1

COMPLAINT AND
DOCKET FEES
 2

subsequently, PIL started its operations in the Philippines; however, it refused to

comply with its undertaking to employ Todaro on a permanent basis. 4

Instead of filing an Answer, PPHI, PCPI and Klepzig separately moved to dismiss the
complaint on the grounds that the complaint states no cause of action, that the RTC
G.R. No. 154830 June 8, 2007
has no jurisdiction over the subject matter of the complaint, as the same is within the
jurisdiction of the NLRC, and that the complaint should be dismissed on the basis of
PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES HOLDINGS, the doctrine of forum non conveniens.5
and PHILIP J. KLEPZIG, petitioners,
vs.
In its Order dated January 4, 1999, the RTC of Makati, Branch 147, denied herein
ANTONIO D. TODARO, respondent.
petitioners' respective motions to dismiss.6 Herein petitioners, as defendants, filed an
Urgent Omnibus Motion7 for the reconsideration of the trial court's Order of January 4,
DECISION 1999 but the trial court denied it via its Order8 dated June 3, 1999.

AUSTRIA-MARTINEZ, J.: On August 3, 1999, herein petitioners filed a Petition for Certiorari with the CA.9 On
October 31, 2000, the CA rendered its presently assailed Decision denying herein
petitioners' Petition for Certiorari. Petitioners filed a Motion for Reconsideration but the
Before the Court is a Petition for Review on Certiorari seeking to annul and set aside CA denied it in its Resolution dated August 21, 2002.
the Decision1 of the Court of Appeals (CA) dated October 31, 2000 in CA-G.R. SP No.
54155 and its Resolution2 of August 21, 2002 denying petitioners’ Motion for
Reconsideration. Hence, herein Petition for Review on Certiorari based on the following assignment of
errors:
The factual and procedural antecedents of the case are as follows:
A.
On January 16, 1998, herein respondent Antonio D. Todaro (Todaro) filed with the
Regional Trial Court (RTC) of Makati City, a complaint for Sum of Money and THE COURT OF APPEALS' CONCLUSION THAT THE COMPLAINT
Damages with Preliminary Attachment against Pioneer International Limited (PIL), STATES A CAUSE OF ACTION AGAINST PETITIONERS IS WITHOUT
Pioneer Concrete Philippines, Inc. (PCPI), Pioneer Philippines Holdings, Inc. (PPHI), ANY LEGAL BASIS. THE ANNEXES TO THE COMPLAINT CLEARLY
John G. McDonald (McDonald) and Philip J. Klepzig (Klepzig).3 BELIE THE ALLEGATION OF EXISTENCE OF AN EMPLOYMENT
CONTRACT BETWEEN PRIVATE RESPONDENT AND PETITIONERS.
In his complaint, Todaro alleged that PIL is a corporation duly organized and existing
under the laws of Australia and is principally engaged in the ready-mix concrete and B.
concrete aggregates business; PPHI is the company established by PIL to own and
hold the stocks of its operating company in the Philippines; PCPI is the company
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN
established by PIL to undertake its business of ready-mix concrete, concrete
A WAY NOT IN ACCORD WITH LAW AND WITH APPLICABLE
aggregates and quarrying operations in the Philippines; McDonald is the Chief
DECISIONS OF THE SUPREME COURT WHEN IT UPHELD THE
Executive of the Hongkong office of PIL; and, Klepzig is the President and Managing
JURISDICTION OF THE TRIAL COURT DESPITE THE FACT THAT THE
Director of PPHI and PCPI; Todaro has been the managing director of Betonval
COMPLAINT INDUBITABLY SHOWS THAT IT IS AN ACTION FOR AN
Readyconcrete, Inc. (Betonval), a company engaged in pre-mixed concrete and
ALLEGED BREACH OF EMPLOYMENT CONTRACT, AND HENCE,
concrete aggregate production; he resigned from Betonval in February 1996; in May
FALLS WITHIN THE EXLCUSIVE JURISDICTION OF THE NATIONAL
1996, PIL contacted Todaro and asked him if he was available to join them in
LABOR RELATIONS COMMISSION.
connection with their intention to establish a ready-mix concrete plant and other
related operations in the Philippines; Todaro informed PIL of his availability and
interest to join them; subsequently, PIL and Todaro came to an agreement wherein C
the former consented to engage the services of the latter as a consultant for two to
three months, after which, he would be employed as the manager of PIL's ready-mix
concrete operations should the company decide to invest in the Philippines;
 3

THE COURT OF APPEALS DISREGARDED AND FAILED TO CONSIDER With respect to the third assigned error, petitioners assert that the principle of forum
THE PRINCIPLE OF "FORUM NON CONVENIENS" AS A VALID GROUND non conveniens dictates that even where exercise of jurisidiction is authorized by law,
FOR DISMISSING A COMPLAINT.10 courts may refuse to entertain a case involving a foreign element where the matter
can be better tried and decided elsewhere, either because the main aspects of the
case transpired in a foreign jurisdiction or the material witnesses have their residence
In their first assigned error, petitioners contend that there was no perfected
there and the plaintiff sought the forum merely to secure procedural advantage or to
employment contract between PIL and herein respondent. Petitioners assert that the
annoy or harass the defendant. Petitioners also argue that one of the factors in
annexes to respondent's complaint show that PIL's offer was for respondent to be
determining the most convenient forum for conflicts problem is the power of the court
employed as the manager only of its pre-mixed concrete operations and not as the
to enforce its decision. Petitioners contend that since the majority of the defendants in
company's managing director or CEO. Petitioners argue that when respondent
the present case are not residents of the Philippines, they are not subject to
reiterated his intention to become the manager of PIL's overall business venture in the
compulsory processes of the Philippine court handling the case for purposes of
Philippines, he, in effect did not accept PIL's offer of employment and instead made a
requiring their attendance during trial. Even assuming that they can be summoned,
counter-offer, which, however, was not accepted by PIL. Petitioners also contend that
their appearance would entail excessive costs. Petitioners further assert that there is
under Article 1318 of the Civil Code, one of the requisites for a contract to be
no allegation in the complaint from which one can conclude that the evidence to be
perfected is the consent of the contracting parties; that under Article 1319 of the same
presented during the trial can be better obtained in the Philippines. Moreover, the
Code, consent is manifested by the meeting of the offer and the acceptance upon the
events which led to the present controversy occurred outside the Philippines.
thing and the cause which are to constitute the contract; that the offer must be certain
Petitioners conclude that based on the foregoing factual circumstances, the case
and the acceptance absolute; that a qualified acceptance constitutes a counter-offer.
should be dismissed under the principle of forum non conveniens.
Petitioners assert that since PIL did not accept respondent's counter-offer, there never
was any employment contract that was perfected between them.
In his Comment, respondent extensively quoted the assailed CA Decision maintaining
that the factual allegations in the complaint determine whether or not the complaint
Petitioners further argue that respondent's claim for damages based on the provisions
states a cause of action.
of Articles 19 and 21 of the Civil Code is baseless because it was shown that there
was no perfected employment contract.
As to the question of jurisdiction, respondent contends that the complaint he filed was
not based on a contract of employment. Rather, it was based on petitioners'
Assuming, for the sake of argument, that PIL may be held liable for breach of
unwarranted breach of their contractual obligation to employ respondent. This breach,
employment contract, petitioners contend that PCPI and PPHI, may not also be held
respondent argues, gave rise to an action for damages which is cognizable by the
liable because they are juridical entities with personalities which are separate and
regular courts.
distinct from PIL, even if they are subsidiary corporations of the latter. Petitioners also
aver that the annexes to respondent's complaint show that the negotiations on the
alleged employment contract took place between respondent and PIL through its Even assuming that there was an employment contract, respondent asserts that for
office in Hongkong. In other words, PCPI and PPHI were not privy to the negotiations the NLRC to acquire jurisdiction, the claim for damages must have a reasonable
between PIL and respondent for the possible employment of the latter; and under causal connection with the employer-employee relationship of petitioners and
Article 1311 of the Civil Code, a contract is not binding upon and cannot be enforced respondent.
against one who was not a party to it even if he be aware of such contract and has
acted with knowledge thereof.
Respondent further argues that there is a perfected contract between him and
petitioners as they both agreed that the latter shall employ him to manage and operate
Petitioners further assert that petitioner Klepzig may not be held liable because he is their ready-mix concrete operations in the Philippines. Even assuming that there was
simply acting in his capacity as president of PCPI and PPHI and settled is the rule that no perfected contract, respondent contends that his complaint alleges an alternative
an officer of a corporation is not personally liable for acts done in the performance of cause of action which is based on the provisions of Articles 19 and 21 of the Civil
his duties and within the bounds of the authority conferred on him. Furthermore, Code.
petitioners argue that even if PCPI and PPHI are held liable, respondent still has no
cause of action against Klepzig because PCPI and PPHI have personalities which are
As to the applicability of the doctrine of forum non conveniens, respondent avers that
separate and distinct from those acting in their behalf, such as Klepzig.
the question of whether a suit should be entertained or dismissed on the basis of the
principle of forum non conveniens depends largely upon the facts of the particular
As to their second assigned error, petitioners contend that since herein respondent's case and is addressed to the sound discretion of the trial judge, who is in the best
claims for actual, moral and exemplary damages are solely premised on the alleged position to determine whether special circumstances require that the court desist from
breach of employment contract, the present case should be considered as falling assuming jurisdiction over the suit.
within the exclusive jurisdiction of the NLRC.

The petition lacks merit.
Section 2, Rule 2 of the Rules of Court, as amended, defines a cause of action as the
act or omission by which a party violates a right of another. A cause of action exists if
the following elements are present: (1) a right in favor of the plaintiff by whatever
means and under whatever law it arises or is created; (2) an obligation on the part of
the named defendant to respect or not to violate such right; and, (3) an act or omission
on the part of such defendant violative of the right of the plaintiff or constituting a
breach of the obligation of the defendant to the plaintiff for which the latter may
maintain an action for recovery of damages.11
In Hongkong and Shanghai Banking Corporation Limited v. Catalan,12 this Court held:
The elementary test for failure to state a cause of action is whether the
complaint alleges facts which if true would justify the relief demanded.
Stated otherwise, may the court render a valid judgment upon the facts
alleged therein? The inquiry is into the sufficiency, not the veracity of the
material allegations. If the allegations in the complaint furnish sufficient
basis on which it can be maintained, it should not be dismissed regardless
of the defense that may be presented by the defendants.13
Moreover, the complaint does not have to establish or allege facts proving the
existence of a cause of action at the outset; this will have to be done at the trial on the
merits of the case.14 To sustain a motion to dismiss for lack of cause of action, the
complaint must show that the claim for relief does not exist, rather than that a claim
has been defectively stated, or is ambiguous, indefinite or uncertain.15
Hence, in resolving whether or not the Complaint in the present case states a cause of
action, the trial court correctly limited itself to examining the sufficiency of the
allegations in the Complaint as well as the annexes thereto. It is proscribed from
inquiring into the truth of the allegations in the Complaint or the authenticity of any of
the documents referred or attached to the Complaint, since these are deemed
hypothetically admitted by the respondent.
This Court has reviewed respondent’s allegations in its Complaint. In a nutshell,
respondent alleged that herein petitioners reneged on their contractual obligation to
employ him on a permanent basis. This allegation is sufficient to constitute a cause of
action for damages.
The issue as to whether or not there was a perfected contract between petitioners and
respondent is a matter which is not ripe for determination in the present case; rather,
this issue must be taken up during trial, considering that its resolution would
necessarily entail an examination of the veracity of the allegations not only of herein
respondent as plaintiff but also of petitioners as defendants.
4
The Court does not agree with petitioners' contention that they were not privy to the
negotiations for respondent's possible employment. It is evident from paragraphs 24 to
28 of the Complaint16 that, on various occasions, Klepzig conducted negotiations with
respondent regarding the latter's possible employment. In fact, Annex "H" 17 of the
complaint shows that it was Klepzig who informed respondent that his company was
no longer interested in employing respondent. Hence, based on the allegations in the
Complaint and the annexes attached thereto, respondent has a cause of action
against herein petitioners.
As to the question of jurisdiction, this Court has consistently held that where no
employer-employee relationship exists between the parties and no issue is involved
which may be resolved by reference to the Labor Code, other labor statutes or any
collective bargaining agreement, it is the Regional Trial Court that has jurisdiction. 18 In
the present case, no employer-employee relationship exists between petitioners and
respondent. In fact, in his complaint, private respondent is not seeking any relief under
the Labor Code, but seeks payment of damages on account of petitioners' alleged
breach of their obligation under their agreement to employ him. It is settled that an
action for breach of contractual obligation is intrinsically a civil dispute.19 In the
alternative, respondent seeks redress on the basis of the provisions of Articles 19 and
21 of the Civil Code. Hence, it is clear that the present action is within the realm of civil
law, and jurisdiction over it belongs to the regular courts.20
With respect to the applicability of the principle of forum non conveniens in the present
case, this Court's ruling in Bank of America NT & SA v. Court of Appeals21 is
instructive, to wit:
The doctrine of forum non conveniens, literally meaning ‘the forum is
inconvenient’, emerged in private international law to deter the practice of
global forum shopping, that is to prevent non-resident litigants from
choosing the forum or place wherein to bring their suit for malicious
reasons, such as to secure procedural advantages, to annoy and harass the
defendant, to avoid overcrowded dockets, or to select a more friendly
venue. Under this doctrine, a court, in conflicts of law cases, may refuse
impositions on its jurisdiction where it is not the most "convenient" or
available forum and the parties are not precluded from seeking remedies
elsewhere.
Whether a suit should be entertained or dismissed on the basis of said
doctrine depends largely upon the facts of the particular case and is
addressed to the sound discretion of the trial court. In the case of
Communication Materials and Design, Inc. vs. Court of Appeals, this Court
held that "xxx [a] Philippine Court may assume jurisdiction over the case if it
chooses to do so; provided, that the following requisites are met: (1) that the
Philippine Court is one to which the parties may conveniently resort to; (2)
that the Philippine Court is in a position to make an intelligent decision as to
the law and the facts; and, (3) that the Philippine Court has or is likely to
have power to enforce its decision."
 5

Moreover, this Court enunciated in Philsec. Investment Corporation vs. Petition for review on certiorari assailing the Decision of the Court of Appeals in CA-
Court of Appeals, that the doctrine of forum non conveniens should not G.R. CV No. 57868, entitled "Dr. Ibarra S. Santos and Josefina M. Rivera versus
be used as a ground for a motion to dismiss because Sec. 1, Rule 16 Spouses Nieves de Leon, Virginia Enales and Deputy Sheriff Pericles Telan."
of the Rules of Court does not include said doctrine as a ground. This
Court further ruled that while it is within the discretion of the trial court
Records show that on September 25, 1995, spouses Pablo and Nieves de Leon,
to abstain from assuming jurisdiction on this ground, it should do so
herein respondents, filed with the Metropolitan Trial Court (MTC), Branch 77,
only after vital facts are established, to determine whether special
Parañaque City a complaint for forcible entry against Josefina Rivera, petitioner,
circumstances require the court’s desistance; and that the propriety of
docketed as Civil Case No. 9500. In her answer, petitioner Rivera claimed that the real
dismissing a case based on this principle of forum non conveniens
owner of the subject property is Dr. Ibarra Santos, also a petitioner.
requires a factual determination, hence it is more properly considered
a matter of defense.22 (emphasis supplied)
The MTC rendered a Decision in favor of respondent spouses de Leon. Upon appeal,
the Regional Trial Court (RTC) affirmed the MTC Decision. Petitioners filed with the
In the present case, the factual circumstances cited by petitioners which would
Court of Appeals a petition for review, but it was denied.
allegedly justify the application of the doctrine of forum non conveniens are matters of
defense, the merits of which should properly be threshed out during trial.
Subsequently, or on July 3, 1996, petitioners Dr. Ibarra Santos and Josefina Rivera
filed with the RTC, Branch 260, Parañaque City, Civil Case No. 96-0285 for
WHEREFORE, the instant petition is DENIED and the assailed Decision and
declaration of nullity of a Deed of Sale with prayer for a temporary restraining order
Resolution of the Court of Appeals are AFFIRMED.
and preliminary injunction. Impleaded as defendants were spouses Pablo and Nieves
de Leon (herein respondents), Virginia Enales and Pericles Telan, deputy sheriff IV of
Costs against petitioners. the said MTC.

SO ORDERED. The complaint alleges that petitioner, Dr. Ibarra Santos, is the registered owner of a
parcel of land and its improvements thereon situated in 1264 Interior Quirino Ave.,
San Dionisio Parañaque City, covered by Transfer Certificate of Title No. 69150 of the
Registry of Deeds, same city; that Virginia Enales and Rosendo Rivera (deceased
husband of petitioner Josefina Rivera) sold Dr. Santos’ property to respondent
spouses de Leon; and that in Civil Case No. 9500 for forcible entry filed by said
respondent spouses with the MTC of Parañaque City involving the same property, a
writ of execution was issued evicting from the premises petitioner Josefina Rivera, the
lessee of Dr. Santos. Petitioners Dr. Santos and Rivera thus prayed that the Deed of
Sale between Virginia Enales and Rosendo Rivera, as vendors, and respondent
spouses de Leon, as vendees, be declared void; and that a temporary restraining
order and/or preliminary injunction be issued enjoining the sheriff from implementing
the Decision of the MTC in Civil Case No. 9500.

On August 1, 1996, respondent spouses de Leon filed a motion to dismiss the

G.R. No. 140892. September 21, 2005 complaint on the ground that it states no cause of action. The motion was granted.

Dr. Ibarra S. Santos and Josefina M. Rivera, Petitioners, Hence, both petitioners filed with the Court of Appeals a petition for review.
vs.
Spouses Pablo and Nieves de Leon and Virginia Enales, Respondent.
On September 22, 1999, the Appellate Court rendered its Decision denying the
petition, holding that the complaint does not state a cause of action considering that
DECISION while it alleges that the Deed of Sale is null and void, however, petitioner Dr. Santos
failed to specify the grounds why the said document is a nullity and should, therefore,
SANDOVAL-GUTIERREZ, J.: be annulled.
 6

Petitioners filed a motion for reconsideration but was denied by the Appellate Court.
Hence, the instant petition.
Petitioners Dr. Santos and Rivera contend that the Court of Appeals erred in ruling
that the complaint states no cause of action. They insist that the allegations therein
"are sufficient for rendering a valid judgment in accordance with their prayer." Their
complaint states only the ultimate facts since the details can be proven during the trial.
Petitioners alleged in their complaint that:
"6. That plaintiff SANTOS is the absolute owner in fee simple of that parcel of land and
improvements thereon disputed in Civil Case No. 9500 entitled ‘SPS. PABLO AND
NIEVES DE LEON versus JOSEFINA RIVERA’ before Branch 77 of the
METROPOLITAN TRIAL COURT of PARAÑAQUE, METRO MANILA, as shown by
copy of TCT No. 69150 (ANNEX ‘A’);
has been prejudiced when the property, belonging to Dr. Santos, was sold by persons
who are not its real owners to spouses de Leon.
In determining whether the allegations of the complaint are sufficient to support a
cause of action, the complaint does not have to establish or allege the facts proving
the existence of a cause at the outset; this will have to be done at the trial on the
merits of the case.2 A complaint is sufficient if it contains sufficient notice of the cause
of action even though the allegations may be vague and indefinite.3 To sustain a
motion to dismiss for lack of cause of action, the complaint must show that the claim
for relief does not exist rather than that a claim has been defectively stated or is
ambiguous, indefinite or uncertain.4 The determination of the issue of ownership of a
property requires proofs which can be threshed out, not in a motion to dismiss, but in a
full-blown trial on the merits.
In fine, we rule that the Court of Appeals erred in ruling that petitioners’ complaint in
Civil Case No. 96-0285 does not state a cause of action and that in filing the said
complaint, petitioners did not violate the Rule on forum shopping.

7. That in said MTC Civil Case No. 9500, defendant ENALES and the late ROSENDO
RIVERA (deceased husband of plaintiff RIVERA) allegedly sold plaintiff SANTOS’ real
estate property covered by TCT No. 69150 (ANNEX ‘A’) to herein defendant spouses
DE LEON as shown by the ‘DEED OF SALE WITH WAIVER OF RIGHTS’ (ANNEX
‘B’), ‘WAIVER WITH SPECIAL POWER OF ATTORNEY’ (ANNEX ‘C’) and ‘RECEIPT
AND COMMITMENT’ (ANNEX ‘D’)."
WHEREFORE, the instant petition is hereby GRANTED. The assailed Decision and
Resolution of the Court of Appeals in CA-G.R. CV No. 57868 are REVERSED. Let the
records of this case be remanded to the Regional Trial Court, Branch 260, Parañaque
City for trial on the merits with dispatch.
SO ORDERED.

The general rule is that the allegations in a complaint are sufficient to constitute a
cause of action against the defendants if, admitting the facts alleged, the court can
render a valid judgment upon the same in accordance with the prayer therein. A cause
of action exists if the following elements are present, namely: (1) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is created; (2) an
obligation on the part of the named defendant to respect or not to violate such right;
and (3) an act or omission on the part of such defendant violative of the right of the
plaintiff or constituting a breach of the obligation of the defendant to the plaintiff for
which the latter may maintain an action for recovery of damages.1

The above allegations quoted above sufficiently establish a cause of action. They
specify that petitioners Dr. Ibarra Santos is the absolute owner of the disputed parcel
of land and the improvements thereon. His claim of ownership is evidenced by
Transfer Certificate of Title No. 4569216 of the Registry of Deeds for Parañaque City.
Definitely, as the registered owner of the subject property, he has a cause of action
against spouses de Leon who claim to have purchased the same from Virginia Enales
and Rosendo Rivera who are not the true owners thereof.

On the part of petitioner Josefina Rivera, she alleged in the same complaint that she
has been in possession, as a lessee, of the same property since 1983 as shown by a
Contract of Lease between her and Dr. Ibarra Santos; and that her right as a lessee
 7

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court assailing the Decision1 dated August 23, 2002 of the Court of Appeals (CA) in
CA-G.R. SP No. 65570 and the CA Resolution2 dated October 22, 2002 which denied
petitioners' Motion for Reconsideration.

The facts:

Universal Aquarius, Inc. (Universal) is engaged in the manufacture and distribution of

chemical products in Metro Manila. It operates a chemical plant in Antipolo City.
Conchita Tan (Tan), as a proprietor under the name and style of Marman Trading
(Marman), is engaged in the trading, delivery and distribution of chemical products in
Metro Manila, with a depot in Antipolo City adjoining Universal's chemical plant.

Q.C. Human Resources Management Corporation (Resources) is engaged in

supplying manpower to various establishments. It supplied Universal with about
seventy-four (74) temporary workers to assist Universal in the operation of its
chemical plant in Antipolo City.

On December 13, 2000, Rodolfo Capocyan (Capocyan), claiming to be the general

counsel/national president of the labor organization called Obrero Pilipino (Universal
Aquarius Chapter), hereinafter referred to as Obrero Filipino, sent a Notice of Strike to
Universal.

On the same date, Resources informed the Regional Office of the Department of
Labor and Employment that the officers and members of Obrero Pilipino are its
employees and not employees of Universal.

Five days later, or on December 19, 2000, Capocyon and 36 other union officers and
members3 of Obrero Pilipino, picketed, barricaded and obstructed the entry and exit of
Universal's Antipolo City chemical plant and intercepted Universal's delivery trucks
thereby disrupting its business operations. Marman's depot, which adjoined
Universal's plant, suffered a similar fate.

On December 27, 2000, Universal and Tan filed a Complaint against the strikers and
G.R. No. 155990 September 12, 2007 Resources before the Regional Trial Court, Branch 74, Antipolo City (RTC) for breach
of contract and damages suffered due to the disruption of their respective business
operations, docketed as Civil Case No. 00-6029.4 The Complaint alleges, in part:
UNIVERSAL AQUARIUS, INC. and CONCHITA TAN, petitioners,
vs.
Q.C. HUMAN RESOURCES MANAGEMENT CORPORATION, respondent *. (17) On December 19, 2000, at about 2:00 o'clock in the morning, in gross
violation of all applicable laws, rules and regulations, defendants Capocyan,
et al., willfully, unlawfully and feloniously picketed, barricaded and otherwise
DECISION obstructed entry and exit to and from the main gate of plaintiff Universal's
plant; x x x

(23) In a parallel move, and a companion activity to their unlawful
obstruction of plaintiff Universal's premises, Capocyan, et al., likewise
picketed , obstructed and otherwise barricaded the premises of plaintiff
Marman, whose depot adjoined that of plaintiff Universal; x x x
(26) As a consequence of the companion blockade on plaintiff Marman's
premises, its business operations were paralyzed;
(27) Plaintiff Universal's and plaintiff Marman's operations continue to be at
a standstill, causing damages in the form of unearned sales x x x
(31) Defendant Resources represented itself to be able to provide
temporary workers who are competent to assist in plaintiff Universal's plant
operations; it held itself out as a manpower firm with a pool of what can
generally be described as law-abiding workers, as that is essential in its
business of job-contracting;
(32) Defendant Resources instead sent a band of scoundrels who allowed
themselves to be misdirected and misguided by Capocyan, an attorney (?),
and "national president" of Obrero Pilipino (?)
x x x5
On January 3, 2001, Universal forged an Agreement (To End Labor Dispute) with
Obrero Pilipino.6 Thus, the strike which affected the business operations of Universal
and Marman ended. Universal and Tan then filed a Notice of Dismissal as against the
strikers.7
On January 8, 2001, Resources filed a Motion to Dismiss on the grounds that the
complaint stated no cause of action against it; that, assuming the existence of such
cause of action, the same was lost upon dismissal of the case against the individual
defendants; and lack of jurisdiction.8
In an Order dated February 2, 2001, the RTC denied the Motion to Dismiss.9
Resources filed a Motion for Reconsideration10 but it was denied by the RTC in its
Order dated May 11, 2001.11
On July 11, 2001, Resources filed a petition for certiorari and prohibition with the CA.12
On August 23, 2002, the CA rendered a Decision which set aside the Orders dated
February 2, 2001 and May 11, 2001 of the RTC and dismissed the complaint for lack
of cause of action.13 The CA held that:
It was very clear from the allegations in the complaint that the claims of
plaintiffs (private respondents in this case) stemmed from the strike, which
resulted in the disruption of their business operations. From the four corners
8
of the complaint, it was apparent that the right of the plaintiffs to operate
their business was violated when the defendants, Rodolfo Capocyan and
company, staged the strike in the premises of Universal Aquarius and
Marman, thereby disrupting the plant's operations. Q.C. Human Resources
Management Corporation (the petitioner in this case) was made defendant
in the complaint only because it was the employer of the strikers. However,
subsequent events erased the cause of action of plaintiffs, that is, when
Universal Aquarius agreed to end the dispute by giving financial assistance
to the striking workers and the dismissal of the case against them. With this
turn of events, the trial court had no more issue to resolve, and the
dismissal of the complaint against the strikers necessarily warranted the
dismissal of the complaint against Q.C. Human Resources Management
Corporation because plaintiffs had no more cause of action against it.14
Universal and Tan filed a Motion for Reconsideration15 but it was denied by the CA in
its Resolution dated October 22, 2002.16
The present petition is anchored on the following grounds:
The Honorable Court of Appeals seriously erred in dismissing Civil Case
No. 00-6829 for lack of cause of action.
The Honorable Court of Appeals seriously erred in holding that the lower
court committed grave abuse of discretion tantamount to lack of jurisdiction
when he denied the motion to dismiss filed by respondent Resources. 17
Universal and Tan aver that the complaint stated a cause of action against Resources
that would warrant cognizance by the RTC; the allegations of the complaint clearly
point out that Universal is suing Resources for the latter's failure to supply the former
with temporary workers who will help in its business.
On the other hand, Resources contends that the complaint stated no cause of action
against it since there is nothing in the allegations thereof that it participated in the acts
committed by its employees.
The petition is partly impressed with merit.
Section 1(g) Rule 1618 of the 1997 Rules of Civil Procedure makes it clear that failure
to make a sufficient allegation of a cause of action in the complaint warrants the
dismissal thereof. Section 2, Rule 2 of the 1997 Rules of Civil Procedure defines a
cause of action as the act or omission by which a party violates the right of another. It
is the delict or the wrongful act or omission committed by the defendant in violation of
the primary right of the plaintiff.19 Its essential elements are as follows:
1. A right in favor of the plaintiff by whatever means and under whatever law
it arises or is created;
 9

2. An obligation on the part of the named defendant to respect or not to
violate such right; and
3. Act or omission on the part of such defendant in violation of the right of
the plaintiff or constituting a breach of the obligation of the defendant to the
plaintiff for which the latter may maintain an action for recovery of damages
or other appropriate relief.20
It is only upon the occurrence of the last element that a cause of action arises, giving
the plaintiff the right to maintain an action in court for recovery of damages or other
appropriate relief.21
In Hongkong and Shanghai Banking Corporation Limited v. Catalan,22 this Court held:
The elementary test for failure to state a cause of action is whether the
complaint alleges facts which if true would justify the relief demanded.
Stated otherwise, may the court render a valid judgment upon the facts
alleged therein? The inquiry is into the sufficiency, not the veracity of the
material allegations. If the allegations in the complaint furnish sufficient
basis on which it can be maintained, it should not be dismissed regardless
of the defense that may be presented by the defendants.23
by the employees of Resources. It is settled that an employer's liability for acts of its
employees attaches only when the tortious conduct of the employee relates to, or is in
the course of, his employment.28 The question then is whether, at the time of the
damage or injury, the employee is engaged in the affairs or concerns of the employer
or, independently, in that of his own. An employer incurs no liability when an
employee’s conduct, act or omission is beyond the range of employment. 29
Unquestionably, when Resources' employees staged a strike, they were acting on
their own, beyond the range of their employment. Thus, Resources cannot be held
liable for damages caused by the strike staged by its employees.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated August 23,
2002 and Resolution dated October 22, 2002 of the Court of Appeals in CA-G.R. SP
No. 65570 are REVERSED and SET ASIDE insofar only as the dismissal of the
complaint in Civil Case No. 00-6029 for lack of cause of action of Universal Aquarius,
Inc. against Q.C. Human Resources Management Corporation is concerned. The
complaint against the latter is REINSTATED. The Regional Trial Court, Branch 74,
Antipolo City is DIRECTED to continue with the proceedings on the cause of action of
Universal Aquarius, Inc. against Q.C. Human Resources Management Corporation.
The dismissal of the complaint in Civil Case No. 00-6029 for lack of cause of action of
Conchita Tan against Q.C. Human Resources Management Corporation is
AFFIRMED.

Verily, it is beside the point whether or not the allegations in the complaint are true, for SO ORDERED.
with a motion to dismiss complaint based on lack of cause of action, the movant only
hypothetically admits the truth of the facts alleged in the complaint; that is, assuming
arguendo that the facts alleged are true, those allegations are insufficient for the court
to render a valid judgment upon the same in accordance with the prayer of the
complaint.24

The complaint does not have to establish or allege facts proving the existence of a
cause of action at the outset; this will have to be done at the trial on the merits of the
case.25 To sustain a motion to dismiss for lack of cause of action, the complaint must
show that the claim for relief does not exist, rather than that a claim has been
defectively stated, or is ambiguous, indefinite or uncertain.26

Anent Universal's claim for breach for contract and damages, the Court is convinced
that the Complaint sufficiently states a cause of action against Resources. The
Complaint alleged that Universal had a contract of employment of temporary workers
with Resources; and that Resources violated said contract by supplying it with unfit,
maladjusted individuals who staged a strike and disrupted its business operations.
Given these hypothetically admitted facts, the RTC, in the exercise of its original and
exclusive jurisdiction,27 could have rendered judgment over the dispute.

However, with regard to Tan's claim for damages, the Court finds that she has no
cause of action against Resources. A thorough reading of the allegations of the
Complaint reveals that Tan's claim for damages clearly springs from the strike effected

G.R. NO. 129242 January 16, 2001
PILAR S. VDA. DE MANALO, ANTONIO S. MANALO, ORLANDO S. MANALO, and
ISABELITA MANALO ,petitioners,
vs.
HON. COURT OF APPEALS, HON. REGIONAL TRIAL COURT OF MANILA
(BRANCH 35), PURITA S. JAYME, MILAGROS M. TERRE, BELEN M. ORILLANO,
ROSALINA M. ACUIN, ROMEO S. MANALO, ROBERTO S. MANALO, AMALIA
MANALO and IMELDA MANALO, respondents.
10
DE LEON, JR., J.:
This is a petition for review on certiorari filed by petitioners Pilar S. Vda De Manalo, et.
Al., seeking to annul the Resolution 1 of the Court of Appeals 2 affirming the Orders 3 of
the Regional Trial Court and the Resolution 4 which denied petitioner' motion for
reconsideration.
The antecedent facts 5 are as follows:
Troadio Manalo, a resident of 1996 Maria Clara Street, Sampaloc, Manila died
intestate on February 14, 1992. He was survived by his wife, Pilar S. Manalo, and his
eleven (11) children, namely: Purita M. Jayme, Antonio Manalo, Milagros M. Terre,
Belen M. Orillano, Isabelita Manalo, Rosalina M. Acuin, Romeo Manalo, Roberto
Manalo, Amalia Manalo, Orlando Manalo and Imelda Manalo, who are all of legal
age.1âwphi1.nêt
At the time of his death on February 14, 1992, Troadio Manalo left several real
properties located in Manila and in the province of Tarlac including a business under
the name and style Manalo's Machine Shop with offices at No. 19 Calavite Street, La
Loma, Quezon City and at NO. 45 General Tinio Street, Arty Subdivision, Valenzuela,
Metro Manila.
On November 26, 1992, herein respondents, who are eight (8) of the surviving
children of the late Troadio Manalo, namely; Purita, Milagros, Belen Rocalina, Romeo,
Roberto, Amalia, and Imelda filed a petition 6 with the respondent Regional Trial Court
of Manila 7 of the judicial settlement of the estate of their late father, Troadio Manalo,
and for the appointment of their brother, Romeo Manalo, as administrator thereof.
On December 15, 1992, the trial court issued an order setting the said petition for
hearing on February 11, 1993 and directing the publication of the order for three (3)
consecutive weeks in a newspaper of general circulation in Metro Manila, and further
directing service by registered mail of the said order upon the heirs named in the
petition at their respective addresses mentioned therein.
On February 11, 1993, the date set for hearing of the petition, the trial court issued an
order 'declaring the whole world in default, except the government," and set the
reception of evidence of the petitioners therein on March 16, 1993. However, the trial
court upon motion of set this order of general default aside herein petitioners
(oppositors therein) namely: Pilar S. Vda. De Manalo, Antonio, Isabelita and Orlando
who were granted then (10) days within which to file their opposition to the petition.
Several pleadings were subsequently filed by herein petitioners, through counsel,
culminating in the filling of an Omnibus Motion8 on July 23, 1993 seeking; (1) to seat
aside and reconsider the Order of the trial court dated July 9, 1993 which denied the
motion for additional extension of time file opposition; (2) to set for preliminary hearing
their affirmative defenses as grounds for dismissal of the case; (3) to declare that the

trial court did not acquire jurisdiction over the persons of the oppositors; and (4) for the
immediate inhibition of the presiding judge.
On July 30, 1993, the trial court issued an order9 which resolved, thus:
A. To admit the so-called Opposition filed by counsel for the oppositors on
July 20, 1993, only for the purpose of considering the merits thereof;
B. To deny the prayer of the oppositors for a preliminary hearing of their
affirmative defenses as ground for the dismissal of this proceeding, said
affirmative defenses being irrelevant and immaterial to the purpose and
issue of the present proceeding;
C. To declare that this court has acquired jurisdiction over the persons of
the oppositors;
D. To deny the motion of the oppositors for the inhibition of this Presiding
Judge;
E. To set the application of Romeo Manalo for appointment as regular
administrator in the intestate estate of the deceased Troadio Manalo for
hearing on September 9, 1993 at 2:00 o'clock in the afternoon.
Herein petitioners filed a petition for certiorari under Rule 65 of the Rules of Court with
the Court of Appeals, docketed as CA-G.R. SP. No. 39851, after the trial court in its
Order 10 dated September 15, 1993. In their petition for improperly laid in SP. PROC.
No. 92-63626; (2) the trial court did not acquire jurisdiction over their persons; (3) the
share of the surviving spouse was included in the intestate proceedings; (4) there was
absence of earnest efforts toward compromise among members of the same family;
and (5) no certification of non-forum shopping was attached to the petition.
Finding the contentions untenable, the Court of Appeals dismissed the petition for
certiorari in its Resolution11 promulgated on September 30, 1996. On May 6, 1997 the
motion for reconsideration of the said resolution was likewise dismissed. 12
The only issue raised by herein petitioners in the instant petition for review is whether
or not the respondent Court of Appeals erred in upholding the questioned orders of the
respondent trial court which denied their motion for the outright dismissal of the
petition for judicial settlement of estate despite the failure of the petitioners therein to
aver that earnest efforts toward a compromise involving members of the same family
have been made prior to the filling of the petition but that the same have failed.
Herein petitioners claim that the petition in SP. PROC. No. 92-63626 is actually an
ordinary civil action involving members of the same family. They point out that it
11
contains certain averments, which, according to them, are indicative of its adversarial
nature, to wit:
X X X
Par. 7. One of the surviving sons, ANTONIO MANALO, since the death of
his father, TROADIO MANALO, had not made any settlement, judicial or
extra-judicial of the properties of the deceased father TROADIO MANALO.
Par. 8. xxx the said surviving son continued to manage and control the
properties aforementioned, without proper accounting, to his own benefit
and advantage xxx.
X X X
Par. 12. That said ANTONIO MANALO is managing and controlling the
estate of the deceased TROADIO MANALO to his own advantage and to
the damage and prejudice of the herein petitioners and their co-heirs xxx.
X X X
Par. 14. For the protection of their rights and interests, petitioners were
compelled to bring this suit and were forced to litigate and incur expenses
and will continue to incur expenses of not less than, P250,000.00 and
engaged the services of herein counsel committing to pay P200,000.00 as
and attorney's fees plus honorarium of P2,500.00 per appearance in court
xxx.13
Consequently, according to herein petitioners, the same should be dismissed under
Rule 16, Section 1(j) of the Revised Rules of Court which provides that a motion to
dismiss a complaint may be filed on the ground that a condition precedent for filling
the claim has not been complied with, that is, that the petitioners therein failed to aver
in the petition in SP. PROC. No. 92-63626, that earnest efforts toward a compromise
have been made involving members of the same family prior to the filling of the
petition pursuant to Article 222 14 of the Civil Code of the Philippines.
The instant petition is not impressed with merit.
It is a fundamental rule that in the determination of the nature of an action or
proceeding, the averments15 and the character of the relief sought 16 in the complaint,
or petition, as in the case at bar, shall be controlling. A careful srutiny of the Petition
for Issuance of Letters of Administration, Settlement and Distribution of Estatein SP.
PROC. No. 92-63626 belies herein petitioners' claim that the same is in the nature of
an ordinary civil action. The said petition contains sufficient jurisdictional facts required
in a petition for the settlement of estate of a deceased person such as the fat of death

of the late Troadio Manalo on February 14, 1992, as well as his residence in the City
of Manila at the time of his said death. The fact of death of the decedent and of his
residence within he country are foundation facts upon which all the subsequent
proceedings in the administration of the estate rest. 17 The petition is SP.PROC No. 92-
63626 also contains an enumeration of the names of his legal heirs including a
tentative list of the properties left by the deceased which are sought to be settled in
the probate proceedings. In addition, the relief's prayed for in the said petition leave no
room for doubt as regard the intention of the petitioners therein (private respondents
herein) to seek judicial settlement of the estate of their deceased father, Troadio
Manalo, to wit;
PRAYER
WHEREFORE, premises considered, it is respectfully prayed for of this Honorable
Court:
a. That after due hearing, letters of administration be issued to petitioner
ROMEO MANALO for the administration of the estate of the deceased
TROADIO MANALO upon the giving of a bond in such reasonable sum that
this Honorable Court may fix.
b. That after all the properties of the deceased TROADIO MANALO have
been inventoried and expenses and just debts, if any, have been paid and
the legal heirs of the deceased fully determined, that the said estate of
TROADIO MANALO be settled and distributed among the legal heirs all in
accordance with law.
c. That the litigation expenses of these proceedings in the amount of
P250,000.00 and attorney's fees in the amount of P300,000.00 plus
honorarium of P2,500.00 per appearance in court in the hearing and trial of
this case and costs of suit be taxed solely against ANTONIO MANALO. 18
Concededly, the petition in SP. PROC. No. 92-63626 contains certain averments
which may be typical of an ordinary civil action. Herein petitioners, as oppositors
therein, took advantage of the said defect in the petition and filed their so-called
Opposition thereto which, as observed by the trial court, is actually an Answer
containing admissions and denials, special and affirmative defenses and compulsory
counterclaims for actual, moral and exemplary damages, plus attorney's fees and
costs 19 in an apparent effort to make out a case of an ordinary civil action and
ultimately seek its dismissal under Rule 16, Section 1(j) of the Rules of Court vis-à-vis,
Article 222 of civil of the Civil Code.
It is our view that herein petitioners may not be allowed to defeat the purpose of the
essentially valid petition for the settlement of the estate of the late Troadio Manalo by
raising matters that as irrelevant and immaterial to the said petition. It must be
emphasized that the trial court, siting as a probate court, has limited and special
jurisdiction 20 and cannot hear and dispose of collateral matters and issues which may
12
be properly threshed out only in an ordinary civil action. In addition, the rule has
always been to the effect that the jurisdiction of a court, as well as the concomitant
nature of an action, is determined by the averments in the complaint and not by the
defenses contained in the answer. If it were otherwise, it would not be too difficult to
have a case either thrown out of court or its proceedings unduly delayed by simple
strategem.21 So it should be in the instant petition for settlement of estate.
Herein petitioners argue that even if the petition in SP. PROC. No. 92-63626 were to
be considered as a special proceeding for the settlement of estate of a deceased
person, Rule 16, Section 1(j) of the Rules of Court vis-à-vis Article 222 of the Civil
Code of the Philippines would nevertheless apply as a ground for the dismissal of the
same by virtue of ule 1, Section 2 of the Rules of Court which provides that the 'rules
shall be liberally construed in order to promote their object and to assist the parties in
obtaining just, speedy and inexpensive determination of every action and
proceedings.' Petitioners contend that the term "proceeding" is so broad that it must
necessarily include special proceedings.
The argument is misplaced. Herein petitioners may not validly take refuge under the
provisions of Rule 1, Section 2, of the Rules of Court to justify the invocation of Article
222 of the Civil Code of the Philippines for the dismissal of the petition for settlement
of the estate of the deceased Troadio Manalo inasmuch as the latter provision is clear
enough. To wit:
Art. 222. No suit shall be filed or maintained between members of the same family
unless it should appear that earnest efforts toward a compromise have been made,
but that the same have failed, subject to the limitations in Article 2035(underscoring
supplied).22
The above-quoted provision of the law is applicable only to ordinary civil actions. This
is clear from the term 'suit' that it refers to an action by one person or persons against
another or other in a court of justice in which the plaintiff pursues the remedy which
the law affords him for the redress of an injury or the enforcement of a right, whether
at law or in equity. 23 A civil action is thus an action filed in a court of justice, whereby a
party sues another for the enforcement of a right, or the prevention or redress of a
wrong.24 Besides, an excerpt form the Report of the Code Commission unmistakably
reveals the intention of the Code Commission to make that legal provision applicable
only to civil actions which are essentially adversarial and involve members of the
same family, thus:
It is difficult to imagine a sadder and more tragic spectacle than a litigation
between members of the same family. It is necessary that every effort
should be made toward a compromise before litigation is allowed to breed
hate and passion in the family. It is know that lawsuit between close
relatives generates deeper bitterness than stranger.25
It must be emphasized that the oppositors (herein petitioners) are not being sued in
SP. PROC. No. 92-63626 for any cause of action as in fact no defendant was
 13

imploded therein. The Petition for issuance of letters of Administration, Settlement and COURT OF APPEALS, SPOUSES PONCIANO MALLARI and GLORIA BINUYA,
Distribution of Estate in SP. PROC. No. 92-63626 is a special proceeding and, as SPOUSES ELENA MALLARI and MELENCIO TULABAN, and REGINA MALLARI,
such, it is a remedy whereby the petitioners therein seek to establish a status, a right, respondents.
or a particular fact. 26 the petitioners therein (private respondents herein) merely seek
to establish the fat of death of their father and subsequently to be duly recognized as
among the heirs of the said deceased so that they can validly exercise their right to
participate in the settlement and liquidation of the estate of the decedent consistent
with the limited and special jurisdiction of the probate court.1âwphi1.nêt DAVIDE, JR., J.:

WHEREFORE, the petition in the above-entitled case, is DENIED for lack of merit, In this petition for review under Rule 45 of the Rules of Court, petitioners seek the
Costs against petitioners. reversal of the decision of the Court of Appeals in CA-G.R. CV No. 400171 which set
aside the Order of the Regional Trial Court of Gapan, Nueva Ecija, Branch 35 in Civil
Case No. 8362 dismissing private respondent's complaint3 which sought the
SO ORDERED.
declaration of nullity of the Original Certificate of Title (OCT) issued pursuant to a Free
Patent in the name of petitioners.

The factual antecedents, as succinctly summarized by the Court of Appeals, are as

follows:

Plaintiffs-appellants [private respondents] filed complaint for the declaration

of nullity of Original Certificate of Title No. P-8265 issued in the name of the
heirs of Marciano Nagaño and covering Cad. Lot. No. 3275. Plaintiff-
appellants alleged that the issuance of the said title was on account of the
fraud, deceit, and misrepresentation committed by defendant Marcario
Valerio. An information for perjury was even filed on November 2, 1983
against defendant Valerio, who unlawfully attested that Lot No. 3275 was
not occupied or being claimed by other persons. Plaintiff-appellants alleged
that part of the subject property was owned by their predecessors-in-interest
Rufino Mallari and Ferminal Jamlig and that they were in possession of the
said land since 1920. They recently discovered that their entire Lot No. 3275
was registered by defendant Valerio under Free Patent No. (III-2) 001953
and OCT No. P-8265 in the name of the heirs of Marciano Nagaño. They
allegedly demanded from defendant Velerio to execute the necessary
document in order that the 2,250 square meters owned by them be
segregated from the property titled in the name of the defendants-appellee
[petitioners herein]. Defendants-appellee, however, refused to accede their
demands.

A motion to dismiss was filed by defendants-appellees on the following

grounds, viz.:

1. The court has no jurisdiction over the nature of the action;

G.R. No. 123231 November 17, 1997 2. Plaintiffs have no cause of action against the defendants, since suit for
annulment of title which actually is a reversion proceedings should be
HEIRS OF MARCIANO NAGAÑO, petitioner, instituted by the Solicitor;
vs.

3. Plaintiff's cause of action is barred by the statute of limitations, the lawsuit
having been instituted more than one year, or in fact almost fifteen years
after the issuance of the title.4
In its Order of 21 September 1992,5 the trial court granted petitioners' motion to
dismiss on the ground that:
[The] action to annul the subject certificate of title, which is the plaintiffs'
principal cause of action, should be instituted by the Solicitor General.
(Lopez v. Padilla, 45 SCRA 44; Maximo v. CFI of Capis (sic), 182 SCRA
420; and Sumali v. Judge of CFI Cotabato, 96 Phil. 946, cited by the
defendants).
Private respondents appealed the order of dismissal to respondents court raising this
lone assignment of error:
THE COURT ERRED IN DISMISSING THE CASE AND/OR ALL THE
CAUSES OF ACTION OF THE PLAINTIFF-APPELLANTS.6
In its decision7 of 20 September 1995, the Court of Appeals set aside the challenged
order of the trial court and reinstated private respondents' complaint. Applying Agne v.
Director of Lands,8 respondent court distinguished private respondents' action from a
review of the decree of title on the ground of fraud, and held that the rule on the
incontrovertibility of a certificate of title upon the expiration of one year after entry of
the decree did not apply as the action for cancellation of the patent and certificate of
title issued pursuant thereto was instituted on the ground that they were null and void
as the Bureau of Lands had no jurisdiction to issue them, the land having been
withdrawn from the public domain prior to the award of the patent and grant of the
certificate of title to another person.
Petitioners' motion to reconsider9 having been denied by the Court of Appeals in its
Resolution of 20 December 1995,10 petitioners filed the petition at bar alleging that:
I
THE HONORABLE COURT OF APPEALS ERRED IN REVERSING THE
ORDER OF DISMISSAL, CONSIDERING THE FACT THAT PRIVATE
RESPONDENTS DO NOT HAVE THE LEGAL PERSONALITY TO
CONTEST THE FINAL AWARD MADE BY THE DIRECTOR OF LANDS,
AND CIVIL COURTS ARE DEVOID OF JURISDICTION AND AUTHORITY
TO REVIEW OR CONTROL SUCH FINAL JUDGMENT.
II
14
PRIVATE RESPONDENTS' PRINCIPAL CAUSE OF ACTION IN THIS
CASE IS FOR THE AWARD IN THEIR FAVOR OF 2,250 SQUARE
METERS PORTION OF THAT PARCEL OF LAND COVERED BY OCT NO.
P-8265 AND CIVIL COURTS HAVE NO JURISDICTION OVER THE
NATURE OF THE ACTION SINCE IT IS THE DIRECTOR OF LANDS, NOT
THE CIVIL COURTS, WHO IS VESTED WITH JURISDICTION TO DECIDE
[TO] WHOM TO AWARD DISPOSABLE LANDS OF THE PUBLIC
DOMAIN.
III
PRIVATE RESPONDENTS HAVE NO CAUSE OF ACTION AGAINST THE
PETITIONERS, SINCE [A] SUIT FOR ANNULMENT OF TITLE WHICH
ACTUALLY IS A REVERSION PROCEEDING [sic], SHOULD BE
INSTITUTED BY THE SOLICITOR GENERAL.
IV
PRIVATE RESPONDENTS' CAUSE OF ACTION IS BARRED BY THE
STATUTE OF LIMITATIONS, THE LAWSUIT HAVING BEEN INSTITUTED
MORE THAN ONE YEAR, OR IN FACT ALMOST FIFTEEN YEARS,
AFTER THE ISSUANCE OF THE TITLE.
The Court of Appeals correctly set aside the challenged order of the trial court, but not
necessarily for the correct reasons. The trial court sustained the second ground of
petitioners' motion to dismiss, namely, that private respondents had no cause of action
since the suit for annulment of title amounted to a reversion proceeding which only the
Office of the Solicitor General could initiate. The propriety of that ruling was the
primary issue before the Court of Appeals, as the trial court did not deem it necessary
to rule on the other grounds, viz., (a) lack of jurisdiction over the nature of the action;
and (2) that private respondents' cause of action was barred by the statute of
limitations since the action was filed more than one year after issuance of the title.
The rule is settled that a motion to dismiss a complaint hypothetically admits the truth
of the facts alleged therein.11 In their complaint,12 private respondents specifically
alleged that: (a) they are "the heirs of Rufino Mallari and Fermina Jamlig who are part
owners of a parcel of land known as Cad. 324-D, Lot 3275, situated at Mambangan,
San Leonardo, Nueva Ecija;" (b) the portion belonging to private respondents, with an
area of 2,250 square meters, was covered by a tax declarations in their names,
occupied and possessed by their predecessors-in-interest since 1920 and
continuously thereafter until the present; (c) their possession has been peaceful,
public, continuous, adverse and in the concept of an owner; (d) on or about 18
February 1974, defendant Macario Valerio, in order to deprive private respondents of
their rights over and ownership of the portion of the lot, committed perjury, for which
he is now criminally charged in court, by causing the entire Lot 3275 to be registered
under Free Patent No. (III-2)001953 and the issuance of original certificate of Title No.
P-8265, both in the name of Marciano Nagaño, represented by Macario Valerio; (e) on

account of the fraud, deceit and misrepresentation committed by Macario Valerio, the
grant of the patent and issuance of the title were null and void and the indefeasibility of
a title issued pursuant thereto one year after did not apply; (f) upon discovery, only
recently, of the issuance of the title in the name of the Heirs of Marciano Nagaño,
private respondents demanded from Macario Valerio the execution of the necessary
documents segregating the 2,250 square meter portion and transferring the property
to them, however, Macario refused without justifiable cause or reason; and (g) as a
consequence of Macario's refusal, they suffered moral damages and were compelled
to incur expenses and secure the services of counsel. Private respondents then
prayed, inter alia, that Original Certificate of Title No. P-8265 be declared null and
void, or that the 2,250 square meter portion be segregated and the Register of Deeds
ordered to issue a title over said portion in their names, and that petitioners be ordered
to pay actual, moral and other damages, attorney's fees and litigation expenses.
It is then clear from the allegations in the complaint that private respondents claim
ownership to the 2,250 square meter portion for having possessed it in the concept of
an owner, openly, peacefully, publicly, continuously and adversely since 1920. This
claim is an assertion that the lot is private land, or that even assuming it was part of
the public domain, private respondents had already acquired imperfect title thereto
under Section 48(b) of C.A. No. 141, otherwise known as the Public Land Act, as
amended by R.A. No. 1942. This section provides:
Sec. 48. The following described citizens of the Philippines, occupying lands
of the public domain or claiming to own any such lands or an interest
therein, but whose titles have not been perfected or completed, may apply
to the Court of First Instance of the province where the land is located for
confirmation of their claims and issuance of a certificate of title therefor,
under the Land Registration Act, to wit:
xxx xxx xxx
(b) Those who by themselves or
through their predecessors in
interest have been in open,
continuous, exclusive and
notorious possession and
occupation of agricultural lands of
the public domain, under a bona
fide claim of acquisition of
ownership, for at least thirty years
immediately preceding the filing of
the application for confirmation of
title except when prevented by was
or force majeure. These shall be
conclusively presumed to have
performed all the conditions
essential to Government grant and
shall be entitled to a certificate of
15
title under the provisions of this
chapter.13
Under Section 48, a subject lot is, for all legal intents and purposes, segregated from
the public domain, because the beneficiary is "conclusively presumed to have
performed all the conditions essential to a Government grant and shall be entitled to a
certificate of title under the provisions of this chapter."
Consequently, merely on the basis of the allegations in the complaint, the lot in
question is apparently beyond the jurisdiction of the Director of the Bureau of Lands
and could not be the subject of a Free Patent. Hence, dismissal of private
respondents' complaint was premature and trial on the merits should have been
conducted to thresh out evidentiary matters.
It would have been entirely differently if the action were clearly for reversion, in which
case, it would have to be instituted by the Solicitor General pursuant to Section 101 of
C.A. No. 141, which provides:
Sec. 101. All actions for the reversion to the Government of lands of the
public domain or improvements thereon shall be instituted by the Solicitor
General or the officer acting in his stead, in the proper courts, in the name of
the [Republic] of the Philippines.
In light of the above, and at this time, prescription is unavailing against private
respondent's action. It is settled that a Free Patent issued over private land is null and
void,14 and produces no legal affects whatsoever. Quod nullum est, nullum producit
effectum.15 Moreover, private respondent's claim of open, public, peaceful,
continuous and adverse possession of the 2,250 square meter portion since 1920,
and its illegal inclusion in the Free Patent of petitioners and in their original certificate
of title, gave private respondents a cause of action for quieting of title which is
imprescriptible.16 The complaint of private respondents may thus likewise be
considered and action for quieting of title.
The grounds then relied upon in petitioners' motion to dismiss are not indubitable and
cannot be impressed with merit. We are not, however, foreclosing the presentation of
evidence during trial on the merits that the land in question is not private property and
that private respondents are not entitled to the benefits of Section 48 of C.A. No. 141.
WHEREFORE, the instant petition is DENIED for lack of merit and the challenged
judgment of the Court of Appeals is AFFIRMED, but for the reasons stated above.
Cost against petitioners.
SO ORDERED.
 16

Brother MARIANO "MIKE" Z. VELARDE, petitioner,

vs.
SOCIAL JUSTICE SOCIETY, respondent.

DECISION

PANGANIBAN, J.:

A decision that does not conform to the form and substance required by the
Constitution and the law is void and deemed legally inexistent. To be valid, decisions
should comply with the form, the procedure and the substantive requirements laid out
in the Constitution, the Rules of Court and relevant circulars/orders of the Supreme
Court. For the guidance of the bench and the bar, the Court hereby discusses these
forms, procedures and requirements.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the
June 12, 2003 Decision2 and July 29, 2003 Order3 of the Regional Trial Court (RTC) of
Manila (Branch 49).4

The challenged Decision was the offshoot of a Petition for Declaratory Relief5 filed
before the RTC-Manila by herein Respondent Social Justice Society (SJS) against
herein Petitioner Mariano "Mike" Z. Velarde, together with His Eminence, Jaime
Cardinal Sin, Executive Minister Eraño Manalo, Brother Eddie Villanueva and Brother
Eliseo F. Soriano as co-respondents. The Petition prayed for the resolution of the
question "whether or not the act of a religious leader like any of herein respondents, in
endorsing the candidacy of a candidate for elective office or in urging or requiring the
members of his flock to vote for a specified candidate, is violative of the letter or spirit
of the constitutional provisions x x x."6

Alleging that the questioned Decision did not contain a statement of facts and a
dispositive portion, herein petitioner filed a Clarificatory Motion and Motion for
Reconsideration before the trial court. Soriano, his co-respondent, similarly filed a
separate Motion for Reconsideration. In response, the trial court issued the assailed
Order, which held as follows:

"x x x [T]his Court cannot reconsider, because what it was asked to do, was
only to clarify a Constitutional provision and to declare whether acts are
violative thereof. The Decision did not make a dispositive portion because a
dispositive portion is required only in coercive reliefs, where a redress from
G.R. No. 159357 April 28, 2004 wrong suffered and the benefit that the prevailing party wronged should get.
The step that these movants have to take, is direct appeal under Rule 45 of
the Rules of Court, for a conclusive interpretation of the Constitutional
provision to the Supreme Court."7
 17

The Antecedent Proceedings This Court, in a Resolution13 dated September 2, 2003, required SJS and the Office of
the Solicitor General (OSG) to submit their respective comments. In the same
Resolution, the Court gave the other parties -- impleaded as respondents in the
On January 28, 2003, SJS filed a Petition for Declaratory Relief ("SJS Petition") before
original case below --the opportunity to comment, if they so desired.
the RTC-Manila against Velarde and his aforesaid co-respondents. SJS, a registered
political party, sought the interpretation of several constitutional provisions, 8
specifically on the separation of church and state; and a declaratory judgment on the On April 13, 2004, the Court en banc conducted an Oral Argument. 14
constitutionality of the acts of religious leaders endorsing a candidate for an elective
office, or urging or requiring the members of their flock to vote for a specified
The Issues
candidate.

In his Petition, Brother Mike Velarde submits the following issues for this Court’s
The subsequent proceedings were recounted in the challenged Decision in these
resolution:
words:

"1. Whether or not the Decision dated 12 June 2003 rendered by the court a
"x x x. Bro. Eddie Villanueva submitted, within the original period [to file an
quo was proper and valid;
Answer], a Motion to Dismiss. Subsequently, Executive Minister Eraño
Manalo and Bro. Mike Velarde, filed their Motions to Dismiss. While His
Eminence Jaime Cardinal L. Sin, filed a Comment and Bro. Eli Soriano, filed "2. Whether or not there exists justiceable controversy in herein
an Answer within the extended period and similarly prayed for the dismissal respondent’s Petition for declaratory relief;
of the Petition. All sought the dismissal of the Petition on the common
grounds that it does not state a cause of action and that there is no
justiciable controversy. They were ordered to submit a pleading by way of "3. Whether or not herein respondent has legal interest in filing the Petition
advisement, which was closely followed by another Order denying all the for declaratory relief;
Motions to Dismiss. Bro. Mike Velarde, Bro. Eddie Villanueva and Executive
Minister Eraño Manalo moved to reconsider the denial. His Eminence Jaime "4. Whether or not the constitutional question sought to be resolved by
Cardinal L. Sin, asked for extension to file memorandum. Only Bro. Eli herein respondent is ripe for judicial determination;
Soriano complied with the first Order by submitting his Memorandum. x x x.
"5. Whether or not there is adequate remedy other than the declaratory
"x x x the Court denied the Motions to Dismiss, and the Motions for relief; and,
Reconsideration filed by Bro. Mike Velarde, Bro. Eddie Villanueva and
Executive Minister Eraño Manalo, which raised no new arguments other
than those already considered in the motions to dismiss x x x."9 "6. Whether or not the court a quo has jurisdiction over the Petition for
declaratory relief of herein respondent."15

After narrating the above incidents, the trial court said that it had jurisdiction over the
Petition, because "in praying for a determination as to whether the actions imputed to During the Oral Argument, the issues were narrowed down and classified as follows:
the respondents are violative of Article II, Section 6 of the Fundamental Law, [the
Petition] has raised only a question of law."10 It then proceeded to a lengthy discussion "A. Procedural Issues
of the issue raised in the Petition – the separation of church and state – even tracing,
to some extent, the historical background of the principle. Through its discourse, the
court a quo opined at some point that the "[e]ndorsement of specific candidates in an "Did the Petition for Declaratory Relief raise a justiciable controversy? Did it
election to any public office is a clear violation of the separation clause." 11 state a cause of action? Did respondent have any legal standing to file the
Petition for Declaratory Relief?

After its essay on the legal issue, however, the trial court failed to include a dispositive
portion in its assailed Decision. Thus, Velarde and Soriano filed separate Motions for
Reconsideration which, as mentioned earlier, were denied by the lower court.
Hence, this Petition for Review.12
"B. Substantive Issues
"1. Did the RTC Decision conform to the form and substance
required by the Constitution, the law and the Rules of Court?

"2. May religious leaders like herein petitioner, Bro. Mike Velarde,
be prohibited from endorsing candidates for public office?
Corollarily, may they be banned from campaigning against said
candidates?"
The Court’s Ruling
The Petition of Brother Mike Velarde is meritorious.
Procedural Issues:
Requisites of Petitions for Declaratory Relief
Section 1 of Rule 63 of the Rules of Court, which deals with petitions for declaratory
relief, provides in part:
"Section 1. Who may file petition.- Any person interested under a deed, will,
contract or other written instrument, whose rights are affected by a statute,
executive order or regulation, ordinance, or any other governmental
regulation may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of construction
or validity arising, and for a declaration of his rights or duties thereunder."
Based on the foregoing, an action for declaratory relief should be filed by a person
interested under a deed, a will, a contract or other written instrument, and whose
rights are affected by a statute, an executive order, a regulation or an ordinance. The
purpose of the remedy is to interpret or to determine the validity of the written
instrument and to seek a judicial declaration of the parties’ rights or duties
thereunder.16 The essential requisites of the action are as follows: (1) there is a
justiciable controversy; (2) the controversy is between persons whose interests are
adverse; (3) the party seeking the relief has a legal interest in the controversy; and (4)
the issue is ripe for judicial determination.17
Justiciable Controversy
Brother Mike Velarde contends that the SJS Petition failed to allege, much less
establish before the trial court, that there existed a justiciable controversy or an
adverse legal interest between them; and that SJS had a legal right that was being
violated or threatened to be violated by petitioner. On the contrary, Velarde alleges
that SJS premised its action on mere speculations, contingent events, and
hypothetical issues that had not yet ripened into an actual controversy. Thus, its
Petition for Declaratory Relief must fail.
A justiciable controversy refers to an existing case or controversy that is appropriate or
ripe for judicial determination, not one that is conjectural or merely anticipatory. 18 The
18
SJS Petition for Declaratory Relief fell short of this test. It miserably failed to allege an
existing controversy or dispute between the petitioner and the named respondents
therein. Further, the Petition did not sufficiently state what specific legal right of the
petitioner was violated by the respondents therein; and what particular act or acts of
the latter were in breach of its rights, the law or the Constitution.
As pointed out by Brother Eliseo F. Soriano in his Comment,19 what exactly has he
done that merited the attention of SJS? He confesses that he does not know the
answer, because the SJS Petition (as well as the assailed Decision of the RTC)
"yields nothing in this respect." His Eminence, Jaime Cardinal Sin, adds that, at the
time SJS filed its Petition on January 28, 2003, the election season had not even
started yet; and that, in any event, he has not been actively involved in partisan
politics.
An initiatory complaint or petition filed with the trial court should contain "a plain,
concise and direct statement of the ultimate facts on which the party pleading relies for
his claim x x x."20 Yet, the SJS Petition stated no ultimate facts.
Indeed, SJS merely speculated or anticipated without factual moorings that, as
religious leaders, the petitioner and his co-respondents below had endorsed or
threatened to endorse a candidate or candidates for elective offices; and that such
actual or threatened endorsement "will enable [them] to elect men to public office who
[would] in turn be forever beholden to their leaders, enabling them to control the
government"[;]21 and "pos[ing] a clear and present danger of serious erosion of the
people’s faith in the electoral process[;] and reinforc[ing] their belief that religious
leaders determine the ultimate result of elections,"22 which would then be violative of
the separation clause.
Such premise is highly speculative and merely theoretical, to say the least. Clearly, it
does not suffice to constitute a justiciable controversy. The Petition does not even
allege any indication or manifest intent on the part of any of the respondents below to
champion an electoral candidate, or to urge their so-called flock to vote for, or not to
vote for, a particular candidate. It is a time-honored rule that sheer speculation does
not give rise to an actionable right.
Obviously, there is no factual allegation that SJS’ rights are being subjected to any
threatened, imminent and inevitable violation that should be prevented by the
declaratory relief sought. The judicial power and duty of the courts to settle actual
controversies involving rights that are legally demandable and enforceable23 cannot be
exercised when there is no actual or threatened violation of a legal right.
All that the 5-page SJS Petition prayed for was "that the question raised in paragraph
9 hereof be resolved."24 In other words, it merely sought an opinion of the trial court on
whether the speculated acts of religious leaders endorsing elective candidates for
political offices violated the constitutional principle on the separation of church and
state. SJS did not ask for a declaration of its rights and duties; neither did it pray for
 19

the stoppage of any threatened violation of its declared rights. Courts, however, are material to the issue and affected by the questioned act or instrument, as
proscribed from rendering an advisory opinion.25 distinguished from simple curiosity or incidental interest in the question raised. 34

Cause of Action To bolster its stance, SJS cites the Corpus Juris Secundum and submits that the
"[p]laintiff in a declaratory judgment action does not seek to enforce a claim against
[the] defendant, but seeks a judicial declaration of [the] rights of the parties for the
Respondent SJS asserts that in order to maintain a petition for declaratory relief, a
purpose of guiding [their] future conduct, and the essential distinction between a
cause of action need not be alleged or proven. Supposedly, for such petition to
‘declaratory judgment action’ and the usual ‘action’ is that no actual wrong need have
prosper, there need not be any violation of a right, breach of duty or actual wrong
been committed or loss have occurred in order to sustain the declaratory judgment
committed by one party against the other.
action, although there must be no uncertainty that the loss will occur or that the
asserted rights will be invaded."35
Petitioner, on the other hand, argues that the subject matter of an action for
declaratory relief should be a deed, a will, a contract (or other written instrument), a
SJS has, however, ignored the crucial point of its own reference – that there must be
statute, an executive order, a regulation or an ordinance. But the subject matter of the
no uncertainty that the loss will occur or that the asserted rights will be invaded.
SJS Petition is "the constitutionality of an act of a religious leader to endorse the
Precisely, as discussed earlier, it merely conjectures that herein petitioner (and his co-
candidacy of a candidate for elective office or to urge or require the members of the
respondents below) might actively participate in partisan politics, use "the awesome
flock to vote for a specified candidate."26 According to petitioner, this subject matter is
voting strength of its faithful flock [to] enable it to elect men to public office x x x,
"beyond the realm of an action for declaratory relief."27 Petitioner avers that in the
enabling [it] to control the government."36
absence of a valid subject matter, the Petition fails to state a cause of action and,
hence, should have been dismissed outright by the court a quo.
During the Oral Argument, though, Petitioner Velarde and his co-respondents below
all strongly asserted that they had not in any way engaged or intended to participate in
A cause of action is an act or an omission of one party in violation of the legal right or
partisan politics. They all firmly assured this Court that they had not done anything to
rights of another, causing injury to the latter.28 Its essential elements are the following:
trigger the issue raised and to entitle SJS to the relief sought.
(1) a right in favor of the plaintiff; (2) an obligation on the part of the named defendant
to respect or not to violate such right; and (3) such defendant’s act or omission that is
violative of the right of the plaintiff or constituting a breach of the obligation of the Indeed, the Court finds in the Petition for Declaratory Relief no single allegation of fact
former to the latter.29 upon which SJS could base a right of relief from the named respondents. In any event,
even granting that it sufficiently asserted a legal right it sought to protect, there was
nevertheless no certainty that such right would be invaded by the said respondents.
The failure of a complaint to state a cause of action is a ground for its outright
Not even the alleged proximity of the elections to the time the Petition was filed below
dismissal.30 However, in special civil actions for declaratory relief, the concept of a
(January 28, 2003) would have provided the certainty that it had a legal right that
cause of action under ordinary civil actions does not strictly apply. The reason for this
would be jeopardized or violated by any of those respondents.
exception is that an action for declaratory relief presupposes that there has been no
actual breach of the instruments involved or of rights arising thereunder.31
Nevertheless, a breach or violation should be impending, imminent or at least Legal Standing
threatened.
Legal standing or locus standi has been defined as a personal and substantial interest
A perusal of the Petition filed by SJS before the RTC discloses no explicit allegation in the case, such that the party has sustained or will sustain direct injury as a result of
that the former had any legal right in its favor that it sought to protect. We can only the challenged act.37 Interest means a material interest in issue that is affected by the
infer the interest, supposedly in its favor, from its bare allegation that it "has thousands questioned act or instrument, as distinguished from a mere incidental interest in the
of members who are citizens-taxpayers-registered voters and who are keenly question involved.38
interested in a judicial clarification of the constitutionality of the partisan participation of
religious leaders in Philippine politics and in the process to insure adherence to the
Petitioner alleges that "[i]n seeking declaratory relief as to the constitutionality of an
Constitution by everyone x x x."32
act of a religious leader to endorse, or require the members of the religious flock to
vote for a specific candidate, herein Respondent SJS has no legal interest in the
Such general averment does not, however, suffice to constitute a legal right or controversy";39 it has failed to establish how the resolution of the proffered question
interest. Not only is the presumed interest not personal in character; it is likewise too would benefit or injure it.
vague, highly speculative and uncertain.33 The Rules require that the interest must be

Parties bringing suits challenging the constitutionality of a law, an act or a statute must
show "not only that the law [or act] is invalid, but also that [they have] sustained or
[are] in immediate or imminent danger of sustaining some direct injury as a result of its
enforcement, and not merely that [they] suffer thereby in some indefinite way." 40 They
must demonstrate that they have been, or are about to be, denied some right or
privilege to which they are lawfully entitled, or that they are about to be subjected to
some burdens or penalties by reason of the statute or act complained of. 41
First, parties suing as taxpayers must specifically prove that they have sufficient
interest in preventing the illegal expenditure of money raised by taxation.42 A
taxpayer’s action may be properly brought only when there is an exercise by Congress
of its taxing or spending power.43 In the present case, there is no allegation, whether
express or implied, that taxpayers’ money is being illegally disbursed.
Second, there was no showing in the Petition for Declaratory Relief that SJS as a
political party or its members as registered voters would be adversely affected by the
alleged acts of the respondents below, if the question at issue was not resolved. There
was no allegation that SJS had suffered or would be deprived of votes due to the acts
imputed to the said respondents. Neither did it allege that any of its members would
be denied the right of suffrage or the privilege to be voted for a public office they are
seeking.
Finally, the allegedly keen interest of its "thousands of members who are citizens-
taxpayers-registered voters" is too general44 and beyond the contemplation of the
standards set by our jurisprudence. Not only is the presumed interest impersonal in
character; it is likewise too vague, highly speculative and uncertain to satisfy the
requirement of standing.45
Transcendental Importance
In any event, SJS urges the Court to take cognizance of the Petition, even sans legal
standing, considering that "the issues raised are of paramount public interest."
In not a few cases, the Court has liberalized the locus standi requirement when a
petition raises an issue of transcendental significance or paramount importance to the
people.46 Recently, after holding that the IBP had no locus standi to bring the suit, the
Court in IBP v. Zamora47 nevertheless entertained the Petition therein. It noted that
"the IBP has advanced constitutional issues which deserve the attention of this Court
in view of their seriousness, novelty and weight as precedents."48
Similarly in the instant case, the Court deemed the constitutional issue raised in the
SJS Petition to be of paramount interest to the Filipino people. The issue did not
simply concern a delineation of the separation between church and state, but ran
smack into the governance of our country. The issue was both transcendental in
importance and novel in nature, since it had never been decided before.
20
The Court, thus, called for Oral Argument to determine with certainty whether it could
resolve the constitutional issue despite the barren allegations in the SJS Petition as
well as the abbreviated proceedings in the court below. Much to its chagrin, however,
counsels for the parties -- particularly for Respondent SJS -- made no satisfactory
allegations or clarifications that would supply the deficiencies hereinabove discussed.
Hence, even if the Court would exempt this case from the stringent locus standi
requirement, such heroic effort would be futile because the transcendental issue
cannot be resolved anyway.
Proper Proceedings Before the Trial Court
To prevent a repetition of this waste of precious judicial time and effort, and for the
guidance of the bench and the bar, the Court reiterates the elementary procedure49
that must be followed by trial courts in the conduct of civil cases.50
Prefatorily, the trial court may -- motu proprio or upon motion of the defendant --
dismiss a complaint51 (or petition, in a special civil action) that does not allege the
plaintiff’s (or petitioner’s) cause or causes of action. 52 A complaint or petition should
contain "a plain, concise and direct statement of the ultimate facts on which the party
pleading relies for his claim or defense."53 It should likewise clearly specify the relief
sought.54
Upon the filing of the complaint/petition and the payment of the requisite legal fees,
the clerk of court shall forthwith issue the corresponding summons to the defendants
or the respondents, with a directive that the defendant answer55 within 15 days, unless
a different period is fixed by the court.56 The summons shall also contain a notice that
if such answer is not filed, the plaintiffs/petitioners shall take a judgment by default and
may be granted the relief applied for.57 The court, however, may -- upon such terms as
may be just -- allow an answer to be filed after the time fixed by the Rules.58
If the answer sets forth a counterclaim or cross-claim, it must be answered within ten
(10) days from service.59 A reply may be filed within ten (10) days from service of the
pleading responded to.60
When an answer fails to tender an issue or admits the material allegations of the
adverse party’s pleading, the court may, on motion of that party, direct judgment on
such pleading (except in actions for declaration of nullity or annulment of marriage or
for legal separation).61 Meanwhile, a party seeking to recover upon a claim, a
counterclaim or crossclaim -- or to obtain a declaratory relief -- may, at any time after
the answer thereto has been served, move for a summary judgment in its favor. 62
Similarly, a party against whom a claim, a counterclaim or crossclaim is asserted -- or
a declaratory relief sought -- may, at any time, move for a summary judgment in its
favor.63 After the motion is heard, the judgment sought shall be rendered forthwith if
there is a showing that, 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.64
 21

Within the time for -- but before -- filing the answer to the complaint or petition, the Based on these elementary guidelines, let us examine the proceedings before the trial
defendant may file a motion to dismiss based on any of the grounds stated in Section court in the instant case.
1 of Rule 16 of the Rules of Court. During the hearing of the motion, the parties shall
submit their arguments on the questions of law, and their evidence on the questions of
First, with respect to the initiatory pleading of the SJS. Even a cursory perusal of the
fact.65 After the hearing, the court may dismiss the action or claim, deny the motion, or
Petition immediately reveals its gross inadequacy. It contained no statement of
order the amendment of the pleadings. It shall not defer the resolution of the motion
ultimate facts upon which the petitioner relied for its claim. Furthermore, it did not
for the reason that the ground relied upon is not indubitable. In every case, the
specify the relief it sought from the court, but merely asked it to answer a hypothetical
resolution shall state clearly and distinctly the reasons therefor. 66
question.

If the motion is denied, the movant may file an answer within the balance of the period
Relief, as contemplated in a legal action, refers to a specific coercive measure prayed
originally prescribed to file an answer, but not less than five (5) days in any event,
for as a result of a violation of the rights of a plaintiff or a petitioner.80 As already
computed from the receipt of the notice of the denial. If the pleading is ordered to be
discussed earlier, the Petition before the trial court had no allegations of fact 81 or of
amended, the defendant shall file an answer within fifteen (15) days, counted from the
any specific violation of the petitioner’s rights, which the respondents had a duty to
service of the amended pleading, unless the court provides a longer period.67
respect. Such deficiency amounted to a failure to state a cause of action; hence, no
coercive relief could be sought and adjudicated. The Petition evidently lacked
After the last pleading has been served and filed, the case shall be set for pretrial, 68 substantive requirements and, we repeat, should have been dismissed at the outset.
which is a mandatory proceeding.69 A plaintiff’s/ petitioner’s (or its duly authorized
representative’s) non-appearance at the pretrial, if without valid cause, shall result in
Second, with respect to the trial court proceedings. Within the period set to file their
the dismissal of the action with prejudice, unless the court orders otherwise. A similar
respective answers to the SJS Petition, Velarde, Villanueva and Manalo filed Motions
failure on the part of the defendant shall be a cause for allowing the plaintiff/petitioner
to Dismiss; Cardinal Sin, a Comment; and Soriano, within a priorly granted extended
to present evidence ex parte, and the court to render judgment on the basis thereof.70
period, an Answer in which he likewise prayed for the dismissal of the Petition.82 SJS
filed a Rejoinder to the Motion of Velarde, who subsequently filed a Sur-Rejoinder.
The parties are required to file their pretrial briefs; failure to do so shall have the same Supposedly, there were "several scheduled settings, in which the "[c]ourt was
effect as failure to appear at the pretrial.71 Upon the termination thereof, the court shall apprised of the respective positions of the parties."83 The nature of such settings --
issue an order reciting in detail the matters taken up at the conference; the action whether pretrial or trial hearings -- was not disclosed in the records. Before ruling on
taken on them, the amendments allowed to the pleadings; and the agreements or the Motions to Dismiss, the trial court issued an Order84 dated May 8, 2003, directing
admissions, if any, made by the parties regarding any of the matters considered. 72 The the parties to submit their memoranda. Issued shortly thereafter was another Order85
parties may further avail themselves of any of the modes of discovery,73 if they so dated May 14, 2003, denying all the Motions to Dismiss.
wish.
In the latter Order, the trial court perfunctorily ruled:
Thereafter, the case shall be set for trial,74 in which the parties shall adduce their
respective evidence in support of their claims and/or defenses. By their written
"The Court now resolves to deny the Motions to Dismiss, and after all the
consent or upon the application of either party, or on its own motion, the court may
memoranda are submitted, then, the case shall be deemed as submitted for
also order any or all of the issues to be referred to a commissioner, who is to be
resolution."86
appointed by it or to be agreed upon by the parties.75 The trial or hearing before the
commissioner shall proceed in all respects as it would if held before the court. 76
Apparently, contrary to the requirement of Section 2 of Rule 16 of the Rules of Court,
the Motions were not heard. Worse, the Order purportedly resolving the Motions to
Upon the completion of such proceedings, the commissioner shall file with the court a
Dismiss did not state any reason at all for their denial, in contravention of Section 3 of
written report on the matters referred by the parties.77 The report shall be set for
the said Rule 16. There was not even any statement of the grounds relied upon by the
hearing, after which the court shall issue an order adopting, modifying or rejecting it in
Motions; much less, of the legal findings and conclusions of the trial court.
whole or in part; or recommitting it with instructions; or requiring the parties to present
further evidence before the commissioner or the court. 78
Thus, Velarde, Villanueva and Manalo moved for reconsideration. Pending the
resolution of these Motions for Reconsideration, Villanueva filed a Motion to suspend
Finally, a judgment or final order determining the merits of the case shall be rendered.
the filing of the parties’ memoranda. But instead of separately resolving the pending
The decision shall be in writing, personally and directly prepared by the judge, stating
Motions fairly and squarely, the trial court again transgressed the Rules of Court when
clearly and distinctly the facts and the law on which it is based, signed by the issuing
it immediately proceeded to issue its Decision, even before tackling the issues raised
magistrate, and filed with the clerk of court.79
in those Motions.

Furthermore, the RTC issued its "Decision" without allowing the parties to file their
answers. For this reason, there was no joinder of the issues. If only it had allowed the
filing of those answers, the trial court would have known, as the Oral Argument
revealed, that the petitioner and his co-respondents below had not committed or
threatened to commit the act attributed to them (endorsing candidates) -- the act that
was supposedly the factual basis of the suit.
Parenthetically, the court a quo further failed to give a notice of the Petition to the
OSG, which was entitled to be heard upon questions involving the constitutionality or
validity of statutes and other measures.87
Moreover, as will be discussed in more detail, the questioned Decision of the trial
court was utterly wanting in the requirements prescribed by the Constitution and the
Rules of Court.
All in all, during the loosely abbreviated proceedings of the case, the trial court indeed
acted with inexplicable haste, with total ignorance of the law -- or, worse, in cavalier
disregard of the rules of procedure -- and with grave abuse of discretion.
Contrary to the contentions of the trial judge and of SJS, proceedings for declaratory
relief must still follow the process described above -- the petition must state a cause of
action; the proceedings must undergo the procedure outlined in the Rules of Court;
and the decision must adhere to constitutional and legal requirements.
First Substantive Issue:
Fundamental Requirements of a Decision
The Constitution commands that "[n]o decision shall be rendered by any court without
expressing therein clearly and distinctly the facts and the law on which it is based. No
petition for review or motion for reconsideration of a decision of the court shall be
refused due course or denied without stating the basis therefor." 88
Consistent with this constitutional mandate, Section 1 of Rule 36 of the Rules on Civil
Procedure similarly provides:
"Sec. 1. Rendition of judgments and final orders. – A judgment or final order
determining the merits of the case shall be in writing personally and directly
prepared by the judge, stating clearly and distinctly the facts and the law on
which it is based, signed by him and filed with the clerk of court."
In the same vein, Section 2 of Rule 120 of the Rules of Court on Criminal Procedure
reads as follows:
22
"Sec. 2. Form and contents of judgments. -- The judgment must be written
in the official language, personally and directly prepared by the judge and
signed by him and shall contain clearly and distinctly a statement of the
facts proved or admitted by the accused and the law upon which the
judgment is based.
"x x x xxx x x x."
Pursuant to the Constitution, this Court also issued on January 28, 1988,
Administrative Circular No. 1, prompting all judges "to make complete findings of facts
in their decisions, and scrutinize closely the legal aspects of the case in the light of the
evidence presented. They should avoid the tendency to generalize and form
conclusions without detailing the facts from which such conclusions are deduced."
In many cases,89 this Court has time and time again reminded "magistrates to heed
the demand of Section 14, Article VIII of the Constitution." The Court, through Chief
Justice Hilario G. Davide Jr. in Yao v. Court of Appeals,90 discussed at length the
implications of this provision and strongly exhorted thus:
"Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is
indisputably a paramount component of due process and fair play. It is likewise
demanded by the due process clause of the Constitution. The parties to a litigation
should be informed of how it was decided, with an explanation of the factual and legal
reasons that led to the conclusions of the court. The court cannot simply say that
judgment is rendered in favor of X and against Y and just leave it at that without any
justification whatsoever for its action. The losing party is entitled to know why he lost,
so he may appeal to the higher court, if permitted, should he believe that the decision
should be reversed. A decision that does not clearly and distinctly state the facts and
the law on which it is based leaves the parties in the dark as to how it was reached
and is precisely prejudicial to the losing party, who is unable to pinpoint the possible
errors of the court for review by a higher tribunal. More than that, the requirement is an
assurance to the parties that, in reaching judgment, the judge did so through the
processes of legal reasoning. It is, thus, a safeguard against the impetuosity of the
judge, preventing him from deciding ipse dixit. Vouchsafed neither the sword nor the
purse by the Constitution but nonetheless vested with the sovereign prerogative of
passing judgment on the life, liberty or property of his fellowmen, the judge must
ultimately depend on the power of reason for sustained public confidence in the
justness of his decision."
In People v. Bugarin,91 the Court also explained:
"The requirement that the decisions of courts must be in writing and that
they must set forth clearly and distinctly the facts and the law on which they
are based serves many functions. It is intended, among other things, to
inform the parties of the reason or reasons for the decision so that if any of
them appeals, he can point out to the appellate court the finding of facts or
the rulings on points of law with which he disagrees. More than that, the
 23

requirement is an assurance to the parties that, in reaching judgment, the
judge did so through the processes of legal reasoning. x x x."
Indeed, elementary due process demands that the parties to a litigation be given
information on how the case was decided, as well as an explanation of the factual and
legal reasons that led to the conclusions of the court. 92
The assailed Decision in the present case leaves us in the dark as to its final
resolution of the Petition. To recall, the original Petition was for declaratory relief. So,
what relief did the trial court grant or deny? What rights of the parties did it
conclusively declare? Its final statement says, "SO ORDERED." But what exactly did
the court order? It had the temerity to label its issuance a "Decision," when nothing
was in fact decided.

Respondent SJS insists that the dispositive portion can be found in the body of the
In Madrid v. Court of Appeals,93 this Court had instructed magistrates to exert effort to
assailed Decision. It claims that the issue is disposed of and the Petition finally
ensure that their decisions would present a comprehensive analysis or account of the
resolved by the statement of the trial court found on page 10 of its 14-page Decision,
factual and legal findings that would substantially address the issues raised by the
which reads: "Endorsement of specific candidates in an election to any public office is
parties.
a clear violation of the separation clause."95

In the present case, it is starkly obvious that the assailed Decision contains no
We cannot agree.
statement of facts -- much less an assessment or analysis thereof -- or of the court’s
findings as to the probable facts. The assailed Decision begins with a statement of the
nature of the action and the question or issue presented. Then follows a brief In Magdalena Estate, Inc. v. Caluag,96 the obligation of the party imposed by the Court
explanation of the constitutional provisions involved, and what the Petition sought to was allegedly contained in the text of the original Decision. The Court, however, held:
achieve. Thereafter, the ensuing procedural incidents before the trial court are
tracked. The Decision proceeds to a full-length opinion on the nature and the extent of
"x x x The quoted finding of the lower court cannot supply deficiencies in the
the separation of church and state. Without expressly stating the final conclusion she
dispositive portion. It is a mere opinion of the court and the rule is settled
has reached or specifying the relief granted or denied, the trial judge ends her
that where there is a conflict between the dispositive part and the opinion,
"Decision" with the clause "SO ORDERED."
the former must prevail over the latter on the theory that the dispositive
portion is the final order while the opinion is merely a statement ordering
What were the antecedents that necessitated the filing of the Petition? What exactly nothing." (Italics in the original)
were the distinct facts that gave rise to the question sought to be resolved by SJS?
More important, what were the factual findings and analysis on which the trial court
Thus, the dispositive portion cannot be deemed to be the statement quoted by SJS
based its legal findings and conclusions? None were stated or implied. Indeed, the
and embedded in the last paragraph of page 10 of the assailed 14-page Decision. If at
RTC’s Decision cannot be upheld for its failure to express clearly and distinctly the
all, that statement is merely an answer to a hypothetical legal question and just a part
facts on which it was based. Thus, the trial court clearly transgressed the
of the opinion of the trial court. It does not conclusively declare the rights (or
constitutional directive.
obligations) of the parties to the Petition. Neither does it grant any -- much less, the
proper -- relief under the circumstances, as required of a dispositive portion.
The significance of factual findings lies in the value of the decision as a precedent.
How can it be so if one cannot apply the ruling to similar circumstances, simply
Failure to comply with the constitutional injunction is a grave abuse of discretion
because such circumstances are unknown? Otherwise stated, how will the ruling be
amounting to lack or excess of jurisdiction. Decisions or orders issued in careless
applied in the future, if there is no point of factual comparison?
disregard of the constitutional mandate are a patent nullity and must be struck down
as void.97
Moreover, the court a quo did not include a resolutory or dispositive portion in its so-
called Decision. The importance of such portion was explained in the early case
Parts of a Decision
Manalang v. Tuason de Rickards,94 from which we quote:

In general, the essential parts of a good decision consist of the following: (1)
"The resolution of the Court on a given issue as embodied in the dispositive
statement of the case; (2) statement of facts; (3) issues or assignment of errors; (4)
part of the decision or order is the investitive or controlling factor that
court ruling, in which each issue is, as a rule, separately considered and resolved;
determines and settles the rights of the parties and the questions presented
and, finally, (5) dispositive portion. The ponente may also opt to include an
therein, notwithstanding the existence of statements or declaration in the
introduction or a prologue as well as an epilogue, especially in cases in which
body of said order that may be confusing."
controversial or novel issues are involved.98
 24

An introduction may consist of a concise but comprehensive statement of the principal 2. Statement of Facts
factual or legal issue/s of the case. In some cases -- particularly those concerning
public interest; or involving complicated commercial, scientific, technical or otherwise
There are different ways of relating the facts of the case. First, under the objective or
rare subject matters -- a longer introduction or prologue may serve to acquaint readers
reportorial method, the judge summarizes -- without comment -- the testimony of each
with the specific nature of the controversy and the issues involved. An epilogue may
witness and the contents of each exhibit. Second, under the synthesis method, the
be a summation of the important principles applied to the resolution of the issues of
factual theory of the plaintiff or prosecution and then that of the defendant or defense
paramount public interest or significance. It may also lay down an enduring philosophy
is summarized according to the judge’s best light. Third, in the subjective method, the
of law or guiding principle.
version of the facts accepted by the judge is simply narrated without explaining what
the parties’ versions are. Finally, through a combination of objective and subjective
Let us now, again for the guidance of the bench and the bar, discuss the essential means, the testimony of each witness is reported and the judge then formulates his or
parts of a good decision. her own version of the facts.

1. Statement of the Case In criminal cases, it is better to present both the version of the prosecution and that of
the defense, in the interest of fairness and due process. A detailed evaluation of the
contentions of the parties must follow. The resolution of most criminal cases, unlike
The Statement of the Case consists of a legal definition of the nature of the action. At
civil and other cases, depends to a large extent on the factual issues and the
the first instance, this part states whether the action is a civil case for collection,
appreciation of the evidence. The plausibility or the implausibility of each version can
ejectment, quieting of title, foreclosure of mortgage, and so on; or, if it is a criminal
sometimes be initially drawn from a reading of the facts. Thereafter, the bases of the
case, this part describes the specific charge -- quoted usually from the accusatory
court in arriving at its findings and conclusions should be explained.
portion of the information -- and the plea of the accused. Also mentioned here are
whether the case is being decided on appeal or on a petition for certiorari, the court of
origin, the case number in the trial court, and the dispositive portion of the assailed On appeal, the fact that the assailed decision of the lower court fully, intelligently and
decision. correctly resolved all factual and legal issues involved may partly explain why the
reviewing court finds no reason to reverse the findings and conclusions of the former.
Conversely, the lower court’s patent misappreciation of the facts or misapplication of
In a criminal case, the verbatim reproduction of the criminal information serves as a
the law would aid in a better understanding of why its ruling is reversed or modified.
guide in determining the nature and the gravity of the offense for which the accused
may be found culpable. As a rule, the accused cannot be convicted of a crime different
from or graver than that charged. In appealed civil cases, the opposing sets of facts no longer need to be presented.
Issues for resolution usually involve questions of law, grave abuse of discretion, or
want of jurisdiction; hence, the facts of the case are often undisputed by the parties.
Also, quoting verbatim the text of the information is especially important when there is
With few exceptions, factual issues are not entertained in non-criminal cases.
a question on the sufficiency of the charge, or on whether qualifying and modifying
Consequently, the narration of facts by the lower court, if exhaustive and clear, may
circumstances have been adequately alleged therein.
be reproduced; otherwise, the material factual antecedents should be restated in the
words of the reviewing magistrate.
To ensure that due process is accorded, it is important to give a short description of
the proceedings regarding the plea of the accused. Absence of an arraignment, or a
In addition, the reasoning of the lower court or body whose decision is under review
serious irregularity therein, may render the judgment void, and further consideration by
should be laid out, in order that the parties may clearly understand why the lower court
the appellate court would be futile. In some instances, especially in appealed cases, it
ruled in a certain way, and why the reviewing court either finds no reason to reverse it
would also be useful to mention the fact of the appellants’ detention, in order to
or concludes otherwise.
dispose of the preliminary query -- whether or not they have abandoned their appeal
by absconding or jumping bail.
3. Issues or Assignment of Errors
Mentioning the court of origin and the case number originally assigned helps in
facilitating the consolidation of the records of the case in both the trial and the Both factual and legal issues should be stated. On appeal, the assignment of errors,
appellate courts, after entry of final judgment. as mentioned in the appellant’s brief, may be reproduced in toto and tackled seriatim,
so as to avoid motions for reconsideration of the final decision on the ground that the
court failed to consider all assigned errors that could affect the outcome of the case.
Finally, the reproduction of the decretal portion of the assailed decision informs the
But when the appellant presents repetitive issues or when the assigned errors do not
reader of how the appealed case was decided by the court a quo.
strike at the main issue, these may be restated in clearer and more coherent terms.
 25

Though not specifically questioned by the parties, additional issues may also be Religious Leaders’ Endorsement
included, if deemed important for substantial justice to be rendered. Note that
appealed criminal cases are given de novo review, in contrast to noncriminal cases in
of Candidates for Public Office
which the reviewing court is generally limited to issues specifically raised in the
appeal. The few exceptions are errors of jurisdiction; questions not raised but
necessary in arriving at a just decision on the case; or unassigned errors that are The basic question posed in the SJS Petition -- WHETHER ENDORSEMENTS OF
closely related to those properly assigned, or upon which depends the determination CANDIDACIES BY RELIGIOUS LEADERS IS UNCONSTITUTIONAL -- undoubtedly
of the question properly raised. deserves serious consideration. As stated earlier, the Court deems this constitutional
issue to be of paramount interest to the Filipino citizenry, for it concerns the
governance of our country and its people. Thus, despite the obvious procedural
4. The Court’s Ruling
transgressions by both SJS and the trial court, this Court still called for Oral Argument,
so as not to leave any doubt that there might be room to entertain and dispose of the
This part contains a full discussion of the specific errors or issues raised in the SJS Petition on the merits.
complaint, petition or appeal, as the case may be; as well as of other issues the court
deems essential to a just disposition of the case. Where there are several issues,
Counsel for SJS has utterly failed, however, to convince the Court that there are
each one of them should be separately addressed, as much as practicable. The
enough factual and legal bases to resolve the paramount issue. On the other hand,
respective contentions of the parties should also be mentioned here. When procedural
the Office of the Solicitor General has sided with petitioner insofar as there are no
questions are raised in addition to substantive ones, it is better to resolve the former
facts supporting the SJS Petition and the assailed Decision.
preliminarily.

We reiterate that the said Petition failed to state directly the ultimate facts that it relied
5. The Disposition or Dispositive Portion
upon for its claim. During the Oral Argument, counsel for SJS candidly admitted that
there were no factual allegations in its Petition for Declaratory Relief. Neither were
In a criminal case, the disposition should include a finding of innocence or guilt, the there factual findings in the assailed Decision. At best, SJS merely asked the trial
specific crime committed, the penalty imposed, the participation of the accused, the court to answer a hypothetical question. In effect, it merely sought an advisory opinion,
modifying circumstances if any, and the civil liability and costs. In case an acquittal is the rendition of which was beyond the court’s constitutional mandate and jurisdiction. 99
decreed, the court must order the immediate release of the accused, if detained,
(unless they are being held for another cause) and order the director of the Bureau of
Indeed, the assailed Decision was rendered in clear violation of the Constitution,
Corrections (or wherever the accused is detained) to report, within a maximum of ten
because it made no findings of facts and final disposition. Hence, it is void and
(10) days from notice, the exact date when the accused were set free.
deemed legally inexistent. Consequently, there is nothing for this Court to review,
affirm, reverse or even just modify.
In a civil case as well as in a special civil action, the disposition should state whether
the complaint or petition is granted or denied, the specific relief granted, and the costs.
Regrettably, it is not legally possible for the Court to take up, on the merits, the
The following test of completeness may be applied. First, the parties should know their
paramount question involving a constitutional principle. It is a time-honored rule that
rights and obligations. Second, they should know how to execute the decision under
"the constitutionality of a statute [or act] will be passed upon only if, and to the extent
alternative contingencies. Third, there should be no need for further proceedings to
that, it is directly and necessarily involved in a justiciable controversy and is essential
dispose of the issues. Fourth, the case should be terminated by according the proper
to the protection of the rights of the parties concerned."100
relief. The "proper relief" usually depends upon what the parties seek in their
pleadings. It may declare their rights and duties, command the performance of positive
prestations, or order them to abstain from specific acts. The disposition must also WHEREFORE, the Petition for Review of Brother Mike Velarde is GRANTED. The
adjudicate costs. assailed June 12, 2003 Decision and July 29, 2003 Order of the Regional Trial Court
of Manila (Branch 49) are hereby DECLARED NULL AND VOID and thus SET
ASIDE. The SJS Petition for Declaratory Relief is DISMISSED for failure to state a
The foregoing parts need not always be discussed in sequence. But they should all be
cause of action.
present and plainly identifiable in the decision. Depending on the writer’s character,
genre and style, the language should be fresh and free-flowing, not necessarily
stereotyped or in a fixed form; much less highfalutin, hackneyed and pretentious. At all Let a copy of this Decision be furnished the Office of the Court Administrator to
times, however, the decision must be clear, concise, complete and correct. evaluate and recommend whether the trial judge may, after observing due process, be
held administratively liable for rendering a decision violative of the Constitution, the
Rules of Court and relevant circulars of this Court. No costs. SO ORDERED.
Second Substantive Issue:
 26

Ventura County Humane Society v. Holloway

Annotate this Case

[Civ. No. 31873.

Court of Appeals of California, First Appellate District, Division Two.

July 23, 1974.]

VENTURA COUNTY HUMANE SOCIETY FOR THE PREVENTION OF CRUELTY

TO CHILDREN AND ANIMALS, INC., Plaintiff and Appellant, v. WILLIAM L.
HOLLOWAY et al., Defendants and Respondents

(Opinion by Kane, J., with Taylor, P. J., and Rouse, J., concurring.) [40 Cal. App. 3d
898]

COUNSEL

Thomas McGinn Smith, James P. Sullivan, Jr., and Ropers, Majeski, Kohn, Bentley &
Wagner and John M. Rubens for Plaintiff and Appellant.

Evelle J. Younger, Attorney General, Anthony C. Joseph, Assistant Attorney General,

Lawrence R. Tapper and Joanne Condas, Deputy Attorneys General, as Amici Curiae
on behalf of Plaintiff and Appellant.

Morrison, Foerster, Holloway, Clinton & Clark, Girvan Peck, Sedgwick, Detert, Moran
& Arnold and Scott Conley for Defendants and Respondents.

OPINION

KANE, J.

Plaintiffs appeal from a judgment of dismissal entered upon an order sustaining

respondents' demurrer to the second amended complaint [40 Cal. App. 3d 900]
without leave to amend. The relevant facts as appear in the second amended
complaint and the record at hand may be summarized as follows:

In October 1967, George Whittel ("Whittel") retained respondents-law firm to prepare

his last will and testament. A will bearing the date of October 5, 1967, was thereafter
drawn by respondents. Whittel died on April 17, 1969, and his will was admitted to
probate on May 15, 1969. The decedent's estate, appraised at approximately
$40,000,000, was largely bequeathed to various charities. The legal dispute in the
probate court centered around Paragraph Eighth of the will which reads as follows:

"Eighth: All of the residue of my estate I give, devise and bequeath to the three
organizations named below. I direct that the three named organizations (or their
respective affiliates) each receive at least 25% of the total; and with this limitation I
give to my executors the authority to choose the exact allocation of the remaining 25%
among said organizations.
"It is my desire the funds be used to relieve pain and suffering among animal, bird and
fish life and to preserve, improve and perpetuate animal, bird and fish life and my
executors should disburse funds in such manner as, in their judgment, to best achieve
these aims.
"I further instruct my executors to require the organizations receiving these funds to
devote some or all of the funds paid over to them to the erection and maintenance of
buildings or other permanent structures to be used pursuant to the desires
enumerated above, said structures to bear my name.
"The organizations so receiving funds must be organizations which qualify under the
provisions of Section 170(c) of the Internal Revenue Code of 1954. If such section is
amended, revised or superseded, the organizations must continue to qualify under the
section as amended or revised or such section or sections as might supersede it.
"The organizations are:
"(1) Defenders of Wildlife, Washington, D.C.
"(2) Society for the Prevention of Cruelty to Animals (Local or National).
"(3) The National Audubon Society, Inc., Washington, D.C., or any affiliated chapter,
branch, etc.
"If any said organization shall not so qualify under the Internal Revenue Code, its
share shall proportionately increase the shares of the qualifying organizations." [40
Cal. App. 3d 901]
In the probate court the fundamental issue revolved around the definition of "Society
for the Prevention of Cruelty to Animals (Local or National)" which, under the will, was
to receive 25 percent of the residuary estate. While numerous humane societies filed
nonexclusive claims to the portion of the estate disposed of by Paragraph Eighth, the
San Francisco Society for the Prevention of Cruelty to Animals (hereinafter SFSPCA)
took the position that it alone was entitled to one-fourth of the estate. The exclusive
claim raised by SFSPCA necessitated extensive hearings and evidence. After 13 days
of trial, the probate court rejected the exclusive claim of SFSPCA, holding that the
testator intended a gift to the local and national humane societies as a group, and, by
its decree interpreting the will, directed the executors to select one or more charitable
organizations which actively perform the functions of societies for the prevention of
cruelty to animals.
27
From the decision of the probate court SFSPCA filed a notice of appeal. The matter,
however, was settled by a court order which approved the agreement entered into
between SFSPCA and the executors of the estate by the terms of which the appeal
was dismissed in consideration of payment of $700,000 to SFSPCA.
In this class action it is alleged that the drafting of the will in ambiguous terms
constituted both breach of contract and negligence, as a result of which appellants
were damaged in the following particulars:
(a) They had to hire legal counsel and participate in lengthy legal proceedings at great
expense to them in order to oppose the exclusive claims of SFSPCA and others and
to obtain a decree interpreting the will of the decedent and determining their interest in
the estate;
(b) They have not received any part whatsoever of the funds to which they are entitled
and the resultant delay has caused and will continue to cause further damages and
deprivation of benefits;
(c) The exclusive claim of SFSPCA resulted in a settlement of $700,000 and
increased the costs of administration of the estate causing direct and indirect losses to
appellants.
Respondents demurred to both the original complaint and the first amended complaint
which demurrers were sustained with leave to amend. Finally, in an order dated March
29, 1972, the trial court sustained respondents' demurrer to the second amended
complaint without leave to amend. Relying on its earlier ruling that there must be a
proximity between the attorney and his acts and the beneficiary and his loss, the trial
court pointed out that an attorney who is given the name of a beneficiary by [40 Cal.
App. 3d 902] a client is under no duty to investigate the named beneficiary to
determine whether it exists or whether the classification is nebulous or confusing. As a
consequence, the trial court held that appellants' second amended complaint did not
state facts sufficient to constitute a cause of action.
Initially, it must be pointed out that, although the second amended complaint purports
to state a cause of action for both breach of contract and negligence, the gist of both
causes of action is respondents' alleged malpractice in drafting the will in ambiguous
terms. [1] The elements of a cause of action for professional negligence are, of
course, well defined. These ingredients are: (1) the duty of the professional to use
such skill, prudence and diligence as other members of his profession commonly
possess and exercise; (2) breach of that duty; (3) a proximate causal connection
between the negligent conduct and the resulting injury; and (4) actual loss or damage
resulting from the professional negligence (Budd v. Nixen (1971) 6 Cal. 3d 195, 200
[98 Cal. Rptr. 849, 491 P.2d 433]; Chavez v. Carter (1967) 256 Cal. App. 2d 577, 579
[64 Cal. Rptr. 350]; Ishmael v. Millington (1966) 241 Cal. App. 2d 520, 523 [50 Cal.
Rptr. 592]; Modica v. Crist (1954) 129 Cal. App. 2d 144, 146 [276 P.2d 614]). When
these elements coexist, they constitute actionable negligence. On the other hand,
absence of, or failure to prove, any of them is fatal to recovery. This applies especially

to the all important element of duty. As the cases underline, in ruling on general
demurrers the dispositive issue ordinarily is that of duty, i.e., the existence of duty of
care owed by the alleged wrongdoer to the person injured or to a class of which he is
a member. If the plaintiff does not and cannot show a duty owed directly to him, the
action is subject to dismissal (Amaya v. Home Ice, Fuel & Supply Co. (1963) 59 Cal.
2d 295, 307 [29 Cal. Rptr. 33, 379 P.2d 513]; 35 Cal.Jur.2d, § 9, p. 494).
Apparently recognizing that but for establishing a duty of care on the part of
respondents there is no right to recovery, appellants, buttressed by amicus curiae,
advance the novel argument that respondent attorneys owed a duty to appellant class
as potential beneficiaries under the will, which duty embraced an obligation to make
an investigation to determine the true intention of the testator and to draft an
unambiguous will. Appellants likewise contend that by ambiguously designating the
intended beneficiaries in Clause Eighth, subdivision (2), as "Society for the Prevention
of Cruelty to Animals (Local or National)," a nonexistent organization, respondents
breached their duty of care, and the delay, litigation expense and the settlement
compromise resulting from the ambiguity constitute recoverable damages. As will be
seen below, appellants' argument is not supported by case law, cannot be accepted
as a matter of legal policy, and, under the facts of the case at bench, must be rejected
as a matter of law. [40 Cal. App. 3d 903]
[2] It is an elementary proposition that an attorney, by accepting employment to give
legal advice or to render legal services, impliedly agrees to use ordinary judgment,
care, skill and diligence in the performance of the tasks he undertakes (Moser v.
Western Harness Racing Assn. (1948) 89 Cal. App. 2d 1, 7 [200 P.2d 7]). [3] In
elaborating on this duty, the cases have repeatedly held that an attorney who
assumes preparation of a will incurs a duty not only to the testator client, but also to
his intended beneficiaries, and lack of privity does not preclude the testamentary
beneficiary from maintaining an action against the attorney based on either the
contractual theory of third party beneficiary or the tort theory of negligence (Heyer v.
Flaig (1969) 70 Cal. 2d 223 [74 Cal. Rptr. 225, 449 P.2d 161]; Lucas v. Hamm (1961)
56 Cal. 2d 583 [15 Cal. Rptr. 821, 364 P.2d 685]; Biakanja v. Irving (1958) 49 Cal. 2d
647 [320 P.2d 16, 65 A.L.R.2d 1358]). However, the foregoing general rule
notwithstanding, the attorney's liability towards the intended beneficiaries under the
will is not automatic. [4] The cases underline that the determination whether in a
specific case the attorney should be held responsible to a third person not in privity
constitutes a policy matter and involves balancing factors, among which are the extent
to which the transaction was intended to affect the plaintiff, the foreseeability of harm
to him, the degree of certainty that the plaintiff suffered injury, the closeness of the
connection between the defendant's conduct and the injury suffered, the moral blame
attached to the defendant's conduct, and the policy of preventing future harm (
Biakanja v. Irving, supra, at p. 650; Lucas v. Hamm, supra, at p. 588).
The cases cited by appellants unhesitatingly support the view that an attorney may be
held liable to the testamentary beneficiaries only if the above stated test is fully met,
that is, if due to the attorney's professional negligence the testamentary intent
expressed in the will is frustrated and the beneficiaries clearly designated by the
testator lose their legacy as a direct result of such negligence. Thus, in Biakanja v.
Irving, supra, the sole beneficiary under the will lost her bequest because defendant, a
28
notary public, failed to have the will properly attested. The court held that defendant
had a duty to protect the beneficiary specified in the will where the "'end and aim'" of
the will was to provide for such beneficiary and where plaintiff would have received her
bequest but for the defendant's negligence. In Lucas v. Hamm, supra, a group of
beneficiaries designated under a will alleged that they failed to receive their intended
bequest as a consequence of the drafting attorney's failure to avoid the operation of
the rule against perpetuities and restraints on alienation. The court first restated the
requisites of a cause of action as laid down in Biakanja v. Irving, supra, then went on
to say: "As in Biakanja, one of the main purposes which the transaction between
defendant and the testator intended [40 Cal. App. 3d 904] to accomplish was to
provide for the transfer of property to plaintiffs; the damage to plaintiffs in the event of
invalidity of the bequest was clearly foreseeable; it became certain, upon the death of
the testator without change of the will, that plaintiffs would have received the intended
benefits but for the asserted negligence of defendant ... ," and concluded that"
intended beneficiaries of a will who lose their testamentary rights because of failure of
the attorney who drew the will to properly fulfill his obligations under his contract with
the testator may recover ..." ( Lucas v. Hamm, supra, at pp. 589, 591; italics added).
fn. 1
Finally, in Heyer v. Flaig, supra, where the attorney negligently failed to advise the
testatrix of the legal consequences of her intended marriage, and as a result her
daughters failed to receive their legacies, the court similarly reaffirmed the foregoing
premise, stating, "We impose this duty because of the relationship between the
attorney and the intended beneficiary; public policy requires that the attorney exercise
his position of trust and superior knowledge responsibly so as not to affect adversely
persons whose rights and interests are certain and foreseeable." (P. 229; italics
added.)
The foregoing analysis makes it evident that the contention that respondents owed a
duty of care towards appellant class as potential beneficiaries, even in the absence of
an allegation of a clear causal connection between the claimed malpractice and the
alleged loss and notwithstanding the fact that appellants did receive their testamentary
share, is not supported by the existing case authorities. Appellants' position therefore
can only be construed as a request to extend the scope of the attorney's liability so
that any defects in wills which result in litigation would also constitute actionable legal
malpractice. Neither appellants nor amicus curiae, however, advance any cogent
reasons why the scope of an attorney's duty should be so extended under the
principles enunciated in Biakanja and the cases following it and/or on the basis of
general legal policy.
[5] In resolving this issue we must call to mind the basic principle that, while out of an
agreement to provide legal services to the testator, a duty also arises to act with due
care with regard to the interests of the intended beneficiary, the scope of duty owed to
the beneficiary is determined by reference to the attorney-client relationship ( Heyer v.
Flaig, supra, at p. 229). The primary duty is owed to the testator-client and the
attorney's [40 Cal. App. 3d 905] paramount obligation is to serve and carry out the
intention of the testator. Consequently, when, as in the case at bench, the
testamentary intent has been implemented, no good reason exists why the attorney
should be held accountable for using certain words suggested or selected by the

testator which later prove to be ambiguous. In addition, the task of proving whether
claimed ambiguity was the result of negligence of the drafting attorney or whether it
was the deliberate choice of the testator, would impose an insurmountable burden on
the parties, since in such a case the trier of fact would be required to decide this
crucial issue without the benefit of the testimony of the most important witness, the
testator himself. Once recognized, such a duty would apply by parity of reasoning not
only to wills, but also to contracts, conveyances and other legal instruments. The duty
thus created would amount to a requirement to draft litigation-proof legal documents.
This unlimited liability, as the learned trial judge aptly observed, would result in a
speculative and almost intolerable burden on the legal profession indeed.
We are not unmindful that some textbooks cited in the amicus curiae brief do set up
certain guidelines for attorneys, suggesting that "Care should be exercised to
determine the correct name of the charity" (Harris, Family Estate Planning Guide (2d
ed. 1971) § 335, p. 648), that "The correct corporate title of any charity to which the
testator wishes to make a gift should be ascertained" (Schwarzberg, Practicing Law
Institute Monographs (1963) p. 30), that "there are several inquiries which must be
made before you actually proceed with your charitable bequest ..." (Callahan, How to
Make a Will Simplified (1965) p. 61). However, it is apparent that these suggestions
are merely in the nature of recommendations and are not established criteria for
determining the scope of the duty of ordinary care imposed upon the will-drafting
attorney. Moreover, these textbooks, too, acknowledge that "Good draftsmanship
requires that the designation of the charity and the charitable purpose be as specific
and unambiguous as the testator's desires will permit" (Cal. Will Drafting (Cont. Ed.
Bar 1965) § 6.19; italics added).
[6] But aside from the foregoing considerations, in the situation here presented
appellants must be precluded from recovery as a matter of law.
First, in interpreting the will, the probate court found that although there were
ambiguities in the designation of the beneficiaries, the trust purpose was clear and
could be fully implemented. fn. 2 Accordingly, unlike the [40 Cal. App. 3d 906] cases
cited, in the present case the testamentary intent was fully carried out and the
beneficiaries under the clause complained of did get their full share.
Secondly, and more significantly, while the second amended complaint contains
allegations that "defendants did negligently and carelessly fail to inquire as to the
testator's true intention and did negligently and carelessly draft said Clause Eighth and
Clause Ninth of said Will in language which was ineffectual to clearly and precisely set
forth the intention of the testator," it is utterly devoid of any indication as to what the
true intention of the testator (if different from that expressed in the will) was; and, oddly
enough, appellants likewise fail to address themselves to this vital issue on appeal.
The importance of this omission can hardly be overstated. It is obvious that in the
absence of an allegation that the testator did intend to leave a part of his residuary
estate to appellants specifically, it cannot be determined with any degree of certainty
that appellants suffered harm or injury at all. It is entirely possible that, had the
suggested inquiry by respondents been made and the "true intention" of the testator
29
detected, appellants would have been altogether precluded from acquiring any portion
of the estate, and the testator's bounty would have been limited exclusively to the
SFSPCA and/or to an entirely different group of beneficiaries. Under these
circumstances, there is ample ground to presume that the institution of the lawsuit, by
which appellants' claim to 25 percent of the residuary estate was successfully
established, worked a benefit rather than a detriment to appellants. The deduction is
thus inescapable, that appellants have failed to show the crucial elements upon which
respondents' duty may be predicated, namely the foreseeability of harm resulting from
the ambiguity, the degree of certainty that injury was suffered, and the closeness of
connection between respondents' conduct and the loss claimed (cf. Biakanja v. Irving;
Lucas v. Hamm; both supra).
But the lack of these allegations negates not only the duty of care, the [40 Cal. App.
3d 907] most vital element of the cause of action, but also the requisite showing that
actual loss or damage resulted from the conduct charged.
While it has been frequently said that a person who commits a wrongful act or
wrongfully omits to perform a particular act required of him is liable for all the detriment
directly flowing from the wrongful act or omission, it is black-letter law that damages
may not be based upon sheer speculation or surmise, and the mere possibility or even
probability that damage will result from wrongful conduct does not render it actionable
(McGregor v. Wright (1931) 117 Cal. App. 186, 196-198 [3 P.2d 624]; 14 Cal.Jur.2d,
§§ 43, 68, 75, pp. 670-671, 692-693, 699-700). As often emphasized, it is the
uncertainty as to the fact of damage rather than its amount which negatives the
existence of a cause of action based on either breach of contract and/or negligence
(Walker v. Pacific Indemnity Co. (1960) 183 Cal. App. 2d 513, 517 [6 Cal.Rptr. 924]).
The judgment is affirmed.
Taylor, P. J., and Rouse, J., concurred.
FN 1. It is of interest to note that while the court in Lucas held that the third party
beneficiary theory is available to testamentary beneficiaries in actions against the
testator's attorney, it also concluded that the error, if any, with respect to the rule
against perpetuities and restraints on alienation was not actionable under either a
negligence or contract theory ( Lucas v. Hamm, supra, at pp. 592-593).
FN 2. The pertinent portion of the memorandum decision reads as follows:
"The charitable trust will provide a proper and adequate vehicle for distribution and will
terminate when the funds have been distributed pursuant to the terms of the will. The
trust, both its purpose and objective, and the rights of the qualified beneficiaries
thereof, will receive adequate protection from a court of equity; and the enforcement of
the requirements of the testator and an accounting of the corpus may be compelled by
the Attorney General. ...
 30

"The guidelines for the executors and trustees have been detailed herein; there is G.R. No. 101526 July 3, 1992
nothing indefinite as to the trust -- the beneficiaries can be ascertained, determined
and qualified pursuant to the will and within the groups which limit selection; the
RODELA D. TORREGOZA, petitioner,
distributive purpose of the trust is clear; provision for termination is made; and,
vs.
protective devices for the effective management and operation of the trust are present
CIVIL SERVICE COMMISSION, respondent.
and available."

PARAS, J.:

The petition filed under Rule 65 of the Revised Rules of Court, seeks to review the
decision of the respondent Civil Service Commission, dated July 4, 1991, denying the
petitioner the privilege granted under Republic Act No. 6850, entitled "An Act to Grant
Civil Service Eligibility Under Certain Conditions to Government Employees Appointed
Under Provisional or Temporary Status Who Have Rendered a Total of Seven (7)
Years of Efficient Service, and for other Purposes". The petition prays for a Writ of
Mandamus to compel the respondent Commission to grant the petitioner the
appropriate civil service eligibility pursuant to the aforestated law, for having worked in
the Legal Office, Office of the President, Malacañang, Manila, since January 18, 1978,
to the present.

The original appointment of the petitioner on January 18, 1978, was one of the six (6)
Staff Aide positions, in the aforementioned office, specifically Item No. 198-6, (P.D.
No. 1050), issued by then Presidential Assistant Juan C. Tuvera for a period of six (6)
months. On June 5, 1978, less than five months after the first appointment, petitioner
was given another appointment to the same position effective "as of June 18, 1978"
and with a notation that "This appointment is declared confidential." (Rollo, p. 39)

Obviously, since 1978 to February 8, 1990 when Republic Act No. 6850 became a
law, petitioner never left the same position. Then on March 5, 1990, respondent
Commission issued the "Rules Implementing Republic Act No. 6850, enabling the
petitioner to file her application for the appropriate eligibility to the position she has
been occupying for the last thirteen (13) years and having accordingly rendered
efficient service. (The Solicitor General's Comment, pp. 3 & 13)

Petitioner's request was returned unacted upon by respondent's field office in

Malacañang, Manila for the reason that based on the service record submitted by the
Personnel Office of the Office of the President, petitioner's position had allegedly been
declared confidential. (Ibid., p. 4)

In the course of time, after the Salary Standardization Law (Republic Act No. 6758)
was passed, the same position was reclassified as Clerk II in July 1989. (Rollo, p. 5)

Subsequently, Deputy Executive Secretary Mariano Sarmiento sent a letter to the

respondent dated November 7, 1990, (Petition, Annex "G") requesting that based on
the present certified function and actual duties of the petitioner, the position be

restored to the career service and that said petitioner be granted the civil service
eligibility under R.A. No. 6850. (Rollo, p. 33).
Respondent Commission denied petitioner's request on January 28, 1991, after
determining that petitioner's appointment in 1978 was declared by the Office of the
President as "confidential in nature", nevertheless, respondent stated that "an analysis
of the duties and responsibilities of the subject position reveals that they are the same
with the other positions in the career service . . ." and specifically held, that:
In view of the foregoing, the request for restoration of the position
of Clerk II to career service is hereby granted effective January 1,
1991. However, the incumbent shall continue to occupy the
position in a confidential status. Any subsequent appointment to
subject position shall be covered by career service policies.
(Petition, Annex "A")
On February 27, 1991, petitioner moved for reconsideration of the foregoing Decision,
but the respondent stood firm in its resolution dated July 4, 1991, by issuing the
following ruling:
After due consideration of the instant request for reconsideration
of Torregoza, this Commission finds no ample reason to disturb
its Opinion of January 28, 1991. The Office of the President
declared her previous appointments as primarily confidential and
they were all attested as such by this Commission. These twin
actions, i.e., declaration by the Office of the President and
confirmation by this Commission made the appointments in
question to be primarily confidential. Moreover, granting en
arguendo that the position in question may not have been
properly and validly declared as primarily confidential, all
concerned were of the belief that the appointments issued to
Torregoza as Clerk II were indeed primarily confidential. Further,
it cannot also be denied that from the time her first appointment
was issued up to the time that she requested for the change of
the status of her appointment, Torregoza enjoyed the benefits of
the primarily confidential nature of her position. She is, therefore,
estopped from questioning and impugning the validity of her
previous appointments specially now, that she stands to benefit
from the provisions of R.A. 6850, with a declaration of her
appointment as temporary.
WHEREFORE, foregoing premises considered, this Commission
resolves to deny the instant request of Rodela Torregoza, Clerk II,
Office of the President that she be issued a temporary
appointment as Clerk II effective July 1, 1989, the effectivity date
of RA 6758 for lack of merit. Hence, CSC Opinion of January 28,
1991 is hereby affirmed." (Petition, Annex "H")
31
From the above facts, there are two (2) issues to be resolved, however, one is
subordinate to the other. The principal issue is whether or not the writ of mandamus
may be issued by this Court to compel the respondent Commission to grant the
petitioner the privilege of securing an appropriate civil service eligibility under Republic
Act No. 6850. The answer to this is NO. The simple reason being that under the law
granting the privilege to government employees, there is a wide latitude of discretion
given to the Commission which determines in Section 1 thereof, "who are qualified to
avail themselves of the privilege granted under this Act." With such a discretion,
Section 2 of the same law requires the Civil Service Commission to promulgate the
rules and regulations to implement this Act using certain standards. Following are the
pertinent provisions of Republic Act No. 6850:
Sec. 1. All government employees as of the approval of this Act
who are holding career civil service positions appointed under
provisional or temporary status who have rendered at least a total
of seven (7) years of efficient service may be granted the civil
service eligibility that will qualify them for permanent appointment
to their present positions.
The Civil Service Commission shall formulate performance
evaluation standards in order to determine these temporary
employees who are qualified to avail themselves of the privilege
granted under this Act.
The civil service eligibility herein grantee may apply to such other
positions as the Civil Service Commission may deem appropriate.
Sec. 2. The Civil Service Commission shall promulgate the rules
and regulations to implement this Act consistent with the merit
and fitness principle within ninety (90) days after its effectivity.
From the above, it is crystal-clear that the Writ of Mandamus will not lie as the
responsibility of the respondent Commission in implementing the law is not ministerial,
besides, what the law granted is a mere privilege and not a right to those who are
qualified according to the standards to be set by the Commission.
In Marcelo vs. Tantuico, Jr., (142 SCRA 439), citing other cases, this Court held that
the "Remedy of mandamus is available only to compel the performance of a
ministerial duty, but not where the reinstatement involves the exercise of sound
judgment and discretion by the appointing power, absent a showing of a clear and
certain right by petitioner."
The other question that this Court deems appropriate for resolution is the
categorization of the position in the Legal Office, Office of the President, Malacañang,
Manila. This categorization attaches to the entire Office of the President under
Republic Act No. 6040, which provides:
 32

Sec. 5. The Non-Competitive Service. — The non-competitive
service shall be composed of positions expressly declared by law
to be in the non-competitive service and those which are policy-
determining, primarily confidential or highly technical in nature.
The following specific officers and employees shall be embraced
in the non-competitive service:
placed the secretarial and office staff of the Office of the President under the non-
competitive category. To do so is a glaring violation of Republic Act No. 6040, the
specific provision of which is quoted above.
WHEREFORE, in view of the foregoing, the petition is DISMISSED for lack of merit.
SO ORDERED.

xxx xxx xxx

(b) The secretarial and office staff of the President, of the Vice-
President, of the President of the Senate, of the Speaker of the
House of Representatives and of each Member of the Congress
of the Philippines including the personnel of all offices of the
Chairmen of committees of both Houses of the Congress;

This particular law has never been repealed and therefore, it is still controlling with
respect to the classification of the secretarial and office staff positions in the Office of
the President as belonging to the non-competitive service. Thus, any subsequent
classification of the same positions has to be made with the specific sanction of the
legislative branch. The mere fact that the functions of the position in question are
parallel or the same as those in the career civil service positions, do not make the said
position eligible for conferment of the civil service eligibility specially given to other
government employees in the competitive service.

Furthermore, the classification under the Salary Standardization Act, also known as
the "Compensation and Position Classification Act of 1989". Republic Act No. 6758,
did not in effect amend the specific above-quoted provision of R.A. 6040. For the
statement of policy of the former is distinctly clear as it states the following:

Sec. 2. Statement of Policy. — It is hereby declared the policy of

the State to provide equal pay for substantially equal work and to
base differences in pay upon substantive differences in duties and
responsibilities, and qualification requirements of the positions. In
determining rates of pay, due regard shall be given to, among
others, prevailing rates in the private sector for comparable work.
For this purpose, the Department of Budget and Management
(DBM) is hereby directed to establish and administer a unified
Compensation Position Classification System, hereinafter referred
to as the System, as provided for in Presidential Decree No. 985,
as amended, that shall be applied for all government entities, as
mandated by the Constitution.

Moreover, this Court noted with alarm the attempt of the respondent Commission in
subjecting the position in question to the coverage of the "career service policies" after
the incumbent shall have ceased to occupy the position in a confidential status,
without the necessary enabling act after the legislative branch of the Government has
 33

[G.R. No. 150605. December 10, 2002]

EUFROCINO M. CODILLA, SR., petitioner, vs. HON. JOSE DE VENECIA, ROBERTO

P. NAZARENO, in their official capacities as Speaker and Secretary-General of the
House of Representatives, respectively, and MA. VICTORIA L. LOCSIN, respondents.

DECISION

PUNO, J.:

In a democracy, the first self-evident principle is that he who has been rejected by the
people cannot represent the people. Respondent Ma. Victoria L. Locsin lost to
petitioner Eufrocino M. Codilla, Sr. by 17,903 votes in the May 14, 2001 elections as
Representative of the 4th legislative district of Leyte. The most sophisticated legal
alchemy cannot justify her insistence that she should continue governing the people of
Leyte against their will. The enforcement of the sovereign will of the people is not
subject to the discretion of any official of the land.

This is a Petition for Mandamus and Quo Warranto directed against respondents
Speaker Jose De Venecia and Secretary-General Roberto P. Nazareno of the House
of Representatives to compel them to implement the decision of the Commission on
Elections en banc by (a) administering the oath of office to petitioner as the duly-
elected Representative of the 4th legislative district of Leyte, and (b) registering the
name of the petitioner in the Roll of Members of the House of Representatives, and
against respondent Ma. Victoria L. Locsin for usurping, intruding into, and unlawfully
holding and exercising the said public office on the basis of a void proclamation.

The facts are uncontroverted. Petitioner and respondent Locsin were candidates for
the position of Representative of the 4th legislative district of Leyte during the May 14,
2001 elections. At that time, petitioner was the Mayor of Ormoc City while respondent
Locsin was the sitting Representative of the 4th legislative district of Leyte. On May 8,
2001, one Josephine de la Cruz, a registered voter of Kananga, Leyte, filed directly
with the COMELEC main office a Petition for Disqualification1[1] against the petitioner
for indirectly soliciting votes from the registered voters of Kananga and Matag-ob,
Leyte, in violation of Section 68 (a) of the Omnibus Election Code. It was alleged that
the petitioner used the equipments and vehicles owned by the City Government of
Ormoc to extract, haul and distribute gravel and sand to the residents of Kananga and
Matag-ob, Leyte, for the purpose of inducing, influencing or corrupting them to vote for

him. Attached to the petition are the (a) Affidavits of Basilio Bates,2[2] Danilo D.
Maglasang,3[3] Cesar A. Laurente;4[4] (b) Joint Affidavit of Agripino C. Alferez and
Rogelio T. Salvera;5[5] (c) Extract Records from the Police Blotter executed by Police
Superintendent Elson G. Pecho;6[6] and (d) Photographs showing government dump
trucks, haulers and surfacers and portions of public roads allegedly filled-in and
surfaced through the intercession of the respondent.7[7] The case was docketed as
SPA No. 01-208 and assigned to the COMELECs Second Division.
On May 10, 2001, the COMELEC Second Division issued an Order delegating the
hearing and reception of evidence on the disqualification case to the Office of the
Regional Director of Region VIII.8[8] On May 11, 2001, the COMELEC Second
Division sent a telegram informing the petitioner that a disqualification case was filed
against him and that the petition was remanded to the Regional Election Director for
investigation.9[9]
At the time of the elections on May 14, 2001, the Regional Election Director had
yet to hear the disqualification case. Consequently, petitioner was included in the
list of candidates for district representative and was voted for. The initial results
showed that petitioner was the winning candidate.
34
On May 16, 2001, before the counting could be finished, respondent Locsin joined as
intervenor in SPA No. 128 and filed a Most Urgent Motion to Suspend
Proclamation of Respondent [herein petitioner] with the COMELEC Second
Division.10[10] Respondent Locsin alleged that the evidence on record against
respondent is very strong and unless rebutted remains. She urged the Commission to
set the hearing of the disqualification case and prayed for the suspension of the
proclamation of the respondent so as not to render the present disqualification case
moot and academic. A copy of the Motion was allegedly served on petitioner by
registered mail but no registry receipt was attached thereto.11[11]
On May 18, 2001, respondent Locsin filed a Second Most Urgent Motion to
Suspend Proclamation of Respondent stating there is clear and convincing
evidence showing that the respondent is undoubtedly guilty of the charges against him
and this remains unrebutted by the respondent. A copy of the Motion was sent to the
petitioner and the corresponding registry receipt was attached to the pleading.12[12]
The records, however, do not show the date the petitioner received the motion.

On the same day, May 18, 2001, the COMELEC Second Division issued an Ex-Parte
Order13[13] directing the Provincial Board of Canvassers of Leyte to suspend the
proclamation of petitioner in case he obtains the highest number of votes by reason of
the seriousness of the allegations in the petition for disqualification.14[14] It also
directed the Regional Election Director to speed up the reception of evidence and to
forward immediately the complete records together with its recommendation to the
Office of the Clerk of the Commission.15[15] As a result, petitioner was not
proclaimed as winner even though the final election results showed that he garnered
71,350 votes as against respondent Locsins 53,447 votes.16[16]
At the time that the COMELEC Second Division issued its Order suspending his
proclamation, the petitioner has yet to be summoned to answer the petition for
disqualification. Neither has said petition been set for hearing. It was only on May 24,
2001 that petitioner was able to file an Answer to the petition for his disqualification
with the Regional Election Director, alleging that: (a) he has not received the
summons together with the copy of the petition; (b) he became aware of the matter
only by virtue of the telegram sent by the COMELEC Second Division informing him
that a petition was filed against him and that the Regional Election Director was
directed to investigate and receive evidence therewith; and (c) he obtained a copy of
35
the petition from the COMELEC Regional Office No. 8 at his own instance.17[17]
Petitioner further alleged that the maintenance, repair and rehabilitation of barangay
roads in the municipalities of Matag-ob and Kananga were undertaken without his
authority, participation or directive as City Mayor of Ormoc. He attached in his Answer
the following: (a) Affidavit of Alex B. Borinaga;18[18] (b) Copy of the Excerpt from the
Minutes of the Regular Session of Barangay Monterico;19[19] (c) Affidavit of Wilfredo
A. Fiel;20[20] (d) Supplemental Affidavit of Wilfredo A. Fiel;21[21] and (e) Affidavit of
Arnel Y. Padayao.22[22]
On May 25, 2001, petitioner filed a Motion to Lift Order of Suspension,23[23]
alleging that (a) he did not receive a copy of the Motion to Suspend his Proclamation
and hence, was denied the right to rebut and refute the allegations in the Motion; (b)
that he did not receive a copy of the summons on the petition for disqualification and
after personally obtaining a copy of the petition, filed the requisite answer only on May
24, 2001; and (c) that he received the telegraph Order of the COMELEC Second
Division suspending his proclamation only on May 22, 2001. He attached
documentary evidence in support of his Motion to Lift the Suspension of his
proclamation, and requested the setting of a hearing on his Motion.24[24]
 36

On May 30, 2001, an oral argument was conducted on the petitioners Motion and the solicitation of votes and ordered his disqualification. It directed the immediate
parties were ordered to submit their respective memoranda.25[25] On June 4, 2001, proclamation of the candidate who garnered the highest number of votes xxx. A
petitioner submitted his Memorandum26[26] in support of his Motion assailing the copy of said Resolution was sent by fax to the counsel of petitioner in Cebu City in
suspension of his proclamation on the grounds that: (a) he was not afforded due the afternoon of the following day.36[36]
process; (b) the order has no legal and factual basis; and (c) evidence of his guilt is
patently inexistent for the purpose of suspending his proclamation. He prayed that his
By virtue of the said Resolution, the votes cast for petitioner, totaling 71,350, were
proclamation as winning congressional candidate be expediently made, even while the
declared stray even before said Resolution could gain finality. On June 15, 2001,
disqualification case against him continue upon due notice and hearing. He attached
respondent Locsin was proclaimed as the duly elected Representative of the 4th
the following additional evidence in his Memorandum: (a) Copy of certification issued
legislative district of Leyte by the Provincial Board of Canvassers of Leyte. It issued a
by PNP Senior Inspector Benjamin T. Gorre;27[27] (b) Certification issued by Elena S.
Certificate of Canvass of Votes and Proclamation of the Winning Candidates for
Aviles, City Budget Officer;28[28] (c) Copy of certification issued by Wilfredo A. Fiel,
Member of the House of Representatives stating that MA. VICTORIA LARRAZABAL
City Engineer of Ormoc;29[29] (d) Joint Affidavit of Antonio Patenio and Pepito
LOCSIN obtained a total of FIFTY THREE THOUSAND FOUR HUNDRED FORTY
Restituto;30[30] and (e) Affidavits of Demetrio Brion,31[31] Igmedio Rita32[32] and
SEVEN (53,447) votes representing the highest number of votes legally cast in the
Gerardo Monteza.33[33] Respondent Locsins memorandum also contained additional
affidavits of his witnesses.34[34]

Petitioners Motion to Lift the Order of Suspension, however, was not resolved.
Instead, on June 14, 2001, the COMELEC Second Division promulgated its
Resolution35[35] in SPA No. 01-208 which found the petitioner guilty of indirect

legislative district for said office.37[37] Respondent Locsin took her oath of office
on June 18, 2001 and assumed office on June 30, 2001.
On June 20, 2001, petitioner seasonably filed with the COMELEC en banc a
Motion for Reconsideration38[38] from the June 14, 2001 Resolution of the
COMELEC Second Division which ordered his disqualification, as well as an
Addendum to the Motion for Reconsideration.39[39] Petitioner alleged in his Motion
for Reconsideration that the COMELEC Second Division erred: (1) in disqualifying
petitioner on the basis solely of the dubious declaration of the witnesses for
respondent Locsin; (2) in adopting in toto the allegations of the witnesses for
respondent Locsin; and (3) in promulgating the resolution in violation of its own rules
of procedure and in directing therein the immediate proclamation of the second
highest vote getter. Respondent Locsin and her co-petitioner in SPA No. 01-208 filed
a joint Opposition to the Motion for Reconsideration.40[40]
On June 21, 2001, petitioner filed with the COMELEC en banc a Petition for
Declaration of Nullity of Proclamation,41[41] docketed as SPC No. 01-324,
assailing the validity of the proclamation of respondent Locsin who garnered only the
second highest number of votes. Respondent Locsin filed her Answer alleging that:
(1) the Commission lost jurisdiction to hear and decide the case because of the
proclamation of Locsin and that any question on the election, returns, and qualification
of Locsin can only be taken cognizance of by the House of Representatives Electoral
Tribunal (HRET); (2) the case should be filed and heard in the first instance by a
37
Division of the Commission and not directly by the Commission en banc; and (3) the
proclamation of Locsin was valid because she received the highest number of valid
votes cast, the votes of Codilla being stray.
On June 28, 2001, petitioner filed an Urgent Manifestation42[42] stating that he was
deprived of a fair hearing on the disqualification case because while the
documentary evidence adduced in his Memorandum was in support of his
Motion for the lifting of the suspension of his proclamation, the COMELEC
Second Division instead ruled on the main disqualification case. In consonance
with his prayer that a full-dress hearing be conducted on the disqualification case, he
submitted Affidavits of additional witnesses43[43] which he claims would refute and
substantially belie the allegations of petitioners/intervenors witnesses. A Reply,44[44]
Rejoinder45[45] and Sur-Rejoinder46[46] were respectively filed by the parties.
Consequently, the motion for reconsideration in SPA No. 01-208 and the petition for
declaration of nullity in SPC No. 01-324 were submitted for resolution.
From the records, it appears that initially, a Resolution penned by Commissioner
Rufino S.B. Javier, dated July 24, 2001, was submitted to the Office of the Chairman,
dismissing the petition for declaration of nullity for lack of jurisdiction and denying the

motion for reconsideration filed by petitioner Codilla.47[47] Commissioners Florentino
A. Tuason, Jr. and Resurreccion Z. Borra submitted their respective dissenting
opinions48[48] to the Javier resolution. It bears emphasis that Commissioner Tuason,
Jr. was the ponente of the Resolution of the COMELEC Second Division which
ordered the disqualification of petitioner but after considering the additional evidence
presented by the latter, he concluded that the totality of the evidence was clearly in
petitioners favor. Equally worth mentioning is the fact that Commissioner Ralph C.
Lantion, who was the Presiding Commissioner of the Second Division, also dissented
and voted to grant Codillas motion for reconsideration on the ground that [T]he people
of Leyte have spoken and I respect the electorates will. x x x. 49[49]
On August 29, 2001, then COMELEC Chairman Alfredo L. Benipayo issued a Vote
and Opinion and Summary of Votes reversing the resolution of the Second
Division and declaring the proclamation of respondent Locsin as null and void.
The dispositive portion reads:
JUDGMENT
WHEREFORE, in view of all the foregoing considerations, I concur with Commissioner
Resurreccion Z. Borra, Commissioner Florentino A. Tuason, Jr. and Commissioner
Ralph C. Lantion, in SPA No. 01-208, to GRANT the motion for reconsideration and to
REVERSE the resolution of the Commission (Second Division) promulgated on June
1, 2001, disqualifying Codilla; and subsequently, in SPC No. 01-324, to GRANT the
petition of Eufrocino M. Codilla, Sr., and declare as null and void the proclamation of
losing candidate Locsin.
Accordingly:
1. On the Motion for Reconsideration of the disqualification resolution against
Codilla, promulgated by the Commission (Second Division) on June 14, 2001 (SPA
No. 01-208), I vote:
(a) to GRANT the Motion for Reconsideration of respondent-
movant Eufrocino M. Codilla, Sr., and to REVERSE the
Resolution of the Commission (Second Division) promulgated
on June 14, 2001, for insufficiency of evidence;
38
(b) to lift the order of suspension of proclamation of petitioner
Codilla, issued by the Commission (Second Division) on May
18, 2001, having been issued without hearing and without
any finding that the evidence of guilt of petitioner Codilla is
strong and, thus, null and void;
(c) to nullify the order contained in the Resolution of the
Commission (Second Division) promulgated on June 14,
2001, for (t)he immediate proclamation of the candidate who
garnered the highest number of votes, to the exclusion of
respondent and the concurrent order for the Provincial Board
of Canvasser (sic) of Leyte to immediately reconvene and
thereafter proclaim forthwith the candidate who obtained the
highest number of votes counting out the Respondent the
same being violative of election laws, established
jurisprudence, and resolutions of the Commission;
(d) to nullify the ruling contained in the Resolution of the
Commission (Second Division) promulgated o June 14, 2001,
that the votes of respondent Codilla are considered stray and
invalid said ruling being issued on the basis of an
inapplicable decision, and contrary to established
jurisprudence;
(e) to order the Provincial Board of Canvassers of Leyte,
upon the finality of this resolution, to reconvene and proclaim
petitioner Codilla as the winning candidate for Representative
of the Fourth Legislative district of Leyte to comply with its
ministerial duty to proclaim the candidate who garnered the
highest number of votes in the elections for that position; and
(f) to order intervenor-oppositor Locsin, upon the finality of
this resolution, to vacate the office of Representative of the
House of Representatives representing the Fourth legislative
district of Leyte and, for this purpose, to inform the House of
Representatives through the Honorable Speaker of this
resolution for its attention and guidance; and

2. On the petition for Declaration of Nullity of proclamation of respondent Ma.
Victoria L. Locsin (SPC No. 01-324), I vote:
(a) to GRANT the petition of Eufrocino M. Codilla, Sr., and
declare as null and void the proclamation of losing candidate
Locsin, the proclamation being violative of election laws,
established jurisprudence, and resolutions of the Commission
on Elections;
(b) to lift the order of suspension of proclamation of petitioner
Codilla, issued by the Commission (Second Division) on May
18, 2001, in SPA No. 01-208, having been issued without
hearing and without any finding that the evidence of guilt of
petitioner Codilla is strong and, thus, null and void;
(c) to nullify the order contained in the Resolution of the
Commission (Second Division) promulgated on June 14,
2001, in SPA No. 01-208, for (t)he immediate proclamation of
the candidate who garnered the highest number of votes, to
the exclusion of respondent and the concurrent order for the
provincial Board of Canvasser (sic) of Leyte to immediately
reconvene and thereafter proclaim forthwith the candidate
who obtained the highest number of votes counting out the
Respondent the same being violative of election laws,
established jurisprudence, and resolutions of the
Commission;
(d) to nullify the ruling contained in the Resolution of the
Commission (Second Division) promulgated on June 14,
2001, in SPA No. 01-208, that the votes of respondent
Codilla are considered stray and invalid said ruling being
issued on the basis of an inapplicable decision, and contrary
to established jurisprudence;
(e) to order the provincial Board of Canvassers of Leyte,
upon the finality of this resolution, to reconvene and proclaim
petitioner Codilla as the winning candidate for Representative
of the Fourth legislative district of Leyte he (sic) having
39
garnered the highest number of votes in the elections for the
position; and
(f) to order respondent Locsin, upon the finality of this
resolution, to vacate the office of Representative of the
House of Representatives representing the Fourth Legislative
district of Leyte and, for this purpose, to inform the House of
Representatives through the Honorable Speaker of this
resolution for its attention and guidance.
Summary of Votes
Considering the FOUR (4) VOTES of the Chairman and Commissioners Resurreccion
Z. Borra, Florentino A. Tuason, Jr., and Ralph C. Lantion, to grant the Motion for
Reconsideration of Codilla and reverse the disqualification Resolution of the
Commission (Second Division) in SPA No. 01-208, promulgated on June 14, 2001,
and as an inevitable consequence, in voting to grant the petition for declaration of
nullity of the proclamation of Ma. Victoria L. Locsin in SPC No. 01-324, the
verdict/opinion of the Chairman and the three (3) Commissioners taken together now
stands, as it is, the MAJORITY DECISION of the Commission En Banc in both cases;
and the Resolution submitted by three (3) Commissioners, namely, Commissioner
Rufino S.B. Javier, Commissioner Luzviminda G. Tancangco, and Commissioner
Mehol K. Sadain, is considered, as it is, the MINORITY DECISION of the Commission
En Banc in both cases.
The MAJORTIY DECISION was arrived at after proper consultation with those who
joined the majority. The Chairman and the three (3) Commissioners comprising the
majority decided that no one will be assigned to write a Majority Decision. Instead,
each one will write his own separate opinion. Commissioners Borra, Tuason, Jr. and
the undersigned Chairman submitted separate opinions. Commissioner Lantion wrote
an explanation on his vote.50[50]
The aforequoted judgment was adopted in a Vote of Adoption signed by
Commissioners Ralph C. Lantion, Resurreccion Z. Borra and Florentino A. Tuason,
Jr.51[51]
Respondent Locsin did not appeal from this decision annulling her
proclamation. Instead, she filed a Comment and Manifestation52[52] with the

COMELEC en banc questioning the procedure and the manner by which the decision
was issued. In addition, respondent Locsin requested and was issued an opinion by
House of Representatives Executive Director and Chief Legal Counsel Leonardo B.
Palicte III declaring that the COMELEC has no jurisdiction to nullify the proclamation
of respondent Locsin after she had taken her oath and assumed office since it is the
HRET which is the sole judge of election, returns and qualifications of Members of the
House.53[53] Relying on this opinion, respondent Locsin submitted a written
privileged speech to the House during its regular session on September 4, 2001,
where she declared that she will not only disregard but will openly defy and disobey
the COMELEC en banc resolution ordering her to vacate her position.54[54]
On September 6, 2001, the COMELEC en banc issued an Order55[55] constituting
the members of the Provincial Board of Canvassers of Leyte to implement the
aforesaid decision. It likewise ordered the Board to reconvene and proclaim the
candidate who obtained the highest number of votes in the district, as the duly-elected
Representative of the Fourth Legislative district of Leyte, and accordingly issue a
Certificate of Canvass and Proclamation of Winning Candidate for Member of the
House of Representatives x x x, based on the city/municipal certificates of canvass
submitted beforehand to the previous Provincial Board of Canvassers of Leyte x x x.
On September 12, 2001, petitioner Codilla was proclaimed by the Provincial Board
of Canvassers as the duly-elected Representative of the 4th legislative district of
Leyte, having obtained a total of 71,350 votes representing the highest number of
votes cast in the district.56[56] On the same day, petitioner took his oath of office
40
before Executive Judge Fortunito L. Madrona of the Regional Trial Court of Ormoc
City.57[57]
On September 14, 2001, petitioner wrote the House of Representatives, thru
respondent Speaker De Venecia, informing the House of the August 29, 2001
COMELEC en banc resolution annulling the proclamation of respondent Locsin, and
proclaiming him as the duly-elected Representative of the 4th legislative district of
Leyte.58[58] Petitioner also served notice that I am assuming the duties and
responsibilities as Representative of the fourth legislative district of Leyte to which
position I have been lawfully elected and proclaimed. On behalf of my constituents, I
therefore expect that all rights and privileges intended for the position of
Representative of the fourth legislative district of Leyte be accorded to me, including
all physical facilities and staff support. On the basis of this letter, a
Memorandum59[59] dated October 8, 2001 was issued by Legal Affairs Deputy
Secretary-General Gaudencio A. Mendoza, Jr., for Speaker De Venecia, stating that
there is no legal obstacle to complying with the duly promulgated and now final and
executory COMELEC Decision of August 29, 2001 x x x.
These notwithstanding, and despite receipt by the House of Representatives of a copy
of the COMELEC en banc resolution on September 20, 2001,60[60] no action was
taken by the House on the letter-appeal of petitioner. Hence, petitioner sought the
assistance of his party, LAKAS-NUCD-UMDP, which sent a letter61[61] addressed to
respondent Speaker De Venecia, dated October 25, 2001, and signed by Party
President Teofisto T. Guingona, Jr., Secretary-General Heherson T. Alvarez, and
Region VIII Party Chairman Sergio Antonio F. Apostol, requesting the House of
Representatives to act decisively on the matter in order that petitioner can avail of

whatever remedy is available should their action remain unfavorable or otherwise
undecisive.
In response, Speaker De Venecia sent a letter62[62] dated October 30, 2001, stating
that:
We recognize the finality of the COMELEC decision and we are inclined to sustain it.
However, Rep. Locsin has officially notified the HOUSE in her privilege speech,
inserted in the HOUSE Journal dated September 4, 2001, that she shall openly defy
and disobey the COMELEC ruling. This ultimately means that implementing the
decision would result in the spectacle of having two (2) legislators occupying the same
congressional seat, a legal situation, the only consideration, that effectively deters the
HOUSEs liberty to take action.
In this light, the accepted wisdom is that the implementation of the COMELEC
decision is a matter that can be best, and with finality, adjudicated by the
Supreme Court, which, hopefully, shall act on it most expeditiously. (emphases
supplied)
Hence, the present petition for mandamus and quo warranto.
Petitioner submits that by virtue of the resolution of the COMELEC en banc which has
become final and executory for failure of respondent Locsin to appeal therefrom, it has
become the ministerial duty: (1) of the Speaker of the House of Representatives, as its
Administrative Head and Presiding Officer, to implement the said resolution of the
COMELEC en banc by installing him as the duly-elected Representative of the 4th
legislative district of Leyte; and (2) of the Secretary-General, as official custodian of
the records of the House, to formally register his name in the Roll of Members of the
House and delete the name of respondent Locsin therefrom. Petitioner further
contends that respondent Locsin has been usurping and unlawfully holding the public
office of Representative of the 4th legislative district of Leyte considering that her
premature proclamation has been declared null and void by the COMELEC en banc.
41
He alleges that the action or inaction of public respondents has deprived him of his
lawful right to assume the office of Representative of the 4th legislative district of Leyte.
In his Comment,63[63] public respondent Speaker De Venecia alleged that
mandamus will not lie to compel the implementation of the COMELEC decision which
is not merely a ministerial duty but one which requires the exercise of discretion by the
Speaker of the House considering that: (1) it affects the membership of the House;
and (2) there is nothing in the Rules of the House of Representatives which imposes a
duty on the House Speaker to implement a COMELEC decision that unseats an
incumbent House member.
In his Comment,64[64] public respondent Secretary-General Nazareno alleged that in
reading the name of respondent Locsin during the roll call, and in allowing her to take
her oath before the Speaker-elect and sit as Member of the House during the Joint
Session of Congress, he was merely performing official acts in compliance with the
opinions65[65] rendered by House of Representatives Chief Counsel and Executive
Director Leonardo C. Palicte III stating that the COMELEC has no jurisdiction to
declare the proclamation of respondent Locsin as null and void since it is the HRET
which is the sole judge of all election, returns and qualifications of Members of the
House. He also contends that the determination of who will sit as Member of the
House of Representatives is not a ministerial function and cannot, thus, be compelled
by mandamus.
Respondent Locsin, in her Comment,66[66] alleged that the Supreme Court has no
original jurisdiction over an action for quo warranto involving a member of the House
of Representatives for under Section 17, Article VI of the Constitution it is the HRET
which is the sole judge of all contests relating to the election, returns and qualifications
of Members of the House of Representatives. She likewise asserts that this Court
cannot issue the writ of mandamus against a co-equal legislative department without
grossly violating the principle of separation of powers. She contends that the act of
recognizing who should be seated as a bona fide member of the House of
Representatives is not a ministerial function but a legislative prerogative, the
performance of which cannot be compelled by mandamus. Moreover, the prayer for a
writ of mandamus cannot be directed against the Speaker and Secretary-General

because they do not have the authority to enforce and implement the resolution of the
COMELEC.
Additionally, respondent Locsin urges that the resolution of the COMELEC en banc is
null and void for lack of jurisdiction. First, it should have dismissed the case pending
before it after her proclamation and after she had taken her oath of office. Jurisdiction
then was vested in the HRET to unseat and remove a Member of the House of
Representatives. Second, the petition for declaration of nullity is clearly a pre-
proclamation controversy and the COMELEC en banc has no original jurisdiction to
hear and decide a pre-proclamation controversy. It must first be heard by a
COMELEC Division. Third, the questioned decision is actually a hodge-podge decision
because of the peculiar manner in which the COMELEC disposed of the case.
Finally, respondent Locsin asserts that the matter of her qualification and eligibility has
been categorically affirmed by the HRET when it dismissed the quo warranto case
filed against her, docketed as HRET Case No. 01-043, entitled Paciano Travero vs.
Ma. Victoria Locsin, on the ground that the allegations stated therein are not proper
grounds for a petition for quo warranto against a Member of the House of
Representatives under section 253 of the Omnibus Election Code and Rule 17 of the
HRET Rules, and that the petition was filed late.67[67]
In his Reply,68[68] petitioner asserts that the remedy of respondent Locsin from the
COMELEC decision was to file a petition for certiorari with the Supreme Court, not to
seek an opinion from the Chief Legal Counsel of the House of Representatives; that
the HRET has no jurisdiction over a petition for declaration of nullity of proclamation
which is based not on ineligibility or disloyalty, but by reason that the candidate
proclaimed as winner did not obtain the highest number of votes; that the petition for
annulment of proclamation is a pre-proclamation controversy and, hence, falls within
the exclusive jurisdiction of the COMELEC pursuant to section 242 of B.P. Blg.
88169[69] and section 3, Article IX (C) of the Constitution; that respondent Speaker
De Venecia himself recognizes the finality of the COMELEC decision but has decided
to refer the matter to the Supreme Court for adjudication; that the enforcement and
implementation of a final decision of the COMELEC involves a ministerial act and
does not encroach on the legislative power of Congress; and that the power to
determine who will sit as Member of the House does not involve an exercise of
legislative power but is vested in the sovereign will of the electorate.
42
The core issues in this case are: (a) whether the proclamation of respondent Locsin by
the COMELEC Second Division is valid; (b) whether said proclamation divested the
COMELEC en banc of jurisdiction to review its validity; and (c) assuming the invalidity
of said proclamation, whether it is the ministerial duty of the public respondents to
recognize petitioner Codilla, Sr. as the legally elected Representative of the 4th
legislative district of Leyte vice respondent Locsin.
I
Whether the proclamation of respondent Locsin is valid.
After carefully reviewing the records of this case, we find that the proclamation of
respondent Locsin is null and void for the following reasons:
First. The petitioner was denied due process during the entire proceedings
leading to the proclamation of respondent Locsin.
COMELEC Resolution Nos. 340270[70] sets the procedure for disqualification cases
pursuant to section 68 of the Omnibus Election Code, viz:
C. PETITION TO DISQUALIFY A CANDIDATE PURSUANT TO SEC. 68 OF
THE OMNIBUS ELECTION CODE AND PETITION TO DISQUALIFY FOR
LACK OF QUALIFICATIONS OR POSSESSING SAME GROUNDS FOR
DISQUALIFICATION
(1) The verified petition to disqualify a candidate pursuant to Sec. 68 of the
Omnibus Election Code and the verified petition to disqualify a
candidate for lack of qualifications or possessing same grounds for
disqualification, may be filed any day after the last day for filing of
certificates of candidacy but not later than the date of proclamation.
(2) The petition to disqualify a candidate pursuant to Sec. 68 of the
Omnibus Election Code shall be filed in ten (10) legible copies by any
citizen of voting age, or duly registered political party, organization or
coalition of political parties against any candidate who in an action or

protest in which he is a party is declared by final decision of a
competent court guilty of, or found by the Commission of:
2.a having given money or other material consideration to influence,
induce or corrupt the voters or public officials performing
electoral functions;
2.b having committed acts of terrorism to enhance his candidacy;
2.c having spent in his election campaign an amount in excess of
that allowed by the Omnibus Election Code;
2.d having solicited, received or made any contribution prohibited
under Sections 89, 95, 96, 97 and 104 of the Omnibus
Election Code;
2.e having violated any of Sections 80, 83, 85, 86 and 261,
paragraphs d, e, k, v, and cc, sub-paragraph 6 of the
Omnibus Election Code, shall be disqualified from continuing
as a candidate, or if he has been elected, from holding the
office.
xxx xxx xxx
(4) Upon payment of the filing fee of P1,000.00 and legal research fee of
P20.00, the offices concerned shall docket the petition and assign to
it a docket number which must be consecutive, according to the order
of receipt and must bear the year and prefixed as SPA with the
corresponding initial of the name of the office, i.e. SPA (RED) No.
C01-001; SPA (PES) No. C01-001;
(5) Within three (3) days from filing of the petitions, the offices concerned
shall issue summons to the respondent candidate together with a
copy of the petition and its enclosures, if any;
(6) The respondent shall be given three (3) days from receipt of summons
within which to file his verified answer (not a motion to dismiss) to the
petition in ten (10) legible copies, serving a copy thereof upon the
petitioner. Grounds for Motion to Dismiss may be raised as an
affirmative defense;
(7) The proceeding shall be summary in nature. In lieu of the testimonies,
the parties shall submit their affidavits or counter-affidavits and other
documentary evidences including their position paper;
43
(8) The hearing must be completed within ten (10) days from the date of
the filing of the answer. The hearing officer concerned shall submit to
the Clerk of the Commission through the fastest means of
communication, his findings, reports and recommendations within five
(5) days from the completion of the hearing and reception of evidence
together with the complete records of the case;
(9) Upon receipt of the records of the case of the findings, reports and
recommendation of the hearing officer concerned, the Clerk of the
Commission shall immediately docket the case consecutively and
calendar the same for raffle to a division;
(10) The division to whom the case is raffled, shall after consultation,
assign the same to a member who shall pen the decision, within
five (5) days from the date of consultation.
Resolution No. 3402 clearly requires the COMELEC, through the Regional Election
Director, to issue summons to the respondent candidate together with a copy of the
petition and its enclosures, if any, within three (3) days from the filing of the petition for
disqualification. Undoubtedly, this is to afford the respondent candidate the opportunity
to answer the allegations in the petition and hear his side. To ensure compliance with
this requirement, the COMELEC Rules of Procedure requires the return of the
summons together with the proof of service to the Clerk of Court of the COMELEC
when service has been completed, viz:
Rule 14. Summons
xxx xxx xxx
Section 5. Return.- When the service has been completed by personal service, the
server shall give notice thereof, by registered mail, to the protestant or his counsel and
shall return the summons to the Clerk of Court concerned who issued it, accompanied
with the proof of service.
Section 6. Proof of Service.- Proof of service of summons shall be made in the
manner provided for in the Rules of Court in the Philippines.
Thereafter, hearings, to be completed within ten (10) days from the filing of the
Answer, must be conducted. The hearing officer is required to submit to the Clerk of
the Commission his findings, reports and recommendations within five (5) days from
the completion of the hearing and reception of evidence together with the complete
records of the case.
(a) Petitioner was not notified of the petition for his disqualification through the
service of summons nor of the Motions to suspend his proclamation.
 44

The records of the case do not show that summons was served on the petitioner. Section 4. Notice.- Notice of a motion shall be served by the movant to all parties
They do not contain a copy of the summons allegedly served on the petitioner and its concerned, at least three (3) days before the hearing thereof, together with a copy of
corresponding proof of service. Furthermore, private respondent never rebutted the motion. For good cause shown, the motion may be heard on shorter notice,
petitioners repeated assertion that he was not properly notified of the petition for his especially on matters which the Commission or the Division may dispose of on its own
disqualification because he never received summons.71[71] Petitioner claims that motion.
prior to receiving a telegraphed Order from the COMELEC Second Division on May
22, 2001, directing the District Board of Canvassers to suspend his proclamation, he
The notice shall be directed to the parties concerned and shall state the time and
was never summoned nor furnished a copy of the petition for his disqualification. He
place of the hearing of the motion.
was able to obtain a copy of the petition and the May 22 Order of the COMELEC
Second Division by personally going to the COMELEC Regional Office on May 23,
2001. Thus, he was able to file his Answer to the disqualification case only on May 24, Section 5. Proof of Service.- No motion shall be acted upon by the Commission
2001. without proof of service of notice thereof, except when the Commission or a Division is
satisfied that the rights of the adverse party or parties are not affected.
More, the proclamation of the petitioner was suspended in gross violation of section
72 of the Omnibus Election Code which provides: Respondents Most Urgent Motion does not fall under the exceptions to notice and
service of motions. First, the suspension of proclamation of a winning candidate is not
a matter which the COMELEC Second Division can dispose of motu proprio. Section 6
Sec. 72. Effects of disqualification cases and priority.- The Commission and the courts
of R.A. No. 664673[73] requires that the suspension must be upon motion by the
shall give priority to cases of disqualification by reason of violation of this Act to the
complainant or any intervenor, viz:
end that a final decision shall be rendered not later than seven days before the
election in which the disqualification is sought.
Section 6. Effect of Disqualification Case.- Any candidate who has been declared by
final judgment to be disqualified shall not be voted for, and the votes cast for him shall
Any candidate who has been declared by final judgment to be disqualified shall not be
not be counted. If for any reason, a candidate is not declared by final judgment before
voted for, and the votes cast for him shall not be counted. Nevertheless, if for any
an election to be disqualified and he is voted for and receives the winning number of
reason, a candidate is not declared by final judgment before an election to be
votes in such election, the Court or Commission (COMELEC) shall continue with
disqualified and he is voted for and receives the winning number of votes in
the trial or hearing of the action, inquiry, or protest and, upon motion of the
such election, his violation of the provisions of the preceding sections shall not
complainant or any intervenor, may during the pendency thereof order the
prevent his proclamation and assumption to office. (emphases supplied)
suspension of the proclamation of such candidate whenever the evidence of his
guilt is strong. (emphases supplied)
In the instant case, petitioner has not been disqualified by final judgment when the
elections were conducted on May 14, 2001. The Regional Election Director has yet to
Second, the right of an adverse party, in this case, the petitioner, is clearly affected.
conduct hearing on the petition for his disqualification. After the elections, petitioner
Given the lack of service of the Most Urgent Motion to the petitioner, said Motion is a
was voted in office by a wide margin of 17,903. On May 16, 2001, however,
respondent Locsin filed a Most Urgent Motion for the suspension of petitioners
proclamation. The Most Urgent Motion contained a statement to the effect that a copy
was served to the petitioner through registered mail. The records reveal that no
registry receipt was attached to prove such service.72[72] This violates COMELEC
Rules of Procedure requiring notice and service of the motion to all parties, viz:

mere scrap of paper.74[74] It cannot be acted upon by the COMELEC Second
Division.
On May 18, 2001 at exactly 5:00 p.m.,75[75] respondent Locsin filed a Second Most
Urgent Motion for the suspension of petitioners proclamation. Petitioner was served a
copy of the Second Motion again by registered mail. A registry receipt76[76] was
attached evidencing service of the Second Most Urgent Motion to the petitioner but it
does not appear when the petitioner received a copy thereof. That same day, the
COMELEC Second Division issued an Order suspending the proclamation of
petitioner. Clearly, the petitioner was not given any opportunity to contest the
allegations contained in the petition for disqualification. The Order was issued on the
very same day the Second Most Urgent Motion was filed. The petitioner could not
have received the Second Most Urgent Motion, let alone answer the same on time as
he was served a copy thereof by registered mail.
Under section 6 of R.A. No. 6646, the COMELEC can suspend proclamation only
when evidence of the winning candidates guilt is strong. In the case at bar, the
COMELEC Second Division did not make any specific finding that evidence of
petitioners guilt is strong. Its only basis in suspending the proclamation of the
petitioner is the seriousness of the allegations in the petition for disqualification.
Pertinent portion of the Order reads:
Without giving due course to the petition xxx the Commission (2nd Division), pursuant
to Section 72 of the Omnibus Election Code in relation to Section 6, Republic Act No.
6646 xxx and considering the serious allegations in the petition, hereby directs
the Provincial Board of Canvassers of Leyte to suspend the proclamation of
respondent, if winning, until further orders.77[77] (emphases supplied)
We hold that absent any finding that the evidence on the guilt of the petitioner is
strong, the COMELEC Second Division gravely abused its power when it suspended
his proclamation.
(b) The COMELEC Second Division did not give ample opportunity to the
petitioner to adduce evidence in support of his defense in the petition for his
disqualification.
45
All throughout the proceeding, no hearing was conducted on the petition for
disqualification in gross violation of section 6 of R.A. No. 6646 which specifically
enjoins the COMELEC to continue with the trial or hearing of the action, inquiry,
or protest. This is also in violation of COMELEC Resolution No. 3402 requiring the
Regional Election Director to complete the hearing and reception of evidence
within ten (10) days from the filing of the Answer, and to submit his findings, reports,
and recommendations within the five (5) days from completion of the hearing and the
reception of evidence.
Petitioner filed a Motion to Lift the Order of Suspension of his proclamation on May
25, 2001. Although an oral argument on this Motion was held, and the parties were
allowed to file their respective memoranda, the Motion was not acted upon. Instead,
the COMELEC Second Division issued a Resolution on the petition for disqualification
against the petitioner. It was based on the following evidence: (a) the affidavits
attached to the Petition for Disqualification; (b) the affidavits attached to the Answer;
and (c) the respective memoranda of the parties.
On this score, it bears emphasis that the hearing for Motion to Lift the Order of
Suspension cannot be substituted for the hearing in the disqualification case. Although
intrinsically linked, it is not to be supposed that the evidence of the parties in the main
disqualification case are the same as those in the Motion to Lift the Order of
Suspension. The parties may have other evidence which they may deem proper to
present only on the hearing for the disqualification case. Also, there may be evidence
which are unavailable during the hearing for the Motion to Lift the Order of Suspension
but which may be available during the hearing for the disqualification case.
In the case at bar, petitioner asserts that he submitted his Memorandum merely to
support his Motion to Lift the Order of Suspension. It was not intended to answer and
refute the disqualification case against him. This submission was sustained by the
COMELEC en banc. Hence, the members of the COMELEC en banc concluded, upon
consideration of the additional affidavits attached in his Urgent Manifestation, that the
evidence to disqualify the petitioner was insufficient. More specifically, the ponente of
the challenged Resolution of the COMELEC Second Division held:
Indeed, I find from the records that the May 30, 2001 hearing of the COMELEC
(Second Division) concerns only the incident relating to the Motion to Lift Order of
Suspension of Proclamation. It also appears that the order for the submission of the

parties respective memoranda was in lieu of the parties oral argument on the motion.
This would explain the fact that Codillas Memorandum refers mainly to the validity of
the issuance of the order of suspension of proclamation. There is, however, no record
of any hearing on the urgent motion for the suspension of proclamation. Indeed, it
was only upon the filing of the Urgent Manifestation by Codilla that the Members
of the Commission (Second Division) and other Members of the Commission en
banc had the opportunity to consider Codillas affidavits. This time, Codilla was
able to present his side, thus, completing the presentation of evidentiary
documents from both sides.78[78] (emphases supplied)
Indeed, careful reading of the petitioners Memorandum shows that he confined his
arguments in support of his Motion to Lift the Order of Suspension. In said
Memorandum, petitioner raised the following issues: (a) he was utterly deprived of
procedural due process, and consequently, the order suspending his proclamation is
null and void; (b) the said order of suspension of proclamation has no legal and factual
basis; and (c) evidence of guilt on his part is patently inexistent for the purpose of
directing the suspension of his proclamation.79[79] He urged the COMELEC Second
Division to conduct a full dress hearing on the main disqualification case should the
suspension be lifted.80[80]
(c) the Resolution of the COMELEC Second Division disqualifying the petitioner
is not based on substantial evidence.
The Resolution of the COMELEC Second Division cannot be considered to be based
on substantial evidence. It relied merely on affidavits of witnesses attached to the
petition for disqualification. As stressed, the COMELEC Second Division gave
credence to the affidavits without hearing the affiants. In reversing said Resolution, the
COMELEC en banc correctly observed:
Lacking evidence of Codilla, the Commission (Second Division) made its decisions
based mainly on the allegation of the petitioner and the supporting affidavits. With this
lopsided evidence at hand, the result was predictable. The Commission (Second
Division) had no choice. Codilla was disqualified.81[81]
46
Worse, the Resolution of the COMELEC Second Division, even without the evidence
coming from the petitioner, failed to prove the gravamen of the offense for which he
was charged.82[82]
Petitioner allegedly violated section 68 (a) of the Omnibus Election Code which reads:
Section 68. Disqualifications.- Any candidate who, in action or protest in which he is a
party is declared by final decision of a competent court guilty of, or found by the
Commission of having (a) given money or other material consideration to influence,
induce or corrupt the voters or public officials performing official functions, xxx shall be
disqualified from continuing as candidate, or if he has been elected, from holding
office
To be disqualified under the above-quoted provision, the following elements must be
proved: (a) the candidate, personally or through his instructions, must have given
money or other material consideration; and (b) the act of giving money or other
material consideration must be for the purpose of influencing, inducing, or corrupting
the voters or public officials performing electoral functions.
In the case at bar, the petition for disqualification alleged that (a) petitioner ordered the
extraction, hauling and distribution of gravel and sand, and (b) his purpose was to
induce and influence the voters of Kananga and Matag-ob, Leyte to vote for him.
Pertinent portion of the petition reads:
[T]he respondent [herein petitioner], within the election period, took advantage of his
current elective position as City Mayor of Ormoc City by illegally and unlawfully using
during the prohibited period, public equipments and vehicles belonging to and owned
by the City Government of Ormoc City in extracting, hauling and distributing gravel
and sand to the residents and voters of the Municipalities of Kananga and Matag-ob
Leyte, well within the territorial limits of the 4th Congressional District of Leyte, which
acts were executed without period, and clearly for the illicit purpose of unduly inducing
or directly corrupting various voters of Kananga and Matag-ob, within the 4th legislative
district of Leyte, for the precise purpose of inducing and influencing the
 47

voters/beneficiaries of Kananga and Matag-ob, Leyte to cast their votes for said who ordered this and the property is owned by the family of Mayor Codilla. We were to
respondent.83[83] deliver sand and gravel to whoever requests from Mayor Codilla.86[86]

The affidavits relied upon by the COMELEC Second Division failed to prove these
allegations. For instance, Cesar A. Laurente merely stated that he saw three (3) ten-
wheeler dump trucks and a Hyundai Payloader with the markings Ormoc City
Government extracting and hauling sand and gravel from the riverbed adjacent to the
property owned by the Codilla family.84[84]
Agripino C. Alferez and Rogelio T. Sulvera in their Joint Affidavit merely stated that
they saw white trucks owned by the City Government of Ormoc dumping gravel and
sand on the road of Purok 6, San Vicente, Matag-ob, Leyte. A payloader then
scattered the sand and gravel unloaded by the white trucks.85[85]
Similarly, the Affidavit of Basilio Bates cannot prove the offense charged against the
petitioner. He alleged that on April 18, 2001, a white truck with the marking City
Government of Ormoc came to his lot at Montebello, Kananga, Leyte and unloaded
mixed sand and that the driver of the truck told him to vote for Codilla as a (sic)
congressman during election.87[87] His statement is hearsay. He has no personal
knowledge of the supposed order of the petitioner to distribute gravel and sand for the
purpose of inducing the voters to vote for him. The same could be said about the
affidavits of Randy T. Merin,88[88] Alfredo C. De la Pea,89[89] Miguel P.
Pandac,90[90] Paquito Bregeldo, Cristeta Alferez , Glicerio Rios,91[91] Romulo

On the other hand, Danilo D. Maglasang, a temporary employee of the City

Government of Ormoc assigned to check and record the delivery of sand and gravel
for the different barangays in Ormoc, stated as follows:

3. That on April 20, 2001, I was ordered by Engr. Arnel Padayo, an employee of the
City Engineering Office, Ormoc City to go to Tagaytay, Kangga (sic), Leyte as that will
be the source of the sand and gravel. I inquired why we had to go to Kananga but
Engr. Padayao said that its not a problem as it was Mayor Eufrocino M. Codilla, Sr.

Alkuino, Sr.,92[92] Abner Casas,93[93] Rita Trangia,94[94] and Judith Erispe95[95]
attached to respondent Locsins Memorandum on the Motion to Lift the Suspension of
Proclamation.
Also valueless are the affidavits of other witnesses96[96] of respondent Locsin, all
similarly worded, which alleged that the petitioner ordered the repair of the road in
Purok 6, Barangay San Vicente, Matag-ob, Leyte and the flattening of the area where
the cockfights were to be held. These allegations are extraneous to the charge in the
petition for disqualification. More importantly, these allegations do not constitute a
ground to disqualify the petitioner based on section 68 of the Omnibus Election Code.
To be sure, the petition for disqualification also ascribed other election offenses
against the petitioner, particularly section 261 of the Omnibus Election Code, viz:
Section 261. Prohibited Acts.- The following shall be guilty of an election offense:
(a) Vote-buying and vote-selling.- (1) Any person who gives, offers or promises money
or anything of value, gives or promises any office or employment, franchise or grant,
public or private, or make or offers to make an expenditure, directly or indirectly, or
cause an expenditure to be made to any person, association, corporation, entity or
community in order to induce anyone or the public in general, to vote for or against
any candidate or withhold his vote in the election, or to vote for or against any aspirant
for the nomination or choice of a candidate in a convention or similar selection process
of a political party.
xxx xxx xxx
(o) Use of public funds, money deposited in trust, equipment, facilities owned or
controlled by the government for an election campaign.- Any person who uses under
any guise whatsoever directly or indirectly, xxx (3) any equipment, vehicle, facility,
apparatus, or paraphernalia owned by the government or by its political subdivisions,
48
agencies including government-owned or controlled corporations, or by the Armed
Forces of the Philippines for any election campaign or for any partisan political activity
x x x.
However, the jurisdiction of the COMELEC to disqualify candidates is limited to those
enumerated in section 68 of the Omnibus Election Code. All other election offenses
are beyond the ambit of COMELEC jurisdiction.97[97] They are criminal and not
administrative in nature. Pursuant to sections 265 and 268 of the Omnibus Election
Code, the power of the COMELEC is confined to the conduct of preliminary
investigation on the alleged election offenses for the purpose of prosecuting the
alleged offenders before the regular courts of justice, viz:
Section 265. Prosecution.- The Commission shall, through its duly authorized legal
officers, have the exclusive power to conduct preliminary investigation of all election
offenses punishable under this Code, and to prosecute the same. The Commission
may avail of the assistance of other prosecuting arms of the government: Provided,
however, That in the event that the Commission fails to act on any complaint within
four months from his filing, the complainant may file the complaint with the office of the
fiscal or with the Ministry of Justice for proper investigation and prosecution, if
warranted.
xxx xxx xxx
Section 268. Jurisdiction.- The regional trial court shall have the exclusive original
jurisdiction to try and decide any criminal action or proceeding for violation of this
Code, except those relating to the offense of failure to register or failure to vote which
shall be under the jurisdictions of metropolitan or municipal trial courts. From the
decision of the courts, appeal will lie as in other criminal cases.

The COMELEC Second Division grievously erred when it decided the disqualification
case based on section 261 (a) and (o), and not on section 68 of the Omnibus Election
Code.
(d) Exclusion of the votes in favor of the petitioner and the proclamation of
respondent Locsin was done with undue haste.
The COMELEC Second Division ordered the exclusion of the votes cast in favor of the
petitioner, and the proclamation of the respondent Locsin, without affording the
petitioner the opportunity to challenge the same. In the morning of June 15, 2001, the
Provincial Board of Canvassers convened, and on the strength of the said Resolution
excluding the votes received by the petitioner, certified that respondent Locsin
received the highest number of votes. On this basis, respondent Locsin was
proclaimed.
Records reveal that the petitioner received notice of the Resolution of the COMELEC
Second Division only through his counsel via a facsimile message in the afternoon of
June 15, 200198[98] when everything was already fait accompli. Undoubtedly, he was
not able to contest the issuance of the Certificate of Canvass and the proclamation of
respondent Locsin. This is plain and simple denial of due process.
The essence of due process is the opportunity to be heard. When a party is deprived
of that basic fairness, any decision by any tribunal in prejudice of his rights is void.
Second. The votes cast in favor of the petitioner cannot be considered stray and
respondent cannot be validly proclaimed on that basis.
The Resolution of the COMELEC Second Division in SPA No. 01-208 contains two
dispositions: (1) it ruled that the petitioner was disqualified as a candidate for the
position of Congressman of the Fourth District of Leyte; and (2) it ordered the
immediate proclamation of the candidate who garnered the highest number of votes,
to the exclusion of the respondent [herein petitioner].
As previously stated, the disqualification of the petitioner is null and void for being
violative of due process and for want of substantial factual basis. Even assuming,
however, that the petitioner was validly disqualified, it is still improper for the
COMELEC Second Division to order the immediate exclusion of votes cast for the
49
petitioner as stray, and on this basis, proclaim the respondent as having garnered the
next highest number of votes.
(a) The order of disqualification is not yet final, hence, the votes cast in favor of
the petitioner cannot be considered stray.
Section 6 of R.A. No. 6646 and section 72 of the Omnibus Election Code require a
final judgment before the election for the votes of a disqualified candidate to be
considered stray. Hence, when a candidate has not yet been disqualified by final
judgment during the election day and was voted for, the votes cast in his favor cannot
be declared stray. To do so would amount to disenfranchising the electorate in whom
sovereignty resides.99[99] For in voting for a candidate who has not been disqualified
by final judgment during the election day, the people voted for him bona fide, without
any intention to misapply their franchise, and in the honest belief that the candidate
was then qualified to be the person to whom they would entrust the exercise of the
powers of government.100[100]
This principle applies with greater force in the case at bar considering that the
petitioner has not been declared by final judgment to be disqualified not only
before but even after the elections. The Resolution of the COMELEC Second
Division disqualifying the petitioner did not attain finality, and hence, could not be
executed, because of the timely filing of a Motion for Reconsideration. Section 13,
Rule 18 of the COMELEC Rules of Procedure on Finality of Decisions and
Resolutions reads:
Sec. 13. Finality of Decisions or Resolutions.- (a) In ordinary actions, special
proceedings, provisional remedies and special reliefs, a decision or resolution of the
Commission en banc shall become final and executory after thirty (30) days from its
promulgation.
(b) In Special Actions and Special Cases a decision or resolution of the
Commission en banc shall become final and executory after five (5) days in
Special Actions and Special Cases and after fifteen (15) days in all other
proceedings, following their promulgation.
(c) Unless a motion for reconsideration is seasonably filed, a decision or
resolution of a Division shall become final and executory after the
lapse of five (5) days in Special Actions and Special Cases and after

fifteen (15) days in all other actions or proceedings, following its
promulgation. (emphasis supplied)
In this wise, COMELEC Resolution No. 4116,101[101] issued in relation to the finality
of resolutions or decisions in disqualification cases, provides:
This pertains to the finality of decisions or resolutions of the Commission en banc or
division, particularly on Special Actions (Disqualification Cases).
Special Action cases refer to the following:
(a) Petition to deny due course to a certificate of candidacy;
(b) Petition to declare a candidate as a nuisance candidate;
(c) Petition to disqualify a candidate; and
(d) Petition to postpone or suspend an election.
Considering the foregoing and in order to guide field officials on the finality of
decisions or resolutions on special action cases (disqualification cases) the
Commission, RESOLVES, as it is hereby RESOLVED, as follows:
(1) the decision or resolution of the En Banc of the Commission on
disqualification cases shall become final and executory after five (5)
days from its promulgation unless restrained by the Supreme Court;
(2) the decision or resolution of a Division on disqualification cases shall
become final and executory after the lapse of five (5) days unless a
motion for reconsideration is seasonably filed;
(3) where the ground for disqualification case is by reason of non-
residence, citizenship, violation of election laws and other analogous
cases and on the day of the election the resolution has not become
final and executory the BEI shall tally and count the votes for such
disqualified candidate;
50
(4) the decision or resolution of the En Banc on nuisance candidates,
particularly whether the nuisance candidate has the same name as
the bona fide candidate shall be immediately executory;
(5) the decision or resolution of a DIVISION on nuisance candidate,
particularly where the nuisance candidate has the same name as the
bona fide candidate shall be immediately executory after the lapse of
five (5) days unless a motion for reconsideration is seasonably filed.
In which case, the votes cast shall not be considered stray but shall
be counted and tallied for the bona fide candidate.
All resolutions, orders and rules inconsistent herewith are hereby modified or
repealed.
Considering the timely filing of a Motion for Reconsideration, the COMELEC Second
Division gravely abused its discretion in ordering the immediate disqualification of the
petitioner and ordering the exclusion of the votes cast in his favor. Section 2, Rule 19
of the COMELEC Rules of Procedure is very clear that a timely Motion for
Reconsideration shall suspend the execution or implementation of the resolution, viz:
Section 2. Period for filing Motion for Reconsideration.- A motion to reconsider a
decision, resolution, order, or ruling of a Division shall be filed within five (5) days from
the promulgation thereof. Such motion, if not pro forma, suspends the execution
or implementation of the decision, resolution, order or ruling. (emphases
supplied)
(b) Respondent Locsin, as a mere second placer, cannot be proclaimed.
More brazen is the proclamation of respondent Locsin which violates the settled
doctrine that the candidate who obtains the second highest number of votes may not
be proclaimed winner in case the winning candidate is disqualified.102[102] In every
election, the peoples choice is the paramount consideration and their expressed will
must at all times be given effect. When the majority speaks and elects into office a
candidate by giving him the highest number of votes cast in the election for the office,

no one can be declared elected in his place.103[103] In Domino v.
COMELEC,104[104] this Court ruled, viz:
It would be extremely repugnant to the basic concept of the constitutionally
guaranteed right to suffrage if a candidate who has not acquired the majority or
plurality of votes is proclaimed winner and imposed as representative of a
constituency, the majority of which have positively declared through their ballots that
they do not choose him. To simplistically assume that the second placer would have
received that (sic) other votes would be to substitute our judgment for the mind of the
voters. He could not be considered the first among the qualified candidates because in
a field which excludes the qualified candidate, the conditions would have substantially
changed.
xxx xxx xxx
The effect of a decision declaring a person ineligible to hold an office is only that the
election fails entirely, that the wreath of victory cannot be transferred from the
disqualified winner to the repudiated loser because the law then as now only
authorizes a declaration in favor of the person who has obtained a plurality of votes,
and does not entitle the candidate receiving the next highest number of votes to be
declared elected. In such case, the electors have failed to make a choice and the
election is a nullity. To allow the defeated and repudiated candidate to take over the
elective position despite his rejection by the electorate is to disenfranchise the
electorate without any fault on their part and to undermine the importance and
meaning of democracy and the peoples right to elect officials of their choice.105[105]
Respondent Locsin proffers a distinction between a disqualification based on personal
circumstances such as age, residence or citizenship and disqualification based on
election offenses. She contends that the election of candidates later disqualified based
on election offenses like those enumerated in section 68 of the Omnibus Election
Code should be invalidated because they violate the very essence of suffrage and as
such, the votes cast in his favor should not be considered.106[106]
51
This contention is without merit. In the recent case of Trinidad v. COMELEC,107[107]
this Court ruled that the effect of a judgment disqualifying a candidate, after winning
the election, based on personal circumstances or section 68 of the Omnibus Election
Code is the same: the second placer could not take the place of the disqualified
winner.
II
Whether the proclamation of respondent Locsin divested the COMELEC en banc of
jurisdiction to review its validity.
Respondent Locsin submits that the COMELEC en banc has no jurisdiction to annul
her proclamation. She maintains that the COMELEC en banc was been divested of
jurisdiction to review the validity of her proclamation because she has become a
member of the House of Representatives. Thus, she contends that the proper forum to
question her membership to the House of Representatives is the House of
Representative Electoral Tribunal (HRET).
We find no merit in these contentions.
First. The validity of the respondents proclamation was a core issue in the
Motion for Reconsideration seasonably filed by the petitioner.
In his timely Motion for Reconsideration with the COMELEC en banc, petitioner
argued that the COMELEC Second Division erred thus:
(1) in disqualifying petitioner on the basis solely of the dubious declaration
of the witnesses for respondent Locsin;
(2) in adopting in toto the allegations of the witnesses for respondent
Locsin; and

(3) in promulgating the resolution in violation of its own rules of
procedure and in directing therein the immediate proclamation
of the second highest vote getter. (emphases supplied)
In support of his third assignment of error, petitioner argued that the Second Divisions
directive for the immediate proclamation of the second highest vote-getter is
premature considering that the Resolution has yet to become final and
executory.108[108] Clearly, the validity of respondent Locsins proclamation was made
a central issue in the Motion for Reconsideration seasonably filed by the petitioner.
Without doubt, the COMELEC en banc has the jurisdiction to rule on the issue.
The fact that the Petition for Nullity of Proclamation was filed directly with the
COMELEC en banc is of no moment. Even without said Petition, the COMELEC en
banc could still rule on the nullity of respondents proclamation because it was properly
raised in the Motion for Reconsideration.
Section 3, Article IX-C of the 1987 Constitution empowers the COMELEC en banc to
review, on motion for reconsideration, decisions or resolutions decided by a division,
viz:
Sec. 3. The Commission on Elections may sit en banc or in two divisions, and shall
promulgate its rules of procedure in order to expedite disposition of election cases,
including pre-proclamation controversies. All such election cases shall be heard and
decided in division, provided that motions for reconsideration of decision shall be
decided by the Commission en banc.
Pursuant to this Constitutional mandate, the COMELEC Rules of Procedure provides:
Rule 19. Motions for Reconsideration.-
Section 1. Grounds for Motion for Reconsideration.- A motion for reconsideration may
be filed on the grounds that the evidence is insufficient to justify the decision, order or
ruling, or that the said decision, order or ruling is contrary to law.
Section 2. Period for filing Motion for Reconsideration.- A motion to reconsider a
decision, resolution, order, or ruling of a Division shall be filed within five (5) days from
the promulgation thereof. Such motion, if not pro forma, suspends the execution
or implementation of the decision, resolution, order or ruling.
52
Section 3. Form and Contents of Motion for Reconsideration.- The motion shall be
verified and shall point out specifically the findings or conclusions of the decision,
resolution, order or ruling which are not supported by the evidence or which are
contrary to law, making express reference to the testimonial or documentary evidence
or to the provisions of law alleged to be contrary to such findings or resolutions.
Section 4. Effect of Motion for Reconsideration on Period to Appeal.- A motion to
reconsider a decision, resolution, order or ruling when not pro forma, suspends the
running of the period to elevate the matter to the Supreme Court.
Section 5. How Motion for Reconsideration Disposed Of.- Upon the filing of a motion
to reconsider a decision, resolution, order or ruling of a Division, the Clerk of Court
concerned shall, within twenty-four (24) hours from the filing thereof, notify the
Presiding Commissioner. The latter shall within two (2) days thereafter certify the case
to the Commission en banc.
Section 6. Duty of the Clerk of Court of the Commission to set Motion for Hearing.-
The Clerk of Court concerned shall calendar the motion for reconsideration for the
resolution of the Commission en banc within ten (10) days from the certification
thereof. (emphases supplied)
Since the petitioner seasonably filed a Motion for Reconsideration of the Order of the
Second Division suspending his proclamation and disqualifying him, the COMELEC
en banc was not divested of its jurisdiction to review the validity of the said Order of
the Second Division. The said Order of the Second Division was yet unenforceable as
it has not attained finality; the timely filing of the motion for reconsideration suspends
its execution. It cannot, thus, be used as the basis for the assumption in office of the
respondent as the duly elected Representative of the 4th legislative district of Leyte.
Second. It is the House of Representatives Electoral Tribunal (HRET) which has
no jurisdiction in the instant case.
Respondent contends that having been proclaimed and having taken oath as
representative of the 4th legislative district of Leyte, any question relative to her
election and eligibility should be brought before the HRET pursuant to section 17 of
Article VI of the 1987 Constitution.109[109]
We reject respondents contention.

(a) The issue on the validity of the Resolution of the COMELEC Second Division
has not yet been resolved by the COMELEC en banc.
To stress again, at the time of the proclamation of respondent Locsin, the validity of
the Resolution of the COMELEC Second Division was seasonably challenged by the
petitioner in his Motion for Reconsideration. The issue was still within the exclusive
jurisdiction of the COMELEC en banc to resolve. Hence, the HRET cannot assume
jurisdiction over the matter.
In Puzon vs. Cua,110[110] even the HRET ruled that the doctrinal ruling that once a
proclamation has been made and a candidate-elect has assumed office, it is this
Tribunal that has jurisdiction over an election contest involving members of the House
of Representatives, could not have been immediately applicable due to the issue
regarding the validity of the very COMELEC pronouncements themselves. This
is because the HRET has no jurisdiction to review resolutions or decisions of the
COMELEC, whether issued by a division or en banc.
(b) The instant case does not involve the election and qualification of
respondent Locsin.
Respondent Locsin maintains that the proper recourse of the petitioner is to file a
petition for quo warranto with the HRET.
A petition for quo warranto may be filed only on the grounds of ineligibility and
disloyalty to the Republic of the Philippines.111[111] In the case at bar, neither the
eligibility of the respondent Locsin nor her loyalty to the Republic of the Philippines is
in question. There is no issue that she was qualified to run, and if she won, to assume
office.
A petition for quo warranto in the HRET is directed against one who has been duly
elected and proclaimed for having obtained the highest number of votes but whose
eligibility is in question at the time of such proclamation. It is evident that respondent
Locsin cannot be the subject of quo warranto proceeding in the HRET. She lost the
elections to the petitioner by a wide margin. Her proclamation was a patent nullity. Her
premature assumption to office as Representative of the 4th legislative district of Leyte
53
was void from the beginning. It is the height of absurdity for the respondent, as a loser,
to tell petitioner Codilla, Sr., the winner, to unseat her via a quo warranto proceeding.
III
Whether it is the ministerial duty of the public respondents to
recognize petitioner Codilla, Sr. as the legally elected Representative
of the 4th legislative district of Leyte vice respondent Locsin.
Under Rule 65, section 3 of the 1997 Rules of Civil Procedure, any person may file a
verified petition for mandamus when any tribunal, corporation, board, officer or person
unlawfully neglects the performance of an act which the law specifically enjoins as a
duty resulting from an office, trust, or station, or unlawfully excludes another from the
use and enjoyment of a right or office to which such other is entitled, and there is no
other plain, speedy and adequate remedy in the ordinary course of law.112[112] For a
petition for mandamus to prosper, it must be shown that the subject of the petition for
mandamus is a ministerial act or duty, and not purely discretionary on the part of
the board, officer or person, and that the petitioner has a well-defined, clear and
certain right to warrant the grant thereof.
The distinction between a ministerial and discretionary act is well delineated. A purely
ministerial act or duty is one which an officer or tribunal performs in a given state of
facts, in a prescribed manner, in obedience to the mandate of a legal authority, without
regard to or the exercise of his own judgment upon the propriety or impropriety of the
act done. If the law imposes a duty upon a public officer and gives him the right to
decide how or when the duty shall be performed, such duty is discretionary and not
ministerial. The duty is ministerial only when the discharge of the same requires
neither the exercise of official discretion or judgment.113[113]
In the case at bar, the administration of oath and the registration of the petitioner in the
Roll of Members of the House of Representatives representing the 4th legislative
district of Leyte is no longer a matter of discretion on the part of the public
respondents. The facts are settled and beyond dispute: petitioner garnered 71,350
votes as against respondent Locsin who only got 53, 447 votes in the May 14, 2001
elections. The COMELEC Second Division initially ordered the proclamation of
respondent Locsin; on Motion for Reconsideration the COMELEC en banc set aside
the order of its Second Division and ordered the proclamation of the petitioner. The
 54

Decision of the COMELEC en banc has not been challenged before this Court by
respondent Locsin and said Decision has become final and executory.
In sum, the issue of who is the rightful Representative of the 4th legislative district of
Leyte has been finally settled by the COMELEC en banc, the constitutional body with
jurisdiction on the matter. The rule of law demands that its Decision be obeyed by
all officials of the land. There is no alternative to the rule of law except the reign
of chaos and confusion.
IN VIEW WHEREOF, the Petition for Mandamus is granted. Public Speaker of the
House of Representatives shall administer the oath of petitioner EUFROCINO M.
CODILLA, SR., as the duly-elected Representative of the 4th legislative district of
Leyte. Public respondent Secretary-General shall likewise register the name of the
petitioner in the Roll of Members of the House of Representatives after he has taken
his oath of office. This decision shall be immediately executory.
SO ORDERED.
MARIE G. GUTIERREZ, NICANOR F. VILLAROSA, JR., MARIE SUE F. CUAL,
MIRAMICHI MAJELLA B. MARIOT, ALMA F. RAMIREZ, ANTOLIN D. ZAMAR, JR.,
MARIO S. ALILING, TEODULO SALVORO, JR., PHILIP JANSON ALTAMARINO,
ANTONIETTA PADURA, ADOLFO R. CORNELIA, IAN RYAN PATULA, WILLIAM
TANOY, VICTOR ARBAS, JEANITH CUAL, BRAULIO SAYSON, DAWN M.
VILLAROSA, AGUSTIN A. RENDOQUE, ENRIQUETA TUMONGHA, LIONEL P.
BANOGON, ROSALITO VERGANTINOS, MARIO T. CUAL, JR., ELAINE MAY
TUMONGHA, NORMAN F. VILLAROSA, RICARDO C. PATULA, RACHEL
BANAGUA, RODOLFO A. CALUGCUGAN, PERGENTINO CUAL, BERNARD J.
OZOA, ROGER JOHN AROMIN, CHERYL E. NOCETE, MARIVIC SANCHEZ,
CRISPIN DURAN, REBCO LINGCONG, ANNA LEE ESTRABELA, MELCHOR B.
MAQUILING, RAUL MOLAS, OSCAR KINIKITO, DARWIN B. CONEJOS, ROMEL
CUAL, ROQUETA AMOR, DISODADO LAJATO, PAUL PINO, LITO PINERO,
RODULFO ZOSA, JR. and JORGE ARBOLADO, Petitioners,
vs.
CITY OF DUMAGUETE, represented by City Mayor Agustin Perdices, Dominador
Dumalag, Jr., Erlinda Tumongha, Josephine Mae Flores and Araceli Campos,
Respondents.

DECISION

CHICO-NAZARIO, J.:

This Petition assails the Decision1 dated 27 March 2007 and Order dated 26 April
2007 of Branch 41 of the Regional Trial Court (RTC) of Dumaguete City, Negros
Oriental, dismissing Civil Case No. 13013.

Petitioners were all bona fide employees of the City Government of Dumaguete. They
were appointed to various positions by City Mayor Felipe Antonio B. Remollo, Jr.
(Remollo) sometime in June 2001, shortly before the end of his term. The details on
petitioners’ appointments are summarized below2 :

Name of Appointee Previous Position Present Position Date of

Appointme

1. Leah M. Nazareno Legal Researcher Asst. Dept. Head I June 7, 200

2. Carlo M. Cual Legislative Staff Legislative Staff Officer III June 5, 200
Officer I

3. Rogelio B. Clamonte Public Services Supply Officer IV June 5, 200

4. Florecita Llosa Supply Officer I Records Officer II June 11, 20

G.R. No. 177795 June 19, 2009
5. Rogelio S. Villarubia Agriculturist II Agriculturist III June 5, 200

LEAH M. NAZARENO, CARLO M. CUAL, ROGELIO B. CLAMONTE, FLORECITA

M. LLOSA, ROGELIO S. VILLARUBIA, RICARDO M. GONZALES, JR., ROSSEL
 55

6. Rossel Marie G. Gutierrez Casual/Plantilla Supervising June 5, 200131. Rachel Banagua Casual/Plantilla Utility Worker I June 5, 200
Environmental
Management Specialist 32. Rodolfo Calugcugan Job Order Driver I June 7, 200

7. Nicanor F. Villarosa, Jr. Casual/Plantilla Dentist II June 5, 200133. Pergentino Cual Job Order Metro Aide II June 11, 20

8. Marie Sue Cual Casual/Plantilla Social Welfare Officer I June 7, 200134. Bernard Ozoa Job Order Utility Worker I June 7, 200

9. Miramichi Majella B. Mariot Casual/Plantilla Records Officer II June 7, 200135. Roger J. Aromin Job Order Utility Worker I June 7, 200

10. Alma F. Ramirez Casual/Plantilla Clerk IV June 7, 200136. Cheryl Nocete Job Order Utility Worker I June 11, 20

11. Antolin D. Zamar, Jr. Casual/Plantilla Metro Aide II 37. Marivic Sanchez
June 11, 2001 Job Order Utility Worker I June 11, 20

12. Mario S. Aliling Casual/Plantilla Driver II June 5, 200138. Crispin Duran Job Order Metro Aide II June 11, 20

13. Teodulo Salvoro, Jr. Casual/Plantilla Metro Aide II June 5, 200139. Rebeco Lingcong Job Order Metro Aide II June 5, 200

14. Philip Janson Altamarino Casual/Plantilla Clerk I June 5, 200140. Anna Lee Estrabela Job Order Cash Clerk III June 5, 200

15. Antonieta Padura Casual/Plantilla Metro Aide II 41. Melchor Maquiling

June 11, 2001 Job Order Engineer I June 7, 200

16. Adolfo Cornelia Casual/Plantilla Metro Aide II 42. Raul Molas

June 11, 2001 Job Order Construction and June 7, 200
Maintenance Foreman
17. Ian Ryan Patula Casual/Plantilla Metro Aide II June 7, 2001
43. Oscar Kinikito Job Order Electrician II June 7, 200
18. William Tanoy Casual/Plantilla Metro Aide II June 5, 2001
44. Darwin Conejos Job Order Engineering Aide June 7, 200
19. Victor Arbas Casual/Plantilla Public Services Foreman June 7, 2001
45. Romel Cual Job Order Metro Aide II June 11, 20
20. Jeanith Cual Casual/Plantilla Utility Worker II June 5, 2001
46. Roqueta Amor Job Order Dental Aide June 5, 200
21.Braulio Sayson Casual/Plantilla Mechanical Plant June 7, 2001
Supervisor 47. Diosdado Lajato Job Order Pest Control Worker II June 5, 200

22. Dawn Villarosa Casual/Plantilla Clerk I June 7, 200148. Paul Pino Job Order Utility Worker II June 5, 200

23. Agustin Rendoque Casual/Plantilla Utility Worker I June 7, 200149. Lito Piñero Job Order Metro Aide II June 11, 20

24. Enriqueta Tumongha Casual/Plantilla Utility Worker II June 5, 200150. Rodulfo Zosa, Jr. Job Order Metro Aide II June 11, 20

25. Lionel Banogon Casual/Plantilla Clerk II June 5, 200151. Jorge Arbolado Job Order Traffic Aide I June 5, 200

26. Rosalito Vergantinos Casual/Plantilla Pest Control Worker II June 5, 200152. Ricardo M. Gonzales, Jr. OIC-General Asst. Dept. Head I June 5, 200
Services Officer
27. Mario Cual, Jr. Casual/Plantilla Utility Foreman June 7, 2001

28. Elaine Tumongha Casual/Plantilla Registration Officer I June

29. Norman Villarosa
30. Ricardo C. Patula
On 211, 2001
July 2001, newly elected City Mayor Agustin Perdices (Perdices) announced
during the flag ceremony held at the City Hall that he was not recognizing the
Casual/Plantilla Utility Worker I June 5, 2001
appointments made by former Mayor Remollo. Thereafter, (1) City Administrator
Casual/Plantilla Revenue Collection Clerk Dominador
June 5, 2001Dumalag, Jr. (Dumalag) issued a Memorandum dated 2 July 2001
I directing Assistant City Treasurer Erlinda Tumongha (Tumongha) to "refrain from
making any disbursements, particularly payments for salary differential[s]" to those
given promotional appointments by former Mayor Remollo, which included several of

the petitioners; (2) several of the petitioners, who were engaged on "casual basis" or
"job order basis," prior to their appointment to permanent positions by former Mayor
Remollo, were not given salary differentials and salaries for June and July 2001,
respectively; (3) several of the petitioners who were assigned to the slaughterhouse
were told not to report for work effective 1 August 2001; and (4) petitioners’ names
were deleted from the list of employees of the City Government of Dumaguete.
Thus, petitioners were constrained to file with the RTC on 1 August 2001 a Petition for
Mandamus with Injunction and Damages with Prayer for a Temporary Restraining
Order and Preliminary Injunction against respondents City Mayor Perdices and City
Officers Dumalag, Tumongha, Josephine Mae Flores (Flores), and Araceli Campos
(Campos), representing the City of Dumaguete.3 The Petition was docketed as Civil
Case No. 13013.
Also on 1 August 2001, the same day petitioners instituted Civil Case No. 13013,
Director II Fabio Abucejo (Abucejo) of the Civil Service Commission Field Office
(CSC-FO), pursuant to CSC Memorandum No. 001374, invalidated and revoked the
appointments made by former Mayor Remollo in June 2001. He relayed his findings to
Mayor Perdices in a letter dated 1 August 2001. Pertinent portions of the 1 August
2001 letter of CSC-FO Director Abucejo reads4 :
1. There was a total of 15 promotional appointments and 74 original
appointments issued as reflected in the submitted ROPA for the month of
June 2001.
2. There was only one (1) en banc meeting of the City Personnel Selection
Board (PSB) held on June 5, 2001 to consider the number of appointments
thus issued, and there was no other call for PSB meeting certified by the
City HRMO.
3. There were no minutes available on the deliberation of the PSB of the 89
appointments listed in the ROPA as certified by the HRMO.
4. There were no PSB statements certifying that there was actual screening
and evaluation done on all candidates for each position.
5. The appointing officer of the 89 appointments was an outgoing local
official who lost during the May 14, 2001 elections for City Mayor of
Dumaguete City.
6. The 89 appointments were all issued after the election and when the new
mayor was about to assume office.
In view of all the foregoing and since all the appointments involved indicated in the
attached ROPA Audit Results, were issued in clear violation of the guidelines of CSC
MC No. 010988, this CSC Field Office has decided to invalidate as it hereby
56
invalidates and revokes these appointments mentioned therein led by Ms. Dolores
Buncalan, Rev. Collection Clerk I and 14 others for the promotional appointments and
Ms. Donna P. Aguilar as Clerk I and 73 others for the original appointments.
From the foregoing facts, several different cases arose.
The 1 August 2001 letter of CSC-FO Director II Abucejo
When petitioners were furnished with a copy of CSC-FO Director Abucejo’s letter
dated 1 August 2001, they filed on 4 September 2001 with the CSC Regional Office
(CSC-RO) No. VII, Cebu City, a Motion for Reconsideration of the same. The CSC-
RO promulgated a Decision on 21 September 2001 dismissing petitioners’ Motion on
the grounds that it should have been filed with the CSC-FO, which rendered the
judgment sought to be reconsidered. Petitioners filed a Motion for Reconsideration of
the Decision dated 21 September 2001 of the CSC-RO, requesting that petitioners’
earlier Motion for Reconsideration be treated as an appeal of CSC-FO Director
Abucejo’s letter dated 1 August 2001. In a Decision dated 14 February 2002, the
CSC-RO dismissed petitioners’ appeal and affirmed the invalidation of petitioners’
appointments. 5
Petitioners elevated their case to the CSC Proper. On 23 August 2004, the CSC
issued Resolution No. 040932 dismissing petitioners’ appeal. The CSC acknowledged
that generally, appeal of invalidated appointments should be made by the appointing
authority. However, since the term of Mayor Repollo, who actually appointed
petitioners, already ended, and there was a new incumbent Mayor, there could be no
other person to file such an appeal except the appointees themselves. The CSC held
that a relaxation of the rules was proper in this case. Nevertheless, the CSC
considered petitioners’ appointments as "mass appointments" unnecessarily made by
an outgoing chief executive, which should be disapproved or invalidated, under Item
No. 3 of CSC Resolution No. 010988. Petitioners filed a Motion for Reconsideration of
CSC Resolution No. 040932, but the same was denied by the CSC in Resolution No.
050473 issued on 11 April 2005.6
Thereafter, petitioners filed with the Court of Appeals a Petition for Review under Rule
43 of the Revised Rules of Court, docketed as CA-G.R. CEB-S.P. No. 00665.7 In a
Decision dated 28 August 2007, the Court of Appeals affirmed CSC Resolutions No.
040932 and No. 050473, dated 23 August 2004 and 11 April 2005, respectively, being
in accordance with CSC Resolution No. 010988, which provided rules and guidelines
geared to prevent the nefarious practices of outgoing chief executives in making
appointments before, during, and/or after the regular local elections for ulterior
partisan motives. The Court of Appeals found that petitioners were appointed by
outgoing Mayor Remollo after the results of the May 2001 elections were already
known, without any showing that there was a need for the issuance of these
appointments. Thus, the appellate court agreed with the CSC that Mayor Remollo
approved the questioned appointments in bad faith and in violation of CSC Resolution
No. 010988.8

Petitioners next filed an appeal before this Court, docketed as G.R. No. 181559,
raising the issue of whether petitioners’ appointments were valid.9
Writ of preliminary injunction
In their Petition in Civil Case No. 13013, petitioners applied for the issuance by the
RTC of a writ of preliminary injunction to enjoin respondents from further doing acts or
issuing orders nullifying petitioners’ appointments. 10
After hearing the parties, the RTC issued an Order11 dated 3 August 2001 granting the
issuance of a writ of preliminary injunction against respondents.
Respondents filed an Urgent Motion for Reconsideration of the 3 August 2001 Order
of the RTC, invoking CSC-FO Director Abucejo’s letter dated 1 August 2001 which
invalidated and revoked petitioners’ appointments.
On 15 August 2001, the RTC denied respondents’ Urgent Motion for Reconsideration
of its 3 August 2001 Order, granting the writ of preliminary injunction in petitioners’
favor. The RTC upheld petitioners’ position that their appointments should continue to
remain effective since the afore-mentioned letter dated 1 August 2001 of CSC-FO
Director Abucejo had not yet become final and executory. Mayor Perdices, the
appointing authority, still had 15 days to file a motion for reconsideration of the said
letter.12
Subsequently, respondents filed with the RTC an Urgent Motion to Dismiss Civil Case
No. 13013, asserting that CSC-FO Director Abucejo’s letter dated 1 August 2001,
which invalidated and revoked petitioners’ appointments, already attained finality on
16 August 2001, without Mayor Perdices filing any motion for reconsideration of the
same.13
Petitioners vehemently opposed respondents’ Urgent Motion to Dismiss, arguing that
former Mayor Remollo should be considered the appointing authority, and since he
had not received a copy of the 1 August 2001 letter of CSC-FO Director Abucejo, the
15-day reglementary period for filing a motion for reconsideration of the same did not
commence. They also contended that CSC-FO Director Abucejo’s recommendations
on the appointments in question have not been approved by the CSC Proper. 14
On 26 September 2001, the RTC issued an Order permanently lifting the writ of
preliminary injunction it earlier issued against the respondents. It held that the
"appointing power" who had personality to file a motion for reconsideration of the 1
August 2001 letter of CSC-FO Director Abucejo was incumbent Mayor Perdices. Since
Mayor Perdices did not file any such motion for reconsideration, CSC-FO Director
Abucejo’s letter dated 1 August 2001, invalidating and revoking petitioners’
appointments, had become final and executory, thus, rendering the writ of preliminary
injunction moot. Petitioners’ Motion for Reconsideration of the RTC Order dated 26
57
September 2001 was denied by the said trial court in another Order dated 17 January
2002.15
Petitioners assailed RTC Orders dated 26 September 2001 and 17 January 2002
before the Court of Appeals, in a Petition for Certiorari under Rule 65 of the Revised
Rules of Court, docketed as CA-G.R. SP No. 70254.
In the meantime, on 18 January 2002, the RTC ordered a contingent suspension of
the proceedings in Civil Case No. 13013 until after the Court of Appeals has resolved
CA-G.R. SP No. 70254.
In a Decision dated 30 January 2004, the Court of Appeals denied petitioners’ Petition
in CA-G.R. SP No. 70254 and affirmed that Mayor Perdices alone had the locus standi
to elevate the matter of petitioners’ appointment to the CSC Proper. Since he failed to
exercise this prerogative by 16 August 2001, or 15 days after he received a copy of
CSC-FO Director Abucejos’ letter dated 1 August 2001, the said letter became final
and executory. Thus, the RTC did not act with grave abuse of discretion when it
permanently lifted the writ of injunction against the respondents.16 The appellate court
denied petitioners’ Motion for Reconsideration in a Resolution dated 6 May 2005.
Unsatisfied, petitioners filed with this Court a Petition for Review on Certiorari under
Rule 45 of the Revised Rules of Court, questioning the Decision and Resolution dated
30 January 2004 and 6 May 2005, respectively, of the Court of Appeals in CA-G.R. SP
No. 70254. The Petition was docketed as G.R. No. 168484. In a Decision dated 12
July 2007, the Court also affirmed the lifting by the RTC of the writ of preliminary
injunction, but on grounds different from those relied upon by the Court of Appeals.
The Court ruled that petitioners, as the appointees, are real parties-in-interest who can
appeal the invalidation of their appointments. The Court noted that petitioners had, in
fact, availed themselves of this remedy by successively appealing the invalidation and
revocation of their appointments by CSC-FO Director Abucejo to the CSC-RO, the
CSC Proper, and the Court of Appeals in CA-G.R. CEB-S.P. No. 00665. Thus,
petitioners were given by law adequate remedies to protect their interests without
need for the remedy of injunction. Petitioners specifically prayed for in their Petition in
CA-G.R. CEB-S.P. No. 00665 that the invalidation of their appointments be stayed in
the interest of justice and equity, which was the same purpose to be served by the writ
of preliminary injunction sought by petitioners in Civil Case No. 13013. The Court
cannot allow petitioners to seek the same relief in two forums, for it would constitute
forum shopping which is proscribed by the Rules of Court. 17
Motion to declare respondents in default
On 2 October 2002, petitioners filed with the RTC in Civil Case No. 13013, a
Manifestation and Motion Ad Cautelam seeking the resumption of the trial on their
main Petition and the declaration that respondents were already in default for failure to
file an Answer. On 5 November 2002, respondents finally filed their Answer to the
Petition in Civil Case No. 13013. In an Order dated 19 November 2002, the RTC
denied petitioners’ motion to declare respondents in default and admitted respondents’

Answer. Petitioners’ Motion for Reconsideration of said Order was denied by the RTC
in the subsequent Order dated 10 February 2003.18
Petitioners again sought recourse with the Court of Appeals by filing a Petition for
Certiorari under Rule 65 of the Revised Rules of Court, docketed as CA-G.R. SP No.
77133. In a Decision dated 18 November 2003, the appellate court reversed the RTC
Orders dated 19 November 2002 and 10 February 2003, and declared respondents in
default since their Answer was filed 15 months after the issuance by the RTC of
summons.19
Main Case for Mandamus, Injunction, and Damages
Given that the Court of Appeals, in its Decision dated 18 November 2003 in CA-G.R.
SP No. 77133, found respondents to be in default in Civil Case No. 13013, the RTC
allowed petitioners, in the proceedings a quo, to present their evidence ex-parte on
the issues of mandamus and damages which, petitioners insisted, were not covered
by their appeals in the other cases.
Petitioners adduced evidence to prove that former Mayor Remollo appointed them
only after a list of vacant positions in the City Government of Dumaguete was
published in the Negros News on 4 March 2001. The Personnel Selection Board held
a meeting on 14 May 2001, during which, a CSC representative, together with various
city officials, were present to assess the qualifications of the applicants. Only after
these requirements were complied with, were petitioners appointed sometime in June
2001.20 Current Mayor Perdices’ announcement during the flag ceremony on 2 July
2001 that he refused to recognize petitioners’ appointments resulted in the latter’s
humiliation before their peers. Petitioners’ termination from work resulted in hardship
and their inability to support their families. It also caused petitioners psychological
depression. Therefore, petitioners should be entitled to their unpaid salaries, as well
as the award of moral and exemplary damages.21
In a Manifestation dated 22 February 2005, Atty. Neil Ray M. Lagahit, counsel for the
respondents, informed the RTC that petitioners were paid their salaries for the period
covered by 1 July 2001 to 27 September 2001.22 Still, petitioners sought the issuance
by the RTC of an order directing respondents to release petitioners’ salaries, salary
differentials, and/or other legal emoluments from 28 September 2001 until present,
since petitioners’ appointments were to be considered valid until the Supreme Court
has finally resolved otherwise.
As regards their claims for damages, petitioners originally sought the award of
₱300,000.00 as moral damages, ₱200,000.00 as exemplary damages, ₱15,000.00 as
costs of litigation, and attorneys fees of ₱50,000.00 and an additional ₱3,000.00 for
every appearance in court. However, during the hearing of Civil Case No. 13013,
petitioners asserted that, as the case was pending for three years, they were already
entitled to ₱1,500,000.00 as moral damages and ₱1,000,000.00 as exemplary
damages.23
58
In a Decision dated 27 March 2007 in Civil Case No. 13013, the RTC dismissed
petitioners’ Petition insofar as it concerns their prayers for the issuance of a writ of
mandamus and for the award of damages, without prejudice to a hearing on their
prayers in the same Petition for the issuance of a writ of injunction and for payment of
their salaries, if warranted. The RTC took note that the invalidation of petitioners’
appointments by the CSC Proper was then a pending appeal before the Court of
Appeals in CA-G.R. CEB-S.P. No. 00665, and unless it was reversed, petitioners’ right
to the salaries, salary adjustments, and other emoluments claimed, were doubtful.
Thus, mandamus would not lie against respondents when petitioners’ rights to the
positions and the corresponding benefits thereof remained unclear. The RTC further
reasoned that damages could only be recovered when a termination constituted an act
oppressive to labor, or was attended by bad faith or fraud, or was done in a manner
contrary to morals, good customs, or policy;24 and since the Decision of the CSC
Proper invalidating petitioners’ appointments has not yet become final and executory,
their claims for damages were premature.25
On 10 April 2007, petitioners filed a Motion for Reconsideration of the foregoing
Decision, which the RTC denied in an Order dated 26 April 2007. 26
Unsatisfied with the judgment of the RTC, petitioners filed this "Petition for Certiorari
under Rule 45 of the Rules of Court, as amended" raising the following issues 27 :
I
WHETHER OR NOT THE MARCH 27, 2007 DECISION (AND THE APRIL 24, 2007
[sic] ORDER) OF THE HONORABLE RTC BRANCH 41 THAT PETITIONERS’
"RIGHT TO THEIR RESPECTIVE POSITIONS IS STILL UNCLEAR", IS CONTRARY
TO LAW, JUSTICE AND THE RULES OF COURT, ESPECIALLY BECAUSE AT
THAT TIME (UNTIL THIS DATE), THE ISSUE OF THE INVALIDITY OR VALIDITY
OF THE APPOINTMENTS REMAINS UNRESOLVED;
II
WHETHER OR NOT THE APPEALED DECISION AND ORDER OF THE
HONORABLE RTC BRANCH 41 ARE CONTRARY TO LAW AND JURISPRUDENCE
FOR HOLDING THAT PETITIONERS ARE NOT ENTITLED TO THEIR CLAIM FOR
DAMAGES AND FOR THEIR FAILURE TO PROVE "BAD FAITH" ON THE PART OF
RESPODENT CITY MAYOR PERDICES; and
III
WHETHER OR NOT THE PETITIONERS ARE FORUM-SHOPPING IN INSTITUTING
THE PRESENT PETITION.
Before proceeding to resolve the issues raised in the instant Petition, the Court shall
first address several procedural matters that caught its notice.

The Petition was confusingly denominated as a "Petition for Certiorari under Rule 45
of the Rules of Court, as amended." Rule 45 of the Revised Rules of Court governs
petitions for review on certiorari, while Rule 65 of the same covers petitions for
ceritorari. These are two distinct remedies. A petition for review under Rule 45 of the
Revised Rules of Court is generally limited only to questions of law or errors of
judgment. On the other hand, the petition for certiorari under Rule 65 may be availed
of to correct errors of jurisdiction including the commission of grave abuse of
discretion amounting to lack or excess of jurisdiction. 28 Considering that the instant
Petition (1) raises supposed errors of judgment committed by the RTC; (2) does not
contain any categorical assertion of grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of the RTC which rendered the assailed judgment;
and (3) states that it is a Petition under Rule 45 of the Revised Rules of Court, the
Court shall treat the present Petition as a Petition for Review. Counsel for petitioners,
however, is cautioned to be more circumspect in properly identifying the remedy his
clients are availing themselves of so as to avoid confusion.
Even if it is settled that the Court shall treat this as a Petition for Review under Rule 45
of the Revised Rules of Court, it faces another obstacle in giving the same due course
since petitioners erroneously filed the appeal directly with this Court.
29
In Five Star Marketing, Co., Inc. v. Booc, this Court distinguished the different modes
of appealing RTC decisions, to wit:
The Court, in Murillo v. Consul, Suarez v. Villarama, Jr. and Velayo-Fong v. Velayo,
had the occasion to clarify the three modes of appeal from decisions of the RTC,
namely: a) ordinary appeal or appeal by writ of error, where judgment was rendered in
a civil or criminal action by the RTC in the exercise of its original jurisdiction; b) petition
for review, where judgment was rendered by the RTC in the exercise of its appellate
jurisdiction; and c) petition for review to this Court. The first mode of appeal is
governed by Rule 41, and is taken to the CA on questions of fact or mixed questions
of fact and law. The second mode, covered by Rule 42, is brought to the CA on
questions of fact, of law, or mixed questions of fact and law. The third mode,
provided for by Rule 45, is elevated to this Court only on questions of law.
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 questions (sic) 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.
xxxx
Section 4 of Circular 2-90 in effect provides that an appeal taken either to this
Court or to the CA by the wrong mode or inappropriate mode shall be
dismissed. This rule is now incorporated in Section 5, Rule 56 of the Rules of
Court. Moreover, the filing of the case directly with this Court departs from the
59
hierarchy of courts. Normally, direct resort from the lower courts to this Court
will not be entertained unless the appropriate remedy cannot be obtained in the
lower tribunals.
Thus, when a party appeals from a decision of the RTC directly to this Court via a
Petition for Review under Rule 45, it must only raise questions of law; otherwise, its
appeal shall be dismissed.
A cursory reading of the three issues raised by petitioners herein, would readily reveal
that the second one – on whether the RTC erred in holding that petitioners are not
entitled to their claim for damages since they failed to prove bad faith on the part of
Mayor Perdices – is a question of fact, since it involves an examination of the
probative value of the evidence presented by the parties.30 Petitioners, therefore,
availed themselves of the wrong or inappropriate mode of appeal. On this score alone,
the present Petition could have been outrightly dismissed. However, the procedural
flaws notwithstanding, the Court deems it judicious to take cognizance of the
substantive questions herein, if only to put petitioners’ mind to rest. 31
This Petition raises two main issues: (1) whether petitioners are entitled to the
issuance of a writ of mandamus ordering respondents to pay petitioners’ salaries,
salary adjustments, and other emoluments, from 28 September 2001 until this Court
finally resolves the issue of the validity of petitioners’ appointments; and (2) whether
petitioners are entitled to an award for damages resulting from the invalidation of their
appointments.
The Court answers both in the negative.
Mandamus is a command issuing from a court of competent jurisdiction, in the name
of the state or the sovereign, directed to some inferior court, tribunal or board, or to
some corporation or person requiring the performance of a particular duty therein
specified, which duty results from the official station of the party to whom the writ is
directed, or from operation of law. A writ of mandamus may issue when any tribunal,
corporation board, officer or person unlawfully: (1) neglects the performance of an act
which the law specifically enjoins as a duty resulting from an office, trust, or station; or
(2) excludes another from the use and enjoyment of a right or office to which the other
is entitled. 32
Petitioners insist that they are entitled to salaries, salary adjustments, and other
emoluments, arising from their June 2001 appointments by former Mayor Remollo,
despite the invalidation of the same by the CSC-FO. They cite an unnumbered CSC
Memorandum Circular, issued on 6 December 2001, with the subject matter:
"Reiteration of the Strict Implementation of Section 1, Rule IV and Section 3, Rules VI,
both of Memorandum Circular No. 40, s. 1998, otherwise known as the Revised
Omnibus Rules on Appointments and Other Personnel Actions."

The CSC Memorandum Circular dated 6 December 2001 referred to Section 1, Rule
IV of the Revised Omnibus Rules on Appointments and Other Personnel Actions,
which reads:
Section 1. An appointment issued in accordance with pertinent laws and rules shall
take effect immediately upon its issuance by the appointing authority, and if the
appointee has assumed the duties of the position, he shall be entitled to receive his
salary at once without awaiting the approval of his appointment by the Commission.
The appointment shall remain effective until disapproved by the Commission. x x x.
The same CSC Memorandum Circular recited Section 3, Rule VI, also of the Revised
Omnibus Rules on Appointments and Other Personnel Actions, which provides:
Section 3. When an appointment is disapproved, the services of the appointee shall
be immediately terminated, unless a motion for reconsideration or appeal is
seasonably filed.
Services rendered by a person for the duration of his disapproved appointment shall
not be credited as government service for whatever purpose.
If the appointment was disapproved on grounds which do not constitute a violation of
civil service law, such as failure of the appointee to meet the Qualification Standards
(QS) prescribed for the position, the same is considered effective until disapproved by
the Commission or any of its regional or field offices. The appointee is meanwhile
entitled to payment of salaries from the government.
If a motion for reconsideration or an appeal from the disapproval is seasonably filed
with the proper office, the appointment is still considered to be effective. The
disapproval becomes final only after the same is affirmed by the Commission.
In relation to the afore-quoted provisions, the CSC Memorandum Circular dated 6
December 2001 gives the following reminder:
The Commission observed that there are some appointing authorities/heads of
agencies in the government who immediately replace their predecessors’ appointees
after the appointments of the latter have been disapproved by the Field Office or
Regional Office of this Commission, notwithstanding the pendency of an appeal with
the Collegial Commission. Said appointing authorities/heads of agencies construe the
disapproval by the CSCFO or CSCRO of the subject appointments as final and
executory.
xxxx
In this regard, it is hereby emphasized that the aforequoted provisions of CSC MC No.
40, s. 1998 should be strictly observed such that the disapproval by either the CSCFO
60
or CSCRO of the appointments issued by the predecessor of the incumbent
appointing authority/head of agency shall not be considered as final and executory
unless and until the Collegial Commission has finally decided on the matter. It is only
after the Collegial Commission has finally affirmed the disapproval of the appointment
that the new appointing authority/head of agency could issue appointments to replace
appointees whose appointments were disapproved. Hence, the appointment of the
replacement of the incumbent whose appointment has been disapproved shall also be
disapproved by the CSCFO or CSCRO unless the appeal has been finally resolved by
the Collegial Commission.1avvphi1
The general rule, therefore, is that appointments shall take effect immediately; and
should the appointees already assume the duties of their positions, they shall be
entitled to receive their salary at once. There is no need to wait for the approval of the
appointments by the CSC. The appointments shall be effective until disapproved by
the CSC.
The CSC, in carrying out its powers and functions, has a three-tiered organizational
structure, i.e., the CSC-FO, the CSC-RO, and the CSC Proper acting as a collegial
body. The appointing authority33 or the appointees themselves34 may file a motion for
reconsideration or an appeal of the disapproval of appointments by the CSC-FO to the
CSC-RO, and by the CSC-RO to the CSC Proper. Until the disapproval of the
appointments by the CSC-FO and CSC-RO is affirmed by the CSC Proper, it shall not
be considered final and executory. Stated differently, the appointments shall remain
effective until they are disapproved by the CSC Proper. In the meantime, there shall
be no obstacle to the concerned appointees continuing to render public service; and to
receiving salary for the actual services they have rendered during the period, based
on the "no work, no pay" policy.35
Nevertheless, the aforementioned general rules cannot be simply applied to the case
at bar given its peculiar circumstances.
The Court stresses that Section 3, Rule VI of the Revised Omnibus Rules on
Appointments and Other Personnel Actions only categorically recognizes the right of
the appointee to payment of salaries from the government, during the pendency of his
motion for reconsideration or appeal of the disapproval of his appointment by the
CSC-FO and/or CSC-RO before the CSC Proper, "[i]f the appointment was
disapproved on grounds which do not constitute a violation of civil service law, such as
failure of the appointee to meet the Qualification Standards (QS) prescribed for the
position."
What happens then if the appointment was disapproved for violation of civil service
law? In such a situation, Section 4, Rule VI of the Revised Omnibus Rules on
Appointments and Other Personnel Action applies. It states:
Sec. 4. The appointing authority shall be personally liable for the salary of appointees
whose appointments have been disapproved for violation of pertinent laws such as the
publication requirement pursuant to RA 7041.

It is clear from the afore-quoted provision that when the appointment was disapproved
for violation of pertinent laws, the appointing authority shall be personally liable for the
salary of the appointee. This is in complete accord with the Section 65, Chapter 10,
Book V, of Executive Order No. 292, otherwise known as the Administrative Code of
1987, to wit:
Section 65. Liability of appointing authority. – No person employed in the Civil Service
in violation of Civil Service law and rules shall be entitled to receive pay from the
government, but the appointing authority responsible for such unlawful employment
shall be personally liable for the pay that would have accrued had the employment
been lawful, and the disbursing officials shall make payment to the employee of such
amount from the salary of the officers so liable.
To recall, petitioners’ appointments were invalidated and revoked by CSC-FO Director
Abucejo, in a letter dated 1 August 2001, on the ground that said appointments were
made by former Mayor Remollo in violation of Items No. 3(d) and 4 of CSC Resolution
No. 010988 dated 4 June 2001, which prohibit the outgoing chief executive from
making mass appointments36 after elections. The rules laid down by the CSC in CSC
Resolution No. 010988, dated 4 June 2001, are deemed included in what is the "civil
service law," it having the force and effect of law.37
Upon disapproval by CSC-FO Director Abucejo of petitioners’ appointments on 1
August 2001, for being in violation of civil service law, petitioners may no longer claim
entitlement to the payment of their salaries from the government. There is no doubt
that, pending their appeals before the CSC-RO, then the CSC Proper, petitioners’
appointments remained effective and they could still continue reporting to work and
rendering service, but there already arose the question as to who shall be liable for
their salaries during the period, i.e., whether it is the City Government of Dumaguete
(under Section 3, Rule VI of the Revised Omnibus Rules on Appointments and Other
Personnel Action) or former Mayor Remollo who appointed them (under Section 4,
Rule VI of the same Revised Omnibus Rules). Hence, petitioners’ right to salary
cannot be firmly anchored as of yet on Section 3, Rule VI of the Revised Omnibus
Rules on Appointments and Other Personnel Action.
Neither can the unnumbered CSC Memorandum Circular dated 6 December 2001
invoked by petitioners support their case. Its avowed intention is to put a stop to the
practice of some appointing authorities/heads of agencies in the government of
immediately replacing their predecessors’ appointees after the latter’s appointments
have been disapproved by the CSC-FO or CSC-RO, notwithstanding the pendency of
an appeal with the CSC Proper. The CSC issuance requires the strict observance of
the rule that until the disapproval of the appointment by the CSC-FO or CSC-RO is
affirmed by the CSC Proper, the new appointing authority/head of agency cannot
issue appointments to replace the appointees whose appointments were disapproved
by the CSC-FO or CSC-RO; and any appointment in violation of this rule should be
disapproved by the CSC-FO or CSC-RO. There is nothing in the CSC Memorandum
Circular dated 6 December 2001 providing for the payment of the salaries of the
appointees whose appointments were disapproved by the CSC-FO or the CSC-RO,
while their appeals are pending before the CSC Proper.
61
Since petitioners’ right to the payment of their salaries by the City Government of
Dumaguete is still unsettled at this point, the Court cannot issue a writ of mandamus
against respondents to make such payment. Mandamus applies only where the
petitioner’s right is founded clearly in law and not when it is doubtful.38 The writ will not
issue to compel an official to give to the applicant anything to which he is not entitled
by law.39 Mandamus will not issue to establish a right, but only to enforce one that is
already established.40
The recent case of Bunsay v. Civil Service Commission41 is not on all fours with this
case. In Bunsay, the Court readily recognized the right of therein petitioners to be paid
compensation by the government for services actually rendered by them while the
disapproval of their appointments by the CSC-FO and CSC-RO was pending appeal
before the CSC Proper. It must be emphasized, however, that in said case, the CSC
Proper had already reversed the initial disapproval and, instead, upheld the validity of
therein petitioners’ appointments. The approval by the CSC Proper of therein
petitioners’ appointments was no longer in dispute; and since such appointments were
already deemed made in accordance with law, then the there was no question that
therein petitioners’ backwages, if they indeed continued to report to work during the
pendency of their appeal before the CSC Proper,42 should be paid by the government.
In contrast, CSC-FO Director Abucejo’s letter dated 1 August 2001 disapproving
herein petitioners’ appointments for being in violation of CSC Resolution No. 010988
dated 4 June 2001, was affirmed not only by the CSC-RO in a Decision dated 14
February 2002; but, more importantly, by the CSC Proper in CSC Resolutions No.
040932 and No. 050473, dated 23 August 2004 and 11 April 2005, respectively. To
stress, the CSC Proper itself already disapproved petitioners’ appointments since they
violated civil service law. Petitioners then challenged the aforementioned CSC
Resolutions before the Court of Appeals in CA-G.R. CEB-S.P. No. 00665, but the
appellate court affirmed the same in its Decision dated 28 August 2007. Petitioners’
appeal of the judgment of the appellate court in CA-G.R. CEB-S.P. No. 00665 is now
pending before this Court in G.R. No. 181559.
It is irrefragable that the issue of whether the City Government of Dumaguete or
former Mayor Repollo is liable to pay for petitioners’ salaries, during the pendency of
their appeal with the CSC-RO, and then the CSC Proper, of the disapproval of their
appointments by CSC-FO Director Abucejo is inextricably intertwined with the issue in
G.R. No. 181559 of whether petitioners’ appointments should be disapproved for
having been made in violation of CSC Resolution No. 010988 dated 4 June 2001.
Only if this Court finally rules in G.R. No. 181559 that petitioners’ appointments did not
violate any civil service law, is petitioners’ right to payment of their salaries by the City
Government of Dumaguete, during the given period, indisputably established.
The remedy of mandamus is available only to compel the performance of a ministerial
duty.43 The distinction between a ministerial and discretionary act is well delineated. A
purely ministerial act or duty is one which an officer or tribunal performs in a given
state of facts, in a prescribed manner, in obedience to the mandate of a legal
authority, without regard to or the exercise of his own judgment upon the propriety or
impropriety of the act done. If the law imposes a duty upon a public officer and gives

him the right to decide how or when the duty shall be performed, such duty is
discretionary and not ministerial. The duty is ministerial only when the discharge of the
same requires neither the exercise of official discretion or judgment.441avvphi1
While it is true that it is the ministerial duty of the government to pay for the
appointees’ salaries while the latter’s appeal of the disapproval of their appointments
by CSC-FO and/or CSC-RO is still pending before the CSC Proper, however, this
applies only when the said appointments have been disapproved on grounds which do
not constitute a violation of civil service law. Such is clearly not the case in the instant
Petition. The factual circumstances which would have made it the ministerial duty of
the City Government of Dumaguete to pay petitioners’ salaries have not yet been
established. Until this Court resolves the Petition in G.R. No. 181559, reversing the
disapproval of petitioners’ appointments or, at the very least, declaring that the
disapproval of the same was not on grounds which constitute violation of civil service
law, this Court cannot rule in the instant Petition that it is the ministerial duty of the City
Government of Dumaguete to pay petitioners’ salaries during the pendency, before
the CSC-RO, then the CSC Proper, of petitioners’ appeal of the disapproval of their
appointments by CSC-FO Director Abucejo. Thus, there is yet no ministerial duty
compellable by a writ of mandamus.
Respondents manifested, and petitioners did not controvert, that the City Government
of Dumaguete had already paid petitioners their salaries, salary adjustments, and
other emoluments from June 2001, when they assumed office immediately upon their
appointment; until 27 September 2001, almost two months after 1 August 2001, when
their appointments were disapproved by CSC-FO Director Abucejo for being in
violation of CSC Resolution No. 010988 dated 4 June 2001. Petitioners, however, still
want this Court to compel by mandamus the payment, by the City Government of
Dumaguete, of their salaries, salary adjustments, and other emoluments from 28
September 2001 until the Court finally resolves the issue on the validity of petitioners’
appointments in G.R. No. 181559. Given that the Court already ruled herein that
petitioners do not have a clear and established right to the payment of their salaries by
the City Government of Dumaguete while their appeal of CSC-FO Director Abucejo’s
disapproval of their appointments was pending before the CSC-RO and the CSC
Proper; then there is even less reason or justification for the payment by the City
Government of Dumaguete of petitioners’ salaries after the CSC Proper already
affirmed the disapproval of petitioners’ appointments.
Furthermore, Section 3, Rule 65 of the Revised Rules of Court also prescribes that a
petition for mandamus can be given due course only if there is no other plain, speedy
and adequate remedy available in the course of law.45 In this case, petitioners already
availed themselves of administrative remedies by appealing CSC-FO Director
Abucejo’s disapproval of their appointments to the CSC-RO, and thereafter, to the
CSC Proper. When even the CSC Proper disapproved their appointments, petitioners
appealed to the Court of Appeals in CEB-S.P. No. 00665, and when they were again
unsuccessful in the latter recourse, they appealed once more to this Court in G.R. No.
181559. After all the administrative, as well as judicial remedies which petitioners
actually availed themselves of, they cannot persuade this Court that there is no other
plain, speedy and adequate remedy available to them in the course of law, to justify
the issuance herein of a writ of mandamus in their favor.
62
Similarly unfounded is petitioners’ claims for moral and exemplary damages, as well
as attorney’s fees and costs of suit.
Moral damages are awarded if the following elements exist in the case: (1) an injury
clearly sustained by the claimant; (2) a culpable act or omission factually established;
(3) a wrongful act or omission by the defendant as the proximate cause of the injury
sustained by the claimant; and (4) the award of damages predicated on any of the
cases stated Article 2219 of the Civil Code.46 In addition, the person claiming moral
damages must prove the existence of bad faith by clear and convincing evidence for
the law always presumes good faith. It is not enough that one merely suffered
sleepless nights, mental anguish, and serious anxiety as the result of the actuations of
the other party. Invariably such action must be shown to have been willfully done in
bad faith or with ill motive.47 Bad faith, under the law, does not simply connote bad
judgment or negligence. It imports a dishonest purpose or some moral obliquity and
conscious doing of a wrong, a breach of a known duty through some motive or interest
or ill will that partakes of the nature of fraud.48
Petitioners enucleate that Mayor Perdices’ act of announcing during the flag ceremony
at the City Hall on 2 July 2001 that he will not honor the mass appointments made by
his predecessor, former Mayor Remollo, even before CSC-FO Director Abucejo
invalidated and revoked petitioners’ appointments in a letter dated 1 August 2001,
evidenced bad faith, especially since Mayor Perdices himself made 36 appointments
at the end of his term in 1998. Mayor Perdices’ subsequent appointments to fill four of
the contested positions sometime in 2001 to 2006 likewise amounted to bad faith. As
a result of these acts, petitioners purportedly endured economic difficulties and
humiliation among their peers. These arguments are untenable.
The announcement made by Mayor Perdices on 2 July 2001 cannot be deemed the
proximate cause for petitioners’ financial and emotional suffering. The validity of
petitioners’ appointments did not depend on Mayor Perdices honoring or rejecting said
appointments but on the CSC approving or disapproving of the same. CSC-FO
Director Abucejo did release a letter dated 1 August 2001 invalidating and revoking
petitioners’ appointments on the ground that they were "mass appointments" in
violation of CSC Resolution No. 010988 dated 4 June 2001. Said letter was
subsequently affirmed by the CSC-RO and the CSC Proper. Therefore, the
invalidation and revocation of petitioners’ appointments, as well as the non-payment of
their salaries, salary adjustments, and emoluments, did not result from Mayor
Perdices’ announcement, but from the official acts of the CSC on petitioners’
appointments.
Although Mayor Perdices could have re-appointed petitioners despite the disapproval
by the CSC of petitioners’ appointments, he chose not to do so. Mayor Perdices’
previous announcement that he will not honor petitioners’ appointments already
indirectly revealed his lack of intention to re-appoint petitioners. Mayor Perdices’
refusal to re-appoint petitioners is merely in exercise of the former’s discretion and
cannot be construed as illegal or, by itself, proof of bad faith or ill-motive. While
petitioners might have been embarrassed by Mayor Perdices’ announcement before
the other city employees on 2 July 2001, they did not adduce any evidence that said

announcement was made with the specific and malicious design to humiliate
petitioners, rather than the expression by Mayor Perdices of an earnest intent to right
a perceived wrong committed by his predecessor. The fact that Mayor Perdices
publicly announced his course of action as regards petitioners’ appointments is not
conclusive of any malevolent intent on his part in doing so.
The "mass appointments" made by Mayor Perdices himself by the end of his term in
1998 are likewise insufficient proof of bad faith or ill motive on his part. CSC
Resolution No. 010988 providing the guidelines on appointments by local chief
executives immediately before and after elections was issued only on 4 June 2001. It
cannot be applied retroactively.49 Moreover, even assuming arguendo that CSC
Resolution No. 010988 could be applied to the appointments made by Mayor Perdices
in 1998, these appointments were not necessarily in violation of said CSC issuance.
CSC Resolution No. 010988 does not totally proscribe the local chief executive from
making any appointments immediately before and after elections. The same
Resolution provides that the validity of an appointment issued immediately before and
after elections by an outgoing local chief executive is to be determined on the basis of
the nature, character, and merit of the individual appointment and the particular
circumstances surrounding the same. The Court cannot simply assume that the
appointments made by Mayor Perdices in 1998 and those made by Mayor Remollo in
2001 (which included those of petitioners) were identical in their natures, characters,
merits, and surrounding circumstances, so that they should have been dealt with in
the same manner. And even if this Court does make such an assumption, Mayor
Perdices’ refusal to honor the appointments made in 2001 by then outgoing Mayor
Remollo, after the former made similar appointments by the end of his mayoralty term
in 1998, may expose Mayor Perdices’ hypocrisy, but, again, not necessarily his
malice, bad faith, or ill-motive against petitioners.
Mayor Perdices’ appointments, made between 2001 to 2006, to fill four out of the 52
posts to which petitioners herein were appointed by former Mayor Remollo, may
indeed constitute a violation of the Revised Omnibus Rules on Appointments and
Other Personnel Action and the unnumbered CSC Memorandum Circular dated 6
December 2001. Thus, petitioners could have sought from the CSC the disapproval of
said appointments. However, any challenge to Mayor Perdices’ appointments to fill in
the contested posts, grounded on petitioners’ pending appeal before the CSC Proper,
had been rendered moot, given that the CSC Proper already denied petitioners’
appeal and affirmed the disapproval of their appointments. Furthermore, petitioners
fail to convince this Court that Mayor Perdices’ appointments to four of the 52
contested posts, made from 2001 to 2006, was not only made in bad faith or with ill-
motive, but that it was the proximate cause of their financial difficulties and humiliation.
The number of the appointments (filling in only four out of the 52 contested posts) and
the length of period in which such appointments were made (spread between 2001 to
2006, or a period of five years) are inconsistent with any supposed malicious motive
on the part of Mayor Perdices to immediately replace petitioners with his own people.
Additionally, as the Court previously ruled herein, the alleged financial difficulties and
humiliation petitioners have suffered, for which they now claim moral damages,
resulted from the disapproval by the CSC of their appointments, not from the afore-
mentioned appointments made by Mayor Perdices.
63
For the same reasons discussed above, there is no basis to award petitioners
exemplary damages. Similar to moral damages, exemplary damages may only be
awarded if it has been shown that the wrongful act was accompanied by bad faith or
done in a wanton, fraudulent and reckless or malevolent manner. Exemplary damages
are allowed only in addition to moral damages such that no exemplary damage can be
awarded unless the claimant first establishes his clear right to moral damages. As the
moral damages are improper in the present case, so is the award of exemplary
damages.50
Finally, petitioners have failed to state the ground on which they base their claim for
attorney’s fees and legal costs, much less submitted evidence in support thereof.
Article 2208 of the Civil Code51 identifies specific circumstances when attorney’s fees
and expenses of litigation may be recovered. The power of the court to award
attorney’s fees under Article 2208 of the Civil Code demands factual, legal and
equitable justification. Its basis cannot be left to speculation or conjecture. 52 Given the
dearth of petitioners’ allegations, arguments, and most importantly, evidence, on the
matter, the Court does not find any basis to award petitioners attorney’s fees and legal
costs.
Considering the foregoing procedural and substantive reasons for dismissing/denying
the instant Petition, the Court is addressing the third issue on forum shopping
succinctly.
For forum-shopping to exists, both actions should involve a common transaction with
essentially the same facts and circumstances and raise identical causes of action,
subject matter and issues. Although much of the factual antecedents of the Petition
herein and that in G.R. No. 168484 are the same, closer study would disclose that
they involve different subject matters and issues.
In must be borne in mind that petitioners filed with the RTC their Petition for
Mandamus with Injunction and Damages, docketed as Civil Case No. 13013, on 1
August 2001, to challenge respondents’ refusal to recognize petitioners’ appointments
and to pay petitioners’ salaries, salary adjustments, and other emoluments. It is the
judgment of the RTC therein, dismissing petitioners’ Petition insofar as it concerns
their applications for the issuance of a writ of mandamus and for the award of
damages, which is assailed in the Petition at bar.
G.R. No. 181559, meanwhile, involves petitioners’ appeal of the invalidation and
revocation of their appointments by CSC-FO Director Abucejo in his letter dated 1
August 2001, affirmed by the CSC-RO, CSC Proper, and the Court of Appeals. Since
CSC-FO Director Abucejo ruled on the validity of petitioners’ appointments only in his
letter dated 1 August 2001, and petitioners had yet to receive notice of said letter, it
could not be expected that the same was already included in and made the subject of
Civil Case No. 13013, which petitioners instituted also on 1 August 2001. Even though
Mayor Perdices later invoked CSC-FO Director Abucejo’s letter dated 1 August 2001
in seeking the dismissal of Civil Case No. 13013, it cannot be denied that said letter
was drafted and issued only subsequent to Mayor Perdices’ announcement on 2 July
2001 that he would not honor petitioners’ appointments.

True, that the present Petition and the one in G.R. No. 181559 are interrelated, but
they are not necessarily the same for this Court to adjudge that the filing of both by
petitioners constitutes forum shopping. In G.R. No. 181559, the Court will resolve
whether or not the petitioners’ appointments are valid. On the present petitions,
petitioners are claiming a right to the salaries, salary adjustments and other
emoluments during the pendency of the administrative cases, regardless of how the
CSC decided the validity of their appointments. It is only herein that the court has
been able to settle that petitioners’ right to salaries, salary adjustments and other
emoluments require a finding in G.R. No. 181559 that (1) petitioners’ appointments
are valid or that (2) if the appointments are invalid, the reasons for the invalidity is not
for a violation of civil service laws. The Court emphasizes that the Court herein only
ruled that, at present, there is still no clear right for it to compel the respondents, by
writ of mandamus, to pay petitioners’ salaries, salary adjustments, and emoluments
until the resolution of G.R. No. 181559. In fact, the RTC dismissed the Petition in Civil
Case No. 13013 without prejudice to further hearings on the payment of petitioners’
salaries, salary adjustments, and emoluments, if warranted by subsequent events.
IN VIEW OF THE FOREGOING, the instant Petition is DENIED and the Decision
dated 27 March 2007 and Order dated 26 April 2007 of Branch 41 of the Regional
Trial Court of Dumaguete City, Negros Oriental, in Civil Case No. 13013 are
AFFIRMED. No costs.
SO ORDERED.
G.R. No. 149576 August 8, 2006
REPUBLIC OF THE PHILIPPINES, represented by the Land Registration
Authority, Petitioner,
vs.
KENRICK DEVELOPMENT CORPORATION, Respondent.
DECISION
64
CORONA, J.:
The Republic of the Philippines assails the May 31, 2001 decision 1 and August 20,
2001 resolution of the Court of Appeals in CA-G.R. SP No. 52948 in this petition for
review under Rule 45 of the Rules of Court.
This case stemmed from the construction by respondent Kenrick Development
Corporation of a concrete perimeter fence around some parcels of land located behind
the Civil Aviation Training Center of the Air Transportation Office (ATO) in 1996. As a
result, the ATO was dispossessed of some 30,228 square meters of prime land.
Respondent justified its action with a claim of ownership over the property. It
presented Transfer Certificate of Title (TCT) Nos. 135604, 135605 and 135606 issued
in its name and which allegedly originated from TCT No. 17508 registered in the name
of one Alfonso Concepcion.
ATO verified the authenticity of respondent’s titles with the Land Registration Authority
(LRA). On May 17, 1996, Atty. Jose Loriega, head of the Land Title Verification Task
Force of the LRA, submitted his report. The Registrar of Deeds of Pasay City had no
record of TCT No. 17508 and its ascendant title, TCT No. 5450. The land allegedly
covered by respondent’s titles was also found to be within Villamor Air Base
(headquarters of the Philippine Air Force) in Pasay City.
By virtue of the report, the Office of the Solicitor General (OSG), on September 3,
1996, filed a complaint for revocation, annulment and cancellation of certificates of title
in behalf of the Republic of the Philippines (as represented by the LRA) against
respondent and Alfonso Concepcion. It was raffled to Branch 114 of the Regional Trial
Court of Pasay City where it was docketed as Civil Case No. 96-1144.
On December 5, 1996, respondent filed its answer which was purportedly signed by
Atty. Onofre Garlitos, Jr. as counsel for respondent.
Since Alfonso Concepcion could not be located and served with summons, the trial
court ordered the issuance of an alias summons by publication against him on
February 19, 1997.
The case was thereafter punctuated by various incidents relative to modes of
discovery, pre-trial, postponements or continuances, motions to dismiss, motions to
declare defendants in default and other procedural matters.
During the pendency of the case, the Senate Blue Ribbon Committee and Committee
on Justice and Human Rights conducted a hearing in aid of legislation on the matter of
land registration and titling. In particular, the legislative investigation looked into the
issuance of fake titles and focused on how respondent was able to acquire TCT Nos.
135604, 135605 and 135606.

During the congressional hearing held on November 26, 1998, one of those
summoned was Atty. Garlitos, respondent’s former counsel. He testified that he
prepared respondent’s answer and transmitted an unsigned draft to respondent’s
president, Mr. Victor Ong. The signature appearing above his name was not his. He
authorized no one to sign in his behalf either. And he did not know who finally signed
it.
With Atty. Garlitos’ revelation, the Republic promptly filed an urgent motion on
December 3, 1998 to declare respondent in default, 2 predicated on its failure to file a
valid answer. The Republic argued that, since the person who signed the answer was
neither authorized by Atty. Garlitos nor even known to him, the answer was effectively
an unsigned pleading. Pursuant to Section 3, Rule 7 of the Rules of Court, 3 it was a
mere scrap of paper and produced no legal effect.
On February 19, 1999, the trial court issued a resolution granting the Republic’s
motion. 4 It found respondent’s answer to be sham and false and intended to defeat
the purpose of the rules. The trial court ordered the answer stricken from the records,
declared respondent in default and allowed the Republic to present its evidence ex
parte.
The Republic presented its evidence ex parte, after which it rested its case and
formally offered its evidence.
Meanwhile, respondent sought reconsideration of the February 19, 1999 resolution but
the trial court denied it.
Aggrieved, respondent elevated the matter to the Court of Appeals via a petition for
certiorari 5 seeking to set aside the February 19, 1999 resolution of the trial court.
Respondent contended that the trial court erred in declaring it in default for failure to
file a valid and timely answer.
On May 31, 2001, the Court of Appeals rendered the assailed decision. It found Atty.
Garlitos’ statements in the legislative hearing to be unreliable since they were not
subjected to cross-examination. The appellate court also scrutinized Atty. Garlitos’
acts after the filing of the answer 6 and concluded that he assented to the signing of
the answer by somebody in his stead. This supposedly cured whatever defect the
answer may have had. Hence, the appellate court granted respondent’s petition for
certiorari. It directed the lifting of the order of default against respondent and ordered
the trial court to proceed to trial with dispatch. The Republic moved for reconsideration
but it was denied. Thus, this petition.
Did the Court of Appeals err in reversing the trial court’s order which declared
respondent in default for its failure to file a valid answer? Yes, it did.
A party may, by his words or conduct, voluntarily adopt or ratify another’s statement.
Where it appears that a party clearly and unambiguously assented to or adopted the
65
statements of another, evidence of those statements is admissible against him. 8 This
is the essence of the principle of adoptive admission.
An adoptive admission is a party’s reaction to a statement or action by another person
when it is reasonable to treat the party’s reaction as an admission of something stated
or implied by the other person. 9 By adoptive admission, a third person’s statement
becomes the admission of the party embracing or espousing it. Adoptive admission
may occur when a party:
10
(a) expressly agrees to or concurs in an oral statement made by another;
(b) hears a statement and later on essentially repeats it; 11
(c) utters an acceptance or builds upon the assertion of another; 12
(d) replies by way of rebuttal to some specific points raised by another but ignores
further points which he or she has heard the other make 13 or
(e) reads and signs a written statement made by another. 14
Here, respondent accepted the pronouncements of Atty. Garlitos and built its case on
them. At no instance did it ever deny or contradict its former counsel’s statements. It
went to great lengths to explain Atty. Garlitos’ testimony as well as its implications, as
follows:
1. While Atty. Garlitos denied signing the answer, the fact was that the answer was
signed. Hence, the pleading could not be considered invalid for being an unsigned
pleading. The fact that the person who signed it was neither known to Atty. Garlitos
nor specifically authorized by him was immaterial. The important thing was that the
answer bore a signature.
2. While the Rules of Court requires that a pleading must be signed by the party or his
counsel, it does not prohibit a counsel from giving a general authority for any person to
sign the answer for him which was what Atty. Garlitos did. The person who actually
signed the pleading was of no moment as long as counsel knew that it would be
signed by another. This was similar to addressing an authorization letter "to whom it
may concern" such that any person could act on it even if he or she was not known
beforehand.
3. Atty. Garlitos testified that he prepared the answer; he never disowned its contents
and he resumed acting as counsel for respondent subsequent to its filing. These
circumstances show that Atty. Garlitos conformed to or ratified the signing of the
answer by another.
7

Respondent repeated these statements of Atty. Garlitos in its motion for
reconsideration of the trial court’s February 19, 1999 resolution. And again in the
petition it filed in the Court of Appeals as well as in the comment 15 and memorandum
it submitted to this Court.
Evidently, respondent completely adopted Atty. Garlitos’ statements as its own.
Respondent’s adoptive admission constituted a judicial admission which was
conclusive on it.
Contrary to respondent’s position, a signed pleading is one that is signed either by the
party himself or his counsel. Section 3, Rule 7 is clear on this matter. It requires that a
pleading must be signed by the party or counsel representing him.
Therefore, only the signature of either the party himself or his counsel operates to
validly convert a pleading from one that is unsigned to one that is signed.
Counsel’s authority and duty to sign a pleading are personal to him. He may not
delegate it to just any person.
The signature of counsel constitutes an assurance by him that he has read the
pleading; that, to the best of his knowledge, information and belief, there is a good
ground to support it; and that it is not interposed for delay. 16 Under the Rules of Court,
it is counsel alone, by affixing his signature, who can certify to these matters.
The preparation and signing of a pleading constitute legal work involving practice of
law which is reserved exclusively for the members of the legal profession. Counsel
may delegate the signing of a pleading to another lawyer 17 but cannot do so
in favor of one who is not. The Code of Professional Responsibility provides:
Rule 9.01 ― A lawyer shall not delegate to any unqualified person the performance of
any task which by law may only be performed by a member of the Bar in good
standing.
Moreover, a signature by agents of a lawyer amounts to signing by unqualified
persons, 18 something the law strongly proscribes.
Therefore, the blanket authority respondent claims Atty. Garlitos entrusted to just
anyone was void. Any act taken pursuant to that authority was likewise void. There
was no way it could have been cured or ratified by Atty. Garlitos’ subsequent acts.
Moreover, the transcript of the November 26, 1998 Senate hearing shows that Atty.
Garlitos consented to the signing of the answer by another "as long as it conformed to
his draft." We give no value whatsoever to such self-serving statement.
66
No doubt, Atty. Garlitos could not have validly given blanket authority for just anyone
to sign the answer. The trial court correctly ruled that respondent’s answer was invalid
and of no legal effect as it was an unsigned pleading. Respondent was properly
declared in default and the Republic was rightly allowed to present evidence ex parte.
Respondent insists on the liberal application of the rules. It maintains that even if it
were true that its answer was supposedly an unsigned pleading, the defect was a
mere technicality that could be set aside.
Procedural requirements which have often been disparagingly labeled as mere
technicalities have their own valid raison d’ etre in the orderly administration of justice.
To summarily brush them aside may result in arbitrariness and injustice. 19
The Court’s pronouncement in Garbo v. Court of Appeals 20 is relevant:
Procedural rules are [tools] designed to facilitate the adjudication of cases. Courts and
litigants alike are thus [enjoined] to abide strictly by the rules. And while the Court, in
some instances, allows a relaxation in the application of the rules, this, we stress, was
never intended to forge a bastion for erring litigants to violate the rules with impunity.
The liberality in the interpretation and application of the rules applies only in proper
cases and under justifiable causes and circumstances. While it is true that litigation is
not a game of technicalities, it is equally true that every case must be prosecuted in
accordance with the prescribed procedure to insure an orderly and speedy
administration of justice.
Like all rules, procedural rules should be followed except only when, for the most
persuasive of reasons, they may be relaxed to relieve a litigant of an injustice not
commensurate with the degree of his thoughtlessness in not complying with the
prescribed procedure. 21 In this case, respondent failed to show any persuasive
reason why it should be exempted from strictly abiding by the rules.
As a final note, the Court cannot close its eyes to the acts committed by Atty. Garlitos
in violation of the ethics of the legal profession. Thus, he should be made to account
for his possible misconduct.
WHEREFORE, the petition is hereby GRANTED. The May 31, 2001 decision and
August 20, 2001 resolution of the Court of Appeals in CA-G.R. SP No. 52948 are
REVERSED and SET ASIDE and the February 19, 1999 resolution of the Regional
Trial Court of Pasay City, Branch 114 declaring respondent in default is hereby
REINSTATED.
Let a copy of this decision be furnished the Commission on Bar Discipline of the
Integrated Bar of the Philippines for the commencement of disbarment proceedings
against Atty. Onofre Garlitos, Jr. for his possible unprofessional conduct not befitting
his position as an officer of the court.

SO ORDERED.
G.R. No. 149634 July 6, 2004
LORETA TORRES, MARILYN TANGTANG, ARMELA FIGURACION, RAQUEL
BERNARTE, ESTRELLA TITO, RHEA ELLORDA, ROSITA FUENTES, ANITA
LAPORRE, JOCELYN RIN, MATODIA DEREPAS, FELICISIMA ALEGRE, LEA
MARTILLANA, EVANGELINE RAFON, ALICIA EMPILLO, AMY TORRES, EDNA
JIMENEZ, EVELYN DOLOM, HAMILI UYVICO, CRISELINA ANQUILO, NILDA
67
ALCAIDE, ROSARIO MABANA, ESTELA MANGUBAT, ROSIE BALDOVE,
CARMELITA RUIZ and LUCILA JUSTARES, petitioners,
vs.
SPECIALIZED PACKAGING DEVELOPMENT CORPORATION and/or ALFREDO
GAO (President) and PETER CHUA (General Manager); EUSEBIO CAMACHO
GENERAL SERVICES and/or EUSEBIO CAMACHO (President/General Manager);
MPL SERVICES and/or MIGUELITO LAURIANO (President/General Manager),
respondents.
DECISION
PANGANIBAN, J.:
The Court may give due course to a petition, even if the accompanying certificate
against forum shopping has not been signed by all the petitioners, provided it is shown
that, as in this case, there is a justifiable cause for such failure; and the outright
dismissal of the petition would seriously impair the orderly administration of justice. In
the interest of substantial justice, strict observance of procedural rules may be
dispensed with for compelling reasons.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to
nullify the January 15, 20012 and the August 28, 20013 Resolutions of the Court of
Appeals (CA) in CA-GR SP No. 62530. The first Resolution disposed as follows:
"ACCORDINGLY, and to strictly enforce the aforesaid circulars to attain
their objectives (Carrara Marble Phil., Inc. vs. Court of Appeals, G.R. No.
127059, January 22, 1997; Far Eastern Shipping Co. vs. Court of Appeals,
297 SCRA 30), the Court [r]esolved to DISMISS the petition for a defective
or insufficient verification and certification thereof."4
The second assailed Resolution, on the other hand, denied petitioners' Motion for
Reconsideration.
The Antecedents
Petitioners claim to be employees of the Specialized Packaging Development
Corporation (SPDC), a business entity engaged in the repackaging of cosmetic
products. In three separate Complaints, they charged SPDC and alleged labor
recruiters Eusebio Camacho General Services (ECGS) and MPL Services with illegal

dismissal; and with nonpayment of overtime, premium and 13th month pays, and night
differential.
The cases were later consolidated and assigned to Labor Arbiter (LA) Salimathar
Nambi. On June 30, 1995, the LA issued his Decision in favor of petitioners, because
SPDC and MPL Services had failed to submit their position papers on or before the
deadline. SPDC was ordered to reinstate all petitioners to their former positions and to
pay them back wages, premium pay for holidays and rest days, service incentive
leave pay and 13th month pay.
The LA's Decision was appealed by SPDC to the National Labor Relations
Commission (NLRC), which set aside the ruling and ordered the case remanded to LA
Nambi for further proceedings.
The case was then set again for hearings. Respondents SPDC and ECGS submitted
their position papers five months after the case had been considered submitted for
decision.
On December 14, 1999, LA Nambi issued a second Decision finding petitioners'
employment to have been illegally terminated by SPDC. The NLRC, however, again
reversed and set aside this new Decision on June 9, 2000.
On January 29, 2001, petitioners appealed to the CA.
Ruling of the CA
The Petition was dismissed by the CA, which found the verification and the
certification against forum shopping to be either defective or insufficient. It justified its
ruling thus:
"x x x [I]t appears that there are twenty-five (25) principal parties-petitioners
who were former workers of private respondent Corporation and
complainants in NLRC NCR Case Nos. 00-04-03325-94, 00-05-03727-94
and 00-05-03971-94 as a result of their being laid-off from employment.
Perusing the verification and certification[,] however, it also appears that it
was executed and signed by only two (2) petitioners, namely, Evelyn Dolom
and Criselina Anquilo, among the said twenty-five (25) principal petitioners.
The duty to verify and certify under oath is strictly addressed to all the
twenty-five (25) principal petitioners. To allow only two (2) of them to
execute the required verification and certification, without the proper
authorization of the others, would render Revised Circular No. 28-91 and
Administrative Circular No. 04-94 (now Sec. 5, Rule 7 of the 1997 Rules of
Civil Procedure) inutile in avoiding the practice of non-forum shopping
because the other principal petitioners, who did not execute and sign the
same, much less execute the proper power of attorney, would not be bound
by the certification executed by only two (2) of them. Any one of the twenty-
68
three (23) remaining principal petitioners may just obtain the services of
another lawyer to institute practically the same case in a different for[um]."5
Denying petitioners' Motion for Reconsideration, the appellate court pointed out that
disregarding the rules could not be rationalized by invoking a liberal construction
thereof. Furthermore, it found no satisfactory explanation why the 25 principal
petitioners, who resided in different provinces, had not executed a special power of
attorney in favor of either of the two petitioners or their counsel.
Hence, this Petition.6
Issues
Petitioners submit the following issues for our consideration:
"A.
Whether or not petitioners are employees of the Respondent Specialized
Packaging Development Corporation (SPDC).
"B.
Whether or not petitioners were illegally dismissed by Respondent SPDC.
"C.
Whether or not petitioners are entitled to their money claims."7
The Court's Ruling
The Petition is meritorious.
Preliminary Issue:
Propriety of the Petition
At the outset we note that the present Petition is anchored on Rule 45, and that it
assails the two CA Resolutions dismissing petitioners' earlier Petition for Certiorari. In
accordance with Section 1 of Rule 45,8 the herein Petition alleges reversible errors
based on the supposedly defective verification and certification against forum
shopping.
The above-quoted issues raised in the Memorandum of petitioners, however, were not
the same ones raised in the Petition. Because these three substantive issues were

sprung by the former only in their own Memorandum, respondents were not able to
traverse these directly in their Comment9 or Memorandum.10 Hence, save for
perfunctory references to the NLRC Decision, the latter were not given the opportunity
to defend themselves on these questions.
Elementary due process -- which means giving the opposite party the opportunity to
be heard, and the assailed court to consider every argument presented11 -- bars this
Court from taking up these three issues in this Decision, even if doing so would speed
up the final resolution of the case. Basic is the rule that issues not presented below
cannot for the first time be taken up on appeal.12
Review of NLRC Decisions
The proper procedure for seeking a review of the final dispositions of the NLRC was
laid down in 1998 in St. Martin Funeral Homes v. NLRC.13 That case heralded two
very important rules: 1) decisions and final resolutions of the NLRC may be reviewed
only via a special civil action for certiorari under Rule 65 of the Rules of Court; and 2)
such petition must be filed with the CA in strict observance of the doctrine of the
hierarchy of courts.
Thus, after St. Martin became final, special civil actions challenging NLRC rulings
have been referred by this Court to the CA for proper disposition. Exceptions to this
rule were those instances when -- prior to the finality of St. Martin -- both parties had
already filed their respective memoranda with this Court, and it then opted to take final
cognizance of the case.14 Under AM No. 99-2-01-SC, however, all new cases
erroneously filed with this Court after June 1, 1999, were dismissed forthwith.
Main Issue:
Propriety of the CA's Dismissal of the Petition
In their present Petition, petitioners plead a liberal construction of the rules. They
argue that the verification and the certification against forum shopping executed by
only two of the 25 petitioners have already satisfied the requirements under Sections
415 and 516 of Rule 7. On the other hand, the CA ruled that all 25 petitioners should
have signed the verification and the certification of non-forum shopping. We clarify.
Actually, two separate rules are involved in the present controversy – one, on
verification; and the other, on the certification against forum shopping.
Two Signatures Sufficient for Verification
The verification requirement is provided under Section 4 of Rule 7 of the Rules of
Court, as follows:
69
"SEC. 4. Verification. – Except when otherwise specifically required by law
or rule,17 pleadings need not be under oath, verified or accompanied by
affidavit.
"A pleading is verified by an affidavit that the affiant has read the pleading
and that the allegations therein are true and correct of his knowledge and
belief.
"A pleading required to be verified which contains a verification based on
'information and belief,' or upon 'knowledge, information and belief,' or lacks
a proper verification, shall be treated as an unsigned pleading." (Italics
supplied)
The purpose of requiring a verification is to secure an assurance that the allegations of
the petition have been made in good faith; or are true and correct, not merely
speculative.18 This requirement is simply a condition affecting the form of pleadings,
and noncompliance therewith does not necessarily render it fatally defective.19
Indeed, verification is only a formal, not a jurisdictional, requirement.20
In the present case, the problem is not the lack of a verification, but the adequacy of
one executed by only two of the 25 petitioners. These two signatories are
unquestionably real parties in interest, who undoubtedly have sufficient knowledge
and belief to swear to the truth of the allegations in the Petition. This verification is
enough assurance that the matters alleged therein have been made in good faith or
are true and correct, not merely speculative. The requirement of verification has thus
been substantially complied with.
Certification Against Forum Shopping
Substantially Complied With
For petitions for certiorari, on the other hand, a certification against forum shopping is
required under Section 3 of Rule 4621 of the Rules of Court, as follows:
"SEC. 3. Contents and filing of petition; effect of non-compliance with
requirements. - x x x
xxx xxx xxx
"The petitioner shall also submit together with the petition a sworn
certification that he has not theretofore commenced any other action
involving the same issues in the Supreme Court, the Court of Appeals or
different divisions thereof, or any other tribunal or agency; if there is such
other action or proceeding, he must state the status of the same; and if he
should thereafter learn that a similar action or proceeding has been filed or
is pending before the Supreme Court, the Court of Appeals, or different
divisions thereof, or any other tribunal or agency, he undertakes to promptly

inform the aforesaid courts and other tribunal or agency thereof within five
(5) days therefrom.
xxx xxx xxx
"The failure of the petitioner to comply with any of the foregoing
requirements shall be sufficient ground for the dismissal of the petition."
The certification requirement is rooted in the principle that a party-litigant shall not be
allowed to pursue simultaneous remedies in different fora, as this practice is
detrimental to an orderly judicial procedure.22 The lack of a certification against forum
shopping, unlike that of verification, is generally not cured by its submission after the
filing of the petition.23
The submission of a certificate against forum shopping is thus deemed obligatory,
though not jurisdictional.24 (Jurisdiction over the subject or nature of the action is
conferred by law.) Not being jurisdictional, the requirement has been relaxed under
justifiable circumstances25 under the rule of substantial compliance.
In fact, the Court has allowed the belated filing of the certification against forum
shopping because of compelling reasons.26 In Uy v. Land Bank,27 it even reinstated
a petition it had already dismissed for lack of verification and certification against
forum shopping, after petitioner had justified the reinstatement. Similarly, in Roadway
Express v. CA,28 the Court considered as substantial compliance the filing of the
certification 14 days prior to the dismissal of the petition.
The rule of substantial compliance has likewise been availed of with respect to the
contents of the certification.29 Gabionza v. Court of Appeals accepted, as sufficient
compliance therewith, petitioner's certification to the effect that "there is no similar
petition [with] the same subject matter previously filed, pending, withdrawn or
dismissed in the Supreme Court, in this Honorable Court [of Appeals] or different
divisions thereof, or any other tribunal or agency."30 It stressed that while Circular 28-
9131 required strict compliance, it did not thereby prevent substantial compliance
under justifiable circumstances.32
In the present case, petitioners aver that the signatures of only two of them suffice as
substantial compliance with the attestation requirement for a certificate against forum
shopping. In effect, they are asking this Court to disregard a defect33 in their Petition.
In previous rulings, we have held that a certificate against forum shopping should be
signed by all the petitioners, because a lone signatory cannot be presumed to have
personal knowledge of the matters required to be stated in the attestation.34 The
ruling is not without exception, however. In Spouses Ortiz v. Court of Appeals35 and
similar rulings, the following has always been pointed out:
70
"x x x. The attestation contained in the certification on non-forum shopping
requires personal knowledge by the party who executed the same. To merit
the Court's consideration, petitioners here must show reasonable cause for
failure to personally sign the certification. The petitioners must convince the
court that the outright dismissal of the petition would defeat the
administration of justice. x x x" (Italics supplied)
Petitioners need only show, therefore, that there was reasonable cause for the failure
of some of them to sign the certification against forum shopping, and that the outright
dismissal of the Petition would defeat the administration of justice.
We find their reasons meritorious. First, as pointed out in the Motion for
Reconsideration filed with the CA, the case dragged for an undeniably long time,
because its remand to the labor arbiter forced many of the petitioners to go back to the
provinces to await the final outcome, while those who remained in Metro Manila were
forced out of temporary quarters every so often.36 Under these circumstances, it was
extremely difficult to secure all the required signatures.
Second, it is safe to assume that the matters alleged in the certificate against forum
shopping have been complied with by the non-signing petitioners. Twenty-one of the
petitioners executed in favor of their counsel, a "Natatanging Gawad ng
Kapangyarihan,"37 which gives him authority to represent them in all matters
connected with the case. As it has not been revoked or superseded, the possibility of
any of them filing another action or claim through another counsel is effectively
foreclosed.
Third, the apparent merits of the substantive aspects of the case, as in Uy, should be
deemed as a "special circumstance" or "compelling reason" for allowing the Petition.
Pertinent thereto, the Court notes that the conflicting findings of the NLRC and of the
labor arbiter -- who ruled twice in favor of petitioners -- provide ample justification for
the CA's review of the merits. The outright dismissal of the Petition was therefore
prejudicial to the substantial rights of the parties.
Indeed, rules of procedure are established to secure substantial justice.38 Being
instruments for the speedy and efficient administration of justice, they must be used to
achieve such end, not to derail it.39 Technical requirements may thus be dispensed
with in meritorious appeals.40
It has been our consistent holding that the ends of justice are better served when
cases are determined on the merits -- after all parties are given full opportunity to
ventilate their causes and defenses -- rather than on technicality or some procedural
imperfections. 41
Consequently, the case should be remanded to the CA for a proper determination of
the substantive issues. Time-honored is the principle that when the law entrusts the
review of factual and substantive issues to a lower court or to a quasi-judicial tribunal,

that court or agency must be given the opportunity to pass upon those issues.42 Only
thereafter may the parties resort to this Court.43
WHEREFORE, this Petition is GRANTED. The assailed Resolutions of the Court of
Appeals are SET ASIDE, and the case is remanded to the CA for a proper
determination of the substantive issues. No costs.
SO ORDERED.
[G.R. No. 135042. September 23, 1999]
71
ROBERN DEVELOPMENT CORPORATION, petitioner, vs. JUDGE JESUS V.
QUITAIN, Regional Trial Court of Davao City, Br. 15; and NATIONAL POWER
CORPORATION, respondents.
DECISION
PANGANIBAN, J.:
Expropriation proceedings are governed by revised Rule 67 of the 1997 Rules of Civil
Procedure which took effect on July 1, 1997. Previous doctrines inconsistent with this
Rule are deemed reversed or modified. Specifically, (1) an answer, not a motion to
dismiss, is the responsive pleading to a complaint in eminent domain; (2) the trial court
may issue a writ of possession once the plaintiff deposits an amount equivalent to the
assessed value of the property, pursuant to Section 2 of said Rule, without need of a
hearing to determine the provisional sum to be deposited; and (3) a final order of
expropriation may not be issued prior to a full hearing and resolution of the objections
and defenses of the property owner.
The Case
Before us is a Petition under Rule 45, challenging the Decision of the Court of
Appealsi[1] promulgated February 27, 1998 and its Resolution promulgated July 23,
1998 in CA-GR SP-46002, which (1) dismissed the action for certiorari and preliminary
injunction filed by Robern Development Corporation ("Robern" for brevity); and (2)
effectively affirmed the Orders (dated August 13, 1997; September 11, 1997; and
November 5, 1997) and the Writ of Possession (dated September 19, 1997), all issued
by the Regional Trial Court of Davao City in Civil Case No. 25356-97.
The assailed Decision disposed as follows:ii[2]
IN VIEW OF ALL THE FOREGOING, the instant petition is ordered DISMISSED.
Costs against the petitioner.
In its assailed Resolution, the Court of Appeals denied reconsideration in this
manner:iii[3]
There being no compelling reason to modify, reverse or reconsider the Decision
rendered in the case dated February 27, 1998[;] the Motion for Reconsideration
posted by petitioner on March 23, 1998 is DENIED, it appearing further that the
arguments raised therein were already considered and passed upon in the aforesaid
Decision.
The Facts
The following facts are undisputed.
 72

1. Robern is the registered owner of a parcel of land with an area of about 8. Without awaiting the outcome of the Motion for Reconsideration, NPC filed a
17,746.50 square meters, which the National Power Corporation ("NPC" for brevity) is Motion to Implement the Writ of Possession.
seeking to expropriate. The property forms part of a proposed low-cost housing project
in Inawayan, Binugao, Toril, Davao City.
9. On September 19, 1997, in spite of petitioners opposition, the trial court
issued a Writ of Possession as follows:
2. On June 6, 1997, NPC filed a Complaint for Eminent Domain against
Robern.iv[4] Instead of filing an answer, petitioner countered with a Motion to
WHEREAS, the applicant National Power Corporation in the above-titled case has
Dismiss,v[5] alleging (a) that the Complaint suffered a jurisdictional defect for not
presented to this Court a petition praying for the issuance of a Writ of Possession of
showing that the action bore the approval of the NPC board of directors; (b) that
the affected property of the xxx Robern Development Corporation, described
Nemesio S. Caete, who signed the verification and certification in the Complaint, was
hereinbelow, as follows:
not the president, the general manager or an officer specifically authorized under the
NPC charter (RA 6395); (c) that the choice of property to be expropriated was
improper, as it had already been intended for use in a low-cost housing project, a TCT No. Total Area in Area Affected in
public purpose within the contemplation of law; and the choice was also arbitrary, as Square Meter Square Meter
there were similar properties available within the area.
T-251558
3. Before this Motion could be resolved, NPC filed a Motion for the Issuance of (T-141754) 11,469.00 3,393.00
Writ of Possession based on Presidential Decree No. 42. On July 9, 1997, NPC
deposited P6,121.20 at the Philippine National Bank, Davao Branch, as evidenced by
T-251559
PNB Savings Account No. 385-560728-9.vi[6]
(T-141755) 10,000.00 2,124.00

4. In its Order of August 13, 1997, the trial court denied the petitioner's Motion
T-251556
to Dismiss in this wise:
(T-14152) 30,000.00 3,402.00

This refers to the motion to dismiss. The issues raised are matters that should be dealt
T-251555 45,000.00 8,827.50
with during the trial proper. Suffice it to say that [NPC] has the privilege as a utility to
use the power of eminent domain.
TOTAL - - 97,371.00 17,746.50 Total
affected area
The motion is denied for lack of merit. The pre-trial conference shall be on August 27,
1997 at 2:30 P.M.vii[7]
WHEREAS, on September 11, 1997 the court issued an Order granting the issuance
of a Writ of Possession in favor of the xxx National Power Corporation for the
5. On September 2, 1997, petitioner filed a Motion for Reconsideration,
pointing out that (a) the issues raised in the Motion to Dismiss could be resolved immediate possession and control of the parcels of land owned by the [petitioner] as
without trial, as they could be readily appreciated on the face of the Complaint itself aforestated for the construction of the Mantanao-New-Loon 138 KV Transmission Line
vis--vis the applicable provisions of law on the matter; and (b) the grounds relied upon Project to be undertaken by the petitioner affecting 17,746.50 sq.m. of the 97,371.00
for dismissing the Complaint did not require evidence aliunde. sq. meters as shown above.

6. On September 11, 1997, the trial court denied the Motion, as follows:
The xxx motion [of the petitioner] for reconsideration is denied for lack of merit.
Finding the xxx motion [of NPC] to be meritorious[,] let a writ of possession issue.viii[8]
NOW THEREFORE, you are hereby commanded to place [NPC] in possession and
control of the affected property consisting 17,746.50 [s]quare [m]eters of the total area
of 97,371.00 square meters described above and to eject therefrom all adverse
occupants, Robern Development Corporation and [all other] persons xxx claiming
under it.ix[9]

7. On September 22, 1997, petitioner filed a Motion for Reconsideration of the 10. On November 5, 1997, before counsel for the petitioner received any order
Order of September 11, 1997, arguing among others that Section 15-A of RA 6395 from the trial court directing the implementation of the Writ of Possession, NPC
was virtually amended when Caete was allowed to verify and sign the certificate of occupied the disputed property.
non-forum shopping in regard to the Complaint for expropriation filed by NPC.

11. In a Petition for Certiorari before the Court of Appeals (CA), Robern assailed
the Writ on the following grounds: (a) patent on the face of the complaint were its
jurisdictional defect, prematurity and noncompliance with RA 6395; and (b) the
issuance of the Writ of Possession was irregular, arbitrary and unconstitutional, as the
trial court had yet to fix the appropriate value for purposes of taking or entering upon
the property to be expropriated.
Ruling of the Court of Appeals
The Court of Appeals upheld the trial court on the following grounds.
First, the verification and certification of the Complaint by someone other than the
president or the general manager of NPC was not a fatal jurisdictional defect. It was
enough to allege that the expropriating body had the right of eminent domain. The
issues of whether the expropriation was properly authorized by the board of directors
and whether Caetes verification and certification of the Complaint was likewise
authorized were evidentiary and could be ruled upon only after the reception of
evidence.
Second, whether the disputed property could still be expropriated even if it had
already been intended to be used in a low-cost housing project and whether the
choice of that lot was arbitrary and erroneous, given the availability of similar
properties in the area, were factual issues that would entail presentation of evidence
by both parties.
Third, the allegation in the Complaint that NPC sought to acquire an easement of
right-of-way through the disputed property did not preclude its expropriation. Section
3-A of the NPC charter allowed the power company to acquire an easement of right-
of-way or even the land itself if the servitude would injure the land.
Fourth, the issuance of the Writ of Possession was proper in view of NPCs
compliance with Section 2, Rule 67 of the 1997 Rules of Civil Procedure, by
depositing with the Philippine National Bank an amount equivalent to the assessed
value of the disputed property.
Fifth, certiorari was not the proper remedy, as the Order sustaining the right to
expropriate the property was not final and could still be appealed by the aggrieved
party. The availability of appeal ruled out certiorari.
Hence, this Petition.x[10]
The Issues
In their Memorandum,xi[11] petitioner raises the following issues:xii[12]
73
I WHETHER OR NOT THE QUESTIONED ORDER OF THE RESPONDENT
JUDGE DATED SEPTEMBER 11, 1997 DIRECTING THE ISSUANCE OF A
WRIT OF POSSESSION IS UNCONSTITUTIONAL, HIGHLY IRREGULAR,
ARBITRARY, AND DESPOTIC.
II WHETHER OR NOT THE COMPLAINT FILED IN THE INSTANT CASE IS
DISMISSIBLE ON ITS FACE FOR LACK OF JURISDICTION, BEING FLAWED
WITH PREMATURITY, AND VIOLATIVE OF RA 6395.
III WHETHER OR NOT THE COURT OF APPEALS MADE A FINDING NOT
BORNE OUT BY THE COMPLAINT, THUS IT EXCEEDED ITS JURISDICTION
AMOUNTING TO LACK OF JURISDICTION.
IV WHETHER OR NOT THE CHOICE OF THE PROPERTY TO BE
EXPROPRIATED IS ARBITRARY.
Simply stated, the petition raises the following issues:
1. Were there valid grounds to dismiss the Complaint?
2. Was the Writ of Possession validly issued, considering that the trial court
had not conducted any hearing on the amount to be deposited?
This Courts Ruling
The Court of Appeals was correct in its rulings, but in the interest of substantial justice,
the petitioner should be given an opportunity to file its answer.
First Issue:
Grounds for Dismissal
Jurisdiction
Petitioner contends that the trial court did not acquire jurisdiction over the case
because, first, Atty. Caete who signed the verification and certification of non-forum
shopping was neither the president nor the general manager of NPC; and second,
under Section 15-A of RA 6395, only the NPC chief legal counsel, under the
supervision of the Office of the Solicitor General is authorized to handle legal matters
affecting the government power corporation. On the other hand, NPC argues that
Caete, as its regional legal counsel in Mindanao, is authorized to prepare the
Complaint on its behalf.

We find the disputed verification and certification to be sufficient in form. Verification is
intended to assure that the allegations therein have been prepared in good faith or are
true and correct, not mere speculations.xiii[13] Generally, lack of verification is merely
a formal defect that is neither jurisdictional nor fatal. Its absence does not divest the
trial court of jurisdiction.xiv[14] The trial court may order the correction of the pleading
or act on the unverified pleading, if the attending circumstances are such that strict
compliance with the rule may be dispensed with in order to serve the ends of justice.
The certificate of non-forum shopping directs the plaintiff or principal party to attest
under oath that (1) no action or claim involving the same issues have been filed or
commenced in any court, tribunal or quasi-judicial agency and that, to the best of the
plaintiff's knowledge, no such other action or claim is pending; (2) if there is such other
pending action or claim, a complete statement of its present status shall be made; and
(3) if it should be learned that the same or a similar action or claim has been filed or is
pending, the plaintiff shall report this fact to the court where the complaint or initiatory
pleading was filed.xv[15] This rule is rooted in the principle that a party-litigant shall
not be allowed to pursue simultaneous remedies in different forums, as this practice is
detrimental to orderly judicial procedure.xvi[16] Administrative Circular No. 04-94,
which came before the 1997 Rules of Court, is deemed mandatory but not
jurisdictional, as jurisdiction over the subject or nature of the action is conferred by
law.xvii[17]
In this case, the questioned verification stated that Atty. Caete was the acting regional
legal counsel of NPC at the Mindanao Regional Center in Iligan City. He was not
merely a retained lawyer, but an NPC in-house counsel and officer, whose basic
function was to prepare legal pleadings and to represent NPC-Mindanao in legal
cases. As regional legal counsel for the Mindanao area, he was the officer who was in
the best position to verify the truthfulness and the correctness of the allegations in the
Complaint for expropriation in Davao City. As internal legal counsel, he was also in the
best position to know and to certify if an action for expropriation had already been filed
and pending with the courts.
Besides, Atty. Caete was not the only signatory to the Complaint; he was joined by
Comie P. Doromal, OIC-assistant general counsel; and Catherine J. Pablo -- both of
the NPC Litigation & Land and Land Rights Department. They all signed on behalf of
the solicitor general in accordance with the NPC charter.xviii[18] Their signatures
prove that the NPC general counsel and the solicitor general approved the filing of the
Complaint for expropriation. Clearly then, the CA did not err in holding that the
Complaint was not dismissible on its face, simply because the person who had signed
the verification and certification of non-forum shopping was not the president or the
general manager of NPC.
Legal Standing and Condition Precedent
Next, petitioner asserts that NPC had no legal standing to file the expropriation case,
because the Complaint did not allege that its board of directors had authorized its
filing. It added that under Section 6, RA 6395, only the board was vested with the
corporate power to sue and be sued.
74
The National Power Corporation explains that, like other corporate officers and
employees whose functions are defined by the board, Atty. Caete is authorized to file
the expropriation case. Even if he is not the general counsel, he has residual authority
to prepare, verify and certify the Complaint for expropriation.
We rule for the private respondent. Rule 67, Section 1 of the Rules of Court, provides:
SECTION 1. The complaint.The right of eminent domain shall be exercised by the
filing of a verified complaint which shall state with certainty the right and purpose of
expropriation, describe the real or personal property sought to be expropriated, and
join as defendants all persons owning or claiming to own, or occupying, any part
thereof or interest therein, showing, so far as practicable, the separate interest of each
defendant. xxxx.
The foregoing Rule does not require that the Complaint be expressly approved by the
board of directors of a corporation. In any event, such authorization is a factual issue
that can be threshed out during the trial. As held by the appellate court, the issue of
whether or not the expropriation proceedings [were] authorized by the Board of
Directors or that those who signed the complaint [were] authorized representatives are
evidentiary in character determinable only in [the] trial proper.
Prematurity of the Complaint
The same ruling applies to the argument alleging prematurity of the Complaint.
Petitioner's insistence that NPC must secure the approval of the provincial board and
the municipal council is unfounded. Section 3(j), RA 6395, merely requires that the
Complaint be filed in the same manner as an expropriation case of the national, the
provincial or the municipal government. At bottom, all that is needed is compliance
with Rule 67 of the Rules of Court and the prevailing jurisprudence on expropriation.
Defenses and Objections
Petitioner avers that the Complaint should be dismissed, because the subject property
was already committed to be used in a low-cost housing project. Besides, there were
other available properties in the area. Finally, the Complaint allegedly sought only an
easement of a right-of-way, not essentially an expropriation.
We disagree. Petitioner's argument in this case is premised on the old rule. Before the
1997 amendment, Section 3 of Rule 67 allowed a defendant in lieu of an answer, [to]
present in a single motion to dismiss or for other appropriate relief, all of his objections
and defenses to the right of the plaintiff to take his property xxx. A motion to dismiss
was not governed by Rule 15 which covered ordinary motions. Such motion was the
required responsive pleading that took the place of an answer and put in issue the
plaintiff's right to expropriate the defendant's property.xix[19] Any relevant and
material fact could be raised as a defense in a condemnation proceeding, such as that
which tended to show that (1) the exercise of the power to condemn was
 75

unauthorized, or (2) there was cause for not taking defendants property for the To be exact, the issues raised by the petitioner are affirmative defenses that should be
purpose alleged in the petition, or (3) the purpose for the taking was not public in alleged in an answer, since they require presentation of evidence aliunde.xxvii[27]
character.xx[20] Section 3 of Rule 67 provides that if a defendant has any objection to the filing of or
the allegations in the complaint, or any objection or defense to the taking of his
property, he should include them in his answer. Naturally, these issues will have to be
This old rule found basis in the constitutional provisions on the exercise of the power
fully ventilated in a full-blown trial and hearing. It would be precipitate to dismiss the
of eminent domain, which were deemed to be for the protection of the individual
Complaint on such grounds as claimed by the petitioner. Dismissal of an action upon a
property owner against the aggressions of the government.xxi[21] Under the old rule,
motion to dismiss constitutes a denial of due process if, from a consideration of the
the hearing of the motion and the presentation of evidence followed.
pleadings, it appears that there are issues that cannot be decided without a trial of the
case on the merits.xxviii[28]
However, Rule 67 of the 1997 Rules of Civil Procedure no longer requires such
extraordinary motion to dismiss. Instead, it provides:
Inasmuch as the 1997 Rules had just taken effect when this case arose, we believe
that in the interest of substantial justice, the petitioner should be given an opportunity
SEC. 3. Defenses and objections. x x x x to file its answer to the Complaint for expropriation in accordance with Section 3, Rule
67 of the 1997 Rules of Civil Procedure.
If a defendant has any objection to the filing of or the allegations in the complaint, or
Order of Condemnation
any objection or defense to the taking of his property, he shall serve his answer within
the time stated in the summons. The answer shall specifically designate or identify the
property in which he claims to have an interest, state the nature and extent of the
The Court will now tackle the validity of the trial court's assailed Order of August 13,
interest claimed, and adduce all his objections and defenses to the taking of his
1997, which Respondent Court affirmed in this wise:
property. x x x x.

xxxx The denial of Roberns Motion to Dismiss [is tantamount] to a confirmation

In his book on remedial law, Justice Florenz D. Regalado writes that the old Rule was
or a determination of the authority of NPC to exercise the power of eminent
a bit confusing as the previous holdings under that former provision also allowed the
domain and the propriety of its exercise in the context of the facts involved in
filing of another motion to dismiss, as that is understood in Rule 16, to raise
the case. Under Section 4 of the present Rule 67, 1997 Rules, supra, an order
additionally the preliminary objections authorized by that Rule. Further, an answer,
sustaining the right to expropriate the property is a final one and may be
which is now required, gives more leeway. First, even if it still applies the omnibus
appealed by any aggrieved party (Municipality of Bian v. Garcia, 180 SCRA 576
motion rule, it allows amendments to be made within ten days from its filing.xxii[22]
[1989]). xxxx.xxix[29]
Second, the failure to file an answer does not produce all the disastrous
consequences of default in ordinary civil actions, because the defendant may still
present evidence as to just compensation.xxiii[23] We clarify. Founded on common necessity and interest, eminent domain is the
inherent right of the state (and of those entities to which the power has been lawfully
delegated) to condemn private property to public use upon payment of just
When petitioner filed its Motion to Dismiss, the 1997 Rules of Civil Procedure had
compensation. It may appear to be harsh and encompassing, but judicial review limits
already taken effect. Statutes regulating procedure in the courts are applicable to
the exercise of eminent domain to the following areas of concern: (1) the adequacy of
actions pending and undetermined at the time those statutes were passed.xxiv[24]
the compensation, (2) the necessity of the taking, and (3) the public-use character of
New court rules apply to proceedings that take place after the date of their
the purpose of the taking.xxx[30]
effectivity.xxv[25] On April 8, 1997, the Court en banc issued a Resolution in Bar
Matter No. 803, declaring that the revisions in the Rules of Court were to become
effective on July 1, 1997. If there are objections and defenses that require the presentation of evidence and the
hearing of arguments, the trial court should not immediately issue an order of
expropriation. This is clearly implied in Section 4 of Rule 67, which mandates that [i]f
Accordingly, Rule 16, Section 1 of the Rules of Court, does not consider as grounds
the objections to and the defenses against the right of the plaintiff to expropriate the
for a motion to dismiss the allotment of the disputed land for another public purpose or
property are overruled, or when no party appears to defend as required by this Rule,
the petition for a mere easement of right-of-way in the complaint for expropriation. The
the court may issue an order of expropriation declaring that the plaintiff has a lawful
grounds for dismissal are exclusive to those specifically mentioned in Section 1, Rule
right to take the property sought to be expropriated, for the public use or purpose
16 of the Rules of Court, and an action can be dismissed only on a ground authorized
described in the complaint x x x.
by this provision.xxvi[26]

The Court of Appeals ruled that there were issues that required presentation of
evidence during the trial proper; namely, whether the expropriation proceeding was
authorized by the NPC board of directors, whether the property to be expropriated was
already devoted to public use, and whether the choice of the property was arbitrary
and erroneous in view of the other properties available in the area. The necessity of
the taking and the public character of the purpose of the expropriation were still in
issue and pending resolution by the trial court. To these we add the issue of whether
the taking of the disputed property would require only an easement of right-of-way or
would perpetually deprive Robern of its proprietary rights. Therefore, the trial court
should not have issued the assailed Order of Expropriation which foreclosed any
further objection to the NPCs right to expropriate and to the public purpose of the
expropriation, leaving the matter of just compensation as the only remaining
substantial issue.
The nullity of the Order was glaring. While the trial court correctly denied the Motion to
Dismiss, as the issues raised by the petitioner should be dealt with during the trial
proper, it nonetheless ruled that NPC had the privilege as a [public] utility to use the
power of eminent domain.
Second Issue
Requisites of a Writ of Possession
Petitioner objects to the issuance of the Writ of Possession for being highly irregular,
arbitrary and despotic, because the Motion to Dismiss was yet to be resolved. It
stresses that there was no hearing on the correct amount of just compensation for the
taking of the disputed property, as required in Panes v. Visayas State College of
Agriculture.xxxi[31] We cannot uphold this contention.
There is no prohibition against a procedure whereby immediate possession of the land
involved in expropriation proceedings may be taken, provided always that due
provision is made to secure the prompt adjudication and payment of just
compensation to the owners.xxxii[32] However, the requirements for authorizing
immediate entry in expropriation proceedings have changed.
To start with, in Manila Railroad Company v. Paredes,xxxiii[33] the Court held that the
railway corporation had the right to enter and possess the land involved in
condemnation proceedings under Section 1, Act No. 1592,xxxiv[34] immediately upon
the filing of a deposit fixed by order of the court.
The Rules of Court of 1964xxxv[35] sanctioned this procedure as follows:
SEC. 2. Entry of plaintiff upon depositing value with National or Provincial Treasurer.--
Upon the filing of the complaint or at any time thereafter the plaintiff shall have the
right to take or enter upon the possession of the real or personal property involved if
he deposits with the National or Provincial Treasurer its value, as provisionally and
76
promptly ascertained and fixed by the court having jurisdiction of the proceedings, to
be held by such treasurer subject to the orders and final dispositon of the court. xxxx.
(Underscoring ours.)
Subsequently, former President Ferdinand E. Marcos signed into law Presidential
Decree No. 42 and its companion decrees, which removed the court's discretion in
determining the amount of the provisional value of the land to be expropriated and
fixed the provisional deposit at its assessed value for taxation purposes. Hearing was
not required; only notice to the owner of the property sought to be condemned.
On the issue of immediate possession, PD 42 (Authorizing The Plaintiff In Eminent
Domain Proceedings To Take Possession Of The Property Involved Upon Depositing
The Assessed Value, For Purposes of Taxation) provided:
WHEREAS, the existing procedure for the exercise of the right of eminent domain is
not expeditious enough to enable the plaintiff to take or enter upon the possession of
the real property involved as soon as possible, when needed for public purposes;
xxx xxx xxx
xxx [T]hat, upon filing in the proper court of the complaint in eminent domain
proceedings or at anytime thereafter, and after due notice to the defendant, plaintiff
shall have the right to take or enter upon the possession of the real property involved if
he deposits with the Philippine National Bank, xxx an amount equivalent to the
assessed value of the property for purposes of taxation, to be held by said bank
subject to the orders and final disposition of the court.
The provisions of Rule 67 of the Rules of Court and of any other existing law contrary
to or inconsistent herewith are hereby repealed.
Paragraph 3 of PD No. 1224 (Defining The Policy On The Expropriation Of Private
Property For Socialized Housing Upon Payment Of Just Compensation) also
authorized immediate takeover of the property in this manner:
3. Upon the filing of the petition for expropriation and the deposit of the amount
of just compensation as provided for herein, the Government, or its authorized agency
or entity, shall immediately have possession, control and disposition of the real
property and the improvements thereon even pending resolution of the issues that
may be raised whether before the Court of First Instance or the higher courts.
Where the taking was for socialized housing, Section 3, PD 1259 (Amending
Paragraphs 1, 2, And 3 Of PD No. 1224 Further Defining The Policy On The
Expropriation Of Private Property For Socialized Housing Upon Payment Of Just
Compensation), amending the above-quoted paragraph, provided:

Upon the filing of the petition for expropriation and the deposit of the amount of the
just compensation provided for in Section 2 hereof, the Government, or its authorized
agency or entity, shall immediately have possession, control and disposition of the real
property and the improvements thereon even pending resolution of the issues that
may be raised whether before the Court of First Instance, Court of Agrarian Relations
or the higher courts.
Similarly, Section 1, PD No. 1313 (Further Amending Paragraph 3 Of Presidential
Decree No. 1224 As Amended By Presidential Decree No. 1259, Defining The Policy
On The Expropriation Of Private Property For Socialized Housing Upon Payment Of
Just Compensation), amending paragraph 3 of PD 1224, decreed:
Upon the filing of the petition for expropriation and the deposit in the Philippine
National Bank at its main office or any of its branches of the amount equivalent to ten
percent (10%) of the just compensation provided for in Section 2 of Presidential
Decree No. 1259, the government, or its authorized agency or entity, shall
immediately have possession, control and disposition of the real property and the
improvements thereon with the power of demolition, if necessary, even pending
resolution of the issues that may be raised whether before the Court of First Instance,
Court of Agrarian Relations, or the higher Courts.
In this connection, we also quote Section 7 of PD No. 1517 (Proclaiming Urban Land
Reform In The Philippines And Providing For The Implementing Machinery Thereof),
which reads:
xxx xxx xxx
Upon the filing of the petition for expropriation and the deposit in the Philippine
National Bank at its main office or any of its branches of the amount equivalent to ten
per cent (10%) of the declared assessment value in 1975, the Government, or its
authorized agency or entity shall immediately have possession, control and disposition
of the real property and the improvements thereon with the power of demolition, if
necessary, even pending resolution of the issues that may be raised whether before
the Court of First Instance, Court of Agrarian Relations, or the higher Courts.
Finally, PD 1533 (Establishing A Uniform Basis For Determining Just Compensation
And The Amount Of Deposit For Immediate Possession Of The Property Involved In
Eminent Domain Proceedings) mandated the deposit of only ten percent (10%) of the
assessed value of the private property being sought to be expropriated, after fixing the
just compensation for it at a value not exceeding that declared by the owner or
determined by the assessor, whichever is lower. Section 2 thereof reads:
SEC. 2. Upon the filing of the petition for expropriation and the deposit in the
Philippine National Bank at its main office or any of its branches of an amount
equivalent to ten per cent (10%) of the amount of compensation provided in Section 1
hereof, the government or its authorized instrumentality agency or entity shall be
entitled to immediate possession, control and disposition of the real property and the
77
improvements thereon, including the power of demolition if necessary, notwithstanding
the pendency of the issues before the courts.
Accordingly, in San Diego v. Valdellon,xxxvi[36] Municipality of Daet v. Court of
Appeals,xxxvii[37] and Haguisan v. Emilia,xxxviii[38] the Court reversed itself and
ruled that Section 2, Rule 67 of the 1964 Rules, was repealed by Presidential Decree
No. 42. The judicial duty of ascertaining and fixing the provisional value of the property
was done away with, because the hearing on the matter had not been expeditious
enough to enable the plaintiff to take possession of the property involved as soon as
possible, when needed for public purpose.xxxix[39]
In Daet, the Court clarified that the provisional value of the land did not necessarily
represent the true and correct one but only tentatively served as the basis for
immediate occupancy by the condemnor. The just compensation for the property
continued to be based on its current and fair market value, not on its assessed value
which constituted only a percentage of its current fair market value.
However, these rulings were abandoned in Export Processing Zone Authority v.
Dulay,xl[40] because [t]he method of ascertaining just compensation under the
aforecited decrees constitute[d] impermissible encroachment on judicial prerogatives.
It tend[ed] to render this Court inutile in a matter which under the Constitution [was]
reserved to it for final determination. The Court added:
We return to older and more sound precedents. This Court has the duty to formulate
guiding and controlling constitutional principles, precepts, doctrines, or rules. (See
Salonga v. Cruz Pano, supra).
The determination of just compensation in eminent domain cases is a judicial function.
The executive department or the legislature may make the initial determinations but
when a party claims a violation of the guarantee in the Bill of Rights that private
property may not be taken for public use without just compensation, no statute,
decree, or executive order can mandate that its own determination shall prevail over
the courts findings. Much less can the courts be precluded from looking into the just-
ness of the decreed compensation.
In Province of Camarines Sur v. Court of Appeals,xli[41] the Court reaffirmed the
unconstitutionality of the presidential decrees that fixed the just compensation in an
expropriation case at the value given to the condemned property either by the owners
or by the assessor, whichever was lower.
More precisely, Panes v. Visayas State College of Agriculturexlii[42] ruled that the
judicial determination of just compensation included the determination of the
provisional deposit. In that case, the Court invalidated the Writ of Possession because
of lack of hearing on the provisional deposit, as required under then Section 2 of Rule
67, pre-1997 Rules. In the light of the declared unconstitutionality of PD Nos. 76, 1533
and 42, insofar as they sanctioned executive determination of just compensation, any
right to immediate possession of the property must be firmly grounded on valid
 78

compliance with Section 2 of Rule 67, pre-1997 Rules; that is, the value of the subject T-251558
property, as provisionally and promptly ascertained and fixed by the court that has (T-141754) 11,469.00 3,393.00 P4,250.00 P1,257.32
jurisdiction over the proceedings, must be deposited with the national or the provincial
treasurer.xliii[43]
T-251559
(T-141755) 10,000.00 2,124.00 8,960.00 1,903.10
However, the 1997 Rules of Civil Procedure revised Section 2 of Rule 67 and clearly
reverted to the San Diego, Daet and Haguisan rulings. Section 2 now reads:
T-251556
(T-14152) 30,000.00 3,402.00 18,910.00 2,144.39
SEC. 2. Entry of plaintiff upon depositing value with authorized government
depositary.Upon the filing of the complaint or at any time thereafter and after due
T-251555 45,000.00 8,827.50 18,450.00 3,619.28
notice to the defendant, the plaintiff shall have the right to take or enter upon the
possession of the real property involved if he deposits with the authorized government
depositary an amount equivalent to the assessed value of the property for purposes of TOTAL 97,371.00 17,746.50 P8,924.09
taxation to be held by such bank subject to the orders of the court. xxxx
Hence, the amount of the provisional deposit should be increased, in order to conform
xxx xxx xxx to the requirement that it should be equivalent to the assessed value of the property.
In the interest of justice, NPC should in the meantime pay Robern reasonable rental,
to be fixed by the trial court in its final decision, for the use and occupation of the
After such deposit is made the court shall order the sheriff or other proper officer to
disputed property from the date of entry until the deposit of the full assessed value of
forthwith place the plaintiff in possession of the property involved and promptly submit
the property, as mandated by Rule 67.
a report thereof to the court with service of copies to the parties. [Underscoring ours.]

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals in CA-
In the present case, although the Complaint for expropriation was filed on June 6,
GR SP-46002 are AFFIRMED with the following MODIFICATIONS: (1) petitioner is
1997, the Motion for the Issuance of the Writ of Possession was filed on July 28, 1997;
granted a period of ten days from the finality of this Decision within which to file its
thus, the issuance of the Writ is covered by the 1997 Rules. As earlier stated,
answer, in accordance with Rule 67 of the 1997 Rules of Court; (2) NPC shall deposit,
procedural rules are given immediate effect and are applicable to actions pending and
also within ten days from the finality if this Decision, the full amount required under the
undetermined at the time they are passed; new court rules apply to proceedings that
aforecited Rule; and (3) the trial court shall, in its final decision, fix the rental for the
take place after the date of their effectivity.xliv[44] Therefore, Section 2, Rule 67 of the
use and the occupation of the disputed property, from the date of NPCs entry until its
1997 Rules of Civil Procedure, is the prevailing and governing law in this case.xlv[45]
deposit of the full amount required under the 1997 Rules. No costs.

With the revision of the Rules, the trial court's issuance of the Writ of Possession
SO ORDERED.
becomes ministerial, once the provisional compensation mentioned in the 1997 Rule
is deposited. Thus, in the instant case the trial court did not commit grave abuse of
discretion when it granted the NPCs Motion for the issuance of the Writ, despite the
absence of hearing on the amount of the provisional deposit.

The Court nonetheless hastens to add that PD 1533 is not being revived.

Under Section 2, Rule 67 of the 1997 Rules, the provisional deposit should be in an
amount equivalent to the full assessed value of the property to be condemned, not
merely ten percent of it. Therefore, the provisional deposit of NPC is insufficient. Since
it seeks to expropriate portions, not the whole, of four parcels of land owned by
Robern, the provisional deposit should be computed on the basis of the Tax
Declarations of the property:xlvi[46]

TCT No. Total Area Area Affected Assessed Provisional

in Sq. M. in Sq. M. Value Deposit
 79

G.R. No. 164929 April 10, 2006

ERNELIZA Z. MAMARIL, Petitioner,

vs.
CIVIL SERVICE COMMISSION and DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, Respondents.

DECISION

CARPIO MORALES, J.:

The present Petition for Review on Certiorari seeks a relaxation of the Rules on verification and certification against forum shopping,
petitioner’s Petition for Review of a Civil Service Commission Resolution having been dismissed1 by the appellate court for failure to
comply therewith.

On October 10, 1983, Erneliza Mamaril (petitioner) was hired by the Department of Transportation and Communications (DOTC) as
Stenographic Reporter on a temporary status. On March 15, 1984, she was promoted to Administrative Assistant II, a permanent position.
In 1992, then DOTC Secretary Jesus B. Garcia, Jr. appointed her as Department Legislative Liaison Specialist (DLLS), a coterminous
position. Her appointment as DLLS was renewed by the succeeding DOTC Secretaries.2
 80

On December 19, 2000, then DOTC Secretary Vicente C. Rivera, Jr. requested the Civil Service Commission (CSC) to attest that at least
two of the four DLLS positions in the DOTC be made permanent. The request was granted by the CSC by Resolution No. 01-0233 dated
January 23, 2001.3
Upon verbal query by DOTC Director Carina S. Valera (Director Valera), then CSC Chairman Corazon Alma de Leon advised the DOTC
that the incumbents of the formerly coterminous DLLS positions had no vested right to occupy the already permanent DLLS positions, and
that they were not automatically appointed thereto; and the positions which were made permanent could only be filled up by following
existing CSC rules and regulations as well as DOTC policies and guidelines on the appointment of personnel.4
The DOTC filed a Motion for Reconsideration of CSC Resolution No. 02-1504 which was denied, by Resolution No. 03-1019 dated
September 26, 2003. In the same Resolution, the CSC declared that petitioner and Cruz are not entitled to back salaries from the time
they were separated from the service up to their date of reinstatement.14
Petitioner thus filed a Motion for Reconsideration of said Resolution No. 03-1019 only insofar as the CSC held that she was not entitled to
backwages. By Resolution No. 04-027915 issued on March 18, 2004, the CSC denied petitioner’s Motion for Reconsideration.
Petitioner thereupon filed on March 7, 2004 before the Court of Appeals a Petition for Review under Rule 43 assailing CSC Resolution No.
03-101916 which the appellate court dismissed, as earlier stated, by Resolution of May 14, 2004,17 for non-compliance with the Rules, it
not having been verified and it containing no sworn certification against forum shopping.

By letter of January 29, 2001,5 DOTC Assistant Secretary for Administrative and Legal Affairs Wilfredo Trinidad (Trinidad) sought from the
CSC a written confirmation of its Chairman’s above-said advice.6 Pending receipt of a reply from the CSC, Trinidad sent separate letters Petitioner filed a Motion for Reconsideration of the appellate court’s May 14, 2004 Resolution to which she attached a verified petition with
dated February 22, 2001 to petitioner7 and Rolando Cruz,8 the other incumbent of the two DLLS positions, advising each of them as certification against forum shopping, but it was denied by Resolution of August 6, 2004, the appellate court holding that her subsequent
follows: compliance with the Rules "[did] not cleanse her Petition of its infirmity."18

The change of the nature of the DLLS position which you held, from coterminous to permanent pursuant to CSC Resolution No. 010233 Hence, the present petition, petitioner arguing that,
dated 23 January 2001 did not automatically make you the holder of the now permanent DLLS position. This interpretation was confirmed
by Director Carina S. Valera with the then CSC Chairman de Leon.1avvphil.net
I

As your appointment was of cotermin[o]us nature, your services automatically terminated with the non-existence of the cotermin[o]us
position and the advent of the new appointing authority.
When the new DLLS permanent positions are authorized to be filled up, you can apply therefor. In the meantime, you may seek
appointment to any other vacant position that suits your qualifications. Needless to say, selection in any case will follow the usual process
in accordance with the DOTC guidelines and the CSC rules and regulations. (Underscoring supplied)
THE HONORABLE COURT OF APPEALS DID NOT ONLY COMMIT GRAVE ABUSE OF DISCRETION IN HOLDING THAT
PETITIONER’S SUBSEQUENT COMPLIANCE WITH THE RULES OF COURT DOES NOT CLEANSE HER PETITION OF ITS
INFIRMITY, BUT ALSO DISREGARDED THE JURISPRUDENTIAL DOCTRINE THAT RULES OF PROCEDURE, WHICH ARE MERELY
SECONDARY IN IMPORTANCE, OUGHT NOT TO BE APPLIED IN A VERY RIGID AND TECHNICAL SENSE AS THEY ARE USED
ONLY TO HELP SECURE NOT OVERRIDE SUBSTANTIAL JUSTICE.

II
Acting on the above-said query of Trinidad, the CSC, by Resolution No. 01-0502 dated February 22, 20019 which was received at his
office on March 9, 2001 and by the DOTC Personnel Division on March 12, 2001,10 ruled that "the two occupants of the two DLLS
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN NOT HOLDING THAT THE PETITIONER
positions are ipso facto appointed to such positions under permanent status if they meet the minimum requirements of the said positions."
IS ENTITLED TO BACK SALARIES FROM THE TIME OF HER ILLEGAL TERMINATION BY RESPONDENT DOTC UP TO THE TIME
OF HER ACTUAL REINSTATEMENT.19 (Underscoring supplied)
In light of the contrary advice previously given by the former CSC Chairman de Leon, the DOTC, by letter of April 27, 2001, sought
clarification on CSC Resolution No. 01-0502.
Petitioner pleads that the dismissal of her petition by the appellate court should be without prejudice as its infirmity was cured by her
subsequent and substantial compliance20 with the Rules which should not be rigidly applied to defeat and override the ends of justice.21
By Resolution No. 01-1409 issued on August 20, 2001, the CSC modified Resolution No. 01-0502 by declaring that "the previous
incumbents of the two Department Legislative Liaison Specialist (DLLS) positions were no longer existing employees as of the date said
On the merits of her petition, petitioner asserts that every employee of the civil service is entitled to security of tenure and should not be
positions were declared by the Commission as career in CSC Resolution No. 01-0233 dated January 23, 2001," and that "DOTC
removed or suspended except for cause provided by law. She concludes that she having been "illegally dismissed," she must not only be
Secretary Pantaleon D. Alvarez may now appoint who will occupy these newly created DLLS positions . . ."11
reinstated but must be entitled to all the rights and privileges that accrued to her by virtue of the office she held, such as her right to back
salaries.22
By petitioner’s own information, her services were "effectively terminated" on September 1, 2001 upon which her name was deleted from
the payroll.12
The petition is bereft of merit.

Petitioner and Cruz filed a Motion for Reconsideration of CSC Resolution No. 01-1409. By Resolution of November 26, 2002, the CSC
Sections 4 and 5 of Rule 7 of the 1997 Revised Rules of Civil Procedure lay down the rules on verification and certification against forum
issued Resolution No. 02-1504 reconsidering and setting aside CSC Resolution No. 01-1409. Petitioner was thus reinstated to her former
shopping as follows:
position on November 26, 2002.13

SEC. 4. Verification. — Except when otherwise specifically required by law or rule, pleadings need not be under oath, verified or
accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his
personal knowledge or based on authentic records.
A pleading required to be verified which contains a verification based on "information and belief" or upon "knowledge, information, and
belief," or lacks a proper verification, shall be treated as an unsigned pleading. (As amended, A.M. No. 00-2-10 SC, May 1, 2000.)
SEC. 5. Certification against forum shopping. — The plaintiff or principal party shall certify under oath in the complaint or other initiatory
pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not
theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the
best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete
statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is
pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been
filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory
pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after
hearing. The submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt
of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute
willful and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt,
as well as a cause for administrative sanctions." (Emphasis supplied)
The purpose of requiring a verification is to secure an assurance that the allegations of the petition have been made in good faith, or are
true and correct, not merely speculative.23 Non-compliance with such requirement does not necessarily render the pleading fatally
defective, hence, the court may order its correction if verification is lacking, or act on the pleading although it is not verified if the attending
circumstances are such that strict compliance with the Rules may be dispensed with in order that the ends of justice may thereby be
served.24
On the other hand, the rule against forum shopping is rooted in the principle that a party-litigant shall not be allowed to pursue
simultaneous remedies in different fora, as this practice is detrimental to orderly judicial procedure. The lack of certification against forum
shopping, unlike that of verification, is generally not curable by the submission thereof after the filing of the petition.25 The submission of a
certificate against forum shopping is thus deemed obligatory, albeit not jurisdictional.26
The rule on certification against forum shopping may, however, be also relaxed on grounds of "substantial compliance" or "special
circumstance or compelling reasons." The Court thus examined the records of the case on hand to determine the existence of any
circumstances or compelling reasons which call for the relaxation of the Rules but appreciated none in light of the following discussion.
The general proposition is that a public official is not entitled to any compensation if he has not rendered any service. As he works, so
shall he earn.27 Compensation is paid only for service actually or constructively rendered."28
Petitioner’s services were actually terminated on September 1, 2001, after the CSC issued Resolution No. 01-1409 dated August 20, 2001
declaring that "the previous incumbents of the two Department Legislative Liaison Specialist (DLLS) positions were no longer existing
employees as of the date said positions were declared by the Commission as career." She was, however, reinstated on November 26,
2002 after the CSC issued on even date Resolution No. 02-1504 setting aside Resolution No. 01-1409.
81
Octot v. Ybañez29 instructs that the good faith or bad faith and grave abuse of discretion in the dismissal or termination of the services of
a government employee come into play in the determination of the award of back salaries upon his reinstatement. In said case, the therein
petitioner, a security guard in the Regional Health Office No. VII, Cebu City who had been convicted of libel by a trial court, was summarily
dismissed pursuant to Presidential Decree No. 6 and LOI Nos. 14 and 14-A issued by then President Marcos directing heads of
departments and agencies of the government to weed out undesirable government officials and employees, specifically those who were
facing charges or were notoriously undesirable on the ground of dishonesty, incompetence or other kinds of misconduct defined in the
Civil Service Law. The therein petitioner was eventually acquitted of the criminal charge. Hence, his request for reinstatement was granted
but not his claim for back salaries from the date of his dismissal. This Court, through then Chief Justice Teehankee, held:
In the absence of proof that respondent Regional Director acted in bad faith and with grave abuse of discretion, petitioner is not entitled to
backwages and consequently cannot claim for damages. In the case at bar, the record manifests that respondents officials were not
motivated by ill will or personal malice in dismissing petitioner but only by their desire to comply with the mandates of Presidential Decree
No. 6. (Emphasis and underscoring supplied)
The denial of the award of back salaries, absent a showing of bad faith and/or grave abuse of discretion in the termination of the services
of a government employee who was reinstated, was reiterated in Clemente v. Commission on Audit,30 Acting Director of Prisons v.
Villaluz,31 and Echeche v. Court of Appeals.32
Petitioner, however, invokes the rulings in Tañala v. Legaspi,33 De Guzman v. Civil Service Commission,34 Gabriel v. Domingo,35 Del
Castillo v. Civil Service Commission36 to the effect that when an official or employee was illegally dismissed and his reinstatement is
ordered, for all legal purposes he is considered as not having left his office and, therefore, is entitled to all rights and privileges that accrue
to him by virtue of the office.
To begin with, petitioner cannot be considered to have been illegally dismissed. Her services were terminated effective September 1, 2001
by the DOTC in light of the CSC August 20, 2001 Resolution.
At any rate, no parity of circumstances in the above-cited cases invoked by petitioner obtains in the case at bar.
In Tañala, payment of back salaries upon reinstatement was ordered upon acquittal in a criminal case of the regular employee of the
government who had been suspended as a result of the filing of said case.37 De Guzman involved a proscribed abolition of office,38
hence, payment of back salaries was ordered upon reinstatement of the separated employee. In Del Castillo, the therein petitioner was
preventively suspended and later dismissed for grave misconduct.39 He was eventually exonerated. He was thus ordered reinstated. He
thereafter filed a "Motion for Clarificatory Relief" praying for an award of backwages. Noting that the CSC did not object to the payment of
backwages and the Solicitor General in fact recommended the payment thereof, this Court granted the motion.
In Gabriel, the therein petitioner was holding a permanent position of Motor Vehicle Registrar I at the Motor Vehicles Office, later renamed
the Land Transportation Commission. In 1979, the Land Transportation Commission was reorganized, renaming plantilla positions. The
therein petitioner’s position was changed to Transportation District Supervisor, but since another had been appointed thereto, he filed a
protest. During the pendency of his protest, he was extended a casual appointment but his services were "in effect terminated" three days
later, drawing him to file a complaint for illegal termination of services which reached the CSC. The CSC eventually found that the
issuance to the therein petitioner of a casual appointment which resulted in the termination of his services was illegal and that he was
more qualified than the one appointed to his renamed position of Transportation District Supervisor. The CSC accordingly directed his
appointment to his former position. He was appointed alright but to a lower position. He later filed a claim for backwages which was denied
by the Commission on Audit but which this Court ordered granted.
 82

In all these cases, the suspensions and/or dismissals were held unjustified, the therein petitioners having been either exonerated from the
charges-bases of suspension or dismissal or were victims of proscribed abolition of office or issuance of appointment to a different position
which soon after resulted in dismissal therefrom.
That the DOTC’s termination of petitioner’s services in accordance with the August 20, 2001 Resolution of the CSC was not attended with
bad faith and/or grave abuse of discretion, it cannot, under the facts and circumstances of the case, be gainsaid.
mortgagor must be the absolute owner of the property mortgaged. This finding, however, is not reflected in the dispositive portion of the
RTC decision, which reads:
WHEREFORE, with all the foregoing disquisition, the court finds no cogent reason to disturb the findings of the trial court and with more
reason where plaintiff-appellant cannot validly and legally claim, to say the least, any POSSESSION over the subject properties involved
herein. Hence, the assailed decision, should be, as it is AFFIRMED en toto [sic].
No cost.

WHEREFORE, the petition is DENIED. Costs against petitioner. SO ORDERED.

SO ORDERED.3

G.R. No. 136100 July 24, 2000

On December 12, 1996, Land Bank filed in the Court of Appeals (CA) a motion for a 30-day extension to file a petition for review, alleging
that:
FELIPE G. UY, petitioner,
vs.
THE LAND BANK OF THE PHILIPPINES, respondent. 1. On May 7, 1996, LANDBANK, received a copy of the decision promulgated by the respondent Regional Trial Court of
Iloilo on April 19, 1996;

DECISION
2. On May 16, 1996, Petitioner LANDBANK filed a Motion for Reconsideration of the aforementioned decision;

KAPUNAN, J.:
3. On December 6, 1996, LANDBANK received a Notice of Resolution promulgated on November 15, 1996 denying the
said Motion for Reconsideration. Thus, LANDBANK has six (6) days or until December 12, 1996 to elevate the case
On February 24, 1988, the Land Bank of the Philippines filed before the Metropolitan Trial Circuit Court of Iloilo City (MTCC) a complaint
through a petition for review on certiorari to the Honorable Court of Appeals;
for unlawful detainer against Felipe Uy. The bank claimed ownership of two parcels of land located in Quezon Street, Iloilo City, and of the
two-story house built thereon, and sought the ejectment of petitioner, the occupant of the premises.
4. On December 10, 1996, the undersigned counsel received the records of this case from the Petitioner’s Regional Legal
Manager based in Iloilo City, for purposes of filing the said Petition for Review on Certiorari since it is the practice of
The properties were originally owned by a certain Tia Yu. Tia Yu, through a special power of attorney, authorized Gold Motors Parts
Petitioner that appealed cases are being handled by its Head Office Lawyers. Hence, undersigned counsel only have two
Corporation to mortgage the same as security for a loan extended by the bank to Gold Motors. On August 19, 1980, Gold Motors
(2) days to file the said Petition for Review on Certiorari;
mortgaged the properties to Land Bank but it eventually defaulted on the loan, prompting Land Bank to initiate foreclosure proceedings.
The highest bidder in the foreclosure sale, Land Bank was subsequently issued a certificate of sale in its favor. Titles to the properties1
were consolidated in the name of Land Bank in October 1986. 5. That the records sent by the Petitioner’s Regional Legal Manager in Iloilo City is incomplete and undersigned counsel
already notified the former of the needed documents and hence, the latter lacks material time within which to prepare the
Petition for Review on Certiorari;
The defendant, Felipe Uy, averred that he furnished Tia Yu the materials used to construct the house on the land but Tia Yu failed to pay
fully for the value of said materials. Thus, on February 1980, he and Tia Yu agreed that the former shall occupy the house and apply the
rent as payment to the balance of Tia Yu’s debt amounting to ₱400,000.00. The terms of their agreement were later put into writing in a 6. In view hereof, petitioner by the undersigned counsel requests for an extension of thirty (30) days within which to file its
Lease Contract dated June 6, 1982. Petition for Review reckoned from December 12, 1996 or until January 11, 1997;

On March 31, 1989, the MTCC rendered a decision finding in Uy’s favor. The court found that at the time the mortgage was constituted the x x x.4
bank was aware that petitioner was leasing the property. Accordingly, the bank accepted the terms of the mortgage subject to the terms of
said lease. The MTCC disposed of the case as follows:
In a Resolution dated January 14, 1997, the CA granted Land Bank an extension of "fifteen (15) days only or until
December 27, 1996" to file its petition. Land Bank did not file its petition within the extension granted, however. Instead, it
WHEREFORE, judgment is rendered dismissing plaintiff[’]s complaint, confirming the right of defendant to continue in possession in filed the petition only on January 11, 1997 or fifteen days beyond the extension granted by the CA.
accordance with the Lease Contract, Exh. "1", as already renewed by defendant per said contract’s own provisions; and ordering the
plaintiff to pay defendant the sum of ₱10,000.00 as attorney’s fees and ₱5,000.00 as litigation expenses.2
On January 23, 1997, respondent filed in the CA a "Manifestation and Motion" reiterating most of the allegations in its
motion for extension, and adding that:
On appeal by Land Bank, the Regional Trial Court (RTC) affirmed the decision of the MTCC in toto. In addition, the RTC made mention in
the body of its decision that the mortgage between Gold Motors and Land Bank was void since under Article 2085 of the Civil Code the

xxx
9. The undersigned counsel could not file the Petition for Review on December 27, 1996 considering that he received the
essential documents only in the afternoon of December 26, 1996 and besides, the Resolution of the Honorable Court
granting him until December 27, 1996 to file the Petition for Review was received only on January 20, 1997. At the same
time, the undersigned counsel also has to contend with the pressures of preparing equally important pleadings,
memoranda and other documents in equally important cases for the Petitioner;
10. In addition and more importantly, the undersigned counsel also needed more time within which to read and study the
voluminous records of this case, which he has to do for the first time, before filing the Petition for Review since he was not
the handling lawyer of the case during trial and even when it was appealed with the Regional Trial Court of Iloilo. Hence,
the prayer for a reasonable period of thirty days or until January 11, 1997 within which to file the said Petition for Review.5
Land Bank prayed that the Court of Appeals reconsider its Resolution dated January 14, 1997 and to admit the petition.
On February 20, 1997, the CA issued a resolution granting the manifestation and motion, and admitting the petition. It also ordered
petitioner herein to comment on the petition.
Previously, petitioner filed a motion to dismiss and an opposition to the manifestation and motion praying for the court to dismiss Land
Bank’s petition. The CA merely noted these pleadings in separate resolutions.
On March 22, 1997, Felipe Uy filed his comment, raising among other issues, the timeliness of the petition.
On July 1, 1998, the CA rendered a decision reversing the decision of the RTC. It held that Land Bank had a superior right over the
property since it was already issued a Transfer Certificate of Title (TCT) in its name. The CA also ruled that the RTC erred in declaring the
mortgage void since the validity of the mortgage was not in issue in the proceedings before the MTCC. The dispositive portion of the CA
decision states:
WHEREFORE, premises considered, the assailed decision (dated April 19, 1996) and resolution (dated November 15, 1998) of the
respondent court in Civil Case No. 22138 are hereby REVERSED and SET ASIDE – and the private respondent ordered to surrender the
possession of the subject premises to the petitioner. Costs against the private respondent.
SO ORDERED.6
Land Bank filed a motion for partial reconsideration, asking that the CA award reasonable rent in its favor. Felipe Uy likewise filed a motion
for reconsideration. The CA denied both parties’ respective motions in a Resolution dated October 2, 1998.
On December 2, 1998, Felipe Uy filed in this Court a petition to review the decision of the CA.
In a Resolution dated February 15, 1999, the Court denied the petition for (a) lack of certification against forum shopping, and (b) lack of
verification.
83
On March 4, 1999, counsel for petitioner filed a "Motion for Admission of Verification and Certification against Forum-Shopping."
Apparently, counsel, at the time of the filing of the motion, had not yet received the February 15, 1999 Resolution denying the petition.
Counsel alleged that:
1. He has filed for the petitioner the above-entitled petition for review on certiorari dated November 30, 1998, with this
Honorable Court;
2. Until today, he has not yet been notified of any action taken thereon;
3. While again reviewing his "office copy" of the above-entitled petition, he just discovered that it contained no Verification
and Certification Against Forum-Shopping, and he is afraid that the copies submitted and filed with this Honorable Court
may also lack this requirement;
4. This non-inclusion of this requirement is only due to excusable neglect and honest inadvertence and may have
happened in the process of collating the many pages of the petition and in the attaching the many annexes thereto;
5. Undersigned most respectfully submits that at this stage of the proceeding, no material damage, injury or prejudice has
yet been caused because (a) as earlier stated, he has yet no notice that any action has already been taken by this
Honorable Court on said petition and (b) no pleading has yet been filed by the respondent thereto x x x.7
Attached to the motion was a "verification/certification."
On March 15, 1999, petitioner filed a Motion for Reconsideration, praying that the verification/certification be admitted to cure the defect of
the petition. Petitioner alleged that he received the Resolution denying the petition only on March 10, 1999.
On June 14, 1999, the Court issued a Resolution denying the motion for admission of verification and certification against forum shopping
for lack of merit. In the same resolution, the Court denied with finality reconsideration of the February 15, 1999 Resolution denying the
petition.
On July 28, 1999, petitioner filed a "Motion for Leave to File and for Admission of Second Motion for Reconsideration," reiterating its
allegations in its motion for admission of verification and certification against forum shopping. The motion for leave was accompanied by
the second motion for reconsideration.
In a Resolution dated September 27, 1999, the Court required respondent Land Bank to comment on the motion for leave and the motion
for second motion for reconsideration. In compliance, respondent submitted its Comment on November 9, 1999. On December 3, 1999,
petitioner filed a Reply to respondent’s Comment.
In a Resolution dated March 22, 2000, the Court granted the second motion for reconsideration, reinstated the petition and required
respondent to comment.
In its Comment, respondent submits that the Court should not have reinstated the petition.
It may be recalled that the Court initially dismissed the present petition on two grounds, namely, (1) for lack of verification, and (2) for lack
of a certification against forum shopping.

The requirement regarding verification of a pleading is formal, not jurisdictional.8 Such requirement is simply a condition affecting the form
of pleading, the non-compliance of which does not necessarily render the pleading fatally defective.9 Verification is simply intended to
secure an assurance that the allegations in the pleading are true and correct and not the product of the imagination or a matter of
speculation, and that the pleading is filed in good faith.10 The court may order the correction of the pleading if verification is lacking or act
on the pleading although it is not verified, if the attending circumstances are such that strict compliance with the rules may be dispensed
with in order that the ends of justice may thereby be served.11
The lack of certification against forum shopping, on the other hand, is generally not curable by the submission thereof after the filing of the
petition. Section 5, Rule 45 of the Rules of Court provides that the failure of petitioner to submit the required documents that should
accompany the petition, including the certification against forum shopping, shall be sufficient ground for the dismissal thereof.
In some cases, though, this Court deemed the belated filing of the certification as substantial compliance with the requirement. In Loyola
vs. Court of Appeals,12 the Court held that the filing of the certification, a day after the filing of an election protest and while within the
reglementary period, constituted substantial compliance.
In Kavinta vs. Castillo, Jr.,13 the Court allowed the submission of the certification after the filing of the petition since Administrative Circular
04-94 was then in effect for only a little over a month when the complaint was filed. "The proximity then of the filing of the complaint to the
date of the effectivity of the Circular may be pleaded as a justifiable circumstance, and the belated filing of the certification required
thereunder may be deemed a substantial compliance therewith." The ruling, however, was expressly pro hac vice:
x x x. We thus rule pro hac vice, but not without a whit of reluctance, that this special circumstance in this case could sustain the action of
the respondent Judge. This should not be taken, however, as a precedent. Elsewise stated, the mere submission of a certification under
Administrative Circular No. 04-94 after the filing of a motion to dismiss on the ground of non-compliance thereof does not ipso facto
operate as a substantial compliance; otherwise the Circular would lose its value or efficacy.
In Roadway Express, Inc. vs. Court of Appeals,14 the Court considered as substantial compliance the filing of the certification 14 days
before the dismissal of the petition. The Court even cited an instance where this Court allowed the filing of the certification even after the
dismissal of the petition for non-compliance with the requirement:
x x x If subsequent compliance [citing Sanchez vs. CA, G.R. 111255, February 7, 1994, First Division, Minute Resolution] with Circular 28-
91, after a petition was dismissed for non-compliance was considered by the court as substantial compliance [citing Fajardo, Jr. vs. CA,
G.R. 112558, en banc, Minute Resolution], with more reason should the petition for review be allowed in this case, in view of the
compliance prior to the dismissal of the petition.
The admission of the petition after the belated filing of the certification, therefore, is not unprecedented. In those cases where the Court
excused non-compliance with the requirements, there were special circumstances or compelling reasons making the strict application of
the rule clearly unjustified.15 In the case at bar, the apparent merits of the substantive aspects of the case should be deemed as a
"special circumstance" or "compelling reason" for the reinstatement of the petition. That counsel for petitioner filed the
"verification/certification" before receipt for the resolution initially denying the petition also mitigates the oversight.
In any event, this Court has the power to suspend its own rules when, as in this case, the ends of justice would be served thereby.16
We come now to the merits of the petition.
84
Petitioner contends that the CA should have dismissed Land Bank’s petition for review outright for having been filed beyond the extension
granted. Petitioner invokes Lacsamana vs. Second Special Cases Division of the Intermediate Appellate Court17 where this Court held
that "an extension of only fifteen days for filing a petition for review may be granted by the Court of Appeals, save in exceptionally
meritorious cases."
The Lacsamana ruling, pursuant to Supreme Court Resolution dated November 24, 1992, was subsequently embodied in Rule 6, Section
3 of the Revised Internal Rules of the Court of Appeals [RIRCA] (As Amended), which states:
SEC. 3. Petitions for Review. – Within the period to appeal, the petitioner shall file a verified petition in seven (7) legible copies and (1) one
copy thereof shall be served on each of the respondents. Upon proper motion presented before the expiration of the original reglementary
period, the Court may grant a non-extendible additional period of fifteen (15) days save in exceptionally meritorious cases within which to
file the petition for review; Provided, however, that should there be no petition filed within the extended period, the case shall be
dismissed. A petition filed after the period shall be denied due course outright. The Regional Trial Court shall be furnished a copy of the
resolution to this effect. (As amended by S. Ct. Res., dated November 24, 1992)
The Lacsamana ruling was reiterated in Loboro vs. Court of Appeals.18
In the case at bar, the petition was filed 15 days after the period allowed by the CA. If the CA were to strictly follow the provisions of
Section 3, Rule 6 of the RIRCA, it should have dismissed the petition filed by Land Bank outright. The CA obviously did not find any
compelling reason in the motion for extension to warrant the allowance of a period longer than the usual fifteen days. Indeed, it granted an
extension of only 15 days, instead of the 30 days respondent prayed for. Respondent, for its part, should not have assumed that the CA
would grant an extension or, if at all, the time prayed for.19
Nevertheless, we find that the CA did not err in admitting respondent’s petition. There is nothing in the Rules of Court or in the RIRCA that
would prevent the CA from reconsidering its resolution granting only a 15-day extension, and thereafter admitting the petition. Moreover,
the CA in this case apparently found merit in the petition, even granting the same eventually. The court acted well within its discretion for
cases should be decided as much as possible on the merits rather on technicalities.
It is also in the exercise of this discretion and, ultimately, in the interest of justice that we have reinstated the petition herein: petitioner’s
right to possession of the property is clearly superior to respondent’s right to possess the same.
In respect of the lease on the foreclosed property, the buyer at the foreclosure sale merely succeeds to the rights and obligations of the
pledgor-mortgagor subject to the provisions of Article 1676 of the Civil Code on its possible termination.20 This article provides that "[t]he
purchaser of a piece of land which is under a lease that is not recorded in the Registry of Property may terminate the lease, save when
there is a stipulation to the contrary in the contract of sale, or when the purchaser knows of the existence of the lease." In short, the buyer
at the foreclosure sale, as a rule, may terminate an unregistered lease except when it knows of the existence of the lease.
The MTCC in this case found it difficult to believe that respondent did not know of the existence of the lease since it was the bank’s
practice to conduct periodic inspections on the property. The MTCC found:
The contention of plaintiff that it learned of the possession of defendant in 1986 only does not appear to be supported by its own evidence.
Plaintiff’s witness, Clarita Rebueno, testified that before accepting the property for collateral of a loan, plaintiff "will send the inspector to
check the property and examine the same[,]" and that "[t]he bank will never loan and accept real properties [to be] mortgage[d] without
examining or inspecting the property[;]" x x x that, this procedure was observed in this case; and that, one of the purpose[s] of this
inspection is to determine the actual occupant of the premises (TSN, Rebueno, January 11, 1991, p. 15-16). Furthermore, after the
mortgage was constituted, which was in August, 1980 in this case, plaintiff also conducted periodic inspection of the premises which is
 85

done at least annually, to determine the condition of the property and its actual occupant for the purpose of collection and monitoring of
account (Ibid, p. 18). In fact, the bank inspector reported the name of the occupant – the defendant in this case – to plaintiff (Ibid, pp. 18-
19). Her testimony is corroborated by plaintiff’s witness, Ivan Binayas (TSN, January 30, 1991, pp. 16-20).21

The only conclusion that can be drawn from the foregoing is that Land Bank knew of the lease and, under Article 1676 of the Civil Code, it
may not terminate the same.1âwphi1

The rights, therefore, acquired by the defendant as lessee of the estate above referred to, which were known to the estate above referred
to, which were known to the plaintiff at the time of purchasing it, cannot be prejudiced, as they cannot be affected by such a transfer.

The plaintiff is not, therefore, entitled to terminate the lease in question, and having been subrogated into the legal situation of the lessor,
created by the contract of lease which was known to [plaintiff], it is [plaintiff’s] duty to respect it in toto.22

The issuance of the Transfer Certificates of Title (TCT) over the properties in respondent's name does not entitle it to disregard the lease.
A TCT is mere evidence of ownership, and ownership may be subjected to limitations imposed by law, in this case, by Article 1676 of the
Civil Code.

Nevertheless, we agree with respondent that the CA did not err in holding that the RTC, by adverting to the validity of the mortgage,
delved into an issue beyond its jurisdiction. The only issue before the RTC was who between petitioner and respondent had a better right
of possession over the subject properties. The validity of the mortgage was not raised by the parties in the MTCC, much less in the RTC,
and the resolution thereof was not necessary for the disposition of the case.

WHEREFORE, the petition is given DUE COURSE and the decision of the appellate court is SET ASIDE insofar as it ordered petitioner to
surrender possession of the subject property to respondent. The Decision of the Municipal Trial Court in Cities of Iloilo City, Branch 4, is
hereby REINSTATED.

SO ORDERED.
 86

Meanwhile, the private respondent demanded that the petitioners vacate and surrender possession of the subject property, but the latter
refused to do so. This compelled the private respondent to file an Ex Parte Petition for Issuance of a Writ of Possession,9 docketed as
LRC Case No. Q-14150(01) also with the Quezon City RTC.

Instead of acting on the petition and receiving the evidence of the private respondent ex parte, as mandated by Act No. 3135, as
amended, the RTC set the case for hearing at 8:30 a.m. of August 30, 2001, and ordered that a copy of the petition be served on the
petitioners.10 The latter filed their Answer alleging that (1) the private respondent failed to incorporate a Certificate of Non-Forum
Shopping in its petition; and (2) the petition was abated by the pendency of their complaint in Civil Case No. Q-98-34094 involving the
non-payment of their mortgage obligation, the validity of the foreclosure sale of the mortgaged property and their failure to redeem the
same. The petitioners prayed that the trial court dismiss the petition outright.11 They appended to their answer a copy of their amended
and supplemental complaint in Civil Case No. Q-98-34094.

The trial court conducted a hearing of the petition during which the petitioners and the private respondent adduced their respective
G.R. No. 160479 June 8, 2005 evidence.

SPOUSES GODOFREDO V. ARQUIZA and REMEDIOS D. ARQUIZA, petitioners, On February 22, 2002, the trial court rendered a Decision in LRC Case No. Q-14150(01) granting the petition, thus:
vs.
COURT OF APPEALS and EQUITABLE PCIBANK, respondents.
WHEREFORE, the Court holds that the Instant Petition for Issuance of a Writ of Possession is meritorious and should be granted. Let a
writ of possession be issued in favor of the petitioner and directing the Respondents Sps. Godofredo and Remedios Arquiza and all
DECISION persons claiming rights and interest under them to vacate the premises and place the petitioner in possession thereof.

CALLEJO, SR., J.: The petitioner Equitable PCIBank is directed to coordinate with the Branch Clerk of Court, this Court, for the expeditious issuance and
implementation of the Writ of Possession.

Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 74592 and its Resolution
denying the motion for reconsideration of the said decision. The assailed decision affirmed the decision of the Regional Trial Court (RTC) SO ORDERED.12
of Quezon City, Branch 221, granting the ex parte petition for the issuance of a writ of possession in LRC Case No. Q-14150(01).

The petitioners appealed the decision to the CA alleging that:

The petitioners, spouses Godofredo V. Arquiza and Remedios D. Arquiza, obtained a loan from private respondent Equitable PCIBank for
₱2.5 million. To secure the payment thereof, the petitioners executed a Real Estate Mortgage over their parcel of land covered by Transfer
1. THAT THE LOWER COURT ERRED IN GIVING DUE COURSE TO THE "EX-PARTE PETITION FOR ISSUANCE OF WRIT OF
Certificate of Title (TCT) No. N-143274 of the Registry of Deeds of Quezon City.2
POSSESSION" AND IN NOT DISMISSING THE SAME FOR BEING INDEROGATION OF THE APPELLANTS’ RIGHT TO A DUE
PROCESS OF LAW;
When the spouses defaulted in the payment of their loan, the private respondent filed a petition for extrajudicial foreclosure of the real
estate mortgage. A public auction was held on October 18, 1999 in accordance with Act No. 3135, as amended by Act No. 4118 during
2. THAT THE LOWER COURT ERRED IN NOT APPLYING IN THIS CASE THE WELL-ESTABLISHED RULE ON "LITIS PENDENCIA"
which the mortgaged property, together with all the improvements existing thereon, was sold to the private respondent as the highest
BY NOT DISMISSING THE "EX-PARTE PETITION, etc." IN QUESTION FOR THE REASON "THAT THERE IS ANOTHER ACTION
bidder.3 Accordingly, a Certificate of Sale4 over the property was issued in favor of the private respondent. This was registered with the
PENDING BETWEEN THE SAME PARTIES FOR THE SAME CAUSE; (Sec. 1(e), Rule 16, Rules of Court).
Registry of Deeds of Quezon City on November 22, 1999.5

3. THAT THE LOWER COURT ERRED IN IGNORING THE RULE AGAINST "FORUM SHOPPING" AND THE MANDATORY
Following the expiry date of the redemption period without the petitioners having exercised their right to redeem the property, the private
REQUIREMENT FOR A "CERTIFICATION OF NON-FORUM SHOPPING" IN AN INITIATORY PLEADING LIKE PETITIONER-
respondent consolidated its ownership over the subject property.6 As a consequence, the Registry of Deeds issued TCT No. N-2216507
APPELLEES’ ÉX-PARTE PETITION, etc." IN QUESTION AND FOR NOT DISMISSING SAID PLEADING ON THE GROUND "THAT A
in the name of the private respondent, canceling the petitioners’ former title.
CONDITION PRECEDENT FOR FILING THE CLAIM HAS NOT BEEN COMPLIED WITH" (Sec. 1(j), Rule 16, Rules of Court).

The petitioners filed a complaint against the private respondent and the sheriffs with the Regional Trial Court (RTC) of Quezon City for the
4. THAT THE LOWER COURT ERRED IN HOLDING TO THE EFFECT THAT SECTIONS 4 & 5, RULE 7 OF THE 1997 RULES OF
declaration of the nullity of the promissory note, real estate mortgage and the foreclosure sale and damages with a plea for injunctive relief
CIVIL PROCEDURE DOES NOT APPLY TO THE "EX-PARTE PETITION, etc." IN QUESTION BECAUSE ALLEGEDLY THE CASE AT
for the suspension redemption period. The case was docketed as Civil Case No. Q-98-34094.8
BAR IS A LAND REGISTRATION CASE.

5. THAT THE LOWER COURT ERRED IN RENDERING A DECISION GRANTING THE RELIEF PRAYED FOR IN THE "EX-PARTE
PETITION, etc. FOR THE ISSUANCE OF A WRIT OF POSSESSION AGAINST THE RESPONDENTS-APPELLANTS ALBEIT NO
EVIDENCE WAS ADDUCED PROVING THAT THE SUBJECT REAL ESTATE MORTGAGE AND ITS FORECLOSURE, AMONG OTHER
SUBSEQUENT PROCEEDINGS, ARE LAWFUL, VALID AND REGULAR, IN CIRCUMVENTION OF THE PREJUDICIAL ISSUES
PRECISELY RAISED IN THE PENDING CIVIL CASE NO. Q-98-34094 INVOLVING THE DECLARATION OF NULLITY OF SAID
MORTGAGE AND RELATED TRANSACTIONS.13
The CA rendered judgment affirming the appealed decision. The CA held that the petition for the issuance of a writ of possession was not
an initiatory pleading; hence, a certification against forum shopping was not necessary. The appellate court also held that there could be
no forum shopping because a petition for the issuance of a writ of possession is but an incident in the transfer of title. The CA held that the
rule requiring the highest bidder to be placed in possession of the property is founded on the right of ownership, which becomes absolute
after title thereto has been issued in favor of the new owner, and that the court must aid in effecting its delivery.14
The motion for reconsideration of the decision having been denied by the CA, the petitioners filed their petition for review on certiorari with
this Court and raised the following issues:
Firstly, is it right, proper and just for the Court below to completely ignore and disregard a related prior and pending action between the
same parties where the very basis of the right of possession over the subject property sought to be enforced as a result of the foreclosure
of a "mortgage" is being assailed in court for being NULL AND VOID ab initio OR INEXISTENT?
Secondly, is it right, proper and just for the Court below to summarily close its eyes to the patent and obvious flaw or irregularity of the
"mortgage" in the appreciation of the evidence offered in support of the Ex-Parte Petition For the Issuance of a Writ of Possession?
Thirdly, does the application of Section 7 of Act 3135, as amended by Act 4118, as the Court below did, exclude or preclude the effectivity
or applicability of the mandate against forum shopping, of the requirement for certification in pleadings against forum shopping, of the
principle of "litis pendentia," and of due process of law?15
The petitioners assert that the ex parte petition for the issuance of the writ of possession should have been dismissed by the RTC for
failure to attach a certification against forum shopping. They claim that this requirement is mandatory and there is no law exempting the
private respondent’s ex parte petition from compliance therewith.16
The petitioners contend that they are legally entitled to be protected in their possession over the subject property pending the resolution of
Civil Case No. Q-98-34094 for the declaration of nullity of the promissory note, real estate mortgage, and foreclosure sale. They argue that
the issuance of a writ of possession preempted and pre-judged the outcome of Civil Case No. Q-98-34094. The petitioners maintain that
the ex parte petition for the issuance of a writ of possession violated the petitioners’ right to procedural due process considering that
Section 4, Rule 15 of the Rules of Court requires every written motion to be set for hearing, except for those which would not prejudice the
rights of the adverse party.17
The petitioners maintain that the private respondent failed to substantiate its ex parte petition for the issuance of the writ of possession.
They fault the trial court for not scrutinizing judiciously the private respondent’s evidence because had it done so, it would have noted the
nullity of the mortgage, which appears to have been executed not by the owners of the subject property. They question the private
respondent’s failure to attach the promissory notes evidencing their loan, which would have shown that the real estate mortgage was
executed prior to the execution of the said promissory notes. The petitioners aver that the private respondent failed to prove the validity
and legality of the real estate mortgage, and without a valid mortgage, there can be no valid foreclosure sale or valid title.18
87
For its part, the private respondent contends that the requirement for the filing of a certificate of non-forum shopping is not applicable,
considering that the ex parte motion for the issuance of a writ of possession is not an initiatory pleading.19 It submits that litis pendentia
does not exist because there is no identity of the issues and the reliefs prayed for between the present case and Civil Case No. Q-98-
34094. Hence, forum shopping cannot likewise exist.20
The private respondent maintains that after the expiration of the redemption period and the consolidation of ownership over the property, it
had the right to be placed in possession thereof without the need of a separate and independent action. It posits that the right to possess
an extrajudicially foreclosed property is not affected by the pendency of an action for annulment of foreclosure proceedings. The private
respondent stresses that the issuance of a writ of possession is a ministerial function of the court, and should be issued as a matter of
course upon the filing of the proper ex parte motion.21
It asserts that the petitioners were not denied their right to due process because, notwithstanding the grant of the writ of possession, they
may still resort to another proceeding to question the regularity and validity of the foreclosure sale. It points out that the petitioners should
appreciate the fact that the court a quo allowed them to participate in the proceedings even if the motion for issuance of a writ of
possession was ex parte in nature.22 Finally, the private respondent avers that it had presented sufficient evidence to show that it is
entitled to the possession of the subject property.23
The petition is denied for lack of merit.
The assailed ruling of the CA is correct. The certification against forum shopping is required only in a complaint or other initiatory
pleading.24 The ex parte petition for the issuance of a writ of possession filed by the respondent is not an initiatory pleading. Although the
private respondent denominated its pleading as a petition, it is, nonetheless, a motion. What distinguishes a motion from a petition or other
pleading is not its form or the title given by the party executing it, but rather its purpose. The office of a motion is not to initiate new
litigation, but to bring a material but incidental matter arising in the progress of the case in which the motion is filed.25 A motion is not an
independent right or remedy, but is confined to incidental matters in the progress of a cause. It relates to some question that is collateral to
the main object of the action and is connected with and dependent upon the principal remedy.26 An application for a writ of possession is
a mere incident in the registration proceeding. Hence, although it was denominated as a "petition," it was in substance merely a motion.
Thus, the CA correctly made the following observations:
Such petition for the issuance of a writ of possession is filed in the form of an ex parte motion, inter alia, in the registration or cadastral
proceedings if the property is registered. Apropos, as an incident or consequence of the original registration or cadastral proceedings, the
motion or petition for the issuance of a writ of possession, not being an initiatory pleading, dispels the requirement of a forum-shopping
certification. Axiomatic is that the petitioner need not file a certification of non-forum shopping since his claims are not initiatory in
character (Ponciano vs. Parentela, Jr., 331 SCRA 605 [2000])27
It bears stressing that Section 7 of Act No. 3135, as amended by Act No. 4118, specifically provides that the buyer at public auction may
file a verified petition in the form of an ex parte motion.
SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance (now Regional Trial
Court) of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption
period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it
be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall
be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is
registered, or in special proceedings in the case of property registered under the Mortgage Law or under Sec. 194 of the Administrative
Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with
any existing law, and in each case the clerk of court shall, upon the filing of such petition, collect the fees specified in par. 11 of Sec. 114
 88

Rejoinder42 to the private respondent’s Reply. The petitioners were even allowed to adduce and offer documentary evidence.43 What the
fundamental law prohibits is total absence of opportunity to be heard. When a party has been afforded opportunity to present his side,
of Act No. 496, and the court shall, upon the filing of the bond, order that a writ of possession issue, addressed to the sheriff of the
such party cannot feign denial of due process.44
province in which the property is situated, who shall execute said order immediately.

The petitioners’ contention that the private respondent failed to sufficiently establish its right to a writ of possession is belied by the
Indeed, it is well-settled that an ordinary action to acquire possession in favor of the purchaser at an extrajudicial foreclosure of real
evidence. In support of its application for a writ of possession, the private respondent submitted the following documentary evidence: (1)
property is not necessary. There is no law in this jurisdiction whereby the purchaser at a sheriff’s sale of real property is obliged to bring a
real estate mortgage; (2) TCT No. N-143274 in the name of the petitioners, and the annotations on its back of the real estate mortgage,
separate and independent suit for possession after the one-year period for redemption has expired and after he has obtained the sheriff’s
certificate of sale, and the consolidation of ownership; (3) the petition for sale; (4) affidavit of publication of the extrajudicial sale; (5) TCT
final certificate of sale.28 The basis of this right to possession is the purchaser’s ownership of the property. The mere filing of an ex parte
No. N-221650 in the name of the private respondent; (6) notice to vacate; (7) petitioners’ reply to the notice to vacate; and (8) affidavit of
motion for the issuance of the writ of possession would suffice, and no bond is required.29lawphil.net
consolidation of ownership.

The Court rejects the contention of the petitioners that the RTC erred in not dismissing the petition of the private respondent on the
The petitioners fault the trial court for not delving into the validity of the mortgage and the foreclosure proceeding before granting the
grounds of forum shopping and litis pendentia, in view of the pendency of Civil Case No. Q-98-34094.
petition for a writ of possession. This contention is barren of legal basis. The judge to whom an application for writ of possession is filed
need not look into the validity of the mortgage or the manner of its foreclosure. In the issuance of a writ of possession, no discretion is left
The requisites of litis pendentia are the following: (a) identity of parties, or at least such as representing the same interests in both actions; to the trial court. Any question regarding the cancellation of the writ or in respect of the validity and regularity of the public sale should be
(b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two cases such determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135.45
that judgment in one, regardless of which party is successful, would amount to res judicata in the other.30 And one element of res judicata
is that the judgment or order must be on the merits of the case.31
IN VIEW OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The Decision and Resolution of the Court of Appeals in CA-
G.R. CV No. 74592 are AFFIRMED. Costs against the petitioner.
As heretofore ruled by the Court, the petition of the private respondent for a writ of possession was not an ordinary action. Any order or
decision of the RTC in LRC Case No. Q-14150(01) is not determinative of the merits of Civil Case No. Q-98-34094.
SO ORDERED.

Well established is the rule that after the consolidation of title in the buyer’s name for failure of the mortgagor to redeem, the writ of
possession becomes a matter of right. Its issuance to a purchaser in an extrajudicial foreclosure is merely a ministerial function.32 The
issuance of the writ of possession being a ministerial function, and summary in nature, it cannot be said to be a judgment on the merits,
but simply an incident in the transfer of title. Hence, a separate case for annulment of mortgage and foreclosure sale cannot be barred by
litis pendentia or res judicata.33

Conversely, we reject the petitioners’ argument that the ex parte petition for the issuance of a writ of possession should have been
dismissed on the ground of forum shopping. The test to determine whether a party violated the rule against forum shopping is whether the
elements of litis pendentia are present, or whether a final judgment in one case will amount to res judicata in another.34 In other words,
when litis pendentia or res judicata does not exist, neither can forum shopping exist. Having settled that litis pendentia does not exist, it
follows then that no forum shopping likewise exists in this case. The Court’s ruling in Ong vs. Court of Appeals35 is instructive, thus:

As a rule, any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground for refusing the issuance of a writ
of possession. Regardless of whether or not there is a pending suit for annulment of the mortgage or the foreclosure itself, the purchaser
is entitled to a writ of possession, without prejudice of course to the eventual outcome of said case.36

Likewise barren of merit is the petitioners’ contention that they were denied their right to due process by the RTC.

Section 7 of Act No. 3135, as amended, specifically provides that a petition (for a writ of possession) is in the nature of an ex parte motion
in which the court hears only one side of the controversy.37 An ex parte proceeding presupposes a right of the petitioners to which there
is no adverse party.38 An ex parte proceeding merely means that it is taken or granted at the instance and for the benefit of one party,
and without notice to or contestation by any party adversely affected.39

In this case, the RTC opted not to conduct an ex parte hearing. It went out of its way and set the application for a writ of possession for
hearing as shown by the trial court’s Order40 dated June 25, 2001. Moreover, the petitioners were allowed to file an Answer,41 and a

rt's refusal to order the release of the amount of Php648,000.00 representing the compensation of Atty. Gabriel as the executor of the last
will and testament; and (2) the court's insistence to hear respondents' allegation of non-payment of taxes resulting from the sale of the
properties located at Quiapo, Manila, for which reason the compensation of Atty. Gabriel should not be released until resolution by the
probate court on this matter.9
In the meantime, the parties came to an agreement to divide the amount deposited in court. Petitioners received Php284,400.00, and
thus, there still remained a balance of Php363,600.00.10
On May 25, 2001, the first questioned Resolution11 was rendered by the CA, the pertinent portion of which reads:
An examination of the instant petition for certiorari, prohibition and mandamus reveals that:
1. The verification and certification of non-forum shopping was signed by only one (Teresa S. Gabriel) of
the seven petitioners, and there is no showing or proof that she was duly authorized to sign on behalf of
her co-petitioners; and
2. There is no written explanation why copies of the petition had to be furnished the respondents by way
of registered mail rather than through the preferred personal service.
WHEREFORE, premises considered, for being insufficient in form and substance pursuant to Section 1, 2 & 3, par. 2,
Rule 65, in relation to Section 3 pars. 3 & 5, Rule 46 and Section 11, Rule 13 both of the 1997 Rules of Civil Procedure,
the petition for certiorari, prohibition and mandamus is hereby DENIED DUE COURSE and accordingly DISMISSED.
SO ORDERED.12
On September 11, 2001, the second assailed Resolution13 was issued by the CA, the relevant portion of which reads:
89
For failure of petitioners to cure the defects that resulted in the dismissal of their petition, per Resolution dated May 25,
2001, the "Motion for Reconsideration" of the Resolution dated June 6, 2001, is hereby DENIED for lack of merit.
SO ORDERED.
Petitioners presented the following issues in their Memorandum: 1) whether there was substantial compliance with the certification of non-
forum shopping before the CA; 2) whether the written explanation of why personal service was not done is a mandatory requirement in
pleadings filed before the CA; 3) whether the remaining balance of compensation of Atty. Gabriel should be released; and 4) whether the
probate court can take cognizance of the tax controversies.14
The petition is devoid of merit. The CA committed no reversible error in issuing the assailed Resolutions.
On the first issue regarding the certification against forum shopping, the Rules of Court provides that the plaintiff or the principal party shall
certify under oath in the complaint or other initiatory pleading the requirements as mandated under Section 5, Rule 7.15 The said
requirements are mandatory, and therefore, strict compliance thereof is necessary for the proper administration of justice.
In the petition filed by the petitioners in the CA, the verification and the certification against forum shopping were signed by Teresa Gabriel
alone, albeit there were seven petitioners therein.16 In their Memorandum,17 petitioners proffer the view that the signature of Teresa,
being the mother of the rest of the petitioners, should be considered as substantial compliance, for she was willing to take the risk of
contempt and perjury should she be found lying. According to petitioners, what is fatal is the utter lack of signatory in the certification.18
In numerous decisions,19 this Court has been consistent in stringently enforcing the requirement of verification20 and certification of non-
forum shopping. When there is more than one petitioner, a petition signed solely by one of them is defective, unless he was authorized by
his co-parties to represent them and to sign the certification. The attestation contained in the certification of non-forum shopping requires
personal knowledge by the party who executed the same.21
In the instant case, the records are bereft of anything that would show that Teresa was authorized by the other petitioners to file the
petition. In the certification against forum shopping, the principal party is required to certify under oath as to the matters contained therein
and failure to comply with the requirements shall not be curable by amendment but shall be a ground for the dismissal of the case.
Personal knowledge of the party executing the same is important and a similar requirement applies to the verification. Thus, the
verification and certification signed only by Teresa are utterly defective, and it is within the prerogative of the court to dismiss the petition.
As aptly stated in Ortiz v. CA,22 substantial compliance will not suffice in a matter involving strict observance. The attestation contained in
the certification of non-forum shopping requires personal knowledge by the party who executed the same. To deserve the Court's
consideration, petitioners must show reasonable cause for failure to personally sign the certification. They must convince the Court that
the outright dismissal of the petition would defeat the administration of justice. In this case, the petitioners did not give any explanation to
warrant their exemption from the strict application of the rule. Downright disregard of the rules cannot justly be rationalized by harking on
the policy of liberal construction.23
On the second issue, the written explanation why another mode of service was resorted to is a mandatory and indispensable requirement
in pleadings or papers filed before all the courts of the land. Parties must exert their best to effect personal service. The Rules of Court24
provides that personal service of petitions and other pleadings is the general rule, while a resort to other modes of service and filing is the
exception.25 Strictest compliance with Section 11 of Rule 13 is mandated by the Court,26 and noncompliance therewith is a ground for
the denial of the petition or the expulsion of the pleading from the records.
 90

This Court will no longer dwell on the third issue because it is a matter that should be ventilated before the probate court.

As to the fourth issue, the probate court can rightfully take cognizance of the unpaid taxes of the estate of the deceased; if the estate is
found liable, the probate court has the discretion to order the payment of the said taxes.27

Finally, petitioners should bear in mind that the right to appeal is not a natural right or a part of due process. It is merely a statutory
privilege, and may be exercised only in the manner and in accordance with the provisions of the law. The party who seeks to avail of the
remedy of appeal must comply with the requirements of the rules; otherwise, the appeal is lost. Rules of procedure are required to be
followed, except only when, for the most persuasive of reasons, they may be relaxed to relieve the litigant of an injustice not
commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed.28

WHEREFORE, in view of the foregoing, the petition is DENIED for lack of merit. The Resolutions of the Court of Appeals dated May 25,
2001 and September 11, 2001 are hereby AFFIRMED. Costs against petitioners.

SO ORDERED.

G.R. No. 157696-97 February 9, 2006

MARICALUM MINING CORPORATION, Petitioner,

vs.
HON. ARTURO D. BRION in his official capacity as Acting Secretary of Labor and Employment and the NATIONAL MINES AND
ALLIED WORKERS UNION (NAMAWU Local 103), Respondents.

DECISION

CHICO-NAZARIO, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to set aside the Decision1 dated 24 January 2002 of the
Court of Appeals in CA-G.R. SP No. 65351 and No. 65458 entitled, "Carlos G. Nerja, Jr., et al. v. Hon. Arturo D. Brion, et al." and
"Maricalum Mining Corporation v. Hon. Arturo D. Brion, et al.," respectively, and the Resolution dated 18 March 2003 denying petitioner’s
motion for reconsideration.
 91

bargaining agent, and providing for an annual across-the-board increase in the daily wage of all rank and file workers in
the amount of P60.00 per day from February, 1995 until January, 1998 and another P50.00 increase annually effective
Petitioner Maricalum Mining Corporation (MMC) is a domestic corporation engaged in mining business and operation, while private
February 1, 1998 until January 31, 2000.
respondent National Mines and Allied Workers Union Local 103 (NAMAWU) is the exclusive bargaining agent of the rank and file
employees of petitioner.
Petitioner filed a motion for reconsideration which was granted by succeeding DOLE Secretary Cresenciano Trajano in an order dated 17
April 1998 (Trajano order). The Trajano order modified the Quisumbing order as follows: (1) setting aside the finding of illegal dismissal
On 29 January 1996, NAMAWU submitted its Collective Bargaining Agreement (CBA) proposals to petitioner. Due to petitioner’s inaction
and unfair labor practice and remanding these issues to the arbitration level of the NLRC for a hearing on the merits; and (2) deleting the
to the proposals submitted by NAMAWU, the latter filed on 19 March 1996, its first Notice of Strike with the National Conciliation and
award of backwages for the workers to be reinstated. The pertinent portions of the Trajano order state:
Mediation Board (NCMB), Bacolod City, for refusal to bargain and Unfair Labor Practice.

This Office finds that there are no new matters/evidence in the Motion for Reconsideration which would warrant a reversal of Our decision
Eventually, petitioner presented its counter-proposals and started the CBA negotiations. While the negotiations were going on, petitioner
on wage issue.
dismissed some workers effective 06 May 1996.

We however find it necessary, in the interest of justice and fairness, to reconsider Our finding of Unfair Labor Practice which could
On 23 August 1996, NAMAWU filed a second Notice of Strike for Unfair Labor Practice against petitioner.
ultimately subject the Company and its officers to criminal prosecution.

On 05 September 1996, while the NCMB Bacolod City was conducting conciliation meetings, petitioner issued Notices of Temporary Lay-
xxxx
off to its selected rank and file employees effective 07 October 1996.

This being the case, it is a matter of necessity that a full-blown hearing be conducted on the issue of unfair labor practice. Indeed, Art. 247
After the NCMB failed to conciliate the labor dispute between NAMAWU and petitioner, then Department of Labor and Employment
of the Labor Code, as amended, mandates that a hearing should be conducted in the resolution of an unfair labor practice.
(DOLE) Secretary Leonardo Quisumbing,2 on 03 October 1996, assumed jurisdiction over the case docketed as OS-AJ-10-96-014
(NCMB-RB6-08-06-96).
Pending resolution of the issue of unfair labor practice and illegal termination, the Company is directed to physically reinstate all workers,
whether union members or not who were laid-off on May 7, 1996 and October 7, 1996.
Meanwhile, Pedro M. Abuana, Jr., an adversely affected employee of petitioner during the retrenchment effected on 07 October 1996,
filed, in his own behalf, an illegal dismissal case against the petitioner before the Regional Arbitration Branch No. VI, National Labor
Relations Commission (NLRC) docketed as RAB Case No. 06-12-10636-96 (Abuana case). The Labor Arbiter ruled that the dismissal of WHEREFORE, except as above modified, Our Order dated 30 July 1997 is hereby AFFIRMED.
Abuana was legal and valid.3 On appeal, the NLRC affirmed the ruling of the Labor Arbiter, which decision became final and executory.4

In an order dated 30 July 1997 (Quisumbing order), Secretary Quisumbing resolved the labor dispute in favor of NAMAWU: (1) directing
the reinstatement with backwages of the workers laid-off in May and October 1996; (2) finding petitioner guilty of illegal dismissal and
unfair labor practice; (3) directing the parties to enter into a collective bargaining agreement incorporating all the terms and conditions of
the previous bargaining agreement; and (4) providing for across-the-board increase of all rank-and-file workers. The dispositive portion
reads:
WHEREFORE, judgment is hereby rendered:
The Executive Labor Arbiter, Regional Arbitration Branch No. VI, National Labor Relations Commission, is hereby deputized as Hearing
Officer and is directed to conduct hearing/s and receive evidence as expeditiously as possible on the issues of unfair labor practice and
terminations effected by the Company on May 7, 1996 and October 7, 1996, and to submit his Report and Recommendation to this Office
within ten (10) days from termination of the hearing.
Meanwhile, as earlier mentioned, on 30 April 1998, the Labor Arbiter handling RAB Case No. 06-12-10636-96 which was filed by Abuana
ruled that the retrenchment effected by MMC on 07 May 1996 and 07 October 1996 were valid and legal.5

1. Declaring that lay-offs implemented on May 7, 1996 and October 7, 1996 as illegal:
2. Ordering that all workers, whether union members or not, who were laid-off on May 7, 1996 and October 7, 1996 be
immediately reinstated without gap in service, loss of seniority, and that their full backwages and benefits from the time of
termination until actual reinstatement be paid;
Dissatisfied by the Quisumbing and Trajano orders, petitioner MMC filed a petition for certiorari before this Court docketed as G.R. No.
133519 entitled, "Maricalum Mining Corporation v. Hon. Cresenciano B. Trajano, et al." In a resolution dated 06 July 1998 (Resolution),
this Court dismissed the petition on the ground that the then Secretary of DOLE Quisumbing did not commit grave abuse of discretion in
issuing his order dated 30 July 1997.
Petitioner moved for a reconsideration of the Resolution.

3. Declaring the Company to have violated the Labor Code provisions on Unfair Labor Practice for negotiating in bad faith On 11 September 1998, NAMAWU filed a Motion for Partial Execution with the DOLE which was not acted upon due to the pendency of
and later refusing to negotiate; and petitioner’s motion for reconsideration.

4. Ordering the parties to enter into a new collective bargaining agreement incorporating all the terms and conditions of
the previous collective bargaining agreement between the Company and the NFL, except the name of the exclusive
 92

Let a partial writ of execution be issued directing the Sheriff, Regional Office No. VI, Department of Labor and Employment, Bacolod City
to proceed to the premises of Mariculum Mining Corporation to execute the Order dated July 30, 1997 affirmed by the Court of Appeals
During the pendency of petitioner’s motion for reconsideration, the decision in St. Martin’s Funeral Homes v. National Labor Relations
and the Supreme Court in the resolutions dated June 14, 1999 and July 6, 1998, respectively, and collect the aggregate amount of
Commission6 was promulgated. Following the ruling in said case, petitioner’s motion for reconsideration of our resolution dated 06 July
P159,054,971.30 whose breakdown is specified in the partial writ of execution.
1998 was remanded to the Court of Appeals for proper disposition.

Petitioner filed a motion for reconsideration. On 11 May 2001, then DOLE Acting Secretary Brion issued a Partial Writ of Execution,9
On 14 June 1999, the appellate court denied petitioner’s motion for reconsideration.
directing to proceed to the MMC premises for the execution of the same. In an order dated o6 June 2001, Acting Secretary Brion denied
petitioner’s motion for reconsideration.
Still undaunted, petitioner brought the case anew to this Court via petition for review on certiorari, docketed as G.R. No. 138996 entitled,
"Maricalum Mining Corporation v. Hon Cresenciano B. Trajano, in his capacity as the Secretary of the DOLE and NAMAWU Local 103,"
With the denial of petitioner’s motion, Carlos G. Nerja, Jr. and Eugenio D. Caras, who claimed to represent the 342 employees of
which was, however, denied with finality in a resolution dated 26 January 2000.
petitioner at that time and who allegedly stand to be adversely affected by the enforcement of the Partial Writ of Execution, filed a petition
for certiorari before the Court of Appeals docketed as CA-G.R. SP No. 65351.
On 10 February 2000, NAMAWU filed an Ex-Parte Manifestation and Second Motion for Execution with the Secretary of DOLE. The
motion also sought assistance from the Bureau of Working Conditions (BWC) in the computation of the awards/benefits due NAMAWU’s
Petitioner also filed a petition for certiorari before the Court of Appeals which was docketed as CA-G.R. SP No. 65458.
members under the Quisumbing order.

NAMAWU filed a motion for consolidation of the two petitions which was granted by the appellate court in its order dated 12 November
On 25 July 2000, the BWC submitted to the DOLE its findings and observation, coming up with a computation in the aggregate amount of
2001.
One Hundred Fifty-Nine Million, Fifty-Four Thousand Nine Hundred Seventy-One and 30/100 (₱159,054,971.30) Pesos for loss of time,
benefits, rice subsidy, health insurance bonus and backwages of union members who were illegally dismissed.
The Court of Appeals dispose of the two petitions by dismissing them in a Decision dated 24 January 2002.

Petitioner filed a comment to the BWC findings on 08 September 2000, stating that the BWC computation was erroneous for the following
reasons: (1) there is no legal basis for the computation of backwages because the Trajano order deleted the award of backwages made in Motions for reconsiderations were filed, which the Court of Appeals denied in an order dated 18 March 2003.
the Quisumbing order; (2) the entitlement to backwages of the employees retrenched in May and October 1996 would be dependent on
the resolution of the cases for illegal dismissal and unfair labor practice; and (3) the wage increase awarded by the Secretary cannot be
Carlos G. Nerja, Jr. and Eugenio D. Caras filed a petition for review before this Court which was dismissed on 09 June 2003.
availed of by the other employees who were not retrenched in May and October 1996.

On 11 April 2003, petitioner filed the instant petition for review on certiorari.
On 18 November 2000, 149 employees of petitioner who claimed were part of the 215 members of NAMAWU filed a Motion for
Intervention With Prior Leave before the Office of the Secretary of DOLE.7

In its Memorandum, petitioner raises the following issues:

In an order8 dated 09 May 2001, DOLE Acting Secretary Arturo D. Brion granted NAMAWU’s motion for execution, approved BWC’s
computation of the benefits due to the laid-off employees and denied the motion for intervention, thus: I

WHEREFORE, premises considered, judgment is hereby rendered:
1. Ordering respondent MMC to immediately reinstate all workers whether union member or not, who were laid-off on May
7, 1997 and October 7, 1996 without gap in service, loss of seniority, and that their full backwages and benefits from the
time of termination until actual reinstatement be paid;
WHETHER THE COURT OF APPEALS ERRED IN NOT RULING THAT THE TRAJANO ORDER MODIFIED THE
QUISUMBING ORDER AND THUS, PUBLIC RESPONDENT GRAVELY ABUSED HIS DISCRETION IN ORDERING
AND ISSUING A WRIT OF EXECUTION BASED ON THE QUISUMBING ORDER.
II

2. Approving the computation of BWC consisting of 23 pages based on the Order of July 30, 1997 submitted on this office
on July 25, 2000 through Director Danilo S. Lorredo and made integral part thereof;
3. Denying intervenor’s motion for intervention; and
WHETHER THE COURT OF APPEALS ERRED IN NOT RULING THAT PUBLIC RESPONDENT ACTED
WHIMSICALLY AND CAPRICIOUSLY IN APPROVING THE COMPUTATION OF THE BUREAU OF WORKING
CONDITIONS (BWC) WITHOUT GIVING ANY CONSIDERATION TO THE SUPERVENING EVENTS THAT RENDER
THE ENFORCEMENT OF THE BWC COMPUTATION UNREASONABLE AND UNJUST.

III
4. Ordering the Bureau of Working Condition to compute the remaining amount of the award due to complainants as per
order of the Secretary of Labor dated July 30, 1997 starting October 1, 1999 until January 31, 2000.
 93

Indeed, the timing of the retrenchment of workers tends to confirm the finding of the Secretary of Labor that the cessation of operations on
October 7, 1996 was an illegal lock-out. It is noteworthy that Petitioner claimed business losses to justify the retrenchment of workers at
WHETHER THE COURT OF APPEALS ERRED IN NOT RULING THAT NAMAWU HAD NO LEGAL STANDING TO
the time when the parties were negotiating a new CBA.
SEEK THE IMPLEMENTATION OF THE ASSAILED ORDERS GIVEN THAT MAJORITY OF ITS TOTAL MEMBERSHIP
HAS CHOSEN TO DISAFFILIATE.
Considering that he found Petitioner to be guilty of unfair labor practice in bargaining in bad faith, the reinstatement of the dismissed
workers and the grant of wage increase were proper.
The petition has no merit.

It must be noted that the Trajano order omitted the findings of unfair labor practice and illegal dismissal and the award of backwages
On the first issue, petitioner contends that the Court of Appeals erred in affirming the assailed orders issued by DOLE Acting Secretary
which were embodied in the Quisumbing order. Since we upheld entirely the findings in the Quisumbing order, i.e., illegal dismissal, unfair
Brion finding that it was the Quisumbing order that this Court upheld in G.R. No. 133519 and that the said order should be the basis for the
labor practice, award of backwages, reinstatement and wage increase in our Resolution, as a result the Trajano order is necessarily
enforcement of the writ of execution.
vacated.

Petitioner stresses that the Trajano order superseded and modified the Quisumbing order, hence, the basis for the issuance and
Furthermore, the dispositive portion could not have been clearer as it categorically declares that the Secretary of Labor, i.e., Leonardo
enforcement of the writ of execution must be the former order. To support its stance, petitioner argues that when it filed the petition in G.R.
Quisumbing, did not commit grave abuse in his order dated 30 July 1997, thus:
No. 133519, it merely questioned the Trajano order inasmuch as the said order affirmed the Quisumbing order directing the reinstatement
of the laid-off workers and the award of wage increase. Petitioner points out that since the only issues raised by it in G.R. No. 133519
were the reinstatement and award of wage increase, it follows that the other issues such as unfair labor practice and the award of WHEREFORE, the petition for certiorari is DISMISSED for lack of showing that the Secretary of Labor and Employment committed grave
backwages are excluded. Thus, the effect of the dismissal of the petition in G.R. No. 133519 was the reinstatement of the Trajano order. abuse of discretion in his order of July 30, 1997.

Petitioner also asserts that even assuming that the Resolution affirmed the Quisumbing order in its entirety without a similar
pronouncement that the Trajano order was a nullity, would only mean that there were two valid and subsisting orders. Since the Trajano
order is the later issuance, ergo, it supersedes and modifies the Quisumbing order.
Petitioner further claims that NAMAWU admitted the validity, finality and enforceability of the Trajano order in its Motion for Partial
Execution dated 11 September 1998.
The order that we sustained in the foregoing fallo is the Quisumbing order which is dated 30 July 1997, and definitely not the Trajano
order which is dated 17 April 1998. Even if we did not explicitly annul the Trajano order, nevertheless the tenor of the Resolution’s
dispositive portion indubitably decreed that we sustained the order dated 30 July 1997 or the Quisumbing order. Indeed, it is the
dispositive part of the judgment that actually settles and declares the rights and obligations of the parties, finally, definitively,
authoritatively, notwithstanding the existence of inconsistent statements in the body that may tend to confuse.13 It is the dispositive part
that controls, for purposes of execution.14 Hence, there is no doubt that it was the Quisumbing order, not the Trajano order, that we
upheld in our Resolution and which should be the basis of the writ of execution.

In the petition filed by petitioner in G.R. No. 133519, the following averments appear:10
As to petitioner’s contention that NAMAWU allegedly admitted in its Motion for Partial Execution dated 11 September 1998 the validity and
finality the Trajano order, the same is unsubstantiated. It does not appear from the said motion that NAMAWU made such categorical
Now, not only was the assumption improperly made, but worse, its implementation was also gravely abused by the then Secretary of admission.
Labor. It may be well to note that in the first assailed Order dated 30 July 1997, the Petitioner was found guilty of unfair labor practice and
illegal dismissal, a finding that was arrived at by then Secretary Quisumbing without observing the measure of due process demanded by
Besides, even if there was such an admission, the same does not bind this Court. It is not the interpretation of NAMAWU that makes the
the gravity of the charges made against MMC x x x.
Trajano order or the Quisumbing order controlling, rather, it is the Court’s declaration that settles such issue.

For all its efforts, the Petitioner should have, at the very least, been spared of these whimsical and arbitrary impositions of the Public
Anent the second issue, petitioner questions the BWC computation. It accentuates that the same is flawed as it included the award of
Respondent and his predecessor in office (referring to Secretary Quisumbing) x x x.
backwages which was already deleted in the Trajano order.

The foregoing portion of the petition amply suggests that petitioner was assailing the Quisumbing order, not only on the issues of
Petitioner also insists that the Abuana case – where the dismissal of Abuana was declared valid, and therefore the award of backwages
reinstatement and the award of wage increase, but also on the matter of unfair labor practice, illegal dismissal and the award of
was deleted by the labor arbiter and later affirmed by the NLRC - should have a bearing in the instant case considering that the
backwages as well. Assuming arguendo that indeed the issues on unfair labor practice and award of backwages were not raised by
circumstances surrounding the dismissal of Abuana are the same circumstances that resulted in the retrenchments of NAMAWU’s
petitioner, there is nothing to prevent this Court from reviewing matters not specifically raised or assigned as error by the parties, if their
members in May and October 1996. As Abuana was not awarded backwages, NAMAWU’s members should not have been awarded
consideration is necessary in arriving at a just resolution of the controversy, as in the instant case. Thus we held:
backwages as well.

x x x It is axiomatic that an appeal, once accepted by this Court, throws the entire case open to review, and that this Court has the
Petitioner likewise avers that the employees who were not retrenched in May and October 1996 should not be awarded the wage increase
authority to review matters not specifically raised or assigned as error by the parties, if their consideration is necessary in arriving at a just
because of subsequent and supervening events such as the fact that these employees had entered into separate agreements with
resolution of the case.11
petitioner for the adoption of a new progressive wage system and that they executed quitclaims releasing petitioner from any liabilities.

In upholding the Quisumbing order over the Trajano order, we resolved:12

 94

illegal.18 In the instant case, the execution of the alleged quitclaims appears to be suspect because of the illegal dismissal of the workers
and the unfair labor practice committed by petitioner. For fear of getting nothing from petitioner, it may be readily concluded that
According to petitioner, another reason why the wage increase cannot be availed of by the employees not retrenched in May and October
employees were compelled to sign the quitclaims. Also, petitioner failed to present evidence to show that payments to the workers were
1996, is because the NAMAWU and petitioner have yet to enter into a collective bargaining as required by the Quisumbing order. It is
made.
petitioner’s interpretation of the said order that prior to the implementation of the wage increase, a CBA must first be constituted.

Equally unavailing is petitioner’s assertion that the wage increase or adjustment adopted under the BWC computation is premature since
On the other hand, the Court of Appeals opined that the Quisumbing order, and not the Trajano order, is controlling and should be the
no CBA had been entered into.
basis of the issuance of the writ of execution.

As accurately explained by the appellate court:19

As to the Abuana case, the appellate court ruled that the same cannot prevail over the Quisumbing order, the latter having been affirmed
both by the Court of Appeals and this Court. The Court of Appeals added that the decision in Abuana cannot bind the parties in the instant
case since they are not involved in the said Abuana case. Neither can We subscribe to petitioner’s contention that the wage adjustment or increase adopted in the BWC computation cannot be
implemented in the absence of a new CBA. It is undisputed that the increase adverted to in the BWC computation does not refer to the
agreed wage increase that could only be implemented based on a new CBA. Rather, it refers to the across-the-board increase granted in
Addressing the matter on the execution of quitclaims, the Court of Appeals discredited the same on the grounds that the copies of the
the Quisumbing order as a consequence of a finding of unfair labor practice on the part of MMC due to its failure to observe its duty to
same were not presented, and that granting that they were indeed executed, the same cannot bar the execution of the Quisumbing order
bargain.
in the absence of any showing that the entire amount due the employees was fully satisfied with the execution of the quitclaims.

Anent the third issue, petitioner argues that NAMAWU had no legal standing to seek the implementation of the assailed orders of DOLE
It ruled that the wage increase embodied in the BWC computation does not refer to the agreed wage increase that can only be
Acting Secretary Brion because of the disaffiliation of the majority of its members which deprived NAMAWU’s authority to represent its
implemented after a CBA is reached by the parties, rather, it refers to the across-the-board increase granted in the Quisumbing order as a
members.
result of a finding of unfair labor practice on the part of petitioner due to its failure to observe its duty to bargain. Thus, the wage increase
as computed by the BWC, is legally in order even in the absence of a new CBA.
Article 256 of the Labor Code partly provides:

We agree with the Court of Appeals.

REPRESENTATION ISSUE IN ORGANIZED ESTABLISHMENTS. – In organized establishments, when a verified petition questioning the
majority status of the incumbent bargaining agent is filed before the Department of Labor and Employment within the sixty-day period
Petitioner’s assertion that there is no basis for the computation of backwages, because the backwages awarded in the Quisumbing order
before the expiration of the collective bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot when
was deleted in the Trajano order flounders in view of our declaration that the Quisumbing order sets aside the Trajano order.
the verified petition is supported by the written consent of at least twenty-five (25%) percent of all the employees in the appropriate
bargaining unit.
The Court of Appeals is correct in saying that the pronouncement in the Abuana case is not binding on the parties in this case. We further
state that the Abuana case does not affect NAMAWU no matter the similarity in situation is on the ground that NAMAWU was not
xxxx
impleaded as a party in the Abuana case. It is a basic postulate in this jurisdiction that "no man shall be affected [in] any proceeding to
which he is a stranger, and strangers to a case are not bound by any judgment rendered by the court."15 Due process requires that a
court decision can only bind a party therein and not against one who did not have his day in court. At the expiration of the freedom period, the employer shall continue to recognize the majority status of the incumbent bargaining agent
where no petition for certification election is filed.

As to petitioner’s argument on the new progressive wage, suffice it to state that the same issue had already been passed upon in
Maricalum Mining Corporation v. Trajano16 where we affirmed the finding of the Court of Appeals, viz:17 According to the foregoing provision, for a union to become an exclusive bargaining representative of a particular establishment, it must
emerge as winner in a certification election. In the case at bar, there was no certification election held challenging the majority status of
NAMAWU as the exclusive bargaining representative of petitioner’s employees. NAMAWU, therefore, remains the exclusive bargaining
The alleged acceptance of the workers of the new wage structure is likewise unreliable. If the alternative is dismissal, who would not sign
representative of petitioner’s employees and possesses legal standing to represent them.
an "acceptance" of such new wage structure? Besides, as pointed out by the private respondent, even granting that the workers freely
agreed to such wage structures, the company could not have validly negotiated with them without violating the Labor Code, considering
that the private respondent was still then the exclusive bargaining agent of the rank-and-file employees. One final point. NAMAWU accuses petitioner of forum shopping. NAMAWU alleges that the instant petition is filed for the purpose of
preventing the execution of the Quisumbing order as affirmed by this Court on 06 July 1998 in G.R. No. 133519 and on 26 January 2000
in G.R. No. 138996.
Petitioner’s contention that the workers whose services were terminated subsequent in May and October 1996 executed quitclaims does
not merit our attention because petitioner failed to prove such execution.
Petitioner counters that it did not commit forum shopping because the relief prayed for in the previous case was the reversal of the Trajano
order while the relief prayed for in this petition is the reversal of the orders enforcing and executing the terms of the Quisumbing order.
Quitclaims are commonly frowned upon as contrary to public policy and ineffective to bar claims for the full measure of the workers’ legal
rights especially if the following are present: (a) there is clear proof that the waiver was wangled from an unsuspecting or gullible person;
or (b) the terms of the settlement are unconscionable, and on their face invalid, such quitclaims must be struck down as invalid or
 95

Forum shopping exists when a party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all
substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same
issues either pending in, or already resolved adversely, by some other court.20 It has been characterized as an act of malpractice that is
prohibited and condemned as trifling with the courts and abusing their processes. The test in determining whether a party violates the rule
against forum shopping is where a final judgment in one case will amount to res judicata in the action under consideration or where the
elements of litis pendentia are present. In turn, the elements of res judicata as enumerated in Sy Kao v. Court of Appeals21 are as follows:
(a) identity of parties; (b) identity of rights asserted and reliefs being founded on the same facts; and (c) identity in the two preceding
particulars should be such that any judgment which may be rendered on the other action will, regardless of which party is successful,
amount to res judicata in the action under consideration.

In this case, the parties are the same, petitioner and NAMAWU. The reliefs prayed for are substantially identical which is ultimately the
nullification of the Quisumbing order. Likewise, res judicata22 exists because a ruling of this Court on the issues raised by petitioner would
amount to revisiting and re-ventilating the essentially same issue, i.e., whether or not the Quisumbing order is controlling, which were
already passed upon and definitely resolved by this Court in Maricalum Mining Corporation v. Trajano.23 Even on this ground alone, for
being violative of the rule against forum shopping, the instant petition for review should be denied.24

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated 24 January 2002 and its Resolution dated 18
March 2003 are hereby AFFIRMED. With costs.

SO ORDERED.

G.R. No. 159323 July 31, 2008

 96

The Labor Arbiter, in each of the complaints, ruled in favor of petitioner company.20 The first complaint was dismissed after Labor Arbiter
Jesus N. Rodriguez, Jr. found that the company did not have the power of control over Dr. Climaco’s performance of his duties and
COCA-COLA BOTTLERS (PHILS.), INC. and ERIC MONTINOLA, Petitioners,
responsibilities. The validity of the Retainer Agreement was also recognized. Labor Arbiter Benjamin Pelaez likewise dismissed the
vs.
second complaint in view of the dismissal of the first complaint.1avvphi1
SOCIAL SECURITY COMMISSION and DR. DEAN CLIMACO, Respondents.

On appeal, the NLRC, Fourth Division, Cebu City, affirmed the Arbiter disposition.21 On petition for review before the CA, the NLRC ruling
DECISION
was reversed.22 The appellate court ruled that using the four-fold test, an employer-employee relationship existed between the company
and Dr. Climaco. Petitioners elevated the case through a petition for review on certiorari23 before this Court.
REYES, R.T., J.:

Meantime, on November 9, 1994, while the NLRC cases were pending, Dr. Climaco filed with the SSC in Bacolod City, a petition24
WE are confronted with triple remedial issues on prejudicial question, forum shopping, and litis pendentia. praying, among others, that petitioner Coca-Cola Bottlers (Phils.), Inc. be ordered to report him for compulsory social security coverage.

We review on certiorari the Decision1 of the Court of Appeals (CA) upholding the order of the Social Security Commission (SSC),2 On April 12, 1995, petitioners moved for the dismissal of the petition on the ground of lack of jurisdiction. They argued that there is no
denying petitioners’ motion to dismiss respondent Climaco’s petition for compulsory coverage with the Social Security System (SSS). employer-employee relationship between the company and Dr. Climaco; and that his services were engaged by virtue of a Retainer
Agreement.25

The Facts
Dr. Climaco opposed the motion.26 According to Dr. Climaco, "[t]he fact that the petitioner [i.e., respondent Dr. Climaco] does not enjoy
the other benefits of the company is a question that is being raised by the petitioner in his cases filed with the National Labor Relations
Petitioner Coca-Cola Bottlers (Phils.), Inc. is a corporation engaged in the manufacture and sale of softdrink beverages.3 Co-petitioner
Commission (NLRC), Bacolod City, against the respondent [i.e., petitioner company]."27
Eric Montinola was the general manager of its plant in Bacolod City.4 Respondent Dr. Dean Climaco was a former retainer physician at
the company’s plant in Bacolod City.5
On July 24, 1995, the SSC issued an order stating among others, that the resolution of petitioner company’s motion to dismiss is held in
abeyance "pending reception of evidence of the parties."28
In 1988, petitioner company and Dr. Climaco entered into a Retainer Agreement6 for one year, with a monthly compensation of
₱3,800.00,7 where he "may charge professional fees for hospital services rendered in line with his specialization."8 The agreement further
provided that "either party may terminate the contract upon giving thirty (30)-day written notice to the other."9 In consideration of the In view of the statements of Dr. Climaco in his opposition to the company’s motion to dismiss, petitioners again, on March 1, 1996, moved
retainer’s fee, Dr. Climaco "agrees to perform the duties and obligations"10 enumerated in the Comprehensive Medical Plan,11 which was for the dismissal of Dr. Climaco’s complaint, this time on the grounds of forum shopping and litis pendentia.29
attached and made an integral part of the agreement.

SSC and CA Dispositions

Explicit in the contract, however, is the provision that no employee-employer relationship shall exist between the company and Dr.
Climaco while the contract is in effect.12 In case of its termination, Dr. Climaco "shall be entitled only to such retainer fee as may be due
On January 17, 1997, the SSC denied petitioners’ motion to dismiss, disposing as follows:
him at the time of termination."13

WHEREFORE, PREMISES CONSIDERED, the respondents’ Motion to Dismiss is hereby denied for lack of merit.
Dr. Climaco continuously served as the company physician, performing all the duties stipulated in the Retainer Agreement and the
Comprehensive Medical Plan. By 1992, his salary was increased to ₱7,500.00 per month.14
Accordingly, let this case be remanded to SSS Bacolod Branch Office for reception of evidence of the parties pursuant to the Order dated
July 24, 1995.
Meantime, Dr. Climaco inquired with the Department of Labor and Employment and the SSS whether he was an employee of the
company. Both agencies replied in the affirmative.15 As a result, Dr. Climaco filed a complaint16 before the National Labor Relations
Commission (NLRC), Bacolod City. In his complaint, he sought recognition as a regular employee of the company and demanded SO ORDERED.30
payment of his 13th month pay, cost of living allowance, holiday pay, service incentive leave pay, Christmas bonus and all other
benefits.17
Petitioners’ motion for reconsideration31 received the same fate.32

During the pendency of the complaint, the company terminated its Retainer Agreement with Dr. Climaco. Thus, Dr. Climaco filed another
On April 29, 1997, the company filed a petition for certiorari before the CA. On March 15, 2002, the CA dismissed the petition, with a fallo
complaint18 for illegal dismissal against the company before the NLRC Bacolod City. He asked that he be reinstated to his former position
reading:
as company physician of its Bacolod Plant, without loss of seniority rights, with full payment of backwages, other unpaid benefits, and for
payment of damages.19
 97

While we deplore the failure of petitioners and counsel in updating the Court on the resolution of the said related case, We hasten to state
that it did not operate to moot the issues pending before Us. We take this opportunity to address the questions on prejudicial question,
WHEREFORE, under the premises, the Court holds that public respondent Social Security Commission did not act with grave abuse of
forum shopping, and litis pendentia.
discretion in issuing the disputed orders, and the herein petition is therefore DISMISSED for want of merit.

No prejudicial question exists.

SO ORDERED.33

Petitioners allege that Dr. Climaco previously filed separate complaints before the NLRC seeking recognition as a regular employee.
Hence, the present recourse.
Necessarily then, a just resolution of these cases hinge on a determination of whether or not Dr. Climaco is an employee of the
company.35 The issue of whether Dr. Climaco is entitled to employee benefits, as prayed for in the NLRC cases, is closely intertwined
Issues with the issue of whether Dr. Climaco is an employee of the company who is subject to compulsory coverage under the SSS Law. Hence,
they argue, said regularization/illegal dismissal case is a prejudicial question.

Petitioners raise the following issues for Our consideration:

The argument is untenable.

WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS ERRED IN RENDERING THE ASSAILED RESOLUTIONS,
HAVING DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW AND THE APPLICABLE DECISIONS OF
THIS HONORABLE COURT, CONSIDERING THAT:
I.
THE PREVIOUS COMPLAINT FOR REGULARIZATION AND/OR ILLEGAL DISMISSAL, WHICH IS NOW PENDING
RESOLUTION BEFORE THE SUPREME COURT, POSES A PREJUDICIAL QUESTION TO THE SUBJECT OF THE
PRESENT CASE.
II.
Our concept of prejudicial question was lifted from Spain, where civil cases are tried exclusively by civil courts, while criminal cases are
tried exclusively in criminal courts. Each kind of court is jurisdictionally distinct from and independent of the other. In the Philippines,
however, courts are invariably tribunals of general jurisdiction. This means that courts here exercise jurisdiction over both civil and criminal
cases. Thus, it is not impossible that the criminal case, as well as the civil case in which a prejudicial question may rise, may be both
pending in the same court. For this reason, the elements of prejudicial question have been modified in such a way that the phrase
"pendency of the civil case in a different tribunal" has been eliminated.36
The rule is that there is prejudicial question when (a) the previously instituted civil action involves an issue similar or intimately related to
the issue raised in the subsequent criminal action, and (b) the resolution of such issue determines whether or not the criminal action may
proceed.37 It comes into play generally in a situation where a civil action and a criminal action both pend and there exists in the former an
issue which must be preemptively resolved before the criminal action may proceed. This is so because howsoever the issue raised in the
civil action is resolved would be determinative juris et de jure of the guilt or innocence of the accused in the criminal case.38

GIVEN THE ATTENDANT CIRCUMSTANCES, RESPONDENT CLIMACO IS GUILTY OF FORUM SHOPPING, WHICH
THEREBY CALLED FOR THE OUTRIGHT DISMISSAL OF HIS PETITION BEFORE THE SOCIAL SECURITY Here, no prejudicial question exists because there is no pending criminal case.39 The consolidated NLRC cases cannot be
COMMISSION. considered as "previously instituted civil action." In Berbari v. Concepcion,40 it was held that a prejudicial question is understood in law to
be that which must precede the criminal action, that which requires a decision with which said question is closely related.

III.
Neither can the doctrine of prejudicial question be applied by analogy. The issue in the case filed by Dr. Climaco with the SSC
involves the question of whether or not he is an employee of Coca-Cola Bottlers (Phils.), Inc. and subject to the compulsory coverage of
THE PETITION SHOULD HAVE ALSO BEEN DISMISSED OUTRIGHT ON THE GROUND OF LITIS PENDENTIA, AS
the Social Security System. On the contrary, the cases filed by Dr. Climaco before the NLRC involved different issues. In his first
THERE ARE OTHER ACTIONS PENDING BETWEEN THE SAME PARTIES FOR THE SAME CAUSE OF ACTION.34
complaint,41 Dr. Climaco sought recognition as a regular employee of the company and demanded payment of his 13th month pay, cost
(Underscoring supplied)
of living allowance, holiday pay, service incentive leave pay, Christmas bonus and all other benefits.42 The second complaint43 was for
illegal dismissal, with prayer for reinstatement to his former position as company physician of the company’s Bacolod Plant, without loss of
Our Ruling seniority rights, with full payment of backwages, other unpaid benefits, and for payment of damages.44 Thus, the issues in the NLRC
cases are not determinative of whether or not the SSC should proceed. It is settled that the question claimed to be prejudicial in nature
must be determinative of the case before the court.45
The petition fails.

There is no forum shopping.

The Court notes that petitioners, in their petition, averred that the appeal from the NLRC and CA dispositions on the illegal dismissal of
respondent Climaco is still pending with this Court. Upon verification, however, it was unveiled that the said case had already been
decided by this Court’s First Division on February 5, 2007. Anent the second issue, petitioners posit that since the issues before the NLRC and the SSC are the same, the SSC cannot make a ruling
on the issue presented before it without necessarily having a direct effect on the issue before the NLRC. It was patently erroneous, if not

malicious, for Dr. Climaco to invoke the jurisdiction of the SSC through a separate petition.46 Thus, petitioners contend, Dr. Climaco was
guilty of forum shopping.
Again, We turn down the contention.
Forum shopping is a prohibited malpractice and condemned as trifling with the courts and their processes.47 It is proscribed because it
unnecessarily burdens the courts with heavy caseloads. It also unduly taxes the manpower and financial resources of the judiciary. It
mocks the judicial processes, thus, affecting the efficient administration of justice.48
The grave evil sought to be avoided by the rule against forum shopping is the rendition by two (2) competent tribunals of two (2) separate
and contradictory decisions. Unscrupulous litigants, taking advantage of a variety of competent tribunals, may repeatedly try their luck in
several different fora until a favorable result is reached.49
It is well to note that forum shopping traces its origin in private international law on choice of venues, which later developed to a choice of
remedies. In First Philippine International Bank v. Court of Appeals,50 the Court had occasion to outline the origin of the rule on forum
shopping. Said the Court:
x x x forum shopping originated as a concept in private international law, where non-resident litigants are given the option to choose the
forum or place wherein to bring their suit for various reasons or excuses, including to secure procedural advantages, to annoy and harass
the defendant, to avoid overcrowded dockets, or to select a more friendly venue. To combat these less than honorable excuses, the
principle of forum non conveniens was developed whereby a court, in conflicts of law cases, may refuse impositions on its jurisdiction
where it is not the most "convenient" or available forum and the parties are not precluded from seeking remedies elsewhere.
xxxx
In the Philippines, forum shopping has acquired a connotation encompassing not only a choice of venues, as it was originally understood
in conflicts of laws, but also to a choice of remedies. As to the first (choice of venues), the Rules of Court, for example, allow a plaintiff to
commence personal actions "where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the
plaintiffs resides, at the election of the plaintiff" (Rule 4, Sec. 2[b]). As to remedies, aggrieved parties, for example, are given a choice of
pursuing civil liabilities independently of the criminal, arising from the same set of facts. A passenger of a public utility vehicle involved in a
vehicular accident may sue on culpa contractual, culpa aquiliana or culpa criminal – each remedy being available independently of the
others – although he cannot recover more than once.
"In either of these situations (choice of venue or choice of remedy), the litigant actually shops for a forum of his action. This was the
original concept of the term forum shopping.
"Eventually, however, instead of actually making a choice of the forum of their actions, litigants, through the encouragement of their
lawyers, file their actions in all available courts, or invoke all relevant remedies simultaneously. This practice had not only resulted to (sic)
conflicting adjudications among different courts and consequent confusion enimical (sic) to an orderly administration of justice. It had
created extreme inconvenience to some of the parties to the action.
"Thus, ‘forum-shopping’ had acquired a different concept – which is unethical professional legal practice. And this necessitated or had
given rise to the formulation of rules and canons discouraging or altogether prohibiting the practice."
98
What therefore started both in conflicts of laws and in our domestic law as a legitimate device for solving problems has been abused and
misused to assure scheming litigants of dubious reliefs.51
Thus, in order to prevent forum shopping, the 1997 Rules of Civil Procedure now provide:
SEC. 5. Certification against forum shopping. – The plaintiff or principal party shall certify under oath in the complaint or other initiatory
pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not
theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the
best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete
statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is
pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been
filed.52
Forum shopping is not only strictly prohibited but also condemned. So much so that "[f]ailure to comply with the foregoing requirements
shall not be curable by mere amendment of the initiatory pleading but shall be cause for the dismissal of the case without prejudice. The
submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court,
without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful
and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt as well
as a cause for administrative sanctions."53
There is forum shopping when one party repetitively avails of several judicial remedies in different courts, simultaneously or successively,
all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same
issues either pending in, or already resolved adversely, by some other court.54 In short, forum shopping exists where the elements of litis
pendentia are present or where a final judgment in one case will amount to res judicata in the other.55
There is res judicata when (1) there is a final judgment or order; (2) the court rendering it has jurisdiction over the subject matter and the
parties; (3) the judgment or order is on the merits; and (4) there is between the two cases identity of parties, subject matter and causes of
action.56
Measured by the foregoing yardstick, Dr. Climaco is not guilty of forum shopping. While it is true that the parties are identical in the NLRC
and in the SSC, the reliefs sought and the causes of action are different.
Admittedly, Dr. Climaco’s basis in filing the cases before the NLRC and the SSC is his Retainer Agreement with the company. This does
not mean, however, that his causes of action are the same:
x x x Some authorities declare the distinction between demands or rights of action which are single and entire and those which are several
and distinct to be that the former arise out of one and the same act or contract and the latter out of different acts or contracts. This rule has
been declared to be unsound, however, and as evidence of its unsoundness, reference has been made to the fact that several promissory
notes may, and often do, grow out of one and the same transaction, and yet they do not constitute an entire demand. The better rule is
that the bare fact that different demands spring out of the same or contract does not ipso facto render a judgment on one a bar to a suit on
another, however distinct. It is clear that the right of a plaintiff to maintain separate actions cannot be determined by the fact that the
claims might have been prosecuted in a single action. A plaintiff having separate demands against a defendant may, at his election, join
them in the same action, or he may prosecute them separately, subject of the power of the court to order their consolidation. There may
be only one cause of action although the plaintiff is entitled to several forms and kinds of relief, provided there is not more than one
primary right sought to be enforced or one subject of controversy presented for adjudication.57 (Underscoring supplied)

As the SSC and the CA correctly observed, different laws are applicable to the cases before the two tribunals. The Labor Code and
pertinent social legislations would govern the cases before the NLRC, while the Social Security Law would govern the case before the
SSC. Clearly, as the issues pending before the NLRC and the SSC are diverse, a ruling on the NLRC cases would not amount to res
judicata in the case before the SSC.
The elements of litis pendentia are absent.
Lastly, petitioners contend that the petition of Dr. Climaco before the SSC is defective because there were pending actions between the
same parties and involving the same issues in different fora.58
For litis pendentia to exist, there must be (1) identity of the parties or at least such as representing the same interests in both actions; (2)
identity of the rights asserted and relief prayed for, the relief founded on the same facts; and (3) identity of the two cases such that
judgment in one, regardless of which party is successful, would amount to res judicata in the other.59
In the case under review, there is no litis pendentia to speak of. As previously explained, although the parties in the cases before the
NLRC and the SSC are similar, the nature of the cases filed, the rights asserted, and reliefs prayed for in each tribunal, are
different.lawp++il
As a last attempt, however, petitioners invoke Rule 16, Section 1(e) of the 1997 Rules of Civil Procedure. Petitioners contend that the
petition Dr. Climaco lodged with the SSC is "another action" prohibited by the Rule.60
In Solancio v. Ramos,61 the issue centered on whether the pending administrative case before the Bureau of Lands is "another action,"
which would justify the dismissal of the complaint of plaintiff against defendants before the then Court of First Instance (now RTC) of
Cagayan. Ruling in the negative, the Court noted that "both parties as well as the trial court have missed the extent or meaning of the
ground of the motion to dismiss as contemplated under the Rules of Court."62 Mr. Justice Regala, who wrote the opinion of the Court,
explained the phrase "another action" in this wise:
This is not what is contemplated under the law because under Section 1(d), Rule 16 (formerly Rule 8) of the Rules of Court, [now Rule 1,
Section 16(e) of the Rules of Court, supra] one of the grounds for the dismissal of an action is that "there is another action pending
between the same parties for the same cause." Note that the Rule uses the phrase "another action." This phrase should be construed in
line with Section 1 of Rule 2, which defines the word action, thus –
"Action means an ordinary suit in a court of justice, by which one party prosecutes another for the enforcement or protection of a right, or
the prevention or redress of a wrong. Every other remedy is a special proceeding."63
Evidently, there is no "another action" pending between petitioners and Dr. Climaco at the time when the latter filed a petition before the
SSC.
WHEREFORE, the petition is DENIED and the appealed decision AFFIRMED.
Costs against petitioners.
SO ORDERED.
99
G.R. No. 147570 February 27, 2004
SPS. NUMERIANO and CARMELITA ROMERO, petitioners
vs.
MERCEDES L. TAN, FLORENTINA L. GONZALES, CELSO L. LUNA, MARIO
LUNA and RAMON L. GARCIA, respondents.
DECISION
QUISUMBING, J.:
Petitioners assail the decision1 dated January 19, 2001, of the Court of Appeals in CA-
GR SP No. 59110, which reversed that of the Provincial Agrarian Reform Adjudication
Board,2 Region III, dated May 9, 2000. The Board found that a tenancy relationship
existed between petitioners and respondents, entitling petitioners to retain possession
of the fishpond in dispute. The appellate court ruled against petitioners, declaring the
PARAB’s decision void for want of jurisdiction.
Subject of this controversy is a private fishpond with an area of one million, two
hundred fifty six thousand and four hundred thirty three (1,256,433) square meters in
Barangay San Jose, Lubao, Pampanga. The records show that under a contract to
petitioners as lessees by respondents as lessors, the fishpond was leased for
P1,200,000.00 yearly rental. This contract is evidenced by a "Kasunduan Sa
Pamuwisan," spanning the period January 1, 1996 until December 31, 1999. 3
Petitioners allege that they have been in peaceful possession of the fishpond as
tenant-lessee since 1985. They present cash vouchers and hand-written receipts
covering the period 1987 to 1997.4 In September 1999, respondents gave verbal
notice to terminate petitioners’ lease. According to petitioners, respondents wanted to
terminate the contract because a third party offered to pay higher rent. However,
despite petitioners’ counter-offer to match the increase in the rent, respondents
appeared bent on removing petitioners from the premises.
For their part, respondents aver that there is no relationship of lease-tenancy by
petitioners to speak of. They add that the existing contract between them and
petitioners is an ordinary lease, governed by the Civil Code. Respondents further
claim that petitioners failed to pay the agreed rental covering the period January 1,
1997 to December 31, 1997. Accordingly, respondents were constrained to file an
ejectment case against petitioners before the Metropolitan Trial Court (MTC) of
Malabon, Branch 55, conformably with the provision on venue in the lease contract. 5
On July 21, 1997, the MTC issued a judgment based on a compromise agreement
wherein the parties agreed, inter alia, that petitioners would vacate the leased
premises not later than December 31, 1999.6
 100

5). Declaring the lease contract between intervenor and defendants as null
and void.10
Both parties admit that the aforestated compromise agreement bore the imprimatur of
the trial court. Equally admitted is the fact that petitioners were not represented by
counsel when they entered into said compromise agreement. In the meantime, while the complaint before the PARAB was pending, herein
petitioners on December 10, 1999, (21 days before the expiration of the lease contract
and the date to relinquish possession of the fishpond pursuant to the compromise
On November 10, 1999, petitioners filed a complaint for maintenance of peaceful
agreement), filed with the RTC of Malabon, Branch 74, a petition for annulment of the
possession and issuance of mandatory preliminary injunction with the Provincial
MTC judgment, order, and compromise agreement.11 Petitioners raised issues
Agrarian Reform Adjudication Board, Region III (PARAB). Respondents filed a motion
concerning the tenancy relationship, lack of assistance by counsel in arriving at the
to dismiss it, alleging lack of jurisdiction, improper venue and litis pendentia, and/or
compromise agreement, as well as lack of jurisdiction by the MTC Malabon because
res judicata. The PARAB in an order dated January 19, 2000 denied the motion to
the subject property is located in Lubao, Pampanga. Respondents filed a motion to
dismiss.
dismiss premised on culpability of petitioners for forum shopping, including lack of
cause of action to file the petition. On March 7, 2001, the RTC dismissed the petition
On January 6, 2000, Kenneth Bautista filed a motion for intervention.7 He alleged that for lack of cause of action and failure to prosecute.12
he had entered into a one year-joint venture agreement8 dated November 30, 1998, to
expire on December 30, 1999, with the petitioners to augment their harvest and
As it turned out, even before the RTC’s Order of dismissal came out in their favor,
enhance their fishpond technology. Intervenor claims that he has the right of
respondents had already elevated the controversy to the appellate court. To be
possession over the subject fishpond as respondents (defendants in the PARAB
precise, on June 8, 2000, respondents filed with the Court of Appeals a petition for
complaint) executed a lease contract extending from January 1, 2000 to December
certiorari assailing the May 9, 2000 decision of the PARAB. Finding in favor of
31, 2003 in his favor.9 He claims that petitioners’ right as lessees of the fishpond
respondents, the Court of Appeals, in a decision dated January 19, 2001, set aside
already lapsed with the expiration of their contract on December 31, 1999.
the PARAB decision, decreeing thus:

On January 28, 2000, petitioners amended their complaint to include intervenor

WHEREFORE, premises considered, the instant petition is hereby GRANTED and
Kenneth Bautista as one of the defendants.
GIVEN DUE COURSE. The assailed Order of January 19, 2000 and the questioned
Decision dated May 9, 2000 are declared NULL and VOID for want of jurisdiction.
After the parties submitted their evidence and position papers, the PARAB rendered
judgment in favor of herein petitioners. It found that petitioners have proved the
Let the final and executory judgment of the MTC of Malabon in Civil Case No. 1694-97
existence of all the elements necessary to establish a tenancy relationship. Dated May
be executed immediately.
9, 2000, the judgment reads:

SO ORDERED.13
Wherefore, in view of the foregoing judgment is hereby rendered:

1) Maintaining plaintiff-spouses Numeriano and Carmelita Romeo as
tenants over the subject fishpond;
2). Ordering the issuance of a Writ of Permanent Mandatory Injunction
restoring plaintiffs in their peaceful possession of the fishpond in question
and directing defendants and intervenor to cease and desist from doing any
act which would deprive herein plaintiffs of their possession and cultivation
of the subject fishpond;
3). Ordering plaintiffs herein to post bond in the amount of 1.2 million pesos
in favor of intervenor herein to answer for the damages which the latter
might suffer if it should be found later on that the former is not entitled to the
relief prayed for;
Petitioners’ motion for reconsideration of the said decision was denied by the CA in a
resolution dated March 19, 2001. Heedless of this development, petitioners filed on
April 4, 2001, a petition with the RTC of Malabon, Branch 170, for certiorari and
prohibition with prayer for the issuance of preliminary injunction/restraining order. This
petition questioned the order of execution dated February 26, 2001 issued by the MTC
of Malabon, Branch 55, which ordered the execution of its judgment based on the
compromise agreement.14
Then on April 11, 2001 petitioners filed before this Court an appeal via a petition
praying for reversal of the abovestated CA decision, which ruled that the PARAB had
no jurisdiction to hear and decide the complaint filed by petitioners, and thus ordered
the immediate execution of MTC judgment.
Petitioners now assign the following as errors:

4). Ordering the defendants and intervenor to respect the peaceful

possession and cultivation by the plaintiffs of the subject fishpond;

I. THE COURT OF APPEALS ERRED WHEN IT DECLARED THAT THE
PROVINCIAL ADJUDICATOR ERASMO SP. CRUZ HAS NO JURISDICTION OVER
THE SUBJECT MATTER OF THE CASE BASED ON THE CASE OF ATLAS
FERTILIZER CORP. VS. SECRETARY OF DEPARTMENT OF AGRARIAN
REFORM, 274 SCRA 30, WHERE THE SUPREME COURT RULED THAT THE
PROVISIONS OF REPUBLIC ACT NO. 7881 EXPRESSLY STATED THAT
FISHPONDS AND PRAWN FARMS ARE EXCLUDED FROM THE COVERAGE OF
THE COMPREHENSIVE AGRARIAN REFORM LAW [CARL];
II. THE COURT OF APPEALS ERRED WHEN IT DECLARED THAT IT IS LIKEWISE
DISMISSIBLE CONSIDERING THAT THERE WAS A COMPROMISE AGREEMENT
BETWEEN THE PETITIONER AND THE PRIVATE RESPONDENTS WHICH HAS
THE FORCE OF RES JUDICATA BETWEEN THE PARTIES AND SHOULD NOT BE
DISTURBED EXCEPT FOR VICES OF CONSENT OR FORGERY;
III. THE COURT OF APPEALS ERRED WHEN IT GAVE DUE COURSE TO THE
PETITION FILED BY THE RESPONDENTS CONSIDERING THAT THE PROPER
REMEDY IS TO APPEAL THE DECISION OF THE PROVINCIAL ADJUDICATOR TO
THE DARAB.15
Principally, the issues for our resolution are (1) whether or not the PARAB had
jurisdiction to hear and decide the complaint for maintenance of peaceful possession
and issuance of mandatory preliminary injunction; (2) whether or not the compromise
agreement duly approved by the MTC of Malabon, Branch 55, had the force and effect
of res judicata; and (3) whether or not the PARAB decision should have been
appealed to the Department of Agrarian Reform Adjudication Board (DARAB), and not
the subject of a special civil action of certiorari filed with the Court of Appeals. These
issues depend, in turn, on whether the fishpond, which is the subject of the
controversy, is governed by the Comprehensive Agrarian Reform Law (CARL).
Noteworthy, respondents counter that petitioners are guilty of forum shopping in filing
different complaints based on the same facts with different judicial and quasi-judicial
bodies. Considering the circumstances of this case, however, we shall first tackle the
substantial issues on the merits before the technical matter raised by respondents.
Petitioners aver that the PARAB had jurisdiction over the subject matter of the case as
it involves a tenancy relationship. They further claim that this tenancy relationship has
long been in existence since 1985 such that any amendment to the Comprehensive
Agrarian Reform Law (CARL) to the effect that fishponds are excluded from the
coverage of the latter cannot be given retroactive effect, hence, will not operate to
divest the PARAB of its jurisdiction over the complaint.
The Court of Appeals in ruling that the PARAB has no jurisdiction relies on our ruling
in the case of Atlas Fertilizer Corp. v. Secretary, Dept. of Agrarian Reform 16 where we
held that Rep. Act No. 7881 expressly provides that fishponds and prawn farms are
excluded from the coverage of CARL. In reversing the PARAB’s findings, the appellate
court stated:
101
…[T]hat the provincial adjudicator’s jurisdiction is only to hear, determine and
adjudicate all agrarian cases, AND disputes and incidents in connection therewith
(DARAB New Rules of Procedure, Rule 2, Section 2), and considering further that
lands devoted to fishing are not agricultural lands because the use of the land is only
incidental to and not the principal factor in productivity, as implied by this Court in the
Atlas case, it follows that the PARAB has no jurisdiction over the instant case. 17
On the jurisdictional issue, we find that it was reversible error for the PARAB to have
taken cognizance of petitioners’ complaint. The jurisdiction of the PARAB in this case
is limited to agrarian disputes or controversies and other matters or incidents involving
the implementation of the Comprehensive Agrarian Reform Program (CARP) under
Rep. Act No. 6657, Rep. Act No. 3844 and other agrarian laws.18 An agrarian dispute
is defined as any controversy relating to tenurial arrangements, whether leasehold,
tenancy, stewardship or otherwise, over lands devoted to agriculture, including
disputes concerning farm workers associations or representation of persons in
negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of
such tenurial arrangements.19
Although Section 166 (1) of Rep. Act No. 3844 had included fishponds in its definition
of agricultural land within its coverage, this definition must be considered modified in
the light of Sec. 2 of Rep. Act No. 7881, which amended Section 10 of Rep. Act No.
6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL).
Expressly, the amendment has excluded private lands actually, directly and
exclusively used for prawn farms and fishponds from the coverage of the CARL. In
fact, under Section 3 (c) of R.A. No. 6657, as amended, defines an agricultural land as
that which is devoted to agricultural activity and not otherwise classified as mineral,
forest, residential, commercial or industrial land. In turn, Section 3 (b) thereof defines
agricultural activity as the cultivation of the soil, planting of crops, growing of fruit
trees, including the harvesting of such farm products, and other farm activities, and
practices performed by a farmer in conjunction with such farming operations done by
persons whether natural or juridical. Clearly, by virtue of the amendments to the
CARL, the operation of a fishpond is no longer considered an agricultural activity, and
a parcel of land devoted to fishpond operation is not agricultural land as therein
defined.
Significantly, although there is no express repeal of Rep. Act No. 3844 as a whole, as
in fact its provisions that are not inconsistent with Rep. Act No. 6657, may still be
given suppletory effect, nonetheless, there is now irreconcilable inconsistency or
repugnancy between the two laws as regards the treatment of fishponds and prawn
farms. Such repugnancy leads us to conclude that the provisions of Rep. Act No. 6657
(CARL) supersede the provisions of Rep. Act No. 3844 insofar as fishponds and
prawn farms are concerned. In any event, Section 76 of Rep. Act No. 6657 (CARL), as
amended, provides that all other laws, decrees, issuances, or parts thereof
inconsistent thereto are repealed or amended accordingly.20
Consequently, we rule that there is no agrarian tenancy relationship to speak of in this
case at this time, since certain requirements set by present law on the matter have not
been met. Among these are: (1) the subject matter should be agricultural land; (2) the

purpose should be agricultural production; and (3) there should be personal cultivation
done by the tenants themselves.21
Unless the requisite elements of agrarian tenancy concur in order to create a tenancy
relationship between the parties, we cannot bring the matter within the purview of
tenancy under CARL. The absence of one element makes an occupant of a parcel of
land, or a cultivator thereof, or a planter thereon outside the scope of CARL. Nor can
such occupant, cultivator or planter be classified as a de jure agricultural tenant for
purposes of agrarian reform law. And unless a person has established his status as a
de jure tenant, he is not entitled to security of tenure nor is he covered by the Land
Reform Program of the Government under existing agrarian reform laws. 22
Here, we also find that petitioners failed to prove their personal "cultivation" of the area
in question. There is personal cultivation if the tenant (lessee) cultivates the land
himself or with the aid of the immediate farm household, which refers to the members
of the family of the tenant (lessee) and other persons who are dependent upon him for
support and who usually help him in the activities. 23 Particularly fatal to petitioners’
cause is the joint venture agreement with Kenneth Bautista. This agreement provides,
among others, that Kenneth Bautista will share in the operation and management of
the fishpond; pay the agreed rentals to the registered owner of the land; and that after
deducting all operational expenses, Kenneth Bautista and petitioners shall have equal
share in the net profits.24 Not only does it reflect lack of personal cultivation by
petitioners, but it also shows the nature of their fishpond operation is that of a large
scale commercial venture.
Petitioners claim vested rights arising from the alleged existing tenancy relations. But
this cannot be done validly under the present circumstances of this case. Section
2(b)25 of Rep. Act No. 7881 now contains a proviso, precisely to protect vested rights
of those who have already been issued a Certificate of Land Ownership Award
(CLOA). Without such CLOA no vested rights could now be claimed by petitioners. In
any event, petitioners failed to substantiate their allegation that they have been in
possession of the fishpond as early as 1985. The records show that the lease contract
began on January 1, 1996, to end on December 31, 1999. Petitioners have not shown
other pieces of evidence in their favor that would show possession prior to this lease
contract, to prove their allegation of prior occupancy.
Coming now to the issue of res judicata, we find that the elements thereof have been
duly established in favor of respondents, to wit: (1) there is a final judgment or order;
(2) the court rendering it has jurisdiction over the subject matter and the parties; (3)
the judgment or order is on the merits; (4) there is between the two cases identity of
parties, subject matter and causes of action.26 The compromise agreement between
the parties was duly approved by the MTC of Malabon, Branch 55. Absent any
evidence that mistake, fraud, violence, intimidation, undue influence, or falsity of
documents that vitiated the compromise agreement, the agreement must be upheld.
Petitioners claim that counsel did not assist them at the time the court approved the
compromise agreement. However, this fact alone does not ipso facto result in a
mistake under the law as to render inutile the approval of the trial court. In the
absence of any evidence to counter the presumption of regularity of the performance
102
of official duty, such presumption of regularity should be upheld. 27 Besides, it is
presumed that a person would take ordinary care of his concerns,28 such that
petitioners’ failure to obtain counsel at that time must be deemed with full knowledge
of the consequences thereof. Had petitioners truly believed that the compromise
agreement should have been stricken down, the proper course to take would have
been to file a motion to set aside the agreement on grounds of nullity under Article
2038 of the Civil Code. It is well settled that a judicial compromise has the effect of res
judicata and is immediately executory and not appealable unless set aside as
abovestated.29 Should the motion to set aside the compromise agreement be denied,
petitioners may then appeal the denial. Further, a judgment based on a compromise
agreement is a judgment on the merits, wherein the parties have validly entered into
stipulations and the evidence was duly considered by the trial court that approved the
agreement.
That the MTC of Malabon, Branch 55, had jurisdiction over the case for ejectment, to
begin with, is in our view beyond dispute. It is a basic tenet of law that courts acquire
jurisdiction over the subject matter based on the allegations of the complaint. The
assertions in the answer by the defendant cannot divest the court of said jurisdiction.
The original complaint filed by respondents clearly alleged that it was a suit for
ejectment, the jurisdiction of which is lodged with the proper MTC.
It cannot be denied also that in the actions filed by petitioners in the different courts,
as well as in the PARAB, there is identity of parties, of subject matter and of causes of
action. The ultimate test in ascertaining the identity of causes of action in two suits is
to look into whether or not the same evidence fully supports and establishes both the
present cause of action and the former cause of action. If in the affirmative, the former
judgment would be a bar.30 Petitioners in all instances sought to prove the existence of
tenancy relationship with respondents over a huge area devoted to fishpond
operations. They had to present the same evidence in any case, and they did. On this
score, we note that petitioners’ counsel failed to apprise this Court of all the actions
tending to raise the same cause of action, filed in different judicial and quasi-judicial
bodies, in contravention of the undertaking specified in the certification on non-forum
shopping. Petitioners and their counsel made no mention of the petition for annulment
of judgment/compromise agreement filed with the RTC of Malabon, Branch 74, nor of
the petition for certiorari with injunction filed with RTC of Malabon, Branch 170, on
April 4, 2001 assailing the February 26, 2001 order of execution of the municipal trial
court. Petitioners through counsel showed a lack of candor in coming to this Court
without full disclosure of prior actions taken successively or simultaneously.
Respondents claim that petitioners engaged in forum shopping as shown by the
records in this controversy. However, the Court deems it necessary to decide now this
case on the merits, rather than merely relying on a technicality, for the sake of
substantive justice due the concerned parties.
Finally, we rule that respondents correctly filed a special civil action of certiorari with
the Court of Appeals, as provided under Section 1, Rule 65, observing the rules on
hierarchy of courts. A special civil action of certiorari is an independent action, raising
the question of jurisdiction where the tribunal, board, or officer exercising judicial or
quasi-judicial functions has acted without or in excess of jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction. 31 As already discussed,
 103

WHEREFORE, the instant petition is DENIED for lack of merit. The assailed decision
dated January 19, 2001 of the Court of Appeals is AFFIRMED. Costs against
the PARAB has no power to act on the case as the subject matter of the action was
petitioners.
beyond the scope of its jurisdiction under the law. Petitioners would want respondents
to appeal the PARAB ruling to the DARAB as a logical and proper remedy, rather than
go on certiorari before the CA. Appeal in this case, however, would have been an SO ORDERED.
inadequate remedy as precisely respondents were questioning the very jurisdiction of
the PARAB to take cognizance of the case.

The availability of the ordinary recourse of appeal does not bar a party from making
use of the extraordinary remedy of certiorari where the ordinary appeal would not be a
prompt and adequate remedy, that is,32 "[a] remedy which is equally beneficial, speedy
and sufficient, not merely a remedy which at some time in the future will bring about a
revival of the judgment of the lower court complained of in the certiorari proceeding,
but a remedy which will promptly relieve the petitioner from the injurious effects of that
judgment and the acts of the inferior court or tribunal."33

The rationale behind CARL, (the Comprehensive Agrarian Reform Law, Rep. Act No.
6657) and other agrarian reform laws is to emancipate the small farmers and farm
workers from the bondage of tilling land they do not own. They aim to put into their
hands the cultivation of economically viable family-sized34 farms. Earlier, the Land
Reform Code (Rep. Act No. 3844) defined economic family-sized farm as an area of
farm land that permits efficient use of labor and capital resources of the farm family,
and will produce an income sufficient to provide a modest standard of living to meet a
farm family’s need for food, clothing, shelter and education with possible allowance for
payment of yearly installments on the land, and reasonable reserves to absorb yearly
fluctuations in income.35 Subsequently, Rep. Act No. 6657 was enacted declaring that
it is the policy of the state to pursue a comprehensive agrarian reform program to the
end that there be a more equitable distribution and ownership of land to provide small
farmers and farm workers with the opportunity to enhance their dignity and improve
the quality of their lives through greater productivity of agricultural lands.36 Indeed, our
agrarian laws have been enacted to make the small farmers more independent, self-
reliant and responsible citizens and a source of genuine strength in our democratic
society.37

In this case, however, the records do not show that petitioners are small farmers or
farm workers deserving of the beneficence and protection afforded by our agrarian
laws. It would stretch one’s imagination to consider petitioners as lowly farm workers
when evidence shows in reality they are businessmen engaged in aquaculture,
operating a huge fishpond with an area of one million, two hundred fifty six thousand
and four hundred thirty three (1,256,433) square meters. Leasing this huge area could
be better appreciated as falling properly under civil law lease rather than agrarian
reform lease-tenancy. Moreover, in this case, there is no showing that large fishpond
operators belong to the class of beneficiaries contemplated by legislators when they
envisioned a policy of emancipation of small farmers or farm workers from bondage of
the soil through agrarian reforms. In sum, we agree that the appellate court did not err
in excluding the fishpond subject of the present controversy from the coverage of
CARL, and holding the PARAB’s decision dated May 9, 2000 void for lack of
jurisdiction.
 104

CHICO-NAZARIO, J.:

Before this Court are two special civil actions for Certiorari and Prohibition under Rule
65 of the 1997 Revised Rules of Civil Procedure, which were consolidated per
Resolution1 dated 5 February 2007.

The petitioners in G.R. No. 174290, namely: St. Mary of the Woods School, Inc.
(SMWSI) and Marcial P. Soriano, seek to annul and set aside on the ground of grave
abuse of discretion tantamount to lack or excess of jurisdiction the Resolution2 dated
18 August 2006 of the Court of Appeals in CA-G.R. CV No. 85561, which granted
herein private respondent Hilario P. Soriano’s Motion to Reinstate/Re-annotate the
Notice of Lis Pendens over Transfer Certificates of Title (TCT) No. 175029, 3 2209774
and 220978,5 of the Registry of Deeds of Makati City, all registered in the name of
herein petitioner SMWSI.

The afore-named petitioners are the same petitioners in G.R. No. 176116 in which
they also seek to annul and set aside, on the ground of grave abuse of discretion
amounting to lack or excess of jurisdiction, the three Resolutions similarly rendered by
the Court of Appeals in CA-G.R. CV No. 85561, to wit: (1) Resolution6 dated 18
August 2006 denying petitioners’ Motion to Dismiss Appeal of herein private
respondent Hilario P. Soriano; (2) Resolution7 dated 9 November 2006 denying for
lack of merit petitioners’ Motion for Reconsideration of the 18 August 2006 Resolution
of the appellate court, as well as the supplement to the said motion; and (3)
Resolution8 dated 9 November 2006 requiring the Register of Deeds of Makati City to
submit to the appellate court the original copies of the documents involved in Civil
Case No. 03-954 so that they can be presented to the National Bureau of Investigation
(NBI) for comparative analysis of the signatures of Tomas Q. Soriano.
G.R. No. 174290 January 20, 2009
Petitioner SMWSI is an educational institution incorporated and existing by virtue of
the laws of the Republic of the Philippines. It is the current registered owner of the
ST. MARY OF THE WOODS SCHOOL, INC. and MARCIAL P. SORIANO, three parcels of land (subject properties), located in Makati City and covered by TCTs
petitioners, No. 175029, No. 220977 and No. 220978. Petitioner Marcial P. Soriano is the
vs. President of petitioner SMWSI.
OFFICE OF THE REGISTRY OF DEEDS OF MAKATI CITY and HILARIO P.
SORIANO,
Private respondent Hilario P. Soriano, on the other hand, is one of the siblings of
petitioner Marcial P. Soriano.
x---------------------x

The consolidated cases presently before this Court originated from the Complaint 9
G.R. No. 176116 January 20, 2009 filed on 14 August 2003 by the private respondent with the Regional Trial Court (RTC)
of Makati City, Branch 148, for Declaration of Nullity of Deed of Assignment, Deed of
ST. MARY OF THE WOODS SCHOOL, INC. and MARCIAL P. SORIANO, Sale and Cancellation of TCTs No. 156249, No. 156250, and No. 156251 of the
petitioners, Register of Deeds of Makati, Metro Manila,10 registered in the name of Oro
vs. Development Corporation (ODC); and TCT No. 175029, registered in the name of
OFFICE OF THE REGISTRY OF DEEDS OF MAKATI CITY, NATIONAL BUREAU petitioner SMWSI. Named defendants therein were the petitioners, together with ODC,
OF INVESTIGATION, and HILARIO P. SORIANO, Respondents. Antonio P. Soriano, Aurelia P. Soriano-Hernandez, Rosario P. Soriano-Villasor,
Eugenia Ma. P. Soriano-Lao and Josefina P. Soriano (hereinafter collectively referred
to as petitioners, et al.). The Complaint was docketed as Civil Case No. 03-954.
DECISION

In his Complaint, private respondent alleged that during the marriage of his parents,
Tomas Q. Soriano and Josefina P. Soriano, the couple acquired both real and
personal properties, including the subject properties, which were then covered by
TCTs No. 169941,11 No. 114408,12 and No. 114409.13 On 10 May 1988, the Soriano
couple allegedly executed14 a Deed of Assignment15 in favor of ODC involving the
subject properties to pay for Tomas Q. Soriano’s subscription of stocks in the said
corporation. On 14 June 1988, Tomas Q. Soriano died16 intestate.
By virtue of the said Deed of Assignment, the ownership and title over the subject
properties were transferred to ODC. Consequently, TCTs No. 169941, No. 114408
and No. 114409 were cancelled and the new TCTs No. 156249, 17 No. 15625018 and
No. 15625119 were issued in the name of ODC.
Thereafter, on 26 April 1991, ODC executed20 in favor of petitioner SMWSI a Deed of
Sale21 over the subject property covered by TCT No. 156249. By virtue of the sale,
petitioner SMWSI acquired ownership and title over the particular property. Thus, TCT
No. 156249 was cancelled and the new TCT No. 175209 was issued in the name of
petitioner SMWSI.
Private respondent claimed that several years after his father Tomas Q. Soriano’s
death, he discovered that the latter’s signature in the Deed of Assignment of 10 May
1988 in favor of ODC was a forgery. Being very familiar with his father’s signature,
private respondent compared Tomas Q. Soriano’s purported signature in the Deed of
Assignment of 10 May 1988 with Tomas Q. Soriano’s genuine signature in another
document captioned Second Amendment of Credit Agreement.22 Private respondent
also presented a Certification23 from the Records Management and Archives Office
which stated that the forged Deed of Assignment dated 10 May 1988 was not
available in the files of the Office.
Meanwhile, by reason of the pendency of Civil Case No. 03-954, a Notice of Lis
Pendens was annotated on TCTs No. 156249, No. 156250, and No. 156251, in the
name of ODC. With the subsequent cancellation of TCT No. 156249 and the issuance
of TCT No. 175209 in the name of petitioner SMWSI, the Notice of Lis Pendens was
carried over to the new certificate of title.
In a Joint Affidavit24 dated 18 July 1990 executed by petitioner Marcial P. Soriano, it
appears that the other individual defendants in Civil Case No. 03-954, and private
respondent, recognized and acknowledged the validity, legality and propriety of the
transfer of the subject properties from Tomas Q. Soriano to ODC. On this basis,
defendants filed with the RTC a Motion to Dismiss 25 Civil Case No. 03-954 on the
grounds that: (1) the Complaint states no cause of action; (2) the claim set forth in the
Complaint has been paid, waived, abandoned or otherwise extinguished; (3) the
Complaint is barred by estoppel or laches; (4) the Complaint is barred by prescription;
(5) the titles to the subject properties are incontestable and can no longer be annulled;
and (6) a condition precedent for filing the claim has not been complied with, i.e., the
compromise agreement failed despite earnest efforts towards that end.
105
On 17 January 2005, the RTC issued an Order26 dismissing the private respondent’s
Complaint. The RTC ratiocinated in this manner:
A careful reading of the [14] August 2003 Complaint filed by [herein private
respondent] Hilario P. Soriano would suffice that he indeed failed to state that he has
a right over the [subject properties] and that the [herein petitioners, et al.] have the
obligation to observe such right. Assuming for the sake of argument that the signature
was forged, the [private respondent] did not state that he was deprived of his share in
the legitime of the deceased. Thus, his right over the [subject properties which were]
assigned by the deceased was not clearly defined and stated in the [C]omplaint filed.
xxxx
x x x. Also, the [private respondent] must comply with the provision of the Civil Code of
[the] Philippines, to wit:
"Article 22227 – No suit shall be filed or maintained between members of the same
family unless it should appear that earnest efforts toward a compromise have been
made, but that the same have failed, subject to the limitations in Article 2035."
x x x. There is no showing in the allegations in the [C]omplaint of the [private
respondent] that he complied with the requirement of the law. Thus, the Court finds
merit in the position of the [petitioners, et al.]
xxxx
x x x. Clearly, the act of the [private respondent] in acknowledging the legality, validity
and genuineness of the [D]eed of [A]ssignment in the [J]oint [A]ffidavit placed him in
no better position to question the validity of the subject document. [Private respondent]
never questioned the distribution of the properties among the heirs of Tomas Soriano.
[Private respondent] even accepted the conveyance of a parcel of land covered by
TCT No. 156253. By accepting said property as his share in the estate of his late
father, [private respondent] is now deemed to have been paid or compensated
because there was delivery of his share in the estate of the deceased. It can now be
conclusively presumed that his share in the legitime of deceased Tomas Soriano was
fully awarded to [private respondent]. He is now estopped in questioning the validity of
the [D]eed of [A]ssignment by Tomas Q. Soriano in favor of [ODC]. Accordingly, all
subsequent conveyances involving the subject properties can no longer be questioned
by [private respondent] Hilario P. Soriano.28
Accordingly, the RTC decreed:
WHEREFORE, finding merits on the [M]otion to [D]ismiss filed by [herein petitioners,
et al.] and in the prayer set forth in the [A]nswer of defendants Josefina P. Soriano and
Rosario P. Soriano-Villasor, the dismissal of this case is hereby GRANTED.
Accordingly, the Complaint filed by [private respondent] Hilario P. Soriano is dismissed
 106

156249, No. 156250, and No. 156251 in the name of ODC were already cancelled
and replaced with TCTs No. 175209, No. 220977, and No. 220978 all registered in the
because it asserts no cause of action and the claim or demand set forth in the [private
name of petitioner SMWSI in which the Notice of Lis Pendens was carried over. The
respondent’s] pleading has been waived, abandoned, or otherwise extinguished, and
private respondent, on the other hand, filed a Motion for Reconsideration of the RTC
that a condition precedent for filing the claim has not been complied with. 29
Order dated 20 June 2005 with Comment on the petitioners, et al.’s, Motion for
Issuance of Supplement to the same RTC Order.
In the interim, the subject properties covered by TCTs No. 156250 and No. 156251 in
the name of ODC were also transferred to petitioner SMWSI by virtue of a Deed of
On 15 July 2005, the RTC issued another Order35 by way of supplement to its Order
Sale dated 3 February 2005. TCTs No. 156250 and No. 156251 in the name of ODC
dated 20 June 2005, directing anew the Registrer of Deeds of Makati City to cancel
were then cancelled and the new TCTs No. 220977 and No. 220978 were issued in
the Notice of Lis Pendens annotated on TCTs No. 175029, No. 220977 and No.
the name of petitioner SMWSI. The Notice of Lis Pendens annotated on the cancelled
220978 in the name of petitioner SMWSI.
TCTs was copied into the new TCTs in the name of petitioner SMWSI.

In a subsequent Order36 dated 15 August 2005, the RTC denied for lack of merit
Aggrieved by the RTC Order dated 17 January 2005, private respondent moved for its
private respondent’s Motion for Reconsideration of the RTC Order dated 20 June
reconsideration, but the RTC denied the same in an Order30 dated 26 April 2005.
2005.

On 16 May 2005, petitioners, et al., filed with the RTC a Motion to Cancel Notice of Lis
Pendens31 annotated on the titles covering the subject properties, which Motion was
opposed by the private respondent.
The very next day, 17 May 2005, private respondent filed a Notice of Appeal stating
his intention to elevate the RTC Orders dated 17 January 2005 and 26 April 2005 to
the Court of Appeals. Private respondent’s appeal before the Court of Appeals was
docketed as CA-G.R. CV No. 85561.
Meanwhile, the RTC issued its Order32 dated 20 June 2005 granting the Motion to
Cancel Notice of Lis Pendens filed by petitioners, et al., and ordering the Registrer of
Deeds of Makati City to cancel the Notice of Lis Pendens annotated on TCTs No.
156249, No. 156250, No. 156251 in the name of ODC and TCT No. 175029 in the
name of petitioner SMWSI. The RTC justified its latest Order as follows:
On 28 September 2005, private respondent received a directive from the Court of
Appeals dated 20 September 2005 requiring him to file his Appellant’s Brief pursuant
to his Notice of Appeal dated 17 May 2005. In compliance therewith, private
respondent submitted his Appellant’s Brief to the Court of Appeals with the following
assignment of errors:
1. The lower court erred in dismissing the [C]omplaint on the ground that no
certificate from a signature expert was attached to affirm the conclusion of
the [herein private respondent] that the signature of Tomas Q. Soriano in
the [D]eed of [A]ssignment was forged and on the ground that neither can
the certificate issued by the Records Management and Archive Office
support such allegation and that the [herein petitioners, et al.] cannot
shoulder the burden caused by the Notary Public in failing to file the
notarized documents, if he indeed failed.

As mentioned in the case, the notice of lis pendens can be cancelled if it is not
necessary to protect the interest of the party who caused it to be recorded. In this
case, the [herein private respondent’s] interest should be considered on whether the
notice of lis pendens should be cancelled or not. As it is the Court believes that the
cancellation is proper in this case. First, the Court still has jurisdiction of the case
considering that the Notice of Appeal was only filed on [17 May 2005], while the
Motion to cancel Notice of Lis Pendens was filed on [16 May 2005]. Second, [private
respondent] Hilario P. Soriano has no interest to be protected insofar as the subject
properties are concerned because of his acknowledgment that he already received his
share in the estate of Tomas Soriano. Lastly, the contention of the [private
respondent] that the motion is premature is not tenable. The authority of the Court to
Cancel Notice of Lis Pendens is even evident in the Comment/Opposition of the
[private respondent] which states that "While it may be true that the cancellation of a
notice of lis pendens may be ordered at any given time even before final judgment, x x
x."33
2. The lower court erred in dismissing the [C]omplaint on the ground that the
[private respondent] failed to state that he has a right over the subject
properties and that the [petitioners, et al.] have the obligation to observe
such right.
3. The lower court erred in ruling that Article 151 of the Family Code should
have been complied with.
4. The lower court erred in denying [private respondent’s] [M]otion for
[R]econsideration despite valid and compelling arguments that warrant the
reconsideration prayed for.
5. The lower court erred in granting [petitioners, et al.] [M]otion for
[C]ancellation of Lis Pendens.

On 4 July 2005, the petitioners, et al., filed with the RTC a Motion for Issuance of
Supplement to Order Cancelling Notice of Lis Pendens 34 to clarify that TCTs No.

6. The lower court erred in dismissing the [C]omplaint on the ground that by
accepting the conveyance of a parcel of land covered by TCT No. 156253
as his share in the estate of his late father, [private respondent] is now
deemed to have been paid or compensated because there was delivery of
his share in the estate of the deceased.37
While CA-G.R. CV No. 85561 was still pending, and since the Notice of Lis Pendens
annotated on the TCTs of the subject properties in the name of petitioner SMWSI was
already cancelled per RTC Orders dated 20 June 2005 and 15 July 2005, petitioner
SMWSI mortgaged the subject properties on 15 February 2006 for the amount of
₱8,000,000.00.
On 14 March 2006, private respondent filed before the Court of Appeals a Motion to
Reinstate/Re-annotate Notice of Lis Pendens on the TCTs of the subject properties
given that there was yet no final judgment of dismissal of his Complaint, as its
dismissal had been duly appealed. Moreover, it had not been shown that the Notice of
Lis Pendens was to molest the petitioners, et al., or that the same was not necessary
to protect his interests; thus, its re-annotation on the TCTs of the subject properties
while the appeal was pending would be in accordance with public policy. Petitioners,
et al., opposed the aforesaid Motion of private respondent.
On 17 March 2006, petitioners, et al., filed a Motion to Dismiss Appeal on the ground
that "the issues in the appeal are and can only be questions of law, the appellate
jurisdiction over which belongs exclusively to the Supreme Court, thus the dismissal of
[private respondent’s] appeal is mandatory pursuant to Supreme Court Circular No. 2-
90 and Section 2, Rule 50 of the 1997 Rules of Civil procedure." 38
Thereafter, on 18 August 2006, the Court of Appeals issued a Resolution granting
private respondent’s Motion to Reinstate/Re-annotate Notice of Lis Pendens on the
TCTs of the subject properties. The Court of Appeals ruled that although the RTC
found that private respondent had no interest to be protected by the Notice of Lis
Pendens, since the appellate court already acquired jurisdiction over the case, it was
the latter which must ascertain the propriety of canceling the Notice of Lis Pendens
upon proper motion and hearing.39 On the same day, the Court of Appeals also issued
a separate Resolution denying petitioners, et al.’s, Motion to Dismiss Appeal of private
respondent. According to the appellate court, private respondent raised both questions
of fact and law in his appeal; hence, the ground for the dismissal of the appeal relied
upon by the petitioners, et al., was untenable.
G.R. No. 17429040
Aggrieved by the Resolution dated 18 August 2006 of the Court of Appeals granting
private respondent’s Motion to Reinstate/Re-annotate Notice of Lis Pendens on the
subject properties, petitioners, without filing a Motion for Reconsideration, filed on 11
September 2006 before this Court the instant Petition for Certiorari under Rule 65 of
the 1997 Revised Rules of Civil Procedure alleging grave abuse of discretion
107
amounting to lack or excess of jurisdiction on the part of the appellate court in
rendering the assailed Resolution. The Petition is docketed as G.R. No. 174290.
Petitioners maintain that the RTC Orders canceling the Notice of Lis Pendens on the
TCTs of the subject properties were valid and proper as they were issued on the basis
of private respondent’s lack of interest/right over the subject properties to be protected
by the annotation of such Notice. Moreover, the cancellation of the Notice of Lis
Pendens is authorized by Section 14,41 Rule 13 of the 1997 Revised Rules of Civil
Procedure, as well as under Section 77,42 Presidential Decree No. 1529.43 Hence, the
reinstatement of the Notice of Lis Pendens should not have been allowed.
Petitioners opine that the Court of Appeals gravely abused its discretion when it
ordered the re-annotation of the Notice of Lis Pendens based on the mere motion filed
by private respondent, as it was violative of the proper procedures prescribed under
Presidential Decree No. 1529.
Grave abuse of discretion is committed when an act is 1) done contrary to the
Constitution, the law or jurisprudence; or 2) executed "whimsically or arbitrarily" in a
manner "so patent and so gross as to amount to an evasion of a positive duty, or to a
virtual refusal to perform the duty enjoined." What constitutes grave abuse of
discretion is such capricious and arbitrary exercise of judgment as that which is
equivalent, in the eyes of the law, to lack of jurisdiction.44 It does not encompass an
error of law.45
At the outset, it is significant to note that petitioners filed the instant Petition without
filing a Motion for Reconsideration of the assailed Resolution. A Motion for
Reconsideration of the order or resolution is a condition precedent for the filing of a
Petition for Certiorari challenging the issuance of the same.46
The general rule that the filing of a Motion for Reconsideration before resort to
certiorari will lie is intended to afford the public respondent an opportunity to correct
any factual or fancied error attributed to it by way of re-examination of the legal and
factual aspects of the case.47 This rule, however, is subject to certain recognized
exceptions, to wit: (1) where the order or a resolution, is a patent nullity, as where the
court a quo has no jurisdiction; (2) where the questions raised in the certiorari
proceeding have been duly raised and passed upon in the lower court; (3) where there
is an urgent necessity for the resolution of the question, and any further delay would
prejudice the interests of the Government or of the petitioner or the subject matter of
the action is perishable; (4) where, under the circumstances, a Motion for
Reconsideration would be useless; (5) where petitioner was deprived of due process
and there is extreme urgency for relief; (6) where, in a criminal case, relief from an
order of arrest is urgent and the granting of such relief by the trial court is improbable;
(7) where the proceedings in the lower court are a nullity for lack of due process; (8)
where the proceedings were ex parte or were such that the petitioner had no
opportunity to object; and (9) where the issue raised is one purely of law or where
public interest is involved.48

In the case at bar, petitioners aver that they dispensed with the filing of a Motion for
Reconsideration of the 18 August 2006 before the Court of Appeals because of the
extreme urgency of the relief prayed for, and the issues raised herein are purely of law
and involve public interest, therefore, placing the instant case within the ambit of the
exceptions to the general rule. Petitioners claim that at the time of filing of this Petition,
private respondent was taking steps and other measures to present for registration the
18 August 2006 Resolution of the Court of Appeals to the Office of the Registry of
Deeds of Makati City so as to already re-annotate the Notice of Lis Pendens on the
TCTs of the subject properties, prompting petitioners to immediately file the instant
Petition without seeking reconsideration of the assailed Resolution.
We find that petitioners’ reasons for excusing themselves from filing a Motion for
Reconsideration before filing the present Petition for Certiorari are baseless and
unsubstantiated.
Petitioners’ averment of sense of urgency in that private respondent was already
taking steps and other measures to have the Notice of Lis Pendens re-annotated by
presenting the 18 August 2006 Resolution of the Court of Appeals to the Office of the
Registry of Deeds of Makati City deserves scant consideration. Petitioners never
described with particularity, much less, presented proof of the steps purportedly taken
by the private respondent that would justify their immediate resort to this Court on
certiorari without seeking reconsideration of the Resolution in question from the Court
of Appeals. Petitioners simply made a sweeping allegation that absolutely has no
basis. The records themselves are bare of any proof that would convince this Court
that the private respondent indeed, took steps to have the challenged Resolution
implemented. In fact, petitioners themselves, in their letter49 dated 8 September 2006
addressed to the Office of the Registry of Deeds of Makati City, pointed out that the
questioned Resolution of the Court of Appeals did not yet order the said Office to re-
annotate the Notice of Lis Pendens. Petitioners explained in their letter that the 18
August 2006 Resolution granting private respondent’s Motion to Reinstate/Re-
annotate Notice of Lis Pendens is a mere indication that private respondent can
proceed with the legal procedure leading to the actual re-annotation of the said notice.
They even reminded the Register of Deeds of Makati City that even if it would be
furnished with a copy of the assailed Resolution, it had no authority to reinstate/re-
annotate the Notice of Lis Pendens without a proper and direct order from the
appellate court. More importantly, petitioners explicitly revealed in their letter that they
intended to file a Motion for Reconsideration with the Court of Appeals, as its
Resolution dated 18 August 2006 had not yet acquired finality. Why then did
petitioners not proceed with filing their motion for reconsideration, and opted to
immediately file the present Petition for Certiorari?
Similarly baseless is petitioners’ bare assertion, without even an attempt at explaining,
that the issues subject of the Petition at bar involve public interest sufficient to excuse
them from filing a Motion for Reconsideration of the Resolution dated 18 August 2006.
Given the foregoing, the Court dismisses the instant Petition for Certiorari for
petitioners’ failure to comply with a condition precedent for filing such a petition.
108
Granting arguendo that the present special civil action for certiorari can be given due
course, the Court still finds that the Court of Appeals did not commit any grave abuse
of discretion in granting private respondent’s Motion to Reinstate/Re-annotate Notice
of Lis Pendens.
Lis pendens, which literally means pending suit, refers to the jurisdiction, power or
control which a court acquires over property involved in a suit, pending the
continuance of the action, and until final judgment. Founded upon public policy and
necessity, lis pendens is intended (1) to keep the properties in litigation within the
power of the court until the litigation is terminated and to prevent the defeat of the
judgment or decree by subsequent alienation; and (2) to announce to the whole world
that a particular property is in litigation and serves as a warning that one who acquires
an interest over said property does so at his own risk, or that he gambles on the result
of the litigation over said property.50
A trial court has, however, the inherent power to cancel a notice of lis pendens, under
the express provisions of law.51 As provided for by Sec. 14, Rule 13 of the 1997 Rules
of Civil Procedure, a notice of lis pendens may be cancelled on two grounds: (1) if the
annotation was for the purpose of molesting the title of the adverse party; or (2) when
the annotation is not necessary to protect the title of the party who caused it to be
recorded.
Considering that the dismissal of private respondent’s Complaint by the RTC was
appealed to the Court of Appeals, which Complaint refers to the properties covered by
TCTs No. 175209, No. 220977, and No. 220978 that bear the annotations of lis
pendens, and such properties therefore are irrefragably still the subject matter of
litigation, the appellate court rightly saw the need for giving notice to the public of such
a fact. The necessity becomes even more compelling considering that petitioner
SMWSI had already entered into transactions with third parties involving the subject
properties.
On the issue of jurisdiction of the Court of Appeals to entertain the issue on the notice
of lis pendens, we adhere to the Court of Appeals’ ratiocination, thus:
However, as the dismissal of this case by the lower court has been appealed to us, we
now have jurisdiction over the case.
The doctrine of lis pendens is based on consideration of public policy and
convenience, under the view that once a court has taken cognizance of a controversy,
it should be impossible to interfere with the consummation of the judgment by any ad
interim transfer, encumbrance, or change of possession.
Now that the case is pending before us on appeal, there is no certainty as to the
outcome of the case. There is a need to warn the whole world that a particular
property is in litigation, serving as a warning that the one who acquires an interest
over said property does so at his own risk, or that he gambles on the result of the
litigation over said property.

x x x. Although the lower court made a finding that [herein private respondent] Hilario
has no interest to be protected by the annotation of the notice of the pendency of the
case as we now have jurisdiction over the case, we have to ascertain for ourselves the
propriety of canceling the annotation of the notice of lis pendens upon proper motion
and hearing.52
There is likewise no merit in petitioners’ contention that the filing by private respondent
with the Court of Appeals of an appeal (where he already raised the issue of re-
annotating the Notice of Lis Pendens) and, subsequently, a separate Motion to
Reinstate/Re-annotate Notice of Lis Pendens is tantamount to forum shopping.
Forum shopping is committed by a party who, having received an adverse judgment in
one forum, seeks another opinion in another court, other than by appeal or the special
civil action of certiorari. More accurately, however, forum shopping is the institution of
two or more suits in different courts, either simultaneously or successively, in order to
ask the courts to rule on the same or related causes and/or to grant the same or
substantially the same reliefs.53 The essence of forum-shopping is the filing of multiple
suits involving the same parties for the same cause of action, either simultaneously or
successively, to secure a favorable judgment. Forum-shopping is present when in the
two or more cases pending, there is identity of parties, rights of action and reliefs
sought.54
In the present case, what were filed by the private respondent before the appellate
court were an appeal and a motion relative to the same case. The appeal and the
motion filed by the private respondent cannot be regarded as separate and distinct
cases or suits. It is settled that the office of a motion is not to initiate new litigation, but
to bring up a material but incidental matter arising in the progress of the case in which
the motion was filed. A motion is not an independent right or remedy, but is confined
to incidental matters in the progress of a cause. It relates to some question that is
collateral to the main object of the action and is connected with and dependent upon
the principal remedy.55 Private respondent’s Motion to Reinstate/Re-annotate Notice
of Lis Pendens is, at the very least, a mere reiteration of one particular issue already
raised in the appeal, and an insistence on the urgency of resolving the same ahead of
the other issues. The filing of said Motion cannot be considered forum shopping and
the admission thereof by the Court of Appeals did not constitute grave abuse of
discretion.
Finally, petitioners futilely attempt to convince this Court that the Court of Appeals
acted with grave abuse of discretion in granting private respondent’s Motion to
Reinstate/Re-annotate Notice of Lis Pendens in violation of the proper procedures
prescribed under Presidential Decree No. 1529:
Section 117. Procedure. When the Register of Deeds is in doubt with regard to the
proper step to be taken or memorandum to be made in pursuance of any deed,
mortgage or other instrument presented to him for registration, or where any party in
interest does not agree with the action taken by the Register of Deeds with reference
to any such instrument, the question shall be submitted to the Commissioner of Land
109
Registration by the Register of Deeds, or by the party in interest thru the Register of
Deeds.
Where the instrument is denied registration, the Register of Deeds shall notify the
interested party in writing, setting forth the defects of the instrument or legal grounds
relied upon, and advising him that if he is not agreeable to such ruling, he may,
without withdrawing the documents from the Registry, elevate the matter by consulta
within five days from receipt of notice of the denial of registration to the Commissioner
of Land Registration.
The Register of Deeds shall make a memorandum of the pending consulta on the
certificate of title which shall be canceled motu proprio by the Register of Deeds after
final resolution or decision thereof, or before resolution, if withdrawn by petitioner.
The Commissioner of Land Registration, considering the consulta and the records
certified to him after notice to the parties and hearing, shall enter an order prescribing
the step to be taken or memorandum to be made. His resolution or ruling in consultas
shall be conclusive and binding upon all Registers of Deeds, provided, that the party in
interest who disagrees with the final resolution, ruling or order of the Commissioner
relative to consultas may appeal to the Court of Appeals within the period and in the
manner provided in Republic Act No. 5434.
It is clear that the afore-quoted procedure applies only when the instrument is already
presented for registration and: (1) the Register of Deeds is in doubt with regard to the
proper step to be taken or memorandum to be made in pursuance of any deed,
mortgage or other instrument presented to him for registration; or (2) where any party
in interest does not agree with the action taken by the Register of Deeds with
reference to any such instrument; and (3) when the registration is denied. None of
these situations is present in this case.
There was no evidence that the 18 August 2006 Resolution of the Court of Appeals
was already presented to the Register of Deeds of Makati City for the re-annotation of
the Notice of Lis Pendens. There is also no showing that the Register of Deeds denied
the re-annotation.
G.R. No. 17611656
Unsatisfied with the other Resolution dated 18 August 2006 of the Court of Appeals
denying their Motion to Dismiss Appeal, petitioners moved for its reconsideration, but
it was denied by the appellate court in a Resolution57 dated 9 November 2006. In a
separate Resolution58 also dated 9 November 2006, the Court of Appeals ordered the
Register of Deeds of Makati City to submit the original copies of the Minutes of the
Meeting of the Board of Directors of ODC dated 7 May 1988, together with the Deed
of Assignment dated 10 May 1988 entered into by and between Tomas Q. Soriano
and ODC involving the subject properties, so that they could be referred to the NBI for
comparative analysis of Tomas Q. Soriano’s signatures.
 110

no cause of action;60 (2) the claim or demand set forth in the Complaint had been paid,
waived, abandoned, or otherwise extinguished;61 and (3) a condition precedent for
Following the foregoing development, petitioners filed before this Court another
filing the claim has not been complied with.62
Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure on
29 December 2006, docketed as G.R. No. 176116.
Settled is the rule that in a Motion to Dismiss based on lack of cause of action, the
issue is passed upon on the basis of the allegations in the complaint, assuming them
Petitioners assert that the Court of Appeals acted with grave abuse of discretion
to be true. The court does not inquire into the truth of the allegations and declare them
amounting to lack or excess of jurisdiction in refusing to dismiss private respondent’s
to be false; otherwise, it would be a procedural error and a denial of due process to
appeal in its Resolutions dated 18 August 2006 and 9 November 2006, even though
the plaintiff. Only the statements in the complaint may be properly considered, and the
the appeal raised only questions of law. Petitioners argue that an appeal raising pure
court cannot take cognizance of external facts or hold preliminary hearings to
questions of law must be filed with the Supreme Court via Petition for Review under
ascertain their existence. To put it simply, the test for determining whether a complaint
Rule 45 and not with the Court of Appeals.
states or does not state a cause of action against the defendants is whether or not,
admitting hypothetically the truth of the allegations of fact made in the complaint, the
Petitioners also contend that the Resolution dated 9 November 2006 of the Court of judge may validly grant the relief demanded in the complaint.63
Appeals ordering the submission of documents so that the NBI could perform a
comparative analysis of Tomas Q. Soriano’s signatures, was apparently for the
In a Motion to Dismiss based on failure to state a cause of action, there cannot be any
purpose of finding out whether forgery was committed in the Deed of Assignment
question of fact or "doubt or difference as to the truth or falsehood of facts," simply
dated 10 May 1988. Petitioners assert that the appellate court has absolutely no
because there are no findings of fact in the first place. What the trial court merely does
original jurisdiction to rule whether Tomas Q. Soriano’s signature was forged in the
is to apply the law to the facts as alleged in the complaint, assuming such allegations
Deed of Assignment in question. There is no need for the Court of Appeals to have
to be true. It follows then that any appeal therefrom could only raise questions of law
done an analytical comparison of Tomas Q. Soriano’s signatures considering that the
or "doubt or controversy as to what the law is on a certain state of facts." Therefore, a
RTC made no factual finding as regards the existence or non-existence of forgery.
decision dismissing a complaint based on failure to state a cause of action necessarily
Accordingly, the Court of Appeals has no power to inquire into the allegations of
precludes a review of the same decision on questions of fact. One is the legal and
forgery made in the private respondent’s Complaint, and for it to proceed to do so is
logical opposite of the other.64
grave abuse of discretion tantamount to lack or excess of jurisdiction.

Hence, private respondent did raise a question of law when he assigned as an error in
The Court resolves first the issue of whether the Court of Appeals committed grave
his appeal to the Court of Appeals the RTC’s alleged error in dismissing his Complaint
abuse of discretion amounting to lack or excess of jurisdiction in denying petitioners’
in Civil Case No. 03-954 for failure to state a cause of action.
Motion to Dismiss Appeal.

It must be remembered, however, that the basis of the RTC Order on 17 January 2005
In resolving such issue, it is necessary to determine only if private respondent's
dismissing private respondent’s Complaint was not only its failure to state a cause of
appeal to the Court of Appeals involves purely questions of law, in which case, the
action, but also the fact that the claim or demand set forth therein had been paid,
proper mode of appeal would be a Petition for Review on Certiorari to the Supreme
waived, abandoned, or otherwise extinguished, and that the condition precedent for
Court under Rule 45 of the 1997 Revised Rules of Civil Procedure; or questions of fact
filing a claim had not been complied with.
or mixed questions of fact and law, in which case, the proper mode would be by
ordinary appeal to the Court of Appeals under Rule 41.
According to the RTC, the Complaint was dismissible on the ground that the claim or
demand set forth therein had been paid, waived, abandoned, or otherwise
A question of law exists when there is doubt or controversy as to what the law is on a
extinguished. Private respondent, in accepting a certain parcel of land as his share in
certain state of facts, and there is a question of fact when the doubt or difference
the estate of his late father Tomas Q. Soriano, was now deemed to have been paid or
arises as to the truth or falsehood of facts, or when the query necessarily invites
compensated because his share in the estate of the deceased had been delivered to
calibration of the whole evidence considering mainly the credibility of witnesses,
him. In arriving at such a finding, the RTC necessarily made a preliminary
existence and relevancy of specific surrounding circumstances, their relation to one
determination of the facts in order to verify that, indeed, private respondent’s claim or
another and to the whole, and probabilities of the situation. Ordinarily, the
demand had been paid. When the private respondent assigned as error in his appeal
determination of whether an appeal involves only questions of law or questions both of
such finding of the RTC, he raised not only a question of law, but also a question of
law and of fact is best left to the appellate court, and all doubts as to the correctness
fact.
of such conclusions will be resolved in favor of the Court of Appeals.59

Among the grounds raised by petitioners in seeking the dismissal by the RTC of
private respondent’s Complaint in Civil Case No. 03-954 are: (1) the Complaint stated
 111

to enable the NBI to perform a comparative analysis of Tomas Q. Soriano’s signatures

therein.
The Court agrees in the following observation and pronouncement made by the Court
of Appeals:
WHEREFORE, premises considered, these consolidated Petitions for Certiorari are
hereby DISMISSED.
The lower court evaluated the documents [herein private respondent] Hilario submitted
to prove his claim of forgery. The lower court practically made a finding of fact that the
signature of Tomas Q. Soriano in the [D]eed of [A]ssignment is a forgery when the SO ORDERED.
court stated that "the signatures in the [D]eed of [A]ssignment and in the [S]econd
[A]mendment of [C]redit [A]greement are the same." Whether the signature of Tomas
Q. Soriano was a forgery or not should have been determined during a trial, and not
merely in the resolution of a [M]otion to [D]ismiss.

[Private respondent] Hilario likewise raised the issue of whether or not there was
payment or estoppel as claimed by the [herein peititoners]. At first glance, it could be
surmised that the issue of estoppel is a question of law. However, in this case, there is
a question of fact involved.

[Private respondent] Hilario comments that there is precisely a need to factually

ascertain whether there has been full payment or award of his legitime, as a
compulsory heir of Tomas Q. Soriano, before the court can conclude that [private
respondent] Hilario is estopped from questioning the [D]eed of [A]ssignment.

xxxx

As [private respondent] Hilario raised questions of fact as well as questions of law in

his appeal, the ground for dismissal relied upon by the [petitioners] is not applicable in
his case.65

The rule is that the determination of whether an appeal involves only questions of law
or questions of both law and fact is best left to the appellate court, and all doubts as to
the correctness of such conclusions will be resolved in favor of the Court of Appeals. 66

Finally, we do not perceive any abusive exercise of power in the Resolution dated 9
November 2006 of the Court of Appeals requiring the submission of the original copies
of the documents involved in Civil Case No. 03-954 to enable the NBI to perform a
comparative analysis of Tomas Q. Soriano’s signatures therein.

It must be stressed that in its 17 January 2005 Order, the trial court expressed a
finding that "in the beholder of untrained eyes, the signatures in the Deed of
Assignment and in the Second Amendment of Credit Agreement are the same."67
Considering that the trial court made a finding of fact as regards the issue of forgery
and such issue was properly raised in the private respondent’s appeal with the
appellate court, it certainly behooves the appellate court to review the said findings.
Accordingly, as the Court of Appeals has the power to inquire into the allegations of
forgery made in the private respondent’s Complaint, it can validly require the
submission of the original copies of the documents involved in Civil Case No. 03-954

G.R. No. 179674 July 28, 2009
PYRO COPPER MINING CORPORATION, petitioner,
vs.
MINES ADJUDICATION BOARD-DEPARTMENT OF ENVIRONMENT AND
NATURAL RESOURCES, MINES AND GEO-SCIENCES BUREAU DIRECTOR
HORACIO C. RAMOS, REGIONAL DIRECTOR SAMUEL T. PARAGAS, REGIONAL
PANEL OF ARBITRATORS ATTY. CLARO E. RAMOLETE, JR., ATTY. JOSEPH
ESTRELLA and ENGR. RENATO RIMANDO, and MONTAGUE RESOURCES
PHILIPPINES CORPORATION, Respondents.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari, under Rule 45 of the 1997
Revised Rules of Civil Procedure, seeking to reverse the Resolutions dated 23
February 20071 and 6 September 20072 of the Court of Appeals in CA-G.R. SP No.
97663. The appellate court, in its assailed Resolution dated 23 February 2007,
dismissed the Petition for Review, under Rule 43 of the 1997 Revised Rules of Civil
Procedure, of herein petitioner Pyro Copper Mining Corporation, for failure of
petitioner to attach pertinent and relevant documents thereto. 3 The appellate court, in
its other assailed Resolution dated 6 September 2007, denied the Motion for
112
Reconsideration of petitioner for lack of merit and for failure to show the authority of
Atty. Vicente R. Acsay (Atty. Acsay), one of the members of the Board of Directors of
petitioner, to sign the Verification and Certification against Forum Shopping
accompanying the Petition.
Petitioner additionally prays for the setting aside or reversal of the Decision4 dated 28
December 2006 of the Department of Environment and Natural Resources (DENR)-
Mines Adjudication Board (MAB) in MAB Case No. 0147-06, which affirmed the
Orders dated 14 September 20055 and 27 December 20056 of the DENR-Panel of
Arbitrators, Region 1, San Fernando City, La Union (Panel of Arbitrators), in Case No.
2005-00012-I, dismissing the Verified Protest/Opposition of petitioner to the
Application for Exploration Permit of private respondent Montague Resources
Philippines Corporation. Ultimately, petitioner seeks the denial of the mining claim and
the revocation/cancellation of the Exploration Permit, EXPA No. 21 dated 12
September 2003, of private respondent.
The factual antecedents of this case are as follows:
Petitioner is a corporation duly organized and existing under Philippine laws engaged
in the business of mining. On 31 March 2000, petitioner’s Application for Mineral
Production Sharing Agreement (MPSA), identified as APSA-SF-000089, with the
Mines and Geo-Sciences Bureau (MGB) of the DENR, Regional Office No. 1, San
Fernando City in La Union, for the exploration, development and commercial utilization
of certain pyrite ore and other mineral deposits in a 4,360.71-hectare land in Dasol,
Pangasinan, was approved and MPSA No. 153-2000-1 was issued in its favor.
Private respondent is also a corporation organized and existing under the laws of the
Philippines and engaged in the business of mining. On 12 September 2003, private
respondent filed an Application for Exploration Permit7 with MGB covering the same
properties covered by and during the subsistence of APSA-SF-000089 and MPSA No.
153-2000-18 of petitioner. In turn, petitioner filed a Verified Protest/Opposition to the
Application for Exploration Permit of the private respondent. It was allegedly filed with
the Panel of Arbitrators9 on 30 August 2005 and was received by the latter on 5
September 2005. The case was docketed as Case No. 2005-00012-I.
Prior, however, to petitioner’s filing of its Verified Protest/Opposition to the private
respondent’s Application for Exploration Permit, petitioner’s MPSA No. 153-2000-1
was cancelled per DENR Memorandum Order (DMO) No. 2005-0310 issued by the
DENR Secretary Michael Defensor on 1 February 2005. Petitioner moved for the
reconsideration of DMO No. 2005-03, which the DENR Secretary denied in its
Decision11 dated 14 June 2005.12
On 1 September 2005,13 the MGB issued EP No. 05-001 to private respondent.
In an Order dated 14 September 2005, the Panel of Arbitrators dismissed motu
proprio the Verified Protest/Opposition of petitioner for the following reasons: (1) the
instant pleading was filed out of time; (2) in view of the issuance of EP No. 05-001 to

private respondent, the Verified Protest/Opposition of petitioner to the Application for
Exploration Permit of private respondent was rendered moot and academic; (3) the
Panel of Arbitrators had no authority/jurisdiction to cancel, deny and/or revoke EP No.
05-001 of private respondent, the same being lodged with the MGB, the issuing
authority; and (4) petitioner failed to include a certification against forum shopping.14
Petitioner moved for its reconsideration, but the Panel of Arbitrators denied the same
in its Order dated 27 December 2005.15
Petitioner elevated by appeal to the MAB the Orders dated 14 September 2005 and
27 December 2005 of the Panel of Arbitrators, docketed as MAB Case No. 0147-06.
Subsequently, in a Decision16 dated 28 December 2006 in MAB Case No. 0147-06,
the MAB dismissed the appeal of petitioner, on the following grounds: (a) the Verified
Protest/Opposition of petitioner to the Application for Exploration Permit of private
respondent was filed beyond the reglementary period; and (b) the Verified
Protest/Opposition of petitioner did not include a certification against forum
shopping.17
Petitioner filed with the Court of Appeals a Petition for Review under Rule 43 of the
1997 Revised Rules of Civil Procedure, which was docketed as CA-G.R. SP No.
97663.
In a Resolution dated 23 February 2007, the Court of Appeals dismissed the said
Petition, pursuant to Section 7, Rule 43, of the 1997 Revised Rules of Civil
Procedure,18 for failure of petitioner to attach thereto some pertinent and relevant
documents required under Section 6 of the same Rule.19
Petitioner filed a Motion for Reconsideration of the 23 February 2007 Resolution,
together with the required documents. Private respondent, however, in its Comment, 20
still prayed for the dismissal of the Petition in CA-G.R. SP No. 97663 for failure of
petitioner to submit Atty. Acsay’s authority to sign the Verification and Certification
against Forum Shopping.
Petitioner was given an opportunity to submit Atty. Acsay’s written authority, but failed
to do so. Consequently, the Court of Appeals issued a Resolution dated 6 September
2007, denying for lack of merit the Petition in CA-G.R. SP No. 97663.
Hence, this Petition.
The petitioner raises the following issues for this Court’s Resolution:
I. WHETHER OR NOT THE [COURT OF APPEALS] DEPARTED FROM THE RULES
AND ESTABLISHED JURISPRUDENCE WHEN IT DISMISSED THE PETITION [A
QUO] DESPITE FAITHFUL COMPLIANCE WITH THE RULES ON DISCLOSURE AS
INCORPORATED IN THE VERIFICATION AND CERTIFICATION PORTION OF THE
MOTION FOR EXTENSION [OF] TIME AND PETITION A QUO.
113
II. WHETHER OR NOT THE [COURT OF APPEALS] DEPARTED FROM THE
RULES AND ESTABLISHED JURISPRUDENCE WHEN IT DISMISSED THE
PETITION A QUO DESPITE THE ATTACHMENT AND SUBMISSION OF THE
REQUISITE AUTHORITY TO MAKE AND SIGN VERIFICATIONS AND
SUBSEQUENTLY REQUIRED PLEADINGS.
III. WHETHER OR NOT THE [COURT OF APPEALS] REFUSED TO ADJUDICATE
THE PETITION A QUO DESPITE THE ATTENDANCE OF A CLEARLY
EXCEPTIONAL CHARACTER AND PARAMOUNT PUBLIC INTEREST INVOLVED
AS WELL AS THE NECESSITY FOR A RULING TO PUT AN END TO
UNSCRUPULOUS ISSUANCE OF MINING CLAIMS.
IV. WHETHER OR NOT PUBLIC RESPONDENTS IN THE DENR COMMITTED
SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN DECLARING THAT:
(A) THE VERIFIED PROTEST/OPPOSITION WAS FILED OUT OF TIME; (B) THE
ISSUANCE OF THE EXPLORATION PERMIT IN FAVOR OF [PRIVATE
RESPONDENT] ON [1 SEPTEMBER 2005] AND THE UNILATERAL
CANCELLATION OF THE MPSA BY THE DENR-SECRETARY RENDERED THE
VERIFIED PROTEST/OPPOSITION MOOT AND ACADEMIC; (C) THE [PANEL OF
ARBITRATORS] HAVE NO JURISDICTION TO CANCEL, DENY AND/OR REVOKE
THE EXPLORATION PERMIT OF [PRIVATE RESPONDENT]; AND (D) THE
VERIFIED PROTEST/OPPOSITION DOES NOT CONTAIN A CERTIFICATION
AGAINST FORUM SHOPPING.21
To resolve the foregoing issues, the Court must address the more specific issues
below:
I. Whether the subsequently attached Minutes of the Special Meeting dated
22 January 2007 of the Board of Directors of petitioner sufficiently granted
Atty. Acsay authority to sign the Verification and Certification against Forum
Shopping which accompanied the Petition in CA-G.R. SP No. 97663.
II. Whether the Verified Protest/Opposition of petitioner to the Application for
Exploration Permit of private respondent was filed out of time.
III. Whether the Verified Protest/Opposition of petitioner filed before the
MAB needs to be accompanied by a Certification against Forum Shopping.
IV. Whether the issuance by the DENR Secretary of DMO No. 2005-03 on 1
February 2005 which cancelled MPSA No. 153-2000-1 of petitioner and the
issuance by MGB of EP No. 05-001 in favor of private respondent on 1
September 2005 rendered the Verified Protest/Opposition of petitioner moot
and academic.
V. Whether the Panel of Arbitrators has jurisdiction to cancel, deny and/or
revoke EP No. 05-001 issued by MGB to private respondent.

The Court finds no merit in the present Petition.
I signing of documents, can be performed only by natural persons duly authorized for
Petitioner maintains that there are special circumstances and basic considerations in
support of Atty. Acsay’s authority to execute and sign the Verification and Certification
against Forum Shopping which accompanied its Petition in CA-G.R. SP No. 97663.
Firstly, Atty. Acsay is an incorporator, stockholder, member of the board of directors,
corporate secretary, and legal counsel of petitioner. Secondly, he was the authorized
representative of petitioner in the signing of MPSA No. 153-2000-1. Therefore, Atty.
Acsay is the best legally suitable person to make the required sworn disclosures in the
Verification and Certification against Forum Shopping in the Petition of petitioner in
CA-G.R. SP No. 97663.
Petitioner also contends that the Minutes of the Meeting held on 22 January 2007 by
the board of directors of petitioner, bestowing upon Atty. Acsay the authority to make
and sign the Verification for the Motion for Extension of Time to File Petition for
Review under Rule 43 of the 1997 Revised Rules of Civil Procedure, must be
construed in its entirety. According to the Minutes, Atty. Acsay was granted authority
by the board to sign even verifications, which may be required in subsequent
pleadings filed by petitioner. The reference in the Minutes to the Motion for Extension
of Time to File Petition for Review is not meant to be restrictive or qualifying, as to
exclude other pleadings.
With the foregoing, petitioner firmly argues that it has substantially complied with the
requirements for the execution of the Verification and Certification against Forum
Shopping, which accompanied its Petition in CA-G.R. SP No. 97663.
Section 6(d), Rule 4322 in relation to Section 2, Rule 4223 of the 1997 Revised Rules of
Civil Procedure mandates that a petition for review shall contain a sworn certification
against forum shopping, in which the petitioner shall attest that he has not
commenced any other action involving the same issues in this Court, the Court of
Appeals or different divisions thereof, or any other tribunal or agency; if there is such
other action or proceeding, he must state the status of the same; and if he should
thereafter learn that a similar action or proceeding has been filed or is pending before
this Court, the Court of Appeals, or different divisions thereof, or any other tribunal or
agency, he undertakes to promptly inform the aforesaid courts and other tribunal or
agency thereof within five days therefrom.24
For failure to comply with this mandate, Section 7, Rule 43 of the 1997 Revised Rules
of Civil Procedure provides:
SEC. 7. Effect of failure to comply with requirements. – The failure of the petitioner to
comply with any of the foregoing requirements regarding the payment of the docket
and other lawful fees, the deposit for costs, proof of service of the petition, and the
contents of and the documents which should accompany the petition shall be sufficient
ground for the dismissal thereof.
114
The requirement that petitioner should sign the Certification against Forum Shopping
applies even to corporations, the Rules of Court making no distinction between natural
and juridical persons.25 A corporation, however, exercises its powers through its board
of directors and/or its duly authorized officers and agents. Physical acts, like the
the purpose by corporate by-laws or by a specific act of the board of directors.26 The
signatory, therefore, in the case of the corporation should be "a duly authorized
director or officer of the corporation" who has knowledge of the matter being
certified.27
If the petitioner is a corporation, a board resolution authorizing a corporate officer to
execute the Certification against Forum Shopping is necessary. A certification not
signed by a duly authorized person renders the petition subject to dismissal. 28
To recall, the Court of Appeals initially dismissed, in its Resolution dated 23 February
2007, the Petition for Review in CA-G.R. SP No. 97663, for failure of petitioner to
submit pertinent and relevant documents required under Section 6, Rule 43 of the
1997 Revised Rules of Civil Procedure. The petitioner filed a Motion for
Reconsideration, attaching thereto the required documents, except the proof of Atty.
Acsay’s authority to sign the Verification and Certification against Forum Shopping for
the Petition. Instead of immediately dismissing the Motion for Reconsideration of
petitioner, however, the Court of Appeals, in its Resolution dated 8 June 2007, gave
petitioner five days from receipt thereof to submit such proof. The petitioner then
submitted the Minutes of the Special Meeting held on 22 January 2007 by its board of
directors, adopting a Resolution to the following effect:
RESOLVED, that [Atty. Acsay], Director and Corporate Secretary of [herein petitioner]
be, as he hereby is, authorized to make and sign the verification of the pleading filed
by [petitioner] entitled "Motion for Extension of Time to File Petition for Review under
Rule 43 of the Rules of Court.29
It can be gleaned from the afore-quoted Resolution of the board of directors of
petitioner that the authority granted to Atty. Acsay was to make and sign the pleading
entitled "Motion for Extension of Time to File Petition for Review under Rule 43 of the
Rules of Court," but not the Petition for Review itself. The wordings of the board
Resolution are so explicit that they cannot be interpreted otherwise. There is nothing
to justify the argument of petitioner that the authority to sign granted to Atty. Acsay by
the said board Resolution extended to all other pleadings subsequent to the Motion for
Extension.
Other than the Minutes of the Special Meeting held on 22 January 2007 by the board
of directors of petitioner, which the Court deemed unsatisfactory, no other proof of
Atty. Acsay’s purported authority to sign the Verification and Certification against
Forum Shopping for the Petition for Review in CA-G.R. SP No. 97663 was presented.
Absent proof of such authority, then the reasonable conclusion is that there is actually
none. Given that a certification not signed by a duly authorized person renders the
petition subject to dismissal,30 the Court of Appeals did not err in finally dismissing in

its Resolution dated 6 September 2007 the Petition of petitioner in CA-G.R. SP No.
97663.
Although the Court has previously relaxed the rules on verification and certification
against forum shopping in some instances,31 it cannot do so here.
From the very beginning, petitioner failed to attach to its Petition for Review before the
Court of Appeals the relevant documents required by Section 6, Rule 43 of the 1997
Revised Rules of Procedure. Petitioner had two opportunities to comply with the
requisites, i.e., when it filed its Motion for Reconsideration of the 23 February 2007
Resolution of the Court of Appeals and when it submitted its compliance with the 8
June 2007 Resolution of the appellate court; yet, petitioner still failed to do so.
Petitioner never offered any satisfactory explanation for its stubborn non-compliance
with or disregard for the rules of procedure.
It is true that a litigation is not a game of technicalities, and that the rules of procedure
should not be strictly enforced at the cost of substantial justice. However, it does not
mean that the Rules of Court may be ignored at will and at random, to the prejudice of
the orderly presentation and assessment of the issues and their just resolution. It must
be emphasized that procedural rules should not be belittled or dismissed simply
because their non-observance may have resulted in prejudice to a party’s substantial
rights. Like all rules, they are required to be followed except only for the most
persuasive of reasons.32
II
Even assuming arguendo that Atty. Acsay did have the authority to sign the
Verification and Certification against Forum Shopping for the Petition for Review of
petitioner in CA-G.R. SP No. 97663, and the Court of Appeals erred in dismissing said
Petition, the Court still cannot grant the prayer of petitioner herein to reverse the
actions undertaken by the DENR as regards the cancellation of its MPSA No. 153-
2000-1 and the issuance of EP No. 05-001 to private respondent.
Petitioner insists that it filed its Verified Protest/Opposition to the Application for
Exploration Permit of private respondent within the reglementary period. Based on the
records of MGB, the Notice of Application for Exploration Permit of private respondent
was actually posted from 14 July 2005 to 28 July 2005. Applying the 30-day
reglementary period, the last date on which to file any adverse claim, protest or
opposition to the said application was 27 August 2005, a Saturday. Since 29 August
2005, Monday, was declared a national holiday, the next business day was 30 August
2005, Tuesday. This very well explains why the Verified Protest/Opposition of
petitioner was filed on 30 August 2005. Petitioner further avows that it paid the
required legal fees through postal money order. The issuance of the official receipt
only after the filing, through registered mail, of its Verified Protest/Opposition, does not
erase the fact that the docket fees were paid to and received by the government.
Section 21 of DAO No. 96-40 mandates:
115
Section 21. Publication/Posting/Radio Announcement of an Exploration Permit
Application. - x x x Any adverse claim, protest or opposition shall be filed directly,
within thirty (30) calendar days from the last date of publication/posting/radio
announcement, with the concerned Regional Office or through any concerned PENRO
or CENRO for filing in the concerned Regional Office for purposes of its resolution by
the Panel of Arbitrators pursuant to the provisions of the Act and these implementing
rules and regulations. x x x.
Considering that the Rules on Pleadings, Practice and Procedure before the Panel of
Arbitrators and MAB are bereft of any provision regarding the computation of time and
the manner of filing, the Court may refer to Section 1, Rule 22 and Section 3, Rule 13
of the 1997 Revised Rules of Civil Procedure,33 which state:
Section 1. How to compute time. – In computing any period of time prescribed or
allowed by these Rules, or by order of the court, or by any applicable statute, the day
of the act or event from which the designated period of time begins to run is to be
excluded and the date of performance included. If the last day of the period, as thus
computed, falls on a Saturday, a Sunday, or a legal holiday in the place where the
court sits, the time shall not run until the next working day. (Emphasis supplied.)
Section 3. Manner of filing. - The filing of pleadings, appearances, motions, notices,
orders, judgments and all other papers shall be made by presenting the original copies
thereof, plainly indicated as such, personally to the clerk of court or by sending them
by registered mail. In the first case, the clerk of court shall endorse on the pleading the
date and hour of filing. In the second case, the date of the mailing of motions,
pleadings, or any other papers or payments or deposits, as shown by the post office
stamp on the envelope or the registry receipt, shall be considered as the date of their
filing, payment or deposit in court. The envelope shall be attached to the record of the
case. (Emphasis supplied.)
In the present case, notices of the Application for Exploration Permit of private
respondent were published in newspapers,34 announced on the radio,35 and posted in
public places. The posting was done the latest, so we reckon the last possible date
petitioner could have validly filed its Verified Petition/Opposition with the Panel of
Arbitrators therefrom.
The notices of the Application for Exploration Permit of private respondent were
posted on the bulletin boards of the Office of the Municipal Mayor of Dasol,
Pangasinan on 16 to 31 March 2005; Office of the Municipal Mayor of Mabini,
Pangasinan on 16 to 31 March 2005; Office of the Pangasinan Provincial Environment
and Natural Resources on 17 March 2005 to 2 April 2005; Office of the DENR
Provincial Environment and Natural Resources-Pangasinan on 15 March 2005 to 6
April 2005; Office of the DENR Community Environment and Natural Resources-
Alaminos City on 17 March 2005 to 5 April 2005; Offices of the Punong Barangays of
Malimpin, San Pedro, Barlo, San Vicente, and Alilao on 16 to 31 March 2005; and
MGB on 14 to 28 July 2005.36

Since the notice of the Application for Exploration Permit of private respondent was
last posted on 28 July 2005, the 30-day reglementary period for filing any adverse
claim/protest/opposition thereto ended on 27 August 2005. As petitioner explained,
however, 27 August 2005 was a Saturday; and 29 August 2005, Monday, was
declared a national holiday,37 so the next working day was 30 August 2005, Tuesday.
Petitioner did send its Verified Protest/Opposition, through registered mail, on 30
August 2005, as evidenced by the Affidavit of Service38 of even date and Registry
Receipts No. 10181; No. 10182; No. 10183; and No. 10184. 39 Nevertheless, the Court
still could not consider the Verified Protest/Opposition of petitioner as having been
filed within the reglementary period.lavvphil
Section 21 of DAO No. 96-40, fixing the 30-day reglementary period for filing any
adverse claim/protest/opposition to an application for exploration permit, must be read
in relation to Section 204 of DAO No. 96-40, which reads:
Section 204. Substantial Requirements for Adverse Claims, Protest and Oppositions.
No adverse claim, protest or opposition involving mining rights shall be accepted for
filing unless verified and accompanied by the prescribed docket fee and proof of
services to the respondent(s), either personally or by registered mail: Provided, That
the requirement for the payment of docket fees shall not be imposed on pauper
litigants[;] (Emphasis supplied.)
and Section 7, Rule III of the Rules on Pleadings, Practice and Procedure before the
Panel of Arbitrators and MAB, which states that:
Section 7. Form and Contents of Adverse Claims, Protest or Opposition. No adverse
claim, petition, protest or opposition involving mining rights shall be accepted for filing
unless verified and accompanied by the prescribed docket fee and proof of services to
the respondent(s), either personally or by registered mail: Provided, That the
requirement for the payment of docket fees shall not be imposed on pauper litigants.
(Emphasis supplied.)
Section 204 of DAO No. 96-40 and Section 7, Rule III of the Rules on Pleadings,
Practice and Procedure before the Panel of Arbitrators and MAB explicitly require that
the adverse claim/protest/opposition be accompanied by the payment of the
prescribed docket fee for the same to be accepted for filing.
Upon a careful examination of the records of this case, it appears that the docket fee
was paid only on 6 September 2005, as evidenced by Official Receipt (O.R.) No.
7478283 B.40 Although petitioner avers that it paid the docket fee through postal
money order – in which case, the date of mailing would be deemed the date of
payment – such averment is unsubstantiated. The Court finds no evidence to prove
that petitioner actually sent the purported postal money order for the payment of the
docket fee. Petitioner submits the following evidence to prove payment of the docket
fee: (a) a Prudential Bank Check in the amount of ₱5,020.00 dated 1 September
2005;41 (b) O.R. No. 7478283 B dated 6 September 2005 issued by MGB Region I,
San Fernando City; and (c) several registry return receipts.42 But these pieces of
116
evidence do not establish at all that the docket fee was paid by postal money order; or
indicate the postal money order number and the date said postal money order was
sent. Without any evidence to prove otherwise, the Court presumes that the docket
fee was paid on the date the receipt for the same was issued, i.e., 6 September 2005.
Based on the foregoing, the Verified Protest/Opposition of petitioner to the Application
for Exploration Permit of respondent is deemed filed with the Panel of Arbitrators only
upon payment of the prescribed docket fee on 6 September 2005, clearly beyond the
reglementary period, which ended on 30 August 2005.
III
The Panel of Arbitrators denied the Verified Protest/Opposition of petitioner in Case
No. 2005-00012-I for another procedural lapse, the lack of a certification against forum
shopping.
Petitioner argues that a Verified Protest/Opposition does not require a certification
against forum shopping. According to it, Section 204 of DAO No. 96-40 identifies the
substantial requirements of a mining adverse claim/ protest/opposition, and a
certification against forum shopping is not among them; the Panel of Arbitrators has
no power and authority to impose additional requirements for the filing and service of
pleadings; the Panel of Arbitrators also does not have the authority to promulgate
rules and regulations involving the practice, pleadings, litigation and disposition of
cases before it, for the same only belongs to the MAB, pursuant to Section 207 of
DAO No. 96-40.
The arguments of petitioner have no merit.
Petitioner filed a Verified Protest/Opposition before the Panel of Arbitrators to oppose
the Application for Exploration Permit filed by private respondent with the MGB. The
Verified Protest/Opposition of petitioner constitutes an initiatory pleading before the
Panel of Arbitrators, for which a certification against forum shopping may be required.
Truly, DAO No. 96-40 is bereft of any provision requiring that a certification against
forum shopping be attached to the adverse claim/protest/opposition. However, Section
4, Rule 1 of the Rules on Pleading, Practice and Procedure before the Panel of
Arbitrators and the MAB allows the application of the pertinent provisions of the Rules
of Court by analogy or in a suppletory manner, in the interest of expeditious justice
and whenever practical and convenient; and, according to Section 5, Rule 7 of the
Revised Rules of Court:
SEC. 5. Certification against forum shopping. – The plaintiff or principal party shall
certify under oath in the complaint or other initiatory pleading asserting a claim for
relief, or in a sworn certification annexed thereto and simultaneously filed therewith:
(a) that he has not theretofore commenced any action or filed any claim involving the
same issues in any court, tribunal or quasi-judicial agency and, to the best of his
knowledge, no such other action or claim is pending therein; (b) if there is such other
pending action or claim, a complete statement of the present status thereof; and (c) if

he should thereafter learn that the same or similar action or claim has been filed or is
pending, he shall report that fact within five (5) days therefrom to the court wherein his
aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading but shall be cause for the
dismissal of the case without prejudice, unless otherwise provided, upon motion and
after hearing. The submission of a false certification or non-compliance with any of the
undertakings therein shall constitute indirect contempt of court, without prejudice to
the corresponding administrative and criminal actions. If the acts of the party or his
counsel clearly constitute willful and deliberate forum shopping, the same shall be
ground for summary dismissal with prejudice and shall constitute direct contempt, as
well as a cause for administrative sanctions.
Hence, the requirement by the Panel of Arbitrators and the MAB that a certification
against forum shopping be attached to initiatory pleadings filed before them, to
ascertain that no similar actions have been filed before other courts, tribunals, or
quasi-judicial bodies, is not arbitrary or baseless. The lack of such a certification is a
ground for the dismissal of the Verified Protest/Opposition of petitioner.
IV
The Panel of Arbitrators dismissed the Verified Protest/Opposition of petitioner for a
third reason: that the same has become moot and academic, given that the DENR
Secretary already issued DMO No. 2005-03 on 1 February 2005 canceling MPSA No.
153-2000-1 and MGB issued EP No. 05-001 to private respondent on 1 September
2005.
However, petitioner asserts that MPSA No. 153-2000-1 has not been finally cancelled
or revoked, considering the pendency of the legal remedies it availed itself of for DMO
No. 2005-03. The issuance of DMO No. 2005-03 by the DENR Secretary, and of EP
No. 05-001 by MGB pursuant thereto, should not render the Verified
Protest/Opposition of petitioner moot and academic.
The position of petitioner is untenable.
It must be stressed that the cancellation of MPSA No. 153-2000-1 of petitioner by the
DENR Secretary in DMO No. 2005-03 is already the subject of separate proceedings.
The Court cannot touch upon it in the Petition at bar.
Also worth stressing is that petitioner filed a Verified Protest/Opposition to the
Application for Exploration Permit of private respondent. When the application was
approved and the exploration permit issued to private respondent, petitioner had
nothing more to protest/oppose. More importantly, with the issuance by MGB of EP
No. 05-001 to private respondent, the remedy of petitioner is to seek the cancellation
thereof, over which, as subsequently discussed herein, the Panel of Arbitrators would
117
have no jurisdiction. The Panel of Arbitrators cannot simply consider or convert the
Verified Protest/Opposition of petitioner to the Application for Exploration Permit of
private respondent as a petition for the cancellation of EP No. 05-001. Since the Panel
of Arbitrators can no longer grant petitioner any actual substantial relief by reason of
the foregoing circumstances, then the Verified Protest/Opposition of petitioner was
appropriately dismissed for being moot and academic.
V
Finally, petitioner posits that Section 77 of Republic Act No. 7942 and Sections 202 to
203 of its Implementing Rules vest the Panel of Arbitrators with the jurisdiction to
entertain and accept any claim, protest or opposition filed directly with its office. In the
discharge thereof, the office and function bestowed upon the Panel of Arbitrators
include the power and authority to deny clearances, exclude exploration permits, and
not to accept or entertain the same.
The Court disagrees.
Section 77 of Republic Act No. 7942 establishes the jurisdiction of the Panel of
Arbitrators, thus:
Sec. 77. Panel of Arbitrators. – x x x. Within thirty (30) working days, after the
submission of the case by the parties for decision, the panel shall have exclusive
and original jurisdiction to hear and decide on the following:
a. Disputes involving rights to mining areas;
b. Disputes involving mineral agreements or permits;
c. Disputes involving surface owners, occupants and
claimholders/concessionaires; and
d. Disputes pending before the Bureau and the Department at the date of
the effectivity of this Act. (Emphasis supplied.)
In Olympic Mines and Development Corporation v. Platinum Group Metals
Corporation43 citing Celestial Nickel Mining Exploration Corporation v. Macroasia
Corporation,44 this Court made the following pronouncements as regards paragraphs
(a) and (b) of Section 77 of Republic Act No. 7942:
In Celestial Nickel Mining Exploration Corporation v. Macroasia Corporation, et al., this
Court speaking through Justice Velasco, specified the kind of disputes that fall under
Section 77(a) of the Mining Act:
 118

SO ORDERED.
The phrase "disputes involving rights to mining areas" refers to any adverse claim,
protest, or opposition to an application for a mineral agreement.

xxxx

[T]he power of the POA to resolve any adverse claim, opposition, or protest relative to
mining rights under Section 77 (a) of RA 7942 is confined only to adverse claims,
conflicts, and oppositions relating to applications for the grant of mineral rights. x x x.
Clearly, POA’s jurisdiction over "disputes involving rights to mining areas" has
nothing to do with the cancellation of existing mineral agreements. (Emphases
supplied.)

xxxx

Parenthetically, the "permit" referred to in Section 77(b) of the Mining Act pertains to
exploration permit, quarry permit, and other mining permits recognized in Chapters IV,
VIII, and IX of the Mining Act. An operating agreement, not being among those listed,
cannot be considered as a "mineral permit" under Section 77 (b). (Emphases
supplied.)

It is clear from the ruling of the Court in Olympic Mines and Celestial Nickel Mining
that the Panel of Arbitrators only has jurisdiction over adverse claims, conflicts, and
oppositions relating to applications for the grant of mineral rights, but not over
cancellation of mineral rights already granted and existing.

As to who has jurisdiction to cancel an existing exploration permit, Section 28 of DAO

NO. 96-40 explicitly provides:

Section 28. Cancellation of an Exploration Permit. – The Director/concerned Regional

Director may cancel the Exploration Permit for failure of the Permittee to comply with
any of the requirements and for violation(s) of the terms and conditions under which
the Permit is issued. For renewed Exploration Permits, the Secretary upon the
recommendation of the Director shall cause the cancellation of the same.

According to Section 5 of DAO No. 96-40, "Director" means the Director of the MGB
Central Office, while "Regional Director" means the Regional Director of any MGB
Regional Office. As the authority to issue an Exploration Permit is vested in the MGB,
then the same necessarily includes the corollary power to revoke, withdraw or cancel
the same.45 Indisputably, the authority to deny, revoke, or cancel EP No. 05-001 of
private respondent is already lodged with the MGB, and not with the Panel of
Arbitrators.

WHEREFORE, premises considered, the instant Petition for Review on Certiorari of

petitioner Pyro Copper Mining Corporation is hereby DENIED. The Resolutions dated
23 February 2007 and 6 September 2007 of the Court of Appeals in CA-G.R. SP No.
97663 are hereby AFFIRMED. Costs against the petitioner.

G.R. No. 139337 August 15, 2001
MA. CARMINIA C. ROXAS, petitioner,
vs.
HON. COURT OF APPEALS and JOSE ANTONIO F. ROXAS, respondents.
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decision1 dated April 21, 1999
and Resolution2 dated July 20, 1999 of the Court of Appeals nullifying the Orders3
dated May 13, 1998, May 19, 1998 and September 23, 1998 of the Regional Trial
Court of Parañaque City, Branch 260, which found private respondent Jose Antonio F.
Roxas liable to pay support pendente lite and subsequently in contempt of court after
failing to tender the required amount of support pendente lite.
The antecedent facts are as follows:
On November 4, 1997, petitioner Ma. Carminia C. Roxas filed with the Regional Trial
Court of Parañaque City, Civil Case No. 97-0523, which is an action for declaration of
nullity of marriage on the ground of psychological incapacity on the part of her
husband, Jose Antonio F. Roxas, private respondent herein, with an application for
support pendente lite for their four (4) minor children. The case was raffled to Branch
257 of the Regional Trial Court of Parañaque City presided by Judge Rolando C. How.
But the petitioner, soon thereafter, filed in the said RTC Branch 257 a Notice of
Dismissal dated November 20, 1997, to dismiss the complaint, without prejudice,
pursuant to the provision of Section 1, Rule 17, of the 1997 Rules of Civil Procedure,
considering that summons has not yet been served and no responsive pleading has
yet been filed.
119
The same complaint, now docketed as Civil Case No. 97-0608, was re-filed on
November 25, 1997. It was raffled in due course to Branch 260 of the Regional Trial
Court of Parañaque City presided by Judge Helen Bautista-Ricafort.
On May 13, 1998, when the case was called for a pre-trial conference, the matter of
plaintiff’s (petitioner’s) application for support pendente lite of their four (4) minor
children was taken up. Judge Bautista-Ricafort received evidence on the application
for support pendente lite. The private respondent and her counsel, Atty. Alberto Diaz,
participated in that proceedings by conducting an extensive cross-examination of the
petitioner. The trial court then issued its Order dated May 13, 1998 declaring the
proceedings on the application for support pendente lite terminated and deemed
submitted for resolution; and as prayed for by the parties, also set the case for pre-trial
on June 15, 1998 at 8:30 a.m.1âwphi1.nêt
On May 19, 1998, Judge Bautista-Ricafort, issued an Order4 granting the application
for support pendente lite, the pertinent portion of which reads:
xxx xxx xxx
The plaintiff, testifying under oath, submitted Exhibit "A" itemizing the
expenses incurred for the support of the children over a period of time
during their stay at Ayala-Alabang; and showed that their total monthly
average expense is P84,585.00, or P42,292.50 per month, per spouse.
Interestingly, the defendant did not adduce any evidence to dispute the
figures presented to the Court by the plaintiff, nor did he present proof of his
financial incapacity to contribute more than 50% of the children’s school
tuition fees.
The court has painstakingly reviewed the item included in Exhibit "A", and
found the same reasonable, xxx.
Under Art. 49 of the Family Code, there being no written agreement
between the plaintiff and the defendant for the adequate support of their
minor children xxx, this Court finds the prayer for support pendente lite to be
in order. Accordingly, the defendant is hereby ordered to contribute to the
support of the above-named minors, (aside from 50% of their school tuition
fees which the defendant has agreed to defray, plus expenses for books
and other supplies), the sum of P42,292.50 per month, effective May 1,
1998, as his share in the monthly support of the children until further orders
from this Court. xxx. All expenses for books and other school supplies shall
be shouldered by the plaintiff and the defendant, share and share alike.
Finally, it is understood that any claim for support-in-arrears prior to May 1,
1998, may be taken up later in the course of the proceedings proper.
On July 22, 1998, the petitioner filed a manifestation and motion praying the trial court
to cite private respondent in contempt of court in accordance with Section 5, Rule 61
of the 1997 Rules of Civil Procedure, after the latter failed to comply with the said

Order dated May 19, 1998 of the trial court. Private respondent, through his counsel,
Atty. Alberto Diaz, filed a counter-manifestation and motion admitting that "xxx there is
really no genuine issue as to his obligation and willingness to contribute to the
expenses for the support of his minor children xxx. He simply wants to make sure that
whatever funds he provides for the purpose will go to the expenses for which they are
intended."5 Thus, he prayed that the manner and mode of payment of his contribution
to the expenses of his minor children be modified such that he will pay directly to the
entities or persons to which the payment for such expenses are intended. On
September 23, 1998, Judge Bautista-Ricafort issued an Order6 directing the private
respondent "to comply fully with the Order of this Court dated May 19, 1998 by
updating payment of his share in the support of the minor children, pendente lite,
covering the period May 1998 to September 1998, within five (5) days from his receipt
hereof xxx under pain of legal sanctions if he still fails to do so. xxx."
On September 28, 1998, or about four (4) months later, private respondent, through
his new counsel, Atty. Francisco Ma. Guerrerro, filed an Omnibus Motion (1) applying
to be authorized to discharge Atty. Alberto Diaz as his counsel and to substitute him
with the new counsel; (2) to re-open hearing on the Motion for Support Pendente Lite;
and (3) to temporarily stay execution of the Orders dated May 19, 1998 and
September 23, 1998. The omnibus motion was set for hearing on October 2, 1998.
Private respondent requested that before the omnibus motion is heard the May 19,
1998 Order be temporarily suspended. When the presiding judge did not grant that
request of private respondent, the latter’s new counsel refused to proceed with the
hearing of his omnibus motion.
On October 8, 1998, Judge Bautista-Ricafort issued an Order giving private
respondent ten (10) days to comply with the May 19, 1998 Order, otherwise, he would
be cited for contempt of court.
On October 23, 1998, private respondent filed with the Court of Appeals a petition for
certiorari questioning the Orders of the trial court dated May 19, 1998, September 23,
1998 and October 8, 1998.
Meanwhile, on November 27, 1998, Judge Bautista-Ricafort issued another Order,7
the dispositive portion of which reads:
xxx xxx xxx
Accordingly, and on the strength of the provisions of Sec. 5 Rule 61 of the
1997 Rules of Civil Procedure, the defendant (herein private respondent) is
hereby pronounced guilty of Contempt of Court, and is hereby ordered
arrested and confined at the City Jail of Parañaque City, Metro Manila,
without bail, and as long as he has not complied with and obeyed in full the
Order of this Court dated May 19, 1998 by updating his monthly contribution
of P42,292.50 for the period of May 1998 to the date, giving the said amount
directly to the plaintiff, or depositing it with the Clerk of Court, who shall
therefor (issue) the corresponding receipts.
120
xxx xxx xxx
Private respondent was arrested by the agents of the National Bureau of Investigation
(NBI) on December 14, 1998 but he was released on the following day after the
appellate court temporarily enjoined Judge Bautista-Ricafort from enforcing her
November 27, 1998 Order as well as her Orders dated May 19, 1998, September 23,
1998, and October 8, 1998. When the temporary restraining order lapsed on March
11, 1998, the respondent was again arrested by virtue of a warrant of arrest issued by
Judge Bautista-Ricafort. After depositing with the clerk of court of the trial court the
amount of support in arrears stated in the Orders of the trial court, private respondent
was released from custody.
On April 21, 1999, the Court of Appeals rendered a Decision in favor of private
respondent, the dispositive portion of which states:
WHEREFORE, being meritorious, the instant petition is GRANTED.
Consequently, all the proceedings/actions taken by respondent Judge on
the matter of support pendente lite in Civil Case No. 97-0608 (formerly Civil
Case No. 97-0523) are hereby declared NULL and VOID, and said CASE is
ordered RETURNED to Branch 257 of the Regional Trial Court of
Parañaque City, for appropriate proceedings.
SO ORDERED.8
The appellate court nullified the Orders and the proceedings of the trial court for the
reason that the certificate of non-forum shopping of the petitioner did not mention the
prior filing of Civil Case No. 97-0523 before the sala of Judge How and the dismissal
thereof without prejudice. The decision of the appellate court elaborated the reasons
for the granting of the petition, to wit:
xxx xxx xxx
While a complaint may be dismissed by the plaintiff by filing a notice of
dismissal at any time before service of the answer (Sec. 1, Rule 17), there is
however a need to state the fact of prior filing and dismissal thereof in the
certification on non-forum shopping, in the event the complaint is refiled, as
in this case. This must be so in order to prevent the plaintiff or principal
party from invoking Section 1 of Rule 17 in the hope that, if and when
refiled, the complaint will be raffled to a more sympathetic judge.
To the mind of the Court, private respondent availed of Section 1 of Rule 17
not for any other reason or purpose than to take the case out of the sala of
Judge How and to have it assigned to another. This belief finds support from
the fact that private respondent’s lawyer and respondent Judge were
classmates at the UP College of Law.

Not only that. While private respondent actually resides in Ayala Alabang,
Muntinlupa City, it was made to appear in the complaint that she is a
resident of Parañaque City, where respondent Judge is one of the RTC
Judges. While the question of venue was not properly raised on time, this
circumstance is being cited to support petitioner’s charge of forum-
shopping.
xxx xxx xxx
Needless to say, forum-shopping merits such serious sanctions as those
prescribed in Section 5, Rule 7 of the 1997 Rules of Civil Procedure.
Considering, however, that when the complaint was withdrawn, no
substantial proceedings had as yet been taken by the court to which it was
first raffled, and that the dismissal thereof was then a matter or (sic) right,
the Court is not inclined to impose any of the said sanctions. Instead, for the
peace of mind of petitioner who entertains some doubts on the impartiality
of respondent Judge, the annulment case should be returned to Branch 257
of the RTC of Parañaque City, to which it was originally raffled. And, to
enable the Presiding Judge of said Branch to act on the matter of support
pendente lite, which gave rise to this petition for certiorari and
disqualification, the proceedings/actions taken by respondent Judge relative
thereto should be set aside, the same having been attended with grave
abuse of discretion.9
xxx xxx xxx
In the instant petition the petitioner poses the following statement of issues, to wit:
I
DID THE HONORABLE COURT OF APPEALS ERR IN HOLDING THE
HEREIN PETITIONER GUILTY OF FORUM SHOPPING?
II
DID THE HONORABLE COURT OF APPEALS ERR IN NULLIFYING
JUDGE RICAFORT’S ORDER OF SUPPORT PENDENTE LITE AND HER
RELATED IMPLEMENTING ORDERS WHICH IT WAS HER JUDICIAL
DUTY TO ISSUE UNDER ART. 49 OF THE FAMILY CODE AND OTHER
RELATED PROVISIONS OF LAW?
III
DID THE HONORABLE COURT OF APPEALS ERR IN NULLIFYING THE
PROCEEDINGS ALREADY HELD BEFORE JUDGE RICAFORT
121
AFFECTING HER QUESTIONED ORDERS, AT THE SAME TIME
IMPLIEDLY UPHOLDING THE VALIDITY OF THE REST OF THE
PROCEEDINGS INCLUDING THE TRIAL ON THE MERITS OF THE CASE
FOR ANNULMENT OF MARRIAGE?
IV
DID THE HONORABLE COURT OF APPEALS ERR IN ORDERING THAT
CIVIL CASE NO. 97-0523 RAFFLED TO JUDGE RICAFORT BE
"RETURNED" TO JUDGE HOW OF BRANCH 257 OF THE RTC OF
PARANAQUE CITY?
In other words, if a case is dismissed without prejudice upon the filing by the plaintiff of
a notice of dismissal pursuant to Section 1 of Rule 17, before the service of the
answer or responsive pleading, would the subsequent re-filing of the case by the
same party require that the certificate of non-forum shopping state that a case
involving the same issues and parties was filed and dismissed without prejudice
beforehand? Would the omission of such a statement in the certificate of non-forum
shopping render null and void the proceedings and orders issued by the trial court in
the re-filed case?
It is our considered view and we hold that the proceedings and orders issued by
Judge Bautista-Ricafort in the application for support pendente lite (and the main
complaint for annulment of marriage) in the re-filed case, that is, in Civil Case No. 97-
0608 were not rendered null and void by the omission of a statement in the certificate
of non-forum shopping regarding the prior filing and dismissal without prejudice of Civil
Case No. 97-0523 which involves the same parties and issues.
Section 5 of Rule 7 of the 1997 Rules of Civil Procedure provides that:
SEC. 5. Certification against forum shopping. – The plaintiff or principal
party shall certify under oath in the complaint or other initiatory pleading
asserting a claim for relief, or in a sworn certification annexed thereto and
simultaneously filed therewith: (a) that he has not theretofore commenced
any action or filed any claim involving the same issues in any court, tribunal
or quasi-judicial agency and, to the best of his knowledge, no such other
action or claim is pending therein; (b) if there is such other pending action or
claim, a complete statement of the present status thereof; and (c) if he
should thereafter learn that the same or similar action or claim has been
filed or is pending, he shall report that fact within five (5) days therefrom to
the court wherein his aforesaid complaint or initiatory pleading has been
filed.
Failure to comply with the foregoing requirements shall not be curable by
mere amendment of the complaint or other initiatory pleading but shall be
cause for the dismissal of the case without prejudice, unless otherwise
provided, upon motion and after hearing. The submission of a false
 122

sympathetic judge. There are five (5) RTC branches in Parañaque, namely, branch
nos. 257, 258, 259, 260 and 274. Second, Judge Bautista-Ricafort of RTC of
certification or non-compliance with any of the undertakings therein shall
Parañaque, Branch 260, is presumed to be fair and impartial despite private
constitute indirect contempt of court, without prejudice to the corresponding
respondent’s claim that she is an alleged law school classmate of the petitioner’s
administrative and criminal actions. If the acts of the party or his counsel
counsel. In any event, at the slightest doubt of the impartiality of the said trial judge,
clearly constitute willful and deliberate forum shopping, the same shall be
private respondent could have filed before the same judge a motion for her inhibition
ground for summary dismissal with prejudice and shall constitute direct
on that ground. But private respondent did not.
contempt as well as a cause for administrative sanctions. (n)

Private respondent is also estopped in questioning the proceedings and orders of

Forum shopping is an act of a party against whom an adverse judgment has been
Judge Bautista-Ricafort. He tacitly acknowledged the validity of the proceedings and
rendered in one forum of seeking and possibly getting a favorable opinion in another
the orders issued by the said trial judge by participating actively in the hearing on the
forum, other than by appeal or the special civil action of certiorari, or the institution of
application for support pendente lite and by praying for the modification of the Order of
two or more actions or proceedings grounded on the same cause on the supposition
May 19, 1998 in that he should be allowed to directly pay to the persons or entities to
that one or the other court would make a favorable disposition. The language of the
which payments of such expenses are intended in connection with the required
Supreme Court circular (now the above-quoted Section 5, Rule 7, 1997 Rules of Civil
support pendente lite of their minor children. Private respondent cannot validly claim
Procedure) distinctly suggests that it is primarily intended to cover an initiatory
that he was not ably and sufficiently represented by his first counsel, Atty. Diaz,
pleading or an incipient application of a party asserting a claim for relief.10 The most
especially during the hearing on that incident on May 13, 1998 when he himself was
important factor in determining the existence of forum shopping is the "vexation
present thereat.
caused the courts and parties-litigants by a party who asks different courts to rule on
the same or related causes or grant the same or substantially the same reliefs."11
It is also too late for the private respondent to claim wrong venue in the Regional Trial
Court of Parañaque City as a alleged proof of forum shopping. He should have raised
Since a party resorts to forum shopping in order to increase his chances of obtaining a
that ground in his answer or in a motion to dismiss. But he did not, so it is deemed
favorable decision or action, it has been held that a party cannot be said to have
waived. Besides, petitioner is also a resident of Parañaque where the family of her
sought to improve his chances of obtaining a favorable decision or action where no
parents reside.
unfavorable decision has ever been rendered against him in any of the cases he has
brought before the courts.12 Forum shopping exists where the elements of litis
pendencia are present, and where a final judgment in one case will amount to res Considering that the complaint in Civil Case No. 97-0523 was dismissed without
judicata in the other.13 For the principle of res judicata to apply, the following must be prejudice by virtue of the plaintiff’s (herein petitioner’s) Notice of Dismissal dated
present: (1) a decision on the merits; (2) by a court of competent jurisdiction; (3) the November 20, 1997 filed pursuant to Section 1, Rule 17, of the 1997 Rules of Civil
decision is final; and (4) the two actions involve identical parties, subject matter and Procedure, there is no need to state in the certificate non-forum shopping in Civil Case
causes of action.14 No. 97-0608 about the prior filing and dismissal of Civil Case No. 97-0523. In
Gabionza v. Court of Appeals,16 we ruled that it is scarcely necessary to add that
Circular No. 28-91 (now Section 5, Rule 7 of the 1997 Rules of Civil Procedure) must
In the case at bar, there was no adverse decision against the petitioner in Civil Case
be so interpreted and applied as to achieve the purposes projected by the Supreme
No. 97-0523 which was the first case filed and raffled to the sala (Branch 257) of
Court when it promulgated that Circular. Circular No. 28-91 was designed to serve as
Judge How. The dismissal without prejudice of the complaint in Civil Case No. 97-
an instrument to promote and facilitate the orderly administration of justice and should
0523 at the instance of the petitioner was pursuant to Section 1, Rule 17 of the 1997
not be interpreted with such absolute literalness as to subvert its own ultimate and
Rules of Civil Procedure15 considering that it was done before service of answer or
legitimate objective or the goal of all rules or procedure – which is to achieve
any responsive pleading. The dismissal does not amount to litis pendencia nor to res
substantial justice as expeditiously as possible. The fact that the Circular requires that
judicata. There is no litis pendencia since the first case before Judge How was
it be strictly complied with merely underscores its mandatory nature in that it cannot be
dismissed or withdrawn by the plaintiff (herein petitioner), without prejudice, upon her
dispensed with or its requirements altogether disregarded, but it does not thereby
filing of a notice of dismissal, pursuant to Section 1, Rule 17 of the 1997 Rules of Civil
interdict substantial compliance with its provisions under justifiable circumstances.17
Procedure. To use the wording of that rule, Judge How’s order is one merely
"confirming the dismissal" of the complaint by the plaintiff (herein petitioner). Neither is
there res judicata for the reason that the order of dismissal was not a decision on the Thus, an omission in the certificate of non-forum shopping about any event that would
merits but a dismissal "without prejudice". not constitute res judicata and litis pendencia as in the case at bar, is not fatal as to
merit the dismissal and nullification of the entire proceedings considering that the evils
sought to be prevented by the said certificate are not present. It is in this light that we
Thus, private respondent’s apprehension that the case was dismissed in order to be
ruled in Maricalum Mining Corp. v. National Labor Relations Commission18 that a
transferred to the sala of a judge who is allegedly more sympathetic to the petitioner’s
liberal interpretation of Supreme Court Circular No. 04-94 on non-forum shopping
cause is baseless and not a valid reason to declare the petitioner guilty of forum
shopping. First, the petitioner is not assured that the case would be raffled to a more
 123

would be more in keeping with the objectives of procedural rules which is to "secure a
just, speedy and inexpensive disposition of every action and proceeding."

For a party to be adjudged guilty of forum shopping in the trial courts, a motion to
dismiss on the ground of either litis pendencia or res judicata must be filed before the
proper trial court and a hearing conducted thereon in accordance with Section 5, Rule
7 of the 1997 Rules of Civil Procedure. The same ground cannot be raised in a
petition for certiorari before the appellate court while the main action in the trial court is
still pending for the reason that such ground for a motion to dismiss can be raised
before the trial court any time during the proceedings and is not barred by the filing of
the answer to the complaint.19

The petition for certiorari in the case at bar on the ground of alleged forum shopping in
the trial court is premature for the reason that there is an adequate and speedy
remedy available in the ordinary course of law to private respondent, i.e., a motion to
dismiss or a motion for reconsideration on the ground of either litis pendencia or res
judicata before the trial court. But private respondent did not file such a motion based
on either of said grounds. And where the ground is short of res judicata or litis
pendencia, as in the case at bar, the Court of Appeals acted with grave abuse of
discretion amounting to excess of jurisdiction when it granted the petition for certiorari
filed by herein private respondent. The trial court should have been given an
opportunity to rule on the matter of alleged forum shopping in consonance with the
hierarchy of courts.

WHEREFORE, the Decision and Resolution dated April 21, 1999 and July 20, 1999
respectively, of the Court of Appeals are hereby REVERSED, and the Orders dated
May 13, 1998, May 19, 1998 and September 23, 1998 of the Regional Trial Court of
Parañaque City, Branch 260, are REINSTATED.

SO ORDERED.1âwphi1.nêt

G.R. No. 164205 September 3, 2009
OLDARICO S. TRAVEÑO, ROVEL A. GENELSA, RUEL U. VILLARMENTE,
ALFREDO A. PANILAGAO, CARMEN P. DANILA, ELIZABETH B. MACALINO,
RAMIL P. ALBITO, REYNALDO A. LADRILLO, LUCAS G. TAMAYO, DIOSDADO
A. AMORIN, RODINO C. VASQUEZ, GLORIA A. FELICANO, NOLE E. FERMILAN,
JOSELITO B. RENDON, CRISTETA D. CAÑA, EVELYN D. ARCENAL and
JEORGE M. NONO, Petitioners,
vs.
BOBONGON BANANA GROWERS MULTI-PURPOSE COOPERATIVE, TIMOG
AGRICULTURAL CORPORATION, DIAMOND FARMS, INC., and DOLE ASIA
PHILIPPINES, Respondents.
DECISION
CARPIO MORALES, J.:
By the account of petitioner Oldarico Traveño and his 16 co-petitioners, in 1992,
respondent Timog Agricultural Corporation (TACOR) and respondent Diamond Farms,
Inc. (DFI) hired them to work at a banana plantation at Bobongon, Santo Tomas,
Davao Del Norte which covered lands previously planted with rice and corn but whose
owners had agreed to convert into a banana plantation upon being convinced that
TACOR and DFI could provide the needed capital, expertise, and equipment.
Petitioners helped prepare the lands for the planting of banana suckers and eventually
carried out the planting as well.1
Petitioners asseverated that while they worked under the direct control of supervisors
assigned by TACOR and DFI, these companies used different schemes to make it
appear that petitioners were hired through independent contractors, including
individuals, unregistered associations, and cooperatives; that the successive changes
124
in the names of their employers notwithstanding, they continued to perform the same
work under the direct control of TACOR and DFI supervisors; and that under the last
scheme adopted by these companies, the nominal individual contractors were
required to, as they did, join a cooperative and thus became members of respondent
Bobongon Banana Growers Multi-purpose Cooperative (the Cooperative).2
Continued petitioners: Sometime in 2000, above-named respondents began utilizing
harassment tactics to ease them out of their jobs. Without first seeking the approval of
the Department of Labor and Employment (DOLE), they changed their compensation
package from being based on a daily rate to a pakyawan rate that depended on the
combined productivity of the "gangs" they had been grouped into. Soon thereafter,
they stopped paying their salaries, prompting them to stop working.3
One after another, three separate complaints for illegal dismissal were filed by
petitioners, individually and collectively, with the National Labor Relations Commission
(NLRC) against said respondents including respondent Dole Asia Philippines as it
then supposedly owned TACOR,4 for unpaid salaries, overtime pay, 13th month pay,
service incentive leave pay, damages, and attorney’s fees.5
DFI answered for itself and TACOR, which it claimed had been merged with it and
ceased to exist as a corporation. Denying that it had engaged the services of
petitioners,6 DFI alleged that during the corporate lifetime of TACOR, it had an
arrangement with several landowners in Santo Tomas, Davao Del Norte whereby
TACOR was to extend financial and technical assistance to them for the development
of their lands into a banana plantation on the condition that the bananas produced
therein would be sold exclusively to TACOR; that the landowners worked on their own
farms and hired laborers to assist them; that the landowners themselves decided to
form a cooperative in order to better attain their business objectives; and that it was
not in a position to state whether petitioners were working on the banana plantation of
the landowners who had contracted with TACOR.7a1f
The Cooperative failed to file a position paper despite due notice, prompting the Labor
Arbiter to consider it to have waived its right to adduce evidence in its defense.
Nothing was heard from respondent Dole Asia Philippines.
By consolidated Decision dated October 30, 2002,8 the Labor Arbiter, found
respondent Cooperative guilty of illegal dismissal. It dropped the complaints against
DFI, TACOR and Dole Asia Philippines. Thus it disposed:
WHEREFORE, judgment is hereby rendered:
1. Declaring respondent Bobongon Banana Growers Multi-purpose
Cooperative guilty of illegal dismissal;
 125

Petitioners posit that the appellate court erred in dismissing their petition on a mere
technicality as it should have, at most, dismissed the petition only with respect to the
2. Ordering respondent Bobongon Banana Growers Multi-purpose
non-signing petitioners.
Cooperative to pay complainants full backwages from the time of their illegal
dismissal up to this promulgation, to be determined during the execution
stage; Dwelling on the merits of the case, petitioners posit that the Labor Arbiter and the
NLRC disregarded evidence on record showing that while the Cooperative was their
employer on paper, the other respondents exercised control and supervision over
3. Ordering respondent Bobongon Banana Growers Multi-purpose
them; that the Cooperative was a labor-only contractor; and that the Orders of the
Cooperative to reinstate complainants to their former positions without loss
DOLE Secretary relied upon by the Labor Arbiter and the NLRC are not applicable to
of seniority rights and if not possible, to pay them separation pay equivalent
them as the same pertained to a certification election case involving different parties
to 1/2 month pay for every year of service;
and issues.14

4. Ordering respondent Bobongon Banana Grower Cooperative [sic] to pay

DFI, commenting for itself and TACOR, maintains that, among other things, it was not
10% of the total award as Attorney’s fees;
the employer of petitioners; and that it cannot comment on their money claims
because no evidence was submitted in support thereof.15
5. All other respondents are hereby dropped as party-respondents for lack
of merit. (Underscoring supplied)
It appears that respondent Cooperative had been dissolved.16

In finding for petitioners, the Labor Arbiter relied heavily on the following Orders
As respondent Dole Asia Philippines failed to file a comment, the Court, by Resolution
submitted by DFI which were issued in an earlier case filed with the DOLE, viz: (1)
of November 29, 2006,17 required it to (1) show cause why it should not be held in
Order dated July 11, 1995 of the Director of DOLE Regional Office No. XI declaring
contempt for its failure to heed the Court’s directive, and (2) file the required comment,
the Cooperative as the employer of the 341 workers in the farms of its several
within 10 days from notice.
members; (2) Order dated December 17, 1997 of the DOLE Secretary affirming the
Order dated July 11, 1995 of the Director of DOLE Regional Office No. XI; and (3)
Order dated June 23, 1998 of the DOLE Secretary denying the Cooperative’s Motion Dole Philippines, Inc. (DPI) promptly filed an Urgent Manifestation18 stating that,
for Reconsideration. among other things, while its division located in Davao City received the Court’s
Resolution directing Dole Asia Philippines to file a comment on the present petition,
DPI did not file a comment as the directive was addressed to "Dole Asia Philippines",
On partial appeal to the NLRC, petitioners questioned the Labor Arbiter’s denial of
an entity which is not registered at the Securities and Exchange Commission.
their money claims and the dropping of their complaints against TACOR, DFI, and
Dole Asia Philippines.
Commenting on DPI’s Urgent Manifestation, petitioners contend that DPI cannot be
allowed to take advantage of their lack of knowledge as to its exact corporate name,
By Resolution dated July 30, 2003, the NLRC sustained the Labor Arbiter’s ruling that
9
DPI having raised the matter for the first time before this Court notwithstanding its
the employer of petitioners is the Cooperative, there being no showing that the earlier
receipt of all pleadings and court processes from the inception of this case. 19
mentioned Orders of the DOLE Secretary had been set aside by a court of competent
jurisdiction. It partially granted petitioners’ appeal, however, by ordering the
Cooperative to pay them their unpaid wages, wage differentials, service incentive Upon review of the records, the Court finds that DPI never ever participated in the
leave pay, and 13th month pay. It thus remanded the case to the Labor Arbiter for proceedings despite due notice. Its posturing, therefore, that the court processes it
computation of those awards. received were addressed to "Dole Asia Philippines," a non-existent entity, does not lie.
That DPI is the intended respondent, there is no doubt.
Their Motion for Reconsideration having been denied by Resolution of September 30,
2003,10 petitioners appealed to the Court of Appeals via certiorari.11 Respecting the appellate court’s dismissal of petitioners’ appeal due to the failure of
some of them to sign the therein accompanying verification and certification against
forum-shopping, the Court’s guidelines for the bench and bar in Altres v. Empleo, 20
By Resolution dated February 20, 2004,12 the appellate court dismissed petitioners’
which were culled "from jurisprudential pronouncements," are instructive:
petition for certiorari on the ground that the accompanying verification and certification
against forum shopping was defective, it having been signed by only 19 of the 22
therein named petitioners. Their Motion for Reconsideration having been denied by For the guidance of the bench and bar, the Court restates in capsule form the
Resolution of May 13, 2004,13 petitioners lodged the present Petition for Review on jurisprudential pronouncements already reflected above respecting non-compliance
Certiorari.

with the requirements on, or submission of defective, verification and certification
against forum shopping:
1) A distinction must be made between non-compliance with the
requirement on or submission of defective verification, and non-compliance
with the requirement on or submission of defective certification against
forum shopping.
2) As to verification, non-compliance therewith or a defect therein does not
necessarily render the pleading fatally defective. The court may order its
submission or correction or act on the pleading if the attending
circumstances are such that strict compliance with the Rule may be
dispensed with in order that the ends of justice may be served thereby.
3) Verification 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 when matters alleged in the petition have
been made in good faith or are true and correct.
4) 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."
5) The certification against forum shopping must be signed by all the
plaintiffs or petitioners in a case; otherwise, those who did not sign will be
dropped as parties to the case. Under reasonable or justifiable
circumstances, however, as when all the plaintiffs or petitioners share a
common interest and invoke a common cause of action or defense, the
signature of only one of them in the certification against forum shopping
substantially complies with the Rule.
6) Finally, the certification against forum shopping must be executed by the
party-pleader, not by his counsel. If, however, for reasonable or justifiable
reasons, the party-pleader is unable to sign, he must execute a Special
Power of Attorney designating his counsel of record to sign on his behalf.
(Emphasis and underscoring supplied)
The foregoing restated pronouncements were lost in the challenged Resolutions of the
appellate court. Petitioners’ contention that the appellate court should have dismissed
the petition only as to the non-signing petitioners or merely dropped them as parties to
the case is thus in order.
Instead of remanding the case to the appellate court, however, the Court deems it
more practical to decide the substantive issue raised in this petition so as not to further
126
delay the disposition of this case.21 And it thus resolves to deviate as well from the
general rule that factual questions are not entertained in petitions for review on
certiorari of the appellate court’s decisions in order to write finis to this protracted
litigation.
The sole issue is whether DFI (with which TACOR had been merged) and DPI should
be held solidarily liable with the Cooperative for petitioners’ illegal dismissal and
money claims.
The Labor Code and its Implementing Rules empower the Labor Arbiter to be the trier
of facts in labor cases.22 Much reliance is thus placed on the Arbiter’s findings of fact,
having had the opportunity to discuss with the parties and their witnesses the factual
matters of the case during the conciliation phase. 23 Just the same, a review of the
records of the present case does not warrant a conclusion different from the Arbiter’s,
as affirmed by the NLRC, that the Cooperative is the employer of petitioners.
To be sure, the matter of whether the Cooperative is an independent contractor or a
labor-only contractor may not be used to predicate a ruling in this case. Job
contracting or subcontracting refers to an arrangement whereby a principal agrees to
farm out with a contractor or subcontractor the performance of a specific job, work or
service within a definite or predetermined period, regardless of whether such job, work
or service is to be performed or completed within or outside the premises of the
principal.24 The present case does not involve such an arrangement.
DFI did not farm out to the Cooperative the performance of a specific job, work, or
service. Instead, it entered into a Banana Production and Purchase Agreement 25
(Contract) with the Cooperative, under which the Cooperative would handle and fund
the production of bananas and operation of the plantation covering lands owned by its
members in consideration of DFI’s commitment to provide financial and technical
assistance as needed, including the supply of information and equipment in growing,
packing, and shipping bananas. The Cooperative would hire its own workers and pay
their wages and benefits, and sell exclusively to DFI all export quality bananas
produced that meet the specifications agreed upon.
To the Court, the Contract between the Cooperative and DFI, far from being a job
contracting arrangement, is in essence a business partnership that partakes of the
nature of a joint venture.26 The rules on job contracting are, therefore, inapposite. The
Court may not alter the intention of the contracting parties as gleaned from their
stipulations without violating the autonomy of contracts principle under Article 1306 of
the Civil Code which gives the contracting parties the utmost liberality and freedom to
establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good custom, public order
or public policy.
Petitioners’ claim of employment relationship with the Cooperative’s herein co-
respondents must be assessed on the basis of four standards, viz: (a) the manner of
their selection and engagement; (b) the mode of payment of their wages; (c) the
 127

WHEREFORE, the petition is DISMISSED.

presence or absence of the power of dismissal; and (d) the presence or absence of
control over their conduct. Most determinative among these factors is the so-called SO ORDERED.
"control test."27

There is nothing in the records which indicates the presence of any of the foregoing
elements of an employer-employee relationship.

The absence of the first requisite, which refers to selection and engagement, is shown
by DFI’s total lack of knowledge on who actually were engaged by the Cooperative to
work in the banana plantation. This is borne out by the Contract between the
Cooperative and DFI, under which the Cooperative was to hire its own workers. As
TACOR had been merged with DFI, and DPI is merely alleged to have previously
owned TACOR, this applies to them as well. Petitioners failed to prove the contrary.
No employment contract whatsoever was submitted to substantiate how petitioners
were hired and by whom.

On the second requisite, which refers to the payment of wages, it was likewise the
Cooperative that paid the same. As reflected earlier, under the Contract, the
Cooperative was to handle and fund the production of bananas and operation of the
plantation.28 The Cooperative was also to be responsible for the proper conduct,
safety, benefits, and general welfare of its members and workers in the plantation.29

As to the third requisite, which refers to the power of dismissal, and the fourth
requisite, which refers to the power of control, both were retained by the Cooperative.
Again, the Contract stipulated that the Cooperative was to be responsible for the
proper conduct and general welfare of its members and workers in the plantation.

The crucial element of control refers to the authority of the employer to control the
employee not only with regard to the result of the work to be done, but also to the
means and methods by which the work is to be accomplished.30 While it suffices that
the power of control exists, albeit not actually exercised, there must be some evidence
of such power. In the present case, petitioners did not present any.

There being no employer-employee relationship between petitioners and the

Cooperative’s co-respondents, the latter are not solidarily liable with the Cooperative
for petitioners’ illegal dismissal and money claims.

While the Court commiserates with petitioners on their loss of employment, especially
now that the Cooperative is no longer a going concern, it cannot simply, by default,
hold the Cooperative’s co-respondents liable for their claims without any factual and
legal justification therefor. The social justice policy of labor laws and the Constitution is
not meant to be oppressive of capital.

En passant, petitioners are not precluded from pursuing any available remedies
against the former members of the defunct Cooperative as their individual
circumstances may warrant.

G.R. No. 193978 February 28, 2012
JELBERT B. GALICTO, Petitioner,
vs.
H.E. PRESIDENT BENIGNO SIMEON C. AQUINO III, in his capacity as President
of the Republic of the Philippines; ATTY. PAQUITO N. OCHOA, JR., in his
capacity as Executive Secretary; and FLORENCIO B. ABAD, in his capacity as
Secretary of the Department of Budget and Management, Respondents.
RESOLUTION
BRION, J.:
Before us is a Petition for Certiorari and Prohibition with Application for Writ of
Preliminary Injunction and/or Temporary Restraining Order,1 seeking to nullify and
enjoin the implementation of Executive Order No. (EO) 7 issued by the Office of the
President on September 8, 2010. Petitioner Jelbert B. Galicto asserts that EO 7 is
unconstitutional for having been issued beyond the powers of the President and for
being in breach of existing laws.
The petitioner is a Filipino citizen and an employee of the Philippine Health Insurance
Corporation (PhilHealth).2 He is currently holding the position of Court Attorney IV and
is assigned at the PhilHealth Regional Office CARAGA.3
Respondent Benigno Simeon C. Aquino III is the President of the Republic of the
Philippines (Pres. Aquino); he issued EO 7 and has the duty of implementing it.
Respondent Paquito N. Ochoa, Jr. is the incumbent Executive Secretary and, as the
alter ego of Pres. Aquino, is tasked with the implementation of EO 7. Respondent
Florencio B. Abad is the incumbent Secretary of the Department of Budget and
Management (DBM) charged with the implementation of EO 7.4
128
The Antecedent Facts
On July 26, 2010, Pres. Aquino made public in his first State of the Nation Address the
alleged excessive allowances, bonuses and other benefits of Officers and Members of
the Board of Directors of the Manila Waterworks and Sewerage System – a
government owned and controlled corporation (GOCC) which has been unable to
meet its standing obligations.5 Subsequently, the Senate of the Philippines (Senate),
through the Senate Committee on Government Corporations and Public Enterprises,
conducted an inquiry in aid of legislation on the reported excessive salaries,
allowances, and other benefits of GOCCs and government financial institutions
(GFIs).6
Based on its findings that "officials and governing boards of various [GOCCs] and
[GFIs] x x x have been granting themselves unwarranted allowances, bonuses,
incentives, stock options, and other benefits [as well as other] irregular and abusive
practices,"7 the Senate issued Senate Resolution No. 17 "urging the President to
order the immediate suspension of the unusually large and apparently excessive
allowances, bonuses, incentives and other perks of members of the governing boards
of [GOCCs] and [GFIs]."8
Heeding the call of Congress, Pres. Aquino, on September 8, 2010, issued EO 7,
entitled "Directing the Rationalization of the Compensation and Position Classification
System in the [GOCCs] and [GFIs], and for Other Purposes." EO 7 provided for the
guiding principles and framework to establish a fixed compensation and position
classification system for GOCCs and GFIs. A Task Force was also created to review
all remunerations of GOCC and GFI employees and officers, while GOCCs and GFIs
were ordered to submit to the Task Force information regarding their compensation.
Finally, EO 7 ordered (1) a moratorium on the increases in the salaries and other
forms of compensation, except salary adjustments under EO 8011 and EO 900, of all
GOCC and GFI employees for an indefinite period to be set by the President,9 and (2)
a suspension of all allowances, bonuses and incentives of members of the Board of
Directors/Trustees until December 31, 2010.10
EO 7 was published on September 10, 2010.11 It took effect on September 25, 2010
and precluded the Board of Directors, Trustees and/or Officers of GOCCs from
granting and releasing bonuses and allowances to members of the board of directors,
and from increasing salary rates of and granting new or additional benefits and
allowances to their employees.
The Petition
The petitioner claims that as a PhilHealth employee, he is affected by the
implementation of EO 7, which was issued with grave abuse of discretion amounting
to lack or excess of jurisdiction, based on the following arguments:
I.

EXECUTIVE ORDER NO. 7 IS NULL AND VOID FOR LACK OF LEGAL
BASIS DUE TO THE FOLLOWING GROUNDS:
A. P.D. 985 IS NOT APPLICABLE AS BASIS FOR EXECUTIVE
ORDER NO. 7 BECAUSE THE GOVERNMENT-OWNED AND
CONTROLLED CORPORATIONS WERE SUBSEQUENTLY
GRANTED THE POWER TO FIX COMPENSATION LONG
AFTER SUCH POWER HAS BEEN REVOKED BY P.D. 1597
AND R.A. 6758.
B. THE GOVERNMENT-OWNED AND CONTROLLED
CORPORATIONS DO NOT NEED TO HAVE ITS
COMPENSATION PLANS, RATES AND POLICIES REVIEWED
BY THE DBM AND APPROVED BY THE PRESIDENT
BECAUSE P.D. 1597 REQUIRES ONLY THE GOCCs TO
REPORT TO THE OFFICE TO THE PRESIDENT THEIR
COMPENSATION PLANS AND RATES BUT THE SAME DOES
NOT GIVE THE PRESIDENT THE POWER OF CONTROL
OVER THE FISCAL POWER OF THE GOCCs.
C. J.R. NO. 4, [SERIES] 2009 IS NOT APPLICABLE AS LEGAL
BASIS BECAUSE IT HAD NOT RIPENED INTO X X X LAW, THE
SAME NOT HAVING BEEN PUBLISHED.
D. ASSUMING ARGUENDO THAT J.R. NO. 1, S. 2004 (sic) AND
J.R. 4, S. 2009 ARE VALID, STILL THEY ARE NOT
APPLICABLE AS LEGAL BASIS BECAUSE THEY ARE NOT
LAWS WHICH MAY VALIDLY DELEGATE POWER TO THE
PRESIDENT TO SUSPEND THE POWER OF THE BOARD TO
FIX COMPENSATION.
II.
EXECUTIVE ORDER NO. 7 IS INVALID FOR DIVESTING THE BOARD OF
DIRECTORS OF [THE] GOCCS OF THEIR POWER TO FIX THE
COMPENSATION, A POWER WHICH IS A LEGISLATIVE GRANT AND
WHICH COULD NOT BE REVOKED OR MODIFIED BY AN EXECUTIVE
FIAT.
III.
EXECUTIVE ORDER NO. 7 IS BY SUBSTANCE A LAW, WHICH IS A
DEROGATION OF CONGRESSIONAL PREROGATIVE AND IS
THEREFORE UNCONSTITUTIONAL.
IV.
129
THE ACTS OF SUSPENDING AND IMPOSING MORATORIUM ARE
ULTRA VIRES ACTS BECAUSE J.R. NO. 4 DOES NOT EXPRESSLY
AUTHORIZE THE PRESIDENT TO EXERCISE SUCH POWERS.
V.
EXECUTIVE ORDER NO. 7 IS AN INVALID ISSUANCE BECAUSE IT HAS
NO SUFFICIENT STANDARDS AND IS THEREFORE ARBITRARY,
UNREASONABLE AND A VIOLATION OF SUBSTANTIVE DUE
PROCESS.
VI.
EXECUTIVE ORDER NO. 7 INVOLVES THE DETERMINATION AND
DISCRETION AS TO WHAT THE LAW SHALL BE AND IS THEREFORE
INVALID FOR ITS USURPATION OF LEGISLATIVE POWER.
VII.
CONSISTENT WITH THE DECISION OF THE SUPREME COURT IN
PIMENTEL V. AGUIRRE CASE, EXECUTIVE ORDER NO. 7 IS ONLY
DIRECTORY AND NOT MANDATORY.12
The Case for the Respondents
On December 13, 2010, the respondents filed their Comment. They pointed out the
following procedural defects as grounds for the petition’s dismissal: (1) the petitioner
lacks locus standi; (2) the petitioner failed to attach a board resolution or secretary’s
certificate authorizing him to question EO 7 in behalf of PhilHealth; (3) the petitioner’s
signature does not indicate his PTR Number, Mandatory Continuing Legal Education
(MCLE) Compliance Number and Integrated Bar of the Philippines (IBP) Number; (4)
the jurat of the Verification and Certification of Non-Forum Shopping failed to indicate
a valid identification card as provided under A.M. No. 02-8-13-SC; (5) the President
should be dropped as a party respondent as he is immune from suit; and (6) certiorari
is not applicable to this case.13
The respondents also raised substantive defenses to support the validity of EO 7.
They claim that the President exercises control over the governing boards of the
GOCCs and GFIs; thus, he can fix their compensation packages. In addition, EO 7
was issued in accordance with law for the purpose of controlling the grant of excessive
salaries, allowances, incentives and other benefits to GOCC and GFI employees.
They also advocate the validity of Joint Resolution (J.R.) No. 4, which they point to as
the authority for issuing EO 7.14

Meanwhile, on June 6, 2011, Congress enacted Republic Act (R.A.) No. 10149,15
otherwise known as the "GOCC Governance Act of 2011." Section 11 of RA 10149
expressly authorizes the President to fix the compensation framework of GOCCs and
GFIs.
The Court’s Ruling
We resolve to DISMISS the petition for its patent formal and procedural infirmities, and
for having been mooted by subsequent events.
A. Certiorari is not the proper remedy.
Under the Rules of Court, petitions for Certiorari and Prohibition are availed of to
question judicial, quasi-judicial and mandatory acts. Since the issuance of an EO is
not judicial, quasi-judicial or a mandatory act, a petition for certiorari and prohibition is
an incorrect remedy; instead a petition for declaratory relief under Rule 63 of the Rules
of Court, filed with the Regional Trial Court (RTC), is the proper recourse to assail the
validity of EO 7:
Section 1. Who may file petition. Any person interested under a deed, will, contract or
other written instrument, whose rights are affected by a statute, executive order or
regulation, ordinance, or any other governmental regulation may, before breach or
violation thereof, bring an action in the appropriate Regional Trial Court to determine
any question of construction or validity arising, and for a declaration of his rights or
duties, thereunder. (Emphases ours.)
Liga ng mga Barangay National v. City Mayor of Manila16 is a case in point.17 In Liga,
we dismissed the petition for certiorari to set aside an EO issued by a City Mayor and
insisted that a petition for declaratory relief should have been filed with the RTC. We
painstakingly ruled:
After due deliberation on the pleadings filed, we resolve to dismiss this petition for
certiorari.
First, the respondents neither acted in any judicial or quasi-judicial capacity nor
arrogated unto themselves any judicial or quasi-judicial prerogatives. A petition for
certiorari under Rule 65 of the 1997 Rules of Civil Procedure is a special civil action
that may be invoked only against a tribunal, board, or officer exercising judicial or
quasi-judicial functions.
Section 1, Rule 65 of the 1997 Rules of Civil Procedure provides:
SECTION 1. Petition for certiorari. — When any tribunal, board or officer exercising
judicial or quasi-judicial functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of
130
jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying that judgment be rendered
annulling or modifying the proceedings of such tribunal, board or officer, and granting
such incidental reliefs as law and justice may require.
Elsewise stated, for a writ of certiorari to issue, the following requisites must concur:
(1) it must be directed against a tribunal, board, or officer exercising judicial or quasi-
judicial functions; (2) the tribunal, board, or officer must have acted without or in
excess of jurisdiction or with grave abuse of discretion amounting [to] lack or excess of
jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in
the ordinary course of law.
A respondent is said to be exercising judicial function where he has the power to
determine what the law is and what the legal rights of the parties are, and then
undertakes to determine these questions and adjudicate upon the rights of the parties.
Quasi-judicial function, on the other hand, is "a term which applies to the actions,
discretion, etc., of public administrative officers or bodies … required to investigate
facts or ascertain the existence of facts, hold hearings, and draw conclusions from
them as a basis for their official action and to exercise discretion of a judicial nature."
Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is
necessary that there be a law that gives rise to some specific rights of persons or
property under which adverse claims to such rights are made, and the controversy
ensuing therefrom is brought before a tribunal, board, or officer clothed with power
and authority to determine the law and adjudicate the respective rights of the
contending parties.
The respondents do not fall within the ambit of tribunal, board, or officer exercising
judicial or quasi-judicial functions. As correctly pointed out by the respondents, the
enactment by the City Council of Manila of the assailed ordinance and the issuance by
respondent Mayor of the questioned executive order were done in the exercise of
legislative and executive functions, respectively, and not of judicial or quasi-judicial
functions. On this score alone, certiorari will not lie.
Second, although the instant petition is styled as a petition for certiorari, in essence, it
seeks the declaration by this Court of the unconstitutionality or illegality of the
questioned ordinance and executive order. It, thus, partakes of the nature of a petition
for declaratory relief over which this Court has only appellate, not original, jurisdiction.
Section 5, Article VIII of the Constitution provides:
Sec. 5. The Supreme Court shall have the following powers:
 131

rules to achieve the petitioner’s objectives. For our part, we cannot and should not – in
the name of liberality and the "transcendental importance" doctrine – entertain these
(1) Exercise original jurisdiction over cases affecting ambassadors, other
types of petitions. As we held in the very recent case of Lozano, et al. vs. Nograles,
public ministers and consuls, and over petitions for certiorari, prohibition,
albeit from a different perspective, our liberal approach has its limits and should not be
mandamus, quo warranto, and habeas corpus.
abused.23 [emphasis supplied]

(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the

B. Petitioner lacks locus standi.
law or the Rules of Court may provide, final judgments and orders of lower
courts in:
"Locus standi or legal standing has been defined as a personal and substantial
interest in a case such that the party has sustained or will sustain direct injury as a
(a) All cases in which the constitutionality or validity of any treaty,
result of the governmental act that is being challenged. The gist of the question on
international or executive agreement, law, presidential decree,
standing is whether a party alleges such personal stake in the outcome of the
proclamation, order, instruction, ordinance, or regulation is in
controversy as to assure that concrete adverseness which sharpens the presentation
question. (Italics supplied).
of issues upon which the court depends for illumination of difficult constitutional
questions."24 This requirement of standing relates to the constitutional mandate that
As such, this petition must necessar[ily] fail, as this Court does not have original this Court settle only actual cases or controversies.25
jurisdiction over a petition for declaratory relief even if only questions of law are
involved.18
Thus, as a general rule, a party is allowed to "raise a constitutional question" when (1)
he can show that he will personally suffer some actual or threatened injury because of
Likewise, in Southern Hemisphere Engagement Network, Inc. v. Anti Terrorism the allegedly illegal conduct of the government; (2) the injury is fairly traceable to the
Council,19 we similarly dismissed the petitions for certiorari and prohibition challenged action; and (3) the injury is likely to be redressed by a favorable action.26
challenging the constitutionality of R.A. No. 9372, otherwise known as the "Human
Security Act of 2007," since the respondents therein (members of the Anti-Terrorism
Jurisprudence defines interest as "material interest, an interest in issue and to be
Council) did not exercise judicial or quasi-judicial functions.
affected by the decree, as distinguished from mere interest in the question involved, or
a mere incidental interest. By real interest is meant a present substantial interest, as
While we have recognized in the past that we can exercise the discretion and distinguished from a mere expectancy or a future, contingent, subordinate, or
rulemaking authority we are granted under the Constitution,20 and set aside consequential interest."27
procedural considerations to permit parties to bring a suit before us at the first
instance through certiorari and/or prohibition,21 this liberal policy remains to be an
To support his claim that he has locus standi to file the present petition, the petitioner
exception to the general rule, and thus, has its limits. In Concepcion v. Commission on
contends that as an employee of PhilHealth, he "stands to be prejudiced by [EO] 7,
Elections (COMELEC),22 we emphasized the importance of availing of the proper
which suspends or imposes a moratorium on the grants of salary increases or new or
remedies and cautioned against the wrongful use of certiorari in order to assail the
increased benefits to officers and employees of GOCC[s] and x x x curtail[s] the
quasi-legislative acts of the COMELEC, especially by the wrong party. In ruling that
prerogative of those officers who are to fix and determine his compensation."28 The
liberality and the transcendental doctrine cannot trump blatant disregard of procedural
petitioner also claims that he has standing as a member of the bar in good standing
rules, and considering that the petitioner had other available remedies (such as a
who has an interest in ensuring that laws and orders of the Philippine government are
petition for declaratory relief with the appropriate RTC under the terms of Rule 63 of
legally and validly issued and implemented.
the Rules of Court), as in this case, we categorically ruled:

The respondents meanwhile argue that the petitioner is not a real party-in-interest
The petitioner’s unusual approaches and use of Rule 65 of the Rules of Court do not
since future increases in salaries and other benefits are merely contingent events or
appear to us to be the result of any error in reading Rule 65, given the way the petition
expectancies.29 The petitioner, too, is not asserting a public right for which he is
was crafted. Rather, it was a backdoor approach to achieve what the petitioner could
entitled to seek judicial protection. Section 9 of EO 7 reads:
not directly do in his individual capacity under Rule 65. It was, at the very least, an
attempted bypass of other available, albeit lengthier, modes of review that the Rules of
Court provide. While we stop short of concluding that the petitioner’s approaches Section 9. Moratorium on Increases in Salaries, Allowances, Incentives and Other
constitute an abuse of process through a manipulative reading and application of the Benefits. –Moratorium on increases in the rates of salaries, and the grant of new
Rules of Court, we nevertheless resolve that the petition should be dismissed for its increases in the rates of allowances, incentives and other benefits, except salary
blatant violation of the Rules. The transgressions alleged in a petition, however adjustments pursuant to Executive Order No. 8011 dated June 17, 2009 and
weighty they may sound, cannot be justifications for blatantly disregarding the rules of
procedure, particularly when remedial measures were available under these same

Executive Order No. 900 dated June 23, 2010, are hereby imposed until specifically
authorized by the President. [emphasis ours]
In the present case, we are not convinced that the petitioner has demonstrated that he
has a personal stake or material interest in the outcome of the case because his
interest, if any, is speculative and based on a mere expectancy. In this case, the
curtailment of future increases in his salaries and other benefits cannot but be
characterized as contingent events or expectancies. To be sure, he has no vested
rights to salary increases and, therefore, the absence of such right deprives the
petitioner of legal standing to assail EO 7.
It has been held that as to the element of injury, such aspect is not something that just
anybody with some grievance or pain may assert. It has to be direct and substantial to
make it worth the court’s time, as well as the effort of inquiry into the constitutionality
of the acts of another department of government. If the asserted injury is more
imagined than real, or is merely superficial and insubstantial, then the courts may end
up being importuned to decide a matter that does not really justify such an excursion
into constitutional adjudication.30 The rationale for this constitutional requirement of
locus standi is by no means trifle. Not only does it assure the vigorous adversary
presentation of the case; more importantly, it must suffice to warrant the Judiciary’s
overruling the determination of a coordinate, democratically elected organ of
government, such as the President, and the clear approval by Congress, in this case.
Indeed, the rationale goes to the very essence of representative democracies.31
Neither can the lack of locus standi be cured by the petitioner’s claim that he is
instituting the present petition as a member of the bar in good standing who has an
interest in ensuring that laws and orders of the Philippine government are legally and
validly issued. This supposed interest has been branded by the Court in Integrated
Bar of the Phils. (IBP) v. Hon. Zamora,32 "as too general an interest which is shared
by other groups and [by] the whole citizenry."33 Thus, the Court ruled in IBP that the
mere invocation by the IBP of its duty to preserve the rule of law and nothing more,
while undoubtedly true, is not sufficient to clothe it with standing in that case. The
Court made a similar ruling in Prof. David v. Pres. Macapagal-Arroyo34 and held that
the petitioners therein, who are national officers of the IBP, have no legal standing,
having failed to allege any direct or potential injury which the IBP, as an institution, or
its members may suffer as a consequence of the issuance of Presidential
Proclamation No. 1017 and General Order No. 5.35
We note that while the petition raises vital constitutional and statutory questions
concerning the power of the President to fix the compensation packages of GOCCs
and GFIs with possible implications on their officials and employees, the same cannot
"infuse" or give the petitioner locus standi under the transcendental importance or
paramount public interest doctrine. In Velarde v. Social Justice Society,36 we held that
even if the Court could have exempted the case from the stringent locus standi
requirement, such heroic effort would be futile because the transcendental issue could
not be resolved any way, due to procedural infirmities and shortcomings, as in the
present case.37 In other words, giving due course to the present petition which is
saddled with formal and procedural infirmities explained above in this Resolution,
132
cannot but be an exercise in futility that does not merit the Court’s liberality. As we
emphasized in Lozano v. Nograles,38 "while the Court has taken an increasingly
liberal approach to the rule of locus standi, evolving from the stringent
requirements of ‘personal injury’ to the broader ‘transcendental importance’
doctrine, such liberality is not to be abused."39
Finally, since the petitioner has failed to demonstrate a material and personal interest
in the issue in dispute, he cannot also be considered to have filed the present case as
a representative of PhilHealth. In this regard, we cannot ignore or excuse the blatant
failure of the petitioner to provide a Board Resolution or a Secretary’s Certificate from
PhilHealth to act as its representative.
C. The petition has a defective jurat.
The respondents claim that the petition should be dismissed for failing to comply with
Section 3, Rule 7 of the Rules of Civil Procedure, which requires the party or the
counsel representing him to sign the pleading and indicate an address that should not
be a post office box. The petition also allegedly violated the Supreme Court En Banc
Resolution dated November 12, 2001, requiring counsels to indicate in their pleadings
their Roll of Attorneys Number, their PTR Number and their IBP Official Receipt or
Lifetime Member Number; otherwise, the pleadings would be considered unsigned
and dismissible. Bar Matter No. 1922 likewise states that a counsel should note down
his MCLE Certificate of Compliance or Certificate of Exemption in the pleading, but the
petitioner had failed to do so.40
We do not see any violation of Section 3, Rule 7 of the Rules of Civil Procedure as the
petition bears the petitioner’s signature and office address. The present suit was
brought before this Court by the petitioner himself as a party litigant and not through
counsel. Therefore, the requirements under the Supreme Court En Banc Resolution
dated November 12, 2001 and Bar Matter No. 1922 do not apply. In Bar Matter No.
1132, April 1, 2003, we clarified that a party who is not a lawyer is not precluded from
signing his own pleadings as this is allowed by the Rules of Court; the purpose of
requiring a counsel to indicate his IBP Number and PTR Number is merely to protect
the public from bogus lawyers. A similar construction should be given to Bar Matter
No. 1922, which requires lawyers to indicate their MCLE Certificate of Compliance or
Certificate of Exemption; otherwise, the provision that allows parties to sign their own
pleadings will be negated.
However, the point raised by the respondents regarding the petitioner’s defective jurat
is correct. Indeed, A.M. No. 02-8-13-SC, dated February 19, 2008, calls for a current
identification document issued by an official agency bearing the photograph and
signature of the individual as competent evidence of identity. Nevertheless, we hasten
to clarify that the defective jurat in the Verification/Certification of Non-Forum
Shopping is not a fatal defect, as we held in In-N-Out Burger, Inc. v. Sehwani,
Incorporated.41 The verification is only a formal, not a jurisdictional, requirement that
the Court may waive.
 133

[N]o GOCC shall be exempt from the coverage of the Compensation and Position
Classification System developed by the GCG under this Act.
D. The petition has been mooted by supervening events.

As may be gleaned from these provisions, the new law amended R.A. No. 7875 and
Because of the transitory nature of EO 7, it has been pointed out that the present case
other laws that enabled certain GOCCs and GFIs to fix their own compensation
has already been rendered moot by these supervening events: (1) the lapse on
frameworks; the law now authorizes the President to fix the compensation and
December 31, 2010 of Section 10 of EO 7 that suspended the allowances and
position classification system for all GOCCs and GFIs, as well as other entities
bonuses of the directors and trustees of GOCCs and GFIs; and (2) the enactment of
covered by the law. This means that, the President can now reissue an EO containing
R.A. No. 10149 amending the provisions in the charters of GOCCs and GFIs
these same provisions without any legal constraints.1âwphi1
empowering their board of directors/trustees to determine their own compensation
system, in favor of the grant of authority to the President to perform this act.
A moot case is "one that ceases to present a justiciable controversy by virtue of
supervening events, so that a declaration thereon would be of no practical use or
With the enactment of the GOCC Governance Act of 2011, the President is now
value."42 "[A]n action is considered ‘moot’ when it no longer presents a justiciable
authorized to fix the compensation framework of GOCCs and GFIs. The pertinent
controversy because the issues involved have become academic or dead[,] or when
provisions read:
the matter in dispute has already been resolved and hence, one is not entitled to
judicial intervention unless the issue is likely to be raised again between the parties x x
Section 5. Creation of the Governance Commission for Government-Owned or - x. Simply stated, there is nothing for the x x x court to resolve as [its] determination x x
Controlled Corporations. — There is hereby created an advisory, monitoring, and x has been overtaken by subsequent events."43
oversight body with authority to formulate, implement and coordinate policies to be
known as the Governance Commission for Government-Owned or-Controlled
This is the present situation here. Congress, thru R.A. No. 10149, has expressly
Corporations, hereinafter referred to as the GCG, which shall be attached to the Office
empowered the President to establish the compensation systems of GOCCs and
of the President. The GCG shall have the following powers and functions:
GFIs. For the Court to still rule upon the supposed unconstitutionality of EO 7 will
merely be an academic exercise. Any further discussion of the constitutionality of EO
xxxx 7 serves no useful purpose since such issue is moot in its face in light of the
enactment of R.A. No. 10149. In the words of the eminent constitutional law expert, Fr.
Joaquin Bernas, S.J., "the Court normally [will not] entertain a petition touching on an
h) Conduct compensation studies, develop and recommend to the President a
issue that has become moot because x x x there would [be] no longer x x x a ‘flesh
competitive compensation and remuneration system which shall attract and retain
and blood’ case for the Court to resolve."44
talent, at the same time allowing the GOCC to be financially sound and sustainable;

All told, in view of the supervening events rendering the petition moot, as well as its
xxxx
patent formal and procedural infirmities, we no longer see any reason for the Court to
resolve the other issues raised in the certiorari petition.
Section 8. Coverage of the Compensation and Position Classification System. — The
GCG, after conducting a compensation study, shall develop a Compensation and
WHEREFORE, premises considered, the petition is DISMISSED. No costs.
Position Classification System which shall apply to all officers and employees of the
GOCCs whether under the Salary Standardization Law or exempt therefrom and shall
consist of classes of positions grouped into such categories as the GCG may SO ORDERED.
determine, subject to approval of the President.

Section 9. Position Titles and Salary Grades. — All positions in the Positions
Classification System, as determined by the GCG and as approved by the President,
shall be allocated to their proper position titles and salary grades in accordance with
an Index of Occupational Services, Position Titles and Salary Grades of the
Compensation and Position Classification System, which shall be prepared by the
GCG and approved by the President.

xxxx

G.R. No. 175512 May 30, 2011
VALLACAR TRANSIT, INC., Petitioner,
vs.
JOCELYN CATUBIG, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
For review under Rule 45 of the Rules of Court is the Decision1 dated November 17,
2005 and the Resolution2 dated November 16, 2006 of the Court Appeals in CA-G.R.
CV No. 66815, which modified the Decision3 dated January 26, 2000 of the Regional
Trial Court (RTC), Branch 30 of Dumaguete City, in Civil Case No. 11360, an action
for recovery of damages based on Article 2180, in relation to Article 2176, of the Civil
Code, filed by respondent Jocelyn Catubig against petitioner Vallacar Transit, Inc.
While the RTC dismissed respondent’s claim for damages, the Court of Appeals
granted the same.
The undisputed facts are as follows:
Petitioner is engaged in the business of transportation and the franchise owner of a
Ceres Bulilit bus with Plate No. T-0604-1348. Quirino C. Cabanilla (Cabanilla) is
employed as a regular bus driver of petitioner.
On January 27, 1994, respondent’s husband, Quintin Catubig, Jr. (Catubig), was on
his way home from Dumaguete City riding in tandem on a motorcycle with his
employee, Teddy Emperado (Emperado). Catubig was the one driving the motorcycle.
While approaching a curve at kilometers 59 and 60, Catubig tried to overtake a slow
moving ten-wheeler cargo truck by crossing-over to the opposite lane, which was then
being traversed by the Ceres Bulilit bus driven by Cabanilla, headed for the opposite
direction. When the two vehicles collided, Catubig and Emperado were thrown from
134
the motorcycle. Catubig died on the spot where he was thrown, while Emperado died
while being rushed to the hospital.
On February 1, 1994, Cabanilla was charged with reckless imprudence resulting in
double homicide in Criminal Case No. M-15-94 before the Municipal Circuit Trial Court
(MCTC) of Manjuyod-Bindoy-Ayungon of the Province of Negros Oriental. After
preliminary investigation, the MCTC issued a Resolution on December 22, 1994,
dismissing the criminal charge against Cabanilla. It found that Cabanilla was not
criminally liable for the deaths of Catubig and Emperado, because there was no
negligence, not even contributory, on Cabanilla’s part.
Thereafter, respondent filed before the RTC on July 19, 1995 a Complaint for
Damages against petitioner, seeking actual, moral, and exemplary damages, in the
total amount of ₱484,000.00, for the death of her husband, Catubig, based on Article
2180, in relation to Article 2176, of the Civil Code. Respondent alleged that petitioner
is civilly liable because the latter’s employee driver, Cabanilla, was reckless and
negligent in driving the bus which collided with Catubig’s motorcycle.
Petitioner, in its Answer with Counterclaim, contended that the proximate cause of the
vehicular collision, which resulted in the deaths of Catubig and Emperado, was the
sole negligence of Catubig when he imprudently overtook another vehicle at a curve
and traversed the opposite lane of the road. As a special and affirmative defense,
petitioner asked for the dismissal of respondent’s complaint for not being verified
and/or for failure to state a cause of action, as there was no allegation that petitioner
was negligent in the selection or supervision of its employee driver.
In the Pre-Trial Order4 dated June 10, 1997, the parties stipulated that the primary
issue for trial was whether or not petitioner should be held liable for Catubig’s death.
Trial then ensued.
Police Officer (PO) 2 Robert B. Elnas (Elnas),5 Emilio Espiritu (Espiritu),6 Dr. Norberto
Baldado, Jr. (Dr. Baldado),7 Peter Cadimas (Cadimas),8 and respondent9 herself
testified in support of respondent’s complaint.
PO2 Elnas conducted an investigation of the collision incident. According to PO2
Elnas, the bus was running fast, at a speed of 100 kilometers per hour, when it
collided with the motorcycle which was trying to overtake a truck. The collision
occurred on the lane of the bus. Catubig was flung 21 meters away, and Emperado,
11 meters away, from the point of impact. The motorcycle was totaled; the chassis
broke into three parts, and the front wheel and the steering wheel with the shock
absorbers were found 26 meters and 38 meters, respectively, from the collision point.
In contrast, only the front bumper of the bus suffered damage.
Cadimas personally witnessed the collision of the bus and the motorcycle. He recalled
that he was then waiting for a ride to Dumaguete City and saw the Ceres Bulilit bus
making a turn at a curve. Cadimas signaled the said bus to halt but it was running fast.
Cadimas also recollected that there was a cargo truck running slow in the opposite

direction of the bus. Cadimas next heard a thud and saw that the bus already collided
with a motorcycle.
Espiritu was the photographer who took photographs of the scene of the accident. He
identified the five photographs which he had taken of Catubig lying on the ground,
bloodied; broken parts of the motorcycle; and the truck which Catubig tried to
overtake.
Dr. Baldado was the medico-legal doctor who conducted the post-mortem examination
of Catubig’s body. He reported that Catubig suffered from the following injuries:
laceration and fracture of the right leg; laceration and fracture of the left elbow;
multiple abrasions in the abdominal area, left anterior chest wall, posterior right arm,
and at the back of the left scapular area; and contusion-hematoma just above the
neck. Dr. Baldado confirmed that Catubig was already dead when the latter was
brought to the hospital, and that the vehicular accident could have caused Catubig’s
instantaneous death.
Respondent herself testified to substantiate the amount of damages she was trying to
recover from petitioner for Catubig’s death, such as Catubig’s earning capacity;
expenses incurred for the wake and burial of Catubig, as well as of Emperado; the
cost of the motorcycle; and the costs of the legal services and fees respondent had
incurred.
Respondent’s documentary exhibits consisted of her and Catubig’s Marriage Contract
dated August 21, 1982, their two children’s Certificate of Live Births, Catubig’s College
Diploma dated March 24, 1983, the list and receipts of the expenses for Catubig’s
burial, the sketch of the collision site prepared by PO2 Elnas, the excerpts from the
police blotter, the photographs of the collision,10 and the Post Mortem Report11 on
Catubig’s cadaver prepared by Dr. Baldado.
In an Order12 dated October 6, 1998, the RTC admitted all of respondent’s
aforementioned evidence.
On the other hand, Rosie C. Amahit (Amahit)13 and Nunally Maypa (Maypa)14 took the
witness stand for petitioner.
Amahit was a Court Stenographer at the MCTC who took the transcript of
stenographic notes (TSN) in Criminal Case No. M-15-94 against Cabanilla. Amahit
verified that the document being presented by the defense in the present case was a
true and correct copy of the TSN of the preliminary investigation held in Criminal Case
No. M-15-94 on May 25, 1994, and another document was a duplicate original of the
MCTC Resolution dated December 22, 1994 dismissing Criminal Case No. M-15-94.
Maypa is the Administrative and Personnel Manager at the Dumaguete branch of
petitioner. He started working for petitioner on September 22, 1990 as a clerk at the
Human Resources Development Department at the Central Office of petitioner in
135
Bacolod City. Sometime in November 1993, he became an Administrative Assistant at
the Dumaguete branch of petitioner; and in August 1995, he was promoted to his
current position at the same branch.
While he was still an Administrative Assistant, Maypa was responsible for the hiring of
personnel including drivers and conductors. Maypa explained that to be hired as a
driver, an applicant should be 35 to 45 years old, have at least five years experience
in driving big trucks, submit police, court, and medical clearances, and possess all the
necessary requirements for driving a motor vehicle of more than 4,500 kilograms in
gross weight such as a professional driver’s license with a restriction code of 3. The
applicant should also pass the initial interview, the actual driving and maintenance
skills tests, and a written psychological examination involving defensive driving
techniques. Upon passing these examinations, the applicant still had to go through a
15-day familiarization of the bus and road conditions before being deployed for work.
Maypa, however, admitted that at the time of his appointment as Administrative
Assistant at the Dumaguete branch, Cabanilla was already an employee driver of
petitioner.
Maypa further explained the investigation and grievance procedure followed by
petitioner in cases of vehicular accidents involving the latter’s employee drivers.
Maypa related that Cabanilla had been put on preventive suspension following the
vehicular accident on January 27, 1994 involving the bus Cabanilla was driving and
the motorcycle carrying Catubig and Emperado. Following an internal investigation of
said accident conducted by petitioner, Cabanilla was declared not guilty of causing the
same, for he had not been negligent.
Lastly, Maypa recounted the expenses petitioner incurred as a result of the present
litigation.
The documentary exhibits of petitioner consisted of the TSN of the preliminary
investigation in Criminal Case No. M-15-94 held on May 25, 1994 before the MCTC of
Manjuyod-Bindoy-Ayungon of the Province of Negros Oriental; Resolution dated
December 22, 1994 of the MCTC in the same case; and the Minutes dated February
17, 1994 of the Grievance Proceeding conducted by petitioner involving Cabanilla.15
The RTC, in its Order16 dated November 12, 1999, admitted all the evidence
presented by petitioner.
On January 26, 2000, the RTC promulgated its Decision favoring petitioner. Based on
the sketch prepared by PO2 Elnas, which showed that "the point of impact x x x
occurred beyond the center lane near a curve within the lane of the Ceres bus[;]" 17
plus, the testimonies of PO2 Elnas and Cadimas that the motorcycle recklessly tried to
overtake a truck near a curve and encroached the opposite lane of the road, the RTC
ruled that the proximate cause of the collision of the bus and motorcycle was the
negligence of the driver of the motorcycle, Catubig. The RTC, moreover, was
convinced through the testimony of Maypa, the Administrative and Personnel Manager

of the Dumaguete branch of petitioner, that petitioner had exercised due diligence in
the selection and supervision of its employee drivers, including Cabanilla.
After trial, the RTC concluded:
WHEREFORE, finding preponderance of evidence in favor of the [herein petitioner]
that the [herein respondent’s] husband is the reckless and negligent driver and not the
driver of the [petitioner], the above-entitled case is hereby ordered dismissed.
[Petitioner’s] counterclaim is also dismissed for lack of merit. 18
Respondent appealed to the Court of Appeals. In its Decision dated November 17,
2005, the appellate court held that both Catubig and Cabanilla were negligent in
driving their respective vehicles. Catubig, on one hand, failed to use reasonable care
for his own safety and ignored the hazard when he tried to overtake a truck at a curve.
Cabanilla, on the other hand, was running his vehicle at a high speed of 100
kilometers per hour. The Court of Appeals also brushed aside the defense of petitioner
that it exercised the degree of diligence exacted by law in the conduct of its business.
Maypa was not in a position to testify on the procedures followed by petitioner in hiring
Cabanilla as an employee driver considering that Cabanilla was hired a year before
Maypa assumed his post at the Dumaguete branch of petitioner.
Thus, the Court of Appeals decreed:
WHEREFORE, based on the foregoing, the assailed decision of the trial court is
modified. We rule that [herein petitioner] is equally liable for the accident in question
which led to the deaths of Quintin Catubig, Jr. and Teddy Emperado and hereby
award to the heirs of Quintin Catubig, Jr. the amount [of] ₱250,000.00 as full
compensation for the death of the latter.19
The Court of Appeals denied the motion for reconsideration of petitioner in a
Resolution dated November 16, 2006.
Hence, the instant Petition for Review.
Petitioner asserts that respondent’s complaint for damages should be dismissed for
the latter’s failure to verify the same. The certification against forum shopping attached
to the complaint, signed by respondent, is not a valid substitute for respondent’s
verification that she "has read the pleading and that the allegations therein are true
and correct of her personal knowledge or based on authentic records."20 Petitioner
cited jurisprudence in which the Court ruled that a pleading lacking proper verification
is treated as an unsigned pleading, which produces no legal effect under Section 3,
Rule 7 of the Rules of Court.
136
Petitioner also denies any vicarious or imputed liability under Article 2180, in relation
to Article 2176, of the Civil Code. According to petitioner, respondent failed to prove
the culpability of Cabanilla, the employee driver of petitioner. There are already two
trial court decisions (i.e., the Resolution dated December 22, 1994 of the MCTC of
Manjuyod-Bindoy-Ayungon of the Province of Negros Oriental in Criminal Case No. M-
15-94 and the Decision dated January 26, 2000 of the RTC in the instant civil suit)
explicitly ruling that the proximate cause of the collision was Catubig’s reckless and
negligent act. Thus, without the fault or negligence of its employee driver, no liability at
all could be imputed upon petitioner.
Petitioner additionally argues, without conceding any fault or liability, that the award by
the Court of Appeals in respondent’s favor of the lump sum amount of ₱250,000.00 as
total death indemnity lacks factual and legal basis. Respondent’s evidence to prove
actual or compensatory damages are all self-serving, which are either inadmissible in
evidence or devoid of probative value. The award of moral and exemplary damages is
likewise contrary to the ruling of the appellate court that Catubig should be equally
held liable for his own death.
Respondent maintains that the Court of Appeals correctly adjudged petitioner to be
liable for Catubig’s death and that the appellate court had already duly passed upon
all the issues raised in the petition at bar.
The petition is meritorious.
At the outset, we find no procedural defect that would have warranted the outright
dismissal of respondent’s complaint.
Respondent filed her complaint for damages against petitioner on July 19, 1995, when
the 1964 Rules of Court was still in effect. Rule 7, Section 6 of the 1964 Rules of Court
provided:
Sec. 6. Verification.—A pleading is verified only by an affidavit stating that the person
verifying has read the pleading and that the allegations thereof are true of his own
knowledge.
Verifications based on "information and belief," or upon "knowledge, information and
belief," shall be deemed insufficient.
On July 1, 1997, the new rules on civil procedure took effect. The foregoing provision
was carried on, with a few amendments, as Rule 7, Section 4 of the 1997 Rules of
Court, viz:
SEC. 4. Verification. – Except when otherwise specifically required by law or rule,
pleadings need not be under oath, verified or accompanied by affidavit.

A pleading is verified by an affidavit that the affiant has read the pleading and that the
allegations therein are true and correct of his knowledge and belief.
A pleading required to be verified which contains a verification based on "information
and belief," or upon "knowledge, information and belief," or lacks a proper verification,
shall be treated as an unsigned pleading."
The same provision was again amended by A.M. No. 00-2-10, which became effective
on May 1, 2000. It now reads:
SEC. 4. Verification. - Except when otherwise specifically required by law or rule,
pleadings need not be under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading and that the
allegations therein are true and correct of his personal knowledge or based on
authentic records.
A pleading required to be verified which contains a verification based on "information
and belief" or upon "knowledge, information and belief," or lacks a proper verification,
shall be treated as an unsigned pleading.
The 1997 Rules of Court, even prior to its amendment by A.M. No. 00-2-10, clearly
provides that a pleading lacking proper verification is to be treated as an unsigned
pleading which produces no legal effect. However, it also just as clearly states that
"[e]xcept when otherwise specifically required by law or rule, pleadings need not be
under oath, verified or accompanied by affidavit." No such law or rule specifically
requires that respondent’s complaint for damages should have been verified.
Although parties would often submit a joint verification and certificate against forum
shopping, the two are different.
In Pajuyo v. Court of Appeals,21 we already pointed out that:
A party’s failure to sign the certification against forum shopping is different from the
party’s failure to sign personally the verification. The certificate of non-forum shopping
must be signed by the party, and not by counsel. The certification of counsel renders
the petition defective.
On the other hand, the requirement on verification of a pleading is a formal and not a
jurisdictional requisite. It is intended simply to secure an assurance that what are
alleged in the pleading are true and correct and not the product of the imagination or a
matter of speculation, and that the pleading is filed in good faith. The party need not
sign the verification. A party’s representative, lawyer or any person who personally
knows the truth of the facts alleged in the pleading may sign the verification.22
137
In the case before us, we stress that as a general rule, a pleading need not be
verified, unless there is a law or rule specifically requiring the same. Examples of
pleadings that require verification are: (1) all pleadings filed in civil cases under the
1991 Revised Rules on Summary Procedure; (2) petition for review from the Regional
Trial Court to the Supreme Court raising only questions of law under Rule 41, Section
2; (3) petition for review of the decision of the Regional Trial Court to the Court of
Appeals under Rule 42, Section 1; (4) petition for review from quasi-judicial bodies to
the Court of Appeals under Rule 43, Section 5; (5) petition for review before the
Supreme Court under Rule 45, Section 1; (6) petition for annulment of judgments or
final orders and resolutions under Rule 47, Section 4; (7) complaint for injunction
under Rule 58, Section 4; (8) application for preliminary injunction or temporary
restraining order under Rule 58, Section 4; (9) application for appointment of a
receiver under Rule 59, Section 1; (10) application for support pendente lite under
Rule 61, Section 1; (11) petition for certiorari against the judgments, final orders or
resolutions of constitutional commissions under Rule 64, Section 2; (12) petition for
certiorari, prohibition, and mandamus under Rule 65, Sections 1 to 3; (13) petition for
quo warranto under Rule 66, Section 1; (14) complaint for expropriation under Rule
67, Section 1; (15) petition for indirect contempt under Rule 71, Section 4, all from the
1997 Rules of Court; (16) all complaints or petitions involving intra-corporate
controversies under the Interim Rules of Procedure on Intra-Corporate Controversies;
(17) complaint or petition for rehabilitation and suspension of payment under the
Interim Rules on Corporate Rehabilitation; and (18) petition for declaration of absolute
nullity of void marriages and annulment of voidable marriages as well as petition for
summary proceedings under the Family Code.
In contrast, all complaints, petitions, applications, and other initiatory pleadings must
be accompanied by a certificate against forum shopping, first prescribed by
Administrative Circular No. 04-94, which took effect on April 1, 1994, then later on by
Rule 7, Section 5 of the 1997 Rules of Court. It is not disputed herein that
respondent’s complaint for damages was accompanied by such a certificate.
In addition, verification, like in most cases required by the rules of procedure, is a
formal, not jurisdictional, requirement, and mainly intended to secure an assurance
that matters which are alleged are done in good faith or are true and correct and not of
mere speculation. When circumstances warrant, the court may simply order the
correction of unverified pleadings or act on it and waive strict compliance with the
rules in order that the ends of justice may thereby be served.23
We agree with petitioner, nonetheless, that respondent was unable to prove imputable
negligence on the part of petitioner.
Prefatorily, we restate the time honored principle that in a petition for review under
Rule 45, only questions of law may be raised. It is not our function to analyze or weigh
all over again evidence already considered in the proceedings below, our jurisdiction
is limited to reviewing only errors of law that may have been committed by the lower
court. The resolution of factual issues is the function of lower courts, whose findings
on these matters are received with respect. A question of law which we may pass

upon must not involve an examination of the probative value of the evidence
presented by the litigants.24
The above rule, however, admits of certain exceptions. The findings of fact of the
Court of Appeals are generally conclusive but may be reviewed when: (1) the factual
findings of the Court of Appeals and the trial court are contradictory; (2) the findings
are grounded entirely on speculation, surmises or conjectures; (3) the inference made
by the Court of Appeals from its findings of fact is manifestly mistaken, absurd or
impossible; (4) there is grave abuse of discretion in the appreciation of facts; (5) the
appellate court, in making its findings, goes beyond the issues of the case and such
findings are contrary to the admissions of both appellant and appellee; (6) the
judgment of the Court of Appeals is premised on a misapprehension of facts; (7) the
Court of Appeals fails to notice certain relevant facts which, if properly considered, will
justify a different conclusion; and (8) the findings of fact of the Court of Appeals are
contrary to those of the trial court or are mere conclusions without citation of specific
evidence, or where the facts set forth by the petitioner are not disputed by respondent,
or where the findings of fact of the Court of Appeals are premised on the absence of
evidence but are contradicted by the evidence on record. 25
The issue of negligence is basically factual.26 Evidently, in this case, the RTC and the
Court of Appeals have contradictory factual findings: the former found that Catubig
alone was negligent, while the latter adjudged that both Catubig and petitioner were
negligent.
Respondent based her claim for damages on Article 2180, in relation to Article 2176,
of the Civil Code, which read:
Art. 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is
no pre-existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this Chapter.
Art. 2180. The obligation imposed by Article 2176 is demandable not only for one’s
own acts or omissions, but also for those persons for whom one is responsible.
xxxx
Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are not
engaged in any business or industry.
xxxx
The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to
prevent damage.
138
There is merit in the argument of the petitioner that Article 2180 of the Civil Code –
imputing fault or negligence on the part of the employer for the fault or negligence of
its employee – does not apply to petitioner since the fault or negligence of its
employee driver, Cabanilla, which would have made the latter liable for quasi-delict
under Article 2176 of the Civil Code, has never been established by respondent. To
the contrary, the totality of the evidence presented during trial shows that the
proximate cause of the collision of the bus and motorcycle is attributable solely to the
negligence of the driver of the motorcycle, Catubig.
Proximate cause is defined as that cause, which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces the injury, and without which
the result would not have occurred. And more comprehensively, the proximate legal
cause is that acting first and producing the injury, either immediately or by setting
other events in motion, all constituting a natural and continuous chain of events, each
having a close causal connection with its immediate predecessor, the final event in the
chain immediately effecting the injury as a natural and probable result of the cause
which first acted, under such circumstances that the person responsible for the first
event should, as an ordinary prudent and intelligent person, have reasonable ground
to expect at the moment of his act or default that an injury to some person might
probably result therefrom.27
The RTC concisely articulated and aptly concluded that Catubig’s overtaking of a
slow-moving truck ahead of him, while approaching a curve on the highway, was the
immediate and proximate cause of the collision which led to his own death, to wit:
Based on the evidence on record, it is crystal clear that the immediate and proximate
cause of the collision is the reckless and negligent act of Quintin Catubig, Jr. and not
because the Ceres Bus was running very fast. Even if the Ceres Bus is running very
fast on its lane, it could not have caused the collision if not for the fact that Quintin
Catubig, Jr. tried to overtake a cargo truck and encroached on the lane traversed by
the Ceres Bus while approaching a curve. As the driver of the motorcycle, Quintin
Catubig, Jr. has not observed reasonable care and caution in driving his motorcycle
which an ordinary prudent driver would have done under the circumstances.
Recklessness on the part of Quintin Catubig, Jr. is evident when he tried to overtake a
cargo truck while approaching a curve in Barangay Donggo-an, Bolisong, Manjuyod,
Negros Oriental. Overtaking is not allowed while approaching a curve in the highway
(Section 41(b), Republic Act [No.] 4136, as amended). Passing another vehicle
proceeding on the same direction should only be resorted to by a driver if the highway
is free from incoming vehicle to permit such overtaking to be made in safety (Section
41(a), Republic Act [No.] 4136). The collision happened because of the recklessness
and carelessness of [herein respondent’s] husband who was overtaking a cargo truck
while approaching a curve. Overtaking another vehicle while approaching a curve
constitute reckless driving penalized not only under Section 48 of Republic Act [No.]
4136 but also under Article 365 of the Revised Penal Code.
The Court commiserate with the [respondent] for the untimely death of her
husband.1avvphi1 However, the Court as dispenser of justice has to apply the law
based on the facts of the case. Not having proved by preponderance of evidence that
 139

SO ORDERED.
the proximate cause of the collision is the negligence of the driver of the Ceres bus,
this Court has no other option but to dismiss this case.28 (Emphases supplied.)

The testimonies of prosecution witnesses Cadimas and PO2 Elnas that Cabanilla was
driving the bus at a reckless speed when the collision occurred lack probative value.

We are unable to establish the actual speed of the bus from Cadimas’s testimony for
he merely stated that the bus did not stop when he tried to flag it down because it was
"running very fast."29

PO2 Elnas, on the other hand, made inconsistent statements as to the actual speed of
the bus at the time of the collision. During the preliminary investigation in Criminal
Case No. M-15-94 before the MCTC, PO2 Elnas refused to give testimony as to the
speed of either the bus or the motorcycle at the time of the collision and an opinion as
to who was at fault.30 But during the trial of the present case before the RTC, PO2
Elnas claimed that he was told by Cabanilla that the latter was driving the bus at the
speed of around 100 kilometers per hour.31

As the RTC noted, Cadimas and PO2 Elnas both pointed out that the motorcycle
encroached the lane of the bus when it tried to overtake, while nearing a curve, a truck
ahead of it, consistent with the fact that the point of impact actually happened within
the lane traversed by the bus. It would be more reasonable to assume then that it was
Catubig who was driving his motorcycle at high speed because to overtake the truck
ahead of him, he necessarily had to drive faster than the truck. Catubig should have
also avoided overtaking the vehicle ahead of him as the curvature on the road could
have obstructed his vision of the oncoming vehicles from the opposite lane.

The evidence shows that the driver of the bus, Cabanilla, was driving his vehicle along
the proper lane, while the driver of the motorcycle, Catubig, had overtaken a vehicle
ahead of him as he was approaching a curvature on the road, in disregard of the
provision of the law on reckless driving, at the risk of his life and that of his employee,
Emperado.

The presumption that employers are negligent under Article 2180 of the Civil Code
flows from the negligence of their employees.32 Having adjudged that the immediate
and proximate cause of the collision resulting in Catubig’s death was his own
negligence, and there was no fault or negligence on Cabanilla’s part, then such
presumption of fault or negligence on the part of petitioner, as Cabanilla’s employer,
does not even arise. Thus, it is not even necessary to delve into the defense of
petitioner that it exercised due diligence in the selection and supervision of Cabanilla
as its employee driver.

WHEREFORE, premises considered, the petition is GRANTED. The Decision dated

November 17, 2005 and Resolution dated November 16, 2006 of the Court Appeals in
CA-G.R. CV No. 66815 are SET ASIDE and the Decision dated January 26, 2000 of
the Regional Trial Court, Branch 30 of Dumaguete City, dismissing Civil Case No.
11360 is REINSTATED.
 140

This Petition for Review on Certiorari seeks the annulment of the September 11, 2001
Order of the Regional Trial Court (RTC) of Naga City, Branch 27, in Civil Case No. 99-
4403 entitled Spouses Antonio F. Algura and Lorencita S.J. Algura v. The Local
Government Unit of the City of Naga, et al., dismissing the case for failure of
petitioners Algura spouses to pay the required filing fees.2 Since the instant petition
involves only a question of law based on facts established from the pleadings and
documents submitted by the parties,3 the Court gives due course to the instant petition
sanctioned under Section 2(c) of Rule 41 on Appeal from the RTCs, and governed by
Rule 45 of the 1997 Rules of Civil Procedure.

The Facts

On September 1, 1999, spouses Antonio F. Algura and Lorencita S.J. Algura filed a
Verified Complaint dated August 30, 19994 for damages against the Naga City
Government and its officers, arising from the alleged illegal demolition of their
residence and boarding house and for payment of lost income derived from fees paid
by their boarders amounting to PhP 7,000.00 monthly.

G.R. No. 150135 October 30, 2006

SPOUSES ANTONIO F. ALGURA and LORENCITA S.J. ALGURA, petitioners,
vs.
THE LOCAL GOVERNMENT UNIT OF THE CITY OF NAGA, ATTY. MANUEL
TEOXON, ENGR. LEON PALMIANO, NATHAN SERGIO and BENJAMIN
NAVARRO, SR., respondents.
Simultaneously, petitioners filed an Ex-Parte Motion to Litigate as Indigent Litigants,5
to which petitioner Antonio Algura's Pay Slip No. 2457360 (Annex "A" of motion) was
appended, showing a gross monthly income of Ten Thousand Four Hundred Seventy
Four Pesos (PhP 10,474.00) and a net pay of Three Thousand Six Hundred Sixteen
Pesos and Ninety Nine Centavos (PhP 3,616.99) for [the month of] July 1999. 6 Also
attached as Annex "B" to the motion was a July 14, 1999 Certification7 issued by the
Office of the City Assessor of Naga City, which stated that petitioners had no property
declared in their name for taxation purposes.

Finding that petitioners' motion to litigate as indigent litigants was meritorious,

Executive Judge Jose T. Atienza of the Naga City RTC, in the September 1, 1999
DECISION Order,8 granted petitioners' plea for exemption from filing fees.

Meanwhile, as a result of respondent Naga City Government's demolition of a portion

VELASCO, JR., J.:
Anyone who has ever struggled with poverty
knows how extremely expensive it is to be poor.
–– James Baldwin
The Constitution affords litigants—moneyed or poor—equal access to the courts;
moreover, it specifically provides that poverty shall not bar any person from having
access to the courts.1 Accordingly, laws and rules must be formulated, interpreted,
and implemented pursuant to the intent and spirit of this constitutional provision. As
such, filing fees, though one of the essential elements in court procedures, should not
be an obstacle to poor litigants' opportunity to seek redress for their grievances before
the courts.
of petitioners' house, the Alguras allegedly lost a monthly income of PhP 7,000.00
from their boarders' rentals. With the loss of the rentals, the meager income from
Lorencita Algura's sari-sari store and Antonio Algura's small take home pay became
insufficient for the expenses of the Algura spouses and their six (6) children for their
basic needs including food, bills, clothes, and schooling, among others.
On October 13, 1999, respondents filed an Answer with Counterclaim dated October
10, 1999,9 arguing that the defenses of the petitioners in the complaint had no cause
of action, the spouses' boarding house blocked the road right of way, and said
structure was a nuisance per se.
Praying that the counterclaim of defendants (respondents) be dismissed, petitioners
then filed their Reply with Ex-Parte Request for a Pre-Trial Setting10 before the Naga
City RTC on October 19, 1999. On February 3, 2000, a pre-trial was held wherein

The Case

respondents asked for five (5) days within which to file a Motion to Disqualify
Petitioners as Indigent Litigants.
On March 13, 2000, respondents filed a Motion to Disqualify the Plaintiffs for Non-
Payment of Filing Fees dated March 10, 2000.11 They asserted that in addition to the
more than PhP 3,000.00 net income of petitioner Antonio Algura, who is a member of
the Philippine National Police, spouse Lorencita Algura also had a mini-store and a
computer shop on the ground floor of their residence along Bayawas St., Sta. Cruz,
Naga City. Also, respondents claimed that petitioners' second floor was used as their
residence and as a boarding house, from which they earned more than PhP 3,000.00
a month. In addition, it was claimed that petitioners derived additional income from
their computer shop patronized by students and from several boarders who paid
rentals to them. Hence, respondents concluded that petitioners were not indigent
litigants.
On March 28, 2000, petitioners subsequently interposed their Opposition to the
Motion12 to respondents' motion to disqualify them for non-payment of filing fees.
On April 14, 2000, the Naga City RTC issued an Order disqualifying petitioners as
indigent litigants on the ground that they failed to substantiate their claim for
exemption from payment of legal fees and to comply with the third paragraph of Rule
141, Section 18 of the Revised Rules of Court—directing them to pay the requisite
filing fees.13
On April 28, 2000, petitioners filed a Motion for Reconsideration of the April 14, 2000
Order. On May 8, 2000, respondents then filed their Comment/Objections to
petitioner's Motion for Reconsideration.
On May 5, 2000, the trial court issued an Order14 giving petitioners the opportunity to
comply with the requisites laid down in Section 18, Rule 141, for them to qualify as
indigent litigants.
On May 13, 2000, petitioners submitted their Compliance15 attaching the affidavits of
petitioner Lorencita Algura16 and Erlinda Bangate,17 to comply with the requirements of
then Rule 141, Section 18 of the Rules of Court and in support of their claim to be
declared as indigent litigants.
In her May 13, 2000 Affidavit, petitioner Lorencita Algura claimed that the demolition of
their small dwelling deprived her of a monthly income amounting to PhP 7,000.00.
She, her husband, and their six (6) minor children had to rely mainly on her husband's
salary as a policeman which provided them a monthly amount of PhP 3,500.00, more
or less. Also, they did not own any real property as certified by the assessor's office of
Naga City. More so, according to her, the meager net income from her small sari-sari
store and the rentals of some boarders, plus the salary of her husband, were not
enough to pay the family's basic necessities.
141
To buttress their position as qualified indigent litigants, petitioners also submitted the
affidavit of Erlinda Bangate, who attested under oath, that she personally knew
spouses Antonio Algura and Lorencita Algura, who were her neighbors; that they
derived substantial income from their boarders; that they lost said income from their
boarders' rentals when the Local Government Unit of the City of Naga, through its
officers, demolished part of their house because from that time, only a few boarders
could be accommodated; that the income from the small store, the boarders, and the
meager salary of Antonio Algura were insufficient for their basic necessities like food
and clothing, considering that the Algura spouses had six (6) children; and that she
knew that petitioners did not own any real property.
Thereafter, Naga City RTC Acting Presiding Judge Andres B. Barsaga, Jr. issued his
July 17, 200018 Order denying the petitioners' Motion for Reconsideration.
Judge Barsaga ratiocinated that the pay slip of Antonio F. Algura showed that the
"GROSS INCOME or TOTAL EARNINGS of plaintiff Algura [was] ₧10,474.00 which
amount [was] over and above the amount mentioned in the first paragraph of Rule
141, Section 18 for pauper litigants residing outside Metro Manila."19 Said rule
provides that the gross income of the litigant should not exceed PhP 3,000.00 a month
and shall not own real estate with an assessed value of PhP 50,000.00. The trial court
found that, in Lorencita S.J. Algura's May 13, 2000 Affidavit, nowhere was it stated
that she and her immediate family did not earn a gross income of PhP 3,000.00.
The Issue
Unconvinced of the said ruling, the Alguras instituted the instant petition raising a
solitary issue for the consideration of the Court: whether petitioners should be
considered as indigent litigants who qualify for exemption from paying filing fees.
The Ruling of the Court
The petition is meritorious.
A review of the history of the Rules of Court on suits in forma pauperis (pauper litigant)
is necessary before the Court rules on the issue of the Algura spouses' claim to
exemption from paying filing fees.
When the Rules of Court took effect on January 1, 1964, the rule on pauper litigants
was found in Rule 3, Section 22 which provided that:
Section 22. Pauper litigant.—Any court may authorize a litigant to
prosecute his action or defense as a pauper upon a proper showing that he
has no means to that effect by affidavits, certificate of the corresponding
provincial, city or municipal treasurer, or otherwise. Such authority[,] once
given[,] shall include an exemption from payment of legal fees and from
filing appeal bond, printed record and printed brief. The legal fees shall be a

lien to any judgment rendered in the case [favorable] to the pauper, unless
the court otherwise provides.
From the same Rules of Court, Rule 141 on Legal Fees, on the other hand, did not
contain any provision on pauper litigants.
On July 19, 1984, the Court, in Administrative Matter No. 83-6-389-0 (formerly G.R.
No. 64274), approved the recommendation of the Committee on the Revision of Rates
and Charges of Court Fees, through its Chairman, then Justice Felix V. Makasiar, to
revise the fees in Rule 141 of the Rules of Court to generate funds to effectively cover
administrative costs for services rendered by the courts. 20 A provision on pauper
litigants was inserted which reads:
Section 16. Pauper-litigants exempt from payment of court fees.—Pauper-
litigants include wage earners whose gross income do not exceed
P2,000.00 a month or P24,000.00 a year for those residing in Metro Manila,
and P1,500.00 a month or P18,000.00 a year for those residing outside
Metro Manila, or those who do not own real property with an assessed value
of not more than P24,000.00, or not more than P18,000.00 as the case may
be.
Such exemption shall include exemption from payment of fees for filing
appeal bond, printed record and printed brief.
The legal fees shall be a lien on the monetary or property judgment
rendered in favor of the pauper-litigant.
To be entitled to the exemption herein provided, the pauper-litigant shall
execute an affidavit that he does not earn the gross income
abovementioned, nor own any real property with the assessed value afore-
mentioned [sic], supported by a certification to that effect by the provincial,
city or town assessor or treasurer.
When the Rules of Court on Civil Procedure were amended by the 1997 Rules of Civil
Procedure (inclusive of Rules 1 to 71) in Supreme Court Resolution in Bar Matter No.
803 dated April 8, 1997, which became effective on July 1, 1997, Rule 3, Section 22 of
the Revised Rules of Court was superseded by Rule 3, Section 21 of said 1997 Rules
of Civil Procedure, as follows:
Section 21. Indigent party.—A party may be authorized to litigate his action,
claim or defense as an indigent if the court, upon an ex parte application
and hearing, is satisfied that the party is one who has no money or property
sufficient and available for food, shelter and basic necessities for himself
and his family.
142
Such authority shall include an exemption from payment of docket and other
lawful fees, and of transcripts of stenographic notes which the court may
order to be furnished him. The amount of the docket and other lawful fees
which the indigent was exempted from paying shall be a lien on any
judgment rendered in the case favorable to the indigent, unless the court
otherwise provides.
Any adverse party may contest the grant of such authority at any time
before judgment is rendered by the trial court. If the court should determine
after hearing that the party declared as an indigent is in fact a person with
sufficient income or property, the proper docket and other lawful fees shall
be assessed and collected by the clerk of court. If payment is not made
within the time fixed by the court, execution shall issue for the payment
thereof, without prejudice to such other sanctions as the court may impose.
At the time the Rules on Civil Procedure were amended by the Court in Bar Matter No.
803, however, there was no amendment made on Rule 141, Section 16 on pauper
litigants.
On March 1, 2000, Rule 141 on Legal Fees was amended by the Court in A.M. No.
00-2-01-SC, whereby certain fees were increased or adjusted. In this Resolution, the
Court amended Section 16 of Rule 141, making it Section 18, which now reads:
Section 18. Pauper-litigants exempt from payment of legal fees.—Pauper
litigants (a) whose gross income and that of their immediate family do not
exceed four thousand (P4,000.00) pesos a month if residing in Metro
Manila, and three thousand (P3,000.00) pesos a month if residing outside
Metro Manila, and (b) who do not own real property with an assessed value
of more than fifty thousand (P50,000.00) pesos shall be exempt from the
payment of legal fees.
The legal fees shall be a lien on any judgment rendered in the case
favorably to the pauper litigant, unless the court otherwise provides.
To be entitled to the exemption herein provided, the litigant shall execute an
affidavit that he and his immediate family do not earn the gross income
abovementioned, nor do they own any real property with the assessed value
aforementioned, supported by an affidavit of a disinterested person attesting
to the truth of the litigant's affidavit.
Any falsity in the affidavit of a litigant or disinterested person shall be
sufficient cause to strike out the pleading of that party, without prejudice to
whatever criminal liability may have been incurred.
It can be readily seen that the rule on pauper litigants was inserted in Rule 141
without revoking or amending Section 21 of Rule 3, which provides for the
 143

exemption of pauper litigants from payment of filing fees. Thus, on March 1, 2000,
there were two existing rules on pauper litigants; namely, Rule 3, Section 21 and
Rule 141, Section 18.
On August 16, 2004, Section 18 of Rule 141 was further amended in Administrative
Matter No. 04-2-04-SC, which became effective on the same date. It then became
Section 19 of Rule 141, to wit:
With this historical backdrop, let us now move on to the sole issue—whether
petitioners are exempt from the payment of filing fees.
It is undisputed that the Complaint (Civil Case No. 99-4403) was filed on September 1,
1999. However, the Naga City RTC, in its April 14, 2000 and July 17, 2000 Orders,
incorrectly applied Rule 141, Section 18 on Legal Fees when the applicable rules
at that time were Rule 3, Section 21 on Indigent Party which took effect on July 1,
1997 and Rule 141, Section 16 on Pauper Litigants which became effective on July
19, 1984 up to February 28, 2000.

Sec. 19. Indigent litigants exempt from payment of legal fees.–

The old Section 16, Rule 141 requires applicants to file an ex-parte motion to litigate
INDIGENT LITIGANTS (A) WHOSE GROSS INCOME AND THAT OF
as a pauper litigant by submitting an affidavit that they do not have a gross income of
THEIR IMMEDIATE FAMILY DO NOT EXCEED AN AMOUNT DOUBLE
PhP 2,000.00 a month or PhP 24,000.00 a year for those residing in Metro Manila and
THE MONTHLY MINIMUM WAGE OF AN EMPLOYEE AND (B) WHO DO
PhP 1,500.00 a month or PhP 18,000.00 a year for those residing outside Metro
NOT OWN REAL PROPERTY WITH A FAIR MARKET VALUE AS STATED
Manila or those who do not own real property with an assessed value of not more than
IN THE CURRENT TAX DECLARATION OF MORE THAN THREE
PhP 24,000.00 or not more than PhP 18,000.00 as the case may be. Thus, there are
HUNDRED THOUSAND (P300,000.00) PESOS SHALL BE EXEMPT
two requirements: a) income requirement—the applicants should not have a gross
FROM PAYMENT OF LEGAL FEES.
monthly income of more than PhP 1,500.00, and b) property requirement––they
should not own property with an assessed value of not more than PhP 18,000.00.
The legal fees shall be a lien on any judgment rendered in the case
favorable to the indigent litigant unless the court otherwise provides.
In the case at bar, petitioners Alguras submitted the Affidavits of petitioner Lorencita
Algura and neighbor Erlinda Bangate, the pay slip of petitioner Antonio F. Algura
To be entitled to the exemption herein provided, the litigant shall showing a gross monthly income of PhP 10,474.00,21 and a Certification of the Naga
execute an affidavit that he and his immediate family do not earn a City assessor stating that petitioners do not have property declared in their names for
gross income abovementioned, and they do not own any real property taxation.22 Undoubtedly, petitioners do not own real property as shown by the
with the fair value aforementioned, supported by an affidavit of a Certification of the Naga City assessor and so the property requirement is met.
disinterested person attesting to the truth of the litigant's affidavit. The However with respect to the income requirement, it is clear that the gross monthly
current tax declaration, if any, shall be attached to the litigant's affidavit. income of PhP 10,474.00 of petitioner Antonio F. Algura and the PhP 3,000.00 income
of Lorencita Algura when combined, were above the PhP 1,500.00 monthly income
threshold prescribed by then Rule 141, Section 16 and therefore, the income
Any falsity in the affidavit of litigant or disinterested person shall be sufficient
requirement was not satisfied. The trial court was therefore correct in disqualifying
cause to dismiss the complaint or action or to strike out the pleading of that
petitioners Alguras as indigent litigants although the court should have applied Rule
party, without prejudice to whatever criminal liability may have been
141, Section 16 which was in effect at the time of the filing of the application on
incurred. (Emphasis supplied.)
September 1, 1999. Even if Rule 141, Section 18 (which superseded Rule 141,
Section 16 on March 1, 2000) were applied, still the application could not have been
Amendments to Rule 141 (including the amendment to Rule 141, Section 18) were granted as the combined PhP 13,474.00 income of petitioners was beyond the PhP
made to implement RA 9227 which brought about new increases in filing fees. 3,000.00 monthly income threshold.
Specifically, in the August 16, 2004 amendment, the ceiling for the gross income of
litigants applying for exemption and that of their immediate family was increased from
Unrelenting, petitioners however argue in their Motion for Reconsideration of the April
PhP 4,000.00 a month in Metro Manila and PhP 3,000.00 a month outside Metro
14, 2000 Order disqualifying them as indigent litigants23 that the rules have been
Manila, to double the monthly minimum wage of an employee; and the maximum
relaxed by relying on Rule 3, Section 21 of the 1997 Rules of Civil procedure which
value of the property owned by the applicant was increased from an assessed value of
authorizes parties to litigate their action as indigents if the court is satisfied that the
PhP 50,000.00 to a maximum market value of PhP 300,000.00, to be able to
party is "one who has no money or property sufficient and available for food, shelter
accommodate more indigent litigants and promote easier access to justice by the poor
and basic necessities for himself and his family." The trial court did not give credence
and the marginalized in the wake of these new increases in filing fees.
to this view of petitioners and simply applied Rule 141 but ignored Rule 3, Section 21
on Indigent Party.
Even if there was an amendment to Rule 141 on August 16, 2004, there was still no
amendment or recall of Rule 3, Section 21 on indigent litigants.

The position of petitioners on the need to use Rule 3, Section 21 on their application to
litigate as indigent litigants brings to the fore the issue on whether a trial court has to
apply both Rule 141, Section 16 and Rule 3, Section 21 on such applications or
should the court apply only Rule 141, Section 16 and discard Rule 3, Section 21 as
having been superseded by Rule 141, Section 16 on Legal Fees.
The Court rules that Rule 3, Section 21 and Rule 141, Section 16 (later amended as
Rule 141, Section 18 on March 1, 2000 and subsequently amended by Rule 141,
Section 19 on August 16, 2003, which is now the present rule) are still valid and
enforceable rules on indigent litigants.
For one, the history of the two seemingly conflicting rules readily reveals that it was
not the intent of the Court to consider the old Section 22 of Rule 3, which took effect
on January 1, 1994 to have been amended and superseded by Rule 141, Section 16,
which took effect on July 19, 1984 through A.M. No. 83-6-389-0. If that is the case,
then the Supreme Court, upon the recommendation of the Committee on the Revision
on Rules, could have already deleted Section 22 from Rule 3 when it amended Rules
1 to 71 and approved the 1997 Rules of Civil Procedure, which took effect on July 1,
1997. The fact that Section 22 which became Rule 3, Section 21 on indigent litigant
was retained in the rules of procedure, even elaborating on the meaning of an indigent
party, and was also strengthened by the addition of a third paragraph on the right to
contest the grant of authority to litigate only goes to show that there was no intent at
all to consider said rule as expunged from the 1997 Rules of Civil Procedure.
Furthermore, Rule 141 on indigent litigants was amended twice: first on March 1,
2000 and the second on August 16, 2004; and yet, despite these two amendments,
there was no attempt to delete Section 21 from said Rule 3. This clearly evinces the
desire of the Court to maintain the two (2) rules on indigent litigants to cover
applications to litigate as an indigent litigant.
It may be argued that Rule 3, Section 21 has been impliedly repealed by the recent
2000 and 2004 amendments to Rule 141 on legal fees. This position is bereft of merit.
Implied repeals are frowned upon unless the intent of the framers of the rules is
unequivocal. It has been consistently ruled that:
(r)epeals by implication are not favored, and will not be decreed, unless it is
manifest that the legislature so intended. As laws are presumed to be
passed with deliberation and with full knowledge of all existing ones on the
subject, it is but reasonable to conclude that in passing a statute[,] it was not
intended to interfere with or abrogate any former law relating to same
matter, unless the repugnancy between the two is not only irreconcilable,
but also clear and convincing, and flowing necessarily from the language
used, unless the later act fully embraces the subject matter of the earlier, or
unless the reason for the earlier act is beyond peradventure removed.
Hence, every effort must be used to make all acts stand and if, by any
reasonable construction they can be reconciled, the later act will not operate
as a repeal of the earlier.24 (Emphasis supplied).
144
Instead of declaring that Rule 3, Section 21 has been superseded and impliedly
amended by Section 18 and later Section 19 of Rule 141, the Court finds that the two
rules can and should be harmonized.
The Court opts to reconcile Rule 3, Section 21 and Rule 141, Section 19 because it is
a settled principle that when conflicts are seen between two provisions, all efforts must
be made to harmonize them. Hence, "every statute [or rule] must be so construed and
harmonized with other statutes [or rules] as to form a uniform system of
jurisprudence."25
In Manila Jockey Club, Inc. v. Court of Appeals, this Court enunciated that in the
interpretation of seemingly conflicting laws, efforts must be made to first harmonize
them. This Court thus ruled:
Consequently, every statute should be construed in such a way that will
harmonize it with existing laws. This principle is expressed in the legal
maxim 'interpretare et concordare leges legibus est optimus interpretandi,'
that is, to interpret and to do it in such a way as to harmonize laws with laws
is the best method of interpretation.26
In the light of the foregoing considerations, therefore, the two (2) rules can stand
together and are compatible with each other. When an application to litigate as an
indigent litigant is filed, the court shall scrutinize the affidavits and supporting
documents submitted by the applicant to determine if the applicant complies with the
income and property standards prescribed in the present Section 19 of Rule 141—that
is, the applicant's gross income and that of the applicant's immediate family do not
exceed an amount double the monthly minimum wage of an employee; and the
applicant does not own real property with a fair market value of more than Three
Hundred Thousand Pesos (PhP 300,000.00). If the trial court finds that the applicant
meets the income and property requirements, the authority to litigate as indigent
litigant is automatically granted and the grant is a matter of right.
However, if the trial court finds that one or both requirements have not been met, then
it would set a hearing to enable the applicant to prove that the applicant has "no
money or property sufficient and available for food, shelter and basic necessities for
himself and his family." In that hearing, the adverse party may adduce countervailing
evidence to disprove the evidence presented by the applicant; after which the trial
court will rule on the application depending on the evidence adduced. In addition,
Section 21 of Rule 3 also provides that the adverse party may later still contest the
grant of such authority at any time before judgment is rendered by the trial court,
possibly based on newly discovered evidence not obtained at the time the application
was heard. If the court determines after hearing, that the party declared as an indigent
is in fact a person with sufficient income or property, the proper docket and other
lawful fees shall be assessed and collected by the clerk of court. If payment is not
made within the time fixed by the court, execution shall issue or the payment of
prescribed fees shall be made, without prejudice to such other sanctions as the court
may impose.
 145

No costs.
The Court concedes that Rule 141, Section 19 provides specific standards while Rule
3, Section 21 does not clearly draw the limits of the entitlement to the exemption. SO ORDERED.
Knowing that the litigants may abuse the grant of authority, the trial court must use
sound discretion and scrutinize evidence strictly in granting exemptions, aware that
the applicant has not hurdled the precise standards under Rule 141. The trial court
must also guard against abuse and misuse of the privilege to litigate as an indigent
litigant to prevent the filing of exorbitant claims which would otherwise be regulated by
a legal fee requirement.

Thus, the trial court should have applied Rule 3, Section 21 to the application of the
Alguras after their affidavits and supporting documents showed that petitioners did not
satisfy the twin requirements on gross monthly income and ownership of real property
under Rule 141. Instead of disqualifying the Alguras as indigent litigants, the trial court
should have called a hearing as required by Rule 3, Section 21 to enable the
petitioners to adduce evidence to show that they didn't have property and money
sufficient and available for food, shelter, and basic necessities for them and their
family.27 In that hearing, the respondents would have had the right to also present
evidence to refute the allegations and evidence in support of the application of the
petitioners to litigate as indigent litigants. Since this Court is not a trier of facts, it will
have to remand the case to the trial court to determine whether petitioners can be
considered as indigent litigants using the standards set in Rule 3, Section 21.

Recapitulating the rules on indigent litigants, therefore, if the applicant for exemption
meets the salary and property requirements under Section 19 of Rule 141, then the
grant of the application is mandatory. On the other hand, when the application does
not satisfy one or both requirements, then the application should not be denied
outright; instead, the court should apply the "indigency test" under Section 21 of Rule
3 and use its sound discretion in determining the merits of the prayer for exemption.

Access to justice by the impoverished is held sacrosanct under Article III, Section 11
of the 1987 Constitution. The Action Program for Judicial Reforms (APJR) itself,
initiated by former Chief Justice Hilario G. Davide, Jr., placed prime importance on
'easy access to justice by the poor' as one of its six major components. Likewise, the
judicial philosophy of Liberty and Prosperity of Chief Justice Artemio V. Panganiban
makes it imperative that the courts shall not only safeguard but also enhance the
rights of individuals—which are considered sacred under the 1987 Constitution.
Without doubt, one of the most precious rights which must be shielded and secured is
the unhampered access to the justice system by the poor, the underprivileged, and the
marginalized.

WHEREFORE, the petition is GRANTED and the April 14, 2000 Order granting the
disqualification of petitioners, the July 17, 2000 Order denying petitioners' Motion for
Reconsideration, and the September 11, 2001 Order dismissing the case in Civil Case
No. RTC-99-4403 before the Naga City RTC, Branch 27 are ANNULLED and SET
ASIDE. Furthermore, the Naga City RTC is ordered to set the "Ex-Parte Motion to
Litigate as Indigent Litigants" for hearing and apply Rule 3, Section 21 of the 1997
Rules of Civil Procedure to determine whether petitioners can qualify as indigent
litigants.

G.R. No. L-46180 August 30, 1938
ANACLETO R. TOLENTINO, petitioner,
vs.
JOSE R. CARLOS, Judge of First Instance of Benguet, Mountain Province,
and COMMONWEALTH OF THE PHILIPPINES, respondents.
Fortunato de Leon for petitioner.
Solicitor-General Tuason for respondents.
IMPERIAL, J.:
This a petition for certiorari to set aside the writ of attachment issued by the
respondent judge in civil case No. 643 of the Court of First Instance of the Mountain
Province.
On February 11, 1938, the fiscal of the City of Baguio filed an information against the
petitioner charging him with malversation of public funds in the City of Baguio, during
the period from January 1 to February 8, 1938. The information alleged that the
petitioner being then the postmaster in the post office of Baguio and an official of the
Commonwealth of the Philippines and having under his custody public funds in the
amount of P23,863.92 and postage stamps valued at P3,197.98, or a total of
P27,061.90, which funds and postage stamps belonged to the Commonwealth of the
Philippines, and being under the legal duty to keep custody thereof, account therefor,
and return the same in due time to the said Government, willfully, illegally and
criminally misappropriated the said property, failed to account therefor, and took the
same for his own use and benefit. The criminal case thus filed against him was
docketed under No. 1602. On February 12, 1938, the said fiscal filed against the same
petitioner civil case No. 643 of the Court of First Instance of Benguet, Mountain
Province. The suit had for its purpose the recovery from the petitioner of the same
public funds and postage stamps in the amount of P27,061.90. The complaint alleged
that the petitioner had under his custody the said public funds and postage stamps in
his capacity as postmaster of the Baguio post office, that as such public official he was
under a duty to account therefor and to return the same to the Commonwealth of the
Philippines, that he was required to return and deliver the said property but he could
146
not do so because he took and misappropriated the same for his own use and benefit
to the prejudice of its owner. To secure a preliminary attachment of all the property of
the petitioner the complaint likewise alleged that the plaintiff Commonwealth had a
good cause of action against the petitioner, that the obligation assumed by the latter
was not sufficiently secured, that the petitioner had misappropriated public property
consisting of the money sought to be recovered, and that he had disposed of his
property or was trying to alienate the same to defraud the Commonwealth of the
Philippines. At the end of the complaint Conrado Alcaraz, auditor of the City of Baguio,
made a verified statement stating that he had read the allegations of the complaint
and that the same were true according to his best knowledge and belief. In view of the
verified petition and allegations of the complaint, the respondent judge issued the writ
of attachment and an officer of the court attached the petitioner's property. The latter
moved to dissolve the attachment, but the motion was denied.
The petitioner contends that the writ of attachment thus issued is null and void
because: (1) the affidavit in support thereof is insufficient and fatally defective; (2) the
Commonwealth of the Philippines did not file any bond before issuing the attachment,
as required by section 427 of the Code of Civil Procedure; (3) the complaint filed in
civil case No. 643 does not state any valid or legal cause of action inasmuch as under
its allegations the action brought, if any, was ex delicto, arising from the crime of
malversation of public funds alleged in the information filed in criminal case No. 1602;
and (4) the respondent judge did not acquire jurisdiction, or acted without it, or abused
his discretion in issuing the writ of attachment.
1. The petition for attachment was included in the complaint which was filed,
and at the end of the latter appears the verified statement of the auditor of
the City of Baguio wherein he avers that all the allegations of the complaint
are true and correct to his knowledge and belief. No petition or verified
statement was filed separately to obtain the attachment. The sworn
statement of the auditor necessarily covered the allegations of the complaint
to the effect that the petitioner was a postmaster and public official, that he
had the property described under his custody, that it was his legal duty to
account therefor and to return the same to the Commonwealth, that he
refused or he failed to return the same upon demand, that he
misappropriated the said property to the prejudice of its owner, that the
value of the property was not sufficiently secured, and that the petitioner
had disposed of his property or was trying to alienate the same in fraud of
the Commonwealth of the Philippines. In this circumstances, we are of the
opinion, and so hold, that the verified statement was sufficient and valid
(section 424, in connection with 412 and 426, Code of Civil Procedure;
Cantral Capiz vs. Salas, 43 Phil., 930).
2. Section 427 of the Code of Civil Procedure provides that before the
issuance of a writ of attachment, the applicant therefor or any person in his
name, should file a bond in favor of the defendant for an amount not less
than P400 nor more than the amount of the claim, answerable for damages
in case it is shown that the attachment was obtained illegally or without
sufficient cause; but in the case at bar the one who applied for and obtained
the attachment is the Commonwealth of the Philippines, as plaintiff, and
 147

the complaint was not ordered amended, the Commonwealth mat try to
prove and confine itself to the action ex lege by abandoning the action ex
under the theory that the State is always solvent it was not bound to post
delicto.
the required bond and the respondent judge did not exceed his jurisdiction
in exempting it from such requirement. It is not necessary to discuss the
validity of Act No. 3531, as amended by Act No. 4108, because they both 4. The respondent judge had full jurisdiction to issue the attachment applied
refer to the bond to be filed when a third party claim is presented under an for in the civil case (section 425 of the Code of Civil Procedure) and he did
attachment levied in execution of a judgment. not abuse the discretion conferred upon him by law in granting the writ
because the plaintiff Commonwealth had complied with the requirements of
sections 424, in connection with 412 and 426 of the Code of Civil
3. The principal ground of the petition is that, the obligation relied upon in
Procedure.
the civil action having arisen from the crime which gave rise to the
prosecution for malversation of public funds, the civil action cannot be
maintained until final judgment has been rendered in the criminal case. For the foregoing reasons, the writ prayed for is denied, with the costs to the
Article 1089 of the Civil Code provides that obligations are created by law, petitioner. So ordered.
by contract, by quasi-contract, and by acts or ommissions or by those in
which any kind of fault or negligence occurs; and article 1092 provides that
civil obligations arising from crimes or misdemeanors shall be governed by
the provisions of the Penal Code. Article 114 of the Spanish Criminal
Procedure, enforced in this jurisdiction in a supplementary character (Rakes
vs. Atlantic, Gulf & Pacific Co., 7 Phil., 359; Almeda Chan Tanco vs.
Abaroa, 8 Phil., 178; 218 U. S., 476; 54 Law. ed., 1116; 40 Phil., 1056; U. S.
vs. Namit, 38 Phil., 926; Alba vs. Acuna and Frial, 53 Phil., 380), provides
that "when a criminal proceedings is instituted for the judicial investigation of
a crime or misdemeanor, no civil action arising from the same act can be
prosecuted; but the same shall be suspended, if there be one, in whatever
stage or state it may be found, until final sentence in the criminal
proceedings is pronounced." The petitioner relies upon these provisions,
especially the latter, in contending that the civil action does not lie and that
there being no cause of action in the civil suit filed by the Commonwealth,
the latter is not entitled to the writ of attachment. Inasmuch as the
prohibition in article 114 that no civil action be brought when a criminal
action has been filed, is conditioned upon the circumstance that the former
is based upon the same fact as that of the criminal action, it is necessary to
ascertain if the action brought by the Commonwealth in the civil case is
based upon the same facts which constitute the crime of malversation of
public funds which is the basis of the criminal case. In the complaint filed in
the civil case, it is alleged, as already stated, that the petitioner was a
postmaster and public official who had custody of the property sought to be
recovered, charged with the legal duty to return and deliver the same upon
demand to the Commonwealth of the Philippines, and that he refused to
return and deliver said property when he was required to do so by the
auditor of the City of Baguio. These allegation alone constitute sufficient G.R. No. 112546 March 13, 1996
cause of action under section 633 of the Revised Administrative Code
providing that every officer of the Government of the Philippine Islands
whose duties permit or require the possession or custody of Government NORTH DAVAO MINING CORPORATION and ASSET PRIVATIZATION TRUST,
funds or property of shall be accountable and directly responsible therefor. It petitioners,
is true that the complaint sets out allegations which are substantially a vs.
reproduction of those in the information for malversation of public funds filed NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ANTONIO M.
in the criminal case, but these allegations, in connection with the civil action, VILLANUEVA and WILFREDO GUILLEMA, respondents.
are unnecessary and may be overlooked. The complaint could have been
demurred to on the ground of ambiguity because it alleged two different and
independent causes of action; but as no demurrer was interposed and as

PANGANIBAN, J.:p
Is a company which is forced by huge business losses to close its business, legally
required to pay separation benefits to its employees at the time of its closure in an
amount equivalent to the separation pay paid to those who were separated when the
company was still a going concern? This is the main question brought before this
Court in this petition for certiorari under Rule 65 of the Revised Rules of Court, which
seeks to reverse and set aside the Resolutions dated July 29, 19931 and September
27, 19932 of the National Labor Relations Commission3 (NLRC) in NLRC CA No. M-
00139593.
The Resolution dated July 29, 1993 affirmed in toto the decision of the Labor Arbiter in
RAB-11-08-00672-92 and RAB-11-08-00713-92 ordering petitioners to pay the
complainants therein certain monetary claims.
The Resolution dated September 27, 1993 denied the motion for reconsideration of
the said July 29, 1993 Resolution.
The Facts
Petitioner North Davao Mining Corporation (North Davao) was incorporated in 1974 as
a 100% privately-owned company. Later, the Philippine National Bank (PNB) became
part owner thereof as a result of a conversion into equity of a portion of loans obtained
by North Davao from said bank. On June 30, 1986, PNB transferred all its loans to
and equity in North Davao in favor of the national government which, by virtue of
Proclamation No. 50 dated December 8, 1986, later turned them over to petitioner
Asset Privatization Trust (APT). As of December 31, 1990 the national government
hold 81.8% of the common stock and 100% of the preferred stock of said company.4
Respondent Wilfredo Guillema is one among several employees of North Davao who
were separated by reason of the company's closure on May 31, 1992, and who were
the complainants in the cases before the respondent labor arbiter.
On May 31, 1992, petitioner North Davao completely ceased operations due to
serious business reverses. From 1988 until its closure in 1992, North Davao suffered
net losses averaging three billion pesos (P3,000,000,000.00) per year, for each of the
five years prior to its closure. All told, as of December 31, 1991, or five months prior to
its closure, its total liabilities had exceeded its assets by 20,392 billion pesos, as
shown by its financial statements audited by the Commission on Audit. When it
ceased operations, its remaining employees were separated and given the equivalent
of 12.5 days' pay for every year of service, computed on their basic monthly pay, in
addition to the commutation to cash of their unused vacation and sick leaves.
However, it appears that, during the life of the petitioner corporation, from the
beginning of its operations in 1981 until its closure in 1992, it had been giving
148
separation pay equivalent to thirty (30) days' pay for every year of service. Moreover,
inasmuch as the region where North Davao operated was plagued by insurgency and
other peace and order problems, the employees had to collect their salaries at a bank
in Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2 1/2
hours' travel time by public transportation; this arrangement lasted from 1981 up to
1990.
Subsequently, a complaint was filed with respondent Labor Arbiter by respondent
Wilfredo Guillema and 271 other separated employees for: (1) additional separation
pay of 17.5 days for every year of service; (2) back wages equivalent to two days a
month; (3) transportation allowance; (4) hazard pay; (5) housing allowance; (6) food
allowance; (7) post-employment medical clearance; and (8) future medical allowance,
all of which amounted to P58,022,878.31 as computed by private respondent.5
On May 6, 1993, respondent Labor Arbiter rendered a decision ordering petitioner
North Davao to pay the complainants the following:
(a) Additional separation pay of 17.5 days for every year of
service;
(b) Backwages equivalent to two (2) days a month times the
number of years of service but not to exceed three (3) years;
(c) Transportation allowance at P80 a month times the number of
years of service but not to exceed three (3) years.
The benefits awarded by respondent Labor Arbiter amounted to P10,240,517.75.
Attorney's fees equivalent to ten percent (10%) thereof were also granted.6
On appeal, respondent NLRC affirmed the decision in toto. Petitioner North Davao's
motion for reconsideration was likewise denied. Hence, this petition.
The Parties' Submissions and the Issues
In affirming the Labor Arbiter's decision, respondent NLRC ruled that "since (North
Davao) has been paying its employees separation pay equivalent to thirty (30) days
pay for every year of service," knowing fully well that the law provides for a lesser
separation pay, then such company policy "has ripened into an obligation," and
therefore, depriving now the herein private respondent and others similarly situated of
the same benefits would be discriminatory.7 Quoting from Businessday Information
Systems and Services, Inc. (BISSI) vs. NLRC,8 it said that petitioners "may not pay
separation benefits unequally for such discrimination breeds resentment and ill-will
among those who have been treated less generously than others." It also cited Abella
vs. NLRC,9 as authority for saying that Art. 283 of the Labor Code protects workers in
case of closure of the establishment.

To justify the award of two days a month in backwages and P80 per month of
transportation allowance, respondent Commission ruled:
As to the appellants' claim that complainants-appellees' time
spent in collecting their wages at Tagum, Davao is not
compensable allegedly because it was on official time can not be
given credence. No iota of evidence has been presented to back
up said contention. The same is true with appellants' assertion
that the claim for transportation expenses is without basis since
they were incurred by the complainants. Appellants should have
submitted the payrolls to prove that complainants appellees were
not the ones who personally collected their wages and/or the
bus/jeep trip tickets or vouchers to show that the complainants-
appellees were provided with free transportation as claimed.
Petitioner, through the Government Corporate Counsel, raised the following grounds
for the allowance of the petition:
1. The NLRC acted with grave abuse of discretion in affirming
without legal basis the award of additional separation pay to
private respondents who were separated due to serious business
losses on the part of petitioner.
2. The NLRC acted with grave abuse of discretion in affirming
without sufficient factual basis the award of backwages and
transportation expenses to private respondents.
3. There is no appeal, nor any plain, speedy and adequate
remedy in the ordinary course of the law.
and the following issues:
1. Whether or not an employer whose business operations
ceased due to serious business losses or financial reverses is
obliged to pay separation pay to its employees separated by
reason of such closure.
2. Whether or not time spent in collecting wages in a place other
than the place of employment is compensable notwithstanding
that the same is done during official time.
3. Whether or not private respondents are entitled to
transportation expenses in the absence of evidence that these
expenses were incurred.
149
The First Issue: Separation Pay
To resolve this issue, it is necessary to revisit the provision of law adverted to by the
parties in their submissions, namely, Art. 283 of the Labor Code, which reads as
follows:
Art. 283. Closure of establishment and reduction of personnel. —
The employer may also terminate the employment of any
employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless
the closing is for the purpose of circumventing the provisions of
this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before
the intended date thereof. In case of termination due to the
installation of labor saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to
at least his one (1) month pay or to at least one (1) month pay for
every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay
shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1)
whole year. (emphasis supplied)
The underscored portion of Art. 283 governs the grant of separation benefits "in case
of closures or cessation of operation" of business establishments "NOT due to serious
business losses or financial reverses . . . ". Where, however, the closure was due to
business losses — as in the instant case, in which the aggregate losses amounted to
over P20 billion — the Labor Code does not impose any obligation upon the employer
to pay separation benefits, for obvious reasons. There is no need to belabor this point.
Even the public respondents, in their Comment 10 filed by the Solicitor General,
impliedly concede this point.
However, respondents tenaciously insist on the award of separation pay, anchoring
their claim solely on petitioner North Davao's long-standing policy of giving separation
pay benefits equivalent to 30-days' pay, which policy had been in force in the years
prior to its closure. Respondents contend that, by denying the same separation
benefits to private respondent and the others similarly situated, petitioners
discriminated against them. They rely on this Court's ruling in Businessday Information
Systems and Services, Inc. (BISSI) vs. NLRC, (supra). In said case, petitioner BISSI,
after experiencing financial reverses, decided "as a retrenchment measure" to lay-off
some employees on May 16, 1988 and gave them separation pay equivalent to one-
half (1/2) month pay for every year of service. BISSI retained some employees in an
attempt to rehabilitate its business as a trading company. However, barely two and a
half months later, these remaining employees were likewise discharged because the
 150

benefits at all — although not required by law — and 12.5-days worth at that, should
have elicited admiration instead of condemnation. But to require it to continue being
company decided to cease business operations altogether. Unlike the earlier
generous when it is no longer in a position to do so would certainly be unduly
terminated employees, the second batch received separation pay equivalent to a full
oppressive, unfair and most revolting to the conscience. As this Court held in Manila
month's salary for every year of service, plus a mid-year bonus. This Court ruled that
Trading & Supply Co. vs. Zulueta, 11 and reiterated in San Miguel Corporation vs.
"there was impermissible discrimination against the private respondents in the
NLRC 12 and later, in Allied Banking Corporation vs. Castro, 13 "(t)he law, in
payment of their separation benefits. The law requires an employer to extend equal
protecting the rights of the laborer, authorizes neither oppression nor self-destruction
treatment to its employees. It may not, in the guise of exercising management
of the employer."
prerogatives, grant greater benefits to some and less to others. . . ."

At this juncture, we note that the Solicitor General in his Comment challenges the
In resolving the present case, it bears keeping in mind at the outset that the factual
petitioners' assertion that North Davao, having closed down, no longer has the means
circumstances of BISSI are quite different from the current case. The Court noted that
to pay for the benefits. The Solicitor General stresses that North Davao was among
BISSI continued to suffer losses even after the retrenchment of the first batch of
the assets transferred by PNB to the national government, and that by virtue of
employees: clearly, business did not improve despite such drastic measure. That
Proclamation No. 50 dated December 8, 1986, the APT was constituted trustee of this
notwithstanding, when BISSI finally shut down, it could well afford to (and actually did)
government asset. He then concludes that "(i)t would, therefore, be incongruous to
pay off its remaining employees with MORE separation benefits as compared with
declare that the National Government, which should always be presumed to be
those earlier laid off; obviously, then, there was no reason for BISSI to skimp on
solvent, could not pay now private respondents' money claims." Such argumentation
separation pay for the first batch of discharged employees. That it was able to pay
is completely misplaced. Even if the national government owned or controlled 81.8%
one-month separation benefit for employees at the time of closure of its business
of the common stock and 100% of the preferred stock of North Davao, it remains only
meant that it must have been also in a position to pay the same amount to those who
a stockholder thereof, and under existing laws and prevailing jurisprudence, a
were separated prior to closure. That it did not do so was a wrongful exercise of
stockholder as a rule is not directly, individually and/or personally liable for the
management prerogatives. That is why the Court correctly faulted it with
indebtedness of the corporation. The obligation of North Davao cannot be considered
"impermissible discrimination." Clearly, it exercised its management prerogatives
the obligation of the national government, hence, whether the latter be solvent or not
contrary to "general principles of fair play and justice."
is not material to the instant case. The respondents have not shown that this case
constitutes one of the instances where the corporate veil may be pierced. 14 From
In the instant case however, the company's practice of giving one month's pay for another angle, the national government is not the employer of private respondent and
every year of service could no longer be continued precisely because the company his co-complainants, so there is no reason to expect any kind of bailout by the national
could not afford it anymore. It was forced to close down on account of accumulated government under existing law and jurisprudence.
losses of over P20 billion. This could not be said of BISSI. In the case of North Davao,
it gave 30-days' separation pay to its employees when it was still a going concern
The Second and Third Issues:
even if it was already losing heavily. As a going concern, its cash flow could still have
Back Wages and Transportation Allowance
sustained the payment of such separation benefits. But when a business enterprise
completely ceases operations, i.e., upon its death as a going business concern, its
vital lifeblood — its cashflow — literally dries up. Therefore, the fact that less Anent the award of back wages and transportation allowance, the issues raised in
separation benefits ware granted when the company finally met its business death connection therewith are factual, the determination of which is best left to the
cannot be characterized as discrimination. Such action was dictated not by a respondent NLRC. It is well settled that this Court is bound by the findings of fact of
discriminatory management option but by its complete inability to continue its business the NLRC, so long as said findings are supported by substantial evidence 15.
life due to accumulated losses. Indeed, one cannot squeeze blood out of a dry stone.
Nor water out of parched land.
As the Solicitor General pointed out in his comment:

As already stated, Art. 283 of the Labor Code does not obligate an employer to pay
separation benefits when the closure is due to losses. In the case before us, the basis
for the claim of the additional separation benefit of 17.5 days is alleged discrimination,
i.e., unequal treatment of employees, which is proscribed as an unfair labor practice
by Art. 248 (e) of said Code. Under the facts and circumstances of the present case,
the grant of a lesser amount of separation pay to private respondent was done, not by
reason of discrimination, but rather, out of sheer financial bankruptcy — a fact that is
not controlled by management prerogatives. Stated differently, the total cessation of
operation due to mind-boggling losses was a supervening fact that prevented the
company from continuing to grant the more generous amount of separation pay. The
fact that North Davao at the point of its forced closure voluntarily paid any separation
It is undisputed that because of security reasons, from the time of
its operations, petitioner NDMC maintained its policy of paying its
workers at a bank in Tagum, Davao del Norte, which usually took
the workers about two and a half (2 1/2) hours of travel from the
place of work and such travel time is not official.
Records also show that on February 12, 1992, when an
inspection was conducted by the Department of Labor and

Employment at the premises of petitioner NDMC at Amacan,
Maco, Davao del Norte, it was found out that petitioners had
violated labor standards law, one of which is the place of payment
of wages (p. 109, Vol. 1, Record)
Section 4, Rule VIII, Book III of the Omnibus Rules Implementing
the Labor Code provides that:
Sec. 4. Place of payment. — (a) As a general rule, the place of
payment shall be at or near the place of undertaking. Payment in
a place other than the workplace shall be permissible only under
the following circumstances:
(1) When payment cannot be effected at or near the place of work
by reason of the deterioration of peace and order conditions, or by
reason of actual or impending emergencies caused by fire, flood,
epidemic or other calamity rendering payment thereat impossible;
(2) When the employer provides free transportation to the
employees back and forth; and
(3) Under any analogous circumstances; provided that the time
spent by the employees in collecting their wages shall be
considered as compensable hours worked.
(b) xxx xxx xxx
(Emphasis supplied)
Accordingly, in his Order dated April 14, 1992 (p. 109, Vol. 1,
Record), the Regional Director, Regional Office No. XI,
Department of Labor and Employment, Davao City, ordered
petitioner NDMC, among others, as follows:
WHEREFORE, . . . . Respondent is further
ordered to pay its workers salaries at the
plantsite at Amacan, New Leyte, Maco,
Davao del Norte or whenever not possible,
through the bank in Tagum, Davao del Norte
as already been practiced subject, however
to the provisions of Section 4 of Rule VIII,
Book III of the rules implementing the Labor
Code as amended.
151
Thus, public respondent Labor Arbiter Antonio M. Villanueva
correctly held that:
From the evidence on record, we find that the
hours spent by complainants in collecting
salaries at a bank in Tagum, Davao del Norte
shall be considered compensable hours
worked. Considering further the distance
between Amacan, Maco to Tagum which is 2
1/2 hours by travel and the risks in
commuting all the time in collecting
complainants' salaries, would justify the
granting of backwages equivalent to two (2)
days in a month as prayed for.
Corollary to the above findings, and for
equitable reasons, we likewise hold
respondents liable for the transportation
expenses incurred by complainants at P40.00
round trip fare during pay days.
(p. 10, Decision; p. 207, Vol. 1, Record)
On the contrary, it will be petitioners' burden
or duty to present evidence of compliance of
the law on labor standards, rather than for
private respondents to prove that they were
not paid/provided by petitioners of their
backwages and transportation expenses.
Other than the bare denials of petitioners, the above findings stand uncontradicted.
Indeed we are not at liberty to set aside findings of facts of the NLRC, absent any
capriciousness, arbitrariness, or abuse or complete lack of basis. In Maya Farms
Employees Organizations vs. NLRC, 16 , we held:
This Court has consistently ruled that findings of fact of
administrative agencies ad quasi-judicial bodies which have
acquired expertise because their jurisdiction is confined to specific
matters are generally accorded not only respect but even finality
and are binding upon this Court unless there is a showing of
grave abuse of discretion, or where it is clearly shown that they
were arrived at arbitrarily or in disregard of the evidence on
record.
WHEREFORE, judgment is hereby rendered MODIFYING the assailed Resolution by
SETTING ASIDE and deleting the award for "additional separation pay of 17.5 days
for every year of service", and AFFIRMING it in all other aspects. No costs.
 152

SO ORDERED.

G.R. Nos. 79937-38 February 13, 1989

SUN INSURANCE OFFICE, LTD., (SIOL), E.B. PHILIPPS and D.J. WARBY,
petitioners,
vs.
HON. MAXIMIANO C. ASUNCION, Presiding Judge, Branch 104, Regional Trial
Court, Quezon City and MANUEL CHUA UY PO TIONG, respondents.
 153

On December 16, 1985, Judge Antonio P. Solano, to whose sala Civil Case No. Q-
41177 was temporarily assigned, issuedan order to the Clerk of Court instructing him
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles Law Offices for petitioners.
to issue a certificate of assessment of the docket fee paid by private respondent and,
Tanjuatco, Oreta, Tanjuatco, Berenguer & Sanvicente Law Offices for private
in case of deficiency, to include the same in said certificate.
respondent.

On January 7, 1984, to forestall a default, a cautionary answer was filed by petitioners.

GANCAYCO, J.:
Again the Court is asked to resolve the issue of whether or not a court acquires
jurisdiction over a case when the correct and proper docket fee has not been paid.
On February 28, 1984, petitioner Sun Insurance Office, Ltd. (SIOL for brevity) filed a
complaint with the Regional Trial Court of Makati, Metro Manila for the consignation of
a premium refund on a fire insurance policy with a prayer for the judicial declaration of
its nullity against private respondent Manuel Uy Po Tiong. Private respondent as
declared in default for failure to file the required answer within the reglementary
period.
On August 30,1984, an amended complaint was filed by private respondent including
the two additional defendants aforestated.
Judge Maximiano C. Asuncion, to whom Civil Case No. Q41177 was thereafter
assigned, after his assumption into office on January 16, 1986, issued a Supplemental
Order requiring the parties in the case to comment on the Clerk of Court's letter-report
signifying her difficulty in complying with the Resolution of this Court of October 15,
1985 since the pleadings filed by private respondent did not indicate the exact amount
sought to be recovered. On January 23, 1986, private respondent filed a "Compliance"
and a "Re-Amended Complaint" stating therein a claim of "not less than Pl0,000,000.
00 as actual compensatory damages" in the prayer. In the body of the said second
amended complaint however, private respondent alleges actual and compensatory
damages and attorney's fees in the total amount of about P44,601,623.70.

On January 24, 1986, Judge Asuncion issued another Order admitting the second
On the other hand, on March 28, 1984, private respondent filed a complaint in the
amended complaint and stating therein that the same constituted proper compliance
Regional Trial Court of Quezon City for the refund of premiums and the issuance of a
with the Resolution of this Court and that a copy thereof should be furnished the Clerk
writ of preliminary attachment which was docketed as Civil Case No. Q-41177, initially
of Court for the reassessment of the docket fees. The reassessment by the Clerk of
against petitioner SIOL, and thereafter including E.B. Philipps and D.J. Warby as
Court based on private respondent's claim of "not less than P10,000,000.00 as actual
additional defendants. The complaint sought, among others, the payment of actual,
and compensatory damages" amounted to P39,786.00 as docket fee. This was
compensatory, moral, exemplary and liquidated damages, attorney's fees, expenses
subsequently paid by private respondent.
of litigation and costs of the suit. Although the prayer in the complaint did not quantify
the amount of damages sought said amount may be inferred from the body of the
complaint to be about Fifty Million Pesos (P50,000,000.00). Petitioners then filed a petition for certiorari with the Court of Appeals questioning the
said order of Judie Asuncion dated January 24, 1986.
Only the amount of P210.00 was paid by private respondent as docket fee which
prompted petitioners' counsel to raise his objection. Said objection was disregarded by On April 24, 1986, private respondent filed a supplemental complaint alleging an
respondent Judge Jose P. Castro who was then presiding over said case. Upon the additional claim of P20,000,000.00 as d.qmages so the total claim amounts to about
order of this Court, the records of said case together with twenty-two other cases P64,601,623.70. On October 16, 1986, or some seven months after filing the
assigned to different branches of the Regional Trial Court of Quezon City which were supplemental complaint, the private respondent paid the additional docket fee of
under investigation for under-assessment of docket fees were transmitted to this P80,396.00.1
Court. The Court thereafter returned the said records to the trial court with the
directive that they be re-raffled to the other judges in Quezon City, to the exclusion of
On August 13, 1987, the Court of Appeals rendered a decision ruling, among others,
Judge Castro. Civil Case No. Q-41177 was re-raffled to Branch 104, a sala which was
as follows:
then vacant.

WHEREFORE, judgment is hereby rendered:

On October 15, 1985, the Court en banc issued a Resolution in Administrative Case
No. 85-10-8752-RTC directing the judges in said cases to reassess the docket fees
and that in case of deficiency, to order its payment. The Resolution also requires all 1. Denying due course to the petition in CA-G.R. SP No. 1, 09715
clerks of court to issue certificates of re-assessment of docket fees. All litigants were insofar as it seeks annulment of the order
likewise required to specify in their pleadings the amount sought to be recovered in
their complaints.

(a) denying petitioners' motion to dismiss the complaint, as
amended, and
(b) granting the writ of preliminary attachment, but giving due
course to the portion thereof questioning the reassessment of the
docketing fee, and requiring the Honorable respondent Court to
reassess the docketing fee to be paid by private respondent on
the basis of the amount of P25,401,707.00. 2
Hence, the instant petition.
During the pendency of this petition and in conformity with the said judgment of
respondent court, private respondent paid the additional docket fee of P62,432.90 on
April 28, 1988. 3
The main thrust of the petition is that the Court of Appeals erred in not finding that the
lower court did not acquire jurisdiction over Civil Case No. Q-41177 on the ground of
nonpayment of the correct and proper docket fee. Petitioners allege that while it may
be true that private respondent had paid the amount of P182,824.90 as docket fee as
herein-above related, and considering that the total amount sought to be recovered in
the amended and supplemental complaint is P64,601,623.70 the docket fee that
should be paid by private respondent is P257,810.49, more or less. Not having paid
the same, petitioners contend that the complaint should be dismissed and all incidents
arising therefrom should be annulled. In support of their theory, petitioners cite the
latest ruling of the Court in Manchester Development Corporation vs. CA, 4 as follows:
The Court acquires jurisdiction over any case only upon the
payment of the prescribed docket fee. An amendment of the
complaint or similar pleading will not thereby vest jurisdiction in
the Court, much less the payment of the docket fee based on the
amounts sought in the amended pleading. The ruling in the
Magaspi Case in so far as it is inconsistent with this
pronouncement is overturned and reversed.
On the other hand, private respondent claims that the ruling in Manchester cannot
apply retroactively to Civil Case No. Q41177 for at the time said civil case was filed in
court there was no such Manchester ruling as yet. Further, private respondent avers
that what is applicable is the ruling of this Court in Magaspi v. Ramolete, 5 wherein
this Court held that the trial court acquired jurisdiction over the case even if the docket
fee paid was insufficient.
The contention that Manchester cannot apply retroactively to this case is untenable.
Statutes regulating the procedure of the courts will be construed as applicable to
actions pending and undetermined at the time of their passage. Procedural laws are
retrospective in that sense and to that extent. 6
154
In Lazaro vs. Endencia and Andres, 7 this Court held that the payment of the full
amount of the docket fee is an indispensable step for the perfection of an appeal. In a
forcible entry and detainer case before the justice of the peace court of Manaoag,
Pangasinan, after notice of a judgment dismissing the case, the plaintiff filed a notice
of appeal with said court but he deposited only P8.00 for the docket fee, instead of
P16.00 as required, within the reglementary period of appeal of five (5) days after
receiving notice of judgment. Plaintiff deposited the additional P8.00 to complete the
amount of the docket fee only fourteen (14) days later. On the basis of these facts, this
court held that the Court of First Instance did notacquire jurisdiction to hear and
determine the appeal as the appeal was not thereby perfected.
In Lee vs. Republic, 8 the petitioner filed a verified declaration of intention to become a
Filipino citizen by sending it through registered mail to the Office of the Solicitor
General in 1953 but the required filing fee was paid only in 1956, barely 5V2 months
prior to the filing of the petition for citizenship. This Court ruled that the declaration
was not filed in accordance with the legal requirement that such declaration should be
filed at least one year before the filing of the petition for citizenship. Citing Lazaro, this
Court concluded that the filing of petitioner's declaration of intention on October 23,
1953 produced no legal effect until the required filing fee was paid on May 23, 1956.
In Malimit vs. Degamo, 9 the same principles enunciated in Lazaro and Lee were
applied. It was an original petition for quo warranto contesting the right to office of
proclaimed candidates which was mailed, addressed to the clerk of the Court of First
Instance, within the one-week period after the proclamation as provided therefor by
law.10 However, the required docket fees were paid only after the expiration of said
period. Consequently, this Court held that the date of such payment must be deemed
to be the real date of filing of aforesaid petition and not the date when it was mailed.
Again, in Garica vs, Vasquez, 11 this Court reiterated the rule that the docket fee must
be paid before a court will act on a petition or complaint. However, we also held that
said rule is not applicable when petitioner seeks the probate of several wills of the
same decedent as he is not required to file a separate action for each will but instead
he may have other wills probated in the same special proceeding then pending before
the same court.
Then in Magaspi, 12 this Court reiterated the ruling in Malimit and Lee that a case is
deemed filed only upon payment of the docket fee regardless of the actual date of its
filing in court. Said case involved a complaint for recovery of ownership and
possession of a parcel of land with damages filed in the Court of First Instance of
Cebu. Upon the payment of P60.00 for the docket fee and P10.00 for the sheriffs fee,
the complaint was docketed as Civil Case No. R-11882. The prayer of the complaint
sought that the Transfer Certificate of Title issued in the name of the defendant be
declared as null and void. It was also prayed that plaintiff be declared as owner
thereof to whom the proper title should be issued, and that defendant be made to pay
monthly rentals of P3,500.00 from June 2, 1948 up to the time the property is
delivered to plaintiff, P500,000.00 as moral damages, attorney's fees in the amount of
P250,000.00, the costs of the action and exemplary damages in the amount of
P500,000.00.

The defendant then filed a motion to compel the plaintiff to pay the correct amount of
the docket fee to which an opposition was filed by the plaintiff alleging that the action
was for the recovery of a parcel of land so the docket fee must be based on its
assessed value and that the amount of P60.00 was the correct docketing fee. The trial
court ordered the plaintiff to pay P3,104.00 as filing fee.
The plaintiff then filed a motion to admit the amended complaint to include the
Republic as the defendant. In the prayer of the amended complaint the exemplary
damages earlier sought was eliminated. The amended prayer merely sought moral
damages as the court may determine, attorney's fees of P100,000.00 and the costs of
the action. The defendant filed an opposition to the amended complaint. The
opposition notwithstanding, the amended complaint was admitted by the trial court.
The trial court reiterated its order for the payment of the additional docket fee which
plaintiff assailed and then challenged before this Court. Plaintiff alleged that he paid
the total docket fee in the amount of P60.00 and that if he has to pay the additional fee
it must be based on the amended complaint.
The question posed, therefore, was whether or not the plaintiff may be considered to
have filed the case even if the docketing fee paid was not sufficient. In Magaspi, We
reiterated the rule that the case was deemed filed only upon the payment of the
correct amount for the docket fee regardless of the actual date of the filing of the
complaint; that there was an honest difference of opinion as to the correct amount to
be paid as docket fee in that as the action appears to be one for the recovery of
property the docket fee of P60.00 was correct; and that as the action is also one, for
damages, We upheld the assessment of the additional docket fee based on the
damages alleged in the amended complaint as against the assessment of the trial
court which was based on the damages alleged in the original complaint.
However, as aforecited, this Court overturned Magaspi in Manchester. Manchester
involves an action for torts and damages and specific performance with a prayer for
the issuance of a temporary restraining order, etc. The prayer in said case is for the
issuance of a writ of preliminary prohibitory injunction during the pendency of the
action against the defendants' announced forfeiture of the sum of P3 Million paid by
the plaintiffs for the property in question, the attachment of such property of
defendants that may be sufficient to satisfy any judgment that may be rendered, and,
after hearing, the issuance of an order requiring defendants to execute a contract of
purchase and sale of the subject property and annul defendants' illegal forfeiture of
the money of plaintiff. It was also prayed that the defendants be made to pay the
plaintiff jointly and severally, actual, compensatory and exemplary damages as well as
25% of said amounts as may be proved during the trial for attorney's fees. The plaintiff
also asked the trial court to declare the tender of payment of the purchase price of
plaintiff valid and sufficient for purposes of payment, and to make the injunction
permanent. The amount of damages sought is not specified in the prayer although the
body of the complaint alleges the total amount of over P78 Millon allegedly suffered by
plaintiff.
Upon the filing of the complaint, the plaintiff paid the amount of only P410.00 for the
docket fee based on the nature of the action for specific performance where the
155
amount involved is not capable of pecuniary estimation. However, it was obvious from
the allegations of the complaint as well as its designation that the action was one for
damages and specific performance. Thus, this court held the plaintiff must be
assessed the correct docket fee computed against the amount of damages of about
P78 Million, although the same was not spelled out in the prayer of the complaint.
Meanwhile, plaintiff through another counsel, with leave of court, filed an amended
complaint on September 12, 1985 by the inclusion of another co-plaintiff and
eliminating any mention of the amount of damages in the body of the complaint. The
prayer in the original complaint was maintained.
On October 15, 1985, this Court ordered the re-assessment of the docket fee in the
said case and other cases that were investigated. On November 12, 1985, the trial
court directed the plaintiff to rectify the amended complaint by stating the amounts
which they were asking for. This plaintiff did as instructed. In the body of the complaint
the amount of damages alleged was reduced to P10,000,000.00 but still no amount of
damages was specified in the prayer. Said amended complaint was admitted.
Applying the principle in Magaspi that "the case is deemed filed only upon payment of
the docket fee regardless of the actual date of filing in court," this Court held that the
trial court did not acquire jurisdiction over the case by payment of only P410.00 for the
docket fee. Neither can the amendment of the complaint thereby vest jurisdiction upon
the Court. For all legal purposes there was no such original complaint duly filed which
could be amended. Consequently, the order admitting the amended complaint and all
subsequent proceedings and actions taken by the trial court were declared null and
void.13
The present case, as above discussed, is among the several cases of under-
assessment of docket fee which were investigated by this Court together with
Manchester. The facts and circumstances of this case are similar to Manchester. In
the body of the original complaint, the total amount of damages sought amounted to
about P50 Million. In the prayer, the amount of damages asked for was not stated.
The action was for the refund of the premium and the issuance of the writ of
preliminary attachment with damages. The amount of only P210.00 was paid for the
docket fee. On January 23, 1986, private respondent filed an amended complaint
wherein in the prayer it is asked that he be awarded no less than P10,000,000.00 as
actual and exemplary damages but in the body of the complaint the amount of his
pecuniary claim is approximately P44,601,623.70. Said amended complaint was
admitted and the private respondent was reassessed the additional docket fee of
P39,786.00 based on his prayer of not less than P10,000,000.00 in damages, which
he paid.
On April 24, 1986, private respondent filed a supplemental complaint alleging an
additional claim of P20,000,000.00 in damages so that his total claim is approximately
P64,601,620.70. On October 16, 1986, private respondent paid an additional docket
fee of P80,396.00. After the promulgation of the decision of the respondent court on
August 31, 1987 wherein private respondent was ordered to be reassessed for
additional docket fee, and during the pendency of this petition, and after the
 156

3. Where the trial court acquires jurisdiction over a claim by the filing of the
appropriate pleading and payment of the prescribed filing fee but, subsequently, the
promulgation of Manchester, on April 28, 1988, private respondent paid an additional
judgment awards a claim not specified in the pleading, or if specified the same has
docket fee of P62,132.92. Although private respondent appears to have paid a total
been left for determination by the court, the additional filing fee therefor shall constitute
amount of P182,824.90 for the docket fee considering the total amount of his claim in
a lien on the judgment. It shall be the responsibility of the Clerk of Court or his duly
the amended and supplemental complaint amounting to about P64,601,620.70,
authorized deputy to enforce said lien and assess and collect the additional fee.
petitioner insists that private respondent must pay a docket fee of P257,810.49.

WHEREFORE, the petition is DISMISSED for lack of merit. The Clerk of Court of the
The principle in Manchester could very well be applied in the present case. The
court a quo is hereby instructed to reassess and determine the additional filing fee that
pattern and the intent to defraud the government of the docket fee due it is obvious not
should be paid by private respondent considering the total amount of the claim sought
only in the filing of the original complaint but also in the filing of the second amended
in the original complaint and the supplemental complaint as may be gleaned from the
complaint.
allegations and the prayer thereof and to require private respondent to pay the
deficiency, if any, without pronouncement as to costs.
However, in Manchester, petitioner did not pay any additional docket fee until] the
case was decided by this Court on May 7, 1987. Thus, in Manchester, due to the fraud
SO ORDERED
committed on the government, this Court held that the court a quo did not acquire
jurisdiction over the case and that the amended complaint could not have been
admitted inasmuch as the original complaint was null and void.

In the present case, a more liberal interpretation of the rules is called for considering
that, unlike Manchester, private respondent demonstrated his willingness to abide by
the rules by paying the additional docket fees as required. The promulgation of the
decision in Manchester must have had that sobering influence on private respondent
who thus paid the additional docket fee as ordered by the respondent court. It
triggered his change of stance by manifesting his willingness to pay such additional
docket fee as may be ordered.

Nevertheless, petitioners contend that the docket fee that was paid is still insufficient
considering the total amount of the claim. This is a matter which the clerk of court of
the lower court and/or his duly authorized docket clerk or clerk in-charge should
determine and, thereafter, if any amount is found due, he must require the private
respondent to pay the same.

Thus, the Court rules as follows:

1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the
payment of the prescribed docket fee, that vests a trial court with jurisdiction over the
subject matter or nature of the action. Where the filing of the initiatory pleading is not
accompanied by payment of the docket fee, the court may allow payment of the fee
within a reasonable time but in no case beyond the applicable prescriptive or
reglementary period.

2. The same rule applies to permissive counterclaims, third party claims and similar
G.R. No. 138822 January 23, 2001
pleadings, which shall not be considered filed until and unless the filing fee prescribed
therefor is paid. The court may also allow payment of said fee within a reasonable
time but also in no case beyond its applicable prescriptive or reglementary period.

EVANGELINE ALDAY, petitioner,
vs.
FGU INSURANCE CORPORATION, respondent.
GONZAGA-REYES, J.:
On 5 May 1989, respondent FGU Insurance Corporation filed a complaint with the
Regional Trial Court of Makati1 alleging that petitioner Evangeline K. Alday owed it
P114,650.76, representing unliquidated cash advances, unremitted costs of premiums
and other charges incurred by petitioner in the course of her work as an insurance
agent for respondent.2 Respondent also prayed for exemplary damages, attorney's
fees, and costs of suit.3 Petitioner filed her answer and by way of counterclaim,
asserted her right for the payment of P104,893.45, representing direct commissions,
profit commissions and contingent bonuses earned from 1 July 1986 to 7 December
1986, and for accumulated premium reserves amounting to P500,000.00. In addition,
petitioner prayed for attorney's fees, litigation expenses, moral damages and
exemplary damages for the allegedly unfounded action filed by respondent.4 On 23
August 1989, respondent filed a "Motion to Strike Out Answer With Compulsory
Counterclaim And To Declare Defendant In Default" because petitioner's answer was
allegedly filed out of time.5 However, the trial court denied the motion on 25 August
1989 and similarly rejected respondent's motion for reconsideration on 12 March
1990.6 A few weeks later, on 11 April 1990, respondent filed a motion to dismiss
petitioner's counterclaim, contending that the trial court never acquired jurisdiction
over the same because of the non-payment of docket fees by petitoner.7 In response,
petitioner asked the trial court to declare her counterclaim as exempt from payment of
docket fees since it is compulsory and that respondent be declared in default for
having failed to answer such counterclaim.8
In its 18 September 1990 Order, the trial court9 granted respondent's motion to
dismiss petitioner's counterclaim and consequently, denied petitioner's motion. The
court found petitioner's counterclaim to be merely permissive in nature and held that
petitioner's failure to pay docket fees prevented the court from acquiring jurisdiction
over the same.10 The trial court similar denied petitioner's motion for reconsideration
on 28 February 1991.1âwphi1.nêt
On 23 December 1998, the Court of Appeals11 sustained the trial court, finding that
petitioner's own admissions, as contained in her answer, show that her counterclaim is
merely permissive. The relevant portion of the appellate court's decision12 is quoted
herewith -
Contrary to the protestations of appellant, mere reading of the allegations in
the answer a quo will readily show that her counterclaim can in no way be
compulsory. Take note of the following numbered paragraphs in her answer:
"(14) That, indeed, FGU's cause of action which is not supported
by any document other than the self-serving 'Statement of
Account' dated March 28, 1988 x x x
157
(15) That it should be noted that the cause of action of FGU is not
the enforcement of the Special Agent's Contract but the alleged
'cash accountabilities which are not based on written agreement x
x x.
x x x x
(19) x x x A careful analysis of FGU's three-page complaint will
show that its cause of action is not for specific performance or
enforcement of the Special Agent's Contract rather, it is for the
payment of the alleged cash accountabilities incurred by
defendant during the period form [sic] 1975 to 1986 which claim is
executory and has not been ratified. It is the established rule that
unenforceable contracts, like this purported money claim of FGU,
cannot be sued upon or enforced unless ratified, thus it is as if
they have no effect. x x x."
To support the heading "Compulsory Counterclaim" in her answer and give
the impression that the counterclaim is compulsory appellant alleged that
"FGU has unjustifiably failed to remit to defendant despite repeated
demands in gross violation of their Special Agent's Contract x x x." The
reference to said contract was included purposely to mislead. While on one
hand appellant alleged that appellee's cause of action had nothing to do
with the Special Agent's Contract, on the other hand, she claim that FGU
violated said contract which gives rise of [sic] her cause of action. Clearly,
appellant's cash accountabilities cannot be the offshoot of appellee's
alleged violation of the aforesaid contract.
On 19 May 1999, the appellate court denied petitioner's motion for reconsideration, 13
giving rise to the present petition.
Before going into the substantive issues, the Court shall first dispose of some
procedural matters raised by the parties. Petitioner claims that respondent is estopped
from questioning her non-payment of docket fees because it did not raise this
particular issue when it filed its motion - the "Motion to Strike out Answer With
Compulsory Counterclaim And To Declare Defendant In Default" - with the trial court;
rather, it was only nine months after receiving petitioner's answer that respondent
assailed the trial court's lack of jurisdiction over petitioner's counterclaims based on
the latter's failure to pay docket fees.14 Petitioner's position is unmeritorious. Estoppel
by laches arises from the negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either has abandoned
or declined to assert it.15 In the case at bar, respondent cannot be considered as
estopped from assailing the trial court's jurisdiction over petitioner's counterclaim since
this issue was raised by respondent with the trial court itself - the body where the
action is pending - even before the presentation of any evidence by the parties and
definitely, way before any judgment could be rendered by the trial court.

Meanwhile, respondent questions the jurisdiction of the Court of Appeals over the
appeal filed by petitioner from the 18 September 1990 and 28 February 1991 orders of
the trial court. It is significant to note that this objection to the appellate court's
jurisdiction is raised for the first time before this Court; respondent never having raised
this issue before the appellate court. Although the lack of jurisdiction of a court may be
raised at any stage of the action, a party may be estopped from raising such questions
if he has actively taken part in the very proceedings which he questions, belatedly
objecting to the court's jurisdiction in the event that the judgment or order
subsequently rendered is adverse to him.16 In this case, respondent actively took part
in the proceedings before the Court of Appeals by filing its appellee's brief with the
same.17 Its participation, when taken together with its failure to object to the appellate
court's jurisdiction during the entire duration of the proceedings before such court,
demonstrates a willingness to abide by the resolution of the case by such tribunal and
accordingly, respondent is now most decidedly estopped from objecting to the Court of
Appeals' assumption of jurisdiction over petitioner's appeal. 18
The basic issue for resolution in this case is whether or not the counterclaim of
petitioner is compulsory or permissive in nature. A compulsory counterclaim is one
which, being cognizable by the regular courts of justice, arises out of or is connected
with the transaction or occurrence constituting the subject matter of the opposing
party's claim and does not require for its adjudication the presence of third parties of
whom the court cannot acquire jurisdiction.19
20
In Valencia v. Court of Appeals, this Court capsulized the criteria or tests that may
be used in determining whether a counterclaim is compulsory or permissive,
summarized as follows:
1. Are the issues of fact and law raised by the claim and counterclaim
largely the same?
2. Would res judicata bar a subsequent suit on defendant's claim absent the
compulsory counterclaim rule?
3. Will substantially the same evidence support or refute plaintiff's claim as
well s defendant's counterclaim?
4. Is there any logical relation between the claim and the counterclaim?
Another test, applied in the more recent case of Quintanilla v. Court of Appeals,21 is
the "compelling test of compulsoriness" which requires "a logical relationship between
the claim and counterclaim, that is, where conducting separate trials of the respective
claims of the parties would entail a substantial duplication of effort and time by the
parties and the court."
As contained in her answer, petitioner's counterclaims are as follows:
158
(20) That defendant incorporates and repleads by reference all the
foregoing allegations as may be material to her Counterclaim against FGU.
(21) That FGU is liable to pay the following just, valid and legitimate claims
of defendant:
(a) the sum of at least P104,893.45 plus maximum interest
thereon representing, among others, direct commissions, profit
commissions and contingent bonuses legally due to defendant;
and
(b) the minimum amount of P500,000.00 plus the maximum
allowable interest representing defendant's accumulated premium
reserve for 1985 and previous years,
which FGU has unjustifiably failed to remit to defendant despite repeated
demands in gross violation of their Special Agent's Contract and in
contravention of the principle of law that "every person must, in the exercise
of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith."
(22) That as a result of the filing of this patently baseless, malicious and
unjustified Complaint, and FGU's unlawful, illegal and vindictive termination
of their Special Agent's Contract, defendant was unnecessarily dragged into
this litigation and to defense [sic] her side and assert her rights and claims
against FGU, she was compelled to hire the services of counsel with whom
she agreed to pay the amount of P30,000.00 as and for attorney's fees and
stands to incur litigation expenses in the amount estimated to at least
P20,000.00 and for which FGU should be assessed and made liable to pay
defendant.
(23) That considering further the malicious and unwarranted action of
defendant in filing this grossly unfounded action, defendant has suffered
and continues to suffer from serious anxiety, mental anguish, fright and
humiliation. In addition to this, defendant's name, good reputation and
business standing in the insurance business as well as in the community
have been besmirched and for which FGU should be adjudged and made
liable to pay moral damages to defendant in the amount of P300,000.00 as
minimum.
(24) That in order to discourage the filing of groundless and malicious suits
like FGU's Complaint, and by way of serving [as] an example for the public
good, FGU should be penalized and assessed exemplary damages in the
sum of P100,000.00 or such amount as the Honorable Court may deem
warranted under the circumstances.22
 159

her permissive counterclaim. As a matter of fact, after respondent filed its motion to
dismiss petitioner's counterclaim based on her failure to pay docket fees, petitioner
Tested against the abovementioned standards, petitioner's counterclaim for
immediately filed a motion with the trial court, asking it to declare her counterclaim as
commissions, bonuses, and accumulated premium reserves is merely permissive. The
compulsory in nature and therefore exempt from docket fees and, in addition, to
evidence required to prove petitioner's claims differs from that needed to establish
declare that respondent was in default for its failure to answer her counterclaim. 29
respondent's demands for the recovery of cash accountabilities from petitioner, such
However, the trial court dismissed petitioner's counterclaim. Pursuant to this Court's
as cash advances and costs of premiums. The recovery of respondent's claims is not
ruling in Sun Insurance, the trial court should have instead given petitioner a
contingent or dependent upon establishing petitioner's counterclaim, such that
reasonable time, but in no case beyond the applicable prescriptive or reglementary
conducting separate trials will not result in the substantial duplication of the time and
period, to pay the filing fees for her permissive counterclaim.
effort of the court and the parties. One would search the records in vain for a logical
connection between the parties' claims. This conclusion is further reinforced by
petitioner's own admissions since she declared in her answer that respondent's cause Petitioner asserts that the trial court should have declared respondent in default for
of action, unlike her own, was not based upon the Special Agent's Contract.23 having failed to answer her counterclaim.30 Insofar as the permissive counterclaim of
However, petitioner's claims for damages, allegedly suffered as a result of the filing by petitioner is concerned, there is obviously no need to file an answer until petitioner has
respondent of its complaint, are compulsory.24 paid the prescribed docket fees for only then shall the court acquire jurisdiction over
such claim.31 Meanwhile, the compulsory counterclaim of petitioner for damages
based on the filing by respondent of an allegedly unfounded and malicious suit need
There is no need for need for petitioner to pay docket fees for her compulsory
not be answered since it is inseparable from the claims of respondent. If respondent
counterclaim.25 On the other hand, in order for the trial court to acquire jurisdiction over
were to answer the compulsory counterclaim of petitioner, it would merely result in the
her permissive counterclaim, petitioner is bound to pay the prescribed docket fees. 26
former pleading the same facts raised in its complaint.32
The rule on the payment of filing fees has been laid down by the Court in the case of
Sun Insurance Office, Ltd. V. Hon. Maximiano Asuncion27-
WHEREFORE, the assailed Decision of the Court of Appeals promulgated on 23
December 1998 and its 19 May 1999 Resolution are hereby MODIFIED. The
1. It is not simply the filing of the complaint or appropriate initiatory pleading,
compulsory counterclaim of petitioner for damages filed in Civil Case No. 89-3816 is
but the payment of the prescribed docket fee, that vests a trial court with
ordered REINSTATED. Meanwhile, the Regional Trial Court of Makati (Branch 134) is
jurisdiction over the subject-matter or nature of the action. Where the filing
ordered to require petitioner to pay the prescribed docket fees for her permissive
of the initiatory pleading is not accompanied by payment of the docket fee,
counterclaim (direct commissions, profit commissions, contingent bonuses and
the court may allow payment of the fee within a reasonable time but in no
accumulated premium reserves), after ascertaining that the applicable prescriptive
case beyond the applicable prescriptive or reglementary period.
period has not yet set in.33

2. The same rule applies to permissive counterclaims, third-party claims and

SO ORDERED.1âwphi1.nêt
similar pleadings, which shall not be considered filed until and unless the
filing fee prescribed therefor is paid. The court may allow payment of said
fee within a reasonable time but also in no case beyond its applicable
prescriptive or reglementary period.

3. Where the trial court acquires jurisdiction over a claim by the filing of the
appropriate pleading and payment of the prescribed filing fee but,
subsequently, the judgment awards a claim not specified in the pleading, or
if specified the same has been left for determination by the court, the
additional filing fee therefor shall constitute a lien on the judgment. It shall
be the responsibility of the Clerk of Court or his duly authorized deputy to
enforce said lien and assess and collect the additional fee.
G.R. No. 161431 October 13, 2010
The above mentioned ruling in Sun Insurance has been reiterated in the recent case
of Susan v. Court of Appeals.28 In Suson, the Court explained that although the CALIBRE TRADERS, INC., MARIO SISON SEBASTIAN, and MINDA BLANCO
payment of the prescribed docket fees is a jurisdictional requirement, its non-payment SEBASTIAN, Petitioners,
does not result in the automatic dismissal of the case provided the docket fees are vs.
paid within the applicable prescriptive or reglementary period. Coming now to the case BAYER PHILIPPINES, INC., Respondent.
at bar, it has not been alleged by respondent and there is nothing in the records to
show that petitioner has attempted to evade the payment of the proper docket fees for

DECISION
DEL CASTILLO, J.:
This petition for review on certiorari1 assails the July 31, 2002 Decision2 and the
December 19, 2003 Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No.
45546, that denied petitioners’ action for damages against respondent Bayer
Philippines Inc. (Bayerphil) and instead granted the latter’s counterclaim for
₱1,272,103.07, representing unpaid purchases of Bayerphil’s products.
Factual Antecedents
Calibre Traders, Inc. (Calibre) was one of Bayerphil’s distributors/dealers of its
agricultural chemicals within the provinces of Pangasinan and Tarlac.4 Their last
distributorship agreement was effective from June 1989 to June 1991. 5 However,
Bayerphil stopped delivering stocks to Calibre on July 31, 1989 after the latter failed to
settle its unpaid accounts in the total amount of ₱1,751,064.56.6
As Bayerphil’s authorized dealer, Calibre then enjoyed discounts and rebates.
Subsequently, however, the parties had a disagreement as to the entitlement and
computations of these discounts. Calibre, although aware of the deadline to pay its
debts with Bayerphil, nevertheless withheld payment to compel Bayerphil to reconcile
its accounts.7
In a letter dated August 16, 1989, Calibre requested Bayerphil for a reconciliation of
accounts. It enumerated the following claims that amounted to ₱968,265.82:
1. Interest charged to our 1984-1985 Volume Rebate. These were charged
to us without our acknowledgment and was under protest since your people
were not serving our account during that period. This amounts to
₱60,000.00 more or less.
2. Request for retroactive application of your special rebate as per our letter
dated August 29, 1988 and your reply dated September 3, 1988. The reply
is not acceptable to us. This amounts to ₱33,127.26.
3. Special rebates of Machete EC and EN for CY 1988 which [were] not
granted to us, [but were] given to the other distributors after we have
withdrawn a sizeable quantity. This amounts to ₱68,244.30.
4. The difference between our claim dated March 31, 1989 amounting to
₱47,746.30 against your Credit Memo 11868 dated April 28, 1989
amounting to ₱21,214.85. The amount of difference is ₱26,531.47.
160
5. The difference between our claim dated October 31, 1988 amounting to
₱23,342.09 against your Credit Memo 11693 dated January 31, 1989
amounting to ₱21,222.48. The amount of difference is ₱2,119.61.
6. Sales Returns as per your CRR 2159 dated December 19, 1988
amounting to ₱8,047.71.
7. Special rebates of 8% for Machete 5G as per Invoice No. 834159 dated
February 14, 1989. This amounts to [₱1,376.80].
8. Request for Sales returns due to overdelivery as per our letter dated April
3, 1989 amounting to ₱147,108.86.
9. Request for Sales returns due to leakage as per our letter dated April 3,
1989 amounting to ₱8,681.24.
10. 1988-1989 Volume Rebate amounting to ₱520,548.41.
11. 5% Prompt Payment on ₱1,839,603.15 amounting to ₱92,480.16 since
your Sales Representative was not servicing our account due to his
[forth]coming resignation.8
Calibre sent follow-up letters dated September 17, October 13, and November 16,
1989.9
On September 29, 1989, Bayerphil’s credit and collection officer, Leon Abesamis,
conferred with Calibre’s General Manager Mario Sebastian (Sebastian). The attempt
to settle failed. Again, on October 27, 1989, Bayerphils’ Sales Manager of the Agro
Division, Vidal Lingan, met with Sebastian. The results of their discussion were put in
writing in Bayerphil’s letter dated November 10, 1989, to wit:
xxxx
Gentlemen:
Following our October 27, 1989 discussions with yourself for the final resolution of
your overdue accounts with our company in the amount of exactly ₱1,718,822.57, we
have arrived at a final arrangement which will no doubt be more than fair specially for
your firm.
We will now go by your claims per your letter of August 16, 1989[. We] now confirm
the following:
 161

6. Your claims on returned stocks on December 19, 1988 per

CRR No. 2159 for ₱8,047.71. We issued the corresponding credit
1. The alleged interest charges of ₱60,000.00 x x x for unpaid
note dated July 25, 1989 in the amount of ₱7,242.26, which is
invoices against your volume rebate for the year 1984-1985 was
based on the prices of the returned goods at the time you
not charged at all. Our records show that we granted your year-
acquired them, not at the time when you returned them when
end rebate per our
there was a corresponding increase in prices. The difference is
₱805.45. Any business house will reluctantly consider this claim
but we thought we should gallantly grant you that oversight. We
Credit Note #9089 of July 1985 - ₱ 973,511.56
are sure you did not intend to do that.
and
7. Special 8% rebates on Machete 5G in the amount of
Credit Note #9149 of September 1985 - 181,441.15 ₱1,376.80. We have given you a Credit Note #12160 to offset that
Total rebate from retention scheme claim.

1984-1985 ₱1,154,952.71 8. Your volume rebate claim for the year 1988-1989 is in the sum
of ₱520,548.41, however, our computation stands at
₱479,326.49. Enclosed herewith please find our CM#12250 in the
These credit notes do not bear any interest charges as you amount of ₱320,849.42 representing your volume rebate for
claimed during that discussion. It means you were not charged 1988-1989 on the paid portion of your volume rebate year
any penalty on delayed payments of subject invoices. purchases. As soon as payment is received on your balance of
₱1,042,248.16 (net of additional volume rebate of ₱158,477.07 on
2. Retroactive application against inventory of special deal the unpaid portion and prompt payment rebate of ₱63,196.06), we
rebates have never been paid to any of our distributors shall issue you the aforementioned additional volume rebate and
nationwide since we began business operations in this country. prompt payment rebate CMs.
As a matter of policy, we regret that we cannot grant this request.
9. Your claim of 5% prompt payment rebate per your note dated
3. Special rebates on Machete EN and Machete EC on the basis June 30, 1989 has been computed to amount to ₱63,196.06 in
of 30-day COD arrangement were granted during the last quarter view of the returns and application of your volume rebate against
of 1988. This agreement did not apply to your purchases on the the total outstanding unpaid balances.
same products from January 1, 1988 to September 30, 1988. We
found your claim difficult to accept. 10. Your intention to return stocks per your letter of April 3, 1989.
We have withdrawn the following products on October 28, 1989,
4. Your claim for ₱26,531.47 from our 30-day COD terms with 5% as follows:
rebate on selected products only, i.e., Gusathion, Folidol,
Machete EC & EN. You have, in your claim included other
products than those listed. Inasmuch as our former Sales Basagran 250 ml. - 230 bottles
Representative agreed to the inclusion of the other [products], we
will grant that claim for ₱26,531.47 net of our earlier issued CM 500 ml. - 102 bottles
#11868, as an honorable business organization is expected to Baycarb 1000 ml. - 64 ‫״‬
act.
Baythroid 100 ml. - 373 ‫״‬
5. Your claim on the difference of ₱2,119.61 [as stated in] your
250 ml. - 336 ‫״‬
letter of October 31, 1988 in the amount of ₱23,342.09 and our
Credit Note #11693 dated January 31, 1989, is granted. Our Gusacarb 500 ml. - 20 ‫״‬
computations are absolutely correct but we shall not argue over a
trivial figure. Roundup 250 ml. - 30 ‫״‬

Machete EC 500 ml. - 12 ‫״‬
1000 ml. - 12 ‫״‬
The net value of the above materials has been computed at ₱124,493.28, [for which]a
credit note will be issued shortly.
We believe that we have been more than fair in meeting your claims. We granted your
requests as a gesture of benevolence in assisting your firm in softening the burdens
as inevitable consequences of business difficulties.
And as the time tested physical law rightly states – for every action, there must be an
equal positive reaction. We feel that you now react favorably in the final and complete
resolution of your main problem.
Yours faithfully,
BAYER PHILIPPINES, INC.10
Bayerphil’s Assistant Sales Manager Rene Garcia (Garcia) gave this letter to
Sebastian11 on November 17, and offered to grant Calibre’s claims just so that it may
finally settle all its unpaid accounts with Bayerphil. Sebastian wrote Bayerphil to
confirm Garcia’s offer.12 In reply, Bayerphil specified in its November 24, 1989 letter
the additional claims it granted and clarified the other claims:
xxxx
[Gentlemen]:
We have your letter of November 22, 1989 with your request that we confirm or deny
the verbal offer of our Mr. Renato G. Garcia granting all your claims with us per your
letter of August 16, 1989.
Please be informed that we confirm that offer subject to the conditions hereunder
made explicit, to wit:
1. We will grant you a credit note for ₱33,127.26 referring to your
Item #2 in your letter dated August 16, 1989.
2. We will also grant you a credit note for ₱68,244.30 referring to
your Item #3 in your above-named letter.
162
3. We will likewise grant the amount of ₱6,572.29 by CM to cover
your Item #4 in your above-named letter. We have excluded the
free goods portion in your claim.
4. We will further grant the sum of ₱2,119.61 by CM as claimed in
Item #5 of your above-named letter.
5. We will also grant ₱805.45 through a CM to complete our CM
#4975 as per your Item #6 in your said letter.
6. Items 7, 8 & 9 in your letter has [sic] been earlier granted by
our CM Nos. 12160 and 5263.
7. We will also grant your additional volume rebate amounting to
₱147,590.03 (see also CM#12250 – ₱320,849.42 VR earlier
granted upon full payment of the hereunder mentioned net
payable to us).
8. Lastly, we will grant you under Item #11 of your August 16
letter, the sum of ₱79,557.21 (credited free goods and volume
rebate which shall be applied against outstanding account are
excluded).
All the foregoing are premised on our receipt of your full payment of the sum of
₱934,086.92, in full and total settlement of your outstanding account after the crediting
of the eight (8) above-named concessions totaling to ₱338,016.15.
We strongly urge you to accept and adhere to the foregoing offer by remitting to us the
said sum of ₱934,086.92 through a bank demand draft on or before close of business
hours of December 8, 1989. Your failure to remit the said demand draft within the
allotted time shall effectively cancel our herein offer, and much to our regret we shall
be left with no other recourse but to protect our interests by and through an
appropriately more drastic legal action.
Yours faithfully,
BAYER PHILIPPINES, INC.13
In his December 8, 1989 letter, Sebastian expressed discontent in Bayerphil’s refusal
to credit his claims in full and underscored the alleged inaction of Bayerphil in
reconciling Calibre’s accounts.14
This was followed by a demand letter requiring Bayerphil to pay the sum of
₱10,000,000.00 for the damages it had allegedly caused to Calibre.15 Bayerphil
replied, reminding that Calibre owed it ₱1,272,103.07 as of December 31, 1989. 16

Accusing Bayerphil of maliciously breaching the distributorship agreement by
manipulating Calibre’s accounts, withholding discounts and rebates due it, charging
unwarranted penalties, refusing to supply goods, and favoring the new
distributors/dealers to drive it out of business, Calibre, on March 14, 1990, filed a suit
for damages, docketed as Civil Case No. 59258, before the Regional Trial Court
(RTC) of Pasig.17 Calibre prayed for ₱8,000,000.00 actual damages, representing
alleged actual losses and profits;18 ₱2,000,000.00 award as alleged damage to its
goodwill and business reputation; ₱3,500,000.00 as exemplary damages; and,
attorney’s fees of ₱1,500,000.00.
In its Answer with Counterclaim,19 Bayerphil denied its alleged wanton appointment of
other distributors, reasoning that it could not be faulted for a difference in treatment
between a paying dealer and a non-paying one. It maintained that Calibre filed the
damage suit to avoid paying its overdue accounts. Considering that those purchased
on credit remained unpaid, Bayerphil had to refuse to further supply Calibre with its
products.
Bayerphil also averred that the dealership agreement provides that rebates and
discounts would only be granted if the previous purchases had been first fully paid. It
denied that it failed to reconcile Calibre’s accounts since it conferred with Calibre, and
even acceded to a number of deductions demanded by Calibre subject to the latter’s
settlement of accounts. Bayerphil thus prayed for the collection of ₱1,272,103.07, with
interest of 14% per annum accruing daily and compounded monthly from the date of
default (as provided in the dealership agreement); ₱1,000,000.00 exemplary
damages; and, ₱200,000.00 attorney’s fees and costs of suit.
Bayerphil also moved that Mario Sebastian and his wife Minda (Sebastians) be
impleaded as co-defendants, considering that the Sebastians bound themselves as
solidary debtors under the distributorship/dealership agreement. 20
Calibre opposed Bayerphil’s motion to implead the Sebastians and moved to strike out
the counterclaim, reasoning that the spouses are not parties in its suit against
Bayerphil and thus are not the proper parties to the counterclaim. It stressed that the
issues between the damages suit it filed and Bayerphil’s counterclaim for collection of
money are totally unrelated.21
On the other hand, Bayerphil contended that both causes of action arose from the
same contract of distributorship, and that the Sebastians’ inclusion is necessary for a
full adjudication of Bayerphil’s counterclaim to avoid duplication of suits. 22
In its October 24, 1990 Resolution,23 the trial court rejected Calibre’s arguments and
granted the motion to implead the Sebastians as co-defendants in the counterclaim.
The spouses then filed their answer to Bayerphil’s counterclaim,24 adopting all the
allegations and defenses of Calibre. They raised the issue that the counterclaim
against them is permissive, and since Bayerphil failed to pay the required docket fees,
the trial court has no jurisdiction over the counterclaim.
163
Ruling of the Regional Trial Court
On December 6, 1993, the trial court rendered judgment25 favoring Calibre. It held that
Calibre was justified in withholding payment because there was deliberate
inaction/employment of dilatory tactics on the part of Bayerphil to reconcile accounts
making it liable for damages for ‘abuse of rights’ and ‘unfair competition’ under Articles
19, 20, and 28 of the Civil Code.26 It opined that Bayerphil unfairly favored other
dealers and deliberately refused to supply the plaintiff with its products to drive it out of
business. As for Bayerphil’s counterclaim, the court a quo adjudged that aside from
being unmeritorious for lack of valid demand, the counterclaim was permissive in
character. Therefore, it must be dismissed for Bayerphil’s failure to pay the required
docket fees. The dispositive portion of the Decision states:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant
Bayer Philippines, Inc., ordering said defendant to pay to plaintiff the amounts of
₱8,000,000.00 as actual damages, plus ₱80,000.00 as attorney’s fees, plus costs.
The "Counter-Complaint" of defendant against the spouses Mario and Minda
Sebastian is DISMISSED, for defendant’s failure to pay the required docket and filing
fees, considering that the counterclaim is permissive in character, and not compulsory.
Defendant’s counterclaim is likewise DISMISSED for lack of merit.
SO ORDERED.27
Ruling of the Court of Appeals
The CA reversed the trial court’s factual findings. In its July 31, 2002 Decision, the CA
found no reason to award Calibre anything as it has no cause of action against
Bayerphil. The CA said:
We agree with the appellant that nothing in the evidence suggests that it deliberately
and maliciously withheld approval of Calibre’s claims. Indeed, the correspondences
between the parties show that either there was an honest difference in the
computation of the amount, and/or a variance in opinion as to the validity of the
claims. There is abundant evidence that Bayer actually examined its records so much
so that through a letter dated November 10, 1989, it gave its explanation why it was
denying certain claims. Bayer sent its representatives to discuss the matter with
Calibre’s General Manager Mario Sebastian. Bayer exerted efforts to arrive at a
compromise with Calibre, and expressed its willingness to grant several concessions
to plaintiff-appellee (Exhibit "N", Record, pp. 256-257)
Parenthetically, Bayer’s offer of compromise cannot be taken as an admission of
liability on its part for the entire claim of appellee Calibre. In civil cases, an offer of
compromise is not an admission of any liability. The compromise settlement of a claim
or cause of action is not an admission that the claim is valid, but merely admits that
there is a dispute, and that the amount is being paid just to buy peace. (Servicewide

Specialists, Inc. vs. Court of Appeals, G.R. No. 117728, June 26, 1996, 257 SCRA
643) After all, it is the policy of the law to encourage compromises.
xxxx
It must also be noted that plaintiff-appellee was not entitled to be the sole distributor
within its area of coverage for Bayer. Under number 3, Part III of the latest
Distributorship/Dealership Agreement (p. 231, Record) between the parties, it was
stipulated that unless otherwise agreed upon, formally and in writing, plaintiff-
appellee’s appointment as distributor/dealer was to be on a non-exclusive basis. The
agreement expressly reserved Bayer’s right to appoint other distributors and/or
dealers, in any number desired and anywhere in the appointed area. There is no
evidence of a formal and written agreement appointing plaintiff-appellee as sole
distributor in Pangasinan and Tarlac. Hence, it cannot validly claim that Bayer caused
its business injury by appointing other dealers and distributors within its area.
Significantly, the Distributorship/Dealership Agreement also reserved to both parties
the right to cancel the agreement at any time. Under the circumstances obtaining,
Bayer was justified, in the exercise of sound business decision, to stop supplying
goods to plaintiff-appellee until the latter’s outstanding account had been finally
settled.28
Furthermore, the CA favored Bayerphil’s counterclaim. It ruled that Bayerphil’s
counterclaim was compulsory hence it need not pay the docket and filing fees. It noted
that it arose out of the same dealership agreement from which the claims of Calibre in
its complaint were likewise based. Finding that Calibre never denied that it owes
Bayerphil, and that the evidence of Bayerphil regarding the amount owed by Calibre
was unrebutted, the CA deemed justified the award of actual damages. Hence:
WHEREFORE, premises considered, the Decision of the lower court is hereby
REVERSED and SET ASIDE and a new one is entered ordering plaintiff-appellee
Calibre Traders and/or Mario Sison Sebastian and Minda Blanco Sebastian to pay
defendant-appellant the amount of One Million Two Hundred Seventy-Two Thousand
One Hundred Three Pesos and Seven Centavos (₱1,272,103.07) with interest thereon
at the rate of 14% per annum compounded from December 31, 1989 until fully paid.
Without pronouncement as to costs.
SO ORDERED.29
In its December 19, 2003 Resolution,30 the CA denied the motion for reconsideration.
Issues
164
Based on the parties’ contentions, the Court should now resolve the following issues:
a) Calibre’s entitlement to an award of damages; and, b) the propriety of granting relief
to Bayerphil’s counterclaim.
Our Ruling
No form of damages can be awarded to Calibre for it miserably failed to prove its right
to the reliefs it sought.
While only questions of law are reviewed in petitions for review on certiorari, the Court
shall delve into the factual milieu of this case in view of the conflicting findings of facts
by the trial court and the CA.31 The question arises whether Calibre has a cause of
action against Bayerphil. The records before us though, highlight the lack of it.
The lower court’s ruling against the latter is premised on a finding of malice or bad
faith, i.e., a finding of an abuse of right on Bayerphil’s part in exercising inimical acts
that prejudiced Calibre’s business. However, we agree with the CA’s conclusion that
there is no adequate proof that Bayerphil was guilty of abusing its rights. "[G]ood faith
is presumed and that the burden of proving bad faith rests upon a party alleging the
same."32 "In civil cases, the law requires that the party who alleges a fact and
substantially asserts the affirmative of the issue has the burden of proving it." 33 This is
where Calibre failed.1avvphi1
As regards the allegations of inaction/refusal to reconcile accounts, accounts
manipulation by withholding discounts/rebates, imposition of penalties, and refusal to
supply goods, the records reveal that Bayerphil never ignored the request for accounts
reconciliation. Bayerphil acted on Calibre’s letter and sent its representatives to meet
with Sebastian. It wrote a letter answering point-by-point why some demands for
discounts and rebates had to be refused. Bayerphil’s second letter, wherein some
claims were additionally granted, was on Bayerphil’s part an act of concession in its
desire to be paid since Calibre remained adamant in not paying its accounts. If ever
Calibre found the second letter to be apparently inconsistent with the first letter, bad
faith cannot be immediately imputed to Bayerphil since the latter is not precluded from
making prompt corrections in its computations.
We cannot subscribe to the accusation of accounts manipulation. As the CA had
found, this matter involves an "honest difference in the computation of the amount,
and/or a variance in opinion as to the validity of the claims." Moreover, Bayerphil could
not be blamed for disallowing some of the claimed discounts and rebates. Under the
latest dealership agreement and the volume rebate agreement executed, payment is a
precondition for the discounts and rebates.34 Bayerphil, to minimize further losses,
was justified in stopping the supply of its products when its dealer still had outstanding
accounts. Lastly, Calibre did not specify during the trial the unwarranted penalties
Bayerphil had allegedly imposed.
Neither do we find any abuse in Bayerphil’s exercise of appointing other distributors
within Calibre’s area. The fact that the distributors appointed were Calibre’s former

customers or salesmen or their relatives does not prove any ill intention to drive
Calibre out of business. Notably, the distributorship/dealership agreement was on a
non-exclusive basis. Bayerphil merely accorded the same business opportunities to
others to better themselves. Naturally, an increase in the number of distributors in an
area will entail corresponding decline in volume sales of the individual distributors.
Even then Bayerphil’s assistant sales manager for internal administration Ofelia
Castillo, who named during the trial the other distributors Bayerphil appointed in
Pangasinan, not only acknowledged that Bayerphil’s former salesmen had resigned to
be dealers, but also admitted that competition is part of business risk:
Q You said in Manaoag, this Rosalyn Agricultural Supply was there as early
as 1980 is that correct?
A At about.
Q But somehow, it was a distributor for only 2 or 3 years?
A Yes, shortly, unlike those dealers who have several years.
Q This Samson in Urdaneta was also short lived?
A It began in the area and operating until now.
Q Would you know when Samson began as a distributor?
A Between the period ’82 and ’85.
Q This San Carlos Agricultural Center owned by William.
A It is owned by Ricardo Rule. There are two operating in San Carlos.
Q There are two dealers operating in San Carlos?
A Yes, Sir.
Q How many in Urdaneta?
A Calibre and Samson. Only those two.
Q You would admit Mrs. Castillo that the Bayer Phils. Salesmen of agro
chemicals are experienced in the products of Bayer Philippines?
165
A Having worked and dealt with Bayer chemicals, with the training they got,
I suppose they get that experience.
Q And this experience would be invaluable in their distributorship?
A Valuable.
Q Very valuable?
A Very valuable.
Q And in fact, you know of many salesmen of Bayer Phils who resigned?
A Yes, sir.
Q Because the chances of getting more is there if you are an independent
distributor?
A Yes, sir.
Q In fact, this is true not only in Pangasinan but all over the country, Mrs.
Castillo?
A Yes, because we have mentioned one in Cotabato, in San Jose, Nueva
Ecija, in Tuguegarao.
Q And from the records that you mentioned earlier on, it would seem some
of them succeeded beautifully and some closed shop afterwards?
A Yes, sir.
Q It is just a matter of luck and yes, business luck?
A Yes, sir.35
Incidentally, under actual or compensatory damages, indemnification comprises not
only the value of the loss suffered, but likewise the profits the obligee failed to obtain. 36
In its attempt to support this claim for compensatory damages, Calibre, based its
computation of more or less a loss of ₱8 million on a 10-year sales projection.37 But as
could be gleaned from Sebastian’s testimony, there is no solid evidence upon which
this sales projection was based:

Q You prepared a projection of your total sales for another ten (10) years
from 1989.
A Yes, sir.
Q In the preparation of your projection, I assume that you based it on the
records of your sales of previous years?
A No.
Q You did not in preparing your projection of sales to determine your
alleged lost profits refer at all to your previous records?
A No.
Q What then was the basis of your projection?
A The basis of my projection is, as one of the valued clients of Bayer
Philippines which is a member of the World Club, we are in the bracket of
10 million per year sales.
Q So you only had capability to sell?
A Yes.
Q Have you ever sold before in the 10 million per year sales?
A Yes.
Q That is why I am asking you, you did not at all base your assumption on
your prior sales record of Bayer Philippines products?
A I cannot possibly base it on the past sales. Cost of money is going up so I
based it on a bracket that Bayer Philippines put us which is in the 10 million
per year sales that is projected for another 10 years because we are the
valued clients of Bayer.
Q You also projected your profits for the next 10 years?
A Yes, sir.
166
Q And you did not consider the profits from the Bayer business of the prior
years in making your projection?
A Yes, sir.
Q I assume then that in determining your profits for the previous years you
used the figures of the summary Exhibit O as to your sales from 1977 to
1989?
A No, sir.
Q You did not refer at all to your profits for the previous years?
A No, sir.
Q Why did you not refer to your previous profits to determine your projection
of probable profits?
A We projected our projection based on our being a valued client of Bayer
Philippines, and based on the contract of the minimum 5% profit. 38
To justify a grant of actual or compensatory damages, the amount of loss must be
proved with a reasonable degree of certainty, based upon competent proof and the
best evidence obtainable by the injured party.39 The projected sum of ₱10 million
sales cannot thus be the proper base in computing actual damages. Calibre computed
its lost income based only on its capability to sell around ₱10 Million, not on the actual
income earned in the past years to properly compute the average income/profit.
At any rate, since Calibre had no cause of action at all against Bayerphil, there can be
no basis to award it with damages.
Bayerphil’s counterclaim is permissive, but the trial court should have given it the
opportunity to pay the docket fees since it did not avoid paying said fees.
"A compulsory counterclaim is any claim for money or other relief, which a defending
party may have against an opposing party, which at the time of suit arises out of, or is
necessarily connected with, the same transaction or occurrence that is the subject
matter of plaintiff’s complaint. It is compulsory in the sense that it is within the
jurisdiction of the court, does not require for its adjudication the presence of third
parties over whom the court cannot acquire jurisdiction, and will be barred x x x if not
set up in the answer to the complaint in the same case. Any other claim is
permissive."40 "[The] Court has already laid down the following tests to determine
whether a counterclaim is compulsory or not, to wit: (1) Are the issues of fact or law
raised by the claim and the counterclaim largely the same? (2) Would res judicata bar
a subsequent suit on defendant's claims, absent the compulsory counterclaim rule?

(3) Will substantially the same evidence support or refute plaintiff's claim as well as
the defendant's counterclaim? and (4) Is there any logical relation between the claim
and the counterclaim, such that the conduct of separate trials of the respective claims
of the parties would entail a substantial duplication of effort and time by the parties
and the court?"41 The fourth test is the ‘compelling test of compulsoriness’.42
Bayerphil’s suit may independently proceed in a separate action. Although the rights
and obligations of the parties are anchored on the same contract, the causes of action
they filed against each other are distinct and do not involve the same factual issues.
We find no logical relationship between the two actions in a way that the recovery or
dismissal of plaintiff’s suit will establish a foundation for the other’s claim. The
counterclaim for collection of money is not intertwined with or contingent on Calibre’s
own claim for damages, which was based on the principle of abuse of rights. Both
actions involve the presentation of different pieces of evidence. Calibre’s suit had to
present evidence of malicious intent, while Bayerphil’s objective was to prove
nonpayment of purchases. The allegations highlighting bad faith are different from the
transactions constituting the subject matter of the collection suit. Respondent’s
counterclaim was only permissive. Hence, the CA erred in ruling that Bayerphil’s claim
against the petitioners partakes of a compulsory counterclaim.
Be that as it may, the trial court was incorrect in dismissing Bayerphil’s counterclaim
for non-payment of docket fees.
All along, Bayerphil has never evaded payment of the docket fees on the honest belief
that its counterclaim was compulsory. It has always argued against Calibre’s
contention that its counterclaim was permissive ever since the latter opposed
Bayerphil’s motion before the RTC to implead the Sebastian spouses. Lastly,
Bayerphil’s belief was reinforced by Judge Claravall’s October 24, 1990 Resolution
when she denied Calibre’s motion to strike out Bayerphil’s counterclaim. Thus:
With respect to the motion to strike out the counterclaim, the Rejoinder and Reply of
CALIBRE mentioned two reasons to support it. These are: 1) that the counterclaim is
not against the opposing party only, and 2) that the plaintiff’s claim against the
defendant is totally unrelated to the latter’s claim against the Sebastian spouses
because they are "not the same."
To resolve the issues abovementioned, the elements of a compulsory counterclaim
are thus given:
A counterclaim is compulsory and is considered barred if not set up where the
following circumstances are present: 1) that it arises out of the, or is necessarily
connected with the transaction or occurrence that is the subject matter of the opposing
party’s claim, 2) that it does not require for its adjudication the presence of third parties
of whom the court cannot acquire jurisdiction, and 3) that the court has jurisdiction to
entertain the claim. (Javier vs. IAC, 171 SCRA 605)
The provisions of Section 8, Rule 6 must necessarily be mentioned also. To wit:
167
Sec. 8, Rule 6. Counterclaim or cross-claim in the answer. – The answer may contain
any counterclaim or crossclaim which a party may have at the time against the
opposing party or a co-defendant provided, that the court has jurisdiction to entertain
the claim and can, if the presence of third parties is essential for its adjudication,
acquire jurisdiction of such parties.
The rules and jurisprudence do not require that the parties to the counterclaim be the
original parties only. In fact, the presence of third parties is allowed, the only provision
being their capacity to be subjected under the court’s jurisdiction. As regards the
nature of the claims of the parties, neither is it required that they be of the same
nature, only that they arise from the same transaction or occurrence.43
It cannot be gainsaid that the emerging trend in the rulings of this Court is to afford
every party litigant the amplest opportunity for the proper and just determination of his
cause, free from the constraints of technicalities. 44 Rules on the payment of filing fees
have already been relaxed:
1. It is not simply the filing of the complaint or appropriate initiatory pleading,
but the payment of the prescribed docket fee, that vests a trial court with
jurisdiction over the subject-matter or nature of the action. Where the filing
of the initiatory pleading is not accompanied by payment of the docket fee,
the court may allow payment of the fee within a reasonable time but in no
case beyond the applicable prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third-party claims and
similar pleadings, which shall not be considered filed until and unless the
filing fee prescribed therefor is paid. The court may also allow payment of
said fee within a reasonable time but also in no case beyond its applicable
prescriptive or reglementary period.
3. Where the trial court acquires jurisdiction over a claim by the filing of the
appropriate pleading and payment of the prescribed filing fee but,
subsequently, the judgment awards a claim not specified in the pleading, or
if specified the same has been left for determination by the court, the
additional filing fee therefor shall constitute a lien on the judgment. It shall
be the responsibility of the Clerk of Court or his duly authorized deputy to
enforce said lien and assess and collect the additional fee. 45
It is a settled doctrine that "although the payment of the prescribed docket fees is a
jurisdictional requirement, its non-payment x x x should not result in the automatic
dismissal of the case provided the docket fees are paid within the applicable
prescriptive period."46 "The prescriptive period therein mentioned refers to the period
within which a specific action must be filed. It means that in every case, the docket fee
must be paid before the lapse of the prescriptive period. Chapter 3, Title V, Book III of
the Civil Code is the principal law governing prescription of actions."47
 168

What remains to be determined now is whether or not defendant-appellant is entitled

to its counterclaim. On this score, We note that plaintiff-appellee never denied that it
In accordance with the aforementioned rules on payment of docket fees, the trial court
still owes defendant-appellant for purchases it had made. Bayer had already
upon a determination that Bayerphil’s counterclaim was permissive, should have
recognized that Calibre was entitled to a volume rebate for the years 1988-1989 in the
instead ordered Bayerphil to pay the required docket fees for the permissive
amount of ₱320,849.42 on paid purchases, and a 5% prompt payment rebate of
counterclaim, giving it reasonable time but in no case beyond the reglementary
₱63,196.06 in view of the application of the volume rebate to Calibre’s outstanding
period.48 At the time Bayerphil filed its counter-claim against Calibre and the spouses
balance, or a total of P384,045.48, as stated in Bayer’s letter dated November 10,
Sebastian without having paid the docket fees up to the time the trial court rendered
1989 (Exhibit "10", Record, pp. 373-375) earlier quoted.
its Decision on December 6, 1993, Bayerphil could still be ordered to pay the docket
fees since no prescription has yet set in.49 Besides, Bayerphil should not suffer from
the dismissal of its case due to the mistake of the trial court. Since no evidence was presented by plaintiff-appellee to rebut the correctness of
Bayer’s computation. We therefore assume it to be correct. Moreover, We note that
the stocks Bayer had withdrawn per plaintiff-appellee’s request under Claims 10 and
Considering the foregoing discussion, we find no need to remand the case to the trial
11 amounting to ₱124,493.28 had been credited to plaintiff-appellee as shown by the
court for the resolution of Bayerphil’s counterclaim. In Metromedia Times Corporation
Statement of Account (Exhibit "4", Record, pp. 366-367) which shows that Calibre’s
v. Pastorin,50 we discussed the rule as to when jurisdiction by estoppel applies and
outstanding indebtedness as of December 31, 1989 was One million Two Hundred
when it does not, thus:
Seventy-Two Thousand, One Hundred Three Pesos and Seventeen Centavos
(₱1,272,103.17) (Exhibit "4-E", p. 367). We also note that the
Lack of jurisdiction over the subject matter of the suit is yet another matter. Whenever Distributorship/Dealership Agreement entered into by the parties provides that default
it appears that the court has no jurisdiction over the subject matter, the action shall be in payment on any account by the DISTRIBUTOR/DEALER when and as they fall due
dismissed (Section 2, Rule 9, Rules of Court). This defense may be interposed at any shall entitle BAYERPHIL to interests thereon at the then maximum lawful interest rates
time, during appeal (Roxas vs. Rafferty, 37 Phil. 957) or even after final judgment which in no case shall be lower than twelve per cent (12%) per annum for accounts
(Cruzcosa vs. Judge Concepcion, et al., 101 Phil. 146). Such is understandable, as fully secured by a mortgage on realty or fourteen per cent (14%) per annum when
this kind of jurisdiction is conferred by law and not within the courts, let alone the otherwise unsecured. (Exhibit "1-F", Record, p. 328).51
parties, to themselves determine or conveniently set aside. In People vs. Casiano
(111 Phil. 73, 93-94), this Court, on the issue of estoppel, held:
WHEREFORE, the July 31, 2002 Decision of the Court of Appeals in CA-G.R. CV No.
45546 is AFFIRMED. Considering that the counterclaim is permissive, respondent
"The operation of the principle of estoppel on the question of jurisdiction seemingly Bayer Philippines, Inc. is ORDERED to pay the prescribed docket fees with the
depends upon whether the lower court actually had jurisdiction or not. If it had no Regional Trial Court of Pasig City within fifteen (15) days from receipt of this Decision.
jurisdiction, but the case was tried and decided upon the theory that it had jurisdiction,
the parties are not barred, on appeal, from assailing such jurisdiction, for the same
SO ORDERED
‘must exist as a matter of law, and may not be conferred by consent of the parties or
by estoppel’ (5 C.J.S., 861-863). However, if the lower court had jurisdiction, and the
case was heard and decided upon a given theory, such, for instance, as that the court
had no jurisdiction, the party who induced it to adopt such theory will not be permitted,
on appeal, to assume an inconsistent position – that the lower court had jurisdiction.
Here, the principle of estoppel applies. The rule that jurisdiction is conferred by law,
and does not depend upon the will of the parties, has no bearing thereon."

In this case, the trial court had jurisdiction over the counterclaim although it
erroneously ordered its automatic dismissal. As already discussed, the trial court
should have instead directed Bayerphil to pay the required docket fees within a
reasonable time. Even then, records show that the trial court heard the counterclaim
although it again erroneously found the same to be unmeritorious. Besides, it must
also be mentioned that Bayerphil was lulled into believing that its counterclaim was
indeed compulsory and thus there was no need to pay docket fees by virtue of Judge
Claravall’s October 24, 1990 Resolution. Petitioners also actively participated in the
adjudication of the counterclaim which the trial court adjudge to be unmeritorious.

However, we are more inclined to affirm the CA’s ruling anent Bayerphil’s
counterclaim. It held thus:

G.R. No. 88353 May 8, 1992
CENTRAL BANK OF THE PHILIPPINES and HON. JOSE B. FERNANDEZ,
petitioners,
vs.
HON. COURT OF APPEALS, RTC JUDGE TEOFILO GUADIZ, JR., PRODUCERS
BANK OF THE PHILIPPINES and PRODUCERS PROPERTIES, INC., respondents.
G.R. No. 92943 May 8, 1992
ATTY. LEONIDA G. TANSINSIN-ENCARNACION, as the Acting Conservator of
Producers Bank of the Philippines, and PRODUCERS BANK OF THE
PHILIPPINES, petitioners,
vs.
PRODUCERS BANK OF THE PHILIPPINES, allegedly represented by HENRY L.
CO, HON. COURT OF APPEALS, HON. TEOFILO GUADIZ, JR., and the "LAW
FIRM OF QUISUMBING, TORRES AND EVANGELISTA" (RAMON J.
QUISUMBING, VICENTE TORRES,RAFAEL E. EVANGELISTA, JR. and
CHRISTOFER L. LIM), respondents.
Agapito S. Fajardo, Jerry P. Rebutoc & Antonio M. Tan for petitioners in G.R. No.
88353.
Leonida G.T. Encarnacion for petitioners in G.R. No. 92943.
Quiason, Makalintal, Barot, Torres, Ibarra Law Office for the respondents in G.R. Nos.
88353 & 92943.
DAVIDE, JR., J.:
The common origin of these cases is Civil Case No. 17692 filed before Branch 147
(Makati) of the Regional trail Court, National Capital Judicial Region and entitled
Producers Bank of the Philippines and Producers Properties, Inc. versus Central Bank
of the Philippines, Jose B. Fernandez. Jr. and the Monetary Board. On 21 January
1991, this Court ordered the consolidation of G.R. No. 92943 with G.R. No. 88353. 1
The first case, G.R. No. 88353, is a petition for review on certiorari of the decision of 6
October 19882 and the resolution of 17 May 19893 of the respondent Court of
Appeals in C.A.-G.R. No. SP-13624. The impugned decision upheld the 21 September
1987 Order of respondent Judge Teofilo Guadiz, Jr. in Civil Case No. 17692 granting
the motion for issuance of a writ of preliminary injunction –– enjoining petitioners
Central Bank of the Philippines (CB), Mr. Jose B. Fernandez, Jr. and the Monetary
Board, or any of their agencies from implementing Monetary Board (MB) Resolutions
169
No. 649 and No. 751, or from taking the threatened appropriate alternative action ––
and the 27 October 1987 Order in the same case denying petitioners' motion to
dismiss and vacate said injunction. The challenged resolution, on the other hand,
denied petitioners' motion for reconsideration of the 6 October 1988 decision.
The second case, G.R. No. 92943, is a petition for review directed principally against
the 17 January 1990 decision of the respondent Court of Appeals in C.A.-G.R. SP No.
16972. The said decision dismissed the petition therein filed and sustained the various
Orders of the respondent Judge in Civil Case No. 17692, but directed the plaintiffs
therein to amend the amended complaint by stating in its prayer the specific amount of
damages which Producers Bank of the Philippines (PBP) claims to have sustained as
a result of losses of operation and the conservator's bank frauds and abuses; the
Clerk of Court was also ordered to determine the amount of filing fees which should be
paid by the plaintiffs within the applicable prescriptive or reglementary period. 4
The records of both cases reveal the following factual and procedural antecedents:
Petitioners claim that on 29 April 1983, during the regular examination of the PBP, CB
examiners stumbled upon some highly questionable loans which had been extended
by the PBP management to several entities. Upon further examination, it was
discovered that these loans, totalling approximately P300 million, were "fictitious" as
they were extended, without collateral, to certain interests related to PBP owners
themselves. Said loans were deemed to be anomalous particularly because the total
paid-in capital of PBP at that time was only P 140.544 million. This means that the
entire paid-in capital of the bank, together with some P160 million of depositors'
money, was utilized by PBP management to fund these unsecured loans.
Sometime in August of the same year, at the height of the controversy surrounding the
discovery of the anomalous loans, several blind items about a family-owned bank in
Binondo which granted fictitious loans to its stockholders appeared in major
newspapers. These news items triggered a bank-run in PBP which resulted in
continuous over-drawings on the bank's demand deposit account with the Central
Bank; the over-drawings reached P74.109 million by 29 August 1983. By 17 January
1984, PBP's overdraft with the CB increased to P143.955 million, an indication of
PBP's continuing inability to maintain that condition of solvency and liquidity necessary
to protect the interests of its depositors and creditors. Hence, on 20 January 1984, on
the basis of the report submitted by the Supervision and Examination Sector,
Department I of the CB, the Monetary Board (MB), pursuant to its authority under
Section 28-A of R.A. No. 265 and by virtue of MB Board Resolution No. 164, placed
PBP under conservatorship. 5
While PBP admits that it had no choice but to submit to the conservatorship, 6 it
nonetheless requested that the same be lifted by the CB. Consequently, the MB
issued on 3 February 1984 Resolution No. 169 directing the principal stockholders of
PBP to increase its capital accounts by such an amount that would be necessary for
the elimination of PBP's negative net worth of P424 million. On 10 April 1984, CB
senior deputy Governor Gabriel Singson informed PBP that pursuant to MB
 170

of disagreements on certain matters such as interest rates, penalties and liquidated

damages.
Resolution No. 490 of 30 March 1984, the CB would be willing to lift the
conservatorship under the following conditions:
No other rehabilitation program was submitted by PBP for almost three (3) years; as a
result thereof, its overdrafts with the CB continued to accumulate. By the end of June
(a) PBP's unsecured overdraft with the Central Bank will be
1987, the figure swelled to a staggering P1.023 billion. Consequently, per Resolution
converted into an emergency loan, to be secured by sufficient
No. 649 dated 3 July 1987, the CB Monetary Board decided to approve in principle
collateral, including but not limited to the Following properties
what it considered a viable rehabilitation program for PBP. The program had these
offered by PBP's principal stockholders:
principal features:

i. 6 floors and other areas of the Producers

Bank Bldg., at Paseo de Roxas, owned by
PBP;
ii. 15 floors of the Producers Bank Bldg., at
Paseo de Roxas, Makati, owned by the
Producers Properties, Inc.;
iii. Manhattan Bldg. on Nueva Street,
Binondo, Manila; and
Al. The Central Bank will assign in favor of the Philippine Deposit
Insurance Corporation (PDIC) its claim over the overdraft of PBP
net of net peso differential arising from swap transactions and
interest thereon, up to the amount of the par value of the
Producers Properties, Inc. (PPI) shares of stock in PBP presently
pledged to the Central Bank, and PDIC will enter into a contract of
dacion en pago with PBP and PPI whereby PDIC will acquire
4,116,100 preferred shares of stock of PBP with a par value of
P100 per share in consideration for which PDIC will convey its
rights over the overdraft assigned to it by the Central Bank, in
favor of PPI;

iv. Producers Bank, Makati Branch Bldg. at

2. The balance of the overdraft of PBP, after the assignment to
Buendia Avenue, Makati;
PDIC of a portion of such overdraft referred to in Item I above, will
also be assigned to PDIC and converted into preferred shares of
(b) A comptroller for PBP and any number of bank examiners stock of PBP;
deemed necessary to oversee PBP's operations shall be
designated by the Central Bank, under terms of reference to be
3. The interest on the overdraft of PBP will be reduced to 11.75%
determined by the Governor;
p.a. retroactively to the date when the overdraft of PBP was
incurred;
(c) A letter from the Management of PBP authorizing the Central
Bank to automatically return clearing items that would result in an
4. The accrued interest on the overdraft of PBP, at the reduced
overdraft in its Central Bank account shall be submitted to the
rate approved in Item 3 above, as well as the unbooked penalties
Central Bank.
on legal reserve deficiencies of PBP will be assigned in favor of
PDIC and such amounts will be allowed to be converted into
On 27 April 1984, the MB adopted Resolution No. 584 approving the consolidation of preferred shares of stock of PBP; and
PBP's other unsecured obligations to the CB with its overdraft and authorizing the
conversion thereof into an emergency loan. The same resolution authorized the CB
5. The booking of valuation reserves will be allowed as follows:
Governor to lift the conservatorship and return PBP's management to its principal
stockholders upon completion of the documentation and full collateralization of the
emergency loan, but directed PBP to pay the emergency loan in five (5) equal annual 3rd year — P31 million
installments, with interest and penalty rates at MRR 180 days plus 48% per annum, 4th year — 48 million
and liquidated damages of 5% for delayed payments. 5th year — 67 million
6th year — 85 million
7th year — 105 million
On 4 June 1984, PBP submitted a rehabilitation plan to the CB which proposed the
8th year — 124.61 million
transfer to PBP of three (3) buildings owned by Producers Properties, Inc. (PPI), its
principal stockholder and the subsequent mortgage of said properties to the CB as
collateral for the bank's overdraft obligation. 7 Although said proposal was explored
and discussed, no program acceptable to both the CB and PPI was arrived at because
 171

Department I incurred up to the date of the

issuance of such shares of stock;
subject to the following conditions:

e. PBP shall execute in favor of a trustee to

a. Fresh capital of P200.0 million shall be put
be approved by the Central Bank of mortgage
up, provided that a new group of stockholders
trust indenture covering the assets presently
shall hold at least 40% of the total
mortgaged/pledged to Central Bank as
outstanding voting shares of stock of PBP;
collateral for the overdraft of PBP as well as
additional collaterals to be submitted to fully
b. PBP shall submit additional collaterals to collateralize the overdraft of PBP, under
fully collateralize its overdraft with the Central which indenture PDIC as holder of preferred
Bank; shares of stocks, shall have the first lien and
preference over the assets subject of the
indenture in case of insolvency, to the extent
c. PPI shall convey to PBP the remaining
of the overdraft converted into preferred
floors of the Producers Bank Centre for a
shares of stock, provided that PBP shall
value of P143.54 million partly in payment of
submit an opinion from the Securities and
DOSRI loans of P27.6 million, principal plus
Exchange Commission that such indenture is
interest, and the balance of P115.94 million
legal and valid; and
for shares of stock of PBP, P15.12 million
common and P100.89 million preferred, with
features as presently provided under PBP's f. The principal stockholders of both PBP and
Articles of Incorporation and By-Laws; PPI shall submit in writing their conformity to
the above conditions, with the effect that any
previous agreements to the contrary shall be
d. PBP's Articles of Incorporation and By-
set aside; and
Laws shall be amended so as to create a
special class of preferred, non-voting,
cumulative, non-participating shares of stock B. To require PBP to submit to the Monetary Board for approval
with a dividend rate of 12% which shall be the identities of the new stockholders and the new management
issued (i) in exchange for the PPI shares that which shall not be changed without the prior approval of the
will be conveyed to PDIC under the dacion en Central Bank, it being understood that final approval of the above
pago mentioned in Item 1 above, (ii) in rehabilitation plan shall depend entirely upon the acceptance by
consideration of the balance of PBP's the Board of the new stockholders and the new management; and
overdraft assigned to PDIC under Item 2 to give PBP a period of two weeks after such final approval within
above, (iii) in consideration of the accrued which to implement the above rehabilitation plan 8 (Emphasis
interest on PBP's overdraft assigned to PDIC supplied).
and the unbooked penalties on legal reserve
deficiencies of PBP also assigned to PDIC.
There being no response from both PBP and PPI on the proposed rehabilitation plan,
The said preferred shares of stock shall be
the MB issued Resolution No. 751 on 7 August 1987 instructing Central Bank
convertible into common voting shares of
management to advise the bank, through Mr. Henry Co, as follows:
stock upon the sale of such preferred shares
to private parties at the option of such parties.
Proceeds from the sale of these shares of a. The Central Bank conservatorship over PBP may be lifted only
stock shall be used to liquidate the advances after PBP shall have identified the new group of stockholders who
made by the Central Bank to PDIC by virtue will put in new capital in PBP and after the Monetary Board shall
of the various assignments under Items 1, 2, have considered such new stockholders as acceptable; and
and 4 above. The said shares of stock shall
not share in losses and other capital
adjustments representing reduction of capital b. The stockholders of PBP have to decide whether or not to
accounts as recommended by SES accept the terms of the rehabilitation plan as provided under

Resolution
No. 649 dated July 3, 1987 within one week from receipt of notice
hereof and if such terms are not acceptable to them, the Central
Bank will take appropriate alternative action on the matter; . . .9
Additionally, in a letter dated 14 August 1987, the CB called the attention of the PBP
directors and officers to Section 107 of R.A. No. 265, as amended by Executive Order
No. 289 dated 23 July 1987, which provides, inter alia, that:
. . . any bank which incurs an overdrawing in its deposit account
with the Central Bank shall fully cover said overdraft not later than
the next clearing day: Provided, further, That settlement of
clearing balances shall not be effected for any account which
continue (sic) to be overdrawn for five consecutive banking days
until such time as the overdrawing is fully covered or otherwise
converted into an emergency loan or advance pursuant to the
provisions of Sec. 90 of this Act. Provided, Finally, That the
appropriate clearing office shall be officially notified of banks with
overdrawn balances. Banks with existing overdrafts with the
Central Bank as of the effectivity of this amended section shall
within such period as may be prescribed by the Monetary Board,
either convert the overdraft into an emergency loan or advance
with a plan of payment, or settle such overdrafts, and that upon
failure to so comply herewith, the Central Bank shall take such
action against the bank as may be warranted under this Act.
(Emphasis provided).
A. few days later, or on 27 August 1987, the PBP, without responding to the
communications of the CB, filed a complaint verified by its former board chairman,
Henry Co, with the Regional Trial Court of Makati against the CB, the MB and CB
Governor Jose B. Fernandez, Jr. The complaint, docketed as Civil Case No. 17692,
10 devoted several pages to specific allegations in support of PBP's assertions that
the conservatorship was unwarranted, ill-motivated, illegal, utterly unnecessary and
unjustified; that the appointment of the conservator was arbitrary; that herein
petitioners acted in bad faith; that the CB-designated conservators committed bank
frauds and abuses; that the CB is guilty of promissory estoppel; and that by reason of
the conservatorship, it suffered losses enumerated in paragraph 27 thereof, the total
quantifiable extent of which is P108,479,771.00, exclusive of loss of profits and loss of
goodwill. 11 It concluded with a prayer for:
. . . judicial review of Monetary Board Resolutions No. 649 dated
July 3, 1987 and No. 751 dated 14 August, 1987 and that
judgment be rendered nullifying the same and ordering defendant
Central Bank's conservator to restore the viability of PBP as
mandated by section 28-A of R.A. 265 and to fully repair the
damages inflicted on PBP consisting of losses of operation and
the conservators' bank frauds and abuses, with costs against
defendants. (emphasis supplied).
172
and for:
. . . the issue of a temporary restraining order/preliminary
injunction enjoining defendants' coercion on PBP to accept the
rehabilitation plan within one week or their taking "appropriate
alternative action" including exclusion of PBP from settlement of
clearing balances at the Central
Bank clearing house, pending judicial review of Monetary Board
Resolutions No. 649 dated July 3, 1987 and No. 751 dated
August 14,
1987 –– defendants not being above the law. 12
Only P102.00 was paid as docket fee.
The case was raffled to Branch 147 of said court which was then presided over by
respondent Judge.
On 31 August 1987, respondent Judge issued a temporary restraining order and set
the hearing of the application for preliminary injunction on 9 September 1987. 13 On
11 September 1987, petitioner filed an Opposition to the application for preliminary
injunction. 14
Subsequently, on 21 September 1987, respondent Judge issued an Order granting
the writ 15 and enjoining defendant-petitioners or any of their agents from:
. . . implementing Monetary Board Resolutions Nos. 649 and 751
or from taking the threatened "appropriate alternative action"
including exclusion of plaintiff bank from settlement of clearing
balances at the Central Bank clearing house or any other action
that will disturb the status quo or the viability of plaintiff bank
during the pendency of this case conditioned upon the posting of
a bond in the amount of P2,000,000.00.
On 25 October 1987, PBP filed the Amended Complaint 16 impleading PPI as an
additional plaintiff. No new allegations or causes of action for said plaintiff were made.
On 5 November 1987, petitioners filed a Motion to Dismiss the Amended Complaint.
The motion contained a prayer to vacate the injunction and raised the following
grounds:
1) the amended complaint states no cause of action; MB
Resolution Nos. 649 and 751 are merely advisory, thus, neither
effect impairment of plaintiffs' rights nor cause it prejudice, loss or
damage; furthermore, there is no basis for the averments on the
legality or illegality of the conservatorship since the amended
complaint does not seek its annulment;

2) the amended complaint is not authorized by the management
of PBP; and
3) the lower court did not acquire jurisdiction over the case except
to order the amended complaint expunged from the records
because the proper filing fee was not paid. 17
On 27 November 1987, the trial court, through the respondent Judge, handed down
an Order denying the motion to dismiss on the following grounds: (a) the amended
complaint alleges ultimate facts showing that plaintiff has a right and that such a right
has been violated by defendant; the questioned MB Resolutions were issued
arbitrarily and with bad faith, "being a part of a scheme to divest plaintiff's present
stockholders of their control of PBP and to award the same to the PDIC or its unknown
transferees"; and the averments of legality or illegality of the conservatorship are
relevant to the cause of action since the complaint seeks the lifting of the
conservatorship; (b) While it is true that under Section 28-A of the Central Bank Act
the conservator takes over the management of a bank, the Board of Directors of such
bank is not prohibited from filing a suit to lift the conservatorship and from questioning
the validity of both the conservator's fraudulent acts and abuses and its principal's
(MB) arbitrary action; besides, PPI is now a party-plaintiff in the action; and (c)
plaintiffs have paid the correct filing fees since "the value of the case cannot be
estimated." 18
G.R. No. 88353
Unable to accept the above Order, herein petitioners CB and Jose B. Fernandez, Jr.
filed with respondent Court of Appeals on 11 January 1988 a petition for certiorari with
preliminary injunction 19 to annul the 21 September and 27 November 1987 Orders of
the respondent Judge, restrain the implementation of the same and nullify the writ of
preliminary injunction. They contend therein that:
1. The trial court's injunctive order and writ are anomalous and
illegal because they are directed against CB acts and measures
which constitute no invasion of plaintiff's rights; and
2. The complaint filed was, on its face, dismissible: (a) for failure
to state a cause of action, (b) for being unauthorized by the party
in whose name it purports to have been filed, and (c) for failure of
the purported plaintiff to pay the required filing fees.
Confronted with the "threshold and decisive issue of whether the respondent Judge
gravely abused his discretion when he issued the Writ of Preliminary Injunction to
enjoin petitioner from implementing Monetary Board Resolutions Nos. 649 and 751 for
having been issued arbitrarily and with bad faith," the respondent Court promulgated
the challenged decision dismissing the petition for lack of merit. 20 Respondent Court
ruled that the CB's sudden and untimely announcement of the conservatorship over
PBP eroded the confidence which the banking public had hitherto reposed on the
173
bank and resulted in the bank-run; it then concluded that when the CB "peremptorily
and illtimely (sic) announced" the conservatorship, PBP was not given an opportunity
to be heard since the CB arbitrarily brushed aside administrative due process
notwithstanding PBP's having sufficiently established its inherent corporate right to
autonomously perform its banking activities without undue governmental interference
that would in effect divest its stockholders of their control over the operations of the
bank." It further held that the challenged resolutions of the MB are not just advisory in
character "because the same sought to impose upon the respondent bank petitioners'
governmental acts that were specifically designed and executed to devise a scheme
that would irreparably divest from the stockholders of the respondent bank control of
the same."
The motion filed by petitioners for the reconsideration of the above decision was
denied by the respondent Court in its Resolution of 17 May
1989. 21 On the issue of the non-payment of the correct docket fees, the said court, in
ruling that the correct amount was paid, said that "the instant case is incapable of
pecuniary estimation because the value of the losses incurred by the respondent bank
cannot be calibrated nor pinned down to a specific amount in view of the damage that
may be caused by the appointment of a conservator to its goodwill and standing in the
community."
Undaunted by the adverse decision of the Court of Appeals, petitioners filed with this
Court on 30 July 1989 the instant petition for review under Rule 45 of the Rules of
Court. 22 It is alleged therein that the respondent Court committed grave abuse of
discretion in:
(1) Ignoring petitioners' contention that since PBP did not pay the
correct filing fees, the trial court did not acquire jurisdiction over
the case; hence, pursuant to Manchester Development Corp., et
al. vs. Court of Appeals, et al., G.R. No. 75919, 7 May 1987, 23
the complaint should have been dismissed for lack of jurisdiction
on the part of the court;
(2) . . . ruling on the propriety or impropriety of the
conservatorship as a basis for determining the existence of a
cause of action since the amended complaint does not seek the
annulment or lifting of the conservatorship;
(3) . . . not holding that the amended complaint should have been
dismissed because it was filed in the name of PBP without the
authority of its conservator; and
(4) . . . not setting aside the Order of the trial court granting the
issuance of a writ of preliminary injunction which unlawfully
restrained the CB from exercising its mandated responsibilities
and effectively compelled it to allow the PBP to continue incurring
overdrafts with it.

This petition was docketed as G.R. No. 88353.
On 19 July 1989, this Court required the respondents to comment on the petition. 24
In the Comment 25 filed on 9 October 1989, private respondents maintain that: (a) the
issue of whether or not they paid the correct filing fees involves a question of
correctness of judgment, not grave abuse of discretion; errors of judgment cannot be
the subject of the present petition for certiorari; (b) the complaint and the amended
complaint state sufficient causes of action because they both contain specific
allegations of an illegal, unnecessary, disastrous and repressive conservatorship
conducted contrary to its mandated purpose, and breach of promissory estoppel;
furthermore, the trial court committed no grave abuse of discretion when it found that
the questioned MB Resolutions were arbitrarily issued in contravention of the due
process clause of the Constitution; (c) the "Filing of the complaint without authority
from the conservator is an issue involving an error of judgment; besides, it would be
ridiculous and absurd to require such prior authorization from the conservator for no
one expects him to sanction the filing of a suit against his principal –– the CB;
moreover, Rule 3 of the Rules of Court requires that every action must be prosecuted
and defended in the name of the real party in interest; besides, no administrative
authority, even the CB, can nullify judicial review of administrative action by requiring
that only said administrative authority or its designated conservator can file suit for
judicial review of its actuation; and (d) the writ of preliminary injunction was properly
issued.
Petitioners filed a Reply 26 to the Comment on 3 November 1989.
In their Supplemental Comment, private respondents argue that the Manchester rule
is not applicable in the case at bar because what is primarily sought for herein is a writ
of injunction and not an award for damages; it is further alleged that an order denying
a motion to dismiss is neither appealable nor be made the proper subject of a petition
for certiorari absent a clear showing of lack of jurisdiction or grave abuse of discretion.
On 15 February 1990, this Court resolved to give due course to the instant petition
and require the parties to simultaneously file their respective Memoranda, 27 which
they complied with.
On 1 March 1990, petitioners filed an Urgent Motion 28 informing this Court of the fact
that on 6 June 1989, PBP, through Henry Co, proposed another rehabilitation plan
which involved the infusion of fresh capital into PBP by Banque Indosuez (Bangue)
and the AFP-Retirement and Separation Benefits Systems (ARSBS). Under said
proposal, all existing law suits of PBP against the Central Bank and the PBP
Conservator, and vice-versa, shall be withdrawn upon approval and implementation of
the plan. The plan was approved by the Monetary Board in its Resolution No. 497
dated 23 June 1989. However, before the mechanics of the rehabilitation plan could
be threshed out among the parties, a "quarrel" developed between Henry and Luis Co,
who both have controlling interests in PBP. Luis accused Henry of "serious
manipulations" in PBP and both steadfastly refused to settle their differences
174
notwithstanding efforts of mediators, including prospective investors. Eventually, the
prospective investors, in a letter dated 20 November 1989, advised the Central Bank
that they are withdrawing their offer to infuse capital in PBP and that they have
terminated all discussions with the Co family.
Petitioner further allege that with the withdrawal of Banque Indosuez and RSBS, the
rehabilitation plan for PBP is no longer feasible. Meanwhile, the bank's overdraft with
the Central Bank continues to rise. As of 13 February 1990, PBP's overdraft with the
CB increased to P1.233 billion. If the injunction is not lifted, PBP will continually bleed
the CB because of the former's liability to discharge its responsibilities under the law.
G.R. No. 92943
Pursuant to the powers and authority conferred upon her by the Central Bank, Atty.
Leonida Tansinsin-Encarnacion, in her capacity as conservator, instituted reforms
aimed at making PBP more viable. With this purpose in mind, she started reorganizing
the bank's personnel and committees.
In order to prevent her from continuing with the reorganization, PBP filed on 24
October 1987, or after it obtained a writ of preliminary injunction in Civil Case No.
17692, an Omnibus Motion asking the trial court for an order:
(a) reinstating PBP officers to their original positions and restoring the bank's standing
committees to their respective compositions prior to said reorganization; (b) enjoining
the lease of any portion of the bank's space in Producers Bank Centre building to third
parties and the relocation of departments/offices of PBP as was contemplated; and (c)
to hold, after an opportunity to be heard is given her, said conservator in contempt of
court for disobedience of and resistance to the writ of injunction. An opposition to the
contempt charge was later filed by said petitioner.
Subsequently, upon its inclusion as party-plaintiff via the amended complaint, PPI filed
on 4 November 1987 a motion asking the lower court to order the Central Bank and its
agents to restore to PPI the administration of the three (3) buildings earlier assigned to
PBP pending the lifting of the conservatorship. PPI claimed that such transfer was
necessary to prevent the rental income of said buildings being dissipated by the
conservator.
On 17 November 1987, both PBP and PPI filed a motion praying:
(1) that the CB Conservator be ordered to publish PBP's financial
statement for the last quarter of 1987 and every quarterly
statement thereafter during the pendency of this case, with the
following claims of plaintiff PBP against the Central Bank, to wit:
(a) Interest in unconscionable rates of CB
overdrawing illegally paid by the CB

conservators to CB –– now totaling
P56,002,000.00,
(b) Penalties on reserve deficiencies illegally
paid by the CB conservators to CB –– now
totaling P20,657,000.00,
(c) Penalties on reserve deficiencies not yet
paid but which the conservator has booked
as liabilities –– now totaling P31,717,000.00,
(d) Losses of operation by the CB
conservators from January 31, 1984 to
October 31, 1987 –– now totaling
P461,092,000.00
as "suspense" accounts; and (2) that the CB conservator be
ordered to carry those "suspense" accounts in the books of PBP.
The following day, respondent Judge issued an Order (a) requiring conservator
Tansinsin-Encarnacion to reinstate PBP officers to their original positions prior to the
reorganization of the bank's personnel and restore PBP's standing committees to their
original compositions, and (b) restraining her from leasing out to third parties any
portion of PBP's space in the Producers Bank Centre building. However, respondent
Judge held in abeyance the contempt proceedings against the conservator pending
her immediate compliance with the Order.
On 22 December 1987, respondent Judge granted PPI's motion for an order
transferring to it the administration of the three (3) buildings assigned to PBP. A
motion for reconsideration of this order was filed by petitioners but was subsequently
denied by respondent Judge in the Order of 4 October 1988.
A second Order, issued by respondent Judge on the same day, 22 December 1987,
directed conservator Tansinsin-Encarnacion to publish the financial statement of PBP
in the manner prayed for in the aforesaid 17 November 1987 motion. The motion to
reconsider this Order was denied by respondent Judge on 3 October 1988.
On several occasions thereafter, conservator Tansinsin-Encarnacion caused the
publication of PBP's financial statement as required by regulations, without, however,
carrying the items enumerated by the trial court as "suspense accounts."
Consequently, two (2) contempt charges were filed against her, one for the 3 February
1988 publication in the Manila Standard of PBP's statement of condition as of 29
December 1987 and the other for the 29 July 1988 publication in the Daily Globe of
the bank's statement as of 30 June 1988. Oppositions to both charges of contempt
were filed.
175
On 9 November 1988, respondent Judge declared said conservator guilty of contempt
of court on three (3) counts and imposed upon her a fine of P1,000.00 for each count
of contempt. The latter asked for reconsideration of the order but the respondent
Judge denied the same.
Another contempt charge against her was filed for publishing the statement of
condition of PBP (as of 13 September 1988) in the 9 November 1988 issue of the
Daily Globe without carrying the alleged "suspense accounts." She was again found
guilty as charged and her motion for reconsideration was denied. Finding no other
adequate relief, Tansinsin-Encarnacion filed with this Court on 11 January 1989 a
petition for certiorari against respondent Judge, Henry L. Co and the law firm of
Quisumbing, Torres and Evangelista. This case was docketed as G.R. No. 86526.
She prays therein for judgment declaring respondent judge to be without jurisdiction to
entertain both the complaint and amended complaint in Civil Case No. 17692;
declaring null and void all his orders, specially the contempt orders; and finding
respondent Judge and respondent lawyers guilty of violating their respective oaths of
office. 29
On 8 February 1989, this Court resolved to refer said petition to the Court of Appeals
which docketed it as C.A.-G.R.-SP No. 16972.
In her Memorandum submitted to the Court of Appeals, Tansinsin-Encarnacion
alleged that: (1) respondent Judge has no jurisdiction over Civil Case No. 17692
because its filing was not authorized by the petitioner or the conservator in violation of
Section 28-A of R.A. No. 265, as amended, it was filed after the ten (10) day period
prescribed by Section 29 of R.A. No. 265, as amended, and the correct docket fees
were not paid; (2) respondent Judge illegally ordered her to return to PPI the
administration of the bank's three (3) properties, contrary to his own writ of preliminary
injunction and earlier order to make the bank viable, and to publish the alleged
"suspense accounts" contrary to Section 28-A of R.A. No. 265, as amended, the writ
of preliminary injunction and her constitutional right to silence; (3) respondent Judge
erred in declaring her in contempt of court notwithstanding his lack of jurisdiction over
the case and failure to set any date for the hearing and reception of evidence, in
violation of her right to due process of law; and (4) respondents Judge and lawyers
are administratively liable for their grossly illegal actuations and for depriving the
Government of at least P13.2 million in filing fees. 30
In its decision dated 17 January 1990, the Court of Appeals (Twelfth Division) 31
dismissed the petition; while finding the claim of lack of jurisdiction to be without merit,
the said court nonetheless gave the following exception:
. . . except that plaintiffs in Civil Case No. 17692, within 15 days
from receipt of a copy of this Decision, shall file the corresponding
amendment to their amended complaint in said case, stating a
specific amount "to fully repair the damages inflicted on PBP
consisting of losses of operation and the conservator's bank
frauds and abuses", in the prayer of their amended complaint.
Thereafter, the Clerk of Court of the lower court and/or his duly

authorized Docket Clerk of Court in charge, should determine the
amount found due, which should be paid by complainants within
the applicable prescriptive or reglementary period, failure of which
said claims for damages shall be dismissed.
In disposing of the issues raised, respondent Court merely adopted with approval the
ruling of the respondent Judge on the question of jurisdiction and cited the decision of
the Court of Appeals in C.A.-G.R. SP No. 13624 (subject of G.R. No. 88353),
sustaining the respondent Judge's ruling. As to the filing of the complaint after the
lapse of the 10-day period provided for in Section 29 of R.A. No. 265, it ruled that the
Section does not apply because the complaint essentially seeks to compel the
conservator to perform his duties and refers to circumstances and incidents which
transpired after said 10-day period.
On the issue of lack of jurisdiction for non-payment of correct filing fees, to
which an exception was made in the dispositive portion, the respondent
Court found the same to be "partly" meritorious. It agreed with petitioner that
while the other losses and damages sought to be recovered are incapable
of pecuniary estimation, the damages inflicted on PBP due to losses of
operation and the conservator's bank frauds and abuses were in fact
pegged at P108,479,771.00 in paragraph 26 of the amended complaint.
This specific amount, however, should have been stated in the prayer of the
complaint. It also held that the Manchester case "has been legally construed
in the subsequent case of Sun Insurance Office Ltd. 32 and the case of
Filipinas Shell Petroleum Corp. 33 to the effect that applying the doctrine
initiated in the case of Manchester, together with said subsequent thereto
(sic), plaintiffs in Civil Case No. 17692 should be given a reasonable time to
amend their complaint, more particularly, to state in their prayer in the
amended complaint the specific amount of damages . . ."
On the orders of contempt and the reasons therefor, respondent Court merely stated:
. . . Generally, when the court has jurisdiction over the subject
matter and of the person, decisions upon or questions pertinent to
the cause are decisions within its jurisdiction, and however,
irregular or erroneous they may be, they cannot be corrected by
certiorari Whether the court's conclusions was based merely on
speculations and conjecture, or on a misapprehension of facts
contrary to the documents and exhibits of the case, is not for us to
determine in a petition for certiorari wherein only issues of
jurisdiction may be raised. . . . Thus, the instant petition cannot
prosper.
and opined that under the Rules of Court, a judgment of contempt may be
questioned on appeal and not on certiorari.
176
Finally, on the administrative liability of the respondent Judge and the lawyers, the
respondent Court declared the claim to be without merit.
Petitioner's motion to reconsider the decision having been denied in the 2 April 1990
Resolution of the respondent Court, 34 she filed with this Court a petition under Rule
45 of the Rules of Court, which was docketed as G.R. No. 92943. Petitioner Claims
that respondent Court grossly erred in confirming/affirming the allegedly void Orders of
respondent Judge which denied the motion to dismiss the complaint and granted the
writ of preliminary injunction, restating in this regard the issues raised by the CB in
G.R.
No. 88353, and in holding her in contempt of court on four occasions. As to the last
ground, she asserts that the Orders were issued in violation of the Rules of Court and
infringed her right to due process since there was no hearing on the motions for
contempt, except for the third motion wherein respondent Judge immediately ordered
the movant to present evidence.
In their Comment, 35 filed in compliance with Our Resolution 21 May 1990, private
respondents practically reiterated the arguments in their Comment to the petition in
G.R. No. 88353; in addition, more specifically on the issue of contempt, they assert
that while the motions for contempt were set for hearing, there is no showing that the
scheduled hearings actually took place. Besides, the remedy to question a contempt
order is an appeal; 36 since petitioner did not appeal the questioned orders, the same
became final and executory. 37
After petitioner filed a Reply and private respondents submitted their Rejoinder
thereto, this Court gave due course to the petition.
THE ISSUES
The basic issue in these cases is whether or not the respondent Court committed
reversible error in affirming the challenged Orders of the respondent Judge. This
necessarily calls for a determination of whether or not the respondent Judge
committed grave abuse of discretion amounting to lack of jurisdiction:
(1) In not dismissing Civil Case No. 17692 on the following
grounds: (a) lack of legal. personality to bring the action as the
same was filed in the name of the PBP without the authority of the
conservator;
(b) failure of the complaint and amended complaint to state a
cause of action; and (c) non-payment of the correct amount of
docket fee in violation of the rule enunciated in Manchester
Development Corp. vs. Court of Appeals, et al.;
(2) In granting the writ of preliminary injunction; and
(3) In issuing the assailed Orders in G.R. No. 92943.

DISCUSSION
We shall take up the issues sequentially.
1. PBP has been under conservatorship since 20 January 1984. Pursuant to Section
28-A of the Central Bank Act, 38 a conservator, once appointed, takes over the
management of the bank and assumes exclusive powers to oversee every aspect of
the bank's operations and affairs. Petitioners now maintain that this power includes
the authority to determine "whether or not to maintain suit in the bank's name." 39 The
trial court overruled this contention stating that the section alluded to "does not prohibit
the Board of Directors of a bank to file suit to lift the conservatorship over it, to
question the validity of the conservator's fraudulent acts and abuses and the arbitrary
action of the conservator's principal –– the Monetary Board of the Central Bank. The
conservator cannot be expected to question his own continued existence and acts. He
cannot be expected to file suit to annul the action of his principal . . . or a suit that
would point out the ill-motivation, the disastrous effects of the conservatorship and the
conservator's bank frauds and abuses as alleged in the complaint." 40
Obviously, the trial court was of the impression that what was sought for in Civil Case
No. 17692 is the lifting of the conservatorship because it was arbitrarily and illegally
imposed. While it may be true that the PBP devoted the first 38 pages of its 47-page
complaint and amended complaint to what it considers an unwarranted, ill-motivated,
illegal, unnecessary, and unjustified conservatorship, it, nevertheless, submitted to the
same. There is nothing in the amended complaint to reflect an unequivocal intention to
ask for its lifting. Of course, as subsequent maneuvers would show, PBP sought to
accomplish the lifting thereof through surreptitious means. That such action was not,
on its face, filed to have the conservatorship lifted, is best evidenced by PBP's prayer
for a judgment "ordering defendant Central Bank's conservator to restore the viability
of PBP as mandated by Section 28-A of R.A. No. 265 . . ." 41 Unfortunately too,
respondent Court was easily misled into believing that the amended complaint sought
the lifting of the conservatorship. Thus, although the matter was not specifically raised
in issue and clearly unnecessary for the determination of the issues squarely raised,
the respondent Court opined:
It is Our sober assessment that the respondent bank was not
given an opportunity to be heard when the Central Bank
peremptorily and illtimely (sic) announced the appointment of a
conservatorship over the latter (bank) for which reason We
believe that administrative due process was arbitrarily brushed
aside to the prejudice of the said bank. . . .
If it were to lift the conservatorship because it was arbitrarily imposed, then the case
should have been dismissed on the grounds of prescription and lack of personality to
bring the action. Per the fifth paragraph of Section 29 of the Central Bank Act, as
amended by Executive Order No. 289, the actions of the MB may be assailed in an
appropriate pleading filed by the stockholders of record representing the majority of
the capital stock within ten (10) days from receipt of notice by the said majority
177
stockholders of the order placing the bank under conservatorship. The pertinent
portion of said paragraph reads as follows:
The provisions of any law to the contrary notwithstanding, the
actions of the Monetary Board under this Section, Section 28-A,
and the second paragraph of section 34 of this Act shall be final
and executory, and can be set aside by a court only if there is
convincing proof, after hearing, that the action is plainly arbitrary
and made in bad faith: Provided, That the same is raised in an
appropriate pleading filed by the stockholders of record
representing the majority of the capital stock within ten (10) days
from the date the receiver takes charge of the assets and
liabilities of the bank or non-bank financial intermediary
performing quasi-banking functions or, in case of conservatorship
or liquidation, within ten (10) days from receipt of notice by the
said majority stockholders of said bank or non-bank financial
intermediary of the order of its placement under conservatorship
or liquidation. . . .
The following requisites, therefore, must be present before the order of
conservatorship may be set aside by a court:
1. The appropriate pleading must be filed by the stockholders of
record representing the majority of the capital stock of the bank in
the proper court;
2. Said pleading must be filed within ten (10) days from receipt of
notice by said majority stockholders of the order placing the bank
under conservatorship; and
3. There must be convincing proof, after hearing, that the action is
plainly arbitrary and made in bad faith. 42
In the instant case, PBP was placed under conservatorship on 20 January 1984. The
original complaint in Civil Case No. 17692 was filed only on 27 August 1987, or three
(3) years, seven (7) months and seven (7) days later, long after the expiration of the
10-day period deferred to above. It is also beyond question that the complaint and the
amended complaint were not initiated by the stockholders of record representing the
majority of the capital stock. Accordingly, the order placing PBP under conservatorship
had long become final and its validity could no longer be litigated upon before the trial
court. Applying the original provision of the aforesaid Section 29 of the Central Bank
Act, this Court, in Rural Bank of Lucena, Inc. vs. Arca, et al., 43 ruled that:
Nor can the proceedings before Judge Arca be deemed a judicial
review of the 1962 resolution No. 122 of the Monetary Board, if
only because by law (Section 29, R.A. 265) such review must be
asked within 10 days from notice of the resolution of the Board.
 178

The original complaint in Civil Case No. 17692 was not initiated by the majority of the
stockholders, hence it should have been dismissed. However, confronted with this
Between the adoption of Resolution No. 122 and the challenged
fatal flaw, counsel for PBP, through shrewd maneuvering, attempted to save the day
order of Judge Arca, more than one year had elapsed. Hence, the
by impleading as co-plaintiff a corporation, the PPI, which was not under
validity of the Monetary Board's resolution can no longer be
conservatorship. Unfortunately, the maneuver was crudely and imperfectly executed.
litigated before Judge Arca, whose role under the fourth
Except for the inclusion of its name, nothing new was actually added to the original
paragraph of section 29 is confined to assisting and supervising
complaint in terms of causes of action and reliefs for PPI. The amendment then was
the liquidation of the Lucena bank.
an exercise in futility. We cannot, however, subscribe to the petitioner's view that: (a)
once a bank is placed under conservatorship, no action may be filed on behalf of the
This rule is still good law notwithstanding the amendment to Section 29 which bank without prior approval of the conservator, and (b) since in this case such
expands its scope by including the action of the MB under Section 28-A of the Act on approval was not secured prior to the filing of Civil Case No. 17692, the latter must
the appointment of a conservator. also be dismissed on that ground. No such approval is necessary where the action
was instituted by the majority of the bank's stockholders. To contend otherwise would
be to defeat the rights of such stockholders under the fifth paragraph of Section 29 of
It was precisely an awareness of the futility of any action to set aside the
the Central Bank Act. It must be stressed here that a bank retains its juridical
conservatorship which prompted PBP to limit its action to a claim for damages and a
personality even if placed under conservatorship; 44 it is neither replaced nor
prayer for an injunction against the implementation of MB Resolution Nos. 649 and
substituted by the conservator who, per Section 28-A of the Central Bank Act, as
751. However, to make it appear that it had a meritorious case and a valid grievance
amended by P.D. No. 1932, shall only:
against the Central Bank, it wandered long into the past and narrated a sad story of
persecution, oppression and injustice since the inception of the conservatorship ––
obviously to gain the sympathy of the court, which it eventually obtained. . . . take charge of the assets, liabilities, and the management of
that institution, collect all monies and debts due said institution
and exercise all powers necessary to preserve the assets of the
The next crucial question that suggests itself for resolution is whether an action for
institution, reorganize the management thereof, and restore its
damages arising from the MB's act of placing the PBP under conservatorship and the
viability. He shall have the power to overrule, or revoke the
acts of the conservator, and to enjoin the MB from implementing resolutions related or
actions of the previous management and board of directors . . .,
incident to, or in connection with the conservatorship, may be brought only for and in
any provision of law to the contrary notwithstanding, and such
behalf of the PBP by the stockholders on record representing the majority of the
other powers as the Monetary Board shall deem necessary.
capital stock thereof or simply upon authority of its Board of Directors, or by its
Chairman. We hereby rule that as to the first kind of damages, the same may be
claimed only if the MB's action is plainly arbitrary and made in bad faith, and that the Even assuming for the sake of argument that the action was properly brought by an
action therefor is inseparable from an action to set aside the conservatorship. In other authorized party, the same must nevertheless be dismissed for failure of the plaintiffs
words, the same must be filed within ten (10) days from receipt of notice of the order therein to pay the correct docket fees, pursuant to Manchester Development Corp. vs.
placing the bank under conservatorship. Otherwise, the provision of the fifth paragraph Court of Appeals, et al.; 45 the said case was decided by this Court on 7 May 1987,
of Section 29 of the Central. Bank Act could be rendered meaningless and illusory by exactly three (3) months and twenty (20) days before the filing of the original complaint
the bank's filing, beyond the prescribed ten-day period, of an action ostensibly and five (5) months and eighteen (18) days before the filing of the Amended
claiming damages but in reality questioning the conservatorship. As to actions for the Complaint in Civil Case No. 17692. We ruled therein that:
second kind of damages and for injunction to restrain the enforcement of the CB's
implementing resolutions, said fifth paragraph of Section 29 of the Central Bank Act,
The Court acquires jurisdiction over any case only upon the
as amended, equally applies because the questioned acts are but incidental to the
payment of the prescribed docket fee. An amendment of the
conservatorship. The purpose of the law in requiring that only the stockholders of
complaint or similar pleading will not thereby vest jurisdiction in
record representing the majority of the capital stock may bring the action to set aside a
the Court, much less the payment of the docket fee based on the
resolution to place a bank under conservatorship is to ensure that it be not frustrated
amounts sought in the amended pleading. The ruling in the
or defeated by the incumbent Board of Directors or officers who may immediately
Magaspi case [115 SCRA 193], in so far as it is inconsistent with
resort to court action to prevent its implementation or enforcement. It is presumed that
this pronouncement is overturned and reversed.
such a resolution is directed principally against acts of said Directors and officers
which place the bank in a state of continuing inability to maintain a condition of liquidity
adequate to protect the interest of depositors and creditors. Indirectly, it is likewise The respondent Judge, in ruling that PBP and PPI had paid the correct docket fee of
intended to protect and safeguard the rights and interests of the stockholders. P102.00, said that "the value of the case cannot be estimated" since what is sought is
Common sense and public policy dictate then that the authority to decide on whether an injunction against the enforcement of the challenged resolutions of the MB; in
to contest the resolution should be lodged with the stockholders owning a majority of short, the claim for damages is merely incidental. Upon the other hand, respondent
the shares for they are expected to be more objective in determining whether the
resolution is plainly arbitrary and issued in bad faith.

Court, in its Resolution of 17 May 1989 in C.A.-G.R. SP No. 13624, ruled that the case
is "incapable of pecuniary estimation" because the value of the losses incurred by the
PBP "cannot be calibrated nor pinned down to a specific amount in view of the
damage that may be caused by the appointment of a conservator to its goodwill and
standing in the community." 46
Both conclusions are unfounded and are the result of a misapprehension of the
allegations and causes of action in both the complaint and amended complaint.
While PBP cleverly worded its complaint in Civil Case No. 17692 to make it appear as
one principally for injunction, deliberately omitting the claim for damages as a specific
cause of action, a careful examination thereof bears that the same is in reality an
action for damages arising out of the alleged "unwarranted, ill-motivated and illegal
conservatorship," or a conservatorship which "was utterly unnecessary and
unjustified," and the "arbitrary" appointment of a conservator. 47 Thus, as stated
earlier, it devoted the bulk of its petition to detailed events, occurrences and
transactions in support thereof and patiently enumerated the losses it sustained and
suffered. The pertinent portions of paragraph 27 of both the original and amended
complaints read as follows:
27. The record of the Central Bank –– conservatorship of PBP
clearly shows that it was responsible for the losses.
xxx xxx xxx
[Then follows an enumeration, from (a) to (u), of particular acts
causing or resulting in losses, most of which are specifically
stated]
xxx xxx xxx
(v) Total of only the foregoing mentioned and only of those that
can be quantified is P108,479,771.00.
And that excludes loss of profits that PBP
could have realized if that disastrous
conservatorship had not been imposed on it
and loss of goodwill.
The causes for these abuses of the
conservators are course graft and corruption
of the conservators aside from fault in the
system which denies private enterprise.
(emphasis supplied)
179
xxx xxx xxx
These are the very damages referred to in the prayer:
. . . to fully repair the damages inflicted on PBP consisting of
losses of operation and the conservators' bank frauds and
abuses, . . .
but not specified therein. To this Court's mind, this was done to evade the
payment of the corresponding filing fees which, as computed by petitioner
on the basis alone of the specified losses of P108,479,771.00, would
amount to about P 437,000.00. 48 The PBP then clearly acted with manifest
bad faith in resorting to the foregoing clever strategy to avoid paying the
correct filing fees. We are thus constrained to reiterate Our pronouncements
in the Manchester case:
The Court cannot close this case without making the observation
that it frowns at the practice of counsel who filed the original
complaint in this case of omitting any specification of the amount
of damages in the prayer although the amount of over P78 million
is alleged in the body of the complaint. This is clearly intended for
no other purpose than to evade the payment of the correct filing
fees if not to mislead the docket clerk in the assessment of the
filing fee. . . .
The respondent Court itself, in its decision of 17 January 1990 in C.A-G.R. SP No.
16972, 49 confronted by the same issue, but perhaps unaware of its Resolution of 17
May 1989 in C.A.-G.R. SP No. 13624 aforementioned, ruled that PBP and PPI are
liable for the filing fees on the claim for damages. It even directed PBP and PPI to file
"the corresponding amendment to their amended complaint in said case stating a
specific amount 'to fully repair the damages inflicted on PBP consisting of losses of
operation and the conservator's bank frauds and abuses' . . .," after which the Clerk of
Court of the lower court or his duly authorized docket clerk should determine the
amount found due, which said plaintiffs shall pay "within the applicable prescriptive or
reglementary period,
. . ." 50 The 17 January 1990 ruling, clearly reversing the earlier one, is of doubtful
propriety in view of the petition for review of the decision in C.A.-G.R. SP No. 13624
filed by the petitioner.
In granting PBP and PPI an opportunity to amend their amended complaint to reflect
the specific amount of damages in the prayer of their Amended Complaint, respondent
Court took refuge under the rule laid down in Sun Insurance Office, Ltd., et al. vs.
Asuncion, et al. 51 and Filipinas Shell Petroleum Corp. vs. Court of Appeals, et al. 52
Of course, it was erroneous for respondent Court to apply these last two (2) cases
which were decided by this Court three (3) months short of two (2) years after the
promulgation of the Manchester decision on 7 May 1987. Accordingly, since the
original complaint in Civil Case No. 17692 was filed on 27 August 1987, the

Manchester doctrine was the controlling and applicable law. The lower court had no
choice but to apply it when its attention was called by the petitioner.
Moreover, even granting for the sake of argument that Sun Insurance and Pilipinas
Shell 53 may apply in this case, We should not lose sight of the fact that in the former,
this Court categorically stated:
1. It is not simply the filing of the complaint or appropriate
initiatory pleading, but the payment of the prescribed docket fee,
that vests a trial court with jurisdiction over the subject-matter or
nature of the action. Where the filling of the initiatory pleading is
not accompanied by payment of the docket fee, the court may
allow the payment of the fee within a reasonable time but in no
case beyond the applicable prescriptive or reglementary period.
The prescriptive period therein mentioned refers to the period within which a specific
action must be filed. It means that in every case, the docket fee must be paid before
the lapse of the prescriptive period. Chapter 3, Title V, Book III of the Civil Code is the
principal law governing prescription of actions.
There can be no question that in the instant case, PBP's claims for damages arise out
of an injury to its rights. Pursuant to Article 1146 of the Civil Code, the action therefor
must be initiated within four (4) years from the time the cause of action accrued. Since
the damages arose out of the alleged unwarranted, ill-motivated, illegal, unnecessary
and unjustified conservatorship, the cause of action, if any, first accrued in 1984 and
continued until 27 August 1987, when the original complaint was filed. Even if We are
to assume that the four-year period should start running on 27 August 1987, that
period lapsed on 27 August 1991. There is no showing that PBP paid the correct filing
fee for the claim within the prescribed period. Hence, nothing can save Civil Case No.
17692 from being dismissed.
2. And now on the issue of the writ of preliminary injunction.
The challenged Orders of the trial court granting the application for a writ of
preliminary injunction and the assailed decision of the respondent Court in C.A. G.R.
No. 13624 clearly betray a prejudgment of the case. In both instances, not only did
said courts declare MB Resolutions Nos. 649 and 751 to be arbitrary, both also
declared the conservatorship to have been issued in violation of PBP's right to
administrative due process, which the CB "arbitrarily brushed aside to the prejudice" of
the latter. The said courts further concluded that "the sudden and untimely
announcement by the Central Bank that respondent Producers Bank will be under a
conservatorship that will oversee its operations worked havoc over the confidence that
the public had hitherto reposed on respondent bank so that the majority of its
depositors over-reacted and rashly withdrew their accounts from said bank, thus it
incurred a loss of P593.707 million or 59.5% of its deposits."
180
Thus, save only for the determination of the full extent of PBP's claim for damages,
said courts have, at the most, decided or, at the very least, prejudged the case.
Courts, notwithstanding the discretion given to them, should avoid issuing writs of
preliminary injunction which in effect dispose of the main case without a trial. 54 We
do not then hesitate to rule that there was grave abuse of discretion in the issuance of
the writ of preliminary injunction.
Besides, there was neither arbitrariness nor bad faith in the issuance of MB
Resolutions Nos. 649 and 751. It must be stressed in this connection that the banking
business is properly subject to reasonable regulation under the police power of the
state because of its nature and relation to the fiscal affairs of the people and the
revenues of the state. 55 Banks are affected with public interest because they receive
funds from the general public in the form of deposits. Due to the nature of their
transactions and functions, a fiduciary relationship is created between the banking
institutions and their depositors. Therefore, banks are under the obligation to treat with
meticulous care and utmost fidelity the accounts of those who have reposed their trust
and confidence in them. 56
It is then Government's responsibility to see to it that the financial interests of those
who deal with banks and banking institutions, as depositors or otherwise, are
protected. In this country, that task is delegated to the Central Bank which, pursuant to
its Charter, 57 is authorized to administer the monetary, banking and credit system of
the Philippines. Under both the 1973 and 1987 Constitutions, the Central Bank is
tasked with providing policy direction in the areas of money, banking and credit;
corollarily, it shall have supervision over the operations of banks. 58 Under its charter,
the CB is further authorized to take the necessary steps against any banking
institution if its continued operation would cause prejudice to its depositors, creditors
and the general public as well. This power has been expressly recognized by this
Court. In Philippine Veterans Bank Employees Union-NUBE vs. Philippine Veterans
Bank, 59 this Court held that:
. . . Unless adequate and determined efforts are taken by the
government against distressed and mismanaged banks, public
faith in the banking system is certain to deteriorate to the
prejudice of the national economy itself, not to mention the losses
suffered by the bank depositors, creditors, and stockholders, who
all deserve the protection of the government. The government
cannot simply cross its arms while the assets of a bank are being
depleted through mismanagement or irregularities. It is the duty of
the Central Bank in such an event to step in and salvage the
remaining resources of the bank so that they may not continue to
be dissipated or plundered by those entrusted with their
management.
One important measure adopted by the government to protect the public against
unscrupulous practices of some bankers is to require banking institutions to set up
reserves against their deposit liabilities. These reserves, pegged at a certain
percentage of the volume of deposit liability, is that portion of the deposit received by a

banking institution which it cannot use for loans and investments. The reserve
requirement, which ordinarily takes the form of a deposit with the Central Bank, is one
means by which the government ensures the liquidity of banking institutions. 60
These reserve accounts maintained by banking institutions with the Central Bank also
serve as a basis for the clearing of checks and the settlement of interbank balances.
61
The need to maintain these required reserves cannot be over-emphasized. Thus,
where over-drawings on deposit accounts (regardless of amount) are incurred, R.A.
No. 265 requires the delinquent bank to:
. . . fully cover said overdraft not later than the next clearing day:
Provided, Further, That settlement of clearing balances shall not
be effected for any account which continue to, be overdrawn for
five consecutive banking days until such time as the overdrawing
is fully covered or otherwise converted into an emergency loan or
advance pursuant to the provisions of Sec. 90 of this Act.
Provided, Finally, That the appropriate clearing office shall be
officially notified of banks with overdrawn balances. Banks with
existing overdrafts with the Central Bank as of the effectivity of
this amended section shall, within such period as may be
prescribed by the Monetary Board, either convert the overdraft
into an emergency loan or advance with a plan of payment, or
settle such overdrafts, and that, upon failure to comply herewith,
the Central Bank shall take such action against the bank as may
be warranted under this Act. 62 [Emphasis supplied.]
The fact that PBP is grossly overdrawn on its reserve account with the CB (up to
P1.233 billion as of 13 February 1990) is not disputed by PBP. This enormous
overdraft evidences the patent inability of the bank's management to keep PBP liquid.
This fact alone sufficiently justifies the remedial measures taken by the Monetary
Board.
MB Resolutions Nos. 649 and 751 were not promulgated to arbitrarily divest the
present stockholders of control over PBP, as is claimed by the latter. The same
contemplates an effective and viable plan to revive and restore PBP. It is to be noted
that before issuing these resolutions, the MB gave the management of PBP ample
opportunity (from 30 March 1984 to June of 1987) to submit a viable rehabilitation plan
for the bank.
MB Resolution Nos. 751 merely reiterated the requirement set forth in Resolution No.
649 for PBP to identify and submit the list of new stockholders who will infuse new
capital into the bank for CB approval. In this Resolution, the MB gave PBP's
stockholders one (1) week from notice within which to signify their acceptance or
rejection of the proposed rehabilitation plan.
181
The foregoing resolutions refer to a recommended rehabilitation plan. What was
conveyed to PBP was a mere proposal. There was nothing in the resolutions to
indicate that the plan was mandatory. On the contrary, PBP was given a specific
period within which to accept or reject the plan. And, as petitioners correctly pointed
out, the plan was not self-implementing. The warning given by the MB that should said
proposal be rejected, the CB "will take appropriate alternative actions on the matter,"
does not make the proposed rehabilitation plan compulsory. Whether or not there is a
rehabilitation plan agreed upon between PBP and the MB, the CB is authorized under
R.A. No. 265 to take appropriate measures to protect the interest of the bank's
depositors as well as of the general public.
Furthermore, the assignment of claims to PDIC and the subsequent dacion en pago
(payment of credit through shares) do not divest the present stockholders of control
over PBP. As may be readily observed from the terms of Resolution No. 645, the
shares which shall be issued to PDIC under the dacion are preferred, non-voting and
non-participating shares. Hence, except for the instances enumerated in the
Corporation Code where holders of non-voting shares are given the right to vote,
PDIC shall have no hand in the bank's operation or business. In any event, these
preferred shares will eventually be sold to private parties or new stockholders as soon
as they are identified by PBP and approved by the CB. Prior approval by the CB of the
stockholders is necessary screening purposes.
There is nothing objectionable to the actions of the MB. We, therefore, find to be
completely without legal or evidentiary basis the contention that the impugned
resolutions are arbitrary, illegal and made in bad faith.
Moreover, respondent Judge acted in complete disregard of Section 107 of R.A. No.
265 when he enjoined the CB from taking appropriate actions against the bank,
"including exclusion of (PBP) from settlement of clearing balances at the Central Bank
clearing house" as warranted by law. By using his own standards, and without
scrutinizing the law, respondent Judge arbitrarily determined when CB may or may not
initiate measures against a bank that cannot maintain its liquidity. He also arbitrarily
and capriciously decided who can continually overdraw from the deposit account with
the CB, to the prejudice of other banking institutions, the banking public and the
government.
3. As could be gleamed from the pleadings in G.R. No. 92943, the respondent Judge,
per his order of 18 November 1987, (a) directed the conservator to restore both the
PBP officers to their original positions prior to the reorganization of the bank's
personnel, and the PBP's standing committees to their original compositions, and (b)
restrained her from leasing out to a third party any portion of PBP's space in the
Producers Bank Centre; per his Order of 22 December 1987, respondent Judge
granted PPI's motion for an order transferring to the latter the administration of the
three (3) buildings; and per the Order of 22 December 1987, he granted the motion
directing the conservator to publish the financial statement of the PBP in the manner
prayed for by the latter.
 182

It is clear from the said section that it is necessary that there be a charge and that the
party cited for contempt be given an opportunity to be heard. The reason for this is
The foregoing Orders were issued without due hearing. Moreover, these reliefs were
that contempt partakes of the nature of a criminal offense. In the instant case, each
not prayed for in the Amended Complaint. They were not even covered by any specific
motion for contempt served as the charge. It is settled that a charge may be filed by a
allegations therein. Except for the prohibition to lease, the rest partook of the nature of
fiscal, a judge, or even a private person. 64 Petitioner Tansinsin-Encarnacion filed
a preliminary mandatory injunction which deprived the conservator of her rights and
oppositions thereto. Thereafter, it was the duty of the respondent Judge to hold a
powers under Section 28-A of R.A. No. 265 and, in effect, set aside the
hearing on the motions. Respondent Judge deliberately did away with the hearing and
conservatorship with PBP itself had earlier accepted. It must be remembered that PBP
this Court finds no justifiable reason therefor.
did not ask, in its Amended Complaint, for the setting aside of the conservatorship. On
the contrary, it even prayed that the conservator be ordered to restore the viability of
PBP as mandated by said Section 28-A. There is, moreover, another reason why the contempt orders must be struck down.
The orders which were supposedly disobeyed and from which the motions for
contempt arose were, as earlier indicated, null and void for having been issued with
The respondent Judge should not have forgotten the settled doctrine that it is improper
grave abuse of discretion amounting to lack of jurisdiction. Such Orders, therefore,
to issue a writ of preliminary mandatory injunction prior to the final hearing, except in
cannot then be characterized as lawful. Consequently, resistance thereto cannot be
cases of extreme urgency, where the right is very clear, where considerations of
punished as contempt 65
relative inconvenience bear strongly in complainant's favor, where there is a willful and
unlawful invasion of plaintiff's right against his protest and remonstrance, the injury
being a continuing one, and where the effect of the mandatory injunction is rather to PREMISES CONSIDERED, the petitions in G.R. Nos. 88353 and 92943 are
re-establish and maintain a pre-existing continuing relation between the parties, GRANTED. The 6 October 1988 decision and 17 May 1989 resolution of the Court of
recently and arbitrarily interrupted by the defendant, than to establish a new relation. Appeals in C.A.-G.R. SP No. 13624 are REVERSED and SET ASIDE. Respondent
63 Judge is ordered to dismiss Civil Case No. 17692. All proceedings undertaken and all
orders issued by respondent Judge are hereby SET ASIDE for being null and void.
The writ of preliminary injunction issued by the trial court in its Order dated 21
It is plain to this Court that respondent Judge ceased to be an impartial arbitrator; he
September 1987 is hereby LIFTED.
became the godfather of PBP and PPI, granting to them practically all that they had
asked for in the motions they filed. Upon the issuance of these Orders, nothing
appeared clearer in the judicial horizon than this –– PBP and PPI had everything in IT IS SO ORDERED.
the bag, so to speak, including the reliefs not even contemplated in their Amended
Complaint. The challenged Orders then were whimsically and arbitrarily issued.

Compounding such detestable conduct is the respondent Judge's issuance, with

undue haste and unusual speed, of the orders of contempt without the proper hearing.
If the conservator could, at all, be liable for contempt, it would be for indirect contempt
punished under Section 3, Rule 71 of the Rules of Court, more specifically item (b) of
the first paragraph which reads:

Sec. 3 Indirect contempts to be punished after charge and

hearing. –– After charge in writing has been filed, and an
opportunity given to the accused to be heard by himself or
counsel, a person guilty of any of the following acts may be
punished for contempt:

xxx xxx xxx

(b) Disobedience of or resistance to a lawful

writ, process, order, judgment, or command
of a court, or injunction granted by a court or
judge, . . .;
 183

29918 ₱ 28,000,000.00
G.R. No. 175914 February 10, 2009
38374 ₱ 12,000,000.00

RUBY SHELTER BUILDERS AND REALTY DEVELOPMENT CORPORATION, 39232 ₱ 1,600,000.00

Petitioner, 39225 ₱ 1,600,000.00
vs.
HON. PABLO C. FORMARAN III, Presiding Judge of Regional Trial Court Branch
21, Naga City, as Pairing Judge for Regional Trial Court Branch 22, Formerly Petitioner could choose to pay off its indebtedness with individual or all five parcels of
Presided By HON. NOVELITA VILLEGAS-LLAGUNO (Retired 01 May 2006), land; or it could redeem said properties by paying respondents Tan and Obiedo the
ROMEO Y. TAN, ROBERTO L. OBIEDO and ATTY. TOMAS A. REYES, following prices for the same, inclusive of interest and penalties:
Respondents.

TCT No. Redemption Price

DECISION
38376 ₱ 25,328,939.00
CHICO-NAZARIO, J.: 29918 ₱ 35,660,800.00
38374 ₱ 28,477,600.00
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court seeking the reversal of the Decision1 dated 22 November 2006 of the Court of 39232 ₱ 6,233,381.00
Appeals in CA-G.R. SP No. 94800. The Court of Appeals, in its assailed Decision,
affirmed the Order2 dated 24 March 2006 of the Regional Trial Court (RTC), Branch 39225 ₱ 6,233,381.00
22, of Naga City, in Civil Case No. RTC-2006-0030, ordering petitioner Ruby Shelter
Builders and Realty Development Corporation to pay additional docket/filing fees,
In the event that petitioner is able to redeem any of the afore-mentioned parcels of
computed based on Section 7(a) of Rule 141 of the Rules of Court, as amended.
land, the Deed of Absolute Sale covering the said property shall be nullified and have
no force and effect; and respondents Tan and Obiedo shall then return the owner’s
The present Petition arose from the following facts: duplicate of the corresponding TCT to petitioner and also execute a Deed of
Discharge of Mortgage. However, if petitioner is unable to redeem the parcels of land
within the period agreed upon, respondents Tan and Obiedo could already present the
Petitioner obtained a loan3 in the total amount of ₱95,700,620.00 from respondents
Deeds of Absolute Sale covering the same to the Office of the Register of Deeds for
Romeo Y. Tan (Tan) and Roberto L. Obiedo (Obiedo), secured by real estate
Naga City so respondents Tan and Obiedo could acquire TCTs to the said properties
mortgages over five parcels of land, all located in Triangulo, Naga City, covered by
in their names.
Transfer Certificates of Title (TCTs) No. 38376,4 No. 29918,5 No. 38374,6 No. 39232,7
and No. 39225,8 issued by the Registry of Deeds for Naga City, in the name of
petitioner. When petitioner was unable to pay the loan when it became due and The Memorandum of Agreement further provided that should petitioner contest,
demandable, respondents Tan and Obiedo agreed to an extension of the same. judicially or otherwise, any act, transaction, or event related to or necessarily
connected with the said Memorandum and the Deeds of Absolute Sale involving the
five parcels of land, it would pay respondents Tan and Obiedo ₱10,000,000.00 as
In a Memorandum of Agreement9 dated 17 March 2005, respondents Tan and Obiedo
liquidated damages inclusive of costs and attorney’s fees. Petitioner would likewise
granted petitioner until 31 December 2005 to settle its indebtedness, and condoned
pay respondents Tan and Obiedo the condoned interests, surcharges and penalties. 10
the interests, penalties and surcharges accruing thereon from 1 October 2004 to 31
Finally, should a contest arise from the Memorandum of Agreement, Mr. Ruben Sia
December 2005 which amounted to ₱74,678,647.00. The Memorandum of Agreement
(Sia), President of petitioner corporation, personally assumes, jointly and severally
required, in turn, that petitioner execute simultaneously with the said Memorandum,
with petitioner, the latter’s monetary obligation to respondent Tan and Obiedo.
"by way of dacion en pago," Deeds of Absolute Sale in favor of respondents Tan and
Obiedo, covering the same parcels of land subject of the mortgages. The Deeds of
Absolute Sale would be uniformly dated 2 January 2006, and state that petitioner sold Respondent Atty. Tomas A. Reyes (Reyes) was the Notary Public who notarized the
to respondents Tan and Obiedo the parcels of land for the following purchase prices: Memorandum of Agreement dated 17 March 2005 between respondent Tan and
Obiedo, on one hand, and petitioner, on the other.

TCT No. Purchase Price

38376 ₱ 9,340,000.00

Pursuant to the Memorandum of Agreement, petitioner, represented by Mr. Sia,
executed separate Deeds of Absolute Sale,11 over the five parcels of land, in favor of
respondents Tan and Obiedo. On the blank spaces provided for in the said Deeds,
somebody wrote the 3rd of January 2006 as the date of their execution. The Deeds
were again notarized by respondent Atty. Reyes also on 3 January 2006.
Without payment having been made by petitioner on 31 December 2005, respondents
Tan and Obiedo presented the Deeds of Absolute Sale dated 3 January 2006 before
the Register of Deeds of Naga City on 8 March 2006, as a result of which, they were
able to secure TCTs over the five parcels of land in their names.
On 16 March 2006, petitioner filed before the RTC a Complaint12 against respondents
Tan, Obiedo, and Atty. Reyes, for declaration of nullity of deeds of sales and
damages, with prayer for the issuance of a writ of preliminary injunction and/or
temporary restraining order (TRO). The Complaint was docketed as Civil Case No.
2006-0030.
On the basis of the facts already recounted above, petitioner raised two causes of
action in its Complaint.
As for the first cause of action, petitioner alleged that as early as 27 December 2005,
its President already wrote a letter informing respondents Tan and Obiedo of the
intention of petitioner to pay its loan and requesting a meeting to compute the final
amount due. The parties held meetings on 3 and 4 January 2006 but they failed to
arrive at a mutually acceptable computation of the final amount of loan payable.
Respondents Tan and Obiedo then refused the request of petitioner for further
dialogues. Unbeknownst to petitioner, despite the ongoing meetings, respondents Tan
and Obiedo, in evident bad faith, already had the pre-executed Deeds of Absolute
Sale notarized on 3 January 2006 by respondent Atty. Reyes. Atty. Reyes, in
connivance with respondents Tan and Obiedo, falsely made it appear in the Deeds of
Absolute Sale that Mr. Sia had personally acknowledged/ratified the said Deeds
before Atty. Reyes.
Asserting that the Deeds of Absolute Sale over the five parcels of land were executed
merely as security for the payment of its loan to respondents Tan and Obiedo; that the
Deeds of Absolute Sale, executed in accordance with the Memorandum of
Agreement, constituted pactum commisorium and as such, were null and void; and
that the acknowledgment in the Deeds of Absolute Sale were falsified, petitioner
averred:
13. That by reason of the fraudulent actions by the [herein respondents], [herein
petitioner] is prejudiced and is now in danger of being deprived, physically and legally,
of the mortgaged properties without benefit of legal processes such as the remedy of
foreclosure and its attendant procedures, solemnities and remedies available to a
mortgagor, while [petitioner] is desirous and willing to pay its obligation and have the
mortgaged properties released.13
184
In support of its second cause of action, petitioner narrated in its Complaint that on 18
January 2006, respondents Tan and Obiedo forcibly took over, with the use of armed
men, possession of the five parcels of land subject of the falsified Deeds of Absolute
Sale and fenced the said properties with barbed wire. Beginning 3 March 2006,
respondents Tan and Obiedo started demolishing some of the commercial spaces
standing on the parcels of land in question which were being rented out by petitioner.
Respondents Tan and Obiedo were also about to tear down a principal improvement
on the properties consisting of a steel-and-concrete structure housing a motor vehicle
terminal operated by petitioner. The actions of respondents Tan and Obiedo were to
the damage and prejudice of petitioner and its tenants/lessees. Petitioner, alone,
claimed to have suffered at least ₱300,000.00 in actual damages by reason of the
physical invasion by respondents Tan and Obiedo and their armed goons of the five
parcels of land.
Ultimately, petitioner’s prayer in its Complaint reads:
WHEREFORE, premises considered, it is most respectfully prayed of this Honorable
Court that upon the filing of this complaint, a 72-hour temporary restraining order be
forthwith issued ex parte:
(a) Restraining [herein respondents] Tan and Obiedo, their agents, privies
or representatives, from committing act/s tending to alienate the mortgaged
properties from the [herein petitioner] pending the resolution of the case,
including but not limited to the acts complained of in paragraph "14", above;
(b) Restraining the Register of Deeds of Naga City from entertaining moves
by the [respondents] to have [petitioner’s] certificates of title to the
mortgaged properties cancelled and changed/registered in [respondents]
Tan’s and Obiedo’s names, and/or released to them;
(c) After notice and hearing, that a writ of preliminary injunction be issued
imposing the same restraints indicated in the next preceding two
paragraphs of this prayer; and
(d) After trial, judgment be rendered:
1. Making the injunction permanent;
2. Declaring the provision in the Memorandum of Agreement
requiring the [petitioner] to execute deed of sales (sic) in favor of
the [respondents Tan and Obiedo] as dacion en pago in the event
of non-payment of the debt as pactum commissorium;
3. Annulling the Deed[s] of Sale for TCT Nos. 29918, 38374,
38376, 39225 and 39232, all dated January 3, 2006, the same
being in contravention of law;
 185

Obiedo. The demolition of the existing structures on the properties was nothing but an
exercise of dominion by respondents Tan and Obiedo.
4. Ordering the [respondents] jointly and solidarily to pay the
[petitioner] actual damages of at least ₱300,000.00; attorney’s
fees in the amount of ₱100,000.00 plus P1,000.00 per court Respondent Tan, thus, sought not just the dismissal of the Complaint of petitioner, but
attendance of counsel as appearance fee; litigation expenses in also the grant of his counterclaim. The prayer in his Answer is faithfully reproduced
the amount of at least ₱10,000.00 and exemplary damages in the below:
amount of ₱300,000.00, plus the costs.
Wherefore, premises considered, it is most respectfully prayed that, after due hearing,
[Petitioner] further prays for such other reliefs as may be proper, just and equitable judgment be rendered dismissing the complaint, and on the counterclaim, [herein
under the premises.14 petitioner] and Ruben Sia, be ordered to indemnify, jointly and severally [herein
respondents Tan and Obiedo] the amounts of not less than ₱10,000,000.00 as
liquidated damages and the further sum of not less than ₱500,000.00 as attorney’s
Upon filing its Complaint with the RTC on 16 March 2006, petitioner paid the sum of
fees. In the alternative, and should it become necessary, it is hereby prayed that
₱13,644.25 for docket and other legal fees, as assessed by the Office of the Clerk of
[petitioner] be ordered to pay herein [respondents Tan and Obiedo] the entire principal
Court. The Clerk of Court initially considered Civil Case No. 2006-0030 as an action
loan of ₱95,700,620.00, plus interests, surcharges and penalties computed from
incapable of pecuniary estimation and computed the docket and other legal fees due
March 17, 2005 until the entire sum is fully paid, including the amount of
thereon according to Section 7(b)(1), Rule 141 of the Rules of Court.
₱74,678,647.00 foregone interest covering the period from October 1, 2004 to
December 31, 2005 or for a total of fifteen (15) months, plus incidental expenses as
Only respondent Tan filed an Answer15 to the Complaint of petitioner. Respondent Tan may be proved in court, in the event that Annexes "G" to "L" be nullified. Other relief
did admit that meetings were held with Mr. Sia, as the representative of petitioner, to and remedies as are just and equitable under the premises are hereby prayed for. 16
thresh out Mr. Sia’s charge that the computation by respondents Tan and Obiedo of
the interests, surcharges and penalties accruing on the loan of petitioner was replete
Thereafter, respondent Tan filed before the RTC an Omnibus Motion in which he
with errors and uncertainties. However, Mr. Sia failed to back up his accusation of
contended that Civil Case No. 2006-0030 involved real properties, the docket fees for
errors and uncertainties and to present his own final computation of the amount due.
which should be computed in accordance with Section 7(a), not Section 7(b)(1), of
Disappointed and exasperated, respondents Tan and Obiedo informed Mr. Sia that
Rule 141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC which took effect
they had already asked respondent Atty. Reyes to come over to notarize the Deeds of
on 16 August 2004. Since petitioner did not pay the appropriate docket fees for Civil
Absolute Sale. Respondent Atty. Reyes asked Mr. Sia whether it was his signature
Case No. 2006-0030, the RTC did not acquire jurisdiction over the said case. Hence,
appearing above his printed name on the Deeds of Absolute Sale, to which Mr. Sia
respondent Tan asked the RTC to issue an order requiring petitioner to pay the correct
replied yes. On 4 January 2006, Mr. Sia still failed to establish his claim of errors and
and accurate docket fees pursuant to Section 7(a), Rule 141 of the Rules of Court, as
uncertainties in the computation of the total amount which petitioner must pay
amended; and should petitioner fail to do so, to deny and dismiss the prayer of
respondent Tan and Obiedo. Mr. Sia, instead, sought a nine-month extension for
petitioner for the annulment of the Deeds of Absolute Sale for having been executed in
paying the loan obligation of petitioner and the reduction of the interest rate thereon to
contravention of the law or of the Memorandum of Agreement as pactum
only one percent (1%) per month. Respondents Tan and Obiedo rejected both
commisorium.
demands.

As required by the RTC, the parties submitted their Position Papers on the matter. On
Respondent Tan maintained that the Deeds of Absolute Sale were not executed
24 March 2006, the RTC issued an Order17 granting respondent Tan’s Omnibus
merely as securities for the loan of petitioner. The Deeds of Absolute Sale over the
Motion. In holding that both petitioner and respondent Tan must pay docket fees in
five parcels of land were the consideration for the payment of the total indebtedness of
accordance with Section 7(a), Rule 141 of the Rules of Court, as amended, the RTC
petitioner to respondents Tan and Obiedo, and the condonation of the 15-month
reasoned:
interest which already accrued on the loan, while providing petitioner with the golden
opportunity to still redeem all or even portions of the properties covered by said
Deeds. Unfortunately, petitioner failed to exercise its right to redeem any of the said It must be noted that under paragraph (b) 2. of the said Section 7, it is provided that
properties. QUIETING OF TITLE which is an action classified as beyond pecuniary estimation
"shall be governed by paragraph (a)". Hence, the filing fee in an action for Declaration
of Nullity of Deed which is also classified as beyond pecuniary estimation, must be
Belying that they forcibly took possession of the five parcels of land, respondent Tan
computed based on the provision of Section 7(A) herein-above, in part, quoted.
alleged that it was Mr. Sia who, with the aid of armed men, on board a Sports Utility
Vehicle and a truck, rammed into the personnel of respondents Tan and Obiedo
causing melee and disturbance. Moreover, by the execution of the Deeds of Absolute
Sale, the properties subject thereof were, ipso jure, delivered to respondents Tan and

Since [herein respondent], Romeo Tan in his Answer has a counterclaim against the
plaintiff, the former must likewise pay the necessary filling (sic) fees as provided for
under Section 7 (A) of Amended Administrative Circular No. 35-2004 issued by the
Supreme Court.18
Consequently, the RTC decreed on the matter of docket/filing fees:
WHEREFORE, premises considered, the [herein petitioner] is hereby ordered to pay
additional filing fee and the [herein respondent], Romeo Tan is also ordered to pay
docket and filing fees on his counterclaim, both computed based on Section 7(a) of
the Supreme Court Amended Administrative Circular No. 35-2004 within fifteen (15)
days from receipt of this Order to the Clerk of Court, Regional Trial Court, Naga City
and for the latter to compute and to collect the said fees accordingly.19
Petitioner moved20 for the partial reconsideration of the 24 March 2006 Order of the
RTC, arguing that Civil Case No. 2006-0030 was principally for the annulment of the
Deeds of Absolute Sale and, as such, incapable of pecuniary estimation. Petitioner
submitted that the RTC erred in applying Section 7(a), Rule 141 of the Rules of Court,
as amended, to petitioner’s first cause of action in its Complaint in Civil Case No.
2006-0030.
In its Order21 dated 29 March 2006, the RTC refused to reconsider its 24 March 2006
Order, based on the following ratiocination:
Analyzing, the action herein pertains to real property, for as admitted by the [herein
petitioner], "the deeds of sale in question pertain to real property" x x x. The Deeds of
Sale subject of the instant case have already been transferred in the name of the
[herein respondents Tan and Obiedo].
Compared with Quieting of Title, the latter action is brought when there is cloud on the
title to real property or any interest therein or to prevent a cloud from being cast upon
title to the real property (Art. 476, Civil Code of the Philippines) and the plaintiff must
have legal or equitable title to or interest in the real property which is the subject
matter of the action (Art. 447, ibid.), and yet plaintiff in QUIETING OF TITLE is
required to pay the fees in accordance with paragraph (a) of Section 7 of the said
Amended Administrative Circular No. 35-2004, hence, with more reason that the
[petitioner] who no longer has title to the real properties subject of the instant case
must be required to pay the required fees in accordance with Section 7(a) of the
Amended Administrative Circular No. 35-2004 afore-mentioned.
Furthermore, while [petitioner] claims that the action for declaration of nullity of deed of
sale and memorandum of agreement is one incapable of pecuniary estimation,
however, as argued by the [respondent Tan], the issue as to how much filing and
docket fees should be paid was never raised as an issue in the case of Russell vs.
Vestil, 304 SCRA 738.
186
xxxx
WHEREFORE, the Motion for Partial Reconsideration is hereby DENIED. 22
In a letter dated 19 April 2006, the RTC Clerk of Court computed, upon the request of
counsel for the petitioner, the additional docket fees petitioner must pay for in Civil
Case No. 2006-0030 as directed in the afore-mentioned RTC Orders. Per the
computation of the RTC Clerk of Court, after excluding the amount petitioner
previously paid on 16 March 2006, petitioner must still pay the amount of ₱720,392.60
as docket fees.23
Petitioner, however, had not yet conceded, and it filed a Petition for Certiorari with the
Court of Appeals; the petition was docketed as CA-G.R. SP No. 94800. According to
petitioner, the RTC24 acted with grave abuse of discretion, amounting to lack or
excess of jurisdiction, when it issued its Orders dated 24 March 2006 and 29 March
2006 mandating that the docket/filing fees for Civil Case No. 2006-0030, an action for
annulment of deeds of sale, be assessed under Section 7(a), Rule 141 of the Rules of
Court, as amended. If the Orders would not be revoked, corrected, or rectified,
petitioner would suffer grave injustice and irreparable damage.
On 22 November 2006, the Court of Appeals promulgated its Decision wherein it held
that:
Clearly, the petitioner’s complaint involves not only the annulment of the deeds of
sale, but also the recovery of the real properties identified in the said documents. In
other words, the objectives of the petitioner in filing the complaint were to cancel the
deeds of sale and ultimately, to recover possession of the same. It is therefore a real
action.
Consequently, the additional docket fees that must be paid cannot be assessed in
accordance with Section 7(b). As a real action, Section 7(a) must be applied in the
assessment and payment of the proper docket fee.
Resultantly, there is no grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the court a quo. By grave abuse of discretion is meant
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction,
and mere abuse of discretion is not enough – it must be grave. The abuse must be
grave and patent, and it must be shown that the discretion was exercised arbitrarily
and despotically.1avvphi1
Such a situation does not exist in this particular case. The evidence is insufficient to
prove that the court a quo acted despotically in rendering the assailed orders. It acted
properly and in accordance with law. Hence, error cannot be attributed to it. 25
Hence, the fallo of the Decision of the appellate court reads:

WHEREFORE, the petition for certiorari is DENIED. The assailed Orders of the court
a quo are AFFIRMED.26
Without seeking reconsideration of the foregoing Decision with the Court of Appeals,
petitioner filed its Petition for Review on Certiorari before this Court, with a lone
assignment of error, to wit:
18. The herein petitioner most respectfully submits that the Court of Appeals
committed a grave and serious reversible error in affirming the assailed Orders of the
Regional Trial Court which are clearly contrary to the pronouncement of this
Honorable Court in the case of Spouses De Leon v. Court of Appeals, G.R. No.
104796, March 6, 1998, not to mention the fact that if the said judgment is allowed to
stand and not rectified, the same would result in grave injustice and irreparable
damage to herein petitioner in view of the prohibitive amount assessed as a
consequence of said Orders.27
In Manchester Development Corporation v. Court of Appeals,28 the Court explicitly
pronounced that "[t]he court acquires jurisdiction over any case only upon the
payment of the prescribed docket fee." Hence, the payment of docket fees is not only
mandatory, but also jurisdictional.
In Sun Insurance Office, Ltd. (SIOL) v. Asuncion,29 the Court laid down guidelines for
the implementation of its previous pronouncement in Manchester under particular
circumstances, to wit:
1. It is not simply the filing of the complaint or appropriate initiatory pleading,
but the payment of the prescribed docket fee, that vests a trial court with
jurisdiction over the subject matter or nature of the action. Where the filing
of the initiatory pleading is not accompanied by payment of the docket fee,
the court may allow payment of the fee within a reasonable time but in no
case beyond the applicable prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third-party claims and
similar pleadings, which shall not be considered filed until and unless the
filing fee prescribed therefor is paid. The court may also allow payment of
said fee within a reasonable time but also in no case beyond its applicable
prescriptive or reglementary period.
3. Where the trial court acquires jurisdiction over a claim by the filing of the
appropriate pleading and payment of the prescribed filing fee but,
subsequently, the judgment awards a claim not specified in the pleading, or
if specified the same has been left for determination by the court, the
additional filing fee therefor shall constitute a lien on the judgment. It shall
be the responsibility of the Clerk of Court or his duly authorized deputy to
enforce said lien and assess and collect the additional fee.
187
In the Petition at bar, the RTC found, and the Court of Appeals affirmed, that petitioner
did not pay the correct amount of docket fees for Civil Case No. 2006-0030. According
to both the trial and appellate courts, petitioner should pay docket fees in accordance
with Section 7(a), Rule 141 of the Rules of Court, as amended. Consistent with the
liberal tenor of Sun Insurance, the RTC, instead of dismissing outright petitioner’s
Complaint in Civil Case No. 2006-0030, granted petitioner time to pay the additional
docket fees. Despite the seeming munificence of the RTC, petitioner refused to pay
the additional docket fees assessed against it, believing that it had already paid the
correct amount before, pursuant to Section 7(b)(1), Rule 141 of the Rules of Court, as
amended.
Relevant to the present controversy are the following provisions under Rule 141 of the
Rules of Court, as amended by A.M. No. 04-2-04-SC30 and Supreme Court Amended
Administrative Circular No. 35-200431 :
SEC. 7. Clerks of Regional Trial Courts. –
(a) For filing an action or a permissive OR COMPULSORY counterclaim, CROSS-
CLAIM, or money claim against an estate not based on judgment, or for filing a third-
party, fourth-party, etc. complaint, or a complaint-in-intervention, if the total sum
claimed, INCLUSIVE OF INTERESTS, PENALTIES, SURCHARGES, DAMAGES OF
WHATEVER KIND, AND ATTORNEY’S FEES, LITIGATIO NEXPENSES AND
COSTS and/or in cases involving property, the FAIR MARKET value of the REAL
property in litigation STATED IN THE CURRENT TAX DECLARATION OR CURRENT
ZONAL VALUATION OF THE BUREAU OF INTERNAL REVENUE, WHICHEVER IS
HIGHER, OR IF THERE IS NONE, THE STATED VALUE OF THE PROPERTY IN
LITIGATION OR THE VALUE OF THE PERSONAL PROPERTY IN LITIGATION OR
THE VALUE OF THE PERSONAL PROPERTY IN LITIGATION AS ALLEGED BY
THE CLAIMANT, is:
[Table of fees omitted.]
If the action involves both a money claim and relief pertaining to property, then THE
fees will be charged on both the amounts claimed and value of property based on the
formula prescribed in this paragraph a.
(b) For filing:
1. Actions where the value of the subject matter cannot be estimated
2. Special civil actions, except judicial foreclosure of mortgage,
EXPROPRIATION PROCEEDINGS, PARTITION AND QUIETING OF
TITLE which will
3. All other actions not involving property

[Table of fees omitted.]
The docket fees under Section 7(a), Rule 141, in cases involving real property depend
on the fair market value of the same: the higher the value of the real property, the
higher the docket fees due. In contrast, Section 7(b)(1), Rule 141 imposes a fixed or
flat rate of docket fees on actions incapable of pecuniary estimation.
In order to resolve the issue of whether petitioner paid the correct amount of docket
fees, it is necessary to determine the true nature of its Complaint. The dictum adhered
to in this jurisdiction is that the nature of an action is determined by the allegations in
the body of the pleading or Complaint itself, rather than by its title or heading. 32
However, the Court finds it necessary, in ascertaining the true nature of Civil Case No.
2006-0030, to take into account significant facts and circumstances beyond the
Complaint of petitioner, facts and circumstances which petitioner failed to state in its
Complaint but were disclosed in the preliminary proceedings before the court a quo.
Petitioner persistently avers that its Complaint in Civil Case No. 2006-0030 is primarily
for the annulment of the Deeds of Absolute Sale. Based on the allegations and reliefs
in the Complaint alone, one would get the impression that the titles to the subject real
properties still rest with petitioner; and that the interest of respondents Tan and
Obiedo in the same lies only in the Deeds of Absolute Sale sought to be annulled.
What petitioner failed to mention in its Complaint was that respondents Tan and
Obiedo already had the Memorandum of Agreement, which clearly provided for the
execution of the Deeds of Absolute Sale, registered on the TCTs over the five parcels
of land, then still in the name of petitioner. After respondents Tan and Obiedo had the
Deeds of Absolute Sale notarized on 3 January 2006 and presented the same to
Register of Deeds for Naga City on 8 March 2006, they were already issued TCTs
over the real properties in question, in their own names. Respondents Tan and Obiedo
have also acquired possession of the said properties, enabling them, by petitioner’s
own admission, to demolish the improvements thereon.
It is, thus, suspect that petitioner kept mum about the afore-mentioned facts and
circumstances when they had already taken place before it filed its Complaint before
the RTC on 16 March 2006. Petitioner never expressed surprise when such facts and
circumstances were established before the RTC, nor moved to amend its Complaint
accordingly.1avvphi1.zw+ Even though the Memorandum of Agreement was
supposed to have long been registered on its TCTs over the five parcels of land,
petitioner did not pray for the removal of the same as a cloud on its title. In the same
vein, although petitioner alleged that respondents Tan and Obiedo forcibly took
physical possession of the subject real properties, petitioner did not seek the
restoration of such possession to itself. And despite learning that respondents Tan
and Obiedo already secured TCTs over the subject properties in their names,
petitioner did not ask for the cancellation of said titles. The only logical and reasonable
explanation is that petitioner is reluctant to bring to the attention of the Court certain
facts and circumstances, keeping its Complaint safely worded, so as to institute only
an action for annulment of Deeds of Absolute Sale. Petitioner deliberately avoided
188
raising issues on the title and possession of the real properties that may lead the
Court to classify its case as a real action.
No matter how fastidiously petitioner attempts to conceal them, the allegations and
reliefs it sought in its Complaint in Civil Case No. 2006-0030 appears to be ultimately
a real action, involving as they do the recovery by petitioner of its title to and
possession of the five parcels of land from respondents Tan and Obiedo.
A real action is one in which the plaintiff seeks the recovery of real property; or, as
indicated in what is now Section 1, Rule 4 of the Rules of Court, a real action is an
action affecting title to or recovery of possession of real property.33
Section 7, Rule 141 of the Rules of Court, prior to its amendment by A.M. No. 04-2-04-
SC, had a specific paragraph governing the assessment of the docket fees for real
action, to wit:
In a real action, the assessed value of the property, or if there is none, the estimated
value thereof shall be alleged by the claimant and shall be the basis in computing the
fees.
It was in accordance with the afore-quoted provision that the Court, in Gochan v.
Gochan,34 held that although the caption of the complaint filed by therein respondents
Mercedes Gochan, et al. with the RTC was denominated as one for "specific
performance and damages," the relief sought was the conveyance or transfer of real
property, or ultimately, the execution of deeds of conveyance in their favor of the real
properties enumerated in the provisional memorandum of agreement. Under these
circumstances, the case before the RTC was actually a real action, affecting as it did
title to or possession of real property. Consequently, the basis for determining the
correct docket fees shall be the assessed value of the property, or the estimated value
thereof as alleged in the complaint. But since Mercedes Gochan failed to allege in
their complaint the value of the real properties, the Court found that the RTC did not
acquire jurisdiction over the same for non-payment of the correct docket fees.
Likewise, in Siapno v. Manalo,35 the Court disregarded the title/denomination of
therein plaintiff Manalo’s amended petition as one for Mandamus with Revocation of
Title and Damages; and adjudged the same to be a real action, the filing fees for
which should have been computed based on the assessed value of the subject
property or, if there was none, the estimated value thereof. The Court expounded in
Siapno that:
In his amended petition, respondent Manalo prayed that NTA’s sale of the property in
dispute to Standford East Realty Corporation and the title issued to the latter on the
basis thereof, be declared null and void. In a very real sense, albeit the amended
petition is styled as one for "Mandamus with Revocation of Title and Damages," it is,
at bottom, a suit to recover from Standford the realty in question and to vest in
respondent the ownership and possession thereof. In short, the amended petition is in
 189

after trial, the writ of injunction be made permanent. The Court dismissed Delica’s
complaint for the following reasons:
reality an action in res or a real action. Our pronouncement in Fortune Motors (Phils.),
Inc. vs. Court of Appeals is instructive. There, we said:
A careful examination of respondent’s complaint is that it is a real action. In
Paderanga vs. Buissan, we held that "in a real action, the plaintiff seeks the recovery
A prayer for annulment or rescission of contract does not operate to efface the true
of real property, or, as stated in Section 2(a), Rule 4 of the Revised Rules of Court, a
objectives and nature of the action which is to recover real property. (Inton, et al., v.
real action is one ‘affecting title to real property or for the recovery of possession of, or
Quintan, 81 Phil. 97, 1948)
for partition or condemnation of, or foreclosure of a mortgage on a real property.’"

An action for the annulment or rescission of a sale of real property is a real action. Its
Obviously, respondent’s complaint is a real action involving not only the recovery of
prime objective is to recover said real property. (Gavieres v. Sanchez, 94 Phil. 760,
real properties, but likewise the cancellation of the titles thereto.
1954)

Considering that respondent’s complaint is a real action, the Rule requires that "the
An action to annul a real estate mortgage foreclosure sale is no different from an
assessed value of the property, or if there is none, the estimated value thereof shall be
action to annul a private sale of real property. (Muñoz v. Llamas, 87 Phil. 737, 1950).
alleged by the claimant and shall be the basis in computing the fees."

While it is true that petitioner does not directly seek the recovery of title or possession
We note, however, that neither the "assessed value" nor the "estimated value" of the
of the property in question, his action for annulment of sale and his claim for damages
questioned parcels of land were alleged by respondent in both his original and
are closely intertwined with the issue of ownership of the building which, under the
amended complaint. What he stated in his amended complaint is that the disputed
law, is considered immovable property, the recovery of which is petitioner's primary
realties have a "BIR zonal valuation" of ₱1,200.00 per square meter. However, the
objective. The prevalent doctrine is that an action for the annulment or rescission of a
alleged "BIR zonal valuation" is not the kind of valuation required by the Rule. It is the
sale of real property does not operate to efface the fundamental and prime objective
assessed value of the realty. Having utterly failed to comply with the requirement of
and nature of the case, which is to recover said real property. It is a real action.
the Rule that he shall allege in his complaint the assessed value of his real properties
in controversy, the correct docket fee cannot be computed. As such, his complaint
Unfortunately, and evidently to evade payment of the correct amount of filing fee, should not have been accepted by the trial court. We thus rule that it has not acquired
respondent Manalo never alleged in the body of his amended petition, much less in jurisdiction over the present case for failure of herein respondent to pay the required
the prayer portion thereof, the assessed value of the subject res, or, if there is none, docket fee. On this ground alone, respondent’s complaint is vulnerable to dismissal.38
the estimated value thereof, to serve as basis for the receiving clerk in computing and
arriving at the proper amount of filing fee due thereon, as required under Section 7 of
Brushing aside the significance of Serrano, petitioner argues that said decision,
this Court’s en banc resolution of 04 September 1990 (Re: Proposed Amendments to
rendered by the Third Division of the Court, and not by the Court en banc, cannot
Rule 141 on Legal Fees).
modify or reverse the doctrine laid down in Spouses De Leon v. Court of Appeals. 39
Petitioner relies heavily on the declaration of this Court in Spouses De Leon that an
Even the amended petition, therefore, should have been expunged from the records. action for annulment or rescission of a contract of sale of real property is incapable of
pecuniary estimation.
In fine, we rule and so hold that the trial court never acquired jurisdiction over its Civil
Case No. Q-95-24791.36 The Court, however, does not perceive a contradiction between Serrano and the
Spouses De Leon. The Court calls attention to the following statement in Spouses De
Leon: "A review of the jurisprudence of this Court indicates that in determining
It was in Serrano v. Delica,37 however, that the Court dealt with a complaint that bore
whether an action is one the subject matter of which is not capable of pecuniary
the most similarity to the one at bar. Therein respondent Delica averred that undue
estimation, this Court has adopted the criterion of first ascertaining the nature of the
influence, coercion, and intimidation were exerted upon him by therein petitioners
principal action or remedy sought." Necessarily, the determination must be done on a
Serrano, et al. to effect transfer of his properties. Thus, Delica filed a complaint before
case-to-case basis, depending on the facts and circumstances of each. What
the RTC against Serrano, et al., praying that the special power of attorney, the
petitioner conveniently ignores is that in Spouses De Leon, the action therein that
affidavit, the new titles issued in the names of Serrano, et al., and the contracts of sale
private respondents instituted before the RTC was "solely for annulment or rescission"
of the disputed properties be cancelled; that Serrano, et al. be ordered to pay Delica,
of the contract of sale over a real property.40 There appeared to be no transfer of title
jointly and severally, actual, moral and exemplary damages in the amount of
or possession to the adverse party. Their complaint simply prayed for:
₱200,000.00, as well as attorney’s fee of ₱200,000.00 and costs of litigation; that a
TRO and a writ of preliminary injunction be issued ordering Serrano, et al. to
immediately restore him to his possession of the parcels of land in question; and that
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1. Ordering the nullification or rescission of the Contract of Conditional Sale
(Supplementary Agreement) for having violated the rights of plaintiffs
(private respondents) guaranteed to them under Article 886 of the Civil
Code and/or violation of the terms and conditions of the said contract.
2. Declaring void ab initio the Deed of Absolute Sale for being absolutely
simulated; and
grave injustice and irreparable injury to petitioner in view of the prohibitive amount
assessed against it. It is a sweeping assertion which lacks evidentiary support.
Undeniably, before the Court can conclude that the amount of docket fees is indeed
prohibitive for a party, it would have to look into the financial capacity of said party. It
baffles this Court that herein petitioner, having the capacity to enter into multi-million
transactions, now stalls at paying ₱720,392.60 additional docket fees so it could
champion before the courts its rights over the disputed real properties. Moreover, even
though the Court exempts individuals, as indigent or pauper litigants, from paying
docket fees, it has never extended such an exemption to a corporate entity.

3. Ordering defendants (petitioners) to pay plaintiffs (private respondents)
attorney's fees in the amount of ₱100,000.00.41
As this Court has previously discussed herein, the nature of Civil Case No. 2006-0030
instituted by petitioner before the RTC is closer to that of Serrano, rather than of
Spouses De Leon, hence, calling for the application of the ruling of the Court in the
former, rather than in the latter.
WHEREFORE, premises considered, the instant Petition for Review is hereby
DENIED. The Decision, dated 22 November 2006, of the Court of Appeals in CA-G.R.
SP No. 94800, which affirmed the Orders dated 24 March 2006 and 29 March 2006 of
the RTC, Branch 22, of Naga City, in Civil Case No. RTC-2006-0030, ordering
petitioner Ruby Shelter Builders and Realty Development Corporation to pay
additional docket/filing fees, computed based on Section 7(a), Rule 141 of the Rules
of Court, as amended, is hereby AFFIRMED. Costs against the petitioner.

SO ORDERED.
It is also important to note that, with the amendments introduced by A.M. No. 04-2-04-
SC, which became effective on 16 August 2004, the paragraph in Section 7, Rule 141
of the Rules of Court, pertaining specifically to the basis for computation of docket
fees for real actions was deleted. Instead, Section 7(1) of Rule 141, as amended,
provides that "in cases involving real property, the FAIR MARKET value of the REAL
property in litigation STATED IN THE CURRENT TAX DECLARATION OR CURRENT
ZONAL VALUATION OF THE BUREAU OF INTERNAL REVENUE, WHICH IS
HIGHER, OR IF THERE IS NONE, THE STATED VALUE OF THE PROPERTY IN
LITIGATION x x x" shall be the basis for the computation of the docket fees. Would
such an amendment have an impact on Gochan, Siapno, and Serrano? The Court
rules in the negative.

A real action indisputably involves real property. The docket fees for a real action
would still be determined in accordance with the value of the real property involved
therein; the only difference is in what constitutes the acceptable value. In computing
the docket fees for cases involving real properties, the courts, instead of relying on the
assessed or estimated value, would now be using the fair market value of the real
properties (as stated in the Tax Declaration or the Zonal Valuation of the Bureau of
Internal Revenue, whichever is higher) or, in the absence thereof, the stated value of
the same.

In sum, the Court finds that the true nature of the action instituted by petitioner against
respondents is the recovery of title to and possession of real property. It is a real
action necessarily involving real property, the docket fees for which must be computed
in accordance with Section 7(1), Rule 141 of the Rules of Court, as amended. The
Court of Appeals, therefore, did not commit any error in affirming the RTC Orders
requiring petitioner to pay additional docket fees for its Complaint in Civil Case No.
2006-0030.

The Court does not give much credence to the allegation of petitioner that if the
judgment of the Court of Appeals is allowed to stand and not rectified, it would result in
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