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Banahaw Broadcasting Corp v.

Pacana GR 171673
LEONARDO-DE CASTRO, J.:


This is a Petition for Review on Certiorari under Rule
45 of the 1997 Rules of Civil Procedure assailing the
Decision[1] dated April 15, 2005 of the Court of Appeals in CA-
G.R. SP No. 57847, and its Resolution[2] dated January 27,
2006 denying petitioners Motion for Reconsideration.

The factual and procedural antecedents of this case
are as follows:

Respondents in the case at bar, Cayetano Pacana
III, Noe U. Dacer, Johnny B. Racaza, Leonardo S. Orevillo,
Araceli T. Libre, Genovevo E. Romitman, Porferia M.
Valmores, Meneleo G. Lactuan, Dionisio G. Bangga,
Francisco D. Manga, Nestor A. Amplayo, Leilani B. Gasataya,
Loreta G. Lactuan, Ricardo B. Pido, Resigolo M. Nacua and
Anacleto C. Remedio (collectively, the DXWG personnel), are
supervisory and rank and file employees of the DXWG-Iligan
City radio station which is owned by petitioner Banahaw
Broadcasting Corporation (BBC), a corporation managed by
Intercontinental Broadcasting Corporation (IBC).

On August 29, 1995, the DXWG personnel filed with
the Sub-regional Arbitration Branch No. XI, Iligan City a
complaint for illegal dismissal, unfair labor practice,
reimbursement of unpaid Collective Bargaining Agreement
(CBA) benefits, and attorneys fees against IBC and BBC.

On June 21, 1996, Labor Arbiter Abdullah L. Alug
rendered his Decision[3] awarding the DXWG personnel a
total of P12,002,157.28 as unpaid CBA benefits consisting of
unpaid wages and increases, 13
th
month pay, longevity pay,
sick leave cash conversion, rice and sugar subsidy, retirement
pay, loyalty reward and separation pay.[4] The Labor Arbiter
denied the other claims of the DXWG personnel for Christmas
bonus, educational assistance, medical check-up and optical
expenses. Both sets of parties appealed to the National Labor
Relations Commission (NLRC).

On May 15, 1997, a Motion to Dismiss, Release,
Waiver and Quitclaim,[5] was jointly filed by IBC and the
DXWG personnel based on the latters admission that IBC is
not their employer as it does not own DXWG-Iligan City. On
April 21, 1997, the NLRC granted the Motion and dismissed
the case with respect to IBC.[6]

BBC filed a Motion for Reconsideration alleging that
(1) neither BBC nor its duly authorized representatives or
officers were served with summons and/or a copy of the
complaint when the case was pending before the Labor Arbiter
or a copy of the Decision therein; (2) since the liability of IBC
and BBC is solidary, the release and quitclaim issued by the
DXWG personnel in favor of IBC totally extinguished BBCs
liability; (3) it was IBC that effected the termination of the
DXWG personnels employment; (4) the DXWG personnel are
members of the IBC union and are not employees of BBC; and
(5) the sequestered properties of BBC cannot be levied upon.

On December 12, 1997, the NLRC issued a
Resolution vacating the Decision of Labor Arbiter Alug and
remanding the case to the arbitration branch of origin on the
ground that while the complaint was filed against both IBC and
BBC, only IBC was served with summons, ordered to submit a
position paper, and furnished a copy of the assailed
decision.[7]

On October 15, 1998, Labor Arbiter Nicodemus G.
Palangan rendered a Decision adjudging BBC to be liable for
the same amount discussed in the vacated Decision of Labor
Arbiter Alug:


WHEREFORE, premises
considered, judgment is hereby rendered
ordering the respondent Banahaw
Broadcasting Corporation to pay
complainants the following:

1. Cayetano Pacana III P 1,730,535.75
2. Noe U. Dacer 886,776.43
3. Johnny B. Racaza 1,271,739.34
4. Leonardo S. Orevillo 1,097,752.70
5. Araceli T. Libre 543,467.22
6. Genovevo E. Romitman 716,455.72
7. Porferia M. Valmores 562,564.78
8. Meneleo G. Lactuan 678,995.91
9. Dionisio G. Bangga 580,873.78
10. Francisco D. Manga 29,286.65
11. Nestor A. Amplayo 583,798.51
12. Leilani B. Gasataya 42,669.75
13. Loreta G. Lactuan 757,252.52
14. Ricardo B. Pido 756,835.64
15. Resigolo M. Nacua 887,344.75
16. Anacleto C. Remedio 887,345.39
____________________
_______
GRAND TOTAL P 12,002,157.28

Respondent is likewise ordered to
pay 10% of the total award as attorneys
fee.[8]


Both BBC and respondents appealed to the NLRC
anew. The appeal was docketed as NLRC CA No. M-004419-
98. In their appeal, the DXWG personnel reasserted their
claim for the remaining CBA benefits not awarded to them,
and alleged error in the reckoning date of the computation of
the monetary award. BBC, in its own Memorandum of Appeal,
challenged the monetary award itself, claiming that such
benefits were only due to IBC, not BBC, employees.[9] In the
same Memorandum of Appeal, BBC incorporated a Motion for
the Recomputation of the Monetary Award (of the Labor
Arbiter),[10] in order that the appeal bond may be reduced.

On September 16, 1999, the NLRC issued an
Order[11] denying the Motion for the Recomputation of the
Monetary Award. According to the NLRC, such recomputation
would result in the premature resolution of the issue raised on
appeal. The NLRC ordered BBC to post the required bond
within 10 days from receipt of said Order, with a warning that
noncompliance will cause the dismissal of the appeal for non-
perfection.[12] Instead of complying with the Order to post the
required bond, BBC filed a Motion for Reconsideration,[13]
alleging this time that since it is wholly owned by the Republic
of the Philippines, it need not post an appeal bond.

On November 22, 1999, the NLRC rendered its
Decision[14] in NLRC CA No. M-004419-98. In said Decision,
the NLRC denied the Motion for Reconsideration of BBC on its
September 16, 1999 Order and accordingly dismissed the
appeal of BBC for non-perfection. The NLRC likewise
dismissed the appeal of the DXWG personnel for lack of merit
in the same Decision.


BBC filed a Motion for Reconsideration of the above
Decision. On January 13, 2000, the NLRC issued a
Resolution[15] denying the Motion.

BBC filed with the Court of Appeals a Petition for
Certiorari under Rule 65 of the Rules of Court assailing the
above dispositions by the NLRC. The Petition was docketed
as CA-G.R. SP No. 57847.

On April 15, 2005, the Court of Appeals rendered the
assailed Decision denying BBCs Petition for Certiorari. The
Court of Appeals held that BBC, though owned by the
government, is a corporation with a personality distinct from
the Republic or any of its agencies or instrumentalities, and
therefore do not partake in the latters exemption from the
posting of appeal bonds. The dispositive portion of the
Decision states:

WHEREFORE, finding no grave
abuse of discretion on the part of public
respondents, We DENY the petition. The
challenged decision of public respondent
dated November 22, 1999, as well as its
subsequent resolution dated January 13,
2000, in NLRC Case No. M-004419-98 are
hereby AFFIRMED. The decision of the
Labor Arbiter dated October 15, 1998 in
RAB Case No. 12-09-00309-95 is hereby
declared FINAL AND EXECUTORY.[16]


On January 27, 2006, the Court of Appeals rendered
the assailed Resolution denying the Motion for
Reconsideration. Hence, this Petition for Review.

As stated above, both the NLRC and the Court of
Appeals dealt with only one issue whether BBC is exempt
from posting an appeal bond. To recall, the NLRC issued an
Order denying BBCs Motion for the Recomputation of the
Monetary Award and ordered BBC to post the required bond
within 10 days from receipt of said Order, with a warning that
noncompliance will cause the dismissal of the appeal for non-
perfection.[17] However, instead of heeding the warning, BBC
filed a Motion for Reconsideration, alleging that it need not
post an appeal bond since it is wholly owned by the Republic
of the Philippines.

There is no dispute as regards the history of the
ownership of BBC and IBC. Both BBC and IBC, together with
Radio Philippines Network (RPN-9), were formerly owned by
Roberto S. Benedicto (Benedicto). In the aftermath of the
1986 people power revolution, the three companies,
collectively denominated as Broadcast City, were sequestered
and placed under the control and management of the Board of
Administrators (BOA).[18] The BOA was tasked to operate
and manage its business and affairs subject to the control and
supervision of the Presidential Commission on Good
Government (PCGG).[19] In December 1986, Benedicto and
PCGG allegedly executed a Management Agreement
whereby the Boards of Directors of BBC, IBC and RPN-9 were
agreed to be reconstituted. Under the agreement, 2/3 of the
membership of the Boards of Directors will be PCGG
nominees, and 1/3 will be Benedicto nominees. A reorganized
Board of Directors was thus elected for each of the three
corporations. The BOA, however, refused to relinquish its
function, paving for the filing by Benedicto of a Petition for
Prohibition with this Court in 1989, which was docketed as
G.R. No. 87710.

In the meantime, it was in 1987 when the Republic,
represented by the PCGG, filed the case for
recovery/reconveyance/reversion and damages against
Benedicto. Following our ruling in Bataan Shipyard &
Engineering Co., Inc. (BASECO) v. Presidential Commission
on Good Government,[20] the institution of this suit necessarily
placed BBC, IBC and RPN-9 under custodia legis of the
Sandiganbayan.

On November 3, 1990, Benedicto and the Republic
executed a Compromise Agreement whereby Benedicto, in
exchange for immunity from civil and criminal actions, ceded
to the government certain pieces of property listed in Annex A
of the agreement and assigned or transferred whatever rights
he may have, if any, to the government over all corporate
assets listed in Annex B of the agreement.[21] BBC is one of
the properties listed in Annex B.[22] Annex A, on the other
hand, includes the following entry:

CESSION TO THE GOVERNMENT:

I. PHILIPPINE ASSETS:

x x x x

7. Inter-Continental
Broadcasting Corporation
(IBC), 100% of total assets
estimated at P450 million,
consisting of 41,000
sq.mtrs. of land, more or
less, located at Broadcast
City Quezon City, other land
and buildings in various
Provinces, and operates the
following TV stations:

a. TV 13 (Manila)
b. DY/TV 13 (Cebu)
c. DX/TV 13
(Davao)
d. DYOB/TV 12
(Iloilo)
e. DWLW/TV 13
(Laoag)
as well as the following
Radio Stations
a. DZMZ-FM
Manila
b. DYBQ Iloilo
c. DYOO Roxas
d. DYRG Kalibo
e. DWLW Laoag
f. DWGW Legaspi
g. DWDW Dagupan
h. DWNW Naga
i. DXWG Iligan . .
. . . . . . . .
P352,455,286.00[
23] (Emphasis
supplied.)


Then Senator Teofisto T. Guingona, Jr. filed a
Petition for Certiorari and Prohibition seeking to invalidate the
Compromise Agreement, which was docketed as G.R. No.
96087. The Petition was consolidated with G.R. No. 87710.

On March 31, 1992, this Court, in Benedicto v.
Board of Administrators of Television Stations RPN, BBC and
IBC,[24] promulgated its Decision on the consolidated petitions
in G.R. No. 87710 and G.R. No. 96087. Holding that the
authority of the BOA had become functus oficio, we granted
the Petition in G.R. No. 87710, ordering the BOA to cease
and desist from further exercising management, operation and
control of Broadcast City and is hereby directed to surrender
the management, operation and control of Broadcast City to
the reorganized Board of Directors of each of the Broadcast
City television stations.[25] We denied the Petition in G.R.
No. 96087 for being premature, since the approval of the
Compromise Agreement was still pending in the
Sandiganbayan.[26]

The Sandiganbayan subsequently approved the
Compromise Agreement on October 31, 1992, and the
approval was affirmed by this Court on September 10, 1993 in
Republic v. Sandiganbayan.[27] Thus, both BBC and IBC
were government-owned and controlled during the time the
DXWG personnel filed their original complaint on August 29,
1995.

In the present Petition, BBC reiterates its argument
that since it is now wholly and solely owned by the
government, the posting of the appeal bond was unnecessary
on account of the fact that it is presumed that the government
is always solvent.[28] Citing the 1975 case of Republic
(Bureau of Forestry) v. Court of Appeals,[29] BBC adds before
us that it is not even necessary for BBC to raise its exempt
status as the NLRC should have taken cognizance of the
same.[30]

When the Court of Appeals affirmed the dismissal by
the NLRC of BBCs appeal for failure of the latter to post an
appeal bond, it relied to the ruling of this Court in Republic v.
Presiding Judge, Branch XV, Court of First Instance of
Rizal.[31] The appellate court, noting that BBCs primary
purpose as stated in its Articles of Incorporation is to engage
in commercial radio and television broadcasting, held that BBC
did not meet the criteria enunciated in Republic v. Presiding
Judge for exemption from the appeal bond.[32]

We pertinently held in Republic v. Presiding Judge:

The sole issue implicit in this
petition is whether or not the RCA is
exempt from paying the legal fees and
from posting an appeal bond.

We find merit in the petition.

To begin with, We have to
determine whether the RCA is a
governmental agency of the Republic of
the Philippines without a separate, distinct
and independent legal personality from the
latter. We maintain the affirmative. The
legal character of the RCA as a
governmental agency had already been
passed upon in the case of Ramos vs.
Court of Industrial Relations wherein this
Court held:

Congress,
by said Republic Act
3452 approved on
June 14, 1962, created
RCA, in pursuance of
its declared policy, viz:

SE
CTI
ON
1.
It is
her
eby
dec
lar
ed
to
be
the
poli
cy
of
the
Go
ver
nm
ent
tha
t in
ord
er
to
sta
bili
ze
the
pric
e
of
pal
ay,
rice
an
d
cor
n, it
sha
ll
en
ga
ge
in
the
'pur
cha
se
of
the
se
bas
ic
foo
ds
dir
ectl
y
fro
m
tho
se
ten
ant
s,
far
me
rs,
gro
wer
s,
pro
duc
ers
an
d
lan
do
wn
ers
in
the
Phi
lipp
ine
s
wh
o
wis
h
to
dis
pos
e
of
thei
r
pro
duc
e
at
a
pric
e
tha
t
will
aff
ord
the
m
a
fair
an
d
just
ret
urn
for
thei
r
lab
or
an
d
cap
ital
inv
est
me
nt
an
d
wh
en
eve
r
circ
um
sta
nce
s
bro
ug
ht
ab
out
by
any
cau
se,
nat
ura
l or
arti
fici
al,
sho
uld
so
req
uir
e,
sha
ll
sell
an
d
dis
pos
e
of
the
se
co
m
mo
diti
es
to
the
con
su
me
rs
at
are
as
of
con
su
mp
tion
at
a
pric
e
tha
t is
wit
hin
thei
r
rea
ch.

RCA is,
therefore, a
government machinery
to carry out a declared
government policy just
noted, and not for
profit.

And more.
By law, RCA depends
for its continuous
operation on
appropriations yearly
set aside by the
General Appropriations
Act. So says Section
14 of Republic Act
3452:

SE
CTI
ON
14.
Th
e
su
m
of
on
e
hu
ndr
ed
mill
ion
pes
os
is
her
eby
ap
pro
pri
ate
d,
out
of
any
fun
ds
in
the
Nat
ion
al
Tre
asu
ry
not
oth
erw
ise
ap
pro
pri
ate
d,
for
the
cap
itali
zati
on
of
the
Ad
min
istr
atio
n:
Pro
vid
ed,
Th
at
the
an
nu
al
op
era
tion
al
exp
ens
es
of
the
Ad
min
istr
atio
n
sha
ll
not
exc
ee
d
thr
ee
mill
ion
pes
os
of
the
sai
d
am
ou
nt:
Pro
vid
ed
furt
her
,
Th
at
the
bu
dg
et
of
the
Ric
e
an
d
Cor
n
Ad
min
istr
atio
n
for
the
fisc
al
yea
r
nin
ete
en
hu
ndr
ed
an
d
sixt
y-
thr
ee
to
nin
ete
en
hu
ndr
ed
an
d
sixt
y-
fou
r
an
d
the
yea
rs
the
rea
fter
sha
ll
be
incl
ud
ed
in
the
Ge
ner
al
ap
pro
pri
atio
ns
sub
mitt
ed
to
Co
ngr
ess
.

RCA is not
possessed of a
separate and distinct
corporate existence.
On the contrary, by the
law of its creation, it is
an office directly under
the Office of the
President of the
Philippines.

Respondent, however, contends
that the RCA has been created to succeed
to the corporate assets, liabilities, functions
and powers of the abolished National Rice
& Corn Corporation which is a
government-owned and controlled
corporation separate and distinct from the
Government of the Republic of the
Philippines. He further contends that the
RCA, being a duly capitalized entity doing
mercantile activity engaged in the buying
and selling of palay, rice, and corn cannot
be the same as the Republic of the
Philippines; rather, it is an entity separate
and distinct from the Republic of the
Philippines. These contentions are patently
erroneous.

x x x x

The mercantile activity of RCA in
the buying and selling of palay, rice, and
corn is only incident to its primary
governmental function which is to carry out
its declared policy of subsidizing and
stabilizing the price of palay, rice, and corn
in order to make it well within the reach of
average consumers, an object obviously
identified with the primary function of
government to serve the well-being of the
people.

As a governmental agency under
the Office of the President the RCA is thus
exempt from the payment of legal fees as
well as the posting of an appeal bond.
Under the decisional laws which form part
of the legal system of the Philippines the
Republic of the Philippines is exempt from
the requirement of filing an appeal bond on
taking an appeal from an adverse
judgment, since there could be no doubt,
as to the solvency of the Government.
This well-settled doctrine of the
Government's exemption from the
requirement of posting an appeal bond
was first enunciated as early as March 7,
1916 in Government of the Philippine
Island vs. Judge of the Court of First
Instance of Iloilo and has since been so
consistently enforced that it has become
practically a matter of public knowledge
and certainly a matter of judicial notice on
the part of the courts of the land.[33]


In the subsequent case of Badillo v. Tayag,[34] we
further discussed that:

Created by virtue of PD No. 757,
the NHA is a government-owned and
controlled corporation with an original
charter. As a general rule, however, such
corporations -- with or without independent
charters -- are required to pay legal fees
under Section 21 of Rule 141 of the 1997
Rules of Civil Procedure:

SEC. 21.
Government Exempt. -
The Republic of the
Philippines, its
agencies and
instrumentalities, are
exempt from paying
the legal fees provided
in this rule. Local
governments and
government-owned or
controlled corporations
with or without
independent charters
are not exempt from
paying such fees.

On the other hand, the NHA
contends that it is exempt from paying all
kinds of fees and charges, because it
performs governmental functions. It cites
Public Estates Authority v. Yujuico, which
holds that the Public Estates Authority
(PEA), a government-owned and
controlled corporation, is exempt from
paying docket fees whenever it files a suit
in relation to its governmental functions.

We agree. x x x.[35]


We can infer from the foregoing jurisprudential
precedents that, as a general rule, the government and all the
attached agencies with no legal personality distinct from the
former are exempt from posting appeal bonds, whereas
government-owned and controlled corporations (GOCCs) are
not similarly exempted. This distinction is brought about by
the very reason of the appeal bond itself: to protect the
presumptive judgment creditor against the insolvency of the
presumptive judgment debtor. When the State litigates, it is
not required to put up an appeal bond because it is presumed
to be always solvent.[36] This exemption, however, does not,
as a general rule, apply to GOCCs for the reason that the
latter has a personality distinct from its shareholders. Thus,
while a GOCCs majority stockholder, the State, will always be
presumed solvent, the presumption does not necessarily
extend to the GOCC itself. However, when a GOCC becomes
a government machinery to carry out a declared government
policy,[37] it becomes similarly situated as its majority
stockholder as there is the assurance that the government will
necessarily fund its primary functions. Thus, a GOCC that is
sued in relation to its governmental functions may be, under
appropriate circumstances, exempted from the payment of
appeal fees.

In the case at bar, BBC was organized as a private
corporation, sequestered in the 1980s and the ownership of
which was subsequently transferred to the government in a
compromise agreement. Further, it is stated in its Amended
Articles of Incorporation that BBC has the following primary
function:

To engage in commercial radio
and television broadcasting, and for this
purpose, to establish, operate and
maintain such stations, both terrestrial and
satellite or interplanetary, as may be
necessary for broadcasting on a network
wide or international basis.[38]


It is therefore crystal clear that BBCs function is
purely commercial or proprietary and not governmental. As
such, BBC cannot be deemed entitled to an exemption from
the posting of an appeal bond.

Consequently, the NLRC did not commit an error,
and much less grave abuse of discretion, in dismissing the
appeal of BBC on account of non-perfection of the same. In
doing so, the NLRC was merely applying Article 223 of the
Labor Code, which provides:

ART. 223. Appeal. - Decisions,
awards, or orders of the Labor Arbiter are
final and executory unless appealed to the
Commission by any or both parties within
ten (10) calendar days from receipt of such
decisions, awards, or orders. Such appeal
may be entertained only on any of the
following grounds:

(a) If there is prima facie
evidence of abuse of discretion on the part
of the Labor Arbiter;

(b) If the decision, order or award
was secured through fraud or coercion,
including graft and corruption;

(c) If made purely on questions
of law; and

(d) If serious errors in the
findings of facts are raised which would
cause grave or irreparable damage or
injury to the appellant.

In case of a judgment involving a
monetary award, an appeal by the
employer may be perfected only upon the
posting of a cash or surety bond issued by
a reputable bonding company duly
accredited by the Commission in the
amount equivalent to the monetary award
in the judgment appealed from. (Italization
supplied.)




The posting of the appeal bond within the period
provided by law is not merely mandatory but jurisdictional.
The failure on the part of BBC to perfect the appeal thus had
the effect of rendering the judgment final and executory.[39]

Neither was there an interruption of the period to
perfect the appeal when BBC filed (1) its Motion for the
Recomputation of the Monetary Award in order to reduce the
appeal bond, and (2) its Motion for Reconsideration of the
denial of the same. In Lamzon v. National Labor Relations
Commission,[40] where the petitioner argued that the NLRC
gravely abused its discretion in dismissing her appeal on the
ground of non-perfection despite the fact that she filed a
Motion for Extension of Time to File an Appeal Bond, we held:

The pertinent provision of Rule
VI, NLRC Rules of Procedure, as
amended, provides as follows:

x x x x

Section 6.
Bond. - In case the
decision of a Labor
Arbiter, POEA
Administrator and
Regional Director or
his duly authorized
hearing officer involves
a monetary award, an
appeal by the
employer shall be
perfected only upon
the posting of a cash
or surety bond issued
by a reputable bonding
company duly
accredited by the
Commission or the
Supreme Court in an
amount equivalent to
the monetary award,
exclusive of moral and
exemplary damages
and attorney's fees.

The
employer as well as
counsel shall submit a
joint declaration under
oath attesting that the
surety bond posted is
genuine and that it
shall be in effect until
final disposition of the
case.

The
Commission may, in
meritorious cases and
upon Motion of the
Appellant, reduce the
amount of the bond.
The filing, however, of
the motion to reduce
bond shall not stop the
running of the period to
perfect appeal.

Section 7.
No Extension of
Period. - No motion or
request for extension
of the period within
which to perfect an
appeal shall be
allowed."

As correctly observed by the
NLRC, petitioner is presumptuous in
assuming that the 10-day period for
perfecting an appeal, during which she
was to post her appeal bond, could be
easily extended by the mere filing of an
appropriate motion for extension to file the
bond and even without the said motion
being granted. It bears emphasizing that
an appeal is only a statutory privilege and
it may only be exercised in the manner
provided by law. Nevertheless, in certain
cases, we had occasion to declare that
while the rule treats the filing of a cash or
surety bond in the amount equivalent to
the monetary award in the judgment
appealed from, as a jurisdictional
requirement to perfect an appeal, the bond
requirement on appeals involving
monetary awards is sometimes given a
liberal interpretation in line with the desired
objective of resolving controversies on the
merits. However, we find no cogent reason
to apply this same liberal interpretation in
this case. Considering that the motion for
extension to file appeal bond remained
unacted upon, petitioner, pursuant to the
NLRC rules, should have seasonably filed
the appeal bond within the ten (10) day
reglementary period following receipt of
the order, resolution or decision of the
NLRC to forestall the finality of such order,
resolution or decision. Besides, the rule
mandates that no motion or request for
extension of the period within which to
perfect an appeal shall be allowed. The
motion filed by petitioner in this case is
tantamount to an extension of the period
for perfecting an appeal. As payment of
the appeal bond is an indispensable and
jurisdictional requisite and not a mere
technicality of law or procedure, we find
the challenged NLRC Resolution of
October 26, 1993 and Order dated
January 11, 1994 in accordance with law.
The appeal filed by petitioner was not
perfected within the reglementary period
because the appeal bond was filed out of
time. Consequently, the decision sought
to be reconsidered became final and
executory. Unless there is a clear and
patent grave abuse of discretion
amounting to lack or excess of jurisdiction,
the NLRC's denial of the appeal and the
motion for reconsideration may not be
disturbed.[41] (Underscoring supplied.)


In the case at bar, BBC already took a risk when it
filed its Motion for the Recomputation of the Monetary Award
without posting the bond itself. The Motion for the
Recomputation of the Monetary Award filed by BBC, like the
Motion for Extension to File the Appeal Bond in Lamzon, was
itself tantamount to a motion for extension to perfect the
appeal, which is prohibited by the rules. The NLRC already
exhibited leniency when, instead of dismissing the appeal
outright, it merely ordered BBC to post the required bond
within 10 days from receipt of said Order, with a warning that
noncompliance will cause the dismissal of the appeal for non-
perfection. When BBC further demonstrated its unwillingness
by completely ignoring this warning and by filing a Motion for
Reconsideration on an entirely new ground, the NLRC cannot
be said to have committed grave abuse of discretion by
making good its warning to dismiss the appeal. Therefore, the
Court of Appeals committed no error when it upheld the
NLRCs dismissal of petitioners appeal.

WHEREFORE, the instant Petition for Review on
Certiorari is DENIED. The Decision of the Court of Appeals
dated April 15, 2005 in CA-G.R. SP No. 57847, and its
Resolution dated January 27, 2006 are hereby AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 182431 November 17, 2010
LAND BANK OF THE PHILIPPINES, Petitioner, vs. ESTHER
ANSON RIVERA, ANTONIO G. ANSON AND CESAR G.
ANSON, Respondents.
D E C I S I O N
PEREZ, J.:
This is a petition for review on certiorari under Rule 45 of the
1997 Rules of Civil Procedure filed by Petitioner Land Bank of
the Philippines (LBP) assailing the Decision
1
of the Court of
Appeals dated 9 October 2007 in CA G.R. SP No. 87463,
ordering the payment by LBP of just compensation and
interest in favor of respondents Esther Anson Rivera, Antonio
G. Anson and Cesar G. Anson, and at the same time directed
LBP to pay the costs of suit. Likewise assailed is the
Resolution
2
of the Court of Appeals dated 18 March 2008
denying the Motion for Reconsideration of LBP.
3

The respondents are the co-owners of a parcel of agricultural
land embraced by Original Certificate of Title No. P-082, and
later transferred in their names under Transfer Certificate of
Title No. T-95690 that was placed under the coverage of
Operation Land Transfer pursuant to Presidential Decree No.
27 in 1972. Only 18.8704 hectares of the total are of 20.5254
hectares were subject of the coverage.
After the Department of Agrarian Reform (DAR) directed
payment, LBP approved the payment of P265,494.20,
exclusive of the advance payments made in the form of lease
rental amounting to P75,415.88 but inclusive of 6% increment
of P191,876.99 pursuant to DAR Administrative Order No. 13,
series of 1994.
4

On 1 December 1994, the respondents instituted Civil Case
No. 94-03 for determination and payment of just compensation
before the Regional Trial Court (RTC), Branch 3 of Legaspi
City,
5
claiming that the landholding involved was irrigated with
two cropping seasons a year with an average gross production
per season of 100 cavans of 50 kilos/hectare, equivalent of
200 cavans/year/hectare; and that the fair market value of the
property was not less that P130,000.00/hectare, or
P2,668,302.00 for the entire landholding of 20.5254 hectares.
LBP filed its answer,
6
stating that rice and corn lands placed
under the coverage of Presidential Decree No. 27
7
were
governed and valued in accordance with the provisions of
Executive Order No. 228
8
as implemented by DAR
Administrative Order No. 2, Series of 1987 and other statutes
and administrative issuances; that the administrative valuation
of lands covered by Presidential Decree No. 27 and Executive
Order No. 228 rested solely in DAR and LBP was the only
financing arm; that the funds that LBP would use to pay
compensation were public funds to be disbursed only in
accordance with existing laws and regulations; that the
supporting documents were not yet received by LBP; and that
the constitutionality of Presidential Decree No. 27 and
Executive Order No. 228 was already settled.
On 6 October 2004, the RTC rendered its decision, holding:
ACCORDINGLY, the just compensation of the land partly
covered by TCT No. T-95690 is fixed at Php1,297,710.63.
Land Bank of the Philippines is hereby ordered to pay Esther
Anson, Cesar Anson and Antonio Anson the aforesaid value of
the land, plus interest of 12% per annum or Php194.36 per
day effective October 7, 2004, until the value is fully paid, in
cash or in bond or in any other mode of payment at the option
of the landowners in accordance with Sec. 18, RA 6657.
9

LBP filed a Motion for Reconsideration
10
which the RTC
denied in its Order dated 29 October 2004.
11

LBP next filed a petition for Review to the Court of Appeals
docketed as CA G.R. SP No. 87463. The Court of Appeals
rendered a decision dated 9 October 2007, the fallo of which
reads:
12

WHEREFORE, the DECISION DATED OCTOBER 6, 2004 is
MODIFIED, ordering petitioner LAND BANK OF THE
PHILIPPINES to pay to the respondents just compensation
(inclusive of interests as of October 6, 2004) in the amount of
P823,957.23, plus interest of 12% per annum on the amount
of P515,777.57, or P61,893.30 per annum, beginning October
7, 2004 until the just compensation is fully paid in accordance
with this decision.
In arriving at its computation, the Court of Appeals explained:
In computing the just compensation of the property, pursuant
to Executive Order No. 228, Sec. 2 thereof, the formula is
LV = AGP x 2.5 x GSP x A
(LV is Land Valuation; AGP is Average Gross Production;
GSP is Government Support Price and A is the Area of the
Land)
AGP
=
99.36 cavans per hectare
GSP
=
Php 35.00 per cavan
WHERE:
A = 18.8704 hectares
COMPUTATION:
LV = (99.36 x2.5 x 35.00) 18.8704
LV = 8,694 x 18.8704
LV = Php 164,059.26
With increment of 6% interest per annum compounded
annually beginning October 21, 1972 until October 21, 1994
and immediately after said date with 12% interest per annum
until the value is fully paid in accordance with extant
jurisprudence, computed as follows:
To be compounded annually at 6% per annum from October
21, 1972 up to October 24, 1994. The formula is
CA = P(1+R)n
(CA is Compounded Amount; P is Principal; R is Rate; and n is
the number of years)
P = Php 164,059.26
R = 6% per annum
WHERE:
N = 22 years
COMPUTATION:
CA
=
164,059.26 x (1+06) 22
CA
=
164,059.26 x (1.06) 22
CA
=
164,059.26 x 3.60353741

CA
=
Php 591,193.68
Plus simple interest of 12% per annum from October 22, 1994
up to October 21, 2003, the formula of which is:
I = P x R x T
(I is the Interest; P is the Principal; R is the Rate and T is the
time)
P
=
Php591,193.68
R
=
12% per annum
WHERE:
T
=
9 years
COMPUTATION:
I
=
591,193.68 x 12 x 9
I
=
70,943.24 x 9

I
=
Php638,489.18
(Plus interest of 12% per annum from October 22, 2003 up to
October 6, 2004 or a period of 350 days)
COMPUTATION:
I
=
(591,193.68 x .12) x 350

350
I
=
194.3605 x 350
I
=
Php68,027.77
Total Interest Php 706,516.95
RECAPITULATION:
Compounded Amount Php 591,193.68
Total Interest 706,516.95
TOTAL AMOUNT Php 1,297,710.63
The Court of Appeals pointed out that:
Pursuant to AO 13, considering that the landholding involved
herein was tenanted prior to October 21, 1972, the rate of 6%
per annum is imposed, compounded annually from October
21, 1972 until October 21, 1994, the date of the effectivity of
AO 13. Beyond October 21, 1994, only the simple rate of 6%
per annum interest is imposable until October 6, 2004 (the
date of the rendition of the decision of the RTC) on the total
value (that is, P164,059.26 plus the compounded increments
up to October 21, 1994) but minus the lease rentals of
P75,415.88. Only the simple rate of 6% is applicable up to
then because the obligation to pay was not founded on a
written agreement that stipulated a different rate of interest.
From October 7, 2004 until the full payment, the simple
interest rate is raised to 12% per annum. The reason is that
the amount thus determined had by then acquired the
character of a forbearance in money.
13

LBP disagreed with the imposition of 12% interest and its
liability to pay the costs of suit. It filed a Motion for
Reconsideration which was denied in the Court of Appeals
Resolution dated 18 March 2008.
The Court of Appeals held:
We DENY the petitioners motion for partial reconsideration for
the following reasons, to wit:
1. Anent the first ground, the decision of October 9, 2007 has
explained in detail why the obligation of the petitioner should
be charged 12% interest. Considering that the motion fails to
persuasively show that a modification of the decision thereon
would be justified, we reject such ground for lack of merit.
2. Regarding costs of suit, they are allowed to the prevailing
party as a matter of course, unless there be special reasons
for the court to decree otherwise (Sec. 1, Rule 43, Rules of
Court). In appeals, the Court has the power to render
judgment for costs as justice may require (Sec. 2, Rule 142,
Rules of Court).
In view of the foregoing, the award of costs to the respondents
was warranted under the circumstances.
14

Before this Court, LBP raises the same issues for resolution:
I. Is it valid or lawful to award 12% rate of interest per annum
in favor of respondents notwithstanding the 6% rate of interest
per annum compounded annually prescribed under DAR A.O.
No. 13, series of 1994, DAR A.O. No. 02, series of 2004, and
DAR A.O. No. 06, series of 2008, "xxx from November 1994
up to the time of actual payment?
II. Is it valid or lawful to adjudge petitioner LBP, which is
performing a governmental function, liable for costs of suit?
15

At the outset, the Court notes that the parcels of land subject
matter of this case were acquired under Presidential Decree
No. 27, but the complaint for just compensation was filed in the
RTC on 1 December 1994 after Republic Act No. 6657 already
took into effect.
16
Thus, our pronouncement in LBP v.
Soriano
17
finds application. We quote:
x x x [I]f just compensation is not settled prior to the passage
of Republic Act No. 6657, it should be computed in
accordance with the said law, although the property was
acquired under Presidential Decree No. 27. The fixing of just
compensation should therefore be based on the parameters
set out in Republic Act No. 6657, with Presidential Decree No.
27 and Executive Order No. 228 having only suppletory effect.
In the instant case, while the subject lands were acquired
under Presidential Decree No. 27, the complaint for just
compensation was only lodged before the court on 23
November 2000 or long after the passage of Republic Act No.
6657 in 1998. Therefore, Section 17 of Republic Act No.
6657 should be the principal basis of the computation for
just compensation. As a matter of fact, the factors
enumerated therein had already been translated into a basic
formula by the DAR pursuant to its rule-making power under
Section 49 of Republic Act No. 6657. The formula outlines in
DAR Administrative Order No. 5, series of 1998 should be
applied in computing just compensation, thus:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)

LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
Where
:
MV = Market Value per Tax Declaration
In the case before Us, the just compensation was computed
based on Executive Order No. 228, which computation the
parties do not contest. Consequently, we reiterate our rule in
LBP v. Soriano that "while we uphold the amount derived from
the old formula, since the application of the new formula is a
matter of law and thus, should be made applicable, the parties
are not precluded from asking for any additional amount as
may be warranted by the new formula."
18

That settled, we now proceed to resolve the issue of the
propriety of the imposition of 12% interest on just
compensation awarded to the respondents. The Court of
Appeals imposed interest of 12% per annum on the amount of
P515,777.57 beginning 7 October 2004, until full payment.
We agree with the Court of Appeals.
In Republic v. Court of Appeals,
19
we affirmed the award of
12% interest on just compensation due to the landowner. The
court decreed:
The constitutional limitation of "just compensation" is
considered to be the sum equivalent to the market value of the
property, broadly described to be the price fixed by the seller
in open market in the usual and ordinary course of legal action
and competition or the fair value of the property as between
one who receives, and one who desires to sell, if fixed at the
time of the actual taking by the government. Thus, if property
is taken for public use before compensation is deposited with
the court having jurisdiction over the case, the final
compensation must include interest on its just value to be
computed from the time the property is taken to the time when
compensation is actually paid or deposited with the court. In
fine, between the taking of the property and the actual
payment, legal interests accrue in order to place the owner in
a position as good as (but not better than) the position he was
in before the taking occurred.
The Bulacan trial court, in its 1979 decision, was correct in
imposing interest on the zonal value of the property to be
computed from the time petitioner instituted condemnation
proceedings and "took" the property in September 1969. This
allowance of interest on the amount found to be the value of
the property as of the time of the taking computed, being an
effective forbearance, at 12% per annum should help eliminate
the issue of the constant fluctuation and inflation of the value
of the currency over time.
20

We similarly upheld Republics 12% per annum interest rate
on the unpaid expropriation compensation in the following
cases: Reyes v. National Housing Authority,
21
Land Bank of
the Philippines v. Wycoco,
22
Republic v. Court of Appeals,
23

Land Bank of the Philippines v. Imperial,
24
Philippine Ports
Authority v. Rosales-Bondoc,
25
Nepomuceno v. City of
Surigao,
26
and Curata v. Philippine Ports Authority.
27

Conformably with the foregoing resolution, this Court rules that
a 12% interest per annum on just compensation, due to the
respondents, from the finality of this decision until its
satisfaction, is proper.
28

We now proceed to the issue of whether or not the Court of
Appeals correctly adjudged LBP liable to pay the cost of suit.
According to LBP, it performs a governmental function when it
disburses the Agrarian Reform Fund to satisfy awards of just
compensation. Hence, it cannot be made to pay costs in
eminent domain proceedings.1avvphi1
LBP cites Sps. Badillo v. Hon. Tayag,
29
to further bolster its
claim that it is exempt from the payment of costs of suit. The
Court in that case made the following pronouncement:
On the other hand, the NHA contends that it is exempt from
paying all kinds of fees and charges, because it performs
governmental functions. It cites Public Estates Authority v.
Yujuico, which holds that the Public Estates Authority (PEA), a
government-owned and controlled corporation, is exempt from
paying docket fees whenever it files a suit in relation to its
governmental functions.
We agree. People's Homesite and Housing Corporation v.
Court of Industrial Relations declares that the provision of
mass housing is a governmental function:
Coming now to the case at bar, We note that since 1941 when
the National Housing Commission (predecessor of PHHC,
which is now known as the National Housing Authority [NHA]
was created, the Philippine government has pursued a mass
housing and resettlement program to meet the needs of
Filipinos for decent housing. The agency tasked with
implementing such governmental program was the PHHC.
These can be gleaned from the provisions of Commonwealth
Act 648, the charter of said agency.
We rule that the PHHC is a governmental institution
performing governmental functions.
This is not the first time We are ruling on the proper
characterization of housing as an activity of the government. In
the 1985 case of National Housing Corporation v. Juco and
the NLRC (No. L-64313, January 17, 1985, 134 SCRA 172),
We ruled that housing is a governmental function.
While it has not always been easy to distinguish governmental
from proprietary functions, the Court's declaration in the
Decision quoted above is not without basis. Indeed, the
characterization of governmental functions has veered away
from the traditional constituent-ministrant classification that
has become unrealistic, if not obsolete. Justice Isagani A. Cruz
avers: "[I]t is now obligatory upon the State itself to promote
social justice, to provide adequate social services to promote a
rising standard of living, to afford protection to labor to
formulate and implement urban and agrarian reform programs,
and to adopt other measures intended to ensure the dignity,
welfare and security of its citizens.....These functions, while
traditionally regarded as merely ministrant and optional, have
been made compulsory by the Constitution."
30

We agree with the LBP. The relevant provision of the Rules of
Court states:
Rule 142 Costs
Section 1. Costs ordinarily follow results of suit. Unless
otherwise provided in these rules, costs shall be allowed
to the prevailing party as a matter of course but the court
shall have power, for special reasons adjudge that either party
shall pay the costs of an action, or that the same be divided,
as may be equitable. No costs shall be allowed against the
Republic of the Philippines unless otherwise provided by
law.
In Heirs of Vidad v. Land Bank of the Philippines,
31
this Court
extensively discussed the role of LBP in the implementation of
the agrarian reform program.
LBP is an agency created primarily to provide financial
support in all phases of agrarian reform pursuant to
Section 74 of Republic Act (RA) No. 3844 and Section 64
of RA No. 6657. It is vested with the primary responsibility
and authority in the valuation and compensation of
covered landholdings to carry out the full implementation
of the Agrarian Reform Program. It may agree with the DAR
and the land owner as to the amount of just compensation to
be paid to the latter and may also disagree with them and
bring the matter to court for judicial determination.
x x x x
To the contrary, the Court had already recognized in Sharp
International Marketing v. Court of Appeals that the LBP plays
a significant role under the CARL and in the implementation of
the CARP, thus:
As may be gleaned very clearly from EO 229, the LBP is an
essential part of the government sector with regard to the
payment of compensation to the landowner. It is, after all, the
instrumentality that is charged with the disbursement of public
funds for purposes of agrarian reform. It is therefore part, an
indispensable cog, in the governmental machinery that fixes
and determines the amount compensable to the landowner.
Were LBP to be excluded from that intricate, if not sensitive,
function of establishing the compensable amount, there would
be no amount "to be established by the government" as
required in Sec. 6, EO 229. This is precisely why the law
requires the [Deed of Absolute Sale (DAS)], even if already
approved and signed by the DAR Secretary, to be transmitted
still to the LBP for its review, evaluation and approval.
It needs no exceptional intelligence to understand the
implications of this transmittal. It simply means that if LBP
agrees on the amount stated in the DAS, after its review and
evaluation, it becomes its duty to sign the deed. But not until
then. For, it is only in that event that the amount to be
compensated shall have been "established" according to law.
Inversely, if the LBP, after review and evaluation, refuses to
sign, it is because as a party to the contract it does not give its
consent thereto. This necessarily implies the exercise of
judgment on the part of LBP, which is not supposed to be
a mere rubber stamp in the exercise. Obviously, were it not
so, LBP could not have been made a distinct member of
[Presidential Agrarian Reform Council (PARC)], the super
body responsible for the successful implementation of the
CARP. Neither would it have been given the power to review
and evaluate the DAS already signed by the DAR Secretary. If
the function of the LBP in this regard is merely to sign the DAS
without the concomitant power of review and evaluation, its
duty to "review/evaluate" mandated in Adm. Order No. 5 would
have been a mere surplus age, meaningless, and a useless
ceremony.
x x x x
Even more explicit is R.A. 6657 with respect to the
indispensable role of LBP in the determination of the amount
to be compensated to the landowner. Under Sec. 18 thereof,
"the LBP shall compensate the landowner in such amount as
may be agreed upon by the landowner and the DAR and
LBP, in accordance with the criteria provided in Secs. 16 and
17, and other pertinent provisions hereof, or as may be finally
determined by the court, as the just compensation for the
land."
x x x x
It must be observed that once an expropriation proceeding for
the acquisition of private agricultural lands is commenced by
the DAR, the indispensable role of Land Bank begins.
x x x x
It is evident from the afore-quoted jurisprudence that the role
of LBP in the CARP is more than just the ministerial duty of
keeping and disbursing the Agrarian Reform Funds. As the
Court had previously declared, the LBP is primarily
responsible for the valuation and determination of
compensation for all private lands. It has the discretion to
approve or reject the land valuation and just compensation for
a private agricultural land placed under the CARP. In case the
LBP disagrees with the valuation of land and determination of
just compensation by a party, the DAR, or even the courts, the
LBP not only has the right, but the duty, to challenge the
same, by appeal to the Court of Appeals or to this Court, if
appropriate.
32

It is clear from the above discussions that since LBP is
performing a governmental function in agrarian reform
proceeding, it is exempt from the payment of costs of suit as
provided under Rule 142, Section 1 of the Rules of Court.
WHEREFORE, premises considered, the petition is
GRANTED. The decision of the Court of Appeals in CA G.R.
SP No. 87463 dated 9 October 2007 is AFFIRMED with the
MODIFICATION that LBP is hereby held exempted from the
payment of costs of suit. In all other respects, the Decision of
the Court of Appeals is AFFIRMED. No costs.
SO ORDERED.
JOSE PORTUGAL PEREZ Associate Justice
G.R. No. 167000 June 8, 2011
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS),
Petitioner, vs. GROUP MANAGEMENT CORPORATION
(GMC) AND LAPU-LAPU DEVELOPMENT & HOUSING
Corporation (LLDHc), Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 169971
GROUP MANAGEMENT CORPORATION (GMC), Petitioner,
vs. LAPU-LAPU DEVELOPMENT & HOUSING Corporation
(LLDHc) and GOVERNMENT SERVICE INSURANCE
SYSTEM (GSIS), Respondents.
D E C I S I O N
LEONARDO-DE CASTRO, J.:
At bar are two consolidated Petitions for Review on Certiorari
concerning 78 parcels of land located in Barrio Marigondon,
Lapu-Lapu City. The parties in both cases have been in
litigation over these lots for the last two decades in what
seems to be an endless exercise of filing repetitious suits
before the Court of Appeals and even this Court, questioning
the various decisions and resolutions issued by the two
separate trial courts involved. With this decision, it is intended
that all legal disputes among the parties concerned,
particularly over all the issues involved in these cases, will
finally come to an end
In the Petition in G.R. No. 167000, the Government Service
Insurance System (GSIS) seeks to reverse and set aside the
November 25, 2004 Decision
1
and January 20, 2005
Resolution
2
of the Twentieth Division of the Court of Appeals in
CA-G.R. SP No. 85096 and to annul and set aside the March
11, 2004
3
and May 7, 2004
4
Orders of the Regional Trial Court
(RTC) of Lapu-Lapu City (Lapu-Lapu RTC) in Civil Case No.
2203-L.
In the Petition in G.R. No. 169971, Group Management
Corporation (GMC) seeks to reverse and set aside the
September 23, 2005 Decision
5
in CA-G.R. SP No. 84382
wherein the Special Nineteenth Division of the Court of
Appeals annulled and set aside the March 11, 2004 Order of
the Lapu-Lapu RTC in Civil Case No. 2203-L.
Both these cases stem from the same undisputed factual
antecedents as follows:
Lapu-Lapu Development & Housing Corporation
6
(LLDHC)
was the registered owner of seventy-eight (78) lots (subject
lots), situated in Barrio Marigondon, Lapu-Lapu City.
On February 4, 1974, LLDHC and the GSIS entered into a
Project and Loan Agreement for the development of the
subject lots. GSIS agreed to extend a Twenty-Five Million
Peso-loan (P25,000,000.00) to LLDHC, and in return, LLDHC
will develop, subdivide, and sell its lots to GSIS members. To
secure the payment of the loan, LLDHC executed a real estate
mortgage over the subject lots in favor of GSIS.
For LLDHCs failure to fulfill its obligations, GSIS foreclosed
the mortgage. As the lone bidder in the public auction sale,
GSIS acquired the subject lots, and eventually was able to
consolidate its ownership over the subject lots with the
corresponding transfer certificates of title (TCTs) issued in its
name.
On November 19, 1979, GMC offered to purchase on
installments the subject lots from GSIS for a total price of One
Million One Hundred Thousand Pesos (P1,100,000.00), with
the aggregate area specified as 423,177 square meters. GSIS
accepted the offer and on February 26, 1980, executed a
Deed of Conditional Sale over the subject lots. However, when
GMC discovered that the total area of the subject lots was only
298,504 square meters, it wrote GSIS and proposed to
proportionately reduce the purchase price to conform to the
actual total area of the subject lots. GSIS approved this
proposal and an Amendment to the Deed of Conditional Sale
was executed to reflect the final sales agreement between
GSIS and GMC.
On April 23, 1980, LLDHC filed a complaint for Annulment of
Foreclosure with Writ of Mandatory Injunction against GSIS
before the RTC of Manila (Manila RTC). This became Civil
Case No. R-82-3429
7
and was assigned to Branch 38.
On November 3, 1989, GMC filed its own complaint against
GSIS for Specific Performance with Damages before the
Lapu-Lapu RTC. The complaint was docketed as Civil Case
No. 2203-L and it sought to compel GSIS to execute a Final
Deed of Sale over the subject lots since the purchase price
had already been fully paid by GMC. GSIS, in defense,
submitted to the court a Commission on Audit (COA)
Memorandum dated April 3, 1989, purportedly disallowing in
audit the sale of the subject lots for "apparent inherent
irregularities," the sale price to GMC being lower than GSISs
purchase price at the public auction. LLDHC, having been
allowed to intervene, filed a Motion to Dismiss GMCs
complaint. When this motion was denied, LLDHC filed its
Answer-in-Intervention and participated in the ensuing
proceedings as an intervenor.
GMC, on February 1, 1992, filed its own Motion to Intervene
with a Complaint-in-Intervention in Civil Case No. R-82-3429.
This was dismissed on February 17, 1992 and finally denied
on March 23, 1992 by the Manila RTC on the ground that
GMC can protect its interest in another proceeding.
8

On February 24, 1992, after a full-blown trial, the Lapu-Lapu
RTC rendered its Decision
9
in Civil Case No. 2203-L, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered ordering
defendant to:
1. Execute the final deed of absolute sale and deliver the
seventy-eight (78) certificates of title covering said seventy-
eight (78) parcels of land to the [Group Management
Corporation (GMC)];
2. Pay [GMC] actual damages, plus attorneys fees and
expenses of litigation, in the amount of P285,638.88 and
P100,000.00 exemplary damages;
3. [D]ismissing in toto intervenors complaint-in-intervention for
lack of evidence of legal standing and legal interest in the suit,
as well as failure to substantiate any cause of action against
either [GMC] or [GSIS].
10

In deciding in favor of GMC, the Lapu-Lapu RTC held that
there existed a valid and binding sales contract between GSIS
and GMC, which GSIS could not continue to ignore without
any justifiable reason especially since GMC had already fully
complied with its obligations.
11

The Lapu-Lapu RTC found GSISs invocation of COAs
alleged disapproval of the sale belated and self-serving. The
Lapu-Lapu RTC said that COA, in disapproving GSISs sale of
the subject lots to GMC, violated its own circular which
excludes the disposal by a government owned and/or
controlled corporation of its "acquired assets" (e.g., foreclosed
assets or collaterals acquired in the regular course of
business).
12
The Lapu-Lapu RTC also held that COA may not
intrude into GSISs charter-granted power to dispose of its
acquired assets within five years from acquisition by
"preventing/aborting the sale in question by refusing to pass it
in audit."
13
Moreover, the Lapu-Lapu RTC held that the GSIS-
proferred COA Memorandum was inadmissible in evidence not
only because as a mere photocopy it failed to measure up to
the "best evidence" rule under the Revised Rules of Court, but
also because no one from COA, not even the auditor who
supposedly prepared it, was ever presented to testify to the
veracity of its contents or its due execution.
14

In dismissing LLDHCs complaint-in-intervention, the Lapu-
Lapu RTC held that LLDHC failed to prove its legal personality
as a party-intervenor and all it was able to establish was a
"suggestion of right for [GSIS] to renege [on] the sale for
reasons peculiar to [GSIS] but not transmissible nor subject to
invocation by [LLDHC]."
15

LLDHC and GSIS filed their separate Notices of Appeal but
these were dismissed by the Lapu-Lapu RTC on December 6,
1993.
16

On May 10, 1994, the Manila RTC rendered a Decision
17
in
Civil Case No. R-82-3429. The Manila RTC held that GSIS
was unable to prove the alleged violations committed by
LLDHC to warrant the foreclosure of the mortgage over the
subject lots. Thus, the Manila RTC annulled the foreclosure
made by GSIS and ordered LLDHC to pay GSIS the balance
of its loan with interest, to wit:
WHEREFORE, judgment is hereby rendered:
1. ANNULLING the foreclosure by the defendant GSIS of the
mortgage over the seventy-eight (78) parcels of land here
involved:
2. CANCELLING the consolidated certificates of [title] issued
in the name of GSIS and directing the Register of Deeds of
Lapu-Lapu City to issue new certificates of [title] over those
seventy-eight (78) parcels of land in the name of the plaintiff,
in exactly the same condition as they were before the
foreclosure;
3. ORDERING the plaintiff to pay the GSIS the amount of
P9,200,000.00 with interest thereon at the rate of twelve (12%)
percent per annum commencing from October 12, 1989 until
fully paid; and
4. ORDERING defendant GSIS to execute a properly
registrable release of discharge of mortgage over the parcels
of land here involved after full payment of such amount by the
plaintiff.
All claims and counterclaims by the parties as against each
other are hereby dismissed.
No pronouncement as to costs.
18

Armed with the Manila RTC decision, LLDHC, on July 27,
1994, filed before the Court of Appeals a Petition for
Annulment of Judgment of the Lapu-Lapu RTC Decision in
Civil Case No. 2203-L.
19
LLDHC alleged that the Manila RTC
decision nullified the sale of the subject lots to GMC and
consequently, the Lapu-Lapu RTC decision was also nullified.
This petition, docketed as CA-G.R. SP No. 34696, was
dismissed by the Court of Appeals on December 29, 1994.
20

The Court of Appeals, in finding that the grounds LLDHC relied
on were without merit, said:
In fine, there being no showing from the allegations of the
petition that the respondent court is without jurisdiction over
the subject matter and of the parties in Civil Case No. 2309
[2203-L], petitioner has no cause of action for the annulment of
judgment. The complaint must allege ultimate facts for the
annulment of the decision (Avendana v. Bautista, 142 SCRA
41). We find none in this case.
21

No appeal having been taken by LLDHC, the decision of the
Court of Appeals in CA-G.R. SP No. 34696 became final and
executory on January 28, 1995, as stated in the Entry of Final
Judgment dated August 18, 1995.
22

On February 2, 1995, LLDHC filed before this Court a Petition
for Certiorari
23
docketed as G.R. No. 118633. LLDHC, in
seeking to annul the February 24, 1992 Decision of the Lapu-
Lapu RTC, again alleged that the Manila RTC Decision
nullified the Lapu-Lapu RTC Decision.
Finding the petition a mere reproduction of the Petition for
Annulment filed before the Court of Appeals in CA-G.R. SP
No. 34696, this Court, in a Resolution
24
dated September 6,
1996, dismissed the petition in this wise:
In a last ditch attempt to annul the February 24, 1992 Decision
of the respondent court, this petition was brought before us on
February 2, 1995.
Dismissal of this petition is inevitable.
The instant petition which is captioned, For: Certiorari With
Preliminary Injunction, is actually another Petition for
Annulment of Judgment of the February 24, 1992 Decision of
the respondent Regional Trial Court of Lapu-lapu City, Branch
27 in Civil Case No. 2203-L. A close perusal of this petition as
well as the Petition for Annulment of Judgment brought by the
petitioner before the Court of Appeals in CA-G.R. SP No.
34696 reveals that the instant petition is a mere reproduction
of the petition/complaint filed before the appellate tribunal for
annulment of judgment. Paragraphs two (2) to eighteen (18) of
this petition were copied verbatim from the Petition for
Annulment of Judgment earlier filed in the court a quo, except
for the designation of the parties thereto, i.e., plaintiff was
changed to petitioner, defendant to respondent. In fact, even
the prayer in this petition is the same prayer in the Petition for
Annulment of Judgment dismissed by the Court of Appeals, x
x x.
x x x x
Under Section 9(2) of Batas Pambansa Blg. 129, otherwise
known as "The Judiciary Reorganization Act of 1980," it is the
Court of Appeals (then the Intermediate Appellate Court), and
not this Court, which has jurisdiction to annul judgments of
Regional Trial Courts, viz:
SEC. 9. Jurisdiction -- The Intermediate Appellate Court shall
exercise:
x x x x
(2) Exclusive original jurisdiction over actions for annulment of
judgments of Regional Trial Courts; and
x x x x
Thus, this Court apparently has no jurisdiction to entertain a
petition which is evidently another petition to annul the
February 24, 1992 Decision of the respondent Branch 27,
Regional Trial Court of Lapu-lapu City, it appearing that
jurisdiction thereto properly pertains to the Court of Appeals.
Such a petition was brought before the appellate court, but
due to petitioners failure to nullify Judge Risos Decision in
said forum, LLDHC, apparently at a loss as to what legal
remedy to take, brought the instant petition under the guise of
a petition for certiorari under Rule 65 seeking once again to
annul the judgment of Branch 27.
Instead of filing this petition for certiorari under Rule 65, which
is essentially another Petition to Annul Judgment, petitioner
LLDHC should have filed a timely Petition for Review under
Rule 45 of the Revised Rules of Court of the decision of the
Court of Appeals, dated December 29, 1994, dismissing the
Petition for Annulment of Judgment filed by the petitioner
LLDHC before the court a quo. But, this is all academic now.
The appellate courts decision had become final and executory
on January 28, 1995.
25

Despite such pronouncements, this Court, nevertheless,
passed upon the merits of LLDHCs Petition for Certiorari in
G.R. No. 118633. This Court said that the petition, "which was
truly for annulment of judgment,"
26
cannot prosper because the
two grounds on which a judgment may be annulled were not
present in the case.
27
Going further, this Court held that even if
the petition were to be given due course as a petition for
certiorari under Rule 65 of the Revised Rules of Court, it would
still be dismissible for not being brought within a reasonable
period of time as it took LLDHC almost three years from the
time it received the February 24, 1992 decision until the time it
brought this action.
28

LLDHCs motion for reconsideration was denied with finality
29

on November 18, 1996, and on February 18, 1997, an Entry of
Judgment
30
was made certifying that the September 6, 1996
Resolution of this Court in G.R. No. 118633 had become final
and executory on December 23, 1996.
Consequently, on November 28, 1996, the Lapu-Lapu RTC
issued an Order
31
directing the execution of the judgment in
Civil Case No. 2203-L. A corresponding Writ of Execution
32

was issued on December 17, 1996. The Motions to Stay
Execution filed by LLDHC and GSIS were denied by the Lapu-
Lapu RTC on February 19, 1997.
33

Meanwhile, on December 27, 1996, the Court of Appeals
rendered a Decision
34
in the separate appeals taken by GSIS
and LLDHC from the May 10, 1994 Manila RTC Decision in
Civil Case No. R-82-3429. This case, docketed as CA-G.R. CV
No. 49117, affirmed the Manila RTC decision with modification
insofar as awarding LLDHC attorneys fees and litigation
expenses.
On March 3, 1997, GSIS came to this Court on a Petition for
Review of the Court of Appeals decision in CA-G.R. CV No.
49117. This was docketed as G.R. No. 127732 and was
dismissed on April 14, 1997
35
due to late filing, the due date
being January 31, 1997. This dismissal became final and
executory on May 30, 1997.
36

On March 8, 1997, LLDHC filed a Petition for Certiorari with
preliminary injunction before the Court of Appeals, praying that
GMC and the Lapu-Lapu RTC be ordered to cease and desist
from proceeding with the execution of its Decision in Civil
Case No. 2203-L, on the theory that the Manila RTC decision
was a supervening event which made it mandatory for the
Lapu-Lapu RTC to stop the execution of its decision. This case
was docketed as CA-G.R. SP No. 44052. On July 16, 1997,
the Court of Appeals issued an Order temporarily restraining
the Lapu-Lapu RTC and GMC from executing the February 24,
1992 decision in Civil Case No. 2203-L so as not to render the
resolution of the case moot and academic.
37

On July 21, 1997, because of GSISs continued refusal to
implement the December 17, 1996 Writ of Execution, the
Lapu-Lapu RTC, upon GMCs motion, issued an Order
38

redirecting its instructions to the Register of Deeds of Lapu-
Lapu City, to wit:
WHEREFORE, the defendant GSIS having refused to
implement the Order of this Court dated December 17, 1996
the Court in accordance with Rule 39, Sec. 10-a of the 1997
Rules of Procedure, hereby directs the Register of Deeds of
Lapu-lapu City to cancel the Transfer Certificate of Titles of the
properties involved in this case and to issue new ones in the
name of the plaintiff and to deliver the same to the latter within
ten (10) days after this Order shall have become final.
39

While the TRO issued by the Court of Appeals in CA-G.R. SP
No. 44052 was in effect, the Manila RTC, on August 1, 1997,
issued a Writ of Execution
40
of its judgment in Civil Case No.
R-82-3429. On August 7, 1997, the Sheriff implemented the
Writ and ordered the Register of Deeds of Lapu-Lapu City to
cancel the consolidated certificates of title issued in the name
of GSIS and to issue new ones in favor of LLDHC. In
conformity with the TRO, the Lapu-Lapu RTC on August 19,
1997, ordered
41
the suspension of its July 21, 1997 Order.
With no similar restraining order against the execution of the
Manila RTC Decision, a Writ of Possession was issued on
August 21, 1997 to cause GSIS and all persons claiming rights
under it to vacate the properties in question and to place
LLDHC in peaceful possession thereof.
42

On October 23, 1997, the Lapu-Lapu RTC, being aware of the
events that have taken place while the TRO was in effect,
issued an Order
43
reiterating its previous Orders of November
28, 1996, December 17, 1996, and July 21, 1997. The Lapu-
Lapu RTC held that since the restraining order issued by the
Court of Appeals in CA-G.R. SP No. 44052 had already lapsed
by operation of law, and the February 24, 1992 Decision in
Civil Case No. 2203-L had not only become final and
executory but had been affirmed and upheld by both the Court
of Appeals and this Court, the inescapable mandate was to
give due course to the efficacy of its decision. The Lapu-Lapu
RTC thus directed the Register of Deeds of Lapu-Lapu City to
effect the transfer of the titles to the subject lots in favor of
GMC and declared "any and all acts done by the Register of
Deeds of Lapu-Lapu City null and void starting with the
surreptitious issuance of the new certificates of title in the
name of [LLDHC], contrary" to its decision and orders.
44

On November 13, 1997, LLDHC filed before the Court of
Appeals another Petition for Certiorari with preliminary
injunction and motion to consolidate with CA-G.R. SP No.
44052. This case was docketed as CA-G.R. SP No. 45946,
but was dismissed
45
on November 20, 1997 for LLDHCs
failure to comply with Section 1, Rule 65 of the 1997 Rules of
Civil Procedure which requires the petition to be accompanied
by, among others, "copies of all pleadings and documents
relevant and pertinent thereto."
46

The petition in CA-G.R. SP No. 44052 would likewise be
dismissed
47
by the Court of Appeals on January 9, 1998, but
this time, on the merits, to wit:
The validity of the decision of the respondent judge in Civil
Case No. 2303-L has thus been brought both before this Court
and to the Supreme Court by the petitioner. In both instances
the respondent judge has been upheld. The instant petition is
petitioners latest attempt to resist the implementation or
execution of that decision using as a shield a decision of a
Regional Trial Court in the National Capital Region. We are
not prepared to allow it. The applicable rule and jurisprudence
are clear. The prevailing party is entitled as a matter of right to
a writ of execution, and the issuance thereof is a ministerial
duty compellable by mandamus. We do not believe that there
exists in this instance a supervening event which would justify
a deviation from this rule.
48

Prior to this, however, on November 28, 1997, the Lapu-Lapu
RTC, acting on GMCs Omnibus Motion, made the following
orders: for LLDHC to show cause why it should not be
declared in contempt; for a writ of preliminary prohibitory
injunction to be issued to restrain all persons acting on
LLDHCs orders from carrying out such orders in defiance of
its final and executory judgment; and for a writ of preliminary
mandatory injunction to be issued to direct the ouster of
LLDHC. The Lapu-Lapu RTC also declared the Register of
Deeds of Lapu-Lapu City in contempt and directed the Office
of the City Sheriff to implement the above orders and to
immediately detain and confine the Register of Deeds of Lapu-
Lapu City at the City Jail if he continues to refuse to transfer
the titles of the subject lots after ten days from receipt of this
order.
49

On December 22, 1997, the Lapu-Lapu RTC denied
50
the
motion for reconsideration filed by the Register of Deeds of
Lapu-Lapu City. In separate motions, LLDHC, and again the
Register of Deeds of Lapu-Lapu City, sought the
reconsideration of the November 28, 1997 and December 22,
1997 Orders. On May 27, 1998, the Lapu-Lapu RTC, acting
under a new judge,
51
granted both motions and accordingly set
aside the November 28, 1997 and December 22, 1997
Orders.
52

With the denial
53
of its motion for reconsideration on August 4,
1998, GMC came to this Court on a Petition for Certiorari,
Prohibition and Mandamus, seeking to set aside the May 27,
1998 Order of the Lapu-Lapu RTC in Civil Case No. 2203-L.
The Petition was referred to the Court of Appeals, which under
Batas Pambansa Blg. 129, exercises original jurisdiction to
issue such writs.
54
This was docketed as CA-G.R. SP No.
50650.
On April 30, 1999, the Court of Appeals rendered its Decision
55

in CA-G.R. SP No. 50650, the dispositive portion of which
reads:
WHEREFORE, the petition being partly meritorious, the Court
hereby resolves as follows:
(1) To AFFIRM the Orders of May 28, 1998 and August 4,
1998 in Civil Case No. 2203-L insofar as they set aside the
order holding respondent Register of Deeds guilty of indirect
contempt of court and to NULLIFY said orders in so far as they
set aside the directives contained in paragraphs (a) and (b)
and (c) of the order dated November 28, 1997.
(2) To DECLARE without FORCE and EFFECT insofar as
petitioner Group Management Corporation is concerned the
decision in Civil Case No. R-82-3429 as well as the orders and
writs issued for its execution and enforcement: and
(3) To ENJOIN respondent Lapu-Lapu Development and
Housing Corporation, along with its agents and
representatives and/or persons/public officials/employees
acting in its interest, specifically respondent Regional Trial
Court of Manila Branch 38, and respondent Register of Deeds
of Lapu-Lapu City, from obstructing, interfering with or in any
manner delaying the implementation/execution/ enforcement
by the Lapu-Lapu City RTC of its order and writ of execution in
Civil Case No. 2203-L.
For lack of sufficient basis the charge of contempt of court
against respondent Lapu-Lapu Development and Housing
Corporation and the public respondents is hereby
DISMISSED.
56

With the denial of LLDHCs motion for reconsideration on
December 29, 1999,
57
LLDHC, on January 26, 2000, filed
before this Court a Petition for Review on Certiorari assailing
the April 30, 1999 decision of the Court of Appeals in CA-G.R.
SP No. 50650. This petition was docketed as G.R. No.
141407.
This Court dismissed LLDHCs petition and upheld the
decision of the Court of Appeals in CA-G.R. SP No. 50650 in
its decision dated September 9, 2002.
58
LLDHCs Motion for
Reconsideration and Second Motion for Reconsideration were
also denied on November 13, 2002
59
and February 3, 2003,
60

respectively.
The September 9, 2002 decision of this Court in G.R. No.
141407 became final on March 10, 2003.
61

On March 11, 2004, the Lapu-Lapu RTC, acting on GMCs
Motion for Execution, issued an Order
62
the dispositive portion
of which reads:
WHEREFORE, in light of the foregoing considerations, plaintiff
Group Management Corporations motion is GRANTED, while
defendant GSIS motion to stay the issuance of a writ of
execution is denied for lack of merit. Consequently, the Sheriff
of this Court is directed to proceed with the immediate
implementation of this Courts decision dated February 24,
1992, by enforcing completely this Courts Order of Execution
dated November 28, 1996, the writ of execution dated
December 17, 1996, the Order dated July 21, 1997, the Order
dated October 23 1997, the Order dated November 28, 1997
and the Order dated December 22, 1997.
63

On May 7, 2004, the Lapu-Lapu RTC denied
64
the motions for
reconsideration filed by LLDHC and GSIS.
On May 27, 2004, LLDHC filed before the Court of Appeals a
Petition for Certiorari, Prohibition and Mandamus
65
against the
Lapu-Lapu RTC for having issued the Orders of March 11,
2004 and May 7, 2004 (assailed Orders). This petition
docketed as CA-G.R. SP No. 84382, sought the annulment of
the assailed Orders and for the Court of Appeals to command
the Lapu-Lapu RTC to desist from further proceeding in Civil
Case No. 2203-L, to dismiss GMCs Motion for Execution, and
for the issuance of a Temporary Restraining Order (TRO)/Writ
of Preliminary Injunction against the Lapu-Lapu RTC and
GMC.
On July 6, 2004, GSIS filed its own Petition for Certiorari and
Prohibition with Preliminary Injunction and Temporary
Restraining Order
66
before the Court of Appeals to annul the
assailed Orders of the Lapu-Lapu RTC, to prohibit the judge
therein and the Register of Deeds of Lapu-Lapu City from
implementing such assailed Orders, and for the issuance of a
TRO and writ of preliminary injunction to maintain the status
quo while the case is under litigation. This petition was
docketed as CA-G.R. SP No. 85096.
The Court of Appeals initially dismissed outright LLDHCs
petition for failure to attach the Required Secretarys
Certificate/Board Resolution authorizing petitioner to initiate
the petition,
67
but in a Resolution
68
dated August 2, 2004, after
having found the explanation for the mistake satisfactory, the
Court of Appeals, "on equitable consideration and for the
purpose of preserving the status quo during the pendency of
the appeal,"
69
issued a TRO against the Lapu-Lapu RTC from
enforcing its jurisdiction and judgment/order in Civil Case No.
2203-L until further orders. In its August 30, 2004 Resolution,
70

the Court of Appeals, without resolving the case on its merits,
also issued a Writ of Preliminary Injunction, commanding the
Lapu-Lapu RTC to cease and desist from implementing the
assailed Orders in Civil Case No. 2203-L, until further orders.
On November 25, 2004, the Twentieth Division of the Court of
Appeals promulgated its decision in CA-G.R. SP No. 85096. It
dismissed GSISs petition and affirmed the assailed Orders of
March 11, 2004 and May 7, 2004. The Court of Appeals found
no merit in GSISs petition since the judgment in Civil Case
No. 2203-L, which was decided way back on February 24,
1992, had long become final and executory, which meant that
the Lapu-Lapu RTC had no legal obstacle to cause said
judgment to be executed and enforced. The Court of Appeals
quoted in full, portions of this Courts Decision in G.R. No.
141407 to underscore the fact that no less than the Supreme
Court had declared that the decision in Civil Case No. 2203-L
was valid and binding and had become final and executory a
long time ago and had not been in any way nullified by the
decision rendered by the Manila RTC on May 10, 1994 in Civil
Case No. R-82-3429. On January 20, 2005, the Court of
Appeals upheld its decision and denied GSISs Motion for
Reconsideration.
71

However, on September 23, 2005, the Special Nineteenth
Division of the Court of Appeals came out with its own decision
in CA-G.R. SP No. 84382. It granted LLDHCs petition,
contrary to the Court of Appeals decision in CA-G.R. SP No.
85096, and annulled and set aside the March 11, 2004 Order
of the Lapu-Lapu RTC in this wise:
WHEREFORE, finding merit in the instant Petition for
Certiorari, Prohibition and Mandamus, the same is hereby
GRANTED, and the assailed Order, dated March 11, 2004, of
the Regional Trial Court, 7th Judicial Region, Branch 27,
Lapulapu City, in Civil Case No. 2203-L is ANNULLED AND
SET ASIDE.
Accordingly, respondent Judge Benedicto Cobarde is hereby
ORDERED:
a) to DESIST from further proceeding in Civil Case No. 2203-
L; and
b) to DISMISS GMCs Motion for Execution in the
abovementioned case;
Meanwhile, the Writ of Preliminary Injunction earlier issued is
hereby declared PERMANENT. No pronouncement as to
costs.
72

GSIS
73
and GMC
74
are now before this Court, with their
separate Petitions for Review on Certiorari, assailing the
decisions of the Court of Appeals in CA-G.R. SP No. 85096
and CA-G.R. SP No. 84382, respectively.
G.R. No. 167000
In G.R. No. 167000, GSIS is assailing the Orders issued by
the Lapu-Lapu RTC on March 11, 2004 and May 7, 2004 for
being legally unenforceable on GSIS because the titles of the
78 lots in Marigondon, Lapu-Lapu City were already in
LLDHCs name, due to the final and executory judgment
rendered by the Manila RTC in Civil Case No. R-82-3429.
GSIS contends that it is legally and physically impossible for it
to comply with the assailed Orders as the "subject matter to be
delivered or performed have already been taken away from"
75

GSIS. GSIS asserts that the circumstances which have arisen,
from the judgment of the Manila RTC to the cancellation of
GSISs titles, are "supervening events" which should be
considered as an exception to the doctrine of finality of
judgments because they render the execution of the final and
executory judgment of the Lapu-Lapu RTC in Civil Case No.
2203-L unjust and inequitable. GSIS further claims that it
should not be made to pay damages of any kind because its
funds and properties are exempt from execution, garnishment,
and other legal processes under Section 39 of Republic Act
No. 8291.
LLDHC, in its Compliance,
76
believes that it was impleaded in
this case as a mere nominal party since it filed its own Petition
for Certiorari before the Court of Appeals, which was granted
in CA-G.R. SP No. 84382. LLDHC essentially agrees with
GSIS that the implementation of the assailed Orders have
become legally impossible due to the fully implemented Writ of
Execution issued by the Manila RTC in Civil Case No. R-82-
3429. LLDHC alleges that because of this "supervening
event," GSIS cannot be compelled to execute a final deed of
sale in GMCs favor, and "LLDHC cannot be divested of its
titles, ownership and possession" of the subject properties.
77

GMC in its comment
78
argues that GSIS has no legal standing
to institute this petition because it has no more interest in the
subject lots, since it is no longer in possession and the titles
thereto have already been registered in LLDHCs name. GMC
claims that the decision of the Special Nineteenth Division of
the Court of Appeals is barred by res judicata, and that LLDHC
is guilty of forum shopping for filing several petitions before the
Court of Appeals and this Court with the same issues and
arguments. GMC also asserts that the judgment in Civil Case
No. R-82-3429 is enforceable only between GSIS and LLDHC
as GMC was not a party to the case, and that the Manila RTC
cannot overrule the Lapu-Lapu RTC, they being co-equal
courts.
G.R. No. 169971
In G.R. No. 169971, GMC is praying that the decision of the
Special Nineteenth Division of the Court of Appeals in CA-G.R.
SP No. 84382 be reversed and set aside. GMC is claiming that
the Court of Appeals, in rendering the said decision,
committed a palpable legal error by overruling several final
decisions rendered by the Lapu-Lapu RTC, the Court of
Appeals, and this Court.
79
GMC claims that the Lapu-Lapu
RTCs duty to continue with the implementation of its orders is
purely ministerial as the judgment has not only become final
and executory, but has been affirmed by both the Court of
Appeals and the Supreme Court in several equally final and
executory decisions.
80
GMC, repeating its arguments in G.R.
No. 167000, maintains that the petition is barred by res
judicata, that there is forum shopping, and that the Manila RTC
decision is not binding on GMC.
LLDHC in its comment
81
insists that there is a supervening
event which rendered it necessary to stay the execution of the
judgment of the Lapu-Lapu RTC. LLDHC also asserts that, as
correctly found by the Court of Appeals in CA-G.R. SP No.
84382, the Lapu-Lapu RTC decision in Civil Case No. 2203-L
was not affirmed with finality by the Court of Appeals and the
Supreme Court as the decision was not reviewed on the
merits.
SUMMARY OF THE ISSUES
The present case is peculiar in the sense that it involves two
conflicting final and executory decisions of two different trial
courts. Moreover, one of the RTC decisions had been fully
executed and implemented. To complicate things further, the
parties have previously filed several petitions, which have
reached not only the Court of Appeals but also this Court.
Upon consolidation of the two petitions, this Court has
narrowed down the issues to the following:
1. Whether or not the decision of the Manila RTC in Civil Case
No. R-82-3429 constitutes a supervening event, which should
be admitted as an exception to the doctrine of finality of
judgments.
2. Whether or not the September 23, 2005 Decision of the
Special Nineteenth Division of the Court of Appeals in CA-G.R.
SP No. 84382 and GSISs Petition in G.R. No. 167000 are
barred by res judicata.
3. Whether or not there is a legal and physical impossibility for
GSIS to comply with the March 11, 2004 and May 7, 2004
Orders of the Lapu-Lapu RTC in Civil Case No. 2203-L.
4. Whether or not LLDHC and GSIS are guilty of forum
shopping.
DISCUSSION
First Issue:
Supervening Event
It is well-settled that once a judgment attains finality, it
becomes immutable and unalterable. It may not be changed,
altered or modified in any way even if the modification were for
the purpose of correcting an erroneous conclusion of fact or
law. This is referred to as the "doctrine of finality of
judgments," and this doctrine applies even to the highest court
of the land.
82
This Court explained its rationale in this wise:
The doctrine of finality of judgment is grounded on
fundamental considerations of public policy and sound
practice, and that, at the risk of occasional errors, the
judgments or orders of courts must become final at some
definite time fixed by law; otherwise, there would be no end to
litigations, thus setting to naught the main role of courts of
justice which is to assist in the enforcement of the rule of law
and the maintenance of peace and order by settling justiciable
controversies with finality.
83

This Court has, on several occasions, ruled that the doctrine of
finality of judgments admits of certain exceptions, namely: "the
correction of clerical errors, the so-called nunc pro tunc entries
which cause no prejudice to any party, void judgments, and
whenever circumstances transpire after the finality of the
decision which render its execution unjust and inequitable."
84

Both GSIS and LLDHC claim that the execution of the decision
and orders in Civil Case No. 2203-L should be stayed because
of the occurrence of "supervening events" which render the
execution of the judgment "impossible, unfair, unjust and
inequitable."
85
However, in order for an event to be considered
a supervening event to justify the alteration or modification of a
final judgment, the event must have transpired after the
judgment has become final and executory, to wit:
Supervening events refer to facts which transpire after
judgment has become final and executory or to new
circumstances which developed after the judgment has
acquired finality, including matters which the parties were not
aware of prior to or during the trial as they were not yet in
existence at that time.
86

The Lapu-Lapu RTC Decision in Civil Case No. 2203-L was
promulgated on February 24, 1992, while the Manila RTC
Decision in Civil Case No. R-82-3429 was promulgated on
May 10, 1994. As early as December 6, 1993, both GSISs
and LLDHCs appeals of the Lapu-Lapu RTC Decision were
dismissed by the said RTC.
87
Only GSIS moved to reconsider
this dismissal, which was denied on July 6, 1994.
88
Strictly
speaking, the Lapu Lapu RTC Decision should have attained
finality at that stage; however, LLDHC filed with the Court of
Appeals its Petition for Annulment of Judgment (CA-G.R. SP
No. 34696) on July 27, 1994 and it used therein the Manila
RTC Decision as its main ground for annulment of the Lapu-
Lapu RTC decision.
The Court of Appeals nonetheless dismissed LLDHCs Petition
for Annulment of Judgment, in CA-G.R. SP No. 34696,
89
and
that became final and executory on January 28, 1995,
90
after
LLDHC interposed no appeal. The entry of judgment in this
case was issued on August 18, 1995.
91
Moreover, the similar
petition of LLDHC before this Court in G.R. No. 118633 was
decided on September 6, 1996 and became final and
executory on December 23, 1996. Therefore, the ruling by the
Manila RTC is evidently not a supervening event. It was
already in existence even before the decision in Civil Case No.
2203-L attained finality.
Just as LLDHC and GSIS, as the losing parties, had the right
to file their respective appeals within the prescribed period,
GMC, as the winning party in Civil Case No. 2203-L, equally
had the correlative right to benefit from the finality of the
resolution of its case,
92
to wit:
A final judgment vests in the prevailing party a right recognized
and protected by law under the due process clause of the
Constitution. A final judgment is "a vested interest which it is
right and equitable that the government should recognize and
protect, and of which the individual could not be deprived
arbitrarily without injustice."
93
(Citations omitted.)
Since the Manila RTC decision does not constitute a
supervening event, there is therefore neither reason nor
justification to alter, modify or annul the Lapu-Lapu RTC
Decision and Orders, which have long become final and
executory. Thus, in the present case, GMC must not be
deprived of its right to enjoy the fruits of a final verdict.
It is settled in jurisprudence that to stay execution of a final
judgment, a supervening event "must create a substantial
change in the rights or relations of the parties which would
render execution of a final judgment unjust, impossible or
inequitable making it imperative to stay immediate execution in
the interest of justice."
94

However, what would be unjust and inequitable is for the Court
to accord preference to the Manila RTC Decision on this
occasion when in the past, the Court of Appeals and this Court
have repeatedly, consistently, and with finality rejected
LLDHCs moves to use the Manila RTC Decision as a ground
to annul, and/or to bar the execution of, the Lapu Lapu RTC
Decision. To be sure, in the Decision dated September 9,
2002 in G.R. No. 141407, penned by former Chief Justice
Artemio V. Panganiban, the Court already passed upon the
lack of effect of the Manila RTC Decision on the finality of the
Lapu Lapu RTC decision in this wise:
The records of the case clearly show that the Lapulapu
Decision has become final and executory and is thus valid and
binding upon the parties. Obviously, petitioner [LLDHC] is
again trying another backdoor attempt to annul the final and
executory Decision of the Lapulapu RTC.
First, it was petitioner that filed on March 11, 1992 a Notice of
Appeal contesting the Lapulapu RTC Judgment in Civil Case
No. 2203-L rendered on February 24, 1992. The Notice was
however rejected by the said RTC for being frivolous and
dilatory. Since petitioner had done nothing thereafter, the
Decision clearly became final and executory.
However, upon receipt of the Manila RTC Decision, petitioner
found a new tool to evade the already final Lapulapu Decision
by seeking the annulment of the latter in a Petition with the
CA. However, the appellate court dismissed the action,
because petitioner had been unable to prove any of the
grounds for annulment; namely lack of jurisdiction or extrinsic
fraud. Because no appeal had been taken by petitioner, the
ruling of the CA also became final and executory.
Second, the Supreme Court likewise recognized the finality of
the CA Decision when it threw out LLDHCs Petition for
Certiorari in GR No. 118633. This Court ruled thus:
"Instead of filing this petition for certiorari under Rule 65, which
is essentially another Petition to Annul Judgment, petitioner
LLDHC should have filed a timely Petition for Review under
Rule 45 of the Revised Rules of Court of the decision of the
Court of Appeals, dated December 29, 1994, dismissing the
Petition for Annulment of Judgment filed by the petitioner
LLDHC before the court a quo. But this is all academic now.
The appellate courts decision had become final and executory
on January 28, 1995."
Jurisprudence mandates that when a decision becomes final
and executory, it becomes valid and binding upon the parties
and their successors in interest. Such decision or order can no
longer be disturbed or reopened no matter how erroneous it
may have been. Petitioners failure to file an appeal within the
reglementary period renders the judgment final and executory.
The perfection of an appeal in the manner and within the
period prescribed by law is mandatory. Failure to conform to
the rules regarding appeal will render the judgment final and
executory and, hence, unappealable. Therefore, since the
Lapulapu Decision has become final and executory, its
execution has become mandatory and ministerial on the part
of the judge.
The CA correctly ruled that the Lapulapu Judgment is binding
upon petitioner [LLDHC] which, by its own motion, participated
as an intervenor. In fact, the latter filed an Answer in
Intervention and thereafter actively took part in the trial. Thus,
having had an opportunity to be heard and to seek a
reconsideration of the action or ruling it complained of, it
cannot claim that it was denied due process of law. What the
law prohibits is the absolute absence of the opportunity to be
heard. Jurisprudence teaches that a party cannot feign denial
of due process if it has been afforded the opportunity to
present its side.
Petitioner likewise claims that Private Respondent GMC
cannot escape the adverse effects of the final and executory
judgment of the Manila RTC.
Again, we do not agree. A trial court has no power to stop an
act that has been authorized by another trial court of equal
rank. As correctly stated by the CA, the Decision rendered by
the Manila RTC -- while final and executory -- cannot bind
herein private respondent [GMC], which was not a party to the
case before the said RTC. A personal judgment is binding only
upon the parties, their agents, representatives and successors
in interest.1avvphi1
Third, petitioner grievously errs in insisting that the judgment of
the Manila RTC nullified that of the Lapulapu RTC. As already
adverted to earlier, courts of coequal and coordinate
jurisdiction may not interfere with or pass upon each others
orders or processes, since they have the same power and
jurisdiction. Except in extreme situations authorized by law,
they are proscribed from doing so.
95
(Emphases supplied.)
It likewise does not escape the attention of this Court that the
only reason the Manila RTC Decision was implemented ahead
of the Lapu Lapu RTC Decision was that LLDHC successfully
secured a TRO from the Court of Appeals through its petition
for certiorari docketed as CA-G.R. SP No. 44052, which was
eventually dismissed by the appellate court. The Court of
Appeals ruled that the Manila RTC Decision did not constitute
a supervening event that would forestall the execution of the
Lapu Lapu RTC Decision. This decision of the Court of
Appeals likewise became final and executory in 1998.
It bears repeating that the issue of whether or not the Manila
RTC Decision could nullify or render unenforceable the Lapu
Lapu RTC Decision has been litigated many times over in
different fora. It would be the height of inequity if the Court
were to now reverse the Court of Appeals and its own final
and executory rulings and allow GSIS to prevent the execution
of the Lapu Lapu RTC Decision on the same legal grounds
previously discredited by the courts.
Second Issue:
Res Judicata
GMC asserts that the September 23, 2005 Decision of the
Special Nineteenth Division of the Court of Appeals in CA-G.R.
SP No. 84382 and the petition herein by GSIS in G.R. No.
167000 are barred by res judicata as the issues involved had
been fully resolved not only by the lower courts but by this
Court as well. GSIS and LLDHC both insist that res judicata
does not apply as this Court "has not yet rendered a decision
involving the same or any similar petition."
96
The petitions by
LLDHC before the Court of Appeals and GSIS before this
Court both prayed for the annulment of the March 11, 2004
and May 7, 2004 Orders of the Lapu-Lapu RTC in Civil Case
No. 2203-L. These assailed Orders were both issued to
resolve the parties motions and to have the February 24, 1992
judgment implemented and executed.
In Republic of the Philippines (Civil Aeronautics
Administration) v. Yu,
97
this Court expounded on the concept
of res judicata and explained it in this wise:
Res judicata literally means "a matter adjudged; a thing
judicially acted upon or decided; a thing or matter settled by
judgment." Res judicata lays the rule that an existing final
judgment or decree rendered on the merits, and without fraud
or collusion, by a court of competent jurisdiction, upon any
matter within its jurisdiction, is conclusive of the rights of the
parties or their privies, in all other actions or suits in the same
or any other judicial tribunal of concurrent jurisdiction on the
points and matters in issue in the first suit.
98

In Villanueva v. Court of Appeals,
99
we enumerated the
elements of res judicata as follows:
a) The former judgment or order must be final;
b) It must be a judgment or order on the merits, that is, it was
rendered after a consideration of the evidence or stipulations
submitted by the parties at the trial of the case;
c) It must have been rendered by a court having jurisdiction
over the subject matter and the parties; and
d) There must be, between the first and second actions,
identity of parties, of subject matter and of cause of action.
This requisite is satisfied if the two (2) actions are substantially
between the same parties.
100

All three parties herein are in agreement with the facts that led
to the petitions in this case. However, not all of them agree
that the matters involved in this case have already been
judicially settled. While GMC contends that GSISs petition is
barred by res judicata, both GSIS and LLDHC assert that this
Court has not yet decided any similar petition, thus disputing
the claim of res judicata.
Res judicata has two concepts: (1) "bar by prior judgment" as
enunciated in Rule 39, Section 47(b) of the 1997 Rules of Civil
Procedure; and (2) "conclusiveness of judgment" in Rule 39,
Section 47(c), which reads as follows:
(b) In other cases, the judgment or final order is, with respect
to the matter directly adjudged or as to any other matter that
could have been raised in relation thereto, conclusive between
the parties and their successors in interest by title subsequent
to the commencement of the action or special proceeding,
litigating for the same thing and under the same title and in the
same capacity; and
(c) In any other litigation between the same parties or their
successors in interest, that only is deemed to have been
adjudged in a former judgment or final order which appears
upon its face to have been so adjudged, or which was actually
and necessarily included therein or necessary thereto.
In explaining the two concepts of res judicata, this Court held
that:
There is "bar by prior judgment" when, as between the first
case where the judgment was rendered, and the second case
that is sought to be barred, there is identity of parties, subject
matter, and causes of action. But where there is identity of
parties and subject matter in the first and second cases, but no
identity of causes of action, the first judgment is conclusive
only as to those matters actually and directly controverted and
determined and not as to matters merely involved therein. This
is "conclusiveness of judgment." Under the doctrine of
conclusiveness of judgment, facts and issues actually and
directly resolved in a former suit cannot again be raised in any
future case between the same parties, even if the latter suit
may involve a different claim or cause of action. The identity of
causes of action is not required but merely identity of issues.
101

In Pealosa v. Tuason,
102
we laid down the test in determining
whether or not the causes of action in the first and second
cases are identical:
Would the same evidence support and establish both the
present and former cause of action? If so, the former recovery
is a bar; if otherwise, it does not stand in the way of the former
action.
103

Res judicata clearly exists in G.R. No. 167000 and in CA-G.R.
SP No. 84382 because both GSISs and LLDHCs actions put
in issue the validity of the Lapu-Lapu RTC Decision and were
based on the assumption that it has either been modified,
altered or nullified by the Manila RTC Decision.
In CA-G.R. SP No. 84382, LLDHC sought to annul the
assailed Orders of the Lapu-Lapu RTC and to order the judge
therein to desist from further proceeding in Civil Case No.
2203-L. LLDHC sought for the same reliefs in its Petition for
Annulment of Judgment in CA-G.R. SP No. 34696 and G.R.
No. 118633, in its Petition for Certiorari in CA-G.R. SP No.
44052, and in its Petition for Review on Certiorari in G.R. No.
141407, all of which have been decided with finality.
In G.R. No. 167000, GSIS is praying for the reversal of the
November 25, 2004 Decision and January 20, 2005
Resolution in CA-G.R. SP No. 85096, wherein the Court of
Appeals affirmed the assailed Orders. The validity of these
assailed Orders hinges on the validity of the Lapu-Lapu RTC
Decision, which issue had already been decided with finality
by both the Court of Appeals and this Court.
Notwithstanding the difference in the forms of actions GSIS
and LLDHC filed, the doctrine of res judicata still applies
considering that the parties were litigating the same thing, i.e.,
the 78 lots in Marigondon, Lapu-Lapu City, and more
importantly, the same contentions and evidence were used in
all causes of action. As this Court held in Mendiola v. Court of
Appeals
104
:
The test of identity of causes of action lies not in the form of an
action but on whether the same evidence would support and
establish the former and the present causes of action. The
difference of actions in the aforesaid cases is of no moment. x
x x.
105

The doctrine of res judicata makes a final judgment on the
merits rendered by a court of competent jurisdiction conclusive
as to the rights of the parties and their privies and amounts to
an absolute bar to subsequent actions involving the same
claim, demand, or cause of action.
106
Even a finding of
conclusiveness of judgment operates as estoppel with respect
to matters in issue or points controverted, on the determination
of which the finding or judgment was anchored.
107

Evidently, this Court could dispose of this case simply upon
the application of the principle of res judicata. It is clear that
GSISs petition in G.R. No. 167000 and LLDHCs petition in
CA-G.R. SP No. 84382 should have never reached those
stages for having been barred by a final and executory
judgment on their claims. However, considering the nature of
the case before us, this Court is compelled to make a final
determination of the issues in the interest of substantial justice
and to end the wasteful use of our courts time and resources.
Third Issue:
GSISs Compliance with the Lapu-Lapu RTC Judgment and
Orders
GSIS asserts that the assailed Orders cannot be enforced
upon it given the physical and legal impossibility for it to
comply as the titles over the subject properties were
transferred to LLDHC under the Manila RTC writ of execution.
A closer perusal of the March 11, 2004 and May 7, 2004
Orders shows that GSISs argument holds no water. The May
7, 2004 Order denied GSISs and LLDHCs motions for
reconsideration of the March 11, 2004 Order. The March 11,
2004 Order resolved GMCs urgent manifestation and motion
to proceed with the implementation of the February 24, 1992
final and executory decision and GSISs and LLDHCs
opposition thereto, as well as GSISs motion to stay the
issuance of a writ of execution against it. The dispositive
portion of the Order reads:
WHEREFORE, in the light of the foregoing considerations,
plaintiff Group Management Corporations motion is
GRANTED, while defendant GSIS motion to stay the issuance
of a writ of execution is denied for lack of merit. Consequently,
the Sheriff of this Court is directed to proceed with the
immediate implementation of this Courts decision dated
February 24, 1992, by enforcing completely this Courts Order
of Execution dated November 28, 1996, the writ of execution
dated December 17, 1996, the Order dated July 21, 1997, the
Order dated October 23, 1997, the Order dated November 28,
1997 and the Order dated December 22, 1997.
108
(Emphasis
ours.)
While the previous orders and writs of execution issued by the
Lapu-Lapu RTC required the GSIS to execute the final deed of
sale and to deliver the subject properties, the Lapu-Lapu RTC,
in its subsequent Orders, modified this by directing its order to
the Register of Deeds of Lapu-Lapu City. In its July 21, 1997
Order,
109
the Lapu-Lapu RTC, seeing GSISs obstinate refusal
to implement the courts previous orders, directed the Register
of Deeds of Lapu-Lapu City to cancel the Transfer Certificates
of Title of the subject properties and to issue new ones in the
name of GMC, and to deliver the same to GMC. Moreover, in
its October 23, 1997 Order, the Lapu-Lapu RTC, noting the
implemented judgment of the Manila RTC, declared the
issuance of new titles to LLDHC null and void for being
contrary to the courts February 24, 1992 decision and directed
the Register of Deeds to effect the transfer of the titles to
GMC.
Considering that the assailed Orders merely directed the
Lapu-Lapu RTCs Sheriff to proceed with the implementation
of the courts previous orders, that is, to make sure that the
Register of Deeds of Lapu-Lapu City complied with the orders,
GSIS had nothing to comply with insofar as the titles to, and
possession of, the subject properties were concerned, the
Orders being clearly directed towards the Sheriff of the Lapu-
Lapu RTC and the Register of Deeds of Lapu-Lapu City.
Hence, GSISs argument of legal and physical impossibility of
compliance with the assailed Orders is baseless.
GSIS also argues that it cannot be the "subject [of any]
execution including [the] payment of any damage and other
monetary judgments because all GSIS funds and properties
are absolutely and expressly exempt from execution and other
legal processes under Section 39 of Republic Act No. 8291."
110

Section 39 of Republic Act No. 8291 provides:
SECTION 39. Exemption from Tax, Legal Process and Lien.
It is hereby declared to be the policy of the State that the
actuarial solvency of the funds of the GSIS shall be preserved
and maintained at all times and that contribution rates
necessary to sustain the benefits under this Act shall be kept
as low as possible in order not to burden the members of the
GSIS and their employers. Taxes imposed on the GSIS tend
to impair the actuarial solvency of its funds and increase the
contribution rate necessary to sustain the benefits of this Act.
Accordingly, notwithstanding any laws to the contrary, the
GSIS, its assets, revenues including all accruals thereto, and
benefits paid, shall be exempt from all taxes, assessments,
fees, charges or duties of all kinds. These exemptions shall
continue unless expressly and specifically revoked and any
assessment against the GSIS as of the approval of this Act are
hereby considered paid. Consequently, all laws, ordinances,
regulations, issuances, opinions or jurisprudence contrary to or
in derogation of this provision are hereby deemed repealed,
superseded and rendered ineffective and without legal force
and effect.
x x x x
The funds and/or the properties referred to herein as well as
the benefits, sums or monies corresponding to the benefits
under this Act shall be exempt from attachment, garnishment,
execution, levy or other processes issued by the courts, quasi
judicial agencies or administrative bodies including
Commission on Audit (COA) disallowances and from all
financial obligations of the members, including his pecuniary
accountability arising from or caused or occasioned by his
exercise or performance of his official functions or duties, or
incurred relative to or in connection with his position or work
except when his monetary liability, contractual or otherwise, is
in favor of the GSIS.
This Court, in Rubia v. Government Service Insurance
System,
111
held that the exemption of GSIS is not absolute and
does not encompass all of its funds, to wit:
In so far as Section 39 of the GSIS charter exempts the GSIS
from execution, suffice it to say that such exemption is not
absolute and does not encompass all the GSIS funds. By way
of illustration and as may be gleaned from the Implementing
Rules and Regulation of the GSIS Act of 1997, one exemption
refers to social security benefits and other benefits of GSIS
members under Republic Act No. 8291 in connection with
financial obligations of the members to other parties. The
pertinent GSIS Rule provides:
Rule XV. Funds of the GSIS
Section 15.7 Exemption of Benefits of Members from Tax,
Attachment, Execution, Levy or other Legal Processes.
The social security benefits and other benefits of GSIS
members under R.A. 8291 shall be exempt from tax,
attachment, garnishment, execution, levy or other processes
issued by the courts, quasi-judicial agencies or administrative
bodies in connection with all financial obligations of the
member, including his pecuniary accountability arising from or
caused or occasioned by his exercise or performance of his
official functions or duties or incurred in connection with his
position or work, as well as COA disallowances. Monetary
liability in favor of the GSIS, however, may be deducted from
the benefits of the member. [Emphasis supplied]
The processual exemption of the GSIS funds and properties
under Section 39 of the GSIS Charter, in our view, should be
read consistently with its avowed principal purpose: to
maintain actuarial solvency of the GSIS in the protection of
assets which are to be used to finance the retirement,
disability and life insurance benefits of its members. Clearly,
the exemption should be limited to the purposes and objects
covered. Any interpretation that would give it an expansive
construction to exempt all GSIS assets from legal processes
absolutely would be unwarranted.
Furthermore, the declared policy of the State in Section 39 of
the GSIS Charter granting GSIS an exemption from tax, lien,
attachment, levy, execution, and other legal processes should
be read together with the grant of power to the GSIS to invest
its "excess funds" under Section 36 of the same Act. Under
Section 36, the GSIS is granted the ancillary power to invest in
business and other ventures for the benefit of the employees,
by using its excess funds for investment purposes. In the
exercise of such function and power, the GSIS is allowed to
assume a character similar to a private corporation. Thus, it
may sue and be sued, as also, explicitly granted by its charter.
Needless to say, where proper, under Section 36, the GSIS
may be held liable for the contracts it has entered into in the
course of its business investments. For GSIS cannot claim a
special immunity from liability in regard to its business
ventures under said Section. Nor can it deny contracting
parties, in our view, the right of redress and the enforcement of
a claim, particularly as it arises from a purely contractual
relationship, of a private character between an individual and
the GSIS.
112

This ruling has been reiterated in the more recent case of
Government Service Insurance System v. Regional Trial Court
of Pasig City, Branch 71,
113
wherein GSIS, which was also the
petitioner in that case, asked to reverse this Courts findings in
Rubia and grant GSIS absolute immunity. This Court rejected
that plea and held that GSIS should not be allowed to hide
behind such immunity especially since its obligation arose
from its own wrongful action in a business transaction.
In this case, the monetary judgments against GSIS arose from
its failure to comply with its private and contractual obligation
to GMC. As such, GSIS cannot claim immunity from the
enforcement of the final and executory judgment against it.
114

Fourth Issue:
Forum Shopping
On the issue of forum shopping, this Court already found
LLDHC guilty of forum shopping and was adjudged to pay
treble costs way back in 2002 in G.R. No. 141407
115
:
There is forum shopping whenever, as a result of an adverse
opinion in one forum, a party seeks a favorable opinion (other
than by appeal or certiorari) from another. In Gatmaytan v. CA,
the petitioner therein repeatedly availed itself of several judicial
remedies in different courts, simultaneously or successively.
All those remedies were substantially founded on the same
transactions and the same essential facts and circumstances;
and all raised substantially the same issues either pending in,
or already resolved adversely by, some other court. This Court
held that therein petitioner was trying to increase his chances
of obtaining a favorable decision by filing multiple suits in
several courts. Hence, he was found guilty of forum shopping.
In the present case, after the Lapulapu RTC had rendered its
Decision in favor of private respondent, petitioner filed several
petitions before this Court and the CA essentially seeking the
annulment thereof. True, petitioner had filed its Complaint in
the Manila RTC before private respondent filed its own suit in
the Lapulapu RTC. Records, however, show that private
respondent learned of the Manila case only when petitioner
filed its Motion for Intervention in the Lapulapu RTC. When
GMC filed its own Motion to Intervene in the Manila RTC, it
was promptly rebuffed by the judge therein. On the other hand,
petitioner was able to present its side and to participate fully in
the proceedings before the Lapulapu RTC.
On July 27, 1994, almost two years after the dismissal of its
appeal by the Lapulapu RTC, petitioner filed in the CA a suit
for the annulment of that RTC judgment. On December 29,
1994, this suit was rejected by the CA in a Decision which
became final and executory on January 28, 1995, after no
appeal was taken by petitioner. However, this action did not
stop petitioner. On February 2, 1995, it filed with this Court
another Petition deceptively cloaked as certiorari, but which in
reality sought the annulment of the Lapulapu Decision. This
Court dismissed the Petition on September 6, 1996.
Petitioners Motion for Reconsideration was denied with finality
on November 18, 1996.
On November 28, 1996, Judge Risos of the Lapulapu RTC
directed the execution of the judgment in the case filed before
it. The Motion to Stay Execution filed by petitioner was denied
on February 19, 1997. Undaunted, it filed in this Court another
Petition for Certiorari, Prohibition and Mandamus. On
September 21, 1998, we referred the Petition to the CA for
appropriate action. This new Petition again essentially sought
to annul the final and executory Decision rendered by the
Lapulapu RTC. Needless to say, the new suit was
unsuccessful. Still, this rejection did not stop petitioner. It
brought before this Court the present Petition for Review on
Certiorari alleging the same facts and circumstances and
raising the same issues already decided by this Court in G.R.
No. 118633.
First Philippine International Bank v. CA stresses that what is
truly important to consider in determining whether forum
shopping exists is the vexation caused the courts and the
parties-litigants by one who asks different courts and/or
administrative agencies to rule on the same or related facts
and causes and/or to grant the same or substantially the same
relief, in the process creating the possibility of conflicting
rulings and decisions.
Petitioner in the present case sued twice before the CA and
thrice before this Court, alleging substantially the same facts
and circumstances, raising essentially the same issues, and
praying for almost identical reliefs for the annulment of the
Decision rendered by the Lapulapu RTC. This insidious
practice of repeatedly bringing essentially the same action --
albeit disguised in various nomenclatures -- before different
courts at different times is forum shopping no less. Because of
petitioners actions, the execution of the Lapulapu Decision
has been needlessly delayed and several courts vexed.
116

There is forum shopping when two or more actions or
proceedings, other than appeal or certiorari, involving the
same parties for the same cause of action, are instituted either
simultaneously or successively to obtain a more favorable
decision.
117
This Court, in Spouses De la Cruz v. Joaquin,
118

explained why forum shopping is disapproved of:
Forum shopping trifles with the courts, abuses their processes,
degrades the administration of justice, and congests court
dockets. Willful and deliberate violation of the rule against it is
a ground for the summary dismissal of the case; it may also
constitute direct contempt of court.
119

It is undeniable that both LLDHC and GSIS are guilty of forum
shopping, for having gone through several actions and
proceedings from the lowest court to this Court in the hopes
that they will obtain a decision favorable to them. In all those
actions, only one issue was in contention: the ownership of the
subject lots. In the process, the parties degraded the
administration of justice, congested our court dockets, and
abused our judicial system. Moreover, the simultaneous and
successive actions filed below have resulted in conflicting
decisions rendered by not only the trial courts but also by
different divisions of the Court of Appeals.
The very purpose of the rule against forum shopping was to
stamp out the abominable practice of trifling with the
administration of justice.
120
It is evident from the history of this
case that not only were the parties and the courts vexed, but
more importantly, justice was delayed. As this Court held in
the earlier case of LLDHC against GMC: "[The] insidious
practice of repeatedly bringing essentially the same action
albeit disguised in various nomenclatures before different
courts at different times is forum shopping no less."
121

Conclusion
Nonetheless, like we said, substantial justice requires the
resolution of this controversy on its merits. It is the duty of this
Court to put an end to this long-delayed litigation and render a
decision, which will bind all parties with finality.
Although it is settled that the Lapu-Lapu RTC Decision was not
in any way nullified by the Manila RTC Decision, it is this
Courts duty to resolve the legal implications of having two
conflicting, final, and executory decisions in existence. In
Collantes v. Court of Appeals,
122
this Court, faced with the
similar issue of having two conflicting, final and executory
decisions before it, offered three options to solve the dilemma:
"the first is for the parties to assert their claims anew, the
second is to determine which judgment came first, and the
third is to determine which of the judgments had been
rendered by a court of last resort."
123

In Collantes, this Court applied the first option and resolved
the conflicting issues anew. However, resorting to the first
solution in the case at bar would entail disregarding not only
the final and executory decisions of the Lapu-Lapu RTC and
the Manila RTC, but also the final and executory decisions of
the Court of Appeals and this Court. Moreover, it would negate
two decades worth of litigating. Thus, we find it more equitable
and practicable to apply the second and third options
consequently maintaining the finality of one of the conflicting
judgments. The primary criterion under the second option is
the time when the decision was rendered and became final
and executory, such that earlier decisions should prevail over
the current ones since final and executory decisions vest rights
in the winning party. In the third solution, the main criterion is
the determination of which court or tribunal rendered the
decision. Decisions of this Court should be accorded more
respect than those made by the lower courts.
124

Applying these criteria to the case at bar, the February 24,
1992 Decision of the Lapu-Lapu RTC in Civil Case No. 2203-L
was not only promulgated first; it also attained finality on
January 28, 1995, before the Manila RTCs May 10, 1994
Decision in Civil Case No. R-82-3429 became final on May 30,
1997. It is especially noteworthy that months after the Lapu-
Lapu RTC issued its writ of execution on December 17, 1996,
the Manila RTC issued its own writ of execution on August 1,
1997. To recall, the Manila RTC writ was only satisfied first
because the Court of Appeals in CA-G.R. SP No. 44052
deemed it appropriate to issue a temporary restraining order
against the execution of the Lapu-Lapu RTC Decision,
pending the case before it. Hence, the fact that the Manila
RTC Decision was implemented and executed first does not
negate the fact that the Lapu-Lapu RTC Decision was not only
rendered earlier, but had also attained finality earlier.
Furthermore, while both judgments reached the Court of
Appeals, only Civil Case No. 2203-L was passed upon on the
merits by this Court. In G.R. No. 141407, this Court resolved
LLDHCs petition for review on certiorari seeking to annul the
Court of Appeals Decision in CA-G.R. SP No. 50650. This
Court, in dismissing the petition, upheld the validity of the
Lapu-Lapu RTC Decision and declared that the Manila RTC
Decision cannot bind GMC. That decision became final and
executory way back on March 10, 2003.
While this Court cannot blame the parties for exhausting all
available remedies to obtain a favorable judgment, the issues
involved in this case should have been resolved upon the
finality of this Courts decision in G.R. No. 141407. As
pronounced by this Court in Villanueva v. Court of Appeals
125
:
The interest of the judicial system in preventing relitigation of
the same dispute recognizes that judicial resources are finite
and the number of cases that can be heard by the court is
limited. Every dispute that is reheard means that another will
be delayed. In modern times when court dockets are filled to
overflowing, this concern is of critical importance. x x x.
126

In summary, this Court finds the execution of the Lapu-Lapu
RTC Decision in Civil Case No. 2203-L to be in order. We
affirm the assailed Orders of March 11, 2004 and May 7, 2004,
which reiterate, among others, the October 23, 1997 Order
issued by the Lapu-Lapu RTC, directing the Register of Deeds
of Lapu-Lapu City to cancel the certificates of title of LLDHC
and to issue new ones in GMCs name. Whatever rights are
due LLDHC from GSIS as a result of the final judgment of the
Manila RTC in Civil Case No. R-82-3429, which we have
previously held to be binding between GSIS and LLDHC, may
be threshed out in an appropriate proceeding. Such
proceeding shall not further delay the execution of the Lapu-
Lapu RTC Decision.
WHEREFORE, in view of the foregoing, the petition in G.R.
No. 167000 is DENIED and the Decision dated November 25,
2004 and Resolution dated January 20, 2005 of the Twentieth
Division of the Court of Appeals are AFFIRMED. The petition
in G.R. No. 169971 is GRANTED and the Decision dated
September 23, 2005 of the Special Nineteenth Division of the
Court of Appeals is hereby REVERSED AND SET ASIDE.
SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO Associate Justice
G.R. No. 185918 April 18, 2012
LOCKHEED DETECTIVE AND WATCHMAN AGENCY, INC.,
Petitioner, vs. UNIVERSITY OF THE PHILIPPINES,
Respondent.
D E C I S I O N
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari under Rule 45 of
the 1997 Rules of Civil Procedure, as amended, assailing the
August 20, 2008 Amended Decision
1
and December 23, 2008
Resolution
2
of the Court of Appeals (CA) in CA-G.R. SP No.
91281.
The antecedent facts of the case are as follows:
Petitioner Lockheed Detective and Watchman Agency, Inc.
(Lockheed) entered into a contract for security services with
respondent University of the Philippines (UP).
In 1998, several security guards assigned to UP filed separate
complaints against Lockheed and UP for payment of
underpaid wages, 25% overtime pay, premium pay for rest
days and special holidays, holiday pay, service incentive leave
pay, night shift differentials, 13th month pay, refund of cash
bond, refund of deductions for the Mutual Benefits Aids
System (MBAS), unpaid wages from December 16-31, 1998,
and attorneys fees.
On February 16, 2000, the Labor Arbiter rendered a decision
as follows:
WHEREFORE, premises considered, respondents Lockheed
Detective and Watchman Agency, Inc. and UP as job
contractor and principal, respectively, are hereby declared to
be solidarily liable to complainants for the following claims of
the latter which are found meritorious.
Underpaid wages/salaries, premium pay for work on rest day
and special holiday, holiday pay, 5 days service incentive
leave pay, 13th month pay for 1998, refund of cash bond
(deducted at P50.00 per month from January to May 1996,
P100.00 per month from June 1996 and P200.00 from
November 1997), refund of deduction for Mutual Benefits Aids
System at the rate of P50.00 a month, and attorneys fees; in
the total amount of P1,184,763.12 broken down as follows per
attached computation of the Computation and [E]xamination
Unit of this Commission, which computation forms part of this
Decision:
1. JOSE SABALAS P77,983.62
2. TIRSO DOMASIAN 76,262.70
3. JUAN TAPEL 80,546.03
4. DINDO MURING 80,546.03
5. ALEXANDER ALLORDE 80,471.78
6. WILFREDO ESCOBAR 80,160.63
7. FERDINAND VELASQUEZ 78,595.53
8. ANTHONY GONZALES 76,869.97
9. SAMUEL ESCARIO 80,509.78
10. PEDRO FAILORINA 80,350.87
11. MATEO TANELA 70,590.58
12. JOB SABALAS 59,362.40
13. ANDRES DACANAYAN 77,403.73
14. EDDIE OLIVAR 77,403.73


P1,077,057.38
plus 10% attorneys fees

107,705.74

GRAND TOTAL AWARD P1,184,763.12
Third party respondent University of the Philippines is hereby
declared to be liable to Third Party Complainant and cross
claimant Lockheed Detective and Watchman Agency for the
unpaid legislated salary increases of the latters security
guards for the years 1996 to 1998, in the total amount of
P13,066,794.14, out of which amount the amounts due
complainants here shall be paid.
The other claims are hereby DISMISSED for lack of merit
(night shift differential and 13th month pay) or for having been
paid in the course of this proceedings (salaries for December
15-31, 1997 in the amount of P40,140.44).
The claims of Erlindo Collado, Rogelio Banjao and Amor
Banjao are hereby DISMISSED as amicably settled for and in
consideration of the amounts of P12,315.72, P12,271.77 and
P12,819.33, respectively.
SO ORDERED.
3

Both Lockheed and UP appealed the Labor Arbiters decision.
By Decision
4
dated April 12, 2002, the NLRC modified the
Labor Arbiters decision. The NLRC held:
WHEREFORE, the decision appealed from is hereby modified
as follows:
1. Complainants claims for premium pay for work on rest day
and special holiday, and 5 days service incentive leave pay,
are hereby dismissed for lack of basis.
2. The respondent University of the Philippines is still solidarily
liable with Lockheed in the payment of the rest of the claims
covering the period of their service contract.
The Financial Analyst is hereby ordered to recompute the
awards of the complainants in accordance with the foregoing
modifications.
SO ORDERED.
5

The complaining security guards and UP filed their respective
motions for reconsideration. On August 14, 2002, however, the
NLRC denied said motions.
As the parties did not appeal the NLRC decision, the same
became final and executory on October 26, 2002.
6
A writ of
execution was then issued but later quashed by the Labor
Arbiter on November 23, 2003 on motion of UP due to
disputes regarding the amount of the award. Later, however,
said order quashing the writ was reversed by the NLRC by
Resolution
7
dated June 8, 2004, disposing as follows:
WHEREFORE, premises considered, we grant this instant
appeal. The Order dated 23 November 2003 is hereby
reversed and set aside. The Labor Arbiter is directed to issue
a Writ of Execution for the satisfaction of the judgment award
in favor of Third-Party complainants.
SO ORDERED.
8

UP moved to reconsider the NLRC resolution. On December
28, 2004, the NLRC upheld its resolution but with modification
that the satisfaction of the judgment award in favor of
Lockheed will be only against the funds of UP which are not
identified as public funds.
The NLRC order and resolution having become final,
Lockheed filed a motion for the issuance of an alias writ of
execution. The same was granted on May 23, 2005.
9

On July 25, 2005, a Notice of Garnishment
10
was issued to
Philippine National Bank (PNB) UP Diliman Branch for the
satisfaction of the award of P12,142,522.69 (inclusive of
execution fee).
In a letter
11
dated August 9, 2005, PNB informed UP that it has
received an order of release dated August 8, 2005 issued by
the Labor Arbiter directing PNB UP Diliman Branch to release
to the NLRC Cashier, through the assigned NLRC Sheriff Max
L. Lago, the judgment award/amount of P12,142,522.69. PNB
likewise reminded UP that the bank only has 10 working days
from receipt of the order to deliver the garnished funds and
unless it receives a notice from UP or the NLRC before the
expiry of the 10-day period regarding the issuance of a court
order or writ of injunction discharging or enjoining the
implementation and execution of the Notice of Garnishment
and Writ of Execution, the bank shall be constrained to cause
the release of the garnished funds in favor of the NLRC.
On August 16, 2005, UP filed an Urgent Motion to Quash
Garnishment.
12
UP contended that the funds being subjected
to garnishment at PNB are government/public funds. As
certified by the University Accountant, the subject funds are
covered by Savings Account No. 275-529999-8, under the
name of UP System Trust Receipts, earmarked for Student
Guaranty Deposit, Scholarship Fund, Student Fund,
Publications, Research Grants, and Miscellaneous Trust
Account. UP argued that as public funds, the subject PNB
account cannot be disbursed except pursuant to an
appropriation required by law. The Labor Arbiter, however,
dismissed the urgent motion for lack of merit on August 30,
2005.
13

On September 2, 2005, the amount of P12,062,398.71 was
withdrawn by the sheriff from UPs PNB account.
14

On September 12, 2005, UP filed a petition for certiorari before
the CA based on the following grounds:
I.
The concept of "solidary liability" by an indirect employer
notwithstanding, respondent NLRC gravely abused its
discretion in a manner amounting to lack or excess of
jurisdiction by misusing such concept to justify the
garnishment by the executing Sheriff of public/government
funds belonging to UP.
II.
Respondents NLRC and Arbiter LORA acted without
jurisdiction or gravely abused their discretion in a manner
amounting to lack or excess of jurisdiction when, by means of
an Alias Writ of Execution against petitioner UP, they
authorized respondent Sheriff to garnish UPs public funds.
Similarly, respondent LORA gravely abused her discretion
when she resolved petitioners Motion to Quash Notice of
Garnishment addressed to, and intended for, the NLRC, and
when she unilaterally and arbitrarily disregarded an official
Certification that the funds garnished are public/government
funds, and thereby allowed respondent Sheriff to withdraw the
same from PNB.
III.
Respondents gravely abused their discretion in a manner
amounting to lack or excess of jurisdiction when they, despite
prior knowledge, effected the execution that caused
paralyzation and dislocation to petitioners governmental
functions.
15

On March 12, 2008, the CA rendered a decision
16
dismissing
UPs petition for certiorari. Citing Republic v. COCOFED,
17

which defines public funds as moneys belonging to the State
or to any political subdivisions of the State, more specifically
taxes, customs, duties and moneys raised by operation of law
for the support of the government or the discharge of its
obligations, the appellate court ruled that the funds sought to
be garnished do not seem to fall within the stated definition.
On reconsideration, however, the CA issued the assailed
Amended Decision. It held that without departing from its
findings that the funds covered in the savings account sought
to be garnished do not fall within the classification of public
funds, it reconsiders the dismissal of the petition in light of the
ruling in the case of National Electrification Administration v.
Morales
18
which mandates that all money claims against the
government must first be filed with the Commission on Audit
(COA).
Lockheed moved to reconsider the amended decision but the
same was denied in the assailed CA Resolution dated
December 23, 2008. The CA cited Manila International Airport
Authority v. Court of Appeals
19
which held that UP ranks with
MIAA, a government instrumentality exercising corporate
powers but not organized as a stock or non-stock corporation.
While said corporations are government instrumentalities, they
are loosely called government corporate entities but not
government-owned and controlled corporations in the strict
sense.
Hence this petition by Lockheed raising the following
arguments:
1. RESPONDENT UP IS A GOVERNMENT ENTITY WITH A
SEPARATE AND DISTINCT PERSONALITY FROM THE
NATIONAL GOVERNMENT AND HAS ITS OWN CHARTER
GRANTING IT THE RIGHT TO SUE AND BE SUED. IT
THEREFORE CANNOT AVAIL OF THE IMMUNITY FROM
SUIT OF THE GOVERNMENT. NOT HAVING IMMUNITY
FROM SUIT, RESPONDENT UP CAN BE HELD LIABLE AND
EXECUTION CAN THUS ENSUE.
2. MOREOVER, IF THE COURT LENDS IT ASSENT TO THE
INVOCATION OF THE DOCTRINE OF STATE IMMUNITY,
THIS WILL RESULT [IN] GRAVE INJUSTICE.
3. FURTHERMORE, THE PROTESTATIONS OF THE
RESPONDENT ARE TOO LATE IN THE DAY, AS THE
EXECUTION PROCEEDINGS HAVE ALREADY BEEN
TERMINATED.
20

Lockheed contends that UP has its own separate and distinct
juridical entity from the national government and has its own
charter. Thus, it can be sued and be held liable. Moreover,
Executive Order No. 714 entitled "Fiscal Control and
Management of the Funds of UP" recognizes that "as an
institution of higher learning, UP has always granted full
management and control of its affairs including its financial
affairs."
21
Therefore, it cannot shield itself from its private
contractual liabilities by simply invoking the public character of
its funds. Lockheed also cites several cases wherein it was
ruled that funds of public corporations which can sue and be
sued were not exempt from garnishment.
Lockheed likewise argues that the rulings in the NEA and
MIAA cases are inapplicable. It contends that UP is not
similarly situated with NEA because the jurisdiction of COA
over the accounts of UP is only on a post-audit basis. As to the
MIAA case, the liability of MIAA pertains to the real estate
taxes imposed by the City of Paranaque while the obligation of
UP in this case involves a private contractual obligation.
Lockheed also argues that the declaration in MIAA specifically
citing UP was mere obiter dictum.
Lockheed moreover submits that UP cannot invoke state
immunity to justify and perpetrate an injustice. UP itself
admitted its liability and thus it should not be allowed to renege
on its contractual obligations. Lockheed contends that this
might create a ruinous precedent that would likely affect the
relationship between the public and private sectors.
Lastly, Lockheed contends that UP cannot anymore seek the
quashal of the writ of execution and notice of garnishment as
they are already fait accompli.
For its part, UP contends that it did not invoke the doctrine of
state immunity from suit in the proceedings a quo and in fact, it
did not object to being sued before the labor department. It
maintains, however, that suability does not necessarily mean
liability. UP argues that the CA correctly applied the NEA
ruling when it held that all money claims must be filed with the
COA.
As to alleged injustice that may result for invocation of state
immunity from suit, UP reiterates that it consented to be sued
and even participated in the proceedings below. Lockheed
cannot now claim that invocation of state immunity, which UP
did not invoke in the first place, can result in injustice.
On the fait accompli argument, UP argues that Lockheed
cannot wash its hands from liability for the consummated
garnishment and execution of UPs trust fund in the amount of
P12,062,398.71. UP cites that damage was done to UP and
the beneficiaries of the fund when said funds, which were
earmarked for specific educational purposes, were misapplied,
for instance, to answer for the execution fee of P120,123.98
unilaterally stipulated by the sheriff. Lockheed, being the party
which procured the illegal garnishment, should be held
primarily liable. The mere fact that the CA set aside the writ of
garnishment confirms the liability of Lockheed to reimburse
and indemnify in accordance with law.
The petition has no merit.
We agree with UP that there was no point for Lockheed in
discussing the doctrine of state immunity from suit as this was
never an issue in this case. Clearly, UP consented to be sued
when it participated in the proceedings below. What UP
questions is the hasty garnishment of its funds in its PNB
account.
This Court finds that the CA correctly applied the NEA case.
Like NEA, UP is a juridical personality separate and distinct
from the government and has the capacity to sue and be sued.
Thus, also like NEA, it cannot evade execution, and its funds
may be subject to garnishment or levy. However, before
execution may be had, a claim for payment of the judgment
award must first be filed with the COA. Under Commonwealth
Act No. 327,
22
as amended by Section 26 of P.D. No. 1445,
23
it
is the COA which has primary jurisdiction to examine, audit
and settle "all debts and claims of any sort" due from or owing
the Government or any of its subdivisions, agencies and
instrumentalities, including government-owned or controlled
corporations and their subsidiaries. With respect to money
claims arising from the implementation of Republic Act No.
6758,
24
their allowance or disallowance is for COA to decide,
subject only to the remedy of appeal by petition for certiorari to
this Court.
25
1wphi1
We cannot subscribe to Lockheeds argument that NEA is not
similarly situated with UP because the COAs jurisdiction over
the latter is only on post-audit basis. A reading of the pertinent
Commonwealth Act provision clearly shows that it does not
make any distinction as to which of the government
subdivisions, agencies and instrumentalities, including
government-owned or controlled corporations and their
subsidiaries whose debts should be filed before the COA.
As to the fait accompli argument of Lockheed, contrary to its
claim that there is nothing that can be done since the funds of
UP had already been garnished, since the garnishment was
erroneously carried out and did not go through the proper
procedure (the filing of a claim with the COA), UP is entitled to
reimbursement of the garnished funds plus interest of 6% per
annum, to be computed from the time of judicial demand to be
reckoned from the time UP filed a petition for certiorari before
the CA which occurred right after the withdrawal of the
garnished funds from PNB.
WHEREFORE, the petition for review on certiorari is DENIED
for lack of merit. Petitioner Lockheed Detective and Watchman
Agency, Inc. is ordered to REIMBURSE respondent University
of the Philippines the amount of P12,062,398.71 plus interest
of 6% per annum, to be computed from September 12, 2005
up to the finality of this Decision, and 12% interest on the
entire amount from date of finality of this Decision until fully
paid.
No pronouncement as to costs.
SO ORDERED.
MARTIN S. VILLARAMA, JR. Associate Justice
G.R. No. 171182 August 23, 2012
UNIVERSITY OF THE PHILIPPINES, JOSE V. ABUEVA,
RAUL P. DE GUZMAN, RUBEN P. ASPIRAS, EMMANUEL
P. BELLO, WILFREDO P. DAVID, CASIANO S. ABRIGO,
and JOSEFINA R. LICUANAN, Petitioners, vs. HON.
AGUSTIN S. DIZON, his capacity as Presiding Judge of the
Regional Trial Court of Quezon City, Branch 80, STERN
BUILDERS, INC., and SERVILLANO DELA CRUZ,
Respondents.
D E C I S I O N
BERSAMIN, J.:
Trial judges should not immediately issue writs of execution or
garnishment against the Government or any of its
subdivisions, agencies and instrumentalities to enforce money
judgments.
1
They should bear in mind that the primary
jurisdiction to examine, audit and settle all claims of any sort
due from the Government or any of its subdivisions, agencies
and instrumentalities pertains to the Commission on Audit
(COA) pursuant to Presidential Decree No. 1445 (Government
Auditing Code of the Philippines).
The Case
On appeal by the University of the Philippines and its then
incumbent officials (collectively, the UP) is the decision
promulgated on September 16, 2005,
2
whereby the Court of
Appeals (CA) upheld the order of the Regional Trial Court
(RTC), Branch 80, in Quezon City that directed the
garnishment of public funds amounting to P16,370,191.74
belonging to the UP to satisfy the writ of execution issued to
enforce the already final and executory judgment against the
UP.
Antecedents
On August 30, 1990, the UP, through its then President Jose
V. Abueva, entered into a General Construction Agreement
with respondent Stern Builders Corporation (Stern Builders),
represented by its President and General Manager Servillano
dela Cruz, for the construction of the extension building and
the renovation of the College of Arts and Sciences Building in
the campus of the University of the Philippines in Los Baos
(UPLB).
3

In the course of the implementation of the contract, Stern
Builders submitted three progress billings corresponding to the
work accomplished, but the UP paid only two of the billings.
The third billing worth P273,729.47 was not paid due to its
disallowance by the Commission on Audit (COA). Despite the
lifting of the disallowance, the UP failed to pay the billing,
prompting Stern Builders and dela Cruz to sue the UP and its
co-respondent officials to collect the unpaid billing and to
recover various damages. The suit, entitled Stern Builders
Corporation and Servillano R. Dela Cruz v. University of the
Philippines Systems, Jose V. Abueva, Raul P. de Guzman,
Ruben P. Aspiras, Emmanuel P. Bello, Wilfredo P. David,
Casiano S. Abrigo, and Josefina R. Licuanan, was docketed
as Civil Case No. Q-93-14971 of the Regional Trial Court in
Quezon City (RTC).
4

After trial, on November 28, 2001, the RTC rendered its
decision in favor of the plaintiffs,
5
viz:
Wherefore, in the light of the foregoing, judgment is hereby
rendered in favor of the plaintiff and against the defendants
ordering the latter to pay plaintiff, jointly and severally, the
following, to wit:
1. P503,462.74 amount of the third billing, additional
accomplished work and retention money
2. P5,716,729.00 in actual damages
3. P10,000,000.00 in moral damages
4. P150,000.00 and P1,500.00 per appearance as attorneys
fees; and
5. Costs of suit.
SO ORDERED.
Following the RTCs denial of its motion for reconsideration on
May 7, 2002,
6
the UP filed a notice of appeal on June 3, 2002.
7

Stern Builders and dela Cruz opposed the notice of appeal on
the ground of its filing being belated, and moved for the
execution of the decision. The UP countered that the notice of
appeal was filed within the reglementary period because the
UPs Office of Legal Affairs (OLS) in Diliman, Quezon City
received the order of denial only on May 31, 2002. On
September 26, 2002, the RTC denied due course to the notice
of appeal for having been filed out of time and granted the
private respondents motion for execution.
8

The RTC issued the writ of execution on October 4, 2002,
9
and
the sheriff of the RTC served the writ of execution and notice
of demand upon the UP, through its counsel, on October 9,
2002.
10
The UP filed an urgent motion to reconsider the order
dated September 26, 2002, to quash the writ of execution
dated October 4, 2002, and to restrain the proceedings.
11

However, the RTC denied the urgent motion on April 1, 2003.
12

On June 24, 2003, the UP assailed the denial of due course to
its appeal through a petition for certiorari in the Court of
Appeals (CA), docketed as CA-G.R. No. 77395.
13

On February 24, 2004, the CA dismissed the petition for
certiorari upon finding that the UPs notice of appeal had been
filed late,
14
stating:
Records clearly show that petitioners received a copy of the
Decision dated November 28, 2001 and January 7, 2002, thus,
they had until January 22, 2002 within which to file their
appeal. On January 16, 2002 or after the lapse of nine (9)
days, petitioners through their counsel Atty. Nolasco filed a
Motion for Reconsideration of the aforesaid decision, hence,
pursuant to the rules, petitioners still had six (6) remaining
days to file their appeal. As admitted by the petitioners in their
petition (Rollo, p. 25), Atty. Nolasco received a copy of the
Order denying their motion for reconsideration on May 17,
2002, thus, petitioners still has until May 23, 2002 (the
remaining six (6) days) within which to file their appeal.
Obviously, petitioners were not able to file their Notice of
Appeal on May 23, 2002 as it was only filed on June 3, 2002.
In view of the said circumstances, We are of the belief and so
holds that the Notice of Appeal filed by the petitioners was
really filed out of time, the same having been filed seventeen
(17) days late of the reglementary period. By reason of which,
the decision dated November 28, 2001 had already become
final and executory. "Settled is the rule that the perfection of an
appeal in the manner and within the period permitted by law is
not only mandatory but jurisdictional, and failure to perfect that
appeal renders the challenged judgment final and executory.
This is not an empty procedural rule but is grounded on
fundamental considerations of public policy and sound
practice." (Rams Studio and Photographic Equipment, Inc. vs.
Court of Appeals, 346 SCRA 691, 696). Indeed, Atty. Nolasco
received the order of denial of the Motion for Reconsideration
on May 17, 2002 but filed a Notice of Appeal only on June 3,
3003. As such, the decision of the lower court ipso facto
became final when no appeal was perfected after the lapse of
the reglementary period. This procedural caveat cannot be
trifled with, not even by the High Court.
15

The UP sought a reconsideration, but the CA denied the UPs
motion for reconsideration on April 19, 2004.
16

On May 11, 2004, the UP appealed to the Court by petition for
review on certiorari (G.R. No. 163501).
On June 23, 2004, the Court denied the petition for review.
17

The UP moved for the reconsideration of the denial of its
petition for review on August 29, 2004,
18
but the Court denied
the motion on October 6, 2004.
19
The denial became final and
executory on November 12, 2004.
20

In the meanwhile that the UP was exhausting the available
remedies to overturn the denial of due course to the appeal
and the issuance of the writ of execution, Stern Builders and
dela Cruz filed in the RTC their motions for execution despite
their previous motion having already been granted and despite
the writ of execution having already issued. On June 11, 2003,
the RTC granted another motion for execution filed on May 9,
2003 (although the RTC had already issued the writ of
execution on October 4, 2002).
21

On June 23, 2003 and July 25, 2003, respectively, the sheriff
served notices of garnishment on the UPs depository banks,
namely: Land Bank of the Philippines (Buendia Branch) and
the Development Bank of the Philippines (DBP),
Commonwealth Branch.
22
The UP assailed the garnishment
through an urgent motion to quash the notices of
garnishment;
23
and a motion to quash the writ of execution
dated May 9, 2003.
24

On their part, Stern Builders and dela Cruz filed their ex parte
motion for issuance of a release order.
25

On October 14, 2003, the RTC denied the UPs urgent motion
to quash, and granted Stern Builders and dela Cruzs ex parte
motion for issuance of a release order.
26

The UP moved for the reconsideration of the order of October
14, 2003, but the RTC denied the motion on November 7,
2003.
27

On January 12, 2004, Stern Builders and dela Cruz again
sought the release of the garnished funds.
28
Despite the UPs
opposition,
29
the RTC granted the motion to release the
garnished funds on March 16, 2004.
30
On April 20, 2004,
however, the RTC held in abeyance the enforcement of the
writs of execution issued on October 4, 2002 and June 3, 2003
and all the ensuing notices of garnishment, citing Section 4,
Rule 52, Rules of Court, which provided that the pendency of a
timely motion for reconsideration stayed the execution of the
judgment.
31

On December 21, 2004, the RTC, through respondent Judge
Agustin S. Dizon, authorized the release of the garnished
funds of the UP,
32
to wit:
WHEREFORE, premises considered, there being no more
legal impediment for the release of the garnished amount in
satisfaction of the judgment award in the instant case, let the
amount garnished be immediately released by the
Development Bank of the Philippines, Commonwealth Branch,
Quezon City in favor of the plaintiff.
SO ORDERED.
The UP was served on January 3, 2005 with the order of
December 21, 2004 directing DBP to release the garnished
funds.
33

On January 6, 2005, Stern Builders and dela Cruz moved to
cite DBP in direct contempt of court for its non-compliance with
the order of release.
34

Thereupon, on January 10, 2005, the UP brought a petition for
certiorari in the CA to challenge the jurisdiction of the RTC in
issuing the order of December 21, 2004 (CA-G.R. CV No.
88125).
35
Aside from raising the denial of due process, the UP
averred that the RTC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in ruling that there
was no longer any legal impediment to the release of the
garnished funds. The UP argued that government funds and
properties could not be seized by virtue of writs of execution or
garnishment, as held in Department of Agriculture v. National
Labor Relations Commission,
36
and citing Section 84 of
Presidential Decree No. 1445 to the effect that "revenue funds
shall not be paid out of any public treasury or depository
except in pursuance of an appropriation law or other specific
statutory authority;" and that the order of garnishment clashed
with the ruling in University of the Philippines Board of
Regents v. Ligot-Telan
37
to the effect that the funds belonging
to the UP were public funds.
On January 19, 2005, the CA issued a temporary restraining
order (TRO) upon application by the UP.
38

On March 22, 2005, Stern Builders and dela Cruz filed in the
RTC their amended motion for sheriffs assistance to
implement the release order dated December 21, 2004, stating
that the 60-day period of the TRO of the CA had already
lapsed.
39
The UP opposed the amended motion and countered
that the implementation of the release order be suspended.
40

On May 3, 2005, the RTC granted the amended motion for
sheriffs assistance and directed the sheriff to proceed to the
DBP to receive the check in satisfaction of the judgment.
41

The UP sought the reconsideration of the order of May 3,
2005.
42

On May 16, 2005, DBP filed a motion to consign the check
representing the judgment award and to dismiss the motion to
cite its officials in contempt of court.
43

On May 23, 2005, the UP presented a motion to withhold the
release of the payment of the judgment award.
44

On July 8, 2005, the RTC resolved all the pending matters,
45

noting that the DBP had already delivered to the sheriff
Managers Check No. 811941 for P16,370,191.74
representing the garnished funds payable to the order of Stern
Builders and dela Cruz as its compliance with the RTCs order
dated December 21, 2004.
46
However, the RTC directed in the
same order that Stern Builders and dela Cruz should not
encash the check or withdraw its amount pending the final
resolution of the UPs petition for certiorari, to wit:
47

To enable the money represented in the check in question
(No. 00008119411) to earn interest during the pendency of the
defendant University of the Philippines application for a writ of
injunction with the Court of Appeals the same may now be
deposited by the plaintiff at the garnishee Bank (Development
Bank of the Philippines), the disposition of the amount
represented therein being subject to the final outcome of the
case of the University of the Philippines et al., vs. Hon. Agustin
S. Dizon et al., (CA G.R. 88125) before the Court of Appeals.
Let it be stated herein that the plaintiff is not authorized to
encash and withdraw the amount represented in the check in
question and enjoy the same in the fashion of an owner during
the pendency of the case between the parties before the Court
of Appeals which may or may not be resolved in plaintiffs
favor.
With the end in view of seeing to it that the check in question is
deposited by the plaintiff at the Development Bank of the
Philippines (garnishee bank), Branch Sheriff Herlan Velasco is
directed to accompany and/or escort the plaintiff in making the
deposit of the check in question.
SO ORDERED.
On September 16, 2005, the CA promulgated its assailed
decision dismissing the UPs petition for certiorari, ruling that
the UP had been given ample opportunity to contest the
motion to direct the DBP to deposit the check in the name of
Stern Builders and dela Cruz; and that the garnished funds
could be the proper subject of garnishment because they had
been already earmarked for the project, with the UP holding
the funds only in a fiduciary capacity,
48
viz:
Petitioners next argue that the UP funds may not be seized for
execution or garnishment to satisfy the judgment award. Citing
Department of Agriculture vs. NLRC, University of the
Philippines Board of Regents vs. Hon. Ligot-Telan, petitioners
contend that UP deposits at Land Bank and the Development
Bank of the Philippines, being government funds, may not be
released absent an appropriations bill from Congress.
The argument is specious. UP entered into a contract with
private respondents for the expansion and renovation of the
Arts and Sciences Building of its campus in Los Baos,
Laguna. Decidedly, there was already an appropriations
earmarked for the said project. The said funds are retained by
UP, in a fiduciary capacity, pending completion of the
construction project.
We agree with the trial Court [sic] observation on this score:
"4. Executive Order No. 109 (Directing all National
Government Agencies to Revert Certain Accounts Payable to
the Cumulative Result of Operations of the National
Government and for Other Purposes) Section 9. Reversion of
Accounts Payable, provides that, all 1995 and prior years
documented accounts payable and all undocumented
accounts regardless of the year they were incurred shall be
reverted to the Cumulative Result of Operations of the
National Government (CROU). This shall apply to accounts
payable of all funds, except fiduciary funds, as long as the
purpose for which the funds were created have not been
accomplished and accounts payable under foreign assisted
projects for the duration of the said project. In this regard, the
Department of Budget and Management issued Joint-Circular
No. 99-6 4.0 (4.3) Procedural Guidelines which provides that
all accounts payable that reverted to the CROU may be
considered for payment upon determination thru administrative
process, of the existence, validity and legality of the claim.
Thus, the allegation of the defendants that considering no
appropriation for the payment of any amount awarded to
plaintiffs appellee the funds of defendant-appellants may not
be seized pursuant to a writ of execution issued by the regular
court is misplaced. Surely when the defendants and the
plaintiff entered into the General Construction of Agreement
there is an amount already allocated by the latter for the said
project which is no longer subject of future appropriation."
49

After the CA denied their motion for reconsideration on
December 23, 2005, the petitioners appealed by petition for
review.
Matters Arising During the Pendency of the Petition
On January 30, 2006, Judge Dizon of the RTC (Branch 80)
denied Stern Builders and dela Cruzs motion to withdraw the
deposit, in consideration of the UPs intention to appeal to the
CA,
50
stating:
Since it appears that the defendants are intending to file a
petition for review of the Court of Appeals resolution in CA-
G.R. No. 88125 within the reglementary period of fifteen (15)
days from receipt of resolution, the Court agrees with the
defendants stand that the granting of plaintiffs subject motion
is premature.
Let it be stated that what the Court meant by its Order dated
July 8, 2005 which states in part that the "disposition of the
amount represented therein being subject to the final outcome
of the case of the University of the Philippines, et. al., vs. Hon.
Agustin S. Dizon et al., (CA G.R. No. 88125 before the Court
of Appeals) is that the judgment or resolution of said court has
to be final and executory, for if the same will still be elevated to
the Supreme Court, it will not attain finality yet until the highest
court has rendered its own final judgment or resolution.
51

However, on January 22, 2007, the UP filed an Urgent
Application for A Temporary Restraining Order and/or A Writ of
Preliminary Injunction,
52
averring that on January 3, 2007,
Judge Maria Theresa dela Torre-Yadao (who had meanwhile
replaced Judge Dizon upon the latters appointment to the CA)
had issued another order allowing Stern Builders and dela
Cruz to withdraw the deposit,
53
to wit:
It bears stressing that defendants liability for the payment of
the judgment obligation has become indubitable due to the
final and executory nature of the Decision dated November 28,
2001. Insofar as the payment of the [sic] judgment obligation is
concerned, the Court believes that there is nothing more the
defendant can do to escape liability. It is observed that there is
nothing more the defendant can do to escape liability. It is
observed that defendant U.P. System had already exhausted
all its legal remedies to overturn, set aside or modify the
decision (dated November 28, 2001( rendered against it. The
way the Court sees it, defendant U.P. Systems petition before
the Supreme Court concerns only with the manner by which
said judgment award should be satisfied. It has nothing to do
with the legality or propriety thereof, although it prays for the
deletion of [sic] reduction of the award of moral damages.
It must be emphasized that this Courts finding, i.e., that there
was sufficient appropriation earmarked for the project, was
upheld by the Court of Appeals in its decision dated
September 16, 2005. Being a finding of fact, the Supreme
Court will, ordinarily, not disturb the same was said Court is
not a trier of fact. Such being the case, defendants arguments
that there was no sufficient appropriation for the payment of
the judgment obligation must fail.
While it is true that the former Presiding Judge of this Court in
its Order dated January 30, 2006 had stated that:
Let it be stated that what the Court meant by its Order dated
July 8, 2005 which states in part that the "disposition of the
amount represented therein being subject to the final outcome
of the case of the University of the Philippines, et. al., vs. Hon.
Agustin S. Dizon et al., (CA G.R. No. 88125 before the Court
of Appeals) is that the judgment or resolution of said court has
to be final and executory, for if the same will still be elevated to
the Supreme Court, it will not attain finality yet until the highest
court has rendered its own final judgment or resolution.
it should be noted that neither the Court of Appeals nor the
Supreme Court issued a preliminary injunction enjoining the
release or withdrawal of the garnished amount. In fact, in its
present petition for review before the Supreme Court, U.P.
System has not prayed for the issuance of a writ of preliminary
injunction. Thus, the Court doubts whether such writ is
forthcoming.
The Court honestly believes that if defendants petition
assailing the Order of this Court dated December 31, 2004
granting the motion for the release of the garnished amount
was meritorious, the Court of Appeals would have issued a
writ of injunction enjoining the same. Instead, said appellate
court not only refused to issue a wit of preliminary injunction
prayed for by U.P. System but denied the petition, as well.
54

The UP contended that Judge Yadao thereby effectively
reversed the January 30, 2006 order of Judge Dizon
disallowing the withdrawal of the garnished amount until after
the decision in the case would have become final and
executory.
Although the Court issued a TRO on January 24, 2007 to
enjoin Judge Yadao and all persons acting pursuant to her
authority from enforcing her order of January 3, 2007,
55
it
appears that on January 16, 2007, or prior to the issuance of
the TRO, she had already directed the DBP to forthwith
release the garnished amount to Stern Builders and dela Cruz;
56
and that DBP had forthwith complied with the order on
January 17, 2007 upon the sheriffs service of the order of
Judge Yadao.
57

These intervening developments impelled the UP to file in this
Court a supplemental petition on January 26, 2007,
58
alleging
that the RTC (Judge Yadao) gravely erred in ordering the
immediate release of the garnished amount despite the
pendency of the petition for review in this Court.
The UP filed a second supplemental petition
59
after the RTC
(Judge Yadao) denied the UPs motion for the redeposit of the
withdrawn amount on April 10, 2007,
60
to wit:
This resolves defendant U.P. Systems Urgent Motion to
Redeposit Judgment Award praying that plaintiffs be directed
to redeposit the judgment award to DBP pursuant to the
Temporary Restraining Order issued by the Supreme Court.
Plaintiffs opposed the motion and countered that the
Temporary Restraining Order issued by the Supreme Court
has become moot and academic considering that the act
sought to be restrained by it has already been performed.
They also alleged that the redeposit of the judgment award
was no longer feasible as they have already spent the same.
It bears stressing, if only to set the record straight, that this
Court did not in its Order dated January 3, 2007 (the
implementation of which was restrained by the Supreme Court
in its Resolution dated January 24, 2002) direct that that
garnished amount "be deposited with the garnishee bank
(Development Bank of the Philippines)". In the first place, there
was no need to order DBP to make such deposit, as the
garnished amount was already deposited in the account of
plaintiffs with the DBP as early as May 13, 2005. What the
Court granted in its Order dated January 3, 2007 was plaintiffs
motion to allow the release of said deposit. It must be recalled
that the Court found plaintiffs motion meritorious and, at that
time, there was no restraining order or preliminary injunction
from either the Court of Appeals or the Supreme Court which
could have enjoined the release of plaintiffs deposit. The
Court also took into account the following factors:
a) the Decision in this case had long been final and executory
after it was rendered on November 28, 2001;
b) the propriety of the dismissal of U.P. Systems appeal was
upheld by the Supreme Court;
c) a writ of execution had been issued;
d) defendant U.P. Systems deposit with DBP was garnished
pursuant to a lawful writ of execution issued by the Court; and
e) the garnished amount had already been turned over to the
plaintiffs and deposited in their account with DBP.
The garnished amount, as discussed in the Order dated
January 16, 2007, was already owned by the plaintiffs, having
been delivered to them by the Deputy Sheriff of this Court
pursuant to par. (c), Section 9, Rule 39 of the 1997 Rules of
Civil Procedure. Moreover, the judgment obligation has
already been fully satisfied as per Report of the Deputy Sheriff.
Anent the Temporary Restraining Order issued by the
Supreme Court, the same has become functus oficio, having
been issued after the garnished amount had been released to
the plaintiffs. The judgment debt was released to the plaintiffs
on January 17, 2007, while the Temporary Restraining Order
issued by the Supreme Court was received by this Court on
February 2, 2007. At the time of the issuance of the
Restraining Order, the act sought to be restrained had already
been done, thereby rendering the said Order ineffectual.
After a careful and thorough study of the arguments advanced
by the parties, the Court is of the considered opinion that there
is no legal basis to grant defendant U.P. Systems motion to
redeposit the judgment amount. Granting said motion is not
only contrary to law, but it will also render this Courts final
executory judgment nugatory. Litigation must end and
terminate sometime and somewhere, and it is essential to an
effective administration of justice that once a judgment has
become final the issue or cause involved therein should be laid
to rest. This doctrine of finality of judgment is grounded on
fundamental considerations of public policy and sound
practice. In fact, nothing is more settled in law than that once a
judgment attains finality it thereby becomes immutable and
unalterable. It may no longer be modified in any respect, even
if the modification is meant to correct what is perceived to be
an erroneous conclusion of fact or law, and regardless of
whether the modification is attempted to be made by the court
rendering it or by the highest court of the land.
WHEREFORE, premises considered, finding defendant U.P.
Systems Urgent Motion to Redeposit Judgment Award devoid
of merit, the same is hereby DENIED.
SO ORDERED.
Issues
The UP now submits that:
I
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN
DISMISSING THE PETITION, ALLOWING IN EFFECT THE
GARNISHMENT OF UP FUNDS, WHEN IT RULED THAT
FUNDS HAVE ALREADY BEEN EARMARKED FOR THE
CONSTRUCTION PROJECT; AND THUS, THERE IS NO
NEED FOR FURTHER APPROPRIATIONS.
II
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN
ALLOWING GARNISHMENT OF A STATE UNIVERSITYS
FUNDS IN VIOLATION OF ARTICLE XIV, SECTION 5(5) OF
THE CONSTITUTION.
III
IN THE ALTERNATIVE, THE UNIVERSITY INVOKES
EQUITY AND THE REVIEW POWERS OF THIS
HONORABLE COURT TO MODIFY, IF NOT TOTALLY
DELETE THE AWARD OF P10 MILLION AS MORAL
DAMAGES TO RESPONDENTS.
IV
THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN
ORDERING THE IMMEDIATE RELEASE OF THE
JUDGMENT AWARD IN ITS ORDER DATED 3 JANUARY
2007 ON THE GROUND OF EQUITY AND JUDICIAL
COURTESY.
V
THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN
ORDERING THE IMMEDIATE RELEASE OF THE
JUDGMENT AWARD IN ITS ORDER DATED 16 JANUARY
2007 ON THE GROUND THAT PETITIONER UNIVERSITY
STILL HAS A PENDING MOTION FOR RECONSIDERATION
OF THE ORDER DATED 3 JANUARY 2007.
VI
THE RTC-BRANCH 80 COMMITTED GRAVE ERROR IN
NOT ORDERING THE REDEPOSIT OF THE GARNISHED
AMOUNT TO THE DBP IN VIOLATION OF THE CLEAR
LANGUAGE OF THE SUPREME COURT RESOLUTION
DATED 24 JANUARY 2007.
The UP argues that the amount earmarked for the construction
project had been purposely set aside only for the aborted
project and did not include incidental matters like the awards
of actual damages, moral damages and attorneys fees. In
support of its argument, the UP cited Article 12.2 of the
General Construction Agreement, which stipulated that no
deductions would be allowed for the payment of claims,
damages, losses and expenses, including attorneys fees, in
case of any litigation arising out of the performance of the
work. The UP insists that the CA decision was inconsistent
with the rulings in Commissioner of Public Highways v. San
Diego
61
and Department of Agriculture v. NLRC
62
to the effect
that government funds and properties could not be seized
under writs of execution or garnishment to satisfy judgment
awards.
Furthermore, the UP contends that the CA contravened
Section 5, Article XIV of the Constitution by allowing the
garnishment of UP funds, because the garnishment resulted in
a substantial reduction of the UPs limited budget allocated for
the remuneration, job satisfaction and fulfillment of the best
available teachers; that Judge Yadao should have exhibited
judicial courtesy towards the Court due to the pendency of the
UPs petition for review; and that she should have also
desisted from declaring that the TRO issued by this Court had
become functus officio.
Lastly, the UP states that the awards of actual damages of
P5,716,729.00 and moral damages of P10 million should be
reduced, if not entirely deleted, due to its being
unconscionable, inequitable and detrimental to public service.
In contrast, Stern Builders and dela Cruz aver that the petition
for review was fatally defective for its failure to mention the
other cases upon the same issues pending between the
parties (i.e., CA-G.R. No. 77395 and G.R No. 163501); that
the UP was evidently resorting to forum shopping, and to
delaying the satisfaction of the final judgment by the filing of its
petition for review; that the ruling in Commissioner of Public
Works v. San Diego had no application because there was an
appropriation for the project; that the UP retained the funds
allotted for the project only in a fiduciary capacity; that the
contract price had been meanwhile adjusted to
P22,338,553.25, an amount already more than sufficient to
cover the judgment award; that the UPs prayer to reduce or
delete the award of damages had no factual basis, because
they had been gravely wronged, had been deprived of their
source of income, and had suffered untold miseries,
discomfort, humiliation and sleepless years; that dela Cruz had
even been constrained to sell his house, his equipment and
the implements of his trade, and together with his family had
been forced to live miserably because of the wrongful
actuations of the UP; and that the RTC correctly declared the
Courts TRO to be already functus officio by reason of the
withdrawal of the garnished amount from the DBP.
The decisive issues to be considered and passed upon are,
therefore:
(a) whether the funds of the UP were the proper subject of
garnishment in order to satisfy the judgment award; and (b)
whether the UPs prayer for the deletion of the awards of
actual damages of P5,716,729.00, moral damages of
P10,000,000.00 and attorneys fees of P150,000.00 plus
P1,500.00 per appearance could be granted despite the
finality of the judgment of the RTC.
Ruling
The petition for review is meritorious.
I. UPs funds, being government funds, are not subject to
garnishment
The UP was founded on June 18, 1908 through Act 1870 to
provide advanced instruction in literature, philosophy, the
sciences, and arts, and to give professional and technical
training to deserving students.
63
Despite its establishment as a
body corporate,
64
the UP remains to be a "chartered
institution"
65
performing a legitimate government function. It is
an institution of higher learning, not a corporation established
for profit and declaring any dividends.
66
In enacting Republic
Act No. 9500 (The University of the Philippines Charter of
2008), Congress has declared the UP as the national
university
67
"dedicated to the search for truth and knowledge
as well as the development of future leaders."
68

Irrefragably, the UP is a government instrumentality,
69

performing the States constitutional mandate of promoting
quality and accessible education.
70
As a government
instrumentality, the UP administers special funds sourced from
the fees and income enumerated under Act No. 1870 and
Section 1 of Executive Order No. 714,
71
and from the yearly
appropriations, to achieve the purposes laid down by Section 2
of Act 1870, as expanded in Republic Act No. 9500.
72
All the
funds going into the possession of the UP, including any
interest accruing from the deposit of such funds in any banking
institution, constitute a "special trust fund," the disbursement of
which should always be aligned with the UPs mission and
purpose,
73
and should always be subject to auditing by the
COA.
74

Presidential Decree No. 1445 defines a "trust fund" as a fund
that officially comes in the possession of an agency of the
government or of a public officer as trustee, agent or
administrator, or that is received for the fulfillment of some
obligation.
75
A trust fund may be utilized only for the "specific
purpose for which the trust was created or the funds
received."
76

The funds of the UP are government funds that are public in
character. They include the income accruing from the use of
real property ceded to the UP that may be spent only for the
attainment of its institutional objectives.
77
Hence, the funds
subject of this action could not be validly made the subject of
the RTCs writ of execution or garnishment. The adverse
judgment rendered against the UP in a suit to which it had
impliedly consented was not immediately enforceable by
execution against the UP,
78
because suability of the State did
not necessarily mean its liability.
79

A marked distinction exists between suability of the State and
its liability. As the Court succinctly stated in Municipality of San
Fernando, La Union v. Firme:
80

A distinction should first be made between suability and
liability. "Suability depends on the consent of the state to be
sued, liability on the applicable law and the established facts.
The circumstance that a state is suable does not necessarily
mean that it is liable; on the other hand, it can never be held
liable if it does not first consent to be sued. Liability is not
conceded by the mere fact that the state has allowed itself to
be sued. When the state does waive its sovereign immunity, it
is only giving the plaintiff the chance to prove, if it can, that the
defendant is liable.
Also, in Republic v. Villasor,
81
where the issuance of an alias
writ of execution directed against the funds of the Armed
Forces of the Philippines to satisfy a final and executory
judgment was nullified, the Court said:
xxx The universal rule that where the State gives its consent to
be sued by private parties either by general or special law, it
may limit claimants action "only up to the completion of
proceedings anterior to the stage of execution" and that the
power of the Courts ends when the judgment is rendered,
since government funds and properties may not be seized
under writs of execution or garnishment to satisfy such
judgments, is based on obvious considerations of public
policy. Disbursements of public funds must be covered by the
corresponding appropriation as required by law. The functions
and public services rendered by the State cannot be allowed
to be paralyzed or disrupted by the diversion of public funds
from their legitimate and specific objects, as appropriated by
law.
The UP correctly submits here that the garnishment of its
funds to satisfy the judgment awards of actual and moral
damages (including attorneys fees) was not validly made if
there was no special appropriation by Congress to cover the
liability. It was, therefore, legally unwarranted for the CA to
agree with the RTCs holding in the order issued on April 1,
2003 that no appropriation by Congress to allocate and set
aside the payment of the judgment awards was necessary
because "there (were) already an appropriations (sic)
earmarked for the said project."
82
The CA and the RTC
thereby unjustifiably ignored the legal restriction imposed on
the trust funds of the Government and its agencies and
instrumentalities to be used exclusively to fulfill the purposes
for which the trusts were created or for which the funds were
received except upon express authorization by Congress or by
the head of a government agency in control of the funds, and
subject to pertinent budgetary laws, rules and regulations.
83

Indeed, an appropriation by Congress was required before the
judgment that rendered the UP liable for moral and actual
damages (including attorneys fees) would be satisfied
considering that such monetary liabilities were not covered by
the "appropriations earmarked for the said project." The
Constitution strictly mandated that "(n)o money shall be paid
out of the Treasury except in pursuance of an appropriation
made by law."
84

II COA must adjudicate private respondents claim before
execution should proceed
The execution of the monetary judgment against the UP was
within the primary jurisdiction of the COA. This was expressly
provided in Section 26 of Presidential Decree No. 1445, to wit:
Section 26. General jurisdiction. - The authority and powers of
the Commission shall extend to and comprehend all matters
relating to auditing procedures, systems and controls, the
keeping of the general accounts of the Government, the
preservation of vouchers pertaining thereto for a period of ten
years, the examination and inspection of the books, records,
and papers relating to those accounts; and the audit and
settlement of the accounts of all persons respecting funds or
property received or held by them in an accountable capacity,
as well as the examination, audit, and settlement of all debts
and claims of any sort due from or owing to the Government or
any of its subdivisions, agencies and instrumentalities. The
said jurisdiction extends to all government-owned or controlled
corporations, including their subsidiaries, and other self-
governing boards, commissions, or agencies of the
Government, and as herein prescribed, including non
governmental entities subsidized by the government, those
funded by donations through the government, those required
to pay levies or government share, and those for which the
government has put up a counterpart fund or those partly
funded by the government.
It was of no moment that a final and executory decision
already validated the claim against the UP. The settlement of
the monetary claim was still subject to the primary jurisdiction
of the COA despite the final decision of the RTC having
already validated the claim.
85
As such, Stern Builders and dela
Cruz as the claimants had no alternative except to first seek
the approval of the COA of their monetary claim.
On its part, the RTC should have exercised utmost caution,
prudence and judiciousness in dealing with the motions for
execution against the UP and the garnishment of the UPs
funds. The RTC had no authority to direct the immediate
withdrawal of any portion of the garnished funds from the
depository banks of the UP. By eschewing utmost caution,
prudence and judiciousness in dealing with the execution and
garnishment, and by authorizing the withdrawal of the
garnished funds of the UP, the RTC acted beyond its
jurisdiction, and all its orders and issuances thereon were void
and of no legal effect, specifically: (a) the order Judge Yadao
issued on January 3, 2007 allowing Stern Builders and dela
Cruz to withdraw the deposited garnished amount; (b) the
order Judge Yadao issued on January 16, 2007 directing DBP
to forthwith release the garnish amount to Stern Builders and
dela Cruz; (c) the sheriffs report of January 17, 2007
manifesting the full satisfaction of the writ of execution; and (d)
the order of April 10, 2007 deying the UPs motion for the
redeposit of the withdrawn amount. Hence, such orders and
issuances should be struck down without exception.
Nothing extenuated Judge Yadaos successive violations of
Presidential Decree No. 1445. She was aware of Presidential
Decree No. 1445, considering that the Court circulated to all
judges its Administrative Circular No. 10-2000,
86
issued on
October 25, 2000, enjoining them "to observe utmost caution,
prudence and judiciousness in the issuance of writs of
execution to satisfy money judgments against government
agencies and local government units" precisely in order to
prevent the circumvention of Presidential Decree No. 1445, as
well as of the rules and procedures of the COA, to wit:
In order to prevent possible circumvention of the rules and
procedures of the Commission on Audit, judges are hereby
enjoined to observe utmost caution, prudence and
judiciousness in the issuance of writs of execution to satisfy
money judgments against government agencies and local
government units.
Judges should bear in mind that in Commissioner of Public
Highways v. San Diego (31 SCRA 617, 625 1970), this Court
explicitly stated:
"The universal rule that where the State gives its consent to be
sued by private parties either by general or special law, it may
limit claimants action only up to the completion of
proceedings anterior to the stage of execution and that the
power of the Court ends when the judgment is rendered, since
government funds and properties may not be seized under
writs of execution or garnishment to satisfy such judgments, is
based on obvious considerations of public policy.
Disbursements of public funds must be covered by the
corresponding appropriation as required by law. The functions
and public services rendered by the State cannot be allowed
to be paralyzed or disrupted by the diversion of public funds
from their legitimate and specific objects, as appropriated by
law.
Moreover, it is settled jurisprudence that upon determination of
State liability, the prosecution, enforcement or satisfaction
thereof must still be pursued in accordance with the rules and
procedures laid down in P.D. No. 1445, otherwise known as
the Government Auditing Code of the Philippines (Department
of Agriculture v. NLRC, 227 SCRA 693, 701-02 1993 citing
Republic vs. Villasor, 54 SCRA 84 1973). All money claims
against the Government must first be filed with the
Commission on Audit which must act upon it within sixty days.
Rejection of the claim will authorize the claimant to elevate the
matter to the Supreme Court on certiorari and in effect, sue the
State thereby (P.D. 1445, Sections 49-50).
However, notwithstanding the rule that government properties
are not subject to levy and execution unless otherwise
provided for by statute (Republic v. Palacio, 23 SCRA 899
1968; Commissioner of Public Highways v. San Diego, supra)
or municipal ordinance (Municipality of Makati v. Court of
Appeals, 190 SCRA 206 1990), the Court has, in various
instances, distinguished between government funds and
properties for public use and those not held for public use.
Thus, in Viuda de Tan Toco v. Municipal Council of Iloilo (49
Phil 52 1926, the Court ruled that "where property of a
municipal or other public corporation is sought to be subjected
to execution to satisfy judgments recovered against such
corporation, the question as to whether such property is
leviable or not is to be determined by the usage and purposes
for which it is held." The following can be culled from Viuda de
Tan Toco v. Municipal Council of Iloilo:
1. Properties held for public uses and generally everything
held for governmental purposes are not subject to levy and
sale under execution against such corporation. The same rule
applies to funds in the hands of a public officer and taxes due
to a municipal corporation.
2. Where a municipal corporation owns in its proprietary
capacity, as distinguished from its public or government
capacity, property not used or used for a public purpose but for
quasi-private purposes, it is the general rule that such property
may be seized and sold under execution against the
corporation.
3. Property held for public purposes is not subject to execution
merely because it is temporarily used for private purposes. If
the public use is wholly abandoned, such property becomes
subject to execution.
This Administrative Circular shall take effect immediately and
the Court Administrator shall see to it that it is faithfully
implemented.
Although Judge Yadao pointed out that neither the CA nor the
Court had issued as of then any writ of preliminary injunction
to enjoin the release or withdrawal of the garnished amount,
she did not need any writ of injunction from a superior court to
compel her obedience to the law. The Court is disturbed that
an experienced judge like her should look at public laws like
Presidential Decree No. 1445 dismissively instead of loyally
following and unquestioningly implementing them. That she
did so turned her court into an oppressive bastion of mindless
tyranny instead of having it as a true haven for the seekers of
justice like the UP.
III Period of appeal did not start without effective service
of decision upon counsel of record; Fresh-period rule
announced in Neypes v. Court of Appeals can be given
retroactive application
The UP next pleads that the Court gives due course to its
petition for review in the name of equity in order to reverse or
modify the adverse judgment against it despite its finality. At
stake in the UPs plea for equity was the return of the amount
of P16,370,191.74 illegally garnished from its trust funds.
Obstructing the plea is the finality of the judgment based on
the supposed tardiness of UPs appeal, which the RTC
declared on September 26, 2002. The CA upheld the
declaration of finality on February 24, 2004, and the Court
itself denied the UPs petition for review on that issue on May
11, 2004 (G.R. No. 163501). The denial became final on
November 12, 2004.
It is true that a decision that has attained finality becomes
immutable and unalterable, and cannot be modified in any
respect,
87
even if the modification is meant to correct
erroneous conclusions of fact and law, and whether the
modification is made by the court that rendered it or by this
Court as the highest court of the land.
88
Public policy dictates
that once a judgment becomes final, executory and
unappealable, the prevailing party should not be deprived of
the fruits of victory by some subterfuge devised by the losing
party. Unjustified delay in the enforcement of such judgment
sets at naught the role and purpose of the courts to resolve
justiciable controversies with finality.
89
Indeed, all litigations
must at some time end, even at the risk of occasional errors.
But the doctrine of immutability of a final judgment has not
been absolute, and has admitted several exceptions, among
them: (a) the correction of clerical errors; (b) the so-called
nunc pro tunc entries that cause no prejudice to any party; (c)
void judgments; and (d) whenever circumstances transpire
after the finality of the decision that render its execution unjust
and inequitable.
90
Moreover, in Heirs of Maura So v.
Obliosca,
91
we stated that despite the absence of the
preceding circumstances, the Court is not precluded from
brushing aside procedural norms if only to serve the higher
interests of justice and equity. Also, in Gumaru v. Quirino State
College,
92
the Court nullified the proceedings and the writ of
execution issued by the RTC for the reason that respondent
state college had not been represented in the litigation by the
Office of the Solicitor General.
We rule that the UPs plea for equity warrants the Courts
exercise of the exceptional power to disregard the declaration
of finality of the judgment of the RTC for being in clear
violation of the UPs right to due process.
Both the CA and the RTC found the filing on June 3, 2002 by
the UP of the notice of appeal to be tardy. They based their
finding on the fact that only six days remained of the UPs
reglementary 15-day period within which to file the notice of
appeal because the UP had filed a motion for reconsideration
on January 16, 2002 vis--vis the RTCs decision the UP
received on January 7, 2002; and that because the denial of
the motion for reconsideration had been served upon Atty.
Felimon D. Nolasco of the UPLB Legal Office on May 17,
2002, the UP had only until May 23, 2002 within which to file
the notice of appeal.
The UP counters that the service of the denial of the motion for
reconsideration upon Atty. Nolasco was defective considering
that its counsel of record was not Atty. Nolasco of the UPLB
Legal Office but the OLS in Diliman, Quezon City; and that the
period of appeal should be reckoned from May 31, 2002, the
date when the OLS received the order. The UP submits that
the filing of the notice of appeal on June 3, 2002 was well
within the reglementary period to appeal.
We agree with the submission of the UP.
Firstly, the service of the denial of the motion for
reconsideration upon Atty. Nolasco of the UPLB Legal Office
was invalid and ineffectual because he was admittedly not the
counsel of record of the UP. The rule is that it is on the
counsel and not the client that the service should be made.
93

That counsel was the OLS in Diliman, Quezon City, which was
served with the denial only on May 31, 2002. As such, the
running of the remaining period of six days resumed only on
June 1, 2002,
94
rendering the filing of the UPs notice of appeal
on June 3, 2002 timely and well within the remaining days of
the UPs period to appeal.
Verily, the service of the denial of the motion for
reconsideration could only be validly made upon the OLS in
Diliman, and no other. The fact that Atty. Nolasco was in the
employ of the UP at the UPLB Legal Office did not render the
service upon him effective. It is settled that where a party has
appeared by counsel, service must be made upon such
counsel.
95
Service on the party or the partys employee is not
effective because such notice is not notice in law.
96
This is
clear enough from Section 2, second paragraph, of Rule 13,
Rules of Court, which explicitly states that: "If any party has
appeared by counsel, service upon him shall be made upon
his counsel or one of them, unless service upon the party
himself is ordered by the court. Where one counsel appears
for several parties, he shall only be entitled to one copy of any
paper served upon him by the opposite side." As such, the
period to appeal resumed only on June 1, 2002, the date
following the service on May 31, 2002 upon the OLS in
Diliman of the copy of the decision of the RTC, not from the
date when the UP was notified.
97

Accordingly, the declaration of finality of the judgment of the
RTC, being devoid of factual and legal bases, is set aside.
Secondly, even assuming that the service upon Atty. Nolasco
was valid and effective, such that the remaining period for the
UP to take a timely appeal would end by May 23, 2002, it
would still not be correct to find that the judgment of the RTC
became final and immutable thereafter due to the notice of
appeal being filed too late on June 3, 2002.
In so declaring the judgment of the RTC as final against the
UP, the CA and the RTC applied the rule contained in the
second paragraph of Section 3, Rule 41 of the Rules of Court
to the effect that the filing of a motion for reconsideration
interrupted the running of the period for filing the appeal; and
that the period resumed upon notice of the denial of the motion
for reconsideration. For that reason, the CA and the RTC
might not be taken to task for strictly adhering to the rule then
prevailing.
However, equity calls for the retroactive application in the UPs
favor of the fresh-period rule that the Court first announced in
mid-September of 2005 through its ruling in Neypes v. Court of
Appeals,
98
viz:
To standardize the appeal periods provided in the Rules and
to afford litigants fair opportunity to appeal their cases, the
Court deems it practical to allow a fresh period of 15 days
within which to file the notice of appeal in the Regional Trial
Court, counted from receipt of the order dismissing a motion
for a new trial or motion for reconsideration.
The retroactive application of the fresh-period rule, a
procedural law that aims "to regiment or make the appeal
period uniform, to be counted from receipt of the order denying
the motion for new trial, motion for reconsideration (whether
full or partial) or any final order or resolution,"
99
is impervious
to any serious challenge. This is because there are no vested
rights in rules of procedure.
100
A law or regulation is procedural
when it prescribes rules and forms of procedure in order that
courts may be able to administer justice.
101
It does not come
within the legal conception of a retroactive law, or is not
subject of the general rule prohibiting the retroactive operation
of statues, but is given retroactive effect in actions pending
and undetermined at the time of its passage without violating
any right of a person who may feel that he is adversely
affected.
We have further said that a procedural rule that is amended for
the benefit of litigants in furtherance of the administration of
justice shall be retroactively applied to likewise favor actions
then pending, as equity delights in equality.
102
We may even
relax stringent procedural rules in order to serve substantial
justice and in the exercise of this Courts equity jurisdiction.
103

Equity jurisdiction aims to do complete justice in cases where
a court of law is unable to adapt its judgments to the special
circumstances of a case because of the inflexibility of its
statutory or legal jurisdiction.
104

It is cogent to add in this regard that to deny the benefit of the
fresh-period rule to the UP would amount to injustice and
absurdity injustice, because the judgment in question was
issued on November 28, 2001 as compared to the judgment in
Neypes that was rendered in 1998; absurdity, because parties
receiving notices of judgment and final orders issued in the
year 1998 would enjoy the benefit of the fresh-period rule but
the later rulings of the lower courts like that herein would
not.
105

Consequently, even if the reckoning started from May 17,
2002, when Atty. Nolasco received the denial, the UPs filing
on June 3, 2002 of the notice of appeal was not tardy within
the context of the fresh-period rule. For the UP, the fresh
period of 15-days counted from service of the denial of the
motion for reconsideration would end on June 1, 2002, which
was a Saturday. Hence, the UP had until the next working day,
or June 3, 2002, a Monday, within which to appeal,
conformably with Section 1 of Rule 22, Rules of Court, which
holds that: "If the last day of the period, as thus computed, falls
on a Saturday, a Sunday, or a legal holiday in the place where
the court sits, the time shall not run until the next working day."
IV Awards of monetary damages, being devoid of factual
and legal bases, did not attain finality and should be
deleted
Section 14 of Article VIII of the Constitution prescribes that
express findings of fact and of law should be made in the
decision rendered by any court, to wit:
Section 14. No decision shall be rendered by any court without
expressing therein clearly and distinctly the facts and the law
on which it is based.
No petition for review or motion for reconsideration of a
decision of the court shall be refused due course or denied
without stating the legal basis therefor.
Implementing the constitutional provision in civil actions is
Section 1 of Rule 36, Rules of Court, viz:
Section 1. Rendition of judgments and final orders. A
judgment or final order determining the merits of the case shall
be in writing personally and directly prepared by the judge,
stating clearly and distinctly the facts and the law on which it is
based, signed by him, and filed with the clerk of the court. (1a)
The Constitution and the Rules of Court apparently delineate
two main essential parts of a judgment, namely: the body and
the decretal portion. Although the latter is the controlling
part,
106
the importance of the former is not to be lightly
regarded because it is there where the court clearly and
distinctly states its findings of fact and of law on which the
decision is based. To state it differently, one without the other
is ineffectual and useless. The omission of either inevitably
results in a judgment that violates the letter and the spirit of the
Constitution and the Rules of Court.
The term findings of fact that must be found in the body of the
decision refers to statements of fact, not to conclusions of
law.
107
Unlike in pleadings where ultimate facts alone need to
be stated, the Constitution and the Rules of Court require not
only that a decision should state the ultimate facts but also that
it should specify the supporting evidentiary facts, for they are
what are called the findings of fact.
The importance of the findings of fact and of law cannot be
overstated. The reason and purpose of the Constitution and
the Rules of Court in that regard are obviously to inform the
parties why they win or lose, and what their rights and
obligations are. Only thereby is the demand of due process
met as to the parties. As Justice Isagani A. Cruz explained in
Nicos Industrial Corporation v. Court of Appeals:
108

It is a requirement of due process that the parties to a litigation
be informed of how it was decided, with an explanation of the
factual and legal reasons that led to the conclusions of the
court. The court cannot simply say that judgment is rendered
in favor of X and against Y and just leave it at that without any
justification whatsoever for its action. The losing party is
entitled to know why he lost, so he may appeal to a higher
court, if permitted, should he believe that the decision should
be reversed. A decision that does not clearly and distinctly
state the facts and the law on which it is based leaves the
parties in the dark as to how it was reached and is especially
prejudicial to the losing party, who is unable to pinpoint the
possible errors of the court for review by a higher tribunal.
Here, the decision of the RTC justified the grant of actual and
moral damages, and attorneys fees in the following terse
manner, viz:
xxx The Court is not unmindful that due to defendants
unjustified refusal to pay their outstanding obligation to
plaintiff, the same suffered losses and incurred expenses as
he was forced to re-mortgage his house and lot located in
Quezon City to Metrobank (Exh. "CC") and BPI Bank just to
pay its monetary obligations in the form of interest and
penalties incurred in the course of the construction of the
subject project.
109

The statement that "due to defendants unjustified refusal to
pay their outstanding obligation to plaintiff, the same suffered
losses and incurred expenses as he was forced to re-
mortgage his house and lot located in Quezon City to
Metrobank (Exh. "CC") and BPI Bank just to pay its monetary
obligations in the form of interest and penalties incurred in the
course of the construction of the subject project" was only a
conclusion of fact and law that did not comply with the
constitutional and statutory prescription. The statement
specified no detailed expenses or losses constituting the
P5,716,729.00 actual damages sustained by Stern Builders in
relation to the construction project or to other pecuniary
hardships. The omission of such expenses or losses directly
indicated that Stern Builders did not prove them at all, which
then contravened Article 2199, Civil Code, the statutory basis
for the award of actual damages, which entitled a person to an
adequate compensation only for such pecuniary loss suffered
by him as he has duly proved. As such, the actual damages
allowed by the RTC, being bereft of factual support, were
speculative and whimsical. Without the clear and distinct
findings of fact and law, the award amounted only to an ipse
dixit on the part of the RTC,
110
and did not attain finality.
There was also no clear and distinct statement of the factual
and legal support for the award of moral damages in the
substantial amount of P10,000,000.00. The award was thus
also speculative and whimsical. Like the actual damages, the
moral damages constituted another judicial ipse dixit, the
inevitable consequence of which was to render the award of
moral damages incapable of attaining finality. In addition, the
grant of moral damages in that manner contravened the law
that permitted the recovery of moral damages as the means to
assuage "physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar injury."
111
The
contravention of the law was manifest considering that Stern
Builders, as an artificial person, was incapable of experiencing
pain and moral sufferings.
112
Assuming that in granting the
substantial amount of P10,000,000.00 as moral damages, the
RTC might have had in mind that dela Cruz had himself
suffered mental anguish and anxiety. If that was the case, then
the RTC obviously disregarded his separate and distinct
personality from that of Stern Builders.
113
Moreover, his moral
and emotional sufferings as the President of Stern Builders
were not the sufferings of Stern Builders. Lastly, the RTC
violated the basic principle that moral damages were not
intended to enrich the plaintiff at the expense of the defendant,
but to restore the plaintiff to his status quo ante as much as
possible. Taken together, therefore, all these considerations
exposed the substantial amount of P10,000,000.00 allowed as
moral damages not only to be factually baseless and legally
indefensible, but also to be unconscionable, inequitable and
unreasonable.
Like the actual and moral damages, the P150,000.00, plus
P1,500.00 per appearance, granted as attorneys fees were
factually unwarranted and devoid of legal basis. The general
rule is that a successful litigant cannot recover attorneys fees
as part of the damages to be assessed against the losing party
because of the policy that no premium should be placed on the
right to litigate.
114
Prior to the effectivity of the present Civil
Code, indeed, such fees could be recovered only when there
was a stipulation to that effect. It was only under the present
Civil Code that the right to collect attorneys fees in the cases
mentioned in Article 2208
115
of the Civil Code came to be
recognized.
116
Nonetheless, with attorneys fees being allowed
in the concept of actual damages,
117
their amounts must be
factually and legally justified in the body of the decision and
not stated for the first time in the decretal portion.
118
Stating
the amounts only in the dispositive portion of the judgment is
not enough;
119
a rendition of the factual and legal justifications
for them must also be laid out in the body of the decision.
120

That the attorneys fees granted to the private respondents did
not satisfy the foregoing requirement suffices for the Court to
undo them.
121
The grant was ineffectual for being contrary to
law and public policy, it being clear that the express findings of
fact and law were intended to bring the case within the
exception and thereby justify the award of the attorneys fees.
Devoid of such express findings, the award was a conclusion
without a premise, its basis being improperly left to speculation
and conjecture.
122

Nonetheless, the absence of findings of fact and of any
statement of the law and jurisprudence on which the awards of
actual and moral damages, as well as of attorneys fees, were
based was a fatal flaw that invalidated the decision of the RTC
only as to such awards. As the Court declared in Velarde v.
Social Justice Society,
123
the failure to comply with the
constitutional requirement for a clear and distinct statement of
the supporting facts and law "is a grave abuse of discretion
amounting to lack or excess of jurisdiction" and that
"(d)ecisions or orders issued in careless disregard of the
constitutional mandate are a patent nullity and must be struck
down as void."
124
The other item granted by the RTC (i.e.,
P503,462.74) shall stand, subject to the action of the COA as
stated herein.
WHEREFORE, the Court GRANTS the petition for review on
certiorari; REVERSES and SETS ASIDE the decision of the
Court of Appeals under review; ANNULS the orders for the
garnishment of the funds of the University of the Philippines
and for the release of the garnished amount to Stern Builders
Corporation and Servillano dela Cruz; and DELETES from the
decision of the Regional Trial Court dated November 28, 2001
for being void only the awards of actual damages of
P5,716,729.00, moral damages of P10,000,000.00, and
attorney's fees of P150,000.00, plus P1,500.00 per
appearance, in favor of Stern Builders Corporation and
Servillano dela Cruz.
The Court ORDERS Stem Builders Corporation and Servillano
dela Cruz to redeposit the amount of P16,370,191.74 within 10
days from receipt of this decision.
Costs of suit to be paid by the private respondents.
SO ORDERED.
LUCAS P. BERSAMIN Associate Justice