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Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

A.M. No. P-14-3271 October 22, 2014


[formerly OCA IPI No. 11-3640-P]

ATTY. ALAN A. TAN, Complainant,


vs.
ELMER S. AZCUETA, Process Server, Regional Trial Court, Branch 22, Imus, Cavite, Respondent.

RESOLU T ION

BRION, J.:

For resolution of the Court is the present affidavit-complaint1 dated May 4, 2011, filed by Atty. Alan A. Tan (Atty. Tan) against Elmer S. Azcueta (respondent), Process Server, Regional Trial Court (RTC), Branch 22, Imus, Cavite, for gross negligence in the performance of his duty.

This administrative case stemmed from the complaint dated November 4, 2010 filed by complainant Atty. Tan, counsel for Jennelyn Yabut-Gopole, plaintiff in Civil Case No. 4263-10, with the RTC of Imus, Cavite, Branch 22, for Damages with prayer that defendant Felomina F. Cayabyab (defendant) be
made liable for grave oral defamation.

Atty. Tan alleged that summons was issued by the RTC against the defendant on November 18, 2010. However, up to the date of the filing of the present administrative case, the summons remained unserved on the defendant. The oral defamation case has not yet been heard because the defendant
has not filed his answerto the complaint for damages.

Required to comment on the administrative complaint, the respondent vehemently denied the accusations against him. He alleged that he tried to serve the summons on the defendant four times but on all occasions she was not around at her given address. To prove his allegations, he attached to his
comment/answer as annexes "1," "2," "3," and "5" the Returns of Summons2 he submitted to the court dated January 4, 2011,February 25, 2011, April 26, 2011 and May 27, 2011. Further, he alleged that due to his heavy workload as Process Server and as Special Sheriff, it took him sometime to
complete the service ofsummons to the defendant. He stressed that he attended to the service of summons issued by the court with earnest efforts and utmost diligence. He also allotted appropriate time and effort to the other equally urgent and important matters not only to the case handled by the
complainant. He prayed that the case against him be dismissed outright for lack of merit.

On recommendation of the Office of the Court Administrator (OCA), the Court, to determine the veracityof the summons submitted by the respondent, issued a resolution dated November 25, 2013 referring the case to the Executive Judge of the RTC, Imus, Cavite, for investigation, report and
recommendation.

Executive Judge Norberto J. Quisumbing, Jr. (Investigating Judge) set the case for hearing twice but on both occasions, Atty. Tan did not appear despite notice. Only the respondent appeared and presented his evidence with the assistance of his lawyer. The respondent testified that on the dates he
went to the residence of the defendant to serve the summons, he was always met only by a minor who told him that the defendant was not in the house. 3 He was able to make a substituted service only on his fourth attempt on May 27, 2011, when he chanced upon one Jennylee Catalan who resides in
the place.4

In an Administrative Investigation Report dated March 27, 2014, the Investigating Judge found that from the evidence submitted by the respondent, it is not true that he did not serve the summons as alleged by Atty. Tan. He served the summons on three different dates but unfortunately the defendant
was not in her house on those dates. He was able to make substituted service only on the fourth attempt on May 27, 2011 by leaving the summons to one Jennylee Catalan. The Investigating Judge felt the intervals between the dates the services were effected were very long. Although he had many
other cases to attend to as process server and special sheriff, still, he should have exerted extra effort in effecting the service of summons as early as possible so as notto delay the speedy administration of justice.

The Investigating Judge recommended that the respondent be suspended from office for one (1) month without pay, with warning that a repetition of the same or similar act will be dealt with more severely.

The Court agrees with the Investigating Judges finding that the intervals between the dates the summons were served werevery lengthy. The first service was made on January 4, 2011, the second service was on February 25, 2011 after a period of 52 days. The third attempt was on April 26, 2011 after
a period of 60 days and the last service was on May 27, 2011 after a period of 31 days.

The duty of a process server is vital to the machinery of the justice system. His primary duty is to serve court notices, which precisely requires utmost care on his part by seeing to it that all notices assigned to him are duly served upon the parties. Having a heavy workload is not a compelling reason to
justify failure to perform ones duties properly. Otherwise, every government employee charged with negligence and dereliction of duty would always proffer a similar excuse to escape punishment, to the prejudice of the government service.

We are not unmindful of the widespread and flagrant practice whereby the defendants actively attempt to frustrate the proper service of summons by refusing to give their names, rebuffing request to sign for or receive documents, or eluding officers of the courts.5 However, although sheriffs are not
expected to be sleuths and cannot be faulted when the defendants themselves engage in deception to thwart the orderly administration of justice, they must be resourceful, persevering, canny and diligent in serving the process on the defendant. 6Although the respondent had many other cases to attend
to as process server and special sheriff, still, the respondent should have exerted extra effort to effect the service of summons as possible so as not to delay the speedy administration of justice.

Atty. Tan had lost interest in pursuing his administrative complaint against the respondent. He failed to appear during the scheduled hearings of the case on February 19, 2014 and March 11, 2014. It appears that as early as June 13, 2011, the parties had already executed a Compromise Agreement
settling the differences between them. This development, however, does not warrant the dismissal of the complaint, because the issue in an administrative case is not whether the complainant has a cause of action against the erring court employee, but whether the latter has breached the court's ethical
and procedural norms and standards. This Court has an interest in the conduct and behavior of all employees of the judiciary.7

The Court finds the respondent liable for simple neglect of duty for failure to serve court notices promptly. 1wphi1 Simple neglect of duty is failure to give proper attention to a required task. It signifies disregard of duty due to carelessness or indifference.8

Section 52(B)(1) of the Revised Uniform Rules on Administrative Cases in the Civil Service (CSC Memorandum Circular No. 19, s. 1999) classifies simple neglect of duty as a less grave offense punishable by one (1) month and one (1) day to six (6) months suspension for the first offense. At the same
time, Section 53 of the same Rules provides that in the detennination of the penalties to be imposed, mitigating, aggravating and alternative circumstances attendant to the commission of the offense shall be considered. The respondent's heavy workload and the fact that he attended to the service of
summons and that the defendant was clearly evading service of summons should work to mitigate the respondent's culpability.

WHEREFORE, the Court finds respondent Elmer S. Azcueta, Process Server, Regional Trial Court, Branch 22, Imus, Cavite GUILTY of simple neglect of duty. He is hereby REPRIMANDED and WARNED that a repetition of the same or similar act shall be dealt with more severely.

SO ORDERED.

ARTURO D. BRION
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE CATRAL MENDOZA ESTELA M. PERLAS-BERNABE*


Associate Justice Associate Justice

FRANCIS H. JARDELEZA**
Associate Justice

Footnotes
* Designated as Acting Member in lieu of Associate Justice Marvic M.V.F. Leonen, per Special Order No. 1841 dated October 13, 2014.

** Designated as Acting Member in lieu of Associate Justice Mariano C. Del Castillo, per Special Order No. 1838 dated October 13, 2014.

1
Rollo, p. 1.

2
Id. at 45-47 and 49.

3
Transcript of Stenographic Notes, hearing of March 11, 2014, id. at 64-65.

4
Id. at 59-60.

5
Sagana v. Francisco, G.R. No. 161952, October 2, 2009, 602 SCRA 184, 195.

6
Id.

7
Re: Complaint filed by Paz de Vera Against Edna Magallanes, Court Stenographer III, Regional Trial Court, Branch 28; and Bonifacio G. Magallanes, Process Server, Regional Trial Court, Brach 30, Bayombong, Nueva Viscaya, A.M. No. P-11-3003, April 25, 2012, 671 SCRA 1,
4.

8
Tolentino-Fuentez v. Galindez, A.M. No. P-07-2410, June 18, 2010, 621SCRA189, 194-195.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 194884 October 22, 2014

IMASEN PHILIPPINE MANUFACTURING CORPORATION, Petitioner,


vs.
RAMONCHITO T. ALCON and JOANN S. PAPA, Respondents.

DECISION

BRION, J.:

We resolve in this petition for review on certiorari1 the challenge to the June 9, 2010 decision2 and the December 22, 2010 resolution3 of the Court of Appeals (CA) in CA-G.R.
SP No. 110327. This CA decision nullified the December 24, 2008 decision4 of the National Labor Relations Commission (NLRC) in NLRC CA No. 043915-05 (NLRC CASE No.
RAB IV-12-1661-02-L). The NLRC ruling, in turn, affirmed the December 10, 2004 decision5 of the Labor Arbiter (LA), dismissing the illegal dismissal complaint filed by
respondents Ramonchito T. Alcon and Joann S. Papa (collectively referred to as respondents).

The Factual Antecedents

Petitioner Imasen Philippine Manufacturing Corporation is a domestic corporation engaged in the manufacture of auto seat-recliners and slide-adjusters. It hired the respondents
as manual welders in 2001.

On October 5, 2002, the respondents reported for work on the second shift from 8:00 pm to 5:00 am of the following day. At around 12:40 am, Cyrus A. Altiche, Imasens
security guard on duty, went to patrol and inspect the production plants premises. When Altiche reached Imasens Press Area, he heard the sound of a running industrial fan.
Intending to turn the fan off, he followed the sound that led him to the plants "Tool and Die" section.

At the "Tool and Die" section, Altiche saw the respondents having sexual intercourse on the floor, using a piece of carton as mattress. Altiche immediately went back to the
guard house and relayed what he saw to Danilo S. Ogana, another security guard on duty.

On Altiches request, Ogana madea follow-up inspection. Ogana went to the "Tool and Die" section and saw several employees, including the respondents, already leaving the
area. He noticed, however, that Alcon picked up the carton that Altiche claimed the respondents used as mattress during their sexual act, and returned it to the place where the
cartons were kept. Altiche then submitted a handwritten report 6 of the incident to Imasens Finance and Administration Manager.

On October 14, 2002, Imasen issued the respondents separate interoffice memoranda 7 informing them of Altichesreport on the October 5, 2002 incident and directing them to
submit their individual explanation. The respondents complied with the directive; they claimed that they were merely sleeping in the "Tool and Die" section at the time of the
incident. They also claimed that other employees were near the area, making the commission of the act charged impossible.

On October 22, 2002, Imasen issued the respondents another interoffice memorandum8 directing them to appear atthe formal hearing of the administrative charge against them.
The hearing was conducted on October 30, 2002,9 presided by a mediator and attended by the representatives of Imasen, the respondents, Altiche and Ogana. Altiche and
Ogana reiterated the narrations in Altiches handwritten report.

On December 4, 2002, Imasen issued the respondents separate interoffice memoranda 10 terminating their services. It found the respondents guilty of the act charged which it
considered as "gross misconduct contrary to the existing policies, rules and regulations of the company."
On December 5, 2002, the respondents filed before the LA the Complaint 11 for illegal dismissal. The respondents maintained their version of the incident.

In the December 10, 2004 decision,12 the LA dismissed the respondents complaint for lack of merit. The LA found the respondents dismissal valid, i.e., for the just cause of
gross misconduct and with due process. The LA gave weight to Altiches account of the incident, which Ogana corroborated, over the respondentsmere denial of the incident
and the unsubstantiated explanation that other employees were present near the "Tool and Die" section, making the sexual act impossible. The LA additionally pointed out that
the respondents did not show any ill motive or intent on the part of Altiche and Ogano sufficient to render their accounts of the incident suspicious.

The NLRCs ruling

In its December 24, 2008 decision,13 the NLRC dismissed the respondents appeal 14 for lack of merit. In affirming the LAs ruling, the NLRC declared that Imasen substantially
and convincingly proved just cause for dismissing the respondents and complied with the required due process.

The respondents filed before the CA a petition for certiorari 15 after the NLRC denied their motion for reconsideration16 in its May 29, 2009 resolution.17

The CAs ruling

In its June 9, 2010 decision,18 the CA nullified the NLRCs ruling. The CA agreed with the labor tribunals findings regarding the infraction charged engaging in sexual
intercourse on October 5, 2002 inside company premises and Imasens observance of due process in dismissing the respondents from employment.

The CA, however, disagreed with the conclusion that the respondents sexual intercourse inside company premises constituted serious misconduct that the Labor Code
considers sufficient tojustify the penalty of dismissal. The CA pointed out that the respondents act, while provoked by "reckless passion in an inviting environment and time,"
was not done with wrongful intent or with the grave or aggravated character that the law requires. To the CA, the penalty of dismissal is not commensurate to the respondents
act, considering especially that the respondents had not committed any infraction in the past.

Accordingly, the CA reduced the respondents penalty to a threemonth suspension and ordered Imasen to: (1) reinstate the respondents to their former position without loss of
seniority rights and other privileges; and (2) pay the respondents backwages from December 4, 2002 until actual reinstatement, less the wages corresponding to the three-
month suspension.

Imasen filed the present petition after the CA denied its motion for Reconsideration19 in the CAs December 22, 2010 resolution.20

The Petition

Imasen argues in this petition that the act of engaging in sexual intercourse inside company premises during work hours is serious misconduct by whatever standard it is
measured. According to Imasen, the respondents infraction is an affront to its core values and high ethical work standards, and justifies the dismissal. When the CA reduced the
penalty from dismissal to three-month suspension, Imasen points out that the CA, in effect, substituted its own judgment with its (Imasens) own legally protected management
prerogative.

Lastly, Imasen questions the CAs award of backwages in the respondents favor. Imasen argues that the respondents would virtually gain from their infraction as they would be
paid eight years worth of wages without having rendered any service; eight (8) years, in fact, far exceeds their actual period of service prior to their dismissal.

The Case for the Respondents

The respondents argue in their comment21 that the elements of serious misconduct that justifies an employees dismissal are absent in this case, adopting thereby the CAs
ruling. Hence, to the respondents, the CA correctly reversed the NLRCs ruling; the CA, in deciding the case, took a wholistic consideration of all the attendant facts, i.e., the
time, the place, the persons involved, and the surrounding circumstances before, during, and after the sexual intercourse, and not merely the infraction committed.

The Issue

The sole issue for this Courts resolution is whether the respondents infraction engaging in sexual intercourse inside company premises during work hours amounts to
serious misconduct within the terms of Article 282 (now Article 296) of the Labor Code justifying their dismissal.

The Courts Ruling

We GRANT the petition.

We find that the CA reversibly erred when it nullified the NLRCs decision for grave abuse of discretion the NLRCs decision.

Preliminary considerations: tenurial security vis--vis management prerogative

The law and jurisprudence guaranteeto every employee security of tenure. This textual and the ensuing jurisprudential commitment to the cause and welfare of the working
class proceed from the social justice principles of the Constitution that the Court zealously implements out of its concern for those with less in life. Thus, the Court will not
hesitate to strike down as invalid any employer act that attempts to undermine workers tenurial security. All these the State undertakes under Article 279 (now Article 293)22 of
the Labor Code which bar an employer from terminating the services of an employee, except for just or authorized cause and upon observance of due process.

In protecting the rights of the workers, the law, however, does not authorize the oppression or self-destruction of the employer.23 The constitutional commitment to the policy of
social justice cannot be understood to mean that every labor dispute shall automatically be decided in favor of labor. 24 The constitutional and legal protection equally recognize
the employers right and prerogative to manage its operation according to reasonable standards and norms of fair play.

Accordingly, except as limited by special law, an employer is free to regulate, according to his own judgment and discretion, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, tools to beused, processes to be followed, supervision of workers, working regulations, transfer of employees,
worker supervision, layoff of workers and the discipline, dismissal and recall of workers. 25 As a general proposition, an employer has free reign over every aspect of its business,
including the dismissal of his employees as long as the exercise of its management prerogativeis done reasonably, in good faith, and in a manner not otherwise intended to
defeat or circumvent the rights of workers.

In these lights, the Courts task inthe present petition is to balance the conflicting rights of the respondents to security of tenure, on one hand, and of Imasen to dismiss erring
employees pursuant to the legitimate exercise of its management prerogative, on the other.

Managements right to dismiss an employee; serious misconduct as just cause for the dismissal

The just causes for dismissing an employee are provided under Article 282 26 (now Article 296)27 of the Labor Code. Under Article 282(a), serious misconduct by the employee
justifies the employer in terminating his or her employment.

Misconduct is defined as an improper or wrong conduct. It is a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment. 28 To constitute a valid cause for the dismissal within the text and meaning of Article 282 of the Labor
Code, the employees misconduct must be serious, i.e., of such grave and aggravated character and not merely trivial or unimportant.29

Additionally, the misconduct must be related to the performance of the employees duties showing him tobe unfit to continue working for the employer.30 Further, and equally
important and required, the act or conduct must have been performed with wrongful intent. 31

To summarize, for misconduct or improper behavior to be a just cause for dismissal, the following elements must concur: (a) the misconduct must be serious; (b) it must relate
to the performance of the employees duties showing that the employee has become unfit to continue working for the employer; 32 and (c) it must have been performed with
wrongful intent.

The respondents infraction amounts to serious misconduct within the terms of Article 282 (now Article296) of the Labor Code justifying their dismissal

Dismissal situations (on the ground of serious misconduct) involving sexual acts, particularly sexual intercourse committed by employees inside company premises and during
workhours, are not usual violations33 and are not found in abundance under jurisprudence. Thus, in resolving the present petition, we are largely guided by the pri nciples we
discussed above, as applied to the totality of the circumstances that surrounded the petitioners dismissal.

In other words, we view the petitioners act from the prism of the elements that must concur for an act to constitute serious misconduct, analyzed and understood within the
context of the overall circumstances of the case. In taking this approach, weare guided, too, by the jurisdictional limitations that a Rule 45 review of the CAs Rule 65 decision in
labor cases imposes on our discretion.34

In addressing the situation that we are faced with in this petition, we determine whether Imasen validly exercised its prerogative as employer to dismiss the respondents-
employees who, within company premises and during work hours, engaged in sexual intercourse. As framed within our limited Rule 45 jurisdiction, the question that we ask is:
whether the NLRC committed grave abuse of discretion in finding that the respondents act amounted to what Article 282 of the Labor Code textually considers as serious
misconduct to warrant their dismissal.

After due consideration, we find the NLRC legally correct and well within its jurisdiction when it affirmed the validity of the respondents dismissal on the ground of serious
misconduct.

Sexual acts and intimacies between two consenting adults belong, as a principled ideal, to the realm of purely private relations. Whether aroused by lust or inflamed by sincere
1wphi1

affection, sexual acts should be carried out at such place, time and circumstance that, by the generally accepted norms of conduct, will not offend public decency nor disturb the
generally held or accepted social morals. Under these parameters, sexual acts between two consenting adults do not have a place in the work environment.

Indisputably, the respondents engaged in sexual intercourse inside company premisesand during work hours. These circumstances, by themselves, are already
punishablemisconduct. Added to these considerations, however, is the implication that the respondents did not only disregard company rules but flaunted their disregard in a
manner that could reflect adversely on the status of ethics and morality in the company.

Additionally, the respondents engaged in sexual intercourse in an area where co-employees or other company personnel have ready and available access. The respondents
likewise committed their act at a time when the employees were expected to be and had, in fact, been at their respective posts, and when they themselves were supposed to
be, as all other employees had in fact been, working.

Under these factual premises and inthe context of legal parameters we discussed, we cannot help but consider the respondents misconduct to be of grave and aggravated
character so that the company was justified in imposing the highest penalty available dismissal. Their infraction transgressed the bounds of sociallyand morally accepted
human public behavior, and at the same time showedbrazen disregard for the respect that their employer expected of them as employees. By their misconduct, the
respondents, in effect, issued an open invitation for othersto commit the same infraction, with like disregard for their employers rules, for the respect owed to their employer,
and for their co-employees sensitivities. Taken together, these considerations reveal a depraved disposition that the Court cannot but consider as a valid cause for dismissal. In
ruling as we do now, we considered the balancing between the respondents tenurial rights and the petitioners interests the need to defend their management prerogative and
to maintain as well a high standard of ethics and morality in the workplace. Unfortunately for the respondents, in this balancing under the circumstances ofthe case, we have to
rule against their tenurial rights in favor of the employers management rights.

All told, the respondents misconduct,under the circumstances of this case, fell within the terms of Article 282 (now Article 296) of the Labor Code. Consequently, we reverse the
CAs decision for its failure to recognize that no grave abuse of discretion attended the NLRCs decision to support the respondents dismissal for serious misconduct.

WHEREFORE, in light of these considerations, we hereby GRANT the petition. We REVERSE the decision dated June 9, 2010 and the resolution dated December 22, 2010 of
the Court of Appeals in CA-G.R. SP No. 110327 and REINSTATE the decision dated December 24, 2008 of the National Labor Relations Commission in NLRC CA No. 043915-
05 (NLRC Case No. RAB IV-12-1661-02-L).

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 169568 October 22, 2014

ROLANDO ROBLES, REPRESENTED BY ATTY. CLARA C. ESPIRITU, Petitioner,


vs.
FERNANDO FIDEL YAPCINCO, PATROCINIO B. YAPCINCO, MARIA CORAZON B. YAPCINCO, and MARIA ASUNCION B. YAPCINCO-FRONDA, Respondents.

DECISION

BERSAMIN, J.:

The dispute involves the ownership of a judicially-foreclosed parcel of land sold at a public auction, but which sale was not judicially confirmed. On one side is the petitioner, the
successor in interest of the purchaser in the public auction, and, on the other, the heirs of the mortgagor, who never manifested interest in redeeming the property from the time
of the foreclosure.

The Case

Assailed herein are the decision and resolution of the Court of Appeals (CA) respectively promulgated on February 24, 2005 and September 12, 2005 in CA-G.R. No. 79824
entitled Rolando Robles, represented by Atty. Clara C. Espiritu v. Fernando Fidel Yapcinco,et al.,1 reversing and setting aside the decision rendered on July 7, 2003 by the
Regional Trial Court, Branch63, in Tarlac City (RTC).2

Antecedents

The property in litiswas originally registered under Transfer Certificate (TCT) No. 20458 of the Registry of Deeds of Tarlac in the name of Fernando F. Yapcinco, married to
Maxima Alcedo.3 In May 4,1944, Yapcinco constituted a mortgage on the property in favor of Jose C. Marcelo to secure the performance of his obligation. In turn, Marcelo
transferred his rights as the mortgagee to Apolinario Cruz on October 24, 1944.4 When Yapcinco did not pay the obligation, Apolinario Cruz brought an action for judicial
foreclosure of the mortgage in the Court of First Instance (CFI) of Tarlac, which rendered its decision on July 27, 1956 ordering Patrocinio Y. Kelly, the administratrix of the
estate of Yapcinco, who died during the pendency of the action, topay Apolinario Cruz the indebtedness secured by the mortgage plus interest; and in case of the failure topay
after 90 days from the date of the decision, the property would be sold at a public auction, 5 to wit:

IN VIEW OF THE FOREGOING, the Court renders decision to the following effect:

A. Ordering the defendant Patrocinio Y. Kelly, as judicial administratrix of the intestate estate of Fernando Yapcinco, to pay to Apolinario Cruz the total amount
of P6,000.00, representing the mortgage indebtedness of the defendant in favor of plaintiff, together with interest thereon at the rate of 8% per annum payable
from May 4, 1944, until all payment thereof; and if after ninety (90) days from the date of this decision shall have become final and executory the defendant shall
not have paid the obligation herein ordered paid, the properties mortgaged shall be sold by the Provincial Sheriff at Public Auction, and the proceeds thereof to be
applied and disposed of in accordance with law.

B. Dismissing the third-party complaint of defendant Fernando Yapcinco against Jose C. Marcelo; and

C. Ordering the defendant to pay the costs of this suit.

SO ORDERED.

Apolinario Cruz was adjudged the highest bidder in the public auction held on March 18, 1959. In his favor was then issued the certificate of absolute sale,6 and he took
possession of the property in due course. However, he did not register the certificate of sale; nor was a judicial confirmation of sale issued.

On September 5, 1972, ApolinarioCruz donated the property to his grandchildren, namely: Carlos C. de la Rosa, Apolinario Bernabe, Ferdinand Cruz, and petitioner Rolando
Robles.7 On August 29, 1991, however, Apolinario Bernabe falsified a deed ofabsolute sale, whereby he made it appear that Yapcinco had sold the property to him, Ma.
Teresita Escopete, Orlando Santos and Oliver Puzon. 8 As a consequence, the Register of Deeds cancelled Yapcincos TCT No. 20458 and issued TCT No. 243719 in their
names as co-vendees.9 The sale was annotated on TCT No. 20458. It appears that another instrument dated August 28, 1991 was annotated on TCT No. 20458 purportedly
releasing and cancelling the mortgage. Both instruments were annotated on February 11, 1992. 10

On February 3, 1993, Carlos C. dela Rosa and Ferdinand Cruz, the other donees, filed a complaint for the nullification of the contract of sale, cancellation of title and
reconveyance against Apolinario Bernabe and his co-vendees, but the case was not aggressively pursued inasmuch as the parties were first degree cousins. 11

On January 2, 2000, the respondents, all heirs of the Spouses Yapcinco, instituted an action against Apolinario Bernabe and his covendees in the Regional Trial Court (RTC) in
Tarlac City for the annulment of TCT No. 243719, document restoration, reconveyance and damages. They claimed that although the property had been mortgaged, the
mortgage had not been foreclosed, judicially or extra-judicially;12 that the property was released from the mortgage per Entry No. 32-2182 in the Memorandum of Incumbrances;
and that the deed ofabsolute sale between Fernando Yapcinco and Bernabe, et al. was void and ineffectual because the Spouses Yapcinco had already been dead as of the
date of the sale.13

Defendants Apolinario Bernabe and his co-vendees were declared in default.

On September 13, 2001, the RTC, Branch 64, in Tarlac City rendered its judgment declaring TCT No. 243719 and the deed of absolute sale dated August 28, 1991 null and
void. As a consequence, TCT No. 243719 was cancelled, and TCT No. 20458 in the name of Yapcinco was restored. 14
On December 17, 2002, the petitioner filed an action for the nullification of document, cancellation of title, reconveyance and damages against the resp ondents (Civil Case No.
9436).15 He averred that the heirs of Yapcinco had acted in bad faith in causing the issuance of TCT No. 354061 because they had known fully well that the property had long
been excluded from the estate of Yapcinco by virtue of the CFI decision dated July 27, 1956, and which the CA affirmed on April 25, 1958; that a certificate of absolute sale was
issued in the name of ApolinarioCruz as early as 1959; and that he had a vested right in the property pursuant to the deed of donation executed on September 5, 1972 by
Apolinario Cruz in his favor, among others. The respondents countered thatTCT No. 20458 contained an annotation to the effect that the property had been released from the
mortgage by virtue of an instrument dated August 28, 2001; and that, in any case, the certificate of absolute saleand the deed of donation relied upon by the petitioner were not
even inscribed in TCT No. 20458.16

Ruling of the RTC

On July 7, 2003, the RTC renderedits judgment, disposing thusly:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff by declaring the subject land covered by TCT No. 354067 to be owned by the late Apolinario Cruz and is
part of his estate; and

1. declaring null and void TCT No. 354067 and that a new title be issued to Apolinario Cruz. Defendants should deliver to plaintiff or to this Court the owners copy
of TCT No. 354067; if they will not do so after finality of this judgment, the Registry of Deeds is nevertheless authorized to cancel TCT NO. 354067 and issue a
new one inname [the] of Apolinario Cruz, even without the surrender of the owners copy;

2. declaring as null and void the extra-judicial settlement of the estate of late the Fernando Yapcinco as far as the subject land is concerned;

3. claim for damages of both parties are denied.

SO ORDERED.17

The RTC opined that the respondents could not claim to have no knowledge that the property in litiswas no longer part of the estate of the late Fernando F. Yapcinco; that one
of them had substituted the late Fernando F. Yapcinco in the judicial foreclosure proceedings, and even appealed the adverse decision to the CA; that they could not argue that
they were not bound by the foreclosure of the mortgage due to the nonregistration of the certificate of sale because as between the parties registration was not a requisite for
the validity of the foreclosure; and that they did not redeem the property until the present. 18

Decision of the CA

The respondents appealed to the CA, insisting that the RTC erred, as follows: (1) in declaring TCT No. 354061as null and void, and issuing a new one to Apolinario Cruz and
including the subject land in his estate; (2) in holding that res judicataapplied; (3) in not honoring that the TCT No. 20458 was free from any lien and encumbrances; (4) in
finding that they were aware of the proceedings in Civil Case No. CA-G.R. No. 19332-R; (5) in not considering prescription, laches and estoppelsto bar the action; and (6) in not
considering that they had the better right to the property. 19

On February 24, 2005, the CA promulgated its assailed decision,20 reversing the judgment of the RTC,and holding that due to the nonregistration of the certificate of sale, the
period of redemption did not commence to run. It also held thatApolinario Cruz never acquired title to the property and could nothave conveyed and transferred ownership over
the same to his grandchildren through the deed of donation; 21 and that contrary to the RTCs finding, Patrocinio Yapcincos knowledge of Apolinario Cruz interest over the
subject property was not tantamount to registration. It found that Patrocinio Yapcinco Kelly, the administratrix of the estate of Fernando F. Yapcinco, and Patrocinio B. Yapcinco,
one of the respondents, were two different persons, such that it could not be concluded that the respondents had knowledge of the sale. Accordingly, it concluded that the heirs
of Fernando F. Yapcinco had the right to include the property as the asset of the estateof Fernando F. Yapcinco. 22

The petitioner moved for reconsideration, but on September 12, 2005, the CA denied his motion for reconsideration, observing that there had been no order confirming the
auction sale; hence, the respondents were never divested of their rights and interest in the property. 23

Issues

In this appeal, the petitioner posits the following issues:

THE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT APOLINARIO CRUZ, AS PURCHASER IN A JUDICIAL FORECLOSURE OF SALE, NEVER ACQUIRED
TITLE TO THE SUBJECT PROPERTY BY THE MERE OMISSION TO REGISTER THE CERTIFICATE OF SALE.

II

THE COURT OF APPEALS SERIOUSLY ERRED IN DECLARING THAT RESPONDENTS HAD NO KNOWLEDGE OF, AND THUS COULD NOT BE BOUND BY, THE
FORECLOSURE OF MORTGAGE THAT WAS EARLIER CONDUCTEDAS THE SAME WAS NOT SUPPORTED BY THE REAL FACTS AND CIRCUMSTANCES
ATTENDANT TO THE INSTANT CASE.

III

THE COURT OF APPEALS SERIOUSLY ERRED IN NOT HOLDING THAT WHATEVER RIGHTS BEING CLAIMED BY THE RESPONDENTS IN THE INSTANT CASE ARE
ALREADY BARRED BY LACHES.24

The petitioner insists that the rules and principles relied upon by the CA were applicable only to extra-judicial foreclosure, not to a judicial foreclosure like the one herein; that the
importance of registration of the certificate of sale was true only in extrajudicial sale where it would be the reckoning point for the exercise of the right of redemption; 25 that the
respondents were aware of the auction sale and even actually participated in the proceedings leading to the foreclosure, but they never tried to exercise their equity of
redemption, before or even after the foreclosure sale; 26 that the family of Apolinario Cruz had been occupying the property for more than 40 years from the time of the
foreclosure sale; and that the respondents should not be allowed to recover the lot on the basis of the non-registration of the certificate of sale.
The petitioner argues that the non-registration of the certificate of sale did not affect the title acquired by Apolinario Cruz as the purchaser in the judicial foreclosure of
mortgage;27 that the respondents actual knowledge of the judicial foreclosure was equivalentto automatic registration; that the doctrine of indefeasibility of Torrens title was not
absolute, and should yield to the right of another person based on equitable principles of laches; 28that the finality of the judgment rendered in the judicial action for foreclosure of
mortgage was valid and binding on the respondents as the successors-ininterest of the judgment debtor; and that whether or not respondent Patrocinio Yapcinco and Patrocinio
Yapcinco Kelly were the same persons, or whether Patrocinio Yapcinco was only the daughter of the latter who was the administratrix was irrelevant because the respondents
remained charged with knowledge of the foreclosure sale by virtue of their being the successors-in-interest of the mortgagor.29

In contrast, the respondents maintainthat they were lawfully entitled to the property in litisbecause there was no registration of the certificate of sale or confirmation from the
court;30 that even the deed of donation executed by Apolinario Cruz was not registered; 31 that the issue revolved on whether or not there was a valid transfer of ownership; 32 and
that with the release of mortgage being validly registered in the Office of Registry of Deeds of Tarlac on February 11, 1992, thereby rendering the title free from any lien and
encumbrances, they already had the right to transfer the property in their names. 33

Ruling of the Court

The petition for review is meritorious.

Before anything more, the Court clarifies that the failure of Apolinario Cruz to register the certificate of sale was of no consequence in this adjudication. The registration of the
sale is required only in extrajudicial foreclosure sale because the date of the registration is the reckoning point for the exercise of the right of redemption. In contrast, the
registration of the sale is superfluous in judicial foreclosure because only the equity of redemption is granted to the mortgagor, except in mortgages with banking
institutions.34 The equity of redemption is the right of the defendant mortgagor to extinguish the mortgage and retain ownership of the property by paying the secured debt within
the 90-day period after the judgment becomes final, or even after the foreclosure sale but prior to the confirmation of the sale.35 In this light, it was patent error for the CA to
declare that: "By Apolinario Cruzs failure to register the 18 March 1958 Certificate of Absolute Salein the Office of the Register of Deeds, the period of redemption did not
commence to run."36

The applicable rule on March 18, 1959, the date of the foreclosure sale, was Section 3, Rule 7037 of the Rules of Court, which relevantly provided that: "Such sale shall not affect
the rights of persons holding prior incumbrances upon the property or a partthereof, and when confirmed by an order of the court, it shall operate to divest the rights of all the
parties to the action and to vest their rights in the purchaser, subject to such rights of redemption as may be allowed by law." The records show that no judicial confirmation of
the sale was made despite the lapse of more than 40 years since the date of the sale. Hence, it cannot be said that title was fully vested in Apolinario Cruz.

However, the Court will not be dispensing true and effective justice if it denies the petition for review on the basis alone of the absence of the judicial confirmation of the sale.
Although procedural rules are not to be belittled or disregarded considering thatthey insure an orderly and speedy administration of justice, it is equally true that litigation is not a
game of technicalities. Law and jurisprudence grant to the courtsthe prerogative to relax compliance with procedural rules of even the most mandatory character, mindful of the
duty to reconcile both the need to speedily put an end to litigation and the parties rightto an opportunity to be heard. 38 The Rules of Courtitself calls for a liberal construction of its
rules with the view of promoting their objective of securing a just, speedy and inexpensive disposition of every action and proceeding.39

To better serve the ends of justice, the Court holds that the real issue to consider and resolve iswho between the parties had the better right to the property, not whether there
was a valid transfer of ownership to Apolinario Cruz.

It was not denied that Fernando F.Yapcinco, as the mortgagor, did not pay his obligation, and that his default led to the filing of the action for judicial foreclosure against him, in
which he actively participated in the proceedings, and upon his death was substituted by the administratrive of his estate. In the end, the decision in the action for judicial
foreclosure called for the holding of the public sale of the mortgaged property. Due to the subsequent failure of the estate of Fernando F. Yapcinco to exercise the equity of
redemption, the property was sold at the public sale, and Apolinario Cruz was declared the highest bidder. Under the circumstances, the respondents as the successors-in-
interest of Fernando F. Yapcinco were fully bound by that decision and by the result of the ensuing foreclosure sale.

In this regard, determining whether Patrocinio Yapcinco Kelly, the adminsitratrix of the estate, and respondent Patrocinio Yapcinco were one and the same person was not
necessary. Even if they were not one and the same person, they were both bound by the foreclosure proceedings by virtue of their being both successors-in-interest of
Fernando F. Yapcinco.

Although the respondents admitted the existence of the mortgage, they somehow denied knowledge of its foreclosure. Yet, in asserting their superior right to the property,
1wphi 1

theyrelied on and cited the entry dated February 11, 1992 concerning the release of mortgage inscribed on TCT No. 20458. This duplicity the Court cannotcountenance. Being
the heirs and successors-in-interest of the late Fernando F. Yapcinco, they could not repudiate the foreclosure sale and its consequences, and escape such consequences that
bound and concluded their predecessor-in-interest whose shoes they only stepped into.40 Given their position on the lack of judicial confirmation of the sale in favor of Apolinario
Cruz, they should have extinguished the mortgage by exercising their equity of redemption through paying the secured debt. They did not do so, and, instead, they sought the
annulment of TCT No. 243719 and caused the issuance of another title in their name.

Even assuming that there was no foreclosure of the mortgage, such that the respondents did not need to exercise the equity of redemption, the legal obligation to pay off the
mortgageindebtedness in favor of Apolinario Cruz nonetheless devolved on them and the estate of Fernando F. Yapcinco. They could not sincerely rely on the entry about the
release or cancellation of the mortgage in TCT No. 20458, because such entry appeared to be unfounded in the face of the lack of any showing by them that either they or the
estate of Fernando F. Yapcinco had settled the obligation.

The petitioner did not tender any explanation for the failure of Apolinario Cruz to secure the judicialconfirmation of the sale. He reminds only that Apolinario Cruz and his
successors-in-interest and representatives have been in actual, notorious, publicand uninterrupted possession of the property from the time of his purchase at the foreclosure
sale until the present.

The effect of the failure of Apolinario Cruz to obtain the judicial confirmation was only to prevent the title to the property from being transferred to him. For sure, such failure did
not give riseto any right in favor of the mortgagor or the respondents as his successors-in-interest to take back the property already validly sold through public auction. Nor did
such failure invalidate the foreclosure proceedings. To maintain otherwise would render nugatory the judicial foreclosure and foreclosure sale, thus unduly disturbing judicial
stability. The non-transfer of the title notwithstanding, Apolinario Cruz as the purchaser should not be deprived of the property purchased at the foreclosure sale. With the
respondents having been fully aware of the mortgage, and being legally bound by the judicial foreclosure and consequent public sale, and in view of the unquestioned
possession by Apolinario Cruz and his successors-in-interest (including the petitioner) from the time of the foreclosure sale until the present, the respondents could not assert
any better right to the property. It would be the height of inequity to still permit them to regain the property on the basis alone of the lack of judicial confirmation of the sale. After
all, under the applicable rule earlier cited, the judicial confirmation operated only "to divest the rights of all the parties to the action and to vest their rights in the purchaser,
subject to such rights of redemption as may be allowed by law."

Consequently, the late Fernando F. Yapcinco and the respondents as his successors-in-interest were divested of their right in the property, for they did not duly exercise the
equity of redemption decreed in the decision of the trial court. With Yapcinco having thereby effectively ceased to be the owner of the property sold, the property was taken out
of the mass of the assets of Y apcinco upon the expiration of the equity of redemption.
WHEREFORE, the Court REVERSES and SETS ASIDE decision promulgated on February 24, 2005 by the Court of Appeals; RE INST ATES the decision rendered on July 7,
2003 by the Regional Trial Court, Branch 63, in Tarlac City; and ORDERS the respondents to pay the costs of suit.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 188066 October 22, 2014

OFFICE OF THE OMBUDSMAN, Petitioner,


vs.
CYNTHIA E. CABEROY, Respondent.

DECISION

REYES, J.:

This is a petition for review1 under Rule 45 of the Rules of Court of the Decision2 dated November 21, 2008 and Resolution3 dated May 14, 2009 of the Court of Appeals (CA) in
CA-G.R. SP No. 03498, which reversed and set aside the Consolidated Decision 4 dated June 30, 2005 of the Office of the Ombudsman-Visayas (Ombudsman) and absolved
respondent Cynthia E. Caberoy (Caberoy) of any administrative liability.

Caberoy is the principal of Ramon Avancea National High School (RANHS) in Arevalo, Iloilo City. She was charged with Oppression and Violation of Section 3(e) and (f)
ofRepublic Act (R.A.) No. 3019 or the "Anti-Graft and Corrupt Practices Act"by Angeles O. Tuares (Tuares) for allegedly withholding her salary for the month of June 2002. The
case was docketed as OMB-V-A-03-0239-E. Saidcase was consolidated with OMB-V-A-03-0572-I, which was a complaint filed by Tuares against Ida B. Endonila, Erlinda G.
Gencaya, Clarissa G. Zamora and Victoria T. Calunsod.

Caberoy denied the charge against her, alleging, among others, that the payrolls of June 1 to15, 2002 and June16 to 30, 2002 show that Tuares received her salary as shown
by her signatures on lines no. 11 of the payrolls.5

In the Consolidated Decision dated June 30, 2005 rendered by the Ombudsman, Caberoy was found guilty of Oppression and was meted out the penalty of dismissal from
service. The dispositive portion of the consolidated decision provides:

WHEREFORE, premises considered, respondent CYNTHIA E. CABEROY, Principal II, Ramon Avancea National High School, (RANHS), Arevalo, Iloilo City, is hereby found
GUILTY of OPPRESSION and is hereby meted the penalty of DISMISSAL FROM THE SERVICE WITH CANCELLATION OF CIVIL SERVICE ELIGIBILITY, FORFEITURE
OFEARNED LEAVECREDITS AND RETIREMENT BENEFITS, AND DISQUALIFICATION FROM REEMPLOYMENT IN THE GOVERNMENT SERVICE. On the other hand,
respondents IDA B. ENDONILA, Schools Division Superintendent, ERLINDA G. GENCAYA, Asst. Schools Division Superintendent, CLARISSA G. ZAMORA, Administrative
Officer III, all three of the Division of Iloilo City, DepEd Region VI, Iloilo City, and VICTORIA T. CALUNSOD, Officer-In-Charge/Secondary School Head Teacher III, Ramon
Avancea National High School, (RANHS) Arevalo, Iloilo City, are found NOT GUILTYof the same offense and/or violating Sec. 3 (f) of R.A. 3019and thus these cases are
considered DISMISSED as far as they are concerned. Furthermore, on the administrative aspect of the counter-allegation of Perjury against herein complainant ANGELES O.
TUARES, Ramon Avancea National High School, Arevalo, Iloilo City, the same is likewise DISMISSED, for lack of merit.

SO DECIDED.6

Caberoy filed a joint motion for reconsideration, which was denied by the Ombudsman in its Order dated September 19, 2006. 7

The Ombudsman found that Tuares was not paid any amount in June 2002 because of her failure to submit her clearance and Performance Appraisal Sheet for Teachers
(PAST), while the other teachers received their salaries for the same month. 8 The Ombudsman concluded that Tuares was "singled out by respondent Caberoy as the only one
who did not receive any amount from the school on June 2002 because, as established earlier, the former failed to submit her clearance and PAST."9 The Ombudsman also
took into consideration several infractions previously committed by Caberoy, which allegedly displayed her "notoriousundesirability as a government officer for withholding
teachers salaries without authority."10 According to the Ombudsman, Caberoy could not honestly claim that she had not been forewarned by the Ombudsman of the grave
consequences of her repeated illegal act.11 Caberoy filed a petition for certiorariwith the CA, seeking the reversal of her dismissal from service, and in the assailed Decision
dated November 21, 2008, the CA granted Caberoys petition. The dispositive portion of the CA decision states:

WHEREFORE, the petition is GRANTED. The consolidated decision dated June 30, 2005, of the respondent Ombudsman is hereby REVERSED and SET ASIDE and another
judgment is hereby rendered ABSOLVING the petitioner of any liability, with costs de oficio.

SO ORDERED.12

The Ombudsman filed a motion for reconsideration, which was denied by the CA in the assailed Resolution dated May 14, 2009.

In clearing Caberoy from the charge against her, the CA found that no undue injury was caused to Tuares since she received her June 2002 salary. According to the CA, since
Caberoy was charged with Violation of Section 3(e) of R.A. No. 3019 and the element of undue injury is absent in this case, Caberoy cannot be held liable for the offense. 13 The
CA also ruled that Caberoys "refusal" to release Tuares salary was justified and the element of "failure to so act x x x for the purpose of obtaining, directly or indirectly, from any
person interested in the matter some pecuniary or material benefit or advantage in favor of an interestedparty, or [discrimination] against another" under Section 3(f) of R.A. No.
3019, is likewise absent.14 Finally, the CA found that the acts of Caberoy are not constitutive of oppression.15
Lastly, the CA ruled that the Ombudsmans findings and conclusions are not supported by substantial evidencesince Caberoys act of withholding Tuares salaries was clearly
justified.16 Hence, the present petition, based on the ground that:

THE HONORABLE COURT OF APPEALS REVERSAL OF THE PETITIONER OFFICE OF THE OMBUDSMANS DECISION FINDING [CABEROY] ADMINISTRATIVELY
LIABLE FOR OPPRESSION IS AN ERROR OF LAW CONSIDERING THAT ITS FINDINGS IS SUPPORTED BY SUBSTAN[T]IAL EVIDENCE. 17

The Ombudsman argues that it was error for the CA to exonerate Caberoy on the reasons that the withholding of Tuares salary was justified and that there was no undue injury
onher part as she later received her salary. The Ombudsman contends that Caberoy was found guilty of Oppression, which is an administrative offense under the Civil Service
law, and is distinct from the crime of Violation of R.A. No. 3019, from which she was absolved. According to the Ombudsman, the quantum of proof in these two offenses
(Oppression and Violation ofR.A. No. 3019) is distinct and the records of the case disclose that there is substantial evidence to support its decision. The Ombudsman also
contests the factual findings of the CA that Tuares actually received her salary, stating that in the summary of payrolls and the checks, Tuares name does not appear.
Moreover, no evidence was presented by Caberoy to prove that Tuares actually received her salary, other than her bare allegation. Finally, the Ombudsman states that Caberoy
has already been penalized several times for previous misconduct, which displays her propensity to commit the misdemeanor. 18

Ruling of the Court

Initially, it must be stated thatin a petition for review filed under Rule 45 of the Rules of Court, the Court is limited only to a review of errors of law committed by the CA, and the
Court is not required to review all over again the evidence presented before the Ombudsman.19 The rule, nevertheless, admits of exceptions, such as when the findings of the
CA and the Ombudsman are conflicting,20 which is what occurred in the present case. Hence, the Court must now look into the matter of whether the CA committed a reversible
error when it reversed the findings and conclusions of the Ombudsman.

Tuares charged Caberoy in OMB-V-A-03-0239-E with both Oppression and Violation of Section 3(e)(f) of R.A. No. 3019. The Ombudsman, however, found Caberoy guilty only
of Oppression.

Oppression is an administrative offense21 penalized under the Uniform Rules on Administrative Cases in the Civil Service, 22 which provides:

Section 52. Classification of Offenses.Administrative offenses with corresponding penalties are classified into grave, less grave or light, depending on their gravity or depravity
and effects on the government service.

A. The following are grave offenses with their corresponding penalties:

xxxx

14. Oppression.

1st Offense Suspension for six (6) months and one (1) day to one (1) year;

2nd Offense Dismissal.

xxxx

Oppression is also known as grave abuse of authority, which is a misdemeanor committed by a public officer, who under color of his office, wrongfully inflict upon any person
any bodily harm, imprisonment or other injury. It is an act ofcruelty, severity, or excessive use of authority. 23 To be held administratively liable for Oppression or Grave Abuse of
Authority, there must be substantial evidence presented proving the complainants allegations. 24 Substantial evidence is that amount of relevant evidence which a reasonable
mind might accept asadequate to support a conclusion. 25 In this case, the CA correctly overturned the Ombudsmans findings and conclusions, and explained the reasonsfor
exculpating Caberoy, as follows:

Evidently, from the foregoing disquisitions, respondent Ombudsman contradicted itself when it found and held thatpetitioner was guilty of "oppression" for not paying the private
respondent her June 2002 salary, because as a matter of fact she has been paidalbeit delayed. Such payment is clearly and indubitably established from the table where it was
shown that private respondent received on July 17 and 25, 2002, her June 2002 salary in the amounts of P4,613.80 and P4,612.00, respectively.

xxxx

The above narration of facts do not show that petitioner committed acts constitutive of "oppression." Assuming petitioners action is erroneous or overly zealous, this certainly
does not merit the most severe penalty of dismissal from government service. Apparently, the petitioner is only protecting herself from any future, adverse consequences if she
allows the disbursement of public funds without the appropriate supporting documents. "It is a well-known fact that in the government service an employee must submit his daily
time record duly accomplished and approved before one cancollect his salary."

xxxx

Finally, on the contention that the findings and conclusions of the respondent Ombudsman is considered conclusive and deserve respect and finality is true only when the same
is based on substantial evidence. As discussed above, the action taken by petitioner in withholding the salaries of private respondent was clearly justified. It was a measure
taken by a superior against a subordinate who ignored the basic tenets of law by not submitting the required documents to support payment of her salary and proportional
vacation pay for the aforesaid period. x x x.

x x x [I]n this case before us, the records is bereft of substantial evidence to support respondent Ombudsmans findings and conclusion that petitioner committed oppressive
acts against private respondent and violated Sections 3(e) and (f) of RA 3019. On the contrary and as earlier discussed, respondent Ombudsman found and concluded that
private respondent was paid her June salaryalbeit late. Hence, it cannot be gainsaid that the act of respondent Ombudsman in concluding that petitioner is guilty as charged
despite absence of substantial evidence to support the same is totally unfounded and is therefore, tantamount to grave abuse of discretion amounting to a lack or excess of
discretion. x x x.26 (Citations omitted)
The complaint filed by Tuares against Caberoy charged the latter with "manifest partiality, evident bad faith or gross inexcusable negligence for having ordered the payroll clerk
of [RANHS] to cause the exclusion of [her] name in the payroll of June 2002 x x x and [in spite of] the fact that [she has already] rendered full service during said days x x x
without any justifiable reason and without due process and without any authority under the law." 27 A perusal of Tuares allegations shows that her claim pertains to the alleged
withholding of her salary for the month of June 2002. Records show, however, that Tuares was actually paid her salary for the month of June 2002. Thus, the vouchers for the
payroll period of June 1 to 15, 200228 and June 16 to 30, 200229 showed Tuares name on line 11 and her signature acknowledging receipt of her salary for such period. This
was, in fact, confirmed in the 2002 salary payrolls submitted by the RANHS Office of the Auditor and summarized by the Ombudsman, 30 to wit:

Period Voucher No. Date of Check Tuares No. in the Payroll Amount Received

June (Proportional pay & salary) 101-02-6-161 June 25, 2002 Name not Found Name not Found

June (Proportional pay) 101-02-6-164 June 28, 2002 Name not Found Name not Found

June (Proportional pay) PS-02-7-182 July 4, 2002 Name not Found Name not Found

June (Proportional pay & salary) PS-02-7-195 July 17, 2002 11 P4,613.80

June (Proportional pay) PS-02-7-196 July 19, 2002 Name not Found Name not Found

June PS-02-7-200 July 25, 2002 11 P4,612.00

July 101-02-8-231 August 19, 2002 16 P4,694.72


1w phi1

The amounts received and signed for by Tuares correspond essentially to the other amounts she received as salaryfor the other periods in 2002. On this score, entries in the
payroll, being entries in the course of business, enjoy the presumption of regularity under Section 43, Rule 130 of the Rules of Court,31 and absent any evidence presented by
Tuares showing the contrary, good faith must be presumed in the preparation and signing of such payrolls.32

Even assuming, as the Ombudsman asserted, that Tuares received her June 2002 salary only on July 2002, the same does not constitute Oppression or Grave Abuse of
Authority. The delay in the release of Tuares salary hardly qualifies as an "act of crueltyor severity or excessive use of authority," especially when she contributed to the cause
of the delay, that is, she submitted her Form 48 (Daily Time Record) for June 2002 only on July 11, 2002. 33

Neither can the Court subscribe to the Ombudsmans conclusion that Tuares was singled out by Caberoy.According to the Ombudsman:

In other words, as far as these fortunate teachers are concerned, checks dated June 25 and 28, 2002 and July 04 and 19, 2002 actually and in paper covered their June 2002
salary; checks dated July 17 and 19, 2002 actually and in paper covered their July 2002 salary; x x x.

Whereas on the part of complainant Tuares, this is what really happened: The checks dated July 17 and 25, 2002 were technically for services rendered in June 2002
ascorrected by COA but the amounts corresponding to complainants salaryfor the whole month of June 2002 was actually received by her only in July 2002 and that in effect
means that she did not really receive any amount from the school in June 2002; x x x.

Viewed from the discussion above, it is therefore crystal clear that complainant was singled out by respondent Caberoy as the only one who did not receive any amount from the
school on June 2002 because, as established earlier, the former failed to submit her clearance and PAST. 34

It must be stressed that like other grave offenses classified under the Civil Service laws, bad faith must attend the act complained of. Bad faith connotes a dishonest purpose or
some moral obliquity and conscious doing of a wrong; a breach of sworn duty through some motive or intent or ill will; it partakes of the nature of fraud.35 There must be
evidence, independent of the fact of such delay, which will lead to the inevitable conclusion that it was for the purpose of singling out Tuares. The Court has consistently upheld
the principle that in administrative cases, to be disciplined for grave misconduct or any grave offense, the evidence against the respondent should be competent and must be
derived from direct knowledge.36 "Reliance on mere allegations, conjectures and suppositions will leave an administrative complaint with no leg to stand on." 37 Except for the
Ombudsmans deduction based on the dates of issuance of the vouchers and the checks as shown in the payroll, the records of thiscase are bereft of evidence that will support
its view that the delay in the release of Tuares salary indicated that she was singled out. Moreover, as correctly pointed out by the CA, "[t]he certifications issued by Acting Book
keeper Hayde S. Momblan will show that it was not only [Tuares] who was not included in the June 2002 payrolls; there were other teachers who were not included because
they failed to submit the required year-end clearance. x x x Evidently, [Tuares] was not singled out or discriminated against as insisted by her and respondent Ombudsman."38

All told, the Court finds that the CA did not commit a reversible error in exonerating Caberoy from the charge against her.

WHEREFORE, the petition for review is DENIED for lack of merit.

SO ORDERED.

G.R. No. 183421 October 22, 2014

COMMISSIONER OF INTERNAL REVENUE, Petitioner,


vs.
AICHI FORGING COMPANY OF ASIA, INC., Respondent.

DECISION

SERENO, CJ:

This is a Petition for Review on Certiorari 1 under Rule 45 of the 1997 Rules of Civil Procedure filed by the Commissioner of Internal Revenue. (petitioner). The Petition assails
the Decision2 dated 30 April 2008 and Resolution3 dated 12 June 2008 issued by the Court of Tax Appeals En Banc (CTA En Banc) in C.T.A. EB No. 324.

THE FACTS
Aichi Forging Company of Asia, Inc. (respondent) is engaged in the business of manufacturing, producing, and processing all kinds of steel and steel by-products, such as
closed impression die steel forging, and all automotive steel parts.

On 29 March 2005, respondent filed with the Bureau of Internal Revenue (BIR), Revenue District Office (RDO) No. 057, an application for tax credit/refund amounting
to P5,057,120.95 representing the formers paid input value-added taxes (VAT) for the first quarter of taxable year 2003. Respondent claimed that it was entitled to a
refund/credit of the input VAT paid on its purchases of goods, services, capital goods, and on its importation of goods other than capital goods that were attributable to zerorated
sales in the total amount of P149,174,477.94.

On 31 March 2005, respondent filed a Petition with the CTA docketed as C.T.A. Case No. 7187. After trial, the CTA First Division rendered a Decision on 13 August 2007. It
partly granted the Petition and ordered the refund to respondent of the reduced amount of 4,138,397.57. That amount represented the input VAT respondent paid on
itspurchases of goods, services, capital goods, and on its importation of goods other than capital goods.

On appeal, the CTA En Bancaffirmed the CTA First Division after finding no reversible error.Respondent was found tohave complied with all the requisites for claiming a refund
under Section 112 (A) of the National Internal Revenue Code (NIRC) of 1997.

THE ISSUES

Petitioners appeal is anchored on the following grounds:

1. The Court of Tax Appeals sitting En Banc erred in holding that respondent is entitled to a refund considering that respondent failed to comply with the requirements of a valid
application for a tax refund. Hence, the judicial claim made before the Court of Tax Appeals deserve outright dismissal for being premature.

2. Respondent has not sufficiently provenits entitlement to a tax refund in the reduced amount of P4,138,397.57 representing alleged input taxes paid by it for the period of
January 1, 2003 to March 31, 2003.4

THE COURTS RULING

Section 112 of the NIRC of 1997 laid down the manner in which the refund or credit of input tax may be made, to wit:

SEC. 112. Refunds or Tax Credits of Input Tax. -

(A) Zero-rated or Effectively Zero-rated Sales. - 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 thatsuch input tax has not been applied against output tax: Provided, however, That in the case of zero-rated
sales under Section 106(A)(2)(a)(1), (2) and (B) and Section 108(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly
accounted for in accordance with the rules and 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 of properties or 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 of sales.

xxxx

(D) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund or issue the tax credit
certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in
accordance with Subsections (A) and (B) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above,
the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the
decision or the unacted claim with the Court of Tax Appeals.

At the outset, petitioner raises the issue of the timeliness of respondents judicial claim before the CTA. Petitioner contends that the Petition of respondent was prematurely filed
with the CTA, considering that it was filed barely two days after respondent had filed the administrative claim with the BIR. Allegedly, petitioner was not given the chance to
properly address the administrative claim. The CTA, however, held that the judicial claim clearly fell within the two-year prescriptive period for filing claims for a refund of input
VAT.

This Court will clarify.

Section 112(A) provides for a two-year prescriptive period after the close of the taxable quarter when the sales were made, within which a VAT registered person whose sales
are zero-rated or effectively zero-rated may apply for the issuance of a tax credit certificate or refund of creditable input tax. In the consolidated tax cases Commissioner of
Internal Revenue v. San Roque Power Corporation, Taganito Mining Corporation v. Commissioner of Internal Revenue, and Philex Mining Corporation v. Commissioner of
Internal Revenue5 (hereby collectively referred to as San Roque), the Court clarified that the two-year period refers to the filing of an administrative claim with the BIR.

In this case, respondents sales to PEZAregistered entities amounted to P149,075,454.37 for the period 1 January 2003 to 31 March 2003. Accordingly, respondent was not
liable to pay any output VAT thereon, and the unutilized input VAT incurred by and attributable to it may be the proper subject of a claim for a refund. Therefore, considering that
respondent was claiming the refund of input VAT incurred for the first quarter of 2003, it had until 31 March 2005 or the close of the taxable quarter when the zerorated sales
were made within which to file its administrative claim for a refund. On this note, we find that petitioners had complied with the two-year prescriptive period when it filed its
claim on 29 March 2005.

In accordance with Section 112(D)of the NIRC of 1997, petitioner had one hundred twenty (120) days from the date of submission of complete documents in support of the
application within which to decide on the administrative claim. Considering thatthe burden to prove entitlement to a tax refund is on the taxpayer, and absent any evidence to the
contrary, it is presumed that in order to discharge its burden, respondent attached to its application 6 filed on 29 March 2005 complete supporting documents necessary to prove
its entitlement to a refund. Thus, the 120-day period for the CIR to act on the administrative claim commenced on that date.
We agree with petitioner that the judicial claim was prematurely filed on 31 March 2005, since respondent failed to observe the mandatory 120-day waiting period to give the
CIR an opportunity to act on the administrative claim. However, the Court ruled in San Roquethat BIR Ruling No. DA-489-03 allowed the premature filing of a judicial claim,
which means non-exhaustion of the 120-day period for the Commissioner to act on an administrative claim: 7

The old rule that the taxpayer may file the judicial claim, without waiting for the Commissioners decision if the two-year prescriptive period is about to expire, cannot apply
because that rule was adopted before the enactment of the 30-day period. The 30-day period was adopted precisely to do away with the old rule, so that under the VAT System
the taxpayer will always have 30 days to file the judicial claim even if the Commissioner acts only on the 120th day, or does not act at all during the 120-day period. With the 30-
day period always available to the taxpayer, the taxpayer can no longer file a judicial claim for refund or credit of input VAT without waiting for the Commissioner to decide until
the expiration of the 120-day period.

To repeat, a claim for tax refund or credit, like a claim for tax exemption, is construed strictly against the taxpayer. One of the conditions for a judicial claim of refund or credit
1wphi1

under the VAT System is with the 120+30 day mandatory and jurisdictional periods. Thus, strict compliance with the 120+30 day periods is necessary for such a claim to
prosper, whether before, during, or after the effectivity of the Atlas doctrine, except for the period from the issuance of BIR Ruling No. DA-489-03 on 10 December 2003 to 6
October 2010 when the Aichi doctrine was adopted, which again reinstated the 120+30 day periods as mandatory and jurisdictional.8 (Emphasis supplied)

In Mindanao II Geothermal Partnership v. Commissioner of Internal Revenue and Mindanao I Geothermal Partnership v. Commissioner of Internal Revenue,9 this Court has
reiterated: Notwithstanding a strict construction of any claim for tax exemption or refund, the Court in San Roque recognized that BIR Ruling No. DA-489-03 constitutes
equitable estoppel in favor of taxpayers. BIR Ruling No. DA-489-03 expressly states that the "taxpayer-claimant need not wait for the lapse of the 120-day period before it could
seek judicial relief with the CTA by way of Petition for Review." This Court discussed BIR Ruling No. DA-489-03 and its effect on taxpayers, thus:

xxxx

Clearly, BIR Ruling No. DA-489-03 is a general interpretative rule. Thus, all taxpayers can rely on BIR Ruling No. DA-489-03 from the time of its issuance on 10 December 2003
up to its reversal by this Court in Aichi on 6 October 2010, where this Court held that the 120+30 day periods are mandatory and jurisdictional.

Therefore, respondent's filing of the judicial claim barely two days after the administrative claim is acceptable, as it fell within the period during which the Court recognized the
validity of BIR Ruling No. DA-489-03.

The second issue raised by petitioner is purely factual.

WHEREFORE, premises considered, the instant Petition is DENIED.

SO ORDERED.

G.R. No. 190021 October 22, 2014

COMMISSIONER OF INTERNAL REVENUE, Petitioner,


vs.
BURMEISTER AND WAIN SCANDINAVIAN CONTRACTOR MINDANAO, INC., Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated August 13, 2009 and the Resolution3dated October 22, 2009 of the Court of Tax Appeals (CTA) En Banc
in C.T.A. EB No. 487 which affirmed the Decision4 dated September 17, 2008 and the Resolution 5 dated April 13, 2009 of the CTA First Division in C.T.A. Case No. 6220
granting respondent Burmeister and Wain Scandinavian Contractor Mindanao, Inc. (respondent) a refund of its unutilized input taxes attributable to zero-rated sales of services
for the fourth quarter of taxable year 1998.

The Facts

Respondent is a corporation duly organized and existing under the laws of the Philippines, and primarily engaged in the business of constructing, erecting, assembling,
commissioning, operating, maintaining, rehabilitating, and managing industrial and power-generating plants and related facilities for the conversion intoelectricity of coal
distillate, and other fuels, provided by and under contract with the Philippine Government, or any government-owned and controlled corporations, or other entities engaged in
the development, supply, or distribution of electricity.6 It is registered as a value-added tax (VAT) taxpayer.7

Respondent subcontracted from a consortium8 of non-resident foreign corporations the actual operation and maintenance of two 100-megawatt power barges owned by the
National Power Corporation, which services are subject to zero percent (0%) VAT, pursuant to Bureau of Internal Revenue (BIR) Ruling No. 023-95 issued on February 14,
1995, that was reconfirmed on January 7, 1999 in its VAT Review Committee Ruling No. 003-99.9

On January 21, 1999, respondent filed its Quarterly VAT Return for the fourth quarter of taxable year1998 indicating zero-rated sales of P68,761,361.50 and input VAT
of P1,834,388.55 paid on its domestic purchases of goods and services for the same period.10

On July 21, 1999, respondent filed an Application for Tax Credit/Refund of VAT Paid for the period July to December 1998 in the amount of 4,154,969.51, which was not acted
upon by herein petitioner, the Commissioner of Internal Revenue (CIR).11

On January 9, 2001, respondent filed a petition for review before the CTA, praying for the refund or the issuance of a tax credit certificate in the amount of P1,834,388.55
representing its alleged unutilized input VAT payment for the fourth quarter of 1998. The petition was denied on January 29, 2003 due to insufficiency of evidence. However, on
appeal before the Court of Appeals (CA), docketed as CA-G.R. SP No. 79272, the case was remanded to the CTA on April 19, 2005 for the reception of respondents evidence
consisting of VAT invoices and receipts which had not been submitted earlier, but were already attached to its motion for reconsideration of the denial of the CTA petition.12

The CTA First Division Ruling


On September 17, 2008, after due trial, the CTA First Division rendered a Decision 13 in C.T.A. Case No. 6220 ordering the CIR to refund or issue a tax credit certificate infavor of
respondent in the reduced amount ofP1,556,913.68 representing the latters valid claim. It was determined that the administrative claim filed on July21, 1999 and the petition for
review filed on January 9, 2001 fell within the two-year prescriptive period reckoned from January 21,1999, the date when respondent filed its Quarterly VAT Return for the
fourth quarter of taxable year 1998.14

The CIR moved for the reconsideration of the aforesaid CTA First Division Decision, but was denied in a Resolution 15 dated April 13, 2009.

Undaunted, the CIR elevated the case to the CTA En Banc on petition for review, docketed as C.T.A. EB No. 487, lamenting the alleged failure on the part of respondent to
comply with the periods mandated under Section 112 of Republic Act No. (RA) 8424,16 otherwise known as the Tax Reform Act of 1997. From the time the administrative claim
for refund was filed on July 21, 1999, the CIR had 120 days, or until November 18, 1999, to act on the application, failing in which, respondent may elevate the case before the
CTA within 30 days from November 18, 1999, or until December 18, 1999. However, respondent filed its judicial claim only on January 9, 2001.

The CTA En BancRuling

In a Decision17 dated August 13, 2009, the CTA En Banc dismissed the petition holding that the CIR could not raise for the first time on appeal the issue of prescription in the
filing of respondents judicial claim for refund, viz.:

It is worthy to note that the present case was remanded from the CA to the CTA ordering the latter to admit and consider the VAT receipts and invoices attached to respondents
Motion for Reconsideration to determine respondents claim for refund. During the proceedings before the CA until this case was remanded to the CTA, [CIR] never questioned
the period within which the respondents judicial claim for refund was filed. When the CTA First Division partially granted respondents judicial claim for refund, [the CIR]
immediately filed his Motion for Reconsideration to which he neither mentioned nor raised the issue of prescription. More than eight years have lapsed before the [CIR] brought
the issue of prescription and was questioned only now at the CTAen banclevel after an unfavorable judgment was issued against him.18

The CIR filed a motion for reconsideration but was likewise denied in a Resolution 19 dated October 22, 2009 for lack of merit, hence, the present petition.

The Issue Before the Court

The lone issue for the Courts resolution is whether or not the CTA En Banc correctly dismissed the petition for review on the ground that the issue of prescription was belatedly
raised.

The Courts Ruling

The petition is meritorious.

Section 112 of RA 8424,20 which was in force at the time of the filing of respondents claim for credit or refund of its creditable input tax, pertinently reads as follows:

SEC. 112. Refunds or Tax Credits of Input Tax.

(A) Zero-rated or Effectively Zero-Rated Sales. 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 x x x.

xxxx

(D) Period within which Refund or Tax Credit of Input Taxes shall be Made. In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for
creditable input taxes within one hundred twenty (120) daysfrom the date of submission of complete documents in support of the application filed in accordance with
Subsections (A) and (B) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above,
the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty-day period, appeal the
decision or the unacted claim with the Court of Tax Appeals.21 (Emphases supplied)

It should be recalled that the CTA First Division declared in its September 17, 2008 Decision that the administrative claim filed on July 21, 1999 and the petition for review filed
on January 9, 2001 fell within the twoyear prescriptive period reckoned from January 21, 1999, the date when respondent filed its Quarterly VAT Returnfor the fourth quarter of
taxable year 1998.22

The CIR argues, on the other hand, that the two-year period for filing both the administrative and judicial claims should be reckoned from the close of the fourth taxable quarter
when the relevant sales were made, which fell on December 31, 1998. As such, respondent only had until December 31, 2000 to file both its administrative and judicial
claims.23 While it filed its administrative claim on July 21, 1999 within the two-year prescriptive period, the same is not true with the petition for review that was filed with the CTA
only on January 9, 2001.24 To support its contention, the CIR cited the case of CIR v. Mirant Pagbilao Corp.25 (Mirant).

To resolve the matter, the Court deems it fit to briefly discuss the doctrinal metamorphosis of the two-year prescriptive period provided under Section 112 (A) as above-cited.

In the case of Atlas Consolidated Mining and Devt. Corp. v. CIR26 (Atlas), which was promulgated on June 8, 2007, the two-year prescriptive period stated in Section 112
(A)27 was counted from the date of payment of the output VAT. 28 At that time, the output VAT must be paid at the time of filing of the quarterly tax returns, which meant within 20
days following the end of each quarter.29 However, on September 12, 2008, the Atlas doctrine was abandoned in the case of Mirant which adopted the verba legis rule and
counted the two-year prescriptive period from the "close of the taxable quarter when the sales were made" as expressly stated in the law, 30regardless when the input VAT was
paid.31 In the recent case of CIR v. San Roque Power Corporation32 (San Roque), promulgated on February 12, 2013, the Court clarified that (a) the Atlasdoctrine was effective
only from its promulgation on June 8, 2007 until its abandonment on September 12, 2008 in Mirant, and (b) prior to the Atlas doctrine, Section 112 (A) should be applied
following the verba legisrule adopted in Mirant. 33

Thus, applying Section 112 (A) strictly as worded, it may then be concluded that the administrative claim filed by respondent on July 21, 1999 was filed within the two-year
prescriptive period reckoned from the close of the fourth taxable quarter falling on December 31, 1998, the last day of filing being December 31, 2000.
In fact, whether the two-year prescriptive period is counted from the date of payment (January 21, 1999) of the output VAT following Atlas, or from the close of the taxable
quarter when the sales weremade (December 31, 1998) pursuant to Mirant, the conclusion that the administrative claim was timely filed would equally stand.

The CIR insists, however, that both the administrative and judicial claims should fall within the two-year prescriptive period. This argument is untenable.

It should be pointed out that on October 6, 2010, the Court held in the case of CIR v. Aichi Forging Company of Asia, Inc. 34 (Aichi) that the phrase "within two (2) years x x x
apply for the issuance of a tax credit certificate or refund" refers to applications for refund/credit filed with the CIR and not to appeals made to the CTA.35 The Court gave three
(3) compelling reasons for this ruling in San Roque, namely:

First, Section 112(A) clearly, plainly, and unequivocally provides that the taxpayer "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 the creditable input tax due or paid to such sales." In short, the law states that the taxpayer may apply with the
Commissioner for a refund or credit "within two (2) years," which means at anytime within two years. Thus, the application for refund or credit may be filed by the taxpayer with
the Commissioner on the last day of the two-year prescriptive period and it will still strictly comply with the law. The twoyear prescriptive period is a grace period in favor of the
taxpayer and he can avail of the full period before his right to apply for a tax refund or credit is barred by prescription.

Second, Section 112(C) provides that the Commissioner shall decide the application for refund orcredit "within one hundred twenty (120) days from the date of submission of
complete documents in support of the application filed in accordance with Subsection (A)." The reference in Section 112(C) of the submission of documents "in support of the
application filed in accordance with Subsection A" means that the application in Section 112(A) is the administrative claim that the Commissioner must decide within the 120-day
period. In short, the twoyear prescriptive period in Section 112(A) refers to the period within which the taxpayer can file an administrative claim for tax refund or credit. Stated
otherwise, the two-year prescriptive period does not refer to the filing of the judicial claim with the CTA but to the filing of the administrative claim with the Commissioner. x x x.

Third, if the 30-day period, or any part of it, is required to fall within the two-year prescriptive period (equivalent to 730 days), then the taxpayer must file his administrative claim
for refund or credit within the first 610 days of the two-year prescriptive period. Otherwise, the filing of the administrative claim beyond the first 610 days will result in the appeal
to the CTA being filed beyond the two-year prescriptive period. Thus, if the taxpayer files his administrative claim on the 611th day, the Commissioner, with his 120-day period,
will have until the 731st day to decide the claim. If the Commissioner decides only on the 731st day, or does not decide at all, the taxpayer can no longer file his judicial claim
with the CTA because the two-year prescriptive period (equivalent to 730 days) has lapsed. The 30-day period granted by law to the taxpayer to file an appeal before the CTA
becomes utterly useless, even if the taxpayer complied with the law by filing his administrative claim within the two-year prescriptive period.36 (Emphases in the original)

In fine, the taxpayer can file its administrative claim for refund or credit at any time within the two-year prescriptive period. If it files its claim on the last day of said period, it is still
filed on time.37 The CIR will have 120 days from such filing to decide the claim. If the CIR decides the claim on the 120th day, or does not decide it on that day, the taxpayer still
has 30 days to file its judicial claim with the CTA; 38 otherwise, the judicial claim would be, properly speaking, dismissed for being filed out of time and not, as the CTA En
Bancputs it, prescribed.

It bears emphasis that Section 112 (D)39 (now renumbered as Section 112[C]) of RA 8424, which is explicit on the mandatory and jurisdictional natureof the 120+30-day period,
was already effective on January 1, 1998.40 Hence, it is of no consequence that the Aichiand San Roque rulings were not yet in existence when respondents administrative
claim was filed in 1999, so as to rid itself of the said sections mandatory and jurisdictional application.

That being said, and notwithstanding the fact that respondents administrative claim had been timely filed, the Court is nonetheless constrained to deny the averred tax refund or
credit, as its judicial claim therefor was filed beyond the 120+30-day period, and, hence as earlier stated deemed to be filed out of time.

As the records would show, the CIR had 120 days from the filing of the administrative claim on July 21, 1999, or until November 18, 1999, to decide on respondents application.
Since the CIR did not act at all, respondent had until December 18, 1999, the last day of the 30-day period, to file its judicial claim. However, respondent filed its petition for
review with the CTA only on January 9, 2001 and, thus, was one (1) year and 22 days late. As a consequence of the late filing of said petition, the CTA did not properly acquire
jurisdiction over the claim.41

In this relation, it is significant to point out that the CTA, being a court of special jurisdiction, can take cognizance only of matters that are clearly within its jurisdiction. Section 7
of RA 1125,42 as amended by RA 9282,43specifically provides:

SEC. 7. Jurisdiction. The CTA shall exercise:

(a) Exclusive appellate jurisdiction to review by appeal, as herein provided:

(1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges,
penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue;

(2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties
in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the
National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial;

x x x x (Emphasis supplied)

The inaction of the CIR on the claim during the 120-day period is, by express provision of law, "deemed a denial" of such claim, and the failure of the taxpayer to file its judicial
claim within 30 days from the expiration of the 120-day period shall render the "deemed a denial" decision of the CIR final and inappealable. The right to appeal to the CTA from
a decision or "deemed a denial" decision of the Commissioner is merely a statutory privilege, not a constitutional right. The exercise of such statutory privilege requires strict
compliance with the conditions attached by the statute for its exercise. 44 Thus, respondent's failure to comply with the statutory conditions is fatal to its claim. This is so,
notwithstanding the fact that the CIR, for his part, failed to raise the issue of non-compliance with the mandatory periods at the earliest opportunity.

In the case of Nippon Express (Philippines) Corporation v. CJR, 45 the Court ruled that, because the 120+ 30-day period is jurisdictional, the issue of whether the taxpayer
complied with the said time frame may be broached at any stage, even on appeal. Well-settled is the rule that the question of jurisdiction over the subject matter can be raised at
any time during the proceedings. Jurisdiction cannot be waived because it is conferred by law and is not dependent on the consent or objection or the acts or omissions of the
parties or any one of them.46 Therefore, respondent's contention on this score is of no moment. 1wphi1

Indeed, it has been pronounced time and again that taxes are the lifeblood of the government and, consequently, tax laws must be faithfully and strictly implemented as they are
not intended to he liberally construed.47 Hence, with this in mind and in light of the foregoing considerations, the Court so holds that the CTA En Banc committed reversible error
when it granted respondent's claim for refund or tax credit despite its noncompliance with the mandatory periods under Section 112 (D) (now renumbered as Section 112[C]) of
RA 8424. Accordingly, the claim for refund/tax credit must be denied.

WHEREFORE, the petition is GRANTED. The Decision dated August 13, 2009 and the Resolution dated October 22, 2009 of the Court of Tax Appeals (CTA) En Banc in C.T.A.
EB No. 487 are hereby REVERSED and SET ASIDE. Respondent Burmeister and Wain Scandinavian Contractor Mindanao, Inc.'s judicial claim for refund or tax credit through
its petition for review before the CTA is DENIED.

SO ORDERED.

G.R. No. 192573 October 22, 2014

RICARDO N. AZUELO, Petitioner,


vs.
ZAMECO II ELECTRIC COOPERATIVE, INC., Respondent.

DECISION

REYES, J.:

Before this Court is a petition for review on certiorari1 under Rule 45 of the Rules of Court seeking to annul and set aside the Decision 2 dated February 26, 2010 and
Resolution3 dated June 10, 2010 issued by the Court of Appeals (CA) in CA-G.R. SP No. 107762, which affirmed the Decision 4 dated September 22, 2008 and Resolution 5 dated
December 15, 2008 of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 052567-07.

The Facts

Petitioner Ricardo N. Azuelo (Azuelo) was employed by the respondent ZAMECO II Electric Cooperative, Inc. (ZAMECO) as a maintenance worker. It appears that sometime in
March 2006, Azuelo filed with the Regional Arbitration Branch (RAB) of the NLRC in San Fernando City, Pampanga a Complaint 6 for illegal dismissal and non-payment of
benefits against ZAMECO. The complaint was docketed as NLRC Case No. RAB III-03-9912-06 and was assigned to Labor Arbiter (LA) Mariano" L. Bactin (LA Bactin). After
several mediations, LA Bactin ordered the parties to submit their respective position papers on July 14, 2006.

On July 14, 2006, Azuelo, instead of submitting his position paper, moved that the submission of his position paper be extended to August 4, 2006, which was granted by LA
Bactin. On August 4, 2006, Azuelo again failed to submit his position paper. LA Bactin then directed Azuelo to submit his position papers on August 22, 2006. On the said date,
Azuelo, instead of submitting his position paper, moved for the issuance of an order directing ZAMECO to furnish him with a complete copy of the investigation report as regards
his dismissal. ZAMECO opposed the said motion, asserting that it has already furnished Azuelo with a copy of its investigation report.

On November 6, 2006, LA Bactin issued an Order,7 which reads:

Record shows that respondent has already filed its position paper while complainant, despite ample opportunity given him, failed to file his[,] leaving this office with no option but
to dismiss this case for lack of interest.

WHEREFORE, let this case be, as it is hereby dismissed for lack of[merit].

SO ORDERED.8

Azuelo received a copy of LA Bactin's Order dated November 6, 2006 on November 17, 2006. On November 21, 2006, Azuelo again filed a complaint with the RAB of the NLRC
in San Fernando City, Pampanga for illegal dismissal with money claims against ZAMECO, containing the same allegations in his first complaint. The case was docketed as
NLRC Case No. RAB-III-11-10779-06 and was assigned to LA Reynaldo V. Abdon (LA Abdon).

On December 20, 2006, ZAMECO filed a Motion to Dismiss9 the second complaint filed by Azuelo on the ground of res judicata. ZAMECO pointed out that Azuelo had earlier
filed a similar complaint, which was dismissed by LA Bactin due to his unreasonable failure to submit his position paper despite ample opportunity given to him by LA Bactin.
ZAMECO likewise averred that Azuelo should have appealed from LA Bactin's Order dated November 6, 2006 instead of filing a complaint for illegal dismissal anew.

Azuelo opposed ZAMECO's motion to dismiss,10 alleging that the dismissal of his first complaint by LA Bactin was without prejudice. He explained that his failure to submit his
position paper was due to ZAMECO's refusal to furnish him with the complete documents pertaining to his illegal dismissal. He further claimed that, since the dismissal of his
first complaint was without prejudice, his remedy was either to file a motion for reconsideration or to re-file the case within 10 days from receipt of the order of dismissal.

On March 12, 2007, LA Abdon issued an Order, 11 which dismissed Azuelo's second complaint for illegal dismissal on the ground of res judicata. LA Abdon pointed out that the
dismissal of Azuelo's first complaint for illegal dismissal was with prejudice; that the appropriate remedy available to Azuelo against LA Bactin's dismissal of the first complaint
was to appeal from the same and not to file a second complaint for illegal dismissal.

On appeal, the NLRC, in its Decision12 dated September 22, 2008, affirmed the Order issued on March 12, 2007 by LA Abdon. The NLRC pointed out that LA Bactin gave
Azuelo ample opportunity to submit his position paper, which he still failed to do. That his failure to prosecute his action for unreasonable length of time indeed warranted the
dismissal of his first complaint, which is deemed to be with prejudice, unless otherwise stated. Considering that the Order issued on November 6, 2006 by LA Bactin did not
qualify the nature of the dismissal of the first complaint, the NLRC opined that the said dismissal is with prejudice. Thus, the filing of the second complaint for illegal dismissal is
already barred by the prior dismissal of Azuelo' s first complaint.

Azuelo sought reconsideration13 of the Decision dated September 22, 2008 but it was denied by the NLRC in its Resolution 14 dated December 15, 2008.

Azuelo then filed a petition for certiorari 15 with the CA, alleging that the NLRC gravely abused its discretion in ruling that the dismissal of his first complaint was with prejudice,
thus constituting a bar to the filing anew of his complaint for illegal dismissal against ZAMECO. He likewise asserted that, since the dismissal of his first complaint was without
prejudice, the remedy available to him, contrary to LA Abdon's ruling, was to re-file his complaint, which he did.
On February 26, 2010, the CA rendered the herein assailed Decision, 16 which denied the petition for certiorari filed by Azuelo. The CA held that the NLRC did not commit any
abuse of discretion in affirming the dismissal of Azuelo' s second complaint for illegal dismissal on the ground of res judicata. That the dismissal of the first complaint, which was
with prejudice, bars the filing of a subsequent complaint for illegal dismissal based on the same allegations.

Azuelo's Motion for Reconsideration17 was denied by the CA in its Resolution18 dated June 10, 2010.

Hence, the instant petition.

Issue

Essentially, the issue set forth by Azuelo for the Court's resolution is whether the dismissal of his first complaint for illegal dismissal, on the ground of lack of interest on his part
to prosecute the same, bars the filing of another complaint for illegal dismissal against ZAMECO based on the same allegations.

Ruling of the Court

The petition is denied.

At the outset, it should be stressed that in a petition for review under Rule 45 of the Rules of Court, such as the instant petition, where the CA' s disposition in a labor case is
sought to be calibrated, the Court's review is quite limited. In ruling for legal correctness, the Court has to view the CA decision in the same context that the petition for certiorari
it ruled upon was presented to it; the Court has to examine the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse .of
discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of the case was correct.19 "The phrase 'grave abuse of discretion' is well-
defined in our jurisprudence. It exists where an act of a court or tribunal is performed with a capricious or whimsical exercise of judgment equivalent to lack of jurisdiction. The
abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty or to a virtual refusal to perform a duty enjoined by law, or to act at all in
contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or personal hostility."20

After a thorough review of the records of the instant case, the Court finds that the CA did not commit any reversible error in upholding the dismissal of Azuelo's second
complaint for illegal dismissal on the ground of res judicata. The NLRC did not abuse its discretion in ruling that the Order issued on November 6, 2006 by LA Bactin, which
dismissed the first complaint filed by Azuelo, was an adjudication on the merits.

At the core of the instant petition is the determination of the nature of the dismissal of Azuelo's first complaint, i.e., whether the dismissal is with prejudice as held by the labor
tribunals. The Order issued on November 6, 2006 by LA Bactin is silent as to the nature of the dismissal; it merely stated that the complaint was dismissed due to Azuelo's
failure, despite ample opportunity afforded him, to submit his position paper.

Ultimately, the question that has to be resolved is this - whether the dismissal of a complaint for illegal dismissal due to the unreasonable failure of the complainant to submit his
position paper amounts to a dismissal with prejudice.

The 2005 Revised Rules of Procedure of the NLRC (2005 Revised Rules), the rules applicable at the time of the controversy, is silent as to the nature of the dismissal of a
complaint on the ground of unreasonable failure to submit a position paper by the complainant. Nevertheless, the 2005 Revised Rules, particularly Section 3, Rule I thereof,
provides for the suppletory application of the Rules of Court to arbitration proceedings before the LAs and the NLRC in the absence of any applicable provisions therein, viz:

Section 3. Suppletory Application of the Rules of Court. - In the absence of any applicable provisions in these Rules, and in order to effectuate the objectives of the Labor Code,
the pertinent provisions of the Rules of Court of the Philippines may, in the interest of expeditious dispensation of labor justice and whenever practicable and convenient, be
applied by analogy or in a suppletory character and effect. (Emphases ours)

The unjustified failure of a complainant in arbitration proceedings before the LA to submit his position paper is akin to the case of a complainant's failure to prosecute his action
for an unreasonable length of time in ordinary civil proceedings. In both cases, the complainants are remiss, sans reasonable cause, to prove the material allagations in their
respective complaints. Accordingly, the Court sees no reason not to apply the rules relative to unreasonable failure to prosecute an action in ordinary civil proceedings to the
unjustified failure of a complainant to submit his position paper in arbitration proceedings before the LA.

In this regard, Section 3, Rule 17 of the Rules of Court provides that:

Section 3. Dismissal due to fault of plaintiff. If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence in chief on the complaint, or to
prosecute his action for an unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the defendant
or upon the court's own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal shall have the
effect of an adjudication upon the merits, unless otherwise declared by the court. (Emphases ours)

"The dismissal of a case for failure to prosecute has the effect of adjudication on the merits, and is necessarily understood to be with prejudice to the filing of another action,
unless otherwise provided in the order of dismissal. Stated differently, the general rule is that dismissal of a case for failure to prosecute is to be regarded as an adjudication on
the merits and with prejudice to the filing of another action, and the only exception is when the order of dismissal expressly contains a qualification that the dismissal is without
prejudice."21

Thus, in arbitration proceedings before the LA, the dismissal of a complaint on account of the unreasonable failure of the complainant to submit his position paper is likewise
regarded as an adjudication on the merits and with prejudice to the filing of another complaint, except when the

LA's order of dismissal expressly states otherwise.

As already stated, the Order dated November 6, 2006, which dismissed Azuelo's first complaint due to his unreasonable failure to submit his position paper is unqualified. It is
thus considered as an adjudication on the merits and with prejudice to filing of another complaint. Accordingly, the NLRC did not abuse its discretion when it affirmed LA Abdon'
s dismissal of the second complaint for illegal dismissal. Azuelo' s filing of a second complaint for illegal dismissal against ZAMECO based on the same allegations cannot be
permitted lest the rule on res judicata be transgressed.

"Under the rule of res judicata, a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of the rights of the parties or their privies, in all later
suits and on all points and matters determined in the previous suit. The term literally means a 'matter adjudged, judicially acted upon, or settled by judgment.' The principle bars
a subsequent suit involving the same parties, subject matter, and cause of action. The rationale for the rule is that 'public policy requires that controversies must be settled with
finality at a given point in time."'22

Azuelo's insistence that the dismissal of his first complaint by LA Bactin was without prejudice since he was not remiss in pursuing his complaint for illegal dismissal is plainly
untenable. To stress, the Order dated November 6, 2006 was unqualified; hence, the dismissal is deemed with prejudice pursuant to Section 3, Rule 17 of the Rules of Court. In
any case, the Court finds Azuelo's failure to file his position paper, despite ample opportunity therefor, unjustified. On this score, LA Abdon' s observation is instructive, thus:

That complainant failed to prosecute his action for unreasonable length of time before Labor Arbiter Bactin is supported by the records of the case. Records show that as early
as July 14, 2006, complainant was already required to submit his position paper on said date. However, instead of submitting one, he requested for "more time" or until August
4, 2006 within which to submit his position paper x x x. Came August 4, 2006, complainant failed to submit the required position paper and again requested for an extension of
time until August 22, 2006. The reason given was due [to] "voluminous workload" xx x. Despite the extensions given to complainant, the latter failed to submit his position paper
on due date. Instead, what complainant submitted on August 22, 2006 is a Motion For the Issuance of Order Directing Respondent to Furnish Complainant The Complete Copy
of Investigation Report. As correctly ruled by Labor Arbiter Abdon, the filing of the said motion is of no moment. The fact remains that more than one (1) month has already
lapsed from the time complainant was first required to submit his position paper on July 14, 2006 up to the last extension on August 22, 2006. Further, if complainant really
intends to prosecute his case within the reasonable time, he should not have waited for August 22, 2006 to file said motion.

It is also worth stressing that under Section 7, Rule V of the NLRC Rules of Procedure, parties are directed to submit position paper within an inextendible period of ten (10)
calendar days from the date of termination of the mandatory conciliation and mediation conference. Clearly, complainant went beyond this period. 23 (Emphasis and italics in the
original)

If indeed Azuelo could not prepare his position paper due to the alleged refusal of ZAMECO to furnish him with its investigation report on his dismissal, he should have
immediately sought the issuance of an order directing ZAMECO to produce the said investigation report. However, Azuelo only moved for the production of the investigation
report on the due date of the third extension of time granted him by LA Bactin to submit his position paper. It is thus apparent that Azuelo's motion seeking the production of the
investigation report is merely a ruse to further extend the period given to Azuelo within which to submit his position paper.

Nonetheless, Azuelo contended that technical rules of procedure, such as the rule on dismissals of actions due to the fault of the plaintiff under Section 3, Rule 17 of the Rules
of Court, does not apply to proceedings before the LAs and the NLRC. Hence, Azuelo claimed, LA Abdon erred in dismissing his second complaint for illegal dismissal.

The Court does not agree.

Indeed, technical rules of procedure are not binding in labor cases. The LAs and the NLRC are mandated to use every and all reasonable means to ascertain the facts in each
1wphi 1

case speedily and objectively, without regard to technicalities of the law or procedure. 24 Nevertheless, though technical rules of procedure are not ends in themselves, they are
necessary for an effective and expeditious administration of justice.25

The non-applicability of technical rules of procedure in labor cases should not be made a license to disregard the rights of employers against unreasonable and/or unjustified
claims. Azuelo was given sufficient chances to establish his claim against ZAMECO, which he failed to do when he did not submit his position paper despite several extensions
granted him. He cannot now be allowed to raise anew his supposed illegal dismissal as it would be plainly unjust to ZAMECO. It bears stressing that the expeditious disposition
of labor cases is mandated not only for the benefit of the employees, but of the employers as well.

It should be made clear that when the law tilts the scale of justice in favor of labor, it is but a recognition of the inherent economic inequality between labor and management.
The intent is to balance the scale of justice; to put up the two parties on relatively equal positions. There may be cases where the circumstances warrant favoring labor over the
interests of management but never should the scale be so tilted if the result is an injustice to the employer, Justicia remini regarda est (Justice is to be denied to none). 26

Lastly, the Court notes that Azuelo sought the wrong remedy in assailing the Order dated November 6, 2006 issued by LA Bactin. Considering that the dismissal of Azuelo's first
complaint was already an adjudication on the merits, he should have filed a verified memorandum of appeal with the RAB of the NLRC in San Fernando City, Pampanga within
10 calendar days from receipt of the said order pursuant to Section 1, Rule VI of the 2005 Revised Rules instead of re-filing his complaint for illegal dismissal.27 His failure to do
so rendered LA Bactin' s Order dated November 6, 2006, which dismissed his first complaint for illegal dismissal, final and executory.

WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED. The Decision dated February 26, 2010 and Resolution dated June 10, 2010 of the Court
of Appeals in CA-G.R. SP No. 107762 are hereby AFFIRMED.

SO ORDERED.

G.R. No. 160107 October 22, 2014

SPOUSES JAIME SEBASTIAN AND EVANGELINE SEBASTIAN, Petitioners,


vs.
BPI FAMILY BANK, INC., CARMELITA ITAPO AND BENJAMIN HAO, Respondents.

DECISION

BERSAMIN, J.:

The protection of Republic Act No. 6552 (Realty Installment Buyer Protection Act) does not cover a loan extended by the employer to enable its employee to finance the
purchase of a house and lot. The law protects only a buyer acquiring the property by installment, not a borrower whose rights are governed by the terms of the loan from the
employer.

The Case

Under appeal is the decision promulgated on November 21, 2002, 1 whereby the Court of Appeals (CA) affirmed the dismissal of the action for injunction filed by the petitioners
against the respondents to prevent the foreclosure of the mortgage constituted on the house and lot acquired out of the proceeds of the loan from respondent BPI Family Bank
(BPI Family), their employer.
Antecedents

The petitioners are spouses who used to work for BPI Family. At the time material to this case, Jaime was the Branch Manager of BPI Familys San Francisco del Monte Branch
in Quezon City and Evangeline was a bank teller at the Blumentritt Branch in Manila. On October 30, 1987, they availed themselves of a housing loan from BPI Family as one of
the benefits extended to its employees. Their loan amounted to P273,000.00, and was covered by a Loan Agreement,2 whereby they agreed that the loan would be payable in
108 equal monthly amortizations of P3,277.57 starting on January 10, 1988 until December 10, 1996;3 and that the monthly amortizations would be deducted from his monthly
salary.4 To secure the payment of the loan, they executed a real estate mortgage in favor of BPI Family 5 over the property situated in Bo. Ibayo, Marilao, Bulacan and covered
by TCT No. T-30.827 (M) of the Register of Deeds of Bulacan.6

Apart from the loan agreement and the real estate mortgage, Jaime signed an undated letter-memorandum addressed to BPI Family,7 stating as follows:

In connection with the loan extended to me by BPI Family Bank, I hereby authorize you to automatically deduct an amount from my salary or any money due to me to be applied
to my loan, more particularly described as follows:

xxxx

This authority is irrevocable and shall continue to exist until my loan is fully paid. I hereby declare that I have signed this authority fully aware of the circumstances leading to the
loan extended to me by BPI Family Bank and with full knowledge of the rights, obligations, and liabilities of a borrower under the law.

I am an employee of BPI Family Bank and I acknowledge that BPI Family Bank has granted to me the above-mentioned loan in consideration of this relationship. In the event I
leave, resign or am discharged from the service of BPI Family Bank or my employment with BPI Family Bank is otherwise terminated, I also authorize you to apply any amount
due me from BPI Family Bank to the payment of the outstanding principal amount of the aforesaid loan and the interest accrued thereon which shall thereupon become entirely
due and demandable on the effective date of such discharge, resignation or termination without need of notice of demand, and to do such other acts as may be necessary under
the circumstances. (Bold emphasis added)

x x x x.

The petitioners monthly loan amortizations were regularly deducted from Jaimes monthly salary since January 10, 1988. On December 14, 1989, however, Jaime received a
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notice of termination from BPI Familys Vice President, Severino P. Coronacion,8 informing him that he had been terminated from employment due to loss of trust and
confidence resulting from his wilful non-observance of standard operating procedures and banking laws. Evangeline also received a notice of termination dated February 23,
1990,9 telling her of the cessation of her employment on the ground of abandonment. Both notices contained a demand for the full payment of their outstanding loans from BPI
Family, viz:

Demand is also made upon you to pay in full whatever outstanding obligations by way of Housing Loans,Salary Loans, etc. that you may have with the bank. You are well aware
that said obligations become due and demandable upon your separation from the service of the bank. 10 (Emphasis supplied.)

Immediately, the petitioners filed a complaint for illegal dismissal against BPI Family in the National Labor Relations Commission (NLRC).11

About a year after their termination from employment, the petitioners received a demand letter dated January 28, 1991 from BPI Familys counsel requiring them to pay their
total outstanding obligation amounting toP221,534.50.12 The demand letter stated that their entire outstanding balance had become due and demandable upon their separation
from BPI Family. They replied through their counsel on February 12, 1991. 13

In the meantime, BPI Family instituted a petition for the foreclosure of the real estate mortgage. 14 The petitioners received on March 6, 1991 the notice of extrajudicial
foreclosure of mortgage dated February 21, 1991.

To prevent the foreclosure of their property, the petitioners filed against the respondents their complaint for injunction and damages with application for preliminary injunction
and restraining order15 in the Regional Trial Court (RTC) in Malolos, Bulacan.16 They therein alleged that their obligation was not yet due and demandable considering that the
legality of their dismissal was still pending resolution by the labor court; hence, there was yet no basis for the foreclosure of the mortgaged property; and that the property
sought to be foreclosed was a family dwelling in which they and their four children resided.

In its answer with counterclaim,17 BPI Family asserted that the loan extended to the petitioners was a special privilege granted to its employees; that the privilege was
coterminous withthe tenure of the employees with the company; and that the foreclosure of the mortgaged property was justified by the petitioners failure to pay their past due
loan balance.

Judgment of the RTC

On June 27, 1995, the RTC rendered judgment, 18 disposing thusly:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court hereby renders judgment DISMISSING the instant case as well as defendant banks counterclaim withoutany
pronouncement as to costs.

SO ORDERED.19

Decision of the CA

The petitioners appealed upon the following assignment of errors, namely:

I. THE TRIAL COURT ERRED IN FINDING THAT APPELLEE BANKS FORECLOSURE OF THE REAL ESTATE MORTGAGE CONSTITUTED ON
APPELLANTS FAMILY HOME WAS IN ORDER.
A. Appellants cannot be consideredas terminated from their employment with appellee bank during the pendency of their complai nt for illegal
dismissal with the NLRC.

B. Appellee bank wrongfully refused to accept the payments of appellants monthly amortizations.

II. THE TRIAL COUT ERRED IN DENYING APPELLANTS PRAYER FOR INJUNCTION.

A. The foreclosure of appellants mortgage was premature.

B. Appellants are entitled to damages.20

On November 21, 2002, the CA promulgated its assailed decision affirming the judgment of the RTC in toto. 21

The petitioners then filed their motion for reconsideration,22 in which they contended for the first timethat their rights under Republic Act No. 6552 (Realty Installment Buyer
Protection Act) had been disregarded, considering that Section 3 of the law entitled them to a grace period within which to settle their unpaid installments without interest; and
that the loan agreement was in the natureof a contract of adhesion that must be construed strictly against the one who prepared it, that is, BPI Family itself.

On September 18, 2003, the CA denied the petitioners motion for reconsideration. 23

Issues

In this appeal, the petitioners submit for our consideration and resolution the following issues, to wit:

WHETHER OR NOT RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING THE FORECLOSURE OF THE REAL ESTATE MORTGAGE ON
PETITIONERS FAMILY HOME IN ORDER.

WHETHER OR NOT RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DENYING PETITIONERS MOTION FOR RECONSIDERATION DESPITE JUSTIFIABLE
REASONS THEREFOR.24

Ruling

The petition for review has no merit.

When the petitioners appealed the RTC decision to the CA, their appellants brief limited the issues to the following:

(a) Whether or not appellee bank wrongfully refused to accept payments by appellants of their monthly amortizations.

(b) Whether or not the foreclosure of appellants real estate mortgage was premature. 25

The CA confined its resolution to these issues. Accordingly, the petitioners could not raise the applicability of Republic Act No. 6552, or the strict construction of the loan
agreement for being a contract of adhesion as issues for the first time either in their motion for reconsideration or in their petition filed in this Court. To allow them to do so would
violate the adverse parties right to fairness and due process. As the Court held in S.C. Megaworld Construction and Development Corporation v. Parada:26

It is well-settled that no question will be entertained on appeal unless it has been raised in the proceedings below. Points of law, theories, issues and arguments not brought to
the attention of the lower court, administrative agency or quasi-judicial body, need not be considered by the viewing court, as they cannot be raised for the first time at that late
stage. Basic considerations of fairness and due process impel this rule. Any issue raised for the first time on appeal is barred by estoppel.

The procedural misstep of the petitioners notwithstanding, the Court finds no substantial basis to reverse the judgments of the lower courts.

Republic Act No. 6552 was enacted to protect buyers of real estate on installment payments against onerous and oppressive conditions. 27 The protections accorded to the
buyers were embodied in Sections 3, 4 and 5 of the law, to wit:

Section 3. In all transactions or contracts, involving the sale or financing of real estateon installment payments, including residential condominium apartments but excluding
industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-Eight hundred forty-four as amended byRepublic Act Sixty-three hundred eighty-
nine, where the buyer has paid atleast two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:

(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him which is hereby fixed at that rate of one month grace
period for every one year of installment payments made; provided, That this right shall be exercised by the Buyer only once in every five years of the life of the
contract and its extensions, if any.

(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent of the total
payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made; Provided,
That the actual cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.

Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.

SECTION 4. In case where less than two years of installments were paid, the seller shall give the buyers a grace period of not less than sixty days from the date the installment
become due.
If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act.

SECTION 5. Under Section 3 and 4,the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by updating the account
during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.

Having paid monthly amortizations for two years and four months, the petitioners now insist that they were entitled to the grace period within which to settle the unpaid
amortizations without interest provided under Section 3, supra. 28 Otherwise, the foreclosure of the mortgaged property should be deemed premature inasmuch as their obligation
was not yet due and demandable.29

The petitioners insistence would have been correct if the monthly amortizations being paid to BPI Family arose from a sale or financing of real estate. In their case, however,
the monthly amortizations represented the installment payments of a housing loan that BPI Family had extended to them as an employees benefit. The monthly amortizations
they were liable for was derived from a loan transaction, not a sale transaction, thereby giving rise to a lender-borrower relationship between BPI Family and the petitioners. It
bears emphasizing that Republic Act No. 6552 aimed to protect buyers of real estate on installment payments, not borrowers or mortgagors who obtained a housing loan to pay
the costs of their purchase of real estate and used the real estate assecurity for their loan. The "financing of real estate in installment payments" referred to in Section 3, supra,
should be construed only as a mode of payment vis--vis the seller of the real estate, and excluded the concept of bank financing that was a type of loan. Accordingly, Sections
3, 4 and 5, supra, must be read as to grant certain rights only to defaulting buyers of real estate on installment, which rights are properly demandable only against the seller of
real estate.

Thus, in Luzon Brokerage Co., Inc. v.Maritime Building Co., Inc.,30 the Court held:

Congress in enacting in September 1972 Republic Act 6552 (the Maceda law), has by law which is its proper and exclusive province (and not that of this Court which is not
supposed to legislate judicially) has taken care of Justice Barredos concern over "the unhappy and helpless plight of thousands upon thousands of subdivision buyers" of
residential lots.

The Act even in residential properties recognizes and reaffirms the vendor's right to cancel the contractto sell upon breach and non-payment of the stipulated installments but
requires a grace period after at least two years of regular installment payments (of one month for every one year of installment payments made, but to be exercise by the buyer
only once in every five years of the life of the contract) with a refund of certain percentages of payments made on account of the cancelled contract (starting with fifty percent
with gradually increasing percentages after five years of installments). In case of industrial and commercial properties, as in the case at bar, the Act recognizes and reaffirms the
Vendor's right unqualifiedly to cancel the sale upon the buyer's default.

The petitioners purchased the realestate from PHILVILLE Realty,31 not from BPI Family. Without the buyer-seller relationship between them and BPI Family, the provisions of
Republic Act No. 6552 were inapplicable and could not be invoked by them against BPI Family.

Apart from relying on the grace period provided in Republic Act No. 6552 to assert the prematurity of the foreclosure of the mortgage, 32 the petitioners argue that the foreclosure
of the mortgage was null and void because BPI Familys acceptance of their late payments estopped it from invoking sanctions against them. 33 They further argue that the
printed conditions appearing at the back of BPI Familys official receipt,34 which the CA cited to affirm the validity of the foreclosure, partook of a contract of adhesion that must
be strictly construed against BPI Family as the party who prepared the same.35

The petitioners arguments do not persuade. To reiterate, their reliance on Republic Act No. 6552 was misplaced because its provisions could not extend to a situation bereft of
any seller-buyer relationship. Hence, they could not escape the consequences of the maturity of their obligation by invoking the grace period provided in Section 3, supra.

The CA correctly found that there was basis to declare the petitioners entire outstanding loan obligation matureas to warrant the foreclosure of their mortgage. It is settled that
foreclosure is valid only when the debtor is in default in the payment of his obligation. 36 Here, the records show that the petitioners were defaulting borrowers, a fact that the CA
thoroughly explained in the following manner:

Appellants insist that there was no valid ground for appellee bank to institute the foreclosure proceedings because they still have a pending case for illegal dismissal before the
NLRC. They argue that the reason for the banks foreclosure is their dismissal from employment. As they are still questioning the illegality of their dismissal, the bank has no
legal basis in foreclosing the property.

xxxx

The arguments fail to persuade Us.

First, appellants cannot rely on the mere possibility that if the decision of the NLRC will be in their favor, part of the reliefs prayed for would be reinstatement without loss of
seniority and other privilege. Such argument is highly speculative. On the contrary, in a thirteen-page decision, the Labor Arbiter exhaustively discussed the validity of appellant
Jaime Sebastians termination. x x x

xxxx

Moreover, appellants appealed the Labor Arbiters decision as early as January 10, 1994. To date, however, nothing has been heard from appellants if they obtained a favorable
judgment from the NLRC.

Second, even if it turns out the appellants werenot validly terminated from their employment, there is valid reason to foreclose the mortgaged property.

Appellants themselves admit that they were in arrears when they made the late payments in March, 1991. While this admission was not in the course of the testimony of
appellant Jaime Sebastian, this was done during the hearing of the case when the trial judge propounded the question to him. Hence, this constitute (sic) judicial admission. An
admission, verbal or written, made by a party in the course of the trial or other 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 is made. Judicial admissions are those made voluntarily by a party, which appear on record in the
proceedings of the court. Formal acts done by a party or his attorney in court on the trial of a cause for the purpose of dispensing with proof by the opposing party of some fact
claimed by the latter to be true.

xxxx
Fourth, the terms and conditions of the loan agreement, promissory notes and the real estate mortgage contract, do not partake of a contract of adhesion. It must be noted that
appellants are personnel of the bank.

Jaime Sebastian was then a branch manager while his wife Evangeline was a bank teller. It is safe to conclude that they are familiar with the documents they signed, including
the conditions stated therein. It is also presumed that they take ordinary care of their concerns and that they voluntarily and knowingly signed the contract.

Appellant Jaime Sebastian, in his letter addressed to appellee bank, even acknowledged that "in the event of resignation or otherwise terminated from his employment, the
principal as well as the interest due shall become entirely due and demandable" (Exh. "E"). The freedom to enter into contracts is protected by law and the courts are not quick
to interfere with such freedom unless the contract is contrary to law, morals, good customs, public policy or public order. Courts are not authorized to extricate parties from the
necessary consequences of their acts, and the fact that the contractual stipulations may turn out to be financially disadvantageous will not relieve parties thereto of their
obligations,

Fifth, We cannot also buy appellants argument that appellee refused to accept the subsequent payments made by them. It is settled that an issue which was not raised during
the trial in the court below could not be raised for the first time on appeal, as to do so, would be offensive to the basic rules of fair play, justice and due process. Here, appellant
Jaime Sebastian twice testified before the Court, first, during the hearing on the preliminary injunction and on the trial proper. Nothing was mentioned about the refusal on the
part of the bank to accept their subsequent payments.

Assuming, arguendo, that appellee bank indeed refused to accept the subsequent payment from appellants, they could have consigned the same before the Court. They failed
to do so. There was no effort on their part to continue paying their obligations.

Thus, having signed a deed of mortgage in favor of appellee bank, appellants should have foreseen thatwhen their principal obligation was not paid when due, the mortgagee
has the right to foreclose the mortgage and to have the property seized and sold with a view to applying the proceeds to the payment ofthe principal obligation.37

Equally notable was that Jaimes undated letter-memorandum to BPI Family expressly stated the following:

x x x In the event I leave, resign or amdischarged from the service of BPI Family Bank or my employment with BPI Family Bank is otherwise terminated, I also authorize you to
apply any amount due me from BPI Family Bank to the payment of the outstanding principal amount of the aforesaid loan and the interest accrued thereon which shall there
upon become entirely due and demandable on the effective date of such discharge, resignation or termination without need of notice of demand, and to do such other acts as
may be necessary under the circumstances.38

(Bold emphasis supplied.)

The petitioners thereby explicitly acknowledged that BPI Family Bank had granted the housing loan inconsideration of their employer employee relationship. They were thus
presumed to understand the conditions for the grant of their housing loan. Considering that the maturity of their loan obligation did not depend on the legality of their termination
from employment, their assertion that the resolution of their labor complaint for illegal dismissal was prejudicial to the ripening of BPI Familys cause of action was properly
rejected. Indeed, a finding of illegal dismissal in their favor would not automatically and exclusively result in their reinstatement. As fittingly ruled in Bani Rural Bank, Inc. v. De
Guzman:39

"By jurisprudence derived from this provision, separation pay may [also] be awarded to an illegally dismissed employee in lieu of reinstatement." Section 4(b), Rule I of the
Rules Implementing Book VI of the Labor Code provides the following instances when the award of separation pay, in lieu of reinstatement to an illegally dismissed employee, is
proper: (a) when reinstatement is no longer possible, in cases where the dismissed employee s position is no longer available; (b) the continued relationship between the
employer and the employee is no longer viable due to the strained relations between them; and(c) when the dismissed employee opted not to be reinstated, or the payment of
separation benefits would be for the best interest of the parties involved. In these instances, separation pay is the alternative remedy to reinstatement in addition to the award of
backwages. The payment of separation pay and reinstatement are exclusive remedies. The payment of separation pay replaces the legal consequences of reinstatement to an
employee who was illegally dismissed.

Nonetheless, it is noteworthy that the Labor Arbiter ultimately ruled that Jaimes dismissal was valid and legal. Such ruling affirmed the legality of the termination of James from
BPI Familys employment. Under the circumstances, the entire unpaid balance of the housing loan extended to him by BPI Family became due and demandable upon such
termination in accordance with Jaimes express and written commitment to BPI Family. Even if we were to disregard this condition, their admission of default in their monthly
amortizations constituted an event of default within the context of Section 7 of the loan agreement that produced the same effect of rendering any outstanding loan balance due
and demandable. Section 7 the loan agreement reads as follows:

SECTION 7. EVENTS OF DEFAULT

If any of the following Events of Default shall have occurred and be continuing:

a) The Borrower shall fail to pay when due the Loan(s) any installment thereof, or any other amount payable under this Agreement the Note(s) or under the Collateral; or

xxxx

then, and in any such event, the Bank may by written notice to the Borrower cancel the Commitment and/or declare all amounts owing to the Bank under this Agreement and
the Note(s), whether of principal, interest or otherwise, to be forthwith due and payable, whereupon all such amounts shall become immediately due and payable without
demand or other notice of any kind, all of which are expressly waived by the Borrower. The Borrower shall pay on demand by the Bank, in respect of any amount or principal
paid in advance of stated maturity pursuant to this Section 7, a prepayment penalty equal to the rate mentioned in Section 2.07 (c).40

With demand, albeit unnecessary, having been made on the petitioners, they were undoubtedly in default in their obligations.

The foreclosure of a mortgage is but the necessary consequence of the non-payment of an obligation secured by the mortgage. Where the parties have stipulated in their
1wphi1

agreement, mortgage contract and promissory note that the mortgagee is authorized to foreclose the mortgage upon the mortgagor's default, the mortgagee has a clear right to
the foreclosure in case of the mortgagor's default. Thereby, the issuance of a writ of preliminary injunction upon the application of the mortgagor to prevent the foreclosure will
be improper.41 As such, the lower courts did not err in dismissing the injunction complaint of the petitioners.

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision promulgated on November 21, 2002; and ORDERS the petitioners to pay the costs
of suit.
SO ORDERED.

G.R. No. 166414 October 22, 2014

GODOFREDO ENRILE AND DR. FREDERICK ENRILE, Petitioners,


vs.
HON. DANILO A. MANALASTAS (AS PRESIDING JUDGE, REGIONAL TRIAL COURT OF MALOLOS BULACAN, BR. VII), HON. ERANIO G. CEDILLO, SR., (AS
PRESIDING JUDGE, MUNICIPAL TRIAL COURT OF MEYCAUAYAN, BULACAN, BR.1) AND PEOPLE OF THE PHILIPPINES, Respondents.

DECISION

BERSAMIN, J.:

The remedy against the denial of a motion to quash is for the movant accused to enter a plea, go to trial, and should the decision be adverse, reiterate on appeal from the final
judgment and assign as error the denial of the motion to quash. The denial, being an interlocutory order, is not appealable, and may not be the subject of a petition for certiorari
because of the availability of other remedies in the ordinary course of law.

Antecedents

Petitioners Godofredo Enrile and Dr. Frederick Enrile come to the Court on appeal, seeking to reverse and undo the adverse resolutions promulgated on August 31, 2004 1 and
December 21, 2004,2 whereby the Court of Appeals (CA) respectively dismissed their petition for certiorari and prohibition (assailing the dismissal of their petition for certiorariby
the Regional Trial Court (RTC), Branch 7, in Malolos, Bulacan, presided by RTC Judge Danilo A. Manalastas, to assail the denial of their motions to quash the two informations
charging themwith less serious physical injuries by the Municipal Trial Court (MTC) of Meycauayan, Bulacan), and denied their motion for reconsideration anent such dismissal.

The mauling incident involving neighbors that transpired on January 18, 2003 outside the house of the petitioners in St. Francis Subdivision, Barangay Pandayan, Meycauayan
Bulacan gave rise to the issue subject of this appeal. Claiming themselves to be the victims in that mauling, Josefina Guinto Morano,3 Rommel Morano and Perla Beltran
Morano charged the petitioners and one Alfredo Enrile 4 in the MTC with frustrated homicide (victim being Rommel) in Criminal Case No. 03-275; with less serious physical
injuries (victim being Josefina) in Criminal Case No. 03-276; and with less serious physical injuries (victim being Perla) in Criminal Case No. 03-277, all of the MTC of
Meycauayan, Bulacan on August 8, 2003 after the parties submitted their respective affidavits, the MTC issued its joint resolution, 5 whereby it found probable cause against the
petitioners for less serious physical injuries in Criminal Case No. 03-276 and Criminal Case No. 03-277, and set their arraignment on September 8, 2003. On August 19, 2003,
the petitioners moved for the reconsideration of the joint resolution, arguing that the complainants had not presented proof of their having been given medical attention lasting 10
days or longer, thereby rendering their charges of less serious physical injuries dismissible; and that the two cases for less serious physical injuries, being necessarily related to
the case of frustrated homicide still pending in the Office of the Provincial Prosecutor, should not be governed by the Rules on Summary Procedure. 6 On November 11, 2003,
the MTC denied the petitioners motion for reconsideration because the grounds of the motion had already been discussed and passed upon in the resolution sought to be
reconsidered; and because the cases were governed by the Rules on Summary Procedure, which prohibited the motion for reconsideration.7 Thereafter, the petitioners
presented a manifestation with motion to quash and a motion for the deferment of the arraignment. 8

On February 11, 2004, the MTC denied the motion to quash, and ruled that the cases for less serious physical injuries were covered by the rules on ordinary procedure; and
reiterated the arraignment previously scheduled on March 15, 2004. 9 It explained its denial of the motion to quash in the following terms, to wit:

xxxx

As to the Motion to Quash, this Court cannot give due course to said motion. A perusal of the records shows that the grounds and/or issues raised therein are matters of
defense that can be fully ventilated in a full blown trial on the merits.

Accordingly, Criminal Cases Nos. 03-276 and 03-277 both for Less Serious Physical Injuries are hereby ordered tried under the ordinary procedure.

The Motion to Quash is hereby DENIED for reasons aforestated.

Meanwhile, set these cases for arraignment on March 15, 2004 as previously scheduled.

SO ORDERED.10

Still, the petitioners sought reconsideration of the denial of the motion to quash, but the MTC denied their motion on March 25, 2004.11

Unsatisfied, the petitioners commenced a special civil action for certiorari assailing the order dated February 11, 2004 denying their motion to quash, and the order dated March
25, 2004 denying their motion for reconsideration. The special civil action for certiorari was assigned to Branch 7, presided by RTC Judge Manalastas.

On May 25, 2004, the RTC Judge Manalastas dismissed the petition for certiorari because:

As could be gleaned from the order of the public respondent dated February 11, 2004, the issuesraised in the motion toquash are matters of defense that could only be threshed
outin a full blown trial on the merits. Indeed, proof of the actual healing period of the alleged injuries of the private complainants could only be established in the trial of the cases
filed against herein petitioners by means of competent evidence x x x. On the other hand, this court is likewise not in a position, not being a trier of fact insofar as the instant
petition is concerned, to rule on the issue as to whether or not there was probable cause to prosecute the petitioners for the alleged less physical injuries with which they stand
charged. x x x.

All things considered, it would be premature to dismiss, the subject criminal cases filed against the herein petitioners when the basis thereof could be determined only after trial
on the merits. x x x.12

The petitioners moved for the reconsideration, but the RTC denied their motion on July 9, 2004. 13
The petitioners next went to the CA via a petition for certiorari and prohibition to nullify the orders issued by the RTC on May 25, 2004 and July 9, 2004, averring grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the RTC. They urged the dismissal of the criminal cases on the same grounds they advanced in the RTC.

However, on August 31, 2004, the CA promulgated its assailed resolution dismissing the petition for certiorari and prohibition for being the wrong remedy, the proper remedy
being an appeal; and ruling that they should have filed their notice of appealon or before August 18, 2004 due to their receiving the order of July 9, 2004 on August 3, 2004. 14

On December 21, 2004, the CA denied the petitioners motion for reconsideration. 15

Issues

In this appeal, the petitioners submit that:

I.

THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE TRIAL COURTS RULING DENYING THE PETITIONERS' MOTION TO QUASH THE COMPLAINTS
DESPITE THE CLEAR AND PATENT SHOWING THAT BOTH COMPLAINTS, ON THEIR FACE, LACKED ONE OF THE ESSENTIAL ELEMENTS OF THE ALLEGED CRIME
OF LESS SERIOUS PHYSICAL INJURIES.

II.

THE HONORABLE COURT OF APPEALS ERRED IN NOT RULING THAT THE INJURIES SUSTAINED BY THE PRIVATE COMPLAINANTS WERE NOT PERPETRATED BY
THE PETITIONERS.16

Ruling of the Court

The CA did not commit any reversible errors.

Firstly, considering that the certiorari case in the RTC was an original action, the dismissal of the petition for certiorarion May 25, 2004, and the denial of the motion for
reconsideration onJuly 9, 2004, were in the exercise of its original jurisdiction. As such, the orders were final by reason of their completely disposing of the case, leaving nothing
more to be done by the RTC.17 The proper recourse for the petitioners should be an appeal by notice of appeal, 18 taken within 15 days from notice of the denial of the motion for
reconsideration.19

Yet, the petitioners chose to assail the dismissal by the RTC through petitions for certiorari and prohibition in the CA, instead of appealing by notice of appeal. Such choice was
patently erroneous and impermissible, because certiorari and prohibition, being extra ordinary reliefs to address jurisdictional errors of a lower court, were not available to them.
Worthy to stress is that the RTC dismissed the petition for certiorari upon its finding that the MTC did not gravely abuse its discretion in denying the petitioners motion to quash.
In its view, the RTC considered the denial of the motion to quash correct, for it would be premature and unfounded for the MTC to dismiss the criminal cases against the
petitioners upon the supposed failure by the complainants to prove the period of their incapacity or of the medical attendance for them. Indeed, the timeand the occasion to
establish the duration of the incapacity or medical attendance would only be at the trial on the merits.

Secondly, the motion to quash is the mode by which an accused, before entering his plea, challenges the complaint or information for insufficiency on its facein point of law, or
for defects apparent on its face.20 Section 3, Rule 117 of the Rules of Court enumerates the grounds for the quashal of the complaint or information, as follows: (a) the facts
charged do not constitute an offense; (b) the court trying the case has no jurisdiction over the offense charged; (c) the court trying the case has no jurisdiction over the person of
the accused; (d) the officer who filed the information had no authority to do so; (e) the complaint or information does not conform substantially to the prescribed form; (f) more
than one offense is charged except when a single punishment for various offenses is prescribed by law; (g) the criminal action or liability has been extinguished; (h) the
complaint or information contains averments which, if true, would constitute a legal excuse or justification; and (i) the accused has been previously convicted or acquitted of the
offense charged, or the case against him was dismissed or otherwise terminated without his express consent.

According to Section 6,21 Rule 110 of the Rules of Court, the complaint or information is sufficient if it states the names of the accused; the designation of the offense given by
the statute; the acts or omissions complained of as constituting the offense; the name of the offended party; the approximate date of the commission of the offense; and the
place where the offense was committed. The fundamental test in determining the sufficiency of the averments in a complaint or information is, therefore, whether the facts
alleged therein, if hypothetically admitted, constitute the elements of the offense. 22

By alleging in their motion to quashthat both complaints should be dismissed for lack of one of the essential elements of less serious physical injuries, the petitioners were
averring that the facts charged did not constitute offenses. To meet the test of sufficiency, therefore, it is necessary to refer to the law definingthe offense charged, which,in this
case, is Article 265 of the Revised Penal Code, which pertinently states:

Article 265. Less serious physical injuries Any person who shall inflict upon another physical injuries x x x which shall incapacitate the offended party for labor for ten days or
more, or shall require medical assistance for the same period, shall be guilty of less serious physical injuries and shall suffer the penalty of arresto mayor.

x x x x.

Based on the law, the elements of the crime of less serious physical injuries are, namely: (1) that the offender inflicted physical injuries upon another; and (2) that the physical
injuries inflicted either incapacitated the victim for labor for 10 days or more, or the injuries required medical assistance for more than 10 days.

Were the elements of the crime sufficiently averred in the complaints? To answer this query, the Court refersto the averments of the complaints themselves, to wit:

Criminal Case No. 03-276

That on the 18th day of January 2003, at around 7:30 in the evening more or less, in Brgy. Pandayan (St. Francis Subd.), Municipality of Meycauayan, Province of Bulacan,
Republic of the Philippines and within the jurisdiction of this Honorable Court, the above named accused motivated by anger by conspiring, confederating and mutually helping
with another did then and there wilfully, unlawfully and feloniously attack, assault and strike the face of one JOSEFINA GUINTO MORAO, thereby inflicting upon his (sic)
physical injuries that will require a period of 10 to 12 days barring healing and will incapacitate his customary labor for the same period of time attached Medical Certificate (sic).
CONTRARY TO LAW.23

Criminal Case No. 03-277

That on the 18th day of January 2003, at around 7:30 in the evening more or less, in Brgy. Pandayan (St. Francis Subd.), Municipality of Meycauayan, Province of Bulacan,
Republic of the Philippines and within the jurisdiction of the Honorable Court, the above named accused MOTIVATED by anger did then and there wilfully, unlawfully and
feloniously attack, assault and right and give hitting her head against pavement of one PERLA BELTRAN MORAO inflicting the latter physical injuries and will require Medical
Attendance for a period of 12 to 15 days barring unforeseen complication as per Medical Certificate hereto attached.

CONTRARY TO LAW.24

The aforequoted complaints bear out that the elements of less serious physical injuries were specifically averred therein. The complaint in Criminal Case No. 03-276 stated that:
(a) the petitioners "wilfully, unlawfully and feloniously attack, assault and strike the face of one JOSEFINA GUINTO MORAO;" and (b) the petitioners inflicted physical injuries
upon the complainant "that will require a period of 10 to 12 days barring healing and will incapacitate his customary labor for the same period of time;" while that in CriminalCase
No. 03-277 alleged that: (a) the petitioners "wilfully, unlawfully and feloniously attack, assault and right and give hitting her head against pavement of one PERLA BELTRAN
MORAO;" and (b) the petitioners inflicted upon the complainant "physical injuries [that] will require Medical Attendance for a period of 12 to 15 days barring unforeseen
complication."

In the context of Section 6, Rule 110 of the Rules of Court,25 the complaints sufficiently charged the petitioners with less serious physical injuries. Indeed, the complaints
onlyneeded to aver the ultimate facts constituting the offense, not the details of why and how the illegal acts allegedly amounted to undue injury or damage, for such matters,
being evidentiary, were appropriate for the trial. Hence, the complaints were not quashable.

In challenging the sufficiency of the complaints, the petitioners insist that the "complaints do not provide any evidence/s that would tend to establish and to show that the
medical attendance rendered on private complainants actually and in fact lasted for a period exceeding ten (10) days;" and the medical certificates attached merely stated that
"the probable disability period of healing is 10 to 12 days, for Josefina G. Morano, and, 12-15 days, for Perla B. Morano, hence, the findings of the healing periods were merely
speculations, surmises and conjectures ."They insist that the "private complainants should have presented medical certificates that would show the number of days rendered for
medication considering that they filed their complaint on March 15, 2003 or about two (2) months after the alleged incident." 26

The petitioners insistence is utterly bereft of merit. 1w phi1

As the MTC and RTC rightly held, the presentation of the medical certificates to prove the duration of the victims need for medical attendance or of their incapacity should take
place only at the trial, not before or during the preliminary investigation. According to Cinco v. Sandiganbayan, 27 the preliminary investigation, which is the occasion for the
submission of the parties respective affidavits, counter-affidavits and evidence to buttress their separate allegations, is merely inquisitorial, and is often the only means of
discovering whether a person may be reasonably charged with a crime, to enable the prosecutor to prepare the information. 28 It is not yet a trial on the merits, for its only
purpose is to determine whether a crime has been committed and whether there is probable cause to believe that the accused is guilty thereof.29 The scope of the investigation
does not approximate that of a trial before the court; hence, what is required is only that the evidence be sufficient to establish probable causethat the accused committed the
crime charged, not that all reasonable doubtof the guilt of the accused be removed. 30

We further agree with the RTCs observation that "the issues raised in the motion to quash are matters of defense that could only be threshed out in a full blown trial on the
merits. Indeed, proof of actual healing period of the alleged injuries of the private complainant could only be established in the trial of the cases filed against herein petitioners by
means of competent evidence, and to grant the main prayer of the instant petition for the dismissal of the criminal cases against them for less serious physical injuries is to
prevent the trial court to hear and receive evidence in connection with said cases and to render judgments thereon. x x x All things considered, it would be premature to dismiss
the subject criminal cases filed against the herein petitioners when the basis thereof could be determined only after trial of the merits."31

And, lastly, in opting to still assail the denial of the motion to quash by the MTC by bringing the special civil action for certiorariin the RTC, the petitioners deliberately
disregarded the fundamental conditions for initiating the special civil action for certiorari. These conditions were, firstly, the petitioners must show thatthe respondent trial court
lacked jurisdiction or exceeded it, or gravely abused its discretion amounting to lack or excess of jurisdiction; and,secondly, because the denial was interlocutory, they must
show that there was no plain, speedy, and adequate remedy in the ordinary course of law. 32

The petitioners disregard of the fundamental conditions precluded the success of their recourse. To start with, the petitioners did not show that the MTC had no jurisdiction, or
exceeded its jurisdiction in denying the motion to quash, or gravely abused its discretion amounting to lack or excess of jurisdiction in its denial. That showing was the door that
would have opened the way to their success with the recourse. Yet, the door remained unopened to them because the denial by the MTC of the motion to quash was
procedurally and substantively correct because the duration of the physical incapacity or medical attendance should be dealt with only during the trial on the merits, not at the
early stage of dealing with and resolving the motion to quash. As to the second condition, the fact that the denial was interlocutory, not a final order, signified that the MTC did
not yet completely terminate its proceedings in the criminal cases. The proper recourse of the petitioners was to enter their pleas as the accused, go to trial in the MTC, and
should the decision of the MTC be adverse to them in the end, reiterate the issue on their appeal from the judgment and assign as error the unwarranted denial of their motion
to quash.33 Certiorari was not available to them in the RTC because they had an appeal, or another plain, speedy or adequate remedy in the ordinary course of law.

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the resolutions promulgated on August 31, 2004 and December 21, 2004; and ORDERS the
petitioners to pay the costs of suit.

SO ORDERED.

G.R. No. 167225 October 22, 2014

RADIO MINDANAO NETWORK, INC., Petitioner,


vs.
MICHAEL MAXIMO R. AMURAO III, Respondent.

DECISION

BERSAMIN, J.:

This appeal deals with the issue of whether the quitclaim executed by the employee was valid and effective against him.
Antecedents

On February 16, 1989, petitioner Radio Mindanao Network, Inc. (RMN) hired respondent Michael Maximo R. Amurao III (Michael) as a radio broadcaster for its DWKC-FM
station and production manager for its metropolitan radio operations at a monthly salary of P28,400.00.1

Years later, RMN decided to reformat and restructure the programming of its DWKC-FM station to meet the demands of the broadcasting industry. On April 25, 2002, the
president of RMN met with Michael and other personnel of the station to inform them of the management's decision, advising them that the reformatting and restructuring of the
station's programs would necessarily affect their employment; but assuring that they would be paid their retirement pay and other benefits.2 To formalize the discussions had in
their meeting, RMN furnished Michael and other personnel separate letters dated May 14, 2002 reading as follows:

This is to formalize your meeting with our President Mr. Eric S. Canoy, last April 25, 2002. During said meeting, you have been informed that in line with the Networks
reformatting/restructuring program for operations, your services are deemedended effective June 15, 2002. However, effective May 16, 2002, you will no longer [be] required to
report for work. And for the services you have rendered, Radio Mindanao Network, Inc. will pay your separation benefits, service incentive leave pay, proportionate 13th month
pay and salary for the month of May 16 to June 15, 2002.

Radio Mindanao Network, Inc. extends its gratitude and prayers to you and to your loved ones. Thank you and God bless. 3

However, Michael and the other personnel refused to sign in receipt when the letters were served on them. Not long after, however, they accepted the offer of RMN and
executed affidavits relinquishing all their claims against the employer. In Michaels case, the Affidavit of Release/Quitclaim Dated May 30, 2002 (quitclaim) stated as follows:

AFFIDAVIT OF RELEASE/QUITCLAIM

That I, MICHAEL MAXIMO R. AMURAO III, of legal age, Filipino, and a resident of Manila after having been duly sworn to according to law, hereby depose and say:

1. That I have retired from my position as Production Manager from RADIO MINDANAO NETWORK INC.EFFECTIVE June 15, 2002;

2. That for and in consideration of sum THREE HUNDRED ELEVEN THOUSAND NINE HUNDRED TWENTY-TWO PESOS & 00 CENTS. (P311,922.00)in
Philippine Currency, to me in hand paid by RADIO MINDANAO NETWORK, INC. in additional retirement benefits per corrected employment period, receipt of
which is hereby acknowledged to my complete and full satisfaction;

3. That I hereby RELEASE AND DISCHARGE RADIO MINDANAO NETWORK, INC., its Officers, Directors, and Managers from any and all claims and demands
whatsoever as maybe due to me incident to employment with radio station DWKC-FMand/or cessation of the same with Radio Mindanao Network, Inc., on June
15, 2002.

4. That I hereby state further that I have no more claims, right or action whatsoever nature whether past, present or contingent against said corporation;

5. That, I manifest that the terms of this release and quitclaim have been read and thoroughly understoodby me and accepted said terms on my own consent." 4

On October 14, 2002, or 5 months after receiving his benefits and his execution of the quitclaim, Michael filed a complaint against RMN for illegal dismissal with money claims in
the National Labor Relations Commission (NLRC).5

Decision of the Labor Arbiter

On November 12, 2002, the Labor Arbiter rendered a decision 6 declaring the dismissal of Michael as illegal on the ground that the reformatting and restructuring of RMNs radio
programming did not fall under any of the just or authorized causes specified under Article 282, Article 283 and Article 284 of the Labor Codethat would make the termination of
his employment valid; and holding the quitclaim Michael signed as void because it was not voluntarily executed. The decision disposed thusly:

WHEREFORE, premises considered, judgment is hereby rendered declaring that the dismissal of the complainant from the respondents employment is illegal and that the
Affidavit of Release/Quitclaim is null and void.

Accordingly, the respondent is ordered as follows:

1) To reinstate the complainant tohis former position as radio broadcaster and production manager without loss of seniority rights;

2) To pay the complainant backwages which as of the date of this decision already amounts toP159,040.00 until his actual reinstatement;

3) To pay the complainant moral damages in the amount of Php100,000.00 and exemplary damages in the amount of Php100,000.00 and

4) To pay the complainant attorneys fees equivalent to 10 percent of the award as stated above.

The complainants claim for regular holiday pay and premiums on holiday pay and rest day are dismissed for lack of sufficient evidence.7

Ruling of the NLRC

RMN appealed to the NLRC, contending that the decision of the Labor Arbiter was premature for being rendered without first issuing an order either setting the case for hearing
or declaring the same submitted for decision in violation of Rule V, Section II of the Rules of Procedure of the NLRC, as amended;8 that the quitclaim signed in its favor was valid
and binding because it represented a voluntary and reasonable settlement of Michaels claims; and that Michael was estopped from filing the illegal dismissal case against it. 9
In its decision rendered on November 28, 2003, 10 the NLRC found no merit in the contention of RMN that the appealed decision was prematurely rendered. It noted that the
constancia dated October 28, 2002, which stated "counsel for respondent appeared and asked for a period of ten (10) days from today within which to file reply and after the
lapse of the allotted period, with or without said pleading, case shall be submitted for resolution," clearly showed that RMN was sufficiently apprised that the case would be
decided after the lapse of the 10-day period RMN prayed for regardless of whether it filed its reply or not. It held that the quitclaim was null and void for not being voluntarily
executed; modified the decision of the Labor Arbiter in that the amount already received by Michael was to be deducted from the monetary benefits awarded to him;and deleted
the awards for moral and exemplary damages.

RMN moved for reconsideration, but the NLRC denied its motion. 11

Decision of the Court of Appeals

Consequently, RMN filed with the Court of Appeals (CA) its petition for certiorari,12 submitting that the NLRC thereby committed a grave abuse of its discretion amounting to
lackor excess of its jurisdiction.

On August 31, 2004, however, the CA denied due course to the petition and dismissed it for lack of merit. 13

RMN sought for reconsideration of the resolution of the CA, but its motion for that purpose was similarly denied by the CA.

Issues

Hence, this appeal by petition for review on certiorari,14 with RMN raising the following issues, to wit:

1. Whether or not the November 12, 2002 decision of the Labor Arbiter was prematurely rendered;

2. Whether or not the November 12, 2002 decision of the Labor Arbiter was rendered in violation of petitioners right to due process;

3. Whether or not the Affidavit of Release/Quitclaim executed by Michael was valid and binding; and

4. Whether or not private respondents dismissal is legal. 15

Ruling of the Court

That Michael was illegally dismissed from his employment is beyond question. RMN does not dispute this. Its only submission now is that it was discharged from whatever
claims Michael had against it arising from his employment by virtue of the Affidavit of Release/Quitclaim he signed in its favor. Accordingly, the remaining question to resolve is
whether the quitclaim was valid and binding.

This Court recognizes that the issue concerning the validity of the quitclaim was a question of fact that isnot within the province of a review on certiorari under Rule 45. However,
there is reason to hold that the CA manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a different conclusion herein. On that
basis, the Court has to delve into the factual issue, and has to review the evidence again to ensure that its ruling on the issue jibes with the evidence on record.16 Its doing so is
an acceptable exception to the general rule of nonreview of factual matters. 17

The CA was quick to rule that Michael had been coerced into signing the quitclaim. It did so because he had assailed the voluntariness of the execution of the quitclaim. It noted
thatthe fact that Michael had refused to sign the May 14, 2002 letter and thereby indicate his acceptance of the terms of his termination stated therein was proof enough of the
quitclaim not being freely signed.18

The Court finds and considers the CAs ruling unfounded.

RMN consistently contended that a series of negotiations between Michael and the management preceded the giving of the settlement pay that they had considered as
reasonable.19 Not once did Michael refute this contention. Worth noting is that Michael signed the quitclaim to release RMN from any and all claims that could be due to him by
reason of his employment after he receiving the agreed settlement pay of P311,922.00.

Not all quitclaims are per sein valid or against public policy. A quitclaim is invalid or contrary to public policy only: (1) where there is clear proof that the waiver was wrangled
from an unsuspecting or gullible person; or (2) where the terms of settlementare unconscionable on their face. In instances of invalid quitclaims, the law steps in to annul the
questionable waiver. Indeed, there are legitimate waivers that represent the voluntary and reasonable settlements of laborers claims that should be respected by the Court as
the law between the parties. Where the party has voluntarily made the waiver, with a full understanding of its terms as well as its consequences, and the consideration for the
quitclaimis credible and reasonable, the transaction must be recognized as a valid and binding undertaking, and may not later be disowned simply because of a change of
mind.20 A waiver is essentially contractual.

In our view, the requisites for the validity of Michaels quitclaim were satisfied. We explain.
1wphi1

Firstly, Michael acknowledged in his quitclaim that he had read and thoroughly understood the terms of his quitclaim and signed it of his own volition. Being a radio broadcaster
and production manager, he occupied a highly responsible position in the company.It would be implausible to hold, therefore, that he could be easily duped into simply signing
away his rights. Besides, the language and content ofthe quitclaim were clear and uncomplicated such that he could not claim that he did not understand what he was signing.

Secondly, the settlement pay of P311,922.00 was credible and reasonable considering that Michael did not even assail such amount as unconscionably low, or even state that
he was entitled to a higher amount.

Thirdly, that he was required to sign the quitclaim as a condition to the release of the settlement pay21 did not prove that its execution was coerced. Having agreed to part with a
substantial amount of money, RMN took steps to protect its interest and obtain its release from all obligations once it paid Michael his settlement pay, which it did in this case.
And, lastly, that he signed the quitclaim out of fear of not being able to provide for the needs of his family and for the schooling of his children did not immediately indicate that
he had been forced to sign the same.22 Dire necessity should not necessarily be an acceptable ground for annulling the quitclaim, especially because it was not at all shown that
he had been forced to execute it. Nor was it even proven that the consideration for the quitclaim was unconscionably low, and that he had been tricked into accepting the
consideration.23

With the quitclaim having been freely and voluntarily signed, RMN was released and absolved from any liability in favor of Michael. Suffice it to say that the quitclaim is
ineffective in barring recovery of the full measure of an employee's rights only when the transaction is shown to be questionable and the consideration is scandalously low and
inequitable.24 Such is not true here.

WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS ASIDE the decision promulgated on August 31, 2004; DECLARES the Affidavit
of Release/Quitclaim executed by and between respondent Michael Maximo R. Amurao III and petitioner Radio Mindanao Network, Inc. valid and binding; and DISMISSES the
complaint for illegal dismissal of Michael Maximo R. Amurao III. No pronouncement on costs of suit.

SO ORDERED.

G.R. No. 187702 October 22, 2014

SECURITIES AND EXCHANGE COMMISSION, Petitioner,


vs.
THE HONORABLE COURT OF APPEALS, OMICO CORPORATION, EMILIO S. TENG AND TOMMY KIN HING TIA, Respondents.

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

G.R. No. 189014

ASTRA SECURITIES CORPORATION, Petitioner,


vs.
OMICO CORPORATION, EMILIO S. TENG AND TOMMY KIN HING TIA, Respondents.

DECISION

SERENO, CJ:

G.R. No. 187702 is a Petition for Certiorari under Rule 65 of the Rules of Court seeking to nullify the Court of Appeals (CA) Decision1 dated 18 March 2009 in CA-G.R. SP No.
106006. G.R. No. 189014 is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the same Decision, as well as the CA Resolution2 dated 9 July
2009. On 12 October 2009, the Court resolved to consolidate the two cases. 3

The CA Decision ruled that because controversies involving the validation of proxies are considered election contests under the Interim Rules of Procedure Governing Intra-
Corporate Controversies, they are properly cognizable by the regular courts, not by the Securities and Exchange Commission. The CA Resolution denied the motion for
reconsideration filed by Astra Securities Corporation.

FACTS

Omico Corporation (Omico) is a company whose shares of stock arelisted and traded in the Philippine Stock Exchange, Inc. 4 Astra Securities Corporation (Astra) is one of the
stockholders of Omico owning about 18% of the latters outstanding capital stock.5

Omico scheduled its annual stockholders meeting on 3 November 2008. 6 It set the deadline for submission of proxies on 23 October 2008 and the validation of proxies on 25
October 2008. Astra objected to the validation of the proxies issued in favor of Tommy Kin Hing Tia (Tia), representing about 38% of the outstanding capital stock of
Omico.7 Astra also objected to the inclusion of the proxies issued in favor of Tia and/or Martin Buncio, representing about 2% of the outstanding capital stock of Omico. 8

Astra maintained that the proxy issuers, who were brokers, did not obtain the required express written authorization of their clients when they issued the proxies in favor of Tia.
In so doing, the issuers were allegedly in violation of SRC Rule 20(11)(b)(xviii)9 of the Amended Securities Regulation Code (SRC or Republic Act No. 8799)
Rules.10 Furthermore, the proxies issued in favor of Tia exceeded 19, thereby giving rise to the presumption of solicitation thereof under SRC Rule 20(2)(B)(ii)(b) 11 of the
Amended SRC Rules. Tia did not comply with the rules on proxy solicitation, in violation of Section 20.1 12 of the SRC.

Despite the objections of Astra, Omicos Board of Inspectors declared that the proxies issued in favor of Tia were valid.13

On 27 October 2008, Astra filed a Complaint14 before the Securities and Exchange Commission (SEC) praying for the invalidation of the proxies issued in favor of Tia. Astra also
prayed for the issuance of a cease and desist order (CDO) enjoining the holding of Omicos annual stockholders meeting until the SEC had resolved the issues pertaining to the
validation of proxies.

On 30 October 2008, SEC issuedthe CDO enjoining Omico from accepting and including the questioned proxies in determining a quorum and in electing the members of the
board of directors during the annual stockholders meeting on 3 November 2008. 15

Attempts to serve the CDO on 3 November 2008 failed, and the stockholders meeting proceeded as scheduled with 52.3% of the outstanding capital stock of Omico present in
person or by proxy.16 The nominees for the board of directors were elected upon motion.17

Astra instituted before the SEC a Complaint18 for indirect contempt against Omico for disobedience of the CDO. On the other hand, Omico filed before the CA a Petition for
Certiorari and Prohibition19 imputing grave abuse of discretion on the part of the SEC for issuing the CDO.

RULING OF THE CA
In the assailed Decision dated 18March 2009, the CA declared the CDO null and void. 20

The CA held that the controversy was an intra-corporate dispute.21 The SRC expressly transferred the jurisdiction over actions involving intracorporate controversies from the
SEC to the regional trial courts.22 Furthermore, Section 2, Rule 623 of the Interim Rules of Procedure Governing Intra-Corporate Disputes,24 provides that any controversy or
dispute involving the validation of proxies is an election contest, the jurisdiction over which has also been transferred by the SRC to the regular courts.25

Thus, according to the CA, the SEC committed grave abuse of discretion in taking cognizance of Astras complaint. 26 The CDO was a patent nullity, for an order issued without
jurisdiction is no order at all.

Aggrieved by the CA Decision, the SEC filed before us the instant Petition for Certiorari docketed as G.R. No. 187702.27 Meanwhile, Astra filed a Motion for Reconsideration
before the CA,28 which subsequently denied the motion in the assailed Resolution dated 9 July 2009. On 14 September 2009, Astra filed the instant Petition for Review on
Certiorari docketed as G.R. No. 189014.29 The Court consolidated the two petitions on 12 October 2009. 30

ISSUE

Whether the SEC has jurisdiction over controversies arising from the validation of proxies for the election of the directors of a corporation.

OUR RULING

About a month after the CA issued the assailed Decision, this Court promulgated GSIS v. CA, 31 which squarely answered the above issue in the negative.

In that case, we observed that Section 632 (g) of Presidential Decree No. (P.D.) 902-A dated 11 March 1976 conferred on SEC the power "[t]o pass upon the validity of the
issuance and use of proxies and voting trust agreements for absent stockholders ormembers." Section 6, however, opens thus: "In order to effectively exercise such jurisdiction
x x x." This opening clearly refers to the preceding Section 5.33 The Court pointed out therein that the power to pass upon the validity of proxies was merely incidental or ancillary
to the powers conferred on the SEC under Section 5 of the same decree. With the passage of the SRC, the powers granted to SEC under Section 5 were withdrawn, together
withthe incidental and ancillary powers enumerated in Section 6.

While the regular courts now had the power to hear and decide cases involving controversies in the election of directors, it was not clear whether the SRC also transferred to
these courtsthe incidental and ancillary powers of the SEC as enumerated in Section 6 of P.D. 902-A. Thus, in GSIS v. CA, it was necessary for the Court to determine whether
the action to invalidate the proxies was intimately tied to an election controversy. Hence, the Court pronounced:

Under Section 5(c) of PresidentialDecree No. 902-A, in relation to the SRC, the jurisdiction of the regular trial courts with respect to election related controversies is specifically
confined to "controversies in the election or appointment of directors, trustees, officers or managers of corporations, partnerships, or associations." Evidently, the jurisdiction of
the regular courts over so-called election contests or controversies under Section 5 (c) does not extend toevery potential subject that may be voted on by shareholders, but only
to the election of directors or trustees, in which stockholders are authorized to participate under Section 24 of the Corporation Code.

This qualification allows for a useful distinction that gives due effect to the statutory right of the SEC to regulate proxy solicitation, and the statutory jurisdiction of regularcourts
over election contests or controversies. The power of the SEC toinvestigate violations of its rules on proxy solicitation is unquestioned whenproxies are obtained to vote on
matters unrelated to the cases enumerated under Section 5 of Presidential Decree No. 902-A. However, when proxies are solicited in relation to the election of corporate
directors, the resulting controversy, even if it ostensibly raised the violation of the SEC rules on proxy solicitation, should be properly seen as an election controversy within the
original and exclusive jurisdiction of the trial courts by virtue of Section 5.2 of the SRC in relation to Section 5 (c) of Presidential Decree No. 902-A.

The conferment of original and exclusive jurisdiction on the regular courts over such controversies in the election of corporate directors must be seen as intended to confine to
one body the adjudication of all related claims and controversy arising from the election of such directors. For that reason, the aforequoted Section 2, Rule 6 of the Interim Rules
broadly defines the term "election contest" as encompassing all plausible incidents arising from the election ofcorporate directors, including: (1) any controversy or dispute
involving title or claim to any elective office in a stock or nonstock corporation, (2) the validation of proxies, (3) the manner and validity of elections and (4) the qualifications of
candidates, including the proclamation of winners. If all matters anteceding the holding of such election which affectits manner and conduct, such as the proxy solicitation
process, are deemed within the original and exclusive jurisdiction of the SEC, then the prospect of overlapping and competing jurisdictions between that body and the regular
courts becomes frighteningly real. From the languageof Section 5 (c) of Presidential Decree No. 902-A, it is indubitable that controversies as to the qualification of voting shares,
or the validity of votes cast in favor of a candidate for election to the board of directors are properly cognizable and adjudicable by the regular courts exercising original and
exclusive jurisdiction over election cases.34 x x x.

The ruling harmonizes the seeming conflict between the Amended SRC Rules promulgated by the SEC and the Interim Rules of Procedure Governing Intra-Corporate Disputes
promulgated by the Court.

SRC Rule 20(11)(b)(xxi) of the Amended SRC Rules provides:

SRC RULE 20.

Disclosures to Stockholders Prior to Meeting

(formerly, SRC Rule 20 The Proxy Rule)

xxxx

11. Other Procedural Requirements

xxxx

b. Proxy
xxxx

xxi. In the validation of proxies, a special committee of inspectors shall be designated or appointed by the Board of Directors which shall be empoweredto pass on the validity of
proxies. Any dispute that may arise pertaining thereto, shall be resolved by the Securities and Exchange Commission upon formal complaint filed by the aggrieved party, or by
the SEC officer supervising the proxy validation process. (Emphasis supplied)

On the other hand, these are the provisions of Section 1, Rule 1; and Section 2, Rule 6 of the Interim Rules of Procedure Governing IntraCorporate Disputes:

RULE 1
General Provisions

SECTION 1. (a) Cases Covered These Rules shall govern the procedure to be observed in civil cases involving the following:

a) Devices or schemes employed by, or any act of, the board of directors, business associates, officers or partners, amounting to fraud or misrepresentation which
may be detrimental to the interest of the public and/or of the stockholders, partners, or members of any corporation, partnership, or association;

b) Controversies arising out of intra-corporate, partnership, or association relations, between and among stockholders, members, or associates; and between, any
or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates, respectively;

c) Controversies in the election or appointment of directors, trustees, officers, or managers of corporations, partnerships, or associations;

d) Derivative suits; and

e) Inspection of corporate books.

xxxx

RULE 6
Election Contests

xxxx

SECTION 2. Definition. An election contest refers to any controversy or dispute involvingtitle or claim to any elective office in a stock or nonstock corporation, the validation of
proxies, the manner and validity of elections, and the qualifications of candidates, including the proclamation of winners, to the office of director, trustee or other officer directly
elected by the stockholders in a close corporation or by members of a non-stock corporation where the articles of incorporation or by-laws so provide. (Emphases supplied)

The Court explained that the powerof the SEC to regulate proxies remains in place in instances when stockholders vote on matters other than the election of directors.35 The test
is whether the controversy relates to such election. All matters affecting the manner and conduct of the election of directors are properly cognizable by the regular courts.
Otherwise, these matters may be brought before the SEC for resolution based on the regulatory powers it exercises over corporations, partnerships and associations.

Astra endeavors to remove the instant case from the ambit of GSIS v. CAby arguing that 1) the validation of proxies in this case relates to the determination of the existence of a
quorum; and 2) no actual voting for the members of the board of directors was conducted, as the directors were merely elected by motion.

Indeed, the validation of proxies in this case relates to the determination of the existence of a quorum. Nonetheless, it is a quorum for the election of the directors, and, assuch,
1w phi1

which requires the presence in person or by proxy of the owners of the majority of the outstanding capital stock of Omico.36 Also, the fact that there was no actual voting did
not make the election any less so, especially since Astra had never denied that an election of directors took place.

We find no merit either in the proposal of Astra regarding the "two (2) viable, non-exclusive and successive legal remedies to question the validity of proxies." 37 It suggests that
the power to pass upon the validity of proxies to determine the existence of a quorum prior to the conduct of the stockholders meeting should lie with the SEC; but, after the
stockholders meeting, questions regarding the use of invalid proxies in the election of directors should be cognizable by the regular courts, since there was already an election
to speak of.

First, this interpretation is akin to the argument struck down by the Court in GSIS v. CA. If the Court adopts the suggestion, "we would be perpetually confronted with the
spectacle of election controversies being heard and adjudicated by both the SEC and the regular courts, made possible through a mere allegation that the anteceding x x x
process was errant, but the competing cases [were] filed with one objective in mind - to affect the outcome of the election of the board of directors." 38

Second, the validation of proxies serves a number of purposes, including determining the existence of a quorum and ascertaining the authenticity of proxies to be used for the
election of directors at the stockholders' meeting. Section 2, Rule 6, of the Interim Rules of Procedure Governing Intra-Corporate Disputes provides that an election contest
covers any controversy or dispute involving the validation of proxies, in general. Thus, it can only refer to all the beneficial purposes that validation of proxies can bring about
when made in connection with a forthcoming election of directors. Thus, there is no point in making distinctions between who has jurisdiction before and who has jurisdiction
after the election of directors, as all controversies related thereto - whether before, during or after - shall be passed upon by regular courts as provided by law. The Court closes
with an observation.

As in the instant cases, GSIS v. CA is a consolidation of two cases, one of which was filed by a private party and the other by the SEC itself. In both cases, the parties were
aggrieved by the CA ruling, so they filed the cases seeking a pronouncement from the Court that it recognizes the jurisdiction of the SEC over the controversy.

Calling to mind established jurisprudential principles, the Court therein ruled that quasi-judicial agencies do not have the right to seek the review of an appellate court decision
reversing any of their rulings.39 This is because they are not real parties-in-interest. Thus, the Court expunged the petition filed by the SEC for the latter's lack of capacity to file
the suit. So it must be in the instant cases.

WHEREFORE, the petition in G.R. No. 187702 is EXPUNGED for lack of capacity of petitioner to file the suit. 1wphi 1
The petition in G.R. No. 189014 is DENIED. The Court of Appeals Decision dated 18 March 2009 and Resolution dated 9 July 2009 in CA-G.R. SP No. 106006 are AFFIRMED.

SO ORDERED.

G.R. No. 197442 October 22, 2014

MAJESTIC FINANCE AND INVESTMENT CO., INC., Petitioner,


vs.
JOSE D. TITO, Respondent.

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

ORNELIO MENDOZA and PAULINA CRUZ, Petitioners-Intervenors,


vs.
JOSE NAZAL and ROSITA NAZAL, Respondents-Intervenors.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated October 30, 2008 and the Resolution3dated June 22, 2011 of the Court of Appeals (CA) in CA-G.R. CV.
No. 81814, which reversed and set aside the Order4 dated July 28, 2003 of the Regional Trial Court of Pasig City, Branch 67 (RTC) in Civil Case No. 27958, and remanded the
case to the court a quo for further proceedings.

The Facts

Petitioner Majestic Finance and Investment Co., Inc. (Majestic) was the judgment obligee in Civil Case No. 20538, a case for rescission of contract (rescission case) filed before
the Court of First Instance of Rizal, Branch 21 (CFI), now the RTC. In order to satisfy the judgment by default, the Sheriff levied upon the property of the judgment obligor,
Thomas D. Cort (Cort), covered by Transfer Certificate of Title (TCT) No. 1104725 (subject property), and sold the same at a public auction to Paulina Cruz (Cruz), the highest
bidder, for a total bid price of 54,460.00. After the redemption period had lapsed, Cruz secured TCT No. 241118 on January 4, 1978 in her name and, thereafter, soldthe subject
property to Cornelio Mendoza (Mendoza) who was issued TCT No. 241177 on January 9, 1978. 6

On November 21, 1977, respondent Jose D. Tito (Tito) filed with the same CFI against Majestic a petition to declare the proceedings and the Decision in the rescission case null
and void, docketed as Civil Case No. 27958 (annulment case). 7 He contended that the court did not acquire jurisdiction over the person of his predecessor-in-interest, Cort,8 who
had passed away on July 9, 1970, or almost five years (5) prior to the filing of the rescission case on January 5, 1975. 9 His standing to file the annulment case was based on his
purported ownership of the subject property, which he allegedly inherited from Cort by way of a devise under his Last Will and Testament dated June 4, 197010 that was later
probated and allowed in Westmoreland County, Pennsylvania, United States of America. 11

Prior to the institution of the annulment case, Tito had, however, already transmitted his interest over the subject property to spouses Jose and Rosita Nazal (Sps. Nazal) on
September 13, 1977,12 prompting the latter to join him in the proceedings as intervenors, impleading Cruz and Mendoza on April 25, 1979. 13 Earlier, or on January 5,1979,
Mendoza filed against Sps. Nazal a case for forcible entry and another case for recovery of possession, which were dismissed on February 22, 197914 and archived pending the
resolution ofthe annulment case,15respectively.

On August 16, 1979, the CFI allowed the intervention of Sps. Nazal in the annulment case, 16 which order eventually attained finality as shown by the entry of judgment issued by
the Court on August 29, 1985 in G.R. No. L-69353.17 In the interim, the proceedings in the annulment case were indefinitely suspended.18

On December 9, 1987, Sps. Nazal moved that the annulment case be set for pre-trial but the motion was not acted upon.19 It appears that the records were among those gutted
by fire on June 11, 1988, and none of the parties or the court did anything for a period of almost eleven (11) years. 20 Meanwhile, Sps. Nazal remained in possession of the
subject property.21 Sometime in 1998, Sps. Nazal received summons in an unlawful detainer case filed by the new registered owners of the subject property, spouses Mariano
and Rhodora Lim (Sps. Lim),22which apparently prompted Sps. Nazal to set the annulment case for hearing. Learning of the loss of the records, Sps. Nazal moved for
reconstitution23 of judicial records and for revival 24 of the proceedings in the annulment case, which was opposed by Majestic. Later, Majestic filed an Urgent Motion to Declare
Case as already Closed and Terminated with Opposition to Revive the Case, 25 contending, among others, that Tito, the principal petitioner in the annulment case, had lost
interest in prosecuting the case and that Sps. Nazal have no personality to further prosecute the same. 26

In another proceeding, Sps. Nazal opposed the unlawful detainer case filed by Sps. Lim all the way tothe Court, but to no avail.27

The RTC Proceedings

In an Order28 dated February 2, 2000 (February 2, 2000 Order), the RTC dismissed the annulment case withprejudice, and declared it closed and terminated for failure of Tito
and Sps. Nazal to prosecute their claim for an unexplained and unreasonable length of time. 29 It held that while it was incumbent upon the Clerk of Court to include the case in
the trial calendar, set the date for trial, and notify the parties thereof, these did not relieve the plaintiff of his duty to prosecute the case diligently and to call the attention of the
court to calendar the case if the latter has neglected to do so because of the numerous cases it has to attend to. 30

Upon Sps. Nazals motion for reconsideration,31 however, the RTC, in an Order32 dated August 23, 2002 (August 23,2002 Order), set aside its earlier dismissal order "in the
interest of justice." It held that as both Majestic and Sps. Nazal were guilty of inaction since 1987 after the latters Motion to Set Case for Pre-Trial was filed, no one should be
allowed to benefit from the other and the case must be allowed to proceed on the merits, 33 especially in this case where Sps. Nazal has a material interest such that it would be
them, not Tito, who would be benefited or injured by the judgment in the said case. 34

Dissatisfied, Majestic moved for reconsideration 35 on September 27, 2002, which was granted in an Order36 dated July 28, 2003 (July 28, 2003 Order), declaring the February 2,
2000 Order to be final and executory. The RTC ruled that an intervention is regarded as mere collateral or accessory, or ancillary to the original action, suchthat the dismissal of
the original case necessarily includes that of the petition-in-intervention.37 It further held that even if Sps. Nazal were to be consideredas real parties-in-interest, the better
remedy for them is to file a separate action, as principal plaintiffs, against Majestic. 38
Aggrieved, Sps. Nazal elevated the matter before the CA. 39

The CA Ruling

In a Decision40 dated October 30, 2008, the CA reversed and set aside the RTCs July 28, 2003 Order, holding that Sps. Nazal are entitled to proceed with the prosecution of
their cause of action against Majestic after having been duly allowed to intervene in the annulment case. 41 It further held that to require Sps. Nazal to refile another case for the
settlement of their claim will result in unnecessary delay and expense, and will entail multiplicity of suits, hence, defeat the very purpose of intervention, i.e., to hear and
determine at the same timeall conflicting claims which may be made on the subject matter in litigation,and to expedite litigation and settle in one action and by a single judgment
the whole controversy among the persons involved.42 Accordingly, it remanded the case to the RTC for further proceedings. 43

Majestics motion for reconsideration44 was denied by the CA in a Resolution45 dated June 22, 2011, hence, the instant petition.

The Issue Before the Court

The essential issue for the Courts resolution is whether or not the CA erred in allowing Sps. Nazal to prosecute their claim against Majestic.

The Courts Ruling

The petition is meritorious.

Sps. Nazal, who were joined as intervenors in the proceedings, had already lost their right to participate therein, in view of the RTCs dismissal of the main action which was
decreed pursuant to Section 3, Rule 17 of the Rules of Court, 46 stemming from the failure of the putative plaintiff, Tito, to diligently and expeditiously prosecutethe same for an
unjustified and unreasonable length of time. Case law states that intervention is never an independent action, but is merely ancillary and supplemental to the existing
litigation. Its purpose is not to obstruct or unnecessarily delay the placid operation of the machinery of trial, but merely to afford one not an original party, who is claiming a
1wphi1

certain right or interest in the pending case, the opportunity to appear and be joined so he could assert or protect such right or interests. In other words, the right of an interven
or should only be in aid of the right of the original party. Thus, as a general rule, 47 where the right of the latter has ceased to exist, there is nothing to aid or fight for and,
consequently, the right of intervention ceases.48

It bears pointing out that, despite having been joined in the annulment case as intervenors, Sps. Nazal should have actually been deemed as the cases plaintiffs considering
that Titohad already transferred his interest over the disputed property to the former, even prior to the institution of the proceedings. Verily, where a transfer of interest was
effected before the commencement of the suit as in this case the transferee must necessarily be the plaintiff (or defendant, as the case may be) 49 as it is he who stands to be
benefited or injured by the judgment in the suit. 50 Thus, on the supposition that they were the cases plaintiffs, Sps. Nazal should bear the obligation imputed by the RTC upon
Tito to diligently and expeditiously prosecute the action within a reasonable length of time. The RTC, however, pointed out that Sps. Nazal failed in this regard. As the records
would bear, while Sps. Nazal moved to set the case for pre-trial on December 9, 1987, no further action was taken by them after the court a quo failed to calendar the case and
set the same for pre-trial. Disconcerting is the fact that it took Sps. Nazal almost eleven (11) years, or on October 20, 1998 to move for the setting of the case for hearing, as
they were apparently compelled to act only upon the threat of being dispossessed of the subject property with the filing of the unlawful detainer case by the new registered
owners, Sps. Lim. Notably, while under both the present 51 and the old52 Rules of Court, the clerk of court has the duty to set the case for pre-trial, the same does not relieve the
plaintiffsof their own duty to prosecute the case diligently. 53 Truth be told, the expeditious disposition of cases is as much the duty of the plaintiff as the court. 54

Furthermore, the Court has perused the records and found no sufficient justification for Sps. Nazal's inordinately long inaction over the annulment case. Other than the
allegation that their counsel assured them that their claim of ownership was well-founded,55 they failed to even offer an explanation as to why they had to wait for more than a
decade to proceed with the case. As the Court sees it, this is an unreasonably long time for the defendant to wait for the outcome of a trial that has yet to commence, especially
as the case had been filed by their predecessor-in-interest, Tito, as early as November 21, 1977.56

All told, whether one treats Sps. Nazal as mere intervenors or, properly speaking, as the plaintiffs in the annulment case, the Court finds no cogent reason as to why the same
should not be dismissed. In fine, Sps. Nazal are precluded from prosecuting their claim against Majestic. WHEREFORE, the petition is GRANTED. The Decision dated October
30, 2008 and the Resolution dated June 22, 2011 of the Court of Appeals in CA-G.R. CV. No. 81814 are hereby REVERSED and SET ASIDE. A new judgment is entered
DISMISSING Civil Case No. 27958. SO ORDERED.

G.R. No. 200454 October 22, 2014

HOLY TRINITY REALTY & DEVELOPMENT CORPORATION, Petitioner,


vs.
VICTORIO DELA CRUZ, LORENZO MANALAYSAY, RICARDO MARCELO, JR. and LEONCIO DE GUZMAN,Respondents.

DECISION

BERSAMIN, J.:

Land on which no agricultural activity is being conducted is not subject to the coverage of either Presidential Decree No. 27 or Republic Act No. 6657 (Comprehensive Agrarian
Reform Law).

The Case

The petitioner appeals the decision promulgated on July 27, 2011, 1 whereby the Court of Appeals (CA) reversed the decision issued by the Office of the President (OP) on
March 1, 2010,2 and reinstated the order of the OIC-Regional Director of the Department of Agrarian Reform in Regional Office III rendered on August 18, 2006.3

Antecedents
Subject of the controversy is a parcel of land located in Brgy. Dakila, Malolos, Bulacan (Dakila property) registered in the name of Freddie Santiago under Transfer Certificate of
Title (TCT) No. T-103698 of the Registry of Deeds of Bulacan with an area of 212,500 square meters. The Dakila property used to be tenantedby Susana Surio,Cipriano Surio,
Alfonso Espiritu, Agustin Surio, Aurelio Surio, Pacifico Eugenio, Godofredo Alcoriza, Lorenza Angeles, Ramon Manalad, Toribio Hernandez, Emerciana Montealegre, Pedro
Manalad, Celerino Ramos and Cecilia L. Martin, 4 but in August 1991, these tenants freely and voluntarily relinquished their tenancy rights infavor of Santiago through their
respective sinumpaang pahayag5 in exchange for some financial assistance and individual homelots titled and distributed in their names, as follows: 6

Area
TCT No. Name of Tenant/Successor
(sq. m.)

T-73006 Susana Surio 186

T-73007 Cipriano Surio 150

T-73008 Alfonso Espiritu 300

T-73009 Agustin Surio 300

T-73010 Aurelio Surio 264

T-73011 Pacifico Eugenio 300

T-73012 Godofredo Alcoriza 300

T-73013 Lorenza Angeles 300

T-73014 Ramon Manalad 300

Toribio M. Hernandez 300

Emerciana Montealegre 300

Pedro Manalad 300

T-73015 Celerino Ramos 300

T-73016 Cecilia L. Martin 300

T-73017 Pablo dela Cruz 300

T-73018 Aurelio dela Cruz 300

T-73019 Julita Leoncio 300

Anicia L. de Guzman

T-73020 Ramon Centeno 300

T-73021 Miguel Centeno 300

TOTAL 4,500

On September 17, 1992, the petitioner purchased the remaining 208,050 square meters of the Dakila property from Santiago, 7 and later caused the transfer of the title to its
name as well as subdivided the Dakila property into six lots, 8 to wit:

TCT No.

Area
(sq. m.)

81618

50,000

81619

50,000

81620

50,000

81621

54,810

73022

2,401

73023

839

TOTAL
208,050

The petitioner then developed the property by dumping filling materials on the topsoil, and by erecting a perimeter fence and steel gate. It established its field office on the
property.9

On March 4, 1998, the Sanggunian Bayan ng Malolos passed Municipal Resolution No. 16-98 reclassifying four of the six subdivided lots belonging to the petitioner, to wit:

MUNICIPAL RESOLUTION NO. 16-98

A RESOLUTION RE-CLASSIFYING AS RESIDENTIAL LOTS THE FOUR (4) PARCELS OF LAND SEPARATELY COVERED BY TCT NO. 81618, TCT NO. 81619, TCT
NO.81620 AND TCT NO. 81621 CONTAINING AN AREAOF 50,000 SQ MTS,50,000 SQ. MTS, 50,000 SQ M (sic) AND 54,810 SQ M (sic) RESPECTIVELY ALL LOCATED AT
DAKILA, MALOLOS, BULACAN REGISTERED IN THE NAME OF THE HOLY TRINITY REALTY AND DEVELOPMENT CORPORATION

WHEREAS, Ms. Jennifer M. Romero, Auditor Representative of Holy Trinity Realty and Development Corporation in [her] letter to the Sangguniang Bayan made a request for
re-classification of four parcel(s) of land registered in the name of Holy Trinity and Development Corporation under TCT NO. 81618, TCT NO. 81619, TCT NO. 81620 AND TCT
NO. 81621 with an area of 50,000 sq. m., 50,000 sq. m., 50,000 sq. m. AND 54,810 sq. m. respectively all located at Dakila, Malolos, Bulacan.

WHEREAS, after an ocular inspection of the subject lots and matured deliberation, the Sangguniang Bayan found merit in the request for the following reasons, thus:

1. The Properties are untenanted;

2. That they are not fitted (sic) for agricultural use for lack of sufficient irrigation;

3. There are improvements already introduce[d] on the property by its owner like construction of subdivision roads;

4. Lack of oppositor to the intend[ed] subdivision project on the properties by its owner;

5. That they are more suitable for residential use considering their location vi[s]--vi[s] with (sic) the residential lots in the area.

NOW THEREFORE, on motion of Hon. Romeo L. Maclang as seconded by all Sangguniang Bayan members present, RESOLVED, as is hereby resolved to re-classify into
residential properties four (4) parcels of land separately covered by TCT NO. 81618, TCT NO. 81619, TCT NO. 81620 AND TCT NO. 81621 of the Registry of Deeds of
Bulacan, containing an area of 50,000 sq. m. respectively, registered in ownership of Holy Trinity and Development Corporation located and adjacent to one another in
Barangay Dakila of this Municipality pursuant to the power vested to this Sangguniang [sic] by the Local Government Code of the Philippines.

RESOLVED further that the owner and/or developer of the said property shall provide adequate [illegible] to protect the adjacent lots and its owners from any inconvenience and
prejudice caused by the development of the above mentioned property.

APPROVED.10

Consequently, the Municipal Planning and Development Office (MPDO) of Malolos, Bulacan issueda Certificate of Eligibility for Conversion (Certificate of Zoning
Conformance),11 as well as a Preliminary Approval and Locational Clearance infavor of the petitioner for its residential subdivision project on the Dakila property. 12

On August 23, 1999, the petitioner purchased from Santiago another parcel of land with an area of 25,611 located in Barangay Sumapang Matanda, Malolos, Bulacan
(Sumapang Matanda property) and covered by TCT No. T-103697 of the Registry of Deeds of Bulacan.13

In April 2006, a certain Silvino Manalad and the alleged heirs of Felix Surio wrote to the Provincial Agrarian Reform Officer (PARO) of Bulacan to request an investigation of the
sale of the Dakila property.14 This was followed by the letter request of Sumapang Matanda Barangay Agrarian Reform Council (BARC) Chairman Numeriano L. Enriquez to
place the Dakila property within the coverage of Operation Land Transfer (OLT) pursuant to Presidential Decree No. 27, which was docketed as A-0302-0608-06, A.R. Case No.
LSD-032406.15

Several days later, the DAR Provincial Office of Bulacan filed a petition to annul the sale of the Dakilaproperty with the Provincial Agrarian Reform Adjudicator (PARAD) of
Bulacan, docketed as DARAB Case No. R-03-02-287306.

Ruling of the DAR Regional Office

On August 18, 2006, the OIC-Regional Director in San Fernando, Pampanga issued an order granting the letter request of BARC Chairman Enriquez in A-0302-0608-06, A.R.
Case No. LSD-032406,16 viz:

WHEREFORE, in the light of the foregoing premises and for the reason indicated therein, this Office resolves to give due course to this instant request. Accordingly, the MARO
and PARO concerned are hereby DIRECTED to place within the ambit of PD 27/RA 6657 the following titles TCT Nos. T-81618, T-81619, T-81620, T-81621, T-81622 and T-
73023, all situated at Sumapang Matanda, Malolos City, Bulacan, registered in the name of Holy Trinity Realty and Development Corporation for distribution to qualified farmer
beneficiary (sic).

Finally, the DAR reserves the right to cancel or withdraw this Order in case of misrepresentation of facts material to its issuance and for violation of pertinent agrarian laws
including applicable implementing guidelines or rules and regulations.

SO ORDERED.17
The OIC-Regional Director opined that the sale of the Dakila property was a prohibited transaction under Presidential Decree No. 27, Section 6 of Republic Act No. 665718 and
DAR Administrative Order No. 1, Series of 1989; and that the petitioner was disqualified from acquiring land under Republic Act No. 6657 because it was a corporation.19

Aggrieved, the petitioner assailed the order through its Motion to Withdraw/Quash/Set Aside, 20 citing lack of jurisdiction and denial of due process. It argued that the letter
request was in the nature of a collateral attack on its title.

Pending resolution of the Motion to Withdraw/Quash/Set Aside, the Register of Deeds issued emancipation patents (EPs) pursuant to the order of the OIC-Regional Director.
The petitioners titles were canceled and EPs were issued to the respondents as follows: 21

Emancipation Area
TCT No. Beneficiary/ies
Patent No. (sqm)

T-2007-EP22 00783329 Victorio dela Cruz 50,000

T-2008-EP 23
00783330 Lorenzo Manalaysay 50,000

T-2009-EP24 00783331 Ricardo Marcelo, Jr. 50,000

T-2010-EP 25
00783332 Leoncio de Guzman 54,810

T-2011-EP26 00783334 Gonzalo Caspe 2,401

T-2012-EP27 00783333 839

Almost two months after the EPs were issued, the OIC-Regional Director denied the petitioners motion for reconsideration. 28

Ruling of the DAR Secretary

The petitioner appealed to the DAR Secretary, submitting that: (1) the letter request for coverage under Presidential Decree No. 27 and the subsequent filing of the petition for
annulment of sale in the DARAB constituted forum shopping; and (2) the EPs were prematurely issued.

On November 22, 2007, DAR Secretary Nasser C. Pangandaman issued an order denying the appeal,29 and holding that forum shopping was not committed because the
causes of action in the letter request and the action for cancellation of the deed of sale before the DARAB were distinct and separate; that the EPs were regularly issued; and
that the resolution of the DARAB would not in any manner affect the validity of the EPs.

Ruling on the petitioners motion for reconsideration, the DAR Secretary said that the Dakila property was not exempt from the coverage of Presidential Decree No. 27 and
Republic Act No. 6657 because Municipal Resolution No. 16-98 did not change or reclassify but merely re-zoned the Dakila property.30

Ruling of the Office of the President

On March 1, 2010, the Office ofthe President (OP) reversed the ruling of DAR Secretary Pangandaman upon its finding that the Dakila property had ceased to be suitable for
agriculture, and had been reclassified as residential land pursuant to Municipal Resolution No. 16-98, thus:31

We find merit in the appeal.

Under Section 3 (c) of RA 6657, agricultural lands refer to lands devoted to agriculture as conferred inthe said law and not classified as industrial land. Agricultural lands are
only those lands which are arable or suitable lands that do not include commercial, industrial and residential lands.

In this case, the subject land holdings are not agricultural lands but rather residential lands. The lands are located in a residential area. Likewise, there are agricultural activities
within or near the area. Even today, the areas in question continued (sic) to be developed as a residential community, albeit at a snails pace. This can be readily gleaned from
the fact that both the City Assessor of Malolos and the Provincial Assessor of Bulacan have considered these lands as residential for taxation purposes.

Based on the foregoing, it is clear that appellants landholding cannot in any language be considered as "agricultural lands." These lots were intended for residential use. They
ceased to be agricultural lands upon approval of Municipal Resolution No. 16-98. The authority of the municipality (now City) of Malolos to issue zoning classification is an
exercise of its police power, not the power of eminent domain. Section 20, Chapter 2, Title I of RA 7160 specifically empowers municipal and/or city councils to adopt zoning and
subdivision ordinances or regulations within its territorial jurisdiction. A zoning ordinance/resolution prescribes, defines, and apportions a given political subdivision into specific
land uses as present and future projection of needs. The power of the local government to convert or reclassify agricultural lands to non-agricultural lands is not subject to the
approval of the Department of Agrarian Reform.

It bears stressing that in his Decision dated April 30, 2002, as affirmed by the Department of Agrarian Reform Adjudication Board (DARAB) in its Resolution dated March 17,
2006, Bulacan Provincial Adjudicator Toribio Ilao, Jr., declared that the properties were not tenanted and/or agricultural and that the alleged farmers-occupants are mere
squatters thereto. These decision and resolution were not appealed by the farmers-occupants and, as such, it became final and executory. By declaring, in its assailed Order of
November 22, 2007, that the properties subject of the suit, were agricultural lands, the DAR Secretary thereby reversed the said DARAB rulings, issued more than a year
before, and nullified Resolution No. 16-98 of the Municipal Council of Malolos, approved nine (9) years earlier, on March 4, 1998. Thus, the DAR Secretary acted with grave
abuse of discretion amounting to excess or lack of jurisdiction.

IN VIEW OF THE FOREGOING, the appeal is hereby GRANTED. Accordingly, the November 22, 2007 Order and February 22, 2008 Resolution of the Department of Agrarian
Reform are hereby REVERSED and SET ASIDE.

SO ORDERED.32

The respondents moved to reconsider, but the OP denied their motion for reconsideration. Hence, they appealed to the CA by petition for review. 33
Ruling of the CA

In the now assailed decision promulgated on July 27, 2011,34 the CA reversed and set aside the decision of the OP. It declared that prior to the effectivity of Republic Act No.
6657 onJune 15, 1988 and even after the passage of Municipal Resolution No. 16-98 on March 4, 1998, the Dakila property was an agricultural land; that there was no valid
reclassification because Section 20 of Republic Act No. 7160 (The Local Government Code) and Memorandum Circular No. 54 required an ordinance, not a resolution; and that
findings of the DAR on the Dakila property being an agricultural land should be respected, 35 subject to the clarification to the effect that its determination was only limited to the
issue of whether the Dakila property was an agricultural land covered by Republic Act No. 6657.

The petitioner sought reconsideration but its motion for that purpose was denied.36

Hence, this appeal by petition for review on certiorari.

Issues

The petitioner presents the following issues for our consideration:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRONEOUSLY OMITTED TO RULE UPON, ALBEIT WITHOUT CITING ANY VALID REASONS, THE
VARIOUS INTERRELATED ISSUES PROFFERED IN PETITIONERS COMMENT RELATIVE TO DARS INCLUSION OF THE SUBJECT DAKILA PROPERTY UNDER THE
COVERAGE OF THE AGRARIAN REFORM LAW, TO WIT: A.) RESPONDENT-GRANTEES OF EMANCIPATION PATENTS FROM DAR ARE NOT LEGITIMATE TENANTS
OF THE DAKILA PROPERTY; B.) THE SALE AND TRANSFER OF TITLES IN THE NAME OF PETITIONER HAVE NOT HERETOFORE BEEN NULLIFIED EITHER BY THE
DARAB CENTRAL OFFICE OR THE REGULAR COURTS; C.) THE BONAFIDE TENANTS OF THE DAKILA PROPERTY HAVE VALIDLY SURRENDERED THEIR TENANCY
RIGHTS IN FAVOR OFPETITIONERS PREDECESSORIN-INTEREST; D.) THE DAKILA PROPERTY WAS NO LONGER TENANTED AND, FURTHER, WAS NO LONGER
SUITABLE TO AGRICULTURE, AT THE TIME OF ITS COVERAGE UNDER AGRARIAN REFORM, ITS ACTUAL USE BEING ALREADY RESIDENTIAL

II

WHETHER OR NOT THE HONORABLE COURT OF APPEALS LIKEWISE ERRED IN FAILING TO RULE ON THE ILLEGALITY OF THE MANNER BY WHICH THE DAR
CAUSED THE SUMMARY COVERAGE OF THE DAKILA PROPERTY UNDER THE CARP, ITS EXTRA-JUDICIAL CANCELLATION OF PETITIONERS TITLES WITHOUT
DUE PROCESS OF LAW, AND ITS PREMATURE ISSUANCE OF EMANCIPATION PATENTS IN FAVOR OF RESPONDENTS

III

WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRONEOUSLY APPLIED THE PROVISIONS OF RA 6657 IN RESOLVING THE SUBJECT PETITION,
EVEN THOUGH THE DAR PLACED THE SUBJECT DAKILA PROPERTY UNDER THE COVERAGE OF PRESIDENTIAL DECREE NO. 27

IV.

WHETHER OR NOT HEREIN RESPONDENTS PETITION FOR REVIEW A QUO OUGHT TO HAVE BEEN DISMISSED OUTRIGHT BY THE HONORABLE COURT
OFAPPEALS FOR FAILURE TO COMPLY WITH SECTION 4, RULE 7 OF THE 1997 REVISED RULES OF CIVIL PROCEDURE. 37

The petitioner argues that the CA ignored issues vital to the complete determination of the parties respective rights over the Dakila property.

Firstly, the CA should have ruled on the propriety of issuing the EPs. In view of the pending petition beforethe DARAB, the DAR should have withheld the issuance of the EPs.
Even granting that a final decision had already been rendered by the DARAB, the issuance of the EPs remained

premature inasmuch as the DAR had not yet commenced any court proceedings for the cancellation of the petitioners title. Accordingly, the petitioners title remained
indefeasible and could not be disturbed by the collateral orders by the OIC-Regional Director and the DAR Secretary.

Secondly, the petitioner was deprived of due process because the requirements of notice and the conduct of a public hearing and a field investigation were not strictly complied
with by the DAR pursuant to Republic Act No. 6657 and DAR Administrative Order No. 12, Series of 1998. Thirdly, the CA erred in placing the Dakila property under the
coverage of Republic Act No. 6657 when the order of the OIC-Regional Director applied the provisions of Presidential Decree No. 27. The two laws should be differentiated from
each other; on one hand, Presidential Decree No. 27 required the beneficiary to be a tenant-farmer of an agricultural land devoted to rice or corn, while on the other Republic
Act No. 6657 was relatively broader and covered all public and private agricultural lands regardless of the tenurial arrangement and the commodity produced. Lastly, the CA
should have dismissed the respondents petition for review due to its defective certification, pointing to the verification having been executed by the respondents despite the
letter request having been signed by BARC Chairman Enriquez; and assailing the verification for containing the statement that the allegations therein were based on their
"knowledge and belief" instead of their "personal knowledge and authentic records" as required by the Rules of Court.

The respondents countered that: (1) the CA correctly set aside the issue of whether or not they were qualified beneficiaries, because that was not the issue raised in the letter
request; (2) the CA could not have ruled on the validity of the sale of the Dakila property in light of the pending action in the DARAB; (3) it was within the jurisdiction of the DAR
to determine whether or not the respondents were qualified beneficiaries; (4) the waivers by the tenants were illegal; and (5) the issuance of the EPs was a necessary
consequence of placing the Dakila property under the coverage of Presidential Decree No. 27.

In view of the foregoing, the Court needs to consider and resolve the following:

1. Did the CA gravely err in limiting its decision to the issue of whether or not the Dakila property was subject to the coverage of Republic Act No. 6657?

2. Was the Dakila property agricultural land within the coverage of Republic Act No. 6657 or Presidential Decree No. 27?

3. Was the issuance of the EPs pursuant to the August 16, 2006 order of the DAR Regional Office proper?
Ruling

We reverse the CA, and reinstate the decision of the OP.

I. Procedural Issue

We first resolve the issue of the supposedly defective verification.

The verification of a petition is intended to secure an assurance that the allegations contained in the petition have been madein good faith, are true and correct and not merely
speculative.38 This requirement affects the form of the pleading, and its non-compliance will not render the pleading defective. It is a formal, not a jurisdictional requisite. 39 The
courts may order the correction of the pleading if the verification is lacking, and may even act on an unverified pleading if doing sowill serve the ends of justice.40

Under the foregoing, the CA rightly allowed the petition for review of the respondents despite the statement that the allegations therein were based on their "knowledge and
belief." We underscore thatthe defect was even lifted upon the voluntary submission by the respondents themselves of their corrected verification in order to comply with the
Rules of Court.

We cannot also subscribe to the argument that the respondents were not appropriate parties to sign the verification. They were, considering that when the DAR issued the EPs,
they became the real parties in interest in the proceedings, giving them the requisite personality to sign the verification. Moreover, there is no question that the party himself
need not sign the verification, for it was enough that the partys representative, lawyer, or any person who personally knew the truth of the facts alleged in the pleadings could
sign the verification.41 In any event, the respondents, as the identified beneficiaries, had legal standing and interest to intervene to protect their rights or interests under Republic
Act No. 6657. This is clear from Section 19 of Republic Act No. 9700, 42 which amended Republic Act No. 6657 by adding Section 50-A, to wit:

Section 19. Section 50of Republic Act No. 6657, as amended, is hereby further amended by adding Section 50-A to read as follows:

Section 50-A. Exclusive Jurisdiction on Agrarian Dispute. x x x

In cases where regular courtsor quasi-judicial bodies have competent jurisdiction, agrarian reform beneficiaries or identified beneficiaries and/or their associations shall have
legal standing and interest to intervene concerning their individual or collective rights and/or interests under the CARP.

xxxx

II. Courts can pass upon matters related to the issues raised by the parties

As a general rule, appellate courts are precluded from discussing and delving into issues that are not raised by the parties. The pertinent rule is Section 8, Rule 51 of the Rules
of Court, to wit:

Section 8. Questions that may be decided. No error which does not affect the jurisdiction over the subject matter or the validity of the judgment appealed from or the
proceedings therein will be considered unless stated in the assignment of errors, or closely related to or dependent on an assigned error and properly argued in the brief, save
as the court may pass upon plain errors and clerical errors.

In Philippine National Bank v. Rabat,43 the Court explained how this rule operates, thus:

In his book, Mr. Justice Florenz D. Regalado commented on this section, thus:

1. Sec. 8, which is an amendment of the former Sec. 7 of this Rule, now includes some substantial changes in the rules on assignment of errors. The basic
procedural rule is that only errors claimed and assigned by a party will be considered by the court, except errors affecting its jurisdiction over the subject matter. To
this exception has now been added errors affecting the validity ofthe judgment appealed from or the proceedings therein.

Also, even if the error complained of by a party is not expressly stated in his assignment of errors butthe same is closely related to or dependent on an assigned
error and properly argued in his brief, such error may now be considered by the court. These changes are of jurisprudential origin.

2. The procedure in the Supreme Court being generally the same as that in the Court of Appeals, unless otherwise indicated (see Secs. 2 and 4, Rule 56), it has
been held that the latter is clothed with ample authority to review matters, even if they are not assigned as errors on appeal, if it finds that their consideration is
necessary in arriving at a just decision of the case. Also, an unassigned error closely related to an error properly assigned (PCIB vs. CA, et al., L-34931, Mar. 18,
1988), or upon which the determination of the question raised by error properly assigned is dependent, will be considered by the appellate court notwithstanding
the failure to assign it as error (Ortigas, Jr. vs. Lufthansa German Airlines, L-28773, June 30, 1975; Soco vs. Militante,et al., G.R. No. 58961, June 28, 1983).

It may also be observed that under Sec. 8 of this Rule, the appellate court is authorized to consider a plain error, although it was not specifically assigned by the
appellant (Dilag vs. Heirs of Resurreccion, 76 Phil. 649), otherwise it would be sacrificing substance for technicalities. 44 (Emphasis supplied)

Conformably with the foregoing, the CA is vested with sufficient authority and discretion to review matters, not assigned as errors on appeal, if it finds that consideration thereof
isnecessary in arriving at a complete and just resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice.45 In fact, the CA is possessed
with inherent authority to review unassigned errors that are closely related to an error properly raised, or upon which the determination of the error properly assigned is
dependent, or where it finds that consideration thereof is necessary in arriving at a just decision of the case.46

It cannot be gainsaid that the validity of the EPs was closely intertwined with the issue of whether the Dakila property was covered by the agrarian reform laws. When the CA
declared that the Dakila property came within the coverage of Republic Act No. 6657, the CA barely scraped the surface and left more questions unresolved rather than writing
finison the matter. To recall, this case originated from the letter of BARC Chairman Enriquez requesting that the Dakila property be placed under the OLT pursuant to
Presidential Decree No. 27. But, as the petitioner correctly argues, the two laws, although similarly seeking to alleviate the plight of landless farmers or farmworkers from the
bondage of tilling the soil, are distinct from each other. Republic Act No. 6657 is broader in scope than Presidential Decree No. 27, for the former applies to all agricultural lands
in which agricultural activities are conducted, while the latter requires that the covered agricultural land betenanted and primarily devoted to rice or corn cultivation.
In Sigre v. Court of Appeals,47 the Court also stated:

[T]he Court need not belabor the fact that R.A. 6657 or the CARP Law operates distinctly from P.D. 27. R.A. 6657 covers all public and private agricultural land including other
lands of the public domain suitable for agriculture as provided for in Proclamation No. 131 and Executive Order No. 229; while, P.D. 27 covers rice and corn lands. On this
score, E.O. 229, which provides for the mechanism of the Comprehensive Agrarian Reform Program, specifically states: "(P)residential Decree No. 27, as amended, shall
continue to operate with respect to rice and corn lands, covered thereunder. x x x" It cannot be gainsaid, therefore, that R.A. 6657 did notrepeal or supersede, in any way, P.D.
27. And whatever provisions of P.D. 27 that are not inconsistent with R.A. 6657 shall be suppletory to the latter, and all rights acquired by the tenant-farmer under P.D. 27 are
retainedeven with the passage of R.A. 6657.48

In addition, the tenurial instruments issued to agrarian reform beneficiaries differ under these laws. Ownership of the beneficiary under Presidential Decree No. 27 is evidenced
by an EP while a certificate of land ownership award (CLOA) is issued under Republic Act No. 6657. For this reason, the CA could not have simply set aside the issue of
whether the EPs issued to the respondents were validly made by the DAR considering its declaration that the Dakila property was subject to Republic Act No. 6657.

III. The Dakila property was not an agricultural land within the coverage of R.A.No. 6657 or P.D. No. 27

The CA declared that the Dakila property as an agricultural land; and that there was no valid reclassification under Municipal Resolution No. 16-98 because the law required an
ordinance, not a resolution.

We agree in part with the CA.

Under Republic Act No. 7160, local government units, such as the Municipality of Malolos, Bulacan, are vested with the power to reclassify lands. However, Section 20, Chapter
II, Title I of Republic Act No. 7160 ordains:

Section 20. Reclassification of Lands. (a) A city or municipality may, through an ordinance passed by the sanggunian after conducting public hearings for the purpose,
authorize the reclassification of agricultural lands and provide for the manner of their utilization or disposition in the following cases: (1) when the land ceases to be economically
feasible and sound for agricultural purposes as determined by the Department of Agriculture or(2) where the land shall have substantially greater economic value for residential,
commercial, or industrial purposes, as determined by the sanggunian concerned: x x x. (Emphasis supplied)

Clearly, an ordinance is required in order to reclassify agricultural lands, and such may only be passed after the conduct of public hearings.

The petitioner claims the reclassification on the basis of Municipal Resolution No. 16-98. Given the foregoing clarifications, however, the resolution was ineffectual for that
purpose. A resolution was a mere declaration of the sentiment or opinionof the lawmaking body on a specific matter that was temporary in nature, and differed from an
ordinance in that the latter was a law by itself and possessed a general and permanent character. 49 We also note that the petitioner did not show if the requisite public hearings
were conducted at all.In the absence of any valid and complete reclassification,therefore, the Dakila property remained under the category of an agricultural land.

Nonetheless, the Dakila property was not an agricultural land subject to the coverage of Republic Act No. 6657 or Presidential Decree No. 27.

Verily, the basic condition for land tobe placed under the coverage of Republic Act No. 6657 is that it must either be primarily devoted to or be suitable for agriculture.50 Perforce,
land that is not devoted to agricultural activity is outside the coverage of Republic Act No. 6657. 51 An agricultural land, according to Republic Act No. 6657, is one that is devoted
to agricultural activity and not classified as mineral, forest, residential, commercial or industrial land. 52 Agricultural activity includes the "cultivation of the soil, planting of crops,
growing of fruit trees, raising livestock, poultry or fish, including the harvesting of such farm products; and other farm activities and practices performed by a farmer in
conjunction with such farming operations doneby persons whether natural or juridical." 53

Consequently, before land may be placed under the coverage of Republic Act No. 6657, two requisites must be met, namely: (1) that the land must be devoted to agricultural
activity; and (2) that the land must not be classified as mineral, forest, residential, commercial orindustrial land. Considering that the Dakila property has not been classified as
mineral, forest, residential, commercial or industrial, the second requisite is satisfied. For the first requisite tobe met, however, there must be a showing that agricultural activity
is undertaken on the property.

It is not difficult to see why Republic Act No. 6657 requires agricultural activity in order to classify land as agricultural. The spirit of agrarian reform laws is not to distribute lands
per se, but to enable the landless to own land for cultivation. Thisis why the basic qualification laid down for the intended beneficiary is to show the willingness, aptitude and
ability to cultivate and make the land as productive as possible.54 This requirement conforms with the policy direction set in the 1987 Constitution to the effect that agrarian
reform laws shall be founded on the right of the landless farmers and farmworkers to own, directly or collectively, the lands they till.55 In Luz Farms v. Secretary of the
Department of Agrarian Reform,56 we even said that the framers of the Constitution limited agricultural lands to the "arable and suitable agricultural lands."

Here, no evidence was submitted to show that any agricultural activity like cultivation of the land, planting of crops, growing of fruit trees, raising of livestock, or poultry or fish,
including the harvesting of such farm products, and other farm activities and practices were being performed on the Dakila property in order to subject it to the coverage of
Republic Act No. 6657. We take particular note that the previous tenants had themselves declared that they were voluntarily surrendering their tenancy rights because the land
was not conducive to farming by reason of its elevation, among others.57 Also notable is the second Whereas Clause of Municipal Resolution No. 16-98, which mentioned that
the Dakila property was not fit for agricultural use due to lack of sufficient irrigation and that it was more suitable for residential use, thus:

WHEREAS, after an ocular inspection of the subject lots and matured deliberation, the Sangguniang Bayan found merit in the request for the following reasons, thus:

1. The properties are untenanted;

2. That they are not fitted [sic] for agricultural use for lack of sufficient irrigation;

3. There are improvements already introduce[d] on the property by its owner like construction of subdivision roads;

4. Lack of oppositor to the intend[ed] subdivision project on the properties by its owner;

5. That they are more suitable for residential use considering their location viz-a-viz (sic) with (sic) the residential lots in the area.58 (Emphasis supplied)
The terse statement by the OIC-Regional Director that the Dakila property would still be subject to Republic Act No. 6657 should Presidential Decree No. 27 be inapplicable59 did
not meet the requirements under Republic Act No. 6657. Section 7 of Republic Act No. 6657 identified rice and corn lands subject to Presidential Decree No. 27 for priority
distribution in the first phase and implementation ofthe CARP. Insofar as the interplay of these two laws was concerned, the Court has said that during the effectivity of the
Republic Act No. 6657and in the event of incomplete acquisition under Presidential Decree No. 27, the former should apply, with the provisions of the latter and Executive Order
No. 22860 having only suppletory effect.61

Even if we supplemented the provisions of Presidential Decree No. 27, the outcome is still the same, because the Dakila property was still not within the scope of the law. For
land to be covered under Presidential Decree No. 27, it must be devoted to rice or corn crops, and there must be a system of share-crop or lease-tenancy obtaining therein. If
either requisite is absent, the land must be excluded. Hence, exemption from coverage followed when the land was not devoted to rice or corn even if it was tenanted; or the
land was untenanted even though it was devoted to rice or corn. 62 Based on these conditions, the DAR Regional Office erred in subjecting the Dakila property under the OLT.

The first requirement, that the land be devoted to rice or corn cultivation, was not sufficiently established. In this regard, the OIC-Regional Director inaccurately based his
holding on the report submitted by the Legal Services Division that

[P]ortion of the property embraced under TCT No. 103697 with an area of 2.5611 hectares more or less, was placed under PD [No.] 27 and subsequently an approved survey
plan (Psd-03-020270) has been prepared which was then the basis of the issuance of titles in favor of Felix Surio and Silvino Manalad under EP Nos. 345262 and 342561. On
the other hand, the land subject of this controversy was, likewise, subdivided and now covered by an approved plan ASP No. Psd-031410-066532.63

What can be gathered from the report of the Legal Services Division was that the land owned by the petitioner and covered by Presidential Decree No. 27 was the Sumapang
Matanda property under TCT No. 103697. As to the Dakila property, we can only infer from the report that it was merely subdivided. The report did not mention whatsoever the
agricultural activities performed in the Dakila property. Nor was there a finding that the Dakila property was devoted to either rice or corn cultivation as to justify its coverage
under Presidential Decree No. 27. Such a finding was necessary, for the Court has observed in Solmayor v. Arroyo:64

Although this Court will not disregard the evidence presented by petitioners that the land is devotedto rice and corn crops in 1993, when the ocular inspection by the DAR
personnel was conducted, it must be noted that around the time of the passage of Presidential Decree No. 27 up to 1978, when the subject property was placed under the
coverage of Operation Land Transfer, the available evidence issued and certified by the different government agencies, closer in time to the mentioned time frame will show that
respondents property has, indeed, been classified as within the residential and commercial zones of Davao City. It cannot escape the notice of this Court that more than a
decade before the issuance of the said ocular investigation reportstating that the land is devoted to agricultural production, government agencies equipped with the technical
expertise to determine the proper classification of the subject land have already determined that the land is part of the residential and commercial zones of Davao City making it
suitable for other urban use. Therefore, it is only reasonable to conclude, based on the certification of various executive agencies issued when this controversy arose, that at the
time of the passage of Presidential Decree No. 27, respondents property was not agricultural. 65

For land to come within the coverage of the OLT, indeed, there must be a showing that it is devoted to the cultivation of rice or corn, and there must be a system of share-crop
or lease tenancy obtaining on October 21, 1972, the time when Presidential Decree No. 27 took effect.66 Unfortunately, no such evidence was presented, nor was there any field
investigation conducted to verify whether or not the landholding was primarily devoted to the cultivation of rice or corn. Accordingly, the Dakila property should be excluded from
the OLT.

The DAR Secretary affirmed the validity of the EPs in favor of the respondents only "pursuant to the Order of the Regional Director."67 We note, however, that the evidence to
establish in the proceedings below that they or their predecessors had been tenants of the petitioners predecessorin-interest to make them the rightful beneficiaries of the
Dakila property was severely wanting. For tenancy to exist, there must be proof that: (1) the parties are the landholder and the tenant; (2) the subject is agricultural land; (3)
there is consent; (4) the purpose isagricultural production; (5) there is consideration; 68 and (6) there is a sharing of the harvests. All these requisites are necessary to create a
tenancy relationship, and the absence of one or more of them will not make the alleged tenant a de facto tenant. 69 Unless a person has established his status as a de juretenant,
he is not entitled to security of tenure; nor is he covered by the land reform program of the Government under the existing tenancy laws.70 Here, the consent to establish a
tenant-landlord relationship was manifestly absent. In view of the petitioners repeated denial of the tenancy, the respondents ought then to establish the tenancy relationship,
but did not do so. Tenancy could not be presumed, but must be established by evidence; its mere allegation is neither evidence nor equivalent to proof of its existence. 71

There was also no showing that the respondents were engaged in any agricultural activities, or agreed with Santiago or the petitioner on the sharing of harvests. The OIC-
Regional Director obviously disregarded the affidavit of Barangay Captain Felino M. Teodoro of Dakila, Malolos, Bulacan stating that the respondents were never the actual
farmers on the Dakila property.72

IV. The petitioner was deprived of due process

The petitioner posits that it was denied due process by the failure of the OIC-Regional Director to see to the compliance withthe procedures outlined by Republic Act No. 6657
and Presidential Decree No. 27. It claims that the OIC-Regional Director resorted to "procedural shortcuts" and irregularities73 in issuing the EPs to the respondents.

We agree with the petitioners position.

In Reyes v. Barrios,74 we identified the procedural requirements that must be followed prior to the issuance of an EP, viz:

The Primer on Agrarian Reform enumerates the steps in transferring the land to the tenant-tiller, thus:

a. First step: the identification of tenants, landowners, and the land covered by OLT.

b. Second step: land survey and sketching of the actual cultivation of the tenantto determine parcel size, boundaries, and possible land use;

c. Third step: the issuance of the Certificate of Land Transfer (CLT). To ensure accuracy and safeguard against falsification, these certificatesare processed at the
National Computer Center (NCC) at Camp Aguinaldo;

d. Fourth step: valuation of the land covered for amortization computation;

e. Fifth step: amortization payments of tenant-tillers over fifteen (15) year period; and

f. Sixth step: the issuance of the Emancipation Patent.


Thus, there are several steps to be undertaken before an Emancipation Patent can be issued. x x x.

xxxx

Furthermore, there are several supporting documents which a tenant-farmer must submit before he can receive the Emancipation Patent, such as:

a. Application for issuance of Emancipation Patent;

b. Applicant's (owner's) copy of Certificate of Land Transfer.

c. Certification of the landowner and the Land Bank of the Philippines that the applicant has tendered full payment of the parcel of land as described in the
application and as actually tilled by him;

d. Certification by the President of the Samahang Nayon or by the head of farmers' cooperative duly confirmed by the municipal district officer (MDO) of the
Ministry of Local Government and Community Development (MLGCD) that the applicant is a full-fledged member of a duly registered farmers' cooperative or a
certification to these effect;

e. Copy of the technical (graphical) description of the land parcel applied for prepared by the Bureau of Land Sketching Team (BLST) and approved by the
regional director of the Bureau of Lands;

f. Clearance from the MAR field team (MARFT) or the MAR District Office (MARDO) legal officer or trial attorney; or in their absence, a clearance by the MARFT
leader to the effect that the land parcel applied for is not subject of adverse claim, duly confirmed by the legal officer or trial attorney of the MAR Regional Office or,
in their absence, by the regional director;

g. Xerox copy of Official Receipts or certification by the municipal treasurer showing that the applicant has fully paid or has effected up-to-date payment of the
realty taxes due on the land parcel applied for; and

h. Certification by the MARFT leader whether applicant has acquired farm machineries from the MAR and/or from other government agencies.

Majority of these supporting documents are lacking in this case. Hence, it was improper for the DARAB to order the issuance of the Emancipation Patent in favor of respondent
without the required supporting documents and without following the requisite procedure before an Emancipation Patent may be validly issued.75

Furthermore, Section 16 of Republic Act No. 6657 outlines the procedure in acquiring private lands subject to its coverage, viz:

Section 16. Procedure for Acquisition of Private Lands. - For purposes of acquisition of private lands, the following procedures shall be followed:

(a) After having identified the land, the landowners and the beneficiaries, the DAR shall send its notice to acquire the land to the owners thereof, by personal
delivery orregistered mail, and post the same in a conspicuous place in the municipal building and barangay hall of the place where the property is located. Said
notice shall contain the offer of the DAR to pay a corresponding value inaccordance with the valuation set forth in Sections 17, 18 and other pertinent provisions
hereof.

(b) Within thirty (30) days from the date of receipt of written notice by personal delivery or registered mail, the landowners, his administrator or representative shall
inform the DAR of his acceptance or rejection of the former.

(c) If the landowner accepts the offer of the DAR, the Land Bank of the Philippines shall pay the landowner the purchase price of the land within thirty (30) days
after he executes and delivers a deed of transfer in favor of the Government and surrenders the Certificate of Title and other muniments of title.

(d) In case of rejection or failure to reply, the DAR shall conduct summary administrative proceedings to determine the compensation for the land by requiring the
landowner, the LBP and other interested parties to submit evidence as to the just compensation for the land, within fifteen (15) days from the receipt of notice.
After the expiration of the above period, the matter is deemed submitted for decision. The DAR shall decide the case within thirty (30) daysafter it is submitted for
decision.

(e) Upon receipt by the landowner of the corresponding payment or in case of rejection or no response from the landowner, upon the deposit with an accessible
bank designated by the DAR of the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take immediate possession of the land and
shall request the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall thereafter
proceed with the redistribution of the land tothe qualified beneficiaries.

(f) Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final determination of just compensation.

Under Republic Act No. No. 6657 and DAR A.O. No. 12, Series of 1989, two notices should be sent to the landowner the first, the notice of coverage; and the other, the
notice of acquisition. The Court cannot consider and declare the proceedings conducted by the OIC-Regional Director as a substantial compliance with the notice requirements.
Compliance with such requirements, being necessary to render the implementation of the CARP valid, was mandatory. As the Court observed in Roxas & Co., Inc. v. Court of
Appeals:76

For a valid implementation of the CAR Program, two notices are required: (1) the Notice of Coverage and letter of invitation to a preliminary conference sent to the landowner,
the representatives of the BARC, LBP, farmer beneficiaries and other interested parties pursuant to DAR A.O. No. 12, Series of 1989; and (2) the Notice of Acquisition sent to
the landowner under Section 16 of the CARL.

The importance of the first notice, i.e., the Notice of Coverage and the letter of invitation to the conference, and its actual conduct cannot be understated. They are steps
designed to comply with the requirements of administrative due process. The implementation of the CARL is an exercise of the States police power and the power of eminent
domain. To the extent that the CARL prescribes retention limits to the landowners, there is an exercise of police power for the regulation of private property in accordance with
the Constitution. But where, to carry out such regulation, the owners are deprived of lands they own in excess of the maximum area allowed, there is also a taking under the
power of eminent domain. The taking contemplated is not a mere limitation of the use of the land. What is required is the surrender of the title to and physical possession of the
said excess and all beneficial rights accruing to the owner in favor of the farmer beneficiary. The Bill of Rights provides that "[n]o person shall be deprived of life, libertyor
property without due process of law." The CARL was not intended to take away property without due process of law. The exercise of the power of eminent domain requires that
due process be observed in the taking of private property.

xxxx

Clearly then, the notice requirements under the CARL are not confined to the Notice of Acquisition set forth in Section 16 of the law. They also include the Notice of Coverage
first laid down in DAR A. O. No. 12, Series of 1989 and subsequently amended in DAR A. O. No. 9, Series of 1990 and DAR A. O. No. 1, Series of 1993. This Notice of
Coverage does not merely notify the landowner that his property shall be placed under CARP and that he is entitled to exercise his retention right; it also notifies him, pursuant
to DAR A. O. No. 9, Series of 1990, that a public hearing shall be conducted where he and representatives of the concerned sectors of society may attend to discuss the results
of the field investigation, the land valuation and other pertinent matters. Under DAR A. O. No. 1, Series of 1993, the Notice of Coverage also informs the landowner that a field
investigation of his landholding shall be conducted where he and the other representatives may be present.77 (Emphasis supplied)

The procedures provided by Section 16 of Republic Act No. 6657 and its relevant DAR administrative issuances are to ensure the compliance with the due process
requirements of the law. The result of their non-compliance is to deprive the landowner of its constitutional right to due process.

The Court has carefully explained in Roxas & Co., Inc. v. Court of Appeals that the taking under the CARL isan exercise of police power as well as of eminent domain. The
taking of the landholding by the State effectively results in the surrender by the landowner of its title and physical possession to the beneficiaries. Hence, compensation should
be given to the landowner prior to the taking. This is the clear-cut directive of Section 16(e) of Republic Act No. 6657 which mandates the DAR to take immediate possession of
the land only after full payment and to thereafter request the Register of Deeds to transfer title inthe name of the Republic of the Philippines, and later on to the intended
beneficiaries.

However, there was no evidence of payment prior to the cancellation of the petitioners TCTs submitted here. The requirement of prior payment was found in Republic Act No.
1wphi 1

6657 and Presidential Decree No. 27, under which full payment by the intended beneficiary was a condition prior to the award of an EP. We haveexplicitly pronounced in
Corua v. Cinamin78 that the emancipation of tenants does not come free. The transfer of lands under Presidential Decree No. 27 remained subject to the terms and conditions
provided in said law. In Paris v. Alfeche,79 we said:

x x x. Section 2 of PD 266 states:

"After the tenant-farmer shall have fully complied with the requirements for a grant of title under Presidential Decree No. 27, an Emancipation Patent and/or Grant shall be
issued by the Department of Agrarian Reform on the basis of a duly approved survey plan."

On the other hand, paragraphs 8 and 9 of PD 27 reads as follows:

"For the purpose of determining the cost of the land to be transferred to the tenant-farmer pursuant to this Decree, the value of the land shall be equivalent to two and one-half
(2 ) times the average harvest of three normal crop years immediately preceding the promulgation of this Decree;

"The total cost of the land, including interest at the rate of six (6) per centum per annum, shall be paid by the tenant in fifteen (15) years of fifteen (15) equal annual
amortizations[.]"

Although, under the law, tenant farmers are already deemed owners of the land they till, they are still required to pay the cost of the land, including interest, within fifteen years
before the title is transferred to them.80 (Emphasis supplied)

The unquestioned non-compliance with the procedures set by Republic Act No. 6657 and its relevant rules and regulations further denied to the petitioner the exercise of its
right of retention.81 In doing so, the OICRegional Director disregarded this constitutionally guaranteed right. We cannot understate the value of the right of retention as the means
to mitigate the effects of compulsory land acquisition by balancing the rights of the landowner and the tenant and by implementing the doctrine that social justice is not meant to
perpetrate an injustice against the landowner. 82

We also consider the manner by which the Dakila property was apportioned to the respondents highly suspect. It appears from the face of the EPs that the individual lots were
allocated based on how the landholding was subdivided by the petitioner. Moreover, all the respondents were awarded lots exceeding three hectares in violation of Section 23 of
Republic Act No. 6657, which provides that "[n]o qualified beneficiary may own more than three (3) hectares of agricultural land."

In fine, the order of the OIC-Regional Director was patently null and void. The denial of due process to the petitioner sufficed to cast the impress of nullity on the official act
thereby taken. A decision rendered without due process is void ah initio and may be attacked directly or collaterally.83 All the resulting acts were also null and void.
Consequently, the EPs awarded to the respondents should be nullified.

WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS ASIDE the decision promulgated on July 27, 2011 by the Court of Appeals;
REINSTATES the assailed decision of the Office of the President issued on March 1, 2010; DIRECTS the cancellaticm of Emancipation Patents No. 00783329, No. 00783330,
No. 0078331, No. 0078332, No. 0078333, and No. 0078334 issued to the respondents for being NULL and VOID; and ORDERS the respondents to pay the costs of suit.

SO ORDERED.

G.R. No. 192912 October 22, 2014


PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,
vs.
DEMOCRITO PARAS, Accused-Appellant.

RESOLUTION

LEONARDO-DE CASTRO, J.:

The accused-appellant Democrito Paras was charged with one count of rape before the Regional
Trial Court (RTC) of Toledo City, Branch 29, in Criminal Case No. TCS-2729, which crime was
allegedly committed against AAA1 who was 17 years old at the time of the incident in March 1996.

After trial on the merits, the R TC rendered its Decision2 dated October 18, 2005, which found the
accused-appellant guilty of the crime charged. The dispositive portion of the RTC judgment states:

WHEREFORE, all the foregoing considered, this Court finds the guilt of the accused DEMOCRITO
PARAS to have been proved beyond peradventure of a reasonable doubt and he is hereby
sentenced to suffer the penalty of RECLUSION PERPETUA and to indemnify the offended party
[AAA] the sum of PS0,000.00 by way of compensatory damages plus the amount of Pl00,000.00 as
and for moral damages.3

On appeal, the Court of Appeals upheld the judgment of the trial court in a Decision4 dated February
2, 2010 in CA-G.R. CEB CR.-H.C. No. 00465. The appellate court decreed: WHEREFORE,
premises considered the Decision dated October 18, 2005 of the Regional Trial Court, Branch 29,
Toledo City, in Criminal Case No. TCS-2729 is hereby AFFIRMEDwith MODIFICATION.

As modified, accused-appellant is found guilty beyond reasonable doubt of the crime of qualified
rape as defined and penalized in Article 335 of the Revised Penal Code, as amended by Section 11
of Republic Act No. 7659, and is hereby sentenced to suffer the penalty of reclusion perpetua.
Accused-appellant is ordered to pay the private complainant the amount of P50,000.00 only as
moral damages plus exemplary damages in the amount ofP25,000.00. The award of civil indemnity
in the amount of P50,000.00 stands.5

On February 15, 2010, the accused-appellant appealed6 the above decision to this Court.

On June 4, 2014, the Court promulgated its Decision,7 affirming the judgment of conviction against
the accused-appellant in this wise:

WHEREFORE, the Court AFFIRMS with MODIFICATIONS the Decision dated February 2, 2010
ofthe Court of Appeals in CA-G.R. CEB CR.-H.C. No. 00465. The accused-appellant is found
GUILTY beyond reasonable doubt of one count of rape and is sentenced to suffer the penalty of
reclusion perpetua. The accused-appellant is ORDERED to pay AAA Fifty Thousand Pesos
(P50,000.00) as civil indemnity, Fifty Thousand Pesos (P50,000.00) as moral damages, and Thirty
Thousand Pesos (P30,000.00) as exemplary damages, plus legal interest on all damages awarded
at the rate of 6% per annum from the date of finality of this Decision.

Costs against the accused-appellant.8

In a letter9 dated August 18, 2014, however, Police Superintendent (P/Supt.) I Roberto R. Rabo,
Officer-in-Charge, New Bilibid Prison, informed the Court that the accused-appellant had died at the
New Bilibid Prison Hospital in Muntinlupa City on January 24, 2013. Attached to the letter is a
certified true copy of the Death Certificate10 of the accusedappellant, stating that he died of
pulmonary tuberculosis at 8:45 p.m. on January 24, 2013. The Court received P/Supt. I Rabos letter
only on August 27, 2014.

Under Article 89, paragraph 1 of the Revised Penal Code, as amended, the death of an accused
pending his appeal extinguishes both his criminal and civil liability ex delicto. Said provision reads:

Art. 89. How criminal liability is totally extinguished. Criminal liability is totally extinguished:

1. By the death of the convict, as to the personal penalties; and as to pecuniary penalties,
liability therefore is extinguished only when the death of the offender occurs before final
judgment[.]

The Court, in People v. Bayotas,11 enunciated the following guidelines construing the above provision
in case the accused dies before final judgment:

1. Death of the accused pending appeal of his conviction extinguishes his criminal liability as
well as the civil liability based solely thereon. As opined by Justice Regalado, in this regard,
"the death of the accused prior to final judgment terminates his criminal liability and only the
civil liability directly arising from and based solely on the offense committed, i.e., civil liability
ex delicto in senso strictiore."

2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the
same may also be predicated on a source of obligation other than delict. Article1157 of the
Civil Code enumerates these other sources of obligation from which the civil liability may
arise as a result of the same act or omission:

a) Law

b) Contracts

c) Quasi-contracts

d) x x x

e) Quasi-delicts

3. Where the civil liability survives, as explained in Number 2 above, an action for recovery
therefor may be pursued but only by way of filing a separate civil action and subject to
Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This separate
civil action may be enforced either against the executor/administrator or the estate of the
accused, depending on the source of obligation upon which the same is based as explained
above.

4. Finally, the private offended party need not fear a forfeiture of his right to file this separate
civil action by prescription, in cases where during the prosecution of the criminal action and
prior to its extinction, the private-offended party instituted together there with the civil action.
In such case, the statute of limitationson the civil liability is deemed interrupted during the
pendency of the criminal case, conformably with provisions of Article 1155 of the Civil Code,
that should thereby avoid any apprehension on a possible privation of right byprescription.
(Citations omitted; emphasis ours.)
Thus, upon the death of the accused pending appeal of his conviction, the criminal action is
extinguished inasmuch as there is no longer a defendant to stand as the accused; the civil action
instituted therein for the recovery of civil liability ex delicto is ipso facto extinguished, grounded as it
is on the criminal action.12

In this case, when the accused-appellant died on January 24, 2013, his appeal to this Court was still
pending. The Decision dated June 4, 2014 was thereafter promulgated as the Court was not
1w phi 1

immediately informed of the accused-appellant's death.

The death of the accused-appellant herein, thus, extinguished his criminal liability, as well as his civil
liability directly arising from and based solely on the crime committed.

Accordingly, the Court's Decision dated June 4, 2014 had been rendered ineffectual and the same
must therefore be set aside. The criminal case against the accused-appellant must also be
dismissed.

WHEREFORE, the Court RESOLVES to SET ASIDE its Decision dated June 4, 2014 and DISMISS
Criminal Case No. TCS-2729 before the RTC of Toledo City, Branch 29, by reason of the death of
the accusedappellant Democrito Paras on January 24, 2013.

SO ORDERED.

G.R. No. 196315 October 22, 2014

PEOPLE OF THE PHILIPPINES, Plaintiff and Appellee,


vs.
LEONARDO CATAYTAY y SILVANO, Accused-appellant.

DECISION

LEONARDO-DE CASTRO, J.:

This is an Appeal1 from the Decision2 of the Court of Appeals in CAG .R. CR No. 32275 dated August 11, 2010 affirming the conviction of accused-appellant Leonardo Cataytay
y Silvano for the crime of rape.

Accused-appellant Cataytay was charged of said crime m an Information dated September 9, 2003:

That on or about the 7th day of September 2003, in the City of Mandaluyong, Philippines, a place within the jurisdiction of this Honorable Court, the above-named accused, with
lewd designs[,] and by means of force and intimidation, did, then and there willfully, unlawfully, and feloniously have carnal knowledge [of AAA],3 19 years of age but with a
mental age of a 5 year old, hence, a retardate, or demented, which is known to accused at the time of the commission of the offense, against her will and consent and to her
damage and prejudice.4

Accused-appellant Cataytay entered a plea of not guilty at his arraignment on October 3, 2003. Trial thereafter ensued.

BBB (AAAs mother) testified that she knew accused-appellant Cataytay as her neighbor in their compound in Mandaluyong City. Accusedappellant was a shoe repairman who
had a shop six houses away from BBBs house.5

On September 7, 2003, at around 6:30 p.m., BBB left AAA in their house to look for BBBs youngest daughter. Thirty minutes later, when she reached the bridge near Block 37,
her neighbor, Lito, told her that there was a problem, and brought her to the barangay outpost. AAA and the accused appellant were already at the outpost. Lito told the persons
at the outpost that she was the mother of the victim. When BBB saw AAA, the latter told her, "Mommy, ni-rape po ako." BBB asked her who raped her. AAA responded by
pointing to accused-appellant. During the interviews made by the barangay officials, AAA narrated howshe was raped by accused appellant, which ended when a certain "Mimi"
knocked at the door. When accused-appellant answered the knock, Mimi told the former that she will shout if he does not leave the house. AAA went out of the house and
sought help from their neighbors. One of their neighbors, Amelita Morante, called the barangayofficials at the outpost.6

BBB identified a Psychological Evaluation Report from the Department of Social Welfare and Development (DSWD) dated May 25, 1999, which was conducted in connection
with another rape case. The report stated that AAA had the mental capacity of an eight-year-old child.7 BBB also identified AAAs birth certificate which showed that she was
biologically 19 years old atthe time of the incident. 8

On cross-examination, BBB confirmed that AAA was the victim in a rape case in 1999 against a certain Norberto Lerit. BBB admitted that she did not personally witness the
alleged rape committed by the accused appellant. 9
When AAA appeared as the second witness for the prosecution, the prosecution manifested that by merely looking at her, it was apparent that she was mentally
retardate.10 AAA, who was crying while being asked questions, testified that she was raped by accused-appellant by inserting his penis into her, despite her protestations. After
the deed, she was given money by accused-appellant. She knew the accused-appellant before the incident as a shoe repairman.11

DSWD Social Worker Arlene Gampal testified that she referred AAA to the National Center for Mental Health (NCMH) for psychological examination. She also conducted a
Social Case Study upon AAA in relation to the incident of sexual abuse at the hands of the accused. 12 NCMH Psychologist Susan Sabado was presented as a prosecution
witness, but her testimony was dispensed with when the defense agreed to a stipulation regarding her expertise and that the tests conducted on AAA affirmed that the latter had
a mental capacity of a seven-year-old child.13

Police Chief Inspector (PC/Insp.) Bonnie Chua, the medico-legal officer who examined AAA on September 8, 2003 was likewise presented as a prosecution witness. The
defense agreedto a stipulation that the findings of the examination were consistent with recent sexual intercourse. 14

For the defense, accused-appellant testified that on September 7, 2003, at around 7:00 p.m., he was in his house together with his brother, feeding his four-year-old daughter.
Hethen went out and proceeded to a videokebar, which was around 20 meters from his house. 15 He stayed at the videoke bar for less than 15 minutes, as barangay officers
suddenly arrived and arrested him. Upon asking why he was being arrested, the officers told him that he was the suspect in the rape of AAA. He was brought to the Barangay
Hall, where he denied the accusations against him. He estimated that the house of BBB was more or less 50 meters away from his house,16and that it would take more orless a
one minute walk from the videokebar to the house of AAA. 17 Accused-appellant admitted that by merely looking at AAA, he could tell that she has a mental disability. 18

Accused-appellants brother, Jose Fresco Cataytay (Jose), testified that at 6:30 p.m. of September 7, 2003,accused-appellant was inside their house feeding his daughter. At
around 7:00 p.m., accused-appellant told Jose that he will go to the videoke bar, which was around 30 meters away from their house. Accused-appellant stayed in the videoke
bar for 5 to 10 minutes, then went back to their house and watched television. Accused appellant was arrested that night within the vicinity of their house by the barangay
tanods. He estimated that AAAs house is 20 to 30 meters away from the videokebar, and that it would take less than five minutes to reach the house of AAA from the
videokebar.19

Alicia Panaguitol (Alicia), a neighbor of AAA and accused appellant, testified that she lives two meters away from AAAs house and 60 meters away from that of accused-
appellant. She was inside her house at around 7:00 p.m. of September 7, 2003, during which time she heard AAA shouting that she was raped. She asked AAA who raped her.
AAA replied "Pilay," apparently referring to their neighbor who was called Jun Pilay. Alicia saw Jun Pilay run from AAAs house towards a dark area.20

On February 5, 2009, the RTC rendered its Judgment finding accused appellant guilty as charged, and disposing of the case as follows:

WHEREFORE, foregoing premises considered, accused LEONARDO CATAYTAY y SILVANO is hereby found GUILTY beyond reasonable doubt for the crime ofrape against
one [AAA] defined and penalized under Article 266-A, paragraph 1 of the Revised Penal Code in relation to Article 266-B paragraph 10 of the same Code.

As a consequence thereof, accused LEONARDO CATAYTAY y SILVANO is hereby sentenced to suffer the penalty of imprisonment of from TWENTY YEARS (20) and ONE (1)
DAY to FORTY (40) YEARS of reclusion perpetua.

Further, accused LEONARDO CATAYTAY y SILVANO is hereby ordered to indemnify the victim [AAA], the amount of SEVENTY FIVE THOUSAND PESOS (P75,000.00)as
and by way of moral damages and SEVENTY FIVE THOUSAND PESOS (P75,000.00) by way of exemplary damages.

Finally, the period of detention of accused LEONARDO CATAYTAY y SILVANO at the Mandaluyong City Jail is hereby fully credited to his account. 21

The case was elevated to the Court of Appeals, where it was docketed as CA-G.R. CR No. 32275. On August 11, 2010, the Court of Appeals rendered the assailed Decision,
the dispositive portion of which reads:

WHEREFORE, in the light of the foregoing, the instant appeal is DENIED. The decision appealed from is AFFIRMED with the MODIFICATIONS that an additional award
of P75,000.00 as civil indemnity is granted to the victim and the award of exemplary damages of P75,000.00 is reduced to P30,000.00. The penalty of imprisonment to be
served is simply reclusion perpetua.22

Hence, this appeal, where accused-appellant Cataytay adopted his Appellants Brief with the Court of Appeals, which contained the following assignment of errors:

THE COURT A QUO GRAVELY ERRED IN CONVICTING THE ACCUSED-APPELLANT DESPITE THE PROSECUTIONS FAILURE TO PROVE HIS GUILT BEYOND
REASONABLE DOUBT.

II

THE COURT A QUO GRAVELY ERRED IN CONVICTING THE ACCUSED-APPELLANT DESPITE THE FACT THAT HE WAS ILLEGALLY ARRESTED.23

In his appellants brief, accused-appellant claims that BBBs testimony concerning the details of the commission of the rape as narrated by AAA is hearsay and therefore has no
probative value. Accused-appellant also points out that the Psychological Evaluation Report dated May 25, 1999 and Psychological Report dated June 29, 2009 illustrate that
AAA can be easily influenced.

At the outset, we agree with accused-appellant that the details concerning the manner of the commission of the rape, which was merely narrated by AAA at the barangay
outpost, is hearsay and cannot be considered by this Court. A witness can testify only on the facts that she knows of his own personal knowledge, or more precisely, those
which are derived from her own perception.24 A witness may not testify on what she merely learned, read or heard from others because such testimony is considered hearsay
and may not be received as proof of the truth of what she has learned, read or heard. 25

Notwithstanding the inadmissibility ofthe details of the rape which BBB merely heard from AAAs narration,we nevertheless find no reason to disturb the findings of fact of the
trial court. Despite lacking certain details concerning the manner in which AAA was allegedly raped, the trial court, taking into consideration the mental incapacity of AAA and
qualifying her to be a child witness,26 found her testimony to be credible and convincing:
Q- Uulitin ko sa iyo yung unang tinanong ko sayo ha, bakit ka nandito sa office ni Judge, para ano?

A - Para magsumbong.

Q - Sinong isusumbong mo?

A - Leonardo Cataytay.

INTERPRETER:

Witness at this moment is now crying.

Q - Nandito ba si Leonardo Cataytay, [AAA], nandito ba siya ngayon sa office ni Judge? Tingin ka sa office ni Judge kung nandito ngayon si Leonardo, sabi mo isusumbong mo
siya kay Judge, diba?

COURT:

Ituro mo nga kung nandiyan siya, sige.

INTERPRETER:

Witness pointed to the male person seated in the first row of the gallery, wearing white t-shirt, who when asked to identify himself, answered to the name of LEONARDO
CATAYTAY Y SILVANO.

PROS. LAZARO:

Q- [AAA], itinuro mo si Leonardo, sabi mo kanina isusumbong mo siya, bakit mo siya isusumbong, anong ginawa niya sayo?

A- Ni-rape po ako.

Q- Ilang beses ka niya ni-rape?

A- Isa lang po.

Q- Papaano ka niya ni-rape?

A- Pinasok niya yung ari niya sa akin.

Q- Anong sinabi mo sa kanya nung ni-rape ka niya, anong sinabi mo kay Leonardo?

A- Ayaw ko na po.

Q- Anong sinabi naman ni Leonardo habang nire-rape ka niya?

A- Wag daw po ako maingay.

Q- Kasi pag maingay ka, ano daw ang gagawin sayo?

A- Uulitin daw niya po.

Q- Anong sinabi ni Leonardo sayo pagkatapos ka niyang ni-rape,

[AAA]? May sinabi sayo pagkatapos ka niya ni-rape? Meron o wala?

A- Wala po.

Q- May binigay sya sayo?

A- Opo.

Q- Anong binigay niya? Punasan mo ang luha mo.

A- Pera po.
Q- Alam mo kung magkano?

A- Hindi po.27

AAAs mental condition may have prevented her from delving into the specifics of the assault in her testimony almost three years later, unlike the way she narrated the same
when she was asked at the barangay outpost merely minutes after the incident. However, as we have ruled in a litany of cases, when a woman, more so if she isa minor, says
she has been raped, she says, in effect, all that is necessary toprove that rape was committed. Youth and, as is more applicablein the case at bar, immaturity are generally
badges of truth.28 Furthermore, the report of PC/Insp. Chua that the findings of the physical examination were consistent with recent sexual intercourse, provide additional
corroboration to the testimonies of AAA and BBB. It should be noted that this report was stipulated upon by the prosecution and the defense.

We have pronounced time and again that both denial and alibi are inherently weak defenses which cannot prevail over the positive and credible testimony of the prosecution
witness thatthe accused committed the crime. Thus, as between a categorical testimony which has a ring of truth on one hand, and a mere denial and alibi on the other, the
former is generally held to prevail.29 For the defense of alibi to prosper, it must be sufficiently convincing as to preclude any doubt onthe physical impossibility of the presence of
the accused at the locus criminisor its immediate vicinity at the time of the incident. 30 In the case at bar, accused-appellant and his brother, second defense witness Jose, claim
thatthe former was taking care of his daughter in his house at around 7:00 p.m. of September 7, 2003. He then went out and proceeded to a videokebar, which was merely 20
meters away from his house. Accused-appellant and his brother admitted that their house was merely 50 meters away, or around a one-minute walk, from the house of AAA,
where the alleged incident occurred. Accused-appellant was therefore clearly in the immediate vicinity of the locus criminisat the time of the commission of the crime, and thus
accused-appellants defense of alibi must fail. 1wphi 1

Other than alibi and denial, accused-appellant presented the testimony of Alicia, a neighbor of AAA and accused-appellant, to prove that another person raped AAA. However,
the record is clear that AAA positively identified accused-appellant asthe culprit both at the barangay outpost minutes after the incident, and in open court. It is furthermore
axiomatic that when it comes to evaluating the credibility of the testimonies of the witnesses, great respect is accorded to the findings of the trial judge who is in a better position
to observe the demeanor, facial expression, and manner of testifying of witnesses, and to decide who among them is telling the truth.31 The trial court, which was able to
carefully observe the testimony of Alicia, was not adequately convinced by her allegations.

To recall, the Information charged accused-appellant of committing the following act: "by means of force and intimidation, did, then and there willfully, unlawfully, and feloniously
have carnal knowledge [of AAA], 19 years of age but with a mental age of a 5 year old, hence, a retardate, or demented, which is known to accused at the time of the
commission of the offense, against her will and consent and to her damage and prejudice." 32 The Information, as worded, can conceivably comprehend rape under either
paragraph 1(b) or 1(d) of Article 266-A of the Revised Penal Code, which provides:

Article 266-A. Rape; When and How Committed. Rape is committed

1) By a man who shall have carnal knowledge of a woman under any of the following circumstances:

a) Through force, threat or intimidation;

b) When the offended party is deprived of reasonor is otherwise unconscious;

c) By means of fraudulent machination or grave abuse of authority;

d) When the offended party is under twelve (12) years of age or is demented, even though none of the circumstances mentioned above be present. (Emphasis
supplied)

In People v. Caoile,33 we differentiated the terms "deprived of reason" and "demented," as follows:

The term dementedrefers to a person who has dementia, which is a condition of deteriorated mentality, characterized by marked decline from the individual's former intellectual
level and often by emotional apathy, madness, or insanity. On the other hand, the phrase deprived of reason under paragraph 1 (b) has been interpreted to include those
suffering from mental abnormality, deficiency, or retardation. Thus, AAA, who was clinically diagnosed to be a mental retardate, can be properly classified as a person who is
"deprived of reason," and not one who is "demented."

In the case at bar, AAA was clinically diagnosed to have mental retardation with the mental capacity of a seven-year old child.34 The prosecution and the defense agreed
tostipulate on the conclusion of the psychologist that the "mental age of the victim whose chronological age at the time of the commission of the offense is nineteen (19) years
old x x x is that of a seven (7) year old child."35 Accused-appellant is therefore criminally liable for rape under paragraph 1(b) of Article 266-A of the Revised Penal Code. The
appropriate penalty is provided for by Article 266-B, which relevantly provides:

The death penalty shall also be imposed if the crime of rape is committed with any of the following aggravating/qualifying circumstances:

xxxx

10. When the offender knew of the mental disability, emotional disorder and/or physical handicap of the offended party at the time of the commission of the crime.

Since the accused-appellants knowledge of AAAs mental retardation was alleged in the Information and admitted by the former during the trial, the above special qualifying
circumstance is applicable, and the penalty of death should have been imposed. With the passage, however, of Republic Act No. 934636 prohibiting the imposition of the death
penalty, the penalty of reclusion perpetua shall instead be imposed.

The RTC sentenced accused-appellant to suffer the penalty of imprisonment of twenty years and one day to forty years of reclusion perpetua. The Court of Appeals correctly
modified the penalty to be simply reclusion perpetua. Since reclusion perpetuais an indivisible penalty, the Indeterminate Sentence Law cannot be applied.37

As regards accused-appellants civil liability, the RTC ordered him to pay AAA in the amount of P75,000.00 asmoral damages and P75,000.00 as exemplary damages. The
Court of Appeals modified the trial courts decision by granting the additional award of P75,000.00 as civil indemnity and reducing the award of exemplary damages
to P30,000.00. In accordance, however, toPeople v. Lumaho, 38 where the penalty for the crime committed is death which cannot be imposed because of Republic Act No. 9346,
we increase the amounts of indemnity and damages to be imposed as follows: P100,000.00 as civil indemnity; P100,000.00 as moral damages; and P100,000.00 as exemplary
damages. In addition, we impose 6% interest per annum from finality of judgment until fully paid. 39
WHEREFORE, the present appeal is DENIED. The Decision of the Court of Appeals in CA-G.R. CRNo. 32275 dated August 11, 2010 is hereby AFFIRMED with
MODIFICATION increasing the amounts of indemnity and damages to be imposed as follows: P100,000.00 as civil indemnity; P100,000.00 as moral damages; andP100,000.00
as exemplary damages. All amounts are furthermore subject to interest at the rate of 6% per annum from the date of finality of this judgment until fully paid.

SO ORDERED.

A.M. No. P-14-3278 October 21, 2014


[Formerly A.M. OCA IPI No. 09-3222-P]

CONCERNED CITIZENS OF NAVAL, BILIRAN, Complainants,


vs.
FLORANTE F. RALAR, Court Stenographer III, Regional Trial Court, Branch 37, Caibiran, Biliran,Respondent.

DECISION

PER CURIAM:

The falsification of an official document like the personal data sheet required for employment in the Judiciary is gross dishonesty, and constitutes a serious administrative
offense that warrants the dismissal of the employee.

Antecedents

By an anonymous letter dated June 17, 2008, 1 the writers, self-styling themselves as the Concerned Citizens of Naval, Biliran, formally charged Florante F. Ralar, Court
Stenographer III of Branch 37 of the Regional Trial Court in Caibiran, Biliran with dishonesty through falsification of public documents.

The letter alleged that Ralar, who had been appointed as Court Stenographer III in 1998, did not state inhis application for the position his having been previously employed in
the Bureau of Post, later known as the Philippine Postal Corporation; that in his Civil Service Form No. 212 (Personal Data Sheet),2 he had filled out and attached his application
without stating therein that he had then been employed in that office; that all papers relative to his employment had shown his deliberate omission of his previous employment in
the Bureau ofPost; that a verification at Regional Office No. 08 of the Philippine Postal Corporation in Tacloban City disclosed that he had been actually employed as a Letter
Carrier prior to his employment in the Judiciary, and that atthat time he had been indefinitely suspended for committing mail pilferage, and had eventually been dismissed from
the service for such offense;3 that his co-employees were wondering why he had been employed in the Judiciary despite his disqualification to work in the Government; that he
had also been previously employed as a Revenue Collection Clerk in Naval, Biliran, in which position he had also committed misappropriation of his collections, but the matter
had been settled without him being formally charged;4 that he had frequently indulged in gambling and drinking during office hours to the prejudice of the public service; that his
notoriety had been of common knowledge in the community; that despite knowing nothing about stenography, he had obtained a falsified certification of his knowledge of
stenography to secure an appointment to his present position; and that he had even asked court litigants for money in consideration of assistance extended to them in cases
pending in court.

In his comment dated September 2, 2009,5 Ralar denied the accusation of dishonesty. He insisted that the allegations made against him were general statements that did not
state causes of action and should be outrightly dismissed; that giving due course tothe complaint against him despite the absence of any named complainant would violate his
fundamental right to face and to confront the witnesses against him; that he admitted having been previously employed by the Philippine Postal Corporation (formerly, the
Bureau of Post), and later on by the local government of Naval, Biliran; that in his pursuit and determination to earn more, particularly to ensure the education of his children, he
had applied in the Judiciary, where he presently holds the position of court stenographer;that he had no knowledge of having violated any law, rules and regulations that would
disqualify or render him ineligible to hold any government position; that all the allegations about his suspension and dismissal from the service for mail pilferage, use of
government funds collected as Revenue Collection Clerk in the local government for his personal benefit, being recently seen in gambling and drinking places during office
hours, and soliciting money from litigants, being unsubstantiated, should not be given credence.

The Office of the Court Administrator (OCA) submitted its report and recommendation dated January 19, 2010, 6as follows:

EVALUATION: After a careful perusal of the records on hand, this Office finds that there is sufficient basis to hold respondent Ralar guilty of the offense attributed to him.

A scrutiny of respondent Ralars Personal Data Sheet (PDS) showed that the latter deliberately concealed the fact that he was previously charged administratively and was
eventually penalized for acts of dishonesty while he was still an employee of then Bureau of Post, now Philippine Postal Corporation. To show proof that respondent Ralar was
previously dismissed from government service, the Department of Transportation and Communication rendered a Decision on 20 March 1990, the dispositive portion ofwhich
reads, to wit:

PREMISES CONSIDERED, Respondent Florante F. Ralar is found guilty as charged. Taking into account the mitigating circumstance of length of service against the
aggravating circumstance of being found guilty of other offenses in this case, he is ordered dismissed from the service, as recommended.

In the interest of the service, it is hereby directed that this decision be implemented immediately.

In determining the authenticity or veracity of the foregoing decision, then Deputy Court Administrator (DCA) Antonio H. Dujua, now retired, requested for a certified copy of the
said decision. In response to such request, the National Archives of the Philippines in a Letter, addressed to DCA Dujua, provided this Office, certified copies of the said
decision. Furthermore, a close scrutiny of respondent Ralars Personal Data Sheet (PDS) are the portions where the latter put a check mark beside the boxes indicating "No"
answers, anent the questions, particularly in No. 37, letters a and b, to wit:

a. Have you ever been formally charged?; and b. Have you ever been found guilty of any administrative offense? (italics ours)

To our mind, the fact that respondent Ralar affixed check marks in the "No" answer box clearly shows his intention to misrepresent himself in order to gain employment in the
government. Indeed, his actuations fall squarely as an act of dishonesty. This is plain and simple.
In Advincula v. Dicen, the Court emphasized that the Personal Data Sheet (PDS) is an official document required of a government employee and official by the CSC. It is the
repository of all information about any government employee and official regarding his personal background, qualification, and eligibility. Since truthful completion of the PDS is
a requirement for employment in the judiciary, the importance of answering the same with candor need not begainsaid. Concealment of any information in the PDS, therefore,
warrants disciplinary action against the erring employee.

Anent respondent Ralars contentions, this Office submits that in the absence of a categorical denial on the charges against him and noting the hostile attitude manifested by
respondent Ralar in his comment, this Office holds that the latters general denial cannot prevail over the sufficiency of the pieces of documentary evidence adduced in this
case. In the first place, respondent Ralars general denial is considered under the rules as a negative pregnant which cannotbe given credence in view of its weakness.

Verily, the complainants overcame the required burden to prove that respondent Ralar committed dishonesty while in government service. It is undisputed that substantial
evidence was present in the instant case. Indeed, respondent Ralar committed the same offense while in the judiciary because of his deliberate omission to state in his personal
data sheet that he was neither formally charged nor found guilty of administrative offense.

More significantly, the pieces of documentary evidence adduced are the very reason why this Office is convinced that respondent Ralar has indeed committed the offense
hurled against him. In the case of Noel G. Wabe vs. Luisita P. Bionson, Clerk of Court of Municipal Trial Court in Cities, Malaybalay City [A.M. No. P-03-1760. December 30,
2003], the Supreme Court held: The Court condemns and cannot countenance any act or omission on the part of court personnel that would violate the norm of public
accountability and diminish or even just tend to diminish the faith of the people in the judiciary (citing, Almario v. Resus, 318 SCRA 742 (1999).)

Corollary thereto, in the case of Civil Service Commission vs. Santos Enrie Perocho, Jr., the Supreme Court ruled that:

Dishonesty, like bad faith, isnot simply bad judgment or negligence. Dishonesty is a question of intention. In ascertaining the intention of a person accused of dishonesty,
consideration must be taken not only of the facts and circumstances which gave rise to the act committed by the respondent, but also of his state of mind at the time the offense
was committed, the time he might have had at his disposal for the purpose of meditating on the consequences of his act, and the degree of reasoning he could have had at that
moment.

The OCA recommended the dismissal of Ralar from the service with forfeiture of all retirement benefits, except his accrued leave credits, and with prejudice to re-employment in
any branch or instrumentality of the government, including government-ownedand controlled corporations.7 Ruling

The Court finds the report of the OCA to be substantiated by the records, and adopts its recommendation in its entirety. 1wphi1

Ralar appeared defiant becausethe charge had been made anonymously. Yet, his invocation of the right to face and to confront his accusers was misplaced, for the charge was
soon easily substantiated by the results of the OCAs legitimate queriesput to the various offices of the public service in which he had previously served. That he committed
falsification of an official document when he did not disclose in his written application for his present position his having been formally charged administratively, and having been
found guilty of such charge became indisputable. His omission, being designed by him to misrepresent his qualifications for the position he sought, constituted gross dishonesty
that the Court cannot tolerate. It is the States policy to promote a high standard of ethics and utmost responsibility in the public service; and to hold all public officials and
employees accountable to the people at all times. This policy demands that they discharge their duties with utmost responsibility, integrity, competence, and loyalty; act with
patriotism and justice; lead modest lives; and uphold public interest over personal interest. 8 No more essential is that policy than in the Judiciary, for no other office in the
Government exacts the greatest demand for moral righteousness and uprightness from public employees and officials than the Judiciary. As such, the Judiciary deserves the
best from all its employees and officials. Dishonesty and falsification malevolent and abhorrent have no place in the Judiciary.

Ralar was guilty of dishonesty, which is defined as the absence of integrity; the disposition to betray, cheat, deceive, or defraud; or the intentional violation of truth. Pursuant to
Section 46, Rule 10 of the Revised Uniform Rules on Administrative Case in the Civil Service, dishonesty, classified as a grave offense, is penalized with dismissal for the first
offense.

WHEREFORE, the Court FINDS and PRONOUNCES FLORANTE F. RALAR, Court Stenographer III of Branch 37, Regional Trial Court in Caibiran, Biliran, GUILTY of
DISHONESTY as charged; and DISMISSES him from the service with forfeiture of all retirement benefits, except his accrued leave credits, with prejudice to re-employment in
any branch or instrumentality of the Government, including government owned and government-controlled corporations.

This decision is FINAL and IMMEDIATELY EXECUTORY, and no further pleadings shall be entertained.

SO ORDERED.

A.M. No. P-09-2673 October 21, 2014


(A.M. OCA IPI No. 00-857-P)

FRUMENCIO E. PULGAR, Petitioner,


vs.
PAUL M. RESURRECCION and MARICAR M. EUGENIO, Respondents.

DECISION

PER CURIAM:

Any employee or official of the Judiciary who usurps the functions of another employee Qr official, or illegally exacts money from law practitioners and litigants is guilty of grave
misconduct, and may be dismissed from the service even for the first offense.

The Charge

In his complaint-affidavit dated March 15, 2000, Atty. Frumencio E. Pulgar denounced Court Interpreter Paul M. Resurreccion of the Regional Trial Court, Branch 276, in
Muntinlupa City, for committing acts of extortion, illegal exaction, and blackmail by using his position to extort money from him, a law practitioner, inexchange for non-existent
goodwill, and for violation of Administrative Circular No. 31-90.1
In the course of the investigation of the complaint-affidavit filed against Resurreccion, Court Stenographer Maricar M. Eugenio testified in favor of Resurreccion. She thereby l aid
the responsibility for theex parte reception of the evidence on Gina Bacayon, then the acting clerk of court. She claimed that being the stenographer recording the ex parte
presentation of evidence on February 26, 1997, she was the one who had asked for the payment of the transcript of the stenographic notes from Atty. Pulgar. However, her
testimony invited suspicion of her covering up Resurreccions malfeasance, leading to her being likewise investigated and made to answer for dishonesty.

Antecedents

In his complaint-affidavit, Atty. Pulgar set forth Resurreccions acts in the following manner:2 1. I am the counsel for the petitioner in Civil Case No. 95-079 entitled Rey O. Chand
vs. Armenia P. Chand for Annulment of marriage based on Art. 36 of the Family Code;

2. The complaint was filed in April 1996 and eventually the aforeindicated case was set for hearing before the Commissioner on February 26, 1997;

3. Herein affiant presented his first and only witness, the petitioner Rey O. Chand and he testified on the factual grounds on why the marriage celebrated between
him and the defendant should be dissolved;

4. After the presentation of ex-parte evidence, I was being charged by the Acting Clerk of Court, Paul M. Resurreccion to whom I paid the first P2,000.00 and I
promised to pay the balance of P3,000.00 on the following day. No receipt was issued to the undersigned;

5. The following day, I sent my Liaison Officer, Oswaldo L. Serdon who brought with him the P3,000.00 in cash with my instruction that he pays the Acting Clerk of
Court the said amount of P3,000.00. My L.O paid the respondent, however the Acting Clerk of Court failed to issue the corresponding receipt;

6. Undersigned being a sucker for public relations and being a practicing lawyer who does not want to cross or antagonize court personnel of Branch 276 by not
giving in to his unwarranted exaction although this not embodied nor allowed in the Rules of Court by coming across to the importunings of respondent;

7. Sometime on June 26, 1997I received a copy of the Resolution denying our Petition. Undersigned was perturbed by the turn of events because the Acting Clerk
of Court promised that he shall be the one to take care of a favorable decision inexchange for the payment that I made. But since, the decision was adverse I did
not anymore bother to file a Motion for Reconsideration and again being a sucker for public relations treated the dismissal as oneof those things being
encountered by a practicing attorney;

8. Sometime on February 21, 2000at around 9:00 a.m while I was attending a case before the Sala of the Honorable Norma Perello in People of the Philippines vs.
Marlon Velancio, I was approached by the person announcing the cases whom I later or (sic) able to identify as the respondent, and he asked whether I am the
Atty. Pulgar who was the counsel of Rey O. Chand in the afore-indicated case of annulment of marriage;

9. I answered in the affirmative. Then all of a sudden Paul M. Ressureccion uttered "may utang pa kayong dapat bayaran sa akin doon sa kaso ni Rey O. Chand
sa ex-parte. Ibinigay na raw sa inyo yung pera pero hindi ninyo naman daw na i-bayad" the voice of Raul Resurrecion was loud enough to be heard by almost
everybody in the Sala. As a matter of fact, another employee butted-in and said "wala pang ibinabayad kayo Atty." And Paul Resurrecion again uttered and said
"ibinigay na sa inyo, abay bayaran nyo na at ng matapos na ang kasong yan". I reasoned that the case that he was referring to was already dismissed and as far
as I am concerned it was already terminated and I said "why should I pay again when it was already dismissed. As a matter of fact, I paid already then why are still
exacting payment from me?." Again, in an angry voice respondent reiterated his previous demands. To cut the display of unbecoming behavior of the respondent
court personnel I told him "mabuti pa maghaharap tayo."

10. In view thereof, I am formally charging Paul M. Resurreccion of extortion, illegal exaction, and blackmail by using his position to extort money from a
practitioner in exchange for non-existent goodwill and for violation of Administrative Circular No. 31-90 particularly Sec. 76 which provides: x x x

On May 25, 2000, the Office of the Court Administrator (OCA), acting on the complaint-affidavit, required Resurreccion to submit his comment within ten days from receipt. 3

In his comment,4 Resurreccion tendered the following explanations:

Pars. 1, 2 and 3 of the complaint-affidavit are admitted.

Par. 4 is vehemently denied. I did not take the ex-parte presentation of evidence for his client, much more received the initial P2,000.00, and the promised P3,000.00 the
following day, hence, must issue the corresponding receipt. In fact, the testimony of the Petitioner was taken before the Clerk of Court not before this Branch Clerk of Court, who
is not a lawyer. The Honorable Judge was then available and in attendance on February 26, 1997. The Resolution denying the Petition was prepared by the Presiding Judge
assisted by the Clerk of Court.

Par. 5. If it is true that his Liaison Officer went to my office the following day, and paid the P3,000.00, where is the Affidavit of his Liaison Officer attesting that he/she gave any
money to me? Again, it is emphasized that ex-parte presentation of evidence, was taken by the Office of the Clerk of Court never by me, the Branch Clerk of Court, hence, no
payment, granting there was, will be forth coming to me. I did nor render any service in connection with this case. Why would this lawyer pay me P2,000.00 and be
promised P3,000.00 more for doing nothing? He is truly confused!

Par. 6 is denied for the same reason as No. 5. I am not an extortionist, much more "importunings." Even granting this is so, I cannot ask to be paid for doing nothing.

Par. 7 is admitted as the Resolution in that case was sent to complainant, which was adverse to him. The reason why the PETITION was denied, was the negligence of Atty.
Pulgar who did not present the Psychiatrist, not even her report, while this Petition is based on psychological incapacity yet. Now he is trying to redeem himself by making it
appear that he lost because he did not pay the alleged P3,000.00. How cheap can he get. The price[-]of his incompetence is truly minimal. In fact, upon a Motion for
Reconsideration by another lawyer, the case was re-opened, the Psychiatrist testimony and report taken, and the decision was reconsidered. His client probably saw his
negligence, so he got himself another lawyer. The case was lost due to his negligence, if not ignorance, not because of the lack of P3,000.00.

Par. 8. If I ever I talke (sic) with Atty. Pulgar on February 21, 2000 at around 9:00 A.M. it was to remind him about the payment of the transcript, upon the prodding of the
stenographer, who had been asking for its payment, from this squelching lawyer, who refused to pay. I only echoed the pleas of said stenographer, who herself attested to the
unpaid sum, and seconded my request. Par. 9. I politely approached Atty. Pulgar, NEVER in a demanding manner as I have no right to the amountdue to the stenographer. It
was Atty. Pulgar who instead shouted, embarrassed probably, because he knew that his client told us that he had remitted the payment for the TSN to Atty. Pulgar by way of a
check, issued to him. But Atty. Pulgar never paid the stenographer for the transcript. All that he paid for was the Commissioners fee. Surely, if there is any amount due me, I
cannot announce this and demand for it in a loud manner, specially, if I am "committing graft." Why would I OPENLY demand the money from Atty. Pulgar in the presence of
lawyers and other people. It was him, shame that made him defensive knowing that the sum for the stenographer was kept by him.

Par. 10 is strongly disputed. Asking for any sum from any lawyer or party litigant, much more "extort", is never tolerated in our office. My presiding judge will gun me down, and I
mean literally, because she carries a gun, if this is everdone by anyone of her staff.

Finally, it is impossible for me or anyone of us to ask money from the LOSING party, should we ever ask, which never happened!

WHEREFORE, it is respectfully prayed that this baseless, unfounded, tramped-up (sic) and malicious charge by this negligent, penny squelching, and blundering lawyer, who
did not pay the TSN even though he received the sum from his client, be dismissed.

Upon the recommendation of then Court Administrator Presbitero J. Velasco, Jr., 5 the Court called upon then Executive Judge Norma C. Perello (Judge Perello) of the Regional
Trial Court in Muntinlupa City (RTC in Muntinlupa City) to investigate the complaint-affidavit, and to report and submit her recommendations thereon. 6

On December 12, 2002, Judge Perello submitted her report and recommendation to the OCA, stating that the complaint-affidavit against Resurreccion should be dismissed due
to what she perceived as the failure of Atty. Pulgar to substantiate his charge.7

On April 24, 2003, however, the OCA rejected the findings and recommendation of Judge Perello, and, instead, recommended that the case be referred to another investigator
in the person of Judge Juanita TomasGuerrero (Judge Guerrero) of the RTC in Muntinlupa City. 8 Accordingly, on June 16, 2003, the Court directed Judge Guerrero to conduct
further investigation, and to submit her report and recommendation; and to exhaust all possible means to locate Atty. Pulgar. 9

In the ensuing hearings conducted by Judge Guerrero, Court Stenographer Maricar Eugenio of the RTC in Muntinlupa City testified that it was Gina Bacayon, then acting clerk
of court, who had received the evidence ex parte in the case of Atty. Pulgar; 10 that being the stenographer who had recorded the ex partepresentation of evidence on February
26, 1997,11 she had asked for the payment of the transcript of the stenographic notes from Atty. Pulgar; 12 and that she had submitted a duplicate copy of the transcript of the
stenographic notes.13

Report and Recommendation of Investigating Judge Guerrero

In her report and recommendation dated October 22, 2003,14 Judge Guerrero made the following conclusions and recommendations, to wit:

CONCLUSIONS:

PREMISES CONSIDERED, the Court concludes that the following scenarios must have happened on February 26, 1997 and February 21, 2000:

On February 26, 1997, after the caseof Rey Chand was called, the Court allowed the petitioner to present evidence ex-partebecause of the failure of Armenia Chand to file her
Answer. As is the practice and being the Acting Branch Clerk of Court,Mr. Resurreccion was allowed to receive the evidence of the petitioner while the Court was busy hearing
other cases ready for trial. Since Mr. Resurreccion, being also the Court Interpreter, was needed in the courtroom, he had to call Ms. Gina Bucayon, the Acting Clerk of Court,
who is also not a lawyer, to attend to the ex-parte proceedings. This is probably the reason why Ms. Bucayons handwritings appeared in the minutes of February 26, 1997 and
why Mr. Resurreccion claimed that he did not know Atty. Pulgar as he had not met him. As was the practice, Atty. Pulgar could have given the fee for the exparteto Mr.
Resurreccion through Ms. Bucayon. Then, Mr. Oswaldo Serdon went to the court office and delivered the balance of the ex-parte proceedings but which failed to reach Mr.
Resurreccion as he had just left it on a table. In the meantime, the Rey Chand case was dismissed.

Subsequently, while Mr. Chand was following up his case after it was revived, he mentioned that hehas paid the commissioners fee inclusive of stenographers fee to his lawyer
(Atty. Pulgar) for the ex-parte proceedings of February 26, 1997. So, when Atty. Pulgar appeared again on February 21, 2000, Ms. Thelma Manlingit who was familiar with Atty.
Pulgar, had to call the attention ofMr. Resurreccion about Mr. Pulgars presence in the courtroom. Mr. Resurrecion, then demanded payment of what was due him as
commissioners fee since he failed to receive it from either Atty. Pulgar or his liaison officer. Atty. Pulgar got irked by the demand for said fee and shouted becauseas far as he
was concerned no amount was due since the Rey Chand case was already dismissed.

RECOMMENDATIONS:

Mr. Paul Resurreccion could not beheld liable for extorting money from Atty. Pulgar because Extortion is defined as compelling of a person by a wrongful and illegal means
(duress, threats, etc.) to give up money or property. There was neither force nor intimidation committed by Mr. Resurreccion in demanding money from a lawyer or litigant.

However, the Court finds Mr. Resurreccion guilty of exacting money for some legal fees that do not exist. While Sec. 6, Rule 130 of the 1997 Rules of Procedure allows a
judgeto delegate the reception of evidence to its clerk of court who is a member of the bar in defaults or expartehearings, the Supreme Court does not give the commissioner
the privilege to collect money from the litigant or lawyer as legal fees for this purpose. Rule 141 of the Rules of Court enumerates the numerous legal fees that may be collected
by the courts, commissioners fees for receiving evidence are not one of them. The demand thereof under the guise of a commissioners fee is illegal and tantamount to conduct
grossly prejudicial to the best interest of the service.

Employees of the Judiciary are expected to be examples of integrity, honesty and uprightness. Their conduct should be characterized by propriety and decorum. Mr. Paul
Resurreccion being the designated Acting Branch Clerk of Court of RTC Branch 276 should be an exemplar of all these characteristics. The Manual of Clerks of Court that
prohibits the collection of commissioners fees in an ex-parte proceeding binds him. Furthermore, he and his lawyers act of dictating upon his witness, Rey O. Chand on what to
say in an investigation is detestable and contumacious, to say the least, he being a judicial employee whose main task is to see to it that the administration of justice is upheld.

The Respondents actions also caused needless anxiety and shame on the part of the complainant thereby diminishing the latters faith not only with the Regional Trial Courts of
Muntinlupa but in the entire Judiciary. The gradual erosion of public confidence in the Judiciary caused by the failure of Mr. Resurreccion to uphold the objective of the Supreme
Court in improving public service and preserving the peoples faith and confidence in the government, is constitutive of the offense Conduct Grossly Prejudicial to the Best
Interest ofthe Service for which respondent must be made answerable.

xxxx

As this is the first time that the respondent committed the act complained of, it is hereby recommended that MR. PAUL RESURRECCION be suspended for one (1) year from
service without pay. Any repetition of the same act shall be dealt with more severely. 15
In addition, Judge Guerrero found impropriety on the part of Eugenio, observing:

As an aside: Equally detestable is the attempt of the other court employees of the Regional Trial Court,Branch 276 more particularly, Ms. Maricar M. Eugenio to cover up the
wrongdoings of their comrade by testifying falsely, should not go unchecked. Ms. Eugenio should also be penalized for trying to mislead the Court by making such false
testimony. Her actuation amounts to neglect in the performance of [her] official function as co-player in the administration of justice. The undersigned recommends that she be
reprimanded.16

First Report of the OCA

In its memorandum for the Court dated July 6, 2009, 17 the OCA rendered its own findings based on the report and recommendation of Judge Guerrero, and recommended: (a)
thatResurreccion be dismissed from the service; and (b) that Eugenio be ordered to explain why she should not be held administratively liable, viz:

WHEREFORE, in view of the foregoing, respectfully submitted for the consideration of the Honorable Court, are the following recommendations:

1. That this instant administrative complaint be REDOCKETED as a regular administrative matter;

2. That respondent Paul M. Resurreccion be found GUILTY of Grave Misconduct for:

1.1) committing gross violation of the following:

a) Circular No. 50-2001, August 21, 2001, Unauthorized Collection of Fees or Amountof Compensation by Clerks of Court for Reception
of Evidence Ex-Partefor demanding commissioners fee in ex-parteproceedings;

b) Section 9, Rule 30, 1997 Rules of Civil Procedure, which requires that only a member of the bar may sit as commissioner to receive
evidence ex-parte in default or ex-partehearings;

c) Republic Act No. 6713, Section 7, Paragraph

(d) which prohibits public officials and employees from soliciting or accepting "directly or indirectly, any gift, gratuity, favor,
entertainment, loan or anything of monetary value from any person in the course oftheir official duties or in connection with any
operation being regulated by, or any transaction which may be affected by the function of their office.

1.2) inducing his witness Rey O. Chand to give false testimony;

3. That respondent Paul M. Ressurreccion be DISMISSED from the service with forfeiture of all benefits, excluding accrued leave credits, with prejudice to re-
employment inany branch or agency of the government, including government-owned or controlled corporations; and

4. That Maricar M. Eugenio, Court Stenographer, Regional Trial Court, Branch 276, be DIRECTED to COMMENT, within ten (10) days from notice, why she
should not be held administratively liable for grave misconduct for giving false testimony in the administrative proceedings of the case and for making fictitious and
excessive claim for payment of nonexistent Transcript of Stenographic Notes.18

In view of the recommendation of the OCA as to her, the Court required Eugenio to show cause why she should not be held administratively liable for grave misconduct.19

On November 13, 2009, Eugenio proffered her comment, denying giving false testimony in favor of Resurreccion and stating as follows:

I did not give false testimony in the administrative proceedings conducted by Hon. Judge Guerrero and for making fictitious and excessive claim for payment of a non-existent
transcript of stenographic notes (TSN for short). I only told the truth as I am a God-fearing person. Nowhere in my testimony that I demanded excessive claim for the payment of
TSN and admitted before the Honorable Judge that I was asking for the payment of my TSN in connection with the case of Rey Chand which was already terminated. When I
was asked how much was I am demanding for the payment of said TSN, I simply stated "Wala po akong sinabing amount", so how could I be charged for making fictitious and
excessive claim for payment of non-existent transcript of stenographic notes? My answer on Page 35, TSN dated August 14, 2003 on the question of the Court: is that the duty
of the lawyer to pay the tsn or the client? And the answer reflected on the said tsn which I quote "A: What I know is that in the payment of commissioners fee isthe payment of
transcript of stenographic notes", which the interpretation is not correct, I answered in vernacular during that said hearing is: "Ang pagkakaalam ko po ang bayad sa tsn ay
kasama na doon sa commissioners fee". I was even asked by Atty. Pulgar about my educational attainment, and the answer as stated in the said tsn is Secretary, which is very
erroneous. The answer should be Secretarial. Also in the said hearing, I was asked by the Court where is the said transcript, I told the Honorable Judge, I will just bring the
same to her. So after the said hearing, I looked for the said TSN and gave the same to one of Judge Guerreros staff, as she, the staff, even went to our office to ask for the
same. I gave her the said tsn together with the diskette. If the said transcript of stenographic notes is inexistent, how could then Judge Perello finished (sic) her
Resolution/Decision regarding the annulment case of Mr. Rey Chand if no transcript of stenographic notes was ever attached to the case record as itwas an ex-parte
presentation of Petitioners evidence? Of course, Judge Perello could not decide the same, as it was taken ex-parte.

As a matter of fact, the Resolution/Decision of the said Annulment case has already been issued and its finality was given likewise. I did not lie in my testimony before
Honorable Judge Guerrero. What I told is only the truth and I was innocent of the charges imputed in my person. Even without the presence of a lawyer, I testified to tell the truth
about the charge against Mr. Paul Resurreccion. I did not give a false testimony and for making a fictitious and excessive claim for the payment of a nonexistent transcript of
stenographic notes, as in fact I furnished the said tsn to the Office of Honorable Judge Guerrero, together with the diskette, when I was required to do so.20

Second Report of the OCA

In its July 22, 2011 memorandum,21 the OCA stated its findings and recommendations on the administrative liability of Eugenio, to wit:

For deliberately offering false testimony during the investigatory hearing, there is substantial evidence that respondent Eugenio committed the act of dishonesty. It behooved
respondent Eugenio to testify truthfully in accordance with the oath she took before her testimony was taken during the investigation conducted by Investigating Judge Guerrero.
Sadly, she disregarded the sanctity of her oath due to her misplaced loyalty to respondent Resurreccion. Time and time again, the Court has stressed that every employee of
the judiciary should be an example of integrity, uprightness and honesty. Like any public servant, she must exhibit the highest sense of honesty and integrity not only in the
performance of her official duties but most especially when she herself is on the witness stand, to preserve the courts good name and standing.

Moreover, respondent Eugenios failure to attach the T.S.N taken on 26 February 1997 amounts to simple neglect of duty which is classified as a less grave offense under
subsection B(1) of the same section and is penalized by suspension of one (1) month and one (1) day to six (6) months for the first offense and dismissal for the second offense.
This is her second infraction of such nature in her eighteen (18) years of service in the Judiciary. As earlier mentioned, the Court extended its compassion the first time
respondent Eugenio committed simple neglect of duty and imposed upon her the penalty of a fine instead of suspension. The instant case is, however, significantly different in
that, aside from committing simple neglect of duty, she further committed an act constituting dishonesty which is a more serious offense.

xxxx

Premises considered, it is respectfully recommended that:

1. Respondent Maricar M. Eugenio, Court Stenographer, RTC Branch 276, Muntinlupa City be IMPLEADED as a co-respondent in the administrative matter; and

2. Respondent Maricar M. Eugenio be found GUILTY of dishonesty and simple neglect of duty, imposing upon her the penalty of SUSPENSION of SIX (6) months
without pay, with a stern warning that commission of the same or similar acts in the future will be dealt with more severely.22

Ruling of the Court

We consider and declare the findings of the OCA fully warranted.

Enshrining the tenet that a public office is a public trust, Section 1, Article XI of the 1987 Constitution mandates that public officers and employees, who are servants of the
people, must at all times be accountable to them, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest lives.
To enforce this constitutional tenet, the Court has incessantly reminded that officials and employees involved in the administration of justice should faithfully adhere to their
mandated duties and responsibilities. Any act of impropriety on their part whether committed by the highest judicial official or by the lowest member of the judicial workforce
can greatly erode the peoples confidence in the Judiciary. This is because the image of a court of justice is necessarily mirrored in the conduct of its personnel; hence, it
becomes their constant duty to maintain the good nameand standing of the Judiciary as a true temple of justice. 23

At the time material to this administrative case, Resurreccion was the Court Interpreter of Branch 276 of the RTC in Muntinlupa City. In order to maintain the trust and
confidence of the people in the Judiciary, therefore, he should have acted within the limits ofhis authority as such. Although his Presiding Judge designated him as
commissioner to receive evidence ex parte in some cases, he still could not discharge or perform that task because he was not a member of the Philippine Bar, and thus had no
authority whatsoever to act or serve as suchcommissioner to receive the evidence ex parte of any of the parties. But, as the records indicated, he served as such commissioner.
His deliberate assumption of the duties of a commissioner for that purpose blatantly transgressed the limits of his official functions as the Court Interpreter, and constituted
unmitigated usurpation of powers. Such irregularity was undeniable, because the language of Section 9, Rule 30 of the Rules of Court, of which he and his Presiding Judge
were well aware, was straightforward and unequivocal, viz:

Section 9. Judge to receive evidence; delegation to clerk of court. The judge of the court where the case is pending shall personally receive the evidence to be adduced by
the parties. However, in default or ex partehearings, and in any case where the parties agree in writing, the court may delegate the reception of evidence to its clerk of court who
is a member of the bar.The clerk of court shall have no power to rule on objections to any question or to the admission of exhibits, which objections shall be resolved by the
court upon submission ofhis report and the transcripts within ten (10) daysfrom termination of the hearing. (n)

Compounding the usurpation of powers was the more serious offense of illegally exacting fees from litigants and their lawyers or representatives. It is worth mentioning that
Circular No. 50-2001, which proscribed the unauthorized collection of fees or amounts of compensation by clerks of court for their reception of evidence ex parte, was issued
only on August 21, 2001. Even then, Resurreccion could not feign ignorance of the prohibition because the Manual of Clerks of Court,which had been issued long before the
issuance of Circular No. 50-2001, already contained a similar prohibition that explicitly stated: No Branch Clerk of Court shall demand and/or receive commissioner's fees for
reception of evidence ex-parte.24

In view of the foregoing, the recommendation of the OCA for the immediate dismissal of Resurreccion from the service is warranted. His acts of dishonesty, usurpation of
1wphi1

official functions and illegal exaction demanded that we classify his acts as grave misconduct. In grave misconduct, as distinguished from simple misconduct, the elements of
corruption, clear intent to violate the law, or flagrant disregard of established rule must be manifest. They were so in his case. Corruption as an element of grave misconduct
consisted in his acts of unlawfully or wrongfully using his position or character of his office to procure some benefit for himself or for another, contrary to the rights of
others.25 The collection of the fees had no legal basis whatsoever; hence, his illegal exactions were outrightly and plainly corrupt. It then becomes unavoidable for us to judge his
transgressions as motivated by the lust for money and power, rather than having proceeded from his unfamiliarity with standing rules and guidelines.

Dismissal from the service was called for because of the grave nature of Resurreccions offense. He thereby revealed his absolute unworthiness to remain in the service of the
Judiciary.Indeed, he should not be allowed to serve a minute longer in the Judiciary lest the reputation and integrity of the service be prejudiced. Under Section 46, Rule 10 of
the Revised Rules on Administrative Cases in the Civil Service, serious dishonesty and grave misconduct, among others, are grave offenses punishable by dismissal from the
service.

As to Eugenio, the OCA justifiably pointed out that her evident intention in testifying in the investigation of Resurreccion was to refute the charge that he had been the one who
had conducted the ex partehearing on February 26, 1997 despite his being not qualified to do so. 26 It was quite obvious that she wanted to give the impression that it was
physically impossible for Resurreccion to demand the commissioners fee from Atty. Pulgar if a different person had received the evidence ex parte. Such thinly veiled attempt to
mislead the investigatorin the quest for the truth during the administrative hearings constituted simple dishonesty nonetheless, considering that Judge Guerreros clear judicial
vision still saw through the attempt in order to reach the most logical conclusion that:

x x x As is the practice and being the Acting Branch Clerk of Court, Mr. Resurreccion was allowed to receive the evidence of the petitioner while the Court was busy hearing
other cases ready for trial. Since Mr. Resurreccion, being also the Court Interpreter, was needed in the court room, he had to call Ms. Gina Bucayon, the Acting Clerk of Court,
who is also not a lawyer, to attend to the ex-parte proceedings. This is probably the reason why Ms. Bucayons handwritings appeared in the minutes of February 26, 1997 and
why Mr. Resurreccion claimed that he did not know Atty. Pulgar as he had not met him. As was the practice, Atty. Pulgar could have given the fee for the ex-parteto Mr.
Resurreccion through Ms. Bucayon. Then, Mr. Oswaldo Serdon went to the court office and delivered the balance of the ex-parte proceedings but which failed to reach Mr.
Resurreccion as he had just left it on the table.x x x. 27

Simple dishonesty is categorized as a less grave offense, and is punishable by suspension of one month and one day to six months for the first offense; six months and one day
toone year for the second offense; or dismissal for the second offense. In Santiago v. Jovellanos, 28 we meted suspension of four months with a warning to a branch clerk of court
of the MTC in Pangasinan for her false testimony. In the case of Eugenio, we should suspend her from the service without pay for six months, a penalty that the Court hopes will
quickly bring her to realize the seriousness of her offense. Although this is not her first administrative case, she being already held administratively liable for simple neglect of
duty and meted a fine of P5,000.00 for not transcribing her stenographic notes in relation to habeas corpus proceedings, 29 such previous case is not a factor here because of the
dissimilarity of the offenses. Even so, she has to be warned to be more prudent in her actuations as an employee of the Judiciary.

WHEREFORE, the Court:

1. FINDS AND PRONOUNCES Court Interpreter PAUL M. RESURRECCION of Branch 276, Regional Trial Court, in Muntinlupa City GUILTY of GRAVE
MISCONDUCT; and DISMISSES him from the service, with forfeiture of all benefits except accrued leave credits and with prejudice to re-employment in any
branch or instrumentality of the government, including government-owned and -controlled corporations;

2. DECLARES Court Stenographer MARICAR EUGENIO of Branch 276, Regional Trial Court, in Muntinlupa City GUILTY of SIMPLE DISHONESTY; and
SUSPENDS her from the service for six months without pay, with a warning that a repetition of the same or similar act shall be dealt with more severely; and

3. ORDERS Court Interpreter PAUL M. RESURRECCION to RESTITUTE to Atty. Frumencio E. Pulgar within 30 days from his receipt of this decision the amount
of P5,000.00.

This decision is IMMEDIATELY EXECUTORY.

SO ORDERED.

G.R. No. 176492 October 20, 2014

MARIETTA N. BARRIDO, Petitioner,


vs.
LEONARDO V. NONATO, Respondent.

DECISION

PERALTA, J.:

For the Court's resolution is a Petition for Review filed by petitioner Marietta N. Barrido questioning the Decision 1of the Court of Appeals (CA), dated November 16, 2006, and its
Resolution2 dated January 24, 2007 in CA-G.R. SP No. 00235. The CA affirmed the Decision 3 of the Regional Trial Court (RTC) ofBacolod City, Branch 53, dated July 21, 2004,
in Civil Case No. 03-12123, which ordered the partition of the subject property.

The facts, as culled from the records, are as follows: In the course of the marriage of respondent Leonardo V. Nonato and petitioner Marietta N. Barrido,they were able to
acquire a property situated in Eroreco, Bacolod City, consisting ofa house and lot, covered by Transfer Certificate of Title (TCT) No. T-140361. On March 15, 1996, their
marriage was declared void on the ground of psychological incapacity. Since there was no more reason to maintain their co-ownership over the property, Nonato asked Barrido
for partition, but the latter refused. Thus, on January 29, 2003, Nonato filed a Complaint for partition before the Municipal Trial Court in Cities (MTCC) of Bacolod City, Branch 3.

Barrido claimed, by way of affirmative defense, that the subject property had already been sold to their children, Joseph Raymund and Joseph Leo. She likewise moved for the
dismissal of the complaint because the MTCC lacked jurisdiction, the partition case being an action incapable of pecuniary estimation.

The Bacolod MTCC rendered a Decision dated September 17, 2003, applying Article 129 of the Family Code. It ruled in this wise:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered, ordering the conjugal property of the former Spouses Leonardo and Marietta Nonato, a house and lot
covered by TCT No. T-140361 located at Eroreco, Bacolod City, which was their conjugal dwelling, adjudicated to the defendant Marietta Nonato, the spouse with whom the
majority of the common children choose to remain.

Furthermore, defendants counterclaim is hereby granted, ordering plaintiff to pay defendant P10,000.00 as moral damages for the mental anguish and unnecessary
inconvenience brought about by this suit; and an additionalP10,000.00 as exemplary damages to deter others from following suit; and attorneys fees of P2,000.00 and litigation
expenses of P575.00.

SO ORDERED.4

Nonato appealed the MTCC Decision before the RTC. On July 21, 2004, the Bacolod RTC reversed the ruling of the MTCC. It found that even though the MTCC aptly applied
Article 129 of the Family Code, it nevertheless made a reversible error in adjudicating the subject property to Barrido. Its dispositive portion reads:

WHEREFORE, premises considered, the decision dated September 17, 2003 is hereby REVERSED and SET ASIDE and a new judgment is hereby rendered ordering the
parties:

(1) to equitably partition the house and lot covered by TCT No. T-140361;

(2) to reimburse Joseph Raymund and Joseph Leo Nonato of the amount advanced by them in payment of the debts and obligation of TCT No. T-140361 with
Philippine National Bank;

(3) to deliver the presumptive legitimes of Joseph Raymund and Joseph Leo Nonato pursuant to Article 51 of the Family Code.

SO ORDERED.5
Upon appeal, the CA affirmed the RTC Decision on November 16, 2006. It held that since the propertys assessed value was only P8,080.00, it clearly fell within the MTCCs
jurisdiction. Also, although the RTC erred in relying on Article 129 of the FamilyCode, instead of Article 147, the dispositive portion of its decision still correctly ordered the
equitable partition of the property. Barrido filed a Motion for Reconsideration, which was, however, denied for lack of merit.

Hence, Barrido brought the case to the Court via a Petition for Review. She assigned the following errors in the CA Decision:

I.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE MTCC HAD JURISDICTION TO TRY THE PRESENT CASE.

II.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE LOT COVERED BY TCT NO. T-140361 IS CONJUGAL AFTER BEING SOLD TO THE
CHILDREN, JOSEPH LEO NONATO AND JOSEPH RAYMUND NONATO.

III.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT ARTICLE 129 OF THE FAMILY CODE HAS NO APPLICATION IN THE PRESENT CASE, ON THE
ASSUMPTION

THAT THE TRIAL COURT HAD JURISDICTION OVER THE CASE.6

The petition lacks merit.

Contrary to Barridos contention, the MTCC has jurisdiction to take cognizance of real actions or those affecting title to real property, or for the recovery of possession, or for the
partition or condemnation of, or foreclosure of a mortgage on real property. 7 Section 33 of Batas Pambansa Bilang 1298 provides:

Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in civil cases. Metropolitan Trial Courts, Municipal Trial Courts,
and Municipal Circuit

Trial Courts shall exercise:

xxxx

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the propertyor
interest therein does not exceed Twenty thousand pesos (P20,000.00)or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty thousand pesos
(P50,000.00) exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses and costs: Provided, That value of such property shall be determined by the
assessed value of the adjacent lots. (as amended by R.A. No. 7691)9

Here, the subject propertys assessed value was merely P8,080.00, an amount which certainly does not exceed the required limit of P20,000.00 for civil actions outside Metro
Manila tofall within the jurisdiction of the MTCC. Therefore, the lower court correctly took cognizance of the instant case.

The records reveal that Nonatoand Barridos marriage had been declared void for psychological incapacity under Article 36 10 of the Family Code. During their marriage,
however, the conjugal partnership regime governed their property relations. Although Article 12911 provides for the

procedure in case of dissolution of the conjugal partnership regime, Article 147 specifically covers the effects of void marriages on the spouses property relations. Article 147
reads:

Art. 147. When a man and a woman who are capacitated to marry each other, live exclusively with each other as husband and wife without the benefit of marriage or under a
void marriage, their wages and salaries shall be owned by them in equal shares and the property acquired by both of them through their work or industry shall be governed by
the rules on co-ownership.

In the absence of proof to the contrary, properties acquired while they lived together shall be presumed tohave been obtained by their joint efforts, work or industry, and shall
beowned by them in equal shares. For purposes of this Article, a party who did not participate in the acquisition by the other party of any property shall be deemed to have
contributed jointly in the acquisition thereof if the former's efforts consisted in the care and maintenance of the family and of the household.

Neither party can encumber or dispose by acts inter vivos of his or her share in the property acquired during cohabitation and owned in common, without the consent of the
other, until after the termination of their cohabitation.

When only one of the parties to a void marriage is in good faith, the share of the party in bad faith in the co-ownership shall be forfeited in favor of their common children. In
case of default of or waiver by any or all of the common children or their descendants, each vacant share shall belong to the respective surviving descendants. In the absence of
descendants, such share shall belong to the innocent party. In all cases, the forfeiture shall take place upon termination of the cohabitation.
1wphi 1

This particular kind of co-ownership applies when a man and a woman, suffering no illegal impedimentto marry each other, exclusively live together as husband and wife under
a void marriage or without the benefit of marriage. 12 It is clear, therefore, that for Article 147 to operate, the man and the woman: (1) must be capacitated to marry each other; (2)
live exclusively with each other as husband and wife; and (3) their union is without the benefit of marriage or their marriage is void. Here, all these elements are present.13 The
term "capacitated" inthe first paragraph of the provision pertains to the legal capacity of a party to contract marriage. 14 Any impediment to marry has not been shown to have
existed on the part of either Nonato or Barrido. They lived exclusively with each other as husband and wife. However, their marriage was found to be void under Article 36 of the
Family Code on the ground of psychological incapacity. 15
Under this property regime, property acquired by both spouses through their work and industry shall be governed by the rules on equal coownership. Any property acquired
during the union is prima faciepresumed to have been obtained through their joint efforts. A party who did not participate in the acquisition of the property shall be considered as
having contributed to the same jointly if said party's efforts consisted in the care and maintenance of the family household. 16 Efforts in the care and maintenance of the family
and household are regarded as contributions to the acquisition of common property by one who has no salary or income or work or industry.17

In the analogous case of Valdez,18 it was likewise averred that the trial court failed to apply the correct law that should govern the disposition of a family dwelling in a situation
where a marriage is declared void ab initiobecause of psychological incapacity on the part of either or both parties in the contract of marriage.The Court held that the court a
quodid not commit a reversible error in utilizing Article 147 of the Family Code and in ruling that the former spouses own the family home and all their common property in equal
shares, as well as in concluding that, in the liquidation and partition of the property that they owned in common, the provisions on coownership under the Civil Code should aptly
prevail.19 The rules which are set up to govern the liquidation of either the absolute community or the conjugal partnership of gains, the property regimes recognized for valid and
voidable marriages, are irrelevant to the liquidation of the co-ownership that exists between common-law spousesor spouses of void marriages.20

Here, the former spouses both agree that they acquired the subject property during the subsistence of their marriage. Thus, it shall be presumed to have been obtained by their
joint efforts, work or industry, and shall be jointly owned by them in equal shares. Barrido, however, claims that the ownership over the property in question is already vested on
their children, by virtue of a Deed of Sale. But aside from the title to the property still being registered in the names of the former spouses, said document of safe does not bear a
notarization of a notary public. It must be noted that without the notarial seal, a document remains to be private and cannot be converted into a public document, 21 making it
inadmissible in evidence unless properly authenticated.22 Unfortunately, Barrido failed to prove its due execution and authenticity. In fact, she merely annexed said Deed of Sale
to her position paper. Therefore, the subject property remains to be owned in common by Nonato and Barrido, which should be divided in accordance with the rules on co-
ownership.

WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals, dated November 16, 2006, as well as its Resolution dated January 24, 2007
in CA-G.R. SP No. 00235, are hereby AFFIRMED.

SO ORDERED.

G.R. No. 187581 October 20, 2014

PHILIPPINE BANK OF COMMUNICATIONS, Petitioner,


vs.
BASIC POLYPRINTERS AND PACKAGING CORPORATION, Respondent.

DECISION

BERSAMIN, J.:

This appeal is taken from the decision promulgated on December 16, 2008 in C.A.-G.R. CV No. I 02484 entitled Philippine Bank of Communications, v. Basic Polyprinters and
Packaging Corporation,1 whereby the Court of Appeals (CA) affirmed the order issued on January 11, 2008 by the Regional Trial Court (RTC), Branch 21, in Imus, Cavite, viz:

WHEREFORE, the instant petition is hereby DISMISSED. ACCORDINGLY, the Order dated January 11, 2008 of the Regional Trial Court oflmus, Cavite, Branch 21, is hereby
AFFIRMED.

SO ORDERED.2

Antecedents

Respondent Basic Polyprinters and Packaging Corporation (Basic Polyprinters) was a domestic corporation engaged in the business of printing greeting cards, gift wrappers,
gift bags, calendars, posters, labels and other novelty items.3

On February 27, 2004, Basic Polyprinters, along with the eight other corporations belonging to the Limtong Group of Companies (namely: Cuisine Connection, Inc., Fine Arts
International, Gibson HP Corporation, Gibson Mega Corporation, Harry U. Limtong Corporation, Main Pacific Features, Inc., T.O.L. Realty & Development Corp., and Wonder
Book Corporation), filed a joint petition for suspension of paymentswith approval of the proposed rehabilitation in the RTC (docketed as SEC Case No. 031-04).4 The RTC
issued a stay order, and eventually approved the rehabilitation plan, but the CA reversed the RTC on October 25, 2005, 5 and directed the petitioning corporations tofile their
individual petitions for suspension of payments and rehabilitation in the appropriate courts.

Accordingly, Basic Polyprinters brought its individual petition,6 averring therein that: (a) its business since incorporation had been very viable and financially profitable; (b) it had
obtained loans from various banks, and had owed accounts payable to various creditors; (c) the Asian currency crisis, devaluation of the Philippine peso, and the current state
of affairs of the Philippine economy, coupled with: (i) high interest rates, penalties and charges by its creditors; (ii) low demand for gift items and cards due to the economic
recession and the use of cellular phones; (iii) direct competition from stores like SM, Gaisano, Robinson and other malls; and (iv) the fire of July 19, 2002 that had destroyed its
warehouse containing inventories worth P264,000,000.00, resulting in difficulty of meeting its obligations; (d) its operations would be hampered and would render rehabilitation
difficult should its creditors enforce their claims through legal actions, including foreclosure proceedings; (e) included in its overall Rehabilitation Program was the full payment of
its outstanding loans in favor of petitioner Philippine Bank of Communications (PBCOM), RCBC, Land Bank, EPCI Bank and AUB via repayment over 15 years with moratorium
of two-years for the interestand five years for the principal at 5% interest per annumand a dacion en pagoof its affiliate property in favor of EPCI Bank; and (f) its assets
worth P15,374,654.00 with net liabilities amounting to P13,031,438.00.7

Finding the petition sufficient in formand substance, the RTC issued the stay order dated August 31, 2006.8 It appointed Manuel N. Cacho III as the rehabilitation receiver, and
required all creditors and interested parties, including the Securities and Exchange Commission (SEC), to file their comments.

After the initial hearing and evaluation of the comments and opposition of the creditors, including PBCOM, the RTC gave due course to the petition and referred it to the
rehabilitation receiver for evaluation and recommendation. 9

On October 18, 2007, the rehabilitation receiver submitted his report recommending the approval of the rehabilitation plan. On December 19, 2007, the rehabilitation receiver
submitted his clarifications and corrections to his report and recommendations. 10
Ruling of the RTC

On January 11, 2008, the RTC issued an order approving the rehabilitation plan, 11 the pertinent portion of which reads:

Petitioners primary business is in the printing business. Based on its updated financial report, the financial condition has greatly improved.

However, because of the indebtedness and the slowdown in sales brought about by a depressed economy, the present income from the operations will be insufficient to pay off
its maturing obligations. Thus, the success of the rehabilitation planlargely depends on its ability to reduce its debt obligation to a manageable level by the suspension of
payments of obligations and the proposed "dacion en pago."

The projected cash flow attached to the report and the repayment program demonstrates the ability of the company to settle its debt liability.

Other factors which justify the approval of the Rehabilitation Plan are as follows:

1. The petitioner has a positive net worth and inventory that can be converted into resources.

2. The Plan ensures preservation of assets, optimizes recovery of creditors claims and provides ofan orderly payment of debts.

3. The plan will restore petitioner to profitability and solvency and maintain it as an on-going concern to the benefit of the stockholders, investors and creditors.

4. The rehabilitation and the continuous operation of the company will generate employment.

5. The plan is endorsed by the Rehabilitation Receiver.

CONSIDERING THE FOREGOING, the Court hereby approves the detailed Rehabilitation Plan including the Receivers Report and Recommendations and its clarifications and
corrections and enjoins the petitioner to comply strictly with the provisions of the plan, perform its obligations thereunder and take all actions necessary to carry out the plan,
failing which, the Court shall either, upon motion, motu proprio or upon the recommendation of the Rehabilitation Receiver, terminate the proceedings pursuant to Section 27,
Rule 1 of the Interim Rules of Procedure on Corporate Rehabilitation.

The Rehabilitation Receiver is directed to strictly monitor the implementation of the Plan and submit a quarterly report on the progress thereon.

SO ORDERED.

PBCOM appealed to the CA in due course.

Ruling of the CA

In the assailed decision promulgated on December 16, 2008, 12 the CA affirmed the questioned order of the RTC, agreeing with the finding of the rehabilitation receiver that there
were sufficient evidence, factors and actual opportunities in the rehabilitation plan indicating that Basic Polyprinters could be successfully rehabilitated in due time.13

Emphasizing the equitable and rehabilitative purposes of rehabilitation proceedings, the CA stated that Presidential Decree No. 902-A, as amended, sought to "effect a feasible
and viable rehabilitation by preserving a foundering business as going concern" because it would be more valuable to preserve the assets of the corporation14 rather than to
pursue its liquidation; and observed in closing:

One last word. The purpose of rehabilitation proceedings is to enable the company to gain new lease on life and thereby allows creditors to be paid their claims from its
earnings. Rehabilitation contemplates a continuance of corporate life and activities in an effort to restore and reinstate the financially distressed corporation to its former position
of successful operation and solvency. This is in consonance with the States objective to promote a wider and moremeaningful equitable distribution of wealth to protect
investments and the public. The approval of the Rehabilitation Plan by the trial court is precisely in furtherance of the rationale behind the Interim Rules of Corporate
Rehabilitation is to effect a feasible and viable rehabilitation ofailing corporations which affect the public welfare. 15

PBCOM moved for reconsideration,16 but its motion was denied.

Issues

Hence, this appeal by PBCOM upon the following issues, namely:

THE COURT OF APPEALS GRAVELY ERRED IN DISMISSING PETITIONERS PETITION FOR REVIEW AND AFFIRMING THE ORDER DATED JANUARY 11, 2008,
CONSIDERING THAT:

A PETITION FILED PURSUANT TO THE INTERIM RULES OF PROCEDURE ON CORPORATE REHABILITATION PRESUPPOSES THAT THE PETITIONING
CORPORATION HAS SUFFICIENT PROPERTY TO COVER ALL ITS INDEBTEDNESS. RESPONDENT IS INSOLVENT AS ITS ASSETS ARE LESS THAN ITS
OBLIGATIONS;
B

THE "DETAILED REHABILITATION PLAN" DOES NOT PROVIDE MATERIAL FINANCIAL COMMITMENTS FROM RESPONDENT ITSELF OR WOULD-BE INVESTORS

THE TERMS AND CONDITIONS OF THE "APPROVED REHABILITATION PLAN" ARE TOO ONEROUS PARTICULARLY THE REHABILITATION TERM OF FIFTEEN (15)
YEARS AS WELL AS THE "WAIVER" OF ALL INTEREST AND PENALTIES BEGINNING FEBRUARY 2004 UPTO THE TIME OF ITS APPROVAL. 17

The petitioner claims that the CA did not pass upon the issues presented in its petition, particularly Basic Polyprinters liquidity that was material in proceedings for corporate
rehabilitation; that a petition for rehabilitation presupposed that the petitioning corporation had sufficient property to cover all its indebtedness, but Basic Polyprinters did not
show so because its assets were much less thanits outstanding obligations; that Basic Polyprinters had under-declared its outstanding loans, i.e., its total loan obligations with
the petitioner was atP118,411,702.70 as of June 30, 2006, and not just P71,315,086.00 as it claimed; that the independent appraisal by the Professional Asset Valuers, Inc.
(PAVI) on Basic Polyprinters machineries and printing equipment mortgaged to it (PBCOM) had a fair market value of only P6,531,000.00, and a prompt sale value of
onlyP4,572,000.00, as compared to the fair market value of P15,110,000.00 declared by Basic Polyprinters; that the rehabilitation plandid not contain the material financial
commitments required by Section 5, Rule 4 of the Interim Rules of Procedure for Corporate Rehabilitation (Interim Rules); that, accordingly, the proposed repayment scheme
did not constitute a material financial commitment, and the proposed dacion en pagowas not proper because the property subject thereof had been mortgaged in its favor; and
that the absence of capital infusion rendered impossible the proposal to invest in new machineries that would increase sales and improve quality and capacity. 18

The petitioner posits that the assailed decision of the CA effectively gave Basic Polyprinters a moratoriumfor seven years on both interest and principal payments counted from
the issuance of the stay order in 2004 that effectively prejudiced its creditors.19

Basic Polyprinters refutes the petitioner, saying that the petitioner raises factual issues improper under Rule 45 of the Rules of Court; that as long as the rehabilitation court
found that the petitioning corporation could still be rehabilitated, its findings of fact should be binding when they were supported by substantial evidence; that the independent
appraisal report by PAVI was unauthorized by the RTC; and that the validity of the rehabilitation plan could be upheld for its complete satisfaction of the requirements of Section
5, Rule4 of the Interim Rules.

In fine, we shall determine whether the approval of the rehabilitation plan was proper despite: (a) the alleged insolvency of Basic Polyprinters; and (b) absence of a material
financial commitment pursuant to Section 5, Rule 4 of the Interim Rules.

Ruling

We reverse the judgment of the CA.

Liquidity was not an issue in a petition for rehabilitation

The petitioner contends that the sole issue in corporate rehabilitation is one of liquidity; hence, the petitioning corporation should have sufficient assets to cover all its
indebtedness because it only foresees the impossibility of paying the indebtedness falling due. It claims that rehabilitation became inappropriate because Basic Polyprinters was
insolvent due to its assets being inadequate to cover the outstanding obligations.20

We disagree with the contention of the petitioner.

Under the Interim Rules, rehabilitation is the process of restoring "the debtor to a position of successful operation and solvency, if it is shown that its continuance of operation is
economically feasible and its creditors can recover by way of the present value of payments projected in the plan more if the corporation continues as a going concern that if it is
immediately liquidated."21 It contemplates a continuance ofcorporate life and activities in an effort to restore and reinstate the corporation to its former position of successful
operation and solvency.22

In Asiatrust Development Bank v. First Aikka Development, Inc., 23 we said that rehabilitation proceedings have a two-pronged purpose, namely: (a) to efficiently and equitably
distribute the assets of the insolvent debtor to its creditors; and (b) to provide the debtor with a fresh start, viz: Rehabilitation proceedings in our jurisdiction have equitable and
rehabilitative purposes. On the one hand, they attempt to provide for the efficient and equitable distribution ofan insolvent debtor's remaining assets to its creditors; and on the
other, to provide debtors with a "fresh start" by relieving them of the weight of their outstanding debts and permitting them to reorganize their affairs. The purpose of
rehabilitation proceedings is to enable the company to gain a new lease on life and thereby allow creditors to be paidtheir claims from its earnings.24

Consequently, the basic issues inrehabilitation proceedings concern the viability and desirability of continuing the business operations of the petitioning corporation. The
determination of such issues was to be carried out by the court-appointed rehabilitation receiver,25 who was Cacho in this case.

Moreover, Republic Act No. 10142 (Financial Rehabilitation and Insolvency Act (FRIA) of 2010), a law that is applicable hereto,26 has defined a corporate debtor as a corporation
duly organized and existing under Philippine laws that has become insolvent.27 The term insolventis defined in Republic Act No. 10142 as "the financial condition of a debtor that
is generally unable to pay its or his liabilities as they fall due in the ordinary course of business or has liabilities that are greater than its or his assets."28

As such, the contention that rehabilitation becomes inappropriate because of the perceived insolvency of BasicPolyprinters was incorrect.

II

A material financial commitment is significant in a rehabilitation plan

The petitioner next argues that Basic Polyprinters did not present any material financial commitment in the rehabilitation plan, thereby violating Section 5, Rule 4 of the Interim
Rules, the rule applicable at the time of the filing of the petition for rehabilitation. In that regard, Basic Polyprinters made no commitment in relation to the infusion of fresh capital
by its stakeholders,29 and presented only a "lopsided" protracted repayment schedule that included the dacion en pago involving an asset mortgaged to the petitioner itself in
favor of another creditor.
A material financial commitment becomes significant in gauging the resolve, determination, earnestness and good faith ofthe distressed corporation in financing the proposed
rehabilitation plan.30 This commitment may include the voluntary undertakings ofthe stockholders or the would-be investors of the debtor-corporation indicating their readiness,
willingness and ability to contribute funds or property to guarantee the continued successful operation of the debtor corporation during the period of rehabilitation.31

Basic Polyprinters presented financial commitments, as follows:

(a) Additional P10 million working capital to be sourced from the insurance claim;

(b) Conversion of the directors and shareholders deposit for future subscription to common stock;32

(c) Conversion of substituted liabilities, if any, to additional paid-in capital to increase the companys equity; and

(d) All liabilities (cash advances made by the stockholders) of the company from the officers and stockholders shall be treated as trade payables.33

However, these financial commitments were insufficient for the purpose. We explain.
1wphi1

The commitment to add P10,000,000.00 working capital appeared to be doubtful considering that the insurance claim from which said working capital would be sourced had
already been written-off by Basic Polyprinterss affiliate, Wonder Book Corporation. 34 A claim that has been written-off is considered a bad debt or a worthless asset,35 and cannot
be deemed a material financial commitment for purposes of rehabilitation. At any rate, the proposed additional P10,000,000.00 working capital was insufficient to cover at least
half ofthe shareholders deficit that amounted to P23,316,044.00 as of June 30, 2006.

We also declared in Wonder Book Corporation v. Philippine Bank of Communications (Wonder Book) 36 that the conversion of all deposits for future subscriptions to common
stock and the treatment of all payables to officers and stockholders as trade payables was hardly constituting material financial commitments. Such "conversion" of cash
advances to trade payables was, in fact, a mere re-classification of the liability entry and had no effect on the shareholders deficit. On the other hand, we cannot determine the
effect of the "conversion"of the directors and shareholders deposits for future subscription to common stock and substituted liabilities on the shareholders deficit because their
amounts were not reflected in the financial statements contained in the rollo.

Basic Polyprinterss rehabilitation plan likewise failed to offer any proposal on how it intended to address the low demands for their products and the effect of direct competition
from stores like SM, Gaisano, Robinsons, and other malls. Even the P245 million insurance claim that was supposed to cover the destroyed inventories worthP264 million
appears to have been written-off with no probability of being realized later on.

We observe, too, that Basic Polyprinterss proposal to enter into the dacion en pagoto create a source of "fresh capital" was not feasible because the object thereof would not be
its own property but one belonging to its affiliate, TOL Realty and Development Corporation, a corporation also undergoing rehabilitation. Moreover, the negotiations (for the
return of books and magazines from Basic Polyprinterss trade creditors) did not partake of a voluntary undertaking because no actual financial commitments had been made
thereon.

Worthy of note here is that Wonder Book Corporation was a sister company of Basic Polyprinters, being one of the corporations that had filed the joint petition for suspension of
payments and rehabilitation in SEC Case No. 031-04 adverted to earlier. Both of them submitted identical commitments in their respective rehabilitation plans. As a result, as
the Court observed in Wonder Book,37 the commitments by Basic Polyprinters could not be considered as firm assurances that could convince creditors, future investors and the
general public of its financial and operational viability.

Due to the rehabilitation plan being an indispensable requirement in corporate rehabilitation proceedings, 38 Basic Polyprinters was expected to exert a conscious effort in
formulating the same, for such plan would spell the future not only for itself but also for its creditors and the public in general. The contents and execution of the rehabilitation
plan could not be taken lightly. We are not oblivious to the plight of corporate debtors like Basic Polyprinters that have inevitably fallen prey to economic recession and
unfortunate incidents in the course of their operations. However, we must endeavor to balance the interests of all the parties that had a stake in the success of rehabilitating the
debtors. In doing so here, we cannot now find the rehabilitation plan for Basic Polyprinters to be genuine and in good faith, for it was, in fact, unilateral and detrimental to its
creditors and the public.

ACCORDINGLY, the Court GRANTS the petition for review on certiorari; SETS ASIDE and REVERSES the decision promulgated on December 16, 2008 and the resolution
promulgated on April 22, 2009, both by the Court of Appeals, as well as the order issued on January 11, 2008 by the Regional Trial Court approving the rehabilitation plan
submitted by Basic Polyprinters and Packaging Corporation; DISMISSES the petition for suspension of payments and rehabilitation of Basic Polyprinters and Packaging
Corporation; and DIRECTS Basic Polyprinters and Packaging Corporation to pay the costs of suit.

SO ORDERED.

G.R. No. 191838 October 20, 2014

YKR CORPORATION, MA. TERESA J. YULO-GOMEZ, JOSE ENRIQUE J. YULO, MA. ANTONIAJ. YULO-LOYZAGA, JOSE MANUEL J. YULO, MA. CARMEN J. YULO
and JOSE MARIAJ. YULO, Petitioners,
vs.
PHILIPPINE AGRI-BUSINESS CENTER CORPORATION, Respondent.

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

G.R. No. 191863

REPUBLIC OF THE PHILIPPINES, Petitioner,


vs.
PHILIPPINE AGRI-BUSINESS CENTER CORPORATION, Respondent.
DECISION

VILLARAMA, JR., J.:

At bar are two consolidated petitions for review on certiorari of the Resolutions promulgated on June 30, 2009 1and April 8, 20102 of the Sandiganbayan, 5th Division, in Civil
Case No. 0024 entitled Republic of the Philippines v. Peter Sabido, et al., rendering summary judgment in favor of respondent Philippine Agri-Business Center Corporation
(PABC).

In G.R. No. 191838, petitioners YuloKing Ranch Corporation (which later changed its name to YKR Corporation and hereafter will be referred to as such) and six out of the ten
Yulo heirs raise purely questions of law as they seek to set aside or modify the assailed Resolutions. YKR Corporation is a domestic corporation with office address at C-J Yulo
& Sons Building, Pasong Tamo corner Don Bosco Road, Makati City. The six out of the ten Yulo heirs include six out of the nine children and legal heirs of the late spouses Luis
A. Yulo and Teresa J. Yulo. The late Luis A. Yulo was one of the original defendants in this civil case. After his death on January 10, 1999, his late wife Teresa J. Yulo and their
six children became substitute defendants. Teresa J. Yulo subsequently passed away on July 21, 2008. Petitioners have three other siblings who, according to the petition,
"have gone their own separate way[s] when Luis A. Yulo died." 3 The petition further states that "[p]etitioners haveno knowledge or information sufficient to form a belief if their
siblings are aware of the proceedings in (Sandiganbayan) Civil Case No. 0024, including respondents move for a summary judgment and the assailed resolutions of the
Sandiganbayan."4 Respondent PABC, a domestic corporation, is a plaintiff-in-intervention in Civil Case No. 0024 which sought, among others, that the Sandiganbayan adjudge
it as the true and lawful owner of a real property known as the "Yulo King Ranch" located in Busuanga, Palawan, and order petitioner Republic of the Philippines (Republic) to lift
the sequestration and return possession of the subject property to said respondent. The Sandiganbayan issued the assailed Resolutions in its favor.

G.R. No. 191863 is a petition filed by the Republic, represented by the Presidential Commission on Good Government (PCGG). The Republic is the plaintiff in Civil Case No.
0024 anaction for reversion, reconveyance, restitution, accounting and damages. Similar to the petition in G.R. No. 191838, petitioner Republic raises a pure question of law
on whether the Sandiganbayan erred in granting respondent PABCs motion for summary judgment. 5

The facts are statedin the Resolution6 promulgated on June 30, 2009 of the Sandiganbayan: On 27 September 1988, plaintiff-in-intervention PABC filed a Motion for Intervention
and a Complaint-in-intervention to recover possession (not title) of real properties registered in its name (PABC's Busuanga Properties), located in Busuanga, Palawan, and
covered by Transfer Certificate of Title Nos. 6110 and 6111. PABC prayed that: (a) it be adjudged the true and lawful owner of the subject properties; and (b) defendant-in-
intervention Republic be ordered to return possession of the subject parcels of land to plaintiff-in-intervention.

In its Complaint-in-intervention, PABC explained that:

1. Among the assets allegedly belonging to defendants-inintervention Ferdinand E. Marcos and Imelda R. Marcos sought to be forfeited or reconveyed to plaintiff
in the instant action is the real property known as the Yulo King Ranch located at Busuanga, Palawan, listed in Annex A of the complaint and the expanded
complaint, as part of the properties of defendant-inintervention Peter Sabido;

2. The property (i.e. Yulo King Ranch) was, prior to sequestration, then controlled by defendant-inintervention YKR Corporation wherein defendants-inintervention
Sabido and Yulo are the controlling stockholders on record;

3. The Yulo King Ranch includes two (2) parcels of land and all the improvements therein which are owned by the plaintiff-in-intervention;

4. Sometime in 1975, without the knowledge or consent of the plaintiff-in-intervention, the defendant-inintervention YKR Corporation unlawfully entered into and
occupied said two (2) parcels of land and all the improvements thereon which are owned by the plaintiff-in-intervention;

5. On or about 2 April 1986, defendant-in-intervention Republic of the Philippines, through the PCGG, sequestered the Yulo King Ranch and gave the possession
and control of all the assets in said ranch, including the two parcels of land owned by plaintiff-inintervention, to the then Ministry of Agriculture; and

6. Defendant-in-intervention Republic of the Philippines is obligated to x x x return possession of those (2 parcels of) lands to plaintiff-in-intervention which was a
victim of the Marcos rule.

On 14 November 1988, the Court issued a Resolution granting PABCs Motion to Intervene and admitting the Complaint-in-intervention. Defendant-in-intervention Republic filed
a Motion for Reconsideration, which was denied by the Court ina Resolution dated 4 January 1989.

On 31 January 1989, PABC received Sabidos Answer with Compulsory Counterclaim (to Complaint-in-intervention), wherein Sabido:

1. Denied that he had acted inconcert with defendants-in- intervention Ferdinand E. Marcos and Imelda R. Marcos in illegally acquiring the real property which is
the subject of the Complaint-in-intervention, the truth being that at the time of the alleged unlawful act in 1975, defendant-in-intervention Sabido had no
involvement directly or indirectly with co-defendantsin-intervention Marcoses and YKR Corporation, much less in the alleged unlawful acquisition of said property;
2. Denied that the Yulo King Ranch forms part of his properties;

3. Admitted that the Republic through the PCGG[,] sequestered the Yulo King Ranch.

On 26 April 2007, PABC served a Request for Admissions on all the defendants-in-intervention, requesting the admission of the following:

1.2. Title to the properties [PABC's Busuanga properties] is registered in the name of plaintiff-in-intervention PABC;

1.3. The properties are legally and beneficially owned by plaintiff-in-intervention PABC;

1.4. The properties have never been registered in the names of any of the defendants-in-intervention;

1.5. Plaintiff-in-intervention PABC did not execute any deed or document transferring the ownership or possession of the propertiesto any of the defendantsin-
intervention or to any other person;
1.6. Plaintiff-in-intervention PABC is, and has never ceased to be, the true, lawfuland registered owner of the properties;

1.7. The properties are not assets of defendant-inintervention YKR;

xxxx

1.10. Sometime in 1975, without the knowledge or consent of plaintiff-in-intervention PABC, defendant-in-intervention YKR entered into and occupied the
properties and used them for its cattle breeding and dispersal operations;

1.11. Defendant-in-intervention YKR possessed and had control of the properties during the time that the Marcos Government declared Martial Law;

1.12. Plaintiff-in-intervention PABC demanded that defendant-in-intervention YKR vacate the properties, but the demand was not heeded;

1.13. Plaintiff-in-intervention PABC could not take any judicial action without risk to itself and its stockholders, because they had been warned that defendants-in-
intervention YKR and its owners were close to or associated with defendants-inintervention Marcoses, and that such action would be futile;

1.14. Plaintiff-in-intervention PABC could not obtain judicial relief during the Martial Law regime without incurring the ire of the Marcoses and risking retaliation;

xxxx

1.17. On or about 2 April 1986, defendant-in-intervention Republic, through the PCGG, sequestered YKR and gave the possession and control of all its assets to
the then Ministry of Agriculture.

Defendant-in-intervention Republicfiled its "Reply" on 9 May 2007 admitting the following:

1. Prior to the issuance of the Sequestration Order dated 2 April 1986, the properties were possessed by defendants-in-intervention YKR;

2. YKR entered into and occupied the properties and used them for its cattle breeding and dispersal operations;

3. YKR possessed and had control of the properties during the time that the Marcos Government declared Martial Law;

4. On or about 2 April 1986, defendant-in-intervention Republic, through the PCGG, sequestered YKRs assets and turned over the management and operation of
the ranch x x x to the Bureau of Animal Industry;

5. The properties are not assets of defendant-in-intervention YKR.

In the same Reply, Republic denied that: a) the properties are legally and beneficially owned by PABC; b) the properties have never been registered in the names of any of the
defendants-in-intervention; and c) PABC is, and has never ceased to be, the true, lawful and registered owner of the properties on account ofthe existence of Presidential
Proclamation No. 1387, entitled "Reserving and Establishing As a Pasture Reserve a Certain Parcel of Land of the Public Domain Situated in the Island of Busuanga, Province
of Palawan" and Presidential Decree No. 1297, entitled "Centralizing the Importation of Ruminants for Breeding and Slaughter And Beef", which placed the entire Busuanga
Ranch as reserved grazing public land.

On 11 May 2007, defendants-in-intervention YKR Corporation and seven out of the ten Yulo Heirs filed their Answer to the Request for Admissions, wherein they answered
thatthey cannot truthfully admit or deny the following matters:

1. Title to the properties is registered in the name of plaintiff-in-intervention PABC;

2. The properties are legally and beneficially owned by plaintiff-in-intervention PABC;

3. The properties have never been registered in the names of any of the defendants-in-intervention;

4. Plaintiff-in-intervention PABC did not execute any deed or document transferring the ownership or possession of the properties to any of the defendants-
inintervention or to any other person;

5. Plaintiff-in-intervention PABC is, and has never ceased to be, the true, lawful and registered owner of the properties;

6. The properties are not assets of defendant-inintervention YKR;

7. Prior to the issuance of the Sequestration Order dated 2 April 1986, the properties were possessed by defendants-in-intervention YKR;

8. Sometime in 1975, without the knowledge or consent of plaintiff-in-intervention PABC, defendant-inintervention YKR entered into and occupied the properties
and used them for its cattle breeding and dispersal operations;

9. Defendants-in-intervention YKR possessed and had control of the properties during the time that the Marcos Government declared Martial Law.
According to YKR Corporation and seven out of the ten Yulo Heirs, a truthful admission or denial of the above-stated matters could not be made because all the records of YKR
Corporation have been taken by the PCGG when it was sequestered.

On the other hand, [d]efendant-in-intervention Sabido did not answer PABCs Request for Admissions despite due notice.

In their Motion for Summary Judgment pursuant to Section 1, Rule 35 of the Revised Rules of Court, plaintiff-in-intervention PABC contends that:

1. There is no genuine issue thatdefendant-in-intervention Sabido has any interest in the Busuanga Properties, as he has admitted or should be deemed to have
admitted PABCs title over the same. Having failed to file an answer to PABCs Request for Admissions, Sabido is deemed to have admitted each of the matters of
which an admission is requested, pursuant to Rule 26, Section 2, of the Rules of Court.

2. There is no genuine issue thatYKR Corporation and seven out of the ten Yulo Heirs have any interestin the Busuanga Properties, as they have not validly
denied PABCs title over the same. Defendants-inintervention YKR Corporation and seven out of the ten Yulo Heirs neither admitted nor denied most of the facts
stated in PABCs Request for Admissions, including PABCs ownership of the Busuanga Properties, on the ground that all records of YKR Corporation have been
taken by the PCGG when it was sequestered. Furthermore, PABC contends that YKR Corporation and seven out of the ten Yulo Heirs Answer is obviously
evasive and cannot be considered a specific denial considering that they do not expressly admit or deny PABCs ownership of the Busuanga Properties a matter
which, even withoutthe records, ought to be within their personal knowledge. PABC concludes that YKR Corporation and seven out of the ten Yulo Heirs response
is in the nature of a negative pregnant which is equivalent to an admission, it being pregnant with admissions of the substantial facts alleged in the Request for
Admission of PABC.

3. There is no genuine issue that the Republic has any interest in the Busuanga Properties, as it has not validly denied PABCs title over the same. PABC
contends that the provisions of Presidential Proclamation No. 1387 and Presidential Decree No. 1297 are not inconsistent with and do not affect PABCs registered
title to the Busuanga Properties; and as such, the Republic should be deemed to have failed to specifically deny the matters stated in PABCs Request for
Admissions, including PABCs registered title to the Busuanga Properties. Moreover, Presidential Proclamation No. 1387 was issued only on 13 February 1975, or
many decades after the Busuanga Properties were originally registered in the Register of Deeds of Palawan, as private properties on 1 July 1916 and 21 May
1919, respectively. Likewise, Presidential Decree No. 1297 does not contain anything that would support the PCGGs claim of ownership over the Busuanga
Properties. In fact, Presidential Decree No. 1297 provides that the approximately 40,000 hectares of grazing land located in Busuanga, Palawan, are placed under
the management of King Ranch pursuant to a Technical Assistance Agreement. Thus, Presidential Decree No. 1297 also shows that YKR Corporation never had
title to these properties.

4. There is no genuine issue that the Busuanga Properties are either ill-gotten wealth or sequestered assets. Since the Republic admits that the Busuanga
Properties are neither ill-gotten nor sequestered, then the PCGG which was created and tasked torecover ill-gotten wealth of the Marcoses and their associates,
had absolutely no authority to take possession of the Busuanga Properties on the basis of Presidential Proclamation No. 1387 and Presidential Decree No. 1297,
considering that the laws defining the statutory authority of the PCGG, Executive Order Nos. 1, 2 and 14, state that the PCGG canonly seize and recover ill-gotten
wealth accumulated by former President Ferdinand E. Marcos, his immediate family, relatives and close associates. It is the Solicitor General and not the PCGG
which is the government agency tasked to resolve issues of whether a real property is land of the public domain under Presidential Proclamation No. 1387 and
Presidential Decree No. 1297 and whether PABCs titles to the property are invalid.

On the other hand, defendants YKR Corporation and seven out of the ten Heirs of the Late Luis A. Yulo filed their "OPPOSITION TO MOTION FOR SUMMARY JUDGMENT"
and argued that the motion for summary judgment filed by plaintiff-in-intervention PABC is not proper considering that herein defendants have not filed an answer to the
complaint-in-intervention.

In its Reply, PABC claims that the contention raised by defendants is lacking in merit. It asserts that this Court, in a Resolution dated 28 November 1991, already ruled that the
filing of answers to PABCs Complaint-in-intervention is only permissive and not mandatory, citing Rule 12, Section 2(c), of the former Rules of Court, hence, the non-filing of
such an answer cannot be a valid basis to oppose the Motion for Summary Judgment; secondly, YKR Corporation and seven out of the ten Yulo Heirs are estopped from
claiming that they have the right to file an answer to PABCs complaint-in-intervention and from relying on their choice to not file an answer as a basis for opposing the Motion
for Summary Judgment. PABC further contends that YKR and seven out of the ten Yulo Heirs Answer to PABCs Request for Admissions provides sufficient basis for the
rendition of a summary judgment as they actually already responded to PABCs allegations and causes of action therein.

For its part, plaintiff Republic filed a Comment/Opposition wherein it argues that the BusuangaBreeding and Experimental Station (BBES) in Busuanga, Palawan, is not a
sequestered asset because it belongs to the government pursuant toPresidential Proclamation No. 1387 and Presidential Decree No. 1297 which placed the same as reserved
grazing public land. It also added that the term Busuanga Properties, as used by PABC, is misleading. Said term tends to encompass all the properties located in the BBES
such as the land and all the improvements thereon, including all the assets and properties of YKR Corporation which were sequestered by the PCGG, when, in fact, PABCs
claim is confined only to two (2) parcels of land situated within the BBES in Busuanga, Palawan, and does not include the assets and properties of YKR Corporation. Plaintiff
Republic also noted that its interest in the subject land finds basis not from a Sequestration Order but from Presidential Proclamation No. 1387 and Presidential Decree No.
1297 which classified the BBES as a reserved grazing publicland, and pointed out that these laws came before the subject lands were registered in the name of PABC on 12
May 1975, hence, whatever rights PABC may have acquired thereon must be subjected to the rights ofthe government, as conferred by the above-mentioned laws. It further
emphasized that PABCs claim that the Republics denials relating to PABCs ownership of the subject lands are in the nature of a negative pregnant, is erroneous, considering
that the Republic has denied all of the PABCs allegations relating to its ownership of the said parcels of land by invoking the provisions of Presidential Proclamation No. 1387,
Presidential Decree No. 1297 and Presidential Decree No. 1593.

Secondly, Republic contends that the Sandiganbayan is not the proper court to decide PABCs claim of ownership over the subject land considering that under Republic Act No.
7975, the Sandiganbayan does not have the power and jurisdiction to determine ownership of land not falling within the civil cases filed pursuant to and in connection with
Executive Order Nos. 1, 2, 14 and 14-a.

In its Reply to Republics Comment/Opposition, PABC reiterated its arguments and insisted that it isclear that the PCGG did not have authority to seize control and possession
of the Busuanga Properties pursuant to Presidential Proclamation No. 1387 and Presidential Decree No. 1297, and further stressed that the Republic has never denied that it
was PCGG and not another governmentagency which actually seized possession of the Busuanga Properties and that the Republic, through the PCGG, took possession of the
sameby reason of the inapplicable Sequestration Order dated 2 April 1986 and not because of Presidential Proclamation No. 1387 and Presidential Decree No. 1297. PABC
claims that it does not need to file any action to prove its ownership of the Busuanga Properties, because it is clear and undisputed that PABC is the registered owner by virtue
of its Transfer Certificate of Title Nos. 6110 and 6111 dated 12 May 1975, which are presumed to be valid and binding on the whole world.7

The Sandiganbayan granted the motion. In its assailed Resolution promulgated on June 30, 2009, the court a quostated, viz.:

When the pleadings on file show that there are no genuine issues of fact to be tried, the Rules of Court allows a party to obtain immediate relief by way of summary judgment.
Rule 35 of the Rules of Court which gives authority to trial courts to grant relief by summary judgment is intended to expedite or promptly dispose of cases where the facts
appear undisputed and certain from the pleadings, admissions and affidavits. That is, when the facts are not in dispute, the court is allowed to decide the case summarily by
applying the law to the material facts. In other words, in a motion for summary judgment, the crucial question is: are the issues raised in the pleadings genuine, sham or
fictitious, as shown by affidavits, depositions or admissions accompanying the motion? 8
The Sandiganbayan ruled that there was no genuine issue of fact in the case at bar since none of the parties to whom the Request for Admissions was served by respondent
PABC specifically denied the latters ownership over the subject properties. The court a quoformulated the following conclusions:

1. Since respondent Sabido failed to file an answer to respondent PABCs Request for Admissions, the court considered him to have impliedly admitted each of
the matters to which an admission was requested.

2. For petitioners YKR Corporation and then seven out of the ten Yulo heirs, they did not make a categorical admission or denial of the matters set forth in the
Request for Admissions "allegedly because all the records of YKR have been taken by the PCGG when it was sequestered." 9 The court a quo, while conceding
that this form of response to the Request for Admissions is allowed by the Rules of Court, found the reason given to be "unconvincing because the matters
requested for admission ought to be within the personal knowledge of YKR Corporation and seven out of the ten Yulo Heirs." 10

3. Petitioner Republic, claiming a superior right to the subject properties by virtue of Presidential Proclamation No. 1387 and Presidential Decree No. 1297 (PD
1297), asserted thatwhatever rights PABC may have acquired on the properties "must yield to or at least be subjected to the rights of the government, as
conferred by [thecited laws] which came before the subject lands were registered in the name of PABC on 12 May 1975." 11 On this form of answer, the court a quo
concluded that "[e]ven plaintiff Republic did not specifically deny PABCs title to the properties." 12 Petitioner Republic also questioned the jurisdiction ofthe
Sandiganbayan to determine the ownership of the subject lands under Republic Act No. 7975, 13 where the Sandiganbayan allegedly does not have the power and
jurisdiction to determine ownership of land not falling within the civil cases filed under Executive Orders Nos. 1, 2, 14 and 14-a. The Republic contended that since
the subject properties are neither ill-gotten wealth nor sequestered assets as they are reserved grazing public landsbelonging to the government pursuant to
Presidential Proclamation No. 1387 and PD 1297, the Sandiganbayan does not have jurisdiction to resolve any claim of ownership involving the subject properties.

Based on the foregoing conclusions of the court a quo, it ruled that it was evident that no genuine issues of fact existed in the case at bar, especially as to respondent PABCs
ownership of the subject lands. It granted the motion for summary judgment and decided the instant case on the conclusion that the instant controversy posed only pure
questions of law, as follows:

1. Whether or not the Court has jurisdiction to resolve PABCs claim over the subject lands; and 2. Whether or not the government has a superior right than that of PABCs over
the subject properties by virtue of Presidential Proclamation No. 1387 and Presidential Decree No. 1297. 14

According to the court a quo, the resolution of these issues does not require an examination of the evidence of the parties, but only "entail[s] an application of prevailing laws to
the particular facts ofthe instant case."15

Anent the first issue, the court held that it has exclusive and original jurisdiction over all civil or criminalcases involving the PCGG regarding the "Funds, Moneys, Assets, and
Properties Illegally Acquired or Misappropriated by Former President Ferdinand Marcos, Mrs. Imelda Romualdez Marcos, and their Close Relatives, Subordinates, Business
Associates, Dummies, Agents, or Nominees," and all incidents arising from, incidental to, or related to, such cases, subject to review on certiorari exclusively by the Supreme
Court.16 It further held that it also has jurisdiction to determine whether the PCGG "has gravely abused its discretion or has overstepped the boundaries of the power conferred
upon it by law"17 as in this case where at issue is the propriety of the PCGGs take-over of the subject parcels of land and their subsequent turn-over to the Bureau of Animal
Industry pursuantto Presidential Proclamation No. 1387 and PD 1297.18

On the issue of ownership, the court a quo upheld respondent PABCs titles to the parcels of land based on Transfer Certificates of Title (TCTs) Nos. 6110 and 6111 dated May
12, 1975 issued in its name. The court a quo considered these TCTs as "uncontroverted evidence proving PABCs ownership" over the subject properties.The court based its
ruling on PD 1297 and especially on the following provision of Presidential Proclamation No. 1387 which states, viz.: Upon the recommendation of the Secretary of Natural
Resources, and pursuant to the authority vested in me by law, I, FERDINAND E. MARCOS, President of the Philippines, do hereby withdraw from sale, settlement or any other
form of disposition, exploration or exploitation, and reserve as a pasture reserve, subject to private rights, if any there be, a certain parcel of landof the public domain situated in
the island of Busuanga, Province of Palawan, x x x. 19

The Sandiganbayan construed the phrase "subject to private rights" in the above-quoted provision to mean "private rights that were acquired before the issuance of said
proclamation on 13 February 1975."20 Petitioner Republic counterclaimed that these laws were issued by the executive department before the subject properties were registered
in the name of respondent PABC, hence, "whatever rights PABC may have acquired on the properties must necessarily yield, or at least be subjected to the rights of the
government."21 The court a quoresolved the parties conflicting claims as follows:

x x x Nonetheless, while it is true that PABCs Certificates of Title to the properties were registered in its name only on 12 May 1975, PABCs predecessors-in-interest have
already acquired private rights over the subject lands upon issuance of Original Certificates of Title in the name of said predecessors-in-interestas early as 1 July 1916 and 21
May 1919, or more than 50 years before the issuance of Presidential Proclamation No. 1387, as reflected in PABCs Transfer Certificate[s] of Title Nos. 6110 and 6111.
Evidently, as early as 1916 and 1919, the subject lands were already under the private ownership of PABCs predecessors-in-interest, and no longer part of the lands of the
public domain.

Consequently, given that the verylaw cited by plaintiff Republic provides that its provisionsand operation are subject to private rights, hence, the government must
necessarilyyield to the private rights of PABCs predecessors-in-interest over the parcels of land as vested by their titles to the property which they acquired decades before the
reservation of said land as pasture reserve. Among these rights which said predecessors-in-interest may exercise is the disposition and transfer of said land in favor of PABC.
And by virtue of said transfer of title over the subject land, PABC has acquired all vested rights which its predecessors-in-interest exercised over said property, which rights are
recognized and respected by Presidential Proclamation No. 1387. Hence, the withdrawal from sale, settlement or any other form of disposition, exploration or exploitation, and
the subsequent reservation as a pasture reserve of the described parcel of land situated in the island of Busuanga, Palawan, as ordered by Presidential Proclamation No. 1387,
cannot be made to apply to the titled property belonging to PABC as the same no longer forms part of the lands of the public domain.22

With the foregoing disquisitions, the Sandiganbayan ruled in its assailed June 30, 2009 Resolution, viz.:

WHEREFORE, premises considered, the instant Motion for Summary Judgment is hereby GRANTED. Philippine Agri-Business Center Corporation is hereby declared the lawful
owner of the real properties located in Busuanga, Palawan, covered by Transfer Certificate of Title Nos. 6110 and 6111. Plaintiff Republic of the Philippines is hereby ordered to
return possession of said properties to Philippine AgriBusiness Center Corporation.

SO ORDERED.23

Both petitioners moved for reconsideration and prayed that the June 30, 2009 Resolution be set aside and a new one be issued denying respondent PABCs Motion for
Summary Judgment for lack of merit. Both motions were denied in the assailed Resolution promulgated on April 8, 2010, viz.:

WHEREFORE, the Motion for Reconsideration dated July 20, 2009 filed by defendants-in-intervention YKR Corporation and six out of the ten legal heirs of the late Luis A. Yulo,
and the Motion for Reconsideration dated July21, 2009 filed by the Plaintiff, Republic of the Philippines, are both denied, and the Resolution dated June 18, 2009 stands.
SO ORDERED.24

Petitioners now come before this Court raising similar grounds for review. In a Resolution issued by the Court on August 11, 2010, the petitions at bar were consolidated "to
avoid conflicting rulings in similar cases brought before this Court for resolution considering that the petitions in both cases involve the same parties and similar facts and assail
the same Sandiganbayan resolutions in Civil Case No. 0024." 25

In G.R. No. 191838, petitioners YKR Corporation and six out of the ten Yulo heirs raised the following issues:

[I.] THE SANDIGANBAYAN DISREGARDED THE LAW AND APPLICABLE JURISPRUDENCE IN RENDERING SUMMARY JUDGMENT AGAINST
PETITIONERS.

[II.] THE SANDIGANBAYAN HAS NO JURISDICTION OVER THE COMPLAINT-IN-INTERVENTION.26

In G.R. No. 191863, petitioner Republic assigned a lone error:

WITH ALL DUE RESPECT, THE SANDIGANBAYAN ERRED IN LAW WHEN IT GRANTED RESPONDENTS MOTION FOR SUMMARY JUDGMENT EVEN IF THE SAME IS
NOT SUPPORTED BY DEPOSITION, AFFIDAVIT OR ADMISSION ON THE RECORDS.27

We grant the petitions.

The 1997 Rules of Civil Procedure, asamended, states the following provisions on summary judgments under Rule 35:

SECTION 1. Summary judgment for claimant. A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the
pleading in answer thereto has been served, move with supporting affidavits, depositions or admissions for a summary judgment in his favorupon all or any part thereof.

SEC. 2. Summary judgment for defending party. A party against whom a claim, counterclaim, or cross-claim is asserted or a declaratory relief is sought may, at any time,
move with supporting affidavits, depositions or admissions for a summary judgment in his favor as to all or any part thereof.

SEC. 3. Motion and proceedings thereon. The motion shall be served at least ten (10) days before the time specified for the hearing. The adverse party may serve opposing
affidavits, depositions, or admissions at least three (3) days before the hearing. After the hearing, the judgment sought shall be rendered forthwith if the pleadings, supporting
affidavits, depositions, and admissions on file, showthat, except as to the amount of damages, there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.

The disposition of a civil action viasummary judgment is a method sanctioned under the Rules where there exists no question or controversy as to the material facts. Thus,
when a party moves for summary judgment, this is premised on the assumption that a scrutiny of the facts will disclose that the issues presented need not be tried either
because these are patently devoid of substance or that there is no genuine issue as to any pertinent fact. A judgment on the motion must be "rendered forthwith if the pleadings,
supporting affidavits, depositions, and admissions on file show that, except as to the amount of damages, there isno genuine issue and that the movi ng party is entitled to a
judgment as a matter of law."28 The case of Viajar v. Judge Estenzo29 incisively explains the rationale for this sanctioned, albeit expedited, procedure: Relief by summary
judgment is intended to expedite or promptly dispose of cases where the facts appear undisputed and certain from the pleadings, depositions, admissions and affidavits. But if
there be a doubt as to such facts and there be an issue orissues of fact joined by the parties, neither one of them can pray for a summary judgment. Where the facts pleaded by
the parties are disputed or contested, proceedings for a summary judgment cannot take the place of a trial. 30

In the same case, the Court expounded that caution must be exercised when courts dispose of a civil case viasummary judgment because this procedural device does away
with trial and deprives parties the opportunity to present their evidence in court, viz.:

An examination of the Rules willreadily show that a summary judgment is by no means a hasty one. Itassumes a scrutiny of facts in a summary hearing after the filing of a
motion for summary judgment by one party supported by affidavits, depositions, admissions, or other documents, with notice upon the adverse party who may file an opposition
to the motion supported also by affidavits, depositions, or other documents (Section 3, Rule 34). In spite of its expediting character, relief by summary judgment can only be
allowed after compliance with the minimum requirement of vigilance by the court in a summary hearing considering that this remedy is in derogation of a partys right to a
plenary trial of his case. At any rate, a party who moves for summary judgment has the burden of demonstrating clearly the absence of any genuine issue of fact, or that the
issue posed in the complaint is so patently unsubstantial as not to constitute a genuine issue for trial,and any doubt as to the existence of such an issue is resolved against the
movant.31

To determine whether summary judgment was properly rendered by the court a quo, we shall examine if the following requisites under Rule 35 of the Rules obtain in the case at
bar, viz.:

1. there must be no genuine issue as toany material fact, except for the amount of damages; and

2. the party presenting the motion for summary judgment must be entitled to a judgment as a matter of law.

A "genuine issue of fact" is an issue "which requires the presentation of evidence as distinguished from a sham, fictitious, contrived or false claim. When the facts as pleaded
appear uncontested or undisputed, then there is no real or genuine issue or question as to the facts, and summary judgment is called for. The party who moves for summary
judgment has the burden of demonstrating clearly the absence of any genuine issue of fact, or that the issue posed in the complaint is patently unsubstantial so as not to
constitute a genuine issue for trial. x x x When the facts as pleaded by the parties are disputed or contested, proceedings for summary judgment cannot take the place of trial." 32

A prudent examination of the evidence on record yields to no other conclusion that there exists a genuine issue of fact as raised in both petitions.

In G.R. No. 191838, petitioners YKR Corporation and then seven out of the ten Yulo heirs responded to the Request for Admissions by making no categorical admission or
denial of the matters set forth inthe Request for Admissions allegedly because all the records of YKR Corporation have been taken by the PCGG when they were sequestered.
This answer is a permissible way of making a specific denial under the Rules. In Section 10, Rule 8 thereof, there are three waysof making a specific denial: (1) by specifying
each material allegation of the fact in the complaint, the truth of which the defendant does not admit, and whenever practicable, setting forth the substance of the matters which
he will rely upon to support his denial; (2) by specifying so much of an averment in the complaint as is true and material and denying only the remainder; and, (3) by stating that
the defendant is without knowledge or information sufficientto form a belief as to the truth of a material averment in the complaint, which has the effect of a denial. 33
With respect to the aforesaid third form of denial, this Court ruled in Philippine Bank of Communications v. Court of Appeals 34 that the defendants contention thatit had no
knowledge or information sufficient to form a belief as to the truth of the deed of exchange was an invalid or ineffectual denial pursuant to the Rules of Court, as it could have
easily asserted whether or not it had executed the deed of exchange attached to the petition. Citing Capitol Motors Corporations v. Yabut,35 the Court stated that:

x x x The rule authorizing an answer to the effect that the defendant has no knowledge or information sufficient to form a belief as to the truth of an averment and giving such
answer the effect of a denial, does not apply where the fact as to which want ofknowledge is asserted, is so plainly and necessarily within the defendants knowledge that his
averment of ignorance must be palpably true. 36 (Emphasis supplied.)

The court a quo, while it recognized that the response given by YKR Corporation and the then seven out of the ten Yulo heirs is allowed by the Rules, did not accept the specific
denial and ruled that there existed no genuine issue of fact because despite the sequestration by the PCGG of YKRs records, the matters "ought to be within the personal
knowledge of YKR Corporation and [the then] seven out of the ten Yulo heirs." 37 On this issue, we agree with petitioners YKR Corporation and the remaining six out of the ten
Yulo heirs that the Sandiganbayan erred when it issued an unsubstantiated statement that the matters requested for admission in respondent PABCs Request for Admission
"ought to be within the personal knowledge" of YKR Corporation and the then seven out of the ten Yulo heirs, without citing any basis both in fact and in law. We quote the
1w phi1

relevant portion of the assailed Resolution promulgated on June 30, 2009 of the court a quo:

In the case at bar, none of the parties to whom a Request for Admissions was served by PABC have specifically denied PABCs ownership over the subject properties. x x x On
the other hand, YKR Corporation and seven out of the ten Yulo Heirs made no categorical admission or denial of the matters set forth in the Request for Admissions allegedly
because all the records ofYKR have been taken by the PCGG when it was sequestered. Although this form of response to a Request for Admissions is allowed by the Rules,
the reason given by YKR Corporation and seven out of the ten Yulo Heirs that a truthful admission or denial of the matters set forth inthe Request for Admissions cannot be
made because all the records of YKR have been taken by the PCGG when it was sequestered is unconvincing because the matters requested for admission ought to be within
the personal knowledge of YKR Corporation and seven out of the ten Yulo Heirs.38

In ruling on the issue of whether a genuine issue of fact exists, there was no mention of any circumstance or situation upon which the court a quo derived its conclusion that the
matters requested for admission "ought to be within the personal knowledge" of YKR Corporation and seven out of the ten Yulo Heirs. We cannot thus properly ascertain
whether the facts which the latter could not make any truthful admission or denial are so plainly and necessarily within their knowledge. The only other instance that the court a
quodiscussed this issue was in the following quoted paragraph of its assailed Resolution promulgated on April 8, 2010, viz.:

If indeed YKR or the Yulo heirs have any right or interest in the properties covered by Transfer Certificates of Title Nos. 6110 and 6111 of the Register of Deeds of Palawan,
then they ought to have made allegations of any knowledge or information as to the nature of such right or interest, or at the very least denied PABCs ownership or right to
possession over the subject properties, in their Answer to Request for Admissions of PABC dated May 11, 2007. x x x 39

Considering that petitioners YKR Corporation and the remaining six out of the ten Yulo heirs were deprived of their day in court, the court a quo should have made its ruling as
to the non-existence of genuine issues of fact by clearly stating its basis both in fact and in law and not on purely conjectural determinations, i.e., that "the matters requested for
admission ought to be within the personal knowledge of YKR Corporation and [the then] seven out of the ten Yulo Heirs"40 and that "they ought to have made allegations of any
knowledge or information as to the nature of such right or interest, or at the very least denied PABCs ownership or right to possession over the subject properties." 41 To be sure,
YKR Corporation and the then seven out of the ten Yulo heirs tendered an answer which is a permissible form of making a specific denial under Section 10, Rule 8 of the Rules.
The court a quoitself stated in the assailed June 30, 2009 Resolution that "this form of response to a Request for Admissions is allowed by the Rules."42 Even respondent PABC
the party that moved for summary judgment and which has the burden to prove that there are no genuine issues of fact in the case at bar did not submit any supporting
affidavits, depositions or admissions to prove that the matters requested for admission "ought to be within the personal knowledge of YKR Corporation and [the then] seven out
of the ten Yulo Heirs."43

There also exists a genuine issue of fact as to petitioner Republic.

In the assailed Resolution promulgated on June 30, 2009, the court a quostated, viz.:

Even plaintiff Republic did not specifically deny PABCs title to the properties, but instead claims a superior right to the subject properties by virtue of Presidential Proclamation
No. 1387 and Presidential Decree No. 1297. Plaintiff Republic argues that whatever rights PABC may have acquired on the property must yield to or at least be subjected to the
rights of the government, as conferred by Presidential Proclamation No. 1387 and Presidential Decree No. 1297 which came before the subject lands were registered in the
name of PABC on 12 May 1975. x x x44

We do not agree. Petitioner Republictendered a specific denial as required under Section 10, Rule 8 of the 1997 Rules of Civil Procedure, as amended, viz.:

REPLY [TO REQUEST FOR ADMISSION NO. 1.1.] Plaintiff cannot truthfully affirm or deny the Request No. 1.1 because the land subject matter thereof forms part and parcel
of the land specially declared by Presidential Proclamation No. 1387 (Reserving and Establishing As A Pasture Reserve A Certain Parcel Of Land Of The Public Domain
Situated In The Island Of Busuanga, Province Of Palawan) and Presidential Decree No. 1297 (Centralizing The Importation Of Ruminants For Breeding And Slaughter And
Beef) as reserved land intended for grazing purposes.45

The court a quoruled that even the very law cited by petitioner Republic states that its provisions and operation are "subject to private rights," so the government must yield to
the private rights of respondent PABCs predecessors-in-interest over the parcels of land as vested by their titles to the subject properties. The court a quonoted that respondent
PABCs predecessors-in-interest acquired their titles decades before the subject land was declared as a pasture reserve. According to the assailed June 30, 2009 Resolution,
when these predecessors-in-interest transferred the subject land in favor of respondent PABC, the private rights transferred to the latter must be recognized and respected
under Presidential Proclamation No. 1387. The court a quothus concluded that "the withdrawal from sale, settlement or any other form of disposition,exploration or exploitation,
and the subsequent reservation as a pasture reserve of the described parcel of land situated in the island of Busuanga, Palawan, as ordered by Presidential Proclamation No.
1387, cannot be made to apply to the titled property belonging to PABC as the same no longer forms part of the lands of the public domain." 46 The Sandiganbayan stated, viz.:

x x x Nonetheless, while it is true that PABCs Certificates of Title to the properties were registered in its name only on 12 May 1975, PABCs predecessors-in-interest have
already acquired private rights over the subject lands upon issuance of the Original Certificates of Title in the name of said predecessors-in-interestas early as 1 July 1916 and
21 May 1919, or more than 50 years before the issuance of Presidential Proclamation No. 1387, as reflected in PABCs Transfer Certificate[s] of Title Nos. 6110 and 6111.
Evidently, as early as 1916 and 1919, the subject lands were already under the private ownership of PABCs predecessors-in-interest, and no longer part of the lands of the
public domain.47

We disagree.

While the Sandiganbayan correctly pointed out that, on their face, the original certificates of title from which the transfer certificates of title of respondent PABC were derived
were issued in the name of respondent PABCs predecessors-in-interest as early as July 1, 1916 and May 21, 1919, evidence is still required to prove that the "private rights"
acquired by respondent PABC are superior over the rights of petitioner Republic which also claims to have a better right over the same properties by virtue of Presidential
Proclamation No. 1387 and PD1297. To be sure, respondent PABCs Motion for Summary Judgment 48 was not supported by "supporting affidavits, depositions or
admissions"49 as stated under the Rules. Without clear, positive and absolute evidence that respondent PABC has a better right than petitioner Republic, such "genuine issue of
fact" could not be resolved because we simply do not have the facts to rule on the issue.

Finally, petitioners YKR Corporation and six out of the ten Yulo heirs raise the issue that the Sandiganbayan did not have jurisdiction to entertain r espondent PABC's
Complaint-in-Intervention50 dated August 31, 1988. It is now too late in the day for petitioners to raise the issue of jurisdiction over a complaint-in-intervention that was filed 26
years ago. Petitioners should have raised the alleged jurisdictional defect at the earliest possible opportunity when respondent PABC filed its Motion for Intervention51 and the
subject Complaint-in-Intervention. However, instead of filing an opposition to the court a quo 's admission of the Complaint-in-Intervention, petitioners even filed their Answer to
Request for Admissions of PABC52 on May 11, 2007, their Opposition to Motion for Summary Judgment 53 on January 21, 2008, and their Motion for Reconsideration (Re:
Resolution dated June 18, 2009)54 on July 20, 2009. It is of no moment that petitioners did not file an answer to the Complaint-in-Intervention. As respondent P ABC correctly
pointed out, viz.:

The Sandiganbayan ruled 22 years ago that unless allowed to intervene, P ABC "may not have any other logical or practical remedy for the protection of its rights in view of the
extraordinary scope and nature of the instant sequestration proceedings." Petitioners never questioned said ruling - until now, 22 long years after. Clearly, petitioners are
estopped from assailing the said ruling by the Sandiganbayan, which has long been final.55

WHEREFORE, in view of the foregoing, the consolidated petitions for review are GRANTED. The Resolutions promulgated on June 30, 2009 and April 8, 2010 of the
Sandiganbayan, 5th Division, in Civil Case No. 0024, are REVERSED and SET ASIDE. The case is hereby REMANDED to the Sandiganbayan for further proceedings with
DELIBERATE DISPATCH. No pronouncement as to costs.

SO ORDERED.

G.R. No. 205249 October 15, 2014

SPOUSES BENEDICT and SANDRA MANUEL, Petitioners,


vs.
RAMON ONG, Respondent.

DECISION

LEONEN, J.:

This resolves a petition1 for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, praying that the June 28, 2012 decision 2 and the December 19, 2012
resolution3 of the Court of Appeals in CA-G.R. SP No. 119270 be reversed and set aside. The assailed June 28, 2012 decision dismissed for lack of merit the petition for
certiorari under Rule 65 of the 1997 Rules of Civil Procedure filed by petitioners Benedict and Sandra Manuel (the Spouses Manuel) and sustained the November 30, 2010 and
February 16, 2011 orders of the Regional Trial Court, La Trinidad, Benguet. 4 The assailed December 19, 2012 resolution of the Court of Appeals denied the Spouses Manuels
motion for reconsideration. The Regional Trial Courts November 30, 2010 order denied their motion to lift order of default, while its February 16, 2011 order denied their motion
for reconsideration.5

On December 21, 2009, respondent Ramon Ong (Ong) filed with the Regional Trial Court, La Trinidad, Benguet, a complaint for accion reivindicatoria.6 Ong charged the
Spouses Manuel with having constructed improvements through force, intimidation, strategy, threats, and stealth on a property he supposedly owned.7 The case was
docketed as Civil Case No. 09-CV-2582.8

On January 19, 2010, Ong filed an "amended complaint."9 On February 3, 2010, summons was issued directed to the Spouses Manuel. 10

On April 23, 2010, Ong filed with the Regional Trial Court a motion to declare the Spouses Manuel in default. 11Per the sheriffs return on summons, on February 12, 2010, Sheriff
Joselito Sales, along with Ongs counsel, Atty. Christopher Donaal, and a certain Federico Laureano, attempted to personally serve summons on the Spouses Manuel at their
address in Lower Bacong, Loacan, Itogon, Benguet.12 The Spouses Manuel, however, requested that service be made at another time considering that petitioner Sandra
Manuel's mother was then critically ill.13The sheriffs return further indicates that on March 16, 2010, another attempt at personal service was made. After Sheriff Joselito Sales
had personally explained to petitioner Sandra Manuel the content of the summons and the complaint, the latter refused to sign and receive the summons and the complaint.
Sheriff Joselito Sales was thus prompted to merely tender the summons and complaint to petitioner Sandra Manuel and to advise her to file their answer within fifteen (15)
days.14 As the Spouses Manuel failed to file their answer within this period, Ong asked that they be declared in default.15

On June 28, 2010, the Regional Trial Court issued an order granting Ong's motion to declare the Spouses Manuel in default. Following this, Ong moved for the ex parte
presentation ofevidence, which the Regional Trial Court granted.16

On September 13, 2010, the Spouses Manuel filed a motion to lift the order of default. They alleged thatit is the siblings of petitioner Sandra Manuel who resided in Lower
Bacong, Itogon, Benguet, while they resided in Ambiong, La Trinidad, Benguet. Thus, summons could not have been properly served on them in the former address. They
surmised that Ong and his companions mistook petitioner Sandra Manuels siblings as the defendants in Civil Case No. 09-CV-2582.They further claimed that they only
subsequently received via registered mail copies of (1) a compliance and manifestation filed by Ong and (2) the Regional Trial Courts order scheduling the ex parte
presentation of evidence. Attachedto the Spouses Manuels motion to lift order of default was their answer. 17

In its order dated November 30, 2010,the Regional Trial Court denied the Spouses Manuels motion to lift order of default. It noted that, first, their motion was not sworn to, as
required by the 1997 Rules of Civil Procedure, and, second, they did not showthat their failure to timely file an answer "was due to fraud, accident, mistake or excusable
negligence."18 In its order dated February16, 2011, the Regional Trial Court denied the Spouses Manuels motion for reconsideration. 19

Aggrieved, the Spouses Manuel filed a petition for certiorari before the Court of Appeals.20

As mentioned, the assailed June 28, 2012 decision of the Court of Appeals dismissed the Spouses Manuels Rule 65 petition for lack of merit. The assailed December 19, 2012
resolution of the Court of Appeals denied their motion for reconsideration.

Hence, this petition.


For resolution is the sole issue ofwhether the Spouses Manuel may be granted relief from the Regional Trial Courts June 28, 2010 order of default.

Jurisdiction over the persons of the Spouses Manuel acquired

As a preliminary matter, we ruleon whether jurisdiction over the persons of the Spouses Manuel, as defendants in Civil Case No. 09-CV-2582, was validly acquired. This
preliminary matter is determinative of whether the fifteen-day period within which they must file their answer started to run, thereby facilitating the context in which they could
have validly been declared to be in default.

We hold that jurisdiction over the persons of both defendants in Civil Case No. 09-CV-2582 the Spouses Benedict and Sandra Manuel was validly acquired. This is so
because personal service of summons, via tender to petitioner Sandra Manuel, was made by Sheriff Joselito Sales on March 16, 2010.

Rule 14, Section 6 of the 1997 Rules of Civil Procedure provides:

SEC. 6. Service in person on defendant. Whenever practicable, the summons shall be served by handing a copy thereof to the defendant in person, or, if he refuses to
receive and sign for it, by tendering it to him.

Tendering summons is itself a means of personal service as it is contained in Rule 14, Section 6. Personal service, as provided by Rule 14, Section 6, is distinguished from its
alternative substituted service as provided by Rule 14, Section 7:

SEC. 7. Substituted service. If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected
(a) by leaving copies of the summons at the defendant's residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at
defendant's office or regular place of business with some competent person in charge thereof. (Emphasis supplied)

In this case, the sheriffs returnon summons indicated that Sheriff Joselito Sales endeavored to personallyhand the summons and a copy of the complaint to the Spouses
Manuel on two (2) separate occasions. He relented from doing so on the first occasion in deference to the medical condition of petitioner Sandra Manuels mother. On the
second occasion, he was constrained to tender the summons and copy of the complaint as petitioner Sandra Manuel refused to accept them.

The Spouses Manuel did not deny the occurrence of the events narrated in the sheriffs return but claimed that no valid service of summons was made. They claimed that they
did not reside in Lower Bacong, Loacan, Itogon, Benguet, where the service of summons was made. From this, they surmised that the "Sandra Manuel" who was specifically
identified in the sheriffs return was someone other than petitioner Sandra Manuel.

The Spouses Manuel cannot capitalize on the supposed variance of address. Personal service of summons has nothing to do with the location where summons is served. A
defendantsaddress is inconsequential. Rule 14, Section 6 of the 1997 Rules of Civil Procedure is clear in what it requires: personally handing the summons to the defendant
(albeit tender is sufficient should the defendant refuseto receive and sign). What is determinative of the validity of personal service is, therefore, the person of the defendant, not
the locus of service.

In any case, the Court of Appeals iscorrect in pointing out that the Spouses Manuels self-serving assertion must crumble in the face of the clear declarations in the sheriffs
return.21 Pursuant to Rule 131, Section 3(m) of the Revised Rules on Evidence,22 the acts of Sheriff Joselito Sales and the events relating to the attempt to personally hand the
summons and a copy of the complaint to the Spouses Manuel, as detailed in the sheriffs return, enjoy the presumption of regularity. 23 Moreover, Sheriff Joselito Sales must be
presumed to have taken ordinary care and diligence in carrying out his duty to make service upon the proper person(s) and not upon an impostor. 24

A sheriffs return, if complete on its face, must be accorded the presumption of regularity and, hence, taken to be an accurate and exhaustive recital of the circumstances
relating to the steps undertaken by a sheriff. In this case, the Spouses Manuel have harped on their (self-serving) claim of maintaining residence elsewhere but failed to even
allege that there was anything irregular about the sheriffsreturn or that it was otherwise incomplete.

Having alleged irregularities in the service of summons, it was incumbent upon the Spouses Manuel to adduce proof of their claims. All they mustered was their self-serving
allegation of an alternative address. If at all, this claim of maintaining residence elsewhere should not even be lent an iota of credibility considering that, as respondent Ramon
Ong pointed out, the barangay clearances, which the Spouses Manuel themselves attached to one of their pleadings (as proof of their identities), actually indicated that they
were residents of Bacong Loacan, Itogon, Benguet. 25 Their lie is, thus, revealed by their own pleading.

As the Spouses Manuel not only failed in discharging the burden of proving their allegation but even succeeded in contradicting themselves, Sheriff Joselito Sales recollection
of events must be taken tobe true. Thus, valid personal service of summons, via tender to petitioner Sandra Manuel, was made. From this, it follows that jurisdiction over the
persons of petitioners Benedict and Sandra Manuel was acquired by the Regional Trial Court, La Trinidad, Benguet, in Civil Case No. 09-CV-2582.

The Spouses Manuel are not entitled to relief from the order of default

As valid service of summons was made on them, it was incumbent upon the Spouses Manuel, pursuant to Rule 11, Section 1 of the 1997 Rules of Civil Procedure, 26 to file their
answer withinfifteen (15) days from March 16, 2011. Having failed to do so, they wererightly declared to be in default.

Rule 9, Section 3 of the 1997 Rules of Civil Procedure provides for when a party to an action may be declared in default. Further, Rule 9, Section 3(b) governs the grant of relief
from orders of default:

SEC. 3. Default; declaration of. If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the
defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his
pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court.

(a) Effect of order of default. A party in default shall be entitled to notice of subsequent proceedingsbut not to take part in the trial. (b)

Relief from order of default. A party declared in default may at any time after notice thereof and before judgment file a motion under oathto set aside the order of default upon
proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense. In such case, the order of default
may be set aside on such terms and conditions as the judge may impose in the interest of justice. (Emphasis supplied)
Pursuant to Rule 9, Section 3, a court may proceed to render judgment as the pleading may warrant should a defendant fail to timely file his or her answer. However, a court
may decline from immediately rendering judgment and instead require the plaintiff to present evidence. Per Rule 9, Section 3(a), a party declared to be indefault shall
nevertheless be "entitled to notice of subsequent proceedings," although he or she may no longer take part in the trial.

As explained in Spouses Delos Santos v. Carpio,27 "there are three requirements which must be complied with by the claiming party before the court may declare the defending
party in default:

(1) the claiming party must filea motion asking the court to declare the defending party in default;

(2) the defending party must be notified of the motion to declare him in default;

(3) the claiming party must provethat the defending party has failed to answer within the period provided by the Rule." 28

All these requisites were complied with by respondent Ramon Ong.

It is not disputed that Ong filed a motion to declare the Spouses Manuel in default. It is also not disputed that the latter filed their answer after the fifteen-day period, counted
from March 16, 2010, had lapsed. The Spouses Manuel only filed their answer along with their motion to lift order of default on September 13, 2010.

It is similarly settled that the Spouses Manuel were notified that a motion to declare them in default had been filed. They acknowledged in the present petition for certiorari that
on June 23, 2010, Ong filed a compliance to the Regional Trial Courts April 30, 2010 order that required the submission of the registry return card evidencing the mailing to the
Spouses Manuel of a copy of the motion to have them declared in default.

Not only were the requisites for declaring a party in default satisfied, the Spouses Manuels motion to lift order of default was also shown to be procedurally infirm.

Consistent with Rule 9, Section 3(b) of the 1997 Rules of Civil Procedure, "the remedy against an order of default is a motion to set it aside on the ground of fraud, accident,
mistake, or excusable negligence."29 However, it is not only the motion to lift order of default which a defendant must file. As this court emphasized in Agravante v. Patriarca,30 to
the motion to lift order of default must "be appended an affidavit showing the invoked ground, and another, denominated affidavit of merit, setting forth facts constituting the
party's meritorious defense or defenses."31

The need for an affidavit of merit isconsistent with Rule 8, Section 5 of the 1997 Rules of Civil Procedure, 32 which requires that "[i]n all averments of fraud or mistake, the
circumstances constituting fraud or mistake must be statedwith particularity."

In Montinola, Jr. v. Republic Planters Bank,33 this court noted that the three (3) requisites that must be satisfied by a motion in order "to warrant the setting aside of an order of
default for failure to file answer, are:

(1) it must be made by motion under oath by one that has knowledge of the facts;

(2) it must be shown that the failure to file answer was due to fraud, accident, mistake or excusable negligence; and

(3) there must be a proper showing of the existence of a meritorious defense."34 (Citations omitted)

Consistent with Agravante, it is through an affidavit of merit that a defendant seeking relief from an order of default shows that "the failure to file answer was due to fraud,
accident, mistake or excusable negligence."35

In this case, the Court of Appeals noted that the Spouses Manuels motion to lift order of default was not made under oath. We add that this motion was not accompanied by an
affidavit of merit specifying the facts which would show that their non-filing of an answer within fifteen (15) days from March 16, 2010 was due to fraud, accident, mistake, or
excusable negligence.

Failing both in making their motion under oath and in attaching an affidavit of merits, the Spouses Manuels motion to lift order of default must be deemed pro-forma. It is not
even worthy of consideration.

Certainly, there is jurisprudence to the effect that an affidavit of merit is not necessary "where a motion to lift an order of default is grounded on the very root of the proceedings
[such as] where the court has not acquired jurisdiction over the defendants."36 Similarly, there is jurisprudence stating that "when a motion to lift an order ofdefault contains the
reasons for the failure to answer as well as the facts constituting the prospective defense of the defendant and it is sworn to by said defendant, neither a formal verification nor a
separate affidavit of merit is necessary."37

However, in this case, the Spouses Manuel failed not only in attaching an affidavit of merit but alsoin making their motion under oath. They are, therefore, left without any
alternative on which to rest. Their motion is utterly ineffectual.

Apart from their failure to make their motion to lift order of default under oath and to attach to it an affidavit of merit, the Court of Appeals also noted that the Spouses Manuel set
their motion to lift order of default for hearing on the same date that they filed it(i.e., September 13, 2010). Thus, they also violated Rule 15, Section 4 of the 1997 Rules of Civil
Procedure,38 which requires that service of a motion upon an adverse party must be made in such a manner that ensures receipt by the latter "at least three (3) days before the
date of hearing. . . ."

We do not lose sight of the admonitions that have been made in jurisprudence that, as a rule, courts should be liberal in setting aside orders of default and that default
judgments are frowned upon.39 Indeed, apart from a motion to lift order of default,other remedies are available to a defaulted defendant evenafter judgment has been rendered.
Thus, if judgment had already been rendered but has not yet become final and executory, an appeal asserting that the judgment was contrary to the law or to the evidence,40 or
a motion for new trial under Rule 37, may be filed.41 In the case of the latter, the same affidavits as are required in a motion to lift order of default must be attached. 42 If judgment
has become final and executory, a defaulted defendant may file a petition for relief from judgment under Rule 38. 43 Still, should the defaulted defendant fail tofile a petition for
relief, a petition for annulment ofjudgment on the ground of lack of jurisdiction or extrinsic fraud remains available. 44
However, jurisprudence, too, has qualified the intent that animates this liberality. As this court stated in Acance v. Court of Appeals: 45
1wphi1

The issuance of the orders of default should be the exception rather than the rule, to be allowed only in clear cases of obstinate refusal by the defendant to comply with the
orders of the trial court.46 (Emphasis supplied)

Moreover, this liberality must be tempered with a recognition that, in the first place, it is a defendant who is at fault in failing to timely file an answer.

Rule 9, Section 3(b) gives an exclusive list of only four (4) grounds that allow for relief from orders of default. Moreover, these grounds extrinsic fraud, accident, mistake, and
excusable negligence relate to factors that are extraneous to a defendant, that is, grounds that show that a defendant was prevented, by reasons beyond his or her influence,
from timely filing an answer.

The recognition that it is the defendant who is at fault and must suffer the consequences of his or her own failure is analogous to the dismissal of an action due to the fault of a
plaintiff, as provided by Rule 17, Section 3 of the 1997 Rules of Civil Procedure. Rule 17, Section 3 reads:

SEC. 3. Dismissal due to fault of plaintiff. If for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence in chief on the complaint, or to
prosecute his action for an unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the defendant
or upon the court's own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal shall have the
effect of an adjudication upon the merits, unless otherwise declared by the court.

Rule 17, Section 3 is qualified by the phrase "for no justifiable cause." Thus, in cases covered by Rule 17, Section 3, should the failure to comply with court processes be the
result of the plaintiffs own fault, it is but logical that a plaintiff must suffer the consequences of his own heedlessness. Rule 9, Section 3 on default applies the same logic
to a culpable defendant. In this case, the Spouses Manuel only have themselves to blame in not properly receiving the summons and copyof the complaint served on them. It
has been shown that their claim that service of summons was made on persons other than them deserves no credence. Quite the contrary, it is quite apparent that Sheriff
Joselito Sales notonly explained the contents of the summons and the complaint but actually told them that they must file their answer in fifteen (15) days. It was petitioner
Sandra Manuel who refused to sign and receive the summons and the complaint. This is evidently an act of obstinate refusal to submit to and to comply with court processes.
Thus, the Spouses Manuel are not deserving of any leniency.

WHEREFORE, the petition for review on certiorari is DENIED. The June 28, 2012 decision and the December 19, 2012 resolution of the Court of Appeals in CA-G.R. SP No.
119270 are AFFIRMED.

SO ORDERED

A.M. No. P-14-3246 October 15, 2014


[Formerly A.M. OCA I.P.I. No. 11-3580-P]

ATTY. RICO PAOLO R. QUICHO, representing Bank of Commerce, Complainant,


vs.
BIENVENIDO S. REYES, JR., Sheriff IV, Branch 98, Regional Trial Court, Quezon City, Respondent.

DECISION

MENDOZA, J.:

For consideration is the Report, 1 dated August 29, 2013, of the Office of the Court Administrator (OCA) on the complaint of Atty. Rico Paolo R. Quicho (Atty. Quicho),
representing the Bank of Commerce (BOC), charging respondent Bienvenido S. Reyes, Jr. (Reyes), Sheriff IV, Branch 98. Regional Trial Court, Quezon City, with abuse of
authority and gross ignorance of the law relative to Civil Case No. Q-89-3580, entitled "Radio Philippines Network. inc. v. Traders Royal Bank."

The Facts

The present case stemmed from the Alias Writ of Execution issued on March 9, 20 I 0 by Branch 98 of the Regional Trial Court of Quezon City (RTC) in Civil Case No. Q-89-
3580, the validity of which was then pending determination in the Court of Appeals (CA), docketed as CA-G.R. No. 91285. Pending its resolution, Atty. Quicho sought the relief
of Reyes as Sheriff of RTC, whom he claimed exceeded his authority in the enforcement of the Alias Writ of Execution on December 9, 2010 at the main office of BOC and on
December 17, 2010 in another BOC branch in Lipa City, Batangas.

In his sworn Letter-Complaint, dated December 27, 2010,2 Atty. Quicho alleged that the procedure observed by Reyes in implementing the alias writ violated the 2002 Revised
Manual for Clerks of Court (Manual). He cited the Manual which provides that "[i]f the judgment obligor cannot pay all or part of the obligation in cash, certified bank check or
other mode of payment acceptable to the judgment obligee, the officer shall levy upon the properties of the judgment obligor of every kind and nature whatsoever which may be
disposed of for value and not otherwise exempt from execution giving the latter the option to immediately choose which property or part thereof may be levied upon, sufficient to
satisfy the judgment."

He asserted that as the holder of the assets and properties of Traders Royal Bank (TRB), which was the judgment obligor in Civil Case No. Q-89- 3580 and whose assets were
the subject of the alias writ, BOC was given the option to choose which property to be surrendered to satisfy the judgment. It was only when BOC was unable to exercise the
option that Reyes was allowed to levy on other properties. He added that BOC was forced to surrender under protest a real estate property situated in Barangay Manggahan,
Paranaque City, to satisfy the judgment and preserve its other properties from being wrongfully levied by Reyes. He argued that Reyes did not give BOC a chance to exercise
that option. Instead of accepting the said property, Reyes blow-torched the locked grill door of BOCs cash vault in Lipa City and forcibly took the money deposits of its clients as
well as its computers. Atty. Quicho further claimed that Reyes sowed terror by bringing with him agents of the National Bureau of Investigation (NBI), who were in full-battle gear
and carrying high-powered firearms, with members of the Philippine National Police (PNP); and that Reyes ignored the pleas of the BOC officers who asked him to spare the
computers as taking them would cripple the banks operations. Atty. Quicho concluded that these illegal acts of Reyes warranted his relief as sheriff of the RTC.

In his Comment,3 dated February 4, 2011, Reyes denied the charges against him. According to him, he did not violate any law when he refused to accept BOCs offer of a
property located in Paranaque City to satisfy the judgment debt. He contended that under the law, the judgment obligor was mandated to pay all or part of the obligation in cash,
certified bank check or other mode of payment acceptable to the judgment obligee and the law was silent on a real estate property being offered as a form of payment. He also
argued that BOC had refused to pay the judgment award despite the fact that the CA, in its Decision, dated December 8, 2009, had already affirmed the validity of the writ of
execution issued by Judge Evelyn Corpus-Cabochan (Judge Cabochan) in Civil Case No. Q-89-3580. Further, the said civil case was filed in 1989 and was decided in favor of
the plaintiffs in 1995, which decision was affirmed by the Court in 2002 and became final in 2003.

Reyes claimed that before he enforced the alias writ, he sent notices of garnishment to seventeen (17) banks, but only three (3) positively responded. These three banks,
however, defied the court order to release the cash money and shares of stock they held in custodia legis. As garnishment was futile, levy on the BOC assets was resorted to.

Reyes insisted that he did not abuse his authority when he implemented the writ. He was constrained to seek the aid of the NBI as the PNP refused to provide police assistance.
He claimed that the NBI agents were not in full battle gear, and that the PNP members, who earlier declined to give assistance, were only posted outside the bank to maintain
peace and order. He used acetylene torch to gain access to the banks main vault as he was left with no other option but to use reasonable force to get the cash inside,
otherwise, he would be accused of being remiss in the performance of his duties. He only levied the computers and monitors, and left the two (2) servers in order not to affect
the banking operations.

Reyes argued that there was no basis to order his relief or suspension as Sheriff as he merely performed his ministerial duty to implement the alias writ of execution.

In his Reply,4 dated February 24, 2011, Atty. Quicho reiterated that Reyes was guilty of ignorance of the law when he refused the real estate property offered by BOC to satisfy
the judgment debt.

Atty. Quicho refuted Reyes argument that BOC was not entitled to exercise the option to choose the properties to be levied. On the contrary, he explained that under Section 9,
Rule 39 of the Rules of Court, it was clear that if the judgment obligor could not pay the judgment debt in cash, certified bank check or other mode of payment acceptable to the
judgment oblige, he still had the option to choose which of his properties he could offer to satisfy the obligation. Citing Equitable PCI Bank, Inc. v. Bellones,5 Atty. Quicho stated
that it was the judgment obligor, not Reyes, who could exercise the option. Reyes could only garnish or levy if BOC did not exercise the option.

Atty. Quicho believed that Reyes abused his authority when he arbitrarily levied on the banks computers which were essential to the banking operations of BOC, and exceeded
his authority when, without just or legal ground, he levied on the cash and certain personal properties of BOC. He asserted that Reyesconsortium with the NBI Regional
Director, whose agents carried high-powered firearms to intimidate and sow fear upon BOC employees and clients, and the use of acetylene torch on vault railings despite
BOCs exercise of its option offering its real property for the satisfaction of the money judgment, were uncalled for. Such acts of Reyes, according to Atty. Quicho, disregarded
the rules on execution of judgment justifying his relief and dismissal as Branch Sheriff.

In his Rejoinder,6 dated March 10, 2011, Reyes countered that BOC had already waived its option to choose properties to be levied upon because its offer to pay its liabilities by
cashiers check and real property came only on December 11 and December 17, 2010, respectively, or eight (8) months after he had served the demand to pay the judgment
award on April 7, 2010. He denied having disrupted the operations of the BOC when he levied the computers as he did not take the computer servers with him.

Reyes argued that the Equitable PCI Bank (EPCIB) case relied upon by BOC was not applicable because, unlike the present case, the decision in the former case was
executed with "deliberate swiftness," and that EPCIB, after being served with the demand to pay, immediately exercised its option to choose which of its properties would be
levied for the satisfaction of the money judgment.

On August 29, 2013, the OCA submitted its report for the Courts consideration.

OCA Report and Recommendation

The OCA found sufficient grounds to hold Reyes administratively liable for his overzealousness in implementing the alias writ of execution.

The OCA opined that when BOC offered its real estate properties in Paranaque to answer for the judgment debt, a legal issue arose as to whether the offer was acceptable
under the law. Thus, according to OCA, Reyes should have brought the matter to the attention of the Court, instead of resolving it himself. It quoted the ruling in the case of
Stilgrove v. Clerk of Court Eriberto Sabas and Sheriff Ernesto Simpliciano, Municipal Trial Court, 4th Judicial Region, Puerto Princesa City,7 which held, in part, that "the sheriffs
duty to execute a judgment is ministerial. He need not look outside the plain meaning of the writ of execution. And when a sheriff is faced with an ambiguous execution order,
prudence and reasonableness dictate that he seek clarification from a judge."

Anent the incident where Reyes blow-torched the cash vault and took away the banks computers, claiming that he was left with no other choice but to use "reasonable force"
because BOC had repeatedly refused to settle its debts, the OCA explained that if Reyes really had difficulty dealing with the BOC, he should have informed the court through
the periodic reports contemplated under Rule 39 of the Rules of Court. It noted from the records, however, that Reyes acted on his own when he decided to resort to such
drastic measures although he reported to the court the items he took from the bank and no evidence was shown that he acted in cahoots with the plaintiffs counsel.

The OCA concluded that Reyes clearly exceeded his authority when he resolved on his own the legal issue that arose in the course of his implementation of the writ and
pursued his own course of action without referring the matter to the issuing court. It, thus, found Reyes liable for abuse of authority and recommended the imposition of the
penalty of fine in the amount of _5,000.00. It cited, as basis for his liability the recent case of Pineda v. Torres, Sheriff III, Branch 2, Municipal Trial Court in Cities, Angeles
City8 where the Court imposed a fine of _5,000.00 after finding respondent sheriff guilty of grave abuse of authority for implementing a writ outside his area of jurisdiction.

On the basis of these findings, the OCA came up with the following recommendation. Thus:

It is respectfully recommended for the consideration of the Honorable Court that:

1. the instant complaint be RE-DOCKETED as a regular administrative matter against Bienvenido S. Reyes, Jr., Sheriff IV, Branch 98, Regional Trial Court,
Quezon City;

2. respondent Sheriff Reyes be found GUILTY of Grave Abuse of Authority relative to his implementation of the Alias Writ of Execution issued in Civil Case No. Q-
89-3580 and, accordingly, be FINED in the amount of Five Thousand Pesos (P5,000.00), payable within thirty (30) days from receipt of the Courts resolution; and

3. respondent Sheriff Reyes be STERNLY WARNED that a repetition of the same or similar offense shall be dealt with more severely by the Court.9

The Courts Ruling


The Court adopts the findings and recommendation of the OCA.

Time and again, the Court has declared that the highest standard of professionalism in the performance of judicial tasks is demanded from every court personnel. The Court
expects every court personnel to perform his/her duties promptly, with great care and diligence, having in mind the important role he/she plays in the administration of justice.10

Reyes, in his Comment, had admitted that he refused to accept the real estate property offered by the BOC to settle the judgment award because he believed that it was not
allowed under the law and also because it was offered late.

Section 9, Rule 39 of the Rules of Court provides for the procedure as to how execution of judgments for money is enforced. It reads:

SEC. 9. Execution of judgments for money, how enforced.

(a) Immediate payment on demand.- The officer shall enforce an execution of a judgment for money by demanding from the judgment obligor the immediate payment of the full
amount stated in the writ of execution and all lawful fees. The judgment obligor shall pay in cash, certified bank check payable to the judgment obligee, or any other form of
payment acceptable to the latter, the amount of the judgment debt under proper receipt directly to the judgment obligee or his authorized representative if present at the time of
payment.

xxx

(b) Satisfaction by levy. If the judgment obligor cannot pay all or part of the obligation in cash, certified bank check or other mode of payment acceptable to the judgment
obligee, the officer shall levy upon the properties of the judgment obligor of every kind and nature whatsoever which may be disposed of for value and not otherwise exempt
from execution giving the latter the option to immediately choose which property or part thereof may be levied upon, sufficient to satisfy the judgment. If the judgment obligor
does not exercise the option, the officer shall first levy on the personal properties, if any, and then on the real properties if the personal properties are insufficient to answer for
the judgment.

xxx

(c) Garnishment of debts and credits. The officer may levy on debts due the judgment obligor and other credits, including bank deposits, financial interests, royalties,
commissions and other personal property not capable of manual delivery in the possession or control of third parties. Levy shall be made by serving notice upon the person
owing such debts or having in his possession or control such credits to which the judgment obligor is entitled. The garnishment shall cover only such amount as will satisfy the
judgment and all lawful fees. (Emphasis supplied)

Under this rule, the duties of a sheriff are: (1) to first make a demand from the obligor for the immediate payment of the full amount stated in the writ of execution and of all lawful
fees; (2) to receive payment in the form of cash, certified bank check payable to the obligee, or any other form of payment acceptable to the latter; (3) to levy upon the properties
of the obligor, not exempt from execution, if the latter cannot pay all or part of the obligation; (4) give the obligor the opportunity to exercise the option to choose which property
may be levied upon; (5) in case the option is not exercised, to first levy on the personal properties of the obligor, including the garnishment of debts due the obligor and other
credits, i.e., bank deposits, financial interests, royalties, commissions and other personal properties not capable of manual delivery or in the possession or control of third
parties; and (6) to levy on real properties if the personal properties are insufficient to answer for the judgment. 11

From the aforecited provisions, it is clear that the sheriff shall demand from the judgment obligor the immediate payment in cash, certified bank check or any other mode of
payment acceptable to the judgment obligee. If the judgment obligor cannot pay by these methods immediately or at once, he can exercise his option to choose which of his
property can be levied upon. If he does not exercise this option immediately or when he is absent or cannot be located, he waives such right, and the sheriff can now first levy
his personal properties, if any, and then the real properties if the personal properties are insufficient to answer for the judgment. 12 In this case, BOC exercised its option,
although belatedly, by offering a parcel of land located in Paranaque City. The Court notes that a second petition for certiorari questioning the subject writ of execution was filed
by BOC with the CA on November 8, 2010.13 The said petition was dismissed in the CA Resolution promulgated on November 26, 2010. On December 9, 2010, BOC filed its
motion for reconsideration. Pending resolution of the motion for reconsideration or on December 17, 2010, the notice of levy was served with BOC at its Lipa City Branch. BOC
offered under protest its real property in Paranaque City to settle the judgment sum. The motion for reconsideration was, however, denied by the CA on February 9, 2011.14

Yet, Reyes ignored BOCs option to surrender the said property. He insisted and pursued to levy on cash and other personal properties of the BOC despite the said offer. Such
1wphi1

act indeed constituted a clear violation of the Rules.

Even on the assumption that BOC waived its right to exercise the option by belatedly offering its real estate property as satisfaction for its obligation, still, it would not exonerate
Reyes from liability.

Considering that BOCs offer was not exercised immediately as strictly required by the prescribed procedure under the Rules, Reyes was confronted with a crucial issue that
should have been threshed out. The nature of his function as sheriff being ministerial, he had no discretion or authority to decide the legal question involved. As aptly ruled by
the OCA, Reyes was duty-bound to seek clarification from the judge who issued the writ to determine whether the offer was acceptable under the circumstances. Instead of
consulting Judge Cabochan who was in the best position to resolve the matter, Reyes acted on his own and rejected the offer outright.

As an officer of the court, he should have known the proper action to take when questions relating to the writ require clarification.15 Regrettably, he failed in this regard.

Reyes claim that he did not act arbitrarily in serving the writ believing that his act was correct and in accordance with law cannot be a valid defense. It is of no moment whether
he executed the writ in good faith because he is chargeable with the knowledge on what is the proper action to observe in case there are questions in the writ which need to be
clarified and to which he is bound to comply.16

Reyes also admitted having blow-torched the cash vault and taken the cash as well as the computers of BOCs Lipa City branch, but the Court rejects his explanation that he
was constrained to use such force to get the cash inside the vault, for him not to be accused of being remiss in his duty.

Clearly, there was no legitimate reason for him to resort to a drastic act of using acetylene torch on the iron grills in order to have access to the banks main vault. He was even
escorted by the Regional Director of the NBI with his agents carrying high-powered firearms which served no apparent purpose but to cause fear and terror among the bank
employees and the clients. Indubitably, such use of force and influence in the enforcement of the writ was totally unnecessary.

Moreover, Reyes act of taking the banks computers cannot be justified. As held in Equitable PCI Bank v. Bellones,17 the sheriff can not arbitrarily levy on property essential to
the work or business of the judgment obligor. He should have heeded the repeated pleas of BOCs officers to spare the computers so as not to hamper its banking operations.
It is observed, however, that Reyes act of rejecting BOCs offer cannot be considered as one brought about by his ignorance of the law, but is apparently due to his
overzealousness in implementing the alias writ of execution. The Court, thus, agrees with the OCA that Reyes actuation only amounted to grave abuse of authority.

Grave abuse of authority is defined as a misdemeanor committed by a public officer, who under color of his office, wrongfully inflicts upon any person any bodily harm,
imprisonment or other injury; it is an act of cruelty, severity, or excessive use of authority. 18

Evidently, the liability of Reyes was proven by substantial evidence, which is that amount of relevant evidence that a reasonable mind might accept as adequate to support a
conclusion, such being the quantum of proof required in administrative cases.19

Reyes should be reminded that by the very nature of his duties, a sheriff performs a very sensitive function in the dispensation of justice. He is duty-bound to know the basic
rules relative to the implementation of writs of execution, and should, at all times show a high degree of professionalism in the performance of his duties. As an agent of the law,
he is therefore called upon to discharge his duties with due care and utmost diligence. He cannot afford to err in serving court writs and processes and in implementing court
orders lest he undermines the integrity of his office and the efficient administration of justice. 20

Sheriffs play an important part in the administration of justice. Being in the grassroots of our judicial machinery they are indispensably in close contact with litigants, hence, their
conduct should be geared towards maintaining the prestige and integrity of the court, for the image of a court or justice is necessarily mirrored in the conduct, official or
otherwise, of the men and women who work thereat, from the judge to the least and lowest of its personnel.21

For the above reasons, the Court affirms the OCA's finding of grave abuse of authority on the part of Reyes. Under the prevailing circumstances, the Court also finds OCA's
recommendation for the imposition of fine in the amount of PS,000.00 in order.

WHEREFORE, finding Bienvenido S. Reyes, Jr., Sherill IV. Regional Trial Court, Branch 98, Quezon City, GUILTY OF GRAVE ABUSE OF AUTHORITY, the Court hereby
ORDERS him to pay 0 FINE in the amount of FIVE THOUSAND PESOS (P5,000.00), with a stern warning that a repetition of similar acts shall be dealt with more severely.

SO ORDERED.

G.R. No.198878 October 15, 2014

RESIDENTS OF LOWER ATAB & TEACHERS' VILLAGE, STO. TOMAS PROPER BARANGAY, BAGUIO CITY, represented by BEATRICE T. PULAS, CRISTINA A. LAPP
AO. MICHAEL MADIGUID, FLORENCIO MABUDYANG and FERNANDO DOSALIN, Petitioners,
vs.
STA. MONICA INDUSTRIAL & DEVELOPMENT CORPORATION, Respondent.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari 1 seeks to set aside: 1) the August 5, 2011 Decision 2 of the Court of Appeals (CA) in CA-G.R. CV No. 84561 which affirmed the December
6, 2004 Decision3 of the Regional Trial Court of Baguio City (Baguio RTC), Branch 6 in Civil Case No. 4946-R; and 2) the CA October 3, 2011 Resolution 4denying herein
petitioners' Motion for Reconsider.5

Factual Antecedents

In May 2001, petitioners residents of Lower Atab & Teachers Village, Sto. Tomas Proper Barangay, Baguio City filed a civil case for quieting of title with damages against
respondent Sta. Monica Industrial and DevelopmentCorporation. The case was docketed as Civil Case No. 4946-R and assigned to Branch 59 of the Baguio RTC.6 The
Complaint7 in said case essentially alleged that petitioners are successors and transferees-in-interest of Torres, the supposed owner of an unregistered parcel of land in Baguio
City (the subject property, consisting of 177,778 square meters) which Torres possessed and declared for tax purposes in 1918; that they are in possession of the subject
property in the concept of owner, declared their respective lots and homes for tax purposes, and paid the real estate taxes thereon; that in May 2000, respondent began to erect
a fence on the subject property, claiming that it is the owner of a large portion thereof8 by virtue of Transfer Certificate of Title No. T-631849 (TCT No. T-63184); that said TCT
No. T-63184 is null and void, as it was derived from Original Certificate of Title No. O-281 (OCT No. O-281), which was declared void pursuant to Presidential Decree No.
127110 (PD 1271) and in the decided case of Republic v. Marcos; 11 and that TCT No. T-63184 is a cloud upon their title and interests and should therefore be cancelled.
Petitioners thus prayed that respondents TCT No. T-63184 be surrendered and cancelled; that actual, moral and exemplary damages, attorneys fees, legal expenses, and
costs be awarded in their favor; and finally, that injunctive relief be issued against respondent to prevent it from selling the subject property.

In its Answer with Special Affirmative Defenses and Counterclaim, 12 respondent claimed that petitioners have no cause of action; that TCT No. T- 63184 is a valid and subsisting
title; that the case for quieting of title constitutes a collateral attack upon TCT No. T-63184; and that petitioners have no title to the subject property and are mere illegal
occupants thereof. Thus, it prayed for the dismissal of Civil Case No. 4946-R and an award of exemplary damages, attorneys fees, litigation expenses, and costs in its favor.

In their Pre-Trial Brief13 and Memorandum,14 petitioners acknowledged that while they declared their respective lots for tax purposes, they applied for the purchase of the same
through Townsite Sales applications with the Department of Environment and Natural Resources (DENR).

Ruling of the Regional Trial Court

After trial, the Baguio RTC issued a Decision15 dated December 6, 2004, the dispositive portion of which reads:

WHEREFORE, Judgment is hereby rendered in favor of defendant Sta. Monica Industrial and Development Corporation and against the plaintiffs, as follows:

1. Dismissing the Complaint for Quieting of Title and Damages with Prayer for a Writ of Preliminary Injunction of plaintiffs;
2. Dismissing likewise the counterclaim for Damages and attorneys fees of defendant corporation since it has not been shown that the plaintiffs acted in bad faith
in filing the Complaint. Without pronouncement as to costs.

SO ORDERED.16

The trial court held that Civil Case No. 4946-R constitutes a collateral attack upon respondents TCT No. T-63184, which became indefeasible after one year from the entry of
the decree of registration thereof. It held that if it is claimed that respondents title is void, then a direct proceeding should have been filed by the State to annul it and to secure
reversion of the land; petitioners have no standing to do so through a quieting of title case. The trial court added that TCT No. T-63184 is a subsisting title; its validity was
confirmed through the annotation therein by the Baguio City Register of Deeds Entry No. 184804-21-15917 that TCT No. T-27096, from which TCT No. T-63184 was derived,
was validated by the PD 1271 Committee in a May 9, 1989 Resolution; that petitioners could not present any title to the subject property upon which to base their case for
quieting of title, and have failed to show during trial that they have a cause of action against respondent.

Petitioners filed a Motion for Reconsideration, 18 but the trial court denied the same in a January 17, 2004 Resolution. 19

Ruling of the Court of Appeals

In an appeal to the CA which was docketed as CA-G.R. CV No. 84561, petitioners insisted that they have a cause of action against respondent for quieting of title and damages;
that Civil Case No. 4946-R is not a collateral attack upon respondents title; that Civil Case No. 4946-R is not a case for reversion and annulment of title which could only be filed
by the State; and that the trial court erred in finding that respondents title was validated in accordance with law.

On August 5, 2011, the CA issued the assailed Decision affirming the trial court, thus:

In this case, plaintiffs-appellants20 are without any title to be cleared of or to be quieted nor can they be regarded as having equitable title over the subject property. Ballantines
Law Dictionary defines an equitable title as follows:

"A title derived through a valid contract or relation, and based on recognized equitable principles; the right in the party, to whom it belongs, to have the legal title transferred to
him (15 Cyc. 1097; 16 Id. 90). In order that a plaintiff may draw to himself an equitable title, he must show that the one from whom he derives his right had himself a right to
transfer. x x x"

xxxx

In the instant case, plaintiffs-appellants cannot find refuge in the tax declarations and receipts under their names considering that the same are not incontrovertible evidence of
ownership.

Moreover, plaintiffs-appellants act of questioning the validity of the title of the defendant-appellee21 constitutes a collateral attack and under Section 48 of P.D. 1529, "a
certificate of title shall not be subject to collateral attack. x x x"

xxxx

Meantime, it is meet to point out that P.D. 127[1] invoked by plaintiffsappellants themselves, specifically provides under Section 6 (paragraph 2) thereof that "the Solicitor
General shall institute such actions or suits as may be necessary to recover possession of lands covered by all void titles not validated under this Decree." Hence, the Office of
the Solicitor General, being mandated by law, must be the proper party to institute actions to recover lands covered by void titles under the said decree x x x.

xxxx

As regards the validation of TCT No. T-63184 x x x, no error was committed by the Court a quo in ruling that the same is in accordance with law. It is important to note that the
validation of the subject TCT was never disputed by the Register of Deeds or any other government agency. Moreover, there is no showing that the TCT of the defendant-
appellee and the OCT wherein it was derived were declared null and void by virtue of Pres. Decree No. 1271. While the TCT of the defendant-appellee was issued under L.R.C.
Case No. 1, Record No. 211, it was validated in accordance with law in Entry No. 184804-21-159 annotated at the dorsal side of the subject title.

xxxx

WHEREFORE, premises considered, the Decision dated December 6, 2004 of the Regional Trial Court, Branch 6, Baguio City is AFFIRMED in toto.

SO ORDERED.22

Petitioners moved for reconsideration, but in its October 3, 2011 Resolution, the CA stood its ground. Hence, the instant Petition.

Issues

Petitioners raise the following issues in this Petition:

1. The Trial Court and the Court of Appeals erred in finding that the Petitioners x x x have no cause of action.

2. The Trial Court and the Court of Appeals erred in finding that the action is a collateral attack on the Torrens Title of respondent Corporation.

3. The Trial Court and the Court of Appeals erred in finding that the present action is to annul the title of respondent Corporation due to fraud, [thus] it should be
the Solicitor General who should file the case for reversion.
4. The Trial Court and the Court of Appeals erred in finding that the validation of TCT No. T-63184 registered in the name of respondent Corporation was in
accordance with law.23

Petitioners Arguments

In their Petition and Reply,24 petitioners seek a reversal of the assailed CA dispositions and the nullification of respondents TCT No. T-63184 so that said title shall not "hinder
the approval of the Townsite Sales Application of the [p]etitioners by the [DENR]-Cordillera Administrative Region and stop the harassment being done by the Corporation on
the [p]etitioners x x x."25 They argue that they have equitable title over the subject property, having possessed the same for many years and obtained the rights of their
predecessor Torres; that Civil Case No. 4946-R is not a collateral attack upon TCT No. T-63184, as said title is null and void by virtue of PD 1271 and the ruling in Republic v.
Marcos; that there is no need to file a reversion case since TCT No. T-63184 has been effectively declared void, and respondent is not in possession of the subject property;
and finally, that Entry No. 184804-21-159 cannot have the effect of validating TCT No. T-63184, because PD 1271 itself states that only certificates of title issued on or before
July 31, 1973 are considered valid.26 Since OCT No. O-281 the predecessor title of TCT No. T-63184 was issued only on January 28, 1977, it is thus null and void, and all
other titles subsequently issued thereafter, including TCT No. T-63184, are invalid as well.

Respondents Arguments

On the other hand, respondents Comment27 simply reiterates the pronouncement of the CA. Consequently, it prays for the denial of the instant Petition.

Our Ruling

The Court denies the Petition.

For an action to quiet title to prosper, two indispensable requisites must be present, namely: "(1) the plaintiff or complainant has a legal or an equitable title to or interest in the
real property subject of the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative
despite its prima facie appearance of validity or legal efficacy." 28

"Legal title denotes registered ownership, while equitable title means beneficial ownership." 29

Beneficial ownership has been defined as ownership recognized by law and capable of being enforced in the courts at the suit of the beneficial owner. Blacks Law Dictionary
indicates that the term is used in two senses: first, to indicate the interest of a beneficiary in trust property (also called "equitable ownership"); and second, to refer to the power
of a corporate shareholder to buy or sell the shares, though the shareholder is not registered in the corporations books as the owner. Usually, beneficial ownership is
distinguished from naked ownership, which is the enjoyment of all the benefits and privileges of ownership, as against possession of the bare title to property. 30

Petitioners do not have legal or equitable title to the subject property. Evidently, there are no certificates of title in their respective names. And by their own admission in their
pleadings, specifically in their pre-trial brief and memorandum before the trial court, they acknowledged that they applied for the purchase of the property from the government,
through townsite sales applications coursed through the DENR. In their Petition before this Court, they particularly prayed that TCT No. T-63184 be nullified in order that the
said title would not hinder the approval of their townsite sales applications pending with the DENR.Thus, petitioners admitted that they are not the owners of the subject
property; the same constitutes state or government land which they would like to acquire by purchase. It would have been different if they were directly claiming the property as
their own as a result of acquisitive prescription, which would then give them the requisite equitable title. By stating that they were in the process of applying to purchase the
subject property from the government, they admitted that they had no such equitable title, at the very least, which should allow them to prosecute a case for quieting of title.

In short, petitioners recognize that legal and equitable title to the subject property lies in the State. Thus, as to them, quieting of title is not an available remedy.
1w phi 1

Lands within the Baguio Townsite Reservation are public land.31 Laws and decrees such as PD 1271 were passed recognizing ownership acquired by individuals over portions
of the Baguio Townsite Reservation, but evidently, those who do not fall within the coverage of said laws and decrees the petitioners included cannot claim ownership over
property falling within the said reservation. This explains why they have pending applications to purchase the portions of the subject property which they occupy; they have no
legal or equitable claim to the same, unless ownership by acquisitive prescription is specifically authorized with respect to such lands, in which case they may prove their
adverse possession, if so. As far as this case is concerned, the extent of petitioners possession has not been sufficiently shown, and by their application to purchase the subject
property, it appears that they are not claiming the same through acquisitive prescription.

The trial and appellate courts are correct in dismissing Civil Case No. 4946-R; however, they failed to appreciate petitioners admission of lack of equitable title which denies
them the standing to institute a case for quieting of title. Nevertheless, they are not precluded from filing another case a direct proceeding to question respondents TCT No. T-
63184; after all, it appears that their townsite sales applications are still pending and have not been summarily dismissed by the government which could indicate that the
subject property is still available for distribution to qualified beneficiaries. If TCT No. T-63184 is indeed null and void, then such proceeding would only be proper to nullify the
same. It is just that a quieting of title case is not an option for petitioners, because in order to maintain such action, it is primarily required that the plaintiff must have legal or
equitable title to the subject property a condition which they could not satisfy.

With the conclusion arrived at, the Court finds no need to resolve the other issues raised.

WHEREFORE, the Petition is DENIED. The assailed August 5, 2011 Decision and October 3, 2011 Resolution of the Court of Appeals in CA-G.R. CV No. 84561 are
AFFIRMED.

SO ORDERED.

G.R. No. 183272 October 15, 2014

SUN LIFE OF CANADA (PHILIPPINES), INC., Petitioner,


vs.
SANDRA TAN KIT and The Estate of the Deceased NORBERTO TAN KIT, respondents.

DECISION
DEL CASTILLO, J.:

The Court of Appeals' (CA) imposition of 12o/o interest on the P13,080.93 premium refund is the only matter in question in this case.

This Petition for Review on Certiorari 1 assails the October 17, 2007 Decision2 of CA in CA-GR. CV No. 86923, which, among others, imposed a 12% per annum rate of interest
reckoned from the time of death of the insured until fully paid, on the premium to be reimbursed by petitioner Sun Life of Canada (Philippines), Inc. (petitioner) to respondents
Sandra Tan Kit (respondent Tan Kit) and the Estate of the Deceased Norberto Tan Kit (respondent estate). Likewise assailed in this Petition is the CA's June 12, 2008
Resolution3 denying petitioner's Motion for Reconsideration of the said Decision.

Factual Antecedents

Respondent Tan Kit is the widow and designated beneficiary of Norberto Tan Kit (Norberto), whose application for a life insurance policy,4 with face value of P300,000.00, was
granted by petitioner on October 28, 1999. On February 19, 2001, or within the two-year contestability period,5 Norberto died of disseminated gastric carcinoma. 6 Consequently,
respondent Tan Kit filed a claim under the subject policy.

In a Letter7 dated September 3, 2001, petitioner denied respondent Tan Kits claim on account of Norbertos failure to fully and faithfully disclose in his insurance application
certain material and relevant information about his health and smoking history. Specifically, Norberto answered "No" to the question inquiring whether he had smoked cigarettes
or cigars within the last 12 months prior to filling out said application.8 However, the medical report of Dr. Anna Chua (Dr. Chua), one of the several physicians that Norberto
consulted for his illness, reveals that he was a smoker and had only stopped smoking in August 1999. According to petitioner, its underwriters would not have approved
Norbertos application for life insurance had they been given the correct information. Believing that the policy is null and void, petitioner opined that its liability is limited to the
refund of all the premiums paid. Accordingly, it enclosed in the said letter a check for P13,080.93 representing the premium refund.

In a letter9 dated September 13, 2001, respondent Tan Kit refused to accept the check and insisted on the payment of the insurance proceeds.

On October 4, 2002, petitioner filed a Complaint10 for Rescission of Insurance Contract before the Regional Trial Court (RTC) of Makati City.

Ruling of the Regional Trial Court

In its November 30, 2005 Decision,11 the RTC noted that petitioners physician, Dr. Charity Salvador (Dr. Salvador), conducted medical examination on Norberto. Moreover,
petitioners agent, Irma Joy E. Javelosa (Javelosa), answered "NO" to the question "Are you aware of anything about the life to be insureds lifestyle, hazardous sports, habits,
medical history, or any risk factor that would have an adverse effect on insurability?" in her Agents Report. Javelosa also already knew Norberto two years prior to the approval
of the latters application for insurance. The RTC concluded that petitioner, through the above-mentioned circumstances, had already cleared Norberto of any misrepresentation
that he may have committed. The RTC also opined that the affidavit of Dr. Chua, presented as part of petitioners evidence and which confirmed the fact that the insured was a
smoker and only stopped smoking a year ago [1999], is hearsay since Dr. Chua did not testify in court. Further, since Norberto had a subsisting insurance policy with petitioner
during his application for insurance subject of this case, it was incumbent upon petitioner to ascertain the health condition of Norberto considering the additional burden that it
was assuming. Lastly, petitioner did not comply with the requirements for rescission of insurance contract as held in Philamcare Health Systems, Inc. v. Court of
Appeals.12 Thus, the dispositive portion of the RTC Decision:

WHEREFORE, in view of the foregoing considerations, this court hereby finds in favor of the [respondents and] against the [petitioner], hence it hereby orders the [petitioner] to
pay the [respondent], Sandra Tan Kit, the sum of Philippine Pesos: THREE HUNDRED THOUSAND (P300,000.00), representing the face value of the insurance policy with
interest at six percent (6%) per annum from October 4, 2002 until fully paid.

Cost de oficio.

SO ORDERED.13

Petitioner moved for reconsideration,14 but was denied in an Order15 dated February 15, 2006.

Hence, petitioner appealed to the CA.

Ruling of the Court of Appeals

On appeal, the CA reversed and set aside the RTCs ruling in its Decision16 dated October 17, 2007.

From the records, the CA found that prior to his death, Norberto had consulted two physicians, Dr. Chua on August 19, 2000, and Dr. John Ledesma (Dr. Ledesma) on
December 28, 2000, to whom he confided that he had stopped smoking only in 1999. At the time therefore that he applied for insurance policy on October 28, 1999, there is no
truth to his claim that he did not smoke cigarettes within 12 months prior to the said application. The CA thus held that Norberto is guilty of concealment which misled petitioner
in forming its estimates of the risks of the insurance policy. This gave petitioner the right to rescind the insurance contract which it properly exercised in this case.

In addition, the CA held that the content of Norbertos medical records are deemed admitted by respondents since they failed to deny the same despite having received from
petitioner a Request for Admission pursuant to Rule 26 of the Rules of Court. 17 And since an admission is in the nature of evidence the legal effects of which form part of the
records, the CA discredited the RTCs ruling that the subject medical records and the affidavits executed by Norbertos physicians attesting to the truth of the same were
hearsay.

The dispositive portion of the CA Decision reads:

WHEREFORE, the foregoing considered, the instant appeal is hereby GRANTED and the appealed Decision REVERSED and SET ASIDE, and in lieu thereof, a judgment is
hereby rendered GRANTING the complaint a quo.

Accordingly, [petitioner] is ordered to reimburse [respondents] the sum of P13,080.93 representing the [premium] paid by the insured with interest at the rate of 12% per annum
from the time of the death of the insured until fully paid.
SO ORDERED.18

The parties filed their separate motions for reconsideration. 19 While respondents questioned the factual and legal bases of the CA Decision, petitioner, on the other hand,
assailed the imposition of interest on the premium ordered refunded to respondents.

However, the appellate court denied the motions in its June 12, 2008 Resolution, 20 viz:

WHEREFORE, the foregoing considered, the separate motions for reconsideration filed by the [petitioner] and the [respondents] are hereby DENIED.

SO ORDERED.21

Only petitioner appealed to this Court through the present Petition for Review on Certiorari.

Issue

The sole issue in this case is whether petitioner is liable to pay interest on the premium to be refunded to respondents.

The Parties Arguments

Petitioner argues that no interest should have been imposed on the premium to be refunded because the CA Decision does not provide any legal or factual basis therefor; that
petitioner directly and timely tendered to respondents an amount representing the premium refund but they rejected it since they opted to pursue their claim for the proceeds of
the insurance policy; that respondents should bear the consequence of their unsound decision of rejecting the refund tendered to them; and, that petitioner is not guilty of delay
or of invalid or unjust rescission as to make it liable for interest. Hence, following the ruling in Tio Khe Chio v. Court of Appeals, 22 no interest can be assessed against petitioner.

Respondents, on the other hand, contend that the reimbursement of premium is clearly a money obligation or one that arises from forbearance of money, hence, the imposition
of 12% interest per annum is just, proper and supported by jurisprudence. While they admit that they refused the tender of payment of the premium refund, they aver that they
only did so because they did not want to abandon their claim for the proceeds of the insurance policy. In any case, what petitioner should have done under the circumstances
was to consign the amount of payment in court during the pendency of the case.

Our Ruling

Tio Khe Chio is not applicable in this case.

Petitioner avers that Tio Khe Chio, albeit pertaining to marine insurance, is instructive on the issue of payment of interest. There, the Court pointed to Sections 243 and 244 of
1wphi1

the Insurance Code which explicitly provide for payment of interest when there is unjustified refusal or withholding of payment of the claim by the insurer, 23 and to Article
220924 of the New Civil Code which likewise provides for payment of interest when the debtor is in delay.

The Court finds, however, that Tio Khe Chio is not applicable here as it deals with payment of interest on the insurance proceeds in which the claim therefor was either
unreasonably denied or withheld or the insurer incurred delay in the payment thereof. In this case, what is involved is an order for petitioner to refund to respondents the
insurance premium paid by Norberto as a consequence of the rescission of the insurance contract on account of the latters concealment of material information in his insurance
application. Moreover, petitioner did not unreasonably deny or withhold the insurance proceeds as it was satisfactorily established that Norberto was guilty of concealment.

Nature of interest imposed by the CA

There are two kinds of interest monetary and compensatory.

"Monetary interest refers to the compensation set by the parties for the use or forbearance of money." 25 No such interest shall be due unless it has been expressly stipulated in
writing.26 "On the other hand, compensatory interest refers to the penalty or indemnity for damages imposed by law or by the courts."27 The interest mentioned in Articles 2209
and 221228of the Civil Code applies to compensatory interest. 29

Clearly and contrary to respondents assertion, the interest imposed by the CA is not monetary interest because aside from the fact that there is no use or forbearance of money
involved in this case, the subject interest was not one which was agreed upon by the parties in writing. This being the case and judging from the tenor of the CA, to wit:

Accordingly, [petitioner] is ordered to reimburse [respondents] the sum of P13,080.93 representing the [premium] paid by the insured with interest at the rate of 12% per annum
from time of death of the insured until fully paid. 30

there can be no other conclusion than that the interest imposed by the appellate court is in the nature of compensatory interest.

The CA incorrectly imposed compensatory interest on the premium refund reckoned from the time of death of the insured until fully paid

As a form of damages, compensatory interest is due only if the obligor is proven to have failed to comply with his obligation.31

In this case, it is undisputed that simultaneous to its giving of notice to respondents that it was rescinding the policy due to concealment, petitioner tendered the refund of
premium by attaching to the said notice a check representing the amount of refund. However, respondents refused to accept the same since they were seeking for the release
of the proceeds of the policy. Because of this discord, petitioner filed for judicial rescission of the contract. Petitioner, after receiving an adverse judgment from the RTC,
appealed to the CA. And as may be recalled, the appellate court found Norberto guilty of concealment and thus upheld the rescission of the insurance contract and
consequently decreed the obligation of petitioner to return to respondents the premium paid by Norberto. Moreover, we find that petitioner did not incur delay or unjustifiably
deny the claim.
Based on the foregoing, we find that petitioner properly complied with its obligation under the law and contract. Hence, it should not be made liable to pay compensatory
interest.

Considering the prevailing circumstances of the case, we hereby direct petitioner to reimburse the premium paid within 15 days from date of finality of this Decision. If petitioner
fails to pay within the said period, then the amount shall be deemed equivalent to a forbearance of credit. 32 In such a case, the rate of interest shall be 6% per annum.33

WHEREFORE, the assailed October 17, 2007 Decision of the Court of Appeals in CA-G.R. CV No. 86923 is MODIFIED in that petitioner Sun Life of Canada (Philippines), Inc.
is ordered to reimburse to respondents Sandra Tan Kit and the Estate of the Deceased Norberto Tan Kit the sum of ~13,080.93 representing the premium paid by the insured
within fifteen (15) days from date of finality of this Decision. If the amount is not reimbursed within said period, the same shall earn interest of 6% per annum until fully paid.

SO ORDERED.

G.R. No. 185745 October 15, 2014

SPOUSES DOMINADOR MARCOS and GLORIA MARCOS, Petitioners,


vs.
HEIRS OF ISIDRO BANGI and GENOVEVA DICCION, represented by NOLITO SABIANO, Respondents.

DECISION

REYES, J.:

Before this Court is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Court seeking to annul and set aside the Decision2 dated September 30, 2008 and
Resolution3 dated :Oecember 4, 2008 issued by the Court of Appeals (CA) in CA-G.R. CV Nb. 89508, which affirmed the Decision 4 dated March 26, 2007 of the Regidnal Trial
Court (RTC) of Urdaneta City, Pangasinan, Branch 47, in Civil Case No. U-6603.

On June 26, 1998, the heirs of Isidro Bangi (Isidro) and Genoveva Diccion (Genoveva) (respondents), filed with the RTC a complaint,5 docketed as Civil Case No. U-6603, for
annulment of documents, cancellation of transfer certificates of titles, restoration of original certificate of title and recovery of ownership plus damages against spouses
Dominador Marcos (Dominador) and Gloria Marcos (Gloria) (petitioners). Likewise impleaded in the said complaint are spouses Jose Dilla (Jose) and Pacita Dilla (Pacita),
Ceasaria Alap (Ceasaria), and spouses Emilio Sumajit (Emilio) and Zenaida Sumajit (Zenaida).

In their complaint, the respondents averred that on November 5, 1943, their parents, Isidro and Genoveva, bought the one-third portion of a 2,138-square meter parcel of land
situated in San Manuel, Pangasinan and covered by Original Certificate of Title (OCT) No. 22361 (subject property) from Eusebio Bangi (Eusebio), as evidenced by a Deed of
Absolute Sale executed by the latter. OCT No. 22361 was registered in the name of Alipio Bangi (Alipio), Eusebios father. After the sale, the respondents claimed that Isidro
and Genoveva took possession of the subject property until they passed away. The respondents then took possession of the same.

Further, the respondents alleged that sometime in 1998, they learned that the title to the subject property, including the portion sold to Isidro and Genoveva, was transferred to
herein petitioner Dominador, Primo Alap (Primo), Ceasarias husband, Jose, and Emilio through a Deed of Absolute Sale dated August 10, 1995, supposedly executed by Alipio
with the consent of his wife Ramona Diccion (Ramona). The respondents claimed that the said deed of absolute sale is a forgery since Alipio died in 1918 while Ramona passed
away on June 13, 1957.

Consequently, by virtue of the alleged Deed of Absolute Sale dated August 10, 1995, OCT No. 22361 was cancelled and Transfer Certificate of Title (TCT) No. 47829 was
issued to Dominador, Primo, Jose and Emilio. On November 21, 1995, Primo, Jose and Emilio executed another deed of absolute sale over the same property in favor of herein
petitioners. TCT No. T-47829 was then cancelled and TCT No. T-48446 was issued in the names of herein petitioners. The respondents claimed that the Deed of Absolute Sale
dated November 21, 1995 was likewise a forgery since Primo could not have signed the same on the said date since he died on January 29, 1972.

Thus, the respondents sought the nullification of the Deeds of Absolute Sale dated August 10, 1995 and November 21, 1995 and, accordingly, the cancellation of TCT Nos. T-
47829 and T-48446. The respondents likewise sought the restoration of OCT No. 22361.

In their answer, herein petitioners, together with the spouses Jose and Pacita, Ceasaria and the spouses Emilio and Zenaida, denied the allegations of the respondents,
claiming that they are the owners of the subject property, including the one-third portion thereof allegedly sold by Eusebio to the respondents parents Isidro and Genoveva.
They averred that the subject property was originally owned by Alipio; that after his death, his children Eusebio, Espedita and Jose Bangi inherited the same. That on May 8,
1995, Espedita and Jose Bangi executed a deed of extrajudicial partition with quitclaim wherein they waived their rights over the subject property in favor of Eusebios children
Ceasaria, Zenaida, Pacita and herein petitioner Gloria.

They further claimed that their father Eusebio could not have validly sold the one-third portion of the subject property to Isidro and Genoveva. They explained that Eusebio
supposedly acquired the parcel of land covered by OCT No. 22361 by virtue of a donation propter nuptias from his father Alipio when he married Ildefonsa Compay (Ildefonsa)
in 1928. They claimed that the donation propter nuptias in favor of Eusebio was fictitious since Alipio died in 1918 and that, in any case, the said donation, even if not fictitious,
is void since the same was not registered.

They also averred that they had no participation in the execution of the Deed of Absolute Sale dated August 10, 1995, claiming that it was a certain Dominador Quero, the one
hired by herein petitioner Gloria to facilitate the transfer of OCT No. 22361 in their names, who caused the execution of the same.

Subsequently, the respondents and Ceasaria and the spouses Emilio and Zenaida entered into a compromise agreement wherein Ceasaria and spouses Emilio and Zenaida
acknowledged the right of the respondents over the subject property and admitted the existence of the sale of the one-third portion thereof by Eusebio in favor of the spouses
Isidro and Genoveva. Thus, the case as to Ceasaria and the spouses Emilio and Zenaida was dismissed.

On March 26, 2007, the RTC rendered a Decision6 the decretal portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1) Declaring the Deed of Absolute Sale dated August 10, 1995 x x x and Deed of Absolute Sale dated November 21, 1995 x x x as null and void;
2) Declaring Transfer Certificate of Title No. T-47829 issued in the names of PRIMO ALAP married to [Ceasaria] Alap, JOSE DILLA married to Pacita Dilla, DOMINADOR
MARCOS married to Gloria Marcos, and EMILIO SUMAJIT married to Zenaida Sumajit x x x and Transfer Certificate of Title No. T-48446 in the name of Spouses DOMINADOR
MARCOS and GLORIA BANGI x x x as null and void.

Consequently, the Registrar of Deeds of Tayug, Pangasinan is hereby directed to cancel the same and all the other copies thereof and that Original Certificate of Title No.
22361 in the name of Alipio Bangi married to Romana Diccion be revived and/or reinstated in the registration book.

3) Declaring the sale by Eusebio Bangi of his share to the land in question in favor of x x x Isidro Bangi and Genoveva Diccion as valid and effective.

4) For the defendant to pay the costs.

SO ORDERED.7

The RTC opined that the Deed of Absolute Sale dated August 10, 1995 is a nullity; that the same was falsified considering that Alipio could not have executed the same in the
said date since he died in 1918. Consequently, all the documents and certificates of title issued as a consequence of the Deed of Absolute Sale dated August 10, 1995 are void.
Thus:

In fact, defendant Gloria Marcos admitted in Court that the Deed of Absolute Sale was falsified, only it was allegedly falsified by a certain Dominador Quero. This
notwithstanding, the fact still remains, that the Deed of Absolute Sale, which was the basis for the cancellation of the Original Certificate of Title No. 22361, was falsified.

xxxx

The Deed of Absolute Sale dated August 10, 1995, being a forged document, is without question, null and void. This being the case, the land titles issued by reason thereof are
also void because a forged deed conveys no right.8

The RTC upheld the Deed of Absolute Sale dated November 5, 1943 over the one-third portion of the subject property executed by Eusebio in favor of the spouses Isidro and
Genoveva. The RTC pointed out that the petitioners merely claimed that the signature of Eusebio appearing on the Deed of Absolute Sale dated November 5, 1943 was falsified
without presenting any other evidence to prove such claim.

As regards the claim that Eusebio could not have validly sold the one-third portion of the subject property since his acquisition of the same in 1928 through a donation propter
nuptias by Alipio was fictitious since the latter died in 1918, the RTC found that the petitioners likewise failed to present any evidence to prove such allegation. Considering that
the Deed of Absolute Sale dated November 5, 1943 is a notarized document, the RTC ruled that the same must be sustained in full force and effect since the petitioners failed
to present strong, complete and conclusive proof of its falsity or nullity.

Unperturbed, the petitioners appealed from the RTC Decision dated March 26, 2007 to the CA, maintaining that the sale between Eusebio and the spouses Isidro and
Genoveva was invalid.9 They explained that the Deed of Absolute Sale dated November 5, 1943 stated that Eusebio acquired the subject property from his parents Alipio and
Ramona through a donation propter nuptias; that Eusebio got married to Ildefonsa in 1928 and Alipio Bangi could not have executed a donation then because he died in 1918.

Ruling of the CA

On September 30, 2008, the CA rendered the herein assailed Decision,10 which affirmed the Decision dated March 26, 2007 of the RTC. The CA upheld the petitioners claim
that the supposed donation propter nuptias of the subject property in favor of Eusebio from his parents was not sufficiently established. The CA pointed out that the purported
Deed of Donation was not recorded in the Register of Deeds; that there is no showing that the said donation was made in a public instrument as required by the Spanish Civil
Code, the law in effect at the time of the supposed donation in favor of Eusebio.

Nevertheless, the CA found that Eusebio, at the time he executed the Deed of Absolute Sale in favor of the spouses Isidro and Genoveva, already owned the subject property,
having inherited the same from his father Alipio who died in 1918. Further, the CA did not give credence to the Deed of Extrajudicial Partition with Quitclaim purportedly
executed by Espedita and Jose Bangi since it appears to have been caused to be executed by the petitioners as a mere afterthought and only for the purpose of thwarting the
respondents valid claim.11

The petitioners sought a reconsideration12 of the Decision dated September 30, 2008, but it was denied by the CA in its Resolution 13 dated December 4, 2008.

Hence, the instant petition.

Issue

The issue set forth by the petitioners for this Courts resolution is whether the CA committed reversible error in affirming the RTC Decision dated March 26, 2007, which upheld
the Deed of Absolute Sale dated November 5, 1943 over the one-third portion of the subject property executed by Eusebio in favor of the spouses Isidro and Genoveva.

Ruling of the Court

The petition is denied.

The appellate court upheld the validity of the sale of the one-third portion of the subject property to the spouses Isidro and Genoveva mainly on the finding that, after the death
of Alipio in 1918, an oral partition was had between Eusebio and his siblings Espedita and Jose Bangi; that at the time of the said sale on November 5, 1943 to the spouses
Isidro and Genoveva, Eusebio was already the owner of the subject property.

On the other hand, the petitioners maintain that the said sale of the one-third portion of the subject property was not valid. They insinuate that the subject property, at the time of
the sale, was still owned in common by the heirs of Alipio; that Eusebio could not validly sell the one-third portion of the subject property as there was no partition yet among the
heirs of Alipio.
Ultimately, the resolution of the instant controversy is hinged upon the question of whether the heirs of Alipio had already effected a partition of his estate prior to the sale of the
one-third portion of the subject property to the spouses Isidro and Genoveva on November 5, 1943. However, the foregoing question is a factual question, which this Court may
not pass upon in a petition for review under Rule 45 of the Rules of Court.

Section 1, Rule 45 of the Rules of Court categorically states that the petition filed shall raise only questions of law, which must be distinctly set forth. A question of law arises
when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a
question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue
must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one
of fact.14

The determination of whether the heirs of Alipio had already partitioned his estate prior to the sale of the one-third portion of the subject property on November 5, 1943
necessarily requires an examination of the probative value of the evidence presented by the parties; the doubt arises on the truth or falsity of the allegations of the parties.

Even granting arguendo that the petition falls under any of the exceptions justifying a factual review of the findings of the appellate court, the petition cannot prosper. The Court
is of the opinion, and so holds, that the CA did not commit any reversible error in ruling that an oral partition of the estate of Alipio had already been effected by his heirs prior to
the sale by Eusebio of the one-third portion of the subject property to the spouses Isidro and Genoveva on November 5, 1943.

The petitioners claim that the CA erred in ruling that there was already a partition of the estate of Alipio prior to the sale of the one-third portion of the subject property by
Eusebio to the spouses Isidro and Genoveva. They insist that "there was no deed of extrajudicial partition by and among Eusebio, Jose and Espedita [Bangi], wherein Eusebio
[was assigned the subject property]."15 Accordingly, the petitioners aver, the sale in favor of the spouses Isidro and Genoveva on November 5, 1943 is a nullity and,
consequently, the respondents do not have any right over the subject property.

The Court does not agree.

Partition is the separation, division and assignment of a thing held in common among those to whom it may belong. 16 Every act which is intended to put an end to indivision
among co-heirs and legatees or devisees is deemed to be a partition. 17 Partition may be inferred from circumstances sufficiently strong to support the presumption. Thus, after a
long possession in severalty, a deed of partition may be presumed. 18 Thus, in Hernandez v. Andal,19 the Court emphasized that:

On general principle, independent and in spite of the statute of frauds, courts of equity have enforced oral partition when it has been completely or partly performed.

Regardless of whether a parol partition or agreement to partition is valid and enforceable at law, equity will in proper cases, where the parol partition has actually been
consummated by the taking of possession in severalty and the exercise of ownership by the parties of the respective portions set off to each, recognize and enforce such parol
partition and the rights of the parties thereunder. Thus, it has been held or stated in a number of cases involving an oral partition under which the parties went into possession,
exercised acts of ownership, or otherwise partly performed the partition agreement, that equity will confirm such partition and in a proper case decree title in accordance with the
possession in severalty.

xxxx

A parol partition may also be sustained on the ground that the parties thereto have acquiesced in and ratified the partition by taking possession in severalty, exercising acts of
ownership with respect thereto, or otherwise recognizing the existence of the partition. 20

The evidence presented by the parties indubitably show that, after the death of Alipio, his heirs Eusebio, Espedita and Jose Bangi had orally partitioned his estate, including
the subject property, which was assigned to Eusebio. On this score, the CAs disquisition is instructive, viz:

Even so, We are of the considered view that in 1943, when Eusebio Bangi executed the deed of sale in favor of Isidro Bangi, Eusebio already had acquired interest in the
property covered by OCT No. 22361 through succession from his father, Alipio Bangi, who died in 1918.

Further, it appears that such interest extends to the entire property embraced by OCT No. 22361. This much can be gleaned from the testimony of appellant Gloria Marcos
herself, who said that her father Eusebio owned the entire lot because his siblings Espedita and Jose already had their share from other properties.

That there was no written memorandum of the partition among Alipio Bangis heirs cannot detract from appellees cause. It has been ruled that oral partition is effective when
1wphi1

the parties have consummated it by the taking of possession in severalty and the exercise of ownership of the respective portions set off to each. Here, it is obvious that
Eusebio took possession of his share and exercised ownership over it. Thus, the preponderant evidence points to the validity of the sale executed between Eusebio Bangi and
Isidro Bangi on November 5, 1943 over the one-third portion of the property covered by OCT No. 22361. x x x. 21 (Emphasis ours)

Further, the CA did not err in not giving credence to the Deed of Extrajudicial Partition with Quitclaim supposedly executed by Espedita and Jose Bangi on May 8, 1995. The
Court notes that Alipio died in 1918 while his wife Ramona died on June 13, 1957. It is quite suspect that Espedita and Jose Bangi executed the said Deed of Extrajudicial
Partition, wherein they waived their rights over the subject property in favor of Eusebios children, only on May 8, 1995. That only several months thereafter, the subject property
was supposedly sold to the spouses of Eusebios children and, later, to herein petitioners spouses Dominador and Gloria.

The foregoing circumstances cast doubt as to the petitioners insinuation that the estate of Alipio had only been partitioned in 1995, when Espedita and Jose Bangi executed the
said Deed of Extrajudicial Partition with Quitclaim. As pointed out by the CA, the execution of the Deed of Extrajudicial Partition with Quitclaim is but a ruse to defeat the rights of
the respondents over the one-third portion of the subject property. If at all, the Deed of Extrajudicial Partition with Quitclaim executed by Espedita and Jose Bangi merely
confirms the partition of Alipios estate that was earlier had, albeit orally, in which the subject property was assigned to Eusebio.

Accordingly, considering that Eusebio already owned the subject property at the time he sold the one-third portion thereof to the spouses Isidro and Genoveva on November 5,
1943, having been assigned the same pursuant to the oral partition of the estate of Alipio effected by his heirs, the lower courts correctly nullified the Deeds of Absolute Sale
dated August 10, 1995 and November 21, 1995, as well as TCT No. T-47829 and T-48446.

WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED. The Decision dated September 30, 2008 and Resolution dated December 4, 2008 of the
Court of Appeals in CA-G.R. CV No. 89508 are hereby AFFIRMED.

SO ORDERED.
G.R. No. 187240 October 15, 2014

CARLOS A. LORIA, Petitioner,


vs.
LUDOLFO P. MUOZ, JR. Respondent.

DECISION

LEONEN, J.:

No person should unjustly enrich himself or herself at the expense of another.

This is a petition for review on certiorari1 to set aside the Court of Appeals' decision 2 and resolution3 in CA-G.R. CV No. 81882. The Court of Appeals ordered petitioner Carlos A.
Loria to pay respondent Ludolfo P. Muoz, Jr.P2,000,000.00 in actual damages with 12% interest per year from the filing of the complaint until full payment. 4

The facts of this case are as follows:

Ludolfo P. Muoz, Jr. (Muoz) filed a complaint for sum of money and damages with an application for issuance of a writ of preliminary attachment against Carlos A. Loria
(Loria) with the Regional Trial Court of Legazpi City. 5

In his complaint, Muoz alleged that he has been engaged in construction under the name, "Ludolfo P. Muoz, Jr. Construction." In August 2000, Loria visited Muoz in his
office in Doa Maria Subdivision in Daraga, Albay. He invited Muoz to advance P2,000,000.00 for a subcontract of a P50,000,000.00 river-dredging project in Guinobatan.6

Loria represented that he would makearrangements such that Elizaldy Co, owner of Sunwest Construction and Development Corporation, would turn out to be the lowest bidder
for the project. Elizaldy Co would payP8,000,000.00 to ensure the projects award to Sunwest. After the award to Sunwest, Sunwest would subcontract 20% or P10,000,000.00
worth of the project to Muoz.7

Since Muoz had known Loria for five years, Muoz accepted Lorias proposal.8

On October 2, 2000, Muoz requested Allied Bank to release P3,000,000.00 from his joint account withhis business partner, Christopher Co, to a certain Grace delos Santos
(delos Santos). Loria then obtained the money from delos Santos.9

Four days later, P1,800,000.00 of the P3,000,000.00 was returned to Muoz.10

On January 10, 2001, Loria collectedMuozs P800,000.00 balance. After deducting Lorias personal loans from Muoz, Muoz issued a check to Loria for P481,800.00. Loria
acknowledged receiving this amount from Muoz. 11

The project to dredge the Masarawag and San Francisco Rivers in Guinobatan was subjected to public bidding. The project was awarded to the lowest bidder, Sunwest
Construction and Development Corporation.12

Sunwest allegedly finished dredging the Masarawag and San Francisco Rivers without subcontracting Muoz.13With the project allegedly finished, Muozdemanded Loria to
return his P2,000,000.00. Loria, however, did not return the money.14

Muoz first charged Loria and Elizaldy Co with estafa. This criminal case was dismissed by the Municipal Trial Court of Daraga, Albay for lack of probable cause.15

Muoz then filed the complaint for sum of money. The case was raffled to Branch 6 and presidedby Judge Vladimir B. Brusola. 16

Loria answered Muozs complaint. He admitted receiving P481,800.00 from Muoz but argued that the complaint did not state a cause of action against him. According to
Loria, he followed up the projects approval with the Central Office of the Department of Public Works and Highways as the parties agreed upon. He was, therefore, entitled to
his representation expenses.17

Loria also argued that Muoz was guilty of forum shopping. Muoz first filed a criminal complaint for estafa against him and Elizaldy Co, which complaint the Municipal Trial
Court of Daraga, Albay dismissed. The subsequently filed complaint for sum of money, allegedly a complaint to recover the civil aspect of the estafa case, must, therefore, be
dismissed as argued by Loria.18

During pre-trial, the parties agreed to litigate the sole issue of whether Loria is liable to Muoz forP2,000,000.00.19

According to the trial court, Muoz established with preponderant evidence that Loria received P2,000,000.00 from Muoz for a subcontract of the river-dredging project. Since
no part of the project was subcontracted to Muoz, Loria must return the P2,000,000.00 he received, or he would be "unduly enriching himself at the expense of [Muoz]." 20

On the claim of forum shopping, the trial court ruled that Lorias obligation to return the 2,000,000.00 did not arise from criminal liability. Muoz may, therefore, file a civil action
to recover his P2,000,000.00.21

As to the prayer for issuance of a writ of preliminary attachment, the trial court denied the prayer for lack of sufficient basis. 22

Thus, in the decision23 dated January 30, 2004, the trial court ordered Loria to return the P2,000,000.00 toMuoz as actual damages with 12% interest from the filing of the
complaint until the amounts full payment. The trial court likewise ordered Loria to pay Muoz P100,000.00 in attorneys fees, P25,000.00 in litigation expenses, andP25,000.00
in exemplary damages with costs against Loria.24
Loria appealed to the Court of Appeals, arguing that Muoz failed to establish his receipt of the P2,000,000.00. Specifically, Muoz failed to establish that he
obtained P3,000,000.00from a certain Grace delos Santos. Loria also appealed the award of attorneys fees, litigation expenses, and exemplary damages for having no basis in
fact and in law.25

The Court of Appeals sustained the trial courts factual findings. In ruling that Loria received the net amount ofP2,000,000.00 from Muoz, the Court of Appeals referred to
Muozs testimony that he ordered Allied Bank to release P3,000,000.00 from his joint account with Christopher Co to a certain Grace delos Santos. 26 Loria then obtained the
money from delos Santos and confirmed with Muoz his receipt of the money. 27 This testimony, according to the appellate court, was supported by Exhibit "C," a check voucher
the trial court admitted inevidence. Loria signed this check voucher and acknowledged receiving P1,200,000.00 on October 2, 2000 andP800,000.00 on January 10, 2001, ora
total of P2,000,000.00.28

Considering that Muoz did not benefit from paying Loria P2,000,000.00, the appellate court ruled that Loria must return the money to Muoz under the principle of unjust
enrichment.29

The appellate court, however, ruled that Muoz failed to show his right to exemplary damages and attorneys fees. 30

Thus, in the decision31 dated October 23, 2008, the Court of Appeals affirmed the trial courts decision but deleted the award of exemplary damages and attorneys fees. 32 The
appellate court likewise denied Lorias motion for reconsideration in the resolution 33 dated March 12, 2009.

Loria filed a petition for review on certiorari 34 with this court, arguing that the principle of unjust enrichment does not apply in this case. As the trial and appellate courts found,
Muoz paid Loria P2,000,000.00 for a subcontract of a government project. The parties agreement, therefore, was void for being contrary to law, specifically, the Anti-Graft and
Corrupt Practices Act, the Revised Penal Code, and Section 6 of Presidential Decree No. 1594. The agreement was likewise contrary to the public policy of public or open
competitive bidding of government contracts. 35

Since the parties agreement was void, Loria argues that the parties were in pari delicto, and Muoz should not be allowed to recover the money he gave under the contract. 36

On the finding that he received a net amount of P2,000,000.00 from Muoz, Loria maintains that Muoz failed to prove his receipt of P3,000,000.00 through a certain Grace
delos Santos.37

In the resolution38 dated June 3, 2009, thiscourt ordered Muoz to comment on Lorias petition.

In his comment,39 Muoz argues that Lorias petition raises questions of fact and law that the trial and appellate courts have already passed upon and resolved in his favor. He
prays that this court deny Lorias petition for raising questions of fact.

Loria replied40 to the comment, arguing thathe raised only questions of law in his petition. 41 Even assuming that he raised questions of fact, Loria argues that this does not
warrant the automatic dismissal of his petition since the trial and appellate courts allegedly erred inruling for Muoz. 42

On October 8, 2010, the parties filed their joint motion to render judgment based on the compromise agreement. 43 In their compromise agreement,44 the parties declared that
thiscase "was a product of a mere misunderstanding."45 To amicably settle their dispute, the parties agreed to waive all their claims, rights, and interests against each other. 46

This court denied the joint motion for lack of merit in the resolution 47 dated December 15, 2010.

The issues for our resolution are the following:

I. Whether Loria initially obtained P3,000,000.00 from a certain Grace delos Santos

II. Whether Loria is liable for P2,000,000.00 to Muoz

We rule for Muoz and deny Lorias petition for review on certiorari.

Whether Loria initially received 3,000,000.00 is a question of fact not proper in a petition for review on certiorari

We first address Lorias contention that Muoz failed to prove his initial receipt of P3,000,000.00. This is a question of fact the trial and appellate courts have already resolved.
In a Rule 45 petition, we do not address questions of fact, questions which require us to ruleon "the truth or falsehood of alleged facts."48 Under Section 1, Rule 45 of the Rules
of Court, we only entertain questions of law questions as to the applicable law given a set of facts 49 in a petition for review on certiorari:

Section 1. Filing of petition with Supreme Court.

A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts
whenever authorized by law, may file withthe Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of lawwhich must be distinctly set
forth. (Emphasis supplied)50

We may review questions of fact in a Rule 45 petition:

. . . (1) when the findings are grounded entirely on speculations, surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) when
there is a grave abuse of discretion; (4) when the judgment is based on misappreciation of facts; (5) when the findings of fact are conflicting; (6) when in making its findings, the
same are contrary to the admissions of both appellant and appellee; (7) the findings are contrary to those of the trial court; (8) when the findings are conclusions without citation
of specific evidence on which they are based; (9) the facts set forth in the petition as well as in petitioners main and reply briefs are not disputed by respondent; and (10) the
findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record. 51 [Emphases omitted]
Loria failed to convince us why we should make an exception in this case.

During trial, Muoz testified thathe ordered Allied Bank to release P3,000,000.00 from his joint account withChristopher Co to a certain Grace delos Santos.52 Loria then
obtained the money from delos Santos and confirmed with Muoz his receipt of the amount. 53 P1,800,000.00 was subsequently returned to Muoz, leaving aP1,200,000.00
balance with Loria. This testimony was supported by Exhibit "C," the check voucher where Loria acknowledged receiving P1,200,000.00 from Muoz.54

We agree that these pieces ofevidence duly prove Lorias initial receipt of P3,000,000.00. We will not disturb this finding.

II

Loria must return Munozs P2,000,000.00 under the principle of unjust enrichment

Under Article 22 of the Civil Codeof the Philippines, "every person who through an act of performance by another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall return the same to him." There is unjust enrichment "when a person unjustly retains a benefit to the loss
of another, or when a person retains money orproperty of another against the fundamental principles of justice, equity and good conscience."55

The principle of unjust enrichment has two conditions. First, a person must have been benefited without a real or valid basis or justification. Second, the benefit was derived at
another persons expense or damage.56

In this case, Loria received P2,000,000.00 from Muoz for a subcontract of a government projectto dredge the Masarawag and San Francisco Rivers in Guinobatan, Albay.
However, contrary to the parties agreement, Muoz was not subcontracted for the project. Nevertheless, Loria retained the P2,000,000.00.

Thus, Loria was unjustly enriched. He retained Muozs money without valid basis or justification. Under Article 22 of the Civil Code of the Philippines, Loria must return
the P2,000,000.00 to Muoz.

Contrary to Lorias claim, Section 6 of the Presidential Decree No. 1594 does not prevent Muoz from recovering his money.

Under Section 6 of the Presidential Decree No. 1594,57 a contractor shall not subcontract a part or interestin a government infrastructure project without the approval of the
relevant department secretary:

Section 6. Assignment and Contract.The contractor shall not assign, transfer, pledge, subcontract ormake any other disposition of the contract or any part or interest therein
except with the approval of the Minister of Public Works, Transportation and Communications, the Minister of Public Highways, or the Minister of Energy, as the case may be.
Approval of the subcontract shall not relieve the main contractor from any liability or obligation under his contract with the Government nor shall it create any contractual relation
between the subcontractor and the Government.

A subcontract, therefore, is void only if not approved by the department secretary.

In this case, it is premature to rule on the legality of the parties agreement precisely becausethe subcontract did not push through. No actual agreement was proven in
evidence.The Secretary of Public Works and Highways could have approved the subcontract, which is allowed under Section 6 of the Presidential Decree No. 1594.

At any rate, even assuming that there was a subcontracting arrangement between Sunwest Construction and Development Corporation and Muoz, this court has allowed
recovery under a void subcontract as an exception to the in pari delicto doctrine.

In Gonzalo v. Tarnate, Jr.,58 the Department of Public Works and Highways (DPWH) awarded the contractto Dominador Gonzalo to improve the Sadsadan-Maba-ay section of
the Mountain Province Road. Gonzalo then subcontracted the supply of materials and labor to John Tarnate, Jr. without the approval of the Secretary of Public Works and
Highways. The parties agreed to a total subcontract fee of 12% of the projects contract price. 59

Tarnate, Jr. also rented equipment to Gonzalo. In a deed of assignment, the parties agreed to a retention fee of 10% of Gonzalos total collection from the Department of Public
Works and Highways, or 233,526.13, as rent for the equipment. They then submitted the deed of assignment to the Department for approval.60

Subsequently, Tarnate, Jr. learned that Gonzalo filed with the Department of Public Works and Highways an affidavit to unilaterally cancel the deed of assignment. Gonzalo also
collected the retention fee from the Department. 61

Tarnate, Jr. demanded payment for the rent of the equipment, but Gonzalo ignored his demand. He thenfiled a complaint for sum of money and damages with the Regional Trial
Court of Mountain Province to collect on the 10% retention fee. 62

In his defense, Gonzalo argued thatthe subcontract was void for being contrary to law, specifically, Section 6 of the Presidential Decree No. 1594. Since the deed of assignment
"was a mere product of the subcontract,"63 the deed of assignment was likewise void. With Tarnate, Jr. "fully aware of the illegality and ineffectuality of the deed of
assignment,"64 Gonzalo contended that Tarnate, Jr. could not collect on the retention fee under the principle of in pari delicto. 65

This court ruled that the subcontract was void for being contrary to law. Under Section 6 of the Presidential Decree No. 1594, a contractor shall not subcontract the
implementation of a government infrastructure project without the approval of the relevant department secretary. 66 Since Gonzalo subcontracted the project to Tarnate, Jr.
without the approvalof the Secretary of Public Works and Highways, the subcontract was void, including the deed of assignment, which "sprung from the subcontract." 67

Generally, parties to an illegal contract may not recover what they gave under the contract. 68 Under the doctrine of in pari delicto, "no action arises, in equity or at law, from
anillegal contract[.] No suit can be maintained for its specific performance, or to recover the property agreed to be sold or delivered, or the money agreed to be paid, or damages
for its violation[.]"69 Nevertheless, this court allowed Tarnate, Jr. to recover 10% of the retention fee. According to this court,"the application of the doctrine of in pari delictois not
always rigid."70 An exception to the doctrine is "when its application contravenes well-established public policy."71 In Gonzalo, this court ruled that "the prevention of unjust
enrichment is a recognized public policy of the State."72 It is, therefore, an exception to the application of the in pari delicto doctrine. This court explained:
. . . the application of the doctrine of in pari delicto is not always rigid. An accepted exception arises when its application contravenes wellestablished public policy. In this
1wphi1

jurisdiction, public policy has been defined as "that principle of the law which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the
public or against the public good."

Unjust enrichment exists, according to Hulst v. PR Builders, Inc., "when a person unjustly retains a benefit at the loss of another, or when a person retains money or property of
another against the fundamental principles of justice, equity and good conscience." The prevention of unjust enrichment is a recognized public policy of the State, for Article 22
of the Civil Code explicitly provides that "[e]veryperson who through an act of performance by another, or any other means, acquires or comes i nto possession of something at
the expense of the latter without just or legal ground, shall return the same to him." It is well to note that Article 22 "is part of the chapter of the Civil Code on Human Relations,
the provisions of which were formulated as basic principles to be observed for the rightful relationship between human beings and for the stability of the social order; designed to
indicate certain norms that spring from the fountain of good conscience;guides for human conduct that should run as golden threads through society to the end that law may
approach its supreme ideal which is the sway and dominance of justice."73 (Citations omitted)

Given that Tarnate, Jr. performed his obligations under the subcontract and the deed of assignment, this court ruled that he was entitled to the agreed fee. According to this
court, Gonzalo "would be unjustly enriched at the expense of Tarnate if the latter was tobe barred from recovering because of the rigid application of the doctrine of in pari
delicto."74

In this case, both the trial and appellate courts found that Loria received P2,000,000.00 from Muoz for a subcontract of the river-dredging project. Loria never denied that
hefailed to fulfill his agreement with Muoz. Throughout the cases proceedings, Loria failed to justify why he has the right to retain Muozs P2,000,000.00. As the Court of
Appeals ruled, "it was not shown that [Muoz] benefited from the delivery of the amount ofP2,000,000.00 to [Loria]."75

Loria, therefore, is retaining the P2,000,000.00 without just or legal ground. This cannot be done. Under Article 22 of the Civil Code of the Philippines, he must return
the P2,000,000.00 to Muoz.

This court notes the possible irregularities in these transactions. At the very least, there appears to have been an attempt to circumvent our procurement laws. If petitioner
indeed had the authority of Sunwest Construction and Development Corporation, it is strange that Loria could have guaranteed a bidding result. If he did not have any true
dealing with Sunwest Construction, then his is an elaborate scheme to cause financiers to lose their hard-earned money for nothing. WHEREFORE, the petition for review on
certiorari is DENIED. The Court of Appeals' decision and resolution in CA-GR. CV No. 81882 are AFFIRMED with MODIFICATION as to interest rate. Petitioner Carlos A. Loria
shall pay respondent Ludolfo P. Mufioi, Jr. P2,000,000.00 in actual damages, with interest of 12% interest per annum from the filing of the complaint until June 30, 2013, and 6%
interest per annum from July 1, 2013 until full payment. 76

Let a copy of this decision be SERVED on the Office of the Ombudsman and the Department of Justice for their appropriate actions.

SO ORDERED.

G.R. No. 204964 October 15, 2014

REMIGIO D. ESPIRITU AND NOEL AGUSTIN, Petitioners,


vs.
LUTGARDA TORRES DEL ROSARIO represented by SYLVIA R. ASPERILLA, Respondents.

DECISION

LEONEN, J.:

Lands classified as non-agricultural in zoning ordinances approved by the Housing and Land Use Regulatory Board or its predecessors prior to June 15, 1998 are outside the
coverage of the compulsory acquisition program of the Comprehensive Agrarian Reform Law. However, there has to be substantial evidence to prove that lands sought to be
exempted fall within the non-agricultural classification.

This is a petition for review on certiorari1 seeking to set aside the decision2 dated September 28, 2012 and resolution3 dated November 29, 2012 of the Court of Appeals. These
orders reinstated the order4 dated February 19, 2004 of then Secretary of Agrarian Reform Roberto M. Pagdanganan approving petitioners application for exemption.

The pertinent facts are as follows:

In 1978, the City Council of Angeles City, Pampanga, enacted Zoning Ordinance No. 13, Series of 1978, classifying areas in Barangay Margot and Barangay Sapang Bato,
Angeles City, as agricultural land.5

Pursuant to this ordinance, Lutgarda Torres del Rosario (del Rosario) allegedly requested the City Zoning Administrator to exempt from the zoning classification Lot Nos. 854
and 855 located in Barangay Margot and Barangay Sapang Bato, Angeles City. 6 The land is covered by Transfer Certificate of Title No. T-11809 withan area of 164.7605
hectares.7 The request was allegedly approved on March 7, 1980 by Engineer Roque L. Dungca, Angeles City Development Coordinator/Zoning Administrator, and the lots were
allegedly reclassified as non-agricultural or industrial lots.8

On June 10, 1988, the Comprehensive Agrarian Reform Law (Republic Act No. 6657) was enacted.

On October 10, 2000, del Rosario, through her representative Sylvia R. Asperilla (Asperilla), filed an application for exemption with the Department of Agrarian Reform, seeking
to exempt Lot Nos. 854 and 855 from the Comprehensive Agrarian Reform Program (CARP) coverage. 9

On February 19, 2004, then Secretary of Agrarian Reform Roberto M. Pagdanganan (Secretary Pagdanganan) issued an order granting the application for exemption. Citing
Department of Justice Opinion No. 44, Series of 1990, Secretary Pagdanganan stated that lands classified as non agricultural before the enactment of CARP are beyond its
coverage.10

On March 26, 2004, farmers in del Rosarios landholdings, led by Remigio Espiritu (Espiritu), filed a motion for reconsideration 11 of the order. They argued that under Zoning
Ordinance No. 13, Series of 1978, Housing and Land Use Regulatory Board Resolution No. 705, Series of 2001, and Angeles City Council Resolution No. 3300, Series of 2001,
the land holdings were classified as agricultural, not industrial. 12 They argued that as per certifications by the Housing and Land Use Regulatory Board dated June 1, 2001, May
28, 2001, and November 24, 2003, the landholdings were within the agricultural zone, and there was no zoning ordinance passed that reclassified the area into other land
uses.13

The motion was given due course by the Department of Agrarian Reform, this time headed by Secretary Nasser C. Pangandaman (Secretary Pangandaman). Hence, on June
15, 2006, then Secretary Pangandaman issued an order 14 granting the motion for reconsideration and revoking the earlier order of then Secretary of Agrarian Reform
Pagdanganan.

Del Rosario contended that this order was sent to her through Clarita Montgomery in Barangay Margot, Sapang Bato, Angeles City, and not at Asperillas address in Cubao,
Quezon City, which was her address on record. Del Rosario alleged that she only came to know of the order on January 26, 2007, when the Provincial Agrarian Reform Officer
of Pampanga handed her a copy of the order. 15 She then filed her motion for reconsideration of the order dated June 15, 2006. The motion was dated February 9, 2007. 16

Acting on del Rosarios motion for reconsideration, Secretary Pangandaman found that the certifications issued by the Housing and Land Use Regulatory Board classified the
landholdings as agricultural before June 15, 1988. 17Based on the ocular inspections conducted by the Center for Land Use Policy, Planning and Implementation (CLUPPI), the
land remained agricultural and was planted with sugar cane and corn. 18 Accordingly, Secretary Pangandaman denied del Rosarios motion in the order 19 dated March 3, 2008.

Del Rosario filed a notice of appeal20 before the Office of the President on March 27, 2008.

On May 7, 2009, the Office of the President, through then Deputy Executive Secretary for Legal Affairs Manuel B. Gaite (Deputy Executive Secretary Gaite), rendered the
decision21 dismissing the appeal for lack of merit.

Del Rosario filed a motion for extension of 10 days to file her motion for reconsideration. 22 Citing Administrative Order No. 18, Series of 1987, and Habaluyas Enterprises, Inc. v.
Japzon,23 the Office of the President, through then Deputy Executive Secretary Natividad G. Dizon, denied the motion in the order24 dated July 14, 2009.

Aggrieved, del Rosario filed a petition for review before the Court of Appeals arguing (1) that she was denied due process when the order of Secretary Pangandaman was
"erroneously sent to another address"25 and (2) that the decision of then Deputy Executive Secretary Gaite was void since he had been appointed to the Securities and
Exchange Commission two months prior to the rendering of the decision. 26

On September 28, 2012, the Court of Appeals rendered a decision granting the petition. The Court of Appeals stated that del Rosario was indeed prevented from participating
inthe proceedings that led to the issuance of Secretary Pangandamans order when the notices were sent to her other address on record.27 It also found that the decision issued
by then Deputy Executive Secretary Gaite was void since it violated Article VII, Section 13 of the Constitution.28 The dispositive portion of the decision states:

WHEREFORE, premises considered, the PETITION is GRANTED. The assailed Decision dated 07 May 2009, and the Order dated 15 June 2006 are hereby SET ASIDE.
Perforce, with the nullity of the said Decision and Order, the Pagdanganan Order granting exemption to petitioners land is REINSTATED.

SO ORDERED.29

Their motion for reconsideration having been denied, 30 petitioners, namely Remigio Espiritu and Noel Agustin, now come before this court via a petition for review on certiorari,
seeking to set aside the ruling of the Court of Appeals.

In particular, petitioners argue that respondent was not denied due process as she was able to actively participate in the proceedings before the Department of Agrarian Reform
and the Office of the President.31 They also argue that respondent was not able to present proof that Deputy Executive Secretary Gaite was not authorized tosign the decision
and, hence, his action is presumed to have been donein the regular performance of duty. 32

Respondent, on the other hand, argues that the Court of Appeals did not commit any reversible error in itsdecision. She argues that she was deprived of due process when
Secretary Pangandamans order was sent to the wrong address. She also argues that the Deputy Executive Secretary Gaites decision was void since he had already been
appointed to the Securities and Exchange Commission two months prior.33

The issue, therefore, before this court is whether the Court of Appeals correctly set aside the order of Secretary Pangandaman and the decision of Deputy Secretary Gaite and
reinstated the order of Secretary Pagdanganan.

This petition should be granted.

Respondent was not deprived of due process

The Court of Appeals, in finding for respondent, stated that:

Since she was not notified, [del Rosario] was not able to participate in the proceedings leading to the issuance of the Pangandaman Order. The absence of notice that resulted
in the inability of [del Rosario] to be heard indubitably confirms her claim of lackof due process. [Del Rosario] indeed was denied her day in the administrative proceedings
below. And considering that [del Rosario] was not accorded due process, the Pangandaman Order is void for lack ofjurisdiction. Hence, contrary to respondents submission, it
could not attain finality.34

The Court of Appeals, however, did not take into consideration that respondent was still able to file a motion for reconsideration of Secretary Pangandamans order, albeit
beyond the allowable period to file. In Department of Agrarian Reform Administrative Order No. 06, 35 Series of 2000:

RULE III
Commencement, Investigation and Resolution of Cases

....
SECTION 21. Motion for Reconsideration. In case any of the parties disagrees with the decision or resolution, the affected party may file a written motion for reconsideration
within fifteen (15) days from receipt of the order, furnishing a copy thereof tothe adverse party. The filing of the motion for reconsideration shall suspend the running of the
period to appeal.

Any party shall be allowed only one(1) motion for reconsideration. Thereafter, the RD or approving authority shall rule on the said motion within fifteen (15) days from receipt
thereof. In the event that the motion is denied, the adverse party has the right to perfect his appeal within the remainder of the period to appeal, reckoned from receipt of the
resolution of denial. If the decision is reversed on reconsideration, the aggrieved party shall have fifteen (15) days from receipt of the resolution of reversal within which to
perfect his appeal.(Emphasis supplied) Despite being filed late, Secretary Pangandaman still gave due course to the motion and resolved it on its merits. This is clear from his
order dated March 3, 2008, which reads:

During the 50th Special CLUPPI Committee-B Meeting, held on 18 December 2007, the Motion for Reconsideration filed by Sylvia Espirilla [sic] was deliberated upon and the
Committee recommended the DENIAL of the Motion for Reconsideration based on the following grounds:

The certifications issued by the HLURB shows that the subject properties were classified as agricultural before 15 June 1986 [sic]; and

Based on the ocular inspection conducted by the CLUPPI Inspection Team, it was found out that the area remained agricultural. In fact, it [is] still dominantly
planted with sugar cane and corn.36 (Emphasis supplied)

While it may be true that respondent was prevented from filing a timelymotion for reconsideration of Secretary Pangandamans order, it would be erroneous to conclude that she
had been completely denied her opportunity to be heard. In Department of Agrarian Reform v. Samson: 37

. . . . In administrative proceedings, a fair and reasonable opportunity to explain ones side suffices to meet the requirements of due process.In Casimiro v. Tandog, the Court
held:

The essence of procedural due process is embodied in the basic requirement of notice and a real opportunity to be heard. In administrative proceedings, such as in the case at
bar, procedural due process simply means the opportunity to explain ones sideor the opportunity to seek a reconsideration of the action or ruling complained of. "To be heard"
does not mean only verbal arguments in court; one may be heard also thru pleadings. Where opportunity to be heard, either through oral arguments or pleadings, is accorded,
there is no denial of procedural due process.

In administrative proceedings, procedural due process has been recognized toinclude the following: (1) the right to actual or constructive notice of the institution of proceedings
which may affect a respondents legal rights; (2) a real opportunity to be heard personally or with the assistance of counsel, to present witnesses and evidence in ones favor,
and to defend ones rights; (3) a tribunal vested with competent jurisdiction and so constituted as to afford a person charged administratively a reasonable guarantee of honesty
as well as impartiality; and (4) a finding by said tribunal which is supported by substantial evidence submitted for consideration during the hearing or contained in the records or
made known to the parties affected.38 (Emphasis supplied)

When respondent filed her motion for reconsideration assailing Secretary Pangandamans order, she was able to completely and exhaustively present her arguments. The
denial of her motion was on the basis of the merits of her arguments and any other evidence she was able to present. She was given a fair and reasonable opportunity to
present her side; hence, there was no deprivation of due process.

It was also erroneous to conclude that respondent was "denied her day in the administrative proceedings below." 39 Respondent was able to actively participate not only in the
proceedings before the Department of Agrarian Reform, but also on appeal to the Office of the President and the Court of Appeals.

Deputy Executive Secretary Gaites decision is presumed valid, effective, and binding

Article VII, Section 13 of the Constitution states:

Section 13. The President, Vice-President, the Members of the Cabinet, and their deputies orassistants shall not, unless otherwise provided in this Constitution, hold any other
office or employment during their tenure. They shall not, during said tenure, directly or indirectly, practice any other profession, participate in any business, or be financially
interested in any contract with, or in any franchise, or special privilege granted by the Government or any subdivision, agency, or instrumentality thereof, including government-
owned or controlled corporations or their subsidiaries. They shall strictly avoid conflict ofinterest in the conduct of their office.

. . . . (Emphasis supplied)

It is alleged that Gaite was appointed Commissioner to the Securities and Exchange Commission on March 16, 2009. 40 It is also alleged that he has already lost his authority as
Deputy Executive Secretary for Legal Affairs when he rendered the decision dated May 7, 2009 since he is constitutionally prohibited from holding two offices during his tenure.
This, however, is not conclusive since no evidence was presented as to when he accepted the appointment, took his oath of office, or assumed the position.

Assuming that Gaites appointment became effective on March 16, 2009, he can be considered a de factoofficer at the time he rendered the decision dated May 7, 2009.

In Funa v. Agra,41 a petition was filed against Alberto Agra for holding concurrent positions as the acting Secretary of Justice and as Solicitor General. This court, while ruling
that the appointment of Alberto Agra as acting Secretary of Justice violated Article VII, Section 13 of the Constitution, held that he was a de facto officer during his tenure in the
Department of Justice:

A de facto officer is one who derives his appointment from one having colorable authority to appoint, if the office is an appointive office, and whose appointment is valid on its
face. He may also be one who is in possession of an office, and is discharging its duties under color of authority, by which is meant authority derived from an appointment,
however irregular or informal, so that the incumbent is not a mere volunteer. Consequently, the acts of the de facto officer are just as valid for all purposes as those of a de jure
officer, in so far as the public or third persons who are interested therein are concerned.

In order to be clear, therefore, the Court holds that all official actions of Agra as a de facto Acting Secretary of Justice, assuming that was his later designation, were presumed
valid, binding and effective as if he was the officer legally appointed and qualified for the office. This clarification is necessary in order to protect the sanctity of the dealings by
the public with persons whose ostensible authority emanates from the State. Agras official actions covered by this clarification extend to but are not limited to the promulgation
of resolutions on petitions for review filed in the Department of Justice, and the issuance of department orders, memoranda and circulars relative to the prosecution of criminal
cases.42 (Emphasis supplied)
Assuming that Gaite was a de facto officer of the Office of the President after his appointment to the Securities and Exchange Commission, any decision he renders during this
time is presumed to be valid, binding, and effective.

With Gaite being a public officer, his acts also enjoy the presumption of regularity, thus:

The presumption of regularity of official acts may be rebutted by affirmative evidence of irregularity or failure to perform a duty. The presumption, however, prevails until it is
overcome by no less than clear and convincing evidence to the contrary. Thus, unless the presumption in [sic] rebutted, it becomes conclusive. Every reasonable intendment
will be madein support of the presumption and in case of doubt as to an officers act being lawful or unlawful, construction should be in favor of its lawfulness.43 (Emphasis
supplied)

Respondent has not presented evidence showing that the decision was rendered ultra vires, other than her allegation that Gaite had already been appointed to another office.
Unless there is clear and convincing evidence to the contrary, the decision dated May 7, 2009 is conclusively presumed to have been rendered in the regular course of
business.

Respondents landholdings were agricultural, not industrial

Prior to the enactment of Republic Act No. 6657, lands were classified into agricultural, residential, or industrial by law or by zoning ordinances enacted by local government
units. In Heirs of Luna v. Afable:44

It is undeniable that local governments have the power to reclassify agricultural into non-agricultural lands. Section 3 of RA No. 2264 (The Local Autonomy Act of 1959)
specifically empowers municipal and/or city councils to adopt zoning and subdivision ordinances or regulations in consultation with the National Planning Commission. By virtue
of a zoning ordinance, the local legislature may arrange, prescribe, define, and apportion the land within itspolitical jurisdiction into specific uses based not only on the present,
butalso on the future projection of needs. It may, therefore, be reasonably presumed that when city and municipal boards and councils approved an ordinance delineating an
area or district in their cities or municipalities as residential, commercial, or industrial zone pursuant to the power granted tothem under Section 3 of the Local Autonomy Act of
1959, they were, at the same time, reclassifying any agricultural lands within the zone for non-agricultural use; hence, ensuring the implementation of and compliance with their
zoning ordinances.45 (Emphasis supplied) Republic Act No. 6657 became effective on June 15, 1988, and it covered all public and private lands, including lands of the public
domain suited for agriculture.46 Upon its enactment, questions arose as to the authority of the Department of Agrarian Reform to approve or disapprove applications for
conversion of agricultural land to non-agricultural. Then Agrarian Reform Secretary Florencio B.Abad (Secretary Abad) was of the opinion that laws prior to Republic Act No.
6657 authorized the Department of Agrarian Reform, together with the Department of Local Government and Community Development and the Human Settlements
Commission, to allow or disallow conversions. In response to Secretary Abads query, the Department of Justice issued Opinion No. 44 on March 16, 1990, written by then
Secretary of Justice Franklin M.Drilon. The opinion, reproduced in full, states:

Sir:

This refers to your letter of the 13th instant stating your "position that prior to the passage of R.A. 6657, the Department of Agrarian Reform had the authority to classify and
declare which agricultural lands are suitable for non-agricultural purposes, and to approve or disapprove applications for conversion from agricultural to non-agricultural uses."

In support of the foregoing view, you contend that under R.A. No. 3844, as amended, the Department of Agrarian Reform (DAR) is empowered to "determine and declare
anagricultural land to be suited for residential, commercial, industrial orsome other urban purpose" and to "convert agricultural land from agricultural to non-agricultural
purposes"; that P.D. No. 583, as amended by P.D. No. 815 "affirms that the conversion of agricultural lands shall be allowed only upon previous authorization of the [DAR]; with
respectto tenanted rice and corn lands"; that a Memorandum of Agreement dated May 13, 1977 between the DAR, the Department of Local Government and Community
Development and the then Human Settlements Commission "further affirms the authority of the [DAR] to allow or disallow conversion of agricultural lands"; that E.O. No. 129-A
expressly invests the DAR with exclusive authority to approve or disapprove conversion of agricultural lands for residential, commercial, industrial and other land uses'; and that
while inthe final version of House Bill 400, Section 9 thereof provided that lands devoted to "residential, housing, commercial and industrial sites classified as such by the
municipal and city development councils as already approved by the Housing and Land Use Regulatory Board, in their respective zoning development plans" be exempted from
the coverage of the Agrarian Reform program, this clause was deleted from Section 10 of the final version of the consolidated bill stating the exemptions from the coverage of
the Comprehensive Agrarian Reform Program. We take it that your query has been prompted by the study previously made by this Department for Executive Secretary Catalino
Macaraig Jr. and Secretary Vicente Jayme (Memorandum dated February 14, 1990) which upheld the authority of the DAR to authorize conversions of agricultural lands to non-
agricultural uses as of June 15, 1988, the date of effectivity of the Comprehensive Agrarian Reform Law (R.A. No. 6657). [I]t is your position that the authority of DAR to
authorize such conversion existed even prior to June 15, 1988 or as early as 1963 under the Agricultural Land Reform Code(R.A. No. 3844; as amended).

It should be made clear at the outset that the aforementioned study of this Department was based on facts and issues arising from the implementation of the Comprehensive
Agrarian Reform Program (CARP). While there is no specific and express authority given to DAR in the CARP law to approve or disapprove conversion of agricultural lands to
nonagricultural uses, because Section 65 only refers to conversions effected after five years from date of the award, we opined that the authority of the DAR to approve or
disapprove conversions of agricultural lands to nonagricultural uses applies only to conversions made on or after June 15, 1988, the date of effectivity of R.A.No. 6657, solely on
the basis of our interpretation of DAR's mandate and the comprehensive coverage of the land reform program. Thus, we said:

"Being vested with exclusive original jurisdiction over all matters involving the implementation of agrarian reform, it is believed to be the agrarian reform law's intention that any
conversion ofa private agricultural land to non-agricultural uses should be cleared beforehand by the DAR. True, the DAR's express power over land use conversion is limited to
cases in which agricultural lands already awarded have, after five years, ceased to be economically feasible and sound for agricultural purposes, or the locality has become
urbanized and the land will have a greater economic value for residential, commercial or industrial purposes. But to suggest that these are the only instances when the DAR can
require conversion clearances would open a loophole in the R.A. No. 6657, which every landowner may use to evade compliance with the agrarian reform program. Hence, it
should logically follow from the said department's express duty and function to execute and enforce the said statute that any reclassification of a private land as a residential,
commercial or industrial property should first be cleared by the DAR."

It is conceded that under the laws in force prior to the enactment and effective date of R.A. No. 6657, the DAR had likewise the authority, to authorize conversions of agricultural
lands to other uses, but always in coordination with other concerned agencies. Under R.A. No. 3344, as amended by R.A. No. 6389, an agricultural lessee may, by order of the
court, be dispossessed of his landholding if after due hearing, it is shown that the "landholding is declared by the [DAR] upon the recommendation of the National Planning
Commission to be suited for residential, commercial, industrial or some other urban purposes."

Likewise, under various Presidential Decrees (P.D. Nos. 583, 815 and 946) which were issued to give teeth to the implementation of the agrarian reform program decreed
inP.D. No. 27, the DAR was empowered to authorize conversions of tenanted agricultural lands, specifically those planted to rice and/or corn, to other agricultural or tonon-
agricultural uses, "subject to studies on zoning of the Human Settlements Commissions" (HSC). This non-exclusive authority of the DAR under the aforesaid laws was, as you
have correctly pointed out, recognized and reaffirmed by other concerned agencies, such as the Department of Local Government and Community Development (DLGCD) and
the then Human Settlements Commission (HSC) in a Memorandum of Agreement executed by the DAR and these two agencies on May 13, 1977, which is an admission that
with respect to land use planning and conversions, the authority is not exclusive to any particular agency but is a coordinated effort of all concerned agencies.

It is significant to mention thatin 1978, the then Ministry of Human Settlements was granted authority to review and ratify land use plans and zoning ordinance of local
governments and to approve development proposals which include land use conversions (see LOI No. 729 [1978]). This was followed by P.D.No. 648 (1981) which conferred
upon the Human Settlements Regulatory Commission (the predecessors of the Housing and Land Use Regulatory Board [HLURB][)] the authority to promulgate zoning and
other land use control standards and guidelines which shall govern land use plans and zoning ordinances of local governments, subdivision or estate development projects of
both the public and private sector and urban renewal plans, programs and projects; as well as to review, evaluate and approve or disapprove comprehensive land use
development plans and zoning components of civil works and infrastructure projects, of national, regional and local governments, subdivisions, condominiums or estate
development projects including industrial estates.

P.D. No. 583, as amended by P.D. No. 815, and the 1977 Memorandum of Agreement, abovementioned, cannot therefore, be construed as sources of authority of the DAR;
these issuances merely affirmed whatever power DAR had at the time oftheir adoption.

With respect to your observation that E.O. No. 129-A also empowered the DAR to approve or disapprove conversions of agricultural lands into non-agricultural uses as of July
22, 1987, it is our view that E.O. No. 129-A likewise did not provide a new source of power of DAR with respect to conversion but it merely recognized and reaffirmed the
existence of such power as granted under existing laws. This is clearly inferrable from the following provision of E.O. No. 129-A to wit:

"Sec. 5. Powers and Functions. Pursuant to the mandate of the Department, and in order to ensure the successful implementation of the Comprehensive Agrarian Reform
Program, the Department is hereby authorized to:

1) Have exclusive authority to approve or disapprove conversion of agricultural lands for residential, commercial, industrial and other land uses as may be provided by law"

Anent the observation regarding the alleged deletion of residential, housing, commercial and industrial sites classifiedby the HLURB in the final version of the CARP bill, we fail
to see how this [sic] circumstances could substantiate your position that DAR's authority to reclassify or approve conversions of agricultural lands to non-agricultural uses
already existed prior to June 15, 1988. Surely, it is clear that the alleged deletion was necessary to avoid a redundancy inthe CARP law whose coverage is expressly limited to
"all public and private agricultural lands" and "other lands of the public domain suitable for agriculture" (Sec. 4, R.A. No. 6657). Section 3(c) of R.A. No. 6657 defines
"agricultural land" as that "devoted to agricultural activity as defined in the Act and not classified as mineral forest, residential, commercial or industrial land."

Based on the foregoing premises, wereiterate the view that with respect to conversions ofagricultural lands covered by R.A. No. 6657 to non-agricultural uses, the authority of
DAR to approve such conversions may be exercised from the date of the law's effectivity on June 15, 1988. This conclusion is based on a liberal interpretation of R.A. No. 6657
in the light of DAR's mandate and the extensive coverage of the agrarian reform program.47 (Emphasis supplied) Department of Justice Opinion No. 44 became the basis of
subsequent issuances by the Department of Agrarian Reform, stating in clear terms that parties need not seek prior conversion clearance from the Department of Agrarian
Reform for lands that were classified as non-agricultural prior to Republic Act No. 6657. The subsequent rulings are outlined in Junio v. Secretary Garilao:48

Following the opinion of the Department of Justice (DOJ), the DAR issued Administrative Order (AO)No. 6, Series of 1994, stating that conversion clearances were no longer
needed for lands already classified as non-agricultural before the enactment of Republic Act 6657. Designed to "streamline the issuance of exemption clearances, based on
DOJ Opinion No. 44," the AO provided guidelines and procedures for the issuance of exemption clearances.

Thereafter, DAR issued AO 12, Series of 1994, entitled "Consolidated and Revised Rules and Procedures Governing Conversion of Agricultural Lands to Non-Agricultural
Uses." It provided that the guidelines on how to secure an exemption clearance under DAR AO No. 6, Series of 1994, shall apply to agricultural lands classified or zoned for
non-agricultural uses by local government units (LGUs); and approved by the Housing and Land Use Regulatory Board (HLURB) before June 15, 1988. Under this AO, the DAR
secretary had the ultimate authority to issue orders granting or denying applications for exemption filed by landowners whose lands were covered by DOJ Opinion No.
44.49 (Citations omitted)

Accordingly, lands are consideredexempt from the coverage of Republic Act No. 6657 if the following requisites are present:

1. Lands were zoned for non-agricultural use by the local government unit; and

2. The zoning ordinance was approved by the Housing and Land Use Regulatory Board before June 15, 1998.

In revoking the prior order of exemption, Secretary Pangandaman took note of the following considerations:

The Certification dated 18 November 2003, of Mr. David D. David, Planning Officer IV and Zoning Administrator of the City of Angeles states that the City
Planning and Development Office, Zoning Administration Unit (CPDO-ZAU) certifies that subject property covered by TCT No. 11804 is classified as agricultural
based on the certified photocopy of Zoning Ordinance, Ordinance No. 13, Series of 1978, issued by the Housing and Land Use Regulatory Board, Regional Office
No. 3 (HLURB-Region III) on 03 September 2001;

Also, upon verification with HLURB-Region III, we were informed that as per copy of the approved Zoning Plan of 1978, the subject properties were classified as
agricultural. The said Zoning Plan of 1978 was approved under NCC Plan dated 24 September 1980; and

Based on the ocular inspection conducted by the CLUPPI Inspection Team, it was found that the area remained agricultural. In fact, it is still dominantly planted
withsugar cane and corn.50

(Emphasis supplied)

Upon respondents motion for reconsideration, Secretary Pangandaman also took into consideration the recommendations of the Center for Land Use Policy, Planning, and
Implementation Committee, thus:

During the 50th Special CLUPPI Committee-B Meeting, held on 18 December 2007, the Motion for Reconsideration filed by Sylvia Espirilla [sic] was deliberated upon and the
Committee recommended the DENIAL of the Motion for Reconsideration based on the following grounds:

The certifications issued by the HLURB shows that the subject properties were classified as agricultural before 15 June 1986 [sic]; and

Based on the ocular inspection conducted by the CLUPPI Inspection Team, it was found out that the area remained agricultural. In fact, it [is] still dominantly
1wphi1

planted with sugar cane and corn.51 (Emphasis supplied)


Secretary Pangandaman also found that:

The certifications submitted by the [respondents] which is the Certification dated 18 November 2003, of Mr. David D. David, Planning Officer IV and Zoning Administrator of the
City of Angeles states that the City Planning Development Office, Zoning Administration Unit (CPDOZAU) certifies that the subject properties covered by TCT No. T-11804 is
classified as agricultural based on the certified photocopy of Zoning Ordinance, Ordinance No. 13[,] Series of 1978 issued by the Housing and Land Use Regulatory Board,
Regional Office No. 3 (HLURB-Region III) on 03 September 2001.

Such certification was corroborated bya certification issued by the HLURB Regional Director, Region III, Ms. Edithat [sic] Barrameda in its certification dated 28 May 2001 and
24 November 2003. It was stated in the said certification that the subject landholding is within the agricultural zone based on Comprehensive LandUse Plan and Zoning
Ordinance of the City Council of Angeles City approved through HLURB Resolution No. 705 dated 17 October 2001. Also a certification was issued by Director Barrameda on
01 June 2001, stating therein that, "Duplicate copies of the Certification issued by this Board toMs. Lutgarda Torres on 18 December 1991 and 8 July 1998, respectively are not
among the files for safekeeping when she assumed as Regional Officer on 03 July 2000.["]52 (Emphasis supplied)

These findings were sustained on appeal by the Office of the President, stating that:

[Respondents'] argument that the land has ceased to be agricultural by virtue of reclassification under Ordinance No. 13, series of 1978 cannot be sustained since the records
of the case or the evidence presented thereto are bereft of any indication showing the same. In fact, nowhere was it shown that a certified true copy of the said Ordinance was
presented before this Office or the office a quo. 53

The factual findings of administrative agencies are generally given great respect and finality by the courts as it is presumed that these agencies have the knowledge and
expertise over matters under their jurisdiction.54 Both the Department of Agrarian Reform and the Office of the President found respondent's lands to be agricultural. We see no
reason to disturb these findings.

WHEREFORE, the petition is GRANTED. The decision dated September 28, 2012 and resolution dated November 29, 2012 of the Court of Appeals are SET ASIDE. The order
dated June 15, 2006 of the Department of Agrarian Reform and the decision dated May 7, 2009 of the Office of the President are REINSTATED.

SO ORDERED.

G.R. No. 204800 October 14, 2014

NATIONAL TRANSMISSION CORPORATION Petitioner,


vs.
COMMISSION ON AUDIT, ATTY. JOSEPHINE A. TILAN, Regional Cluster Director and MR. ROBERTO G. PADILLA, State Auditor IV, Respondents.

DECISION

PERALTA, J.:

Before the Court is an original action for certiorari under Rule 65, in relation to Rule 64 of the Rules of Court, and the 2009 Revised Rules of Procedure1 of the Commission on
Audit (COA), seeking to nullify and set aside COAs Decision 2 dated May 26, 2009, which affirmed the Legal and Adjudication Office-Corporates (LAO-C)Decision requiring all
persons found liable in the Notice of Disallowance (ND)05-037 dated July 5, 2007 to refund the amount of loyalty award received, as well as its Resolution 3 dated November 26,
2009.

The facts of the case are undisputed.

In 2003, the National Power Corporation (NPC) underwent reorganization pursuant to Republic Act (R.A.) No. 9136, otherwise known as the Electric Power Industry Reform Act
of 2001 (EPIRA Law), wherein NPC was split into two (2): the NPC, which became in-charge of the generation of electricity, and the National Transmission Corporation
(Transco), which was charged with the transmission of electricity to the power customers.4Consequently, Transco was created effective June 24, 2001 and acquired all the
transmission assets of the NPC.5Meanwhile, due to such reorganization, the services of all the employees of the NPC were terminated effective February 28, 2003, wherein they
received their separation benefits and terminal leave pay.6 However, on March 1, 2003, some of the said employeeswere rehired by Transco. 7

On February 9, 2004, the Officer-in-Charge of the Human Resources Department of Transco, Noli E. Pomperada, sent a query to the Civil Service Commission (CSC), on the
entitlement to loyalty award of Transco employees who were previously employed with the NPC and who were rehired by Transco with no gap in service under CSC
Memorandum Circular No. 06, series of 2002 (CSC Memorandum Circular), otherwise known as the Revised Policies on Grant of Loyalty Award.8 Section 4 of the CSC
Memorandum Circular provides:

Effective January 1, 2002, continuousand satisfactory services in government for purposes of granting loyalty award shall include services in one or more government agencies
without any gap.

Services rendered in other government agencies prior to January 1, 2002 shall not be considered for purposes of granting the loyalty award.9

In response, CSC Assistant Commissioner Nelson L. Acevedo, in a Letter 10 dated March 23, 2004, clarified that

The above-quoted policy specifies that only the entire service in the particular agency where a government personnel is employed as of January 1, 2002 shall be considered
part of the 10th year loyalty award. Services rendered in other government agencies before January 1, 2002 shall not be considered for purposes of completing the required 10-
year loyalty award.

To illustrate this policy, may we cite an example:

Mr. X was employed at the National Computer Center (NCC) in May 1993 and transferred to the Department of Trade and Industry (DTI) in October 1995. Mr. X shall be entitled
to the 10th year in government service Loyalty Award on October 2005. His services at [the] NCC can no longer be considered for purposesof granting the loyalty award.
However, even if X employee again transfers from DTI to another government agency on May 2004, she/he will still be entitled to receive the 10th year loyalty award by July
2005 since his services in DTI from October 1995 shall be considered. The entire service in the agency where a government personnel is employed as of January 1, 2002 shall
be considered part of the 10th year loyalty award or 5th year milestone loyalty award.

Based on the sample service record you cited, said Transco employee is entitledto receive the 10th year loyalty award effective April 1, 2003 and Transco, where she/he is
presently employed is obliged to pay said personnel. However, services rendered at DENR and Congress can no longer be considered for purposes of granting the loyalty
award. Thus, on April 1, 2008, she/he will again be entitled to 5,000 Loyalty Award for completing the 15th year service in government.

On the other hand, if the grantee had already been paid by NPC of the 10-year Loyalty Award last October 3, 1998, Transco will only pay for the 5-year milestone Loyalty Award
on October 3, 2003.11

On the basis of the foregoing CSC clarification, Transco Circular No. 2004-37 dated June 24, 2004 was issued, granting loyalty award to qualified Transco employees in the
aggregate amount of P670,000.00, taking into account the services of said employees in the NPC prior to their reemployment by Transco. 12

On November 18, 2004, Transco North Luzon Operations & Maintenance (NLO&M) received an observation 13from Mr. Roberto G. Padilla, State Auditor IV of the COA,
pertaining to the legality of the grant of loyalty award, viz.:

The above transaction clearly violated the provisions of the abovementioned EPIRA law and CSC Memorandum Circular. The attached schedule presents the total amountof
loyalty award paid to NLTRANSCO employees. Since the services of these retired employees were already terminated effective February 28, 2003 and received their
separation benefits, they are considered new in the government service. Hence, for purposes of computing the rendition of continuous and satisfactory service for the grant of
loyalty award, the same shall be reckoned from the date of reemployment which is March 1, 2003.

xxxx

The foregoing CSC Primer on Loyalty Award provides that services rendered prior to the reemployment of an employee who was separated from the service with separation
benefits with or without gaps are not included for purposes of the grant of Loyalty Award. This is because such separation partakes of retirement.A retired government official or
employee is considered tohave already severed his relationship with the government. Thus, for purposes of computing the rendition of continuous and satisfactory service for
the grant of Loyalty Award, the same shall be reckoned from the date of reemployment.14

The aforequoted observations were purportedly gathered from the Opinion 15 of the CSC CAR Director, dated September 14, 2004, in reply to COAs query on the loyalty award,
which reads as follows:

Is a retired/resigned governmentemployee entitled to loyalty award?

No. A retired/resigned governmentemployee shall no longer be entitled to the grant of loyalty award since he has already severed his relationship with the Government (CSC
Letter dated February 26, 1993 to Irenea F. Bahian)

Could an official or employee who retired/resigned but was reinstated or reemployed later in the service be entitled to the award?

Yes. The computation of length ofservice shall reckon from the date of reinstatement/reemploymentin the particular agency granting the award. (CSC Letter February 4, 1993 to
Pablo S. Sayson)

xxxx

Are the services rendered prior to the reemployment of an employee who was separated from the service with separation benefits, with or without gaps, considered for purposes
of the grant? No. Said separation from the service partakes the nature of retirement. (CSC Letter dated October 14, 1993 to Antonio R. Dizon) 16

In a letter dated November 22, 2004, Transco, through its Assistant Vice-President Fernando S. Abesamis, submitted its reply17 and justified the grant of the loyalty award on the
following grounds:

1. The release of the subject award was made in compliance with Transco Circular No. 2004-37; 2. The CSC letter dated March 23, 2004 allowed the grant of the
loyalty award to Transco employees who were previously employed with the NTC; and

3. There was no gap in the service of Transco employees when their services were severed from NPC since they were rehired the next day.

On July 5, 2005, the Legal and Adjudication Sector (LAS) of the Commission on Audit, Cordillera Administrative Region (COA-CAR), La Trinidad, Benguet, through its Regional
Cluster Director, Atty. Josephine A. Tilan, issued ND No. 05-037,18 disallowing the payment of loyalty award to Transco NLO&M employees, on the ground that they had not met
the 10-year continuous government service required under the CSC Memorandum Circular, and therefore, is without legal basis and considered irregular under COA Circular
85-55A,19 thus:

The separated employees were considered legally terminated when they availed the benefits and separation pay prescribed under said Act. (Sec. 3b (i), Rule 33 of the
Implementing Rules and Regulation). Thus, when these separated employees were rehired either by NPC or TRANSCO, they are reconsidered as new.This is the main gist of
Section 3c, Rule 33 of the same IRR which expressly provides that:

"xxx The governing board or authority of the entities enumerated in Section 3(b) hereof shall have the sole prerogative to hire the separated employees as NEW EMPLOYEES
who start their service for such position and for such compensation as may be determined by such board or authority pursuant to its restructuring program. Those who avail of
the foregoing privileges shall start their government service anew if absorbed by any government agency or any government-owned successor company."

This express provision of the IRR negated Item 4.4 of MC No. 06, S. 2002 which provides that the continuous and satisfactory service in government for purpose of granting
loyaltyaward shall include services in one or more government agencies without any gap. 20
Transcos Appeal Memorandum dated January 6, 2006 and its Motion for Reconsideration dated March 20,2007 were both denied in LAO-C Decision No. 2007-007 dated
February27, 2007 and LAO-C Decision No. 2007-056 dated July 13, 2007, respectively.21

Aggrieved, Transco elevated itsAppeal to the COA, raising the following arguments: (1) the separation benefits availed of by the NPC employees in accordance with the EPIRA
Law did not include the rights of these employees that had already accrued by reason of continuous service to the government at the time of their separation from NPC; (2) the
purpose or intent of the EPIRA Law and its implementing rules and regulations was only to limit the claim of separation benefits of employees who may be absorbed or re-hired
by any government agency or government-owned or controlled corporation; (3) the reason behind the formulation of CSC Memorandum Circular No. 06, s. 2002 is to recognize
the dedication of individuals who preferred to work asgovernment employees, and as a token thereof, loyalty pay is awarded; (4) the grant of loyalty pay was in accordance with
the CSC Directors letter dated March 23, 2004, interpreting CSC Memorandum Circular No. 06, s. 2002 vis-a-visthe situation of the Transco employees; and (5) Transco
Management was guided by the CSC letter dated March 23, 2004 before it granted the loyalty award to deserving Transco employees, hence, said payment is considered in
good faith.22 The falloof its Decision23 dated May 26, 2009 reads:

WHEREFORE, foregoing premises considered and finding the instant petition to be devoid ofmerit, the same is hereby DENIED. Accordingly, this Commission affirms LAO-
Corporate Decision Nos. 2007-056 and 2007-007 dated July 13, 2007 and February 27, 2007, respectively, and all persons found liable in ND No. 05-037 dated July 5, 2005
should refund the loyalty award received.24

Despite petitioners Motion for Reconsideration,25 the COA maintained the aforequoted ruling. Hence, the instant petition.

Petitioner alleged that the COA acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction when it:

A. MISINTERPRETED CSC MEMORANDUM CIRCULAR 06, SERIES OF 2002 (MC 06), AND ERRONEOUSLY STATED THAT AN EMPLOYEE IS ENTITLED
TOLOYALTY AWARD ONLY IF HE HAS CONTINUOUSLY RENDERED THE TEN-YEAR SERVICE IN ONE PARTICULAR GOVERNMENT AGENCY.

B. MISTAKENLY RULED THAT THE CONTINUITY OF THE SERVICE OF EMPLOYEES SEPARATED FROM SERVICE DUE TO REORGANIZATION, IS
RECOGNIZED ONLY WHEN THE SEPARATION PACKAGE PROVIDED UNDER THE EPIRA IS NOT CLAIMED.26

Anent the first issue, it is worthy to note that in its Comment, 27 respondents denied having stated in its decision that an employee is entitled to loyalty award only if he has
rendered his service in one particular agency. 28Moreover, respondents did not dispute, and in fact, categorically declared that there was no "gap" in the services of the NPC
employees who were terminated on February 28, 2003 but rehired by Transco the following day or on March 1, 2003, to wit:

x x x. This Office agrees that NPC employees did not incur any "gap" after being separated from NPC on February 23, 2003 since they were rehired by TRANSCO immediately
the following day or on March 01, 2003. x x x29

The main contention of respondents is, therefore, centered on the claim that employees who availed of the separation benefit under the EPIRA Law are considered to have
retired. Consequently, upon re-hiring, they are considered new employees; and thus, not entitled to loyalty award. 30

In view of the foregoing, it would appear that the issue left for this Courts resolution is whether or not the NPC employees who were separated from the service because of the
reorganization of the electric power industry and who received their separation pay under the EPIRA Law are still entitled to receive loyalty awards under the CSC Memorandum
Circular.

We rule in the affirmative.

Under Section 35, Chapter 5, Subtitle A, Title I, Book V of Executive Order (E.O.) No. 292, there shall be established a government-wide employee suggestions and incentive
awards system which shall be administered under such rules, regulations and standards as may be promulgated by the CSC. Accordingly, the CSC Memorandum Circular was
issued setting forth the terms and conditions for granting loyalty awards, to wit:

Pursuant to CSC Resolution No. 02-0295 dated Feb. 26, 2002, the Commission amends the policies on the grant of loyalty award. These policies were formulated to recognize
the continuous and satisfactory service rendered in the government by officials and employees for a period of ten years. The revised policies are as follows:

1. A loyalty award is granted to all officials and employees, in the national and local governments, including those in the state colleges and universities (SUCs) and
government-owned and controlled corporations (GOCCs) with original charter, who rendered ten (10) years of continuous and satisfactory service in the
government.

2. The particular agency where the employee or official completed the ten (10) years of continuous and satisfactory service shall grant the award.

3. An official or employee who incurredan aggregate of not more than 50 days authorized vacation leave without pay within the 10-year period shall be considered
as having rendered continuous service for purposes of granting the loyalty award. In the same way, an official or employee who incurred an aggregate of not more
than twenty five (25) days authorized vacation leave without pay within the 5-yearperiod may qualify for the 5-year milestone loyalty award.

4. Effective January 1, 2002, continuousand satisfactory services in government for purposes of granting loyalty award shall include services in one or more
government agencies without any gap.

Services rendered in other government agencies prior to January 1, 2002 shall not be considered for purposes of granting the loyalty award.31

The rules are well-defined. What appears to be contended is the definition of "continued service," which respondents aver was interrupted when the subject employees were
terminated from their posts in NPC and received their separation package under the EPIRA Law. On the other hand, petitioner posits that said separation benefits did not
include the rights of these employees that had already accrued by reason of continuous service to the government at the time of their separation from NPC, 32 such as the
assailed grant of loyalty award.

We agree with petitioner.


While Section 63 of the EPIRA Law provides that those who avail themselves of the separation pay shall start their governmentservice anew if absorbed by any government-
owned successor company, the "reset" relates only to any and all separation benefits due to an employee once he is terminated or if he retires from service. As correctly pointed
out by petitioner, what is avoided is a situation wherein an employee who was separated from service and availed himself of the separation package under the EPIRA Law,
would still use the accrued years of service in NPC for purposes of computing their future separation benefits to be settled by the absorbing government agency or government-
owned successor corporation.

It could not have been the intendment of the EPIRA Law to impair the employees rights to loyalty award, which have already accrued prior to its promulgation. Stated differently,
before the EPIRA Law was enacted, the NPC employees had a fixed right to the loyalty award under the terms and conditions then obtaining. They could not therefore be
excluded from its enjoyment just because they havereceived separation pay for the termination of their services in view of the reorganization, without violating basic precepts of
fairness and due process.

Indeed, the payment or non-payment of separation pay was never made a condition for the grant of loyalty awards to these employees. The CSC Memorandum Circular
neitherdistinguishes nor imposes a qualification for the grant of loyalty award except that: (1) effective January 1, 2002, the services are rendered inone or more government
agencies without any gap; and (2) services rendered in other government agencies prior to January 1, 2002 shall not be considered. Adding the qualification of non-payment of
separation pay would in effect be expanding the law inappropriately without due process.

This was highlighted in Betoy v. The Board of Directors, National Power Corporation, 33 wherein we delved into the spirit of the EPIRA Law in granting separation benefits tothe
employees affected by the reorganization, thus:

Even in the deliberations of Congress during the passage of R.A. No. 9136, it was manifest that it was not the intention of the law to infringe upon the vested rights of NPC
personnel to claim benefits under existing laws. To assure the worried and uneasy NPC employees, Congress guaranteed their entitlement to a separation pay to tide them over
in the meantime. More importantly, to further allay the fears of the NPC employees, especially those who were nearing retirement age, Congress repeatedly assured them in
several public and congressional hearings that on top of their separation benefits, they would still receive their retirement benefits, as long as they would qualify and meet the
requirements for its entitlement.

The transcripts of the Public Consultative Meeting on the Power Bill held on February 16, 2001, disclose the following:

xxxx

THE CHAIRMAN (SEN. J. OSMENA). Well, the other labor representation here is Mr. Anguluan.

MR. ANGULUAN: Yes, Your Honor.

THE CHAIRMAN (SEN. J. OSMENA). Okay. Will you present your paper?

MR. ANGULUAN: We have prepared a paper which we have sent to the honorable members of the Bicam. x x x.

THE CHAIRMAN (SEN. J. OSMENA). I don't think anyone is going to deprive you of your rights under the law. You will enjoy all your rights. You will receive retirement benefits,
separation pay, and all of the rights that are provided to you by law. What we have objected to in the Senate is retirement benefits higher than what everybody else gets, like
150 percent or subject to the approval of the board which means sky is the limit. So, we have objected to that. But what you are entitled to under the law, you will get under the
law and nobody will deprive you of that.

A year later, on February 12, 2002, the Joint Congressional Power Commission was held. The transcripts of the hearing bare the following:

xxxx

THE CHAIRMAN (REP. BADELLES). They will still be subject to the same conditions. Meaning, NPC has the discretion whether to reabsorb or hire back those that avail of the
separation benefits.

SEN. OSMENA (J). No. But they are notbeing - - the plants are not being sold, so they are - but what we are giving them is a special concession of retiring early.

No, okay. You consider . . .

THE CHAIRMAN (REP. BADELLES).We are not speaking of retirement here, we are speaking of their separation benefits . . .

SEN. OSMENA (J). Okay, separation benefits.

THE CHAIRMAN (REP. BADELLES). Precisely, if they are considered terminated.

SEN. OSMENA (J). All right. Separation . . .

THE CHAIRMAN (REP. BADELLES). A retirement plan is a different program than separation.

SEN. OSMENA (J). Separation benefits, okay.

THE CHAIRMAN (REP. BADELLES). All right.34

While the foregoing pertains to the grant of retirement pay under R.A. No. 660, Presidential Decree (P.D.) No. 1146, R.A. No. 8291, and other GSIS and social security laws, on
top of the separation pay already granted under the EPIRA Law, the intent of the lawmakers in awarding the separation pay can be easily ascertainedfrom the aforequoted
deliberations. Clearly, the purpose or intent of the EPIRA Law and its implementing rules and regulations was only to limit the claim for future separation benefits of employees
who may be absorbed or re-hired by any government agency or government-owned or controlled corporation. It was not meant to curtail the grant of loyalty awards to
employees who decided to work for the government for more than ten (10) years, but were unfortunately terminated in between due to reorganization.

Anent petitioners argument that the reason behind the formulation of the CSC Memorandum Circular is to recognize the dedication of individuals who preferred to work as
government employees, and as a token thereof, loyalty pay is awarded, 35 we find the same impressed with merit.

The grant of the loyalty award under the CSC Memorandum Circular and of the separation benefits under the EPIRA Law should be distinctly and separately treated. Such
distinction is imperative because they have different legal bases, different sources offunds, and different intents. 36

On one hand, the loyalty award isgranted pursuant to Section 35, Chapter 5, Subtitle A, Title I, Book V of E.O. No. 292, as well as Section 7(e), Rule 10 of the Omnibus Civil
Service Rules and Regulations Implementing Book V of E.O. No. 292, which provides that all members of the government workforce shall receive incentive awards, including
the grant of loyalty award based on continuous and satisfactory service. The particular agency where the employee or official completed the required years of service, which in
this case is Transco, is responsible for granting the award. With respect to the purpose thereof, as correctly pointed out by petitioner, the CSC Memorandum Circular aims to
reward employees who have efficiently served the government for more than a decade, and opted to serve the government instead of taking employment elsewhere. It is a
valuable component of an organization's overall employee recognition efforts to reward long and dedicated service.

On the other hand, the separation pay under the EPIRA Law was a consequence of the restructuring ofthe electric power industry or privatization of NPC assets and was based
on the restructuring plan as approved by the NPC Board. 37 Accordingly, the source of funds came from NPC. In effect, the payment of separation pay is a statutory right
designed to provide the employee with the wherewithal during the period that he/she is looking for another employment. 38

On this score, our ruling in Betoy39 is instructive and may be applied analogously to the present case, to wit:

In the case of Santos v. Servier Philippines, Inc., citing Aquino v. National Labor Relations Commission, We declared that the receipt of retirement benefits does not bar the
retiree from receiving separation pay. Separation pay is a statutory rightdesigned to provide the employee with the wherewithal during the period that he/she is looking for
another employment. On the other hand, retirement benefits are intended to help the employee enjoy the remaining years of his life, lessening the burden of worrying about his
financial support, and are a form of reward for his loyalty and service to the employer. A separation pay is given during one's employable years, while retirement benefits are
given during one's unemployable years. Hence, they are not mutually exclusive.

xxxx

Thus, it is clear that a separation pay at the time of the reorganization of the NPC and retirement benefits at the appropriate future time are two separateand distinct
entitlements. Stated otherwise, a retirement plan is a different program from a separation package.

There is a whale of a difference between R.A. No. 1616 and C.A. No. 186, together with its amendatory laws. They have different legal bases, different sources of funds and
1w phi 1

different intents.40

Based on the foregoing legal precepts, the grant of loyalty award and the separation pay are not inconsistent with each other and they have distinct noble purposes. In fact, the
entitlement of a qualified employee to both loyalty award and separation pay is not proscribed by the 1987 Constitution. Section 8 of Article IX (B) of the 1987 Constitution reads:

SEC. 8. No elective or appointive public officer or employee shall receive additional, double or indirect compensation, unless specifically authorized by law, nor accept without
the consent of the Congress, any present, emolument, office, or title of any kind from any foreign government.

Pensions or gratuities shall not be considered as additional, double, or indirect ompensation.41

Thus, entitlement to separation pay does not disqualify the separated employee who is likewise qualified to receive loyalty award pursuant to the CSC Memorandum Circular.
Verily, when an employee has complied with the statutory requirements for the grant of loyalty award under the CSC Memorandum Circular, his right to receive what is due him
by virtue thereof becomes vested and may not thereafter be revoked or impaired.

Otherwise, it would be ridiculous, if not deleterious, to deprive employees who were forced to relinquishtheir livelihood, of an award they have duly earned throughout their
service in the government, simply because they accepted the separation pay due them from the separation or displacement. After all, being terminated from service as a
consequence of the restructuring of the electric power industry or privatization of NPC assets was not their choice, but staying in the government despite that, is. Thus, not
unless the loyalty award was considered in the computation of the separation pay, the same should not be withdrawn from the employees enumerated in the ND.

At any rate, it would be tenacious to disregard the conscientious efforts undertaken by petitioner before implementing the CSC Memorandum Circular, as told in its petition, thus:

It is irrefutable that before TRANSCO issued its internal guidelines on the grant of the LoyaltyAward, it first sought and awaited the CSCs advice on the interpretation of
applicable MC 06 provisions and the entitlement of separated NPC employees. It only issued its internal guidelines after the receipt of the CSCs opinion on the matter.
TRANSCO prudently observed the necessary measures to implement CSC MC 06. It also ensured that the recipients of the Award are qualified. 42

As can be gleaned from the foregoing, petitioners distribution of the loyalty award was guided by the CSC letter dated March 23, 2004, which categorically allowed the grant of
loyalty award to qualified employees who were dismissed by NPC but were immediately rehired by Transco the next day, to wit:

Based on the sample service record you cited, said Transco employee is entitled to receive the 10th year loyalty award effective April 1, 2003 and Transco, where she/he is
presently employed is obliged to pay said personnel. However, services rendered at DENR and Congress can no longer be considered for purposes of granting the loyalty
award.

Thus, on April 1, 2008, she/he will again be entitled to 5,000 Loyalty Award for completing the 15th year service in government.43

It cannot be gainsaid, therefore, that petitioner was of the honest belief that Transco Circular No. 2004-37 was valid and enforceable in accordance with the aforesaid CSC
letter. Accordingly, the Court sustains the allowance of the loyalty awards granted to the qualified employees of Transco in accordance with the CSC Memorandum Circular.
At any rate, even assuming that the payment of loyalty award is unwarranted, as to the employees who received the same without participating in the approval thereof, they
cannot be said to be either in bad faith or grossly negligent in so doing.44 The imprimatur given by the approving officers on such award certainly gave it a color of legality from
the perspective of these employees.45 Being in good faith, they cannot, following Blaquera v. Alcala,46be compelled to refund the benefits already granted to them, 47 to wit:

Considering, however, that all the parties here acted in good faith, we cannot countenance the refund of subject incentive benefits for the year 1992, which amounts the
petitionershave already received. Indeed, no indicia of bad faith can be detected under the attendant facts and circumstances. The officials and chiefs of offices concerned
disbursed such incentive benefits in the honestbelief that the amounts given were due to the recipients and the latter accepted the same with gratitude, confident that they
richlydeserve such benefits.48

WHEREFORE, the Court GRANTSthe petition and SETS ASIDE the Decision of the Commission on Audit in Decision No. 2009-037 dated May 26, 2009, as well as its
Resolution dated November 26, 2012 in Decision No. 2012-221.

SO ORDERED.

A.M. No. P-14-3252 October 14, 2014


[Formerly OCA IPI No. 08-2960-P]

JUDGE JUAN GABRIEL H. ALANO, Complainant,


vs.
PADMA L. SAHI, COURT INTERPRETER, MUNICIPAL CIRCUIT TRIAL COURT, MALUSO, BASILAN,Respondent.

DECISION

Per Curiam:

This refers to the administrative complaint filed by Judge Juan Gabriel H. Alano (Judge Alano) of the 2nd Municipal Circuit Trial Court (MCTC) of Sumisip, Maluso and
Lantawan, Basilan Province against Padma L. Sahi (Sahi), Court Interpreter I of the same court, charging her with violations of Sections 11 and 2,2 Canon 1 of the Code of
Conduct for Court Personnel,3 violation of Section 3(a) of Republic Act No. 3019,4 otherwise known as the Anti-Graft and Corrupt Practices Act, Grave Misconduct and Absence
Without Leave (AWOL).

In the complaint, Judge Alano alleged that Sahi brokered for party litigants and solicited money and gifts in exchange for favorable decisions in the election protest cases
pending before his court, despite constant reminders to his staff that they should never demand, solicit, or receive money, gifts or other benefits from any party litigants. For
particulars:

1. During the months of November to December 2007, there were 19 election protests involving barangay elective officials filed in the MCTC. Sahi was constantly
telling him that some of the protestants and protestees were offering cash between P50,000.00 and P100,000.00 in exchange for favorable judgments.

2. In the middle of December 2007, Sahi went to Judge Alanos chamber and informed him that Arzad, the protestee in EP11-2007, offered to give him a brand
new M-4 carbine assault rifle worth at leastP180,000.00 "with no strings attached." So as not to arouse Sahis suspicions that she was discreetly being
investigated, Judge Alano told her that he preferred to buy a Russian AK-47 assault rifle (Russian AK-47) instead. On January 18, 2008, Sahi informed him that
she has a Russian AK-47 at her home for sale forP70,000.00. After viewing it, Judge Alano offered to buy the same for P30,000.00 since he noted some defects.
Sahi immediately agreed and insisted that he bring the firearm home. Judge Alanos suspicion that the firearm was part of a bribe was confirmed by Sahi herself.

In April 2008, Sahi informed Judge Alano of Arzads new offer of a Honda 200R motorcycle in exchange for a favorable judgment.

3. Sometime in November 2007, Sahi demanded from Sawari, a protestee in EP09-2007, to pay the courtP50,000.00 in exchange for a favorable judgment.
Sahifurther demanded and received from him the amount of P5,000.00 for the alleged transportation expenses of Judge Alano to Manila.

4. Abdurajak A. Jalil (Jalil), protestant in EP03-2007, claimed that sometime in December 2007, Sahi solicited from him the amount of P60,000.00 for the purchase
of a printer for the court. Through his son, he gave Sahi the initial amount of P10,000. Upon inquiry, he learned that Sahi never bought any printer but instead used
the said amount for her own benefit.

5. Sahi received bribe money in the amount of P50,000.00 and P5,000.00 from the Barangay Chairman of Mebak, Sumisip, Basilan allegedly intended for
JudgeAlano. She further stated that the former Mayor of Sumisip, Jim Hataman, was collecting P200,000.00 from each barangay captain through Judge Alanos
father.

Judge Alano further claimed that, on May 4, 2008, Sahi went to his residence to inform him that she already returned the P50,000.00 to Sawari and that there was no truth to the
allegations that she received P5,000.00 allegedly for Judge Alanos travel to Manila.

On Sahis case of AWOL, Judge Alano also complained that she had not been reporting for work, and did not even file an official leave application for more than 30 calendar
days since the afternoon of June 18, 2008.

On July 11 and 24, 2008, Judge Alano requested the Leave Section of the Office of the Administrative Services, Office of the Court Administrator (OAS-OCA), to drop Sahi from
the rolls pursuant to Section 635 of the Omnibus Leave Rules for being on AWOLfor more than 30 calendar days.

In the 1st Indorsement6 dated October 6, 2008, Sahi was directed to file her Comment within 10 days from receipt thereof.

On November 17, 2008, Sahi filed her Answer 7 denying that she defied the order given by Judge Alano in relation to soliciting gifts or money from party litigants. She contended
thatshe went inside the chambers of Judge Alano because the latter requested her to look for a dealer of a Russian AK-47. When she found one through Arzad, Judge Alano
allegedly wanted to view the firearm at her house. The sale, however, was not consummated because the owner and Judge Alano failed to agree on the purchase price.

She denied that she informed Judge Alano of Arzads alleged offer of a brand new motorcycle and that she received P5,000.00 from Jalil for Judge Alanos travel.
She countered that the two witnesses presented against her were the type who can easily be pressured to execute a document, like affidavits, without being fully aware of its
consequences and content.

With respect to Judge Alanos allegation on her failure to report for work without prior leave, Sahi contended that she was forced not to report for work on June 10 and 11, 2008
and June 18 until July 2008 because she was having high fever, prompting her to seek medical help in Basilan. She said that she was found to be suffering from acute
bronchitis8 and later on, of urinary tract infection.9

Sahi claimed that she filed her leave applications for the absences incurred and presumed that they were recommended for approval. She later on discovered that her leave
application was just thrown to the waste basket by Judge Alano.

On August 4, 2008, Sahi narrated that when she reported for work at around 7:30 a.m. she was prohibited by court personnel to enter the court upon instructions of Judge
Alano. On the following day, Sahi reported the incident to Executive JudgeLeo J. Principe (Judge Principe) and was advised to report, for the meantime, at the Regional Trial
Court (RTC)-Office of the Clerk of Court.

When Sahi did not receive her salary and other benefits for the month of August 2008, she was allegedly forced to fly to Manila to inquire with the Leave Section of the OAS-
OCA regarding her alleged dropping from the rolls and unclaimed salaries. Upon inquiry, she was informed that her leave application for June 2008 was disapproved while her
July 2008 leave applications were not yet transmitted to the OAS-OCA.

In the Resolution10 dated December 14, 2009, the Court referred the instant administrative matter to Judge Principe, RTC, Isabela City, Basilan for investigation, report and
recommendation.

On December 1, 2010, acting on Sahis request for the inhibition of Judge Principe due to the latters close family relationship with Judge Alano, the Court ordered the transfer of
the administrative case to Executive Judge Reynerio G. Estacio (Judge Estacio) of the RTC of Zamboanga Del Sur, Branch 14 for investigation,report and recommendation.

On July 25, 2013, Judge Estacio submitted his report and Recommendation11 dated July 12, 2013 with the following findings:

The undersigned is convinced that respondent had indeed, been into the activities of brokering for party litigants and soliciting money or gifts, in consideration for favorable
decision. The respondent admitted to having heard herself of rumors that she received P70,000.00 from a party litigant and that the same was indeed, brought to the attention of
the complainant. Rumors on respondents activities prompted complainant to subject the respondent to investigation, lest he would be suspected of being involved therein, if not
faulted for tolerating respondents acts.

The respondent was said to have been calling the complainants attention to the offer either in cash of various amounts or in kind, by the protestants and protestees in exchange
for a favorable decision in their election protest cases pending before his sala in connection with the 2007 Barangay Election, despite his constant reminder to her not to
entertain the same. The complainant has been cautioning the respondent not to demand, solicit or receive money or other gifts or benefits from any party litigant.

True indeed, the said actsof the respondent found confirmation in the Affidavit of Complaint of Gajad Sawari, Protestee in EPC No. 09-2007, subscribed and sworn to on April
29, 2008, wherein he declared that respondent demanded from him P50,000.00 in consideration of her promise for a favorable action on the election protest case filed against
him, which amount, he delivered to her at her house at Barangay Kaumpurnah, Isabela City, Basilan, on January 4, 2008; and in his Supplemental Affidavit which he subscribed
and swore to on May 13, 2008, wherein he declared that in April 2008, the respondent demanded from him the amount of P5,000.00 allegedly, for the complainants travel to
Manila, which amount, he delivered tothe respondent also at the latters house at Kaumpurnah, Isabela City.

Similarly, Abdurajak Jalil, protestee in EPC No. 06-2007, in his affidavit of complaint subscribed and sworn to on May 15, 2008, declared that during the pendency of his case
sometime in December 2007, and while he was at the Isabela City Hallof Justice, the respondent solicited from him the amount of [P60,000.00], allegedly, for the purchase of a
printer for courts use with the assurance that he will get a favorable decision in the election protest case filed against him; that he was able to agree with her to give the amount
but on installment basis with the first payment of P10,000.00 delivered to her by his son, Hassan Jalil, for which the respondent issued a receipt.

Hassan Jalil confirmed the sworn statement of his father, Abdujarak Jalil, in his affidavit subscribed and sworn to also on May 15, 2008. He also identified respondents receipt x
x x. Comparing the signature appearing on the receipt with the signature of the respondent appearing on the Clerk of Courts Log Book of Attendance, the undersigned finds that
the signature appearing on the receipt is strikingly, similar to the signature of the respondent appearing on the Clerk of Courts Log Book of Attendance.

The respondent on the other hand, had only to say that it is in the height of stupidity and hence, unbelievable that, she would sign the receipt which could be used against her,
adding that the questioned receipt could easily be procured, implying that the same is fabricated evidence. The respondent could have dared the questioned signature subject to
handwriting examination, to prove that it is indeed, a forgery. She however, did not and did not even, attempt.12

Judge Estacio recommended that Sahi be dismissed from service, with prejudice to re-employment in any branch, instrumentality or agency of the government, including
government-owned and controlled corporation, and forfeiture of all her benefits, except accrued leave credits. The findings and the recommendation of the Investigating Judge
are well-taken.

As found by Judge Estacio, the evidence on record undeniably shows that during several instances, Sahi solicited and received various sums of money from party litigants in the
election protest cases pending before the 2nd MCTC of Sumisip, Maluso and Lantawan, Basilan Province despite constant reminders from Judge Alano not to demand, solicit or
receive money or other gifts or benefits from any party litigant. In fact, Judge Alanos discreet investigation was corroborated by affidavits executed by the parties who stated
that Sahi exacted money from them in exchange for favorable judgments in the sala of Judge Alano. 13

Moreover, the records of the case will show that the party litigants in the election protest cases pending before Judge Alanos court had the impression that Sahi was acting as
an agent of Judge Alano. This explained why several protestants and protestees inquired from several court personnel if Judge Alano received the bribe money they gave
through Sahi. Convincingly, the Affidavits of Sawari and Jalil showed Sahis corrupt practice of soliciting money in exchange for favorable judgments.

To escape liability, Sahi proffered her defense of bare denial and self-serving claim that she never acted as broker to any party litigant. According to her, the affidavits executed
by the party litigants should not be taken as gospel truth because they are the kind of persons who can easily be pressured to execute a document without being fully aware of
its consequences and contents. It bears to note, however, that during the hearing held on March 30, 2011 at about 2:00 p.m., Sawari and Jalil, together with the latters son,
Hassan Jalil, appeared and re-affirmed their respective affidavits.

Clearly, Sahi failed to overcome the positive, candid, and straightforward testimonies of the complaining party litigants. By jurisprudence, "denial is an intrinsically weak defense
which must be buttressed by strong evidence of non-culpability to merit credibility."14 In the present case, the investigating judge took note of the fact that Sahi failed to present
even a single witness to believe the accusations hurled against her.
Time and time again, the Court has stressed that the behavior of all employees and officials involved in the administration of justice, from judges to the most junior clerks, is
circumscribed with a heavy responsibility.15 "That is why, the Court provides the rule against any form of solicitations of gift or other pecuniary or material benefits or receipts of
contributions for himself/herself from any person, whether or not a litigant or lawyer, to avoid any suspicion that the major purpose of the donor is to influence the court
personnel in performing official duties."16

Section 2, Canon I of the Code of Conduct for Court Personnel, provides that "court personnel shall not solicit or accept any gift, favor or benefit based on any explicit or implicit
understanding that such gift, favor or benefit shall influence their official actions," while Section 2(e), Canon III states that "court personnel shall not x x x solicit or accept any
gift, loan, gratuity, discount, favor, hospitality or service under circumstances from which it could reasonably be inferred that a major purpose of the donor is to influence the
court personnel in performing official duties."

In the present case, the corrupt practice of Sahi in soliciting and receiving bribe money from party litigants on the pretext that they will obtain a favorable judgment undoubtedly
degraded the Judiciary and diminished the respect and regard of the people for the court and its personnel. Such practice constitutes grave misconduct in office which is
appalling. It is a grave offense that carries an equally grave penalty. Under Section 22(c) of Rule XIV of the Omnibus Rules Implementing Book V of Executive Order No. 292
and Other Pertinent Civil Service Laws, gross misconduct is classified as a grave offense. The penalty for this offense is dismissal even for the first offense.

This Court has been resolute in its drive to discipline and, if warranted, to remove from the service errant magistrates, employees and even Justices of higher collegiate
appellate courts for any infraction that tends to give the Judiciary a bad name. The Court has been unflinching in imposing discipline on errant personnel or in purging the ranks
of those undeserving to remain in the service, suchas in this case. Thus, this Court finds the respondent administratively liable for improper solicitation and imposes the penalty
prescribed by prevailing rules and jurisprudence, which is dismissal from service on the first offense. 17

Anent Sahis continuous absences, this Court finds that she, indeed, had been AWOL from June 18, 2008 until September 24, 2008, or for 67 consecutive working days.18

The records show that Sahis absences from June 18, 2008 to June 30, 2008 were unauthorized because her application for leave was disapproved by Judge Alano on the
ground, among others, that no notice was given by Sahi regarding her alleged illness despite reports from court employees that she was able to personally claim her paycheck
on June 20, 2008 and that she was seen loitering around the City prior to that date.

On Sahis claim that she submitted her sick and vacation leave application for the month of July, the records show that the same was neither acted upon nor filed at all with the
court.

Pursuant to Section 63, Rule XVI of the Omnibus Rules on Leave, as amended by Civil Service Resolution No. 070631, an employees AWOL for at least 30 working days
warrants his separation from the service. The Rule specifically provides:

Sec. 63. Effect of absences without approved leave. An official or employee who is continuously absent without approved leave for at least thirty (30) working days shall be
considered on absence without official leave (AWOL) and shall be separated from the service or dropped from the rolls without prior notice. However, when it is clear under the
obtaining circumstances that the official or employee concerned, has established a scheme to circumvent the rule by incurring substantial absences though less than thirty
working (30) days3x in a semester, such that a pattern is already apparent, dropping from the rolls without notice may likewise be justified.

If the number of unauthorized absences incurred is less than thirty (30) working days, a written Return-to-Work-Order shall be served to him at his last known address on
record. Failure on his part to report for work within the period stated in the order shall be valid ground to drop him from the rolls.

In this connection, Section 63, Rule XVI of the Omnibus Civil Service Rules and Regulations, as amended by Circular No. 14, series of 1999, provides:

Sec. 63. Effect of absences without approved leave. An official or employee who is continuously absent without approved leave for at least thirty (30) calendar days shall be
considered on absence without official leave (AWOL) and shall be separated from the service or dropped from the rolls without prior notice. He shall, however, be informed, at
his address appearing on his 201 files, of his separation from the service, not later than five (5) days from its effectivity.

Thus, under civil service rules, Sahi should be dropped from the rolls on account of her continued unauthorized absence since June 18, 2008. Proofs of Sahis ongoing AWOL
are: (1) her disapproved leave application for the month of June 2008; (2) the absence of any application for leave during the remaining relevant dates; (3) the letters dated July
11 and 24, 2008 of Judge Alano to the Leave Section of the OAS-OCA, stating that Sahi had been on AWOL for more than 30 calendar days; and (4) the Certification 19 issued
by Clerk of Court Pawaki dated September 24, 2008 stating that Sahi had not been reporting for work since June 18, 2008 and that she had not given any notice of her
absences.

A court employee who goes on AWOLfor a prolonged period of time disrupts the normal functioning of the organization20 and delays its operations. His conduct is prejudicial to
the best interest of public service.21 It contravenes a public servants duty toserve the public with utmost degree of responsibility, integrity, loyalty and efficiency.22 It also
manifests disrespect for his superiors and colleagues, in particular, and for the service and the public at large, in general.

By going on AWOL, Sahi grossly ignored and abandoned the duties of her office. She failed to remain faithful to the high standards of public accountability imposed on all
1wphi1

those in government service.23

Moreover, Judge Estacio also took note of Sahis poor performance rating in the discharge of her duties and responsibilities as Court Interpreter. The report and
recommendation of Judge Estacio stated:

The absences of [Sahi] from June 19 to August 1, 2008, were incurred without prior approval. [Sahi] has been remiss in her duties as interpreter of the court and her continuous
absence from work has been prejudicial to public service. In fact, [Judge Alano] has expressed his dissatisfaction with her performance for the past four (4) years x x x.24

The Court has repeatedly held that the conduct and behavior of everyone connected with an office charged with the dispensation of justice is circumscribed with the heavy
burden of responsibility. The Court cannot countenance any act or omission on the part of all those involved in the administration of justice which would violate the norm of
public accountability and diminish or even justtend to diminish the faith of the people in the Judiciary. 25

WHEREFORE, the Court finds Padma L. Sahi, Court Interpreter I of the 2nd Municipal Circuit Trial Court ofSumisip, Maluso and Lantawan, Basilan Province, GUILTY of
GRAVE MISCONDUCT and imposes upon her the penalty of DISMISSAL with forfeiture of retirement benefits except leave credits, with prejudice to re-employment in any
branch, instrumentality or agency of the government, including government-owned or controlled corporations.

SO ORDERED.
G.R. No. 181760 October 14, 2014

ATTY. ANACLETO B. BUENA, JR., MNSA, in his capacity as Regional Director of Regional Office No. XVI, Civil Service Commission, Autonomous Region in Muslim
Mindanao, Cotabato City, Petitioner,
vs.
DR. SANGCAD D. BENITO, Respondent.

DECISION

LEONEN, J.:

The Regional Governor of the Autonomous Region in Muslim Mindanao has the power to appoint officers in the region's civil service. However, if there is no regional law
providing for the qualifications for the position at the time of appointment, the appointee must satisfy the civil service eligibilities required for the position in the national
government to be appointed in a permanent capacity.

This is a petition for review on certiorari1 of the Court of Appeals resolution,2 dismissing the appeal of the Civil Service Commission Regional Office for the Autonomous Region
in Muslim Mindanao (Regional Office) for failure to file a memorandum. The Regional Office appealed the Regional Trial Courts decision,3 ruling that the position of Assistant
Schools Division Superintendent of the Department of Education, Division of Lanao del Sur-I, does not require career executive service eligibility.

On August 27, 2004, Dr. Parouk S. Hussin (Regional Governor Hussin), then Regional Governor of the Autonomous Region in Muslim Mindanao, appointed Dr. Sangcad D.
Benito (Dr. Benito) as Assistant Schools Division Superintendent of the Department of Education, Division of Lanao del Sur-I, ina temporary capacity.4 On June 20, 2005,
Regional Governor Hussin reappointed Dr. Benito as Assistant Schools Division Superintendent, this time in a permanent capacity. 5 To change the status of Dr. Benitos
appointment from temporary to permanent, Regional Governor Hussin requested the Civil Service Commission Regional Office for the Autonomous Region in Muslim Mindanao
to attest to Dr. Benitos permanent appointment. 6 However, the Regional Office, through Regional Director Anacleto B. Buena, Jr. (Regional Director Buena), returnedthe
appointment to the Regional Governor. According to the Regional Office, Dr. Benito did not possess the career executive service eligibility required for the position of Assistant
Schools Division Superintendent.7

On August 24, 2005, Dr. Benito filed a petition for mandamus 8 with the Regional Trial Court, Branch 9, Lanao del Sur, to compel the Regional Office to attest to his permanent
appointment as Assistant Schools Division Superintendent. He argued that the position does not belong to the Career Executive Service under Book V, Title I, Subtitle A,
Chapter 2, Section 7(3) of the Administrative Code of 1987. 9 Consequently, the position of Assistant Schools Division Superintendent does not require career executive service
eligibility.10

Dr. Benito claimed that it was the Regional Offices ministerial duty to attest to his appointment. 11 Under Article VII, Section 19 of Republic Act No. 9054, 12 the Regional Governor
of the Autonomous Region in Muslim Mindanao is the appointing authority for positions in the civil service in the region. Since the appointing authority already exercised his
discretion, the Regional Office allegedly had no choicebut to attest to Dr. Benitos appointment. 13

In his answer,14 Regional Director Buena claimed that the position of Assistant Schools Division Superintendent meets the following criteria for positions in the Career Executive
Service: The position is career, ranks higher than Division Chief, has a salary grade of 25, and entails performance of executive and managerial functions and supervisory
responsibility over a division.15 The permanent appointee to the position must, therefore, have career executive service eligibility. 16

According to Regional Director Buena, the Regional Office recognizes the autonomy of the Autonomous Region in Muslim Mindanao. However, until the region enacts its own
regional civil service law, the Regional Office shall carry on with the Civil Service Commissions mandate under the Constitution to promote and enforce civil service laws and
rules.17

For Dr. Benitos failure to exhaust administrative remedies before filing a petition for mandamus, Regional Director Buena prayed that the trial court dismiss the petition for
mandamus.18

The trial court noted that Dr. Benito did not appeal to the Civil Service Commission proper the Regional Offices refusal to attest to his appointment. Nevertheless, the trial court
found that the petition for mandamus raised a purely legal question. The case, therefore, falls within the exceptions to the rule on exhaustion of administrative remedies.19

As to whether the position of Assistant Schools Division Superintendent requires career executive service eligibility, the trial court held that it did not. Under Civil Service
Commission Resolution No. 021011 dated August 1,2002, only "director positions" in the Autonomous Region in Muslim Mindanao require career executive service eligibility.
Considering that the Career Executive Service Board had not declared the position of Assistant Schools Division Superintendent a director position, the trial court ruled that the
position does not require career executive service eligibility.20 The Regional Office "ha[d] no choice but to attest to [Dr. Benitos] appointment in accordance with Civil Service
Laws."21

Thus, in the decision22 dated September 12, 2005, the trial court granted Dr. Benitos petition for mandamus. It ordered the Civil Service Commission Regional Office for the
Autonomous Region in Muslim Mindanao to attest to the permanent appointment of Dr. Benito as Assistant Schools Division Superintendent of the Department of Education,
Division of Lanao del Sur-I.23

In the meantime, Regional Director Buena retired. 24 The Regional Office, through Regional Director Grace R. Belgado-Saqueton, thus, filed a motion for reconsideration, which
the trial court denied in its order25 dated May 19, 2006. The notice of appeal26 filed was initially denied due course in the order 27 dated August 16, 2006. On reconsideration, the
trial court reversed itself and granted the Regional Offices notice of appeal. 28

The Court of Appeals took cognizance of the appeal. On November 8, 2006, the Court of Appeals directed the parties to file their respective memoranda. 29

Dr. Benito filed his memorandum30 on December 27, 2006. As for the Regional Office, it filed a manifestation, requesting representation by the Office of the Solicitor General and
an additional 30 days to file a memorandum.31

The 30th day within which to filea memorandum lapsed without the Regional Office filing the required memorandum. Thus, in the resolution32 dated June 8, 2007, the Court of
Appeals declared the Regional Offices appeal abandoned and dismissed:
While We could have granted CSCs prayer for an additional period, per JRD Report dated April 12, 2007 however, no Memorandum for the appellant was filed as per docket
book entry. Consequently, considering that appellant is the initiator of the instant appeal, We are constrained to dismiss the same pursuant to Section 3, Rule 17; Section 10,
Rule 44; and Section 1(e), Rule 50 of the 1997 Rules of Civil Procedure.

WHEREFORE, in view of the foregoing, the instant appeal is hereby deemed ABANDONED and DISMISSED pursuant to Section 3, Rule 17; Section 10, Rule 44; and Section
1(e), Rule 50 of the 1997 Rules of Civil Procedure. 33

The Regional Office, through the Office of the Solicitor General, filed a motion for reconsideration. The Associate Solicitor handling the case assumed responsibility for the non-
filing of the memorandum, citing her alleged heavy workload as an excuse. She subsequently filed the required memorandum on behalf of the Regional Office.34

In his comment on the motion for reconsideration, Dr. Benito argued that the delay of seven (7) months and 22 days in the filing of the memorandum was inexcusable
negligence.35

In the resolution36 dated January 14, 2008,the Court of Appeals denied the Regional Offices motion for reconsideration.

On April 1, 2008, the Regional Office filed a petition for review on Certiorari 37 on which Dr. Benito commented.38 A reply39 to the comment was filed. Afterwards, this court
considered this case submitted for deliberation in the resolution40 dated December 1, 2009.

On March 6, 2012, this court resolvedto require the parties to move in the premises.41 On June 19, 2012, this court clarified its March 6, 2012 resolution and required the parties
to notify the court of new or intervening significant developments relevant to the case, if any. The parties were likewise required to signify their interest in resolving the legal
matters in this case.42

Dr. Benito filed the compliance43 dated August 20, 2012, on which the Regional Office commented. 44

In the petition for review on certiorari for the Regional Office, the Associate Solicitor handling the casepleads for this courts "kind understanding on her human limitations as a
government lawyer handling numerous cases."45She contends that "[the Regional Office] should not be made to bear the prejudice on account of [her] failure to submit the
required memorandum."46

The Regional Office argues that the trial court erred in taking cognizance of respondent Dr. Benitospetition for mandamus. A petition for mandamus, according tothe Regional
Office, is filed only when there is no other plain, speedy, and adequate remedy in the ordinary course of law. In this case, appeal to the Civil Service Commission proper was still
available. Worse, the petition for mandamus was allegedly filed as a substitute for a lost appeal. Consequently, the Regional Offices action on the attestation had already
become final and executory, "bar[ring] . . . resort to any judicial action." 47 The trial court should not have entertained the petition for mandamus. 48

On the merits, petitioner Regional Director Buena maintains that the position of Assistant Schools Division Superintendent requires career executive service eligibility, citing Civil
Service Commission Resolution No. 02101149 dated August 1, 2002. Since the resolution does not distinguish between a holder of a government position in the Autonomous
Region in Muslim Mindanao and one ina regular agency of the national government, the qualifications for positions in the national government must apply to positions in the
Autonomous Region in Muslim Mindanao.50

In his comment, respondent Dr. Benito emphasizes that the Regional Office took seven (7) months and 22 days to file a memorandum with the Court of Appeals. 51 He argues
that the failure of petitioner Regional Director Buenas counsel to file the memorandum is inexcusable negligence. Consequently, the negligence of petitioner Regional Director
Buenas counsel binds the Regional Office.

In his compliance52 dated August 20, 2012, respondent Dr. Benito added that the issuance of Civil Service Commission Resolution No. 100623 and, subsequently, the Regional
Assemblys enactment of the Muslim Mindanao Autonomy Act No. 279 or the ARMM Basic Education Act of 2010 confirm that the position of Assistant Schools Division
Superintendent does not require career executive service eligibility.53

The issues for our resolution are the following:

I. Whether the Court of Appeals erred in dismissing the Civil Service Commission Regional Office for the Autonomous Region in Muslim Mindanaos appealfor its
failure to file the required memorandum;

II. Whether respondent Dr. Benito correctly availed himself of a petition for mandamus against the Civil Service Commissions refusal to attest to his appointment;
and

III. Whether the position of Assistant Schools Division Superintendent requires careerexecutive service eligibility.

We rule for the Civil Service Commission Regional Office.

The Court of Appeals did not err in dismissing the Civil Service Commissions appeal for failure to file the required memorandum

Failure to comply with the Rules orwith any order of the court is a ground to dismiss the action.54 Specifically on the appellants failure to file a memorandum with the Court of
Appeals, Rule 44, Section 10 of the Rules of Civil Procedure provides:

SEC. 10. Time for filing memoranda in special cases. In certiorari, prohibition, mandamus, quo warranto and habeas corpus cases, the parties shall file, in lieu of briefs, their
respective memoranda within a non-extendible period of thirty (30) days from receipt of the notice issued by the clerk that all evidence, oral and documentary, is already
attached to the record.

The failure of the appellant tofile his memorandum within the period therefor may be a ground for dismissal of the appeal.
Rule 50, Section 1 reiterates that the appellants failure to file the required memorandum within the reglementary period is a ground for the Court of Appeals to dismiss the
appeal:

SECTION 1. Grounds for dismissal of appeal. An appeal may be dismissed by the Court of Appeals,on its motion or on that of the appellee, on the following grounds:

....

(e) Failure of the appellant to serve and file the required number of copies of his brief or memorandum within the time provided by these Rules[.]

In this case, the Court of Appeals ordered the parties to file their respective memoranda. Instead of filing the memorandum, the Regional Office requested additional 30 days to
file the pleading. The additional period requested lapsed without the Regional Office filing the required memorandum. The Court of Appeals, therefore, correctly dismissed the
appeal.

That "the case was not properly calendared in the list of due dates of the . . . Associate Solicitor [handling the case]" 55 and the Associate Solicitors "overwhelming workload"56 do
not justify counsels failure to file the memorandum on behalf of the Regional Office. We have ruled that heavy workload is no excuse for failure to comply with the reglementary
periods under the Rules.57

Nevertheless, considering the important question before us, we take cognizance of the petition and resolve the case on the merits.58

II

A petition for mandamus is the proper remedy to compel the Civil Service Commission to attest to the appointment of respondent

Under Rule 65, Section 3 of the Rules of Civil Procedure, 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 froman office, trust, or station. It may also be filed when any tribunal, corporation, board, officer, or
person unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled.

For mandamus to lie, the act sought to be enjoined must be a ministerial act or duty.59 An act is ministerial if the act should be performed "[under] a given state of facts, in a
prescribed manner, in obedience to the mandate of a legal authority, without regard to or the exercise of [the tribunal or corporations] own judgment upon the propriety or
impropriety of the act done."60 The tribunal, corporation, board, officer, or person must have no choice but to perform the act specifically enjoined by law. 61 This is opposed to a
discretionary act wherein the officer has the choice to decide how or when to perform the duty. 62

In the context of attestation of appointments in the civil service, this court has ruled that the Civil Service Commissions attestation is a ministerial duty once it finds the
appointee eligible for the position. The Commission "is limited only to the non-discretionary authority of determining whether or not the person appointed meets all the required
conditions laid down by the law."63 If the appointee possesses the required civil service eligibility, the Commission has "no choice but to attest to the appointment." 64 As this court
explained in Luego v. Civil Service Commission:65

The Civil Service Commission is not empowered to determine the kind or nature of the appointment extended by the appointing officer, its authority being limited to approving
orreviewing the appointment in the light of the requirements of the Civil Service Law. When the appointee is qualified and all the other legal requirements are satisfied, the
Commission has no choice but to attest to the appointment in accordance with the Civil Service Laws. 66 Mandamus, therefore, is the proper remedy to compel the Civil Service
Commission to attest to a valid appointment as this court ruled in Villegas v. Subido. 67

In Villegas, Manila Mayor Antonio J. Villegas appointed Gregorio A. Ejercito as City Legal Officer pursuant to Republic Act No. 5185. Mayor Villegas then sent the appointment
of Atty. Ejercito to the Civil Service Commission for attestation. 68

The Commission disapproved the appointment, reasoning that Atty. Ejercito did not meet the required trial work experience. Arguing that Atty. Ejercito possessed the
requirements under the civil service law, Mayor Villegas filed a petition for mandamus to compel the Commission to attest to Atty. Ejercitos appointment.69

Finding that Atty. Ejercito possessed the required civil service eligibility, this court granted the petition for mandamus. The Civil Service Commission was ordered to approve the
appointment of Atty. Ejercito as City Legal Officer of Manila. 70

In this case, respondent Dr. Benito availed himself of the correct remedy. Given his claim that he possesses the required civil service eligibility for the position of Assistant
Schools Division Superintendent, he correctly filed a petition for mandamus to compel the Civil Service Commission to approve his appointment.

The Regional Office argues that respondent Dr. Benito availed himself of the wrong remedy considering that the plain, speedy, and adequate remedy of appeal to the Civil
Service Commission proper was still available. The trial court should have dismissed respondent Dr. Benitos petition for mandamus.

True, the general rule is that there be no other plain, speedy, and adequate remedy in the ordinary course of law when filing a petition for mandamus.71 Moreover, the rule on
exhaustion of administrative remedies requires that a party "exhaust all administrative remedies to give the administrative agency an opportunity to decide the matter and to
prevent unnecessary and premature resort to the courts."72 The Revised Uniform Rules on Administrative Casesin the Civil Service, 73 then effective when Dr. Benito was
appointed, states:

Section 71. Complaint or Appeal to the Commission. Other personnel actions, such as, but not limited to, separation from the service due to unsatisfactory conduct or wantof
capacity during probationary period, dropping from the rolls due toAbsence Without Official Leave (AWOL), physically and mentally unfit, and unsatisfactory or poor
performance, action on appointments (disapproval, invalidation, recall, and revocation), reassignment, transfer, detail, secondment, demotion, or termination of services, may be
brought to the Commission, by way of an appeal.

Section 72. When and Where to File. A decision or ruling of a department or agency may be appealed within fifteen (15) days from receipt thereof by the party adversely
affected to the Civil Service Regional Office and finally, to the Commission Proper within the same period.

A motion for reconsideration may be filed with the same office which rendered the decision or ruling within fifteen (15) days from receipt thereof. (Emphasis supplied)
Nevertheless, there are exceptionsto the rule on exhaustion of administrative remedies. A party may directly resort to judicial remedies if any of the following is present:

1. when there is a violation of due process;

2. when the issue involved ispurely a legal question;

3. when the administrative action is patently illegal amounting to lack or excess ofjurisdiction;

4. when there is estoppel on the part of the administrative agency concerned;

5. when there is irreparable injury;

6. when the respondent is a department secretary whose acts as an alter ego of the President bear the implied and assumed approval of the latter;

7. when to require exhaustion of administrative remedies would be unreasonable;

8. when it would amount to a nullification of a claim;

9. when the subject matter is a private land in land case proceedings;

10. when the rule does not providea plain, speedy and adequate remedy; and

11. when there are circumstances indicating the urgency of judicial intervention. 74

In this case, the facts are undisputed. Respondent Dr. Benito is not career executive service eligible. The question is whether the position for which he was appointed requires
career executive service eligibility. This is a purely legal question which is an exception to the rule on exhaustion of administrative remedies.

All told, respondent Dr. Benito did not err in filing a petition for mandamus with the trial court.

III

The position of Assistant Schools Division Superintendent is a position in the Career Executive Service

Under the civil service law, positions in the Career Executive Service are: "Under secretary, Assistant Secretary, Bureau Director, Assistant Bureau Director, Regional Director,
Assistant Regional Director, Chief of Department Service, and other officers of equivalent rank as may be identified by the Career Executive Service Board, all of whom are
appointed by the President."75

In the exercise of its legal mandate, the Career Executive Service Board issued Resolution No. 945 dated June 14, 2011, where it set the following criteria to determine whether
a position belongs to the Career Executive Service:

1. The position is career;

2. The position is above division chief; and

3. The position entails performance of executive and managerial functions.

Aside from satisfying the criteriaset by the Career Executive Service Board, the holder of the position must also be a presidential appointee.76

Applying these principles in thiscase, we rule that the position of Assistant Schools Division Superintendent belongs to the Career Executive Service.

The position of Assistant Schools Division Superintendent is a career position. Appointment to the position is based on merit and fitness and gives the appointee an opportunity
for advancement to higher career positions,77such as Schools Division Superintendent. If permanently appointed, the appointee is guaranteed security of tenure. 78

The position is above Division Chief. An Assistant Schools Division Superintendent has a salary grade of 25. 79

As to functions and responsibilities, the Assistant Schools Division Superintendent assists the Schools Division Superintendent in performing the following executive and
managerial functions under Republic Act No. 9155 or the Governance of Basic Education Act of 2001:

1. Developing and implementing division education development plans;

2. Planning and managing the effective and efficient use of all personnel, physical and fiscal resources of the division, including professional staff development;

3. Hiring, placing and evaluating all division supervisors and schools district supervisors as well as all employees in the division, both teaching and non-teaching
personnel, including school heads, except for the assistant division superintendent;
4. Monitoring the utilization of funds provided by the national government and the local government units to the schools and learning centers;

5. Ensuring compliance of quality standards for basic education programs and for this purpose strengthening the role of division supervisors as subject area
specialists;

6. Promoting awareness of and adherence by all schools and learning centers to accreditation standards prescribed by the Secretary of Education;

7. Supervising the operations of all public and private elementary, secondary and integrated schools, and learning centers; and

8. Performing such other functions as may be assigned by proper authorities.80

In fact, the law recognizes that the position of Assistant Schools Division Superintendent belongs to the Career Executive Service. Section 7 of Republic Act No. 9155 explicitly
provides that an appointee to the position must be a career executive service officer:

SEC. 7. Powers, Duties and Functions.

....

No appointment to the positions of regional directors, assistant regional directors, schools division superintendents and assistant schools division superintendents shall be made
unless the appointee is a career executive service officer who preferably shall have risen from the ranks. (Emphasis supplied)

In Osea v. Malaya,81 this court took judicial notice of the Career Executive Service Boards Memorandum Circular No. 21, Series of 1994, where the Board identified the position
of Assistant Schools Division Superintendent as a Career Executive Service position.82

Even Regional Governor Hussin admitted that the President appoints the Assistant Schools Division Superintendent. In his letter-request for attestation of respondent Dr.
1wphi1

Benitos appointment, he said:

Our stand is that Dr. Benito, Assistant Schools Division Superintendent being an appointee of the ARMM Regional Governor need not possess the said eligibility. More
importantly, if the agencies of the National Government who have fiscal autonomy enjoys the exemption, then the more for an appointee of the ARMM for the reason that in the
ARMM we do not only exercise fiscal autonomy but weare an Autononmous [sic] Local Government Unit with unique structure. We emphasize that the other Assistant Schools
Superintendents in the ARMM were appointed by the President thus, they were required to have the 3rd level eligibility pursuant to Presidential Decree 1.

In view of this, we are submitting the herein appointment for the approval of your Office. 83 (Emphasis supplied)

It is settled, therefore, that the position of Assistant Schools Division Superintendent belongs to the Career Executive Service. The appointee to the position must be career
executive service eligible.

Permanent appointment to positionsin the Career Executive Service presupposes that the appointee has passed the Career Executive Service examinations. 84 In this case,
respondent Dr. Benito does not possess the required career executive service eligibility. He, therefore, cannot be appointed to the position of Assistant Schools Division
Superintendent in a permanent capacity. The Civil Service Commission cannot be compelled to attest to the permanent appointment of respondent Dr. Benito.

The Regional Governor has the power to appoint civil servants in the Autonomous Region in Muslim Mindanao under Article VII, Section 19 of Republic Act No. 9054.85 In
Muslim Mindanao Autonomy Act No. 279 or the ARMM Basic Education Act of 2010, the Regional Assembly set the qualification standards of Assistant Schools Division
Superintendents of Divisions of the Department of Education in the Autonomous Region:

Sec. 45. Qualification Standards of Schools Division Superintendent and Assistant Schools Division Superintendent. No person maybe appointed Schools Division
1wphi1

Superintendent or Assistant Schools Division Superintendent unless he is natural born citizen of the Philippines; a native inhabitant of the Autonomous Region; a registered
voter in any province or cityin the region for at least five years prior to his appointment.

. . . The Assistant Schools Division Superintendent, at the time of his appointment, shall at least be a Masters Degree holder; five years of supervisory and administrative
experiences; with relevant trainings; and possesses appropriate civil service eligibility.

....

Nevertheless, when respondent Dr. Benito was appointed Assistant Schools Division Superintendent in 2005, there was yet no regional law providing for the qualifications for
the Assistant Schools Division Superintendents of Divisions of the Department of Education in the Autonomous Region. Consequently, the civil service eligibilities required for
positions in the national government shall likewise be required for appointments to positions in the Autonomous Region. Article XVI, Section 4 of Republic Act No. 9054
provides:

SEC. 4. Civil Service Eligibility. Until the Regional Assembly shall have enacted a civil service law, the civil service eligibilities required by the central government or national
government for appointments to public positions shall likewise be required for appointments to government positions in the Regional Government. As may be necessary, the
Civil Service Commission shall hold special civil service examinations in the autonomous region. For a period not longer more than six (6) years from the approval of this
Organic Act, the central government or national government shall endeavor to provide appropriate civil service eligibility to applicants coming from the autonomous region for
government positions therein. The minimum qualifications prescribed by law shall, however, be met.

All told, respondent Dr. Benito did not possess the required civil service eligibility at the time he was appointed Assistant Schools Division Superintendent. Consequently, he
cannot be appointed in a permanent capacity to the position. The Civil Service Commission cannot be compelled through a writ of mandamus to attest to the permanent
appointment of respondent Dr. Benito.

WHEREFORE, the petition for review on certiorari is GRANTED. The Regional Trial court, Branch 9, Lanao del Sur's September 12, 2005 decision in Special Civil Action Case
No. 1538-05 is SET ASIDE.
SO ORDERED.

G.R. No. 191225 October 13, 2014

ZARSONA MEDICAL CLINIC, Petitioner,


vs.
PHILIPPINE HEALTH INSURANCE CORPORATION, Respondent.

DECISION

PEREZ, J.:

Before the Court is a petition for review on certiorari under Ruic 45 of the Rules of Court, questioning the 28 January 2009 1 and 7 December 20092 Resolutions of the Court of
Appeals in CA-G.R. SP No. 02489-MIN.

A complaint was filed against petitioner Zarsona Medical Clinic (ZMC) for violation of Section 149 of the Revised Implementing Rules and Regulations of Republic Act No. 7875
or the National Health Insurance Act of 1995. Section 149 penalizes any health care provider that increases the period of actual confinement of any patient with revocation of
accreditation.

ZMC filed a claim withthe Philippine Health Insurance Corporation (Philhealth) on the confinement of National Health Insurance Program (NHIP) member Lorna M. Alestre
(Alestre) on 10-12 August 2003. Said claim was denied on the ground of "extended confinement." It was stated on the claim form that Alestre was admitted to ZMC on 6 August
2003 and was discharged on 12 August 2003. Itwas also revealed in her Salaysay3 dated 12 January 2004 that Alestres actual confinement at ZMC was on 10-11 August 2003.
Alestre, who is a teacher at Rizal Elementary School, was found to have reported for work on 12 August 2003.

In defense of ZMC, Dr. Sylvia Bragat (Dr. Bragat), its Medical Director, stated that ZMCs Midwife/Clerk Jennifer R. Acuram (Acuram) committed an honest mistake when she
wrote 6-12 August 2003 as the confinement period in the claim form. Dr. Bragat asserted that the hospital had in fact claimed only for two (2) days. Acuram acknowledged her
mistake in her Affidavit of Explanation.4

ZMC also presented an Affidavit of Explanation 5 dated 21 January 2005 from Alestre recanting her previous Salaysay. Alestre explained that the previous statement she gave
does not reflect the truth because she was protecting herself when she logged-in at the schools time record on 12 August 2003 when she was supposedly still confined at ZMC.
Alestre narrated that she and her son were admitted at ZMC on 10 August 2003 at around 1:30 p.m. and was discharged on 12 August 2003. In the morning of 12 August 2003,
after her attending physician went to check on her, she managed to slip out of the hospital. She proceeded to the school, which was a mere ten minute drive away from
ZMC.She reported for work and came back to the hospital at noon to take her medicines and look after her child. Thereafter, she again wentback to the school and at about 1:30
p.m., she asked permission from the school principal that she needed to go back to the hospital. She then went back to ZMC to attend to her child and process her discharge
papers. At around 2:00 p.m., she finally came back to the school.

Dr. Ariel dela Cruz, attending physician of Alestre, confirmed that he ordered Alestres discharge inthe morning of 12 August 2003.6

On 12 December 2007, ZMC was found liable for the charge of "Extending Period of Confinement" in violation of Section 149 of the Revised Rules and Regulations of Republic
Act No. 7875 and was meted the penalty of suspension from participating in the NHIP for a period of three (3) months and a fine of P10,000.00.

While Health Insurance Arbiter Michael Troy Polintan considered the admission date of 6 August 2003 reflected in Alestres clinical record as a mere clerical error, he refused to
believe Alestres claim that she was discharged only on 12 August 2003 but onthat day, she was travelling back and forth from hospital tothe school where she teaches. The
Philhealth Arbiter gave more evidentiary weight to the signature ofAlestre in the schools attendance logbook which established the fact that she reported for work on 12 August
2003.

ZMC appealed but on 24 July 2008, the Philhealth Board of Directors (the Board) issued Philhealth Board Resolution No. 1151, Series of 2008 dismissing the appeal and
affirming the 12 December 2007 Decision of the Philhealth Arbiter.

The Board ruled that the contentsof the Affidavit of Explanation dated 3 May 2005executed by Alestre is "too good to be true" because "in the first place, she has stated in detail
all her acts from 7:17 a.m. to 8:15 [a.m.], 9:30 [a.m.], 9:50 [a.m.], 12:00 [noon]; 12:55 p.m., 1:30 p.m., 1:50 p.m., 2:15 p.m. and 2:30 p.m. The recollection of all these times after
22 months is not only fantastic but likewise incredible."7 Moreover, the Board also noted that Alestre could not possibly be in ZMC and in the school at the same time on 12
August 2003 while her son was still confined at the hospital.

ZMC filed a petition for review withthe Court of Appeals putting in the forefront of its arguments Alestres Affidavit of Explanation. ZMC admitted to Alestres recantation but inits
defense, ZMC emphasized that the Affidavit, being notarized and executed under oath, should weigh more than the Salaysay, which was not so. ZMC added that Alestres
retraction rang true because she was willing to incriminate herself in exchange for telling the truth.

Acting on the petition, the Court of Appeals issued the 4 September 2008 Resolution, which reads:

In the greater interest of substantial justice, petitioner is directed to RECTIFY within five (5) days from notice, the following deficiencies in its petition: (1) failure to attach the
Special Power of Attorney executed by the petitioner Zarsona Medical Clinicin favor of Ma. Irene M. Hao, authorizing the latter to execute the verification and certification of
nonforum shopping; (2) failure of the petitioner to attach the certified true copy of the assailed decision of the Board of Directors of the Philippine Health Insurance Corporation
as required under Rule 43, Section 6(c) of the Revised Rules of Court; (3) failure of the petitioners counsel, Atty. John Tracy F. Cagas, to indicate the dates and places of
issuance of his IBP and PTR Receipts as well as his Roll of Attorneys Number.

Further action on the petition isheld in abeyance pending the petitioners compliance on these matters. 8

On 30 October 2008, ZMC filed its Compliance, attaching thereto the plain copies of the Official Receipts of Atty. John Tracy F. Cagas Integrated Bar of the Philippines dues
and Professional Tax Receipts showing the dates and places of issuance thereof, his roll number, a certified true copy of the assailed Decision dated 24 July 2008, and a
Special Power of Attorney (SPA) dated 5 February 2001 executed by Dr. Leandro Zarsona, Jr. (Dr. Zarsona) in favor of Dr. Bragat and William Bragat.
On 28 January 2009, the Court of Appeals dismissed the petition for failure on the part of ZMC to attach a valid SPA. The appellate court found the SPA defective on the ground
that it does not explicitly authorize Dr. Bragat to sign and execute the required verification and certification of nonforum shopping in this case. The appellate court noted that the
powers granted to Dr. Bragat pertain only to her administrative functions as Medical Director of ZMC.

ZMC moved for reconsideration but itwas denied for lack of merit on 7 December 2009. In his Dissent, Court of Appeals Associate Justice Ruben Ayson believed that ZMC
should be given the opportunity to rectify any defect or infirmity in the petition pursuant to the preference on liberal construction of the Rules of Court over strict construction.9

Hence, this petition for review with the following assignment of errors:

1. THE COURT OF APPEALS ERRED IN RULING THAT THE SPECIAL POWER OF ATTORNEY (SPA) EXECUTED IN FAVOR OF DR. SYLVIA P. BRAGAT
WAS INSUFFICIENT TO COVER THE AUTHORITY GRANTED UPON HER TO SIGN THE VERIFICATION AND CERTIFICATION OF NON-FORUM
SHOPPING OF THIS INSTANT CASE.

2. THE COURT OF APPEALS ERRED IN DISMISSING THIS INSTANT CASE BY DISREGARDING THE MERITS THEREOF.10

ZMC insists that the SPA provided that the Attorney-in-fact can make, execute and sign any contract, documents or all other writing of whatever kind and nature which are
necessary to the power granted to it which is to represent, process, follow-up, transact and facilitate claims in Philhealth. This also covers the execution of verification and
certification of non-forum shopping. ZMC then asserts that it will not gain anything in extending the period of confinement and reiterates that its clerk committed a mistake in
entering the exact period of confinement.

At the outset, the issues revolve on the sufficiency of the SPA authorizing Dr. Bragat to sign the verification and certification of non-forum shopping in the petition filed before the
Court of Appeals.

Verification of a pleading is a formal, not jurisdictional, requirement intended to secure the assurance that the matters alleged in a pleading are true and correct. Thus, the court
may simply order the correction of unverified pleadings or act on them and waive strict compliance with the rules. It is deemed substantially complied with when one who has
ample knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, and whenmatters alleged inthe petition have been made in good faith
orare true and correct.11

As to certification against forum shopping, non-compliance therewith or a defect therein, unlike in verification, is generally not curable by its subsequent submission or correction
thereof, unless there is a need to relax the Rule on the ground of "substantial compliance" or presence of "special circumstances or compelling reasons." 12 Rule 7, Section 5 of
the Rules of the Court, requires that the certification should be signed by the "petitioner or principal party" himself. The rationalebehind this is "because only the petitioner
himself has actual knowledge of whether or not he has initiated similar actions or proceedings indifferent courts or agencies."13

In Lim v. The Court of Appeals, Mindanao Station,14 we reiterated that the requirements of verification and certification against forum shopping are not jurisdictional. Verification
is required to secure an assurance that the allegations in the petition have been made in good faith or are true and correct, and not merely speculative. Non-compliance with the
verification requirement does not necessarily render the pleading fatally defective, and is substantially complied with when signed by one who has ample knowledge of the truth
of the allegations in the complaint or petition, and when matters alleged in the petition have been made in good faith orare true and correct. On the other hand, the certification
against forum shopping is required based on the principle that a party-litigantshould not be allowed to pursue simultaneous remedies in different fora. While the certification
requirement is obligatory, non-compliance or a defect in the certificate could be cured by its subsequent correction or submission under special circumstances or compelling
reasons, or on the ground of "substantial compliance." 15

In both cases, the submission of an SPA authorizing an attorney-infact to sign the verification and certification against forum-shopping in behalf of the principal party is
considered as substantial compliance with the Rules.

In this case, Philhealth found the SPA defective.

The SPA granted by Dr. Zarsona tohis attorneys-in-fact, Dr. Bragat and William Bragat, authorizes the latter to do the following:

A) To represent(,) process, follow up, transact and facilitate all claims, benefits and privileges belonging to or owing to Zarsona Medical Clinic in the Philippine
Health Insurance Corporation, Department of Health and in other agencies, may it be private or government;

B) To receive, withdraw, and encash any check or checks belonging to or in the name of Zarsona Medical Clinic;

C) To make, execute, and sign any contract, documents or all other writings of whatever kind and nature which are necessary to the foregoing powers. 16

Indeed, a reading of the SPA reveals that the powers conferred by Dr. Zarsona to his attorneys-in-fact pertain to administrative matters. The phrase "claims, benefits and
privileges belonging to or owing to Zarsona Medical Clinic" clearly does not include the filing of cases before the courts or any quasi-judicial agencies. The term"claims" in
particular refers to those claims for payment of services rendered by the hospital during a Philhealth members confinement. These claims are filed by the hospital with
Philhealth. Furthermore, the SPA makes no mention of any court, judicial or quasi-judicial bodies. The enumeration of agencies in the first paragraph of the SPA, such as
Philhealth and Department of Health, refers to those agencies which are health-related. There is no explicit authorization for Dr. Bragat to sign and execute the requirement
verification and certification in this case. At the very least, the SPA should have granted the attorneys-in-fact the power and authority to institute civil and criminal actions which
would necessarily include the signing of the verification and certification against forum-shopping.

The defects in the SPA notwithstanding, we rule in favor of ZMC. We agree with the Dissent registeredby Associate Justice Ruben Ayson when he suggested that ZMC should
begiven the opportunity to rectify the defects in the petition. We are aware that the Court of Appeals in its Resolution dated 28 January 2009 had directed ZMC to submit an
SPA. ZMC had in good faith complied by submitting an SPA which it thought was sufficient and encompasses the filing of the instant suit. Time and again, we had espoused the
doctrine that provisions of the Rules of Court should be liberally construed in order to promote their objective of securing a just, speedy and inexpensive disposition of every
action and proceeding. Otherwise put, the rule requiring a certification of forum shopping to accompany every initiatory pleading, or the verification for that matter "should not be
interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective or the goal of all rules of procedure which is to achieve substantial justice as
expeditiously as possible."17 While it is true that the rules of procedure are intended to promote rather than frustrate the ends of justice, and the swift unclogging of court docket
is a laudable objective, it nevertheless mustnot be met at the expense of substantial justice. This Court has time and again reiterated the doctrine that the rules of procedure are
mere tools aimed at facilitating the attainment of justice, rather than its frustration. A strict and rigid application of the rules must always be eschewed when it would subvert the
primary objective of the rules, that is, to enhance fair trialsand expedite justice. Technicalities should never be used to defeat the substantive rights of the other party. Every
party-litigant must be affordedthe amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities.18
We choose to apply liberality becauseof the substantial merit of the petition.

The petition was dismissed by the Court of Appeals purely on a procedural ground. Ordinarily, procedure dictates that the Court of Appeals should be tasked with properly
disposing the petition, a second time around, on the merits. However, when there is enough basis on which a proper evaluation of the merits of petitioners case may be had,
the Court may dispense with the time-consuming procedure of remand in order to prevent further delays in the disposition of the case. Clearly, a remand of the instant case to
the Court of Appeals would only unnecessarily prolong its resolution which had been pending for a decade. It is already an accepted rule of procedure for us to strive to settlethe
entire controversy in a single proceeding, leaving no root or branch tobear the seeds of future litigation. If, based on the records, the pleadings, and other evidence, the dispute
can be resolved by us, we will do so to serve the ends of justice instead of remanding the case to the lower court for further proceedings.19

Thus, we find the petition meritorious.

ZMC was charged with extending the period of confinement punishable under Section 149 of the Revised Implementing Rules and Regulations of Republic Act No. 7875, which
provides:

Section 149. Extending Period of Confinement. This is

committed by any health care provider who, for the purpose of claiming payment from the NHIP, files a claim with extended period of confinement by:

a. Increasing the actual confinement of any patient;

b. Continuously charting entries in the Doctor's Order, Nurse's Notes and Observation despite actual discharge or absence of the patients;

c. Using such other machinations that would result in the unnecessary extension of confinement.

The foregoing offenses shall be penalized by revocation of accreditation. In addition, a recommendation shall be submitted to the DOH for cancellation of its license,
oraccreditation, orclearance to operate, as appropriate.

The Philhealth Arbiter and the Board did not give weight to the Affidavit of Explanation submitted by the patient herself recanting her previous statement and categorically stating
that she was discharged only on 12 August 2003.

It is an oft-repeated rule that findings of administrative agencies are generally accorded not only respect but also finality when the decision and order are not tainted with
unfairness or arbitrariness that would amount to abuse of discretion or lack of jurisdiction. The findings of facts must be respected, so long as they are supported by substantial
evidence even if not overwhelming or preponderant.20

After an exhaustive review of the records, we find that this case warrants a departure from said rule. 1wphi 1

We are inclined to give more credence to Alestres Affidavit, which is essentially a recantation of her previous Salaysay, for the following reasons: First, Alestre has fully
explained toour satisfaction why she initially misdeclared her dates of confinement in ZMC. In her desire to report and be compensated for one day of work, Alestre hied back
and forth between school and the hospital. It is difficultto believe that she would risk her reputation as a public schoolteacher, as well as prosecution for violation of civil service
rules, to be an abettor ofZMC. Second, Alestre truly cannot be in two places at the same time. But her narration clearly accounts for her whereabouts on 12 August 2003. She
travelled at least 3 times to and from the hospital and school. She admitted that the school was a mere ten-minute drive away from the hospital so she can easily traverse
between the two locations. Third, ZMC had in fact admitted to its error in indicating the dates of Alestres confinement so there is no reason for ZMC to further conceal the actual
days of Alestres confinement. Fourth, the Salaysayis not notarized. While recantation is frowned upon and hardly given much weight in the determination of a case, the affidavit
is still a notarized document which carries in its favor the presumption of regularity with respect to its due execution, and thatthere must be clear, convincing and more than
merely preponderant evidence to contradict the same.21

Based on the foregoing, we reverse the finding of Philhealth and hold that ZMC is not guilty of extending the period of confinement.

WHEREFORE, the petition is GRANTED. The Resolution of the Court or Appeals in CA-G.R. SP No. 02489-MIN dismissing the petition is REVERSED and SET ASIDE.
Philhcalth Board Resolution No. 1151, Series or 2008 is SET ASIDE.

SO ORDERED.

G.R. No. 203583 October 13, 2014

LEONORA B. RIMANDO, Petitioner,


vs.
SPOUSES WINSTON and ELENITA ALDABA and PEOPLE OF THE PHILIPPINES, Respondents.

DECISION

PERLAS-BERNABE, J.:

Before the Court is a petition for review on certiorari 1 assailing the Decision2 dated July 25, 2012 and the Resolution3 dated September 25, 2012 of the Court of Appeals (CA) in
CA-G.R. CV No. 96528, which affirmed the Decision4 dated October 28, 2010 of the Regional Trial Court of Manila, Branch 15 (RTC) in Criminal Case No. 04-227211 acquitting
petitioner Leonora B. Rimando (Rimando) of the crime of estafa, but nonetheless, held her civilly liable to respondents-spouses Winston and Elenita Aldaba (Sps. Aldaba) in the
amount of P500,000.00. The Facts

An Information dated January 21, 2004 was filed before the RTC charging Rimando of the crime of estafa through the use of false manifestations and fraudulent representations
(estafa case).5 According to the prosecution, Rimando enticed Sps. Aldaba to invest in her business under the assurance that it is stable and that their money would earn 8%
monthly interest.6 Convinced by Rimandos proposal and taking into consideration their long friendship, Sps. Aldaba gave Rimando a check in the amount of P500,000.00 as
investment in her business. In turn, Rimando gave Sps. Aldaba three (3) postdatedchecks, one for P500,000.00 and the other two (2) forP40,000.00 each, and made them sign
an investment contract with Multitel International Holding Corporation (Multitel). Upon maturity of the checks, Sps. Aldaba attempted to encash the same but were dishonored
for being drawn against insufficient funds.7 This prompted Sps. Aldaba to demand Rimando to make good the said checks, but to no avail. Hence, they were constrained tofile a
criminal complaint for estafa against her.8

In her defense, Rimando denied her friendship with Sps. Aldaba and that she enticed them to invest in her own business, as she had none. According to her, she only referred
them to Multitel Investment Manager Jaimelyn9Cayaban who handled their investment.10 She also maintained that she only issued the three (3) post dated checks to
accommodate them while waiting for the check from Multitel, but when the latter issued the check, Sps. Aldaba refused to accept it so she can be held liable in case their
investment fails.11

Meanwhile, Sps. Aldaba also filed a criminal case against Rimando for violation of Batas Pambansa Bilang (BP) 22 12 before the Metropolitan Trial Court of Manila, Branch VI,
docketed as Crim. Cases Nos. 407191-193 (BP 22 cases).13 On July 7, 2010, Rimando was acquitted14 in the BP 22 cases on the ground of reasonable doubt, with a declaration
that the act or omission from which liability may arise does not exist.

The RTC Ruling

In a Decision15 dated October 28, 2010, the RTC acquitted Rimando of the crime of estafa, but found her civilly liable to Sps. Aldaba in the amount of P500,000.00. It found the
absence of the element of deceit as Sps. Aldaba were fully aware that they would be investing their money in Multitel and not in Rimandos purported business. Nevertheless,
the RTC ruled that as an accommodation party to one of the checks she issued to Sps. Aldaba on behalf of Multitel, Rimando should be heldliable to Sps. Aldaba for the
corresponding amount of P500,000.00.16Aggrieved, Rimando appealed to the CA. In her Appellants Brief 17 dated October 29, 2011, she contended that her acquittal and
exoneration from the civil liability in the BP 22 cases should have barred Sps. Aldaba from claiming civil liability from her in the estafa case. 18

The CA Ruling

In a Decision19 dated July 25, 2012, the CAaffirmed the RTC Ruling. It held that a prosecution for violation of BP 22 is distinct, separate, and independent from a prosecution for
estafa, albeit they may both involve the same parties and transaction. As such, Rimandos acquittal and subsequent exoneration from civil liability in the BP 22 cases does not
automatically absolve her from civil liability in the estafa case. 20

Rimando moved for reconsideration, which was, however, denied in a Resolution 21 dated September 25, 2012, hence, this petition.

The Issue Before the Court

The primordial issue for the Courts resolution is whether or not the CA correctly upheld Rimandos civil liability in the estafa case despite her acquittal and exoneration from civil
liability in the BP 22 cases.

The Courts Ruling

The petition is without merit.

At the outset, the Court notes that Rimandos acquittal in the estafa case does not necessarily absolve her from any civil liability to private complainants, Sps. Aldaba. It is well-
settled that "the acquittal of the accused does not automatically preclude a judgment against him on the civil aspect of the case. The extinction of the penal action does not carry
with it the extinction of the civil liability where: (a) the acquittal is based on reasonable doubt as only preponderance of evidence is required; (b) the court declares that the
liability of the accused is only civil; and (c) the civil liability of the accused does not arise from or is not based upon the crime of which the accused is acquitted. However, the
civil action based on delict may be deemed extinguished if there isa finding on the final judgment in the criminal action that the act or omission from which the civil liability may
arise did not exist or where the accused did not commit the acts or omission imputed to him." 22

In this case, Rimandos civil liability did not arise from any purported act constituting the crime of estafa as the RTC clearly found that Rimando never employed any deceit on
Sps. Aldaba to induce them to invest money in Multitel. Rather, her civil liability was correctly traced from being an accommodation party to one of the checks she issued to Sps.
Aldaba on behalf of Multitel. In lending her name to Multitel, she, in effect, acted as a surety to the latter, and assuch, she may be held directly liable for the value of the issued
check.23 Verily, Rimandos civil liability to Sps. Aldaba in the amount of P500,000.00 does not arise from or is not based upon the crime she is charged with, and hence, the CA
correctly upheld the same despite her acquittal in the estafa case.

In this relation, the CA is also correct in holding that Rimandos acquittal and subsequent exoneration in the BP 22 cases had no effect in the estafa case, even if both cases
were founded on the same factual circumstances. In Nierras v. Judge Dacuycuy,24 the Court laid down the fundamental differences between BP 22 and estafa, to wit:

What petitioner failed to mention in his argument is the fact that deceit and damage are essential elements in Article 315 (2-d) Revised Penal Code, but are not required in
Batas Pambansa Bilang 22. Under the latter law, mere issuance of a check that is dishonored gives rise to the presumption of knowledge on the part of the drawer that he
1wphi1

issued the same without sufficient funds and hence punishable which is not so under the Penal Code. Other differences between the two also include the following: (1) a drawer
of a dishonored check may be convicted under Batas Pambansa Bilang 22 even if he had issued the same for a preexisting obligation, while under Article 315 (2-d) of the
Revised Penal Code, such circumstance negates criminal liability; (2) specific and different penalties are imposed in each of the two offenses; (3) estafa is essentially a crime
against property, while violation of Batas Pambansa Bilang 22 is principally a crime against public interest as it does injury to the entire banking system; (4) violations of Article
315 of the Revised Penal Code are mala in se, while those of Batas Pambansa Bilang 22 are mala prohibita. 25

Owing to such differences, jurisprudence in People v. Reyes26 even instructs that the simultaneous filing of BP 22 and estafa cases do not amount to double jeopardy:

While the filing of the two sets of Information under the provisions of Batas Pambansa Bilang 22 and under the provisions of the Revised Penal Code, as amended, on estafa,
may refer to identical acts committed by the petitioner, the prosecution thereof cannot be limited to one offense, because a single criminal act may give rise to a multiplicity of
offenses and where there is variance or differences between the elements of an offense is one law and another law as in the case at bar there will be no double jeopardy
because what the rule on double jeopardy prohibits refers to identity of elements in the two (2) offenses. Otherwise stated, prosecution for the same act is not prohibited. What
is forbidden is prosecution for the same offense. Hence, the mere filing of the two (2) sets of information does not itself give rise to double jeopardy.27

Essentially, while a BP 22 case and an estafa case may be rooted from an identical set of facts, they nevertheless present different causes of action, which, under the law, are
considered "separate, distinct, and independent" from each other. Therefore, both cases can proceed to their final adjudication both as to their criminal and civil aspects
subject to the prohibition on double recovery. 28 Perforce, a ruling in a BP 22 case concerning the criminal and civil liabilities of the accused cannot be given any bearing
whatsoever in the criminal and civil aspects of a related estafa case, as in this instance.
WHEREFORE, the petition is DENIED. Accordingly, the Decision dated July 25, 2012 and the Resolution dated September 25, 2012 of the Court of Appeals in CA-G.R. CV No.
96528 are hereby AFFIRMED.

SO ORDERED.

G.R. No. 198528 October 13, 2014

MAGSAYSAY MITSUI OSK MARINE, INC. and/or MOL TANKSHIP MANAGEMENT (ASIA) PTE LTD.,Petitioners,
vs.
JUANITO G. BENGSON*, Respondent

DECISION

DEL CASTILLO, J.:

Time and again, this Court has held that cardiovascular disease, coronary artery disease, and other heart ailments are work-related and, thus, compensable.

Assailed in this Petition for Review on Certiorari1 is the July 15, 2011 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 118501 which set aside the August 31, 2010
Decision of the National Labor Relations Commission (NLRC) in NLRC LAC No. (OFW-M) 10-000643-09 and reinstated with modification the June 18, 2009 Decision of the
Labor Arbiter in NLRC OFW Case No. (M) 07-10402-08. Also assailed herein is the CA's September 9, 2011 Resolution 3 denying reconsideration of its assailed Decision.

Factual Antecedents

The facts are succinctly summarized by the appellate court, thus:

Since the year 1986, x x x Juanito G. Bengson4 has been working as a seafarer for x x x Magsaysay Mitsui OSK Marine, Inc.5 (Magsaysay, Inc.), from his first position as Deck
Cadet until his present position as Third Mate Officer. On August 7, 2007, at the age of 45, [Bengson] entered into his 22nd contract of employment with Magsaysay, Inc. for and
in behalf of its foreign principal MOL Tankship Management (Asia) Pte., Ltd., 6 as a Third Mate Officer on board the vessel "KN TRADER". The contract was for a duration of nine
(9) months with a basic monthly salary of US$814.00 for a minimum of 40 hours of work in a week. Prior to his deployment, [Bengson] underwent and passed the Pre-
Employment Medical Examination (PEME) and was found to be "fit for sea duty" on August 11, 2007. Thereafter, [Bengson] boarded the ship and performed his assigned tasks.

On October 5, 2007, after doing his usual duties on board the vessel, [Bengson] suddenly experienced difficulty in breathing and numbness on half of his body. Thinking that it
was caused by fatigue, he rested for a while. After two hours, he still felt numbness over his half body prompting him to ask for assistance. On October 7, 2007, [Bengson] was
brought to the Neurological Department of the Izola General Hospital in Slovenia where he was confined for three days. While in the hospital, [Bengson] had partial paralysis of
the right hand and a minor partial paralysis of the right leg. His Computed Tomography (CT) Scan of the head showed a "small hematoma in the left part of the crane". At that
time, [Bengson] could only walk with the help of a physiotherapist and was prohibited from lifting heavy things. Due to his incapacity to work, his immediate repatriation was
arranged.

Upon [Bengsons] arrival in the Philippines on October 21, 2007, he was immediately brought to the Manila Doctors Hospital for confinement under the supervision of company-
designated-physician Dr. Benigno F. Agbayani, Jr. [Bengsons] Cerebrovascular Investigation Form reveals that he had, among other things, stroke, hypertension, carotid bruit,
Transient Ischemic Attack (T.I.A.), Hemiplegia, and Amaurosis Fugax. His Plaque Morphology Type I reveals a "uniformly echolucent with thin echogenic cap (homogenous
hypoechoic) or a high risk for plaque rupture and embolism regardless of % of stenosis". Upon [Bengsons] discharge on November 1, 2007, his Medical Abstract/Discharge
Summary showed that he had a stroke.

On November 4, 2007, Dr. Agbayani issued an Initial Out-Patient Consult Report which stated that [Bengsons] illness of "hematoma in the cranium" was not work-related. Thus,
[Magsaysay, Inc. and MOL Tankship] did not anymore issue any assessment on [Bengsons] disability grade. [Bengson], on the other hand, continuously took medications and
was unable to return to his work as a seaman due to the severity of his disability. [Bengson] thus filed his disability compensation claim against x x x Magsaysay, Inc. However,
during the grievance proceedings before the Associated Marine Officers and Seamens Union of the Philippines (AMOSUP), his claim was outrightly denied by x x x Magsaysay,
Inc.7

Ruling of the Labor Arbiter

Bengson filed against the petitioners, Magsaysay Mitsui Osk Marine, Inc. (Magsaysay, Inc.) and MOL Tankship Management (Asia) Pte Ltd. (MOL Tankship), a complaint for
the recovery of total permanent disability benefits, reimbursement of medical and transportation expenses, damages, and attorneys fees, with interest. The labor case was
docketed as NLRC OFW Case No. (M) 07-10402-08.

In his Position Paper and related pleadings,8 Bengson argued that under his Collective Bargaining Agreement (CBA) with the petitioners (IBF JSU/ AMOSUP-IMMA CBA), he is
entitled to US$137,500.00 work-related compensation as Third Mate; that his illness is work-related and was contracted as a result of the pressure, stress, and demands of his
work as well as the long period of service with petitioners; that his illness is continuing, and has resulted in total and permanent disability, complete inability to perform his work,
and loss of qualifications and aptitude required for employment as seaman in any capacity; that petitioners unjustifiably refused to compensate him, thus causing upon him
further anxiety, sleepless nights, and mental anguish and forcing him to litigate. Thus, he prayed that judgment be rendered in his favor for the payment of permanent and total
disability compensation in the amount of US$137,500.00; moral and exemplary damages in the amount of P150,000.00; attorneys fees equivalent to 10% of his claims;
reimbursement of his medical and transportation expenses; and legal interest.

On the other hand, petitioners main defense in their Position Paper and other written submissions 9 is that Bengsons illness is not an occupational disease; that it is not work-
related and therefore not compensable; that there is no medical evidence to support his claims; that his "small hematoma on the left cranium" has already been declared by the
company-designated physician to be not workrelated, and is not included in the Philippine Overseas and Employment Authority Standard Employment Contract (POEA-SEC) list
of occupational diseases; that they have shouldered Bengsons medical expenses and paid him his sickness and transportation allowances; that the standard in measuring the
degree of disability of a seafarer is not the 120-day period provided under Article 192(c) (1) of the

Labor Code10 and Rule X, Section 2 of the Amended Rules on Employees Compensation Commission, 11 but the disability grading issued by the company-designated physician
that is, a seafarer may be entitled to total and permanent disability benefits if he has been issued a Grade 1 disability; that consequently, Bengson is not entitled to damages,
attorneys fees and other claims. Petitioners thus prayed for the dismissal of the labor complaint.
On June 18, 2009, the Labor Arbiter issued his Decision 12 in NLRC OFW Case No. (M) 07-10402-08, which decreed as follows:

WHEREFORE, judgment is hereby rendered ordering respondents jointly and severally liable to pay complainant JUANITO BENGZON [sic] the Philippine peso equivalent at the
actual payment of One Hundred Thirty Seven Thousand Five Hundred U.S. Dollars (US$137,500.00) representing 100% of the compensation benefit under the CBA and ten
(10%) percent of the total money claims as attorneys fees.

Other monetary claims are dismissed for lack of merit.

SO [ORDERED].13

The Labor Arbiter declared that Bengsons hematoma in the left part of his cranium is related to his work as Third Mate, and the strenuous nature of his work and the conditions
he was subjected to while working on board petitioners vessel caused his illness; that respondent suffered from heart disease and/or cerebral infarction which required
medication and regular medical check-up up to the present; that despite his condition, the company-designated physician (Agbayani) has to date failed to issue a disability
assessment; that consequently, Bengson suffered from permanent and total disability.

The Labor Arbiter added that Agbayanis November 4, 2007 Initial Out- Patient Consult Report declaring that Bengsons illness is not work-related cannot be given credence, as
it has been shown that prior to boarding MOL Tankships vessel, respondent was declared "fit to work" by petitioners own physicians, and if he contracted heart disease while
on board the ship, it can only be caused by his work and the conditions he was subjected to during his employment. Finally, the Labor Arbiter held that pursuant to the IBF
JSU/AMOSUP-IMMA CBA under which Bengson is covered, disability compensation should be awarded to him in the amount of US$137,500.00, which is equivalent to 100%
degree of disability under said CBA.

Ruling of the National Labor Relations Commission

Petitioners appealed to the NLRC, where the case was docketed as NLRC LAC No. (OFW-M) 10-000643-09.

On August 31, 2010, the NLRC rendered its Decision14 granting the appeal, setting aside the Labor Arbiters June 18, 2009 Decision, and thus dismissing the complaint in NLRC
OFW Case No. (M) 07-10402-08. Respondent moved to reconsider, but the NLRC stood its ground.15

Essentially, the NLRC held that the IBF JSU/AMOSUP-IMMA CBA is relevant only in cases of permanent disability arising from accident which is not the case for Bengson,
who contracted illness; thus, the provisions of the POEASEC apply instead. It added that under the POEA-SEC, hematoma is not included in the list of compensable illnesses;
this being the case, Bengson should have proved that such illness was work-related and compensable, and it is not enough for him to claim or show that it was contracted
during his employment with petitioners. Having failed to do so, Agbayanis findings that his illness is not work-related should prevail. It held further that since respondents illness
is not work-related, his inability to work for more than 120 days is therefore irrelevant and does not entitle him to permanent total disability benefits.

Ruling of the Court of Appeals

In a Petition for Certiorari16 filed with the CA and docketed therein as CA-G.R. SP No. 118501, Bengson sought to set aside the above NLRC Decision and reinstate that of the
Labor Arbiters, arguing mainly that his illness is work-connected which therefore entitles him to disability compensation under the IBF JSU/AMOSUP-IMMA CBA.

On July 15, 2011, the CA issued the herein assailed Decision containing the following decretal portion:

WHEREFORE, premises considered, the instant petition for certiorari is hereby GRANTED. The Decision dated August 31, 2010 of public respondent National Labor Relations
Commission (NLRC), First Division, is ANNULLED and SET ASIDE. Accordingly, the Decision dated June 18, 2009 of the Labor Arbiter is REINSTATED with the modification in
that private respondents Magsaysay Mitsui OSK Marine, Inc. and/or MOL Tankship Management (ASIA) PTE, Ltd. are jointly and severally liable to pay petitioner Juanito G.
Bengson the amount of Sixty Thousand U.S. Dollars (US$60,000.00) representing 120% of the compensation benefit under the 2000 POEA Standard Terms and Conditions
Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels.

SO ORDERED.17

The CA held that Bengsons exposure to different hazards on board petitioners vessel, the performance of his functions as Third Mate, and the extraordinary physical and
mental strain required by his position caused him to suffer his present illness, which requires continuous medication to date. It held that as Third Mate, Bengson is a licensed
member of the deck department of his ship and is under the supervision of the Chief Mate. He traditionally stands [an] "8-12" watch: from 8am until 12 noon and 8pm until
midnight. At sea, the mate on watch has three fundamental duties: to navigate the ship, to safely avoid traffic, and to respond to any emergencies that may arise. He also has
special responsibilities to keep the ship seaworthy during fire and loss of stability, and providing aid and maintaining safety during man overboard, abandoning ship, and medical
emergencies. Indeed, in performing his functions as a Third Mate, [Bengsons] position requires a thorough knowledge of the environment in which he is operating, otherwise,
the safety of the ship would be endangered.

In addition, [Bengson] was performing a minimum of 40 hours a week and was made to work under the heat of the sun. [Bengson] has also been subjected to this same kind of
work as a Third Mate for twelve (12) years since he was continuously rehired and deployed after the expiration of his employment contract. He has no known disease or illness
based on his Pre-Employment Medical Examination, thus, bolstering petitioners claim that his illness was caused by his strenuous activities on board the vessel.18

The CA added that in the course of performing his duties, Bengson suffered a stroke or cerebro-vascular accident (CVA), which means that a blood vessel within or about his
brain burst which caused cerebral or intracranial hemorrhage; that such illness is an occupational disease under Section 32-A (12) of the POE-ASEC; that according to
Agbayanis Cerebrovascular Investigation Form, Bengson suffered from stroke, hypertension, carotid bruit, Transient Ischemic Attack (T.I.A.), Hemiplegia, and Amaurosis
Fugax; that the disease being work-related, Agbayani should have made a declaration either of fitness or disability, which he failed to do up to this day; that the failure to make a
declaration entitles Bengson to permanent total disability benefits in the amount of US$60,000.00 in accordance with Sections 20 19 and 3220 of the POEA-SEC, and not
US$137,500.00 under the IBF JSU/AMOSUP-IMMA CBA which applies only in case of accident; and finally, that an award of attorneys fees is proper as the case is one for
recovery of wages and indemnity under employers liability laws.

Petitioners filed a Motion for Reconsideration, but the CA denied the same in its September 9, 2011 Resolution. Hence, the present Petition.

Issues
Petitioners submit the following issues for resolution:

1. Whether the Court of Appeals committed serious error in law when it disregarded the expert opinion of the company-designated physician that Respondents
illness is not work-related.

2. Whether the Court of Appeals committed serious error in law when it ruled that Respondent is considered as Cerebro-Vascular accident, and thus compensable,
when not all the requisites for the same have been complied with. 21

Petitioners Arguments

Praying that the assailed CA pronouncements be set aside and that a new judgment be rendered absolving them from the payment of disability benefits and attorneys fees,
petitioners essentially maintain in their Petition and Reply22 that Bengsons illness hypertensive cardio-vascular disease (HCVD) not in failure, CVD infarct left
thalamocapsular23 is not work-related; that between Bengsons bare allegations that his exposure to different hazards and the stressful nature of his work were the causes of
his illness and Agbayanis categorical declaration that Bengsons illness is not work-related, the latter should prevail; that the CA failed to specifically point out the exact unusual
and extraordinary physical or mental strain or event which caused respondents alleged CVA; and that with Agbayanis expertise and experience as petitioners company-
designated physician, his declaration and diagnosis should be given more weight. 24

Respondents Arguments

In his Comment,25 respondent counters that the CA finding that his illness is work-related prevails over Agbayanis declaration; that it is not required that in order to be entitled to
disability benefits, his work should be the sole cause of the growth, development or acceleration of his illness; 26 that Agbayanis declaration should not be given credence
because it is self-serving and biased, favoring petitioners and protecting the latters interests; that the opinions of company-designated physicians should not at all times be
believed;27 that he could not have contracted his illness except while working for petitioners on board their vessel; and that since he could no longer return to work, he should
thus be paid permanent disability benefits.

Our Ruling

The Court denies the Petition.

The only issue in this case is whether Bengsons illness which petitioners claim and admit to be hypertensive cardio-vascular disease (HCVD) not in failure, CVD infarct left
thalamocapsular is an occupational disease.

In many cases decided in the past, this Court has held that cardiovascular disease, coronary artery disease, and other heart ailments are compensable. Thus, in Fil-Pride
Shipping Company, Inc. v. Balasta,28 severe 3-vessel coronary artery disease which the seaman contracted while serving as Able Seaman was considered an occupational
disease. In Villanueva, Sr. v. Baliwag Navigation, Inc.,29 it was held that the 2000 POEA-SEC considers heart disease as an occupational disease. In Jebsens Maritime, Inc. v.
Undag,30 the Court held that hypertensive cardiovascular disease may be a compensable illness, upon proof. In Oriental Shipmanagement Co., Inc. v. Bastol31 and Heirs of the
late Aniban v. National Labor Relations Commission, 32 it was held that myocardial infarction as a disease or cause of death is compensable, such being occupational. Iloreta v.
Philippine Transmarine Carriers, Inc.33 held that hypertensive cardiovascular disease/coronary artery disease and chronic stable angina are compensable. Micronesia
Resources v. Cantomayor34 stated that a finding of coronary artery disease entitles the claimant a seaman Third Officer to disability compensation. In Remigio v. National
Labor Relations Commission,35 the Court held that the claimant a musician on board an ocean-going vessel was entitled to recover for suffering from coronary artery
disease. In Sepulveda v. Employees Compensation Commission, 36 it was declared that the employees illness, myocardial infarction, was directly brought about by his
employment as schoolteacher or was a result of the nature of such employment.

In the present case, petitioners flatly claim that Bengsons hypertensive cardio-vascular disease is not compensable on the sole basis of its company-designated physician
Agbayanis declaration that such illness is not work-related.

However, the Court finds that Bengsons illness is work-related. The undisputed facts indicate that respondent has been working for petitioners since 1988; that per his service
record,37 he has been serving as Third Mate for twelve (12) years; and that as Third Mate, he was saddled with heavy responsibilities relative to navigation of the vessel, ship
safety and management of emergencies. It is beyond doubt that respondent was subjected to physical and mental stress and strain: as Third Mate, he is the ships fourth in
command, and he is the ships safety officer; these responsibilities have been heavy burdens on respondents shoulders all these years, and certainly contributed to the
development of his illness. Besides, "[i]t is already recognized that any kind of work or labor produces stress and strain normally resulting in wear and tear of the human
body."38 "Notably, it is a matter of judicial notice that an overseas worker, having to ward off homesickness by reason of being physically separated from his family for the entire
duration of his contract, bears a great degree of emotional strain while making an effort to perform his work well. The strain is even greater in the case of a seaman who is
constantly subjected to the perils of the sea while at work abroad and away from his family." 39

Having worked for petitioners since 1988 under employment contracts that were continuously renewed, it can be said that respondent spent much of his productive years with
petitioners; his years of service certainly took a toll on his body, and he could not have contracted his illness elsewhere except while working for petitioners. To be sure, the
Court has ruled that "the list of illnesses/diseases in Section 32-A40 does not preclude other illnesses/diseases not so listed from being compensable. The POEA-SEC cannot be
presumed to contain all the possible injuries that render a seafarer unfit for further sea duties."41 And equally significant, "it is not the injury which is compensated, but rather it is
the incapacity to work resulting in the impairment of ones earning capacity."42

Respondents illness, which has likewise been diagnosed as intracerebral hemorrhage 43 or hemorrhagic stroke,44is a serious condition,45 and could be deadly.46

In Alpha Ship Management Corporation v. Calo, 47 it was held that an employees disability becomes permanent and total when so declared by the company-designated
physician, or, in case of absence of such a declaration either of fitness or permanent total disability, upon the lapse of the 120 or 240-day treatment period under Article 192 (c)
(1) of the Labor Code48 and Rule X, Section 2 of the Amended Rules on Employees Compensation Commission,49 while the employees disability continues and he is unable to
engage in gainful employment during such period, and the company-designated physician fails to arrive at a definite assessment of the employees fitness or disability. This is
true regardless of whether the employee loses the use of any part of his body or if the injury or disability is classified as Grade 1 under the PO EA-SEC.

Bengson was repatriated on October 21, 2007 and immediately brought to the Manila Doctors Hospital for confinement. He was discharged on November 1, 2007. On
1w phi1

November 4, 2007, Agbayani issued an Initial Out-Patient Consult Report which stated that respondent's illness was not work-related. As a result of such adverse declaration,
respondent filed NLRC OFW Case No. (M) 07-10402-08. Meanwhile, respondent underwent medication and rehabilitation under Agbayani's supervision until February
2008.50 However, Agbayani did not make a definite assessment of respondent's fitness or disability, even up to this day; thus, respondent's medical condition remains
unresolved. In the meantime, respondent's medical condition persists, and petitioners did not renew or continue with respondent's employment; nor was he able to work for
other employers. Quite understandably, respondent's condition remains delicate given that his illness is serious and could be fatal. Thus, applying the above doctrine in Alpha
Ship Management Corporation v. Calo, respondent is deemed totally and permanently disabled and entitled to the corresponding benefit under the POEASEC in the amount
ofUS$60,000.00.
Finally, while the CA's assailed Decision is correct, it should nonetheless be modified, such that the award therein should be paid in the national currency.

WHEREFORE, the Petition is DENIED. The assailed July 15, 2011 Decision and September 9, 2011 Resolution of the Court of Appeals in CA-G.R. SP No. 118501 are
AFFIRMED, with the MODIFICATION that the adjudged awards of US$60,000.00 and attorney's fees equivalent to 10% per cent thereof, be paid in Philippine pesos, computed
at the exchange rate prevailing at the time of payment.

SO ORDERED.

G.R. No. 190161 October 13, 2014

ANITA N. CANUEL, for herself and on behalf of her minor children, namely: CHARMAINE, CHARLENE, and CHARL SMITH, all surnamed CANUEL, Petitioners,
vs.
MAGSAYSAY MARITIME CORPORATION, EDUARDO U. MANESE, and KOTANI SHIPMANAGEMENT LIMITED, Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated May 19, 2009 and the Resolution3 dated October 30, 2009 of the Court of Appeals (CA) in CA-G.R. SP.
No. 104479 which dismissed petitioners' complaint for death benefits.

The Facts

On July 14, 2006, Nancing R. Canuel (Nancing) was hired by respondent Magsaysay Maritime Corporation (Magsaysay) as Third Assistant Engineer for its foreign principal,
respondent Kotani Ship management Limited (Kotani), to be deployed on board the vessel M/V North Sea (vessel) for a period of twelve (12) months, with a basic salary of
US$640.00 a month.4 He underwent the required pre-employment medical examination, and was declared fit to work by the company-designated physician.5 Thereafter, he
joined the vessel and commenced his work on July 19, 2006. 6

On February 20, 2007, Nancing figured in an accident while in the performance of his duties on board the vessel, and, as a result, injured the right side of his body.7 On March 5,
2007, he was brought to Shanghai Seamens Hospital in Shanghai, China where he was diagnosed to have suffered "bilateral closed traumatic hemothorax."8On March 12,
2007, Nancing informed his wife, herein petitioner Anita N. Canuel (Anita), about the accident and his confinement. 9 On March 24, 2007, he was medically repatriated and
immediately admitted to the Manila Doctors Hospital under the care of a team of medical doctors led by Dr. Benigno A. Agbayani, Jr., Magsaysays Medical Coordinator.10 Due
to his worsening condition, Nancing was placed at the hospitals intensive care unit on April 8, 2007. 11 He eventually died on April 25, 2007.12 Nancings death
certificate13 indicated the immediate cause of his death as acute respiratory failure, with lung metastasis and r/o bone cancer as antecedent cause and underlying cause,
respectively.

On May 23, 2007, Nancings widow, Anita, for herself and on behalf of their children, Charmaine, Charlene, and Charl Smith, all surnamed Canuel (petitioners) filed a
complaint14 against Magsaysay and Kotani, as well as Magsaysays Manager/President, Eduardo U. Manese (respondents), before the National Labor Relations Commission
(NLRC), docketed as NLRC-OFW Case No. (M)-07-05-01423-00, seeking to recover death benefits, death compensation of minor children, burial allowance, damages, and
attorneys fees.

In their defense, respondents denied any liability and contended that while Nancing died of acute respiratory failure, the real cause of his death, as shown in the autopsy
conducted by the National Bureau of Investigation, was "moderately differentiated andenocarcinoma, pneumonia and pulmonary edema, lung tissue" or lung cancer.15 The said
illness is not work-related per advise of their company doctor, Dr. Marie Cherry Lyn Samson- Fernando, hence, not compensable.16

The LA Ruling

In a Decision17 dated December 27, 2007, the Labor Arbiter (LA) ruled in favor of petitioners and thereby ordered respondents to pay them: (a) the aggregate sum of
US$72,000.00 consisting of US$50,000.00 as death benefits, US$21,000.00 as death compensation for the three minor children (US$7,000.00 each), and US$1,000.00 for
burial expenses; (b) illness allowance from March 5, 2007 to April 25, 2007; (c) _100,000.00 as moral damages; (d) _100,000.00 as exemplary damages; and (e) 10% of the
total award as attorneys fees.18

The LA found that Nancings death on April 25, 2007 occurred during the term of his twelve-month employment contract.19 Moreover, the evidence on record supports the
conclusion that his demise was caused by the injury he sustained in an accident while performing his job on board the vessel. Hence, his death was the result of a work-related
injury that occurred during the term of his employment. 20 Corollary thereto, the LA disregarded respondents contention that lung cancer, a non-work related illness, caused
Nancings death as it was apparent that it was the injury he sustained while working on board the vessel that triggered the deterioration of his resistance against the said illness
or any other affliction that he may have had.21

At odds with the LA Ruling, respondents appealed to the NLRC.

The NLRC Ruling

Respondents appeal22 was denied by the NLRC in a Decision23 dated April 30, 2008.

The NLRC ruled that while respondents correctly argued that Nancings death did not occur during the term of his employment pursuant to Section 18 of the Philippine Overseas
Employment Administration Standard Employment Contract (POEA-SEC) as his employment was deemed terminated after his medical repatriation, still, it cannot be doubted
that his death was brought about by the same or similar cause or illness which caused him to be repatriated. 24 Thus, it sustained the findings of the LA that petitioners are
entitled to receive compensation for Nancings death. 25 It further affirmed the award of damages and attorneys fees in petitioners favor but found respondents not liable for
sickness allowance and burial benefits since the same were already paid by respondents. 26

Dissatisfied, respondents sought reconsideration 27 but were denied by the NLRC in a Resolution28 dated June 18, 2008, prompting them to elevate the case to the CA on
certiorari.29
The CA Ruling

In a Decision30 dated May 19, 2009, the CA found that the NLRC Ruling was tainted with grave abuse of discretion and, thus, rendered a new judgment dismissing petitioners
complaint for death benefits.31 Citing the case of Klaveness Maritime Agency, Inc. v. Beneficiaries of the Late Second Officer Anthony S. Allas (Klaveness),32 it held that the
death of the seafarer after the termination of his contract is not compensable, even if the death is caused by the same illness which prompted the repatriation of the seafarer and
the termination of his contract.33

Petitioners motion for reconsideration34 therefrom was denied by the CA in a Resolution35 dated October 30, 2009, hence, the instant petition.

The Issue Before the Court

The core issue for the Courts resolution is whether or not the CA committed reversible error in holding that the NLRC committed grave abuse of discretion in granting
petitioners complaint for death benefits.

Petitioners claim that the death of Nancing after his repatriation is compensable because it was the accident he suffered on board the vessel that triggered his traumatic
hemothorax,36 eventually leading to his acute respiratory failure, the immediate cause of his death. 37

Echoing the CA, respondents aver that since the Nancings employment contract was deemed terminated when he was medically repatriated on March 24, 2007, petitioners are
not entitled to death and other benefits.38 They also maintain that Nancing died of lung cancer which is not a work-related illness.39

The Courts Ruling

The terms and conditions of a seafarers employment are governed by the provisions of the contract he signs with the employer at the time of his hiring. Deemed integrated in
his employment contract is a set of standard provisions determined and implemented by the POEA, called the "Standard Terms and Conditions Governing the Employment of
Filipino Seafarers on Board Ocean-Going Vessels," which provisions are considered to be the minimum requirements acceptable to the government for the employment of
Filipino seafarers on board foreign ocean-going vessels.40

The provisions currently governing the entitlement of the seafarers beneficiaries to death benefits are found in Section 20 of the 2000 POEASEC.

Part A (1) thereof states that the seafarers beneficiaries may successfully claim death benefits if they are able to establish that the seafarers death is (a) work-related, and (b)
had occurred during the term of his employment contract, viz.:

SECTION 20. COMPENSATION AND BENEFITS

A. COMPENSATION AND BENEFITS FOR DEATH

1. In case of work-related death of the seafarer, during the term of his contract, the employer shall pay his beneficiaries the Philippine Currency equivalent to the amount of Fifty
Thousand US dollars (US$50,000) and an additional amount of Seven Thousand US dollars (US$7,000) to each child under the age of twenty-one (21) but not exceeding four
(4) children, at the exchange rate prevailing during the time of payment. (Emphases supplied)

Part A (4) of the same provision further complements Part A (1) by stating the "other liabilities" of the employer to the seafarers beneficiaries if the seafarer dies (a) as a result
of work-related injury or illness, and (b) during the term of his employment, viz.:

SECTION 20. COMPENSATION AND BENEFITS

A. COMPENSATION AND BENEFITS FOR DEATH

xxxx

4. The other liabilities of the employer when the seafarer dies as a result of work-related injury or illness during the term of employment are as follows:

a. The employer shall pay the deceaseds beneficiary all outstanding obligations due the seafarer under this Contract.

b. The employer shall transport the remains and personal effects of the seafarer to the Philippines at employers expense except if the death occurred in a port
where local government laws or regulations do not permit the transport of such remains. In case death occurs at sea, the disposition of the remains shall be
handled or dealt with in accordance with the masters best judgment. In all cases, the employer/master shall communicate with the manning agency to advise for
disposition of seafarers remains.

c. The employer shall pay the beneficiaries of the seafarer the Philippines currency equivalent to the amount of One Thousand US dollars (US$1,000) for burial
expenses at the exchange rate prevailing during the time of payment. (Emphasis and underscoring supplied)

Integral as they are for a valid claim for death compensation, the Court examines this case according to the above-stated dual requirements.

First Requirement:

The Seafarers Death Should Be Work-Related.


While the 2000 POEA-SEC does not expressly define what a "work related death" means, it is palpable from Part A (4) as above-cited that the said term refers to the seafarers
death resulting from a work-related injury or illness. This denotation complements the definitions accorded to the terms "work-related injury" and "work-related illness" under the
2000 POEA-SEC as follows:

Definition of Terms:

For purposes of this contract, the following terms are defined as follows:

xxxx

11. Work-Related Injury injury(ies) resulting in disability or death arising out of and in the course of employment.

12. Work-Related Illness any sickness resulting to disability or death as a result of an occupational disease listed under Section 32-A of this contract with the
conditions set therein satisfied. (Emphases supplied)

Given that the seafarers death in this case resulted from a work-related injury as defined in the 2000 POEA-SEC above, it is clear that the first requirement for death
compensability is present.

As the records show, Nancing suffered a work-related injury within the term of his employment contract when he figured in an accident while performing his duties as Third
Assistant Engineer at cylinder number 7 of the vessel on February 20, 2007.41 The foregoing circumstances aptly fit the legal attribution of the phrase "arising out of and in the
course of employment" which the Court, in the early case of Iloilo Dock & Engineering Co. v. Workmens Compensation Commission,42 pronounced as follows:

The two components of the coverage formula "arising out of" and "in the course of employment" are said to be separate tests which must be independently satisfied;
however, it should not be forgotten that the basic concept of compensation coverage is unitary, not dual, and is best expressed in the word, "work-connection," because an
uncompromising insistence on an independent application of each of the two portions of the test can, in certain cases, exclude clearly work-connected injuries. The words
"arising out of" refer to the origin or cause of the accident, and are descriptive of its character, while the words "in the course of" refer to the time, place, and circumstances
under which the accident takes place.

As a matter of general proposition, an injury or accident is said to arise "in the course of employment" when it takes place within the period of the employment, at a place where
the employee reasonably may be, and while he is fulfilling his duties or is engaged in doing something incidental thereto. 43 (Emphases supplied; citations omitted)

That Nancing was suffering from lung cancer, which was found to have been pre-existing, hardly impels a contrary conclusion since as the LA herein earlier noted the
February 20, 2007 injury actually led to the deterioration of his condition.44 As held in More Maritime Agencies, Inc. v. NLRC,45 "[i]f the injury is the proximate cause of [the
seafarers] death or disability for which compensation is sought, [his] previous physical condition x x x is unimportant and recovery may be had for injury independent of any pre-
existing weakness or disease," viz.:

Compensability x x x does not depend on whether the injury or disease was pre-existing at the time of the employment but rather if the disease or injury is work-related or
aggravated his condition. It is indeed safe to presume that, at the very least, the arduous nature of [the seafarers] employment had contributed to the aggravation of his injury, if
indeed it was pre-existing at the time of his employment. Therefore, it is but just that he be duly compensated for it. It is not necessary, in order for an employee to recover
compensation, that he must have been in perfect condition or health at the time he received the injury, or that he be free from disease. Every workman brings with him to his
employment certain infirmities, and while the employer is not the insurer of the health of his employees, he takes them as he finds them, and assumes the risk of having a
weakened condition aggravated by some injury which might not hurt or bother a perfectly normal, healthy person. If the injury is the proximate cause of his death or disability for
which compensation is sought, the previous physical condition of the employee is unimportant and recovery may be had for injury independent of any pre-existing weakness or
disease. 46 (Emphases and underscoring supplied)

Clearly, Nancings injury was the proximate cause of his death considering that the same, unbroken by any efficient, intervening cause, triggered the following sequence of
events: (a) Nancings hospitalization at the Shanghai Seamens Hospital 47 where he was diagnosed with "bilateral closed traumatic haemothorax";48 (b) his repatriation and
eventual admission to the Manila Doctors Hospital;49 and (c) his acute respiratory failure, which was declared to be the immediate cause of his death. 50

Thus, for the foregoing reasons, it cannot be seriously disputed that the first requirement for death compensability concurs in this case.

Second Requirement:

The Seafarers Death Should Occur During The Term Of Employment.

With respect to the second requirement for death compensability, the Court takes this opportunity to clarify that while the general rule is that the seafarers death should occur
during the term of his employment, the seafarers death occurring after the termination of his employment due to his medical repatriation on account of a work-related injury or
illness constitutes an exception thereto. This is based on a liberal construction of the 2000 POEA-SEC as impelled by the plight of the bereaved heirs who stand to be deprived
of a just and reasonable compensation for the seafarers death, notwithstanding its evident work-connection. The present petition is a case in point.

Here, Nancings repatriation occurred during the eighth (8th) month of his one (1) year employment contract. Were it not for his injury, which had been earlier established as
work-related, he would not have been repatriated for medical reasons and his contract consequently terminated pursuant to Part 1 of Section 18 (B) of the 2000 POEA-SEC as
hereunder quoted:

SECTION 18. TERMINATION OF EMPLOYMENT

xxxx

B. The employment of the seafarer is also terminated when the seafarer arrives at the point of hire for any of the following reasons:

1. when the seafarer signs-off and is disembarked for medical reasons pursuant to Section 20 (B)[5] of this Contract.
The terminative consequence of a medical repatriation case then appears to present a rather prejudicial quandary to the seafarer and his heirs. Particularly, if the Court were to
apply the provisions of Section 20 of the 2000 POEA-SEC as above-cited based on a strict and literal construction thereof, then the heirs of Nancing would stand to be barred
from receiving any compensation for the latters death despite its obvious work-relatedness. Again, this is for the reason that the work-related death would, by mere legal
technicality, be considered to have occurred after the term of his employment on account of his medical repatriation. It equally bears stressing that neither would the heirs be
able to receive any disability compensation since the seafarers death in this case precluded the determination of a disability grade, which, following Section 20 (B) 51 in relation to
Section 3252 of the 2000 POEA-SEC, stands as the basis therefor.

However, a strict and literal construction of the 2000 POEA-SEC, especially when the same would result into inequitable consequences against labor, is not subscribed to in this
jurisdiction. Concordant with the States avowed policy to give maximum aid and full protection to labor as enshrined in Article XIII of the 1987 Philippine Constitution,53 contracts
of labor, such as the 2000 POEA-SEC, are deemed to be so impressed with public interest that the more beneficial conditions must be endeavoured in favor of the laborer.54 The
rule therefore is one of liberal construction. As enunciated in the case of Philippine Transmarine Carriers, Inc. v. NLRC: 55

The POEA Standard Employment Contract for Seamen is designed primarily for the protection and benefit of Filipino seamen in the pursuit of their employment on board ocean-
going vessels. Its provisions must [therefore] be construed and applied fairly, reasonably and liberally in their favor [as it is only] then can its beneficent provisions be fully
carried into effect.56 (Emphasis supplied)

Applying the rule on liberal construction, the Court is thus brought to the recognition that medical repatriation cases should be considered as an exception to Section 20 of the
2000 POEA-SEC. Accordingly, the phrase "work-related death of the seafarer, during the term of his employment contract" under Part A (1) of the said provision should not be
strictly and literally construed to mean that the seafarers work-related death should have precisely occurred during the term of his employment. Rather, it is enough that the
seafarers work-related injury or illness which eventually causes his death should have occurred during the term of his employment. Taking all things into account, the Court
reckons that it is by this method of construction that undue prejudice to the laborer and his heirs may be obviated and the State policy on labor protection be championed. For if
the laborers death was brought about (whether fully or partially) by the work he had harbored for his masters profit, then it is but proper that his demise be compensated. Here,
since it has been established that (a) the seafarer had been suffering from a work-related injury or illness during the term of his employment, (b) his injury or illness was the
cause for his medical repatriation, and (c) it was later determined that the injury or illness for which he was medically repatriated was the proximate cause of his actual death
although the same occurred after the term of his employment, the above-mentioned rule should squarely apply. Perforce, the present claim for death benefits should be granted.

To quell any confusion, it is but fitting to make clear that a liberal construction of Section 20 of the 2000 POEA-SEC as above-discussed would not offend the Courts ruling in
Klaveness,57 which was inaccurately relied upon by the CA to justify its decision. The inaccuracy so recognized stems from the glaring factual and legal variance between
Klaveness and the present case. Upon careful scrutiny, the seafarer in Klaveness was not medically repatriated but was actually signed off from the vessel after the completion
of his contract. He was subsequently diagnosed to have urinary bladder cancer, which was not proven to be work-related, and died almost two (2) years after the termination of
his contract of employment. Hence, since the employment contract was terminated without any connection to a work-related cause, but rather because of its mere lapse, death
benefits were denied to the seafarers heirs. In contrast, the seafarer in this case was medically repatriated due to a work-related injury which resulted to his death a month after
his confinement in a local hospital. Again, were it not for said injury, the seafarer would not have been medically repatriated and his employment contract, in turn, terminated. By
these circumstances, it is clear that the termination of the employment contract was forced upon by a work-related cause. As alluded earlier, it would then be antithetical to the
States policy on labor to deprive the seafarers heirs of death compensation despite its palpable work-connection. Based on the foregoing, it is, hence, apparent that the Courts
pronouncement herein would not conflict that in Klaveness. Truth be told, the defining parameter in workers compensation cases should be the element of work-relatedness
which was clearly absent in the "contract-completion" situation in Klaveness.58 To reiterate, if the death is work-related, as herein ascribed, then the seafarers heirs should not
be denied compensation.

To reinforce the point, a survey of previous Court rulings wherein death compensability had been denied the heirs of the seafarer actually demonstrates the significance of the
work-relatedness element in workers compensation cases. For instance, in Gau Sheng Phils., Inc. v. Joaquin, 59 the illness of the seafarer therein, who was terminated based on
mutual consent, was found to be non-compensable since he died of chronic renal failure which was not listed as a compensable illness. Likewise, in Aya-ay, Sr. v. Arpaphil
Shipping Corp.,60 the Court denied the claim for death compensation because the seafarer therein was repatriated due to an eye injury but subsequently died of a stroke, which
was not listed as a compensable illness under the POEA-SEC. Death compensation was also denied to the claimants in Hermogenes v. Osco Shipping Services, Inc., 61 since no
evidence was offered to prove the cause of the termination of the contract of employment, whereas it was found that the seafarer therein died three (3) years after his
disembarkation of an illness which was not shown to have been contracted during his employment. An identical ruling was rendered in Prudential Shipping and Management
Corp. v. Sta. Rita,62wherein the seafarer in said case was repatriated due to umbilical hernia but died one (1) year after of cardiopulmonary arrest, which was not, however,
established as work-related. Similarly, death compensation was denied the claimants in Ortega v. CA,63 considering that the seafarer therein died of lung cancer which was not
found to be work-related.

Meanwhile, on the opposite end of the jurisprudential spectrum, the Court, in a number of cases, granted claims for death benefits although the seafarers death therein had
occurred after their repatriation primarily because of the causal connection between their work and the illness which had eventually resulted in their death.

In the 1999 case of Wallem Maritime Service, Inc. v. NLRC,64 the death benefit claims of the heirs of the seafarer who had died after having been repatriated on account of
"mutual consent" between him and his employer was allowed by the Court because of the "reasonable connection" between his job and his illness. As pertinently stated in that
case:

It is not required that the employment be the sole factor in the growth, development or acceleration of the illness to entitle the claimant to the benefits provided therefor. It is
enough that the employment had contributed, even in a small degree, to the development of the disease and in bringing about his death.

It is indeed safe to presume that, at the very least, the nature of Faustino Inductivos employment had contributed to the aggravation of his illness if indeed it was pre-existing
at the time of his employment and therefore it is but just that he be duly compensated for it. It cannot be denied that there was at least a reasonable connection between his
job and his lung infection, which eventually developed into septicemia and ultimately caused his death. As a [utility man] on board the vessel, he was exposed to harsh sea
weather, chemical irritants, dusts, etc., all of which invariably contributed to his illness.

Neither is it necessary, in order to recover compensation, that the employee must have been in perfect condition or health at the time he contracted the disease. Every
workingman brings with him to his employment certain infirmities, and while the employer is not the insurer of the health of the employees, he takes them as he finds them and
assumes the risk of liability. If the disease is the proximate cause of the employees death for which compensation is sought, the previous physical condition of the employee is
1wphi 1

unimportant and recovery may be had therefor independent of any pre-existing disease.65 (Emphases and underscoring supplied)

Later, the Court, in Seagull Shipmanagement and Transport, Inc. v. NLRC 66 a sickness and permanent disability claims case decided under the auspices of the 1984 version
of the POEA-SEC (which, unlike the present standard contract, only requires that the illness of death occur during the term of the employment whether work-related or not)
significantly observed that:

Even assuming that the ailment of the worker was contracted prior to his employment, this still would not deprive him of compensation benefits. For what matters is that his work
had contributed, even in a small degree, to the development of the disease and in bringing about his eventual death. Neither is it necessary, in order to recover compensation,
that the employee must have been in perfect health at the time he contracted the disease. A worker brings with him possible infirmities in the course of his employment, and
while the employer is not the insurer of the health of the employees, he takes them as he finds them and assumes the risk of liability. If the disease is the proximate cause of the
employees death for which compensation is sought, the previous physical condition of the employee is unimportant, and recovery may be had for said death, independently of
any pre-existing disease. 67 (Emphases and underscoring supplied; citations omitted)
The Court similarly took into account the work-relatedness element in granting the death benefits claim in Interorient Maritime Enterprises, Inc. v. Remo,68 a 2010 case decided
under the 1996 POEA-SEC which operated under parameters identical to the 1984 POEA-SEC. Quoted hereunder are the pertinent portions of that ruling:

It was established on record that before the late Lutero Remo signed his last contract with private respondents as Cook-Steward of the vessel "M/T Captain Mitsos L," he was
required to undergo a series of medical examinations. Yet, he was declared "fit to work" by private respondents company designated-physician. On April 19, 1999, Remo was
discharged from his vessel after he was hospitalized in Fujairah for atrial fibrillation and congestive heart failure. His death on August 28, 2000, even if it occurred months after
his repatriation, due to hypertensive cardio-vascular disease, could clearly have been work related. Declared as "fit to work" at the time of hiring, and hospitalized while on
service onaccount of "atrial fibrillation and congestive heart failure," his eventual death due to "hypertensive cardio-vascular disease" could only be work related. The death due
to "hypertensive cardio-vascular disease" could in fact be traced to Lutero Remos being the "Cook-Steward." As Cook-Steward of an ocean going vessel, Remo had no choice
but to prepare and eat hypertension inducing food, a kind of food that eventually caused his "hypertensive cardio-vascular disease," a disease which in turn admittedly caused
his death.

Private respondents cannot deny liability for the subject death by claiming that the seafarers death occurred beyond the term of his employment and worsely, that there has
been misrepresentation on the part of the seafarer. For, as employer, the private respondents had all the opportunity to pre-qualify, thoroughly screen and choose their
applicants to determine if they are medically, psychologically and mentally fit for employment. That the seafarer here was subjected to the required prequalification standards
before he was admitted as Cook-Steward, it thus has to be safely presumed that the late Remo was in a good state of health when he boarded the vessel. 69 (Emphases and
underscoring supplied; citation omitted)

More recently, in the 2013 case of Inter-Orient Maritime, Incorporated v. Candava,70 also decided under the framework of the 1996 POEA-SEC, the Court pronounced that the
seafarers death therein, despite occurring after his repatriation, remains "compensable for having been caused by an illness duly established to have been contracted in the
course of his employment."71

Thus, considering the constitutional mandate on labor as well as relative jurisprudential context, the rule, restated for a final time, should be as follows: if the seafarers work-
related injury or illness (that eventually causes his medical repatriation and, thereafter, his death, as in this case) occurs during the term of his employment, then the employer
becomes liable for death compensation benefits under Section 20 (A) of the 2000 POEA-SEC. The provision cannot be construed otherwise for to do so would not only
transgress prevailing constitutional policy and deride the bearings of relevant case law but also result in a travesty of fairness and an indifference to social justice.

For all these reasons, the Court hereby grants the petition.

WHEREFORE, the petition is GRANTED. The Decision dated May 19, 2009 and the Resolution dated October 30, 2009 of the Court of Appeals in CA-G.R. SP No. 104479 are
hereby REVERSED and SET ASIDE and the Decision dated April 30, 2008 of the National Labor Relations Commission is REINSTATED.

SO ORDERED.

G.R. No. 190161 October 13, 2014

ANITA N. CANUEL, for herself and on behalf of her minor children, namely: CHARMAINE, CHARLENE, and CHARL SMITH, all surnamed CANUEL, Petitioners,
vs.
MAGSAYSAY MARITIME CORPORATION, EDUARDO U. MANESE, and KOTANI SHIPMANAGEMENT LIMITED, Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated May 19, 2009 and the Resolution3 dated October 30, 2009 of the Court of Appeals (CA) in CA-G.R. SP.
No. 104479 which dismissed petitioners' complaint for death benefits.

The Facts

On July 14, 2006, Nancing R. Canuel (Nancing) was hired by respondent Magsaysay Maritime Corporation (Magsaysay) as Third Assistant Engineer for its foreign principal,
respondent Kotani Ship management Limited (Kotani), to be deployed on board the vessel M/V North Sea (vessel) for a period of twelve (12) months, with a basic salary of
US$640.00 a month.4 He underwent the required pre-employment medical examination, and was declared fit to work by the company-designated physician.5 Thereafter, he
joined the vessel and commenced his work on July 19, 2006. 6

On February 20, 2007, Nancing figured in an accident while in the performance of his duties on board the vessel, and, as a result, injured the right side of his body.7 On March 5,
2007, he was brought to Shanghai Seamens Hospital in Shanghai, China where he was diagnosed to have suffered "bilateral closed traumatic hemothorax."8On March 12,
2007, Nancing informed his wife, herein petitioner Anita N. Canuel (Anita), about the accident and his confinement. 9 On March 24, 2007, he was medically repatriated and
immediately admitted to the Manila Doctors Hospital under the care of a team of medical doctors led by Dr. Benigno A. Agbayani, Jr., Magsaysays Medical Coordinator.10 Due
to his worsening condition, Nancing was placed at the hospitals intensive care unit on April 8, 2007. 11 He eventually died on April 25, 2007.12 Nancings death
certificate13 indicated the immediate cause of his death as acute respiratory failure, with lung metastasis and r/o bone cancer as antecedent cause and underlying cause,
respectively.

On May 23, 2007, Nancings widow, Anita, for herself and on behalf of their children, Charmaine, Charlene, and Charl Smith, all surnamed Canuel (petitioners) filed a
complaint14 against Magsaysay and Kotani, as well as Magsaysays Manager/President, Eduardo U. Manese (respondents), before the National Labor Relations Commission
(NLRC), docketed as NLRC-OFW Case No. (M)-07-05-01423-00, seeking to recover death benefits, death compensation of minor children, burial allowance, damages, and
attorneys fees.

In their defense, respondents denied any liability and contended that while Nancing died of acute respiratory failure, the real cause of his death, as shown in the autopsy
conducted by the National Bureau of Investigation, was "moderately differentiated andenocarcinoma, pneumonia and pulmonary edema, lung tissue" or lung cancer.15 The said
illness is not work-related per advise of their company doctor, Dr. Marie Cherry Lyn Samson- Fernando, hence, not compensable.16

The LA Ruling
In a Decision17 dated December 27, 2007, the Labor Arbiter (LA) ruled in favor of petitioners and thereby ordered respondents to pay them: (a) the aggregate sum of
US$72,000.00 consisting of US$50,000.00 as death benefits, US$21,000.00 as death compensation for the three minor children (US$7,000.00 each), and US$1,000.00 for
burial expenses; (b) illness allowance from March 5, 2007 to April 25, 2007; (c) _100,000.00 as moral damages; (d) _100,000.00 as exemplary damages; and (e) 10% of the
total award as attorneys fees.18

The LA found that Nancings death on April 25, 2007 occurred during the term of his twelve-month employment contract.19 Moreover, the evidence on record supports the
conclusion that his demise was caused by the injury he sustained in an accident while performing his job on board the vessel. Hence, his death was the result of a work-related
injury that occurred during the term of his employment. 20 Corollary thereto, the LA disregarded respondents contention that lung cancer, a non-work related illness, caused
Nancings death as it was apparent that it was the injury he sustained while working on board the vessel that triggered the deterioration of his resistance against the said illness
or any other affliction that he may have had.21

At odds with the LA Ruling, respondents appealed to the NLRC.

The NLRC Ruling

Respondents appeal22 was denied by the NLRC in a Decision23 dated April 30, 2008.

The NLRC ruled that while respondents correctly argued that Nancings death did not occur during the term of his employment pursuant to Section 18 of the Philippine Overseas
Employment Administration Standard Employment Contract (POEA-SEC) as his employment was deemed terminated after his medical repatriation, still, it cannot be doubted
that his death was brought about by the same or similar cause or illness which caused him to be repatriated.24 Thus, it sustained the findings of the LA that petitioners are
entitled to receive compensation for Nancings death. 25 It further affirmed the award of damages and attorneys fees in petitioners favor but found respondents not liable for
sickness allowance and burial benefits since the same were already paid by respondents.26

Dissatisfied, respondents sought reconsideration 27 but were denied by the NLRC in a Resolution28 dated June 18, 2008, prompting them to elevate the case to the CA on
certiorari.29

The CA Ruling

In a Decision30 dated May 19, 2009, the CA found that the NLRC Ruling was tainted with grave abuse of discretion and, thus, rendered a new judgment dismissing petitioners
complaint for death benefits.31 Citing the case of Klaveness Maritime Agency, Inc. v. Beneficiaries of the Late Second Officer Anthony S. Allas (Klaveness), 32 it held that the
death of the seafarer after the termination of his contract is not compensable, even if the death is caused by the same illness which prompted the repatriation of the seafarer and
the termination of his contract.33

Petitioners motion for reconsideration34 therefrom was denied by the CA in a Resolution35 dated October 30, 2009, hence, the instant petition.

The Issue Before the Court

The core issue for the Courts resolution is whether or not the CA committed reversible error in holding that the NLRC committed grave abuse of discretion in granting
petitioners complaint for death benefits.

Petitioners claim that the death of Nancing after his repatriation is compensable because it was the accident he suffered on board the vessel that triggered his traumatic
hemothorax,36 eventually leading to his acute respiratory failure, the immediate cause of his death. 37

Echoing the CA, respondents aver that since the Nancings employment contract was deemed terminated when he was medically repatriated on March 24, 2007, petitioners are
not entitled to death and other benefits.38 They also maintain that Nancing died of lung cancer which is not a work-related illness.39

The Courts Ruling

The terms and conditions of a seafarers employment are governed by the provisions of the contract he signs with the employer at the time of his hiring. Deemed integrated in
his employment contract is a set of standard provisions determined and implemented by the POEA, called the "Standard Terms and Conditions Governing the Employment of
Filipino Seafarers on Board Ocean-Going Vessels," which provisions are considered to be the minimum requirements acceptable to the government for the employment of
Filipino seafarers on board foreign ocean-going vessels.40

The provisions currently governing the entitlement of the seafarers beneficiaries to death benefits are found in Section 20 of the 2000 POEASEC.

Part A (1) thereof states that the seafarers beneficiaries may successfully claim death benefits if they are able to establish that the seafarers death is (a) work-related, and (b)
had occurred during the term of his employment contract, viz.:

SECTION 20. COMPENSATION AND BENEFITS

A. COMPENSATION AND BENEFITS FOR DEATH

1. In case of work-related death of the seafarer, during the term of his contract, the employer shall pay his beneficiaries the Philippine Currency equivalent to the amount of Fifty
Thousand US dollars (US$50,000) and an additional amount of Seven Thousand US dollars (US$7,000) to each child under the age of twenty-one (21) but not exceeding four
(4) children, at the exchange rate prevailing during the time of payment. (Emphases supplied)

Part A (4) of the same provision further complements Part A (1) by stating the "other liabilities" of the employer to the seafarers beneficiaries if the seafarer dies (a) as a result
of work-related injury or illness, and (b) during the term of his employment, viz.:

SECTION 20. COMPENSATION AND BENEFITS


A. COMPENSATION AND BENEFITS FOR DEATH

xxxx

4. The other liabilities of the employer when the seafarer dies as a result of work-related injury or illness during the term of employment are as follows:

a. The employer shall pay the deceaseds beneficiary all outstanding obligations due the seafarer under this Contract.

b. The employer shall transport the remains and personal effects of the seafarer to the Philippines at employers expense except if the death occurred in a port
where local government laws or regulations do not permit the transport of such remains. In case death occurs at sea, the disposition of the remains shall be
handled or dealt with in accordance with the masters best judgment. In all cases, the employer/master shall communicate with the manning agency to advise for
disposition of seafarers remains.

c. The employer shall pay the beneficiaries of the seafarer the Philippines currency equivalent to the amount of One Thousand US dollars (US$1,000) for burial
expenses at the exchange rate prevailing during the time of payment. (Emphasis and underscoring supplied)

Integral as they are for a valid claim for death compensation, the Court examines this case according to the above-stated dual requirements.

First Requirement:

The Seafarers Death Should Be Work-Related.

While the 2000 POEA-SEC does not expressly define what a "work related death" means, it is palpable from Part A (4) as above-cited that the said term refers to the seafarers
death resulting from a work-related injury or illness. This denotation complements the definitions accorded to the terms "work-related injury" and "work-related illness" under the
2000 POEA-SEC as follows:

Definition of Terms:

For purposes of this contract, the following terms are defined as follows:

xxxx

11. Work-Related Injury injury(ies) resulting in disability or death arising out of and in the course of employment.

12. Work-Related Illness any sickness resulting to disability or death as a result of an occupational disease listed under Section 32-A of this contract with the
conditions set therein satisfied. (Emphases supplied)

Given that the seafarers death in this case resulted from a work-related injury as defined in the 2000 POEA-SEC above, it is clear that the first requirement for death
compensability is present.

As the records show, Nancing suffered a work-related injury within the term of his employment contract when he figured in an accident while performing his duties as Third
Assistant Engineer at cylinder number 7 of the vessel on February 20, 2007.41 The foregoing circumstances aptly fit the legal attribution of the phrase "arising out of and in the
course of employment" which the Court, in the early case of Iloilo Dock & Engineering Co. v. Workmens Compensation Commission,42 pronounced as follows:

The two components of the coverage formula "arising out of" and "in the course of employment" are said to be separate tests which must be independently satisfied;
however, it should not be forgotten that the basic concept of compensation coverage is unitary, not dual, and is best expressed in the word, "work-connection," because an
uncompromising insistence on an independent application of each of the two portions of the test can, in certain cases, exclude clearly work-connected injuries. The words
"arising out of" refer to the origin or cause of the accident, and are descriptive of its character, while the words "in the course of" refer to the time, place, and circumstances
under which the accident takes place.

As a matter of general proposition, an injury or accident is said to arise "in the course of employment" when it takes place within the period of the employment, at a place where
the employee reasonably may be, and while he is fulfilling his duties or is engaged in doing something incidental thereto. 43 (Emphases supplied; citations omitted)

That Nancing was suffering from lung cancer, which was found to have been pre-existing, hardly impels a contrary conclusion since as the LA herein earlier noted the
February 20, 2007 injury actually led to the deterioration of his condition.44 As held in More Maritime Agencies, Inc. v. NLRC,45 "[i]f the injury is the proximate cause of [the
seafarers] death or disability for which compensation is sought, [his] previous physical condition x x x is unimportant and recovery may be had for injury independent of any pre-
existing weakness or disease," viz.:

Compensability x x x does not depend on whether the injury or disease was pre-existing at the time of the employment but rather if the disease or injury is work-related or
aggravated his condition. It is indeed safe to presume that, at the very least, the arduous nature of [the seafarers] employment had contributed to the aggravation of his injury, if
indeed it was pre-existing at the time of his employment. Therefore, it is but just that he be duly compensated for it. It is not necessary, in order for an employee to recover
compensation, that he must have been in perfect condition or health at the time he received the injury, or that he be free from disease. Every workman brings with him to his
employment certain infirmities, and while the employer is not the insurer of the health of his employees, he takes them as he finds them, and assumes the risk of having a
weakened condition aggravated by some injury which might not hurt or bother a perfectly normal, healthy person. If the injury is the proximate cause of his death or disability for
which compensation is sought, the previous physical condition of the employee is unimportant and recovery may be had for injury independent of any pre-existing weakness or
disease. 46 (Emphases and underscoring supplied)

Clearly, Nancings injury was the proximate cause of his death considering that the same, unbroken by any efficient, intervening cause, triggered the following sequence of
events: (a) Nancings hospitalization at the Shanghai Seamens Hospital47 where he was diagnosed with "bilateral closed traumatic haemothorax"; 48 (b) his repatriation and
eventual admission to the Manila Doctors Hospital;49 and (c) his acute respiratory failure, which was declared to be the immediate cause of his death. 50
Thus, for the foregoing reasons, it cannot be seriously disputed that the first requirement for death compensabil ity concurs in this case.

Second Requirement:

The Seafarers Death Should Occur During The Term Of Employment.

With respect to the second requirement for death compensability, the Court takes this opportunity to clarify that while the general rule is that the seafarers death should occur
during the term of his employment, the seafarers death occurring after the termination of his employment due to his medical repatriation on account of a work-related injury or
illness constitutes an exception thereto. This is based on a liberal construction of the 2000 POEA-SEC as impelled by the plight of the bereaved heirs who stand to be deprived
of a just and reasonable compensation for the seafarers death, notwithstanding its evident work-connection. The present petition is a case in point.

Here, Nancings repatriation occurred during the eighth (8th) month of his one (1) year employment contract. Were it not for his injury, which had been earlier established as
work-related, he would not have been repatriated for medical reasons and his contract consequently terminated pursuant to Part 1 of Section 18 (B) of the 2000 POEA-SEC as
hereunder quoted:

SECTION 18. TERMINATION OF EMPLOYMENT

xxxx

B. The employment of the seafarer is also terminated when the seafarer arrives at the point of hire for any of the following reasons:

1. when the seafarer signs-off and is disembarked for medical reasons pursuant to Section 20 (B)[5] of this Contract.

The terminative consequence of a medical repatriation case then appears to present a rather prejudicial quandary to the seafarer and his heirs. Particularly, if the Court were to
apply the provisions of Section 20 of the 2000 POEA-SEC as above-cited based on a strict and literal construction thereof, then the heirs of Nancing would stand to be barred
from receiving any compensation for the latters death despite its obvious work-relatedness. Again, this is for the reason that the work-related death would, by mere legal
technicality, be considered to have occurred after the term of his employment on account of his medical repatriation. It equally bears stressing that neither would the heirs be
able to receive any disability compensation since the seafarers death in this case precluded the determination of a disability grade, which, following Section 20 (B)51 in relation to
Section 3252 of the 2000 POEA-SEC, stands as the basis therefor.

However, a strict and literal construction of the 2000 POEA-SEC, especially when the same would result into inequitable consequences against labor, is not subscribed to in this
jurisdiction. Concordant with the States avowed policy to give maximum aid and full protection to labor as enshrined in Article XIII of the 1987 Philippine Constitution,53 contracts
of labor, such as the 2000 POEA-SEC, are deemed to be so impressed with public interest that the more beneficial conditions must be endeavoured in favor of the laborer.54 The
rule therefore is one of liberal construction. As enunciated in the case of Philippine Transmarine Carriers, Inc. v. NLRC: 55

The POEA Standard Employment Contract for Seamen is designed primarily for the protection and benefit of Filipino seamen in the pursuit of their employment on board ocean-
going vessels. Its provisions must [therefore] be construed and applied fairly, reasonably and liberally in their favor [as it is only] then can its beneficent provisions be fully
carried into effect.56 (Emphasis supplied)

Applying the rule on liberal construction, the Court is thus brought to the recognition that medical repatriation cases should be considered as an exception to Section 20 of the
2000 POEA-SEC. Accordingly, the phrase "work-related death of the seafarer, during the term of his employment contract" under Part A (1) of the said provision should not be
strictly and literally construed to mean that the seafarers work-related death should have precisely occurred during the term of his employment. Rather, it is enough that the
seafarers work-related injury or illness which eventually causes his death should have occurred during the term of his employment. Taking all things into account, the Court
reckons that it is by this method of construction that undue prejudice to the laborer and his heirs may be obviated and the State policy on labor protection be championed. For if
the laborers death was brought about (whether fully or partially) by the work he had harbored for his masters profit, then it is but proper that his demise be compensated. Here,
since it has been established that (a) the seafarer had been suffering from a work-related injury or illness during the term of his employment, (b) his injury or illness was the
cause for his medical repatriation, and (c) it was later determined that the injury or illness for which he was medically repatriated was the proximate cause of his actual death
although the same occurred after the term of his employment, the above-mentioned rule should squarely apply. Perforce, the present claim for death benefits should be granted.

To quell any confusion, it is but fitting to make clear that a liberal construction of Section 20 of the 2000 POEA-SEC as above-discussed would not offend the Courts ruling in
Klaveness,57 which was inaccurately relied upon by the CA to justify its decision. The inaccuracy so recognized stems from the glaring factual and legal variance between
Klaveness and the present case. Upon careful scrutiny, the seafarer in Klaveness was not medically repatriated but was actually signed off from the vessel after the completion
of his contract. He was subsequently diagnosed to have urinary bladder cancer, which was not proven to be work-related, and died almost two (2) years after the termination of
his contract of employment. Hence, since the employment contract was terminated without any connection to a work-related cause, but rather because of its mere lapse, death
benefits were denied to the seafarers heirs. In contrast, the seafarer in this case was medically repatriated due to a work-related injury which resulted to his death a month after
his confinement in a local hospital. Again, were it not for said injury, the seafarer would not have been medically repatriated and his employment contract, in turn, terminated. By
these circumstances, it is clear that the termination of the employment contract was forced upon by a work-related cause. As alluded earlier, it would then be antithetical to the
States policy on labor to deprive the seafarers heirs of death compensation despite its palpable work-connection. Based on the foregoing, it is, hence, apparent that the Courts
pronouncement herein would not conflict that in Klaveness. Truth be told, the defining parameter in workers compensation cases should be the element of work-relatedness
which was clearly absent in the "contract-completion" situation in Klaveness.58 To reiterate, if the death is work-related, as herein ascribed, then the seafarers heirs should not
be denied compensation.

To reinforce the point, a survey of previous Court rulings wherein death compensability had been denied the heirs of the seafarer actually demonstrates the significance of the
work-relatedness element in workers compensation cases. For instance, in Gau Sheng Phils., Inc. v. Joaquin, 59 the illness of the seafarer therein, who was terminated based on
mutual consent, was found to be non-compensable since he died of chronic renal failure which was not listed as a compensable illness. Likewise, in Aya-ay, Sr. v. Arpaphil
Shipping Corp.,60 the Court denied the claim for death compensation because the seafarer therein was repatriated due to an eye injury but subsequently died of a stroke, which
was not listed as a compensable illness under the POEA-SEC. Death compensation was also denied to the claimants in Hermogenes v. Osco Shipping Services, Inc., 61 since no
evidence was offered to prove the cause of the termination of the contract of employment, whereas it was found that the seafarer therein died three (3) years after his
disembarkation of an illness which was not shown to have been contracted during his employment. An identical ruling was rendered in Prudential Shipping and Management
Corp. v. Sta. Rita,62wherein the seafarer in said case was repatriated due to umbilical hernia but died one (1) year after of cardiopulmonary arrest, which was not, however,
established as work-related. Similarly, death compensation was denied the claimants in Ortega v. CA, 63 considering that the seafarer therein died of lung cancer which was not
found to be work-related.

Meanwhile, on the opposite end of the jurisprudential spectrum, the Court, in a number of cases, granted claims for death benefits although the seafarers death therein had
occurred after their repatriation primarily because of the causal connection between their work and the illness which had eventually resulted in their death.
In the 1999 case of Wallem Maritime Service, Inc. v. NLRC, 64 the death benefit claims of the heirs of the seafarer who had died after having been repatriated on account of
"mutual consent" between him and his employer was allowed by the Court because of the "reasonable connection" between his job and his illness. As pertinently stated in that
case:

It is not required that the employment be the sole factor in the growth, development or acceleration of the illness to entitle the claimant to the benefits provided therefor. It is
enough that the employment had contributed, even in a small degree, to the development of the disease and in bringing about his death.

It is indeed safe to presume that, at the very least, the nature of Faustino Inductivos employment had contributed to the aggravation of his illness if indeed it was pre-existing
at the time of his employment and therefore it is but just that he be duly compensated for it. It cannot be denied that there was at least a reasonable connection between his
job and his lung infection, which eventually developed into septicemia and ultimately caused his death. As a [utility man] on board the vessel, he was exposed to harsh sea
weather, chemical irritants, dusts, etc., all of which invariably contributed to his illness.

Neither is it necessary, in order to recover compensation, that the employee must have been in perfect condition or health at the time he contracted the disease. Every
workingman brings with him to his employment certain infirmities, and while the employer is not the insurer of the health of the employees, he takes them as he finds them and
assumes the risk of liability. If the disease is the proximate cause of the employees death for which compensation is sought, the previous physical condition of the employee is
1wphi 1

unimportant and recovery may be had therefor independent of any pre-existing disease.65 (Emphases and underscoring supplied)

Later, the Court, in Seagull Shipmanagement and Transport, Inc. v. NLRC 66 a sickness and permanent disability claims case decided under the auspices of the 1984 version
of the POEA-SEC (which, unlike the present standard contract, only requires that the illness of death occur during the term of the employment whether work-related or not)
significantly observed that:

Even assuming that the ailment of the worker was contracted prior to his employment, this still would not deprive him of compensation benefits. For what matters is that his work
had contributed, even in a small degree, to the development of the disease and in bringing about his eventual death. Neither is it necessary, in order to recover compensation,
that the employee must have been in perfect health at the time he contracted the disease. A worker brings with him possible infirmities in the course of his employment, and
while the employer is not the insurer of the health of the employees, he takes them as he finds them and assumes the risk of liability. If the disease is the proximate cause of the
employees death for which compensation is sought, the previous physical condition of the employee is unimportant, and recovery may be had for said death, independently of
any pre-existing disease. 67 (Emphases and underscoring supplied; citations omitted)

The Court similarly took into account the work-relatedness element in granting the death benefits claim in Interorient Maritime Enterprises, Inc. v. Remo, 68 a 2010 case decided
under the 1996 POEA-SEC which operated under parameters identical to the 1984 POEA-SEC. Quoted hereunder are the pertinent portions of that ruling:

It was established on record that before the late Lutero Remo signed his last contract with private respondents as Cook-Steward of the vessel "M/T Captain Mitsos L," he was
required to undergo a series of medical examinations. Yet, he was declared "fit to work" by private respondents company designated-physician. On April 19, 1999, Remo was
discharged from his vessel after he was hospitalized in Fujairah for atrial fibrillation and congestive heart failure. His death on August 28, 2000, even if it occurred months after
his repatriation, due to hypertensive cardio-vascular disease, could clearly have been work related. Declared as "fit to work" at the time of hiring, and hospitalized while on
service onaccount of "atrial fibrillation and congestive heart failure," his eventual death due to "hypertensive cardio-vascular disease" could only be work related. The death due
to "hypertensive cardio-vascular disease" could in fact be traced to Lutero Remos being the "Cook-Steward." As Cook-Steward of an ocean going vessel, Remo had no choice
but to prepare and eat hypertension inducing food, a kind of food that eventually caused his "hypertensive cardio-vascular disease," a disease which in turn admittedly caused
his death.

Private respondents cannot deny liability for the subject death by claiming that the seafarers death occurred beyond the term of his employment and worsely, that there has
been misrepresentation on the part of the seafarer. For, as employer, the private respondents had all the opportunity to pre-qualify, thoroughly screen and choose their
applicants to determine if they are medically, psychologically and mentally fit for employment. That the seafarer here was subjected to the required prequalification standards
before he was admitted as Cook-Steward, it thus has to be safely presumed that the late Remo was in a good state of health when he boarded the vessel.69 (Emphases and
underscoring supplied; citation omitted)

More recently, in the 2013 case of Inter-Orient Maritime, Incorporated v. Candava,70 also decided under the framework of the 1996 POEA-SEC, the Court pronounced that the
seafarers death therein, despite occurring after his repatriation, remains "compensable for having been caused by an illness duly established to have been contracted in the
course of his employment."71

Thus, considering the constitutional mandate on labor as well as relative jurisprudential context, the rule, restated for a final time, should be as follows: if the seafarers work-
related injury or illness (that eventually causes his medical repatriation and, thereafter, his death, as in this case) occurs during the term of his employment, then the employer
becomes liable for death compensation benefits under Section 20 (A) of the 2000 POEA-SEC. The provision cannot be construed otherwise for to do so would not only
transgress prevailing constitutional policy and deride the bearings of relevant case law but also result in a travesty of fairness and an indifference to social justice.

For all these reasons, the Court hereby grants the petition.

WHEREFORE, the petition is GRANTED. The Decision dated May 19, 2009 and the Resolution dated October 30, 2009 of the Court of Appeals in CA-G.R. SP No. 104479 are
hereby REVERSED and SET ASIDE and the Decision dated April 30, 2008 of the National Labor Relations Commission is REINSTATED.

SO ORDERED.

G.R. No. 183700 October 13, 2014

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,


vs.
PABLITO ANDAYA y REANO, Accused-Appellant.

DECISION

BERSAMIN, J.:

The non-presentation of the confidential informant as a witness does not ordinarily weaken the State's case against the accused. However, if the arresting lawmen arrested the
accused based on the pre-arranged signal from the confidential informant who acted as the poseur buyer, his nonpresentation must be credibly explained and the transaction
established by other ways in order to satisfy the quantum of proof beyond reasonable doubt because the arresting lawmen did not themselves participate in the buy-bust
transaction with the accused.

Antecedents

On February 7, 2003, an information for violation of Section 5 of Republic Act No. 9165 1 (RA 9165) was filed charging Pablito Andaya y Reano (Andaya). The accusatory portion
of the information reads:

That on or about December 16, 2002 at around 9:50 o'clock in the evening at Brgy. San Jose Sico, Batangas City, Philippines and within the jurisdiction of this Honorable Court,
the above-named accused, not being authorized by law, did then and there, willfully, unlawfully and feloniously, sell, dispense or deliver, more or less 0.09 gram(s) of
Methamphetamine Hydrochloride (shabu), a dangerous drug, which is a clear violation of the above-cited law. CONTRARY TO LAW.2

Upon arraignment,3 Andaya pleaded not guilty to the charge. Thereafter, trial on the merits ensued.

The CA summed up the versions of the parties, as follows: 4

Five (5) witnesses were presented by the prosecution, namely: SPO4 Delfin Alea, SPO3 Nelio Lopez, SPO2 Danilo Mercado, SPO4 Protasio Marasigan and Jupri Delantar.

SPO2 Delfin Alea testified that at about 8:00 o'clock in the evening of December 16, 2002, their asset who was conducting surveillance of Pablito Andaya in Barangay San Jose
Sico, Batangas City, arrived at their station. Said asset reported that he had arranged to buy shabu from Pablito. A team composed of SPO1 Aguila, SPO1 Cabungcal, Eric de
Chavez, PO1 Lindberg Yap, Edwalberto Villar and asset Bagsit was constituted to conduct a buy-bust. Two (2) pieces of P100.00 bills both duly marked "X" were recorded in
the police blotter. Alea gave the marked bills to the asset. Upon reaching the designated place, the team members alighted from their vehicles and occupied different positions
where they could see and observe the asset. The asset knocked on the door of Pablito's house. Pablito came out. Pablito and the asset talked briefly. The asset gave Pablito
the marked money. The asset received something from appellant. The pre-arranged signal signifying consummation of the transaction was given. The team members
approached Pablito and the asset, introduced themselves as police officers and arrested accused. He was brought to the police station. The arrival of the team was recorded in
the police blotter. The merchandise handed by accused to the asset was sent to the Regional Crime Laboratory in Camp Vicente Lim, Canlubang, Laguna. The specimen was
positive for methampethamine Hydrochloride (shabu), a dangerous drug.

SPO2 Lopez received the person of the accused, the marked money and the item accused handed to the asset. Lopez prepared the request for laboratory examination. He also
prepared the documents required for filing of the case with the Public Prosecutor.

SPO2 Danilo Mercado recorded the marked bills in the police blotter before the buy-bust. Upon the team's return, the marked money and the merchandise from accused were
turned over to SPO2 Mercado. He prepared a complaint sheet. Thereafter, he turned over accused and the evidence to the Police Investigator.

SPo4 Protacio Marasigan received a written request for laboratory examination of the subject merchandise. He brought the request to the crime laboratory in Laguna.

Jupri Delantar, a Forensic Chemical Officer in Camp Vicente Lim, Laguna, conducted the examination. The merchandise tested positive for shabu.

Accused-appellant denied the charge. He stated that at about 9: 15 in the evening of December 16, 2002 he was at home watching TV with his family when police officers
arrived. When he opened the door, a police officer poked his gun at him. Somebody else held a long firearm. Pablito was handcuffed and brought outside. He refused to
negotiate and asked for a warrant. The policemen searched the house, turned over the beddings and uncovered their furniture. No gun nor shabu was found. Pablito was
brought to the police station and detained. After three (3) days he was released. He received a subpoena from the Public Prosecutor afterwards.

His wife Crisanta, corroborated appellants' testimony. She added having told her husband about the loss of their cellphone and the money in his wallet. She was asked to
produce P5,000.00 which she was unable to do. She was able to raise only P2,000.00.

Judgment of the RTC

On February 21, 2006, the Regional Trial Court, Branch 4, in Batangas City (R TC) rendered its judgment convicting Andaya as charged, and meted him the penalty of life
imprisonment,5 viz:

In the case at bar, the buy-bust operation conducted on the night of December 16, 2002 is supported by the police blotter wherein not only was the depaiiure and arrival of the
operatives have been duly recorded but also the two (2) pieces of marked one hundred peso bills. The arrest of the accused was made after the police asset had given the pre-
arranged signal outside his house. The marked money was recovered from the very hand of the accused while the deck of crystalline substances given to the asset upon the
latter's handing over to the accused the marked money has been turned over to the police by the asset. The crystalline substance when examined at the police crime laboratory
was found to contain methamphetamine hydrochloride a dangerous and prohibited drug and weighed 0.09 gram.

These foregoing facts have been clearly testified to by the Prosecution witnesses who are members of the Philippine Integrated National Police Force stationed at Batangas
City. No ill-motive has been imputed to any of these police officers prior to and at the time the herein accused was arrested on the night of December 16, 2002.

The accused and his wife as a defense denied the sale of shabu that fateful night. There were allegations in their testimonies that the police demanded money from them. The
wife of the accused even testified that she gave P 1,500.00 to the police officer who then eventually released said accused. And early on, she even claimed money and a
cellphone were missing after the accused was arrested in their house.

The testimonies of the accused and his wife are bereft of any corroborating evidence emanating from a disinterested source. It is no less than self-serving devoid of any
credence considering the following circumstances:

1. Scrutinizing the entirety of the testimony of the accused and his wife Crisanta Andaya, there are material variances gleaned therefrom. The accused himself
never testified that he was pushed to a chair and yet witness Crisanta Andaya said she saw her husband pushed to a chair. Also, the accused said there were two
guns poked at him when he opened the door but his wife said only one was holding a gun while another had a long firearm on his shoulder.
2. The testimony of the accused was that only P500.00 was taken by the police before his release. But the wife said P1,500.00 was given to the police before the
accused was released. 3. The accused and his wife never made any complaint to the proper authorities as regards the alleged loss of money and cellphone when
the accused was arrested on December 16, 2002. Neither was there any complaint filed by them for the alleged P500.00 or Pl1500.00 demanded from and given
by them to the police.

4. The accused was a resident of Barangay San Jose Sico, Batangas City since the 1980's why was it that it was at Rosario, Batangas where the accused was
arrested. The Defense gave no evidence to contest the presumption of guilt based on flight.

5. It is significant to note also that the accused never bothered to ask who was knocking at his door past 9:00 o'clock in the evening. While his family was already
lying in bed to sleep he was still watching T.V. These actuations of the accused tend to support the fact that the police asset had made a deal with the accused for
the sale of shabu and was expecting the asset to come that night.

In the light of all foregoing considerations, the Court is left with no alternative than to find the herein accused criminally liable for the offense charged in the information.

Wherefore, accused Pablito Andaya y Reano is found GUILTY beyond reasonable doubt of violating Section 5, Article II of Republic Act No. 9165. He is therefore sentenced to
undergo life imprisonment and to pay the costs of this action. The 0.09 gram of methamphetamine hydrochloride subject of this case is confiscated and directed to be
proceeded against pursuant to law.

The accused may be credited with his preventive imprisonment if he is entitled to any.

SO ORDERED.6

Decision of the CA

In his appeal, Andaya contended:

I.

THE TRIAL COURT GRAVELY ERRED IN NOT FINDING THE ACCUSED-APPELLANT'S SEARCH AND ARREST AS ILLEGAL.

II.

THE TRIAL COURT GRAVELY ERRED IN CONVICTING ACCUSED-APPELLANT OF THE CRIME CHARGED DESPITE THE FAIL URE OF THE
PROSECUTION TO PROVE HIS GUILT BEYOND REASONABLE DOUBT.7

On February 11, 2008, the CA promulgated its assailed decision affirming the conviction,8 viz:

WHEREFORE, in view of the foregoing, the appeal is DISMISSED. The decision of Branch IV, RTC, Fourth Judicial Region, Batangas City, in Criminal Case No. 12771 is
AFFIRMED in toto.

SO ORDERED.9

Issues

Hence, Andaya appeals, insisting that the search of his house and his person and his arrest by the police officers violated his constitutional right against unreasonable searches
and seizures; and that the Prosecution's nonpresentation of the confidential informant was adverse to the Prosecution, indicating that his guilt was not proved beyond
reasonable doubt.

Ruling

The appeal is meritorious.

To secure the conviction of the accused who is charged with the illegal sale of dangerous drugs as defined and punished by Section 5, Article II of Republic Act No. 9165
(Comprehensive Drugs Act of 2002), the State must establish the concurrence of the following elements, namely: (a) that the transaction or sale took place between the
accused and the poseur buyer; and ( b) that the dangerous drugs subject of the transaction or sale is presented in court as evidence of the corpus delicti. 10

We reiterate that a buy-bust operation is a valid and legitimate form of entrapment of the drug pusher.11 In such operation, the poseur buyer transacts with the suspect by
purchasing a quantity of the dangerous drug and paying the price agreed upon, and in turn the drug pusher turns over or delivers the dangerous drug subject of their agreement
in exchange for the price or other consideration. Once the transaction is consummated, the drug pusher is arrested, and can be held to account under the criminal law. The
justification that underlies the legitimacy of the buy-bust operation is that the suspect is arrested in jlagranti delicto, that is, the suspect has just committed, or is in the act of
committing, or is attempting to commit the offense in the presence of the arresting police officer or private person. 12 The arresting police officer or private person is favored in
such instance with the presumption of regularity in the performance of official duty.

Proof of the transaction must be credible and complete. In every criminal prosecution, it is the State, and no other, that bears the burden of proving the illegal sale of the
dangerous drug beyond reasonable doubt.13 This responsibility imposed on the State accords with the presumption of innocence in favor of the accused, who has no duty to
prove his innocence until and unless the presumption of innocence in his favor has been overcome by sufficient and competent evidence. 14

Here, the confidential informant was not a police officer. He was designated to be the poseur buyer himself. It is notable that the members of the buy-bust team arrested Andaya
on the basis of the pre-arranged signal from the poseur buyer. The pre-arranged signal signified to the members of the buy-bust team that the transaction had been
consummated between the poseur buyer and Andaya. However, the State did not present the confidential informant/poseur buyer during the trial to describe how exactly the
transaction between him and Andaya had taken place. There would have been no issue against that, except that none of the members of the buy-bust team had directly
witnessed the transaction, if any, between Andaya and the poseur buyer due to their being positioned at a distance from the poseur buyer and Andaya at the moment of the
supposed transaction.

The CA did not find anything wrong or odd in the non-presentation of the poseur buyer as a witness against the accused. In fact, it justified the non-presentation as follows:

Appellant also questioned the failure of the prosecution to present the informer. The court is aware of the considerations why confidential informants are usually not presented
by the prosecution. There is the need to hide their identity and preserve their invaluable service to the police. (People v. Khor, 307 SCRA 295 [1999], citing People v. Gireng,
241 SCRA 11 [1995].) Foremost is the desire to protect them from being objects or targets of revenge by the criminals they implicate once they become known. (People vs.
Ong, G.R. No. 137348, June 21, 2004.)

In People vs Lopez (214 SCRA 323), it was held that there was no need for the prosecution to present the confidential informer as the poseur buyer himself positively identified
the accused as the one who sold to him one deck of methamphetamine hydrochloride or "shabu." The trial court then properly relied on the testimonies of the police officers
despite the decision of the prosecution not to present the informer. 15

The foregoing justification by the CA was off-tangent and does not help the State's cause any. It is obvious that the rulings cited to supp01i the need to conceal the confidential
1w phi 1

infonnants' identities related to the confidential informants who gave information against suspected drug dealers. The presentation of the confidential informants as witnesses for
the Prosecution in those instances could be excused because there were poseur buyers who directly incriminated the accused. In this case, however, it was different, because
the poseur buyer and the confidential informant were one and the same. Without the poseur buyer's testimony, the State did not credibly incriminate Andaya.

Indeed, Section 5 of Republic Act No. 9165 punishes "any person, who, unless authorized by law, shall sell, trade, administer, dispense, deliver, give away to another,
distribute, dispatch in transit or transport any dangerous drug, including any and all species of opium poppy regardless of the quantity and purity involved, or shall act as a
broker in any of such transactions." Under the law, selling was any act "of giving away any dangerous drug and/or controlled precursor and essential chemical whether for
money or any other consideration;"16 while delivering was any act "of knowingly passing a dangerous drug to another, personally or otherwise, and by any means, with or without
consideration."17 Given the legal characterizations of the acts constituting the offense charged, the members of the buy-bust team could not incriminate Andaya by simply
declaring that they had seen from their positions the poseur buyer handing something to Andaya who, in turn, gave something to the poseur buyer. If the transaction was a sale,
it was unwarranted to infer from such testimonies of the members of the buy-bust team that what the poseur buyer handed over were the marked P100.00 bills and that what
Andaya gave to the poseur buyer was the shabu purchased.

Another mark of suspicion attending the evidence of guilt related to the reliance by the members of the buy-bust team on the pre-arranged signal from the poseur buyer. To start
with, the record does not show what the prearranged signal consisted of. It is fundamental enough to expect the State to be clear and definite about its evidence of guilt,
particularly here where the conviction of Andaya would require him to spend the rest of his natural life behind bars. Nothing less should be done here. Secondly, the reliance on
the supposed signal to establish the consummation of the transaction between the poseur buyer and Andaya was unwarranted because the unmitigatedly hearsay character of
the signal rendered it entirely bereft of trustworthiness. The arresting members of the buy-bust team interpreted the signal from the anonymous poseur buyer as the sign of the
consummation of the transaction. Their interpretation, being necessarily subjective without the testimony of the poseur buyer, unfairly threatened the liberty of Andaya. We
should not allow that threat to perpetuate itself. And, lastly, the reliance on the signal would deprive Andaya the right to confront and test the credibility of the poseur buyer who
supposedly gave it.

We should look at the situation of Andaya with utmost caution because of what our judicial experience through the years has told us about unscrupulous lawmen resorting to
stratagems of false incrimination in order to arrest individuals they target for ulterior reasons. In this case, the arrest did not emanate from probable cause, for the formless
signal from the anonymous poseur buyer did not establish beyond reasonable doubt the elements of illegal sale of dangerous drugs under Section 5 of Republic Act No. 9165. 1wphi1

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