G.R. No.

178645               January 30, 2009

LINA PEÑALBER, Petitioner,
vs.
QUIRINO RAMOS, LETICIA PEÑALBER, and BARTEX INC., Respondents.

DECISION

CHICO-NAZARIO, J.:

Assailed in this Petition for Review on Certiorari under Rule 45 of the Rules of Court is the Decision 1 dated 15
December 2006 of the Court of Appeals in CA-G.R. CV No. 69731. Said Decision reversed and set aside the
Decision2 dated 19 January 2000 of the Regional Trial Court (RTC) of Tuguegarao City, Branch 2, in Civil Case No.
3672, which declared petitioner Lina Peñalber the owner of the Bonifacio property subject of this case and ordered
respondent spouses Quirino Ramos and Leticia Peñalber to reconvey the same to petitioner.

The factual and procedural antecedents of the case are set forth hereunder.

Petitioner is the mother of respondent Leticia and the mother-in-law of respondent Quirino, husband of Leticia.
Respondent Bartex, Inc., on the other hand, is a domestic corporation which bought from respondent spouses
Ramos one of the two properties involved in this case.

On 18 February 1987, petitioner filed before the RTC a Complaint for Declaration of Nullity of Deeds and Titles,
Reconveyance, Damages, [with] Application for a Writ of Preliminary Prohibitory Injunction against the
respondents.3 It was docketed as Civil Case No. 3672.

First Cause of Action

Firstly, petitioner alleged in her Complaint that she was the owner of a parcel of land situated in Ugac Norte,
Tuguegarao, Cagayan, with an area of 1,457 sq.m. and covered by Transfer Certificate of Title (TCT) No. T-
433734 of the Register of Deeds for the Province of Cagayan, registered in petitioner’s name. A residential house
and a warehouse were constructed on the said parcel of land which petitioner also claimed to own (the land and the
improvements thereon shall be hereinafter referred to as the Ugac properties). Petitioner averred that in the middle
part of 1986, she discovered that TCT No. T-43373 was cancelled on 13 May 1983 and TCT No. T-58043 5 was
issued in its stead in the name of respondent spouses Ramos. Upon verification, petitioner learned that the basis for
the cancellation of her title was a Deed of Donation of a Registered Land, Residential House and Camarin,6 which
petitioner purportedly executed in favor of respondent spouses Ramos on 27 April 1983. Petitioner insisted that her
signature on the said Deed of Donation was a forgery as she did not donate any property to respondent spouses
Ramos. When petitioner confronted the respondent spouses Ramos about the false donation, the latter pleaded that
they would just pay for the Ugac properties in the amount of ₱1 Million. Petitioner agreed to the proposition of the
respondent spouses Ramos.

Subsequently, around 10 January 1987,7 petitioner found out that the respondent spouses Ramos were selling the
Ugac properties to respondent Bartex, Inc. Petitioner then sent her son, Johnson Paredes (Johnson), 8 to caution
respondent Bartex, Inc. that respondent spouses Ramos were not the lawful owners of the said properties. Johnson
was allegedly able to convey petitioner’s caveat to a representative of respondent Bartex, Inc. Petitioner also
warned respondent spouses Ramos not to sell the Ugac properties anymore, otherwise, she would file the
necessary action against them. The respondent spouses Ramos then assured her that they would do no such thing.
As a precaution, petitioner executed an Affidavit of Adverse Claim over the Ugac Properties on 19 January 1987
and caused the same to be annotated on TCT No. T-58043 on the same day. Despite petitioner’s warnings,
respondent spouses Ramos still executed in favor of respondent Bartex, Inc. a Deed of Absolute Sale 9 over the
Ugac properties on 12 January 1987 for a total price of ₱150,000.00. As a result, TCT No. T-58043 in the name of
respondent spouses Ramos was cancelled and TCT No. T-6882510 in the name of respondent Bartex, Inc. was
issued on 20 January 1987.

Petitioner contended that the Deed of Absolute Sale executed by respondent spouses Ramos in favor of respondent
Bartex, Inc. did not convey any valid title, not only because respondent Bartex, Inc. was a buyer in bad faith, but
also because respondent spouses Ramos did not own the Ugac properties. Thus, petitioner prayed for the
declaration of nullity of (1) the Deed of Donation of a Registered Land, Residential House and Camarin purportedly
executed by petitioner in favor respondent spouses Ramos; (2) TCT No. T-58043, issued in the name of respondent
spouses Ramos; (3) the Deed of Absolute Sale executed by the respondent spouses Ramos in favor of respondent
Bartex, Inc.; and (4) TCT No. T-68825, issued in the name of respondent Bartex, Inc. Should petitioner’s prayer not
be granted, petitioner sought in the alternative that respondent spouses Ramos be ordered to pay the assessed
value of the Ugac properties, which was about ₱1.5 Million. Petitioner further prayed that TCT No. T-43373, in her
name, be declared valid and active.
Second Cause of Action

Secondly, petitioner claimed that for many years prior to 1984, she operated a hardware store in a building she
owned along Bonifacio St., Tuguegarao, Cagayan. However, the commercial lot (Bonifacio property) upon which the
building stood is owned by and registered in the name of Maria Mendoza (Mendoza), from whom petitioner rented
the same.

On 22 March 1982, petitioner allowed respondent spouses Ramos to manage the hardware store. Thereafter, in
1984, Mendoza put the Bonifacio property up for sale. As petitioner did not have available cash to buy the property,
she allegedly entered into a verbal agreement with respondent spouses Ramos with the following terms:

[1.] The lot would be bought [by herein respondent spouses Ramos] for and in behalf of [herein petitioner];

[2.] The consideration of ₱80,000.00 for said lot would be paid by [respondent spouses Ramos] from the
accumulated earnings of the store;

[3.] Since [respondent spouses Ramos] have the better credit standing, they would be made to appear in the
Deed of Sale as the vendees so that the title to be issued in their names could be used by [them] to secure a
loan with which to build a bigger building and expand the business of [petitioner].

In accordance with the above agreement, respondent spouses Ramos allegedly entered into a contract of sale 11 with
Mendoza over the Bonifacio property,12 and on 24 October 1984, TCT No. T-62769 13 covering said property was
issued in the names of respondent spouses Ramos.

On 20 September 1984, respondent spouses Ramos returned the management of the hardware store to petitioner.
On the bases of receipts and disbursements, petitioner asserted that the Bonifacio property was fully paid out of the
funds of the store and if respondent spouses Ramos had given any amount for the purchase price of the said
property, they had already sufficiently reimbursed themselves from the funds of the store. Consequently, petitioner
demanded from respondent spouses Ramos the reconveyance of the title to the Bonifacio property to her but the
latter unjustifiably refused.

Petitioner insisted that respondent spouses Ramos were, in reality, mere trustees of the Bonifacio property, thus,
they were under a moral and legal obligation to reconvey title over the said property to her. Petitioner, therefore,
prayed that she be declared the owner of the Bonifacio property; TCT No. T-62769, in the name of respondent
spouses, be declared null and void; and the Register of Deeds for the Province of Cagayan be directed to issue
another title in her name.

On 2 March 1987, respondent spouses Ramos accordingly filed before the RTC their Answer 14 to petitioner’s
Complaint. As regards the first cause of action, respondent spouses Ramos alleged that petitioner, together with her
son, Johnson, and the latter’s wife, Maria Teresa Paredes, mortgaged the Ugac properties to the Development Bank
of the Philippines (DBP) on 19 August 1990 for the amount of ₱150,000.00. When the mortgage was about to be
foreclosed because of the failure of petitioner to pay the mortgage debt, petitioner asked respondent spouses
Ramos to redeem the mortgaged property or pay her mortgage debt to DBP. In return, petitioner promised to cede,
convey and transfer full ownership of the Ugac properties to them. Respondent spouses Ramos paid the mortgage
debt and, in compliance with her promise, petitioner voluntarily transferred the Ugac properties to the former by way
of a Deed of Donation dated 27 April 1983. After accepting the donation and having the Deed of Donation
registered, TCT No. T- 58043 was issued to respondent spouses Ramos and they then took actual and physical
possession of the Ugac properties. Respondent spouses Ramos asserted that petitioner had always been aware of
their intention to sell the Ugac properties as they posted placards thereon stating that the said properties were for
sale. Respondent spouses Ramos further averred that petitioner also knew that they finally sold the Ugac properties
to respondent Bartex, Inc. for ₱150,000.00. Thus, respondent spouses Ramos maintained that petitioner was not
entitled to any reimbursement for the Ugac properties.

With regard to petitioner’s second cause of action involving the Bonifacio property, respondent spouses Ramos
contended that they were given not only the management, but also the full ownership of the hardware store by the
petitioner, on the condition that the stocks and merchandise of the store will be inventoried, and out of the proceeds
of the sales thereof, respondent spouses Ramos shall pay petitioner’s outstanding obligations and liabilities. After
settling and paying the obligations and liabilities of petitioner, respondent spouses Ramos bought the Bonifacio
property from Mendoza out of their own funds.

Lastly, even if petitioner and respondent spouses Ramos belonged to the same family, the spouses Ramos faulted
petitioner for failing to exert efforts to arrive at an amicable settlement of their dispute. Hence, respondent spouses
Ramos sought, by way of a counterclaim against petitioner, moral and exemplary damages and attorney’s fees, for
allegedly filing a false, flimsy and frivolous complaint.

On 27 April 1987, respondent Bartex, Inc. filed before the RTC its own Answer to petitioner’s Complaint, alleging,
inter alia, that when a representative of the corporation inquired about the Ugac properties for sale, respondent
spouses Ramos presented their owner’s duplicate copy of TCT No. T-58043, together with the tax declarations
covering the parcel of land and the buildings thereon. Respondent Bartex, Inc. even verified the title and tax
declarations covering the Ugac properties with the Register of Deeds and the Office of the Municipal Assessor as to
any cloud, encumbrance or lien on the properties, but none were found. Respondent spouses Ramos were then
actually occupying the Ugac properties and they only vacated the same after the consummation of the sale to
respondent Bartex, Inc. Respondent Bartex, Inc. claimed that the sale of the Ugac properties by respondent
spouses Ramos to the corporation was already consummated on 12 January 1987, and the documents conveying
the said properties were by then being processed for registration, when petitioner caused the annotation of an
adverse claim at the back of TCT No. T-58043 on 19 January 1987. As respondent Bartex, Inc. was never aware of
any imperfection in the title of respondent spouses Ramos over the Ugac properties, it claimed that it was an
innocent purchaser in good faith.

Trial of the case thereafter ensued.

On 19 January 2000, the RTC promulgated its decision, ruling on petitioner’s first cause of action in this wise:

On the first cause of action, the Court finds the testimony of [herein petitioner] Lina Penalber (sic) denying her
execution of the deed of donation over the Ugac property in favor of [herein respondent spouses] Quirino Ramos
and Leticia Penalber-Ramos (sic) insufficient to support the said cause of action. A notarial document is, by law,
entitled to full faith and credit upon its face (Arrieta v. Llosa, 282 SCRA 248) and a high degree of proof is needed to
overthrow the presumption of truth in the recitals contained in a public document executed with all legal formalities
(People vs. Fabro, 277 SCRA 19). Hence, in order to contradict the facts contained in a notarial document and the
presumption of regularity in its favor, these (sic) must be evidence that is clear, convincing and more than merely
preponderant (Calahat vs. Intermediate Appellate Court, 241 SCRA 356). In the case at bench, [petitioner] claims
that she did not execute the deed of donation over the Ugac property in favor of [respondent spouses Ramos]. Such
denial, by itself, is not sufficient to overcome the presumption of regularity of the notarial deed of donation and its
entitlement to full faith and credit. While it is true that, generally, the party who asserts the affirmative side of a
proposition has the burden of proof, which in this instance is (sic) the [respondent spouses Ramos] who are
asserting the validity of the deed of donation, [respondent spouses Ramos] can merely rely on the above-stated
presumption given to notarial documents and need not present any evidence to support their claim of validity and
due execution of the notarized deed of donation. On the other hand, [petitioner], in addition to her allegation that she
did not execute any such deed of donation in favor of [respondent spouses Ramos] should have had her allegedly
falsified signature on the deed of donation examined by qualified handwriting experts to prove that, indeed, she did
not execute the same. Her failure to do so results in the failure of her cause.15 (Emphasis ours.)

With respect to petitioner’s second cause of action, the RTC adjudged that:

On the second cause of action, the Court finds the evidence preponderantly in favor of the [herein petitioner]. The
evidence on record shows that when [petitioner] allowed [herein respondent spouses Ramos] full management of
the hardware store located on the Bonifacio property in March, 1982 (sic) an inventory of the stocks in trade in the
said store was made showing stocks worth ₱226,951.05* and when she got back the store from [respondent
spouses Ramos] on September 1984, another inventory was made [on] the stocks in trade in the said store
showing, stocks worth ₱110,005.88* or a difference of ₱116,946.17.* The only reason for an inventory having been
made when the hardware store was turned over to [respondent spouses Ramos] was, to the mind of the Court, for
the latter to account for the sales of such stocks. And to arrive at the net amount due to [petitioner], all that is
needed to be done is to deduct the value of the stocks present at the store when management was returned to
[petitioner] in September 1984 from the value of the stocks found in the hardware store when said management was
given to [respondent spouses Ramos] in 1982. [Petitioner] claims that the purchase price for the Bonifacio property
was to be taken from the proceeds of sales from the hardware store which, as the evidence on record stands[,]
shows a balance in her favor of more than ₱116,000.00. [Respondent spouses Ramos] contend that said amount
was expended to pay off [petitioner’s] obligations to her suppliers. The record, however, is totally silent on how much
and when [respondent spouses Ramos] paid said alleged obligations of [petitioner] or even who were the said
suppliers thus paid. That [petitioner] and [respondent spouses Ramos] agreed that the amount due [petitioner] from
the proceeds of the sales of her stocks in the hardware store would be applied to the purchase price of the Bonifacio
property is supported by the fact that [petitioner] did not ever ask for an accounting of said proceeds, despite the
fact that as early as September, 1984 (sic) she already knew that her stocks left by her in March, 1982 (sic) was
already sold by [respondent spouses Ramos] and that there was a difference of ₱116,000.00 plus which was due to
her.16 (Emphasis ours.)

Thus, the RTC decreed:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered:

1. Finding the evidence on record insufficient to prove the [herein petitioner’s] first cause of action, and,
hence, dismissing the same;

2. On the second cause of action, in favor of the [petitioner] and against the [herein respondent spouses
Ramos];

2.1 Declaring the [petitioner] the owner of Lot 2-B of subdivision plan PST-2-01-019316 (sic) with an
area of 195 square meters situated along Bonifacio Street, Tuguegarao, Cagayan; and
 2.2 Ordering the [respondent spouses Ramos] to reconvey to the [petitioner] the said property
(Bonifacio property).

With costs de oficio.17 (Emphasis ours.)

On 22 February 2000, respondent spouses Ramos filed with the RTC a Motion for Reconsideration18 of the afore-
mentioned decision, assailing the ruling of the RTC on petitioner’s second cause of action on the ground that the
alleged express trust created between them and petitioner involving the Bonifacio property could not be proven by
parol evidence. In an Order19 dated 17 July 2000, the RTC denied respondent spouses Ramos’ Motion for
Reconsideration for lack of merit, ratiocinating that respondent spouses Ramos failed to interpose timely objections
when petitioner testified on their alleged verbal agreement regarding the purchase of the Bonifacio property. As
such, respondent spouses Ramos were deemed to have waived such objections, which cannot be raised anymore
in their Motion for Reconsideration. The RTC then reiterated its finding that petitioner’s evidence clearly established
her second cause of action. Additionally, the RTC held that the requirement that the parties exert earnest efforts
towards an amicable settlement of the dispute had likewise been waived by the respondents as they filed no motion
regarding the same before the trial.

On 24 July 2000, respondent spouses Ramos elevated their case to the Court of Appeals, insofar as the ruling of
the RTC on petitioner’s second cause of action was concerned.20 The appeal was docketed as CA-G.R. CV No.
69731.

On 15 December 2006, the Court of Appeals rendered the assailed Decision in favor of respondent spouses
Ramos.

Finding merit in the appeal, the appellate court observed that the second cause of action involved not only the
petitioner and her daughter, but also her son-in-law, who was not covered by the term "family relations" under Article
15021 of the Family Code. Therefore, Article 15122 of the Family Code, requiring the exertion of earnest efforts toward
a compromise, did not apply as the impediment arising from the said provision was limited only to suits between
members of the same family or those encompassed in the term "family relations" under Article 150.

The Court of Appeals also declared that petitioner failed to prove her claim with the required quantum of evidence.
According to the Court of Appeals:

It appears that before management of the store was transferred to [herein respondent spouses Ramos], a beginning
inventory of the stocks of the hardware store was made by [herein petitioner’s] other children showing stocks
amounting to Php226,951.05. After management of the hardware store was returned to [petitioner], a second
inventory was made with stocks amounting to Php110,004.88 showing a difference of Php116,946.15. Contrary,
however, to the finding of the trial court, We find that said inventory showing such difference is not conclusive proof
to show that the said amount was used to pay the purchase price of the subject lot. In fact, as testified by Johnson
Paredes, son of [petitioner] who made the computation on the alleged inventories, it is not known if the goods,
representing the amount of Php116,946.17, were actually sold or not. It may have been taken without actually being
sold.

It is a basic rule of evidence that bare allegations, unsubstantiated by evidence, are not equivalent to proof. As
between [petitioner’s] bare allegation of a verbal trust agreement, and the deed of absolute sale between Maria
Mendoza and [respondent spouses Ramos], the latter should prevail.

Although oral testimony is allowed to prove that a trust exists, contrary to the contention of [respondent spouses
Ramos], and the court may rely on parol evidence to arrive at a conclusion that an express trust exists, what is
crucial is the intention to create a trust. While oftentimes the intention is manifested by the trustor in express or
explicit language, such intention may be manifested by inference from what the trustor has said or done, from the
nature of the transaction, or from the circumstances surrounding the creation of the purported trust.

However, an inference of the intention to create a trust, made from language, conduct or circumstances, must be
made with reasonable certainty. It cannot rest on vague, uncertain or indefinite declarations. An inference of
intention to create a trust, predicated only on circumstances, can be made only where they admit of no other
interpretation. Here, [petitioner] failed to establish with reasonable certainty her claim that the purchase of the
subject lot was pursuant to a verbal trust agreement with [respondent spouses Ramos].23 (Emphasis ours.)

Thus, the Court of Appeals disposed of the case as follows:

WHEREFORE, in view of the foregoing, the instant appeal is hereby GRANTED and the Decision dated 19 January
2000 of the Regional Trial Court (RTC) of Tuguegarao City, Branch 2, with respect to the second cause of action or
the Bonifacio Property in Civil Case No. 3672 is hereby REVERSED and SET ASIDE and a new one entered
DISMISSING the second cause of action of [herein petitioner’s] complaint.24

On 12 January 2007, petitioner sought reconsideration 25 of the foregoing Decision, but it was denied by the
appellate court in a Resolution26 dated 31 May 2007.
To have the ruling of the Court of Appeals overturned, petitioner brought her case before us through the instant
Petition, raising the following issues: (1) whether the existence of a trust agreement between her and respondent
spouses Ramos was clearly established, and (2) whether such trust agreement was valid and enforceable.

At the outset, it is apparent that petitioner is raising questions of fact in the instant Petition. Be it noted that in a
petition for review under Rule 45 of the Rules of Court, only questions of law must be entertained. 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.27 When the doubt or difference arises as to the truth or
falsehood of alleged facts or when the query necessarily solicits calibration of the whole evidence considering
mostly the credibility of witnesses, existence and relevancy of specific surrounding circumstances, their relation to
each other and to the whole and probabilities of the situation, questions or errors of fact are raised. 28 The rule that
only questions of law may be raised in a petition for review under Rule 45, however, admits of certain
exceptions,29 among which is when the findings of the trial court are grounded entirely on speculation, surmise and
conjecture. As will be discussed further, we find the afore-mentioned exception to be applicable in the present
Petition, thus, warranting a departure from the general rule.

In its technical legal sense, a trust is defined as the right, enforceable solely in equity, to the beneficial enjoyment of
property, the legal title to which is vested in another, but the word "trust" is frequently employed to indicate duties,
relations, and responsibilities which are not strictly technical trusts.30 A person who establishes a trust is called the
trustor; one in whom confidence is reposed is known as the trustee; and the person for whose benefit the trust has
been created is referred to as the beneficiary.31 There is a fiduciary relation between the trustee and the beneficiary
(cestui que trust) as regards certain property, real, personal, money or choses in action.32

Trusts are either express or implied. Express trusts are created by the intention of the trustor or of the parties.
Implied trusts come into being by operation of law.33 Express trusts are those which are created by the direct and
positive acts of the parties, by some writing or deed, or will, or by words either expressly or impliedly evincing an
intention to create a trust.34 No particular words are required for the creation of an express trust, it being sufficient
that a trust is clearly intended.35 However, in accordance with Article 1443 of the Civil Code, when an express trust
concerns an immovable property or any interest therein, the same may not be proved by parol or oral evidence.36

In the instant case, petitioner maintains that she was able to prove the existence of a trust agreement between her
and respondent spouses Ramos. She calls attention to the fact that respondent spouses Ramos could not account
for the ₱116,946.15 difference in the beginning inventory and the second inventory of the stocks of the hardware
store, and they failed to present proof to support their allegation that the amount was used to pay the other
obligations of petitioner. As respondent spouses Ramos never denied the existence of the ₱116,946.15 difference,
petitioner contends that they have the burden of proving where this amount had gone, if indeed they did not use the
same to buy the Bonifacio property. Petitioner asserts that given the respondent spouses Ramos’ failure to
discharge such burden, the only conclusion would be that they did use the amount to purchase the Bonifacio
property.

Petitioner further alleges that based on the verbal agreement between her and respondent spouses Ramos, a trust
agreement was created and that the same is valid and enforceable. Petitioner claims that she is the trustor for it was
she who entrusted the Bonifacio property to respondent spouses Ramos as the trustees, with the condition that the
same be used to secure a loan, the proceeds of which would be used to build a bigger building to expand
petitioner’s business. Petitioner maintains that a trust agreement was clearly intended by the parties when petitioner
left the management of the hardware store to respondent spouses Ramos, with the agreement that the proceeds
from the sales from said store be used to buy the lot upon which the store stands. The respondent spouses Ramos’
assumption of the management of the hardware store and their eventual purchase of the Bonifacio property
indubitably shows that respondent spouses Ramos honored their obligation under the verbal agreement. Such
being the case, it behooved for the respondent spouses Ramos to hold the Bonifacio property for petitioner’s
benefit.

Petitioner’s arguments fail to persuade.

It bears stressing that petitioner has the burden of proving her cause of action in the instant case and she may not
rely on the weakness of the defense of respondent spouses Ramos. Burden of proof is the duty of any party to
present evidence to establish his claim or defense by the amount of evidence required by law, which is
preponderance of evidence in civil cases. Preponderance of evidence 37 is the weight, credit, and value of the
aggregate evidence on either side and is usually considered to be synonymous with the term "greater weight of the
evidence" or "greater weight of the credible evidence. It is evidence which is more convincing to the court as worthy
of belief than that which is offered in opposition thereto. 38 Therefore, the party, whether plaintiff or defendant, who
asserts the affirmative of the issue has the burden of proof to obtain a favorable judgment. For the plaintiff, the
burden of proof never parts.39 For the defendant, an affirmative defense is one which is not a denial of an essential
ingredient in the plaintiff’s cause of action, but one which, if established, will be a good defense i.e., an avoidance of
the claim.40

From the allegations of the petitioner’s Complaint in Civil Case No. 3672, the alleged verbal trust agreement
between petitioner and respondent spouses Ramos is in the nature of an express trust as petitioner explicitly agreed
therein to allow the respondent spouses Ramos to acquire title to the Bonifacio property in their names, but to hold
the same property for petitioner’s benefit. Given that the alleged trust concerns an immovable property, however,
respondent spouses Ramos counter that the same is unenforceable since the agreement was made verbally and no
parol evidence may be admitted to prove the existence of an express trust concerning an immovable property or
any interest therein.

On this score, we subscribe to the ruling of the RTC in its Order dated 17 July 2000 that said spouses were deemed
to have waived their objection to the parol evidence as they failed to timely object when petitioner testified on the
said verbal agreement. The requirement in Article 1443 that the express trust concerning an immovable or an
interest therein be in writing is merely for purposes of proof, not for the validity of the trust agreement. Therefore, the
said article is in the nature of a statute of frauds. The term statute of frauds is descriptive of statutes which require
certain classes of contracts to be in writing. The statute does not deprive the parties of the right to contract with
respect to the matters therein involved, but merely regulates the formalities of the contract necessary to render it
enforceable.41 The effect of non-compliance is simply that no action can be proved unless the requirement is
complied with. Oral evidence of the contract will be excluded upon timely objection. But if the parties to the action,
during the trial, make no objection to the admissibility of the oral evidence to support the contract covered by the
statute, and thereby permit such contract to be proved orally, it will be just as binding upon the parties as if it had
been reduced to writing.42

Per petitioner’s testimony,43 the Bonifacio property was offered for sale by its owner Mendoza. Petitioner told
respondent spouses Ramos that she was going to buy the lot, but the title to the same will be in the latter’s names.
The money from the hardware store managed by respondent spouses Ramos shall be used to buy the Bonifacio
property, which shall then be mortgaged by the respondent spouses Ramos so that they could obtain a loan for
building a bigger store. The purchase price of ₱80,000.00 was paid for the Bonifacio property. On 20 September
1984, the respondent spouses Ramos returned the management of the store to petitioner. Thereafter, petitioner
allowed her son Johnson to inventory the stocks of the store. Johnson found out that the purchase price of
₱80,000.00 for the Bonifacio property was already fully paid. When petitioner told the respondent spouses Ramos to
transfer the title to the Bonifacio property in her name, the respondent spouses Ramos refused, thus, prompting
petitioner to file a complaint against them.

Similarly, Johnson testified44 that on 22 March 1982, petitioner turned over the management of the hardware store to
respondent spouses Ramos. During that time, an inventory45 of the stocks of the store was made and the total value
of the said stocks were determined to be ₱226,951.05. When respondent spouses Ramos returned the
management of the store to petitioner on 20 September 1984, another inventory 46 of the stocks was made, with the
total value of the stocks falling to ₱110,004.88. The difference of ₱116,946.16 was attributed to the purchase of the
Bonifacio property by the respondent spouses Ramos using the profits from the sales of the store.

A careful perusal of the records of the case reveals that respondent spouses Ramos did indeed fail to interpose
their objections regarding the admissibility of the afore-mentioned testimonies when the same were offered to prove
the alleged verbal trust agreement between them and petitioner. Consequently, these testimonies were rendered
admissible in evidence. Nevertheless, while admissibility of evidence is an affair of logic and law, determined
as it is by its relevance and competence, the weight to be given to such evidence, once admitted, still
depends on judicial evaluation.47 Thus, despite the admissibility of the said testimonies, the Court holds that the
same carried little weight in proving the alleged verbal trust agreement between petitioner and respondent spouses.

Petitioner’s allegations as to the existence of an express trust agreement with respondent spouses Ramos,
supported only by her own and her son Johnson’s testimonies, do not hold water. As correctly ruled by the Court of
Appeals, a resulting difference of ₱116,946.15 in the beginning inventory of the stocks of the hardware store (before
management was transferred to respondent spouses Ramos) and the second inventory thereof (after management
was returned to petitioner), by itself, is not conclusive proof that the said amount was used to pay the purchase price
of the Bonifacio property, such as would make it the property of petitioner held merely in trust by respondent
spouses Ramos. Such a conclusion adopted by the RTC is purely speculative and non sequitur. The resulting
difference in the two inventories might have been caused by other factors and the same is capable of other
interpretations (e. g., that the amount thereof may have been written off as business losses due to a bad economic
condition, or that the stocks of the store might have been damaged or otherwise their purchase prices have
increased dramatically, etc.), the exclusion of which rested upon the shoulders of petitioner alone who has the
burden of proof in the instant case. This petitioner miserably failed to do. The fact that respondent spouses Ramos
never denied the ₱116,946.15 difference, or that they failed to present proof that they indeed used the said amount
to pay the other obligations and liabilities of petitioner is not sufficient to discharge petitioner’s burden to prove the
existence of the alleged express trust agreement.

WHEREFORE, premises considered, the instant Petition for Review on Certiorari under Rule 45 of the Rules of
Court is hereby DENIED. The assailed Decision of the Court of Appeals in CA-G.R. CV No. 69731 dated 15
December 2006 is hereby AFFIRMED. Costs against petitioner.

SO ORDERED.
G.R. No. 172822               Petitioner,

MOF COMPANY, INC., Petitioner,

vs.
SHIN YANG BROKERAGE CORPORATION Respondent.

DECISION

DEL CASTILLO, J.:

The necessity of proving lies with the person who sues.

The refusal of the consignee named in the bill of lading to pay the freightage on the claim that it is not privy to the
contract of affreightment propelled the shipper to sue for collection of money, stressing that its sole evidence, the bill
of lading, suffices to prove that the consignee is bound to pay. Petitioner now comes to us by way of Petition for
Review on Certiorari1 under Rule 45 praying for the reversal of the Court of Appeals' (CA) judgment that dismissed
its action for sum of money for insufficiency of evidence.

Factual Antecedents

On October 25, 2001, Halla Trading Co., a company based in Korea, shipped to Manila secondhand cars and other
articles on board the vessel Hanjin Busan 0238W. The bill of lading covering the shipment, i.e., Bill of Lading No.
HJSCPUSI14168303,2 which was prepared by the carrier Hanjin Shipping Co., Ltd. (Hanjin), named respondent
Shin Yang Brokerage Corp. (Shin Yang) as the consignee and indicated that payment was on a "Freight Collect"
basis, i.e., that the consignee/receiver of the goods would be the one to pay for the freight and other charges in the
total amount of ₱57,646.00.3

The shipment arrived in Manila on October 29, 2001. Thereafter, petitioner MOF Company, Inc. (MOF), Hanjin’s
exclusive general agent in the Philippines, repeatedly demanded the payment of ocean freight, documentation fee
and terminal handling charges from Shin Yang. The latter, however, failed and refused to pay contending that it did
not cause the importation of the goods, that it is only the Consolidator of the said shipment, that the ultimate
consignee did not endorse in its favor the original bill of lading and that the bill of lading was prepared without its
consent.

Thus, on March 19, 2003, MOF filed a case for sum of money before the Metropolitan Trial Court of Pasay City
(MeTC Pasay) which was docketed as Civil Case No. 206-03 and raffled to Branch 48. MOF alleged that Shin Yang,
a regular client, caused the importation and shipment of the goods and assured it that ocean freight and other
charges would be paid upon arrival of the goods in Manila. Yet, after Hanjin's compliance, Shin Yang unjustly
breached its obligation to pay. MOF argued that Shin Yang, as the named consignee in the bill of lading, entered
itself as a party to the contract and bound itself to the "Freight Collect" arrangement. MOF thus prayed for the
payment of ₱57,646.00 representing ocean freight, documentation fee and terminal handling charges as well as
damages and attorney’s fees.

Claiming that it is merely a consolidator/forwarder and that Bill of Lading No. HJSCPUSI14168303 was not
endorsed to it by the ultimate consignee, Shin Yang denied any involvement in shipping the goods or in promising to
shoulder the freightage. It asserted that it never authorized Halla Trading Co. to ship the articles or to have its name
included in the bill of lading. Shin Yang also alleged that MOF failed to present supporting documents to prove that it
was Shin Yang that caused the importation or the one that assured payment of the shipping charges upon arrival of
the goods in Manila.

Ruling of the Metropolitan Trial Court

On June 16, 2004, the MeTC of Pasay City, Branch 48 rendered its Decision4 in favor of MOF. It ruled that Shin
Yang cannot disclaim being a party to the contract of affreightment because:

x x x it would appear that defendant has business transactions with plaintiff. This is evident from defendant’s letters
dated 09 May 2002 and 13 May 2002 (Exhibits "1" and "2", defendant’s Position Paper) where it requested for the
release of refund of container deposits x x x. [In] the mind of the Court, by analogy, a written contract need not be
necessary; a mutual understanding [would suffice]. Further, plaintiff would have not included the name of the
defendant in the bill of lading, had there been no prior agreement to that effect.

In sum, plaintiff has sufficiently proved its cause of action against the defendant and the latter is obliged to honor its
agreement with plaintiff despite the absence of a written contract.5

The dispositive portion of the MeTC Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff and against the defendant,
ordering the latter to pay plaintiff as follows:

1. ₱57,646.00 plus legal interest from the date of demand until fully paid,

2. ₱10,000.00 as and for attorney’s fees and

3. the cost of suit.

SO ORDERED.6

Ruling of the Regional Trial Court

The Regional Trial Court (RTC) of Pasay City, Branch 108 affirmed in toto the Decision of the MeTC. It held that:

MOF and Shin Yang entered into a contract of affreightment which Black’s Law Dictionary defined as a contract with
the ship owner to hire his ship or part of it, for the carriage of goods and generally take the form either of a charter
party or a bill of lading.

The bill of lading contain[s] the information embodied in the contract.

Article 652 of the Code of Commerce provides that the charter party must be in writing; however, Article 653 says:
"If the cargo should be received without charter party having been signed, the contract shall be understood as
executed in accordance with what appears in the bill of lading, the sole evidence of title with regard to the cargo for
determining the rights and obligations of the ship agent, of the captain and of the charterer". Thus, the Supreme
Court opined in the Market Developers, Inc. (MADE) vs. Honorable Intermediate Appellate Court and Gaudioso Uy,
G.R. No. 74978, September 8, 1989, this kind of contract may be oral. In another case, Compania Maritima vs.
Insurance Company of North America, 12 SCRA 213 the contract of affreightment by telephone was recognized
where the oral agreement was later confirmed by a formal booking.

xxxx

Defendant is liable to pay the sum of ₱57,646.00, with interest until fully paid, attorney’s fees of ₱10,000.00 [and]
cost of suit.

Considering all the foregoing, this Court affirms in toto the decision of the Court a quo.

SO ORDERED.7

Ruling of the Court of Appeals

Seeing the matter in a different light, the CA dismissed MOF’s complaint and refused to award any form of damages
or attorney’s fees. It opined that MOF failed to substantiate its claim that Shin Yang had a hand in the importation of
the articles to the Philippines or that it gave its consent to be a consignee of the subject goods. In its March 22,
2006 Decision,8 the CA said:

This Court is persuaded [that except] for the Bill of Lading, respondent has not presented any other evidence to
bolster its claim that petitioner has entered [into] an agreement of affreightment with respondent, be it verbal or
written. It is noted that the Bill of Lading was prepared by Hanjin Shipping, not the petitioner. Hanjin is the principal
while respondent is the former’s agent. (p. 43, rollo)

The conclusion of the court a quo, which was upheld by the RTC Pasay City, Branch 108 xxx is purely speculative
and conjectural. A court cannot rely on speculations, conjectures or guesswork, but must depend upon competent
proof and on the basis of the best evidence obtainable under the circumstances. Litigation cannot be properly
resolved by suppositions, deductions or even presumptions, with no basis in evidence, for the truth must have to be
determined by the hard rules of admissibility and proof (Lagon vs. Hooven Comalco Industries, Inc. 349 SCRA 363).

While it is true that a bill of lading serves two (2) functions: first, it is a receipt for the goods shipped; second, it is a
contract by which three parties, namely, the shipper, the carrier and the consignee who undertake specific
responsibilities and assume stipulated obligations (Belgian Overseas Chartering and Shipping N.V. vs. Phil. First
Insurance Co., Inc., 383 SCRA 23), x x x if the same is not accepted, it is as if one party does not accept the
contract. Said the Supreme Court:

"A bill of lading delivered and accepted constitutes the contract of carriage[,] even though not signed, because the
acceptance of a paper containing the terms of a proposed contract generally constitutes an acceptance of the
contract and of all its terms and conditions of which the acceptor has actual or constructive notice" (Keng Hua Paper
Products Co., Inc. vs. CA, 286 SCRA 257).
In the present case, petitioner did not only [refuse to] accept the bill of lading, but it likewise disown[ed] the shipment
x x x. [Neither did it] authorize Halla Trading Company or anyone to ship or export the same on its behalf.

It is settled that a contract is upheld as long as there is proof of consent, subject matter and cause (Sta. Clara
Homeowner’s Association vs. Gaston, 374 SCRA 396). In the case at bar, there is not even any iota of evidence to
show that petitioner had given its consent.

"He who alleges a fact has the burden of proving it and a mere allegation is not evidence" (Luxuria Homes Inc. vs.
CA, 302 SCRA 315).

The 40-footer van contains goods of substantial value. It is highly improbable for petitioner not to pay the charges,
which is very minimal compared with the value of the goods, in order that it could work on the release thereof.

For failure to substantiate its claim by preponderance of evidence, respondent has not established its case against
petitioner.9

Petitioners filed a motion for reconsideration but it was denied in a Resolution10 dated May 25, 2006. Hence, this
petition for review on certiorari.

Petitioner’s Arguments

In assailing the CA’s Decision, MOF argues that the factual findings of both the MeTC and RTC are entitled to great
weight and respect and should have bound the CA. It stresses that the appellate court has no justifiable reason to
disturb the lower courts’ judgments because their conclusions are well-supported by the evidence on record.

MOF further argues that the CA erred in labeling the findings of the lower courts as purely ‘speculative and
conjectural’. According to MOF, the bill of lading, which expressly stated Shin Yang as the consignee, is the best
evidence of the latter’s actual participation in the transportation of the goods. Such document, validly entered,
stands as the law among the shipper, carrier and the consignee, who are all bound by the terms stated therein.
Besides, a carrier’s valid claim after it fulfilled its obligation cannot just be rejected by the named consignee upon a
simple denial that it ever consented to be a party in a contract of affreightment, or that it ever participated in the
preparation of the bill of lading. As against Shin Yang’s bare denials, the bill of lading is the sufficient preponderance
of evidence required to prove MOF’s claim. MOF maintains that Shin Yang was the one that supplied all the details
in the bill of lading and acquiesced to be named consignee of the shipment on a ‘Freight Collect’ basis.

Lastly, MOF claims that even if Shin Yang never gave its consent, it cannot avoid its obligation to pay, because it
never objected to being named as the consignee in the bill of lading and that it only protested when the shipment
arrived in the Philippines, presumably due to a botched transaction between it and Halla Trading Co. Furthermore,
Shin Yang’s letters asking for the refund of container deposits highlight the fact that it was aware of the shipment
and that it undertook preparations for the intended release of the shipment.

Respondent’s Arguments

Echoing the CA decision, Shin Yang insists that MOF has no evidence to prove that it consented to take part in the
contract of affreightment. Shin Yang argues that MOF miserably failed to present any evidence to prove that it was
the one that made preparations for the subject shipment, or that it is an ‘actual shipping practice’ that
forwarders/consolidators as consignees are the ones that provide carriers details and information on the bills of
lading.

Shin Yang contends that a bill of lading is essentially a contract between the shipper and the carrier and ordinarily,
the shipper is the one liable for the freight charges. A consignee, on the other hand, is initially a stranger to the bill of
lading and can be liable only when the bill of lading specifies that the charges are to be paid by the consignee. This
liability arises from either a) the contract of agency between the shipper/consignor and the consignee; or b) the
consignee’s availment of the stipulation pour autrui drawn up by and between the shipper/ consignor and carrier
upon the consignee’s demand that the goods be delivered to it. Shin Yang contends that the fact that its name was
mentioned as the consignee of the cargoes did not make it automatically liable for the freightage because it never
benefited from the shipment. It never claimed or accepted the goods, it was not the shipper’s agent, it was not
aware of its designation as consignee and the original bill of lading was never endorsed to it.

Issue

The issue for resolution is whether a consignee, who is not a signatory to the bill of lading, is bound by the
stipulations thereof. Corollarily, whether respondent who was not an agent of the shipper and who did not make any
demand for the fulfillment of the stipulations of the bill of lading drawn in its favor is liable to pay the corresponding
freight and handling charges.

Our Ruling
Since the CA and the trial courts arrived at different conclusions, we are constrained to depart from the general rule
that only errors of law may be raised in a Petition for Review on Certiorari under Rule 45 of the Rules of Court and
will review the evidence presented.11

The bill of lading is oftentimes drawn up by the shipper/consignor and the carrier without the intervention of the
consignee. However, the latter can be bound by the stipulations of the bill of lading when a) there is a relation of
agency between the shipper or consignor and the consignee or b) when the consignee demands fulfillment of the
stipulation of the bill of lading which was drawn up in its favor.12

In Keng Hua Paper Products Co., Inc. v. Court of Appeals, 13 we held that once the bill of lading is received by the
consignee who does not object to any terms or stipulations contained therein, it constitutes as an acceptance of the
contract and of all of its terms and conditions, of which the acceptor has actual or constructive notice.1avvphi1

In Mendoza v. Philippine Air Lines, Inc.,14 the consignee sued the carrier for damages but nevertheless claimed that
he was never a party to the contract of transportation and was a complete stranger thereto. In debunking
Mendoza’s contention, we held that:

x x x First, he insists that the articles of the Code of Commerce should be applied; that he invokes the provisions of
said Code governing the obligations of a common carrier to make prompt delivery of goods given to it under a
contract of transportation. Later, as already said, he says that he was never a party to the contract of transportation
and was a complete stranger to it, and that he is now suing on a tort or a violation of his rights as a stranger (culpa
aquiliana). If he does not invoke the contract of carriage entered into with the defendant company, then he would
hardly have any leg to stand on. His right to prompt delivery of the can of film at the Pili Air Port stems and is derived
from the contract of carriage under which contract, the PAL undertook to carry the can of film safely and to deliver it
to him promptly. Take away or ignore that contract and the obligation to carry and to deliver and right to prompt
delivery disappear. Common carriers are not obligated by law to carry and to deliver merchandise, and persons are
not vested with the right to prompt delivery, unless such common carriers previously assume the obligation. Said
rights and obligations are created by a specific contract entered into by the parties. In the present case, the
findings of the trial court which as already stated, are accepted by the parties and which we must accept are
to the effect that the LVN Pictures Inc. and Jose Mendoza on one side, and the defendant company on the
other, entered into a contract of transportation (p. 29, Rec. on Appeal). One interpretation of said finding is
that the LVN Pictures Inc. through previous agreement with Mendoza acted as the latter's agent. When he
negotiated with the LVN Pictures Inc. to rent the film 'Himala ng Birhen' and show it during the Naga town
fiesta, he most probably authorized and enjoined the Picture Company to ship the film for him on the PAL
on September 17th. Another interpretation is that even if the LVN Pictures Inc. as consignor of its own
initiative, and acting independently of Mendoza for the time being, made Mendoza a consignee. [Mendoza
made himself a party to the contract of transportaion when he appeared at the Pili Air Port armed with the
copy of the Air Way Bill (Exh. 1) demanding the delivery of the shipment to him.] The very citation made by
appellant in his memorandum supports this view. Speaking of the possibility of a conflict between the order of the
shipper on the one hand and the order of the consignee on the other, as when the shipper orders the shipping
company to return or retain the goods shipped while the consignee demands their delivery, Malagarriga in his book
Codigo de Comercio Comentado, Vol. 1, p. 400, citing a decision of the Argentina Court of Appeals on commercial
matters, cited by Tolentino in Vol. II of his book entitled 'Commentaries and Jurisprudence on the Commercial Laws
of the Philippines' p. 209, says that the right of the shipper to countermand the shipment terminates when the
consignee or legitimate holder of the bill of lading appears with such bill of lading before the carrier and
makes himself a party to the contract. Prior to that time he is a stranger to the contract.

Still another view of this phase of the case is that contemplated in Art. 1257, paragraph 2, of the old Civil
Code (now Art. 1311, second paragraph) which reads thus:

‘Should the contract contain any stipulation in favor of a third person, he may demand its fulfillment
provided he has given notice of his acceptance to the person bound before the stipulation has been
revoked.'

Here, the contract of carriage between the LVN Pictures Inc. and the defendant carrier contains the
stipulations of delivery to Mendoza as consignee. His demand for the delivery of the can of film to him at
the Pili Air Port may be regarded as a notice of his acceptance of the stipulation of the delivery in his favor
contained in the contract of carriage and delivery. In this case he also made himself a party to the contract,
or at least has come to court to enforce it. His cause of action must necessarily be founded on its
breach.15 (Emphasis Ours)

In sum, a consignee, although not a signatory to the contract of carriage between the shipper and the carrier,
becomes a party to the contract by reason of either a) the relationship of agency between the consignee and the
shipper/ consignor; b) the unequivocal acceptance of the bill of lading delivered to the consignee, with full
knowledge of its contents or c) availment of the stipulation pour autrui, i.e., when the consignee, a third person,
demands before the carrier the fulfillment of the stipulation made by the consignor/shipper in the consignee’s favor,
specifically the delivery of the goods/cargoes shipped.16
In the instant case, Shin Yang consistently denied in all of its pleadings that it authorized Halla Trading, Co. to ship
the goods on its behalf; or that it got hold of the bill of lading covering the shipment or that it demanded the release
of the cargo. Basic is the rule in evidence that the burden of proof lies upon him who asserts it, not upon him who
denies, since, by the nature of things, he who denies a fact cannot produce any proof of it. 17 Thus, MOF has the
burden to controvert all these denials, it being insistent that Shin Yang asserted itself as the consignee and the one
that caused the shipment of the goods to the Philippines.

In civil cases, the party having the burden of proof must establish his case by preponderance of evidence, 18 which
means evidence which is of greater weight, or more convincing than that which is offered in opposition to it. 19 Here,
MOF failed to meet the required quantum of proof. Other than presenting the bill of lading, which, at most, proves
that the carrier acknowledged receipt of the subject cargo from the shipper and that the consignee named is to
shoulder the freightage, MOF has not adduced any other credible evidence to strengthen its cause of action. It did
not even present any witness in support of its allegation that it was Shin Yang which furnished all the details
indicated in the bill of lading and that Shin Yang consented to shoulder the shipment costs. There is also nothing in
the records which would indicate that Shin Yang was an agent of Halla Trading Co. or that it exercised any act that
would bind it as a named consignee. Thus, the CA correctly dismissed the suit for failure of petitioner to establish its
cause against respondent.

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated March 22, 2006
dismissing petitioner’s complaint and the Resolution dated May 25, 2006 denying the motion for reconsideration are
AFFIRMED.

SO ORDERED.
G.R. No. 170677               July 31, 2013

VSD REALTY & DEVELOPMENT CORPORATION, Petitioner,

vs.
UNIWIDE SALES, INC. and DOLORES BAELLO TEJADA, Respondents.

RESOLUTION

PERALTA, J.:

This is a motion for reconsideration of the Decision1 dated October 24, 2012, the dispositive portion of which reads:

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated May 30, 2005 and its
Resolution dated December 6, 2005 in CA-G.R. 2V No. 69824 are REVERSED and SET ASIDE. The Decision of
the Regional Trial Court of Caloocan City, Branch 126, in Civil Case No. C-16933 is REINSTATED with
MODIFICATION as follows:

(1) Paragraph 1 of the dispositive portion of the Decision dated October 2, 2000 of the Regional Trial Court
of Caloocan City, Branch 126, in Civil Case No. C-16933, is deleted;

(2) Respondent Dolores Baello and all persons/entities claiming title under her, including respondent
Uniwide Sales, Inc., are ordered to convey and to return the property or the lot covered by TCT No. T-
285312 to petitioner VSD Realty and Development Corporation upon finality of this Decision;

(3) Respondent Dolores Baello is ordered to pay just and reasonable compensation for the occupancy and
use of the land of petitioner VSD Realty and Development Corporation in the amount of ₱58,333.30 per
month from September 12, 1994 until the Decision is final and executory, with legal interest of six percent
(6%) per annum reckoned from the filing of the Complaint on June 8, 1995 until the finality of this Decision.
Thereafter, respondent Uniwide Sales, Inc. is jointly and severally liable with Dolores Baello for the payment
to petitioner VSD Realty and Development Corporation of monthly rental in the amount of ₱58,333.30 from
the finality of this Decision until the land is actually vacated, with twelve percent (12%) interest per annum.

(4) The award of attorney's fees is deleted.

No costs.

SO ORDERED.2

We recapitulate the facts. On June 8, 1995, petitioner VSD Realty and Development Corporation (VSD) filed a
Complaint for annulment of title and recovery of possession of property against respondents Uniwide Sales, Inc.
(Uniwide) and Dolores Baello3 with the Regional Trial Court (RTC) of Caloocan City, Branch 126 (trial court).
Petitioner sought the nullification of Transfer Certificate of Title (TCT) No. (35788) 12754 in the name of Dolores
Baello and the recovery of possession of property that is being occupied by Uniwide by virtue of a contract of lease
with Dolores Baello.

Petitioner VSD alleged that it is the registered owner of a parcel of land in Caloocan City, with an area of 2,835.30
square meters, more or less, and covered by TCT No. T-2853124 of the Register of Deeds of Caloocan City. VSD
bought the said property from Felisa D. Bonifacio, whose title thereto, TCT No. 265777, was registered by virtue of
an Order5 dated October 8, 1992 authorizing the segregation of the same in Land Registration Commission (LRC)
Case No. C-3288. Petitioner also alleged that its right to the subject property and the validity and correctness of the
technical description and location of the property are duly established in LRC Case No. C-3288. 6 Petitioner alleged
that its title, TCT No. 285312, is the correct, valid and legal document that covers the subject property, since it is the
result of land registration proceedings in accordance with law.

Petitioner alleged that respondent Baello’s title, TCT No. 35788, covering the same property, is spurious and can
only be the result of falsification and illegal machinations, and has no legal basis to establish any right over the
subject property. Moreover, the technical description of Baello’s title is so general that it is impossible to determine
with certainty the exact location of the property covered by it. Petitioner further alleged that the technical description
has no legal basis per the records of the Lands Management Bureau and the Bureau of Lands. It added that
Baello’s title described the property to be Lot 3-A of subdivision plan Psd 706, but an examination of Psd 706 shows
that there is no Lot 3-A in plan Psd 706. Petitioner contends that in view of the foregoing reasons, Baello has no
legal basis to claim the subject property, and Baello’s title, TCT No. 35788, is spurious and illegal and should be
annulled. Thus, petitioner sought recovery of possession of the subject property and the payment of rent from
respondents.
Respondent Baello filed a Motion to Dismiss on the grounds that the complaint stated no cause of action, and that
the demand for annulment of title and/or conveyance, whether grounded upon the commission of fraud or upon a
constructive trust, has prescribed, and is barred by laches. The trial court denied Baello’s motion to dismiss as well
as Baello's subsequent motion for reconsideration for lack of merit.

Thereafter, respondent Baello filed an Answer, alleging that the subject property was bequeathed to her through a
will by her adoptive mother, Jacoba Galauran. She alleged that during the lifetime of Jacoba Galauran, the subject
property was originally surveyed on January 24-26, 19237 and, thereafter, on December 29, 1924.8 Baello alleged
that after Jacoba Galauran died in 1952, her will was duly approved by the probate court, the Court of First Instance,
Pasig, Rizal. Baello stated that she registered the subject property in her name, and TCT No. (35788) 127549 was
issued in her favor on September 6, 1954. In 1959, she had the subject property surveyed. On July 15, 1988, she
entered into a Contract of Lease10 with respondent Uniwide, which erected in full public view the building it presently
occupies. Baello stated that she has been religiously paying realty taxes for the subject property,11 and that the
Complaint should be dismissed as she enjoys a superior right over the subject property because the registration of
her title predates the registration of petitioner’s title by at least 40 years.

The deposition of respondent Baello, which was taken on October 1, 1998 at the Philippine Consular Office in San
Francisco, California, United States of America, affirmed the same facts stated in her Answer.

On October 2, 2000, the trial court rendered a Decision12 in favor of petitioner. The trial court held that the evidence
for petitioner showed that it is the rightful owner of the subject lot covered by TCT No. 285312 of the Register of
Deeds of Caloocan City. The lot was purchased by petitioner from Felisa D. Bonifacio, who became the owner
thereof by virtue of her petition for segregation of the subject property from Original Certificate of Title (OCT) No.
994 of the Register of Deeds of Rizal in LRC Case No. C-3288. TCT No. 265777 was issued to Felisa Bonifacio
pursuant to an Order dated October 8, 1992 by the RTC of Caloocan City in LRC Case No. C-3288. The trial court
stated that it cannot question the Order (in LRC Case No. C-3288) issued by a co-equal court in this respect,
considering that Regional Trial Courts now have the authority to act not only on applications for original registration,
but also over all petitions filed after original registration of title, with power to hear and determine all questions
arising from such applications or petitions.

Moreover, the trial court found that the technical description in respondent Baello’s title is not the same as the
technical description in petitioner’s title, and that a mere reading of the technical description in petitioner’s title and
that in Baello’s title would show that they are not one and the same. The trial court averred that the technical
description of the subject lot in petitioner’s title is recorded with the Register of Deeds of Caloocan City.13

The trial court stated that in the face of the documentary and testimonial evidence of competent government
witnesses who affirmed petitioner’s right to the technical description, it was incumbent on respondent Baello to
present credible evidence to overcome the same, but she failed to do so. The trial court held that from the evidence
adduced, petitioner is the registered owner of TCT No. 285312, formerly TCT No. 265777 when Felisa D. Bonifacio
was the registered owner, while respondent Baello is the registered owner of a parcel of land covered by TCT No.
(35788) 12754 and respondent Uniwide is a mere lessee of the land. Baello is the holder of a title over a lot entirely
different and not in any way related to petitioner’s title and its technical description. Petitioner proved its ownership
and the identity of the subject property that it sought to recover, which is an essential requisite in its action for
annulment of title and recovery of possession of property. The dispositive portion of the trial court's Decision reads:

WHEREFORE, in the light of the foregoing consideration, judgment is hereby rendered ordering the following:

1. Declaring TCT No. 35788 [12754] to be null and void;

2. Defendant Baello and all persons/entity claiming title under her, including UNIWIDE, to convey and to
return the property to plaintiff VSD on the basis of the latter's full, complete, valid and legal ownership;

3. Defendant Baello and UNIWIDE, jointly and severally, to pay a just and reasonable compensation per
month of ₱1,200,000.00 with legal interest for the occupancy and use of plaintiff's land from September 12,
1994, until actually vacated by them;

4. Defendants, jointly and severally, to pay attorney's fees of ₱200,000.00.

SO ORDERED.14

Respondents appealed the trial court’s decision to the Court of Appeals, which rendered a Decision dated May 30,
2005 in favor of respondents, and reversed and set aside the Decision of the RTC and dismissed petitioner’s
complaint.

The Court of Appeals stated that the main issue to be resolved was whether or not there was a valid ground to
annul respondent Baello's TCT No. (35788) 12754 to warrant the reconveyance of the subject property to petitioner.
The Court of Appeals stated that based on existing jurisprudence, a certificate of title may be annulled or cancelled
by the court under the following grounds: (1) when the title is void because (a) it was procured through fraud, (b) it
was issued for a land already covered by a prior Torrens title, (c) it covers land reserved for military, naval or civil
public purposes, and (d) it covers a land which has not been brought under the registration proceeding; (2) when the
title is replaced by one issued under a cadastral proceeding; and (3) when the condition for its issuance has been
violated by the registered owner.15 The Court of Appeals averred that while petitioner sought to annul respondent
Baello's TCT No. 35788 on the ground that the same was spurious, it failed to prove that Baello’s title was indeed
spurious. The appellate court also noted that the trial court’s decision never mentioned that Baello's title was
spurious. It further stated that any doubt or uncertainty as to the technical description contained in a certificate of
title is not a ground for annulment of title. It held that since there was no legal basis for the annulment of Baello's
TCT No. 35788, the trial court erred in declaring the said title null and void. It stated that well settled is the rule that a
Torrens title is generally conclusive evidence of ownership of the land referred to therein, and a strong presumption
exists that it was regularly issued and valid. 16 Hence, respondent Baello's TCT No. 35788 enjoys the presumption of
validity.

Petitioner filed a petition for review on certiorari before this Court, raising the following issues: (1) The Court of
Appeals erred in ruling that the burden of proof did not shift to respondents, notwithstanding the overwhelming
evidence presented by petitioner; (2) the Court of Appeals misconstrued petitioner's allegation that the "issuance of
two titles over the same piece of land has not been proved"; (3) the Court of Appeals erred in treating petitioner's
complaint as one only for annulment of title when petitioner also sought reconveyance of the lot in question; (4) the
Court of Appeals erred in ruling that respondent Baello's title is not spurious; and (5) respondent Uniwide is not a
lessee in good faith.17

This Court discussed the pertinent issues raised with the main issues: whether or not petitioner is entitled to recover
possession of the subject property; and, whether or not the title of respondent Baello may be annulled.

The established legal principle in actions for annulment or reconveyance of title is that a party seeking it should
establish not merely by a preponderance of evidence but by clear and convincing evidence that the land sought to
be reconveyed is his.18 Article 43419 of the Civil Code provides that to successfully maintain an action to recover the
ownership of a real property, the person who claims a better right to it must prove two (2) things: first, the identity of
the land claimed, and; second, his title thereto.20 In an action to recover, the property must be identified, and the
plaintiff must rely on the strength of his title and not on the weakness of the defendant's claim.21

The Court upheld the decision of the trial court that petitioner was able to establish through documentary and
testimonial evidence that the technical description of its Torrens title, embodying the identity of the land claimed,
covers the property that is being occupied by respondent Uniwide by virtue of a lease contract with respondent
Baello, and that a comparison of the technical description of the land covered by the title of petitioner and the
technical description of the land covered by the title of Baello shows that they are not the same. Hence, the Court
granted the petition, and reversed and set aside the Decision of the Court of Appeals and its Resolution denying
petitioners' motion for reconsideration; and the Decision of the RTC was reinstated with modification. The dispositive
portion of the Court's decision has been cited earlier.

Respondent Baello filed a motion for reconsideration22 of the Court's decision on the following grounds:

1) This honorable Court erred in not holding that petitioner VSD's Title (Transfer Certificate of Title No. T-
285312) is null and void and that the same cannot give rise to any claim of ownership or possession over
the subject property, having been derived from the fake and nonexistent Original Certificate of Title (OCT)
No. 994 dated 19 April 1917, which purportedly covered the non-existent Maysilo estate.

2) This honorable Court erred, and deprived respondent Baello of due process, when it made a finding that
respondent Baello's title ([TCT] No. (35788) 12754) does not cover the subject property considering that:

(a) Whether respondent Baello's title covers the subject property was never the issue in this case. In
praying for the annulment of respondent Baello's title, the basic underlying premise and basis of
such action is that the two titles, petitioner VSD's title and respondent Baello's title, cover the same
property. Even if VSD's action is considered as one for reconveyance, the same hinges on the
validity of the title of VSD.

(b) A determination of whether a certificate of title's technical description covers a particular area of
land is a matter involving technical expertise, which this Honorable Court does not have. Such a
determination can only be resolved through a survey conducted by a licensed and reputable
geodetic engineer.

(c) In any case, records of the case show that respondent Baello was able to establish through
positive evidence that her title covers the subject property.

3) This honorable Court erred in finding that petitioner VSD was able to prove that it has a better right to the
subject property by mere presentation of TCT No. T-28512 registered under its name and by showing that
the technical descriptions contained in TCT No. T-28512 correctly described the subject property. On the
contrary, the evidence presented by petitioner VSD is insufficient to overcome the presumptive title of
respondent Baello, who has been in possession of the subject property for more than fifty years. Thus, this
instant action for reconveyance of the subject property initiated by petitioner VSD must fail.
 4) This honorable Court erred in not holding that respondent Baello enjoys a superior right to the disputed
property because the registration of her title predated the registration of petitioner VSD's title by at least 40
years.

5) This honorable Court erred in ordering respondent Baello to pay monthly compensation to petitioner VSD
considering that respondent Baello merely entered into a contract of lease with Uniwide involving land that is
covered by the technical description of her title – which this Honorable Court has held to be valid.23

On February 13, 2013, respondent Baello,24 by counsel, filed a Motion for Leave and Time to File Judicial Affidavit of
Mr. Felino Cortez and Supplemental Motion for Reconsideration (Re: Decision dated 24 October 2012). In the said
motion, respondent Baello contended that subsequent to the filing of her motion for reconsideration, she discovered
new evidence, not available at the time of trial and of the filing of her motion for reconsideration, which established
that petitioner VSD's TCT No. T-285312 cannot be traced to the legitimate and authentic TCT No. 994; hence,
petitioner's title is null and void. Baello's daughter, Bernadette Flores, requested Mr. Felino Cortez, retired and
former Director on Registration of the Land Registration Authority (LRA) to conduct an investigation on petitioner
VSD's TCT No. T-285312. Mr. Cortez examined the documents with the LRA and the Register of Deeds of
Caloocan, and he allegedly found that the copy of Felisa Bonifacio's TCT No. 265777/T-1325 that was presented to
the Register of Deeds of Caloocan, for the purpose of the issuance of petitioner VSD's TCT No. T-285312, was
tampered to fraudulently reflect that it was derived from the legitimate and authentic OCT No. 994 dated May 3,
1917. It is alleged that the original microfilm copy retained by the LRA shows that the same TCT No. 265777/T-1325
did not originate from the legitimate and authentic OCT No. 994 dated May 3, 1917, but was instead derived from a
certain OCT No. 994 dated April 19, 1912. In view of this development, and in the interest of justice, and to protect
respondent Baello's constitutional right to property, and to avoid conflicting ruling of this Court, respondent Baello
begged the indulgence of this Court to grant her Motion for Leave and Time to File Judicial Affidavit of Mr. Felino
Cortez and Supplemental Motion for Reconsideration, which motion was granted by the Court.25

On March 14, 2013, respondent Dolores Baello, by counsel, filed a Supplemental Motion for reconsideration of the
Decision dated October 24, 201226 on the following grounds:

1) Felisa Bonifacio's [TCT] No. 265777/T-1325, from which petitioner [VSD] derived its title, is null and void,
having been derived from a fake and non-existent OCT No. 994. This new evidence bolsters respondent
Baello's position that this honorable Court erred in not holding that petitioner VSD's title (TCT No. T-285312)
is null and void and cannot give rise to any claim of ownership or possession over the subject property;

2) This honorable Court seriously erred in finding that respondent Baello's TCT No. (35788) 12754 does not
cover the subject property. A careful examination of respondent Baello's TCT No. (35788) 12754 and
petitioner VSD's TCT No. T-285312 will show that the technical descriptions of the land referred to in those
titles both refer to the same parcel of land;

3) Aside from the manifest irregularities appearing on the face of Felisa Bonifacio's TCT No. 265777/T-1325
(from which petitioner VSD derived its title), Felisa Bonifacio's TCT No. 265777/T-1325 cannot be traced
back to the legitimate and authentic OCT No. 994. On the other hand, respondent Baello's TCT No. (35788)
12754 and its predecessor titles can be traced back to the legitimate and authentic OCT No. 994 dated 3
May 1917.27

Petitioner VSD was required to file a comment on the motion for reconsideration. In its Comment on the motion for
reconsideration and the supplemental motion for reconsideration, petitioner contends that a valid title can arise even
from an allegedly void title if a buyer in good faith, like petitioner, intervenes; that the alleged nullity of its title cannot
be raised for the first time on appeal; that additional evidence cannot be presented for the first time on appeal, more
so in a motion for reconsideration before this Court; and that respondent Baello failed to prove that her title covers
the subject property, among others.

In the main, respondent Baello contends that the Court erred in not declaring petitioner VSD's TCT No. T-285312 as
null and void, considering that it is derived from Felisa Bonifacio's TCT No. 265777/T-1325, which, in turn, is derived
from the false and fictitious OCT No. 994 dated April 19, 1917. The records of this case, however, show that Felisa
Bonifacio's TCT No. 265777/T-1325 and VSD's TCT No. T-285312 are derived from the legitimate OCT No. 994
registered on May 3, 1917, which date has been held as the correct date of registration of the said OCT in Manotok
Realty, Inc. v. CLT Realty Development Corporation. 28 In her Motion for Leave and Time to File Judicial Affidavit of
Mr. Felino Cortez and Supplemental Motion for Reconsideration, which the Court granted, respondent Baello
contends that she has additional evidence showing that the copy of Felisa Bonifacio's TCT No. 265777/T-1325 that
was presented to the Register of Deeds of Caloocan, for the purpose of the issuance of petitioner VSD's TCT No. T-
285312, was tampered with to fraudulently reflect that it was derived from the legitimate and authentic OCT No. 994
dated May 3, 1917. It is alleged that the original microfilm copy retained by the LRA shows that Felisa Bonifacio's
TCT No. 265777/T-1325 did not originate from the legitimate and authentic OCT No. 994 dated May 3, 1917, but
was instead derived from OCT No. 994 dated April 19, 1912. Baello cited Manotok Realty, Inc. v. CLT Realty
Development Corporation,29 which allowed the presentation of evidence before a Special Division of the Court of
Appeals to ascertain which of the conflicting claims of title should prevail, even though the case had already been
decided; and the additional evidence was presented in connection with a motion for reconsideration of this Court's
decision.
The Court notes that in Manotok Realty, Inc. v. CLT Realty Development Corporation, 30 the Court pronounced that
there is only one OCT No. 994, which is correctly registered on May 3, 1917, and that any title that traces its source
to OCT No. 994 dated April 17, 1917 is void, for such mother title is inexistent.

The Court recognizes the importance of protecting the country's Torrens system from fake land titles and deeds.
Considering that there is an issue on the validity of the title of petitioner VSD, which title is alleged to be traceable to
OCT No. 994 registered on April 19, 1917, which mother title was held to be inexistent in Manotok Realty, Inc. v.
CLT Realty Development Corporation, 31 in the interest of justice, and to safeguard thecorrect titling of properties, a
remand is proper to determine which of the parties derived valid title from the legitimate OCT No. 994 registered on
May 3, 1917. Since this Court is not a trier of facts and not capacitated to appreciate evidence of the first instance,
the Court may remand this case to the Court of Appeals for further proceedings, as it has been similarly tasked in
Manotok Realty, Inc. v. CLT Realty Development Corporation32 on these bases:

Under Section 6 of Rule 46, which is applicable to original cases for certiorari, the Court may, whenever necessary
to resolve factual issues, delegate the reception of the evidence on such issues to any of its members or to an
appropriate court, agency or office.The delegate need not be the body that rendered the assailed decision.

The Court of Appeals generally has the authority to review findings of fact. Its conclusions as to findings of fact are
generally accorded great respect by this Court. It is a body that is fully capacitated and has a surfeit of experience in
appreciating factual matters, including documentary evidence.

In fact, the Court had actually resorted to referring a factual matter pending before it to the Court of Appeals.  In 1âwphi1

Republic v. Court of Appeals, this Court commissioned the former Thirteenth Division of the Court of Appeals to
hear and receive evidence on the controversy, more particularly to determine "the actual area reclaimed by the
Republic Real Estate Corporation, and the areas of the Cultural Center Complex which are ‘open spaces’ and/or
‘areas reserved for certain purposes,’ determining in the process the validity of such postulates and the respective
measurements of the areas referred to." The Court of Appeals therein received the evidence of the parties and
rendered a "Commissioner’s Report" shortly thereafter. Thus, resort to the Court of Appeals is not a deviant
procedure.

The provisions of Rule 32 should also be considered as governing the grant of authority to the Court of Appeals to
receive evidence in the present case. Under Section 2, Rule 32 of the Rules of Court, a court may, motu proprio,
direct a reference to a commissioner when a question of fact, other than upon the pleadings, arises upon motion or
otherwise, in any stage of a case, or for carrying a judgment or order into effect. The order of reference can be
limited exclusively to receive and report evidence only, and the commissioner may likewise rule upon the
admissibility of evidence. The commissioner is likewise mandated to submit a report in writing to the court upon the
matters submitted to him by the order of reference. In Republic, the commissioner’s report formed the basis of the
final adjudication by the Court on the matter. The same result can obtain herein.33

Accordingly, the Court hereby remands this case to the Court of Appeals.  The Court of Appeals is tasked to hear
1âwphi1

and receive evidence, conclude the proceedings and submit to this Court a report on its findings and recommended
conclusions within three (3) months from finality of this Resolution.

In determining which of the conflicting claims of title should prevail, the Court of Appeals is directed to establish,
based on the evidence already on record and other evidence that will be presented in the proceedings before it, the
following matter:

(1) Whether the title of Felisa D. Bonifacio, TCT No. 265777/T-1325, and the title of VSD, TCT No. T-
285312, can be traced back to the legitimate and authentic OCT No. 994 dated May 3, 1917;

(2) Whether Eleuteria Rivera Bonifacio, who allegedly assigned the subject property to Felisa D. Bonifacio,
had the right and interest over the subject property, and whether Eleuteria Rivera Bonifacio was entitled to
assign her alleged rights and interests over the subject property, known as Lot 23-A-4-B-2-A-3-A, Psd 706,
covered by OCT No. 994, to Felisa D. Bonifacio;

(3) Whether the copy ofFelisa Bonifacio's TCT No. 265777/T-1325 was tampered with to fraudulently reflect
that it was derived from the legitimate and authentic OCT No. 994 dated May 3, 1917;

(4) Whether respondent Baello's TCT No. (35788) 12754 can be traced back to the legitimate and authentic
OCT No. 994 dated May 3, 1917;

(5) Whether the technical description of the title 'of Baello covers the subject property; and

(6) Such other matters necessary and proper in determining which of the conflicting claims of title should
prevail.

WHEREFORE, this case is REMANDED to the Court of Appeals for further proceedings in accordance with the two
preceding paragraphs of this Resolution.
SO ORDERED.

A.M. No. RTJ-09-2197               April 13, 2011

[Formerly OCA-I.P.I. No. 08-3026-RTJ]

ANTONINO MONTICALBO, Complainant,
vs.
JUDGE CRESCENTE F. MARAYA, JR., Regional Trial Court, Branch 11, Calubian, Leyte, Respondent.

DECISION

MENDOZA, J.:

This administrative case stemmed from a verified Complaint dated September 24, 2008 filed by complainant
Antonino Monticalbo charging respondent Judge Crescente F. Maraya, Jr. of the Regional Trial Court, Branch 11,
Calubian, Leyte, with gross ignorance of the law, gross incompetence and grave abuse of authority thru false
representation.1

Complainant Monticalbo is one of the defendants in a civil case for collection of a sum of money filed by Fatima
Credit Cooperative against him and his wife before the 6th Municipal Circuit Trial Court of Calubian-San Isidro,
Leyte (MCTC).2

The case was dismissed by the said court in its February 1, 2008 Order on the ground that the representative of
Fatima Credit Cooperative had no authority to prosecute the case.3 The MCTC, however, did not rule on the
counterclaim of complainant Monticalbo for attorney’s fees and litigation expenses. For said reason, he filed a
motion for reconsideration which was, however, denied by the court.4

Aggrieved, complainant elevated the case to the Regional Trial Court, Branch 11, Calubian, Leyte (RTC), where his
appeal was docketed as Civil Case No. CN-89.5 He then filed a motion for extension of time to file a memorandum
on appeal, which was granted by respondent judge in his Order dated June 25, 2008.6

In his August 26, 2008 Order, respondent judge dismissed the appeal for having been filed out of time. He stated
that:

Under the rules on Summary Procedure which was applied to govern the proceedings of this case, a motion for
reconsideration is a prohibited pleading. Being a prohibited pleading, it will not suspend the period of appeal.
(Jaravata vs. CA G.R. No. 85467, April 25, 1990, 3rd Division). Since the appealed Order was received by counsel
for the defendants-appellants on February 13, 2008, the notice of appeal, not a motion for reconsideration, should
have been filed within a period of 15 days which lapsed on February 29, 2008. As the Notice of Appeal was filed on
March 31, 2008, the appeal was, therefore, filed out of time and the appealed Order has become final and
executory. The lapse of the appeal period deprives the courts of jurisdiction to alter the final judgment (Delgado vs.
Republic, 164 SCRA 347).7

Complainant Monticalbo imputes the following errors on the part of respondent judge: (1) respondent erred in ruling
that Civil Case No. CN-89 is covered by the Rules on Summary Procedure, considering that the total claim of the
plaintiff in the said case exceeded ₱10,000.00; (2) respondent, motivated by bad faith and corruption, cited the non-
existent case of Jaravata v. Court of Appeals in his questioned Order; and (3) respondent accepted bribes in the
form of food from plaintiff cooperative in Civil Case No. CN-89, through Margarito Costelo, Jr., then Sheriff of the
trial court presided over by respondent judge, and Chairman of the Board and President of the said
cooperative.8 Complainant further avers that he personally witnessed the respondent judge enjoying a drinking
spree with Costelo and his other male staff members in a nipa hut annexed to the building of the trial court during
office hours in the afternoons of July 9, 2008, August 6, 2008 and September 10, 2008.9

In his Comment and Manifestations dated December 29, 2008, respondent judge refutes all the accusations hurled
by complainant against him. He explains that he decided to dismiss complainant’s appeal because it was filed out of
time under the Rules on Summary Procedure. This decision was made in the exercise of the appellate jurisdiction of
the MCTC and of his sound discretion. 10 Secondly, he argues that complainant’s accusation of bad faith and
corruption is baseless and that the complaint was filed upon the urging of Atty. Alexander Lacaba, his counsel, in an
attempt to get even with him (respondent judge) for having lost the appeal in the case. 11 Lastly, respondent denies
having participated in any drinking spree with his staff members or Costelo, who has been prohibited by his doctor
from drinking alcoholic beverages. He claims that he only eats his meals in the nipa hut because he has to refrain
from eating in public eateries for security reasons.12

The administrative complaint was re-docketed as a regular administrative matter and referred to the Executive
Justice of the Court of Appeals, Cebu City Station, for raffle among the justices thereat for investigation, report and
recommendation.13
On April 13, 2010, Associate Justice Edwin D. Sorongon issued his Report and Recommendation, the pertinent
portion of which reads as follows:

In sum, it is recommended that respondent Judge be ABSOLVED from the charge of grave misconduct and
corruption. However, the citation of a non-existent case by the respondent Judge in his assailed order of dismissal is
tantamount to a misrepresentation and therefore reflect poorly on his esteemed position as a public officer in a court
of justice, it is therefore recommended that he be ADMONISHED AND STRICTLY WARNED that a repetition
thereof will be more severely dealt with.14

The Court agrees with the findings of the Investigating Justice.

Grave Misconduct and Bribery

In order to merit disciplinary action, it must be established that respondent’s actions were motivated by bad faith,
dishonesty or hatred or were attended by fraud, dishonesty or corruption. 15 In the absence of such proof, the
decision or order in question is presumed to have been issued in good faith by respondent judge. 16 This was
emphasized in the case of Balsamo v. Judge Suan,17 where the Court explained:

The Court has to be shown acts or conduct of the judge clearly indicative of arbitrariness or prejudice before the
latter can be branded the stigma of being biased and partial. Thus, not every error or mistake that a judge commits
in the performance of his duties renders him liable, unless he is shown to have acted in bad faith or with deliberate
intent to do an injustice. Good faith and absence of malice, corrupt motives or improper considerations are sufficient
defenses in which a judge charged with ignorance of the law can find refuge.18 1avvphi1

In cases where a judge is charged with bribery or grave misconduct, bias or partiality cannot be presumed. Neither
can bad faith or malice be inferred just because the judgment or order rendered by respondent is adverse to
complainant.19 What constitutes bad faith has been expounded on in the case of Sampiano v. Judge Indar:20

Bad faith does not simply connote bad judgment or negligence; it imputes a dishonest purpose or some moral
obliquity and conscious doing of a wrong; a breach of a sworn duty through some motive or intent or ill-will; it
partakes of the nature of fraud. It contemplates a state of mind affirmatively operating with furtive design or some
motive of self-interest or ill-will for ulterior purposes. Evident bad faith connotes a manifest deliberate intent on the
part of the accused to do wrong or cause damage.21

Before a judge can be held liable for deliberately rendering an unjust judgment or order, one must be able to show
that such judgment or order is unjust and that it was issued with malicious intent to cause injustice to the aggrieved
party.22 Well-established is the rule in administrative proceedings that the burden of proof rests on the complainant,
who must be able to support and prove by substantial evidence his accusations against respondent. 23 Substantial
evidence, the quantum of proof required in administrative cases, is that amount of relevant evidence which a
reasonable mind might accept as adequate to support a conclusion.24 Failure of the complainant to substantiate his
claims will lead to the dismissal of the administrative complaint for lack of merit because, in the absence of evidence
to the contrary, the presumption that a judge has regularly performed his duties will prevail.25

In this case, complainant has nothing but mere assertions and conjectures to buttress his allegations of grave
misconduct and bribery on the part of respondent who, if complainant is to be believed, accepted bribes of food and
engaged in drinking sprees with court employees during office hours. Contrary to complainant’s statement, the
Investigating Justice found that respondent was attending to his cases during the dates when he allegedly had
those drinking sessions.

Time and again, this Court has held that charges based on mere suspicion and speculation cannot be given
credence.26 Complainant miserably failed to substantiate his allegations of grave misconduct and bribery. He merely
alleged hollow suppositions to shore up his Complaint. Consequently, this Court has no other option except to
dismiss the administrative complaint for lack of merit.

Although the Court will never tolerate or condone any conduct, act or omission that would violate the norm of public
accountability or diminish the people’s faith in the judiciary, it will not hesitate to protect an innocent court employee
against any groundless accusation or administrative charge which has no basis in fact or law. 27 As succinctly put by
Justice Quisumbing in the case of Francisco v. Leyva,28

This Court will not shirk from its responsibility of imposing discipline upon employees of the Judiciary. At the same
time, however, neither will we hesitate to shield the same employees from unfounded suits that only serve to disrupt
rather than promote the orderly administration of justice.29

Gross Ignorance of the Law

Respondent judge can be held liable for gross ignorance of the law if it can be shown that he committed an error so
gross and patent as to produce an inference of bad faith.30 In addition to this, the acts complained of must not only
be contrary to existing law and jurisprudence, but should also be motivated by bad faith, fraud, dishonesty, and
corruption.31
Complainant Monticalbo insists that respondent judge erred in ruling that his counterclaim for attorney’s fees and
litigation expenses was covered by the Rules on Summary Procedure which provides that a motion for
reconsideration is a prohibited pleading and will not toll the running of the period to appeal. To support his
argument, complainant points out that his claim exceeds the ₱10,000.00 limit set in the Rule on Summary
Procedure.

Complainant is mistaken.

A cursory reading of Section 1 of the Revised Rule on Summary Procedure clearly shows that complainant’s claim
is covered by the said rule which reads:

Section 1. Scope. – This rule shall govern the summary procedure in the Metropolitan Trial Courts, the Municipal
Trial Courts in Cities, the Municipal Trial Courts, and the Municipal Circuit Trial Courts in the following cases falling
within their jurisdiction:

A. Civil Cases

xxx

(2) All other cases, except probate proceedings, where the total amount of the plaintiff’s claim does not exceed One
hundred thousand pesos (₱100,000.00) or Two hundred thousand pesos (₱200,000.00) in Metropolitan Manila,
exclusive of interest and costs.

Evidently, the complainant has been consulting old books. The rule now, as amended by A.M. No. 02-11-09-SC,
effective November 25, 2002, has placed the ceiling at ₱100,000.00. As such, the complainant has no basis in
charging that respondent’s "knowledge of law fell so short" and that he was remiss in his obligation to be familiar
with the law which "even law students these days know such x x x."32

For this reason, counsel for complainant is reminded to choose his words carefully and refrain from hurling insults at
respondent judge especially if, as in this instance, he is obviously mistaken in his reading of the law. His use of
insulting language and unfair criticism is a violation of his duty as a lawyer to accord due respect to the courts.
Canon 11 of the Code of Professional Responsibility requires that "a lawyer shall observe and maintain the respect
due to the courts and to judicial officers and should insist on similar conduct by others."

Moreover, even assuming for the sake of argument that respondent judge erred in issuing the questioned order, he
cannot be held liable for his official acts, no matter how erroneous, for as long as he acted in good faith. 33 A judge is
not required to be faultless because to demand otherwise would make the judicial office untenable for no one called
upon to try the facts or interpret the law in the administration of justice can be infallible. 34 As a matter of policy, a
judge cannot be subject to disciplinary action for his erroneous actions, unless it can be shown that they were
accompanied by bad faith, malice, corrupt motives, or improper considerations.35

The complainant should have elevated his grievance to the higher courts. The filing of an administrative case
against the judge is not an alternative to the other judicial remedies provided by law, neither is it complementary or
supplementary to such actions.36 With regard to this matter, the case of Flores v. Abesamis37 is instructive:

As everyone knows, the law provides ample judicial remedies against errors or irregularities being committed by a
Trial Court in the exercise of its jurisdiction. The ordinary remedies against errors or irregularities which may be
regarded as normal in nature (i.e., error in appreciation or admission of evidence, or in construction or application of
procedural or substantive law or legal principle) include a motion for reconsideration (or after rendition of a judgment
or final order, a motion for new trial), and appeal. The extraordinary remedies against error or irregularities which
may be deemed extraordinary in character (i.e., whimsical, capricious, despotic exercise of power or neglect of duty,
etc.) are inter alia the special civil actions of certiorari, prohibition or mandamus, or a motion for inhibition, a petition
for change of venue, as the case may be.

Now, the established doctrine and policy is that disciplinary proceedings and criminal actions against Judges are not
complementary or suppletory of, nor a substitute for, these judicial remedies, whether ordinary or extraordinary.
Resort to and exhaustion of these judicial remedies, as well as the entry of judgment in the corresponding action or
proceeding, are pre-requisites for the taking of other measures against the persons of the judges concerned,
whether of civil, administrative, or criminal nature. It is only after the available judicial remedies have been
exhausted and the appellate tribunals have spoken with finality, that the door to an inquiry into his criminal, civil or
administrative liability may be said to have opened, or closed.38

Citation of non-existent case

The Court now deals with the charge that respondent judge cited a non-existent case – Jaravata v. Court of Appeals
with case number CA G.R. No. 85467 supposedly promulgated on April 25, 1990 – in his questioned Order.

A search of available legal resources reveals that no such decision has been promulgated by the Supreme Court.
Besides, Supreme Court docket numbers do not bear the initials, "CA G.R." And, it cannot be considered a CA case
because the respondent is the "Court of Appeals." This undoubtedly runs counter to the standard of competence
and integrity expected of those occupying respondent’s judicial position. A judge must be "the embodiment of
competence, integrity and independence."39 The Code of Judicial Conduct also demands that he "be faithful to the
law and maintain professional competence."40

While a judge may not be disciplined for error of judgment without proof that it was made with a deliberate intent to
cause an injustice, still he is required to observe propriety, discreetness and due care in the performance of his
official duties.41 As such, he should always strive to live up to the strict standards of competence, integrity and
diligence in public service necessary for one in his position.42 The case of Lacanilao v. Judge Rosete appropriately
states that: "A judge should always be a symbol of rectitude and propriety, comporting himself in a manner that will
raise no doubt whatsoever about his honesty. Integrity, in a judicial office is more than a virtue, it is a necessity."43

It is important to note that respondent did not offer any explanation for the incorrect citation of the said case in his
Comment to the complaint against him. He should be admonished for his failure to address this issue, especially as
it pertains to the proper execution of his office.

Nonetheless, considering that this is the first time that respondent has been reported to have committed such
carelessness, the Court will accord him leniency.

WHEREFORE, the complaint for Grave Misconduct and Corruption is hereby DISMISSED. For citing a non-existent
case, however, respondent judge is ADMONISHED to observe due care in the performance of his functions and
duties and WARNED that a repetition thereof would be dealt with more severely.

SO ORDERED.
G.R. No. 167366               September 26, 2012

DR. PEDRO DENNIS CERENO, and DR. SANTOS ZAFE, Petitioners,

vs.
COURT OF APPEALS, SPOUSES DIOGENES S. OLAVERE and FE R. SERRANO, Respondents.

DECISION

PEREZ, J.:

Before the Court is a Petition for Review on Certiorari  under Rule 45 of the Rules of Court seeking the annulment
1 

and setting aside of the 21 February 2005 decision of the Court of Appeals (CA) in CA-G.R. CV No. 65800. In the
2 

assailed decision, the CA affirmed in toto the decision of the Regional Trial Court (R TC), Branch 22, Nag a City
finding herein petitioners Dr. Pedro Dennis Cereno (Dr. Cereno) and Dr. Santos Zafe (Dr. Zafe) liable for damages.

Culled from the records are the following antecedent facts:

At about 9:15 in the evening of 16 September 1995, Raymond S. Olavere (Raymond), a victim of a stabbing
incident, was rushed to the emergency room of the Bicol Regional Medical Center (BRMC). There, Raymond was
attended to by Nurse Arlene Balares (Nurse Balares) and Dr. Ruel Levy Realuyo (Dr. Realuyo) — the emergency
room resident physician.

Subsequently, the parents of Raymond—the spouses Deogenes Olavere (Deogenes) and Fe R. Serrano—arrived
at the BRMC. They were accompanied by one Andrew Olavere, the uncle of Raymond.

After extending initial medical treatment to Raymond, Dr. Realuyo recommended that the patient undergo
"emergency exploratory laparotomy." Dr. Realuyo then requested the parents of Raymond to procure 500 cc of type
"O" blood needed for the operation. Complying with the request, Deogenes and Andrew Olavere went to the
Philippine National Red Cross to secure the required blood.

At 10:30 P.M., Raymond was wheeled inside the operating room. During that time, the hospital surgeons, Drs. Zafe
and Cereno, were busy operating on gunshot victim Charles Maluluy-on. Assisting them in the said operation was
Dr. Rosalina Tatad (Dr. Tatad), who was the only senior anesthesiologist on duty at BRMC that night. Dr. Tatad also
happened to be the head of Anesthesiology Department of the BRMC.

Just before the operation on Maluluy-on was finished, another emergency case involving Lilia Aguila, a woman who
was giving birth to triplets, was brought to the operating room.

At 10:59 P.M., the operation on Charles Maluluy-on was finished. By that time, however, Dr. Tatad was already
working with the obstetricians who will perform surgery on Lilia Aguila. There being no other available
anesthesiologist to assist them, Drs. Zafe and Cereno decided to defer the operation on Raymond.

Drs. Zafe and Cereno, in the meantime, proceeded to examine Raymond and they found that the latter’s blood
pressure was normal and "nothing in him was significant." Dr. Cereno reported that based on the xray result he
3 

interpreted, the fluid inside the thoracic cavity of Raymond was minimal at around 200-300 cc.

At 11:15 P.M., Deogenes and Andrew Olavere returned to the BRMC with a bag containing the requested 500 cc
type "O" blood. They handed over the bag of blood to Dr. Realuyo.

After Dr. Tatad finished her work with the Lilia Aguila operation, petitioners immediately started their operation on
Raymond at around 12:15 A.M. of 17 September 1995. Upon opening of Raymond’s thoracic cavity, they found that
3,200 cc of blood was stocked therein. The blood was evacuated and petitioners found a puncture at the inferior
pole of the left lung.

In his testimony, Dr. Cereno stated that considering the loss of blood suffered by Raymond, he did not immediately
transfuse blood because he had to control the bleeders first. 4

Blood was finally transfused on Raymond at 1:40 A.M. At 1:45 A.M., while the operation was on-going, Raymond
suffered a cardiac arrest. The operation ended at 1:50 A.M. and Raymond was pronounced dead at 2:30 A.M.

Raymond’s death certificate indicated that the immediate cause of death was "hypovolemic shock" or the cessation
5 

of the functions of the organs of the body due to loss of blood. 6

Claiming that there was negligence on the part of those who attended to their son, the parents of Raymond, on 25
October 1995, filed before the RTC, Branch 22, Naga City a complaint for damages against Nurse Balares, Dr.
7 

Realuyo and attending surgeons Dr. Cereno and Dr. Zafe.

During trial, the parents of Raymond testified on their own behalf. They also presented the testimonies of Andrew
Olavere and one Loira Oira, the aunt of Raymond. On the other hand, Dr. Cereno, Dr. Realuyo, Nurse Balares and
Security Guard Diego Reposo testified for the defense. On rebuttal, the parents of Raymond presented Dr. Tatad,
among others.

On 15 October 1999, the trial court rendered a decision the dispositive portion of which reads:
8 

WHEREFORE, premises considered, this Court hereby renders judgment:

1. Dismissing the case against Dr. Ruel Levy Realuyo and Arlene Balares for lack of merit;

2. Ordering defendants Dr. Santos Zafe and Dr. Dennis Cereno to pay the heirs of Raymond Olavere, jointly
and severally the following amounts:

1. ₱ 50,000.00 for the death of the victim;

2. ₱ 150,000.00 as moral damages;

3. ₱ 100,000.00 as exemplary damages;

4. ₱ 30,000.00 for attorney’s fees; and

5. Cost of suit. 9

x x x x.

The trial court found petitioners negligent in not immediately conducting surgery on Raymond. It noted that
petitioners have already finished operating on Charles Maluluy-on as early as 10:30 in the evening, and yet they
only started the operation on Raymond at around 12:15 early morning of the following day. The trial court held that
had the surgery been performed promptly, Raymond would not have lost so much blood and, therefore, could have
been saved. 10

The trial court also held that the non-availability of Dr. Tatad after the operation on Maluluy-on was not a sufficient
excuse for the petitioners to not immediately operate on Raymond. It called attention to the testimony of Dr. Tatad
herself, which disclosed the possibility of calling a standby anesthesiologist in that situation. The trial court opined
that the petitioners could have just requested for the standby anesthesiologist from Dr. Tatad, but they did not.

Lastly, the trial court faulted petitioners for the delay in the transfusion of blood on Raymond.

On appeal, the CA in a decision dated 21 February 2005 affirmed in toto the judgment rendered by the RTC finding
herein petitioners guilty of gross negligence in the performance of their duties and awarding damages to private
respondents.

Hence, this petition for review on certiorari under Rule 45 of the Rules of Court assailing the CA decision on the
following grounds:

1. THAT THE CA ERRED IN RULING THAT PETITIONERS WERE GROSSLY NEGLIGENT IN THE
PERFORMANCE OF THEIR DUTIES;

2. THAT THE CA ERRED IN NOT CONSIDERING THE BICOL REGIONAL MEDICAL CENTER AS AN
INDISPENSABLE PARTY AND SUBSIDIARILY LIABLE SHOULD PETITIONERS BE FOUND LIABLE FOR
DAMAGES; and

3. THAT THE CA ERRED IN NOT FINDING THE AWARD OF MORAL AND EXEMPLARY DAMAGES AS
WELL AS ATTORNEY’S FEES EXORBITANT OR EXCESSIVE.

We grant the petition

It is well-settled that under Rule 45 of the Rules of Court, only questions of law may be raised. The reason behind
this is that this Court is not a trier of facts and will not re-examine and re-evaluate the evidence on record. Factual
11 

findings of the CA, affirming that of the trial court, are therefore generally final and conclusive on this Court. This rule
is subject to the following exceptions: (1) the conclusion is grounded on speculations, surmises or conjectures; (2)
the inference is manifestly mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is
based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) there is no citation of specific
evidence on which the factual findings are based; (7) the findings of absence of fact are contradicted by the
presence of evidence on record; (8) the findings of the CA are contrary to those of the trial court; (9) the CA
manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a different
conclusion; (10) the findings of the CA are beyond the issues of the case; and (11) such findings are contrary to the
admissions of both parties. In this case, We find exceptions (1) and (4) to be applicable.
12 

The type of lawsuit which has been called medical malpractice or, more appropriately, medical negligence, is that
type of claim which a victim has available to him or her to redress a wrong committed by a medical professional
which has caused bodily harm. In order to successfully pursue such a claim, a patient must prove that a health
care provider, in most cases a physician, either failed to do something which a reasonably prudent health
care provider would have done, or that he or she did something that a reasonably prudent provider would
not have done; and that the failure or action caused injury to the patient. Stated otherwise, the complainant
13 

must prove: (1) that the health care provider, either by his act or omission, had been negligent, and (2) that such act
or omission proximately caused the injury complained of.

The best way to prove these is through the opinions of expert witnesses belonging in the same neighborhood and in
the same general line of practice as defendant physician or surgeon. The deference of courts to the expert opinion
of qualified physicians stems from the former’s realization that the latter possess unusual technical skills which
laymen in most instances are incapable of intelligently evaluating, hence, the indispensability of expert testimonies. 14

Guided by the foregoing standards, We dissect the issues at hand.

Petitioners Not Negligent

The trial court first imputed negligence on the part of the petitioners by their failure to perform the operation on
Raymond immediately after finishing the Maluluy-on operation. It rejected as an excuse the nonavailability of Dr.
Tatad. The trial court relied on the testimony of Dr. Tatad about a "BRMC protocol" that introduces the possibility
that a standby anesthesiologist could have been called upon. The pertinent portions of the testimony of Dr. Tatad
provides:

Q: Aside from you and Dr. Rebancos, who was the standby anesthesiologist?
A: We have a protocol at the Bicol Medical Center to have a consultant who is on call.
Q: How many of them?
A: One.
Q: Who is she?
A: Dra. Flores.
Q: What is the first name?
A: Rosalina Flores.
Q: Is she residing in Naga City?
A: In Camaligan.
Q: She is on call anytime when there is an emergency case to be attended to in the Bicol Medical Center?
A: Yes sir. 15

Dr. Tatad further testified:

Q: Alright (sic), considering that you said you could not attend to Raymond Olavere because another patient was
coming in the person of Lilia Aguila, did you not suggest to Dr. Cereno to call the standby anesthesiologist?
A: They are not ones to do that. They have no right to call for the standby anesthesiologist.
Q: Then, who should call for the standby anesthesiologist?
A: It is me if the surgeon requested.
Q: But in this case, the surgeon did not request you?
A: No. It is their prerogative.
Q: I just want to know that in this case the surgeon did not request you to call for the standby anesthesiologist?
A: No sir.
16

From there, the trial court concluded that it was the duty of the petitioners to request Dr. Tatad to call on Dr.
Rosalina Flores, the standby anesthesiologist. Since petitioners failed to do so, their inability to promptly perform the
operation on Raymond becomes negligence on their part.

This Court does not agree with the aforesaid conclusion.

First. There is nothing in the testimony of Dr. Tatad, or in any evidence on the record for that matter, which shows
that the petitioners were aware of the "BRMC protocol" that the hospital keeps a standby anesthesiologist available
on call. Indeed, other than the testimony of Dr. Tatad, there is no evidence that proves that any such "BRMC
protocol" is being practiced by the hospital’s surgeons at all.

Evidence to the effect that petitioners knew of the "BRMC protocol" is essential, especially in view of the contrary
assertion of the petitioners that the matter of assigning anesthesiologists rests within the full discretion of the BRMC
Anesthesiology Department. Without any prior knowledge of the "BRMC protocol," We find that it is quite reasonable
for the petitioners to assume that matters regarding the administration of anesthesia and the assignment of
anesthesiologists are concerns of the Anesthesiology Department, while matters pertaining to the surgery itself fall
under the concern of the surgeons. Certainly, We cannot hold petitioners accountable for not complying with
something that they, in the first place, do not know.
Second. Even assuming ex gratia argumenti that there is such "BRMC protocol" and that petitioners knew about it,
We find that their failure to request for the assistance of the standby anesthesiologist to be reasonable when taken
in the proper context. There is simply no competent evidence to the contrary.

From the testimony of Dr. Tatad herself, it is clear that the matter of requesting for a standby anaesthesiologist is not
within the full discretion of petitioners. The "BRMC protocol" described in the testimony requires the petitioners to
course such request to Dr. Tatad who, as head of the Department of Anesthesiology, has the final say of calling the
standby anesthesiologist.

As revealed by the facts, however, after the Maluluy-on operation, Dr. Tatad was already assisting in the Lilia Aguila
operation. Drs. Zafe and Cereno then proceeded to examine Raymond and they found that the latter’s blood
pressure was normal and "nothing in him was significant." Dr. Cereno even concluded that based on the x-ray
17 

result he interpreted, the fluid inside the thoracic cavity of Raymond was minimal at around 200-300 cc. Such
findings of Drs. Cereno and Zafe were never challenged and were unrebutted.

Given that Dr. Tatad was already engaged in another urgent operation and that Raymond was not showing any
symptom of suffering from major blood loss requiring an immediate operation, We find it reasonable that petitioners
decided to wait for Dr. Tatad to finish her surgery and not to call the standby anesthesiologist anymore. There is,
after all, no evidence that shows that a prudent surgeon faced with similar circumstances would decide otherwise.

Here, there were no expert witnesses presented to testify that the course of action taken by petitioners were not in
accord with those adopted by other reasonable surgeons in similar situations. Neither was there any testimony
given, except that of Dr. Tatad’s, on which it may be inferred that petitioners failed to exercise the standard of care,
diligence, learning and skill expected from practitioners of their profession. Dr. Tatad, however, is an expert neither
in the field of surgery nor of surgical practices and diagnoses. Her expertise is in the administration of anesthesia
and not in the determination of whether surgery ought or not ought to be performed.

Another ground relied upon by the trial court in holding petitioners negligent was their failure to immediately
transfuse blood on Raymond. Such failure allegedly led to the eventual death of Raymond through "hypovolemic
shock." The trial court relied on the following testimony of Dr. Tatad:

Q: In this case of Raymond Olavere was blood transfused to him while he was inside the operating room?
A: The blood arrived at 1:40 a.m. and that was the time when this blood was hooked to the patient.
xxxx
Q: Prior to the arrival of the blood, you did not request for blood?
A: I requested for blood.
Q: From whom?
A: From the attending physician, Dr. Realuyo.
Q: What time was that?
xxxx
A: 9:30.
xxxx
Q: Had this blood been given to you before the operation you could have transfused the blood to the patient?
A: Of course, yes.
Q: And the blood was transfused only after the operation?
A: Because that was the time when the blood was given to us.
xxxx
Q: Have you monitored the condition of Raymond Olavere?
A: I monitored the condition during the time when I would administer anesthesia.
Q: What time was that?
A: 11:45 already.
Q: What was the condition of the blood pressure at that time?
A: 60/40 initial.
Q: With that kind of blood pressure the patient must have been in critical condition?
A: At the time when the blood pressure was 60/40 I again told Dr. Cereno that blood was already needed.
Q: With that condition, Doctor, that the patient had 60/40 blood pressure you did not decide on transfusing blood to
him?
A: I was asking for blood but there was no blood available.
Q: From whom did you ask?
A: From the surgeon. According to Dr. Zafe there was only 500 cc but still for cross-matching. 18

From the aforesaid testimony, the trial court ruled that there was negligence on the part of petitioners for their failure
to have the blood ready for transfusion. It was alleged that at 11:15 P.M., the 500 cc of blood was given to Dr.
Realuyo by Raymond’s parents. At 11:45 P.M., when Dr. Tatad was asking for the blood, 30 minutes had passed.
Yet, the blood was not ready for transfusion as it was still being cross-matched. It took another two hours before
19 

blood was finally transfused to Raymond at 1:40 A.M. of 17 September 1995.

Again, such is a mistaken conclusion.

First, the alleged delay in the cross-matching of the blood, if there was any, cannot be attributed as the fault of the
petitioners. The petitioners were never shown to be responsible for such delay. It is highly unreasonable and the
height of injustice if petitioners were to be sanctioned for lapses in procedure that does not fall within their duties
and beyond their control.

Second, Dr. Cereno, in his unchallenged testimony, aptly explained the apparent delay in the transfusion of blood
on Raymond before and during the operation.

Before the operation, Dr. Cereno explained that the reason why no blood transfusion was made on Raymond was
because they did not then see the need to administer such transfusion, viz:

Q: Now, you stated in your affidavit that prior to the operation you were informed that there was 500 cc of blood
available and was still to be cross-matched. What time was that when you were informed that 500 cc of blood was
due for crossmatching?

A: I am not sure of the time.

Q: But certainly, you learned of that fact that there was 500 cc of blood, which was due for crossmatching
immediately prior to the operation?

A: Yes, sir.

Q: And the operation was done at 12:15 of September 17?

A: Yes, sir.

Q: And that was the reason why you could not use the blood because it was being crossmatched?

A: No, sir. That was done only for a few minutes. We did not transfuse at that time because there was no
need. There is a necessity to transfuse blood when we saw there is gross bleeding inside the
body.  (Emphasis supplied)
20 

During the operation, on the other hand, Dr. Cereno was already able to discover that 3,200 cc of blood was
stocked in the thoracic cavity of Raymond due to the puncture in the latter’s left lung. Even then, however,
immediate blood transfusion was not feasible because:

Q: Now considering the loss of blood suffered by Raymund Olavere, why did you not immediately transfuse blood to
the patient and you waited for 45 minutes to elapse before transfusing the blood?

A: I did not transfuse blood because I had to control the bleeders. If you will transfuse blood just the same
the blood that you transfuse will be lost. After evacuation of blood and there is no more bleeding…

Q: It took you 45 minutes to evacuate the blood?

A: The evacuation did not take 45 minutes.

Q: So what was the cause of the delay why you only transfuse blood after 45 minutes?

A: We have to look for some other lesions. It does not mean that when you slice the chest you will see the
lesions already. 21

(Emphasis supplied)

Again, the foregoing testimonies of Dr. Cereno went unchallenged or unrebutted. The parents of Raymond were not
able to present any expert witness to dispute the course of action taken by the petitioners.

Causation Not Proven

In medical negligence cases, it is settled that the complainant has the burden of establishing breach of duty on the
part of the doctors or surgeons. It must be proven that such breach of duty has a causal connection to the resulting
death of the patient. A verdict in malpractice action cannot be based on speculation or conjecture. Causation must
22 

be proven within a reasonable medical probability based upon competent expert testimony.

The parents of Raymond failed in this respect. Aside from their failure to prove negligence on the part of the
petitioners, they also failed to prove that it was petitioners’ fault that caused the injury. Their cause stands on the
mere assumption that Raymond’s life would have been saved had petitioner surgeons immediately operated on him;
had the blood been cross-matched immediately and had the blood been transfused immediately. There was,
however, no proof presented that Raymond’s life would have been saved had those things been done. Those are
mere assumptions and cannot guarantee their desired result. Such cannot be made basis of a decision in this case,
especially considering that the name, reputation and career of petitioners are at stake.

The Court understands the parents’ grief over their son’s death.  That notwithstanding, it cannot hold petitioners
1âwphi1

liable. It was noted that Raymond, who was a victim of a stabbing incident, had multiple wounds when brought to the
hospital. Upon opening of his thoracic cavity, it was discovered that there was gross bleeding inside the body. Thus,
the need for petitioners to control first what was causing the bleeding. Despite the situation that evening i.e.
numerous patients being brought to the hospital for emergency treatment considering that it was the height of the
Peñafrancia Fiesta, it was evident that petitioners exerted earnest efforts to save the life of Raymond. It was just
unfortunate that the loss of his life was not prevented.

In the case of Dr. Cruz v. CA, it was held that "[d]octors are protected by a special law. They are not guarantors of
care. They do not even warrant a good result. They are not insurers against mishaps or unusual consequences.
Furthermore, they are not liable for honest mistake of judgment…" 23

This Court affirms the ruling of the CA that the BRMC is not an indispensible party. The core issue as agreed upon
by the parties and stated in the pre-trial order is whether petitioners were negligent in the performance of their
duties. It pertains to acts/omissions of petitioners for which they could be held liable. The cause of action against
petitioners may be prosecuted fully and the determination of their liability may be arrived at without impleading the
hospital where they are employed. As such, the BRMC cannot be considered an indispensible party without whom
no final determination can be had of an action.
24

IN THE LIGHT OF THE FOREGOING, the instant Petition for Review on Certiorari is hereby GRANTED. The Court
of Appeals decision dated 21 February 2005 in CA-G.R. CV No. 65800 is hereby REVERSED and SET ASIDE. No
costs.

SO ORDERED.
G.R. No. L-47120 October 15, 1990

SPOUSES LORETO CLARAVALL and VICTORIA CLARAVALL petitioners,

vs.
THE HONORABLE COURT OF APPEALS and SPOUSES FRANCISCO RAMIREZ and CAROLINA
RAMIREZ, respondents.

Emerito M. Salva & Associates for petitioners.

De Castro & Cagampang Law Offices for private respondents.

BIDIN, J.:

This is a petition for review on certiorari of: (a) the decision of respondent Court of Appeals * promulgated on April 22, 1976 affirming the decision of the Court of
first Instance of Isabela, Branch I, in Civil Case No. 2043: (b) its, re-solution dated June 22, 1977 setting aside its resolution of December 14, 1976 and reaffirming
its decision; and (c) its resolution of September 29, 1977 denying petitioners' motion for reconsideration dated July 27, 1977, all in CA-G.R. No. 46364-R,
entitled "Spouses Loreto Claravall and Victoria H. Claravall v. Spouses Francisco Ramirez, Jr. and Carolina P. Ramirez."

The dispositive portion of the decision of the Court of First Instance of Isabela, Branch I (Record on Appeal, p. 74)
affirmed in toto by respondent court in its decision (Rollo, p.124) reads as follows:

WHEREFORE, the court renders judgment (a) dismissing the complaint of the plaintiffs Claravall as
against the defendant Ramirez with costs against the plaintiffs; (b) declaring the document Exh. "A",
same as Exh. "I" and Exh. "B", same as Exh. "5" as essentially an absolute sale, and an option to
repurchase, respectively; (c) declaring the defendants herein as the owners in fee simple of the said
property, described under paragraph 2 of the complaint and covered by TCT 28717; (d) no attorney's
fee and no damages awarded; (e) dismissing the complaint of reconveyance filed by the intervenor
as against the plaintiffs, it appearing that the property sought to be reconveyed had already passed
to third and innocent purchasers for valuable consideration. Sec. 38, Act 496; (f) dismissing the
complaint Of intervention as against the defendant Ramirez. With costs against the intervenor (g)
ordering the Register of Deeds to cancel the lis pendens and any other encumbrances over TCT-
28717.

The facts of the case as found by the Court of Appeals are as follows:

Between the years 1952 to 1960, appellant Loreto Claravall and Victoria H. Claravall obtained loans
from the Development Bank of the Philippines (DBP) in the amount of P52,000.00 for the
construction of a commercial building on their property situated in the Municipality of Ilagan Isabela.
To secure the loan, a mortgage was executed upon said property in favor of the DBP. Claravall was
unable to pay the amortization over said loan and the DBP threatened to foreclose the mortgage.
However, Claravall was able to pay DBP by executing a deed of sale over the property in question
with a 5-year option to repurchase the same with a certain Juan Ang-ngan

On December 29, 1965, Claravall exercised the said right to repurchase the property from Ang-
angan by obtaining a loan from spouses Francisco and Carolina Ramirez in the amount of
P75,000.00. A deed of sale dated December 29, 1965 was executed over the same property by the
Claravalls in favor of Ramirez.

On that same day of December 29, 1965, another instrument was entered into by Claravall and
Ramirez which granted Claravall an option to repurchase the property in question within a period of
two (2) years from December 29, 1965 but not earlier nor later than the month of December, 1967,
for the sum of P10,000.00 payable at the time of repurchase.

At the expiration of the 2-year period, appellant Claravall failed to redeem the property in question
and because of this they brought suit against Francisco and Carolina Ramirez to compel the latter to
sell the property in question back to them Claravall as per the second contract (Exhibit B) executed
on December 29, 1967. (Rollo, pp. 122-124)

Pending trial of the case, a complaint in intervention was filed by one Domingo G. Herman alleging that he is a
brother of plaintiff Victoria H. Claravall (one of the petitioners herein) and owner of ½ of the entire property as his
inheritance from their deceased parents and that plaintiff Victoria H. Claravall obtained a certificate of title by means
of fraud. He prays that the contract between plaintiffs and defendants be declared null and void with respect to his ½
legitimate share of the property in question (Record on Appeal, p. 53).

The lower court rendered judgment in favor of defendants, the Ramirez spouses, (private respondents herein) which
was affirmed in toto by respondent court in its decision promulgated on April 22, 1976 (Rollo, p. 122).
On June 4, 1976, petitioners as plaintiffs-appellants filed with respondent court a motion for reconsideration of its
decision on the grounds that respondent court: (1) should have declared that the transaction between plaintiffs-
appellants and defendants-appellees is one of equitable mortgage, or at the very least, one of sale with pacto de
retro; and (2) should not have decided the appeal by merely resolving the first and second assignments of errors,
leaving the two remaining assigned errors unresolved which could have altered the result of the assailed decision
(Rollo, p. 132).

Finding the motion meritorious, respondent court in a resolution dated December 14, 1976 ordered the remand of
the records of the case to the court of origin for further proceedings, particularly to receive the testimonies of Juan
dela Rosa, Maximo Amurao, Cornelio Lim, Juan Ang-angan and Mrs. Claravall based on its finding that appellants'
former counsel had taken a course of action jeopardizing the substantial rights of the spouses Loreto and Victoria
Claravall (Rollo, p. 207).

Feeling aggrieved by said resolution of the case, defendants-appellees on January 6, 1977, moved for the
reconsideration of the resolution of December 14, 1976 on the ground that the resolution is contrary to law and the
facts (Rollo, p. 211) and then on January 18, 1977 filed a supplemental motion for reconsideration (Rollo, p. 218).
On January 24, 1977, private defendants-appellees also filed a motion for leave to submit affidavits as integral part
of their motion for reconsideration (Rollo, P. 223) which affidavits were admitted by respondent court on February
10, 1977 (Rollo, p. 231).

On January 27, 1977, Associate Justice Samuel F. Reyes inhibited himself from further participation in the
disposition of the case "in view of certain 'influences' that have lately made themselves felt, especially because the
case arose from Isabela, my home province" (Rollo, p. 232).

On June 22, 1977, respondent Court promulgated its questioned resolution setting aside its previous resolution
dated December 14, 1976 and reaffirming its decision promulgated on April 22, 1976 (Rollo, p. 257).

The subsequent motion for reconsideration of the resolution of respondent Court dated June 22, 1977 filed by
petitioners on July 27, 1977 (Rollo, p. 269) was denied by respondent Court on September 29,1977 (Rollo, p. 314).

Hence, this petition filed with the Court on November 26, 1977 (Rollo, p. 11).

Petitioners assigned the following errors:

RESPONDENT COURT GRAVELY ERRED IN SETTING ASIDE ITS RESOLUTION DATED

DECEMBER 14, 1976;

II

RESPONDENT COURT GRAVELY ERRED IN NOT HOLDING THAT RESPONDENT RAMIREZES

WERE ESTOPPED FROM FILING THEIR MOTION FOR RECONSIDERATION DATED JANUARY
6, 1977;

III

RESPONDENT COURT GRAVELY ERRED IN HAVING ENTERTAINED AND ACTED UPON THE
MOTION FOR RECONSIDERATION OF RESPONDENT RAMIREZES DESPITE THE FACT THAT
SAID MOTION FOR RECONSIDERATION WAS PRO FORMA;

IV

RESPONDENT COURT GRAVELY ERRED IN CONSIDERING, ENTERTAINING AND PASSING

UPON THE ISSUES FOR RECONSIDERATION FILED BY RESPONDENT RAMIREZES BEYOND
THE FIFTEEN-DAY PERIOD PROVIDED IN THE RULES;

RESPONDENT COURT GRAVELY ERRED IN G G RESPONDENT RAMIREZES MOTION FOR

LEAVE TO SUBMIT AFFIDAVITS AS PART OF THEIR MOTION FOR RECONSIDERATION AND
IN HAVING ADMITTED SAID APPENDED AFFIDAVITS DESPITE THE FACT THAT THE SAME
WERE FILED BEYOND THE FIFTEEN-DAY PERIOD FIXED BY THE RULES AND ON THE
FURTHER GROUND THAT THE SUBMISSION OF SAID AFFIDAVITS WHICH ARE HEARSAY
WAS IMPROPER AT THAT STAGES OF THE APPEAL;

VI
RESPONDENT COURT GRAVELY ERRED IN DEPARTING FROM OR CHANGING ITS
PREVIOUS FINDING THAT THE IRRESPONSIBILITY OR NEGLIGENCE OF PRIOR COUNSEL
(ATTY. MINA) GREATLY JEOPARDIZED PETITIONERS' CAUSE AND THAT PETITIONERS
WERE DENIED DUE PROCESS OF LAW BY THE FAILURE OF SAID PRIOR COUNSEL TO
PRESENT PETITIONERS' EVIDENCE;

VII

RESPONDENT COURT GRAVELY ERRED IN HAVING GIVEN EMPHASIS AND CREDENCE TO

AND INVOKED AS SOLID SUPPORT OF ITS CONCLUSION THE AFFIDAVIT OF ATTY.
ALEJANDRO MINA WHEN IT SET ASIDE ITS RESOLUTION OF DECEMBER 14, 1976;

VIII

RESPONDENT COURT GRAVELY ERRED IN HAVING FOUND THAT ATTY. ALEJANDRO MINA
DID NOT COMMIT A GRAVE MISTAKE WHEN HE HANDLED PETITIONERS' CASE BASED
MERELY ON THE PRINCIPLE THAT THE FINDING OF THE LOWER COURT IN THIS RESPECT
SHOULD BE ENTITLED TO GREAT WEIGHT;

IX

RESPONDENT COURT GRAVELY ERRED IN HAVING STATED THAT THE TESTIMONY OF THE
WITNESSES SOUGHT TO BE PRESENTED BY PETITIONER WOULD NOT PROVE THE
COMPLAINT MERELY ON THE STRENGTH OF THE HEARSAY AFFIDAVIT OF ATTY. MINA
WHO SOUGHT TO REFUTE HIS INCOMPETENCE OR NEGLIGENCE AND JUSTIFY HIS NON-
PRESENTATION OF PETITIONERS' WITNESSES;

RESPONDENT GRAVELY ERRED IN HOLDING THAT THE ONLY ALLEGATION GIVEN IN THE
COMPLAINT TO SUSTAIN THE PRAYER OF DECLARING EXHIBITS "A" AND "B" AS
EQUITABLE MORTGAGE IS THAT PETITIONERS NEVER PARTED WITH THE PROPERTY IN
QUESTION

XI

RESPONDENT COURT GRAVELY ERRED IN HOLDING THAT NONE OF THE

CIRCUMSTANCES ENUMERATED IN ART. 1602 OF THE CIVIL CODE WAS EVER ALLEGED IN
THE COMPLAINT SO AS TO ENABLE PETITIONERS TO PROVE THAT THE TRANSACTION
BETWEEN PETITIONERS AND RESPONDENT RAMIREZES EMBODIED IN EXHS. "A" AND "B"
AN EQUITABLE MORTGAGE;

XII

RESPONDENT COURT GRAVELY ERRED IN HOLDING THAT PETITIONERS NEVER TRIED TO

REPURCHASE THE PROPERTY IN QUESTION SIMPLY BECAUSE THE COMPLAINT PRAYED
THAT EXHS. "A" AND "B" BE DECLARED AS EQUITABLE MORTGAGE;

XIII

RESPONDENT COURT GRAVELY ERRED IN RENDERING ITS DECISION ON APRIL 22, 1976 IN
FAVOR OF RESPONDENT RAMIREZES;

XIV

RESPONDENT COURT GRAVELY ERRED IN CONCLUDING THAT THE DOCUMENTS

EXHIBIT'S "A" AND "B" WERE SEPARATE AND DISTINCT;

XV

RESPONDENT COURT GRAVELY ERRED IN DENYING PETITIONERS' MOTION FOR

RECONSIDERATION DATED JULY 27, 1977;

XVI

RESPONDENT COURT CORRECTLY IMPUTED NEGLIGENCE OR INDIFFERENCE TO ATTY.

TEOFILO LEONIN, RESPONDENT RAMIREZES' FORMER COUNSEL, BUT RESPONDENT
COURT GRAVELY ERRED IN RELIEVING RESPONDENT RAMIREZES FROM THE
 CONSEQUENCES OF ATTY. LEONIN'S NEGLIGENCE AND INACTION SINCE RESPONDENT
RAMIREZES THEMSELVES NEVER ASSAILED THE FAILURE OF ATTY. LEONIN TO APPEAR
DURING THE ORAL ARGUMENTS AND TO REFUTE THE ARGUMENTS CONTAINED IN
PETITIONERS' MOTION FOR RECONSIDERATION AND MEMORANDUM;

XVII

RESPONDENT COURT GRAVELY ERRED IN HOLDING THAT THE AFFIDAVITS WERE

SUBMITTED BY ANOTHER LAWYER AND NOT BY ATTY. LEONIN, WHEN THE PLEADING
ITSELF SHOWED THAT THE MOTION FOR LEAVE TO SUBMIT AFFIDAVITS WAS SIGNED BY A
LAWYER IN BEHALF OF ATTY. LEONIN HIMSELF WHO FILED PIECEMEAL MOTIONS FOR
RECONSIDERATION;

XVIII

THE CONCURRENCE OF HON. EMILIO GANCAYCO AND HON. MAMA BUSRAN IN

REVERSING THE RESOLUTION OF DECEMBER 14, 1976 WHICH THEY ALSO PREVIOUSLY
CONCURRED IN, SPELLS CIRCUMSTANCES GENERATING SUSPICION ON HOW
RESPONDENT COURT ARRIVED AT COMPLETE REVERSAL OF ITS RESOLUTION OF
DECEMBER 14, 1976; and

XIX

THE SUDDEN AND UNEXPLAINED INHIBITION OF HON. SAMUEL F. REYES FROM THE
DIVISION AND THE APPOINTMENT OF HON. RAFAEL CLIMACO AS HIS REPLACEMENT,
BASED MERELY ON UNEXPLAINED PRESSURES UPON THE FORMER, GIVES RISE TO
SUSPICION IN ONE'S MIND THAT THE RESOLUTION OF JUNE 22, 1977 WAS NOT FAIRLY
REACHED.

The main issue in this case is whether or not the Deed of Absolute Sale and Option to Repurchase executed by the
parties must be treated as an equitable mortgage and not the absolute sale it purports to be.

The issue must be answered in the affirmative.

Articles 1602 and 1604 of the Civil Code state:

ART. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following
cases:

(1) When the price of a sale with right to repurchase is unusually inadequate;

(2) When the vendor remains in possession as lessee or otherwise;

(3) When upon or after the expiration of the right to repurchase another instrument extending the
period of redemption or granting a new period is executed;

(4) When the purchaser retains for himself a part of the purchase price;

(5) When the vendor binds himself to pay the taxes on the thing sold;

(6) In any other case where it may be fairly inferred that the real intention of the parties is that the
transaction shall secure the payment of a debt or the performance of any other obligation. In any of
the foregoing case, any money, fruits, or other benefit to be received by the vendees as rent or
otherwise shall be considered as interest which shall be subject to the usury laws.

ART. 1604. The provisions of Article 1602 shall also apply to a contract purporting to be an absolute
sale.

Under Article 1604 a contract purporting to be an absolute sale shall be presumed to be an equitable mortgage,
should any of the conditions in Article 1602 be present. Otherwise stated, the presence of only one circumstance
defined in Article 1602 is sufficient for a contract of sale with right to repurchase to be presumed an equitable
mortgage.

The records show that this case involves a series of transactions patterned after the earlier contract with Juan Ang-
angan which was indisputably a loan, although the contract executed to secure the loan was an absolute deed of
sale instead of a mortgage. Thus, it will be recalled, that petitioner first mortgaged subject property with the
Development Bank of the Philippines as security for a loan of P52,000. To avert foreclosure of the mortgage,
petitioners borrowed P52,000.00 from Juan Ang-angan with 12% interest, executing a deed of absolute sale in favor
of Juan Ang-angan with Tight to collect the rentals from the lessees thereof. Later, the loan from Ang-ngan was
again liquidated and the property repurchased by borrowing the amount of P75,000.00 from private respondents. As
in their transaction with Ang-angan, they executed a Deed of Absolute Sale in favor of private respondents to secure
the loan with rights to collect rentals of the property. On the same date, December 29, 1965, three documents were
executed, namely: (1) a Deed of Absolute Sale from Ang-angan in favor of petitioners, (2) a Deed of Absolute Sale
from petitioners in favor of private respondents and (3) an Option to Repurchase within a period of two (2) years in
favor of petitioners.

The consideration of the Deed of Absolute Sale executed by petitioners in favor of private respondent was the
P75,000.00 borrowed by the former from the latter while the Option to Repurchase had a stated consideration of
P10,000.00 "payable at the time of repurchase" or two (2) years after execution of the contract.

Before the expiration of the two-year period, that is December 31, 1967, it appears that petitioners were again
negotiating for a loan of P100,000.00 from Mr. and Mrs. Maximino Amurao in order to pay private respondents the
amount of P85,000.00. This time, petitioners failed to redeem their property, thereby necessitating the filing of an
action in Court to compel private respondents to sell the property in question back to them.

It appears obvious that petitioners were holding on to their property despite financial difficulties to the extent that
they had to incur bigger and bigger loans in order to be able to pay the usurious interest involved. In this regard, this
Court has already laid down the rule that a pacto de retro sale may be deemed an equitable mortgage when
executed due to urgent necessity for money of the apparent vendor (Labasan v. Lacuesta, 86 SCRA 16 [1978]).

Another circumstance that supports the presumption that the transaction between the parties was one of equitable
mortgage is the inadequacy of the consideration for the supposed sale considering that the property involved is a
parcel of land containing an area of 2,344 sq. m. with a three-storey commercial building made of concrete walling
and G.I. roofing constructed thereon. For the construction of the said commercial building, petitioners were able to
obtain a loan in 1952 from the Development Bank of the Philippines in the amount of P52,000.00 with the above-
described commercial property as collateral (Rollo, p. 19). The property is located in the heart of Ilagan's
commercial district. There is merit in petitioners' submission that if they were able to borrow with it as collateral,
P52,000.00 from the DBP in 1952, the fair market value of the 2,344 sq. m. commercial lot and building at the time
of the purported sale to private respondents on December 29, 1965 or thirteen (13) years later could have easily be
within the range of P300,000.00. Hence, the alleged purchase price of P75,000.00 is, indeed, not only unusually
inadequate but shocking to the conscience (Rollo, p. 141).

A third circumstance is the fact that on the date of expiration of the period to repurchase the property, private
respondents, specifically Carolina Ramirez instead of accepting the repurchase price of the property on the pretext
that she would not want to transact business with petitioners in the absence of her husband, executed a note
extending the period of redemption to January 2, 1968 (Rollo, p. 333). It is well-settled that extension of the period
of redemption is indicative of equitable mortgage (Reyes v. de Leon, 20 SCRA 369 [1967]; Bundalian v. Court of
Appeals, 129 SCRA 645 [19841).

From the foregoing transactions, it is evident that petitioners and private respondents entered into a contract of
equitable mortgage and not a deed of absolute sale as the latter insisted.

But respondent Court of Appeals held the view that the two (2) contracts entered into by the petitioners and private
respondents herein were separate and distinct and cannot be construed as an equitable mortgage and/or a sale
with pacto de retro. Among others, respondent Court based its ruling on the doctrine laid down in the case
of Villarica v. Court of Appeals (26 SCRA 189 [1968]), to the effect that the right of repurchase is not a right granted
the vendor by the vendee in a subsequent instrument, but is a right reserved by the vendor in the same instrument
of sale as one of the stipulations of the contract.

However, under similar circumstances, as in the case at bar, this Court in a much later case (Capulong vs. Court of
Appeals, 130 SCRA 248 [1984], ruled otherwise, holding that respondent Court of Appeals

Thus, this Court held:

There is one important factor that differentiates the Villarica case from the instant petition. The
document granting the vendors therein an option to buy back the property was executed six (6) days
after the execution of the deed of sale whereas in the instant case the option to buy was embodied
in a document executed at the same time that the questioned deed of sale was executed. The option
to buy in the Villarica case was interpreted to be only an afterthought. On the other hand, the intent
of the parties to circumvent the provision discouraging pacto de retro sales is very apparent in the
instant case. The two contracts, the deed of sale and the documents embodying the option to
repurchase were prepared, signed and notarized on the same day. The respondent court should
have seen through a transparent effort to make it appear that the two transactions were not
intimately related but distinct and separate as in the Villarica case. This should have put the Court on
guard considering the other circumstances of the case from which no other conclusion could be
derived except that the deed of absolute sale and the document giving the right to repurchase were,
 in fact, only one transaction of sale pacto de retro which must be construed as an equitable
mortgage. (Capulong v. Court of Appeals, supra).

As previously stated, the Deed of Absolute Sale and the Option to Repurchase in the instant case were executed by
the parties and notarized on the same date, that is December 29, 1965 by the same notary public, Julian dela Rosa,
as Document No. 171 and Document No. 172, respectively Brief for the Petitioners Appellants, p. 157). That the two
documents are intimately related is also shown by the fact that in the Option to Repurchase, the consideration
agreed upon for the repurchase of the properties is stated as P75,000.00 which is the same amount stated as
consideration in the Deed of Absolute Sale. It is also expressly stated in the Option to Repurchase that as
consideration for the execution thereof, the sum of P10,000.00 payable at the time of repurchase was agreed upon
and all expenses incidental to the sale and repurchase shall be chargeable to the account of petitioners, same to be
added to the consideration therein covenanted (Record on Appeal, p. 33).

Still further, this Court ruled that even if no usury was involved, a contract of loan with mortgage made to appear in
paper as an absolute sale with a companion option to buy, is null and void (Capulong v. C.A., supra).

WHEREFORE, the decision of respondent Court promulgated on April 22, 1976 and its resolution of June 22, 1977
are hereby Reversed and Set Aside. The deed of absolute sale between the parties with the option to repurchase is
declared as an equitable mortgage and, petitioners are declared entitled to redeem the mortgaged property which
shall be effected upon payment of their mortgage debt to private respondents in the total amount of P85,000.00 with
legal rate of interest from December 31, 1967, the time the loan matured until it is fully paid.

SO ORDERED.
A.C. No. 7649               December 14, 2011

SIAO ABA, MIKO LUMABAO, ALMASIS LAUBAN, and BENJAMIN DANDA, Complainants,

vs.
ATTYS. SALVADOR DE GUZMAN, JR., WENCESLAO "PEEWEE" TRINIDAD, and ANDRESITO
FORNIER, Respondents.

DECISION

CARPIO, J.:

The Case

This is an administrative complaint filed by Siao Aba, Miko Lumabao, Almasis Lauban and Benjamin Danda
(complainants) against lawyers Salvador De Guzman, Jr., Wenceslao "Peewee" Trinidad, and Andresito Fornier
(respondents). Complainants claim that respondents instigated and filed fabricated criminal complaints against them
before the Iligan City Prosecutor’s Office for Large Scale and Syndicated Illegal Recruitment and Estafa under I.S.
No. 06-1676 and I.S. No. 06-1835.1 Complainants pray for the imposition of the grave penalty of disbarment upon
respondents.2 Attached to complainants’ letter-complaint is the Joint Counter-Affidavit and Affidavit of
Complaint3 allegedly submitted by complainants in the preliminary investigation of the criminal complaints.

The Facts

Complainants claim that in January 2006 they met former Pasay City Regional Trial Court Judge Salvador P. De
Guzman, Jr. (De Guzman) in Cotabato City.4 De Guzman allegedly persuaded them to file an illegal recruitment
case (I.S. No. 2006-C-31, Lauban, et al. vs. Alvarez, Amante, Montesclaros, et al.) against certain persons, in
exchange for money.5 De Guzman allegedly represented to complainants that his group, composed of Pasay City
Mayor Wenceslao "Peewee" Trinidad (Trinidad), Atty. Andresito Fornier (Fornier), Everson Lim Go Tian, Emerson
Lim Go Tian, and Stevenson Lim Go Tian (Go Tian Brothers), were untouchable.6

In the third week of February 2006, complainants allegedly received from De Guzman a prepared Joint Complaint-
Affidavit with supporting documents, which they were directed to sign and file. 7 The Joint Complaint-Affidavit and
supporting documents were allegedly fabricated and manufactured by De Guzman.8

During the I.S. No. 2006-C-31 proceedings before the Cotabato City Prosecutor’s Office, complainants allegedly
received several phone calls from De Guzman, Trinidad, Fornier, and the Go Tian brothers, all of them continuously
telling complainants to pursue the case.9 When complainants asked De Guzman what would happen if a warrant of
arrest would be issued, De Guzman allegedly replied, "Ipa tubus natin sa kanila, perahan natin sila."10

Complainants claim they were bothered by their conscience, and that is why they told De Guzman and his group
that they planned to withdraw the criminal complaint in I.S. No. 2006-C-31. 11 Complainants were allegedly offered by
respondents ₱ 200,000.00 to pursue the case, but they refused.12 Complainants were once again allegedly offered
by respondents One Million Pesos (₱ 1,000,000.00) to pursue the case until the end, but they refused again.13 For
this reason, respondents allegedly orchestrated the filing of fabricated charges for syndicated illegal recruitment and
estafa (I.S. No. 06-1676 and I.S. No. 06-1835) against complainants in Iligan City.14 On 30 November 2006, Aba
claims to have received a text message from De Guzman, saying, "Gud p.m. Tago na kayo. Labas today from Iligan
Warrant of Arrest. No Bail. Dating sa Ctbto pulis mga Wednesday. Gud luck kayo." 15

In support of their allegations in the administrative complaint, complainants submitted the allegedly fabricated
complaint,16 supporting documents,17 letter of De Guzman to Cotabato City Councilor Orlando Badoy, 18 De Guzman’s
Affidavit of Clarification submitted in I.S. No. 2006-C-31, 19 and other relevant documents. Subsequently,
complainants filed a Motion to Dismiss Complaint against Atty. Trinidad and Atty. Fornier,20 and prayed that the
complaint be pursued against De Guzman.

Trinidad, on the other hand, in his Comment filed with this Court21 and Position Paper filed with the Commission on
Bar Discipline,22 denied all the allegations in the complaint. Trinidad vehemently declared that he has never
communicated with any of the complainants and has never been to Cotabato. 23 He further claimed that the
subscribed letter-complaint does not contain ultimate facts because it does not specify the times, dates, places and
circumstances of the meetings and conversations with him.24 Trinidad asserted that the complaint was a fabricated,
politically motivated charge, spearheaded by a certain Joseph Montesclaros (Montesclaros), designed to tarnish
Trinidad’s reputation as a lawyer and city mayor.25 Trinidad claims that Montesclaros was motivated by revenge
because Montesclaros mistakenly believed that Trinidad ordered the raid of his gambling den in Pasay
City.26 Trinidad also claims that he, his family members and close friends have been victims of fabricated criminal
charges committed by the syndicate headed by Montesclaros.27

Trinidad pointed out that this syndicate, headed by Montesclaros, is abusing court processes by filing fabricated
criminal complaints of illegal recruitment in remote areas with fabricated addresses of defendants.28 Since the
defendants’ addresses are fabricated, the defendants are not informed of the criminal complaint, and thus the
information is filed with the court.29 Consequently, a warrant of arrest is issued by the court, and only when the
warrant of arrest is served upon the defendant will the latter know of the criminal complaint. 30 At this point,
Montesclaros intervenes by extorting money from the defendant in order for the complainants to drop the criminal
complaint.31 To prove the existence of this syndicate, Trinidad presented the letter of Eden Rabor, then a second
year law student in Cebu City, to the Philippine Center for Investigative Journalism and to this Court, requesting
these institutions to investigate the syndicate of Montesclaros, who has victimized a Canadian citizen who was at
that time jailed in Cebu City due to an extortion racket. 32 Trinidad also presented the Decision of Branch 65 of the
Regional Trial Court of Tarlac City on the illegal recruitment charge against his friend, Emmanuel Cinco, which
charge was dismissed because the charge was fabricated, as admitted by complainants themselves.33

Trinidad further claimed that, in some cases, the Montesclaros syndicate included some of their members as
respondents to divert suspicion. 34 Trinidad pointed out that his wife was a victim of this fabricated criminal charge of
illegal recruitment filed in Marawi City.35 Fortunately, when the warrant of arrest was being served in Pasay City Hall,
Trinidad’s wife was not there.36 Lastly, Trinidad declared that Montesclaros has perfected the method of filing
fabricated cases in remote and dangerous places to harass his victims.37

Fornier, on the other hand, in his Comment filed with this Court 38 and Position Paper filed with the Commission on
Bar Discipline,39 claimed that in his 35 years as a member of the bar, he has conducted himself professionally in
accordance with the exacting standards of the legal profession. 40 Fornier denied knowing any of the complainants,
and also denied having any dealings or communication with any of them. He likewise claimed that he has not filed,
either for himself or on behalf of a client, any case, civil, criminal or otherwise, against complainants. 41 Fornier
claimed that he was included in this case for acting as defense counsel for the Go Tian Brothers in criminal
complaints for illegal recruitment.42 Fornier claimed that the Go Tian Brothers are victims of an extortion racket led
by Montesclaros.43 For coming to the legal aid of the Go Tian Brothers, Fornier exposed and thwarted the plan of the
group of Montesclaros to extort millions of pesos from his clients. 44 Fornier claimed that the filing of the complaint is
apparently an attempt of the syndicate to get even at those who may have exposed and thwarted their criminal
designs at extortion.45 Fornier prays that the Court will not fall prey to the scheme and machinations of this syndicate
that has made and continues to make a mockery of the justice system by utilizing the courts, the Prosecutor’s
Offices, the Philippine National Police and the Philippine Overseas Employment Administration in carrying out their
criminal activities.46 Lastly, Fornier claimed that complainants failed to establish the charges against him by clear,
convincing and satisfactory proof, as complainants’ affidavits are replete with pure hearsay, speculations,
conjectures and sweeping conclusions, unsupported by specific, clear and convincing evidence.47

De Guzman, on the other hand, instead of filing a Comment with this Court, filed a Motion to Dismiss Complaint 48 on
the ground that the Joint Counter-Affidavit and Affidavit of Complaint attached to the Letter-Complaint, which was
made the basis of this administrative complaint, are spurious. 49 According to the Certification issued by the Office of
the City Prosecutor in Iligan City, complainants Lauban, Lumabao and Aba, who were charged for violation of
Republic Act No. 8042 (Migrant Workers Act), which charge was subsequently dismissed through a Joint Resolution
rendered by the Prosecutor, did not submit any Joint Counter-Affidavit in connection with the charge, nor did they
file any Affidavit of Complaint against any person.50

In his Position Paper filed with the Commission on Bar Discipline, 51 De Guzman stated he is an 81-year old retired
Regional Trial Court judge.52 He pointed out that there are no details regarding the allegations of grave and serious
misconduct, dishonesty, oppression, bribery, falsification of documents, violation of lawyers’ oath and other
administrative infractions.53 De Guzman invited the attention of the Investigating Commissioner to his Affidavit of
Clarification which he submitted in I.S. No. 2006-C-31 to deny any participation in the preparation of the criminal
complaint and to narrate in detail how he became involved in this case which was masterminded by
Montesclaros.54 In his Affidavit of Clarification,55 De Guzman claimed that he had no participation in the preparation
of the criminal complaint in I.S. No. 2006-C-31, and he was surprised to receive a photocopy of the counter-affidavit
of Rogelio Atangan, Atty. Nicanor G. Alvarez, Lolita Zara, Marcelo Pelisco and Atty. Roque A. Amante, Jr.,
implicating him in the preparation of the complaint. 56 De Guzman stated that he was surprised to find his and his
clients’ names in the counter-affidavit, and for this reason, felt under obligation to make the Affidavit of
Clarification.57 Lastly, De Guzman declared that he has "no familiarity with the complainants or Tesclaros
Recruitment and Employment Agency, nor with other respondents in the complaint, but he believes that Atty. Roque
A. Amante, Jr. and Atty. Nicanor G. Alvarez are the key players of Joseph L. Montesclaros in the illegal recruitment
business."58

During the mandatory conference hearings on 28 November 200859 and 13 March 2009,60 none of the complainants
appeared before the Investigating Commissioner to substantiate the allegations in their complaint despite due
notice.61

Report and Recommendation of the Commission on Bar Discipline

The recommendation of the Investigating Commissioner of the Commission on Bar Discipline reads:

In view of the foregoing, the charges against the Respondent Trinidad and Fornier are deemed to be without basis
and consequently, the undersigned recommends DISMISSAL of the charges against them.
As to Respondent de Guzman, a former Regional Trial Court Judge, there is enough basis to hold him
administratively liable. Accordingly, a penalty of SUSPENSION for two (2) months is hereby recommended.62

The Investigating Commissioner found, after a careful perusal of the allegations in the complaint as well as in the
attachments, that complainants failed to substantiate their charges against respondents Trinidad and
Fornier.63 Other than bare allegations, complainants did not adduce proof of Trinidad and Fornier’s supposed
involvement or participation directly or indirectly in the acts constituting the complaint. 64 In addition, complainants, on
their own volition, admitted the non-participation and non-involvement of Trinidad and Fornier when complainants
filed their Motion to Dismiss Complaint against Atty. Trinidad and Atty. Fornier Only.65 For these reasons, the
Investigating Commissioner recommended that the charges against Trinidad and Fornier be dismissed for utter lack
of merit.

On the other hand, the Investigating Commissioner stated that De Guzman failed to deny the allegations in the
Letter-Complaint or to explain the import of the same. 66 Moreover, De Guzman failed to controvert the "truly vicious
evidence" against him:

But what should appear to be a truly vicious evidence for Respondent is the letter he sent to Orlando D. Badoy, City
Councilor, Cotabato City dated February 16, 2006. This letter was alleged in and attached to the Joint Counter-
Affiavit with Affidavit of Complaint. The letter had confirmed the allegation of his travel to Cotabato City to file
charges against persons he did not identify. He intriguingly mentioned the name Ben Danda as the one to whom he
handed the complaint. Danda, incidentally, was one of those who executed the Letter of Complaint along with Siao
Aba, Miko Lumabao, Benjamin Danda and Almasis Lauban which was filed before the Supreme Court.67

The Decision of the Board of Governors of theIntegrated Bar of the Philippines

The Board of Governors of the Integrated Bar of the Philippines adopted the recommendation of the Investigating
Commissioner’s Report and Recommendation on the dismissal of the charges against Fornier and Trinidad. 68 In De
Guzman’s case, the Board of Governors increased the penalty from a suspension of two (2) months to a suspension
of two (2) years from the practice of law for his attempt to file illegal recruitment cases to extort money:

RESOLVED to ADOPT and APPROVE, as it is hereby unanimously ADOPTED with modification, and

APPROVED the Report and Recommendation of the Investigating Commissioner in the above-entitled case, herein
made part of this Resolution as Annex "A" and finding the recommendation fully supported by the evidence on
record and the applicable laws and rules, and considering that the case against Respondents Trinidad and Fornier
is without merit, the same is hereby DISMISSED. However, Atty. Salvador De Guzman, Jr. is
hereby SUSPENDED from the practice of law for two (2) years for his attempt to file illegal recruitment cases in
order to extort money.69

The Issue

The issue in this case is whether Trinidad, Fornier and De Guzman should be administratively disciplined based on
the allegations in the complaint.

The Ruling of this Court

We adopt the Decision of the Board of Governors and the Report and Recommendation of the Investigating
Commissioner on the dismissal of the charges against Trinidad and Fornier.

We reverse the Decision of the Board of Governors and the Report and Recommendation of the Investigating
Commissioner with regard to De Guzman’s liability, and likewise dismiss the charges against De Guzman.

Presumption, Burden of Proof and Weight of Evidence

Section 3(a), Rule 131 of the Rules of Court provides that a person is presumed innocent of crime or wrongdoing.
This Court has consistently held that an attorney enjoys the legal presumption that he is innocent of charges against
him until the contrary is proved, and that as an officer of the court, he is presumed to have performed his duties in
accordance with his oath.70

Burden of proof, on the other hand, is defined in Section 1 of Rule 131 as the duty of a party to present evidence on
the facts in issue necessary to establish his claim or defense by the amount of evidence required by law. In
disbarment proceedings, the burden of proof rests upon the complainant, and for the court to exercise its
disciplinary powers, the case against the respondent must be established by convincing and satisfactory proof.71 1avvphi1

Weight and sufficiency of evidence, under Rule 133 of the Rules of Court, is not determined mathematically by the
numerical superiority of the witnesses testifying to a given fact. It depends upon its practical effect in inducing belief
for the party on the judge trying the case.72
Consequently, in the hierarchy of evidentiary values, proof beyond reasonable doubt is at the highest level, followed
by clear and convincing evidence, then by preponderance of evidence, and lastly by substantial evidence, in that
order.73 Considering the serious consequences of the disbarment or suspension of a member of the Bar, the Court
has consistently held that clearly preponderant evidence is necessary to justify the imposition of administrative
penalty on a member of the Bar.74

Preponderance of evidence means that the evidence adduced by one side is, as a whole, superior to or has greater
weight than that of the other.75 It means evidence which is more convincing to the court as worthy of belief than that
which is offered in opposition thereto.76 Under Section 1 of Rule 133, in determining whether or not there is
preponderance of evidence, the court may consider the following: (a) all the facts and circumstances of the case; (b)
the witnesses’ manner of testifying, their intelligence, their means and opportunity of knowing the facts to which they
are testifying, the nature of the facts to which they testify, the probability or improbability of their testimony; (c) the
witnesses’ interest or want of interest, and also their personal credibility so far as the same may ultimately appear in
the trial; and (d) the number of witnesses, although it does not mean that preponderance is necessarily with the
greater number.

When the evidence of the parties are evenly balanced or there is doubt on which side the evidence preponderates,
the decision should be against the party with the burden of proof, according to the equipoise doctrine.77

To summarize, the Court has consistently held that in suspension or disbarment proceedings against lawyers, the
lawyer enjoys the presumption of innocence, and the burden of proof rests upon the complainant to prove the
allegations in his complaint. The evidence required in suspension or disbarment proceedings is preponderance of
evidence. In case the evidence of the parties are equally balanced, the equipoise doctrine mandates a decision in
favor of the respondent.

De Guzman’s Liability

The Court reverses the Decision of the Board of Governors and the Report and Recommendation of the
Investigating Commissioner regarding De Guzman’s liability for the following reasons: (a) the documents submitted
by complainants in support of their complaint are not credible; (b) complainants did not appear in any of the
mandatory conference proceedings to substantiate the allegations in their complaint; and (c) complainants were not
able to prove by preponderance of evidence that De Guzman communicated with them for the purpose of filing
fabricated illegal recruitment charges for purposes of extortion.

The documents submitted by complainants are clearly not credible. First, complainants submitted a Joint Counter-
Affidavit and Affidavit of Complaint, which contained all their allegations of misconduct against De Guzman, Trinidad
and Fornier. Complainants misled the Investigating Commissioner, the Board of Governors of the Integrated Bar of
the Philippines, and this Court into believing that the Joint Counter-Affidavit and Affidavit of Complaint was
submitted to the Office of the City Prosecutor in Iligan to rebut the illegal recruitment charges against them.
The Joint Counter-Affidavit and Affidavit of Complaint purportedly appears to be subscribed and sworn to before a
prosecutor. After inquiry by De Guzman, however, the Office of the City Prosecutor of Iligan issued a Certification
denying the submission of this document by complainants:

This is to certify that based on available records of the Office, ALMASIS LAUBAN, MIKO LUMABAO and SIAO
ALBA were among the respondents named and charged with Violation of Republic Act No. 8042 under I.S. No. 06-
1835, Page 254, Vol. XVI, and I.S. No. 06-1676, Page 240, Vol. XVI, which complaints were dismissed thru a Joint
Resolution dated December 29, 2006 rendered by the Office.

This is to certify further that the abovenamed persons did not submit any Joint Counter-Affidavit in
connection to the complaints filed against them, and neither did they file any Affidavit of Complaint against
any person.78 (Emphasis supplied)

To repeat, complainants deceived and misled the Investigating Commissioner, the Board of Governors of the
Integrated Bar of the Philippines, and this Court into believing that the Joint Counter-Affidavit and Affidavit of
Complaint, which contained all their allegations of misconduct, were submitted and sworn to before a prosecutor.
This deception gives doubt to the credibility of the other documents complainants submitted in support of their
administrative charges against respondents. Worse, complainants submitted falsified documents to the Investigating
Commissioner, the Board of Governors, and this Court.

Second, De Guzman, Fornier and Trinidad all claim that complainants are part of a syndicate headed by
Montesclaros that has perfected the filing of fabricated criminal charges. Given this claim that complainants are well-
adept in filing fabricated criminal charges supported by fabricated documents, this Court is more cautious in
appreciating the supporting documents submitted by complainants. Complainants bear the burden of proof to
establish that all the documents they submitted in support of their allegations of misconduct against respondents are
authentic. Unfortunately, complainants did not even attend any mandatory conference called by the Investigating
Commissioner to identify the documents and substantiate or narrate in detail the allegations of misconduct allegedly
committed by respondents. To make matters worse, the Joint Counter-Affidavit and Affidavit of
Complaint complainants attached to their Letter-Complaint, which supposedly contained all their allegations of
misconduct against respondents, is spurious, not having been submitted to the Office of the City Prosecutor of
Iligan, despite purportedly having the signature and seal of the prosecutor.

Third, the allegations of complainants lack material details to prove their communication with De Guzman. If De
Guzman really called and texted them that a warrant of arrest would be issued, what mobile number did De Guzman
use? Out of the voluminous documents that complainants submitted, where is the warrant for their arrest? What is
their occupation or profession? Who are these complainants? These questions are unanswered because
complainants did not even bother to attend any mandatory conference called by the Investigating Commissioner,
despite due notice. For this reason, the allegations of De Guzman’s misconduct are really doubtful.

Lastly, the supposedly "vicious" evidence against De Guzman, which was a letter he allegedly sent to Cotabato City
Councilor Orlando Badoy, is not credible. This letter states:

Dear Orly,

Thank you very much for a wonderful visit to Cotabato City. I learned much about the South and the way of life
there.

It took me time to prepare the complaint to be filed. In the meantime, the son-of-a-gun filed charges against us in
Marawi City! I have addressed the affidavit-complaint directly to your man, Ben Danda, with instructions for him and
the other two complainants to sign the same before an assistant prosecutor and file with City Prosecutor Bagasao.
But we are relying on you to orchestrate the whole thing, from the prosecutor to the RTC Judge, especially the
warrants of arrest.

Thank you and best regards.79

The signatures of De Guzman in his Affidavit of Clarification and in the purported letter have material discrepancies.
At the same time, complainants did not even explain how they were able to get a copy of the purported letter.
Complainants did not present the recipients, Orlando Badoy or Atty. Francis V. Gustilo, to authenticate the letter. In
addition, none of the complainants appeared before the Investigating Commissioner to substantiate their allegations
or authenticate the supporting documents.

The Investigating Commissioner, on the other hand, put a lot of weight and credibility into this purported letter:

Again, to the extreme amazement of the undersigned, Respondent failed to offer denial of the letter or explain the
import of the same differently from what is understood by the Complainants. But even with that effort, the letter is so
plain to understand. Verily, the undersigned cannot ignore the same and the message it conveys.80

Generally, the letter would have been given weight, if not for the fact that complainants, whom respondents claim
are part of an extortion syndicate, are consistently involved in the fabrication of evidence in support of their criminal
complaints. Moreover, contrary to the Investigating Commissioner’s observation, De Guzman actually denied any
involvement in the preparation of complainants’ criminal complaint in I.S. No. 2006-C-31. In his Affidavit of
Clarification, De Guzman stated:

5. Undersigned has no participation in the above-captioned complaint, but to his surprise, he recently received a
photocopy of (a) the counter-affidavit of Rogelio Atangan, (b) Atty. Nicanor G. Alvarez, (c) Lolita Zara, (d) Marcelo
Pelisco, and (e) Atty. Roque A. Amante Jr. (his records at the Surpeme Court does not have any "Daryll");

6. Undersigned counsel’s name and that of his clients appear in the counter-affidavit of Atty. Nicanor G. Alcarez
(Montesclaros’ lawyer who appeared in the sala of Pasay RTC Judge Francisco Mendiola as against the
undersigned), or Marcelo Pelisco, a known henchman of Montesclaros and a squatter at the Monica Condominium,
and Atty. Amante, and for this reason, undersigned counsel feels under obligation to make this affidavit of
clarification for the guidance of the Investigating Prosecutor;

xxx

4.4. Undersigned has no familiarity with the Tesclaros Recruitment & Employment Agency nor with the complainants
(except for Laura Timbag Tuico of Cotabato City), nor with the other respondents, but he believes that Atty. Roque
A. Amante Jr. and Atty. Nicanor G. Alvarez are the key players of Joseph L. Montesclaros in the illegal recruitment
business.81

For these reasons, the Court finds that the documents submitted by complainants in support of their complaint
against De Guzman are not credible. Accordingly, the Court dismisses the charges against De Guzman.

De Guzman enjoys the legal presumption that he committed no crime or wrongdoing. Complainants have the
burden of proof to prove their allegations of misconduct against De Guzman. Complainants were not able to
discharge this burden because the documents they submitted were not authenticated and were apparently
fabricated. Also, complainants did not appear in the mandatory conference proceedings to substantiate the
allegations in their complaint. In disbarment proceedings, what is required to merit the administrative penalty is
preponderance of evidence, which weight is even higher than substantial evidence in the hierarchy of evidentiary
values. Complainants were not able to prove by preponderance of evidence that De Guzman communicated with
them and persuaded them to file fabricated charges against other people for the purpose of extorting money. In fact,
even if the evidence of the parties are evenly balanced, the Court must rule in favor of De Guzman according to the
equipoise doctrine. For these reasons, the Court reverses the Decision of the Board of Governors and the Report
and Recommendation of the Investigating Commissioner, and accordingly dismisses the charges against De
Guzman.

Trinidad’s and Fornier’s Liabilities

The Court adopts the findings of fact and the report and recommendation of the Investigating Commissioner with
respect to Trinidad’s and Fornier’s liabilities:

A careful persusal of the allegations in as well as the attachments to the Joint Counter Affidavit with Affidavit of
Complaint reveals that Complainants failed miserably to substantiate their charges against Respondents. Other than
their bare allegations, the Complainants did not adduce proof of Respondent’s supposed involvement or
participation directly or indirectly in the acts complained of. For instance, they failed to prove though faintly that
Respondents had gone to Cotabato City to personally induce and persuade the complainants to file illegal
recruitment charges against Atty. Nicanor G. Alvarez and sixteen (16) others or that they have prodded and stirred
them to do so as they did by any form of communication. The supposed telephone call the Respondents and their
supposed cohorts had made during the proceedings before the Cotabato City Prosecutor’s Office to the
Complainants is unbelievable and absurd. It is inconceivable that Complainants could have answered the calls of six
(6) persons during a serious proceeding such as the inquest or preliminary investigation of a criminal complaint
before the City Prosecutor. To the undersigned, the fallacy of the allegation above strongly militates against the
reliabiity of Complainants’ charges against Respondents.

xxx

But on top of all, the Complainants had by their own volition already made unmistakable Respondents’ non-
participation or non-involvement in the charges they have filed when they wittingly filed their Motion to Dismiss
Complaint against Atty. Trinidad and Atty. Fornier Only. The undersigned realizes only too well that the filing of a
Motion to Dismiss is proscribed in this Commission, however, any such pleading must be appreciated as to its
intrinsic merit. A clear reading of the same reveals that the Complainants had wanted to clarify that they have
erroneously included Respondents Trinidad and Fornier as parties to the case. In particular, they explained that they
had no communication or dealings whatsoever with the said lawyers as to inspire belief that the latter had some
involvement in their charges. The undersigned finds the affidavit persuasive and for that he has no reason to ignore
the import of the same as a piece of evidence.82

At any rate, we consider the case against Trinidad and Fornier terminated. Under Section 12(c) of Rule 139-B, the
administrative case is deemed terminated if the penalty imposed by the Board of Governors of the Integrated Bar of
the Philippines is less than suspension or disbarment (such as reprimand, admonition or fine), unless the
complainant files a petition with this Court within 15 days from notice:

c. If the respondent is exonerated by the Board or the disciplinary sanction imposed by it is less than suspension or
disbarment (such as admonition, reprimand, or fine) it shall issue a decision exonerating respondent or imposing
such sanction. The case shall be deemed terminated unless upon petition of the complainant or other interested
party filed with the Supreme Court within fifteen (15) days from notice of the Board’s resolution, the Supreme Court
orders otherwise.

Here, complainants did not appeal the Decision of the Board of Governors dismissing the charges against Trinidad
and Fornier. In fact, complainants filed with this Court a Motion to Dismiss Complaint Against Trinidad and Fornier.

WHEREFORE, we AFFIRM the Decision of the Board of Governors of the Integrated Bar of the Philippines,
adopting the Report and Recommendation of the Investigating Commissioner, and DISMISS the charges against
Attys. Wenceslao "Peewee" Trinidad and Andresito Fornier for utter lack of merit. We REVERSE the Decision of the
Board of Governors of the Integrated Bar of the Philippines, modifying and increasing the penalty in the Report and
Recommendation of the Investigating Commissioner, and accordingly DISMISS the charges against Atty. Salvador
P. De Guzman, Jr. also for utter lack of merit.

SO ORDERED.
A.M. OCA IPI No. 04-1606-MTJ               September 19, 2012

ATTY. ARTURO JUANITO T.MATURAN, Complainant,

vs.
JUDGE LIZABETH GUTIERREZ-TORRES, Respondent.

DECISION

BERSAMIN, J.:

A judge must exert every effort to timely rule upon a case submitted for decision. If she thinks that she would need a
period to decide a case or to resolve an issue longer than what the Constitution prescribes, she may request an
extension from the Court to avoid administrative sanctions.

Antecedents

On August 12, 2004, complainant Atty. Arturo Juanita T. Maturan (Maturan), the counsel for the private complainant
in Criminal Case No. 67659 entitled People v. Anicia C. Ventanilla, filed a sworn complaint against Judge Lizabeth
1 

Gutierrez-Torres, the former Presiding Judge of Branch 60 of the Metropolitan Trial Court in Mandaluyong City,
charging her with unjustifiably delaying the rendition of the decision in his client’s criminal case. Atty. Maturan
averred that the criminal case had remained pending and unresolved despite its having been submitted for decision
since June 2002 yet, pertinently alleging in detail as follows:

Court Record show that-

1. 10 April 2002- This is the date of the last hearing during which the defense counsel, Atty. Williard S.
Wong, manifested in open court that he has no more documentary exhibit to offer and accordingly rested his
case. The Honorable Court then ordered the parties to file their respective memorandum after which, the
case was ordered submitted for decision.

2. 03 June 2002- The prosecution filed its MEMORANDUM. (Copy attached as ANNEX "A") The defense
waived filing any MEMORANDUM as court records show that up to this day, the defense counsel, Atty.
Wong, did not file any.

3. 09 December 2002- The prosecution filed a MOTION TO DECIDE case dated 09 December 2002. (Copy
attached as ANNEX "B") The Honorable Presiding Judge simply sat on said motion and did not take any
action thereto.

4. 10 July 2003- The prosecution filed a SECOND MOTION TO DECIDE CASE dated 10 July 2003 (Copy
attached as ANNEX "C"). The Honorable Presiding Judge denied it for the alleged failure to comply with the
ORDER dated 03 May 2001. Said ORDER involves sur-rebuttal evidence, however, this has been rendered
moot by the proceedings held on 10 April 2002. Court records would show that as mentioned above, Atty.
Wong manifested in open court that the defense is already resting its case. In fact, the Honorable Court
thereafter ordered the parties to file their respective memorandum and ordered the case submitted for
decision thereafter.

5. 04 February 2004- The prosecution filed a THIRD MOTION TO DECIDE CASE dated 04 February 2004
(Copy attached as ANNEX "D").

6. 11 August 2004- In the morning of 11 August 2004, undersigned thoroughly reviewed the court records
and discovered that the Hon. Presiding Judge has not taken any action to the motion. Records also show
that the Hon. Presiding Judge has not yet made a decision on the case despite the lapse of more than 2
years. When undersigned came back to again examine the records in the afternoon of 11 August 2004, he
was surprised to be shown with a newly-signed ORDER also dated 11 August 2004 stating completion of
the transcript of records and considered the case is now supposedly "submitted for decision". 2

Atty. Maturan stated that Judge Gutierrez-Torres’ failure to render the judgment within the 90-day period from
submission of the case for decision violated Canon 3, Rule 3.05 of the Code of Judicial Conduct and the
Constitution, and constituted gross inefficiency.
3

On August 27, 2004, the Office of the Court Administrator (OCA) directed Judge Gutierrez-Torres through its first
indorsement of the complaint to submit her comment, and also to show cause why no disciplinary action should be
taken against her for her violation of her professional responsibility as a lawyer pursuant to the Resolution dated
September 17, 2002 issued in A.M. No. 02-9-02-SC. 4
On September 24, 2004, Judge Gutierrez-Torres implored the OCA to grant her a 20-day extension of the period
within which to submit her comment. Despite her request being granted, she failed to submit a comment, causing
the Court to issue on June 29, 2005 its Resolution "to REQUIRE the respondent to (a) SHOW CAUSE why she
should not be administratively dealt with for refusing to submit her comment despite the two directives from the
Office of the Court Administrator; and (b) SUBMIT the required COMMENT, both within five (5) days from receipt
hereof, failing which the Court shall take the necessary action against her and decide the administrative complaint
on the basis of the record on hand." 5

The records show that Judge Gutierrez-Torres sought four more extensions of the period within which to submit a
comment; and that the Court granted her further requests through its Resolutions dated September 12,
2005, October 19, 2005, February 8, 2006, and March 21, 2007. The Court likewise granted her request to
6  7  8  9 

photocopy documents relevant to the complaint. Notwithstanding the liberality of the Court in granting several
10 

extensions, she still did not submit a comment. In its Memorandum dated August 25, 2011, the OCA rendered the
11 

following findings, to wit:

The respondent has consistently exhibited indifference to the Court’s Resolutions requiring her to comment on the
instant complaint. Her behavior constitutes gross misconduct and blatant insubordination, even outright disrespect
for the Court. It must be borne in mind that a resolution of the Court requiring comment on an administrative
complaint is not a mere request, nor should it be complied with partially, inadequately or selectively. Failure by the
respondent to comply betrays not only a recalcitrant streak in character, but also disrespect for the Court’s lawful
order and directive.

Moreover, she has no defense whatsoever to refute the charges against her. The records are replete with
documentary evidence that in Criminal Case No. 67659, entitled "People of the Philippines vs. Anicia C. Ventenilla,"
she miserably failed to decide the said case within the reglementary period of 90 days. In fact, three (3) successive
Motions to Decide Case dated 9 December 2002, 10 July 2003 and 4 February 2004, were filed by the prosecution
without any action on the part of the respondent. By the time the instant administrative complaint was filed on 12
August 2004, more than two (2) years had already elapsed since the said criminal case was submitted for decision.
Clearly, the respondent is not only guilty of insubordination and gross inefficiency, but also
of grave and serious misconduct, having violated Canon 3, Rule 3.05 of the Code of Judicial Conduct and Section
15, Article VIII of the 1987 Constitution.

Considering the gravity of the above-mentioned offenses committed by the respondent, the penalty of dismissal
from the service is commensurate, imposing the penalty of dismissal from the service on the respondent will be in
consonance with the ruling of the Court in the consolidated cases of Alice Davila vs. Judge Joselito S.D.
Generoso and Leticia S. Santos vs. Judge Joselito S.D. Generoso, to wit:

"The failure of the respondent judge to comply with the show-cause resolutions aforecited constitutes
‘grave and serious misconduct affecting his fitness and worthiness of the honor and integrity attached to his
office. It is noteworthy that respondent judge was afforded several opportunities to explain his failure to decide the
subject cases long pending before his court and to comply with the directives of the Court, but he has failed, and
continues to fail, to heed the orders of the Court; a glaring proof that he has become disinterested in his position in
the judicial system to which he belongs.

It is beyond cavil that the inability of respondent judge to decide the cases in question within the
reglementary period of ninety (90) days from their date of submission, constitutes gross inefficiency and is
violative of Rule 3.05, Canon 3 of the Code of Judicial Conduct, which provides that ‘[a] judge shall dispose of
the court’s business promptly and decide cases within the required periods.’

The separation of the respondent judge from the service is indeed warranted, if only to see to it that the
people’s trust in the judiciary be maintained and speedy administration of justice be assured."

It bears mentioning that the instant case is not an isolated one. Several administrative cases against the respondent
are still pending before the Court, all of which invariably charge her with gross misconduct and inexcusable
inefficiency, among others, for failing to decide cases or resolve pending incidents for inordinately long periods of
time. in similar lackadaisical fashion, the respondent has ignored the orders of the Court directing her to comment
on said complaints. She has likewise been previously penalized with fines and suspensions. However, the
respondent Judge has not shown any sign of remorse or contrition, even as the administrative complaints against
her piled up. And worse, in her sala, hundreds of criminal and civil cases submitted for decision and/or resolution
remained untouched and unresolved, gathering dust as they aged.

Finally, on 23 November 2010, in three (3) consolidated cases against the respondent, docketed as A.M. No. MTJ-
08-1719, A.M. No. MTJ-08-1722, and A.M. No. MTJ-08-1723, the Court, in a Per Curiam Decision, finally
DISMISSED the respondent from the service with forfeiture of all retirement benefits except earned leave and
vacation benefits, with benefits, with prejudice to employment in any branch of the government or any of its
instrumentalities including government-owned and controlled corporations. The court ruled therein that:

"The magnitude of her transgressions in the present consolidated cases – gross inefficiency, gross ignorance of the
law, dereliction of duty, violation of the Code of Judicial Conduct, and insubordination, taken collectively, cast a
heavy shadow on her moral, intellectual and attitudinal competence. She has shown herself unworthy of the judicial
robe and place of honor reserved for guardians of justice. Thus, the Court is constrained to impose upon her the
severest of administrative penalties – dismissal from the service, to assure the people’s faith in the judiciary and the
speedy administration of justice."

Even though the respondent has been dismissed from the service, this does not necessarily mean that she cannot
be held administratively liable in the instant case. In its fairly recent Decision in Narag vs.Manio, the Court ruled that:

"Unfortunately for the respondent, this did not render her case moot. She must not be allowed to evade
administrative liability by her previous dismissal from the service. Thus, for this case involving additional
serious offenses, the Court finds it proper to impose upon her a fine of ₱ 20,000 to be deducted from her accrued
leave credits in lieu of dismissal from the service."

Upon the foregoing findings, the OCA recommended that Judge Gutierrez-Torres be administratively sanctioned as
follows:

xxxx

2. Respondent Lizabeth Gutierrez-Torres be found GUILTY of INSUBORDINATION, GROSS

INEFFICIENCY, and GRAVE and SERIOUS MISCONDUCT;

3. In view of her previous dismissal from the service, a FINE of ₱ 20,000.00 instead be imposed upon her,
to be deducted from her accrued leave credits;

xxxx

Ruling

We adopt the findings and uphold the recommendations of the OCA.

Article VIII, Section 15(1) of the 1987 Constitution requires that all cases or matters filed after the effectivity of the
Constitution must be decided or resolved within twenty-four months from date of submission for the Supreme Court,
and, unless reduced by the Supreme Court, twelve months for all lower collegiate courts, and three months for all
other lower courts. Thereby, the Constitution mandates all justices and judges to be efficient and speedy in the
disposition of the cases or matters pending in their courts.

Reiterating the mandate, the New Code of Judicial Conduct for the Philippine Judiciary requires judges to "devote
their professional activity to judicial duties, which include xxx the performance of judicial functions and
responsibilities in court and the making of decisions xxx," and to "perform all judicial duties, including the delivery of
12 

reserved decisions, efficiently, fairly and with reasonable promptness." Likewise, Rule 3.05, Canon 3 of the Code of
13 

Judicial Conduct imposes on all judges the duty to dispose of their courts’ business promptly and to decide cases
within the required periods.

These judicial canons directly demand efficiency from the judges in obvious recognition of the right of the public to
the speedy disposition of their cases. In such context, the saying justice delayed is justice denied becomes a true
encapsulation of the felt need for efficiency and promptness among judges.

To fix the time when a case pending before a court is to be considered as submitted for decision, the Court has
issued Administrative Circular No. 28 dated July 3, 1989, whose third paragraph provides:

A case is considered submitted for decision upon the admission of the evidence of the parties at the termination of
the trial. The ninety (90) day period for deciding the case shall commence to run from submission of the
case for decision without memoranda; in case the court requires or allows its filing, the case shall be
considered submitted for decision upon the filing of the last memorandum or upon the expiration  of the
period to do so, whichever is earlier. Lack of transcript of stenographic notes shall not be a valid reason to interrupt
or suspend the period for deciding the case unless the case was previously heard by another judge not the deciding
judge in which case the latter shall have the full period of ninety (90) days for the completion of the transcripts within
which to decide the same.

The time when a case or other matter is deemed submitted for decision or resolution by a judge is, therefore, settled
and well defined. There is no longer any excuse for not complying with the canons mandating efficiency and
promptness in the resolution of cases and other matters pending in the courts. Hence, all judges should be mindful
of the duty to decide promptly, knowing that the public’s faith and confidence in the Judiciary are no less at stake if
they should ignore such duty. They must always be aware that upon each time a delay occurs in the disposition of
cases, their stature as judicial officers and the respect for their position diminish. The reputation of the entire
Judiciary, of which they are among the pillars, is also thereby undeservedly tarnished.
A judge like Judge Gutierrez-Torres should be imbued with a high sense of duty and responsibility in the discharge
of the obligation to promptly administer justice. She must cultivate a capacity for promptly rendering her decisions.
Should she anticipate that she would need a period longer than what the Constitution and the issuances of the
Court prescribe within which to render her decision or resolution, she should request a proper extension of the
period from the Court, through the OCA, and lay out in the request the justification for her inability. Yet, she did not
at all do so in Criminal Case No. 67659 entitled People v. Anicia C. Ventanilla. She was clearly guilty of gross
inefficiency, especially because her inability to decide the case within the required period became absolutely devoid
of excuse after she did not bother to proffer any explanation for her inability.

The gross inefficiency of Judge Gutierrez-Torres warranted the imposition of administrative sanction against
her. Rule 140 of the Rules of Court, as amended by A.M. No. 01-8-10-SC, classifies undue delay in rendering a
14 

decision or order as a less serious charge punishable by either: (a) suspension from office without salary and other
benefits for not less than one nor more than three months; or (b) a fine of more than ₱ 10,000.00 but not exceeding
₱ 20,000.00. We adopt the OCA’s recommendation as to the fine in the maximum of ₱ 20,000.00, considering that
she had already been dismissed from the service due to a similar offense of unjustified delay in rendering
decisions. 15

As a final word, the Court must focus attention to the indifference of Judge Gutierrez-Torres towards the Court’s
directive for her to file her comment despite the repeated extensions of the period to do so liberally extended by the
Court at her request. Such indifference reflected not only that she had no credible explanation for her omission, but
also that she did not care to comply with the directives of the Court. The latter represents an attitude that no judge
should harbor towards the Highest Tribunal of the country, and for that reason is worse than the former. She should
not be emulated by any other judge, for that attitude reflected her lack of personal character and ethical merit. To be
sure, the Court does not brook her insubordination, and would do more to her had she not been removed from the
Judiciary. Accordingly, the Court must still hold her to account for her actuations as a member of the Law
Profession, which is what remains to be done after first giving her the opportunity to show cause why she should
not.
1âwphi1

WHEREFORE, the Court finds former Metropolitan Trial Court JUDGE LIZABETH GUTIERREZ-TORRES guilty of

gross inefficiency, and imposes on her a fine of F20,000.00, to be deducted from her accrued leave credits, if any.

The Court orders JUDGE GUTIERREZ-TORRES to show cause in writing within ten days from notice why she
should not be suspended from membership in the Integrated Bar of the Philippines for her act of insubordination
towards the Court.

The Court directs the Employees Leave Division, Office of Administrative Services-OCA to compute the balance of
Judge GutierrezTorres' earned leave credits and forward the same to the Finance Division, Fiscal Management
Office-OCA which shall compute its monetary value.

SO ORDERED.