Law __ Evidence

G.R. No. 178830

Prof. Avena

2. JUDICIAL NOTICE

July 14, 2008

Page 1 of 121

G.R. No. 179613

ROLEX SUPLICO, Petitioner,

vs.
NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY,
represented by NEDA SECRETARY ROMULO L. NERI, and the NEDAINVESTMENT COORDINATION COMMITTEE, DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS (DOTC), represented
by DOTC SECRETARY LEANDRO MENDOZA, including the
COMMISSION ON INFORMATION AND COMMUNICATIONS
TECHNOLOGY, headed by its Chairman, RAMON P. SALES, THE
TELECOMMUNICATIONS OFFICE, BIDS AND AWARDS FOR
INFORMATION AND COMMUNICATIONS TECHNOLOGY (ICT), headed
by DOTC ASSISTANT SECRETARY ELMER A. SONEJA as Chairman,
and the TECHNICAL WORKING GROUP FOR ICT, AND DOTC
ASSISTANT SECRETARY LORENZO FORMOSO, AND ALL OTHER
OPERATING UNITS OF THE DOTC FOR INFORMATION AND
COMMUNICATIONS TECHNOLOGY, and ZTE CORPORATION,
AMSTERDAM HOLDINGS, INC., AND ALL PERSONS ACTING IN THEIR
BEHALF, Respondents.

GALELEO P. ANGELES, VICENTE C. ANGELES, JOB FLORANTE L.

CASTILLO, TRINI ANNE G. NIEVA, ROY ALLAN T. ARELLANO, CARLO
MAGNO M. REONAL, ETHEL B. REGADIO, RAENAN B. MALIG, AND
VINALYN M. POTOT, TOGETHER WITH LAWYERS AND ADVOCATES
FOR ACCOUNTABILITY, TRANSPARENCY, INTEGRITY AND GOOD
GOVERNANCE (LATIGO), Petitioners,
vs.
DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS
(DOTC), represented by DOTC SECRETARY LEANDRO MENDOZA,
and ZHONG XING EQUIPMENT (ZTE) COMPANY, LTD., AND ANY AND
ALL PERSONS ACTING ON THEIR BEHALF, Respondents.

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

The Office of the Solicitor General (OSG) respectfully avers that in an

Indorsement dated October 24, 2007, the Legal Service of the
Department of Transportation and Communications (DOTC) has
informed it of the Philippine Governments decision not to continue with
the ZTE National Broadband Network Project (see attachment2). That
said, there is no more justiciable controversy for this Honorable Court to
resolve. WHEREFORE, public respondents respectfully pray that the
present petitions be DISMISSED.

G.R. No. 179317

AMSTERDAM HOLDINGS, INC., and NATHANIEL SAUZ, Petitioners,
vs.
DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS,
SECRETARY LEANDRO MENDOZA, COMMISSION ON INFORMATION
AND COMMUNICATIONS TECHNOLOGY, and ASSISTANT SECRETARY
LORENZO FORMOSO III, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x

RESOLUTION
REYES, R.T., J.:
Under consideration is the Manifestation and Motion1 dated October 26,
2007 of the Office of the Solicitor General (OSG) which states:

On November 13, 2007, the Court noted the OSGs manifestation and
motion and required petitioners in G.R. Nos. 178830, 179317, and
179613 to comment.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

On December 6, 2007, Rolex Suplico, petitioner in G.R. No. 178830, filed

his Consolidated Reply and Opposition,3 opposing the aforequoted OSG
Manifestation and Motion, arguing that:
66. Aside from the fact that the Notes of the Meeting Between
President Gloria Macapagal-Arroyo and Chinese President Hu
Jintao held 2 October 2007 were not attached to the 26 October
2007 Manifestation and Motion thus depriving petitioners of
the opportunity to comment thereon a mere verbally requested
1st Indorsement is not sufficient basis for the conclusion that the
ZTE-DOTC NBN deal has been permanently scrapped.
67. Suffice to state, said 1st Indorsement is glaringly self-serving,
especially without the Notes of the Meeting Between President
Gloria Macapagal-Arroyo and Chinese President Hu Jintao to
support its allegations or other proof of the supposed decision to
cancel the ZTE-DOTC NBN deal. Public respondents can certainly
do better than that.4

Page 2 of 121

On January 31, 2008, Amsterdam Holdings, Inc. (AHI) and Nathaniel

Sauz, petitioners in G.R. No. 179317, also filed their comment expressing
their sentiments, thus:
3. First of all, the present administration has never been known
for candor. The present administration has a very nasty habit of
not keeping its word. It says one thing, but does another.
4. This being the case, herein petitioners are unable to bring
themselves to feel even a bit reassured that the government, in
the event that the above-captioned cases are dismissed, will not
backtrack, re-transact, or even resurrect the now infamous NBNZTE transaction. This is especially relevant since what was
attached to the OSGs Manifestation and Motion was a mere one
(1) page written communication sent by the Department of
Transportation and Communications (DOTC) to the OSG,
allegedly relaying that the Philippine Government has decided
not to continue with the NBN project "x x x due to several
reasons and constraints."

Petitioner Suplico further argues that:

79. Assuming arguendo that some aspects of the present Petition
have been rendered moot (which is vehemently denied), this
Honorable Court, consistent with well-entrenched jurisprudence,
may still take cognizance thereof.5
Petitioner Suplico cites this Courts rulings in Gonzales v. Chavez,6
Rufino v. Endriga,7 and Alunan III v. Mirasol8 that despite their
mootness, the Court nevertheless took cognizance of these cases and
ruled on the merits due to the Courts symbolic function of educating the
bench and the bar by formulating guiding and controlling principles,
precepts, doctrines, and rules.

Petitioners AHI and Sauz further contend that because of the

transcendental importance of the issues raised in the petition, which
among others, included the Presidents use of the power to borrow, i.e.,
to enter into foreign loan agreements, this Court should take cognizance
of this case despite its apparent mootness.
On January 15, 2008, the Court required the OSG to file respondents
reply to petitioners comments on its manifestation and motion.
On April 18, 2008, the OSG filed respondents reply, reiterating their
position that for a court to exercise its power of adjudication, there must
be an actual case or controversy one which involves a conflict of legal
rights, an assertion of opposite legal claims susceptible of judicial
resolution; the case must not be moot or academic or based on extra-

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

legal or other similar considerations not cognizable by a court of

justice.9
Respondents also insist that there is no perfected contract in this case
that would prejudice the government or public interest. Explaining the
nature of the NBN Project as an executive agreement, respondents stress
that it remained in the negotiation stage. The conditions precedent10 for
the agreement to become effective have not yet been complied with.
Respondents further oppose petitioners claim of the right to
information, which they contend is not an absolute right. They contend
that the matters raised concern executive policy, a political question
which the judicial branch of government would generally hesitate to
pass upon.
On July 2, 2008, the OSG filed a Supplemental Manifestation and Motion.
Appended to it is the Highlights from the Notes of Meeting between
President Gloria Macapagal-Arroyo and Chinese President Hu Jintao,
held in XI Jiao Guesthouse, Shanghai, China, on October 2, 2007. In the
Notes of Meeting, the Philippine Government conveyed its decision not
to continue with the ZTE National Broadband Network Project due to
several constraints. The same Notes likewise contained President Hu
Jintaos expression of understanding of the Philippine Government
decision.
We resolve to grant the motion.
Firstly, the Court notes the triple petitions to be for certiorari,
prohibition and mandamus, with application for the issuance of a
Temporary Restraining Order (TRO) and/or Preliminary Injunction. The
individual prayers in each of the three (3) consolidated petitions are:
G.R. No. 178830

Page 3 of 121

WHEREFORE, it is respectfully prayed of this Honorable Court:

1. Upon the filing of this Petition, pursuant to the second
paragraph of Rule 58, Section 5 of the Rules of Court, issue
forthwith an ex parte temporary restraining order enjoining
respondents, their subordinates, agents, representatives and any
and all persons acting on their behalf from pursuing, entering
into indebtedness, disbursing funds, and implementing the ZTEDOTC Broadband Deal;
2. Compel respondents, upon Writ of Mandamus, to forthwith
produce and furnish petitioner or his undersigned counsel a
certified true copy of the contract or agreement covering the
NBN project as agreed upon with ZTE Corporation;
3. Schedule Oral Arguments in the present case pursuant to Rule
49 in relation to Section 2, Rule 56 of the revised Rules of Court;
and,
4. Annul and set aside the award of the ZTE-DOTC Broadband
Deal, and compel public respondents to forthwith comply with
pertinent provisions of law regarding procurement of
government ICT contracts and public bidding for the NBN
contract.11 (Emphasis supplied)
G.R. No. 179317
WHEREFORE, petitioners Amsterdam Holdings, Inc., and Nathaniel Sauz
respectfully pray as follows:
A. upon the filing of this Petition for Mandamus and conditioned
upon the posting of a bond in such amount as the Honorable
Court may fix, a temporary restraining order and/or writ of
preliminary injunction be issued directing the Department of

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Transportation and Communication, the Commission on

Information and Communications Technology, all other
government agencies and instrumentalities, their officers,
employees, and/or other persons acting for and on their behalf
to desist during the pendency of the instant Petition for
Mandamus from entering into any other agreements and from
commencing with any kind, sort, or specie of activity in
connection with the National Broadband Network Project;
B. the instant Petition for Mandamus be given due course; and,
C. after due consideration of all relevant issues, judgment be
rendered directing respondents to allow herein petitioners
access to all agreements entered into with the Government of
China, the ZTE Corporation, and/or other entities, government
instrumentalities, and/or individuals with regard to the National
Broadband Network Project.12 (Emphasis supplied)
G.R. No. 179613
WHEREFORE, it is respectfully prayed of this Honorable Court to:
1. Compel respondents, upon Writ of Mandamus, to forthwith
produce and furnish petitioner or his undersigned counsel a
certified true copy of the contract or agreement covering the
NBN project as agreed upon with ZTE Corporation;
2. Schedule Oral Arguments in the present case pursuant to Rule
49 in relation to Section 2, Rule 56 of the Revised Rules of Court;
3. Annul and set aside the award of the contract for the national
broadband network to respondent ZTE Corporation, upon the
ground that said contract, as well as the procedures resorted to

Page 4 of 121
preparatory to the execution thereof, is contrary to the
Constitution, to law and to public policy;
4. Compel public respondent to forthwith comply with pertinent
provisions of law regarding procurement of government
infrastructure projects, including public bidding for said contract
to undertake the construction of the national broadband
network.13 (Emphasis supplied)

On September 11, 2007, the Court issued a TRO14 in G.R. No. 178830,
enjoining the parties from "pursuing, entering into indebtedness,
disbursing funds, and implementing the ZTE-DOTC Broadband Deal and
Project" as prayed for. Pertinent parts of the said Order read:
WHEREAS, the Supreme Court, on 11 September 2007,
adopted a resolution in the above-entitled case, to wit:
"G.R. No. 178830 (Rolex Suplico vs. National Economic
and Development Authority, represented by NEDA
Secretary Romulo L. Neri, and the NEDA Investment
Coordination Committee, Department of Transportation
and Communications (DOTC), represented by DOTC
Secretary Leandro Mendoza, including the Commission
on Information and Communications Technology, headed
by its Chairman, Ramon P. Sales, The
Telecommunications Office, Bids and Awards for
Information and Communications Technology Committee
(ICT), headed by DOTC Assistant Secretary Elmer A.
Soneja as Chairman, and The Technical Working Group
for ICT, and DOTC Assistant Secretary Lorenzo Formoso,
and All Other Operating Units of the DOTC for
Information and Communications Technology, and ZTE
Corporation, Amsterdam Holdings, Inc., and ARESCOM,
Inc.Acting on the instant petition with prayer for

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

temporary restraining order and/or writ of preliminary

injunction, the Court Resolved, without giving due course
to the petition, to
xxxx
(d) Issue a TEMPORARY RESTRAINING ORDER, effective
immediately and continuing until further orders from
this Court, enjoining the (i) National Economic and
Development Authority, (ii) NEDA-Investment
Coordination Committee, (iii) Department of
Transportation and Communications, Commission on
Information and Communications Technology, (iv)
Telecommunications Office, Bids and Awards for
Information and Communications Technology Committee
(ICT), (v) Technical Working Group for ICT, and all other
Operating Units of the DOTC for Information and
Communications Technology, (vi) ZTE Corporation; (vii)
Amsterdam Holdings, Inc., and (viii) ARESCOM, Inc., and
any and all persons acting on their behalf from pursuing,
entering into indebtedness, disbursing funds, and
implementing the ZTE-DOTC Broadband Deal and
Project as prayed for."
NOW THEREFORE, effective immediately and continuing
until further orders from this Court, You, Respondents (i)
National Economic and Development Authority, (ii)
NEDA-Investment Coordination Committee, (iii)
Department of Transportation and Communications,
Commission on Information and Communications
Technology, (iv) Telecommunications Office, Bids and
Awards for Information and Communications
Technology Committee (ICT), (v) Technical Working
Group for ICT, and all other Operating Units of the DOTC

Page 5 of 121
for Information and Communications Technology, (vi)
ZTE Corporation; (vii) Amsterdam Holdings, Inc., and
(viii) ARESCOM, Inc., and any and all persons acting on
their behalf are hereby ENJOINED from "pursuing,
entering into indebtedness, disbursing funds, and
implementing the ZTE-DOTC Broadband Deal and
Project" as prayed for.15 (Emphasis supplied.)

Petitioners in G.R. Nos. 178830 and 179613 pray that they be furnished
certified true copies of the "contract or agreement covering the NBN
project as agreed upon with ZTE Corporation." It appears that during
one of the Senate hearings on the NBN project, copies of the supply
contract16 were readily made available to petitioners.17 Evidently, the
said prayer has been complied with and is, thus, mooted.
When President Gloria Macapagal-Arroyo, acting in her official capacity
during the meeting held on October 2, 2007 in China, informed Chinas
President Hu Jintao that the Philippine Government had decided not to
continue with the ZTE-National Broadband Network (ZTE-NBN) Project
due to several reasons and constraints, there is no doubt that all the
other principal prayers in the three petitions (to annul, set aside, and
enjoin the implementation of the ZTE-NBN Project) had also become
moot.
Contrary to petitioners contentions that these declarations made by
officials belonging to the executive branch on the Philippine
Governments decision not to continue with the ZTE-NBN Project are
self-serving, hence, inadmissible, the Court has no alternative but to take
judicial notice of this official act of the President of the Philippines.
Section 1, Rule 129 of the Rules of Court provides:
SECTION 1. Judicial Notice, when mandatory. A court shall take judicial
notice, without introduction of evidence, of the existence and territorial

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

extent of states, their political history, forms of government and symbols

of nationality, the law of nations, the admiralty and maritime courts of
the world and their seals, the political constitution and history of the
Philippines, the official acts of the legislative, executive and judicial
departments of the Philippines, the laws of nature, the measure of time,
and the geographical divisions. (Emphasis supplied)
Under the rules, it is mandatory and the Court has no alternative but to
take judicial notice of the official acts of the President of the Philippines,
who heads the executive branch of our government. It is further
provided in the above-quoted rule that the court shall take judicial
notice of the foregoing facts without introduction of evidence. Since we
consider the act of cancellation by President Macapagal-Arroyo of the
proposed ZTE-NBN Project during the meeting of October 2, 2007 with
the Chinese President in China as an official act of the executive
department, the Court must take judicial notice of such official act
without need of evidence.
In David v. Macapagal-Arroyo,18 We took judicial notice of the
announcement by the Office of the President banning all rallies and
canceling all permits for public assemblies following the issuance of
Presidential Proclamation No. 1017 and General Order No. 5.
In Estrada v. Desierto,19 the Court also resorted to judicial notice in
resolving the factual ingredient of the petition.
Moreover, under Section 2, paragraph (m) of Rule 131 of the Rules of
Court, the official duty of the executive officials20 of informing this Court
of the governments decision not to continue with the ZTE-NBN Project
is also presumed to have been regularly performed, absent proof to the
contrary. Other than petitioner AHIs unsavory insinuation in its
comment, the Court finds no factual or legal basis to disregard this
disputable presumption in the present instance.

Page 6 of 121

Concomitant to its fundamental task as the ultimate citadel of justice and

legitimacy is the judiciarys role of strengthening political stability
indispensable to progress and national development. Pontificating on
issues which no longer legitimately constitute an actual case or
controversy will do more harm than good to the nation as a whole. Wise
exercise of judicial discretion militates against resolving the academic
issues, as petitioners want this Court to do. This is especially true where,
as will be further discussed, the legal issues raised cannot be resolved
without previously establishing the factual basis or antecedents.
Judicial power presupposes actual controversies, the very antithesis of
mootness. In the absence of actual justiciable controversies or disputes,
the Court generally opts to refrain from deciding moot issues. Where
there is no more live subject of controversy, the Court ceases to have a
reason to render any ruling or make any pronouncement.
Kapag wala nang buhay na kaso, wala nang dahilan para magdesisyon
ang Husgado.
In Republic Telecommunications Holdings, Inc. v. Santiago,21 the lone
issue tackled by the Court of Appeals (CA) was whether the Securities
Investigation and Clearing Department (SICD) and Securities and
Exchange Commission (SEC) en banc committed reversible error in
issuing and upholding, respectively, the writ of preliminary injunction.
The writ enjoined the execution of the questioned agreements between
Qualcomm, Inc. and Republic Telecommunications Holdings, Inc.
(RETELCOM). The implementation of the agreements was restrained
through the assailed orders of the SICD and the SEC en banc which,
however, were nullified by the CA decision. Thus, RETELCOM elevated
the matter to this Court praying for the reinstatement of the writ of
preliminary injunction of the SICD and the SEC en banc. However, before
the matter was finally resolved, Qualcomm, Inc. withdrew from the
negotiating table. Its withdrawal had thwarted the execution and
enforcement of the contracts. Thus, the resolution of whether the

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Page 7 of 121

implementation of said agreements should be enjoined became no

longer necessary.

Resolution dated 29 January 1999, which set aside the TRO issued by the
appellate court.

Equally applicable to the present case is the Court ruling in the abovecited Republic Telecommunications. There We held, thus:

A ruling on the matter practically partakes of a mere advisory opinion,

which falls beyond the realm of judicial review. The exercise of the
power of judicial review is limited to actual cases and controversies.
Courts have no authority to pass upon issues through advisory opinions
or to resolve hypothetical or feigned problems.

Indeed, the instant petition, insofar as it assails the Court of Appeals

Decision nullifying the orders of the SEC en banc and the SICD, has been
rendered moot and academic. To rule, one way or the other, on the
correctness of the questioned orders of the SEC en banc and the SICD
will be indulging in a theoretical exercise that has no practical worth in
view of the supervening event.
The rule is well-settled that for a court to exercise its power of
adjudication, there must be an actual case or controversy one which
involves a conflict of legal rights, an assertion of opposite legal claims
susceptible of judicial resolution; the case must not be moot or academic
or based on extra-legal or other similar considerations not cognizable by
a court of justice. Where the issue has become moot and academic, there
is no justiciable controversy, and an adjudication thereon would be of no
practical use or value as courts do not sit to adjudicate mere academic
questions to satisfy scholarly interest, however intellectually
challenging.
In the ultimate analysis, petitioners are seeking the reinstatement of the
writ of injunction to prevent the concerned parties from pushing
through with transactions with Qualcomm, Inc. Given that Qualcomm,
Inc. is no longer interested in pursuing the contracts, there is no actual
substantial relief to which petitioners would be entitled and which
would be negated by the dismissal of the petition.
The Court likewise finds it unnecessary to rule whether the assailed
Court of Appeals Decision had the effect of overruling the Courts

While there were occasions when the Court passed upon issues although
supervening events had rendered those petitions moot and academic,
the instant case does not fall under the exceptional cases. In those cases,
the Court was persuaded to resolve moot and academic issues to
formulate guiding and controlling constitutional principles, precepts,
doctrines or rules for future guidance of both bench and bar.
In the case at bar, the resolution of whether a writ of preliminary
injunction may be issued to prevent the implementation of the assailed
contracts calls for an appraisal of factual considerations which are
peculiar only to the transactions and parties involved in this
controversy. Except for the determination of whether petitioners are
entitled to a writ of preliminary injunction which is now moot, the issues
raised in this petition do not call for a clarification of any constitutional
principle or the interpretation of any statutory provision.22
Secondly, even assuming that the Court will choose to disregard the
foregoing considerations and brush aside mootness, the Court cannot
completely rule on the merits of the case because the resolution of the
three petitions involves settling factual issues which definitely requires
reception of evidence. There is not an iota of doubt that this may not be
done by this Court in the first instance because, as has been stated often
enough, this Court is not a trier of facts.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Ang pagpapasiya sa tatlong petisyon ay nangangailangan ng paglilitis na

hindi gawain ng Hukumang ito.
Respondent ZTE, in its Comment in G.R. No. 178830,23 correctly pointed
out that since petitioner Suplico filed his petition directly with this
Court, without prior factual findings made by any lower court, a
determination of pertinent and relevant facts is needed. ZTE enumerated
some of these factual issues, to wit:
(1) Whether an executive agreement has been reached between
the Philippine and Chinese governments over the NBN Project;
(2) Whether the ZTE Supply Contract was entered into by the
Republic of the Philippines, through the DOTC, and ZTE
International pursuant to, and as an integral part of, the
executive agreement;
(3) Whether a loan agreement for the NBN Project has actually
been executed;
(4) Whether the Philippine government required that the NBN
Project be completed under a Build-Operate-and-Transfer
Scheme;
(5) Whether the AHI proposal complied with the requirements
for an unsolicited proposal under the BOT Law;
(6) Whether the Philippine government has actually earmarked
public finds for disbursement under the ZTE Supply Contract;
and
(7) Whether the coverage of the NBN Project to be supplied
under the ZTE Supply Contract is more extensive than that under
the AHI proposal or such other proposal submitted therefor.24

Page 8 of 121

Definitely, some very specific reliefs prayed for in both G.R. Nos. 178830
and 179613 require prior determination of facts before pertinent legal
issues could be resolved and specific reliefs granted.
In G.R. No. 178830, petitioner seeks to annul and set aside the award of
the ZTE-DOTC Broadband Deal and compel public respondents to
forthwith comply with pertinent provisions of law regarding
procurement of government ICT contracts and public bidding for the
NBN contract.
In G.R. No. 179613, petitioners also pray that the Court annul and set
aside the award of the contract for the national broadband network to
respondent ZTE Corporation, upon the ground that said contract, as well
as the procedures resorted to preparatory to the execution thereof, is
contrary to the Constitution, to law and to public policy. They also ask
the Court to compel public respondent to forthwith comply with
pertinent provisions of law regarding procurement of government
infrastructure projects, including public bidding for said contract to
undertake the construction of the national broadband network.
It is simply impossible for this Court "to annul and set aside the award of
the ZTE-DOTC Broadband Deal" without any evidence to support a prior
factual finding pointing to any violation of law that could lead to such
annulment order. For sure, the Supreme Court is not the proper venue
for this factual matter to be threshed out.
Thirdly, petitioner Suplico in G.R. No. 178830 prayed that this Court
order "public respondents to forthwith comply with pertinent
provisions of law regarding procurement of government ICT contracts
and public bidding for the NBN contract."25 It would be too
presumptuous on the part of the Court to summarily compel public
respondents to comply with pertinent provisions of law regarding
procurement of government infrastructure projects without any factual
basis or prior determination of very particular violations committed by

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

specific government officials of the executive branch. For the Court to do

so would amount to a breach of the norms of comity among co-equal
branches of government. A perceived error cannot be corrected by
committing another error. Without proper evidence, the Court cannot
just presume that the executive did not comply with procurement laws.
Should the Court allow itself to fall into this trap, it would plainly commit
grave error itself.
Magiging kapangahasan sa Hukumang ito na pilitin ang mga pinipetisyon
na tumalima sa batas sa pangongontrata ng pamahalaan kung wala pang
pagtitiyak o angkop na ebidensiya ng nagawang paglabag dito.
Let it be clarified that the Senate investigation in aid of legislation cannot
be the basis of Our decision which requires a judicial finding of facts.
Justice Antonio T. Carpio takes the view that the National Broadband
Network Project should be declared null and void. The foregoing
threefold reasons would suffice to address the concern of Our esteemed
colleague.
The Court is, therefore, constrained to dismiss the petitions and deny
them due course because of mootness and because their resolution
requires reception of evidence which cannot be done in an original
petition brought before the Supreme Court.
WHEREFORE, the petitions are DISMISSED. The Temporary Restraining
Order issued on September 11, 2007 is DISSOLVED.
SO ORDERED.

Footnotes

Page 9 of 121
*

On official leave per Special Order No. 508 dated June 25, 2008.

1 Rollo (G.R. No. 178830), p. 1093.

2 1st Indorsement dated October 24, 2007 from the DOTC signed
by Atty. Raquel Desiderio, Director III, Legal Service states:
Respectfully indorsed to SOLICITOR GENERAL AGNES
VST DEVANADERA (Attention: ASSISTANT SOLICITOR
GENERAL AMPARO M. CABOTAJE-TANG), herein copy of
the Highlights From the Notes of the Meeting Between
President Gloria Macapagal-Arroyo and Chinese
President Hu Jintao which was held in Xi Jiao Guesthouse,
Shanghai, The Peoples Republic of China on 02 October
2007 as transmitted from the Office of the President as
provided by the Department of Foreign Affairs (DFA).
As per verbal request from your honorable office we are
furnishing you a copy of the record of the said meeting
which states in sum the Philippine Governments
decision not to continue with the ZTE National
Broadband Network Project due to several reasons and
constraints. It is the understanding of the DOTC that this
document will form part of the evidence that will be
submitted to the Honorable Supreme Court in connection
with the cases filed against the DOTC in relation to the
NBN Project.
Kindly refer to the attached document and respectfully
request appropriate action on the same. Thank you very
much for your continued support and assistance to the
Department of Transportation and Communications.
3 Rollo (G.R. No. 178830), p. 1124.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

4 Id. at 1157.
5 Id. at 1160.

Page 10 of 121
Chairman and President of the Export-Import Bank of
China, Peoples Republic of China nominating the NBN
Project.

6 G.R. No. 97351, February 4, 1992, 205 SCRA 816.

11 Rollo (G.R. No. 178830), pp. 127-128.

7 G.R. No. 139554, July 21, 2006, 496 SCRA 13.

12 Rollo (G.R. No. 179317), pp. 35-36.

8 G.R. No. 108399, July 31, 1997, 276 SCRA 501.

13 Rollo (G.R. No. 179613), pp. 77-78.

9 Citing Republic v. Tan, G.R. No. 145255, March 30, 2004, 426
SCRA 485, 492-493.

14 Rollo (G.R. No. 178830), p. 232.

15 Id. at 233-235.

10 (a) Issuance of a Forward Obligation Authority (FOA) by the

Department of Budget and Management (DBM) of the
Government of the Republic of the Philippines;
(b) Conclusion of the Loan Agreement between the
Export-Import Bank of China and the Department of
Finance (DOF) of the Government of the Republic of the
Philippines;
(c) Legal Opinion on the procurement process by the
Department of Justice of the Government of the Republic
of the Philippines;

16 Also attached to public respondents Comment in G.R. No.

178830 as Annex "LL." Id. at 537.
17 Id. at 589-590; Annex "OO." Letter of Sec. Leandro Mendoza,
DOTC, to Sen. Allan Peter Cayetano dated September 25, 2007. In
response to a request of the Senate Blue Ribbon Committee to be
furnished with the copy of the supply contract, DOTC Secretary
Mendoza informed Sen. Allan Peter Cayetano that the pertinent
documents were transmitted as publicly requested, and the same
were distributed to guests who requested a copy.
18 G.R. No. 171396, May 3, 2006, 489 SCRA 160.

(d) The ratification by the Government of the Republic of

the Philippines and the Peoples Republic of China of the
Executive Agreement evidenced by the letter dated 02
December 2006 of Chinese Ambassador Li Jinjun to
Presidential Chief of Staff Michael T. Defensor relating to
the NBN project and the letter of the NEDA Secretary
dated 20 April 2007 addressed to Honorable Minister Bo
Xilai, Ministry of Commerce and Honorable Li Rougu,

19 G.R. No. 146710, March 2, 2001, 353 SCRA 452.

20 The Highlights from the notes of the meeting between
President Gloria Macapagal-Arroyo and Chinese President Hu
Jintao which was held in the Xi Jiao Guesthouse, Shanghai, China
on October 2, 2007 was transmitted by the Office of the
President through the Department of Foreign Affairs (DFA) to

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

the Department of Transportation and Communications (DOTC),

which in turn transmitted the communication through 1st
Indorsement dated October 24, 2007 (Rollo [G.R. No. 178830], p.
1097) to the Office of the Solicitor General, which in informed
this Court, through its Manifestation and Motion dated October
26, 2007 (Id. at 1093).
21 G.R. No. 140338, August 7, 2007, 529 SCRA 232.
22 Republic Telecommunications Holdings, Inc. v. Santiago, id. at
242-244.
23 Rollo (G.R. No. 178830), p. 676.
24 Id. at 720-721.
25 Id. at 127-128.

DISSENTING OPINION
CARPIO, J.:
I dissent on the ground that the ZTE Supply Contract is void from the
beginning for being contrary to the Constitution, the Administrative
Code of 1987, the Government Auditing Code of the Philippines, and the
Government Procurement Reform Act. As such, the ZTE Supply Contract
is legally non-existent. The Philippine Governments decision "not to
continue with the ZTE National Broadband Network Project"1 during
the pendency of this case, even if deemed a cancellation of the ZTE
Supply Contract, had no legal effect on the status of the contract, and did
not moot this petition.

Page 11 of 121

This case is of transcendental importance to the nation since it involves

the constitutionality of a US$329.48 million (approximately P14.82
billion) government procurement contract awarded and signed without
an appropriation from Congress and without public bidding. This case
puts to the test the efficacy of constitutional and statutory proscriptions
designed precisely to prevent such contracts. The Court has a duty to
resolve the important issues in this case, including the novel question on
the status of executive agreements that conflict with national law, to
prevent a recurrence of government contracts that violate the
Constitution and existing statutes.
Not only are the legal issues in this case "capable of repetition yet
evading review."2 The ZTE Supply Contract itself is capable of being
resurrected. Public respondents merely stated that the Philippine
Government would "not continue with the ZTE National Broadband
Network Project," citing as basis the 1st Indorsement dated 24 October
2007 from the DOTC. Public respondents did not manifest that the ZTE
Supply Contract had been mutually cancelled by the parties to the
contract.
Equally important, private respondent ZTE Corporation has not
manifested to this Court its consent to the discontinuance or cancellation
of the ZTE Supply Contract. Indeed, private respondent ZTE Corporation
has not wavered from its position that "the ZTE Supply Contract is
entirely legal and proper."3 It is axiomatic that one party to a bilateral
contract cannot unilaterally declare a contract discontinued or cancelled.
Clearly, this case is far from being moot.
Petitioner assails the ZTE Supply Contract as void from the beginning on
two grounds. First, the contract has no appropriation from Congress,
violating Section 29(2), Article VI of the Constitution. Second, the
absence of public bidding violates the Government Procurement Reform
Act.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Page 12 of 121

In their Comment, public respondents attached the ZTE Supply Contract

dated 21 April 2007, the Memorandum of Understanding on the
Establishment of Philippines-China Economic Partnership dated 5 June
2006, and the letters between Philippine and Chinese officials relating to
the National Broadband Network Project. These attachments mooted
petitioners prayer for copies of these documents, leaving as sole issue of
this petition the legal status of the ZTE Supply Contract.

2. There was no public bidding in the award of the contract to

ZTE Corporation, and the Chinese Government handpicked ZTE
Corporation to supply the goods and services to the Philippine
Government;6

This Petition for the Issuance of a Temporary Restraining Order and

Writs of Prohibition and/or Permanent Injunction, and Mandamus
seeks, among others, to annul the ZTE Supply Contract and to prohibit
public respondents from disbursing public funds to implement the
contract. The Constitution and existing statutes prohibit public officers
from disbursing public funds without the corresponding appropriation
from Congress. Existing statutes also prohibit public officials from
entering into procurement contracts without a certificate of
appropriation and fund availability from the proper accounting and
auditing officials. It is the ministerial duty of public officials to not only
desist from disbursing public funds without the corresponding
appropriation from Congress, but also to refrain from signing and
implementing procurement contracts without the requisite certificate of
appropriation and fund availability. Indisputably, a petition for
prohibition is a proper action to test the legality of such disbursement of
public funds and the legality of the execution of such procurement
contracts.4

4. The Loan Agreement to finance the ZTE Supply Contract was

not concluded before or after the signing of the ZTE Supply
Contract;8

From the admissions of respondents in their Consolidated Comment, the

following facts are undisputed:
1. The ZTE Supply Contract, a procurement of goods and services
for the Philippine Government, was signed on 21 April 2007 by
DOTC Secretary Leandro R. Mendoza and ZTE Corporation Vice
President Yu Yong;5

3. The ZTE Supply Contract is to be financed by a loan from the

Export-Import Bank of China to the Philippine Government;7

5. There is no appropriation law enacted by Congress to fund the

ZTE Supply Contract;9
6. A certificate of appropriation and fund availability is not
attached to the ZTE Supply Contract;10 and
7. ZTE Corporation is publicly listed in the Hong Kong and
Shenzhen stock exchanges.11
In addition, the 2006 and 2007 General Appropriations Acts12 do not
contain any appropriation for a foreign-assisted National Broadband
Network Project, under which the ZTE Supply Contract would fall.
This case raises the following issues:
1. Whether the ZTE Supply Contract is void from the beginning in
the absence of an appropriation by law to fund the contract, and
in the absence of a certificate of appropriation and fund
availability; and
2. Whether the ZTE Supply Contract is void from the beginning in
the absence of a public bidding.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

The simple answer to each question is yes, the ZTE Supply Contract is
void from the beginning. The absence of any of the three - an
appropriation law, a certificate of appropriation and fund availability,
and public bidding - renders the ZTE Supply Contract void from the
beginning.
Absence of an Appropriation Law
The Constitution requires an appropriation law before public funds are
spent for any purpose. Section 29(2), Article VI of the Constitution
provides:
No money shall be paid out of the Treasury except in pursuance of an
appropriation made by law.13
The power of the purse or the power of Congress to authorize payment
from funds in the National Treasury is lodged exclusively in Congress.
One of the fundamental checks and balances finely crafted in the
Constitution is that Congress authorizes the amount to be spent, while
the Executive spends the amount so authorized. The Executive cannot
authorize its own spending, and neither can Congress spend what it has
authorized. The rationale of this basic check and balance is to prevent
abuse of discretion in the expenditure of public funds.
Thus, the Executive branch cannot spend a single centavo of government
receipts, whether from taxes, sales, donations, dividends, profits, loans,
or from any other source, unless there is an appropriation law
authorizing the expenditure. Any government expenditure without the
corresponding appropriation from Congress is unconstitutional. There is
no exception to this constitutional prohibition that "no money shall be
paid out of the Treasury except in pursuance of an appropriation made
by law." This constitutional prohibition is self-executory.

Page 13 of 121

To further insure compliance with Section 29(2), Article VI of the

Constitution, the Administrative Code of 1987 expressly prohibits the
entering into contracts involving the expenditure of public funds unless
two prior requirements are satisfied. First, there must be an
appropriation law authorizing the expenditure required in the contract.
Second, there must be attached to the contract a certification by the
proper accounting official and auditor that funds have been
appropriated by law and such funds are available. Failure to comply with
any of these two requirements renders the contract void.
Thus, Sections 46, 47 and 48, Chapter 8, Subtitle B, Title I, Book V of the
Administrative Code of 1987 provide:
SECTION 46. Appropriation Before Entering into Contract. (1) No
contract involving the expenditure of public funds shall be entered into
unless there is an appropriation therefor, the unexpended balance of
which, free of other obligations, is sufficient to cover the proposed
expenditure; and
(2) Notwithstanding this provision, contracts for the procurement of
supplies and materials to be carried in stock may be entered into under
regulations of the Commission provided that when issued, the supplies
and materials shall be charged to the proper appropriations account.
SECTION 47. Certificate Showing Appropriation to Meet Contract.
Except in the case of a contract for personal service, for supplies for
current consumption or to be carried in stock not exceeding the
estimated consumption for three (3) months, or banking transactions of
government-owned or controlled banks, no contract involving the
expenditure of public funds by any government agency shall be entered
into or authorized unless the proper accounting official of the agency
concerned shall have certified to the officer entering into the obligation
that funds have been duly appropriated for the purpose and that the
amount necessary to cover the proposed contract for the current

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

calendar year is available for expenditure on account thereof, subject to

verification by the auditor concerned. The certificate signed by the
proper accounting official and the auditor who verified it, shall be
attached to and become an integral part of the proposed contract, and
the sum so certified shall not thereafter be available for expenditure for
any other purpose until the obligation of the government agency
concerned under the contract is fully extinguished.
SECTION 48. Void Contract and Liability of Officer. Any contract
entered into contrary to the requirements of the two (2) immediately
preceding sections shall be void, and the officer or officers entering into
the contract shall be liable to the Government or other contracting party
for any consequent damage to the same extent as if the transaction had
been wholly between private parties. (Emphasis supplied)
Sections 85, 86 and 87 of the Government Auditing Code of the
Philippines,14 an earlier law, contain the same provisions.
The Administrative Code of 1987 and the Government Auditing Code
expressly mandate that "[N]o contract involving the expenditure of
public funds shall be entered into unless there is an appropriation
therefor." The law prohibits the mere entering into a contract without
the corresponding appropriation from Congress. It does not matter
whether the contract is subject to a condition as to its effectivity, such as
a subsequent favorable legal opinion by the Department of Justice,15
because even a contract with such condition is still a contract under the
law.16
Moreover, the Administrative Code of 1987 and the Government
Auditing Code expressly mandate that "[N]o contract involving the
expenditure of public funds x x x shall be entered into or authorized
unless the proper accounting official x x x shall have certified to the
officer entering into the obligation that funds have been duly
appropriated for the purpose and that the amount necessary to cover

Page 14 of 121

the proposed contract for the current fiscal year is available for
expenditure." The law prohibits not only the entering into the contract,
but also authorizing the entering into the contract without the
certification from the proper accounting official. This means that the
certificate of appropriation and fund availability must be issued before
the signing of the contract.
In addition, the Administrative Code of 1987 and the Government
Auditing Code expressly require that the "certificate signed by the
proper accounting official and the auditor who verified it, shall be
attached to and become an integral part of the proposed contract." The
certificate of appropriation and fund availability must be attached to the
"proposed contract," again clearly showing that the certificate must be
issued before the signing of the contract.
In several cases, the Court had the occasion to apply these provisions of
the Administrative Code of 1987 and the Government Auditing Code of
the Philippines. In these cases, the Court clearly ruled that the two
requirements the existence of appropriation and the attachment of the
certification are "conditions sine qua non for the execution of
government contracts." In COMELEC v. Quijano-Padilla,17 the Court
ruled:
It is quite evident from the tenor of the language of the law that the
existence of appropriations and the availability of funds are
indispensable pre-requisites to or conditions sine qua non for the
execution of government contracts. The obvious intent is to impose such
conditions as a priori requisites to the validity of the proposed contract.
Using this as our premise, we cannot accede to PHOTOKINA's contention
that there is already a perfected contract. x x x
xxx

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Petitioners are justified in refusing to formalize the contract with

PHOTOKINA. Prudence dictated them not to enter into a contract not
backed up by sufficient appropriation and available funds. Definitely, to
act otherwise would be a futile exercise for the contract would inevitably
suffer the vice of nullity. In Osmea vs. Commission on Audit, this Court
held:
The Auditing Code of the Philippines (P.D. 1445) further provides that
no contract involving the expenditure of public funds shall be entered
into unless there is an appropriation therefor and the proper accounting
official of the agency concerned shall have certified to the officer
entering into the obligation that funds have been duly appropriated for
the purpose and the amount necessary to cover the proposed contract
for the current fiscal year is available for expenditure on account thereof.
Any contract entered into contrary to the foregoing requirements shall
be VOID.
Clearly then, the contract entered into by the former Mayor Duterte was
void from the very beginning since the agreed cost for the project
(P8,368,920.00) was way beyond the appropriated amount
(P5,419,180.00) as certified by the City Treasurer. Hence, the contract
was properly declared void and unenforceable in COA's 2nd
Indorsement, dated September 4, 1986. The COA declared and we agree,
that:
The prohibition contained in Sec. 85 of PD 1445 (Government Auditing
Code) is explicit and mandatory. Fund availability is, as it has always
been, an indispensable prerequisite to the execution of any government
contract involving the expenditure of public funds by all government
agencies at all levels. Such contracts are not to be considered as final or
binding unless such a certification as to fund availability is issued (Letter
of Instruction No. 767, s. 1978). Antecedent of advance appropriation is
thus essential to government liability on contracts (Zobel vs. City of
Manila, 47 Phil. 169). This contract being violative of the legal

Page 15 of 121

requirements aforequoted, the same contravenes Sec. 85 of PD 1445 and

is null and void by virtue of Sec. 87.
Verily, the contract, as expressly declared by law, is inexistent and void
ab initio. This is to say that the proposed contract is without force and
effect from the very beginning or from its incipiency, as if it had never
been entered into, and hence, cannot be validated either by lapse of time
or ratification. (Emphasis supplied)
The law expressly declares void a procurement contract that fails to
comply with the two requirements, namely, an appropriation law
funding the contract and a certification of appropriation and fund
availability. The clear purpose of these requirements is to insure that
government contracts are never signed unless supported by the
corresponding appropriation law and fund availability.18 The ZTE
Supply Contract does not comply with any of these two requirements.
Thus, the ZTE Supply Contract is void for violation of Sections 46, 47 and
48, Chapter 8, Subtitle B, Title I, Book V of the Administrative Code of
1987, as well as Sections 85, 86 and 87 of the Government Auditing Code
of the Philippines. These provisions of both Codes implement Section
29(2), Article VI of the Constitution.
Public respondent National Economic and Development Authority is
fully aware that all proceeds of loans and grants secured by the
Philippine Government cannot be disbursed without an appropriation
from Congress. Public respondent National Economic and Development
Authority and its officials know, or ought to know by heart, that this is a
fundamental requirement of the Constitution and existing statutes. The
National Economic and Development Authority has succinctly
summarized this fundamental rule in Section 5.1 of the Implementing
Rules and Regulations for the Official Development Assistance (ODA) Act
of 1996:

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Section 5.1. General Principles on Budget - All expenditures, inclusive of

counterpart and proceeds of loans and loans and grant funds, must be
included in the annual national expenditure program to be submitted to
Congress for approval. (Emphasis supplied)
There can be no dispute that the proceeds of foreign loans, whether
concluded or not, cannot be obligated in a procurement contract without
a prior appropriation from Congress.
The Office of the Solicitor General (OSG), representing the public
respondents, advances two arguments to justify the absence of
appropriation for the ZTE Supply Contract. First, there is no need for an
appropriation by law because the loan agreement has not been
concluded. Second, the automatic appropriation for payment of foreign
loans under Section 31 of Presidential Decree No. 117719 provides the
appropriation cover to fund the ZTE Supply Contract. Thus, the OSG
asserts:
At the outset, there is no need yet for a budget allocation as the loan
agreement has yet to be concluded. Assuming arguendo that one has
already been executed, the appropriation therefor is covered by the
Executive branchs power of automatic appropriation for payment of
foreign loans contracted. x x x20
The OSGs first argument is an admission that when the ZTE Supply
Contract was signed, there was no loan agreement, no loan proceeds,
and no appropriation from Congress for the contract. This only drives
the last nail deeper into the coffin of the ZTE Supply Contract because
the absence of an appropriation from Congress makes the signing of the
ZTE Supply Contract an unconstitutional and unlawful act.
The OSGs second argument betrays a lack of understanding of
appropriations for payment of goods and services as distinguished from
appropriations for repayment of loans. When the Executive branch

Page 16 of 121

secures a loan to fund a procurement of goods or services, the loan

proceeds enter the National Treasury as part of the general funds of the
government. Congress must appropriate by law the loan proceeds to
fund the procurement of goods or services, otherwise the loan proceeds
cannot be spent by the Executive branch. When the loan falls due,
Congress must make another appropriation law authorizing the
repayment of the loan out of the general funds in the National
Treasury.21 This appropriation for the repayment of the loan is what is
covered by the automatic appropriation in Section 31 of PD No. 1177.22
It is not the appropriation needed to fund a procurement contract. The
OSGs arguments are clearly misplaced.

Absence of Public Bidding

The Government Procurement Reform Act requires public bidding in all
procurement of infrastructure, goods and services. Section 10, Article IV
of the Government Procurement Reform Act provides:
Section 10. Competitive Bidding All procurement shall be done through
Competitive Bidding, except as provided for in Article XVI of this Act.
(Emphasis supplied)
In addition, Section 4 of the Government Procurement Reform Act
provides that the Act applies to government procurement "regardless of
source of funds, whether local or foreign." Hence, the requirement of
public bidding applies to foreign-funded contracts like the ZTE Supply
Contract.
Respondents admit that there was no public bidding for the ZTE Supply
Contract. Respondents do not claim that the ZTE Supply Contract falls
under any of the exceptions to public bidding in Article XVI of the
Government Procurement Reform Act. Instead, private respondent ZTE

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Corporation claims that the ZTE Supply Contract, being part of an

executive agreement, is exempt from public bidding under the last
sentence of Section 4 of the Government Procurement Reform Act. Thus,
private respondent ZTE Corporation argues:
x x x Section 4 of RA 9184 itself expressly provides that executive
agreements that deal on subject matters covered by said law shall be
observed. Hence, the requirement of competitive bidding under section
10 of the law is not applicable. Section 4 of RA 9184 provides:
Section 4. Scope and Application. - This Act shall apply to the
procurement of Infrastructure Projects, Goods and Consulting Services,
regardless of source of funds, whether local or foreign, by all branches
and instrumentalities of government, its departments, offices and
agencies, including government-owned and/or controlled corporations
and local government units, subject to the provisions of Commonwealth
Act No. 138. Any treaty or international or executive agreement affecting
the subject matter of this Act to which the Philippine government is a
signatory shall be observed.

Page 17 of 121

amend or repeal a prior law. The obvious answer is that an executive

agreement cannot amend or repeal a prior law.
Admittedly, an executive agreement has the force and effect of law, just
like implementing rules of executive agencies. However, just like
implementing rules of executive agencies, executive agreements cannot
amend or repeal prior laws but must comply with the laws they
implement.23 Only a treaty, upon ratification by the Senate, acquires the
status of a municipal law. Thus, a treaty may amend or repeal a prior law
and vice-versa.24 Hence, a treaty may change state policy embodied in a
prior law.
In sharp contrast, an executive agreement, being an exclusive act of the
Executive branch, does not have the status of a municipal law. Acting
alone, the Executive has no law-making power. While the Executive does
possess rule-making power, such power must be exercised consistent
with the law it seeks to implement.

xxx

Consequently, an executive agreement cannot amend or repeal a prior

law. An executive agreement must comply with state policy embodied in
existing municipal law. This Court has declared:

There is no provision in the Executive Agreement that requires the

conduct of competitive public bidding before the award of the NBN
Project, or any project envisioned in the RP-China MNOU for that matter.
The subsequent exchange of notes between China and the Philippines
clearly shows that ZTE was chosen as the contractor for the NBN Project.
This was formalized through the DTI-ZTE MOU and the ZTE Supply
Contract. (Boldfacing and underlining in the original)

International agreements involving political issues or changes of

national policy and those involving international arrangements of a
permanent character usually take the form of treaties. But international
agreements embodying adjustments of detail carrying out wellestablished national policies and traditions and those involving
arrangements of a more or less temporary nature usually take the form
of executive agreements.25 (Emphasis supplied)

Private respondent ZTE Corporations argument will hold water if an

executive agreement can amend the mandatory statutory requirement of
public bidding in the Government Procurement Reform Act. In short, the
issue turns on the novel question of whether an executive agreement can

Executive agreements are intended to carry out well-established

national policies, and these are found in statutes.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

In the United States, from where we adopted the concept of executive

agreements, the prevailing view is that executive agreements26 cannot
alter existing law but must conform with all statutory requirements. The
U.S. State Department has explained the distinction between treaties and
executive agreements in this manner:
x x x it may be desirable to point out here the well-recognized distinction
between an executive agreement and a treaty. In brief, it is that the
former cannot alter the existing law and must conform to all statutory
enactments, whereas a treaty, if ratified by and with the advice and
consent of two-thirds of the Senate, as required by the Constitution,
itself becomes the supreme law of the land and takes precedence over
any prior statutory enactments.27 (Emphasis supplied)
As Professor Erwin Chemerinsksy states, "So long as the (U.S.) president
is not violating another constitutional provision or a federal statute,
there seems little basis for challenging the constitutionality of an
executive agreement."28 In the United States, while an executive
agreement cannot alter a federal law, an executive agreement prevails
over state law.29
Likewise, Professor Laurence H. Tribe states that an executive
agreement cannot override a prior act of Congress even as it prevails
over state law. Thus:
x x x Although it seems clear that an unratified executive agreement,
unlike a treaty, cannot override a prior act of Congress, executive
agreements, even without Senate ratification, have the same weight as
formal treaties in their effect upon conflicting state laws.30
Professor Tribe cited United States v. Gary W. Capps, Inc.,31 where the
Court of Appeals (4th Circuit) ruled that an unratified executive
agreement could not prevail over a conflicting federal law. The U.S.

Page 18 of 121

Supreme Court affirmed the appellate courts decision but on nonconstitutional grounds.
Clearly, an executive agreement must comply with well-established state
policies, and these state policies are laid down in statutes. The
Government Procurement Reform Act has laid down a categorical state
policy "All procurement shall be done through Competitive Bidding,"
subject only to narrowly defined exceptions that respondents do not
invoke here. Consequently, the executive agreement between China and
the Philippines cannot exempt the ZTE Supply Contract from the state
policy of public bidding.
Private respondent ZTE Corporation further claims that the ZTE Supply
Contract is part of the executive agreement between China and the
Philippines. This is plain error. An executive agreement is an agreement
between governments. The Executive branch has defined an
"international agreement," which includes an executive agreement, to
refer to a contract or an understanding "entered into between the
Philippines and another government."32
That the Chinese Government handpicked the ZTE Corporation to supply
the goods and services to the Philippine Government does not make the
ZTE Supply Contract an executive agreement. ZTE Corporation is not a
government or even a government agency performing governmental or
developmental functions like the Export-Import Bank of China or the
Japan Bank for International Cooperation,33 or a multilateral lending
agency organized by governments like the World Bank.34 ZTE
Corporation is a business enterprise performing purely commercial
functions. ZTE Corporation is publicly listed in the Hong Kong and
Shenzhen stock exchanges, with individual and juridical stockholders
that receive dividends from the corporation.
Moreover, an executive agreement is governed by international law.35
However, the ZTE Supply Contract expressly provides that it shall be

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

governed by Philippine law.36 Thus, the ZTE Supply Contract is not an

executive agreement but simply a commercial contract, which must
comply with public bidding as mandated by the governing law, which is
Philippine law.
Finally, respondents seek refuge in the second sentence of Section 4 of
the Government Procurement Reform Act:
Section 4. Scope and Application - This Act shall apply to the
Procurement of Infrastructure Projects, Goods and Consulting Services,
regardless of the source of funds, whether local or foreign, by all
branches of the government, its departments, offices and agencies,
including government-owned and/or-controlled corporations and local
government units, subject to the provisions of Commonwealth Act No.
138. Any treaty or international or executive agreement affecting the
subject matter of this Act to which the Philippine government is a
signatory shall be observed. (Emphasis supplied)
Respondents argue that the second sentence of Section 4 allows an
executive agreement to override the mandatory public bidding in
Section 10 of the Government Procurement Reform Act.lawphil
Respondents argument is flawed. First, an executive agreement, being
an exclusive act of the Executive branch, cannot amend or repeal a
mandatory provision of law requiring public bidding in government
procurement contracts. To construe otherwise the second sentence of
Section 4 would constitute an undue delegation of legislative powers to
the President, making such sentence unconstitutional. There are no
standards prescribed in the Government Procurement Reform Act that
would guide the President in exercising such alleged delegated
legislative power. Thus, the second sentence of Section 4 cannot be
construed to delegate to the President the legislative power to amend or
repeal mandatory requirements in the Government Procurement
Reform Act.

Page 19 of 121

Second, under Section 10 of the Government Procurement Reform Act,

the only exceptions to mandatory public bidding are those specified in
Article XVI of the Act. These specified exceptions do not include
purchases from foreign suppliers handpicked by foreign governments,
or from suppliers owned or controlled by foreign governments.
Moreover, Section 4 of the Government Procurement Reform Act
mandates that the "Act shall apply to the Procurement of Infrastructure
Projects, Goods and Consulting Services, regardless of source of funds,
whether local or foreign x x x."
Third, the second sentence of Section 4 should be read in conjunction
with Section 4 of the Foreign Borrowings Act,37 which provides:
Section 4. In the contracting of any loan, credit or indebtedness under
this Act, the President of the Philippines may, when necessary, agree to
waive or modify the application of any law granting preferences or
imposing restrictions on international competitive bidding, including
among others, Act Numbered Four Thousand Two Hundred Thirty-Nine,
Commonwealth Act Numbered One Hundred Thirty-Eight, the
provisions of Commonwealth Act Numbered Five Hundred Forty-One,
insofar as such provisions do not pertain to constructions primarily for
national defense or security purposes, Republic Act Numbered Five
Thousand One Hundred Eighty-Three: Provided, however, That as far as
practicable, utilization of the services of qualified domestic firms in the
prosecution of projects financed under this Act shall be encouraged:
Provided, further, That in case where international competitive bidding
shall be conducted preference of at least fifteen per centum shall be
granted in favor of articles, materials, or supplies of the growth,
production or manufacture of the Philippines: Provided, finally, That the
method and procedure in the comparison of bids shall be the subject of
agreement between the Philippine Government and the lending
institution. (Emphasis supplied)

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Likewise, Section 4 of the Government Procurement Reform Act should

be read in conjunction with Section 11-A of the Official Development
Assistance Act of 1996:38
Section 11-A. In the contracting of any loan, credit or indebtedness
under this Act or any law, the President of the Philippines may, when
necessary, agree to waive or modify the application of any provision of
law granting preferences in connection with, or imposing restrictions on,
the procurement of goods or services: Provided, however, That as far as
practicable, utilization of the services of qualified Filipino citizens or
corporations or associations owned by such citizens in the prosecution
of projects financed under this Act shall be prepared on the basis of the
standards set for a particular project: Provided, further, That the matter
of preference in favor of articles, materials, or supplies of the growth,
production or manufacture of the Philippines, including the method or
procedure in the comparison of bids for purposes therefor, shall be the
subject of agreement between the Philippine Government and the
lending institution. (Emphasis supplied)
Consequently, as construed together, the executive agreements
mentioned in the second sentence of Section 4 of the Government
Procurement Reform Act should refer to executive agreements on (1)
the waiver or modification of preferences to local goods or domestic
suppliers;39 (2) the waiver or modification of restrictions on
international competitive bidding; and (3) the method or procedure in
the comparison of bids.
The executive agreements cannot refer to the waiver of public bidding
for two reasons. First, the law only allows the President to "waive or
modify, the application of any law x x x imposing restrictions on
international competitive bidding." The law does not authorize the
President to waive entirely public bidding but only the restrictions on
public bidding. Thus, the President may restrict the public bidding to
suppliers domiciled in the country of the creditor. This is the usual

Page 20 of 121

modification on restrictions imposed by creditor countries. Second,

when the law speaks of executive agreements on the method or
procedure in the comparison of bids, the obvious assumption is there
will be competitive bidding. Third, there is no provision of law allowing
waiver of public bidding outside of the well-defined exceptions in Article
XVI of the Government Procurement Reform Act.1avvphil
Respondents, while not raising this argument, cannot also rely on
Section 1 of the Foreign Borrowings Act, which provides:
Section 1. The President of the Philippines is hereby authorized, in
behalf of the Republic of the Philippines, to contract such loans, credits,
including supplier's credit, deferred payment arrangements, or
indebtedness as may be necessary and upon terms and conditions as
may be agreed upon, not inconsistent with this Act, with Governments of
foreign countries with whom the Philippines has diplomatic or trade
relations or which are members of the United Nations, their agencies,
instrumentalities or financial institutions or with reputable international
organizations or non-governmental national or international lending
institutions or firms extending supplier's credit deferred payment
arrangements x x x . (Emphasis supplied)
A solitary Department of Justice opinion40 has ventured that the phrase
"as may be necessary and upon terms and conditions as may be agreed
upon" serves as statutory basis for the President to exempt foreignfunded government procurement contracts from public bidding. This is a
mistake. This phrase means that the President has discretion to decide
the terms and conditions of the loan, such as the rate of interest, the
maturity period, amortization amounts, and similar matters. This phrase
does not delegate to the President the legislative power to amend or
repeal mandatory provisions of law like compulsory public bidding of
government procurement contracts. Otherwise, this phrase would
constitute undue delegation of legislative power since there are no

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

standards that would guide the President in exercising this alleged

delegated legislative power.
What governs the waiver or modification of restrictions on public
bidding is Section 4-A of the Foreign Borrowings Act, which authorizes
the President to, "when necessary, agree to modify the application of any
law x x x imposing restrictions on international competitive bidding."
Section 4 is the specific provision of the Foreign Borrowings Act that
deals with the Presidents authority to waive or modify restrictions on
public bidding. Section 1 of the Act does not deal with the requirement of
public bidding. Besides, if Section 1 is construed as granting the
President full authority to waive or limit public bidding, Section 4
becomes a superfluous provision.
In any event, whatever doubt may have existed before has been erased
by the enactment in 2003 of the Government Procurement Reform Act,
which reformed the laws regulating government procurement. The
following provisions of the Act clearly prescribe the rule that
government procurement contracts shall be subject to mandatory public
bidding:
Section 3. Governing Principles on Government Procurement. - All
procurement of the national government, its departments, bureaus,
offices and agencies, including state universities and colleges,
government-owned and/or controlled corporations, government
financial institutions and local government units shall, in all cases, be
governed by these principles:
(a) Transparency in the procurement process x x x.
(b) Competitiveness by extending equal opportunity to enable
private contracting parties who are eligible and qualified to
participate in public bidding.

Page 21 of 121
x x x.

Section 4. Scope and Application. - This Act shall apply to the

Procurement of Infrastructure Projects, Goods and Consulting Services,
regardless of source of funds, whether local or foreign, by all branches
and instrumentalities of government, its departments, offices and
agencies, including government-owned and/or controlled corporations
and local government units, x x x.
Section 10. Competitive Bidding. - All procurement shall be done
through Competitive Bidding, except as provided for in Article XVI of this
Act. (Emphasis supplied)
The only exceptions to mandatory public bidding are procurements
falling under any of the narrowly defined situations in Article XVI of the
Act, which respondents do not invoke.
Foreign-funded projects of the government are not exempt from public
bidding despite executive agreements entered into by the Philippines
with creditor countries or lending institutions. In Abaya v. Ebdane, Jr.,41
the Court cited Memorandum Circular No. 104 dated 21 August 198942
issued by the President:
x x x it is hereby clarified that foreign-assisted infrastructure projects
may be exempted from the application of the pertinent provisions of the
Implementing Rules and Regulations (IRR) of Presidential Decree (P.D.)
No. 1594 relative to the method and procedure in the comparison of
bids, which may be the subject of agreement between the infrastructure
agency concerned and the lending institution. It should be made clear
however that public bidding is still required and can only be waived
pursuant to existing laws. (Italicization in the original of the
Memorandum Circular; boldfacing supplied)

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Executive agreements with lending institutions have never been

understood to allow exemptions from public bidding. What the executive
agreements can modify are the methods or procedures in the
comparison of bids, such as the adoption of the competitive bidding
procedures or guidelines of the Japan Bank for International
Cooperation43 or the World Bank44 on the method or procedure in the
evaluation or comparison of bids. It is self-evident that these procedures
or guidelines require public bidding.
Even so-called tied loans from creditor countries cannot justify
exemption from public bidding although the bidders may be limited to
suppliers domiciled in the creditor countries. Such a geographic
restriction on the domicile of suppliers can be the subject of an executive
agreement as a modification of restrictions on international competitive
bidding. A publication issued by public respondent National Economic
and Development Authority summarizes the international practice on
tied loans with respect to public bidding:
The conditions imposed by the donor on the recipient with respect to
ODA utilization provide another basis for differentiating ODA. In
particular, restriction of the geographic areas where procurement of
goods and services are eligible for ODA funding make ODA loan/grant
tied or untied with respect to source of procurement. Usually, bilateral
ODA is tied to the donor country in terms of procurement. While
competitive bidding is still practiced, qualified bidders for the supply of
goods and services are confined to those firms which are owned or
controlled by nationals of the donor country. x x x45 (Emphasis
supplied)
Even for tied loans, the international practice still requires public
bidding although the public bidding is restricted only among suppliers
that are nationals of the creditor country. In the present case, there was
no such public bidding because the Export-Import Bank of China simply

Page 22 of 121

handpicked ZTE Corporation as the supplier of the goods and services to

the Philippine Government.
That the funding for the ZTE Supply Contract will come from a foreign
loan does not negate the rationale for public bidding. Filipino taxpayers
will still pay for the loan with interest. The need to safeguard public
interest against anomalies exists in all government procurement
contracts, regardless of the source of funding. Public bidding is the most
effective means to prevent anomalies in the award of government
contracts. Public bidding promotes transparency and honesty in the
expenditure of public funds. Public bidding is accepted as the best means
of securing the most advantageous price for the government, whether in
procuring infrastructure, goods or services, or in disposing off
government assets.
Even in a Build-Operate-Transfer project where the proponent provides
all the capital with no government guarantee on project loans, the law
requires public bidding in the form of a Swiss challenge.46 With more
reason should a project financed by a tied loan to the government be
subject to public bidding. There is no sound reason why the Philippine
government should allow its foreign creditor in an already tied loan to
handpick the supplier of goods and services.
A tied loan, driven by a handpicked supplier, violates the principle of fair
and open process in government procurement transactions. Such a tied
loan, which arbitrarily reserves a contract to a pre-determined supplier,
will likely lead to anomalies. This is contrary to the state policies
enunciated in Sections 27 and 28, Article II of the Constitution:
Section 27. The State shall maintain honesty and integrity in the public
service and take positive and effective measures against graft and
corruption.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Section 28. Subject to reasonable conditions prescribed by law, the State

adopts and implements a policy of full public disclosure of all its
transactions involving public interest.
ZTE Supply Contract is Void from the Beginning
Contracts expressly prohibited or declared void by law are void from the
beginning. Article 1409 of the Civil Code provides:
Article 1409. The following contracts are inexistent and void from the
beginning:
xxx
(7) Those expressly prohibited or declared void by law.
x x x. (Emphasis supplied)
Sections 46 and 47, Chapter 8, Subtitle B, Title I, Book V of the
Administrative Code of 1987 expressly prohibit the entering into
procurement contracts that are not funded by an appropriation law and
which do not have certificates of appropriation and fund availability.
Section 48 of the same law expressly declares such contracts void. To
repeat, Section 48 provides:
SECTION 48. Void Contract and Liability of Officer. Any contract
entered into contrary to the requirements of the two (2) immediately
preceding sections shall be void, x x x. (Emphasis supplied)
The ZTE Supply Contract, which is not funded by an appropriation law
and does not have a certificate of appropriation and fund availability, is
not only void, but also void from the beginning under Article 1409 of the
Civil Code. As the Court held in COMELEC v. Quijano-Padilla,47 which

Page 23 of 121

involved a procurement contract without the requisite appropriation

law and certificate of appropriation and fund availability:
Verily, the contract, as expressly declared by law, is inexistent and void
ab initio. This is to say that the proposed contract is without force and
effect from the very beginning or from its incipiency, as if it had never
been entered into, and hence, cannot be validated either by lapse of time
or ratification. (Emphasis supplied)
A contract void from the beginning is legally non-existent. As such, it
cannot be annulled because to annul a contract assumes a voidable
contract.48 A cancellation of a contract void from the beginning has no
legal effect because the contract is legally non-existent. Any cancellation
may simply be construed as an acknowledgment or admission that the
contract is void from the beginning. A contract void from the beginning
can only be declared as such, that is, void from the beginning.
Thus, the discontinuance or cancellation of the ZTE Supply Contract by
the Philippine Government, apart from being unilateral, had no legal
effect and did not moot this petition. The members of this Court have the
sworn duty to uphold the system of checks and balances that is so
essential to our democratic system of government. In the present case,
the members of this Court must uphold the check and balance in the
appropriation and expenditure of public funds as embodied in Section
29(2), Article VI of the Constitution and the statutes insuring its
compliance. If our democratic institutions are to be strengthened, this
Court must not shirk from its primordial duty to preserve and uphold
the Constitution.
It is time to put an end to government procurement contracts,
amounting to tens of billions of pesos, exceeding even the annual budget
of the Judiciary, that are awarded and signed without an appropriation
from Congress, and without the required public bidding. This Court must
categorically declare the ZTE Supply Contract void from the beginning.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Accordingly, I vote to GRANT the petition and to DECLARE the ZTE

Supply Contract VOID from the beginning.
ANTONIO T. CARPIO
Associate Justice

Footnotes
1 Rollo, p. 1093. Public respondents Manifestation and Motion
dated 26 October 2007.
2 Rufino v. Endriga, G.R. No. 139554, 21 July 2006, 496 SCRA 13;
Manalo v. Calderon, G.R. No. 178920, 15 October 2007, 536 SCRA
290.
3 Private respondent ZTE Corporations Comment, p. 8.
4 Section 2, Rule 65 of the Rules of Court.
5 Rollo, pp. 348-349. In their Consolidated Comment, pubic
respondents attached as Annex "LL" a copy of the ZTE Supply
Contract. Public respondents explained, "On April 21, 2007,
Mendoza and ZTE Corporation Vice President Yu Yong signed a
US$329 million supply contract for the NBN Project at the VIP
room of the Haikou Meilan International Airport of the Peoples
Republic of China."
6 The fourth whereas clause of the ZTE Supply Contract (Annex
"LL") states: "an Executive Agreement was entered into between
the Republic of the Philippines and the Peoples Republic of
China where the latter agreed to finance the National Broadband
Network Project through a Loan Agreement with Export-Import

Page 24 of 121
Bank of China subject to the condition that the Equipment and
Services to be procured from the proceeds of the loan come from
ZTE Corporation." (Id. at 539) Public respondents also attached
to their Consolidated Comment the 2 December 2006 letter
(Annex "N") of Chinese Ambassador Li Jinjun to Presidential
Chief of Staff Michael T. Defensor, stating: "It may interest Your
Honorable to know that ZTE Corporation, a reputable and
established telecommunications company in China, responded to
this worthwhile undertaking and, consequently, the Peoples
Republic of China through the Chinese Ministry of Commerce
designated it as the NBN projects prime contractor." (Id. at 472)
7 Id. at 369, fourth whereas clause of the ZTE Supply Contract. In
their Consolidated Comment, public respondents stated, "Among
the above-enumerated requisites (including the conclusion of the
loan agreement), only the issuance of a legal opinion from the
DOJ had been complied with."
8 Id. at 431. In their Consolidated Comment, public respondents
stated: "At the outset, there is no need yet for a budget allocation
as the loan agreement has yet to be concluded."
9 Id.
10 Supra, note 5. Annex "LL," which is a copy of the ZTE Supply
Contract, does not have as attachment the certificate of
appropriation and fund availability.
11 Rollo, p. 339. Consolidated Comment of public respondents,
footnote 14.
12 Republic Act No. 9336 (2005 reenacted for 2006) and
Republic Act No. 9401, respectively.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

13 This provision originated from the Jones Law, or the

Philippine Bill of 1901. Section 5 of the Jones Law provides:
"That no money shall be paid out of the Treasury except in
pursuance of an appropriation by law." This provision was
carried over almost verbatim in the 1935, 1973 and 1987
Constitutions.
14 Presidential Decree No. 1445. Sections 85, 86 and 87 of this
Decree provide:
SECTION 85. Appropriation Before Entering into
Contract. (1) No contract involving the
expenditure of public funds shall be entered into
unless there is an appropriation therefor, the
unexpended balance of which, free of other
obligations, is sufficient to cover the proposed
expenditure.
(2) Notwithstanding this provision,
contracts for the procurement of supplies
and materials to be carried in stock may
be entered into under regulations of the
Commission provided that when issued,
the supplies and materials shall be
charged to the proper appropriation
account.
SECTION 86. Certificate Showing Appropriation
to Meet Contract. Except in the case of a
contract for personal service, for supplies for
current consumption or to be carried in stock not
exceeding the estimated consumption for three
months, or banking transactions of governmentowned or controlled banks no contract involving

Page 25 of 121
the expenditure of public funds by any
government agency shall be entered into or
authorized unless the proper accounting official
of the agency concerned shall have certified to
the officer entering into the obligation that funds
have been duly appropriated for the purpose and
that the amount necessary to cover the proposed
contract for the current fiscal year is available for
expenditure on account thereof, subject to
verification by the auditor concerned. The
certificate signed by the proper accounting
official and the auditor who verified it, shall be
attached to and become an integral part of the
proposed contract, and the sum so certified shall
not thereafter be available for expenditure for
any other purpose until the obligation of the
government agency concerned under the contract
is fully extinguished.
SECTION 87. Void Contract and Liability of
Officer. Any contract entered into contrary to
the requirements of the two immediately
preceding sections shall be void, and the officer
or officers entering into the contract shall be
liable to the government or other contracting
party for any consequent damage to the same
extent as if the transaction had been wholly
between private parties.
15 Rollo, pp. 572-573. The ZTE Supply Contract (Annex "LL" of
public respondents Consolidated Comment), on the paragraph
Conditions for the Effectivity of the Contract, provides:

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

The Effectivity of this Contract shall be subject to the

fulfillment of the following conditions precedent:
Issuance of a Forward Obligation Authority (FOA) by the
Department of Budget and Management (DBM) of the
Government of the Philippines;
Conclusion of the Loan Agreement between ExportImport Bank of China and the Department of Finance
(DOF) of the Government of the Republic of the
Philippines;
Legal opinion on the procurement process by the
Department of Justice of the Government of the Republic
of the Philippines.
The ratification by the Government of the Republic of the
Philippines and the Peoples Republic of China of the
Executive Agreement evidenced by the letter dated 02
December 2006 of Chinese Ambassador Li Jinjun to
Presidential Chief of Staff Michael T. Defensor relating to
the NBN Project and the letter of NEDA Secretary dated
20 April 2007 addressed to Honorable Minister Bo XllI,
Ministry of Commerce and Honorable Li Ruogu,
Chairman and President, of the Export-Import Bank of
China, Peoples Republic of China nominating the NBN
Project.
16 Article 1318 of the Civil Code provides: "There is no contract
unless the following requisites concur: (1) Consent of the
contracting parties; (2) Object certain which is the subject of the
contract; (3) Cause of the obligation which is established." Hence,
once the three requisites concur, a contract arises, regardless of
any stipulation on conditional obligations.

Page 26 of 121
17 438 Phil. 72 (2002). See also Osmea v. Commission on Audit,
G.R. No. 98355, 2 March 1994, 230 SCRA 585; Agan, Jr. v. Phil.
International Air Terminals Co., Inc., 450 Phil. 744 (2003).
18 Melchor v. Commission on Audit, G.R. No. 95398, 16 August
1991, 200 SCRA 704.
19 Section 31 of Presidential Decree No. 1177 provides:
SECTION 31. Automatic Appropriations. All
expenditures for (a) personnel retirement premiums,
government service insurance, and other similar fixed
expenditures, (b) principal and interest on public debt,
(c) national government guarantees of obligations which
are drawn upon, are automatically appropriated:
provided, that no obligations shall be incurred or
payments made from funds thus automatically
appropriated except as issued in the form of regular
budgetary allotments. (Emphasis supplied)
20 Rollo, p. 431. Consolidated Comment of public respondents.
21 Guingona, Jr. v. Carague, G.R. No. 94571, 22 April 1991, 196
SCRA 221.
22 See also Section 6 of Presidential Decree No. 81, and Section 1
of Presidential Decree No. 1967.
23 Land Bank of the Philippines v. Court of Appeals, 319 Phil.
246 (1995).
24 Secretary of Justice v. Lantion, 379 Phil. 165 (2000).

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

25 Commissioner of Customs v. Eastern Sea Trading, No. L14279, 31 October 1961, 3 SCRA 351, reiterated in Adolfo v.
Court of First Instance of Zambales, 145 Phil. 264 (1970).
26 Made solely by the Executive, as distinguished from
executive-legislative agreements that are embodied in ordinary
legislation.

Page 27 of 121
33 Abaya v. Ebdane, Jr., G.R. No. 167919, 14 February 2007, 515
SCRA 720.
34 DBM-Procurement Service v. Kolonwel Trading, G.R. Nos.
175608, 175616 and 175659, 8 June 2007, 524 SCRA 591.
35 Supra, note 32.

27 Prof. Edwin Borchard (Justus S. Hotchkiss Professor of Law,

Yale Law School), Treaties and Executive Agreements A Reply,
Yale Law Journal, June 1945, citing Current Information Series,
No. 1, 3 July 1934, quoted in 5 Hackworth, Digest of International
Law (1943) pp. 425-6.

36 Article 33 of the ZTE Supply Contract provides: "The Contract

shall be governed by and construed in accordance with the laws
of the Republic of the Philippines."

28 Constitutional Law: Principles and Polices, 2nd Edition

(2002), p. 361.

38 Republic Act No. 8182, as amended.

29 United States v. Pink, 315 U.S. 203 (1942); United States v.

Belmont, 301 U.S. 324 (1937).
30 American Constitutional Law, Vol. 1, 3rd Edition (2000), p.
648.

37 Republic Act No. 4860, as amended.

39 Commonwealth Act No. 138, otherwise known as the Flag

Law.
40 DOJ Opinion No. 143 dated 10 October 1991 issued by Acting
Secretary Silvestre H. Bello III on the Municipal Telephone
Project funded by a French Financial Protocol loan of 186.6
million French francs.

31 204 F.2d 655 (4th Circuit, 1953).

41 Supra, note 33.
32 Section 2(a) of Executive Order No. 459 dated 25 November
1997, entitled Providing for the Guidelines in the Negotiation of
International Agreements and its Ratification, provides:
"International agreement - shall refer to a contract or
understanding, regardless of nomenclature, entered into
between the Philippines and another government in written
form and governed by international law, whether embodied in a
single instrument or in two or more instruments." (Emphasis
supplied)

42 Clarification on the Applicability of the Amended

Implementing Rules and Regulations (IRR) of Presidential
Decree No. 1595 relative to the Prosecution of Foreign-Assisted
Projects.
43 Supra, note 33.
44 Supra, note 34.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

45 Romeo A. Reyes, Official Development Assistance to the

Philippines: A Study of Administrative Capacity and
Performance, published by National Economic and Development
Authority, 1985.
46 Section 4-A, Republic Act No. 6957, as amended. A Swiss
challenge is a form of public procurement in some (usually lesser
developed) jurisdictions which requires a public authority
(usually an agency of government) which has received an
unsolicited bid for a public project (such as a port, road or
railway) or services to be provided to government, to publish the
bid and invite third parties to match or exceed it. x x x Some
Swiss challenges also allow the entity which submitted the
unsolicited bid itself then to match or better the best bid which
comes out of the Swiss challenge process. It is a form of
regulating public procurement.
http://en.wikipedia.org/wiki/Swiss_challenge.
47 Supra, note 17.
48 Article 1390 of the Civil Code provides that voidable contracts
"are binding, unless they are annulled by a proper action in
court." Of course, voidable contracts can also be annulled by
mutual agreement of the parties.
SEPARATE CONCURRING OPINION
AZCUNA, J.:
I find the points raised by Justice Antonio T. Carpio in his dissenting
opinion arguably sound, correct and almost unassailable as an abstract
treatise in law. Nevertheless, under the facts and pursuant to Article VIII,
Section 1 of the Constitution that defines judicial power as the duty of
the courts of justice to settle actual controversies involving rights which

Page 28 of 121

are legally demandable and enforceable, I am of the view that the

desistance from the agreement in question renders the matter academic
and moot, leaving no actual controversy calling for the exercise of
judicial power. The resolution of the issue in these proceedings would,
therefore, partake of the nature of an advisory opinion which this Court
is not allowed to render.
Furthermore, the so-called supply or procurement contract is clearly an
incomplete agreement and cannot stand alone without the companion
and yet-to-be-agreed loan agreement. As such, desistance at this stage
from further pursuing the project on the part of one party effectively
prevents the contract from materializing.
I, therefore, vote to DISMISS the petition for being moot and academic,
without prejudice to a proper case to settle an actual controversy
involving rights that are legally demandable and enforceable, if there be
any, arising from the incomplete agreement.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

G.R. No. 72764 July 13, 1989

STATE INVESTMENT HOUSE, petitioner,
vs.
INTERMEDIATE APPELLATE COURT, ANITA PEA CHUA and
HARRIS CHUA, respondents.

Edgardo F. Sundiam for respondents.

FERNAN, C.J.:
Petitioner State Investment House seeks a review of the decision of
respondent Intermediate Appellate Court (now Court of Appeals) in ACG.R. CV No. 04523 reversing the decision of the Regional Trial Court of
Manila, Branch XXXVII dated April 30, 1984 and dismissing the
complaint for collection filed by petitioner against private respondents
Spouses Anita Pena Chua and Harris Chua.
It appears that shortly before September 5, 1980, New Sikatuna Wood
Industries, Inc. requested for a loan from private respondent Harris
Chua. The latter agreed to grant the same subject to the condition that
the former should wait until December 1980 when he would have the
money. In view of this agreement, private respondent-wife, Anita Pena
Chua issued three (3) crossed checks payable to New Sikatuna Wood
Industries, Inc. all postdated December 22, 1980 as follows:

1. China Banking
Corporation

CHECK NO.
589053

04045549

3. Metropolitan Bank & 036512

Trust Co.

Dec. 22, 1980

102,313.00

Dec. 22, 1980

98,387.00

The total value of the three (3) postdated checks amounted to P

299,450.00.

Macalino, Salonga & Associates for petitioner.

DRAWEE BANK

2. International
Corporate Bank

Page 29 of 121

DATE
Dec. 22, 1980

AMOUNT
P98,750.00

Subsequently, New Sikatuna Wood Industries, Inc. entered into an

agreement with herein petitioner State Investment House, Inc. whereby
for and in consideration of the sum of Pl,047,402.91 under a deed of sale,
the former assigned and discounted with petitioner eleven (11)
postdated checks including the aforementioned three (3) postdated
checks issued by herein private respondent-wife Anita Pea Chua to
New Sikatuna Wood Industries, Inc.
When the three checks issued by private respondent Anita Pena Chua
were allegedly deposited by petitioner, these checks were dishonored by
reason of "insufficient funds", "stop payment" and "account closed",
respectively. Petitioner claims that despite demands on private
respondent Anita Pea to make good said checks, the latter failed to pay
the same necessitating the former to file an action for collection against
the latter and her husband Harris Chua before the Regional Trial Court
of Manila, Branch XXXVII docketed as Civil Case No. 82-10547.
Private respondents-defendants filed a third party complaint against
New Sikatuna Wood Industries, Inc. for reimbursement and
indemnification in the event that they be held liable to petitionerplaintiff. For failure of third party defendant to answer the third party
complaint despite due service of summons, the latter was declared in
default.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

On April 30, 1984, the lower court 1 rendered judgment against herein
private respondents spouses, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of
the plaintiff or against the defendants ordering the
defendants to pay jointly and severally to the plaintiff the
following amounts:
1. P 229,450.00 with interest at the rate of
12% per annum from February 24,1981
until fully paid;
2. P 29,945.00 as and for attorney's fees;
and
3. the costs of suit.
On the third party complaint, third party defendant New
Sikatuna Wood Industries, Inc. is ordered to pay third
party plaintiffs Anita Pena Chua and Harris Chua all
amounts said defendants' third- party plaintiffs may pay
to the plaintiff on account of this case. 2
On appeal filed by private respondents in AC-G.R. CV No. 04523, the
Intermediate Appellate Court 3 (now Court of Appeals) reversed the
lower court's judgment in the now assailed decision, the dispositive
portion of which reads:
WHEREFORE, finding this appeal meritorious, We
Reverse and Set Aside the appealed judgment, dated
April 30, 1984 and a new judgment is hereby rendered
dismissing the complaint, with costs against plaintiffappellee. 4

Page 30 of 121

Hence, this petition.

The pivotal issue in this case is whether or not petitioner is a holder in
due course as to entitle it to proceed against private respondents for the
amount stated in the dishonored checks.
Section 52(c) of the Negotiable Instruments Law defines a holder in due
course as one who takes the instrument "in good faith and for value". On
the other hand, Section 52(d) provides that in order that one may be a
holder in due course, it is necessary that "at the time the instrument was
negotiated to him he had no notice of any x x x defect in the title of the
person negotiating it." However, under Section 59 every holder is
deemed prima facie to be a holder in due course.
Admittedly, the Negotiable Instruments Law regulating the issuance of
negotiable checks as well as the lights and liabilities arising therefrom,
does not mention "crossed checks". But this Court has taken cognizance
of the practice that a check with two parallel lines in the upper left hand
corner means that it could only be deposited and may not be converted
into cash. Consequently, such circumstance should put the payee on
inquiry and upon him devolves the duty to ascertain the holder's title to
the check or the nature of his possession. Failing in this respect, the
payee is declared guilty of gross negligence amounting to legal absence
of good faith and as such the consensus of authority is to the effect that
the holder of the check is not a holder in good faith. 5
Petitioner submits that at the time of the negotiation and endorsement
of the checks in question by New Sikatuna Wood Industries, it had no
knowledge of the transaction and/or arrangement made between the
latter and private respondents.
We agree with respondent appellate court.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Relying on the ruling in Ocampo v. Gatchalian (supra), the Intermediate

Appellate Court (now Court of Appeals), correctly elucidated that the
effects of crossing a check are: the check may not be encashed but only
deposited in the bank; the check may be negotiated only once to one
who has an account with a bank; and the act of crossing the check serves
as a warning to the holder that the check has been issued for a definite
purpose so that he must inquire if he has received the check pursuant to
that purpose, otherwise he is not a holder in due course. Further, the
appellate court said:
It results therefore that when appellee rediscounted the
check knowing that it was a crossed check he was
knowingly violating the avowed intention of crossing the
check. Furthermore, his failure to inquire from the
holder, party defendant New Sikatuna Wood Industries,
Inc., the purpose for which the three checks were cross
despite the warning of the crossing, prevents him from
being considered in good faith and thus he is not a holder
in due course. Being not a holder in due course, plaintiff
is subject to personal defenses, such as lack of
consideration between appellants and New Sikatuna
Wood Industries. Note that under the facts the checks
were postdated and issued only as a loan to New
Sikatuna Wood Industries, Inc. if and when deposits were
made to back up the checks. Such deposits were not
made, hence no loan was made, hence the three checks
are without consideration (Sec. 28, Negotiable
Instruments Law).
Likewise New Sikatuna Wood Industries negotiated the
three checks in breach of faith in violation of Article (sic)
55, Negotiable Instruments Law, which is a personal
defense available to the drawer of the check. 6

Page 31 of 121

In addition, such instruments are mentioned in Section 541 of the

Negotiable Instruments Law as follows:
Sec. 541. The maker or any legal holder of a check shall
be entitled to indicate therein that it be paid to a certain
banker or institution, which he shall do by writing across
the face the name of said banker or institution, or only
the words "and company."
The payment made to a person other than the banker or
institution shall not exempt the person on whom it is
drawn, if the payment was not correctly made.
Under usual practice, crossing a check is done by placing two parallel
lines diagonally on the left top portion of the check. The crossing may be
special wherein between the two parallel lines is written the name of a
bank or a business institution, in which case the drawee should pay only
with the intervention of that bank or company, or crossing may be
general wherein between two parallel diagonal lines are written the
words "and Co." or none at all as in the case at bar, in which case the
drawee should not encash the same but merely accept the same for
deposit.
The effect therefore of crossing a check relates to the mode of its
presentment for payment. Under Section 72 of the Negotiable
Instruments Law, presentment for payment to be sufficient must be
made (a) by the holder, or by some person authorized to receive
payment on his behalf ... As to who the holder or authorized person will
be depends on the instructions stated on the face of the check.
The three subject checks in the case at bar had been crossed generally
and issued payable to New Sikatuna Wood Industries, Inc. which could
only mean that the drawer had intended the same for deposit only by the
rightful person, i.e., the payee named therein. Apparently, it was not the

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

payee who presented the same for payment and therefore, there was no
proper presentment, and the liability did not attach to the drawer.
Thus, in the absence of due presentment, the drawer did not become
liable. 7 Consequently, no right of recourse is available to petitioner
against the drawer of the subject checks, private respondent wife,
considering that petitioner is not the proper party authorized to make
presentment of the checks in question.
Yet it does not follow as a legal proposition that simply because
petitioner was not a holder in due course as found by the appellate court
for having taken the instruments in question with notice that the same is
for deposit only to the account of payee named in the subject checks,
petitioner could not recover on the checks. The Negotiable Instruments
Law does not provide that a holder who is not a holder in due course
may not in any case recover on the instrument for in the case at bar,
petitioner may recover from the New Sikatuna Wood Industries, Inc. if
the latter has no valid excuse for refusing payment. The only
disadvantage of a holder who is not in due course is that the negotiable
instrument is subject to defenses as if it were non-negotiable. 8
That the subject checks had been issued subject to the condition that
private respondents on due date would make the back up deposit for
said checks but which condition apparently was not made, thus resulting
in the non-consummation of the loan intended to be granted by private
respondents to New Sikatuna Wood Industries, Inc., constitutes a good
defense against petitioner who is not a holder in due course.
WHEREFORE, the decision appealed from is hereby AFFIRMED with
costs against petitioner.
SO ORDERED.

Page 32 of 121

Law __ Evidence
G.R. No. 169606

Prof. Avena

2. JUDICIAL NOTICE

November 27, 2009

BERNARDO B. JOSE, JR., Petitioner,

vs.
MICHAELMAR PHILS., INC. and MICHAELMAR SHIPPING SERVICES,
INC., Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition1 for review on certiorari under Rule 45 of the Rules
of Court. The petition challenges the 11 May 2005 Decision2 and 5
August 2005 Resolution3 of the Court of Appeals in CA-G.R. SP No.
83272. The Court of Appeals set aside the 19 January4 and 22
March5 2004 Resolutions of the National Labor Relations
Commission (NLRC) in NLRC NCR CA No. 036666-03 and reinstated
the 18 June 2003 Decision6 of the Labor Arbiter in NLRC NCR OFW
Case No. (M)02-12-3137-00.
The Facts
Michaelmar Philippines, Inc. (MPI) is the Philippine agent of Michaelmar
Shipping Services, Inc. (MSSI). In an undertaking7 dated 2 July 2002 and
an employment contract8 dated 4 July 2002, MSSI through MPI engaged
the services of Bernardo B. Jose, Jr. (Jose, Jr.) as oiler of M/T Limar. The
employment contract stated:
That the employee shall be employed on board under the following
terms and conditions:

Page 33 of 121
1.1 Duration of
Contract

EIGHT (8) MONTHS

Position

OILER

Basic Monthly Salary

US$ 450.00 & US$ 39.00 TANKER

ALLOWANCE

Hours of Work

48 HOURS/WEEK

Overtime

US$ 386.00 FIXED OT. 105 HRS/ MOS.

Vacation Leave with

Pay

US$ 190.00 & US$ 150 OWNERS BONUS

Point of Hire

MANILA, PHILIPPINES9

In connection with the employment contract, Jose, Jr. signed a

declaration10 dated 10 June 2002 stating that:
In order to implement the Drug and Alcohol Policy on board the
managed vessels the following with [sic] apply:
All alcoholic beverages, banned substances and unprescribed drugs
including but not limited to the following: Marijuana Cocaine
Phencyclidine Amphetamines Heroin Opiates are banned from Stelmar
Tankers (Management) Ltd. managed vessels.
Disciplinary action up to and including dismissal will be taken against
any employee found to be in possession of or impaired by the use of any
of the above mentioned substances.
A system of random testing for any of the above banned substances will
be used to enforce this policy. Any refusal to submit to such tests shall be
deemed as a serious breach of the employment contract and shall result
to the seamans dismissal due to his own offense.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Therefore any seaman will be instantly dismissed if:

Page 34 of 121

In her 18 June 2003 Decision, the Labor Arbiter dismissed the complaint
for lack of merit. The Labor Arbiter held that:

xxx
They are found to have positive trace of alcohol or any of the banned
substances in any random testing sample.
Jose, Jr. began performing his duties on board the M/T Limar on 21
August 2002. On 8 October 2002, a random drug test was conducted on
all officers and crew members of M/T Limar at the port of Curacao. Jose,
Jr. was found positive for marijuana. Jose, Jr. was informed about the
result of his drug test and was asked if he was taking any medication.
Jose, Jr. said that he was taking Centrum vitamins.
Jose, Jr. was allowed to continue performing his duties on board the M/T
Limar from 8 October to 29 November 2002. In the Sea Going Staff
Appraisal Report11 on Jose Jr.s work performance for the period of 1
August to 28 November 2002, Jose, Jr. received a 96% total rating and
was described as very hardworking, trustworthy, and reliable.
On 29 December 2002, M/T Limar reached the next port after the
random drug test and Jose, Jr. was repatriated to the Philippines. When
Jose, Jr. arrived in the Philippines, he asked MPI that a drug test be
conducted on him. MPI ignored his request. On his own, Jose, Jr.
procured drug tests from Manila Doctors Hospital,12 S.M. Lazo Medical
Clinic, Inc.,13 and Maritime Clinic for International Services, Inc.14 He
was found negative for marijuana.
Jose, Jr. filed with the NLRC a complaint against MPI and MSSI for illegal
dismissal with claim for his salaries for the unexpired portion of the
employment contract.
The Labor Arbiters Ruling

Based from the facts and evidence, this office inclined [sic] to rule
in favor of the respondents: we find that complainants termination
from employment was valid and lawful. It is established that
complainant, after an unannounced drug test conducted by the
respondent principal on the officers and crew on board the vessel,
was found positive of marijuana, a prohibited drug. It is a
universally known fact the menace that drugs bring on the user as
well as to others who may have got on his way. It is noted too that
complainant worked on board a tanker vessel which carries toxic
materials such as fuels, gasoline and other combustible materials
which require delicate and careful handling and being an oiler,
complainant is expected to be in a proper disposition. Thus, we
agree with respondents that immediate repatriation of
complainant is warranted for the safety of the vessel as well as to
complainants co-workers on board. It is therefore a risk that
should be avoided at all cost. Moreover, under the POEA Standard
Employment Contract as cited by the respondents (supra), violation
of the drug and alcohol policy of the company carries with it the
penalty of dismissal to be effected by the master of the vessel. It is
also noted that complainant was made aware of the results of the
drug test as per Drug Test Certificate dated October 29, 2002. He
was not dismissed right there and then but it was only on December
29, 2002 that he was repatriated for cause.
As to the complainants contention that the ship doctors report can not
be relied upon in the absence of other evidence supporting the doctors
findings for the simple reason that the ship doctor is under the control of
the principal employer, the same is untenable. On the contrary, the
findings of the doctor on board should be given credence as he would
not make a false clarification. Dr. A.R.A Heath could not be said to have
outrageously contrived the results of the complainants drug test. We are

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

therefore more inclined to believe the original results of the

unannounced drug test as it was officially conducted on board the vessel
rather than the subsequent testing procured by complainant on his own
initiative. The result of the original drug test is evidence in itself and
does not require additional supporting evidence except if it was shown
that the drug test was conducted not in accordance with the drug testing
procedure which is not obtaining in this particular case. [H]ence, the
first test prevails.
We can not also say that respondents were motivated by ill will against
the complainant considering that he was appraised to be a good worker.
For this reason that respondents would not terminate [sic] the services
of complainant were it not for the fact that he violated the drug and
alcohol policy of the company. [T]hus, we find that just cause exist [sic]
to justify the termination of complainant.15
Jose, Jr. appealed the Labor Arbiters 18 June 2003 Decision to the NLRC.
Jose, Jr. claimed that the Labor Arbiter committed grave abuse of
discretion in ruling that he was dismissed for just cause.
The NLRCs Ruling
In its 19 January 2004 Resolution, the NLRC set aside the Labor
Arbiters 18 June 2003 Decision. The NLRC held that Jose, Jr.s
dismissal was illegal and ordered MPI and MSSI to pay Jose, Jr. his
salaries for the unexpired portion of the employment contract. The
NLRC held that:
Here, a copy of the purported drug test result for Complainant
indicates, among others, the following typewritten words "Hoofd:
Drs. R.R.L. Petronia Apotheker" and "THC-COOH POS."; the
handwritten word "Marihuana"; and the stamped words "Dr. A.R.A.
Heath, MD", "SHIPS DOCTOR" and "29 OKT. 2002." However, said
test result does not contain any signature, much less the signature

Page 35 of 121

of any of the doctors whose names were printed therein (Page 45,
Records). Verily, the veracity of this purported drug test result is
questionable, hence, it cannot be deemed as substantial proof that
Complainant violated his employers "no alcohol, no drug" policy. In
fact, in his November 14, 2002 message to Stelmar Tanker Group,
the Master of the vessel where Complainant worked, suggested that
another drug test for complainant should be taken when the vessel
arrived [sic] in Curacao next call for final findings (Page 33,
Records), which is an indication that the Master, himself, was in
doubt with the purported drug test result. Indeed there is reason
for the Master of the vessel to doubt that Complainant was taking in
the prohibited drug "marihuana." The Sea Going Staff Appraisal
Report signed by Appraiser David A. Amaro, Jr. and reviewed by the
Master of the vessel himself on complainants work performance as
Wiper from August 1, 2002 to November 28, 2002 which included a
two-month period after the purported drug test, indicates that out
of a total score of 100% on Safety Consciousness (30%), Ability
(30%), Reliability (20%) and Behavior & Attitude (20%),
Complainant was assessed a score of 96% (Pages 30-31, Records).
Truly, a worker who had been taking in prohibited drug could not
have given such an excellent job performance. Significantly, under
the category "Behavior & Attitude (20%)," referring to his personal
relationship and his interactions with the rest of the ships staff and
his attitude towards his job and how the rest of the crew regard
him, Complainant was assessed the full score of 20% (Page 31,
Records), which belies Respondents insinuation that his alleged
offense directly affected the safety of the vessel, its officers and
crew members. Indeed, if Complainant had been a threat to the
safety of the vessel, officers and crew members, he would not be
been [sic] allowed to continue working almost three (3) months
after his alleged offense until his repatriation on December 29,
2002. Clearly, Respondents failed to present substantial proof that
Complainants dismissal was with just or authorized cause.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Moreover, Respondents failed to accord Complainant due process prior

to his dismissal. There is no showing that Complainants employer
furnished him with a written notice apprising him of the particular act or
omission for which his dismissal was sought and a subsequent written
notice informing him of the decision to dismiss him, much less any proof
that Complainant was given an opportunity to answer and rebut the
charges against him prior to his dismissal. Worse, Respondents invoke
the provision in the employment contract which allows summary
dismissal for cases provided therein. Consequently, Respondents argue
that there was no need for him to be notified of his dismissal. Such
blatant violation of basic labor law principles cannot be permitted by
this Office. Although a contract is law between the parties, the provisions
of positive law which regulate such contracts are deemed included and
shall limit and govern the relations between the parties (Asia World
Recruitment, Inc. vs. NLRC, G.R. No. 113363, August 24, 1999).
Relative thereto, it is worth noting Section 10 of Republic Act No. 8042,
which provides that "In cases of termination of overseas employment
without just, valid or authorized cause as defined by law or contract, the
worker shall be entitled to the full reimbursement of his placement fee
with interest of twelve percent (12%) per annum, plus his salaries for
the unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term, whichever is less."16
MPI and MSSI filed a motion for reconsideration. In its 22 March
2004 Resolution, the NLRC denied the motion for lack of merit. MPI
and MSSI filed with the Court of Appeals a petition17 for certiorari
under Rule 65 of the Rules of Court. MPI and MSSI claimed that the
NLRC gravely abused its discretion when it (1) reversed the Labor
Arbiters factual finding that Jose, Jr. was legally dismissed; (2)
awarded Jose, Jr. his salaries for the unexpired portion of the
employment contract; (3) awarded Jose, Jr. $386 overtime pay; and
(4) ruled that Jose, Jr. perfected his appeal within the reglementary
period.

Page 36 of 121
The Court of Appeals Ruling

In its 11 May 2005 Decision, the Court of Appeals set aside the 19
January and 22 March 2004 Resolutions of the NLRC and reinstated the
18 June 2003 Decision of the Labor Arbiter. The Court of Appeals held
that:
The POEA standard employment contract adverted to in
the labor arbiters decision to which all seamens
contracts must adhere explicitly provides that the failure
of a seaman to obey the policy warrants a penalty of
dismissal which may be carried out by the master even
without a notice of dismissal if there is a clear and
existing danger to the safety of the vessel or the crew.
That the petitioners were implementing a no-alcohol, no
drug policy that was communicated to the respondent
when he embarked is not in question. He had signed a
document entitled Drug and Alcohol Declaration in which
he acknowledged that alcohol beverages and
unprescribed drugs such as marijuana were banned on
the vessel and that any employee found possessing or
using these substances would be subject to instant
dismissal. He undertook to comply with the policy and
abide by all the relevant rules and guidelines, including
the system of random testing that would be employed to
enforce it.
We can hardly belabor the reasons and justification for this policy. The
safety of the vessel on the high seas is a matter of supreme and
unavoidable concern to all the owners, the crew and the riding public.
In the ultimate analysis, a vessel is only as seaworthy as the men who
sail it, so that it is necessary to maintain at every moment the efficiency
and competence of the crew. Without an effective no alcohol, no drug
policy on board the ship, the vessels safety will be seriously

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

compromised. The policy is, therefore, a reasonable and lawful order or

regulation that, once made known to the employee, must be observed by
him, and the failure or refusal of a seaman to comply with it should
constitute serious misconduct or willful disobedience that is a just cause
for the termination of employment under the Labor Code (Aparente vs.
National Labor Relations Commission, 331 SCRA 82). As the labor
arbiter has discerned, the seriousness and earnestness in the
enforcement of the ban is highlighted by the provision of the POEA
Standard Employment Contract allowing the ship master to forego the
notice of dismissal requirement in effecting the repatriation of the
seaman violating it.
xxxx
Under legal rules of evidence, not all unsigned documents or papers fail
the test of admissibility. There are kinds of evidence known as
exceptions to the hearsay rule which need not be invariably signed by
the author if it is clear that it issues from him because of necessity and
under circumstances that safeguard the trustworthiness of the paper. A
number of evidence of this sort are called entries in the course of
business, which are transactions made by persons in the regular course
of their duty or business. We agree with the labor arbiter that the drug
test result constitutes entries made in the ordinary or regular course of
duty of a responsible officer of the vessel. The tests administered to the
crew were routine measures of the vessel conducted to enforce its stated
policy, and it was a matter of course for medical reports to be issued and
released by the medical officer. The ships physician at Curacao under
whom the tests were conducted was admittedly Dr. Heath. It was under
his name and with his handwritten comments that the report on the
respondent came out, and there is no basis to suspect that these results
were issued other than in the ordinary course of his duty. As the labor
arbiter points out, the drug test report is evidence in itself and does not
require additional supporting evidence except if it appears that the drug
test was conducted not in accordance with drug testing procedures.

Page 37 of 121

Nothing of the sort, he says, has even been suggested in this particular
case.
The regularity of the procedure observed in the administration and
reporting of the tests is the very assurance of the reports admissibility
and credibility under the laws of the evidence. We see no reason why it
cannot be considered substantial evidence, which, parenthetically, is the
lowest rung in the ladder of evidence. It is from the fact that a report or
entry is a part of the regular routine work of a business or profession
that it derives its value as legal evidence.
Then the respondent was notified of the results and allowed to explain
himself. He could not show any history of medication that could account
for the traces of drugs in his system. Despite his lack of plausible
excuses, the ship captain came out in support of him and asked his
superiors to give him another chance. These developments prove that
the respondent was afforded due process consistent with the exigencies
of his service at sea. For the NLRC to annul the process because he was
somehow not furnished with written notice is already being pedantic.
What is the importance to the respondent of the difference between a
written and verbal notice when he was actually given the opportunity to
be heard? x x x
The working environment in a seagoing vessel is sui generis which
amply justifies the difference in treatment of seamen found guilty of
serious infractions at sea. The POEA Standard Employment Contract
allows the ship master to implement a repatriation for just cause
without a notice of dismissal if this is necessary to avoid a clear and
existing danger to the vessel. The petitioners have explained that that
[sic] it is usually at the next port of call where the offending crewman is
made to disembark. In this case, a month had passed by after the date of
the medical report before they reached the next port. We may not
second-guess the judgment of the master in allowing him to remain at
his post in the meantime. It is still reasonable to believe that the proper

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

safeguards were taken and proper limitations observed during the

period when the respondent remained on board.
Finally, the fact that the respondent obtained negative results in
subsequent drug tests in the Philippines does not negate the findings
made of his condition on board the vessel. A drug test can be negative if
the user undergoes a sufficient period of abstinence before taking the
test. Unlike the tests made at his instance, the drug test on the vessel was
unannounced. The credibility of the first test is, therefore, greater than
the subsequent ones.18
Jose, Jr. filed a motion19 for reconsideration. In its 5 August 2005
Resolution, the Court of Appeals denied the motion for lack of merit.
Hence, the present petition.
In a motion20 dated 1 August 2007, MPI and MSSI prayed that they be
substituted by OSG Ship Management Manila, Inc. as respondent in the
present case. In a Resolution21 dated 14 November 2007, the Court
noted the motion.

Page 38 of 121

as it goes to the veracity of the said purported drug test result.

Consequently, the purported drug test result cannot be deemed as
substantial proof that petitioner violated his employers "no alcohol, no
drug policy [sic].
xxxx
Even assuming arguendo that there was just cause, respondents
miserably failed to show that the presence of the petitioner in the
vessel constitutes a clear and existing danger to the safety of the
crew or the vessel. x x x
xxxx
It is a basic principle in Labor Law that in termination disputes, the
burden is on the employer to show that the dismissal was for a just and
valid cause. x x x
xxxx

In his petition dated 13 September 2005, Jose, Jr. claims that he was
illegally dismissed from employment for two reasons: (1) there is no just
cause for his dismissal because the drug test result is unsigned by the
doctor, and (2) he was not afforded due process. He stated that:

x x x [T]he Honorable Labor Arbiter as well as the Honorable Court of

Appeals clearly erred in ruling that there was just cause for the
termination of petitioners employment. Petitioners employment was
terminated on the basis only of a mere allegation that is unsubstantiated,
unfounded and on the basis of the drug test report that was not even
signed by the doctor who purportedly conducted such test.

2. The purported drug test result conducted to petitioner indicates,

among others, the following: [sic] typwritten words Hool: Drs. R.R.L..
[sic] Petronia Apotheker" [sic] and :THC-COOH POS." [sic]; the
handwritten word "Marihuana"; and the stamped words "Dr. A.R.A
Heath, MD", "SHIPS DOCTOR" and "29 OKT. 2002." However, said test
result does not contain any signature, much less the signature of any of
the doctors whose name [sic] were printed therein. This omission is fatal

5. Moreover, respondents failed to observe due process in terminating

petitioners employment. There is no evidence on record that petitioner
was furnished by his employer with a written notice apprising him of the
particular act or omission which is the basis for his dismissal.
Furthermore, there is also no evidence on record that the second notice,
informing petitioner of the decision to dismiss, was served to the
petitioner. There is also no proof on record that petitioner was given an

The Issues

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

opportunity to answer and rebut the charges against him prior to the
dismissal.22
The Courts Ruling
In its 11 May 2005 Decision, the Court of Appeals held that there was
just cause for Jose, Jr.s dismissal. The Court of Appeals gave credence to
the drug test result showing that Jose, Jr. was positive for marijuana. The
Court of Appeals considered the drug test result as part of entries in the
course of business. The Court of Appeals held that:
Under legal rules of evidence, not all unsigned documents or papers fail
the test of admissibility. There are kinds of evidence known as
exceptions to the hearsay rule which need not be invariably signed by
the author if it is clear that it issues from him because of necessity and
under circumstances that safeguard the trustworthiness of the paper. A
number of evidence of this sort are called entries in the course of
business, which are transactions made by persons in the regular course
of their duty or business. We agree with the labor arbiter that the drug
test result constitutes entries made in the ordinary or regular course of
duty of a responsible officer of the vessel. The tests administered to the
crew were routine measures of the vessel conducted to enforce its stated
policy, and it was a matter of course for medical reports to be issued and
released by the medical officer. The ships physician at Curacao under
whom the tests were conducted was admittedly Dr. Heath. It was under
his name and with his handwritten comments that the report on the
respondent came out, and there is no basis to suspect that these results
were issued other than in the ordinary course of his duty. As the labor
arbiter points out, the drug test report is evidence in itself and does not
require additional supporting evidence except if it appears that the drug
test was conducted not in accordance with drug testing procedures.
Nothing of the sort, he says, has even been suggested in this particular
case.23 (Emphasis supplied)

Page 39 of 121

Jose, Jr. claims that the Court of Appeals erred when it ruled that there
was just cause for his dismissal. The Court is not impressed. In a petition
for review on certiorari under Rule 45 of the Rules of Court, a mere
statement that the Court of Appeals erred is insufficient. The petition
must state the law or jurisprudence and the particular ruling of the
appellate court violative of such law or jurisprudence. In Encarnacion v.
Court of Appeals,24 the Court held that:
Petitioner asserts that there is a question of law involved in this appeal.
We do not think so. The appeal involves an appreciation of facts, i.e.,
whether the questioned decision is supported by the evidence and the
records of the case. In other words, did the Court of Appeals commit a
reversible error in considering the trouble record of the subject
telephone? Or is this within the province of the appellate court to
consider? Absent grave abuse of discretion, this Court will not reverse
the appellate courts findings of fact.
In a petition for review under Rule 45, Rules of Court, invoking the usual
reason, i.e., that the Court of Appeals has decided a question of substance
not in accord with law or with applicable decisions of the Supreme
Court, a mere statement of the ceremonial phrase is not sufficient to
confer merit on the petition. The petition must specify the law or
prevailing jurisprudence on the matter and the particular ruling of the
appellate court violative of such law or previous doctrine laid down by
the Supreme Court. (Emphasis supplied)
In the present case, Jose, Jr. did not show that the Court of Appeals
ruling is violative of any law or jurisprudence. Section 43, Rule 130, of
the Rules of Court states:
SEC. 43. Entries in the course of business. Entries made at, or near the
time of the transactions to which they refer, by a person deceased, or
unable to testify, who was in a position to know the facts therein stated,
may be received as prima facie evidence, if such person made the entries

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

in his professional capacity or in the performance of duty and in the

ordinary or regular course of business or duty.1avvphi1
In Canque v. Court of Appeals,25 the Court laid down the requisites for
admission in evidence of entries in the course of business: (1) the person
who made the entry is dead, outside the country, or unable to testify; (2)
the entries were made at or near the time of the transactions to which
they refer; (3) the person who made the entry was in a position to know
the facts stated in the entries; (4) the entries were made in a
professional capacity or in the performance of a duty; and (5) the entries
were made in the ordinary or regular course of business or duty.
Here, all the requisites are present: (1) Dr. Heath is outside the country;
(2) the entries were made near the time the random drug test was
conducted; (3) Dr. Heath was in a position to know the facts made in the
entries; (4) Dr. Heath made the entries in his professional capacity and
in the performance of his duty; and (5) the entries were made in the
ordinary or regular course of business or duty.
The fact that the drug test result is unsigned does not necessarily lead to
the conclusion that Jose, Jr. was not found positive for marijuana. In KAR
ASIA, Inc. v. Corona,26 the Court admitted in evidence unsigned payrolls.
In that case, the Court held that:
Entries in the payroll, being entries in the course of business, enjoy the
presumption of regularity under Rule 130, Section 43 of the Rules of
Court. It is therefore incumbent upon the respondents to adduce clear
and convincing evidence in support of their claim. Unfortunately,
respondents naked assertions without proof in corroboration will not
suffice to overcome the disputable presumption.
In disputing the probative value of the payrolls for December 1994, the
appellate court observed that the same contain only the signatures of
Ermina Daray and Celestino Barreto, the paymaster and the president,

Page 40 of 121

respectively. It further opined that the payrolls presented were only

copies of the approved payment, and not copies disclosing actual
payment.
The December 1994 payrolls contain a computation of the amounts
payable to the employees for the given period, including a breakdown of
the allowances and deductions on the amount due, but the signatures of
the respondents are conspicuously missing. Ideally, the signatures of the
respondents should appear in the payroll as evidence of actual payment.
However, the absence of such signatures does not necessarily lead to the
conclusion that the December 1994 COLA was not received. (Emphasis
supplied)
In the present case, the following facts are established (1) random drug
tests are regularly conducted on all officers and crew members of M/T
Limar; (2) a random drug test was conducted at the port of Curacao on 8
October 2002; (3) Dr. Heath was the authorized physician of M/T Limar;
(4) the drug test result of Jose, Jr. showed that he was positive for
marijuana; (5) the drug test result was issued under Dr. Heaths name
and contained his handwritten comments. The Court of Appeals found
that:
The tests administered to the crew were routine measures of the vessel
conducted to enforce its stated policy, and it was a matter of course for
medical reports to be issued and released by the medical officer. The
ships physician at Curacao under whom the tests were conducted was
admittedly Dr. Heath. It was under his name and with his handwritten
comments that the report on the respondent came out, and there is no
basis to suspect that these results were issued other than in the ordinary
course of his duty. As the labor arbiter points out, the drug test report is
evidence in itself and does not require additional supporting evidence
except if it appears that the drug test was conducted not in accordance
with drug testing procedures. Nothing of the sort, he says, has even been
suggested in this particular case.27

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Factual findings of the Court of Appeals are binding on the Court. Absent
grave abuse of discretion, the Court will not disturb the Court of Appeals
factual findings.28 In Encarnacion,29 the Court held that, "unless there is
a clearly grave or whimsical abuse on its part, findings of fact of the
appellate court will not be disturbed. The Supreme Court will only
exercise its power of review in known exceptions such as gross
misappreciation of evidence or a total void of evidence." Jose, Jr. failed to
show that the Court of Appeals gravely abused its discretion.
Article 282(a) of the Labor Code states that the employer may terminate
an employment for serious misconduct. Drug use in the premises of the
employer constitutes serious misconduct. In Bughaw, Jr. v. Treasure
Island Industrial Corporation,30 the Court held that:
The charge of drug use inside the companys premises and during
working hours against petitioner constitutes serious misconduct, which
is one of the just causes for termination. Misconduct is improper or
wrong conduct. It is the transgression of some established and definite
rule of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not merely an error in judgment. The
misconduct to be serious within the meaning of the Act must be of such a
grave and aggravated character and not merely trivial or unimportant.
Such misconduct, however serious, must nevertheless, in connection
with the work of the employee, constitute just cause for his separation.
This Court took judicial notice of scientific findings that drug abuse can
damage the mental faculties of the user. It is beyond question therefore
that any employee under the influence of drugs cannot possibly continue
doing his duties without posing a serious threat to the lives and property
of his co-workers and even his employer. (Emphasis supplied)
Jose, Jr. claims that he was not afforded due process. The Court agrees.
There are two requisites for a valid dismissal: (1) there must be just
cause, and (2) the employee must be afforded due process.31 To meet
the requirements of due process, the employer must furnish the

Page 41 of 121

employee with two written notices a notice apprising the employee of

the particular act or omission for which the dismissal is sought and
another notice informing the employee of the employers decision to
dismiss. In Talidano v. Falcon Maritime & Allied Services, Inc.,32 the Court
held that:
[R]espondent failed to comply with the procedural due process required
for terminating the employment of the employee. Such requirement is
not a mere formality that may be dispensed with at will. Its disregard is a
matter of serious concern since it constitutes a safeguard of the highest
order in response to mans innate sense of justice. The Labor Code does
not, of course, require a formal or trial type proceeding before an erring
employee may be dismissed. This is especially true in the case of a vessel
on the ocean or in a foreign port. The minimum requirement of due
process termination proceedings, which must be complied with even
with respect to seamen on board a vessel, consists of notice to the
employees intended to be dismissed and the grant to them of an
opportunity to present their own side of the alleged offense or
misconduct, which led to the managements decision to terminate. To
meet the requirements of due process, the employer must furnish the
worker sought to be dismissed with two written notices before
termination of employment can be legally effected, i.e., (1) a notice
which apprises the employee of the particular acts or omissions for
which his dismissal is sought; and (2) the subsequent notice after due
hearing which informs the employee of the employers decision to
dismiss him. (Emphasis supplied)
In the present case, Jose, Jr. was not given any written notice about his
dismissal. However, the propriety of Jose, Jr.s dismissal is not affected
by the lack of written notices. When the dismissal is for just cause, the
lack of due process does not render the dismissal ineffectual but merely
gives rise to the payment of P30,000 in nominal damages.33

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

WHEREFORE, the petition is DENIED. The 11 May 2005 Decision and 5

August 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 83272
are AFFIRMED with the MODIFICATION that OSG Ship Management
Manila, Inc. is ordered to pay Bernardo B. Jose, Jr. P30,000 in nominal
damages.
SO ORDERED.

Page 42 of 121

Law __ Evidence
G.R. No. 152392

Prof. Avena

2. JUDICIAL NOTICE

May 26, 2005

EXPERTRAVEL & TOURS, INC., petitioner,

vs.
COURT OF APPEALS and KOREAN AIRLINES, respondent.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the Decision1 of the
Court of Appeals (CA) in CA-G.R. SP No. 61000 dismissing the petition for
certiorari and mandamus filed by Expertravel and Tours, Inc. (ETI).
The Antecedents
Korean Airlines (KAL) is a corporation established and registered in the
Republic of South Korea and licensed to do business in the Philippines.
Its general manager in the Philippines is Suk Kyoo Kim, while its
appointed counsel was Atty. Mario Aguinaldo and his law firm.
On September 6, 1999, KAL, through Atty. Aguinaldo, filed a Complaint2
against ETI with the Regional Trial Court (RTC) of Manila, for the
collection of the principal amount of P260,150.00, plus attorneys fees
and exemplary damages. The verification and certification against forum
shopping was signed by Atty. Aguinaldo, who indicated therein that he
was the resident agent and legal counsel of KAL and had caused the
preparation of the complaint.
ETI filed a motion to dismiss the complaint on the ground that Atty.
Aguinaldo was not authorized to execute the verification and certificate
of non-forum shopping as required by Section 5, Rule 7 of the Rules of
Court. KAL opposed the motion, contending that Atty. Aguinaldo was its
resident agent and was registered as such with the Securities and

Page 43 of 121

Exchange Commission (SEC) as required by the Corporation Code of the

Philippines. It was further alleged that Atty. Aguinaldo was also the
corporate secretary of KAL. Appended to the said opposition was the
identification card of Atty. Aguinaldo, showing that he was the lawyer of
KAL.
During the hearing of January 28, 2000, Atty. Aguinaldo claimed that he
had been authorized to file the complaint through a resolution of the
KAL Board of Directors approved during a special meeting held on June
25, 1999. Upon his motion, KAL was given a period of 10 days within
which to submit a copy of the said resolution. The trial court granted the
motion. Atty. Aguinaldo subsequently filed other similar motions, which
the trial court granted.
Finally, KAL submitted on March 6, 2000 an Affidavit3 of even date,
executed by its general manager Suk Kyoo Kim, alleging that the board of
directors conducted a special teleconference on June 25, 1999, which he
and Atty. Aguinaldo attended. It was also averred that in that same
teleconference, the board of directors approved a resolution authorizing
Atty. Aguinaldo to execute the certificate of non-forum shopping and to
file the complaint. Suk Kyoo Kim also alleged, however, that the
corporation had no written copy of the aforesaid resolution.
On April 12, 2000, the trial court issued an Order4 denying the motion to
dismiss, giving credence to the claims of Atty. Aguinaldo and Suk Kyoo
Kim that the KAL Board of Directors indeed conducted a teleconference
on June 25, 1999, during which it approved a resolution as quoted in the
submitted affidavit.
ETI filed a motion for the reconsideration of the Order, contending that it
was inappropriate for the court to take judicial notice of the said
teleconference without any prior hearing. The trial court denied the
motion in its Order5 dated August 8, 2000.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

ETI then filed a petition for certiorari and mandamus, assailing the
orders of the RTC. In its comment on the petition, KAL appended a
certificate signed by Atty. Aguinaldo dated January 10, 2000, worded as
follows:
SECRETARYS/RESIDENT AGENTS CERTIFICATE
KNOW ALL MEN BY THESE PRESENTS:
I, Mario A. Aguinaldo, of legal age, Filipino, and duly elected and
appointed Corporate Secretary and Resident Agent of KOREAN
AIRLINES, a foreign corporation duly organized and existing
under and by virtue of the laws of the Republic of Korea and also
duly registered and authorized to do business in the Philippines,
with office address at Ground Floor, LPL Plaza Building, 124
Alfaro St., Salcedo Village, Makati City, HEREBY CERTIFY that
during a special meeting of the Board of Directors of the
Corporation held on June 25, 1999 at which a quorum was
present, the said Board unanimously passed, voted upon and
approved the following resolution which is now in full force and
effect, to wit:
RESOLVED, that Mario A. Aguinaldo and his law firm M.A.
Aguinaldo & Associates or any of its lawyers are hereby
appointed and authorized to take with whatever legal
action necessary to effect the collection of the unpaid
account of Expert Travel & Tours. They are hereby
specifically authorized to prosecute, litigate, defend, sign
and execute any document or paper necessary to the
filing and prosecution of said claim in Court, attend the
Pre-Trial Proceedings and enter into a compromise
agreement relative to the above-mentioned claim.

Page 44 of 121
IN WITNESS WHEREOF, I have hereunto affixed my signature
this 10th day of January, 1999, in the City of Manila, Philippines.
(Sgd.)
MARIO A. AGUINALDO
Resident Agent
SUBSCRIBED AND SWORN to before me this 10th day of January,
1999, Atty. Mario A. Aguinaldo exhibiting to me his Community
Tax Certificate No. 14914545, issued on January 7, 2000 at
Manila, Philippines.
Doc. No. 119;
Page No. 25;
Book No. XXIV
Series of 2000.

(Sgd.)
ATTY. HENRY D. ADASA
Notary Public
Until December 31, 2000
PTR #889583/MLA 1/3/20006

On December 18, 2001, the CA rendered judgment dismissing the

petition, ruling that the verification and certificate of non-forum
shopping executed by Atty. Aguinaldo was sufficient compliance with the
Rules of Court. According to the appellate court, Atty. Aguinaldo had
been duly authorized by the board resolution approved on June 25,
1999, and was the resident agent of KAL. As such, the RTC could not be
faulted for taking judicial notice of the said teleconference of the KAL
Board of Directors.
ETI filed a motion for reconsideration of the said decision, which the CA
denied. Thus, ETI, now the petitioner, comes to the Court by way of
petition for review on certiorari and raises the following issue:

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

DID PUBLIC RESPONDENT COURT OF APPEALS DEPART FROM

THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS WHEN IT RENDERED ITS QUESTIONED
DECISION AND WHEN IT ISSUED ITS QUESTIONED
RESOLUTION, ANNEXES A AND B OF THE INSTANT PETITION?7
The petitioner asserts that compliance with Section 5, Rule 7, of the
Rules of Court can be determined only from the contents of the
complaint and not by documents or pleadings outside thereof. Hence,
the trial court committed grave abuse of discretion amounting to excess
of jurisdiction, and the CA erred in considering the affidavit of the
respondents general manager, as well as the Secretarys/Resident
Agents Certification and the resolution of the board of directors
contained therein, as proof of compliance with the requirements of
Section 5, Rule 7 of the Rules of Court. The petitioner also maintains that
the RTC cannot take judicial notice of the said teleconference without
prior hearing, nor any motion therefor. The petitioner reiterates its
submission that the teleconference and the resolution adverted to by the
respondent was a mere fabrication.
The respondent, for its part, avers that the issue of whether modern
technology is used in the field of business is a factual issue; hence,
cannot be raised in a petition for review on certiorari under Rule 45 of
the Rules of Court. On the merits of the petition, it insists that Atty.
Aguinaldo, as the resident agent and corporate secretary, is authorized
to sign and execute the certificate of non-forum shopping required by
Section 5, Rule 7 of the Rules of Court, on top of the board resolution
approved during the teleconference of June 25, 1999. The respondent
insists that "technological advances in this time and age are as
commonplace as daybreak." Hence, the courts may take judicial notice
that the Philippine Long Distance Telephone Company, Inc. had provided
a record of corporate conferences and meetings through FiberNet using
fiber-optic transmission technology, and that such technology facilitates
voice and image transmission with ease; this makes constant

Page 45 of 121

communication between a foreign-based office and its Philippine-based

branches faster and easier, allowing for cost-cutting in terms of travel
concerns. It points out that even the E-Commerce Law has recognized
this modern technology. The respondent posits that the courts are aware
of this development in technology; hence, may take judicial notice
thereof without need of hearings. Even if such hearing is required, the
requirement is nevertheless satisfied if a party is allowed to file
pleadings by way of comment or opposition thereto.
In its reply, the petitioner pointed out that there are no rulings on the
matter of teleconferencing as a means of conducting meetings of board
of directors for purposes of passing a resolution; until and after
teleconferencing is recognized as a legitimate means of gathering a
quorum of board of directors, such cannot be taken judicial notice of by
the court. It asserts that safeguards must first be set up to prevent any
mischief on the public or to protect the general public from any possible
fraud. It further proposes possible amendments to the Corporation Code
to give recognition to such manner of board meetings to transact
business for the corporation, or other related corporate matters; until
then, the petitioner asserts, teleconferencing cannot be the subject of
judicial notice.
The petitioner further avers that the supposed holding of a special
meeting on June 25, 1999 through teleconferencing where Atty.
Aguinaldo was supposedly given such an authority is a farce, considering
that there was no mention of where it was held, whether in this country
or elsewhere. It insists that the Corporation Code requires board
resolutions of corporations to be submitted to the SEC. Even assuming
that there was such a teleconference, it would be against the provisions
of the Corporation Code not to have any record thereof.
The petitioner insists that the teleconference and resolution adverted to
by the respondent in its pleadings were mere fabrications foisted by the
respondent and its counsel on the RTC, the CA and this Court.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

The petition is meritorious.

Section 5, Rule 7 of the Rules of Court provides:
SEC. 5. Certification against forum shopping. The plaintiff or
principal party shall certify under oath in the complaint or other
initiatory pleading asserting a claim for relief, or in a sworn
certification annexed thereto and simultaneously filed therewith:
(a) that he has not theretofore commenced any action or filed
any claim involving the same issues in any court, tribunal or
quasi-judicial agency and, to the best of his knowledge, no such
other action or claim is pending therein; (b) if there is such other
pending action or claim, a complete statement of the present
status thereof; and (c) if he should thereafter learn that the same
or similar action or claim has been filed or is pending, he shall
report that fact within five (5) days therefrom to the court
wherein his aforesaid complaint or initiatory pleading has been
filed.
Failure to comply with the foregoing requirements shall not be
curable by mere amendment of the complaint or other initiatory
pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after
hearing. The submission of a false certification or noncompliance with any of the undertakings therein shall constitute
indirect contempt of court, without prejudice to the
corresponding administrative and criminal actions. If the acts of
the party or his counsel clearly constitute willful and deliberate
forum shopping, the same shall be ground for summary
dismissal with prejudice and shall constitute direct contempt, as
well as a cause for administrative sanctions.
It is settled that the requirement to file a certificate of non-forum
shopping is mandatory8 and that the failure to comply with this

Page 46 of 121

requirement cannot be excused. The certification is a peculiar and

personal responsibility of the party, an assurance given to the court or
other tribunal that there are no other pending cases involving basically
the same parties, issues and causes of action. Hence, the certification
must be accomplished by the party himself because he has actual
knowledge of whether or not he has initiated similar actions or
proceedings in different courts or tribunals. Even his counsel may be
unaware of such facts.9 Hence, the requisite certification executed by the
plaintiffs counsel will not suffice.10
In a case where the plaintiff is a private corporation, the certification
may be signed, for and on behalf of the said corporation, by a specifically
authorized person, including its retained counsel, who has personal
knowledge of the facts required to be established by the documents. The
reason was explained by the Court in National Steel Corporation v. Court
of Appeals,11 as follows:
Unlike natural persons, corporations may perform physical
actions only through properly delegated individuals; namely, its
officers and/or agents.

The corporation, such as the petitioner, has no powers except

those expressly conferred on it by the Corporation Code and
those that are implied by or are incidental to its existence. In
turn, a corporation exercises said powers through its board of
directors and/or its duly-authorized officers and agents. Physical
acts, like the signing of documents, can be performed only by
natural persons duly-authorized for the purpose by corporate
by-laws or by specific act of the board of directors. "All acts
within the powers of a corporation may be performed by agents
of its selection; and except so far as limitations or restrictions
which may be imposed by special charter, by-law, or statutory

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

provisions, the same general principles of law which govern the

relation of agency for a natural person govern the officer or
agent of a corporation, of whatever status or rank, in respect to
his power to act for the corporation; and agents once appointed,
or members acting in their stead, are subject to the same rules,
liabilities and incapacities as are agents of individuals and
private persons."

For who else knows of the circumstances required in the

Certificate but its own retained counsel. Its regular officers, like
its board chairman and president, may not even know the details
required therein.
Indeed, the certificate of non-forum shopping may be incorporated in
the complaint or appended thereto as an integral part of the complaint.
The rule is that compliance with the rule after the filing of the complaint,
or the dismissal of a complaint based on its non-compliance with the
rule, is impermissible. However, in exceptional circumstances, the court
may allow subsequent compliance with the rule.12 If the authority of a
partys counsel to execute a certificate of non-forum shopping is
disputed by the adverse party, the former is required to show proof of
such authority or representation.

Page 47 of 121

The verification and certificate of non-forum shopping which was

incorporated in the complaint and signed by Atty. Aguinaldo reads:
I, Mario A. Aguinaldo of legal age, Filipino, with office address at
Suite 210 Gedisco Centre, 1564 A. Mabini cor. P. Gil Sts., Ermita,
Manila, after having sworn to in accordance with law hereby
deposes and say: THAT 1. I am the Resident Agent and Legal Counsel of the plaintiff in
the above entitled case and have caused the preparation of the
above complaint;
2. I have read the complaint and that all the allegations contained
therein are true and correct based on the records on files;
3. I hereby further certify that I have not commenced any other
action or proceeding involving the same issues in the Supreme
Court, the Court of Appeals, or different divisions thereof, or any
other tribunal or agency. If I subsequently learned that a similar
action or proceeding has been filed or is pending before the
Supreme Court, the Court of Appeals, or different divisions
thereof, or any tribunal or agency, I will notify the court, tribunal
or agency within five (5) days from such notice/knowledge.
(Sgd.)

In this case, the petitioner, as the defendant in the RTC, assailed the
authority of Atty. Aguinaldo to execute the requisite verification and
certificate of non-forum shopping as the resident agent and counsel of
the respondent. It was, thus, incumbent upon the respondent, as the
plaintiff, to allege and establish that Atty. Aguinaldo had such authority
to execute the requisite verification and certification for and in its behalf.
The respondent, however, failed to do so.

MARIO A. AGUINALDO
Affiant
CITY OF MANILA
SUBSCRIBED AND SWORN TO before me this 30th day of August,
1999, affiant exhibiting to me his Community Tax Certificate No.
00671047 issued on January 7, 1999 at Manila, Philippines.

Law __ Evidence

Prof. Avena

Doc. No. 1005;

Page No. 198;
Book No. XXI
Series of 1999.

2. JUDICIAL NOTICE
(Sgd.)ATTY. HENRY D. ADASA
Notary Public
Until December 31, 2000
PTR No. 320501 Mla.
1/4/9913

As gleaned from the aforequoted certification, there was no allegation

that Atty. Aguinaldo had been authorized to execute the certificate of
non-forum shopping by the respondents Board of Directors; moreover,
no such board resolution was appended thereto or incorporated therein.
While Atty. Aguinaldo is the resident agent of the respondent in the
Philippines, this does not mean that he is authorized to execute the
requisite certification against forum shopping. Under Section 127, in
relation to Section 128 of the Corporation Code, the authority of the
resident agent of a foreign corporation with license to do business in the
Philippines is to receive, for and in behalf of the foreign corporation,
services and other legal processes in all actions and other legal
proceedings against such corporation, thus:
SEC. 127. Who may be a resident agent. A resident agent may
either be an individual residing in the Philippines or a domestic
corporation lawfully transacting business in the Philippines:
Provided, That in the case of an individual, he must be of good
moral character and of sound financial standing.
SEC. 128. Resident agent; service of process. The Securities and
Exchange Commission shall require as a condition precedent to
the issuance of the license to transact business in the Philippines
by any foreign corporation that such corporation file with the
Securities and Exchange Commission a written power of
attorney designating some persons who must be a resident of the
Philippines, on whom any summons and other legal processes

Page 48 of 121
may be served in all actions or other legal proceedings against
such corporation, and consenting that service upon such resident
agent shall be admitted and held as valid as if served upon the
duly-authorized officers of the foreign corporation as its home
office.14

Under the law, Atty. Aguinaldo was not specifically authorized to execute
a certificate of non-forum shopping as required by Section 5, Rule 7 of
the Rules of Court. This is because while a resident agent may be aware
of actions filed against his principal (a foreign corporation doing
business in the Philippines), such resident may not be aware of actions
initiated by its principal, whether in the Philippines against a domestic
corporation or private individual, or in the country where such
corporation was organized and registered, against a Philippine
registered corporation or a Filipino citizen.
The respondent knew that its counsel, Atty. Aguinaldo, as its resident
agent, was not specifically authorized to execute the said certification. It
attempted to show its compliance with the rule subsequent to the filing
of its complaint by submitting, on March 6, 2000, a resolution purporting
to have been approved by its Board of Directors during a teleconference
held on June 25, 1999, allegedly with Atty. Aguinaldo and Suk Kyoo Kim
in attendance. However, such attempt of the respondent casts veritable
doubt not only on its claim that such a teleconference was held, but also
on the approval by the Board of Directors of the resolution authorizing
Atty. Aguinaldo to execute the certificate of non-forum shopping.
In its April 12, 2000 Order, the RTC took judicial notice that because of
the onset of modern technology, persons in one location may confer with
other persons in other places, and, based on the said premise, concluded
that Suk Kyoo Kim and Atty. Aguinaldo had a teleconference with the
respondents Board of Directors in South Korea on June 25, 1999. The
CA, likewise, gave credence to the respondents claim that such a

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

teleconference took place, as contained in the affidavit of Suk Kyoo Kim,

as well as Atty. Aguinaldos certification.
Generally speaking, matters of judicial notice have three material
requisites: (1) the matter must be one of common and general
knowledge; (2) it must be well and authoritatively settled and not
doubtful or uncertain; and (3) it must be known to be within the limits of
the jurisdiction of the court. The principal guide in determining what
facts may be assumed to be judicially known is that of notoriety. Hence,
it can be said that judicial notice is limited to facts evidenced by public
records and facts of general notoriety.[15] Moreover, a judicially noticed
fact must be one not subject to a reasonable dispute in that it is either:
(1) generally known within the territorial jurisdiction of the trial court;
or (2) capable of accurate and ready determination by resorting to
sources whose accuracy cannot reasonably be questionable.16
Things of "common knowledge," of which courts take judicial matters
coming to the knowledge of men generally in the course of the ordinary
experiences of life, or they may be matters which are generally accepted
by mankind as true and are capable of ready and unquestioned
demonstration. Thus, facts which are universally known, and which may
be found in encyclopedias, dictionaries or other publications, are
judicially noticed, provided, they are of such universal notoriety and so
generally understood that they may be regarded as forming part of the
common knowledge of every person. As the common knowledge of man
ranges far and wide, a wide variety of particular facts have been
judicially noticed as being matters of common knowledge. But a court
cannot take judicial notice of any fact which, in part, is dependent on the
existence or non-existence of a fact of which the court has no constructive
knowledge.17
In this age of modern technology, the courts may take judicial notice that
business transactions may be made by individuals through
teleconferencing. Teleconferencing is interactive group communication

Page 49 of 121

(three or more people in two or more locations) through an electronic

medium. In general terms, teleconferencing can bring people together
under one roof even though they are separated by hundreds of miles.18
This type of group communication may be used in a number of ways, and
have three basic types: (1) video conferencing - television-like
communication augmented with sound; (2) computer conferencing printed communication through keyboard terminals, and (3) audioconferencing-verbal communication via the telephone with optional
capacity for telewriting or telecopying.19
A teleconference represents a unique alternative to face-to-face (FTF)
meetings. It was first introduced in the 1960s with American Telephone
and Telegraphs Picturephone. At that time, however, no demand existed
for the new technology. Travel costs were reasonable and consumers
were unwilling to pay the monthly service charge for using the
picturephone, which was regarded as more of a novelty than as an actual
means for everyday communication.20 In time, people found it
advantageous to hold teleconferencing in the course of business and
corporate governance, because of the money saved, among other
advantages include:
1. People (including outside guest speakers) who wouldnt
normally attend a distant FTF meeting can participate.
2. Follow-up to earlier meetings can be done with relative ease
and little expense.
3. Socializing is minimal compared to an FTF meeting; therefore,
meetings are shorter and more oriented to the primary purpose
of the meeting.
4. Some routine meetings are more effective since one can audioconference from any location equipped with a telephone.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

5. Communication between the home office and field staffs is

maximized.

Page 50 of 121
7. Greater participant preparation time needed.
8. Informal, one-to-one, social interaction not possible.22

6. Severe climate and/or unreliable transportation may

necessitate teleconferencing.
7. Participants are generally better prepared than for FTF
meetings.
8. It is particularly satisfactory for simple problem-solving,
information exchange, and procedural tasks.
9. Group members participate more equally in well-moderated
teleconferences than an FTF meeting.21
On the other hand, other private corporations opt not to hold
teleconferences because of the following disadvantages:
1. Technical failures with equipment, including connections that
arent made.
2. Unsatisfactory for complex interpersonal communication, such
as negotiation or bargaining.
3. Impersonal, less easy to create an atmosphere of group
rapport.
4. Lack of participant familiarity with the equipment, the
medium itself, and meeting skills.
5. Acoustical problems within the teleconferencing rooms.
6. Difficulty in determining participant speaking order;
frequently one person monopolizes the meeting.

Indeed, teleconferencing can only facilitate the linking of people; it does

not alter the complexity of group communication. Although it may be
easier to communicate via teleconferencing, it may also be easier to
miscommunicate. Teleconferencing cannot satisfy the individual needs
of every type of meeting.23
In the Philippines, teleconferencing and videoconferencing of members
of board of directors of private corporations is a reality, in light of
Republic Act No. 8792. The Securities and Exchange Commission issued
SEC Memorandum Circular No. 15, on November 30, 2001, providing the
guidelines to be complied with related to such conferences.24 Thus, the
Court agrees with the RTC that persons in the Philippines may have a
teleconference with a group of persons in South Korea relating to
business transactions or corporate governance.
Even given the possibility that Atty. Aguinaldo and Suk Kyoo Kim
participated in a teleconference along with the respondents Board of
Directors, the Court is not convinced that one was conducted; even if
there had been one, the Court is not inclined to believe that a board
resolution was duly passed specifically authorizing Atty. Aguinaldo to
file the complaint and execute the required certification against forum
shopping.
The records show that the petitioner filed a motion to dismiss the
complaint on the ground that the respondent failed to comply with
Section 5, Rule 7 of the Rules of Court. The respondent opposed the
motion on December 1, 1999, on its contention that Atty. Aguinaldo, its
resident agent, was duly authorized to sue in its behalf. The respondent,
however, failed to establish its claim that Atty. Aguinaldo was its
resident agent in the Philippines. Even the identification card25 of Atty.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Aguinaldo which the respondent appended to its pleading merely

showed that he is the company lawyer of the respondents Manila
Regional Office.
The respondent, through Atty. Aguinaldo, announced the holding of the
teleconference only during the hearing of January 28, 2000; Atty.
Aguinaldo then prayed for ten days, or until February 8, 2000, within
which to submit the board resolution purportedly authorizing him to file
the complaint and execute the required certification against forum
shopping. The court granted the motion.26 The respondent, however,
failed to comply, and instead prayed for 15 more days to submit the said
resolution, contending that it was with its main office in Korea. The court
granted the motion per its Order27 dated February 11, 2000. The
respondent again prayed for an extension within which to submit the
said resolution, until March 6, 2000.28 It was on the said date that the
respondent submitted an affidavit of its general manager Suk Kyoo Kim,
stating, inter alia, that he and Atty. Aguinaldo attended the said
teleconference on June 25, 1999, where the Board of Directors
supposedly approved the following resolution:
RESOLVED, that Mario A. Aguinaldo and his law firm M.A.
Aguinaldo & Associates or any of its lawyers are hereby
appointed and authorized to take with whatever legal action
necessary to effect the collection of the unpaid account of Expert
Travel & Tours. They are hereby specifically authorized to
prosecute, litigate, defend, sign and execute any document or
paper necessary to the filing and prosecution of said claim in
Court, attend the Pre-trial Proceedings and enter into a
compromise agreement relative to the above-mentioned claim.29
But then, in the same affidavit, Suk Kyoo Kim declared that the
respondent "do[es] not keep a written copy of the aforesaid Resolution"
because no records of board resolutions approved during
teleconferences were kept. This belied the respondents earlier

Page 51 of 121

allegation in its February 10, 2000 motion for extension of time to

submit the questioned resolution that it was in the custody of its main
office in Korea. The respondent gave the trial court the impression that it
needed time to secure a copy of the resolution kept in Korea, only to
allege later (via the affidavit of Suk Kyoo Kim) that it had no such written
copy. Moreover, Suk Kyoo Kim stated in his affidavit that the resolution
was embodied in the Secretarys/Resident Agents Certificate signed by
Atty. Aguinaldo. However, no such resolution was appended to the said
certificate.
The respondents allegation that its board of directors conducted a
teleconference on June 25, 1999 and approved the said resolution (with
Atty. Aguinaldo in attendance) is incredible, given the additional fact that
no such allegation was made in the complaint. If the resolution had
indeed been approved on June 25, 1999, long before the complaint was
filed, the respondent should have incorporated it in its complaint, or at
least appended a copy thereof. The respondent failed to do so. It was
only on January 28, 2000 that the respondent claimed, for the first time,
that there was such a meeting of the Board of Directors held on June 25,
1999; it even represented to the Court that a copy of its resolution was
with its main office in Korea, only to allege later that no written copy
existed. It was only on March 6, 2000 that the respondent alleged, for the
first time, that the meeting of the Board of Directors where the
resolution was approved was held via teleconference.
Worse still, it appears that as early as January 10, 1999, Atty. Aguinaldo
had signed a Secretarys/Resident Agents Certificate alleging that the
board of directors held a teleconference on June 25, 1999. No such
certificate was appended to the complaint, which was filed on
September 6, 1999. More importantly, the respondent did not explain
why the said certificate was signed by Atty. Aguinaldo as early as
January 9, 1999, and yet was notarized one year later (on January 10,
2000); it also did not explain its failure to append the said certificate to
the complaint, as well as to its Compliance dated March 6, 2000. It was

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Page 52 of 121

only on January 26, 2001 when the respondent filed its comment in the
CA that it submitted the Secretarys/Resident Agents Certificate30 dated
January 10, 2000.

Id. at 47-50.

Rollo, pp. 51-52.

The Court is, thus, more inclined to believe that the alleged
teleconference on June 25, 1999 never took place, and that the
resolution allegedly approved by the respondents Board of Directors
during the said teleconference was a mere concoction purposefully
foisted on the RTC, the CA and this Court, to avert the dismissal of its
complaint against the petitioner.

Rollo, p. 108.

Id. at 18.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The

Decision of the Court of Appeals in CA-G.R. SP No. 61000 is REVERSED
and SET ASIDE. The Regional Trial Court of Manila is hereby ORDERED
to dismiss, without prejudice, the complaint of the respondent.

SO ORDERED.
Puno, Acting C.J., (Chairman), Austria-Martinez, and Chico-Nazario, JJ.,
concur.
Tinga, J., out of the country.

Melo v. Court of Appeals, G.R. No. 123686, 16 November 1999,

318 SCRA 94.
8

Digital Microwave Corporation v. Court of Appeals, G.R. No.

128550, 16 March 2000, 328 SCRA 286.
United Residents Dominican Hill, Inc. v. COSLAP, G.R. No.
135945, 7 March 2001, 353 SCRA 782.
10

11

Uy v. Land Bank of the Philippines, G.R. No. 136100, 24 July

2000, 336 SCRA 419; and National Steel Corporation v. Court of
Appeals, supra.
12

13

Footnotes
Penned by Associate Justice Elvi John S. Asuncion, with
Associate Justices Romeo A. Brawner (now Presiding Justice) and
Juan Q. Enriquez, Jr., concurring; Rollo, pp. 27-30.
1

Rollo, pp. 53-56.

Rollo, p. 109.

G.R. No. 134468, 29 August 2002, 388 SCRA 85.

Rollo, pp. 55-56.

These provisions are the basis of Section 12, Rule 14 of the

Rules of Court, which reads:
14

SEC. 12. Service upon foreign private juridical entity.

When the defendant is a foreign private juridical entity
which has transacted business in the Philippines, service
may be made on its resident agent designated in
accordance with law for that purpose, or, if there be no
such agent, on the government official designated by law

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

to that effect, or on any of its officers or agents within the

Philippines.
State Prosecutors v. Muro, A.M. No. RTJ-92-876, 19 September
1994, 236 SCRA 505.
15

Page 53 of 121
others, Audioconferencing; and Sonneville, Teleconferencing
Enters its Growth Stage, supra.
23

Ibid.

The Court also approved the Rule on Examination of a child

witness which allows live-link television testimony in criminal
cases where the child is a victim or a witness (Section 25), which
took effect on December 15, 2000.
24

16

Wood v. Astleford, 412 N.W. 2d 753 (1987).

17

Trepanier v. Toledo & D. C. Ry, Co., 130 N.E. 558.

J. Carroll, Teleconferencing, CIX Duns Business Month, 1

(1982), pp. 130-34, cited in R. Rogan and G. Simons,
Teleconferencing, 22 Journal of Extensions 5, 20 (September
1984) available at http:// joe.org/joe/1984 September/a4 html.
(last visited 20 May 2005).

The early applications of videoconferencing in the States

in the United States courts primarily focused on video
arraignments and probable cause hearings. As courts
began to appreciate the costs savings and the decreased
security risks of the technology, other uses became
apparent. Videoconferencing is an effective tool for
parole interviews, juvenile detention hearings, mental
health hearings, domestic violence hearings, pretrial
conferences, remote witness testimony, and
depositionsto name a few. The technology will prove
even more valuable in an age of international terrorist
trials with witnesses from around the world.
Videoconferencing has become quite commonplace in
State Courts per the Report. The last comprehensive
report: "Use of Interactive Video for Court
Proceedings: Legal Status and Use Nationwide."
Published in 1995, by the National Institute of
Corrections, is that videoconferencing is used in 50 states
in the United States of America.

18

19

Ibid.

R. Johansen, J. Vallee, and K. Spangler, Electronic Meetings:

Utopian Dreams and Complex Realities, The Futurist, XII (No. 5,
1978), 313-19, supra.
20

J. Bartlett, Interesting Highlights of the Growing

Teleconferencing Boom, XVII Communication News 12 (1980),
42; Sonneville, Teleconferencing Enters Its Growth Stage; Stu
Sutherland, Extension Teleconferencing in the 1980s, LII
Extension Service Review 2 (1981), 12-16; L. Parker, M. Baird, and
M. Monson, Introduction to Teleconferencing (Madison:
University of Wisconsin-Extension, Center for Interactive
Programs, 1982); and Rogan and others, Audioconferencing,
supra.
21

Johansen, Vallee, and Spangler, Electronic Meetings; Parker,

Baird, and Monson, Introduction to Teleconferencing; Rogan and
22

25

Rollo, p. 68.

26

Id. at 86.

Law __ Evidence

Prof. Avena

27

Id. at 87.

28

Rollo, pp. 90-91.

29

Id. at 93.

30

Rollo, p. 108.

2. JUDICIAL NOTICE

Page 54 of 121

Law __ Evidence
G.R. No. 159230

Prof. Avena

2. JUDICIAL NOTICE

October 18, 2010

B.E. SAN DIEGO, INC., Petitioner,

vs.
COURT OF APPEALS and JOVITA MATIAS, Respondents.

Page 55 of 121

Matias stated that she and her family have introduced substantial
improvements on the subject property and have been regularly paying
realty taxes thereon. She further claimed that she is a legitimate
beneficiary of Presidential Decree (PD) No. 15178 and PD No. 2016,9
which classified the subject property as part of the Urban Land Reform
Zone (ULRZ) and an Area for Priority Development (APD).

DECISION
BRION, J.:
Petitioner B. E. San Diego, Inc. (B.E. San Diego) filed before the Court a
petition for review on certiorari1 assailing the September 25, 2002
decision2 of the Court of Appeals (CA) in CA-G.R. CV No. 50213. The CA
decision reversed the June 22, 1995 decision3 of the Regional Trial Court
(RTC) of Malabon, Branch 74, in Civil Case No. 1421-MN.4 The RTC in
turn granted the complaint for recovery of possession5 instituted by B. E.
San Diego against private respondent Jovita Matias (Matias).
THE FACTS
B.E. San Diego alleged that it is the registered owner of a parcel of land
(subject property) located in Hernandez Street, Catmon, Malabon,
covered by Transfer Certificate of Title (TCT) No. T-134756 of the
Register of Deeds of Caloocan, and delineated as Lot No. 3, Block No. 13,
with an area of 228 square meters. B. E. San Diego claimed that Matias
has been occupying the subject property for over a year without its
authority or consent. As both its oral and written demands to vacate
were left unheeded, B. E. San Diego filed a complaint for the recovery of
possession of the subject property against Matias on March 15, 1990
before the RTC.6
In her answer to the complaint, Matias alleged that she and her family
have been living on the subject property since the 1950s on the basis of a
written permit issued by the local government of Malabon in 1954.7

More importantly, she questioned B. E. San Diegos claim over the

subject property by pointing out that the title relied on by B. E. San Diego
(TCT No. T-134756) covers a property located in Barrio Tinajeros,
Malabon, while the subject property is actually located in Barrio Catmon,
Malabon. Matias thus claimed that the property she is occupying in
Barrio Catmon is different from the property that B. E. San Diego seeks
to recover in the possessory action before the RTC.10
The RTC found no issue as to the identity of the property, ruling that the
property covered by B. E. San Diegos TCT No. T-134756, located in
Barrio Tinajeros, is the same property being occupied by Matias, located
in Barrio Catmon. The RTC took judicial notice of the fact that Barrio
Catmon was previously part of Barrio Tinajeros. It found that the
Approved Subdivision Plan and tax declarations showed that the subject
property is located in Barrio Catmon, Malabon. The RTC thus declared
that B. E. San Diego sufficiently proved its right to recover possession of
the subject property on the basis of its TCT No. T-134756. As opposed to
B. E. San Diegos clear right, it found Matias claimed of possession over
the subject property as a long-time occupant and as a beneficiary of PD
Nos. 1517 and 2016 unfounded.11
On appeal, the CA disagreed with the RTCs findings. It considered the
discrepancy in the location significant and declared that this should have
prompted the RTC to require an expert witness from the concerned
government agency to explain the matter. Since it was undisputed that
Matias was in actual possession of the subject property at the time of the
filing of the complaint, the CA declared that her possession should have

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

been upheld under Article 538 of the Civil Code.12 The CA also upheld
Matias possession based on PD Nos. 1517 and 2016. 13
As its motion for reconsideration of the CAs judgment was denied,14 B.
E. San Diego filed the present petition for review on certiorari under
Rule 45 of the Rules of Court.
THE PETITION FOR REVIEW ON CERTIORARI
B. E. San Diego contends that the CA erred in reversing the RTCs finding
on the sole basis of a discrepancy, which it claims has been explained
and controverted by the evidence it presented. It assails the CA decision
for failing to consider the following evidence which adequately show
that the property covered by its TCT No. T-134756 is the same property
occupied by Matias:
a. TCT No. T-134756 issued in the name of B. E. San Diego,
covering a property delineated as Lot No. 3, Block No. 13;
b. Approved Subdivision Plan showing Lot No. 3, Block No. 3 is
situated in Barrio Catmon, Malabon;
c. Tax Declaration No. B-005-00296 issued in the name of B. E.
San Diego, referring to a property covered by TCT No. T-134756;
d. Testimonial evidence of B. E. San Diegos witness that the
property described in TCT No. T-134756 is the same property
occupied by Matias; and
e. Judicial notice taken by the RTC of Malabon, based on public
and common knowledge, that Barrio Catmon was previously part
of Barrio Tinajeros, Malabon.

Page 56 of 121

B. E. San Diego also alleges that Matias is estopped from alleging that the
property she is occupying is different from the property covered by its
TCT No. T-134756. Matias previously moved to dismiss its complaint for
recovery of possession of the subject property (accion publiciana),
raising res judicata as ground.15 She alleged that the accion publiciana16
is barred by the judgment in an earlier ejectment case,17 as both involved
the same parties, the same subject matter, and the same cause of action.
The ejectment case involved a parcel of land covered by TCT No. T134756, located at Hernandez Street, Barrio Catmon, Malabon; Matias
never questioned the identity and location of the property in that case.18
B. E. San Diego thus contends that Matias, by raising the ground of res
judicata, has impliedly admitted there is no difference in the subject
matter of the two actions and, thus, could no longer question the identity
and location of the subject property.
In controverting B. E. San Diegos petition, Matias relies on the same
points that the CA discussed in its decision.
THE COURTS RULING
The Court finds the petition meritorious.
From the errors raised in the petition, what emerges as a primary issue
is the identity of the subject matter of the case whether the subject
property that Matias occupies is the same as the property covered by B.
E. San Diegos title. Our reading of the records discloses that the two are
one and the same.
B. E. San Diegos TCT No. T-134756 refers to a property located in Barrio
Tinajeros, Malabon, but the subject property sought to be recovered
from Matias is in Barrio Catmon, Malabon. In ruling for Matias, the CA
declared that this discrepancy should have been explained by an expert
witness, which B. E. San Diego failed to present.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

The Court, however, does not find the testimony of an expert witness
necessary to explain the discrepancy. The RTC declared that the
discrepancy arose from the fact that Barrio Catmon was previously part
of Barrio Tinajeros. The RTC has authority to declare so because this is a
matter subject of mandatory judicial notice. Section 1 of Rule 129 of the
Rules of Court19 includes geographical divisions as among matters that
courts should take judicial notice of. Given that Barrio Tinajeros is
adjacent to Barrio Catmon,20 we find it likely that, indeed, the two
barrios previously formed one geographical unit.
Even without considering judicial notice of the geographical divisions
within a political unit, sufficient evidence exists supporting the RTCs
finding that the subject property B. E. San Diego seeks to recover is the
Barrio Catmon property in Matias possession. TCT No. T-134756
identifies a property in Barrio Tinajeros as Lot No. 3, Block No. 13.
Although B. E. San Diegos tax declaration refers to a property in Barrio
Catmon, it nevertheless identifies it also as Lot No. 3, Block No. 13,
covered by the same TCT No. T-134756. Indeed, both title and the tax
declaration share the same boundaries to identify the property. With
this evidence, the trial court judge can very well ascertain the facts to
resolve the discrepancy, and dispense with the need for the testimony of
an expert witness.21
Additionally, we agree with B. E. San Diego that Matias can no longer
question the identity of the property it seeks to recover when she
invoked res judicata as ground to dismiss the accion publiciana that is
the root of the present petition. An allegation of res judicata necessarily
constitutes an admission that the subject matter of the pending suit (the
accion publiciana) is the same as that in a previous one (the ejectment
case).22 That Matias never raised the discrepancy in the location stated
in B.E. San Diegos title and the actual location of the subject property in
the ejectment suit bars her now from raising the same. Thus, the issue of
identity of the subject matter of the case has been settled by Matias

Page 57 of 121

admission and negates the defenses she raised against B. E. San Diegos
complaint.
We then proceed to resolve the core issue of the accion publiciana who
between the parties is entitled possession of the subject property.
Notably, the judgment in the ejectment suit that B. E. San Diego
previously filed against Matias is not determinative of this issue and will
not prejudice B. E. San Diegos claim.23 While there may be identity of
parties and subject matter, there is no identity of cause of action
between the two cases; an action for ejectment and accion publiciana,
though both referring to the issue of possession, differ in the following
manner:
First, forcible entry should be filed within one year from the unlawful
dispossession of the real property, while accion publiciana is filed a year
after the unlawful dispossession of the real property. Second, forcible
entry is concerned with the issue of the right to the physical possession
of the real property; in accion publiciana, what is subject of litigation is
the better right to possession over the real property. Third, an action for
forcible entry is filed in the municipal trial court and is a summary
action, while accion publiciana is a plenary action in the RTC.24
B. E. San Diego anchors it right to possess based on its ownership of the
subject property, as evidenced by its title. Matias, on the other hand,
relies on (1) the 1954 permit she secured from the local government of
Malabon, (2) the Miscellaneous Sales Application, (3) the tax
declarations and realty tax payments she made annually beginning 1974,
(4) her standing as beneficiary of PD Nos. 1517 and 2016, and (5) her
long possession of the subject property since 1954 up to the present.
Unfortunately for Matias, her evidence does not establish a better right
of possession over B. E. San Diegos ownership.
The settled doctrine in property law is that no title to register land in
derogation of that of the registered owner shall be acquired by

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

prescription or adverse possession.25 Even if the possession is coupled

with payment of realty taxes, we cannot apply in Matias case the rule
that these acts combined constitute proof of the possessors claim of
title.26 Despite her claim of possession since 1954, Matias began paying
realty taxes on the subject property only in 1974 when B. E. San Diego
filed an ejectment case against her husband/predecessor, Pedro
Matias.27 Considering these circumstances, we find Matias payment of
realty taxes suspect.1avvphi1

Page 58 of 121

WHEREFORE, we GRANT the petition for review on certiorari, and

REVERSE the September 25, 2002 decision and May 20, 2003 resolution
of the Court of Appeals in CA-G.R. CV No. 50213. The June 22, 1995
decision of the Regional Trial Court of Malabon in Civil Case No. 1421MN is REINSTATED. Costs against the respondent.
SO ORDERED.
Footnotes

Matias cannot rely on the Miscellaneous Sales Application and the local
government permit issued in her favor; neither establishes a clear right
in favor of Matias over the subject property. A sales application, in the
absence of approval by the Bureau of Lands or the issuance of a sales
patent, remains simply as an application that does not vest title in the
applicant.28 The local government permit contained only a statement of
the local executive that the case between the local government and B. E.
San Diego was decided by a trial court in favor of the former.29
The CA erroneously upheld Matias claim of possession based on PD Nos.
1517 and 2016. Matias is not a qualified beneficiary of these laws. The
tenants/occupants who have a right not to be evicted from urban lands
"does not include those whose presence on the land is merely tolerated
and without the benefit of contract, those who enter the land by force or
deceit, or those whose possession is under litigation." 30 At the time of
PD 1517s enactment, there was already a pending ejectment suit
between B. E. San Diego and Pedro Matias over the subject property.
"Occupants of the land whose presence therein is devoid of any legal
authority, or those whose contracts of lease were already terminated or
had already expired, or whose possession is under litigation, are not
considered tenants under the [PD Nos. 1517]."31 The RTC correctly
ruled that Matias cannot be considered a legitimate tenant who can avail
the benefits of these laws no matter how long her possession of the
subject property was.

Designated Additional Member of the Third Division, per

Special Order No. 907 dated October 13, 2010.
*

Designated Acting Chairperson of the Third Division, per

Special Order No. 906 dated October 13, 2010.
**

***Designated

Additional Member of the Third Division, per

Special Order No. 911 dated October 15, 2010.
1

Rollo, pp. 3-24.

Penned by Associate Justice Delilah Vidallon-Magtolis, with

Associate Justice Renato C. Dacudao and Associate Justice Mario
L. Guaria concurring, id. at 29-35.
2

Penned by Judge (now CA Associate Justice) Bienvenido L.

Reyes, records, pp. 329-338.
3

Also assailed in the present petition is the May 20, 2003

resolution of the CA, denying B. E. San Diegos motion for
reconsideration of the September 25, 2002 decision, rollo, p. 37.
4

Records, pp. 2-4.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Page 59 of 121

Id. at 2-4.

15

Records, pp. 61-63.

Payahag dated December 24, 1954, id. at 277.

16

Civil Case No. 1421-MN.

Entitled "Proclaiming Urban Land Reform in the Philippines

and Providing for the Implementing Machinery Thereof," Section
6 of which grants preferential rights to landless
tenants/occupants to acquire land within urban land reform
areas.
8

Entitled "Prohibiting the Eviction of Occupant Families from

Land Identified and Proclaimed as Areas for Priority
Development (APD) or as Urban Land Reform Zones and
Exempting Such Land from Payment of Real Property Taxes,"
Section 2 of which prohibits the eviction of qualified
tenants/occupants.
9

10

Records, pp. 12-16.

11

Id. at 336-339.

Art. 538. Possession as a fact cannot be recognized at the same

time in two different personalities except in the cases of copossession. Should a question arise regarding the fact of
possession, the present possessor shall be preferred; if there are
two possessors, the one longer in possession; if the dates of the
possession are the same, the one who presents a title; and if all
these conditions are equal, the thing shall be placed in judicial
deposit pending determination of its possession or ownership
through proper proceedings.
12

13

Rollo, pp. 33-34.

14

Supra note 4.

Civil Case No. 668-87 is one of the four ejectment cases

instituted by B. E. San Diego against the Matias family before the
Metropolitan Trial Court of Malabon, Branch 56.
17

The RTC denied Matias motion to dismiss in its Order dated

March 5, 1991, records, pp. 95-96. The CA dismissed Matias
certiorari petition (CA-G.R. No. 26172) assailing the denial of her
motion to dismiss in its Order dated October 10, 1991, id. at 124.
18

RULES OF COURT, Rule 129, Section 1. Judicial notice, when

mandatory. A court shall take judicial notice, without the
introduction of evidence, of the existence and territorial extent of
states, their political history, forms of government and symbols
of nationality, the law of nations, the admiralty and maritime
courts of the world and their seals, the political constitution and
history of the Philippines, the official acts of the legislative,
executive and judicial departments of the Philippines, the laws of
nature, the measure of time, and the geographical divisions.
19

Malabon City map at

http://www.kabeetmaps.com/flash/detail.php?name_id=11245
92.
20

Expert witnesses are not allowed to give opinion evidence if

from the other evidence available, the judge can be put in
possession of the facts. Such evidence, if permitted, would result
in the substitution of the judgment of experts for that of the
court, R. Francisco, Evidence (1994 ed.), pp. 351-352, citing
McBain, California Evidence Manual, p. 278.
21

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

For res judicata to apply, there must be (1) a former judgment

or order that is final and executory, (2) rendered by a court that
has jurisdiction over the subject matter and the parties, (3) the
former judgment or order was resolved on the merits, and (4)
there is identity of parties, subject matter, and cause of action
between the first and second actions, see Agustin v. de los
Santos, G.R. No. 168139, January 20, 2009, 576 SCRA 576, 586.
22

The Metropolitan Trial Court (MTC) of Malabon, Branch 56,

granted B. E. San Diegos ejectment complaint against Matias (see
rollo, pp. 41-44). The RTC of Malabon, Branch 72, reversed the
MTCs decision after finding that B. E. San Diegos complaint
failed to allege that it had prior physical possession of the
property (see records, pp. 64-66).
23

Regis v. CA, G. R. No. 153914, July 31, 2007, 528 SCRA 611,
620; see also Custodio v. Corrado, G. R. No. 146082, July 30,
2004, 435 SCRA 500.
24

25

PD No. 1529, Section 47.

Although tax declarations or realty tax payment of property

are not conclusive evidence of ownership, nevertheless, they are
good indicia of possession in the concept of owner for no one in
his right mind would be paying taxes for a property that is not in
his actual or at least constructive possession. They constitute at
least proof that the holder has a claim of title over the property,
Director of Lands v. CA, G.R. No. 103949, June 17, 1999, 308
SCRA 317, 324-325, citing Republic v. CA, 258 SCRA 712 (1996).
26

27

Civil Case No. 3667.

Javier v. CA, G. R. No. 101177, March 28, 1994, 231 SCRA 498,
507.
28

Page 60 of 121
29

Supra note 7.

Estreller v. Ysmael, G. R. No. 170264, March 13, 2009, 581

SCRA 247, 256.
30

31

Ibid.

Law __ Evidence
G.R. No. 187917

Prof. Avena

2. JUDICIAL NOTICE

January 19, 2011

METROPOLITAN BANK & TRUST COMPANY, Petitioner,

vs.
SPOUSES EDMUNDO MIRANDA and JULIE MIRANDA, Respondents.
DECISION
NACHURA, J.:
On appeal is the June 30, 2008 Decision1 of the Court of Appeals (CA) in
CA-G.R. CV No. 87775, affirming the June 16, 2006 Decision2 of the
Regional Trial Court (RTC) of Santiago City, Branch 35, as well as its
subsequent Resolution dated May 7, 2009,3 denying petitioners motion
for reconsideration.
Respondents, spouses Edmundo Miranda and Julie Miranda, applied for
and obtained a credit accommodation from petitioner Metropolitan
Bank & Trust Company (Metrobank). On August 27, 1996, respondents
obtained a P4,000,000.00 loan from Metrobank and executed a real
estate mortgage4 over a parcel of land in Poblacion, Santiago, Isabela,
covered by Transfer Certificate of Title (TCT) No. 202288. Upon
respondents request, Metrobank increased the loan from P4,000,000.00
to P5,000,000.00. The real estate mortgage executed on August 27, 1996
was thus amended5 to increase the principal amount of loan secured by
the mortgage to P5,000,000.00.
Subsequently, respondents obtained additional loans from Metrobank P1,000,000.00 on December 3, 1996, and P1,000,000.00 on May 8, 1997.
The additional loans were secured by mortgage6 over lands situated in
Dubinan and Mabini, Santiago, Isabela, covered by TCT Nos. T-202288,
T-180503, T-260279, and T-272664.

Page 61 of 121

Respondents encountered difficulties in paying their loans. They

requested for a longer period to settle their account and further
requested for the restructuring of their loans, which requests Metrobank
granted. Respondents then signed Promissory Note (PN) No. 5997737
for P6,400,000.00, and PN No. 5997728 for P950,000.00, both payable on
February 24, 2002, with interest at 17.250% per annum. They also
amended the deeds of real estate mortgage they executed in favor of
Metrobank to increase the amount of loans secured by mortgage to
P6,350,000.00. The amendment was inscribed on TCT Nos. T-202288,9
T-260279,10 and T-180503.11
On August 25, 2000, Metrobank sent respondents a demand letter12 to
settle their overdue account of P8,512,380.15, inclusive of interest and
penalties; otherwise, the bank would initiate "the necessary legal
proceedings x x x, without further notice." Respondents, however, failed
to settle their account. Consequently, Metrobank caused the extrajudicial
foreclosure and auction sale of the mortgaged properties on November
16, 2000. The Clerk of Court and Ex-Officio Sheriff of Santiago City sold
the mortgaged properties at public auction for the sum of P9,284,452.00
to Metrobank, as the highest bidder. A Certificate of Sale13 was issued in
favor of Metrobank on November 27, 2000, which was registered with
the Registry of Deeds on November 29, 2000.
Claiming that the extrajudicial foreclosure was void, respondents filed a
complaint for Nullification of the Foreclosure Proceedings and Damages
with Prayer for Temporary Restraining Order/Injunction14 with the RTC
of Santiago City. They alleged non-compliance with the provisions of
Presidential Decree No. 107915 and Act No. 3135,16 particularly the
publication requirement. Respondents further asserted that Metrobank
required them to sign blank promissory notes and real estate mortgage,
and that they were not furnished with copies of these documents. Later,
they discovered that the terms and conditions of the promissory notes
and of the mortgage were entirely different from what was represented
to them by the bank. The right to fix the interest rates, they added, was

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Page 62 of 121

exclusively given to the bank. Respondents, thus, prayed for the

annulment of the extrajudicial foreclosure proceedings.

2) DECLARING as null and void the Sheriffs Final Deed of Sale,

dated December 21, 2000, Exhibit "12";

Metrobank answered the complaint, denying its material allegations and

asserting the validity of the foreclosure proceedings. Specifically, it
averred compliance with the posting and publication requirements.
Thus, it prayed for the dismissal of the complaint.17

3) CANCELLING [Metrobanks] TCT Nos. T-319236 (Exhibit

"13"); T-319235 over Lot 6-B-18 (Exhibit "14"); T-T-319235
over Lot 4-F (Exhibit "15"); and T-319237 (Exhibit "16");

Meanwhile, on December 20, 2001, Metrobank caused the cancellation

of the TCTs in the name of respondents and the issuance of new ones in
its name. On December 21, 2001, the Ex-Officio Sheriff executed a Final
Deed of Sale.18
On June 16, 2006, the RTC rendered a decision19 annulling the
extrajudicial foreclosure proceedings. The RTC reviewed the records of
the foreclosure proceedings and found no proof of publication of the
sheriffs notice of sale; there was no affidavit of publication attached to
the records. This fatal defect, it held, invalidated the auction sale and the
entire foreclosure proceedings. The RTC further held that, when
Metrobank foreclosed the mortgaged properties, respondents loan
account was still outstanding for there was an overpayment of interests
amounting to P1,529,922.00. Thus, the foreclosure proceedings were
without factual and legal basis. The RTC further noted that Metrobank
consolidated its title even before the issuance of the sheriffs Final Deed
of Sale. The trial court considered it an irregularity sufficient to
invalidate the consolidation.
The dispositive portion of the RTC decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of [respondents] and against [petitioner] Metrobank as follows:
1) DECLARING as null and void the Sheriffs Certificate of Sale,
dated November 27, 2000, Exhibit "11";

4) RESTORING [respondents] TCT Nos. T-260279 (Exhibit "E");

T-202288 (Exhibit "F"); T-180503 (Exhibit "G"; and T- 272664
(Annex "E"); and
5) ORDERING x x x Metrobank to pay PHP50,000.00 as attorneys
fees, and the cost of suit.
SO ORDERED. 20
Metrobank filed a motion for reconsideration, but the RTC denied it on
July 31, 2006.
Metrobank then appealed to the CA, faulting the RTC for annulling the
foreclosure proceedings. It insisted that the bank complied with the
publication requirement. Metrobank also disagreed with the trial courts
finding of overpayment of interests amounting to P1,529,922.00,
claiming that the applicable interest rates on respondents loans were
17% and not 12% as computed by the trial court. It further asserted that
a final deed of sale is not necessary for purposes of consolidating its
ownership over the subject properties. Finally, Metrobank assailed the
award of attorneys fees for lack of basis.
On June 30, 2008, the CA resolved Metrobanks appeal in this wise:
WHEREFORE, the appeal is DISMISSED. The assailed decision dated June
16, 2006 of the RTC of Santiago City, Branch 35, in Civil Case No. 353022 is AFFIRMED.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

SO ORDERED.21
Metrobanks motion for reconsideration also suffered the same fate, as
the CA denied it on May 7, 2009.22
Before us, Metrobank insists on the validity of the foreclosure
proceedings. Essentially, it argues that foreclosure proceedings enjoy the
presumption of regularity, and the party alleging irregularity has the
burden of proving his claim. Metrobank asserts that, in this case, the
presumption of regularity was not disputed because respondents failed
to prove that the notice of sale was not published as required by law.
At the outset, it must be stated that only questions of law may be raised
before this Court in a Petition for Review under Rule 45 of the Revised
Rules of Civil Procedure. This Court is not a trier of facts, and it is not the
function of this Court to reexamine the evidence submitted by the
parties.23
It has been our consistent ruling that the question of compliance or noncompliance with notice and publication requirements of an extrajudicial
foreclosure sale is a factual issue, and the resolution thereof by the trial
court is generally binding on this Court. The matter of sufficiency of
posting and publication of a notice of foreclosure sale need not be
resolved
by this Court, especially when the findings of the RTC were sustained by
the CA. Well-established is the rule that factual findings of the CA are
conclusive on the parties and carry even more weight when the said
court affirms the factual findings of the trial court.24
The unanimity of the CA and the trial court in their factual ascertainment
that there was non-compliance with the publication requirement bars us
from supplanting their findings and substituting them with our own.
Metrobank has not shown that they are entitled to an exception to this

Page 63 of 121

rule. It has not sufficiently demonstrated any special circumstances to

justify a factual review.
Metrobank makes much ado of respondents failure to present proof of
non-compliance with the publication requirement. It insists that
respondents failed to discharge the requisite burden of proof.
Apparently, Metrobank lost sight of our ruling in Spouses Pulido v. CA,25
Sempio v. CA,26 and, recently, in Philippine Savings Bank v. Spouses
Dionisio Geronimo and Caridad Geronimo,27 viz.:
While it may be true that the party alleging non-compliance with the
requisite publication has the burden of proof, still negative allegations
need not be proved even if essential to ones cause of action or defense if
they constitute a denial of the existence of a document the custody of
which belongs to the other party.
It would have been a simple matter for Metrobank to rebut the allegation
of non-compliance by producing the required proof of publication. Yet,
Metrobank opted not to rebut the allegation; it simply relied on the
presumption of regularity in the performance of official duty.
Unfortunately, Metrobanks reliance on the presumption of regularity
must fail because it did not present any proof of publication of the notice
of sale. As held by this Court in Spouses Pulido v. Court of Appeals:28
[P]etitioners' reliance on the presumption of regularity in the
performance of official duties falls in the face of a serious imputation on
non-compliance. The presumption of compliance with official duty is
rebutted by failure to present proof of posting.
Further, in Philippine Savings Bank v. Spouses Dionisio Geronimo and
Caridad Geronimo,29 this Court rejected a similar contention, viz.:

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Page 64 of 121

Petitioner's invocation of the presumption of regularity in the

performance of official duty on the part of Sheriff Castillo is misplaced.
While posting the notice of sale is part of a sheriff's official functions, the
actual publication of the notice of sale cannot be considered as such,
since this concerns the publisher's business. Simply put, the sheriff is
incompetent to prove that the notice of sale was actually published in a
newspaper of general circulation.

foreclosure proceedings. Further, the RTC did not even set a hearing for
the purpose of declaring its intention to take judicial notice of the
records of the extrajudicial proceedings, as required by Section 332 of
Rule 129. Metrobank, thus, contends that the RTC exceeded its authority
in taking cognizance of the records of the extrajudicial proceedings.

As correctly found by the RTC and the CA, the records30 of the
foreclosure proceedings lacked any proof of publication. This explains
why Metrobank could not present any proof of publication.

As a rule, courts do not take judicial notice of the evidence presented in

other proceedings, even if these have been tried or are pending in the
same court or before the same judge. This rule, however, is not absolute.

We take this occasion to reiterate that the object of a notice of sale is to

inform the public of the nature and condition of the property to be sold,
and of the time, place, and terms of the sale. Notices are given for the
purpose of securing bidders and preventing a sacrifice sale of the
property.

In Juaban v. Espina33 and "G" Holdings, Inc. v. National Mines and Allied
Workers Union Local 103 (NAMAWU),34 we held that, in some instances,
courts have also taken judicial notice of proceedings in other cases that
are closely connected to the matter in controversy. These cases may be
so closely interwoven, or so clearly interdependent, as to invoke a rule of
judicial notice.

The goal of the notice requirement is to achieve a "reasonably wide

publicity" of the auction sale. This is why publication in a newspaper of
general circulation is required. The Court has previously taken judicial
notice of the "far-reaching effects" of publishing the notice of sale in a
newspaper of general circulation. Thus, the publication of the notice of
sale was held essential to the validity of foreclosure proceedings.31 In
this case, Metrobank failed to establish compliance with the publication
requirement. The RTC and the CA cannot, therefore, be faulted for
nullifying the foreclosure proceedings.
Metrobank next questions the authority of the RTC and the CA to take
cognizance of the records of the foreclosure proceedings as basis for
annulling the auction sale. It claims that the trial court may not take
judicial notice of the records of proceedings in another case, unless the
parties themselves agreed to it. Metrobank asserts that it did not give its
consent to the trial courts examination of the records of the extrajudicial

We disagree.

The RTC, therefore, acted well within its authority in taking cognizance
of the records of the extrajudicial foreclosure proceedings, and the CA
cannot be faulted for sustaining the RTC.
Metrobank further questions the trial courts finding of overpayment of
interests. But like the issue on compliance with the publication
requirement, the issue on overpayment of interests involves the
ascertainment of facts not subject of review by this Court. We reiterate
that our jurisdiction is limited to reviewing and revising errors of law
imputed to the lower court, the latters findings of fact being conclusive
and not reviewable by this Court.35
Besides, we find nothing erroneous in this factual finding of the RTC. As
explained by the RTC in its decision:

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

[T]he Court notes that the original promissory notes evidencing the
various loans of the plaintiffs were not presented in court by either
party; they are needed to determine the stipulated interest rate. The
Court is thus left to determine the same based on the testimony of the
plaintiffs that the agreed interest rate is 12% per annum; amazingly, this
was not denied or refuted by the [petitioner] bank, in which case, 12%
interest rate is applied at least for the period beginning 1997 until 1999,
when the loan was renewed under the two (2) new promissory notes
which indicated a higher rate of interest of 17.250% per annum. As
mentioned above, the interest payments made by the [respondents]
were already admitted by [Metrobank] in its answer to the complaint as
well as in its comment to [respondents] formal offer of evidence, and
such interest payments are duly reflected and contained in the passbook
account of the [respondents], Exhibit "H," "H-1" to "H-10." But, in order
to determine whether [respondents] account has become past due or
not, as the [petitioner] bank represents, the Court deems it necessary to
undertake some mathematical computation the result of which would
decisively guide the Court to arrive at a rightful conclusion, thus:

1) Total interest payments by

[respondents]
from May 7, 1997 to June 30, 1999 -

P3,332,422.00

2) Interest due

P1,802,500.00

Page 65 of 121
from May 7, 1997 to June 30, 1999 computed as follows:
a) 1st year (P7 M x 12%), from May 7,
1997 to May 28, 1998 -

P 840,000.00

b) 2nd year
i) from June 3, 1998 to Feb. 24, 1999 (8
mos.) -

P 560,000.00

ii) from March, 1999 to June 30, 1999 (4

mos.) -

P 402,500.00

3) Total Interest paid -

P 3,332,422.00

Less Interest due -

P 1,802,500.00

Overpaid interest -

P 1,529,922.00

From the foregoing, it is evident that [respondents] overpaid interests

for the period of two (2) years, from May 1997 to June 1999, in the total
amount of Php. 1,529,922.00. Thus, the Court is convinced that it is just
and equitable that such an overpayment be construed as advance
interest payments which should be applied for the succeeding period or
year of their contract. Otherwise, [Metrobank] would unjustly enrich
itself at the expense of [respondents]. In such a case, it was premature
then for [Metrobank] to declare [respondents] account as past due,
because at that juncture[, respondents] loan obligation was outstanding
and in declaring otherwise, [Metrobanks] action was without basis as
there was no violation of their loan contract. Consequently, it follows
that the foreclosure proceedings subsequently held on November 26,
2000 was without factual and legal basis, too. For, indeed, when the
foreclosure proceedings in question was conducted, [respondents] loan
account with [Metrobank], as it is said, was still outstanding, because

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

[respondents] were able to pay the interest due. Therefore, the Court is
again convinced that the nullification prayed for is in order.36
We need not say more.
In fine, the right of a bank to foreclose a mortgage upon the mortgagor's
failure to pay his obligation must be exercised according to its clear
mandate, and every requirement of the law must be complied with, or
the valid exercise of the right would end. The exercise of a right ends
when the right disappears, and it disappears when it is abused especially
to the prejudice of others.37
As further declared by this Court in Philippine Savings Bank v. Spouses
Dionisio Geronimo and Caridad Geronimo:38
While the law recognizes the right of a bank to foreclose a mortgage
upon the mortgagor's failure to pay his obligation, it is imperative that
such right be exercised according to its clear mandate. Each and every
requirement of the law must be complied with, lest, the valid exercise of
the right would end. It must be remembered that the exercise of a right
ends when the right disappears, and it disappears when it is abused
especially to the prejudice of others.1avvphi1
We, therefore, affirm the CA and sustain the RTC in nullifying the
extrajudicial foreclosure of real estate mortgage and sale, including
Metrobanks title.
With this disquisition, we find no necessity to discuss the issue of the
validity of the consolidation of title by Metrobank.
WHEREFORE, the petition is DENIED. The challenged Decision and
Resolution of the Court of Appeals in CA-G.R. CV No. 87775 are
AFFIRMED.

SO ORDERED.

Page 66 of 121

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Republic of the Philippines

SUPREME COURT
Manila

Page 67 of 121

elevated the matter to the Department of Agrarian Reform (DAR)

Provincial Agrarian Reform Adjudicator (PARAD) of San Pablo City,
which then conducted summary administrative proceedings for the
determination of just compensation.9

SECOND DIVISION
G.R. No.172551

January 15, 2014

LAND BANK OF THE PHILIPPINES, Petitioner,

vs.
YATCO AGRICULTURAL ENTERPRISES, Respondent.
DECISION
BRION, J.:
We resolve the Land Bank of the Philippines (LBP s) Rule 45 petition for
review on certiorari1 challenging the decision2 dated January 26, 2006
and the resolution3 dated May 3, 2006 of the Court of Appeals (CA) in
CA-G.R. SP No. 87530. This CA decision affirmed the decision4 dated July
30, 2004 of the Regional Trial Court, Branch 30, San Pablo City, acting as
a Special Agrarian Court (RTC-SAC), in Agrarian Case No. SP-064(02).
The Factual Antecedents
Respondent Yatco Agricultural Enterprises (Yatco) was the registered
owner of a 27.5730-hectare parcel of agricultural land (property) in
Barangay Mabato, Calamba, Laguna, covered by Transfer Certificate of
Title No. T-49465.5 On April 30, 1999,6 the government placed the
property under the coverage of its Comprehensive Agrarian Reform
Program (CARP).
Pursuant to Executive Order (E.O.) No. 405,7 the LBP valued the property
at P1,126,132.89.8 Yatco did not find this valuation acceptable and thus

The PARAD computed the value of the property at P16,543,800.00;10 it

used the propertys current market value (as shown in the tax
declaration11 that Yatco submitted) and applied the formula "MV x 2."
The PARAD noted that the LBP did not present any verified or authentic
document to back up its computation; hence, it brushed aside the LBPs
valuation.
The LBP did not move to reconsider the PARADs ruling. Instead, it filed
with the RTC-SAC a petition for the judicial determination of just
compensation.12
The RTC-SACs Decision
The RTC-SAC fixed the just compensation for the property at P200.00
per square meter.13 The RTC-SAC arrived at this valuation by adopting
the valuation set by the RTC of Calamba City,
Branch 35 (Branch 35) in Civil Case No. 2326-96-C,14 which, in turn,
adopted the valuation that the RTC of Calamba City, Branch 36 (Branch
36) arrived at in Civil Case No. 2259-95-C15 (collectively, civil cases). The
RTC-SAC did not give weight to the LBPs evidence in justifying its
valuation, pointing out that the LBP failed to prove that it complied with
the prescribed procedure and likewise failed to consider the valuation
factors provided in Section 17 of the Comprehensive Agrarian Reform
Law of 1988 (CARL).16
The RTC-SAC subsequently denied the LBPs motion for
reconsideration.17 The LBP appealed to the CA.18

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Page 68 of 121

The CAs Ruling

The Case for the Respondent

The CA dismissed the LBPs appeal.19 Significantly, it did not find the
LBPs assigned errors the RTC-SACs reliance on the valuation made by
Branches 35 and 36 in the civil cases to be persuasive. First, according
to the CA, the parcels of land in the civil cases were the very same
properties in the appealed agrarian case. Second, Branch 36s valuation
was based on the report of the duly appointed commissioners and was
arrived at after proper land inspection. As the determination of just
compensation is essentially a judicial function, the CA thus affirmed the
RTC-SACs valuation which was founded on factual and legal bases. The
LBP filed the present petition after the CA denied its motion for
reconsideration20 in the CAs May 3, 2006 resolution.21

Yatco argues that the RTC-SAC correctly fixed the just compensation for
its property at P200.00 per square meter.23 It points to several reasons
for its position. First, the RTC-SACs valuation was not only based on the
valuation fixed by Branch 36 (as adopted by Branch 35); it was also
based on the propertys market value as stated in the current tax
declaration that it presented in evidence before the RTC-SAC. Second,
the RTC-SAC considered the evidence of both parties; unfortunately for
the LBP, the RTC-SAC found its evidence wanting and in total disregard
of the factors enumerated in Section 17 of R.A. No. 6657. And third, the
RTC-SAC considered all of the factors enumerated in Section 17 when it
set the propertys value at P200.00 per square meter. Procedurally,
Yatco claims that the present petitions issues and arguments are purely
factual and they are not allowed in a petition for review on certiorari and
the LBP did not point to any specific error that the CA committed when it
affirmed the RTC-SACs decision.

The Petition
The LBP argues in the present petition that the CA erred when it
affirmed the RTC-SACs ruling that fixed the just compensation for the
property based on the valuation set by Branches 35 and 36.22 The LBP
pointed out that the property in the present case was expropriated
pursuant to its agrarian reform program; in contrast, the land subject of
the civil cases was expropriated by the National Power Corporation
(NAPOCOR) for industrial purposes.

The Issue
Based on the parties submissions, only a single issue is before us,i.e., the
question of whether the RTC-SACs determination of just compensation
for the property was proper.

The LBP added that in adopting the valuation fixed by Branches 35 and
36, the RTC-SAC completely disregarded the factors enumerated in
Section 17 of R.A. No. 6657 and the guidelines and procedure laid out in
DAR AO 5-98.

The Courts Ruling

Preliminary considerations: factual-issue-bar rule; issues raised are not
factual

Finally, the LBP maintains that it did not encroach on the RTC-SACs
prerogative when it fixed the valuation for the property as it only
followed Section 17 of R.A. No. 6657 and DAR AO 5-98, and merely
discharged its mandate under E.O. No. 405.

As a general rule, the Courts jurisdiction in a Rule 45 petition is limited

to the review of pure questions of law.24 A question of law arises when
the doubt or difference exists as to what the law is on a certain state of
facts. Negatively put, Rule 45 does not allow the review of questions of

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

fact. A question of fact exists when the doubt or difference arises as to

the truth or falsity of the alleged facts.
The test in determining whether a question is one of law or of fact is
"whether the appellate court can determine the issue raised without
reviewing or evaluating the evidence, in which case, it is a question of
law."25 Any question that invites calibration of the whole evidence, as
well as their relation to each other and to the whole, is a question of fact
and thus proscribed in a Rule 45 petition.
The LBP essentially questions in the present petition the RTC-SACs
adoption of the valuation made by Branch 36 in fixing the just
compensation for the property. The LBP asks the question: was the just
compensation fixed by the RTC-SAC for the property, which was based
solely on Branch 36s valuation, determined in accordance with law?
We find the presented issue clearly one of law. Resolution of this
question can be made by mere inquiry into the law and jurisprudence on
the matter, and does not require a review of the parties evidence. We,
therefore, disagree with Yatco on this point as we find the present
petition compliant with the Rule 45 requirement.
The determination of just compensation is essentially a judicial function
that the Judiciary exercises within the parameters of the law.
The determination of just compensation is fundamentally a judicial
function.26 Section 57 of R.A. No. 665727explicitly vests the RTC-SAC the
original and exclusive power to determine just compensation for lands
under CARP coverage.
To guide the RTC-SAC in the exercise of its function, Section 17 of R.A.
No. 6657 enumerates the factors required to be taken into account to
correctly determine just compensation. The law (under Section 49 of
R.A. No. 665728) likewise empowers the DAR to issue rules for its

Page 69 of 121

implementation. The DAR thus issued DAR AO 5-98 incorporating the

laws listed factors in determining just compensation into a basic
formula that contains the details that take these factors into account.
That the RTC-SAC must consider the factors mentioned by the law (and
consequently the DARs implementing formula) is not a novel
concept.29 In Land Bank of the Philippines v. Sps. Banal,30 we said that
the RTC-SAC must consider the factors enumerated under Section 17 of
R.A. No. 6657, as translated into a basic formula by the DAR, in
determining just compensation. We stressed the RTC-SACs duty to apply
the DAR formula in determining just compensation in Landbank of the
Philippines v. Celada31 and reiterated this same ruling in Land Bank of
the Philippines v. Lim,32 Land Bank of the Philippines v. Luciano,33 and
Land Bank of the Philippines v. Colarina,34 to name a few.
In the recent case of Land Bank of the Philippines v. Honeycomb Farms
Corporation,35 we again affirmed the need to apply Section 17 of R.A. No.
6657 and DAR AO 5-98 in just compensation cases. There, we considered
the CA and the RTC in grave error when they opted to come up with
their own basis for valuation and completely disregarded the DAR
formula. The need to apply the parameters required by the law cannot
be doubted; the DARs administrative issuances, on the other hand,
partake of the nature of statutes and have in their favor a presumption of
legality.36 Unless administrative orders are declared invalid or unless the
cases before them involve situations these administrative issuances do
not cover, the courts must apply them.37
In other words, in the exercise of the Courts essentially judicial function
of determining just compensation, the RTC-SACs are not granted
unlimited discretion and must consider and apply the R.A. No. 6657enumerated factors and the DAR formula that reflect these factors. These
factors and formula provide the uniform framework or structure for the
computation of the just compensation for a property subject to agrarian
reform. This uniform system will ensure that they do not arbitrarily fix

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Page 70 of 121

an amount that is absurd, baseless and even contradictory to the

objectives of our agrarian reform laws as just compensation. This system
will likewise ensure that the just compensation fixed represents, at the
very least, a close approximation of the full and real value of the
property taken that is fair and equitable for both the farmerbeneficiaries and the landowner.

abuse of discretion as it used the wrong considerations and thereby

acted outside the contemplation of the law.

When acting within the parameters set by the law itself, the RTC-SACs,
however, are not strictly bound to apply the DAR formula to its minute
detail, particularly when faced with situations that do not warrant the
formulas strict application; they may, in the exercise of their discretion,
relax the formulas application to fit38 the factual situations before
them.39 They must, however, clearly explain the reason for any deviation
from the factors and formula that the law and the rules have provided.40

The rules allow the courts to take judicial notice of certain facts; the
RTC-SACs valuation is erroneous

The situation where a deviation is made in the exercise of judicial

discretion should at all times be distinguished from a situation where
there is utter and blatant disregard of the factors spelled out by law and
by the implementing rules. For in such a case, the RTC-SACs action
already amounts to grave abuse of discretion for having been taken
outside of the contemplation of the law.41
Gonzales v. Solid Cement Corporation42 teaches us that the use of the
wrong considerations by the ruling tribunal in deciding the case or a
particular matter in issue amounts to grave abuse of discretion. In
Gonzales, the CA reversed the NLRCs ruling that ordered the payment of
interest on the total monetary award. In reversing this CA ruling and
reinstating the NLRCs award of interest, the Court pointed out that the
CA relied solely on the doctrine of immutability of judgments, a
consideration that was completely erroneous particularly in light of the
other attendant and relevant factors, i.e., the law on the legal interests
that final orders and rulings on forbearance of money should bear, which
the CA utterly ignored. Accordingly, the Court considered the CA in grave

This use of considerations that were completely outside the

contemplation of the law is the precise situation we find in the present
case, as fully explained below.

The taking of judicial notice is a matter of expediency and convenience

for it fulfills the purpose that the evidence is intended to achieve, and in
this sense, it is equivalent to proof.43 Generally, courts are not authorized
to "take judicial notice of the contents of the records of other cases even
when said cases have been tried or are pending in the same court or
before the same judge."44 They may, however, take judicial notice of a
decision or the facts prevailing in another case sitting in the same court
if: (1) the parties present them in evidence, absent any opposition from
the other party; or (2) the court, in its discretion, resolves to do so.45 In
either case, the courts must observe the clear boundary provided by
Section 3, Rule 129 of the Rules of Court.
We note that Yatco offered in evidence copies of the decisions in the civil
cases,46 which offer the LBP opposed.47These were duly noted by the
court.48 Even assuming, however, that the April 21, 2004 order49 of the
RTC-SAC (that noted Yatcos offer in evidence and the LBPs opposition
to it) constitutes sufficient compliance with the requirement of Section 3,
Rule 129 of the Rules of Court, still we find the RTC-SACs valuation
based on Branch 36s previous ruling to be legally erroneous.
1. The RTC-SAC fully disregarded Section 17 of R.A. No. 6657 and DAR
AO 5-98 and thus acted outside the contemplation of the law.
Section 17 of R.A. No. 6657 reads:

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Section 17. Determination of Just Compensation. In determining just

compensation, the cost of acquisition of the land, the current value of
like properties, its nature, actual use and income, the sworn valuation by
the owner, the tax declarations, and the assessment made by
government assessors shall be considered. The social and economic
benefits contributed by the farmers and the farmworkers and by the
Government to the property as well as the non-payment of taxes or loans
secured from any government financing institution on the said land shall
be considered as additional factors to determine its valuation.
While DAR AO 5-9850 pertinently provides:
A. There shall be one basic formula for the valuation of lands covered by
VOS or CA:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where:
LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all three factors are present, relevant,
and applicable.
A1. When the CS factor is not present and CNI and MV are applicable, the
formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)

Page 71 of 121

A2. When the CNI factor is not present, and CS and MV are applicable,
the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A3. When both the CS and CNI are not present and only MV is applicable,
the formula shall be: LV = MV x 2
In no case shall the value of idle land using the formula MV x 2 exceed
the lowest value of land within the same estate under consideration or
within the same barangay or municipality (in that order) approved by
LBP within one (1) year from receipt of claimfolder.
After considering these factors and formula, we are convinced that the
RTC-SAC completely disregarded them and simply relied on Branch 36s
valuation. For one, the RTC-SAC did not point to any specific evidence or
cite the values and amounts it used in arriving at the P200.00 per square
meter valuation. It did not even consider the propertys market value
based on the current tax declaration that Yatco insists the RTC-SAC
considered in addition to Branch 36s valuation. Assuming that the RTCSAC considered the propertys market value (which, again, we find that it
did not), this alone will not suffice as basis, unless justified under Item
II.A.3 of DAR AO 5-98 (as provided above). Then too, it did not indicate
the formula that it used in arriving at its valuation or which led it to
believe that Branch 36s valuation was applicable to this case. Lastly, the
RTC-SAC did not conduct an independent assessment and computation
using the considerations required by the law and the rules.
To be exact, the RTC-SAC merely relied on Branch 36s valuation as it
found the LBPs evidence on the matter of just compensation inadequate.
While indeed we agree that the evidence presented by the LBP was
inadequate and did not also consider the legally prescribed factors and
formula, the RTC-SAC still legally erred in solely relying on Yatcos

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

evidence51 which we find equally irrelevant and off-tangent to the

factors enumerated in Section 17 of R.A. No. 6657.
2. The valuation fixed by Branches 35 and 36 was inapplicable to the
property
Civil Case No. 2326-96-C,52 decided by Branch 35, and Civil Case No.
2259-95-C,53 decided by Branch 36, were both eminent domain cases
initiated by the NAPOCOR under the power granted to it by
Commonwealth Act (C.A.) No. 120,54 as amended by R.A. No. 6395,55 i.e.,
to acquire property or easement of right of way.
Under these laws, the NAPOCOR was tasked to carry out the state policy
of providing electricity throughout the Philippines, specifically, "to
undertake the development of hydroelectric generation of power and
the production of electricity from nuclear, geothermal and other sources,
as well as the transmission of electric power on a nationwide basis."56
In its decision in Civil Case No. 2259-95-C, Branch 36 accordingly
recognized the NAPOCORs authority to enter the property of the
defendant GP Development Corporation and to acquire the "easement of
right of way" in the exercise of its powers. Thus, in disposing of the case,
Branch 36 adopted the recommendation of the appointed
commissioners and ordered the NAPOCOR to pay easement fee of P20.00
per square meter. Similarly recognizing this authority of NAPOCOR,
Branch 35 in Civil Case No. 2326-96-C likewise ordered NAPOCOR to pay
easement fee of P20.00 per square meter.
Evidently, the civil cases were not made under the provisions of the
CARL nor for agrarian reform purposes, as enunciated under R.A. No.
6657.57 In exercising the power vested in it by the provisions of C.A. No.
120 (as amended), the NAPOCOR did not seek to acquire and distribute
lands to farmers and regular farmworkers; the NAPOCOR sought
easement of right of way to transmit electric power as it was tasked to.

Page 72 of 121

We need not delve into the factors that Branches 35 and 36 considered
in the civil cases. By simply looking at the expropriating body
(NAPOCOR) and the law governing the expropriations made, we are
convinced that the valuation fixed by Branch 36 is inapplicable to the
present case. A comparison of the required parameters and guidelines
used alone demonstrates the disparity.
Also, we point out that the RTC-SAC adopted Branch 36s valuation
without any qualification or condition. Yet, in disposing of the present
case, the just compensation that it fixed for the property largely differed
from the former. Note that Branch 36 fixed a valuation of P20.00 per
square meter;58 while the RTC-SAC, in the present case, valued the
property at P200.00 per square meter.59 Strangely, the RTC-SAC did not
offer any explanation nor point to any evidence, fact or particular that
justified the obvious discrepancy between these amounts.
Lastly, in ascertaining just compensation, the fair market value of the
expropriated property is determined as of the time of taking.60 The "time
of taking" refers to that time when the State deprived the landowner of
the use and benefit of his property, as when the State acquires title to the
property61 or as of the filing of the complaint, per Section 4, Rule 67 of
the Rules of Court.62
The decision in Civil Case No. 2259-95-C, which pegged the valuation
at P20.00 per square meter, was made in 1997. The record did not
disclose when title to the land subject of that case was transferred to the
State. We can safely assume, however, that the "taking" was made in
1997 (the date Branch 36 issued its decision) or at the time of the filing
of the complaint, which logically was prior to 1997.
The RTC-SAC, in the present case, rendered its decision in 2004; the LBP
filed the petition for judicial determination of just compensation in 2002.
Obviously, the "taking" of the property could not have been made any
earlier than 2002; otherwise, the parties would have pointed these out.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Page 73 of 121

Between 1997 in Civil Case No. 2259-95-C and the earliest taking in
2002 in this case is a difference of 5 years a significant gap in the
matter of valuation since the lands involved are not in the hinterlands,
but in the rapidly industrializing Calamba, Laguna.

take into consideration the factors laid down by law and the pertinent
DAR regulations.

Under these circumstances i.e., the insufficiency of the evidence

presented by both the LBP and Yatco on the issue of just compensation the more judicious approach that the RTC-SAC could have taken was to
exercise the authority granted to it by Section 58 of R.A. No. 6657, rather
than simply adopt Branch 36s valuation. Under Section 5863 of R.A. No.
6657, the RTC-SAC may appoint one or more Commissioners to ascertain
and report to it the facts necessary for the determination of the just
compensation for the property. Unfortunately, the RTC-SAC did not avail
of this opportunity, with disastrous results for the parties in light of the
time gap between now and the time the RTC-SAC decision was made in
2004.1wphi1

Considering that both parties failed to adduce satisfactory evidence of

the property s value at the time of taking, we deem it premature to make
a final determination of the matter in controversy. We are not a trier of
facts and we cannot receive new evidence from the parties to aid them in
the prompt resolution of this case. We are thus compelled to remand the
case to the RTC-SAC for the reception of evidence and the determination
of just compensation, with a cautionary reminder for the proper
observance of the factors under Section 17 of R.A. No. 6657 and the
applicable DAR regulations. In its determination, the RTC-SAC may
exercise the authority granted to it by Section 58 of R.A. No. 6657.

We cannot help but highlight the attendant delay as the RTC-SAC

obviously erred in a manner that we cannot now remedy at our level.
The RTC-SAC erred and effectively abused its discretion by fixing the just
compensation for the property based solely on the valuation fixed by
Branches 35 and 36 considerations that we find were completely
irrelevant and misplaced. This is an error that now requires fresh
determination of just compensation again at the RTC-SAC level.
As a final note and clarificatory reminder, we agree that the LBP is
primarily charged with determining land valuation and compensation
for all private lands acquired for agrarian reform purposes.64 But this
determination is only preliminary. The landowner may still take the
matter of just compensation to the court for final adjudication.65Thus, we
clarify and reiterate: the original and exclusive jurisdiction over all
petitions for the determination of just compensation under R.A. No. 6657
rests with the RTC-SAC.66 But, in its determination the RTC-SAC must

Remand of the case

WHEREFORE, in view of these considerations, we hereby GRANT the

petition. Accordingly, we REVERSE and SET ASIDE the decision dated
January 26, 2006 and the resolution dated May 3, 2006 of the Court of
Appeals in CA-G.R. SP No. 87530, and REMAND Agrarian Case No. SP064(02) to the Regional Trial Court of San Pablo City, Branch 30, for its
determination of just compensation under the terms of Section 17 of
Republic Act No. 6657 and Department of Agrarian Reform
Administrative Order No. 5, series of 1998, as amended.
No costs.
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

ANTONIO T. CARPIO
Associate Justice
Chairperson
MARIANO C. DEL CASTILLO
Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

ESTELA M. PERLAS-BERNABE
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of
the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairperson s Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Courts Division.
MARIA LOURDES P. A. SERENO
Chief Justice

Page 74 of 121
1

Penned by Associate Justice Jose L. Sabio, Jr., and concurred in

by Associate Justices Jose C. Mendoza and Arturo G. Tayag; id. at
62-71.
2

Id. at 73-74.

Penned by Judge Gregorio T. Villanueva; id. at 488-500.

Id. at 244.

Through a Second Notice of Coverage dated April 30, 1999; id.

at 243. Yatco denies receiving this Second Notice of Coverage; id.
at 63.
6

Approved on June 14, 1990, entitled "VESTING IN THE LAND

BANK OF THE PHILIPPINES THE PRIMARY RESPONSIBILITY TO
DETERMINE THE LAND VALUATION AND COMPENSATION FOR
ALL LANDS COVERED UNDER REPUBLIC ACT NO. 6657, KNOWN
AS THE COMPREHENSIVE AGRARIAN REFORM LAW OF 1988."
Its Section 1 provides: Section 1. The Land Bank of the
Philippines shall be primarily responsible for the determination
of the land valuation and compensation for all private lands
suitable for agriculture under either the Voluntary Offer to Sell
(VOS) or Compulsory Acquisition (CA) arrangement as governed
by Republic Act No. 6657. The Department of Agrarian Reform
shall make use of the determination of the land valuation and
compensation by the Land Bank of the Philippines, in the
performance of its functions.
7

Claims Valuation and Processing Form approved on September

4, 2000; rollo, pp. 274-278. The LBP claimed that it used the
guidelines and procedure set out under DAR Administrative
8

Footnotes

Dated June 20, 2006 and filed on June 22, 2006; rollo, pp. 23-61.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Order No. 6, Series of 1992 (DAR AO 6-92), No. 11, Series of 1994
and No. 5, Series of 1998.
9

Page 75 of 121
23

Rollo, pp. 400-410.

24

Section 1, Rule 45 of the Rules of Court provides:

DARAB Case No. V-0403-0006-01.

Section 1. Filing of petition with Supreme Court. A
party desiring to appeal by certiorari from a judgment or
final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts
whenever authorized by law, may file with the Supreme
Court a verified petition for review on certiorari. The
petition shall raise only questions of law which must be
distinctly set forth. [italics supplied]

Decision dated December 28, 2001, penned by Provincial

Adjudicator Virgilio M. Sorita; rollo, pp. 486-487.
10

11

Id. at 208.

12

On February 6, 2002; id. at 171-173.

13

Supra note 4.

Tongonan Holdings and Development Corporation v. Escao,

Jr., G.R. No. 190994, September 7, 2011, 657 SCRA 306, 314,
citing Republic of the Philippines v. Malabanan, G.R. No. 169067,
October 6, 2010, 632 SCRA 338; and Cando v. Sps. Olazo, 547
Phil. 630, 636 (2007).
25

Order dated August 29, 2001, penned by Judge Romeo C. de

Leon; rollo, pp. 291-292.
14

Judgment dated July 23, 1997, penned by Judge Norberto Y.

Geraldez; id. at 293-295.
15

Landbank of the Philippines v. Celada, 515 Phil 467, 477

(2006); Land Bank of the Philippines v. Escandor, G.R. No.
171685, October 11, 2010, 632 SCRA 504, 512; and Heirs of
Lorenzo and Carmen Vidad v. Land Bank of the Philippines, G.R.
No. 166461, April 30, 2010, 619 SCRA 609, 625-629.
26

Republic Act (R.A.) No. 6657 which took effect on June 15,
1988.
16

17

Rollo, pp. 151-156; Order dated October 26, 2004, pp. 149-150

18

Filed under Rule 42 of the Rules of Court; id. at 98-135.

19

Supra note 2.

20

Rollo, pp. 373-382.

21

Supra note 3.

22

Supra note 1.

27

The pertinent portion of Section 57 of R.A. No. 6657 reads:

Section 57. Special Jurisdiction. The Special Agrarian
Courts shall have original and exclusive jurisdiction over
all petitions for the determination of just compensation
to landowners, and the prosecution of all criminal
offenses under this Act. The Rules of Court shall apply to
all proceedings before the Special Agrarian Courts, unless
modified by this Act. [emphasis ours, italics supplied]

Law __ Evidence
28

Prof. Avena

2. JUDICIAL NOTICE

Section 49 of R.A. No. 6657 reads:

Section 49. Rules and Regulations. The PARC and the
DAR shall have the power to issue rules and regulations,
whether substantive or procedural, to carry out the
objects and purposes of this Act. Said rules shall take
effect ten (10) days after publication in two (2) national
newspapers of general circulation. [italics supplied]

See Landbank of the Philippines v. Celada, supra note 26, at

479.
29

30

Page 76 of 121
This view is shared by and enunciated in Land Bank of the
Philippines v. Bienvenido Castro, supra, citing Land Bank of the
Philippines v. Chico, G.R. No. 168453, March 13, 2009, 581 SCRA
226, 243; Apo Fruits Corporation v. Court of Appeals, G.R. No.
164195, December 19, 2007, 541 SCRA 117, 131-132.
39

See Land Bank of the Philippines v. Bienvenido Castro, supra

note 38, wherein the Court found the RTC-SAC in reversible
error because of, among other things, the "unexplained disregard
for the guide administrative formula, neglecting such factors as
capitalized net income, comparable sales, and market value per
tax declaration."
40

478 Phil 701, 709-710 (2004).

Aldovino, Jr. v. Commission on Elections, G.R. No. 184836,
December 23, 2009, 609 SCRA 234; Gonzales v. Solid Cement
Corporation, G.R. No. 198423, October 23, 2012, 684 SCRA 344;
and Pecson v. Commission on Elections, G.R. No. 182865,
December 24, 2008, 575 SCRA 634.
41

31

Supra note 26, at 479; italics ours.

32

G.R. No. 171941, August 2, 2007, 529 SCRA 129, 134-136.

33

G.R. No. 165428, November 25, 2009, 605 SCRA 426, 434-436.

34

G.R. No. 176410, September 1, 2010, 629 SCRA 614, 624-632.

35

G.R. No. 169903, February 29, 2012, 667 SCRA 255, 268-271.

36

Landbank of the Philippines v. Celada, supra note 26, at 479.

37

Ibid.

See also Land Bank of the Philippines v. Escandor, supra

note 26, at 515, citing Land Bank of the Philippines v.
Barrido, G.R. No. 183688, August 18, 2010, 628 SCRA
454. Republic v. Sandiganbayan (Fourth Division), G.R.
No. 152375, December 13, 2011, 662 SCRA 152.
42

Supra.

Lee v. Land Bank of the Philippines, G.R. No. 170422, March 7,

2008, 548 SCRA 52, 58.
43

See Land Bank of the Philippines v. Heirs of Maximo Puyat, G.R.

No. 175055, June 27, 2012, 675 SCRA 233, 250; and Land Bank of
the Philippines v. Bienvenido Castro, G.R. No. 189125, August 28,
2013.
38

Land Bank of the Philippines v. Sps. Banal, supra note 30, at

713.
44

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Page 77 of 121

Lee v. Land Bank of the Philippines, supra note 43, at 58, citing
TBoli AgroIndustrial Development, Inc. v. Solipapsi, 442 Phil.
499, 513 (2002); and Land Bank of the Philippines v. Sps. Banal,
supra note 30, at 713.
45

.12
AGP= Average Gross Production corresponding to the
latest available 12 months gross production immediately
preceding the date of FI (field investigation)

Yatcos Formal Offer of Evidence dated March 24, 2004; rollo,

pp. 283-286.
46

SP= Selling Price (the average of the latest available 12

months selling prices prior to the date of receipt of the CF
(claimfolder) by LBP for processing, such prices to be
secured from the Department of Agriculture (DA) and
other appropriate regulatory bodies or, in their absence,
from the Bureau of Agricultural Statistics. If possible, SP
data shall be gathered for the barangay or municipality
where the property is located. In the absence thereof, SP
may be secured within the province or region. CO = Cost
of Operations

LBPs Opposition/Comments to the Formal Offer of Evidence

of Respondent Yatco Agricultural Enterprises, Inc. dated April 12,
2004 to Yatcos Formal Offer of Evidence; id. at 297-299.
47

48

Id. at 300.

49

Id. at 300.

The following portions of Item II. of DAR AO 5-98 provides the

formula for computing the factors "Capitalized Net Income
(CNI)," "Comparable Sales (CS)" and "Market Value per Tax
Declaration (MV)," namely:
50

"B. Capitalized Net Income (CNI) This shall refer to the

difference between the gross sales (AGP x SP) and total cost of
operations (CO) capitalized at 12%. Expressed in equation form:
(AGP x SP) - CO

Whenever the cost of operations could not be obtained or

verified, an assumed net income rate (NIR) of 20% shall be used.
Landholdings planted to coconut which are productive at the
time of FI shall continue to use the assumed NIR of 70 %. DAR
and LBP shall continue to conduct joint industry studies to
establish the applicable NIR for each crop covered under CARP.
0.12 = Capitalization rate

CNI =

xxx

.12

C. CS shall refer to any one or the average of all the applicable

sub-factors, namely, ST, AC and MVM:

Where:
CNI= (AGPxSP) - CO

Where:

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

ST = Sales Transactions as defined under Item C.2

AC = Acquisition Cost as defined under Item C.3
MVM = Market Value Based on Mortgage as defined
under Item C.4

Page 78 of 121
COMMONWEALTH ACT NO. 120 AN ACT CREATING THE
"NATIONAL POWER CORPORATION," PRESCRIBING ITS
POWERS AND ACTIVITIES, APPROPRIATING THE NECESSARY
FUNDS THEREFOR, AND RESERVING THE UNAPPROPRIATED
PUBLIC WATERS FOR ITS USE. Approved on November 3, 1936.
54

AN ACT REVISING THE CHARTER OF THE NATIONAL POWER

CORPORATION. (Approved on September 10, 1971) The
pertinent provision reads:
55

xxx
D. In the computation of Market Value per Tax Declaration (MV),
the most recent Tax Declaration (TD) and Schedule of Unit
Market Value (SMV) issued prior to receipt of claimfolder by LBP
shall be considered. The Unit Market Value (UMV) shall be
grossed up from the date of its effectivity up to the date of
receipt of claimfolder by LBP from DAR for processing, in
accordance with item II.A.A.6.

xxx
Sec. 3. Powers and General Functions of the Corporation.
The powers, functions, rights and activities of the
Corporation shall be the following:
xxx

Yatcos evidence consisted of: (1) the Secretarys Certificate

authorizing Mr. Albert Yatco Garcia to represent Yatco in the case
before the RTC-SAC; (2) LBPs Certification showing the LBPs
deposit of the sum of P946,119.22 and in agrarian reform bonds
as compensation for the subject property; (3) copy of the DARAB
December 28, 2001 decision in DARAB Case No. V-0403-000601; (4) Tax Declaration for the subject property for the year
2000; (5) copy of the order dated August 29, 2001 in Civil Case
No. 2326-96-C; and (6) copy of the judgment and order dated
July 23, 1997 and September 24, 1997, respectively, in Civil Case
No. 2259-95-C; rollo, pp. 283-296.
51

52

Supra note 14.

53

Supra note 15.

(h) To acquire, promote, hold, transfer, sell, lease, rent,

mortgage, encumber and otherwise dispose of property
incident to, or necessary, convenient or proper to carry
out the purposes for which the Corporation was created:
Provided, That in case a right of way is necessary for its
transmission lines, easement of right of way shall only be
sought: Provided, however, That in case the property
itself shall be acquired by purchase, the cost thereof shall
be the fair market value at the time of the taking of such
property;
xxx
(j) To exercise the right of eminent domain for the
purpose of this Act in the manner provided by law for
instituting condemnation proceedings by the national,

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Page 79 of 121

provincial and municipal governments. [emphases ours,

italics supplied]
56

Section 2. Declaration of Principles and Policies. It is

the policy of the State to pursue a Comprehensive
Agrarian Reform Program (CARP). The welfare of the
landless farmers and farmworkers will receive the
highest consideration to promote social justice and to
move the nation toward sound rural development and
industrialization, and the establishment of owner
cultivatorship of economic-size farms as the basis of
Philippine agriculture.

See Sections 1 and 2 of R.A. No. 6395; partly, they read:

Section 1. Declaration of Policy. Congress hereby
declares that (1) the comprehensive development,
utilization and conservation of Philippine water
resources for all beneficial uses, including power
generation, and (2) the total electrification of the
Philippines through the development of power from all
sources to meet the needs of industrial development and
dispersal and the needs of rural electrification are
primary objectives of the nation which shall be pursued
coordinately and supported by all instrumentalities and
agencies of the government, including its financial
institutions.

To this end, a more equitable distribution and ownership

of land, with due regard to the rights of landowners to
just compensation and to the ecological needs of the
nation, shall be undertaken to provide farmers and
farmworkers with the opportunity to enhance their
dignity and improve the quality of their lives through
greater productivity of agricultural lands.

Section 2. The National Power Corporation; Its Corporate

Life; "Corporation" and "Board" Defined. To carry out
the above-stated policy, specifically to undertake the
development of hydroelectric generation of power and
the production of electricity from nuclear, geothermal
and other sources, as well as the transmission of electric
power on a nationwide basis, the public corporation
created under Commonwealth Act Numbered One
hundred twenty and know[n] as the "National Power
Corporation" shall continue to exist for fifty years from
and after the expiration of its present corporate
existence. [emphases ours]
57

The agrarian reform program is founded on the right of

farmers and regular farmworkers, who are landless, to
own directly or collectively the lands they till or, in the
case of other farm workers, to receive a just share of the
fruits thereof. To this end, the State shall encourage and
undertake the just distribution of all agricultural lands,
subject to the priorities and retention limits set forth in
this Act, having taken into account ecological,
developmental, and equity considerations, and subject to
the payment of just compensation.
The State shall respect the right of small landowners, and
shall provide incentives for voluntary land-sharing.
[emphases ours]

Section 2 of R.A. No. 6657 reads in part:

58

Rollo, p. 295.

Law __ Evidence
59

Prof. Avena

2. JUDICIAL NOTICE

Id. at 149-150.

Page 80 of 121
Land Bank of the Philippines v. Sps. Banal, supra note 30, at
708.
64

Land Bank of the Philippines v. Livioco, G.R. No. 170685,

September 22, 2010, 631 SCRA 86, 112-113.

65

Ibid., citing Ansaldo v. Tantuico, Jr., G.R. No. 50147, August 3,

1990, 188 SCRA 300, in Eusebio v. Luis, G.R. No. 162474, October
13, 2009, 603 SCRA 576, 586-587.

66

60

61

62

Section 4, Rule 67 of the Rules of Court reads:

Section 4. Order of expropriation. If the objections to
and the defenses against the right of the plaintiff to
expropriate the property are overruled, or when no party
appears to defend as required by this Rule, the court may
issue an order of expropriation declaring that the
plaintiff has a lawful right to take the property sought to
be expropriated, for the public use or purpose described
in the complaint, upon the payment of just compensation
to be determined as of the date of the taking of the
property or the filing of the complaint, whichever came
first. [emphasis ours]

63

Section 58 of R.A. No. 6657 reads:

Section 58. Appointment of Commissioners.The Special
Agrarian Courts, upon their own initiative or at the
instance of any of the parties, may appoint one or more
commissioners to examine, investigate and ascertain
facts relevant to the dispute, including the valuation of
properties, and to file a written report thereof with the
court.

See Land Bank of the Philippines v. Livioco, supra note 60, at

110; and Land Bank of the Philippines v. Sps. Banal, supra note
30, at 709. See also Section 57 of R.A. No. 6657.
Heirs of Lorenzo and Carmen Vidad v. Land Bank of he
Philippines supra note 26, at 625-628, citing and Bank of he
Philippines v. Belista G.R. No. 164631, June 26, 2009, 59 SCRA
137, 143-147; Land Bank of the Philippines v. Escandor supra
note 26, at 512; and Land Bank of the Philippines v. Montalvan
G.R. No. 190336, June 27, 2012, 675 SCRA 380, 389-390.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 198240

July 3, 2013

LUISA NAVARRO MARCOS*, Petitioner,

vs.
THE HEIRS OFTHE LATE DR. ANDRES NAVARRO, JR., namely
NONITA NAVARRO, FRANCISCA NAVARRO MALAPITAN, SOLEDAD
NAVARRO BROCHLER, NONITA BARRUN NAVARRO, JR., IMELDA
NAVARRO, ANDRES NAVARRO III, MILAGROS NAVARRO YAP, PILAR
NAVARRO, TERESA NAVARRO-TABITA, and LOURDES BARRUNREJUSO, Respondents.

Page 81 of 121

son Andres Navarro, Jr. The heirs of Andres, Jr. are the respondents
herein.4
Petitioner and her sister Lydia discovered that respondents are claiming
exclusive ownership of the subject lot. Respondents based their claim on
the Affidavit of Transfer of Real Property dated May 19, 1954 where
Andres, Sr. donated the subject lot to Andres, Jr.5
Believing that the affidavit is a forgery, the sisters, through Assistant
Fiscal Andres Marcos, requested a handwriting examination of the
affidavit. The PNP handwriting expert PO2 Mary Grace Alvarez found
that Andres, Sr.s signature on the affidavit and the submitted standard
signatures of Andres, Sr. were not written by one and the same person.6
Thus, the sisters sued the respondents for annulment of the deed of
donation before the Regional Trial Court (RTC) of Masbate, where the
case was docketed as Civil Case No. 5215.7

DECISION
VILLARAMA, JR., J.:
Petitioner Luisa Navarro Marcos appeals the Decision1 dated February
28, 2011 and Resolution2 dated July 29, 2011 of the Court of Appeals
(CA) in CA-G.R. SP No. 92460.
The antecedent facts follow:
Spouses Andres Navarro, Sr. and Concepcion Medina-Navarro died in
1958 and 1993, respectively. They left behind several parcels of land
including a 108.3997-hectare lot (subject lot) located in Cayabon,
Milagros, Masbate.3
The spouses were survived by their daughters Luisa Navarro Marcos,
herein petitioner, and Lydia Navarro Grageda, and the heirs of their only

After the pre-trial, respondents moved to disqualify PO2 Alvarez as a

witness. They argued that the RTC did not authorize the handwriting
examination of the affidavit. They added that presenting PO2 Alvarez as
a witness will violate their constitutional right to due process since no
notice was given to them before the examination was conducted.8 Thus,
PO2 Alvarezs report is a worthless piece of paper and her testimony
would be useless and irrelevant.9
In its Order10 dated August 19, 2004, the RTC granted respondents
motion and disqualified PO2 Alvarez as a witness. The RTC ruled that
PO2 Alvarezs supposed testimony would be hearsay as she has no
personal knowledge of the alleged handwriting of Andres, Sr. Also, there
is no need for PO2 Alvarez to be presented, if she is to be presented as an
expert witness, because her testimony is not yet needed.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

The sisters sought reconsideration of the order but the RTC denied their
motion in an Order11 dated October 11, 2005.
Aggrieved, the sisters filed a petition for certiorari before the CA, which
however, dismissed their petition in the assailed Decision dated
February 28, 2011 on the ground that the dismissal of Civil Case No.
5215 has mooted the issue of PO2 Alvarezs disqualification as a witness.
Later, the CA likewise denied their motion for reconsideration in its
Resolution dated July 29, 2011. The CA refused to take judicial notice of
the decision of another CA Division which reinstated Civil Case No. 5215.
The CA held that a CA Justice cannot take judicial notice of decisions or
matters pending before another Division of the appellate court where he
or she is not a member. The CA also held that the sisters were negligent
for belatedly informing it that Civil Case No. 5215 was reinstated.
Hence, this appeal.
Petitioner argues that the CA erred in refusing to reconsider the assailed
decision in light of the reinstatement of Civil Case No. 5215. Petitioner
adds that the CA erred in not ruling that the RTC committed grave abuse
of discretion in disqualifying PO2 Alvarez as a witness.12 They stress that
PO2 Alvarez will be presented as an expert witness to render an opinion
on whether the disputed handwriting was indeed made by Andres, Sr. or
whether it is a forgery.13
In their comment,14 respondents counter that the CA properly
disqualified PO2 Alvarez. They also agreed with the CA that her
disqualification was mooted by the dismissal of Civil Case No. 5215.
We find in favor of petitioner.
The CA ruling that the dismissal of Civil Case No. 5215 has mooted the
issue of PO2 Alvarezs disqualification as a witness can no longer be

Page 82 of 121

justified. Hence, we reverse the CA ruling. While we agree with the CA in

considering the RTCs Orders15 which dismissed Civil Case No. 5215, we
are unable to agree with its refusal to take judicial notice of the
Decision16 of another CA Division which reinstated Civil Case No. 5215.
Subsequent proceedings were even held in the reinstated Civil Case No.
5215 per Orders17 issued by the RTC which were already submitted to
the CA. That Civil Case No. 5215 was reinstated is a fact that cannot be
ignored.
We also agree with petitioner that the RTC committed grave abuse of
discretion in disqualifying PO2 Alvarez as a witness. Grave abuse of
discretion defies exact definition, but it generally refers to capricious or
whimsical exercise of judgment as is equivalent to lack of jurisdiction.
The abuse of discretion must be patent and gross as to amount to an
evasion of a positive duty or a virtual refusal to perform a duty enjoined
by law, or to act at all in contemplation of law, as where the power is
exercised in an arbitrary and despotic manner by reason of passion and
hostility.18 Grave abuse of discretion arises when a lower court or
tribunal violates the Constitution or grossly disregards the law or
existing jurisprudence.19
In Armed Forces of the Philippines Retirement and Separation Benefits
System v. Republic of the Philippines,20 we said that a witness must only
possess all the qualifications and none of the disqualifications provided
in the Rules of Court. Section 20, Rule 130 of the Rules on Evidence
provides:
SEC. 20. Witnesses; their qualifications.Except as provided in the next
succeeding section, all persons who can perceive, and perceiving, can
make known their perception to others, may be witnesses.
Religious or political belief, interest in the outcome of the case, or
conviction of a crime unless otherwise provided by law, shall not be a
ground for disqualification.

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Specific rules of witness disqualification are provided under Sections 21

to 24, Rule 130 of the Rules on Evidence. Section 21 disqualifies a
witness by reason of mental incapacity or immaturity. Section 22
disqualifies a witness by reason of marriage. Section 23 disqualifies a
witness by reason of death or insanity of the adverse party. Section 24
disqualifies a witness by reason of privileged communication.
In Cavili v. Judge Florendo,21 we have held that the specific enumeration
of disqualified witnesses excludes the operation of causes of disability
other than those mentioned in the Rules. The Rules should not be
interpreted to include an exception not embodied therein. We said:
The generosity with which the Rule allows people to testify is apparent.
Interest in the outcome of a case, conviction of a crime unless otherwise
provided by law, and religious belief are not grounds for disqualification.
Sections 19 and 20 of Rule 130 provide for specific disqualifications.
Section 19 disqualifies those who are mentally incapacitated and
children whose tender age or immaturity renders them incapable of
being witnesses. Section 20 provides for disqualification based on
conflicts of interest or on relationship. Section 21 provides for
disqualification based on privileged communications. Section 15 of Rule
132 may not be a rule on disqualification of witnesses but it states the
grounds when a witness may be impeached by the party against whom
he was called.
There is no provision of the Rules disqualifying parties declared in
default from taking the witness stand for non-disqualified parties. The
law does not provide default as an exception. The specific enumeration
of disqualified witnesses excludes the operation of causes of disability
other than those mentioned in the Rules. It is a maxim of recognized
utility and merit in the construction of statutes that an express
exception, exemption, or saving clause excludes other exceptions. x x x
As a general rule, where there are express exceptions these comprise the

Page 83 of 121

only limitations on the operation of a statute and no other exception will

be implied. x x x The Rules should not be interpreted to include an
exception not embodied therein. (Emphasis supplied; citations omitted.)
As a handwriting expert of the PNP, PO2 Alvarez can surely perceive and
make known her perception to others.1wphi1We have no doubt that
she is qualified as a witness. She cannot be disqualified as a witness
since she possesses none of the disqualifications specified under the
Rules. Respondents motion to disqualify her should have been denied
by the RTC for it was not based on any of these grounds for
disqualification. The RTC rather confused the qualification of the witness
with the credibility and weight of her testimony.
Moreover, Section 49, Rule 130 of the Rules of Evidence is clear that the
opinion of an expert witness may be received in evidence, to wit:
SEC. 49. Opinion of expert witness.The opinion of a witness on a matter
requiring special knowledge, skill, experience or training which he is
shown to possess, may be received in evidence.
For instance, in Tamani v. Salvador,22 we were inclined to believe that
Tamanis signature was forged after considering the testimony of the
PNP document examiner that the case involved simulated or copied
forgery, such that the similarities will be superficial. We said that the
value of the opinion of a handwriting expert depends not upon his mere
statements of whether a writing is genuine or false, but upon the
assistance he may afford in pointing out distinguishing marks,
characteristics and discrepancies in and between genuine and false
specimens of writing which would ordinarily escape notice or detection
from an unpracticed observer.
Thus, we disagree with the RTC that PO2 Alvarezs testimony would be
hearsay. Under Section 49, Rule 130 of the Rules on Evidence, PO2
Alvarez is allowed to render an expert opinion, as the PNP document

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

examiner was allowed in Tamani. But the RTC already ruled at the outset
that PO2 Alvarezs testimony is hearsay even before her testimony is
offered and she is called to the witness stand. Under the circumstances,
the CA should have issued a corrective writ of certiorari and annulled
the RTC ruling.

Page 84 of 121

SO ORDERED.
MARTIN S. VILLARAMA, JR.
Associate Justice
WE CONCUR:

True, the use of the word "may" in Section 49, Rule 130 of the Rules on
Evidence signifies that the use of opinion of an expert witness is
permissive and not mandatory on the part of the courts.23 Jurisprudence
is also replete with instances wherein this Court dispensed with the
testimony of expert witnesses to prove forgeries.24 However, we have
also recognized that handwriting experts are often offered as expert
witnesses considering the technical nature of the procedure in
examining forged documents.25 More important, analysis of the
questioned signature in the deed of donation executed by the late
Andres Navarro, Sr. in crucial to the resolution of the case.
In sum, the RTC should not have disqualified P02 Alvarez as a witness.
She has the qualifications of witness and possess none of the
disqualifications under the Rules. The Rules allow the opinion of an
expert witness to be received as evidence. In Tamani, we used the
opinion of an expert witness. The value of P02 Alvarez's expert opinion
cannot be determined if P02 Alvarez is not even allowed to testify on the
handwriting examination she conducted.
WHEREFORE, we GRANT the petition. We SET ASIDE the (1) Decision
dated February 28, 2011 and Resolution dated July 29, 2011 of the Court
of Appeals in CA-G.R. SP No. 92460, and (2) Orders dated August 19,
2004 and October II, 2005 of the Regional Trial Court in Civil Case No.
5215. We DENY respondents' motion to disqualify P02 Mary Grace
Alvarez as a witness.

MARIA LOURDES P. A. SERENO

Chief Justice
Chairperson
TERESITA J. LEONARDO-DE
CASTRO
Associate Justice

BIENVENIDO L. REYES
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the 1987 Constitution, I certify that
the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court's
Division.
MARIA LOURDES P. A. SERENO
Chief Justice

Footnotes
No pronouncement as to costs.

LUCAS P. BERSAMIN
Associate Justice

Law __ Evidence

Prof. Avena

2. JUDICIAL NOTICE

Page 85 of 121

* Rollo, pp. 14, 42. While Lydia Navarro Grageda is named as copetitioner in the title of the petition, only Luisa Navarro Marcos
has verified it.

15

CA rollo, pp. 262, 267-268.

16

Id. at 297-306.

Id. at 47-52. Penned by Associate Justice Mario V. Lopez with

the concurrence of Associate Justices Magdangal M. De Leon and
Franchito N. Diamante.

17

Id. at 307-308.

Deutsche Bank AG v. Court of Appeals, G.R. No. 193065,

February 27, 2012, 667 SCRA 82, 100.
18

Id. at 54-57.
Republic of the Philippines v. Hon. Ramon S. Caguioa, et al., G.R.
No. 174385, February 20, 2013, p. 10.
19

Id. at 48.

Id.

20

G.R. No. 188956, March 20, 2013, p. 5.

Id.

21

238 Phil. 597, 602-603 (1987).

Id.

22

G.R. No. 171497, April 4, 2011, 647 SCRA 132, 144.

Id.

23

Id. at 48-49.

Tabao v. People, G.R. No. 187246, July 20,2011,654 SCRA

216,237.
Manzano, Jr. v. Garcia, G.R. No. 179323, November 28,2011,
661 SCRA 350, 357.
24

Id. at 211.

10

CA rollo, pp. 24-25.

11

Id. at 26.

12

Rollo, p. 29.

13

Id. at 35.

14

Id. at 530-532.

Mendez v. Court of Appeals, G.R. No. 174937, June 13,2012,

672 SCRA 200,209.
25

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

3. JUDICIAL ADMISSIONS

G.R. No. 108028 July 30, 1996

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
CRISTINA M HERNANDEZ, accused-appellant.

FRANCISCO, J.:p
Accused-appellant Cristina Hernandez was charged with the
crime of illegal recruitment committed in large scale in violating
of Article 38 (a) and (b) in relation to Article 13 (b) and (c) of the
New Labor Code 1, committed as follows:
That in or about and during the period comprised
between December 14, 1988 to December 24, 1988,
inclusive in the City of Manila, Philippines, the said
accused representing herself to have the capacity to
contract, enlist and transport Filipino workers for
employment abroad, did then and there willfully and
unlawfully for a fee, recruit and promise employment/job
placement abroad to the following persons to wit:
ROGELIO N. LEGASPI, ULDARICO P. LEGASPI, SONNY P.
BERNABE, ARNEL B. MENDOZA, BENITO L. BERNABE,
ARNOLD P. VALENZUELA, ARMANDO P. PAGULAYAN,
GREGORIO P. MENDOZA, JR., RONALD T. CORREA,
DANILO PALAD and ROBERT P. VELASQUEZ (herein
known as private complainants) without first having

Page 86 of 121
secured the required license or authority from the POEA. 2
(Emphasis supplied.)
Upon arraignment, appellant pleaded not guilty and trial on the
merits ensued. Of the fourteen (14) private complainants, four
(4) were presented as witnesses for the prosecution, namely:
Benito L. Bernabe, Robert P. Velasquez, Gregorio P. Mendoza and
Arnel Mendoza. They testified to the following essential facts:
Private complainants' first encounter with the appellant was on
December 12, 1988 when one Josefa Cinco accompanied them to
the office of the Philippine Thai Association, Inc. (PhilippineThai) in Ermita, Manila to meet the appellant. Introducing herself
as the general manager of Philippine-Thai, appellant asserted
that her company recruited workers for placement abroad and
asked private complainants if they wanted to work as factory
workers in Taipeh. Enticed by the assurance of immediate
employment and an $800 per month salary, private
complainants applied. Appellant required private complainants
to pay placement and passport fees in the total amount of
P22,500.00 per applicant, to be paid in three installments, to wit:
P1,500 on December 14, 1988, P10,000.00 on December 16,
1988, and P11,000.00 on December 22, 1988. When the
complainants-witnesses paid the first two installments, they
were issued receipts by Liza Mendoza, the alleged treasurer of
Philippine-Thai signed by the latter in the presence of the
appellant. The receipts for the last installment paid by them were
signed by Liza Mendoza, and the appellant. After having received
the entire amount 3 from the witnesses, appellant assured them
that they would be able to leave for Taipeh sometime before the
end of December, 1988. But contrary to appellant's promise,
complainants-witnesses were unable to leave for abroad. They
demanded for the return of their money but to no avail.
Appellant's unfulfilled promise of employment and her refusal to

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

return the money that had been paid by way of placement and
passport fees, triggered the filing of the complaint.
For its part, the defense presented as its lone witness, the
appellant whose testimony consisted mainly in denying the
charges against her. Appellant claimed that she never met any of
the complainants nor did she ever recruit any of them. She
likewise denied having received money from anyone and
asserted that she did not know any Liza Mendoza who is the
alleged treasure of Philippine-Thai. Appellant maintained that
although she had an office in Ermita Building located at Arquiza
Street, Ermita, Manila, the said office belonged to B.C. Island
Wood Products Corporation which was engaged in the logging
business. However, when questioned further, appellant admitted
being the president of Philippine-Thai but only in a nominal
capacity, and claimed that as nominee-president, she did not
participate in any of its transactions. Appellant likewise insisted
that Philippine-Thai was engaged solely in the barong tagalog
business.
After careful calibration of the evidence presented by the
prosecution and the defense, the court a quo rendered a decision
holding that the defense of "denial" interposed by the accused
could not prevail over the positive and clear testimonies of the
prosecution witnesses which had established the guilt of the
accused beyond reasonable doubt. 4 The dispositive portion of
the decision reads:
WHEREFORE, premises considered, this Court hereby
finds that the accused CRISTINA HERNANDEZ, (sic) guilty
beyond reasonable doubt of the crime of illegal
recruitment, committed in large scale, as defined in
Article 38(a) & (b) of Presidential Decree No. 1412, . . . in
relation to Article 13(b) and (c) . . . , accordingly,

Page 87 of 121
sentences the accused to suffer the penalty of life
imprisonment (RECLUSION PERPETUA) with the
accessory penalties provided for by law; to pay a fine of
ONE HUNDRED THOUSAND (P100,000.00) PESOS
without subsidiary imprisonment in case of insolvency;
to return and pay to BENITO L. BERNABE the amount of
TWENTY EIGHT THOUSAND AND FIVE HUNDRED
(P28,500) PESOS; to ROBERT P. VELASQUEZ the amount
of TWENTY TWO THOUSAND AND FIVE HUNDRED
(P22,500.00) PESOS; to GREGORIO P. MENDOZA the
amount of TWENTY TWO THOUSAND FIVE HUNDRED
(22,500.00) PESOS; to ARNEL MENDOZA the amount of
TWENTY TWO THOUSAND FIVE HUNDRED (P22,500.00)
PESOS also without subsidiary imprisonment in case of
insolvency; and to pay the costs.
SO ORDERED.
Manila, Philippines, November 29, 1991. 5
Appellant comes to this Court for the reversal of the judgment of
conviction assigning the following errors against the lower court:
I
THE TRIAL COURT ERRED IN FINDING THE ACCUSED
"LIABLE OF (sic) ILLEGAL RECRUITMENT COMMITTED
IN A LARGE SCALE AND BY A SYNDICATE (sic)" FOR
HAVING "MAINTAINED OFFICE WITHOUT LICENSE OR
REGISTRATION FROM THE DEPARTMENT OF LABOR,
THRU ITS OFFICE, THE PHILIPPINE OVERSEAS
EMPLOYMENT ADMINISTRATION (POEA)."
II

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

THE TRIAL COURT ERRED IN TAKING JUDICIAL NOTICE

OF THE "FACT THAT ACCUSED CRISTINA M.
HERNANDEZ HAD BEEN CHARGED . . . OF ANOTHER
ILLEGAL RECRUITMENT . . . DOCKETED AS CRIMINAL
CASE NO. 88-62599" AND IN CONSIDERING THE
PENDENCY THEREOF AS EVIDENCE OF THE "SCHEME
AND STRATEGY ADOPTED BY THE ACCUSED . . . AND
PRACTICED WITH THE HELP OF HER AGENTS AND
OTHER PERSONS WORKING UNDER THE SHADE OF HER
PROTECTION."
III
THE TRIAL COURT ERRED IN NOT GIVING CREDENCE
OR WEIGHT TO THE DEFENSE OF THE ACCUSED. 6
The first assignment of error is anchored on the contention that
the prosecution failed to prove one of the essential elements of
the crime of illegal recruitment that the offender is a nonlicensee or non-holder of authority to lawfully engage in the
recruitment and placement of workers. 7 The aforementioned
element, specifically the fact that neither appellant nor
Philippine-Thai was licensed or authorized to recruit workers as
shown by the records of the POEA, was the subject of a
stipulation proposed by the prosecution and admitted by the
defense during trial. Appellant assails as erroneous the reliance
placed by the prosecution on the said stipulation of facts in
dispensing with the presentation of evidence to prove the said
element of the crime of illegal recruitment. Appellant argues
that: (1) the stipulation of facts was not tantamount to an
admission by the appellant of the fact of non-possession of the
requisite authority or license from the POEA, but was merely an
admission that the Chief Licensing Officer of the POEA, if
presented in court, would testify to this fact, and (2) the

Page 88 of 121
stipulation of facts is null and void for being contrary to law and
public policy. Appellant posits the foregoing arguments to
bolster her contention that the stipulation of facts did not relieve
the prosecution of its duty to present evidence to prove all the
elements of the crime charged to the end that the guilt of the
accused may be proven beyond reasonable doubt.
At the outset, it should be said that the above contention and the
arguments are insignificant in view of the fact that records
disclose that the prosecution had in fact presented evidence to
prove the said element of the crime of illegal recruitment.
"EXHIBIT I", a certification issued by the Chief Licensing Branch
of the POEA, attesting to the fact that neither appellant nor
Philippine-Thai is licensed/authorized to recruit workers for
employment abroad, was offered and admitted in evidence
without the objection of the appellant. 8
Although appellant's arguments find no significant bearing in the
face of the existence of "EXHIBIT I", they nonetheless require
deeper scrutiny and a clear response for future application.
Hence, the following discussion.
Appellant correctly distinguishes between an admission that a
particular witness if presented in court would testify to certain
facts, and an admission of the facts themselves. According to the
appellant, what was stipulated on between the prosecution and
defense counsel at the hearing on June 6, 1990 was "merely that
the testimony of the Chief Licensing Officer of the POEA would be
to the effect that appellant is not licensed nor authorized to
recruit workers", 9 Thus:
Prosecutor

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

. . . Before we call on our first witness, we propose some

stipulations regarding the testimony of the Chief
Licensing Branch of the POEA that Cristina Hernandez
is not a (sic) licensed nor authorized by the Department
of Labor to recruit workers abroad.
Court

Page 89 of 121
same effect as if the witness had testified to the facts. Such
testimony the party is free to contradict. 11

The distinction, though cogent, is unfortunately inapplicable to the case

at bar. Conveniently omitted from the appellant's reply chief is the
ensuing statement made by the court after counsel for the accused, Atty.
Ulep agreed to the stipulation proposed by the prosecution, to wit:

Would you agree?

Atty. Ulep (counsel for the accused): Agreed, Your Honor.

Atty. Ulep (Counsel for the Accused): Agreed, Your

Honor. 10

Court

She claims that the foregoing clearly indicate that there was no judicial
admission of the fact of non-possession of a license/authority but rather
a mere admission that the witness, if presented, would testify to such
fact. This being the case, it remained incumbent upon the prosecution to
present evidence of such fact. To buttress her position, the following was
cited to note the distinction:
Suppose a case is set for trial and one of the parties
moves for a continuance because of the absence of W, an
important witness. His opponent, who is anxious to go to
trial; asks what are the facts to which W would testify.
The other attorney tells him, adding: "If I consent to the
overruling of my motion, will you stipulate that those are
the facts?" The attorney who is pressing for trial says:
"No but I will stipulate that if W were called in this case as
a witness, he would so testify." What is the difference
between the two stipulations?
In the first stipulation proposed there is a judicial
admission of the facts, and they cannot be contradicted.
But the second stipulation proposed will only have the

The prosecution and the defense agreed to

stipulate/admit that from the record of the POEA
Licensing and Regulation Office, Dept. of Labor and
Employment, accused Cristina Hernandez/Phil. etc., Ass. .
. . is neither licensed nor authorized by the office to
recruit workers overseas abroad and that if the duly
authorized representative from the POEA Administration
is to take the witness stand, he will confirm to this fact as
borne by the records. 12 (Emphasis supplied.)
From the foregoing, it is evident that the prosecution and the defense
counsel stipulated on two things: that ". . . from the record of the POEA, . .
. accused Cristina Hernandez, Phil. etc. Ass. . . . is neither licensed nor
authorized by that office to recruit workers for overseas abroad and that
if the duly authorized representative from the POEA Administration (sic)
is to take the witness stand, he will confirm to this fact . . . ." 13 The claim
that the lower court mistakenly interpreted defense counsel's
acquiescence to the prosecution's proposed stipulation as an admission
of non-possession of the requisite POEA license or authority is belied by
the fact that after the above enunciation by the court, no objection was
interposed by defense counsel.

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Appellant further contends that granting arguendo that defense counsel

had in fact agreed to the above stipulation of facts, the same is null and
void for being contrary to the well-established rule that a stipulation of
facts is not allowed in criminal cases. To bolster this contention,
appellant cited the consistent ruling of this Court on the matter. Thus, as
held in the case of U.S. vs. Donato: 14
Agreements between attorneys for the prosecution and
for the defense in criminal cases, by which it is stipulated
that certain witnesses, if present, would testify to certain
facts prevent a review of the evidence by the Supreme
Court and arc in violation of the law. 15
The above ruling was reiterated in a subsequent case where the accused
was convicted solely on the basis of an agreement between the fiscal and
the counsel for the accused that certain witnesses would testify
confirming the complaint in all its parts. In reversing the judgment of
conviction, this Court held that:
It is neither proper nor permissible to consider a case
closed, or to render judgment therein, by virtue of an
agreement entered into between the provincial fiscal and
the counsel for the accused with reference to facts, some
of which are favorable to the defense, and others related
to the prosecution, without any evidence being adduced
or testimony taken from the witnesses mentioned in the
agreement; such practice is not authorized and defeats
the purposes of criminal law; it is an open violation of the
rules of criminal procedure . . . . 16
The rule prohibiting the stipulation of facts in criminal cases is grounded
on the fundamental right of the accused to be presumed innocent until
proven guilty, and corollary duty of the prosecution to prove the guilt of
the accused beyond reasonable doubt. It is therefor advanced that the

Page 90 of 121

prosecution being duty-bound to prove all the elements of the crime,

may not be relieve of this obligation by the mere expedient of stipulating
with defense counsel on a matter constitutive of an essential elements of
the crime charged.
The rationale behind the proscription against this class of agreements
between prosecution and defense was enunciated in the case of U.S. vs.
Manlimos: 17
It is not supposed to be within the knowledge or
competence of counsel to predict what a proposed
witness shall say under the sanction of his oath and the
test of cross-examination. A conviction for crime should
not rest upon mere conjecture. Nor is it possible for a
trial court to weigh with exact nicety the contradictory
declaration of witnesses not produced so as to be
subjected to its observation and its judgment as to their
credibility. 18
However, in the light of recent changes in our rules on criminal
procedure, particularly the pre-trial provisions found in Rule 118, the
prohibition against a stipulation of facts in criminal cases no longer
holds true. Rule 118 provides the following:
Sec. 1. Pre-trial; when proper To expedite trial, where
the accused and counsel agree, the court shall conduct a
pre-trial conference on the matters enunciated in Section
2 hereof, without impairing the rights of the accused.
Sec. 2. Pre-trial conference; subjects . . . The pre-trial
conference shall consider the following:
(a) Plea bargaining;

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

(b) Stipulation of facts;

xxx xxx xxx (Emphasis supplied)
By virtue of the foregoing rule, a stipulation facts in criminal cases is
now expressly sanctioned by law. In further pursuit of the objective of
expediting trial by dispensing with the presentation of evidence on
matters that the accused is willing to admit, a stipulation of fact should
be allowed not only during pre-trial but also and with more reason,
during trial proper itself. Parenthetically, although not expressly
sanctioned under the old rules of court, a stipulation of facts by the
parties in criminal cases has long been allowed and recognized as
declarations constituting judicial admissions, hence, binding upon the
parties. In the case of People vs. Mapa 19 where the accused was charged
with illegal possession of firearms, the prosecution and the defense
stipulated on the fact that the accused was found in possession of gun
without the requisite permit or license. More at point is the case of
People vs. Bocar 20 wherein the fiscal proposed the admission by the
accused of the affidavits and other exhibits already presented by the
prosecution to dispense with oral testimonies on the matter. Holding
that the admissions made by the parties were binding, this Court stated
that:
. . . [T]here is nothing unlawful or irregular about the
above procedure. The declarations constitute judicial
admission, which are binding on the parties, by virtue of
which the prosecution dispensed with the introduction of
additional evidence and the defense waived the right to
contest or dispute the veracity of the statements contained
in the exhibits. 21 (Emphasis supplied.)
American jurisprudence has established the acceptability of the practice
of stipulating during the trial of criminal cases, and categorically stated
in People vs. Hare 22 that:

Page 91 of 121
The record discloses that the defense counsel stipulated
to what certain witnesses would testify if they were
present in court. . . .
. . . The defendant contends that it was error for his
counsel to make these stipulations. This court has held
that an accused may by stipulation waive the necessity of
a proof of all or any part of the case which the people
have alleged against him and that having done so, he
cannot complain in this Court of evidence which he has
stipulated into the
record. 23

The collorally issue left for the determination of this Court is whether or
not Section 4 of Rule 118requiring an agreement or admission made
or entered during the pre-trial conference to be reduced in writing and
signed by the accused and his counsel before the same may be used in
evidence against the accused-equally applies to a stipulation of facts
made during trial. We resolved this issue in the negative.
A stipulation of facts entered into by the prosecution and defense
counsel during trial in open court is automatically reduced into writing
and contained in the official transcript of the proceedings had in court.
The conformity of the accused in the form of his signature affixed thereto
is unnecessary in view of the fact that: ". . . an attorney who is employed
to manage a party's conduct of a lawsuit . . . has prima facie authority to
make relevant admissions by pleadings, by oral or written stipulation, . . .
which unless allowed to be withdrawn are conclusive." 24 (Emphasis
supplied.) In fact, "judicial admission are frequently those of counsel or
of the attorney of record, who is, for the purpose of the trial, the agent of
his client. When such admissions are made . . . for the purpose of
dispensing with proof of some fact, . . . they bind the client, whether
made during, or even after, the trial." 25

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

The foregoing find basis in the general rule that a client is bound by the
acts of his counsel who represents him. 26 For all intents and purposes,
the acts of a lawyer in the defense of a case are the acts of his client. The
rule extends even to the mistakes and negligence committed by the
lawyer except only when such mistakes would result in serious injustice
to the client. 27 No cogent reason exists to make such exception in this
case. It is worth noting that Atty. Ulep, appellant's counsel in the lower
court, agreed to the stipulation of facts proposed by the prosecution not
out of mistake nor inadvertence, but obviously because the said
stipulation of facts was also in conformity of defense's theory of the case.
It may be recalled that throughout the entire duration of the trial,
appellant staunchly denied ever having engaged in the recruitment
business either in her personal capacity or through Philippine-Thai.
Therefore, it was but logical to admit that the POEA records show that
neither she nor Philippine-Thai was licensed or authorized to recruit
workers.
It is true that the rights of an accused during trial are given paramount
importance in our laws on criminal procedure. Among the fundamental
rights of the accused is the right to confront and cross-examine the
witnesses against
him. 28 But the right of confrontation guaranteed and secured to the
accused is a personal privilege which may be waived. 29 Thus, in the case
of U.S. vs. Anastasio, 30 this Court deemed as a waiver of the right of
confrontation, the admission by the accused that witnesses if present
would testify to certain facts stated in the affidavit of the prosecution. 31
In the same vein, it may be said that such an admission is a waiver of the
right of an accused to present evidence on his behalf. Although the right
to present evidence is guaranteed by no less than the Constitution itself
for the protection of the accused, this right may be waived expressly or
impliedly. 32 This is in consonance with the doctrine of waiver which
recognizes that ". . . everyone has a right to waive, and agree to waive,
the advantage of a law or rule made solely for the benefit and protection

Page 92 of 121

of the individual in his private capacity, if it can be dispensed with and

relinquished without infringing on any public right, and without
detriment to the community at large." 33
The abovementioned doctrine is squarely applicable to the case at bar.
Appellant was never prevented from presenting evidence contrary to the
stipulation of facts. If appellant believed that the testimony of the Chief
Licensing Officer of the POEA would be beneficial to her case, then it is
the defense who should have presented him. Her continuous failure to
do so during trial was a waiver of her right to present the pertinent
evidence to contradict the stipulation of facts and establish her defense.
In view of the foregoing, the stipulation of facts proposed during trial by
prosecution and admitted by defense counsel is tantamount to a judicial
admission by the appellant of the facts stipulated on. Controlling,
therefore, is Section 4, Rule 129 of the Rules of Court which provides
that:
An admission, verbal or written, made by a party in the
course of the proceedings in the same case, does not
require proof. The admission may be contradicted only
by showing that it was made through palpable mistake or
that no such admission was made.
We now go to appellant's second and third assignment of errors. In her
second assignment of error, appellant makes much ado of the "judicial
notice" taken by the lower court of the fact that appellant had been
charged with another illegal recruitment case, 34 and in considering the
pendency thereof as evidence of the scheme and strategy adopted by the
accused. Appellant cites a violation of Section 3 of Rule 129 of the Rules
of Court which provides that before the court may take judicial notice of
any matter, the parties shall be heard thereon if such matter is decisive
of a material issue in the case. It is claimed that the lower court never
announced its intention to take judicial notice of the pendency of the

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Page 93 of 121

other illegal recruitment case nor did it allow the accused to be heard
thereon.

A: They told me that there was a

complaint against me.

It is true that as a general rule, courts are not authorized to take judicial
notice of the contents of the records of other cases, even when such
cases have been tried or are pending in the same court, and
notwithstanding the fact that both cases may have been tried or are
actually pending before the same judge. 35 However, this rule is subject
to the exception that:

Q: Complaint about what?

. . . in the absence of objection and as a matter of

convenience to all parties, a court may properly treat all
or any part of the original record of the case filed in its
archives as read into the records of a case pending before
it, when with the knowledge of the opposing party,
reference is made to it, by name and number or in some
other manner by which it is sufficiently designated, . . . 36
(emphasis supplied.)
The judicial notice taken by the lower court of the pendency of another
illegal recruitment case against the appellant falls squarely under the
above exception in view of the fact that it was the appellant herself who
introduced evidence on the matter when she testified in open court as
follows:
Q: You mean to say . . . by the way, where
(sic) were you at the NBI when Mrs. Cinco
inquired from you about placement
abroad?
A: I was just invited by the personnel of
the NBI and I was not allowed to go home.
Q: Whey were you invited by the NBI?

A: The same case.

Q: You mean illegal recruitment also?
A: Yes, sir.
xxx xxx xxx
Q: You made mention that an illegal
recruitment case which was supposed to
be the cause of your detention at the NBI .
..
I am not referring to this case, Mrs.
Hernandez what happened to that
case, what is the status of that case?
A: It is also in this sala.
COURT: It is already submitted for
decision. 37
Even assuming, however, that the lower court improperly took judicial
notice of the pendency of another illegal recruitment case against the
appellant, the error would not be fatal to the prosecution's cause. The
judgment of conviction was not based on the existence of another illegal
recruitment case filed against appellant by a different group of
complainants, but on the overwhelming evidence against her in the
instant case.

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Anent the last assignment of error, suffice it to say that we do not find
any compelling reason to reverse the findings of the lower court that
appellant's bare denials cannot overthrow the positive testimonies of
the prosecution witnesses against her.

Page 94 of 121

ARNEL MENDOZA the amount of TWENTY TWO THOUSAND FIVE

HUNDRED (P22,000.00) PESOS also without subsidiary imprisonment in
case of insolvency; and to pay the costs.
SO ORDERED.

Well established is the rule that denials if unsubstantiated by clear and

convincing evidence are negative, self-serving evidence which deserve
no weight in law and cannot be given greater evidentiary weight over
the testimony of credible witnesses who testify on affirmative matters. 38
That she did not merely deny, but likewise raised as an affirmative
defense her appointment as mere nominee-president of Philippine-Thai
is a futile attempt at exculpating herself and is of no consequence
whatsoever when weighed against the positive declarations of witnesses
that it was the appellant who executed the acts of illegal recruitment as
complained of.
Finally, under Article 39 of the New Labor Code, the penalty for illegal
recruitment committed in large scale is life imprisonment and a fine of
ONE HUNDRED THOUSAND PESOS (P100,000.00). As previously held by
this Court, life imprisonment is not synonymous with reclusion perpetua.
39 The lower court erred in imposing "the penalty of life imprisonment
(reclusion perpetua) with the accessory penalties provided for by law; . . .
40 (Emphasis supplied)
WHEREFORE, appellant's conviction of the crime of illegal recruitment
in large scale is hereby AFFIRMED, and the penalty imposed MODIFIED
as follows: the court sentences the accused to suffer the penalty of life
imprisonment and to pay a fine of ONE HUNDRED THOUSAND
(P100,000.00) PESOS without subsidiary imprisonment in case of
insolvency; to return and pay to BENITO L. BERNABE the amount of
TWENTY EIGHT THOUSAND FIVE HUNDRED (P28,500.00) PESOS; to
ROBERT P. VELASQUEZ the amount of TWENTY TWO THOUSAND FIVE
HUNDRED (P22,500.00) PESOS; to GREGORIO P. MENDOZA the amount
of TWENTY TWO THOUSAND FIVE HUNDRED (P22,500.00) PESOS; to

Narvasa, C.J., Davide, Jr., Melo and Panganiban, JJ., concur.

Footnotes
1 Art. 38. Illegal Recruitment. (a) Any recruitment activities,
including the prohibited practices enumerated under Article 34
of this Code, to be undertaken by non-licensees or non-holders of
authority shall be deemed illegal and punishable under Article
39 of this Code. The Ministry of Labor and Employment or any
law enforcement officers may initiate complaints under this
article.
(b) Illegal recruitment when committed by a syndicate or in
large scale shall be considered an offense involving economic
sabotage and shall be penalized in accordance with Article 39
hereof.
Illegal recruitment is deemed committed by a syndicate if carried
out by a group of three (3) or more persons conspiring and/or
confederating with one another in carrying out any unlawful or
illegal transaction, enterprise or scheme, defined under the first
paragraph hereof. Illegal recruitment is deemed committed
against three (3) or more persons individually or as a group. . . .

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Page 95 of 121
xxxx

G.R. No. 165896

RUSTICO ABAY, JR. and REYNALDO DARILAG,
Petitioners,
- versus PEOPLE OF THE PHILIPPINES,
Respondent.
September 19, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
QUISUMBING, J.:
This petition for review assails the Decision[1] dated October 27,
2003 and the Resolution[2] dated October 14, 2004 of the Court of
Appeals in CA G.R. CR No. 25212. The Court of Appeals had affirmed
the Decision[3] of the Regional Trial Court (RTC) of San Pedro,
Laguna, Branch 31, finding petitioners guilty of the crime of
Highway Robbery in Criminal Case No. 9045-B.

That on or about 7:30 oclock in the evening of February 17, 1994,

at the South Luzon Expressway, Municipality of Bian, Province of
Laguna, and within the jurisdiction of this Honorable Court,
accused Ramoncito Aban y Casiano, Ernesto Ricalde y Jovillano,
Rustico Abay, Jr. y Serafico, Ramon Punzalan y Carpena, Reynaldo
Darilag y Apolinario, Leonardo Perello y Esguerra and Danilo
Pascual y Lagata, who are principals by direct participation,
conspiring and confederating together with Ariston Reyes y Plaza,
Isagani Espeleta y Arguelles and Cesar Camacho y Deolazo, who are
principals by indispensable cooperation and mutually helping each
other, form themselves as band of robbers and conveniently armed
with handguns and deadly bladed weapons, and while on board a
Kapalaran Bus Line with plate number DVT-527 bound for Sta.
Cruz, Laguna and a semi stainless owner type jeep with plate
number PJD-599 as backup vehicle, accused with the use of the
aforesaid handguns and bladed weapons with intent to gain and
taking the passengers of the bus by surprise, did then and there
wilfully, unlawfully and feloniously divest and take away
personalties of the passengers and/or occupants therein, among
them were:
a) Thelma Andrade y Lorenzana, P3,500.00 cash;
b) Gloria Tolentino y Pamatmat, P30,000.00 cash, $2,000.00 dollars
and eyeglasses (Perare) worth P5,000.00;

The facts are as follows:

c) Lilian Ojeda y Canta, P120.00 cash;
On January 13, 1995, an Information was filed charging Rustico
Abay, Jr., Reynaldo Darilag, Ramoncito Aban, Ernesto Ricalde,
Ramon Punzalan, Ariston Reyes, Isagani Espeleta, Cesar Camacho,
Leonardo Perello and Danilo Pascual with the crime of Highway
Robbery/Brigandage. Said information reads:

d) Paul Masilang y Reyes, assorted used clothes of undetermined

amount;

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Page 96 of 121

and by reason or on occasion of the said robbery, accused shot

passenger Rogelio Ronillo y Lumboy, inflicting upon him gunshot
wounds on the neck, thus, accused performed all the acts of
execution that would produce the crime of homicide, but
nevertheless, did not produce by reason of causes independent of
the will of the accused, that is by the timely medical assistance
rendered to Rogelio Ronillo y Lumboy, and to his damage and
prejudice and to the damages and prejudices of the following:

2) Ariston Reyes y Plaza with prison number 115906-P, as

recidivist, having been convicted by final judgment on March 11,
1982 by the CFI, Manila in Criminal Case No. 82-3001 for Robbery;
having been convicted by final judgment on September 2, 1987 by
the RTC Branch 94, Quezon City, in Criminal Case No. 37432 for
Robbery; and for Reiteracion or habituality for having served
sentence for Homicide, convicted on March 25, 1991 by the RTC,
Branch 34, Quezon City;

a) Thelma Andrade y Lorenzana in the sum of P3,500.00;

3) Reynaldo Darilag y Apolinario with prison number 129552-P for

reiteracion or habituality for having been previously punished for
an offense of murder in Criminal Case No. 039 by the RTC, Branch 5,
Tuguegarao, Cagayan and as a recidivist for having been previously
convicted by final judgment on July 8, 1987 by the same Court in
Criminal Case No. 040 for Robbery;

b) Gloria Tolentino y Pamatmat in the sum of P30,000.00;

c) Lilian Ojeda y Canta in the sum of P120.00
That the commission of the offense was attended with the
aggravating circumstances of nighttime, by a band and with the use
of motor vehicle.
With the additional aggravating circumstance that accused Isagani
Espeleta y Arguelles and Cesar Camacho y Deolazo, being prison
guards, have taken advantage of their public position by bringing
out prison inmates and equipped them with deadly weapons and
were utilized in the commission of robbery:
With the further additional aggravating circumstance on the
following accused/inmates, as follows:
1) Ramoncito Aban y Casiano with prison number 121577 as
recidivist, having been convicted by final judgment on June 15,
1984 by the RTC, Branch VI, Malolos, Bulacan, in Criminal Case No.
3874-M for Robbery with Homicide;

4) Rustico Abay, Jr. y Serafico with prison number 132566-P as a

recidivist for having been previously convicted by final judgment
on August 31, 1988 by the RTC, Branch 163 Manila, in Criminal Case
No. 71060 for Theft;
5) Ramon Punzalan y Carpena with prison number 113605-P as
recidivist for having been previously convicted by final judgment
by the RTC, Branch 111, San Pablo City on the following dates, to
wit:
January 8, 1981 in Criminal Case No. 2454-SP, for Robbery in Band;
December 8, 1981, in Criminal Case No. 2549 for Theft;
October 7, 1983 in Criminal Case No. 2550-SP for Carnapping; and

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Page 97 of 121

Having been previously convicted by final judgment by the City

Court of San Pablo City on March 30, 1981 in Criminal Case No.
17738 for simple theft;

took her money and pieces of jewelry and handed them over to
Reynaldo Darilag. She also identified Rustico Abay, Jr. as one of the
companions of the robbers.[6]

6) Ernesto R[i]calde y Jov[i]llano with prison number N92P-2735,

as a recidivist for having been previously convicted by final
judgment on August 2, 1992 by the RTC, Branch 54, Lucena City in
Criminal Case No. 91-679 for simple theft.

Ramoncito Aban, the last witness, testified that on February 22,

1994, Camacho and Espeleta, who were both prison guards of the
New Bilibid Prison (NBP), took him and his companions, Ricalde,
Abay, Jr., Punzalan, Darilag, Reyes, Perello and Pascual, on board
the owner-type jeepney of Camacho to stage a hold-up. He said they
held-up a Kapalaran bus and it was Punzalan and Darilag who took
the money and other belongings of the passengers in the bus. He
further testified that the February 22, 1994 hold-up was the fourth
staged by their group. According to Aban, the other hold-ups were
carried out on February 11, 13 and 17, and all four hold-ups were
staged by the same persons.[7]

CONTRARY TO LAW.[4]
When arraigned, all the accused pleaded not guilty. However, upon
motion filed by accused Ramoncito Aban, with the conformity of the
public prosecutor and private complainants Thelma Andrade and
Gloria Tolentino, he was allowed to withdraw his earlier plea of
"not guilty". Thus, on September 11, 1997, Ramoncito Aban, with
the assistance of his counsel, pleaded "guilty" to the crime of simple
robbery and on even date, the trial court sentenced him.
Meanwhile, trial proceeded with respect to the other accused.
The prosecution presented the following witnesses: Thelma
Andrade, Gloria Tolentino and Ramoncito Aban.
Thelma Andrade, a conductress of the Kapalaran Bus Line, testified
that in the evening of February 17, 1994, the bus she was on was
held-up. She said that Ramoncito Aban took from her, at gunpoint,
the fares she collected from the passengers of the bus. She also
identified Rustico Abay, Jr. and Ernesto Ricalde as two of the other
companions of Aban.[5]
Gloria Tolentino, a passenger of the bus, testified that someone
shouted "hold-up" and ordered them to bow their heads. She
obeyed the order but once in a while she would raise her head.
According to Tolentino, the man seated beside her, Ariston Reyes,

The defense, for its part, presented the testimony of petitioners

Rustico Abay, Jr., and Reynaldo Darilag, the other co-accused, and
Genaro Alberto.
All the accused denied participation in the robbery that happened
on February 17, 1994. Abay, Jr., Darilag, Reyes and Ricalde, who
were detention prisoners, testified that they were confined in the
NBP at the time the incident happened.[8] Pascual and Perello, both
civilians, testified that they were at home then.[9] Genaro Alberto, a
prison guard at the Bureau of Corrections, testified that during the
headcount of the inmates conducted at 5:00 p.m. and 8:00 p.m. on
February 17, 1994, no inmate was found to be missing.[10]
In a Decision dated November 29, 2000, the RTC of San Pedro,
Laguna, Branch 31 found petitioners Abay, Jr. and Darilag, as well
as the other accused guilty of the crime charged. The trial court
decreed as follows:

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Page 98 of 121

WHEREFORE, this Court hereby renders judgment convicting

accused Ernesto Ricalde y Jovillano, Rustico Abay, Jr. y Serafico,
Ramon Punzalan y Carpena, Reynaldo Darilag y Apolicario, Ariston
Reyes y Plaza, Isagani Espeleta y Arguelles, Cesar Camacho y
Deolazo, Leonardo Perello y Esguerra and Danilo Pascual y Lagata
of the crime of highway robbery/holdup attended by the
aggravating circumstance of a band only and hereby sentences each
of them:

With respect to accused-appellants Rustico Abay, Jr., Ernesto

Ricalde, Reynaldo Darilag and Ariston Reyes, the said decision of
the Regional Trial Court of San Pedro, Laguna, Branch 31, in
Criminal Case No. 9045-B, finding them guilty beyond reasonable
doubt of the crime of highway robbery/hold-up is hereby
AFFIRMED IN TOTO.

1) to suffer an indeterminate penalty of imprisonment [of] twelve

(12) years and one (1) day as minimum to thirteen (13) years, nine
(9) months and eleven (11) days as maximum, both of reclusion
temporal in its minimum period;

Petitioners Abay, Jr. and Darilag moved for a reconsideration of the

aforesaid decision, but their motion was denied. Hence, they filed
the instant petition raising a single issue:

2) to indemnify Thelma Andrade, the amount of P3,500 and Gloria

Tolentino, the amount of P30,000 and US$2,000; and
3) to pay the costs.
SO ORDERED.[11]
The Court of Appeals on appeal acquitted Espeleta, Camacho and
Punzalan of the crime charged but affirmed the conviction of
petitioners Abay, Jr. and Darilag, Ricalde and Reyes. The dispositive
portion of the Decision dated October 27, 2003 states:
WHEREFORE, the assailed decision of the Regional Trial Court of
San Pedro, Laguna, Branch 31, in Criminal Case No. 9045-B, is
REVERSED and SET ASIDE, but only insofar as accused-appellants
Isagani Espeleta, Cesar Camacho and Ramon Punzalan, are
concerned, for insufficiency of evidence. Isagani Espeleta, Cesar
Camacho and Ramon Punzalan are hereby ACQUITTED. Unless held
for any other charge/charges their immediate release is hereby
ordered.

SO ORDERED.[12]

WHETHER OR NOT PETITIONERS MAY BE CONVICTED ON THE

BASIS OF THE TESTIMONIES OF RAMONCITO ABAN, THELMA
ANDRADE AND GLORIA TOLENTINO.13
Stated simply, did the Court of Appeals err in affirming on the basis
of the testimonies of said three witnesses the conviction of
petitioners Abay, Jr. and Darilag?
In their petition,[14] petitioners Abay, Jr. and Darilag assert that
their guilt has not been proven beyond reasonable doubt. They
argue that Ramoncito Aban is not a credible witness and that he
testified on an incident which happened on February 22, 1994 and
not on February 17, 1994 as alleged in the information. Petitioners
also claim that no physical evidence linking petitioners to the crime
was presented. They likewise point to a related case filed against
them wherein they were acquitted. They fault the trial court and
Court of Appeals for disregarding their defense of alibi and in
giving credence to the testimonies of Andrade and Tolentino,
contending that these testimonies were incredible and
unsubstantiated. They likewise contend that the lower courts erred
in relying on Abans extrajudicial confession which was coerced.

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

The Office of the Solicitor General (OSG) challenges the petition on

the ground that the petition raises a question of fact. It also
maintains that Aban is a credible witness and that petitioners
defense of alibi cannot prevail over the positive testimonies of the
prosecution witnesses.[15]
After a thorough examination of the evidence presented, we are in
agreement that the appeal lacks merit.
At the outset, we note that it was not Abans extrajudicial
confession but his court testimony reiterating his declarations in
his extrajudicial admission, pointing to petitioners as his coparticipants, which was instrumental in convicting petitioners of
the crime charged. Settled is the rule that when the extrajudicial
admission of a conspirator is confirmed at the trial, it ceases to be
hearsay. It becomes instead a judicial admission, being a testimony
of an eyewitness admissible in evidence against those it
implicates.[16] Here, the extrajudicial confession of Aban was
affirmed by him in open court during the trial. Thus, such
confession already partook of judicial testimony which is
admissible in evidence against the petitioners.
We likewise agree in finding without merit the petitioners
argument that, since Abans testimony is not credible as to Espeleta,
Camacho and Punzalan who were acquitted, then it should also be
held not credible as to them. But in our considered view, the
petitioners are not similarly situated as their aforementioned coaccused. Other than the testimony of Aban, there were no other
witnesses who testified on the participation of Espeleta, Camacho
and Punzalan. In contrast, anent the herein petitioners
participation in the crime, not only is their conviction based on the
testimony of Aban, but it was also established by the eyewitness
testimony of Andrade and Tolentino who identified positively the
petitioners in open court.

Page 99 of 121

Petitioners further aver that Aban testified on a robbery which took

place on February 22, 1994, not February 17, 1994. Granted that
Ramoncito Aban in fact testified on the details of the robbery which
happened on February 22, 1994. However, it is also worth stressing
as part of the prosecution evidence that Aban testified that
malefactors used the same route and strategy in the perpetration of
the robberies which happened on four occasions -- February 11, 13,
17 and 22, 1994. What happened on February 22 was but a
replication, so to speak, of the robbery scenarios earlier
perpetrated by the same gang on three previous dates. It is very
clear, however, that Aban, on the witness stand was testifying
specifically also about the offense that took place on February 17 in
the Expressway, Bian, Laguna.
Petitioners claim that no physical evidence was presented by the
prosecution linking the petitioners to the crime charged. But in this
case, the alleged failure of the prosecution to present physical
evidence does not adversely affect the over-all weight of the
evidence actually presented. Physical evidence would be merely
corroborative because there are credible witnesses who testified
on the complicity of petitioners in the crime charged.[17]
Further, petitioners assert that in a similar case filed against them,
they were acquitted by the trial court of Imus, Cavite. As correctly
observed by the OSG, there is no showing that the amount and
quality of evidence in the present case and those in the case where
petitioners were allegedly acquitted are the same. Indeed, if
petitioners truly believed that the prosecution evidence is deficient
to establish their guilt, their defense could have earlier filed a
demurrer to evidence in this case. But, they did not.[18]
Additionally, petitioners claim that the trial court and the Court of
Appeals erred in disregarding their defense of alibi.[19] However,

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

we are in agreement with the OSG that the defense of alibi cannot
prevail over the positive identification of the accused in this case.
Worth stressing, this Court has consistently ruled that the defense
of alibi must be received with suspicion and caution, not only
because it is inherently weak and unreliable, but also because it can
be easily fabricated.[20] Alibi is a weak defense that becomes even
weaker in the face of the positive identification of the accused. An
alibi cannot prevail over the positive identification of the
petitioners by credible witnesses who have no motive to testify
falsely.[21]
In this case, petitioners defense of alibi rested solely upon their
own self-serving testimonies. For their defense of alibi to prosper,
it should have been clearly and indisputably demonstrated by them
that it was physically impossible for them to have been at, or near,
the scene of the crime at the time of its commission. But as the trial
court correctly ruled, it was not impossible for the petitioners to be
at the scene of the crime since petitioners place of detention is less
than an hour ride from the crime scene. Moreover, no dubious
reason or improper motive was established to render the
testimonies of Andrade, Tolentino and Aban false and unbelievable.
Absent the most compelling reason, it is highly inconceivable why
Andrade, Tolentino and Aban would openly concoct a story that
would send innocent men to jail.[22]
Similarly, petitioners assert that the testimonies of Andrade and
Tolentino are incredible and unsubstantiated. They question the
failure of Tolentino to identify Punzalan in court, and stress that
Andrade and Tolentino were not able to identify all the accused.
The OSG, on the other hand, maintains that the testimonies of
Andrade and Tolentino are credible since the facts testified to by
them and Aban support each other.

Page 100 of 121

We find petitioners allegations untenable. The testimonies given

by Andrade, Tolentino and Aban corroborate each other. Their
testimonies agree on the essential facts and substantially
corroborate a consistent and coherent whole. The failure of
Tolentino to point to Punzalan in court does not dent her credibility
as a witness. It must be noted that it took years before Tolentino
was placed on the witness stand. As to the allegation that the
testimony of Andrade and Tolentino are incredible because they
were not able to identify all the accused deserves scant
consideration. During the robbery, they were told to bow their
heads and hence, they were only able to raise their heads from time
to time. It is but logical that the witnesses would not be able to
identify all of the accused.
Considering the testimonies of witnesses and the evidence
presented by the parties, we are in agreement that the crime of
Highway Robbery/Brigandage was duly proven in this case. As
defined under Section 2(e) of Presidential Decree No. 532,[23]
Highway Robbery/Brigandage is the seizure of any person for
ransom, extortion or other unlawful purposes, or the taking away
of the property of another by means of violence against or
intimidation of person or force upon things or other unlawful
means, committed by any person on any Philippine highway. Also,
as held in People v. Puno:[24]
In fine, the purpose of brigandage is, inter alia, indiscriminate
highway robbery. If the purpose is only a particular robbery, the
crime is only robbery, or robbery in band if there are at least four
armed participants
Further, that Presidential Decree No. 532 punishes as highway
robbery or brigandage only acts of robbery perpetrated by outlaws
indiscriminately against any person or persons on Philippine
highways as defined therein, and not acts of robbery committed

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

against only a predetermined or particular victim[Emphasis

supplied.]
The elements of the crime of Highway Robbery/Brigandage have
been clearly established in this case. First, the prosecution evidence
demonstrated with clarity that the petitioners group was
organized for the purpose of committing robbery in a highway.
Next, there is no predetermined victim. The Kapalaran bus was
chosen indiscriminately by the accused upon reaching their agreed
destination -- Alabang, Muntinlupa.
All told, we rule that petitioners Rustico Abay, Jr. and Reynaldo
Darilag are guilty beyond reasonable doubt of the crime of Highway
Robbery/Brigandage.
WHEREFORE, the Decision dated October 27, 2003 and the
Resolution dated October 14, 2004 of the Court of Appeals in CA
G.R. CR No. 25212, affirming the Decision dated November 29, 2000
of the Regional Trial Court of San Pedro, Laguna, Branch 31 in
Criminal Case No. 9045-B, are hereby AFFIRMED.
No pronouncement as to costs.
SO ORDERED.

Page 101 of 121

Law __ Evidence
G.R. No. 177777

Prof. Avena

3. JUDICIAL ADMISSIONS

December 4, 2009

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
FERNANDO GUTIERREZ y GATSO, Accused-Appellant.
DECISION
VELASCO, JR., J.:
On appeal is the Decision1 dated January 22, 2007 of the Court of
Appeals (CA) in CA-G.R. CR-H.C. No. 01688, affirming the decision in
Criminal Case No. 12318 of the Regional Trial Court (RTC), Branch 65 in
Tarlac City. The RTC found accused-appellant Fernando Gutierrez guilty
of the crime of illegal possession of dangerous drugs punishable under
Section 11, Article II of Republic Act No. (RA) 9165 or the Comprehensive
Dangerous Drugs Act of 2002.
An Amended Information2 charged accused-appellant Fernando with
violation of Sec. 11, Art. II of RA 9165, allegedly committed as follows:
That on or about September 12, 2002 at around 4:45 oclock in the
afternoon at Purok Jasmin, Poblacion North, Municipality of Ramos,
Province of Tarlac, Philippines and within the jurisdiction of this
Honorable Court, the above-named accused, did then and there willfully,
unlawfully and feloniously possess two (2) small plastic [sachets]
containing white crystalline substance weighing more or less 14.052
grams of shabu.
Contrary to law.
Arraigned on December 12, 2002, Fernando, assisted by counsel de
officio, entered a plea of "not guilty." After pre-trial, trial on the merits
ensued.

Page 102 of 121

To substantiate the accusation, the prosecution presented the

testimonies of the arresting police officers. Offered in evidence too was
Exhibit "B," captioned Chemistry Report No. D-186-2002 and prepared
and signed by Ma. Luisa G. David, forensic chemist of the Tarlac
Provincial Crime Laboratory Office. Exhibit "B" contains the following
entries, among others: the precise time and date the specimen
confiscated from Fernando was submitted for examination by the
requesting party, the time and date of the examinations completion, and
the results of the examination.
Culled from the challenged CA decision, the Peoples version of the
incident is synthesized as follows:
At around 4:45 p.m. on September 12, 2002, the police station of Ramos,
Tarlac acting on a tip regarding a shabu transaction (drug-pushing)
taking place somewhere in Purok Jasmin, Poblacion Norte, dispatched a
three-man team composed of PO3 Romeo Credo, P/Insp. Napoleon
Dumlao, and SPO1 Restituto Fernandez to the place mentioned. Arriving
at the target area, the three noticed Fernando and one Dennis Cortez
under a santol tree handing plastic sachets containing white crystalline
substance to certain individuals. At the sight of the police officers,
Fernando and the others scampered in different directions. After a brief
chase, however, one of the three police operatives caught up with and
apprehended Fernando, then carrying a bag.
When searched in the presence of the barangay captain of Poblacion
Norte, the bag yielded the following, among other items: plastic sachets
containing white crystalline substance weighing 15 grams or less, one
small plastic sachet/bag containing white powdered substance, one set
of pipe tooter tube glass, one laptop computer, one Motorola cell phone,
one rolled aluminum foil, three bundles of plastic used for repacking,
one weighing scale, a Metrobank deposit slip in the name of Dhen Bito,
and cash amounting to PhP 1,500 in different denominations. Forthwith,
Fernando and the seized items were brought to the Ramos police station

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

and the corresponding request for examination was then prepared. The
following day, the confiscated sachets were sent to and received by the
Tarlac Provincial Crime Laboratory Field Office. When subjected to
qualitative examination, the substances in the plastic sachets and plastic
bags were found positive for methamphetamine hydrochloride.
For its part, the defense offered in evidence the sole testimony of
Fernando. His defense relied on denial and alleged fabrication of the
charge by the police, thus:
At around 4:35 in the afternoon of September 12, 2002, while at home in
Anao, Tarlac resting, Fernando was asked by a neighbor, Cortez, to
accompany him to Ramos, Tarlac to buy a duck. At that time, Cortez had
with him a backpack, the contents of which Fernando knew nothing
about.
In Ramos, Tarlac, the two, after buying a duck, repaired to a house whose
owner was not known to Fernando. Cortez went inside the house with
his backpack, leaving Fernando outside the front yard. Not long
thereafter, the police arrived, fired a warning shot, and went inside the
house. After a while, the policemen emerged from the house
accompanied by two individuals who pointed to Fernando as Cortezs
companion, a fact Fernando readily admitted. The policemen then
proceeded to arrest Fernando on the pretext he and Cortez were earlier
peddling shabu in the town of Paniqui. As they were not able to
apprehend Cortez, the arresting officers had Fernando hold and admit
ownership of Cortezs backpack earlier taken from inside the house.
Fernando denied ownership of the backpack that contained items
belonging to Cortez, such as but not limited to the cell phone, laptop
computer, drivers license, and wallet. A bank book and Metrobank
deposit slip signed by Cortez were also inside the bag.
The Ruling of the RTC and CA

Page 103 of 121

After due proceedings, the RTC, invoking, among other things, the
presumptive regularity in the performance of official duties, rendered,
on September 1, 2005, its judgment3 finding Fernando guilty beyond
reasonable doubt of possession of 14.052 grams of the prohibited drug,
methamphetamine hydrochloride, commonly known as shabu. The fallo
reads:
WHEREFORE, the prosecution having proven the guilt of the accused
beyond reasonable doubt, the court hereby sentences him to suffer the
penalty of life imprisonment, to pay the fine of P400,000.00 and to pay
the costs.
The Tarlac Provincial Crime Laboratory who has custody of the 14.052
grams of shabu, subject of this case is hereby ordered to transmit the
same to the Philippine Drug Enforcement Agency for proper disposition
and furnish the court proof of compliance.
SO ORDERED.
Therefrom, Fernando went on appeal to the CA, docketed as CA-G.R. CRH.C. No. 01688.
Eventually, the CA issued the assailed decision dated January 22, 2007,
affirming that of the trial court, thus:
WHEREFORE, premises considered, the Decision dated September 1,
2005 of the Regional Trial Court, Branch 65 of Tarlac City in Criminal
Case No. 12318 finding accused-appellant Fernando Gutierrez y Gatso
GUILTY beyond reasonable doubt of violation of Section 11, Rule II of
Republic Act No. 9165 or the Dangerous Drugs Act of 2002 is hereby
AFFIRMED.
SO ORDERED.4

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

The Issues
Undaunted, Fernando is now with this Court via the present recourse
raising the very same assignment of errors he invoked before the CA,
thus:

Page 104 of 121

manner, unless there be evidence to the contrary. Moreover, in the

absence of proof of motive on the part of the police officers to falsely
ascribe a serious crime against the accused, the presumption of
regularity in the performance of official duty, as well as the trial courts
assessment on the credibility of the apprehending officers, shall prevail
over the accuseds self-serving and uncorroborated claim of frame-up.6

I
THE COURT A QUO ERRED IN GIVING WEIGHT AND
CREDENCE TO THE TESTIMONY OF THE PROSECUTION
WITNESSES.
II
THE TRIAL COURT ERRED IN FINDING THE ACCUSEDAPPELLANT GUILTY BEYOND REASONABLE DOUBT FOR
VIOLATION OF SECTION 11, ARTICLE II, R.A. NO. 9165.5
The foregoing assignment of errors can actually be reduced and
summarized to one: the credibility of the testimonies of the three police
officers as prosecution witnesses and the weight to be accorded on said
parol evidence.
The parties chose not to file any supplemental briefs, maintaining their
respective positions and arguments in their briefs filed before the CA.
The Courts Ruling
The appeal is bereft of merit.
In prosecution proceedings involving illegal possession or sale of
prohibited drugs, credence is usually accorded the narration of the
incident by the prosecution witnesses, especially when they are police
officers who are presumed to have performed their duties in a regular

In the case at bench, there is nothing in the records that would dictate a
departure from the above doctrinal rule as far as the testimonies of
prosecution witnesses PO3 Credo, SPO1 Fernandez, and P/Insp. Dumlao
are concerned. We see no valid reason, in fine, to discredit the veracity of
their narration. And as aptly noted by the trial court, there is no evidence
of any ill motive on the part of the police officers who merely responded
to a tip about a drug-pushing incident in their area.
The prosecutions evidence established the fact that a bona fide followup operation was undertaken following a phone call, reporting some
drug-pushing activities in Poblacion Norte. To recall, PO3 Credo, SPO1
Fernandez, and P/Insp. Dumlao, Chief of the Ramos police station, made
up the team that proceeded to the reported area to check the veracity of
the drug-related call. Upon reaching the target site, they espied
Fernando passing sachets of white crystalline substance. And Fernando,
upon noticing the arrival of policemen, lost no time in fleeing from the
scene. PO3 Credo gave chase and eventually collared the bag-carrying
Fernando and conducted an immediate search on the bag. The search led
to the discovery of two sachets and one small plastic bag containing
suspicious-looking crystalline substance and drug paraphernalia, among
other items.
Thereafter, the police team brought Fernando to the Ramos police
station and a request was immediately made for the examination of the
seized items. After laboratory examination, the white crystalline
substance contained in the sachets was found positive for shabu.

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Fernando now questions the credibility of the prosecution witnesses and

the weight the trial court gave to their narration of events, laying stress
on the inconsistencies and/or discrepancies of their respective accounts.
The adverted inconsistencies/discrepancies relate to the place where
the police initially spotted and apprehended Fernando and where the
confiscated bag was searched. Fernando urges the Court to consider: (1)
SPO1 Fernandez and P/Insp. Dumlao testified first seeing Fernando and
the three others under a santol tree exchanging sachets of drugs, while
PO3 Credo testified that they (Fernando and three others) were under a
kubo; and (2) PO3 Credo testified that, immediately upon apprehending
Fernando, he searched the latters bag and found the contraband inside.
On the other hand, SPO1 Fernandez and P/Insp. Dumlao placed the
search as having been effected in the police station in the presence of the
barangay captain of Poblacion Norte.
The inconsistencies Fernando cited relate to extraneous matters that do
not in any way affect the material points of the crime charged. The
seeming inconsistency with regard to where Fernando and Cortez
exactly were when the sachets of shabu changed handsbe they in a
kubo, as PO3 Credo mentioned,7 or under a santol tree, as SPO3
Fernandez8 and P/Insp. Dumlao9 assertedis of little moment and
hardly of any bearing on the central fact of the commission of the crime.
In context, the more important occurrence relates to Fernando and his
companions scampering in different directions when the policemen
chanced upon them, and that Fernando, when apprehended, was holding
a bag which contained shabu and drug paraphernaliafacts
categorically confirmed by the prosecution witnesses. It is perhaps too
much to hope that different eyewitnesses shall give, at all times,
testimonies that are in all fours with the realities on the ground. Minor
discrepancies in their testimonies are in fact to be expected; they neither
vitiate the essential integrity of the evidence in its material entirety nor
reflect adversely on the credibility of witnesses. Inconsistencies deflect
suspicions that the testimony is rehearsed or concocted. And as
jurisprudence teaches, honest differing accounts on minor and trivial

Page 105 of 121

matters serve to strengthen rather than destroy the credibility of a

witness to a crime.10
We took pains in reviewing the transcript of stenographic notes taken
during the trial and found nothing to support Fernandos allegations of
inconsistencies between or among the prosecution witnesses versions
of relevant events. For instance, PO3 Credo testified that, after arresting
Fernando, he immediately searched the bag the latter was carrying.11
This account does not contradict the testimonies of SPO3 Fernandez12
and P/Insp. Dumlao,13 who both recounted the search made in the police
station in the presence of a barangay captain. As earlier indicated, it was
PO3 Credo who arrested Fernando14 and had the opportunity to make
the search at the scene of the crime.
On the other hand, SPO3 Fernandez and P/Insp. Dumlao ran after Cortez
and the two others, eventually arresting Cortez, who was initially
included in the original Information.15 What is fairly deducible from the
testimonies of the arresting operatives is that there were two separate
searches actually made: (1) the first done by PO3 Credo immediately
after he arrested Fernando which is the usual and standard police
practice; and (2) a subsequent one effected at the police station where
the bag was apparently marked and its contents inventoried.
The Court notes that immediately after his arrest, Cortez was also
searched but no illegal drugs were found in his person. It was obviously
for this reason that after the original Information was filed following an
inquest, Fernando and Cortez filed a joint Motion for Preliminary
Investigation and/or Re-Investigation.16 The preliminary investigation
resulted in the filing of the Amended Information that dropped Cortez as
accused paving the way for the dismissal of the charge against him, but
retained Fernando as the sole accused in Criminal Case No. 12318.
To reiterate a long-settled rule, the Court will not disturb the trial courts
evaluation of the credibility of witnesses, save when it had overlooked,

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

misunderstood, or misapplied some facts or circumstances of weight and

substance which, when considered, will alter the assailed decision or
affect the result of the case.17 None of the exceptions obtain in the case at
bar.
At the trial, Fernando invoked the defenses of denial and frame-up,
claiming at every opportunity that the bag containing the shabu sachets
and drug paraphernalia belonged to Cortez, not to him, as the arresting
officers would make it appear. To prove this point, Fernando testified
that among the items found in the bag were Cortezs drivers license and
wallet.
The defense thus put up deserves scant consideration, because, off-hand,
it stands uncorroborated. Fernando, as may be noted, failed to present
the owner of the house where he and Cortez supposedly went to and
where he allegedly was when arrested, to substantiate his posture about
Cortez being really owning the bag. Certainly, Fernando had the right to
compel the appearance of persons who he believes can support his
defense, but for reasons known only to Fernando, he did not secure the
appearance of the person who could have plausibly lent credence to his
claim of frame-up. As we have time and again held, the defense of denial
or frame-up, like alibi, has been invariably viewed with disfavor for it
can easily be concocted and is a common defense ploy in most
prosecutions for violation of the Dangerous Drugs Act.
Here, no clear and convincing evidence was adduced to prove
Fernandos defense of denial or frame-up. On the contrary, Fernandos
action while the policemen were undertaking follow-up operations was
what took him behind the bars. The reference, of course, is to the fact
that Fernando hastily fled from the scene of the crime upon noticing the
arrival of the police at the target area.
Fernandos allegation that the bag the police seized contained Cortezs
drivers license and walleta futile attempt to avoid culpability over his

Page 106 of 121

possession of the bagwill not save the day for him. First, his assertion
on what the bag contained is belied by the Joint Affidavit18 of the three
apprehending officers. It was stated under paragraph 5 of their joint
affidavit that the items found in the bag had been duly inventoried. The
items enumerated clearly did not include any wallet or drivers license of
Cortez. Since said joint affidavit was used in the inquest to indict
Fernando and Cortez, the inventoried items would have included the
license and wallet adverted to, the search of the bag conducted in the
police station having been made in the presence of the barangay captain
of Poblacion Norte.
Second, it bears to stress that Fernando was indicted for illegal
possession of dangerous drugs. In the prosecution of this offense, the
ownership of the bag where the shabu and drug paraphernalia were
found is really inconsequential. The elements necessary for the
prosecution of illegal possession of dangerous drugs are: (1) the accused
is in possession of an item or object which is identified to be a prohibited
drug; (2) such possession is not authorized by law; and (3) the accused
freely and consciously possessed the said drug.19 Elucidating on the
nature of this offense, the Court in People v. Tira wrote:
x x x This crime is mala prohibita, and, as such, criminal intent is not an
essential element. However, the prosecution must prove that the
accused had the intent to possess (animus posidendi) the drugs.
Possession, under the law, includes not only actual possession, but also
constructive possession. Actual possession exists when the drug is in
the immediate physical possession or control of the accused. On the
other hand, constructive possession exists when the drug is under the
dominion and control of the accused or when he has the right to exercise
dominion and control over the place where it is found. Exclusive
possession or control is not necessary. The accused cannot avoid
conviction if his right to exercise control and dominion over the place
where the contraband is located, is shared with another.20 (Emphasis
ours.)

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Without a trace of equivocation, the RTC and later the CA held that the
prosecution had discharged the burden of proving all the elements of the
crime charged. Since Fernando was caught carrying the incriminating
bag after the police had been tipped off of drug pushing in the target
area, any suggestion that he was not in actual possession or control of
the prohibited drug hidden in the area would be puny. Thus, ownership
of the bag is truly inconsequential.
We emphasize at this juncture that in no instance did Fernando intimate
to the trial court that there were lapses in the safekeeping of the seized
items that affected their integrity and evidentiary value. He, thus,
veritably admits that the crystalline substance in the sachets found in his
bag was the same substance sent for laboratory examination and there
positively determined to be shabu and eventually presented in evidence
in court as part of the corpus delicti. In other words, Fernando, before the
RTC and the CA, opted not to make an issue of whether the chain of
custody of the drugs subject of this case has been broken. This
disposition on the part of Fernando is deducible from the August 18,
2005 Order21 of the trial court, pertinently saying, "[The] Acting
Provincial Prosecutor x x x and Atty. Emmanuel Abellera, counsel de
officio of the accused manifested that the chain of custody of the
searched illegal drug or shabu is admitted."
As a mode of authenticating evidence, the chain of custody rule requires
that the presentation of the seized prohibited drugs as an exhibit be
preceded by evidence sufficient to support a finding that the matter in
question is what the proponent claims it to be.22 This would ideally cover
the testimony about every link in the chain, from seizure of the
prohibited drug up to the time it is offered in evidence, in such a way
that everyone who touched the exhibit would describe how and from
whom it was received, to include, as much as possible, a description of
the condition in which it was delivered to the next link in the chain.23

Page 107 of 121

Given the foregoing considerations, particularly the established fact that

the crystalline powder in two sachets the police confiscated from
Fernando in the afternoon of September 12, 2002 was shabu, the Court is
constrained to affirm the judgment of conviction appealed from.
We find the penalty imposed by the RTC, as affirmed by the CA, to be in
accordance with law. As aptly pointed out by the appellate court, Sec. 11,
Art. II of RA 9165 pertinently provides:
SEC. 11. Possession of Dangerous Drugs. The penalty of life
imprisonment to death and a fine ranging from Five hundred thousand
pesos (P500,000.00) to Ten million pesos (P10,000,000.00) shall be
imposed upon any person, who, unless authorized by law, shall possess
any dangerous drug in the following quantities, regardless of the degree
of purity thereof:
xxxx
(5) 50 grams or more of methamphetamine hydrochloride or "shabu";
xxxx
Otherwise, if the quantity involved is less than the foregoing quantities,
the penalties shall be graduated as follows:
(1) Life imprisonment and a fine ranging from Four hundred
thousand pesos (P400,000.00) to Five hundred thousand pesos
(P500,000.00), if the quantity of methamphetamine hydrochloride or
"shabu" is ten (10) grams or more but less than fifty (50) grams.
(Emphasis supplied.)
Fernando was caught in possession of 14.052 grams of shabu. Applying
the law, the proper penalty should be life imprisonment and a fine

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

ranging from PhP 400,000 to PhP 500,000. Hence, Fernando was

correctly sentenced to life imprisonment and a fine of PhP 400,000.

Page 108 of 121

Q How many were they?
A Four to five persons sir.

WHEREFORE, the appeal of accused-appellant Fernando Gutierrez is

hereby DENIED. Accordingly, the January 22, 2007 CA Decision in CAG.R. CR-H.C. No. 01688 is AFFIRMED.

xxxx
Q And they were seated under what kind of tree?

Costs against accused-appellant.

A Santol tree sir.
SO ORDERED.
9
7

TSN, May 15, 2003, p. 2. P/Insp. Dumlao testified:

TSN, February 18, 2003, p. 3. PO3 Credo testified:

Q Will you describe the place where they were pushing shabu?
Q When you arrived at Jasmin, Poblacion, Ramos, Tarlac, what
happened?
A When we arrived in the place, they were in a hut and when we
arrived, they suddenly ran away.

TSN, June 26, 2003, pp. 2 and 5. SPO3 Fernandez testified:

Q Did you go out of the police station?

A The place sir is under a santol tree, they were there, and we
noticed that they ran away when they saw us.
10

People v. Pateo, G.R. No. 156786, June 3, 2004, 430 SCRA 609, 615.

11

TSN, February 18, 2003, p. 4. PO3 Credo testified:

Q You said you chased Fernando Gutierrez who was then
carrying a bag, were you able to chase him?

A Yes sir.
A Yes, sir.
Q Where did you go?
A We received a call and we went to Poblacion Norte, Ramos,
Tarlac.

Q And what did you do with him when you were able to chase
him?
A We searched the bag.

Q What happened?
Q And what did you find out?
A We reached someone seated under the santol tree.
A Shabu and shabu paraphernalia.

Law __ Evidence
12

Prof. Avena

3. JUDICIAL ADMISSIONS

TSN, June 26, 2003, pp. 2-3. SPO3 Fernandez testified:

Page 109 of 121

Q And so you said that they scampered when they saw the police,
what did you do?

Q When you saw them transferring a plastic sachet from one

another, what did you do?

A We ran after them.

A They ran away sir.

Q What transpired when you ran after them?

Q What about you, what did you do?

A Fernando Gutierrez and Dennis Cortez were apprehended and

were brought to the police station and the bag that they were
carrying contains the items listed in the information.

A We chased them sir and we were able to apprehend Fernando

Gutierrez in a small house.

Q From whom did you get the bag?

Q What did you find out?
A From the possession of Fernando Gutierrez sir.
A He was carrying a bag sir.
Q What did you do with the bag?
Q What did you do with the bag?
A We inspected the bag.
A We brought it to the police station sir.
Q What did you find out?
Q Did you not open the bag?
A Sachet of shabu containing more or less 15 grams.
A Not yet sir.
Q What did you discover from Dennis Cortez?
Q When did you open it?
A Yes sir.
A At the police station sir.
Q What did you discover from Dennis Cortez?
Q What did you find out?
A Nothing sir.
A Shabu and shabu paraphernalia sir.
13

TSN, May 15, 2003, pp. 2-3. P/Insp. Dumlao testified:

Q What did you do with the items in the bag of Fernando

Gutierrez?

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

A We inventorie[d] the contents in the presence of the barangay

captain of Poblacion Norte.
14

TSN, June 26, 2003, pp. 3 and 6. SPO3 Fernandez testified:

Q Who were your companions in going to Barangay Jasmin?
A Napoleon Dumlao and Romeo Credo sir.
Q And who was the one who chased Fernando Gutierrez?
A Romeo Credo sir.
Q So you and Dumlao were left and it was Credo who ran after
the accused in this case.
A Only Credo gave chase sir.
Q So you were not the one who found the bag containing the
shabu?
A Yes sir.
xxxx
Q Is it not a fact that Credo was able to apprehend the accused
because he chased the accused?
A Yes sir.
Q And when you arrived at the place, Credo already subdued
Gutierrez?
A We went there together but only Credo actually arrested him.

Page 110 of 121

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 201011

January 27, 2014

THERESITA, JUAN, ASUNCION, PATROCINIA, RICARDO, and GLORIA,

all surnamed DIMAGUILA, Petitioners,
vs.
JOSE and SONIA A. MONTEIRO, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the August 15, 2011Decision1 and the March 5, 2012
Resolution2 of the Court of Appeals (CA), in CA-G.R. CV No. 92707, which
affirmed the August 23, 2007 Decision3 of the Regional Trial Court,
Branch 27, Santa Cruz, Laguna (RTC), in Civil Case No. SC-3108.
The Facts
On July 5, 1993, the respondent spouses, Jose and Sonia Monteiro
(Spouses Monteiro), along with Jose, Gerasmo, Elisa, and Clarita Nobleza,
filed their Complaint for Partition and Damages before the RTC, against
the pet1t10ners, Theresita, Juan, Asuncion, Patrocinia, Ricardo, and
Gloria Dimaguila (The Dimaguilas), together with Rosalina, Jonathan,
Eve, Sol, Venus, Enrique, Nina, Princess Arieta, and Evangelina Borlaza.
The complaint alleged that all the pmiies were co-owners and prayed for
the pmiition of a residential house and lot located at Gat. Tayaw St.,
Liliw, Laguna, with an area of 489 square meters, and covered by Tax

Page 111 of 121

Declaration No. 1453. Spouses Monteiro anchored their claim on a deed

of sale executed in their favor by the heirs of Pedro Dimaguila (Pedro).
In their Answer, the Dimaguilas and the other defendants countered that
there was no co-ownership to speak of in the first place. They alleged
that the subject property, then owned by Maria Ignacio Buenaseda, had
long been partitioned equally between her two sons, Perfecto and
Vitaliano Dimaguila, through a Deed of Extrajudicial Partition, with its
southern-half portion assigned to Perfecto and the northern-half portion
to Vitaliano. They claimed that they were the heirs of Vitaliano and that
Spouses Monteiro had nothing to do with the property as they were not
heirs of either Perfecto or Vitaliano.
During the course of the proceedings, several incidents were initiated,
namely: (a) Motion to Dismiss for lack of legal capacity to sue of Spouses
Monteiro and for lack of cause of action; (b) Motion for Reconsideration
of the Order of denial thereof, which was denied; (c) Motion for
Production and Inspection of Documents; (d) Motion for
Reconsideration of the Order granting the same, which was denied; (e)
Motion to Defer Pre-trial; (f) Notice of Consignation by the petitioners in
the exercise of their alleged right of redemption of the share being
claimed by the Spouses Monteiro in light of the deed of sale they
produced and claimed to have been executed by the heirs of Pedro in
their favor; (g) Motion to Remove Sonia Monteiro (Sonia) as plaintiff,
which was denied; (h) Motion for Reconsideration thereof, which was
also denied; (i) Motion for Clarification and/or Extended Resolution; and
(j) Motion to Suspend Proceedings due to a pending Petition for
Certiorari before the CA assailing several of the RTC orders. The
proceedings resumed after the promulgation by the CA of its April 5,
2000 Resolution in CA-G.R. No. SP 52833, which upheld the assailed RTC
orders.
On January 2, 2001, upon resumption of the proceedings, Spouses
Monteiro filed their Motion for Leave to Amend and/or Admit Amended

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Complaint.4 The RTC granted their motion. The amended complaint

abandoned the original claim for partition and instead sought the
recovery of possession of a portion of the subject property occupied by
the Dimagui as and other defendants, specifically, the potiion sold to the
couple by the heirs of Pedro. Furthermore, only Spouses Monteiro were
retained as plaintiffs and the Dimaguilas as defendants.
In amending their complaint, Spouses Montiero adopted the Dimaguilas'
admission in their original answer that the subject propetiy had already
been partitioned between Perfecto and Vitaliano, through a Deed of
Extrajudicial Partition, dated October 5, 1945, and that during their
lifetime, the brothers agreed that Perfecto would become the owner of
the southern-hal f portion and Vitaliano of the northern-half portion,
which division was observed and respected by them as well as their
heirs and successors-in-interest.
Spouses Monteiro further averred that Perfecto was survived by
Esperanza, Leandro and Pedro, who had divided the southern-half
portion equally amongst themselves, with their respective 1 /3 shares
measuring 81.13 square meters each; that Pedro's share pertains to the
1 /3 of the southern-half immediately adjacent to the northern-half
adjudicated to the
Dimaguilas as heirs of Vitaliano; that on September 29, 1992, Pedro's
share was sold by his heirs to them through a Bilihan ng Lahat Naming
Karapatan (Bilihan) with the acquiescence of the heirs of Esperanza and
Leandro appearing in an Affidavit of Conformity and Waiver; and that
when they attempted to take possession of the share of Pedro, they
discovered that the subject portion was being occupied by the
Dimaguilas.
In their Answer5 to the amended complaint, the Dimaguilas admitted
that the subject property was inherited by, and divided equally between
Perfecto and Vitaliano, but denied the admission in their original answer

Page 112 of 121

that it had been actually divided into southern and nmihern portions.
Instead, they argued that the Extrajudicial Partition mentioned only the
division of the subject property "into two and share and share alike." In
effect, they argued the existence of a co-owenrship, contrary to their
original position. The Dimaguilas further argued that the Bilihan did not
specify the metes and bounds of the property sold, in violation of Article
1458 of the Civil Code. Even assuming that such had been specified, they
averred that the sale of a definite portion of a property owned in
common was void since a co-owner could only sell his undivided share
in the property.
During the trial, Spouses Monteiro presented Pedrito Adrieta, brother of
Sonia Monteiro (Sonia), who testified that Perfecto was his grandfather
and that at the time of Perfecto's death, he had two properties, one of
which was the subject property in Liliw, Laguna, which went to his
children, Esperanza, Leonardo and Pedro. Pedro was survived by his
children Pedrito, Theresita, Francisco, and Luis, who, in turn, sold their
rights over the subject property to Sonia.
Sonia testified that she was approached by Pedro's son, Francisco, and
was asked if she was interested in purchasing Pedro's 1/3 share of the
southern portion of the Bahay na Sato, and that he showed her a deed of
extrajudicial partition executed by and between Perfecto and Vitaliano,
as well as the tax declaration of the property to prove that the property
had already been partitioned between the two brothers.
Engineer Baltazar F. Mesina testified that he was the geodetic engineer
hired by Spouses Monteiro to survey the property in Liliw, and
recounted that he checked the boundary of the subject property,
subdivided the lot into two and came up with a survey plan.
Crisostomo Arves, an employee from the Office of the Municipal
Assessor, presented a certified true copy of the cadastral map of Liliw
and a list of claimants/owners.

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Dominga Tolentino, a record officer of the Department of Environment

and Natural Resources (DENR), testified that as part of her duties, she
certifies and safekeeps the records of surveyed land, including cadastral
maps from the region.
One of the Dimaguilas, Asuncion, was the sole witness for the
defendants. She testified that their first counsel made a mistake when he
alleged in their original answer that the property had already been
partitioned into n01ihern and southern portions between the two
brothers, as the original answer had been rushed and they were never
given a copy of it. She claimed that the mistake was only pointed out to
her by their new counsel after their former counsel withdrew due to
cancer. She further testified that there was no intention to partition the
"bahay na bato" which stood on the subject property, in order to
preserve its historical and sentimental value.
Ruling of the RTC
In its August 23, 2007 Decision, the RTC ruled in favor of Spouses
Monteiro and ordered the Dimaguilas to turn over the possession of the
subject 1 /3 portion of the southern-half of the property, to wit:
WHEREOF, judgment is hereby rendered in favor of the plaintiffs and
against the defendants:
a. Ordering the defendants and all persons claiming rights under
them to peacefully vacate and turn-over possession of 1/ 3 of the
southern portion of the property covered by Tax Declaration No.
1453, specifically described as "A" of Lot 877 in the sketch plan
marked as Exhibit "I", within 60 days from the finality of this
Decision, failing which let a writ of possession issue;
b. Ordering the defendants to pay the plaintiffs, jointly and
solidarily, the amount of ?500 per month in the form of rent for

Page 113 of 121

the use of the property from July 1993 until the property is
vacated;
c. Ordering the defendants to pay the plaintiffs, jointly and
solidarily, attorney's fees of P30,000 and litigation expense
of P20,000.

SO ORDERED.6
The RTC found that although the extrajudicial partition merely divided
the property into two share and share alike, evidence aliunde was
appreciated to show that there was an actual division of the property
into south and north between Perfecto and Vitaliano, and that such
partition was observed and honored by their heirs. These pieces of
evidence were the cadastral map of Liliw7 and a corresponding list of
claimants, which showed that the subject property had long been
registered as Lot 876 (northern-half), claimed by Buenaventura
Dimaguila (Buenaventura), an heir of Vitaliano, and Lot 877 (southernhalf), claimed by Perfecto.
The RTC held that the manner of partition was admitted by the
Dimaguilas themselves in their original answer. It gave no credence to
the claim of Asuncion that such admission was an error of their fonner
counsel and that she was unaware of the contents of their original
answer. It noted that the Dimaguilas had strongly maintained their
theory of partition from 1992 when the complaint was first filed, and
only changed their defense in 2001 when Spouses Monteiro filed their
amended complaint. It keenly observed that it was precisely their
admission which propelled Spouses Monteiro to amend their complaint
from one of partition to recovery of possession. Thus, the RTC concluded
that there was indeed a partition of the subject property into southernhalf and northern-half portions between Perfecto and Vitaliano and that
the Dimaguilas were estopped from denying the same.

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

As to the authenticity of the Bilihan, where the 1 /3 share of Pedro was

sold to Spouses Monteiro, the RTC found the document to be regular and
authentic absent any piece of evidence to the contrary. It stated that the
proper persons to contest the sale were not the Dimaguilas, who were
the heirs of Vitaliano, but the heirs of Perfecto. It noted that the records
showed that the heirs of Esperanza and Leandro (Pedro's siblings), had
signified their conformity to the pa1iition and to the sale of Pedro's 1 /3
portion.
Ruling of the CA
In its assailed August 15, 2011 Decision, the CA affirmed the ruling of the
RTC.
The CA found that Spouses Monteiro had established their case by a
preponderance of evidence thru their presentation of the Deed of
Extrajudicial Partition,8 the cadastral map and the municipal assessor's
records.9 It noted, more importantly, that the Dimaguilas themselves
corroborated the claim of partition in their original answer. It likewise
ruled that the petitioners were estopped from denying their admission
of partition after the respondent spouses had relied on their judicial
admission.
The Dimaguilas also insisted on their argument, which was raised before
the RTC, but not addressed, that the Bilihan should not have been
admitted as evidence for lack of a documentary stamp tax, in accordance
with Section 201 of the National Internal Revenue Code (N!RC). Citing
Gabucan v. Manta10 and Del Rosario v. Hamoy,11 the CA, however, ruled
that if a document which did not bear the required documentary stamp
was presented in evidence, the court should require the proponent to
affix the requisite stamp. The CA noted that the RTC had failed to direct
Spouses Monteiro to affix the stamp and merely reminded the presiding
judge to be more vigilant on similar situations in the future. Nonetheless,
it held that the petitioners did not possess the necessary personality to

Page 114 of 121

assail the sale between Spouses Monteiro and the heirs of Pedro because
it pe1iained to the southern-half of the property to which they had no
claim.
The CA likewise found sufficient basis for the award of rentals as
compensatory damages since Spouses Monteiro were wrongfully
deprived of possession of the 1/3 portion of the southern-half of the
subject property. It also upheld the award of attorney's fees and
litigation expenses by the RTC, considering that Spouses Monteiro were
compelled to litigate and incur expenses to protect their rights and
interest.
In its assailed March 5, 2012 Resolution, the CA denied the petitioners'
motion for reconsideration for lack of merit.
Hence, this petition.
ASSIGNMENT OF ERRORS
I
THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THERE
WAS AN ACTUAL PARTITION OF THE PROPERTY COVERED BY TAX
DECLARATION NO. 1453.
II
THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE 1/3
PORTION OF THE SOUTHERN HALF OF THE PROPERTY WAS SOLD TO
THE RESPONDENTS.
III

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

THE COURT OF APPEALS GRAVELY ERRED IN ADMITTING IN EVIDENCE

EXHIBIT C, THE BIL/HAN NG LAHA T NAMING KARAPATAN.
IV
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE
RESPONDENTS ARE ENTITLED TO RECOVER POSSESSION OF THE 1/3
PORTION OF THE SOUTHERN HALF OF THE PROPERTY.
V
THE COURT OF APPEALS GRAVELY ERRED IN FINDING THE
PETITIONERS LIABLE FOR RENTALS FOR THE USE OF THE PROPERTY
FROM JULY 1993 UNTIL VACATED.
VI
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THE
PETITIONERS LIABLE FOR ATTORNEY'S FEES AND LITIGATION
EXPENSES.
VII
THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO
CONSIDER THE PETITIONERS' SUPPLEMENTAL ANSWER TO AMENDED
COMPLAINT AND TO GRANT THE COUNTERCLAIMS INTERPOSED
THEREIN.12
The Dimaguilas argue that their original allegation regarding the
partition of the subject property into northern and southern portions
was a mistake of their former counsel, and it was not their intention to
partition the property because to do so would damage the house
thereon. Even assuming an admission was made, the petitioners aver
that such was made only by some, but not all, of the co-owners; and that

Page 115 of 121

partition can only be made by all co-owners, and allowing the admission
is tantamount to effecting partition by only some co-owners. Spouses
Monteiro themselves, in their original complaint, made an admission
that they were co-owners of the property and asserted that there was no
partition. The evidence aliunde considered by the RTC, consisting of the
cadastral map and the list of claimants, were timely objected to during
the trial as hearsay and a violation of the best evidence rule.
The petitioners reiterate that the Bilihan should not have been admitted
into evidence because it lacked the documentary stamp tax required by
Section 201 of the NIRC, providing that no document shall be admitted in
evidence until the requisite stamps have been affixed thereto. They
argue that the ruling of petitioners' lack of personality to assail the deed
of sale is different from the issue of the deed of sale's admissibility as
evidence. They conclude that considering that no documentary stamp
was ever affixed on the deed of sale, such should never have been
admitted into evidence and consequently, should not have been relied
upon by the lower courts to prove the sale of 1/3 of the southern
portion; and that considering that the Bilihan is inadmissible as
evidence, the respondent spouses have no basis for their claim to the
subject 1/3 portion of the southern-half of the property. Thus, they insist
that the lower courts erred in awarding to Spouses Monteiro the
possession of the subject prope1iy, the rentals, attorney's fees and
litigation expenses, and in failing to rule on their counterclaim for
demolition of improvements and payment of damages.
The assignment of errors boils down to two main issues:
I. Whether there was a pa1iition of the subject property; and
2. Whether the 1/3 portion of the southern-half of the subject
property was sold to the respondent spouses.
Ruling of the Court

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

At the outset, it must be pointed out that the petitioners' assignment of

errors calls for the Court to again evaluate the evidence to determine
whether there was a partition of the property and whether the 1/3
portion of the southern half was sold to the respondent spouses. These
clearly entail questions of fact which are beyond the Court's ambit of
review under Rule 45 of the Rules of Court, especially considering that
the findings of fact of the RTC were affirmed by the CA.13 On this ground
alone, the present petition must be denied. Nonetheless, the Court shall
delve into these factual issues to finally put this case to rest.
Partition of the Subject Property
Spouses Monteiro, as plaintiffs in the original case, had the burden of
proof to establish their case by a preponderance of evidence, which is
the weight, credit, and value of the aggregate evidence on either side,
synonymous with the term "greater weight of the evidence."
Preponderance of evidence is evidence which is more convincing to the
court as worthy of belief than that which is offered in opposition
thereto.14
To prove their claim of partition, the respondent spouses presented the
following: (1) the Deed of Extrajudicial Partition, dated October 5, 1945,
executed by and between the brothers Perfecto and Vitaliano; (2) the
cadastral map of Liliw Cadm-484,15 dated August 6, 1976, showing that
the subject property had been divided into southern and northern
portions, registered as Lot Nos. 876 and 877; and (3) the Municipal
Assessor's records16 showing that the said lots were respectively
claimed by Buenaventura and Perfecto.
It is undisputed that the Deed of Extrajudicial Partition stated that
Perfecto and Vitaliano agreed "to divide between them into two and
share and share alike" the subject property, including the house situated
thereon. It appears, however, that the property was actually partitioned
into definite portions, namely, southern and northern halves, as

Page 116 of 121

reflected in the cadastral map of Liliw, which were respectively claimed

by an heir of Vitaliano and Perfecto himself. It, thus, appears that the
subject property had already been partitioned into definite portions
more than 20 years prior to the original complaint for partition filed in
1993, and that such division had been observed by the brothers' heirs.
As earlier pointed out, the petitioners themselves admitted to this very
fact in their original answer, to wit:
(b) On September 5, 1945 the brothers PERFECTO and VITALIANO
DIMAGUILA executed a deed of EXTRA JUDICIAL PARTITION of the
aforedescribed property dividing the same into two (2) equal parts as
indicated in the aforesaid deed as follows, to wit:
xxx
(c) As a result of the foregoing partition and as known by all the parties
in this case from the beginning or as soon as they reached the age of
discernment PERFECTO DIMAGUILA became the sole and exclusive
owner of the southern half of the aforedescribed property and
VITALIANO DIMAGUILA became the sole owner of the northern half of
the same property; the house that was built thereon and still existing up
to this time was likewise equally divided between the two (2)
DIMAGUILA brothers in accordance with the extrajudicial partition of
half equal shares;
xxx
2. In other words, the share of VITALIANO DIMAGUILA in the above
described property has already been long segregated and had passed on
to his heirs as is very well known by all the parties in this case;17
xxx
(Emphases in the Original)

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Section 418 of Rule 129 of the Rules of Court provides that an admission
made by a pa1iy in the course of the proceedings in the same case does
not require proof, and may be contradicted only by showing that it was
made through palpable mistake. The petitioners argue that such
admission was the palpable mistake of their former counsel in his rush
to file the answer, a copy of which was not provided to them. Petitioner
Asuncion testified:
Q So, why was that allegations (sic) made in the Answer?
A May be, (sic) in his rush to file the Answer, Atty. Paredes filed the same
without giving us a copy ...19
This contention is unacceptable. It is a purely self-serving claim
unsupported by any iota of evidence. Bare allegations, unsubstantiated
by evidence, are not equivalent to proof.20 Furthermore, the Court notes
that this position was adopted by the petitioners only almost eight (8)
years after their original answer was filed, in response to the amended
complaint of the respondent spouses. In their original answer to the
complaint for partition, their claim that there was already a partition
into northern-half and southern-half portions, was the very essence of
their defense. It was precisely this admission which moved the
respondent spouses to amend their complaint. The petitioners cannot
now insist that the very foundation of their original defense was a
palpable mistake.
Article 143121 of the Civil Code provides that through estoppel, an
admission is rendered conclusive upon the person making it, and cannot
be denied or disproved as against the person relying thereon. The
respondent spouses had clearly relied on the petitioners' admission and
so amended their original complaint for partition to one for recovery of
possession of a portion of the subject property. Thus, the petitioners are
now estopped from denying or attempting to prove that there was no
partition of the property.

Page 117 of 121

Considering that an admission does not require proof, the admission of

the petitioners would actually be sufficient to prove the partition even
without the documents presented by the respondent spouses. If
anything, the additional evidence they presented only served to
corroborate the petitioners' admission.
The petitioners argue that they timely objected to the cadastral map and
the list of claimants presented by the respondent spouses, on the ground
that they violated the rule on hearsay and the best evidence rule.
Anent the best evidence rule, Section 3( d) of Rule 130 of the Rules of
Court provides that when the subject of inquiry is the contents of a
document, no evidence shall be admissible other than the original
document itself, except when the original is a public record in the
custody of a public officer or is recorded in a public office.22Section 7 of
the same Rule provides that when the original of a document is in the
custody of a public officer or is recorded in a public office, its contents
may be proved by a certified copy issued by the public officer in custody
thereof.23 Section 24 of Rule 132 provides that the record of public
documents may be evidenced by a copy attested by the officer having the
legal custody or the record.24
Certified true copies of the cadastral map of Liliw and the corresponding
list of claimants of the area covered by the map were presented by two
public officers. The first was Crisostomo Arves, Clerk III of the Municipal
Assessor's Office, a repository of such documents. The second was
Dominga Tolentino, a DENR employee, who, as a record officer, certifies
and safekeeps records of surveyed land involving cadastral maps. The
cadastral maps and the list of claimants, as ce1iified true copies of
original public records, fall under the exception to the best evidence rule.
As to the hearsay rule, Section 44 of Rule 130 of the Rules of Court
similarly provides that entries in official records are an exception to the
rule.25 The rule provides that entries in official records made in the

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

performance of the duty of a public officer of the Philippines, or by a

person in the performance of a duty specially enjoined by law, are prima
facie evidence of the facts therein stated. The necessity of this rule
consists in the inconvenience and difficulty of requiring the official's
attendance as a witness to testify to the innumerable transactions in the
course of his duty. The document's trustworthiness consists in the
presumption of regularity of performance of official duty.26
Cadastral maps are the output of cadastral surveys. The DENR is the
department tasked to execute, supervise and manage the conduct of
cadastral surveys.27 It is, therefore, clear that the cadastral map and the
corresponding list of claimants qualify as entries in official records as
they were prepared by the DENR, as mandated by law. As such, they are
exceptions to the hearsay rule and are primafacie evidence of the facts
stated therein.
Even granting that the petitioners had not admitted the partition, they
presented no evidence to contradict the evidence of the respondent
spouses. Thus, even without the admission of the petitioners, the
respondent spouses proved by a preponderance of evidence that there
had indeed been a partition of the subject property.
Sale of 1/3 Portion of the Southern-half
To prove that 1/3 of the southern-half portion of the subject property
was sold to them, Spouses Monteiro presented a deed of sale entitled
Bilihan ng Lahat Naming Karapatan,28 dated September 29, 1992,
wherein Pedro's share was sold by his heirs to them, with the
acquiescence of the heirs of Esperanza and Leandro in an Affidavit of
Conformity and Waiver.29 The petitioners argue that the Bilihan should
not have been admitted into evidence because it lacked the documentary
stamp tax required by Section 201 of the NIRC.

Page 118 of 121

On August 29, 1994, the petitioners filed a motion for the production
and/or inspection of documents,30 praying that Spouses Monteiro be
ordered to produce the deed of sale, which they cited as the source of
their rights as co-owners. On November 20, 1995, Spouses Monteiro
submitted their compliance,31 furnishing the RTC and the petitioners
with a copy32 of the Bilihan. On January 3, 1996, the petitioners filed a
notice of consignation,33manifesting that they had attempted to exercise
their right of redemption as co-owners of the 1/3 portion of the
southern half of the property under Article 162334 of the Civil Code by
sending and tendering payment of redemption to Spouses Monteiro,
which was, however, returned.
By filing the notice of consignation and tendering their payment for the
redemption of the 1/3 portion of the southern-half of the property, the
petitioners, in effect, admitted the existence, due execution and validity
of the Bilihan. Consequently, they are now estopped from questioning its
admissiblity in evidence for relying on such for their right of redemption.
Additionally, the Court notes that the copy35 of the Bilihan which was
originally submitted by Spouses Monteiro with its compliance filed on
November 20, 1995, does in fact bear a documentary stamp tax. It could
only mean that the documentary stamp tax on the sale was properly
paid. The Bilihan was, therefore, properly admitted into evidence and
considered by the RTC.
In any case, as correctly held by the lower cou1is, the petitioners, as
heirs of Vitaliano, who inherited the northern-half po1iion of the subject
property, do not possess the necessary personality to assail the sale of
the southern-half portion between Spouses Monteiro and the heirs of
Pedro.1wphi1 They are not real parties-in-interest who stand to be
benefited or injured by the sale of the 1/3 portion of the southern-half
over which they have absolutely no right. As correctly ruled by the
courts below, only fellow co-owners have the personality to assail the
sale, namely, the heirs of Pedro's siblings, Esperanza and Leandro. They
have, however, expressly aquiesced to the sale and waived their right to

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Page 119 of 121

the property in the affidavit presented by Spouses Monteiro.36 As such,

the petitioners have no right to their counterclaims of demolition of
improvements and payment of damages.
With Spouses Monteiro having sufficiently proved their claim over the
subject I /3 portion of the southern-half of the prope1iy through the
Bilihan, the lower courts did not err in awarding possession, rentals,
attorney's fees, and litigation expenses to them.
The Court, however, finds that the award of rentals should be reckoned
from January 2, 2001, the date the Spouses Monteiro filed their
Amended Complaint seeking recovery of the subject portion. Interest at
the rate of 6% per annum shall also be imposed on the total amount of
rent due from finality of this Decision until fully paid.37
WHEREFORE, the petition is DENIED. The August 15, 2011 Decision and
the March 15, 2012 Resolution of the Court of Appeals, in CA-G .R. CV No.
92707 are AFFIRMED with MODIFICATION, in that:
a. The award of rent at the rate of P500.00 per month shall be
reckoned from January 2, 2001 until the property is vacated; and
b. Interest at the rate of 6% per annum shall be imposed on the
total amount of rent due from finality of this Decision until fully
paid.
SO ORDERED.
JOSE CATRAL MENDOZA
Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice
Chairperson
DIOSDADO M. PERALTA
Associate Justice

ROBERTO A. ABAD
Associate Justice

MARVIC MARIO VICTOR F. LEONEN

Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the pinion of
the Court's Division.
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court's Division.
MARIA LOURDES P. A. SERENO
Chief Justice

WE CONCUR:
Footnotes

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Rollo. pp. 29-43; penned by Associate Justice Hakim S.

Abdulwahid. with Associate Justice Ricardo R. Rosario and
Associate Justice Rodil V. Zalameda. concurring.
1

Page 120 of 121

16

Records, Vol. Ill. Exhibit "L," p. 556.

17

Records. Vol. I. pp. 11-12.

Id. at 44-45.

Id. at 144-157.

Records, Vol. II pp. 289-308.

Section 4 . .Judicial admissions. An admission. verbal or

written. made by the party in the course or the proceedings in
the same case. does not require proof. The admission may be
contradicted only by showing that it was made through palpable
mistake or that no such admission was made.

Id. at 315-328.

19

TSN, December 1, 2005. p 15.

Rollo, pp. 156-157.

20

Rosaroso v. Soria, G.R. No. 194846, June 19, 2013.

Records, Vol. I, Exhibit "A." pp. 24-25.

21

Records, Vol. Ill, Exhibit"J," p. 519.

Art. 1431. Through estoppel an admission or representation is

rendered conclusive upon the person making it, and cannot be
denied or disproved as against the person relying thereon.

Records, Vol. I, Exhibit "A." pp. 24-25.

22

10

184 Phil. 588 (1980).

11

235 Phil. 719(1987).

12

Rollo, pp. 13-14.

Heirs of Vda. Dela Cruz v. Heirs of Fajardo, G.R. No. 184966,

May 30, 2011, 649 SCRA 463. 470.
13

18

Section 3. Original document must be produced; exceptions. When the subject of inquiry is the contents of a document. no
evidence shall be admissible other than the original document
itself. except in the following cases:
xxx
(d) When the original is a public record in the custody ofa public
officer or is recorded in a public office.
Section 7. Evidence admissible when original document is a
public record. - When the original or document is in the custody
of public officer or is recorded in a public office. its contents may
be proved by a certified copy issued by the public officer in
custody thereof.
23

Bank of the Philippine Islands v. Spouses Roveca. 581 Phil.

188. 194 (2008).
14

15

Records. Vol. Ill. Exhibit"J," p. 519.

Law __ Evidence

Prof. Avena

3. JUDICIAL ADMISSIONS

Section 24. Proof of official record. - The record of public

documents referred to in paragraph (a) or Section 19, when
admissible for any purpose, may be evidenced by an official
publication thereof or by a copy attested by the officer having the
legal custody of the record. or by his deputy. and accompanied if
the record is not kept in the Philippines. with a certificate that
such officer has the custody. If the office in which the record is
kept is in foreign country, the certificate may be made by a
secretary of the embassy or legation consul general, consul, vice
consul, or consular agent or by any officer in the foreign service
or the Philippines stationed in the foreign country in which the
record is kept. and authenticated by the seal or his office.
24

Section 44. Entries in official records. -- Entries in official

records made in the performance of his duty by a public officer
of the Philippines, or by a person in the performance ofa duty
specially enjoined by law, are prima facie evidence of the facts
therein stated.

Page 121 of 121

33

Id. at 113-115.

Art. 1623. The right of legal pre-emption or redemption shall

not be exercised except within thirty days from the notice in
writing by the prospective vendor. or by the vendor. as the case
may be. The deed of sale shall not be recorded in the Registry of
Property. unless accompanied by an affidavit of the vendor that
he has given written notice thereof to all possible redemptioners.
34

The right of redemption of co-owners excludes that of

adjoining owners.
35

"Records, Vol. I. p. 112.

36

Id. at 303-304.

37

Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013.

25

'Oscar M. Herrera, Remedial Law: Vol. V. (Quezon City.

Philippines. Rex Printing Company. Inc 2004). p. 740.
26

27

DENR Admin Order 2001-23.

28

Records, Vol. Ill, Exhibit "C," p. 514.

29

Records, Vol. I. pp. 303-305 .

30

Id. at 75-76.

31

Id. at 111.

32

Id. at 112.