1.

Atienza vs. Board of Medicine (feb 8, 2011)

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision [1] dated
September 22, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 87755. The CA dismissed the petition
for certiorari filed by petitioner Rico Rommel Atienza (Atienza), which, in turn, assailed the Orders [2] issued by
public respondent Board of Medicine (BOM) in Administrative Case No. 1882.
The facts, fairly summarized by the appellate court, follow.
Due to her lumbar pains, private respondent Editha Sioson went to Rizal Medical Center (RMC)
for check-up on February 4, 1995. Sometime in 1999, due to the same problem, she was referred
to Dr. Pedro Lantin III of RMC who, accordingly, ordered several diagnostic laboratory tests. The
tests revealed that her right kidney is normal. It was ascertained, however, that her left kidney is
non-functioning and non-visualizing. Thus, she underwent kidney operation in September, 1999.
On February 18, 2000, private respondents husband, Romeo Sioson (as complainant), filed a
complaint for gross negligence and/or incompetence before the [BOM] against the doctors who
allegedly participated in the fateful kidney operation, namely: Dr. Judd dela Vega, Dr. Pedro
Lantin, III, Dr. Gerardo Antonio Florendo and petitioner Rico Rommel Atienza.
It was alleged in the complaint that the gross negligence and/or incompetence committed by the
said doctors, including petitioner, consists of the removal of private respondents fully functional
right kidney, instead of the left non-functioning and non-visualizing kidney.
The complaint was heard by the [BOM]. After complainant Romeo Sioson presented his evidence,
private respondent Editha Sioson, also named as complainant there, filed her formal offer of
documentary evidence. Attached to the formal offer of documentary evidence are her Exhibits A to
D, which she offered for the purpose of proving that her kidneys were both in their proper
anatomical locations at the time she was operated. She described her exhibits, as follows:
EXHIBIT A the certified photocopy of the X-ray Request form dated December
12, 1996, which is also marked as Annex 2 as it was actually originally the
Annex to x x x Dr. Pedro Lantin, IIIs counter affidavit filed with the City
Prosecutor of Pasig City in connection with the criminal complaint filed by
[Romeo Sioson] with the said office, on which are handwritten entries which are
the interpretation of the results of the ultrasound examination. Incidentally, this
exhibit happens to be the same as or identical to the certified photocopy of the
document marked as Annex 2 to the Counter-Affidavit dated March 15, 2000,
filed by x x x Dr. Pedro Lantin, III, on May 4, 2000, with this Honorable Board
in answer to this complaint;
EXHIBIT B the certified photo copy of the X-ray request form dated January
30, 1997, which is also marked as Annex 3 as it was actually likewise originally
an Annex to x x x Dr. Pedro Lantin, IIIs counter-affidavit filed with the Office of
the City Prosecutor of Pasig City in connection with the criminal complaint filed
by the herein complainant with the said office, on which are handwritten entries
which are the interpretation of the results of the examination. Incidentally, this
exhibit happens to be also the same as or identical to the certified photo copy of
the document marked as Annex 3 which is likewise dated January 30, 1997,
which is appended as such Annex 3 to the counter-affidavit dated March 15,
2000, filed by x x x Dr. Pedro Lantin, III on May 4, 2000, with this Honorable
Board in answer to this complaint.
EXHIBIT C the certified photocopy of the X-ray request form dated March 16,
1996, which is also marked as Annex 4, on which are handwritten entries which
are the interpretation of the results of the examination.
EXHIBIT D the certified photocopy of the X-ray request form dated May 20,
1999, which is also marked as Annex 16, on which are handwritten entries
which are the interpretation of the results of the examination. Incidentally, this

exhibit appears to be the draft of the typewritten final report of the same
examination which is the document appended as Annexes 4 and 1 respectively to
the counter-affidavits filed by x x x Dr. Judd dela Vega and Dr. Pedro Lantin, III
in answer to the complaint. In the case of Dr. dela Vega however, the document
which is marked as Annex 4 is not a certified photocopy, while in the case of Dr.
Lantin, the document marked as Annex 1 is a certified photocopy. Both
documents are of the same date and typewritten contents are the same as that
which are written on Exhibit D.
Petitioner filed his comments/objections to private respondents [Editha Siosons] formal offer of
exhibits. He alleged that said exhibits are inadmissible because the same are mere photocopies, not
properly identified and authenticated, and intended to establish matters which are hearsay. He
added that the exhibits are incompetent to prove the purpose for which they are offered.
Dispositions of the Board of Medicine
The formal offer of documentary exhibits of private respondent [Editha Sioson] was admitted by
the [BOM] per its Order dated May 26, 2004. It reads:
The Formal Offer of Documentary Evidence of [Romeo Sioson], the
Comments/Objections of [herein petitioner] Atienza, [therein respondents] De la
Vega and Lantin, and the Manifestation of [therein] respondent Florendo are
hereby ADMITTED by the [BOM] for whatever purpose they may serve in the
resolution of this case.
Let the hearing be set on July 19, 2004 all at 1:30 p.m. for the reception of the
evidence of the respondents.
SO ORDERED.
Petitioner moved for reconsideration of the abovementioned Order basically on the same reasons
stated in his comment/objections to the formal offer of exhibits.
The [BOM] denied the motion for reconsideration of petitioner in its Order dated October 8, 2004.
It concluded that it should first admit the evidence being offered so that it can determine its
probative value when it decides the case. According to the Board, it can determine whether the
evidence is relevant or not if it will take a look at it through the process of admission. x x x.[3]
Disagreeing with the BOM, and as previously adverted to, Atienza filed a petition for certiorari with the
CA, assailing the BOMs Orders which admitted Editha Siosons (Edithas) Formal Offer of Documentary Evidence.
The CA dismissed the petition for certiorari for lack of merit.
Hence, this recourse positing the following issues:
I. PROCEDURAL ISSUE:
WHETHER PETITIONER ATIENZA AVAILED OF THE PROPER REMEDY WHEN HE
FILED THE PETITION FOR CERTIORARIDATED 06 DECEMBER 2004 WITH
THE COURT OF APPEALS UNDER RULE 65 OF THE RULES OF COURT TO
ASSAIL THE ORDERS DATED 26 MAY 2004 AND 08 OCTOBER 2004 OF
RESPONDENT BOARD.
II. SUBSTANTIVE ISSUE:
WHETHER THE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR AND
DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORDANCE
WITH LAW AND THE APPLICABLE DECISIONS OF THE HONORABLE COURT
WHEN IT UPHELD THE ADMISSION OF INCOMPETENT AND INADMISSIBLE

EVIDENCE BY RESPONDENT BOARD, WHICH CAN RESULT IN THE

DEPRIVATION OF PROFESSIONAL LICENSE A PROPERTY RIGHT OR ONES
LIVELIHOOD.[4]
We find no reason to depart from the ruling of the CA.
Petitioner is correct when he asserts that a petition for certiorari is the proper remedy to assail the Orders of the
BOM, admitting in evidence the exhibits of Editha. As the assailed Orders were interlocutory, these cannot be the
subject of an appeal separate from the judgment that completely or finally disposes of the case. [5] At that stage,
where there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, the only and
remaining remedy left to petitioner is a petition for certiorari under Rule 65 of the Rules of Court on the ground of
grave abuse of discretion amounting to lack or excess of jurisdiction.
However, the writ of certiorari will not issue absent a showing that the BOM has acted without or in excess
of jurisdiction or with grave abuse of discretion. Embedded in the CAs finding that the BOM did not exceed its
jurisdiction or act in grave abuse of discretion is the issue of whether the exhibits of Editha contained in her Formal
Offer of Documentary Evidence are inadmissible.
Petitioner argues that the exhibits formally offered in evidence by Editha: (1) violate the best evidence rule;
(2) have not been properly identified and authenticated; (3) are completely hearsay; and (4) are incompetent to prove
their purpose. Thus, petitioner contends that the exhibits are inadmissible evidence.
We disagree.
To begin with, it is well-settled that the rules of evidence are not strictly applied in proceedings before
administrative bodies such as the BOM. [6] Although trial courts are enjoined to observe strict enforcement of the
rules of evidence,[7] in connection with evidence which may appear to be of doubtful relevancy, incompetency, or
admissibility, we have held that:
[I]t is the safest policy to be liberal, not rejecting them on doubtful or technical grounds, but
admitting them unless plainly irrelevant, immaterial or incompetent, for the reason that their
rejection places them beyond the consideration of the court, if they are thereafter found relevant or
competent; on the other hand, their admission, if they turn out later to be irrelevant or
incompetent, can easily be remedied by completely discarding them or ignoring them.[8]
From the foregoing, we emphasize the distinction between the admissibility of evidence and the probative weight to
be accorded the same pieces of evidence. PNOC Shipping and Transport Corporation v. Court of Appeals[9] teaches:
Admissibility of evidence refers to the question of whether or not the circumstance (or evidence)
is to be considered at all. On the other hand, the probative value of evidence refers to the question
of whether or not it proves an issue.
Second, petitioners insistence that the admission of Edithas exhibits violated his substantive rights leading
to the loss of his medical license is misplaced. Petitioner mistakenly relies on Section 20, Article I of the
Professional Regulation Commission Rules of Procedure, which reads:
Section 20. Administrative investigation shall be conducted in accordance with these
Rules. The Rules of Court shall only apply in these proceedings by analogy or on a suppletory
character and whenever practicable and convenient. Technical errors in the admission of evidence
which do not prejudice the substantive rights of either party shall not vitiate the proceedings. [10]
As pointed out by the appellate court, the admission of the exhibits did not prejudice the substantive rights of
petitioner because, at any rate, the fact sought to be proved thereby, that the two kidneys of Editha were in their
proper anatomical locations at the time she was operated on, is presumed under Section 3, Rule 131 of the Rules of
Court:
Sec. 3. Disputable presumptions. The following presumptions are satisfactory if uncontradicted,
but may be contradicted and overcome by other evidence:
xxxx
(y) That things have happened according to the ordinary course of nature and the ordinary habits
of life.

The exhibits are certified photocopies of X-ray Request Forms dated December 12, 1996, January 30, 1997,
March 16, 1996, and May 20, 1999, filed in connection with Edithas medical case. The documents contain
handwritten entries interpreting the results of the examination. These exhibits were actually attached as annexes to
Dr. Pedro Lantin IIIs counter affidavit filed with the Office of the City Prosecutor of Pasig City, which was
investigating the criminal complaint for negligence filed by Editha against the doctors of Rizal Medical Center
(RMC) who handled her surgical procedure. To lay the predicate for her case, Editha offered the exhibits in evidence
to prove that her kidneys were both in their proper anatomical locations at the time of her operation.
The fact sought to be established by the admission of Edithas exhibits, that her kidneys were both in their
proper anatomical locations at the time of her operation, need not be proved as it is covered by mandatory judicial
notice.[11]
Unquestionably, the rules of evidence are merely the means for ascertaining the truth respecting a matter of
fact.[12] Thus, they likewise provide for some facts which are established and need not be proved, such as those
covered by judicial notice, both mandatory and discretionary.[13] Laws of nature involving the physical sciences,
specifically biology,[14] include the structural make-up and composition of living things such as human beings. In this
case, we may take judicial notice that Edithas kidneys before, and at the time of, her operation, as with most human
beings, were in their proper anatomical locations.
Third, contrary to the assertion of petitioner, the best evidence rule is inapplicable. Section 3 of Rule 130 provides:
1. Best Evidence Rule
Sec. 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:
(a) When the original has been lost or destroyed, or cannot be produced in court, without bad faith
on the part of the offeror;
(b) When the original is in the custody or under the control of the party against whom the evidence
is offered, and the latter fails to produce it after reasonable notice;
(c) When the original consists of numerous accounts or other documents which cannot be
examined in court without great loss of time and the fact sought to be established from them is
only the general result of the whole; and
(d) When the original is a public record in the custody of a public officer or is recorded in a public
office.
The subject of inquiry in this case is whether respondent doctors before the BOM are liable for gross negligence in
removing the right functioning kidney of Editha instead of the left non-functioning kidney, not the proper anatomical
locations of Edithas kidneys. As previously discussed, the proper anatomical locations of Edithas kidneys at the time
of her operation at the RMC may be established not only through the exhibits offered in evidence.
Finally, these exhibits do not constitute hearsay evidence of the anatomical locations of Edithas kidneys. To
further drive home the point, the anatomical positions, whether left or right, of Edithas kidneys, and the removal of
one or both, may still be established through a belated ultrasound or x-ray of her abdominal area.
In fact, the introduction of secondary evidence, such as copies of the exhibits, is allowed. [15] Witness Dr. Nancy
Aquino testified that the Records Office of RMC no longer had the originals of the exhibits because [it] transferred
from the previous building, x x x to the new building. [16] Ultimately, since the originals cannot be produced, the
BOM properly admitted Edithas formal offer of evidence and, thereafter, the BOM shall determine the probative
value thereof when it decides the case.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 87755
is AFFIRMED. Costs against petitioner.
2.

SO ORDERED.
People vs. Wagas (Sept 4, 2013)

BERSAMIN, J.:
The Bill of Rights guarantees the right of an accused to be presumed innocent until the contrary is proved. In order
to overcome the presumption of innocence, the Prosecution is required to adduce against him nothing less than proof
beyond reasonable doubt. Such proof is not only in relation to the elements of the offense, but also in relation to the
identity of the offender. If the Prosecution fails to discharge its heavy burden, then it is not only the right of the
accused to be freed, it becomes the Courts constitutional duty to acquit him.
The Case
Gilbert R. Wagas appeals his conviction for estafa under the decision rendered on July 11, 2002 by the Regional
Trial Court, Branch 58, in Cebu City (RTC), meting on him the indeterminate penalty of 12 years of prision mayor,
as minimum, to 30 years of reclusion perpetua, as maximum.
Antecedents
Wagas was charged with estafa under the information that reads:
That on or about the 30th day of April, 1997, and for sometime prior and subsequent thereto, in the City of Cebu,
Philippines, and within the jurisdiction of this Honorable Court, the said accused, with deliberate intent, with intent
to gain and by means of false pretenses or fraudulent acts executed prior to or simultaneously with the commission
of the fraud, to wit: knowing that he did not have sufficient funds deposited with the Bank of Philippine Islands, and
without informing Alberto Ligaray of that circumstance, with intent to defraud the latter, did then and there issue
Bank of the Philippine Islands Check No. 0011003, dated May 08, 1997 in the amount of P200,000.00, which check
was issued in payment of an obligation, but which check when presented for encashment with the bank, was
dishonored for the reason "drawn against insufficient funds" and inspite of notice and several demands made upon
said accused to make good said check or replace the same with cash, he had failed and refused and up to the present
time still fails and refuses to do so, to the damage and prejudice of Alberto Ligaray in the amount aforestated.
CONTRARY TO LAW.1
After Wagas entered a plea of not guilty,2 the pre-trial was held, during which the Defense admitted that the check
alleged in the information had been dishonored due to insufficient funds. 3 On its part, the Prosecution made no
admission.4
At the trial, the Prosecution presented complainant Alberto Ligaray as its lone witness. Ligaray testified that on April
30, 1997, Wagas placed an order for 200 bags of rice over the telephone; that he and his wife would not agree at first
to the proposed payment of the order by postdated check, but because of Wagas assurance that he would not
disappoint them and that he had the means to pay them because he had a lending business and money in the bank,
they relented and accepted the order; that he released the goods to Wagas on April 30, 1997 and at the same time
received Bank of the Philippine Islands (BPI) Check No. 0011003 for P200,000.00 payable to cash and postdated
May 8, 1997; that he later deposited the check with Solid Bank, his depository bank, but the check was dishonored
due to insufficiency of funds;5 that he called Wagas about the matter, and the latter told him that he would pay upon
his return to Cebu; and that despite repeated demands, Wagas did not pay him.6
On cross-examination, Ligaray admitted that he did not personally meet Wagas because they transacted through
telephone only; that he released the 200 bags of rice directly to Robert Caada, the brother-in-law of Wagas, who
signed the delivery receipt upon receiving the rice.7
After Ligaray testified, the Prosecution formally offered the following: (a) BPI Check No. 0011003 in the amount
of P200,000.00 payable to "cash;" (b) the return slip dated May 13, 1997 issued by Solid Bank; (c) Ligarays
affidavit; and (d) the delivery receipt signed by Caada. After the RTC admitted the exhibits, the Prosecution then
rested its case.8
In his defense, Wagas himself testified. He admitted having issued BPI Check No. 0011003 to Caada, his brotherin-law, not to Ligaray. He denied having any telephone conversation or any dealings with Ligaray. He explained that
the check was intended as payment for a portion of Caadas property that he wanted to buy, but when the sale did
not push through, he did not anymore fund the check.9
On cross-examination, the Prosecution confronted Wagas with a letter dated July 3, 1997 apparently signed by him
and addressed to Ligarays counsel, wherein he admitted owing Ligaray P200,000.00 for goods received, to wit:
This is to acknowledge receipt of your letter dated June 23, 1997 which is self-explanatory. It is worthy also to
discuss with you the environmental facts of the case for your consideration, to wit:

It is true that I obtained goods from your client worth P200,000.00 and I promised to settle the same last May 10,
1997, but to no avail. On this point, let me inform you that I sold my real property to a buyer in Manila, and
promised to pay the consideration on the same date as I promised with your client. Unfortunately, said buyer
likewise failed to make good with such obligation. Hence, I failed to fulfill my promise resultant thereof. (sic)
Again, I made another promise to settle said obligation on or before June 15, 1997, but still to no avail attributable to
the same reason as aforementioned. (sic)
To arrest this problem, we decided to source some funds using the subject property as collateral. This other means is
resorted to for the purpose of settling the herein obligation. And as to its status, said funds will be rele[a]sed within
thirty (30) days from today.
In view of the foregoing, it is my sincere request and promise to settle said obligation on or before August 15, 1997.
Lastly, I would like to manifest that it is not my intention to shy away from any financial obligation.
xxxx
Respectfully yours,
(SGD.)
GILBERT R. WAGAS10
Wagas admitted the letter, but insisted that it was Caada who had transacted with Ligaray, and that he had signed
the letter only because his sister and her husband (Caada) had begged him to assume the responsibility.11 On
redirect examination, Wagas declared that Caada, a seafarer, was then out of the country; that he signed the letter
only to accommodate the pleas of his sister and Caada, and to avoid jeopardizing Caadas application for overseas
employment.12 The Prosecution subsequently offered and the RTC admitted the letter as rebuttal evidence. 13
Decision of the RTC
As stated, the RTC convicted Wagas of estafa on July 11, 2002, viz:
WHEREFORE, premises considered, the Court finds the accused GUILTY beyond reasonable doubt as charged and
he is hereby sentenced as follows:
To suffer an indeterminate penalty of from twelve (12) years of pris[i]on mayor, as minimum, to thirty (30) years of
reclusion perpetua as maximum;
To indemnify the complainant, Albert[o] Ligaray in the sum of P200,000.00;
To pay said complainant the sum of P30,000.00 by way of attorneys fees; and the costs of suit.
SO ORDERED.14
The RTC held that the Prosecution had proved beyond reasonable doubt all the elements constituting the crime of
estafa, namely: (a) that Wagas issued the postdated check as payment for an obligation contracted at the time the
check was issued; (b) that he failed to deposit an amount sufficient to cover the check despite having been informed
that the check had been dishonored; and (c) that Ligaray released the goods upon receipt of the postdated check and
upon Wagas assurance that the check would be funded on its date.
Wagas filed a motion for new trial and/or reconsideration,15 arguing that the Prosecution did not establish that it was
he who had transacted with Ligaray and who had negotiated the check to the latter; that the records showed that
Ligaray did not meet him at any time; and that Ligarays testimony on their alleged telephone conversation was not
reliable because it was not shown that Ligaray had been familiar with his voice. Wagas also sought the reopening of
the case based on newly discovered evidence, specifically: (a) the testimony of Caada who could not testify during
the trial because he was then out of the country, and (b) Ligarays testimony given against Wagas in another criminal
case for violation of Batas Pambansa Blg. 22.
On October 21, 2002, the RTC denied the motion for new trial and/or reconsideration, opining that the evidence
Wagas desired to present at a new trial did not qualify as newly discovered, and that there was no compelling ground
to reverse its decision.16
Wagas appealed directly to this Court by notice of appeal.17
Prior to the elevation of the records to the Court, Wagas filed a petition for admission to bail pending appeal. The
RTC granted the petition and fixed Wagas bond at P40,000.00.18 Wagas then posted bail for his provisional liberty
pending appeal.19
The resolution of this appeal was delayed by incidents bearing on the grant of Wagas application for bail. On
November 17, 2003, the Court required the RTC Judge to explain why Wagas was out on bail.20 On January 15,
2004, the RTC Judge submitted to the Court a so-called manifestation and compliance which the Court referred to

the Office of the Court Administrator (OCA) for evaluation, report, and recommendation.21 On July 5, 2005, the
Court, upon the OCAs recommendation, directed the filing of an administrative complaint for simple ignorance of
the law against the RTC Judge.22 On September 12, 2006, the Court directed the OCA to comply with its July 5,
2005 directive, and to cause the filing of the administrative complaint against the RTC Judge. The Court also
directed Wagas to explain why his bail should not be cancelled for having been erroneously granted.23 Finally, in its
memorandum dated September 27, 2006, the OCA manifested to the Court that it had meanwhile filed the
administrative complaint against the RTC Judge.24
Issues
In this appeal, Wagas insists that he and Ligaray were neither friends nor personally known to one other; that it was
highly incredible that Ligaray, a businessman, would have entered into a transaction with him involving a huge
amount of money only over the telephone; that on the contrary, the evidence pointed to Caada as the person with
whom Ligaray had transacted, considering that the delivery receipt, which had been signed by Caada, indicated that
the goods had been "Ordered by ROBERT CAADA," that the goods had been received by Caada in good order
and condition, and that there was no showing that Caada had been acting on behalf of Wagas; that he had issued the
check to Caada upon a different transaction; that Caada had negotiated the check to Ligaray; and that the element
of deceit had not been established because it had not been proved with certainty that it was him who had transacted
with Ligaray over the telephone.
The circumstances beg the question: did the Prosecution establish beyond reasonable doubt the existence of all the
elements of the crime of estafa as charged, as well as the identity of the perpetrator of the crime?
Ruling
The appeal is meritorious.
Article 315, paragraph 2(d) of the Revised Penal Code, as amended, provides:
Article 315. Swindling (estafa). Any person who shall defraud another by any of the means mentioned
hereinbelow shall be punished by:
xxxx
2. By means of any of the following false pretenses or fraudulent acts executed prior to or simultaneously with the
commission of the fraud:
xxxx
(d) By postdating a check, or issuing a check in payment of an obligation when the offender had no funds in the
bank, or his funds deposited therein were not sufficient to cover the amount of the check. The failure of the drawer
of the check to deposit the amount necessary to cover his check within three (3) days from receipt of notice from the
bank and/or the payee or holder that said check has been dishonored for lack or insufficiency of funds shall be prima
facie evidence of deceit constituting false pretense or fraudulent act.
In order to constitute estafa under this statutory provision, the act of postdating or issuing a check in payment of an
obligation must be the efficient cause of the defraudation. This means that the offender must be able to obtain money
or property from the offended party by reason of the issuance of the check, whether dated or postdated. In other
words, the Prosecution must show that the person to whom the check was delivered would not have parted with his
money or property were it not for the issuance of the check by the offender.25
The essential elements of the crime charged are that: (a) a check is postdated or issued in payment of an obligation
contracted at the time the check is issued; (b) lack or insufficiency of funds to cover the check; and (c) damage to
the payee thereof.26 It is the criminal fraud or deceit in the issuance of a check that is punishable, not the nonpayment of a debt.27 Prima facie evidence of deceit exists by law upon proof that the drawer of the check failed to
deposit the amount necessary to cover his check within three days from receipt of the notice of dishonor.
The Prosecution established that Ligaray had released the goods to Caada because of the postdated check the latter
had given to him; and that the check was dishonored when presented for payment because of the insufficiency of
funds.
In every criminal prosecution, however, the identity of the offender, like the crime itself, must be established by
proof beyond reasonable doubt.28 In that regard, the Prosecution did not establish beyond reasonable doubt that it
was Wagas who had defrauded Ligaray by issuing the check.
Firstly, Ligaray expressly admitted that he did not personally meet the person with whom he was transacting over
the telephone, thus:

Q:
On April 30, 1997, do you remember having a transaction with the accused in this case?
A:
Yes, sir. He purchased two hundred bags of rice from me.
Q:
How did this purchase of rice transaction started? (sic)
A:
He talked with me over the phone and told me that he would like to purchase two hundred bags of rice and he will
just issue a check.29
Even after the dishonor of the check, Ligaray did not personally see and meet whoever he had dealt with and to
whom he had made the demand for payment, and that he had talked with him only over the telephone, to wit:
Q:
After the check was (sic) bounced, what did you do next?
A:
I made a demand on them.
Q:
How did you make a demand?
A:
I called him over the phone.
Q:
Who is that "him" that you are referring to?
A:
Gilbert Wagas.30
Secondly, the check delivered to Ligaray was made payable to cash. Under the Negotiable Instruments Law, this
type of check was payable to the bearer and could be negotiated by mere delivery without the need of an
indorsement.31 This rendered it highly probable that Wagas had issued the check not to Ligaray, but to somebody
else like Caada, his brother-in-law, who then negotiated it to Ligaray.1wphi1 Relevantly, Ligaray confirmed that
he did not himself see or meet Wagas at the time of the transaction and thereafter, and expressly stated that the
person who signed for and received the stocks of rice was Caada.
It bears stressing that the accused, to be guilty of estafa as charged, must have used the check in order to defraud the
complainant. What the law punishes is the fraud or deceit, not the mere issuance of the worthless check. Wagas
could not be held guilty of estafa simply because he had issued the check used to defraud Ligaray. The proof of guilt
must still clearly show that it had been Wagas as the drawer who had defrauded Ligaray by means of the check.
Thirdly, Ligaray admitted that it was Caada who received the rice from him and who delivered the check to him.
Considering that the records are bereft of any showing that Caada was then acting on behalf of Wagas, the RTC had
no factual and legal bases to conclude and find that Caada had been acting for Wagas. This lack of factual and legal
bases for the RTC to infer so obtained despite Wagas being Caadas brother-in-law.
Finally, Ligarays declaration that it was Wagas who had transacted with him over the telephone was not reliable
because he did not explain how he determined that the person with whom he had the telephone conversation was
really Wagas whom he had not yet met or known before then. We deem it essential for purposes of reliability and
trustworthiness that a telephone conversation like that one Ligaray supposedly had with the buyer of rice to be first
authenticated before it could be received in evidence. Among others, the person with whom the witness conversed
by telephone should be first satisfactorily identified by voice recognition or any other means. 32 Without the
authentication, incriminating another person just by adverting to the telephone conversation with him would be all
too easy. In this respect, an identification based on familiarity with the voice of the caller, or because of clearly
recognizable peculiarities of the caller would have sufficed.33 The identity of the caller could also be established by
the callers self-identification, coupled with additional evidence, like the context and timing of the telephone call,
the contents of the statement challenged, internal patterns, and other distinctive characteristics, and disclosure of
knowledge of facts known peculiarly to the caller.34
Verily, it is only fair that the caller be reliably identified first before a telephone communication is accorded
probative weight. The identity of the caller may be established by direct or circumstantial evidence. According to
one ruling of the Kansas Supreme Court:

Communications by telephone are admissible in evidence where they are relevant to the fact or facts in issue, and
admissibility is governed by the same rules of evidence concerning face-to-face conversations except the party
against whom the conversations are sought to be used must ordinarily be identified. It is not necessary that the
witness be able, at the time of the conversation, to identify the person with whom the conversation was had,
provided subsequent identification is proved by direct or circumstantial evidence somewhere in the development of
the case. The mere statement of his identity by the party calling is not in itself sufficient proof of such identity, in the
absence of corroborating circumstances so as to render the conversation admissible. However, circumstances
preceding or following the conversation may serve to sufficiently identify the caller. The completeness of the
identification goes to the weight of the evidence rather than its admissibility, and the responsibility lies in the first
instance with the district court to determine within its sound discretion whether the threshold of admissibility has
been met.35 (Bold emphasis supplied)
Yet, the Prosecution did not tender any plausible explanation or offer any proof to definitely establish that it had
been Wagas whom Ligaray had conversed with on the telephone. The Prosecution did not show through Ligaray
during the trial as to how he had determined that his caller was Wagas. All that the Prosecution sought to elicit from
him was whether he had known and why he had known Wagas, and he answered as follows:
Q:
Do you know the accused in this case?
A:
Yes, sir.
Q:
If he is present inside the courtroom []
A:
No, sir. He is not around.
Q:
Why do you know him?
A:
I know him as a resident of Compostela because he is an ex-mayor of Compostela.36
During cross-examination, Ligaray was allowed another opportunity to show how he had determined that his caller
was Wagas, but he still failed to provide a satisfactory showing, to wit:
Q:
Mr. Witness, you mentioned that you and the accused entered into [a] transaction of rice selling, particularly with
these 200 sacks of rice subject of this case, through telephone conversation?
A:
Yes, sir.
Q:
But you cannot really ascertain that it was the accused whom you are talking with?
A:
I know it was him because I know him.
Q:
Am I right to say [that] that was the first time that you had a transaction with the accused through telephone
conversation, and as a consequence of that alleged conversation with the accused through telephone he issued a
check in your favor?
A:
No. Before that call I had a talk[ ] with the accused.
Q:
But still through the telephone?
A:
Yes, sir.
Q:
There was no instant (sic) that the accused went to see you personally regarding the 200 bags rice transaction?
A:
No. It was through telephone only.
Q:

In fact[,] you did not cause the delivery of these 200 bags of rice through the accused himself?
A:
Yes. It was through Robert.
Q:
So, after that phone call[,] you deliver[ed] th[ose] 200 sacks of rice through somebody other than the accused?
A:
Yes, sir.37
Ligarays statement that he could tell that it was Wagas who had ordered the rice because he "know[s]" him was still
vague and unreliable for not assuring the certainty of the identification, and should not support a finding of Ligarays
familiarity with Wagas as the caller by his voice. It was evident from Ligarays answers that Wagas was not even an
acquaintance of Ligarays prior to the transaction. Thus, the RTCs conclusion that Ligaray had transacted with
Wagas had no factual basis. Without that factual basis, the RTC was speculating on a matter as decisive as the
identification of the buyer to be Wagas.
The letter of Wagas did not competently establish that he was the person who had conversed with Ligaray by
telephone to place the order for the rice. The letter was admitted exclusively as the States rebuttal evidence to
controvert or impeach the denial of Wagas of entering into any transaction with Ligaray on the rice; hence, it could
be considered and appreciated only for that purpose. Under the law of evidence, the court shall consider evidence
solely for the purpose for which it is offered,38 not for any other purpose.39 Fairness to the adverse party demands
such exclusivity. Moreover, the high plausibility of the explanation of Wagas that he had signed the letter only
because his sister and her husband had pleaded with him to do so could not be taken for granted.
It is a fundamental rule in criminal procedure that the State carries the onus probandi in establishing the guilt of the
accused beyond a reasonable doubt, as a consequence of the tenet ei incumbit probation, qui dicit, non qui negat,
which means that he who asserts, not he who denies, must prove,40 and as a means of respecting the presumption of
innocence in favor of the man or woman on the dock for a crime. Accordingly, the State has the burden of proof to
show: (1) the correct identification of the author of a crime, and (2) the actuality of the commission of the offense
with the participation of the accused. All these facts must be proved by the State beyond reasonable doubt on the
strength of its evidence and without solace from the weakness of the defense. That the defense the accused puts up
may be weak is inconsequential if, in the first place, the State has failed to discharge the onus of his identity and
culpability. The presumption of innocence dictates that it is for the Prosecution to demonstrate the guilt and not for
the accused to establish innocence.41 Indeed, the accused, being presumed innocent, carries no burden of proof on
his or her shoulders. For this reason, the first duty of the Prosecution is not to prove the crime but to prove the
identity of the criminal. For even if the commission of the crime can be established, without competent proof of the
identity of the accused beyond reasonable doubt, there can be no conviction.42
There is no question that an identification that does not preclude a reasonable possibility of mistake cannot be
accorded any evidentiary force.43 Thus, considering that the circumstances of the identification of Wagas as the
person who transacted on the rice did not preclude a reasonable possibility of mistake, the proof of guilt did not
measure up to the standard of proof beyond reasonable doubt demanded in criminal cases. Perforce, the accuseds
constitutional right of presumption of innocence until the contrary is proved is not overcome, and he is entitled to an
acquittal,44 even though his innocence may be doubted.45
Nevertheless, an accused, though acquitted of estafa, may still be held civilly liable where the preponderance of the
established facts so warrants.46 Wagas as the admitted drawer of the check was legally liable to pay the amount of it
to Ligaray, a holder in due course.47 Consequently, we pronounce and hold him fully liable to pay the amount of the
dishonored check, plus legal interest of 6% per annum from the finality of this decision.
WHEREFORE, the Court REVERSES and SETS ASIDE the decision rendered on July 11, 2002 by the Regional
Trial Court, Branch 58, in Cebu City; and ACQUITS Gilbert R. Wagas of the crime of estafa on the ground of
reasonable doubt, but ORDERS him to pay Alberto Ligaray the amount of P200,000.00 as actual damages, plus
interest of 6% per annum from the finality of this decision.
No pronouncement on costs of suit.
SO ORDERED.

3. People vs. Lauga (March 12, 2010)

PEREZ, J.:
Before Us for final review is the trial courts conviction of the appellant for the rape of his thirteen-year old
daughter.
Consistent with the ruling of this Court in People v. Cabalquinto,[1] the real name and the personal
circumstances of the victim, and any other information tending to establish or compromise her identity, including
those of her immediate family or household members, are not disclosed in this decision.
The Facts
In an Information dated 21 September 2000,[2] the appellant was accused of the crime of QUALIFIED
RAPE allegedly committed as follows:
That on or about the 15th day of March 2000, in the evening, at Barangay xxx,
municipality of xxx, province of Bukidnon, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused, being the father of AAA with lewd design, with the
use of force and intimidation, did then and there, willfully, unlawfully and criminally have carnal
knowledge with his own daughter AAA, a 13 year[s]old minor against her will.[3]
On 12 October 2000, appellant entered a plea of not guilty. [4] During the pre-trial conference, the
prosecution and the defense stipulated and admitted: (a) the correctness of the findings indicated in the medical
certificate of the physician who examined AAA; (b) that AAA was only thirteen (13) years old when the alleged
offense was committed; and (c) that AAA is the daughter of the appellant. [5] On trial, three (3) witnesses testified for
the prosecution, namely: victim AAA; [6] her brother BBB;[7] and one Moises Boy Banting, [8] a bantay bayan in
the barangay. Their testimonies revealed the following:
In the afternoon of 15 March 2000, AAA was left alone at home. [9] AAAs father, the appellant, was having
a drinking spree at the neighbors place. [10] Her mother decided to leave because when appellant gets drunk, he has
the habit of mauling AAAs mother.[11] Her only brother BBB also went out in the company of some neighbors.[12]

At around 10:00 oclock in the evening, appellant woke AAA up; [13] removed his pants, slid inside the
blanket covering AAA and removed her pants and underwear; [14]warned her not to shout for help while threatening
her with his fist;[15] and told her that he had a knife placed above her head. [16] He proceeded to mash her breast, kiss
her repeatedly, and inserted his penis inside her vagina.[17]
Soon after, BBB arrived and found AAA crying. [18] Appellant claimed he scolded her for staying out late.
BBB decided to take AAA with him.[20] While on their way to their maternal grandmothers house, AAA recounted
her harrowing experience with their father.[21] Upon reaching their grandmothers house, they told their grandmother
and uncle of the incident,[22] after which, they sought the assistance of Moises Boy Banting.[23]
[19]

Moises Boy Banting found appellant in his house wearing only his underwear.[24] He invited appellant to the
police station,[25] to which appellant obliged. At the police outpost, he admitted to him that he raped AAA because he
was unable to control himself.[26]
The following day, AAA submitted herself to physical examination. [27] Dra. Josefa Arlita L. Alsula,
Municipal Health Officer of x x x, Bukidnon, issued the Medical Certificate, which reads:
hyperemic vulvae with 4 oclock & 6 oclock freshly lacerated hymen; (+) minimal to
moderate bloody discharges 2 to an alleged raping incident[28]
On the other hand, only appellant testified for the defense. He believed that the charge against him was illmotivated because he sometimes physically abuses his wife in front of their children after engaging in a heated
argument,[29] and beats the children as a disciplinary measure. [30] He went further to narrate how his day was on the
date of the alleged rape.
He alleged that on 15 March 2000, there was no food prepared for him at lunchtime. [31] Shortly after, AAA
arrived.[32] She answered back when confronted.[33] This infuriated him that he kicked her hard on her buttocks.[34]
home,

[36]

Appellant went back to work and went home again around 3 oclock in the afternoon.[35] Finding nobody at
he prepared his dinner and went to sleep.[37]

Later in the evening, he was awakened by the members of the Bantay Bayan headed by Moises Boy
Banting.[38] They asked him to go with them to discuss some matters. [39] He later learned that he was under detention
because AAA charged him of rape.[40]
On 8 July 2006, the Regional Trial Court, Branch 9, Malaybalay City, Bukidnon, rendered its
decision[41] in Criminal Case No. 10372-0, finding appellant guilty of rape qualified by relationship and minority,
and sentenced him to suffer the penalty of reclusion perpetua.[42] It also ordered him to indemnify
AAA P50,000.00 as moral damages, and P50,000.00 as civil indemnity with exemplary damages of P25,000.00.[43]
On 30 September 2008, the decision of the trial court was AFFIRMED with MODIFICATIONS [44] by the
Court of Appeals in CA-G.R. CR HC No. 00456-MIN.[45] The appellate court found that appellant is not eligible for
parole and it increased both the civil indemnity and moral damages from P50,000.00 to P75,000.00.[46]
On 24 November 2008, the Court of Appeals gave due course to the appellants notice of appeal. [47] This
Court required the parties to simultaneously file their respective supplemental briefs, [48] but both manifested that they
will no longer file supplemental pleadings.[49]
The lone assignment of error in the appellants brief is that, the trial court gravely erred in finding him guilty
as charged despite the failure of the prosecution to establish his guilt beyond reasonable doubt, [50] because: (1) there
were inconsistencies in the testimonies of AAA and her brother BBB; [51] (2) his extrajudicial confession before
Moises Boy Banting was without the assistance of a counsel, in violation of his constitutional right; [52] and (3) AAAs
accusation was ill-motivated.[53]
Our Ruling

Appellant contests the admissibility in evidence of his alleged confession with a bantay bayan and the credibility of
the witnesses for the prosecution.
Admissibility in Evidence of an
Extrajudicial Confession before
a Bantay Bayan
Appellant argues that even if he, indeed, confessed to Moises Boy Banting, a bantay bayan, the confession was
inadmissible in evidence because he was not assisted by a lawyer and there was no valid waiver of such
requirement.[54]
The case of People v. Malngan[55] is the authority on the scope of the Miranda doctrine provided for under
Article III, Section 12(1)[56] and (3)[57] of the Constitution. In Malngan, appellant questioned the admissibility of her
extrajudicial confessions given to the barangay chairman and a neighbor of the private complainant. This Court
distinguished. Thus:
Arguably, the barangay tanods, including the Barangay Chairman, in this particular
instance, may be deemed as law enforcement officer for purposes of applying Article III, Section
12(1) and (3), of the Constitution. When accused-appellant was brought to the barangay hall in the
morning of 2 January 2001, she was already a suspect, actually the only one, in the fire that
destroyed several houses x x x. She was, therefore, already under custodial investigation and the
rights guaranteed by x x x [the] Constitution should have already been observed or applied to
her.Accused-appellants confession to Barangay Chairman x x x was made in response to the
interrogation made by the latter admittedly conducted without first informing accused-appellant of
her rights under the Constitution or done in the presence of counsel. For this reason, the
confession of accused-appellant, given to Barangay Chairman x x x, as well as the lighter found
x x x in her bag are inadmissible in evidence against her x x x.
[But such does] not automatically lead to her acquittal. x x x [T]he constitutional safeguards
during custodial investigations do not apply to those not elicited through questioning by the
police or their agents but given in an ordinary manner whereby the accused verbally admits
x x x as x x x in the case at bar when accused-appellant admitted to Mercedita Mendoza, one of
the neighbors x x x [of the private complainant].[58] (Emphasis supplied)
Following the rationale behind the ruling in Malngan, this Court needs to ascertain whether or not
a bantay bayan may be deemed a law enforcement officer within the contemplation of Article III, Section 12 of the
Constitution.
In People of the Philippines v. Buendia,[59] this Court had the occasion to mention the nature of a bantay
bayan, that is, a group of male residents living in [the] area organized for the purpose of keeping peace in their
community[,which is] an accredited auxiliary of the x x x PNP.[60]
Also, it may be worthy to consider that pursuant to Section 1(g) of Executive Order No. 309 issued on 11
November 1987, as amended, a Peace and Order Committee in each barangay shall be organized to serve as
implementing arm of the City/Municipal Peace and Order Council at the Barangay level.[61] The composition of the
Committee includes, among others: (1) the Punong Barangay as Chairman; (2) the Chairman of the Sangguniang
Kabataan; (3) a Member of the Lupon Tagapamayapa; (4) a Barangay Tanod; and (5) at least three (3) Members
of existing Barangay-Based Anti-Crime or neighborhood Watch Groups or a Non Government Organization
Representative well-known in his community.[62]
This Court is, therefore, convinced that barangay-based volunteer organizations in the nature of watch
groups, as in the case of the bantay bayan, are recognized by the local government unit to perform functions relating
to the preservation of peace and order at the barangay level. Thus, without ruling on the legality of the actions taken

by Moises Boy Banting, and the specific scope of duties and responsibilities delegated to a bantay bayan,
particularly on the authority to conduct a custodial investigation, any inquiry he makes has the color of a staterelated function and objective insofar as the entitlement of a suspect to his constitutional rights provided for under
Article III, Section 12 of the Constitution, otherwise known as the Miranda Rights, is concerned.
We, therefore, find the extrajudicial confession of appellant, which was taken without a counsel,
inadmissible in evidence.
Be that as it may, We agree with the Court of Appeals that the conviction of the appellant was not deduced
solely from the assailed extrajudicial confession but from the confluence of evidence showing his guilt beyond
reasonable doubt.[63]
Credibility of the Witnesses for the Prosecution
Appellant assails the inconsistencies in the testimonies of AAA and her brother BBB. AAA testified that BBB
accompanied her to the house of their grandmother. Thereafter, they, together with her relatives, proceeded to look
for a bantay bayan. On the other hand, BBB testified that he brought her sister to the house of their bantay
bayan after he learned of the incident.
Citing Bartocillo v. Court of Appeals,[64] appellant argues that where the testimonies of two key witnesses
cannot stand together, the inevitable conclusion is that one or both must be telling a lie, and their story a mere
concoction.[65]
The principle, however, is not applicable in the case at bar. In Bartocillo, the two testimonies could not simply stand
together because:
On one hand, if we are to believe Susan, Orlando could not have possibly seen the
hacking incident since he had accompanied Vicente home. On the other hand, if we are to accept
the testimony of Orlando, then Susan could not have possibly witnessed the hacking incident since
she was with Vicente at that time.
Here, the testimony of AAA does not run contrary to that of BBB. Both testified that they sought the help
of a bantay bayan. Their respective testimonies differ only as to when the help was sought for, which this Court
could well attribute to the nature of the testimony of BBB, a shortcut version of AAAs testimony that dispensed with
a detailed account of the incident.
At any rate, the Court of Appeals is correct in holding that the assailed inconsistency is too trivial to affect
the veracity of the testimonies. [66] In fact, inconsistencies which refer to minor, trivial or inconsequential
circumstances even strengthen the credibility of the witnesses, as they erase doubts that such testimonies have been
coached or rehearsed.[67]
Appellants contention that AAA charged him of rape only because she bore grudges against him is likewise
unmeritorious. This Court is not dissuaded from giving full credence to the testimony of a minor complainant by
motives of feuds, resentment or revenge.[68] As correctly pointed out by the Court of Appeals:
Indeed, mere disciplinary chastisement is not strong enough to make daughters in a Filipino family
invent a charge that would not only bring shame and humiliation upon them and their families but
also bring their fathers into the gallows of death. [69] The Supreme Court has repeatedly held that it
is unbelievable for a daughter to charge her own father with rape, exposing herself to the ordeal
and embarrassment of a public trial and subjecting her private parts to examination if such heinous
crime was not in fact committed. [70] No person, much less a woman, could attain such height of
cruelty to one who has sired her, and from whom she owes her very existence, and for which she
naturally feels loving and lasting gratefulness. [71] Even when consumed with revenge, it takes a
certain amount of psychological depravity for a young woman to concoct a story which would put
her own father to jail for the most of his remaining life and drag the rest of the family including
herself to a lifetime of shame. [72] It is highly improbable for [AAA] against whom no proof of

sexual perversity or loose morality has been shown to fake charges much more against her own
father. In fact her testimony is entitled to greater weight since her accusing words were directed
against a close relative.[73]
Elements of Rape
Having established the credibility of the witnesses for the prosecution, We now examine the applicability of
the Anti-Rape Law of 1997[74] to the case at bar.
The law provides, in part, that rape is committed, among others, [b]y a man who shall have carnal
knowledge of a woman through force, threat or intimidation. [75] The death penalty shall be imposed if it is committed
with aggravating/qualifying circumstances, which include, [w]hen the victim is under eighteen (18) years of age and
the offender is a parent.[76]
The consistent and forthright testimony of AAA detailing how she was raped, culminating with the
penetration of appellants penis into her vagina, suffices to prove that appellant had carnal knowledge of her. When a
woman states that she has been raped, she says in effect all that is necessary to show that rape was committed.
[77]
Further, when such testimony corresponds with medical findings, there is sufficient basis to conclude that the
essential requisites of carnal knowledge have been established.[78]
The Court of Appeals pointed out that the element of force or intimidation is not essential when the accused
is the father of the victim, inasmuch as his superior moral ascendancy or influence substitutes for violence and
intimidation.[79] At any rate, AAA was actually threatened by appellant with his fist and a knife allegedly placed
above AAAs head.[80]
It may be added that the self-serving defense of appellant cannot prevail over the positive and
straightforward testimony of AAA. Settled is the rule that, alibi is an inherently weak defense that is viewed with
suspicion because it is easy to fabricate.[81] Alibi and denial must be supported by strong corroborative evidence in
order to merit credibility.[82] Moreover, for the defense of alibi to prosper, the accused must establish two elements
(1) he was not at the locus delicti at the time the offense was committed; and (2) it was physically impossible for
him to be at the scene at the time of its commission.[83] Appellant failed in this wise.
Aggravating/Qualifying Circumstances
The presence of the qualifying circumstances of minority and relationship with the offender in the instant
case has likewise been adequately established. Both qualifying circumstances were specifically alleged in the
Information, stipulated on and admitted during the pre-trial conference, and testified to by both parties in their
respective testimonies. Also, such stipulation and admission, as correctly pointed out by the Court of Appeals, are
binding upon this Court because they are judicial admissions within the contemplation of Section 4, Rule 129 of the
Revised Rules of Court. It provides:
Sec. 4. Judicial admissions. - 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.
Penalty
Finally, in increasing the amount of civil indemnity and damages each from P50,000.00 to P75,000.00, the
Court of Appeals correctly considered controlling jurisprudence to the effect that where, as here, the rape is
committed with any of the qualifying/aggravating circumstances warranting the imposition of the death penalty, the
victim is entitled to P75,000.00 as civil indemnity ex delicto[84] and P75,000.00 as moral damages.[85] However, the
award of exemplary damages should have been increased from P25,000.00 to P30,000.00.[86] Also, the penalty
of reclusion perpetua in lieu of death was correctly imposed considering that the imposition of the death penalty
upon appellant would have been appropriate were it not for the enactment of Republic Act No. 9346, or An Act
Prohibiting the Imposition of Death Penalty in the Philippines.[87] We further affirm the ruling of the Court of

Appeals on appellants non-eligibility for parole. Sec. 3 of Republic Act No. 9346 clearly provides that persons
convicted of offenses punished with reclusion perpetua, or whose sentences will be reduced
to reclusion perpetua by reason of the law, shall not be eligible for parole.
WHEREFORE, the Decision of the Court of Appeals dated 30 September 2008 in CA-G.R. CR HC No.
00456-MIN is hereby AFFIRMED. Appellant Antonio Lauga is GUILTY beyond reasonable doubt of qualified
rape, and is hereby sentenced to suffer the penalty of reclusion perpetua without eligibility for parole and to pay
AAA P75,000.00as civil indemnity, P75,000.00 as moral damages, and P30,000.00 as exemplary damages.
SO ORDERED.

4. Tating vs. Marcella (March 27, 2007)

AUSTRIA-MARTINEZ, J.:
Assailed in the Special Civil Action for Certiorari before the Court are the Decision1 dated February 22, 2002 and
the Resolution dated August 22, 2002 of the Court of Appeals (CA) in CA-G.R. CV No. 64122, which affirmed the
Decision2 of the Regional Trial Court (RTC) of Cadiz City, Negros Occidental, Branch 60.
The present case arose from a controversy involving a parcel of land denominated as Lot 56 of Subdivision plan
Psd-31182, located at Abelarde St., Cadiz City, Negros Occidental. The subject lot, containing an area of 200 square
meters, was owned by Daniela Solano Vda. de Tating (Daniela) as evidenced by Transfer Certificate of Title (TCT)
No. T-4393 issued by the Registry of Deeds of the City of Cadiz.3
On October 14, 1969, Daniela sold the subject property to her granddaughter, herein petitioner Nena Lazalita Tating
(Nena). The contract of sale was embodied in a duly notarized Deed of Absolute Sale executed by Daniela in favor
of Nena.4 Subsequently, title over the subject property was transferred in the name of Nena. 5 She declared the
property in her name for tax purposes and paid the real estate taxes due thereon for the years 1972, 1973, 1975 to
1986 and 1988.6 However, the land remained in possession of Daniela.
On December 28, 1977, Daniela executed a sworn statement claiming that she had actually no intention of selling
the property; the true agreement between her and Nena was simply to transfer title over the subject property in favor
of the latter to enable her to obtain a loan by mortgaging the subject property for the purpose of helping her defray
her business expenses; she later discovered that Nena did not secure any loan nor mortgage the property; she wants
the title in the name of Nena cancelled and the subject property reconveyed to her.7
Daniela died on July 29, 19888 leaving her children as her heirs, namely: Ricardo, Felicidad, Julio, Carlos and Cirilo
who predeceased Daniela and was represented by herein petitioner.
In a letter dated March 1, 1989, Carlos informed Nena that when Daniela died they discovered the sworn statement
she executed on December 28, 1977 and, as a consequence, they are demanding from Nena the return of their
rightful shares over the subject property as heirs of Daniela.9 Nena did not reply. Efforts to settle the case amicably
proved futile.
Hence, on September 6, 1989, Carlos and Felicidad, represented by her son Salvador, filed a complaint with the
RTC of Cadiz City, Negros Occidental against Nena praying for the nullification of the Deed of Absolute Sale
executed by Daniela in her favor, cancellation of the TCT issued in the name of Nena, and issuance of a new title
and tax declaration in favor of the heirs of Daniela.10 The complaint also prayed for the award of moral and

exemplary damages as well as attorneys fees and litigation expenses. On March 19, 1993, the plaintiffs filed an
amended complaint with leave of court for the purpose of excluding Ricardo as a party plaintiff, he having died
intestate and without issue in March 1991.11 He left Carlos, Felicidad, Julio, and Nena as his sole heirs.
In her Answer, Nena denied that any fraud or misrepresentation attended the execution of the subject Deed of
Absolute Sale. She also denied having received the letter of her uncle, Carlos. She prayed for the dismissal of the
complaint, and in her counterclaim, she asked the trial court for the award of actual, exemplary and moral damages
as well as attorneys fees and litigation expenses.12
Trial ensued. On November 4, 1998, the RTC rendered judgment with the following dispositive portion:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of the plaintiffs and against the
defendant, and hereby declaring the document of sale dated October 14, 1969 (Exh. "Q") executed between Daniela
Solano Vda. de Tating and Nena Lazalita Tating as NULL and VOID and further ordering:
1. The Register of Deeds of Cadiz City to cancel TCT No. 5975 and in lieu thereof to issue a new title in
the names of Carlos Tating, Pro-indiviso owner of one-fourth () portion of the property; Felicidad Tating
Marcella, Pro-indiviso owner of one-fourth () portion; Julio Tating, Pro-indiviso owner of one-fourth ()
portion and Nena Lazalita Tating, Pro-indiviso owner of one-fourth () portion, all of lot 56 after payment
of the prescribed fees;
2. The City Assessor of the City of Cadiz to cancel Tax Declaration No. 143-00672 and in lieu thereof issue
a new Tax Declaration in the names of Carlos Tating, Pro-indiviso portion; Felicidad Tating Marcella,
Pro-indiviso portion; Julio Tating, Pro-indiviso portion; and Nena Lazalita Tating, Pro-indiviso
portion, all of lot 56 as well as the house standing thereon be likewise declared in the names of the persons
mentioned in the same proportions as above-stated after payment of the prescribed fees;
3. The defendant is furthermore ordered to pay plaintiffs the sum of P20,000.00 by way of moral
damages, P10,000.00 by way of exemplary damages, P5,000.00 by way of attorneys fees and P3,000.00 by
way of litigation expenses; and to
4. Pay the costs of suit.
SO ORDERED.13
Nena filed an appeal with the CA. On February 22, 2002, the CA rendered its Decision affirming the judgment of
the RTC.14
Nenas Motion for Reconsideration was denied by the CA in its Resolution dated August 22, 2002.15
Hence, herein petition for certiorari anchored on the ground that the CA "has decided the instant case without due
regard to and in violation of the applicable laws and Decisions of this Honorable Court and also because the
Decision of the Regional Trial Court, which it has affirmed, is not supported by and is even against the evidence on
record."16
At the outset, it must be stated that the filing of the instant petition for certiorari under Rule 65 of the Rules of Court
is inappropriate. Considering that the assailed Decision and Resolution of the CA finally disposed of the case, the
proper remedy is a petition for review under Rule 45 of the Rules of Court.
The Court notes that while the instant petition is denominated as a Petition for Certiorari under Rule 65 of the Rules
of Court, there is no allegation that the CA committed grave abuse of discretion. On the other hand, the petition
actually avers errors of judgment, rather than of jurisdiction, which are the proper subjects of a petition for review
on certiorari. Hence, in accordance with the liberal spirit pervading the Rules of Court and in the interest of justice,
the Court decided to treat the present petition for certiorari as having been filed under Rule 45, especially
considering that it was filed within the reglementary period for filing the same. 17
As to the merits of the case, petitioner contends that the case for the private respondents rests on the proposition that
the Deed of Absolute Sale dated October 14, 1969 is simulated because Danielas actual intention was not to dispose
of her property but simply to help petitioner by providing her with a collateral. Petitioner asserts that the sole
evidence which persuaded both the RTC and the CA in holding that the subject deed was simulated was the Sworn
Statement of Daniela dated December 28, 1977. However, petitioner argues that said Sworn Statement should have
been rejected outright by the lower courts considering that Daniela has long been dead when the document was
offered in evidence, thereby denying petitioner the right to cross-examine her.
Petitioner also contends that while the subject deed was executed on October 14, 1969, the Sworn Statement was
purportedly executed only on December 28, 1977 and was discovered only after the death of Daniela in

1994.18 Petitioner argues that if the deed of sale is indeed simulated, Daniela would have taken action against the
petitioner during her lifetime. However, the fact remains that up to the time of her death or almost 20 years after the
Deed of Absolute Sale was executed, she never uttered a word of complaint against petitioner.
Petitioner further asserts that the RTC and the CA erred in departing from the doctrine held time and again by the
Supreme Court that clear, strong and convincing evidence beyond mere preponderance is required to show the
falsity or nullity of a notarial document. Petitioner also argues that the RTC and the CA erred in its pronouncement
that the transaction between Daniela and petitioner created a trust relationship between them because of the settled
rule that where the terms of a contract are clear, it should be given full effect.
In their Comment and Memorandum, private respondents contend that petitioner failed to show that the CA or the
RTC committed grave abuse of discretion in arriving at their assailed judgments; that Danielas Sworn Statement is
sufficient evidence to prove that the contract of sale by and between her and petitioner was merely simulated; and
that, in effect, the agreement between petitioner and Daniela created a trust relationship between them.
The Court finds for the petitioner.
The CA and the trial court ruled that the contract of sale between petitioner and Daniela is simulated. A contract is
simulated if the parties do not intend to be bound at all (absolutely simulated) or if the parties conceal their true
agreement (relatively simulated).19 The primary consideration in determining the true nature of a contract is the
intention of the parties.20 Such intention is determined from the express terms of their agreement as well as from
their contemporaneous and subsequent acts.21
In the present case, the main evidence presented by private respondents in proving their allegation that the subject
deed of sale did not reflect the true intention of the parties thereto is the sworn statement of Daniela dated December
28, 1977. The trial court admitted the said sworn statement as part of private respondents evidence and gave
credence to it. The CA also accorded great probative weight to this document.
There is no issue in the admissibility of the subject sworn statement. However, the admissibility of evidence should
not be equated with weight of evidence.22 The admissibility of evidence depends on its relevance and competence
while the weight of evidence pertains to evidence already admitted and its tendency to convince and
persuade.23 Thus, a particular item of evidence may be admissible, but its evidentiary weight depends on judicial
evaluation within the guidelines provided by the rules of evidence.24 It is settled that affidavits are classified as
hearsay evidence since they are not generally prepared by the affiant but by another who uses his own language in
writing the affiants statements, which may thus be either omitted or misunderstood by the one writing
them.25Moreover, the adverse party is deprived of the opportunity to cross-examine the affiant. 26 For this reason,
affidavits are generally rejected for being hearsay, unless the affiants themselves are placed on the witness stand to
testify thereon.27 The Court finds that both the trial court and the CA committed error in giving the sworn statement
probative weight. Since Daniela is no longer available to take the witness stand as she is already dead, the RTC and
the CA should not have given probative value on Danielas sworn statement for purposes of proving that the contract
of sale between her and petitioner was simulated and that, as a consequence, a trust relationship was created between
them.
Private respondents should have presented other evidence to sufficiently prove their allegation that Daniela, in fact,
had no intention of disposing of her property when she executed the subject deed of sale in favor of petitioner. As in
all civil cases, the burden is on the plaintiff to prove the material allegations of his complaint and he must rely on the
strength of his evidence and not on the weakness of the evidence of the defendant.28 Aside from Danielas sworn
statement, private respondents failed to present any other documentary evidence to prove their claim. Even the
testimonies of their witnesses failed to establish that Daniela had a different intention when she entered into a
contract of sale with petitioner.
In Suntay v. Court of Appeals,29 the Court ruled that the most protuberant index of simulation is the complete
absence, on the part of the vendee, of any attempt in any manner to assert his rights of ownership over the disputed
property.30 In the present case, however, the evidence clearly shows that petitioner declared the property for taxation
and paid realty taxes on it in her name. Petitioner has shown that from 1972 to 1988 she religiously paid the real
estate taxes due on the said lot and that it was only in 1974 and 1987 that she failed to pay the taxes thereon. While
tax receipts and declarations and receipts and declarations of ownership for taxation purposes are not, in themselves,
incontrovertible evidence of ownership, they constitute at least proof that the holder has a claim of title over the

property.31 The voluntary declaration of a piece of property for taxation purposes manifests not only ones sincere
and honest desire to obtain title to the property and announces his adverse claim against the State and all other
interested parties, but also the intention to contribute needed revenues to the Government.32 Such an act strengthens
ones bona fide claim of acquisition of ownership.33 On the other hand, private respondents failed to present even a
single tax receipt or declaration showing that Daniela paid taxes due on the disputed lot as proof that she claims
ownership thereof. The only Tax Declaration in the name of Daniela, which private respondents presented in
evidence, refers only to the house standing on the lot in controversy.34 Even the said Tax Declaration contains a
notation that herein petitioner owns the lot (Lot 56) upon which said house was built.
Moreover, the Court agrees with petitioner that if the subject Deed of Absolute Sale did not really reflect the real
intention of Daniela, why is it that she remained silent until her death; she never told any of her relatives regarding
her actual purpose in executing the subject deed; she simply chose to make known her true intentions through the
sworn statement she executed on December 28, 1977, the existence of which she kept secret from her relatives; and
despite her declaration therein that she is appealing for help in order to get back the subject lot, she never took any
concrete step to recover the subject property from petitioner until her death more than ten years later.
It is true that Daniela retained physical possession of the property even after she executed the subject Absolute Deed
of Sale and even after title to the property was transferred in petitioners favor. In fact, Daniela continued to occupy
the property in dispute until her death in 1988 while, in the meantime, petitioner continued to reside in Manila.
However, it is well-established that ownership and possession are two entirely different legal concepts. 35Just as
possession is not a definite proof of ownership, neither is non-possession inconsistent with ownership. The first
paragraph of Article 1498 of the Civil Code states that when the sale is made through a public instrument, the
execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed
the contrary does not appear or cannot clearly be inferred. Possession, along with ownership, is transferred to the
vendee by virtue of the notarized deed of conveyance.36 Thus, in light of the circumstances of the present case, it is
of no legal consequence that petitioner did not take actual possession or occupation of the disputed property after the
execution of the deed of sale in her favor because she was already able to perfect and complete her ownership of and
title over the subject property.
As to Danielas affidavit dated June 9, 1983, submitted by petitioner, which confirmed the validity of the sale of the
disputed lot in her favor, the same has no probative value, as the sworn statement earlier adverted to, for being
hearsay. Naturally, private respondents were not able to cross-examine the deceased-affiant on her declarations
contained in the said affidavit.
However, even if Danielas affidavit of June 9, 1983 is disregarded, the fact remains that private respondents failed
to prove by clear, strong and convincing evidence beyond mere preponderance of evidence37 that the contract of sale
between Daniela and petitioner was simulated. The legal presumption is in favor of the validity of contracts and the
party who impugns its regularity has the burden of proving its simulation.38 Since private respondents failed to
discharge the burden of proving their allegation that the contract of sale between petitioner and Daniela was
simulated, the presumption of regularity and validity of the October 14, 1969 Deed of Absolute Sale stands.
Considering that the Court finds the subject contract of sale between petitioner and Daniela to be valid and not
fictitious or simulated, there is no more necessity to discuss the issue as to whether or not a trust relationship was
created between them.
WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals in CAG.R. CV No. 64122, affirming the Decision of the Regional Trial Court of Cadiz City, Negros Occidental, Branch
60, in Civil Case No. 278-C, are REVERSED AND SET ASIDE. The complaint of the private respondents
is DISMISSED.
No costs. SO ORDERED.
5. PNOC Shipping vs. CA (Oct 8, 1998)
ROMERO, J.:

[1]

A party is entitled to adequate compensation only for such pecuniary loss actually suffered and duly proved.
Indeed, basic is the rule that to recover actual damages, the amount of loss must not only be capable of proof but

must actually be proven with a reasonable degree of certainty, premised upon competent proof or best evidence
obtainable of the actual amount thereof. [2] The claimant is duty-bound to point out specific facts that afford a basis
for measuring whatever compensatory damages are borne. [3] A court cannot merely rely on speculations, conjectures,
or guesswork as to the fact and amount of damages [4] as well as hearsay[5] or uncorroborated testimony whose truth is
suspect.[6] Such are the jurisprudential precepts that the Court now applies in resolving the instant petition.
The records disclose that in the early morning of September 21, 1977, the M/V Maria Efigenia XV, owned
by private respondent Maria Efigenia Fishing Corporation, was navigating the waters near Fortune Island in
Nasugbu, Batangas on its way to Navotas, Metro Manila when it collided with the vessel Petroparcel which at the
time was owned by the Luzon Stevedoring Corporation (LSC).
After investigation was conducted by the Board of Marine Inquiry, Philippine Coast Guard Commandant
Simeon N. Alejandro rendered a decision finding the Petroparcel at fault. Based on this finding by the Board and
after unsuccessful demands on petitioner,[7] private respondent sued the LSC and the Petroparcel captain, Edgardo
Doruelo, before the then Court of First Instance of Caloocan City, paying thereto the docket fee of one thousand two
hundred fifty-two pesos (P1,252.00) and the legal research fee of two pesos (P2.00). [8] In particular, private
respondent prayed for an award of P692,680.00, allegedly representing the value of the fishing nets, boat equipment
and cargoes of M/V Maria Efigenia XV, with interest at the legal rate plus 25% thereof as attorneys fees. Meanwhile,
during the pendency of the case, petitioner PNOC Shipping and Transport Corporation sought to be substituted in
place of LSC as it had already acquired ownership of the Petroparcel.[9]
For its part, private respondent later sought the amendment of its complaint on the ground that the original
complaint failed to plead for the recovery of the lost value of the hull of M/V Maria Efigenia XV.[10] Accordingly, in
the amended complaint, private respondent averred that M/V Maria Efigenia XV had an actual value of P800,000.00
and that, after deducting the insurance payment of P200,000.00, the amount of P600,000.00 should likewise be
claimed. The amended complaint also alleged that inflation resulting from the devaluation of the Philippine peso had
affected the replacement value of the hull of the vessel, its equipment and its lost cargoes, such that there should be a
reasonable determination thereof. Furthermore, on account of the sinking of the vessel, private respondent
supposedly incurred unrealized profits and lost business opportunities that would thereafter be proven. [11]
Subsequently, the complaint was further amended to include petitioner as a defendant [12] which the lower court
granted in its order of September 16, 1985.[13] After petitioner had filed its answer to the second amended complaint,
on February 5, 1987, the lower court issued a pre-trial order [14] containing, among other things, a stipulations of
facts, to wit:
1. On 21 September 1977, while the fishing boat `M/V MARIA EFIGENIA owned by plaintiff was
navigating in the vicinity of Fortune Island in Nasugbu, Batangas, on its way to Navotas, Metro Manila,
said fishing boat was hit by the LSCO tanker Petroparcel causing the former to sink.
2. The Board of Marine Inquiry conducted an investigation of this marine accident and on 21 November
1978, the Commandant of the Philippine Coast Guard, the Honorable Simeon N. Alejandro, rendered a
decision finding the cause of the accident to be the reckless and imprudent manner in which Edgardo
Doruelo navigated the LSCO Petroparcel and declared the latter vessel at fault.
3. On 2 April 1978, defendant Luzon Stevedoring Corporation (LUSTEVECO), executed in favor of
PNOC Shipping and Transport Corporation a Deed of Transfer involving several tankers, tugboats, barges
and pumping stations, among which was the LSCO Petroparcel.
4. On the same date on 2 April 1979 (sic), defendant PNOC STC again entered into an Agreement of
Transfer with co-defendant Lusteveco whereby all the business properties and other assets appertaining to
the tanker and bulk oil departments including the motor tanker LSCO Petroparcel of defendant Lusteveco
were sold to PNOC STC.
5. The aforesaid agreement stipulates, among others, that PNOC-STC assumes, without qualifications, all
obligations arising from and by virtue of all rights it obtained over the LSCO `Petroparcel.
6. On 6 July 1979, another agreement between defendant LUSTEVECO and PNOC-STC was executed
wherein Board of Marine Inquiry Case No. 332 (involving the sea accident of 21 September 1977) was
specifically identified and assumed by the latter.

7. On 23 June 1979, the decision of Board of Marine Inquiry was affirmed by the Ministry of National
Defense, in its decision dismissing the appeal of Capt. Edgardo Doruelo and Chief mate Anthony Estenzo
of LSCO `Petroparcel.
8. LSCO `Petroparcel is presently owned and operated by PNOC-STC and likewise Capt. Edgardo
Doruelo is still in their employ.
9. As a result of the sinking of M/V Maria Efigenia caused by the reckless and imprudent manner in
which LSCO Petroparcel was navigated by defendant Doruelo, plaintiff suffered actual damages by the
loss of its fishing nets, boat equipments (sic) and cargoes, which went down with the ship when it sank the
replacement value of which should be left to the sound discretion of this Honorable Court.
After trial, the lower court[15] rendered on November 18, 1989 its decision disposing of Civil Case No. C-9457
as follows:
WHEREFORE, and in view of the foregoing, judgment is hereby rendered in favor of the plaintiff and
against the defendant PNOC Shipping & Transport Corporation, to pay the plaintiff:
a. The sum of P6,438,048.00 representing the value of the fishing boat with interest from the date of the
filing of the complaint at the rate of 6% per annum;
b. The sum of P50,000.00 as and for attorneys fees; and
c. The costs of suit.
The counterclaim is hereby DISMISSED for lack of merit. Likewise, the case against defendant Edgardo
Doruelo is hereby DISMISSED, for lack of jurisdiction.
SO ORDERED.
In arriving at the above disposition, the lower court cited the evidence presented by private respondent
consisting of the testimony of its general manager and sole witness, Edilberto del Rosario. Private respondents
witness testified that M/V Maria Efigenia XV was owned by private respondent per Exhibit A, a certificate of
ownership issued by the Philippine Coast Guard showing that M/V Maria Efigenia XV was a wooden motor boat
constructed in 1965 with 128.23 gross tonnage. According to him, at the time the vessel sank, it was then carrying
1,060 tubs (baeras) of assorted fish the value of which was never recovered. Also lost with the vessel were two
cummins engines (250 horsepower), radar, pathometer and compass. He further added that with the loss of his
flagship vessel in his fishing fleet of fourteen (14) vessels, he was constrained to hire the services of counsel whom
he paid P10,000 to handle the case at the Board of Marine Inquiry and P50,000.00 for commencing suit for damages
in the lower court.
As to the award of P6,438,048.00 in actual damages, the lower court took into account the following pieces of
documentary evidence that private respondent proffered during trial:
(a) Exhibit A certified xerox copy of the certificate of ownership of M/V Maria Efigenia XV;
(b) Exhibit B a document titled Marine Protest executed by Delfin Villarosa, Jr. on September 22,
1977 stating that as a result of the collision, the M/V Maria Efigenia XV sustained a hole at its
left side that caused it to sink with its cargo of 1,050 baeras valued at P170,000.00;
(c) Exhibit C a quotation for the construction of a 95-footer trawler issued by Isidoro A. Magalong of
I. A. Magalong Engineering and Construction on January 26, 1987 to Del Rosario showing
that construction of such trawler would cost P2,250,000.00;
(d) Exhibit D pro forma invoice No. PSPI-05/87-NAV issued by E.D. Daclan of Power Systems,
Incorporated on January 20, 1987 to Del Rosario showing that two (2) units of CUMMINS
Marine Engine model N855-M, 195 bhp. at 1800 rpm. would cost P1,160,000.00;
(e) Exhibit E quotation of prices issued by Scan Marine Inc. on January 20, 1987 to Del Rosario
showing that a unit of Furuno Compact Daylight Radar, Model FR-604D, would

cost P100,000.00 while a unit of Furuno Color Video Sounder, Model FCV-501 would
cost P45,000.00 so that the two units would cost P145,000.00;
(f) Exhibit F quotation of prices issued by Seafgear Sales, Inc. on January 21, 1987 to Del Rosario
showing that two (2) rolls of nylon rope (5 cir. X 300fl.) would cost P140,000.00; two (2)
rolls of nylon rope (3 cir. X 240fl.), P42,750.00; one (1) binocular (7 x 50), P1,400.00, one (1)
compass (6), P4,000.00 and 50 pcs. of floats, P9,000.00 or a total of P197, 150.00;
(g) Exhibit G retainer agreement between Del Rosario and F. Sumulong Associates Law Offices
stipulating an acceptance fee of P5,000.00, per appearance fee of P400.00, monthly retainer
of P500.00, contingent fee of 20% of the total amount recovered and that attorneys fee to be
awarded by the court should be given to Del Rosario; and
(h) Exhibit H price quotation issued by Seafgear Sales, Inc. dated April 10, 1987 to Del Rosario
showing the cost of poly nettings as: 50 rolls of 400/18 3kts. 100md x 100mtrs., P70,000.00;
50 rolls of 400/18 5kts. 100md x 100mtrs., P81,500.00; 50 rolls of 400/18 8kts. 100md x
100mtrs., P116,000.00, and 50 rolls of 400/18 10kts. 100md x 100mtrs., P146,500
and banera (tub) at P65.00 per piece or a total of P414,065.00
The lower court held that the prevailing replacement value of P6,438,048.00 of the fishing boat and all its
equipment would regularly increase at 30% every year from the date the quotations were given.
On the other hand, the lower court noted that petitioner only presented Lorenzo Lazaro, senior estimator at
PNOC Dockyard & Engineering Corporation, as sole witness and it did not bother at all to offer any documentary
evidence to support its position. Lazaro testified that the price quotations submitted by private respondent were
excessive and that as an expert witness, he used the quotations of his suppliers in making his estimates. However, he
failed to present such quotations of prices from his suppliers, saying that he could not produce a breakdown of the
costs of his estimates as it was a sort of secret scheme. For this reason, the lower court concluded:
Evidently, the quotation of prices submitted by the plaintiff relative to the replacement value of the fishing
boat and its equipments in the tune of P6,438,048.00 which were lost due to the recklessness and
imprudence of the herein defendants were not rebutted by the latter with sufficient evidence. The
defendants through their sole witness Lorenzo Lazaro relied heavily on said witness bare claim that the
amount afore-said is excessive or bloated, but they did not bother at all to present any documentary
evidence to substantiate such claim. Evidence to be believed, must not only proceed from the mouth of the
credible witness, but it must be credible in itself. (Vda. de Bonifacio vs. B. L. T. Bus Co., Inc. L-26810,
August 31, 1970).
Aggrieved, petitioner filed a motion for the reconsideration of the lower courts decision contending that: (1)
the lower court erred in holding it liable for damages; that the lower court did not acquire jurisdiction over the case
by paying only P1,252.00 as docket fee; (2) assuming that plaintiff was entitled to damages, the lower court erred in
awarding an amount greater than that prayed for in the second amended complaint; and (3) the lower court erred
when it failed to resolve the issues it had raised in its memorandum. [16] Petitioner likewise filed a supplemental
motion for reconsideration expounding on whether the lower court acquired jurisdiction over the subject matter of
the case despite therein plaintiffs failure to pay the prescribed docket fee. [17]
On January 25, 1990, the lower court declined reconsideration for lack of merit. [18] Apparently not having
received the order denying its motion for reconsideration, petitioner still filed a motion for leave to file a reply to
private respondents opposition to said motion. [19] Hence, on February 12, 1990, the lower court denied said motion
for leave to file a reply on the ground that by the issuance of the order of January 25, 1990, said motion had become
moot and academic.[20]
Unsatisfied with the lower courts decision, petitioner elevated the matter to the Court of Appeals which,
however, affirmed the same in toto on October 14, 1992.[21] On petitioners assertion that the award of P6,438,048.00
was not convincingly proved by competent and admissible evidence, the Court of Appeals ruled that it was not

necessary to qualify Del Rosario as an expert witness because as the owner of the lost vessel, it was well within his
knowledge and competency to identify and determine the equipment installed and the cargoes loaded on the
vessel. Considering the documentary evidence presented as in the nature of market reports or quotations, trade
journals, trade circulars and price lists, the Court of Appeals held, thus:
Consequently, until such time as the Supreme Court categorically rules on the admissibility or
inadmissibility of this class of evidence, the reception of these documentary exhibits (price quotations) as
evidence rests on the sound discretion of the trial court. In fact, where the lower court is confronted with
evidence which appears to be of doubtful admissibility, the judge should declare in favor of admissibility
rather than of non-admissibility (The Collector of Palakadhari, 124 [1899], p. 43, cited in Francisco,
Revised Rules of Court, Evidence, Volume VII, Part I, 1990 Edition, p. 18). Trial courts are enjoined to
observe the strict enforcement of the rules of evidence which crystallized through constant use and
practice and are very useful and effective aids in the search for truth and for the effective administration of
justice. But in connection with evidence which may appear to be of doubtful relevancy or incompetency
or admissibility, it is the safest policy to be liberal, not rejecting them on doubtful or technical grounds,
but admitting them unless plainly irrelevant, immaterial or incompetent, for the reason that their rejection
places them beyond the consideration of the court. If they are thereafter found relevant or competent, can
easily be remedied by completely discarding or ignoring them. (Banaria vs. Banaria, et al., C.A. No.
4142, May 31, 1950; cited in Francisco, Supra). [Underscoring supplied].
Stressing that the alleged inadmissible documentary exhibits were never satisfactorily rebutted by appellants
own sole witness in the person of Lorenzo Lazaro, the appellate court found that petitioner ironically situated itself
in an inconsistent posture by the fact that its own witness, admittedly an expert one, heavily relies on the very same
pieces of evidence (price quotations) appellant has so vigorously objected to as inadmissible evidence. Hence, it
concluded:
x x x. The amount of P6,438,048.00 was duly established at the trial on the basis of appellees
documentary exhibits (price quotations) which stood uncontroverted, and which already included the
amount by way of adjustment as prayed for in the amended complaint. There was therefore no need for
appellee to amend the second amended complaint in so far as to the claim for damages is concerned to
conform with the evidence presented at the trial. The amount of P6,438,048.00 awarded is clearly within
the relief prayed for in appellees second amended complaint.
On the issue of lack of jurisdiction, the respondent court held that following the ruling in Sun Insurance Ltd. v.
Asuncion,[22] the additional docket fee that may later on be declared as still owing the court may be enforced as a lien
on the judgment.
Hence, the instant recourse.
In assailing the Court of Appeals decision, petitioner posits the view that the award of P6,438,048 as actual
damages should have been in light of these considerations, namely: (1) the trial court did not base such award on the
actual value of the vessel and its equipment at the time of loss in 1977; (2) there was no evidence on extraordinary
inflation that would warrant an adjustment of the replacement cost of the lost vessel, equipment and cargo; (3) the
value of the lost cargo and the prices quoted in respondents documentary evidence only amount to P4,336,215.00;
(4) private respondents failure to adduce evidence to support its claim for unrealized profit and business
opportunities; and (5) private respondents failure to prove the extent and actual value of damages sustained as a
result of the 1977 collision of the vessels.[23]
Under Article 2199 of the Civil Code, actual or compensatory damages are those awarded in satisfaction of, or
in recompense for, loss or injury sustained. They proceed from a sense of natural justice and are designed to repair
the wrong that has been done, to compensate for the injury inflicted and not to impose a penalty. [24] In actions based
on torts or quasi-delicts, actual damages include all the natural and probable consequences of the act or omission

complained of.[25] There are two kinds of actual or compensatory damages: one is the loss of what a person already
possesses (dao emergente), and the other is the failure to receive as a benefit that which would have pertained to him
(lucro cesante).[26] Thus:
Where goods are destroyed by the wrongful act of the defendant the plaintiff is entitled to their value at
the time of destruction, that is, normally, the sum of money which he would have to pay in the market for
identical or essentially similar goods, plus in a proper case damages for the loss of use during the period
before replacement. In other words, in the case of profit-earning chattels, what has to be assessed is the
value of the chattel to its owner as a going concern at the time and place of the loss, and this means, at
least in the case of ships, that regard must be had to existing and pending engagements.x x x.
x x x. If the market value of the ship reflects the fact that it is in any case virtually certain of profitable
employment, then nothing can be added to that value in respect of charters actually lost, for to do so
would be pro tanto to compensate the plaintiff twice over. On the other hand, if the ship is valued without
reference to its actual future engagements and only in the light of its profit-earning potentiality, then it
may be necessary to add to the value thus assessed the anticipated profit on a charter or other engagement
which it was unable to fulfill. What the court has to ascertain in each case is the `capitalised value of the
vessel as a profit-earning machine not in the abstract but in view of the actual circumstances, without, of
course, taking into account considerations which were too remote at the time of the loss. [27] [Underscoring
supplied].
As stated at the outset, to enable an injured party to recover actual or compensatory damages, he is required to
prove the actual amount of loss with reasonable degree of certainty premised upon competent proof and on the best
evidence available.[28] The burden of proof is on the party who would be defeated if no evidence would be presented
on either side. He must establish his case by a preponderance of evidence which means that the evidence, as a
whole, adduced by one side is superior to that of the other.[29] In other words, damages cannot be presumed and
courts, in making an award must point out specific facts that could afford a basis for measuring whatever
compensatory or actual damages are borne.[30]
In this case, actual damages were proven through the sole testimony of private respondents general manager
and certain pieces of documentary evidence. Except for Exhibit B where the value of the 1,050 baeras of fish were
pegged at their September 1977 value when the collision happened, the pieces of documentary evidence proffered
by private respondent with respect to items and equipment lost show similar items and equipment with
corresponding prices in early 1987 or approximately ten (10) years after the collision. Noticeably, petitioner did not
object to the exhibits in terms of the time index for valuation of the lost goods and equipment. In objecting to the
same pieces of evidence, petitioner commented that these were not duly authenticated and that the witness (Del
Rosario) did not have personal knowledge on the contents of the writings and neither was he an expert on the
subjects thereof.[31] Clearly ignoring petitioners objections to the exhibits, the lower court admitted these pieces of
evidence and gave them due weight to arrive at the award of P6,438,048.00 as actual damages.
The exhibits were presented ostensibly in the course of Del Rosarios testimony. Private respondent did not
present any other witnesses especially those whose signatures appear in the price quotations that became the bases of
the award. We hold, however, that the price quotations are ordinary private writings which under the Revised Rules
of Court should have been proffered along with the testimony of the authors thereof. Del Rosario could not have
testified on the veracity of the contents of the writings even though he was the seasoned owner of a fishing fleet
because he was not the one who issued the price quotations. Section 36, Rule 130 of the Revised Rules of Court
provides that a witness can testify only to those facts that he knows of his personal knowledge.
For this reason, Del Rosarios claim that private respondent incurred losses in the total amount
of P6,438,048.00 should be admitted with extreme caution considering that, because it was a bare assertion, it
should be supported by independent evidence. Moreover, because he was the owner of private respondent
corporation[32] whatever testimony he would give with regard to the value of the lost vessel, its equipment and
cargoes should be viewed in the light of his self-interest therein. We agree with the Court of Appeals that his

testimony as to the equipment installed and the cargoes loaded on the vessel should be given credence [33] considering
his familiarity thereto. However, we do not subscribe to the conclusion that his valuationof such equipment, cargo
and the vessel itself should be accepted as gospel truth. [34] We must, therefore, examine the documentary evidence
presented to support Del Rosarios claim as regards the amount of losses.
The price quotations presented as exhibits partake of the nature of hearsay evidence considering that the
persons who issued them were not presented as witnesses. [35] Any evidence, whether oral or documentary, is hearsay
if its probative value is not based on the personal knowledge of the witness but on the knowledge of another person
who is not on the witness stand. Hearsay evidence, whether objected to or not, has no probative value unless the
proponent can show that the evidence falls within the exceptions to the hearsay evidence rule. [36] On this point, we
believe that the exhibits do not fall under any of the exceptions provided under Sections 37 to 47 of Rule 130. [37]
It is true that one of the exceptions to the hearsay rule pertains to commercial lists and the like under Section
45, Rule 130 of the Revised Rules on Evidence. In this respect, the Court of Appeals considered private respondents
exhibits as commercial lists. It added, however, that these exhibits should be admitted in evidence until such time as
the Supreme Court categorically rules on the admissibility or inadmissibility of this class of evidence because the
reception of these documentary exhibits (price quotations) as evidence rests on the sound discretion of the trial
court.[38] Reference to Section 45, Rule 130, however, would show that the conclusion of the Court of Appeals on the
matter was arbitrarily arrived at. This rule states:
Commercial lists and the like. Evidence of statements of matters of interest to persons engaged in an
occupation contained in a list, register, periodical, or other published compilation is admissible as tending
to prove the truth of any relevant matter so stated if that compilation is published for use by persons
engaged in that occupation and is generally used and relied upon by them there.
Under Section 45 of the aforesaid Rule, a document is a commercial list if: (1) it is a statement of matters
of interest to persons engaged in an occupation; (2) such statement is contained in a list, register, periodical or other
published compilation; (3) said compilation is published for the use of persons engaged in that occupation, and (4) it
is generally used and relied upon by persons in the same occupation.
Based on the above requisites, it is our considered view that Exhibits B, C, D, E, F and H [39] are not commercial
lists for these do not belong to the category of other published compilations under Section 45 aforequoted. Under the
principle of ejusdem generis, (w)here general words follow an enumeration of persons or things, by words of a
particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held
as applying only to persons or things of the same kind or class as those specifically mentioned. [40] The exhibits
mentioned are mere price quotations issued personally to Del Rosario who requested for them from dealers of
equipment similar to the ones lost at the collision of the two vessels. These are not published in any list, register,
periodical or other compilation on the relevant subject matter. Neither are these market reports or quotations within
the purview of commercial lists as these are not standard handbooks or periodicals, containing data of everyday
professional need and relied upon in the work of the occupation. [41] These are simply letters responding to the
queries of Del Rosario. Thus, take for example Exhibit D which reads:
January 20, 1987
PROFORMA INVOICE NO. PSPI-05/87-NAV
MARIA EFIGINIA FISHING CORPORATION
Navotas, Metro Manila
Attention: MR. EDDIE DEL ROSARIO
Gentlemen:
In accordance to your request, we are pleased to quote our Cummins Marine Engine, to wit.
Two (2) units CUMMINS Marine Engine model N855-M, 195 bhp.
at 1800 rpm., 6-cylinder in-line, 4-stroke cycle, natural aspirated, 5 in. x 6 in. bore
and stroke, 855 cu. In. displacement, keel-cooled, electric starting coupled with

Twin-Disc Marine gearbox model MG-509, 4.5:1 reduction ratio, includes oil
cooler, companion flange, manual and standard accessories as per attached sheet.
Price FOB Manila - - - - - - - - - - - - - - - P 580,000.00/unit
Total FOB Manila - - - - - - - - - - - - - - - P 1,160,000.00
vvvvvvvvv
T E R M S : CASH
DELIVERY : 60-90 days from date of order.
VALIDITY : Subject to our final confirmation.
WARRANTY : One (1) full year against factory defect.
Very truly yours,
POWER SYSTEMS, INC.
(Sgd.)
E. D. Daclan
To be sure, letters and telegrams are admissible in evidence but these are, however, subject to the general
principles of evidence and to various rules relating to documentary evidence. [42] Hence, in one case, it was held that a
letter from an automobile dealer offering an allowance for an automobile upon purchase of a new automobile after
repairs had been completed, was not a price current or commercial list within the statute which made such items
presumptive evidence of the value of the article specified therein. The letter was not admissible in evidence as a
commercial list even though the clerk of the dealer testified that he had written the letter in due course of business
upon instructions of the dealer.[43]
But even on the theory that the Court of Appeals correctly ruled on the admissibility of those letters or
communications when it held that unless plainly irrelevant, immaterial or incompetent, evidence should better be
admitted rather than rejected on doubtful or technical grounds, [44] the same pieces of evidence, however, should not
have been given probative weight. This is a distinction we wish to point out. Admissibility of evidence refers to the
question of whether or not the circumstance (or evidence) is to considered at all. [45] On the other hand, the probative
value of evidence refers to the question of whether or not it proves an issue. [46] Thus, a letter may be offered in
evidence and admitted as such but its evidentiary weight depends upon the observance of the rules on
evidence. Accordingly, the author of the letter should be presented as witness to provide the other party to the
litigation the opportunity to question him on the contents of the letter. Being mere hearsay evidence, failure to
present the author of the letter renders its contents suspect. As earlier stated, hearsay evidence, whether objected to
or not, has no probative value. Thus:
The courts differ as to the weight to be given to hearsay evidence admitted without objection. Some hold
that when hearsay has been admitted without objection, the same may be considered as any other properly
admitted testimony. Others maintain that it is entitled to no more consideration than if it had been
excluded.
The rule prevailing in this jurisdiction is the latter one. Our Supreme Court held that although the question
of admissibility of evidence can not be raised for the first time on appeal, yet if the evidence is hearsay it
has no probative value and should be disregarded whether objected to or not. `If no objection is made
quoting Jones on Evidence - `it (hearsay) becomes evidence by reason of the want of such objection even
though its admission does not confer upon it any new attribute in point of weight. Its nature and quality
remain the same, so far as its intrinsic weakness and incompetency to satisfy the mind are concerned, and
as opposed to direct primary evidence, the latter always prevails.
The failure of the defense counsel to object to the presentation of incompetent evidence, like hearsay
evidence or evidence that violates the rules of res inter alios acta, or his failure to ask for the striking out
of the same does not give such evidence any probative value. But admissibility of evidence should not be
equated with weight of evidence. Hearsay evidence whether objected to or not has no probative value.[47]

Accordingly, as stated at the outset, damages may not be awarded on the basis of hearsay evidence.[48]
Nonetheless, the non-admissibility of said exhibits does not mean that it totally deprives private respondent of
any redress for the loss of its vessel. This is because in Lufthansa German Airlines v. Court of Appeals,[49] the
Court said:
In the absence of competent proof on the actual damage suffered, private respondent is `entitled to
nominal damages which, as the law says, is adjudicated in order that a right of the plaintiff, which has
been violated or invaded by defendant, may be vindicated and recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered. [Underscoring supplied].
Nominal damages are awarded in every obligation arising from law, contracts, quasi-contracts, acts or
omissions punished by law, and quasi-delicts, or in every case where property right has been invaded. [50] Under
Article 2223 of the Civil Code, (t)he adjudication of nominal damages shall preclude further contest upon the right
involved and all accessory questions, as between the parties to the suit, or their respective heirs and assigns.
Actually, nominal damages are damages in name only and not in fact. Where these are allowed, they are not
treated as an equivalent of a wrong inflicted but simply in recognition of the existence of a technical injury.
[51]
However, the amount to be awarded as nominal damages shall be equal or at least commensurate to the injury
sustained by private respondent considering the concept and purpose of such damages. [52] The amount of nominal
damages to be awarded may also depend on certain special reasons extant in the case. [53]
Applying now such principles to the instant case, we have on record the fact that petitioners
vessel Petroparcel was at fault as well as private respondents complaint claiming the amount of P692,680.00
representing the fishing nets, boat equipment and cargoes that sunk with the M/V Maria Efigenia XV. In its amended
complaint, private respondent alleged that the vessel had an actual value of P800,000.00 but it had been paid
insurance in the amount of P200,000.00 and, therefore, it claimed only the amount of P600,000.00. Ordinarily, the
receipt of insurance payments should diminish the total value of the vessel quoted by private respondent in his
complaint considering that such payment is causally related to the loss for which it claimed compensation. This
Court believes that such allegations in the original and amended complaints can be the basis for determination of a
fair amount of nominal damages inasmuch as a complaint alleges the ultimate facts constituting the plaintiff's cause
of action.[54] Private respondent should be bound by its allegations on the amount of its claims.
With respect to petitioners contention that the lower court did not acquire jurisdiction over the amended
complaint increasing the amount of damages claimed to P600,000.00, we agree with the Court of Appeals that the
lower court acquired jurisdiction over the case when private respondent paid the docket fee corresponding to its
claim in its original complaint. Its failure to pay the docket fee corresponding to its increased claim for damages
under the amended complaint should not be considered as having curtailed the lower courts jurisdiction. Pursuant to
the ruling in Sun Insurance Office, Ltd. (SIOL) v. Asuncion,[55] the unpaid docket fee should be considered as a lien
on the judgment even though private respondent specified the amount of P600,000.00 as its claim for damages in its
amended complaint.
Moreover, we note that petitioner did not question at all the jurisdiction of the lower court on the ground of
insufficient docket fees in its answers to both the amended complaint and the second amended complaint. It did so
only in its motion for reconsideration of the decision of the lower court after it had received an adverse decision. As
this Court held in Pantranco North Express, Inc. v. Court of Appeals,[56] participation in all stages of the case
before the trial court, that included invoking its authority in asking for affirmative relief, effectively barred petitioner
by estoppel from challenging the courts jurisdiction. Notably, from the time it filed its answer to the second
amended complaint on April 16, 1985,[57] petitioner did not question the lower courts jurisdiction. It was only on
December 29, 1989[58] when it filed its motion for reconsideration of the lower courts decision that petitioner raised
the question of the lower courts lack of jurisdiction. Petitioner thus foreclosed its right to raise the issue of
jurisdiction by its own inaction.WHEREFORE, the challenged decision of the Court of Appeals dated October 14,
1992 in CA-G. R. CV No. 26680 affirming that of the Regional Trial Court of Caloocan City, Branch 121, is hereby
MODIFIED insofar as it awarded actual damages to private respondent Maria Efigenia Fishing Corporation in the

amount of P6,438,048.00 for lack of evidentiary bases therefor. Considering the fact, however, that: (1) technically
petitioner sustained injury but which, unfortunately, was not adequately and properly proved, and (2) this case has
dragged on for almost two decades, we believe that an award of Two Million (P2,000,000.00)[59] in favor of private
respondent as and for nominal damages is in order.No pronouncement as to costs.SO ORDERED.
6. Sasan vs. NLRC (Oct 17, 2008)
CHICO-NAZARIO, J.:
Assailed in this Petition for Review under Rule 45 of the Rules of Court are the Decision [1] dated 24 April
2006 of the Court of Appeals in CA-G.R. SP No. 79912, which affirmed the Decision dated 22 January 2003 of the
National Labor Relations Commission (NLRC) in NLRC Case No. V-000241-2002 finding that Helpmate, Inc. (HI)
is a legitimate independent job contractor and that the petitioners were not illegally dismissed from work; and the
Resolution[2] dated 31 October 2006 of the same court denying the Motion for Reconsideration filed by the
petitioners.
Respondent Equitable-PCI Bank (E-PCIBank),[3] a banking entity duly organized and existing under and by
virtue of Philippine laws, entered into a Contract for Services [4] with HI, a domestic corporation primarily engaged
in the business of providing janitorial and messengerial services. Pursuant to their contract, HI shall hire and assign
workers to E-PCIBank to perform janitorial/messengerial and maintenance services. The contract was impliedly
renewed year after year. Petitioners Rolando Sasan, Sr.,[5]Leonilo Dayday,[6] Modesto Aguirre,[7] Alejandro Ardimer,
[8]
Eleuterio Sacil,[9] Wilfredo Juegos,[10] Petronilo Carcedo,[11] and Cesar Peciencia[12] were among those employed
and assigned to E-PCIBank at its branch along Gorordo Avenue, Lahug, Cebu City, as well as to its other branches
in the Visayas.[13]
O 23 July 2001, petitioners filed with the Arbitration Branch of the NLRC in Cebu City separate
complaints[14] against E-PCIBank and HI for illegal dismissal, with claims for separation pay, service incentive leave
pay, allowances, damages, attorneys fees and costs. Their complaints were docketed as NLRC RAB-VII Case No.
07-1381-2001 and raffled to Labor Arbiter Jose G. Gutierrez (Labor Arbiter Gutierrez) for their proper
disposition. Subsequently, on 22 August 2001, the petitioners [15] amended their complaints to include a claim for
13th month-pay.
Several conciliation hearings were scheduled by Labor Arbiter Gutierrez but the parties still failed to arrive
at a mutually beneficial settlement; hence, Labor Arbiter Gutierrez ordered that they submit their respective position
papers.
In their position papers, petitioners claimed that they had become regular employees of E-PCIBank with
respect to the activities for which they were employed, having continuously rendered janitorial and messengerial
services to the bank for more than one year; that E-PCIBank had direct control and supervision over the means and
methods by which they were to perform their jobs; and that their dismissal by HI was null and void because the
latter had no power to do so since they had become regular employees of E-PCIBank.
For its part, E-PCIBank averred that it entered into a Contract for Services with HI, an independent job
contractor which hired and assigned petitioners to the bank to perform janitorial and messengerial services thereat. It
was HI that paid petitioners wages, monitored petitioners daily time records (DTR) and uniforms, and exercised
direct control and supervision over the petitioners and that therefore HI has every right to terminate their services
legally. E-PCIBank could not be held liable for whatever misdeed HI had committed against its employees.
HI, on the other hand, asserted that it was an independent job contractor engaged in the business of
providing janitorial and related services to business establishments, and E-PCIBank was one of its
clients. Petitioners were its employees, part of its pool of janitors/messengers assigned to E-PCIBank. The Contract
for Services between HI and E-PCIBank expired on 15 July 2000. E-PCIBank no longer renewed said contract with
HI and, instead, bidded out its janitorial requirements to two other job contractors, Able Services and Puritan. HI
designated petitioners to new work assignments, but the latter refused to comply with the same. Petitioners were not
dismissed by HI, whether actually or constructively, thus, petitioners complaints before the NLRC were without
basis.

Labor Arbiter Gutierrez focused on the following issues: (a) whether petitioners were regular employees of
HI; (b) whether petitioners were illegally dismissed from their employment; and (c) whether petitioners were
entitled to their money claims.
On 7 January 2002, on the basis of the parties position papers and documentary evidence, Labor Arbiter
Gutierrez rendered a Decision finding that HI was not a legitimate job contractor on the ground that it did not
possess the required substantial capital or investment to actually perform the job, work, or service under its own
account and responsibility as required under the Labor Code. [16] HI is therefore a labor-only contractor and the real
employer of petitioners is E-PCIBank which is held liable to petitioners.According to Labor Arbiter Gutierrez:
[T]he undisputed facts show that the [herein petitioners] were made to perform not only as janitors
but also as messengers, drivers and one of them even worked as an electrician. For us, these jobs
are not only directly related to the main business of the principal but are, likewise deemed
necessary in the conduct of respondent Equitable-PCI Banks principal business. Thus, based on
the above, we so declare that the [petitioners] are employees of respondent Equitable-PCI
Bank. And having worked with respondent Equitable-PCI Bank for more than one (1) year, they
are deemed regular employees. They cannot, therefore, be removed from employment without
cause and without due process, which is wanting in this case. Hence, the severance of their
employment in the guise of termination of contract is illegal.[17]
In the dispositive portion of his 7 January 2002 Decision, Labor Arbiter Gutierrez awarded to petitioners
the following amounts:
I. CESAR PACIENCIA
a) Backwages
July 15, 2001 to January 8, 2002
= P190.00 per day
= 5 months and 6 days
= 136 days x P190.00

= P25,840.00

b) Separation Pay
June 10, 1996 to July 15, 2001
= 5 years
=P190.00 x 26 days x 5 years / 2

=P12,350.00

c) 13th Month Pay

= P190.00 x 26 days
Total

= P4,940.00
P43,130.00

II Dominador Suico, Jr. (did not file

Amended Complaint)
a) Backwages
July 15, 2001 to January 15, 2002
same as Paciencia

= P25,840.00

b) Separation Pay
Feb. 2, 1999 to July 15, 2001
= P190.00 x 26 days x 2.5 years / 2
Total

= P6,175.00
= P32,015.00

III Roland Mosquera (did not file

Amended Complaint)

a) Backwages
(same as Paciencia)

= P25,840.00

b) Separation Pay
March 8, 1998 to July 15, 2001
= P190.00 x 26 days x 3 yrs. / 2
Total

= P7,410.00
= P33,250.00

IV Petronillo Carcedo
a) Backwages
(same as Paciencia)
b) Separation Pay
Sept. 16, 1984 to July 15, 2001
= P190.00 x 26 days x 17 yrs. / 2
c) 13th Month Pay
= P190.00 x 26 days
Total

= P25,840.00

= P41,990.00
= P4,940.00
= P72,770.00

V Rolando Sasan, Sr.

a) Backwages
(same as Paciencia)

= P25,840.00

b) Separation Pay
October 1989 to July 15, 2001
= P190.00 x 26 days x 12 yrs. / 2

= P29,640.00

c) 13th Month Pay

= P190.00 x 26 days
Total

= P4,940.00
= P60,420.00

VI Leonilo Dayday
a) Backwages
(same as Paciencia)

= P25,840.00

b) Separation Pay
Feb. 8, 1983 to July 15, 2001
= P190.00 x 26 days x 18 yrs. / 2

= P44,460.00

c) 13th Month Pay

= P190.00 x 26 days
Total

= P4,940.00
= P75,240.00

VII Eleuterio Sacil

a) Backwages
(same as Paciencia)

= P25,840.00

b) Separation Pay
June 2, 1992 to July 15, 2001
= P190.00 x 26 days x 9 yrs. / 2

= P22,230.00

c) 13th Month Pay

= P190.00 x 26 days
Total

= P4,940.00
= P53,010.00

VIII Mario Juntilla

a) Backwages
(same as Pacencia)

= P25,840.00

b) Separation Pay
October 7, 1987 to July 15, 2001
= P190.00 x 26 days x 14 yrs. / 2

= P34,580.00

c) 13th Month Pay

= P190.00 x 26 days
Total

= P4,940.00
= P65,360.00

IX Wilfredo Juegos
a) Backwages
(same as Pacencia)

= P25,840.00

b) Separation Pay
July 23, 1990 to July 15, 2001
= P190.00 x 26 days x 11 yrs. / 2

= P27,170.00

c) 13th Month Pay

= P190.00 x 26 days
Total

= P4,840.00
= P57,950.00

X Modesto Aguirre
a) Backwages
(same as Paciencia)

= P25,840.00

b) Separation Pay
= Jan. 5, 1992 to July 15, 2001
= P190.00 x 26 days x 9.5 yrs. / 2

= P23,465.00

c) 13th Month Pay

= P190.00 x 26 days
Total

= P4,940.00
= P54,245.00

XI Alejandro Ardimer
a) Backwages
(same as Paciencia)

= P25,840.00

b) Separation Pay
= Jan. 20, 1990 to July 15, 2001
= P190.00 x 26 days x 11.5 yrs. / 2

= P28,405.00

c) 13th Month Pay

= P190.00 x 26 days
Total

= P4,940.00
= P59,185.00

xxxx
WHEREFORE, the foregoing premises considered, judgment is hereby rendered
directing the respondents Equitable PCI Bank and Helpmate, Inc. to pay jointly and solidarily the
complainants as follows:
1. Cesar Paciencia - P43,130.00
2. Dominador Suico, Jr. - 32,015.00
3. Roland Mosquera - 33,250.00
4. Petronilo Carceda - 72,770.00
5. Roland Sasan, Sr. - 60,420.00
6. Leonilo Dayday - 75,240.00
7. Eleuterio Sacil - 53,010.00
8. Mario Juntilla - 65,360.00
9. Wilfredo Juegos - 57,950.00
10. Modesto Aguirre - 54,245.00
11. Alejandro Ardimer - 59,185.00
TOTAL - P606,575.00[18]
Aggrieved by the decision of Labor Arbiter Gutierrez, respondents E-PCIBank and HI appealed the same to
the NLRC, 4th Division, stationed in Cebu City. Their appeals were docketed as NLRC Case No. V-000241-2002. In
support of its allegation that it was a legitimate job contractor, HI submitted before the NLRC several documents
which it did not present before Labor Arbiter Gutierrez. These are:
1. Certificate of Filing of Certificate of Increase of Capital Stock, Certificate of Filing Amended
Articles of Incorporation, and General Information Sheet Stock Corporation of HI showing
therein that it increased its authorized capital stock from P1,500,000.00 to P20,000,000.00 on
12 March 1999 with the Securities and Exchange Commission;
2. Audited Financial Statement of HI showing therein that it has Total Assets of P20,939,935.72 as
of 31 December 2000;
3. Transfer Certificate of Title No. 110173 and Tax Declaration No. GR2K-09-063-00582
registered under the name of HI showing that it has a parcel of land with Market Value
of P1,168,860.00 located along Rizal Avenue (now Bacalso Avenue), Cebu City, and
4. Tax Declaration No. GR2K-09-063-00583 registered under the name of HI showing that it has a
commercial building constructed on the preceding lot located along Bacalso
Avenue, CebuCity with market value of P2,515,170.00.[19]
The NLRC promulgated its Decision on 22 January 2003 modifying the ruling of Labor Arbiter
Gutierrez. The NLRC took into consideration the documentary evidence presented by HI for the first time on appeal
and, on the basis thereof, declared HI as a highly capitalized venture with sufficient capitalization, which cannot be
considered engaged in labor-only contracting.
On the charge of illegal dismissal, the NLRC ruled that:
The charge of illegal dismissal was prematurely filed. The record shows that barely eight
(8) days from 15 July 2001 when the complainants were placed on a temporary off-detail, they
filed their complaints on 23 July 2001 and amended their complaints on 22 August 2001 against
the respondents on the presumption that their services were already terminated. Temporary offdetail is not equivalent to dismissal. x x x.[20]

The NLRC deleted Labor Arbiter Gutierrezs award of backwages and separation pay, but affirmed his
award for 13th month pay and attorneys fees equivalent to ten percent (10%) of the 13 th month pay, to the petitioners.
[21]
Thus, the NLRC decreed in its 22 January 2003 Decision, the payment of the following reduced amounts to
petitioners:
WHEREFORE, premises considered, the decision of Labor Arbiter Jose G. Gutierrez
dated 7 January 2002 is MODIFIED, to wit:
Ordering respondents Helpmate, Inc. and Equitable PCI Bank to jointly and
severally[22] pay the complainants of their 13 th month pay and attorneys fees in the aggregate
amount of Forty-Three Thousand Four Hundred Seventy-Two and 00/100 (P43,472.00), broken
down as follows:
1. Aguirre, Modesto - P5,434.00
2. Ardimer, Alejandro - 5,434.00
3. Carcedo, Petronilo - 5,434.00
4. Dayday, Leonilo - 5,434.00
5. Juegos, Wilfredo - 5,434.00
6. Juntilla, Mario - 5,434.00
7. Paciencia, Cesar - 5,434.00
8. Sacil, Eleuterio - 5,434.00
TOTAL P43,472.00[23]
Petitioners Motion for Reconsideration was denied by the NLRC in its Resolution dated 1 July 2003.[24]
Distressed by the decision of the NLRC, petitioners sought recourse with the Court of Appeals by filing a Petition
for Certiorari[25] under Rule 65 of the 1997 Rules of Civil Procedure docketed as CA-G.R. SP No. 79912.
In its Decision dated 24 April 2006, the Court of Appeals affirmed the findings of the NLRC that HI was a
legitimate job contractor and that it did not illegally dismiss petitioners:
As to the question of whether or not, as a legitimate independent job contractor,
respondent HI illegally dismissed the petitioners. We rule in the negative.
It is undisputed that the contract between respondent HI and its client E-PCIBank expired on July
15, 2000. The record shows that after said expiration, respondent HI offered the petitioners new
work assignments to various establishments which are HIs clients. The petitioners, therefore, were
not even placed on floating status. They simply refused, without justifiable reason, to assume their
new work assignments which refusal was tantamount to abandonment. There being no illegal
dismissal, petitioners are not entitled to backwages or separation pay.[26]
The fallo of the 24 April 2006 Decision of the appellate court reads:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DENYING
the petition filed in this case and AFFIRMING the decision of the NLRC, Fourth Division, in
NLRC Case No. V-000145-2003 promulgated on June 22, 2003.[27]
Petitioners now come before us via the instant Petition raising the following issues:
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ACTED IN EXCESS OF
THEIR JURISDICTION AND/OR COMMITTED GRAVE ABUSE OF DISCRETION IN
UPHOLDING THE NLRC 4TH DIVISIONS DECISION AND GRAVELY ERRED IN:

I. ACCEPTING AND APPRECIATING THE PIECES OF EVIDENCE SUBMITTED BY

RESPONDENTS DURING APPEAL, ALL EXISTING DURING THE TIME THE NLRC RAB
7S TRIAL, CONTRARY TO THIS HONORABLE COURTS PREVIOUS ESTABLISHED
DECISIONS.
II. REVERSING, WITHOUT ANY LEGAL BASIS, THE FACTUAL FINDING OF NLRC RAB
7 THAT THE RESPONDENT HI WAS LABOR ONLY CONTRACTOR.
III. RULING, WITHOUT ANY LEGAL BASIS, THAT THE ILLEGAL DISMISSAL
COMPLAINTS WERE PREMATURELY FILED.[28]
Before proceeding to the substantive issues, we first address the procedural issues raised by petitioners.
Petitioners object to the acceptance and consideration by the NLRC of the evidence presented by HI for the
first time on appeal. This is not a novel procedural issue, however, and our jurisprudence is already replete with
cases[29] allowing the NLRC to admit evidence, not presented before the Labor Arbiter, and submitted to the NLRC
for the first time on appeal. Technical rules of evidence are not binding in labor cases. Labor officials should use
every reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities
of law or procedure, all in the interest of due process.[30]
The submission of additional evidence before the NLRC is not prohibited by its New Rules of Procedure.
After all, rules of evidence prevailing in courts of law or equity are not controlling in labor cases. The NLRC and
labor arbiters are directed to use every and all reasonable means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of law and procedure all in the interest of substantial justice. In keeping
with this directive, it has been held that the NLRC may consider evidence, such as documents and affidavits,
submitted by the parties for the first time on appeal. The submission of additional evidence on appeal does not
prejudice the other party for the latter could submit counter-evidence.[31]
In Clarion Printing House, Inc. v. National Labor Relations Commission,[32] we again emphasized that:
[T]he NLRC is not precluded from receiving evidence, even for the first time on appeal, because
technical rules of procedure are not binding in labor cases.
The settled rule is that the NLRC is not precluded from receiving evidence on appeal as technical
rules of evidence are not binding in labor cases. In fact, labor officials are mandated by the Labor
Code to use every and all reasonable means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of law or procedure, all in the interest of due
process. Thus, in Lawin Security Services v. NLRC, and Bristol Laboratories Employees
Association-DFA v. NLRC, we held that even if the evidence was not submitted to the labor arbiter,
the fact that it was duly introduced on appeal to the NLRC is enough basis for the latter to be more
judicious in admitting the same, instead of falling back on the mere technicality that said evidence
can no longer be considered on appeal. Certainly, the first course of action would be more
consistent with equity and the basic notions of fairness.
For the same reasons, we cannot find merit in petitioners protestations against the documentary evidence
submitted by HI because they were mere photocopies. Evidently, petitioners are invoking the best evidence rule,
espoused in Section 3, Rule130 of the Rules of Court. It provides that:
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 x x
x.

The above provision explicitly mandates that when the subject of inquiry is the contents of a document, no
evidence shall be admissible other than the original document itself. Notably, certified true copies of these
documents, acceptable under the Rules of Court [33] were furnished to the petitioners. Even assuming that petitioners
were given mere photocopies, again, we stress that proceedings before the NLRC are not covered by the technical
rules of evidence and procedure as observed in the regular courts.Technical rules of evidence do not apply if the
decision to grant the petition proceeds from an examination of its sufficiency as well as a careful look into the
arguments contained in position papers and other documents.[34]
Petitioners had more than adequate opportunity when they filed their motion for reconsideration before the
NLRC, their Petition to the Court of Appeals and even to this Court, to refute or present their counter-evidence to
the documentary evidence presented by HI. Having failed in this respect, petitioners cannot now be heard to
complain about these documentary evidences presented by HI upon which the NLRC and the Court of Appeals
based its finding that HI is a legitimate job contractor.
The essence of due process is simply an opportunity to be heard, or as applied to administrative
proceedings, a fair and reasonable opportunity to explain one's side. It is also an opportunity to seek a
reconsideration of the action or ruling complained of. It is not the denial of the right to be heard but denial of the
opportunity to be heard that constitutes violation of due process of law. Petitioners herein were afforded every
opportunity to be heard and to seek reconsideration of the adverse judgment against them. They had every
opportunity to strengthen their positions by presenting their own substantial evidence to controvert those submitted
by E-PCIBank and HI before the NLRC, and even before the Court of Appeals. It cannot win its case by merely
raising unsubstantiated doubt or relying on the weakness of the adverse parties evidence.
We now proceed to the resolution of the substantive issues submitted by petitioners for our consideration,
particularly, whether HI is a labor-only contactor and E-PCIBank should be deemed petitioners principal employer;
and whether petitioners were illegally dismissed from their employment.
Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put
out or farm out to a contractor or subcontractor the performance or completion of a specific job, work or service
within a definite or predetermined period, regardless of whether such job, work or service is to be performed or
completed within or outside the premises of the principal. [35] A person is considered engaged in legitimate job
contracting or subcontracting if the following conditions concur:
(a) The contractor or subcontractor carries on a distinct and independent business and undertakes
to perform the job, work or service on its own account and under its own responsibility according
to its own manner and method, and free from the control and direction of the principal in all
matters connected with the performance of the work except as to the results thereof;
(b) The contractor or subcontractor has substantial capital or investment; and
(c) The agreement between the principal and contractor or subcontractor assures the contractual
employees entitlement to all labor and occupational safety and health standards, free exercise of
the right to self-organization, security of tenure, and social and welfare benefits.[36]
In contrast, labor-only contracting, a prohibited act, is an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. [37] In
labor-only contracting, the following elements are present:
(a) The contractor or subcontractor does not have substantial capital or investment to
actually perform the job, work or service under its own account and responsibility; and
(b) The employees recruited, supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main business of the principal. [38]

In distinguishing between permissible job contracting and prohibited labor-only contracting, [39] we
elucidated in Vinoya v. National Labor Relations Commission, [40] that it is not enough to show substantial
capitalization or investment in the form of tools, equipment, etc. Other facts that may be considered include the
following: whether or not the contractor is carrying on an independent business; the nature and extent of the work;
the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of
work; the control and supervision of the work to another; the employers power with respect to the hiring, firing and
payment of the contractors workers; the control of the premises; the duty to supply premises, tools, appliances,
materials and labor; and the mode and manner or terms of payment. [41] Simply put, the totality of the facts and the
surrounding circumstances of the case are to be considered.[42] Each case must be determined by its own facts and all
the features of the relationship are to be considered.[43]
In the case at bar, we find substantial evidence to support the finding of the NLRC, affirmed by the Court of
Appeals, that HI is a legitimate job contractor.
We take note that HI has been issued by the Department of Labor and Employment (DOLE) Certificate of
Registration[44] Numbered VII-859-1297-048. The said certificate states among other things:
CERTIFICATE OF REGISTRATION
Numbered VII-859-1297-048
is issued to
HELPMATE, INCORPORATED
330 N. Bacalso Avenue, Cebu City
for having complied with the requirements as provided for under the Labor Code, as amended, and
its Implementing Rules and having paid the registration fee in the amount of ONE HUNDRED
PESOS (P100.00) per Official Receipt Number 9042769, dated October 16, 1997.
In witness whereof, and by authority vested in me by the Labor Code, as amended, and its
Implementing Rules specifically Department Order No. 10 series of 1997, I have hereunto set my
hand and affixed the Official on this 23rd day of December 1997.[45]
Having been issued by a public officer, this certification carries with it the presumption that it was issued in
the regular performance of official duty.[46] In the absence of proof, petitioners bare assertion cannot prevail over this
presumption. Moreover, the DOLE being the agency primarily responsible for regulating the business of
independent job contractors, we can presume in the absence of evidence to the contrary that it thoroughly evaluated
the requirements submitted by HI as a precondition to the issuance of the Cerificate of Registration.
The evidence on record also shows that HI is carrying on a distinct and independent business from EPCIBank. The employees of HI are assigned to clients to perform janitorial and messengerial services, clearly
distinguishable from the banking services in which E-PCIBank is engaged.
Despite the afore-mentioned compliance by HI with the requisites for permissible job contracting, Labor
Arbiter Gutierrez still declared that HI was engaged in prohibited labor-only contracting because it did not possess
substantial capital or investment to actually perform the job, work or service under its own account or
responsibility. Both the NLRC and the Court of Appeals ruled to the contrary, and we agree.
Substantial capital or investment refers to capital stocks and subscribed capitalization in the case of
corporations, tools, equipments, implements, machineries and work premises, actually and directly used by the
contractor or subcontractor in the performance or completion of the job, work or service contracted out. [47] An
independent contractor must have either substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others. The law does not require both substantial capital and investment in the
form of tools, equipment, machineries, etc.[48] It is enough that it has substantial capital. In the case of HI, it has
proven both.

We have expostulated that once it is established that an entity such as in this case, HI has substantial
capital, it was no longer necessary to adduce further evidence to prove that it does not fall within the purview of
labor-only contracting.[49] There is even no need for HI to refute the contention of petitioners that some of the
activities they performed such as those of messengerial services are directly related to the principal business of EPCIBank.
In any event, we have earlier declared that while these services rendered by the petitioners as janitors,
messengers and drivers are considered directly related to the principal business of a bank, in this case E-PCIBank,
nevertheless, they are not necessary in the conduct of its (E-PCIBANKs) principal business.[50]
HI has substantial capital in the amount of P20,939,935.72. It has its own building where it holds office and
it has been engaged in business for more than a decade now.[51] As observed by the Court of Appeals, surely, such a
well-established business entity cannot be considered a labor-only contractor.
Etched in an unending stream of cases are four standards in determining the existence of an employeremployee relationship, namely: (a) the manner of selection and engagement of the putative employee; (b) the mode
of payment of wages; (c) the presence or absence of power of dismissal; and, (d) the presence or absence of control
of the putative employees conduct. Most determinative among these factors is the so-called control test.[52]
The presence of the first requisite for the existence of an employer-employee relationship to wit, the
selection and engagement of the employee is shown by the fact that it was HI which selected and engaged the
services of petitioners as its employees. This is fortified by the provision in the contract of services between HI and
E-PCIBank which states:
Selection, Engagement, Discharge. [HI] shall have exclusive discretion in the selection,
engagement, investigation, discipline and discharge of its employees.[53]
On the second requisite regarding the payment of wages, it was HI who paid petitioners their wages and
who provided their daily time records and uniforms and other materials necessary for the work they
performed. Therefore, it is HI who is responsible for petitioners claims for wages and other employees
benefits. Precisely, the contract of services between HI and E-PCIBank reveals the following:
Indemnity for Salaries and Benefits, etc. [HI] shall be responsible for the salaries,
allowances, overtime and holiday pay, and other benefits of its personnel including withholding
taxes.[54]
As to the third requisite on the power to control the employees conduct, and the fourth requisite regarding
the power of dismissal, again E-PCIBank did not have the power to control petitioners with respect to the means and
methods by which their work was to be accomplished. It likewise had no power of dismissal over the petitioners. All
that E-PCIBank could do was to report to HI any untoward act, negligence, misconduct or malfeasance of any
employee assigned to the premises. The contract of services between E-PCIBank and HI is noteworthy. It states:
[HI] shall have the entire charge, control and supervision over all its employees who may
be fielded to [E-PCIBank]. For this purpose, [HI] shall assign a regular supervisor of its
employees who may be fielded to the Bank and which regular supervisor shall exclusively
supervise and control the activities and functions defined in Section 1 hereof. x x x.[55]
All these circumstances establish that HI undertook said contract on its account, under its own
responsibility, according to its own manner and method, and free from the control and direction of EPCIBank. Where the control of the principal is limited only to the result of the work, independent job contracting
exists. The janitorial service agreement between E-PCIBank and HI is definitely a case of permissible job
contracting.

Considering the foregoing, plus taking judicial notice of the general practice in private, as well as in
government institutions and industries, of hiring an independent contractor to perform special services, [56] ranging
from janitorial, security and even technical services, we can only conclude that HI is a legitimate job contractor. As
such legitimate job contractor, the law creates an employer-employee relationship between HI and
petitioners[57] which renders HI liable for the latters claims.
In view of the preceding conclusions, petitioners will never become regular employees of E-PCIBank
regardless of how long they were working for the latter.[58]
We further rule that petitioners were not illegally dismissed by HI. Upon the termination of the Contract of
Service between HI and E-PCIBank, petitioners cannot insist to continue to work for the latter. Their pull-out from
E-PCIBank did not constitute illegal dismissal since, first, petitioners were not employees of E-PCIBank;
and second, they were pulled out from said assignment due to the non-renewal of the Contract of Service between
HI and E-PCIBank. At the time they filed their complaints with the Labor Arbiter, petitioners were not even
dismissed by HI; they were only off-detail pending their re-assignment by HI to another client. And when they were
actually given new assignments by HI with other clients, [59] petitioners even refused the same. As the NLRC
pronounced, petitioners complaint for illegal dismissal is apparently premature.
WHEREFORE, premises considered, the Petition is DENIED for lack of merit. The Decision dated 24 April
2006 and Resolution dated 31 October 2006 of the Court of Appeals are AFFIRMED. Costs against petitioners.
SO ORDERED.

7. Ramirez vs. CA (Sept 28, 1995)

KAPUNAN, J.:
A civil case damages was filed by petitioner Socorro D. Ramirez in the Regional Trial Court of Quezon City
alleging that the private respondent, Ester S. Garcia, in a confrontation in the latter's office, allegedly vexed, insulted
and humiliated her in a "hostile and furious mood" and in a manner offensive to petitioner's dignity and personality,"
contrary to morals, good customs and public policy." 1
In support of her claim, petitioner produced a verbatim transcript of the event and sought moral damages, attorney's
fees and other expenses of litigation in the amount of P610,000.00, in addition to costs, interests and other reliefs
awardable at the trial court's discretion. The transcript on which the civil case was based was culled from a tape
recording of the confrontation made by petitioner. 2 The transcript reads as follows:
Plaintiff Soccoro D. Ramirez (Chuchi) Good Afternoon M'am.
Defendant Ester S. Garcia (ESG) Ano ba ang nangyari sa 'yo, nakalimot ka
na kung paano ka napunta rito, porke member ka na, magsumbong ka kung ano
ang gagawin ko sa 'yo.
CHUCHI Kasi, naka duty ako noon.
ESG Tapos iniwan no. (Sic)
CHUCHI Hindi m'am, pero ilan beses na nila akong binalikan, sabing ganoon

ESG Ito and (sic) masasabi ko sa 'yo, ayaw kung (sic) mag explain ka, kasi
hanggang 10:00 p.m., kinabukasan hindi ka na pumasok. Ngayon ako ang
babalik sa 'yo, nag-aaply ka sa States, nag-aaply ka sa review mo, kung
kakailanganin ang certification mo, kalimutan mo na kasi hindi ka sa akin
makakahingi.
CHUCHI Hindi M'am. Kasi ang ano ko talaga noon i-cocontinue ko up to
10:00 p.m.

ESG Bastos ka, nakalimutan mo na kung paano ka pumasok dito sa hotel.

Magsumbong ka sa Union kung gusto mo. Nakalimutan mo na kung paano ka
nakapasok dito "Do you think that on your own makakapasok ka kung hindi
ako. Panunumbyoyan na kita (Sinusumbatan na kita).
CHUCHI Itutuloy ko na M'am sana ang duty ko.
ESG Kaso ilang beses na akong binabalikan doon ng mga no (sic) ko.
ESG Nakalimutan mo na ba kung paano ka pumasok sa hotel, kung on your
own merit alam ko naman kung gaano ka "ka bobo" mo. Marami ang nag-aaply
alam kong hindi ka papasa.
CHUCHI Kumuha kami ng exam noon.
ESG Oo, pero hindi ka papasa.
CHUCHI Eh, bakit ako ang nakuha ni Dr. Tamayo
ESG Kukunin ka kasi ako.
CHUCHI Eh, di sana
ESG Huwag mong ipagmalaki na may utak ka kasi wala kang utak. Akala
mo ba makukuha ka dito kung hindi ako.
CHUCHI Mag-eexplain ako.
ESG Huwag na, hindi ako mag-papa-explain sa 'yo, makaalala ka kung paano
ka puma-rito. "Putang-ina" sasabi-sabihin mo kamag-anak ng nanay at tatay mo
ang mga magulang ko.
ESG Wala na akong pakialam, dahil nandito ka sa loob, nasa labas ka puwede
ka ng hindi pumasok, okey yan nasaloob ka umalis ka doon.
CHUCHI Kasi M'am, binbalikan ako ng mga taga Union.
ESG Nandiyan na rin ako, pero huwag mong kalimutan na hindi ka
makakapasok kung hindi ako. Kung hindi mo kinikilala yan okey lang sa akin,
dahil tapos ka na.
CHUCHI Ina-ano ko m'am na utang na loob.
ESG Huwag na lang, hindi mo utang na loob, kasi kung baga sa no,
nilapastangan mo ako.
CHUCHI Paano kita nilapastanganan?
ESG Mabuti pa lumabas ka na. Hindi na ako makikipagusap sa 'yo. Lumabas
ka na. Magsumbong ka. 3
As a result of petitioner's recording of the event and alleging that the said act of secretly taping the confrontation
was illegal, private respondent filed a criminal case before the Regional Trial Court of Pasay City for violation of
Republic Act 4200, entitled "An Act to prohibit and penalize wire tapping and other related violations of private
communication, and other purposes." An information charging petitioner of violation of the said Act, dated October
6, 1988 is quoted herewith:
INFORMATION
The Undersigned Assistant City Fiscal Accusses Socorro D. Ramirez of Violation of Republic Act
No. 4200, committed as follows:
That on or about the 22nd day of February, 1988, in Pasay City Metro Manila,
Philippines, and within the jurisdiction of this honorable court, the above-named
accused, Socorro D. Ramirez not being authorized by Ester S. Garcia to record
the latter's conversation with said accused, did then and there willfully,
unlawfully and feloniously, with the use of a tape recorder secretly record the
said conversation and thereafter communicate in writing the contents of the said
recording to other person.
Contrary to law.
Pasay City, Metro Manila, September 16, 1988.
MARIANO M. CUNETA
Asst. City Fiscal

Upon arraignment, in lieu of a plea, petitioner filed a Motion to Quash the Information on the ground that the facts
charged do not constitute an offense, particularly a violation of R.A. 4200. In an order May 3, 1989, the trial court
granted the Motion to Quash, agreeing with petitioner that 1) the facts charged do not constitute an offense under
R.A. 4200; and that 2) the violation punished by R.A. 4200 refers to a the taping of a communication by a
person other than a participant to the communication. 4
From the trial court's Order, the private respondent filed a Petition for Review on Certiorari with this Court, which
forthwith referred the case to the Court of Appeals in a Resolution (by the First Division) of June 19, 1989.
On February 9, 1990, respondent Court of Appeals promulgated its assailed Decision declaring the trial court's order
of May 3, 1989 null and void, and holding that:
[T]he allegations sufficiently constitute an offense punishable under Section 1 of R.A. 4200. In
thus quashing the information based on the ground that the facts alleged do not constitute an
offense, the respondent judge acted in grave abuse of discretion correctible by certiorari. 5
Consequently, on February 21, 1990, petitioner filed a Motion for Reconsideration which respondent Court of
Appeals denied in its Resolution 6 dated June 19, 1990. Hence, the instant petition.
Petitioner vigorously argues, as her "main and principal issue" 7 that the applicable provision of Republic Act 4200
does not apply to the taping of a private conversation by one of the parties to the conversation. She contends that the
provision merely refers to the unauthorized taping of a private conversation by a party other than those involved in
the communication. 8 In relation to this, petitioner avers that the substance or content of the conversation must be
alleged in the Information, otherwise the facts charged would not constitute a violation of R.A. 4200. 9 Finally,
petitioner agues that R.A. 4200 penalizes the taping of a "private communication," not a "private conversation" and
that consequently, her act of secretly taping her conversation with private respondent was not illegal under the said
act. 10
We disagree.
First, legislative intent is determined principally from the language of a statute. Where the language of a statute is
clear and unambiguous, the law is applied according to its express terms, and interpretation would be resorted to
only where a literal interpretation would be either impossible 11 or absurb or would lead to an injustice. 12
Section 1 of R.A. 4200 entitled, " An Act to Prohibit and Penalized Wire Tapping and Other Related Violations of
Private Communication and Other Purposes," provides:
Sec. 1. It shall be unlawfull for any person, not being authorized by all the parties to any private
communication or spoken word, to tap any wire or cable, or by using any other device or
arrangement, to secretly overhear, intercept, or record such communication or spoken word by
using a device commonly known as a dictaphone or dictagraph or detectaphone or walkie-talkie or
tape recorder, or however otherwise described.
The aforestated provision clearly and unequivocally makes it illegal for any person, not authorized by all the parties
to any private communication to secretly record such communication by means of a tape recorder. The law makes no
distinction as to whether the party sought to be penalized by the statute ought to be a party other than or different
from those involved in the private communication. The statute's intent to penalize all persons unauthorized to make
such recording is underscored by the use of the qualifier "any". Consequently, as respondent Court of Appeals
correctly concluded, "even a (person) privy to a communication who records his private conversation with another
without the knowledge of the latter (will) qualify as a violator" 13 under this provision of R.A. 4200.
A perusal of the Senate Congressional Records, moreover, supports the respondent court's conclusion that in
enacting R.A. 4200 our lawmakers indeed contemplated to make illegal, unauthorized tape recording of private
conversations or communications taken either by the parties themselves or by third persons. Thus:
xxx xxx xxx
Senator Taada: That qualified only "overhear".
Senator Padilla: So that when it is intercepted or recorded, the element of secrecy would not
appear to be material. Now, suppose, Your Honor, the recording is not made by all the parties but
by some parties and involved not criminal cases that would be mentioned under section 3 but
would cover, for example civil cases or special proceedings whereby a recording is made not
necessarily by all the parties but perhaps by some in an effort to show the intent of the parties
because the actuation of the parties prior, simultaneous even subsequent to the contract or the act

may be indicative of their intention. Suppose there is such a recording, would you say, Your
Honor, that the intention is to cover it within the purview of this bill or outside?
Senator Taada: That is covered by the purview of this bill, Your Honor.
Senator Padilla: Even if the record should be used not in the prosecution of offense but as
evidence to be used in Civil Cases or special proceedings?
Senator Taada: That is right. This is a complete ban on tape recorded conversations taken
without the authorization of all the parties.
Senator Padilla: Now, would that be reasonable, your Honor?
Senator Taada: I believe it is reasonable because it is not sporting to record the observation of
one without his knowing it and then using it against him. It is not fair, it is not sportsmanlike. If the
purpose; Your honor, is to record the intention of the parties. I believe that all the parties should
know that the observations are being recorded.
Senator Padilla: This might reduce the utility of recorders.
Senator Taada: Well no. For example, I was to say that in meetings of the board of directors
where a tape recording is taken, there is no objection to this if all the parties know. It is but fair
that the people whose remarks and observations are being made should know that the observations
are being recorded.
Senator Padilla: Now, I can understand.
Senator Taada: That is why when we take statements of persons, we say: "Please be informed
that whatever you say here may be used against you." That is fairness and that is what we demand.
Now, in spite of that warning, he makes damaging statements against his own interest, well, he
cannot complain any more. But if you are going to take a recording of the observations and
remarks of a person without him knowing that it is being taped or recorded, without him knowing
that what is being recorded may be used against him, I think it is unfair.
xxx xxx xxx
(Congression Record, Vol. III, No. 31, p. 584, March 12, 1964)
Senator Diokno: Do you understand, Mr. Senator, that under Section 1 of the bill as now
worded, if a party secretly records a public speech, he would be penalized under Section 1?
Because the speech is public, but the recording is done secretly.
Senator Taada: Well, that particular aspect is not contemplated by the bill. It is the
communication between one person and another person not between a speaker and a public.
xxx xxx xxx
(Congressional Record, Vol. III, No. 33, p. 626, March 12, 1964)
xxx xxx xxx
The unambiguity of the express words of the provision, taken together with the above-quoted deliberations from the
Congressional Record, therefore plainly supports the view held by the respondent court that the provision seeks to
penalize even those privy to the private communications. Where the law makes no distinctions, one does not
distinguish.
Second, the nature of the conversations is immaterial to a violation of the statute. The substance of the same need
not be specifically alleged in the information. What R.A. 4200 penalizes are the acts of secretly overhearing,
intercepting or recording private communications by means of the devices enumerated therein. The mere allegation
that an individual made a secret recording of a private communication by means of a tape recorder would suffice to
constitute an offense under Section 1 of R.A. 4200. As the Solicitor General pointed out in his COMMENT before
the respondent court: "Nowhere (in the said law) is it required that before one can be regarded as a violator, the
nature of the conversation, as well as its communication to a third person should be professed." 14
Finally, petitioner's contention that the phrase "private communication" in Section 1 of R.A. 4200 does not include
"private conversations" narrows the ordinary meaning of the word "communication" to a point of absurdity. The
word communicate comes from the latin word communicare, meaning "to share or to impart." In its ordinary
signification, communication connotes the act of sharing or imparting signification, communication connotes the act
of sharing or imparting, as in a conversation, 15 or signifies the "process by which meanings or thoughts are shared
between individuals through a common system of symbols (as language signs or gestures)" 16 These definitions are

broad enough to include verbal or non-verbal, written or expressive communications of "meanings or thoughts"
which are likely to include the emotionally-charged exchange, on February 22, 1988, between petitioner and private
respondent, in the privacy of the latter's office. Any doubts about the legislative body's meaning of the phrase
"private communication" are, furthermore, put to rest by the fact that the terms "conversation" and "communication"
were interchangeably used by Senator Taada in his Explanatory Note to the bill quoted below:
It has been said that innocent people have nothing to fear from their conversations being
overheard. But this statement ignores the usual nature of conversations as well the undeniable fact
that most, if not all, civilized people have some aspects of their lives they do not wish to expose.
Free conversations are often characterized by exaggerations, obscenity, agreeable falsehoods, and
the expression of anti-social desires of views not intended to be taken seriously. The right to
the privacy of communication, among others, has expressly been assured by our Constitution.
Needless to state here, the framers of our Constitution must have recognized the nature
of conversations between individuals and the significance of man's spiritual nature, of his feelings
and of his intellect. They must have known that part of the pleasures and satisfactions of life are to
be found in the unaudited, and free exchange of communication between individuals free from
every unjustifiable intrusion by whatever means. 17
In Gaanan vs. Intermediate Appellate Court, 18 a case which dealt with the issue of telephone wiretapping, we held
that the use of a telephone extension for the purpose of overhearing a private conversation without authorization did
not violate R.A. 4200 because a telephone extension devise was neither among those "device(s) or arrangement(s)"
enumerated therein, 19 following the principle that "penal statutes must be construed strictly in favor of the
accused." 20 The instant case turns on a different note, because the applicable facts and circumstances pointing to a
violation of R.A. 4200 suffer from no ambiguity, and the statute itself explicitly mentions the unauthorized
"recording" of private communications with the use of tape-recorders as among the acts punishable.WHEREFORE,
because the law, as applied to the case at bench is clear and unambiguous and leaves us with no discretion, the
instant petition is hereby DENIED. The decision appealed from is AFFIRMED. Costs against petitioner.SO
ORDERED.

8. Salcedo-Ortanez vs. CA (Aug 4, 1994)

PADILLA, J.:
This is a petition for review under Rule 45 of the Rules of Court which seeks to reverse the decision * of respondent
Court of Appeals in CA-G. R. SP No. 28545 entitled "Teresita Salcedo-Ortanez versus Hon. Romeo F. Zamora,
Presiding Judge, Br. 94, Regional Trial Court of Quezon City and Rafael S. Ortanez".
The relevant facts of the case are as follows:
On 2 May 1990, private respondent Rafael S. Ortanez filed with the Regional Trial Court of Quezon City a
complaint for annulment of marriage with damages against petitioner Teresita Salcedo-Ortanez, on grounds of lack
of marriage license and/or psychological incapacity of the petitioner. The complaint was docketed as Civil Case No.
Q-90-5360 and raffled to Branch 94, RTC of Quezon City presided over by respondent Judge Romeo F. Zamora.
Private respondent, after presenting his evidence, orally formally offered in evidence Exhibits "A" to "M".
Among the exhibits offered by private respondent were three (3) cassette tapes of alleged telephone conversations
between petitioner and unidentified persons.
Petitioner submitted her Objection/Comment to private respondent's oral offer of evidence on 9 June 1992; on the
same day, the trial court admitted all of private respondent's offered evidence.
A motion for reconsideration from petitioner was denied on 23 June 1992.
A petition for certiorari was then filed by petitioner in the Court of Appeals assailing the admission in evidence of
the aforementioned cassette tapes.
On 10 June 1993, the Court of Appeals rendered judgment which is the subject of the present petition, which in part
reads:
It is much too obvious that the petition will have to fail, for two basic reasons:
(1) Tape recordings are not inadmissible per se. They and any other variant thereof can be
admitted in evidence for certain purposes, depending on how they are presented and offered and
on how the trial judge utilizes them in the interest of truth and fairness and the even handed
administration of justice.
(2) A petition for certiorari is notoriously inappropriate to rectify a supposed error in admitting
evidence adduced during trial. The ruling on admissibility is interlocutory; neither does it impinge
on jurisdiction. If it is erroneous, the ruling should be questioned in the appeal from the judgment
on the merits and not through the special civil action of certiorari. The error, assuming
gratuitously that it exists, cannot be anymore than an error of law, properly correctible by appeal
and not by certiorari. Otherwise, we will have the sorry spectacle of a case being subject of a
counterproductive "ping-pong" to and from the appellate court as often as a trial court is perceived
to have made an error in any of its rulings with respect to evidentiary matters in the course of trial.
This we cannot sanction.
WHEREFORE, the petition for certiorari being devoid of merit, is hereby DISMISSED. 1
From this adverse judgment, petitioner filed the present petition for review, stating:
Grounds for Allowance of the Petition
10. The decision of respondent [Court of Appeals] has no basis in law nor previous decision of the
Supreme Court.
10.1 In affirming the questioned order of respondent judge, the Court of Appeals
has decided a question of substance not theretofore determined by the Supreme
Court as the question of admissibility in evidence of tape recordings has not,
thus far, been addressed and decided squarely by the Supreme Court.
11. In affirming the questioned order of respondent judge, the Court of Appeals has likewise
rendered a decision in a way not in accord with law and with applicable decisions of the Supreme
Court.
11.1 Although the questioned order is interlocutory in nature, the same can still
be [the] subject of a petition for certiorari. 2
The main issue to be resolved is whether or not the remedy of certiorari under Rule 65 of the Rules of Court was
properly availed of by the petitioner in the Court of Appeals.

The extraordinary writ of certiorari is generally not available to challenge an interlocutory order of a trial court. The
proper remedy in such cases is an ordinary appeal from an adverse judgment, incorporating in said appeal the
grounds for assailing the interlocutory order.
However, where the assailed interlocutory order is patently erroneous and the remedy of appeal would not afford
adequate and expeditious relief, the Court may allow certiorari as a mode of redress. 3
In the present case, the trial court issued the assailed order admitting all of the evidence offered by private
respondent, including tape recordings of telephone conversations of petitioner with unidentified persons. These tape
recordings were made and obtained when private respondent allowed his friends from the military to wire tap his
home telephone. 4
Rep. Act No. 4200 entitled "An Act to Prohibit and Penalize Wire Tapping and Other Related Violations of the
Privacy of Communication, and for other purposes" expressly makes such tape recordings inadmissible in evidence.
The relevant provisions of Rep. Act No. 4200 are as follows:
Sec. 1. It shall be unlawful for any person, not being authorized by all the parties to any
private communication or spoken word, to tap any wire or cable, or by using any other
device or arrangement, to secretly overhear, intercept, or record such communication or
spoken word by using a device commonly known as a dictaphone or dictagraph or
detectaphone or walkie-talkie or tape-recorder, or however otherwise described. . . .
Sec. 4. Any communication or spoken word, or the existence, contents, substance,
purport, or meaning of the same or any part thereof, or any information therein contained,
obtained or secured by any person in violation of the preceding sections of this Act shall
not be admissible in evidence in any judicial, quasi-judicial, legislative or administrative
hearing or investigation.
Clearly, respondents trial court and Court of Appeals failed to consider the afore-quoted provisions of the law in
admitting in evidence the cassette tapes in question. Absent a clear showing that both parties to the telephone
conversations allowed the recording of the same, the inadmissibility of the subject tapes is mandatory under Rep.
Act No. 4200.
Additionally, it should be mentioned that the above-mentioned Republic Act in Section 2 thereof imposes a penalty
of imprisonment of not less than six (6) months and up to six (6) years for violation of said Act. 5
We need not address the other arguments raised by the parties, involving the applicability of American
jurisprudence, having arrived at the conclusion that the subject cassette tapes are inadmissible in evidence under
Philippine law.
WHEREFORE, the decision of the Court of Appeals in CA-G. R. SP No. 28545 is hereby SET ASIDE. The subject
cassette tapes are declared inadmissible in evidence.
SO ORDERED.

9. Gaanan vs IAC (Oct. 16, 1986)

GUTIERREZ, JR., J.:
This petition for certiorari asks for an interpretation of Republic Act (RA) No. 4200, otherwise known as the AntiWiretapping Act, on the issue of whether or not an extension telephone is among the prohibited devices in Section 1
of the Act, such that its use to overhear a private conversation would constitute unlawful interception of
communications between the two parties using a telephone line.
The facts presented by the People and narrated in the respondent court's decision are not disputed by the petitioner.
In the morning of October 22, 1975, complainant Atty. Tito Pintor and his client Manuel
Montebon were in the living room of complainant's residence discussing the terms for the
withdrawal of the complaint for direct assault which they filed with the Office of the City Fiscal of
Cebu against Leonardo Laconico. After they had decided on the proposed conditions, complainant
made a telephone call to Laconico (tsn, August 26, 1981, pp. 3-5).
That same morning, Laconico telephoned appellant, who is a lawyer, to come to his office and
advise him on the settlement of the direct assault case because his regular lawyer, Atty. Leon
Gonzaga, went on a business trip. According to the request, appellant went to the office of
Laconico where he was briefed about the problem. (Exhibit 'D', tsn, April 22, 1982, pp. 4-5).
When complainant called up, Laconico requested appellant to secretly listen to the telephone
conversation through a telephone extension so as to hear personally the proposed conditions for
the settlement. Appellant heard complainant enumerate the following conditions for withdrawal of
the complaint for direct assault.
(a) the P5,000.00 was no longer acceptable, and that the figure had been increased to P8,000.00. A
breakdown of the P8,000.00 had been made together with other demands, to wit: (a) P5,000.00 no
longer for the teacher Manuel Montebon, but for Atty. Pintor himself in persuading his client to
withdraw the case for Direct Assault against Atty. Laconico before the Cebu City Fiscal's Office;
(b) Public apology to be made by Atty. Laconico before the students of Don Bosco Technical High
School;
(c) Pl,000.00 to be given to the Don Bosco Faculty club;
(d) transfer of son of Atty. Laconico to another school or another section of Don Bosco Technical
High School;
(e) Affidavit of desistance by Atty. Laconico on the Maltreatment case earlier filed against Manuel
Montebon at the Cebu City Fiscal's Office, whereas Montebon's affidavit of desistance on the
Direct Assault Case against Atty. Laconico to be filed later;
(f) Allow Manuel Montebon to continue teaching at the Don Bosco Technical School;
(g) Not to divulge the truth about the settlement of the Direct Assault Case to the mass media;
(h) P2,000.00 attorney s fees for Atty. Pintor. (tsn, August 26, 1981, pp. 47-48).
Twenty minutes later, complainant called up again to ask Laconico if he was agreeable to the
conditions. Laconico answered 'Yes'. Complainant then told Laconico to wait for instructions on
where to deliver the money. (tsn, March 10, 1983, pp. 2-12).
Complainant called up again and instructed Laconico to give the money to his wife at the office of
the then Department of Public Highways. Laconico who earlier alerted his friend Colonel Zulueta
of the Criminal Investigation Service of the Philippine Constabulary, insisted that complainant

himself should receive the money. (tsn, March 10, 1982, pp. 26-33). When he received the money
at the Igloo Restaurant, complainant was arrested by agents of the Philippine Constabulary.
Appellant executed on the following day an affidavit stating that he heard complainant demand
P8,000.00 for the withdrawal of the case for direct assault. Laconico attached the affidavit of
appellant to the complainant for robbery/extortion which he filed against complainant. Since
appellant listened to the telephone conversation without complainant's consent, complainant
charged appellant and Laconico with violation of the Anti-Wiretapping Act.
After trial on the merits, the lower court, in a decision dated November 22, 1982, found both Gaanan and Laconico
guilty of violating Section 1 of Republic Act No. 4200. The two were each sentenced to one (1) year imprisonment
with costs. Not satisfied with the decision, the petitioner appealed to the appellate court.
On August 16, 1984, the Intermediate Appellate Court affirmed the decision of the trial court, holding that the
communication between the complainant and accused Laconico was private in nature and, therefore, covered by
Rep. Act No. 4200; that the petitioner overheard such communication without the knowledge and consent of the
complainant; and that the extension telephone which was used by the petitioner to overhear the telephone
conversation between complainant and Laconico is covered in the term "device' as provided in Rep. Act No. 4200.
In this petition for certiorari, the petitioner assails the decision of the appellate court and raises the following issues;
(a) whether or not the telephone conversation between the complainant and accused Laconico was private in nature;
(b) whether or not an extension telephone is covered by the term "device or arrangement" under Rep. Act No. 4200;
(c) whether or not the petitioner had authority to listen or overhear said telephone conversation and (d) whether or
not Rep. Act No. 4200 is ambiguous and, therefore, should be construed in favor of the petitioner.
Section 1 of Rep. Act No. 4200 provides:
Section 1. It shall be unlawful for any person, not being authorized by all the parties to any private
communication or spoken word, to tap any wire or cable or by using any other device or
arrangement, to secretly overhear, intercept, or record such communication or spoken word by
using a device commonly known as a dictaphone or dictagraph or detectaphone or walkie-talkie or
tape-recorder, or however otherwise described:
It shall be unlawful for any person, be he a participant or not in the act or acts penalized in the
next preceeding sentence, to knowingly possess any tape record, wire record, disc record, or any
other such record, or copies thereof, of any communication or spoken word secured either before
or after the effective date of this Act in the manner prohibited by this law; or to replay the same for
any other person or persons; or to communicate the contents thereof, either verbally or in writing,
or to furnish transcriptions thereof, whether complete or partial, to any other person: Provided, that
the use of such record or any copies thereof as evidence in any civil, criminal investigation or trial
of offenses mentioned in Section 3 hereof, shall not be covered by this prohibition.
We rule for the petitioner.
We are confronted in this case with the interpretation of a penal statute and not a rule of evidence. The issue is not
the admissibility of evidence secured over an extension line of a telephone by a third party. The issue is whether or
not the person called over the telephone and his lawyer listening to the conversation on an extension line should both
face prison sentences simply because the extension was used to enable them to both listen to an alleged attempt at
extortion.
There is no question that the telephone conversation between complainant Atty. Pintor and accused Atty. Laconico
was "private" in the sense that the words uttered were made between one person and another as distinguished from
words between a speaker and a public. It is also undisputed that only one of the parties gave the petitioner the
authority to listen to and overhear the caller's message with the use of an extension telephone line. Obviously,
complainant Pintor, a member of the Philippine bar, would not have discussed the alleged demand for an P8,000.00
consideration in order to have his client withdraw a direct assault charge against Atty. Laconico filed with the Cebu
City Fiscal's Office if he knew that another lawyer was also listening. We have to consider, however, that affirmance
of the criminal conviction would, in effect, mean that a caller by merely using a telephone line can force the listener
to secrecy no matter how obscene, criminal, or annoying the call may be. It would be the word of the caller against
the listener's.

Because of technical problems caused by the sensitive nature of electronic equipment and the extra heavy loads
which telephone cables are made to carry in certain areas, telephone users often encounter what are called "crossed
lines". An unwary citizzen who happens to pick up his telephone and who overhears the details of a crime might
hesitate to inform police authorities if he knows that he could be accused under Rep. Act 4200 of using his own
telephone to secretly overhear the private communications of the would be criminals. Surely the law was never
intended for such mischievous results.
The main issue in the resolution of this petition, however, revolves around the meaning of the phrase "any other
device or arrangement." Is an extension of a telephone unit such a device or arrangement as would subject the user
to imprisonment ranging from six months to six years with the accessory penalty of perpetual absolute
disqualification for a public officer or deportation for an alien? Private secretaries with extension lines to their
bosses' telephones are sometimes asked to use answering or recording devices to record business conversations
between a boss and another businessman. Would transcribing a recorded message for the use of the boss be a
proscribed offense? or for that matter, would a "party line" be a device or arrangement under the law?
The petitioner contends that telephones or extension telephones are not included in the enumeration of "commonly
known" listening or recording devices, nor do they belong to the same class of enumerated electronic devices
contemplated by law. He maintains that in 1964, when Senate Bill No. 9 (later Rep. Act No. 4200) was being
considered in the Senate, telephones and extension telephones were already widely used instruments, probably the
most popularly known communication device.
Whether or not listening over a telephone party line would be punishable was discussed on the floor of the Senate.
Yet, when the bill was finalized into a statute, no mention was made of telephones in the enumeration of devices
"commonly known as a dictaphone or dictagraph, detectaphone or walkie talkie or tape recorder or however
otherwise described." The omission was not a mere oversight. Telephone party lines were intentionally deleted from
the provisions of the Act.
The respondent People argue that an extension telephone is embraced and covered by the term "device" within the
context of the aforementioned law because it is not a part or portion of a complete set of a telephone apparatus. It is
a separate device and distinct set of a movable apparatus consisting of a wire and a set of telephone receiver not
forming part of a main telephone set which can be detached or removed and can be transferred away from one place
to another and to be plugged or attached to a main telephone line to get the desired communication corning from the
other party or end.
The law refers to a "tap" of a wire or cable or the use of a "device or arrangement" for the purpose of secretly
overhearing, intercepting, or recording the communication. There must be either a physical interruption through a
wiretap or the deliberate installation of a device or arrangement in order to overhear, intercept, or record the spoken
words.
An extension telephone cannot be placed in the same category as a dictaphone, dictagraph or the other devices
enumerated in Section 1 of RA No. 4200 as the use thereof cannot be considered as "tapping" the wire or cable of a
telephone line. The telephone extension in this case was not installed for that purpose. It just happened to be there
for ordinary office use. It is a rule in statutory construction that in order to determine the true intent of the
legislature, the particular clauses and phrases of the statute should not be taken as detached and isolated expressions,
but the whole and every part thereof must be considered in fixing the meaning of any of its parts. (see Commissioner
of Customs v. Esso Estandard Eastern, Inc., 66 SCRA 113,120).
In the case of Empire Insurance Com any v. Rufino (90 SCRA 437, 443-444), we ruled:
Likewise, Article 1372 of the Civil Code stipulates that 'however general the terms of a contract
may be, they shall not be understood to comprehend things that are distinct and cases that are
different from those upon which the parties intended to agree.' Similarly, Article 1374 of the same
Code provides that 'the various stipulations of a contract shall be interpreted together, attributing
to the doubtful ones that sense which may result from all of them taken jointly.
xxx xxx xxx
Consequently, the phrase 'all liabilities or obligations of the decedent' used in paragraph 5(c) and
7(d) should be then restricted only to those listed in the Inventory and should not be construed as
to comprehend all other obligations of the decedent. The rule that 'particularization followed by a

general expression will ordinarily be restricted to the former' is based on the fact in human
experience that usually the minds of parties are addressed specially to the particularization, and
that the generalities, though broad enough to comprehend other fields if they stood alone, are used
in contemplation of that upon which the minds of the parties are centered. (Hoffman v. Eastern
Wisconsin R., etc., Co., 134 Wis. 603, 607, 115 NW 383, cited in Francisco, Revised Rules of
Court (Evidence), 1973 ed, pp. 180-181).
Hence, the phrase "device or arrangement" in Section 1 of RA No. 4200, although not exclusive to that enumerated
therein, should be construed to comprehend instruments of the same or similar nature, that is, instruments the use of
which would be tantamount to tapping the main line of a telephone. It refers to instruments whose installation or
presence cannot be presumed by the party or parties being overheard because, by their very nature, they are not of
common usage and their purpose is precisely for tapping, intercepting or recording a telephone conversation.
An extension telephone is an instrument which is very common especially now when the extended unit does not
have to be connected by wire to the main telephone but can be moved from place ' to place within a radius of a
kilometer or more. A person should safely presume that the party he is calling at the other end of the line probably
has an extension telephone and he runs the risk of a third party listening as in the case of a party line or a telephone
unit which shares its line with another. As was held in the case of Rathbun v. United States (355, U.S. 107, 2 L Ed 2d
137-138):
Common experience tells us that a call to a particular telephone number may cause the bell to ring
in more than one ordinarily used instrument. Each party to a telephone conversation takes the risk
that the other party may have an extension telephone and may allow another to overhear the
conversation. When such takes place there has been no violation of any privacy of which the
parties may complain. Consequently, one element of 605, interception, has not occurred.
In the same case, the Court further ruled that the conduct of the party would differ in no way if instead of repeating
the message he held out his hand-set so that another could hear out of it and that there is no distinction between that
sort of action and permitting an outsider to use an extension telephone for the same purpose.
Furthermore, it is a general rule that penal statutes must be construed strictly in favor of the accused. Thus, in case
of doubt as in the case at bar, on whether or not an extension telephone is included in the phrase "device or
arrangement", the penal statute must be construed as not including an extension telephone. In the case of People v.
Purisima, 86 SCRA 542, 562, we explained the rationale behind the rule:
American jurisprudence sets down the reason for this rule to be the tenderness of the law of the
rights of individuals; the object is to establish a certain rule by conformity to which mankind
would be safe, and the discretion of the court limited. (United States v. Harris, 177 US 305, 44 L
Ed 780, 20 S Ct 609; Braffith v. Virgin Islands (CA3) 26 F2d 646; Caudill v. State, 224 Ind 531,
69 NE2d; Jennings v. Commonwealth, 109 VA 821,63 SE 1080, all cited in 73 Am Jur 2d 452).
The purpose is not to enable a guilty person to escape punishment through a technicality but to
provide a precise definition of forbidden acts." (State v. Zazzaro, 20 A 2d 737, quoted in Martin's
Handbook on Statutory Construction, Rev. Ed. pp. 183-184).
In the same case of Purisima, we also ruled that on the construction or interpretation of a legislative measure, the
primary rule is to search for and determine the intent and spirit of the law. A perusal of the Senate Congressional
Records will show that not only did our lawmakers not contemplate the inclusion of an extension telephone as a
prohibited device or arrangement" but of greater importance, they were more concerned with penalizing the act of
recording than the act of merely listening to a telephone conversation.
xxx xxx xxx
Senator Taada. Another possible objection to that is entrapment which is
certainly objectionable. It is made possible by special amendment which Your
Honor may introduce.
Senator Diokno.Your Honor, I would feel that entrapment would be less possible
with the amendment than without it, because with the amendment the evidence
of entrapment would only consist of government testimony as against the
testimony of the defendant. With this amendment, they would have the right,

and the government officials and the person in fact would have the right to tape
record their conversation.
Senator Taada. In case of entrapment, it would be the government.
Senator Diokno. In the same way, under this provision, neither party could
record and, therefore, the court would be limited to saying: "Okay, who is more
credible, the police officers or the defendant?" In these cases, as experienced
lawyers, we know that the Court go with the peace offices.
(Congressional Record, Vol. 111, No. 33, p. 628, March 12, 1964).
xxx xxx xxx
Senator Diokno. The point I have in mind is that under these conditions, with an
agent outside listening in, he could falsify the testimony and there is no way of
checking it. But if you allow him to record or make a recording in any form of
what is happening, then the chances of falsifying the evidence is not very much.
Senator Taada. Your Honor, this bill is not intended to prevent the presentation
of false testimony. If we could devise a way by which we could prevent the
presentation of false testimony, it would be wonderful. But what this bill intends
to prohibit is the use of tape record and other electronic devices to intercept
private conversations which later on will be used in court.
(Congressional Record, Vol. III, No. 33, March 12, 1964, p. 629).
It can be readily seen that our lawmakers intended to discourage, through punishment, persons such as government
authorities or representatives of organized groups from installing devices in order to gather evidence for use in court
or to intimidate, blackmail or gain some unwarranted advantage over the telephone users. Consequently, the mere
act of listening, in order to be punishable must strictly be with the use of the enumerated devices in RA No. 4200 or
others of similar nature. We are of the view that an extension telephone is not among such devices or arrangements.
WHEREFORE, the petition is GRANTED. The decision of the then Intermediate Appellate Court dated August 16,
1984 is ANNULLED and SET ASIDE. The petitioner is hereby ACQUITTED of the crime of violation of Rep. Act
No. 4200, otherwise known as the Anti-Wiretapping Act.
SO ORDERED.

10. Pollo vs. Constantino- David ()ct. 18, 2011)

VILLARAMA, JR., J.:
This case involves a search of office computer assigned to a government employee who was charged
administratively and eventually dismissed from the service. The employees personal files stored in the computer
were used by the government employer as evidence of misconduct.
Before us is a petition for review on certiorari under Rule 45 which seeks to reverse and set aside the
Decision[1] dated October 11, 2007 and Resolution[2] dated February 29, 2008 of the Court of Appeals (CA). The CA
dismissed the petition for certiorari (CA-G.R. SP No. 98224) filed by petitioner Briccio Ricky A. Pollo to nullify the
proceedings conducted by the Civil Service Commission (CSC) which found him guilty of dishonesty, grave
misconduct, conduct prejudicial to the best interest of the service, and violation of Republic Act (R.A.) No. 6713 and
penalized him with dismissal.
The factual antecedents:
Petitioner is a former Supervising Personnel Specialist of the CSC Regional Office No. IV and also the
Officer-in-Charge of the Public Assistance and Liaison Division (PALD) under the Mamamayan Muna Hindi
Mamaya Na program of the CSC.
On January 3, 2007 at around 2:30 p.m., an unsigned letter-complaint addressed to respondent CSC Chairperson
Karina Constantino-David which was marked Confidential and sent through a courier service (LBC) from a certain
Alan San Pascual of Bagong Silang, Caloocan City, was received by the Integrated Records Management Office

(IRMO) at the CSC Central Office. Following office practice in which documents marked Confidential are left
unopened and instead sent to the addressee, the aforesaid letter was given directly to Chairperson David.
The letter-complaint reads:
The Chairwoman
Civil Service Commission
Batasan Hills, Quezon City
Dear Madam Chairwoman,
Belated Merry Christmas and Advance Happy New Year!
As a concerned citizen of my beloved country, I would like to ask from you personally if it is
just alright for an employee of your agency to be a lawyer of an accused govt employee having a
pending case in the csc. I honestly think this is a violation of law and unfair to others and your
office.
I have known that a person have been lawyered by one of your attorny in the region 4 office. He is
the chief of the Mamamayan muna hindi mamaya na division. He have been helping many who
have pending cases in the Csc. The justice in our govt system will not be served if this will
continue. Please investigate this anomaly because our perception of your clean and good office is
being tainted.
Concerned Govt employee[3]
Chairperson David immediately formed a team of four personnel with background in information technology (IT),
and issued a memo directing them to conduct an investigation and specifically to back up all the files in the
computers found in the Mamamayan Muna (PALD) and Legal divisions. [4] After some briefing, the team proceeded
at once to the CSC-ROIV office at Panay Avenue, Quezon City. Upon their arrival thereat around 5:30 p.m., the
team informed the officials of the CSC-ROIV, respondents Director IV Lydia Castillo (Director Castillo) and
Director III Engelbert Unite (Director Unite) of Chairperson Davids directive.
The backing-up of all files in the hard disk of computers at the PALD and Legal Services Division (LSD) was
witnessed by several employees, together with Directors Castillo and Unite who closely monitored said activity. At
around 6:00 p.m., Director Unite sent text messages to petitioner and the head of LSD, who were both out of the
office at the time, informing them of the ongoing copying of computer files in their divisions upon orders of the
CSC Chair. The text messages received by petitioner read:
Gud p.m. This is Atty. Unite FYI: Co people are going over the PCs of PALD and LSD per
instruction of the Chairman. If you can make it here now it would be better.
All PCs Of PALD and LSD are being backed up per memo of the chair.
CO IT people arrived just now for this purpose. We were not also informed about this.
We cant do anything about it its a directive from chair.
Memo of the chair was referring to an anonymous complaint; ill send a copy of the memo via
mms[5]
Petitioner replied also thru text message that he was leaving the matter to Director Unite and that he will just get a
lawyer. Another text message received by petitioner from PALD staff also reported the presence of the team from
CSC main office: Sir may mga taga C.O. daw sa kuarto natin. [6] At around 10:00 p.m. of the same day, the
investigating team finished their task. The next day, all the computers in the PALD were sealed and secured for the
purpose of preserving all the files stored therein. Several diskettes containing the back-up files sourced from the
hard disk of PALD and LSD computers were turned over to Chairperson David. The contents of the diskettes were
examined by the CSCs Office for Legal Affairs (OLA). It was found that most of the files in the 17 diskettes
containing files copied from the computer assigned to and being used by the petitioner, numbering about 40 to 42
documents, were draft pleadings or letters [7] in connection with administrative cases in the CSC and other tribunals.
On the basis of this finding, Chairperson David issued the Show-Cause Order [8] dated January 11, 2007, requiring
the petitioner, who had gone on extended leave, to submit his explanation or counter-affidavit within five days from
notice.
Evaluating the subject documents obtained from petitioners personal files, Chairperson David made the following
observations:
Most of the foregoing files are drafts of legal pleadings or documents that are related to
or connected with administrative cases that may broadly be lumped as pending either in the
CSCRO No. IV, the CSC-NCR, the CSC-Central Office or other tribunals. It is also of note that

most of these draft pleadings are for and on behalves of parties, who are facing charges as
respondents in administrative cases. This gives rise to the inference that the one who prepared
them was knowingly, deliberately and willfully aiding and advancing interests adverse and
inimical to the interest of the CSC as the central personnel agency of the government tasked to
discipline misfeasance and malfeasance in the government service. The number of pleadings so
prepared further demonstrates that such person is not merely engaged in an isolated practice but
pursues it with seeming regularity. It would also be the height of naivete or credulity, and certainly
against common human experience, to believe that the person concerned had engaged in this
customary practice without any consideration, and in fact, one of the retrieved files (item 13
above) appears to insinuate the collection of fees. That these draft pleadings were obtained from
the computer assigned to Pollo invariably raises the presumption that he was the one responsible
or had a hand in their drafting or preparation since the computer of origin was within his direct
control and disposition.[9]
Petitioner filed his Comment, denying that he is the person referred to in the anonymous letter-complaint which had
no attachments to it, because he is not a lawyer and neither is he lawyering for people with cases in the CSC. He
accused CSC officials of conducting a fishing expedition when they unlawfully copied and printed personal files in
his computer, and subsequently asking him to submit his comment which violated his right against selfincrimination. He asserted that he had protested the unlawful taking of his computer done while he was on leave,
citing the letter dated January 8, 2007 in which he informed Director Castillo that the files in his computer were his
personal files and those of his sister, relatives, friends and some associates and that he is not authorizing their
sealing, copying, duplicating and printing as these would violate his constitutional right to privacy and protection
against self-incrimination and warrantless search and seizure. He pointed out that though government property, the
temporary use and ownership of the computer issued under a Memorandum of Receipt (MR) is ceded to the
employee who may exercise all attributes of ownership, including its use for personal purposes. As to the
anonymous letter, petitioner argued that it is not actionable as it failed to comply with the requirements of a formal
complaint under the Uniform Rules on Administrative Cases in the Civil Service (URACC). In view of the illegal
search, the files/documents copied from his computer without his consent is thus inadmissible as evidence, being
fruits of a poisonous tree.[10]
On February 26, 2007, the CSC issued Resolution No. 070382 [11] finding prima facie case against the petitioner and
charging him with Dishonesty, Grave Misconduct, Conduct Prejudicial to the Best Interest of the Service and
Violation of R.A. No. 6713 (Code of Conduct and Ethical Standards for Public Officials and Employees). Petitioner
was directed to submit his answer under oath within five days from notice and indicate whether he elects a formal
investigation. Since the charges fall under Section 19 of the URACC, petitioner was likewise placed under 90 days
preventive suspension effective immediately upon receipt of the resolution. Petitioner received a copy of Resolution
No. 070382 on March 1, 2007.
Petitioner filed an Omnibus Motion (For Reconsideration, to Dismiss and/or to Defer) assailing the formal charge as
without basis having proceeded from an illegal search which is beyond the authority of the CSC Chairman, such
power pertaining solely to the court. Petitioner reiterated that he never aided any people with pending cases at the
CSC and alleged that those files found in his computer were prepared not by him but by certain persons whom he
permitted, at one time or another, to make use of his computer out of close association or friendship. Attached to the
motion were the affidavit of Atty. Ponciano R. Solosa who entrusted his own files to be kept at petitioners CPU and
Atty. Eric N. Estrellado, the latter being Atty. Solosas client who attested that petitioner had nothing to do with the
pleadings or bill for legal fees because in truth he owed legal fees to Atty. Solosa and not to petitioner. Petitioner
contended that the case should be deferred in view of the prejudicial question raised in the criminal complaint he
filed before the Ombudsman against Director Buensalida, whom petitioner believes had instigated this
administrative case. He also prayed for the lifting of the preventive suspension imposed on him. In its Resolution
No. 070519[12] dated March 19, 2007, the CSC denied the omnibus motion. The CSC resolved to treat the said
motion as petitioners answer.
On March 14, 2007, petitioner filed an Urgent Petition [13] under Rule 65 of the Rules of Court, docketed as
CA-G.R. SP No. 98224, assailing both the January 11, 2007 Show-Cause Order and Resolution No. 070382 dated
February 26, 2007 as having been issued with grave abuse of discretion amounting to excess or total absence of
jurisdiction. Prior to this, however, petitioner lodged an administrative/criminal complaint against respondents
Directors Racquel D.G. Buensalida (Chief of Staff, Office of the CSC Chairman) and Lydia A. Castillo (CSC-RO
IV) before the Office of the Ombudsman, and a separate complaint for disbarment against Director Buensalida. [14]
On April 17, 2007, petitioner received a notice of hearing from the CSC setting the formal investigation of the case
on April 30, 2007. On April 25, 2007, he filed in the CA an Urgent Motion for the issuance of TRO and preliminary

injunction.[15] Since he failed to attend the pre-hearing conference scheduled on April 30, 2007, the CSC reset the
same to May 17, 2007 with warning that the failure of petitioner and/or his counsel to appear in the said pre-hearing
conference shall entitle the prosecution to proceed with the formal investigation ex-parte.[16] Petitioner moved to
defer or to reset the pre-hearing conference, claiming that the investigation proceedings should be held in abeyance
pending the resolution of his petition by the CA. The CSC denied his request and again scheduled the pre-hearing
conference on May 18, 2007 with similar warning on the consequences of petitioner and/or his counsels nonappearance.[17] This prompted petitioner to file another motion in the CA, to cite the respondents, including the
hearing officer, in indirect contempt.[18]
On June 12, 2007, the CSC issued Resolution No. 071134[19] denying petitioners motion to set aside the denial of his
motion to defer the proceedings and to inhibit the designated hearing officer, Atty. Bernard G. Jimenez. The hearing
officer was directed to proceed with the investigation proper with dispatch.
In view of the absence of petitioner and his counsel, and upon the motion of the prosecution, petitioner was deemed
to have waived his right to the formal investigation which then proceeded ex parte.
On July 24, 2007, the CSC issued Resolution No. 071420,[20] the dispositive part of which reads:
WHEREFORE, foregoing premises considered, the Commission hereby finds Briccio A.
Pollo, a.k.a. Ricky A. Pollo GUILTY of Dishonesty, Grave Misconduct, Conduct Prejudicial to the
Best Interest of the Service and Violation of Republic Act 6713. He is meted the penalty of
DISMISSAL FROM THE SERVICE with all its accessory penalties, namely, disqualification to
hold public office, forfeiture of retirement benefits, cancellation of civil service eligibilities and
bar from taking future civil service examinations.[21]
On the paramount issue of the legality of the search conducted on petitioners computer, the CSC noted the dearth of
jurisprudence relevant to the factual milieu of this case where the government as employer invades the private files
of an employee stored in the computer assigned to him for his official use, in the course of initial investigation of
possible misconduct committed by said employee and without the latters consent or participation. The CSC thus
turned to relevant rulings of the United States Supreme Court, and cited the leading case of OConnor v. Ortega[22] as
authority for the view that government agencies, in their capacity as employers, rather than law enforcers, could
validly conduct search and seizure in the governmental workplace without meeting the probable cause or warrant
requirement for search and seizure. Another ruling cited by the CSC is the more recent case of United States v. Mark
L. Simons[23] which declared that the federal agencys computer use policy foreclosed any inference of reasonable
expectation of privacy on the part of its employees. Though the Court therein recognized that such policy did not, at
the same time, erode the respondents legitimate expectation of privacy in the office in which the computer was
installed, still, the warrantless search of the employees office was upheld as valid because a government employer is
entitled to conduct a warrantless search pursuant to an investigation of work-related misconduct provided the search
is reasonable in its inception and scope.
With the foregoing American jurisprudence as benchmark, the CSC held that petitioner has no reasonable
expectation of privacy with regard to the computer he was using in the regional office in view of the CSC computer
use policy which unequivocally declared that a CSC employee cannot assert any privacy right to a computer
assigned to him. Even assuming that there was no such administrative policy, the CSC was of the view that the
search of petitioners computer successfully passed the test of reasonableness for warrantless searches in the
workplace as enunciated in the aforecited authorities. The CSC stressed that it pursued the search in its capacity as
government employer and that it was undertaken in connection with an investigation involving work-related
misconduct, which exempts it from the warrant requirement under the Constitution. With the matter of admissibility
of the evidence having been resolved, the CSC then ruled that the totality of evidence adequately supports the
charges of grave misconduct, dishonesty, conduct prejudicial to the best interest of the service and violation of R.A.
No. 6713 against the petitioner. These grave infractions justified petitioners dismissal from the service with all its
accessory penalties.
In his Memorandum[24] filed in the CA, petitioner moved to incorporate the above resolution dismissing him
from the service in his main petition, in lieu of the filing of an appeal via a Rule 43 petition. In a subsequent motion,
he likewise prayed for the inclusion of Resolution No. 071800[25] which denied his motion for reconsideration.
By Decision dated October 11, 2007, the CA dismissed the petition for certiorari after finding no grave
abuse of discretion committed by respondents CSC officials. The CA held that: (1) petitioner was not charged on the
basis of the anonymous letter but from the initiative of the CSC after a fact-finding investigation was conducted and
the results thereof yielded a prima facie case against him; (2) it could not be said that in ordering the back-up of files
in petitioners computer and later confiscating the same, Chairperson David had encroached on the authority of a
judge in view of the CSC computer policy declaring the computers as government property and that employee-users
thereof have no reasonable expectation of privacy in anything they create, store, send, or receive on the computer

system; and (3) there is nothing contemptuous in CSCs act of proceeding with the formal investigation as there was
no restraining order or injunction issued by the CA.
His motion for reconsideration having been denied by the CA, petitioner brought this appeal arguing that
I
THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED AND COMMITTED
SERIOUS IRREGULARITY AND BLATANT ERRORS IN LAW AMOUNTING TO GRAVE
ABUSE OF DISCRETION WHEN IT RULED THAT ANONYMOUS COMPLAINT IS
ACTIONABLE UNDER E.O. 292 WHEN IN TRUTH AND IN FACT THE CONTRARY IS
EXPLICITLY PROVIDED UNDER 2nd PARAGRAPH OF SECTION 8 OF CSC RESOLUTION
NO. 99-1936, WHICH IS AN [AMENDMENT] TO THE ORIGINAL RULES PER CSC
RESOLUTION NO. 94-0521;
II
THE HONORABLE COURT GRIEVOUSLY ERRED AND COMMITTED PALPABLE
ERRORS IN LAW AMOUNTING TO GRAVE ABUSE OF DISCRETION WHEN IT RULED
THAT PETITIONER CANNOT INVOKE HIS RIGHT TO PRIVACY, TO UNREASONABLE
SEARCH AND SEIZURE, AGAINST SELF-INCRIMINATION, BY VIRTUE OF OFFICE
MEMORANDUM NO. 10 S. 2002, A MERE INTERNAL MEMORANDUM SIGNED SOLELY
AND EXCLUSIVELY BY RESPONDENT DAVID AND NOT BY THE COLLEGIAL
COMMISSION CONSIDERING THAT POLICY MATTERS INVOLVING SUB[S]TANTIAL
RIGHTS CANNOT BE COVERED BY AN OFFICE MEMORANDUM WHICH IS LIMITED
TO PROCEDURAL AND ROUTINARY INSTRUCTION;
III
THE HONORABLE COURT GRAVELY ERRED AND COMMITTED GRAVE ABUSE OF
DISCRETION WHEN IT RULED THAT MEMO SEARCH DATED JANUARY 3, 2007 AND
THE TAKING OF DOCUMENTS IN THE EVENING THEREOF FROM 7:00 TO 10:00 P.M. IS
NOT GRAVE ABUSE OF DISCRETION LIMITING THE DEFINITION [OF] GRAVE ABUSE
OF DISCRETION TO ONE INVOLVING AND TAINTED WITH PERSONAL HOSTILITY. IT
LIKEWISE ERRED IN HOLDING THAT DATA STORED IN THE GOVERNMENT
COMPUTERS ARE GOVERNMENT PROPERTIES INCLUDING THE PERSONAL
FILES WHEN THE CONTRARY IS PROVIDED UNDER SECTION 14 OF OM. 10 s. 2002.
AND GRIEVOUSLY ERRED STILL WHEN IT RULED THAT RESPONDENT DAVID BY
VIRTUE OF O.M. 10 DID NOT ENCROACH ON THE DUTIES AND FUNCTIONS OF A
JUDGE PURSUANT TO ARTICLE III, SECTION 2 OF THE 1987 PHILIPPINE
CONSTITUTION;
IV
THE HONORABLE COURT ERRED WHEN IT FAILED TO CONSIDER ALL OTHER NEW
ARGUMENTS, ADDITIONAL EVIDENCE HEREUNTO SUBMITTED AS WELL AS ITS
FAILURE TO EVALUATE AND TAKE ACTION ON THE 2 MOTIONS TO ADMIT AND
INCORPORATE CSC RESOLUTION NOS. 07-1420 DATED JULY 24, 2007 AND CSC
RESOLUTION 07-1800 DATED SEPTEMBER 10, 2007. IT DID NOT RULE LIKEWISE ON
THE FOUR URGENT MOTION TO RESOLVE ANCILLARY PRAYER FOR TRO.[26]
Squarely raised by the petitioner is the legality of the search conducted on his office computer and the copying of his
personal files without his knowledge and consent, alleged as a transgression on his constitutional right to privacy.
The right to privacy has been accorded recognition in this jurisdiction as a facet of the right protected by
the guarantee against unreasonable search and seizure under Section 2, Article III of the 1987 Constitution, [27] which
provides:
SEC. 2. The right of the people to be secure in their persons, houses, papers, and effects
against unreasonable searches and seizures of whatever nature and for any purpose shall be
inviolable, and no search warrant or warrant of arrest shall issue except upon probable cause to be
determined personally by the judge after examination under oath or affirmation of the complainant
and the witnesses he may produce, and particularly describing the place to be searched and the
persons or things to be seized.
The constitutional guarantee is not a prohibition of all searches and seizures but only of unreasonable searches and
seizures.[28] But to fully understand this concept and application for the purpose of resolving the issue at hand, it is
essential that we examine the doctrine in the light of pronouncements in another jurisdiction. As the Court declared
in People v. Marti[29]:

Our present constitutional provision on the guarantee against unreasonable search and
seizure had its origin in the 1935 Charter which, worded as follows:
The right of the people to be secure in their persons, houses, papers and
effects against unreasonable searches and seizures shall not be violated, and no
warrants shall issue but upon probable cause, to be determined by the judge
after examination under oath or affirmation of the complainant and the witnesses
he may produce, and particularly describing the place to be searched, and the
persons or things to be seized. (Sec. 1[3], Article III)
was in turn derived almost verbatim from the Fourth Amendment to the United States
Constitution. As such, the Court may turn to the pronouncements of the United States Federal
Supreme Court and State Appellate Courts which are considered doctrinal in this jurisdiction. [30]
In the 1967 case of Katz v. United States,[31] the US Supreme Court held that the act of FBI agents in electronically
recording a conversation made by petitioner in an enclosed public telephone booth violated his right to privacy and
constituted a search and seizure. Because the petitioner had a reasonable expectation of privacy in using the
enclosed booth to make a personal telephone call, the protection of the Fourth Amendment extends to such area. In
the concurring opinion of Mr. Justice Harlan, it was further noted that the existence of privacy right under prior
decisions involved a two-fold requirement: first, that a person has exhibited an actual (subjective) expectation of
privacy; and second, that the expectation be one that society is prepared to recognize as reasonable (objective). [32]
In Mancusi v. DeForte[33] which addressed the reasonable expectations of private employees in the workplace, the
US Supreme Court held that a union employee had Fourth Amendment rights with regard to an office at union
headquarters that he shared with other union officials, even as the latter or their guests could enter the office. The
Court thus recognized that employees may have a reasonable expectation of privacy against intrusions by police.
That the Fourth Amendment equally applies to a government workplace was addressed in the 1987 case of OConnor
v. Ortega[34] where a physician, Dr. Magno Ortega, who was employed by a state hospital, claimed a violation of his
Fourth Amendment rights when hospital officials investigating charges of mismanagement of the psychiatric
residency program, sexual harassment of female hospital employees and other irregularities involving his private
patients under the state medical aid program, searched his office and seized personal items from his desk and filing
cabinets. In that case, the Court categorically declared that [i]ndividuals do not lose Fourth Amendment rights
merely because they work for the government instead of a private employer.[35] A plurality of four Justices concurred
that the correct analysis has two steps: first, because some government offices may be so open to fellow employees
or the public that no expectation of privacy is reasonable, a court must consider [t]he operational realities of the
workplace in order to determine whether an employees Fourth Amendment rights are implicated; and next, where an
employee has a legitimate privacy expectation, an employers intrusion on that expectation for noninvestigatory,
work-related purposes, as well as for investigations of work-related misconduct, should be judged by the standard of
reasonableness under all the circumstances.[36]
On the matter of government employees reasonable expectations of privacy in their workplace, OConnor teaches:
x x x Public employees expectations of privacy in their offices, desks, and file cabinets,
like similar expectations of employees in the private sector, may be reduced by virtue of actual
office practices and procedures, or by legitimate regulation. x x x The employees expectation of
privacy must be assessed in the context of the employment relation. An office is seldom a private
enclave free from entry by supervisors, other employees, and business and personal
invitees. Instead, in many cases offices are continually entered by fellow employees and other
visitors during the workday for conferences, consultations, and other work-related visits. Simply
put, it is the nature of government offices that others such as fellow employees, supervisors,
consensual visitors, and the general public may have frequent access to an individuals office. We
agree with JUSTICE SCALIA that [c]onstitutional protection against unreasonable searches by the
government does not disappear merely because the government has the right to make reasonable
intrusions in its capacity as employer, x x x but some government offices may be so open to
fellow employees or the public that no expectation of privacy is reasonable. x x x Given the
great variety of work environments in the public sector, the question of whether an employee
has a reasonable expectation of privacy must be addressed on a case-by-case basis.
[37]
(Citations omitted; emphasis supplied.)
On the basis of the established rule in previous cases, the US Supreme Court declared that Dr. Ortegas Fourth
Amendment rights are implicated only if the conduct of the hospital officials infringed an expectation of privacy that
society is prepared to consider as reasonable. Given the undisputed evidence that respondent Dr. Ortega did not
share his desk or file cabinets with any other employees, kept personal correspondence and other private items in his

own office while those work-related files (on physicians in residency training) were stored outside his office, and
there being no evidence that the hospital had established any reasonable regulation or policy discouraging
employees from storing personal papers and effects in their desks or file cabinets (although the absence of such a
policy does not create any expectation of privacy where it would not otherwise exist), the Court concluded that Dr.
Ortega has a reasonable expectation of privacy at least in his desk and file cabinets.[38]
Proceeding to the next inquiry as to whether the search conducted by hospital officials was reasonable,
the OConnor plurality decision discussed the following principles:
Having determined that Dr. Ortega had a reasonable expectation of privacy in his office,
the Court of Appeals simply concluded without discussion that the searchwas not a reasonable
search under the fourth amendment. x x x [t]o hold that the Fourth Amendment applies to searches
conducted by [public employers] is only to begin the inquiry into the standards governing such
searches[W]hat is reasonable depends on the context within which a search takes place. x x x
Thus, we must determine the appropriate standard of reasonableness applicable to the search.A
determination of the standard of reasonableness applicable to a particular class of searches
requires balanc[ing] the nature and quality of the intrusion on the individuals Fourth Amendment
interests against the importance of the governmental interests alleged to justify the intrusion. x x
x In the case of searches conducted by a public employer, we must balance the invasion of
the employees legitimate expectations of privacy against the governments need for
supervision, control, and the efficient operation of the workplace.
xxxx
In our view, requiring an employer to obtain a warrant whenever the employer wished to
enter an employees office, desk, or file cabinets for a work-related purpose would seriously disrupt
the routine conduct of business and would be unduly burdensome. Imposing unwieldy warrant
procedures in such cases upon supervisors, who would otherwise have no reason to be familiar
with such procedures, is simply unreasonable. In contrast to other circumstances in which we have
required warrants, supervisors in offices such as at the Hospital are hardly in the business of
investigating the violation of criminal laws. Rather, work-related searches are merely incident to
the primary business of the agency. Under these circumstances, the imposition of a warrant
requirement would conflict with the common-sense realization that government offices could not
function if every employment decision became a constitutional matter. x x x
xxxx
The governmental interest justifying work-related intrusions by public employers is the
efficient and proper operation of the workplace. Government agencies provide myriad services to
the public, and the work of these agencies would suffer if employers were required to have
probable cause before they entered an employees desk for the purpose of finding a file or piece of
office correspondence. Indeed, it is difficult to give the concept of probable cause, rooted as it is in
the criminal investigatory context, much meaning when the purpose of a search is to retrieve a file
for work-related reasons. Similarly, the concept of probable cause has little meaning for a routine
inventory conducted by public employers for the purpose of securing state property. x x x To
ensure the efficient and proper operation of the agency, therefore, public employers must be given
wide latitude to enter employee offices for work-related, noninvestigatory reasons.
We come to a similar conclusion for searches conducted pursuant to an investigation of
work-related employee misconduct. Even when employers conduct an investigation, they have an
interest substantially different from the normal need for law enforcement. x x x Public employers
have an interest in ensuring that their agencies operate in an effective and efficient manner, and the
work of these agencies inevitably suffers from the inefficiency, incompetence, mismanagement, or
other work-related misfeasance of its employees. Indeed, in many cases, public employees are
entrusted with tremendous responsibility, and the consequences of their misconduct or
incompetence to both the agency and the public interest can be severe. In contrast to law
enforcement officials, therefore, public employers are not enforcers of the criminal law; instead,
public employers have a direct and overriding interest in ensuring that the work of the agency is
conducted in a proper and efficient manner. In our view, therefore, a probable cause requirement
for searches of the type at issue here would impose intolerable burdens on public
employers. The delay in correcting the employee misconduct caused by the need for
probable cause rather than reasonable suspicion will be translated into tangible and often
irreparable damage to the agencys work, and ultimately to the public interest. x x x

xxxx
In sum, we conclude that the special needs, beyond the normal need for law
enforcement make theprobable-cause requirement impracticable, x x x for legitimate, workrelated noninvestigatory intrusions as well as investigations of work-related misconduct. A
standard of reasonableness will neither unduly burden the efforts of government employers to
ensure the efficient and proper operation of the workplace, nor authorize arbitrary intrusions upon
the privacy of public employees. We hold, therefore, that public employer intrusions on the
constitutionally protected privacy interests of government employees for noninvestigatory,
work-related purposes, as well as for investigations of work-related misconduct, should be
judged by the standard of reasonableness under all the circumstances. Under this
reasonableness standard, both the inception and the scope of the intrusion must be reasonable:
Determining the reasonableness of any search involves a twofold inquiry: first,
one must consider whether theaction was justified at its inception, x x
x ; second, one must determine whether the search as actually conducted was
reasonably related in scope to the circumstances which justified the interference
in the first place, x x x
Ordinarily, a search of an employees office by a supervisor will be justified at its
inception when there are reasonable grounds for suspecting that the search will turn up
evidence that the employee is guilty of work-related misconduct, or that the search is
necessary for a noninvestigatory work-related purpose such as to retrieve a needed file. x x
x The search will be permissible in its scope when the measures adopted are reasonably
related to the objectives of the search and not excessively intrusive in light of the nature of
the [misconduct]. x x x[39] (Citations omitted; emphasis supplied.)
Since the District Court granted summary judgment without a hearing on the factual dispute as to the character of
the search and neither was there any finding made as to the scope of the search that was undertaken, the case was
remanded to said court for the determination of the justification for the search and seizure, and evaluation of the
reasonableness of both the inception of the search and its scope.
In OConnor the Court recognized that special needs authorize warrantless searches involving public
employees for work-related reasons. The Court thus laid down a balancing test under which government interests are
weighed against the employees reasonable expectation of privacy. This reasonableness test implicates neither
probable cause nor the warrant requirement, which are related to law enforcement.[40]
OConnor was applied in subsequent cases raising issues on employees privacy rights in the workplace. One
of these cases involved a government employers search of an office computer, United States v. Mark L.
Simons[41] where the defendant Simons, an employee of a division of the Central Intelligence Agency (CIA), was
convicted of receiving and possessing materials containing child pornography. Simons was provided with an office
which he did not share with anyone, and a computer with Internet access.The agency had instituted a policy on
computer use stating that employees were to use the Internet for official government business only and that
accessing unlawful material was specifically prohibited. The policy also stated that users shall understand that the
agency will periodically audit, inspect, and/or monitor the users Internet access as deemed appropriate. CIA agents
instructed its contractor for the management of the agencys computer network, upon initial discovery of prohibited
internet activity originating from Simons computer, to conduct a remote monitoring and examination of Simons
computer. After confirming that Simons had indeed downloaded pictures that were pornographic in nature, all the
files on the hard drive of Simons computer were copied from a remote work station. Days later, the contractors
representative finally entered Simons office, removed the original hard drive on Simons computer, replaced it with a
copy, and gave the original to the agency security officer. Thereafter, the agency secured warrants and searched
Simons office in the evening when Simons was not around. The search team copied the contents of Simons
computer; computer diskettes found in Simons desk drawer; computer files stored on the zip drive or on zip drive
diskettes; videotapes; and various documents, including personal correspondence. At his trial, Simons moved to
suppress these evidence, arguing that the searches of his office and computer violated his Fourth Amendment
rights. After a hearing, the district court denied the motion and Simons was found guilty as charged.
Simons appealed his convictions. The US Supreme Court ruled that the searches of Simons computer and
office did not violate his Fourth Amendment rights and the first search warrant was valid. It held that the search
remains valid under the OConnor exception to the warrant requirement because evidence of the crime was
discovered in the course of an otherwise proper administrative inspection. Simons violation of the agencys Internet
policy happened also to be a violation of criminal law; this does not mean that said employer lost the capacity and
interests of an employer. The warrantless entry into Simons office was reasonable under the Fourth Amendment

standard announced in OConnor because at the inception of the search, the employer had reasonable grounds for
suspecting that the hard drive would yield evidence of misconduct, as the employer was already aware that Simons
had misused his Internet access to download over a thousand pornographic images. The retrieval of the hard drive
was reasonably related to the objective of the search, and the search was not excessively intrusive. Thus, while
Simons had a reasonable expectation of privacy in his office, he did not have such legitimate expectation of privacy
with regard to the files in his computer.
x x x To establish a violation of his rights under the Fourth Amendment, Simons must
first prove that he had a legitimate expectation of privacy in the place searched or the item seized.
x x x And, in order to prove a legitimate expectation of privacy, Simons must show that his
subjective expectation of privacy is one that society is prepared to accept as objectively
reasonable. x x x
xxxx
x x x We conclude that the remote searches of Simons computer did not violate his
Fourth Amendment rights because, in light of the Internet policy, Simons lacked a legitimate
expectation of privacy in the files downloaded from the Internet. Additionally, we conclude that
Simons Fourth Amendment rights were not violated by FBIS retrieval of Simons hard drive from
his office.
Simons did not have a legitimate expectation of privacy with regard to the record or
fruits of his Internet use in light of the FBIS Internet policy. The policy clearly stated that
FBIS would audit, inspect, and/or monitor employees use of the Internet, including all file
transfers, all websites visited, and all e-mail messages, as deemed appropriate. x x x This
policy placed employees on notice that they could not reasonably expect that their Internet activity
would be private. Therefore, regardless of whether Simons subjectively believed that the files he
transferred from the Internet were private, such a belief was not objectively reasonable after FBIS
notified him that it would be overseeing his Internet use. x x x Accordingly, FBIS actions in
remotely searching and seizing the computer files Simons downloaded from the Internet did not
violate the Fourth Amendment.
xxxx
The burden is on Simons to prove that he had a legitimate expectation of privacy in
his office. x x x Here, Simons has shown that he had an office that he did not share. As noted
above, the operational realities of Simons workplace may have diminished his legitimate privacy
expectations. However, there is no evidence in the record of any workplace practices, procedures,
or regulations that had such an effect. We therefore conclude that, on this record, Simons
possessed a legitimate expectation of privacy in his office.
xxxx
In the final analysis, this case involves an employees supervisor entering the employees
government office and retrieving a piece of government equipment in which the employee had
absolutely no expectation of privacy equipment that the employer knew contained evidence of
crimes committed by the employee in the employees office. This situation may be contrasted with
one in which the criminal acts of a government employee were unrelated to his employment. Here,
there was a conjunction of the conduct that violated the employers policy and the conduct that
violated the criminal law. We consider that FBIS intrusion into Simons office to retrieve the hard
drive is one in which a reasonable employer might engage. x x x [42] (Citations omitted; emphasis
supplied.)
This Court, in Social Justice Society (SJS) v. Dangerous Drugs Board[43] which involved the constitutionality of a
provision in R.A. No. 9165 requiring mandatory drug testing of candidates for public office, students of secondary
and tertiary schools, officers and employees of public and private offices, and persons charged before the
prosecutors office with certain offenses, have also recognized the fact that there may be such legitimate intrusion of
privacy in the workplace.
The first factor to consider in the matter of reasonableness is the nature of the privacy
interest upon which the drug testing, which effects a search within the meaning of Sec. 2, Art. III
of the Constitution, intrudes. In this case, the office or workplace serves as the backdrop for the
analysis of the privacy expectation of the employees and the reasonableness of drug testing
requirement. The employees privacy interest in an office is to a large extent circumscribed by
the companys work policies, the collective bargaining agreement, if any, entered into by
management and the bargaining unit, and the inherent right of the employer to maintain

discipline and efficiency in the workplace. Their privacy expectation in a regulated office
environment is, in fine, reduced; and a degree of impingement upon such privacy has been upheld.
(Emphasis supplied.)
Applying the analysis and principles announced in OConnor and Simons to the case at bar, we now address the
following questions: (1) Did petitioner have a reasonable expectation of privacy in his office and computer files?;
and (2) Was the search authorized by the CSC Chair, the copying of the contents of the hard drive on petitioners
computer reasonable in its inception and scope?
In this inquiry, the relevant surrounding circumstances to consider include (1) the employees relationship to the item
seized; (2) whether the item was in the immediate control of the employee when it was seized; and (3) whether the
employee took actions to maintain his privacy in the item. These factors are relevant to both the subjective and
objective prongs of the reasonableness inquiry, and we consider the two questions together. [44] Thus, where the
employee used a password on his computer, did not share his office with co-workers and kept the same locked, he
had a legitimate expectation of privacy and any search of that space and items located therein must comply with the
Fourth Amendment.[45]
We answer the first in the negative. Petitioner failed to prove that he had an actual (subjective) expectation
of privacy either in his office or government-issued computer which contained his personal files. Petitioner did not
allege that he had a separate enclosed office which he did not share with anyone, or that his office was always
locked and not open to other employees or visitors. Neither did he allege that he used passwords or adopted any
means to prevent other employees from accessing his computer files. On the contrary, he submits that being in the
public assistance office of the CSC-ROIV, he normally would have visitors in his office like friends, associates and
even unknown people, whom he even allowed to use his computer which to him seemed a trivial request. He
described his office as full of people, his friends, unknown people and that in the past 22 years he had been
discharging his functions at the PALD, he is personally assisting incoming clients, receiving documents, drafting
cases on appeals, in charge of accomplishment report, Mamamayan Muna Program, Public Sector Unionism,
Correction of name, accreditation of service, and hardly had anytime for himself alone, that in fact he stays in the
office as a paying customer.[46] Under this scenario, it can hardly be deduced that petitioner had such expectation of
privacy that society would recognize as reasonable.
Moreover, even assuming arguendo, in the absence of allegation or proof of the aforementioned factual
circumstances, that petitioner had at least a subjective expectation of privacy in his computer as he claims, such is
negated by the presence of policy regulating the use of office computers, as in Simons.
Office Memorandum No. 10, S. 2002 Computer Use Policy (CUP) explicitly provides:
POLICY
1.
The Computer Resources are the property of the Civil Service Commission and may be used
only for legitimate business purposes.
2.
3.

Users shall be permitted access to Computer Resources to assist them in the performance of
their respective jobs.
Use of the Computer Resources is a privilege that may be revoked at any given time.

xxxx
No Expectation of Privacy
4. No expectation of privacy. Users except the Members of the Commission shall not have an
expectation of privacy in anything they create, store, send, or receive on the computer
system.
The Head of the Office for Recruitment, Examination and Placement shall select and
assign Users to handle the confidential examination data and processes.
5. Waiver of privacy rights. Users expressly waive any right to privacy in anything they create,
store, send, or receive on the computer through the Internet or any other computer
network. Usersunderstand that the CSC may use human or automated means to monitor
the use of its Computer Resources.
6. Non-exclusivity of Computer Resources. A computer resource is not a personal property or for
the exclusive use of a User to whom a memorandum of receipt (MR) has been issued. It can
be shared or operated by other users. However, he is accountable therefor and must insure
its care and maintenance.

xxxx
Passwords
12. Responsibility for passwords. Users shall be responsible for safeguarding their passwords for
access to the computer system. Individual passwords shall not be printed, stored online, or
given to others. Users shall be responsible for all transactions made using their
passwords. No User may access the computer system with another Users password or
account.
13. Passwords do not imply privacy. Use of passwords to gain access to the computer system or to
encode particular files or messages does not imply that Users have an expectation of
privacy in the material they create or receive on the computer system. The Civil Service
Commission has global passwords that permit access to all materials stored on its
networked computer system regardless of whether those materials have been encoded with
a particular Users password. Only members of the Commission shall authorize the
application of the said global passwords.
x x x x[47] (Emphasis supplied.)
The CSC in this case had implemented a policy that put its employees on notice that they have no expectation of
privacy in anything they create, store, send or receive on the office computers, and that the CSC may monitor the
use of the computer resources using both automated or human means. This implies that on-the-spot inspections may
be done to ensure that the computer resources were used only for such legitimate business purposes.
One of the factors stated in OConnor which are relevant in determining whether an employees expectation of
privacy in the workplace is reasonable is the existence of a workplace privacy policy. [48] In one case, the US Court of
Appeals Eighth Circuit held that a state university employee has not shown that he had a reasonable expectation of
privacy in his computer files where the universitys computer policy, the computer user is informed not to expect
privacy if the university has a legitimate reason to conduct a search. The user is specifically told that computer files,
including e-mail, can be searched when the university is responding to a discovery request in the course of
litigation.Petitioner employee thus cannot claim a violation of Fourth Amendment rights when university officials
conducted a warrantless search of his computer for work-related materials. [49]
As to the second point of inquiry on the reasonableness of the search conducted on petitioners computer, we answer
in the affirmative.
The search of petitioners computer files was conducted in connection with investigation of work-related misconduct
prompted by an anonymous letter-complaint addressed to Chairperson David regarding anomalies in the CSC-ROIV
where the head of the Mamamayan Muna Hindi Mamaya Na division is supposedly lawyering for individuals with
pending cases in the CSC. Chairperson David stated in her sworn affidavit:
8. That prior to this, as early as 2006, the undersigned has received several text messages from
unknown sources adverting to certain anomalies in Civil Service Commission Regional
Office IV (CSCRO IV) such as, staff working in another government agency, selling cases
and aiding parties with pending cases, all done during office hours and involved the use of
government properties;
9. That said text messages were not investigated for lack of any verifiable leads and details
sufficient to warrant an investigation;
10. That the anonymous letter provided the lead and details as it pinpointed the persons and
divisions involved in the alleged irregularities happening in CSCRO IV;
11. That in view of the seriousness of the allegations of irregularities happening in CSCRO IV and
its effect on the integrity of the Commission, I decided to form a team of Central Office
staff to back up the files in the computers of the Public Assistance and Liaison Division
(PALD) and Legal Division;
x x x x[50]
A search by a government employer of an employees office is justified at inception when there are reasonable
grounds for suspecting that it will turn up evidence that the employee is guilty of work-related misconduct. [51] Thus,
in the 2004 case decided by the US Court of Appeals Eighth Circuit, it was held that where a government agencys
computer use policy prohibited electronic messages with pornographic content and in addition expressly
provided that employees do not have any personal privacy rights regarding their use of the agency information
systems and technology, the government employee had no legitimate expectation of privacy as to the use and
contents of his office computer, and therefore evidence found during warrantless search of the computer was
admissible in prosecution for child pornography. In that case, the defendant employees computer hard drive was first
remotely examined by a computer information technician after his supervisor received complaints that he was

inaccessible and had copied and distributed non-work-related e-mail messages throughout the office. When the
supervisor confirmed that defendant had used his computer to access the prohibited websites, in contravention of the
express policy of the agency, his computer tower and floppy disks were taken and examined. A formal
administrative investigation ensued and later search warrants were secured by the police department. The initial
remote search of the hard drive of petitioners computer, as well as the subsequent warrantless searches was held as
valid under the OConnor ruling that a public employer can investigate work-related misconduct so long as any
search is justified at inception and is reasonably related in scope to the circumstances that justified it in the first
place.[52]
Under the facts obtaining, the search conducted on petitioners computer was justified at its inception and scope. We
quote with approval the CSCs discussion on the reasonableness of its actions, consistent as it were with the
guidelines established by OConnor:
Even conceding for a moment that there is no such administrative policy, there is no
doubt in the mind of the Commission that the search of Pollos computer has successfully passed
the test of reasonableness for warrantless searches in the workplace as enunciated in the abovediscussed American authorities. It bears emphasis that the Commission pursued the search in
its capacity as a government employer and that it was undertaken in connection with an
investigation involving a work-related misconduct, one of the circumstances exempted from the
warrant requirement. At the inception of the search, a complaint was received recounting that a
certain division chief in the CSCRO No. IV was lawyering for parties having pending cases with
the said regional office or in the Commission. The nature of the imputation was serious, as it
was grievously disturbing. If, indeed, a CSC employee was found to be furtively engaged in the
practice of lawyering for parties with pending cases before the Commission would be a highly
repugnant scenario, then such a case would have shattering repercussions. It would undeniably
cast clouds of doubt upon the institutional integrity of the Commission as a quasi-judicial agency,
and in the process, render it less effective in fulfilling its mandate as an impartial and objective
dispenser of administrative justice. It is settled that a court or an administrative tribunal must not
only be actually impartial but must be seen to be so, otherwise the general public would not have
any trust and confidence in it.
Considering the damaging nature of the accusation, the Commission had to act fast,
if only to arrest or limit any possible adverse consequence or fall-out. Thus, on the same date that
the complaint was received, a search was forthwith conducted involving the computer resources in
the concerned regional office. That it was the computers that were subjected to the search was
justified since these furnished the easiest means for an employee to encode and store
documents. Indeed, the computers would be a likely starting point in ferreting out
incriminating evidence. Concomitantly, the ephemeral nature of computer files, that is, they
could easily be destroyed at a click of a button, necessitated drastic and immediate
action. Pointedly, to impose the need to comply with the probable cause requirement would
invariably defeat the purpose of the wok-related investigation.
Worthy to mention, too, is the fact that the Commission effected the warrantless search in
an open and transparent manner. Officials and some employees of the regional office, who
happened to be in the vicinity, were on hand to observe the process until its completion. In
addition, the respondent himself was duly notified, through text messaging, of the search and the
concomitant retrieval of files from his computer.
All in all, the Commission is convinced that the warrantless search done on computer
assigned to Pollo was not, in any way, vitiated with unconstitutionality. It was a reasonable
exercise of the managerial prerogative of the Commission as an employer aimed at ensuring its
operational effectiveness and efficiency by going after the work-related misfeasance of its
employees.Consequently, the evidence derived from the questioned search are deemed admissible.
[53]

Petitioners claim of violation of his constitutional right to privacy must necessarily fail. His other argument
invoking the privacy of communication and correspondence under Section 3(1), Article III of the 1987
Constitution is also untenable considering the recognition accorded to certain legitimate intrusions into the privacy
of employees in the government workplace under the aforecited authorities. We likewise find no merit in his
contention that OConnor and Simons are not relevant because the present case does not involve a criminal offense
like child pornography. As already mentioned, the search of petitioners computer was justified there being
reasonable ground for suspecting that the files stored therein would yield incriminating evidence relevant to the

investigation being conducted by CSC as government employer of such misconduct subject of the anonymous
complaint. This situation clearly falls under the exception to the warrantless requirement in administrative searches
defined in OConnor.
The Court is not unaware of our decision in Anonymous Letter-Complaint against Atty. Miguel Morales,
Clerk of Court, Metropolitan Trial Court of Manila [54] involving a branch clerk (Atty. Morales) who was investigated
on the basis of an anonymous letter alleging that he was consuming his working hours filing and attending to
personal cases, using office supplies, equipment and utilities. The OCA conducted a spot investigation aided by NBI
agents. The team was able to access Atty. Morales personal computer and print two documents stored in its hard
drive, which turned out to be two pleadings, one filed in the CA and another in the RTC of Manila, both in the name
of another lawyer. Atty. Morales computer was seized and taken in custody of the OCA but was later ordered
released on his motion, but with order to the MISO to first retrieve the files stored therein. The OCA disagreed with
the report of the Investigating Judge that there was no evidence to support the charge against Atty. Morales as no one
from the OCC personnel who were interviewed would give a categorical and positive statement affirming the
charges against Atty. Morales, along with other court personnel also charged in the same case. The OCA
recommended that Atty. Morales should be found guilty of gross misconduct. The Court En Banc held that while
Atty. Morales may have fallen short of the exacting standards required of every court employee, the Court cannot
use the evidence obtained from his personal computer against him for it violated his constitutional right against
unreasonable searches and seizures. The Court found no evidence to support the claim of OCA that they were able to
obtain the subject pleadings with the consent of Atty. Morales, as in fact the latter immediately filed an
administrative case against the persons who conducted the spot investigation, questioning the validity of the
investigation and specifically invoking his constitutional right against unreasonable search and seizure. And as there
is no other evidence, apart from the pleadings, retrieved from the unduly confiscated personal computer of Atty.
Morales, to hold him administratively liable, the Court had no choice but to dismiss the charges against him for
insufficiency of evidence.
The above case is to be distinguished from the case at bar because, unlike the former which involved
a personal computer of a court employee, the computer from which the personal files of herein petitioner were
retrieved is a government-issued computer, hence government property the use of which the CSC has absolute right
to regulate and monitor. Such relationship of the petitioner with the item seized (office computer) and other relevant
factors and circumstances under American Fourth Amendment jurisprudence, notably the existence of CSC MO 10,
S. 2007 on Computer Use Policy, failed to establish that petitioner had a reasonable expectation of privacy in the
office computer assigned to him.
Having determined that the personal files copied from the office computer of petitioner are admissible in
the administrative case against him, we now proceed to the issue of whether the CSC was correct in finding the
petitioner guilty of the charges and dismissing him from the service.
Well-settled is the rule that the findings of fact of quasi-judicial agencies, like the CSC, are accorded not
only respect but even finality if such findings are supported by substantial evidence. Substantial evidence is such
amount of relevant evidence which a reasonable mind might accept as adequate to support a conclusion, even if
other equally reasonable minds might conceivably opine otherwise.[55]
The CSC based its findings on evidence consisting of a substantial number of drafts of legal pleadings and
documents stored in his office computer, as well as the sworn affidavits and testimonies of the witnesses it presented
during the formal investigation. According to the CSC, these documents were confirmed to be similar or exactly the
same content-wise with those on the case records of some cases pending either with CSCRO No. IV, CSC-NCR or
the Commission Proper. There were also substantially similar copies of those pleadings filed with the CA and duly
furnished the Commission. Further, the CSC found the explanation given by petitioner, to the effect that those files
retrieved from his computer hard drive actually belonged to his lawyer friends Estrellado and Solosa whom he
allowed the use of his computer for drafting their pleadings in the cases they handle, as implausible and doubtful
under the circumstances. We hold that the CSCs factual finding regarding the authorship of the subject pleadings and
misuse of the office computer is well-supported by the evidence on record, thus:
It is also striking to note that some of these documents were in the nature of pleadings
responding to the orders, decisions or resolutions of these offices or directly in opposition to them
such as a petition for certiorari or a motion for reconsideration of CSC Resolution. This indicates
that the author thereof knowingly and willingly participated in the promotion or advancement of
the interests of parties contrary or antagonistic to the Commission. Worse, the appearance in one
of the retrieved documents the phrase, Eric N. Estr[e]llado, Epal kulang ang bayad mo,lends
plausibility to an inference that the preparation or drafting of the legal pleadings was pursued with
less than a laudable motivation. Whoever was responsible for these documents was simply doing

the same for the money a legal mercenary selling or purveying his expertise to the highest bidder,
so to speak.
Inevitably, the fact that these documents were retrieved from the computer of Pollo
raises the presumption that he was the author thereof. This is because he had a control of the
said computer. More significantly, one of the witnesses, Margarita Reyes, categorically
testified seeing a written copy of one of the pleadings found in the case records lying on the table
of the respondent. This was the Petition for Review in the case of Estrellado addressed to the
Court of Appeals. The said circumstances indubitably demonstrate that Pollo was secretly
undermining the interest of the Commission, his very own employer.
To deflect any culpability, Pollo would, however, want the Commission to believe that
the documents were the personal files of some of his friends, including one Attorney Ponciano
Solosa, who incidentally served as his counsel of record during the formal investigation of this
case. In fact, Atty. Solosa himself executed a sworn affidavit to this effect. Unfortunately, this
contention of the respondent was directly rebutted by the prosecution witness, Reyes, who testified
that during her entire stay in the PALD, she never saw Atty. Solosa using the computer assigned to
the respondent. Reyes more particularly stated that she worked in close proximity with Pollo and
would have known if Atty. Solosa, whom she personally knows, was using the computer in
question. Further, Atty. Solosa himself was never presented during the formal investigation to
confirm his sworn statement such that the same constitutes self-serving evidence unworthy of
weight and credence. The same is true with the other supporting affidavits, which Pollo submitted.
At any rate, even admitting for a moment the said contention of the respondent, it evinces
the fact that he was unlawfully authorizing private persons to use the computer assigned to him for
official purpose, not only once but several times gauging by the number of pleadings, for ends not
in conformity with the interests of the Commission. He was, in effect, acting as a principal by
indispensable cooperationOr at the very least, he should be responsible for serious misconduct for
repeatedly allowing CSC resources, that is, the computer and the electricity, to be utilized for
purposes other than what they were officially intended.
Further, the Commission cannot lend credence to the posturing of the appellant that the
line appearing in one of the documents, Eric N. Estrellado, Epal kulang ang bayad mo, was a
private joke between the person alluded to therein, Eric N. Estrellado, and his counsel, Atty.
Solosa, and not indicative of anything more sinister. The same is too preposterous to be
believed.Why would such a statement appear in a legal pleading stored in the computer assigned
to the respondent, unless he had something to do with it? [56]
Petitioner assails the CA in not ruling that the CSC should not have entertained an anonymous complaint
since Section 8 of CSC Resolution No. 99-1936 (URACC) requires a verified complaint:
Rule II Disciplinary Cases
SEC. 8. Complaint. - A complaint against a civil service official or employee shall not be given
due course unless it is in writing and subscribed and sworn to by the complainant. However, in
cases initiated by the proper disciplining authority, the complaint need not be under oath.
No anonymous complaint shall be entertained unless there is obvious truth or merit to the
allegation therein or supported by documentary or direct evidence, in which case the person
complained of may be required to comment.
xxxx
We need not belabor this point raised by petitioner. The administrative complaint is deemed to have been initiated by
the CSC itself when Chairperson David, after a spot inspection and search of the files stored in the hard drive of
computers in the two divisions adverted to in the anonymous letter -- as part of the disciplining authoritys own factfinding investigation and information-gathering -- found a prima facie case against the petitioner who was then
directed to file his comment. As this Court held in Civil Service Commission v. Court of Appeals[57] -Under Sections 46 and 48 (1), Chapter 6, Subtitle A, Book V of E.O. No. 292 and Section
8, Rule II of Uniform Rules on Administrative Cases in the Civil Service, a complaint may be
initiated against a civil service officer or employee by the appropriate disciplining authority,
even without being subscribed and sworn to. Considering that the CSC, as the disciplining
authority for Dumlao, filed the complaint, jurisdiction over Dumlao was validly acquired.
(Emphasis supplied.)
As to petitioners challenge on the validity of CSC OM 10, S. 2002 (CUP), the same deserves scant
consideration. The alleged infirmity due to the said memorandum order having been issued solely by the CSC Chair

and not the Commission as a collegial body, upon which the dissent of Commissioner Buenaflor is partly anchored,
was already explained by Chairperson David in her Reply to the Addendum to Commissioner Buenaflors previous
memo expressing his dissent to the actions and disposition of the Commission in this case. According to
Chairperson David, said memorandum order was in fact exhaustively discussed, provision by provision in
the January 23, 2002 Commission Meeting, attended by her and former Commissioners Erestain, Jr. and
Valmores. Hence, the Commission En Banc at the time saw no need to issue a Resolution for the purpose and further
because the CUP being for internal use of the Commission, the practice had been to issue a memorandum order.
[58]
Moreover, being an administrative rule that is merely internal in nature, or which regulates only the personnel of
the CSC and not the public, the CUP need not be published prior to its effectivity.[59]
In fine, no error or grave abuse of discretion was committed by the CA in affirming the CSCs ruling that petitioner is
guilty of grave misconduct, dishonesty, conduct prejudicial to the best interest of the service, and violation of R.A.
No. 6713. The gravity of these offenses justified the imposition on petitioner of the ultimate penalty of dismissal
with all its accessory penalties, pursuant to existing rules and regulations.
WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated October 11, 2007 and
Resolution dated February 29, 2008 of the Court of Appeals in CA-G.R. SP No. 98224 are AFFIRMED.
With costs against the petitioner.
SO ORDERED.

11. People vs. Aminnudin (July 6, 1988)

CRUZ, J.:
The accused-appellant claimed his business was selling watches but he was nonetheless arrested, tried and found
guilty of illegally transporting marijuana. The trial court, disbelieving him, held it was high time to put him away
and sentenced him to life imprisonment plus a fine of P20,000.00. 1
Idel Aminnudin was arrested on June 25, 1984, shortly after disembarking from the M/V Wilcon 9 at about 8:30 in
the evening, in Iloilo City. The PC officers who were in fact waiting for him simply accosted him, inspected his bag
and finding what looked liked marijuana leaves took him to their headquarters for investigation. The two bundles of
suspect articles were confiscated from him and later taken to the NBI laboratory for examination. When they were
verified as marijuana leaves, an information for violation of the Dangerous Drugs Act was filed against him. 2Later,
the information was amended to include Farida Ali y Hassen, who had also been arrested with him that same
evening and likewise investigated. 3 Both were arraigned and pleaded not guilty. 4 Subsequently, the fiscal filed a
motion to dismiss the charge against Ali on the basis of a sworn statement of the arresting officers absolving her
after a 'thorough investigation." 5 The motion was granted, and trial proceeded only against the accused-appellant,
who was eventually convicted . 6
According to the prosecution, the PC officers had earlier received a tip from one of their informers that the accusedappellant was on board a vessel bound for Iloilo City and was carrying marijuana. 7 He was Identified by
name. 8 Acting on this tip, they waited for him in the evening of June 25, 1984, and approached him as he descended
from the gangplank after the informer had pointed to him. 9 They detained him and inspected the bag he was
carrying. It was found to contain three kilos of what were later analyzed as marijuana leaves by an NBI forensic
examiner, 10 who testified that she conducted microscopic, chemical and chromatographic tests on them. On the
basis of this finding, the corresponding charge was then filed against Aminnudin.
In his defense, Aminnudin disclaimed the marijuana, averring that all he had in his bag was his clothing consisting
of a jacket, two shirts and two pairs of pants. 11 He alleged that he was arbitrarily arrested and immediately

handcuffed. His bag was confiscated without a search warrant. At the PC headquarters, he was manhandled to force
him to admit he was carrying the marijuana, the investigator hitting him with a piece of wood in the chest and arms
even as he parried the blows while he was still handcuffed. 12 He insisted he did not even know what marijuana
looked like and that his business was selling watches and sometimes cigarettes. 13 He also argued that the marijuana
he was alleged to have been carrying was not properly Identified and could have been any of several bundles kept in
the stock room of the PC headquarters. 14
The trial court was unconvinced, noting from its own examination of the accused that he claimed to have come to
Iloilo City to sell watches but carried only two watches at the time, traveling from Jolo for that purpose and
spending P107.00 for fare, not to mention his other expenses. 15 Aminnudin testified that he kept the two watches in
a secret pocket below his belt but, strangely, they were not discovered when he was bodily searched by the arresting
officers nor were they damaged as a result of his manhandling. 16 He also said he sold one of the watches for
P400.00 and gave away the other, although the watches belonged not to him but to his cousin, 17 to a friend whose
full name he said did not even know. 18 The trial court also rejected his allegations of maltreatment, observing that he
had not sufficiently proved the injuries sustained by him. 19
There is no justification to reverse these factual findings, considering that it was the trial judge who had immediate
access to the testimony of the witnesses and had the opportunity to weigh their credibility on the stand. Nuances of
tone or voice, meaningful pauses and hesitation, flush of face and dart of eyes, which may reveal the truth or expose
the lie, are not described in the impersonal record. But the trial judge sees all of this, discovering for himself the
truant fact amidst the falsities.
The only exception we may make in this case is the trial court's conclusion that the accused-appellant was not really
beaten up because he did not complain about it later nor did he submit to a medical examination. That is hardly fair
or realistic. It is possible Aminnudin never had that opportunity as he was at that time under detention by the PC
authorities and in fact has never been set free since he was arrested in 1984 and up to the present. No bail has been
allowed for his release.
There is one point that deserves closer examination, however, and it is Aminnudin's claim that he was arrested and
searched without warrant, making the marijuana allegedly found in his possession inadmissible in evidence against
him under the Bill of Rights. The decision did not even discuss this point. For his part, the Solicitor General
dismissed this after an all-too-short argument that the arrest of Aminnudin was valid because it came under Rule
113, Section 6(b) of the Rules of Court on warrantless arrests. This made the search also valid as incidental to a
lawful arrest.
It is not disputed, and in fact it is admitted by the PC officers who testified for the prosecution, that they had no
warrant when they arrested Aminnudin and seized the bag he was carrying. Their only justification was the tip they
had earlier received from a reliable and regular informer who reported to them that Aminnudin was arriving in Iloilo
by boat with marijuana. Their testimony varies as to the time they received the tip, one saying it was two days before
the arrest, 20 another two weeks 21 and a third "weeks before June 25." 22 On this matter, we may prefer the
declaration of the chief of the arresting team, Lt. Cipriano Querol, Jr., who testified as follows:
Q You mentioned an intelligence report, you mean with respect to the coming of
Idel Aminnudin on June 25, 1984?
A Yes, sir.
Q When did you receive this intelligence report?
A Two days before June 25, 1984 and it was supported by reliable sources.
Q Were you informed of the coming of the Wilcon 9 and the possible trafficking
of marijuana leaves on that date?
A Yes, sir, two days before June 25, 1984 when we received this information
from that particular informer, prior to June 25, 1984 we have already reports of
the particular operation which was being participated by Idel Aminnudin.
Q You said you received an intelligence report two days before June 25, 1984
with respect to the coming of Wilcon 9?
A Yes, sir.
Q Did you receive any other report aside from this intelligence report?

A Well, I have received also other reports but not pertaining to the coming of
Wilcon 9. For instance, report of illegal gambling operation.
COURT:
Q Previous to that particular information which you said two days before June
25, 1984, did you also receive daily report regarding the activities of Idel
Aminnudin
A Previous to June 25, 1984 we received reports on the activities of Idel
Aminnudin.
Q What were those activities?
A Purely marijuana trafficking.
Q From whom did you get that information?
A It came to my hand which was written in a required sheet of information,
maybe for security reason and we cannot Identify the person.
Q But you received it from your regular informer?
A Yes, sir.
ATTY. LLARIZA:
Q Previous to June 25, 1984, you were more or less sure that Idel Aminnudin is
coming with drugs?
A Marijuana, sir.
Q And this information respecting Idel Aminnudin's coming to Iloilo with
marijuana was received by you many days before you received the intelligence
report in writing?
A Not a report of the particular coming of Aminnudin but his activities.
Q You only knew that he was coming on June 25,1984 two days before?
A Yes, sir.
Q You mean that before June 23, 1984 you did not know that minnudin was
coming?
A Before June 23,1984, I, in my capacity, did not know that he was coming but
on June 23, 1984 that was the time when I received the information that he was
coming. Regarding the reports on his activities, we have reports that he was
already consummated the act of selling and shipping marijuana stuff.
COURT:
Q And as a result of that report, you put him under surveillance?
A Yes, sir.
Q In the intelligence report, only the name of Idel Aminnudin was mentioned?
A Yes, sir.
Q Are you sure of that?
A On the 23rd he will be coming with the woman.
Q So that even before you received the official report on June 23, 1984, you had
already gathered information to the effect that Idel Aminnudin was coming to
Iloilo on June 25, 1984?
A Only on the 23rd of June.
Q You did not try to secure a search warrant for the seizure or search of the
subject mentioned in your intelligence report?
A No, more.
Q Why not?
A Because we were very very sure that our operation will yield positive result.
Q Is that your procedure that whenever it will yield positive result you do not
need a search warrant anymore?
A Search warrant is not necessary. 23
That last answer is a cavalier pronouncement, especially as it comes from a mere lieutenant of the PC. The Supreme
Court cannot countenance such a statement. This is still a government of laws and not of men.
The mandate of the Bill of Rights is clear:

Sec. 2. The right of the people to be secure in their persons, houses, papers and effects against
unreasonable searches and seizures of whatever nature and for any purpose shall be inviolable, and
no search warrant or warrant of arrest shall issue except upon probable cause to be determined
personally by the judge after examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be searched and the persons or
things to be seized.
In the case at bar, there was no warrant of arrest or search warrant issued by a judge after personal determination by
him of the existence of probable cause. Contrary to the averments of the government, the accused-appellant was not
caught in flagrante nor was a crime about to be committed or had just been committed to justify the warrantless
arrest allowed under Rule 113 of the Rules of Court. Even expediency could not be invoked to dispense with the
obtention of the warrant as in the case of Roldan v. Arca, 24 for example. Here it was held that vessels and aircraft are
subject to warrantless searches and seizures for violation of the customs law because these vehicles may be quickly
moved out of the locality or jurisdiction before the warrant can be secured.
The present case presented no such urgency. From the conflicting declarations of the PC witnesses, it is clear that
they had at least two days within which they could have obtained a warrant to arrest and search Aminnudin who was
coming to Iloilo on the M/V Wilcon 9. His name was known. The vehicle was Identified. The date of its arrival was
certain. And from the information they had received, they could have persuaded a judge that there was probable
cause, indeed, to justify the issuance of a warrant. Yet they did nothing. No effort was made to comply with the law.
The Bill of Rights was ignored altogether because the PC lieutenant who was the head of the arresting team, had
determined on his own authority that a "search warrant was not necessary."
In the many cases where this Court has sustained the warrantless arrest of violators of the Dangerous Drugs Act, it
has always been shown that they were caught red-handed, as a result of what are popularly called "buy-bust"
operations of the narcotics agents. 25 Rule 113 was clearly applicable because at the precise time of arrest the
accused was in the act of selling the prohibited drug.
In the case at bar, the accused-appellant was not, at the moment of his arrest, committing a crime nor was it shown
that he was about to do so or that he had just done so. What he was doing was descending the gangplank of the M/V
Wilcon 9 and there was no outward indication that called for his arrest. To all appearances, he was like any of the
other passengers innocently disembarking from the vessel. It was only when the informer pointed to him as the
carrier of the marijuana that he suddenly became suspect and so subject to apprehension. It was the furtive finger
that triggered his arrest. The Identification by the informer was the probable cause as determined by the officers (and
not a judge) that authorized them to pounce upon Aminnudin and immediately arrest him.
Now that we have succeeded in restoring democracy in our country after fourteen years of the despised dictatorship,
when any one could be picked up at will, detained without charges and punished without trial, we will have only
ourselves to blame if that kind of arbitrariness is allowed to return, to once more flaunt its disdain of the Constitution
and the individual liberties its Bill of Rights guarantees.
While this is not to say that the accused-appellant is innocent, for indeed his very own words suggest that he is
lying, that fact alone does not justify a finding that he is guilty. The constitutional presumption is that he is innocent,
and he will be so declared even if his defense is weak as long as the prosecution is not strong enough to convict him.
Without the evidence of the marijuana allegedly seized from Aminnudin, the case of the prosecution must fall. That
evidence cannot be admitted, and should never have been considered by the trial court for the simple fact is that the
marijuana was seized illegally. It is the fruit of the poisonous tree, to use Justice Holmes' felicitous phrase. The
search was not an incident of a lawful arrest because there was no warrant of arrest and the warrantless arrest did not
come under the exceptions allowed by the Rules of Court. Hence, the warrantless search was also illegal and the
evidence obtained thereby was inadmissible.
The Court strongly supports the campaign of the government against drug addiction and commends the efforts of
our law-enforcement officers against those who would inflict this malediction upon our people, especially the
susceptible youth. But as demanding as this campaign may be, it cannot be more so than the compulsions of the Bill
of Rights for the protection of the liberty of every individual in the realm, including the basest of criminals. The
Constitution covers with the mantle of its protection the innocent and the guilty alike against any manner of highhandedness from the authorities, however praiseworthy their intentions.

Those who are supposed to enforce the law are not justified in disregarding the rights of the individual in the name
of order. Order is too high a price for the loss of liberty. As Justice Holmes, again, said, "I think it a less evil that
some criminals should escape than that the government should play an ignoble part." It is simply not allowed in the
free society to violate a law to enforce another, especially if the law violated is the Constitution itself.
We find that with the exclusion of the illegally seized marijuana as evidence against the accused-appellant, his guilt
has not been proved beyond reasonable doubt and he must therefore be discharged on the presumption that he is
innocent.
ACCORDINGLY, the decision of the trial court is REVERSED and the accused-appellant is ACQUITTED. It is so
ordered.
Narvasa, Gancayco and Medialdea, JJ., concur.
Separate Opinions
AQUINO, J., dissenting:
I respectfully dissent. I hold that the accused was caught in flagrante, for he was carrying marijuana leaves in his
bag at the moment of his arrest. He was not "innocently disembarking from the vessel." The unauthorized
transportation of marijuana (Indian hemp), which is a prohibited drug, is a crime. (Sec. 4, Rep. Act No. 6425). Since
he was committing a crime, his arrest could be lawfully effected without a warrant (Sec. 6a, Rule 113, Rules of
Court), and the search of his bag (which yielded the marijuana leaves) without a search warrant was also lawful
(Sec. 12, Rule 126, Rules of Court). I vote to affirm the judgment of the trial court finding him guilty of illegally
transporting marijuana.

12. People vs. Mengote (June 22, 1992)

CRUZ, J.:
Accused-appellant Rogelio Mengote was convicted of illegal possession of firearms on the strength mainly of the
stolen pistol found on his person at the moment of his warrantless arrest. In this appeal, he pleads that the weapon
was not admissible as evidence against him because it had been illegally seized and was therefore the fruit of the

poisonous tree. The Government disagrees. It insists that the revolver was validly received in evidence by the trial
judge because its seizure was incidental to an arrest that was doubtless lawful even if admittedly without warrant.
The incident occurred shortly before noon of August 8, 1987, after the Western Police District received a telephone
call from an informer that there were three suspicious-looking persons at the corner of Juan Luna and North Bay
Boulevard in Tondo, Manila. A surveillance team of plainclothesmen was forthwith dispatched to the place. As later
narrated at the trial by Patrolmen Rolando Mercado and Alberto Juan, 1 they there saw two men "looking from side
to side," one of whom was holding his abdomen. They approached these persons and identified themselves as
policemen, whereupon the two tried to run away but were unable to escape because the other lawmen had
surrounded them. The suspects were then searched. One of them, who turned out to be the accused-appellant, was
found with a .38 caliber Smith and Wesson revolver with six live bullets in the chamber. His companion, later
identified as Nicanor Morellos, had a fan knife secreted in his front right pants pocket. The weapons were taken
from them. Mengote and Morellos were then turned over to police headquarters for investigation by the Intelligence
Division.
On August 11, 1987, the following information was filed against the accused-appellant before the Regional Trial
Court of Manila:
The undersigned accuses ROGELIO MENGOTE y TEJAS of a violation of Presidential Decree
No. 1866, committed as follows:
That on or about August 8, 1987, in the City of Manila, Philippines, the said accused did then and
there wilfully, unlawfully and knowingly have in his possession and under his custody and control
a firearm, to wit:
one (1) cal. 38 "S & W" bearing
Serial No. 8720-T
without first having secured the necessary license or permit therefor from the proper authorities.
Besides the police officers, one other witness presented by the prosecution was Rigoberto Danganan, who identified
the subject weapon as among the articles stolen from him during the robbery in his house in Malabon on June 13,
1987. He pointed to Mengote as one of the robbers. He had duly reported the robbery to the police, indicating the
articles stolen from him, including the revolver. 2 For his part, Mengote made no effort to prove that he owned the
firearm or that he was licensed to possess it and claimed instead that the weapon had been "Planted" on him at the
time of his arrest. 3
The gun, together with the live bullets and its holster, were offered as Exhibits A, B, and C and admitted over the
objection of the defense. As previously stated, the weapon was the principal evidence that led to Mengote's
conviction for violation of P.D. 1866. He was sentenced to reclusion
perpetua. 4
It is submitted in the Appellant's Brief that the revolver should not have been admitted in evidence because of its
illegal seizure. no warrant therefor having been previously obtained. Neither could it have been seized as an incident
of a lawful arrest because the arrest of Mengote was itself unlawful, having been also effected without a warrant.
The defense also contends that the testimony regarding the alleged robbery in Danganan's house was irrelevant and
should also have been disregarded by the trial court.
The following are the pertinent provision of the Bill of Rights:
Sec. 2. The right of the people to be secure in their persons, houses, papers, and effects against
unreasonable searches and seizures of whatever nature and for any purpose shall be inviolable, and
no search warrant or warrant of arrest shall issue except upon probable cause to be determined
personally by the judge after examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be searched and the persons or
things to be seized.
Sec. 3 (1). The privacy of communication and correspondence shall be inviolable except upon
lawful order of the court, or when public safety or order requires otherwise as prescribed by law.
(2) Any evidence obtained in violation of this or the preceding section shall be inadmissible for
any purpose in any proceeding.
There is no question that evidence obtained as a result of an illegal search or seizure is inadmissible in any
proceeding for any purpose. That is the absolute prohibition of Article III, Section 3(2), of the Constitution. This is

the celebrated exclusionary rule based on the justification given by Judge Learned Hand that "only in case the
prosecution, which itself controls the seizing officials, knows that it cannot profit by their wrong will the wrong be
repressed." The Solicitor General, while conceding the rule, maintains that it is not applicable in the case at bar. His
reason is that the arrest and search of Mengote and the seizure of the revolver from him were lawful under Rule 113,
Section 5, of the Rules of Court reading as follows:
Sec. 5. Arrest without warrant when lawful. A peace officer or private person may, without a
warrant, arrest a person;
(a) When, in his presence, the person to be arrested has committed, is actually committing, or is
attempting to commit an offense;
(b) When an offense has in fact just been committed, and he has personal knowledge of facts
indicating that the person to be arrested has committed it; and
(c) When the person to be arrested is a prisoner who has escaped from a penal establishment or
place where he is serving final judgment or temporarily confined while his case is pending, or has
escaped while being transferred from one confinement to another.
In cases failing under paragraphs (a) and (b) hereof, the person arrested without a warrant shall be
forthwith delivered to the nearest police station or jail, and he shall be proceeded against in
accordance with Rule 112, Section 7.
We have carefully examined the wording of this Rule and cannot see how we can agree with the prosecution.
Par. (c) of Section 5 is obviously inapplicable as Mengote was not an escapee from a penal institution when he was
arrested. We therefore confine ourselves to determining the lawfulness of his arrest under either Par. (a) or Par. (b) of
this section.
Par. (a) requires that the person be arrested (1) after he has committed or while he is actually committing or is at
least attempting to commit an offense, (2) in the presence of the arresting officer.
These requirements have not been established in the case at bar. At the time of the arrest in question, the accusedappellant was merely "looking from side to side" and "holding his abdomen," according to the arresting officers
themselves. There was apparently no offense that had just been committed or was being actually committed or at
least being attempted by Mengote in their presence.
The Solicitor General submits that the actual existence of an offense was not necessary as long as Mengote's acts
"created a reasonable suspicion on the part of the arresting officers and induced in them the belief that an offense
had been committed and that the accused-appellant had committed it." The question is, What offense? What offense
could possibly have been suggested by a person "looking from side to side" and "holding his abdomen" and in a
place not exactly forsaken?
These are certainly not sinister acts. And the setting of the arrest made them less so, if at all. It might have been
different if Mengote bad been apprehended at an ungodly hour and in a place where he had no reason to be, like a
darkened alley at 3 o'clock in the morning. But he was arrested at 11:30 in the morning and in a crowded street
shortly after alighting from a passenger jeep with I his companion. He was not skulking in the shadows but walking
in the clear light of day. There was nothing clandestine about his being on that street at that busy hour in the blaze of
the noonday sun.
On the other hand, there could have been a number of reasons, all of them innocent, why his eyes were darting from
side to side and be was holding his abdomen. If they excited suspicion in the minds of the arresting officers, as the
prosecution suggests, it has nevertheless not been shown what their suspicion was all about. In fact, the policemen
themselves testified that they were dispatched to that place only because of the telephone call from the informer that
there were "suspicious-looking" persons in that vicinity who were about to commit a robbery at North Bay
Boulevard. The caller did not explain why he thought the men looked suspicious nor did he elaborate on the
impending crime.
In the recent case of People v. Malmstedt, 5 the Court sustained the warrantless arrest of the accused because there
was a bulge in his waist that excited the suspicion of the arresting officer and, upon inspection, turned out to be a
pouch containing hashish. In People v. Claudio, 6 the accused boarded a bus and placed the buri bag she was
carrying behind the seat of the arresting officer while she herself sat in the seat before him. His suspicion aroused,

be surreptitiously examined the bag, which he found to contain marijuana. He then and there made the warrantless
arrest and seizure that we subsequently upheld on the ground that probable cause had been sufficiently established.
The case before us is different because there was nothing to support the arresting officers' suspicion other than
Mengote's darting eyes and his hand on his abdomen. By no stretch of the imagination could it have been inferred
from these acts that an offense had just been committed, or was actually being committed, or was at least being
attempted in their presence.
This case is similar to People v. Aminnudin, 7 where the Court held that the warrantless arrest of the accused was
unconstitutional. This was effected while be was coming down a vessel, to all appearances no less innocent than the
other disembarking passengers. He had not committed nor was be actually committing or attempting to commit an
offense in the presence of the arresting officers. He was not even acting suspiciously. In short, there was no probable
cause that, as the prosecution incorrectly suggested, dispensed with the constitutional requirement of a warrant.
Par. (b) is no less applicable because its no less stringent requirements have also not been satisfied. The prosecution
has not shown that at the time of Mengote's arrest an offense had in fact just been committed and that the arresting
officers had personal knowledge of facts indicating that Mengote had committed it. All they had was hearsay
information from the telephone caller, and about a crime that had yet to be committed.
The truth is that they did not know then what offense, if at all, had been committed and neither were they aware of
the participation therein of the accused-appellant. It was only later, after Danganan had appeared at the Police
headquarters, that they learned of the robbery in his house and of Mengote's supposed involvement therein. 8 As for
the illegal possession of the firearm found on Mengote's person, the policemen discovered this only after he had
been searched and the investigation conducted later revealed that he was not its owners nor was he licensed to
possess it.
Before these events, the Peace officers had no knowledge even of Mengote' identity, let alone the fact (or suspicion)
that he was unlawfully carrying a firearm or that he was involved in the robbery of Danganan's house.
In the landmark case of People v. Burgos, 9 this Court declared:
Under Section 6(a) of Rule 113, the officer arresting a person who has just committed, is
committing, or is about to commit an offense must have personal knowledge of the fact. The
offense must also be committed in his presence or within his view. (Sayo v. Chief of Police, 80
Phil. 859). (Emphasis supplied)
xxx xxx xxx
In arrests without a warrant under Section 6(b), however, it is not enough that there is reasonable
ground to believe that the person to be arrested has committed a crime. A crime must in fact or
actually have been committed first. That a crime has actually been committed is an essential
precondition. It is not enough to suspect that a crime may have been committed. The fact of the
commission of the offense must be undisputed. The test of reasonable ground applies only to the
identity of the perpetrator. (Emphasis supplied)
This doctrine was affirmed in Alih v. Castro, 10 thus:
If the arrest was made under Rule 113, Section 5, of the Rules of Court in connection with a crime
about to be committed, being committed, or just committed, what was that crime? There is no
allegation in the record of such a falsification. Parenthetically, it may be observed that under the
Revised Rule 113, Section 5(b), the officer making the arrest must have personal knowledge of the
ground therefor as stressed in the recent case of People v. Burgos. (Emphasis supplied)
It would be a sad day, indeed, if any person could be summarily arrested and searched just because he is holding his
abdomen, even if it be possibly because of a stomach-ache, or if a peace officer could clamp handcuffs on any
person with a shifty look on suspicion that he may have committed a criminal act or is actually committing or
attempting it. This simply cannot be done in a free society. This is not a police state where order is exalted over
liberty or, worse, personal malice on the part of the arresting officer may be justified in the name of security.
There is no need to discuss the other issues raised by the accused-appellant as the ruling we here make is sufficient
to sustain his exoneration. Without the evidence of the firearm taken from him at the time of his illegal arrest, the
prosecution has lost its most important exhibit and must therefore fail. The testimonial evidence against Mengote
(which is based on the said firearm) is not sufficient to prove his guilt beyond reasonable doubt of the crime imputed

to him. We commend Atty. Violeta Calvo-Drilon for her able and spirited defense of the accused-appellant not only
in the brief but also in the reply brief, which she did not have to file but did so just the same to stress the
constitutional rights of her client. The fact that she was acting only as a counsel de oficio with no expectation of
material reward makes her representation even more commendable. The Court feels that if the peace officers had
been more mindful of the provisions of the Bill of Rights, the prosecution of the accused-appellant might have
succeeded. As it happened, they allowed their over-zealousness to get the better of them, resulting in their disregard
of the requirements of a valid search and seizure that rendered inadmissible the vital evidence they had invalidly
seized. This should be a lesson to other peace officers. Their impulsiveness may be the very cause of the acquittal of
persons who deserve to be convicted, escaping the clutches of the law because, ironically enough, it has not been
observed by those who are supposed to enforce it.
WHEREFORE, the appealed decision is REVERSED and SET ASIDE. The accused-appellant is ACQUITTED and
ordered released immediately unless he is validly detained for other offenses. No costs. SO ORDERED.
13. People vs. Laguio (March 16, 2007)
GARCIA, J.:
On pure questions of law, petitioner People of the Philippines has directly come to this Court via this petition for
review on certiorari to nullify and set aside the Resolution1 dated 13 March 1997 of the Regional Trial Court of
Manila, Branch 18, in Criminal Case Nos. 96-149990 to 96-149992, entitled People of the Philippines v. Lawrence
Wang y Chen, granting private respondent Lawrence C. Wangs Demurrer to Evidence and acquitting him of the
three (3) charges filed against him, namely: (1) Criminal Case No. 96-149990 for Violation of Section 16, Article III
in relation to Section 2(e)(2), Article I of Republic Act (R.A.) No. 6425 (Dangerous Drugs Act); (2) Criminal Case
No. 96-149991 for Violation of Presidential Decree No. 1866 (Illegal Possession of Firearms); and (3) Criminal
Case No. 96-149992 for Violation of Comelec Resolution No. 2828 in relation to R.A. No. 7166 (COMELEC Gun
Ban).
The three (3) separate Informations filed against Lawrence C. Wang in the court of origin respectively read:
Criminal Case No. 96-149990 (Violation of Dangerous Drugs Act):
That on or about the 17th day of May 1996, in the City of Manila, Philippines, the said accused did then and there
willfully, unlawfully and knowingly have in his possession and under his custody and control a bulk of white and
yellowish crystalline substance known as SHABU contained in thirty-two (32) transparent plastic bags weighing
approximately 29.2941 kilograms, containing methamphetamine hydrochloride, a regulated drug, without the
corresponding license or prescription therefor.
Contrary to law.2
Criminal Case No. 96-149991 (Illegal Possession of Firearms):
That on or about the 17th day of May 1996, in the City of Manila, Philippines, the said accused did then and there
willfully, unlawfully and knowingly have in his possession and under his custody and control one (1) DAEWOO
Cal. 9mm, automatic pistol with one loaded magazine and one AMT Cal. .380 9mm automatic backup pistol with
magazine loaded with ammunitions without first having secured the necessary license or permit therefor from the
proper authorities.
Contrary to law. 3
Criminal Case No. 96-149992 (Violation of Comelec Gun Ban):
That on or about the 17th day of May 1996, in the City of Manila, Philippines, the said accused did then and there
willfully, unlawfully and knowingly have in his possession and under his custody and control one (1) DAEWOO
Cal. 9mm automatic pistol with one loaded magazine and one (1) AMT Cal. 380 9mm automatic backup pistol with
magazine loaded with ammunitions, carrying the same along Maria Orosa St., Ermita, Manila, which is a public
place, on the date which is covered by an election period, without first securing the written permission or authority
from the Commission on Elections, as provided by the COMELEC Resolution 2828 in relation to Republic Act
7166.
Contrary to law. 4
During his arraignment, accused Wang refused to enter a plea to all the Informations and instead interposed a
continuing objection to the admissibility of the evidence obtained by the police operatives. Thus, the trial court
ordered that a plea of "Not Guilty" be entered for him.5 Thereafter, joint trial of the three (3) consolidated cases
followed.

The pertinent facts are as follows:

On 16 May 1996, at about 7:00 p.m., police operatives of the Public Assistance and Reaction Against Crime of the
Department of Interior and Local Government, namely, Captain Margallo, Police Inspector Cielito Coronel and
SPO3 Reynaldo Cristobal, arrested SPO2 Vergel de Dios, Rogelio Anoble and a certain Arellano, for unlawful
possession of methamphetamine hydrochloride, a regulated drug popularly known as shabu. In the course of the
investigation of the three arrested persons, Redentor Teck, alias Frank, and Joseph Junio were identified as the
source of the drug. An entrapment operation was then set after the three were prevailed upon to call their source and
pretend to order another supply of shabu.
At around 11:00 p.m. that same date, Redentor Teck and Joseph Junio were arrested while they were about to hand
over another bag of shabu to SPO2 De Dios and company. Questioned, Redentor Teck and Joseph Junio informed
the police operatives that they were working as talent manager and gymnast instructor, respectively, of Glamour
Modeling Agency owned by Lawrence Wang. Redentor Teck and Joseph Junio did not disclose their source of shabu
but admitted that they were working for Wang.6 They also disclosed that they knew of a scheduled delivery of shabu
early the following morning of 17 May 1996, and that their employer (Wang) could be found at the Maria Orosa
Apartment in Malate, Manila. The police operatives decided to look for Wang to shed light on the illegal drug
activities of Redentor Teck and Joseph Junio. Police Inspector Cielito Coronel and his men then proceeded to Maria
Orosa Apartment and placed the same under surveillance.
Prosecution witness Police Inspector Cielito Coronel testified that at about 2:10 a.m. of 17 May 1996, Wang, who
was described to the operatives by Teck, came out of the apartment and walked towards a parked BMW car. On
nearing the car, he (witness) together with Captain Margallo and two other police officers approached Wang,
introduced themselves to him as police officers, asked his name and, upon hearing that he was Lawrence Wang,
immediately frisked him and asked him to open the back compartment of the BMW car.7 When frisked, there was
found inside the front right pocket of Wang and confiscated from him an unlicensed AMT Cal. 380 9mm automatic
Back-up Pistol loaded with ammunitions. At the same time, the other members of the operatives searched the BMW
car and found inside it were the following items: (a) 32 transparent plastic bags containing white crystalline
substance with a total weight of 29.2941 kilograms, which substance was later analyzed as positive for
methamphetamine hydrochloride, a regulated drug locally known as shabu; (b) cash in the amount of P650,000.00;
(c) one electronic and one mechanical scales; and (d) an unlicensed Daewoo 9mm Pistol with magazine. Then and
there, Wang resisted the warrantless arrest and search.8
On 6 December 1996, the prosecution rested its case and upon motion, accused Wang was granted 25 days from said
date within which to file his intended Demurrer to Evidence.9 On 19 December 1996, the prosecution filed a
Manifestation10 to the effect that it had rested its case only in so far as the charge for Violation of the Dangerous
Drugs Act in Criminal Case No. 96-149990 is concerned, and not as regards the two cases for Illegal Possession of
Firearms (Crim. Case No. 96-149991) and Violation of the Comelec Gun Ban (Crim. Case No. 96-149992).
Accordingly, trial continued.
On 9 January 1997, Wang filed his undated Demurrer to Evidence,11 praying for his acquittal and the dismissal of the
three (3) cases against him for lack of a valid arrest and search warrants and the inadmissibility of the prosecutions
evidence against him. Considering that the prosecution has not yet filed its Opposition to the demurrer, Wang filed
an Amplification12 to his Demurrer of Evidence on 20 January 1997. On 12 February 1997, the prosecution filed its
Opposition13 alleging that the warrantless search was legal as an incident to the lawful arrest and that it has proven
its case, so it is now time for the defense to present its evidence.
On 13 March 1997, the respondent judge, the Hon. Perfecto A.S. Laguio, Jr., issued the herein assailed
Resolution14 granting Wangs Demurrer to Evidence and acquitting him of all charges for lack of evidence, thus:
WHEREFORE, the accused's undated Demurrer to Evidence is hereby granted; the accused is acquitted of the
charges against him for the crimes of Violation of Section 16, Article III of the Dangerous Drugs Act, Illegal
Possession of Firearms, and Violation of Comelec Gun Ban, for lack of evidence; the 32 bags of shabu with a total
weight of 29.2941 kilograms and the two unlicensed pistols, one AMT Cal. .380 9mm and one Daewoo Cal. 9mm.
are ordered confiscated in favor of the government and the branch clerk is directed to turn over the 32 bags of shabu
to the Dangerous Drugs Board in Intramuros, Manila, and the two firearms to the Firearms and Explosive Units,
PNP, Camp Crame, Quezon City, for proper disposition, and the officer-in-charge of PARAC, Department of Interior

and Local Government, is ordered to return the confiscated amount of P650,000.00 to the accused, and the
confiscated BMW car to its registered owner, David Lee. No costs.
SO ORDERED.
Hence, this petition15 for review on certiorari by the People, submitting that the trial court erred I
XXX IN HOLDING THAT THE UNDISPUTED FACTS AND CIRCUMSTANCES DID NOT CONSTITUTE
PROBABLE CAUSE WITHIN THE CONTEMPLATION OF SECTION 2, ARTICLE III OF THE
CONSTITUTION, AND IN HOLDING THAT SUCH FACTS AND CIRCUMSTANCES NEITHER JUSTIFIED
THE WARRANTLESS SEARCH OF ACCUSED'S VEHICLE AND THE SEIZURE OF THE CONTRABAND
THEREIN.
ll
XXX IN HOLDING, IN EFFECT, THAT A WARRANTLESS SEARCH IS CONSTITUTIONALLY ALLOWABLE
AND CAN ONLY BE VALID AS AN INCIDENT TO A LAWFUL ARREST.
lII
XXX IN DECLARING THE WARRANTLESS ARREST OF THE ACCUSED AND THE SEARCH AND
SEIZURE OF HIS HANDGUNS UNLAWFUL.
IV
XXX IN NOT DECLARING THE ACCUSED AS HAVING WAIVED, AS A RESULT OF HIS SUBMISSION
AND FAILURE TO PROTEST THE SEARCH AND HIS ARREST, HIS CONSTITUTIONAL RIGHT AGAINST
UNREASONABLE SEARCH AND SEIZURE AND HIS OBJECTION TO THE ADMISSION OF THE
EVIDENCE SEIZED.
V
XXX IN NOT ADMITTING IN EVIDENCE THE EVIDENCE SEIZED AND OFFERED BY THE
PROSECUTION AND IN NOT DENYING ACCUSED'S DEMURRER TO EVIDENCE.
In its Resolution16 of 9 July 1997, the Court, without giving due course to the petition, required the public and
private respondents to comment thereon within ten days from notice. Private respondent Wang filed his
comment17on 18 August 1997.
On 10 September 1997, the Court required the People to file a reply,18 which the Office of the Solicitor General did
on 5 December 1997, after several extensions.19
On 20 October 2004, the Court resolved to give due course to the petition and required the parties to submit their
respective memoranda,20 which they did.
The case presents two main issues: (a) whether the prosecution may appeal the trial courts resolution granting
Wangs demurrer to evidence and acquitting him of all the charges against him without violating the constitutional
proscription against double jeopardy; and (b) whether there was lawful arrest, search and seizure by the police
operatives in this case despite the absence of a warrant of arrest and/or a search warrant.
First off, it must be emphasized that the present case is an appeal filed directly with this Court via a petition for
review on certiorari under Rule 45 in relation to Rule 41, Section 2, paragraph (c) of the Rules of Court raising only
pure questions of law, ordinary appeal by mere filing of a notice of appeal not being allowed as a mode of appeal
directly to this Court. Then, too, it bears stressing that the right to appeal is neither a natural right nor a part of due
process, it being merely a statutory privilege which may be exercised only in the manner provided for by law
(Velasco v. Court of Appeals21). Although Section 2, Rule 122 of the Rules on Criminal Procedure states that any
party may appeal, the right of the People to appeal is, in the very same provision, expressly made subject to the
prohibition against putting the accused in double jeopardy. It also basic that appeal in criminal cases throws the
whole records of the case wide open for review by the appellate court, that is why any appeal from a judgment of
acquittal necessarily puts the accused in double jeopardy. In effect, the very same Section 2 of Rule 122 of the Rules
on Criminal Procedure, disallows appeal by the People from judgments of acquittal.
An order granting an accuseds demurrer to evidence is a resolution of the case on the merits, and it amounts to an
acquittal. Generally, any further prosecution of the accused after an acquittal would violate the constitutional
proscription on double jeopardy. To this general rule, however, the Court has previously made some exceptions.
The celebrated case of Galman v. Sandiganbayan22 presents one exception to the rule on double jeopardy, which is,
when the prosecution is denied due process of law:

No court whose Presiding Justice has received "orders or suggestions" from the very President who by an
amendatory decree (disclosed only at the hearing of oral arguments on November 8, 1984 on a petition challenging
the referral of the Aquino-Galman murder cases to the Tanodbayan and Sandiganbayan instead of to a court martial,
as mandatorily required by the known P.D. 1850 at the time providing for exclusive jurisdiction of courts martial
over criminal offenses committed by military men) made it possible to refer the cases to the Sandiganbayan, can be
an impartial court, which is the very essence of due process of law. As the writer then wrote, "jurisdiction over cases
should be determined by law, and not by preselection of the Executive, which could be much too easily transformed
into a means of predetermining the outcome of individual cases." This criminal collusion as to the handling and
treatment of the cases by public respondents at the secret Malacaang conference (and revealed only after fifteen
months by Justice Manuel Herrera) completely disqualified respondent Sandiganbayan and voided ab initio its
verdict. This renders moot and irrelevant for now the extensive arguments of respondents accused, particularly
Generals Ver and Olivas and those categorized as accessories, that there has been no evidence or witness suppressed
against them, that the erroneous conclusions of Olivas as police investigator do not make him an accessory of the
crimes he investigated and the appraisal and evaluation of the testimonies of the witnesses presented and suppressed.
There will be time and opportunity to present all these arguments and considerations at the remand and retrial of the
cases herein ordered before a neutral and impartial court.
The Supreme Court cannot permit such a sham trial and verdict and travesty of justice to stand unrectified. The
courts of the land under its aegis are courts of law and justice and equity. They would have no reason to exist if they
were allowed to be used as mere tools of injustice, deception and duplicity to subvert and suppress the truth, instead
of repositories of judicial power whose judges are sworn and committed to render impartial justice to all alike who
seek the enforcement or protection of a right or the prevention or redress of a wrong, without fear or favor and
removed from the pressures of politics and prejudice. More so, in the case at bar where the people and the world are
entitled to know the truth, and the integrity of our judicial system is at stake. In life, as an accused before the
military tribunal Ninoy had pleaded in vain that as a civilian he was entitled to due process of law and trial in the
regular civil courts before an impartial court with an unbiased prosecutor. In death, Ninoy, as the victim of the
"treacherous and vicious assassination" and the relatives and sovereign people as the aggrieved parties plead once
more for due process of law and a retrial before an impartial court with an unbiased prosecutor. The Court is
constrained to declare the sham trial a mock trial the non-trial of the century and that the predetermined
judgment of acquittal was unlawful and void ab initio.
1. No double jeopardy. It is settled doctrine that double jeopardy cannot be invoked against this Court's setting
aside of the trial courts' judgment of dismissal or acquittal where the prosecution which represents the sovereign
people in criminal cases is denied due process. As the Court stressed in the 1985 case of People vs. Bocar,
Where the prosecution is deprived of a fair opportunity to prosecute and prove its case, its right to due process is
thereby violated.
The cardinal precept is that where there is a violation of basic constitutional rights, courts are ousted of their
jurisdiction. Thus, the violation of the State's right to due process raises a serious jurisdictional issue (Gumabon vs.
Director of the Bureau of Prisons, L-30026, 37 SCRA 420 [Jan. 30, 1971]) which cannot be glossed over or
disregarded at will. Where the denial of the fundamental right of due process is apparent, a decision rendered in
disregard of that right is void for lack of jurisdiction (Aducayen vs. Flores, L-30370 [May 25, 19731, 51 SCRA 78;
Shell Co. vs. Enage, L-30111-12, 49 SCRA 416 Feb. 27, 1973]). Any judgment or decision rendered
notwithstanding such violation may be regarded as a "lawless thing, which can be treated as an outlaw and slain at
sight, or ignored wherever it exhibits its head" (Aducayen vs. Flores, supra).
Respondent Judge's dismissal order dated July 7, 1967 being null and void for lack of jurisdiction, the same does not
constitute a proper basis for a claim of double jeopardy (Serino vs. Zosa, supra).
xxx xxx xxx
Legal jeopardy attaches only (a) upon a valid indictment, (b) before a competent court, (c) after arraignment, (d) a
valid plea having been entered; and (e) the case was dismissed or otherwise terminated without the express consent
of the accused (People vs. Ylagan, 58 Phil. 851). The lower court was not competent as it was ousted of its
jurisdiction when it violated the right of the prosecution to due process.

In effect, the first jeopardy was never terminated, and the remand of the criminal case for further hearing and/or trial
before the lower courts amounts merely to a continuation of the first jeopardy, and does not expose the accused to a
second jeopardy.
Another exception is when the trial court commits grave abuse of discretion in dismissing a criminal case by
granting the accuseds demurrer to evidence. In point is the fairly recent case of People v. Uy,23 which involved the
trial courts decision which granted the two separate demurrers to evidence filed by the two accused therein, both
with leave of court, resulting in their acquittal of their respective charges of murder due to insufficiency of evidence.
In resolving the petition for certiorari filed directly with this Court, we had the occasion to explain:
The general rule in this jurisdiction is that a judgment of acquittal is final and unappealable. People v. Court of
Appeals explains the rationale of this rule:
In our jurisdiction, the finality-of-acquittal doctrine as a safeguard against double jeopardy faithfully adheres to the
principle first enunciated in Kepner v. United States. In this case, verdicts of acquittal are to be regarded as
absolutely final and irreviewable. The cases of United States v. Yam Tung Way, People v. Bringas, Gandicela v.
Lutero, People v. Cabarles, People v. Bao, to name a few, are illustrative cases. The fundamental philosophy behind
the constitutional proscription against double jeopardy is to afford the defendant, who has been acquitted, final
repose and safeguard him from government oppression through the abuse of criminal processes. As succinctly
observed in Green v. United States "(t)he underlying idea, one that is deeply ingrained in at least the AngloAmerican system of jurisprudence, is that the State with all its resources and power should not be allowed to make
repeated attempts to convict an individual for an alleged offense, thereby subjecting him to embarrassment, expense
and ordeal and compelling him to live in a continuing state of anxiety and insecurity, as well as enhancing the
possibility that even though innocent, he may be found guilty." (Underscoring supplied)
The same rule applies in criminal cases where a demurrer to evidence is granted. As held in the case of People v.
Sandiganbayan:
The demurrer to evidence in criminal cases, such as the one at bar, is "filed after the prosecution had rested its case,"
and when the same is granted, it calls "for an appreciation of the evidence adduced by the prosecution and its
sufficiency to warrant conviction beyond reasonable doubt, resulting in a dismissal of the case on the merits,
tantamount to an acquittal of the accused." Such dismissal of a criminal case by the grant of demurrer to evidence
may not be appealed, for to do so would be to place the accused in double-jeopardy. The verdict being one of
acquittal, the case ends there. (Italics in the original)
Like any other rule, however, the above-said rule is not absolute. By way of exception, a judgment of acquittal in a
criminal case may be assailed in a petition for certiorari under Rule 65 of the Rules of Court upon a clear showing
by the petitioner that the lower court, in acquitting the accused, committed not merely reversible errors of
judgment but also grave abuse of discretion amounting to lack or excess of jurisdiction or a denial of due process,
thus rendering the assailed judgment void. (Emphasis supplied.)
In Sanvicente v. People,24 the Court allowed the review of a decision of the Court of Appeals (CA) which reversed
the accuseds acquittal upon demurrer to evidence filed by the accused with leave of court, the CA ruling that the
trial court committed grave abuse of discretion in preventing the prosecution from establishing the due execution
and authenticity of certain letter marked therein as Exhibit "LL," which supposedly "positively identified therein
petitioner as the perpetrator of the crime charged." The Court, in a petition for certiorari, sustained the CAs power to
review the order granting the demurrer to evidence, explaining thus:
Under Rule 119, Section 23 of the Revised Rules of Criminal Procedure, as amended, the trial court may dismiss the
action on the ground of insufficiency of evidence upon a demurrer to evidence filed by the accused with or without
leave of court. In resolving accuseds demurrer to evidence, the court is merely required to ascertain whether there is
competent or sufficient evidence to sustain the indictment or support a verdict of guilt.
The grant or denial of a demurrer to evidence is left to the sound discretion of the trial court and its ruling on the
matter shall not be disturbed in the absence of a grave abuse of discretion. Significantly, once the court grants the
demurrer, such order amounts to an acquittal and any further prosecution of the accused would violate the
constitutional proscription on double jeopardy. This constitutes an exception to the rule that the dismissal of a
criminal case made with the express consent of the accused or upon his own motion bars a plea of double jeopardy.
The finality-of-acquittal rule was stressed thus in People v. Velasco:

The fundamental philosophy highlighting the finality of an acquittal by the trial court cuts deep into the "humanity
of the laws and in jealous watchfulness over the rights of the citizens, when brought in unequal contest with the
State xxx. Thus Green expressed the concern that "(t)he underlying idea, one that is deeply ingrained in at least the
Anglo-American system of jurisprudence, is that the State with all its resources and power should not be allowed to
make repeated attempts to convict an individual for an alleged offense thereby subjecting him to embarrassment,
expense and ordeal and compelling him to live in a continuing state of anxiety and insecurity, as well as enhancing
the possibility that even though innocent, he may be found guilty."
It is axiomatic that on the basis of humanity, fairness and justice, an acquitted defendant is entitled to the right of
repose as a direct consequence of the finality of his acquittal. The philosophy underlying this rule establishing the
absolute nature of acquittals is "part of the paramount importance criminal justice system attaches to the protection
of the innocent against wrongful conviction." The interest in the finality-of-acquittal rule, confined exclusively to
verdicts of not guilty, is easy to understand: it is a need for "repose", a desire to know the exact extent of ones
liability. With this right of repose, the criminal justice system has built in a protection to insure that the innocent,
even those whose innocence rests upon a jurys leniency, will not be found guilty in a subsequent proceeding.
Given the far-reaching scope of an accuseds right against double jeopardy, even an appeal based on an alleged
misappreciation of evidence will not lie. The only instance when double jeopardy will not attach is when the trial
court acted with grave abuse of discretion amounting to lack or excess of jurisdiction, such as where the prosecution
was denied the opportunity to present its case or where the trial was a sham. However, while certiorari may be
availed of to correct an erroneous acquittal, the petitioner in such an extraordinary proceeding must clearly
demonstrate that the trial court blatantly abused its authority to a point so grave as to deprive it of its very power to
dispense justice. (Emphasis supplied.)
By this time, it is settled that the appellate court may review dismissal orders of trial courts granting an accuseds
demurrer to evidence. This may be done via the special civil action of certiorari under Rule 65 based on the ground
of grave abuse of discretion, amounting to lack or excess of jurisdiction. Such dismissal order, being considered void
judgment, does not result in jeopardy. Thus, when the order of dismissal is annulled or set aside by an appellate
court in an original special civil action via certiorari, the right of the accused against double jeopardy is not violated.
Unfortunately, what petitioner People of the Philippines, through then Secretary of Justice Teofisto T. Guingona, Jr.
and then Solicitor General Silvestre H. Bello, III, filed with the Court in the present case is an appeal by way of a
petition for review on certiorari under Rule 45 raising a pure question of law, which is different from a petition for
certiorari under Rule 65.
In Madrigal Transport Inc. v. Lapanday Holdings Corporation,25 we have enumerated the distinction between the two
remedies/actions, to wit:
Appeal and Certiorari Distinguished
Between an appeal and a petition for certiorari, there are substantial distinctions which shall be explained below.
As to the Purpose. Certiorari is a remedy designed for the correction of errors of jurisdiction, not errors of judgment.
In Pure Foods Corporation v. NLRC, we explained the simple reason for the rule in this light:
"When a court exercises its jurisdiction, an error committed while so engaged does not deprive it of the jurisdiction
being exercised when the error is committed. If it did, every error committed by a court would deprive it of its
jurisdiction and every erroneous judgment would be a void judgment. This cannot be allowed. The administration of
justice would not survive such a rule. Consequently, an error of judgment that the court may commit in the exercise
of its jurisdiction is not correct[a]ble through the original civil action of certiorari."
The supervisory jurisdiction of a court over the issuance of a writ of certiorari cannot be exercised for the purpose of
reviewing the intrinsic correctness of a judgment of the lower court -- on the basis either of the law or the facts of
the case, or of the wisdom or legal soundness of the decision. Even if the findings of the court are incorrect, as long
as it has jurisdiction over the case, such correction is normally beyond the province of certiorari. Where the error is
not one of jurisdiction, but of an error of law or fact -- a mistake of judgment -- appeal is the remedy.
As to the Manner of Filing. Over an appeal, the CA exercises its appellate jurisdiction and power of review. Over a
certiorari, the higher court uses its original jurisdiction in accordance with its power of control and supervision over
the proceedings of lower courts. An appeal is thus a continuation of the original suit, while a petition for certiorari is
an original and independent action that was not part of the trial that had resulted in the rendition of the judgment or

order complained of. The parties to an appeal are the original parties to the action. In contrast, the parties to a
petition for certiorari are the aggrieved party (who thereby becomes the petitioner) against the lower court or quasijudicial agency, and the prevailing parties (the public and the private respondents, respectively).
As to the Subject Matter. Only judgments or final orders and those that the Rules of Court so declared are
appealable. Since the issue is jurisdiction, an original action for certiorari may be directed against an interlocutory
order of the lower court prior to an appeal from the judgment; or where there is no appeal or any plain, speedy or
adequate remedy.
As to the Period of Filing. Ordinary appeals should be filed within fifteen days from the notice of judgment or final
order appealed from. Where a record on appeal is required, the appellant must file a notice of appeal and a record on
appeal within thirty days from the said notice of judgment or final order. A petition for review should be filed and
served within fifteen days from the notice of denial of the decision, or of the petitioners timely filed motion for new
trial or motion for reconsideration. In an appeal by certiorari, the petition should be filed also within fifteen days
from the notice of judgment or final order, or of the denial of the petitioners motion for new trial or motion for
reconsideration.
On the other hand, a petition for certiorari should be filed not later than sixty days from the notice of judgment,
order, or resolution. If a motion for new trial or motion for reconsideration was timely filed, the period shall be
counted from the denial of the motion.
As to the Need for a Motion for Reconsideration. A motion for reconsideration is generally required prior to the
filing of a petition for certiorari, in order to afford the tribunal an opportunity to correct the alleged errors. Note also
that this motion is a plain and adequate remedy expressly available under the law. Such motion is not required
before appealing a judgment or final order.
Also in Madrigal, we stressed that the special civil action of certiorari and appeal are two different remedies
mutually exclusive; they are neither alternative nor successive. Where appeal is available, certiorari will not prosper.
In the dismissal of a criminal case upon demurrer to evidence, appeal is not available as such an appeal will put the
accused in double jeopardy. Certiorari, however, is allowed.
For being the wrong remedy taken by petitioner People of the Philippines in this case, this petition is outrightly
dismissible. The Court cannot reverse the assailed dismissal order of the trial court by appeal without violating
private respondents right against double jeopardy.
Even assuming that the Court may treat an "appeal" as a special civil action of certiorari, which definitely this Court
has the power to do, when there is a clear showing of grave abuse of discretion committed by the lower court, the
instant petition will nevertheless fail on the merits as the succeeding discussion will show.
There are actually two (2) acts involved in this case, namely, the warrantless arrest and the warrantless search. There
is no question that warrantless search may be conducted as an incident to a valid warrantless arrest. The law requires
that there be first a lawful arrest before a search can be made; the process cannot be reversed. 26However, if there are
valid reasons to conduct lawful search and seizure which thereafter shows that the accused is currently committing a
crime, the accused may be lawfully arrested in flagrante delicto27 without need for a warrant of arrest.
Finding that the warrantless arrest preceded the warrantless search in the case at bar, the trial court granted private
respondent's demurrer to evidence and acquitted him of all the three charges for lack of evidence, because the
unlawful arrest resulted in the inadmissibility of the evidence gathered from an invalid warrantless search. The trial
courts ratiocination is quoted as follows:
The threshold issue raised by the accused in his Demurrer to Evidence is whether his warrantless arrest and search
were lawful as argued by the prosecution, or unlawful as asserted by the defense.
Under Section 5, Rule 113 of the New Rules of Court, a peace officer may arrest a person without a warrant: (a)
when in his presence, the person to be arrested has committed, is actually committing, or is attempting to commit an
offense; (b) when an offense has in fact just been committed, and he has personal knowledge of facts indicating that
the person to be arrested has committed it, and (c) when the person to be arrested is a prisoner who has escaped from
a penal establishment or place where he is serving final judgment or temporarily confined while being transferred
from one confinement to another. None of these circumstances were present when the accused was arrested. The
accused was merely walking from the Maria Orosa Apartment and was about to enter the parked BMW car when the
police officers arrested and frisked him and searched his car. The accused was not committing any visible offense at

the time of his arrest. Neither was there an indication that he was about to commit a crime or that he had just
committed an offense. The unlicensed AMT Cal.380 9mm Automatic Back-up Pistol that the accused had in his
possession was concealed inside the right front pocket of his pants. And the handgun was bantam and slim in size
that it would not give an outward indication of a concealed gun if placed inside the pant's side pocket as was done by
the accused. The arresting officers had no information and knowledge that the accused was carrying an unlicensed
handgun, nor did they see him in possession thereof immediately prior to his arrest.
Ditto on the 32 bags of shabu and the other unlicensed Daewoo Cal. 9mm Pistol with magazine that were found and
seized from the car. The contraband items in the car were not in plain view. The 32 bags of shabu were in the trunk
compartment, and the Daewoo handgun was underneath the drivers seat of the car. The police officers had no
information, or knowledge that the banned articles were inside the car, or that the accused had placed them there.
The police officers searched the car on mere suspicion that there was shabu therein.
On this matter, pertinent portions of the testimonies of Police Inspector Cielito Coronel and SP03 Reynaldo are
hereunder quoted:
POLICE INSPECTOR CIELITO CORONELS TESTIMONY
"PROSECUTOR TO WITNESS: Direct-Examination
Q. Mr. Witness, what was your role or participation in this case?
A. I am one of those responsible for the arrest of the accused.
xxx xxx xxx
Q. Where did you make that arrest, Mr. Witness?
A. The apprehension was made in front of an apartment along Maria Orosa Street, Ermita, Manila.
Q. What date was that when you arrested the accused?
A. It was on May 17, 1996, at about 2:10 a.m.
xxx xxx xxx
Q. What was the reason why you together with other policemen effected the arrest of the accused?
A. We arrested him because of the information relayed to us by one of those whom we have previously apprehended
in connection with the delivery of shabu somewhere also in Ermita, Manila.
xxx xxx xxx
Q. When you established that he was somewhere at Maria Orosa, what did you do?
A. We waited for him.
xxx xxx xxx
Q. You yourself, Mr. Witness, where did you position yourself during that time?
A. I was inside a vehicle waiting for the accused to appear.
Q. What about your other companions where were they?
A. They were position in strategic places within the area.
Q. What happened when you and your companions were positioned in that place?
A. That was when the accused arrived.
Q. How many of your approached him.
A. Inspector Margallo, myself and two other operatives.
Q. What happened when you approached the accused, Mr. Witness?
A. We introduced ourselves as police officers and we frisked him and we asked him to open the back compartment
of his car.
Q. You said you frisked him, what was the result of that?
A. He was found in possession of one back-up pistol with one loaded magazine and likewise when the compartment
was opened several plastic bags containing white crystalline substance suspected to be shabu (were found).
Q. What did you do when you found out Mr. Witness?
A. When the car was further search we later found another firearm, a Daewoo Pistol at the place under the seat of
the driver.
Q. Then what happened?
A. He was brought to our headquarters at Mandaluyong for further investigation.
Q. What about the suspected shabu that you recovered, what did you do with that?
A. The suspected shabu that we recovered were forwarded to the NBI for laboratory examination.
Q. Did you come to know the results?
A. It was found positive for methamphetamine hydrochloride. (TSN, pp. 3-8, November 15, 1996).
ATTY. LOZANO TO WITNESS: CROSS

Q. You arrested Joseph Junio and Redentor Teck for alleged transporting of shabu on May 16, 1996, at 11:00 p.m., is
it not?
A. Yes, Sir.
Q. You asked Redentor Teck where he is employed, is it not?
A. Yes, Sir.
xxx xxx xxx
Q. Redentor Teck told you that he is a talent manager at the Glenmore Modeling Agency, is it not?
A. Yes, Sir.
.Q. The Glenmore Modeling Agency is owned by Lawrence Wang, is it not?
A. I supposed, Sir.
Q. And that is why immediately after Redentor Teck told you that he is an employee of the Glenmore Modeling
Agency owned by Lawrence Wang, naturally, you and your companions look for Lawrence Wang to shed light on
the transporting of shabu by Redentor Teck and Joseph Junio, is it not?
A. Yes, Sir.
Q. Thereafter, you spotted a person previously described by Redentor Teck as Lawrence Wang, is it not?
A. Yes, Sir.
Q. While you were arresting Lawrence Wang, your companions at the same time searched the BMW car described
in your affidavit of arrest, is it not?
A. Yes, Sir.
xxx xxx xxx
Q. Lawrence Wang was not inside the BMW car while the same was searched, is it not?
A. He was outside, Sir.
Q. The driver of the car was inside the car when the arrest and search were made, is it not?
A. He was likewise outside, Sir.
Q. Lawrence Wang did resist arrest and search is it not?
A. Yes, Sir.
Q. When you effected the arrest, there was no warrant of arrest, is it not?
A. Yes, Sir.
Q. When the search was made on the BMW car, there was no search warrant, is it not?
A. Yes, none, Sir. (TSN, pp. 3-12, November 15, 1996)
SPO3 REYNALDO CRISTOBALS TESTIMONY
PROSECUTOR TO WITNESS: DIRECT EXAMINATION
Q. What is you role or participation in this case?
A. I was one of the arresting officers and investigator, Sir.
xxx xxx xxx
Q. What kind of specific offense did the accused allegedly do so that you arrested him, Mr. Witness?
A. He was arrested on the basis of the recovered drugs in his possession placed inside his car.
xxx xxx xxx
Q. Mr. witness, you said that you recovered drug from the car of the accused, please tell us the antecedent
circumstances which led you to recover or confiscate these items?
A. Earlier in the evening about 11:00 p.m. of May 16, we arrested one Redentor Teck and Joseph Junio.
COURT: Where did you arrest these people?
A They were arrested in Metro Manila also.
COURT: The same date?
A. May 16, about 11:00 p.m. They were arrested and when they were investigated, Teck mentioned the name of
Lawrence Wang as his employer.
COURT: Why were these people, arrested?
A. For violation of R.A. 6425.
COURT: How were they arrested?
A. They were arrested while in the act of transporting shabu or handling shabu to another previously arrested person.
It was a series of arrest.
COURT: So, this involved a series of operation?
A. Yes, Your Honor. About 11:00 p.m. of May 16, we arrested three (3) persons, SPO2 Vergel de Dios, a certain
Arellano and a certain Rogelio Noble. When they were arrested they divulged the name of the source.
COURT: They were arrested for what, for possession?

A. Yes, Your Honor. For unlawful possession of shabu . Then they divulged to us the name of the person from whom
they get shabu.
COURT: Whose name did they mention:
A. One Alias Frank, who turned out to be Redentor Teck and Joseph Junio. We let them call Redentor Teck and
Joseph Junio thru the cellphone and pretend and to order another supply of shabu.
COURT: So there was an entrapment?
A. Yes, Your Honor.
COURT: So, these two (2) were arrested?
A. While they were about to hand over another bag of shabu to Noble and company.
COURT: And these two reveals (revealed) some information to you as to the source of the shabu?
A. Yes, Your Honor.
COURT: What was the information?
A. Teck told us that he is an employee of Lawrence Wang.
COURT: What did you do when you were told about that?
A. They also told us that there was an ongoing delivery of shabu on that morning.
COURT: When?
A. Of that date early morning of May 17, 1996.
COURT: At what place?
A. We asked them where we could find Lawrence Wang and Teck lead us to Maria Orosa Apartment where we
conducted a stake out which lasted up to 2:00 a.m.
xxx xxx xxx
COURT: What happened during the stake out?
A. When the person of the accused was identified to us, we saw him opening his car together with his driver.
COURT: So, he was about to leave when you saw him?
A. Probably, Sir.
COURT: What did you do?
A. We saw him opened his car and we have a suspicion that there was a shabu inside the compartment of the car.
xxx xxx xxx
COURT: All right, when you saw the accused opened his car, what did you do?
A. We approached him.
COURT: What happened when you approached him?
A. We suspected the shabu inside the compartment of his car.
COURT: And this shabu that you saw inside the compartment of the car, what did you do with that?
A. Well, he was first arrested by Captain Margallo and Lt. Coronel while I was the one who inspected and opened
the compartment of the car and saw the shabu. (TSN, pp. 15-24, December 16, 1996).
CLARIFICATORY QUESTIONING OF SPO3 CRISTOBAL BY THE COURT
COURT: From your testimony and that of Police Inspector Cielito Coronel, this Court has gathered that prior to the
arrest of the accused there were three (3) men that your team arrested. One of whom is a police officer.
A: Yes, Sir.
xxx xxx xxx
COURT: And on the occasion of the arrest of these three men shabu were confiscated from them?
A: Yes, Sir.
Q: And in the course of the investigation of these three men, you were able to discover that Redentor Teck and
Joseph Junio were the source of the regulated drug that were confiscated from the three men that you have arrested?
A: Yes, Sir.
Q: Now, thru entrapment base[d] on your testimony you were able to apprehend also these two men, Redentor Teck
and Joseph Junio?
A: Yes, Sir.
xxx xxx xxx
Q: These two men, Redentor Teck and Joseph Junio they were also investigated by your team?
A: Yes, Sir.
Q: You were present while they were investigated?
A: I was the one whom investigated them.
xxx xxx xxx

Q: Did you ask Redentor and Joseph the source of shabu that you confiscated from them at the time of the (their)
arrest?
A: Yes, Sir. They refuse to say the source, however, they told me that they were working for the accused.
Q: You also testified that Redentor informed you that there was another delivery of shabu scheduled that morning of
(stop) was it May 16 or 17? The other delivery that is scheduled on?
A: On the 17th.
xxx xxx xxx
Q: Did he tell you who was to make the delivery?
A: No, Sir.
xxx xxx xxx
Q: At that time when you decided to look for the accused to ask him to shed light on the matter concerning the arrest
of these two employees in possession of shabu. Did you and did your team suspect the accused as being involved in
the transaction that lead (led) to the arrest of Redentor and Joseph?
A: Yes, Sir. We suspected that he was the source of the shabu.
xxx xxx xxx
Q: When you saw the accused walking towards his car, did you know whether he was carrying a gun?
A: No, Sir. It cannot be seen.
Q: It was concealed?
A: Yes, Sir.
Q: So, the only time that you and your team learned that he was in possession of the gun is when he was bodily
search?
A: Yes, Sir. That is the only time that I came to know about when Capt. Margallo handed to me the gun.
Q: Other than walking towards his car, the accused was not doing anything else?
A: None, Sir.
Q: That would invite your suspicion or give indication that he was intending to do something unlawful or illegal?
A: No, Sir.
Q: When you searched the car, did the accused protest or try to prevent your team from searching his car?
A: No, Sir." (TSN pp. 3-16, Feb. 26, 1997)
Clearly therefore, the warrantless arrest of the accused and the search of his person and the car were without
probable cause and could not be licit. The arrest of the accused did not fall under any of the exception to the
requirements of warrantless arrests, (Sec. 5, Rule 113, Rules of Court) and is therefore, unlawful and derogatory of
his constitutional right of liberty. x x x
The trial court resolved the case on the basis of its findings that the arrest preceded the search, and finding no basis
to rule in favor of a lawful arrest, it ruled that the incidental search is likewise unlawful. Any and all pieces of
evidence acquired as a consequence thereof are inadmissible in evidence. Thus, the trial court dismissed the case for
lack of evidence.
Contrary to its position at the trial court, the People, however, now posits that "inasmuch as it has been shown in the
present case that the seizure without warrant of the regulated drugs and unlicensed firearms in the accuseds
possession had been validly made upon probable cause and under exigent circumstances, then the warrantless arrest
of the accused must necessarily have to be regarded as having been made on the occasion of the commission of the
crime in flagrante delicto, and therefore constitutionally and statutorily permissible and lawful." 28 In effect, the
People now contends that the warrantless search preceded the warrantless arrest. Since the case falls under an
exception to the general rule requiring search warrant prior to a valid search and seizure, the police officers were
justified in requiring the private respondent to open his BMW cars trunk to see if he was carrying illegal drugs.
The conflicting versions as to whether the arrest preceded the search or vice versa, is a matter of credibility of
evidence. It entails appreciation of evidence, which may be done in an appeal of a criminal case because the entire
case is thrown open for review, but not in the case of a petition for certiorari where the factual findings of the trial
court are binding upon the Court. Since a dismissal order consequent to a demurrer to evidence is not subject to
appeal and reviewable only by certiorari, the factual finding that the arrest preceded the search is conclusive upon
this Court. The only legal basis for this Court to possibly reverse and set aside the dismissal order of the trial court
upon demurrer to evidence would be if the trial court committed grave abuse of discretion in excess of jurisdiction
when it ruled that there was no legal basis to lawfully effect a warrantless arrest.

The pertinent provisions of Rule 113 of the Rules on Criminal Procedure on warrantless arrest provide:
Sec. 5. Arrest without warrant; when lawful. - A peace officer or a private person may, without a warrant, arrest a
person:
a) When, in his presence, the person to be arrested has committed, is actually committing, or is attempting
to commit an offense;
b) When an offense has just been committed, and he has probable cause to believe based on personal
knowledge of facts or circumstances that the person to be arrested has committed it; and
c) When the person to be arrested is a prisoner who has escaped from a penal establishment or place where
he is serving final judgment or is temporarily confined while his case is pending, or has escaped while
being transferred from one confinement to another.
Section 5, above, provides three (3) instances when warrantless arrest may be lawfully effected: (a) arrest of a
suspect in flagrante delicto; (b) arrest of a suspect where, based on personal knowledge of the arresting officer, there
is probable cause that said suspect was the author of a crime which had just been committed; (c) arrest of a prisoner
who has escaped from custody serving final judgment or temporarily confined while his case is pending.
For a warrantless arrest of an accused caught in flagrante delicto under paragraph (a) of Section 5 to be valid, two
requisites must concur: (1) the person to be arrested must execute an overt act indicating that he has just committed,
is actually committing, or is attempting to commit a crime; and (2) such overt act is done in the presence or within
the view of the arresting officer.291awphi1.nt
The facts and circumstances surrounding the present case did not manifest any suspicious behavior on the part of
private respondent Lawrence Wang that would reasonably invite the attention of the police. He was merely walking
from the Maria Orosa Apartment and was about to enter the parked BMW car when the police operatives arrested
him, frisked and searched his person and commanded him to open the compartment of the car, which was later on
found to be owned by his friend, David Lee. He was not committing any visible offense then. Therefore, there can
be no valid warrantless arrest in flagrante delicto under paragraph (a) of Section 5. It is settled that "reliable
information" alone, absent any overt act indicative of a felonious enterprise in the presence and within the view of
the arresting officers, is not sufficient to constitute probable cause that would justify an in flagrante delicto arrest. 30
Neither may the warrantless arrest be justified under paragraph (b) of Section 5. What is clearly established from the
testimonies of the arresting officers is that Wang was arrested mainly on the information that he was the employer of
Redentor Teck and Joseph Junio who were previously arrested and charged for illegal transport of shabu. Teck and
Junio did not even categorically identify Wang to be their source of the shabu they were caught with in flagrante
delicto. Upon the duos declaration that there will be a delivery of shabu on the early morning of the following day,
May 17, which is only a few hours thereafter, and that Wang may be found in Maria Orosa Apartment along Maria
Orosa Street, the arresting officers conducted "surveillance" operation in front of said apartment, hoping to find a
person which will match the description of one Lawrence Wang, the employer of Teck and Junio. These
circumstances do not sufficiently establish the existence of probable cause based on personal knowledge as required
in paragraph (b) of Section 5. And doubtless, the warrantless arrest does not fall under paragraph (c) of Section 5.
The inevitable conclusion, as correctly made by the trial court, is that the warrantless arrest was illegal. Ipso jure, the
warrantless search incidental to the illegal arrest is likewise unlawful. In People v. Aminnudin, 31 the Court declared
as inadmissible in evidence the marijuana found in appellants possession during a search without a warrant, because
it had been illegally seized, in disregard of the Bill of Rights:In the case at bar, the accused-appellant was not, at the
moment of his arrest, committing a crime nor was it shown that he was about to do so or that he had just done so.
What he was doing was descending the gangplank of the M/V Wilcon 9 and there was no outward indication that
called for his arrest. To all appearances, he was like any of the other passengers innocently disembarking from the
vessel. It was only when the informer pointed to him as the carrier of the marijuana that he suddenly became a
suspect and so subject to apprehension. It was the fugitive finger that triggered his arrest. The identification of the
informer was the probable cause as determined by the officer (and not a judge) that authorized them to pounce upon
Aminnudin and immediately arrest him. The Peoples contention that Wang waived his right against unreasonable
search and seizure has no factual basis. While we agree in principle that consent will validate an otherwise illegal
search, however, based on the evidence on record, Wang resisted his arrest and the search on his person and
belongings.32 The implied acquiescence to the search, if there was any, could not have been more than mere passive

conformity given under intimidating or coercive circumstances and is thus considered no consent at all within the
purview of the constitutional guarantee.33 Moreover, the continuing objection to the validity of the warrantless arrest
made of record during the arraignment bolsters Wangs claim that he resisted the warrantless arrest and search.
We cannot close this ponencia without a word of caution: those who are supposed to enforce the law are not justified
in disregarding the rights of the individual in the name of order. Order is too high a price for the loss of liberty. As
Justice Holmes once said, "I think it is less evil that some criminals should escape than that the government should
play an ignoble part." It is simply not allowed in free society to violate a law to enforce another, especially if the law
violated is the Constitution itself.34 WHEREFORE, the instant petition is DENIED.
SO ORDERED.
14. People vs. Dela Cruz ( Nov. 20, 2008)
VELASCO, JR., J.:
This is an appeal from the November 29, 2007 Decision of the Court of Appeals (CA) in CA-G.R. CR-H.C. No.
02286 entitled People of the Philippines v. Carlos Dela Cruzwhich affirmed the September 16, 2005 Decision of the
Regional Trial Court (RTC), Branch 77 in San Mateo, Rizal in Criminal Case Nos. 6517 (Illegal Possession of
Firearm and Ammunition) and 6518 (Possession of Dangerous Drug). The RTC found accused- appellant Carlos
Dela Cruz guilty beyond reasonable doubt of violation of Section 11(2) of Republic Act No. (RA) 9165
or The Comprehensive Dangerous Drugs Act of 2002.
The Facts
On November 15, 2002, charges against accused-appellant were made before the RTC. The Informations read as
follows:
Criminal Case No. 6517
That, on or about the 20th day of October 2002, in the Municipality of San Mateo, Province of
Rizal, Philippines and within the jurisdiction of this Honorable Court, the above-named accused,
being then a private citizen, without any lawful authority, did then and there willfully, unlawfully,
and knowingly have in his possession and under his custody and control One (1) Gauge Shotgun
marked ARMSCOR with Serial No. 1108533 loaded with four (4) live ammunition, which are
high powered firearm and ammunition respectively, without first securing the necessary license to
possess or permit to carry said firearm and ammunition from the proper authorities.
Criminal Case No. 6518
That on or about the 20th day of October 2002, in the Municipality of San Mateo, Province of
Rizal, Philippines and within the jurisdiction of this Honorable Court, the above-named accused,
not being authorized by law, did then and there willfully, unlawfully and knowingly have in his
possession, direct custody and control one (1) heat-sealed transparent plastic bag weighing 49.84
grams of white crystalline substance, which gave positive results for Methamphetamine
Hydrochloride, a dangerous drug.[1]
Accused-appellant entered a not guilty plea and trial ensued.
The facts, according to the prosecution, showed that in the morning of October 20, 2002, an informant tipped off the
Drug Enforcement Unit of the Marikina Police Station that wanted drug pusher Wifredo Loilo alias Boy Bicol was
at his nipa hut hideout in San Mateo, Rizal. A team was organized to arrest Boy Bicol. Once there, they saw Boy
Bicol by a table talking with accused-appellant. They shouted Boy Bicol sumuko ka na may warrant of
arrest ka. (Surrender yourself Boy Bicol you have a warrant of arrest.) Upon hearing this, Boy Bicol engaged them
in a shootout and was fatally shot. Accused-appellant was seen holding a shotgun through a window. He dropped his
shotgun when a police officer pointed his firearm at him. The team entered the nipa hut and apprehended accusedappellant. They saw a plastic bag of suspected shabu, a digital weighing scale, drug paraphernalia, ammunition, and
magazines lying on the table. PO1 Calanoga, Jr. put the markings CVDC, the initials of accused-appellant, on the
bag containing the seized drug.

Accused-appellant was subsequently arrested. The substance seized from the hideout was sent to the Philippine
National Police crime laboratory for examination and tested positive for methamphetamine hydrochloride or shabu.
He was thus separately indicted for violation of RA 9165 and for illegal possession of firearm.
According to the defense, accused-appellant was at Boy Bicols house having been asked to do a welding job for Boy
Bicols motorcycle. While accused-appellant was there, persons who identified themselves as police officers
approached the place, prompting accused-appellant to scamper away. He lied face down when gunshots rang. The
buy-bust team then helped him get up. He saw the police officers searching the premises and finding shabu and
firearms, which were on top of a table or drawer. [2] When he asked the reason for his apprehension, he was told that
it was because he was a companion of Boy Bicol. He denied under oath that the gun and drugs seized were found in
his possession and testified that he was only invited by Boy Bicol to get the motorcycle from his house. [3]
The RTC acquitted accused-appellant of illegal possession of firearm and ammunition but convicted him of
possession of dangerous drugs. The dispositive portion of the RTC Decision reads:
WHEREFORE, the Court based on insufficiency of evidence hereby ACQUITS accused CARLOS
DELA CRUZ Y VICTORINO in Criminal Case No. 6517 for violation of P.D. 1866 as amended
by RA 8294.
In Criminal Case No. 6518 for Possession of Dangerous Drug under Section 11, 2 nd paragraph of
Republic Act 9165, the Court finds said accused CARLOS DELA CRUZ Y VICTORINO,
GUILTY beyond reasonable doubt and is hereby sentenced to Life Imprisonment and to Pay a
Fine of FOUR HUNDRED THOUSAND PESOS (P400,000.00).
SO ORDERED.[4]
On December 7, 2005, accused-appellant filed a Notice of Appeal of the RTC Decision.
In his appeal to the CA, accused-appellant claimed that: (1) the version of the prosecution should not have
been given full credence; (2) the prosecution failed to prove beyond reasonable doubt that he was guilty of
possession of an illegal drug; (3) his arrest was patently illegal; and (4) the prosecution failed to establish the chain
of custody of the illegal drug allegedly in his possession.
The CA sustained accused-appellants conviction. [5] It pointed out that accused-appellant was positively
identified by prosecution witnesses, rendering his uncorroborated denial and allegation of frame-up weak. As to
accused-appellants alleged illegal arrest, the CA held that he is deemed to have waived his objection when he
entered his plea, applied for bail, and actively participated in the trial without questioning such arrest.
On the supposedly broken chain of custody of the illegal drug, the appellate court held that accusedappellants claim is unpersuasive absent any evidence showing that the plastic sachet of shabu had been tampered or
meddled with.
On December 20, 2007, accused-appellant filed his Notice of Appeal of the CA Decision.
On June 25, 2008, this Court required the parties to submit supplemental briefs if they so desired. The
parties later signified their willingness to submit the case on the basis of the records already with the Court.
Accused-appellant presents the following issues before us:
I
THE COURT A QUO GRAVELY ERRED IN GIVING FULL CREDENCE TO THE VERSION
OF THE PROSECUTION
II

THE COURT A QUO GRAVELY ERRED IN FINDING THE ACCUSED-APPELLANT

GUILTY OF VIOLATION OF SECTION 11, ARTICLE II, RA 9165 DESPITE THE FAILURE
OF THE PROSECUTION TO PROVE THE COMMISSION OF THE OFFENSE CHARGED
BEYOND REASONABLE DOUBT
III
THE COURT A QUO GRAVELY ERRED IN CONVICTING THE ACCUSED-APPELLANT OF
THE OFFENSE CHARGED DESPITE THE PATENT ILLEGALITY OF HIS ARREST
IV
THE TRIAL COURT GRAVELY ERRED IN CONVICTING THE ACCUSED-APPELLANT OF
VIOLATION OF SECTION 11, ARTICLE II, RA 9165 DESPITE THE FAILURE OF THE
PROSECUTION TO ESTABLISH THE CHAIN OF CUSTODY OF THE ILLEGAL DRUG
ALLEGEDLY FOUND IN HIS POSSESSION
Accused-appellant claims that the presence of all the elements of the offense of possession of dangerous
drug was not proved beyond reasonable doubt since both actual and constructive possessions were not proved. He
asserts that the shabu was not found in his actual possession, for which reason the prosecution was required to
establish that he had constructive possession over the shabu. He maintains that as he had no control and dominion
over the drug or over the place where it was found, the prosecution likewise failed to prove constructive possession.
The Courts Ruling
The appeal has merit.
The elements in illegal possession of dangerous drug 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.[6] On the third element, we have held that the possession must be with
knowledge of the accused or that animus possidendi existed with the possession or control of said articles.
[7]
Considering that as to this knowledge, a persons mental state of awareness of a fact is involved, we have ruled
that:
Since courts cannot penetrate the mind of an accused and thereafter state its perceptions with
certainty, resort to other evidence is necessary. Animus possidendi, as a state of mind, may be
determined on a case-to-case basis by taking into consideration the prior or contemporaneous acts
of the accused, as well as the surrounding circumstances. Its existence may and usually must be
inferred from the attendant events in each particular case.[8]
The prior or contemporaneous acts of accused-appellant show that: he was inside the nipa hut at the time
the buy-bust operation was taking place; he was talking to Boy Bicol inside the nipa hut; he was seen holding a
shotgun; when PO1 Calanoga, Jr. pointed his firearm at accused-appellant, the latter dropped his shotgun; and when
apprehended, he was in a room which had the seized shabu, digital weighing scale, drug paraphernalia, ammunition,
and magazines. Accused-appellant later admitted that he knew what the content of the seized plastic bag was. [9]
Given the circumstances, we find that the prosecution failed to establish possession of the shabu, whether
in its actual or constructive sense, on the part of accused-appellant.
The two buy-bust team members corroborated each others testimonies on how they saw Boy Bicol talking
to accused-appellant by a table inside the nipa hut. That table, they testified, was the same table where they saw
the shabu once inside the nipa hut. This fact was used by the prosecution to show that accused-appellant exercised
dominion and control over the shabu on the table. We, however, find this too broad an application of the concept of
constructive possession.

In People v. Torres,[10] we held there was constructive possession of prohibited drugs even when the
accused was not home when the prohibited drugs were found in the masters bedroom of his house.
In People v. Tira,[11] we sustained the conviction of the accused husband and wife for illegal possession of
dangerous drugs. Their residence was searched and their bed was found to be concealing illegal drugs underneath.
We held that the wife cannot feign ignorance of the drugs existence as she had full access to the room, including the
space under the bed.
In Abuan v. People,[12] we affirmed the finding that the accused was in constructive possession of prohibited
drugs which had been found in the drawer located in her bedroom.
In all these cases, the accused was held to be in constructive possession of illegal drugs since they were
shown to enjoy dominion and control over the premises where these drugs were found.
In the instant case, however, there is no question that accused-appellant was not the owner of the nipa hut
that was subject of the buy-bust operation. He did not have dominion or control over the nipa hut. Neither was
accused-appellant a tenant or occupant of the nipa hut, a fact not disputed by the prosecution. The target of the
operation was Boy Bicol. Accused-appellant was merely a guest of Boy Bicol. But in spite of the lack of evidence
pinning accused-appellant to illegal possession of drugs, the trial court declared the following:
It cannot be denied that when the accused was talking with Boy Bicol he knew that the
shabu was on the table with other items that were confiscated by the police operatives. The court
[surmises] that the accused and boy Bicol were members of a gang hiding in that nipa hut where
they were caught red-handed with prohibited items and dangerous [drugs].[13]
The trial court cannot assume, based on the prosecutions evidence, that accused-appellant was part of a
gang dealing in illegal activities. Apart from his presence in Boy Bicols nipa hut, the prosecution was not able to
show his participation in any drug-dealing. He was not even in possession of drugs in his person. He was merely
found inside a room with shabu, not as the rooms owner or occupant but as a guest. While he allegedly pointed a
firearm at the buy-bust team, the prosecution curiously failed to produce the firearm that accused-appellant
supposedly used.
The prosecution in this case clearly failed to show all the elements of the crime absent a showing of either
actual or constructive possession by the accused-appellant.
Since accused-appellant was not in possession of the illegal drugs in Boy Bicols nipa hut, his subsequent
arrest was also invalid. Rule 113 of the Rules on Criminal Procedure on warrantless arrest provides:
Sec. 5. Arrest without warrant; when lawful.A peace officer or a private person may,
without a warrant, arrest a person:
a) When, in his presence, the person to be arrested has committed, is actually committing,
or is attempting to commit an offense;
b) When an offense has just been committed, and he has probable cause to believe based
on personal knowledge of facts or circumstances that the person to be arrested has committed it;
and
c) When the person to be arrested is a prisoner who has escaped from a penal establishment
or place where he is serving final judgment or is temporarily confined while his case is pending, or
has escaped while being transferred from one confinement to another.
The warrantless arrest of accused-appellant was effected under Sec. 5(a), arrest of a suspect in flagrante
delicto. For this type of warrantless arrest to be valid, two requisites must concur: (1) the person to be arrested must
execute an overt act indicating that he has just committed, is actually committing, or is attempting to commit a
crime; and (2) such overt act is done in the presence or within the view of the arresting officer.[14]
Accused-appellants act of pointing a firearm at the buy-bust team would have been sufficient basis for his
arrest in flagrante delicto; however, the prosecution was not able to adequately prove that accused-appellant was

committing an offense. Although accused-appellant merely denied possessing the firearm, the prosecutions charge
was weak absent the presentation of the alleged firearm. He was eventually acquitted by the trial court because of
this gaffe. His arrest, independent of the buy-bust operation targeting Boy Bicol, was therefore not lawful as he was
not proved to be committing any offense.
In sum, we find that there is insufficient evidence to show accused-appellants guilt beyond reasonable
doubt. Having ruled on the lack of material or constructive possession by accused-appellant of the seized shabu and
his succeeding illegal arrest, we deem it unnecessary to deal with the other issue raised.
WHEREFORE, the appeal is GRANTED. The CA Decision dated November 29, 2007 in CA-G.R. CR-H.C. No.
02286 is REVERSED and SET ASIDE. Accused-appellant Carlos Dela Cruz is ACQUITTED of violation of Sec.
11(2) of RA 9165 in Criminal Case No. 6518 of the RTC, Branch 77 in San Mateo, Rizal. SO ORDERED.
15. Republic vs. Roque (Sept 24, 2013)
PERLAS-BERNABE, J.:
Assailed in this petition for certiorari1 are the April 23, 20122 and July 31, 20123 Orders of the Regional Trial Court
of Quezon City, Branch 92(RTC) in Special Civil Action (SCA) No. Q-07-60778, denying petitioners motion to
dismiss (subject motion to dismiss) based on the following grounds: (a) that the Court had yet to pass upon the
constitutionality of Republic Act No. (RA) 9372,4 otherwise known as the "Human Security Act of 2007," in the
consolidated cases of Southern Hemisphere Engagement Network, Inc. v. Anti-Terrorism Council 5 (Southern
Hemisphere); and (b) that private respondents petition for declaratory relief was proper.
The Facts
On July 17, 2007, private respondents filed a Petition6 for declaratory relief before the RTC, assailing the
constitutionality of the following sections of RA 9372: (a) Section 3,7 for being void for vagueness;8 (b) Section
7,9for violating the right to privacy of communication and due process and the privileged nature of priest-penitent
relationships;10 (c)Section 18,11 for violating due process, the prohibition against ex post facto laws or bills of
attainder, the Universal Declaration of Human Rights, and the International Covenant on Civil and Political Rights,
as well as for contradicting Article 12512 of the Revised Penal Code, as amended;13 (d) Section 26,14 for violating the
right to travel;15 and (e) Section 27,16 for violating the prohibition against unreasonable searches and seizures. 17
Petitioners moved to suspend the proceedings,18 averring that certain petitions (SC petitions) raising the issue of RA
9372s constitutionality have been lodged before the Court.19 The said motion was granted in an Order dated October
19, 2007.20
On October 5, 2010, the Court promulgated its Decision21 in the Southern Hemisphere cases and thereby dismissed
the SC petitions.
On February 27, 2012, petitioners filed the subject motion to dismiss,22 contending that private respondents failed to
satisfy the requisites for declaratory relief. Likewise, they averred that the constitutionality of RA 9372 had already
been upheld by the Court in the Southern Hemisphere cases.
In their Comment/Opposition,23 private respondents countered that: (a) the Court did not resolve the issue of RA
9372s constitutionality in Southern Hemisphere as the SC petitions were dismissed based purely on technical
grounds; and (b) the requisites for declaratory relief were met.
The RTC Ruling
On April 23, 2012, the RTC issued an Order24 which denied the subject motion to dismiss, finding that the Court did
not pass upon the constitutionality of RA 9372 and that private respondents petition for declaratory relief was
properly filed.
Petitioners moved for reconsideration25 which was, however, denied by the RTC in an Order dated July 31,
2012.26 The RTC observed that private respondents have personal and substantial interests in the case and that it
would be illogical to await the adverse consequences of the aforesaid laws implementation considering that the case
is of paramount impact to the Filipino people.27
Hence, the instant petition.
The Issues Before the Court
The present controversy revolves around the issue of whether or not the RTC gravely abused its discretion when it
denied the subject motion to dismiss.
Asserting the affirmative, petitioners argue that private respondents failed to satisfy the requirements for declaratory
relief and that the Court had already sustained with finality the constitutionality of RA 9372.

On the contrary, private respondents maintain that the requirements for declaratory relief have been satisfied and that
the Court has yet to resolve the constitutionality of RA 9372, negating any grave abuse of discretion on the RTCs
part.
The Courts Ruling
The petition is meritorious.
An act of a court or tribunal can only be considered as with grave abuse of discretion when such act is done in a
capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction.28 It is well-settled that the abuse
of discretion to be qualified as "grave" must be so patent or gross as to constitute an evasion of a positive duty or a
virtual refusal to perform the duty or to act at all in contemplation of law.29 In this relation, case law states that not
every error in the proceedings, or every erroneous conclusion of law or fact, constitutes grave abuse of
discretion.30 The degree of gravity, as above-described, must be met.
Applying these principles, the Court observes that while no grave abuse of discretion could be ascribed on the part
of the RTC when it found that the Court did not pass upon the constitutionality of RA 9372 in the Southern
Hemisphere cases, it, however, exceeded its jurisdiction when it ruled that private respondents petition had met all
the requisites for an action for declaratory relief. Consequently, its denial of the subject motion to dismiss was
altogether improper.
To elucidate, it is clear that the Court, in Southern Hemisphere, did not make any definitive ruling on the
constitutionality of RA 9372. The certiorari petitions in those consolidated cases were dismissed based solely on
procedural grounds, namely: (a) the remedy of certiorari was improper; 31 (b) petitioners therein lack locus
standi;32 and (c) petitioners therein failed to present an actual case or controversy.33 Therefore, there was no grave
abuse of discretion.
The same conclusion cannot, however, be reached with regard to the RTCs ruling on the sufficiency of private
respondents petition for declaratory relief.
Case law states that the following are the requisites for an action for declaratory relief:
first , the subject matter of the controversy must be a deed, will, contract or other written instrument, statute,
executive order or regulation, or ordinance; second , the terms of said documents and the validity thereof are
doubtful and require judicial construction; third , there must have been no breach of the documents in question;
fourth , there must be an actual justiciable controversy or the "ripening seeds" of one between persons whose
interests are adverse; fifth , the issue must be ripe for judicial determination; and sixth , adequate relief is not
available through other means or other forms of action or proceeding.34
Based on a judicious review of the records, the Court observes that while the first,35 second,36 and
third37requirements appear to exist in this case, the fourth, fifth, and sixth requirements, however, remain wanting.
As to the fourth requisite, there is serious doubt that an actual justiciable controversy or the "ripening seeds" of one
exists in this case.
Pertinently, a justiciable controversy refers to an existing case or controversy that is appropriate or ripe for judicial
determination, not one that is conjectural or merely anticipatory.38 Corollary thereto, by "ripening seeds" it is meant,
not that sufficient accrued facts may be dispensed with, but that a dispute may be tried at its inception before it has
accumulated the asperity, distemper, animosity, passion, and violence of a full blown battle that looms ahead. The
concept describes a state of facts indicating imminent and inevitable litigation provided that the issue is not settled
and stabilized by tranquilizing declaration.39
A perusal of private respondents petition for declaratory relief would show that they have failed to demonstrate how
they are left to sustain or are in immediate danger to sustain some direct injury as a result of the enforcement of the
assailed provisions of RA 9372. Not far removed from the factual milieu in the Southern Hemisphere cases, private
respondents only assert general interests as citizens, and taxpayers and infractions which the government could
prospectively commit if the enforcement of the said law would remain untrammeled. As their petition would
disclose, private respondents fear of prosecution was solely based on remarks of certain government officials which
were addressed to the general public.40 They, however, failed to show how these remarks tended towards any
prosecutorial or governmental action geared towards the implementation of RA 9372 against them. In other words,
there was no particular, real or imminent threat to any of them. As held in Southern Hemisphere:

Without any justiciable controversy, the petitions have become pleas for declaratory relief, over which the Court has
no original jurisdiction. Then again, declaratory actions characterized by "double contingency," where both the
activity the petitioners intend to undertake and the anticipated reaction to it of a public official are merely theorized,
lie beyond judicial review for lack of ripeness.1wphi1
The possibility of abuse in the implementation of RA 9372does not avail to take the present petitions out of the
realm of the surreal and merely imagined. Such possibility is not peculiar to RA 9372 since the exercise of any
power granted by law may be abused. Allegations of abuse must be anchored on real events before courts may step
in to settle actual controversies involving rights which are legally demandable and enforceable. 41 (Emphasis
supplied; citations omitted)
Thus, in the same light that the Court dismissed the SC petitions in the Southern Hemisphere cases on the basis of,
among others, lack of actual justiciable controversy (or the ripening seeds of one), the RTC should have dismissed
private respondents petition for declaratory relief all the same.
It is well to note that private respondents also lack the required locus standi to mount their constitutional challenge
against the implementation of the above-stated provisions of RA 9372 since they have not shown any direct and
personal interest in the case.42 While it has been previously held that transcendental public importance dispenses
with the requirement that the petitioner has experienced or is in actual danger of suffering direct and personal
injury,43 it must be stressed that cases involving the constitutionality of penal legislation belong to an altogether
different genus of constitutional litigation.44 Towards this end, compelling State and societal interests in the
proscription of harmful conduct necessitate a closer judicial scrutiny of locus standi, 45 as in this case. To rule
otherwise, would be to corrupt the settled doctrine of locus standi, as every worthy cause is an interest shared by the
general public.46
As to the fifth requisite for an action for declaratory relief, neither can it be inferred that the controversy at hand is
ripe for adjudication since the possibility of abuse, based on the above-discussed allegations in private respondents
petition, remain highly-speculative and merely theorized.1wphi1 It is well-settled that a question is ripe for
adjudication when the act being challenged has had a direct adverse effect on the individual challenging it. 47 This
private respondents failed to demonstrate in the case at bar.
Finally, as regards the sixth requisite, the Court finds it irrelevant to proceed with a discussion on the availability of
adequate reliefs since no impending threat or injury to the private respondents exists in the first place.
All told, in view of the absence of the fourth and fifth requisites for an action for declaratory relief, as well as the
irrelevance of the sixth requisite, private respondents petition for declaratory relief should have been dismissed.
Thus, by giving due course to the same, it cannot be gainsaid that the RTC gravely abused its discretion.
WHEREFORE, the petition is GRANTED. Accordingly, the April23, 2012 and July 31, 2012 Orders of the Regional
Trial Court of Quezon City, Branch 92 in SCA No. Q-07-60778 are REVERSED and SET ASIDE and the petition
for declaratory relief before the said court is hereby DISMISSED.
SO ORDERED.

16. G Holdings Inc vs National Mines (Oct. 16, 2009)

NACHURA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the October 14,
2003 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 75322.
The Facts
The petitioner, G Holdings, Inc. (GHI), is a domestic corporation primarily engaged in the business of owning and
holding shares of stock of different companies. [2] It was registered with the Securities and Exchange Commission on
August 3, 1992. Private respondent, National Mines and Allied Workers Union Local 103 (NAMAWU), was the
exclusive bargaining agent of the rank and file employees of Maricalum Mining Corporation (MMC), [3] an entity
operating a copper mine and mill complex at Sipalay, Negros Occidental.[4]
MMC was incorporated by the Development Bank of the Philippines (DBP) and the Philippine National Bank
(PNB) on October 19, 1984, on account of their foreclosure of Marinduque Mining and Industrial Corporations
assets. MMC started its commercial operations in August 1985. Later, DBP and PNB transferred it to the National
Government for disposition or privatization because it had become a non-performing asset.[5]
On October 2, 1992, pursuant to a Purchase and Sale Agreement [6] executed between GHI and Asset Privatization
Trust (APT), the former bought ninety percent (90%) of MMCs shares and financial claims. [7] These financial claims
were converted into three Promissory Notes [8] issued by MMC in favor of GHI totaling P500M and secured by
mortgages over MMCs properties. The notes, which were similarly worded except for their amounts, read as
follows:
PROMISSORY NOTE
AMOUNT - Php114,715,360.00 [Php186,550,560.00 in the second
note, and Php248,734,080.00 in the
third note.]

MAKATI, METRO MANILA, PHILIPPINES, October 2, 1992

For Value Received, MARICALUM MINING CORPORATION (MMC) with postal address at
4th Floor, Manila Memorial Park Bldg., 2283 Pasong Tamo Extension, Makati, Metro Manila,
Philippines, hereby promises to pay G HOLDINGS, INC., at its office at Phimco Compound, F.
Manalo Street, Punta, Sta. Ana, Manila, the amount of PESOS ONE HUNDRED FOURTEEN
MILLION, SEVEN HUNDRED FIFTEEN THOUSAND AND THREE HUNDRED SIXTY
(Php114,715,360.00) [PESOS ONE HUNDRED EIGHTY SIX MILLION FIVE HUNDRED
FIFTY THOUSAND FIFE HUNDRED AND SIXTY (Php186,550,560.00) in the second note,
and PESOS TWO HUNDRED FORTY EIGHT MILLION, SEVEN HUNDRED THIRTY FOUR
THOUSAND AND EIGHTY (Php248,734,080.00) in the third note], PHILIPPINE CURRENCY,
on or before October 2, 2002. Interest shall accrue on the amount of this Note at a rate per annum
equal to the interest of 90-day Treasury Bills prevailing on the Friday preceding the maturity date
of every calendar quarter.
As collateral security, MMC hereby establishes and constitutes in favor of G HOLDINGS, INC., its
successors and/or assigns:
1.

A mortgage over certain parcels of land, more particularly listed and described in the
Sheriffs Certificate of Sale dated September 7, 1984 issued by the Ex-Officio Provincial
Sheriff of Negros Occidental, Rolando V. Ramirez, with office at Bacolod City following
the auction sale conducted pursuant to the provisions of Act 3135, a copy of which
certificate of sale is hereto attached as Annex A and made an integral part hereof;

2.

A chattel mortgage over assets and personal properties more particularly listed and
described in the Sheriffs Certificate of Sale dated September 7, 1984 issued by the ExOfficio Provincial Sheriff of Negros Occidental, Rolando V. Ramirez, with office at
Bacolod City following the auction conducted pursuant to the provisions of Act 1508, a
copy of which Certificate of Sale is hereto attached as Annex B and made an integral part
hereof.

3.

Mortgages over assets listed in APT Specific Catalogue GC-031 for MMC, a copy of
which Catalogue is hereby made an integral part hereof by way of reference, as well as
assets presently in use by MMC but which are not listed or included in paragraphs 1 and
2 above and shall include all assets that may hereinafter be acquired by MMC.
MARICALUM MINING CORPORATION
(Maker)

x x x x[9]
Upon the signing of the Purchase and Sale Agreement and upon the full satisfaction of the stipulated down
payment, GHI immediately took physical possession of the mine site and its facilities, and took full control of the
management and operation of MMC.[10]
Almost four years thereafter, or on August 23, 1996, a labor dispute (refusal to bargain collectively and
unfair labor practice) arose between MMC and NAMAWU, with the latter eventually filing with the National
Conciliation and Mediation Board of Bacolod City a notice of strike. [11] Then Labor Secretary, now Associate Justice
of this Court, Leonardo A. Quisumbing, later assumed jurisdiction over the dispute and ruled in favor of
NAMAWU. In his July 30, 1997 Order in OS-AJ-10-96-014 (Quisumbing Order), Secretary Quisumbing declared
that the lay-off (of workers) implemented on May 7, 1996 and October 7, 1996 was illegal and that MMC
committed unfair labor practice. He then ordered the reinstatement of the laid-off workers, with payment of full
backwages and benefits, and directed the execution of a new collective bargaining agreement (CBA) incorporating

the terms and conditions of the previous CBA providing for an annual increase in the workers daily wage. [12] In two
separate casesG.R. Nos. 133519 and 138996filed with this Court, we sustained the validity of the Quisumbing
Order, which became final and executory on January 26, 2000.[13]
On May 11, 2001, then Acting Department of Labor and Employment (DOLE) Secretary, now also an
Associate Justice of this Court, Arturo D. Brion, on motion of NAMAWU, directed the issuance of a partial writ of
execution (Brion Writ), and ordered the DOLE sheriffs to proceed to the MMC premises for the execution of the
same.[14]Much later, in 2006, this Court, in G.R. Nos. 157696-97, entitled Maricalum Mining Corporation v. Brion
and NAMAWU,[15] affirmed the propriety of the issuance of the Brion Writ.
The Brion Writ was not fully satisfied because MMCs resident manager resisted its enforcement. [16] On
motion of NAMAWU, then DOLE Secretary Patricia A. Sto. Tomas ordered the issuance of the July 18, 2002 Alias
Writ of Execution and Break-Open Order (Sto. Tomas Writ). [17] On October 11, 2002, the respondent acting sheriffs,
the members of the union, and several armed men implemented the Sto. Tomas Writ, and levied on the properties of
MMC located at its compound in Sipalay, Negros Occidental.[18]
On October 14, 2002, GHI filed with the Regional Trial Court (RTC) of Kabankalan City, Negros
Occidental, Special Civil Action (SCA) No. 1127 for Contempt with Prayer for the Issuance of a Temporary
Restraining Order (TRO) and Writ of Preliminary Injunction and to Nullify the Sheriffs Levy on Properties. [19] GHI
contended that the levied properties were the subject of a Deed of Real Estate and Chattel Mortgage, dated
September 5, 1996[20] executed by MMC in favor of GHI to secure the aforesaid P550M promissory notes; that this
deed was registered on February 24, 2000; [21] and that the mortgaged properties were already extrajudicially
foreclosed in July 2001 and sold to GHI as the highest bidder on December 3, 2001, as evidenced by the Certificate
of Sale dated December 4, 2001.[22]
The trial court issued ex parte a TRO effective for 72 hours, and set the hearing on the application for a writ
of injunction.[23] On October 17, 2002, the trial court ordered the issuance of a Writ of Injunction (issued on October
18, 2002)[24] enjoining the DOLE sheriffs from further enforcing the Sto. Tomas Writ and from conducting any
public sale of the levied-on properties, subject to GHIs posting of a P5M bond.[25]
Resolving, among others, NAMAWUs separate motions for the reconsideration of the injunction order and
for the dismissal of the case, the RTC issued its December 4, 2002 Omnibus Order, [26] the dispositive portion of
which reads:
WHEREFORE, premises considered, respondent NAMAWU Local 103s Motion for
Reconsideration dated October 23, 2002 for the reconsideration of the Order of this Court
directing the issuance of Writ of Injunction prayed for by petitioner and the Order dated October
18, 2002 approving petitioners Injunction Bond in the amount of P5,000,000.00 is hereby
DENIED.
Respondents Motion to Dismiss as embodied in its Opposition to Extension of Temporary
Restraining Order and Issuance of Writ of Preliminary Injunction with Motion to Dismiss and
Suspend Period to File Answer dated October 15, 2002 is likewise DENIED.
Petitioners Urgent Motion for the return of the levied firearms is GRANTED. Pursuant
thereto, respondent sheriffs are ordered to return the levied firearms and handguns to the petitioner
provided the latter puts [up] a bond in the amount of P332,200.00.
Respondents lawyer, Atty. Jose Lapak, is strictly warned not to resort again to disrespectful and
contemptuous language in his pleadings, otherwise, the same shall be dealt with accordingly.
SO ORDERED.[27]
Aggrieved, NAMAWU filed with the CA a petition for certiorari under Rule 65, assailing the October 17,
18 and December 4, 2002 orders of the RTC.[28]

After due proceedings, on October 14, 2003, the appellate court rendered a Decision setting aside the RTC
issuances and directing the immediate execution of the Sto. Tomas Writ. The CA ruled, among others, that the
circumstances surrounding the execution of the September 5, 1996 Deed of Real Estate and Chattel Mortgage
yielded the conclusion that the deed was sham, fictitious and fraudulent; that it was executed two weeks after the
labor dispute arose in 1996, but surprisingly, it was registered only on February 24, 2000, immediately after the
Court affirmed with finality the Quisumbing Order. The CA also found that the certificates of title to MMCs real
properties did not contain any annotation of a mortgage lien, and, suspiciously, GHI did not intervene in the long
drawn-out labor proceedings to protect its right as a mortgagee of virtually all the properties of MMC. [29]
The CA further ruled that the subsequent foreclosure of the mortgage was irregular, effected precisely to
prevent the satisfaction of the judgment against MMC. It noted that the foreclosure proceedings were initiated in
July 2001, shortly after the issuance of the Brion Writ; and, more importantly, the basis for the extrajudicial
foreclosure was not the failure of MMC to pay the mortgage debt, but its failure to satisfy any money judgment
against it rendered by a court or tribunal of competent jurisdiction, in favor of any person, firm or entity, without any
legal ground or reason.[30] Further, the CA pierced the veil of corporate fiction of the two corporations. [31] The
dispositive portion of the appellate courts decision reads:
WHEREFORE, in view of the foregoing considerations, the petition is GRANTED. The
October 17, 2002 and the December 4, 2002 Order of the RTC, Branch 61 of Kabankalan City,
Negros Occidental are hereby ANNULLED and SET ASIDE for having been issued in excess or
without authority. The Writ of Preliminary Injunction issued by the said court is lifted, and the
DOLE Sheriff is directed to immediately enforce the Writ of Execution issued by the Department
of Labor and Employment in the case In re: Labor Dispute in Maricalum Mining Corporation
docketed as OS-AJ-10-96-01 (NCMB-RB6-08-96).[32]
The Issues
Dissatisfied, GHI elevated the case to this Court via the instant petition for review on certiorari, raising the
following issues:
I
WHETHER OR NOT GHI IS A PARTY TO THE LABOR DISPUTE BETWEEN NAMAWU
AND MMC.
II
WHETHER OR NOT, ASSUMING ARGUENDO THAT THE PERTINENT DECISION OR
ORDER IN THE SAID LABOR DISPUTE BETWEEN MMC AND NAMAWU MAY BE
ENFORCED AGAINST GHI, THERE IS ALREADY A FINAL DEETERMINATION BY THE
SUPREME COURT OF THE RIGHTS OF THE PARTIES IN SAID LABOR DISPUTE
CONSIDERING THE PENDENCY OF G.R. NOS. 157696-97.
III
WHETHER OR NOT GHI IS THE ABSOLUTE OWNER OF THE PROPERTIES
UNLAWFULLY GARNISHED BY RESPONDENTS SHERIFFS.

IV

WHETHER OR NOT THE HONORABLE HENRY D. ARLES CORRECTLY ISSUED A WRIT

OF INJUNCTION AGAINST THE UNLAWFUL EXECUTIOIN ON GHIS PROPERTIES.
V
WHETHER OR NOT THE VALIDITY OF THE DEED OF REAL AND CHATTEL
MORTGAGE OVER THE SUBJECT PROPERTIES BETWEEN MMC AND GHI MAY BE
COLLATERALLY ATTACKED.
VI
WHETHER OR NOT, ASSUMING ARGUENDO THAT THE VALIDITY OF THE SAID REAL
AND CHATTEL MORTGAGE MAY BE COLLATERALLY ATTACKED, THE SAID
MORTGAGE IS SHAM, FICTITIOUS AND FRAUDULENT.
VII
WHETHER OR NOT GHI IS A DISTINCT AND SEPARATE CORPORATE ENTITY FROM
MMC.
VIII
WHETHER OR NOT GHI CAN BE PREVENTED THROUGH THE ISSUANCE OF A
RESTRAINING ORDER OR INJUNCTION FROM TAKING POSSESSION OR BE
DISPOSSESSED OF ASSETS PURCHASED BY IT FROM APT.[33]
Stripped of non-essentials, the core issue is whether, given the factual circumstances obtaining, the RTC properly
issued the writ of injunction to prevent the enforcement of the Sto. Tomas Writ. The resolution of this principal
issue, however, will necessitate a ruling on the following key and interrelated questions:
1.

Whether the mortgage of the MMCs properties to GHI was a sham;

2.

Whether there was an effective levy by the DOLE upon the MMCs real and personal properties; and

3.

Whether it was proper for the CA to pierce the veil of corporate fiction between MMC and GHI.
Our Ruling

Before we delve into an extended discussion of the foregoing issues, it is essential to take judicial cognizance of
cases intimately linked to the present controversy which had earlier been elevated to and decided by this Court.
Judicial Notice.
Judicial notice must be taken by this Court of its Decision in Maricalum Mining Corporation v. Hon. Arturo D.
Brion and NAMAWU,[34] in which we upheld the right of herein private respondent, NAMAWU, to its labor
claims. Upon the same principle of judicial notice, we acknowledge our Decision in Republic of the Philippines,
through its trustee, the Asset Privatization Trust v. G Holdings, Inc., [35] in which GHI was recognized as the rightful
purchaser of the shares of stocks of MMC, and thus, entitled to the delivery of the company notes accompanying the

said purchase. These company notes, consisting of three (3) Promissory Notes, were part of the documents executed
in 1992 in the privatization sale of MMC by the Asset Privatization Trust (APT) to GHI. Each of these notes
uniformly contains stipulations establishing and constituting in favor of GHI mortgages over MMCs real and
personal properties. The stipulations were subsequently formalized in a separate document denominated Deed of
Real Estate and Chattel Mortgage on September 5, 1996. Thereafter, the Deed was registered on February 4, 2000.
[36]

We find both decisions critically relevant to the instant dispute. In fact, they should have guided the courts below in
the disposition of the controversy at their respective levels. To repeat, these decisions respectively confirm the right
of NAMAWU to its labor claims [37] and affirm the right of GHI to its financial and mortgage claims over the real and
personal properties of MMC, as will be explained below. The assailed CA decision apparently failed to consider the
impact of these two decisions on the case at bar. Thus, we find it timely to reiterate that: courts have also taken
judicial notice of previous cases to determine whether or not the case pending is a moot one or whether or not a
previous ruling is applicable to the case under consideration.[38]
However, the CA correctly assessed that the authority of the lower court to issue the challenged writ of injunction
depends on the validity of the third partys (GHIs) claim of ownership over the property subject of the writ of
execution issued by the labor department. Accordingly, the main inquiry addressed by the CA decision was whether
GHI could be treated as a third party or a stranger to the labor dispute, whose properties were beyond the reach of
the Writ of Execution dated December 18, 2001.[39]
In this light, all the more does it become imperative to take judicial notice of the two cases aforesaid, as they provide
the necessary perspective to determine whether GHI is such a party with a valid ownership claim over the properties
subject of the writ of execution. In Juaban v. Espina,[40] 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 two cases that we
have taken judicial notice of are of such character, and our review of the instant case cannot stray from the findings
and conclusions therein.
Having recognized these crucial Court rulings, situating the facts in proper perspective, we now proceed to resolve
the questions identified above.
The mortgage
was not a sham.
Republic etc., v. G Holdings, Inc. acknowledged the existence of the Purchase and Sale Agreement between
the APT and the GHI, and recounts the facts attendant to that transaction, as follows:
The series of negotiations between the petitioner Republic of the Philippines, through the
APT as its trustee, and G Holdings culminated in the execution of a purchase and sale agreement
on October 2, 1992. Under the agreement, the Republic undertook to sell and deliver 90% of the
entire issued and outstanding shares of MMC, as well as its company notes, to G Holdings in
consideration of the purchase price of P673,161,280. It also provided for a down payment
of P98,704,000 with the balance divided into four tranches payable in installment over a period of
ten years.[41]
The company notes mentioned therein were actually the very same three (3) Promissory Notes amounting
to P550M, issued by MMC in favor of GHI. As already adverted to above, these notes uniformly contained
stipulations establishing and constituting mortgages over MMCs real and personal properties.
It may be remembered that APT acquired the MMC from the PNB and the DBP. Then, in compliance with
its mandate to privatize government assets, APT sold the aforesaid MMC shares and notes to GHI. To repeat, this
Court has recognized this Purchase and Sale Agreement in Republic, etc., v. G Holdings, Inc.

The participation of the Government, through APT, in this transaction is significant. Because the
Government had actively negotiated and, eventually, executed the agreement, then the transaction is imbued with an
aura of official authority, giving rise to the presumption of regularity in its execution. This presumption would cover
all related transactional acts and documents needed to consummate the privatization sale, inclusive of the
Promissory Notes. It is obvious, then, that the Government, through APT, consented to the establishment and
constitution of the mortgages on the assets of MMC in favor of GHI, as provided in the notes. Accordingly, the notes
(and the stipulations therein) enjoy the benefit of the same presumption of regularity accorded to government
actions. Given the Government consent thereto, and clothed with the presumption of regularity, the mortgages
cannot be characterized as sham, fictitious or fraudulent.
Indeed, as mentioned above, the three (3) Promissory Notes, executed on October 2, 1992, established and
constituted in favor of GHI the following mortgages:
1. A mortgage over certain parcels of land, more particularly listed and described in the Sheriffs
Certificate of Sale dated September 7, 1984 issued by the Ex-Officio Provincial Sheriff of
Negros Occidental, Rolando V. Ramirez, with office at Bacolod City following the
auction sale conducted pursuant to the provisions of Act 3135, a copy of which certificate
of sale is hereto attached as Annex A and made an integral part hereof;
2.

A chattel mortgage over assets and personal properties more particularly listed and
described in the Sheriffs Certificate of Sale dated September 7, 1984 issued by the ExOfficio Provincial Sheriff of Negros Occidental, Rolando V. Ramirez, with office at
Bacolod City following the auction conducted pursuant to the provision of Act 1508, a
copy of which Certificate of Sale is hereto attached as Annex B and made an integral part
hereof.

3. Mortgages over assets listed in APT Specific catalogue GC-031 for MMC, a copy of which
Catalogue is hereby made an integral part hereof by way of reference, as well as assets
presently in use by MMC but which are not listed or included in paragraphs 1 and 2
above and shall include all assets that may hereinafter be acquired by MMC.[42]
It is difficult to conceive that these mortgages, already existing in 1992, almost four (4) years before NAMAWU
filed its notice of strike, were a fictitious arrangement intended to defraud NAMAWU. After all, they were agreed
upon long before the seeds of the labor dispute germinated.
While it is true that the Deed of Real Estate and Chattel Mortgage was executed only on September 5,
1996, it is beyond cavil that this formal document of mortgage was merely a derivative of the original mortgage
stipulations contained in the Promissory Notes of October 2, 1992. The execution of this Deed in 1996 does not
detract from, but instead reinforces, the manifest intention of the parties to establish and constitute the mortgages on
MMCs real and personal properties.
Apparently, the move to execute a formal document denominated as the Deed of Real Estate and Chattel
Mortgage came about after the decision of the RTC of Manila in Civil Case No. 95-76132 became final in mid1996. This conclusion surfaces when we consider the genesis of Civil Case No. 95-76132 and subsequent incidents
thereto, as narrated in Republic, etc. v. G Holdings, Inc., viz:
Subsequently, a disagreement on the matter of when installment payments should commence arose
between the parties. The Republic claimed that it should be on the seventh month from the signing
of the agreement while G Holdings insisted that it should begin seven months after the fulfillment
of the closing conditions.
Unable to settle the issue, G Holdings filed a complaint for specific performance and
damages with the Regional Trial Court of Manila, Branch 49, against the Republic to compel it to
close the sale in accordance with the purchase and sale agreement. The complaint was docketed as
Civil Case No. 95-76132.

During the pre-trial, the respective counsels of the parties manifested that the issue involved in the
case was one of law and submitted the case for decision. On June 11, 1996, the trial court rendered
its decision. It ruled in favor of G Holdings and held:
In line with the foregoing, this Court having been convinced that the
Purchase and Sale Agreement is indeed subject to the final closing conditions
prescribed by Stipulation No. 5.02 and conformably to Rule 39, Section 10 of
the Rules of Court, accordingly orders that the Asset Privatization Trust
execute the corresponding Document of Transfer of the subject shares and
financial notes and cause the actual delivery of subject shares and notes to
G Holdings, Inc., within a period of thirty (30) days from receipt of this
Decision, and after G Holdings Inc., shall have paid in full the entire balance, at
its present value of P241,702,122.86, computed pursuant to the prepayment
provisions of the Agreement. Plaintiff shall pay the balance simultaneously with
the delivery of the Deed of Transfer and actual delivery of the shares and notes.
SO ORDERED.
The Solicitor General filed a notice of appeal on behalf of the Republic on June 28, 1996. Contrary to the
rules of procedure, however, the notice of appeal was filed with the Court of Appeals (CA), not
with the trial court which rendered the judgment appealed from.
No other judicial remedy was resorted to until July 2, 1999 when the Republic, through the APT, filed a
petition for annulment of judgment with the CA. It claimed that the decision should be annulled on
the ground of abuse of discretion amounting to lack of jurisdiction on the part of the trial court. x x
x
Finding that the grounds necessary for the annulment of judgment were inexistent, the appellate
court dismissed the petition. x x x x[43]
With the RTC decision having become final owing to the failure of the Republic to perfect an appeal, it may have
become necessary to execute the Deed of Real Estate and Chattel Mortgage on September 5, 1996, in order to
enforce the trial courts decision of June 11, 1996. This appears to be the most plausible explanation for the execution
of the Deed of Real Estate and Chattel Mortgage only in September 1996. Even as the parties had already validly
constituted the mortgages in 1992, as explicitly provided in the Promissory Notes, a specific deed of mortgage in a
separate document may have been deemed necessary for registration purposes. Obviously, this explanation is more
logical and more sensible than the strained conjecture that the mortgage was executed on September 5, 1996 only for
the purpose of defrauding NAMAWU.
It is undeniable that the Deed of Real Estate and Chattel Mortgage was formally documented two weeks after
NAMAWU filed its notice of strike against MMC on August 23, 1996. However, this fact alone cannot give rise to
an adverse inference for two reasons. First, as discussed above, the mortgages had already been established and
constituted as early as October 2, 1992 in the Promissory Notes, showing the clear intent of the parties to impose a
lien upon MMCs properties. Second, the mere filing of a notice of strike by NAMAWU did not, as yet, vest in
NAMAWU any definitive right that could be prejudiced by the execution of the mortgage deed.
The fact that MMCs obligation to GHI is not reflected in the formers financial statementsa circumstance made
capital of by NAMAWU in order to cast doubt on the validity of the mortgage deedis of no moment. By itself, it
does not provide a sufficient basis to invalidate this public document. To say otherwise, and to invalidate the
mortgage deed on this pretext, would furnish MMC a convenient excuse to absolve itself of its mortgage obligations
by adopting the simple strategy of not including the obligations in its financial statements. It would ignore our ruling
in Republic, etc. v. G Holdings, Inc., which obliged APT to deliver the MMC shares and financial notes to
GHI. Besides, the failure of the mortgagor to record in its financial statements its loan obligations is surely not an

essential element for the validity of mortgage agreements, nor will it independently affect the right of the mortgagee
to foreclose.
Contrary to the CA decision, Tanongon v. Samson[44] is not on all fours with the instant case. There are material
differences between the two cases. At issue in Tanongon was a third-party claim arising from a Deed of Absolute
Sale executed between Olizon and Tanongon on July 29, 1997, after the NLRC decision became final and executory
on April 29, 1997. In the case at bar, what is involved is a loan with mortgage agreement executed on October 2,
1992, well ahead of the unions notice of strike on August 23, 1996. No presumption of regularity inheres in the deed
of sale in Tanongon, while the participation of APT in this case clothes the transaction in 1992 with such a
presumption that has not been successfully rebutted. In Tanongon, the conduct of a full-blown trial led to the
findingduly supported by evidencethat the voluntary sale of the assets of the judgment debtor was made in bad
faith. Here, no trial was held, owing to the motion to dismiss filed by NAMAWU, and the CA failed to consider the
factual findings made by this Court in Republic, etc. v. G Holdings, Inc. Furthermore, in Tanongon, the claimant did
not exercise his option to file a separate action in court, thus allowing the NLRC Sheriff to levy on execution and to
determine the rights of third-party claimants.[45] In this case, a separate action was filed in the regular courts by GHI,
the third-party claimant. Finally, the questioned transaction in Tanongon was a plain, voluntary transfer in the form
of a sale executed by the judgment debtor in favor of a dubious third-party, resulting in the inability of the judgment
creditor to satisfy the judgment. On the other hand, this case involves an involuntary transfer (foreclosure of
mortgage) arising from a loan obligation that well-existed long before the commencement of the labor claims of the
private respondent.
Three other circumstances have been put forward by the CA to support its conclusion that the mortgage contract is a
sham. First, the CA considered it highly suspect that the Deed of Real Estate and Chattel Mortgage was registered
only on February 4, 2000, three years after its execution, and almost one month after the Supreme Court rendered its
decision in the labor dispute.[46] Equally suspicious, as far as the CA is concerned, is the fact that the mortgages were
foreclosed on July 31, 2001, after the DOLE had already issued a Partial Writ of Execution on May 9, 2001. [47] To
the appellate court, the timing of the registration of the mortgage deed was too coincidental, while the date of the
foreclosure signified that it was effected precisely to prevent the satisfaction of the judgment awards.
[48]
Furthermore, the CA found that the mortgage deed itself was executed without any consideration, because at the
time of its execution, all the assets of MMC had already been transferred to GHI. [49]
These circumstances provided the CA with sufficient justification to apply Article 1387 of the Civil Code on
presumed fraudulent transactions, and to declare that the mortgage deed was void for being simulated and fictitious.
[50]

We do not agree. We find this Courts ruling in MR Holdings, Ltd. v. Sheriff Bajar[51] pertinent and instructive:
Article 1387 of the Civil Code of the Philippines provides:
Art. 1387. All contracts by virtue of which the debtor alienates property
by gratuitous title are presumed to have been entered into in fraud of creditors,
when the donor did not reserve sufficient property to pay all debts contracted
before the donation.
Alienations by onerous title are also presumed fraudulent when made
by persons against whom some judgment has been rendered in any instance or
some writ of attachment has been issued. The decision or attachment need not
refer to the property alienated, and need not have been obtained by the party
seeking rescission.
In addition to these presumptions, the design to defraud creditors may
be proved in any other manner recognized by law and of evidence.
This article presumes the existence of fraud made by a debtor. Thus, in
the absence of satisfactory evidence to the contrary, an alienation of a property
will be held fraudulent if it is made after a judgment has been rendered against
the debtor making the alienation. This presumption of fraud is not conclusive

and may be rebutted by satisfactory and convincing evidence. All that is

necessary is to establish affirmatively that the conveyance is made in good
faith and for a sufficient and valuable consideration.
The Assignment Agreement and the Deed of Assignment were executed for valuable
considerations. Patent from the Assignment Agreement is the fact that petitioner assumed the
payment of US$18,453,450.12 to ADB in satisfaction of Marcoppers remaining debt as of March
20, 1997. Solidbank cannot deny this fact considering that a substantial portion of the said
payment, in the sum of US$13,886,791.06, was remitted in favor of the Bank of Nova Scotia, its
major stockholder.
The facts of the case so far show that the assignment contracts were executed in good
faith. The execution of the Assignment Agreement on March 20, 1997 and the Deed of
Assignment on December 8,1997 is not the alpha of this case. While the execution of these
assignment contracts almost coincided with the rendition on May 7, 1997 of the Partial
Judgment in Civil Case No. 96-80083 by the Manila RTC, however, there was no intention on
the part of petitioner to defeat Solidbanks claim. It bears reiterating that as early as November 4,
1992, Placer Dome had already bound itself under a Support and Standby Credit Agreement to
provide Marcopper with cash flow support for the payment to ADB of its obligations. When
Marcopper ceased operations on account of disastrous mine tailings spill into the Boac River and
ADB pressed for payment of the loan, Placer Dome agreed to have its subsidiary, herein petitioner,
pay ADB the amount of US$18,453,450.12.
Thereupon, ADB and Marcopper executed, respectively, in favor of petitioner an
Assignment Agreement and a Deed of Assignment. Obviously, the assignment contracts were
connected with transactions that happened long before the rendition in 1997 of the Partial
Judgment in Civil Case No. 96-80083 by the Manila RTC. Those contracts cannot be viewed
in isolation. If we may add, it is highly inconceivable that ADB, a reputable international financial
organization, will connive with Marcopper to feign or simulate a contract in 1992 just to defraud
Solidbank for its claim four years thereafter. And it is equally incredible for petitioner to be paying
the huge sum of US$18,453,450.12 to ADB only for the purpose of defrauding Solidbank of the
sum of P52,970,756.89.
It is said that the test as to whether or not a conveyance is fraudulent is does it prejudice the
rights of creditors? We cannot see how Solidbanks right was prejudiced by the assignment
contracts considering that substantially all of Marcoppers properties were already covered
by the registered Deed of Real Estate and Chattel Mortgage executed by Marcopper in favor
of ADB as early as November 11, 1992. As such, Solidbank cannot assert a better right than
ADB, the latter being a preferred creditor. It is basic that mortgaged properties answer
primarily for the mortgaged credit, not for the judgment credit of the mortgagors unsecured
creditor. Considering that petitioner assumed Marcoppers debt to ADB, it follows that Solidbanks
right as judgment creditor over the subject properties must give way to that of the former.[52]
From this ruling in MR Holdings, we can draw parallel conclusions. The execution of the subsequent Deed of Real
Estate and Chattel Mortgage on September 5, 1996 was simply the formal documentation of what had already been
agreed in the seminal transaction (the Purchase and Sale Agreement) between APT and GHI. It should not be viewed
in isolation, apart from the original agreement of October 2, 1992. And it cannot be denied that this original
agreement was supported by an adequate consideration. The APT was even ordered by the court to deliver the shares
and financial notes of MMC in exchange for the payments that GHI had made.
It was also about this time, in 1996, that NAMAWU filed a notice of strike to protest non-payment of its rightful
labor claims.[53] But, as already mentioned, the outcome of that labor dispute was yet unascertainable at that time,
and NAMAWU could only have hoped for, or speculated about, a favorable ruling. To paraphrase MR Holdings, we
cannot see how NAMAWUs right was prejudiced by the Deed of Real Estate and Chattel Mortgage, or by its
delayed registration, when substantially all of the properties of MMC were already mortgaged to GHI as early as
October 2, 1992. Given this reality, the Court of Appeals had no basis to conclude that this Deed of Real Estate and
Chattel Mortgage, by reason of its late registration, was a simulated or fictitious contract.

The importance of registration and its binding effect is stated in Section 51 of the Property Registration
Decree or Presidential Decree (P.D.) No. 1529,[54] which reads:
SECTION 51. Conveyance and other dealings by registered owner.An owner of registered land
may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing
laws. He may use such forms, deeds, mortgages, leases or other voluntary instrument as are
sufficient in law. But no deed, mortgage, lease or other voluntary instrument, except a will
purporting to convey or effect registered land, shall take effect as a conveyance or bind the land,
but shall operate only as a contract between the parties and as evidence of authority to the Registry
of Deeds to make registration.
The act of registration shall be the operative act to convey or affect the land insofar as third
persons are concerned, and in all cases under this Decree, the registration shall be made in the
Office of the Register of Deeds for the province or the city where the land lies.[55]
Under the Torrens system, registration is the operative act which gives validity to the transfer or creates a lien upon
the land. Further, entrenched in our jurisdiction is the doctrine that registration in a public registry creates
constructive notice to the whole world. [56] Thus, Section 51 of Act No. 496, as amended by Section 52 of P.D. No.
1529, provides:
SECTION 52. Constructive notice upon registration.Every conveyance, mortgage, lease, lien,
attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed
or entered in the Office of the Register of Deeds for the province or city where the land to which it
relates lies, be constructive notice to all persons from the time of such registering, filing or
entering.
But, there is nothing in Act No. 496, as amended by P.D. No. 1529, that imposes a period within which to
register annotations of conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting
registered land. If liens were not so registered, then it shall operate only as a contract between the parties and as
evidence of authority to the Registry of Deeds to make registration. If registered, it shall be the operative act to
convey or affect the land insofar as third persons are concerned. The mere lapse of time from the execution of the
mortgage document to the moment of its registration does not affect the rights of a mortgagee.
Neither will the circumstance of GHIs foreclosure of MMCs properties on July 31, 2001, or after the DOLE had
already issued a Partial Writ of Execution on May 9, 2001 against MMC, support the conclusion of the CA that
GHIs act of foreclosing on MMCs properties was effected to prevent satisfaction of the judgment award. GHIs
mortgage rights, constituted in 1992, antedated the Partial Writ of Execution by nearly ten (10) years. GHIs resort to
foreclosure was a legitimate enforcement of a right to liquidate a bona fide debt. It was a reasonable option open to a
mortgagee which, not being a party to the labor dispute between NAMAWU and MMC, stood to suffer a loss if it
did not avail itself of the remedy of foreclosure.
The well-settled rule is that a mortgage lien is inseparable from the property mortgaged. [57] While it is true
that GHIs foreclosure of MMCs mortgaged properties may have had the effect to prevent satisfaction of the
judgment award against the specific mortgaged property that first answers for a mortgage obligation ahead of any
subsequent creditors, that same foreclosure does not necessarily translate to having been effected to prevent
satisfaction of the judgment award against MMC.
Likewise, we note the narration of subsequent facts contained in the Comment of the Office of the Solicitor
General. Therein, it is alleged that after the Partial Writ of Execution was issued on May 9, 2001, a motion for
reconsideration was filed by MMC; that the denial of the motion was appealed to the CA; that when the appeal was
dismissed by the CA on January 24, 2002, it eventually became the subject of a review petition before this Court,
docketed as G.R. No. 157696; and that G.R. No. 157696 was decided by this Court only on February 9, 2006.
This chronology of subsequent events shows that February 9, 2006 would have been the earliest date for
the unimpeded enforcement of the Partial Writ of Execution, as it was only then that this Court resolved the

issue. This happened four and a half years after July 31, 2001, the date when GHI foreclosed on the mortgaged
properties. Thus, it is not accurate to say that the foreclosure made on July 31, 2001 was effected [only] to prevent
satisfaction of the judgment award.
We also observe the error in the CAs finding that the 1996 Deed of Real Estate and Chattel Mortgage was not
supported by any consideration since at the time the deed was executed, all the real and personal property of MMC
had already been transferred in the hands of G Holdings.[58] It should be remembered that the Purchase and Sale
Agreement between GHI and APT involved large amounts (P550M) and even spawned a subsequent court action
(Civil Case No. 95-76132, RTC of Manila). Yet, nowhere in the Agreement or in the RTC decision is there any
mention of real and personal properties of MMC being included in the sale to GHI in 1992. These properties simply
served as mortgaged collateral for the 1992 Promissory Notes. [59] The Purchase and Sale Agreement and the
Promissory Notes themselves are the best evidence that there was ample consideration for the mortgage.
Thus, we must reject the conclusion of the CA that the Deed of Real Estate and Chattel Mortgage executed in 1996
was a simulated transaction.
On the issue of whether there
had been an effective levy upon
the properties of GHI.
The well-settled principle is that the rights of a mortgage creditor over the mortgaged properties are
superior to those of a subsequent attaching creditor. In Cabral v. Evangelista,[60] this Court declared that:
Defendants-appellants purchase of the mortgaged chattels at the public sheriff's sale and
the delivery of the chattels to them with a certificate of sale did not give them a superior right to
the chattels as against plaintiffs-mortgagees. Rule 39, Section 22 of the old Rules of Court (now
Rule 39, Section 25 of the Revised Rules), cited by appellants precisely provides that the sale
conveys to the purchaser all the right which the debtor had in such property on the day the
execution or attachment was levied. It has long been settled by this Court that The right of those
who so acquire said properties should not and can not be superior to that of the creditor who has in
his favor an instrument of mortgage executed with the formalities of the law, in good faith, and
without the least indication of fraud. This is all the more true in the present case, because, when
the plaintiff purchased the automobile in question on August 22, 1933, he knew, or at least, it is
presumed that he knew, by the mere fact that the instrument of mortgage, Exhibit 2, was registered
in the office of the register of deeds of Manila, that said automobile was subject to a mortgage
lien. In purchasing it, with full knowledge that such circumstances existed, it should be presumed
that he did so, very much willing to respect the lien existing thereon, since he should not have
expected that with the purchase, he would acquire a better right than that which the vendor then
had. In another case between two mortgagees, we held that As between the first and second
mortgagees, therefore, the second mortgagee has at most only the right to redeem, and even when
the second mortgagee goes through the formality of an extrajudicial foreclosure, the purchaser
acquires no more than the right of redemption from the first mortgagee. The superiority of the
mortgagee's lien over that of a subsequent judgment creditor is now expressly provided in Rule 39,
Section 16 of the Revised Rules of Court, which states with regard to the effect of levy on
execution as to third persons that The levy on execution shall create a lien in favor of the judgment
creditor over the right, title and interest of the judgment debtor in such property at the time of the
levy, subject to liens or encumbrances then existing.
Even in the matter of possession, mortgagees over chattel have superior, preferential and paramount rights thereto,
and the mortgagor has mere rights of redemption.[61]
Similar rules apply to cases of mortgaged real properties that are registered. Since the properties were already
mortgaged to GHI, the only interest remaining in the mortgagor was its right to redeem said properties from the

mortgage. The right of redemption was the only leviable or attachable property right of the mortgagor in the
mortgaged real properties. We have held that
The main issue in this case is the nature of the lien of a judgment creditor, like the
petitioner, who has levied an attachment on the judgment debtor's (CMI) real properties which had
been mortgaged to a consortium of banks and were subsequently sold to a third party, Top Rate.
xxxx
The sheriff's levy on CMI's properties, under the writ of attachment obtained by the
petitioner, was actually a levy on the interest only of the judgment debtor CMI on those properties.
Since the properties were already mortgaged to the consortium of banks, the only interest
remaining in the mortgagor CMI was its right to redeem said properties from the mortgage. The
right of redemption was the only leviable or attachable property right of CMI in the mortgaged
real properties. The sheriff could not have attached the properties themselves, for they had already
been conveyed to the consortium of banks by mortgage (defined as a conditional sale), so his levy
must be understood to have attached only the mortgagor's remaining interest in the mortgaged
property the right to redeem it from the mortgage.[62]
xxxx
There appears in the record a factual contradiction relating to whether the foreclosure by GHI on July 13,
2001[63] over some of the contested properties came ahead of the levy thereon, or the reverse. NAMAWU claims that
the levy on two trucks was effected on June 22, 2001, [64] which GHI disputes as a misstatement because the levy was
attempted on July 18, 2002, and not 2001 [65] What is undisputed though is that the mortgage of GHI was registered
on February 4, 2000,[66] well ahead of any levy by NAMAWU. Prior registration of a lien creates a preference, as the
act of registration is the operative act that conveys and affects the land, [67] even against subsequent judgment
creditors, such as respondent herein. Its registration of the mortgage was not intended to defraud NAMAWU of its
judgment claims, since even the courts were already judicially aware of its existence since 1992. Thus, at that
moment in time, with the registration of the mortgage, either NAMAWU had no properties of MMC to attach
because the same had been previously foreclosed by GHI as mortgagee thereof; or by virtue of the DOLEs levy to
enforce NAMAWUs claims, the latters rights are subject to the notice of the foreclosure on the subject properties by
a prior mortgagees right. GHIs mortgage right had already been registered by then, and it is basic that mortgaged
properties answer primarily for the mortgaged credit, not for the judgment credit of the mortgagors unsecured
creditor.[68]
On the issue of piercing the
veil of corporate fiction.
The CA found that:
Ordinarily, the interlocking of directors and officers in two different corporations is not a
conclusive indication that the corporations are one and the same for purposes of applying the
doctrine of piercing the veil of corporate fiction. However, when the legal fiction of the separate
corporate personality is abused, such as when the same is used for fraudulent or wrongful ends,
the courts have not hesitated to pierce the corporate veil (Francisco vs. Mejia, 362 SCRA 738). In
the case at bar, the Deed of Real Estate and Chattel Mortgage was entered into between MMC and
G Holdings for the purpose of evading the satisfaction of the legitimate claims of the petitioner
against MMC. The notion of separate personality is clearly being utilized by the two corporations
to perpetuate the violation of a positive legal duty arising from a final judgment to the prejudice of
the petitioners right.[69]
Settled jurisprudence[70] has it that

(A) corporation, upon coming into existence, is invested by law with a personality
separate and distinct from those persons composing it as well as from any other legal entity to
which it may be related. By this attribute, a stockholder may not, generally, be made to answer for
acts or liabilities of the said corporation, and vice versa. This separate and distinct personality is,
however, merely a fiction created by law for convenience and to promote the ends of justice. For
this reason, it may not be used or invoked for ends subversive to the policy and purpose behind its
creation or which could not have been intended by law to which it owes its being. This is
particularly true when the fiction is used to defeat public convenience, justify wrong, protect
fraud, defend crime, confuse legitimate legal or judicial issues, perpetrate deception or
otherwise circumvent the law. This is likewise true where the corporate entity is being used as
an alter ego, adjunct, or business conduit for the sole benefit of the stockholders or of
another corporate entity. In all these cases, the notion of corporate entity will be pierced or
disregarded with reference to the particular transaction involved.
Given this jurisprudential principle and the factual circumstances obtaining in this case, we now ask: Was the CA
correct in piercing the veil of corporate identity of GHI and MMC?
In our disquisition above, we have shown that the CAs finding that there was a simulated mortgage between GHI
and MMC to justify a wrong or protect a fraud has struggled vainly to find a foothold when confronted with the
ruling of this Court in Republic v. G Holdings, Inc.
The negotiations between the GHI and the Government--through APT, dating back to 1992--culminating in the
Purchase and Sale Agreement, cannot be depicted as a contrived transaction. In fact, in the said Republic, etc., v. G
Holdings, Inc., this Court adjudged that GHI was entitled to its rightful claims not just to the shares of MMC itself,
or just to the financial notes that already contained the mortgage clauses over MMCs disputed assets, but also to the
delivery of those instruments. Certainly, we cannot impute to this Courts findings on the case any badge of
fraud. Thus, we reject the CAs conclusion that it was right to pierce the veil of corporate fiction, because the
foregoing circumstances belie such an inference. Furthermore, we cannot ascribe to the Government, or the APT in
particular, any undue motive to participate in a transaction designed to perpetrate fraud.Accordingly, we consider the
CA interpretation unwarranted.
We also cannot agree that the presumption of fraud in Article 1387 of the Civil Code relative to property
conveyances, when there was already a judgment rendered or a writ of attachment issued, authorizes piercing the
veil of corporate identity in this case. We find that Article 1387 finds less application to an involuntary alienation
such as the foreclosure of mortgage made before any final judgment of a court. We thus hold that when the
alienation is involuntary, and the foreclosure is not fraudulent because the mortgage deed has been previously
executed in accordance with formalities of law, and the foreclosure is resorted to in order to liquidate a bona
fide debt, it is not the alienation by onerous title contemplated in Article 1387 of the Civil Code wherein fraud is
presumed.
Since the factual antecedents of this case do not warrant a finding that the mortgage and loan agreements
between MMC and GHI were simulated, then their separate personalities must be recognized. To pierce the veil of
corporate fiction would require that their personalities as creditor and debtor be conjoined, resulting in a merger of
the personalities of the creditor (GHI) and the debtor (MMC) in one person, such that the debt of one to the other is
thereby extinguished. But the debt embodied in the 1992 Financial Notes has been established, and even made
subject of court litigation (Civil Case No. 95-76132, RTC Manila). This can only mean that GHI and MMC have
separate corporate personalities.
Neither was MMC used merely as an alter ego, adjunct, or business conduit for the sole benefit of GHI, to
justify piercing the formers veil of corporate fiction so that the latter could be held liable to claims of third-party
judgment creditors, like NAMAWU. In this regard, we find American jurisprudence persuasive. In a decision by the
Supreme Court of New York[71] bearing upon similar facts, the Court denied piercing the veil of corporate fiction to
favor a judgment creditor who sued the parent corporation of the debtor, alleging fraudulent corporate asset-shifting
effected after a prior final judgment. Under a factual background largely resembling this case at bar, viz:

In this action, plaintiffs seek to recover the balance due under judgments they obtained
against Lake George Ventures Inc. (hereinafter LGV), a subsidiary of defendant that was formed
to develop the Top O the World resort community overlooking Lake George, by piercing the
corporate veil or upon the theory that LGV's transfer of certain assets constituted fraudulent
transfers under the Debtor and Creditor Law. We previously upheld Supreme Court's denial of
defendant's motion for summary judgment dismissing the complaint (252 A.D.2d 609, 675
N.Y.S.2d 234) and the matter proceeded to a nonjury trial. Supreme Court thereafter rendered
judgment in favor of defendant upon its findings that, although defendant dominated LGV, it did
not use that domination to commit a fraud or wrong on plaintiffs. Plaintiffs appealed.

The trial evidence showed that LGV was incorporated in November 1985. Defendant's principal,
Francesco Galesi, initially held 90% of the stock and all of the stock was ultimately transferred to
defendant. Initial project funding was provided through a $2.5 million loan from Chemical Bank,
secured by defendant's guarantee of repayment of the loan and completion of the project. The loan
proceeds were utilized to purchase the real property upon which the project was to be established.
Chemical Bank thereafter loaned an additional $3.5 million to LGV, again guaranteed by
defendant, and the two loans were consolidated into a first mortgage loan of $6 million. In 1989,
the loan was modified by splitting the loan into a $1.9 term note on which defendant was primary
obligor and a $4.1 million project note on which LGV was the obligor and defendant was a
guarantor.
Due to LGV's lack of success in marketing the project's townhouses and in order to
protect itself from the exercise of Chemical Bank's enforcement remedies, defendant was
forced to make monthly installments of principal and interest on LGV's behalf. Ultimately,
defendant purchased the project note from Chemical Bank for $3.1 million, paid the $1.5 million
balance on the term note and took an assignment of the first mortgage on the project's realty. After
LGV failed to make payments on the indebtedness over the course of the succeeding two years,
defendant brought an action to foreclose its mortgage. Ultimately, defendant obtained a judgment
of foreclosure and sale in the amount of $6,070,246.50. Defendant bid in the property at the
foreclosure sale and thereafter obtained a deficiency judgment in the amount of $3,070,246.50.
Following the foreclosure sale, LGV transferred to defendant all of the shares of Top of
the World Water Company, a separate entity that had been organized to construct and operate the
water supply and delivery system for the project, in exchange for a $950,000 reduction in the
deficiency judgment.
the U.S. Supreme Court of New York held
Based on the foregoing, and accepting that defendant exercised complete domination and
control over LGV, we are at a loss as to how plaintiffs perceive themselves to have been
inequitably affected by defendant's foreclosure action against LGV, by LGV's divestiture of the
water company stock or the sports complex property, or by defendant's transfer to LGV of a third
party's uncollectible note, accomplished solely for tax purposes. It is undisputed that LGV was,
and for some period of time had been, unable to meet its obligations and, at the time of the
foreclosure sale, liens against its property exceeded the value of its assets by several million
dollars, even including the water company and sports complex at the values plaintiffs would
assign to them. In fact, even if plaintiffs' analysis were utilized to eliminate the entire $3 million
deficiency judgment, the fact remains that subordinate mortgages totaling nearly an
additional $2 million have priority over plaintiffs' judgments.

As properly concluded by Supreme Court, absent a finding of any inequitable consequence to

plaintiffs, both causes of action pleaded in the amended complaint must fail. Fundamentally,
a party seeking to pierce the corporate veil must show complete domination and control of
the subsidiary by the parent and also that such domination was used to commit a fraud or
wrong against the plaintiff that resulted in the plaintiff's injury ( 252 A.D.2d 609, 610, 675
N.Y.S.2d 234, supra; see, Matter of Morris v. New York State Dept. of Taxation & Fin., 82 N.Y.2d
135, 141, 603 N.Y.S.2d 807, 623 N.E.2d 1157). Notably, [e]vidence of domination alone does
not suffice without an additional showing that it led to inequity, fraud or malfeasance (TNS
Holdings v. MKI Sec. Corp., 92 N.Y.2d 335, 339, 680 N.Y.S.2d 891, 703 N.E.2d 749).
xxxx
In reaching that conclusion, we specifically reject a number of plaintiffs' assertions,
including the entirely erroneous claims that our determination on the prior appeal (252 A.D.2d
609, 675 N.Y.S.2d 234, supra) set forth a roadmap for the proof required at trial and mandated a
verdict in favor of plaintiffs upon their production of evidence that supported the decision's listed
facts. To the contrary, our decision was predicated upon the existence of such evidence, absent
which we would have granted summary judgment in favor of defendant. We are equally
unpersuaded by plaintiffs' continued reliance upon defendant's December 1991 unilateral
conversion of its intercompany loans with LGV from debt to equity, which constituted nothing
more than a bookkeeping transaction and had no apparent effect on LGV's obligations to
defendant or defendant's right to foreclose on its mortgage.[72]
This doctrine is good law under Philippine jurisdiction.
In Concept Builders, Inc. v. National Labor Relations Commission,[73] we laid down the test in determining
the applicability of the doctrine of piercing the veil of corporate fiction, to wit:
1. Control, not mere majority or complete control, but complete domination, not only of finances
but of policy and business practice in respect to the transaction attacked so that the
corporate entity as to this transaction had at the time no separate mind, will or existence
of its own.
2. Such control must have been used by the defendant to commit fraud or wrong, to perpetuate the
violation of a statutory or other positive legal duty, or dishonest and, unjust act in
contravention of plaintiffs legal rights; and,
3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss
complained of.
xxxx
Time and again, we have reiterated that mere ownership by a single stockholder or by another corporation
of all or nearly all of the capital stock of a corporation is not, by itself, a sufficient ground for disregarding a separate
corporate personality.[74] It is basic that a corporation has a personality separate and distinct from that composing it
as well as from that of any other legal entity to which it may be related. Clear and convincing evidence is needed to
pierce the veil of corporate fiction.[75]
In this case, the mere interlocking of directors and officers does not warrant piercing the separate corporate
personalities of MMC and GHI. Not only must there be a showing that there was majority or complete control, but
complete domination, not only of finances but of policy and business practice in respect to the transaction attacked,
so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own. The
mortgage deed transaction attacked as a basis for piercing the corporate veil was a transaction that was an offshoot, a
derivative, of the mortgages earlier constituted in the Promissory Notes dated October 2, 1992. But these Promissory

Notes with mortgage were executed by GHI with APT in the name of MMC, in a full privatization process. It
appears that if there was any control or domination exercised over MMC, it was APT, not GHI, that wielded
it. Neither can we conclude that the constitution of the loan nearly four (4) years prior to NAMAWUs notice of
strike could have been the proximate cause of the injury of NAMAWU for having been deprived of MMCs
corporate assets.
On the propriety of injunction
to prevent execution by the
NLRC on the properties
of third-party claimants
It is settled that a Regional Trial Court can validly issue a Temporary Restraining Order (TRO) and, later, a
writ of preliminary injunction to prevent enforcement of a writ of execution issued by a labor tribunal on the basis of
a third-partys claim of ownership over the properties levied upon. [76] While, as a rule, no temporary or permanent
injunction or restraining order in any case involving or growing out of a labor dispute shall be issued by any court-where the writ of execution issued by a labor tribunal is sought to be enforced upon the property of a stranger to the
labor dispute, even upon a mere prima facie showing of ownership of such claimant--a separate action for injunctive
relief against such levy may be maintained in court, since said action neither involves nor grows out of a labor
dispute insofar as the third party is concerned.[77] Instructively, National Mines and Allied Workers Union v. Vera[78]
Petitioners' reliance on the provision of Art. 254 of the New Labor Code (herein earlier
quoted) which prohibits injunctions or restraining orders in any case involving or growing out of a
'labor dispute' is not well-taken. This has no application to the case at bar. Civil Case No. 2749 is
one which neither "involves" nor "grows out" of a labor dispute. What 'involves' or 'grows out' of a
labor dispute is the NLRC case between petitioners and the judgment debtor, Philippine Iron
Mines. The private respondents are not parties to the said NLRC case. Civil Case No. 2749 does
not put in issue either the fact or validity of the proceeding in theNLRC case nor the decision
therein rendered, much less the writ of execution issued thereunder. It does not seek to enjoin the
execution of the decision against the properties of the judgment debtor. What is sought to be tried
in Civil Case No. 2749 is whether the NLRC's decision and writ of execution, above mentioned,
shall be permitted to be satisfied against properties of private respondents, and not of the judgment
debtor named in the NLRC decision and writ of execution. Such a recourse is allowed under the
provisions of Section 17, Rule 39 of the Rules of Court.
To sustain petitioners' theory will inevitably lead to disastrous consequences and lend judicial
imprimatur to deprivation of property without due process of law. Simply because a writ of
execution was issued by the NLRC does not authorize the sheriff implementing the same to levy
on anybody's property. To deny the victim of the wrongful levy, the recourse such as that availed
of by the herein private respondents, under the pretext that no court of general jurisdiction can
interfere with the writ of execution issued in a labor dispute, will be sanctioning a greater evil than
that sought to be avoided by the Labor Code provision in question. Certainly, that could not have
been the intendment of the law creating the NLRC. For well-settled is the rule that the power of a
court to execute its judgment extends only over properties unquestionably belonging to the
judgment debtor.
Likewise, since the third-party claimant is not one of the parties to the action, he cannot, strictly speaking, appeal
from the order denying his claim, but he should file a separate reivindicatory action against the execution creditor or
the purchaser of the property after the sale at public auction, or a complaint for damages against the bond filed by
the judgment creditor in favor of the sheriff.[79]
A separate civil action for recovery of ownership of the property would not constitute interference with the
powers or processes of the labor tribunal which rendered the judgment to execute upon the levied properties. The

property levied upon being that of a stranger is not subject to levy. Thus, a separate action for recovery, upon a claim
and prima facie showing of ownership by the petitioner, cannot be considered as interference. [80]
Upon the findings and conclusions we have reached above, petitioner is situated squarely as such third-party
claimant. The questioned restraining order of the lower court, as well as the order granting preliminary injunction,
does not constitute interference with the powers or processes of the labor department. The registration of the
mortgage document operated as notice to all on the matter of the mortgagees prior claims. Official proceedings
relative to the foreclosure of the subject properties constituted a prima facie showing of ownership of such claimant
to support the issuance of injunctive reliefs.
As correctly held by the lower court:
The subject incidents for TRO and/or Writ of Injunction were summarily heard and in resolving the same,
the Court believes, that the petitioner has a clear and unmistakable right over the levied
properties. The existence of the subject Deed of Real Estate and Chattel Mortgage, the fact that
petitioner initiated a foreclosure of said properties before the Clerk of Court and Ex-Officio
Sheriff, RTC Branch 61, Kabankalan City on July 13, 2001, the fact that said Ex-Officio Sheriff
and the Clerk of Court issue a Notice of Foreclosure, Possession and Control over said mortgaged
properties on July 19, 2001 and the fact that a Sheriffs Certificate of Sale was issued on December
3, 2001 are the basis of its conclusion. Unless said mortgage contract is annulled or declared null
and void, the presumption of regularity of transaction must be considered and said document must
be looked [upon] as valid.
Notably, the Office of the Solicitor General also aptly observed that when the respondent maintained that the Deed
of Real Estate and Chattel mortgage was entered into in fraud of creditors, it thereby admitted that the mortgage was
not void, but merely rescissible under Article 1381(3) of the Civil Code; and, therefore, an independent action is
needed to rescind the contract of mortgage. [81] We, however, hold that such an independent action cannot now be
maintained, because the mortgage has been previously recognized to exist, with a valid consideration, in Republic,
etc., v. G Holdings, Inc.
A final word
The Court notes that the case filed with the lower court involves a principal action for injunction to prohibit
execution over properties belonging to a third party not impleaded in the legal dispute between NAMAWU and
MMC. We have observed, however, that the lower court and the CA failed to take judicial notice of, or to consider,
our Decisions in Republic, etc., v. G Holdings, Inc., and Maricalum Mining Corporation v. Brion and NAMAWU, in
which we respectively recognized the entitlement of GHI to the shares and the company notes of MMC (under the
Purchase and Sale Agreement), and the rights of NAMAWU to its labor claims. At this stage, therefore, neither the
lower court nor the CA, nor even this Court, can depart from our findings in those two cases because of the doctrine
of stare decisis.
From our discussion above, we now rule that the trial court, in issuing the questioned orders, did not commit grave
abuse of discretion, because its issuance was amply supported by factual and legal bases.
We are not unmindful, however, of the fact that the labor claims of NAMAWU, acknowledged by this Court
in Maricalum, still awaits final execution. As success fades from NAMAWUs efforts to execute on the properties of
MMC, which were validly foreclosed by GHI, we see that NAMAWU always had, and may still have, ample
supplemental remedies found in Rule 39 of the Rules of Court in order to protect its rights against MMC. These
include the examination of the judgment obligor when judgment is unsatisfied, [82] the examination of the obligors of
judgment obligors,[83] or even the resort to receivership.[84]
While, theoretically, this case is not ended by this decision, since the lower court is still to try the case filed
with it and decide it on the merits, the matter of whether the mortgage and foreclosure of the assets that are the
subject of said foreclosure is ended herein, for the third and final time. So also is the consequential issue of the
separate and distinct personalities of GHI and MMC. Having resolved these principal issues with certainty, we
find no more need to remand the case to the lower court, only for the

purpose of resolving again the matter of whether GHI owns the properties that were the subject of the latters
foreclosure.
WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals dated October 14, 2003
is SET ASIDE. The Omnibus Order dated December 4, 2002 of the Regional Trial Court, Branch 61 of Kabankalan
City, Negros Occidental is AFFIRMED. No costs.
SO ORDERED.

17. Sps. Latip vs Chua (Oct 16, 2009)

NACHURA, J.:
Challenged in this petition for review on certiorari is the Court of Appeals (CA) Decision in CA-G.R. SP No.
89300:[1] (1) reversing the decision of the Regional Trial Court (RTC), Branch 274, Paraaque City in Civil Case No.
04-0052;[2] and (2) reinstating and affirming in toto the decision of the Metropolitan Trial Court (MeTC), Branch 78,
of the same city in Civil Case No. 2001-315.[3]
First, we sift through the varying facts found by the different lower courts.
The facts parleyed by the MeTC show that respondent Rosalie Chua (Rosalie) is the owner
of Roferxane Building, a commercial building, located at No. 158 Quirino Avenue corner Redemptorist Road,
Barangay Baclaran, Paraaque City.
On July 6, 2001, Rosalie filed a complaint for unlawful detainer plus damages against petitioners, Spouses
Omar and Moshiera Latip (Spouses Latip). Rosalie attached to the complaint a contract of lease over two cubicles in
Roferxane Bldg., signed by Rosalie, as lessor, and by Spouses Latip, as lessees thereof.
The contract of lease reads:
CONTRACT OF LEASE
KNOW ALL MEN BY THESE PRESENTS:
This Contract of Lease is entered into by and between:
ROSALIE PALAA CHUA, Filipino, of legal age, married with office at 2/F JOFERXAN
Building, F.B. Harrison St., Brgy. Baclaran, Paraaque City, and hereinafter referred to as the
LESSOR,
- and -

OMAR LATIEF marriage to MOSHIERA LATIEF, also both Filipino, of legal age with address
at 24 Anahan St. RGV Homes Paraaque City, and hereinafter referred to as the LESSEES.
WITNESSETH
1. That the LESSOR is the owner of the commercial building erected at the lot of the Toribio G.
Reyes Realty, Inc. situated at 158 Quirino Ave. corner Redemptorist Road, Barangay Baclaran in
Paraaque Ctiy;
2. That LESSOR hereby leases two (2) cubicles located at the 1 st & 2nd Floor, of said building with
an area of 56 square meters under the following terms and conditions, to wit:
a. That the monthly rental of the two (2) cubicles in PESOS, SIXTY THOUSAND
(P60,000.00), Philippine Currency. However, due to unstable power of the peso
LESSEES agrees to a yearly increase of ten (10%) percent of the monthly rental;
b. That any rental in-arrears shall be paid before the expiration of the contract to the
LESSOR;
c. That LESSEES agree to pay their own water and electric consumptions in the said
premises;
d. That the LESSEES shall not sub-let or make any alteration in the cubicles without a
written permission from the LESSOR. Provided, however, that at the termination of the
Contract, the lessee shall return the two cubicles in its original conditions at their
expenses;
e. That the LESSEES agree to keep the cubicles in a safe and sanitary conditions, and
shall not keep any kinds of flammable or combustible materials.
f. That in case the LESSEES fail to pay the monthly rental every time it falls due or
violate any of the above conditions shall be enough ground to terminate this Contract of
Lease.Provided, further, that, if the LESSEES pre-terminate this Contract they shall pay
the rentals for the unused month or period by way of liquidated damages in favor of the
LESSOR.
3. That this Contract of Lease is for six (6) yrs. only starting from December _____, 1999
or up to December ______, 2005.
IN WITNESS WHEREOF, the parties have hereunto affixed their hands this ___th day of
December, 1999 at City of Manila, Philippines.
(sgd.) (sgd.)
ROSALIE PALAA-CHUA MOSHIERA LATIEF
LESSORLESSEE
(sgd.)
OMAR LATIEF
LESSEE
SIGNED IN THE PRESENCE OF:
(sgd.) (sgd.)

1. Daisy C. Ramos 2. Ferdinand C. Chua

Republic of the Philippines)
C i t y o f M a n i l a )s.s.
AC K NOWLED GME NT
BEFORE ME, a Notary Public for and in the City of Manila personally appeared the following
persons:
Rosalie P. Chua with CTC No. 05769706 at Paraaque City on 2/1/99; Moshiera Latief with CTC
No. 12885654 at Paraaque City on 11/11/99; Omar Latief with CTC No. 12885653 Paraaque City
on Nov. 11, 1999.
known to me and to me known to be the same persons who executed this instrument consisting of
two (2) pages duly signed by them and the two (2) instrumental witnesses and acknowledged to
me that the same is their free and voluntarily acts and deeds.
IN FAITH AND TESTIMONY WHEREOF, I have hereunto affixed my hand and Notarial Seal
this ____th day of December, 1999 at the City of Manila, Philippines.
Doc. No. _____ ATTY. CALIXTRO B. RAMOS
Page No. _____ NOTARY PUBLIC
Book No. LXV Until December 31, 2000
Series of 1999 PTR # 374145-1/11/99/-Mla.
IBP # 00262-Life Member[4]
A year after the commencement of the lease and with Spouses Latip already occupying the leased cubicles, Rosalie,
through counsel, sent the spouses a letter demanding payment of back rentals and should they fail to do so, to vacate
the leased cubicles. When Spouses Latip did not heed Rosalies demand, she instituted the aforesaid complaint.
In their Answer, Spouses Latip refuted Rosalies claims. They averred that the lease of the two (2) cubicles had
already been paid in full as evidenced by receipts showing payment to Rosalie of the total amount of P2,570,000.00.
The three (3) receipts, in Rosalies handwriting, read:
1. I received the amount of P2,000,000.00 (two million pesos) from [O]mar Latip & Moshi[e]ra
Latip for the payment of 2 cubicles located at 158 Quirino Ave. corner Redemptorist Rd.[,]
Baclaran P[ara]aque City. ROFERLAND[5] Bldg. with the terms 6 yrs. Contract.
P2,000,000.00 ______(sgd.)______
CHECK # 3767924 Rosalie Chua
FAR EAST BANK
______(sgd.)______
Ferdinand Chua
2. Received cash
P500,000.00
From Moshiera Latip
(sgd.)
12/10/99 Rosalie Chua
Received by

3. Received cash
P70,000.00 from
Moshiera Latip
12-11-99
____(sgd.)___
Received by:[6]
Spouses Latip asseverated that sometime in October 1999, Rosalie offered for sale lease rights over two (2)
cubicles in Roferxane Bldg. Having in mind the brisk sale of goods during the Christmas season, they readily
accepted Rosalies offer to purchase lease rights in Roferxane Bldg., which was still under construction at the time.
According to Spouses Latip, the immediate payment of P2,570,000.00 would be used to finish construction of the
building giving them first priority in the occupation of the finished cubicles.
Thereafter, in December 1999, as soon as two (2) cubicles were finished, Spouses Latip occupied them
without waiting for the completion of five (5) other stalls. Spouses Latip averred that the contract of lease they
signed had been novated by their purchase of lease rights of the subject cubicles. Thus, they were surprised to
receive a demand letter from Rosalies counsel and the subsequent filing of a complaint against them.
The MeTC ruled in favor of Rosalie, viz.:
WHEREFORE, premises considered, the [Spouses Latip] and all persons claiming rights
under them are hereby ordered to VACATE the property subject of this case located at the 1 stand
2nd floors of a Roferxane Building situated at No. 158 Quirino Avenue corner Redemptorist Road,
Barangay Baclaran, Paraaque City. The [Spouses Latip] are also ordered to PAY [Rosalie] the
amount of SEVEN HUNDRED TWENTY THOUSAND PESOS (P720,000.00) as rent arrearages
for the period of December 1999 to December 2000 and thereafter to PAY [Rosalie] the amount of
SEVENTY TWO THOUSAND PESOS (P72,000.00) per month from January 2001 to December
2002, plus ten percent (10%) increase for each and every succeeding years thereafter as stipulated
in paragraph 2(a) of the Contract of Lease x x x, until the [Spouses Latip] have completely vacated
the leased premises subject of this lease. Finally[,] the [Spouses Latip] are hereby ordered to PAY
[Rosalie] the amount of TWENTY THOUSAND PESOS (P20,000.00) as attorneys fees and TWO
THOUSAND PESOS (P2,000.00) per [Rosalies] appearance in Court as appearance fee and to
PAY the cost of this suit.
[Spouses Latips] counterclaim is hereby DISMISSED for lack of merit.
SO ORDERED.[7]
In stark contrast, the RTC reversed the MeTC and ruled in favor of Spouses Latip. The RTC did not give credence to
the contract of lease, ruling that it was not notarized and, in all other substantial aspects, incomplete. Further on this
point, the RTC noted that the contract of lease lacked: (1) the signature of Ferdinand Chua, Rosalies husband; (2) the
signatures of Spouses Latip on the first page thereof; (3) the specific dates for the term of the contract which only
stated that the lease is for six (6) y[ea]rs only starting from December 1999 or up to December 2005; (4) the exact
date of execution of the document, albeit the month of December and year 1999 are indicated therein; and (5) the
provision for payment of deposit or advance rental which is supposedly uncommon in big commercial lease
contracts.
The RTC believed the claim of Spouses Latip that the contract of lease was modified and supplemented; and the
entire lease rentals for the two (2) cubicles for six (6) years had already been paid by Spouses Latip in the amount
of P2,570,000.00. As to Rosalies claim that her receipt of P2,570,000.00 was simply goodwill payment by
prospective lessees to their lessor, and not payment for the purchase of lease rights, the RTC shot this down and
pointed out that, apart from her bare allegations, Rosalie did not adduce evidence to substantiate this claim. On the
whole, the RTC declared an existent lease between the parties for a period of six (6) years, and already fully paid for

by Spouses Latip. Thus, Spouses Latip could not be ejected from the leased premises until expiration of the lease
period.
The RTC disposed of the appeal, viz.:
WHEREFORE, all the foregoing considered, the appealed decision of the [MeTC] dated January
13, 2004 is reversed as judgment is hereby rendered for the [Spouses Latip] and against [Rosalie],
ordering the latter to pay the former
(1) the sum of PhP1,000,000.00 as moral damages;
(2) the sum of PhP500,000.00 as exemplary damages;
(3) the sum of PhP250,000.00 plus PhP3,000.00 per court appearance as and for attorneys
fees; and
(4)

costs of suit.

SO ORDERED.[8]
In yet another turn of events, the CA, as previously mentioned, reversed the RTC and reinstated the decision of the
MeTC. The CA ruled that the contract of lease, albeit lacking the signature of Ferdinand and not notarized, remained
a complete and valid contract. As the MeTC had, the CA likewise found that the alleged defects in the contract of
lease did not render the contract ineffective. On the issue of whether the amount of P2,570,000.00 merely
constituted payment of goodwill money, the CA took judicial notice of this common practice in the area of Baclaran,
especially around the Redemptorist Church. According to the appellate court, this judicial notice was bolstered by
the Joint Sworn Declaration of the stallholders at Roferxane Bldg. that they all had paid goodwill money to Rosalie
prior to occupying the stalls thereat. Thus, ruling on Rosalies appeal, the CA disposed of the case:
WHEREFORE, in view of the foregoing, the Petition for Review is hereby GRANTED. The
assailed decision of RTC Paraaque City Branch 274 dated September 24, 2004 is hereby
REVERSED and SET ASIDE, and the January 13, 2004 decision of the MeTC is REINSTATED
and AFFIRMED en toto.
SO ORDERED.[9]
Not surprisingly, Spouses Latip filed the present appeal.
The singular issue for our resolution is whether Spouses Latip should be ejected from the leased cubicles.
As previously adverted to, the CA, in ruling for Rosalie and upholding the ejectment of Spouses Latip, took judicial
notice of the alleged practice of prospective lessees in the Baclaran area to pay goodwill money to the lessor.
We disagree.
Sections 1 and 2 of Rule 129 of the Rules of Court declare when the taking of judicial notice is mandatory
or discretionary on the courts, thus:
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.

SEC. 2. Judicial notice, when discretionary. A court may take judicial notice of matters which are
of public knowledge, or are capable of unquestionable demonstration or ought to be known to
judges because of their judicial functions.
On this point, State Prosecutors v. Muro[10] is instructive:
I. The doctrine of judicial notice rests on the wisdom and discretion of the courts. The
power to take judicial notice is to be exercised by courts with caution; care must be taken
that the requisite notoriety exists; and every reasonable doubt on the subject should be
promptly resolved in the negative.
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.
To say that a court will take judicial notice of a fact is merely another way of saying that the usual
form of evidence will be dispensed with if knowledge of the fact can be otherwise acquired. This
is because the court assumes that the matter is so notorious that it will not be disputed. But
judicial notice is not judicial knowledge. The mere personal knowledge of the judge is not the
judicial knowledge of the court, and he is not authorized to make his individual knowledge
of a fact, not generally or professionally known, the basis of his action. Judicial cognizance is
taken only of those matters which are commonly known.
Things of common knowledge, of which courts take judicial notice, may be 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.[11]
We reiterated the requisite of notoriety for the taking of judicial notice in the recent case of Expertravel &
Tours, Inc. v. Court of Appeals,[12] which cited State Prosecutors:
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. 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.
Things of common knowledge, of which courts take judicial notice, may be 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 such of
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.
From the foregoing provisions of law and our holdings thereon, it is apparent that the matter which the appellate
court took judicial notice of does not meet the requisite of notoriety. To begin with, only the CA took judicial notice
of this supposed practice to pay goodwill money to the lessor in the Baclaran area. Neither the MeTC nor the RTC,
with the former even ruling in favor of Rosalie, found that the practice was of common knowledge or notoriously
known.
We note that the RTC specifically ruled that Rosalie, apart from her bare allegation, adduced no evidence to prove
her claim that the amount of P2,570,000.00 simply constituted the payment of goodwill money. Subsequently,
Rosalie attached an annex to her petition for review before the CA, containing a joint declaration under oath by
other stallholders in Roferxane Bldg. that they had paid goodwill money to Rosalie as their lessor. On this score, we
emphasize that the reason why our rules on evidence provide for matters that need not be proved under Rule 129,
specifically on judicial notice, is to dispense with the taking of the usual form of evidence on a certain matter so
notoriously known, it will not be disputed by the parties.
However, in this case, the requisite of notoriety is belied by the necessity of attaching documentary evidence, i.e.,
the Joint Affidavit of the stallholders, to Rosalies appeal before the CA. In short, the alleged practice still had to be
proven by Rosalie; contravening the title itself of Rule 129 of the Rules of Court What need not be proved.
Apparently, only that particular division of the CA had knowledge of the practice to pay goodwill money in
the Baclaran area. As was held in State Prosecutors, justices and judges alike ought to be reminded that the power to
take judicial notice must be exercised with caution and every reasonable doubt on the subject should be ample
reason for the claim of judicial notice to be promptly resolved in the negative.
Ultimately, on the issue of whether Spouses Latip ought to be ejected from the leased cubicles, what
remains in evidence is the documentary evidence signed by both parties the contract of lease and the receipts
evidencing payment of P2,570,000.00.
We need not be unduly detained by the issue of which documents were executed first or if there was a
novation of the contract of lease. As had been found by the RTC, the lease contract and the receipts for the amount
of P2,570,000.00 can be reconciled or harmonized. The RTC declared:
Definitely, the parties entered into a lease agreement over two (2) cubicles of the 1 st and 2nd floors
of Roferxane (Roferland) Building, a commercial building located at 158 Quirino Avenue,
corner Redemptorist Road, Baclaran, Paraaque City and belonging to [Rosalie]. The lease
agreement is for a term of six (6) years commencing in December 1999 up to December 2005.
This agreement was embodied in a Contract of Lease x x x. The terms of this lease contract,
however, are modified or supplemented by another agreement between the parties executed and or
entered into in or about the time of execution of the lease contract, which exact date of execution
of the latter is unclear.[13]
We agree with the RTCs holding only up to that point. There exists a lease agreement between the parties as set forth
in the contract of lease which is a complete document. It need not be signed by Ferdinand Chua as he likewise did
not sign the other two receipts for P500,000.00 and P70,000.00, respectively, which contained only the signature of
Rosalie. Besides, it is undisputed that Rosalie owns and leases the stalls in Roferxane Bldg.; thus, doing away with
the need for her husbands consent. The findings of the three lower courts concur on this fact.
The contract of lease has a period of six (6) years commencing in December 1999. This fact is again buttressed by
Spouses Latips admission that they occupied the property forthwith in December 1999, bearing in mind the brisk
sales during the holiday season.

On the conflicting interpretations by the lower courts of the receipts amounting to P2,570,000.00, we hold that the
practice of payment of goodwill money in the Baclaran area is an inadequate subject of judicial notice. Neither was
Rosalie able to provide sufficient evidence that, apart from the belatedly submitted Joint Affidavit of the stallholders
of Roferxane Bldg., the said amount was simply for the payment of goodwill money, and not payment for advance
rentals by Spouses Latip.
In interpreting the evidence before us, we are guided by the Civil Code provisions on interpretation of contracts, to
wit:
Art. 1371. In order to judge the intention of the contracting parties, their contemporaneous and
subsequent acts shall be principally considered.
Art. 1372. However general the terms of a contract may be, they shall not be understood to
comprehend things that are distinct and cases that are different from those which the parties intended to
agree.
Art. 1373. If some stipulation of any contract should admit of several meanings, it shall be
understood as bearing that import which is most adequate to render it effectual.
The RTC was already on the right track when it declared that the receipts for P2,570,000.00 modified or
supplemented the contract of lease. However, it made a quantum leap when it ruled that the amount was payment for
rentals of the two (2) cubicles for the entire six-year period. We cannot subscribe to this finding. To obviate
confusion and for clarity, the contents of the receipts, already set forth above, are again reproduced:
1. I received the amount of P2,000,000.00 (two million pesos) from [O]mar Latip & Moshi[e]ra
Latip for the payment of 2 cubicles located at 158 Quirino Ave. corner Redemptorist Rd.[,]
Baclaran P[ara]que City. ROFERLAND Bldg. with the terms 6 yrs. Contract.
P2,000,000.00 ______(sgd.)______
CHECK # 3767924 Rosalie Chua
FAR EAST BANK
______(sgd.)______
Ferdinand Chua
2. Received cash
P500,000.00
From Moshiera Latip
(sgd.)
12/10/99 Rosalie Chua
Received by
3. Received cash
P70,000.00 from
Moshiera Latip
12-11-99
___(sgd.) ____
Received by:[14]
There is nothing on the receipts and on record that the payment and receipt of P2,570,000.00 referred to full
payment of rentals for the whole period of the lease. All three receipts state Rosalies receipt of cash in varying

amounts. The first receipt for P2,000,000.00 did state payment for two (2) cubicles, but this cannot mean full
payment of rentals for the entire lease period when there are no words to that effect. Further, two receipts were
subsequently executed pointing to the obvious fact that the P2,000,000.00 is not for full payment of rentals. Thus,
since the contract of lease remained operative, we find that Rosalies receipt of the monies should be considered as
advanced rentals on the leased cubicles. This conclusion is bolstered by the fact that Rosalie demanded payment of
the lease rentals only in 2000, a full year after the commencement of the lease.
Finally, we note that the lease ended in 2005. Consequently, Spouses Latip can be ejected from the leased premises.
They are liable to Rosalie for unpaid rentals on the lease of the two (2) cubicles in accordance with the stipulations
on rentals in the Contract of Lease. However, the amount of P2,570,000.00, covering advance rentals, must be
deducted from this liability of Spouses Latip to Rosalie.
WHEREFORE, premises considered, the petition is hereby GRANTED. The decision of the Court of
Appeals in CA-G.R. SP No. 89300 is REVERSED. The petitioners, spouses Omar and Moshiera Latip, are liable to
respondent Rosalie Chua for unpaid rentals minus the amount of P2,570,000.00 already received by her as advance
rentals. No costs.

SO ORDERED.

18. Corinthian Gardens vs Sps. Tanjangco ( June 27, 2008)

NACHURA, J.:
Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Civil Procedure seeking the
reversal of the Court of Appeals (CA) Decision[2] dated January 31, 2003 in CA-G.R. CV No. 43217, which reversed
and set aside the Decision[3] of the Regional Trial Court (RTC) of Quezon City, dated March 30, 1993.
The Antecedents:
Respondents-spouses Reynaldo and Maria Luisa Tanjangco (the Tanjangcos) own Lots 68 and 69 covered by
Transfer Certificates of Title (TCT) No. 242245 [4] and 282961[5]respectively, located at Corinthian Gardens
Subdivision, Quezon City, which is managed by petitioner Corinthian Gardens Association, Inc. (Corinthian). On the
other hand, respondents-spouses Frank and Teresita Cuaso (the Cuasos) own Lot 65 which is adjacent to the
Tanjangcos lots.
Before the Cuasos constructed their house on Lot 65, a relocation survey was necessary. As Geodetic Engineer
Democrito De Dios (Engr. De Dios), operating under the business name D.M. De Dios Realty and Surveying,
conducted all the previous surveys for the subdivision's developer, Corinthian referred Engr. De Dios to the
Cuasos. Before, during and after the construction of the said house, Corinthian conducted periodic ocular
inspections in order to determine compliance with the approved plans pursuant to the Manual of Rules and
Regulations of Corinthian.[6] Unfortunately, after the Cuasos constructed their house employing the services of C.B.
Paraz & Construction Co., Inc. (C.B. Paraz) as builder, their perimeter fence encroached on the Tanjangcos Lot 69
by 87 square meters.
No amicable settlement was reached between the parties. Thus, the Tanjangcos demanded that the Cuasos demolish
the perimeter fence but the latter failed and refused, prompting the Tanjangcos to file with the RTC a suit against the
Cuasos for Recovery of Possession with Damages.[7]

Eventually, the Cuasos filed a Third-Party Complaint[8] against Corinthian, C.B. Paraz and Engr. De Dios. The
Cuasos ascribed negligence to C.B. Paraz for its failure to ascertain the proper specifications of their house, and to
Engr. De Dios for his failure to undertake an accurate relocation survey, thereby, exposing them to litigation. The
Cuasos also faulted Corinthian for approving their relocation survey and building plans without verifying their
accuracy and in making representations as to Engr. De Dios' integrity and competence. The Cuasos alleged that had
Corinthian exercised diligence in performing its duty, they would not have been involved in a boundary dispute with
the Tanjangcos. Thus, the Cuasos opined that Corinthian should also be held answerable for any damages that they
might incur as a result of such construction.
On March 30, 1993, the RTC rendered a Decision in favor of the Tanjangcos. It ruled that the Cuasos perimeter wall
encroached on the land of the Tanjangos by 87 square meters.It, however, ruled that the Cuasos were builders in
good faith, and gave the Tanjangcos the option to sell and the Cuasos the option to buy the encroaching portion of
the land, at a price to be agreed upon by the parties within sixty (60) days from receipt of the said Decision. In the
event that the Cuasos were unable and unwilling to purchase the said portion, the perimeter wall should be
demolished at the latters expense. The RTC also ordered the Cuasos to pay monthly rentals of P2,000.00
commencing from the time of the filing of the complaint. The RTC likewise held that C.B. Paraz was grossly
negligent in not taking into account the correct boundaries of Cuasos lot when it constructed the house. It, thus,
ordered C.B. Paraz to pay moral and exemplary damages as well as attorneys fees to the Tanjangcos and the
Cuasos. The third-party complaint against Corinthian and Engr. De Dios, on the other hand, was dismissed for lack
of cause of action.
The Tanjangcos filed a Motion for Reconsideration [9] of the said RTC Decision which the RTC, however, denied in
its Order[10] dated June 28, 1993.
Dissatisfied with the RTC ruling, the Tanjangcos, the Cuasos, and C.B. Paraz all appealed to the CA.
On appeal, the CA reversed and set aside the RTC Decision. It held that the Cuasos acted in bad faith in landgrabbing the 87 square meter-portion of Lot 69 as of April 5, 1989. Correlatively, the CA allowed the Tanjangcos to
exercise the rights granted under Articles 449, 450, 451 and 549 of the New Civil Code, which include the right to
demand the demolition of the offending perimeter wall after reimbursing the Cuasos the necessary expenses for the
preservation of the encroached area. The Cuasos were ordered to pay monthly rentals of P10,000.00 for the use,
enjoyment and occupancy of the lot from 1989 up to the time they vacate the property considering the location and
category of the same. They were, likewise, ordered to pay the Tanjangcos P100,000.00, as moral
damages, P50,000.00 as exemplary damages, and P150,000.00 as attorneys fees. The CA also imposed six percent
(6%) interest per annum on all the awards. The Cuasos appeal against the Tanjangcos, on the other hand, was
dismissed for lack of merit. On the third-party complaints, Corinthian, C.B. Paraz and Engr. De Dios were all found
negligent in performing their respective duties and so they were ordered to contribute five percent (5%) each, or a
total of fifteen percent (15%) to all judgment sums and amounts that the Cuasos shall eventually pay under the
decision, also with interest of six percent (6%) per annum.
Only Corinthian filed a Motion for Reconsideration [11] of the CA Decision within the 15-day reglementary period.
No motion for reconsideration was filed by the Cuasos, C.B. Paraz and/or Engr. De Dios.
About six (6) months later, or on August 12, 2003, the Cuasos filed a Comment/Manifestation [12] praying that they
be allowed to adopt Corinthians Motion for Reconsideration.
In its Resolution[13] dated November 14, 2003, the CA denied Corinthians Motion for Reconsideration.
Hence, Corinthian filed the instant Petition for Review on Certiorari assailing the CA Decision and Resolution, and
impleading the Cuasos as one of the respondents being the third-party plaintiffs in the RTC.
This Court gave due course to Corinthians petition and required the parties to submit their respective memorandum.
[14]
In compliance, the Cuasos submitted their Memorandum [15] and Supplement to Memorandum,[16] which were both
noted by this Court in its Resolutions dated January 10, 2005[17] and February 2, 2005, [18]respectively.

In the meantime, the Tanjangcos moved for partial entry of judgment of the CA Decision which was granted by the
CA in its Resolution[19] dated May 26, 2006, directing the issuance of an Entry of Judgment and a Certification that
its Decision dated January 31 2003 has become final and executory with respect to the Cuasos, C.B. Paraz and Engr.
De Dios for their failure to file an appeal assailing the said Decision before this Court.
The Tanjangcos then moved for the execution of the judgment against the Cuasos, specifically the demolition of the
perimeter fence,[20] which was also granted by the RTC in its Order[21] dated December 18, 2006.
Other than the filing of an Opposition [22] and a Motion for Reconsideration[23] before the RTC, the Cuasos prayed for
the issuance of a temporary restraining order (TRO) and/or preliminary injunction before this Court to enjoin the
demolition of the perimeter fence. They averred that the premature demolition of the alleged encroaching perimeter
wall and other improvements will cause grave and irreparable damage to them, because what is sought to be
demolished is part of their residence. They claimed that no amount of money will compensate for the damage they
stand to suffer should any demolition subsequently prove to be wrongful. They argued that before any execution can
be carried out, it is necessary to first determine whether or not Corinthian was negligent in approving the building
plan and whether or not it acted in good faith in doing so. Such determination, according to the Cuasos, will in turn
determine whether or not they were in good faith in constructing the house. [24]
The Tanjangcos opposed the Cuasos' application for TRO. They countered that the only pending matter with this
Court is the appeal by Corinthian; hence, the implementation of the January 31, 2003 Decision of the CA against the
Cuasos will not preempt the outcome of the said pending incidents. Also, any action taken by this Court on
Corinthians petition would not benefit the Cuasos for they did not appeal the adverse decision against them.
Accordingly, they cannot obtain affirmative relief from this Court by reason or on account of the appeal taken by
Corinthian. The appeal, they added, is personal to Corinthian. Finally, they argued that the Cuasos are now estopped
from questioning the enforcement of the CA Decision since they issued a managers check to pay the money
judgment.[25]
In this Court's Resolution dated July 18, 2007, we denied the Cuasos' application for TRO and/or writ of preliminary
injunction for lack of merit.
The denial was based on sound legal principles. It is axiomatic that to be entitled to the injunctive writ, one must
show that there exists a right to be protected which is directly threatened by the act sought to be enjoined.
Furthermore, there must be a showing that the invasion of the right is material and substantial, that the right of
complainant is clear and unmistakable, and that there is an urgent and paramount necessity for the writ to issue in
order to prevent serious damage.[26]
In the Cuasos case, their right to injunctive relief had not been clearly and unmistakably demonstrated. They failed
to show proof that there is material and substantial invasion of their right to warrant the issuance of an injunctive
writ. Indeed, the enforcement of the writ of execution, which would demolish the Cuasos perimeter fence, is
manifestly prejudicial to their interest. However, they possess no clear and unmistakable legal right that merits
protection through the writ of preliminary injunction. [27] Their right to maintain the said fence had been declared
inferior to the Tanjangcos right to the demolition of the fence, after the CA judgment had become final and
executory as to the Cuasos.
It bears stressing that the Cuasos failed to appeal the ruling of the CA. This failure to contest the CA decision before
this Court was fatal to their cause. It had the effect of an admission that they indeed acted in bad faith, as they
accepted the CA ruling. The decision of the CA, therefore, became binding and final as to them. [28] As a matter of
fact, the CA already issued a partial entry of judgment against the Cuasos.
An injunction to stay a final and executory decision is unavailing except only after a showing that facts and
circumstances exist which would render execution unjust or inequitable, or that a change in the situation of the
parties occurred. Here, no such exception exists as shown by the facts earlier narrated. [29]
While it is true that this Court noted the Memorandum and Supplemental Memorandum filed by the Cuasos, such
notation was made only insofar as Corinthian made them respondents in this petition. This Court cannot grant to the
Cuasos any affirmative relief as they did not file a petition questioning the CA ruling. Consequently, the Decision of
the CA holding that the Cuasos acted in bad faith and that the perimeter fence may now be demolished cannot be put

in issue by the Cuasos. It is a fundamental principle that a party who does not appeal, or file a petition for certiorari,
is not entitled to any affirmative relief. [30] An appellee who is not an appellant may assign errors in his brief where
his purpose is to maintain the judgment, but he cannot seek modification or reversal of the judgment or claim
affirmative relief unless he has also appealed. [31] This applies to C.B. Paraz and Engr. De Dios who likewise failed to
assail the aforementioned CA Decision.
With this matter put to rest, we now go to the main issues raised by Corinthian, the sole petitioner in this case, to
wit:
a) Whether or not there is legal basis for the Court of Appeals to hold petitioner Corinthian
Gardens Association, Inc. liable to pay 5% of the judgment money to Sps. Tanjangco on account
of the encroachment made by Sps. Cuaso[; and]
b)

Whether or not the Court of Appeals has legal basis to increase unilaterally and without
proof the amount prayed for in the Complaint, i.e., P2,000.00, as reasonable compensation
for the use and enjoyment of the portion of the lot encroached upon, to P10,000.00.[32]

Corinthian claims that the approval of the building plan of the Cuasos was not tainted with negligence as it did not
approve the survey relocation plan but merely the architectural, structural and sanitary plans for Cuasos' house; that
the purpose of the said approval is not to ensure that the house to be erected on a particular lot is constructed within
its boundaries but only to ensure compliance with the Manual of Rules and Regulations; that while Corinthian
conducts actual site inspections, the inspection and approval of the building plans are limited to table inspection
only; that the survey relocation plan was never submitted for Corinthian's approval; that the acceptance of the
builder's bond did not make Corinthian automatically liable for the encroachment and for damages; and that
Corinthian approved the building plan with the good faith and due diligence required under the circumstances. It,
thus, concludes that it cannot be held liable to pay five
percent (5%) of the money judgment to the Tanjangcos on account of the encroachment made by the
Cuasos. Likewise, it finds no legal basis for the CA to unilaterally increase the amount of the adjudged rent
from P2,000.00 to P10,000.00 which was not prayed for by the Tanjangcos in their complaint and in the absence of
evidence adduced by the parties.[33]
On the other hand, the Tanjangcos stand by the ruling of the CA and opine that Corinthian was negligent in
approving the building plan of the Cuasos. They submit that Corinthian's claim that it merely conducts table
inspections of buildings further bolsters their argument that Corinthian was negligent in conveniently and
unilaterally restricting and limiting the coverage of its approval, contrary to its own Manual of Rules and
Regulations; that the acceptance of a builder's bond does not automatically make Corinthian liable but the same
affirms the fact that a homeowner can hold it liable for the consequences of the approval of a building plan; and that
Corinthian, by regularly demanding and accepting membership dues, must be wary of its responsibility to protect the
rights and interests of its members. Lastly, the Tanjangcos contend that a court can take judicial notice of the general
increase in the rentals of real estate, as in this case, where the CA considered the value of their lot in the posh-andswank Corinthian Gardens Subdivision and the fact that they were deprived of it for almost two decades. The
Tanjangcos pray that this Court sustain the ruling of the CA.[34]
The instant case is obviously one for tort, as governed by Article 2176 of the Civil Code, which provides:
ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence,
is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasi-delict and is governed by the provisions
of this Chapter.
In every tort case filed under this provision, plaintiff has to prove by a preponderance of evidence: (1) the damages
suffered by the plaintiff; (2) the fault or negligence of the defendant or some other person for whose act he must
respond; and (3) the connection of cause and effect between the fault or negligence and the damages incurred.[35]

Undeniably, the perimeter fence of the Cuasos encroached on Lot 69 owned by the Tanjangcos by 87 square meters
as duly found by both the RTC and the CA in accordance with the evidence on record. As a result, the Tanjangcos
suffered damage in having been deprived of the use of that portion of their lot encroached upon. Thus, the
primordial issue to be resolved in this case is whether Corinthian was negligent under the circumstances and, if so,
whether such negligence contributed to the injury suffered by the Tanjangcos.
A negligent act is an inadvertent act; it may be merely carelessly done from a lack of ordinary prudence and may be
one which creates a situation involving an unreasonable risk to another because of the expectable action of the other,
a third person, an animal, or a force of nature. A negligent act is one from which an ordinary prudent person in the
actor's position, in the same or similar circumstances, would foresee such an appreciable risk of harm to others as to
cause him not to do the act or to do it in a more careful manner.[36]
The test to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in
committing the alleged negligent act use that reasonable care and caution which an ordinary person would have used
in the same situation? If not, then he is guilty of negligence. The law, in effect, adopts the standard supplied by the
imaginary conduct of the discreet paterfamilias in Roman law. The existence of negligence in a given case is not
determined by reference to the personal judgment of the actor in the situation before him. The law considers what
would be reckless, blameworthy, or negligent in a man of ordinary intelligence and prudence, and determines
liability according to that standard.[37]
By this test, we find Corinthian negligent.
While the issue of Corinthian's alleged negligence is factual in character, [38] a review by this Court is proper because
the CA's factual findings differ from those of the RTC's. [39] Thus, after a meticulous review of the evidence on
record, we hold that the CA committed no reversible error when it deviated from the findings of fact of the
RTC. The CA's findings and conclusions are substantiated by the evidence on record and are more in accord with
law and reason. Indeed, it is clear that Corinthian failed to exercise the requisite diligence in insuring that the Cuasos
abide by its Manual of Rules and Regulations, thereby resulting in the encroachment on the Tanjangcos property.
We agree with the CA when it aptly held:
Corinthian cannot and should not be allowed to justify or excuse its negligence by claiming that its
approval of the Cuasos building plans was only limited to a so-called table inspection; and not
actual site measurement. To accept some such postulate is to put a premium on
negligence. Corinthian was not organized solely for the defendants Cuasos. It is also the
subdivision of the plaintiffs-spouses Tanjangcos - and of all others who have their dwelling units
or abodes therein. Pertinently, its Manual of Rules and Regulations stipulates in Section 3 thereof
(under the heading Construction), thus:

A. Rules and Regulations

No new construction can be started unless the building plans are approved by
the Association and the appropriate Builders cash bond and pre-construction
fees are paid. The Association will not allow the entry of construction materials
and process identification cards for workers if the above conditions are not
complied with. Likewise, all renovations, repairs, additions and improvements
to a finished house except electrical wiring, will have to be approved by the
Association. Water service connection of a homeowner who undertakes
construction work without prior approval of the Association will be cut-off in
addition to the sanctions previously mentioned.
It goes without saying that this Manual of Rules and Regulations applies to all - or it does not
apply at all. To borrow a popular expression, what is sauce for the gander is sauce for the goose or ought to be. To put it matter-of-factly and bluntly, thus, its so-called table inspection approval of
the Cuasos building plans is no less of an approval, as approvals come and go. And since it is an
approval tainted with negligence, the necessary and inevitable consequences which law and justice

attach to such negligence must, as a matter of law and justice, also necessarily attach to
Corinthian.
And then again third party defendant-appellee Corinthian Garden required the posting of a
builders cash bond (Exh. 5-Corinthian) from the defendants-appellants Cuasos and the third-party
defendant C.B. Paraz Construction to secure the performance of their undertaking. Surely,
Corinthian does not imply that while it may take the benefits from the Builders cash bond, it may,
Pilate-like, wash its hands of any responsibility or liability that would or might arise from the
construction or building of the structure for which the cash bond was in the first place posted. That
is not only unjust and immoral, but downright unchristian and iniquitous.
Under the same parity of reasoning, the payment by the appellants-Cuasos to the appellee
Corinthian of pre-construction and membership fees in the Association must necessarily entail the
creation of certain obligations on the part of Corinthian. For duties and responsibilities always go
hand in hand with rights and privileges. That is the law of life - and that is the law of every
civilized society. It is an axiom of equity that he who receives the benefits must share the burdens.
[40]

By its Manual of Rules and Regulations, it is reasonable to assume that Corinthian, through its representative, in the
approval of building plans, and in the conduct of periodic inspections of on-going construction projects within the
subdivision, is responsible in insuring compliance with the approved plans, inclusive of the construction of
perimeter walls, which in this case is the subject of dispute between the Tanjangcos and the Cuasos. [41] It is not just
or equitable to relieve Corinthian of any liability when, by its very own rules, it imposes its authority over all its
members to the end that no new construction can be started unless the plans are approved by the Association and the
appropriate cash bond and pre-construction fees are paid. Moreover, Corinthian can impose sanctions for violating
these rules. Thus, the proposition that the inspection is merely a table inspection and, therefore, should exempt
Corinthian from liability, is unacceptable. After all, if the supposed inspection is merely a table inspection and the
approval granted to every member is a mere formality, then the purpose of the rules would be defeated. Compliance
therewith would not be mandatory, and sanctions imposed for violations could be disregarded.
Corinthian's imprimatur on the construction of the Cuasos' perimeter wall over the property of the Tanjangcos
assured the Cuasos that everything was in order.
In sum, Corinthians failure to prevent the encroachment of the Cuasos perimeter wall into Tanjangcos property
despite the inspection conducted constitutes negligence and, at the very least, contributed to the injury suffered by
the Tanjangcos.
On the second issue, our ruling in Spouses Badillo v. Tayag[42] is instructive:
Citing Sia v. Court of Appeals [272 SCRA 141, May 5, 1997], petitioners argue that the MTC may
take judicial notice of the reasonable rental or the general price increase of land in order to
determine the amount of rent that may be awarded to them. In that case, however, this Court relied
on the CA's factual findings, which were based on the evidence presented before the trial court. In
determining reasonable rent,
the RTC therein took account of the following factors: 1) the realty assessment of the land, 2) the
increase in realty taxes, and 3) the prevailing rate of rentals in the vicinity. Clearly, the trial court
relied, not on mere judicial notice, but on the evidence presented before it.
Indeed, courts may fix the reasonable amount of rent for the use and occupation of a disputed
property. However, petitioners herein erred in assuming that courts, in determining the amount of
rent, could simply rely on their own appreciation of land values without considering any evidence.
As we have said earlier, a court may fix the reasonable amount of rent, but it must still base its
action on the evidence adduced by the parties.

In Herrera v. Bollos [G.R. No. 138258, January 18, 2002], the trial court awarded rent to the
defendants in a forcible entry case. Reversing the RTC, this Court declared that the reasonable
amount of rent could be determined not by mere judicial notice, but by supporting evidence:
x x x A court cannot take judicial notice of a factual matter in controversy. The
court may take judicial notice of matters of public knowledge, or which are
capable of unquestionable demonstration, or ought to be known to judges
because of their judicial functions. Before taking such judicial notice, the court
must allow the parties to be heard thereon. Hence, there can be no judicial notice
on the rental value of the premises in question without supporting evidence.
Truly, mere judicial notice is inadequate, because evidence is required for a court to determine the proper rental
value. But contrary to Corinthian's arguments, both the RTC and the CA found that indeed rent was due the
Tanjangcos because they were deprived of possession and use of their property. This uniform factual finding of the
RTC and the CA was based on the evidence presented below. Moreover, in Spouses Catungal v. Hao,[43] we
considered the increase in the award of rentals as reasonable given the particular circumstances of each case. We
noted therein that the respondent denied the petitioners the benefits, including rightful possession, of their property
for almost a decade.
Similarly, in the instant case, the Tanjangcos were deprived of possession and use of their property for more than
two decades through no fault of their own. Thus, we find no cogent reason to disturb the monthly rental fixed by the
CA.
All told, the CA committed no reversible error.WHEREFORE, the petition is DENIED. The Decision of the Court
of Appeals is AFFIRMED. Costs against petitioner.SO ORDERED.
19. Social Justice System vs. Atienza (Feb 13, 2008 First Div)
CORONA, J.:
After we promulgated our decision in this case on March 7, 2007, Chevron Philippines Inc. (Chevron), Petron
Corporation (Petron) and Pilipinas Shell Petroleum Corporation (Shell) (collectively, the oil companies) and the
Republic of the Philippines, represented by the Department of Energy (DOE), filed their respective motions for
leave to intervene and for reconsideration of the decision.
Chevron[1] is engaged in the business of importing, distributing and marketing of petroleum products in
the Philippines while Shell and Petron are engaged in the business of manufacturing, refining and likewise
importing, distributing and marketing of petroleum products in the Philippines. [2] The DOE is a governmental
agency created under Republic Act (RA) No. 7638 [3] and tasked to prepare, integrate, coordinate, supervise and
control all plans, programs, projects and activities of the government relative to energy exploration,
development, utilization, distribution and conservation.[4]
The facts are restated briefly as follows:
Petitioners Social Justice Society, Vladimir Alarique T. Cabigao and Bonifacio S. Tumbokon, in an original
petition for mandamus under Rule 65 of the Rules of Court, sought to compel respondent Hon. Jose L. Atienza, Jr.,
then mayor of the City of Manila, to enforce Ordinance No. 8027. This ordinance was enacted by the Sangguniang
Panlungsod of Manila on November 20, 2001,[5] approved by respondent Mayor on November 28, 2001,[6] and
became effective on December 28, 2001 after publication.[7] Sections 1 and 3 thereof state:

SECTION 1. For the purpose of promoting sound urban planning and ensuring health, public
safety, and general welfare of the residents of Pandacan and Sta. Ana as well as its adjoining areas,
the land use of [those] portions of land bounded by the Pasig River in the north, PNR Railroad
Track in the east, Beata St. in the south, Palumpong St. in the southwest, and Estero de Pandacan

in the west[,] PNR Railroad in the northwest area, Estero de Pandacan in the [n]ortheast, Pasig
River in the southeast and Dr. M.L. Carreon in the southwest. The area of Punta, Sta. Ana bounded
by the Pasig River, Marcelino Obrero St., Mayo 28 St., and F. Manalo Street, are hereby
reclassified from Industrial II to Commercial I.

xxx xxx xxx

SEC. 3. Owners or operators of industries and other businesses, the operation of which are no
longer permitted under Section 1 hereof, are hereby given a period of six (6) months from the date
of effectivity of this Ordinance within which to cease and desist from the operation of businesses
which are hereby in consequence, disallowed.
Ordinance No. 8027 reclassified the area described therein from industrial to commercial and directed the
owners and operators of businesses disallowed under the reclassification to cease and desist from operating their
businesses within six months from the date of effectivity of the ordinance. Among the businesses situated in the area
are the so-called Pandacan Terminals of the oil companies.
On June 26, 2002, the City of Manila and the Department of Energy (DOE) entered into a memorandum of
understanding (MOU)[8] with the oil companies. They agreed that the scaling down of the Pandacan Terminals [was]
the most viable and practicable option. The Sangguniang Panlungsod ratified the MOU in Resolution No. 97.[9] In
the same resolution, the Sanggunian declared that the MOU was effective only for a period of six months starting
July 25, 2002.[10] Thereafter, on January 30, 2003, the Sanggunian adopted Resolution No. 13[11] extending the
validity of Resolution No. 97 to April 30, 2003 and authorizing the mayor of Manila to issue special business
permits to the oil companies.[12]
This was the factual backdrop presented to the Court which became the basis of our March 7, 2007
decision. We ruled that respondent had the ministerial duty under the Local Government Code (LGC) to enforce all
laws and ordinances relative to the governance of the city, [13]including Ordinance No. 8027. We also held that we
need not resolve the issue of whether the MOU entered into by respondent with the oil companies and the
subsequent resolutions passed by the Sanggunian could amend or repeal Ordinance No. 8027 since the resolutions
which ratified the MOU and made it binding on the City of Manila expressly gave it full force and effect only until
April 30, 2003. We concluded that there was nothing that legally hindered respondent from enforcing Ordinance No.
8027.
After we rendered our decision on March 7, 2007, the oil companies and DOE sought to intervene and filed
motions for reconsideration in intervention on March 12, 2007 and March 21, 2007 respectively. On April 11, 2007,
we conducted the oral arguments in Baguio City to hear petitioners, respondent and movants-intervenors oil
companies and DOE.
The oil companies called our attention to the fact that on April 25, 2003, Chevron had filed a complaint
against respondent and the City of Manila in the Regional Trial Court (RTC) of Manila, Branch 39, for the
annulment of Ordinance No. 8027 with application for writs of preliminary prohibitory injunction and preliminary
mandatory injunction.[14] The case was docketed as civil case no. 03-106377. On the same day, Shell filed a petition
for prohibition and mandamus likewise assailing the validity of Ordinance No. 8027 and with application for writs
of preliminary prohibitory injunction and preliminary mandatory injunction. [15] This was docketed as civil case no.
03-106380. Later on, these two cases were consolidated and the RTC of Manila, Branch 39 issued an order dated
May 19, 2003 granting the applications for writs of preliminary prohibitory injunction and preliminary mandatory
injunction:
WHEREFORE, upon the filing of a total bond of TWO MILLION (Php 2,000,000.00)
PESOS, let a Writ of Preliminary Prohibitory Injunction be issued ordering [respondent] and the
City of Manila, their officers, agents, representatives, successors, and any other persons assisting
or acting in their behalf, during the pendency of the case, to REFRAIN from taking steps to
enforce Ordinance No. 8027, and let a Writ of Preliminary Mandatory Injunction be issued

ordering [respondent] to issue [Chevron and Shell] the necessary Business Permits to operate at
the Pandacan Terminal.[16]
Petron likewise filed its own petition in the RTC of Manila, Branch 42, also attacking the validity of Ordinance
No. 8027 with prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order
(TRO). This was docketed as civil case no. 03-106379. In an order dated August 4, 2004, the RTC enjoined the
parties to maintain the status quo.[17]
Thereafter, in 2006, the city council of Manila enacted Ordinance No. 8119, also known as the Manila
Comprehensive Land Use Plan and Zoning Ordinance of 2006. [18] This was approved by respondent on June 16,
2006.[19]
Aggrieved anew, Chevron and Shell filed a complaint in the RTC of Manila, Branch 20, asking for the
nullification of Ordinance No. 8119.[20] This was docketed as civil case no. 06-115334. Petron filed its own
complaint on the same causes of action in the RTC of Manila, Branch 41. [21] This was docketed as civil case no.
07-116700.[22] The court issued a TRO in favor of Petron, enjoining the City of Manila and respondent from
enforcing Ordinance No. 8119.[23]
Meanwhile, in civil case no. 03-106379, the parties filed a joint motion to withdraw complaint and counterclaim
on February 20, 2007.[24] In an order dated April 23, 2007, the joint motion was granted and all the claims and
counterclaims of the parties were withdrawn.[25]
Given these additional pieces of information, the following were submitted as issues for our resolution:
1. whether movants-intervenors should be allowed to intervene in this case;[26]
2. whether the following are impediments to the execution of our March 7, 2007 decision:
(a)
Ordinance No. 8119, the enactment and existence of which were not previously
brought by the parties to the attention of the Court and
(b)
writs of preliminary prohibitory injunction and preliminary mandatory
injunction and status quo order issued by the RTC of Manila, Branches 39 and
42 and
3. whether the implementation of Ordinance No. 8027 will unduly encroach upon the DOEs powers and
functions involving energy resources.
During the oral arguments, the parties submitted to this Courts power to rule on the constitutionality
and validity of Ordinance No. 8027 despite the pendency of consolidated cases involving this issue in the RTC.
[27]
The importance of settling this controversy as fully and as expeditiously as possible was emphasized,
considering its impact on public interest. Thus, we will also dispose of this issue here. The parties were after all
given ample opportunity to present and argue their respective positions. By so doing, we will do away with the
delays concomitant with litigation and completely adjudicate an issue which will most likely reach us anyway
as the final arbiter of all legal disputes.
Before we resolve these issues, a brief review of the history of the Pandacan Terminals is called for to
put our discussion in the proper context.
HISTORY OF THE PANDACAN
OIL TERMINALS
Pandacan (one of the districts of the City of Manila) is situated along the banks of the Pasig river. At the
turn of the twentieth century, Pandacan was unofficially designated as the industrial center of Manila. The area, then
largely uninhabited, was ideal for various emerging industries as the nearby river facilitated the transportation of
goods and products. In the 1920s, it was classified as an industrial zone. [28]Among its early industrial settlers were
the oil companies. Shell established its installation there on January 30, 1914. [29] Caltex (now Chevron) followed suit
in 1917 when the company began marketing its products in the country. [30] In 1922, it built a warehouse depot which

was later converted into a key distribution terminal. [31] The corporate presence in the Philippines of Esso (Petrons
predecessor) became more keenly felt when it won a concession to build and operate a refinery in Bataan in 1957.
[32]
It then went on to operate a state-of-the-art lube oil blending plant in the Pandacan Terminals where it
manufactures lubes and greases.[33]
On December 8, 1941, the Second World War reached the shores of the Philippine Islands. Although
Manila was declared an open city, the Americans had no interest in welcoming the Japanese. In fact, in their zealous
attempt to fend off the Japanese Imperial Army, the United States Army took control of the Pandacan Terminals and
hastily made plans to destroy the storage facilities to deprive the advancing Japanese Army of a valuable logistics
weapon.[34] The U.S. Army burned unused petroleum, causing a frightening conflagration. Historian Nick Joaquin
recounted the events as follows:
After the USAFFE evacuated the City late in December 1941, all army fuel storage dumps were
set on fire. The flames spread, enveloping the City in smoke, setting even the rivers ablaze,
endangering bridges and all riverside buildings. For one week longer, the open city blazeda cloud
of smoke by day, a pillar of fire by night.[35]
The fire consequently destroyed the Pandacan Terminals and rendered its network of depots and service stations
inoperative.[36]
After the war, the oil depots were reconstructed. Pandacan changed as Manila rebuilt itself. The three major oil
companies resumed the operation of their depots.[37] But the district was no longer a sparsely populated industrial
zone; it had evolved into a bustling, hodgepodge community. Today, Pandacan has become a densely populated area
inhabited by about 84,000 people, majority of whom are urban poor who call it home. [38]Aside from numerous
industrial installations, there are also small businesses, churches, restaurants, schools, daycare centers and residences
situated there.[39] Malacaang Palace, the official residence of the President of the Philippines and the seat of
governmental power, is just two kilometers away.[40] There is a private school near the Petron depot. Along the walls
of the Shell facility are shanties of informal settlers. [41] More than 15,000 students are enrolled in elementary and
high schools situated near these facilities. [42] A university with a student population of about 25,000 is located
directly across the depot on the banks of the Pasig river.[43]
The 36-hectare Pandacan Terminals house the oil companies distribution terminals and depot facilities. [44] The
refineries of Chevron and Shell in Tabangao and Bauan, both in Batangas, respectively, are connected to the
Pandacan Terminals through a 114-kilometer[45] underground pipeline system.[46] Petrons refinery in Limay, Bataan,
on the other hand, also services the depot. [47] The terminals store fuel and other petroleum products and supply 95%
of the fuel requirements of Metro Manila, [48] 50% of Luzons consumption and 35% nationwide. [49] Fuel can also be
transported through barges along the Pasig river or tank trucks via the South Luzon Expressway.
We now discuss the first issue: whether movants-intervenors should be allowed to intervene in this case.
INTERVENTION OF THE OIL COMPANIES AND
THE DOE SHOULD BE ALLOWED IN THE
INTEREST OF JUSTICE
Intervention is a remedy by which a third party, not originally impleaded in the proceedings, becomes a litigant
therein to enable him, her or it to protect or preserve a right or interest which may be affected by such
proceedings.[50] The pertinent rules are Sections 1 and 2, Rule 19 of the Rules of Court:
SEC. 1. Who may intervene. A person who has a legal interest in the matter in litigation,
or in the success of either of the parties, or an interest against both, or is so situated as to be
adversely affected by a distribution or other disposition of property in the custody of the court or
of an officer thereof may, with leave of court, be allowed to intervene in the action. The court shall
consider whether or not the intervention will unduly delay or prejudice the adjudication of the

rights of the original parties, and whether or not the intervenors rights may be fully protected in a
separate proceeding.
SEC. 2. Time to intervene. The motion to intervene may be filed at any time before
rendition of judgment by the trial court. A copy of the pleading-in-intervention shall be attached to
the motion and served on the original parties.

Thus, the following are the requisites for intervention of a non-party:

(1) Legal interest
(a) in the matter in controversy; or
(b) in the success of either of the parties; or
I against both parties; or
(d) person is so situated as to be adversely affected by a distribution or other disposition
of property in the custody of the court or of an officer thereof;
(2) Intervention will not unduly delay or prejudice the adjudication of rights of original parties;
(3) Intervenors rights may not be fully protected in a separate proceeding[51] and
(g)The motion to intervene may be filed at any time before rendition of judgment by the trial
court.

For both the oil companies and DOE, the last requirement is definitely absent. As a rule, intervention is
allowed before rendition of judgment as Section 2, Rule 19 expressly provides. Both filed their separate motions
after our decision was promulgated. In Republic of the Philippines v. Gingoyon,[52] a recently decided case
which was also an original action filed in this Court, we declared that the appropriate time to file the motionsin-intervention was before and not after resolution of the case.[53]
The Court, however, has recognized exceptions to Section 2, Rule 19 in the interest of substantial
justice:
The rule on intervention, like all other rules of procedure, is intended to make the powers
of the Court fully and completely available for justice. It is aimed to facilitate a comprehensive
adjudication of rival claims overriding technicalities on the timeliness of the filing thereof. [54]
The oil companies assert that they have a legal interest in this case because the implementation of
Ordinance No. 8027 will directly affect their business and property rights.[55]

[T]he interest which entitles a person to intervene in a suit between other parties must be
in the matter in litigation and of such direct and immediate character that the intervenor will either
gain or lose by direct legal operation and effect of the judgment. Otherwise, if persons not parties
to the action were allowed to intervene, proceedings would become unnecessarily complicated,
expensive and interminable. And this would be against the policy of the law. The words an interest
in the subject means a direct interest in the cause of action as pleaded, one that would put the
intervenor in a legal position to litigate a fact alleged in the complaint without the establishment of
which plaintiff could not recover.[56]

We agree that the oil companies have a direct and immediate interest in the implementation of Ordinance
No. 8027. Their claim is that they will need to spend billions of pesos if they are compelled to relocate their oil
depots out of Manila. Considering that they admitted knowing about this case from the time of its filing on
December 4, 2002, they should have intervened long before our March 7, 2007 decision to protect their
interests. But they did not.[57] Neither did they offer any worthy explanation to justify their late intervention.
Be that as it may, although their motion for intervention was not filed on time, we will allow it because
they raised and presented novel issues and arguments that were not considered by the Court in its March 7, 2007
decision. After all, the allowance or disallowance of a motion to intervene is addressed to the sound discretion
of the court before which the case is pending. [58] Considering the compelling reasons favoring intervention, we
do not think that this will unduly delay or prejudice the adjudication of rights of the original parties. In fact, it
will be expedited since their intervention will enable us to rule on the constitutionality of Ordinance No. 8027
instead of waiting for the RTCs decision.
The DOE, on the other hand, alleges that its interest in this case is also direct and immediate as Ordinance
No. 8027 encroaches upon its exclusive and national authority over matters affecting the oil industry. It seeks to
intervene in order to represent the interests of the members of the public who stand to suffer if the Pandacan
Terminals operations are discontinued. We will tackle the issue of the alleged encroachment into DOEs domain later
on. Suffice it to say at this point that, for the purpose of hearing all sides and considering the transcendental
importance of this case, we will also allow DOEs intervention.

THE INJUNCTIVE WRITS ARE NOT

IMPEDIMENTS TO THE ENFORCEMENT OF
ORDINANCE NO. 8027
Under Rule 65, Section 3[59] of the Rules of Court, a petition for mandamus may be filed when any tribunal,
corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically
enjoins as a duty resulting from an office, trust or station.According to the oil companies, respondent did not
unlawfully fail or neglect to enforce Ordinance No. 8027 because he was lawfully prevented from doing so by virtue
of the injunctive writs and status quo order issued by the RTC of Manila, Branches 39 and 42.
First, we note that while Chevron and Shell still have in their favor the writs of preliminary injunction and
preliminary mandatory injunction, the status quo order in favor of Petron is no longer in effect since the court
granted the joint motion of the parties to withdraw the complaint and counterclaim.[60]
Second, the original parties failed to inform the Court about these injunctive writs. Respondent (who was
also impleaded as a party in the RTC cases) defends himself by saying that he informed the court of the pendency of
the civil cases and that a TRO was issued by the RTC in the consolidated cases filed by Chevron and Shell. It is true
that had the oil companies only intervened much earlier, the Court would not have been left in the dark about these
facts. Nevertheless, respondent should have updated the Court, by way of manifestation, on such a relevant matter.
In his memorandum, respondent mentioned the issuance of a TRO. Under Section 5 of Rule 58 of the Rules
of Court, a TRO issued by the RTC is effective only for a period of 20 days. This is why, in our March 7, 2007
decision, we presumed with certainty that this had already lapsed. [61] Respondent also mentioned the grant of
injunctive writs in his rejoinder which the Court, however, expunged for being a prohibited pleading. The parties
and their counsels were clearly remiss in their duties to this Court.
In resolving controversies, courts can only consider facts and issues pleaded by the parties. [62] Courts, as
well as magistrates presiding over them are not omniscient. They can only act on the facts and issues presented

before them in appropriate pleadings. They may not even substitute their own personal knowledge for evidence. Nor
may they take notice of matters except those expressly provided as subjects of mandatory judicial notice.
We now proceed to the issue of whether the injunctive writs are legal impediments to the enforcement of
Ordinance No. 8027.
Section 3, Rule 58 of the Rules of Court enumerates the grounds for the issuance of a writ of preliminary
injunction:
SEC. 3. Grounds for issuance of preliminary injunction. A preliminary injunction may be
granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief
consists in restraining the commission or continuance of the act or acts complained of, or in
requiring the performance of an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance or nonperformance of the act or acts complained of during
the litigation would probably work injustice to the applicant; or
(g)

IThat a party, court, agency or a person is doing, threatening, or is attempting to do, or is

procuring or suffering to be done, some act or acts probably in violation of the rights of
the applicant respecting the subject of the action or proceeding, and tending to render the
judgment ineffectual.

There are two requisites for the issuance of a preliminary injunction: (1) the right to be protected
exists prima facie and (2) the acts sought to be enjoined are violative of that right. It must be proven that the
violation sought to be prevented will cause an irreparable injustice.
The act sought to be restrained here was the enforcement of Ordinance No. 8027. It is a settled rule that an
ordinance enjoys the presumption of validity and, as such, cannot be restrained by injunction. [63] Nevertheless, when
the validity of the ordinance is assailed, the courts are not precluded from issuing an injunctive writ against its
enforcement. However, we have declared that the issuance of said writ is proper only when:
... the petitioner assailing the ordinance has made out a case of unconstitutionality strong
enough to overcome, in the mind of the judge, the presumption of validity, in addition to a
showing of a clear legal right to the remedy sought....[64] (Emphasis supplied)
Judge Reynaldo G. Ros, in his order dated May 19, 2003, stated his basis for issuing the injunctive writs:
The Court, in resolving whether or not a Writ of Preliminary Injunction or Preliminary Mandatory
Injunction should be issued, is guided by the following requirements: (1) a clear legal right of the
complainant; (2) a violation of that right; and (3) a permanent and urgent necessity for the Writ to
prevent serious damage. The Court believes that these requisites are present in these cases.
There is no doubt that the plaintiff/petitioners have been legitimately operating their business in the
Pandacan Terminal for many years and they have made substantial capital investment
therein. Every year they were issued Business Permits by the City of Manila. Its operations have
not been declared illegal or contrary to law or morals. In fact, because of its vital importance to the
national economy, it was included in the Investment Priorities Plan as mandated under the
Downstream Oil Industry Deregulation Act of 1988 (R.A. 8479). As a lawful business, the
plaintiff/petitioners have a right, therefore, to continue their operation in the Pandacan Terminal
and the right to protect their investments. This is a clear and unmistakable right of the
plaintiff/petitioners.

The enactment, therefore, of City Ordinance No. 8027 passed by the City Council of Manila
reclassifying the area where the Pandacan Terminal is located from Industrial II to Commercial I
and requiring the plaintiff/petitioners to cease and desist from the operation of their business has
certainly violated the rights of the plaintiff/petitioners to continue their legitimate business in the
Pandacan Terminal and deprived them of their huge investments they put up therein. Thus, before
the Court, therefore, determines whether the Ordinance in question is valid or not, a Writ of
Preliminary Injunction and a Writ of Mandatory Injunction be issued to prevent serious and
irreparable damage to plaintiff/petitioners.[65]
Nowhere in the judges discussion can we see that, in addition to a showing of a clear legal right of
Chevron and Shell to the remedy sought, he was convinced that they had made out a case of
unconstitutionality or invalidity strong enough to overcome the presumption of validity of the
ordinance. Statutes and ordinances are presumed valid unless and until the courts declare the contrary in clear and
unequivocal terms.[66] The mere fact that the ordinance is alleged to be unconstitutional or invalid will not entitle a
party to have its enforcement enjoined.[67] The presumption is all in favor of validity. The reason for this is obvious:
The action of the elected representatives of the people cannot be lightly set aside. The councilors
must, in the very nature of things, be familiar with the necessities of their particular municipality
and with all the facts and circumstances which surround the subject and necessitate action. The
local legislative body, by enacting the ordinance, has in effect given notice that the regulations are
essential to the well being of the people . . . The Judiciary should not lightly set aside legislative
action when there is not a clear invasion of personal or property rights under the guise of police
regulation.[68]
Xxx
...[Courts] accord the presumption of constitutionality to legislative enactments, not only because
the legislature is presumed to abide by the Constitution but also because the judiciary[,] in the
determination of actual cases and controversies[,] must reflect the wisdom and justice of the
people as expressed through their representatives in the executive and legislative departments of
the government.[69]
The oil companies argue that this presumption must be set aside when the invalidity or unreasonableness
appears on the face of the ordinance itself. [70] We see no reason to set aside the presumption. The ordinance, on its
face, does not at all appear to be unconstitutional. It reclassified the subject area from industrial to
commercial. Prima facie, this power is within the power of municipal corporations:
The power of municipal corporations to divide their territory into industrial, commercial and
residential zones is recognized in almost all jurisdictions inasmuch as it is derived from the police
power itself and is exercised for the protection and benefit of their inhabitants.[71]
Xxx
There can be no doubt that the City of Manila has the power to divide its territory into residential
and industrial zones, and to prescribe that offensive and unwholesome trades and occupations are
to be established exclusively in the latter zone.
Xxx xxx xxx
Likewise, it cannot be denied that the City of Manila has the authority, derived from the police
power, of forbidding the appellant to continue the manufacture of toyo in the zone where it is now
situated, which has been declared residential....[72]
Courts will not invalidate an ordinance unless it clearly appears that it is unconstitutional. There is no such
showing here. Therefore, the injunctive writs issued in the Manila RTCs May 19, 2003 order had no leg to stand on.

We are aware that the issuance of these injunctive writs is not being assailed as tainted with grave abuse of
discretion. However, we are confronted with the question of whether these writs issued by a lower court are
impediments to the enforcement of Ordinance No. 8027 (which is the subject of the mandamus petition). As already
discussed, we rule in the negative.

ORDINANCE NO. 8027 WAS NOT SUPERSEDED BY

ORDINANCE NO. 8119
The March 7, 2007 decision did not take into consideration the passage of Ordinance No. 8119 entitled An
Ordinance Adopting the Manila Comprehensive Land Use Plan and Zoning Regulations of 2006 and Providing for
the Administration, Enforcement and Amendment thereto which was approved by respondent on June 16, 2006. The
simple reason was that the Court was never informed about this ordinance.
While courts are required to take judicial notice of the laws enacted by Congress, the rule with respect to local
ordinances is different. Ordinances are not included in the enumeration of matters covered by mandatory judicial
notice under Section 1, Rule 129 of the Rules of Court.[73]
Although, Section 50 of RA 409[74] provides that:
SEC. 50 Judicial notice of ordinances. - All courts sitting in the city shall take judicial notice of
the ordinances passed by the [Sangguniang Panglungsod].
This cannot be taken to mean that this Court, since it has its seat in the City of Manila, should have taken steps to
procure a copy of the ordinance on its own, relieving the party of any duty to inform the Court about it.
Even where there is a statute that requires a court to take judicial notice of municipal ordinances, a court is
not required to take judicial notice of ordinances that are not before it and to which it does not have access. The
party asking the court to take judicial notice is obligated to supply the court with the full text of the rules the party
desires it to have notice of. [75] Counsel should take the initiative in requesting that a trial court take judicial notice of
an ordinance even where a statute requires courts to take judicial notice of local ordinances. [76]
The intent of a statute requiring a court to take judicial notice of a local ordinance is to remove any discretion a court
might have in determining whether or not to take notice of an ordinance. Such a statute does not direct the court to
act on its own in obtaining evidence for the record and a party must make the ordinance available to the court for it
to take notice.[77]
In its defense, respondent claimed that he did not inform the Court about the enactment of Ordinance No. 8119
because he believed that it was different from Ordinance No. 8027 and that the two were not inconsistent with each
other.[78]
In the same way that we deem the intervenors late intervention in this case unjustified, we find the failure of
respondent, who was an original party here, inexcusable.

THE RULE ON JUDICIAL ADMISSIONS IS NOT

APPLICABLE AGAINST RESPONDENT
The oil companies assert that respondent judicially admitted that Ordinance No. 8027 was repealed by Ordinance
No. 8119 in civil case no. 03-106379 (where Petron assailed the constitutionality of Ordinance No. 8027) when the
parties in their joint motion to withdraw complaint and counterclaim stated that the issue ...has been rendered moot
and academic by virtue of the passage of [Ordinance No. 8119]. [79] They contend that such admission worked as an
estoppel against the respondent.

Respondent countered that this stipulation simply meant that Petron was recognizing the validity and legality of
Ordinance No. 8027 and that it had conceded the issue of said ordinances constitutionality, opting instead to
question the validity of Ordinance No. 8119.[80] The oil companies deny this and further argue that respondent, in his
answer in civil case no. 06-115334 (where Chevron and Shell are asking for the nullification of Ordinance No.
8119), expressly stated that Ordinance No. 8119 replaced Ordinance No. 8027:[81]
... Under Ordinance No. 8027, businesses whose uses are not in accord with the reclassification
were given six months to cease [their] operation. Ordinance No. 8119, which in effect, replaced
Ordinance [No.] 8027, merely took note of the time frame provided for in Ordinance No. 8119....
Ordinance No. 8119 thus provided for an even longer term, that is[,] seven years; [82] (Emphasis
supplied)
Rule 129, Section 4 of the Rules of Court provides:
Section 4. Judicial admissions. 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. (Emphasis supplied)
While it is true that a party making a judicial admission cannot subsequently take a position contrary to or
inconsistent with what was pleaded, [83] the aforestated rule is not applicable here. Respondent made the statements
regarding the ordinances in civil case nos. 03-106379 and 06-115334 which are not the same as this case before us.
[84]
To constitute a judicial admission, the admission must be made in the same case in which it is offered.
Hence, respondent is not estopped from claiming that Ordinance No. 8119 did not supersede Ordinance No.
8027. On the contrary, it is the oil companies which should be considered estopped. They rely on the argument that
Ordinance No. 8119 superseded Ordinance No. 8027 but, at the same time, also impugn its (8119s) validity. We
frown on the adoption of inconsistent positions and distrust any attempt at clever positioning under one or the other
on the basis of what appears advantageous at the moment. Parties cannot take vacillating or contrary positions
regarding the validity of a statute[85] or ordinance. Nonetheless, we will look into the merits of the argument of
implied repeal.
ORDINANCE NO. 8119 DID NOT IMPLIEDLY
REPEAL ORDINANCE NO. 8027
Both the oil companies and DOE argue that Ordinance No. 8119 repealed Ordinance No. 8027. They assert that
although there was no express repeal[86] of Ordinance No. 8027, Ordinance No. 8119 impliedly repealed it.
According to the oil companies, Ordinance No. 8119 reclassified the area covering the Pandacan Terminals to High
Density Residential/Mixed Use Zone (R-3/MXD) [87] whereas Ordinance No. 8027 reclassified the same area from
Industrial II to Commercial I:

SECTION 1. For the purpose of promoting sound urban planning and ensuring health, public
safety, and general welfare of the residents of Pandacan and Sta. Ana as well as its adjoining areas,
the land use of [those] portions of land bounded by the Pasig River in the north, PNR Railroad
Track in the east, Beata St. in the south, Palumpong St. in the southwest, and Estero de Pancacan
in the west[,] PNR Railroad in the northwest area, Estero de Pandacan in the [n]ortheast, Pasig
River in the southeast and Dr. M.L. Carreon in the southwest. The area of Punta, Sta. Ana bounded
by the Pasig River, Marcelino Obrero St., Mayo 28 St., and F. Manalo Street, are
hereby reclassified from Industrial II to Commercial I. (Emphasis supplied)

Moreover, Ordinance No. 8119 provides for a phase-out of seven years:

SEC. 72. Existing Non-Conforming Uses and Buildings. - The lawful use of any building,
structure or land at the time of the adoption of this Ordinance may be continued, although such use
does not conform with the provision of the Ordinance, provided:
xxx xxx xxx
(g)

In case the non-conforming use is an industrial use:

xxx xxx xxx
d.

The land use classified as non-conforming shall program the phase-out and
relocation of the non-conforming use within seven (7) years from the date of
effectivity of this Ordinance. (Emphasis supplied)

This is opposed to Ordinance No. 8027 which compels affected entities to vacate the area within six months from
the effectivity of the ordinance:
SEC. 3. Owners or operators of industries and other businesses, the operation of which are no
longer permitted under Section 1 hereof, are hereby given a period of six (6) months from the date
of effectivity of this Ordinance within which to cease and desist from the operation of businesses
which are hereby in consequence, disallowed.
Ordinance No. 8119 also designated the Pandacan oil depot area as a Planned Unit Development/Overlay
Zone (O-PUD):
SEC. 23. Use Regulations in Planned Unit Development/Overlay Zone (O-PUD). O-PUD Zones
are identified specific sites in the City of Manila wherein the project site is comprehensively
planned as an entity via unitary site plan which permits flexibility in planning/ design, building
siting, complementarily of building types and land uses, usable open spaces and the preservation
of significant natural land features, pursuant to regulations specified for each particular
PUD. Enumerated below are identified PUD:
xxx xxx xxx
6.

Pandacan Oil Depot Area

xxx xxx xxx

Enumerated below are the allowable uses:

1.
all uses allowed in all zones where it is located
2.
the [Land Use Intensity Control (LUIC)] under which zones are located shall, in all
instances be complied with
3.
the validity of the prescribed LUIC shall only be [superseded] by the development
controls and regulations specified for each PUD as provided for each PUD as provided
for by the masterplan of respective PUDs.[88] (Emphasis supplied)
Respondent claims that in passing Ordinance No. 8119, the Sanggunian did not intend to repeal Ordinance
No. 8027 but meant instead to carry over 8027s provisions to 8119 for the purpose of making Ordinance No. 8027
applicable to the oil companies even after the passage of Ordinance No. 8119. [89] He quotes an excerpt from the
minutes of the July 27, 2004 session of the Sanggunian during the first reading of Ordinance No. 8119:
Member GARCIA: Your Honor, iyong patungkol po roon sa oil depot doon sa amin sa Sixth
District sa Pandacan, wala pong nakalagay eith sa ordinansa rito na taliwas o kakaiba roon sa
ordinansang ipinasa noong nakaraang Konseho, iyong Ordinance No. 8027. So kung ano po ang
nandirito sa ordinansa na ipinasa ninyo last time, iyon lang po ang ni-lift eithe at inilagay eith. At

eith eith ordinansang iyong naipasa ng huling Konseho, niri-classify [ninyo] from Industrial II to
Commercial C-1 ang area ng Pandacan kung nasaan ang oil depot. So ini-lift lang po [eithe]
iyong definition, density, at saka po yon pong ng noong ordinansa ninyo na siya eith naming
inilagay eith, iniba lang po naming iyong title. So wala po kaming binago na taliwas o nailagay
na taliwas doon sa ordinansang ipinasa ninyo, ni-lift lang po [eithe] from Ordinance No.
8027.[90] (Emphasis supplied)
We agree with respondent.
Repeal by implication proceeds on the premise that where a statute of later date clearly reveals the intention
of the legislature to abrogate a prior act on the subject, that intention must be given effect.[91]
There are two kinds of implied repeal. The first is: where the provisions in the two acts on the same subject
matter are irreconcilably contradictory, the latter act, to the extent of the conflict, constitutes an implied repeal of the
earlier one.[92] The second is: if the later act covers the whole subject of the earlier one and is clearly intended as a
substitute, it will operate to repeal the earlier law.[93] The oil companies argue that the situation here falls under the
first category.
Implied repeals are not favored and will not be so declared unless the intent of the legislators is manifest.
As statutes and ordinances are presumed to be passed only after careful deliberation and with knowledge of all
existing ones on the subject, it follows that, in passing a law, the legislature did not intend to interfere with or
abrogate a former law relating to the same subject matter.[95] If the intent to repeal is not clear, the later act should be
construed as a continuation of, and not a substitute for, the earlier act. [96]
[94]

These standards are deeply enshrined in our jurisprudence. We disagree that, in enacting Ordinance No.
8119, there was any indication of the legislative purpose to repeal Ordinance No. 8027. [97] The excerpt quoted above
is proof that there was never such an intent. While it is true that both ordinances relate to the same subject
matter, i.e. classification of the land use of the area where Pandacan oil depot is located, if there is no intent to repeal
the earlier enactment, every effort at reasonable construction must be made to reconcile the ordinances so that both
can be given effect:
The fact that a later enactment may relate to the same subject matter as that of an earlier
statute is not of itself sufficient to cause an implied repeal of the prior act, since the new statute
may merely be cumulative or a continuation of the old one. What is necessary is a manifest
indication of legislative purpose to repeal.[98]
For the first kind of implied repeal, there must be an irreconcilable conflict between the two ordinances.
There is no conflict between the two ordinances. Ordinance No. 8027 reclassified the Pandacan area from Industrial
II to Commercial I. Ordinance No. 8119, in Section 23, designated it as a Planned Unit Development/Overlay Zone
(O-PUD). In its Annex C which defined the zone boundaries, [99] the Pandacan area was shown to be within the High
Density Residential/Mixed Use Zone (R-3/MXD). These zone classifications in Ordinance No. 8119 are not
inconsistent with the reclassification of the Pandacan area from Industrial to Commercial in Ordinance No. 8027.
The O-PUD classification merely made Pandacan a project site ... comprehensively planned as an entity via unitary
site plan which permits flexibility in planning/design, building siting, complementarity of building types and land
uses, usable open spaces and the preservation of significant natural land features.... [100] Its classification as R-3/MXD
means that it should be used primarily for high-rise housing/dwelling purposes and limited
complementary/supplementary trade, services and business activities. [101] There is no conflict since both ordinances
actually have a common objective, i.e., to shift the zoning classification from industrial to commercial (Ordinance
No. 8027) or mixed residential/commercial (Ordinance No. 8119).
Moreover, it is a well-settled rule in statutory construction that a subsequent general law does not repeal a
prior special law on the same subject unless it clearly appears that the legislature has intended by the latter general
act to modify or repeal the earlier special law. Generalia specialibus non derogant (a general law does not nullify a
specific or special law).[102] This is so even if the provisions of the general law are sufficiently comprehensive to
include what was set forth in the special act. [103] The special act and the general law must stand together, one as the

law of the particular subject and the other as the law of general application. [104] The special law must be taken as
intended to constitute an exception to, or a qualification of, the general act or provision.[105]
The reason for this is that the legislature, in passing a law of special character, considers and
makes special provisions for the particular circumstances dealt with by the special law. This being
so, the legislature, by adopting a general law containing provisions repugnant to those of the
special law and without making any mention of its intention to amend or modify such special law,
cannot be deemed to have intended an amendment, repeal or modification of the latter.[106]
Ordinance No. 8027 is a special law [107] since it deals specifically with a certain area described therein (the
Pandacan oil depot area) whereas Ordinance No. 8119 can be considered a general law [108] as it covers the entire city
of Manila.
The oil companies assert that even if Ordinance No. 8027 is a special law, the existence of an allencompassing repealing clause in Ordinance No. 8119 evinces an intent on the part of the Sanggunian to repeal the
earlier ordinance:
Sec. 84. Repealing Clause. All ordinances, rules, regulations in conflict with the provisions of this
Ordinance are hereby repealed; PROVIDED, That the rights that are vested upon the effectivity of
this Ordinance shall not be impaired.
They cited Hospicio de San Jose de Barili, Cebu City v. Department of Agrarian Reform:[109]
The presence of such general repealing clause in a later statute clearly indicates the legislative
intent to repeal all prior inconsistent laws on the subject matter, whether the prior law is a general
law or a special law... Without such a clause, a later general law will ordinarily not repeal a prior
special law on the same subject. But with such clause contained in the subsequent general law, the
prior special law will be deemed repealed, as the clause is a clear legislative intent to bring about
that result.[110]
This ruling in not applicable here. The repealing clause of Ordinance No. 8119 cannot be taken to indicate
the legislative intent to repeal all prior inconsistent laws on the subject matter, including Ordinance No. 8027, a
special enactment, since the aforequoted minutes (an official record of the discussions in the Sanggunian) actually
indicated the clear intent to preserve the provisions of Ordinance No. 8027.
To summarize, the conflict between the two ordinances is more apparent than real. The two ordinances can be
reconciled. Ordinance No. 8027 is applicable to the area particularly described therein whereas Ordinance No. 8119
is applicable to the entire City of Manila.
MANDAMUS LIES TO COMPEL RESPONDENT MAYOR TO
ENFORCE ORDINANCE NO. 8027
The oil companies insist that mandamus does not lie against respondent in consideration of the separation of
powers of the executive and judiciary.[111] This argument is misplaced. Indeed,
[the] Courts will not interfere by mandamus proceedings with the legislative [or executive
departments] of the government in the legitimate exercise of its powers, except to enforce mere
ministerial acts required by law to be performed by some officer thereof. [112] (Emphasis
Supplied)
since this is the function of a writ of mandamus, which is the power to compel the performance of an act which
the law specifically enjoins as a duty resulting from office, trust or station. [113]

They also argue that petitioners had a plain, speedy and adequate remedy to compel respondent to enforce
Ordinance No. 8027 which was to seek relief from the President of the Philippines through the Secretary of the
Department of Interior and Local Government (DILG) by virtue of the Presidents power of supervision over
local government units. Again, we disagree. A party need not go first to the DILG in order to compel the
enforcement of an ordinance. This suggested process would be unreasonably long, tedious and consequently
injurious to the interests of the local government unit (LGU) and its constituents whose welfare is sought to be
protected. Besides, petitioners resort to an original action for mandamus before this Court is undeniably allowed
by the Constitution.[114]

ORDINANCE
NO.
8027
CONSTITUTIONAL AND VALID

IS

Having ruled that there is no impediment to the enforcement of Ordinance No. 8027, we now proceed to make a
definitive ruling on its constitutionality and validity.
The tests of a valid ordinance are well established. For an ordinance to be valid, it must not only be within the
corporate powers of the LGU to enact and be passed according to the procedure prescribed by law, it must also
conform to the following substantive requirements: (1) must not contravene the Constitution or any statute; (2)
must not be unfair or oppressive; (3) must not be partial or discriminatory; (4) must not prohibit but may
regulate trade; (5) must be general and consistent with public policy and (6) must not be unreasonable. [115]
THE CITY OF MANILA HAS THE POWER TO
ENACT ORDINANCE NO. 8027

Ordinance No. 8027 was passed by the Sangguniang Panlungsod of Manila in the exercise of its police
power. Police power is the plenary power vested in the legislature to make statutes and ordinances to promote
the health, morals, peace, education, good order or safety and general welfare of the people. [116] This power
flows from the recognition that salus populi est suprema lex (the welfare of the people is the supreme law).
[117]
While police power rests primarily with the national legislature, such power may be delegated. [118] Section
16 of the LGC, known as the general welfare clause, encapsulates the delegated police power to local
governments:[119]
Section 16. General Welfare. Every local government unit shall exercise the powers expressly
granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or
incidental for its efficient and effective governance, and those which are essential to the promotion
of the general welfare. Within their respective territorial jurisdictions, local government units shall
ensure and support, among other things, the preservation and enrichment of culture, promote
health and safety, enhance the right of the people to a balanced ecology, encourage and support the
development of appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full employment among
their residents, maintain peace and order, and preserve the comfort and convenience of their
inhabitants.

LGUs like the City of Manila exercise police power through their respective legislative bodies, in this case,
the Sangguniang Panlungsod or the city council. Specifically, the Sanggunian can enact ordinances for the general
welfare of the city:

Section. 458. Powers, Duties, Functions and Compensation. (a) The sangguniang panglungsod, as
the legislative branch of the city, shall enact ordinances, approve resolutions and appropriate funds
for the general welfare of the city and its inhabitants pursuant to Section 16 of this Code xxxx

This police power was also provided for in RA 409 or the Revised Charter of the City of Manila:

Section 18. Legislative powers. The [City Council] shall have the following legislative powers:
xxx xxx xxx
(g)

To enact all ordinances it may deem necessary and proper for the sanitation and safety,
the furtherance of the prosperity, and the promotion of the morality, peace, good order,
comfort, convenience, and general welfare of the city and its inhabitants, and such others
as may be necessary to carry into effect and discharge the powers and duties conferred by
this chapter xxxx[120]

Specifically, the Sanggunian has the power to reclassify land within the jurisdiction of the city.[121]

THE ENACTMENT OF ORDINANCE NO. 8027 IS A

LEGITIMATE EXERCISE OF POLICE POWER
As with the State, local governments may be considered as having properly exercised their police power
only if the following requisites are met: (1) the interests of the public generally, as distinguished from those of a
particular class, require its exercise and (2) the means employed are reasonably necessary for the accomplishment of
the purpose and not unduly oppressive upon individuals. In short, there must be a concurrence of a lawful subject
and a lawful method.[122]
Ordinance No. 8027 was enacted for the purpose of promoting sound urban planning, ensuring health,
public safety and general welfare [123] of the residents of Manila. The Sanggunian was impelled to take measures to
protect the residents of Manila from catastrophic devastation in case of a terrorist attack on the Pandacan
Terminals. Towards this objective, the Sanggunian reclassified the area defined in the ordinance from industrial to
commercial.
The following facts were found by the Committee on Housing, Resettlement and Urban Development of the City of
Manila which recommended the approval of the ordinance:
(1) the depot facilities contained 313.5 million liters of highly flammable and highly volatile products
which include petroleum gas, liquefied petroleum gas, aviation fuel, diesel, gasoline, kerosene and
fuel oil among others;
(2) the depot is open to attack through land, water or air;
(3) it is situated in a densely populated place and near Malacaang Palace and
(4) in case of an explosion or conflagration in the depot, the fire could spread to the neighboring
communities.[124]

The ordinance was intended to safeguard the rights to life, security and safety of all the inhabitants of Manila and
not just of a particular class.[125] The depot is perceived, rightly or wrongly, as a representation of western interests
which means that it is a terrorist target. As long as it there is such a target in their midst, the residents of Manila are
not safe. It therefore became necessary to remove these terminals to dissipate the threat. According to respondent:

Such a public need became apparent after the 9/11 incident which showed that what was perceived
to be impossible to happen, to the most powerful country in the world at that, is actually
possible. The destruction of property and the loss of thousands of lives on that fateful day became
the impetus for a public need. In the aftermath of the 9/11 tragedy, the threats of terrorism
continued [such] that it became imperative for governments to take measures to combat their
effects.[126]
Wide discretion is vested on the legislative authority to determine not only what the interests of the public
require but also what measures are necessary for the protection of such interests. [127] Clearly, the Sanggunian was in
the best position to determine the needs of its constituents.
In the exercise of police power, property rights of individuals may be subjected to restraints and burdens in
order to fulfill the objectives of the government. [128] Otherwise stated, the government may enact legislation that may
interfere with personal liberty, property, lawful businesses and occupations to promote the general welfare.
[129]
However, the interference must be reasonable and not arbitrary. And to forestall arbitrariness, the methods or
means used to protect public health, morals, safety or welfare must have a reasonable relation to the end in view.[130]
The means adopted by the Sanggunian was the enactment of a zoning ordinance which reclassified the area
where the depot is situated from industrial to commercial. A zoning ordinance is defined as a local city or municipal
legislation which logically arranges, prescribes, defines and apportions a given political subdivision into specific
land uses as present and future projection of needs. [131] As a result of the zoning, the continued operation of the
businesses of the oil companies in their present location will no longer be permitted. The power to establish zones
for industrial, commercial and residential uses is derived from the police power itself and is exercised for the
protection and benefit of the residents of a locality.[132] Consequently, the enactment of Ordinance No. 8027 is within
the power of the Sangguniang Panlungsod of the City of Manila and any resulting burden on those affected cannot
be said to be unjust:
There can be no doubt that the City of Manila has the power to divide its territory into residential
and industrial zones, and to prescribe that offensive and unwholesome trades and occupations are
to be established exclusively in the latter zone.
The benefits to be derived by cities adopting such regulations (zoning) may be summarized as
follows: They attract a desirable and assure a permanent citizenship; they foster pride in and
attachment to the city; they promote happiness and contentment; they stabilize the use and value
of property and promote the peace, [tranquility], and good order of the city. We do not hesitate to
say that the attainment of these objects affords a legitimate field for the exercise of the police
power. He who owns property in such a district is not deprived of its use by such regulations. He
may use it for the purposes to which the section in which it is located is dedicated. That he shall
not be permitted to use it to the desecration of the community constitutes no unreasonable or
permanent hardship and results in no unjust burden.
Xxx xxx xxx
The 14th Amendment protects the citizen in his right to engage in any lawful business, but it does
not prevent legislation intended to regulate useful occupations which, because of their nature or
location, may prove injurious or offensive to the public.[133]
We entertain no doubt that Ordinance No. 8027 is a valid police power measure because there is a concurrence of
lawful subject and lawful method.

ORDINANCE NO. 8027 IS NOT UNFAIR, OPPRESSIVE OR

CONFISCATORY WHICH AMOUNTS TO TAKING WITHOUT
COMPENSATION
According to the oil companies, Ordinance No. 8027 is unfair and oppressive as it does not only regulate but also
absolutely prohibits them from conducting operations in the City of Manila. Respondent counters that this is not
accurate since the ordinance merely prohibits the oil companies from operating their businesses in the Pandacan
area.
Indeed, the ordinance expressly delineated in its title and in Section 1 what it pertained to. Therefore, the oil
companies contention is not supported by the text of the ordinance. Respondent succinctly stated that:
The oil companies are not forbidden to do business in the City of Manila. They may still very well
do so, except that their oil storage facilities are no longer allowed in the Pandacan area. Certainly,
there are other places in the City of Manila where they can conduct this specific kind of
business. Ordinance No. 8027 did not render the oil companies illegal. The assailed ordinance
affects the oil companies business only in so far as the Pandacan area is concerned.[134]
The oil companies are not prohibited from doing business in other appropriate zones in Manila. The City of Manila
merely exercised its power to regulate the businesses and industries in the zones it established:
As to the contention that the power to regulate does not include the power to prohibit, it will be
seen that the ordinance copied above does not prohibit the installation of motor engines within the
municipality of Cabanatuan but only within the zone therein fixed. If the municipal council of
Cabanatuan is authorized to establish said zone, it is also authorized to provide what kind of
engines may be installed therein. In banning the installation in said zone of all engines not
excepted in the ordinance, the municipal council of Cabanatuan did no more than regulate their
installation by means of zonification.[135]
The oil companies aver that the ordinance is unfair and oppressive because they have invested billions of pesos in
the depot.[136] Its forced closure will result in huge losses in income and tremendous costs in constructing new
facilities.
Their contention has no merit. In the exercise of police power, there is a limitation on or restriction of property
interests to promote public welfare which involves no compensable taking. Compensation is necessary only when
the states power of eminent domain is exercised. In eminent domain, property is appropriated and applied to some
public purpose. Property condemned under the exercise of police power, on the other hand, is noxious or intended
for a noxious or forbidden purpose and, consequently, is not compensable. [137] The restriction imposed to protect
lives, public health and safety from danger is not a taking. It is merely the prohibition or abatement of a noxious use
which interferes with paramount rights of the public.
Property has not only an individual function, insofar as it has to provide for the needs of the owner, but also a social
function insofar as it has to provide for the needs of the other members of society.[138] The principle is this:
Police power proceeds from the principle that every holder of property, however absolute and
unqualified may be his title, holds it under the implied liability that his use of it shall not be
injurious to the equal enjoyment of others having an equal right to the enjoyment of their property,
nor injurious to the right of the community. Rights of property, like all other social and
conventional rights, are subject to reasonable limitations in their enjoyment as shall prevent them
from being injurious, and to such reasonable restraints and regulations established by law as the
legislature, under the governing and controlling power vested in them by the constitution, may
think necessary and expedient.[139]

In the regulation of the use of the property, nobody else acquires the use or interest therein, hence there is no
compensable taking.[140] In this case, the properties of the oil companies and other businesses situated in the affected
area remain theirs. Only their use is restricted although they can be applied to other profitable uses permitted in the
commercial zone.
ORDINANCE NO. 8027 IS NOT
PARTIAL AND DISCRIMINATORY
The oil companies take the position that the ordinance has discriminated against and singled out the Pandacan
Terminals despite the fact that the Pandacan area is congested with buildings and residences that do not comply with
the National Building Code, Fire Code and Health and Sanitation Code.[141]
This issue should not detain us for long. An ordinance based on reasonable classification does not violate the
constitutional guaranty of the equal protection of the law.[142] The requirements for a valid and reasonable
classification are: (1) it must rest on substantial distinctions; (2) it must be germane to the purpose of the law; (3) it
must not be limited to existing conditions only and (4) it must apply equally to all members of the same class. [143]
The law may treat and regulate one class differently from another class provided there are real and substantial
differences to distinguish one class from another.[144] Here, there is a reasonable classification. We reiterate that what
the ordinance seeks to prevent is a catastrophic devastation that will result from a terrorist attack. Unlike the depot,
the surrounding community is not a high-value terrorist target. Any damage caused by fire or explosion occurring in
those areas would be nothing compared to the damage caused by a fire or explosion in the depot itself. Accordingly,
there is a substantial distinction. The enactment of the ordinance which provides for the cessation of the operations
of these terminals removes the threat they pose. Therefore it is germane to the purpose of the ordinance. The
classification is not limited to the conditions existing when the ordinance was enacted but to future conditions as
well. Finally, the ordinance is applicable to all businesses and industries in the area it delineated.
ORDINANCE NO. 8027 IS NOT INCONSISTENT WITH
RA 7638 AND RA 8479
The oil companies and the DOE assert that Ordinance No. 8027 is unconstitutional because it contravenes
RA 7638 (DOE Act of 1992)[145]and RA 8479 (Downstream Oil Industry Deregulation Law of 1998). [146] They argue
that through RA 7638, the national legislature declared it a policy of the state to ensure a continuous, adequate, and
economic supply of energy[147] and created the DOE to implement this policy. Thus, under Section 5 I, DOE is
empowered to establish and administer programs for the exploration, transportation, marketing, distribution,
utilization, conservation, stockpiling, and storage of energy resources. Considering that the petroleum products
contained in the Pandacan Terminals are major and critical energy resources, they conclude that their administration,
storage, distribution and transport are of national interest and fall under DOEs primary and exclusive jurisdiction. [148]
They further assert that the terminals are necessary for the delivery of immediate and adequate supply of oil to its
recipients in the most economical way.[149] Local legislation such as Ordinance No. 8027 (which effectively calls for
the removal of these terminals) allegedly frustrates the state policy of ensuring a continuous, adequate, and
economic supply of energy expressed in RA 7638, a national law.[150] Likewise, the ordinance thwarts the
determination of the DOE that the terminals operations should be merely scaled down and not discontinued. [151] They
insist that this should not be allowed considering that it has a nationwide economic impact and affects public interest
transcending the territorial jurisdiction of the City of Manila.[152]
According to them, the DOEs supervision over the oil industry under RA 7638 was subsequently underscored by RA
8479, particularly in Section 7 thereof:
SECTION 7. Promotion of Fair Trade Practices. The Department of Trade and Industry (DTI)
and DOE shall take all measures to promote fair trade and prevent cartelization, monopolies,
combinations in restraint of trade, and any unfair competition in the Industry as defined in Article

186 of the Revised Penal Code, and Articles 168 and 169 of Republic Act No. 8293, otherwise
known as the Intellectual Property Rights Law. The DOE shall continue to encourage certain
practices in the Industry which serve the public interest and are intended to achieve efficiency
and cost reduction, ensure continuous supply of petroleum products, and enhance
environmental protection. These practices may include borrow-and-loan agreements, rationalized
depot and manufacturing operations, hospitality agreements, joint tanker and pipeline utilization,
and joint actions on oil spill control and fire prevention. (Emphasis supplied)
Respondent counters that DOEs regulatory power does not preclude LGUs from exercising their police power.[153]
Indeed, ordinances should not contravene existing statutes enacted by Congress. The rationale for this was clearly
explained in Magtajas vs. Pryce Properties Corp., Inc.:[154]
The rationale of the requirement that the ordinances should not contravene a statute is obvious.
Municipal governments are only agents of the national government. Local councils exercise only
delegated legislative powers conferred on them by Congress as the national lawmaking body. The
delegate cannot be superior to the principal or exercise powers higher than those of the latter. It is a
heresy to suggest that the local government units can undo the acts of Congress, from which they
have derived their power in the first place, and negate by mere ordinance the mandate of the statute.
Municipal corporations owe their origin to, and derive their powers and rights wholly from the
legislature. It breathes into them the breath of life, without which they cannot exist. As it creates, so
it may destroy. As it may destroy, it may abridge and control. Unless there is some constitutional
limitation on the right, the legislature might, by a single act, and if we can suppose it capable of so
great a folly and so great a wrong, sweep from existence all of the municipal corporations in the
State, and the corporation could not prevent it. We know of no limitation on the right so far as to the
corporation themselves are concerned. They are, so to phrase it, the mere tenants at will of the
legislature.
This basic relationship between the national legislature and the local government units has not been
enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy.
Without meaning to detract from that policy, we here confirm that Congress retains control of the
local government units although in significantly reduced degree now than under our previous
Constitutions. The power to create still includes the power to destroy. The power to grant still
includes the power to withhold or recall. True, there are certain notable innovations in the
Constitution, like the direct conferment on the local government units of the power to tax, which
cannot now be withdrawn by mere statute. By and large, however, the national legislature is still the
principal of the local government units, which cannot defy its will or modify or violate it. [155]
The question now is whether Ordinance No. 8027 contravenes RA 7638 and RA 8479. It does not.
Under Section 5 I of RA 7638, DOE was given the power to establish and administer programs for the exploration,
transportation, marketing, distribution, utilization, conservation, stockpiling, and storage of energy resources. On the
other hand, under Section 7 of RA 8749, the DOE shall continue to encourage certain practices in the Industry which
serve the public interest and are intended to achieve efficiency and cost reduction, ensure continuous supply of
petroleum products. Nothing in these statutes prohibits the City of Manila from enacting ordinances in the exercise
of its police power.
The principle of local autonomy is enshrined in and zealously protected under the Constitution. In Article II, Section
25 thereof, the people expressly adopted the following policy:

Section 25. The State shall ensure the autonomy of local governments.

An entire article (Article X) of the Constitution has been devoted to guaranteeing and promoting the autonomy of
LGUs. The LGC was specially promulgated by Congress to ensure the autonomy of local governments as mandated
by the Constitution:
Sec. 2. Declaration of Policy. (a) It is hereby declared the policy of the State that the
territorial and political subdivisions of the State shall enjoy genuine and meaningful local
autonomy to enable them to attain their fullest development as self-reliant communities and
make them more effective partners in the attainment of national goals. Toward this end, the
State shall provide for a more responsive and accountable local government structure instituted
through a system of decentralization whereby local government units shall be given more powers,
authority, responsibilities, and resources. The process of decentralization shall proceed from the
National Government to the local government units. (Emphasis supplied)
We do not see how the laws relied upon by the oil companies and DOE stripped the City of Manila of its power to
enact ordinances in the exercise of its police power and to reclassify the land uses within its jurisdiction. To guide
us, we shall make a brief survey of our decisions where the police power measure of the LGU clashed with national
laws.
In Tan v. Perea,[156] the Court ruled that Ordinance No. 7 enacted by the municipality of Daanbantayan, Cebu
allowing the operation of three cockpits was invalid for violating PD 449 (or the Cockfighting Law of 1974) which
permitted only one cockpit per municipality.
In Batangas CATV, Inc. v. Court of Appeals,[157] the Sangguniang Panlungsod of Batangas City enacted Resolution
No. 210 granting Batangas CATV, Inc. a permit to operate a cable television (CATV) system in Batangas City. The
Court held that the LGU did not have the authority to grant franchises to operate a CATV system because it was the
National Telecommunications Commission (NTC) that had the power under EO Nos. 205 and 436 to regulate CATV
operations. EO 205 mandated the NTC to grant certificates of authority to CATV operators while EO 436 vested on
the NTC the power to regulate and supervise the CATV industry.
In Lina, Jr. v. Pao,[158] we held that Kapasiyahan Bilang 508, Taon 1995 of the Sangguniang Panlalawigan of
Laguna could not be used as justification to prohibit lotto in the municipality of San Pedro, Laguna because lotto
was duly authorized by RA 1169, as amended by BP 42. This law granted a franchise to the Philippine Charity
Sweepstakes Office and allowed it to operate lotteries.
In Magtajas v. Pryce Properties Corp., Inc.,[159] the Sangguniang Panlungsod of Cagayan de Oro City passed
Ordinance Nos. 3353 and 3375-93 prohibiting the operation of casinos in the city. We ruled that these ordinances
were void for contravening PD 1869 or the charter of the Philippine Amusements and Gaming Corporation which
had the power to operate casinos.
The common dominator of all of these cases is that the national laws were clearly and expressly in conflict with the
ordinances/resolutions of the LGUs. The inconsistencies were so patent that there was no room for doubt. This is not
the case here.
The laws cited merely gave DOE general powers to establish and administer programs for the exploration,
transportation, marketing, distribution, utilization, conservation, stockpiling, and storage of energy resources and to
encourage certain practices in the [oil] industry which serve the public interest and are intended to achieve efficiency
and cost reduction, ensure continuous supply of petroleum products. These powers can be exercised without
emasculating the LGUs of the powers granted them. When these ambiguous powers are pitted against the
unequivocal power of the LGU to enact police power and zoning ordinances for the general welfare of its
constituents, it is not difficult to rule in favor of the latter. Considering that the powers of the DOE regarding the
Pandacan Terminals are not categorical, the doubt must be resolved in favor of the City of Manila:
SECTION 5. Rules of Interpretation. In the interpretation of the provisions of this Code, the
following rules shall apply:

(a) Any provision on a power of a local government unit shall be liberally interpreted in its favor,
and in case of doubt, any question thereon shall be resolved in favor of devolution of powers and
of the lower local government unit. Any fair and reasonable doubt as to the existence of the power
shall be interpreted in favor of the local government unit concerned;
xxx xxx xxx
(g) IThe general welfare provisions in this Code shall be liberally interpreted to give more
powers to local government units in accelerating economic development and upgrading the
quality of life for the people in the community xxxx
The least we can do to ensure genuine and meaningful local autonomy is not to force an interpretation that negates
powers explicitly granted to local governments. To rule against the power of LGUs to reclassify areas within their
jurisdiction will subvert the principle of local autonomy guaranteed by the Constitution. [160] As we have noted in
earlier decisions, our national officials should not only comply with the constitutional provisions on local autonomy
but should also appreciate the spirit and liberty upon which these provisions are based.[161]

THE DOE CANNOT EXERCISE THE POWER OF

CONTROL OVER LGUS
Another reason that militates against the DOEs assertions is that Section 4 of Article X of the Constitution confines
the Presidents power over LGUs to one of general supervision:
SECTION 4. The President of the Philippines shall exercise general supervision over local
governments. Xxxx
Consequently, the Chief Executive or his or her alter egos, cannot exercise the power of control over them.
[162]
Control and supervision are distinguished as follows:
[Supervision] means overseeing or the power or authority of an officer to see that subordinate
officers perform their duties. If the latter fail or neglect to fulfill them, the former may take such
action or step as prescribed by law to make them perform their duties. Control, on the other hand,
means the power of an officer to alter or modify or nullify or set aside what a subordinate officer
ha[s] done in the performance of his duties and to substitute the judgment of the former for that of
the latter.[163]
Supervisory power, when contrasted with control, is the power of mere oversight over an inferior body; it does not
include any restraining authority over such body.[164] It does not allow the supervisor to annul the acts of the
subordinate.[165] Here, what the DOE seeks to do is to set aside an ordinance enacted by local officials, a power that
not even its principal, the President, has. This is because:
Under our present system of government, executive power is vested in the President. The members
of the Cabinet and other executive officials are merely alter egos. As such, they are subject to the
power of control of the President, at whose will and behest they can be removed from office; or
their actions and decisions changed, suspended or reversed. In contrast, the heads of political
subdivisions are elected by the people. Their sovereign powers emanate from the electorate, to
whom they are directly accountable. By constitutional fiat, they are subject to the Presidents
supervision only, not control, so long as their acts are exercised within the sphere of their legitimate
powers. By the same token, the President may not withhold or alter any authority or power given
them by the Constitution and the law.[166]
Thus, the President and his or her alter egos, the department heads, cannot interfere with the activities of local
governments, so long as they act within the scope of their authority. Accordingly, the DOE cannot substitute its own
discretion for the discretion exercised by the sanggunian of the City of Manila. In local affairs, the wisdom of local
officials must prevail as long as they are acting within the parameters of the Constitution and the law.[167]

ORDINANCE NO. 8027 IS NOT INVALID FOR FAILURE

TO COMPLY WITH RA 7924 AND EO 72
The oil companies argue that zoning ordinances of LGUs are required to be submitted to the Metropolitan Manila
Development Authority (MMDA) for review and if found to be in compliance with its metropolitan physical
framework plan and regulations, it shall endorse the same to the Housing and Land Use Regulatory Board
(HLURB). Their basis is Section 3 (e) of RA 7924:[168]
SECTION 3. Scope of MMDA Services. Metro-wide services under the jurisdiction of the
MMDA are those services which have metro-wide impact and transcend local political boundaries
or entail huge expenditures such that it would not be viable for said services to be provided by the
individual [LGUs] comprising Metropolitan Manila. These services shall include:
xxx xxx xxx
(g)

Urban renewal, zoning, and land use planning, and shelter services which include the
formulation, adoption and implementation of policies, standards, rules and regulations,
programs and projects to rationalize and optimize urban land use and provide direction to
urban growth and expansion, the rehabilitation and development of slum and blighted
areas, the development of shelter and housing facilities and the provision of necessary
social services thereof. (Emphasis supplied)
Reference was also made to Section 15 of its implementing rules:
Section 15. Linkages with HUDCC, HLURB, NHA, LGUs and Other National Government
Agencies Concerned on Urban Renewal, Zoning and Land Use Planning and Shelter
Services. Within the context of the National Housing and Urban Development Framework, and
pursuant to the national standards, guidelines and regulations formulated by the Housing and Land
Use Regulatory Board [HLURB] on land use planning and zoning, the [MMDA] shall prepare a
metropolitan physical framework plan and regulations which shall complement and translate the
socio-economic development plan for Metro Manila into physical or spatial terms, and provide the
basis for the preparation, review, integration and implementation of local land use plans and zoning,
ordinance of cities and municipalities in the area.
Said framework plan and regulations shall contain, among others, planning and zoning policies and
procedures that shall be observed by local government units in the preparation of their own plans
and ordinances pursuant to Section 447 and 458 of RA 7160, as well as the identification of sites
and projects that are considered to be of national or metropolitan significance.
Cities and municipalities shall prepare their respective land use plans and zoning ordinances
and submit the same for review and integration by the [MMDA] and indorsement to HLURB
in accordance with Executive Order No. 72 and other pertinent laws.
In the preparation of a Metropolitan Manila physical framework plan and regulations, the [MMDA]
shall coordinate with the Housing and Urban Development Coordinating Council, HLURB, the
National Housing Authority, Intramuros Administration, and all other agencies of the national
government which are concerned with land use and zoning, urban renewal and shelter
services. (Emphasis supplied)
They also claim that EO 72[169] provides that zoning ordinances of cities and municipalities of Metro Manila are
subject to review by the HLURB to ensure compliance with national standards and guidelines. They cite Section 1,
paragraphs I, (e), (f) and (g):
SECTION 1. Plan formulation or updating.
xxx xxx xxx

(g)

Cities and municipalities of Metropolitan Manila shall continue to formulate or

update their respective comprehensive land use plans, in accordance with the
land use planning and zoning standards and guidelines prescribed by the HLURB
pursuant to EO 392, S. of 1990, and other pertinent national policies.

Xxx xxx xxx

(e) Pursuant to LOI 729, S. of 1978, EO 648, S. of 1981, and RA 7279, the comprehensive land
use plans of provinces, highly urbanized cities and independent component cities shall be
reviewed and ratified by the HLURB to ensure compliance with national standards and guidelines.
(f) Pursuant to EO 392, S. of 1999, the comprehensive land use plans of cities and municipalities
of Metropolitan Manila shall be reviewed by the HLURB to ensure compliance with national
standards and guidelines.
(g)

Said review shall be completed within three (3) months upon receipt thereof
otherwise, the same shall be deemed consistent with law, and, therefore, valid.
(Emphasis supplied)

They argue that because Ordinance No. 8027 did not go through this review process, it is invalid.
The argument is flawed.
RA 7942 does not give MMDA the authority to review land use plans and zoning ordinances of cities and
municipalities. This was only found in its implementing rules which made a reference to EO 72. EO 72 expressly
refers to comprehensive land use plans (CLUPs) only. Ordinance No. 8027 is admittedly not a CLUP nor intended to
be one. Instead, it is a very specific ordinance which reclassified the land use of a defined area in order to prevent
the massive effects of a possible terrorist attack. It is Ordinance No. 8119 which was explicitly formulated as the
Manila [CLUP] and Zoning Ordinance of 2006. CLUPs are the ordinances which should be submitted to the
MMDA for integration in its metropolitan physical framework plan and approved by the HLURB to ensure that they
conform with national guidelines and policies.
Moreover, even assuming that the MMDA review and HLURB ratification are necessary, the oil companies did not
present any evidence to show that these were not complied with. In accordance with the presumption of validity in
favor of an ordinance, its constitutionality or legality should be upheld in the absence of proof showing that the
procedure prescribed by law was not observed. The burden of proof is on the oil companies which already had
notice that this Court was inclined to dispose of all the issues in this case. Yet aside from their bare assertion, they
did not present any certification from the MMDA or the HLURB nor did they append these to their pleadings.
Clearly, they failed to rebut the presumption of validity of Ordinance No. 8027.[170]

CONCLUSION
Essentially, the oil companies are fighting for their right to property. They allege that they stand to lose
billions of pesos if forced to relocate.However, based on the hierarchy of constitutionally protected rights, the right
to life enjoys precedence over the right to property.[171] The reason is obvious: life is irreplaceable, property is
not. When the state or LGUs exercise of police power clashes with a few individuals right to property, the former
should prevail.[172]
Both law and jurisprudence support the constitutionality and validity of Ordinance No. 8027. Without a
doubt, there are no impediments to its enforcement and implementation. Any delay is unfair to the inhabitants of the
City of Manila and its leaders who have categorically expressed their desire for the relocation of the terminals. Their

power to chart and control their own destiny and preserve their lives and safety should not be curtailed by the
intervenors warnings of doomsday scenarios and threats of economic disorder if the ordinance is enforced.
Secondary to the legal reasons supporting the immediate implementation of Ordinance No. 8027 are the
policy considerations which drove Manilas government to come up with such a measure:
... [The] oil companies still were not able to allay the apprehensions of the city regarding the
security threat in the area in general. No specific action plan or security measures were presented
that would prevent a possible large-scale terrorist or malicious attack especially an attack aimed at
Malacaang. The measures that were installed were more directed towards their internal security
and did not include the prevention of an external attack even on a bilateral level of cooperation
between these companies and the police and military.
Xxx xxx xxx
It is not enough for the city government to be told by these oil companies that they have the most
sophisticated fire-fighting equipments and have invested millions of pesos for these
equipments. The city government wants to be assured that its residents are safe at any time from
these installations, and in the three public hearings and in their position papers, not one statement
has been said that indeed the absolute safety of the residents from the hazards posed by these
installations is assured.[173]
We are also putting an end to the oil companies determination to prolong their stay in Pandacan despite the
objections of Manilas residents. As early as October 2001, the oil companies signed a MOA with the DOE obliging
themselves to:
... undertake a comprehensive and comparative study ... [which] shall include the preparation of a
Master Plan, whose aim is to determine the scope and timing of the feasible location of the
Pandacan oil terminals and all associated facilities and infrastructure including government
support essential for the relocation such as the necessary transportation infrastructure, land and
right of way acquisition, resettlement of displaced residents and environmental and social
acceptability which shall be based on mutual benefit of the Parties and the public.[174]
Now that they are being compelled to discontinue their operations in the Pandacan Terminals, they cannot feign
unreadiness considering that they had years to prepare for this eventuality.
Just the same, this Court is not about to provoke a crisis by ordering the immediate relocation of the Pandacan
Terminals out of its present site. The enforcement of a decision of this Court, specially one with far-reaching
consequences, should always be within the bounds of reason, in accordance with a comprehensive and wellcoordinated plan, and within a time-frame that complies with the letter and spirit of our resolution. To this end, the
oil companies have no choice but to obey the law.
A WARNING TO PETITIONERS COUNSEL
We draw the attention of the parties to a matter of grave concern to the legal profession.
Petitioners and their counsel, Atty. Samson Alcantara, submitted a four-page memorandum that clearly
contained either substance nor research. It is absolutely insulting to this Court.
We have always tended towards judicial leniency, temperance and compassion to those who suffer from a
wrong perception of what the majesty of the law means. But for a member of the bar, an officer of the court, to file
in this Court a memorandum of such unacceptable quality is an entirely different matter.
It is indicative less of a personal shortcoming or contempt of this Court and more of a lawyers sorry descent
from a high sense of duty and responsibility. As a member of the bar and as an officer of the court, a lawyer ought to
be keenly aware that the chief safeguard of the body politic is respect for the law and its magistrates.

There is nothing more effective than the written word by which counsel can persuade this Court of the
righteousness of his cause. For if truth were self-evident, a memorandum would be completely unnecessary and
superfluous.
The inability of counsel to prepare a memorandum worthy of this Courts consideration is an ejemplo
malo to the legal profession as it betrays no genuine interest in the cause he claims to espouse. Or did counsel think
he can earn his moment of glory without the hard work and dedication called for by his petition?
A FINAL WORD
On Wednesday, January 23, 2008, a defective tanker containing 2,000 liters of gasoline and 14,000 liters of diesel
exploded in the middle of the street a short distance from the exit gate of the Pandacan Terminals, causing death,
extensive damage and a frightening conflagration in the vicinity of the incident. Need we say anthing about what
will happen if it is the estimated 162 to 211 million liters [175] of petroleum products in the terminal complex which
blow up?
WHEREFORE, the motions for leave to intervene of Chevron Philippines Inc., Petron Corporation and
Pilipinas Shell Petroleum Corporation, and the Republic of the Philippines, represented by the Department of
Energy, are hereby GRANTED. Their respective motions for reconsideration are hereby DENIED. The Regional
Trial Court, Manila, Branch 39 is ORDERED to DISMISS the consolidated cases of Civil Case No. 03-106377 and
Civil Case No. 03-106380.
We reiterate our order to respondent Mayor of the City of Manila to enforce Ordinance No. 8027. In
coordination with the appropriate agencies and other parties involved, respondent Mayor is hereby ordered to
oversee the relocation and transfer of the Pandacan Terminals out of its present site.
To ensure the orderly transfer, movement and relocation of assets and personnel, the intervenors Chevron
Philippines Inc., Petron Corporation and Pilipinas Shell Petroleum Corporation shall, within a non-extendible period
of ninety (90) days, submit to the Regional Trial Court of Manila, Branch 39, the comprehensive plan and relocation
schedule which have allegedly been prepared. The presiding judge of Manila RTC, Branch 39 will monitor the strict
enforcement of this resolution.
Atty. Samson Alcantara is hereby ordered to explain within five (5) days from notice why he should not be
disciplined for his refusal, or inability, to file a memorandum worthy of the consideration of this Court.
Treble costs against petitioners counsel, Atty. Samson Alcantara.
SO ORDERED.

19.1 Social Justice vs Atienza (Nov. 25, 2014)

Challenged in these consolidated petitions2 is the validity of Ordinance No. 81873 entitled AN ORDINANCE
AMENDING ORDINANCE NO. 8119, OTHERWISE KNOWN AS THE MANILA COMPREHENSIVE LAND
USE PLAN AND ZONING ORDINANCE OF 2006, BY CREATING A MEDIUM INDUSTRIAL ZONE (1-2)
AND HEAVY INDUSTRIAL ZONE (1-3), AND PROVIDING FOR ITS ENFORCEMENT enacted by
the Sangguniang Panlungsod of Manila (Sangguniang Panlungsod) on 14 May 2009.
The creation of a medium industrial zone (1-2) and heavy industrial zone (1-3) effectively lifted the prohibition
against owners and operators of businesses, including herein intervenors Chevron Philippines, Inc. (Chevron),
Pilipinas Shell Petroleum Corporation (Shell), and Petron Corporation (Petron), collectively referred to as the oil
companies, from operating in the designated commercial zone an industrial zone prior to the enactment of
Ordinance No. 80274 entitled AN ORDINANCE RECLASSIFYING THE LAND USE OF THAT PORTION OF
LAND BOUNDED BY THE PASIG RIVER IN THE NORTH, PNR RAILROAD TRACK IN THE EAST, BEATA
ST. IN THE SOUTH, PALUMPONG ST. IN THE SOUTHWEST AND ESTERO DE PANDACAN IN THE WEST,
PNR RAILROAD IN THE NORTHWEST AREA, ESTERO DE PANDACAN IN THE NORTHEAST, PASIG
RIVER IN THE SOUTHEAST AND DR. M. L. CARREON IN THE SOUTHWEST, THE AREA OF PUNTA,
STA. ANA BOUNDED BY THE PASIG RIVER, MARCELINO OBRERO ST., MAYO 28 ST. AND THE F.

MANALO STREET FROM INDUSTRIAL II TO COMMERCIAL I, and Ordinance No. 81195 entitled AN
ORDINANCE ADOPTING THE MANILA COMPREHENSIVE LAND USE PLAN AND ZONING
REGULATIONS OF 2006 AND PROVIDING FOR THE ADMINISTRATION, ENFORCEMENT AND
AMENDMENT THERETO.ChanRoblesVirtualawlibrary
The Parties
Petitioners allege the parties respective capacity to sue and be sued, viz:
Petitioners

Residence in Manila

Suing capacity aside from being residents of

Manila/other personal circumstances

G.R. No. 187836

SJS Officer Samson S.
Alcantara (Alcantara)

Manila taxpayer;
One of the petitioners in SJS v. Atienza (G.R. No.
Not mentioned in the petition;
156052);*
holding office in Ermita, Manila
Pesident of ABAKADA GURO PARTY LIST with
members who are residents of the City of Manila

SJS Officer Vladimir

One of the petitioners in SJS v. Atienza (G.R. No.
Alarique T. Cabigao
Pandacan
156052)
(Cabigao)
* The allegation is inaccurate. SJS Officer Alcantara is actually one of the counsels for petitioner SJS in G.R. No.
156052. The petitioners in that case are the SJS itself, Cabigao and Bonifacio S. Tumbokon (Tumbokon).
G.R. No. 187916
Former Mayor of Manila;

Former Mayor Jose L. Atienza, Jr. (Mayor Atienza)

Bienvinido M. Abante
Ma. Lourdes M. Isip-Garcia
Rafael P. Borromeo

Secretary of Department of
Environment and Natural Resources
(DENR)
Citizen and taxpayer;member of the
Sta. Ana House of Representatives
San
Incumbent City Councilor of the City of
Miguel Manila
Incumbent City Councilor of the City of
Paco
Manila
Incumbent City Councilor of the City of
Sta. Mesa Manila
San
Andres

Jocelyn Dawis-Asuncion
Minors Marian Regina B. Taran, Macalia Ricci B. Taran,
Richard Kenneth B. Taran, represented and joined by their
parents Richard and Marites Taran
Paco
Minors Czarina Alysandra C. Ramos, Cezarah Adrianna C.
Ramos, and Cristen Aidan C. Ramos represented and joined by
their mother Donna c. Ramos
Tondo
Minors Jasmin Syllita T. Vila and Antonio T. Cruz IV,
represented and joined by their mother Maureen C. Tolentino
Sta. Ana
Respondents
G.R. Nos. 187836 and 187916

Citizens, real estate owners and

taxpayers
Citizens, real estate owners and
taxpayers
Citizens, real estate owners and
taxpayers

Sued in their capacity as

Former Mayor Alfredo S. Lim (Mayor Lim)

Respondents

Incumbent Mayor of Manila at the time of the filing of

the present petitions
Sued in their capacity as

G.R. No. 187916

Vice-Mayor Francisco Domagoso (Vice-Mayor
Vice-Mayor and Presiding Officer of the City Council of
Domagoso)
Manila
Arlene Woo Koa
Principal author of City Ordinance No. 8187
Moises T. Lim, Jesus Fajardo, Louisito N. Chua,
Victoriano A. Melendez, John Marvin Nieto, Rolando M.
Valeriano, Raymondo R. Yupangco, Edward VP Maceda,
Roderick D. Valbuena, Josefina M. Siscar, Phillip H.
Personal and official capacities as councilors who voted
Lacuna, Luciano M. Veloso, Carlo V. Lopez, Ernesto F. and approved City Ordinance No. 8187
Rivera,6 Danilo Victor H. Lacuna, Jr., Ernesto G. Isip,
Honey H. Lacuna-Pangan, Ernesto M. Dionisio, Jr., Erick
Ian O. Nieva
The following intervenors, all of which are corporations organized under Philippine laws, intervened: 7
Intervenors
Nature of Business
Chevron Philippines, Inc.
(CHEVRON)
Pilipinas Shell Petroleum
Corporation (SHELL)

importing, distributing and marketing of petroleum products in the Philippines

since 1922
manufacturing, refining, importing, distributing and marketing of petroleum
products in the Philippines
manufacturing, refining, importing, distributing and marketing of petroleum
Petron Corporation (PETRON)
products in the Philippines
They claim that their rights with respect to the oil depots in Pandacan would be directly affected by the outcome of
these cases.chanrobleslaw
The Antecedents
These petitions are a sequel to the case of Social Justice Society v. Mayor Atienza, Jr.8 (hereinafter referred to as
G.R. No. 156052), where the Court found: (1) that the ordinance subject thereof Ordinance No. 8027 was
enacted to safeguard the rights to life, security and safety of the inhabitants of Manila; 9 (2) that it had passed the
tests of a valid ordinance; and (3) that it is not superseded by Ordinance No. 8119.10 Declaring that it is
constitutional and valid,11 the Court accordingly ordered its immediate enforcement with a specific directive on the
relocation and transfer of the Pandacan oil terminals.12chanrobleslaw
Highlighting that the Court has so ruled that the Pandacan oil depots should leave, herein petitioners now seek the
nullification of Ordinance No. 8187, which contains provisions contrary to those embodied in Ordinance No. 8027.
Allegations of violation of the right to health and the right to a healthful and balanced environment are also
included.
For a better perspective of the facts of these cases, we again trace the history of the Pandacan oil terminals, as well
as the intervening events prior to the reclassification of the land use from Industrial II to Commercial I under
Ordinance No. 8027 until the creation of Medium Industrial Zone and Heavy Industrial Zone pursuant to Ordinance
No. 8187.
History of the Pandacan
Oil Terminals

We quote the following from the Resolution of the Court in G.R. No. 156052:
Pandacan (one of the districts of the City of Manila) is situated along the banks of the Pasig [R]iver. At the turn of
the twentieth century, Pandacan was unofficially designated as the industrial center of Manila. The area, then largely
uninhabited, was ideal for various emerging industries as the nearby river facilitated the transportation of goods and
products. In the 1920s, it was classified as an industrial zone. Among its early industrial settlers were the oil
companies.
x
x
x
On December 8, 1941, the Second World War reached the shores of the Philippine Islands. x x x [I]n their zealous
attempt to fend off the Japanese Imperial Army, the United States Army took control of the Pandacan Terminals and
hastily made plans to destroy the storage facilities to deprive the advancing Japanese Army of a valuable logistics
weapon. The U.S. Army burned unused petroleum, causing a frightening conflagration. Historian Nick Joaquin
recounted the events as follows:
After the USAFFE evacuated the City late in December 1941, all army fuel storage dumps were set on fire. The
flames spread, enveloping the City in smoke, setting even the rivers ablaze, endangering bridges and all riverside
buildings. For one week longer, the open city blazeda cloud of smoke by day, a pillar of fire by night.
The fire consequently destroyed the Pandacan Terminals and rendered its network of depots and service stations
inoperative.
After the war, the oil depots were reconstructed. Pandacan changed as Manila rebuilt itself. The three major oil
companies resumed the operation of their depots. But the district was no longer a sparsely populated industrial zone;
it had evolved into a bustling, hodgepodge community. Today, Pandacan has become a densely populated area
inhabited by about 84,000 people, majority of whom are urban poor who call it home. Aside from numerous
industrial installations, there are also small businesses, churches, restaurants, schools, daycare centers and residences
situated there. Malacaang Palace, the official residence of the President of the Philippines and the seat of
governmental power, is just two kilometers away. There is a private school near the Petron depot. Along the walls of
the Shell facility are shanties of informal settlers. More than 15,000 students are enrolled in elementary and high
schools situated near these facilities. A university with a student population of about 25,000 is located directly across
the
depot
on
the
banks
of
the
Pasig
[R]iver.
The 36-hectare Pandacan Terminals house the oil companies distribution terminals and depot facilities. The
refineries of Chevron and Shell in Tabangao and Bauan, both in Batangas, respectively, are connected to the
Pandacan Terminals through a 114-kilometer underground pipeline system. Petrons refinery in Limay, Bataan, on
the other hand, also services the depot. The terminals store fuel and other petroleum products and supply 95% of the
fuel requirements of Metro Manila, 50% of Luzons consumption and 35% nationwide. Fuel can also be transported
through barges along the Pasig [R]iver or tank trucks via the South Luzon Expressway.13 (Citations omitted)
Memorandum of Agreement (MOA)
dated 12 October 2001 between the oil companies
and the Department of Energy (DOE)
On 12 October 2001, the oil companies and the DOE entered into a MOA14 in light of recent international
developments involving acts of terrorism on civilian and government landmarks,15potential new security risks
relating to the Pandacan oil terminals and the impact on the surrounding community which may be affected, 16 and
to address the perceived risks posed by the proximity of communities, businesses and offices to the Pandacan oil
terminals, consistent with the principle of sustainable development.17 The stakeholders acknowledged that there is
a need for a comprehensive study to address the economic, social, environmental and security concerns with the end
in view of formulating a Master Plan to address and minimize the potential risks and hazards posed by the proximity
of communities, businesses and offices to the Pandacan oil terminals without adversely affecting the security and
reliability of supply and distribution of petroleum products to Metro Manila and the rest of Luzon, and the interests
of consumers and users of such petroleum products in those areas.18chanrobleslaw
The enactment of Ordinance No. 8027
against the continued stay of the oil depots
The MOA, however, was short-lived.

On 20 November 2001, during the incumbency of former Mayor Jose L. Atienza, Jr. (Mayor Atienza) now one of
the petitioners in G.R. No. 187916 the Sangguniang Panlungsod enacted Ordinance No. 802719 reclassifying the
use of the land in Pandacan, Sta. Ana, and its adjoining areas from Industrial II to Commercial I.
The owners and operators of the businesses thus affected by the reclassification were given six months from the date
of effectivity of the Ordinance within which to stop the operation of their businesses.
Nevertheless, the oil companies were granted an extension of until 30 April 2003 within which to comply with the
Ordinance pursuant to the following:chanroblesvirtuallawlibrary
(1) Memorandum of Understanding (MOU)20 dated 26 June 2002 between the City of Manila and the Department of
Energy (DOE), on the one hand, and the oil companies, on the other, where the parties agreed that the scaling down
of the Pandacan Terminals [was] the most viable and practicable option21 and committed to adopt specific
measures22 consistent with the said objective;
(2) Resolution No. 97 dated 25 July 200223 of the Sangguniang Panlungsod, which ratified the 26 June 2002 MOU
but limited the extension of the period within which to comply to six months from 25 July 2002; and
(3) Resolution No. 13 dated 30 January 200324 of the Sanguniang Panlungsod, which extended the validity of
Resolution No. 97 to 30 April 2003, authorized then Mayor Atienza to issue special business permits to the oil
companies, and called for a reassessment of the ordinance.
Social Justice Society v. Atienza (G.R. No. 156052):
The filing of an action for mandamus
before the Supreme Court
to enforce Ordinance No. 8027
In the interim, an original action for mandamus entitled Social Justice Society v. Atienza, Jr. docketed as G.R. No.
15605225 was filed on 4 December 2002 by Tumbokon and herein petitioners SJS and Cabigao against then Mayor
Atienza. The petitioners sought to compel former Mayor Atienza to enforce Ordinance No. 8027 and cause the
immediate removal of the terminals of the oil companies.26chanrobleslaw
Issuance by the Regional Trial Court (RTC)
of writs of preliminary prohibitory injunction
and preliminary mandatory injunction,
and status quo order in favor of the oil companies
Unknown to the Court, during the pendency of G.R. No. 156052, and before the expiration of the validity of
Resolution No. 13, the oil companies filed the following actions before the Regional Trial Court of Manila: (1) an
action for the annulment of Ordinance No. 8027 with application for writs of preliminary prohibitory injunction and
preliminary mandatory injunction by Chevron; (2) a petition for prohibition and mandamus also for the annulment
of the Ordinance with application for writs of preliminary prohibitory injunction and preliminary mandatory
injunction by Shell; and (3) a petition assailing the validity of the Ordinance with prayer for the issuance of a writ
of preliminary injunction and/or temporary restraining order (TRO) by Petron.27chanrobleslaw
Writs of preliminary prohibitory injunction and preliminary mandatory injunction were issued in favor of Chevron
and Shell on 19 May 2003. Petron, on the other hand, obtained a status quo order on 4 August 2004.28chanrobleslaw
The Enactment of Ordinance No. 8119
defining the Manila land use plan
and zoning regulations
On 16 June 2006, then Mayor Atienza approved Ordinance No. 8119 entitled An Ordinance Adopting the Manila
Comprehensive Land Use Plan and Zoning Regulations of 2006 and Providing for the Administration, Enforcement
and Amendment thereto.29chanrobleslaw

Pertinent provisions relative to these cases are the following:chanroblesvirtuallawlibrary

(a) Article IV, Sec. 730 enumerating the existing zones or districts in the City of Manila;
(b) Article V, Sec. 2331 designating the Pandacan oil depot area as a Planned Unit Development/Overlay Zone (OPUD); and
(c) the repealing clause, which reads:
SEC. 84. Repealing Clause. All ordinances, rules, regulations in conflict with the provisions of this Ordinance are
hereby repealed; PROVIDED, That the rights that are vested upon the effectivity of this Ordinance shall not be
impaired.32
7 March 2007 Decision in G.R. No. 156052;
The mayor has the mandatory legal duty
to enforce Ordinance No. 8027 and order
the removal of the Pandacan terminals
On 7 March 2007, the Court granted the petition for mandamus, and directed then respondent Mayor Atienza to
immediately enforce Ordinance No. 8027.33chanrobleslaw
Confined to the resolution of the following issues raised by the petitioners, to wit:
1. whether respondent [Mayor Atienza] has the mandatory legal duty to enforce Ordinance No. 8027 and order the
removal
of
the
Pandacan
Terminals,
and
2. whether the June 26, 2002 MOU and the resolutions ratifying it can amend or repeal Ordinance No. 8027.34
the Court declared:
x x x [T]he Local Government Code imposes upon respondent the duty, as city mayor, to enforce all laws and
ordinances relative to the governance of the city. One of these is Ordinance No. 8027. As the chief executive of the
city, he has the duty to enforce Ordinance No. 8027 as long as it has not been repealed by the Sanggunian or
annulled by the courts. He has no other choice. It is his ministerial duty to do so. x x x
x

The question now is whether the MOU entered into by respondent with the oil companies and the subsequent
resolutions passed by the Sanggunian have made the respondents duty to enforce Ordinance No. 8027 doubtful,
unclear
or
uncertain.
x
x
x
We need not resolve this issue. Assuming that the terms of the MOU were inconsistent with Ordinance No. 8027, the
resolutions which ratified it and made it binding on the City of Manila expressly gave it full force and effect only
until April 30, 2003. Thus, at present, there is nothing that legally hinders respondent from enforcing Ordinance No.
8027.
Ordinance No. 8027 was enacted right after the Philippines, along with the rest of the world, witnessed the horror of
the September 11, 2001 attack on the Twin Towers of the World Trade Center in New York City. The objective of
the ordinance is to protect the residents of Manila from the catastrophic devastation that will surely occur in
case of a terrorist attack on the Pandacan Terminals. No reason exists why such a protective measure should
be delayed.35 (Emphasis supplied; citations omitted)
13 February 2008 Resolution in G.R. No. 156052;
Ordinance No. 8027 is constitutional
The oil companies and the Republic of the Philippines, represented by the DOE, filed their motions for leave to
intervene and for reconsideration of the 7 March 2007 Decision. During the oral arguments, the parties submitted to
the power of the Court to rule on the constitutionality and validity of the assailed Ordinance despite the pendency of

the cases in the RTC.36chanrobleslaw

On 13 February 2008, the Court granted the motions for leave to intervene of the oil companies and the Republic of
the Philippines but denied their respective motions for reconsideration. The dispositive portion of the Resolution
reads:
WHEREFORE,

We reiterate our order to respondent Mayor of the City of Manila to enforce Ordinance No. 8027. In coordination
with the appropriate agencies and other parties involved, respondent Mayor is hereby ordered to oversee the
relocation and transfer of the Pandacan Terminals out of its present site. 37
13 February 2008 Resolution in G.R. No. 156052;
Ordinance No. 8027 was not impliedly repealed
by Ordinance No. 8119
The Court also ruled that Ordinance No. 8027 was not impliedly repealed by Ordinance No. 8119. On this score, the
Court ratiocinated:
For the first kind of implied repeal, there must be an irreconcilable conflict between the two ordinances. There is no
conflict between the two ordinances. Ordinance No. 8027 reclassified the Pandacan area from Industrial II to
Commercial I. Ordinance No. 8119, Section 23, designated it as a Planned Unit Development/Overlay Zone (OPUD). In its Annex C which defined the zone boundaries, the Pandacan area was shown to be within the High
Density Residential/Mixed Use Zone (R-3/MXD). x x x [B]oth ordinances actually have a common objective, i.e.,
to shift the zoning classification from industrial to commercial (Ordinance No. 8027) or mixed residential
commercial
(Ordinance
No.
8119)
x

Ordinance No. 8027 is a special law since it deals specifically with a certain area described therein (the Pandacan oil
depot area) whereas Ordinance No. 8119 can be considered a general law as it covers the entire city of
Manila.cralawred
x

x x x The repealing clause of Ordinance No. 8119 cannot be taken to indicate the legislative intent to repeal all prior
inconsistent laws on the subject matter, including Ordinance No. 8027, a special enactment, since the aforequoted
minutes (an official record of the discussions in the Sanggunian) actually indicated the clear intent to preserve the
provisions of Ordinance No. 8027.38
Filing of a draft Resolution amending
Ordinance No. 8027 effectively allowing
the oil depots to stay in the Pandacan area;
Manifestation and Motion to forestall
the passing of the new Ordinance
filed in G.R. No. 156052
On 5 March 2009, respondent then Councilor Arlene W. Koa, filed with the Sangguniang Panlungsod a draft
resolution entitled An Ordinance Amending Ordinance No. 8119 Otherwise Known as The Manila Comprehensive
Land Use Plan and Zoning Ordinance of 2006 by Creating a Medium Industrial Zone (1-2) and Heavy Industrial
Zone (1-3) and Providing for its Enforcement.39 Initially numbered as Draft Ordinance No. 7177, this was later
renumbered as Ordinance No. 8187, the assailed Ordinance in these instant petitions.
Considering that the provisions thereof run contrary to Ordinance No. 8027, the petitioners in G.R. No. 156052 filed
a Manifestation and Motion to: a) Stop the City Council of Manila from further hearing the amending ordinance to
Ordinance No. 8027; [and] b) Transfer the monitoring of the enforcement of the Resolution of the Honorable Court
on this case dated 13 February 2008 from Branch 39, Manila Regional Trial Court to the Supreme
Court.40chanrobleslaw

28 April 2009 Resolution in G.R. No. 156052;

Second Motion for Reconsideration
denied with finality; succeeding motions
likewise denied or otherwise noted
without action
On 28 April 2009, pending the resolution of the Manifestation and Motion, the Court denied with finality the second
motion for reconsideration dated 27 February 2008 of the oil companies.41 It further ruled that no further pleadings
shall be entertained in the case.42chanrobleslaw
Succeeding motions were thus denied and/or noted without action. And, after the Very Urgent Motion to Stop the
Mayor of the City of Manila from Signing Draft Ordinance No. 7177 and to Cite Him for Contempt if He Would Do
So filed on 19 May 2009 was denied on 2 June 2009 for being moot,43 all pleadings pertaining to the earlier motion
against the drafting of an ordinance to amend Ordinance No. 8027 were noted without action.44chanrobleslaw
The Enactment of Ordinance No. 8187
allowing the continued stay of the oil depots
On 14 May 2009, during the incumbency of former Mayor Alfredo S. Lim (Mayor Lim), who succeeded Mayor
Atienza, the Sangguniang Panlungsod enacted Ordinance No. 8187.45chanrobleslaw
The new Ordinance repealed, amended, rescinded or otherwise modified Ordinance No. 8027, Section 23 of
Ordinance No. 8119, and all other Ordinances or provisions inconsistent therewith46 thereby allowing, once again,
the operation of Pollutive/Non-Hazardous and Pollutive/Hazardous manufacturing and processing establishments
and Highly Pollutive/Non-Hazardous[,] Pollutive/Hazardous[,] Highly Pollutive/Extremely Hazardous[,] NonPollutive/Extremely Hazardous; and Pollutive/Extremely Hazardous; and Pollutive/Extremely Hazardous
manufacturing and processing establishments within the newly created Medium Industrial Zone (1-2) and Heavy
Industrial Zone (1-3) in the Pandacan area.
Thus, where the Industrial Zone under Ordinance No. 8119 was limited to Light Industrial Zone (I-1), Ordinance
No. 8187 appended to the list a Medium Industrial Zone (I-2) and a Heavy Industrial Zone (I-3), where petroleum
refineries and oil depots are now among those expressly allowed.
Hence these petitions.chanrobleslaw
The Petitions
G.R. No. 187836
To support their petition for prohibition against the enforcement of Ordinance No. 8187, the petitioner Social Justice
Society (SJS) officers allege that:chanroblesvirtuallawlibrary
1. The enactment of the assailed Ordinance is not a valid exercise of police power because the measures provided
therein do not promote the general welfare of the people within the contemplation of the following provisions of
law:
a)
Article III, Section 18 (kk)47 of Republic Act No. 409 otherwise known as the Revised Charter of the City of
Manila, which provides that the Municipal Board shall have the legislative power to enact all ordinances it
may deem necessary and proper;
Section 1648 of Republic Act No. 7160 known as the Local Government Code, which defines the scope of the
general welfare clause;
2. The conditions at the time the Court declared Ordinance No. 8027 constitutional in G.R. No. 156052 exist to this
date;
b)

3. Despite the finality of the Decision in G.R. No. 156052, and notwithstanding that the conditions and
circumstances warranting the validity of the Ordinance remain the same, the Manila City Council passed a contrary
Ordinance, thereby refusing to recognize that judicial decisions applying or interpreting the laws or the
Constitution form part of the legal system of the Philippines; 49 and
4. Ordinance No. 8187 is violative of Sections 15 and 16, Article II of the Constitution of the Philippines on the duty
of the State to protect and promote the right to health of the people50 and protect and advance the right of the
people to a balanced and healthful ecology.51chanrobleslaw
Petitioners pray that Ordinance No. 8187 of the City of Manila be declared null and void, and that respondent, and
all persons acting under him, be prohibited from enforcing the same.
G.R. No. 187916
The petition for Prohibition, Mandamus and Certiorari with Prayer for Temporary Restraining Order and/or
Injunction against the enforcement of Ordinance No. 8187 of former Secretary of Department of Environment and
Natural Resources and then Mayor Atienza, together with other residents and taxpayers of the City of Manila, also
alleges violation of the right to health of the people and the right to a healthful and balanced environment under
Sections 15 and 16 of the Constitution.
Petitioners likewise claim that the Ordinance is in violation of the following health and environment-related
municipal laws, and international conventions and treaties to which the Philippines is a state
party:chanroblesvirtuallawlibrary
1. Municipal Laws
(a) Sections 4,52 12,53 1954 and 3055 of Republic Act No. 8749 otherwise known as the Philippine Clean Air Act;
(b)
(c)

Environment
Toxic

and

Code
Hazardous

(Presidential
Wastes

Law

Decree
(Republic

Act

No.
No.

1152);
6969);

and

(d) Civil Code provisions on nuisance and human relations;

2. International Conventions and Treaties to which the Philippines is a state party
a. Section 1 of the Universal Declaration of Human Rights, which states that [e]veryone has the right to life, liberty
and
security
of
person;
b. Articles 6,56 2457 and 2758 of the Convention on the Rights of the Child, summarized by the petitioners in the
following manner:
1.
the
human
right
to
safe
and
healthy
environment[;]
2.

human

right

3.

the

human

to

the
right

highest
to

attainable
ecologically

standard
sustainable

of

health[;]
development[;]

4. the human right to an adequate standard of living, including access to safe food and water[;]
5. the human right of the child to live in an environment appropriate for physical and mental development[; and]
6. the human right to full and equal participation for all persons in environmental decision-making and development
planning, and in shaping decisions and policies affecting ones community, at the local, national and international
levels.59
Petitioners likewise posit that the title of Ordinance No. 8187 purports to amend or repeal Ordinance No. 8119 when
it actually intends to repeal Ordinance No. 8027. According to them, Ordinance No. 8027 was never mentioned in

the title and the body of the new ordinance in violation of Section 26, Article VI of the 1987 Constitution, which
provides that every bill passed by Congress shall embrace only one subject which shall be expressed in the title
thereof.
Also pointed out by the petitioners is a specific procedure outlined in Ordinance No. 8119 that should be observed
when amending the zoning ordinance. This is provided for under Section 81 thereof, which reads:
SEC. 81. Amendments to the Zoning Ordinance. The proposed amendments to the Zoning Ordinance as reviewed
and evaluated by the City Planning and Development Office (CPDO) shall be submitted to the City Council for
approval of the majority of the Sangguniang Panlungsod members. The amendments shall be acceptable and
eventually approved: PROVIDED, That there is sufficient evidence and justification for such proposal; PROVIDED
FURTHER, That such proposal is consistent with the development goals, planning objectives, and strategies of the
Manila Comprehensive Land Use Plan. Said amendments shall take effect immediately upon approval or after thirty
(30) days from application.
Petitioners thus pray that:
1. upon filing of [the] petition, [the] case be referred to the Court [E]n Banc, and setting (sic) the case for oral
argument;
2. upon the filing of [the] petition, a temporary restraining order be issued enjoining the respondents from publishing
and posting Manila City Ordinance No. 8187 and/or posting of Manila City Ordinance No. 8187; and/or taking any
steps to implementing (sic) and/or enforce the same and after due hearing, the temporary restraining order be
converted
to
a
permanent
injunction;
3. x x x Manila City Ordinance 8187 [be declared] as null and void for being repugnant to the Constitution and
existing
municipal
laws
and
international
covenants;
4. x x x the respondents [be ordered] to refrain from enforcing and/or implementing Manila City Ordinance No.
8187;
5. x x x respondent City Mayor Alfredo S. Lim [be enjoined] from issuing any permits (business or otherwise) to all
industries whose allowable uses are anchored under the provisions of Manila Ordinance No. 8187; and
6. x x x respondent Mayor of Manila Alfredo S. Lim [be ordered] to comply with the Order of the Honorable Court
in G.R. 156052 dated February 13, 2008.60
The Respondents Position
on the Consolidated Petitions
Respondent former Mayor Lim
In his Memorandum,61 former Mayor Lim, through the City Legal Officer, attacks the petitioners lack of legal
standing to sue. He likewise points out that the petitioners failed to observe the principle of hierarchy of courts.
Maintaining that Ordinance No. 8187 is valid and constitutional, he expounds on the following
arguments:chanroblesvirtuallawlibrary
On the procedural issues, he contends that: (1) it is the function of the Sangguniang Panlungsod to enact zoning
ordinances, for which reason, it may proceed to amend or repeal Ordinance No. 8119 without prior referral to the
Manila Zoning Board of Adjustment and Appeals (MZBAA) as prescribed under Section 80 (Procedure for ReZoning) and the City Planning and Development Office (CPDO) pursuant to Section 81 (Amendments to the Zoning
Ordinance) of Ordinance No. 8119, especially when the action actually originated from the Sangguniang
Panlungsod itself; (2) the Sangguniang Panlungsod may, in the later ordinance, expressly repeal all or part of the
zoning ordinance sought to be modified; and (3) the provision repealing Section 23 of Ordinance No. 8119 is not
violative of Section 26, Article VI of the 1987 Constitution, which requires that every bill must embrace only one
subject and that such shall be expressed in the title.

On the substantive issues, he posits that the petitions are based on unfounded fears; that the assailed ordinance is a
valid exercise of police power; that it is consistent with the general welfare clause and public policy, and is not
unreasonable; that it does not run contrary to the Constitution, municipal laws, and international conventions; and
that the petitioners failed to overcome the presumption of validity of the assailed ordinance.
Respondents Vice-Mayor Domagoso
and the City Councilors who voted
in favor of the assailed ordinance
On 14 September 2012, after the Court gave the respondents several chances to submit their Memorandum, 62 they,
through the Secretary of the Sangguniang Panlungsod, prayed that the Court dispense with the filing thereof.
In their Comment,63 however, respondents offered a position essentially similar to those proffered by former Mayor
Lim.chanrobleslaw
The Intervenors Position
on the Consolidated Petitions
On the other hand, the oil companies sought the outright dismissal of the petitions based on alleged procedural
infirmities, among others, incomplete requisites of judicial review, violation of the principle of hierarchy of courts,
improper remedy, submission of a defective verification and certification against forum shopping, and forum
shopping.
As to the substantive issues, they maintain, among others, that the assailed ordinance is constitutional and valid; that
the Sangguniang Panlalawigan is in the best position to determine the needs of its constituents; that it is a valid
exercise of legislative power; that it does not violate health and environment-related provisions of the Constitution,
laws, and international conventions and treaties to which the Philippines is a party; that the oil depots are not likely
targets of terrorists; that the scaling down of the operations in Pandacan pursuant to the MOU has been followed;
and that the people are safe in view of the safety measures installed in the Pandacan terminals.
Incidentally, in its Manifestation dated 30 November 2010,64 Petron informed the Court that it will cease [the]
operation of its petroleum product storage facilities65 in the Pandacan oil terminal not later than January 2016 on
account of the following:
2.01 Environmental issues, many of which are unfounded, continually crop up and tarnish the Companys image.
2.02. The location of its Pandacan terminal is continually threatened, and made uncertain preventing long-term
planning, by the changing local government composition. Indeed, the relevant zoning ordinances have been
amended three (3) times, and their validity subjected to litigation.66
Intervening Events
On 28 August 2012, while the Court was awaiting the submission of the Memorandum of respondents Vice-Mayor
Domagoso and the councilors who voted in favor of the assailed Ordinance, the Sangguniang Panlungsod, which
composition had already substantially changed, enacted Ordinance No. 828367 entitled AN ORDINANCE
AMENDING SECTION 2 OF ORDINANCE NO. 8187 BY RECLASSIFYING THE AREA WHERE
PETROLEUM REFINERIES AND OIL DEPOTS ARE LOCATED FROM HEAVY INDUSTRIAL (1-3) TO HIGH
INTENSITY COMMERCIAL/MIXED USE ZONE (C3/MXD).
The new ordinance essentially amended the assailed ordinance to exclude the area where petroleum refineries and
oil depots are located from the Industrial Zone.
Ordinance No. 8283 thus permits the operation of the industries operating within the Industrial Zone. However, the
oil companies, whose oil depots are located in the High Intensity Commercial/Mixed Use Zone (C3/MXD), are
given until the end of January 2016 within which to relocate their terminals.

Former Mayor Lim, who was then the incumbent mayor, did not support the amendment. Maintaining that the
removal of the oil depots was prejudicial to public welfare, and, on account of the pending cases in the Supreme
Court, he vetoed Ordinance No. 8283 on 11 September 2012.68chanrobleslaw
On 28 November 2012, former Mayor Lim filed a Manifestation informing this Court that the Sangguniang
Panlungsod voted to override the veto, and that he, in turn, returned it again with his veto. He likewise directed
the Sangguniang Panlungsod to append his written reasons for his veto of the Ordinance, so that the same will be
forwarded to the President for his consideration in the event that his veto is overridden again.69chanrobleslaw
On 11 December 2012, Shell also filed a similar Manifestation.70chanrobleslaw
Meanwhile, three days after former Mayor Lim vetoed the new ordinance, Atty. Luch R. Gempis, Jr. (Atty. Gempis),
Secretary of the Sangguniang Panlungsod, writing on behalf of respondents Vice-Mayor Domagoso and the City
Councilors of Manila who voted in favor of the assailed Ordinance, finally complied with this Courts Resolution
dated 17 July 2012 reiterating its earlier directives71 to submit the said respondents Memorandum.
In his Compliance/Explanation with Urgent Manifestation72 dated 13 September 2012, Atty. Gempis explained that it
was not his intention to show disrespect to this Court or to delay or prejudice the disposition of the cases.
According to him, he signed the Comment prepared by respondents Vice-Mayor and the City Councilors only to
attest that the pleading was personally signed by the respondents. He clarified that he was not designated as the legal
counsel of the respondents as, in fact, he was of the impression that, pursuant to Section 481(b)(3) of the Local
Government Code,73 it is the City Legal Officer who is authorized to represent the local government unit or any
official thereof in a litigation. It was for the same reason that he thought that the filing of a Memorandum may
already be dispensed with when the City Legal Officer filed its own on 8 February 2010. He further explained that
the Ordinance subject of these cases was passed during the 7th Council (2007-2010); that the composition of the 8th
Council (2010-2013) had already changed after the 2010 elections; and that steps were already taken to amend the
ordinance again. Hence, he was in a dilemma as to the position of the Sangguniang Panlungsod at the time he
received the Courts Resolution of 31 May 2011.
Atty. Gempis, thus, prayed that the Court dispense with the filing of the required memorandum in view of the
passing of Ordinance No. 8283.chanrobleslaw
Issue
The petitioners arguments are primarily anchored on the ruling of the Court in G. R. No. 156052 declaring
Ordinance No. 8027 constitutional and valid after finding that the presence of the oil terminals in Pandacan is a
threat to the life and security of the people of Manila. From thence, the petitioners enumerated constitutional
provisions, municipal laws and international treaties and conventions on health and environment protection
allegedly violated by the enactment of the assailed Ordinance to support their position.
The resolution of the present controversy is, thus, confined to the determination of whether or not the enactment of
the assailed Ordinance allowing the continued stay of the oil companies in the depots is, indeed, invalid and
unconstitutional.chanrobleslaw
Our Ruling
We see no reason why Ordinance No. 8187 should not be stricken down insofar as the presence of the oil depots in
Pandacan is concerned.chanrobleslaw
I
We first rule on the procedural issues raised by the respondents and the oil companies.

At the outset, let it be emphasized that the Court, in G.R. No. 156052, has already pronounced that the matter of
whether or not the oil depots should remain in the Pandacan area is of transcendental importance to the residents of
Manila.74chanrobleslaw
We may, thus, brush aside procedural infirmities, if any, as we had in the past, and take cognizance of the cases 75 if
only to determine if the acts complained of are no longer within the bounds of the Constitution and the laws in
place.76chanrobleslaw
Put otherwise, there can be no valid objection to this Courts discretion to waive one or some procedural
requirements if only to remove any impediment to address and resolve the serious constitutional question 77 raised in
these petitions of transcendental importance, the same having far-reaching implications insofar as the safety and
general welfare of the residents of Manila, and even its neighboring communities, are concerned.
Proper Remedy
Respondents and intervenors argue that the petitions should be outrightly dismissed for failure on the part of the
petitioners to properly apply related provisions of the Constitution, the Rules of Court, and/or the Rules of Procedure
for Environmental Cases relative to the appropriate remedy available to them.
To begin with, questioned is the applicability of Rule 6578 of the Rules of Court to assail the validity and
constitutionality of the Ordinance.
there is no appeal, or any plain,
speedy, and adequate remedy
in the ordinary course of law
Rule 65 specifically requires that the remedy may be availed of only when there is no appeal, or any plain, speedy,
and adequate remedy in the ordinary course of law.79chanrobleslaw
Shell argues that the petitioners should have sought recourse before the first and second level courts under the Rules
of Procedure for Environmental Cases,80 which govern the enforcement or violations of environmental and other
related laws, rules and regulations.81 Petron additionally submits that the most adequate remedy available to
petitioners is to have the assailed ordinance repealed by the Sangguniang Panlungsod. In the alternative, a local
referendum may be had. And, assuming that there were laws violated, the petitioners may file an action for each
alleged violation of law against the particular individuals that transgressed the law.
It would appear, however, that the remedies identified by the intervenors prove to be inadequate to resolve the
present controversies in their entirety owing to the intricacies of the circumstances herein prevailing.
The scope of the Rules of Procedure for Environmental Cases is embodied in Sec. 2, Part I, Rule I thereof. It states
that the Rules shall govern the procedure in civil, criminal and special civil actions before the Metropolitan Trial
Courts, Municipal Trial Courts in Cities, Municipal Trial Courts and Municipal Circuit Trial Courts, and the
Regional Trial Courts involving enforcement or violations of environmental and other related laws, rules and
regulations such as but not limited to the following:
(k)

R.A.

No.

x
(r)
x

6969,

Toxic

Substances

x
R.A.

No.
x

and

Hazardous

Waste

x
8749,

Clean
x

Act;
x

Air

Act;
x

(y) Provisions in C.A. No. 141, x x x; and other existing laws that relate to the conservation, development,
preservation, protection and utilization of the environment and natural resources.82 (Emphasis supplied)

Notably, the aforesaid Rules are limited in scope. While, indeed, there are allegations of violations of environmental
laws in the petitions, these only serve as collateral attacks that would support the other position of the petitioners
the protection of the right to life, security and safety.
Moreover, it bears emphasis that the promulgation of the said Rules was specifically intended to meet the following
objectives:
SEC. 3. Objectives.The objectives of these Rules are:chanroblesvirtuallawlibrary
(a)
(b)

To protect and advance the constitutional right of the people to a balanced and healthful ecology;
To provide a simplified, speedy and inexpensive procedure for the enforcement of environmental rights and
duties recognized under the Constitution, existing laws, rules and regulations, and international agreements;
(c) To introduce and adopt innovations and best practices ensuring the effective enforcement of remedies and
redress for violation of environmental laws; and
(d) To enable the courts to monitor and exact compliance with orders and judgments in environmental cases. 83
Surely, the instant petitions are not within the contemplation of these Rules.
Relative to the position of Petron, it failed to consider that these petitions are already a sequel to G.R. No. 156052,
and that there are some issues herein raised that the remedies available at the level of the Sangguniang
Panlungsod could not address. Neither could the filing of an individual action for each law violated be harmonized
with the essence of a plain, speedy, and adequate remedy.
From another perspective, Shell finds fault with the petitioners direct recourse to this Court when, pursuant to
Section 5, Article VIII of the Constitution, the Supreme Court exercises only appellate jurisdiction over cases
involving the constitutionality or validity of an ordinance.84 Thus:
Section

5. The

Supreme

Court

shall

have

the

following

powers:chanroblesvirtuallawlibrary

xxxx
2. Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the Rules of Court may
provide, final
judgments
and
orders
of
lower
courts in:chanroblesvirtuallawlibrary
a. All cases in which the constitutionality or validity of any treaty, international or executive agreement, law,
presidential decree, proclamation, order, instruction, ordinance, or regulation is in question. (Emphasis supplied)
To further support its position, it cites the case of Liga ng mga Barangay National v. City Mayor of Manila,85 where
the petitioners sought the nullification of the mayors executive order and the councils ordinance concerning certain
functions of the petitioners that are vested in them by law. There, the Court held:
Second, although the instant petition is styled as a petition for certiorari, in essence, it seeks the declaration by this
Court of the unconstitutionality or illegality of the questioned ordinance and executive order. It, thus, partakes of the
nature of a petition for declaratory relief over which this Court has only appellate, not original, jurisdiction. 86 Section
5,
Article
VIII
of
the
Constitution
provides:
x
x
x
As such, this petition must necessary fail, as this Court does not have original jurisdiction over a petition for
declaratory relief even if only questions of law are involved.87
Assuming that a petition for declaratory relief is the proper remedy, and that the petitions should have been filed
with the Regional Trial Court, we have, time and again, resolved to treat such a petition as one for prohibition,
provided that the case has far-reaching implications and transcendental issues that need to be resolved, 88 as in these
present petitions.
On a related issue, we initially found convincing the argument that the petitions should have been filed with the
Regional Trial Court, it having concurrent jurisdiction with this Court over a special civil action for prohibition, and
original jurisdiction over petitions for declaratory relief.
However, as we have repeatedly said, the petitions at bar are of transcendental importance warranting a relaxation of

the doctrine of hierarchy of courts.89 In the case of Jaworski v. PAGCOR,90the Court ratiocinated:
Granting arguendo that the present action cannot be properly treated as a petition for prohibition, the
transcendental importance of the issues involved in this case warrants that we set aside the technical defects
and take primary jurisdiction over the petition at bar. x x x This is in accordance with the well-entrenched
principle that rules of procedure are not inflexible tools designed to hinder or delay, but to facilitate and
promote the administration of justice. Their strict and rigid application, which would result in technicalities
that tend to frustrate, rather than promote substantial justice, must always be eschewed. (Emphasis supplied)
persons aggrieved thereby
As to who may file a petition for certiorari, prohibition or mandamus, Petron posits that petitioners are not among
the persons aggrieved contemplated under Sections 1 to 3 of Rule 65 of the Rules of Court.
Chevron argues that petitioners, whether as citizens, taxpayers, or legislators, lack the legal standing to assail
the validity and constitutionality of Ordinance No. 8187. It further claims that petitioners failed to show that they
have suffered any injury and/or threatened injury as a result of the act complained of. 91chanrobleslaw
Shell also points out that the petitions cannot be considered taxpayers suit, for then, there should be a claim that
public funds were illegally disbursed and that petitioners have sufficient interest concerning the prevention of illegal
expenditure of public money.92 In G.R. No. 187916, Shell maintains that the petitioners failed to show their personal
interest in the case and/or to establish that they may represent the general sentiments of the constituents of the City
of Manila so as to be treated as a class suit. Even the minors, it argues, are not numerous and representative enough
for the petition to be treated as a class suit. As to the city councilors who joined the petitioners in assailing the
validity of Ordinance No. 8187, Shell posits that they cannot invoke the ruling in Prof. David v. Pres. MacapagalArroyo,93 where the Court held that legislators may question the constitutionality of a statute, if and when it infringes
upon their prerogatives as legislators, because of the absence of the allegation that the assailed ordinance indeed
infringes upon their prerogatives.
Former Mayor Lim submitted a similar position supported by a number of cases on the concept of locus standi,94 the
direct injury test,95 an outline of the stringent requirements of legal standing when suing as a citizen,96 as a
taxpayer,97 as a legislator and in cases where class suits are filed in behalf of all citizens. 98chanrobleslaw
Their arguments are misplaced.
In G.R. No. 156052, we ruled that the petitioners in that case have a legal right to seek the enforcement of Ordinance
No. 8027 because the subject of the petition concerns a public right, and they, as residents of Manila, have a direct
interest in the implementation of the ordinances of the city. Thus:
To support the assertion that petitioners have a clear legal right to the enforcement of the ordinance, petitioner SJS
states that it is a political party registered with the Commission on Elections and has its offices in Manila. It claims
to have many members who are residents of Manila. The other petitioners, Cabigao and Tumbokon, are allegedly
residents
of
Manila.
We need not belabor this point. We have ruled in previous cases that when a mandamus proceeding concerns a
public right and its object is to compel a public duty, the people who are interested in the execution of the laws are
regarded as the real parties in interest and they need not show any specific interest. Besides, as residents of Manila,
petitioners have a direct interest in the enforcement of the citys ordinances.99 x x x (Citations omitted)
No different are herein petitioners who seek to prohibit the enforcement of the assailed ordinance, and who deal with
the same subject matter that concerns a public right. Necessarily, the people who are interested in the nullification of
such an ordinance are themselves the real parties in interest, for which reason, they are no longer required to show
any specific interest therein. Moreover, it is worth mentioning that SJS, now represented by SJS Officer Alcantara,
has been recognized by the Court in G.R. No. 156052 to have legal standing to sue in connection with the same
subject matter herein considered. The rest of the petitioners are residents of Manila. Hence, all of them have a direct
interest in the prohibition proceedings against the enforcement of the assailed ordinance.

In the case of Initiatives for Dialogue and Empowerment through Alternative Legal Services, Inc. (IDEALS, INC.) v.
Power Sector Assets and Liabilities Management Corporation (PSALM),100 involving a petition for certiorari and
prohibition to permanently enjoin PSALM from selling the Angat Hydro-Electric Power Plant (AHEPP) to Korea
Water Resources Corporation (K-Water), the Court ruled:chanRoblesvirtualLawlibrary
Legal standing or locus standi has been defined as a personal and substantial interest in the case such that the
party has sustained or will sustain direct injury as a result of the governmental act that is being challenged, alleging
more than a generalized grievance. x x x This Court, however, has adopted a liberal attitude on the locus standi of a
petitioner where the petitioner is able to craft an issue of transcendental significance to the people, as when the
issues raised are of paramount importance to the public. Thus, when the proceeding involves the assertion of a
public right, the mere fact that the petitioner is a citizen satisfies the requirement of personal interest.
There can be no doubt that the matter of ensuring adequate water supply for domestic use is one of paramount
importance to the public. That the continued availability of potable water in Metro Manila might be compromised if
PSALM proceeds with the privatization of the hydroelectric power plant in the Angat Dam Complex confers upon
petitioners such personal stake in the resolution of legal issues in a petition to stop its implementation. 101 (Emphasis
supplied; citations omitted)
In like manner, the preservation of the life, security and safety of the people is indisputably a right of utmost
importance to the public. Certainly, the petitioners, as residents of Manila, have the required personal interest to seek
relief from this Court to protect such right.
in excess of its or his jurisdiction,
or with grave abuse of discretion
amounting to lack or excess of jurisdiction
Petron takes issue with the alleged failure of the petitioners to establish the facts with certainty that would show that
the acts of the respondents fall within the parameters of the grave abuse of discretion clause settled by jurisprudence,
to wit:chanRoblesvirtualLawlibrary
x x x [G]rave abuse of discretion means such capricious and whimsical exercise of judgment as is equivalent to
lack of jurisdiction. The abuse of discretion must be grave as where the power is exercised in an arbitrary or despotic
manner by reason of passion or personal hostility and must be so patent and gross as to amount to an evasion of
positive duty or to a virtual refusal to perform the duty enjoined by or to act all in contemplation of law.102
It is pointless to discuss the matter at length in these instant cases of transcendental importance in view of the
Courts pronouncement, in Magallona v. Ermita.103 There it held that the writs of certiorari and prohibition are
proper remedies to test the constitutionality of statutes, notwithstanding the following
defects:chanRoblesvirtualLawlibrary
In praying for the dismissal of the petition on preliminary grounds, respondents seek a strict observance of the
offices of the writs of certiorari and prohibition, noting that the writs cannot issue absent any showing of grave
abuse of discretion in the exercise of judicial, quasi-judicial or ministerial powers on the part of
respondents and
resulting
prejudice
on
the
part
of
petitioners.
Respondents submission holds true in ordinary civil proceedings. When this Court exercises its constitutional power
of judicial review, however, we have, by tradition, viewed the writs of certiorari and prohibition as proper remedial
vehicles to test the constitutionality of statutes, and indeed, of acts of other branches of government. Issues of
constitutional import x x x carry such relevance in the life of this nation that the Court inevitably finds itself
constrained to take cognizance of the case and pass upon the issues raised, non-compliance with the letter of

procedural rules notwithstanding. The statute sought to be reviewed here is one such law.104 (Emphasis supplied;
citations omitted)
Requisites of judicial review
For a valid exercise of the power of judicial review, the following requisites shall concur: (1) the existence of a legal
controversy; (2) legal standing to sue of the party raising the constitutional question; (3) a plea that judicial review
be exercised at the earliest opportunity; and (4) the constitutional question is the lis mota of the
case.105chanrobleslaw
Only the first two requisites are put in issue in these cases.
On the matter of the existence of a legal controversy, we reject the contention that the petitions consist of bare
allegations based on speculations, surmises, conjectures and hypothetical grounds.
The Court declared Ordinance No. 8027 valid and constitutional and ordered its implementation. With the passing of
the new ordinance containing the contrary provisions, it cannot be any clearer that here lies an actual case or
controversy for judicial review. The allegation on this, alone, is sufficient for the purpose.
The second requisite has already been exhaustively discussed.
Proof of identification required in the notarization
of the verification and certification against forum
shopping in G.R. No. 187916
At the bottom of the Verification and Certification against Forum Shopping of the petition in G.R. No. 187916 is the
statement of the notary public to the effect that the affiant, in his presence and after presenting an integrally
competent proof of identification with signature and photograph,106 signed the document under oath.
Citing Sec. 163 of the Local Government Code,107 which provides that an individual acknowledging any document
before a notary public shall present his Community Tax Certificate (CTC), Chevron posits that the petitioners
failure to present his CTC rendered the petition fatally defective warranting the outright dismissal of the petition.
We disagree.
The verification and certification against forum shopping are governed specifically by Sections 4 and 5, Rule 7 of
the Rules of Court.
Section 4 provides that a pleading, when required to be verified, shall be treated as an unsigned pleading if it lacks a
proper verification while Section 5 requires that the certification to be executed by the plaintiff or principal party be
under oath.
These sections, in turn, should be read together with Sections 6 and 12, Rule 2 of the 2004 Rules on Notarial
Practice.
Section 6108 of the latter Rules, specifically, likewise provides that any competent evidence of identity specified
under Section 12 thereof may now be presented before the notary public, to wit:chanRoblesvirtualLawlibrary
SEC. 12. Competent Evidence of Identity. - The phrase competent evidence of identity refers to the identification
of
an
individual
based
on:chanroblesvirtuallawlibrary

(a)

(b)

at least one current identification document issued by an official agency bearing the photograph and signature
of the individual, such as but not limited to passport, drivers license, Professional Regulations Commission
ID, National Bureau of Investigation clearance, police clearance, postal ID, voters ID, Barangay certification,
Government Service and Insurance System (GSIS) e-card, Social Security System (SSS) card, Philhealth card,
senior citizen card, Overseas Workers Welfare Administration (OWWA) ID, OFW ID, seamans book, alien
certificate of registration/immigrant certificate of registration, government office ID, certification from the
National Council for the Welfare of Disable Persons (NCWDP), Department of Social Welfare and
Development (DSWD) certification; or
x x x.109

Forum shopping
Shell contends that the petitioners in G.R. No. 187836 violated the rule against forum shopping allegedly because all
the elements thereof are present in relation to G.R. No. 156052, to wit:chanroblesvirtuallawlibrary
1. identity of parties, or at least such parties who represent the same interests in both actions
According to Shell, the interest of petitioner SJS in G.R. No. 156052 and the officers of SJS in G.R. No. 187836 are
clearly the same. Moreover, both actions implead the incumbent mayor of the City of Manila as respondent. Both
then respondent Mayor Atienza in G.R. No. 156052 and respondent former Mayor Lim in G.R. No. 187836 are sued
in their capacity as Manila mayor.
2. identity of rights asserted and relief prayed for, the relief being founded on the same fact(s)
Shell contends that, in both actions, petitioners assert the same rights to health and to a balanced and healthful
ecology relative to the fate of the Pandacan terminal, and seek essentially the same reliefs, that is, the removal of the
oil depots from the present site.
3. the identity of the two preceding particulars is such that any judgment rendered in the pending case, regardless of
which party is successful, would amount to res judicata in the other
Relative to the filing of the Manifestation and Motion to: a) Stop the City Council of Manila from further hearing
the amending ordinance to Ordinance No. 8027 x x x (Manifestation and Motion) and Very Urgent Motion to Stop
the Mayor of the City of Manila from Signing Draft Ordinance No. 7177 [now Ordinance No. 8187] and to Cite Him
for Contempt if He Would Do So (Urgent Motion) both in G.R. No. 156052, Shell points out the possibility that the
Court would have rendered conflicting rulings on cases involving the same facts, parties, issues and reliefs prayed
for.110chanrobleslaw
We are not persuaded.
In Spouses Cruz v. Spouses Caraos,111 the Court expounded on the nature of forum shopping.
Thus:chanRoblesvirtualLawlibrary
Forum shopping is an act of a party, against whom an adverse judgment or order has been rendered in one forum, of
seeking and possibly getting a favorable opinion in another forum, other than by appeal or special civil action
for certiorari. It may also be the institution of two or more actions or proceedings grounded on the same cause on
the supposition that one or the other court would make a favorable disposition. The established rule is that for forum

shopping to exist, both actions must involve the same transactions, same essential facts and circumstances and must
raise identical causes of actions, subject matter, and issues. x x x112 (Citations omitted)
It bears to stress that the present petitions were initially filed, not to secure a judgment adverse to the first decision,
but, precisely, to enforce the earlier ruling to relocate the oil depots from the Pandacan area.
As to the matter of the denial of the petitioners Manifestation and Urgent Motion in G.R. No. 156052, which were
both incidental to the enforcement of the decision favorable to them brought about by the intervening events after
the judgment had become final and executory, and which involve the same Ordinance assailed in these petitions, we
so hold that the filing of the instant petitions is not barred by res judicata.
In the same case of Spouses Cruz v. Spouses Caraos involving the re-filing of a complaint, which had been earlier
dismissed without qualification that the dismissal was with prejudice, and which had not been decided on the merits,
the Court declared that such re-filing did not amount to forum shopping. It ratiocinated:chanRoblesvirtualLawlibrary
It is not controverted that the allegations of the respective complaints in both Civil Case No. 95-1387 and Civil Case
No. 96-0225 are similarly worded, and are identical in all relevant details, including typographical errors, except for
the additional allegations in support of respondents prayer for the issuance of preliminary injunction in Civil Case
No. 95-1387. It is similarly not disputed that both actions involve the same transactions; same essential facts and
circumstances; and raise identical causes of actions, subject matter, and issues.cralawred
x

x x x The dismissal of Civil Case No. 95-1387 was without prejudice. Indeed, the Order dated 20 November 1995,
dismissing Civil Case No. 95-1387 was an unqualified dismissal. More significantly, its dismissal was not based on
grounds under paragraphs (f), (h), and (i) of Section 1 of Rule 16 of the Rules of Court, which dismissal shall bar the
refiling of the same action or claim as crystallized in Section 5 of Rule 16 thereof, thus:chanRoblesvirtualLawlibrary
SEC. 5. Effect of dismissal. Subject to the right of appeal, an order granting a motion to dismiss based on
paragraphs (f), (h), and (i) of section 1 hereof shall bar the refiling of the same action or claim.
From the foregoing, it is clear that dismissals under paragraphs (f), (h), and (i) of Section 1 of Rule 16 of the Rules
of Court constitute res judicata, to wit:chanRoblesvirtualLawlibrary
(f) That the cause of action is barred by a prior judgment or by the statute of limitations;
x

(h) That the claim or demand set forth in the plaintiffs pleading has been paid, waived, abandoned, or otherwise
extinguished;
(i) That the claim on which the action is founded is unenforceable under the provisions of the statute of frauds.
Res judicata or bar by prior judgment is a doctrine which holds that a matter that has been adjudicated by a court of
competent jurisdiction must be deemed to have been finally and conclusively settled if it arises in any subsequent
litigation between the same parties and for the same cause. Res judicata exists when the following elements are
present: (a) the former judgment must be final; (b) the court which rendered judgment had jurisdiction over the
parties and the subject matter; (3) it must be a judgment on the merits; and (d) and there must be, between the first
and second actions, identity of parties, subject matter, and cause of action.113 (Emphasis supplied; citations omitted)
Here, it should be noted that this Court denied the said Manifestation and Urgent Motion, and refused to act on the
succeeding pleadings, for being moot.114 Clearly, the merits of the motion were not considered by the Court. The
following disquisition of the Court in Spouses Cruz v. Spouses Caraos is further

enlightening:chanRoblesvirtualLawlibrary
The judgment of dismissal in Civil Case No. 95-1387 does not constitute res judicata to sufficiently bar the refiling
thereof in Civil Case No. 96-0225. As earlier underscored, the dismissal was one without prejudice. Verily, it was
not a judgment on the merits. It bears reiterating that a judgment on the merits is one rendered after a
determination of which party is right, as distinguished from a judgment rendered upon some preliminary or
formal or merely technical point. The dismissal of the case without prejudice indicates the absence of a decision
on the merits and leaves the parties free to litigate the matter in a subsequent action as though the dismissed action
had not been commenced.115 (Emphasis supplied; citations omitted)
Considering that there is definitely no forum shopping in the instant cases, we need not discuss in detail the elements
of forum shopping.chanrobleslaw
II
The Local Government Code of 1991 expressly provides that the Sangguniang Panlungsod is vested with the power
to reclassify land within the jurisdiction of the city116 subject to the pertinent provisions of the Code. It is also
settled that an ordinance may be modified or repealed by another ordinance.117 These have been properly applied in
G.R. No. 156052, where the Court upheld the position of the Sangguniang Panlungsod to reclassify the land subject
of the Ordinance,118 and declared that the mayor has the duty to enforce Ordinance No. 8027, provided that it has not
been repealed by the Sangguniang Panlungsod or otherwise annulled by the courts.119 In the same case, the Court
also used the principle that the Sanguniang Panlungsod is in the best position to determine the needs of its
constituents120 that the removal of the oil depots from the Pandacan area is necessary to protect the residents of
Manila from catastrophic devastation in case of a terrorist attack on the Pandacan Terminals. 121chanrobleslaw
Do all these principles equally apply to the cases at bar involving the same subject matter to justify the contrary
provisions of the assailed Ordinance?
We answer in the negative.
We summarize the position of the Sangguniang Panlungsod on the matter subject of these petitions. In 2001,
the Sanggunian found the relocation of the Pandacan oil depots necessary. Hence, the enactment of Ordinance No.
8027.
In 2009, when the composition of the Sanggunian had already changed, Ordinance No. 8187 was passed in favor of
the retention of the oil depots. In 2012, again when some of the previous members were no longer re-elected, but
with the Vice-Mayor still holding the same seat, and pending the resolution of these petitions, Ordinance No. 8283
was enacted to give the oil depots until the end of January 2016 within which to transfer to another site. Former
Mayor Lim stood his ground and vetoed the last ordinance.
In its Comment, the 7th Council (2007-2010) alleged that the assailed Ordinance was enacted to alleviate the
economic condition of its constituents.122chanrobleslaw
Expressing the same position, former Mayor Lim even went to the extent of detailing the steps 123 he took prior to the
signing of the Ordinance, if only to show his honest intention to make the right decision.
The fact remains, however, that notwithstanding that the conditions with respect to the operations of the oil depots
existing prior to the enactment of Ordinance No. 8027 do not substantially differ to this day, as would later be
discussed, the position of the Sangguniang Panlungsod on the matter has thrice changed, largely depending on the
new composition of the council and/or political affiliations. The foregoing, thus, shows that its determination of the
general welfare of the city does not after all gear towards the protection of the people in its true sense and
meaning, but is, one way or another, dependent on the personal preference of the members who sit in the council as

to which particular sector among its constituents it wishes to favor.

Now that the City of Manila, through the mayor and the city councilors, has changed its view on the matter, favoring
the citys economic-related benefits, through the continued stay of the oil terminals, over the protection of the very
lives and safety of its constituents, it is imperative for this Court to make a final determination on the basis of the
facts on the table as to which specific right of the inhabitants of Manila should prevail. For, in this present
controversy, history reveals that there is truly no such thing as the will of Manila insofar as the general welfare of
the people is concerned.
If in sacrilege, in free translation of Angara124 by Justice Laurel, we say when the judiciary mediates we do not in
reality nullify or invalidate an act of the Manila Sangguniang Panlungsod, but only asserts the solemn and sacred
obligation assigned to the Court by the Constitution to determine conflicting claims of authority under the
Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and
guarantees to them.chanrobleslaw
III
The measures taken by the intervenors to lend support to their position that Manila is now safe despite the presence
of the oil terminals remain ineffective. These have not completely removed the threat to the lives of the inhabitants
of Manila.
In G.R. No. 156052, the validity and constitutionality of Ordinance No. 8027 was declared as a guarantee for the
protection of the constitutional right to life of the residents of Manila. There, the Court said that the enactment of the
said ordinance was a valid exercise of police power with the concurrence of the two requisites: a lawful subject to
safeguard the rights to life, security and safety of all the inhabitants of Manila;125 and a lawful method the
enactment of Ordinance No. 8027 reclassifying the land use from industrial to commercial, which effectively ends
the continued stay of the oil depots in Pandacan.126chanrobleslaw
In the present petitions, the respondents and the oil companies plead that the Pandacan Terminal has never been one
of the targets of terrorist attacks;127 that the petitions were based on unfounded fears and mere conjectures;128 and
that the possibility that it would be picked by the terrorists is nil given the security measures installed
thereat.129chanrobleslaw
The intervenors went on to identify the measures taken to ensure the safety of the people even with the presence of
the Pandacan Terminals. Thus:chanroblesvirtuallawlibrary
1. Chevron claims that it, together with Shell and Petron, continues to enhance the safety and security features of the
terminals. They likewise adopt fire and product spill prevention measures in accordance with the local standards set
by the Bureau of Fire Protection, among others, and with the international standards of the American Petroleum
Industry (API) and the National Fire Prevention and Safety Association (NFPSA); that since 1914, the oil
depots had not experienced any incident beyond the ordinary risks and expectations130 of the residents of
Manila; and that it received a passing grade on the safety measures they installed in the facilities from the
representatives of the City of Manila who conducted an ocular inspection on 22 May 2009; and
2. Referring to the old MOU entered into between the City of Manila and the DOE, on the one hand, and the oil
companies, on the other, where the parties thereto conceded and acknowledged that the scale-down option for the
Pandacan Terminal operations is the best alternative to the relocation of the terminals, Shell enumerates the steps
taken to scale down its operations.
As to the number of main fuel tanks, the entire Pandacan Terminal has already decommissioned twenty-eight out of
sixty-four tanks. Speaking for Shell alone, its LPG Spheres, which it claims is the only product that may cause
explosion, was part of those decommissioned, thereby allegedly removing the danger of explosion. Safety buffer
zones and linear/green parks were likewise created to separate the terminal from the nearest residential area. Shells
portion of the oil depot is likewise allegedly equipped with the latest technology to ensure air-quality control and

water-quality control, and to prevent and cope with possible oil spills with a crisis management plan in place in the
event that an oil spill occurs. Finally, Shell claims that the recommendations of EQE International in its Quantitative
Risk Assessment (QRA) study, which it says is one of the leading independent risk assessment providers in the
world and largest risk management consultancy, were sufficiently complied with; and that, on its own initiative, it
adopted additional measures for the purpose, for which reason, the individual risk level resulting from any incident
occurring from the Pandacan Terminal, per the QRA study, is twenty (20) times lower compared to the individual
risk level of an average working or domestic environment.131chanrobleslaw
We are not persuaded.
The issue of whether or not the Pandacan Terminal is not a likely target of terrorist attacks has already been passed
upon in G. R. No. 156052. Based on the assessment of the Committee on Housing, Resettlement and Urban
Development of the City of Manila and the then position of the Sangguniang Panlungsod,132 the Court was
convinced that the threat of terrorism is imminent. It remains so convinced.
Even assuming that the respondents and intervenors were correct, the very nature of the depots where millions of
liters of highly flammable and highly volatile products, regardless of whether or not the composition may cause
explosions, has no place in a densely populated area. Surely, any untoward incident in the oil depots, be it related to
terrorism of whatever origin or otherwise, would definitely cause not only destruction to properties within and
among the neighboring communities but certainly mass deaths and injuries.
With regard to the scaling down of the operations in the Pandacan Terminals, which the oil companies continue to
insist to have been validated and recognized by the MOU, the Court, in G.R. No. 156052, has already put this issue
to rest. It specifically declared that even assuming that the terms of the MOU and Ordinance No. 8027 were
inconsistent, the resolutions ratifying the MOU gave it full force and effect only until 30 April 2003. 133chanrobleslaw
The steps taken by the oil companies, therefore, remain insufficient to convince the Court that the dangers posed by
the presence of the terminals in a thickly populated area have already been completely removed.
For, given that the threat sought to be prevented may strike at one point or another, no matter how remote it is as
perceived by one or some, we cannot allow the right to life to be dependent on the unlikelihood of an event.
Statistics and theories of probability have no place in situations where the very life of not just an individual but of
residents of big neighborhoods is at stake.chanrobleslaw
IV
It is the removal of the danger to life not the mere subdual of risk of catastrophe, that we saw in and made us favor
Ordinance No. 8027. That reason, unaffected by Ordinance No. 8187, compels the affirmance of our Decision in
G.R. No. 156052.
In striking down the contrary provisions of the assailed Ordinance relative to the continued stay of the oil depots, we
follow the same line of reasoning used in G.R. No. 156052, to wit:chanRoblesvirtualLawlibrary
Ordinance No. 8027 was enacted for the purpose of promoting sound urban planning, ensuring health, public safety
and general welfare of the residents of Manila. The Sanggunian was impelled to take measures to protect the
residents of Manila from catastrophic devastation in case of a terrorist attack on the Pandacan Terminals. Towards
this objective, the Sanggunian reclassified the area defined in the ordinance from industrial to commercial.
The following facts were found by the Committee on Housing, Resettlement and Urban Development of the City of
Manila which recommended the approval of the ordinance:

(1)
(2)
(3)
(4)

the depot facilities contained 313.5 million liters of highly flammable and highly volatile products which
include petroleum gas, liquefied petroleum gas, aviation fuel, diesel, gasoline, kerosene and fuel oil among
others;
the depot is open to attack through land, water or air;
it is situated in a densely populated place and near Malacaang Palace; and
in case of an explosion or conflagration in the depot, the fire could spread to the neighboring communities.

The ordinance was intended to safeguard the rights to life, security and safety of all the inhabitants of Manila and
not just of a particular class. The depot is perceived, rightly or wrongly, as a representation of western interests
which means that it is a terrorist target. As long as it (sic) there is such a target in their midst, the residents of Manila
are not safe. It therefore became necessary to remove these terminals to dissipate the threat. According to
respondent:chanRoblesvirtualLawlibrary
Such a public need became apparent after the 9/11 incident which showed that what was perceived to be impossible
to happen, to the most powerful country in the world at that, is actually possible. The destruction of property and the
loss of thousands of lives on that fateful day became the impetus for a public need. In the aftermath of the 9/11
tragedy, the threats of terrorism continued [such] that it became imperative for governments to take measures to
combat their effects.
x

Both law and jurisprudence support the constitutionality and validity of Ordinance No. 8027. Without a doubt, there
are no impediments to its enforcement and implementation. Any delay is unfair to the inhabitants of the City of
Manila and its leaders who have categorically expressed their desire for the relocation of the terminals. Their power
to chart and control their own destiny and preserve their lives and safety should not be curtailed by the intervenors
warnings of doomsday scenarios and threats of economic disorder if the ordinance is enforced. 134
The same best interest of the public guides the present decision. The Pandacan oil depot remains a terrorist target
even if the contents have been lessened. In the absence of any convincing reason to persuade this Court that the life,
security and safety of the inhabitants of Manila are no longer put at risk by the presence of the oil depots, we hold
that Ordinance No. 8187 in relation to the Pandacan Terminals is invalid and unconstitutional.
There is, therefore, no need to resolve the rest of the issues.
Neither is it necessary to discuss at length the test of police power against the assailed ordinance. Suffice it to state
that the objective adopted by the Sangguniang Panlungsod to promote the constituents general welfare in terms of
economic benefits cannot override the very basic rights to life, security and safety of the people.
In. G.R. No. 156052, the Court explained:chanRoblesvirtualLawlibrary

Essentially, the oil companies are fighting for their right to property. They allege that they stand to lose billions of
pesos if forced to relocate. However, based on the hierarchy of constitutionally protected rights, the right to life
enjoys precedence over the right to property. The reason is obvious: life is irreplaceable, property is not. When the
state or LGUs exercise of police power clashes with a few individuals right to property, the former should
prevail.135
We thus conclude with the very final words in G.R. No. 156052:chanRoblesvirtualLawlibrary
On Wednesday, January 23, 2008, a defective tanker containing 2,000 liters of gasoline and 14,000 liters of diesel
exploded in the middle of the street a short distance from the exit gate of the Pandacan Terminals, causing death,
extensive damage and a frightening conflagration in the vicinity of the incident. Need we say anthing about what
will happen if it is the estimated 162 to 211 million liters [or whatever is left of the 26 tanks] of petroleum products
in the terminal complex will blow up?136

V
As in the prequel case, we note that as early as October 2001, the oil companies signed a MOA with the DOE
obliging themselves to:chanRoblesvirtualLawlibrary
... undertake a comprehensive and comparative study ... [which] shall include the preparation of a Master Plan,
whose aim is to determine the scope and timing of the feasible location of the Pandacan oil terminals and all
associated facilities and infrastructure including government support essential for the relocation such as the
necessary transportation infrastructure, land and right of way acquisition, resettlement of displaced residents and
environmental and social acceptability which shall be based on mutual benefit of the Parties and the public.
such that:chanRoblesvirtualLawlibrary
Now that they are being compelled to discontinue their operations in the Pandacan Terminals, they cannot feign
unreadiness considering that they had years to prepare for this eventuality.137
On the matter of the details of the relocation, the Court gave the oil companies the following time frames for
compliance:chanRoblesvirtualLawlibrary
To ensure the orderly transfer, movement and relocation of assets and personnel, the intervenors Chevron
Philippines Inc., Petron Corporation and Pilipinas Shell Petroleum Corporation shall, within a non-extendible period
of ninety (90) days, submit to the Regional Trial Court of Manila, Branch 39, the comprehensive plan and relocation
schedule which have allegedly been prepared. The presiding judge of Manila RTC, Branch 39 will monitor the strict
enforcement of this resolution.138
The periods were given in the Decision in G.R. No. 156052 which became final on 23 April 2009. Five years have
passed, since then. The years of non-compliance may be excused by the swing of local legislative leads. We now
stay the sway and begin a final count.

A comprehensive and well-coordinated plan within a specific time-frame shall, therefore, be observed in the
relocation of the Pandacan Terminals. The oil companies shall be given a fresh non-extendible period of forty-five
(45) days from notice within which to submit to the Regional Trial Court, Branch 39, Manila an updated
comprehensive plan and relocation schedule. The relocation, in turn, shall be completed not later than six months
from the date of their submission.
Finally, let it be underscored that after the last Manifestation filed by Shell informing this Court that respondent
former Mayor Lim vetoed Ordinance No. 8283 for the second time, and was anticipating its referral to the President
for the latters consideration, nothing was heard from any of the parties until the present petitions as to the status of
the approval or disapproval of the said ordinance. As it is, the fate of the Pandacan Terminals remains dependent on
this final disposition of these cases.chanrobleslaw
VI
On the matter of the failure of Atty. Gempis to immediately comply with the directives of this Court to file the
Memorandum for the Vice-Mayor and the city councilors who voted in favor of the assailed Ordinance, the records
do not bear proof that he received a copy of any of the resolutions pertaining to the filing of the Memorandum.
A narration of the events from his end would show, however, that he was aware of the directive issued in 2009 when
he stated that when the City Legal Officer filed its Memorandum dated 8 February 2010, [he] thought the filing of a
Memorandum for the other respondent city officials could be dispensed with.139 There was also a categorical
admission that he received the later Resolution of 31 May 2011 but that he could not prepare a Memorandum
defending the position of respondents vice-mayor and the city councilors who voted in favor of Ordinance No. 8187
in view of the on-going drafting of Ordinance No. 8283, which would change the position of the Sanggunian, if
subsequently approved.
The reasons he submitted are not impressed with merit.
That he was not officially designated as the counsel for the vice-mayor and the city councilors is beside the point. As
an officer of the court, he cannot feign ignorance of the fact that a resolution of this Court is not a mere request but
an order which should be complied with promptly and completely.140 As early as 2009, he should have immediately
responded and filed a Manifestation and therein set forth his reasons why he cannot represent the vice-mayor and the
city councilors. And, even assuming that the 31 May 2011 Resolution was the first directive he personally received,
he had no valid excuse for disregarding the same. Worse, the Court had to issue a show cause order before he finally
heeded.
Atty. Gempis should strive harder to live up to his duties of observing and maintaining the respect due to the courts,
respect for law and for legal processes and of upholding the integrity and dignity of the legal profession in order to
perform his responsibilities as a lawyer effectively.141chanrobleslaw
In Sibulo v. Ilagan,142 which involves a lawyers repeated failure to comply with the directives of the Court, the
penalty recommended by the Integrated Bar of the Philippines was reduced from suspension to reprimand and a
warning. The Court ratiocinated:chanRoblesvirtualLawlibrary
Considering, however, that respondent was absolved of the administrative charge against him and is being taken to
task for his intransigence and lack of respect, the Court finds that the penalty of suspension would not be warranted
under
the
circumstances.cralawred
x

To the Courts mind, a reprimand and a warning are sufficient sanctions for respondents disrespectful actuations
directed against the Court and the IBP. The imposition of these sanctions in the present case would be more

consistent with the avowed purpose of disciplinary case, which is not so much to punish the individual attorney as
to protect the dispensation of justice by sheltering the judiciary and the public from the misconduct or inefficiency
of officers of the court.143
We consider the participation of Atty. Gempis in this case and opt to be lenient even as we reiterate the objective of
protecting the dispensation of justice. We deem it sufficient to remind Atty. Gempis to be more mindful of his duty
as a lawyer towards the Court.
WHEREFORE, in light of all the foregoing, Ordinance No. 8187 is hereby
declared UNCONSTITUTIONAL and INVALID with respect to the continued stay of the Pandacan Oil Terminals.
The incumbent mayor of the City of Manila is hereby ordered to CEASE and DESIST from enforcing Ordinance
No. 8187. In coordination with the appropriate government agencies and the parties herein involved, he is further
ordered to oversee the relocation and transfer of the oil terminals out of the Pandacan area.
As likewise required in G.R. No. 156052, the intervenors Chevron Philippines, Inc., Pilipinas Shell Petroleum
Corporation, and Petron Corporation shall, within a non-extendible period of forty-five (45) days, submit to the
Regional Trial Court, Branch 39, Manila an updated comprehensive plan and relocation schedule, which relocation
shall be completed not later than six (6) months from the date the required documents are submitted. The presiding
judge of Branch 39 shall monitor the strict enforcement of this Decision.
For failure to observe the respect due to the Court, Atty. Luch R. Gempis, Jr., Secretary of the Sangguniang
Panlungsod, is REMINDED of his duties towards the Court and WARNED that a repetition of an act similar to that
here committed shall be dealt with more severely.
SO ORDERED.cral

20. Toshiba vs CIR (March 9, 2010)

In this Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court, petitioner Toshiba
Information Equipment (Philippines), Inc. (Toshiba) seeks the reversal and setting aside of (1) the Decision [2] dated
August 29, 2002 of the Court of Appeals in CA-G.R. SP No. 63047, which found that Toshiba was not entitled to the
credit/refund of its unutilized input Value-Added Tax (VAT) payments attributable to its export sales, because it was
a tax-exempt entity and its export sales were VAT-exempt transactions; and (2) the Resolution [3] dated February 19,
2003 of the appellate court in the same case, which denied the Motion for Reconsideration of Toshiba. The herein
assailed judgment of the Court of Appeals reversed and set aside the Decision [4] dated October 16, 2000 of the Court
of Tax Appeals (CTA) in CTA Case No. 5762 granting the claim for credit/refund of Toshiba in the amount
of P1,385,282.08.

Toshiba is a domestic corporation principally engaged in the business of manufacturing and exporting of
electric machinery, equipment systems, accessories, parts, components, materials and goods of all kinds, including
those relating to office automation and information technology and all types of computer hardware and software,
such as but not limited to HDD-CD-ROM and personal computer printed circuit board. [5] It is registered with the
Philippine Economic Zone Authority (PEZA) as an Economic Zone (ECOZONE) export enterprise in the Laguna
Technopark, Inc., as evidenced by Certificate of Registration No. 95-99 dated September 27, 1995. [6] It is also
registered with Regional District Office No. 57 of the Bureau of Internal Revenue (BIR) in San Pedro, Laguna, as a
VAT-taxpayer with Taxpayer Identification No. (TIN) 004-739-137.[7]
In its VAT returns for the first and second quarters of 1997, [8] filed on April 14, 1997 and July 21, 1997,
respectively, Toshiba declared input VAT payments on its domestic purchases of taxable goods and services in the
aggregate sum of P3,875,139.65,[9] with no zero-rated sales. Toshiba subsequently submitted to the BIR on July 23,
1997 its amended VAT returns for the first and second quarters of 1997, [10] reporting the same amount of input VAT
payments but, this time, with zero-rated sales totaling P7,494,677,000.00.[11]
On March 30, 1999, Toshiba filed with the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback
Center of the Department of Finance (DOF One-Stop Shop) two separate applications for tax credit/refund [12] of its
unutilized input VAT payments for the first half of 1997 in the total amount of P3,685,446.73.[13]
The next day, on March 31, 1999, Toshiba likewise filed with the CTA a Petition for Review [14] to toll the
running of the two-year prescriptive period under Section 230 of the Tax Code of 1977, [15] as amended.[16] In said
Petition, docketed as CTA Case No. 5762, Toshiba prayed that
[A]fter due hearing, judgment be rendered ordering [herein respondent Commissioner of Internal
Revenue (CIR)] to refund or issue to [Toshiba] a tax refund/tax credit certificate in the amount of
P3,875,139.65 representing unutilized input taxes paid on its purchase of taxable goods and
services for the period January 1 to June 30, 1997.[17]
The Commissioner of Internal Revenue (CIR) opposed the claim for tax refund/credit of Toshiba, setting up
the following special and affirmative defenses in his Answer[18]
5.
[Toshibas] alleged claim for refund/tax credit is subject to administrative
routinary investigation/examination by [CIRs] Bureau;
6.
[Toshiba] failed miserably to show that the total amount of P3,875,139.65 claimed
as VAT input taxes, were erroneously or illegally collected, or that the same are properly
documented;
7.
Taxes paid and collected are presumed to have been made in accordance with law;
hence, not refundable;
8.
In an action for tax refund, the burden is on the taxpayer to establish its right to
refund, and failure to sustain the burden is fatal to the claim for refund;
9.
It is incumbent upon [Toshiba] to show that it has complied with the provisions of
Section 204 in relation to Section 229 of the Tax Code;
10.
Well-established is the rule that claims for refund/tax credit are construed
in strictissimi juris against the taxpayer as it partakes the nature of exemption from tax.[19]

[21]

Upon being advised by the CTA, [20] Toshiba and the CIR filed a Joint Stipulation of Facts and Issues,
wherein the opposing parties agreed and admitted that

1.
[Toshiba] is a duly registered value-added tax entity in accordance with Section
107 of the Tax Code, as amended.
2.
[Toshiba] is subject to zero percent (0%) value-added tax on its export sales in
accordance with then Section 100(a)(2)(A) of the Tax Code, as amended.
3.
[Toshiba] filed its quarterly VAT returns for the first two quarters of 1997 within
the legally prescribed period.
xxxx
7.

[Toshiba] is subject to zero percent (0%) value-added tax on its export sales.

8.
[Toshiba] has duly filed the instant Petition for Review within the two-year
prescriptive period prescribed by then Section 230 of the Tax Code.[22]
In the same pleading, Toshiba and the CIR jointly submitted the following issues for determination by the
CTA
Whether or not [Toshiba] has incurred input taxes in the amount of P3,875,139.65 for the period
January 1 to June 30, 1997 which are directly attributable to its export sales[.]
Whether or not the input taxes incurred by [Toshiba] for the period January 1 to June 30, 1997
have not been carried over to the succeeding quarters[.]
Whether or not input taxes incurred by [Toshiba] for the first two quarters of 1997 have not been
offset against any output tax[.]
Whether or not input taxes incurred by [Toshiba] for the first two quarters of 1997 are properly
substantiated by official receipts and invoices.[23]
During the trial before the CTA, Toshiba presented documentary evidence in support of its claim for tax
credit/refund, while the CIR did not present any evidence at all.
With both parties waiving the right to submit their respective memoranda, the CTA rendered its Decision in
CTA Case No. 5762 on October 16, 2000 favoring Toshiba. According to the CTA, the CIR himself admitted that the
export sales of Toshiba were subject to zero percent (0%) VAT based on Section 100(a)(2)(A)(i) of the Tax Code of
1977, as amended. Toshiba could then claim tax credit or refund of input VAT paid on its purchases of goods,
properties, or services, directly attributable to such zero-rated sales, in accordance with Section 4.102-2 of Revenue
Regulations No. 7-95. The CTA, though, reduced the amount to be credited or refunded to Toshiba
to P1,385,292.02.
The dispositive portion of the October 16, 2000 Decision of the CTA fully reads
WHEREFORE, [Toshibas] claim for refund of unutilized input VAT payments is
hereby GRANTED but in a reduced amount of P1,385,282.08 computed as follows:
1st Quarter
2nd Quarter
Total
Amount of claimed input taxes filed
with the DOF One Stop Shop Center P3,268,682.34 P416,764.39 P3,685,446.73
Less: 1) Input taxes not properly
supported by VAT invoices
and official receipts
a. Per SGVs verification

(Exh. I)
P 242,491.45 P154,391.13 P 396,882.58
b. Per this courts further
verification (Annex A)
P1,852,437.65 P 35,108.00 P1,887,545.65
P189,499.13 P2,300,164.65
Amount Refundable
P1,158,016.82 P227,265.26 P1,385,282.08
Respondent Commissioner of Internal Revenue is ORDERED to REFUND to
[Toshiba] or in the alternative, ISSUE a TAX CREDIT CERTIFICATE in the amount
of P1,385,282.08 representing unutilized input taxes paid by [Toshiba] on its purchases of taxable
goods and services for the period January 1 to June 30, 1997.[24]
Both Toshiba and the CIR sought reconsideration of the foregoing CTA Decision.
Toshiba asserted in its Motion for Reconsideration[25] that it had presented proper substantiation for
the P1,887,545.65 input VAT disallowed by the CTA.
The CIR, on the other hand, argued in his Motion for Reconsideration [26] that Toshiba was not entitled to the
credit/refund of its input VAT payments because as a PEZA-registered ECOZONE export enterprise, Toshiba was
not subject to VAT. The CIR invoked the following statutory and regulatory provisions
Section 24 of Republic Act No. 7916[27]
SECTION 24. Exemption from Taxes Under the National Internal Revenue Code. Any
provision of existing laws, rules and regulations to the contrary notwithstanding, no taxes, local
and national, shall be imposed on business establishments operating within the ECOZONE. In
lieu of paying taxes, five percent (5%) of the gross income earned by all businesses and
enterprises within the ECOZONE shall be remitted to the national government. x x x.
Section 103(q) of the Tax Code of 1977, as amended
Sec. 103. Exempt transactions. The following shall be exempt from the value-added tax:
xxxx
(q) Transactions which are exempt under special laws, except those granted under
Presidential Decree Nos. 66, 529, 972, 1491, and 1950, and non-electric cooperatives under
Republic Act No. 6938, or international agreements to which the Philippines is a signatory.
Section 4.103-1 of Revenue Regulations No. 7-95
SEC. 4.103-1. Exemptions. (A) In general. An exemption means that the sale of goods
or properties and/or services and the use or lease of properties is not subject to VAT (output tax)
and the seller is not allowed any tax credit on VAT (input tax) previously paid.
The person making the exempt sale of goods, properties or services shall not bill any
output tax to his customers because the said transaction is not subject to VAT. On the other hand, a
VAT-registered purchaser of VAT-exempt goods, properties or services which are exempt from
VAT is not entitled to any input tax on such purchase despite the issuance of a VAT invoice or
receipt.
The CIR contended that under Section 24 of Republic Act No. 7916, a special law, all businesses and
establishments within the ECOZONE were to remit to the government five percent (5%) of their gross income

earned within the zone, in lieu of all taxes, including VAT. This placed Toshiba within the ambit of Section 103(q)
of the Tax Code of 1977, as amended, which exempted from VAT the transactions that were exempted under special
laws. Following Section 4.103-1(A) of Revenue Regulations No. 7-95, the VAT-exemption of Toshiba meant that its
sale of goods was not subject to output VAT and Toshiba as seller was not allowed any tax credit on the input VAT it
had previously paid.
On January 17, 2001, the CTA issued a Resolution [28] denying both Motions for Reconsideration of Toshiba
and the CIR.
The CTA took note that the pieces of evidence referred to by Toshiba in its Motion for Reconsideration
were insufficient substantiation, being mere schedules of input VAT payments it had purportedly paid for the first
and second quarters of 1997. While the CTA gives credence to the report of its commissioned certified public
accountant (CPA), it does not render its decision based on the findings of the said CPA alone. The CTA has its own
CPA and the tax court itself conducts an investigation/examination of the documents presented. The CTA stood by
its earlier disallowance of the amount of P1,887,545.65 as tax credit/refund because it was not supported by VAT
invoices and/or official receipts.
The CTA refused to consider the argument that Toshiba was not entitled to a tax credit/refund under Section
24 of Republic Act No. 7916 because it was only raised by the CIR for the first time in his Motion for
Reconsideration. Also, contrary to the assertions of the CIR, the CTA held that Section 23, and not Section 24, of
Republic Act No. 7916, applied to Toshiba. According to Section 23 of Republic Act No. 7916
SECTION 23. Fiscal Incentives. Business establishments operating within the
ECOZONES shall be entitled to the fiscal incentives as provided for under Presidential Decree
No. 66, the law creating the Export Processing Zone Authority, or those provided under Book VI
of Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987.
Furthermore, tax credits for exporters using local materials as inputs shall enjoy the
benefits provided for in the Export Development Act of 1994.

Among the fiscal incentives granted to PEZA-registered enterprises by the Omnibus Investments Code
of 1987 was the income tax holiday, to wit
Art. 39. Incentives to Registered Enterprises. All registered enterprises shall be granted
the following incentives to the extent engaged in a preferred area of investment:
(a) Income Tax Holiday.
(1) For six (6) years from commercial operation for pioneer firms and four (4) years for
non-pioneer firms, new registered firms shall be fully exempt from income taxes levied by the
national government. Subject to such guidelines as may be prescribed by the Board, the income
tax exemption will be extended for another year in each of the following cases:
(i) The project meets the prescribed ratio of capital equipment to number of workers set
by the Board;
(ii) Utilization of indigenous raw materials at rates set by the Board;
(iii) The net foreign exchange savings or earnings amount to at least US$500,000.00
annually during the first three (3) years of operation.
The preceding paragraph notwithstanding, no registered pioneer firm may avail of this
incentive for a period exceeding eight (8) years.
(2) For a period of three (3) years from commercial operation, registered expanding firms
shall be entitled to an exemption from income taxes levied by the National Government
proportionate to their expansion under such terms and conditions as the Board may
determine: Provided, however, That during the period within which this incentive is availed of by
the expanding firm it shall not be entitled to additional deduction for incremental labor expense.

(3) The provision of Article 7(14) notwithstanding, registered firms shall not be entitled
to any extension of this incentive.
The CTA pointed out that Toshiba availed itself of the income tax holiday under the Omnibus Investments
Code of 1987, so Toshiba was exempt only from income tax but not from other taxes such as VAT. As a
result, Toshiba was liable for output VAT on its export sales, but at zero percent (0%) rate, and entitled to the
credit/refund of the input VAT paid on its purchases of goods and services relative to such zero-rated export sales.
Unsatisfied, the CIR filed a Petition for Review [29] with the Court of Appeals, docketed as CA-G.R. SP No.
63047.
In its Decision dated August 29, 2002, the Court of Appeals granted the appeal of the CIR, and reversed
and set aside the Decision dated October 16, 2000 and the Resolution dated January 17, 2001 of the CTA. The
appellate court ruled that Toshiba was not entitled to the refund of its alleged unused input VAT payments because it
was a tax-exempt entity under Section 24 of Republic Act No. 7916. As a PEZA-registered corporation, Toshiba
was liable for remitting to the national government the five percent (5%) preferential rate on its gross income earned
within the ECOZONE, in lieu of all other national and local taxes, including VAT.
The Court of Appeals further adjudged that the export sales of Toshiba were VAT-exempt, not zero-rated,
transactions. The appellate court found that the Answer filed by the CIR in CTA Case No. 5762 did not contain any
admission that the export sales of Toshiba were zero-rated transactions under Section 100(a)(2)(A) of the Tax Code
of 1977, as amended. At the least, what was admitted by the CIR in said Answer was that the Tax Code provisions
cited in the Petition for Review of Toshiba in CTA Case No. 5762 were correct. As to the Joint Stipulation of Facts
and Issues filed by the parties in CTA Case No. 5762, which stated that Toshiba was subject to zero percent (0%)
VAT on its export sales, the appellate court declared that the CIR signed the said pleading through palpable
mistake. This palpable mistake in the stipulation of facts should not be taken against the CIR, for to do otherwise
would result in suppressing the truth through falsehood. In addition, the State could not be put in estoppel by the
mistakes or errors of its officials or agents.
Given that Toshiba was a tax-exempt entity under Republic Act No. 7916, a special law, the Court of
Appeals concluded that the export sales of Toshiba were VAT-exempt transactions under Section 109(q) of the Tax
Code of 1997, formerly Section 103(q) of the Tax Code of 1977. Therefore, Toshiba could not claim refund of its
input VAT payments on its domestic purchases of goods and services.
The Court of Appeals decreed at the end of its August 29, 2002 Decision
WHEREFORE, premises considered, the appealed decision of the Court of Tax Appeals
in CTA Case No. 5762, is hereby REVERSED and SET ASIDE, and a new one is hereby rendered
finding [Toshiba], being a tax exempt entity under R.A. No. 7916, not entitled to refund the VAT
payments made in its domestic purchases of goods and services. [30]
Toshiba filed a Motion for Reconsideration[31] of the aforementioned Decision, anchored on the following
arguments: (a) the CIR never raised as an issue before the CTA that Toshiba was tax-exempt under Section 24 of
Republic Act No. 7916; (b) Section 24 of Republic Act No. 7916, subjecting the gross income earned by a PEZAregistered enterprise within the ECOZONE to a preferential rate of five percent (5%), in lieu of all taxes, did not
apply to Toshiba, which availed itself of the income tax holiday under Section 23 of the same statute; (c) the
conclusion of the CTA that the export sales of Toshiba were zero-rated was supported by substantial evidence, other
than the admission of the CIR in the Joint Stipulation of Facts and Issues; and (d) the judgment of the CTA granting
the refund of the input VAT payments was supported by substantial evidence and should not have been set aside by
the Court of Appeals.
In a Resolution dated February 19, 2003, the Court of Appeals denied the Motion for Reconsideration of
Toshiba since the arguments presented therein were mere reiterations of those already passed upon and found to be
without merit by the appellate court in its earlier Decision. The Court of Appeals, however, mentioned that it was

incorrect for Toshiba to say that the issue of the applicability of Section 24 of Republic Act No. 7916 was only
raised for the first time on appeal before the appellate court. The said issue was adequately raised by the CIR in his
Motion for Reconsideration before the CTA, and was even ruled upon by the tax court.
Hence, Toshiba filed the instant Petition for Review with the following assignment of errors
5.1
THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT
[TOSHIBA], BEING A PEZA-REGISTERED ENTERPRISE, IS EXEMPT FROM VAT UNDER
SECTION 24 OF R.A. 7916, AND FURTHER HOLDING THAT [TOSHIBAS] EXPORT
SALES ARE EXEMPT TRANSACTIONS UNDER SECTION 109 OF THE TAX CODE.
5.2
THE HONORABLE COURT OF APPEALS ERRED WHEN IT FAILED TO
DISMISS OUTRIGHT AND GAVE DUE COURSE TO [CIRS] PETITION
NOTWITHSTANDING [CIRS] FAILURE TO ADEQUATELY RAISE IN ISSUE DURING
THE TRIAL IN THE COURT OF TAX APPEALS THE APPLICABILITY OF SECTION 24 OF
R.A. 7916 TO [TOSHIBAS] CLAIM FOR REFUND.
5.3
THE HONORABLE COURT OF APPEALS ERRED WHEN [IT] RULED THAT
THE COURT OF TAX APPEALS FINDINGS, WITH REGARD [TOSHIBAS] EXPORT
SALES BEING ZERO RATED SALES FOR VAT PURPOSES, WERE BASED MERELY ON
THE ADMISSIONS MADE BY [CIRS] COUNSEL AND NOT SUPPORTED BY
SUBSTANTIAL EVIDENCE.
5.4
THE HONORABLE COURT OF APPEALS ERRED WHEN IT REVERSED
THE DECISION OF THE COURT OF TAX APPEALS GRANTING [TOSHIBAS] CLAIM FOR
REFUND[;][32]
and the following prayer
WHEREFORE, premises considered, Petitioner TOSHIBA INFORMATION
EQUIPMENT (PHILS.), INC. most respectfully prays that the decision and resolution of the
Honorable Court of Appeals, reversing the decision of the CTA in CTA Case No. 5762, be set
aside and further prays that a new one be rendered AFFIRMING AND UPHOLDING the Decision
of the CTA promulgated on October 16, 2000 in CTA Case No. 5762.
Other reliefs, which the Honorable Court may deem just and equitable under the
circumstances, are likewise prayed for.[33]
The Petition is impressed with merit.
The CIR did not timely raise before the CTA the issues on
the VAT-exemptions of Toshiba and its export sales.
Upon the failure of the CIR to timely plead and prove before the CTA the defenses or objections that
Toshiba was VAT-exempt under Section 24 of Republic Act No. 7916, and that its export sales were VAT-exempt
transactions under Section 103(q) of the Tax Code of 1977, as amended, the CIR is deemed to have waived the
same.
During the pendency of CTA Case No. 5762, the proceedings before the CTA were governed by the Rules
of the Court of Tax Appeals,[34] while the Rules of Court were applied suppletorily.[35]
Rule 9, Section 1 of the Rules of Court provides:

SECTION 1. Defenses and objections not pleaded. Defenses and objections not
pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it
appears from the pleadings or the evidence on record that the court has no jurisdiction over the
subject matter, that there is another action pending between the same parties for the same cause, or
that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the
claim.
The CIR did not argue straight away in his Answer in CTA Case No. 5762 that Toshiba had no right to the
credit/refund of its input VAT payments because the latter was VAT-exempt and its export sales were VAT-exempt
transactions. The Pre-Trial Brief[36] of the CIR was equally bereft of such allegations or arguments. The CIR passed
up the opportunity to prove the supposed VAT-exemptions of Toshiba and its export sales when the CIR chose not to
present any evidence at all during the trial before the CTA. [37] He missed another opportunity to present the said
issues before the CTA when he waived the submission of a Memorandum. [38] The CIR had waited until the CTA
already rendered its Decision dated October 16, 2000 in CTA Case No. 5762, which granted the claim for
credit/refund of Toshiba, before asserting in his Motion for Reconsideration that Toshiba was VAT-exempt and its
export sales were VAT-exempt transactions.
The CIR did not offer any explanation as to why he did not argue the VAT-exemptions of Toshiba and its
export sales before and during the trial held by the CTA, only doing so in his Motion for Reconsideration of the
adverse CTA judgment. Surely, said defenses or objections were already available to the CIR when the CIR filed his
Answer to the Petition for Review of Toshiba in CTA Case No. 5762.
It is axiomatic in pleadings and practice that no new issue in a case can be raised in a pleading which by
due diligence could have been raised in previous pleadings. [39] The Court cannot simply grant the plea of the CIR
that the procedural rules be relaxed based on the general averment of the interest of substantive justice. It should not
be forgotten that the first and fundamental concern of the rules of procedure is to secure a just determination of
every action.[40] Procedural rules are designed to facilitate the adjudication of cases. Courts and litigants alike are
enjoined to abide strictly by the rules. While in certain instances, the Court allows a relaxation in the application of
the rules, it never intends to forge a weapon for erring litigants to violate the rules with impunity. The liberal
interpretation and application of rules apply only in proper cases of demonstrable merit and under justifiable causes
and circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every case
must be prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy administration of
justice. Party litigants and their counsel are well advised to abide by, rather than flaunt, procedural rules for these
rules illumine the path of the law and rationalize the pursuit of justice. [41]
The CIR judicially admitted that Toshiba was VAT-registered
and its export sales were subject to VAT at zero percent (0%)
rate.
More importantly, the arguments of the CIR that Toshiba was VAT-exempt and the latters export sales were
VAT-exempt transactions are inconsistent with the explicit admissions of the CIR in the Joint Stipulation of Facts
and Issues (Joint Stipulation) that Toshiba was a registered VAT entity and that it was subject to zero percent (0%)
VAT on its export sales.
The Joint Stipulation was executed and submitted by Toshiba and the CIR upon being advised to do so by
the CTA at the end of the pre-trial conference held on June 23, 1999. [42] The approval of the Joint Stipulation by the
CTA, in its Resolution[43] dated July 12, 1999, marked the culmination of the pre-trial process in CTA Case No.
5762.
Pre-trial is an answer to the clarion call for the speedy disposition of cases. Although it was discretionary
under the 1940 Rules of Court, it was made mandatory under the 1964 Rules and the subsequent amendments in
1997. It has been hailed as the most important procedural innovation in Anglo-Saxon justice in the nineteenth
century.[44]

The nature and purpose of a pre-trial have been laid down in Rule 18, Section 2 of the Rules of Court:
SECTION 2. Nature and purpose. The pre-trial is mandatory. The court shall consider:
(a)
The possibility of an amicable settlement or of a submission to alternative modes
of dispute resolution;
(b)

The simplification of the issues;

(c)

The necessity or desirability of amendments to the pleadings;

(d)
The possibility of obtaining stipulations or admissions of facts and of
documents to avoid unnecessary proof;
(e)

The limitation of the number of witnesses;

(f)

The advisability of a preliminary reference of issues to a commissioner;

(g)
The propriety of rendering judgment on the pleadings, or summary judgment, or
of dismissing the action should a valid ground therefor be found to exist;
(h)

The advisability or necessity of suspending the proceedings; and

(i)

Such other matters as may aid in the prompt disposition of the action. (Emphasis

ours.)
The admission having been made in a stipulation of facts at pre-trial by the parties, it must be treated as a
judicial admission.[45] Under Section 4, Rule 129 of the Rules of Court, a judicial admission requires no proof. The
admission may be contradicted only by a showing that it was made through palpable mistake or that no such
admission was made. The Court cannot lightly set aside a judicial admission especially when the opposing party
relied upon the same and accordingly dispensed with further proof of the fact already admitted. An admission made
by a party in the course of the proceedings does not require proof.[46]
In the instant case, among the facts expressly admitted by the CIR and Toshiba in their CTA-approved Joint
Stipulation are that Toshiba is a duly registered value-added tax entity in accordance with Section 107 of the Tax
Code, as amended[,][47] that is subject to zero percent (0%) value-added tax on its export sales in accordance with
then Section 100(a)(2)(A) of the Tax Code, as amended. [48] The CIR was bound by these admissions, which he
could not eventually contradict in his Motion for Reconsideration of the CTA Decision dated October 16, 2000, by
arguing that Toshiba was actually a VAT-exempt entity and its export sales were VAT-exempt
transactions. Obviously, Toshiba could not have been subject to VAT and exempt from VAT at the same
time. Similarly, the export sales of Toshiba could not have been subject to zero percent (0%) VAT and exempt
from VAT as well.
The CIR cannot escape the binding effect of his judicial
admissions.
The Court disagrees with the Court of Appeals when it ruled in its Decision dated August 29, 2002 that the
CIR could not be bound by his admissions in the Joint Stipulation because (1) the said admissions were made
through palpable mistake[49] which, if countenanced, would result in falsehood, unfairness and injustice; [50] and
(2) the State could not be put in estoppel by the mistakes of its officials or agents. This ruling of the Court of
Appeals is rooted in its conclusion that a palpable mistake had been committed by the CIR in the signing of the
Joint Stipulation. However, this Court finds no evidence of the commission of a mistake, much more, of a palpable
one.

The CIR does not deny that his counsel, Atty. Joselito F. Biazon, Revenue Attorney II of the BIR, signed
the Joint Stipulation, together with the counsel of Toshiba, Atty. Patricia B. Bisda. Considering the presumption of
regularity in the performance of official duty,[51] Atty. Biazon is presumed to have read, studied, and understood the
contents of the Joint Stipulation before he signed the same. It rests on the CIR to present evidence to the contrary.
Yet, the Court observes that the CIR himself never alleged in his Motion for Reconsideration of the CTA
Decision dated October 16, 2000, nor in his Petition for Review before the Court of Appeals, that Atty. Biazon
committed a mistake in signing the Joint Stipulation. Since the CIR did not make such an allegation, neither did he
present any proof in support thereof. The CIR began to aver the existence of a palpable mistake only after the Court
of Appeals made such a declaration in its Decision dated August 29, 2002.
Despite the absence of allegation and evidence by the CIR, the Court of Appeals, on its own,
concluded that the admissions of the CIR in the Joint Stipulation were due to a palpable mistake based on the
following deduction
Scrutinizing the Answer filed by [the CIR], we rule that the Joint Stipulation of Facts and
Issues signed by [the CIR] was made through palpable mistake. Quoting paragraph 4 of its
Answer, [the CIR] states:
4. He ADMITS the allegations contained in paragraph 5 of the
petition only insofar as the cited provisions of Tax Code is concerned, but
SPECIFICALLY DENIES the rest of the allegations therein for being mere
opinions, arguments or gratuitous assertions on the part of [Toshiba] and/or
because they are mere erroneous conclusions or interpretations of the quoted law
involved, the truth of the matter being those stated hereunder
x x x x
And paragraph 5 of the petition for review filed by [Toshiba] before the CTA states:
5. Petitioner is subject to zero percent (0%) value-added tax on its
export sales in accordance with then Section 100(a)(2)(A) of the Tax Code x x x.
x x x x
As we see it, nothing in said Answer did [the CIR] admit that the export sales of
[Toshiba] were indeed zero-rated transactions. At the least, what was admitted only by [the CIR]
concerning paragraph 4 of his Answer, is the fact that the provisions of the Tax Code, as cited by
[Toshiba] in its petition for review filed before the CTA were correct.[52]
The Court of Appeals provided no explanation as to why the admissions of the CIR in his Answer in CTA
Case No. 5762 deserved more weight and credence than those he made in the Joint Stipulation. The appellate court
failed to appreciate that the CIR, through counsel, Atty. Biazon, also signed the Joint Stipulation; and that absent
evidence to the contrary, Atty. Biazon is presumed to have signed the Joint Stipulation willingly and knowingly, in
the regular performance of his official duties. Additionally, the Joint Stipulation[53] of Toshiba and the CIR was a
more recent pleading than the Answer[54] of the CIR. It was submitted by the parties after the pre-trial conference
held by the CTA, and subsequently approved by the tax court. If there was any discrepancy between the admissions
of the CIR in his Answer and in the Joint Stipulation, the more logical and reasonable explanation would be that the
CIR changed his mind or conceded some points to Toshiba during the pre-trial conference which immediately
preceded the execution of the Joint Stipulation. To automatically construe that the discrepancy was the result of a
palpable mistake is a wide leap which this Court is not prepared to take without substantial basis.
The judicial admissions of the CIR in the Joint Stipulation
are not intrinsically false, wrong, or illegal, and are

consistent with the ruling on the VAT treatment of PEZAregistered enterprises in the previous Toshiba case.
There is no basis for believing that to bind the CIR to his judicial admissions in the Joint Stipulation that
Toshiba was a VAT-registered entity and its export sales were zero-rated VAT transactions would result in
falsehood, unfairness and injustice. The judicial admissions of the CIR are not intrinsically false, wrong, or
illegal. On the contrary, they are consistent with the ruling of this Court in a previous case involving the same
parties, Commissioner of Internal Revenue v. Toshiba Information Equipment (Phils.) Inc. [55] (Toshiba case),
explaining the VAT treatment of PEZA-registered enterprises.
In the Toshiba case, Toshiba sought the refund of its unutilized input VAT on its purchase of capital goods
and services for the first and second quarters of 1996, based on Section 106(b) of the Tax Code of 1977, as
amended.[56] In the Petition at bar, Toshiba is claiming refund of its unutilized input VAT on its local purchase of
goods and services which are attributable to its export sales for the first and second quarters of 1997, pursuant to
Section 106(a), in relation to Section 100(a)(1)(A)(i) of the Tax Code of 1977, as amended, which read
SEC. 106. Refunds or tax credits of creditable input tax. (a) Any VAT-registered
person, whose sales are zero-rated or effectively zero-rated, may, within two (2) years after the
close of the taxable quarter when the sales were made, apply for the issuance of a tax credit
certificate or refund of creditable input tax due or paid attributable to such sales, except
transitional input tax, to the extent that such input tax has not been applied against output
tax: Provided, however, That in the case of zero-rated sales under Section 100(a)(2)(A)(i),(ii) and
(b) and Section 102(b)(1) and (2), the acceptable foreign currency exchange proceeds thereof has
been duly accounted for in accordance with the regulations of the Bangko Sentral ng Pilipinas
(BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zerorated sale and also in taxable or exempt sale of goods or properties of services, and the amount of
creditable input tax due or paid cannot be directly and entirely attributed to any one of the
transactions, it shall be allocated proportionately on the basis of the volume sales.
SEC. 100. Value-added tax on sale of goods or properties. (a) Rate and base of tax.
xxx
xxxx
(2) The following sales by VAT-registered persons shall be subject to 0%:
(A)

Export sales. The term export sales means:

(i) The sale and actual shipment of goods from the Philippines to a foreign country,
irrespective of any shipping arrangement that may be agreed upon which may influence or
determine the transfer of ownership of the goods so exported and paid for in acceptable foreign
currency or its equivalent in goods or services, and accounted for in accordance with the rules and
regulations of the Bangko Sentral ng Pilipnas (BSP).
Despite the difference in the legal bases for the claims for credit/refund in the Toshiba case and the case at
bar, the CIR raised the very same defense or objection in both that Toshiba and its transactions were VATexempt. Hence, the ruling of the Court in the former case is relevant to the present case.
At the outset, the Court establishes that there is a basic distinction in the VAT-exemption of a person and the
VAT-exemption of a transaction
It would seem that petitioner CIR failed to differentiate between VAT-exempt transactions
from VAT-exempt entities. In the case of Commissioner of Internal Revenue v. Seagate
Technology (Philippines), this Court already made such distinction

An exempt transaction, on the one hand, involves goods or services

which, by their nature, are specifically listed in and expressly exempted from the
VAT under the Tax Code, without regard to the tax status VAT-exempt or not
of the party to the transaction
An exempt party, on the other hand, is a person or entity granted VAT
exemption under the Tax Code, a special law or an international agreement to
which the Philippines is a signatory, and by virtue of which its taxable
transactions become exempt from VAT x x x.[57]
In effect, the CIR is opposing the claim for credit/refund of input VAT of Toshiba on two grounds: (1) that
Toshiba was a VAT-exempt entity; and (2) that its export sales were VAT-exempt transactions.
It is now a settled rule that based on the Cross Border Doctrine, PEZA-registered enterprises, such as
Toshiba, are VAT-exempt and no VAT can be passed on to them. The Court explained in the Toshiba case that

PEZA-registered enterprise, which would necessarily be located within ECOZONES, are VATexempt entities, not because of Section 24 of Rep. Act No. 7916, as amended, which imposes the
five percent (5%) preferential tax rate on gross income of PEZA-registered enterprises, in lieu of
all taxes; but, rather, because of Section 8 of the same statute which establishes the fiction that
ECOZONES are foreign territory.

xxxx
The Philippine VAT system adheres to the Cross Border Doctrine, according to which, no
VAT shall be imposed to form part of the cost of goods destined for consumption outside of the
territorial border of the taxing authority. Hence, actual export of goods and services from the
Philippines to a foreign country must be free of VAT; while, those destined for use or consumption
within the Philippines shall be imposed with ten percent (10%) VAT.
Applying said doctrine to the sale of goods, properties, and services to and from the
ECOZONES, the BIR issued Revenue Memorandum Circular (RMC) No. 74-99, on 15 October
1999. Of particular interest to the present Petition is Section 3 thereof, which reads
SECTION 3. Tax Treatment of Sales Made by a VAT Registered
Supplier from the Customs Territory, to a PEZA Registered Enterprise.
(1) If the Buyer is a PEZA registered enterprise which is subject to the
5% special tax regime, in lieu of all taxes, except real property tax, pursuant to
R.A. No. 7916, as amended:
(a) Sale of goods (i.e., merchandise). This shall be treated as
indirect export hence, considered subject to zero percent (0%) VAT, pursuant to
Sec. 106(A)(2)(a)(5), NIRC and Sec. 23 of R.A. No. 7916, in relation to ART.
77(2) of the Omnibus Investments Code.
(b) Sale of service. This shall be treated subject to zero percent (0%)
VAT under the cross border doctrine of the VAT System, pursuant to VAT
Ruling No. 032-98 dated Nov. 5, 1998.

(2) If Buyer is a PEZA registered enterprise which is not embraced by

the 5% special tax regime, hence, subject to taxes under the NIRC, e.g., Service
Establishments which are subject to taxes under the NIRC rather than the 5%
special tax regime:
(a) Sale of goods (i.e., merchandise). This shall be treated as
indirect export hence, considered subject to zero percent (0%) VAT, pursuant to
Sec. 106(A)(2)(a)(5), NIRC and Sec. 23 of R.A. No. 7916 in relation to ART.
77(2) of the Omnibus Investments Code.
(b) Sale of Service. This shall be treated subject to zero percent (0%)
VAT under the cross border doctrine of the VAT System, pursuant to VAT
Ruling No. 032-98 dated Nov. 5, 1998.
(3) In the final analysis, any sale of goods, property or services made
by a VAT registered supplier from the Customs Territory to any registered
enterprise operating in the ecozone, regardless of the class or type of the latters
PEZA registration, is actually qualified and thus legally entitled to the zero
percent (0%) VAT. Accordingly, all sales of goods or property to such enterprise
made by a VAT registered supplier from the Customs Territory shall be treated
subject to 0% VAT, pursuant to Sec. 106(A)(2)(a)(5), NIRC, in relation to ART.
77(2) of the Omnibus Investments Code, while all sales of services to the said
enterprises, made by VAT registered suppliers from the Customs Territory, shall
be treated effectively subject to the 0% VAT, pursuant to Section 108(B)(3),
NIRC, in relation to the provisions of R.A. No. 7916 and the Cross Border
Doctrine of the VAT system.
This Circular shall serve as a sufficient basis to entitle such supplier of
goods, property or services to the benefit of the zero percent (0%) VAT for sales
made to the aforementioned ECOZONE enterprises and shall serve as sufficient
compliance to the requirement for prior approval of zero-rating imposed by
Revenue Regulations No. 7-95 effective as of the date of the issuance of this
Circular.
Indubitably, no output VAT may be passed on to an ECOZONE enterprise since it is a
VAT-exempt entity. x x x.[58]
The Court, nevertheless, noted in the Toshiba case that the rule which considers any sale by a supplier from
the Customs Territory to a PEZA-registered enterprise as export sale, which should not be burdened by output VAT,
was only clearly established on October 15, 1999, upon the issuance by the BIR of RMC No. 74-99. Prior to
October 15, 1999, whether a PEZA-registered enterprise was exempt or subject to VAT depended on the type of
fiscal incentives availed of by the said enterprise. [59] The old rule, then followed by the BIR, and recognized and
affirmed by the CTA, the Court of Appeals, and this Court, was described as follows
According to the old rule, Section 23 of Rep. Act No. 7916, as amended, gives the PEZAregistered enterprise the option to choose between two sets of fiscal incentives: (a) The five
percent (5%) preferential tax rate on its gross income under Rep. Act No. 7916, as amended; and
(b) the income tax holiday provided under Executive Order No. 226, otherwise known as the
Omnibus Investment Code of 1987, as amended.
The five percent (5%) preferential tax rate on gross income under Rep. Act No. 7916, as
amended, is in lieu of all taxes. Except for real property taxes, no other national or local tax may
be imposed on a PEZA-registered enterprise availing of this particular fiscal incentive, not even an
indirect tax like VAT.

Alternatively, Book VI of Exec. Order No. 226, as amended, grants income tax holiday to
registered pioneer and non-pioneer enterprises for six-year and four-year periods,
respectively. Those availing of this incentive are exempt only from income tax, but shall be
subject to all other taxes, including the ten percent (10%) VAT.
This old rule clearly did not take into consideration the Cross Border Doctrine essential to
the VAT system or the fiction of the ECOZONE as a foreign territory. It relied totally on the
choice of fiscal incentives of the PEZA-registered enterprise. Again, for emphasis, the old VAT
rule for PEZA-registered enterprises was based on their choice of fiscal incentives: (1) If the
PEZA-registered enterprise chose the five percent (5%) preferential tax on its gross income, in lieu
of all taxes, as provided by Rep. Act No. 7916, as amended, then it would be VAT-exempt; (2) If
the PEZA-registered enterprise availed of the income tax holiday under Exec. Order No. 226, as
amended, it shall be subject to VAT at ten percent (10%). Such distinction was abolished by RMC
No. 74-99, which categorically declared that all sales of goods, properties, and services made by a
VAT-registered supplier from the Customs Territory to an ECOZONE enterprise shall be subject to
VAT, at zero percent (0%) rate, regardless of the latters type or class of PEZA registration; and,
thus, affirming the nature of a PEZA-registered or an ECOZONE enterprise as a VAT-exempt
entity.[60]
To recall, Toshiba is herein claiming the refund of unutilized input VAT payments on its local purchases of
goods and services attributable to its export sales for the first and second quarters of 1997. Such export sales took
place before October 15, 1999, when the old rule on the VAT treatment of PEZA-registered enterprises still
applied. Under this old rule, it was not only possible, but even acceptable, for Toshiba, availing itself of the income
tax holiday option under Section 23 of Republic Act No. 7916, in relation to Section 39 of the Omnibus Investments
Code of 1987, to be subject to VAT, both indirectly (as purchaser to whom the seller shifts the VAT burden) and
directly (as seller whose sales were subject to VAT, either at ten percent [10%] or zero percent [0%]).
A VAT-registered seller of goods and/or services who made zero-rated sales can claim tax credit or refund
of the input VAT paid on its purchases of goods, properties, or services relative to such zero-rated sales, in
accordance with Section 4.102-2 of Revenue Regulations No. 7-95, which provides

Sec. 4.102-2. Zero-rating. (a) In general. - A zero-rated sale by a VAT-registered

person, which is a taxable transaction for VAT purposes, shall not result in any output
tax. However, the input tax on his purchases of goods, properties or services related to such zerorated sale shall be available as tax credit or refund in accordance with these regulations.

The BIR, as late as July 15, 2003, when it issued RMC No. 42-2003, accepted applications for credit/refund
of input VAT on purchases prior to RMC No. 74-99, filed by PEZA-registered enterprises which availed themselves
of the income tax holiday. The BIR answered Question Q-5(1) of RMC No. 42-2003 in this wise

Q-5:

1)

Under Revenue Memorandum Circular (RMC) No. 74-99, purchases by PEZA-registered

firms automatically qualify as zero-rated without seeking prior approval from the BIR
effective October 1999.
Will the OSS-DOF Center still accept applications from PEZA-registered
claimants who were allegedly billed VAT by their suppliers before and during the
effectivity of the RMC by issuing VAT invoices/receipts?
xxxx

A-5(1): If the PEZA-registered enterprise is paying the 5% preferential tax in lieu of all other
taxes, the said PEZA-registered taxpayer cannot claim TCC or refund for the VAT paid
on purchases. However, if the taxpayer is availing of the income tax holiday, it can
claim VAT credit provided:
a.

The taxpayer-claimant is VAT-registered;

b.

Purchases are evidenced by VAT invoices or receipts, whichever is applicable,

with shifted VAT to the purchaser prior to the implementation of RMC No.
74-99; and

c.

The supplier issues a sworn statement under penalties of perjury that it shifted
the VAT and declared the sales to the PEZA-registered purchaser as taxable sales
in its VAT returns.

For invoices/receipts issued upon the effectivity of RMC No. 74-99, the claims for input VAT by
PEZA-registered companies, regardless of the type or class of PEZA-registration, should be
denied. (Emphases ours.)

Consequently, the CIR cannot herein insist that all PEZA-registered enterprises are VAT-exempt in every
instance. RMC No. 42-2003 contains an express acknowledgement by the BIR that prior to RMC No. 74-99, there
were PEZA-registered enterprises liable for VAT and entitled to credit/refund of input VAT paid under certain
conditions.
This Court already rejected in the Toshiba case the argument that sale transactions of a PEZA-registered
enterprise were VAT-exempt under Section 103(q) of the Tax Code of 1977, as amended, ratiocinating that
Section 103(q) of the Tax Code of 1977, as amended, relied upon by petitioner CIR,
relates to VAT-exempt transactions. These are transactions exempted from VAT by special laws or
international agreements to which the Philippines is a signatory. Since such transactions are not
subject to VAT, the sellers cannot pass on any output VAT to the purchasers of goods, properties,
or services, and they may not claim tax credit/refund of the input VAT they had paid thereon.
Section 103(q) of the Tax Code of 1977, as amended, cannot apply to transactions of
respondent Toshiba because although the said section recognizes that transactions covered by
special laws may be exempt from VAT, the very same section provides that those falling under
Presidential Decree No. 66 are not. Presidential Decree No. 66, creating the Export Processing
Zone Authority (EPZA), is the precursor of Rep. Act No. 7916, as amended, under which the
EPZA evolved into the PEZA. Consequently, the exception of Presidential Decree No. 66
from Section 103(q) of the Tax Code of 1977, as amended, extends likewise to Rep. Act No.
7916, as amended.[61] (Emphasis ours.)
In light of the judicial admissions of Toshiba, the CTA
correctly confined itself to the other factual issues submitted
for resolution by the parties.
In accord with the admitted facts that Toshiba was a VAT-registered entity and that its export sales were
zero-rated transactions the stated issues in the Joint Stipulation were limited to other factual matters, particularly,
on the compliance by Toshiba with the rest of the requirements for credit/refund of input VAT on zero-rated
transactions. Thus, during trial, Toshiba concentrated on presenting evidence to establish that it

incurred P3,875,139.65 of input VAT for the first and second quarters of 1997 which were directly attributable to its
export sales; that said amount of input VAT were not carried over to the succeeding quarters; that said amount of
input VAT has not been applied or offset against any output VAT liability; and that said amount of input VAT was
properly substantiated by official receipts and invoices.
After what truly appears to be an exhaustive review of the evidence presented by Toshiba, the CTA made
the following findings
(1) The amended quarterly VAT returns of Toshiba for 1997 showed that it made no other sales, except
zero-rated export sales, for the entire year, in the sum of P2,083,305,000.00 for the first quarter
and P5,411,372,000.00 for the second quarter. That being the case, all input VAT allegedly incurred by Toshiba for
the first two quarters of 1997, in the amount of P3,875,139.65, was directly attributable to its zero-rated sales for the
same period.
(2) Toshiba did carry-over the P3,875,139.65 input VAT it reportedly incurred during the first two quarters
of 1997 to succeeding quarters, until the first quarter of 1999. Despite the carry-over of the subject input VAT
of P3,875,139.65, the claim of Toshiba was not affected because it later on deducted the said amount as VAT
Refund/TCC Claimed from its total available input VAT of P6,841,468.17 for the first quarter of 1999.
(3) Still, the CTA could not allow the credit/refund of the total input VAT of P3,875,139.65 being claimed
by Toshiba because not all of said amount was actually incurred by the company and duly substantiated by invoices
and official receipts. From the P3,875,139.65 claim, the CTA deducted the amounts of (a) P189,692.92, which was
in excess of the P3,685,446.23 input VAT Toshiba originally claimed in its application for credit/refund filed with
the DOF One-Stop Shop; (b) P396,882.58, which SGV & Co., the commissioned CPA, disallowed for being
improperly substantiated, i.e., supported only by provisional acknowledgement receipts, or by documents other than
official receipts, or not supported by TIN or TIN VAT or by any document at all; (c) P1,887,545.65, which the CTA
itself verified as not being substantiated in accordance with Section 4.104-5 [62]of Revenue Regulations No. 7-95, in
relation to Sections 108[63] and 238[64] of the Tax Code of 1977, as amended; and (d) P15,736.42, which Toshiba
already applied to its output VAT liability for the fourth quarter of 1998.
(4) Ultimately, Toshiba was entitled to the credit/refund of unutilized input VAT payments attributable to
its zero-rated sales in the amounts of P1,158,016.82 andP227,265.26, for the first and second quarters of 1997,
respectively, or in the total amount of P1,385,282.08.
Since the aforementioned findings of fact of the CTA are borne by substantial evidence on record,
unrefuted by the CIR, and untouched by the Court of Appeals, they are given utmost respect by this Court.
The Court will not lightly set aside the conclusions reached by the CTA which, by the very nature of its
functions, is dedicated exclusively to the resolution of tax problems and has accordingly developed an expertise on
the subject unless there has been an abuse or improvident exercise of authority. [65] In Barcelon, Roxas Securities,
Inc. (now known as UBP Securities, Inc.) v. Commissioner of Internal Revenue,[66] this Court more explicitly
pronounced
Jurisprudence has consistently shown that this Court accords the findings of fact by the
CTA with the highest respect. In Sea-Land Service Inc. v. Court of Appeals [G.R. No. 122605, 30
April 2001, 357 SCRA 441, 445-446], this Court recognizes that the Court of Tax Appeals, which
by the very nature of its function is dedicated exclusively to the consideration of tax problems, has
necessarily developed an expertise on the subject, and its conclusions will not be overturned
unless there has been an abuse or improvident exercise of authority. Such findings can only be
disturbed on appeal if they are not supported by substantial evidence or there is a showing of gross
error or abuse on the part of the Tax Court. In the absence of any clear and convincing proof to
the contrary, this Court must presume that the CTA rendered a decision which is valid in every
respect.

WHEREFORE, the assailed Decision dated August 29, 2002 and the Resolution dated February 19, 2003
of the Court of Appeals in CA-G.R. SP No. 63047 are REVERSED and SET ASIDE, and the Decision dated
October 16, 2000 of the Court of Tax Appeals in CTA Case No. 5762 is REINSTATED. Respondent Commissioner
of Internal Revenue is ORDERED to REFUND or, in the alternative, to ISSUE a TAX CREDIT
CERTIFICATE in favor of petitioner Toshiba Information Equipment (Phils.), Inc. in the amount of P1,385,282.08,
representing the latters unutilized input VAT payments for the first and second quarters of 1997. No
pronouncement as to costs.

SO ORDERED.