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Republic of the Philippines On February 14, 2001, the HRD imposed on Caragdag the
SUPREME COURT penalty of reprimand for the February 3, 2001 incident, which
Manila was considered a first offense, and suspended him for three
days for the February 6, 2001 incident, which was considered
THIRD DIVISION as a second offense.8 Both penalties were in accordance with
the hotels Code of Discipline.
G.R. No. 164939 June 6, 2011
Subsequently, on February 22, 2001, when Mike Moral, the
manager of Hyatts Cafe Al Fresco and Caragdags
SAMAHAN NG MGA MANGGAGAWA SA HYATT
immediate superior, was about to counsel two staff members,
(SAMASAH-NUWHRAIN), Petitioner,
Larry Lacambacal and Allan Alvaro, at the training room,
vs.
HON. VOLUNTARY ARBITRATOR BUENAVENTURA Caragdag suddenly opened the door and yelled at the two
C. MAGSALIN and HOTEL ENTERPRISES OF THE with an enraged look. In a disturbing voice he said, "Ang
PHILIPPINES, INC., Respondents. titigas talaga ng ulo nyo. Sinabi ko na sa inyo na huwag
kayong makikipagusap sa management habang ongoing pa
ang kaso!" (You are very stubborn. I told you not to speak to
x-----------------------x
management while the case is ongoing!) Moral asked
Caragdag what the problem was and informed him that he
G.R. No. 172303 was simply talking to his staff. Moral also told Caragdag that
he did not have the right to interrupt and intimidate him
SAMAHAN NG MGA MANGGAGAWA SA HYATT during his counseling session with his staff.
(SAMASAH-NUWHRAIN), Petitioner,
vs. On February 23, 2001, Moral issued a Memorandum9
HOTEL ENTERPRISES OF THE PHILIPPINES, INC., requiring Caragdag to explain his actions in the training
Respondent. room. Caragdag submitted his written explanation on
February 25, 200110 narrating that he was informed by
DECISION someone that Lacambacal and Alvaro were requesting for his
assistance because Moral had invited them to the training
VILLARAMA, JR., J.: room. Believing that he should advise the two that they
should be accompanied by a union officer to any inquisition,
he went to the training room. However, before he could enter
Before this Court are two consolidated petitions filed by
the door, Moral blocked him. Thus, he told Lacambacal and
petitioner Samahan ng mga Manggagawa sa Hyatt-
Alvaro that they should be assisted by a union representative
NUWHRAIN-APL under Rule 45 of the 1997 Rules of Civil
before giving any statement to management. Caragdag also
Procedure, as amended. The first petition, docketed as G.R.
prayed that Moral be investigated for harassing union
No. 164939, assails the Resolutions dated October 3, 20031
officers and union members.
and August 13, 20042 of the Court of Appeals (CA) in CA-
G.R. SP No. 78364, which dismissed petitioners petition for
review at the CA for being the wrong remedy. The second On February 28, 2001, Moral found the explanations
petition, docketed as G.R. No. 172303, assails the Decision 3 unsatisfactory. In a Memorandum11 issued on the same date,
dated December 16, 2005 and Resolution4 dated April 12, Moral held Caragdag liable for Offenses Subject to
2006 of the CA in CA-G.R. SP No. 77478, modifying the Disciplinary Action (OSDA) 3.01 of the hotels Code of
judgment of the Voluntary Arbitrator in NCMB-NCR-CRN- Discipline, i.e., "threatening, intimidating, coercing, and
07-008-01. provoking to a fight your superior for reasons directly
connected with his discharge of official duty." Thus,
Caragdag was imposed the penalty of seven days suspension
The antecedent facts are as follows:
in accordance with the hotels Code of Discipline.

Petitioner Samahan ng mga Manggagawa sa Hyatt-


Still later, on March 2, 2001, Caragdag committed another
NUWHRAIN-APL is a duly registered union and the
infraction. At 9:35 a.m. on the said date, Caragdag left his
certified bargaining representative of the rank-and-file
work assignment during official hours without prior
employees of Hyatt Regency Manila, a five-star hotel owned
permission from his Department Head. He was required to
and operated by respondent Hotel Enterprises of the
submit an explanation, but the explanation12 he submitted
Philippines, Inc. On January 31, 2001, Hyatts General
was found unsatisfactory. On March 17, 2001, Moral found
Manager, David C. Pacey, issued a Memorandum5 informing
Caragdag liable for violating OSDA 3.07, i.e., "leaving work
all hotel employees that hotel security have been instructed
assignment during official working hours without prior
to conduct a thorough bag inspection and body frisking in
permission from the department head or immediate
every entrance and exit of the hotel. He enjoined employees
superior," and suspended him for three days.13
to comply therewith. Copies of the Memorandum were
furnished petitioner.
Because of the succession of infractions he committed, the
HRD also required Caragdag to explain on May 11, 2001 why
On February 3, 2001, Angelito Caragdag, a waiter at the
the hotels OSDA 4.32 (Committing offenses which are
hotels Cafe Al Fresco restaurant and a director of the union,
penalized with three [3] suspensions during a 12-month
refused to be frisked by the security personnel. The incident
period) should not be enforced against him.14 An
was reported to the hotels Human Resources Department
investigation board was formed after receipt of Caragdags
(HRD), which issued a Memorandum6 to Caragdag on
written explanation, and the matter was set for hearing on
February 5, 2001, requiring him to explain in writing within
May 19, 2001. However, despite notice of the scheduled
forty-eight (48) hours from notice why no disciplinary action
hearing, both Caragdag and the Union President failed to
should be taken against him. The following day, on February
attend. Thereafter, the investigating board resolved on the
6, 2001, Caragdag again refused to be frisked by the security
said date to dismiss Caragdag for violation of OSDA 4.32.15
personnel. Thus, on February 8, 2001, the HRD issued
Caragdag appealed but the investigating board affirmed its
another Memorandum7 requiring him to explain.
resolution after hearing on May 24, 2001.
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On June 1, 2001, the hotel, through Atty. Juancho A. Baltazar, Review is until June 17, 2003. The petitioner filed the present
sent Caragdag a Notice of Dismissal,16 the pertinent portion petition on August 1, 2003, way beyond the reglementary
of which reads: period provided for by the Rules.20

Based on the findings of the Investigation Board dated May Petitioner duly filed a motion for reconsideration of the
19, 2001 which was approved by the General Manager Mr. dismissal, but the motion was denied by the CA. Thus,
David Pacey on the same day and which did not merit any petitioner filed before this Court a petition for review on
reversal or modification after the hearing on your appeal on certiorari which was docketed as G.R. No. 164939.
May 24, 2001, the penalty of DISMISSAL is therefore affirmed
to take effect on June 1, 2001. In the meantime, on June 30, 2003, respondent also filed a
petition for review21 with the CA on the ground that the
Caragdags dismissal was questioned by petitioner, and the Voluntary Arbitrator committed a grievous error in
dispute was referred to voluntary arbitration upon awarding financial assistance to Caragdag despite his finding
agreement of the parties. On May 6, 2002, the Voluntary that the dismissal due to serious misconduct was valid. On
Arbitrator rendered a decision,17 the dispositive portion of December 16, 2005, the CA promulgated a decision in CA-
which reads: G.R. SP. No. 77478 as follows:

WHEREFORE, premises considered, this Arbiter rules that WHEREFORE, the Decision dated May 6, 2002 of Voluntary
the three separate suspensions of Mr. Caragdag are valid, his Arbitrator Buenaventura C. Magsalin is AFFIRMED with
dismissal is legal and OSDA 4.32 of Hyatts Code of MODIFICATION by DELETING the award of financial
Discipline is reasonable. assistance in the amount of P100,000.00 to Angelito
Caragdag.
However, for humanitarian considerations, Hyatt is hereby
ordered to grant financial assistance to Mr. Caragdag in the SO ORDERED.22
amount of One Hundred Thousand Pesos (PhP100,000.00).
In deleting the award of financial assistance to Caragdag, the
In finding the three separate suspensions of Caragdag valid, CA cited the case of Philippine Commercial International
the Voluntary Arbitrator reasoned that the union officers and Bank v. Abad,23 which held that the grant of separation pay
members had no right to breach company rules and or other financial assistance to an employee dismissed for just
regulations on security and employee discipline on the basis cause is based on equity and is a measure of social justice,
of certain suspicions against management and an ongoing awarded to an employee who has been validly dismissed if
CBA negotiation standoff. The Voluntary Arbitrator also the dismissal was not due to serious misconduct or causes
found that when Caragdag advised Lacambacal and Alvaro that reflected adversely on the moral character of the
not to give any statement, he threatened and intimidated his employee. In this case, the CA agreed with the findings of the
superior while the latter was performing his duties. Voluntary Arbitrator that Caragdag was validly dismissed
Moreover, there is no reason why he did not arrange his time- due to serious misconduct. Accordingly, financial assistance
off with the Department Head concerned. Thus, Caragdag should not have been awarded to Caragdag. The CA also
was validly dismissed pursuant to OSDA 4.32 of Hyatts noted that it is the employers prerogative to prescribe
Code of Discipline, which states that an employee who reasonable rules and regulations necessary or proper for the
commits three different acts of misconduct within a twelve conduct of its business or concern, to provide certain
(12)-month period commits serious misconduct. disciplinary measures to implement said rules and to ensure
compliance therewith.
Petitioner sought reconsideration of the decision while
respondent filed a motion for partial reconsideration. Petitioner sought reconsideration of the decision, but the CA
However, the Voluntary Arbitrator denied both motions on denied the motion for lack of merit. Hence, petitioner filed
May 26, 2003.18 before us a petition for review on certiorari docketed as G.R.
No. 172303.
On August 1, 2003, petitioner assailed the decision of the
Voluntary Arbitrator before the CA in a petition for certiorari Considering that G.R. Nos. 164939 and 172303 have the same
which was docketed as CA-G.R. SP No. 78364.19 As origin, involve the same parties, and raise interrelated issues,
mentioned at the outset, the CA dismissed the petition the petitions were consolidated.
outright for being the wrong remedy. The CA explained:
Petitioner raises the following issues:
Rule 43, Section 5 of the 1997 Rules of Civil Procedure
explicitly provides that the proper mode of appeal from In G.R. No. 164939
judgments, final orders or resolution of voluntary arbitrators
is through a Petition for Review which should be filed within
THE COURT OF APPEALS ERRED IN DISMISSING
fifteen (15) days from the receipt of notice of judgment, order
OUTRIGHT THE PETITION FOR CERTIORARI ON THE
or resolution of the voluntary arbitrator.
GROUND THAT THE SAME IS AN IMPROPER MODE OF
APPEAL.24
Considering that petitioner intends this petition to be a
Petition for Certiorari, the Court hereby resolves to dismiss
In G.R. No. 172303
the petition outright for being an improper mode of appeal.

THE COURT OF APPEALS ERRED IN DELETING THE


Even if this Court treats the instant petition as a Petition for
AWARD OF FINANCIAL ASSISTANCE IN THE AMOUNT
Review, still the Court has no alternative but to dismiss the
OF P100,000.00 TO ANGELITO CARAGDAG.25
same for having been filed out of time. As admitted by the
petitioner it received the Order dated 26 May 2003 denying
their motion for reconsideration on 02 June 2003. The fifteen The issues for our resolution are thus two-fold: first, whether
(15) day period within which to appeal through a Petition for the CA erred in dismissing outright the petition for certiorari
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filed before it on the ground that the same is an improper or commissions, including the Securities and Exchange
mode of appeal; and second, whether the CA erred in Commission, the Employees Compensation Commission
deleting the award of financial assistance in the amount of and the Civil Service Commission, except those falling within
P100,000.00 to Caragdag. the appellate jurisdiction of the Supreme Court in accordance
with the Constitution, the Labor Code of the Philippines
On the first issue, petitioner argues that because decisions under Presidential Decree No. 442, as amended, the
rendered by voluntary arbitrators are issued under Title VII- provisions of this Act and of subparagraph (1) of the third
A of the Labor Code, they are not covered by Rule 43 of the paragraph and subparagraph (4) of the fourth paragraph of
1997 Rules of Civil Procedure, as amended, by express Section 17 of the Judiciary Act of 1948.
provision of Section 2 thereof. Section 2, petitioner points out,
expressly provides that Rule 43 "shall not apply to judgments "The Court took into account this exception in Luzon
or final orders issued under the Labor Code of the Development Bank but, nevertheless, held that the decisions
Philippines." Hence, a petition for certiorari under Rule 65 is of voluntary arbitrators issued pursuant to the Labor Code
the proper remedy for questioning the decision of the do not come within its ambit x x x"
Voluntary Arbitrator, and petitioner having availed of such
remedy, the CA erred in declaring that the petition was filed Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of
out of time since the petition was filed within the sixty (60)- Civil Procedure, as amended, provide:
day reglementary period.
SECTION 1. Scope. - This Rule shall apply to appeals from
On the other hand, respondent maintains that the CA acted judgments or final orders of the Court of Tax Appeals and
correctly in dismissing the petition for certiorari for being the from awards, judgments, final orders or resolutions of or
wrong mode of appeal. It stresses that Section 1 of Rule 43 authorized by any quasi-judicial agency in the exercise of its
clearly states that it is the governing rule with regard to quasi-judicial functions. Among these agencies are the x x x,
appeals from awards, judgments, final orders or resolutions and voluntary arbitrators authorized by law.
of voluntary arbitrators. Respondent contends that the
voluntary arbitrators authorized by law include the
xxxx
voluntary arbitrators appointed and accredited under the
Labor Code, as they are considered as included in the term
"quasi-judicial instrumentalities." SEC. 3. Where to appeal. - An appeal under this Rule may be
taken to the Court of Appeals within the period and in the
manner therein provided, whether the appeal involves
Petitioners arguments fail to persuade.
questions of fact, of law, or mixed questions of fact and law.

In the case of Samahan ng mga Manggagawa sa Hyatt-


SEC. 4. Period of appeal. - The appeal shall be taken within
NUWHRAIN-APL v. Bacungan,26 we repeated the well-
fifteen (15) days from notice of the award, judgment, final
settled rule that a decision or award of a voluntary arbitrator
order or resolution, or from the date of its last publication, if
is appealable to the CA via petition for review under Rule 43.
publication is required by law for its effectivity, or of the
We held that:
denial of petitioners motion for new trial or reconsideration
duly filed in accordance with the governing law of the court
The question on the proper recourse to assail a decision of a or agency a quo. x x x. (Emphasis supplied.)
voluntary arbitrator has already been settled in Luzon
Development Bank v. Association of Luzon Development
Hence, upon receipt on May 26, 2003 of the Voluntary
Bank Employees, where the Court held that the decision or
Arbitrators Resolution denying petitioners motion for
award of the voluntary arbitrator or panel of arbitrators
reconsideration, petitioner should have filed with the CA,
should likewise be appealable to the Court of Appeals, in line
within the fifteen (15)-day reglementary period, a petition for
with the procedure outlined in Revised Administrative
review, not a petition for certiorari.
Circular No. 1-95 (now embodied in Rule 43 of the 1997 Rules
of Civil Procedure), just like those of the quasi-judicial
agencies, boards and commissions enumerated therein, and Petitioner insists on a liberal interpretation of the rules but
consistent with the original purpose to provide a uniform we find no cogent reason in this case to deviate from the
procedure for the appellate review of adjudications of all general rule. Verily, rules of procedure exist for a noble
quasi-judicial entities. purpose, and to disregard such rules in the guise of liberal
construction would be to defeat such purpose. Procedural
rules are not to be disdained as mere technicalities. They may
Subsequently, in Alcantara, Jr. v. Court of Appeals, and
not be ignored to suit the convenience of a party. Adjective
Nippon Paint Employees Union-Olalia v. Court of Appeals,
law ensures the effective enforcement of substantive rights
the Court reiterated the aforequoted ruling. In Alcantara, the
through the orderly and speedy administration of justice.
Court held that notwithstanding Section 2 of Rule 43, the
Rules are not intended to hamper litigants or complicate
ruling in Luzon Development Bank still stands. The Court
litigation. But they help provide for a vital system of justice
explained, thus:
where suitors may be heard following judicial procedure and
in the correct forum. Public order and our system of justice
"The provisions may be new to the Rules of Court but it is far are well served by a conscientious observance by the parties
from being a new law. Section 2, Rules 42 of the 1997 Rules of the procedural rules.27
of Civil Procedure, as presently worded, is nothing more but
a reiteration of the exception to the exclusive appellate
On the second issue, petitioner argues that Caragdag is
jurisdiction of the Court of Appeals, as provided for in
entitled to financial assistance in the amount of P100,000 on
Section 9, Batas Pambansa Blg. 129, as amended by Republic
humanitarian considerations. Petitioner stresses that
Act No. 7902:
Caragdags infractions were due to his being a union officer
and his acts did not show moral depravity. Petitioner also
(3) Exclusive appellate jurisdiction over all final judgments, adds that, while it is true that the award of financial
decisions, resolutions, orders or awards of Regional Trial assistance is given only for dismissals due to causes specified
Courts and quasi-judicial agencies, instrumentalities, boards under Articles 283 and 284 of the Labor Code, as amended,
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this Court has, by way of exception, allowed the grant of prescribed by his employer. The Voluntary Arbitrator
financial assistance to an employee dismissed for just causes pointed out that according to the hotels Code of Discipline,
based on equity. an employee who commits three different acts of misconduct
within a twelve (12)-month period commits serious
Respondent on the other hand, asserts that the CA correctly misconduct. He stressed that Caragdags infractions were not
deleted the award of financial assistance erroneously granted even spread in a period of twelve (12) months, but rather in
to Caragdag considering that he was found guilty of serious a period of a little over a month. Records show the various
misconduct and other acts adversely reflecting on his moral violations of the hotels rules and regulations were
character. Respondent stresses that Caragdags willful committed by Caragdag. He was suspended for violating the
defiance of the hotels security policy, disrespect and hotel policy on bag inspection and body frisking. He was
intimidation of a superior, and unjustifiable desertion of his likewise suspended for threatening and intimidating a
work assignment during working hours without permission, superior while the latter was counseling his staff. He was
patently show his serious and gross misconduct as well as again suspended for leaving his work assignment without
amoral character.28 permission. Evidently, Caragdags acts constitute serious
misconduct.1wphi1
Again, petitioners arguments lack merit.
In Piedad v. Lanao del Norte Electric Cooperative, Inc.,32 we
ruled that a series of irregularities when put together may
The grant of separation pay or some other financial assistance
constitute serious misconduct, which under Article 282 of the
to an employee dismissed for just causes is based on equity.29
Labor Code, as amended, is a just cause for dismissal.
In Phil. Long Distance Telephone Co. v. NLRC,30 we ruled
that severance compensation, or whatever name it is called,
on the ground of social justice shall be allowed only when the Caragdags dismissal being due to serious misconduct, it
cause of the dismissal is other than serious misconduct or for follows that he should not be entitled to financial assistance.
causes which reflect adversely on the employees moral To rule otherwise would be to reward him for the grave
character. The Court succinctly discussed the propriety of the misconduct he committed. We must emphasize that social
grant of separation pay in this wise: justice is extended only to those who deserve its
compassion.33
We hold that henceforth separation pay shall be allowed as a
measure of social justice only in those instances where the WHEREFORE, the petitions for review on certiorari are
employee is validly dismissed for causes other than serious DENIED. The October 3, 2003 and August 13, 2004 Court of
misconduct or those reflecting on his moral character. Where Appeals Resolutions in CA-G.R. SP No. 78364, as well as the
the reason for the valid dismissal is, for example, habitual Court of Appeals December 16, 2005 Decision and April 12,
intoxication or an offense involving moral turpitude, like 2006 Resolution in CA-G.R. SP No. 77478, are AFFIRMED
theft or illicit sexual relations with a fellow worker, the and UPHELD.
employer may not be required to give the dismissed
employee separation pay, or financial assistance, or whatever With costs against the petitioner.
other name it is called, on the ground of social justice.
SO ORDERED.
A contrary rule would, as the petitioner correctly argues,
have the effect, of rewarding rather than punishing the erring Republic of the Philippines
employee for his offense. And we do not agree that the SUPREME COURT
punishment is his dismissal only and that the separation pay Manila
has nothing to do with the wrong he has committed. Of
course it has. Indeed, if the employee who steals from the
SECOND DIVISION
company is granted separation pay even as he is validly
dismissed, it is not unlikely that he will commit a similar
offense in his next employment because he thinks he can G. R. No. 154061 January 25, 2012
expect a like leniency if he is again found out. This kind of
misplaced compassion is not going to do labor in general any PANAY RAILWAYS INC., Petitioner,
good as it will encourage the infiltration of its ranks by those vs.
who do not deserve the protection and concern of the HEVA MANAGEMENT and DEVELOPMENT
Constitution. CORPORATION, PAMPLONA AGRO-INDUSTRIAL
CORPORATION, and SPOUSES CANDELARIA DAYOT
The policy of social justice is not intended to countenance and EDMUNDO DAYOT, Respondents.
wrongdoing simply because it is committed by the
underprivileged. At best it may mitigate the penalty but it DECISION
certainly will not condone the offense. Compassion for the
poor is an imperative of every humane society but only when SERENO, J.:
the recipient is not a rascal claiming an undeserved privilege.
Social justice cannot be permitted to be refuge of scoundrels The present Petition stems from the dismissal by the Regional
any more than can equity be an impediment to the Trial Court (RTC) of Iloilo City of a Notice of Appeal for
punishment of the guilty. Those who invoke social justice petitioners failure to pay the corresponding docket fees.
may do so only if their hands are clean and their motives
blameless and not simply because they happen to be poor.
The facts are as follows:
This great policy of our Constitution is not meant for the
protection of those who have proved they are not worthy of
it, like the workers who have tainted the cause of labor with On 20 April 1982, petitioner Panay Railways Inc., a
the blemishes of their own character.31 government-owned and controlled corporation, executed a
Real Estate Mortgage Contract covering several parcels of
lands, including Lot No. 6153, in favor of Traders Royal Bank
Here, Caragdags dismissal was due to several instances of
willful disobedience to the reasonable rules and regulations (TRB) to secure P 20 million worth of loan and credit
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accommodations. Petitioner excluded certain portions of Lot assigns, together with all the buildings,
No. 6153: that already sold to Shell Co., Inc. referred to as warehouses, offices, and all other permanent
6153-B, a road referred to as 6153-C, and a squatter area improvements constructed thereon and will attest
known as 6153-D.1 to the title and possession of petitioner over said
real properties. (Emphasis supplied)
Petitioner failed to pay its obligations to TRB, prompting the
bank to extra-judicially foreclose the mortgaged properties TCT No. T-84235 mentioned in the quoted portion above is
including Lot No. 6153. On 20 January 1986, a Certificate of Lot No. 6153, which is under dispute.
Sale was issued in favor of the bank as the highest bidder and
purchaser. Consequently, the sale of Lot No. 6153 was It was only in 1994 that petitioner realized that the
registered with the Register of Deeds on 28 January 1986 and extrajudicial foreclosure included some excluded properties
annotated at the back of the transfer certificates of title (TCT) in the mortgage contract. Thus, on 19 August 1994, it filed a
covering the mortgaged properties. Complaint for Partial Annulment of Contract to Sell and
Deed of Absolute Sale with Addendum; Cancellation of Title
Thereafter, TRB caused the consolidation of the title in its No. T-89624; and Declaration of Ownership of Real Property
name on the basis of a Deed of Sale and an Affidavit of with Reconveyance plus Damages.3
Consolidation after petitioner failed to exercise the right to
redeem the properties. The corresponding TCTs were It then filed an Amended Complaint4 on 1 January 1995 and
subsequently issued in the name of the bank. again filed a Second Amended Complaint5 on 8 December
1995.
On 12 February 1990, TRB filed a Petition for Writ of
Possession against petitioner. During the proceedings, Meanwhile, respondents filed their respective Motions to
petitioner, through its duly authorized manager and officer- Dismiss on these grounds: (1) petitioner had no legal capacity
in-charge and with the assistance of counsel, filed a to sue; (2) there was a waiver, an abandonment and an
Manifestation and Motion to Withdraw Motion for extinguishment of petitioners claim or demand; (3)
Suspension of the Petition for the issuance of a writ of petitioner failed to state a cause of action; and (4) an
possession.2 The pertinent portions of the Manifestation and indispensable party, namely TRB, was not impleaded.
Motion state:
On 18 July 1997, the RTC issued an Order6 granting the
3. That after going over the records of this case and Motion to Dismiss of respondents. It held that the
the case of Traders Royal Bank vs. Panay Railway, Manifestation and Motion filed by petitioner was a judicial
Inc., Civil Case No. 18280, PRI is irrevocably admission of TRBs ownership of the disputed properties.
withdrawing its Motion for Suspension referred to The trial court pointed out that the Manifestation was
in paragraph 1 above, and its Motion for executed by petitioners duly authorized representative with
Reconsideration referred in paragraph 2 above and the assistance of counsel. This admission thus operated as a
will accept and abide by the September 21, 1990 waiver barring petitioner from claiming otherwise.
Order denying the Motion For Suspension;
On 11 August 1997, petitioner filed a Notice of Appeal
4. That PRI recognizes and acknowledges without paying the necessary docket fees. Immediately
petitioner (TRB) to be the registered owner of Lot thereafter, respondents filed a Motion to Dismiss Appeal on
1-A; Lot 3834; Lot 6153; Lot 6158; Lot 6159, and Lot the ground of nonpayment of docket fees.
5 covered by TCT No. T-84233; T-84234; T-84235; T-
84236; T-84237, T-84238 and T-45724 respectively,
In its Opposition,7 petitioner alleged that its counsel was not
free of liens and encumbrances, except that
yet familiar with the revisions of the Rules of Court that
portion sold to Shell Co. found in Lot 5. That
became effective only on 1 July 1997. Its representative was
Petitioner (TRB) as registered owner is entitled to
peaceful ownership and immediate physical likewise not informed by the court personnel that docket fees
possession of said real properties. needed to be paid upon the filing of the Notice of Appeal.
Furthermore, it contended that the requirement for the
payment of docket fees was not mandatory. It therefore
5. That PRI further acknowledges that the asked the RTC for a liberal interpretation of the procedural
Provincial Sheriff validly foreclosed the Real
rules on appeals.
Estate Mortgage erected by PRI due to failure to
pay the loan of P 20,000,000.00. That TRB was the
purchaser of these lots mentioned in paragraph 4 On 29 September 1997, the RTC issued an Order8 dismissing
above at Sheriffs Auction Sale as evidenced by the the appeal citing Sec. 4 of Rule 419 of the Revised Rules of
Certificate of Sale dated January 20, 1986 and the Court.
Certificates of Titles issued to Petitioner;
Petitioner thereafter moved for a reconsideration of the
6. That PRI further manifests that it has no past, Order10 alleging that the trial court lost jurisdiction over the
present or future opposition to the grant of the case after the former had filed the Notice of Appeal.
Writ of Possession to TRB over the parcels of land Petitioner also alleged that the court erred in failing to relax
mentioned in paragraph 4 above and subject of procedural rules for the sake of substantial justice.
this Petition and even assuming "arguendo" that it
has, PRI irrevocably waives the same. That PRI On 25 November 1997, the RTC denied the Motion.11
will even assist TRB in securing possession of said
properties as witness against squatters, illegal
On 28 January 1998, petitioner filed with the Court of
occupants, and all other possible claimants;
Appeals (CA) a Petition for Certiorari and Mandamus under
Rule 65 alleging that the RTC had no jurisdiction to dismiss
7. That upon execution hereof, PRI voluntarily the Notice of Appeal, and that the trial court had acted with
surrenders physical possession and control of the grave abuse of discretion when it strictly applied procedural
premises of these lots to TRB, its successors or its rules.
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On 29 November 2000, the CA rendered its Decision12 on the pay the docket fees on time. Clearly, there were no
Petition. It held that while the failure of petitioner to pay the substantive rights to speak of when the RTC dismissed the
docket and other lawful fees within the reglementary period Notice of Appeal.
was a ground for the dismissal of the appeal pursuant to Sec.
1 of Rule 50 of the Revised Rules of Court, the jurisdiction to The argument that the CA had the exclusive jurisdiction to
do so belonged to the CA and not the trial court. Thus, dismiss the appeal has no merit.1wphi1 When this Court
appellate court ruled that the RTC committed grave abuse of accordingly amended Sec. 13 of Rule 41 through A.M. No. 00-
discretion in dismissing the appeal and set aside the latters 2-10-SC, the RTCs dismissal of the action may be considered
assailed Order dated 29 September 1997. to have had the imprimatur of the Court. Thus, the CA
committed no reversible error when it sustained the
Thereafter, respondents filed their respective Motions for dismissal of the appeal, taking note of its directive on the
Reconsideration. matter prior to the promulgation of its Decision.

It appears that prior to the promulgation of the CAs As early as 1932, in Lazaro v. Endencia,17 we have held that
Decision, this Court issued Administrative Matter (A.M.) No. the payment of the full amount of the docket fees is an
00-2-10-SC which took effect on 1 May 2000, amending Rule indispensable step for the perfection of an appeal. The Court
4, Sec. 7 and Sec. 13 of Rule 41 of the 1997 Revised Rules of acquires jurisdiction over any case only upon the payment of
Court. The circular expressly provided that trial courts may, the prescribed docket fees.18
motu proprio or upon motion, dismiss an appeal for being
filed out of time or for nonpayment of docket and other Moreover, the right to appeal is not a natural right and is not
lawful fees within the reglementary period. Subsequently, part of due process. It is merely a statutory privilege, which
Circular No. 48-200013 was issued on 29 August 2000 and was may be exercised only in accordance with the law.19
addressed to all lower courts.
We have repeatedly stated that the term "substantial justice"
By virtue of the amendment to Sec. 41, the CA upheld the is not a magic wand that would automatically compel this
questioned Orders of the trial court by issuing the assailed Court to suspend procedural rules. Procedural rules are not
Amended Decision14 in the present Petition granting to be belittled or dismissed simply because their non-
respondents Motion for Reconsideration. observance may result in prejudice to a partys substantive
rights. Like all other rules, they are required to be followed,
The CAs action prompted petitioner to file a Motion for except only for the most persuasive of reasons when they
Reconsideration alleging that SC Circular No. 48-2000 should may be relaxed to relieve litigants of an injustice not
not be given retroactive effect. It also alleged that the CA commensurate with the degree of their thoughtlessness in
should consider the case as exceptionally meritorious. not complying with the procedure prescribed.20
Petitioners counsel, Atty. Rexes V. Alejano, explained that he
was yet to familiarize himself with the Revised Rules of We cannot consider counsels failure to familiarize himself
Court, which became effective a little over a month before he with the Revised Rules of Court as a persuasive reason to
filed the Notice of Appeal. He was thus not aware that the relax the application of the Rules. It is well-settled that the
nonpayment of docket fees might lead to the dismissal of the negligence of counsel binds the client. This principle is based
case. on the rule that any act performed by lawyers within the
scope of their general or implied authority is regarded as an
On 30 May 2002, the CA issued the assailed Resolution 15 act of the client. Consequently, the mistake or negligence of
denying petitioners Motion for Reconsideration. the counsel of petitioner may result in the rendition of an
unfavorable judgment against it.21
Hence, this Petition.
WHEREFORE, in view of the foregoing, the Petition is
Petitioner alleges that the CA erred in sustaining the RTCs DENIED for lack of merit.
dismissal of the Notice of Appeal. Petitioner contends that
the CA had exclusive jurisdiction to dismiss the Notice of SO ORDERED.
Appeal at the time of filing. Alternatively, petitioner argues
that while the appeal was dismissible for failure to pay Republic of the Philippines
docket fees, substantial justice demands that procedural rules SUPREME COURT
be relaxed in this case. Manila

The Petition has no merit. FIRST DIVISION

Statutes and rules regulating the procedure of courts are G.R. No. 158239 January 25, 2012
considered applicable to actions pending and unresolved at
the time of their passage. Procedural laws and rules are
PRISCILLA ALMA JOSE, Petitioner,
retroactive in that sense and to that extent. The effect of
vs.
procedural statutes and rules on the rights of a litigant may
RAMON C. JAVELLANA, ET AL., Respondents.
not preclude their retroactive application to pending actions.
This retroactive application does not violate any right of a
person adversely affected. Neither is it constitutionally DECISION
objectionable. The reason is that, as a general rule, no vested
right may attach to or arise from procedural laws and rules. BERSAMIN, J.:
It has been held that "a person has no vested right in any
particular remedy, and a litigant cannot insist on the The denial of a motion for reconsideration of an order
application to the trial of his case, whether civil or criminal, granting the defending partys motion to dismiss is not an
of any other than the existing rules of procedure."16 More so interlocutory but a final order because it puts an end to the
when, as in this case, petitioner admits that it was not able to particular matter involved, or settles definitely the matter
@lendelacruz 7

therein disposed of, as to leave nothing for the trial court to Javellana moved for reconsideration, contending that the
do other than to execute the order.1 Accordingly, the claiming presentation of evidence of full payment was not necessary
party has a fresh period of 15 days from notice of the denial at that stage of the proceedings; and that in resolving a
within which to appeal the denial.2 motion to dismiss on the ground of failure to state a cause of
action, the facts alleged in the complaint were hypothetically
Antecedents admitted and only the allegations in the complaint should be
considered in resolving the motion.10 Nonetheless, he
attached to the motion for reconsideration the receipts
On September 8, 1979, Margarita Marquez Alma Jose
showing the payments made to Juvenal.11 Moreover, he
(Margarita) sold for consideration of P160,000.00 to
maintained that Priscilla could no longer succeed to any
respondent Ramon Javellana by deed of conditional sale two
rights respecting the parcels of land because he had
parcels of land with areas of 3,675 and 20,936 square meters
meanwhile acquired absolute ownership of them; and that
located in Barangay Mallis, Guiguinto, Bulacan. They agreed
the only thing that she, as sole heir, had inherited from
that Javellana would pay P80,000.00 upon the execution of
Margarita was the obligation to register them under the
the deed and the balance of P80,000.00 upon the registration
Torrens System.12
of the parcels of land under the Torrens System (the
registration being undertaken by Margarita within a
reasonable period of time); and that should Margarita On June 21, 2000, the RTC denied the motion for
become incapacitated, her son and attorney-in-fact, Juvenal reconsideration for lack of any reason to disturb the order of
M. Alma Jose (Juvenal), and her daughter, petitioner Priscilla June 24, 1999.13
M. Alma Jose, would receive the payment of the balance and
proceed with the application for registration.3 Accordingly, Javellana filed a notice of appeal from the June
21, 2000 order,14 which the RTC gave due course to, and the
After Margarita died and with Juvenal having predeceased records were elevated to the Court of Appeals (CA).
Margarita without issue, the vendors undertaking fell on the
shoulders of Priscilla, being Margaritas sole surviving heir. In his appeal (C.A.-G.R. CV No. 68259), Javellana submitted
However, Priscilla did not comply with the undertaking to the following as errors of the RTC,15 to wit:
cause the registration of the properties under the Torrens
System, and, instead, began to improve the properties by I
dumping filling materials therein with the intention of
converting the parcels of land into a residential or industrial
THE TRIAL COURT GRIEVOUSLY ERRED IN
subdivision.4 Faced with Priscillas refusal to comply,
NOT CONSIDERING THE FACT THAT
Javellana commenced on February 10, 1997 an action for
PLAINTIFF-APELLANT HAD LONG COMPLIED
specific performance, injunction, and damages against her in
WITH THE FULL PAYMENT OF THE
the Regional Trial Court in Malolos, Bulacan (RTC), docketed
CONSIDERATION OF THE SALE OF THE
as Civil Case No. 79-M-97 entitled Ramon C. Javellana,
SUBJECT PROPERTY AND HAD IMMEDIATELY
represented by Atty. Guillermo G. Blanco v. Priscilla Alma
TAKEN ACTUAL AND PHYSICAL POSSESSION
Jose.
OF SAID PROPERTY UPON THE SIGNING OF
THE CONDITIONAL DEED OF SALE;
In Civil Case No. 79-M-97, Javellana averred that upon the
execution of the deed of conditional sale, he had paid the
II
initial amount of P80,000.00 and had taken possession of the
parcels of land; that he had paid the balance of the purchase
price to Juvenal on different dates upon Juvenals THE TRIAL COURT OBVIOUSLY ERRED IN
representation that Margarita had needed funds for the MAKING TWO CONFLICTING
expenses of registration and payment of real estate tax; and INTERPRETATIONS OF THE PROVISION OF
that in 1996, Priscilla had called to inquire about the THE CIVIL [CODE], PARTICULARLY ARTICLE
mortgage constituted on the parcels of land; and that he had 1911, IN THE LIGHT OF THE TERMS OF THE
told her then that the parcels of land had not been mortgaged CONDITIONAL DEED OF SALE;
but had been sold to him.5
III
Javellana prayed for the issuance of a temporary restraining
order or writ of preliminary injunction to restrain Priscilla THE TRIAL COURT ERRED IN HOLDING THAT
from dumping filling materials in the parcels of land; and DEFENDANT-APPELLEE BEING NOT A PARTY
that Priscilla be ordered to institute registration proceedings TO THE CONDITIONAL DEED OF SALE
and then to execute a final deed of sale in his favor.6 EXECUTED BY HER MOTHER IN FAVOR OF
PLAINTFF-
Priscilla filed a motion to dismiss, stating that the complaint
was already barred by prescription; and that the complaint APPELLANT IS NOT BOUND THEREBY AND
did not state a cause of action.7 CAN NOT BE COMPELLED TO DO THE ACT
REQUIRED IN THE SAID DEED OF
The RTC initially denied Priscillas motion to dismiss on CONDITIONAL SALE;
February 4, 1998.8 However, upon her motion for
reconsideration, the RTC reversed itself on June 24, 1999 and IV
granted the motion to dismiss, opining that Javellana had no
cause of action against her due to her not being bound to THE TRIAL COURT ERRED IN DISMISSING THE
comply with the terms of the deed of conditional sale for not AMENDED COMPLAINT WITHOUT HEARING
being a party thereto; that there was no evidence showing the THE CASE ON THE MERITS.
payment of the balance; that he had never demanded the
registration of the land from Margarita or Juvenal, or brought
a suit for specific performance against Margarita or Juvenal;
and that his claim of paying the balance was not credible. 9
@lendelacruz 8

Priscilla countered that the June 21, 2000 order was not CV No. 68259, and because the issue of ownership raised in
appealable; that the appeal was not perfected on time; and C.A.-G.R. CV No. 68259 was different from the issue of grave
that Javellana was guilty of forum shopping.16 abuse of discretion raised in C.A.-G.R. SP No. 60455.

It appears that pending the appeal, Javellana also filed a Ruling


petition for certiorari in the CA to assail the June 24, 1999 and
June 21, 2000 orders dismissing his complaint (C.A.-G.R. SP The petition for review has no merit.
No. 60455). On August 6, 2001, however, the CA dismissed
the petition for certiorari,17 finding that the RTC did not
I
commit grave abuse of discretion in issuing the orders, and
holding that it only committed, at most, an error of judgment
correctible by appeal in issuing the challenged orders. Denial of the motion for reconsideration of the
order of dismissal was a final order and appealable
On November 20, 2002, the CA promulgated its decision in
C.A.-G.R. CV No. 68259,18 reversing and setting aside the Priscilla submits that the order of June 21, 2000 was not the
dismissal of Civil Case No. 79-M-97, and remanding the proper subject of an appeal considering that Section 1 of Rule
records to the RTC "for further proceedings in accordance 41 of the Rules of Court provides that no appeal may be taken
with law."19 The CA explained that the complaint sufficiently from an order denying a motion for reconsideration.
stated a cause of action; that Priscilla, as sole heir, succeeded
to the rights and obligations of Margarita with respect to the Priscillas submission is erroneous and cannot be sustained.
parcels of land; that Margaritas undertaking under the
contract was not a purely personal obligation but was First of all, the denial of Javellanas motion for
transmissible to Priscilla, who was consequently bound to reconsideration left nothing more to be done by the RTC
comply with the obligation; that the action had not yet because it confirmed the dismissal of Civil Case No. 79-M-97.
prescribed due to its being actually one for quieting of title It was clearly a final order, not an interlocutory one. The
that was imprescriptible brought by Javellana who had Court has distinguished between final and interlocutory
actual possession of the properties; and that based on the orders in Pahila-Garrido v. Tortogo,22 thuswise:

complaint, Javellana had been in actual possession since The distinction between a final order and an interlocutory
1979, and the cloud on his title had come about only when order is well known. The first disposes of the subject matter
Priscilla had started dumping filling materials on the in its entirety or terminates a particular proceeding or action,
premises.20 leaving nothing more to be done except to enforce by
execution what the court has determined, but the latter does
On May 9, 2003, the CA denied the motion for not completely dispose of the case but leaves something else
reconsideration, 21 stating that it decided to give due course to be decided upon. An interlocutory order deals with
to the appeal even if filed out of time because Javellana had preliminary matters and the trial on the merits is yet to be
no intention to delay the proceedings, as in fact he did not held and the judgment rendered. The test to ascertain
even seek an extension of time to file his appellants brief; that whether or not an order or a judgment is
current jurisprudence afforded litigants the amplest
opportunity to present their cases free from the constraints of interlocutory or final is: does the order or judgment leave
technicalities, such that even if an appeal was filed out of something to be done in the trial court with respect to the
time, the appellate court was given the discretion to merits of the case? If it does, the order or judgment is
nonetheless allow the appeal for justifiable reasons. interlocutory; otherwise, it is final.

Issues And, secondly, whether an order is final or interlocutory


determines whether appeal is the correct remedy or not. A
Priscilla then brought this appeal, averring that the CA final order is appealable, to accord with the final judgment
thereby erred in not outrightly dismissing Javellanas appeal rule enunciated in Section 1, Rule 41 of the Rules of Court to
because: (a) the June 21, 2000 RTC order was not appealable; the effect that "appeal may be taken from a judgment or final
(b) the notice of appeal had been filed belatedly by three order that completely disposes of the case, or of a particular
days; and (c) Javellana was guilty of forum shopping for matter therein when declared by these Rules to be
filing in the CA a petition for certiorari to assail the orders of appealable;"23 but the remedy from an interlocutory one is
the RTC that were the subject matter of his appeal pending in not an appeal but a special civil action for certiorari. The
the CA. She posited that, even if the CAs decision to explanation for the differentiation of remedies given in
entertain the appeal was affirmed, the RTCs dismissal of the Pahila-Garrido v. Tortogo is apt:
complaint should nonetheless be upheld because the
complaint stated no cause of action, and the action had xxx The reason for disallowing an appeal from an
already prescribed. interlocutory order is to avoid multiplicity of appeals in a
single action, which necessarily suspends the hearing and
On his part, Javellana countered that the errors being decision on the merits of the action during the pendency of
assigned by Priscilla involved questions of fact not proper for the appeals. Permitting multiple appeals will necessarily
the Court to review through petition for review on certiorari; delay the trial on the merits of the case for a considerable
that the June 21, 2000 RTC order, being a final order, was length of time, and will compel the adverse party to incur
appealable; that his appeal was perfected on time; and that unnecessary expenses, for one of the parties may interpose as
he was not guilty of forum shopping because at the time he many appeals as there are incidental questions raised by him
filed the and as there are interlocutory orders rendered or issued by
the lower court. An interlocutory order may be the subject of
petition for certiorari the CA had not yet rendered a decision an appeal, but only after a judgment has been rendered, with
in C.A.-G.R. the ground for appealing the order being included in the
appeal of the judgment itself.
@lendelacruz 9

The remedy against an interlocutory order not subject of an To standardize the appeal periods provided in the Rules and
appeal is an appropriate special civil action under Rule 65, to afford litigants fair opportunity to appeal their cases, the
provided that the interlocutory order is rendered without or Court deems it practical to allow a fresh period of 15 days
in excess of jurisdiction or with grave abuse of discretion. within which to file the notice of appeal in the Regional Trial
Then is certiorari under Rule 65 allowed to be resorted to. Court, counted from receipt of the order dismissing a motion
for a new trial or motion for reconsideration.
Indeed, the Court has held that an appeal from an order
denying a motion for reconsideration of a final order or Henceforth, this "fresh period rule" shall also apply to Rule
judgment is effectively an appeal from the final order or 40 governing appeals from the Municipal Trial Courts to the
judgment itself; and has expressly clarified that the Regional Trial Courts; Rule 42 on petitions for review from
prohibition against appealing an order denying a motion for the Regional Trial Courts to the Court of Appeals; Rule 43 on
appeals from quasi-judicial agencies to the Court of Appeals
reconsideration referred only to a denial of a motion for and Rule 45 governing appeals by certiorari to the Supreme
reconsideration of an interlocutory order.24 Court. The new rule aims to regiment or make the appeal
period uniform, to be counted from receipt of the order
denying the motion for new trial, motion for reconsideration
II
(whether full or partial) or any final order or resolution.26

Appeal was made on time pursuant to Neypes v. CA


The fresh period rule may be applied to this case, for the
Court has already retroactively extended the fresh period
Priscilla insists that Javellana filed his notice of appeal out of rule to "actions pending and undetermined at the time of
time. She points out that he received a copy of the June 24, their passage and this will not violate any right of a person
1999 order on July 9, 1999, and filed his motion for who may feel that he is adversely affected, inasmuch as there
reconsideration on July 21, 1999 (or after the lapse of 12 days); are no vested rights in rules of procedure."27 According to De
that the RTC denied his motion for reconsideration through los Santos v. Vda. de Mangubat:28
the order of June 21, 2000, a copy of which he received on July
13, 2000; that he had only three days from July 13, 2000, or
Procedural law refers to the adjective law which prescribes
until July 16, 2000, within which to perfect an appeal; and that
rules and forms of procedure in order that courts may be able
having filed his notice of appeal on July 19, 2000, his appeal
to administer justice. Procedural laws do not come within the
should have been dismissed for being tardy by three days
legal conception of a retroactive law, or the general rule
beyond the expiration of the reglementary period.
against the retroactive operation of statues they may be
given retroactive effect on actions pending and
Section 3 of Rule 41 of the Rules of Court provides: undetermined at the time of their passage and this will not
violate any right of a person who may feel that he is adversely
Section 3. Period of ordinary appeal. The appeal shall be affected, insomuch as there are no vested rights in rules of
taken within fifteen (15) days from notice of the judgment or procedure.
final order appealed from. Where a record on appeal is
required, the appellant shall file a notice of appeal and a The "fresh period rule" is a procedural law as it prescribes a
record on appeal within thirty (30) days from notice of the fresh period of 15 days within which an appeal may be made
judgment or final order. in the event that the motion for reconsideration is denied by
the lower court. Following the rule on retroactivity of
The period of appeal shall be interrupted by a timely motion procedural laws, the "fresh period rule" should be applied to
for new trial or reconsideration. No motion for extension of pending actions, such as the present case.
time to file a motion for new trial or reconsideration shall be
allowed. (n) Also, to deny herein petitioners the benefit of the "fresh
period rule" will amount to injustice, if not absurdity, since
Under the rule, Javellana had only the balance of three days the subject notice of judgment and final order were issued
from July 13, 2000, or until July 16, 2000, within which to two years later or in the year 2000, as compared to the notice
perfect an appeal due to the timely filing of his motion for of judgment and final order in Neypes which were issued in
reconsideration interrupting the running of the period of 1998. It will be incongruous and illogical that parties
appeal. As such, his filing of the notice of appeal only on July receiving notices of judgment and final orders issued in the
19, 2000 did not perfect his appeal on time, as Priscilla insists. year 1998 will enjoy the benefit of the "fresh period rule"
while those later rulings of the lower courts such as in the
The seemingly correct insistence of Priscilla cannot be instant case, will not.29
upheld, however, considering that the Court meanwhile
adopted the fresh period rule in Neypes v. Court of Consequently, we rule that Javellanas notice of appeal was
Appeals,25 by which an aggrieved party desirous of timely filed pursuant to the fresh period rule.
appealing an adverse judgment or final order is allowed a
fresh period of 15 days within which to file the notice of III
appeal in the RTC reckoned from receipt of the order denying
a motion for a new trial or motion for reconsideration, to wit:
No forum shopping was committed

The Supreme Court may promulgate procedural rules in all


Priscilla claims that Javellana engaged in forum shopping by
courts. It has the sole prerogative to amend, repeal or even
filing a notice of appeal and a petition for certiorari against
establish new rules for a more simplified and inexpensive
the same orders. As earlier noted, he denies that his doing so
process, and the speedy disposition of cases. In the rules
violated the policy against forum shopping.
governing appeals to it and to the Court of Appeals,
particularly Rules 42, 43 and 45, the Court allows extensions
of time, based on justifiable and compelling reasons, for The Court expounded on the nature and purpose of forum
parties to file their appeals. These extensions may consist of shopping in In Re: Reconstitution of Transfer Certificates of
15 days or more. Title Nos. 303168 and 303169 and Issuance of Owners
@lendelacruz 10

Duplicate Certificates of Title In Lieu of Those Lost, Rolando cannot post facto validate this circumstance as a
Edward G. Lim, Petitioner:30 demonstration that the ordinary appeal had not been speedy
or adequate enough, in order to justify the recourse to Rule
Forum shopping is the act of a party litigant against whom 65. This practice, if adopted, would sanction the filing of
an adverse judgment has been rendered in one forum seeking multiple suits in multiple fora, where each one, as the
and possibly getting a favorable opinion in another forum, petitioner couches it, becomes a "precautionary measure" for
other than by appeal or the special civil action of certiorari, or the rest, thereby increasing the chances of a favorable
the institution of two or more actions or proceedings decision. This is the very evil that the proscription on forum
grounded on the same cause or supposition that one or the shopping seeks to put right. In Guaranteed Hotels, Inc. v.
other court would make a favorable disposition. Forum Baltao, the Court stated that the grave evil sought to be
shopping happens when, in the two or more pending cases, avoided by the rule against forum shopping is the rendition
there is identity of parties, identity of rights or causes of by two competent tribunals of two separate and
action, and identity of reliefs sought. Where the elements of contradictory decisions. Unscrupulous party litigants, taking
litis pendentia are present, and where a final judgment in one advantage of a variety of competent tribunals, may
case will amount to res judicata in the other, there is forum repeatedly try their luck in several different fora until a
shopping. For litis pendentia to be a ground for the dismissal favorable result is reached. To avoid the resultant confusion,
of an action, there must be: (a) identity of the parties or at the Court adheres strictly to the rules against forum
least such as to represent the same interest in both actions; (b) shopping, and any violation of these rules results in the
identity of rights asserted and relief prayed for, the relief dismissal of the case.32
being founded on the same acts; and (c) the identity in the
two cases should be such that the judgment which may be The same result was reached in Zosa v. Estrella,33 which
rendered in one would, regardless of which party is likewise involved the successive filing of a notice of appeal
successful, amount to res judicata in the other. and a petition for certiorari to challenge the same orders, with
the Court upholding the CAs dismissals of the appeal and
For forum shopping to exist, both actions must involve the the petition for certiorari through separate decisions.
same transaction, same essential facts and circumstances and
must raise identical causes of action, subject matter and Yet, the outcome in Young v. Sy and Zosa v. Estrella is unjust
issues. Clearly, it does not exist where different orders were here even if the orders of the RTC being challenged through
questioned, two distinct causes of action and issues were appeal and the petition for certiorari were the same. The
raised, and two objectives were sought. unjustness exists because the appeal and the petition for
certiorari actually sought different objectives. In his appeal in
Should Javellanas present appeal now be held barred by his C.A.-G.R. CV No. 68259, Javellana aimed to undo the RTCs
filing of the petition for certiorari in the CA when his appeal erroneous dismissal of Civil Case No. 79-M-97 to clear the
in that court was yet pending? way for his judicial demand for specific performance to be
tried and determined in due course by the RTC; but his
petition for certiorari had the ostensible objective "to prevent
We are aware that in Young v. Sy,31 in which the petitioner
(Priscilla) from developing the subject property and from
filed a notice of appeal to elevate the orders concerning the
proceeding with the ejectment case until his appeal is finally
dismissal of her case due to non-suit to the CA and a petition
resolved," as the CA explicitly determined in its decision in
for certiorari in the CA assailing the same orders four months
C.A.-G.R. SP No. 60455.34
later, the Court ruled that the successive filings of the notice
of appeal and the petition for certiorari to attain the same
objective of nullifying the trial courts dismissal orders Nor were the dangers that the adoption of the judicial policy
constituted forum shopping that warranted the dismissal of against forum shopping designed to prevent or to eliminate
both cases. The Court said: attendant. The first danger, i.e., the multiplicity of suits upon
one and the same cause of action, would not materialize
considering that the appeal was a continuity of Civil Case No.
Ineluctably, the petitioner, by filing an ordinary appeal and a
79-M-97, whereas C.A.-G.R. SP No. 60455 dealt with an
petition for certiorari with the CA, engaged in forum
independent ground of alleged grave abuse of discretion
shopping. When the petitioner commenced the appeal, only
amounting to lack or excess of jurisdiction on the part of the
four months had elapsed prior to her filing with the CA the
RTC. The second danger, i.e., the unethical malpractice of
Petition for Certiorari under Rule 65 and which eventually
shopping for a friendly court or judge to ensure a favorable
came up to this Court by way of the instant Petition (re: Non-
ruling or judgment after not getting it in the appeal, would
Suit). The elements of litis pendentia are present between the
not arise because the CA had not yet decided C.A.-G.R. CV
two suits. As the CA, through its Thirteenth Division,
No. 68259 as of the filing of the petition for certiorari.
correctly noted, both suits are founded on exactly the same
facts and refer to the same subject matterthe RTC Orders
which dismissed Civil Case No. SP-5703 (2000) for Instead, we see the situation of resorting to two inconsistent
remedial approaches to be the result of the tactical
misjudgment by Javellanas counsel on the efficacy of the
failure to prosecute. In both cases, the petitioner is seeking
appeal to stave off his caretakers eviction from the parcels of
the reversal of the RTC orders.1wphi1 The parties, the rights
land and to prevent the development of them into a
asserted, the issues professed, and the reliefs prayed for, are
residential or commercial subdivision pending the appeal. In
all the same. It is evident that the judgment of one forum may
the petition for certiorari, Javellana explicitly averred that his
amount to res judicata in the other.
appeal was "inadequate and not speedy to prevent private
respondent Alma Jose and her transferee/assignee xxx from
xxxx developing and disposing of the subject property to other
parties to the total deprivation of petitioners rights of
The remedies of appeal and certiorari under Rule 65 are possession and ownership over the subject property," and
mutually exclusive and not alternative or cumulative. This is that the dismissal by the RTC had "emboldened private
a firm judicial policy. The petitioner cannot hedge her case by respondents to fully develop the property and for respondent
wagering two or more appeals, and, in the event that the Alma Jose to file an ejectment case against petitioners
ordinary appeal lags significantly behind the others, she overseer xxx."35 Thereby, it became far-fetched that Javellana
@lendelacruz 11

brought the petition for certiorari in violation of the policy In an order2 dated February 12, 1998, the trial court dismissed
against forum shopping. petitioners complaint on the ground that the action had
already prescribed. Petitioners allegedly received a copy of
WHEREFORE, the Court DENIES the petition for review on the order of dismissal on March 3, 1998 and, on the 15th day
certiorari; AFFIRMS the decision promulgated on November thereafter or on March 18, 1998, filed a motion for
20, 2002; and ORDERS the petitioner to pay the costs of suit. reconsideration. On July 1, 1998, the trial court issued another
order dismissing the motion for reconsideration3 which
petitioners received on July 22, 1998. Five days later, on July
SO ORDERED.
27, 1998, petitioners filed a notice of appeal4 and paid the
appeal fees on August 3, 1998.
Republic of the Philippines
SUPREME COURT
On August 4, 1998, the court a quo denied the notice of appeal,
holding that it was filed eight days late.5 This was received
EN BANC by petitioners on July 31, 1998. Petitioners filed a motion for
reconsideration but this too was denied in an order dated
G.R. No. 141524 September 14, 2005 September 3, 1998.6

DOMINGO NEYPES, LUZ FAUSTINO, ROGELIO Via a petition for certiorari and mandamus under Rule 65 of
FAUSTINO, LOLITO VICTORIANO, JACOB OBANIA the 1997 Rules of Civil Procedure, petitioners assailed the
AND DOMINGO CABACUNGAN, Petitioners, dismissal of the notice of appeal before the Court of Appeals.
vs.
HON. COURT OF APPEALS, HEIRS OF BERNARDO In the appellate court, petitioners claimed that they had
DEL MUNDO, namely: FE, CORAZON, JOSEFA,
seasonably filed their notice of appeal. They argued that the
SALVADOR and CARMEN, all surnamed DEL MUNDO,
15-day reglementary period to appeal started to run only on
LAND BANK OF THE PHILIPPINES AND HON.
July 22, 1998 since this was the day they received the final
ANTONIO N. ROSALES, Presiding Judge, Branch 43,
order of the trial court denying their motion for
Regional Trial Court, Roxas, Oriental Mindoro,
reconsideration. When they filed their notice of appeal on
Respondent.
July 27, 1998, only five days had elapsed and they were well
within the reglementary period for appeal.7
DECISION
On September 16, 1999, the Court of Appeals (CA) dismissed
CORONA, J.: the petition. It ruled that the 15-day period to appeal should
have been reckoned from March 3, 1998 or the day they
Petitioners Domingo Neypes, Luz Faustino, Rogelio received the February 12, 1998 order dismissing their
Faustino, Lolito Victoriano, Jacob Obania and Domingo complaint. According to the appellate court, the order was
Cabacungan filed an action for annulment of judgment and the "final order" appealable under the Rules. It held further:
titles of land and/or reconveyance and/or reversion with
preliminary injunction before the Regional Trial Court, Perforce the petitioners tardy appeal was correctly
Branch 43, of Roxas, Oriental Mindoro, against the Bureau of dismissed for the (P)erfection of an appeal within the
Forest Development, Bureau of Lands, Land Bank of the reglementary period and in the manner prescribed by law is
Philippines and the heirs of Bernardo del Mundo, namely, Fe, jurisdictional and non-compliance with such legal
Corazon, Josefa, Salvador and Carmen. requirement is fatal and effectively renders the judgment
final and executory.8
In the course of the proceedings, the parties (both petitioners
and respondents) filed various motions with the trial court. Petitioners filed a motion for reconsideration of the
Among these were: (1) the motion filed by petitioners to aforementioned decision. This was denied by the Court of
declare the respondent heirs, the Bureau of Lands and the Appeals on January 6, 2000.
Bureau of Forest Development in default and (2) the motions
to dismiss filed by the respondent heirs and the Land Bank
In this present petition for review under Rule 45 of the Rules,
of the Philippines, respectively.
petitioners ascribe the following errors allegedly committed
by the appellate court:
In an order dated May 16, 1997, the trial court, presided by
public respondent Judge Antonio N. Rosales, resolved the
I
foregoing motions as follows: (1) the petitioners motion to
declare respondents Bureau of Lands and Bureau of Forest
Development in default was granted for their failure to file THE HONORABLE COURT OF APPEALS ERRED IN
an answer, but denied as against the respondent heirs of del DISMISSING THE PETITIONERS PETITION FOR
Mundo because the substituted service of summons on them CERTIORARI AND MANDAMUS AND IN AFFIRMING
was improper; (2) the Land Banks motion to dismiss for lack THE ORDER OF THE HON. JUDGE ANTONIO N.
of cause of action was denied because there were ROSALES WHICH DISMISSED THE PETITIONERS
hypothetical admissions and matters that could be APPEAL IN CIVIL CASE NO. C-36 OF THE REGIONAL
determined only after trial, and (3) the motion to dismiss filed TRIAL COURT, BRANCH 43, ROXAS, ORIENTAL
by respondent heirs of del Mundo, based on prescription, MINDORO, EVEN AFTER THE PETITIONERS HAD PAID
was also denied because there were factual matters that could THE APPEAL DOCKET FEES.
be determined only after trial.1
II
The respondent heirs filed a motion for reconsideration of the
order denying their motion to dismiss on the ground that the THE HONORABLE COURT OF APPEALS LIKEWISE
trial court could very well resolve the issue of prescription ERRED IN RULING AND AFFIRMING THE DECISION OR
from the bare allegations of the complaint itself without ORDER OF THE RESPONDENT HON. ANTONIO M.
waiting for the trial proper. ROSALES THAT PETITIONERS APPEAL WAS FILED OUT
@lendelacruz 12

OF TIME WHEN PETITIONERS RECEIVED THE LAST OR categorically what the rights and obligations of the parties
FINAL ORDER OF THE COURT ON JULY 22, 1998 AND are; or it may be an order or judgment that dismisses an
FILED THEIR NOTICE OF APPEAL ON JULY 27, 1998 AND action.12
PAID THE APPEAL DOCKET FEE ON AUGUST 3, 1998.
As already mentioned, petitioners argue that the order of July
III 1, 1998 denying their motion for reconsideration should be
construed as the "final order," not the February 12, 1998 order
THE HONORABLE COURT OF APPEALS FURTHER which dismissed their complaint. Since they received their
ERRED IN RULING THAT THE WORDS "FINAL ORDER" copy of the denial of their motion for reconsideration only on
IN SECTION 3, RULE 41, OF THE 1997 RULES OF CIVIL July 22, 1998, the 15-day reglementary period to appeal had
PROCEDURE WILL REFER TO THE [FIRST] ORDER OF not yet lapsed when they filed their notice of appeal on July
RESPONDENT JUDGE HON. ANTONIO M. MORALES 27, 1998.
DATED FEBRUARY 12, 1998 INSTEAD OF THE LAST AND
FINAL ORDER DATED JULY 1, 1998 COPY OF WHICH What therefore should be deemed as the "final order," receipt
WAS RECEIVED BY PETITIONERS THROUGH COUNSEL of which triggers the start of the 15-day reglementary period
ON JULY 22, 1998. to appeal the February 12, 1998 order dismissing the
complaint or the July 1, 1998 order dismissing the MR?
IV.
In the recent case of Quelnan v. VHF Philippines, Inc.,13 the trial
THE HONORABLE COURT OF APPEALS FINALLY court declared petitioner Quelnan non-suited and
ERRED IN FINDING THAT THE DECISION IN THE CASE accordingly dismissed his complaint. Upon receipt of the
OF DENSO, INC. V. IAC, 148 SCRA 280, IS APPLICABLE IN order of dismissal, he filed an omnibus motion to set it aside.
THE INSTANT CASE THEREBY IGNORING THE When the omnibus motion was filed, 12 days of the 15-day
PECULIAR FACTS AND CIRCUMSTANCES OF THIS period to appeal the order had lapsed. He later on received
CASE AND THE FACT THAT THE SAID DECISION WAS another order, this time dismissing his omnibus motion. He
RENDERED PRIOR TO THE ENACTMENT OF THE 1997 then filed his notice of appeal. But this was likewise
RULES OF CIVIL PROCEDURE.9 dismissed for having been filed out of time.

The foregoing issues essentially revolve around the period The court a quo ruled that petitioner should have appealed
within which petitioners should have filed their notice of within 15 days after the dismissal of his complaint since this
appeal. was the final order that was appealable under the Rules. We
reversed the trial court and declared that it was the denial of
the motion for reconsideration of an order of dismissal of a
First and foremost, the right to appeal is neither a natural
complaint which constituted the final order as it was what
right nor a part of due process. It is merely a statutory
ended the issues raised there.
privilege and may be exercised only in the manner and in
accordance with the provisions of law. Thus, one who seeks
to avail of the right to appeal must comply with the This pronouncement was reiterated in the more recent case
requirements of the Rules. Failure to do so often leads to the of Apuyan v. Haldeman et al.14 where we again considered the
loss of the right to appeal.10 The period to appeal is fixed by order denying petitioner Apuyans motion for
both statute and procedural rules. BP 129,11 as amended, reconsideration as the final order which finally disposed of
provides: the issues involved in the case.

Sec. 39. Appeals. The period for appeal from final orders, Based on the aforementioned cases, we sustain petitioners
resolutions, awards, judgments, or decisions of any court in view that the order dated July 1, 1998 denying their motion for
all these cases shall be fifteen (15) days counted from the reconsideration was the final order contemplated in the Rules.
notice of the final order, resolution, award, judgment, or
decision appealed from. Provided, however, that in habeas We now come to the next question: if July 1, 1998 was the
corpus cases, the period for appeal shall be (48) forty-eight start of the 15-day reglementary period to appeal, did
hours from the notice of judgment appealed from. x x x petitioners in fact file their notice of appeal on time?

Rule 41, Section 3 of the 1997 Rules of Civil Procedure states: Under Rule 41, Section 3, petitioners had 15 days from notice
of judgment or final order to appeal the decision of the trial
SEC. 3. Period of ordinary appeal. The appeal shall be court. On the 15th day of the original appeal period (March
taken within fifteen (15) days from the notice of the 18, 1998), petitioners did not file a notice of appeal but instead
judgment or final order appealed from. Where a record on opted to file a motion for reconsideration. According to the
appeal is required, the appellant shall file a notice of appeal trial court, the MR only interrupted the running of the 15-day
and a record on appeal within thirty (30) days from the notice appeal period.15 It ruled that petitioners, having filed their
of judgment or final order. MR on the last day of the 15-day reglementary period to
appeal, had only one (1) day left to file the notice of appeal
upon receipt of the notice of denial of their MR. Petitioners,
The period to appeal shall be interrupted by a timely motion
however, argue that they were entitled under the Rules to a
for new trial or reconsideration. No motion for extension of
fresh period of 15 days from receipt of the "final order" or the order
time to file a motion for new trial or reconsideration shall be
dismissing their motion for reconsideration.
allowed. (emphasis supplied)

In Quelnan and Apuyan, both petitioners filed a motion for


Based on the foregoing, an appeal should be taken within 15
reconsideration of the decision of the trial court. We ruled
days from the notice of judgment or final order appealed
there that they only had the remaining time of the 15-day
from. A final judgment or order is one that finally disposes
appeal period to file the notice of appeal. We consistently
of a case, leaving nothing more for the court to do with
applied this rule in similar cases,16 premised on the long-
respect to it. It is an adjudication on the merits which,
settled doctrine that the perfection of an appeal in the manner
considering the evidence presented at the trial, declares
@lendelacruz 13

and within the period permitted by law is not only The Supreme Court may promulgate procedural rules in all
mandatory but also jurisdictional.17 The rule is also founded courts.26 It has the sole prerogative to amend, repeal or even
on deep-seated considerations of public policy and sound establish new rules for a more simplified and inexpensive
practice that, at risk of occasional error, the judgments and process, and the speedy disposition of cases. In the rules
awards of courts must become final at some definite time governing appeals to it and to the Court of Appeals,
fixed by law.18 particularly Rules 42,27 4328 and 45,29 the Court allows
extensions of time, based on justifiable and compelling
Prior to the passage of BP 129, Rule 41, Section 3 of the 1964 reasons, for parties to file their appeals. These extensions may
Revised Rules of Court read: consist of 15 days or more.

Sec. 3. How appeal is taken. Appeal maybe taken by To standardize the appeal periods provided in the Rules and
serving upon the adverse party and filing with the trial to afford litigants fair opportunity to appeal their cases, the
court within thirty (30) days from notice of order or Court deems it practical to allow a fresh period of 15 days
judgment, a notice of appeal, an appeal bond, and a record within which to file the notice of appeal in the Regional Trial
on appeal. The time during which a motion to set aside the Court, counted from receipt of the order dismissing a motion
judgment or order or for new trial has been pending shall be for a new trial or motion for reconsideration. 30
deducted, unless such motion fails to satisfy the
requirements of Rule 37. Henceforth, this "fresh period rule" shall also apply to Rule
40 governing appeals from the Municipal Trial Courts to the
But where such motion has been filed during office hours of Regional Trial Courts; Rule 42 on petitions for review from
the last day of the period herein provided, the appeal must the Regional Trial Courts to the Court of Appeals; Rule 43 on
be perfected within the day following that in which the party appeals from quasi-judicial agencies31 to the Court of
appealing received notice of the denial of said motion.19 Appeals and Rule 45 governing appeals by certiorari to the
(emphasis supplied) Supreme Court.32 The new rule aims to regiment or make the
appeal period uniform, to be counted from receipt of the
order denying the motion for new trial, motion for
According to the foregoing provision, the appeal period
reconsideration (whether full or partial) or any final order or
previously consisted of 30 days. BP 129, however, reduced
resolution.
this appeal period to 15 days. In the deliberations of the
Committee on Judicial Reorganization20 that drafted BP 129,
the raison d etre behind the amendment was to shorten the We thus hold that petitioners seasonably filed their notice of
period of appeal21 and enhance the efficiency and appeal within the fresh period of 15 days, counted from July
dispensation of justice. We have since required strict 22, 1998 (the date of receipt of notice denying their motion for
observance of this reglementary period of appeal. Seldom reconsideration). This pronouncement is not inconsistent
have we condoned late filing of notices of appeal,22 and only with Rule 41, Section 3 of the Rules which states that the
in very exceptional instances to better serve the ends of appeal shall be taken within 15 days from notice of judgment
justice. or final order appealed from. The use of the disjunctive word
"or" signifies disassociation and independence of one thing
from another. It should, as a rule, be construed in the sense
In National Waterworks and Sewerage Authority and Authority v.
in which it ordinarily implies.33 Hence, the use of "or" in the
Municipality of Libmanan,23 however, we declared that appeal
above provision supposes that the notice of appeal may be
is an essential part of our judicial system and the rules of
filed within 15 days from the notice of judgment or within 15
procedure should not be applied rigidly. This Court has on
days from notice of the "final order," which we already
occasion advised the lower courts to be cautious about not
determined to refer to the July 1, 1998 order denying the
depriving a party of the right to appeal and that every party
motion for a new trial or reconsideration.
litigant should be afforded the amplest opportunity for the
proper and just disposition of his cause, free from the
constraint of technicalities. Neither does this new rule run counter to the spirit of Section
39 of BP 129 which shortened the appeal period from 30 days
to 15 days to hasten the disposition of cases. The original
In de la Rosa v. Court of Appeals,24 we stated that, as a rule,
period of appeal (in this case March 3-18, 1998) remains and
periods which require litigants to do certain acts must be
the requirement for strict compliance still applies. The fresh
followed unless, under exceptional circumstances, a delay in
period of 15 days becomes significant only when a party opts to file
the filing of an appeal may be excused on grounds of
a motion for new trial or motion for reconsideration. In this
substantial justice. There, we condoned the delay incurred by
manner, the trial court which rendered the assailed decision
the appealing party due to strong considerations of fairness
is given another opportunity to review the case and, in the
and justice.
process, minimize and/or rectify any error of judgment.
While we aim to resolve cases with dispatch and to have
In setting aside technical infirmities and thereby giving due judgments of courts become final at some definite time, we
course to tardy appeals, we have not been oblivious to or likewise aspire to deliver justice fairly.
unmindful of the extraordinary situations that merit liberal
application of the Rules. In those situations where
In this case, the new period of 15 days eradicates the
technicalities were dispensed with, our decisions were not
confusion as to when the 15-day appeal period should be
meant to undermine the force and effectivity of the periods
counted from receipt of notice of judgment (March 3, 1998)
set by law. But we hasten to add that in those rare cases
or from receipt of notice of "final order" appealed from (July
where procedural rules were not stringently applied, there
22, 1998).
always existed a clear need to prevent the commission of a
grave injustice. Our judicial system and the courts have
always tried to maintain a healthy balance between the strict To recapitulate, a party litigant may either file his notice of
enforcement of procedural laws and the guarantee that every appeal within 15 days from receipt of the Regional Trial
litigant be given the full opportunity for the just and proper Courts decision or file it within 15 days from receipt of the
disposition of his cause.25 order (the "final order") denying his motion for new trial or
motion for reconsideration. Obviously, the new 15-day
period may be availed of only if either motion is filed;
@lendelacruz 14

otherwise, the decision becomes final and executory after the demanding from Jose R. Victoriano a P200-monthly rent on
lapse of the original appeal period provided in Rule 41, said property, beginning from February, 1945, plus P2,000 as
Section 3. damages.

Petitioners here filed their notice of appeal on July 27, 1998 or On July 21, 1945, Jose R. Victoriano filed an answer to said
five days from receipt of the order denying their motion for counterclaim, denying Fredesvindo S. Alvero's alleged
reconsideration on July 22, 1998. Hence, the notice of appeal ownership over said land, and the other allegations
was well within the fresh appeal period of 15 days, as already contained in Alvero's answer.
discussed.34
After the trial of the case before the Hon. Mariano L. de la
We deem it unnecessary to discuss the applicability of Denso Rosa, Judge of the Court of First Instance of the City of
(Philippines), Inc. v. IAC35 since the Court of Appeals never Manila, one of the respondents in this case, on November 16,
even referred to it in its assailed decision. 1945, said respondent judge rendered his decision, in which
it was declared that the two (2) parcels of land in question,
WHEREFORE, the petition is hereby GRANTED and the with a combined area of 480 square meters had been sold by
assailed decision of the Court of Appeals REVERSED and Margarita Villarica to Jose R. Victoriano, since October 1,
SET ASIDE. Accordingly, let the records of this case be 1940, for the sum of P6,000, on the condition that the
remanded to the Court of Appeals for further proceedings. purchaser should make a down payment of P1,700, and a
monthly payment of P76.86 in 120 equal monthly
installments; that Jose R. Victoriano continued making said
No costs.
monthly payments until December, 1941, but that owing to
the war-time conditions then existing, Margarita Villarica
SO ORDERED. agreed verbally to suspend such payments until the
restoration of peace; that immediately after said sale of said
Republic of the Philippines land to him, Jose R. Victoriano took possession thereof and
SUPREME COURT made improvements thereon to the amount of P800, and
Manila continued occupying said property until December, 1944,
when he abandoned the same to go to evacuation places, but
EN BANC returned thereto in February, 1945; that Margarita Villarica,
having forgotten the sale of said land to Jose R. Victoriano,
sold the same for P100,000 in Japanese military notes, on
G.R. No. L-286 March 29, 1946
December 31, 1944, to Fredesvindo S. Alvero, but afterwards
offered to repurchase said property from him, for the sum of
FREDESVINDO S. ALVERO, petitioner, P8,000 in genuine Philippine currency, after liberation; that
vs. Fredesvindo S. Alvero presented the deed of sale, executed
M.L. DE LA ROSA, Judge of First Instance of Manila, in his favor, to the Register of Deeds of the City of Manila, on
JOSE R. VICTORIANO, and MARGARITA VILLARICA, January 3, 1945, and took possession of said property in
respondents.. December, 1944, but afterwards found Jose R. Victoriano in
the premises in February, 1945; that in the contract of sale
DE JOYA, J.: executed by Margarita Villarica, in favor of Jose R.
Victoriano, it was agreed that, upon failure of the purchaser
This is an original petition for certiorari filed in this court. to make payments of three (3) successive mothly
installments, the vendor would be free to sell the property
The record shows that, on June 25, 1945, respondent Jose R. again, forfeiting the payments made, except in the case of
Victoriano had filed a complaint, in the Court of First force majeure; that there was really a verbal agreement
Instance of the City of Manila, against petitioner Fredesvindo between Margarita Villarica and Jose Victoriano, made in
S. Alvero and one Margarita Villarica, alleging two causes of February, 1942, for the suspension of the payment of the
action, to wit, (1) to declare in force the contract of sale, made monthly installments until the restoration of peace; and that
on October 1, 1940, between said Jose R. Victoriano and although Jose R. Victoriano had presented the deed of sale,
Margarita Villarica, of two (2) parcels of land in the Manotoc executed in his favor, to the Register of Deeds, in Pasig, Rizal,
subdivision, Balintawak, in the barrio of Calaanan, like Fredesvindo S. Alvero, he had also failed to secure the
municipality of Caloocan, Province of Rizal, with a combined transfer of title to his name. And considering that Jose R.
area of 480 square meters, which land was subsequently sold Victoriano's document was older than that of Fredesvindo S.
by said Villarica, in favor of petitioner Fredesvindo S. Alvero, Alvero, and that he had taken possession of said property,
on December 31, 1944, for the sum of P100,000 in Japanese since October 1, 1940, the respondent judge rendered his
military notes; and (2) to declare said subsequent sale null decision in favor of Jose R. Victoriano, adjudging to him the
and void. title over the property in question, including all the
improvements existing thereon, and dismissed the
counterclaim.
On July 7, 1945, Margarita Villarica filed an answer to said
complaint, expressly admitting having sold said land to
Fresdesvindo S. Alvero, for P100,000, in December, 1944, due On November 28, 1945, Fredesvindo S. Alvero was notified
to the imperative necessity of raising funds with which to of said decision; and on December 27, 1945, he filed a petition
provide for herself and family, and that she did not for reconsideration and new trial, which was denied on
remember the previous sale; at the same time, offering to January 3, 1946; and of said order he was notified on January
repurchase said land from Fredesvindo S. Alvero in the sum 7, 1946.
of P5,000, but that the latter refused to accept the offer.
On January 8, 1946, Fredesvindo S. Alvero filed his notice of
On July 13, 1945, Fredesvindo S. Alvero, in answering said appeal and record on appeal simultaneously in the lower
complaint, denied the allegations made therein, and claimed court, without filing the P60-appeal bond.
exclusive ownership of the land in question, and at the same
time set up a counterclaim and crossclaim in his answer,
@lendelacruz 15

On January 14, 1946, Jose R. Victoriano filed a petition to Strict compliance with the rules of court has been held
dismiss the appeal, and at the same time, asked for the mandatory and imperative, so that failure to pay the docket
execution of the judgment. fee in the Supreme Court, within the period fixed for that
purpose, will cause the dismissal of the appeal. (Salaveria vs.
On January 15, 1946, Fredesvindo S. Alvero filed an Albindo, 39Phil., 922.) In the same manner, on failure of the
opposition to said motion to dismiss, alleging that on the appellant in a civil case to serve his brief, within the time
very same day, January 15, 1946, said appeal bond for P60 prescribed by said rules, on motion of the appellee and notice
had been actually filed, and allege as an excuse, for not filing to the appellant, or on its own motion, the court may dismiss
the said appeal bond, in due time, the illness of his lawyer's the appeal. (Shioji vs. Harvey, 43 Phil., 333.)
wife, who died on January 10, 1946, and buried the following
day. Counsel for the petitioner Fredesvindo Alvero alleges as an
excuse, for his failure to perfect and file his appeal, in due
On January 17, 1946, the respondent judge, Hon. Mariano L. time, the illness of his wife, which ended in her death on
de la Rosa, ordered the dismissal of the appeal, declaring January 10, 1946, and by which he was greatly affected.
that, although the notice of appeal and record on appeal had
been filed in due time, the P60-appeal bond was filed too late. How little, indeed, does one realize that in life he lives in the
midst of death; and that every that passes in a step nearer
On January 23, 1946, Fredesvindo S. Alvero filed a petition towards eternity. Yet, notwithstanding the inexorable laws of
for the reconsideration of the said order dated January 17, human destiny, every mortal fears death, and such fear is
1946, dismissing his appeal; and said petition for worse than death itself. That is perhaps the reason why those
reconsideration was denied on January 29, 1946. Hence, this feeling its approach, in their last moments, want to be
petition for certiorari. surrounded by the ones dearest to their heart, to hear from
them words of tenderness and eternal truth, and thus receive
as balm their love and the cheering influence of the
On February 11, 1946, the respondents filed their answer to
traditional faith, and the consolation of religious hope.
the petition for certiorari, alleging (1) that said petition is
defective in form as well as in substance; (2) that there has
been no excusable negligence, on the part of the petitioner, or The virtuous and loving wife is the peculiar gift of heaven,
grave abuse of discretion on the part of the respondent judge, and Mother is the name for God in the innocent lips and
in the instant case. hearts of adoring children. "She looketh well to the ways of
her household, and eateth not the bread of idleness." "And
her daughters arise up and call her blessed." And when she
As already stated, the decision rendered by the respondent
dies in the bosom of God, her children find solace in the
judge, Hon. Mariano L. de la Rosa, was dated November 16,
contemplation of her eternal bliss, as mirrored in her tranquil
1945, of which counsel for Fredesvindo S. Alvero was
beauty.
notified on November 28, 1945; that his motion for
reconsideration and new trial was filed on December 27,
1945, and denied on January 3, 1946, and that said counsel for It is not, therefore, difficult to understand the state of mind
Alvero was notified of said order on January 7, 1946; and that of the attorney, and his intense devotion and ardent affection
he filed his notice of appeal and record on appeal the towards his dying wife.
following day, to wit, January 8, 1946, and that the P60-
appeal bond was filed only on January 15, 1946. Unfortunately, counsel for petitioner has created a difficult
situation. In his motion for reconsideration and new trial,
According to the computation erroneously made by the dated December 27, 1945, he did not point out specifically the
court, the last day for filing and perfecting the appeal, in this findings or conclusions in the judgment, are not supported
case, was January 8, 1946, or which date, Fredesvindo S. by the evidence or which are contrary to law, making express
Alvero should have filed his (1) notice of appeal, (2) record reference to the pertinent evidence or legal provisions, as
on appeal, and (3) appeal bond. But the P60-appeal bond was expressly required by Rule 37, section 2, paragraph (c) of the
filed only on January 15, 1946. Rules of Court. Motions of that kind have been considered as
motions pro forma intended merely to delay the proceeding,
and, as such, they cannot and will not interrupt or suspend
Failure to perfect the appeal, within the time prescribed by
the period of time for the perfection of the appeal. (Valdez vs.
the rules of court, will cause the judgment to become final,
Jugo, 74 Phil., 49, and Reyes vs. Court of Appeals and
and the certification of the record on appeal thereafter,
Bautista, 74 Phil., 235.) Hence, the period for perfecting
cannot restore the jurisdiction which has been lost. (Roman
herein petitioner's appeal commenced from November 28,
Catholic Bishop of Tuguegarao vs. Director of Lands, 34 Phil.,
1945, when he was notified of the judgment rendered in the
623; Estate of Cordoba and Zarate vs. Alabado, 34 Phil., 920;
case, and expired on December 28, 1945; and, therefore, his
and Bermudez vs. Director of Lands, 36 Phil., 774.)
notice of appeal and record on appeal filed on January 8,
1946, were filed out of time, and much more so his appeal
The period within which the record on appeal and appeal bond, which was only filed on January 15, 1946.
bond should be perfected and filed may, however, be
extended by order of the court, upon application made, prior
It is futile to speak of hospitals, doctors and nurses to minister
to the expiration of the original period. (Layda vs. Legaspi, 39
alone to the needs of the sick and the dying, who are dearest
Phil., 83.)
to us, for our reasoning powers are of little avail when sorrow
or despair rages within.
Rules of courts, promulgated by authority of law, have the
force and effect of law; and rules of court prescribing the time
But human laws are inflexible and no personal consideration
within which certain acts must be done, or certain
should stand in the way of performing a legal duty.
proceedings taken, are considered absolutely indispensable
to the prevention of needless delays and to the orderly and
speedy discharge of judicial business. (Shioji vs. Harvey, 43 The attorney for petitioner Fredesvindo S. Alvero could have
Phil., 333.) asked for an extension of time, within which to file and
perfect his appeal, in the court below; but he had failed to do
@lendelacruz 16

so, and he must bear the consequences of his act. A strict xxx xxx xxx
observance of the rules of court, which have been considered
indispensable to the prevention of needless delays and to the That some of these employees badmouthed the security
orderly and speedy dispatch of judicial business, is an guards and the GSIS management and defiantly raised
imperative necessity. clenched fists led by Atty. Velasco who was barred by
Hearing Officer Marvin R. Gatpayat in an Order dated 24
It may not be amiss to state in this connection that no May 2005 from appearing as counsel for Atty. Molina
irreparable damage has been caused to the petitioner pursuant to Section 7 (b) (2) of R.A. 6713 otherwise known as
Fredesvindo S. Alvero, as Margarita Villarica, the vendor to the Code of Conduct and Ethical Standards for Public
the two, of the land in question, has shown readiness to Officials and Employees;
repair the damage done.
That respondent, together with other employees in utter
No showing having been made that there had been merely contempt of CSC Resolution No. 021316, dated 11 October
excusable negligece, on the part of the attorney for petitioner 2002, otherwise known as Omnibus Rules on Prohibited
Fredesvindo S. Alvero, and that there had been gave abuse of Concerted Mass Actions in the Public Sector caused alarm
sound judicial discretion, on the part of the respondent judge, and heightened some employees and disrupted the work at
the petition for certiorari filed in this case, is, therefore, hereby the Investigation Unit during office hours.2
dismissed, without costs. So ordered.
This episode was earlier reported to PGM Garcia, through an
Republic of the Philippines office memorandum dated May 31, 2005, by the Manager of
SUPREME COURT the GSIS Security Department (GSIS-SD), Dennis Nagtalon.
Manila On the same day, the Manager of the GSIS Investigation Unit
(GSIS-IU), Atty. Lutgardo Barbo, issued a memorandum to
EN BANC each of the seven (7) respondents requiring them to explain
in writing and under oath within three (3) days why they
should not be administratively dealt with.3
G.R. No. 180291 July 27, 2010

Respondents Duque, Echavez, Rubio, Gracia, Layco, and


GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS)
and WINSTON F. GARCIA, in his capacity as Legarda, together with two others, submitted a letter-
PRESIDENT and GENERAL MANAGER of the GSIS, explanation to Atty. Barbo dated June 6, 2005. Denying that
Petitioners, there was a planned mass action, the respondents explained
vs. that their act of going to the office of the GSIS-IU was a
DINNAH VILLAVIZA, ELIZABETH DUQUE, spontaneous reaction after learning that their former union
ADRONICO A. ECHAVEZ, RODEL RUBIO, ROWENA president was there. Aside from some of them wanting to
THERESE B. GRACIA, PILAR LAYCO, and ANTONIO show their support, they were interested in that hearing as it
JOSE LEGARDA, Respondents. might also affect them. For her part, respondent Villaviza
submitted a separate letter explaining that she had a
scheduled pre-hearing at the GSIS-IU that day and that she
DECISION
had informed her immediate supervisor about it, attaching a
copy of the order of pre-hearing. These letters were not under
MENDOZA, J.: oath.4

This is a Petition for Review on Certiorari under Rule 45 of PGM Garcia then filed the above-mentioned formal charges
the Rules of Court seeking to reverse and set aside the August for Grave Misconduct and/or Conduct Prejudicial to the Best
31, 2007 Decision1 of the Court of Appeals (CA), in CA-G.R. Interest of the Service against each of the respondents, all
SP No. 98952, dismissing the petition for certiorari of dated June 4, 2005. Respondents were again directed to
Government Service Insurance System (GSIS) assailing the submit their written answers under oath within three (3)
Civil Service Commission's Resolution No. 062177. days from receipt thereof.5 None was filed.

THE FACTS: On June 29, 2005, PGM Garcia issued separate but similarly
worded decisions finding all seven (7) respondents guilty of
Petitioner Winston Garcia (PGM Garcia), as President and the charges and meting out the penalty of one (1) year
General Manager of the GSIS, filed separate formal charges suspension plus the accessory penalties appurtenant thereto.
against respondents Dinnah Villaviza, Elizabeth Duque,
Adronico A. Echavez, Rodel Rubio, Rowena Therese B. On appeal, the Civil Service Commission (CSC) found the
Gracia, Pilar Layco, and Antonio Jose Legarda for Grave respondents guilty of the lesser offense of Violation of
Misconduct and/or Conduct Prejudicial to the Best Interest Reasonable Office Rules and Regulations and reduced the
of the Service pursuant to the Rules of Procedure in penalty to reprimand. The CSC ruled that respondents were
Administrative Investigation (RPAI) of GSIS Employees and not denied their right to due process but there was no
Officials, III, D, (1, c, f) in relation to Section 52A (3), (20), Rule substantial evidence to hold them guilty of Conduct
IV, of the Uniform Rules on Administrative Cases in the Civil Prejudicial to the Best Interest of the Service. Instead,
Service (URACCS), in accordance with Book V of the
Administrative Code of 1987, committed as follows:
x x x. The actuation of the appellants in going to the IU,
wearing red shirts, to witness a public hearing cannot be
That on 27 May 2005, respondent, wearing red shirt together considered as constitutive of such offense. Appellants'
with some employees, marched to or appeared (respondents herein) assembly at the said office to express
simultaneously at or just outside the office of the support to Velasco, their Union President, who pledged to
Investigation Unit in a mass demonstration/rally of protest defend them against any oppression by the GSIS
and support for Messrs. Mario Molina and Albert Velasco, management, can be considered as an exercise of their
the latter having surreptitiously entered the GSIS premises;
@lendelacruz 17

freedom of expression, a constitutionally guaranteed right. 6 UNNOTARIZED LETTERS THAT DID NOT FORM PART
xxx OF THE CASE RECORD.

PGM Garcia sought reconsideration but was denied. Thus, III


PGM Garcia went to the Court of Appeals via a Petition for
Review under Rule 43 of the Rules on Civil Procedure.7 The WHETHER A DECISION THAT MAKES CONCLUSIONS
CA upheld the CSC in this wise: OF FACTS BASED ON EVIDENCE ON RECORD BUT
MAKES A CONCLUSION OF LAW BASED ON THE
The Civil Service Commission is correct when it found that ALLEGATIONS OF A DOCUMENT THAT NEVER
the act sought to be punished hardly falls within the FORMED PART OF THE CASE RECORDS IS VALID.
definition of a prohibited concerted activity or mass action.
The petitioners failed to prove that the supposed concerted IV
activity of the respondents resulted in work stoppage and
caused prejudice to the public service. Only about twenty
WHETHER FURTHER PROOF OF SUSBTANTIAL
(20) out of more than a hundred employees at the main office,
REDUCTION OF THE OPERATIONAL CAPACITY OF AN
joined the activity sought to be punished. These employees,
AGENCY, DUE TO UNRULY MASS GATHERING OF
now respondents in this case, were assigned at different
GOVERNMENT EMPLOYEES INSIDE OFFICE PREMISES
offices of the petitioner GSIS. Hence, despite the belated
AND WITHIN OFFICE HOURS, IS REQUIRED TO HOLD
claim of the petitioners that the act complained of had created
THE SAID EMPLOYEES LIABLE FOR CONDUCT
substantial disturbance inside the petitioner GSIS' premises
PREJUDICIAL TO THE BEST INTEREST OF THE SERVICE
during office hours, there is nothing in the record that could
PURSUANT TO CSC RESOLUTION NO. 021316.
support the claim that the operational capacity of petitioner
GSIS was affected or reduced to substantial percentage when
respondents gathered at the Investigation Unit. Despite the V
hazy claim of the petitioners that the gathering was intended
to force the Investigation Unit and petitioner GSIS to be WHETHER AN UNRULY MASS GATHERING OF
lenient in the handling of Atty. Molina's case and allow Atty. TWENTY EMPLOYEES, LASTING FOR MORE THAN AN
Velasco to represent Atty. Molina in his administrative case HOUR DURING OFFICE HOURS, INSIDE OFFICE
before petitioner GSIS, there is likewise no concrete and PREMISES AND WITHIN A UNIT TASKED TO HEAR AN
convincing evidence to prove that the gathering was made to ADMINISTRATIVE CASE, TO PROTEST THE
demand or force concessions, economic or otherwise from PROHIBITION AGAINST THE APPEARANCE OF THEIR
the GSIS management or from the government. In fact, in the LEADER AS COUNSEL IN THE SAID ADMINISTRATIVE
separate formal charges filed against the respondents, CASE, FALLS WITHIN THE PURVIEW OF THE
petitioners clearly alleged that respondents "marched to or CONSTITUTIONAL GUARANTEE TO FREEDOM OF
appeared simultaneously at or just outside the office of the EXPRESSION AND PEACEFUL ASSEMBLY.
Investigation Unit in a mass demonstration/rally of protest
and support for Mssrs. Mario Molina and Albert Velasco, the VI
latter surreptitiously entered the GSIS premises." Thus,
petitioners are aware at the outset that the only apparent
WHETHER THE CONCERTED ABANDONMENT OF
intention of the respondents in going to the IU was to show
EMPLOYEES OF THEIR POSTS FOR MORE THAN AN
support to Atty. Mario Molina and Albert Velasco, their
HOUR TO HOLD AN UNRULY PROTEST INSIDE OFFICE
union officers. The belated assertion that the intention of the
PREMISES ONLY CONSTITUTES THE ADMINISTRATIVE
respondents in going to the IU was to disrupt the operation
OFFENSE OF VIOLATION OF REASONABLE OFFICE
and pressure the GSIS administration to be lenient with Atty.
RULES AND REGULATIONS.9
Mario Molina and Albert Velasco, is only an afterthought.8

The Court finds no merit in the petition.


Not in conformity, PGM Garcia is now before us via this
Petition for Review presenting the following:
Petitioners primarily question the probative value accorded
to respondents' letters of explanation in response to the
STATEMENT OF THE ISSUES
memorandum of the GSIS-IU Manager. The respondents
never filed their answers to the formal charges. The
I petitioners argue that there being no answers, the allegations
in the formal charges that they filed should have been
WHETHER AN ADMINISTRATIVE TRIBUNAL MAY deemed admitted pursuant to Section 11, Rule 8 of the Rules
APPLY SUPPLETORILY THE PROVISIONS OF THE RULES of Court which provides:
OF COURT ON THE EFFECT OF FAILURE TO DENY THE
ALLEGATIONS IN THE COMPLAINT AND FAILURE TO SECTION 11. Allegations not specifically denied deemed
FILE ANSWER, WHERE THE RESPONDENTS IN THE admitted.- Material averment in the complaint, other than
ADMINISTRATIVE PROCEEDINGS DID NOT FILE ANY those as to the amount of liquidated damages, shall be
RESPONSIVE PLEADING TO THE FORMAL CHARGES deemed admitted when not specifically denied. Allegations
AGAINST THEM. of usury in a complaint to recover usurious interest are
deemed admitted if not denied specifically and under oath.
II
According to the petitioners, this rule is applicable to the case
WHETHER THE RULE THAT ADMINISTRATIVE DUE at bench pursuant to Rule 1, Section 4 of the Rules of Court
PROCESS CANNOT BE EQUATED WITH DUE PROCESS which reads:
IN JUDICIAL SENSE AUTHORIZES AN
ADMINISTRATIVE TRIBUNAL TO CONSIDER IN SECTION 4. In what cases not applicable. - These Rules shall not
EVIDENCE AND GIVE FULL PROBATIVE VALUE TO apply to election cases, land registration, cadastral,
naturalization and insolvency proceedings, and other cases
@lendelacruz 18

not herein provided for, except by analogy or in a suppletory On the merits, what needs to be resolved in the case at bench
character and whenever practicable and convenient. is the question of whether or not there was a violation of
(underscoring supplied) Section 5 of CSC Resolution No. 02-1316. Stated differently,
whether or not respondents' actions on May 27, 2005
The Court does not subscribe to the argument of the amounted to a "prohibited concerted activity or mass action."
petitioners. Petitioners' own rules, Rule XI, Section 4 of the Pertinently, the said provision states:
GSIS' Amended Policy and Procedural Guidelines No. 178-
04, specifically provides: Section 5. As used in this Omnibus Rules, the phrase
''prohibited concerted activity or mass action'' shall be
If the respondent fails to file his Answer within five (5) understood to refer to any collective activity undertaken by
working days from receipt of the Formal Charge for the government employees, by themselves or through their
supporting evidence, when requested, he shall be considered employees organizations, with intent of effecting work
to have waived his right to file an answer and the PGM or the stoppage or service disruption in order to realize their
Board of Trustees, in proper cases, shall render judgment, as demands of force concession, economic or otherwise, from
may be warranted by the facts and evidence submitted by the their respective agencies or the government. It shall include
prosecution. mass leaves, walkouts, pickets and acts of similar nature.
(underscoring supplied)
A perusal of said section readily discloses that the failure of
a respondent to file an answer merely translates to a waiver In this case, CSC found that the acts of respondents in going
of "his right to file an answer." There is nothing in the rule to the GSIS-IU office wearing red shirts to witness a public
that says that the charges are deemed admitted. It has not hearing do not amount to a concerted activity or mass action
done away with the burden of the complainant to prove the proscribed above. CSC even added that their actuations can
charges with clear and convincing evidence. be deemed an exercise of their constitutional right to freedom
of expression. The CA found no cogent reason to deviate
therefrom.
It is true that Section 4 of the Rules of Court provides that the
rules can be applied in a "suppletory character." Suppletory
is defined as "supplying deficiencies."10 It means that the As defined in Section 5 of CSC Resolution No. 02-1316 which
provisions in the Rules of Court will be made to apply only serves to regulate the political rights of those in the
where there is an insufficiency in the applicable rule. There government service, the concerted activity or mass action
is, however, no such deficiency as the rules of the GSIS are proscribed must be coupled with the "intent of effecting work
explicit in case of failure to file the required answer. What is stoppage or service disruption in order to realize their
clearly stated there is that GSIS may "render judgment as may demands of force concession." Wearing similarly colored
be warranted by the facts and evidence submitted by the shirts, attending a public hearing at the GSIS-IU office,
prosecution." bringing with them recording gadgets, clenching their fists,
some even badmouthing the guards and PGM Garcia, are
acts not constitutive of an (i) intent to effect work stoppage
Even granting that Rule 8, Section 11 of the Rules of Court
or service disruption and (ii) for the purpose of realizing their
finds application in this case, petitioners must remember that
demands of force concession.
there remain averments that are not deemed admitted by the
failure to deny the same. Among them are immaterial
allegations and incorrect conclusions drawn from facts set Precisely, the limitations or qualifications found in Section 5
out in the complaint.11 Thus, even if respondents failed to file of CSC Resolution No. 02-1316 are there to temper and focus
their answer, it does not mean that all averments found in the the application of such prohibition. Not all collective activity
complaint will be considered as true and correct in their or mass undertaking of government employees is prohibited.
entirety, and that the forthcoming decision will be rendered Otherwise, we would be totally depriving our brothers and
in favor of the petitioners. We must not forget that even in sisters in the government service of their constitutional right
administrative proceedings, it is still the complainant, or in to freedom of expression.
this case the petitioners, who have the burden of proving,
with substantial evidence, the allegations in the complaint or Government workers, whatever their ranks, have as much
in the formal charges.12 right as any person in the land to voice out their protests
against what they believe to be a violation of their rights and
A perusal of the decisions of the CA and of the CSC will interests. Civil Service does not deprive them of their
reveal that the case was resolved against petitioners based, freedom of expression. It would be unfair to hold that by
not on the absence of respondents' evidence, but on the joining the government service, the members thereof have
weakness of that of the petitioners. Thus, the CA wrote: renounced or waived this basic liberty. This freedom can be
reasonably regulated only but can never be taken away.
Petitioners correctly submitted the administrative cases for
resolution without the respondents' respective answer to the A review of PGM Garcia's formal charges against the
separate formal charges in accordance with Section 4, Rule XI respondents reveals that he himself was not even certain
of the RPAI. Being in full control of the administrative whether the respondents and the rest of the twenty or so GSIS
proceeding and having effectively prevented respondents employees who were at the GSIS-IU office that fateful day
from further submitting their responsive answer and marched there or just simply appeared there
evidence for the defense, petitioners were in the most simultaneously.14 Thus, the petitioners were not even sure if
advantageous position to prove the merit of their allegations the spontaneous act of each of the twenty or so GSIS
in the formal charges. When petitioner Winston Garcia employees on May 27, 2005 was a concerted one. The report
issued those similarly worded decisions in the administrative of Manager Nagtalon of the GSIS-SD which was the basis for
cases against the respondents, it is presumed that all PGM Garcia's formal charges reflected such uncertainty.
evidence in their favor were duly submitted and justly Thus,
considered independent of the weakness of respondent's
evidence in view of the principle that ''the burden of proof Of these red shirt protesters, only Mr. Molina has official
belongs to the one who alleges and not the one who denies."13 business at the Investigation Unit during this time. The rest
abandoned their post and duties for the duration of this
@lendelacruz 19

incident which lasted until 10:55 A.M. It was also observed ORLANDO L. SALVADOR, for and in behalf of the
that the protesters, some of whom raised their clenched left Presidential Ad Hoc Fact-Finding Committee on Behest
fists, carefully planned this illegal action as evident in their Loans, Petitioner,
behavior of arrogance, defiance and provocation, the vs.
presence of various recording gadgets such as VCRs, voice PLACIDO L. MAPA, JR., RAFAEL A. SISON, ROLANDO
recorders and digital cameras, the bad mouthing of the M. ZOSA, CESAR C. ZALAMEA, BENJAMIN BAROT,
security guards and the PGM, the uniformity in their attire CASIMIRO TANEDO, J.V. DE OCAMPO, ALICIA L.
and the collusion regarding the anomalous entry of Mr. REYES, BIENVENIDO R. TANTOCO, JR., BIENVENIDO
Albert Velasco to the premises as reported earlier.15 R. TANTOCO, SR., FRANCIS B. BANES, ERNESTO M.
CARINGAL, ROMEO V. JACINTO, and MANUEL D.
TANGLAO, Respondents.
The said report of Nagtalon contained only bare facts. It did
not show respondents' unified intent to effect disruption or
stoppage in their work. It also failed to show that their DECISION
purpose was to demand a force concession.
NACHURA, J.:
In the recent case of GSIS v. Kapisanan ng mga Manggagawa
sa GSIS,16 the Court upheld the position of petitioner GSIS The Presidential Ad Hoc Fact-Finding Committee on Behest
because its employees, numbering between 300 and 800 each Loans, (the Committee), through Atty. Orlando L. Salvador
day, staged a walkout and participated in a mass protest or (Atty. Salvador), filed this Petition for Review on Certiorari
demonstration outside the GSIS for four straight days. We seeking to nullify the October 9, 1997 Resolution1 of the Office
cannot say the same for the 20 or so employees in this case. of the Ombudsman in OMB-0-96-2428, dismissing the
To equate their wearing of red shirts and going to the GSIS- criminal complaint against respondents on ground of
IU office for just over an hour with that four-day mass action prescription, and the July 27, 1998 Order2 denying
in Kapisanan ng mga Manggagawa sa GSIS case and to punish petitioners motion for reconsideration.
them in the same manner would most certainly be unfair and
unjust. On October 8, 1992 then President Fidel V. Ramos issued
Administrative Order No. 13 creating the Presidential Ad
Recent analogous decisions in the United States, while Hoc Fact-Finding Committee on Behest Loans, which reads:
recognizing the government's right as an employer to lay
down certain standards of conduct, tend to lean towards a WHEREAS, Sec. 28, Article II of the 1987 Constitution
broad definition of "public concern speech" which is provides that "Subject to reasonable conditions prescribed by
protected by their First Amendment. One such case is that of law, the State adopts and implements a policy of full public
Scott v. Meters.17 In said case, the New York Transit disclosure of all its transactions involving public interest";
Authority (NYTA), responsible for operation of New York
City's mass transit service, issued a rule prohibiting
WHEREAS, Sec. 15, Article XI of the 1987 Constitution
employees from wearing badges or buttons on their
provides that "The right of the state to recover properties
uniforms. A number of union members wore union buttons
unlawfully acquired by public officials or employees, from
promoting their opposition to a collective bargaining
them or from their nominees or transferees, shall not be
agreement. Consequently, the NYTA tried to enforce its rule
barred by prescription, laches or estoppel";
and threatened to subject these union members to discipline.
The court, though recognizing the government's right to
impose reasonable restrictions, held that the NYTA's rule WHEREAS, there have been allegations of loans, guarantees,
was "unconstitutionally overboard." and other forms of financial accommodations granted,
directly or indirectly, by government-owned and controlled
bank or financial institutions, at the behest, command, or
In another case, Communication Workers of America v. Ector
urging by previous government officials to the disadvantage
County Hospital District,18 it was held that,
and detriment of the Philippines government and the
Filipino people;
A county hospital employee's wearing of a "Union Yes" lapel
pin during a union organization drive constituted speech on
ACCORDINGLY, an "Ad-Hoc FACT FINDING
a matter of public concern, and the county's proffered interest
COMMITTEE ON BEHEST LOANS" is hereby created to be
in enforcing the anti-adornment provision of its dress code
composed of the following:
was outweighed by the employee's interest in exercising his
Chairman of the Presidential
First Amendment speech and associational rights by wearing
a pro-union lapel button.19
Commission on Good Government - Chairman
Thus, respondents' freedom of speech and of expression
remains intact, and CSC's Resolution No. 02-1316 defining The Solicitor General - Vice-Chairman
what a prohibited concerted activity or mass action has only
tempered or regulated these rights. Measured against that Representative from the
definition, respondents' actuations did not amount to a Office of the Executive Secretary - Member
prohibited concerted activity or mass action. The CSC and
the CA were both correct in arriving at said conclusion. Representative from the
Department of Finance - Member
WHEREFORE, the assailed August 31, 2007 Decision of the
Court of Appeals as well as its October 16, 2007 Resolution in Representative from the
CA G.R. SP No. 98952 are hereby AFFIRMED. Department of Justice - Member

SO ORDERED. Representative from the


Development Bank of the Philippines - Member
G.R. No. 135080 November 28, 2007
@lendelacruz 20

Representative from the 2. The borrower corporation is undercapitalized;


Philippine National Bank - Member
3. Direct or indirect endorsement by high
Representative from the government officials like presence of marginal
Asset Privatization Trust - Member notes;

Government Corporate Counsel - Member 4. Stockholders, officers or agents of the borrower


corporation are identified as cronies;
Representative from the
Philippine Export and Foreign 5. Deviation of use of loan proceeds from the
purpose intended;
Loan Guarantee Corporation - Member
6. Use of corporate layering;
The Ad Hoc Committee shall perform the following
functions: 7. Non-feasibility of the project for which financing
is being sought; and
1. Inventory all behest loans; identify the lenders
and borrowers, including the principal officers and 8. Extraordinary speed in which the loan release
stockholders of the borrowing firms, as well as the was made.
persons responsible for granting the loans or who
influenced the grant thereof; Moreover, a behest loan may be distinguished from a non-
behest loan in that while both may involve civil liability for
2. Identify the borrowers who were granted non-payment or non-recovery, the former may likewise
"friendly waivers," as well as the government entail criminal liability.4
officials who granted these waivers; determine the
validity of these waivers; Several loan accounts were referred to the Committee for
investigation, including the loan transactions between Metals
3. Determine the courses of action that the Exploration Asia, Inc. (MEA), now Philippine Eagle Mines,
government should take to recover those loans, and Inc. (PEMI) and the Development Bank of the Philippines
to recommend appropriate actions to the Office of (DBP).
the President within sixty (60) days from the date
hereof. After examining and studying the documents relative to the
loan transactions, the Committee determined that they bore
The Committee is hereby empowered to call upon any the characteristics of behest loans, as defined under
department, bureau, office, agency, instrumentality or Memorandum Order No. 61 because the stockholders and
corporation of the government, or any officer or employee officers of PEMI were known cronies of then President
thereof, for such assistance as it may need in the discharge of Ferdinand Marcos; the loan was under-collateralized; and
its functions.3 PEMI was undercapitalized at the time the loan was granted.

By Memorandum Order No. 61 dated November 9, 1992, the Specifically, the investigation revealed that in 1978, PEMI
functions of the Committee were subsequently expanded, applied for a foreign currency loan and bank investment on
viz.: its preferred shares with DBP. The loan application was
approved on April 25, 1979 per Board Resolution (B/R) No.
WHEREAS, among the underlying purposes for the creation 1297, but the loan was never released because PEMI failed to
of the Ad Hoc Fact-Finding Committee on Behest Loans is to comply with the conditions imposed by DBP. To
facilitate the collection and recovery of defaulted loans owing accommodate PEMI, DBP subsequently adopted B/R No.
government-owned and controlled banking and/or 2315 dated June 1980, amending B/R No. 1297, authorizing
financing institutions; the release of PEMIs foreign currency loan proceeds, and
even increasing the same. Per B/R No. 95 dated October 16,
1980, PEMI was granted a foreign currency loan of
WHEREAS, this end may be better served by broadening the
$19,680,267.00 or P146,601,979.00, and it was released despite
scope of the fact-finding mission of the Committee to include
non-compliance with the conditions imposed by DBP. The
all non-performing loans which shall embrace behest and
Committee claimed that the loan had no sufficient collaterals
non-behest loans;
and PEMI had no sufficient capital at that time because its
acquired assets were only valued at P72,045,700.00, and its
NOW THEREFORE, I, FIDEL V. RAMOS, President of the paid up capital was only P46,488,834.00.
Republic of the Philippines, by virtue of the power vested in
me by law, do hereby order:
Consequently, Atty. Orlando L. Salvador, Consultant of the
Fact-Finding Committee, and representing the Presidential
Sec. 1. The Ad Hoc Fact-Finding Committee on Behest Loans Commission on Good Government (PCGG), filed with the
shall include in its investigation, inventory, and study, all Office of the Ombudsman (Ombudsman) a sworn complaint
non-performing loans which shall embrace both behest and for violation of Sections 3(e) and (g) of Republic Act No. 3019,
non-behest loans: or the Anti-Graft and Corrupt Practices Act, against the
respondents Placido I. Mapa, Jr., Rafael A. Sison; Rolando M.
The following criteria may be utilized as a frame of reference Zosa; Cesar C. Zalamea; Benjamin Barot, Casimiro Tanedo,
in determining a behest loan: J.V. de Ocampo, Bienvenido R. Tantoco, Jr., Francis B. Banes,
Ernesto M. Caringal, Romeo V. Jacinto, Manuel D. Tanglao
1. It is under-collateralized; and Alicia Ll. Reyes.5
@lendelacruz 21

After considering the Committees allegation, the therefore, the offenses charged had already prescribed or
Ombudsman handed down the assailed Resolution,6 forever barred by Statute of Limitations.
dismissing the complaint. The Ombudsman conceded that
there was ground to proceed with the conduct of preliminary It bears mention that the acts complained of were committed
investigation. Nonetheless, it dismissed the complaint before the issuance of BP 195 on March 2, 1982. Hence, the
holding that the offenses charged had already prescribed, prescriptive period in the instant case is ten (10) years as
viz.: provided in the (sic) Section 11 of R.A. 3019, as originally
enacted.
[W]hile apparently, PEMI was undercapitalized at the time
the subject loans were entered into; the financial Equally important to stress is that the subject financial
accommodations were undercollateralized at the time they transactions between 1978 and 1981 transpired at the time
were granted; the stockholders and officers of the borrower when there was yet no Presidential Order or Directive
corporation are identified cronies of then President Marcos; naming, classifying or categorizing them as Behest or Non-
and the release of the said loans was made despite non- Behest Loans.
compliance by PEMI of the conditions attached therewith,
which consequently give a semblance that the subject Foreign
To reiterate, the Presidential Ad Hoc Committee on Behest
Currency Loans are indeed Behest Loans, the prosecution of
Loans was created on October 8, 1992 under Administrative
the offenses charged cannot, at this point, prosper on
Order No. 13. Subsequently, Memorandum Order No. 61,
grounds of prescription.
dated November 9, 1992, was issued defining the criteria to
be utilized as a frame of reference in determining behest
It bears to stress that Section 11 of R.A. No. 3019 as originally loans. Accordingly, if these Orders are to be considered the
enacted, provides that the prescriptive period for violations bases of charging respondents for alleged offenses
of the said Act (R.A. 3019) is ten (10) years. Subsequently, BP committed, they become ex-post facto laws which are
195, enacted on March 16, 1982, amended the period of proscribed by the Constitution. The Supreme Court in the
prescription from ten (10) years to fifteen (15) years case of People v. Sandiganbayan, supra, citing Wilensky V.
Fields, Fla, 267 So 2dl, 5, held that "an ex-post facto law is
Moreover as enunciated in [the] case of People vs. defined as a law which provides for infliction of punishment
Sandiganbayan, 211 SCRA 241, the computation of the upon a person for an act done which when it was committed,
prescriptive period of a crime violating a special law like R.A. was innocent."7
3019 is governed by Act No. 3326 which provides, thus:
Thus, the Ombudsman disposed:
xxxx
WHEREFORE, premises considered, it is hereby respectfully
Section 2. Prescription shall begin to run from the day of the recommended that the instant case be DISMISSED.
commission of the violation of law, and if the same be not
known at the time, from the discovery thereof and the SO RESOLVED.8
institution of the judicial proceedings for its investigation
and punishment.
The Committee filed a Motion for Reconsideration, but the
Ombudsman denied it on July 27, 1998.
The prescription shall be interrupted when the proceedings
are instituted against the guilty person, and shall begin to run
Hence, this petition positing these issues:
again if the proceedings are dismissed for reasons not
constituting jeopardy.
A. WHETHER OR NOT THE CRIME DEFINED BY
SEC. 3(e) AND (g) OF R.A. 3019 HAS ALREADY
Corollary thereto, the Supreme Court in the case of People vs.
PRESCRIBED AT THE TIME THE PETITIONER
Dinsay, C.A. 40 O.G. 12th Supp., 50, ruled that when there is
FILED ITS COMPLAINT.
nothing which was concealed or needed to be discovered
because the entire series of transactions were by public
instruments, the period of prescription commenced to run B. WHETHER OR NOT ADMINISTRATIVE
from the date the said instrument were executed. ORDER NO. 13 AND MEMORANDUM ORDER
NO. 61 ARE EX-POST FACTO LAW[S].9
The aforesaid principle was further elucidated in the cases of
People vs. Sandiganbayan, 211 SCRA 241, 1992, and People The Court shall deal first with the procedural issue.
vs. Villalon, 192 SCRA 521, 1990, where the Supreme Court
pronounced that when the transactions are contained in Commenting on the petition, Tantoco, Reyes, Mapa, Zalamea
public documents and the execution thereof gave rise to and Caringal argued that the petition suffers from a
unlawful acts, the violation of the law commences therefrom. procedural infirmity which warrants its dismissal. They
Thus, the reckoning period for purposes of prescription shall claimed that the PCGG availed of the wrong remedy in
begin to run from the time the public instruments came into elevating the case to this Court.
existence.
Indeed, what was filed before this Court is a petition
In the case at bar, the subject financial accommodations were captioned as Petition for Review on Certiorari. We have
entered into by virtue of public documents (e.g., notarized ruled, time and again, that a petition for review on certiorari
contracts, board resolutions, approved letter-request) during is not the proper mode by which resolutions of the
the period of 1978 to 1981 and for purposes of computing the Ombudsman in preliminary investigations of criminal cases
prescriptive period, the aforementioned principles in the are reviewed by this Court. The remedy from the adverse
Dinsay, Villalon and Sandiganbayan cases will apply. resolution of the Ombudsman is a petition for certiorari
Records show that the complaint was referred and filed with under Rule 65,10 not a petition for review on certiorari under
this Office on October 4, 1996 or after the lapse of more than Rule 45.
fifteen (15) years from the violation of the law. [Deductibly]
@lendelacruz 22

However, though captioned as a Petition for Review on ostensibly inflicting punishment upon a person for an act
Certiorari, we will treat this petition as one filed under Rule done prior to their issuance and which was innocent when
65 since a reading of its contents reveals that petitioner done.
imputes grave abuse of discretion to the Ombudsman for
dismissing the complaint. The averments in the complaint, The constitutionality of laws is presumed. To justify
not the nomenclature given by the parties, determine the nullification of a law, there must be a clear and unequivocal
nature of the action.11 In previous rulings, we have treated breach of the Constitution, not a doubtful or arguable
differently labeled actions as special civil actions for implication; a law shall not be declared invalid unless the
certiorari under Rule 65 for reasons such as justice, equity, conflict with the Constitution is clear beyond reasonable
and fair play.12 doubt. The presumption is always in favor of
constitutionality. To doubt is to sustain.19 Even this Court
Having resolved the procedural issue, we proceed to the does not decide a question of constitutional dimension,
merits of the case. unless that question is properly raised and presented in an
appropriate case and is necessary to a determination of the
As the Committee puts it, the issues to be resolved are: (i) case, i.e., the issue of constitutionality must be the very lis
whether or not the offenses subject of its criminal complaint mota presented.201wphi1
have prescribed, and (ii) whether Administrative Order No.
13 and Memorandum Order No. 61 are ex post facto laws. Furthermore, in Estarija v. Ranada,21 where the petitioner
raised the issue of constitutionality of Republic Act No. 6770
The issue of prescription has long been settled by this Court in his motion for reconsideration of the Ombudsmans
in Presidential Ad Hoc Fact-Finding Committee on Behest decision, we had occasion to state that the Ombudsman had
Loans v. Desierto,13 thus: no jurisdiction to entertain questions on the constitutionality
of a law. The Ombudsman, therefore, acted in excess of its
jurisdiction in declaring unconstitutional the subject
[I]t is well-nigh impossible for the State, the aggrieved party,
administrative and memorandum orders.
to have known the violations of R.A. No. 3019 at the time the
questioned transactions were made because, as alleged, the
public officials concerned connived or conspired with the In any event, we hold that Administrative Order No. 13 and
"beneficiaries of the loans." Thus, we agree with the Memorandum Order No. 61 are not ex post facto laws.
COMMITTEE that the prescriptive period for the offenses
with which the respondents in OMB-0-96-0968 were charged An ex post facto law has been defined as one (a) which
should be computed from the discovery of the commission makes an action done before the passing of the law and
thereof and not from the day of such commission.14 which was innocent when done criminal, and punishes such
action; or (b) which aggravates a crime or makes it greater
The ruling was reiterated in Presidential Ad Hoc Fact- than it was when committed; or (c) which changes the
Finding Committee on Behest Loans v. Ombudsman punishment and inflicts a greater punishment than the law
Desierto,15 wherein the Court explained: annexed to the crime when it was committed; or (d) which
alters the legal rules of evidence and receives less or different
testimony than the law required at the time of the
In cases involving violations of R.A. No. 3019 committed
commission of the offense in order to convict the defendant.22
prior to the February 1986 EDSA Revolution that ousted
This Court added two (2) more to the list, namely: (e) that
President Ferdinand E. Marcos, we ruled that the
which assumes to regulate civil rights and remedies only but
government as the aggrieved party could not have known of
in effect imposes a penalty or deprivation of a right which
the violations at the time the questioned transactions were
when done was lawful; or (f) that which deprives a person
made. Moreover, no person would have dared to question
accused of a crime of some lawful protection to which he has
the legality of those transactions. Thus, the counting of the
become entitled, such as the protection of a former conviction
prescriptive period commenced from the date of discovery of
or acquittal, or a proclamation of amnesty.23
the offense in 1992 after an exhaustive investigation by the
Presidential Ad Hoc Committee on Behest Loans.16
The constitutional doctrine that outlaws an ex post facto law
generally prohibits the retrospectivity of penal laws. Penal
This is now a well-settled doctrine which the Court has
laws are those acts of the legislature which prohibit certain
applied in subsequent cases involving the PCGG and the
acts and establish penalties for their violations; or those that
Ombudsman.17
define crimes, treat of their nature, and provide for their
punishment.24 The subject administrative and memorandum
Since the prescriptive period commenced to run on the date orders clearly do not come within the shadow of this
of the discovery of the offenses, and since discovery could definition. Administrative Order No. 13 creates the
not have been made earlier than October 8, 1992, the date Presidential Ad Hoc Fact-Finding Committee on Behest
when the Committee was created, the criminal offenses Loans, and provides for its composition and functions. It
allegedly committed by the respondents had not yet does not mete out penalty for the act of granting behest loans.
prescribed when the complaint was filed on October 4, 1996. Memorandum Order No. 61 merely provides a frame of
reference for determining behest loans. Not being penal laws,
Even the Ombudsman, in its Manifestation & Motion (In Lieu Administrative Order No. 13 and Memorandum Order No.
of Comment),18 conceded that the prescriptive period 61 cannot be characterized as ex post facto laws. There is,
commenced from the date the Committee discovered the therefore, no basis for the Ombudsman to rule that the
crime, and not from the date the loan documents were subject administrative and memorandum orders are ex post
registered with the Register of Deeds. As a matter of fact, it facto.
requested that the record of the case be referred back to the
Ombudsman for a proper evaluation of its merit. One final note. Respondents Mapa and Zalamea, in their
respective comments, moved for the dismissal of the case
Likewise, we cannot sustain the Ombudsmans declaration against them. Mapa claims that he was granted transactional
that Administrative Order No. 13 and Memorandum Order immunity from all PCGG-initiated cases,25 while Zalamea
No. 61 violate the prohibition against ex post facto laws for denied participation in the approval of the subject loans. 26
@lendelacruz 23

The arguments advanced by Mapa and Zalamea are matters By Order5 of April 5, 2006, then POEA Administrator
of defense which should be raised in their respective counter- Rosalinda D. Baldoz penalized petitioner with one year
affidavits. Since the Ombudsman erroneously dismissed the suspension from overseas deployment upon a finding that
complaint on ground of prescription, respondents respective his refusal to complete his contract aboard the M/T Haruna
defenses were never passed upon during the preliminary constituted a breach thereof.
investigation. Thus, the complaint should be referred back to
the Ombudsman for proper evaluation of its merit. On appeal by petitioner, the Secretary of Labor, by Order 6 of
September 22, 2006, noting that it was petitioners first
WHEREFORE, the petition is GRANTED. The assailed offense, modified the POEA Order by shortening the period
Resolution and Order of the Office of Ombudsman in OMB- of suspension from one year to six months.
0-96-2428, are SET ASIDE. The Office of the Ombudsman is
directed to conduct with dispatch an evaluation of the merits The Office of the President (OP), by Decision7 of November
of the complaint against the herein respondents. 26, 2007, dismissed petitioners appeal for lack of jurisdiction,
citing National Federation of Labor v. Laguesma.8
SO ORDERED.
The OP held that appeals to it in labor cases, except those
Republic of the Philippines involving national interest, have been eliminated.
SUPREME COURT Petitioners motion for partial reconsideration was denied by
Manila Resolution9 of June 26, 2009, hence, the present petition.

THIRD DIVISION Following settled jurisprudence, the proper remedy to


question the decisions or orders of the Secretary of Labor is
G.R. No. 189314 June 15, 2011 via Petition for Certiorari under Rule 65, not via an appeal to
the OP. For appeals to the OP in labor cases have indeed been
eliminated, except those involving national interest over
MIGUEL DELA PENA BARAIRO, Petitioner,
which the President may assume jurisdiction. The rationale
vs.
behind this development is mirrored in the OPs Resolution
OFFICE OF THE PRESIDENT and MST MARINE
of June 26, 2009 the pertinent portion of which reads:
SERVICES (PHILS.), INC. Respondent.

. . . [T] he assailed DOLEs Orders were both issued by


DECISION
Undersecretary Danilo P. Cruz under the authority of the
DOLE Secretary who is the alter ego of the President. Under
CARPIO MORALES, J.: the "Doctrine of Qualified Political Agency," a corollary rule
to the control powers of the President, all executive and
Miguel Barairo (petitioner) was hired1 on June 29, 2004 by administrative organizations are adjuncts of the Executive
respondent MST Marine Services (Phils.) Inc., (MST) for its Department, the heads of the various executive departments
principal, TSM International, Ltd., as Chief Mate of the vessel are assistants and agents of the Chief Executive, and, except
Maritina, for a contract period of six months. He boarded the in cases where the Chief Executive is required by
vessel and discharged his duties on July 23, 2004, but was Constitution or law to act in person or the exigencies of the
relieved2 on August 28, 2004 ostensibly for transfer to another situation demand that he act personally, the multifarious
vessel, Solar. Petitioner thus disembarked in Manila on executive and administrative functions of the Chief
August 29, 2004. Executive are performed by and through the executive
departments, and the acts of the Secretaries of such
Petitioner was later to claim that he was not paid the departments, performed and promulgated in the regular
promised "stand-by fee" in lieu of salary that he was to course of business are, unless disapproved or reprobated by
receive while awaiting transfer to another vessel as in fact the the Chief Executive presumptively the acts of the Chief
transfer never materialized. Executive.10 (emphasis and underscoring supplied)

On October 20, 2004, petitioner signed a new Contract of It cannot be gainsaid that petitioners case does not involve
Employment3 for a six-month deployment as Chief Mate in a national interest.
newly-built Japanese vessel, M/T Haruna. He was paid a
one-month "standby fee" in connection with the Maritina Petitioners appeal of the Secretary of Labors Decision to the
contract. Office of the President did not toll the running of the period,
hence, the assailed Decisions of the Secretary of Labor are
Petitioner boarded the M/T Haruna on October 31, 2004 but deemed to have attained finality.
he disembarked a week later as MST claimed that his
boarding of M/T Haruna was a "sea trial" which, MST Although appeal is an essential part of our judicial process, it
maintains, was priorly made known to him on a "stand-by" has been held, time and again, that the right thereto is not a
fee. MST soon informed petitioner that he would be natural right or a part of due process but is merely a statutory
redeployed to the M/T Haruna on November 30, 2004, but privilege. Thus, the perfection of an appeal in the manner and
petitioner refused, prompting MST to file a complaint4 for within the period prescribed by law is not only mandatory
breach of contract against him before the Philippine Overseas but also jurisdictional and failure of a party to conform to the
Employment Administration (POEA). rules regarding appeal will render the judgment final and
executory. Once a decision attains finality, it becomes the law
Petitioner claimed, however, that he was placed on "forced of the case irrespective of whether the decision is erroneous
vacation" when he was made to disembark from the M/T or not and no court - not even the Supreme Court - has the
Haruna, and that not wanting to experience a repetition of power to revise, review, change or alter the same. The basic
the previous "termination" of his employment aboard the rule of finality of judgment is grounded on the fundamental
Maritina, he refused to be redeployed to the M/T Haruna. principle of public policy and sound practice that, at the risk
of occasional error, the judgment of courts and the award of
@lendelacruz 24

quasi-judicial agencies must become final at some definite officers of the Mindanao Coconut Oil Mills (MINCOCO), a
date fixed by law.11 (underscoring in the original, emphasis domestic corporation established in 1974,2 while respondents
supplied)1avvphi1 Panfilo O. Domingo, Conrado S. Reyes, Enrique M. Herboza,
and Ricardo Sunga, were then officers of the National
At all events, on the merits, the petition just the same fails. Investment and Development Corporation (NIDC).

As found by the POEA Administrator and the Secretary of On 10 May 1976, MINCOCO applied for a Guarantee Loan
Labor, through Undersecretary Danilo P. Cruz, petitioners Accommodation with the NIDC for the amount of
refusal to board the M/T Haruna on November 30, 2004 approximately P30,400,000.00, which the NIDCs Board of
constituted unjustified breach of his contract of employment Directors approved on 23 June 1976.
under Section 1 (A-2) Rule II, Part VI [sic] of the POEA
Seabased Rules and Regulations.12 That petitioner believed The guarantee loan was, however, both undercapitalized and
that respondent company violated his rights when the period under-collateralized because MINCOCOs paid capital then
of his earlier Maritina contract was not followed and his was only P7,000,000.00 and its assets worth is P7,000,000.00.
"stand-by fees" were not fully paid did not justify his refusal
to abide by the valid and existing Haruna contract requiring This notwithstanding, MINCOCO further obtained
him to serve aboard M/T Haruna. For, as noted in the additional Guarantee Loan Accommodations from NIDC in
assailed DOLE Order, "if petitioners rights has been violated the amount of P13,647,600.00 and P7,000,000.00, 3
as he claims, he has various remedies under the contract respectively.
which he did not avail of."
When MINCOCOs mortgage liens were about to be
Parenthetically, the Undersecretary of Labor declared that foreclosed by the government banks due its outstanding
"the real reason [petitioner] refused to re-join Haruna on obligations, Eduardo Cojuangco issued a memorandum
November 30, 2004, is that he left the Philippines on dated 18 July 1983, bearing the late President Ferdinand E.
November 29, 2004 to join MT Adriatiki, a vessel of another Marcos (President Marcos) marginal note, disallowing the
manning agency," which declaration petitioner has not foreclosure of MINCOCOs properties.4 The government
refuted. banks were not able to recover any amount from MINCOCO
and President Marcos marginal note was construed by the
WHEREFORE, the petition is DENIED. NIDC to have effectively released MINCOCO, including its
owners, from all of its financial liabilities.5
SO ORDERED.
The above mentioned transactions, were, however,
Republic of the Philippines discovered only in 1992 after then President Fidel V. Ramos
SUPREME COURT (President Ramos), in an effort to recover the ill-gotten
Manila wealth of the late President Marcos, his family, and cronies,
issued Administrative Order No. 136 creating the Presidential
Ad Hoc Fact-Finding Committee on Behest Loans (the
FIRST DIVISION
Committee), with the Chairman of the Philippine
Commission on Good Government (PCGG) as the
G.R. No. 135715 April 13, 2011 Committees head. The Committee was directed, inter alia, to
inventory all behest loans, and identify the lenders and
PRESIDENTIAL AD HOC FACT- FINDING borrowers, including the principal officers and stockholders
COMMITTEE ON BEHEST LOANS, represented by of the borrowing firms, as well as the persons responsible for
MAGDANGAL B. ELMA, PCGG CHAIRMAN AND the granting of loans or who influenced the grant thereof. 7
ORLANDO C. SALVADOR AS CONSULTANT OF THE Subsequently, then President Ramos issued Memorandum
TECHNICAL WORKING GROUP OF THE AD-HOC Order No. 618 outlining the criteria which may be utilized as
COMMITTEE, Petitioners, a frame of reference in determining a behest loan, viz:
vs.
HONORABLE ANIANO A. DESIERTO AS
a. It is under-collateralized;
OMBUDSMAN, PANFILO O. DOMINGO, CONRADO S.
REYES, ENRIQUE M. HERBOZA, MOHAMMAD ALI
DIMAPORO, ABDULLAH DIMAPORO AND AMER b. The borrower corporation is undercapitalized;
DIANALAN, Respondents.
c. Direct or indirect endorsement by high
DECISION government officials like presence of marginal note;

PEREZ, J.: d. Stockholders, officers or agents of the borrower


corporation are identified as cronies;
This petition for review on certiorari1 is one among the 17
cases filed before us by the Presidential Ad Hoc Fact-Finding e. Deviation of use of loan proceeds from the
Committee on Behest Loans, charging public respondent purpose intended;
Ombudsman Aniano A. Desierto (Ombudsman) for grave
abuse of discretion, when, on the ground of prescription and f. Use of corporate layering;
insufficiency of evidence, he dismissed all of these cases then
pending before him, including this case in OMB-0-97-1718. g. Non-feasibility of the project for which financing
is being sought;
The Facts
h. Extraordinary speed in which the loan release
Respondents Mohammad Ali Dimaporo, Abdullah was made.
Dimaporo, and Amer Dianalan, were stockholders and
@lendelacruz 25

The Committee found that twenty-one (21) corporations, The petitioner argued that the right of the State to recover
including MINCOCO, obtained behest loans. It claimed that behest loans as ill-gotten wealth is imprescriptible under
the fact that MINCOCO was under-collateralized and Section 15, Article XI of the 1987 Constitution;13 and,
undercapitalized; that its officers were identified as cronies; assuming that the period to file criminal charges herefore is
that the late President Marcos had marginal note, effectively subject to prescription, the prescriptive period should be
waiving the governments right to foreclose MINCOCOs counted from the time of discovery of behest loans or
mortgage liens; and, that the Guarantee Loan sometime in 1992 when the Committee was constituted.14
Accommodation were approved in an extraordinary speed of
one month, bore badges of behest loans. The Ombudsman, in his Comment, countered that his office
has the discretionary power during preliminary
Subsequently, the Committee filed with the Ombudsman a investigation to determine the sufficiency of evidence for
sworn complaint against MINCOCOs Officers and NIDCs indictment;15 that it is beyond the ambit of the Court to
Board of Directors for violation of Section 3(e) and (g) of review this exercise of discretion;16 that Section 15, Article XI
Republic Act No. 3019,9 as amended. of the 1987 Constitution applies only to civil suits and not to
criminal proceedings;17 and, that the crime under which the
By Resolution dated 9 July 1998, the Ombudsman motu respondents herein were charged had already prescribed. 18
prorio dismissed the complaint on the grounds that, first,
there was insufficient evidence to warrant the indictment of Private respondents Panfilo O. Domingo and Enrique M.
the persons charged; and, second, the alleged offenses had Herboza, filed their respective Comments mainly reiterating
prescribed.10 The Ombudsman explained: the Ombudsmans contentions. The other respondents did
not file their Comments, and, thus, considered to have
Being undercapitalized, standing alone is meaningless. The waived their chance thereto.
approval of the loans/guarantees was still based on sound
lending practice, otherwise, MINCOCO would have been The Courts Ruling
disqualified from obtaining the same. If MINCOCOs equity
was more than the amount of the loans, there was no need The remedy from an adverse resolution of the Ombudsman
for it to obtain the latter. is a petition for certiorari under Rule 65 of the Rules of Court;
what was filed with the Court, however, was a petition for
Anent the claim that Mohammad Ali Dimaporo was a crony review on certiorari under Rule 45. Nevertheless, the Court
of the late President Marcos, no evidence was adduced to will treat this petition as one filed under Rule 65 since a
prove the same, hence, remains a bare allegation. x x x. reading of its contents shows that the Committee imputes
grave abuse of discretion to the Ombudsman for dismissing
On the issue that the notation by President Marcos in the the complaint.19 This was how we also treated the previous
Memorandum of July 18, 1983 is a behest order, suffice it to cases marred by the same procedural lapse, the latest of
state that these marginal notes, if they meant endorsement as which is the 2009 Presidential Ad-Hoc Fact Finding
defined under Memorandum Order No. 61, endorsed the Committee on Behest Loans v. Desierto (G.R. No. 135703). 20
recommendation regarding the mortgage liens of the
government banks of the Mothballed Coconut Oil Mills and At the core of the controversy is the Ombudsmans
not the approval/grant of the loans/guarantees in 1976. It is Resolution holding that prescription had already set-in
in effect approved the release of the liabilities of the former effectively barring the institution of charges against the
owners of coconut oil mills, one of which was MINCOCO, private respondents. The Ombudsman claimed that the
but not the acquisition of the said loans/guarantees. alleged behest loans, transpired in 1976,21 and, thus, the
complaint filed after more than two decades from the
The take over of MINCOCO by UNICOM without the commission thereof or on 8 October 1997, was well beyond
consent of NIDC is not a characteristic of a behest loan. It is a the 10-year prescriptive period provided for under the old
mere violation of procedures that does not warrant a criminal Republic Act No. 3019.22
action.
In resolving the issue of prescription, the following shall be
xxxx considered: (1) the period of prescription for the offense
charged; (2) the time the period of prescription started to run;
and (3) the time the prescriptive period was interrupted.23
For the perpetration of the acts being complained of, the
respondents are charged of violations of Sections 3(e) and (g)
of Republic Act No. 3019. The instant case however will no At the outset, the provision found in Section 15, Article XI of
longer prosper for the offenses have already prescribed. the 1987 Constitution that "the right of the State to recover
properties unlawfully acquired by public officials or
employees, from them or from their nominees or transferees,
Be it remembered that MINCOCO applied for and was
shall not be barred by prescription, laches or estoppels," has
granted loans/guarantees way back in 1976. Thus, these acts
already been settled in Presidential Ad Hoc Fact-Finding
are governed by the law in force at the time of their
Committee on Behest Loans v. Desierto (G.R. No. 130140), 24
commission, which is the old R.A. No. 3019 before its
where the Court held that the above cited constitutional
amendment by Batas Pambansa Blg. 195 in March 1982.
provision "applies only to civil actions for recovery of ill-
Offenses perpetrated prior to the enactment of this latter law
gotten wealth, and not to criminal cases."25
prescribed ten (10) years later. And since the case was filed
against the herein respondents only in September 1997, the
offenses have long prescribed in 1986. The period of prescription for the crime charged in this
petition, committed in 1976 and prior to the amendment of
Republic Act No. 3019, is ten (10) years.
Prescription commenced to run in 1976 when the assailed
transaction happened. x x x.11
Section 1126 of Republic Act No. 3019 as amended by Batas
Pambansa Blg. 195, provides that the offenses committed
Hence, this petition for review on certiorari under Rule 45 of
under Republic Act No. 3019 shall prescribe in fifteen (15)
the Rules of Court.12
@lendelacruz 26

years; prior to this amendment, however, under the old impossible for the State, the aggrieved party, to have known
Republic Act No. 3019, this prescriptive period was only ten these crimes committed prior to the 1986 EDSA Revolution,
(10) years. In People v. Pacificador,27 the Court held that the because of the alleged connivance and conspiracy among
longer prescriptive period of 15-years does not apply in involved public officials and the beneficiaries of the loans."37
crimes committed prior to the effectivity of Batas Pambansa In yet another pronouncement, in the 2001 Presidential Ad
Blg. 195, which was approved on 16 March 1982, because, not Hoc Fact-Finding Committee on Behest Loans v. Desierto
being favorable to the accused, it cannot be given retroactive (G.R. No. 130817),38 the Court held that during the Marcos
effect. Considering that the alleged crime was committed in regime, no person would have dared to question the legality
1976, and in line with the Courts ruling in Pacificador, the of these transactions.
prescription period should be ten (10) years.
While the Ombudsman has the full discretion to determine
Prescription of crime shall begin to run from the day of its whether a criminal case is to be filed, the Court is not
commission, and if the same be not known at the time, from precluded from reviewing the Ombudsmans action when
the discovery thereof and the institution of judicial there is a grave abuse of discretion.
proceedings for its investigation and punishment.
True, the Ombudsman is a constitutionally created body with
While we sustain the Ombudsmans contention that the constitutionally mandated independence. Despite this,
prescriptive period for the crime charged herein is 10 years however, the Ombudsman comes within the purview of the
and not 15 years, we are not persuaded that in this specific Courts power of judicial review39 a peculiar concept of
case, the prescriptive period began to run in 1976, when the Philippine Ombudsman, embodied in Article VIII, Section 1
loans were transacted. of the 1987 Constitution40 which serves as a safety net
against its capricious and arbitrary acts.41 Thus, in Garcia-
The time as to when the prescriptive period starts to run for Rueda v. Pascasio,42 the Court held that "while the
crimes committed under Republic Act No. 3019, a special Ombudsman has the full discretion to determine whether or
law, is covered by Act No. 3326,28 Section 2 of which provides not a criminal case is to be filed, the Court is not precluded
that: from reviewing the Ombudsmans action when there is grave
abuse of discretion."43 This is because, "while the
Ombudsman enjoys, as it must, complete independence, it
Section 2. Prescription shall begin to run from the day of the
cannot and must not lose track of the law, which it is bound
commission of the violation of the law, and if the same be not
to uphold and obey."44
known at the time, from the discovery thereof and the
institution of judicial proceedings for its investigation and
punishment. After reviewing the cases records, the Court finds that the
present petition calls for the exercise of its power of judicial
review.
The prescription shall be interrupted when proceedings are
instituted against the guilty person, and shall begin to run
again if the proceedings are dismissed for reasons not Private respondents are charged with violation of Section 3(e)
constituting double jeopardy. and (g) of Republic Act No. 3019 which states:

Generally, the prescriptive period shall commence to run on Section 3. Corrupt practices of public officers. - In addition to acts
the day the crime is committed. That an aggrieved person or omissions of public officers already penalized by existing
"entitled to an action has no knowledge of his right to sue or law, the following shall constitute corrupt practices of any
of the facts out of which his right arises," does not prevent the public officer and are hereby declared to be unlawful:
running of the prescriptive period.29 An exception to this rule
is the "blameless ignorance" doctrine, incorporated in Section xxxx
2 of Act No. 3326. Under this doctrine, "the statute of
limitations runs only upon discovery of the fact of the (e) Causing any undue injury to any party, including the
invasion of a right which will support a cause of action. In Government, or giving any private party any unwarranted
other words, the courts would decline to apply the statute of benefits, advantage or preference in the discharge of his
limitations where the plaintiff does not know or has no official administrative or judicial functions through manifest
reasonable means of knowing the existence of a cause of partiality, evident bad faith or gross inexcusable negligence.
action."30 It was in this accord that the Court confronted the This provision shall apply to officers and employees of
question on the running of the prescriptive period in People offices or government corporations charged with the grant of
v. Duque31 which became the cornerstone of our 1999 licenses or permits or other concessions.
Decision in Presidential Ad Hoc Fact-Finding Committee on
Behest Loans v. Desierto (G.R. No. 130149),32 and the
xxxx
subsequent cases33 which Ombudsman Desierto dismissed,
emphatically, on the ground of prescription too. Thus, we
held in a catena of cases,34 that if the violation of the special (g) Entering, on behalf of the Government, into any contract
law was not known at the time of its commission, the or transaction manifestly and grossly disadvantageous to the
prescription begins to run only from the discovery thereof, same, whether or not the public officer profited or will profit
i.e., discovery of the unlawful nature of the constitutive act thereby.
or acts.
From the 1999 landmark case of Presidential Ad Hoc Fact-
Corollary, it is safe to conclude that the prescriptive period Finding Committee on Behest Loans v. Desierto (G.R. No.
for the crime which is the subject herein, commenced from 130140),45 to the 2008 Presidential Ad Hoc Fact-Finding
the date of its discovery in 1992 after the Committee made an Committee on Behest Loans v. Tabasondra (G.R. No.
exhaustive investigation.35 When the complaint was filed in 133756),46 and to the 2009 Presidential Ad Hoc Fact-Finding
1997, only five years have elapsed, and, hence, prescription Committee on Behest Loans v. Desierto (G.R. No. 135703), 47
has not yet set in. The rationale for this was succinctly the same issues confronted the Court as the one presented in
discussed in the 1999 Presidential Ad Hoc Fact-Finding the present petition, in that the Ombudsman similarly
Committee on Behest Loans,36 that "it was well-high
@lendelacruz 27

dismissed these cases not only on the ground of prescription The waiver of MINCOCOs multi-peso loan should have
but also for insufficiency of evidence.48 been enough basis in finding that probably Section 3(e) of
Republic Act No. 3019 was violated and the fact that NIDC
Interestingly, the facts in Tabasondra49 are squarely on all extended a loan guarantee to MINCOCO, despite its being
fours as the present case. Tabasondra,50 involved Coco- undercapitalized and under-collateralized, should have also
Complex Philippines, Inc., (CCPI), a domestic corporation been enough ground in finding probable cause for violation
primarily incorporated for the manufacture of coconut oil.51 of Section 3(g) of the above-cited law.
CCPI applied for Guarantee Loan Accommodation thru the
National Investment Development Corporation amounting More importantly, the finding of the Committee that
to P9,277,080.00, allegedly for the purchase of an oil mill to MINCOCO obtained behest loans because of the following
be supplied by Krupp Germany. The NIDC Board approved circumstances: MINCOCO was under-collateralized and
the loan in 1969,52 notwithstanding the fact that CCPI was undercapitalized; its officers were identified as cronies;
undercapitalized with only P2,111,000.00 paid-up capital,53 President Marcos had marginal note, effectively waiving the
and under-collateralized with only P495,300.00 assets.54 governments right to foreclose MINCOCOs mortgage liens;
Thus, with the NIDCs Guarantee Loan Accommodation, the and, NIDC approved MINCOCOs Guarantee Loan
Philippine National Bank (PNB) granted the loan. Still, with Accommodation in an extraordinary speed of one month,
NIDCs guarantee, CCPI obtained additional loans from PNB should have been accorded a proper modicum of respect by
in 1972, which, as of 1992, ballooned to P205,889,545.76. the Ombudsman.

When the Committee filed criminal complaints against the Considering the membership of the Committee
CCPIs Officers and PNBs Board of Directors for violation of representatives from the Department of Finance, The
Section 3(e) and (g) of Republic Act No. 3019, the Philippine National Bank, the Asset Privatization Trust, the
Ombudsman dismissed the complaint on the ground of Philippine Export and Foreign Loan Guarantee Corporation
prescription. For this, the Committee charged the and even the Development Bank of the Philippines its
Ombudsman for grave abuse of discretion, but pending its recommendation should be given great weight. No doubt,
resolution before us, the Ombudsman, taking cue from the the members of the Committee are experts in the field of
Courts 1999 ruling in G.R. No. 130140,55 motu proprio banking. On account of their special knowledge and
reinvestigated the complaint it earlier dismissed (and was expertise, they are in a better position to determine whether
still pending before us), only to dismiss it anew, in a standard banking practices are followed in the approval of
Resolution dated 16 October 2000, opining that NIDCs the loan/guarantee or what would generally constitute as
Board of Directors, who approved the loans in favor of CCPI, adequate security for a given loan.631avvphi1
should have been the ones indicted.56 Subsequently, the
Court dismissed Tabasondra for being moot and academic. The duty of the Ombudsman in the conduct of a preliminary
investigation is to establish whether there exists probable
Similarly, in the present petition, MINCOCO was also cause to file information in court against the accused.64 A
granted by NIDC a Guarantee Loan Accommodation finding of probable cause needs only to rest on evidence
amounting initially to P30.4 million pesos, despite its being showing that more likely than not, the accused committed
undercapitalized and under-collateralized.57 the crime.65 Considering the quantum of evidence needed to
support a finding of probable cause, the Court holds that the
As the Ombudsman admitted, when MINCOCOs mortgage Ombudsman gravely abused its discretion when it dismissed
liens were about to be foreclosed by the government banks, the complaint against herein respondents.
the late President Marcos intervened and through a marginal
note, in connivance with the NIDCs officers, waived the Preliminary investigation is not the occasion for the full and
liabilities of its owners to the detriment of the government.58 exhaustive display of the parties evidence.66 It is for the
It behooves the Court that while the Ombudsman admitted presentation of such evidence only as may engender a well
this fact, it saw nothing wrong in President Marcos founded belief that an offense has been committed and that
intervention, and the involvement therein of the NIDCs the accused is probably guilty thereof.67 The validity and
officers. This intervention alone, by no less than the highest merits of a partys accusation or defense, as well as
official of the land, waiving a multi-million peso liability of a admissibility of testimonies and evidence, are better
private corporation, should have alarmed the Ombudsman. ventilated during the trial proper.68

It surprises us that while the Ombudsman dismissed In conclusion, the offenses ascribed to respondents "involve
Tabasondra for not impleading therein the NIDCs Board of behest loans which bled white the economy of the country,
Directors, now that they (NIDCs Board of Directors) have one of the excesses of the authoritarian regime that led to the
been impleaded, the Ombudsman still dismissed the EDSA revolution, a serious evil that the 1987 Constitution
complaint, allegedly for insufficiency of evidence.59 aimed to extirpate."69 It involves nothing less than the interest
of the people whose transgressed rights are supposed to be
Applying mutatis mutandis G.R. No. 13375660 in this petition, vindicated by their protector the Ombudsman.70 As
it is apparent that there can be liability for violation of Section protector of the people, the Ombudsman should be pro-
3(e) and (g) of Republic Act No. 3019. active in making use of its vast arsenal of powers to "bring
the lamp of scrutiny to otherwise dark places even over the
resistance of those who would draw the blinds."71
Violation of Section 3(e)61 of Republic Act No. 3019 requires
that there be injury caused by giving unwarranted benefits,
advantages or preferences to private parties who conspire The criminal liability of Conrado S. Reyes is hereby
with public officers. In contrast, Section 3(g)62 does not extinguished in accordance with Article 89(1)72 of the Revised
require the giving of unwarranted benefits, advantages or Penal Code as confirmed by his death certificate.73 With
preferences to private parties, its core element being the respect to respondents Panfilo O. Domingo and Mohammad
engagement in a transaction or contract that is grossly and Ali Dimaporo, the facts of their deaths have to be confirmed
manifestly disadvantageous to the government. to determine the application to them of the same provision.
@lendelacruz 28

WHEREFORE, the petition is GRANTED. The Ombudsman of votes as a Barangay Kagawad. Mendoza appealed the
is hereby ORDERED to: MTC Decision to the COMELEC.

1. DISMISS the complaint against deceased On February 28, 2008, Villas administered the Oath of Office
respondent Conrado S. Reyes; to Herato.5 Then, Villas issued Memorandum No. 2008-03-
010 dated March 3, 2008,6 directing all department heads of
2. REQUIRE the counsels of respondents Panfilo O. the Municipal Government to act only on documents signed
Domingo and Mohammad Ali Dimaporo to submit or authorized by Herato.
proof of their deaths; and
Meanwhile, Mendoza sought the advice of the Department
3. FILE with the Sandiganbayan the necessary of the Interior and Local Government (DILG) as to who
Information against respondents Abdullah should exercise the powers of Punong Barangay of Balatasan
Dimaporo, Amer Dianalan, Enrique M. Herboza, given the prevailing controversy.
and Ricardo Sunga.
In a letter dated April 11, 2008,7 DILG Undersecretary
SO ORDERED. Austere A. Panadero responded to Mendozas inquiry
informing Villas that Mendoza should occupy the post of
Punong Barangay as there was no Writ of Execution Pending
Republic of the Philippines
Appeal of the MTC Decision dated February 23, 2008.
SUPREME COURT
Manila
Nevertheless, the Bulalacao Municipal Administrator,
Edezer Aceron, by the authority of Villas, issued a letter
FIRST DIVISION
dated April 23, 20088 to respondent Marlon de Castro,
Manager, Pinamalayan Branch, Land Bank of the Philippines
G.R. No. 187256 February 23, 2011 (LBP), requesting that transactions entered into by Mendoza
in behalf of Barangay Bulalacao should not be honored. In the
CONSTANCIO F. MENDOZA and SANGGUNIANG same letter, Aceron dismissed the DILG letter dated April 11,
BARANGAY OF BALATASAN, BULALACAO, 2008, saying that it is merely advisory and not binding on the
ORIENTAL MINDORO, Petitioners, municipal government of Bulalacao and the LBP.
vs.
MAYOR ENRILO VILLAS and BRGY. KAGAWAD In response, de Castro issued Villas and Mendoza a letter
LIWANAG HERATO and MARLON DE CASTRO,
dated April 24, 2008,9 advising both parties that the LBP shall
Manager, Pinamalayan Branch, Land Bank of the
not honor any transaction with regard the accounts of
Philippines, Respondents.
Barangay Balatasan.

RESOLUTION
Thereafter, petitioners filed a Petition dated May 5, 2008 for
Mandamus with Damages and Prayer for the Writ of
VELASCO, JR., J.: Preliminary Mandatory Injunction, docketed as Special Civil
Action No. 08-10 pending with the Regional Trial Court,
Before this Court is a Petition dated April 7, 2009 1 filed by Branch 43 in Roxas, Oriental Mindoro. Petitioners prayed
Constancio F. Mendoza and Sangguniang Barangay of that the LBP be directed to release the funds of Barangay
Balatasan, Bulalacao, Oriental Mindoro. In the Petition, it is Balatasan to them in order to render necessary, basic public
prayed that the Court: (1) set aside the Order dated February services to the inhabitants of the barangay.
2, 20092 of the Regional Trial Court (RTC), Branch 43 in
Roxas, Oriental Mindoro and its Order dated March 17, 20093 Thus, Villas and Herato filed an Answer dated May 16, 2008
denying petitioners motion for reconsideration of the Order interposing the following affirmative defenses: (1) that the
dated February 2, 2009; and (2) direct the RTC to continue petition for mandamus was defective, being directed against
with the proceedings in Special Civil Action No. 08-10 two or more different entities and requiring to perform
entitled Constancio Mendoza v. Mayor Enrilo Villas. different acts; and (2) that Mendoza does not have any clear
and legal right for the writ of mandamus.
The factual antecedents of the case are as follows:
On the other hand, the LBP also filed its Answer dated June
In the 2007 barangay elections, Mendoza obtained the highest 5, 2008, stating that its decision of withholding the barangay
votes for the position of Punong Barangay of Barangay funds was a mere act of prudence given the controversy
Balatasan, Bulalacao, Oriental Mindoro, while respondent surrounding the true Punong Barangay of Balatasan while
Liwanag Herato obtained the highest number of votes for the manifesting that it will release the funds to whom the Court
position of Barangay Kagawad. Notably, Mayor Enrilo Villas directs it to.
was the incumbent Mayor of Bulalacao, Oriental Mindoro at
the time of the barangay elections.4 Thereafter, Villas and Herato filed a Motion to Dismiss dated
November 7, 2008. In the Motion, a copy of the COMELEC
After the elections, the Commission on Elections Resolution dated September 8, 2008 in COMELEC Case No.
(COMELEC) proclaimed Mendoza as the duly-elected SPA-07-243-BRGY was attached. This case originated from a
Punong Barangay of Balatasan. Thus, the losing candidate, disqualification case against Mendoza filed with the
Thomas Pajanel, filed a petition for quo warranto with the COMELEC by Senen Familara before the conduct of the 2007
Municipal Trial Court (MTC) of Mansalay-Bulalacao which barangay elections. In the Resolution, the COMELEC
was docketed as Election Case No. 407-B. The MTC issued a disqualified Mendoza as a candidate for Punong Barangay of
Decision dated February 23, 2008, disqualifying Mendoza Barangay Balatasan in the 2007 barangay elections for having
and declaring that Herato was entitled to succeed him as already served three (3) consecutive terms for the same
Punong Barangay with Herato garnering the highest number position. In response, Mendoza presented a Certification
dated February 27, 200910 from the COMELEC which stated
@lendelacruz 29

that COMELEC Case No. SPA-07-243-BRGY is still pending On the other hand, direct recourse to this Court has been
with the Commission. allowed for petitions filed under Rule 45 when only
questions of law are raised, as in this case. Thus, the Court
In an attempt to clarify the issues on the matter, Mendoza ruled in Barcenas v. Tomas:13
again sought the opinion of the DILG regarding the
controversy. Thus, the DILG issued another letter, Section 1 of Rule 45 clearly states that the following may be
denominated as DILG Opinion No. 5, Series of 2009 dated appealed to the Supreme Court through a petition for review
January 2009,11 reiterating its stance that the MTC Decision by certiorari: 1) judgments; 2) final orders; or 3) resolutions
dated February 23, 2008 has not yet become final and of the Court of Appeals, the Sandiganbayan, the Regional
executory. Trial Court or similar courts, whenever authorized by law.
The appeal must involve only questions of law, not of fact.
Nevertheless, the RTC issued the assailed order dated
February 2, 2009 dismissing the petition on the strength of This Court has, time and time again, pointed out that it is not
the COMELEC Resolution dated September 8, 2008 a trier of facts; and that, save for a few exceptional instances,
disqualifying Mendoza from running in the 2007 elections. its function is not to analyze or weigh all over again the
As stated, petitioners motion for reconsideration of the factual findings of the lower courts. There is a question of law
Order dated February 2, 2009 was denied in an Order dated when doubts or differences arise as to what law pertains to a
March 17, 2009. certain state of facts, and a question of fact when the doubt
pertains to the truth or falsity of alleged facts.
From such orders the petitioners went directly to this Court.
Under the principle of the hierarchy of courts, decisions, final
The instant petition is a direct recourse to this Court from the orders or resolutions of an MTC should be appealed to the
assailed orders of the RTC. Notably, petitioners did not cite RTC exercising territorial jurisdiction over the former. On the
the rule under the Rules of Court by which the petition was other hand, RTC judgments, final orders or resolutions are
filed. If the petition is to be treated as a petition filed under appealable to the CA through either of the following: an
Rule 65 of the Rules of Court, the petition must be dismissed ordinary appeal if the case was originally decided by the
outright for having been filed prematurely. RTC; or a petition for review under Rule 42, if the case was
decided under the RTC's appellate jurisdiction.
In Chamber of Real Estate and Builders Associations, Inc.
(CREBA) v. Secretary of Agrarian Reform,12 a petition for Nonetheless, a direct recourse to this Court can be taken for
certiorari filed under Rule 65 was dismissed for having been a review of the decisions, final orders or resolutions of the
filed directly with the Court, violating the principle of RTC, but only on questions of law. Under Section 5 of Article
hierarchy of courts, to wit: VIII of the Constitution, the Supreme Court has the power to

Primarily, although this Court, the Court of Appeals and the (2) Review, revise, reverse, modify, or affirm on appeal or
Regional Trial Courts have concurrent jurisdiction to issue certiorari as the law or the Rules of Court may provide, final
writs of certiorari, prohibition, mandamus, quo warranto, judgments and orders of lower courts in:
habeas corpus and injunction, such concurrence does not
give the petitioner unrestricted freedom of choice of court xxxx
forum. In Heirs of Bertuldo Hinog v. Melicor, citing People
v. Cuaresma, this Court made the following (e) All cases in which only an error or question of law is
pronouncements: involved.

This Courts original jurisdiction to issue writs of certiorari is This kind of direct appeal to this Court of RTC judgments,
not exclusive. It is shared by this Court with Regional Trial final orders or resolutions is provided for in Section 2(c) of
Courts and with the Court of Appeals. This concurrence of Rule 41, which reads:
jurisdiction is not, however, to be taken as according to
parties seeking any of the writs an absolute, unrestrained
SEC. 2. Modes of appeal.
freedom of choice of the court to which application therefor
will be directed. There is after all a hierarchy of courts. That
hierarchy is determinative of the venue of appeals, and also xxxx
serves as a general determinant of the appropriate forum for
petitions for the extraordinary writs. A becoming regard for (c) Appeal by certiorari.In all cases where only questions of
that judicial hierarchy most certainly indicates that petitions law are raised or involved, the appeal shall be to the Supreme
for the issuance of extraordinary writs against first level Court by petition for review on certiorari in accordance with
("inferior") courts should be filed with the Regional Trial Rule 45.
Court, and those against the latter, with the Court of Appeals.
A direct invocation of the Supreme Courts original Procedurally then, petitioners could have appealed the RTC
jurisdiction to issue these writs should be allowed only when Decision affirming the MTC (1) to this Court on questions of
there are special and important reasons therefor, clearly and law only; or (2) if there are factual questions involved, to the
specifically set out in the petition. This is [an] established CA -- as they in fact did. Unfortunately for petitioners, the
policy. It is a policy necessary to prevent inordinate demands CA properly dismissed their petition for review because of
upon the Courts time and attention which are better devoted serious procedural defects. This action foreclosed their only
to those matters within its exclusive jurisdiction, and to available avenue for the review of the factual findings of the
prevent further over-crowding of the Courts docket. RTC. (Emphasis supplied.)
(Emphasis supplied.)
Thus, the Court shall exercise liberality and consider the
Similarly, there are no special and important reasons that instant petition as one filed under Rule 45. In Artistica
petitioners cite to justify their direct recourse to this Court Ceramica, Inc. v. Ciudad Del Carmen Homeowners
under Rule 65. Association, Inc.,14 citing Republic v. Court of Appeals,15 the
@lendelacruz 30

Court noted that it has the discretion to determine whether a VELASCO, JR., J.:
petition was filed under Rule 45 or 65 of the Rules of Court:
The Case
Admittedly, this Court, in accordance with the liberal spirit
pervading the Rules of Court and in the interest of justice, has This is an original action for Injunction to restrain and/or
the discretion to treat a petition for certiorari as having been prevent the implementation of Resolution Nos. 46 and 59,
filed under Rule 45, especially if filed within the dated July 10, 2003 and September 3, 2003, respectively,
reglementary period for filing a petition for review.lawphi1 otherwise known as the National Electrification
Administration (NEA) Termination Pay Plan, issued by
Nevertheless, even providing that the petition was not filed respondent NEA Board of Administrators (NEA Board).
prematurely, it must still be dismissed for having become
moot and academic. The Facts

In Gunsi, Sr. v. Commissioners, The Commission on Petitioners are former employees of NEA who were
Elections,16 the Court defined a moot and academic case as terminated from their employment with the implementation
follows: of the assailed resolutions.

A moot and academic case is one that ceases to present a Respondent NEA is a government-owned and/or controlled
justiciable controversy by virtue of supervening events, so corporation created in accordance with Presidential Decree
that a declaration thereon would be of no practical value. As No. (PD) 269 issued on August 6, 1973. Under PD 269, Section
a rule, courts decline jurisdiction over such case, or dismiss it 5(a)(5), the NEA Board is empowered to organize or
on ground of mootness. reorganize NEAs staffing structure, as follows:

With the conduct of the 2010 barangay elections, a Section 5. National Electrification Administration; Board of
supervening event has transpired that has rendered this case Administrators; Administrator.
moot and academic and subject to dismissal. This is because,
as stated in Fernandez v. Commission on Elections,17
(a) For the purpose of administering the provisions of this
"whatever judgment is reached, the same can no longer have
Decree, there is hereby established a public corporation to be
any practical legal effect or, in the nature of things, can no
known as the National Electrification Administration. All of
longer be enforced." Mendozas term of office has expired
the powers of the corporation shall be vested in and exercised
with the conduct of last years local elections. As such, Special
by a Board of Administrators, which shall be composed of a
Civil Action No. 08-10, where the assailed Orders were
Chairman and four (4) members, one of whom shall be the
issued, can no longer prosper. Mendoza no longer has any
Administrator as ex-officio member. The Chairman and the
legal standing to further pursue the case, rendering the
three other members shall be appointed by the President of
instant petition moot and academic.
the Philippines to serve for a term of six years. x x x

WHEREFORE, the Petition is DENIED.


xxxx

SO ORDERED.
The Board shall, without limiting the generality of the
foregoing, have the following specific powers and duties.
Republic of the Philippines
SUPREME COURT
1. To implement the provisions and purposes of this Decree;
Manila

xxxx
EN BANC

5. To establish policies and guidelines for employment on the


G.R. No. 187107 January 31, 2012
basis of merit, technical competence and moral character,
and, upon the recommendation of the Administrator to
UNITED CLAIMANTS ASSOCIATION OF NEA organize or reorganize NEAs staffing structure, to fix the
(UNICAN), represented by its representative salaries of personnel and to define their powers and duties.
BIENVENIDO R. LEAL, in his official capacity as its (Emphasis supplied.)
President and in his own individual capacity, EDUARDO
R. LACSON, ORENCIO F. VENIDA, JR., THELMA V.
OGENA, BOBBY M. CARANTO, MARILOU B. DE Thereafter, in order to enhance and accelerate the
JESUS, EDNA G. RAA, and ZENAIDA P. OLIQUINO, electrification of the whole country, including the
in their own capacities and in behalf of all those similarly privatization of the National Power Corporation, Republic
situated officials and employees of the National Act No. (RA) 9136, otherwise known as the Electric Power
Electrification Administration, Petitioners, Industry Reform Act of 2001 (EPIRA Law), was enacted,
vs. taking effect on June 26, 2001. The law imposed upon NEA
NATIONAL ELECTRIFICATION ADMINISTRATION additional mandates in relation to the promotion of the role
(NEA), NEA BOARD OF ADMINISTRATORS (NEA of rural electric cooperatives to achieve national
BOARD), ANGELO T. REYES as Chairman of the NEA electrification. Correlatively, Sec. 3 of the law provides:
Board of Administrators, EDITHA S. BUENO, Ex-Officio
Member and NEA Administrator, and WILFRED L. Section 3. Scope. - This Act shall provide a framework for the
BILLENA, JOSPEPH D. KHONGHUN, and FR. JOSE restructuring of the electric power industry, including the
VICTOR E. LOBRIGO, Members, NEA Board, privatization of the assets of NPC, the transition to the
Respondents. desired competitive structure, and the definition of the
responsibilities of the various government agencies and
DECISION private entities. (Emphasis supplied.)
@lendelacruz 31

Sec. 77 of RA 9136 also provides: 2. Injunction is improper in this case given that the
assailed resolutions of the NEA Board have long
Section 77. Implementing Rules and Regulations. - The DOE been implemented; and
shall, in consultation with the electric power industry
participants and end-users, promulgate the Implementing 3. The assailed NEA Board resolutions were issued
Rules and Regulations (IRR) of this Act within six (6) months in good faith.
from the effectivity of this Act, subject to the approval by the
Power Commission. The Courts Ruling

Thus, the Rules and Regulations to implement RA 9136 were This petition must be dismissed.
issued on February 27, 2002. Under Sec. 3(b)(ii), Rule 33 of the
Rules and Regulations, all the NEA employees and officers
The procedural issues raised by respondents shall first be
are considered terminated and the 965 plantilla positions of
discussed.
NEA vacant, to wit:

This Court Has Jurisdiction over the Case


Section 3. Separation and Other Benefits.

Respondents essentially argue that petitioners violated the


(a) x x x
principle of hierarchy of courts, pursuant to which the instant
petition should have been filed with the Regional Trial Court
(b) The following shall govern the application of Section 3(a) first rather than with this Court directly.
of this Rule:
We explained the principle of hierarchy of courts in Mendoza
xxxx v. Villas,1 stating:

(ii) With respect to NEA officials and employees, they shall In Chamber of Real Estate and Builders Associations, Inc.
be considered legally terminated and shall be entitled to the (CREBA) v. Secretary of Agrarian Reform, a petition for
benefits or separation pay provided in Section 3(a) herein certiorari filed under Rule 65 was dismissed for having been
when a restructuring of NEA is implemented pursuant to a filed directly with the Court, violating the principle of
law enacted by Congress or pursuant to Section 5(a)(5) of hierarchy of courts, to wit:
Presidential Decree No. 269. (Emphasis supplied.)
Primarily, although this Court, the Court of Appeals and the
Meanwhile, on August 28, 2002, former President Gloria Regional Trial Courts have concurrent jurisdiction to issue
Macapagal- Arroyo issued Executive Order No. 119 directing writs of certiorari, prohibition, mandamus, quo warranto,
the NEA Board to submit a reorganization plan. Thus, the habeas corpus and injunction, such concurrence does not
NEA Board issued the assailed resolutions. give the petitioner unrestricted freedom of choice of court
forum. In Heirs of Bertuldo Hinog v. Melicor, citing People
On September 17, 2003, the Department of Budget and v. Cuaresma, this Court made the following
Management approved the NEA Termination Pay Plan. pronouncements:

Thereafter, the NEA implemented an early retirement This Courts original jurisdiction to issue writs of certiorari is
program denominated as the "Early Leavers Program," not exclusive. It is shared by this Court with Regional Trial
giving incentives to those who availed of it and left NEA Courts and with the Court of Appeals. This concurrence of
before the effectivity of the reorganization plan. The other jurisdiction is not, however, to be taken as according to
employees of NEA were terminated effective December 31, parties seeking any of the writs an absolute, unrestrained
2003. freedom of choice of the court to which application therefor
will be directed. There is after all a hierarchy of courts. That
Hence, We have this petition. hierarchy is determinative of the venue of appeals, and also
serves as a general determinant of the appropriate forum for
petitions for the extraordinary writs. A becoming regard for
The Issues
that judicial hierarchy most certainly indicates that petitions
for the issuance of extraordinary writs against first level
Petitioners raise the following issues: ("inferior") courts should be filed with the Regional Trial
Court, and those against the latter, with the Court of Appeals.
1. The NEA Board has no power to terminate all the A direct invocation of the Supreme Courts original
NEA employees; jurisdiction to issue these writs should be allowed only when
there are special and important reasons therefor, clearly and
2. Executive Order No. 119 did not grant the NEA specifically set out in the petition. This is [an] established
Board the power to terminate all NEA employees; policy. It is a policy necessary to prevent inordinate demands
and upon the Courts time and attention which are better devoted
to those matters within its exclusive jurisdiction, and to
prevent further over-crowding of the Courts docket.
3. Resolution Nos. 46 and 59 were carried out in bad
(Emphasis supplied.)
faith.

Evidently, the instant petition should have been filed with


On the other hand, respondents argue in their Comment
the RTC. However, as an exception to this general rule, the
dated August 20, 2009 that:
principle of hierarchy of courts may be set aside for special
and important reasons. Such reason exists in the instant case
1. The Court has no jurisdiction over the petition; involving as it does the employment of the entire plantilla of
NEA, more than 700 employees all told, who were effectively
@lendelacruz 32

dismissed from employment in one swift stroke. This to the Under Rule 33, Section 3(b)(ii) of the Implementing Rules and
mind of the Court entails its attention. Regulations of the EPIRA Law, all NEA employees shall be
considered legally terminated with the implementation of a
Moreover, the Court has made a similar ruling in National reorganization program pursuant to a law enacted by
Power Corporation Drivers and Mechanics Association Congress or pursuant to Sec. 5(a)(5) of PD 269 through which
(NPC-DAMA) v. National Power Corporation (NPC).2 In the reorganization was carried out, viz:
that case, the NPC-DAMA also filed a petition for injunction
directly with this Court assailing NPC Board Resolution Nos. Section 5. National Electrification Administration; Board of
2002-124 and 2002-125, both dated November 18, 2002, Administrators; Administrator.
directing the termination of all employees of the NPC on
January 31, 2003. Despite such apparent disregard of the (a) For the purpose of administering the provisions of this
principle of hierarchy of courts, the petition was given due Decree, there is hereby established a public corporation to be
course. We perceive no compelling reason to treat the instant known as the National Electrification Administration. x x x
case differently.
xxxx
The Remedy of Injunction Is still Available
The Board shall, without limiting the generality of the
Respondents allege that the remedy of injunction is no longer foregoing, have the following specific powers and duties.
available to petitioners inasmuch as the assailed NEA Board
resolutions have long been implemented.
xxxx

Taking respondents above posture as an argument on the


5. To establish policies and guidelines for employment on the
untenability of the petition on the ground of mootness,
basis of merit, technical competence and moral character,
petitioners contend that the principle of mootness is subject
and, upon the recommendation of the Administrator to
to exceptions, such as when the case is of transcendental
organize or reorganize NEAs staffing structure, to fix the
importance.
salaries of personnel and to define their powers and duties.
(Emphasis supplied.)
In Funa v. Executive Secretary,3 the Court passed upon the
seeming moot issue of the appointment of Maria Elena H.
Thus, petitioners argue that the power granted unto the NEA
Bautista (Bautista) as Officer-in-Charge (OIC) of the
Board to organize or reorganize does not include the power
Maritime Industry Authority (MARINA) while concurrently
to terminate employees but only to reduce NEAs manpower
serving as Undersecretary of the Department of
complement.
Transportation and Communications. There, even though
Bautista later on was appointed as Administrator of
MARINA, the Court ruled that the case was an exception to Such contention is erroneous.
the principle of mootness and that the remedy of injunction
was still available, explaining thus: In Betoy v. The Board of Directors, National Power
Corporation,4 the Court upheld the dismissal of all the
A moot and academic case is one that ceases to present a employees of the NPC pursuant to the EPIRA Law. In ruling
justiciable controversy by virtue of supervening events, so that the power of reorganization includes the power of
that a declaration thereon would be of no practical use or removal, the Court explained:
value. Generally, courts decline jurisdiction over such case or
dismiss it on ground of mootness. However, as we held in [R]eorganization involves the reduction of personnel,
Public Interest Center, Inc. v. Elma, supervening events, consolidation of offices, or abolition thereof by reason of
whether intended or accidental, cannot prevent the Court economy or redundancy of functions. It could result in the
from rendering a decision if there is a grave violation of the loss of ones position through removal or abolition of an
Constitution. Even in cases where supervening events had office. However, for a reorganization for the purpose of
made the cases moot, this Court did not hesitate to resolve economy or to make the bureaucracy more efficient to be
the legal or constitutional issues raised to formulate valid, it must pass the test of good faith; otherwise, it is void
controlling principles to guide the bench, bar, and public. ab initio. (Emphasis supplied.)

As a rule, the writ of prohibition will not lie to enjoin acts Evidently, the termination of all the employees of NEA was
already done. However, as an exception to the rule on within the NEA Boards powers and may not successfully be
mootness, courts will decide a question otherwise moot if it impugned absent proof of bad faith.
is capable of repetition yet evading review. (Emphasis
supplied.) Petitioners Failed to Prove that the NEA Board Acted in Bad
Faith
Similarly, in the instant case, while the assailed resolutions of
the NEA Board may have long been implemented, such acts Next, petitioners challenge the reorganization claiming bad
of the NEA Board may well be repeated by other government faith on the part of the NEA Board.
agencies in the reorganization of their offices. Petitioners
have not lost their remedy of injunction.
Congress itself laid down the indicators of bad faith in the
reorganization of government offices in Sec. 2 of RA 6656, an
The Power to Reorganize Includes the Power to Terminate Act to Protect the Security of Tenure of Civil Service Officers
and Employees in the Implementation of Government
The meat of the controversy in the instant case is the issue of Reorganization, to wit:
whether the NEA Board had the power to pass Resolution
Nos. 46 and 59 terminating all of its employees. Section 2. No officer or employee in the career service shall
be removed except for a valid cause and after due notice and
This must be answered in the affirmative. hearing. A valid cause for removal exists when, pursuant to
@lendelacruz 33

a bona fide reorganization, a position has been abolished or and rate fixing functions as these were all abolished by
rendered redundant or there is a need to merge, divide, or Congress (2) the creation of new positions that pertain to the
consolidate positions in order to meet the exigencies of the additional mandates of the EPIRA Law and (3) maintaining
service, or other lawful causes allowed by the Civil Service the old positions that were not affected by the EPIRA Law.
Law. The existence of any or some of the following
circumstances may be considered as evidence of bad faith in The Court already had the occasion to pass upon the validity
the removals made as a result of reorganization, giving rise of the similar reorganization in the NPC. In the aforecited
to a claim for reinstatement or reappointment by an case of Betoy,7 the Court upheld the policy of the Executive
aggrieved party: to terminate all the employees of the office before rehiring
those necessary for its operation. We ruled in Betoy that such
(a) Where there is a significant increase in the policy is not tainted with bad faith:
number of positions in the new staffing pattern of
the department or agency concerned; It is undisputed that NPC was in financial distress and the
solution found by Congress was to pursue a policy towards
(b) Where an office is abolished and other its privatization. The privatization of NPC necessarily
performing substantially the same functions is demanded the restructuring of its operations. To carry out
created; the purpose, there was a need to terminate employees and re-
hire some depending on the manpower requirements of the
(c) Where incumbents are replaced by those less privatized companies. The privatization and restructuring of
qualified in terms of status of appointment, the NPC was, therefore, done in good faith as its primary
performance and merit; purpose was for economy and to make the bureaucracy more
efficient. (Emphasis supplied.)
(d) Where there is a reclassification of offices in the
department or agency concerned and the Evidently, the fact that the NEA Board resorted to
reclassified offices perform substantially the same terminating all the incumbent employees of NPC and, later
function as the original offices; on, rehiring some of them, cannot, on that ground alone,
vitiate the bona fides of the reorganization.
(e) Where the removal violates the order of
separation provided in Section 3 hereof. (Emphasis WHEREFORE, the instant petition is hereby DISMISSED.
supplied.) Resolution Nos. 46 and 59, dated July 10, 2003 and September
3, 2003, respectively, issued by the NEA Board of Directors
are hereby UPHELD.
It must be noted that the burden of proving bad faith rests on
the one alleging it. As the Court ruled in Culili v. Eastern
Telecommunications, Inc.,5 "According to jurisprudence, No costs.
basic is the principle that good faith is presumed and he who
alleges bad faith has the duty to prove the same. " Moreover, SO ORDERED.
in Spouses Palada v. Solidbank Corporation,6 the Court
stated, "Allegations of bad faith and fraud must be proved by Republic of the Philippines
clear and convincing evidence." SUPREME COURT
Manila
Here, petitioners have failed to discharge such burden of
proof. SECOND DIVISION

In alleging bad faith, petitioners cite RA 6656, particularly its G.R. No. 190710 June 6, 2011
Sec. 2, subparagraphs (b) and (c).1wphi1 Petitioners have the
burden to show that: (1) the abolished offices were replaced
JESSE U. LUCAS, Petitioner,
by substantially the same units performing the same
vs.
functions; and (2) incumbents are replaced by less qualified
JESUS S. LUCAS, Respondent.
personnel.

DECISION
Petitioners failed to prove such facts. Mere allegations
without hard evidence cannot be considered as clear and
convincing proof. NACHURA, J.:

Next, petitioners state that the NEA Board should not have Is a prima facie showing necessary before a court can issue a
abolished all the offices of NEA and instead made a selective DNA testing order? In this petition for review on certiorari,
termination of its employees while retaining the other we address this question to guide the Bench and the Bar in
employees. dealing with a relatively new evidentiary tool. Assailed in
this petition are the Court of Appeals (CA) Decision1 dated
September 25, 2009 and Resolution dated December 17, 2009.
Petitioners argue that for the reorganization to be valid, it is
necessary to only abolish the offices or terminate the
employees that would not be retained and the retention of The antecedents of the case are, as follows:
the employees that were tasked to carry out the continuing
mandate of NEA. Petitioners argue in their Memorandum On July 26, 2007, petitioner, Jesse U. Lucas, filed a Petition to
dated July 27, 2010: Establish Illegitimate Filiation (with Motion for the
Submission of Parties to DNA Testing)2 before the Regional
A valid reorganization, pursued in good faith, would have Trial Court (RTC), Branch 72, Valenzuela City. Petitioner
resulted to: (1) the abolition of old positions in the NEAs narrated that, sometime in 1967, his mother, Elsie Uy (Elsie),
table of organization that pertain to the granting of franchises migrated to Manila from Davao and stayed with a certain
"Ate Belen (Belen)" who worked in a prominent nightspot in
@lendelacruz 34

Manila. Elsie would oftentimes accompany Belen to work. On July 30, 2008, the RTC, acting on respondents motion for
On one occasion, Elsie got acquainted with respondent, Jesus reconsideration, issued an Order6 dismissing the case. The
S. Lucas, at Belens workplace, and an intimate relationship court remarked that, based on the case of Herrera v. Alba, 7
developed between the two. Elsie eventually got pregnant there are four significant procedural aspects of a traditional
and, on March 11, 1969, she gave birth to petitioner, Jesse U. paternity action which the parties have to face: a prima facie
Lucas. The name of petitioners father was not stated in case, affirmative defenses, presumption of legitimacy, and
petitioners certificate of live birth. However, Elsie later on physical resemblance between the putative father and the
told petitioner that his father is respondent. On August 1, child. The court opined that petitioner must first establish
1969, petitioner was baptized at San Isidro Parish, Taft these four procedural aspects before he can present evidence
Avenue, Pasay City. Respondent allegedly extended of paternity and filiation, which may include incriminating
financial support to Elsie and petitioner for a period of about acts or scientific evidence like blood group test and DNA test
two years. When the relationship of Elsie and respondent results. The court observed that the petition did not show
ended, Elsie refused to accept respondents offer of support that these procedural aspects were present. Petitioner failed
and decided to raise petitioner on her own. While petitioner to establish a prima facie case considering that (a) his mother
was growing up, Elsie made several attempts to introduce did not personally declare that she had sexual relations with
petitioner to respondent, but all attempts were in vain. respondent, and petitioners statement as to what his mother
told him about his father was clearly hearsay; (b) the
Attached to the petition were the following: (a) petitioners certificate of live birth was not signed by respondent; and (c)
certificate of live birth; (b) petitioners baptismal certificate; although petitioner used the surname of respondent, there
(c) petitioners college diploma, showing that he graduated was no allegation that he was treated as the child of
from Saint Louis University in Baguio City with a degree in respondent by the latter or his family. The court opined that,
Psychology; (d) his Certificate of Graduation from the same having failed to establish a prima facie case, respondent had
school; (e) Certificate of Recognition from the University of no obligation to present any affirmative defenses. The
the Philippines, College of Music; and (f) clippings of several dispositive portion of the said Order therefore reads:
articles from different newspapers about petitioner, as a
musical prodigy. WHEREFORE, for failure of the petitioner to establish
compliance with the four procedural aspects of a traditional
Respondent was not served with a copy of the petition. paternity action in his petition, his motion for the submission
Nonetheless, respondent learned of the petition to establish of parties to DNA testing to establish paternity and filiation
filiation. His counsel therefore went to the trial court on is hereby denied. This case is DISMISSED without prejudice.
August 29, 2007 and obtained a copy of the petition.
SO ORDERED.8
Petitioner filed with the RTC a Very Urgent Motion to Try
and Hear the Case. Hence, on September 3, 2007, the RTC, Petitioner seasonably filed a motion for reconsideration to
finding the petition to be sufficient in form and substance, the Order dated July 30, 2008, which the RTC resolved in his
issued the Order3 setting the case for hearing and urging favor. Thus, on October 20, 2008, it issued the Order9 setting
anyone who has any objection to the petition to file his aside the courts previous order, thus:
opposition. The court also directed that the Order be
published once a week for three consecutive weeks in any WHEREFORE, in view of the foregoing, the Order dated July
newspaper of general circulation in the Philippines, and that 30, 2008 is hereby reconsidered and set aside.
the Solicitor General be furnished with copies of the Order
and the petition in order that he may appear and represent
Let the Petition (with Motion for the Submission of Parties to
the State in the case.
DNA Testing) be set for hearing on January 22, 2009 at 8:30
in the morning.
On September 4, 2007, unaware of the issuance of the
September 3, 2007 Order, respondent filed a Special
xxxx
Appearance and Comment. He manifested inter alia that: (1)
he did not receive the summons and a copy of the petition;
(2) the petition was adversarial in nature and therefore SO ORDERED.10
summons should be served on him as respondent; (3) should
the court agree that summons was required, he was waiving This time, the RTC held that the ruling on the grounds relied
service of summons and making a voluntary appearance; and upon by petitioner for filing the petition is premature
(4) notice by publication of the petition and the hearing was considering that a full-blown trial has not yet taken place.
improper because of the confidentiality of the subject matter.4 The court stressed that the petition was sufficient in form and
substance. It was verified, it included a certification against
On September 14, 2007, respondent also filed a Manifestation forum shopping, and it contained a plain, concise, and direct
and Comment on Petitioners Very Urgent Motion to Try and statement of the ultimate facts on which petitioner relies on
Hear the Case. Respondent reiterated that the petition for for his claim, in accordance with Section 1, Rule 8 of the Rules
recognition is adversarial in nature; hence, he should be of Court. The court remarked that the allegation that the
served with summons. statements in the petition were not of petitioners personal
knowledge is a matter of evidence. The court also dismissed
respondents arguments that there is no basis for the taking
After learning of the September 3, 2007 Order, respondent
of DNA test, and that jurisprudence is still unsettled on the
filed a motion for reconsideration.5 Respondent averred that
acceptability of DNA evidence. It noted that the new Rule on
the petition was not in due form and substance because
DNA Evidence11 allows the conduct of DNA testing, whether
petitioner could not have personally known the matters that
at the courts instance or upon application of any person who
were alleged therein. He argued that DNA testing cannot be
has legal interest in the matter in litigation.
had on the basis of a mere allegation pointing to respondent
as petitioners father. Moreover, jurisprudence is still
unsettled on the acceptability of DNA evidence. Respondent filed a Motion for Reconsideration of Order
dated October 20, 2008 and for Dismissal of Petition,12
reiterating that (a) the petition was not in due form and
@lendelacruz 35

substance as no defendant was named in the title, and all the DNA test for compulsory recognition case opens wide the
basic allegations were hearsay; and (b) there was no prima opportunities for extortionist to prey on victims who have no
facie case, which made the petition susceptible to dismissal. stomach for scandal.15

The RTC denied the motion in the Order dated January 19, Petitioner moved for reconsideration. On December 17, 2009,
2009, and rescheduled the hearing.13 the CA denied the motion for lack of merit.16

Aggrieved, respondent filed a petition for certiorari with the In this petition for review on certiorari, petitioner raises the
CA, questioning the Orders dated October 20, 2008 and following issues:
January 19, 2009.
I.
On September 25, 2009, the CA decided the petition for
certiorari in favor of respondent, thus: WHETHER OR NOT THE COURT OF APPEALS
ERRED WHEN IT RESOLVED THE ISSUE OF
WHEREFORE, the instant petition for certiorari is hereby LACK OF JURISDICTION OVER THE PERSON OF
GRANTED for being meritorious. The assailed Orders dated HEREIN RESPONDENT ALBEIT THE SAME WAS
October 20, 2008 and January 19, 2009 both issued by the NEVER RAISED IN THE PETITION FOR
Regional Trial Court, Branch 172 of Valenzuela City in SP. CERTIORARI.
Proceeding Case No. 30-V-07 are REVERSED and SET
ASIDE. Accordingly, the case docketed as SP. Proceeding I.A
Case No. 30-V-07 is DISMISSED.14
WHETHER OR NOT THE COURT OF
The CA held that the RTC did not acquire jurisdiction over APPEALS ERRED WHEN IT RULED
the person of respondent, as no summons had been served THAT JURISDICTION WAS NOT
on him. Respondents special appearance could not be ACQUIRED OVER THE PERSON OF THE
considered as voluntary appearance because it was filed only RESPONDENT.
for the purpose of questioning the jurisdiction of the court
over respondent. Although respondent likewise questioned
I.B
the courts jurisdiction over the subject matter of the petition,
the same is not equivalent to a waiver of his right to object to
the jurisdiction of the court over his person. WHETHER OR NOT THE COURT OF
APPEALS ERRED WHEN IT FAILED TO
REALIZE THAT THE RESPONDENT
The CA remarked that petitioner filed the petition to
HAD ALREADY SUBMITTED
establish illegitimate filiation, specifically seeking a DNA
VOLUNTARILY TO THE JURISDICTION
testing order to abbreviate the proceedings. It noted that
OF THE COURT A QUO.
petitioner failed to show that the four significant procedural
aspects of a traditional paternity action had been met. The CA
further held that a DNA testing should not be allowed when I.C
the petitioner has failed to establish a prima facie case, thus:
WHETHER OR NOT THE COURT OF
While the tenor [of Section 4, Rule on DNA Evidence] APPEALS ERRED WHEN IT
appears to be absolute, the rule could not really have been ESSENTIALLY RULED THAT THE TITLE
intended to trample on the substantive rights of the parties. OF A PLEADING, RATHER THAN ITS
It could have not meant to be an instrument to promote BODY, IS CONTROLLING.
disorder, harassment, or extortion. It could have not been
intended to legalize unwarranted expedition to fish for II.
evidence. Such will be the situation in this particular case if a
court may at any time order the taking of a DNA test. If the WHETHER OR NOT THE COURT OF APPEALS
DNA test in compulsory recognition cases is immediately ERRED WHEN IT ORDERED THE DISMISSAL OF
available to the petitioner/complainant without requiring THE PETITION BY REASON OF THE MOTION
first the presentation of corroborative proof, then a dire and (FILED BY THE PETITIONER BEFORE THE
absurd rule would result. Such will encourage and promote COURT A QUO) FOR THE CONDUCT OF DNA
harassment and extortion. TESTING.

xxxx II.A

At the risk of being repetitious, the Court would like to stress WHETHER OR NOT THE COURT OF APPEALS
that it sees the danger of allowing an absolute DNA testing ERRED WHEN IT ESSENTIALLY RULED THAT
to a compulsory recognition test even if the DNA TESTING CAN ONLY BE ORDERED AFTER
plaintiff/petitioner failed to establish prima facie proof. x x x THE PETITIONER ESTABLISHES PRIMA FACIE
If at anytime, motu proprio and without pre-conditions, the PROOF OF FILIATION.
court can indeed order the taking of DNA test in compulsory
recognition cases, then the prominent and well-to-do
III.
members of our society will be easy prey for opportunists
and extortionists. For no cause at all, or even for [sic] casual
sexual indiscretions in their younger years could be used as WHETHER OR NOT THE COURT OF APPEALS
a means to harass them. Unscrupulous women, unsure of the ERRED WITH ITS MISPLACED RELIANCE ON
paternity of their children may just be taking the chances-just THE CASE OF HERRERA VS. ALBA,
in case-by pointing to a sexual partner in a long past one-time
encounter. Indeed an absolute and unconditional taking of
@lendelacruz 36

ESPECIALLY AS REGARDS THE FOUR extraordinary remedy of certiorari on the denial of the
SIGNIFICANT PROCEDURAL ASPECTS OF A motion to dismiss but only when it has been tainted with
TRADITIONAL PATERNITY ACTION.17 grave abuse of discretion amounting to lack or excess of
jurisdiction.21 In the present case, we discern no grave abuse
Petitioner contends that respondent never raised as issue in of discretion on the part of the trial court in denying the
his petition for certiorari the courts lack of jurisdiction over motion to dismiss.
his person. Hence, the CA had no legal basis to discuss the
same, because issues not raised are deemed waived or The grounds for dismissal relied upon by respondent were
abandoned. At any rate, respondent had already voluntarily (a) the courts lack of jurisdiction over his person due to the
submitted to the jurisdiction of the trial court by his filing of absence of summons, and (b) defect in the form and
several motions asking for affirmative relief, such as the (a) substance of the petition to establish illegitimate filiation,
Motion for Reconsideration of the Order dated September 3, which is equivalent to failure to state a cause of action.
2007; (b) Ex Parte Motion to Resolve Motion for
Reconsideration of the Order dated November 6, 2007; and We need not belabor the issues on whether lack of
(c) Motion for Reconsideration of the Order dated October 20, jurisdiction was raised before the CA, whether the court
2008 and for Dismissal of Petition. Petitioner points out that acquired jurisdiction over the person of respondent, or
respondent even expressly admitted that he has waived his whether respondent waived his right to the service of
right to summons in his Manifestation and Comment on summons. We find that the primordial issue here is actually
Petitioners Very Urgent Motion to Try and Hear the Case. whether it was necessary, in the first place, to serve summons
Hence, the issue is already moot and academic. on respondent for the court to acquire jurisdiction over the
case. In other words, was the service of summons
Petitioner argues that the case was adversarial in nature. jurisdictional? The answer to this question depends on the
Although the caption of the petition does not state nature of petitioners action, that is, whether it is an action in
respondents name, the body of the petition clearly indicates personam, in rem, or quasi in rem.
his name and his known address. He maintains that the body
of the petition is controlling and not the caption. An action in personam is lodged against a person based on
personal liability; an action in rem is directed against the
Finally, petitioner asserts that the motion for DNA testing thing itself instead of the person; while an action quasi in rem
should not be a reason for the dismissal of the petition since names a person as defendant, but its object is to subject that
it is not a legal ground for the dismissal of cases. If the CA person's interest in a property to a corresponding lien or
entertained any doubt as to the propriety of DNA testing, it obligation. A petition directed against the "thing" itself or the
should have simply denied the motion.18 Petitioner points res, which concerns the status of a person, like a petition for
out that Section 4 of the Rule on DNA Evidence does not adoption, annulment of marriage, or correction of entries in
require that there must be a prior proof of filiation before the birth certificate, is an action in rem.22
DNA testing can be ordered. He adds that the CA
erroneously relied on the four significant procedural aspects In an action in personam, jurisdiction over the person of the
of a paternity case, as enunciated in Herrera v. Alba.19 defendant is necessary for the court to validly try and decide
Petitioner avers that these procedural aspects are not the case. In a proceeding in rem or quasi in rem, jurisdiction
applicable at this point of the proceedings because they are over the person of the defendant is not a prerequisite to
matters of evidence that should be taken up during the trial.20 confer jurisdiction on the court, provided that the latter has
jurisdiction over the res. Jurisdiction over the res is acquired
In his Comment, respondent supports the CAs ruling on either (a) by the seizure of the property under legal process,
most issues raised in the petition for certiorari and merely whereby it is brought into actual custody of the law, or (b) as
reiterates his previous arguments. However, on the issue of a result of the institution of legal proceedings, in which the
lack of jurisdiction, respondent counters that, contrary to power of the court is recognized and made effective. 23
petitioners assertion, he raised the issue before the CA in
relation to his claim that the petition was not in due form and The herein petition to establish illegitimate filiation is an
substance. Respondent denies that he waived his right to the action in rem. By the simple filing of the petition to establish
service of summons. He insists that the alleged waiver and illegitimate filiation before the RTC, which undoubtedly had
voluntary appearance was conditional upon a finding by the jurisdiction over the subject matter of the petition, the latter
court that summons is indeed required. He avers that the thereby acquired jurisdiction over the case. An in rem
assertion of affirmative defenses, aside from lack of proceeding is validated essentially through publication.
jurisdiction over the person of the defendant, cannot be Publication is notice to the whole world that the proceeding
considered as waiver of the defense of lack of jurisdiction has for its object to bar indefinitely all who might be minded
over such person. to make an objection of any sort to the right sought to be
established.24 Through publication, all interested parties are
The petition is meritorious. deemed notified of the petition.

Primarily, we emphasize that the assailed Orders of the trial If at all, service of summons or notice is made to the
court were orders denying respondents motion to dismiss defendant, it is not for the purpose of vesting the court with
the petition for illegitimate filiation. An order denying a jurisdiction, but merely for satisfying the due process
motion to dismiss is an interlocutory order which neither requirements.25 This is but proper in order to afford the
terminates nor finally disposes of a case, as it leaves person concerned the opportunity to protect his interest if he
something to be done by the court before the case is finally so chooses.26 Hence, failure to serve summons will not
decided on the merits. As such, the general rule is that the deprive the court of its jurisdiction to try and decide the case.
denial of a motion to dismiss cannot be questioned in a In such a case, the lack of summons may be excused where it
special civil action for certiorari, which is a remedy designed is determined that the adverse party had, in fact, the
to correct errors of jurisdiction and not errors of judgment. opportunity to file his opposition, as in this case. We find that
Neither can a denial of a motion to dismiss be the subject of the due process requirement with respect to respondent has
an appeal unless and until a final judgment or order is been satisfied, considering that he has participated in the
rendered. In a number of cases, the court has granted the
@lendelacruz 37

proceedings in this case and he has the opportunity to file his Clearly then, it was also not the opportune time to discuss the
opposition to the petition to establish filiation. lack of a prima facie case vis--vis the motion for DNA testing
since no evidence has, as yet, been presented by petitioner.
To address respondents contention that the petition should More essentially, it is premature to discuss whether, under
have been adversarial in form, we further hold that the herein the circumstances, a DNA testing order is warranted
petition to establish filiation was sufficient in form. It was considering that no such order has yet been issued by the trial
indeed adversarial in nature despite its caption which lacked court. In fact, the latter has just set the said case for hearing.
the name of a defendant, the failure to implead respondent
as defendant, and the non-service of summons upon At any rate, the CAs view that it would be dangerous to
respondent. A proceeding is adversarial where the party allow a DNA testing without corroborative proof is well
seeking relief has given legal warning to the other party and taken and deserves the Courts attention. In light of this
afforded the latter an opportunity to contest it.27 In this observation, we find that there is a need to supplement the
petitionclassified as an action in remthe notice Rule on DNA Evidence to aid the courts in resolving motions
requirement for an adversarial proceeding was likewise for DNA testing order, particularly in paternity and other
satisfied by the publication of the petition and the giving of filiation cases. We, thus, address the question of whether a
notice to the Solicitor General, as directed by the trial court. prima facie showing is necessary before a court can issue a
DNA testing order.
The petition to establish filiation is sufficient in substance. It
satisfies Section 1, Rule 8 of the Rules of Court, which The Rule on DNA Evidence was enacted to guide the Bench
requires the complaint to contain a plain, concise, and direct and the Bar for the introduction and use of DNA evidence in
statement of the ultimate facts upon which the plaintiff bases the judicial system. It provides the "prescribed parameters on
his claim. A fact is essential if it cannot be stricken out the requisite elements for reliability and validity (i.e., the
without leaving the statement of the cause of action proper procedures, protocols, necessary laboratory reports,
inadequate.28 A complaint states a cause of action when it etc.), the possible sources of error, the available objections to
contains the following elements: (1) the legal right of plaintiff, the admission of DNA test results as evidence as well as the
(2) the correlative obligation of the defendant, and (3) the act probative value of DNA evidence." It seeks "to ensure that
or omission of the defendant in violation of said legal right.29 the evidence gathered, using various methods of DNA
analysis, is utilized effectively and properly, [and] shall not
The petition sufficiently states the ultimate facts relied upon be misused and/or abused and, more importantly, shall
by petitioner to establish his filiation to respondent. continue to ensure that DNA analysis serves justice and
Respondent, however, contends that the allegations in the protects, rather than prejudice the public."35
petition were hearsay as they were not of petitioners
personal knowledge. Such matter is clearly a matter of Not surprisingly, Section 4 of the Rule on DNA Evidence
evidence that cannot be determined at this point but only merely provides for conditions that are aimed to safeguard
during the trial when petitioner presents his evidence. the accuracy and integrity of the DNA testing. Section 4
states:
In a motion to dismiss a complaint based on lack of cause of
action, the question submitted to the court for determination SEC. 4. Application for DNA Testing Order. The appropriate
is the sufficiency of the allegations made in the complaint to court may, at any time, either motu proprio or on application
constitute a cause of action and not whether those allegations of any person who has a legal interest in the matter in
of fact are true, for said motion must hypothetically admit the litigation, order a DNA testing. Such order shall issue after
truth of the facts alleged in the complaint.30 due hearing and notice to the parties upon a showing of the
following:
The inquiry is confined to the four corners of the complaint,
and no other.31 The test of the sufficiency of the facts alleged (a) A biological sample exists that is relevant to the
in the complaint is whether or not, admitting the facts case;
alleged, the court could render a valid judgment upon the
same in accordance with the prayer of the complaint.32 (b) The biological sample: (i) was not previously
subjected to the type of DNA testing now requested;
If the allegations of the complaint are sufficient in form and or (ii) was previously subjected to DNA testing, but
substance but their veracity and correctness are assailed, it is the results may require confirmation for good
incumbent upon the court to deny the motion to dismiss and reasons;
require the defendant to answer and go to trial to prove his
defense. The veracity of the assertions of the parties can be (c) The DNA testing uses a scientifically valid
ascertained at the trial of the case on the merits.33 technique;

The statement in Herrera v. Alba34 that there are four (d) The DNA testing has the scientific potential to
significant procedural aspects in a traditional paternity case produce new information that is relevant to the
which parties have to face has been widely misunderstood proper resolution of the case; and
and misapplied in this case. A party is confronted by these
so-called procedural aspects during trial, when the parties
(e) The existence of other factors, if any, which the
have presented their respective evidence. They are matters of
court may consider as potentially affecting the
evidence that cannot be determined at this initial stage of the
accuracy or integrity of the DNA testing.
proceedings, when only the petition to establish filiation has
been filed. The CAs observation that petitioner failed to
establish a prima facie casethe first procedural aspect in a This Rule shall not preclude a DNA testing, without need of
paternity caseis therefore misplaced. A prima facie case is a prior court order, at the behest of any party, including law
built by a partys evidence and not by mere allegations in the enforcement agencies, before a suit or proceeding is
initiatory pleading. commenced.
@lendelacruz 38

This does not mean, however, that a DNA testing order will MANOLITO AGRA, EDMUNDO P. AGUILAR, IMELDA
be issued as a matter of right if, during the hearing, the said I. AMERICA, EVELYN R. CONCEPCION, DIOSDADO
conditions are established. A. CORSIGA, PERCIVAL G. CRISOSTOMO, CESAR E.
FAELDON, MA. REGINA C. FILOTEO, ZARINA O.
In some states, to warrant the issuance of the DNA testing HIPOLITO, JANICE F. MABILOG, ROBERTO
MARTINEZ, JONATHAN MENDROS, NORMAN
order, there must be a show cause hearing wherein the
MIRASOL, EDRICK V. MOZO, LORENZO A.
applicant must first present sufficient evidence to establish a
PENOLIAR, LOURDES QUINTERO, GLORIA GUDELIA
prima facie case or a reasonable possibility of paternity or
SAMBO, DEMOSTHENES V. ERENO, RHONEIL
"good cause" for the holding of the test. 36 In these states, a
LIBUNAO, ILUGEN P. MABANSAG, JOSEPHINE
court order for blood testing is considered a "search," which,
MAGBOO, MADELEINE ANN B. BAUTISTA, ULYSSES
under their Constitutions (as in ours), must be preceded by a
C. BIBON, ANGELINA RAMOS, EDUARDO M.
finding of probable cause in order to be valid. Hence, the SUMAYOD, DOMINGO TAMAYO, HERACLEA M.
requirement of a prima facie case, or reasonable possibility, AFABLE, ANNA LISSA CREENCIA, CHONA O. DELA
was imposed in civil actions as a counterpart of a finding of CRUZ, MERCY NANETTE C. IBOY, JEAN A. LUPANGO,
probable cause. The Supreme Court of Louisiana eloquently MARIE DELA O. NA-OBRE, PERLA LUZ OCAMPO,
explained ROUCHELLEJANE PAYURAN, ABIGAIL E.
PORMENTO, THERESITA A. RIVERA, MILAGROS
Although a paternity action is civil, not criminal, the ROBLES, JOSEPHINE ROSILLO, ARSENIA M.
constitutional prohibition against unreasonable searches and SACDALAN, PRECILA TUBIO, IRENE H. VIRAY,
seizures is still applicable, and a proper showing of sufficient WILFREDO O. BUCSIT, BONIFACIO DAVID, ROSARIO
justification under the particular factual circumstances of the P. DIZON, EXEQUIEL EVALE, JR., RONALD M.
case must be made before a court may order a compulsory MANALO, HENRIETTA A. MARAMOT, FELICISIMO U.
blood test. Courts in various jurisdictions have differed PULA, JONAS F. SALVADOR, ERNESTO SILVANO, JR.,
regarding the kind of procedures which are required, but ENRICO G. VELGADO, FEDERICO VILLAR, JR.,
those jurisdictions have almost universally found that a ARNEL C. ABEN, ABDULMALIK BACARAMAN,
preliminary showing must be made before a court can VIRGINIA BORJA, ANTONIO CARANDANG, JR.,
constitutionally order compulsory blood testing in paternity RINA RIEL DOLINA, MANOLITO FAJARDO, ARVIN B.
cases. We agree, and find that, as a preliminary matter, before GARDUQUE, CAYETANO JUAREZ, MA. SHERYL
the court may issue an order for compulsory blood testing, LABONETE, HERCONIDA T. LAZARO, MARITESS
MARTINEZ, AURELIO L. MENDOZA, ARNEL M.
the moving party must show that there is a reasonable
NOGOT, GERARDO G. POMOY, DENCIO RAMOS,
possibility of paternity. As explained hereafter, in cases in
CORAZON TAGUDIN, ANAFEL B. TIO, AGATONA S.
which paternity is contested and a party to the action refuses
ZALATAR, MARGIE EULALIA CALMA, RENEE D.
to voluntarily undergo a blood test, a show cause hearing
MELLA, ARLIQUIN AMERICA, DEANNA B. AYSON,
must be held in which the court can determine whether there
GERALDINE J. CALICA, CHESTER FERNANDEZ,
is sufficient evidence to establish a prima facie case which LUISA I. HERNANDEZ, CYNTHIA E. LISONDRA,
warrants issuance of a court order for blood ALONA S. LLVATA, CLAIRE P. QUETUA, ROSEMARIE
testing.371avvphi1 S. QUINTOS, RUTH S. RAMIREZ, LINO VERMUDO,
JR., ROLANDO R. APOLONIO, CELIA I. ACCAD, MA.
The same condition precedent should be applied in our ALMA AYOS, PAMELA CASTILLO, ARNOLD DUPA,
jurisdiction to protect the putative father from mere LAURENCE FELICIANO, LEANDRO P. LIBRANDO,
harassment suits. Thus, during the hearing on the motion for MARILOU B. LOPEZ, AMELITA P. LUCERO,
DNA testing, the petitioner must present prima facie ESTERBELLE T. SIBALA, JONA ANDAL, ANDRES
evidence or establish a reasonable possibility of paternity. RATIO, MA. THERESA Q. MALLANO, DANILO P.
LIGUA, JOY ABOGADO, VIRGINIA C. STA. ANA,
ALBERNARD BAUTISTA, JUBANE DE PEDRO, PAUL
Notwithstanding these, it should be stressed that the
DINDO C. DELA CRUZ, ALEJO B. INCISO, SHERWIN
issuance of a DNA testing order remains discretionary upon
MAADA, JESUS T. OBIDOS, JOEL B. ARELLANO,
the court. The court may, for example, consider whether
ALFREDO CABRERA, MARY LYNN E. GELLOR, JOHN
there is absolute necessity for the DNA testing. If there is
JOSEPH M. MAGTULOY, MICHELLE MONTEMAYOR,
already preponderance of evidence to establish paternity and
RHINA ANGUE, NORBERTO BAYAGA, JR., JUSTINO
the DNA test result would only be corroborative, the court
CALVEZ, EDWIN CONCEPCION, ALAN JOSEPH IBE,
may, in its discretion, disallow a DNA testing. CESAR JACINTO, JOSERITA MADRID, IRENE
MARTIN, GINA T. QUINDO, RENATO SUBIJANO,
WHEREFORE, premises considered, the petition is NIELMA E. VERZOSA, ALL NATIONAL
GRANTED. The Court of Appeals Decision dated September ELECTRIFICATION ADMINISTRATION EMPLOYEES,
25, 2009 and Resolution dated December 17, 2009 are REPRESENTED BY REGINA FILOTEO, Petitioners,
REVERSED and SET ASIDE. The Orders dated October 20, vs.
2008 and January 19, 2009 of the Regional Trial Court of COMMISSION ON AUDIT, Respondent.
Valenzuela City are AFFIRMED.
DECISION
SO ORDERED.
LEONARDO-DE CASTRO, J.:
Republic of the Philippines
SUPREME COURT This is a special civil action via certiorari under Rule 65 in
Manila relation to Rule 64 of the 1997 Revised Rules of Civil
Procedure from the Decision1 of the Commission on Audit
EN BANC (COA) No. 2003-134 dated October 9, 2003, which denied the
grant of rice allowance to employees of the National
G.R. No. 167807 December 6, 2011 Electrification Administration (NEA) who were hired after
June 30, 1989 (petitioners) and COAs Resolution2 No. 2005-
@lendelacruz 39

010 dated February 24, 2005, which likewise denied of Administrators before the Regional Trial Court (RTC),
petitioners Motion for Reconsideration. Branch 88, Quezon City, docketed as SP. Civil Action No. Q-
99-38275, alleging violation of their right to the equal
On July 1, 1989, Republic Act No. 6758 (the Compensation protection clause under the Constitution.
and Position Classification Act of 1989) took effect, Section 12
of which provides: On December 15, 1999, the RTC rendered its Decision 4 in
their favor, disposing of the case in the following manner:
Sec. 12. Consolidation of Allowances and Compensation.
All allowances, except for representation and transportation WHEREFORE, foregoing considered, the petition is hereby
allowances; clothing and laundry allowances; subsistence GRANTED directing the respondent NEA, its Board of
allowance of marine officers and crew on board government Administrators to forthwith settle the claims of the
vessels and hospital personnel; hazard pay; allowances of petitioners and other employees similarly situated and
foreign service personnel stationed abroad; and such other extend to them the benefits and allowances to which they are
additional compensation not otherwise specified herein as entitled but which until now they have been deprived of as
may be determined by the DBM, shall be deemed included in enumerated under Section 5 of DBM CCC No. 10 and their
the standardized salary rates herein prescribed. Such other inclusion in the Provident Funds Membership, retroactive
additional compensation, whether in cash or in kind, being from the date of their appointments up to the present or until
received by incumbents only as of July 1, 1989 not integrated their separation from the service.5
into the standardized salary rates shall continue to be
authorized. At the instance of the complainants, the Branch Clerk of
Court of RTC Branch 88, Quezon City, Lily D. Labarda,
Existing additional compensation of any national issued a CERTIFICATION6 dated January 24, 2000, which
government official or employee paid from local funds of a states:
local government unit shall be absorbed into the basic salary
of said official or employee and shall be paid by the National This is to certify that the Decision dated December 16, 1999 7
Government. (Emphasis ours.) of the above-entitled case which reads the dispositive
portion:
Pursuant to its authority to implement Republic Act No. 6758
under Section 23 thereof, the Department of Budget and xxxx
Management (DBM) on October 2, 1989 issued Corporate
Compensation Circular No. 10 (DBM-CCC No. 10), otherwise
is now final and executory.
known as the "Implementing Rules and Regulations of R.A.
No. 6758." Paragraph 5.5 of DBM-CCC No. 10 reads:
This certification [is] issued upon the request of Ms. Blesilda
B. Aguilar for whatever legal purpose/s it may serve. 8
5.5 The following allowances/fringe benefits
authorized to GOCCs/GFIs pursuant to the
aforementioned issuances are not likewise to be Afterwards, the Presiding Judge of RTC Branch 88, Quezon
integrated into the basic salary and allowed to be City issued a Writ of Execution9 in SP. Civil Action No. Q-99-
continued only for incumbents of positions as of 38275 on February 22, 2000.10 Thereafter, the RTC issued a
June 30, 1989 who are authorized and actually Notice of Garnishment against the funds of NEA with
receiving said allowances/benefits as of said date, Development Bank of the Philippines (DBP) to the extent of
at the same terms and conditions prescribed in said P16,581,429.00.11
issuances[:]
NEA questioned before the Court of Appeals the Orders of
5.5.1 Rice Subsidy; the lower court, and the case was docketed as CA-G.R. SP No.
62919. On July 4, 2002, the Court of Appeals rendered a
Decision12 declaring null and void the December 11, 2000
5.5.2 Sugar Subsidy;
Resolution as well as the January 8, 2001 Order of the RTC,
and ordering the implementation of a writ of execution
5.5.3 Death Benefits other than those against the funds of NEA. Thus, NEA filed a Petition for
granted by the GSIS; Review on Certiorari with this Court, docketed as G.R. No.
154200. Meanwhile, the RTC held in abeyance the execution
5.5.4 Medical/dental/optical of its December 15, 1999 Decision pending resolution of this
allowances/benefits; Court of the review on certiorari in National Electrification
Administration v. Morales.13
5.5.5 Childrens Allowance;
On July 24, 2007, this Court reversed and set aside the Court
5.5.6 Special Duty Pay/Allowance; of Appeals decision and described the subsequent events
relating to the case in this manner14 :
5.5.7 Meal Subsidy;
Meanwhile, in a letter dated June 28, 2000, former DBM
Secretary Benjamin E. Diokno informed NEA Administrator
5.5.8 Longevity Pay; and
Conrado M. Estrella III of the denial of the NEA request for a
supplemental budget on the ground that the claims under
5.5.9 Tellers Allowance. (Emphasis R.A. No. 6758 which the RTC had ordered to be settled
added.) cannot be paid because Morales, et al. are not "incumbents of
positions as of July 1, 1989 who are actually receiving and
A group of NEA employees who were hired after October 31, enjoying such benefits."
19893 claimed that they did not receive meal, rice, and
childrens allowances. Thus, on July 23, 1999, they filed a
special civil action for mandamus against NEA and its Board
@lendelacruz 40

Moreover, in an Indorsement dated March 23, 2000, the Section 11. Execution of special judgments. - When a judgment
Commission on Audit (COA) advised NEA against making requires the performance of any act other than those
further payments in settlement of the claims of Morales, et al. mentioned in the two preceding sections, a certified copy of
Apparently, COA had already passed upon claims similar the judgment shall be attached to the writ of execution and
to those of Morales, et al. in its earlier "Decision No. 95-074" shall be served by the officer upon the party against whom
dated January 25, 1995. Portions of the Indorsement read as the same is rendered, or upon any other person required
follows: thereby, or by law, to obey the same, and such party or
person may be punished for contempt if he disobeys such
This Office concurs with the above view. The court may have judgment.
exceeded its jurisdiction when it entertained the petition for
the entitlement of the after-hired employees which had xxxx
already been passed upon by this Commission in COA
Decision No. 95-074 dated January 25, 1995. There, it was Garnishment is proper only when the judgment to be
held that: "the adverse action of this Commission sustaining enforced is one for payment of a sum of money.
the disallowance made by the Auditor, NEA, on the payment
of fringe benefits granted to NEA employees hired from July
The RTC exceeded the scope of its judgment when, in its
1, 1989 to October 31, 1989 is hereby reconsidered.
Accordingly, subject disallowance is lifted." February 22, 2000 Writ of Execution, it directed petitioners to
"extend to [respondents] the benefits and allowances to
which they are entitled but which until now they have been
Thus, employees hired after the extended date of October 31, deprived of as enumerated under Sec. 5 of DBM CCC No. 10
1989, pursuant to the above COA decision cannot defy that and x x x to cause their inclusion in the Provident Fund
decision by filing a petition for mandamus in the lower court.
Membership." Worse, it countenanced the issuance of a
Presidential Decree No. 1445 and the 1987 Constitution
notice of garnishment against the funds of petitioners with
prescribe that the only mode for appeal from decisions of this
DBP to the extent of P16,581,429.00 even when no such
Commission is on certiorari to the Supreme Court in the
amount was awarded in its December 16, 1999 Decision.
manner provided by law and the Rules of Court. Clearly, the
lower court had no jurisdiction when it entertained the
subject case of mandamus. And void decisions of the lower However, in its subsequent Orders dated May 17, 2000 and
court can never attain finality, much less be executed. January 8, 2001, the RTC attempted to set matters right by
Moreover, COA was not made a party thereto, hence, it directing the parties to now await the outcome of the legal
cannot be compelled to allow the payment of claims on the processes for the settlement of respondents claims.
basis of the questioned decision.
That is only right.
PREMISES CONSIDERED, the auditor of NEA should post-
audit the disbursement vouchers on the bases of this Without question, petitioner NEA is a GOCC -- a juridical
Commission's decision particularly the above-cited COA personality separate and distinct from the government, with
Decision No. 94-074 [sic] and existing rules and regulations, capacity to sue and be sued. As such GOCC, petitioner NEA
as if there is no decision of the court in the subject special civil cannot evade execution; its funds may be garnished or levied
action for mandamus. At the same time, management should upon in satisfaction of a judgment rendered against it.
be informed of the intention of this Office to question the However, before execution may proceed against it, a claim
validity of the court decision before the Supreme Court for payment of the judgment award must first be filed with
through the Office of the Solicitor General. the COA.

Parenthetically, the records at hand do not indicate when Under Commonwealth Act No. 327, as amended by Section
Morales, et al. were appointed. Even the December [15], 1999 26 of P.D. No. 1445, it is the COA which has primary
RTC Decision is vague for it merely states that they were jurisdiction to examine, audit and settle "all debts and claims
appointed after June 30, 1989, which could mean that they of any sort" due from or owing the Government or any of its
were appointed either before the cut-off date of October 31, subdivisions, agencies and instrumentalities, including
1989 or after. Thus, there is not enough basis for this Court to government-owned or controlled corporations and their
determine that the foregoing COA Decision No. 95-074 subsidiaries. With respect to money claims arising from the
adversely affects Morales, et al.. Moreover, the records do not implementation of R.A. No. 6758, their allowance or
show whether COA actually questioned the December 16, disallowance is for COA to decide, subject only to the remedy
1999 RTC Decision before this Court.15 of appeal by petition for certiorari to this Court.

The Court ruled that respondents therein could not proceed All told, the RTC acted prudently in halting implementation
against the funds of NEA "because the December [15], 1999 of the writ of execution to allow the parties recourse to the
RTC Decision sought to be satisfied is not a judgment for a processes of the COA. It may be that the tenor of the March
specific sum of money susceptible of execution by 23, 2000 Indorsement issued by COA already spells doom for
garnishment; it is a special judgment requiring petitioners to respondents claims; but it is not for this Court to preempt the
settle the claims of respondents in accordance with existing action of the COA on the post-audit to be conducted by it per
regulations of the COA."16 The Court further held as follows: its Indorsement dated March 23, 2000.

In its plain text, the December [15], 1999 RTC Decision merely In fine, it was grave error for the CA to reverse the RTC and
directs petitioners to "settle the claims of [respondents] and direct immediate implementation of the writ of execution
other employees similarly situated." It does not require through garnishment of the funds of petitioners,
petitioners to pay a certain sum of money to respondents. The
judgment is only for the performance of an act other than the
WHEREFORE, the petition is GRANTED. The July 4, 2002
payment of money, implementation of which is governed by
Decision of the Court of Appeals is REVERSED and SET
Section 11, Rule 39 of the Rules of Court, which provides:
ASIDE. The Resolution dated December 11, 2000 and Order
dated January 8, 2001 of the Regional Trial Court, Branch 88,
@lendelacruz 41

Quezon City in Special Civil Action No. Q-99-38275 are aforequoted Decision of the Court on the matter. Its
REINSTATED.17 judgment is now res judicata, hence, the controlling legal
rule, as far as Petitioners NEA employees are concerned, is
Meantime, the Civil Service Commission issued Resolution that they must be extended the benefits and allowances "to
No. 001295 dated June 1, 200118 and interpreted Section 12 of which they are entitled but which until now they have been
Republic Act No. 6758 in this manner: deprived of as enumerated under Section 5 of DBM CCC No.
101 x x x, retroactive from the date of their appointments up
to the present or until their separation from the service." This
Material to the resolution of this instant request is Section 12
is the law of the case which must now be applied. At any rate,
of SSL x x x.
we have stated in OGCC Opinion No. 086, S. 2001 that even
employees hired after July 1, 1989 may receive the subject
xxxx benefits provided there is determination by the DBM that the
same have not been actually integrated into their basic
The Commission, x x x is of the view that this provision of salaries.
law does not imply that such other additional compensation
not integrated into the salary rates shall not be received by Hence, your query is therefore answered in the affirmative.21
employees appointed after July 1, 1989. The word "only"
before the phrase "as of July 1, 1989" does not refer to
Pursuant to the above opinion in its favor, the NEA Board of
incumbents but qualifies what additional compensation can
Administrators issued Resolution No. 29 on August 9, 200122
be continued together with the qualifying words "not
approving the entitlement to rice, medical, children, meal,
integrated into the standardized rates shall continue to be
and other related allowances to NEA employees hired after
authorized." The correct interpretation therefore is that,
October 31, 1989,23 and the payment of these benefits,
additional compensation being received by employees not
chargeable to its Personnel Services Savings. This resolution
integrated into the standardized rates as of July 1, 1989 shall
was the outcome of the meeting of the NEA Board of
continue to be authorized and received/enjoyed by said
Administrators on the same date, and reads:
employees, whether or not said employee was appointed
prior to or after July 1, 1989.
RESOLUTION NO. 29
A different interpretation will result in the creation of two
classes of employees, i.e., one class receiving less pay than xxxx
another class for substantially equal work. Said
interpretation will violate Section 2 of the SSL which RESOLVED THEREFORE TO APPROVE, as it hereby
provides, thus: approves, the entitlement to rice, medical, children, meal and
other related allowances of NEA employees hired after
xxxx October 31, 1989 and payment of these benefits;

Additionally, this interpretation will also violate the RESOLVED FURTHER TO CONFIRM, as it hereby confirms,
constitutional precept that no person shall be denied the the initial appropriation and payment of One Million Six
equal protection of law (Section 1, Article III of the 1987 Hundred Forty Six Thousand One Hundred Twenty Seven
Constitution). Applying this precept the Supreme Court Pesos and Thirty Centavos (P1,646,127.30) for this purpose
declared that "equal protection of the law is against unde chargeable against the Personnel Services Savings.24
favor on an individual or class (Tiu vs. Court of Appeals, GR
No. 127410, January 20, 1999).19 Thus, NEA granted the questioned allowances to its
employees who were not receiving these
The Office of the Government Corporate Counsel (OGCC), in benefits/allowances, including rice allowance amounting to
response to the request of then NEA Administrator Manuel P1,865,811.84 covering the period January to August 2001. 25
Luis S. Sanchez, issued on August 14, 2001 its Opinion No.
157, s. 200120 declaring that the RTC decision, not having However, the resident auditor of COA, Carmelita M.
been appealed, had become the law of the case which must Agullana (Agullana), did not allow the payment of rice
now be applied. The pertinent portion of such opinion reads: allowance for the period January to August 2001 to NEA
employees who were not incumbents as of June 30, 1989,
HON. MANUEL LUIS S. SANCHEZ under Notice of Disallowance26 No. 2001-004-101 dated
Administrator September 6, 2001. Agullana indicated the "Facts and/or
National Electrification Administration Reasons for Disallowance" as follows:
NEA Road, Diliman, Quezon City
Payment of Rice Allowance for the period January, 2001 to
Re: Request for legal opinion on the propriety and August, 2001 to employees who were not incumbents as of
applicability to NEA employees hired after July 1, 1989 of June 30, 1989 not allowed pursuant to RA #6758 as
OGCC Opinion NO. 086, s. 2001 implemented by Corporate Compensation Circular No. 10
prescribing the Rules and Regulations for the
Implementation of the Revised Compensation and Position
xxxx
Classification System for Government-Owned and/or
Controlled Corporations (GOCCs) and Financial Institutions
Pursuant to law, subject Decision became final and executory (GFIs) specifically Sections 5.4 and 5.5 thereof. x x x.27
fifteen (15) days after its rendition, there being no appeal or
motion for reconsideration filed in the interim, as certified to
NEA, through then Acting Administrator Francisco G. Silva,
by Atty. Lily D. Labarda, Branch 88, Quezon City, on January
and assisted by counsel, appealed Agullanas disallowance
24, 2000.
to the COA on September 27, 2001,28 arguing that the
disallowance had no basis in law and in fact, and that the
The foregoing considered, this Office therefore cannot opine subject disbursement was anchored on a court decision that
otherwise save to uphold the supremacy and finality of the had become final and executory.
@lendelacruz 42

The COA denied the appeal from the disallowance in a not be adhered to where its application will result in unjust
Decision29 dated October 9, 2003 (Decision No. 2003-134). The decision."
COA stated that:
xxxx
The Director of x x x Corporate Audit Office II recommended
the affirmance of the subject disallowance contending that PREMISES CONSIDERED, the instant appeal is hereby
Section 12 of Republic Act (RA) No. 6758 (Salary DENIED and the disallowance in the total amount of
Standardization Law) x x x remains applicable on the matter P1,865,811.84 is accordingly affirmed.30
since Department of Budget and Management-Corporate
Compensation Circular No. 10, s. 1989 (DBM-CCC No. 10)
NEA filed a Motion for Reconsideration of the said Decision,
was declared ineffective by the Supreme Court in the case of
but this was denied in COA Decision No. 2005-01031 dated
De Jesus, et al. vs. COA, et al. (G.R. No. 109023, August 13,
February 24, 2005, the pertinent portions of which read:
1998) due to its non-publication in the Official Gazette or in a
newspaper of general circulation. She pointed out that the
alleged discriminatory effect and violation of the policy to After a careful re-evaluation, this Commission finds herein
provide equal pay for substantially equal work in the above- motion devoid of merit, the issues raised therein being a mere
quoted provision have been sufficiently considered in reiteration of the previous arguments of the movant in his
Philippine Ports Authority vs. COA, 214 SCRA 653 and later appeal and which were already considered and passed upon
confirmed in Philippine International Trading Corporation by this Commission in the assailed decision.
vs. COA, G.R. No. 132593, June 25, 1999, wherein the
Supreme Court ruled that: WHEREFORE, there being no new and material evidence
adduced as would warrant a reversal or modification of the
"x x x we must mention that this Court has confirmed in decision herein sought to be reconsidered, the instant motion
Philippine Ports Authority vs. Commission on Audit the for reconsideration has to be, as it is hereby, denied with
legislative intent to protect incumbents who are receiving finality.32
salaries and allowances over and above those authorized by
RA 6758 to continue to receive the same even after RA 6758 Thus, petitioners came to this Court questioning the COAs
took effect. In reserving the benefit to incumbents, the decision and resolution on the disallowance of their rice
legislature has manifested its intent to gradually phase out subsidy.
this privilege without upsetting the policy of non-diminution
of pay and consistent with the rule that laws should only be Petitioners claim that the COAs reliance on DBM-CCC No.
applied prospectively in the spirit of fair play." 10 is totally misplaced, alleging that this interpretation had
been "squarely debunked" by the Supreme Court in a number
She also conformed to the OGCC Opinion No. 52, s. 1999 of cases, including Cruz v. Commission on Audit.33
dated March 22, 1999, edifying the implication of the De Jesus Furthermore, petitioners claim that in a similar case
Case which enunciated thusly: involving Opinion No. 086, s. 2001 of the OGCC, it wrote: "[It]
is our considered opinion that employees of COA, whether
"Notwithstanding the ruling in the De Jesus Case, the appointed before or after July 1, 1989, are entitled to the
applicable law is still Section 12 of R.A. No. 6758 which benefits enumerated under Section 5.5 of DBM-CCC No. 10 x
allows additional compensation being received by x x."34
incumbents as of July 1, 1989 not integrated into the standard
rates to continue. The recent nullification of DBM-CCC No. We quote portions of Opinion No. 086, s. 2001 of the OGCC
10 applies favorably only to those incumbent employees below:
(hired prior to July 1, 1989) and does not in any way change
the position or situation of those employees hired after the Please be informed that our Office had previously rendered
cut-off date. With the issuance of R.A. 6758, employees hired legal opinions involving the same issue upon the request of
after July 1, 1989 must follow the revised and unified some of our client corporations similarly situated. In our
compensation and position classification system in the Opinion No. 55, Series of 2000, we stated:
government, for which the DBM was directed to establish
and administer and which shall be applied for all
"At the outset we would like to clarify that the amount of the
government entities.
standardized salary vis--vis the pre-SSL salary (plus
allowance) is not conclusively determinant of whether or not
xxxx a certain allowance is deemed integrated into the former.
Section 12 of R.A. 6758 expressly provides:
The new hirees having accepted their employment, aware of
such a condition that they are not entitled to additional xxxx
benefits and allowances, they would be estopped from
complaining."
The law is thus clear. The general rule is that all allowances
are deemed included in the standardized rates set forth in
Moreover, the Director noted that when the rice allowance to R.A. 6758. This is consistent with the primary intent of the
the claimants was granted in the year 2001, the DBM had Act to eliminate wage inequities. The law, however, admits
already published CCC No. 10. of certain exceptions and as stated in the second sentence of
the aforecited provision, such other additional compensation
Anent the contention that the subject decision of the RTC has in cash or in kind not integrated into the standardized rates
become the law of the case which must be applied, she being received by incumbents as of July 1, 1989 shall continue
stressed that the said doctrine is one of the policies only and to be authorized. It is our view, however, that a government
will be disregarded when compelling circumstances call for agency, in this case NDC, does not have discretion to
a redetermination of the point of law. As cited in Blacks Law determine what allowances received by incumbent
Dictionary, 6th Edition, 1990, "the doctrine is merely a rule of employees prior to SSL are deemed included or integrated in
procedure and does not go to the power of the court, and will the standardized rates. It is the DBM which has the mandate
@lendelacruz 43

and authority under the SSL to determine what additional receiving said allowances/benefits as of said date. Among
compensation shall be integrated and it is precisely why it these was the rice subsidy/allowance.
issued NCC No. 10."
Hence, in light of the effectivity of DBM-CCC No. 10 on
The foregoing opinion is consistent with our Opinion No. 52, March 16, 1999 following its reissuance (in its entirety on
Series of 1999, wherein we opined: February 15, 1999) and publication in the Official Gazette on
March 1, 1999, the disallowance by the COA of the rice
"x x x Nonetheless, as Section 12 of RA 6758 expressly allowance for the period beginning January 2001 up to
provides that such additional compensation, whether in cash August 2001 is not tainted with grave abuse of discretion but
or in kind, being received by incumbent employees as of July in accord with the law and the rules.39
1, 1989 not integrated to the standardized salary rates as may
be determined by the DBM shall continue to be authorized, Petitioners, in their Reply,40 anchor their petition on their
the question becomes a matter of fact, on whether or not the allegation that the RTC Decision had already become final
aforementioned allowances have been integrated into the and executory, could no longer be disturbed, and must be
salaries of employees."35 (Emphases in the quoted text.) respected by the parties. To support their claim, they cite
Arcenas v. Court of Appeals41 wherein this Court held:
Petitioners claim that "the Civil Service Commission, the
Office of the Government Corporate Counsel and the highest For, it is a fundamental rule that when a final judgment
court of the land, the Supreme Court, chose not to distinguish becomes executory, it thereby becomes immutable and
the entitlement of benefits to those hired before and after unalterable. The judgment may no longer be modified in any
October 31, 1989 (or in this case, July [1], 1989)," while "the respect, even if the modification is meant to correct what is
COA sweepingly does so by just a wave of the hand."36 To perceived to be an erroneous conclusion of fact or law, and
support this claim, petitioners erroneously cite Javier v. regardless of whether the modification is attempted to be
Philippine Ports Authority, CA-G.R. No. 67937, March 12, made by the court rendering it or by the highest Court of the
2002, as a decision by this Court, but said decision was land. The only recognized exceptions are the correction of
rendered by the Court of Appeals. clerical errors or the making of so-called nunc pro tunc entries
which cause no prejudice to any party, and, of course, where
Petitioners argue that assuming that they are not entitled to the judgment is void. Any amendment or alteration which
the rice allowance in question, they should not be required to substantially affects a final and executory judgment is null
refund the amounts received, on grounds of fairness and and void for lack of jurisdiction, including the entire
equity. In connection with this, petitioners allege as follows: proceedings held for that purpose.42 (Emphasis ours.)

Prior to December 31, 2003, NEA consists of 720 employees Petitioners likewise cite Panado v. Court of Appeals 43
more or less who received the rice allowance. Upon [the] wherein the Court held that "[i]t is axiomatic that final and
restructuring of NEA in December 2003, all NEA employees executory judgments can no longer be attacked by any of the
were legally terminated. Out of 720 employees, only 320 parties or be modified, directly or indirectly, even by the
employees are now left with to operate NEA. Most of the (sic) highest court of the land."44 From the foregoing
them are rehired while minority of them are newly hired. jurisprudence, petitioners conclude that the acts of COA in
Thus, the refund of P1,865,811.84, shall be shouldered by disallowing the claims and ordering refund of benefits
those who remained as NEA employees. Secondly, those already received clearly constitute grave abuse of discretion
who received the said rice allowance accepted it in good faith amounting to lack of jurisdiction inasmuch as said acts
believing that they are entitled to it as a matter of law.37 frustrated the final and executory decision of the trial court.

In its Comment38 dated September 21, 2005, COAs lone The pivotal issues as determined by the COA are:
argument is that "[t]he assailed COA decision is not tainted
with grave abuse of discretion. The disallowance of payment 1. Whether or not the immutability of final decision
for the rice [subsidy] by the COA is in accord with the law doctrine must prevail over the exclusive jurisdiction
and the rules." COA maintains that the law on the matter, of [the COA] to audit and settle disbursements of
Section 12 of Republic Act No. 6758, is clear, as its last funds; and
sentence provides reservation of certain allowances to
incumbents. COA argues in this wise: 2. Whether or not the NEA employees hired after
June 30, 1989 are entitled to rice allowance.45
The Supreme Court in Philippine Ports Authority vs.
Commission on Audit confirmed the legislative intent to The COA resolved these issues in this manner:
protect incumbents who are receiving salaries and/or
allowances over and above those authorized by R.A. 6758 to
As to the first issue, the immutability rule applies only when
continue to receive the same even after the law took effect. In
the decision is promulgated by a court possessed of
reserving the benefit to incumbents, the legislature has
jurisdiction to hear and decide the case. Undoubtedly, the
manifested its intent to gradually phase out this privilege
petition in the guise of a case for mandamus is a money claim
without upsetting the policy of non-diminution of pay and
falling within the original and exclusive jurisdiction of this
consistent with the rule that laws should only be applied
Commission. Noting the propensity of the lower courts in
prospectively in the spirit of fairness and justice.
taking cognizance of cases filed by claimants in violation of
such primary jurisdiction, the Supreme Court issued
Thus, pursuant to its authority under Section 23 of R.A. No. Administrative Circular 10-2000 dated October 23, 2000
6758, the DBM x x x issued on October 2, 1989, DBM-CCC enjoining judges of lower courts to exercise caution in order
No. 10. Section 5.5 of DBM-CCC No. 10 enumerated the to prevent "possible circumvention of the rules and
various allowances/fringe benefits authorized to procedures of the Commission on Audit" and reiterating the
GOCCs/GFIs which are not to be integrated into the basic basic rule that: "All money claims against the Government
salary and allowed to be continued only for incumbents of must be filed with the Commission on Audit which shall act
positions as of June 30, 1989 who are authorized and actually upon it within sixty days. Rejection of the claim will
@lendelacruz 44

authorize the claimant to elevate the matter to the Supreme likewise characterized NEA as a GOCC in National
Court on certiorari and in effect sue the State thereby." Electrification Administration v. Morales. Thus, Section 5.5
quoted above, issued pursuant to the authority given to the
Under the doctrine of primary jurisdiction, when an DBM under Section 12 of Republic Act No. 6758, was
administrative body is clothed with original and exclusive correctly applied by the COA.
jurisdiction, courts are utterly without power and authority
to exercise concurrently such jurisdiction. Accordingly, all We find our pronouncements in Philippine National Bank v.
the proceedings of the court in violation of that doctrine and Palma53 to be applicable and conclusive on this issue now
all orders and decisions reached thereby are null and void. It before us:
will be noted in the cited Supreme Court Circular that money
claims are cognizable by the COA and its decision is During these tough economic times, this Court understands,
appealable only to the Supreme Court. The lower courts have and in fact sympathizes with, the plight of ordinary
nothing to do with such genus of transactions. government employees. Whenever legally possible, it has
bent over backwards to protect labor and favor it with
Anent the issue of entitlement to rice allowance by additional economic advantages. In the present case,
employees hired after June 30, 1989, this Commission is left however, the Salary Standardization Law clearly provides
with no option but to affirm the disallowance in the face of that the claimed benefits shall continue to be granted only to
the explicit provisions of DBM-CCC No. 10. After its employees who were "incumbents" as of July 1, 1989. Hence,
publication on March 9, 1999 in the Official Gazette, rice much to its regret, the Court has no authority to reinvent or
allowance was allowed only for incumbents as of July 1, 1989. modify the law to extend those benefits even to employees
Obviously, there is no violation of the equal protection clause hired after that date.1awphil
as cited in the PITC case, supra, because whatever increments
the incumbents are enjoying over those of non-incumbents xxxx
are transitory, for the same law provides that such difference
shall be deducted from the salary increase the former should
Stare Decisis
receive under Section 17. Thus, the equalization or
standardization of what the two categories of employees will
be receiving in terms of benefits is ensured. The doctrine "stare decisis et non quieta movere (Stand by the
decisions and disturb not what is settled)" is firmly
entrenched in our jurisprudence. Once this Court has laid
PREMISES CONSIDERED, the instant appeal is hereby
down a principle of law as applicable to a certain state of
DENIED and the disallowance in the total amount of
facts, it would adhere to that principle and apply it to all
P1,865,811.84 is accordingly affirmed.46
future cases in which the facts are substantially the same as
in the earlier controversy.
We agree with the findings of the COA.
The precise interpretation and application of the assailed
In National Electrification Administration v. Morales, the provisions of RA 6758, namely those in Section 12, have long
order of garnishment against the NEA funds to implement been established in Philippine Ports Authority v. COA. The
the RTC Decision was in issue, and we said that the COA had essential pronouncements in that case have further been
exclusive jurisdiction to decide on the allowance or fortified by Manila International Airport Authority v. COA,
disallowance of money claims arising from the Philippine International Trading Corporation v. COA, and Social
implementation of Republic Act No. 6758. We observed Security System v. COA.
therein that "the RTC acted prudently in halting
implementation of the writ of execution to allow the parties
This Court has consistently held in those cases that
recourse to the processes of the COA."47 In fact, we even
allowances or fringe benefits, whether or not integrated into
stated there that "it is not for this Court to preempt the action
the standardized salaries prescribed by RA 6758, should
of the COA on the post-audit to be conducted by it per its
continue to be enjoyed by employees who (1) were
Indorsement dated March 23, 2000."48
incumbents and (2) were receiving those benefits as of July 1,
1989.
We find that the COA had ruled in accordance with law and
jurisprudence, and we see no reason to reverse its decision.
In Philippine Ports Authority v. COA, the x x x Court said that
the intention of the framers of that law was to phase out
Section 5.5 of DBM-CCC No. 10 is clear that rice subsidy is certain allowances and privileges gradually, without
one of the benefits that will be granted to employees of upsetting the principle of non-diminution of pay. The
GOCCs49 or GFIs50 only if they are "incumbents" as of July 1, intention of Section 12 to protect incumbents who were
1989. We reproduce the first paragraph of Section 5.5 below: already receiving those allowances on July 1, 1989, when RA
6758 took effect was emphasized thus:
5.5 The following allowances/fringe benefits authorized to
GOCCs/GFIs pursuant to the aforementioned issuances are "An incumbent is a person who is in present possession of an
not likewise to be integrated into the basic salary and allowed office.
to be continued only for incumbents of positions as of June
30, 1989 who are authorized and actually receiving said
"The consequential outcome, under sections 12 and 17, is that
allowances/benefits as of said date, at the same terms and
if the incumbent resigns or is promoted to a higher position,
conditions prescribed in said issuances[:]
his successor is no longer entitled to his predecessors RATA
privilege x x x or to the transition allowance."
5.5.1 Rice Subsidy; x x x.51
Finally, to explain what July 1, 1989 pertained to, we held in
We have defined an incumbent as "a person who is in present the same case as follows:
possession of an office; one who is legally authorized to
discharge the duties of an office."52 There is no question that
petitioners were not incumbents as of June 30, 1989. We have
@lendelacruz 45

"x x x. The date July 1, 1989 becomes crucial only to determine 4. PITC v. COA held that in enacting RA 6758,
that as of said date, the officer was an incumbent and was Congress was adhering to the policy of non-
receiving the RATA, for purposes of entitling him to its diminution of existing pay. Hence, if a benefit was
continued grant. x x x." not yet existing when the law took effect on July 1,
1989, there was nothing to continue and no basis for
In Philippine International Trading Corporation v. COA, this applying the policy.
Court confirmed the legislative intention in this wise:
5. Neither would Cruz v. COA be applicable. In
"x x x [T]here was no intention on the part of the legislature those cases, the COA arbitrarily set a specific date,
to revoke existing benefits being enjoyed by incumbents of October 31, 1989; RA 6758 had not made a
government positions at the time of the passage of RA 6758 distinction between those hired before and those
by virtue of Sections 12 and 17 thereof. x x x." after that date. In the present case, the law itself set
July 1, 1989, as the date when employees should be
"incumbents," because that was when RA 6758 took
The Court stressed that in reserving the benefits to
effect. It was not an arbitrarily chosen date; there
incumbents alone, the legislatures intention was not only to
was sufficient reason for setting it as the cutoff
adhere to the policy of non-diminution of pay, but also to be
point.56
consistent with the prospective application of laws and the
spirit of fairness and justice.
Notwithstanding our ruling above, however, we take up as
another matter the refund ordered by the COA on the rice
xxxx
subsidy that petitioners had already received. As regards the
refund, we rule in favor of petitioners and will not require
In consonance with stare decisis, there should be no more them to return the amounts anymore.
misgivings about the proper application of Section 12. In the
present case, the payment of benefits to employees hired after
This is because, to begin with, the officials and administrators
July 1, 1989, was properly withheld, because the law clearly
of NEA themselves had believed that their employees were
mandated that those benefits should be reserved only to
entitled to the allowances, and this was covered by
incumbents who were already enjoying them before its
Resolution No. 29 of the NEA Board of Administrators. The
enactment. Withholding them from the others ensured that
petitioners thus received in good faith the rice subsidy
the compensation of the incumbents would not be
together with other allowances provided in said Resolution.
diminished in the course of the latters continued
For reasons of equity and fairness, therefore, and considering
employment with the government agency.54 (Emphasis ours,
their long wait for this matter to be resolved with finality, we
citations omitted.)1avvphi1
will no longer require a refund from these public servants.

As petitioners were hired after June 30, 1989, the COA was
Our pronouncements on refund in De Jesus v. Commission
correct in disallowing the grant of the benefit to them, as they
on Audit,57 wherein we cited Blaquera v. Hon. Alcala,58 are
were clearly not entitled to it. As quoted above, we have
applicable:
repeatedly held that under Section 12 of Republic Act No.
6758, the only requirements for the continuous grant of
allowances and fringe benefits on top of the standardized Considering, however, that all the parties here acted in good
salary rates for employees of GOCCs and GFIs are as follows: faith, we cannot countenance the refund of subject incentive
(1) the employee must be an incumbent as of July 1, 1989; and benefits for the year 1992, which amounts the petitioners
(2) the allowance or benefit was not consolidated in the have already received. Indeed, no indicia of bad faith can be
standardized salary rate as prescribed by Republic Act No. detected under the attendant facts and circumstances. The
6758.55 officials and chiefs of offices concerned disbursed such
incentive benefits in the honest belief that the amounts given
were due to the recipients and the latter accepted the same
We hereby reiterate our ruling in Philippine National Bank v.
with gratitude, confident that they richly deserve such
Palma as regards Section 12 of Republic Act No. 6758, as
benefits.
follows:

This ruling in Blaquera applies to the instant case. Petitioners


In sum, we rule thus:
here received the additional allowances and bonuses in good
faith under the honest belief that LWUA Board Resolution
1. Under Section 12 of RA 6758, additional No. 313 authorized such payment. At the time petitioners
compensation already being received by the received the additional allowances and bonuses, the Court
employees of petitioner, but not integrated into the had not yet decided Baybay Water District. Petitioners had no
standardized salary rates -- enumerated in Section knowledge that such payment was without legal basis. Thus,
5.5 of DBM-CC[C] No. 10, like "rice subsidy, sugar being in good faith, petitioners need not refund the
subsidy, death benefits other than those granted by allowances and bonuses they received but disallowed by the
the GSIS," and so on -- shall continue to be given. COA.59 (Emphasis supplied.)

2. However, the continuation of the grant shall be As in the cases above quoted, we cannot countenance the
available only to those "incumbents" already refund of the rice subsidies given to petitioners by NEA for
receiving it on July 1, 1989. the period January to August 2001 at this late time, especially
since they were given by the government agency to its
3. Thus, in PPA v. COA, this Court held that PPA employees in good faith.
employees already receiving the RATA granted by
LOI No. 97 should continue to receive them, WHEREFORE, premises considered, the petition is hereby
provided they were already "incumbents" on or PARTIALLY GRANTED. COA Decision No. 2003-134 dated
before July 1, 1989. October 9, 2003 and COA Resolution No. 2005-010 dated
February 24, 2005 are hereby AFFIRMED with the
@lendelacruz 46

CLARIFICATION that the petitioners shall no longer be Subsequently, the Surety moved to quash the writ on the
required to refund the rice subsidies for the period January ground that the same was issued without the required
to August 2001, which they had received from NEA but were summary hearing provided for in Section 17 of Rule 59 of the
later disallowed by the COA. Rules of Court. As the Court denied the motion, the Surety
appealed to the Court of Appeals from such order of denial
SO ORDERED. and from the one denying its motion for reconsideration (Id.
p. 97). Its record on appeal was then printed as required by
the Rules, and in due time it filed its brief raising therein no
Republic of the Philippines
other question but the ones covered by the following
SUPREME COURT
assignment of errors:
Manila

I. That the Honorable Court a quo erred in issuing its


EN BANC
order dated November 2, 1957, by holding the
incident as submitted for resolution, without a
G.R. No. L-21450 April 15, 1968 summary hearing and compliance with the other
mandatory requirements provided for in Section 17,
SERAFIN TIJAM, ET AL., plaintiffs-appellees, Rule 59 of the Rules of Court.
vs.
MAGDALENO SIBONGHANOY alias GAVINO II. That the Honorable Court a quo erred in ordering
SIBONGHANOY and LUCIA BAGUIO, defendants, the issuance of execution against the herein bonding
MANILA SURETY AND FIDELITY CO., INC. (CEBU company-appellant.
BRANCH) bonding company and defendant-appellant.

III. That the Honorable Court a quo erred in denying


DIZON, J.: the motion to quash the writ of execution filed by
the herein bonding company-appellant as well as its
On July 19, 1948 barely one month after the effectivity of subsequent motion for reconsideration, and/or in
Republic Act No. 296 known as the Judiciary Act of 1948 not quashing or setting aside the writ of execution.
the spouses Serafin Tijam and Felicitas Tagalog commenced
Civil Case No. R-660 in the Court of First Instance of Cebu Not one of the assignment of errors it is obvious raises
against the spouses Magdaleno Sibonghanoy and Lucia the question of lack of jurisdiction, neither directly nor
Baguio to recover from them the sum of P1,908.00, with legal indirectly.
interest thereon from the date of the filing of the complaint
until the whole obligation is paid, plus costs. As prayed for
in the complaint, a writ of attachment was issued by the court Although the appellees failed to file their brief, the Court of
against defendants' properties, but the same was soon Appeals, on December 11, 1962, decided the case affirming
dissolved upon the filing of a counter-bond by defendants the orders appealed from.
and the Manila Surety and Fidelity Co., Inc. hereinafter
referred to as the Surety, on the 31st of the same month. On January 8, 1963 five days after the Surety received
notice of the decision, it filed a motion asking for extension
After being duly served with summons the defendants filed of time within which to file a motion for reconsideration. The
their answer in which, after making some admissions and Court of Appeals granted the motion in its resolution of
denials of the material averments of the complaint, they January 10 of the same year. Two days later the Surety filed
interposed a counterclaim. This counterclaim was answered a pleading entitled MOTION TO DISMISS, alleging
by the plaintiffs. substantially that appellees action was filed in the Court of
First Instance of Cebu on July 19, 1948 for the recovery of the
sum of P1,908.00 only; that a month before that date Republic
After trial upon the issues thus joined, the Court rendered Act No. 296, otherwise known as the Judiciary Act of 1948,
judgment in favor of the plaintiffs and, after the same had had already become effective, Section 88 of which placed
become final and executory, upon motion of the latter, the within the original exclusive jurisdiction of inferior courts all
Court issued a writ of execution against the defendants. The civil actions where the value of the subject-matter or the
writ having been returned unsatisfied, the plaintiffs moved amount of the demand does not exceed P2,000.00, exclusive
for the issuance of a writ of execution against the Surety's of interest and costs; that the Court of First Instance therefore
bond (Rec. on Appeal, pp. 46-49), against which the Surety had no jurisdiction to try and decide the case. Upon these
filed a written opposition (Id. pp. 49) upon two grounds, premises the Surety's motion prayed the Court of Appeals to
namely, (1) Failure to prosecute and (2) Absence of a demand set aside its decision and to dismiss the case. By resolution of
upon the Surety for the payment of the amount due under January 16, 1963 the Court of Appeals required the appellees
the judgment. Upon these grounds the Surety prayed the to answer the motion to dismiss, but they failed to do so.
Court not only to deny the motion for execution against its Whereupon, on May 20 of the same year, the Court resolved
counter-bond but also the following affirmative relief : "to to set aside its decision and to certify the case to Us. The
relieve the herein bonding company of its liability, if any, pertinent portions of its resolution read as follows:
under the bond in question" (Id. p. 54) The Court denied this
motion on the ground solely that no previous demand had
been made on the Surety for the satisfaction of the judgment. It would indeed appear from the record that the
Thereafter the necessary demand was made, and upon action at bar, which is a suit for collection of money
failure of the Surety to satisfy the judgment, the plaintiffs in the sum of exactly P1,908.00 exclusive of interest,
filed a second motion for execution against the counterbond. was originally instituted in the Court of First
On the date set for the hearing thereon, the Court, upon Instance of Cebu on July 19, 1948. But about a month
motion of the Surety's counsel, granted the latter a period of prior to the filing of the complaint, more specifically
five days within which to answer the motion. Upon its failure on June 17, 1948, the Judiciary Act of 1948 took
to file such answer, the Court granted the motion for effect, depriving the Court of First Instance of
execution and the corresponding writ was issued. original jurisdiction over cases in which the
demand, exclusive of interest, is not more than
P2,000.00. (Secs. 44[c] and 86[b], R.A. No. 296.)
@lendelacruz 47

We believe, therefore, that the point raised in Upon the filing of the first motion for execution against the
appellant's motion is an important one which merits counter-bond the Surety not only filed a written opposition
serious consideration. As stated, the complaint was thereto praying for its denial but also asked for an additional
filed on July 19, 1948. This case therefore has been affirmative relief that it be relieved of its liability under the
pending now for almost 15 years, and throughout counter-bond upon the grounds relied upon in support of its
the entire proceeding appellant never raised the opposition lack of jurisdiction of the court a quo not being
question of jurisdiction until after receipt of this one of them.
Court's adverse decision.
Then, at the hearing on the second motion for execution
There are three cases decided by the Honorable against the counter-bond, the Surety appeared, through
Supreme Court which may be worthy of counsel, to ask for time within which to file an answer or
consideration in connection with this case, namely: opposition thereto. This motion was granted, but instead of
Tyson Tan, et al. vs. Filipinas Compaia de Seguros, such answer or opposition, the Surety filed the motion to
et al., G.R. No. L-10096, March 23, 1956; Pindangan dismiss mentioned heretofore.
Agricultural Co., Inc. vs. Jose P. Dans, etc., et al.,
G.R. No. L-14591, September 26, 1962; and Alfredo A party may be estopped or barred from raising a question
Montelibano, et al. vs. Bacolod-Murcia Milling Co., in different ways and for different reasons. Thus we speak of
Inc., G.R. No. L-15092, September 29, 1962, wherein estoppel in pais, or estoppel by deed or by record, and of
the Honorable Supreme Court frowned upon the estoppel by laches.
'undesirable practice' of appellants submitting their
case for decision and then accepting the judgment,
Laches, in a general sense is failure or neglect, for an
if favorable, but attacking it for lack of jurisdiction
unreasonable and unexplained length of time, to do that
when adverse.
which, by exercising due diligence, could or should have
been done earlier; it is negligence or omission to assert a right
Considering, however, that the Supreme Court has within a reasonable time, warranting a presumption that the
the "exclusive" appellate jurisdiction over "all cases party entitled to assert it either has abandoned it or declined
in which the jurisdiction of any inferior court is in to assert it.
issue" (See. 1, Par. 3[3], Judiciary Act of 1948, as
amended), we have no choice but to certify, as we
The doctrine of laches or of "stale demands" is based upon
hereby do certify, this case to the Supreme
grounds of public policy which requires, for the peace of
Court.1wph1.t
society, the discouragement of stale claims and, unlike the
statute of limitations, is not a mere question of time but is
ACCORDINGLY, pursuant to Section 31 of the principally a question of the inequity or unfairness of
Judiciary Act of 1948 as amended, let the record of permitting a right or claim to be enforced or asserted.
this case be forwarded to the Supreme Court.
It has been held that a party can not invoke the jurisdiction of
It is an undisputed fact that the action commenced by a court to sure affirmative relief against his opponent and,
appellees in the Court of First Instance of Cebu against the after obtaining or failing to obtain such relief, repudiate or
Sibonghanoy spouses was for the recovery of the sum of question that same jurisdiction (Dean vs. Dean, 136 Or. 694,
P1,908.00 only an amount within the original exclusive 86 A.L.R. 79). In the case just cited, by way of explaining the
jurisdiction of inferior courts in accordance with the rule, it was further said that the question whether the court
provisions of the Judiciary Act of 1948 which had taken effect had jurisdiction either of the subject-matter of the action or of
about a month prior to the date when the action was the parties was not important in such cases because the party
commenced. True also is the rule that jurisdiction over the is barred from such conduct not because the judgment or order
subject matter is conferred upon the courts exclusively by of the court is valid and conclusive as an adjudication, but for the
law, and as the lack of it affects the very authority of the court reason that such a practice can not be tolerated obviously for
to take cognizance of the case, the objection may be raised at reasons of public policy.
any stage of the proceedings. However, considering the facts
and circumstances of the present case which shall
Furthermore, it has also been held that after voluntarily
forthwith be set forth We are of the opinion that the Surety
submitting a cause and encountering an adverse decision on
is now barred by laches from invoking this plea at this late
the merits, it is too late for the loser to question the
hour for the purpose of annuling everything done heretofore
jurisdiction or power of the court (Pease vs. Rathbun-Jones
in the case with its active participation.
etc., 243 U.S. 273, 61 L. Ed. 715, 37 S. Ct. 283; St. Louis etc. vs.
McBride, 141 U.S. 127, 35 L. Ed. 659). And in Littleton vs.
As already stated, the action was commenced in the Court of Burgess, 16 Wyo. 58, the Court said that it is not right for a
First Instance of Cebu on July 19, 1948, that is, almost fifteen party who has affirmed and invoked the jurisdiction of a
years before the Surety filed its motion to dismiss on January court in a particular matter to secure an affirmative relief, to
12, 1963 raising the question of lack of jurisdiction for the first afterwards deny that same jurisdiction to escape a penalty.
time.
Upon this same principle is what We said in the three cases
It must be remembered that although the action, originally, mentioned in the resolution of the Court of Appeals of May
was exclusively against the Sibonghanoy spouses the Surety 20, 1963 (supra) to the effect that we frown upon the
became a quasi-party therein since July 31, 1948 when it filed "undesirable practice" of a party submitting his case for
a counter-bond for the dissolution of the writ of attachment decision and then accepting the judgment, only if favorable,
issued by the court of origin (Record on Appeal, pp. 15-19). and attacking it for lack of jurisdiction, when adverse as
Since then, it acquired certain rights and assumed specific well as in Pindagan etc. vs. Dans, et al., G.R. L-14591,
obligations in connection with the pending case, in September 26, 1962; Montelibano, et al., vs. Bacolod-Murcia
accordance with sections 12 and 17, Rule 57, Rules of Court Milling Co., Inc., G.R. L-15092; Young Men Labor Union etc. vs.
(Bautista vs. Joaquin, 46 Phil. 885; Kimpang & Co. vs. Javier, The Court of Industrial Relation et al., G.R. L-20307, Feb. 26,
65 Phil. 170). 1965, and Mejia vs. Lucas, 100 Phil. p. 277.
@lendelacruz 48

The facts of this case show that from the time the Surety SO ORDERED.
became a quasi-party on July 31, 1948, it could have raised
the question of the lack of jurisdiction of the Court of First Given in open court, this 2nd day of
Instance of Cebu to take cognizance of the present action by November, 1957, at Cebu City,
reason of the sum of money involved which, according to the Philippines.
law then in force, was within the original exclusive
jurisdiction of inferior courts. It failed to do so. Instead, at
(Sgd.) JOSE M. MENDOZA
several stages of the proceedings in the court a quo as well as
Judge
in the Court of Appeals, it invoked the jurisdiction of said
courts to obtain affirmative relief and submitted its case for a
final adjudication on the merits. It was only after an adverse (Record on Appeal, pp.
decision was rendered by the Court of Appeals that it finally 64-65, emphasis ours)
woke up to raise the question of jurisdiction. Were we to
sanction such conduct on its part, We would in effect be Since the surety's counsel failed to file any answer
declaring as useless all the proceedings had in the present or objection within the period given him, the court,
case since it was commenced on July 19, 1948 and compel the on December 7, 1957, issued an order granting
judgment creditors to go up their Calvary once more. The plaintiffs' motion for execution against the surety;
inequity and unfairness of this is not only patent but and on December 12, 1957, the corresponding writ
revolting. of execution was issued.

Coming now to the merits of the appeal: after going over the On December 24, 1957, the surety filed a motion to
entire record, We have become persuaded that We can do quash the writ of execution on the ground that the
nothing better than to quote in toto, with approval, the same was "issued without the requirements of
decision rendered by the Court of Appeals on December 11, Section 17, Rule 59 of the Rules of Court having been
1962 as follows: complied with," more specifically, that the same
was issued without the required "summary
In Civil Case No. R-660 of the Court of First Instance hearing". This motion was denied by order of
of Cebu, which was a suit for collection of a sum of February 10, 1958.
money, a writ of attachment was issued against
defendants' properties. The attachment, however, On February 25, 1958, the surety filed a motion for
was subsequently discharged under Section 12 of reconsideration of the above-stated order of denial;
Rule 59 upon the filing by defendants of a bond which motion was likewise denied by order of
subscribed by Manila Surety & Fidelity Co., Inc. March 26, 1958.

After trial, judgment was rendered in favor of From the above-stated orders of February 10, 1958
plaintiffs. and March 26, 1958 denying the surety's motion
to quash the writ of execution and motion for
The writ of execution against defendants having reconsideration, respectively the surety has
been returned totally unsatisfied, plaintiffs moved, interposed the appeal on hand.
under Section 17 of Rule 59, for issuance of writ of
execution against Manila Surety & Fidelity Co., Inc. The surety insists that the lower court should have
to enforce the obligation of the bond. But the motion granted its motion to quash the writ of execution
was, upon the surety's opposition, denied on the because the same was issued without the summary
ground that there was "no showing that a demand hearing required by Section 17 of Rule 59, which
had been made, by the plaintiffs to the bonding reads;
company for payment of the amount due under the
judgment" (Record on Appeal, p. 60). "Sec. 17. When execution returned unsatisfied,
recovery had upon bond. If the execution
Hence, plaintiffs made the necessary demand upon be returned unsatisfied in whole or in part,
the surety for satisfaction of the judgment, and upon the surety or sureties on any bond given
the latter's failure to pay the amount due, plaintiffs pursuant to the provisions of this role to
again filed a motion dated October 31, 1957, for secure the payment of the judgment shall
issuance of writ of execution against the surety, with become finally charged on such bond, and
notice of hearing on November 2, 1957. On October bound to pay to the plaintiff upon demand
31, 1957, the surety received copy of said motion the amount due under the judgment,
and notice of hearing. which amount may be recovered from
such surety or sureties after notice and
It appears that when the motion was called on summary hearing in the same action."
November 2, 1957, the surety's counsel asked that (Emphasis ours)
he be given time within which to answer the
motion, and so an order was issued in open court, Summary hearing is "not intended to be carried on
as follows:1wph1.t in the formal manner in which ordinary actions are
prosecuted" (83 C.J.S. 792). It is, rather, a procedure
As prayed for, Atty. Jose P. Soberano, Jr., by which a question is resolved "with dispatch, with
counsel for the Manila Surety & Fidelity the least possible delay, and in preference to
Co., Inc., Cebu Branch, is given until ordinary legal and regular judicial proceedings"
Wednesday, November 6, 1957, to file his (Ibid, p. 790). What is essential is that "the defendant
answer to the motion for the issuance of a is notified or summoned to appear and is given an
writ of execution dated October 30, 1957 of opportunity to hear what is urged upon him, and to
the plaintiffs, after which this incident shall be interpose a defense, after which follows an
deemed submitted for resolution. adjudication of the rights of the parties" (Ibid., pp.
@lendelacruz 49

793-794); and as to the extent and latitude of the SERENO, J.:


hearing, the same will naturally lie upon the
discretion of the court, depending upon the This Rule 45 Petition requires this Court to address the issue
attending circumstances and the nature of the of the proper scope of the delegated jurisdiction of municipal
incident up for consideration. trial courts in land registration cases. Petitioner Republic of
the Philippines (Republic) assails the Decision of the Court of
In the case at bar, the surety had been notified of the Appeals (CA)1 in CA-G.R. CV No. 70349, which affirmed the
plaintiffs' motion for execution and of the date when Decision of the Municipal Trial Court (MTC) of San Juan,
the same would be submitted for consideration. In Batangas2 in LRC Case No. N-98-20, LRA Record No. 68329,
fact, the surety's counsel was present in court when granting respondent Bantigue Point Development
the motion was called, and it was upon his request Corporations (Corporation) application for original
that the court a quo gave him a period of four days registration of a parcel of land. Since only questions of law
within which to file an answer. Yet he allowed that have been raised, petitioner need not have filed a Motion for
period to lapse without filing an answer or Reconsideration of the assailed CA Decision before filing this
objection. The surety cannot now, therefore, Petition for Review.
complain that it was deprived of its day in court.
The Facts
It is argued that the surety's counsel did not file an
answer to the motion "for the simple reason that all On 17 July 1997, respondent Bantigue Point Development
its defenses can be set up during the hearing of the Corporation filed with the Regional Trial Court (RTC) of
motion even if the same are not reduced to writing" Rosario, Batangas an application for original registration of
(Appellant's brief, p. 4). There is obviously no merit title over a parcel of land with an assessed value of 4,330,
in this pretense because, as stated above, the record 1,920 and 8,670, or a total assessed value of 14,920 for the
will show that when the motion was called, what entire property, more particularly described as Lot 8060 of
the surety's counsel did was to ask that he be Cad 453-D, San Juan Cadastre, with an area of more or less
allowed and given time to file an answer. Moreover, 10,732 square meters, located at Barangay Barualte, San Juan,
it was stated in the order given in open court upon Batangas. 3
request of the surety's counsel that after the four-
day period within which to file an answer, "the
On 18 July 1997, the RTC issued an Order setting the case for
incident shall be deemed submitted for resolution";
initial hearing on 22 October 1997.4 On 7 August 1997, it
and counsel apparently agreed, as the order was
issued a second Order setting the initial hearing on 4
issued upon his instance and he interposed no
November 1997.5
objection thereto.

Petitioner Republic filed its Opposition to the application for


It is also urged that although according to Section 17
registration on 8 January 1998 while the records were still
of Rule 59, supra, there is no need for a separate
with the RTC.6
action, there must, however, be a separate judgment
against the surety in order to hold it liable on the
bond (Appellant's Brief, p. 15). Not so, in our On 31 March 1998, the RTC Clerk of Court transmitted motu
opinion. A bond filed for discharge of attachment is, proprio the records of the case to the MTC of San Juan,
per Section 12 of Rule 59, "to secure the payment to because the assessed value of the property was allegedly less
the plaintiff of any judgment he may recover in the than 100,000.7
action," and stands "in place of the property so
released". Hence, after the judgment for the plaintiff Thereafter, the MTC entered an Order of General Default8
has become executory and the execution is and commenced with the reception of evidence.9 Among the
"returned unsatisfied" (Sec. 17, Rule 59), as in this documents presented by respondent in support of its
case, the liability of the bond automatically attaches application are Tax Declarations,10 a Deed of Absolute Sale in
and, in failure of the surety to satisfy the judgment its favor,11 and a Certification from the Department of
against the defendant despite demand therefor, writ Environment and Natural Resources (DENR) Community
of execution may issue against the surety to enforce Environment and Natural Resources Office (CENRO) of
the obligation of the bond. Batangas City that the lot in question is within the alienable
and disposable zone.12 Thereafter, it awarded the land to
UPON ALL THE FOREGOING, the orders appealed from are respondent Corporation.13
hereby affirmed, with costs against the appellant Manila
Surety and Fidelity Company, Inc. Acting on an appeal filed by the Republic,14 the CA ruled that
since the former had actively participated in the proceedings
Republic of the Philippines before the lower court, but failed to raise the jurisdictional
SUPREME COURT challenge therein, petitioner is thereby estopped from
Manila questioning the jurisdiction of the lower court on appeal. 15
The CA further found that respondent Corporation had
sufficiently established the latters registrable title over the
SECOND DIVISION
subject property after having proven open, continuous,
exclusive and notorious possession and occupation of the
G. R. No. 162322 March 14, 2012 subject land by itself and its predecessors-in-interest even
before the outbreak of World War II.16
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs. Dissatisfied with the CAs ruling, petitioner Republic filed
BANTIGUE POINT DEVELOPMENT CORPORATION, this instant Rule 45 Petition and raised the following
Respondent. arguments in support of its appeal:

DECISION I.
@lendelacruz 50

THE REPUBLIC CANNOT BE ESTOPPED FROM Laches has been defined as the "failure or neglect, for an
QUESTIONING THE JURISDICTION OF THE unreasonable and unexplained length of time, to do that
MUNICIPAL TRIAL COURT OVER THE which, by exercising due diligence, could or should have
APPLICATION FOR ORIGINAL REGISTRATION been done earlier; it is negligence or omission to assert a right
OF LAND TITLE EVEN FOR THE FIRST TIME ON within a reasonable time, warranting the presumption that
APPEAL the party entitled to assert it either has abandoned or
declined to assert it."27 In this case, petitioner Republic has
II. not displayed such unreasonable failure or neglect that
would lead us to conclude that it has abandoned or declined
to assert its right to question the lower court's jurisdiction.
THE MUNICIPAL TRIAL COURT FAILED TO
ACQUIRE JURISDICTION OVER THE
APPLICATION FOR ORIGINAL REGISTRATION II
OF LAND TITLE.17
The Municipal Trial Court properly acquired jurisdiction
The Courts Ruling over the case.

We uphold the jurisdiction of the MTC, but remand the case In assailing the jurisdiction of the lower courts, petitioner
to the court a quo for further proceedings in order to Republic raised two points of contention: (a) the period for
determine if the property in question forms part of the setting the date and hour of the initial hearing; and (b) the
alienable and disposable land of the public domain. value of the land to be registered.

I First, petitioner argued that the lower court failed to acquire


jurisdiction over the application, because the RTC set the date
and hour of the initial hearing beyond the 90-day period
The Republic is not estopped from raising the issue of
provided under the Property Registration Decree.28
jurisdiction in this case.

We disagree.
At the outset, we rule that petitioner Republic is not estopped
from questioning the jurisdiction of the lower court, even if
the former raised the jurisdictional question only on appeal. The Property Registration Decree provides:
The rule is settled that lack of jurisdiction over the subject
matter may be raised at any stage of the proceedings.18 Sec. 23. Notice of initial hearing, publication, etc. - The court
Jurisdiction over the subject matter is conferred only by the shall, within five days from filing of the application, issue an
Constitution or the law.19 It cannot be acquired through a order setting the date and hour of the initial hearing which
waiver or enlarged by the omission of the parties or conferred shall not be earlier than forty-five days nor later than ninety
by the acquiescence of the court.20 Consequently, questions days from the date of the order. x x x.
of jurisdiction may be cognizable even if raised for the first
time on appeal.21 In this case, the application for original registration was filed
on 17 July 1997.29 On 18 July 1997, or a day after the filing of
The ruling of the Court of Appeals that "a party may be the application, the RTC immediately issued an Order setting
estopped from raising such [jurisdictional] question if he has the case for initial hearing on 22 October 1997, which was 96
actively taken part in the very proceeding which he days from the Order.30 While the date set by the RTC was
questions, belatedly objecting to the courts jurisdiction in the beyond the 90-day period provided for in Section 23, this fact
event that the judgment or order subsequently rendered is did not affect the jurisdiction of the trial court. In Republic v.
adverse to him"22 is based on the doctrine of estoppel by Manna Properties, Inc.,31 petitioner Republic therein
laches. We are aware of that doctrine first enunciated by this contended that there was failure to comply with the
Court in Tijam v. Sibonghanoy.23 In Tijam, the party-litigant jurisdictional requirements for original registration, because
actively participated in the proceedings before the lower there were 125 days between the Order setting the date of the
court and filed pleadings therein. Only 15 years thereafter, initial hearing and the initial hearing itself. We ruled that the
and after receiving an adverse Decision on the merits from lapse of time between the issuance of the Order setting the
the appellate court, did the party-litigant question the lower date of initial hearing and the date of the initial hearing itself
courts jurisdiction. Considering the unique facts in that case, was not fatal to the application. Thus, we held:
we held that estoppel by laches had already precluded the
party-litigant from raising the question of lack of jurisdiction x x x [A] party to an action has no control over the
on appeal. In Figueroa v. People,24 we cautioned that Tijam Administrator or the Clerk of Court acting as a land court; he
must be construed as an exception to the general rule and has no right to meddle unduly with the business of such
applied only in the most exceptional cases whose factual official in the performance of his duties. A party cannot
milieu is similar to that in the latter case. intervene in matters within the exclusive power of the trial
court. No fault is attributable to such party if the trial court
The facts are starkly different in this case, making the errs on matters within its sole power. It is unfair to punish an
exceptional rule in Tijam inapplicable. Here, petitioner applicant for an act or omission over which the applicant has
Republic filed its Opposition to the application for neither responsibility nor control, especially if the applicant
registration when the records were still with the RTC.25 At has complied with all the requirements of the law.32
that point, petitioner could not have questioned the
delegated jurisdiction of the MTC, simply because the case Indeed, it would be the height of injustice to penalize
was not yet with that court. When the records were respondent Corporation by dismissing its application for
transferred to the MTC, petitioner neither filed pleadings nor registration on account of events beyond its control.
requested affirmative relief from that court. On appeal,
petitioner immediately raised the jurisdictional question in
Moreover, since the RTC issued a second Order on 7 August
its Brief.26 Clearly, the exceptional doctrine of estoppel by
1997 setting the initial hearing on 4 November 1997,33 within
laches is inapplicable to the instant appeal.
the 90-day period provided by law, petitioner Republic
@lendelacruz 51

argued that the jurisdictional defect was still not cured, as the However, the MTC had jurisdiction under the second
second Order was issued more than five days from the filing instance, because the value of the lot in this case does not
of the application, again contrary to the prescribed period exceed 100,000.
under the Property Registration Decree.34
Contrary to petitioners contention, the value of the land
Petitioner is incorrect. should not be determined with reference to its selling price.
Rather, Section 34 of the Judiciary Reorganization Act
The RTCs failure to issue the Order setting the date and hour provides that the value of the property sought to be
of the initial hearing within five days from the filing of the registered may be ascertained in three ways: first, by the
application for registration, as provided in the Property affidavit of the claimant; second, by agreement of the
Registration Decree, did not affect the courts its jurisdiction. respective claimants, if there are more than one; or, third,
Observance of the five-day period was merely directory, and from the corresponding tax declaration of the real property.42
failure to issue the Order within that period did not deprive
the RTC of its jurisdiction over the case. To rule that In this case, the value of the property cannot be determined
compliance with the five-day period is mandatory would using the first method, because the records are bereft of any
make jurisdiction over the subject matter dependent upon affidavit executed by respondent as to the value of the
the trial court. Jurisdiction over the subject matter is property. Likewise, valuation cannot be done through the
conferred only by the Constitution or the law.35 It cannot be second method, because this method finds application only
contingent upon the action or inaction of the court. where there are multiple claimants who agree on and make
a joint submission as to the value of the property. Here, only
This does not mean that courts may disregard the statutory respondent Bantigue Point Development Corporation claims
periods with impunity. We cannot assume that the law the property.
deliberately meant the provision "to become meaningless
and to be treated as a dead letter."36 However, the records of The value of the property must therefore be ascertained with
this case do not show such blatant disregard for the law. In reference to the corresponding Tax Declarations submitted
fact, the RTC immediately set the case for initial hearing a by respondent Corporation together with its application for
day after the filing of the application for registration,37 except registration. From the records, we find that the assessed
that it had to issue a second Order because the initial hearing value of the property is 4,330, 1,920 and 8,670, or a total
had been set beyond the 90-day period provided by law. assessed value of 14,920 for the entire property.43 Based on
these Tax Declarations, it is evident that the total value of the
Second, petitioner contended38 that since the selling price of land in question does not exceed 100,000. Clearly, the MTC
the property based on the Deed of Sale annexed to may exercise its delegated jurisdiction under the Judiciary
respondents application for original registration was Reorganization Act, as amended.
160,000,39 the MTC did not have jurisdiction over the case.
Under Section 34 of the Judiciary Reorganization Act, as III
amended,40 the MTCs delegated jurisdiction to try cadastral
and land registration cases is limited to lands, the value of A certification from the CENRO is not sufficient proof that
which should not exceed 100,000. the property in question is alienable and disposable land of
the public domain.
We are not persuaded.
Even as we affirm the propriety of the MTCs exercise of its
The delegated jurisdiction of the MTC over cadastral and delegated jurisdiction, we find that the lower court erred in
land registration cases is indeed set forth in the Judiciary granting respondent Corporations application for original
Reorganization Act, which provides: registration in the absence of sufficient proof that the
property in question was alienable and disposable land of the
Sec. 34. Delegated Jurisdiction in Cadastral and Land Registration public domain.
Cases. - Metropolitan Trial Courts, Municipal Trial Courts,
and Municipal Circuit Trial Courts may be assigned by the The Regalian doctrine dictates that all lands of the public
Supreme Court to hear and determine cadastral or land domain belong to the State.44 The applicant for land
registration cases covering lots where there is no controversy registration has the burden of overcoming the presumption
or opposition, or contested lots where the value of which of State ownership by establishing through incontrovertible
does not exceed One hundred thousand pesos (100,000.00), evidence that the land sought to be registered is alienable or
such value to be ascertained by the affidavit of the claimant disposable based on a positive act of the government.45 We
or by agreement of the respective claimants if there are more held in Republic v. T.A.N. Properties, Inc. that a CENRO
than one, or from the corresponding tax declaration of the certification is insufficient to prove the alienable and
real property. Their decision in these cases shall be disposable character of the land sought to be registered.46 The
appealable in the same manner as decisions of the Regional applicant must also show sufficient proof that the DENR
Trial Courts. (As amended by R.A. No. 7691) (Emphasis Secretary has approved the land classification and released
supplied.) the land in question as alienable and disposable.47

Thus, the MTC has delegated jurisdiction in cadastral and Thus, the present rule is that an application for original
land registration cases in two instances: first, where there is registration must be accompanied by (1) a CENRO or
no controversy or opposition; or, second, over contested lots, PENRO48 Certification; and (2) a copy of the original
the value of which does not exceed 100,000. classification approved by the DENR Secretary and certified
as a true copy by the legal custodian of the official records.49
The case at bar does not fall under the first instance, because
petitioner opposed respondent Corporations application for Here, respondent Corporation only presented a CENRO
registration on 8 January 1998.41 certification in support of its application.50 Clearly, this falls
short of the requirements for original registration.1wphi1
@lendelacruz 52

We therefore remand this case to the court a quo for reception preliminary prohibitory injunction during the pendency of
of further evidence to prove that the property in question the action against the defendants' announced forfeiture of the
forms part of the alienable and disposable land of the public sum of P3 Million paid by the plaintiffs for the property in
domain. If respondent Bantigue Point Development question, to attach such property of defendants that maybe
Corporation presents a certified true copy of the original sufficient to satisfy any judgment that maybe rendered, and
classification approved by the DENR Secretary, the after hearing, to order defendants to execute a contract of
application for original registration should be granted. If it purchase and sale of the subject property and annul
fails to present sufficient proof that the land in question is defendants' illegal forfeiture of the money of plaintiff,
alienable and disposable based on a positive act of the ordering defendants jointly and severally to pay plaintiff
government, the application should be denied. actual, compensatory and exemplary damages as well as 25%
of said amounts as maybe proved during the trial as
WHEREFORE, premises considered, the instant Petition for attorney's fees and declaring the tender of payment of the
Review is DENIED. Let this case be REMANDED to the purchase price of plaintiff valid and producing the effect of
Municipal Trial Court of San Juan, Batangas, for reception of payment and to make the injunction permanent. The amount
evidence to prove that the property sought to be registered is of damages sought is not specified in the prayer although the
alienable and disposable land of the public domain. body of the complaint alleges the total amount of over P78
Million as damages suffered by plaintiff. 5
SO ORDERED.
3. Upon the filing of the complaint there was an honest
difference of opinion as to the nature of the action in the
Republic of the Philippines
Magaspi case. The complaint was considered as primarily an
SUPREME COURT
action for recovery of ownership and possession of a parcel
Manila
of land. The damages stated were treated as merely to the
main cause of action. Thus, the docket fee of only P60.00 and
EN BANC P10.00 for the sheriff's fee were paid. 6

G.R. No. 75919 May 7, 1987 In the present case there can be no such honest difference of
opinion. As maybe gleaned from the allegations of the
MANCHESTER DEVELOPMENT CORPORATION, ET complaint as well as the designation thereof, it is both an
AL., petitioners, action for damages and specific performance. The docket fee
vs. paid upon filing of complaint in the amount only of P410.00
COURT OF APPEALS, CITY LAND DEVELOPMENT by considering the action to be merely one for specific
CORPORATION, STEPHEN ROXAS, ANDREW performance where the amount involved is not capable of
LUISON, GRACE LUISON and JOSE DE MAISIP, pecuniary estimation is obviously erroneous. Although the
respondents. total amount of damages sought is not stated in the prayer of
the complaint yet it is spelled out in the body of the complaint
RESOLUTION totalling in the amount of P78,750,000.00 which should be the
basis of assessment of the filing fee.
GANCAYCO, J.:
4. When this under-re assessment of the filing fee in this case
Acting on the motion for reconsideration of the resolution of was brought to the attention of this Court together with
the Second Division of January 28,1987 and another motion similar other cases an investigation was immediately ordered
to refer the case to and to be heard in oral argument by the by the Court. Meanwhile plaintiff through another counsel
Court En Banc filed by petitioners, the motion to refer the case with leave of court filed an amended complaint on
to the Court en banc is granted but the motion to set the case September 12, 1985 for the inclusion of Philips Wire and
for oral argument is denied. Cable Corporation as co-plaintiff and by emanating any
mention of the amount of damages in the body of the
complaint. The prayer in the original complaint was
Petitioners in support of their contention that the filing fee
maintained. After this Court issued an order on October 15,
must be assessed on the basis of the amended complaint cite
1985 ordering the re- assessment of the docket fee in the
the case of Magaspi vs. Ramolete. 1 They contend that the
present case and other cases that were investigated, on
Court of Appeals erred in that the filing fee should be levied
November 12, 1985 the trial court directed plaintiffs to rectify
by considering the amount of damages sought in the original
the amended complaint by stating the amounts which they
complaint.
are asking for. It was only then that plaintiffs specified the
amount of damages in the body of the complaint in the
The environmental facts of said case differ from the present reduced amount of P10,000,000.00. 7 Still no amount of
in that damages were specified in the prayer. Said amended
complaint was admitted.
1. The Magaspi case was an action for recovery of ownership
and possession of a parcel of land with damages. 2 While the On the other hand, in the Magaspi case, the trial court
present case is an action for torts and damages and specific ordered the plaintiffs to pay the amount of P3,104.00 as filing
performance with prayer for temporary restraining order, fee covering the damages alleged in the original complaint as
etc. 3 it did not consider the damages to be merely an or incidental
to the action for recovery of ownership and possession of real
2. In the Magaspi case, the prayer in the complaint seeks not property. 8 An amended complaint was filed by plaintiff with
only the annulment of title of the defendant to the property, leave of court to include the government of the Republic as
the declaration of ownership and delivery of possession defendant and reducing the amount of damages, and
thereof to plaintiffs but also asks for the payment of actual attorney's fees prayed for to P100,000.00. Said amended
moral, exemplary damages and attorney's fees arising complaint was also admitted. 9
therefrom in the amounts specified therein. 4 However, in the
present case, the prayer is for the issuance of a writ of
@lendelacruz 53

In the Magaspi case, the action was considered not only one The Court acquires jurisdiction over any case only upon the
for recovery of ownership but also for damages, so that the payment of the prescribed docket fee. An amendment of the
filing fee for the damages should be the basis of assessment. complaint or similar pleading will not thereby vest
Although the payment of the docketing fee of P60.00 was jurisdiction in the Court, much less the payment of the docket
found to be insufficient, nevertheless, it was held that since fee based on the amounts sought in the amended pleading.
the payment was the result of an "honest difference of The ruling in the Magaspi case 14 in so far as it is inconsistent
opinion as to the correct amount to be paid as docket fee" the with this pronouncement is overturned and reversed.
court "had acquired jurisdiction over the case and the
proceedings thereafter had were proper and regular." 10 WHEREFORE, the motion for reconsideration is denied for
Hence, as the amended complaint superseded the original lack of merit.
complaint, the allegations of damages in the amended
complaint should be the basis of the computation of the filing
SO ORDERED.
fee. 11

Republic of the Philippines


In the present case no such honest difference of opinion was
SUPREME COURT
possible as the allegations of the complaint, the designation
Manila
and the prayer show clearly that it is an action for damages
and specific performance. The docketing fee should be
assessed by considering the amount of damages as alleged in EN BANC
the original complaint.
G.R. Nos. 79937-38 February 13, 1989
As reiterated in the Magaspi case the rule is well-settled "that
a case is deemed filed only upon payment of the docket fee SUN INSURANCE OFFICE, LTD., (SIOL), E.B. PHILIPPS
regardless of the actual date of filing in court . 12 Thus, in the and D.J. WARBY, petitioners,
present case the trial court did not acquire jurisdiction over vs.
the case by the payment of only P410.00 as docket fee. Neither HON. MAXIMIANO C. ASUNCION, Presiding Judge,
can the amendment of the complaint thereby vest jurisdiction Branch 104, Regional Trial Court, Quezon City and
upon the Court. 13 For an legal purposes there is no such MANUEL CHUA UY PO TIONG, respondents.
original complaint that was duly filed which could be
amended. Consequently, the order admitting the amended GANCAYCO, J.:
complaint and all subsequent proceedings and actions taken
by the trial court are null and void. Again the Court is asked to resolve the issue of whether or
not a court acquires jurisdiction over a case when the correct
The Court of Appeals therefore, aptly ruled in the present and proper docket fee has not been paid.
case that the basis of assessment of the docket fee should be
the amount of damages sought in the original complaint and On February 28, 1984, petitioner Sun Insurance Office, Ltd.
not in the amended complaint. (SIOL for brevity) filed a complaint with the Regional Trial
Court of Makati, Metro Manila for the consignation of a
The Court cannot close this case without making the premium refund on a fire insurance policy with a prayer for
observation that it frowns at the practice of counsel who filed the judicial declaration of its nullity against private
the original complaint in this case of omitting any respondent Manuel Uy Po Tiong. Private respondent as
specification of the amount of damages in the prayer declared in default for failure to file the required answer
although the amount of over P78 million is alleged in the within the reglementary period.
body of the complaint. This is clearly intended for no other
purpose than to evade the payment of the correct filing fees On the other hand, on March 28, 1984, private respondent
if not to mislead the docket clerk in the assessment of the filed a complaint in the Regional Trial Court of Quezon City
filing fee. This fraudulent practice was compounded when, for the refund of premiums and the issuance of a writ of
even as this Court had taken cognizance of the anomaly and preliminary attachment which was docketed as Civil Case
ordered an investigation, petitioner through another counsel No. Q-41177, initially against petitioner SIOL, and thereafter
filed an amended complaint, deleting all mention of the including E.B. Philipps and D.J. Warby as additional
amount of damages being asked for in the body of the defendants. The complaint sought, among others, the
complaint. It was only when in obedience to the order of this payment of actual, compensatory, moral, exemplary and
Court of October 18, 1985, the trial court directed that the liquidated damages, attorney's fees, expenses of litigation
amount of damages be specified in the amended complaint, and costs of the suit. Although the prayer in the complaint
that petitioners' counsel wrote the damages sought in the did not quantify the amount of damages sought said amount
much reduced amount of P10,000,000.00 in the body of the may be inferred from the body of the complaint to be about
complaint but not in the prayer thereof. The design to avoid Fifty Million Pesos (P50,000,000.00).
payment of the required docket fee is obvious.

Only the amount of P210.00 was paid by private respondent


The Court serves warning that it will take drastic action upon as docket fee which prompted petitioners' counsel to raise his
a repetition of this unethical practice. objection. Said objection was disregarded by respondent
Judge Jose P. Castro who was then presiding over said case.
To put a stop to this irregularity, henceforth all complaints, Upon the order of this Court, the records of said case together
petitions, answers and other similar pleadings should specify with twenty-two other cases assigned to different branches
the amount of damages being prayed for not only in the body of the Regional Trial Court of Quezon City which were under
of the pleading but also in the prayer, and said damages shall investigation for under-assessment of docket fees were
be considered in the assessment of the filing fees in any case. transmitted to this Court. The Court thereafter returned the
Any pleading that fails to comply with this requirement shall said records to the trial court with the directive that they be
not bib accepted nor admitted, or shall otherwise be re-raffled to the other judges in Quezon City, to the exclusion
expunged from the record. of Judge Castro. Civil Case No. Q-41177 was re-raffled to
Branch 104, a sala which was then vacant.
@lendelacruz 54

On October 15, 1985, the Court en banc issued a Resolution in (a) denying petitioners' motion to dismiss
Administrative Case No. 85-10-8752-RTC directing the the complaint, as amended, and
judges in said cases to reassess the docket fees and that in
case of deficiency, to order its payment. The Resolution also (b) granting the writ of preliminary
requires all clerks of court to issue certificates of re- attachment, but giving due course to the
assessment of docket fees. All litigants were likewise portion thereof questioning the
required to specify in their pleadings the amount sought to reassessment of the docketing fee, and
be recovered in their complaints. requiring the Honorable respondent Court
to reassess the docketing fee to be paid by
On December 16, 1985, Judge Antonio P. Solano, to whose private respondent on the basis of the
sala Civil Case No. Q-41177 was temporarily assigned, amount of P25,401,707.00. 2
issuedan order to the Clerk of Court instructing him to issue
a certificate of assessment of the docket fee paid by private Hence, the instant petition.
respondent and, in case of deficiency, to include the same in
said certificate.
During the pendency of this petition and in conformity with
the said judgment of respondent court, private respondent
On January 7, 1984, to forestall a default, a cautionary answer paid the additional docket fee of P62,432.90 on April 28, 1988.
was filed by petitioners. On August 30,1984, an amended 3
complaint was filed by private respondent including the two
additional defendants aforestated.
The main thrust of the petition is that the Court of Appeals
erred in not finding that the lower court did not acquire
Judge Maximiano C. Asuncion, to whom Civil Case No. jurisdiction over Civil Case No. Q-41177 on the ground of
Q41177 was thereafter assigned, after his assumption into nonpayment of the correct and proper docket fee. Petitioners
office on January 16, 1986, issued a Supplemental Order allege that while it may be true that private respondent had
requiring the parties in the case to comment on the Clerk of paid the amount of P182,824.90 as docket fee as herein-above
Court's letter-report signifying her difficulty in complying related, and considering that the total amount sought to be
with the Resolution of this Court of October 15, 1985 since the recovered in the amended and supplemental complaint is
pleadings filed by private respondent did not indicate the P64,601,623.70 the docket fee that should be paid by private
exact amount sought to be recovered. On January 23, 1986, respondent is P257,810.49, more or less. Not having paid the
private respondent filed a "Compliance" and a "Re-Amended same, petitioners contend that the complaint should be
Complaint" stating therein a claim of "not less than dismissed and all incidents arising therefrom should be
Pl0,000,000. 00 as actual compensatory damages" in the annulled. In support of their theory, petitioners cite the latest
prayer. In the body of the said second amended complaint ruling of the Court in Manchester Development Corporation vs.
however, private respondent alleges actual and CA, 4 as follows:
compensatory damages and attorney's fees in the total
amount of about P44,601,623.70.
The Court acquires jurisdiction over any
case only upon the payment of the
On January 24, 1986, Judge Asuncion issued another Order prescribed docket fee. An amendment of
admitting the second amended complaint and stating therein the complaint or similar pleading will not
that the same constituted proper compliance with the thereby vest jurisdiction in the Court,
Resolution of this Court and that a copy thereof should be much less the payment of the docket fee
furnished the Clerk of Court for the reassessment of the based on the amounts sought in the
docket fees. The reassessment by the Clerk of Court based on amended pleading. The ruling in the
private respondent's claim of "not less than P10,000,000.00 as Magaspi Case in so far as it is inconsistent
actual and compensatory damages" amounted to P39,786.00 with this pronouncement is overturned
as docket fee. This was subsequently paid by private and reversed.
respondent.
On the other hand, private respondent claims that the ruling
Petitioners then filed a petition for certiorari with the Court in Manchester cannot apply retroactively to Civil Case No.
of Appeals questioning the said order of Judie Asuncion Q41177 for at the time said civil case was filed in court there
dated January 24, 1986. was no such Manchester ruling as yet. Further, private
respondent avers that what is applicable is the ruling of this
On April 24, 1986, private respondent filed a supplemental Court in Magaspi v. Ramolete, 5 wherein this Court held that
complaint alleging an additional claim of P20,000,000.00 as the trial court acquired jurisdiction over the case even if the
d.qmages so the total claim amounts to about P64,601,623.70. docket fee paid was insufficient.
On October 16, 1986, or some seven months after filing the
supplemental complaint, the private respondent paid the The contention that Manchester cannot apply retroactively to
additional docket fee of P80,396.00. 1 this case is untenable. Statutes regulating the procedure of
the courts will be construed as applicable to actions pending
On August 13, 1987, the Court of Appeals rendered a and undetermined at the time of their passage. Procedural
decision ruling, among others, as follows: laws are retrospective in that sense and to that extent. 6

WHEREFORE, judgment is hereby In Lazaro vs. Endencia and Andres, 7 this Court held that the
rendered: payment of the full amount of the docket fee is an
indispensable step for the perfection of an appeal. In a
1. Denying due course to the petition in forcible entry and detainer case before the justice of the peace
CA-G.R. SP No. 1, 09715 insofar as it seeks court of Manaoag, Pangasinan, after notice of a judgment
annulment of the order dismissing the case, the plaintiff filed a notice of appeal with
said court but he deposited only P8.00 for the docket fee,
instead of P16.00 as required, within the reglementary period
@lendelacruz 55

of appeal of five (5) days after receiving notice of judgment. attorney's fees of P100,000.00 and the costs of the action. The
Plaintiff deposited the additional P8.00 to complete the defendant filed an opposition to the amended complaint. The
amount of the docket fee only fourteen (14) days later. On the opposition notwithstanding, the amended complaint was
basis of these facts, this court held that the Court of First admitted by the trial court. The trial court reiterated its order
Instance did notacquire jurisdiction to hear and determine for the payment of the additional docket fee which plaintiff
the appeal as the appeal was not thereby perfected. assailed and then challenged before this Court. Plaintiff
alleged that he paid the total docket fee in the amount of
In Lee vs. Republic, 8 the petitioner filed a verified declaration P60.00 and that if he has to pay the additional fee it must be
of intention to become a Filipino citizen by sending it through based on the amended complaint.
registered mail to the Office of the Solicitor General in 1953
but the required filing fee was paid only in 1956, barely 5V2 The question posed, therefore, was whether or not the
months prior to the filing of the petition for citizenship. This plaintiff may be considered to have filed the case even if the
Court ruled that the declaration was not filed in accordance docketing fee paid was not sufficient. In Magaspi, We
with the legal requirement that such declaration should be reiterated the rule that the case was deemed filed only upon
filed at least one year before the filing of the petition for the payment of the correct amount for the docket fee
citizenship. Citing Lazaro, this Court concluded that the filing regardless of the actual date of the filing of the complaint;
of petitioner's declaration of intention on October 23, 1953 that there was an honest difference of opinion as to the
produced no legal effect until the required filing fee was paid correct amount to be paid as docket fee in that as the action
on May 23, 1956. appears to be one for the recovery of property the docket fee
of P60.00 was correct; and that as the action is also one, for
In Malimit vs. Degamo, 9 the same principles enunciated in damages, We upheld the assessment of the additional docket
Lazaro and Lee were applied. It was an original petition for fee based on the damages alleged in the amended complaint
quo warranto contesting the right to office of proclaimed as against the assessment of the trial court which was based
candidates which was mailed, addressed to the clerk of the on the damages alleged in the original complaint.
Court of First Instance, within the one-week period after the
proclamation as provided therefor by law. 10 However, the However, as aforecited, this Court overturned Magaspi in
required docket fees were paid only after the expiration of Manchester. Manchester involves an action for torts and
said period. Consequently, this Court held that the date of damages and specific performance with a prayer for the
such payment must be deemed to be the real date of filing of issuance of a temporary restraining order, etc. The prayer in
aforesaid petition and not the date when it was mailed. said case is for the issuance of a writ of preliminary
prohibitory injunction during the pendency of the action
Again, in Garica vs, Vasquez, 11 this Court reiterated the rule against the defendants' announced forfeiture of the sum of P3
that the docket fee must be paid before a court will act on a Million paid by the plaintiffs for the property in question, the
petition or complaint. However, we also held that said rule is attachment of such property of defendants that may be
not applicable when petitioner seeks the probate of several sufficient to satisfy any judgment that may be rendered, and,
wills of the same decedent as he is not required to file a after hearing, the issuance of an order requiring defendants
separate action for each will but instead he may have other to execute a contract of purchase and sale of the subject
wills probated in the same special proceeding then pending property and annul defendants' illegal forfeiture of the
before the same court. money of plaintiff. It was also prayed that the defendants be
made to pay the plaintiff jointly and severally, actual,
compensatory and exemplary damages as well as 25% of said
Then in Magaspi, 12 this Court reiterated the ruling in Malimit
amounts as may be proved during the trial for attorney's fees.
and Lee that a case is deemed filed only upon payment of the
The plaintiff also asked the trial court to declare the tender of
docket fee regardless of the actual date of its filing in court.
payment of the purchase price of plaintiff valid and sufficient
Said case involved a complaint for recovery of ownership
for purposes of payment, and to make the injunction
and possession of a parcel of land with damages filed in the
permanent. The amount of damages sought is not specified
Court of First Instance of Cebu. Upon the payment of P60.00
in the prayer although the body of the complaint alleges the
for the docket fee and P10.00 for the sheriffs fee, the
total amount of over P78 Millon allegedly suffered by
complaint was docketed as Civil Case No. R-11882. The
plaintiff.
prayer of the complaint sought that the Transfer Certificate
of Title issued in the name of the defendant be declared as
null and void. It was also prayed that plaintiff be declared as Upon the filing of the complaint, the plaintiff paid the
owner thereof to whom the proper title should be issued, and amount of only P410.00 for the docket fee based on the nature
that defendant be made to pay monthly rentals of P3,500.00 of the action for specific performance where the amount
from June 2, 1948 up to the time the property is delivered to involved is not capable of pecuniary estimation. However, it
plaintiff, P500,000.00 as moral damages, attorney's fees in the was obvious from the allegations of the complaint as well as
amount of P250,000.00, the costs of the action and exemplary its designation that the action was one for damages and
damages in the amount of P500,000.00. specific performance. Thus, this court held the plaintiff must
be assessed the correct docket fee computed against the
amount of damages of about P78 Million, although the same
The defendant then filed a motion to compel the plaintiff to
was not spelled out in the prayer of the complaint.
pay the correct amount of the docket fee to which an
opposition was filed by the plaintiff alleging that the action
was for the recovery of a parcel of land so the docket fee must Meanwhile, plaintiff through another counsel, with leave of
be based on its assessed value and that the amount of P60.00 court, filed an amended complaint on September 12, 1985 by
was the correct docketing fee. The trial court ordered the the inclusion of another co-plaintiff and eliminating any
plaintiff to pay P3,104.00 as filing fee. mention of the amount of damages in the body of the
complaint. The prayer in the original complaint was
maintained.
The plaintiff then filed a motion to admit the amended
complaint to include the Republic as the defendant. In the
prayer of the amended complaint the exemplary damages On October 15, 1985, this Court ordered the re-assessment of
earlier sought was eliminated. The amended prayer merely the docket fee in the said case and other cases that were
sought moral damages as the court may determine, investigated. On November 12, 1985, the trial court directed
@lendelacruz 56

the plaintiff to rectify the amended complaint by stating the In the present case, a more liberal interpretation of the rules
amounts which they were asking for. This plaintiff did as is called for considering that, unlike Manchester, private
instructed. In the body of the complaint the amount of respondent demonstrated his willingness to abide by the
damages alleged was reduced to P10,000,000.00 but still no rules by paying the additional docket fees as required. The
amount of damages was specified in the prayer. Said promulgation of the decision in Manchester must have had
amended complaint was admitted. that sobering influence on private respondent who thus paid
the additional docket fee as ordered by the respondent court.
Applying the principle in Magaspi that "the case is deemed It triggered his change of stance by manifesting his
filed only upon payment of the docket fee regardless of the willingness to pay such additional docket fee as may be
actual date of filing in court," this Court held that the trial ordered.
court did not acquire jurisdiction over the case by payment
of only P410.00 for the docket fee. Neither can the Nevertheless, petitioners contend that the docket fee that was
amendment of the complaint thereby vest jurisdiction upon paid is still insufficient considering the total amount of the
the Court. For all legal purposes there was no such original claim. This is a matter which the clerk of court of the lower
complaint duly filed which could be amended. court and/or his duly authorized docket clerk or clerk in-
Consequently, the order admitting the amended complaint charge should determine and, thereafter, if any amount is
and all subsequent proceedings and actions taken by the trial found due, he must require the private respondent to pay the
court were declared null and void. 13 same.

The present case, as above discussed, is among the several Thus, the Court rules as follows:
cases of under-assessment of docket fee which were
investigated by this Court together with Manchester. The facts 1. It is not simply the filing of the complaint or appropriate
and circumstances of this case are similar to Manchester. In initiatory pleading, but the payment of the prescribed docket
the body of the original complaint, the total amount of fee, that vests a trial court with jurisdiction over the subject
damages sought amounted to about P50 Million. In the matter or nature of the action. Where the filing of the
prayer, the amount of damages asked for was not stated. The initiatory pleading is not accompanied by payment of the
action was for the refund of the premium and the issuance of docket fee, the court may allow payment of the fee within a
the writ of preliminary attachment with damages. The reasonable time but in no case beyond the applicable
amount of only P210.00 was paid for the docket fee. On prescriptive or reglementary period.
January 23, 1986, private respondent filed an amended
complaint wherein in the prayer it is asked that he be
2. The same rule applies to permissive counterclaims, third
awarded no less than P10,000,000.00 as actual and exemplary
party claims and similar pleadings, which shall not be
damages but in the body of the complaint the amount of his
considered filed until and unless the filing fee prescribed
pecuniary claim is approximately P44,601,623.70. Said
therefor is paid. The court may also allow payment of said
amended complaint was admitted and the private
fee within a reasonable time but also in no case beyond its
respondent was reassessed the additional docket fee of
applicable prescriptive or reglementary period.
P39,786.00 based on his prayer of not less than P10,000,000.00
in damages, which he paid.
3. Where the trial court acquires jurisdiction over a claim by
the filing of the appropriate pleading and payment of the
On April 24, 1986, private respondent filed a supplemental
prescribed filing fee but, subsequently, the judgment awards
complaint alleging an additional claim of P20,000,000.00 in
a claim not specified in the pleading, or if specified the same
damages so that his total claim is approximately
has been left for determination by the court, the additional
P64,601,620.70. On October 16, 1986, private respondent paid
filing fee therefor shall constitute a lien on the judgment. It
an additional docket fee of P80,396.00. After the
shall be the responsibility of the Clerk of Court or his duly
promulgation of the decision of the respondent court on
authorized deputy to enforce said lien and assess and collect
August 31, 1987 wherein private respondent was ordered to
the additional fee.
be reassessed for additional docket fee, and during the
pendency of this petition, and after the promulgation of
Manchester, on April 28, 1988, private respondent paid an WHEREFORE, the petition is DISMISSED for lack of merit.
additional docket fee of P62,132.92. Although private The Clerk of Court of the court a quo is hereby instructed to
respondent appears to have paid a total amount of reassess and determine the additional filing fee that should
P182,824.90 for the docket fee considering the total amount be paid by private respondent considering the total amount
of his claim in the amended and supplemental complaint of the claim sought in the original complaint and the
amounting to about P64,601,620.70, petitioner insists that supplemental complaint as may be gleaned from the
private respondent must pay a docket fee of P257,810.49. allegations and the prayer thereof and to require private
respondent to pay the deficiency, if any, without
pronouncement as to costs.
The principle in Manchester could very well be applied in the
present case. The pattern and the intent to defraud the
government of the docket fee due it is obvious not only in the SO ORDERED.
filing of the original complaint but also in the filing of the
second amended complaint. Republic of the Philippines
SUPREME COURT
However, in Manchester, petitioner did not pay any Manila
additional docket fee until] the case was decided by this
Court on May 7, 1987. Thus, in Manchester, due to the fraud EN BANC
committed on the government, this Court held that the court
a quo did not acquire jurisdiction over the case and that the G.R. Nos. 88075-77 December 20, 1989
amended complaint could not have been admitted inasmuch
as the original complaint was null and void.
MAXIMO TACAY, PONCIANO PANES and ANTONIA
NOEL, petitioners,
vs.
@lendelacruz 57

REGIONAL TRIAL COURT OF TAGUM Davao del The prayer of each complaint contained a handwritten
Norte, Branches 1 and 2, Presided by Hon. Marcial notation (evidently made by plaintiff's counsel) reading,
Fernandez and Hon. Jesus Matas, respectively, PATSITA "P5,000.00 as and for," immediately above the typewritten
GAMUTAN, Clerk of Court, and GODOFREDO PINEDA, words, "Actual damages, as proven," the intention
respondents. apparently being to make the entire phrase read, " P5,000.00
as and for actual damages as proven. 5
RESOLUTION
Motions to dismiss were filed in behalf of each of the
NARVASA, J.: defendants by common counsel . 6 Every motion alleged that
the Trial Court had not acquired jurisdiction of the case
In the Regional Trial Court at Tagum, Davao del Norte, 1

three . . . for the reason that the ... complaint


violates the mandatory and clear provision
(3) actions for recovery of possession (acciones publicianas 2 of Circular No. 7 of the ... Supreme Court
) were separately instituted by Godofredo Pineda against dated March 24,1988, by failing to specify
three (3) defendants, docketed as follows: all the amounts of damages which plaintiff
is claiming from defendant;" and

1) vs. Antonia Noel Civil Case No. 2209


. . . for ... failure (of the complaint) to even
allege the basic requirement as to the
2) vs. Ponciano Panes Civil Case No. 2210 assessed value of the subject lot in dispute.

3) vs. Maximo Tacay Civil Case No. 2211. Judge Matas denied the motion to dismiss filed in Civil Case
No. 2210 but ordered the expunction of the "allegations in
Civil Cases Numbered 2209 and 2211 were raffled to Branch paragraph 11 of the ... complaint regarding moral as well as
I of the Trial Court, presided over by Judge Marcial nominal damages . 7 On motion of defendant Panes, Judge
Hernandez. Civil No. 2210 was assigned to Branch 2, Matas later ordered the striking out, too, of the "handwritten
presided over by Judge Jesus Matas. amount of 'P5,000. 00 as and for.' including the typewritten
words 'actual damages as proven' ... in sub-paragraph b of
The complaints 3 all alleged the same essential facts (1) paragraph 4 in the conclusion and prayer of the complaint ..."
8
Pineda was the owner of a parcel of land measuring 790
square meters, his ownership being evidenced by TCT No. T-
46560; (2) the previous owner had allowed the defendants to The motions to dismiss submitted in Civil Cases Numbered
occupy portions of the land by mere tolerance; (3) having 2211 and 2209 were also denied in separate orders
himself need to use the property, Pineda had made demands promulgated by Judge Marcial Fernandez. 9 His Order in
on the defendants to vacate the property and pay reasonable Case No. 2209 dated March 15, 1989 (a) declared that since
rentals therefor, but these demands had been refused; and (4) the "action at bar is for Reivindicatoria, Damages and
the last demand had been made more than a year prior to the Attorney's fees ... (d)efinitely this Court has the exclusive
commencement of suit. The complaints prayed for the same jurisdiction," (b) that the claims for actual, moral and nominal
reliefs, to wit: damages "are only one aspect of the cause of action," and (c)
because of absence of specification of the amounts claimed as
1) that plaintiff be declared owner of the moral, nominal and actual damages, they should be
areas occupied by the defendants; "expunged from the records."

2) that defendants and their "privies and Ascribing grave abuse of discretion to both Judges Matas and
allies" be ordered to vacate and deliver the Fernandez in the rendition of the Orders above described, the
portions of the land usurped by them; defendants in all three (3) actions have filed with this Court
a "Joint Petition" for certiorari, prohibition and mandamus,
3) that each defendant be ordered to pay: with prayer for temporary restraining order and/or writ of
preliminary prohibitory injunction," praying essentially that
said orders be annulled and respondent judges directed to
1 ) P 2,000 as monthly rents from February, dismiss all the complaints "without prejudice to private
1987; respondent Pineda's re-filing a similar complaint that
complies with Circular No. 7." The joint petition (a) re-
2 ) Actual damages, as proven; asserted the proposition that because the complaints had
failed to state the amounts being claimed as actual, moral and
3 ) Moral and nominal damages as the nominal damages, the Trial Courts a quo had not acquired
Honorable Court may fix ; jurisdiction over the three (3) actions in question-indeed, the
respondent Clerk of Court should not have accepted the
complaints which initiated said suits, and (b) it was not
4) P30,000.00, "as attorney's fees, and
proper merely to expunge the claims for damages and allow
representation fees of P5,000.00 per day of
"the so-called cause of action for "reivindicatoria" remain for
appearance;" 4
trial" by itself. 10

and
The joint petition should be, as it is hereby, dismissed.

4) that he (Pineda) be granted such "further


It should be dismissed for failure to comply with this Court's
relief and remedies ... just and equitable in
Circular No. 1-88 (effective January 1, 1989). The copies of the
the premises.
challenged Orders thereto attached 11 were not certified by
the proper Clerk of Court or his duly authorized
@lendelacruz 58

representative. Certification was made by the petitioners' 1. All complaints, petitions, answers, and similar pleadings
counsel, which is not allowed. should specify the amount of damages being prayed for not
only in the body of the pleading but also in the prayer, and
The petition should be dismissed, too, for another equally said damages shall be considered in the assessment of the
important reason. It fails to demonstrate any grave abuse of filing fees in any case.
discretion on the part of the respondent Judges in rendering
the Orders complained of or, for that matter, the existence of 2. Any pleading that fails to comply with this requirement
any proper cause for the issuance of the writ of mandamus. shall not be accepted nor admitted, or shall otherwise be
On the contrary, the orders appear to have correctly applied expunged from the record.
the law to the admitted facts.
3. The Court acquires jurisdiction over any case only upon
It is true that the complaints do not state the amounts being the payment of the prescribed docket fee. An amendment of
claimed as actual, moral and nominal damages. It is also true, the complaint or similar pleading will not thereby vest
however, that the actions are not basically for the recovery of jurisdiction in the Court, much less the payment of the docket
sums of money. They are principally for recovery of fee based on the amount sought in the amended pleading.
possession of real property, in the nature of an accion
publiciana. Determinative of the court's jurisdiction in this The clarificatory and additional rules laid down in Sun
type of actions is the nature thereof, not the amount of the Insurance Office, Ltd. v. Asuncion, supra, read as follows:
damages allegedly arising from or connected with the issue
of title or possession, and regardless of the value of the
1. It is not simply the filing of the complaint or appropriate
property. Quite obviously, an action for recovery of
initiatory pleading, but (also) the payment of the prescribed
possession of real property (such as an accion plenaria de
docket fee that vests a trial court with jurisdiction over the
possesion) or the title thereof, 12 or for partition or
subject-matter or nature of the action. Where the filing of the
condemnation of, or the foreclosure of a mortgage on, said
initiatory pleading is not accompanied by payment of the
real property 13 - in other words, a real action-may be
docket fee, the court may allow payment of the fee within a
commenced and prosecuted without an accompanying claim
reasonable time but in no case beyond the applicable
for actual, moral, nominal or exemplary damages; and such
prescriptive or reglementary period.
an action would fall within the exclusive, original jurisdiction
of the Regional Trial Court.
2. The same rule applies to permissive counterclaims, third-
party claims and similar pleadings, which shall not be
Batas Pambansa Bilang 129 provides that Regional Trial
considered filed until and unless the filing fee prescribed
Courts shall exercise exclusive original jurisdiction inter alia
therefor is paid. The court may also allow payment of said
over "all civil actions which involve the title to, or possession
fee within a reasonable time but also in no case beyond its
of, real property, or any interest therein, except actions for
applicable prescriptive or reglementary period.
forcible entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is conferred upon
Metropolitan Trial Courts, Municipal Trial Courts, and 3. Where the trial court acquires jurisdiction over a claim by
Municipal Circuit Trial Courts." 14 The rule applies regardless the filing of the appropriate pleading and payment of the
of the value of the real property involved, whether it be prescribed filing fee but, subsequently, the judgment awards
worth more than P20,000.00 or not, infra. The rule also a claim not specified in the pleading, or if specified, the same
applies even where the complaint involving realty also prays has been left for determination by the court, the additional
for an award of damages; the amount of those damages filing fee therefor shall constitute a lien on the judgment. It
would be immaterial to the question of the Court's shall be the responsibility of the Clerk of Court or his duly
jurisdiction. The rule is unlike that in other cases e.g., actions authorized deputy to enforce said lien and assess and collect
simply for recovery of money or of personal property, 15 or the additional fee.
actions in admiralty and maritime jurisdiction 16 in which the
amount claimed, 17 or the value of the personal property, is As will be noted, the requirement in Circular No. 7 that
determinative of jurisdiction; i.e., the value of the personal complaints, petitions, answers, and similar pleadings should
property or the amount claimed should exceed twenty specify the amount of damages being prayed for not only in
thousand pesos (P20,000.00) in order to be cognizable by the the body of the pleading but also in the prayer, has not been
Regional Trial Court. altered. What has been revised is the rule that subsequent
"amendment of the complaint or similar pleading will not
Circular No. 7 of this Court, dated March 24, 1988, cannot thereby vest jurisdiction in the Court, much less the payment
thus be invoked, as the petitioner does, as authority for the of the docket fee based on the amount sought in the amended
dismissal of the actions at bar. That circular, avowedly pleading," the trial court now being authorized to allow
inspired by the doctrine laid down in Manchester Development payment of the fee within a reasonable time but in no case
Corporation v. Court of appeals, 149 SCRA 562 (May 7, 1987), beyond the applicable prescriptive or reglementary period.
has but limited application to said actions, as shall presently Moreover, a new rule has been added, governing awards of
be discussed. Moreover, the rules therein laid down have claims not specified in the pleading - i.e., damages arising
since been clarified and amplified by the Court's subsequent after the filing of the complaint or similar pleading-as to
decision in Sun Insurance Office, Ltd. (SIOL) v. Asuncion, et al., which the additional filing fee therefor shall constitute a lien
G.R. Nos. 79937-38, February 13, 1989. on the judgment.

Circular No. 7 was aimed at the practice of certain parties Now, under the Rules of Court, docket or filing fees are
who omit from the prayer of their complaints "any assessed on the basis of the "sum claimed," on the one hand,
specification of the amount of damages," the omission being or the "value of the property in litigation or the value of the
"clearly intended for no other purposes than to evade the estate," on the other. 18 There are, in other words, as already
payment of the correct filing fees if not to mislead the docket above intimated, actions or proceedings involving real
clerk, in the assessment of the filing fee." The following rules property, in which the value of the property is immaterial to
were therefore set down: the court's jurisdiction, account thereof being taken merely
for assessment of the legal fees; and there are actions or
@lendelacruz 59

proceedings, involving personal property or the recovery of G.R. No. 149227 December 11, 2003
money and/or damages, in which the value of the property
or the amount of the demand is decisive of the trial court's LA SALETTE COLLEGE, Represented by Its President,
competence (aside from being the basis for fixing the FR. ROMEO GONZALES, MS; and JESUS T. BAYAUA,
corresponding docket fees). 19 Dean of Student Services, petitioners,
vs.
Where the action is purely for the recovery of money or VICTOR C. PILOTIN, respondent
damages, the docket fees are assessed on the basis of the
aggregate amount claimed, exclusive only of interests and DECISION
costs. In this case, the complaint or similar pleading should,
according to Circular No. 7 of this Court, "specify the amount
PANGANIBAN, J.:
of damages being prayed for not only in the body of the
pleading but also in the prayer, and said damages shall be
considered in the assessment of the filing fees in any case." An appeal is not perfected by the mere filing of a Notice of
Appeal that has been served on the adverse party. The docket
fees must likewise be paid within the reglementary period.
Two situations may arise. One is where the complaint or Petitioners have failed to show why they merit an exception
similar pleading sets out a claim purely for money or to these stringent rules.
damages and there is no precise statement of the amounts
being claimed. In this event the rule is that the pleading will
"not be accepted nor admitted, or shall otherwise be The Case
expunged from the record." In other words, the complaint or
pleading may be dismissed, or the claims as to which the Before us is a Petition for Review1 under Rule 45 of the Rules
amounts are unspecified may be expunged, although as of Court, seeking to set aside the November 16, 20002 and the
aforestated the Court may, on motion, permit amendment of June 22, 2001 Resolutions3 of the Court of Appeals (CA) in
the complaint and payment of the fees provided the claim has CA-GR CV UDK No. 0236C. The November 16, 2000
not in the meantime become time-barred. The other is where Resolution disposed as follows:
the pleading does specify the amount of every claim, but the
fees paid are insufficient; and here again, the rule now is that "In view of the foregoing, Appellees Motion for
the court may allow a reasonable time for the payment of the Reconsideration is GRANTED. The Resolution, dated March
prescribed fees, or the balance thereof, and upon such 14, 2000, is hereby RECALLED and SET ASIDE and the
payment, the defect is cured and the court may properly take appeal is hereby DISMISSED."4
cognizance of the action, unless in the meantime prescription
has set in and consequently barred the right of action.
The June 22, 2001 Resolution denied reconsideration.

Where the action involves real property and a related claim The Facts
for damages as well, the legal fees shall be assessed on the
basis of both (a) the value of the property and (b) the total
amount of related damages sought. The Court acquires The facts of the case are narrated by the trial court5 as follows:
jurisdiction over the action if the filing of the initiatory
pleading is accompanied by the payment of the requisite fees, "[Respondent] is a bonafide student of [petitioner] College
or, if the fees are not paid at the time of the filing of the dating back [to] the school year 1988-1989 taking up the
pleading, as of the time of full payment of the fees within degree of Bachelor of Science in Commerce. In the enrollment
such reasonable time as the court may grant, unless, of period for the second semester held on October 22 to
course, prescription has set in the meantime. But where-as in November 5, 1993, [respondent] was denied re-enrollment,
the case at bar-the fees prescribed for an action involving real despite repeated pleas by x x x himself and by other
property have been paid, but the amounts of certain of the interested parties and his lawyer.
related damages (actual, moral and nominal) being
demanded are unspecified, the action may not be dismissed. "On November 16, 1993, he filed his complaint and asked for
The Court undeniably has jurisdiction over the action the issuance of a writ of preliminary mandatory injunction to
involving the real property, acquiring it upon the filing of the compel [petitioner college to] re-admit him. On December 28,
complaint or similar pleading and payment of the prescribed 1993, an order was issued directing [petitioner college] to
fee. And it is not divested of that authority by the admit [respondent] for the second semester but still
circumstance that it may not have acquired jurisdiction over [petitioner college] refused to re-admit [respondent], despite
the accompanying claims for damages because of lack of implementation of said order and the pleas of [respondent]
specification thereof. What should be done is simply to thru his counsel so that he could catch up with the bulk of the
expunge those claims for damages as to which no amounts school days of the semester and could graduate.
are stated, which is what the respondent Courts did, or allow,
on motion, a reasonable time for the amendment of the
"Because of the adamant refusal of [respondent] school in re-
complaints so as to allege the precise amount of each item of
admitting him and his defiance to the order and because the
damages and accept payment of the requisite fees therefor
period of the second semester [was] already about to close,
within the relevant prescriptive period.
[respondent] amended his complaint and concentrate[d] on
damages, hence, this case.
WHEREFORE, the petition is DISMISSED, without
pronouncement as to costs.
"On the other hand, the [petitioner college] alleged that it
opened its enrollment period for the second semester of
Republic of the Philippines school year 1993-1994 on 11 October 1993 up to 22 October,
SUPREME COURT 1993 to 05 November, 1993. However, classes for the second
Manila semester of that school year commenced on 25 October, 1993.
During these periods for enrolment, [respondent] never
FIRST DIVISION enrolled with the x x x College and neither did he accomplish
the basic requirements for enrolment. However, on 05
@lendelacruz 60

November, 1993, the x x x College was in receipt of a letter Sole Issue:


from Atty. Quirino L. Pilotin dated on that same date
requesting for a reconsideration of an alleged decision Timeliness of Payment of
denying enrolment to the [respondent]. Upon receipt of the Appellate Court Docket Fees
said letter, it was endorsed to [Respondent] Bayaua who in
turn wrote Atty. Pilotin explaining among others that was
The payment of docket fees is not a trivial matter. These fees
not denied enrolment but rather [the] latter did not enroll
are necessary to defray court expenses in the handling of
with the said College. Considering, however, that the x x x
cases.15 For this reason, and to secure a just and speedy
College started its regular classes on 25 October, 1993, in the
disposition of every action and proceeding,16 the Rules on
event [respondent] was able to enroll on 6 November, 1993,
Civil Procedure17 mandates the payment of docket and other
he would have then exceeded the required absences for his
lawful fees within the prescribed period.1awp++i1
supposed enrolled subjects.
Otherwise, the jurisdiction of the proper court to handle a
case is adversely affected.18
"Since plaintiff failed to enrol on the last day for enrolment,
there is no reason why the x x x College should relax its rules
The above rule applies squarely to this case, in which the
to accommodate [respondent]. The x x x College merely
judgment issued by the RTC, in the exercise of its original
imposed its disciplining authority when it sets dates for the
jurisdiction, was elevated to the CA for review. Rule 41 of the
period to enrol and the matter of admission of students is
Rules on Civil Procedure provides the essential requirements
within the ambit of academic freedom and beyond the
for making such an appeal, as follows:
province of the Courts to decide."6

"SEC. 2. Modes of appeal.


On November 17, 1998, the trial court rendered judgment in
favor of respondent.7 Petitioners received the Decision on
November 26, 1998. On the same date, they filed a Notice of "(a) Ordinary appeal. The appeal to the Court of Appeals
Appeal, which the RTC approved on December 2, 1998. in cases decided by the Regional Trial Court in the exercise of
its original jurisdiction shall be taken by filing a notice of
appeal with the court which rendered the judgment or final
Respondent moved for a reconsideration thereof on the
order appealed from and serving a copy thereof upon the
ground of petitioners failure to pay the docket fees within
adverse party. x x x.
the reglementary period. The trial court, however, denied the
Motion in its April 23, 1999 Order.8
"x x x xxx xxx
Ruling of the Court of Appeals
"SEC. 3. Period of ordinary appeal. The appeal shall be taken
within fifteen (15) days from notice of the judgment or final
In its November 29, 1999 Resolution, the CA dismissed the
order appealed from. x x x.
appeal of petitioners for their failure to pay "the required
docketing fee within the period for filing an appeal."9 But,
upon their motion, the CA granted, in a Resolution dated "SEC. 4. Appellate court docket and other lawful fees. Within the
March 14, 2000, reconsideration of their appeal, which it period for taking an appeal, the appellant shall pay to the
reinstated "in the interest of substantial justice and clerk of court which rendered the judgment or final order
considering that [petitioners] already paid the docket fees." 10 appealed from, the full amount of the appellate court docket
Respondent moved for a reconsideration on March 29, 2000. and other lawful fees. Proof of payment of said fees shall be
transmitted to the appellate court together with the original
record or the record on appeal.
After reexamining the records of the case, the CA, in the
challenged November 16, 2000 Resolution, dismissed the
appeal filed by petitioners, because "the docket fees were "SEC. 9. Perfection of appeal; effect thereof. A partys appeal
only paid after one (1) year and eleven (11) months from the by notice of appeal is deemed perfected as to him upon the
filing of the notice of appeal."11 It deemed it imperative to filing of the notice of appeal in due time.
reverse the March 14, 2000 Resolution "to conform with the
law and long settled jurisprudence"12 on the matter. Thus, in "x x x x x x x x x.
the June 22, 2001 Resolution, it denied their Motion for
Reconsideration. "In appeals by notice of appeal, the court loses jurisdiction
over the case upon the perfection of the appeals filed in due
Hence, this Petition.13 time and the expiration of the time to appeal of the other
parties.
Issues
"x x x x x x x x x."
Petitioners submit the following issues for our consideration:
Accordingly, in order to perfect an appeal from a decision
"1. Whether or not the appeal was seasonably filed; rendered by the RTC in the exercise of its original
jurisdiction, the following requirements must be complied
with. First, within 15 days, a notice of appeal must be filed
"2. With all due respect, the Court of Appeals did
with the court that rendered the judgment or final order
not have the authority to dismiss the appeal."14
sought to be appealed; second, such notice must be served on
the adverse party; and third, within the same 15-day period,
In the main, the case revolves around the timeliness of the the full amount of appellate court docket and other legal fees
payment of the docket fees. must be paid to the clerk of the court that rendered the
judgment or final order.
The Courts Ruling
It should be noted that full payment of the appellate docket
The Petition has no merit. fees within the prescribed period is mandatory,19 even
@lendelacruz 61

jurisdictional,20 for the perfection of the appeal. Otherwise, (7) months thereafter. They adamantly insisted on page 6 of
the appellate court would not be able to act on the subject their Petition28 that "the appeal was seasonably filed," but
matter of the action,21 and the decision or final order sought later said that the "the appeal fee was paid immediately after
to be appealed from would become final and executory.22 23 April 1999 when the court a quo denied the respondents
motion for reconsideration and approved the appeal. x x x.
In the present case, petitioners insist that they seasonably With the foregoing therefore, the notice of appeal was
paid the docket fees. After resolving thrice the timeliness of seasonably filed with the payment of docket fees on time." 29
the payment of the docket fees, the CA finally found that
these had been paid one (1) year and 11 days from the filing They admitted, though, that because of the "excusable
of their notice of appeal. negligence or mistake" of their counsel, the official receipts
for the Notice of Appeal had not been attached. They
To recapitulate, on November 26, 1998, petitioners received reasoned that they had failed to transmit the proof of
the November 17, 1998 RTC Decision. Consequently, they payment of the docket fees to the CA, because such
had 15 days to file their Notice of Appeal. They did so on "provision of civil procedure was relatively new x x x at that
November 26, 1998, but failed to pay the docket fees. A time."30 At any event, respondent denies being served such
review of the records shows that they paid these only on July notice.31
8, 1999,23 or after almost seven (7) months from the mandated
last day for payment, which was December 11, 1998. Clearly, Assuming arguendo that the period of appeal was
the November 17, 1998 RTC Decision, which petitioners interrupted by respondents motion for reconsideration of
sought to appeal, had long become final and executory. the RTCs approval of petitioners notice of appeal, the
required docket fees for the latter were still not paid on time.
Relaxation of the Rule on From November 23, 1998, when petitioners filed their Notice
Nonpayment of Docket Fees of Appeal, until April 23, 1999, when the trial court approved
it with finality, they made no effort to pay those fees. It took
them more than two (2) months to "immediately pay" the
Notwithstanding the mandatory nature of the requirement of
docket fees after being informed of the April 23, 1999 Order
payment of appellate docket fees, we also recognize that its
denying respondents motion for reconsideration of the RTC
strict application is qualified by the following: first, failure to
Order approving petitioners Notice of Appeal. This lapse of
pay those fees within the reglementary period allows only
time hardly reflected sincere willingness to abide by the
discretionary, not automatic, dismissal; second, such power
Rules, especially when respondent had raised the very issue
should be used by the court in conjunction with its exercise
of nonpayment of docket fees as early as December 28, 1998.
of sound discretion in accordance with the tenets of justice
and fair play, as well as with a great deal of circumspection
in consideration of all attendant circumstances.24 On this point, petitioners counsel is reminded of the role that
lawyers play in the dispensation of justice. Bayas v.
Sandiganbayan32 held thus:
In Mactan Cebu International Airport Authority v. Mangubat,25
the payment of the docket fees was delayed by six (6) days,
but the late payment was accepted, because the party showed "Lawyers are not merely representatives of the parties but,
willingness to abide by the Rules by immediately paying first and foremost, officers of the court. As such, one of their
those fees. Yambao v. Court of Appeals26 saw us again relaxing duties -- assisting in the speedy and efficient administration
the Rules when we declared therein that "the appellate court of justice -- is more significant than that of [the cause of] their
may extend the time for the payment of the docket fees if client, rightly or wrongly. x x x. We stress that candor in all
appellant is able to show that there is a justifiable reason for dealings is the very essence of membership in the legal
x x x the failure to pay the correct amount of docket fees profession. Lawyers are obliged to observe rules of
within the prescribed period, like fraud, accident, mistake, procedure in good faith, not to misuse them to defeat the
excusable negligence, or a similar supervening casualty, ends of justice."33
without fault on the part of the appellant."27
We stress that the payment of docket fees is not a mere
In the present case, petitioners have not shown any technicality of law or procedure, but an essential requirement
satisfactory reason to warrant the relaxation of the Rules. In for the perfection of an appeal.34 Without such payment, the
fact, the manner in which they presented their case before us appellate court does not acquire jurisdiction over the subject
leaves too much to be desired. Indeed, we are almost tempted matter of the action, and the decision or final order sought to
to say that they tried to mislead -- nay, deceive -- this Court be appealed from becomes final and executory.35 As laid
as well as the appellate court. down in Barangay 24 of Legazpi City v. Imperial:36

The present case calls for the adjudication of whether "The right to appeal is not a natural right or a part of due
petitioners paid the docket fees on time. Hence, it is essential process. It is purely a statutory privilege, and may be
that they specify the exact dates when they filed their notice exercised only in the manner and in accordance with the
of appeal and paid the corresponding docket fees. But provisions of the law. Well-rooted is the principle that
nowhere in their pleadings did they do so. All they said was perfection of an appeal within the statutory or reglementary
that the appeal had been seasonably filed. period is not only mandatory but also jurisdictional and
failure to do so renders the questioned decision final and
executory, and deprives the appellate court of jurisdiction to
In accordance with the requisites for the perfection of an
alter the final judgment much less to entertain the appeal."37
appeal as enumerated earlier, petitioners should have (1)
filed a notice of appeal with the RTC of Santiago, Isabela,
within 15 days from the issuance of the trial court Decision WHEREFORE, the Petition is hereby DENIED and the
being appealed; (2) paid the docket fees within the same assailed Resolutions AFFIRMED. Costs against petitioners.
period; and (3) served the notice to the adverse party.
SO ORDERED.
True, petitioners filed their Notice of Appeal within the
prescribed period, but they paid the docket fees only seven
@lendelacruz 62

Republic of the Philippines


4. Moral damages .. 50,000.00
SUPREME COURT
Manila 5. Exemplary damages 25,000.00

THIRD DIVISION 6. Litigation expenses . 15,000.00

7. Attorneys fees 25,000.00


G.R. No. 116121 July 18, 2011
P
Or a total of
THE HEIRS OF THE LATE RUBEN REINOSO, SR., 250,000.00
represented by Ruben Reinoso Jr., Petitioners,
vs.
COURT OF APPEALS, PONCIANO TAPALES, JOSE For damages to property:
GUBALLA, and FILWRITERS GUARANTY
ASSURANCE CORPORATION,** Respondent. In favor of defendant Ponciano Tapales and against
defendant Jose Guballa:
DECISION
1. Actual damages for repair is already
MENDOZA, J.: awarded to defendant-cross-claimant
Ponciano Tapales by Br. 9, RTC-Malolos,
Before the Court is a petition for review assailing the May 20, Bulacan (Vide: Exh. 1-G-Tapales); hence,
1994 Decision1 and June 30, 1994 Resolution2 of the Court of cannot recover twice.
Appeals (CA), in CA-G.R. CV No. 19395, which set aside the
March 22, 1988 Decision of the Regional Trial Court, Branch 2. Compensatory damages (earnings at P
8, Manila (RTC) for non-payment of docket fees. The 150.00 per day) and for two (2) months
dispositive portion of the CA decision reads: jeepney stayed at the repair P
shop. 9,000.00
IN VIEW OF ALL THE FOREGOING, the decision appealed 3. Moral damages ... 10,000.00
from is SET ASIDE and REVERSED and the complaint in this
case is ordered DISMISSED. 4. Exemplary damages . 10,000.00

No costs pronouncement. 5. Attorneys fees 15,000.00

P
SO ORDERED. or a total of
44,000.00

The complaint for damages arose from the collision of a


passenger jeepney and a truck at around 7:00 oclock in the Under the 3rd party complaint against 3rd party defendant
evening of June 14, 1979 along E. Rodriguez Avenue, Quezon Filwriters Guaranty Assurance Corporation, the Court
City. As a result, a passenger of the jeepney, Ruben Reinoso, hereby renders judgment in favor of said 3rd party plaintiff
Sr. (Reinoso), was killed. The passenger jeepney was owned by by way of 3rd party liability under policy No. OV-09527 in
Ponciano Tapales (Tapales) and driven by Alejandro Santos the amount of P 50,000.00 undertaking plus P 10,000.00 as
(Santos), while the truck was owned by Jose Guballa (Guballa) and for attorneys fees.
and driven by Mariano Geronimo (Geronimo).
For all the foregoing, it is the well considered view of the
On November 7, 1979, the heirs of Reinoso (petitioners) filed Court that plaintiffs, defendant Ponciano Tapales and 3rd
a complaint for damages against Tapales and Guballa. In Party plaintiff Jose Guballa established their claims as
turn, Guballa filed a third party complaint against Filwriters specified above, respectively. Totality of evidence
Guaranty Assurance Corporation (FGAC) under Policy preponderance in their favor.
Number OV-09527.
JUDGMENT
On March 22, 1988, the RTC rendered a decision in favor of
the petitioners and against Guballa. The decision in part, WHEREFORE, in view of the foregoing, judgment is hereby
reads: rendered as follows:

In favor of herein plaintiffs and against defendant Jose In favor of plaintiffs for the death of Ruben Reinoso,
Guballa: Sr.P 250,000.00;

In favor of defendant Ponciano Tapales due to damage of his


P
passenger jeepney . P 44,000.00;
1. For the death of Ruben Reinoso, Sr. 30,000.00

2. Loss of earnings (monthly income at the time of In favor of defendant Jose Guballa under Policy No. OV-
death (P 2,000.00 Court used P 1,000.00 only per 09527 P 60,000.00;
month (or P 12,000.00 only per year) & victim then
being 55 at death had ten (10) years life All the specified accounts with 6% legal rate of interest per
expectancy 120,000.00 annum from date of complaint until fully paid (Reformina vs.
Tomol, 139 SCRA 260; and finally;
3. Mortuary, Medical & funeral expenses and all
incidental expenses in the wake in serving those
who condoled 15,000.00 Costs of suit.
@lendelacruz 63

SO ORDERED.3 by the rules by paying additional docket fees when required


by the court, the liberal doctrine enunciated in Sun Insurance
On appeal, the CA, in its Decision dated May 20, 1994, set Office, Ltd., and not the strict regulations set in Manchester,
aside and reversed the RTC decision and dismissed the will apply. It has been on record that the Court, in several
complaint on the ground of non-payment of docket fees instances, allowed the relaxation of the rule on non-payment
pursuant to the doctrine laid down in Manchester v. CA.4 In of docket fees in order to afford the parties the opportunity
addition, the CA ruled that since prescription had set in, to fully ventilate their cases on the merits. In the case of La
petitioners could no longer pay the required docket fees.5 Salette College v. Pilotin,13 the Court stated:

Petitioners filed a motion for reconsideration of the CA Notwithstanding the mandatory nature of the requirement of
decision but it was denied in a resolution dated June 30, payment of appellate docket fees, we also recognize that its
1994.6 Hence, this appeal, anchored on the following strict application is qualified by the following: first, failure to
pay those fees within the reglementary period allows only
discretionary, not automatic, dismissal; second, such power
GROUNDS:
should be used by the court in conjunction with its exercise
of sound discretion in accordance with the tenets of justice
A. The Court of Appeals MISAPPLIED THE and fair play, as well as with a great deal of circumspection
RULING of the Supreme Court in the case of in consideration of all attendant circumstances.14
Manchester Corporation vs. Court of Appeals to this
case.
While there is a crying need to unclog court dockets on the
one hand, there is, on the other, a greater demand for
B. The issue on the specification of the damages resolving genuine disputes fairly and equitably,15 for it is far
appearing in the prayer of the Complaint was better to dispose of a case on the merit which is a primordial
NEVER PLACED IN ISSUE BY ANY OF THE end, rather than on a technicality that may result in injustice.
PARTIES IN THE COURT OF ORIGIN
(REGIONAL TRIAL COURT) NOR IN THE
In this case, it cannot be denied that the case was litigated
COURT OF APPEALS.
before the RTC and said trial court had already rendered a
decision. While it was at that level, the matter of non-
C. The issues of the case revolve around the more payment of docket fees was never an issue. It was only the
substantial issue as to the negligence of the private CA which motu propio dismissed the case for said reason.
respondents and their culpability to petitioners."7
Considering the foregoing, there is a need to suspend the
The petitioners argue that the ruling in Manchester should not strict application of the rules so that the petitioners would be
have been applied retroactively in this case, since it was filed able to fully and finally prosecute their claim on the merits at
prior to the promulgation of the Manchester decision in 1987. the appellate level rather than fail to secure justice on a
They plead that though this Court stated that failure to state technicality, for, indeed, the general objective of procedure is
the correct amount of damages would lead to the dismissal to facilitate the application of justice to the rival claims of
of the complaint, said doctrine should be applied contending parties, bearing always in mind that procedure is
prospectively. not to hinder but to promote the administration of justice.16

Moreover, the petitioners assert that at the time of the filing The Court also takes into account the fact that the case was
of the complaint in 1979, they were not certain of the amount filed before the Manchester ruling came out. Even if said
of damages they were entitled to, because the amount of the ruling could be applied retroactively, liberality should be
lost income would still be finally determined in the course of accorded to the petitioners in view of the recency then of the
the trial of the case. They claim that the jurisdiction of the trial ruling. Leniency because of recency was applied to the cases
court remains even if there was failure to pay the correct of Far Eastern Shipping Company v. Court of Appeals17 and
filing fee as long as the correct amount would be paid Spouses Jimmy and Patri Chan v. RTC of Zamboanga.18 In the
subsequently. case of Mactan Cebu International Airport Authority v.
Mangubat (Mactan),19 it was stated that the "intent of the
Finally, the petitioners stress that the alleged defect was Court is clear to afford litigants full opportunity to comply
never put in issue either in the RTC or in the CA. with the new rules and to temper enforcement of sanctions in
view of the recency of the changes introduced by the new
The Court finds merit in the petition. rules." In Mactan, the Office of the Solicitor General (OSG)
also failed to pay the correct docket fees on time.
The rule is that payment in full of the docket fees within the
prescribed period is mandatory.8 In Manchester v. Court of We held in another case:
Appeals,9 it was held that a court acquires jurisdiction over
any case only upon the payment of the prescribed docket fee. x x x It bears stressing that the rules of procedure are merely
The strict application of this rule was, however, relaxed two tools designed to facilitate the attainment of justice. They
(2) years after in the case of Sun Insurance Office, Ltd. v. were conceived and promulgated to effectively aid the court
Asuncion,10 wherein the Court decreed that where the in the dispensation of justice. Courts are not slaves to or
initiatory pleading is not accompanied by the payment of the robots of technical rules, shorn of judicial discretion. In
docket fee, the court may allow payment of the fee within a rendering justice, courts have always been, as they ought to
reasonable period of time, but in no case beyond the be, conscientiously guided by the norm that, on the balance,
applicable prescriptive or reglementary period. This ruling technicalities take a backseat against substantive rights, and
was made on the premise that the plaintiff had demonstrated not the other way around. Thus, if the application of the
his willingness to abide by the rules by paying the additional Rules would tend to frustrate rather than promote justice, it
docket fees required.11 Thus, in the more recent case of United is always within the power of the Court to suspend the Rules,
Overseas Bank v. Ros,12 the Court explained that where the or except a particular case from its operation.20
party does not deliberately intend to defraud the court in
payment of docket fees, and manifests its willingness to abide
@lendelacruz 64

The petitioners, however, are liable for the difference distance of about 30-40 meters from the wooden barricade
between the actual fees paid and the correct payable docket astride lanes 1 and 2, upon reaching said wooden block
fees to be assessed by the clerk of court which shall constitute suddenly swerved to the left into lanes 3 and 4 at high speed
a lien on the judgment pursuant to Section 2 of Rule 141 "napakabilis po ng dating ng truck." (29 tsn, Sept. 26, 1985) in
which provides: the process hitting them (Jeepney passenger) at the left side
up to where the reserve tire was in an oblique manner
SEC. 2. Fees in lien. Where the court in its final judgment "pahilis" (57 tsn, Sept. 26, 1985). The jeepney after it was
awards a claim not alleged, or a relief different from, or more bumped by the truck due to the strong impact was thrown
than that claimed in the pleading, the party concerned shall "resting on its right side while the left side was on top of the
pay the additional fees which shall constitute a lien on the Bangketa (side walk)". The passengers of the jeepney and its
judgment in satisfaction of said lien. The clerk of court shall driver were injured including two passengers who died. The
assess and collect the corresponding fees. left side of the jeepney suffered considerable damage as seen
in the picture (Exhs. 4 & 5-Tapales, pages 331-332, records)
taken while at the repair shop.
As the Court has taken the position that it would be grossly
unjust if petitioners claim would be dismissed on a strict
application of the Manchester doctrine, the appropriate The Court is convinced of the narration of Santos to the effect
action, under ordinary circumstances, would be for the Court that the "gravel & sand" truck was running in high speed on
to remand the case to the CA. Considering, however, that the the good portion of E. Rodriguez Avenue (lane 1 & 2) before
case at bench has been pending for more than 30 years and the wooden barricade and (having in mind that it had just
the records thereof are already before this Court, a remand of delivered its load at the Corinthian Gardens) so that when
the case to the CA would only unnecessarily prolong its suddenly confronted with the wooden obstacle before it had
resolution. In the higher interest of substantial justice and to to avoid the same in a manner of a reflex reaction or knee-
spare the parties from further delay, the Court will resolve jerk response by forthwith swerving to his left into the right
the case on the merits. lanes (lanes 3 & 4). At the time of the bumping, the jeepney
was running on its right lane No. 4 and even during the
moments before said bumping, moving at moderate speed
The facts are beyond dispute. Reinoso, the jeepney passenger,
thereon since lane No. 3 was then somewhat rough because
died as a result of the collision of a jeepney and a truck on June
being repaired also according to Mondalia who has no reason
14, 1979 at around 7:00 oclock in the evening along E.
to prevaricate being herself one of those seriously injured.
Rodriguez Avenue, Quezon City. It was established that the
The narration of Santos and Mondalia are convincing and
primary cause of the injury or damage was the negligence of
consistent in depicting the true facts of the case untainted by
the truck driver who was driving it at a very fast pace. Based
vacillation and therefore, worthy to be relied upon. Their
on the sketch and spot report of the police authorities and the
story is forfeited and confirmed by the sketch drawn by the
narration of the jeepney driver and his passengers, the
investigating officer Pfc. F. Amaba, Traffic Division, NPD,
collision was brought about because the truck driver
Quezon City who rushed to the scene of the mishap (Vide:
suddenly swerved to, and encroached on, the left side
Resolution of Asst fiscal Elizabeth B. Reyes marked as Exhs.
portion of the road in an attempt to avoid a wooden
7, 7-A, 7-B-Tapales, pp. 166-168, records; the Certified Copy
barricade, hitting the passenger jeepney as a consequence. The
found on pages 598-600, ibid, with the attached police sketch
analysis of the RTC appears in its decision as follows:
of Pfc. Amaba, marked as Exh. 8-Tapales on page 169, ibid;
certified copy of which is on page 594, ibid) indicating the
Perusal and careful analysis of evidence adduced as well as fact that the bumping indeed occurred at lane No. 4 and
proper consideration of all the circumstances and factors showing how the gavel & sand truck is positioned in
bearing on the issue as to who is responsible for the instant relation to the jeepney. The said police sketch having been
vehicular mishap convince and persuade this Court that made right after the accident is a piece of evidence worthy to
preponderance of proof is in favor of plaintiffs and defendant be relied upon showing the true facts of the bumping-
Ponciano Tapales. The greater mass of evidence spread on occurrence. The rule that official duty had been performed
the records and its influence support plaintiffs plaint (Sec.5(m), R-131, and also Sec. 38, R-a30, Rev. Rules of Court)
including that of defendant Tapales. there being no evidence adduced and made of record to the
contrary is that said circumstance involving the two
The Land Transportation and Traffic Rule (R.A. No. 4136), vehicles had been the result of an official investigation and
reads as follows: must be taken as true by this Court.211awphi1

"Sec. 37. Driving on right side of highway. Unless a While ending up on the opposite lane is not conclusive proof
different course of action is required in the interest of the of fault in automobile collisions,22 the position of the two
safety and the security of life, person or property, or because vehicles, as depicted in the sketch of the police officers,
of unreasonable difficulty of operation in compliance clearly shows that it was the truck that hit the jeepney. The
therewith, every person operating a motor vehicle or an evidentiary records disclosed that the truck was speeding
animal drawn vehicle on highway shall pass to the right along E. Rodriguez, heading towards Santolan Street, while
when meeting persons or vehicles coming toward him, and the passenger jeepney was coming from the opposite
to the left when overtaking persons or vehicles going the direction. When the truck reached a certain point near the
same direction, and when turning to the left in going from Meralco Post No. J9-450, the front portion of the truck hit the
one highway to another, every vehicle shall be conducted to left middle side portion of the passenger jeepney, causing
the right of the center of the intersection of the highway." damage to both vehicles and injuries to the driver and
passengers of the jeepney. The truck driver should have been
Having in mind the foregoing provision of law, this Court is more careful, because, at that time, a portion of E. Rodriguez
convinced of the veracity of the version of the passenger Avenue was under repair and a wooden barricade was
jeepney driver Alejandro Santos, (plaintiffs and Tapales placed in the middle thereof.
witness) that while running on lane No. 4 westward bound
towards Ortigas Avenue at between 30-40 kms. per hour (63- The Court likewise sustains the finding of the RTC that the
64 tsn, Jan. 6, 1984) the "sand & gravel" truck from the truck owner, Guballa, failed to rebut the presumption of
opposite direction driven by Mariano Geronimo, the negligence in the hiring and supervision of his employee.
headlights of which the former had seen while still at a
@lendelacruz 65

Article 2176, in relation to Article 2180 of the Civil Code, Republic of the Philippines
provides: SUPREME COURT
Manila
Art. 2176. Whoever by act or omission causes damage to
another, there being fault or negligence is obliged to pay for SECOND DIVISION
the damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called a G.R. No. 176339 January 10, 2011
quasi-delict and is governed by the provisions of this
Chapter.
DO-ALL METALS INDUSTRIES, INC., SPS. DOMINGO
LIM and LELY KUNG LIM, Petitioners,
xxxx vs.
SECURITY BANK CORP., TITOLAIDO E.
Art. 2180. The obligation imposed by Art. 2176 is demandable PAYONGAYONG, EVYLENE C. SISON, PHIL.
not only for ones own acts or omissions but also for those of INDUSTRIAL SECURITY AGENCY CORP. and GIL
persons for whom one is responsible. SILOS, Respondents.

xxxx DECISION

Employers shall be liable for the damage caused by their ABAD, J.:
employees and household helpers acting within the scope of
their assigned tasks even though the former are not engaged This case is about the propriety of awarding damages based
in any business or industry. on claims embodied in the plaintiffs supplemental
complaint filed without prior payment of the corresponding
xxxx filing fees.

The responsibility treated of in this article shall cease when The Facts and the Case
the persons herein mentioned prove that they observed all
the diligence of a good father of a family to prevent damage. From 1996 to 1997, Dragon Lady Industries, Inc., owned by
petitioner spouses Domingo Lim and Lely Kung Lim (the
Whenever an employees negligence causes damage or injury Lims) took out loans from respondent Security Bank
to another, there instantly arises a presumption juris tantum Corporation (the Bank) that totaled P92,454,776.45. Unable to
that the employer failed to exercise diligentissimi patris families pay the loans on time, the Lims assigned some of their real
in the selection or supervision of his employee.23 Thus, in the properties to the Bank to secure the same, including a
selection of prospective employees, employers are required building and the lot on which it stands (the property), located
to examine them as to their qualification, experience and at M. de Leon St., Santolan, Pasig City.1
service record. With respect to the supervision of employees,
employers must formulate standard operating procedures, In 1998 the Bank offered to lease the property to the Lims
monitor their implementation, and impose disciplinary through petitioner Do-All Metals Industries, Inc. (DMI)
measures for breaches thereof. These facts must be shown by primarily for business although the Lims were to use part of
concrete proof, including documentary evidence.24 Thus, the the property as their residence. DMI and the Bank executed
RTC committed no error in finding that the evidence a two-year lease contract from October 1, 1998 to September
presented by respondent Guballa was wanting. It ruled: 30, 2000 but the Bank retained the right to pre-terminate the
lease. The contract also provided that, should the Bank
x x x. As expected, defendant Jose Guballa, attempted to decide to sell the property, DMI shall have the right of first
overthrow this presumption of negligence by showing that refusal.
he had exercised the due diligence required of him by seeing
to it that the driver must check the vital parts of the vehicle On December 3, 1999, before the lease was up, the Bank gave
he is assigned to before he leaves the compound like the oil, notice to DMI that it was pre-terminating the lease on
water, brakes, gasoline, horn (9 tsn, July 17, 1986); and that December 31, 1999. Wanting to exercise its right of first
Geronimo had been driving for him sometime in 1976 until refusal, DMI tried to negotiate with the Bank the terms of its
the collision in litigation came about (5-6 tsn, ibid); that purchase. DMI offered to pay the Bank P8 million for the
whenever his trucks gets out of the compound to make property but the latter rejected the offer, suggesting P15
deliveries, it is always accompanied with two (2) helpers (16- million instead. DMI made a second offer of P10 million but
17 tsn, ibid). This was all which he considered as selection the Bank declined the same.
and supervision in compliance with the law to free himself
from any responsibility. This Court then cannot consider the While the negotiations were on going, the Lims claimed that
foregoing as equivalent to an exercise of all the care of a good they continued to use the property in their business. But the
father of a family in the selection and supervision of his Bank posted at the place private security guards from
driver Mariano Geronimo."25 Philippine Industrial Security Agency (PISA). The Lims also
claimed that on several occasions in 2000, the guards, on
WHEREFORE, the petition is GRANTED. The May 20, 1994 instructions of the Bank representatives Titolaido
Decision and June 30, 1994 Resolution of the Court of Payongayong and Evylene Sison, padlocked the entrances to
Appeals are REVERSED and SET ASIDE and the March 22, the place and barred the Lims as well as DMIs employees
1988 Decision of the Regional Trial Court, Branch 8, Manila, from entering the property. One of the guards even pointed
is REINSTATED. his gun at one employee and shots were fired. Because of this,
DMI was unable to close several projects and contracts with
SO ORDERED. prospective clients. Further, the Lims alleged that they were
unable to retrieve assorted furniture, equipment, and
personal items left at the property.
@lendelacruz 66

The Lims eventually filed a complaint with the Regional Trial well as the counterclaims.5 DMI and the Lims filed a motion
Court (RTC) of Pasig City for damages with prayer for the for reconsideration but the CA denied the same, hence this
issuance of a temporary restraining order (TRO) or petition.
preliminary injunction against the Bank and its co-
defendants Payongayong, Sison, PISA, and Gil Silos.2 The Issues Presented
Answering the complaint, the Bank pointed out that the lease
contract allowed it to sell the property at any time provided
The issues presented in this case are:
only that it gave DMI the right of first refusal. DMI had seven
days from notice to exercise its option. On September 10, 1999
the Bank gave notice to DMI that it intended to sell the 1. Whether or not the RTC acquired jurisdiction to
property to a third party. DMI asked for an extension of its hear and adjudicate plaintiffs supplemental
option to buy and the Bank granted it. But the parties could complaint against the Bank considering their failure
not agree on a purchase price. The Bank required DMI to to pay the filing fees on the amounts of damages
vacate and turnover the property but it failed to do so. As a they claim in it;
result, the Banks buyer backed-out of the sale. Despite what
happened, the Bank and DMI continued negotiations for the 2. Whether or not the Bank is liable for the
purchase of the leased premises but they came to no intimidation and harassment committed against
agreement. DMI and its representatives; and

The Bank denied, on the other hand, that its guards harassed 3. Whether or not the Bank is liable to DMI and the
DMI and the Lims. To protect its property, the Bank began Lims for the machineries, equipment, and other
posting guards at the building even before it leased the same properties they allegedly lost after they were barred
to DMI. Indeed, this arrangement benefited both parties. The from the property.
Bank alleged that in October of 2000, when the parties could
not come to an agreement regarding the purchase of the The Courts Rulings
property, DMI vacated the same and peacefully turned over
possession to the Bank.
One. On the issue of jurisdiction, respondent Bank argues
that plaintiffs failure to pay the filing fees on their
The Bank offered no objection to the issuance of a TRO since supplemental complaint is fatal to their action.
it claimed that it never prevented DMI or its employees from
entering or leaving the building. For this reason, the RTC
But what the plaintiffs failed to pay was merely the filing fees
directed the Bank to allow DMI and the Lims to enter the
for their Supplemental Complaint. The RTC acquired
building and get the things they left there. The latter claimed,
jurisdiction over plaintiffs action from the moment they filed
however, that on entering the building, they were unable to
their original complaint accompanied by the payment of the
find the movable properties they left there. In a supplemental
filing fees due on the same. The plaintiffs non-payment of
complaint, DMI and the Lims alleged that the Bank
the additional filing fees due on their additional claims did
surreptitiously took such properties, resulting in additional
not divest the RTC of the jurisdiction it already had over the
actual damages to them of over P27 million.
case.6

The RTC set the pre-trial in the case for December 4, 2001. On
Two. As to the claim that Banks representatives and retained
that date, however, counsel for the Bank moved to reset the
guards harassed and intimidated DMIs employees and the
proceeding. The court denied the motion and allowed DMI
Lims, the RTC found ample proof of such wrongdoings and
and the Lims to present their evidence ex parte. The court
accordingly awarded damages to the plaintiffs. But the CA
eventually reconsidered its order but only after the plaintiffs
disagreed, discounting the testimony of the police officers
had already presented their evidence and were about to rest
regarding their investigations of the incidents since such
their case. The RTC declined to recall the plaintiffs witnesses
officers were not present when they happened. The CA may
for cross- examination but allowed the Bank to present its
be correct in a way but the plaintiffs presented eyewitnesses
evidence.3 This prompted the Bank to seek relief from the
who testified out of personal knowledge. The police officers
Court of Appeals (CA) and eventually from this Court but to
testified merely to point out that there had been trouble at the
no avail.4
place and their investigations yielded their findings.

During its turn at the trial, the Bank got to present only
The Bank belittles the testimonies of the petitioners
defendant Payongayong, a bank officer. For repeatedly
witnesses for having been presented ex parte before the clerk
canceling the hearings and incurring delays, the RTC
of court. But the ex parte hearing, having been properly
declared the Bank to have forfeited its right to present
authorized, cannot be assailed as less credible. It was the
additional evidence and deemed the case submitted for
Banks fault that it was unable to attend the hearing. It cannot
decision.
profit from its lack of diligence.

On September 30, 2004 the RTC rendered a decision in favor


Domingo Lim and some employees of DMI testified
of DMI and the Lims. It ordered the Bank to pay the plaintiffs
regarding the Bank guards unmitigated use of their superior
P27,974,564.00 as actual damages, P500,000.00 as moral
strength and firepower. Their testimonies were never
damages, P500,000 as exemplary damages, and P100,000.00
refuted. Police Inspector Priscillo dela Paz testified that he
as attorneys fees. But the court absolved defendants
responded to several complaints regarding shooting
Payongayong, Sison, Silos and PISA of any liability.
incidents at the leased premises and on one occasion, he
found Domingo Lim was locked in the building. When he
The Bank moved for reconsideration of the decision, asked why Lim had been locked in, a Bank representative
questioning among other things the RTCs authority to grant told him that they had instructions to prevent anyone from
damages considering plaintiffs failure to pay the filing fees taking any property out of the premises. It was only after
on their supplemental complaint. The RTC denied the Dela Paz talked to the Bank representative that they let Lim
motion. On appeal to the CA, the latter found for the Bank, out.7
reversed the RTC decision, and dismissed the complaint as
@lendelacruz 67

Payongayong, the Banks sole witness, denied charges of Lim damages in the following amounts: P500,000.00 as moral
harassment against the Banks representatives and the damages, P500,000.00 as exemplary damages, and
guards. But his denial came merely from reports relayed to P100,000.00 for attorneys fees. The Court DELETES the
him. They were not based on personal knowledge.1avvphil award of actual damages of P27,974,564.00.

While the lease may have already lapsed, the Bank had no SO ORDERED.
business harassing and intimidating the Lims and their
employees. The RTC was therefore correct in adjudging Republic of the Philippines
moral damages, exemplary damages, and attorneys fees SUPREME COURT
against the Bank for the acts of their representatives and Manila
building guards.
THIRD DIVISION
Three. As to the damages that plaintiffs claim under their
supplemental complaint, their stand is that the RTC
committed no error in admitting the complaint even if they
had not paid the filing fees due on it since such fees
constituted a lien anyway on the judgment award. But this G.R. No. 125138 March 2, 1999
after-judgment lien, which implies that payment depends on
a successful execution of the judgment, applies to cases NICHOLAS Y. CERVANTES, petitioner,
where the filing fees were incorrectly assessed or paid or vs.
where the court has discretion to fix the amount of the COURT OF APPEALS AND THE PHILIPPINE AIR
award.8 None of these circumstances obtain in this case. LINES, INC., respondent.

Here, the supplemental complaint specified from the PURISMA, J.:


beginning the actual damages that the plaintiffs sought
against the Bank. Still plaintiffs paid no filing fees on the This Petition for Review on certiorari assails the 25 July 1995
same. And, while petitioners claim that they were willing to decision of the Court of Appeals 1 in CA GR CV No. 41407,
pay the additional fees, they gave no reason for their entitled "Nicholas Y. Cervantes vs. Philippine Air Lines Inc.",
omission nor offered to pay the same. They merely said that affirming in toto the judgment of the trial court dismissing
they did not yet pay the fees because the RTC had not petitioner's complaint for damages.
assessed them for it. But a supplemental complaint is like any
complaint and the rule is that the filing fees due on a On March 27, 1989, the private respondent, Philippines Air
complaint need to be paid upon its filing.9 The rules do not Lines, Inc. (PAL), issued to the herein petitioner, Nicholas
require the court to make special assessments in cases of
Cervantes (Cervantes), a round trip plane ticket for Manila-
supplemental complaints.
Honolulu-Los Angeles-Honolulu-Manila, which ticket
expressly provided an expiry of date of one year from
To aggravate plaintiffs omission, although the Bank brought issuance, i.e., until March 27, 1990. The issuance of the said
up the question of their failure to pay additional filing fees in plane ticket was in compliance with a Compromise
its motion for reconsideration, plaintiffs made no effort to Agreement entered into between the contending parties in
make at least a late payment before the case could be two previous suits, docketed as Civil Case Nos. 3392 and
submitted for decision, assuming of course that the 3451 before the Regional Trial Court in Surigao City. 2
prescription of their action had not then set it in. Clearly,
plaintiffs have no excuse for their continuous failure to pay
On March 23, 1990, four days before the expiry date of subject
the fees they owed the court. Consequently, the trial court
ticket, the petitioner used it. Upon his arrival in Los Angeles
should have treated their Supplemental Complaint as not on the same day, he immediately booked his Los Angeles-
filed.
Manila return ticket with the PAL office, and it was
confirmed for the April 2, 1990 flight.
Plaintiffs of course point out that the Bank itself raised the
issue of non-payment of additional filing fees only after the
Upon learning that the same PAL plane would make a stop-
RTC had rendered its decision in the case. The implication is
over in San Francisco, and considering that he would be there
that the Bank should be deemed to have waived its objection
on April 2, 1990, petitioner made arrangements with PAL for
to such omission. But it is not for a party to the case or even him to board the flight In San Francisco instead of boarding
for the trial court to waive the payment of the additional in Las Angeles.
filing fees due on the supplemental complaint. Only the
Supreme Court can grant exemptions to the payment of the
fees due the courts and these exemptions are embodied in its On April 2, 1990, when the petitioner checked in at the PAL
rules. counter in San Francisco, he was not allowed to board. The
PAL personnel concerned marked the following notation on
his ticket: "TICKET NOT ACCEPTED DUE EXPIRATION OF
Besides, as correctly pointed out by the CA, plaintiffs had the VALIDITY."
burden of proving that the movable properties in question
had remained in the premises and that the bank was
responsible for their loss. The only evidence offered to prove Aggrieved, petitioner Cervantes filed a Complaint for
the loss was Domingo Lims testimony and some undated Damages, for breach of contract of carriage docketed as Civil
and unsigned inventories. These were self-serving and Case No. 3807 before Branch 32 of the Regional Trial Court of
uncorroborated. Surigao del Norte in Surigao City. But the said complaint was
dismissed for lack of merit. 3

WHEREFORE, the Court PARTIALLY GRANTS the petition


and REINSTATES with modification the decision of the On September 20, 1993, petitioner interposed an appeal to the
Regional Trial Court of Pasig City in Civil Case 68184. The Court of Appeals, which came out with a Decision, on July
Court DIRECTS respondent Security Bank Corporation to 25, 1995, upholding the dismissal of the case.
pay petitioners DMI and spouses Domingo and Lely Kung
@lendelacruz 68

On May 22, 1996, petitioner came to this Court via the to the Philippines.' (pp. 320-321, Original Records)
Petition for Review under consideration. 8

The issues raised for resolution are: (1) Whether or not the act The question is: "Did these two (2) employees, in
of the PAL agents in confirming subject ticket extended the effect, extend the validity or lifetime of the ticket in
period of validity of petitioner's ticket; (2) Whether or not the question? The answer is in the negative. Both had
defense of lack of authority was correctly ruled upon; and (3) no authority to do so. Appellant knew this from
Whether or not the denial of the award for damages was the very start when he called up the Legal
proper. Department of appellee in the Philippines before
he left for the United States of America. He had
To rule on the first issue, there is a need to quote the findings first hand knowledge that the ticket in question
below. As a rule, conclusions and findings of fact arrived at would expire on March 27, 1990 and that to secure
by the trial court are entitled to great weight on appeal and an extension, he would have to file a written
should not be disturbed unless for strong and cogent reasons. request for extension at the PAL's office in the
4 Philippines (TSN, Testimony of Nicholas
Cervantes, August 2, 1991, pp. 20-23). Despite this
knowledge, appellant persisted to use the ticket in
The facts of the case as found by the lower court 5 are, as
question." 9
follows:

From the aforestated facts, it can be gleaned that the


The plane ticket itself (Exhibit A for
petitioner was fully aware that there was a need to send a
plaintiff; Exhibit 1 for defendant) provides
letter to the legal counsel of PAL for the extension of the
that it is not valid after March 27, 1990.
period of validity of his ticket.
(Exhibit 1-F). It is also stipulated in
paragraph 8 of the Conditions of Contract
(Exhibit 1, page 2) as follows: Since the PAL agents are not privy to the said Agreement and
petitioner knew that a written request to the legal counsel of
PAL was necessary, he cannot use what the PAL agents did
8. This ticket is good for
to his advantage. The said agents, according to the Court of
carriage for one year from
Appeals, 10 acted without authority when they confirmed the
date of issue, except as
flights of the petitioner.
otherwise provided in
this ticket, in carrier's
tariffs, conditions of Under Article 1989 11 of the New Civil Code, the acts an agent
carriage, or related beyond the scope of his authority do not bind the principal,
regulations. The fare for unless the latter ratifies the same expressly or impliedly.
carriage hereunder is Furthermore, when the third person (herein petitioner)
subject to change prior knows that the agent was acting beyond his power or
to commencement of authority, the principal cannot be held liable for the acts of
carriage. Carrier may the agent. If the said third person is aware of such limits of
refuse transportation if authority, he is to blame, and is not entitled to recover
the applicable fare has damages from the agent, unless the latter undertook to secure
not been paid. 6 the principal's ratification. 12

The question on the validity of subject ticket can be resolved Anent the second issue, petitioner's stance that the defense of
in light of the ruling in the case of Lufthansa vs. Court of lack of authority on the part of the PAL employees was
Appeals. 7 In the said case, the Tolentinos were issued first deemed waived under Rule 9, Section 2 of the Revised Rules
class tickets on April 3, 1982, which will be valid until April of Court, is unsustainable. Thereunder, failure of a party to
10, 1983. On June 10, 1982, they changed their put up defenses in their answer or in a motion to dismiss is a
accommodations to economy class but the replacement waiver thereof.
tickets still contained the same restriction. On May 7, 1983,
Tolentino requested that subject tickets be extended, which Petitioner stresses that the alleged lack of authority of the
request was refused by the petitioner on the ground that the PAL employees was neither raised in the answer nor in the
said tickets had already expired. The non-extension of their motion to dismiss. But records show that the question of
tickets prompted the Tolentinos to bring a complaint for whether there was authority on the part of the PAL
breach of contract of carriage against the petitioner. In ruling employees was acted upon by the trial court when Nicholas
against the award of damages, the Court held that the "ticket Cervantes was presented as a witness and the depositions of
constitute the contract between the parties. It is axiomatic the PAL employees, Georgina M. Reyes and Ruth Villanueva,
that when the terms are clear and leave no doubt as to the were presented.
intention of the contracting parties, contracts are to be
interpreted according to their literal meaning." The admission by Cervantes that he was told by PAL's legal
counsel that he had to submit a letter requesting for an
In his effort to evade this inevitable conclusion, petitioner extension of the validity of subject tickets was tantamount to
theorized that the confirmation by the PAL's agents in Los knowledge on his part that the PAL employees had no
Angeles and San Francisco changed the compromise authority to extend the validity of subject tickets and only
agreement between the parties. PAL's legal counsel was authorized to do so.

As aptly by the appellate court: However, notwithstanding PAL's failure to raise the defense
of lack of authority of the said PAL agents in its answer or in
. . . on March 23, 1990, he was aware of the risk that a motion to dismiss, the omission was cured since the said
his ticket could expire, as it did, before he returned issue was litigated upon, as shown by the testimony of the
@lendelacruz 69

petitioner in the course of trial. Rule 10, Section 5 of the 1997 ALLAN C. GO, doing business under the name and style
Rules of Civil Procedure provides: "ACG Express Liner," Petitioner,
vs.
Sec. 5. Amendment to conform, or MORTIMER F. CORDERO, Respondent.
authorize presentation of evidence.
When issues not raised by the pleadings x - - - - - - - - - - - - - - - - - - - - - - -x
are tried with express or implied consent
of the parties, as if they had been raised in G.R. No. 164747
the pleadings. Such amendment of the
pleadings as may be necessary to cause
MORTIMER F. CORDERO, Petitioner,
them to conform to the evidence and to
vs.
raise these issues may be made upon
ALLAN C. GO, doing business under the name and style
motion of any party at any time, even after "ACG Express Liner," FELIPE M. LANDICHO and
judgment; but failure to amend does not VINCENT D. TECSON, Respondents.
affect the result of the trial of these issues.
...
DECISION

Thus, "when evidence is presented by one party, with the


express or implied consent of the adverse party, as to issues VILLARAMA, JR., J.:
not alleged in the pleadings, judgment may be rendered
validly as regards the said issue, which shall be treated as if For review is the Decision1 dated March 16, 2004 as modified
they have been raised in the pleadings. There is implied by the Resolution2 dated July 22, 2004 of the Court of Appeals
consent to the evidence thus presented when the adverse (CA) in CA-G.R. CV No. 69113, which affirmed with
party fails to object thereto." 13 modifications the Decision3 dated May 31, 2000 of the
Regional Trial Court (RTC) of Quezon City, Branch 85 in
Re: the third issue, an award of damages is improper because Civil Case No. 98-35332.
petitioner failed to show that PAL acted in bad faith in
refusing to allow him to board its plane in San Francisco. The factual antecedents:

In awarding moral damages for breach of contract of Sometime in 1996, Mortimer F. Cordero, Vice-President of
carriage, the breach must be wanton and deliberately Pamana Marketing Corporation (Pamana), ventured into the
injurious or the one responsible acted fraudulently or with business of marketing inter-island passenger vessels. After
malice or bad faith. 14 Petitioner knew there was a strong contacting various overseas fast ferry manufacturers from all
possibility that he could not use the subject ticket, so much so over the world, he came to meet Tony Robinson, an
that he bought a back-up ticket to ensure his departure. Australian national based in Brisbane, Australia, who is the
Should there be a finding of bad faith, we are of the opinion Managing Director of Aluminium Fast Ferries Australia
that it should be on the petitioner. What the employees of (AFFA).
PAL did was one of simple negligence. No injury resulted on
the part of petitioner because he had a back-up ticket should Between June and August 1997, Robinson signed documents
PAL refuse to accommodate him with the use of subject appointing Cordero as the exclusive distributor of AFFA
ticket. catamaran and other fast ferry vessels in the Philippines. As
such exclusive distributor, Cordero offered for sale to
Neither can the claim for exemplary damages be upheld. prospective buyers the 25-meter Aluminium Passenger
Such kind of damages is imposed by way of example or catamaran known as the SEACAT 25.4
correction for the public good, and the existence of bad faith
is established. The wrongful act must be accompanied by bad After negotiations with Felipe Landicho and Vincent Tecson,
faith, and an award of damages would be allowed only if the lawyers of Allan C. Go who is the owner/operator of ACG
guilty party acted in a wanton, fraudulent, reckless or Express Liner of Cebu City, a single proprietorship, Cordero
malevolent manner. 15 Here, there is no showing that PAL was able to close a deal for the purchase of two (2) SEACAT
acted in such a manner. An award for attorney's fees is also 25 as evidenced by the Memorandum of Agreement dated
improper. August 7, 1997.5 Accordingly, the parties executed
Shipbuilding Contract No. 7825 for one (1) high-speed
WHEREFORE, the Petition is DENIED and the decision of catamaran (SEACAT 25) for the price of US$1,465,512.00.6 Per
the Court of Appeals dated July 25, 1995 AFFIRMED in toto. agreement between Robinson and Cordero, the latter shall
No pronouncement as to costs. receive commissions totalling US$328,742.00, or 22.43% of the
purchase price, from the sale of each vessel.7
SO ORDERED.
Cordero made two (2) trips to the AFFA Shipyard in
Brisbane, Australia, and on one (1) occasion even
accompanied Go and his family and Landicho, to monitor the
progress of the building of the vessel. He shouldered all the
Republic of the Philippines expenses for airfare, food, hotel accommodations,
SUPREME COURT transportation and entertainment during these trips. He also
Manila
spent for long distance telephone calls to communicate
regularly with Robinson, Go, Tecson and Landicho.
FIRST DIVISION
However, Cordero later discovered that Go was dealing
G.R. No. 164703 May 4, 2010 directly with Robinson when he was informed by Dennis
Padua of Wartsila Philippines that Go was canvassing for a
second catamaran engine from their company which
@lendelacruz 70

provided the ship engine for the first SEACAT 25. Padua told and wanton disregard of his rights, thus depriving him of his
Cordero that Go instructed him to fax the requested due commissions (balance of unpaid commission from the
quotation of the second engine to the Park Royal Hotel in sale of the first vessel in the amount of US$31,522.01 and
Brisbane where Go was then staying. Cordero tried to contact unpaid commission for the sale of the second vessel in the
Go and Landicho to confirm the matter but they were amount of US$328,742.00) and causing him actual, moral and
nowhere to be found, while Robinson refused to answer his exemplary damages, including P800,000.00 representing
calls. Cordero immediately flew to Brisbane to clarify matters expenses for airplane travel to Australia, telecommunications
with Robinson, only to find out that Go and Landicho were bills and entertainment, on account of AFFAs untimely
already there in Brisbane negotiating for the sale of the cancellation of the exclusive distributorship agreement.
second SEACAT 25. Despite repeated follow-up calls, no Cordero also prayed for the award of moral and exemplary
explanation was given by Robinson, Go, Landicho and damages, as well as attorneys fees and litigation expenses.12
Tecson who even made Cordero believe there would be no
further sale between AFFA and ACG Express Liner. Robinson filed a motion to dismiss grounded on lack of
jurisdiction over his person and failure to state a cause of
In a handwritten letter dated June 24, 1998, Cordero informed action, asserting that there was no act committed in violation
Go that such act of dealing directly with Robinson violated of the distributorship agreement. Said motion was denied by
his exclusive distributorship and demanded that they respect the trial court on December 20, 1999. Robinson was likewise
the same, without prejudice to legal action against him and declared in default for failure to file his answer within the
Robinson should they fail to heed the same.8 Corderos period granted by the trial court.13 As for Go and Tecson,
lawyer, Atty. Ernesto A. Tabujara, Jr. of ACCRA law firm, their motion to dismiss based on failure to state a cause of
also wrote ACG Express Liner assailing the fraudulent action was likewise denied by the trial court on February 26,
actuations and misrepresentations committed by Go in 1999.14 Subsequently, they filed their Answer denying that
connivance with his lawyers (Landicho and Tecson) in they have anything to do with the termination by AFFA of
breach of Corderos exclusive distributorship appointment.9 Corderos authority as exclusive distributor in the
Philippines. On the contrary, they averred it was Cordero
Having been apprised of Corderos demand letter, Thyne & who stopped communicating with Go in connection with the
Macartney, the lawyer of AFFA and Robinson, faxed a letter purchase of the first vessel from AFFA and was not doing his
to ACCRA law firm asserting that the appointment of part in making progress status reports and airing the clients
Cordero as AFFAs distributor was for the purpose of one (1) grievances to his principal, AFFA, such that Go engaged the
transaction only, that is, the purchase of a high-speed services of Landicho to fly to Australia and attend to the
catamaran vessel by ACG Express Liner in August 1997. The documents needed for shipment of the vessel to the
letter further stated that Cordero was offered the exclusive Philippines. As to the inquiry for the Philippine price for a
distributorship, the terms of which were contained in a draft Wartsila ship engine for AFFAs other on-going vessel
agreement which Cordero allegedly failed to return to AFFA construction, this was merely requested by Robinson but
within a reasonable time, and which offer is already being which Cordero misinterpreted as indication that Go was
revoked by AFFA.10 buying a second vessel. Moreover, Landicho and Tecson had
no transaction whatsoever with Cordero who had no
document to show any such shipbuilding contract. As to the
As to the response of Go, Landicho and Tecson to his demand
supposed meeting to settle their dispute, this was due to the
letter, Cordero testified before the trial court that on the same
malicious demand of Cordero to be given US$3,000,000 as
day, Landicho, acting on behalf of Go, talked to him over the
otherwise he will expose in the media the alleged
telephone and offered to amicably settle their dispute. Tecson
undervaluation of the vessel with the BOC. In any case,
and Landicho offered to convince Go to honor his exclusive
Cordero no longer had cause of action for his commission for
distributorship with AFFA and to purchase all vessels for
the sale of the second vessel under the memorandum of
ACG Express Liner through him for the next three (3) years.
agreement dated August 7, 1997 considering the termination
In an effort to amicably settle the matter, Landicho, acting in
of his authority by AFFAs lawyers on June 26, 1998. 15
behalf of Go, set up a meeting with Cordero on June 29, 1998
between 9:30 p.m. to 10:30 p.m. at the Mactan Island Resort
Hotel lobby. On said date, however, only Landicho and Pre-trial was reset twice to afford the parties opportunity to
Tecson came and no reason was given for Gos absence. reach a settlement. However, on motion filed by Cordero
Tecson and Landicho proposed that they will convince Go to through counsel, the trial court reconsidered the resetting of
pay him US$1,500,000.00 on the condition that they will get a the pre-trial to another date for the third time as requested by
cut of 20%. And so it was agreed between him, Landicho and Go, Tecson and Landicho, in view of the latters failure to
Tecson that the latter would give him a weekly status report appear at the pre-trial conference on January 7, 2000 despite
and that the matter will be settled in three (3) to four (4) due notice. The trial court further confirmed that said
weeks and neither party will file an action against each other defendants misled the trial court in moving for continuance
until a final report on the proposed settlement. No such during the pre-trial conference held on December 10, 1999,
report was made by either Tecson or Landicho who, it turned purportedly to go abroad for the holiday season when in
out, had no intention to do so and were just buying time as truth a Hold-Departure Order had been issued against
the catamaran vessel was due to arrive from Australia. them.16 Accordingly, plaintiff Cordero was allowed to
Cordero then filed a complaint with the Bureau of Customs present his evidence ex parte.
(BOC) to prohibit the entry of SEACAT 25 from Australia
based on misdeclaration and undervaluation. Consequently, Corderos testimony regarding his transaction with
an Alert Order was issued by Acting BOC Commissioner defendants Go, Landicho and Tecson, and the latters offer of
Nelson Tan for the vessel which in fact arrived on July 17, settlement, was corroborated by his counsel who also took
1998. Cordero claimed that Go and Robinson had conspired the witness stand. Further, documentary evidence including
to undervalue the vessel by around US$500,000.00.11 photographs taken of the June 29, 1998 meeting with
Landicho, Tecson and Atty. Tabujara at Shangri-las Mactan
On August 21, 1998, Cordero instituted Civil Case No. 98- Island Resort, photographs taken in Brisbane showing
35332 seeking to hold Robinson, Go, Tecson and Landicho Cordero, Go with his family, Robinson and Landicho, and
liable jointly and solidarily for conniving and conspiring also various documents, communications, vouchers and
together in violating his exclusive distributorship in bad faith bank transmittals were presented to prove that: (1) Cordero
was properly authorized and actually transacted in behalf of
@lendelacruz 71

AFFA as exclusive distributor in the Philippines; (2) Cordero Order and Ex-Parte Motion for Encashment of Check filed by
spent considerable sums of money in pursuance of the Cordero.26 On November 29, 2000, the trial court
contract with Go and ACG Express Liner; and (3) AFFA reconsidered its Order dated August 21, 2000 denying due
through Robinson paid Cordero his commissions from each course to the notice of appeal and forthwith directed the
scheduled payment made by Go for the first SEACAT 25 transmittal of the records to the CA.27
purchased from AFFA pursuant to Shipbuilding Contract
No. 7825.17 On January 29, 2001, the CA rendered judgment granting the
petition for certiorari in CA-G.R. SP No. 60354 and setting
On May 31, 2000, the trial court rendered its decision, the aside the trial courts orders of execution pending appeal.
dispositive portion of which reads as follows: Cordero appealed the said judgment in a petition for review
filed with this Court which was eventually denied under our
WHEREFORE, PREMISES CONSIDERED, judgment is Decision dated September 17, 2002.28
hereby rendered in favor of Plaintiff and against defendants
Allan C. Go, Tony Robinson, Felipe Landicho, and Vincent On March 16, 2004, the CA in CA-G.R. CV No. 69113 affirmed
Tecson. As prayed for, defendants are hereby ordered to pay the trial court (1) in allowing Cordero to present his evidence
Plaintiff jointly and solidarily, the following: ex-parte after the unjustified failure of appellants (Go, Tecson
and Landicho) to appear at the pre-trial conference despite
1. On the First Cause of Action, the sum total of due notice; (2) in finding that it was Cordero and not Pamana
SIXTEEN MILLION TWO HUNDRED NINETY who was appointed by AFFA as the exclusive distributor in
ONE THOUSAND THREE HUNDRED FIFTY the Philippines of its SEACAT 25 and other fast ferry vessels,
TWO AND FORTY THREE CENTAVOS which is not limited to the sale of one (1) such catamaran to
(P16,291,352.43) as actual damages with legal Go on August 7, 1997; and (3) in finding that Cordero is
interest from 25 June 1998 until fully paid; entitled to a commission per vessel sold for AFFA through
his efforts in the amount equivalent to 22.43% of the price of
each vessel or US$328,742.00, and with payments of
2. On the Second Cause of Action, the sum of ONE
US$297,219.91 having been made to Cordero, there remained
MILLION PESOS (P1,000,000.00) as moral damages;
a balance of US$31,522.09 still due to him. The CA sustained
the trial court in ruling that Cordero is entitled to damages
3. On the Third Cause of Action, the sum of ONE for the breach of his exclusive distributorship agreement
MILLION PESOS (P1,000,000.00) as exemplary with AFFA. However, it held that Cordero is entitled only to
damages; and commission for the sale of the first catamaran obtained
through his efforts with the remaining unpaid sum of
4. On the Fourth Cause of Action, the sum of ONE US$31,522.09 or P1,355,449.90 (on the basis of
MILLION PESOS (P1,000,000.00) as attorneys fees; US$1.00=P43.00 rate) with interest at 6% per annum from the
time of the filing of the complaint until the same is fully paid.
Costs against the defendants. As to the P800,000.00 representing expenses incurred by
Cordero for transportation, phone bills, entertainment, food
and lodging, the CA declared there was no basis for such
SO ORDERED.18
award, the same being the logical and necessary
consequences of the exclusive distributorship agreement
Go, Robinson, Landicho and Tecson filed a motion for new which are normal in the field of sales and distribution, and
trial, claiming that they have been unduly prejudiced by the the expenditures having redounded to the benefit of the
negligence of their counsel who was allegedly unaware that distributor (Cordero).
the pre-trial conference on January 28, 2000 did not push
through for the reason that Cordero was then allowed to
On the amounts awarded by the trial court as moral and
present his evidence ex-parte, as he had assumed that the
exemplary damages, as well as attorneys fees, the CA
said ex-parte hearing was being conducted only against
reduced the same to P500,000.00, P300,000.00 and P50,000.00,
Robinson who was earlier declared in default.19 In its Order
respectively. Appellants were held solidarily liable pursuant
dated July 28, 2000, the trial court denied the motion for new
to the provisions of Article 1207 in relation to Articles 19, 20,
trial.20 In the same order, Corderos motion for execution
21 and 22 of the New Civil Code. The CA further ruled that
pending appeal was granted. Defendants moved to
no error was committed by the trial court in denying their
reconsider the said order insofar as it granted the motion for
motion for new trial, which said court found to be pro forma
execution pending appeal.21 On August 8, 2000, they filed a
and did not raise any substantial matter as to warrant the
notice of appeal.22
conduct of another trial.

On August 18, 2000, the trial court denied the motion for
By Resolution dated July 22, 2004, the CA denied the motions
reconsideration and on August 21, 2000, the writ of execution
for reconsideration respectively filed by the appellants and
pending appeal was issued.23 Meanwhile, the notice of
appellee, and affirmed the Decision dated March 16, 2004
appeal was denied for failure to pay the appellate court
with the sole modification that the legal interest of 6% per
docket fee within the prescribed period.24 Defendants filed a
annum shall start to run from June 24, 1998 until the finality
motion for reconsideration and to transmit the case records
of the decision, and the rate of 12% interest per annum shall
to the CA.25
apply once the decision becomes final and executory until the
judgment has been satisfied.
On September 29, 2000, the CA issued a temporary
restraining order at the instance of defendants in the
The case before us is a consolidation of the petitions for
certiorari case they filed with said court docketed as CA-G.R.
review under Rule 45 separately filed by Go (G.R. No.
SP No. 60354 questioning the execution orders issued by the
164703) and Cordero (G.R. No. 164747) in which petitioners
trial court. Consequently, as requested by the defendants, the
raised the following arguments:
trial court recalled and set aside its November 6, 2000 Order
granting the ex-parte motion for release of garnished funds,
cancelled the scheduled public auction sale of levied real G.R. No. 164703
properties, and denied the ex-parte Motion for Break-Open
@lendelacruz 72

(Petitioner Go) THE COURT OF APPEALS ERRED IN RULING THAT


PETITIONER IS NOT ENTITLED TO HIS COMMISSIONS
I. THE HONORABLE COURT OF APPEALS FOR THE PURCHASE OF A SECOND VESSEL, SINCE IT
DISREGARDED THE RULES OF COURT AND PERTINENT WAS PETITIONERS EFFORTS WHICH ACTUALLY
JURISPRUDENCE AND ACTED WITH GRAVE ABUSE OF FACILITATED AND SET-UP THE TRANSACTION FOR
DISCRETION IN NOT RULING THAT THE RESPONDENT RESPONDENTS.
IS NOT THE REAL PARTY-IN-INTEREST AND IN NOT
DISMISSING THE INSTANT CASE ON THE GROUND OF III.
LACK OF CAUSE OF ACTION;
THE COURT OF APPEALS ERRED IN NOT IMPOSING
II. THE HONORABLE COURT OF APPEALS IGNORED THE PROPER LEGAL INTEREST RATE ON
THE LAW AND JURISPRUDENCE AND ACTED WITH RESPONDENTS UNPAID OBLIGATION WHICH
GRAVE ABUSE OF DISCRETION IN HOLDING HEREIN SHOULD BE TWELVE PERCENT (12%) FROM THE TIME
PETITIONER RESPONSIBLE FOR THE BREACH IN THE OF THE BREACH OF THE OBLIGATION.
ALLEGED EXCLUSIVE DISTRIBUTORSHIP AGREEMENT
WITH ALUMINIUM FAST FERRIES AUSTRALIA; IV.

III. THE HONORABLE APPELLATE COURT MISAPPLIED THE COURT OF APPEALS ERRED IN NOT SUSTAINING
THE LAW AND ACTED WITH GRAVE ABUSE OF THE ORIGINAL AMOUNT OF CONSEQUENTIAL
DISCRETION IN FINDING PETITIONER LIABLE IN DAMAGES AWARDED TO PETITIONER BY THE TRIAL
SOLIDUM WITH THE CO-DEFENDANTS WITH RESPECT COURT CONSIDERING THE BAD FAITH AND
TO THE CLAIMS OF RESPONDENT; FRAUDULENT CONDUCT OF RESPONDENTS IN
MISAPPROPRIATING THE MONEY OF PETITIONER.30
IV. THE HONORABLE COURT OF APPEALS MISAPPLIED
LAW AND JURISPRUDENCE AND GRAVELY ABUSED The controversy boils down to two (2) main issues: (1)
ITS DISCRETION WHEN IT FOUND PETITIONER LIABLE whether petitioner Cordero has the legal personality to sue
FOR UNPAID COMMISSIONS, DAMAGES, ATTORNEYS the respondents for breach of contract; and (2) whether the
FEES, AND LITIGATION EXPENSES; and respondents may be held liable for damages to Cordero for
his unpaid commissions and termination of his exclusive
V. THE HONORABLE APPELLATE COURT ACTED distributorship appointment by the principal, AFFA.
CONTRARY TO LAW AND JURISPRUDENCE AND
GRAVELY ABUSED ITS DISCRETION WHEN IT I. Real Party-in-Interest
EFFECTIVELY DEPRIVED HEREIN PETITIONER OF HIS
RIGHT TO DUE PROCESS BY AFFIRMING THE LOWER
First, on the issue of whether the case had been filed by the
COURTS DENIAL OF PETITIONERS MOTION FOR NEW
real party-in-interest as required by Section 2, Rule 3 of the
TRIAL.29
Rules of Court, which defines such party as the one (1) to be
benefited or injured by the judgment in the suit, or the party
G.R. No. 164747 entitled to the avails of the suit. The purposes of this
provision are: 1) to prevent the prosecution of actions by
(Petitioner Cordero) persons without any right, title or interest in the case; 2) to
require that the actual party entitled to legal relief be the one
I. to prosecute the action; 3) to avoid a multiplicity of suits; and
4) to discourage litigation and keep it within certain bounds,
pursuant to sound public policy.31 A case is dismissible for
THE COURT OF APPEALS ERRED IN NOT SUSTAINING
lack of personality to sue upon proof that the plaintiff is not
THE JUDGMENT OF THE TRIAL COURT AWARDING
the real party-in-interest, hence grounded on failure to state
PETITIONER ACTUAL DAMAGES FOR HIS
a cause of action.32
COMMISSION FOR THE SALE OF THE SECOND VESSEL,
SINCE THERE IS SUFFICIENT EVIDENCE ON RECORD
WHICH PROVES THAT THERE WAS A SECOND SALE OF On this issue, we agree with the CA in ruling that it was
A VESSEL. Cordero and not Pamana who is the exclusive distributor of
AFFA in the Philippines as shown by the Certification dated
June 1, 1997 issued by Tony Robinson.33 Petitioner Go
A. THE MEMORANDUM OF AGREEMENT DATED 7
mentions the following documents also signed by
AUGUST 1997 PROVIDES THAT RESPONDENT GO WAS
respondent Robinson which state that "Pamana Marketing
CONTRACTUALLY BOUND TO BUY TWO (2) VESSELS
Corporation represented by Mr. Mortimer F. Cordero" was
FROM AFFA.
actually the exclusive distributor: (1) letter dated 1 June
199734; (2) certification dated 5 August 199735; and (3) letter
B. RESPONDENT GOS POSITION PAPER AND dated 5 August 1997 addressed to petitioner Cordero
COUNTER-AFFIDAVIT/POSITION PAPER THAT WERE concerning "commissions to be paid to Pamana Marketing
FILED BEFORE THE BUREAU OF CUSTOMS, ADMITS Corporation."36 Such apparent inconsistency in naming
UNDER OATH THAT HE HAD INDEED PURCHASED A AFFAs exclusive distributor in the Philippines is of no
SECOND VESSEL FROM AFFA. moment. For all intents and purposes, Robinson and AFFA
dealt only with Cordero who alone made decisions in the
C. RESPONDENTS ADMITTED IN THEIR PRE-TRIAL performance of the exclusive distributorship, as with other
BRIEF THAT THEY HAD PURCHASED A SECOND clients to whom he had similarly offered AFFAs fast ferry
VESSEL. vessels. Moreover, the stipulated commissions from each
progress payments made by Go were directly paid by
II. Robinson to Cordero.37 Respondents Landicho and Tecson
were only too aware of Corderos authority as the person
who was appointed and acted as exclusive distributor of
@lendelacruz 73

AFFA, which can be gleaned from their act of immediately a trading firm in West Germany and sold these in the
furnishing him with copies of bank transmittals everytime Philippines. We held that the rights granted to the petitioner
Go remits payment to Robinson, who in turn transfers a under the exclusive distributorship agreement may not be
portion of funds received to the bank account of Cordero in diminished nor rendered illusory by the expedient act of
the Philippines as his commission. Out of these partial utilizing or interposing a person or firm to obtain goods for
payments of his commission, Cordero would still give which the exclusive distributorship was conceptualized, at
Landicho and Tecson their respective "commission," or "cuts" the expense of the sole authorized distributor.47
from his own commission. Respondents Landicho and
Tecson failed to refute the evidence submitted by Cordero In the case at bar, it was established that petitioner Cordero
consisting of receipts signed by them. Said amounts were was not paid the balance of his commission by respondent
apart from the earlier expenses shouldered by Cordero for Robinson. From the time petitioner Go and respondent
Landichos airline tickets, transportation, food and hotel Landicho directly dealt with respondent Robinson in
accommodations for the trip to Australia.38 Brisbane, and ceased communicating through petitioner
Cordero as the exclusive distributor of AFFA in the
Moreover, petitioner Go, Landicho and Tecson never raised Philippines, Cordero was no longer informed of payments
petitioner Corderos lack of personality to sue on behalf of remitted to AFFA in Brisbane. In other words, Cordero had
Pamana,39 and did so only before the CA when they clearly been cut off from the transaction until the arrival of
contended that it is Pamana and not Cordero, who was the first SEACAT 25 which was sold through his efforts.
appointed and acted as exclusive distributor for AFFA.40 It When Cordero complained to Go, Robinson, Landicho and
was Robinson who argued in support of his motion to Tecson about their acts prejudicial to his rights and
dismiss that as far as said defendant is concerned, the real demanded that they respect his exclusive distributorship, Go
party plaintiff appears to be Pamana, against the real party simply let his lawyers led by Landicho and Tecson handle the
defendant which is AFFA.41 As already mentioned, the trial matter and tried to settle it by promising to pay a certain
court denied the motion to dismiss filed by Robinson. amount and to purchase high-speed catamarans through
Cordero. However, Cordero was not paid anything and
We find no error committed by the trial court in overruling worse, AFFA through its lawyer in Australia even terminated
Robinsons objection over the improper resort to summons his exclusive dealership insisting that his services were
by publication upon a foreign national like him and in an engaged for only one (1) transaction, that is, the purchase of
action in personam, notwithstanding that he raised it in a the first SEACAT 25 in August 1997.
special appearance specifically raising the issue of lack of
jurisdiction over his person. Courts acquire jurisdiction over Petitioner Go argues that unlike in Yu v. Court of Appeals 48
the plaintiffs upon the filing of the complaint, while there is no conclusive proof adduced by petitioner Cordero
jurisdiction over the defendants in a civil case is acquired that they actually purchased a second SEACAT 25 directly
either through the service of summons upon them in the from AFFA and hence there was no violation of the exclusive
manner required by law or through their voluntary distributorship agreement. Further, he contends that the CA
appearance in court and their submission to its authority.42 A gravely abused its discretion in holding them solidarily liable
party who makes a special appearance in court challenging to Cordero, relying on Articles 1207, 19 and 21 of the Civil
the jurisdiction of said court based on the ground of invalid Code despite absence of evidence, documentary or
service of summons is not deemed to have submitted himself testimonial, showing that they conspired to defeat the very
to the jurisdiction of the court.43 purpose of the exclusive distributorship agreement.49

In this case, however, although the Motion to Dismiss filed We find that contrary to the claims of petitioner Cordero,
by Robinson specifically stated as one (1) of the grounds the there was indeed no sufficient evidence that respondents
lack of "personal jurisdiction," it must be noted that he had actually purchased a second SEACAT 25 directly from AFFA.
earlier filed a Motion for Time to file an appropriate But this circumstance will not absolve respondents from
responsive pleading even beyond the time provided in the liability for invading Corderos rights under the exclusive
summons by publication.44 Such motion did not state that it distributorship. Respondents clearly acted in bad faith in
was a conditional appearance entered to question the bypassing Cordero as they completed the remaining
regularity of the service of summons, but an appearance payments to AFFA without advising him and furnishing him
submitting to the jurisdiction of the court by acknowledging with copies of the bank transmittals as they previously did,
the summons by publication issued by the court and praying and directly dealt with AFFA through Robinson regarding
for additional time to file a responsive pleading. arrangements for the arrival of the first SEACAT 25 in Manila
Consequently, Robinson having acknowledged the and negotiations for the purchase of the second vessel
summons by publication and also having invoked the pursuant to the Memorandum of Agreement which Cordero
jurisdiction of the trial court to secure affirmative relief in his signed in behalf of AFFA. As a result of respondents
motion for additional time, he effectively submitted actuations, Cordero incurred losses as he was not paid the
voluntarily to the trial courts jurisdiction. He is now balance of his commission from the sale of the first vessel and
estopped from asserting otherwise, even before this Court.45 his exclusive distributorship revoked by AFFA.

II. Breach of Exclusive Distributorship, Contractual Petitioner Go contends that the trial and appellate courts
Interference and Respondents Liability for Damages erred in holding them solidarily liable for Corderos unpaid
commission, which is the sole obligation of the principal
In Yu v. Court of Appeals,46 this Court ruled that the right to AFFA. It was Robinson on behalf of AFFA who, in the letter
perform an exclusive distributorship agreement and to reap dated August 5, 1997 addressed to Cordero, undertook to
the profits resulting from such performance are proprietary pay commission payments to Pamana on a staggered
rights which a party may protect. Thus, injunction is the progress payment plan in the form of percentage of the
appropriate remedy to prevent a wrongful interference with commission per payment. AFFA explicitly committed that it
contracts by strangers to such contracts where the legal will, "upon receipt of progress payments, pay to Pamana
remedy is insufficient and the resulting injury is irreparable. their full commission by telegraphic transfer to an account
In that case, the former dealer of the same goods purchased nominated by Pamana within one to two days of [AFFA]
the merchandise from the manufacturer in England through receiving such payments."50 Petitioner Go further maintains
@lendelacruz 74

that he had not in any way violated or caused the termination As early as Gilchrist vs. Cuddy, we held that where there was
of the exclusive distributorship agreement between Cordero no malice in the interference of a contract, and the impulse
and AFFA; he had also paid in full the first and only vessel behind ones conduct lies in a proper business interest rather
he purchased from AFFA.51 than in wrongful motives, a party cannot be a malicious
interferer. Where the alleged interferer is financially
While it is true that a third person cannot possibly be sued interested, and such interest motivates his conduct, it cannot
for breach of contract because only parties can breach be said that he is an officious or malicious intermeddler.
contractual provisions, a contracting party may sue a third
person not for breach but for inducing another to commit In the instant case, it is clear that petitioner So Ping Bun
such breach. prevailed upon DCCSI to lease the warehouse to his
enterprise at the expense of respondent corporation. Though
Article 1314 of the Civil Code provides: petitioner took interest in the property of respondent
corporation and benefited from it, nothing on record imputes
deliberate wrongful motives or malice in him.
Art. 1314. Any third person who induces another to violate
his contract shall be liable for damages to the other
contracting party. xxx

The elements of tort interference are: (1) existence of a valid While we do not encourage tort interferers seeking their
contract; (2) knowledge on the part of the third person of the economic interest to intrude into existing contracts at the
existence of a contract; and (3) interference of the third person expense of others, however, we find that the conduct herein
is without legal justification.52 complained of did not transcend the limits forbidding an
obligatory award for damages in the absence of any malice.
The business desire is there to make some gain to the
The presence of the first and second elements is not disputed.
detriment of the contracting parties. Lack of malice, however,
Through the letters issued by Robinson attesting that
precludes damages. But it does not relieve petitioner of the
Cordero is the exclusive distributor of AFFA in the
legal liability for entering into contracts and causing breach
Philippines, respondents were clearly aware of the contract
of existing ones. The respondent appellate court correctly
between Cordero and AFFA represented by Robinson. In
confirmed the permanent injunction and nullification of the
fact, evidence on record showed that respondents initially
lease contracts between DCCSI and Trendsetter Marketing,
dealt with and recognized Cordero as such exclusive dealer
without awarding damages. The injunction saved the
of AFFA high-speed catamaran vessels in the Philippines. In
respondents from further damage or injury caused by
that capacity as exclusive distributor, petitioner Go entered
petitioners interference.54 [emphasis supplied.]
into the Memorandum of Agreement and Shipbuilding
Contract No. 7825 with Cordero in behalf of AFFA.
Malice connotes ill will or spite, and speaks not in response
to duty. It implies an intention to do ulterior and unjustifiable
As to the third element, our ruling in the case of So Ping Bun
harm. Malice is bad faith or bad motive.55 In the case of Lagon
v. Court of Appeals53 is instructive, to wit:
v. Court of Appeals,56 we held that to sustain a case for
tortuous interference, the defendant must have acted with
A duty which the law of torts is concerned with is respect for malice or must have been driven by purely impure reasons
the property of others, and a cause of action ex delicto may to injure the plaintiff; in other words, his act of interference
be predicated upon an unlawful interference by one person cannot be justified. We further explained that the word
of the enjoyment by the other of his private property. This "induce" refers to situations where a person causes another to
may pertain to a situation where a third person induces a choose one course of conduct by persuasion or intimidation.
party to renege on or violate his undertaking under a As to the allegation of private respondent in said case that
contract. In the case before us, petitioners Trendsetter petitioner induced the heirs of the late Bai Tonina Sepi to sell
Marketing asked DCCSI to execute lease contracts in its the property to petitioner despite an alleged renewal of the
favor, and as a result petitioner deprived respondent original lease contract with the deceased landowner, we
corporation of the latters property right. Clearly, and as ruled as follows:
correctly viewed by the appellate court, the three elements of
tort interference above-mentioned are present in the instant
Assuming ex gratia argumenti that petitioner knew of the
case.
contract, such knowledge alone was not sufficient to make
him liable for tortuous interference. x x x
Authorities debate on whether interference may be justified
where the defendant acts for the sole purpose of furthering
Furthermore, the records do not support the allegation of
his own financial or economic interest. One view is that, as a
private respondent that petitioner induced the heirs of Bai
general rule, justification for interfering with the business
Tonina Sepi to sell the property to him. The word "induce"
relations of another exists where the actors motive is to
refers to situations where a person causes another to choose
benefit himself. Such justification does not exist where his
one course of conduct by persuasion or intimidation. The
sole motive is to cause harm to the other. Added to this, some
records show that the decision of the heirs of the late Bai
authorities believe that it is not necessary that the interferers
Tonina Sepi to sell the property was completely of their own
interest outweigh that of the party whose rights are invaded,
volition and that petitioner did absolutely nothing to
and that an individual acts under an economic interest that is
influence their judgment. Private respondent himself did not
substantial, not merely de minimis, such that wrongful and
proffer any evidence to support his claim. In short, even
malicious motives are negatived, for he acts in self-
assuming that private respondent was able to prove the
protection. Moreover, justification for protecting ones
renewal of his lease contract with Bai Tonina Sepi, the fact
financial position should not be made to depend on a
was that he was unable to prove malice or bad faith on the
comparison of his economic interest in the subject matter
part of petitioner in purchasing the property. Therefore, the
with that of others. It is sufficient if the impetus of his conduct
claim of tortuous interference was never established.57
lies in a proper business interest rather than in wrongful
motives.
In their Answer, respondents denied having anything to do
with the unpaid balance of the commission due to Cordero
@lendelacruz 75

and the eventual termination of his exclusive distributorship which even gives credence to the claim of Cordero that
by AFFA. They gave a different version of the events that respondents negotiated for the sale of the second vessel and
transpired following the signing of Shipbuilding Contract that the nonpayment of the remaining two (2) instalments of
No. 7825. According to them, several builder-competitors his commission for the sale of the first SEACAT 25 was a
still entered the picture after the said contract for the result of Go and Landichos directly dealing with Robinson,
purchase of one (1) SEACAT 25 was sent to Brisbane in July obviously to obtain a lower price for the second vessel at the
1997 for authentication, adding that the contract was to be expense of Cordero.
effective on August 7, 1997, the time when their funds was to
become available. Go admitted he called the attention of The act of Go, Landicho and Tecson in inducing Robinson
AFFA if it can compete with the prices of other builders, and and AFFA to enter into another contract directly with ACG
upon mutual agreement, AFFA agreed to give them a Express Liner to obtain a lower price for the second vessel
discounted price under the following terms and conditions: resulted in AFFAs breach of its contractual obligation to pay
(1) that the contract price be lowered; (2) that Go will obtain in full the commission due to Cordero and unceremonious
another vessel; (3) that to secure compliance of such termination of Corderos appointment as exclusive
conditions, Go must make an advance payment for the distributor. Following our pronouncement in Gilchrist v.
building of the second vessel; and (4) that the payment Cuddy (supra), such act may not be deemed malicious if
scheme formerly agreed upon as stipulated in the first impelled by a proper business interest rather than in
contract shall still be the basis and used as the guiding factor wrongful motives. The attendant circumstances, however,
in remitting money for the building of the first vessel. This demonstrated that respondents transgressed the bounds of
led to the signing of another contract superseding the first permissible financial interest to benefit themselves at the
one (1), still to be dated 07 August 1997. Attached to the expense of Cordero. Respondents furtively went directly to
answer were photocopies of the second contract stating a Robinson after Cordero had worked hard to close the deal for
lower purchase price (US$1,150,000.00) and facsimile them to purchase from AFFA two (2) SEACAT 25, closely
transmission of AFFA to Go confirming the transaction.58 monitored the progress of building the first vessel sold,
attended to their concerns and spent no measly sum for the
As to the cessation of communication with Cordero, Go trip to Australia with Go, Landicho and Gos family
averred it was Cordero who was nowhere to be contacted at members. But what is appalling is the fact that even as Go,
the time the shipbuilding progress did not turn good as Landicho and Tecson secretly negotiated with Robinson for
promised, and it was always Landicho and Tecson who, after the purchase of a second vessel, Landicho and Tecson
several attempts, were able to locate him only to obtain continued to demand and receive from Cordero their
unsatisfactory reports such that it was Go who would still "commission" or "cut" from Corderos earned commission
call up Robinson regarding any progress status report, from the sale of the first SEACAT 25.
lacking documents for MARINA, etc., and go to Australia for
ocular inspection. Hence, in May 1998 on the scheduled Cordero was practically excluded from the transaction when
launching of the ship in Australia, Go engaged the services Go, Robinson, Tecson and Landicho suddenly ceased
of Landicho who went to Australia to see to it that all communicating with him, without giving him any
documents needed for the shipment of the vessel to the explanation. While there was nothing objectionable in
Philippines would be in order. It was also during this time negotiating for a lower price in the second purchase of
that Robinsons request for inquiry on the Philippine price of SEACAT 25, which is not prohibited by the Memorandum of
a Wartsila engine for AFFAs then on-going vessel Agreement, Go, Robinson, Tecson and Landicho clearly
construction, was misinterpreted by Cordero as indicating connived not only in ensuring that Cordero would have no
that Go was buying a second vessel.59 participation in the contract for sale of the second SEACAT
25, but also that Cordero would not be paid the balance of his
We find these allegations unconvincing and a mere commission from the sale of the first SEACAT 25. This,
afterthought as these were the very same averments despite their knowledge that it was commission already
contained in the Position Paper for the Importer dated earned by and due to Cordero. Thus, the trial and appellate
October 9, 1998, which was submitted by Go on behalf of courts correctly ruled that the actuations of Go, Robinson,
ACG Express Liner in connection with the complaint- Tecson and Landicho were without legal justification and
affidavit filed by Cordero before the BOC-SGS Appeals intended solely to prejudice Cordero.
Committee relative to the shipment valuation of the first
SEACAT 25 purchased from AFFA.60 It appears that the The existence of malice, ill will or bad faith is a factual matter.
purported second contract superseding the original As a rule, findings of fact of the trial court, when affirmed by
Shipbuilding Contract No. 7825 and stating a lower price of the appellate court, are conclusive on this Court.63 We see no
US$1,150,000.00 (not US$1,465,512.00) was only presented compelling reason to reverse the findings of the RTC and the
before the BOC to show that the vessel imported into the CA that respondents acted in bad faith and in utter disregard
Philippines was not undervalued by almost US$500,000.00. of the rights of Cordero under the exclusive distributorship
Cordero vehemently denied there was such modification of agreement.
the contract and accused respondents of resorting to falsified
documents, including the facsimile transmission of AFFA
The failure of Robinson, Go, Tecson and Landico to act with
supposedly confirming the said sale for only
fairness, honesty and good faith in securing better terms for
US$1,150,000.00. Incidentally, another document filed in said
the purchase of high-speed catamarans from AFFA, to the
BOC case, the Counter-Affidavit/Position Paper for the
prejudice of Cordero as the duly appointed exclusive
Importer dated November 16, 1998,61 states in paragraph 8
distributor, is further proscribed by Article 19 of the Civil
under the Antecedent facts thereof, that --
Code:

8. As elsewhere stated, the total remittances made by herein


Art. 19. Every person must, in the exercise of his rights and
Importer to AFFA does not alone represent the purchase
in the performance of his duties, act with justice, give
price for Seacat 25. It includes advance payment for the
everyone his due, and observe honesty and good faith.
acquisition of another vessel as part of the deal due to the
discounted price.62
As we have expounded in another case:
@lendelacruz 76

Elsewhere, we explained that when "a right is exercised in a Joint tort feasors are not liable pro rata. The damages can not
manner which does not conform with the norms enshrined be apportioned among them, except among themselves. They
in Article 19 and results in damage to another, a legal wrong cannot insist upon an apportionment, for the purpose of each
is thereby committed for which the wrongdoer must be paying an aliquot part. They are jointly and severally liable
responsible." The object of this article, therefore, is to set for the whole amount. x x x
certain standards which must be observed not only in the
exercise of ones rights but also in the performance of ones A payment in full for the damage done, by one of the joint
duties. These standards are the following: act with justice, tort feasors, of course satisfies any claim which might exist
give everyone his due and observe honesty and good faith. against the others. There can be but satisfaction. The release
Its antithesis, necessarily, is any act evincing bad faith or of one of the joint tort feasors by agreement generally
intent to injure. Its elements are the following: (1) There is a operates to discharge all. x x x
legal right or duty; (2) which is exercised in bad faith; (3) for
the sole intent of prejudicing or injuring another. When
Of course, the court during trial may find that some of the
Article 19 is violated, an action for damages is proper under
alleged tort feasors are liable and that others are not liable.
Articles 20 or 21 of the Civil Code. Article 20 pertains to
The courts may release some for lack of evidence while
damages arising from a violation of law x x x. Article 21, on
condemning others of the alleged tort feasors. And this is true
the other hand, states:
even though they are charged jointly and severally.67
[emphasis supplied.]
Art. 21. Any person who willfully causes loss or injury to
another in a manner that is contrary to morals, good customs
The rule is that the defendant found guilty of interference
or public policy shall compensate the latter for the damage.
with contractual relations cannot be held liable for more than
the amount for which the party who was inducted to break
Article 21 refers to acts contra bonus mores and has the the contract can be held liable.68 Respondents Go, Landicho
following elements: (1) There is an act which is legal; (2) but and Tecson were therefore correctly held liable for the
which is contrary to morals, good custom, public order, or balance of petitioner Corderos commission from the sale of
public policy; and (3) it is done with intent to injure. the first SEACAT 25, in the amount of US$31,522.09 or its
peso equivalent, which AFFA/Robinson did not pay in
A common theme runs through Articles 19 and 21, and that violation of the exclusive distributorship agreement, with
is, the act complained of must be intentional.64 interest at the rate of 6% per annum from June 24, 1998 until
the same is fully paid.
Petitioner Gos argument that he, Landicho and Tecson
cannot be held liable solidarily with Robinson for actual, Respondents having acted in bad faith, moral damages may
moral and exemplary damages, as well as attorneys fees be recovered under Article 2219 of the Civil Code.69 On the
awarded to Cordero since no law or contract provided for other hand, the requirements of an award of exemplary
solidary obligation in these cases, is equally bereft of merit. damages are: (1) they may be imposed by way of example in
Conformably with Article 2194 of the Civil Code, the addition to compensatory damages, and only after the
responsibility of two or more persons who are liable for the claimants right to them has been established; (2) that they
quasi-delict is solidary.65 In Lafarge Cement Philippines, Inc. cannot be recovered as a matter of right, their determination
v. Continental Cement Corporation,66 we held: depending upon the amount of compensatory damages that
may be awarded to the claimant; and (3) the act must be
[O]bligations arising from tort are, by their nature, always accompanied by bad faith or done in a wanton, fraudulent,
solidary. We have assiduously maintained this legal oppressive or malevolent manner.70 The award of exemplary
principle as early as 1912 in Worcester v. Ocampo, in which damages is thus in order. However, we find the sums
we held: awarded by the trial court as moral and exemplary damages
as reduced by the CA, still excessive under the circumstances.
x x x The difficulty in the contention of the appellants is that
they fail to recognize that the basis of the present action is Moral damages are meant to compensate and alleviate the
tort. They fail to recognize the universal doctrine that each physical suffering, mental anguish, fright, serious anxiety,
joint tort feasor is not only individually liable for the tort in besmirched reputation, wounded feelings, moral shock,
which he participates, but is also jointly liable with his tort social humiliation, and similar injuries unjustly caused.
feasors. x x x Although incapable of pecuniary estimation, the amount
must somehow be proportional to and in approximation of
the suffering inflicted. Moral damages are not punitive in
It may be stated as a general rule that joint tort feasors are all
nature and were never intended to enrich the claimant at the
the persons who command, instigate, promote, encourage,
expense of the defendant. There is no hard-and-fast rule in
advise, countenance, cooperate in, aid or abet the
determining what would be a fair and reasonable amount of
commission of a tort, or who approve of it after it is done, if
moral damages, since each case must be governed by its own
done for their benefit. They are each liable as principals, to
peculiar facts. Trial courts are given discretion in
the same extent and in the same manner as if they had
determining the amount, with the limitation that it "should
performed the wrongful act themselves. x x x
not be palpably and scandalously excessive." Indeed, it must
be commensurate to the loss or injury suffered.71
Joint tort feasors are jointly and severally liable for the tort
which they commit.1avvphi1 The persons injured may sue all
We believe that the amounts of P300,000.00 and P200,000.00
of them or any number less than all. Each is liable for the
as moral and exemplary damages, respectively, would be
whole damages caused by all, and all together are jointly
sufficient and reasonable. Because exemplary damages are
liable for the whole damage. It is no defense for one sued
awarded, attorneys fees may also be awarded in consonance
alone, that the others who participated in the wrongful act
with Article 2208 (1).72 We affirm the appellate courts award
are not joined with him as defendants; nor is it any excuse for
of attorneys fees in the amount of P50,000.00.
him that his participation in the tort was insignificant as
compared to that of the others. x x x
WHEREFORE, the petitions are DENIED. The Decision
dated March 16, 2004 as modified by the Resolution dated
@lendelacruz 77

July 22, 2004 of the Court of Appeals in CA-G.R. CV No. The case at bar does not come within the rationale of the
69113 are hereby AFFIRMED with MODIFICATION in that above decisions. Attorney Subido is a regular officer or
the awards of moral and exemplary damages are hereby employee in the Department of Interior, more particularly in
reduced to P300,000.00 and P200,000.00, respectively. the City Mayor's office. For this reason he belongs to the class
of persons disqualified for appointment to the post of special
With costs against the petitioner in G.R. No. 164703. counsel.

SO ORDERED. That to be eligible as special counsel to aid a fiscal the


appointee must be either an employee or officer in the
Department of Justice is so manifest from a bare reading of
Republic of the Philippines
section 1686 of the Revised Administrative Code as to
SUPREME COURT
preclude construction. And the limitation of the range of
Manila
choice in the appointment or designation is not without
reason.
EN BANC
The obvious reason is to have appointed only lawyers over
G.R. No. L-4313 March 20, 1951 whom the Secretary of Justice can exercise exclusive and
absolute power of supervision. An appointee from a branch
PEDRO P. VILLA, petitioner, of the government outside the Department of Justice would
vs. owe obedience to, and be subject to orders by, mutually
FIDEL IBAEZ, Judge of the Court of First Instance of independent superiors having, possibly, antagonistic
Manila, EUGENIO ANGELES, City Fiscal, ABELARDO interests. Referring particularly to the case at hand for
SUBIDO, Chief, Division of Investigation, Office of the illustration, Attorney Subido could be recalled or his time
Manila, respondents. and attention be required elsewhere by the Secretary of
Interior or the City Mayor while he was discharging his
TUASON, J.: duties as public prosecutor, and the Secretary of Justice
would be helpless to stop such recall or interference. An
Attorney Abelardo Subido, chief of the division of eventually or state of affairs so undesirable, not to say
investigation in the office of the mayor of the City of Manila, detrimental to the public service and specially the
was appointed by the then Secretary of Justice, Honorable administration of justice, the legislature wisely intended to
Ricardo Nepomuceno, as special counsel to assist the City avoid.
Fiscal of Manila in the cases of city government officials or
employees he had investigated; and in pursuance of that The defendant had pleaded to the information before he filed
appointment, he subscribed, swore to and presented an a motion to quash, and it is contended that by his plea he
information against Pedro P. Villa, the present petitioner, for waived all objections to the information. The contention is
falsification of a payroll of the division of veterinary service, correct as far as formal objections to the pleading are
Manila health department. Attorney Subido's authority to concerned. But by clear implication it not by express
file information was thereafter challenged by the accused but provision of section 10 of Rule 113 of the Rules of Court, and
was sustained by His Honor, Judge Fidel Ibaez. Hence this by a long line of uniform decisions, questions of want of
petition for certiorari, which is in reality a petition for jurisdiction may be raised at any stage of the proceeding.
prohibition and will be so regarded. Now, the objection to the respondent's actuations goes to the
very foundations of jurisdiction. It is a valid information
Chief ground of attack, the resolution of which will dispose signed by a competent officer which, among other requisites,
of the others and to which this opinion will therefore be confers jurisdiction on the court over the person of the
confined, has to do with Attorney Subido's legal accused and the subject matter of the accusation. In
qualifications for the appointment in question under section consonance with this view, an infirmity of the nature noted
1686 of the Revised Administrative Code, as amended by in the information can not be cured by silence, acquiescence,
Section 4 of Commonwealth Act No. 144, which reads as or even by express consent.
follows:
The petition will therefore be granted and the respondent
SEC. 189. Additional counsel to assist fiscal. The judge ordered to desist from proceeding with criminal case
Secretary of Justice may appoint any lawyer, being No. 11963 upon the information filed by Attorney Abelardo
either a subordinate from his office or a competent Subido, without costs.
person not in the public service, temporarily to
assist a fiscal or prosecuting attorney in the
discharge of his duties, and with the same authority
therein as might be exercised by the Attorney Republic of the Philippines
General or Solicitor General. SUPREME COURT
Manila
Appointments by the Secretary of Justice in virtue of the
foregoing provisions of the Revised Administrative Code, as THIRD DIVISION
amended, were upheld in Lo Cham vs. Ocampo et al.,1 44
Official Gazette, 458, and Go Cam et al., vs. Gatmaitan et al., (47 G.R. No. 149588 September 29, 2009
Official Gazette, 5092)2. But in those cases, the appointees
were officials or employees in one or another of the bureaus
FRANCISCO R. LLAMAS and CARMELITA C. LLAMAS,
or offices under the Department of Justice, and were rightly
Petitioners,
considered subordinates in the office of the Secretary of
vs.
Justice within the meaning of section 1686, ante.
THE HONORABLE COURT OF APPEALS, BRANCH 66
OF THE REGIONAL TRIAL COURT IN MAKATI CITY
and THE PEOPLE OF THE PHILIPPINES, Respondents.
@lendelacruz 78

DECISION There being no action taken by the trial court on the said
motion, petitioners instituted, on September 13, 2001, the
NACHURA, J.: instant proceedings for the annulment of the trial and the
appellate courts decisions.
In this petition captioned as "Annulment of Judgment and
Certiorari, with Preliminary Injunction," petitioners assail, on The Court initially dismissed on technical grounds the
the ground of lack of jurisdiction, the trial courts decision petition in the September 24, 2001 Resolution,11 but reinstated
convicting them of "other form of swindling" penalized by the same, on motion for reconsideration, in the October 22,
Article 316, paragraph 2, of the Revised Penal Code (RPC). 2001 Resolution.12

The antecedent facts and proceedings that led to the filing of After a thorough evaluation of petitioners arguments vis--
the instant petition are pertinently narrated as follows: vis the applicable law and jurisprudence, the Court denies
the petition.
On August 16, 1984, petitioners were charged before the
Regional Trial Court (RTC) of Makati with, as aforesaid, the In People v. Bitanga,13 the Court explained that the remedy
crime of "other forms of swindling" in the Information,1 of annulment of judgment cannot be availed of in criminal
docketed as Criminal Case No. 11787, which reads: cases, thus

That on or about the 20th day of November, 1978, in the Section 1, Rule 47 of the Rules of Court, limits the scope of
municipality of Paraaque, Metro Manila, Philippines and the remedy of annulment of judgment to the following:
within the jurisdiction of this Honorable Court, the above-
named accused, conspiring and confederating together and Section 1. Coverage. This Rule shall govern the annulment
mutually helping and aiding one another, well knowing that by the Court of Appeals of judgments or final orders and
their parcel of land known as Lot No. 11, Block No. 6 of the resolutions in civil actions of Regional Trial Courts for which
Subdivision Plan (LRC) Psd 67036, Cadastral Survey of the ordinary remedies of new trial, appeal, petition for relief
Paraaque, LRC Record No. N-26926, Case No. 4869, situated or other appropriate remedies are no longer available
at Barrio San Dionisio, Municipality of Paraaque, Metro through no fault of the petitioner.a1f
Manila, was mortgaged to the Rural Bank of Imus, did then
and there willfully, unlawfully and feloniously sell said The remedy cannot be resorted to when the RTC judgment
property to one Conrado P. Avila, falsely representing the being questioned was rendered in a criminal case. The 2000
same to be free from all liens and encumbrances whatsoever, Revised Rules of Criminal Procedure itself does not permit
and said Conrado P. Avila bought the aforementioned such recourse, for it excluded Rule 47 from the enumeration
property for the sum of P12,895.00 which was paid to the of the provisions of the 1997 Revised Rules of Civil Procedure
accused, to the damage and prejudice of said Conrado P. which have suppletory application to criminal cases. Section
Avila in the aforementioned amount of P12,895.00. 18, Rule 124 thereof, provides:

Contrary to law.2 Sec. 18. Application of certain rules in civil procedure to criminal
cases. The provisions of Rules 42, 44 to 46 and 48 to 56
After trial on the merits, the RTC rendered its Decision 3 on relating to procedure in the Court of Appeals and in the
June 30, 1994, finding petitioners guilty beyond reasonable Supreme Court in original and appealed civil cases shall be
doubt of the crime charged and sentencing them to suffer the applied to criminal cases insofar as they are applicable and
penalty of imprisonment for two months and to pay the fine not inconsistent with the provisions of this Rule.
of P18,085.00 each.
There is no basis in law or the rules, therefore, to extend the
On appeal, the Court of Appeals, in its February 19, 1999 scope of Rule 47 to criminal cases. As we explained in
Decision4 in CA-G.R. CR No. 18270, affirmed the decision of Macalalag v. Ombudsman, when there is no law or rule
the trial court. In its December 22, 1999 Resolution,5 the providing for this remedy, recourse to it cannot be allowed x
appellate court further denied petitioners motion for x x.14
reconsideration.
Here, petitioners are invoking the remedy under Rule 47 to
Assailing the aforesaid issuances of the appellate court, assail a decision in a criminal case. Following Bitanga, this
petitioners filed before this Court, on February 11, 2000, their Court cannot allow such recourse, there being no basis in law
petition for review, docketed as G.R. No. 141208.6 The Court, or in the rules.
however, on March 13, 2000, denied the same for petitioners
failure to state the material dates. Since it subsequently In substance, the petition must likewise fail. The trial court
denied petitioners motion for reconsideration on June 28, which rendered the assailed decision had jurisdiction over
2000,7 the judgment of conviction became final and the criminal case.
executory.
Jurisdiction being a matter of substantive law, the established
With the consequent issuance by the trial court of the April rule is that the statute in force at the time of the
19, 2001 Warrant of Arrest,8 the police arrested, on April 27, commencement of the action determines the jurisdiction of
2001, petitioner Carmelita C. Llamas for her to serve her 2- the court.15 In this case, at the time of the filing of the
month jail term. The police, nevertheless, failed to arrest information, the applicable law was Batas Pambansa Bilang
petitioner Francisco R. Llamas because he was nowhere to be 129,16 approved on August 14, 1981, which pertinently
found.9 provides:

On July 16, 2001, petitioner Francisco moved for the lifting or Section 20. Jurisdiction in criminal cases. Regional Trial
recall of the warrant of arrest, raising for the first time the Courts shall exercise exclusive original jurisdiction in all
issue that the trial court had no jurisdiction over the offense criminal cases not within the exclusive jurisdiction of any
charged.10
@lendelacruz 79

court, tribunal or body, except those now falling under the THIRD DIVISION
exclusive and concurrent jurisdiction of the Sandiganbayan
which shall hereafter be exclusively taken cognizance of by G.R. No. 167471 February 5, 2007
the latter.
GLICERIA SARMIENTO, Petitioner,
xxxx vs.
EMERITA ZARATAN, Respondent.
Section 32. Jurisdiction of Metropolitan Trial Courts, Municipal
Trial Courts and Municipal Circuit Trial Courts in criminal cases.
Except in cases falling within the exclusive original
jurisdiction of Regional Trial Courts and of the
DECISION
Sandiganbayan, the Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts shall
exercise: CHICO-NAZARIO, J.:

(1) Exclusive original jurisdiction over all violations This petition for Review on Certiorari under Rule 45 of the
of city or municipal ordinances committed within Rules of Court seeks to nullify the Court of Appeals Decision1
their respective territorial jurisdiction; and in CA-G.R. SP No. 79001 entitled, "Emerita Zaratan v. Hon.
Ramon A. Cruz, as Presiding Judge of RTC, Quezon City,
Branch 223, and Gliceria Sarmiento," dated 17 August 2004,
(2) Exclusive original jurisdiction over all offenses
which reversed and set side the Orders dated 19 June 2003
punishable with imprisonment of not exceeding
and 31 July 2003 of the Regional Trial Court (RTC) of Quezon
four years and two months, or a fine of not more
City in Civil Case No. Q-03-49437, dismissing respondents
than four thousand pesos, or both such fine and
appeal for failure to file the memorandum within the period
imprisonment, regardless of other imposable
provided for by law.
accessory or other penalties, including the civil
liability arising from such offenses or predicated
thereon, irrespective of kind, nature, value, or On 2 September 2002, petitioner Gliceria Sarmiento filed an
amount thereof: Provided, however, That in ejectment case2 against respondent Emerita Zaratan, in the
offenses involving damage to property through Metropolitan Trial Court (MeTC) of Quezon City, Branch 36,
criminal negligence they shall have exclusive docketed as Civil Case No. 29109.
original jurisdiction where the imposable fine does
not exceed twenty thousand pesos. On 31 March 2003, the MeTC rendered a decision in favor of
petitioner, the dispositive portion of which reads:
Article 316(2) of the RPC, the provision which penalizes the
crime charged in the information, provides that WHEREFORE, the Court finds that plaintiff has sufficiently
established her causes against the defendant and hereby
Article 316. Other forms of swindling.The penalty of order the defendant and all persons claiming rights under
arresto mayor in its minimum and medium periods and a her:
fine of not less than the value of the damage caused and not
more than three times such value, shall be imposed upon: 1. to pay plaintiff the monthly rentals of P3,500.00
for the said premises from August 1, 2002 until
xxxx defendant vacates the premises;

2. Any person who, knowing that real property is 2. to pay plaintiff the sum of P20,000.00 plus
encumbered, shall dispose of the same, although such P1,500.00 per appearance of counsel in court, as and
encumbrance be not recorded. for attorneys fees; and

The penalty for the crime charged in this case is arresto to pay the cost of suit.3
mayor in its minimum and medium periods, which has a
duration of 1 month and 1 day to 4 months, and a fine of not Respondent filed her notice of appeal.4 Thereafter, the case
less than the value of the damage caused and not more than was raffled to the RTC of Quezon City, Branch 223, docketed
three times such value. Here, as alleged in the information, as Civil Case No. Q-03-49437.
the value of the damage caused, or the imposable fine, is
P12,895.00. Clearly, from a reading of the information, the In the Notice of Appealed Case,5 the RTC directed
jurisdiction over the criminal case was with the RTC and not respondent to submit her memorandum in accordance with
the Metropolitan Trial Court (MeTC). The MeTC could not the provisions of Section 7(b) of Rule 40 of the Rules of Court
have acquired jurisdiction over the criminal action because at and petitioner to file a reply memorandum within 15 days
the time of the filing of the information, its jurisdiction was from receipt.
limited to offenses punishable with a fine of not more than
P4,000.00.17
Respondents counsel having received the notice on 19 May
2003, he had until 3 June 2003 within which to file the
WHEREFORE, premises considered, the petition is DENIED. requisite memorandum. But on 3 June 2003, he filed a Motion
for Extension of Time of five days due to his failure to finish
SO ORDERED. the draft of the said Memorandum. He cited as reasons for
the delay of filing his illness for one week, lack of staff to do
Republic of the Philippines the work due to storm and flood compounded by the
SUPREME COURT grounding of the computers because the wirings got wet.6
Manila But the motion remained unacted.
@lendelacruz 80

On 9 June 2003, respondent filed her Memorandum. On 19 day period provided under Section 7(b), Rule 40 of the 1997
June 2003, the RTC dismissed the appeal as follows: Rules of Civil Procedure.

Record shows that defendant-appellant received the Notice With regard to the "Motion for Immediate Execution," dated
of Appealed Case, through counsel, on May 19, 2003 June 23, 2003, filed by plaintiff-appellee, the rule is explicit
(Registry Return Receipt dated May 12, 2003, Record, back of that the execution of a judgment in an ejectment case, must
p. 298). Thus, under Section 7(b), Rule 40 of the 1997 Rules of be sought with the inferior court which rendered the same.
Civil Procedure, she had fifteen (15) days or until June 3, 2003 The appellate court which affirms a decision brought before
within which to submit a memorandum on appeal. As it on appeal cannot decree its execution in the guise of an
further appears on record, however, the required execution of the affirming decision. The only exception is
Memorandum was filed by defendant-appellant only on June when said appellate court grants an execution pending
9, 2003 (Record, p. 623), or six (6) days beyond the expiration appeal, which is not the case herein (City of Manila vs. Court
of the aforesaid fifteen day period. of Appeals, 204 SCRA 362; Sy vs. Romero, 214 SCRA 187). 10

It should be stressed that while the rules should be liberally Petitioner moved for reconsideration of the said Order, while
construed, the provisions on reglemenatry periods are respondent sought clarification on whether the 31 July 2003
strictly applied as they are "deemed indispensable to the Order dismissing the appeal was anchored on Section (b),
prevention of needless delays and necessary to the orderly Rule 40 or Section 7(c) of the same Rule.
and speedy discharge of judicial business" (Legaspi-Santos
vs. Court of Appeals, G.R. No. 60577, October 11, 1983) and On 27 August 2003, the RTC reconsidered its previous Order
strict compliance therewith is mandatory and imperative by granting petitioners motion for Immediate Execution, but
(FJR Garments Industries vs. Court of Appeals, G.R. No. L- denied respondents Motion for Clarification, in this wise:
49329, June 29, 1984). The same is true with respect to the
rules on the manner and periods for perfecting appeals
Section 21, Rule 70 of the Rules of Court provides that "the
(Gutierrez vs. Court of Appeals, L-25972, November 26,
judgment of the Regional Trial Court against the defendant
1968).
shall be immediately executory, without prejudice to a
further appeal that may be taken therefrom. Pursuant to this
Premises considered, the instant appeal is hereby Rule and taking into account the arguments of the plaintiff in
DISMISSED. This renders academic defendant-appellants her "Urgent Motion for Reconsideration," the Court is
application for a writ of preliminary injunction.7 1awphi1.net inclined to grant the same. As further correctly argued by the
plaintiff, through counsel, during the hearing on her motion
On the basis of the above-quoted Order, petitioner filed a on August 15, 2003, the cases of City of Manila v. Court of
Motion for Immediate Execution,8 while respondent moved Appeals (204 SCRA 362) and Sy vs. Romero (214 SCRA 187)
for the Reconsideration.9 Both motions were denied by the cited in the July 31, 2003 Order refer to ejectment cases which
RTC on 31 July 2003. The Order in part reads: has (sic) been decided with finality and hence, inapplicable
to this case where a further appeal is still available to the
In the main, defendant-appellants Motion for defendant. It should likewise be noted that while the
Reconsideration is premised on the argument that she filed a Supreme Court ruled in these cases that execution of a
timely "Motion for Extension of Time To File Memorandum," judgment in an ejectment case must be sought with the
dated and filed on June 3, 2003, but that her motion was not inferior court which rendered the same, it likewise provided
acted upon by this Court. She adds that her appeal that for an exception to this rule, that is, in cases where the
memorandum was filed well within the period sought by her appellate court grants an execution pending appeal, as the
in her "Motion for Extension of Time to File Memorandum" case herein.
so that her appeal should not have been dismissed.
With regard to defendants Motion for Clarification,
The argument is without merit. This Court did not take contained in her Opposition, the Court notes that the issues
cognizance of defendant-appellants "Motion for Extension raised therein have already been squarely dealt with in the
of Time to File Memorandum," and rightly so, because it did July 31, 2003 Order. The same must, therefore, be denied. 11
not contain a notice of hearing as required by Sections 4 and
5, Rule 15 of the Rules of Court, an omission for which it Aggrieved, respondent filed a Petition for Certiorari in the
could offer no explanation. As declared in the case of Gozon, Court of Appeals, which was granted in a decision dated 17
et al. v. court of Appeals (G.R. No. 105781, June 17, 1993); August 2004. The appellate court nullified and set aside the
19 June 2003 and 31 July 2003 Orders of the RTC and ordered
xxx the reinstatement of respondents appeal. Consequently,
respondents appeal memorandum was admitted and the
case remanded to the RTC for further proceedings.12
It is well-entrenched in this jurisdiction that a motion does
not meet the requirements of Sections 4 and 5 of Rule 15 of
the Rules of Court is considered a worthless piece of paper Petitioner filed a motion for reconsideration13 on 13
which the clerk has no right to receive, and the court has no September 2004, followed by a Motion for Inhibition14 of the
authority to act upon. members of the Eighth Division of the Court of Appeals on
20 September 2004. Both motions were denied for lack of
merit on 10 March 2005.15
xxx

Hence, this appeal by petitioner posing the following


Moreover, parties and counsel should not assume that courts
issues,16 thus:
are bound to grant the time they pray for. A motion that is
not acted upon in due time is deemed denied (Orosa vs.
Court of Appeals, 261 SCRA 376 [1996]). Thus, defendant- 1. Whether respondents petition for certiorari
appellants appeal was properly dismissed on account of her should have been dismissed in the first place;
failure to file an appeal memorandum within the fifteen (15)
@lendelacruz 81

2. Whether the trial court committed grave abuse of That as respondent, I further certify that I have not
discretion in denying respondents motion for commenced any other action or proceeding involving the
extension; same issues in the foregoing Petition in the Court of Appeals,
the Supreme Court, or different Divisions thereof,
3. Whether it is Section 19 of Rule 7 that applies, and respectively, or any tribunal, or agency; and should it be
not Section 21; and known that a similar action or proceeding has been filed or is
pending in any of the abovementioned Courts or different
Divisions thereof, the petitioner shall notify the Honorable
4. Whether the Court of Appeals Justices should
Court to which this certification is filed, within five (5) days
have inhibited themselves from further proceeding
from such notice. (Underscoring ours.)
with the subject case.

Petitioner avers that respondent by stating in the above-


Stated otherwise, the main issue for resolution is whether the
quoted certification that she was the respondent, while in
Court of Appeals committed a reversible error of law in
truth she was the petitioner and by stating that respondent
granting the Writ of Certiorari. In granting the petition, the
caused the preparation of the comment on the petition,
Court of Appeals ruled that the RTC erred in dismissing
instead of the petition itself, indicate that respondent did not
respondents appeal for failure to file the required
understand what she was signing. The defect of the
Memorandum within the period provided by law and in
verification all renders the petition in the Court of Appeals
granting petitioners Motion for Immediate Execution of the
without legal effect and constitutes ground for its dismissal.
MeTC decision.

The contention is baseless.


Before resolving the substantive issues raised by petitioner,
the Court will first address the procedural infirmities
ascribed by petitioner. Petitioner assails the correctness and The purpose of requiring a verification is to secure an
propriety of the remedy resorted to by respondent by filing a assurance that the allegations of the petition have been made
Petition for Certiorari in the Court of Appeals. According to in good faith, or are true and correct, not merely speculative.
petitioner, certiorari is not appropriate and unavailing as the This requirement is simply a condition affecting the form of
proper remedy is an appeal. pleadings and non-compliance therewith does not
necessarily render it fatally defective.17 Perusal of the
verification in question shows there was sufficient
It must be noted that respondents appeal in the RTC was
compliance with the requirements of the Rules and the
dismissed for failure to file the required memorandum
alleged defects are not so material as to justify the dismissal
within the period allowed by law, as the Motion for
of the petition in the Court of Appeals. The defects are mere
Extension of Time to file Memorandum was not acted upon
typographical errors. There appears to be no intention to
for failure to attach a notice of hearing. From the said
circumvent the need for proper verification and certification,
dismissal, respondent filed a Petition for Certiorari in the
which are intended to assure the truthfulness and correctness
Court of Appeals.
of the allegations in the petition and to discourage forum
shopping.18
Respondent correctly filed said petition pursuant to Section
41 of the Rules of Court, which provides:
Now, the substantial issues.

Section 1. Subject of appeal. An appeal may be taken from a


Corollary to the dismissal of the appeal by the RTC is the
judgment or final order that completely disposes of the case,
question of whether the lack of notice of hearing in the
or of a particular matter therein when declared by these Rules
Motion for Extension of Time to file Memorandum on
to be appealable.
Appeal is fatal, such that the filing of the motion is a
worthless piece of paper.
No appeal may be taken:
Petitioner avers that, because of the failure of respondent to
xxxx include a Notice of Hearing in her Motion for Extension of
Time to file Memorandum on Appeal in the RTC, the latters
(d) An order disallowing or dismissing an appeal; motion is a worthless piece of paper with no legal effect.

xxxx It is not disputed that respondent perfected her appeal on 4


April 2003 with the filing of her Notice of Appeal and
In all the above instances where the judgment or final order payment of the required docket fees. However, before the
is not appealable, the aggrieved party may file an appropriate expiration of time to file the Memorandum, she filed a
civil action under Rule 65. (Underscoring supplied.) Motion for Extension of Time seeking an additional period of
five days within which to file her Memorandum, which
motion lacked the Notice of Hearing required by Section 4,
Petitioner also contends that the Petition for Certiorari filed
Rule 15 of the 1997 Rules of Court which provides:
in the Court of Appeals should be dismissed as the
certification of non-forum shopping was defective. The
verification in part reads: SEC. 4. Hearing of Motion. - Except for motions which the
court may act upon without prejudicing the rights of the
adverse party, every written motion shall be set for hearing
I, EMERITA ZARATAN, of legal age, after having been duly
by the applicant.
sworn to, according to law, depose and say:

Every written motion required to be heard and the notice of


That I, Emerita Zaratan is one of the respondent (sic) in the
the hearing thereof shall be served in such a manner as to
above entitled case, hereby declare, that I have caused the
ensure its receipt by the other party at least three (3) days
preparation and filing of the foregoing Comment on the
before the date of hearing, unless the court for good cause
Petition; that I have read all the allegations therein, which are
sets the hearing on shorter notice.
true and correct to the best of my own knowledge.
@lendelacruz 82

As may be gleaned above and as held time and again, the would be better served.27 Furthermore, this Court
notice requirement in a motion is mandatory. As a rule, a emphasized its policy that technical rules should accede to
motion without a Notice of Hearing is considered pro forma the demands of substantial justice because there is no vested
and does not affect the reglementary period for the appeal or right in technicalities. Litigations, should, as much as
the filing of the requisite pleading.19 possible, be decided on their merits and not on technicality.
Dismissal of appeals purely on technical grounds is frowned
As a general rule, notice of motion is required where a party upon, and the rules of procedure ought not to be applied in a
has a right to resist the relief sought by the motion and very rigid, technical sense, for they are adopted to help
principles of natural justice demand that his right be not secure, not override, substantial justice, and thereby defeat
affected without an opportunity to be heard.20 The three-day their very aims. As has been the constant rulings of this
notice required by law is intended not for the benefit of the Court, every party-litigant should be afforded the amplest
movant but to avoid surprises upon the adverse party and to opportunity for the proper and just disposition of his cause,
give the latter time to study and meet the arguments of the free from constraints of technicalities.28 Indeed, rules of
motion.21 Principles of natural justice demand that the right procedure are mere tools designed to expedite the resolution
of a party should not be affected without giving it an of cases and other matters pending in court. A strict and rigid
opportunity to be heard.22 application of the rules that would result in technicalities that
tend to frustrate rather than promote justice must be
avoided.29
The test is the presence of the opportunity to be heard, as well
as to have time to study the motion and meaningfully oppose
or controvert the grounds upon which it is based.23 The visible emerging trend is to afford every party-litigant
Considering the circumstances of the present case, we believe the amplest opportunity for the proper and just
that procedural due process was substantially complied determination of his cause, free from constraints and
with. technicalities.

There are, indeed, reasons which would warrant the Parenthetically, it must be noted also that when the appeal
suspension of the Rules: (a) the existence of special or was dismissed on 19 June 2003, the memorandum was
compelling circumstances, b) the merits of the case, (c) a already filed in court on 9 June 2003.
cause not entirely attributable to the fault or negligence of the
party favored by the suspension of rules, (d) a lack of any On the issue of immediate execution of judgment.
showing that the review sought is merely frivolous and
dilatory, and (e) the other party will not be unjustly The applicable provision is Section 19, Rule 70 of the Rules of
prejudiced thereby.24 Elements or circumstances (c), (d) and Court, which reads:
(e) exist in the present case.
SEC. 19. Immediate Execution of judgment; how to stay the
The suspension of the Rules is warranted in this case. The same.- If judgment is rendered against the defendant,
motion in question does not affect the substantive rights of execution shall issue immediately upon motion, unless an
petitioner as it merely seeks to extend the period to file appeal has been perfected and the defendant to stay
Memorandum. The required extension was due to execution files a sufficient supersedeas bond, approved by
respondents counsels illness, lack of staff to do the work due the Municipal Trial Court and executed in favor of the
to storm and flood, compounded by the grounding of the plaintiff to pay the rents, damages, and costs accruing down
computers. There is no claim likewise that said motion was to the time of the judgment appealed from, and unless,
interposed to delay the appeal.25 As it appears, respondent during the pendency of the appeal, he deposits with the
sought extension prior to the expiration of the time to do so appellate court the amount of rent due from time to time
and the memorandum was subsequently filed within the under the contract, if any, as determined by the judgment of
requested extended period. Under the circumstances, the Municipal Trial Court. x x x.
substantial justice requires that we go into the merits of the
case to resolve the issue of who is entitled to the possession
To stay the immediate execution of judgment in ejectment
of the land in question.
proceedings, Section 19 requires that the defendant-appellant
must (a) perfect his appeal, (b) file a supersedeas bond, and
Further, it has been held that a "motion for extension of time (c) periodically deposit the rentals falling due during the
x x x is not a litigated motion where notice to the adverse pendency of the appeal.
party is necessary to afford the latter an opportunity to resist
the application, but an ex parte motion made to the court in
As correctly observed by the Court of Appeals, execution
behalf of one or the other of the parties to the action, in the
pending appeal was premature as respondent had already
absence and usually without the knowledge of the other
filed a supersedeas bond and the monthly rental for the
party or parties." As a general rule, notice of motion is
current month of the premises in question.30
required where a party has a right to resist the relief sought
by the motion and principles of natural justice demand that
his rights be not affected without an opportunity to be heard. The invocation of petitioner of the provisions of Section 21,
It has been said that "ex parte motions are frequently Rule 70 of the Rules of Court, which runs:
permissible in procedural matters, and also in situations and
under circumstances of emergency; and an exception to a Sec. 21. Immediate execution on appeal to Court of Appeals
rule requiring notice is sometimes made where notice or the or Supreme Court.- The judgment of the Regional Trial Court
resulting delay might tend to defeat the objective of the against the defendant shall be immediately executory,
motion."26 without prejudice to a further appeal that may be taken
therefrom.
It is well to remember that this Court, in not a few cases, has
consistently held that cases shall be determined on the merits, to justify the issuance of the writ of execution pending appeal
after full opportunity to all parties for ventilation of their in this case is misplaced.
causes and defense, rather than on technicality or some
procedural imperfections. In so doing, the ends of justice
@lendelacruz 83

A closer examination of the above-quoted provision reveals SECOND DIVISION


that said provision applies to decision of the RTC rendered
in its appellate jurisdiction, affirming the decision of the G.R. No. 164668 February 14, 2005
MeTC. In the case at bar, the RTC order was an order
dismissing respondents appeal based on technicality. It did
ASIAN SPIRIT AIRLINES (AIRLINE EMPLOYEES
not resolve substantive matters delving on the merits of the
COOPERATIVE), petitioner,
parties claim in the ejectment case. Thus, the case brought to
vs.
the Court of Appeals was the dismissal of the appeal for
SPOUSES BENJAMIN AND ANNE MARIE BAUTISTA,
failure to file the required memorandum within the period KARL BAUTISTA and GLORIA POMERA, respondents.
provided by law, and not on the merits of the ejectment case.

DECISION
Lastly, petitioner posited the view that the Court of Appeals
justices should have inhibited themselves because of bias and
partiality for deciding the case within eight months and for CALLEJO, SR., J.:
being very selective in discussing the issues.
This is a petition for review on certiorari of the Resolution1 of
We reject the proposition. the Court of Appeals (CA) dismissing the appeal of the
petitioner herein in CA-G.R. CV No. 79317 and its resolution
in the same case denying the petitioners motion for
Inhibition must be for just and valid causes. The mere reconsideration of its first resolution.
imputation of bias and partiality is not enough ground for
judges to inhibit, especially when the charge is without basis.
This Court has to be shown acts or conduct clearly indicative The Antecedents
of arbitrariness or prejudice before it can brand them with the
stigma of bias and partiality.31 This Court has invariably held The Spouses Benjamin and Anna Marie Bautista filed a
that for bias and prejudice to be considered valid reasons for complaint, in behalf of their son Karl Bautista and Gloria
the voluntary inhibition of judges, mere suspicion is not Pomera, against the Asian Spirit Airlines in the Regional Trial
enough. Bare allegations of their partiality will not suffice "in Court of Pasig City for breach of contract and damages. After
the absence of clear and convincing evidence to overcome the trial, the court rendered a decision on March 24, 2003 in favor
presumption that the judge will undertake his noble role to of the plaintiffs and against the defendant. The fallo of the
dispense justice according to law and evidence and without decision reads:
fear and favor."32
WHEREFORE, judgment is hereby rendered IN FAVOR OF
There is no factual support to petitioners charge of bias and THE PLAINTIFFS and AGAINST THE DEFENDANT
partiality. A perusal of the records of the case fails to reveal ordering the latter to pay the former:
that any bias or prejudice motivated the Court of Appeals in
granting respondents petition. Neither did this Court find 1. P5,000.00 as temperate damages;
any questionable or suspicious circumstances leading to the
issuance of the questioned decision, as suggested by 2. P200,000.00 as moral damages;
petitioner.

3. P150,000.00 as exemplary damages;


The fact alone that the Court of Appeals decided the case
within eight months does not in any way indicate bias and
partiality against petitioner. It is within the constitutional 4. P50,000.00 as attorneys fees;
mandate to decide the case within 12 months.33
5. P18,371.25 as litigation expenses.
As to petitioners allegation that the Court of Appeals was
selective in choosing what issues to resolve, it bears to stress Defendants counterclaim is DISMISSED.2
again that "a judges appreciation or misappreciation of the
sufficiency of evidence x x x adduced by the parties, x x x, Its motion for the reconsideration of the decision having been
without proof of malice on the part of respondent judge, is denied by the trial court,3 the defendant appealed. The
not sufficient to show bias and partiality."34 We also appeal was docketed as CA-G.R. CV No. 79317. On
emphasized that "repeated rulings against a litigant, no December 10, 2003, the appellate court directed the
matter how erroneously, vigorously and consistently defendant-appellant to file its brief as appellant within forty-
expressed, do not amount to bias and prejudice which can be five (45) days from notice thereof.4 The defendant-appellant
bases for the disqualification of a judge."35 received its copy of the resolution on December 17, 2003.
Thus, it had until January 31, 2004 within which to file its
IN ALL, petitioner utterly failed to show that the appellate brief. However, the defendant-appellant failed to file its
court erred in issuing the assailed decision. On the contrary, appellants brief. On March 3, 2004, the plaintiffs-appellees
it acted prudently in accordance with law and jurisprudence. filed a Manifestation and Motion5 for the dismissal of the
appeal of the defendant-appellant for its failure to file its
WHEREFORE, the instant petition is hereby DENIED for lack brief.
of merit. The Decision dated 17 August 2004 and the
Resolution dated 10 March 2005 of the Court of Appeals in On March 10, 2004, the defendant-appellant filed an
CA-G.R. SP No. 79001 are hereby AFFIRMED. No costs. unverified Motion to Admit Attached Appellants Brief.6 The
plaintiffs-appellees opposed the motion.7 On April 23, 2004,
SO ORDERED. the CA issued a Resolution8 denying the motion of the
defendant-appellant and granting the motion of the
plaintiffs-appellees, and ordered the appeal of the defendant-
Republic of the Philippines
appellant dismissed. The defendant-appellant filed a motion
SUPREME COURT
for the reconsideration of the said resolution but on July 16,
Manila
@lendelacruz 84

2004, the appellate court denied the said motion for lack of 1. The filing of the Appellants Brief is due on January 31,
merit.9 2004. The notice from the Honorable Court was received on
December 17, 2003 and because of the holiday season at that
The defendant-appellant, now the petitioner, filed a petition time, the undersigned counsel gave instruction to his
for review on certiorari with this Court assailing the Secretary to file the usual Motion for Time asking for forty-
resolutions of the CA and asserting that: five (45) days from January 31, 2004 or until March 16, 2004.

THE HONORABLE COURT OF APPEALS GRAVELY 2. The undersigned started to prepare the Appellants Brief
ERRED IN STRICTLY APPLYING THE PROVISIONS OF bearing in mind the new deadline.
THE RULES OF COURT ON DISMISSAL OF APPEAL TO
HEREIN PETITIONERS APPEAL WHICH IS CONTRARY 3. It was only when the undersigned received the
TO THE MANDATED PRECEPT OF LIBERAL Manifestation of plaintiffs on March 5, 2004 that he inquired
CONSTRUCTION EXPLICITLY PROVIDED FOR IN THE with his secretary if the Manifestation of counsel is true and
RULES AND SANCTIONED BY JURISPRUDENTIAL she readily admitted that she failed to prepare and file the
PRONOUNCEMENTS OF THIS HONORABLE SUPREME Motion for Time.12
COURT, AND CONSIDERING THAT PETITIONERS
APPEAL BELOW IS BASED AND FOUNDED ON VERY The excuse contrived by the petitioners counsel is totally
MERITORIOUS GROUNDS THE DENIAL OF WHICH unacceptable. We note that the motion of the petitioner is
WILL DEFINITELY RESULT TO PREJUDICE TO unverified. Neither did the petitioner bother appending to its
PETITIONERS SUBSTANTIAL RIGHTS AND DENIAL TO motion an affidavit of its counsels secretary containing
IT OF ITS RIGHT TO DUE PROCESS.10 his/her explanation why he/she failed to file the said motion
for extension if there was such a motion in the first place. The
The petitioner avers that the late filing of its brief did not petitioner did not even bother appending to its Motion to
cause material injury or prejudice to the respondents and the Admit its motion for extension to file brief which its counsels
issues raised by it in its brief require an examination of the secretary allegedly failed to file in the CA. Blaming its
evidence on record. counsels unidentified secretary for its abject failure to file its
brief is a common practice for negligent lawyers to cover up
The petitioner prays that we set aside the assailed resolution for their own negligence, incompetence, indolence, and
of the CA and order the appellate court to reinstate its appeal ineptitude. Such excuse is the most hackneyed and habitual
for further proceedings. In their comment on the petition, the subterfuge employed by litigants who fail to observe the
respondents submit that: procedural requirements prescribed by the Rules of Court.13
It bears stressing that it is the duty of counsel to adopt and
strictly maintain a system that insures that all pleadings
The Court of Appeals was evidently not satisfied with the
should be filed and duly served within the period therefor
explanation by the petitioner. Its action in this regard is not
and, if he fails to do so, the negligence of his secretary or clerk
subject to review, for the Supreme Court cannot interfere
to file such pleading is imputable to the said counsel.14
with the discretion of the Court of Appeals.

We agree with the petitioners contention that the rules of


It is necessary to impress upon litigants and their lawyers the
procedure may be relaxed for the most persuasive reasons.
necessity of a strict compliance with the periods for
But as this Court held in Galang v. Court of Appeals:15
performing certain acts incident to the appeal and the
transgressions thereof, as a rule, would not be tolerated;
otherwise, those periods could be evaded by subterfuges Procedural rules are not to be belittled or dismissed simply
and manufactured excuses and would ultimately become because their non-observance may have resulted in prejudice
inutile. (Don Lino Gutierrez & Sons, Inc. vs. CA, G.R. No. L- to a partys substantive rights. Like all rules, they are
39124, Nov. 15, 1974). required to be followed except only for the most persuasive
of reasons when they may be relaxed to relieve a litigant of
an injustice not commensurate with the degree of his
This Honorable Court will be setting a bad example if it
thoughtlessness in not complying with the procedure
accepts the excuse of the Petitioners counsel that he
prescribed.16
instructed his secretary to file the motion for extension who,
in turn, forgot to file it. Logic dictates that the Secretary
cannot release the request without the lawyers signature but In an avuncular case,17 we emphasized that:
still the basic and simple prudence to follow it up by counsel
leaves much to be desired. Every lawyer may soon adopt this Procedural rules are tools designed to facilitate the
reasoning to justify non-filing of the brief on time.11 adjudication of cases. Courts and litigants alike are, thus,
enjoined to abide strictly by the rules. And while the Court,
The petition has no merit. in some instances, allows a relaxation in the application of the
rules, this, we stress, was never intended to forge a bastion
for erring litigants to violate the rules with impunity. The
Under Section 1(e), Rule 50 of the Rules of Court, as
liberality in the interpretation and application of the rules
amended, an appeal may be dismissed by the CA on its own
applies only in proper cases and under justifiable causes and
motion or that of the appellee for failure of the appellant to
circumstances. While it is true that litigation is not a game of
file its brief within the time provided by Section 7, Rule 44 of
technicalities, it is equally true that every case must be
the said Rules. The petitioner had until January 31, 2004
prosecuted in accordance with the prescribed procedure to
within which to file its brief but failed to do so. It was only
insure an orderly and speedy administration of justice. The
on March 10, 2004, after receipt of respondents motion filed
instant case is no exception to this rule.
on March 3, 2004, praying for the dismissal of the petitioners
appeal for its failure to file its brief, that the petitioner filed
its brief appended to an unverified motion to admit the said In the present case, we find no cogent reason to exempt the
brief. The only excuse of the petitioner for its failure to file its petitioner from the effects of its failure to comply with the
brief was the claim of its counsel in the said Motion for Leave Rules of Court.
to Admit, thus:
@lendelacruz 85

The right to appeal is a statutory right and the party who On June 2, 1981, the spouses Rudy R. Robles, Jr. and Elizabeth
seeks to avail of the same must comply with the requirements R. Robles entered into a mortgage contract7 with DBP in
of the Rules. Failing to do so, the right to appeal is lost. More order to secure a loan from the said bank in the amount of
so, as in this case, where petitioner not only neglected to file P500,000.00. The properties mortgaged were a parcel of land
its brief within the stipulated time but also failed to seek an situated in Tabunoc, Talisay, Cebu, which was then covered
extension of time for a cogent ground before the expiration by Transfer Certificate of Title (TCT) No. T- 47783 of the
of the time sought to be extended.18 Register of Deeds of Cebu, together with all the existing
improvements, and the commercial building to be
In not a few instances, the Court relaxed the rigid application constructed thereon8 (subject properties). Upon completion,
of the rules of procedure to afford the parties the opportunity the commercial building was named the State Theatre
to fully ventilate their cases on the merits. This is in line with Building.
the time-honored principle that cases should be decided only
after giving all parties the chance to argue their causes and On October 28, 1981, Rudy Robles executed a contract of lease
defenses. Technicality and procedural imperfection should, in favor of petitioner Cebu Bionic Builders Supply, Inc. (Cebu
thus, not serve as basis of decisions. In that way, the ends of Bionic), a domestic corporation engaged in the construction
justice would be better served.19 For, indeed, the general business, as well as the sale of hardware materials. The
objective of procedure is to facilitate the application of justice contract pertinently provides:
to the rival claims of contending parties, bearing always in
mind that procedure is not to hinder but to promote the CONTRACT OF LEASE
administration of justice.20 In this case, however, such
liberality in the application of rules of procedure may not
KNOW ALL MEN BY THESE PRESENTS:
be invoked if it will result in the wanton disregard of the
rules or cause needless delay in the administration of
justice. It is equally settled that, save for the most persuasive This Lease Contract made and entered into, by and between:
of reasons, strict compliance is enjoined to facilitate the
orderly administration of justice.21 RUDY ROBLES, JR., Filipino, of legal age, married and
resident of 173 Maria Cristina Ext., Cebu City, hereinafter
IN LIGHT OF ALL THE FOREGOING, the petition is referred to as the LESSOR,
DENIED
- and -
Republic of the Philippines
SUPREME COURT CEBU BIONIC BUILDER SUPPLY, represented by LYDIA
Manila SIA, Filipino, of legal age, married and with address at 240
Magallanes St., Cebu City hereinafter known as the LESSEE;
FIRST DIVISION
WITNESSETH:
G.R. No. 154366 November 17, 2010
The LESSOR is the owner of a commercial building along
CEBU BIONIC BUILDERS SUPPLY, INC. and LYDIA Tabunok, Talisay, Cebu, known as the State Theatre Building.
SIA, Petitioners,
vs. The LESSOR agrees to lease unto the LESSEE and the LESSEE
DEVELOPMENT BANK OF THE PHILIPPINES, JOSE TO accepts the lease from the LESSOR, a portion of the ground
CHIP, PATRICIO YAP and ROGER BALILA, floor thereof, consisting of one (1) unit/store space under the
Respondents. following terms and conditions:

DECISION 1. The LESSEE shall pay a monthly rental


of One Thousand (P1,000.00) Pesos,
LEONARDO DE CASTRO, J.: Philippine Currency. The rental is payable
in advance within the first five (5) days of
This Petition for Review on Certiorari1 under Rule 45 of the the month, without need of demand;
Rules of Court assails the Resolution2 dated February 5, 2002
and the Amended Decision3 dated July 5, 2002 of the Court 2. That the term of this agreement shall
of Appeals in CA-G.R. CV No. 57216. In the Resolution dated start on November 1, 1981 and shall
February 5, 2002, the Court of Appeals admitted the Motion terminate on the last day of every month
for Reconsideration4 of herein respondents Development thereafter; provided however that this
Bank of the Philippines (DBP), Jose To Chip, Patricio Yap and contract shall be automatically renewed on
Roger Balila, notwithstanding the fact that the same was filed a month to month basis if no notice, in
more than six months beyond the reglementary period. Said writing, is sent to the other party to
motion prayed for the reversal of the Court of Appeals terminate this agreement after fifteen (15)
Decision5 dated February 14, 2001, which affirmed the days from receipt of said notice;
Decision6 dated April 25, 1997 of the Regional Trial Court
(RTC) of Cebu, Branch 8, in Civil Case No. CEB-10104 that xxxx
ruled in favor of petitioners. In the Amended Decision of July
5, 2002, the Court of Appeals reversed its previous Decision
9. Should the LESSOR decide to sell the
dated February 14, 2001 and dismissed the petitioners
property during the term of this lease
complaint for lack of merit.
contract or immediately after the
expiration of the lease, the LESSEE shall
The facts leading to the instant petition are as follows: have the first option to buy and shall
match offers from outside parties.9
(Emphases ours.)
@lendelacruz 86

The above contract was not registered by the parties thereto (SGD)LUCILO S. REVILLAS
with the Registry of Deeds of Cebu. Branch Head13 (Emphases ours.)

Subsequently, the spouses Robles failed to settle their loan On July 7, 1987, the counsel of Bonifacio Sia replied to the
obligation with DBP. The latter was, thus, prompted to effect above letter, to wit:
extrajudicial foreclosure on the subject properties.10 On
February 6, 1987, DBP was the lone bidder in the foreclosure July 7, 1987
sale and thereby acquired ownership of the mortgaged
subject properties.11 On October 13, 1988, a final Deed of
Mr. Lucilo S. Revillas
Sale12 was issued in favor of DBP.
Branch Head
Development Bank of the Philippines
Meanwhile, on June 18, 1987, DBP sent a letter to Bonifacio
Sia, the husband of petitioner Lydia Sia who was then
Dear Mr. Revillas,
President of Cebu Bionic, notifying the latter of DBPs
acquisition of the State Theatre Building. Said letter reads:
This has reference to your letter of 18 June 1987 which you
sent to my client, Mr. Bonifacio Sia of Cebu Bionic Builders
June 18, 1987
Supply the lessee of a commercial space of the State Theatre
Bldg., located at Tabunok, Talisay, Cebu.
Mr. Bonifacio Sia
Bionic Builders Inc.
My client is amenable to the terms contained in your letter
State Theatre Bldg.
except the following:
Tabunok, Talisay, Cebu

1. In lieu of item no. 2 thereof, my client


Sir:
will deposit with your bank the amount of
P10,000.00, as assigned time deposit;
This refers to the commercial space you are occupying in the
acquired property of the Bank, formerly owned by Rudy
2. The 30 days notice you mentioned in
Robles, Jr.
your letter, (3), is too short. My client is
requesting for at least 60 days notice.
Please be informed that said property has been acquired
through foreclosure on February 6, 1987. Considering
I sincerely hope that you will give due course to this request.
thereat, we require you to remit the rental due for June 1987.

Thank you.
If you wish to continue on leasing the property, we request
you to come to the Bank for the execution of a Contract of
Lease, the salient conditions of which are as follows: Truly yours,

1. The lease will be on month to month (SGD) ANASTACIO T. MUNTUERTO, JR.14


basis, for a maximum period of one (1)
year; Thereafter, on November 14, 1989, a Certificate of Time
Deposit15 for P11,395.64 was issued in the name of Bonifacio
2. Deposit equivalent to two (2) months Sia and the same was allegedly remitted to DBP as advance
rental and advance of one (1) month rental, rental deposit.
and the remaining amount for one year
period (equivalent to 9 months rental) For reasons unclear, however, no written contract of lease
shall be secured by either surety bond, was executed between DBP and Cebu Bionic.
cash bond or assigned time deposit;
In the meantime, subsequent to the acquisition of the subject
3. That in case there is a better offer or if the properties, DBP offered the same for sale along with its other
property will be subject of a purchase assets. Pursuant thereto, DBP published a series of
offer, within the term, the lessor is given an invitations to bid on such properties, which were scheduled
option of first refusal, otherwise he has to on January 19, 1989,16 February 23, 1989,17 April 13, 1989,18
vacate the premises within thirty (30) days and November 15, 1990.19 As no interested bidder came
from date of notice. forward, DBP publicized an Invitation on Negotiated
Sale/Offer, the relevant terms and conditions of which
We consider, temporarily, the current monthly rental based stated:
on the six-month receipts, which we require you to submit,
until such time when we will fix the amount accordingly. INVITATION ON NEGOTIATED SALE/OFFER

If the contract of lease is not executed within thirty (30) days The DEVELOPMENT BANK OF THE PHILIPPINES, Cebu
from date hereof, it is construed that you are not interested Branch, will receive SEALED NEGOTIATED
in leasing the premises and will vacate within the said period. OFFERS/PURCHASE PROPOSALS tendered at its Branch
Office, DBP Building, Osmea Boulevard, Cebu City for the
Please be guided accordingly. sale of its acquired assets mentioned hereinunder within the
"15-Day-Acceptance-Period" starting from NOVEMBER 19,
1990 up to 12:00 oclock noon of DECEMBER 3, 1990. Sealed
Truly yours,
offers submitted shall be opened by the Committee on
Negotiated Offers at exactly 2:00 oclock in the afternoon of
@lendelacruz 87

the last day of the acceptance period in order to determine premises within thirty (30) days from receipt of the letter and
the highest and/or most advantageous offer. directed to pay the rentals from January 1, 1991 until the end
of the said 30-day period.
Item Description/Location Starting
No. The counsel of Cebu Bionic
Price replied that his client received
24

the above letter on January 11, 1991. He stated that he has


xxxx instructed Cebu Bionic to verify first the ownership of the
subject properties since it had the preferential right to
II Commercial land, Lot No. 3681-C-3, having anpurchase
area of 396
the sq. m., He
same. P1,838,100.00
likewise requested that he be
situated in Tabunok, Talisay, Cebu and covered furnished
by TCT No. T-65199
a copy of the deed of sale executed by DBP in favor
(DBP), including the commercial building thereon.
of respondents To Chip, Yap and Balila.
xxxx
On February 15, 1991, respondent To Chip wrote a letter25 to
the counsel of Cebu Bionic, insisting that he and his co-
A pre-numbered Acknowledgment Receipt duly signed by respondents Yap and Balila urgently needed the subject
at least two (2) of the Committee members shall be issued properties to pursue their business plans. He also reiterated
to the offeror acknowledging receipt of such offer. their demand for Cebu Bionic to vacate the premises.

Negotiated offers may be made in CASH or TERMS, the


Shortly thereafter, on February 27, 1991, the counsel of
former requiring a deposit of 10% and the latter 20% of the
respondents To Chip, Yap and Balila sent its final demand
starting price, either in the form of cash or
letter26 to Cebu Bionic, warning the latter to vacate the subject
cashiers/managers check to be enclosed in the sealed
properties within seven (7) days from receipt of the letter,
offer.
otherwise, a case for ejectment with damages will be filed
against it.27
xxxx
Despite the foregoing notice, Cebu Bionic still paid28 to DBP,
Interested negotiated offerors are requested to see Atty. on March 22, 1991, the amount of P5,000.00 as monthly
Apolinar K. Panal, Jr., Acquired Asset in Charge (Tel. No. 9- rentals on the unit of the State Theatre Building it was
63-25), in order to secure copies of the Letter-Offer form and occupying for period of November 1990 to March 1991.
Negotiated Sale Rules and Procedures.
On April 10, 1991, petitioners filed against respondents DBP,
NOTE: If no offer is received during the above stated To Chip, Yap and Balila a complaint29 for specific
acceptance period, the properties described above shall be performance, cancellation of deed of sale with damages,
sold to the first offeror who submits an acceptable proposal injunction with a prayer for the issuance of a writ of
on a "First-Come-First-Served" basis. preliminary injunction.30 The complaint was docketed as
Civil Case No. CEB-10104 in the RTC.
City of Cebu, Philippines, November 16, 1990.
Petitioners alleged, inter alia, that Cebu Bionic was the lessee
(SGD.) TIMOTEO P. OLARTE and occupant of a commercial space in the State Theatre
Branch Head20 (Emphases ours.) Building from October 1981 up to the time of the filing of the
complaint. During the latter part of 1990, DBP advertised for
In the morning of December 3, 1990, the last day for the sale the State Theatre Building and the commercial lot on
acceptance of negotiated offers, petitioners submitted which the same was situated. In the prior invitation to bid,
through their representative, Judy Garces, a letter-offer form, the bidding was scheduled on November 15, 1990; while in
offering to purchase the subject properties for P1,840,000.00. the next, under the 15-day acceptance period, the submission
Attached to the letter-offer was a copy of the Negotiated Sale of proposals was to be made from November 19, 1990 up to
Rules and Procedures issued by DBP and a managers check 12:00 noon of December 3, 1990. Petitioners claimed that, at
for the amount of P184,000.00, representing 10% of the about 10:00 a.m. on December 3, 1990, they duly submitted to
offered purchase price. This offer of petitioners was not Atty. Apolinar Panal, Jr., Chief of the Acquired Assets of
accepted by DBP, however, as the corresponding deposit DBP, the following documents, namely:
therefor was allegedly insufficient.
6.1 Letter-offer form, offering to purchase the
After the lapse of the above-mentioned 15-day acceptance property advertised, for the price of P1,840,000,
period, petitioners did not submit any other offer/proposal which was higher than the starting price of
to purchase the subject properties.1avvphi1 P1,838,100.00 on cash basis. x x x;

On December 17, 1990, respondents To Chip, Yap and Balila 6.2 Negotiated Sale Rules and Procedures, duly
presented their letter-offer21 to purchase the subject signed by plaintiff, x x x;
properties on a cash basis for P1,838,100.00. Said offer was
accompanied by a downpayment of 10% of the offered 6.3 Managers check for the amount of P184,000
purchase price, amounting to P183,810.00. On even date, DBP representing 10% of the deposit dated December 3,
acknowledged the receipt of and accepted their offer. On 1990 and issued by Allied Banking Corp. in favor of
December 28, 1990, respondents To Chip, Yap and Balila paid the Development Bank of the Philippines. x x x.31
the balance of the purchase price and DBP issued a Deed of (Emphasis ours.)
Sale22 over the subject properties in their favor.
Petitioners asserted that the above documents were initially
On January 11, 1991, the counsel of respondents To Chip, Yap accepted but later returned. DBP allegedly advised
and Balila sent a letter23 addressed to the proprietor of Cebu petitioners that "there was no urgent need for the same x x x,
Bionic, informing the latter of the transfer of ownership of the considering that the property will necessarily be sold to
subject properties. Cebu Bionic was ordered to vacate the [Cebu Bionic] for the reasons that there was no other
@lendelacruz 88

interested party and that [Cebu Bionic] was a preferred party It is a fact on record that [petitioners] complied with the
being the lessee and present occupant of the property subject requirements of deposit and advance rental as conditions for
of the lease[.]"32 Petitioners then related that, without their constitution of lease between the parties. [Petitioners] in
knowledge, DBP sold the subject properties to respondents complying with the requirements, issued a time deposit in
To Chip, Yap and Balila. The sale was claimed to be the amount of P11,395.64 and remitted faithfully its monthly
simulated and fictitious, as DBP still received rentals from rentals until April, 1991, which monthly rental was no longer
petitioners until March 1991. By acquiring the subject accepted by the DBP. Although there was no formal written
properties, petitioners contended that DBP was deemed to contract executed between [respondent] DBP and the
have assumed the contract of lease executed between them [petitioners], it is very clear that DBP opted to continue the
and Rudy Robles. As such, DBP was bound by the provision old and previous contract including the terms thereon by
of the lease contract, which stated that: accepting the requirements contained in paragraph 2 of its
letter dated June 18, 1987. It is also a fact on record that under
9. Should the Lessor decide to sell the property during the the lease contract continued by the DBP on the [petitioners],
term of this lease contract or immediately after the expiration it is provided in paragraph 9 thereof that the lessee shall have
of the lease, the Lessee shall have the first option to buy and the first option to buy and shall match offers from outside
shall match offers from outside parties.33 parties. And yet, [respondent] DBP never gave [petitioners]
the first option to buy or to match offers from outside
parties, more specifically [respondents] To Chip, Balila and
Petitioners sought the rescission of the contract of sale Yap. It is also a fact on record that [respondent] DBP in its
between DBP and respondents To Chip, Yap and Balila. letter dated June 18, 1987 to [petitioners] wrote in paragraph
Petitioners also prayed for the issuance of a writ of 3 thereof, "that in case there is better offer or if a property will
preliminary injunction, restraining respondents To Chip, Yap be subject of purchase offer, within the term, the lessee is
and Balila from registering the Deed of Sale in the latters given the option of first refusal, otherwise, he has to vacate
favor and from undertaking the ejectment of petitioners from the premises within thirty (30) days". Yet, [respondent] DBP
the subject properties. Likewise, petitioners entreated that never informed [petitioners] that there was an interested
DBP be ordered to execute a deed of sale covering the subject party to buy the property, meaning, [respondents To Chip,
properties in their name and to pay damages and attorneys Yap and Balila], thus depriving [petitioners] of the
fees. opportunity of first refusal promised to them in its letter
dated June 18, 1987. x x x.38 (Emphases ours.)
In its answer,34 DBP denied the existence of a contract of lease
between itself and petitioners. DBP countered that the letter- As regards the offer of petitioners to purchase the subject
offer of petitioners was actually not accepted as their offer to properties from DBP, the RTC gave more credence to the
purchase was on a term basis, which therefore required a 20% petitioners version of the facts, to wit:
deposit. The 10% deposit accompanying the petitioners
letter-offer was declared insufficient. DBP stated that the
It is also a fact on record that when [respondent] DBP offered
letter-offer form was not completely filled out as the "Term"
the property for negotiated sale under the 15-day acceptance
and "Mode of Payment" fields were left blank. DBP then
period[, which] ended at noon of December 3, 1991, [Cebu
informed petitioner Lydia Sia of the inadequacy of her offer.
Bionic] submitted its offer, complete with [the required
After ascertaining that there was no other offeror as of that
documents.] x x x.
time, Lydia Sia allegedly summoned back her representative
who did not leave a copy of the letter-offer and the attached
documents. DBP maintained that petitioners documents did xxxx
not show that the same were received and approved by any
approving authority of the bank. The letter-offer attached to These requirements, however, were unceremoniously
the complaint, which indicated that the mode of payment returned by [respondent] bank with the assurance that since
was on a cash basis, was allegedly not the document shown there was no other bidder of the said property, there was no
to DBP. In addition, DBP argued that there was no urgency for the same and that [Cebu Bionic] also, in all
assumption of the lease contract between Rudy Robles and events, is entitled to first option being the present lessee.
petitioners since it acquired the subject properties through
the involuntary mode of extrajudicial foreclosure and its The declaration of Atty. Panal to the effect that Cebu Bionic
request to petitioners to sign a new lease contract was simply wanted to buy the property on installment terms, such that
ignored. DBP, therefore, insisted that petitioners occupancy the deposit of P184,000.00 was insufficient being only 10% of
of the unit in the State Theatre Building was merely upon its the offer, could not be given much credence as it is refuted by
acquiescence. The petitioners payment of rentals on March Exh. "H" which is the negotiated offer to purchase form
22, 1991 was supposedly made in bad faith as they were under the 15-day acceptance period accomplished by
made to a mere teller who had no knowledge of the sale of [petitioners] which shows clearly the written word "Cash"
the subject properties to respondents To Chip, Yap and after the printed words "Term" and "Mode of Payment",
Balila. DBP, thus, prayed for the dismissal of the complaint Exhibit "J", the Managers check issued by Allied Banking
and, by way of counterclaim, asked that petitioners be Corporation dated December 3, 1990 in the amount of
ordered to pay damages and attorneys fees. P184,000.00 representing 10% of the offer showing the mode
of payment is for cash; Exhibit "K" which is the application
Respondents To Chip, Yap and Balila no longer filed a for Managers check in the amount of P184,000.00 dated
separate answer, adopting instead the answer of DBP.35 December 3, 1990 showing the beneficiary as DBP. If it is true
that the offer of [petitioners] was for installment payments,
In an Order36 dated July 31, 1991, the RTC granted the prayer then in the ordinary course of human behavior, it would
of petitioners for the issuance of a writ of preliminary not have wasted effort in securing a Managers check in the
injunction.37 amount of P184,000.00 which was insufficient for 20%
deposit as required for installment payments. More
credible is the explanation [given by] witness Judy Garces
On April 25, 1997, the RTC rendered judgment in Civil Case when she said that DBP through Atty. Panal returned the
No. CEB-10104, finding meritorious the complaint of the documents submitted by her, saying that there was no
petitioners. Explained the trial court: urgency for the same as there was no other bidder of [the
said] property and that Cebu Bionic was entitled to a first
@lendelacruz 89

option to buy being the present lessee. In the letter also of xxxx
[respondent] bank dated June 18, 1987, it is important to note
that aside from requiring Cebu Bionic to comply with certain WHEREFORE, THE FOREGOING PREMISES
requirements of time deposit and advance rental, as CONSIDERED, judgment is hereby rendered:
condition for constitution of lease between the parties and
which was complied by Cebu Bionic[,] said letter further
(1) Rescinding the Deed of Sale dated December 28,
states in paragraph 3 thereof that "in case there is [a] better
1990 between [respondent] Development Bank of
offer or if the property will be subject of a purchase offer,
the Philippines and [respondents] Roger Balila, Jose
within the term, the lessee is given the option of first refusal,
To Chip and Patricio Yap;
otherwise, he has to vacate the premises within thirty days".
In answer to the Courts question, however, Atty. Panal
admitted that he did not tell [petitioners] that there was (2) Ordering the [respondent] Development Bank of
another party who was willing to purchase the property, in the Philippines to execute a Deed of Sale over the
violation of [petitioners] right of first refusal.39 (Emphasis property, subject matter of this case upon payment
ours.) by [petitioners] of the whole consideration involved
and to complete all acts or documents necessary to
have the title over said property transferred to the
Likewise, the RTC found that respondents To Chip, Yap and
name of [petitioners];
Balila were aware of the lease contract involving the subject
properties before they purchased the same from DBP. Thus:
(3) Costs against [respondents].41
[Respondent] Jose To Chip lamely pretends ignorance that
[petitioners] are lessees of the property, subject matter of this DBP forthwith filed a Notice of Appeal.42 Respondents To
case. He states that he and his partners, the other Chip, Yap and Balila filed a Motion for Reconsideration 43 of
[respondents], were given assurances by Atty. Panal of the the above decision, but the RTC denied the same in an
DBP that [Lydia Sia] is not a lessee, although he knew that Order44 dated July 4, 1997. Said respondents then filed their
[petitioners] were presently occupying the property and that Notice of Appeal.45
it was possessed by [petitioners] even before it was owned by
the DBP. x x x. On February 14, 2001, the Court of Appeals promulgated its
Decision,46 pronouncing that:
xxxx
We find nothing erroneous with the judgment rendered by
[Respondent] Roger Balila, in his testimony, likewise the trial court. Perforce, We sustain it and dismiss the
pretended ignorance that he knew that [Lydia Sia] was a [respondents] submission.
lessee of the property. x x x.
The RTC determined, upon evidence on record after a careful
xxxx evaluation of the witnesses and their testimonies during the
trial that indeed [petitioners] right of first option was
violated and thus, rescission of the sale made by DBP to
Upon further questioning by the Court, he admitted that
[respondents To Chip, Yap and Balila] are in order.
[Lydia Sia] was not possessing the building freely; that she
was a lessee of Rudy Robles, the former owner, but cleverly
insisted in disowning knowledge that [Lydia Sia] was a xxxx
lessee, denying knowledge that [Lydia Sia] was paying
rentals to [respondent] bank. His pretended ignorance x x x Apparently, DBP accepted [the documents submitted by
was a way of evading [Cebu Bionics] right of first priority to petitioners] and thereafter, through Atty. Panal (of DBP),
buy the property under the contract of lease. x x x The Court returned all of it to the [petitioners] "with the assurance that
is convinced that [respondents To Chip, Yap and Balila] since there was no other bidder of the said property, there
knew that [Cebu Bionic] was the present lessee of the was no urgency for the same and that [Cebu Bionic] also, in
property before they bought the same from [respondent] all events, is entitled to first option being the present lessee.
bank. Common observation, knowledge and experience
dictates that as a prudent businessman, it was but natural [DBP] maintains that the return of the documents [submitted
that he ask Lydia Sia what her status was in occupying the by petitioners] was in order since the [petitioners] offered to
property when he went to talk to her, that he ask her if she buy the property in question on installment basis requiring a
was a lessee. But he said, all he asked her was whether she higher 20% deposit. This, however, was correctly rejected by
was interested to buy the property. x x x.40 the trial court[.] x x x

The trial court, therefore, concluded that: The binding effect of the lease agreement upon the
[respondents To Chip, Yap and Balila] must be sustained
From the foregoing facts on record, it is thus clear that since from existing jurisprudence cited by the lower court, it
[petitioner] Cebu Bionic is the present lessee of the property, was determined during trial that:
the lease contract having been continued by [respondent]
DBP when it received rental payments up to March of 1991 "... [respondents To Chip, Yap and Balila] knew that [Cebu
as well as the advance rental for one year represented by the Bionic] was the present lessee of the property before they
assigned time deposit which is still in [respondent] banks bought the same from [respondent] bank. Common
possession. The provision, therefore, in the lease contract, on observation, knowledge and experience dictates that as a
the right of first option to buy and the right of first refusal prudent businessman, it was but natural that he ask Lydia
contained in [respondent] banks letter dated June 18, 1987, Sia what her status was in occupying the property when he
are still subsisting and binding up to the present, not only on went to talk to her, that he ask her if she was a lessee. But
[respondent] bank but also on [respondents To Chip, Yap he said, all he asked her was whether she was interested to
and Balila]. x x x. buy the property. x x x.
@lendelacruz 90

Moreover, We find that the submissions presented by the 2. Deposit equivalent to two (2) months rental and
[respondents] in their respective briefs argue against advance of one (1) month rental, and the
questions of facts as found and determined by the lower remaining amount for one year (equivalent to 9
court. The respondents contentions consist of crude attempts months rental) shall be secured by either surety
to question the assessment and evaluation of testimonies and bond, cash bond or assigned time deposit;
other evidence gathered by the trial court.
3. That in case there is a better offer or if the
It must be remembered that findings of fact as determined by property will be subject of a purchase offer, within
the trial court are entitled to great weight and respect from the term, the lessor is given an option of first
appellate courts and should not be disturbed on appeal refusal, otherwise he has to vacate the premises
unless for [strong] and cogent reasons. These findings within thirty (30) days from date of notice.
generally, so long as supported by evidence on record, are
not to be disturbed unless there are some facts or evidence We consider, temporarily, the current monthly rental based
which the trial court has misappreciated or overlooked, and on the six-month receipts, which we require you to submit,
which if considered would have altered the results of the until such time when we will fix the amount accordingly."
entire case. Sad to say for the [respondents], We see no reason
to depart from this well-settled legal principle. Evidently, except for the remittance of the monthly rentals up
to March 1991, the conditions imposed by DBP have never
WHEREFORE, in view of the foregoing, the judgment of the been complied with. [Petitioners] did not go to the Bank to
Regional Trial Court of Cebu City, Branch 8, in Civil Case sign any new written contract of lease with DBP. [Petitioners]
No. 10104 is hereby AFFIRMED in toto.47 also did not put up a surety bond nor cash bond nor assign a
time deposit to secure the payment of rental for nine (9)
On October 1, 2001, petitioners filed a Motion for Issuance of months, although the [petitioners] opened a time deposit but
Entry of Judgment.48 Petitioners stressed that, based on the did not assign it to DBP.
records of the case, respondents were served a copy of the
Court of Appeals Decision dated February 14, 2001 sometime But even with the remittance and acceptance of the deposit
on March 7, 2001. However, petitioners discovered that made by [petitioners] equivalent to two (2) months rental and
respondents have not filed any motion for reconsideration of advance of one (1) month rental it does not necessarily follow
the said decision within the reglementary period therefor, that DBP opted to continue with the Robles lease. This is
nor was there any petition for certiorari or appeal filed before because the Robles contract provides:
the Supreme Court.
"That the term of the agreement shall start on November 1,
In response to the above motion, respondents To Chip, Yap 1981 and shall terminate on the last day of every month
and Balila filed on October 8, 2001 a Motion to Admit Motion thereafter, provided however, that this contract shall be
for Reconsideration.49 Atty. Francis M. Zosa, the counsel for automatically renewed on a month to month basis if no
respondents To Chip, Yap and Balila, explained that he sent notice in writing is sent to the other party to determine to
copies of the motion for reconsideration to petitioners and terminate this agreement after fifteen (15) days from the
DBP via personal delivery. On the other hand, the copies of receipt of said notice."
the motion to be filed with the Court of Appeals were
purportedly sent to Mr. Domingo Tan, a friend of Atty. Zosa Here, a notice was sent to [petitioners] on June 18, 1987,
in Quezon City, who agreed to file the same personally with informing them that if they "wish to continue on leasing the
the appellate court in Manila. When Atty. Zosa inquired if property, we request you to come to the Bank for the
the motion for reconsideration was accordingly filed, Mr. Tan execution of a Contract of Lease x x x."
allegedly answered in the affirmative. To his surprise, Atty.
Zosa received a copy of petitioners Motion for Issuance of [Petitioners] failed to enter into the contract of lease required
Entry of Judgment. Atty. Zosa, thus, attributed the failure of by DBP for it to continue occupying the leased premises.
his clients to file a motion for reconsideration on the mistake,
excusable negligence and/or fraud committed by Mr. Tan.
Because of [petitioners] failure to comply with the
conditions embodied in the 18 June 1987 letter, it cannot be
In the assailed Resolution dated February 5, 2002, the Court said that [petitioners] entered into a new contract with DBP
of Appeals granted the motion of respondents To Chip, Yap where they were given the first option to buy the leased
and Balila and admitted the motion for reconsideration property and to match offers from outside parties.
attached therewith "in the higher interest of substantial
justice."50
xxxx

On July 5, 2002, the Court of Appeals reversed its original


Be that as it may, DBP continued to accept the monthly
Decision dated February 14, 2001, reasoning thus:
rentals based on the old Robles contract despite the fact that
the [petitioners] failed to enter into a written lease contract
After a judicious review and reevaluation of the evidence and with it. Corollarily, the relations between the parties is now
facts on record, we are convinced that DBP had terminated governed by Article 1670 of the New Civil Code, thus:
the Robles lease contract. From its letter of June 18, 1987, DBP
had expressly notified [petitioners] that "(I)f they wish to
"Art. 1670. If at the end of contract the lessee should continue
continue on leasing the property x x x" "to come to the Bank
enjoying the thing leased for fifteen days with the
for the execution of a Contract of Lease, the salient conditions
acquiescence of the lessor, and unless a notice to the contrary
of which are as follows:
by either party has previously been given, it is understood
that there is an implied new lease, not for the period of the
1. The lease will be on a month to month basis for original contract, but for the time established in Articles 1682
a maximum period of one (1) year; and 1687. The other terms of the original contract shall be
revived."
@lendelacruz 91

xxxx WHETHER OR NOT THE HON. COURT


OF APPEALS ERRED IN DECLARING
x x x [T]he acceptance by DBP of the monthly rentals does not THAT PETITIONERS DID NOT ENTER
mean that the terms of the Robles contract were revived. In INTO CONTRACT WITH RESPONDENT
the case of Dizon vs. Court of Appeals, the Supreme Court DBP CONTINUING THE TERMS OF THE
declared that: ROBLES CONTRACT

"The other terms of the original contract of lease which are III
revived in the implied new lease under Article 1670 of the
New Civil Code are only those terms which are germane to WHETHER OR NOT THE HON. COURT
the lessees right [of] continued enjoyment of the property OF APPEALS ERRED WHEN IT
leased an implied new lease does not ipso facto carry with DECLARED THAT THE
it any implied revival of any option to purchase the leased CONTINUATION BY RESPONDENT
premises." DBP OF THE LEASE CONTRACT DID
NOT CONTAIN THE RIGHT OF FIRST
In view of the foregoing, it is clear that [petitioners] had no REFUSAL
right to file a case for rescission of the deed of sale executed
by DBP in favor of [respondents To Chip, Yap and Balila] IV
because said deed of sale did not violate their alleged first
option to buy or match offers from outside parties which is WHETHER OR NOT THE HON. COURT
legally non-existent and which was not impliedly renewed OF APPEALS ERRED WHEN IT
under Article 1670 of the Civil Code. DECLARED THAT THE LEASE
CONTRACT IS GOVERNED BY ART.
WHEREFORE, premises considered, the 14 February 2001 1670 OF THE NEW CIVIL CODE
Decision is hereby RECONSIDERED and another one is
issued REVERSING the 25 April 1997 Decision of the V
Regional Trial Court, Branch 8, Cebu City in Civil Case No.
CEB-10104 and the complaint of [petitioners] is DISMISSED
WHETHER OR NOT THE HON. COURT
for lack of merit.51
OF APPEALS ERRED WHEN IT FAILED
TO RECOGNIZE PETITIONERS RIGHT
Without seeking a reconsideration of the above decision, OF FIRST REFUSAL TO WHICH
petitioners filed the instant petition. In their Comment, RESPONDENTS WERE BOUND
respondents opposed the petition on both procedural and
substantive grounds.
VI

In petitioners Memorandum, they summarized the issues to


WHETHER OR NOT THE HON. COURT
be resolved in the present case as follows:
OF APPEALS ERRED WHEN IT FAILED
TO DECLARE THAT RESPONDENT DBP
A) PRELIMINARY ISSUES: HAD VIOLATED PETITIONERS RIGHTS

I VII

WHETHER OR NOT THE WHETHER OR NOT THE HON. COURT


VERIFICATION (AND CERTIFICATION OF APPEALS ERRED IN REVERSING ITS
OF NON-FORUM SHOPPING) IN THE OWN JUDGMENT AND DISMISSING
INSTANT PETITION WAS PROPER AND PETITIONERS CLAIM FOR
VALID DESPITE ITS BEING SIGNED BY RESCISSION52
ONLY ONE OF THE TWO PETITIONERS.
We shall first resolve the preliminary issues.
II
Respondents To Chip, Yap and Balila argue that the instant
WHETHER OR NOT ONLY QUESTIONS petition should be dismissed outright as the verification and
OF LAW AND NOT OF FACT CAN BE certification of non-forum shopping was executed only by
RAISED IN THE INSTANT PETITION petitioner Lydia Sia in her personal capacity, without the
BEFORE THIS HON. SUPREME COURT. participation of Cebu Bionic.

B) MAIN AND PRINCIPAL ISSUES IN THE INSTANT The Court is not persuaded.
PETITION:
Except for the powers which are expressly conferred on it by
I the Corporation Code and those that are implied by or are
incidental to its existence, a corporation has no powers. It
WHETHER OR NOT THE HON. COURT exercises its powers through its board of directors and/or its
OF APPEALS ERRED IN ADMITTING duly authorized officers and agents. Thus, its power to sue
RESPONDENTS MOTION FOR and be sued in any court is lodged with the board of directors
RECONSIDERATION DESPITE ITS that exercises its corporate powers.53 Physical acts, like the
BEING FILED OUT OF TIME signing of documents, can be performed only by natural
persons duly authorized for the purpose by corporate by-
II laws or by a specific act of the board of directors.54
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In this case, respondents To Chip, Yap and Balila obviously be better served if respondents procedural lapse will be
overlooked the Secretarys Certificate55 attached to the excused.
instant petition, which was executed by the Corporate
Secretary of Cebu Bionic. Unequivocally stated therein was Verily, we had occasion to apply this liberality in the
the fact that the Board of Directors of Cebu Bionic held a application of procedural rules in Barnes v. Padilla 59 where
special meeting on July 26, 2002 and they thereby approved we aptly declared that
a Resolution authorizing Lydia Sia to elevate the present case
to this Court in behalf of Cebu Bionic, to wit:
The failure of the petitioner to file his motion for
reconsideration within the period fixed by law renders the
Whereas, the board appointed LYDIA I. SIA to act and in decision final and executory. Such failure carries with it the
behalf of the corporation to file the CERTIORARI with the result that no court can exercise appellate jurisdiction to
Supreme Court in relations to the decision of the Court of review the case. Phrased elsewise, a final and executory
Appeals dated July 5, 2002 which reversed its own judgment judgment can no longer be attacked by any of the parties or
earlier promulgated on February 14, 2001 entitled CEBU be modified, directly or indirectly, even by the highest court
BIONIC BUILDERS SUPPLY, INC. and LYDIA SIA, of the land.
(Petitioners- Appellants) versus THE DEVELOPMENT
BANK OF THE PHILIPPINES, JOSE TO CHIP, PATRICIO
However, this Court has relaxed this rule in order to serve
YAP and ROGER BALILA (Respondents- Appelles),
substantial justice considering (a) matters of life, liberty,
docketed CA-G.R. NO. 57216.
honor or property, (b) the existence of special or compelling
circumstances, (c) the merits of the case, (d) a cause not
Whereas, on mass unanimously motion of all members of entirely attributable to the fault or negligence of the party
directors present hereby approved the appointment of favored by the suspension of the rules, (e) a lack of any
LYDIA I. SIA to act and sign all papers in connection of CA- showing that the review sought is merely frivolous and
G.R. NO. 57216. dilatory, and (f) the other party will not be unjustly
prejudiced thereby.60
Resolved and it is hereby resolve to appoint and authorized
LYDIA I. SIA to sign and file with the SUPREME COURT in In this case, what are involved are the property rights of the
connection to decision of the Court of Appeals as above parties given that, ultimately, the fundamental issue to be
mention.56 determined is who among the petitioners and respondents
To Chip, Yap and Balila has the better right to purchase the
Respondents To Chip, Yap and Balila next argue that the subject properties. More importantly, the merits of the case
instant petition raises questions of fact, which are not sufficiently called for the suspension of the rules in order to
allowed in a petition for review on certiorari. They, therefore, settle conclusively the rights and obligations of the parties
submit that the factual findings of the Court of Appeals are herein.
binding on this Court.
In essence, the questions that must be resolved are: 1)
Section 1, Rule 45 of the Rules of Court categorically states whether or not there was a contract of lease between
that the petition filed thereunder shall raise only questions of petitioners and DBP; 2) if in the affirmative, whether or not
law, which must be distinctly set forth. A question of law this contract contained a right of first refusal in favor of
arises when there is doubt as to what the law is on a certain petitioners; and 3) whether or not respondents To Chip, Yap
state of facts, while there is a question of fact when the doubt and Balila are likewise bound by such right of first refusal.
arises as to the truth or falsity of the alleged facts. For a
question to be one of law, the same must not involve an Petitioners contend that there was a contract of lease between
examination of the probative value of the evidence presented them and DBP, considering that they had been allowed to
by the litigants or any of them. The resolution of the issue occupy the premises of the subject property from 1987 up to
must rest solely on what the law provides on the given set of 1991 and DBP received their rental payments corresponding
circumstances. Once it is clear that the issue invites a review to the said period. Petitioners claim that DBP were aware of
of the evidence presented, the question posed is one of fact.57 their lease on the subject property when the latter foreclosed
the same and the acquisition of the subject properties
The above rule, however, admits of certain exceptions,58 one through foreclosure did not terminate the lease. Petitioners
of which is when the findings of the Court of Appeals are subscribe to the ruling of the RTC that even if there was no
contrary to those of the trial court. As will be discussed written contract of lease, DBP chose to continue the existing
further, this exception is attendant in the case at bar. contract of lease between petitioners and Rudy Robles by
accepting the requirements set down by DBP on the letter
We now determine the principal issues put forward by dated June 18, 1987. Petitioners likewise posit that the
petitioners. contract of lease between them and Rudy Robles never
expired, inasmuch as the contract did not have a definite term
and none of the parties thereto terminated the same. In view
First off, petitioners fault the Court of Appeals for admitting
of the continuation of the lease contract between petitioners
the Motion for Reconsideration of its Decision dated
and Rudy Robles, petitioners submit that Article 1670 of the
February 14, 2001, which was filed by respondents To Chip,
Civil Code on implied lease is not applicable on the instant
Yap and Balila more than six months after receipt of the said
case.
decision. The motion was eventually granted and the Court
of Appeals issued its assailed Amended Decision, ruling in
favor of respondents. We are not persuaded.

Indeed, the appellate courts Decision dated February 14, In Uy v. Land Bank of the Philippines,61 the Court held that
2001 would have ordinarily attained finality for failure of "[i]n respect of the lease on the foreclosed property, the buyer
respondents to seasonably file their Motion for at the foreclosure sale merely succeeds to the rights and
Reconsideration thereon. However, we agree with the Court obligations of the pledgor-mortgagor subject to the
of Appeals that the higher interest of substantial justice will provisions of Article 1676 of the Civil Code on its possible
@lendelacruz 93

termination. This article provides that [t]he purchaser of a In the case at bar, there was no concurrence of offer and
piece of land which is under a lease that is not recorded in the acceptance vis--vis the terms of the proposed lease
Registry of Property may terminate the lease, save when agreement. In fact, after the reply of petitioners counsel
there is a stipulation to the contrary in the contract of sale, or dated July 7, 1987, there was no indication that the parties
when the purchaser knows of the existence of the lease. In undertook any other action to pursue the execution of the
short, the buyer at the foreclosure sale, as a rule, may intended lease contract. Petitioners even admitted that they
terminate an unregistered lease except when it knows of the merely waited for DBP to present the contract to them,
existence of the lease." despite being instructed to come to the bank for the execution
of the same.67
In the instant case, the lease contract between petitioners and
Rudy Robles was not registered.62 During trial, DBP denied Contrary to the ruling of the RTC, the Court is also not
having any knowledge of the said lease contract.63 It asserted convinced that DBP opted to continue the existing lease
that the lease was merely presumed in view of the existence contract between petitioners and Rudy Robles.
of tenants in the subject property.64 Nevertheless, DBP
recognized and acknowledged this lease contract in its letter The findings of the RTC that DBP supposedly accepted the
dated June 18, 1987, which was addressed to Bonifacio Sia, requirements the latter set forth in its letter dated June 18,
then President of Cebu Bionic. DBP even required Sia to pay 1987 is not well taken. To recapitulate, the third paragraph of
the monthly rental for the month of June 1987, thereby the letter reads: If you wish to continue on leasing the
exercising the right of the previous lessor, Rudy Robles, to property, we request you to come to the Bank for the
collect the rental payments from the lessee. In the same letter, execution of a Contract of Lease, the salient conditions of
DBP extended an offer to Cebu Bionic to continue the lease which are as follows:
on the subject property, outlining the provisions of the
proposed contract and specifically instructing the latter to
1. The lease will be on month to month basis, for a
come to the bank for the execution of the same. DBP likewise
maximum period of one (1) year;
gave Cebu Bionic a 30-day period within which to act on the
said contract execution. Should Cebu Bionic fail to do so, it
would be deemed uninterested in continuing with the lease. 2. Deposit equivalent to two (2) months rental and
In that eventuality, the letter states that Cebu Bionic should advance of one (1) month rental, and the remaining
vacate the premises within the said period. amount for one year period (equivalent to 9 months
rental) shall be secured by either surety bond, cash
bond or assigned time deposit;
Instead of acceding to the terms of the aforementioned letter,
the counsel of Cebu Bionic sent a counter-offer to DBP dated
July 7, 1987, suggesting a different mode of payment for the 3. That in case there is a better offer or if the property
rentals and requesting for a 60-day period within which time will be subject of a purchase offer, within the term,
the parties will execute a new contract of lease. the lessor is given an option of first refusal,
otherwise he has to vacate the premises within
thirty (30) days from date of notice.68
The parties, however, failed to execute a written contract of
lease. Petitioners put the blame on DBP, asserting that no
contract was signed because DBP did not prepare it for them. The so-called "requirements" enumerated in the above
DBP, on the other hand, counters that it was petitioners who paragraph are not really requirements to be complied with
did not positively act on the conditions for the execution of by the petitioners for the execution of the proposed lease
the lease contract. In view of the counter-offer of petitioners, contract, as apparently considered by the RTC and the
DBP and respondents To Chip, Yap and Balila argue that petitioners. A close reading of the letter reveals that the items
there was no meeting of minds between DBP and petitioners, enumerated therein were in fact the salient terms and
which would have given rise to a new contract of lease. conditions of the proposed contract of lease, which the DBP
and the petitioners were to execute if the latter were so
willing. Also, the Certificate of Time Deposit in the amount
The Court rules that, indeed, no new contract of lease was
of P11,395.64, which was allegedly paid to DBP as advance
ever perfected between petitioners and DBP.
rental deposit pursuant to the said requirements, was not
even clearly established as such since it was neither secured
In Metropolitan Manila Development Authority v. JANCOM by a security bond or a cash bond, nor was it assigned to DBP.
Environmental Corporation,65 we emphasized that:
The contention that the lease contract between petitioners
Under Article 1305 of the Civil Code, "[a] contract is a and Rudy Robles did not expire, given that it did not have a
meeting of minds between two persons whereby one binds definite term and the parties thereto failed to terminate the
himself, with respect to the other, to give something or to same, deserves scant consideration. To recall, the second
render some service." A contract undergoes three distinct paragraph of the terms and conditions of the contract of lease
stages preparation or negotiation, its perfection, and between petitioners and Rudy Robles reads:
finally, its consummation. Negotiation begins from the time
the prospective contracting parties manifest their interest in
2. That the term of this agreement shall start on November 1,
the contract and ends at the moment of agreement of the
1981 and shall terminate on the last day of every month
parties. The perfection or birth of the contract takes place
thereafter; provided however that this contract shall be
when the parties agree upon the essential elements of the
automatically renewed on a month to month basis if no
contract. The last stage is the consummation of the contract
notice, in writing, is sent to the other party to terminate this
wherein the parties fulfill or perform the terms agreed upon
agreement after fifteen (15) days from receipt of said notice.69
in the contract, culminating in the extinguishment thereof
(Emphases ours.)
(Bugatti vs. CA, 343 SCRA 335 [2000]). Article 1315 of the Civil
Code, provides that a contract is perfected by mere consent.
Consent, on the other hand, is manifested by the meeting of Crystal clear from the above provision is that the lease is on
the offer and the acceptance upon the thing and the cause a month-to-month basis. Relevantly, the well-entrenched
which are to constitute the contract (See Article 1319, Civil principle is that a lease from month-to-month is with a
Code). x x x.66 definite period and expires at the end of each month upon
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the demand to vacate by the lessor.70 As held by the Court of purchase is revived in an implied lease under Article 1670, to
Appeals in the assailed Amended Decision, the above- wit:
mentioned lease contract was duly terminated by DBP by
virtue of its letter dated June 18, 1987. We reiterate that the "[T]he other terms of the original contract" which are revived
letter explicitly directed the petitioners to come to the office in the implied new lease under Article 1670 are only those
of the DBP if they wished to enter into a new lease agreement terms which are germane to the lessees right of continued
with the said bank. Otherwise, if no contract of lease was enjoyment of the property leased. This is a reasonable
executed within 30 days from the date of the letter, construction of the provision, which is based on the
petitioners were to be considered uninterested in entering presumption that when the lessor allows the lessee to
into a new contract and were thereby ordered to vacate the continue enjoying possession of the property for fifteen days
property. As no new contract was in fact executed between after the expiration of the contract he is willing that such
petitioners and DBP within the 30-day period, the directive enjoyment shall be for the entire period corresponding to the
to vacate, thus, took effect. DBPs letter dated June 18, 1987, rent which is customarily paid in this case up to the end of
therefore, constituted the written notice that was required to the month because the rent was paid monthly. Necessarily, if
terminate the lease agreement between petitioners and Rudy the presumed will of the parties refers to the enjoyment of
Robles. From then on, the petitioners continued possession possession the presumption covers the other terms of the
of the subject property could be deemed to be without the contract related to such possession, such as the amount of
consent of DBP. rental, the date when it must be paid, the care of the property,
the responsibility for repairs, etc. But no such presumption
Thusly, petitioners assertion that Article 1670 of the Civil may be indulged in with respect to special agreements which
Code is not applicable to the instant case is correct. The by nature are foreign to the right of occupancy or enjoyment
reason, however, is not that the existing contract was inherent in a contract of lease.73
continued by DBP, but because the lease was terminated by
DBP, which termination was accompanied by a demand to DBP cannot, therefore, be accused of violating the rights of
petitioners to vacate the premises of the subject property. petitioners when it offered the subject properties for sale, and
eventually sold the same to respondents To Chip, Yap and
Article 1670 states that "[i]f at the end of the contract the Balila, without first notifying petitioners. Neither were the
lessee should continue enjoying the thing leased for fifteen said respondents bound by any right of first refusal in favor
days with the acquiescence of the lessor, and unless a notice of petitioners. Consequently, the sale of the subject properties
to the contrary by either party has previously been given, it to respondents was valid. Petitioners claim for rescission
is understood that there is an implied new lease, not for the was properly dismissed.
period of the original contract, but for the time established in
Articles 1682 and 1687. The other terms of the original WHEREFORE, the Petition for Review on Certiorari under
contract shall be revived." In view of the order to vacate Rule 45 of the Rules of Court is DENIED. The Resolution
embodied in the letter of DBP dated June 18, 1987 in the event dated February 5, 2002 and the Amended Decision dated July
that no new lease contract is entered into, the petitioners 5, 2002 of the Court of Appeals in CA-G.R. CV No. 57216 are
continued possession of the subject properties was without hereby AFFIRMED. No costs.
the acquiescence of DBP, thereby negating the constitution of
an implied lease.
SO ORDERED.

Contrary to the ruling of the RTC, DBPs acceptance of


petitioners rental payments of P5,000.00 for the period of
November 1990 to March 1991 did not likewise give rise to
an implied lease between petitioners and DBP. In Tagbilaran
Integrated Settlers Association (TISA) Incorporated v. Court
of Appeals,71 we held that "the subsequent acceptance by the
lessor of rental payments does not, absent any circumstance
that may dictate a contrary conclusion, legitimize the
unlawful character of their possession." In the present case,
the petitioners rental payments to DBP were made in lump
sum on March 22, 1991. Significantly, said payments were
remitted only after petitioners were notified of the sale of the
subject properties to respondents To Chip, Yap and Balila
and after the petitioners were given a final demand to vacate
the properties. These facts substantially weaken, if not
controvert, the finding of the RTC and the argument of
petitioners that the latter were faithfully remitting their rental
payments to DBP until the year 1991.

Thus, having determined that the petitioners and DBP


neither executed a new lease agreement, nor entered into an
implied lease contract, it follows that petitioners claim of
entitlement to a right of first refusal has no leg to stand on.
Furthermore, even if we were to grant, for the sake of
argument, that an implied lease was constituted between
petitioners and the DBP, the right of first refusal that was
contained in the prior lease contract with Rudy Robles was
not renewed therewith. This is in accordance with the ruling
in Dizon v. Magsaysay,72 which involved the issue of
whether a provision regarding a preferential right to