya (Joy) casts doubt as to the possibility of rape
having taken place as narrated by complainant. In addition, the testimony of a disinterested
defense witness, Juanita Angeles (Juanita) corroborated the alibi of appellant.

Before dwelling on the testimonies of Juanita and Joy, the Court shall first scrutinize the
testimonial evidence presented by the prosecution and the defense.

Aside from the testimony of complainant, the prosecution presented the following witnesses:
Dr. James Sison, BBB, and CCC. The pertinent portions of their testimonies may be
summarized as follows:

Dr. James Sison testified that he conducted the medical examination of complainant. His
diagnosis was that there was a significant laceration completely healed at the 11:00
o'clock position.[33] However, Dr. Sison testified that his findings were not conclusive, but were
rather suggestive that complainant was raped. Furthermore, as to the question of paternity of
the child of complainant, Dr. Sison suggested doing a DNA match.[34]

BBB testified the she brought AAA to her grandmother, a hilot residing in XXX, Tarlac, to
consult her on the unusual palpitation on the mid-portion of complainant's throat and the
absence of her monthly period.[35] After examining complainant, the hilot told BBB that her
daughter was pregnant. AAA later revealed that she was raped by appellant. [36]BBB further

testified that she accompanied AAA to the police headquarters in YYY, Pangasinan to report
the incident.[37] Afterwards, the police brought complainant to YYYDistrict Hospital[38] where Dr.
James Sison, Medical Officer III of said hospital, conducted the examination on
complainant. On cross-examination, BBB testified that the family of appellant offered her
money to settle the case.[39]

CCC, the father of AAA, was the lone rebuttal witness of the prosecution. In order to rebut the
allegation made by appellant's family that the present case was filed because appellant's
family did a poor job in preparing for the wedding of CCC's daughter DDD
and apellant's brother Carlito, CCC testified that on the contrary, the wedding went smoothly.
[40]
CCC further claimed that the family of appellant knelt before him crying and offered money
to settle the case.[41] Moreover, CCC testified that appellant left his house at 4:00
p.m. on January 5, 2000.

On
the
other
hand,
the
defense
presented
four
namely: Juanito Macaraeg (Macaraeg), Albina Erguiza (Albina), Juanita and Joy.

witnesses,

Macaraeg, the caretaker of the mango orchard, testified that he did not see appellant on any
occasion in the orchard.[42] More specifically, Macaraeg emphasized that he did not see
appellant on January 5, 2000.[43] However, on cross-examination, he testified that the house of
appellant is only a three-minute walk from the mango orchard and probably a minute if one
walks fast.[44]

Albina, the mother of appellant, testified that on January 5, 2000, she was with appellant at
the house of CCC and BBB preparing for the wedding of CCC's daughter DDD and appellant's
brother Carlito. She said that they left the house of CCC at around 5:00 p.m.
[45]
Albina narrated that when they arrived home, at around 5:02 or 5:03 p.m., she sent
appellant to fetch a hilot, as the wife of appellant was having some labor pains. [46] She said
that appellant and the hilot arrived at around 5:30 p.m.[47] According to Albinaappellant never
left their house.[48]

On the day of the wedding, Albina testified that she had an altercation with BBB regarding the
bills and that they never resolved their quarrel. [49] She spoke to BBB and CCC because she
learned that they were falsely accusing appellant of raping AAA. [50] After talking to BBB and
CCC, she and her husband confronted appellant and asked if he had raped complainant,
which
appellant
denied.[51] Albina claimed
that
CCC
and
BBB
were
demanding P1,000,000.00 and that they later reduced it to P250,000.00.[52] Albina said that
she offered P5,000.00 to BBB and CCC only to preserve their relationship as in-laws and for
peace.[53]

In sum, with the exception of the claim of AAA that she was raped by appellant, other
evidence presented by the prosecution did not identify appellant as the perpetrator of the
crime.
Moreover, the testimonies of the witnesses for both the prosecution and the defense conflict
on certain points, more notably the claim by BBB and CCC that the family of appellant offered
to settle the case. This, however, was denied by Albina, who claimed that it was BBB and
CCC who demanded P1,000,000.00.
The offer of compromise allegedly made by Albina is critical to the case at bar in light of law
and jurisprudence that an offer of compromise in a criminal case may be received in evidence
as an implied admission of guilt. [54] In the case at bar, the offer of compromise was first
testified to by BBB on cross-examination, to wit:

Q. What happened when you went to the house of BBB and CCC talking
with them about their problem of the alleged rape on AAA, their
daughter?
A. They were asking for a settlement price for one million pesos but we
have no money, sir.

Q. What did you do when they were asking one million pesos from you?
A. We told them that we do not have that money until they reduced the
price to P250,000.00 but we have no money because we are poor,
sir.

Q. Were you around when BBB testified to the witness stand?

Q. Is it not a fact that there was an offer by you to the mother of the
accused that they pay you 1 million and you have reduced it
to P250,000.00?

A. I was here, sir.

A. No, sir, it was they who were the ones offering for settlement, but we
never offer them any settlement, sir.[55]

Q. Did you hear what BBB said that you were the one offering money?

On rebuttal, CCC corroborated the testimony of BBB that the family of appellant offered to
settle the case, to wit:

Q. And according to Larry Erguiza as well as his witnesses they told the
Honorable Court that you and your wife are demanding from
Larry Erguiza and his parents the amount of one million pesos so
that you will not file this case against the accused, what can you
say about that?
A. There is no truth about that, sir.

A. Yes, sir, I was here and I heard that.

Q. What can you say to that allegation of BBB?

A. That is not true, sir. She was saying that we were the ones offering
money for one million to them but she was telling a lie, it was they
who were asking for one million pesos, sir.

Q. What is your proof that is was they who are demanding the amount of
one million and reduced that to two hundred fifty thousand
(P250,000.00)?
A. We already left because we cannot afford to give that much, sir.

Q. And what is the truth about it?

A. It was they who went to my house, they even knelt before me crying
and they were offering money, sir.[56]

However, Albina, the mother of appellant, denied the foregoing allegations, to wit:

Q. Aside from the fact that you do not have money, was there any reason
or what was your other reason in going there?
A. Our reason in talking to them was that when Larry said that he did not
commit the alleged rape and so we went there to talk to them so
that we could preserve our relationship as in-laws even if it is for
the sake of peace we could try our best to cope up
even P5,000.00 just for the sake of peace because our intention in
going to their house was to extract the truth, sir. [57]

On cross-examination, appellant gave the following statements:

Q. Before the filing of this case with this Honorable Court, your parents
and you were pleading to the parents of AAA not to continue
anymore the case, is it not?

In addition, the Court, in weighing the evidence presented, may give less weight to the
testimonies of Albina, on the one hand, and BBB and CCC, on the other, as they are related to
the appellant and the victim, respectively [63] Their testimonies relating to the offer of settlement
simply contradict each other. As a matter of fact, even the lower courts did not consider the
alleged offer of settlement in resolving the case.

Thus, the Court now considers the testimonies of Juanita and Joy.

A. Yes, sir, so that the case will not be filed and our relationship will not be
destroyed, sir.
Testimony of Juanita Angeles
Q. In fact you asked your parents to do so, is it not?
A. No, sir. They were the ones who went to the house of AAA, sir.

Juanita, a hilot, testified that appellant fetched her at around 5:10 in the afternoon of January
5, 2000.[64] She asserted that they arrived at the house of appellant at 5:30 p.m. She said that
appellant's wife gave birth at dawn at 3:00 a.m. of January 6, 2000.[65] Juanita said that
appellant was with her the entire time and never left the house. [66]

Q. But the family of AAA did not agree to the pleadings of your parents
that the case be not filed anymore, is it not?
A. They will agree if we will pay then 1 million, but we do not have 1
million, sir.

Q. Did you offer them 1 million?

A. No, sir. They were the ones who told that to us. [58] (Emphasis Supplied)

The alleged offer of the parents of appellant to settle the case cannot be used against
appellant as evidence of his guilt. Appellant testified that he did not ask his parents to settle
the case. Moreover, appellant was not present when the offer to settle was allegedly made.

Testimony of Joy Agbuya

For a better perspective on the testimony of Joy, it is necessary to repeat the testimony of
AAA. AAA testified that on January 5, 2000, she was accompanied by 12-year-old Joy and the
latter's brother Ricky Agbuya (Ricky) to the mango orchard at the back of the elementary
school to pick fallen mangoes. Further, complainant claims that she was left behind by Joy
and Ricky when her shorts got hooked to the fence and that while she was unhooking her
pants from the fence, appellant grabbed her and raped her. [67]

This was however contradicted by Joy, to wit:

Q.
An offer of compromise from an unauthorized person cannot amount to an admission of the
party himself.[59] Although the Court has held in some cases that an attempt of the parents of
the accused to settle the case is an implied admission of guilt, [60] we believe that the better
rule is that for a compromise to amount to an implied admission of guilt, the accused should
have been present or at least authorized the proposed compromise. [61] Moreover, it has been
held that where the accused was not present at the time the offer for monetary consideration
was made, such offer of compromise would not save the day for the prosecution. [62]

How many times did

of Juanito Macaraeg?

you

go

to

the

mango

orchard

A. Three (3) times, sir.

Q. When you usually go to the mango orchard of Juanito Macaraeg,

where did you met [sic] with AAA?
A. In their house, I dropped by her house, sir.

Q. Was there an occasion wherein you brought your brother Ricky when
you went with AAA to the mango orchard of Juanito Macaraeg?
A. No, sir.

Q. Are we made to understand that Ricky, your brother did not go even
once to the mango orchard of Maning Macaraeg?
A. Yes, sir.

Q. Is AAA your bestfriend?

A. Yes, sir.

Q. Since you said that AAA is your bestfriend was there an occasion
wherein she told you that she was raped?
A. None, sir.[69] (Emphasis and underscoring supplied)

Q. According to AAA in her sworn statement she stated that in [sic]

January 5, 2000 you were with your brother Ricky and AAA in
going to the mango orchard, what can you say about that?

On cross-examination, Prosecutor Ely Reintar elicited the following statements from Joy:

A. What she is saying is not true. I was not with my brother, sir. I did not
tug him along with me.

Q. In the year 2000, when was the last time that you talked to AAA?
A. April, sir.

Q. It is also said by AAA that you left her behind in the mango orchard
when her pants was hooked, what can you say about that?

Q. After April, you did not talk to AAA anymore?

A. No, sir I waited for her.

A. No more, sir.

Q. Are we made to understand Madam Witness, that there was no

instance or never that happened that you left her in the mango
orchard alone?

Q. Your friendship was severed?

A. Yes, sir.

A. No, sir, I waited for her and both of us went home together, sir.

Q. Going back to the occasion wherein you were with AAA, who were with
you in going back home?

Q. Will you please tell the Honorable Court why your friendship became
severed?
A. Because she quarreled with me, sir.

A. Just the two (2) of us, sir.

Q. In your way home, where did you part or separate with each other?
A. In front of the store of auntie Beth, sir.[68]

xxxx

Q. And because you quarreled, that is the reason why you are now
testifying against her?
A. Yes, sir.[70]

On re-direct examination, Joy clarified, thus:

Q. Madam Witness, you said that you have a quarrel with the private
complainant, AAA, will you please tell this Honorable Court what is
the reason or cause of your quarrel with AAA?

Q. You try to understand clearly the question, Madam Witness, and may I
repeat that, at the time of the rape when according to you, you
were the one raped, where were Joy and RickyAgbuya?

A. Because they wanted me to say another statement that I left AAA

behind, sir.[71] (Emphasis supplied)

A. They left ahead of me because my short pants was hooked at the fence
so I was left behind, sir.

On re-cross examination, Joy gave the following answers to the questions of

Prosecutor Reintar:

Q. Were you able to remove the pants of yours at the fence?

Q. You said that the reason for your quarrel is that they wanted you to
change your statement, that you left behind AAA, who are
those they, that you are referring to?

A. I was removing it sir, when he suddenly grabbed me.

INTERPRETER

Q. And who is this person you are referring to as the one who grabbed
you?

No answer.

A. Larry Erguiza, sir.[73]

Witness
I, sir.

PROS. REINTAR

Put simply, complainant could not have been raped because Joy waited for complainant when
the latters shorts got hooked to the fence and thereafter both went home together.The Court
finds no cogent reason for Joy to lie and say that she had waited for complainant and that they
both went home together. She had nothing to gain for lying under oath.Moreover, the records
are bereft of any showing or claim that Joy was related to or was a close friend of appellant or
his family. On the contrary, Joy considers herself the best-friend and playmate of complainant.
[74]

Q. Who told you to change your statement that you left AAA behind?
A. Because they are saying that I will change my statement that I left AAA
but I did not sir.

Q. Who are these who are telling that?

When Prosecutor Reintar questioned her as to her understanding of the oath she took, Joy
answered, That I will swear to God, sir. x x x The truth, sir.[75] Furthermore, Joy did not
succumb to pressure even as she was being conscientiously examined by
Prosecutor Reintar. Joy boldly testified that BBB, the mother of complainant, was forcing her
to change her statement.

A. They, sir.

Q. Will you please mention them?

A. BBB, only her, sir.[72]

The testimony of 12-year-old Joy makes it impossible for the appellant to have raped AAA the
way complainant narrated it, to wit:

The testimony of Joy clearly lays down the following facts which are damaging to the case of
the prosecution: first, that Joy did not leave behind AAA when the latters shorts got hooked to
the fence; and secondly, that Joy and AAA left the orchard, went home together and separated
at their Aunt Beth's house, indicating that no untoward incident, much less rape, was
committed by appellant at the time and place that complainant had testified on.

Necessarily, either Joy or AAA lied under oath. It was thus critical for the prosecution to show
that Joy gave false statements.
Unfortunately for AAA, the prosecution miserably failed to rebut Joys testimony. Neither
complainant nor Ricky, BBB or any other witness was called to the witness stand to refute
Joys testimony. True, it is up to the prosecution to determine who to present as witnesses.
[76]
However, considering that the testimony of Joy critically damaged the case of the
prosecution, it behooved the prosecution to present evidence to rebut the defense
evidence. Witnesses such as Ricky, AAA and BBB should have been presented by the
prosecution to demolish Joy's testimony. The testimony of Ricky is particularly significant,
especially since AAA claimed that he was with her and his sister Joy at the mango orchard on
the day of the alleged rape incident. The failure on the part of the prosecution to present Ricky
or AAA bolsters the defense evidence, that no rape happened on the date and time claimed by
AAA.

The prosecution presented CCC, the father of complainant, as it's lone rebuttal witness.
[77]
However, the testimony of CCC covered facts and issues not related to the testimony of
Joy. The testimony of CCC merely rebutted the allegation made by appellant's family that the
present case was filed because appellant's family did a poor job of preparing for the wedding
of CCC's daughter DDD and apellant's brother Carlito. To this, CCC testified that on the
contrary, the wedding went smoothly. [78] Furthermore, CCC claimed that the family of appellant
knelt before him crying and offered money to settle the case. [79] In addition, CCC testified that
appellant left his house at 4:00 p.m. on January 5, 2000.Thus, the testimony of CCC did not in
any way rebut the testimony of Joy.

Further, Joy testified that during the three times she went with AAA to the mango orchard, the
time was 1:00 p.m.[80] However, AAA testified that she went to the mango orchard with Joy at
4:00 p.m.[81] The variance in the testimonies of Joy and AAA as to the time they went to the
mango orchard on the day of the alleged rape incident may be disregarded as they
are de minimis in nature and do not relate to the commission of the crime. There is a common
point uniting the testimonies of both Joy and AAA; that is, that both referred to the day when
AAAs short got hooked to the fence.

[82]

Such, however, finds no application to the case at bar. AAA and Joy may differ in their
testimonies as to the time they were at the mango orchard, but there could be no mistake as
to the actual day when AAA was supposed to have been raped; it was the day when AAA's
shorts got hooked to the fence at the mango orchard.
The RTC and CA unwittingly brushed aside the testimonies of Juanita and Joy and gave full
credence to the testimony of AAA. As a matter of fact, their probative weight were not
considered or evaluated in the text of the lower courts' decision.

As mentioned earlier, the prosecution could have rebutted the testimony of Joy, but for some
reason or oversight, it chose not to do so.

Consequently, in view of the unrebutted testimony of Joy, appellants defense of alibi and
denial assumes considerable weight. It is at this point that the issue as to the time that the
rape was committed plays a significant factor in determining the guilt or innocence of
appellant. This Court must therefore address this issue for a thorough evaluation of the case.
The Court takes note that Macaraeg, the caretaker of the orchard, testified that appellant's
house was only a minute away from the orchard if one would run.

As earlier mentioned, CCC testified that appellant left CCC's house at 4:00 p.m. on January 5,
2000, contrary to the testimony of Albina that she and appellant left at 5:00 p.m.AAA declared
that the alleged rape took place after 5:00 p.m.

Q. So at 4:00 o'clock you were at the house and you left and proceeded at
the back of the school to pick mangoes?
A. Yes, sir.

Q. That was already around 5:00 o'clock?

Moreover, assuming arguendo that the variance between the testimonies of AAA and Joy as
to the time they were together at the mango orchard is an indicia that AAA may have been
raped by appellant on a different day, not on January 5, 2000, to still impute to appellant the
crime of rape is not plausible.

The Court is not unmindful of the rule that the exact date of the commission of the crime of
rape is extraneous to and is not an element of the offense, such that any inconsistency or
discrepancy as to the same is irrelevant and is not to be taken as a ground for acquittal.

A. Yes, sir. I asked my companion Joy.

Q. What did you ask of her?

A. She was wearing a wristwatch and I asked Joy what time is it and when
I looked at her wristwatch, it was already 5:00 o'clock, sir.
[83]
(Emphasis Supplied)

Moreover, on cross-examination, AAA gave the following statements, to wit:

Q. So it is almost 5:00 p.m. When you went to the mango orchard with
Joy Agbuya and Ricky Agbuya?

Faced with two conflicting versions, the Court is guided by the equipoise rule.[88] Thus, where
the inculpatory facts and circumstances are capable of two or more explanations, one of
which is consistent with the innocence of the accused and the other consistent with his guilt,
then the evidence does not fulfill the test of moral certainty and is not sufficient to support a
conviction.[89] The equipoise rule provides that where the evidence in a criminal case is evenly
balanced, the constitutional presumption of innocence tilts the scales in favor of the accused.

A. What I only know was that, it was already about 5:00 o'clock then, sir.

[90]

Q. How many minutes did you consume in getting mangoes?

A. When we went there, we were not able to get some mango and when I
asked sir what was the time then and when I looked at the
wristwatch, it was already 5:00 o'clock, sir.[84](Emphasis Supplied)

It is the primordial duty of the prosecution to present its side with clarity and persuasion, so
that conviction becomes the only logical and inevitable conclusion. [91] What is required of it is
to justify the conviction of the accused with moral certainty. [92] Upon the prosecution's failure to
meet this test, acquittal becomes the constitutional duty of the Court, lest its mind be tortured
with the thought that it has imprisoned an innocent man for the rest of his life. [93]

The testimony of Joy makes it impossible for AAA to have been raped at 4:00 p.m. or 5:00
p.m. or any time thereafter since it was not rebutted that Joy never left complainant at the
mango orchard even when AAA's shorts got hooked to the fence, and both went home
together without any other untoward incident.

WHEREFORE, the Decision dated November 18, 2005 of the Court of Appeals in
CA-G.R.
CR
H.
C.
No.
00763
is REVERSED and SET ASIDE.
Larry Erguiza isACQUITTED and ordered immediately RELEASED from custody, unless he is
being held for some other lawful cause.

This Court is not unmindful of the doctrine that for alibi to succeed as a defense, appellant
must establish by clear and convincing evidence (a) his presence at another place at the time
of the perpetration of the offense and (b) the physical impossibility of his presence at the
scene of the crime.[85]

The Director of the Bureau of Corrections is ORDERED to implement this Decision forthwith
and to INFORM this Court, within five (5) days from receipt hereof, of the date appellant was
actually released from confinement.

In the case at bar, although the orchard is just a minute away from the house of
appellant, in view of the testimony of the hilot Juanita that appellant was with her from 5:10
p.m. and never left his house from that time until his wife gave birth at 3:00 a.m.; and the
testimony of Joy that she never left AAA in the orchard and that they both went home together,
the defense of alibi assumes significance or strength when it is amply corroborated by a
credible witness.[86] Thus, the Court finds that appellant's alibi is substantiated by clear and
convincing evidence.

What needs to be stressed is that a conviction in a criminal case must be supported by proof
beyond reasonable doubt -- moral certainty that the accused is guilty. [87] The conflicting
testimonies of Joy and complainant, and the testimony of Juanita that corroborated appellants
alibi preclude the Court from convicting appellant of rape with moral certainty.

Costs de oficio.

SO ORDERED.

EN BANC

HUBERT JEFFREY P. WEBB,

ANTONIO LEJANO, MICHAEL

ANTONIO LEJANO, G.R. No. 176389

Petitioner,
Present:
CORONA, C.J.,

A. GATCHALIAN, HOSPICIO
FERNANDEZ, MIGUEL RODRIGUEZ,
PETER ESTRADA and GERARDO Promulgated:

CARPIO,

BIONG,

CARPIO MORALES,

Appellants. December 14, 2010

VELASCO, JR.,
NACHURA,

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

LEONARDO-DE CASTRO,

DECISION

- versus - BRION,
PERALTA,

ABAD, J.:

BERSAMIN,
DEL CASTILLO,

Brief Background

ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA, and
SERENO, JJ.

On June 30, 1991 Estrellita Vizconde and her daughters Carmela, nineteen years
old, and Jennifer, seven, were brutally slain at their home in Paraaque City. Following an
intense investigation, the police arrested a group of suspects, some of whom gave detailed
confessions. But the trial court smelled a frame-up and eventually ordered them
discharged. Thus, the identities of the real perpetrators remained a mystery especially to the
public whose interests were aroused by the gripping details of what everybody referred to as
the Vizconde massacre.

PEOPLE OF THE PHILIPPINES,

Respondent.

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

PEOPLE OF THE PHILIPPINES, G.R. No. 176864

Appellee,
- versus -

Four years later in 1995, the National Bureau of Investigation or NBI announced that
it had solved the crime. It presented star-witness Jessica M. Alfaro, one of its informers, who
claimed that she witnessed the crime. She pointed to accused Hubert Jeffrey P. Webb,
Antonio Tony Boy Lejano, Artemio Dong Ventura, Michael A. Gatchalian, Hospicio Pyke
Fernandez, Peter Estrada, Miguel Ging Rodriguez, and Joey Filart as the culprits. She also
tagged accused police officer, Gerardo Biong, as an accessory after the fact. Relying primarily
on Alfaro's testimony, on August 10, 1995 the public prosecutors filed an information for rape
with homicide against Webb, et al.[1]

The Regional Trial Court of Paraaque City, Branch 274, presided over by Judge
Amelita G. Tolentino, tried only seven of the accused since Artemio Ventura and Joey Filart
remained at large.[2] The prosecution presented Alfaro as its main witness with the others

corroborating her testimony. These included the medico-legal officer who autopsied the bodies
of the victims, the security guards of Pitong Daan Subdivision, the former laundrywoman of
the Webbs household, police officer Biongs former girlfriend, and Lauro G. Vizconde,
Estrellitas husband.

For their part, some of the accused testified, denying any part in the crime and
saying they were elsewhere when it took place. Webbs alibi appeared the strongest since he
claimed that he was then across the ocean in the United States of America. He presented the
testimonies of witnesses as well as documentary and object evidence to prove this. In
addition, the defense presented witnesses to show Alfaro's bad reputation for truth and the
incredible nature of her testimony.

But impressed by Alfaros detailed narration of the crime and the events surrounding
it, the trial court found a credible witness in her. It noted her categorical, straightforward,
spontaneous, and frank testimony, undamaged by grueling cross-examinations. The trial court
remained unfazed by significant discrepancies between Alfaros April 28 and May 22, 1995
affidavits, accepting her explanation that she at first wanted to protect her former boyfriend,
accused Estrada, and a relative, accused Gatchalian; that no lawyer assisted her; that she did
not trust the investigators who helped her prepare her first affidavit; and that she felt unsure if
she would get the support and security she needed once she disclosed all about the Vizconde
killings.

In contrast, the trial court thought little of the denials and alibis that Webb, Lejano,
Rodriguez, and Gatchalian set up for their defense. They paled, according to the court,
compared to Alfaros testimony that other witnesses and the physical evidence
corroborated. Thus, on January 4, 2000, after four years of arduous hearings, the trial court
rendered judgment, finding all the accused guilty as charged and imposing on Webb, Lejano,
Gatchalian, Fernandez, Estrada, and Rodriguez the penalty of reclusion perpetua and on
Biong, an indeterminate prison term of eleven years, four months, and one day to twelve
years. The trial court also awarded damages to Lauro Vizconde. [3]

On appeal, the Court of Appeals affirmed the trial courts decision, modifying the
penalty imposed on Biong to six years minimum and twelve years maximum and increasing
the award of damages to Lauro Vizconde. [4] The appellate court did not agree that the
accused were tried by publicity or that the trial judge was biased. It found sufficient evidence
of conspiracy that rendered Rodriguez, Gatchalian, Fernandez, and Estrada equally guilty with
those who had a part in raping and killing Carmela and in executing her mother and sister.

On motion for reconsideration by the accused, the Court of Appeals' Special

Division of five members voted three against two to deny the motion, [5] hence, the present
appeal.

On April 20, 2010, as a result of its initial deliberation in this case, the Court issued a
Resolution granting the request of Webb to submit for DNA analysis the semen specimen
taken from Carmelas cadaver, which specimen was then believed still under the safekeeping
of the NBI. The Court granted the request pursuant to section 4 of the Rule on DNA
Evidence[6] to give the accused and the prosecution access to scientific evidence that they
might want to avail themselves of, leading to a correct decision in the case.

Unfortunately, on April 27, 2010 the NBI informed the Court that it no longer has
custody of the specimen, the same having been turned over to the trial court. The trial record
shows, however, that the specimen was not among the object evidence that the prosecution
offered in evidence in the case.

This outcome prompted accused Webb to file an urgent motion to acquit on the
ground that the governments failure to preserve such vital evidence has resulted in the denial
of his right to due process.

Issues Presented

Accused Webbs motion to acquit presents a threshold issue: whether or not the
Court should acquit him outright, given the governments failure to produce the semen
specimen that the NBI found on Carmelas cadaver, thus depriving him of evidence that would
prove his innocence.

In the main, all the accused raise the central issue of whether or not Webb, acting in
conspiracy with Lejano, Gatchalian, Fernandez, Estrada, Rodriguez, Ventura, and Filart,
raped and killed Carmela and put to death her mother and sister. But, ultimately, the
controlling issues are:

1. Whether or not Alfaros testimony as eyewitness, describing the crime and

identifying Webb, Lejano, Gatchalian, Fernandez, Estrada, Rodriguez, and two others as the
persons who committed it, is entitled to belief; and

2. Whether or not Webb presented sufficient evidence to prove his alibi and rebut
Alfaros testimony that he led the others in committing the crime.

testing did not come up. Indeed, neither Webb nor his co-accused brought up the matter of
preserving the specimen in the meantime.

The issue respecting accused Biong is whether or not he acted to cover up the
crime after its commission.

Parenthetically, after the trial court denied Webbs application for DNA testing, he
allowed the proceeding to move on when he had on at least two occasions gone up to the
Court of Appeals or the Supreme Court to challenge alleged arbitrary actions taken against
him and the other accused.[11] They raised the DNA issue before the Court of Appeals but
merely as an error committed by the trial court in rendering its decision in the case. None of
the accused filed a motion with the appeals court to have the DNA test done pending
adjudication of their appeal. This, even when the Supreme Court had in the meantime passed
the rules allowing such test. Considering the accuseds lack of interest in having such test
done, the State cannot be deemed put on reasonable notice that it would be required to
produce the semen specimen at some future time.

The Right to Acquittal

Due to Loss of DNA Evidence

Webb claims, citing Brady v. Maryland,[7] that he is entitled to outright acquittal on

the ground of violation of his right to due process given the States failure to produce on order
of the Court either by negligence or willful suppression the semen specimen taken from
Carmela.

The medical evidence clearly established that Carmela was raped and, consistent
with this, semen specimen was found in her. It is true that Alfaro identified Webb in her
testimony as Carmelas rapist and killer but serious questions had been raised about her
credibility. At the very least, there exists a possibility that Alfaro had lied. On the other hand,
the semen specimen taken from Carmela cannot possibly lie. It cannot be coached or allured
by a promise of reward or financial support. No two persons have the same DNA fingerprint,
with the exception of identical twins. [8] If, on examination, the DNA of the subject specimen
does not belong to Webb, then he did not rape Carmela. It is that simple. Thus, the Court
would have been able to determine that Alfaro committed perjury in saying that he did.

Now, to the merit of the case.

Alfaros Story

Based on the prosecutions version, culled from the decisions of the trial court and
the Court of Appeals, on June 29, 1991 at around 8:30 in the evening, Jessica Alfaro drove
her Mitsubishi Lancer, with boyfriend Peter Estrada as passenger, to
the Ayala Alabang Commercial Center parking
lot
to
buy shabu from
Artemio
Dong Ventura. There,Ventura introduced her to his friends: Hubert Jeffrey P. Webb, Antonio
Tony Boy Lejano, Miguel Ging Rodriguez, Hospicio Pyke Fernandez, Michael Gatchalian, and
Joey Filart. Alfaro recalled frequently seeing them at a shabu house in Paraaque in January
1991, except Ventura whom she had known earlier in December 1990.

Still, Webb is not entitled to acquittal for the failure of the State to produce the
semen specimen at this late stage. For one thing, the ruling in Brady v. Maryland[9] that he
cites has long be overtaken by the decision in Arizona v. Youngblood,[10] where the U.S.
Supreme Court held that due process does not require the State to preserve the semen
specimen although it might be useful to the accused unless the latter is able to show bad faith
on the part of the prosecution or the police. Here, the State presented a medical expert who
testified on the existence of the specimen and Webb in fact sought to have the same
subjected to DNA test.

As Alfaro smoked her shabu, Webb approached and requested her to relay a
message for him to a girl, whom she later identified as Carmela Vizconde. Alfaro agreed. After
using up their shabu, the group drove to Carmelas house at 80 Vinzons Street, Pitong Daan
Subdivision, BF Homes, Paraaque City. Riding in her car, Alfaro and Estrada trailed Filart and
Rodriguez who rode a Mazda pick-up and Webb, Lejano, Ventura, Fernandez, and Gatchalian
who were on a Nissan Patrol car.

For, another, when Webb raised the DNA issue, the rule governing DNA evidence
did not yet exist, the country did not yet have the technology for conducting the test, and no
Philippine precedent had as yet recognized its admissibility as evidence. Consequently, the
idea of keeping the specimen secure even after the trial court rejected the motion for DNA

On reaching their destination, Alfaro parked her car on Vinzons Street, alighted, and
approached Carmelas house. Alfaro pressed the buzzer and a woman came out. Alfaro
queried her about Carmela. Alfaro had met Carmela twice before in January 1991. When
Carmela came out, Alfaro gave her Webbs message that he was just around. Carmela replied,

however, that she could not go out yet since she had just arrived home. She told Alfaro to
return after twenty minutes. Alfaro relayed this to Webb who then told the group to drive back
to the Ayala Alabang Commercial Center.

The group had another shabu session at the parking lot. After sometime, they drove
back but only Alfaro proceeded to Vinzons Street where Carmela lived. The Nissan Patrol and
the Mazda pick-up, with their passengers, parked somewhere along Aguirre Avenue. Carmela
was at their garden. She approached Alfaro on seeing her and told the latter that she
(Carmela) had to leave the house for a while. Carmela requested Alfaro to return before
midnight and she would leave the pedestrian gate, the iron grills that led to the kitchen, and
the kitchen door unlocked. Carmela also told Alfaro to blink her cars headlights twice when
she approached the pedestrian gate so Carmela would know that she had arrived.

Alfaro returned to her car but waited for Carmela to drive out of the house in her
own car. Alfaro trailed Carmela up to Aguirre Avenue where she dropped off a man whom
Alfaro believed was Carmelas boyfriend. Alfaro looked for her group, found them, and relayed
Carmelas
instructions
to
Webb. They
then
all
went
back
to
the AyalaAlabang Commercial Center. At the parking lot, Alfaro told the group about her talk
with Carmela. When she told Webb of Carmelas male companion, Webbs mood changed for
the rest of the evening (bad trip).

Webb gave out free cocaine. They all used it and some shabu, too. After about 40 to
45 minutes, Webb decided that it was time for them to leave. He said, Pipilahan natin
siya [Carmela] at ako ang mauuna. Lejano said, Ako ang susunod and the others
responded Okay, okay. They all left the parking lot in a convoy of three vehicles and drove into
Pitong Daan Subdivision for the third time. They arrived at Carmelas house shortly before
midnight.

Alfaro parked her car between Vizcondes house and the next. While waiting for the
others to alight from their cars, Fernandez approached Alfaro with a suggestion that they blow
up the transformer near the Vizcondes residence to cause a brownout (Pasabugin kaya natin
ang transformer na ito). But Alfaro shrugged off the idea, telling Fernandez, Malakas lang ang
tama mo. When Webb, Lejano, and Ventura were already before the house, Webb told the
others again that they would line up for Carmela but he would be the first. The others
replied, O sige, dito lang kami, magbabantay lang kami.

Alfaro was the first to pass through the pedestrian gate that had been left
open. Webb, Lejano, and Ventura followed her. On entering the garage, Ventura using a chair
mounted the hood of the Vizcondes Nissan Sentra and loosened the electric bulb over it (para
daw walang ilaw). The small group went through the open iron grill gate and passed the dirty

kitchen. Carmela opened the aluminum screen door of the kitchen for them. She and Webb
looked each other in the eyes for a moment and, together, headed for the dining area.

As she lost sight of Carmela and Webb, Alfaro decided to go out. Lejano asked her
where she was going and she replied that she was going out to smoke. As she eased her way
out through the kitchen door, she saw Ventura pulling out a kitchen drawer. Alfaro smoked a
cigarette at the garden. After about twenty minutes, she was surprised to hear a womans
voice ask, Sino yan? Alfaro immediately walked out of the garden to her car. She found her
other companions milling around it. Estrada who sat in the car asked her,Okay ba?

After sitting in the car for about ten minutes, Alfaro returned to the Vizconde house,
using the same route. The interior of the house was dark but some light filtered in from
outside. In the kitchen, Alfaro saw Ventura searching a ladys bag that lay on the dining
table. When she asked him what he was looking for, he said: Ikaw na nga dito, maghanap ka
ng susi. She asked him what key he wanted and he replied: Basta maghanap ka ng susi ng
main door pati na rin ng susi ng kotse. When she found a bunch of keys in the bag, she tried
them on the main door but none fitted the lock. She also did not find the car key.

Unable to open the main door, Alfaro returned to the kitchen. While she was at a
spot leading to the dining area, she heard a static noise (like a television that remained on
after the station had signed off). Out of curiosity, she approached the masters bedroom from
where the noise came, opened the door a little, and peeked inside. The unusual sound grew
even louder. As she walked in, she saw Webb on top of Carmela while she lay with her back
on the floor. Two bloodied bodies lay on the bed. Lejano was at the foot of the bed about to
wear his jacket. Carmela was gagged, moaning, and in tears while Webb raped her, his bare
buttocks exposed.

Webb gave Alfaro a meaningful look and she immediately left the room. She
met Ventura at the dining area. He told her, Prepare an escape. Aalis na tayo. Shocked with
what she saw, Alfaro rushed out of the house to the others who were either sitting in her car or
milling on the sidewalk. She entered her car and turned on the engine but she did not know
where to go. Webb, Lejano, and Ventura came out of the house just then. Webb suddenly
picked up a stone and threw it at the main door, breaking its glass frame.

As the three men approached the pedestrian gate, Webb told Ventura that he forgot
his jacket in the house. But Ventura told him that they could not get in anymore as the iron
grills had already locked. They all rode in their cars and drove away until they reached Aguirre
Avenue. As they got near an old hotel at the Tropical Palace area, Alfaro noticed the Nissan
Patrol slow down. Someone threw something out of the car into the cogonal area.

The convoy of cars went to a large house with high walls, concrete fence, steel gate,
and a long driveway at BF Executive Village. They entered the compound and gathered at the
lawn where the blaming session took place. It was here that Alfaro and those who remained
outside the Vizconde house learned of what happened. The first to be killed was Carmelas
mother, then Jennifer, and finally, Carmella. Ventura blamed Webb, telling him, Bakit naman
pati yung bata? Webb replied that the girl woke up and on seeing him molesting Carmela, she
jumped on him, bit his shoulders, and pulled his hair. Webb got mad, grabbed the girl, pushed
her to the wall, and repeatedly stabbed her.Lejano excused himself at this point to use the
telephone in the house. Meanwhile, Webb called up someone on his cellular phone.

At around 2:00 in the morning, accused Gerardo Biong arrived. Webb ordered him
to go and clean up the Vizconde house and said to him, Pera lang ang katapat nyan.Biong
answered, Okay lang. Webb spoke to his companions and told them, We dont know each
other. We havent seen each otherbaka maulit yan. Alfaro and Estrada left and they drove to
her fathers house.[12]

Sacaguing continued to press her, she told him that she might as well assume the role of her
informant. Sacaguing testified thus:

ATTY. ONGKIKO:
Q. Atty. Sacaguing, how did Jessica Alfaro become a witness in the
Vizconde murder case? Will you tell the Honorable Court?
xxxx

A. She told me. Your Honor, that she knew somebody who related to her
the circumstances, I mean, the details of the massacre of the
Vizconde family. Thats what she told me, Your Honor.

ATTY. ONGKIKO:
1. The quality of the witness

Was Alfaro an ordinary subdivision girl who showed up at the NBI after four years,
bothered by her conscience or egged on by relatives or friends to come forward and do what
was right? No. She was, at the time she revealed her story, working for the NBI as an asset, a
stool pigeon, one who earned her living by fraternizing with criminals so she could squeal on
them to her NBI handlers. She had to live a life of lies to get rewards that would pay for her
subsistence and vices.

According to Atty. Artemio Sacaguing, former head of the NBI Anti-Kidnapping,

Hijacking, and Armed Robbery Task Force (AKHAR) Section, Alfaro had been hanging around
at the NBI since November or December 1994 as an asset. She supplied her handlers with
information against drug pushers and other criminal elements. Some of this information led to
the capture of notorious drug pushers like Christopher Cruz Santos and Orlando
Bacquir. Alfaros tip led to the arrest of the leader of the Martilyo gang that killed a police
officer. Because of her talent, the task force gave her very special treatment and she became
its darling, allowed the privilege of spending nights in one of the rooms at the NBI offices.

Q. And what did you say?

xxxx

A. I was quite interested and I tried to persuade her to introduce to me that

man and she promised that in due time, she will bring to me the
man, and together with her, we will try to convince him to act as
a state witness and help us in the solution of the case.

xxxx

Q. Atty. Sacaguing, were you able to interview this alleged witness?

WITNESS SACAGUING:
When Alfaro seemed unproductive for sometime, however, they teased her about it
and she was piqued. One day, she unexpectedly told Sacaguing that she knew someone who
had the real story behind the Vizconde massacre. Sacaguing showed interest. Alfaro
promised to bring that someone to the NBI to tell his story. When this did not happen and

A. No, sir.

ATTY. ONGKIKO:
Q. Why not?

ATTY. ONGKIKO:
Q. And what was the reply of Ms. Alfaro?

WITNESS SACAGUING:
A. Because Jessica Alfaro was never able to comply with her promise to
bring the man to me. She told me later that she could not and
the man does not like to testify.

WITNESS SACAGUING:
A. Hindi siya nakakibo, until she went away.
(TSN, May 28, 1996, pp. 49-50, 58, 77-79)

ATTY. ONGKIKO:
Q. All right, and what happened after that?
Quite significantly, Alfaro never refuted Sacaguings above testimony.
WITNESS SACAGUING:
A. She told me, easy lang kayo, Sir, if I may quote, easy lang Sir, huwag
kayong

2. The suspicious details

But was it possible for Alfaro to lie with such abundant details some of which even
tallied with the physical evidence at the scene of the crime? No doubt, yes.

COURT:
How was that?

WITNESS SACAGUING:
A. Easy lang, Sir. Sir, relax lang, Sir, papapelan ko, papapelan ko na lang
yan.

xxxx

Firstly, the Vizconde massacre had been reported in the media with dizzying
details. Everybody was talking about what the police found at the crime scene and there were
lots of speculations about them.

Secondly, the police had arrested some akyat-bahay group in Paraaque and
charged them with the crime. The police prepared the confessions of the men they
apprehended and filled these up with details that the evidence of the crime scene
provided. Alfaros NBI handlers who were doing their own investigation knew of these details
as well. Since Alfaro hanged out at the NBI offices and practically lived there, it was not too
difficult for her to hear of these evidentiary details and gain access to the documents.

ATTY. ONGKIKO:
Q. All right, and what was your reaction when Ms. Alfaro stated that
papapelan ko na lang yan?

WITNESS SACAGUING:
A. I said, hindi puwede yan, kasi hindi ka naman eye witness.

Not surprisingly, the confessions of some members of the Barroso akyat bahay
gang, condemned by the Makati RTC as fabricated by the police to pin the crime on them,
shows how crime investigators could make a confession ring true by matching some of its
details with the physical evidence at the crime scene. Consider the following:

a. The Barroso gang members said that they got into Carmelas house by breaking
the glass panel of the front door using a stone wrapped in cloth to deaden the noise.Alfaro
could not use this line since the core of her story was that Webb was Carmelas
boyfriend. Webb had no reason to smash her front door to get to see her.

Consequently, to explain the smashed door, Alfaro had to settle for claiming that, on
the way out of the house, Webb picked up some stone and, out of the blue, hurled it at the
glass-paneled front door of the Vizconde residence. His action really made no sense. From
Alfaros narration, Webb appeared rational in his decisions. It was past midnight, the house
was dark, and they wanted to get away quickly to avoid detection. Hurling a stone at that glass
door and causing a tremendous noise was bizarre, like inviting the neighbors to come.

b. The crime scene showed that the house had been ransacked. The rejected
confessions of the Barroso akyat-bahay gang members said that they tried to rob the
house. To explain this physical evidence, Alfaro claimed that at one point Ventura was pulling
a kitchen drawer, and at another point, going through a handbag on the dining table. He said
he was looking for the front-door key and the car key.

Again, this portion of Alfaros story appears tortured to accommodate the physical
evidence of the ransacked house. She never mentioned Ventura having taken some valuables
with him when they left Carmelas house. And why would Ventura rummage a bag on the table
for the front-door key, spilling the contents, when they had already gotten into the house. It is
a story made to fit in with the crime scene although robbery was supposedly not the reason
Webb and his companions entered that house.

c. It is the same thing with the garage light. The police investigators found that the
bulb had been loosened to turn off the light. The confessions of the Barroso gang claimed that
one of them climbed the parked cars hood to reach up and darken that light. This made sense
since they were going to rob the place and they needed time to work in the dark trying to open
the front door. Some passersby might look in and see what they were doing.

Alfaro had to adjust her testimony to take into account that darkened garage
light. So she claimed that Ventura climbed the cars hood, using a chair, to turn the light
off.But, unlike the Barroso akyat-bahay gang, Webb and his friends did not have anything to
do in a darkened garage. They supposedly knew in advance that Carmela left the doors to the
kitchen open for them. It did not make sense for Ventura to risk standing on the cars hood and
be seen in such an awkward position instead of going straight into the house.
And, thirdly, Alfaro was the NBIs star witness, their badge of excellent investigative
work. After claiming that they had solved the crime of the decade, the NBI people had a stake

in making her sound credible and, obviously, they gave her all the preparations she needed
for the job of becoming a fairly good substitute witness. She was their darling of an asset. And
this is not pure speculation. As pointed out above, Sacaguing of the NBI, a lawyer and a
ranking official, confirmed this to be a cold fact. Why the trial court and the Court of Appeals
failed to see this is mystifying.

At any rate, did Alfaro at least have a fine memory for faces that had a strong effect
on her, given the circumstances? Not likely. She named Miguel Ging Rodriguez as one of the
culprits in the Vizconde killings. But when the NBI found a certain Michael Rodriguez, a drug
dependent from the Bicutan Rehabilitation Center, initially suspected to be Alfaros Miguel
Rodriguez and showed him to Alfaro at the NBI office, she ran berserk, slapping and kicking
Michael, exclaiming: How can I forget your face. We just saw each other in a disco one month
ago and you told me then that you will kill me. As it turned out, he was not Miguel Rodriguez,
the accused in this case.[13]

Two possibilities exist: Michael was really the one Alfaro wanted to implicate to
settle some score with him but it was too late to change the name she already gave or she
had myopic vision, tagging the wrong people for what they did not do.

3. The quality of the testimony

There is another thing about a lying witness: her story lacks sense or suffers from
inherent inconsistencies. An understanding of the nature of things and the common behavior
of people will help expose a lie. And it has an abundant presence in this case.

One. In her desire to implicate Gatchalian, Fernandez, Estrada, Rodriguez, and

Filart, who were supposed to be Webbs co-principals in the crime, Alfaro made it a point to
testify that Webb proposed twice to his friends the gang-rape of Carmela who had hurt
him. And twice, they (including, if one believes Alfaro, her own boyfriend Estrada) agreed in a
chorus to his proposal. But when they got to Carmelas house, only Webb, Lejano, Ventura,
and Alfaro entered the house.

Gatchalian, Fernandez, Estrada, and Rodriguez supposedly stayed around Alfaros

car, which was parked on the street between Carmelas house and the next. Some of these
men sat on top of the cars lid while others milled on the sidewalk, visible under the street light
to anyone who cared to watch them, particularly to the people who were having a drinking
party in a nearby house. Obviously, the behavior of Webbs companions out on the street did
not figure in a planned gang-rape of Carmela.

Two. Ventura, Alfaros dope supplier, introduced her for the first time in her life to
Webb and his friends in a parking lot by a mall. So why would she agree to act as Webbs
messenger, using her gas, to bring his message to Carmela at her home. More inexplicably,
what motivated Alfaro to stick it out the whole night with Webb and his friends?

They were practically strangers to her and her boyfriend Estrada. When it came to a
point that Webb decided with his friends to gang-rape Carmela, clearly, there was nothing in it
for Alfaro. Yet, she stuck it out with them, as a police asset would, hanging in there until she
had a crime to report, only she was not yet an asset then. If, on the other hand, Alfaro had
been too soaked in drugs to think clearly and just followed along where the group took her,
how could she remember so much details that only a drug-free mind can?

Three. When Alfaro went to see Carmela at her house for the second time, Carmella
told her that she still had to go out and that Webb and his friends should come back around
midnight. Alfaro returned to her car and waited for Carmela to drive out in her own car. And
she trailed her up to Aguirre Avenue where she supposedly dropped off a man whom she
thought was Carmelas boyfriend. Alfaros trailing Carmela to spy on her unfaithfulness to
Webb did not make sense since she was on limited errand. But, as a critical witness, Alfaro
had to provide a reason for Webb to freak out and decide to come with his friends and harm
Carmela.

Four. According to Alfaro, when they returned to Carmelas house the third time
around midnight, she led Webb, Lejano, and Ventura through the pedestrian gate that
Carmela had left open. Now, this is weird. Webb was the gang leader who decided what they
were going to do. He decided and his friends agreed with him to go to Carmelas house and
gang-rape her. Why would Alfaro, a woman, a stranger to Webb before that night, and
obviously with no role to play in the gang-rape of Carmela, lead him and the others into her
house? It made no sense. It would only make sense if Alfaro wanted to feign being a witness
to something she did not see.

Five. Alfaro went out of the house to smoke at the garden. After about twenty
minutes, a woman exclaimed, Sino yan? On hearing this, Alfaro immediately walked out of the
garden and went to her car. Apparently, she did this because she knew they came on a
sly. Someone other than Carmela became conscious of the presence of Webb and others in
the house. Alfaro walked away because, obviously, she did not want to get involved in a
potential confrontation. This was supposedly her frame of mind: fear of getting involved in
what was not her business.

But if that were the case, how could she testify based on personal knowledge of
what went on in the house? Alfaro had to change that frame of mind to one of boldness and

reckless curiosity. So that is what she next claimed. She went back into the house to watch as
Webb raped Carmela on the floor of the masters bedroom. He had apparently stabbed to
death Carmelas mom and her young sister whose bloodied bodies were sprawled on the
bed. Now, Alfaro testified that she got scared (another shift to fear) for she hurriedly got out of
the house after Webb supposedly gave her a meaningful look.

Alfaro quickly went to her car, not minding Gatchalian, Fernandez, Estrada,
Rodriguez, and Filart who sat on the car or milled on the sidewalk. She did not speak to them,
even to Estrada, her boyfriend. She entered her car and turned on the engine but she testified
that she did not know where to go. This woman who a few minutes back led Webb, Lejano,
and Ventura into the house, knowing that they were decided to rape and harm Carmela, was
suddenly too shocked to know where to go! This emotional pendulum swing indicates a
witness who was confused with her own lies.

4. The supposed corroborations

Intending to provide corroboration to Alfaros testimony, the prosecution presented

six additional witnesses:

Dr. Prospero A. Cabanayan, the NBI Medico-Legal Officer who autopsied the bodies
of the victims, testified on the stab wounds they sustained [14] and the presence of semen in
Carmelas genitalia,[15] indicating that she had been raped.

Normal E. White, Jr., was the security guard on duty at Pitong Daan Subdivision
from 7 p.m. of June 29 to 7 a.m. of June 30, 1991. He got a report on the morning of June 30
that something untoward happened at the Vizconde residence. He went there and saw the
dead bodies in the masters bedroom, the bag on the dining table, as well as the loud noise
emanating from a television set.[16]
White claimed that he noticed Gatchalian and his companions, none of whom he
could identify, go in and out of Pitong Daan Subdivision. He also saw them along Vinzons
Street. Later, they entered Pitong Daan Subdivision in a three-car convoy. White could not,
however, describe the kind of vehicles they used or recall the time when he saw the group in
those two instances. And he did not notice anything suspicious about their coming and going.

But Whites testimony cannot be relied on. His initial claim turned out to be
inaccurate. He actually saw Gatchalian and his group enter the Pitong Daan Subdivision only
once. They were not going in and out. Furthermore, Alfaro testified that when the convoy of

cars went back the second time in the direction of Carmelas house, she alone entered the
subdivision and passed the guardhouse without stopping. Yet, White who supposedly manned
that guardhouse did not notice her.

Surprisingly, White failed to note Biong, a police officer, entering or exiting the
subdivision on the early morning of June 30 when he supposedly cleaned up Vizconde
residence on Webbs orders. What is more, White did not notice Carmela arrive with her mom
before Alfaros first visit that night. Carmela supposedly left with a male companion in her car
at around 10:30 p.m. but White did not notice it. He also did not notice Carmela reenter the
subdivision. White actually discredited Alfaros testimony about the movements of the persons
involved.

Further, while Alfaro testified that it was the Mazda pick-up driven by Filart that led
the three-vehicle convoy,[17] White claimed it was the Nissan Patrol with Gatchalian on it that
led the convoy since he would not have let the convoy in without ascertaining that Gatchalian,
a resident, was in it. Security guard White did not, therefore, provide corroboration to Alfaros
testimony.

Justo Cabanacan, the security supervisor at Pitong Daan Subdivision testified that
he saw Webb around the last week of May or the first week of June 1991 to prove his
presence in the Philippines when he claimed to be in the United States. He was manning the
guard house at the entrance of the subdivision of Pitong Daan when he flagged down a car
driven by Webb. Webb said that he would see Lilet Sy. Cabanacan asked him for an ID but he
pointed to his United BF Homes sticker and said that he resided there.Cabanacan replied,
however, that Pitong Daan had a local sticker.

Cabanacan testified that, at this point, Webb introduced himself as the son of
Congressman Webb. Still, the supervisor insisted on seeing his ID. Webb grudgingly gave it
and after seeing the picture and the name on it, Cabanacan returned the same and allowed
Webb to pass without being logged in as their Standard Operating Procedure required. [18]

But Cabanacan's testimony could not be relied on. Although it was not common for
a security guard to challenge a Congressmans son with such vehemence, Cabanacan did not
log the incident on the guardhouse book. Nor did he, contrary to prescribed procedure, record
the visitors entry into the subdivision. It did not make sense that Cabanacan was strict in the
matter of seeing Webbs ID but not in recording the visit.

Mila Gaviola used to work as laundry woman for the Webbs at their house at
BF Homes Executive Village. She testified that she saw Webb at his parents house on the
morning of June 30, 1991 when she got the dirty clothes from the room that he and two
brothers occupied at about 4.a.m. She saw him again pacing the floor at 9 a.m. At about 1
p.m., Webb left the house in t-shirt and shorts, passing through a secret door near the maids
quarters on the way out. Finally, she saw Webb at 4 p.m. of the same day. [19]

On cross-examination, however, Gaviola could not say what distinguished June 30,
1991 from the other days she was on service at the Webb household as to enable her to
distinctly remember, four years later, what one of the Webb boys did and at what time. She
could not remember any of the details that happened in the household on the other days. She
proved to have a selective photographic memory and this only damaged her testimony.

Gaviola tried to corroborate Alfaro's testimony by claiming that on June 30, 1991
she noticed bloodstains on Webb's t-shirt. [20] She did not call the attention of anybody in the
household about it when it would have been a point of concern that Webb may have been
hurt, hence the blood.

Besides, Victoria Ventoso, the Webbs' housemaid from March 1989 to May 1992,
and Sgt. Miguel Muoz, the Webbs' security aide in 1991, testified that Gaviola worked for the
Webbs only from January 1991 to April 1991. Ventoso further testified that it was not Gaviola's
duty to collect the clothes from the 2 nd floor bedrooms, this being the work of the housemaid
charged with cleaning the rooms.

What is more, it was most unlikely for a laundrywoman who had been there for only
four months to collect, as she claimed, the laundry from the rooms of her employers and their
grown up children at four in the morning while they were asleep.

And it did not make sense, if Alfaros testimony were to be believed that Webb, who
was so careful and clever that he called Biong to go to the Vizconde residence at 2 a.m. to
clean up the evidence against him and his group, would bring his bloodied shirt home and put
it in the hamper for laundrywoman Gaviola to collect and wash at 4 a.m. as was her supposed
habit.
Lolita De Birrer was accused Biongs girlfriend around the time the Vizconde
massacre took place. Birrer testified that she was with Biong playing mahjong from the
evening of June 29, 1991 to the early morning of June 30, when Biong got a call at around 2
a.m. This prompted him, according to De Birrer, to leave and go to BF. Someone sitting at the
backseat of a taxi picked him up. When Biong returned at 7 a.m. he washed off what looked
like dried blood from his fingernails. And he threw away a foul-smelling handkerchief. She also

saw Biong take out a knife with aluminum cover from his drawer and hid it in his steel cabinet.
[21]

The security guard at Pitong Daan did not notice any police investigator flashing a
badge to get into the village although Biong supposedly came in at the unholy hour of two in
the morning. His departure before 7 a.m. also remained unnoticed by the subdivision
guards. Besides, if he had cleaned up the crime scene shortly after midnight, what was the
point of his returning there on the following morning to dispose of some of the evidence in the
presence of other police investigators and on-lookers? In fact, why would he steal valuable
items from the Vizconde residence on his return there hours later if he had the opportunity to
do it earlier?
At most, Birrers testimony only established Biongs theft of certain items from the
Vizconde residence and gross neglect for failing to maintain the sanctity of the crime scene by
moving around and altering the effects of the crime. Birrers testimony failed to connect Biong's
acts to Webb and the other accused.

But, except for Alfaro, the NBI asset, no one among Carmelas friends or her friends
friends would testify ever hearing of such relationship or ever seeing them together in some
popular hangouts in Paraaque or Makati. Alfaros claim of a five-hour drama is like an alien
page, rudely and unconnectedly inserted into Webb and Carmelas life stories or like a piece of
jigsaw puzzle trimmed to fit into the shape on the board but does not belong because it
clashes with the surrounding pieces. It has neither antecedent nor concomitant support in the
verifiable facts of their personal histories. It is quite unreal.

What is more, Alfaro testified that she saw Carmela drive out of her house with a
male passenger, Mr. X, whom Alfaro thought the way it looked was also Carmelas lover.This
was the all-important reason Webb supposedly had for wanting to harm her. Again, none of
Carmelas relatives, friends, or people who knew her ever testified about the existence of Mr.X
in her life. Nobody has come forward to testify having ever seen him with Carmela. And
despite the gruesome news about her death and how Mr. X had played a role in it, he never
presented himself like anyone who had lost a special friend normally would. Obviously, Mr. X
did not exist, a mere ghost of the imagination of Alfaro, the woman who made a living
informing on criminals.

Lauro Vizconde testified about how deeply he was affected by the loss of her wife
and two daughters. Carmella spoke to him of a rejected suitor she called Bagyo, because he
was a Paraaque politicians son. Unfortunately, Lauro did not appear curious enough to insist
on finding out who the rejected fellow was. Besides, his testimony contradicts that of Alfaro
who testified that Carmela and Webb had an on-going relation. Indeed, if Alfaro were to be
believed, Carmela wanted Webb to come to her house around midnight. She even left the
kitchen door open so he could enter the house.

Webbs U.S. Alibi

Among the accused, Webb presented the strongest alibi.

5. The missing corroboration

a. The travel preparations

There is something truly remarkable about this case: the prosecutions core theory
that Carmela and Webb had been sweethearts, that she had been unfaithful to him, and that it
was for this reason that Webb brought his friends to her house to gang-rape her is totally
uncorroborated!

Webb claims that in 1991 his parents, Senator Freddie Webb and his wife,
Elizabeth, sent their son to the United States (U.S.) to learn the value of independence, hard
work, and money.[22] Gloria Webb, his aunt, accompanied him. Rajah Tours booked their flight
to San Francisco via United Airlines. Josefina Nolasco of Rajah Tours confirmed that Webb
and his aunt used their plane tickets.

For instance, normally, if Webb, a Congressmans son, courted the young Carmela,
that would be news among her circle of friends if not around town. But, here, none of her
friends or even those who knew either of them came forward to affirm this. And if Webb
hanged around with her, trying to win her favors, he would surely be seen with her.And this
would all the more be so if they had become sweethearts, a relation that Alfaro tried to project
with her testimony.

Webb told his friends, including his neighbor, Jennifer Claire Cabrera, and his
basketball buddy, Joselito Orendain Escobar, of his travel plans. He even invited them to
hisdespedida party on March 8, 1991 at Faces Disco along Makati Ave.[23] On March 8,1991,
the eve of his departure, he took girlfriend Milagros Castillo to a dinner at Bunchums at
the Makati Cinema Square. His basketball buddy Rafael Jose with Tina Calma, a blind date
arranged by Webb, joined them. They afterwards went to Faces Disco for
Webb'sdespedida party. Among those present were his friends Paulo Santos and Jay Ortega.
[24]

b. The two immigration checks

The following day, March 9, 1991, Webb left for San Francisco, California, with his
Aunt Gloria on board United Airlines Flight 808. [25] Before boarding his plane, Webb passed
through the Philippine Immigration booth at the airport to have his passport cleared and
stamped. Immigration Officer, Ferdinand Sampol checked Webbs visa, stamped, and initialed
his passport, and let him pass through. [26] He was listed on the United Airlines Flights
Passenger Manifest.[27]

On arrival at San Francisco, Webb went through the U.S. Immigration where his
entry into that country was recorded. Thus, the U.S. Immigration Naturalization Service,
checking with its Non-immigrant Information System, confirmed Webb's entry into the U.S. on
March 9, 1991. Webb presented at the trial the INS Certification issued by the U.S.
Immigration and Naturalization Service, [28] the computer-generated print-out of the US-INS
indicating Webb's entry on March 9, 1991, [29] and the US-INS Certification dated August 31,
1995, authenticated by the Philippine Department of Foreign Affairs, correcting an earlier
August 10, 1995 Certification.[30]

to visit.[40] On the following day, June 29, Webb, in the company of his father and Aragon went
to Riverside, California, to look for a car. They bought an MR2 Toyota car. [41]Later that day, a
visitor at the Brottmans, Louis Whittacker, saw Webb looking at the plates of his new car. [42] To
prove the purchase, Webb presented the Public Records of California Department of Motor
Vehicle[43] and a car plate LEW WEBB. [44] In using the car in the U.S., Webb even received
traffic citations.[45]

On June 30, 1991 Webb, again accompanied by his father and Aragon, [46] bought a
bicycle at Orange Cycle Center.[47] The Center issued Webb a receipt dated June 30, 1991.
[48]
On July 4, 1991, Independence Day, the Webbs, the Brottmans, and the Vaca family had a
lakeside picnic.[49]

Webb stayed with the Brottmans until mid July and rented a place for less than a
month. On August 4, 1991 he left for Longwood, Florida, to stay with the spouses Jack and
Sonja Rodriguez.[50] There, he met Armando Rodriguez with whom he spent time, playing
basketball on weekends, watching movies, and playing billiards. [51] In November 1991, Webb
met performing artist Gary Valenciano, a friend of Jack Rodriguez, who was invited for a
dinner at the Rodriguezs house.[52] He left the Rodriguezs home in August 1992, returned
to Anaheim and stayed with his aunt Imelda Pagaspas. He stayed there until he left for
the Philippines on October 26, 1992.

c. Details of U.S. sojourn

d. The second immigration checks
In San Francisco, Webb and his aunt Gloria were met by the latters daughter, Maria
Teresa Keame, who brought them to Glorias house in Daly City, California. During his stay
with his aunt, Webb met Christopher Paul Legaspi Esguerra, Glorias grandson. In April 1991,
Webb, Christopher, and a certain Daphne Domingo watched the concert of Deelite Band
in San Francisco.[31] In the same month, Dorothy Wheelock and her family invited Webb to
Lake Tahoe to return the Webbs hospitality when she was in thePhilippines. [32]

In May 1991, on invitation of another aunt, Susan Brottman, Webb moved

to Anaheim Hills, California.[33] During his stay there, he occupied himself with playing
basketball once or twice a week with Steven Keeler [34] and working at his cousin-in-laws pest
control company.[35] Webb presented the companys logbook showing the tasks he performed,
[36]
his paycheck,[37] his ID, and other employment papers. On June 14, 1991 he applied for a
driver's license[38] and wrote three letters to his friend Jennifer Cabrera. [39]

On June 28, 1991, Webbs parents visited him at Anaheim and stayed with the
Brottmans. On the same day, his father introduced Honesto Aragon to his son when he came

As with his trip going to the U.S., Webb also went through both the U.S. and
Philippine immigrations on his return trip. Thus, his departure from the U.S. was confirmed by
the same certifications that confirmed his entry. [53] Furthermore, a Diplomatic Note of the U.S.
Department of State with enclosed letter from Acting Director Debora A. Farmer of the
Records Operations, Office of Records of the US-INS stated that the Certification dated
August 31, 1995 is a true and accurate statement. And when he boarded his plane, the
Passenger Manifest of Philippine Airlines Flight No. 103, [54] certified by Agnes
Tabuena[55] confirmed his return trip.

When he arrived in Manila, Webb again went through the Philippine Immigration. In
fact, the arrival stamp and initial on his passport indicated his return to Manila on October 27,
1992. This was authenticated by Carmelita Alipio, the immigration officer who processed
Webbs reentry.[56] Upon his return, in October 1992, Paolo Santos, Joselito Erondain Escobar,
and Rafael Jose once again saw Webb playing basketball at the BF's Phase III basketball
court.

e. Alibi versus positive identification

The trial court and the Court of Appeals are one in rejecting as weak Webbs
alibi. Their reason is uniform: Webbs alibi cannot stand against Alfaros positive identification
of him as the rapist and killer of Carmela and, apparently, the killer as well of her mother and
younger sister. Because of this, to the lower courts, Webbs denial and alibi were fabricated.

But not all denials and alibis should be regarded as fabricated. Indeed, if the
accused is truly innocent, he can have no other defense but denial and alibi. So how can such
accused penetrate a mind that has been made cynical by the rule drilled into his head that a
defense of alibi is a hangmans noose in the face of a witness positively swearing, I saw him
do it.? Most judges believe that such assertion automatically dooms an alibi which is so easy
to fabricate. This quick stereotype thinking, however, is distressing. For how else can the truth
that the accused is really innocent have any chance of prevailing over such a stone-cast
tenet?

There is only one way. A judge must keep an open mind. He must guard against
slipping into hasty conclusion, often arising from a desire to quickly finish the job of deciding a
case. A positive declaration from a witness that he saw the accused commit the crime should
not automatically cancel out the accuseds claim that he did not do it. A lying witness can make
as positive an identification as a truthful witness can. The lying witness can also say as
forthrightly and unequivocally, He did it! without blinking an eye.

Rather, to be acceptable, the positive identification must meet at least two criteria:

First, the positive identification of the offender must come from a credible
witness. She is credible who can be trusted to tell the truth, usually based on past experiences
with her. Her word has, to one who knows her, its weight in gold.

And second, the witness story of what she personally saw must be believable, not
inherently contrived. A witness who testifies about something she never saw runs into
inconsistencies and makes bewildering claims.

Here, as already fully discussed above, Alfaro and her testimony fail to meet the
above criteria.

She did not show up at the NBI as a spontaneous witness bothered by her
conscience. She had been hanging around that agency for sometime as a stool pigeon, one
paid for mixing up with criminals and squealing on them. Police assets are often criminals
themselves. She was the prosecutions worst possible choice for a witness. Indeed, her
superior testified that she volunteered to play the role of a witness in the Vizconde killings
when she could not produce a man she promised to the NBI.

And, although her testimony included details, Alfaro had prior access to the details
that the investigators knew of the case. She took advantage of her familiarity with these
details to include in her testimony the clearly incompatible act of Webb hurling a stone at the
front door glass frames even when they were trying to slip away quietlyjust so she can
accommodate this crime scene feature. She also had Ventura rummaging a bag on the dining
table for a front door key that nobody needed just to explain the physical evidence of that bag
and its scattered contents. And she had Ventura climbing the cars hood, risking being seen in
such an awkward position, when they did not need to darken the garage to force open the
front doorjust so to explain the darkened light and foot prints on the car hood.

Further, her testimony was inherently incredible. Her story that Gatchalian,
Fernandez, Estrada, Rodriguez, and Filart agreed to take their turns raping Carmela is
incongruent with their indifference, exemplified by remaining outside the house, milling under
a street light, visible to neighbors and passersby, and showing no interest in the developments
inside the house, like if it was their turn to rape Carmela. Alfaros story that she agreed to
serve as Webbs messenger to Carmela, using up her gas, and staying with him till the bizarre
end when they were practically strangers, also taxes incredulity.

To provide basis for Webbs outrage, Alfaro said that she followed Carmela to the
main road to watch her let off a lover on Aguirre Avenue. And, inexplicably, although Alfaro
had only played the role of messenger, she claimed leading Webb, Lejano, and Ventura into
the house to gang-rape Carmella, as if Alfaro was establishing a reason for later on testifying
on personal knowledge. Her swing from an emotion of fear when a woman woke up to their
presence in the house and of absolute courage when she nonetheless returned to become
the lone witness to a grim scene is also quite inexplicable.

Ultimately, Alfaros quality as a witness and her inconsistent, if not inherently

unbelievable, testimony cannot be the positive identification that jurisprudence acknowledges
as sufficient to jettison a denial and an alibi.

f. A documented alibi

To establish alibi, the accused must prove by positive, clear, and satisfactory
evidence[57] that (a) he was present at another place at the time of the perpetration of the
crime, and (b) that it was physically impossible for him to be at the scene of the crime. [58]

The courts below held that, despite his evidence, Webb was actually in Paraaque
when the Vizconde killings took place; he was not in the U.S. from March 9, 1991 to October
27, 1992; and if he did leave on March 9, 1991, he actually returned before June 29, 1991,
committed the crime, erased the fact of his return to the Philippines from the records of the
U.S. and Philippine Immigrations, smuggled himself out of the Philippines and into the U.S.,
and returned the normal way on October 27, 1992. But this ruling practically makes the death
of Webb and his passage into the next life the only acceptable alibi in the Philippines. Courts
must abandon this unjust and inhuman paradigm.

If one is cynical about the Philippine system, he could probably claim that Webb,
with his fathers connections, can arrange for the local immigration to put a March 9, 1991
departure stamp on his passport and an October 27, 1992 arrival stamp on the same. But this
is pure speculation since there had been no indication that such arrangement was
made. Besides, how could Webb fix a foreign airlines passenger manifest, officially filed in
the Philippines and at the airport in the U.S. that had his name on them? How could Webb fix
with the U.S. Immigrations record system those two dates in its record of his travels as well as
the dates when he supposedly departed in secret from the U.S. to commit the crime in
the Philippines and then return there? No one has come up with a logical and plausible
answer to these questions.

The Court of Appeals rejected the evidence of Webbs passport since he did not
leave the original to be attached to the record. But, while the best evidence of a document is
the original, this means that the same is exhibited in court for the adverse party to examine
and for the judge to see. As Court of Appeals Justice Tagle said in his dissent, [59] the practice
when a party does not want to leave an important document with the trial court is to have a
photocopy of it marked as exhibit and stipulated among the parties as a faithful reproduction
of the original. Stipulations in the course of trial are binding on the parties and on the court.

The U.S. Immigration certification and the computer print-out of Webbs arrival in and
departure from that country were authenticated by no less than the Office of the U.S. Attorney
General and the State Department. Still the Court of Appeals refused to accept these
documents for the reason that Webb failed to present in court the immigration official who
prepared the same. But this was unnecessary. Webbs passport is a document issued by the
Philippine government, which under international practice, is the official record of travels of the
citizen to whom it is issued. The entries in that passport are presumed true.[60]

The U.S. Immigration certification and computer print-out, the official certifications of
which have been authenticated by the Philippine Department of Foreign Affairs, merely
validated the arrival and departure stamps of the U.S. Immigration office on Webbs
passport. They have the same evidentiary value. The officers who issued these certifications
need not be presented in court to testify on them. Their trustworthiness arises from the sense
of official duty and the penalty attached to a breached duty, in the routine and disinterested
origin of such statement and in the publicity of the record. [61]

The Court of Appeals of course makes capital of the fact that an earlier certification
from the U.S. Immigration office said that it had no record of Webb entering the U.S.But that
erroneous first certification was amply explained by the U.S. Government and Court of
Appeals Justice Tagle stated it in his dissenting opinion, thus:

While it is true that an earlier Certification was issued by

the U.S. INS on August 16, 1995 finding no evidence of lawful admission
of Webb, this was already clarified and deemed erroneous by no less than
the US INS Officials. As explained by witness Leo Herrera-Lim, Consul
and Second Secretary of the Philippine Embassy in Washington D.C.,
said Certification did not pass through proper diplomatic channels and
was obtained in violation of the rules on protocol and standard procedure
governing such request.

The initial request was merely initiated by BID Commissioner

Verceles who directly communicated with the Philippine Consulate in San
Francisco, USA, bypassing the Secretary of Foreign Affairs which is the
proper protocol procedure. Mr. Steven Bucher, the acting Chief of the
Records Services Board of US-INS Washington D.C. in his letter
addressed to Philip Antweiler, Philippine Desk Officer, State Department,
declared the earlier Certification as incorrect and erroneous as it was not
exhaustive and did not reflect all available information. Also, Richard L.
Huff, Co-Director of the Office of Information and privacy, US Department
of Justice, in response to the appeal raised by Consul General Teresita V.
Marzan, explained that the INS normally does not maintain records on
individuals who are entering the country as visitors rather than as
immigrants: and that a notation concerning the entry of a visitor may be
made at the Nonimmigrant Information system. Since appellant Webb
entered the U.S. on a mere tourist visa, obviously, the initial search could
not have produced the desired result inasmuch as the data base that was
looked into contained entries of the names of IMMIGRANTS and not that
of NON-IMMIGRANT visitors of the U.S..[62]

The trial court and the Court of Appeals expressed marked cynicism over the
accuracy of travel documents like the passport as well as the domestic and foreign records of
departures and arrivals from airports. They claim that it would not have been impossible for
Webb to secretly return to the Philippines after he supposedly left it on March 9, 1991, commit
the crime, go back to the U.S., and openly return to the Philippines again on October 26,
1992. Travel between the U.S. and the Philippines, said the lower courts took only about
twelve to fourteen hours.

If the Court were to subscribe to this extremely skeptical view, it might as well tear
the rules of evidence out of the law books and regard suspicions, surmises, or speculations as
reasons for impeaching evidence. It is not that official records, which carry the presumption of
truth of what they state, are immune to attack. They are not. That presumption can be
overcome by evidence. Here, however, the prosecution did not bother to present evidence to
impeach the entries in Webbs passport and the certifications of the Philippine
and U.S. immigration services regarding his travel to the U.S. and back. The prosecutions
rebuttal evidence is the fear of the unknown that it planted in the lower courts minds.

7. Effect of Webbs alibi to others

Webbs documented alibi altogether impeaches Alfaro's testimony, not only with
respect to him, but also with respect to Lejano, Estrada, Fernandez, Gatchalian, Rodriguez,
and Biong. For, if the Court accepts the proposition that Webb was in the U.S. when the crime
took place, Alfaros testimony will not hold together. Webbs participation is the anchor of
Alfaros story. Without it, the evidence against the others must necessarily fall.

CONCLUSION
In our criminal justice system, what is important is, not whether the court entertains
doubts about the innocence of the accused since an open mind is willing to explore all
possibilities, but whether it entertains a reasonable, lingering doubt as to his guilt. For, it would
be a serious mistake to send an innocent man to jail where such kind of doubt hangs on to
ones inner being, like a piece of meat lodged immovable between teeth.
Will the Court send the accused to spend the rest of their lives in prison on the
testimony of an NBI asset who proposed to her handlers that she take the role of the witness
to the Vizconde massacre that she could not produce?

WHEREFORE, the Court REVERSES and SETS ASIDE the Decision dated
December 15, 2005 and Resolution dated January 26, 2007 of the Court of Appeals in CAG.R. CR-H.C. 00336 and ACQUITS accused-appellants Hubert Jeffrey P. Webb, Antonio
Lejano, Michael A. Gatchalian, Hospicio Fernandez, Miguel Rodriguez, Peter Estrada and
Gerardo Biong of the crimes of which they were charged for failure of the prosecution to prove
their guilt beyond reasonable doubt. They are ordered immediatelyRELEASED from detention
unless they are confined for another lawful cause.

Let a copy of this Decision be furnished the Director, Bureau of

Corrections, Muntinlupa City for immediate implementation. The Director of the Bureau of
Corrections isDIRECTED to report the action he has taken to this Court within five days from
receipt of this Decision.

SO ORDERED.

Manila. The police had no leads on the perpetrators of the crime until a certain Reynaldo
Geron surfaced and executed an affidavit dated September 12, 2003. He stated that a certain
Lucio Columna told him during a drinking spree that Atty. Tamargo was ordered killed by
respondent Lloyd Antiporda and that he (Columna) was one of those who killed Atty. Tamargo.
He added that he told the Tamargo family what he knew and that the sketch of the suspect
closely resembled Columna.[4]

THIRD DIVISION
HAROLD V. TAMARGO, G.R. No. 177727
Petitioner,
Present:

CORONA, J., Chairperson,

CARPIO MORALES,
- v e r s u s - VELASCO, JR.,

After conducting a preliminary investigation and on the strength of Gerons affidavit, the
investigating prosecutor[5] issued a resolution dated December 5, 2003 finding probable cause
against Columna and three John Does. [6] On February 2, 2004, the corresponding
Informations for murder were filed against them in the Regional Trial Court (RTC) of Manila,
one assigned to Branch 27 for the death of Atty. Franklin Tamargo, and the other to Branch 29
for the death of the minor Gail Franzielle. [7] Columna was arrested in the province of Cagayan
on February 17, 2004 and brought to Manila for detention and trial. [8]

On March 8, 2004, Columna (whose real name was Manuel, Jr.) executed an
affidavit wherein he admitted his participation as look out during the shooting and implicated
respondent Romulo Awingan (alias Mumoy) as the gunman and one Richard Mecate. He also
tagged as masterminds respondent Licerio Antiporda, Jr. and his son, respondent Lloyd
Antiporda.[9] The former was the ex-mayor and the latter the mayor of Buguey, Cagayan at
that time. When the killing took place, Licerio Antiporda was in detention for a kidnapping case
in which Atty. Tamargo was acting as private prosecutor.

NACHURA and
LEONARDO-DE CASTRO, JJ.

ROMULO AWINGAN, LLOYD

ANTIPORDA and LICERIO
ANTIPORDA, JR.,

Pursuant to this affidavit, petitioner Harold V. Tamargo (brother of Atty. Tamargo)

filed a complaint against those implicated by Columna in the Office of the City Prosecutor of
Manila.[10]

Respondents. Promulgated:
January 19, 2010

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

DECISION
CORONA, J.:

This is a petition for review on certiorari [1] of the November 10, 2006 decision [2] and May 18,
2007 resolution[3] of the Court of Appeals (CA) in CA-G.R. SP No. 93610.
Atty. Franklin V. Tamargo and his eight-year-old daughter, Gail Franzielle, were shot and killed
at around 5:15 p.m. of August 15, 2003 along Nueva Street corner Escolta Street, Binondo,

On April 19, 2004, Columna affirmed his affidavit before the investigating
prosecutor[11] who subjected him to clarificatory questions.[12]

Respondents denied any involvement in the killings. They alleged that Licerio was a
candidate for mayor in Buguey, Cagayan during the May 2004 elections and that the case was
instituted by his political opponents in order to derail his candidacy. The Antipordas admitted
that Atty. Tamargo was their political rival for the mayoralty post of Buguey. Atty. Tamargo had
been defeated twice by Lloyd and once by Licerio. Before the killing, Atty. Tamargo filed an
election case against Lloyd and a kidnapping case in the Sandiganbayan against
Licerio. However, they claimed that both cases were dismissed as Lloyd emerged as the
winner in the elections and Licerio was acquitted by the Sandiganbayan. [13]

During the preliminary investigation, respondent Licerio presented Columnas

unsolicited handwritten letter dated May 3, 2004 to respondent Lloyd, sent from Columnas jail
cell in Manila. In the letter, Columna disowned the contents of his March 8, 2004 affidavit and
narrated how he had been tortured until he signed the extrajudicial confession. He stated that
those he implicated had no participation in the killings. [14] Respondent Licerio also submitted
an affidavit of Columna dated May 25, 2004 wherein the latter essentially repeated the
statements in his handwritten letter.

Due to the submission of Columnas letter and affidavit, the investigating prosecutor
set a clarificatory hearing, to enable Columna to clarify his contradictory affidavits and his
unsolicited letter. During the hearing held on October 22, 2004, Columna categorically
admitted the authorship and voluntariness of the unsolicited letter. He affirmed the May 25,
2004 affidavit and denied that any violence had been employed to obtain or extract the
affidavit from him.[15]

Thus, on November 10, 2004, the investigating prosecutor recommended the

dismissal of the charges. This was approved by the city prosecutor.

Meanwhile, in another handwritten letter addressed to City Prosecutor Ramon

Garcia dated October 29, 2004, Columna said that he was only forced to withdraw all his
statements against respondents during the October 22, 2004 clarificatory hearing because of
the threats to his life inside the jail. He requested that he be transferred to another detention
center.[16]
Aggrieved by the dismissal of the charges, petitioner filed an appeal to the
Department of Justice (DOJ).[17] On May 30, 2005, the DOJ, through then Secretary Raul M.
Gonzalez, reversed the dismissal and ordered the filing of the Informations for murder. [18] He
opined that the March 8, 2004 extrajudicial confession was not effectively impeached by the
subsequent recantation and that there was enough evidence to prove the probable guilt of
respondents.[19] Accordingly, the Informations were filed and the cases were consolidated and
assigned to the RTC of Manila, Branch 29.[20]

However, on August 12, 2005, Secretary Gonzales granted the Antipordas motion
for reconsideration (MR) and directed the withdrawal of the Informations. [21] This time, he
declared that the extrajudicial confession of Columna was inadmissible against respondents
and that, even if it was admissible, it was not corroborated by other evidence. [22]As a result, on
August 22, 2005, the trial prosecutor filed a motion to withdraw the Informations. On October
4, 2005, Secretary Gonzalez denied petitioners MR.

The RTC, through Judge Cielito Mindaro-Grulla, granted the motion to withdraw the
Informations in an order dated October 26, 2005. [23] Petitioner filed an MR but the judge
voluntarily inhibited herself without resolving the same. The cases were re-raffled to Branch
19, presided by Judge Zenaida R. Daguna. Judge Daguna granted the MR of petitioner in a
resolution dated December 9, 2005. She ruled that, based on Columnas March 8, 2004
affidavit which he affirmed before the investigating prosecutor, there was probable cause to
hold the accused for trial. She denied the MR of the Antipordas in an order dated February 6,
2006.

Consequently, respondent Awingan filed a special civil action for certiorari and
prohibition in the CA docketed as CA-G.R. SP No. 93610. The Antipordas separately filed
another certiorari case docketed as CA-G.R. SP No. 94188.

In a decision dated November 10, 2006 in CA-G.R. SP No. 93610, the CA ruled that
the RTC judge gravely abused her discretion because she arbitrarily left out of her
assessment and evaluation the substantial matters that the DOJ Secretary had fully taken into
account in concluding that there was no probable cause against all the accused. It also held
that Columnas extrajudicial confession was not admissible against the respondents because,
aside from the recanted confession, there was no other piece of evidence presented to
establish the existence of the conspiracy. Additionally, the confession was made only after
Columna was arrested and not while the conspirators were engaged in carrying out the
conspiracy.

After this decision was promulgated, CA-G.R. SP No. 93610 was consolidated with
CA-G.R. SP No. 94188. The CA denied reconsideration in a resolution dated May 18, 2007. In
a decision dated August 24, 2007, the CA likewise granted the petition for certiorari of
respondents Antiporda.[24]

Petitioner filed this petition assailing the decision in CA-G.R. SP No. 93610. Later on, he filed
an amended petition impleading respondents Antiporda and likewise assailing the CA decision
in CA-G.R. SP No. 94188. The Court treated this as a supplemental petition.

The main issue for our resolution is whether or not the CA erred in finding that Judge Daguna
had committed grave abuse of discretion in denying the withdrawal of the Informations for
murder against respondents.

Petitioner argues that, based on the independent assessment of Judge Daguna,

there was probable cause based on the earlier affidavit of Columna. She considered all the
pieces of evidence but did not give credit to Columnas recantation.
Respondents counter that Judge Daguna committed grave abuse of discretion by
limiting her evaluation and assessment only to evidence that supported probable cause while
completely disregarding contradicting evidence. They also contend that Columnas
extrajudicial confession was inadmissible against respondents because of the rule on res inter
alios acta.
We find no merit in the petition.

It is settled that, when confronted with a motion to withdraw an Information (on the
ground of lack of probable cause to hold the accused for trial based on a resolution of the DOJ
Secretary), the trial court has the duty to make an independent assessment of the merits of
the motion.[25] It may either agree or disagree with the recommendation of the
Secretary. Reliance alone on the resolution of the Secretary would be an abdication of the trial
courts duty and jurisdiction to determine a prima facie case.[26] The court must itself be
convinced that there is indeed no sufficient evidence against the accused. [27]

We agree with the CA that Judge Daguna limited herself only to the following: (1)
Columnas affidavit dated March 8, 2004 wherein he implicated the respondents in the
murders; (2) his affirmation of this affidavit during the April 19, 2004 clarificatory hearing; (3)
his letter dated October 29, 2004 and (4) the May 30, 2005 DOJ resolution upholding the
prosecutors recommendation to file the murder charges. [28]

She completely ignored other relevant pieces of evidence such as: (1) Columnas
May 3, 2004 letter to respondent Lloyd Antiporda narrating the torture he suffered to force him
to admit his participation in the crimes and to implicate the respondents; (2) his May 25, 2004
affidavit where he stated that neither he nor the respondents had any involvement in the
murders and (3) his testimony during the October 22, 2004 clarificatory hearing wherein he
categorically affirmed his May 3, 2004 letter and May 25, 2004 affidavit.

We declared in Jimenez v. Jimenez[29] that

[although] there is no general formula or fixed rule for the determination of

probable cause since the same must be decided in the light of the
conditions obtaining in given situations and its existence depends to a
large degree upon the finding or opinion of the judge conducting the
examination, such a finding should not disregard the facts before the
judge nor run counter to the clear dictates of reason. The judge or fiscal,
therefore, should not go on with the prosecution in the hope that some
credible evidence might later turn up during trial for this would be a
flagrant violation of a basic right which the courts are created to uphold.
[30]
(Emphasis supplied)

Had Judge Daguna reviewed the entire records of the investigation, she would have
seen that, aside from the pieces of evidence she relied on, there were others which cast doubt
on them. We quote with approval the reflections of the CA on this point:

The selectivity of respondent RTC Judge for purposes of

resolving the motion to withdraw the informations effectively sidetracked
the guidelines for an independent assessment and evaluation of the
merits of the case. Respondent RTC Judge thus impaired the substantial
rights of the accused. Instead, she should have made a circumspect
evaluation by looking at everything made available to her at that point of
the cases. No less than that was expected and required of her as a
judicial officer. According to Santos v. Orda, Jr., the trial judge may make
an independent assessment of the merits of the case based on the
affidavits and counter-affidavits, documents, or evidence appended to the
Information; the records of the public prosecutor which the court may
order the latter to produce before the court; or any evidence already
adduced before the court by the accused at the time the motion is filed by
the public prosecutor.[31]

Moreover, Judge Daguna failed to consider that Columnas extrajudicial confession

in his March 8, 2004 affidavit was not admissible as evidence against respondents in view of
the rule on res inter alios acta.

Res inter alios acta alteri nocere non debet. The rule on res inter alios acta provides
that the rights of a party cannot be prejudiced by an act, declaration, or omission of another.
[32]
Consequently, an extrajudicial confession is binding only on the confessant, is not
admissible against his or her co-accused [33] and is considered as hearsay against them. [34] The
reason for this rule is that:

on a principle of good faith and mutual convenience, a mans own acts are
binding upon himself, and are evidence against him. So are his conduct
and declarations. Yet it would not only be rightly inconvenient, but also
manifestly unjust, that a man should be bound by the acts of mere
unauthorized strangers; and if a party ought not to be bound by the acts of
strangers, neither ought their acts or conduct be used as evidence against
him.[35]
An exception to the res inter alios acta rule is an admission made by a conspirator
under Section 30, Rule 130 of the Rules of Court:

Admission by conspirator. The act or declaration of a conspirator

relating to the conspiracy and during its existence, may be given in
evidence against the co-conspirator after the conspiracy is shown by
evidence other than such act or declaration.

This rule prescribes that the act or declaration of the conspirator relating to the
conspiracy and during its existence may be given in evidence against co-conspirators
provided that the conspiracy is shown by independent evidence aside from the extrajudicial
confession.[36] Thus, in order that the admission of a conspirator may be received against his
or her co-conspirators, it is necessary that (a) the conspiracy be first proved by evidence other
than the admission itself (b) the admission relates to the common object and (c) it has been
made while the declarant was engaged in carrying out the conspiracy. [37] Otherwise, it cannot
be used against the alleged co-conspirators without violating their constitutional right to be
confronted with the witnesses against them and to cross-examine them. [38]

Here, aside from the extrajudicial confession, which was later on recanted, no other
piece of evidence was presented to prove the alleged conspiracy. There was no other
prosecution evidence, direct or circumstantial, which the extrajudicial confession could
corroborate. Therefore, the recanted confession of Columna, which was the sole evidence
against respondents, had no probative value and was inadmissible as evidence against them.

Considering the paucity and inadmissibility of the evidence presented against the
respondents, it would be unfair to hold them for trial. Once it is ascertained that no probable

cause exists to form a sufficient belief as to the guilt of the accused, they should be relieved
from the pain of going through a full blown court case. [39] When, at the outset, the evidence
offered during the preliminary investigation is nothing more than an uncorroborated
extrajudicial confession of an alleged conspirator, the criminal complaint should not prosper so
that the system would be spared from the unnecessary expense of such useless and
expensive litigation.[40] The rule is all the more significant here since respondent Licerio
Antiporda remains in detention for the murder charges pursuant to the warrant of arrest issued
by Judge Daguna.[41]

Indeed, at that stage of the proceedings, the duty of Judge Daguna was only to
satisfy herself whether there was probable cause or sufficient ground to hold respondents for
trial as co-conspirators. Given that she had no sufficient basis for a finding of probable cause
against respondents, her orders denying the withdrawal of the Informations for murder against
them were issued with grave abuse of discretion.

Hence, we hold that the CA committed no reversible error in granting the petitions
for certiorari of respondents.

WHEREFORE, the petition is hereby DENIED.

No pronouncement as to costs.

SO ORDERED.

FIRST DIVISION
BOSTON BANK OF THE G. R. No. 158149
PHILIPPINES, (formerly BANK
OF COMMERCE),
Petitioner, Present:
PANGANIBAN, J., Chairperson,
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
- versus - CALLEJO, SR., and
CHICO-NAZARIO, JJ.
PERLA P. MANALO and CARLOS
MANALO, JR.,
Promulgated:
Respondents. February 9, 2006
x--------------------------------------------------x
DECISION
CALLEJO, SR., J.:
Before us is a Petition for Review on Certiorari of the Decision[1] of the Court of Appeals (CA)
in CA-G.R. CV No. 47458 affirming, on appeal, the Decision [2] of the Regional Trial Court
(RTC) of Quezon City, Branch 98, in Civil Case No. Q-89-3905.

The Antecedents
The Xavierville Estate, Inc. (XEI) was the owner of parcels of land in Quezon City, known as
the Xavierville Estate Subdivision, with an area of 42 hectares. XEI caused the subdivision of
the property into residential lots, which was then offered for sale to individual lot buyers. [3]
On September 8, 1967, XEI, through its General Manager, Antonio Ramos, as
vendor, and The Overseas Bank of Manila (OBM), as vendee, executed a Deed of Sale of
Real Estate over some residential lots in the subdivision, including Lot 1, Block 2, with an area
of 907.5 square meters, and Lot 2, Block 2, with an area of 832.80 square meters. The
transaction was subject to the approval of the Board of Directors of OBM, and was covered by
real estate mortgages in favor of the Philippine National Bank as security for its account
amounting to P5,187,000.00, and the Central Bank of the Philippines as security for advances
amounting to P22,185,193.74.[4] Nevertheless, XEI continued selling the residential lots in the
subdivision as agent of OBM.[5]
Sometime in 1972, then XEI president Emerito Ramos, Jr. contracted the services of
Engr. Carlos Manalo, Jr. who was in business of drilling deep water wells and installing pumps
under the business name Hurricane Commercial, Inc. For P34,887.66, Manalo, Jr. installed a
water pump at Ramos residence at the corner of Aurora Boulevardand Katipunan
Avenue, Quezon City. Manalo, Jr. then proposed to XEI, through Ramos, to purchase a lot in
the Xavierville subdivision, and offered as part of the downpayment the P34,887.66 Ramos
owed him. XEI, through Ramos, agreed. In a letter dated February 8, 1972, Ramos requested
Manalo, Jr. to choose which lots he wanted to buy so that the price of the lots and the terms of
payment could be fixed and incorporated in the conditional sale. [6] Manalo, Jr. met with Ramos
and informed him that he and his wife Perla had chosen Lots 1 and 2 of Block 2 with a total
area of 1,740.3 square meters.
In a letter dated August 22, 1972 to Perla Manalo, Ramos confirmed the reservation
of the lots. He also pegged the price of the lots at P200.00 per square meter, or a total
of P348,060.00, with a 20% down payment of the purchase price amounting to P69,612.00
less the P34,887.66 owing from Ramos, payable on or before December 31, 1972; the
corresponding Contract of Conditional Sale would then be signed on or before the same date,
but if the selling operations of XEI resumed after December 31, 1972, the balance of the
downpayment would fall due then, and the spouses would sign the aforesaid contract within
five (5) days from receipt of the notice of resumption of such selling operations. It was also
stated in the letter that, in the meantime, the spouses may introduce improvements thereon
subject to the rules and regulations imposed by XEI in the subdivision. Perla Manalo
conformed to the letter agreement.[7]
The spouses Manalo took possession of the property on September 2, 1972,
constructed a house thereon, and installed a fence around the perimeter of the lots.

In the meantime, many of the lot buyers refused to pay their monthly installments
until they were assured that they would be issued Torrens titles over the lots they had
purchased.[8] The spouses Manalo were notified of the resumption of the selling operations of
XEI.[9] However, they did not pay the balance of the downpayment on the lots because Ramos
failed to prepare a contract of conditional sale and transmit the same to Manalo for their
signature. On August 14, 1973, Perla Manalo went to the XEI office and requested that the
payment of the amount representing the balance of the downpayment be deferred, which,
however, XEI rejected. On August 10, 1973, XEI furnished her with a statement of their
account as of July 31, 1973, showing that they had a balance of P34,724.34 on the
downpayment of the two lots after deducting the account of Ramos, plus P3,819.68[10] interest
thereon from September 1, 1972 to July 31, 1973, and that the interests on the unpaid
balance of the purchase price ofP278,448.00 from September 1, 1972 to July 31, 1973
amounted to P30,629.28.[11] The spouses were informed that they were being billed for said
unpaid interests.[12]
On January 25, 1974, the spouses Manalo received another statement of account
from XEI, inclusive of interests on the purchase price of the lots. [13] In a letter dated April 6,
1974 to XEI, Manalo, Jr. stated they had not yet received the notice of resumption of Leis
selling operations, and that there had been no arrangement on the payment of interests;
hence, they should not be charged with interest on the balance of the downpayment on the
property.[14] Further, they demanded that a deed of conditional sale over the two lots be
transmitted to them for their signatures. However, XEI ignored the demands. Consequently,
the spouses refused to pay the balance of the downpayment of the purchase price. [15]
Sometime in June 1976, Manalo, Jr. constructed a business sign in the sidewalk
near his house. In a letter dated June 17, 1976, XEI informed Manalo, Jr. that business signs
were not allowed along the sidewalk. It demanded that he remove the same, on the ground,
among others, that the sidewalk was not part of the land which he had purchased on
installment basis from XEI.[16] Manalo, Jr. did not respond. XEI reiterated its demand
on September 15, 1977.[17]
Subsequently, XEI turned over its selling operations to OBM, including the
receivables for lots already contracted and those yet to be sold. [18] On December 8, 1977,
OBM warned Manalo, Jr., that putting up of a business sign is specifically prohibited by their
contract of conditional sale and that his failure to comply with its demand would impel it to
avail of the remedies as provided in their contract of conditional sale. [19]

subdivision.[22] CBM reiterated in its letter to Ng that, as of January 24, 1984, Manalo was a
homeowner in the subdivision.[23]
In a letter dated August 5, 1986, the CBM requested Perla Manalo to stop any ongoing construction on the property since it (CBM) was the owner of the lot and she had no
permission for such construction.[24] She agreed to have a conference meeting with CBM
officers where she informed them that her husband had a contract with OBM, through XEI, to
purchase the property. When asked to prove her claim, she promised to send the documents
to CBM. However, she failed to do so. [25] On September 5, 1986, CBM reiterated its demand
that it be furnished with the documents promised, [26] but Perla Manalo did not respond.
On July 27, 1987, CBM filed a complaint [27] for unlawful detainer against the spouses
with the Metropolitan Trial Court of Quezon City. The case was docketed as Civil Case No.
51618. CBM claimed that the spouses had been unlawfully occupying the property without its
consent and that despite its demands, they refused to vacate the property.The latter alleged
that they, as vendors, and XEI, as vendee, had a contract of sale over the lots which had not
yet been rescinded.[28]
While the case was pending, the spouses Manalo wrote CBM to offer an amicable
settlement, promising to abide by the purchase price of the property (P313,172.34), per
agreement with XEI, through Ramos. However, on July 28, 1988, CBM wrote the spouses,
through counsel, proposing that the price of P1,500.00 per square meter of the property was a
reasonable starting point for negotiation of the settlement. [29] The spouses rejected the counter
proposal,[30] emphasizing that they would abide by their original agreement with XEI. CBM
moved to withdraw its complaint[31] because of the issues raised.[32]
In the meantime, the CBM was renamed the Boston Bank of the Philippines. After
CBM filed its complaint against the spouses Manalo, the latter filed a complaint for specific
performance and damages against the bank before the Regional Trial Court (RTC) of Quezon
City on October 31, 1989.

Meanwhile, on December 5, 1979, the Register of Deeds issued Transfer Certificate

of Title (TCT) No. T-265822 over Lot 1, Block 2, and TCT No. T-265823 over Lot 2, Block 2, in
favor of the OBM.[20] The lien in favor of the Central Bank of the Philippines was annotated at
the dorsal portion of said title, which was later cancelled on August 4, 1980.[21]

The plaintiffs alleged therein that they had always been ready, able and willing to
pay the installments on the lots sold to them by the defendants remote predecessor-ininterest, as might be or stipulated in the contract of sale, but no contract was forthcoming; they
constructed their house worth P2,000,000.00 on the property in good faith; Manalo, Jr.,
informed the defendant, through its counsel, on October 15, 1988 that he would abide by the
terms and conditions of his original agreement with the defendants predecessor-in-interest;
during the hearing of the ejectment case on October 16, 1988, they offered to
pay P313,172.34 representing the balance on the purchase price of said lots; such tender of
payment was rejected, so that the subject lots could be sold at considerably higher prices to
third parties.

Subsequently, the Commercial Bank of Manila (CBM) acquired the Xavierville

Estate from OBM. CBM wrote Edilberto Ng, the president of Xavierville Homeowners
Association that, as of January 31, 1983, Manalo, Jr. was one of the lot buyers in the

Plaintiffs further alleged that upon payment of the P313,172.34, they were entitled to
the execution and delivery of a Deed of Absolute Sale covering the subject lots, sufficient in
form and substance to transfer title thereto free and clear of any and all liens and

encumbrances of whatever kind and nature. [33] The plaintiffs prayed that, after due hearing,
judgment be rendered in their favor, to wit:
WHEREFORE, it is respectfully prayed that after due hearing:
(a) The defendant should be ordered to execute and deliver a
Deed of Absolute Sale over subject lots in favor of the plaintiffs after
payment of the sum of P313,172.34, sufficient in form and substance to
transfer to them titles thereto free and clear of any and all liens and
encumbrances of whatever kind or nature;
(b) The defendant should be held liable for moral and exemplary
damages in the amounts of P300,000.00 and P30,000.00, respectively, for
not promptly executing and delivering to plaintiff the necessary Contract of
Sale, notwithstanding repeated demands therefor and for having been
constrained to engage the services of undersigned counsel for which they
agreed to pay attorneys fees in the sum of P50,000.00 to enforce their
rights in the premises and appearance fee of P500.00;
(c) And for such other and further relief as may be just and
equitable in the premises.[34]

contract of conditional sale. Since plaintiffs failed to pay, OBM consequently refused to
execute the corresponding contract of conditional sale and forfeited the P34,877.66
downpayment for the two lots, but did not notify them of said forfeiture. [42] It alleged that OBM
considered the lots unsold because the titles thereto bore no annotation that they had been
sold under a contract of conditional sale, and the plaintiffs were not notified of XEIs
resumption of its selling operations.
On May 2, 1994, the RTC rendered judgment in favor of the plaintiffs and against
the defendant. The fallo of the decision reads:
WHEREFORE, judgment is hereby rendered in favor of the
plaintiffs and against the defendant
(a) Ordering the latter to execute and deliver a Deed of Absolute
Sale over Lot 1 and 2, Block 2 of the Xavierville Estate Subdivision after
payment of the sum of P942,978.70 sufficient in form and substance to
transfer to them titles thereto free from any and all liens and
encumbrances of whatever kind and nature.
(b) Ordering the defendant to pay moral and exemplary
damages in the amount of P150,000.00; and
(c) To pay attorneys fees in the sum of P50,000.00 and to pay

In its Answer to the complaint, the defendant interposed the following affirmative
defenses: (a) plaintiffs had no cause of action against it because the August 22, 1972 letter
agreement between XEI and the plaintiffs was not binding on it; and (b) it had no record of any
contract to sell executed by it or its predecessor, or of any statement of accounts from its
predecessors, or records of payments of the plaintiffs or of any documents which entitled them
to the possession of the lots.[35] The defendant, likewise, interposed counterclaims for
damages and attorneys fees and prayed for the eviction of the plaintiffs from the property. [36]
Meanwhile, in a letter dated January 25, 1993, plaintiffs, through counsel, proposed
an amicable settlement of the case by paying P942,648.70, representing the balance of the
purchase price of the two lots based on the current market value. [37] However, the defendant
rejected the same and insisted that for the smaller lot, they pay P4,500,000.00, the current
market value of the property.[38] The defendant insisted that it owned the property since there
was no contract or agreement between it and the plaintiffs relative thereto.
During the trial, the plaintiffs adduced in evidence the separate Contracts of
Conditional Sale executed between XEI and Alberto Soller; [39] Alfredo Aguila,[40] and Dra. Elena
Santos-Roque[41] to prove that XEI continued selling residential lots in the subdivision as agent
of OBM after the latter had acquired the said lots.
For its part, defendant presented in evidence the letter dated August 22, 1972,
where XEI proposed to sell the two lots subject to two suspensive conditions: the payment of
the balance of the downpayment of the property, and the execution of the corresponding

the costs.
SO ORDERED.[43]
The trial court ruled that under the August 22, 1972 letter agreement of XEI and the
plaintiffs, the parties had a complete contract to sell over the lots, and that they had already
partially consummated the same. It declared that the failure of the defendant to notify the
plaintiffs of the resumption of its selling operations and to execute a deed of conditional sale
did not prevent the defendants obligation to convey titles to the lots from acquiring binding
effect. Consequently, the plaintiffs had a cause of action to compel the defendant to execute a
deed of sale over the lots in their favor.
Boston Bank appealed the decision to the CA, alleging that the lower court erred in
(a) not concluding that the letter of XEI to the spouses Manalo, was at most a mere contract to
sell subject to suspensive conditions, i.e., the payment of the balance of the downpayment on
the property and the execution of a deed of conditional sale (which were not complied with);
and (b) in awarding moral and exemplary damages to the spouses Manalo despite the
absence of testimony providing facts to justify such awards. [44]
On September 30, 2002, the CA rendered a decision affirming that of the RTC with
modification. The fallo reads:

WHEREFORE, the appealed decision is AFFIRMED with

MODIFICATIONS that (a) the figure P942,978.70 appearing [in] par. (a) of
the dispositive portion thereof is changed toP313,172.34 plus interest
thereon at the rate of 12% per annum from September 1, 1972 until fully
paid and (b) the award of moral and exemplary damages and attorneys
fees in favor of plaintiffs-appellees is DELETED.
SO ORDERED.[45]
The appellate court sustained the ruling of the RTC that the appellant and the
appellees had executed a Contract to Sell over the two lots but declared that the balance of
the purchase price of the property amounting to P278,448.00 was payable in fixed amounts,
inclusive of pre-computed interests, from delivery of the possession of the property to the
appellees on a monthly basis for 120 months, based on the deeds of conditional sale
executed by XEI in favor of other lot buyers. [46] The CA also declared that, while XEI must
have resumed its selling operations before the end of 1972 and the downpayment on the
property remained unpaid as of December 31, 1972, absent a written notice of cancellation of
the contract to sell from the bank or notarial demand therefor as required by Republic Act No.
6552, the spouses had, at the very least, a 60-day grace period from January 1, 1973 within
which to pay the same.
Boston Bank filed a motion for the reconsideration of the decision alleging that there
was no perfected contract to sell the two lots, as there was no agreement between XEI and
the respondents on the manner of payment as well as the other terms and conditions of the
sale. It further averred that its claim for recovery of possession of the aforesaid lots in its
Memorandum dated February 28, 1994 filed before the trial court constituted a judicial
demand for rescission that satisfied the requirements of the New Civil Code.However, the
appellate court denied the motion.
Boston Bank, now petitioner, filed the instant petition for review
on certiorari assailing the CA rulings. It maintains that, as held by the CA, the records do not
reflect any schedule of payment of the 80% balance of the purchase price, or P278,448.00.
Petitioner insists that unless the parties had agreed on the manner of payment of the principal
amount, including the other terms and conditions of the contract, there would be no existing
contract of sale or contract to sell. [47] Petitioner avers that the letter agreement to respondent
spouses dated August 22, 1972 merely confirmed their reservation for the purchase of Lot
Nos. 1 and 2, consisting of 1,740.3 square meters, more or less, at the price of P200.00 per
square meter (or P348,060.00), the amount of the downpayment thereon and the application
of the P34,887.00 due from Ramos as part of such downpayment.
Petitioner asserts that there is no factual basis for the CA ruling that the terms and
conditions relating to the payment of the balance of the purchase price of the property (as
agreed upon by XEI and other lot buyers in the same subdivision) were also applicable to the
contract entered into between the petitioner and the respondents. It insists that such a ruling is
contrary to law, as it is tantamount to compelling the parties to agree to something that was

not even discussed, thus, violating their freedom to contract. Besides, the situation of the
respondents cannot be equated with those of the other lot buyers, as, for one thing, the
respondents made a partial payment on the downpayment for the two lots even before the
execution of any contract of conditional sale.
Petitioner posits that, even on the assumption that there was a perfected contract to
sell between the parties, nevertheless, it cannot be compelled to convey the property to the
respondents because the latter failed to pay the balance of the downpayment of the property,
as well as the balance of 80% of the purchase price, thus resulting in the extinction of its
obligation to convey title to the lots to the respondents.
Another egregious error of the CA, petitioner avers, is the application of Republic
Act No. 6552. It insists that such law applies only to a perfected agreement or perfected
contract to sell, not in this case where the downpayment on the purchase price of the property
was not completely paid, and no installment payments were made by the buyers.
Petitioner also faults the CA for declaring that petitioner failed to serve a notice on
the respondents of cancellation or rescission of the contract to sell, or notarial demand
therefor. Petitioner insists that its August 5, 1986 letter requiring respondents to vacate the
property and its complaint for ejectment in Civil Case No. 51618 filed in the Metropolitan Trial
Court amounted to the requisite demand for a rescission of the contract to sell. Moreover, the
action of the respondents below was barred by laches because despite demands, they failed
to pay the balance of the purchase price of the lots (let alone the downpayment) for a
considerable number of years.
For their part, respondents assert that as long as there is a meeting of the minds of
the parties to a contract of sale as to the price, the contract is valid despite the parties failure
to agree on the manner of payment. In such a situation, the balance of the purchase price
would be payable on demand, conformably to Article 1169 of the New Civil Code. They insist
that the law does not require a party to agree on the manner of payment of the purchase price
as a prerequisite to a valid contract to sell. The respondents cite the ruling of this Court
in Buenaventura v. Court of Appeals[48] to support their submission.

They argue that even if the manner and timeline for the payment of the balance of
the purchase price of the property is an essential requisite of a contract to sell, nevertheless,
as shown by their letter agreement of August 22, 1972 with the OBM, through XEI and the
other letters to them, an agreement was reached as to the manner of payment of the balance
of the purchase price. They point out that such letters referred to the terms of the terms of the
deeds of conditional sale executed by XEI in favor of the other lot buyers in the subdivision,
which contained uniform terms of 120 equal monthly installments (excluding the
downpayment, but inclusive of pre-computed interests). The respondents assert that XEI was
a real estate broker and knew that the contracts involving residential lots in the subdivision
contained uniform terms as to the manner and timeline of the payment of the purchase price
of said lots.
Respondents further posit that the terms and conditions to be incorporated in the
corresponding contract of conditional sale to be executed by the parties would be the same as
those contained in the contracts of conditional sale executed by lot buyers in the subdivision.
After all, they maintain, the contents of the corresponding contract of conditional sale referred
to in the August 22, 1972 letter agreement envisaged those contained in the contracts of
conditional sale that XEI and other lot buyers executed. Respondents cite the ruling of this
Court in Mitsui Bussan Kaisha v. Manila E.R.R. & L. Co.[49]
The respondents aver that the issues raised by the petitioner are factual,
inappropriate in a petition for review on certiorari under Rule 45 of the Rules of Court. They
assert that petitioner adopted a theory in litigating the case in the trial court, but changed the
same on appeal before the CA, and again in this Court. They argue that the petitioner is
estopped from adopting a new theory contrary to those it had adopted in the trial and
appellate courts. Moreover, the existence of a contract of conditional sale was admitted in the
letters of XEI and OBM. They aver that they became owners of the lots upon delivery to them
by XEI.

The issues for resolution are the following: (1) whether the factual issues raised by
the petitioner are proper; (2) whether petitioner or its predecessors-in-interest, the XEI or the
OBM, as seller, and the respondents, as buyers, forged a perfect contract to sell over the
property; (3) whether petitioner is estopped from contending that no such contract was forged
by the parties; and (4) whether respondents has a cause of action against the petitioner for
specific performance.

parties had perfected a contract to sell, as against petitioners claim that no such contract
existed. However, in resolving the issue of whether the petitioner was obliged to sell the
property to the respondents, while the CA declared that XEI or OBM and the respondents
failed to agree on the schedule of payment of the balance of the purchase price of the
property, it ruled that XEI and the respondents had forged a contract to sell; hence, petitioner
is entitled to ventilate the issue before this Court.

The rule is that before this Court, only legal issues may be raised in a petition for
review on certiorari. The reason is that this Court is not a trier of facts, and is not to review and
calibrate the evidence on record. Moreover, the findings of facts of the trial court, as affirmed
on appeal by the Court of Appeals, are conclusive on this Court unless the case falls under
any of the following exceptions:

We agree with petitioners contention that, for a perfected contract of sale or contract
to sell to exist in law, there must be an agreement of the parties, not only on the price of the
property sold, but also on the manner the price is to be paid by the vendee.

(1) when the conclusion is a finding grounded entirely on

speculations, surmises and conjectures; (2) when the inference made is
manifestly mistaken, absurd or impossible; (3) where there is a grave
abuse of discretion; (4) when the judgment is based on a
misapprehension of facts; (5) when the findings of fact are conflicting; (6)
when the Court of Appeals, in making its findings went beyond the issues
of the case and the same is contrary to the admissions of both appellant
and appellee; (7) when the findings are contrary to those of the trial court;
(8) when the findings of fact are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in the
petition as well as in the petitioners main and reply briefs are not disputed
by the respondents; and (10) when the findings of fact of the Court of
Appeals are premised on the supposed absence of evidence and
contradicted by the evidence on record.[50]
We have reviewed the records and we find that, indeed, the ruling of the appellate
court dismissing petitioners appeal is contrary to law and is not supported by evidence. A
careful examination of the factual backdrop of the case, as well as the antecedental
proceedings constrains us to hold that petitioner is not barred from asserting that XEI or OBM,
on one hand, and the respondents, on the other, failed to forge a perfected contract to sell the
subject lots.
It must be stressed that the Court may consider an issue not raised during the trial
when there is plain error.[51] Although a factual issue was not raised in the trial court, such
issue may still be considered and resolved by the Court in the interest of substantial justice, if
it finds that to do so is necessary to arrive at a just decision, [52] or when an issue is closely
related to an issue raised in the trial court and the Court of Appeals and is necessary for a just
and complete resolution of the case. [53] When the trial court decides a case in favor of a party
on certain grounds, the Court may base its decision upon some other points, which the trial
court or appellate court ignored or erroneously decided in favor of a party. [54]
In this case, the issue of whether XEI had agreed to allow the respondents to pay
the purchase price of the property was raised by the parties. The trial court ruled that the

Under Article 1458 of the New Civil Code, in a contract of sale, whether absolute or
conditional, one of the contracting parties obliges himself to transfer the ownership of and
deliver a determinate thing, and the other to pay therefor a price certain in money or its
equivalent. A contract of sale is perfected at the moment there is a meeting of the minds upon
the thing which is the object of the contract and the price. From the averment of perfection, 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.[55] On the other hand, when the contract of sale or to sell is not perfected, it
cannot, as an independent source of obligation, serve as a binding juridical relation between
the parties.[56]
A definite agreement as to the price is an essential element of a binding agreement
to sell personal or real property because it seriously affects the rights and obligations of the
parties. Price is an essential element in the formation of a binding and enforceable contract of
sale. The fixing of the price can never be left to the decision of one of the contracting parties.
But a price fixed by one of the contracting parties, if accepted by the other, gives rise to a
perfected sale.[57]
It is not enough for the parties to agree on the price of the property. The parties
must also agree on the manner of payment of the price of the property to give rise to a binding
and enforceable contract of sale or contract to sell. This is so because the agreement as to
the manner of payment goes into the price, such that a disagreement on the manner of
payment is tantamount to a failure to agree on the price. [58]
In a contract to sell property by installments, it is not enough that the parties agree on the
price as well as the amount of downpayment. The parties must, likewise, agree on the manner
of payment of the balance of the purchase price and on the other terms and conditions relative
to the sale. Even if the buyer makes a downpayment or portion thereof, such payment cannot
be considered as sufficient proof of the perfection of any purchase and sale between the
parties. Indeed, this Court ruled in Velasco v. Court of Appeals[59]that:
It is not difficult to glean from the aforequoted averments that
the petitioners themselves admit that they and the respondent still had to
meet and agree on how and when the down-payment and the installment
payments were to be paid. Such being the situation, it cannot, therefore,
be said that a definite and firm sales agreement between the parties had
been perfected over the lot in question. Indeed, this Court has already
ruled before that a definite agreement on the manner of payment of the
purchase price is an essential element in the formation of a binding and
enforceable contract of sale. The fact, therefore, that the petitioners
delivered to the respondent the sum of P10,000.00 as part of the
downpayment that they had to pay cannot be considered as sufficient
proof of the perfection of any purchase and sale agreement between the
parties herein under article 1482 of the New Civil Code, as the petitioners
themselves admit that some essential matter the terms of payment still
had to be mutually covenanted.[60]

We agree with the contention of the petitioner that, as held by the CA, there is no
showing, in the records, of the schedule of payment of the balance of the purchase price on
the property amounting to P278,448.00. We have meticulously reviewed the records, including
Ramos February 8, 1972 and August 22, 1972 letters to respondents, [61] and find that said
parties confined themselves to agreeing on the price of the property (P348,060.00), the 20%
downpayment of the purchase price (P69,612.00), and credited respondents for
the P34,887.00 owing from Ramos as part of the 20% downpayment. The timeline for the
payment of the balance of the downpayment (P34,724.34) was also agreed upon, that is, on
or before XEI resumed its selling operations, on or before December 31, 1972, or within five
(5) days from written notice of such resumption of selling operations. The parties had also
agreed to incorporate all the terms and conditions relating to the sale, inclusive of the terms of
payment of the balance of the purchase price and the other substantial terms and conditions
in the corresponding contract of conditional sale, to be later signed by the parties,
simultaneously with respondents settlement of the balance of the downpayment.
The February 8, 1972 letter of XEI reads:
Mr. Carlos T. Manalo, Jr.
Hurricane Rotary Well Drilling
Rizal Avenue Ext.,Caloocan City
Dear Mr. Manalo:
We agree with your verbal offer to exchange the proceeds of
your contract with us to form as a down payment for a lot in our Xavierville
Estate Subdivision.
Please let us know your choice lot so that we can fix the price
and terms of payment in our conditional sale.
Sincerely yours,
XAVIERVILLE ESTATE, INC.
(Signed)
EMERITO B. RAMOS, JR.
President
CONFORME:
(Signed)
CARLOS T. MANALO, JR.
Hurricane Rotary Well Drilling[62]
The August 22, 1972 letter agreement of XEI and the respondents reads:

Mrs. Perla P. Manalo

1548 Rizal Avenue Extension
Caloocan City

So long as an essential element entering into the proposed obligation of either of the
parties remains to be determined by an agreement which they are to make, the contract is
incomplete and unenforceable.[66] The reason is that such a contract is lacking in the
necessary qualities of definiteness, certainty and mutuality. [67]

Dear Mrs. Manalo:

This is to confirm your reservation of Lot Nos. 1 and 2; Block 2 of our
consolidation-subdivision plan as amended, consisting of 1,740.3 square
meters more or less, at the price of P200.00 per square meter or a total
price of P348,060.00.
It is agreed that as soon as we resume selling operations, you must pay a
down payment of 20% of the purchase price of the said lots and sign the
corresponding Contract of Conditional Sale, on or before December 31,
1972, provided, however, that if we resume selling after December 31,
1972, then you must pay the aforementioned down payment and sign the
aforesaid contractwithin five (5) days from your receipt of our notice of
resumption of selling operations.
In the meanwhile, you may introduce such improvements on the said lots
as you may desire, subject to the rules and regulations of the subdivision.
If the above terms and conditions are acceptable to you, please signify
your conformity by signing on the space herein below provided.
Thank you.
Very truly yours,
XAVIERVILLE ESTATE, INC. CONFORME:
By:
(Signed) (Signed)
EMERITO B. RAMOS, JR. PERLA P. MANALO
President Buyer[63]
Based on these two letters, the determination of the terms of payment of
the P278,448.00 had yet to be agreed upon on or before December 31, 1972, or even
afterwards, when the parties sign the corresponding contract of conditional sale.
Jurisprudence is that if a material element of a contemplated contract is left for
future negotiations, the same is too indefinite to be enforceable. [64] And when an essential
element of a contract is reserved for future agreement of the parties, no legal obligation arises
until such future agreement is concluded.[65]

There is no evidence on record to prove that XEI or OBM and the respondents had
agreed, after December 31, 1972, on the terms of payment of the balance of the purchase
price of the property and the other substantial terms and conditions relative to the sale.
Indeed, the parties are in agreement that there had been no contract of conditional sale ever
executed by XEI, OBM or petitioner, as vendor, and the respondents, as vendees. [68]
The ruling of this Court in Buenaventura v. Court of Appeals has no bearing in this
case because the issue of the manner of payment of the purchase price of the property was
not raised therein.
We reject the submission of respondents that they and Ramos had intended to
incorporate the terms of payment contained in the three contracts of conditional sale executed
by XEI and other lot buyers in the corresponding contract of conditional sale, which would
later be signed by them.[69] We have meticulously reviewed the respondents complaint and
find no such allegation therein.[70] Indeed, respondents merely alleged in their complaint that
they were bound to pay the balance of the purchase price of the property in
installments. When respondent Manalo, Jr. testified, he was never asked, on direct
examination or even on cross-examination, whether the terms of payment of the balance of
the purchase price of the lots under the contracts of conditional sale executed by XEI and
other lot buyers would form part of the corresponding contract of conditional sale to be signed
by them simultaneously with the payment of the balance of the downpayment on the purchase
price.
We note that, in its letter to the respondents dated June 17, 1976, or almost three
years from the execution by the parties of their August 22, 1972 letter agreement, XEI stated,
in part, that respondents had purchased the property on installment basis. [71] However, in the
said letter, XEI failed to state a specific amount for each installment, and whether such
payments were to be made monthly, semi-annually, or annually. Also, respondents, as
plaintiffs below, failed to adduce a shred of evidence to prove that they were obliged to pay
the P278,448.00 monthly, semi-annually or annually. The allegation that the payment of
the P278,448.00 was to be paid in installments is, thus, vague and indefinite. Case law is that,
for a contract to be enforceable, its terms must be certain and explicit, not vague or indefinite .
[72]

There is no factual and legal basis for the CA ruling that, based on the terms of
payment of the balance of the purchase price of the lots under the contracts of conditional
sale executed by XEI and the other lot buyers, respondents were obliged to pay
the P278,448.00 with pre-computed interest of 12% per annum in 120-month installments. As
gleaned from the ruling of the appellate court, it failed to justify its use of the terms of payment
under the three contracts of conditional sale as basis for such ruling, to wit:

On the other hand, the records do not disclose the schedule of

payment of the purchase price, net of the downpayment. Considering,
however, the Contracts of Conditional Sale (Exhs. N, O and P) entered
into by XEI with other lot buyers, it would appear that the subdivision lots
sold by XEI, under contracts to sell, were payable in 120 equal monthly
installments (exclusive of the downpayment but including pre-computed
interests) commencing on delivery of the lot to the buyer. [73]
By its ruling, the CA unilaterally supplied an essential element to the letter
agreement of XEI and the respondents. Courts should not undertake to make a contract for
the parties, nor can it enforce one, the terms of which are in doubt. [74] Indeed, the Court
emphasized in Chua v. Court of Appeals[75] that it is not the province of a court to alter a
contract by construction or to make a new contract for the parties; its duty is confined to the
interpretation of the one which they have made for themselves, without regard to its wisdom or
folly, as the court cannot supply material stipulations or read into contract words which it does
not contain.
Respondents, as plaintiffs below, failed to allege in their complaint that the terms of
payment of the P278,448.00 to be incorporated in the corresponding contract of conditional
sale were those contained in the contracts of conditional sale executed by XEI and Soller,
Aguila and Roque.[76] They likewise failed to prove such allegation in this Court.
The bare fact that other lot buyers were allowed to pay the balance of the purchase
price of lots purchased by them in 120 or 180 monthly installments does not constitute
evidence that XEI also agreed to give the respondents the same mode and timeline of
payment of the P278,448.00.
Under Section 34, Rule 130 of the Revised Rules of Court, evidence that one did a
certain thing at one time is not admissible to prove that he did the same or similar thing at
another time, although such evidence may be received to prove habit, usage, pattern of
conduct or the intent of the parties.
Similar acts as evidence. Evidence that one did or did not do a
certain thing at one time is not admissible to prove that he did or did not
do the same or a similar thing at another time; but it may be received to
prove a specific intent or knowledge, identity, plan, system, scheme, habit,
custom or usage, and the like.
However, respondents failed to allege and prove, in the trial court, that, as a matter
of business usage, habit or pattern of conduct, XEI granted all lot buyers the right to pay the
balance of the purchase price in installments of 120 months of fixed amounts with precomputed interests, and that XEI and the respondents had intended to adopt such terms of
payment relative to the sale of the two lots in question. Indeed, respondents adduced in
evidence the three contracts of conditional sale executed by XEI and other lot buyers merely to
prove that XEI continued to sell lots in the subdivision as sales agent of OBM after it acquired

said lots, not to prove usage, habit or pattern of conduct on the part of XEI to require all lot
buyers in the subdivision to pay the balance of the purchase price of said lots in 120 months.
It further failed to prive that the trial court admitted the said deeds [77] as part of the testimony of
respondent Manalo, Jr.[78]
Habit, custom, usage or pattern of conduct must be proved like any other facts.
Courts must contend with the caveat that, before they admit evidence of usage, of habit or
pattern of conduct, the offering party must establish the degree of specificity and frequency of
uniform response that ensures more than a mere tendency to act in a given manner but
rather, conduct that is semi-automatic in nature. The offering party must allege and prove
specific, repetitive conduct that might constitute evidence of habit. The examples offered in
evidence to prove habit, or pattern of evidence must be numerous enough to base on
inference of systematic conduct. Mere similarity of contracts does not present the kind of
sufficiently similar circumstances to outweigh the danger of prejudice and confusion.
In determining whether the examples are numerous enough, and sufficiently regular,
the key criteria are adequacy of sampling and uniformity of response. After all, habit means a
course of behavior of a person regularly represented in like circumstances. [79] It is only when
examples offered to establish pattern of conduct or habit are numerous enough to lose an
inference of systematic conduct that examples are admissible. The key criteria are adequacy
of sampling and uniformity of response or ratio of reaction to situations. [80]
There are cases where the course of dealings to be followed is defined by the usage
of a particular trade or market or profession. As expostulated by Justice Benjamin Cardozo of
the United States Supreme Court: Life casts the moulds of conduct, which will someday
become fixed as law. Law preserves the moulds which have taken form and shape from life.
[81]
Usage furnishes a standard for the measurement of many of the rights and acts of men.
[82]
It is also well-settled that parties who contract on a subject matter concerning which known
usage prevail, incorporate such usage by implication into their agreement, if nothing is said to
be contrary.[83]
However, the respondents inexplicably failed to adduce sufficient competent
evidence to prove usage, habit or pattern of conduct of XEI to justify the use of the terms of
payment in the contracts of the other lot buyers, and thus grant respondents the right to pay
the P278,448.00 in 120 months, presumably because of respondents belief that the manner of
payment of the said amount is not an essential element of a contract to sell. There is no
evidence that XEI or OBM and all the lot buyers in the subdivision, including lot buyers who
pay part of the downpayment of the property purchased by them in the form of service, had
executed contracts of conditional sale containing uniform terms and conditions. Moreover,
under the terms of the contracts of conditional sale executed by XEI and three lot buyers in
the subdivision, XEI agreed to grant 120 months within which to pay the balance of the
purchase price to two of them, but granted one 180 months to do so. [84] There is no evidence
on record that XEI granted the same right to buyers of two or more lots.
Irrefragably, under Article 1469 of the New Civil Code, the price of the property sold
may be considered certain if it be so with reference to another thing certain. It is sufficient if it
can be determined by the stipulations of the contract made by the parties thereto [85] or by

reference to an agreement incorporated in the contract of sale or contract to sell or if it is

capable of being ascertained with certainty in said contract; [86] or if the contract contains
express or implied provisions by which it may be rendered certain; [87]or if it provides some
method or criterion by which it can be definitely ascertained. [88] As this Court held in Villaraza
v. Court of Appeals,[89] the price is considered certain if, by its terms, the contract furnishes a
basis or measure for ascertaining the amount agreed upon.
We have carefully reviewed the August 22, 1972 letter agreement of the parties and
find no direct or implied reference to the manner and schedule of payment of the balance of
the purchase price of the lots covered by the deeds of conditional sale executed by XEI and
that of the other lot buyers[90] as basis for or mode of determination of the schedule of the
payment by the respondents of the P278,448.00.
The ruling of this Court in Mitsui Bussan Kaisha v. Manila Electric Railroad and Light
Company[91] is not applicable in this case because the basic price fixed in the contract
was P9.45 per long ton, but it was stipulated that the price was subject to modification in
proportion to variations in calories and ash content, and not otherwise. In this case, the parties
did not fix in their letters-agreement, any method or mode of determining the terms of payment
of the balance of the purchase price of the property amounting toP278,448.00.
It bears stressing that the respondents failed and refused to pay the balance of the
downpayment and of the purchase price of the property amounting to P278,448.00 despite
notice to them of the resumption by XEI of its selling operations. The respondents enjoyed
possession of the property without paying a centavo. On the other hand, XEI and OBM failed
and refused to transmit a contract of conditional sale to the respondents. The respondents
could have at least consigned the balance of the downpayment after notice of the resumption
of the selling operations of XEI and filed an action to compel XEI or OBM to transmit to them
the said contract; however, they failed to do so.
As a consequence, respondents and XEI (or OBM for that matter) failed to forge a
perfected contract to sell the two lots; hence, respondents have no cause of action for specific
performance against petitioner. Republic Act No. 6552 applies only to a perfected contract to
sell and not to a contract with no binding and enforceable effect.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision of the
Court of Appeals in CA-G.R. CV No. 47458 is REVERSED and SET ASIDE. The Regional
Trial Court of Quezon City, Branch 98 is ordered to dismiss the complaint. Costs against the
respondents.
SO ORDERED.

THIRD DIVISION
[G.R. No. 146481. April 30, 2003]
ARTURO G. RIMORIN SR., petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent.
DECISION
PANGANIBAN, J.:
Corpus delicti in its legal sense refers to the fact of the commission of the crime, not to
the physical body of the deceased or to the ashes of a burned building or -- as in the present
case -- to the smuggled cigarettes. The corpus delicti may be proven by the credible testimony
of a sole witness, not necessarily by physical evidence such as those aforementioned.
The Case
Before the Court is a Petition for Review [1] under Rule 45 of the Rules of Court, seeking
to reverse the December 22, 2002 Decision [2] of the Court of Appeals (CA) in CA-GR CR No.
17388. The assailed Decision modified the February 18, 1994 Judgment [3] of the Regional
Trial Court (RTC)[4] of Manila (Branch 46) in Criminal Case Nos. CCC-VI-137 (79) and CCCVI-138 (79), finding Arturo Rimorin Sr. guilty of smuggling under the Tariff and Customs
Code. The dispositive portion of assailed CA Decision reads as follows:
WHEREFORE, the assailed Decision is hereby MODIFIED as follows:
(a) The Court AFFIRMS the decision of the trial court finding Felicisimo Rieta, Arturo Rimorin,
Pacifico Teruel and Carmelo Manaois GUILTY BEYOND REASONABLE DOUBT of the crime
charged.
(b) Appellants Ernesto Miaco, Guillermo Ferrer, Fidel Balita, Robartolo Alincastre and Ernesto
de Castro are ACQUITTED as recommended by the Solicitor General. [5]
In an Information docketed as CCC-VI-137 (79), petitioner and his co-accused
Felicisimo Rieta, Fidel Balita, Gonzalo Vargas, Robartolo Alincastre, Guillermo Ferrer and
Ernesto Miaco were charged in these words:
That on or about October 15, 1979, in the City of Manila, Philippines, the said accused,
conspiring and confederating together and helping one another with the evident intent to
defraud the government of the Republic of the Philippines of the legitimate duties accruing to it
from merchandise imported into this country, did then and there [willfully,] unlawfully [and]

fraudulently import or bring into the Philippines or assist in so doing contrary to law, three
hundred five (305) cases of assorted brands of blue seal cigarettes which are foreign articles
valued at P513,663.47 including duties and taxes, and/or buy, sell transport or assist and
facilitate the buying, selling and transporting of the above-named foreign articles after
importation knowing the same to have been imported contrary to law which was found in the
possession of said accused and under their control which articles said accused fully well knew
have not been properly declared and that the duties and specific taxes thereon have not been
paid to the proper authorities in violation of said Sec. 3601 of the Tariff and Customs Code of
the Philippines, as amended by Presidential Decree No. 34, in relation to Sec. 3602 of said
Code and Sec. 184 of the National Internal Revenue Code. [6]
With the assistance of his counsel de parte,[7] petitioner pleaded not guilty when
arraigned on May 5, 1980.[8] After trial in due course, the latter was found guilty of smuggling
under the Tariff and Customs Code.
The Facts
The Office of the Solicitor General (OSG) [9] presents the prosecutions version of the
facts thus:
On October 12, 1979, Col. Panfilo Lacson, then Chief of the Police Intelligence Branch of the
Metrocom Intelligence and Security Group (MISG for brevity), received information that certain
syndicated groups were engaged in smuggling activities somewhere in Port Area, Manila. It
was further revealed that the activities [were being] done at nighttime and the smuggled goods
in a delivery panel and delivery truck [were] being escorted by some police and military
personnel. He fielded three surveillance stake-out teams the following night along Roxas
Boulevard and Bonifacio Drive near Del Pan Bridge, whereby they were to watch out for a
cargo truck with Plate No. T-SY-167 bound for Malabon. Nothing came out of it. On the basis
of his investigation, [it was discovered that] the truck was registered in the name of Teresita
Estacio of Pasay City.
At around 9:00 oclock in the evening of October 14, 1979, Col. Lacson and his men returned
to the same area, with Col. Lacson posting himself at the immediate vicinity of the 2nd
COSAC Detachment in Port Area, Manila, because as per information given to him, the said
cargo truck will come out from the premises of the 2nd COSAC Detachment in said
place. COSAC stands for Constabulary Off-Shore Anti-Crime Battalion. The night watch lasted
till the wee hours of the following morning. About 3:00 a.m. an Isuzu panel came out from the
place of the 2nd COSAC Detachment. It returned before 4:00 a.m. of same day.
At around 5 minutes before 4:00 oclock that morning, a green cargo truck with Plate No. T-SY167 came out from the 2nd COSAC Detachment followed and escorted closely by a light
brown Toyota Corona car with Plate No. GR-433 and with 4 men on board. At that time, Lt.

Col. Panfilo Lacson had no information whatsoever about the car, so he gave an order by
radio to his men to intercept only the cargo truck. The cargo truck was intercepted. Col.
Lacson noticed that the Toyota car following the cargo truck suddenly made a sharp U-turn
towards the North, unlike the cargo truck which was going south.Almost by impulse, Col.
Lacsons car also made a U-turn and gave chase to the speeding Toyota car, which was
running between 100 KPH to 120 KPH. Col. Lacson sounded his siren. The chase lasted for
less than 5 minutes, until said car made a stop along Bonifacio Drive, at the foot of Del Pan
Bridge. Col. Lacson and his men searched the car and they found several firearms,
particularly: three (3) .45 cal. Pistol and one (1) armalite M-16 rifle. He also discovered that
T/Sgt. Ernesto Miaco was the driver of the Toyota car, and his companions inside the car were
Sgt. Guillermo Ferrer, Sgt. Fidel Balita and Sgt. Robartolo Alincastre, the four of them all
belonging to the 2nd COSAC Detachment. They were found not to be equipped with mission
orders.
When the cargo truck with Plate No. T-SY-167 was searched, 305 cases of blue seal or
untaxed cigarettes were found inside said truck. The cargo truck driver known only as Boy
was able to escape while the other passengers or riders of said truck were apprehended,
namely: Police Sgt. Arturo Rimorin of Pasay City Police Force, Pat. Felicisimo Rieta of Kawit
Police Force, and Gonzalo Vargas, a civilian.[10]
On the other hand, petitioners version of the facts is summarized by the CA [11] as
follows:
Accused Pasay City Policeman Arturo Rimorin, was assigned at Manila International Airport
(MIA for brevity) Detachment, Pasay City. He tried to show that in the [latter] part of 1978
during the wake of a fellow police officer, he met a man named Leonardo [a.k.a.] Boy. After
that occasion, Boy would see him at Pasay City Police Station asking for some assistance.
Once Boy told him he will get rice at Sta. Maria, Bulacan and he asked him to just follow
him. He consented. A truckload of rice was brought from Sta. Maria to Quezon City. Boy gave
him a sack of rice for providing company.
In the afternoon of October 14, 1979 while he was at his Station at MIA, Boy came and
requested that he [accompany] him to Divisoria to haul household fixtures. By arrangement,
they met at the gasoline station near Cartimar in Pasay City not later than 2:30 a.m. of
October 15. At the gasoline station, Boy introduced him to Gonzalo Vargas, a mechanic and
who is his co-accused herein. After boarding the truck, they went to the other gasoline station
where he was introduced to Felicisimo Rieta [a.k.a.] Sonny, who also boarded the truck. When
he came to know that Rieta is a policeman from Kawit, he started entertaining the thought that
Leonardo had plenty of policemen friends.
They passed Roxas Boulevard on their way to Divisoria. But he [noted] something
unusual. Boy, who was on the wheels, turned right before reaching Del Pan Bridge and
proceeded to pass under the bridge, a route that will take them to Port Area and not

Divisoria. So he commented that it [was] not the route to Divisoria. Boy replied that there
[would] be some cargo to be loaded. At a small carinderia fronting the Delgado Bros., Boy
pulled over after Rieta commented that he was hungry. So Rieta alighted and Rimorin joined
him. Rimorin asked Rieta what [would] be loaded in the truck but Rieta professed
ignorance.After about an hour, the truck arrived. Rimorin and Rieta boarded the truck and they
drove towards Roxas Boulevard-Bonifacio Drive. Rimorin noted one more unusual thing. He
expected Boy to have driven towards Rotonda so they can go back to Divisoria but Boy drove
straight ahead at the corner of Aduana to Roxas Boulevard. So he asked why they x x x
[werent] going to Divisoria, but Boy replied that theres no more space in the truck and theyll
just go the next day. But then, they were ordered to pull over by men in a vehicle who upon
alighting[,] poked guns at them. They introduced themselves as Metrocom [agents]. He
noticed some back-up vehicles. They were made to alight, lie on their belly x x x on the road
and they were frisked. They were ordered to board a Land Cruiser, one of the vehicles used
by the Metrocom [agents] and they drove towards Bonifacio Drive. The Metrocom [agents]
intercepted another vehicle.
Rimorin claims that he did not see the Metrocom men open their truck. They were hauled later
to Camp Crame. There he asked: Whats this? But a certain Barrameda, while pointing to a
truck different from what they used, told them thats the reason why youll be jailed. So he
thought they were being framed up. It was only two to three days later that he saw the alleged
smuggled cigarettes at the office of the MISG when it was presented by the investigator. They
were not present when these alleged smuggled cigarettes were taken from the truck they rode
in. On inquiry from the Metrocom men where their driver Boy [was], the Metrocom men said
he escaped. He thought there [was] something fishy in that claim. He also thought there was
something fishy in their apprehension. He wondered that they were the only persons during
the apprehension, so how could have Boy escaped? There was no possibility for escape
when they were intercepted. Yet, out of the four, only three of them were apprehended. [12]
Ruling of the Court of Appeals
In affirming the RTC, the CA ruled that the defense of denial interposed by petitioner
paled in comparison with the overwhelming testimonial and documentary evidence against
him. In particular, it noted that while he and his co-accused raised questions of fact in their
appeal, they failed to show that the trial court had significantly erred in assessing the
credibility of the testimonies of witnesses for respondent.
Moreover, the CA held that the non-presentation in court of the seized blue seal
cigarettes was not fatal to respondents cause, because the crime was established by other
competent evidence.
The appellate court, however, found no sufficient evidence against the other co-accused
who, unlike petitioner, were not found to be in possession of any blue seal cigarettes.

Hence, this Petition.[13]

Corpus Delicti Established by Other Evidence

Issues

Petitioner raises the following issues for our consideration:

I
That the Court of Appeals has decided a question of substance not yet determined by the
Supreme Court.
II
That the Court of Appeals gravely erred when it misapprehended and sanctioned the following
glaring and fatal errors committed by the lower court[:]
(a) In not dismissing the charge for the prosecutions failure to produce
the corpus delicti of the crime;
(b) In concluding, even without evidence, that the petitioner knew that what
was loaded in the intercepted truck were contraband cigarettes;
(c) In including in its appreciation with inculpatory effects the notice of sale
and the results of the auction sale which were made without the
benefit of court order, much less, notice to the accused;
(d) In merely relying on the photographs of the contraband as a substitute
for the seized goods;
(e) In not acquitting the petitioner on ground of reasonable doubt. [14]
In sum, the issues boil down to the following: (1) whether it was necessary to present
the seized goods to prove the corpus delicti; (2) whether petitioner knew that the cargo being
transported was illegal; and (3) whether, in the sale of the seized cargo, a notice to petitioner
was required.

Petitioner argues that he cannot be convicted of smuggling under the Tariff and
Customs Code, because respondent failed to present the seized contraband cigarettes in
court.Equating the actual physical evidence -- the 305 cases of blue seal cigarettes -- with
the corpus delicti, he urges this Court to rule that the failure to present it was fatal to
respondents cause.
We disagree. The Court, on several occasions, has explained that corpus delicti refers
to the fact of the commission of the crime charged [15] or to the body or substance of the crime.
[16]
In its legal sense, it does not refer to the ransom money in the crime of kidnapping for
ransom[17] or to the body of the person murdered. [18] Hence, to prove the corpus delicti, it is
sufficient for the prosecution to be able show that (1) a certain fact has been proven -- say, a
person has died or a building has been burned; and (2) a particular person is criminally
responsible for the act.[19]
Since the corpus delicti is the fact of the commission of the crime, this Court has ruled
that even a single witness uncorroborated testimony, if credible, may suffice to prove it and
warrant a conviction therefor.[20] Corpus delicti may even be established by circumstantial
evidence.[21]
Both the RTC and the CA ruled that the corpus delicti had been competently established
by respondents evidence, which consisted of the testimonies of credible witnesses and the
Custody Receipt[22] issued by the Bureau of Customs for the confiscated goods.
Col. Panfilo Lacsons testimony on the apprehension of petitioner and on the seizure of
the blue seal cigarettes was clear and straightforward. He categorically testified as follows:
Q Let us go back to the truck after you apprehended the COSAC soldiers on
board the [C]orona car, what did you do thereafter?
A We told them to the place where the cargo truck was intercepted, Sir.
Q What did you notice thereat?

The Courts Ruling

A Inside the truck were hundreds of cases of blue seal cigarettes, and I also found
out that my men were able to apprehend the occupants of the cargo truck
although they reported to me that the driver managed to make good escape,
Sir.

First Issue:

Q Now you stated that a search was made on the truck and you found how many
cases of blue seal cigarettes?

The Petition has no merit.

A Three hundred five (305) cases, Sir.

Manila, which for [purposes] of identification we respectfully request that it

be marked [on] evidence as Exhibit A.

Q Blue seal cigarettes?

COURT:
A Yes, Sir.
Mark it Exhibit A.
Q What do you mean by blue seal cigarettes?
Fiscal Macaraeg:
A Blue seal cigarettes are untaxed cigarettes, Sir.
Q Did you find out how many were there on board the truck which was intercepted
by your men per your order?

Q Will you please do examine Exhibit A and tell us whether this is the same
receipt?
A This is the same receipt, Sir.

A Yes, Sir, [there] were three.

Q Who?

Q By the way, were photographs taken of the car as well as the vehicle involved in
this case, together with the blue seal cigarettes that were confiscated?

A They were P/Sgt. Arturo Rimorin, Sir.

A Yes, Sir.

Q P/Sgt. of what department?

Q Do you have copies of these photographs?

A Of Pasay City Police Force, Sir, and Pat. Felicisimo Rieta.

A The copies are with our evidence custodian, Sir.

Q Of what police department?

Q Can you bring those pictures if required next time?

A Of Kawit, Cavite Police Force, and Gonzalo Vargas, Sir.

A Yes, Sir.[24]

Q Who is this Gonzalo Vargas?

A Civilian, Sir.[23]
xxxxxxxxx
Fiscal Macaraeg:
I am showing to you a Custody Receipt dated October 15, 1979, which states;
Received from Lt. Col. Rolando N. Abadilla, AC of S, M2/CC, MISG. PC
METROCOM (Thru S/Sgt. Rodolfo Bucao, PC) THREE HUNDRED
SEVENTY ONE (371) cases of assorted brands of Blue Seal Cigarettes,
which were intercepted and confiscated by elements of the MISG, PC
METROCOM on or about 0400 15 October 79 along Bonifacio Drive,

So, too, did Gregorio Abrigo -- customs warehouse storekeeper of the Bureau -categorically testify[25] that the MISG had turned over to him the seized blue seal cigarettes, for
which he issued a Custody Receipt dated October 15, 1979.
We find no reason to depart from the oft repeated doctrine of giving credence to the
narration of prosecution witnesses, especially when they are public officers who are presumed
to have performed their duties in a regular manner. [26]
Moreover, it is well-settled that findings of fact of lower courts are binding on this Court,
absent any showing that they overlooked or misinterpreted facts or circumstances of weight
and substance.[27] This doctrine applies particularly to this case in which the RTCs findings, as
far as petitioner is concerned, were affirmed by the appellate court.
Second Issue:

Knowledge of the Illegal Nature of the Goods

According to petitioner, the CA erred in concluding that he knew of the nature of the
contraband cargo. However, he conveniently overlooks the fact that the burden of proving
knowledge that the seized goods were smuggled was no longer incumbent upon respondent,
as it had sufficiently established the fact of possession. This point is clear from Section 3601
of the Tariff and Customs Code, as amended, which reads:
SEC. 3601 - Unlawful Importation. - Any person who shall fraudulently import or bring into the
Philippines, or assist in so doing, any article, contrary to law, or shall receive, conceal, buy,
sell, or in any manner facilitate the transportation, concealment, or sale of such article after
importation, knowing the same to have been imported contrary to law, shall be guilty of
smuggling and shall be punished x x x[.]

Now on the explanations of Police Sgt. Rimorin of Pasay City Police Force and Pat. Rieta of
Kawit Police Force, riders in the loaded cargo truck driven by Boy. Their claim that they did not
have any knowledge about the cargo of blue seal cigarettes is not given credence by the
court. They tried to show lack of knowledge by claiming that along the way, Boy and Gonzalo
Vargas left them behind at a certain point for snacks and picked them up later after the cargo
had been loaded. The Court cannot see its way through how two policemen, joining Boy in the
dead of the night, explicitly to give him and his goods some protection, which service would be
paid, yet would not know what they are out to protect. And neither could the Court see reason
in Boys leaving them behind when he was going to pick up and load the blue seal cigarettes.
Boy knew the risks. He wanted them for protection, so why will he discard them? How so
unnatural and so contrary to reason.[30]
Third Issue:
No Need for Notice to Petitioner

xxxxxxxxx
When, upon trial for a violation of this section, the defendant is shown to have or to have had
possession of the article in question, possession shall be deemed sufficient evidence to
authorize conviction unless the defendant shall explain the possession to the satisfaction of
the court; Provided, however that payment of the tax due after apprehension shall not
constitute a valid defense in any prosecution under this section. (Emphasis provided)
In his discussion of a similarly worded provision of Republic Act No. 455,
law authority explained thus:

[28]

a criminal

Petitioner questions the sale of the seized cigarettes without notice to him. However, the
sale of the seized items, which were then already in the custody of the Bureau of Customs,
[31]
was authorized under the Tariff and Customs Code, Sections 2601 and 2602 of which
provide as follows:
SECTION 2601. Property Subject to Sale. - Property in customs custody shall be subject to
sale under the conditions hereinafter provided:
a. Abandoned articles;

In order that a person may be deemed guilty of smuggling or illegal importation under the
foregoing statute three requisites must concur: (1) that the merchandise must have been
fraudulently or knowingly imported contrary to law; (2) that the defendant, if he is not the
importer himself, must have received, concealed, bought, sold or in any manner facilitated the
transportation, concealment or sale of the merchandise; and (3) that the defendant must be
shown to have knowledge that the merchandise had been illegally imported. If the defendant,
however, is shown to have had possession of the illegally imported merchandise, without
satisfactory explanation, such possession shall be deemed sufficient to authorize conviction.
[29]
(Emphasis supplied)
The prosecution competently established that (1) the 305 cases of untaxed blue seal
cigarettes discovered inside the cargo truck were fraudulently imported; and (2) petitioner was
in control of the truck when it transported the cargo on October 15, 1979. Petitioner was
unable to satisfactorily explain his possession of the untaxed cigarettes, which the MISG
agents seized from him and his co-accused. Rather, he feigns ignorance of the true nature of
the cargo, a claim which the RTC and the CA found incredible:

b. Bonded articles entered under warehousing entry not withdrawn nor the
duties and taxes paid thereon within the period prescribed by
law;
c. Articles for which import entry has been filed but have not been claimed
within fifteen days thereafter; Provided, that in justifiable cases,
or when public interest so requires, the Collector may, in his
discretion, grant an extension of not more than fifteen days;
d. Seized property, other than contraband, after liability to sale shall have
been established by proper administrative or judicial
proceedings in conformity with the provisions of this Code.
e. Any article subject to a valid lien for customs duties, taxes or other
charges collectible by the Bureau of Customs, after the
expiration of the period allowed for the satisfaction of the same.

SECTION 2602. Place of Sale or Other Disposition of Property. - Property within the purview
of this Part of this Code shall be sold, or otherwise disposed of, upon the order of the Collector
of the port where the property in question is found, unless the Commissioner shall direct its
conveyance for such purpose to some other port.
Moreover, Section 2603 of the Code states that the seized goods shall be sold at public
auction after the required ten-day notice. In the instant case, these were sold on November
15-16, 1979. Thus, absent any evidence to the contrary, the sale is presumed to have been
conducted by public officers in the regular performance of their duties.

Petitioner did not raise any objection to the presentation of the Notice of Sale and the
results of the auction as evidence for respondent. [32] Clearly, his belated protestation now
comes as an afterthought.
WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. Costs
against petitioner.
SO ORDERED.