(1) CIVPRO – CONCEPT OF REMEDIAL OR PROCEDURAL LAW The RTC initially denied Priscilla’s motion to dismiss on February 4, 1998.
denied Priscilla’s motion to dismiss on February 4, 1998.8 However, upon her
G.R. No. 158239 January 25, 2012
PRISCILLA ALMA JOSE, Petitioner,
vs.
RAMON C. JAVELLANA, ET AL., Respondents.
DECISION
BERSAMIN, J.:
The denial of a motion for reconsideration of an order granting the defending party’s motion to
dismiss is not an interlocutory but a final order because it puts an end to the particular matter
involved, or settles definitely the matter therein disposed of, as to leave nothing for the trial court
to do other than to execute the order.1 Accordingly, the claiming party has a fresh period of 15 days
from notice of the denial within which to appeal the denial.2
Antecedents
On September 8, 1979, Margarita Marquez Alma Jose (Margarita) sold for consideration of
₱160,000.00 to respondent Ramon Javellana by deed of conditional sale two parcels of land with
areas of 3,675 and 20,936 square meters located in Barangay Mallis, Guiguinto, Bulacan. They
agreed that Javellana would pay ₱80,000.00 upon the execution of the deed and the balance of
₱80,000.00 upon the registration 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
become incapacitated, her son and attorney-in-fact, Juvenal M. Alma Jose (Juvenal), and her
daughter, petitioner Priscilla M. Alma Jose, would receive the payment of the balance and proceed
with the application for registration.3
After Margarita died and with Juvenal having predeceased Margarita without issue, the vendor’s
undertaking fell on the shoulders of Priscilla, being Margarita’s sole surviving heir. However, Priscilla
did not comply with the undertaking to cause the registration of the properties under the Torrens
System, and, instead, began to improve the properties by dumping filling materials therein with the
intention of converting the parcels of land into a residential or industrial subdivision. 4 Faced with
Priscilla’s refusal to comply, Javellana commenced on February 10, 1997 an action for specific
performance, injunction, and damages against her in the Regional Trial Court in Malolos, Bulacan
(RTC), docketed as Civil Case No. 79-M-97 entitled Ramon C. Javellana, represented by Atty.
Guillermo G. Blanco v. Priscilla Alma Jose.
In Civil Case No. 79-M-97, Javellana averred that upon the execution of the deed of conditional sale,
he had paid the initial amount of ₱80,000.00 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 Juvenal’s
representation that Margarita had needed funds for the expenses of registration and payment of
real estate tax; and that in 1996, Priscilla had called to inquire about the mortgage constituted on
the parcels of land; and that he had told her then that the parcels of land had not been mortgaged
but had been sold to him.5
Javellana prayed for the issuance of a temporary restraining order or writ of preliminary injunction
to restrain Priscilla from dumping filling materials in the parcels of land; and that Priscilla be ordered
to institute registration proceedings and then to execute a final deed of sale in his favor.6
Priscilla filed a motion to dismiss, stating that the complaint was already barred by prescription; and
that the complaint did not state a cause of action.7
motion for reconsideration, the RTC reversed itself on June 24, 1999 and granted the motion to
dismiss, opining that Javellana had no cause of action against her due to her not being bound to
comply with the terms of the deed of conditional sale for not being a party thereto; that there was
no evidence showing the 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
Javellana moved for reconsideration, contending that the presentation of evidence of full payment
was not necessary at that stage of the proceedings; and that in resolving a motion to dismiss on the
ground of failure to state a cause of action, the facts alleged in the complaint were hypothetically
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 showing the payments
made to Juvenal.11 Moreover, he maintained that Priscilla could no longer succeed to any rights
respecting the parcels of land because he had meanwhile acquired absolute ownership of them;
and that the only thing that she, as sole heir, had inherited from Margarita was the obligation to
register them under the Torrens System.12
On June 21, 2000, the RTC denied the motion for reconsideration for lack of any reason to disturb
the order of June 24, 1999.13
Accordingly, Javellana filed a notice of appeal from the June 21, 2000 order,14 which the RTC gave
due course to, and the records were elevated to the Court of Appeals (CA).
In his appeal (C.A.-G.R. CV No. 68259), Javellana submitted the following as errors of the RTC, 15 to
wit:
I
THE TRIAL COURT GRIEVOUSLY ERRED IN NOT CONSIDERING THE FACT THAT PLAINTIFF-
APELLANT HAD LONG COMPLIED WITH THE FULL PAYMENT OF THE CONSIDERATION OF THE SALE
OF THE SUBJECT PROPERTY AND HAD IMMEDIATELY TAKEN ACTUAL AND PHYSICAL POSSESSION
OF SAID PROPERTY UPON THE SIGNING OF THE CONDITIONAL DEED OF SALE;
II
THE TRIAL COURT OBVIOUSLY ERRED IN MAKING TWO CONFLICTING INTERPRETATIONS OF THE
PROVISION OF THE CIVIL [CODE], PARTICULARLY ARTICLE 1911, IN THE LIGHT OF THE TERMS OF
THE CONDITIONAL DEED OF SALE;
III
THE TRIAL COURT ERRED IN HOLDING THAT DEFENDANT-APPELLEE BEING NOT A PARTY TO THE
CONDITIONAL DEED OF SALE EXECUTED BY HER MOTHER IN FAVOR OF PLAINTFF-APPELLANT IS
NOT BOUND THEREBY AND CAN NOT BE COMPELLED TO DO THE ACT REQUIRED IN THE SAID
DEED OF CONDITIONAL SALE;
IV
THE TRIAL COURT ERRED IN DISMISSING THE AMENDED COMPLAINT WITHOUT HEARING THE
CASE ON THE MERITS.
Priscilla countered that the June 21, 2000 order was not appealable; that the appeal was not
perfected on time; and that Javellana was guilty of forum shopping.16
It appears that pending the appeal, Javellana also filed a 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 No. 60455). On August
6, 2001, however, the CA dismissed the petition for certiorari,17 finding that the RTC did not 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.
On November 20, 2002, the CA promulgated its decision in C.A.-G.R. CV No. 68259,18 reversing and
setting aside the dismissal of Civil Case No. 79-M-97, and remanding the records to the RTC "for
further proceedings in accordance with law."19 The CA explained that the complaint sufficiently
stated a cause of action; that Priscilla, as sole heir, succeeded to the rights and obligations of
Margarita with respect to the parcels of land; that Margarita’s undertaking under the contract was
not a purely personal obligation but was transmissible to Priscilla, who was consequently bound to
comply with the obligation; that the action had not yet prescribed due to its being actually one for
quieting of title that was imprescriptible brought by Javellana who had actual possession of the
properties; and that based on the
complaint, Javellana had been in actual possession since 1979, and the cloud on his title had come
about only when Priscilla had started dumping filling materials on the premises.20
On May 9, 2003, the CA denied the motion for reconsideration, 21 stating that it decided to give due
course to the appeal even if filed out of time because Javellana had no intention to delay the
proceedings, as in fact he did not even seek an extension of time to file his appellant’s brief; that
current jurisprudence afforded litigants the amplest opportunity to present their cases free from
the constraints of technicalities, such that even if an appeal was filed out of time, the appellate
court was given the discretion to nonetheless allow the appeal for justifiable reasons.
Issues
Priscilla then brought this appeal, averring that the CA thereby erred in not outrightly dismissing
Javellana’s appeal because: (a) the June 21, 2000 RTC order was not appealable; (b) the notice of
appeal had been filed belatedly by three days; and (c) Javellana was guilty of forum shopping for
filing in the CA a petition for certiorari to assail the orders of the RTC that were the subject matter
of his appeal pending in the CA. She posited that, even if the CA’s decision to entertain the appeal
was affirmed, the RTC’s dismissal of the complaint should nonetheless be upheld because the
complaint stated no cause of action, and the action had already prescribed.
On his part, Javellana countered that the errors being assigned by Priscilla involved questions of fact
not proper for the Court to review through petition for review on certiorari; that the June 21, 2000
RTC order, being a final order, was appealable; that his appeal was perfected on time; and that he
was not guilty of forum shopping because at the time he filed the
petition for certiorari the CA had not yet rendered a decision in C.A.-G.R.
CV No. 68259, and because the issue of ownership raised in C.A.-G.R. CV No. 68259 was different
from the issue of grave abuse of discretion raised in C.A.-G.R. SP No. 60455.
Ruling
The petition for review has no merit.
I expressly clarified that the prohibition against appealing an order denying a motion for
Denial of the motion for reconsideration of the
order of dismissal was a final order and appealable
Priscilla submits that the order of June 21, 2000 was not the proper subject of an appeal considering
that Section 1 of Rule 41 of the Rules of Court provides that no appeal may be taken from an order
denying a motion for reconsideration.
Priscilla’s submission is erroneous and cannot be sustained.
First of all, the denial of Javellana’s motion for reconsideration left nothing more to be done by the
RTC because it confirmed the dismissal of Civil Case No. 79-M-97. It was clearly a final order, not an
interlocutory one. The Court has distinguished between final and interlocutory orders in Pahila-
Garrido v. Tortogo,22 thuswise:
The distinction between a final order and an interlocutory order is well known. The first disposes of
the subject matter in its entirety or terminates a particular proceeding or action, leaving nothing
more to be done except to enforce by execution what the court has determined, but the latter does
not completely dispose of the case but leaves something else to be decided upon. An interlocutory
order deals with preliminary matters and the trial on the merits is yet to be held and the judgment
rendered. The test to ascertain whether or not an order or a judgment is
interlocutory or final is: does the order or judgment leave something to be done in the trial court
with respect to the merits of the case? If it does, the order or judgment is interlocutory; otherwise,
it is final.
And, secondly, whether an order is final or interlocutory determines whether appeal is the correct
remedy or not. A final order is appealable, to accord with the final judgment rule enunciated in
Section 1, Rule 41 of the Rules of Court to the effect that "appeal may be taken from a judgment or
final order that completely disposes of the case, or of a particular matter therein when declared by
these Rules to be appealable;"23 but the remedy from an interlocutory one is not an appeal but a
special civil action for certiorari. The explanation for the differentiation of remedies given in Pahila-
Garrido v. Tortogo is apt:
xxx The reason for disallowing an appeal from an interlocutory order is to avoid multiplicity of
appeals in a single action, which necessarily suspends the hearing and decision on the merits of the
action during the pendency of the appeals. Permitting multiple appeals will necessarily delay the
trial on the merits of the case for a considerable length of time, and will compel the adverse party
to incur unnecessary expenses, for one of the parties may interpose as many appeals as there are
incidental questions raised by him and as there are interlocutory orders rendered or issued by the
lower court. An interlocutory order may be the subject of an appeal, but only after a judgment has
been rendered, with the ground for appealing the order being included in the appeal of the
judgment itself.
The remedy against an interlocutory order not subject of an appeal is an appropriate special civil
action under Rule 65, provided that the interlocutory order is rendered without or in excess of
jurisdiction or with grave abuse of discretion. Then is certiorari under Rule 65 allowed to be resorted
to.
Indeed, the Court has held that an appeal from an order denying a motion for reconsideration of a
final order or judgment is effectively an appeal from the final order or judgment itself; and has
reconsideration referred only to a denial of a motion for reconsideration of an interlocutory order.24
II
Appeal was made on time pursuant to Neypes v. CA
Priscilla insists that Javellana filed his notice of appeal out of time. She points out that he received
a copy of the June 24, 1999 order on July 9, 1999, and filed his motion for reconsideration on July
21, 1999 (or after the lapse of 12 days); that the RTC denied his motion for reconsideration through
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 until July 16, 2000, within which to perfect an appeal; and that having
filed his notice of appeal on July 19, 2000, his appeal should have been dismissed for being tardy by
three days beyond the expiration of the reglementary period.
Section 3 of Rule 41 of the Rules of Court provides:
Section 3. Period of ordinary appeal. — The appeal shall be taken within fifteen (15) days from
notice of the judgment or final order appealed from. Where a record on appeal is required, the
appellant shall file a notice of appeal and a record on appeal within thirty (30) days from notice of
the judgment or final order.
The period of appeal shall be interrupted by a timely motion for new trial or reconsideration. No
motion for extension of time to file a motion for new trial or reconsideration shall be allowed. (n)
Under the rule, Javellana had only the balance of three days from July 13, 2000, or until July 16,
2000, within which to perfect an appeal due to the timely filing of his motion for reconsideration
interrupting the running of the period of appeal. As such, his filing of the notice of appeal only on
July 19, 2000 did not perfect his appeal on time, as Priscilla insists.
The seemingly correct insistence of Priscilla cannot be upheld, however, considering that the Court
meanwhile adopted the fresh period rule in Neypes v. Court of Appeals,25 by which an aggrieved
party desirous of appealing an adverse judgment or final order is allowed a fresh period of 15 days
within which to file the notice of appeal in the RTC reckoned from receipt of the order denying a
motion for a new trial or motion for reconsideration, to wit:
The Supreme Court may promulgate procedural rules in all courts. It has the sole prerogative to
amend, repeal or even establish new rules for a more simplified and inexpensive process, and the
speedy disposition of cases. In the rules 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 parties to file their appeals. These extensions may consist of 15 days or
more.
To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to
appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to
file the notice of appeal in the Regional Trial Court, counted from receipt of the order dismissing a
motion for a new trial or motion for reconsideration.
Henceforth, this "fresh period rule" shall also apply to Rule 40 governing appeals from the Municipal
Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from the Regional Trial
Courts to the Court of Appeals; Rule 43 on appeals from quasi-judicial agencies to the Court of
Appeals and Rule 45 governing appeals by certiorari to the Supreme 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 (whether full or partial) or any final order or
resolution.26
The fresh period rule may be applied to this case, for the Court has already retroactively extended
the fresh period rule to "actions pending and undetermined at the time of their passage and this
will not violate any right of a person who may feel that he is adversely affected, inasmuch as there
are no vested rights in rules of procedure."27 According to De los Santos v. Vda. de Mangubat:28
Procedural law refers to the adjective law which prescribes rules and forms of procedure in order
that courts may be able to administer justice. Procedural laws do not come within the legal
conception of a retroactive law, or the general rule against the retroactive operation of statues ―
they may be given retroactive effect on actions pending and undetermined at the time of their
passage and this will not violate any right of a person who may feel that he is adversely affected,
insomuch as there are no vested rights in rules of procedure.
The "fresh period rule" is a procedural law as it prescribes a fresh period of 15 days within which an
appeal may be made in the event that the motion for reconsideration is denied by the lower court.
Following the rule on retroactivity of procedural laws, the "fresh period rule" should be applied to
pending actions, such as the present case.
Also, to deny herein petitioners the benefit of the "fresh period rule" will amount to injustice, if not
absurdity, since the subject notice of judgment and final order were issued two years later or in the
year 2000, as compared to the notice of judgment and final order in Neypes which were issued in
1998. It will be incongruous and illogical that parties receiving notices of judgment and final orders
issued in the year 1998 will enjoy the benefit of the "fresh period rule" while those later rulings of
the lower courts such as in the instant case, will not.29
Consequently, we rule that Javellana’s notice of appeal was timely filed pursuant to the fresh period
rule.
III
No forum shopping was committed
Priscilla claims that Javellana engaged in forum shopping by filing a notice of appeal and a petition
for certiorari against the same orders. As earlier noted, he denies that his doing so violated the
policy against forum shopping.
The Court expounded on the nature and purpose of forum shopping in In Re: Reconstitution of
Transfer Certificates of Title Nos. 303168 and 303169 and Issuance of Owner’s Duplicate Certificates
of Title In Lieu of Those Lost, Rolando Edward G. Lim, Petitioner:30
Forum shopping is the act of a party litigant against whom an adverse judgment has been rendered
in one forum seeking and possibly getting a favorable opinion in another forum, other than by
appeal or the special civil action of certiorari, or the institution of two or more actions or
proceedings grounded on the same cause or supposition that one or the other court would make a
favorable disposition. Forum shopping happens when, in the two or more pending cases, there is
identity of parties, identity of rights or causes of action, and identity of reliefs sought. Where the
elements of litis pendentia are present, and where a final judgment in one case will amount to res
judicata in the other, there is forum shopping. For litis pendentia to be a ground for the dismissal of
an action, there must be: (a) identity of the parties or at least such as to represent the same interest
in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the
same acts; and (c) the identity in the two cases should be such that the judgment which may be
rendered in one would, regardless of which party is successful, amount to res judicata in the other.
For forum shopping to exist, both actions must involve the same transaction, same essential facts
and circumstances and must raise identical causes of action, subject matter and issues. Clearly, it
does not exist where different orders were questioned, two distinct causes of action and issues
were raised, and two objectives were sought.
Should Javellana’s present appeal now be held barred by his filing of the petition for certiorari in
the CA when his appeal in that court was yet pending?
We are aware that in Young v. Sy,31 in which the petitioner filed a notice of appeal to elevate the Case No. 79-M-97, whereas C.A.-G.R. SP No. 60455 dealt with an independent ground of alleged
orders concerning the dismissal of her case due to non-suit to the CA and a petition for certiorari in grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the RTC. The
the CA assailing the same orders four months later, the Court ruled that the successive filings of the second danger, i.e., the unethical malpractice of shopping for a friendly court or judge to ensure a
notice of appeal and the petition for certiorari to attain the same objective of nullifying the trial favorable ruling or judgment after not getting it in the appeal, would not arise because the CA had
court’s dismissal orders constituted forum shopping that warranted the dismissal of both cases. The not yet decided C.A.-G.R. CV No. 68259 as of the filing of the petition for certiorari.
Court said:
Instead, we see the situation of resorting to two inconsistent remedial approaches to be the result
Ineluctably, the petitioner, by filing an ordinary appeal and a petition for certiorari with the CA, of the tactical misjudgment by Javellana’s counsel on the efficacy of the appeal to stave off his
engaged in forum shopping. When the petitioner commenced the appeal, only four months had caretaker’s eviction from the parcels of land and to prevent the development of them into a
elapsed prior to her filing with the CA the Petition for Certiorari under Rule 65 and which eventually residential or commercial subdivision pending the appeal. In the petition for certiorari, Javellana
came up to this Court by way of the instant Petition (re: Non-Suit). The elements of litis pendentia explicitly averred that his appeal was "inadequate and not speedy to prevent private respondent
are present between the two suits. As the CA, through its Thirteenth Division, correctly noted, both Alma Jose and her transferee/assignee xxx from developing and disposing of the subject property
suits are founded on exactly the same facts and refer to the same subject matter—the RTC Orders to other parties to the total deprivation of petitioner’s rights of possession and ownership over the
which dismissed Civil Case No. SP-5703 (2000) for subject property," and that the dismissal by the RTC had "emboldened private respondents to fully
develop the property and for respondent Alma Jose to file an ejectment case against petitioner’s
failure to prosecute. In both cases, the petitioner is seeking the reversal of the RTC orders.1âwphi1 overseer xxx."35 Thereby, it became far-fetched that Javellana brought the petition for certiorari in
The parties, the rights asserted, the issues professed, and the reliefs prayed for, are all the same. It violation of the policy against forum shopping.
is evident that the judgment of one forum may amount to res judicata in the other.
WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision
xxxx promulgated on November 20, 2002; and ORDERS the petitioner to pay the costs of suit.
The remedies of appeal and certiorari under Rule 65 are mutually exclusive and not alternative or SO ORDERED.
cumulative. This is a firm judicial policy. The petitioner cannot hedge her case by wagering two or
more appeals, and, in the event that the ordinary appeal lags significantly behind the others, she
cannot post facto validate this circumstance as a demonstration that the ordinary appeal had not
been speedy or adequate enough, in order to justify the recourse to Rule 65. This practice, if
adopted, would sanction the filing of multiple suits in multiple fora, where each one, as the
petitioner couches it, becomes a "precautionary measure" for the rest, thereby increasing the
chances of a favorable decision. This is the very evil that the proscription on forum shopping seeks
to put right. In Guaranteed Hotels, Inc. v. Baltao, the Court stated that the grave evil sought to be
avoided by the rule against forum shopping is the rendition by two competent tribunals of two
separate and contradictory decisions. Unscrupulous party litigants, taking advantage of a variety of
competent tribunals, may repeatedly try their luck in several different fora until a favorable result
is reached. To avoid the resultant confusion, the Court adheres strictly to the rules against forum
shopping, and any violation of these rules results in the dismissal of the case.32

The same result was reached in Zosa v. Estrella,33 which likewise involved the successive filing of a
notice of appeal and a petition for certiorari to challenge the same orders, with the Court upholding
the CA’s dismissals of the appeal and the petition for certiorari through separate decisions.

Yet, the outcome in Young v. Sy and Zosa v. Estrella is unjust here even if the orders of the RTC being
challenged through appeal and the petition for certiorari were the same. The unjustness exists
because the appeal and the petition for certiorari actually sought different objectives. In his appeal
in C.A.-G.R. CV No. 68259, Javellana aimed to undo the RTC’s erroneous dismissal of Civil Case No.
79-M-97 to clear the 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 (Priscilla) from developing the subject property and from proceeding with the ejectment
case until his appeal is finally resolved," as the CA explicitly determined in its decision in C.A.-G.R.
SP No. 60455.34

Nor were the dangers that the adoption of the judicial policy against forum shopping designed to
prevent or to eliminate 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
(2) CIVPRO – NATURE OF REMEDIAL LAW
G.R. No. L-286 March 29, 1946
FREDESVINDO S. ALVERO, petitioner,
vs.
M.L. DE LA ROSA, Judge of First Instance of Manila, JOSE R. VICTORIANO, and MARGARITA
VILLARICA, respondents.
DE JOYA, J.:
This is an original petition for certiorari filed in this court.
The record shows that, on June 25, 1945, respondent Jose R. Victoriano had filed a complaint, in the
Court of First Instance of the City of Manila, against petitioner Fredesvindo S. Alvero and one
Margarita Villarica, alleging two causes of action, to wit, (1) to declare in force the contract of sale,
made on October 1, 1940, between said Jose R. Victoriano and Margarita Villarica, of two (2) parcels
of land in the Manotoc subdivision, Balintawak, in the barrio of Calaanan, municipality of Caloocan,
Province of Rizal, with a combined area of 480 square meters, which land was subsequently sold by
said Villarica, in favor of petitioner Fredesvindo S. Alvero, on December 31, 1944, for the sum of
P100,000 in Japanese military notes; and (2) to declare said subsequent sale null and void.
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 to the imperative
necessity of raising funds with which to provide for herself and family, and that she did not
remember the previous sale; at the same time, offering to repurchase said land from Fredesvindo
S. Alvero in the sum of P5,000, but that the latter refused to accept the offer.
On July 13, 1945, Fredesvindo S. Alvero, in answering said complaint, denied the allegations made
therein, and claimed exclusive ownership of the land in question, and at the same time set up a
counterclaim and crossclaim in his answer, demanding from Jose R. Victoriano a P200-monthly rent
on said property, beginning from February, 1945, plus P2,000 as damages.
On July 21, 1945, Jose R. Victoriano filed an answer to said counterclaim, denying Fredesvindo S.
Alvero's alleged ownership over said land, and the other allegations contained in Alvero's answer.
After the trial of the case before the Hon. Mariano L. de la Rosa, Judge of the Court of First Instance
of the City of Manila, one of the respondents in this case, on November 16, 1945, said respondent
judge rendered his decision, in which it was declared that the two (2) parcels of land in question,
with a combined area of 480 square meters had been sold by Margarita Villarica to Jose R.
Victoriano, since October 1, 1940, for the sum of P6,000, on the condition that the 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 monthly payments until December,
1941, but that owing to the war-time conditions then existing, Margarita Villarica agreed verbally
to suspend such payments until the restoration of peace; that immediately after said sale of said
land to him, Jose R. Victoriano took possession thereof and made improvements thereon to the
amount of P800, and continued occupying said property until December, 1944, when he abandoned
the same to go to evacuation places, but 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 December 31, 1944, to Fredesvindo S. Alvero, but afterwards offered to
repurchase said property from him, for the sum of P8,000 in genuine Philippine currency, after
liberation; that Fredesvindo S. Alvero presented the deed of sale, executed in his favor, to the
Register of Deeds of the City of Manila, on January 3, 1945, and took possession of said property in
December, 1944, but afterwards found Jose R. Victoriano in the premises in February, 1945; that in
the contract of sale executed by Margarita Villarica, in favor of Jose R. Victoriano, it was agreed that,
upon failure of the purchaser to make payments of three (3) successive mothly installments, the
vendor would be free to sell the property again, forfeiting the payments made, except in the case
of force majeure; that there was really a verbal agreement between Margarita Villarica and Jose
Victoriano, made in February, 1942, for the suspension of the payment of the monthly installments
until the restoration of peace; and that although Jose R. Victoriano had presented the deed of sale,
executed in his favor, to the Register of Deeds, in Pasig, Rizal, like Fredesvindo S. Alvero, he had also
failed to secure the transfer of title to his name. And considering that Jose R. Victoriano's document
was older than that of Fredesvindo S. Alvero, and that he had taken possession of said property,
since October 1, 1940, the respondent judge rendered his decision in favor of Jose R. Victoriano,
adjudging to him the title over the property in question, including all the improvements existing
thereon, and dismissed the counterclaim.
On November 28, 1945, Fredesvindo S. Alvero was notified of said decision; and on December 27,
1945, he filed a petition for reconsideration and new trial, which was denied on January 3, 1946;
and of said order he was notified on January 7, 1946.
On January 8, 1946, Fredesvindo S. Alvero filed his notice of appeal and record on appeal
simultaneously in the lower court, without filing the P60-appeal bond.
On January 14, 1946, Jose R. Victoriano filed a petition to dismiss the appeal, and at the same time,
asked for the execution of the judgment.
On January 15, 1946, Fredesvindo S. Alvero filed an opposition to said motion to dismiss, alleging
that on the very same day, January 15, 1946, said appeal bond for P60 had been actually filed, and
allege as an excuse, for not filing the said appeal bond, in due time, the illness of his lawyer's wife,
who died on January 10, 1946, and buried the following day.
On January 17, 1946, the respondent judge, Hon. Mariano L. de la Rosa, ordered the dismissal of
the appeal, declaring that, although the notice of appeal and record on appeal had been filed in due
time, the P60-appeal bond was filed too late.
On January 23, 1946, Fredesvindo S. Alvero filed a petition for the reconsideration of the said order
dated January 17, 1946, dismissing his appeal; and said petition for reconsideration was denied on
January 29, 1946. Hence, this petition for certiorari.
On February 11, 1946, the respondents filed their answer to 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 grave abuse of discretion on the part of the respondent
judge, in the instant case.
As already stated, the decision rendered by the respondent judge, Hon. Mariano L. de la Rosa, was
dated November 16, 1945, of which counsel for Fredesvindo S. Alvero was 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 Alvero was notified of said order on January 7,
1946; and that he filed his notice of appeal and record on appeal the following day, to wit, January
8, 1946, and that the P60-appeal bond was filed only on January 15, 1946.
According to the computation erroneously made by the court, the last day for filing and perfecting
the appeal, in this case, was January 8, 1946, or which date, Fredesvindo S. Alvero should have filed
his (1) notice of appeal, (2) record on appeal, and (3) appeal bond. But the P60-appeal bond was
filed only on January 15, 1946.
Failure to perfect the appeal, within the time prescribed by the rules of court, will cause the
judgment to become final, and the certification of the record on appeal thereafter, cannot restore
the jurisdiction which has been lost. (Roman Catholic Bishop of Tuguegarao vs. Director of Lands,
34 Phil., 623; Estate of Cordoba and Zarate vs. Alabado, 34 Phil., 920; and Bermudez vs. Director of
Lands, 36 Phil., 774.)
The period within which the record on appeal and appeal bond should be perfected and filed may,
however, be extended by order of the court, upon application made, prior to the expiration of the
original period. (Layda vs. Legaspi, 39 Phil., 83.)
appeal and record on appeal filed on January 8, 1946, were filed out of time, and much more so his
appeal bond, which was only filed on January 15, 1946.
It is futile to speak of hospitals, doctors and nurses to minister alone to the needs of the sick and
the dying, who are dearest to us, for our reasoning powers are of little avail when sorrow or despair
rages within.
But human laws are inflexible and no personal consideration should stand in the way of performing
a legal duty.

Rules of courts, promulgated by authority of law, have the force and effect of law; and rules of court
prescribing the time within which certain acts must be done, or certain 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 Phil., 333.)
Strict compliance with the rules of court has been held mandatory and imperative, so that failure
to pay the docket fee in the Supreme Court, within the period fixed for that purpose, will cause the
dismissal of the appeal. (Salaveria vs. Albindo, 39Phil., 922.) In the same manner, on failure of the
appellant in a civil case to serve his brief, within the time prescribed by said rules, on motion of the
appellee and notice to the appellant, or on its own motion, the court may dismiss the appeal. (Shioji
vs. Harvey, 43 Phil., 333.)
Counsel for the petitioner Fredesvindo Alvero alleges as an excuse, for his failure to perfect and file
his appeal, in due time, the illness of his wife, which ended in her death on January 10, 1946, and
by which he was greatly affected.
The attorney for petitioner Fredesvindo S. Alvero could have asked for an extension of time, within
which to file and perfect his appeal, in the court below; but he had failed to do so, and he must bear
the consequences of his act. A strict observance of the rules of court, which have been considered
indispensable to the prevention of needless delays and to the orderly and speedy dispatch of judicial
business, is an imperative necessity.
It may not be amiss to state in this connection that no irreparable damage has been caused to the
petitioner Fredesvindo S. Alvero, as Margarita Villarica, the vendor to the two, of the land in
question, has shown readiness to repair the damage done.
No showing having been made that there had been merely excusable negligece, on the part of the
attorney for petitioner Fredesvindo S. Alvero, and that there had been gave abuse of sound judicial
discretion, on the part of the respondent judge, the petition for certiorari filed in this case, is,
therefore, hereby dismissed, without costs. So ordered.

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 towards eternity. Yet, notwithstanding the inexorable laws of human
destiny, every mortal fears death, and such fear is worse than death itself. That is perhaps the
reason why those feeling its approach, in their last moments, want to be 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 traditional faith, and the consolation of religious
hope.

The virtuous and loving wife is the peculiar gift of heaven, and Mother is the name for God in the
innocent lips and 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
dies in the bosom of God, her children find solace in the contemplation of her eternal bliss, as
mirrored in her tranquil beauty.

It is not, therefore, difficult to understand the state of mind of the attorney, and his intense devotion
and ardent affection towards his dying wife.

Unfortunately, counsel for petitioner has created a difficult situation. In his motion for
reconsideration and new trial, dated December 27, 1945, he did not point out specifically the
findings or conclusions in the judgment, are not supported by the evidence or which are contrary
to law, making express reference to the pertinent evidence or legal provisions, as expressly required
by Rule 37, section 2, paragraph (c) of the 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 the period of time for the perfection of the appeal. (Valdez vs. Jugo, 74
Phil., 49, and Reyes vs. Court of Appeals and Bautista, 74 Phil., 235.) Hence, the period for perfecting
herein petitioner's appeal commenced from November 28, 1945, when he was notified of the
judgment rendered in the case, and expired on December 28, 1945; and, therefore, his notice of
(3) CIVPRO – SUBSTANTIVE LAW VIS A VIS REMEDIAL LAW

G.R. No. L-2068 October 20, 1948

DOMINADOR B. BUSTOS, petitioner,

vs.
ANTONIO G. LUCERO, Judge of First Instance of Pampanga, respondent.

TUASON, J.:

The petitioner herein, an accused in a criminal case, filed a motion with the Court of First Instance
of Pampanga after he had been bound over to that court for trial, praying that the record of the
case be remanded to the justice of the peace court of Masantol, the court of origin, in order that
the petitioner might cross-examine the complainant and her witnesses in connection with their
testimony, on the strength of which warrant was issued for the arrest of the accused. The motion
was denied and that denial is the subject matter of this proceeding.

According to the memorandum submitted by the petitioner's attorney to the Court of First Instance
in support of his motion, the accused, assisted by counsel, appeared at the preliminary
investigation. In that investigation, the justice of the peace informed him of the charges and asked
him if he pleaded guilty or not guilty, upon which he entered the plea of not guilty. "Then his counsel
moved that the complainant present her evidence so that she and her witnesses could be examined
and cross-examined in the manner and form provided by law." The fiscal and the private prosecutor
objected, invoking section 11 of rule 108, and the objection was sustained. "In view thereof, the
accused's counsel announced his intention to renounce his right to present evidence," and the
justice of the peace forwarded the case to the court of first instance.

Leaving aside the question whether the accused, after renouncing his right to present evidence, and
by reason of that waiver he was committed to the corresponding court for trial, is estopped, we are
of the opinion that the respondent judge did not act in excess of his jurisdiction or in abuse of
discretion in refusing to grant the accused's motion to return the record for the purpose set out
therein. In Dequito and Saling Buhay vs. Arellano, G.R. No. L-1336, recently promulgated, in which
case the respondent justice of the peace had allowed the accused, over the complaint's objection,
to recall the complainant and her witnesses at the preliminary investigation so that they might be
cross-examined, we sustained the justice of the peace's order. We said that section 11 of Rule 108
does not curtail the sound discretion of the justice of the peace on the matter. We said that "while
section 11 of Rule 108 defines the bounds of the defendant's right in the preliminary investigation,
there is nothing in it or any other law restricting the authority, inherent in a court of justice, to
pursue a course of action reasonably calculated to bring out the truth."

But we made it clear that the "defendant can not, as a matter of right, compel the complaint and
his witnesses to repeat in his presence what they had said at the preliminary examination before
the issuance of the order of arrest." We called attention to the fact that "the constitutional right of
an accused to be confronted by the witnesses against him does not apply to preliminary hearings'
nor will the absence of a preliminary examination be an infringement of his right to confront
witnesses." As a matter of fact, preliminary investigation may be done away with entirely without
infringing the constitutional right of an accused under the due process clause to a fair trial.

The foregoing decision was rendered by a divided court. The minority went farther than the majority
and denied even any discretion on the part of the justice of the peace or judge holding the
preliminary investigation to compel the complainant and his witnesses to testify anew.

Upon the foregoing considerations, the present petition is dismissed with costs against the
petitioner.
(4) CIVPRO – PROCEDURAL LAWS APPL. TO PENDING ACTIONS AT TIME OF PROMULGATION
G. R. No. 154061 January 25, 2012
PANAY RAILWAYS INC., Petitioner,
vs.
HEVA MANAGEMENT and DEVELOPMENT CORPORATION, PAMPLONA AGRO-INDUSTRIAL
CORPORATION, and SPOUSES CANDELARIA DAYOT and EDMUNDO DAYOT, Respondents.
DECISION
SERENO, J.:
The present Petition stems from the dismissal by the Regional Trial Court (RTC) of Iloilo City of a
Notice of Appeal for petitioner’s failure to pay the corresponding docket fees.
The facts are as follows:
On 20 April 1982, petitioner Panay Railways Inc., a 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 (TRB) to secure ₱ 20 million worth of loan and credit
accommodations. Petitioner excluded certain portions of Lot No. 6153: that already sold to Shell
Co., Inc. referred to as 6153-B, a road referred to as 6153-C, and a squatter area known as 6153-D.1
Petitioner failed to pay its obligations to TRB, prompting the bank to extra-judicially foreclose the
mortgaged properties including Lot No. 6153. On 20 January 1986, a Certificate of Sale was issued
in favor of the bank as the highest bidder and purchaser. Consequently, the sale of Lot No. 6153
was registered with the Register of Deeds on 28 January 1986 and annotated at the back of the
transfer certificates of title (TCT) covering the mortgaged properties.
Thereafter, TRB caused the consolidation of the title in its name on the basis of a Deed of Sale and
an Affidavit of Consolidation after petitioner failed to exercise the right to redeem the properties.
The corresponding TCTs were subsequently issued in the name of the bank.
On 12 February 1990, TRB filed a Petition for Writ of Possession against petitioner. During the
proceedings, petitioner, through its duly authorized manager and officer-in-charge and with the
assistance of counsel, filed a Manifestation and Motion to Withdraw Motion for Suspension of the
Petition for the issuance of a writ of possession.2 The pertinent portions of the Manifestation and
Motion state:
3. That after going over the records of this case and the case of Traders Royal Bank vs.
Panay Railway, Inc., Civil Case No. 18280, PRI is irrevocably withdrawing its Motion for
Suspension referred to in paragraph 1 above, and its Motion for Reconsideration referred
in paragraph 2 above and will accept and abide by the September 21, 1990 Order denying
the Motion For Suspension;
4. That PRI recognizes and acknowledges petitioner (TRB) to be the registered owner of
Lot 1-A; Lot 3834; Lot 6153; Lot 6158; Lot 6159, and Lot 5 covered by TCT No. T-84233;
T-84234; T-84235; T-84236; T-84237, T-84238 and T-45724 respectively, free of liens and
encumbrances, except that portion sold to Shell Co. found in Lot 5. That Petitioner (TRB)
as registered owner is entitled to peaceful ownership and immediate physical
possession of said real properties.
5. That PRI further acknowledges that the Provincial Sheriff validly foreclosed the Real
Estate Mortgage erected by PRI due to failure to pay the loan of ₱ 20,000,000.00. That
TRB was the purchaser of these lots mentioned in paragraph 4 above at Sheriff’s Auction
Sale as evidenced by the Certificate of Sale dated January 20, 1986 and the Certificates of
Titles issued to Petitioner;
6. That PRI further manifests that it has no past, present or future opposition to the
grant of the Writ of Possession to TRB over the parcels of land mentioned in paragraph
4 above and subject of this Petition and even assuming "arguendo" that it has, PRI
irrevocably waives the same. That PRI will even assist TRB in securing possession of said
properties as witness against squatters, illegal occupants, and all other possible
claimants;
7. That upon execution hereof, PRI voluntarily surrenders physical possession and
control of the premises of these lots to TRB, its successors or its assigns, together with
all the buildings, warehouses, offices, and all other permanent improvements
constructed thereon and will attest to the title and possession of petitioner over said
real properties. (Emphasis supplied)
TCT No. T-84235 mentioned in the quoted portion above is Lot No. 6153, which is under dispute.
It was only in 1994 that petitioner realized that the extrajudicial foreclosure included some excluded
properties in the mortgage contract. Thus, on 19 August 1994, it filed a Complaint for Partial
Annulment of Contract to Sell and Deed of Absolute Sale with Addendum; Cancellation of Title No.
T-89624; and Declaration of Ownership of Real Property with Reconveyance plus Damages.3
It then filed an Amended Complaint4 on 1 January 1995 and again filed a Second Amended
Complaint5 on 8 December 1995.
Meanwhile, respondents filed their respective Motions to Dismiss on these grounds: (1) petitioner
had no legal capacity to sue; (2) there was a waiver, an abandonment and an extinguishment of
petitioner’s claim or demand; (3) petitioner failed to state a cause of action; and (4) an indispensable
party, namely TRB, was not impleaded.
On 18 July 1997, the RTC issued an Order6 granting the Motion to Dismiss of respondents. It held
that the Manifestation and Motion filed by petitioner was a judicial admission of TRB’s ownership
of the disputed properties. The trial court pointed out that the Manifestation was executed by
petitioner’s duly authorized representative with the assistance of counsel. This admission thus
operated as a waiver barring petitioner from claiming otherwise.
On 11 August 1997, petitioner filed a Notice of Appeal without paying the necessary docket fees.
Immediately thereafter, respondents filed a Motion to Dismiss Appeal on the ground of
nonpayment of docket fees.
In its Opposition,7 petitioner alleged that its counsel was not yet familiar with the revisions of the
Rules of Court that became effective only on 1 July 1997. Its representative was likewise not
informed by the court personnel that docket fees 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 asked the RTC for a liberal interpretation of the procedural rules on appeals.
On 29 September 1997, the RTC issued an Order8 dismissing the appeal citing Sec. 4 of Rule 41 9 of
the Revised Rules of Court.
Petitioner thereafter moved for a reconsideration of the Order10 alleging that the trial court lost
jurisdiction over the case after the former had filed the Notice of Appeal. Petitioner also alleged
that the court erred in failing to relax procedural rules for the sake of substantial justice.
On 25 November 1997, the RTC denied the Motion.11
On 28 January 1998, petitioner filed with the Court of Appeals (CA) a Petition for Certiorari and
Mandamus under Rule 65 alleging that the RTC had no jurisdiction to dismiss the Notice of Appeal,
and that the trial court had acted with grave abuse of discretion when it strictly applied procedural
rules.
On 29 November 2000, the CA rendered its Decision12 on the Petition. It held that while the failure
of petitioner to pay the docket and other lawful fees within the reglementary period 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 do so belonged to the CA and not the trial court. Thus, appellate court ruled that the
RTC committed grave abuse of discretion in dismissing the appeal and set aside the latter’s assailed
Order dated 29 September 1997.
the existing rules of procedure."16 More so when, as in this case, petitioner admits that it was not
able to pay the docket fees on time. Clearly, there were no substantive rights to speak of when the
RTC dismissed the Notice of Appeal.
The argument that the CA had the exclusive jurisdiction to dismiss the appeal has no merit.1âwphi1
When this Court accordingly amended Sec. 13 of Rule 41 through A.M. No. 00-2-10-SC, the RTC’s
dismissal of the action may be considered to have had the imprimatur of the Court. Thus, the CA
committed no reversible error when it sustained the dismissal of the appeal, taking note of its
directive on the matter prior to the promulgation of its Decision.
As early as 1932, in Lazaro v. Endencia,17 we have held that the payment of the full amount of the
docket fees is an indispensable step for the perfection of an appeal. The Court acquires jurisdiction
over any case only upon the payment of the prescribed docket fees.18

Thereafter, respondents filed their respective Motions for Reconsideration.
It appears that prior to the promulgation of the CA’s Decision, this Court issued Administrative
Matter (A.M.) No. 00-2-10-SC which took effect on 1 May 2000, amending Rule 4, Sec. 7 and Sec. 13
of Rule 41 of the 1997 Revised Rules of Court. The circular expressly provided that trial courts may,
motu proprio or upon motion, dismiss an appeal for being filed out of time or for nonpayment of
docket and other lawful fees within the reglementary period. Subsequently, Circular No. 48-200013
was issued on 29 August 2000 and was addressed to all lower courts.
By virtue of the amendment to Sec. 41, the CA upheld the questioned Orders of the trial court by
issuing the assailed Amended Decision14 in the present Petition granting respondents’ Motion for
Reconsideration.
The CA’s action prompted petitioner to file a Motion for Reconsideration alleging that SC Circular
No. 48-2000 should not be given retroactive effect. It also alleged that the CA should consider the
case as exceptionally meritorious. Petitioner’s counsel, Atty. Rexes V. Alejano, explained that he was
yet to familiarize himself with the Revised Rules of Court, which became effective a little over a
month before he filed the Notice of Appeal. He was thus not aware that the nonpayment of docket
fees might lead to the dismissal of the case.
On 30 May 2002, the CA issued the assailed Resolution15 denying petitioner’s Motion for
Reconsideration.
Moreover, the right to appeal is not a natural right and is not part of due process. It is merely a
statutory privilege, which may be exercised only in accordance with the law.19
We have repeatedly stated that the term "substantial justice" is not a magic wand that would
automatically compel this Court to suspend procedural rules. Procedural rules are not to be belittled
or dismissed simply because their non-observance may result in prejudice to a party’s substantive
rights. Like all other rules, they are required to be followed, except only for the most persuasive of
reasons when they may be relaxed to relieve litigants of an injustice not commensurate with the
degree of their thoughtlessness in not complying with the procedure prescribed. 20
We cannot consider counsel’s failure to familiarize himself with the Revised Rules of Court as a
persuasive reason to relax the application of the Rules. It is well-settled that the negligence of
counsel binds the client. This principle is based on the rule that any act performed by lawyers within
the scope of their general or implied authority is regarded as an act of the client. Consequently, the
mistake or negligence of the counsel of petitioner may result in the rendition of an unfavorable
judgment against it.21
WHEREFORE, in view of the foregoing, the Petition is DENIED for lack of merit.
SO ORDERED.

Hence, this Petition.

Petitioner alleges that the CA erred in sustaining the RTC’s dismissal of the Notice of Appeal.
Petitioner contends that the CA had exclusive jurisdiction to dismiss the Notice of Appeal at the time
of filing. Alternatively, petitioner argues that while the appeal was dismissible for failure to pay
docket fees, substantial justice demands that procedural rules be relaxed in this case.

The Petition has no merit.

Statutes and rules regulating the procedure of courts are considered applicable to actions pending
and unresolved at the time of their passage. Procedural laws and rules are retroactive in that sense
and to that extent. The effect of procedural statutes and rules on the rights of a litigant may 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 objectionable. The
reason is that, as a general rule, no vested right may attach to or arise from procedural laws and
rules. It has been held that "a person has no vested right in any particular remedy, and a litigant
cannot insist on the application to the trial of his case, whether civil or criminal, of any other than
(5) CIVPRO – RETROACTIVE APPLICATION PROCEDURAL LAW: FRESH PERIOD RULE
G.R. No. 141524 September 14, 2005
DOMINGO NEYPES, LUZ FAUSTINO, ROGELIO FAUSTINO, LOLITO VICTORIANO, JACOB OBANIA
AND DOMINGO CABACUNGAN, Petitioners,
vs.
HON. COURT OF APPEALS, HEIRS OF BERNARDO DEL MUNDO, namely: FE, CORAZON, JOSEFA,
SALVADOR and CARMEN, all surnamed DEL MUNDO, LAND BANK OF THE PHILIPPINES AND
HON. ANTONIO N. ROSALES, Presiding Judge, Branch 43, Regional Trial Court, Roxas, Oriental
Mindoro, Respondent.
DECISION
CORONA, J.:
Petitioners Domingo Neypes, Luz Faustino, Rogelio Faustino, Lolito Victoriano, Jacob Obania and
Domingo Cabacungan filed an action for annulment of judgment and titles of land and/or
reconveyance and/or reversion with preliminary injunction before the Regional Trial Court, Branch
43, of Roxas, Oriental Mindoro, against the Bureau of Forest Development, Bureau of Lands, Land
Bank of the Philippines and the heirs of Bernardo del Mundo, namely, Fe, Corazon, Josefa, Salvador
and Carmen.
In the course of the proceedings, the parties (both petitioners and respondents) filed various
motions with the trial court. Among these were: (1) the motion filed by petitioners to declare the
respondent heirs, the Bureau of Lands and the Bureau of Forest Development in default and (2) the
motions to dismiss filed by the respondent heirs and the Land Bank of the Philippines, respectively.
In an order dated May 16, 1997, the trial court, presided by public respondent Judge Antonio N.
Rosales, resolved the 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 an answer, but denied as against the respondent heirs of del Mundo because the
substituted service of summons on them was improper; (2) the Land Bank’s motion to dismiss for
lack of cause of action was denied because there were hypothetical admissions and matters that
could be determined only after trial, and (3) the motion to dismiss filed by respondent heirs of del
Mundo, based on prescription, was also denied because there were factual matters that could be
determined only after trial.1
The respondent heirs filed a motion for reconsideration of the order denying their motion to dismiss
on the ground that the trial court could very well resolve the issue of prescription from the bare
allegations of the complaint itself without waiting for the trial proper.
In an order2 dated February 12, 1998, the trial court dismissed petitioners’ complaint on the ground
that the action had already prescribed. Petitioners allegedly received a copy of the order of dismissal
on March 3, 1998 and, on the 15th day thereafter or on March 18, 1998, filed a motion for
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 27, 1998,
petitioners filed a notice of appeal4 and paid the appeal fees on August 3, 1998.
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 by petitioners on July 31, 1998. Petitioners filed a motion for
reconsideration but this too was denied in an order dated September 3, 1998.6
Via a petition for certiorari and mandamus under Rule 65 of the 1997 Rules of Civil Procedure,
petitioners assailed the dismissal of the notice of appeal before the Court of Appeals.
In the appellate court, petitioners claimed that they had seasonably filed their notice of appeal.
They argued that the 15-day reglementary period to appeal started to run only on July 22, 1998
since this was the day they received the final order of the trial court denying their motion for
reconsideration. When they filed their notice of appeal on July 27, 1998, only five days had elapsed
and they were well within the reglementary period for appeal.7
On September 16, 1999, the Court of Appeals (CA) dismissed the petition. It ruled that the 15-day
period to appeal should have been reckoned from March 3, 1998 or the day they received the
February 12, 1998 order dismissing their complaint. According to the appellate court, the order was
the "final order" appealable under the Rules. It held further:
Perforce the petitioners’ tardy appeal was correctly dismissed for the (P)erfection of an appeal
within the reglementary period and in the manner prescribed by law is jurisdictional and non-
compliance with such legal requirement is fatal and effectively renders the judgment final and
executory.8
Petitioners filed a motion for reconsideration of the aforementioned decision. This was denied by
the Court of Appeals on January 6, 2000.
In this present petition for review under Rule 45 of the Rules, petitioners ascribe the following errors
allegedly committed by the appellate court:
I
THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE PETITIONERS’ PETITION FOR
CERTIORARI AND MANDAMUS AND IN AFFIRMING THE ORDER OF THE HON. JUDGE ANTONIO N.
ROSALES WHICH DISMISSED THE PETITIONERS’ APPEAL IN CIVIL CASE NO. C-36 OF THE REGIONAL
TRIAL COURT, BRANCH 43, ROXAS, ORIENTAL MINDORO, EVEN AFTER THE PETITIONERS HAD PAID
THE APPEAL DOCKET FEES.
II
THE HONORABLE COURT OF APPEALS LIKEWISE ERRED IN RULING AND AFFIRMING THE DECISION
OR ORDER OF THE RESPONDENT HON. ANTONIO M. ROSALES THAT PETITIONERS’ APPEAL WAS
FILED OUT OF TIME WHEN PETITIONERS RECEIVED THE LAST OR FINAL ORDER OF THE COURT ON
JULY 22, 1998 AND FILED THEIR NOTICE OF APPEAL ON JULY 27, 1998 AND PAID THE APPEAL DOCKET
FEE ON AUGUST 3, 1998.
III
THE HONORABLE COURT OF APPEALS FURTHER ERRED IN RULING THAT THE WORDS "FINAL ORDER"
IN SECTION 3, RULE 41, OF THE 1997 RULES OF CIVIL PROCEDURE WILL REFER TO THE [FIRST] ORDER
OF RESPONDENT JUDGE HON. ANTONIO M. MORALES DATED FEBRUARY 12, 1998 INSTEAD OF THE
LAST AND FINAL ORDER DATED JULY 1, 1998 COPY OF WHICH WAS RECEIVED BY PETITIONERS
THROUGH COUNSEL ON JULY 22, 1998.
IV.
THE HONORABLE COURT OF APPEALS FINALLY ERRED IN FINDING THAT THE DECISION IN THE CASE
OF DENSO, INC. V. IAC, 148 SCRA 280, IS APPLICABLE IN THE INSTANT CASE THEREBY IGNORING THE
PECULIAR FACTS AND CIRCUMSTANCES OF THIS CASE AND THE FACT THAT THE SAID DECISION WAS
RENDERED PRIOR TO THE ENACTMENT OF THE 1997 RULES OF CIVIL PROCEDURE. 9
 The foregoing issues essentially revolve around the period within which petitioners should have
filed their notice of appeal.
First and foremost, the right to appeal is neither a natural right nor a part of due process. It is merely
a statutory 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 requirements of
the Rules. Failure to do so often leads to the loss of the right to appeal. 10 The period to appeal is
fixed by both statute and procedural rules. BP 129,11 as amended, provides:
Sec. 39. Appeals. – The period for appeal from final orders, resolutions, awards, judgments, or
decisions of any court in all these cases shall be fifteen (15) days counted from the notice of the
final order, resolution, award, judgment, or decision appealed from. Provided, however, that in
habeas corpus cases, the period for appeal shall be (48) forty-eight hours from the notice of
judgment appealed from. x x x
Rule 41, Section 3 of the 1997 Rules of Civil Procedure states:
SEC. 3. Period of ordinary appeal. ― The appeal shall be taken within fifteen (15) days from the
notice of the judgment or final order appealed from. Where a record on appeal is required, the
appellant shall file a notice of appeal and a record on appeal within thirty (30) days from the notice
of judgment or final order.
The period to appeal shall be interrupted by a timely motion for new trial or reconsideration. No
motion for extension of time to file a motion for new trial or reconsideration shall be allowed.
(emphasis supplied)
Based on the foregoing, an appeal should be taken within 15 days from the notice of judgment or
final order appealed from. A final judgment or order is one that finally disposes of a case, leaving
nothing more for the court to do with respect to it. It is an adjudication on the merits which,
considering the evidence presented at the trial, declares categorically what the rights and
obligations of the parties are; or it may be an order or judgment that dismisses an action.12
As already mentioned, petitioners argue that the order of July 1, 1998 denying their motion for
reconsideration should be construed as the "final order," not the February 12, 1998 order which
dismissed their complaint. Since they received their copy of the denial of their motion for
reconsideration only on July 22, 1998, the 15-day reglementary period to appeal had not yet lapsed
when they filed their notice of appeal on July 27, 1998.
What therefore should be deemed as the "final order," receipt of which triggers the start of the 15-
day reglementary period to appeal ¾ the February 12, 1998 order dismissing the complaint or the
July 1, 1998 order dismissing the MR?
In the recent case of Quelnan v. VHF Philippines, Inc.,13 the trial court declared petitioner Quelnan
non-suited and accordingly dismissed his complaint. Upon receipt of the order of dismissal, he filed
an omnibus motion to set it aside. When the omnibus motion was filed, 12 days of the 15-day period
to appeal the order had lapsed. He later on received another order, this time dismissing his omnibus
motion. He then filed his notice of appeal. But this was likewise dismissed ― for having been filed
out of time.
The court a quo ruled that petitioner should have appealed within 15 days after the dismissal of his
complaint since this 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 complaint which constituted the final order as it was what ended the issues raised there.
This pronouncement was reiterated in the more recent case of Apuyan v. Haldeman et al.14 where
we again considered the order denying petitioner Apuyan’s motion for reconsideration as the final
order which finally disposed of the issues involved in the case.
Based on the aforementioned cases, we sustain petitioners’ view that the order dated July 1, 1998
denying their motion for reconsideration was the final order contemplated in the Rules.
We now come to the next question: if July 1, 1998 was the start of the 15-day reglementary period
to appeal, did petitioners in fact file their notice of appeal on time?
Under Rule 41, Section 3, petitioners had 15 days from notice of judgment or final order to appeal
the decision of the trial court. On the 15th day of the original appeal period (March 18, 1998),
petitioners did not file a notice of appeal but instead opted to file a motion for reconsideration.
According to the trial court, the MR only interrupted the running of the 15-day appeal period.15 It
ruled that petitioners, having filed their 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, however, argue that they were entitled under the Rules to a fresh period of
15 days from receipt of the "final order" or the order dismissing their motion for reconsideration.
In Quelnan and Apuyan, both petitioners filed a motion for reconsideration of the decision of the
trial court. We ruled there that they only had the remaining time of the 15-day appeal period to file
the notice of appeal. We consistently applied this rule in similar cases,16 premised on the long-
settled doctrine that the perfection of an appeal in the manner and within the period permitted by
law is not only mandatory but also jurisdictional.17 The rule is also founded on deep-seated
considerations of public policy and sound practice that, at risk of occasional error, the judgments
and awards of courts must become final at some definite time fixed by law.18
Prior to the passage of BP 129, Rule 41, Section 3 of the 1964 Revised Rules of Court read:
Sec. 3. How appeal is taken. — Appeal maybe taken by serving upon the adverse party and filing
with the trial court within thirty (30) days from notice of order or judgment, a notice of appeal,
an appeal bond, and a record on appeal. The time during which a motion to set aside the judgment
or order or for new trial has been pending shall be deducted, unless such motion fails to satisfy the
requirements of Rule 37.
But where such motion has been filed during office hours of the last day of the period herein
provided, the appeal must be perfected within the day following that in which the party appealing
received notice of the denial of said motion.19 (emphasis supplied)
According to the foregoing provision, the appeal period previously consisted of 30 days. BP 129,
however, reduced 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
period of appeal21 and enhance the efficiency and dispensation of justice. We have since required
strict observance of this reglementary period of appeal. Seldom have we condoned late filing of
notices of appeal,22 and only in very exceptional instances to better serve the ends of justice.
In National Waterworks and Sewerage Authority and Authority v. Municipality of Libmanan,23
however, we declared that appeal is an essential part of our judicial system and the rules of
procedure should not be applied rigidly. This Court has on occasion advised the lower courts to be
cautious about not depriving a party of the right to appeal and that every party litigant should be
afforded the amplest opportunity for the proper and just disposition of his cause, free from the
constraint of technicalities.
In de la Rosa v. Court of Appeals,24 we stated that, as a rule, periods which require litigants to do
certain acts must be followed unless, under exceptional circumstances, a delay in the filing of an
appeal may be excused on grounds of substantial justice. There, we condoned the delay incurred
by the appealing party due to strong considerations of fairness and justice.
In setting aside technical infirmities and thereby giving due course to tardy appeals, we have not
been oblivious to or unmindful of the extraordinary situations that merit liberal application of the
Rules. In those situations where technicalities were dispensed with, our decisions were not meant
to undermine the force and effectivity of the periods set by law. But we hasten to add that in those
rare cases where procedural rules were not stringently applied, there 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 enforcement of procedural laws and the guarantee
that every litigant be given the full opportunity for the just and proper disposition of his cause.25
In this case, the new period of 15 days eradicates the confusion as to when the 15-day appeal period
should be counted – from receipt of notice of judgment (March 3, 1998) or from receipt of notice
of "final order" appealed from (July 22, 1998).
To recapitulate, a party litigant may either file his notice of appeal within 15 days from receipt of
the Regional Trial Court’s decision or file it within 15 days from receipt of the 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; otherwise, the decision becomes final and
executory after the lapse of the original appeal period provided in Rule 41, Section 3.
Petitioners here filed their notice of appeal on July 27, 1998 or five days from receipt of the order
denying their motion for reconsideration on July 22, 1998. Hence, the notice of appeal was well
within the fresh appeal period of 15 days, as already discussed.34

The Supreme Court may promulgate procedural rules in all courts.26 It has the sole prerogative to We deem it unnecessary to discuss the applicability of Denso (Philippines), Inc. v. IAC35 since the
amend, repeal or even establish new rules for a more simplified and inexpensive process, and the Court of Appeals never even referred to it in its assailed decision.
speedy disposition of cases. In the rules governing appeals to it and to the Court of Appeals,
WHEREFORE, the petition is hereby GRANTED and the assailed decision of the Court of Appeals
particularly Rules 42,27 4328 and 45,29 the Court allows extensions of time, based on justifiable and
REVERSED and SET ASIDE. Accordingly, let the records of this case be remanded to the Court of
compelling reasons, for parties to file their appeals. These extensions may consist of 15 days or
Appeals for further proceedings.
more.
No costs.
To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to
appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to SO ORDERED.
file the notice of appeal in the Regional Trial Court, counted from receipt of the order dismissing a
motion for a new trial or motion for reconsideration. 30

Henceforth, this "fresh period rule" shall also apply to Rule 40 governing appeals from the Municipal
Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from the Regional Trial
Courts to the Court of Appeals; Rule 43 on appeals from quasi-judicial agencies31 to the Court of
Appeals and Rule 45 governing appeals by certiorari to the 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 reconsideration (whether full or partial) or any final order or
resolution.

We thus hold that petitioners seasonably filed their notice of appeal within the fresh period of 15
days, counted from July 22, 1998 (the date of receipt of notice denying their motion for
reconsideration). This pronouncement is not inconsistent with Rule 41, Section 3 of the Rules which
states that the appeal shall be taken within 15 days from notice of judgment 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 which it ordinarily implies. 33 Hence,
the use of "or" in the above provision supposes that the notice of appeal may be filed within 15 days
from the notice of judgment or within 15 days from notice of the "final order," which we already
determined to refer to the July 1, 1998 order denying the motion for a new trial or reconsideration.

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 period of
appeal (in this case March 3-18, 1998) remains and the requirement for strict compliance still
applies. The fresh period of 15 days becomes significant only when a party opts to file a motion for
new trial or motion for reconsideration. In this manner, the trial court which rendered the assailed
decision is given another opportunity to review the case and, in the process, minimize and/or rectify
any error of judgment. While we aim to resolve cases with dispatch and to have judgments of courts
become final at some definite time, we likewise aspire to deliver justice fairly.
(6) CIVPRO – RETROACTIVE APPLICATION PROCEDURAL LAW: FRESH PERIOD RULE
G.R. No. 194702, April 20, 2015
SAN LORENZO RUIZ BUILDERS AND DEVELOPERS GROUP, INC. AND OSCAR VIOLAGO, Petitioners,
v. MA. CRISTINA F. BAYANG, Respondent.
DECISION
BRION, J.:
This is a petition for review on certiorari assailing the July 23, 2010 decision1 and the December 2,
2010 resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 100332. The CA affirmed the
resolutions dated November 17, 2006 and July 26, 2007 of the Office of President in O.P. Case No.
06-D-160, which dismissed the appeal of petitioners San Lorenzo Ruiz Builders and Developers
Group, Inc. (SLR Builders) and Oscar Violago for having been filed out of time.
Facts
On April 15, 2000, petitioner SLR Builders (then known as Violago Builders, Inc), as seller, and
respondent Ma. Cristina F. Bayang (Cristina), as buyer, entered into a "contract to sell" of a sixty
(60)-square meter lot in Violago Homes Parkwoods Subdivision, located in Barangay Payatas,
Quezon City.
Upon full payment of the monthly amortizations on the purchased lot, Cristina demanded from
SLR Builders the execution of the deed of absolute sale and the lot's certificate of title but the
latter failed to deliver, prompting Cristina to file a complaint for specific performance and
damages against SLR Builders and its President, Oscar Violago (petitioners) before the Housing and
Land Use Regulatory Board (HLURB).
In a decision3 dated February 16, 2004, Housing and Land Use Arbiter Atty. Joselito F. Melchor
ruled in Cristina's favor, to wit:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Ordering the respondents (referring to the petitioners) to execute the Deed of
Absolute Sale of the subject property in the name of the complainant
(referring to the respondent) and deliver the title thereof free from all liens
and encumbrances;
2. In� the alternative, in� case of legal and� physical impossibility of the
respondents to perform the aforementioned acts in the preceding paragraph,
respondent San Lorenzo Ruiz Builders and Developers Group, Incorporated is
hereby ordered to reimburse to the complainant the amount of THREE
HUNDRED TWENTY FOUR THOUSAND EIGHT HUNDRED SIXTY FIVE PESOS &
16/100 (P324,865.16) with legal interest of twelve percent (12%) per annum to
be computed from the filing of the complaint on November 04, 2002 until fully
paid; and
3. Ordering respondent San Lorenzo Ruiz Builders and Developers Group,
Incorporated to pay the following sums:
a. FIVE THOUSAND PESOS (P5,000.00) as moral damages;
b. FIVE THOUSAND PESOS� (P5,000.00) as exemplary damages;
c. FIVE THOUSAND PESOS� (P5,000.00) as attorney's fees;
d. An administrative fine of TEN THOUSAND PESOS (P10,000.00)
payable to this Office fifteen (15) days upon receipt of this decision,
for violation of Section 18 in relation to Section 38 of PD 957.
SO ORDERED.4
The petitioners appealed Arbiter Melchor's decision to the HLURB Board of Commissioners. The
Board dismissed5 and denied,6 respectively, the petitioners' appeal and subsequent motion for
reconsideration. The petitioners then brought their case to the Office of the President (OP), which
was docketed as O.P. Case No. 06-D-160.
In a resolution7 dated November 17, 2006, the OP dismissed the petitioners' appeal for having
been filed out of time. The OP's resolution stated:
A review of the records shows that the HLURB Decision affirming the Arbiter's decision was
received by the respondents/appellants (referring to the petitioners) on July 27, 2005. On that
date, the 15-day prescriptive period within which to file an appeal began to run. Instead of
preparing an appeal, respondents-appellants opted to file a Motion for Reconsideration on
August 10, 2005. Their filing of the said motion interrupted the period of appeal by that time,
however, fourteen (14) days had already elapsed.
On April 17, 2006, respondents-appellants received the Resolution denying their Motion for
Reconsideration. Following the above rules, respondents-appellants have only one (1) day left,
or until April 18, 2006, within which to file their notice of appeal to this Office. Unfortunately,
they were able to do so only on April 27, 2006, or nine (9) days late8 (Emphasis supplied.)
The petitioners moved to reconsider and argued that the "fresh period rule" enunciated in the
case of Domingo Neypes, et at. v. Court of Appeals, et al.9 should be applied to their case.
The OP, in a resolution10 dated July 26, 2007, denied the petitioners' motion with finality, stating
that the "fresh period rule" applies only to judicial appeals and not to administrative appeals, such
as in petitioners' case. The petitioners then appealed to the CA via petition for review under Rule
43 of the Rules of Court.
In its assailed decision, the CA denied the petitioners' petition for review. The CA, likewise, denied
the petitioners' motion for reconsideration; hence, the filing of the present petition for review on
certiorari with this Court.
Issue
Whether the "fresh period rule" in Neypes applies to administrative appeals, such as an appeal filed
from a decision of the HLURB Board of Commissioners to the Office to the President.
Our Ruling
We DENY the petition. It is settled that the "fresh period rule" in Neypes applies only to judicial
appeals and not to administrative appeals.
In Panolino v. Tajala,11 the Court was confronted with a similar issue of whether the "fresh period
rule" applies to an appeal filed from the decision or order of the DENR regional office to the DENR
Secretary, an appeal which is administrative in nature. We held in Panolino that the "fresh period
rule" only covers judicial proceedings under the 1997 Rules of Civil Procedure:
Section 2. Appeal. - Any party may, upon notice to the Board and the other party, appeal a decision
rendered by the Board of Commissioners to the Office of the President within fifteen (15) days from
receipt thereof, in accordance with P.D. No. 1344 and A.O. No. 18 Series of 1987.
The pendency of the motion for reconsideration shall suspend the running of the period of appeal
to the Office of the President.

The "fresh period rule" in Neypes declares:
To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to
appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to
file the notice of appeal in the Regional Trial Court, counted from receipt of the order dismissing a
motion for a new trial or motion for reconsideration.
Corollary thereto, paragraph 2, Section 1 of Administrative Order No. 18, series of 1987, provides
that in case the aggrieved party files a motion for reconsideration from an adverse decision of any
agency/office, the said party has the only remaining balance of the prescriptive period within
which to appeal, reckoned from receipt of notice of the decision denying his/her motion for
reconsideration.12 (Emphasis supplied.)

Henceforth, this "fresh� period rule" shall also apply to Rule 40 governing appeals from the
Municipal Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from the
Regional Trial Courts to the Court of Appeals; Rule 43 on appeals from quasi-judicial agencies to
the Court of Appeals; and Rule 45 governing appeals by certiorari to the Supreme 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 (whether full or partial) or any final
order or resolution.
xxxx
Thus, in applying the above-mentioned rules to the present case, we find that the CA correctly
affirmed the OP in dismissing the petitioners' appeal for having been filed out of time.
WHEREFORE, we DENY the present petition for review on certiorari and AFFIRM the decision dated
July 23, 2010 and resolution dated December 2, 2010 of the Court of Appeals in CA-G.R. SP No.
100332.
SO ORDERED.

As reflected in the above-quoted portion of the decision in Neypes, the "fresh period rule" shall
apply to Rule 40_(appeals from the Municipal Trial Courts to the Regional Trial Courts); Rule 41
(appeals from the Regional Trial Courts to the Court of Appeals or Supreme Court); Rule 42 (appeals
from the Regional Trial Courts to the Court of Appeals); Rule 43 (appeals from quasi-judicial agencies
to the Court of Appeals); and Rule 45 (appeals by certiorari to the Supreme Court). Obviously, these
Rules cover judicial proceedings under the 1997 Rules of Civil Procedure.

Petitioner's present case is administrative in nature involving an appeal from the decision or order
of the DENR regional office to the DENR Secretary. Such appeal is indeed governed by Section 1 of
Administrative Order No. 87, Series of 1990. As earlier quoted, Section 1 clearly provides that if the
motion for reconsideration is denied, the movant shall perfect his appeal "during the remainder of
the period of appeal, reckoned from receipt of the resolution of denial;" whereas if the decision is
reversed, the adverse party has a fresh 15-day period to perfect his appeal. (Emphasis supplied.)

In this case, the subject appeal, i.e., appeal from a decision of the HLURB Board of Commissioners
to the OP, is not judicial but administrative in nature; thus, the "fresh period rule" in Neypes does
not apply.

As aptly pointed out by the OP, the rules and regulations governing appeals from decisions of the
HLURB Board of Commissioners to the OP are Section 2, Rule XXI of HLURB Resolution No. 765,
series of 2004, in relation to Paragraph 2, Section 1 of Administrative Order No. 18, series of 1987:

Section 2, Rule XXI of the HLURB Resolution No. 765, series of 2004, prescribing the rules and
regulations governing appeals from decisions of the Board of Commissioners to the Office of the
President, pertinently reads:
(7) CIVPRO – LIBERAL CONSTRUCTION OF PROCEDURAL RULES San Jose Plains Project (hereafter SJPP), located in Montalban, Rizal. SJPP, which is also known as
the "Erap City" calls for the construction of low cost housing, which are being turned over to the
G.R. No. 192650 October 24, 2012 National Housing Authority to be awarded to deserving poor families.

Private respondents alleged that, on various dates, petitioner hired them on different positions,
FELIX MARTOS, JIMMY ECLANA, RODEL PILONES, RONALDO NOVAL, JONATHAN PAILAGO, ERNESTO hereunder specified:
MONTANO, DOYONG JOSE, DEO MAMALATEO, ROSELO MAGNO, BONNIE SANTILLAN, ARSENIO GONZALES,
ALEX EDRADAN, MICHAEL ERASCA, MARLON MONTANO, VICENTE OLIVEROS, REYNALDO LAMBOSON, Names Date Employed Date Dismissed
DOMINGO ROTA, EDDIE ROTA, ZALDY OLIVEROS, ANTONIO NATIL, HERMIE BUISON, ROGER BUISON, 1. Felix Martos October 5, 1998 February 25, 2002
MARIANO LAZATE, JUAN VILLABER, LIMUEL LLANETA, LITO BANTILO, TERSO GARAY, ROWEL BESTOLO, JERRY 2. Jimmy Eclana 1999 July 2001
YORTAS, PASTOR PANTIG, GAVINO NICOLAS, RAFAEL VILLA, FELIX YORTAS, MELVIN GARAY, NEIL DOMINGUEZ
3. Rodel Pilones February 1999 July 2001
REYNALDO EVANGELISTA, JR., JOSE RAMOS, ELVIN ROSALES, JUN GRANEHO, DANNY ASPARES, SALVEDOR
TONLOC, ROLANDO EVANGELISTA, RICKY M. FRANCISCO, EDUARDO ALEGRIA, SALVADOR SANTOS, GREG 4. Ronaldo Noval
BISONIA, RUFO CARBILLO, MARVIN MONTERO, DANILO BESSIRE, ALLAN CABALLERO, ORLANDO LIMOS, 5. Jonathan Pailago
EDGARDO BICLAR, MANDY MAMALATEO, ALFRED GAJO, ERIC CASTRENCE, ANTHONY MOLINA, JAIME SALIM, 6. Ernesto Montaño 1998 2000
ROY SILVA, DANILO BEGORIE, PEPING CALISANA, ERIC RONDA, RUFO CARBANILLO, ROWEL BATA, RICARDO 7. Doyong Jose 1996 July 2001
TOLENTINO, ARNEL ARDINEZ, FERDINAND R. ARANDIA, ROMEO R. GARBO, ANTONIO ROTA, REYNIELANDRE 8. Deo Mamalateo 1999 July 2001
QUINTANILLA, JOSELITO HILARIO, JIMMY CAMPANA, DANILO LIDO-AN, EMERSON PENAFLOR, CESAR 9. Roselo Magno 1994 November 2000
PABALINAS, JONATHAN MELCHOR, ALEX DAVID, EUTIQUIO ALCALA, MICHAEL CARANDANG, EDUARDO 10. Bonnie Santillan 1998 July 2001
MANUEL, RAMON EVANGELISTA, RUBEN MENDOZA, ERNESTO MENDOZA, RICKY RAMOS, ROBERTO
11. Arsenio Gonzales 1998 July 2001
NOVELLA, RUBEN CONDE, DANILO POLISTICO, DOMINGO MENDOZA, FERNANDO SAN GABRIEL, AND
12. Alex Edradan 1998 November 2001
DOMINGO ROTO, Petitioners,
13. Michael Erasca 1999 July 2001
vs.
14. Marlon Montaño 1998 July 2001
NEW SAN JOSE BUILDERS, INC., Respondent.
15. Vicente Oliveros April 5, 1998 July 2001
16. Reynaldo Lamboson 1999 July 2001
DECISION 17. Domingo Rota 1998
18. Eddie Rota 1998
MENDOZA, J.: 19. Zaldy Oliveros 1999 July 2001
20. Antonio Natel 1998 July 2001
Questioned in this Petition for Review is the July 31, 2009 Decision1 of the Court of Appeals (CA) and 21. Hermie Buison 1998 July 2001
its June 17, 2010 Resolution,2 which reversed and set aside the July 30, 2008 Decision3 and October 22. Roger Buison 1998 2000
28, 2008, Resolution4 of the National Labor Relations Commission (NLRC); and reinstated the May 23. Mariano Lazate February 19, 1995
23, 2003 Decision5 of the Labor Arbiter (LA). The dispositive portion of the CA Decision reads: 24. Juan Villaber January 10, 1997
25. Limuel Llaneta March 5, 1994
WHEREFORE, decision is hereby rendered, as follows: 26. Lito Bantilo May 1987
27. Terso Garay October 3, 1986
1. Declaring the complainant Felix Martos was illegally dismissed and ordering respondent New San 28. Rowel Bestolo February 6, 1999
Jose Builders, Inc. to pay him his separation pay, backwages, salary differentials, 13th month pay, 29. Jerry Yortas May 1994
service incentive leave pay, and attorney’s fees in the total amount of TWO HUNDRED SIXTY 30. Pastor Pantig April 11,1998
THOUSAND SIX HUNDRED SIXTY ONE PESOS and 50/1000 (P260, 661.50). 31. Gavino Nicolas June 20, 1997
32. Rafael Villa March 9, 1998
The awards for separation pay, backwages and the corresponding attorney’s fees are subject to
33. Felix Yortas 1992
further computation until the decision in this case becomes final and executory; and
34. Melvin Garay February 2, 1994
2. Dismissing the complaints/claim of the other complainants without prejudice. 35. Neil Dominguez February 16, 1998
36. Reynaldo Evangelista, Jr. October 10, 1998
SO ORDERED.6 37. Jose Ramos October 10, 1998
38. Elvis Rosales June 14, 1998
The Facts 39. Jun Graneho January 15, 1998
The factual and procedural antecedents were succinctly summarized by the CA as follows: 40. Danny Espares April 1999
41. Salvador Tonloc January 8, 1998
New San Jose Builders, Inc. (hereafter petitioner) is a domestic corporation duly organized and 42. Rolando Evangelista March 15, 1998
existing under the laws of the Philippines and is engaged in the construction of road, bridges, 43. Ricky M. Francisco September 28, 1991
buildings, and low cost houses primarily for the government. One of the projects of petitioner is the 44. Eduardo Alegria May 2001
 45. Salvador Santos September 22, 2000 Limos, Mandy Mamalateo, Eric Castrence, Anthony Molina, and Roy Silva were among those who
46. Greg Bisonia March 28, 1993 were retained and were issued new appointment papers to their respective assignments, indicating
47. Rufo Carbillo March 28, 1993 therein that they are project employees. However, they refused to sign the appointment papers as
48. Marvin Montero 1997 January 2001 project employees and subsequently refused to continue to work.
49. Danilo Bessiri 1997 2002
50. Allan Caballero 1997 2002 On different dates, three (3) Complaints for Illegal Dismissal and for money claims were filed before
51. Orlando Limos 1997 July 2001 the NLRC against petitioner and Jose Acuzar, by private respondents who claimed to be the former
52. Edgardo Biclar 1997 July 2001 employees of petitioner, to wit:
53. Mandy Mamalatco 1989 2002
1. Complaint dated March 11, 2002, entitled "Felix Martos, et al. vs. NSJBI", docketed as
54. Alfred Gajo 1998 July 2001
NLRC-NCR Case No. 03-01639-2002;
55. Eric Castrence 1988 2002
56. Anthony Molina 1997 2002 2. Complaint dated July 9, 2002, entitled "Jimmy Campana, et al. vs. NSJBI," docketed as
57. Jaime Salin NLRC-NCR Case No. 07-04969-2002;
58. Roy Silva 1997 2002
59. Danilo V. Begorie 1994 January 2001 3. Complaint dated July 4, 2002, entitled "Greg Bisonia, et al. vs. NSJBI", docketed as
60. Peping Celisana 1999 July 2001 NLRC-NCR Case No. 07-02888-2002.
61. Eric Ronda 1998 July 2001
62. Rufo Carbanillo 1998 July 2001 Petitioner denies that private respondents were illegally dismissed, and alleged that they were
63. Rowel Batta 1999 July 2001 project employees, whose employments were automatically terminated upon completion of the
64. Ricardo Tolentino 1997 July 2001 project for which they were hired. On the other hand, private respondents claim that petitioner
65. Arnel Ardinez 1998 July 2001 hired them as regular employees, continuously and without interruption, until their dismissal on
66. Ferdinand P. Arandia 1998 1999 February 28, 2002.
67. Romeo R. Garbo 1998 2000 Subsequently, the three Complaints were consolidated and assigned to Labor Arbiter Facundo
68. Antonio Rota 1998 July 2001 Leda.7
69. Reynielande Quintanilla February 28, 1998 2002
70. Joselito Hilario 1998 2002 Ruling of the Labor Arbiter
71. Jimmy Campana August 15, 1998 August 2001
72. Danilo Lido-An September 8, 1998 As earlier stated, on May 23, 2003, the LA handed down a decision declaring, among others, that
73. Emerson Peñaflor August 8,1998 petitioner Felix Martos (Martos) was illegally dismissed and entitled to separation pay, backwages
74. Cesar Pabalinas and other monetary benefits; and dismissing, without prejudice, the complaints/claims of the other
75. Jonathan Melchor November 1998 complainants (petitioners).
76. Alex David 1998
Ruling of The NLRC
77. Eutiquio Alcala December 1999
78. Michael Carandang June 2000 Both parties appealed the LA decision to the NLRC. Petitioners appealed that part which dismissed
79. Eduardo Nanuel October 1999 all the complaints, without prejudice, except that of Martos. On the other hand, New San Jose
80. Ramon Evangelista February 15, 1998 Builders, Inc. (respondent) appealed that part which held that Martos was its regular employee and
81. Ruben Mendoza 1999 July 2001 that he was illegally dismissed.
82. Ernesto A. Mendoza 1998 July 2001
83. Ricky Ramos 1999 July 2001 On July 30, 2008, the NLRC resolved the appeal by dismissing the one filed by respondent and
84. Roberto Novella 1998 July 2001 partially granting that of the other petitioners. The dispositive portion of the NLRC decision reads
85. Ruben Conde 1998 July 2001 as follows:
86. Ramon Evangelista 1997 July 2001
87. Danilo Polistico 1999 July 2001 WHEREFORE, premises considered, respondent’s appeal is DISMISSED for lack of merit. The appeal
88. Domingo Mendoza 1999 July 2001 of the complainants is, however, PARTIALLY GRANTED by modifying the 23 May 2003 Decision of
89. Fernando San Gabriel 1999 July 2001 the Labor Arbiter Facundo L. Leda, in that, respondents are ordered to reinstate all the complainants
90. Domingo Roto 1994 July 2001 to their former positions, without loss of seniority rights and with full backwages, counted from the
Sometime in 2000, petitioner was constrained to slow down and suspend most of the works on the time their compensation was withheld from them until actual reinstatement.
SJPP project due to lack of funds of the National Housing Authority. Thus, the workers were
Respondents are likewise ordered to pay complainants their salary differentials, service incentive
informed that many of them [would] be laid off and the rest would be reassigned to other projects.
leave pay, and 13th month pay, using, as basis, the computation made on the claims of complainant
Juan Villaber, Terso Garay, Rowell Batta, Pastor Pantig, Rafael Villa, and Melvin Garay were laid off.
Felix Martos.
While on the other hand, Felix Martos, Ariel Dominguez, Greg Bisonia, Allan Caballera, Orlando
In all other aspects, the Decision is AFFIRMED.
SO ORDERED.8
Ruling Of The CA
After the denial of its motion for reconsideration, respondent filed before the CA a petition for
certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended, raising the following
issues:
I) The public respondent has committed grave abuse of discretion in holding that the
private respondents were regular employees and, thus, have been illegally dismissed.
II) The public respondent has committed grave abuse of discretion in reviving the
complaints of the other private respondents despite their failure to verify the same.
III) The public respondent has committed grave abuse of discretion when it upheld the
findings of the Labor Arbiter granting relief in favor of those supposed complainants who
did not even render service to the petitioner and, hence, are not on its payroll.
On July 31, 2009, the CA rendered a decision reversing and setting aside the July 30, 2008 Decision
and the October 28, 2008 Resolution of the NLRC and reinstating the May 23, 2003 Decision of the
LA. The dispositive portion of the CA decision reads:
WHEREFORE, premises considered, the present petition is hereby GRANTED. Accordingly, the
assailed Resolution dated October 28, 2008 of public respondent National Labor Relations
Commission is REVERSED and SET ASIDE, and the Decision dated May 23, 2003 of Labor Arbiter
Facundo L. Leda, is hereby ordered reinstated.
SO ORDERED.9
The CA explained that the NLRC committed grave abuse of discretion in reviving the complaints of
petitioners despite their failure to verify the same. Out of the 102 complainants, only Martos
verified the position paper and his counsel never offered any explanation for his failure to secure
the verification of the others. The CA also held that the NLRC gravely abused its discretion when it
took cognizance of petitioners’ appeal because Rule 41, Section 1(h) of the 1997 Rules of Civil
Procedure, as amended, which is suppletory, provides that no appeal may be taken from an order
dismissing an action without prejudice.
Nevertheless, the CA stated that the factual circumstances of Martos’ employment and his dismissal
from work could not equally apply to petitioners because they were not similarly situated. The NLRC
did not even bother to look at the evidence on record and inappropriately granted monetary awards
to petitioners who had either denied having filed a case or withdrawn the case against respondent.
According to the CA, the position papers should have covered only those claims and causes of action
raised in the complaint excluding those that might have been amicably settled.
With respect to Martos, the CA ruled that he was a regular employee of respondent and his
termination was illegal. It explained that Martos should have been considered a regular employee
because there was no indication that he was merely a project employee when he was hired. To
show otherwise, respondent should have presented his employment contract for the alleged
specific project and the successive employment contracts for the different projects or phases for
which he was hired. In the absence of such document, he could not be considered such an employee
because his work was necessary and desirable to the respondent’s usual business and that he was
not required to sign any employment contract fixing a definite period or duration of his
engagement. Thus, Martos already attained the status of a regular employee. Moreover, the CA
noted that respondent did not report the termination of Martos’ supposed project employment to
the Department of Labor and Employment (DOLE), as required under Department Order No. 19.
Being a regular employee, the CA concluded that he was constructively dismissed when he was
asked to sign a new appointment paper indicating therein that he was a project employee and that
his appointment would be co-terminus with the project.
Not in conformity with the CA decision, petitioners filed this petition anchored on the following
ASSIGNMENT OF ERRORS
A
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS AND THE LABOR ARBITER
BELOW GRAVELY ERRED IN DISMISSING THE COMPLAINTS OF THE NINETY NINE (99)
PETITIONERS DUE TO FAILURE OF THE LATTER TO VERIFY THEIR POSITION PAPER WHEN,
OBVIOUSLY, SUCH TECHNICALITY SHOULD NOT HAVE BEEN RESORTED TO BY THEM AS IT
WILL DEPRIVE THESE PETITIONERS OF THEIR PROPERTY RIGHT TO WORK.
B
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS AND THE LABOR ARBITER
BELOW GRAVELY ERRED IN NOT ORDERING THE REINSTATEMENT OF PETITIONER
MARTOS AND THE OTHER 99 PETITIONERS WHEN, OBVIOUSLY, AND AS FOUND BY
THEM, THE DISMISSAL OF MARTOS IS ILLEGAL WHICH WOULD WARRANT HIS
REINSTATEMENT AND THE GRANT TO HIM OF FULL BACKWAGES AND OTHER
EMPLOYEES’ BENEFITS.
C
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT
ORDERING THE RESPONDENTS TO PAY THE PETITIONERS ACTUAL, MORAL AND
EXEMPLARY DAMAGES.
Position of Petitioners
Petitioners basically argue that the CA was wrong in affirming the dismissal of their complaints due
to their failure to verify their position paper. They insist that the lack of verification of a position
paper is only a formal and not a jurisdictional defect. Hence, it was not fatal to their cause of action
considering that the CA could have required them to submit the needed verification.
The CA overlooked the fact that all of them verified their complaints by declaring under oath
relevant and material facts such as their names, addresses, employment status, salary rates, facts,
causes of action, and reliefs common to all of them. The information supplied in their complaints is
sufficient to prove their status of employment and entitlement of their monetary claims. In the
adjudication of labor cases, the adherence to stringent technical rules may be relaxed in the interest
of the working man. Moreover, respondent failed to adduce evidence of payment of their money
claims.
Finally, petitioners argue that they and Martos were similarly situated. The award of separation pay
instead of reinstatement to an illegally dismissed employee was improper because the strained
relations between the parties was not clearly established. Moreover, they are entitled to actual,
moral and exemplary damages for respondent’s illegal act of violating labor standard laws, the
minimum wage law and the 13th month pay law.
Position of Respondents
On the other hand, respondent principally counters that the CA and the LA 1) did not err in
dismissing the complaints of the 88 petitioners who failed to verify their position paper, without
prejudice; 2) correctly ruled that Martos and the 88 petitioners concerned were not entitled to
reinstatement; and 3) correctly ruled that petitioners were not entitled to an award of actual, moral
and exemplary damages.
Petitioners have the propensity to disregard the mandatory provisions of the 2005 Revised Rules of
Procedure of the NLRC (NLRC Rules) which require the parties to submit simultaneously their
verified position papers with supporting documents and affidavits. In the proceedings before the
LA, the complaints of the 99 workers were dismissed because they failed to verify or affix their
signatures to the position paper filed with the LA.
While it is true that the NLRC Rules must be liberally construed and that the NLRC is not bound by
the technicalities of law and procedure, it should not be the first to arbitrarily disregard specific
provisions of the rules which are precisely intended to assist the parties in obtaining just,
expeditious and inexpensive settlement of labor disputes. It was only Felix Martos who verified their
position paper and their memorandum of appeal. It was only he alone who was vigilant in looking
after his interest and enforcing his rights. Petitioners should be considered to have waived their
rights and interests in the case for their consistent neglect and passive attitude.
Moreover, Martos was never authorized by any of his fellow complainants through a special power
of attorney or other document in the proceedings to represent them before the LA and the NLRC.
His acts and verifications were made only in his own personal capacity and did not bind or benefit
petitioners. There is only one logical reason why a majority of them failed to verify their position
paper, their appeal and now their petition: they were not in any way employees of the respondent.
They were total strangers to the respondent. They even refused to identify themselves during the
proceedings by their failure to appear thereat. Hence, it is too late for the others to participate in
the fruits, if any, of this litigation.
Finally, the reinstatement being sought by Martos and the others was no longer practicable because
of the strained relation between the parties. Petitioners can no longer question this fact. This issue
was never raised or taken up on appeal before the NLRC. It was only when the petitioners lost in
the appeal in the CA that they first raised the issue of strained relation. Moreover, no proof of actual
damages was presented by the petitioners. There is no clear and convincing evidence on record
showing that the termination of an employee’s services had been carried out in an arbitrary,
capricious or malicious manner.
The Court’s Ruling
The Court is basically asked to resolve two (2) issues: 1 whether or not the CA was correct in
dismissing the complaints filed by those petitioners who failed to verify their position papers; and
2 whether or not Martos should be reinstated.
Regarding the first issue, the Court agrees with the respondent.
Sections 4 and 5 of Rule 7 of the 1997 Rules of Civil Procedure provide:
SEC. 4. Verification. – Except when otherwise specifically required by law or rule, pleadings need
not be under oath, verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the pleadings and that the allegations
therein are true and correct of his personal knowledge or based on authentic records.
A pleading required to be verified which contains a verification based on "information and belief"
or upon "knowledge, information and belief" or lacks a proper verification, shall be treated as an
unsigned pleading.
SEC. 5. Certification against forum shopping. – The plaintiff or principal party shall certify under oath
in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification
annexed thereto and simultaneously filed therewith:
(a) that he has not theretofore commenced any action or filed any claim involving the same issues
in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action
or claim is pending therein; (b) if there is such other pending action or claim, a complete statement
of the present status thereof; and (c) if he should thereafter learn that the same or similar action or
claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the
court wherein his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the
complaint or other initiatory pleading but shall be cause for the dismissal of the case without
prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false
certification or non-compliance with any of the undertakings therein shall constitute indirect
contempt of court, without prejudice to the corresponding administrative and criminal actions. If
the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the
same shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as
well as a cause for administrative sanctions. x x x. [Emphases supplied]
The verification requirement is significant, as it is intended to secure an assurance that the
allegations in the pleading are true and correct and not the product of the imagination or a matter
of speculation, and that the pleading is filed in good faith.10 Verification is deemed substantially
complied with when, as in this case, one who has ample knowledge to swear to the truth of the
allegations in the complaint or petition signs the verification, and when matters alleged in the
petition have been made in good faith or are true and correct.11
The absence of a proper verification is cause to treat the pleading as unsigned and dismissible. 12
The lone signature of Martos would have been sufficient if he was authorized by his co-petitioners
to sign for them. Unfortunately, petitioners failed to adduce proof that he was so authorized. The
complaints of the other parties in the case of Nellie Vda. De Formoso v. v. PNB13 suffered a similar
fate. Thus:
Admittedly, among the seven (7) petitioners mentioned, only Malcaba signed the verification and
certification of non-forum shopping in the subject petition. There was no proof that Malcaba was
authorized by his co-petitioners to sign for them. There was no special power of attorney shown by
the Formosos authorizing Malcaba as their attorney-in-fact in filing a petition for review on
certiorari. Neither could the petitioners give at least a reasonable explanation as to why only he
signed the verification and certification of non-forum shopping.
The liberal construction of the rules may be invoked in situations where there may be some
excusable formal deficiency or error in a pleading, provided that the same does not subvert the
essence of the proceeding and it at least connotes a reasonable attempt at compliance with the
rules. Besides, fundamental is the precept that rules of procedure are meant not to thwart but to
facilitate the attainment of justice; hence, their rigid application may, for deserving reasons, be
subordinated by the need for an apt dispensation of substantial justice in the normal course. They
ought to be relaxed when there is subsequent or even substantial compliance, consistent with the
policy of liberality espoused by Rule 1, Section 6.14 Not being inflexible, the rule on verification WHEREFORE, the petition is DENIED.
allows for such liberality.15
SO ORDERED.
Considering that the dismissal of the other complaints by the LA was without prejudice, the other
complainants should have taken the necessary steps to rectify their procedural mistake after the
decision of the LA was rendered. They should have corrected this procedural flaw by immediately
filing another complaint with the correct verification this time. Surprisingly, they did not even
attempt to correct this technical blunder. Worse, they committed the same procedural error when
they filed their appeal16 with the NLRC.

Under the circumstances, the Court agrees with the CA that the dismissal of the other complaints
were brought about by the own negligence and passive attitude of the complainants themselves. In
Formoso, the Court further wrote:

The petitioners were given a chance by the CA to comply with the Rules when they filed their motion
for reconsideration, but they refused to do so. Despite the opportunity given to them to make all of
them sign the verification and certification of non-forum shopping, they still failed to comply. Thus,
the CA was constrained to deny their motion and affirm the earlier resolution.

The Court can only do so much for them.

Most probably, as the list17 submitted is not complete with the information as to when each started
and when each was dismissed there must be some truth in the claim of respondent that those
complainants who failed to affix their signatures in the verification were either not employees of
respondent at all or they simply refused to prosecute their complaints. In its position paper, 18
respondent alleged that, aside from the four (4) complainants who withdrew their complaints, only
17 out of the more or less 104 complainants appeared on its records as its former project employees
or at least known by it to have worked in one of its construction projects. From the sworn
statements executed by Felix Yortas,19 Marvin Batta,20

Lito Bantillo,21 Gavino Felix Nicolas,22 and Romeo Pangacian Martos,23 they already withdrew their
complaints against respondent. Their status and cause of action not being clear and proven, it is just
not right that these complaints be considered as similarly situated as Martos and entitled to the
same benefits.

As to Martos, the Court agrees that the reinstatement being sought by him was no longer
practicable because of strained relation between the parties. Indeed, he can no longer question this
fact. This issue was never raised or taken up on appeal before the MLRC. It was only after he lost
the appeal in the CA that he raised it.

Thus, the Court deems it fair to award separation pay in lieu of reinstatement.1âwphi1 In addition
to his separation pay. Martos is also entitled to payment of full backwages, 13th month pay, service
incentive leave pay, and attorney’s fees.

The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is
no longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement may
likewise be awarded if the employee decides not to be reinstated.

Under the doctrine of stained relations, the payment of separation pay is considered an acceptable
alternative to reinstatement when the latter opinion is no longer desirable or viable. On one hand,
such payment liberates the employee from what could be highly oppressive work environment. On
the other hand, it release the employer from the grossly unpalatable obligation of maintaining in its
employ a worker it could no longer trust.24
(8) CIVPRO – LIBERAL CONSTRUCTION OF PROCEDURAL RULES
G.R. No. 191837 September 19, 2012
MARIA CONSOLACION RIVERA-PASCUAL, Petitioner,
vs.
SPOUSES MARILYN LIM and GEORGE LIM and the REGISTRY OF DEEDS OF VALENZUELA CITY,
Respondents.
RESOLUTION
REYES, J.:
This is a petition for review on certiorari assailing the Resolutions dated October 15, 20091 and
March 11, 20102 of the Court of Appeals (CA) in CA-G.R. SP No. 109265.
The facts leading to the filing of this petition are undisputed.
Subject of the present controversy is a parcel of land with an approximate area of 4.4 hectares and
located at Bignay, Valenzuela City. The property is covered by Transfer Certificate of Title (TCT) No.
V-73892, registered in the names of George and Marilyn Lim (Spouses Lim).
On September 8, 2004, Maria Consolacion Rivera-Pascual (Consolacion) filed before the Office of
the Regional Agrarian Reform Adjudicator (RARAD) for Region IV-A a petition to be recognized as a
tenant of a property located at Bignay, Valenzuela City against Danilo Deato (Deato). At that time,
the property, which has an approximate area of 4.4 hectares, was covered by TCT No. 24759 under
Deato’s name. During the pendency of the petition, Deato sold the property to Spouses Lim. The
sale was registered on December 21, 2004 leading to the issuance of TCT No. V-73892 in favor of
Spouses Lim. Considering this development, Consolacion filed a motion on March 3, 2005 to implead
Spouses Lim as respondents.3
The petition, which was docketed as DARAB Case No. R-0400-0012-04, was granted byRegional
Adjudicator Conchita C. Miñas (RA Miñas) in a Decision4 dated December 2, 2005, the dispositive
portion of which states:
WHEREFORE, premises considered, judgment is hereby rendered:
1) Declaring that petitioner is the tenant of the subject landholding by succession from her
deceased father;
2) Declaring respondents spouses George and Marilyn Lim to have subrogated to the rights and
substituted to the obligation of spouses Danilo and Divina Deato;
3) Ordering the respondents and all persons claiming rights under them to maintain petitioner in
peaceful possession and cultivation of the agricultural land subject hereof;
4) Declaring petitioner to have the right to exercise the right of redemption of the subject parcel
of agricultural land pursuant to Section 12 of RA 3844 as amended; and
5) Dismissing the petition against Louie Cruz, Fire Force Agency and Danny Boy Rivera for having
no proximate tenurial relationship with the petitioner hence beyond the jurisdictional ambit of
this Office.
SO ORDERED.5
On July 7, 2006, the foregoing decision became final.6
Upon Consolacion’s motion for execution filed on January 7, 2008, RA Miñas issued a writ of
execution on January 8, 2008.7
On January 21, 2008, Consolacion filed a petition against Spouses Lim and the Registrar of Deeds of
Valenzuela City praying for the issuance of an order directing Spouses Lim to accept the amount of
₱ 10,000,000.00 which she undertook to tender during the initial hearing, declaring the property
redeemed, and cancelling TCT No. V-73892.8 Consolacion consigned with the RARAD the amount of
₱ 10,000,000.00 on March 3, 2008.9
Consolacion’s petition, which was docketed as DARAB Case No. R-0400-001-08, was given due
course by RA Miñas in a Decision10 dated June 2, 2008, the dispositive portion of which states:
WHEREFORE, foregoing premises considered, judgment is hereby rendered:
1. As prayed for, declaring that the landholding subject of the petition as lawfully redeemed;
2. Ordering respondent spouses to accept and withdraw the amount of the redemption price
consigned with this Office which was deposited for safekeeping indicated in Manager’s Check No.
0000004518 issued by Allied Bank in the name of Spouses Marilyn and George Lim and/or DAR
Adjudication Board Region IV-A in the amount of ten (10) million pesos;
3. Upon acceptance and the withdrawal of the redemption price as ordered in paragraph 2
hereof, ordering respondent spouses to execute a Deed of Redemption in favor of petitioner;
4. In case of refusal and/or failure of respondent spouses to execute the Deed of Redemption as
ordered above, the Regional Clerk of the Board is hereby ordered to execute a Deed of
Redemption in the name of the petitioner; and
5. Directing the Register of Deeds for Valenzuela City to cause the cancellation of TCT No. V-73892
registered in the name of respondent spouses Marilyn and George Lim and a new one issued in
the name of petitioner upon presentment of the Deed of Redemption.
SO ORDERED.11
On appeal, the Department of Agrarian Reform Adjudication Board (DARAB) issued a Decision12 on
February 18, 2009 reversing RA Miñas Decision dated June 2, 2008. Specifically:
WHEREFORE, in view of the foregoing, the appealed Decision dated 02 June 2008 is hereby
REVERSED and SET ASIDE. A new judgment is hereby rendered:
1. DECLARING the landholding to be not lawfully redeemed;
2. DECLARING petitioner-appellee not a bona fide tenant of the subject landholding;
3. DECLARING that petitioner-appellee cannot redeem the subject parcel registered in the names
of the respondents-appellants;
4. ORDERING the respondents-appellants to be maintained in peaceful possession of the subject
landholding; and
5. DIRECTING the Clerk of the Board of the Regional Agrarian Reform Adjudicator of Region IV-A
to return the Manager’s Check No. 0000004518 issued by Allied Bank in the name of Spouses
Marilyn and George Lim and/or DAR Adjudication Board Region IV-A in the amount of Ten Million
pesos to herein petitioner-appellee.
 SO ORDERED.13
On April 13, 2009, Consolacion moved for reconsideration,14 which the DARAB denied in a
Resolution15 dated June 8, 2009 for being filed out of time.
SECTION 12 Rule X of the 2003 DARAB Rules provides that a Motion for Reconsideration shall be
filed within fifteen (15) days from receipt of notice of the order, resolution, or decision of the Board
or Adjudicator. Records show that both the petitioner-appellee and her counsel received a copy of
the Decision dated 18 February 2009 on 27 February 2009 and that Legal Officer Nancy Geocada,
the alleged new counsel of the herein petitioner-appellee, filed the Motion for Reconsideration only
on 13 April 2009, clearly the Motion for Reconsideration was filed beyond the fifteen (15) days (sic)
reglementary period thus the herein Decision has already become final and executory. x x x.16
On June 25, 2009, Consolacion filed a petition for review under Rule 43 of the Rules of Court with
the CA.17
On July 1, 2009, the CA resolved to require Consolacion’s counsel to submit within five (5) days from
notice his Mandatory Continuing Legal Education (MCLE) Certificate of Compliance or Exemption
and an amended Verification and Certification Against Non-Forum-Shopping.18 Apparently,
Consolacion’s counsel failed to indicate in the petition his MCLE Certificate of Compliance or
Exemption Number as required under Bar Matter No. 1922. Also, the jurat of Consolacion’s
verification and certification against non-forum-shopping failed to indicate any competent evidence
of Consolacion’s identity apart from her community tax certificate.
Considering the failure of Consolacion and her counsel to comply, the CA issued a Resolution 19 on
October 15, 2009 dismissing the petition.
On July 7, 2009, the counsel for the petitioner received the above-mentioned Resolution. However,
the counsel for the petitioner failed to comply with the said Resolution which was due on July 19,
2009.
comply with basic procedural requirements attendant to the filing of a petition for review under
Rule 43 of the Rules of Court. Notably, Consolacion and her counsel remained obstinate despite the
opportunity afforded to them by the CA to rectify their lapses. While there was compliance, this
took place, however, after the CA had ordered the dismissal of Consolacion’s petition and without
reasonable cause proffered to justify its belatedness. Consolacion and her counsel claimed
inadvertence and negligence but they did not explain the circumstances thereof. Absent valid and
compelling reasons, the requested leniency and liberality in the observance of procedural rules
appears to be an afterthought, hence, cannot be granted. The CA saw no compelling need meriting
the relaxation of the rules. Neither does this Court see any.
The Court is aware of the exceptional cases where technicalities were liberally construed. However,
in these cases, outright dismissal is rendered unjust by the presence of a satisfactory and persuasive
explanation. The parties therein who prayed for liberal interpretation were able to hurdle that
heavy burden of proving that they deserve an exceptional treatment. It was never the Court’s intent
"to forge a bastion for erring litigants to violate the rules with impunity."22
This Court will not condone a cavalier attitude towards procedural rules. It is the duty of every
member of the bar to comply with these rules. They are not at liberty to seek exceptions should
they fail to observe these rules and rationalize their omission by harking on liberal construction.
While it IS the negligence of Consolacion's counsel that led to this unfortunate result, she is bound
by such.
WHEREFORE, premises considered, the petition is DISMISSED. The Resolutions dated October 15,
2009 and March 11, 2010 of the Court of Appeals in CA-G.R. SP No. 109265 are AFFIRMED.
Costs against the petitioner.
SO ORDERED.

For failure of the counsel for the petitioner to comply with the Resolution dated July 1, 2009, despite
receipt of the notice thereof, the petition is hereby DISMISSED.

SO ORDERED.20

Consolacion moved for reconsideration but this was denied by the CA in a Resolution21 dated March
11, 2010.

Consolacion is, before this Court, claiming that the CA’s summary dismissal of her petition on
technical grounds is unwarranted.1âwphi1 Consolacion invoked substantial justice against the CA’s
strict application of the rule requiring her counsel to note his MCLE Compliance or Exemption
Certificate Number and the rule rendering the jurat of her verification and certification on non-
forum-shopping defective in the absence of the details of any one of her current identification
document issued by an official agency bearing her photograph and signature. That there was merit
in her petition and that she complied, albeit belatedly as her counsel’s MCLE Compliance Certificate
Number was indicated and a verification and certificate on non-forum-shopping with a proper jurat
was attached to her motion for reconsideration, should have sufficed for the CA to reverse the
dismissal of her petition and decide the same on its merits. Consolacion alleged that procedural
rules or technicalities are designed to facilitate the attainment of justice and their rigid application
should be avoided if this would frustrate rather than promote substantial justice.

The Court finds no merit in the petition. The Court sees no reversible error committed by the CA in
dismissing Consolacion’s petition before it on the ground of petitioner’s unexplained failure to
(9) CIVPRO – RULE MAKING POWER OF SC
G.R. No. 159593 October 12, 2006
COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs.
MIRANT1 PAGBILAO CORPORATION (formerly SOUTHERN ENERGY QUEZON, INC.), respondent.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review2 under Rule 45 of the 1997 Rules of Civil Procedure assailing
the Decision,3 dated 30 July 2003, of the Court of Appeals in CA-G.R. SP No. 60783, which affirmed
in toto the Decision,4 dated 11 July 2000, of the Court of Tax Appeals (CTA) in CTA Case No. 5658.
The CTA partially granted the claim of herein respondent Mirant Pagbilao Corporation (MPC) for the
refund of the input Value Added Tax (VAT) on its purchase of capital goods and services for the
period 1 April 1996 to 31 December 1996, and ordered herein petitioner Commissioner of the
Bureau of Internal Revenue (BIR) to issue a tax credit certificate in the amount of P28,744,626.95.
There is no dispute as to the following facts that gave rise to the claim for refund of MPC, as found
by the CTA5 –
[MPC] is a domestic corporation duly organized and existing under and by virtue of the laws of
the Philippines with principal office address in Pagbilao Grande Island, Pagbilao, Quezon. It is
licensed by the Securities and Exchange Commission to principally engage in the business of
power generation and subsequent sale thereof (Exh. A). It is registered with the Bureau of Internal
Revenue as a VAT registered entity with Certificate of Registration bearing RDO Control No. 96-
600-002498, dated January 26, 1996.
For the period April 1, 1996 to December 31, 1996, [MPC] seasonably filed its Quarterly VAT
Returns reflecting an (sic) accumulated input taxes in the amount of P39,330,500.85 (Exhs. B, C,
and D). These input taxes were allegedly paid by [MPC] to the suppliers of capital goods and
services for the construction and development of the power generating plant and other related
facilities in Pagbilao, Quezon (TSN, November 16, 1998, p. 11).
Pursuant to the procedures prescribed under Revenue Regulations No. 7-95, as amended, [MPC]
filed on June 30, 1998, an application for tax credit or refund of the aforementioned unutilized
VAT paid on capital goods (Exhibit "E").
Without waiting for an answer from the [BIR Commissioner], [MPC] filed the instant petition for
review on July 10, 1998, in order to toll the running of the two-year prescriptive period for
claiming a refund under the law.
In answer to the Petition, [the BIR Commissioner] advanced as special and affirmative defenses
that "[MPC]'s claim for refund is still pending investigation and consideration before the office of
[the BIR Commissioner] accordingly, the filing of the present petition is premature; well-settled
is the doctrine that provisions in tax refund and credit are construed strictly against the taxpayer
as they are in the nature of a tax exemption; in an action for refund or tax credit, the taxpayer
has the burden to show that the taxes paid were erroneously or illegally paid and failure to sustain
the said burden is fatal to the action for refund; it is incumbent upon [MPC] to show that the
claim for tax credit has been filed within the prescriptive period under the Tax Code; and the
taxes allegedly paid by [MPC] are presumed to have been collected and received in accordance
with law and revenue regulations.["]
On July 14, 1998, while the case was pending trial, Revenue Officer, Rosemarie M. Vitto, was
assigned by Revenue District Officer, Ma. Nimfa Penalosa-Asensi, of Revenue District No. 60 to
investigate [MPC]'s application for tax credit or refund of input taxes (Exhs. 1 and 1-a). As a result,
a memorandum report, dated August 27, 1998, was submitted recommending a favorable action
but in a reduced amount of P49,616.40 representing unapplied input taxes on capital goods.
(Exhs. 2, 2-a, 3, and 3-a).
[MPC], due to the voluminous nature of evidence to be presented, availed of the services of an
independent Certified Public Accountant pursuant to CTA Circular No. 1-95, as amended. As a
consequence, Mr. Ruben R. Rubio, Partner of SGV & Company, was commissioned to verify the
accuracy of [MPC]'s summary of input taxes (TSN, October 15, 1998, pp. 3-5). A report, dated
March 8, 1999, was presented stating the audit procedures performed and the finding that out
of the total claimed input taxes of P39,330,500.85, only the sum of P28,745,502.40 was properly
supported by valid invoices and/or official receipts (Exh. G; see also TSN, March 3, 1999, p. 12).
The CTA ruled in favor of MPC, and declared that MPC had overwhelmingly proved, through the VAT
invoices and official receipts it had presented, that its purchases of goods and services were
necessary in the construction of power plant facilities which it used in its business of power
generation and sale. The tax court, however, reduced the amount of refund to which MPC was
entitled, in accordance with the following computation –
Total amount of the claim for refund P39,330,500.85
Less: Disallowances
a. Per independent auditor P10,584,998.45
b. Per CTA's examination 875.45 10,585,873.90
P28,744,626.956
Thus, the dispositive portion of the CTA Decision,7 dated 11 July 2000, reads -
WHEREFORE, in view of the foregoing, [MPC]'s claim for refund is hereby partially
GRANTED. [The BIR Commissioner] is ORDERED to ISSUE A TAX CREDIT CERTIFICATE in
the amount of P28,744,626.95 representing input taxes paid on capital goods for the
period April 1, 1996 to December 31, 1996.
The CTA subsequently denied the BIR Commissioner's Motion for Reconsideration in a Resolution,8
dated 31 August 2001.
Aggrieved, the BIR Commissioner filed with the Court of Appeals a Petition for Review 9 of the
foregoing Decision, dated 11 July 2000, and Resolution, dated 31 August 2001, of the CTA. Notably,
the BIR Commissioner identified and discussed as grounds10 for its Petition arguments that were
totally new and were never raised before the CTA, to wit –
 1. RESPONDENT BEING AN ELECTRIC UTILITY, IT IS SUBJECT TO FRANCHISE TAX UNDER
THEN SECTION 117 (NOW SECTION 119) OF THE TAX CODE AND NOT TO VALUE ADDED
TAX (VAT).
2. SINCE RESPONDENT IS EXEMPT FROM VAT, IT IS NOT ENTITLED TO THE REFUND OF
INPUT VAT PURSUANT TO SECTION 4.103-1 OF REVENUE REGULATIONS NO. 7-95.
The Court of Appeals found no merit in the BIR Commissioner's Petition, and in its Decision, dated
30 July 2003, it pronounced that: (1) The BIR Commissioner cannot validly change his theory of the
case on appeal; (2) The MPC is not a public utility within the contemplation of law; (3) The sale by
MPC of its generated power to the National Power Corporation (NAPOCOR) is subject to VAT at zero
percent rate; and (4) The MPC, as a VAT-registered taxpayer, may apply for tax credit. Accordingly,
the decretal portion of the said Decision11 reads as follows –
WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit and the
assailed 11 July 2000 Decision of respondent Court in CTA Case No. 5658 is hereby
AFFIRMED in toto. No costs.
Refusing to give up his cause, the BIR Commissioner filed the present Petition before this Court on
the ground that the Court of Appeals committed reversible error in affirming the Decision of the
CTA holding respondent entitled to the refund of the amount of P28,744,626.95, allegedly
representing input VAT on capital goods and services for the period 1 April 1996 to 31 December
1996. He argues that (1) The observance of procedural rules may be relaxed considering that
technicalities are not ends in themselves but exist to protect and promote the substantive rights of
the parties; and (2) A tax refund is in the nature of a tax exemption which must be construed strictly
against the taxpayer. He reiterates his position before the Court of Appeals that MPC, as a public
utility, is exempt from VAT, subject instead to franchise tax and, thus, not entitled to a refund of
input VAT on its purchase of capital goods and services.
This Court finds no merit in the Petition at bar.
I motion for new trial in the court below, he may include in his assignment of errors any question
The general rule is that a party cannot change his theory of the case on appeal.
To recall, the BIR Commissioner raised in its Answer12 before the CTA the following special and
affirmative defenses –
3. [MPC]'s claim for refund is still pending investigation and consideration before the office of
[the BIR Commissioner]. Accordingly, the present petition is premature;
4. Well-settled is the doctrine that provisions in tax refund and credit are construed strictly
against the taxpayer as they are in the nature of a tax exemption;
5. In an action for refund or tax credit, the taxpayer has the burden to show that the taxes paid
were erroneously or illegally paid and failure to sustain the said burden is fatal to the action for
refund;
6. It is incumbent upon [MPC] to show that the claim for tax credit has been filed within
the prescriptive period under the tax code;
7. The taxes allegedly paid by [MPC] are presumed to have been collected and received
in accordance with law and revenue regulations.
These appear to be general and standard arguments used by the BIR to oppose any claim by a
taxpayer for refund. The Answer did not posit any allegation or contention that would defeat the
particular claim for refund of MPC. Trial proper ensued before the CTA, during which the MPC
presented evidence of its entitlement to the refund and in negation of the afore-cited defenses of
the BIR Commissioner. It was only after the CTA promulgated its Decision on 11 July 2000, which
was favorable to MPC and adverse to the BIR Commissioner, that the latter filed his Petition for
Review before the Court of Appeals on 4 October 2000, averring, for the very first time, that MPC
was a public utility, subject to franchise tax and not VAT; and since it was not paying VAT, it could
not claim the refund of input VAT on its purchase of capital goods and services.
There is a palpable shift in the BIR Commissioner's defense against the claim for refund of MPC and
an evident change of theory. Before the CTA, the BIR Commissioner admitted that the MPC is a VAT-
registered taxpayer, but charged it with the burden of proving its entitlement to refund. However,
before the Court of Appeals, the BIR Commissioner, in effect denied that the MPC is subject to VAT,
making an affirmative allegation that it is a public utility liable, instead, for franchise tax.
Irrefragably, the BIR Commissioner raised for the first time on appeal questions of both fact and law
not taken up before the tax court, an actuality which the BIR Commissioner himself does not deny,
but he argues that he should be allowed to do so as an exception to the technical rules of procedure
and in the interest of substantial justice.
It is already well-settled in this jurisdiction that a party may not change his theory of the case on
appeal.13 Such a rule has been expressly adopted in Rule 44, Section 15 of the 1997 Rules of Civil
Procedure, which provides –
SEC. 15. Questions that may be raised on appeal. – Whether or not the appellant has filed a
of law or fact that has been raised in the court below and which is within the issues framed by
the parties.
Thus, in Carantes v. Court of Appeals,14 this Court emphasized that –
The settled rule is that defenses not pleaded in the answer may not be raised for the first time
on appeal. A party cannot, on appeal, change fundamentally the nature of the issue in the case.
When a party deliberately adopts a certain theory and the case is decided upon that theory in the
court below, he will not be permitted to change the same on appeal, because to permit him to
do so would be unfair to the adverse party.
In the more recent case of Mon v. Court of Appeals,15 this Court again pronounced that, in this
jurisdiction, the settled rule is that a party cannot change his theory of the case or his cause of action
on appeal. It affirms that "courts of justice have no jurisdiction or power to decide a question not in
issue." Thus, a judgment that goes beyond the issues and purports to adjudicate something on
which the court did not hear the parties, is not only irregular but also extrajudicial and invalid. The
rule rests on the fundamental tenets of fair play.
The BIR Commissioner pleads with this Court not to apply the foregoing rule to the instant case, for
a rule on technicality should not defeat substantive justice. The BIR Commissioner apparently
forgets that there are specific reasons why technical or procedural rules are imposed upon the
courts, and that compliance with these rules, should still be the general course of action. Hence,
this Court has expounded that –
Procedural rules, we must stress, should be treated with utmost respect and due regard since
they are designed to facilitate the adjudication of cases to remedy the worsening problem of
delay in the resolution of rival claims and in the administration of justice. The requirement is in
pursuance to the bill of rights inscribed in the Constitution which guarantees that "all persons
shall have a right to the speedy disposition of their cases before all judicial, quasi-judicial and
administrative bodies." The adjudicatory bodies and the parties to a case are thus enjoined to
abide strictly by the rules. While it is true that a litigation is not a game of technicalities, it is
equally true that every case must be prosecuted in accordance with the prescribed procedure to
ensure an orderly and speedy administration of justice. There have been some instances wherein
this Court allowed a relaxation in the application of the rules, but this flexibility was "never
intended to forge a bastion for erring litigants to violate the rules with impunity." A liberal
interpretation and application of the rules of procedure can be resorted to only in proper cases
and under justifiable causes and circumstances.16
The courts have the power to relax or suspend technical or procedural rules or to except a case from
their operation when compelling reasons so warrant or when the purpose of justice requires it.
What constitutes good and sufficient cause that would merit suspension of the rules is discretionary
upon the courts.17
In his Petition and Memorandum before this Court, the BIR Commissioner made no attempt to
provide reasonable explanation for his failure to raise before the CTA the issue of MPC being a public
utility subject to franchise tax rather than VAT. The BIR Commissioner argues, in a singular
paragraph in his Petition,18 subsequently reproduced in his Memorandum,19 that the Court of
Appeals should have taken cognizance of the said issue, although it was raised for the first time on
appeal, entirely on the basis of this Court's ruling in Sy v. Court of Appeals.20 He contends that –
The submission fails to take into account that although this Honorable Court has
repeatedly ruled that litigants cannot raise an issue for the first time on appeal, as this
would contravene the basic rules of justice and fair play, the observance of procedural
rules may be relaxed, noting that technicalities are not ends in themselves but exist to
protect and promote the substantive rights of the litigants (Sy v. Court of Appeals, 330
SCRA 570 [2000]).
This Court is unconvinced. There is no sufficient cause to warrant the relaxation of technical or
procedural rules in the instant case. The general rules of procedure still apply and the BIR
Commissioner cannot be allowed to raise an issue for the first time on appeal.
It should be emphasized that the BIR Commissioner is invoking a suspension of the general rules of
procedure or an exception thereto, thus, it is incumbent upon him to present sufficient cause or
justifiable circumstance that would qualify his case for such a suspension or exception. That this
Court had previously allowed in another case such suspension of or exception to technical or
procedural rules does not necessarily mean that the same shall also be allowed in the present case.
The BIR Commissioner has the burden of persuading this Court that the same causes or
circumstances that justified the suspension of or exception to the technical or procedural rules in
the other case are also present in the case at bar.
The Sy case, on which the BIR Commissioner fully anchored his claim for suspension of or exception
to the technical or procedural rules, is not even on all fours with his case. It involves a petition for
declaration of nullity of marriage instituted by the therein petitioner Filipina Sy before the Regional
Trial Court (RTC) on the basis of the alleged psychological incapacity of her husband, Fernando Sy.
Her petition was denied by the RTC because it found that Fernando's acts did not constitute
psychological incapacity, a finding later affirmed by the Court of Appeals. In an appeal by certiorari
before this Court, Filipina raised the issue that her marriage to Fernando was void from the very
beginning for lack of a marriage license at the time of the ceremony. This Court took cognizance of
the said issue, reversed the RTC and the Court of Appeals, and ruled in favor of Filipina. Its
ratiocination on the matter is reproduced in full below –
Petitioner, for the first time, raises the issue of the marriage being void for lack of a valid marriage
license at the time of its celebration. It appears that, according to her, the date of the actual
celebration of their marriage and the date of issuance of their marriage certificate and marriage
license are different and incongruous.
Although we have repeatedly ruled that litigants cannot raise an issue for the first time on appeal,
as this would contravene the basic rules of fair play and justice, in a number of instances, we have
relaxed observance of procedural rules, noting that technicalities are not ends in themselves but
exist to protect and promote substantive rights of litigants. We said that certain rules ought not
to be applied with severity and rigidity if by so doing, the very reason for their existence would
be defeated. Hence, when substantial justice plainly requires, exempting a particular case from
the operation of technicalities should not be subject to cavil. In our view, the case at bar requires
that we address the issue of the validity of the marriage between Filipina and Fernando which
petitioner claims is void from the beginning for lack of a marriage license, in order to arrive at a
just resolution of a deeply seated and violent conflict between the parties. Note, however, that
here the pertinent facts are not disputed; and what is required now is a declaration of their
effects according to existing law.21 [Emphasis supplied.]
In the instant case, the conflict between the MPC and the BIR Commissioner could be hardly
described as "deeply seated and violent," it remaining on a professional level.
Moreover, this Court pointed out in the Sy case that the pertinent facts, i.e., the dates of actual
celebration of the marriage, issuance of the marriage certificate, and issuance of the marriage
license, were undisputed. The same cannot be said in the case at bar. That MPC is a public utility is
not an undisputed fact; on the contrary, the determination thereof gives rise to a multitude of other
questions of fact and law. It is a mere deduction on the part of the BIR Commissioner that since the
MPC is engaged in the generation of power, it is a public utility. The MPC contests this arguing that
it is not a public utility because it sells its generated power to NAPOCOR exclusively, and not to the
general public. It asserts that it is subject to VAT and that its sale of generated electricity to
NAPOCOR is subject to zero-rated VAT.
Substantial justice, in such a case, requires not the allowance of issues raised for the first time on
appeal, but that the issue of whether MPC is a public utility, and the correlated issue of whether
MPC is subject to VAT or franchise tax, be raised and threshed out in the first opportunity before
the CTA so that either party would have fully presented its evidence and legal arguments in support
of its position and to contravene or rebut those of the opposing party.
In Atlas Consolidated Mining & Development Corp. v. Commissioner of Internal Revenue,22 this Court
held that it was too late for the BIR Commissioner to raise an issue of fact of payment for the first
time in his memorandum in the CTA and in his appeal to this Court. If raised earlier, the matter
ought to have been seriously delved into by the CTA. On this ground, this Court was of the opinion
that under all the attendant circumstances of the case, substantial justice would be served if the BIR
Commissioner be held as precluded from attempting to raise the issue at this stage. Failure to assert
a question within a reasonable time warrants a presumption that the party entitled to assert it
either has abandoned or declined to assert it.
Therefore, the Court of Appeals correctly refused to consider the issues raised by the BIR
Commissioner for the first time on appeal. Its discussion on whether the MPC is a public utility and
whether it is subject to VAT or franchise tax is nothing more than obiter dictum. It is best not at all
to discuss these issues for they do not simply involve questions of law, but also closely-related
questions of fact23 which neither the Court of Appeals nor this Court could presume or garner from
the evidence on record.
II
Input VAT on capital goods and services may be the subject of a claim for refund.
The MPC bases its claim for refund of its input VAT on Section 106(b) of the Tax Code of 1986, as
amended by Republic Act No. 7716,24 which provides –
Sec. 106. Refunds or tax credits of creditable input tax. –
xxxx
(b) Capital goods. - A VAT-registered person may apply for the issuance of a tax credit certificate
or refund of input taxes paid on capital goods imported or locally purchased, to the extent that
such input taxes have not been applied against output taxes. The application may be made only
within two (2) years, after the close of the taxable quarter when the importation or purchase was
made.
Capital goods or properties, as defined in Revenue Regulations No. 7-95, the implementing rules on
VAT, are "goods and properties with estimated useful life greater than one year and which are
treated as depreciable assets under Section 29(f), used directly or indirectly in the production or
sale of taxable goods or services."25
Contrary to the argument of the BIR Commissioner, input VAT on capital goods is among those
expressly recognized as creditable input tax by Section 104(a) of the Tax Code of 1986, as amended
by Rep. Act No. 7716,26 to wit –
Sec. 104. Tax Credits. - (a) Creditable input tax. - Any input tax evidenced by a VAT invoice or
official receipt issued in accordance with Section 108 hereof on the following transactions shall
be creditable against the output tax:
(1) Purchase or importation of goods:
(A) For sale; or
(B) For conversion into or intended to form part of a finished product for sale including packing
materials; or
(C) For use as supplies in the course of business; or
(D) For use as materials supplied in the sale of service; or
(E) For use in trade or business for which deduction for depreciation or amortization is allowed
under this Code, except automobiles, aircraft and yachts. [Emphasis supplied.]
Thus, goods and properties used by the taxpayer in its VAT-taxable business, subject to depreciation
or amortization in accordance with the Tax Code, are considered capital goods. Input VAT on the
purchase of such capital goods is creditable against the taxpayer's output VAT. The taxpayer is
further given the option, under Section 106(b) of the Tax Code of 1986, as amended by Republic Act
No. 7716, to claim refund of the input VAT on its capital goods, but only to the extent that the said
input VAT has not been applied to its output VAT.
This Court, likewise, will not give credence to the BIR Commissioner's contention that the claim for
refund of input VAT on capital goods by the MPC should be denied for the latter's failure to comply
with the requirements for the refund of input VAT credits on zero-rated sales provided in Section
16 of Revenue Regulations No. 5-87, as amended by Revenue Regulations No. 3-88. The BIR
Commissioner is apparently confused. MPC is claiming refund of the input VAT it has paid on the
purchase of capital goods, it is not claiming refund of its input VAT credits attributable to its zero-
rated sales. These are two different input VAT credits, arising from distinct transactions, although
both may be the subject of claims for refund by the taxpayer.27 Indeed, the very same regulation
invoked by the BIR Commissioner, Revenue Regulations No. 5-87, as amended, distinguishes
between these two refundable input VAT credits and discusses them in two separate paragraphs:
Section 16(a) on zero-rated sales of goods and services, and Section 16(b) on capital goods. It is also
worth noting that Revenue Regulations No. 7-95, issued on 9 December 1995, which consolidated
all VAT regulations, already superseded Revenue Regulations No. 5-87. Still, Revenue Regulations
No. 7-95 maintains the distinction between these two input VAT credits, discussing the zero-rated
sales of goods or properties or services in Section 4.106-1(a), and capital goods in Section 4.106-
1(b).
Hence, the present claim for refund of input VAT on capital goods filed by MPC need not comply
with the requirements for refund of input VAT attributable to zero-rated sales.
III
There is no reason for this Court to disturb the findings of fact of the CTA, as affirmed by the Court
of Appeals.
While it is true, as the BIR Commissioner alleges, that the MPC has the burden of proving that it is
entitled to the refund it is claiming for, both the CTA and Court of Appeals had ruled that the MPC
presented substantial evidence to support its claim for refund of its input VAT on capital goods and
services in the amount of P28,744,626.95.
The CTA found that MPC is registered as a VAT-taxpayer, as evidenced by its Certificate of
Registration, issued by the BIR Revenue District Office (RDO) No. 60, on 26 January 1996. The BIR
Commissioner does not contest this fact, and does not offer any explanation as to why the BIR RDO
had approved the registration of MPC as a VAT-taxpayer when, as the BIR Commissioner is now
asserting, the MPC is not subject to VAT but to franchise tax. The MPC had been filing its VAT representing input VAT paid on capital goods and services for the period of 1 April 1996 to 31
Quarterly Returns, including those for the period covered by its claim for refund, 1 April 1996 to 31 December 1996. No pronouncement as to costs.
December 1996, reporting and reflecting therein the input VAT it had paid on its purchase of capital
goods and services. These capital goods and services were necessary in the construction of the SO ORDERED.
power plant facilities used by MPC in electric power generation.

The VAT invoices and receipts submitted by MPC, in support of its claim for refund, had been
examined and evaluated by an independent auditor, as well as by the CTA itself. Thus, from the
original amount of P39,330,500.85 claimed by MPC for refund, the independent auditor, SGV & Co.,
found only the sum of P28,745,502.40 sufficiently supported by valid invoices and/or official
receipts. Following its own examination and evaluation of the evidence submitted, the CTA further
reduced the amount refundable to P28,744,626.95 after disallowing the input VAT on the purchase
of "xerox and office supplies which cannot be capitalized and not necessary in the construction of
power plant facilities."28

It is worth noting that the foregoing findings by the CTA were affirmed in totality by the Court of
Appeals. Likewise, this Court finds no reason to disturb the foregoing findings of the tax court.

Another well-settled principle in this jurisdiction is that this Court is bound by the findings of fact of
the CTA. Only errors of law, and not rulings on the weight of evidence, are reviewable by this Court.
Findings of fact of the CTA are not to be disturbed unless clearly shown to be unsupported by
substantial evidence.29 Quite the reverse, the claim of MPC for refund of input VAT on its purchase
of capital goods and services in the present case is found to be supported by substantial evidence,
not just by the CTA, but also by the Court of Appeals. The BIR Commissioner failed to convince this
Court otherwise.

IV

The BIR should seriously study and consider each and every application for claim for refund
pending before it.

As a final point, this Court would like to call the attention of the BIR Commissioner, as well as the
responsible BIR officers, to seriously study and consider each and every application for claim for
refund filed before their office. It is very obvious to this Court that the Answer filed by the BIR
Commissioner before the Court of Appeals, which it essentially reproduced as its Memorandum
before the same court, presented general and pro forma arguments. The BIR Commissioner only
raised belatedly before the Court of Appeals the issues of whether MPC is a public utility and
whether it is subject to franchise tax and not VAT. Even then, his Petition for Review before the
appellate court, numbering only six pages, with only one page devoted to a discussion of the merits
of his Petition, left much to be desired and would hardly persuade any court. Since he represents
the interest of the government in tax cases, the BIR Commissioner should exert more effort and
exercise more diligence in preparing his pleadings before any court; he should not wait to do so only
upon appeal of his case to the higher court. This Court may not always be inclined to allow him to
remedy his past laxity.

IN VIEW OF THE FOREGOING, the instant Petition is hereby DENIED. The Decision, dated 30 July
2003, of the Court of Appeals in CA-G.R. SP No. 60783, which affirmed in toto the Decision, dated
11 July 2000, of the CTA in CTA Case No. 5658, is hereby AFFIRMED. The BIR Commissioner is hereby
ORDERED to issue in favor of MPC a tax credit certificate in the amount of P28,744,626.95
(10) CIVPRO – RULE MAKING POWER OF SC
G.R. No. 197151 October 22, 2012
SM LAND, INC. (Formerly Shoemart, Inc.) and WATSONS PERSONAL CARE STORES, PHILS., INC.,
Petitioners,
vs.
CITY OF MANILA, LIBERTY TOLEDO, in her official capacity as the City Treasurer of Manila and
JOSEPH SANTIAGO, in his official capacity as the Chief of License Division of the City of Manila,
Respondents.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
reverse and set aside the Decision1 and Resolution2 of the Court of Tax Appeals (CTA) En Banc, dated
December 17, 2010 and May 27, 2011, respectively, in CTA EB No. 548. The assailed Decision
affirmed the July 3, 2009 Decision3 and September 30, 2009 Resolution4 of the CTA Second Division
in CTA AC No. 51, while the questioned Resolution denied herein petitioners' Motion for
Reconsideration.
The factual and procedural antecedents of the case are as follows:
On the strength of the provisions of Tax Ordinance Nos. 7988 and
8011, which amended Ordinance No. 7794, also known as the Revenue Code of Manila, herein
respondent City of Manila assessed herein petitioners, together with their other sister companies,
increased rates of business taxes for the year 2003 and the first to third quarters of 2004.
Petitioners and their sister companies paid the additional taxes under protest.
Subsequently, petitioners and their sister companies claimed with herein respondent City Treasurer
of Manila a credit or refund of the increased business taxes which they paid for the period
abovementioned. However, the City Treasurer denied their claim.
Aggrieved, petitioners and their sister companies filed with the Regional Trial Court (RTC) of Pasay
City a Complaint for Refund and/or Issuance of Tax Credit of Taxes Illegally Collected.5
On July 10, 2007, the RTC rendered a summary judgment in favor of herein petitioners, disposing as
follows:
WHEREFORE, this Court renders judgment in plaintiffs’ favor and directs the defendants to grant a
refund/tax credit:
(a) To Plaintff SM Mart, Inc. –
i. The amount of P3,543,318.97 representing overpayment of increased local
business taxes under Sections 15, 16, 17, 18, and 19, under the rates imposed
by Ordinance Nos. 7988 and 8011, and
ii. The amount of P17,519,133.16 representing payment of the Section 21 tax;
(b) To Plaintiff SM Prime Holdings, Inc. –
i. The amount of P667,377.21 representing overpayment of increased local
business taxes under Sections 15, 16, 17, 18, and 19, under the rates imposed
by Ordinance Nos. 7988 and 8011, and
ii. The amount of P6,711,068.38 representing payment of the Section 21 tax;
(c) To Plaintiff Shoemart, Inc. –
i. The amount of P691,887.07 representing overpayment of increased local
business taxes under Section 17, under the rates imposed by Ordinance Nos.
7988 and 8011, and
ii. The amount of P2,954,520.24 representing payment of the Section 21 tax;
(d) To Plaintiff Star Appliances Center –
i. The amount of P700,974.98 representing overpayment of increased local
business taxes under Section 17, under the rates imposed by Ordinance Nos.
7988 and 8011, and
ii. The amount of P3,459,812.76 representing payment of the Section 21 tax;
(e) To Plaintiff Supervalue, Inc. –
i. The amount of P1,360,984.69 representing overpayment of increased local
business taxes under Sections 17 and 18, under the rates imposed by Ordinance
Nos. 7988 and 8011, and
ii. The amount of P2,774,859.82 representing payment of the Section 21 tax;
(f) To Plaintiff Ace Hardware Philippines, Inc. –
i. The amount of P202,175.67 representing overpayment of increased local
business taxes under Section 17, under the rates imposed by Ordinance Nos.
7988 and 8011, and
ii. The amount of P988,347.16 representing payment of the Section 21 tax;
(g) To Plaintiff Watsons Personal Care Stores Philippines, Inc.–
i. The amount of P214,667.73 representing overpayment of increased local
business taxes under Section 17, under the rates imposed by Ordinance Nos.
7988 and 8011, and
ii. The amount of P636,857.15 representing payment of the Section 21 tax;
(h) To Plaintiff Jollimart Phils., Corp. –
i. The amount of P98,223.61 representing overpayment of increased local
business taxes under Section 17, under the rates imposed by Ordinance Nos.
7988 and 8011, and
ii. The amount of P296,178.13 representing payment of the Section 21 tax;
(i) To Plaintiff Surplus Marketing Corporation –
 i. The amount of P84,494.76 representing overpayment of increased local
business taxes under Section 17, under the rates imposed by Ordinance Nos.
7988 and 8011, and
ii. The amount of P399,942.81 representing payment of the Section 21 tax;
(j) To Plaintiff Signature Lines –
i. The amount of P49,566.91 representing overpayment of increased local
business taxes under Section 17, under the rates imposed by Ordinance Nos.
7988 and 8011, and
ii. The amount of P222,565.79 representing payment of the Section 21 tax.
No Costs.
SO ORDERED.6
The RTC held that Tax Ordinance Nos. 7988 and 8011, which were the bases of the City of Manila in
imposing the assailed additional business taxes on petitioners and their co-plaintiffs, had already
been declared null and void by this Court in the case of Coca-Cola Bottlers Philippines, Inc. v. City of
Manila.7 On this ground, the RTC ruled that respondents cannot use the assailed Ordinances in
imposing additional taxes on petitioners and their co-plaintiffs.
Respondents moved for reconsideration, but the RTC denied it in its Order dated December 14,
2007.
After the CTA granted their request for extension of time, herein respondents filed a petition for
review with the tax court.8 The case was raffled to the Second Division of the said court.
On July 3, 2009, the CTA Second Division rendered its Decision, the dispositive portion of which
reads, thus:
WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY
GRANTED.1âwphi1 The appealed Order dated July 10, 2007 and Order dated December 14, 2007 of
the Regional Trial Court of Pasay City, Branch 115, in Civil Case No. 05-0051-CFM are hereby
MODIFIED. Accordingly, with the exception of Shoemart, Inc. and Watsons Personal Care Stores,
Phils., petitioners are hereby ORDERED to REFUND the rest of the respondents, their erroneously
paid local business taxes for taxable year 2003 and for the first to third quarters of taxable year 2004
in the aggregate amount of THIRTY-NINE MILLION SEVENTY-EIGHT THOUSAND NINE HUNDRED
EIGHTY-EIGHT PESOS AND 81/100 (P39,078,988.81), detailed as follows:9
The CTA Second Division sustained the ruling of the RTC that Ordinance Nos. 7988 and 8011 are null
and void. Applying the doctrine of stare decisis, the CTA Second Division held that the ruling in the
Coca-Cola case cited by the RTC is applicable in the present case as both cases involve substantially
the same facts and issues. The CTA Second Division, nonetheless, held that herein petitioners' claims
for tax refund should be denied because of their failure to comply with the provisions of the Rules
of Court requiring verification and submission of a certificate of non-forum shopping. The CTA
Second Division noted that petitioners failed to attach to the complaint filed with the RTC their
respective Secretary's Certificates authorizing their supposed representative, a certain Atty. Rex
Enrico V. Cruz III (Atty. Cruz), to file the said complaint in their behalf. The CTA also observed that
in the Verification and Certification of Non-Forum Shopping attached to the complaint, petitioner
SM Land, Inc. was not included in the list of corporations represented by the person who executed
the said Verification and Certification.
Petitioners filed a Motion for Partial Reconsideration.10 Attached to the said Motion was the
Verification and Certification executed by Atty. Cruz as the representative of petitioner SM Land,
Inc. Also attached were petitioners' Secretary's Certificates authorizing Atty. Cruz as their
representative. The CTA Second Division, however, denied the Motion for Partial Reconsideration
in its Resolution11 dated September 30, 2009.
Aggrieved, petitioners filed a petition for review with the CTA En Banc, contending that: (1) the CTA
Second Division erred in holding that the 30-day period provided by law within which to appeal
decisions of the RTC to the CTA may be extended; and (2) the CTA Second Division committed error
in denying herein petitioners' claim for tax refund on the ground that they violated the rules on
verification and certification of non-forum shopping.
On December 17, 2010, the CTA En Banc rendered its assailed Decision affirming in toto the
judgment of the CTA Second Division.
Petitioners' Motion for Reconsideration was subsequently denied by the CTA En Banc in its
Resolution dated May 27, 2011.
Hence, the present petition anchored on the following arguments:
A. SECTION 11, REPUBLIC ACT NO. 1125, AS AMENDED BY REPUBLIC ACT NO. 9282,
CLEARLY DID NOT INTEND FOR THE THIRTY (30)-DAY PERIOD TO APPEAL DECISIONS OF
THE REGIONAL TRIAL COURT TO THE CTA TO BE EXTENDIBLE; AND
B. ASSUMING HYPOTHETICALLY THAT THE CTA WAS CORRECT IN GRANTING
RESPONDENTS AN EXTENSION, THERE WERE STILL COMPELLING REASONS TO JUSTIFY THE
RELAXATION OF THE RULES REQUIRING VERIFICATION AND CERTIFICATION OF NON-
FORUM SHOPPING.12
The Court finds the petition meritorious. Nonetheless, the Court does not fully agree with
petitioners' contentions.
In the first argument raised, the Court is not persuaded by petitioners’ insistence that the 30-day
period to appeal decisions of the RTC to the CTA is non-extendible.
Petitioners cited cases decided by this Court wherein it was held that the 30-day period within which
to file an appeal with the CTA is jurisdictional and non-extendible. However, these rulings had been
superseded by this Court's decision in the case of City of Manila v. Coca-Cola Bottlers, Philippines,
Inc.,13 as correctly cited by the CTA En Banc. Suffice it to say that this Court's ruling in the said case
is instructive, to wit:
xxxx
The period to appeal the decision or ruling of the RTC to the CTA via a Petition for Review is
specifically governed by Section 11 of Republic Act No. 9282, and Section 3 (a), Rule 8 of the Revised
Rules of the CTA.
Section 11 of Republic Act No. 9282 provides:
SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. – Any party adversely affected by a
decision, ruling or inaction of the Commissioner of Internal Revenue, the Commissioner of Customs,
the Secretary of Finance, the Secretary of Trade and Industry or the Secretary of Agriculture or the
Central Board of Assessment Appeals or the Regional Trial Courts may file an Appeal with the CTA
within thirty (30) days after the receipt of such decision or ruling or after the expiration of the period
fixed by law for action as referred to in Section 7(a)(2) herein.
Appeal shall be made by filing a petition for review under a procedure analogous to that provided
for under Rule 42 of the 1997 Rules of Civil Procedure with the CTA within thirty (30) days from the
receipt of the decision or ruling or in the case of inaction as herein provided, from the expiration of
the period fixed by law to act thereon. x x x. (Emphasis supplied.)
Section 3(a), Rule 8 of the Revised Rules of the CTA states:
SEC 3. Who may appeal; period to file petition. – (a) A party adversely affected by a decision, ruling
or the inaction of the Commissioner of Internal Revenue on disputed assessments or claims for
refund of internal revenue taxes, or by a decision or ruling of the Commissioner of Customs, the
Secretary of Finance, the Secretary of Trade and Industry, the Secretary of Agriculture, or a Regional
Trial Court in the exercise of its original jurisdiction may appeal to the Court by petition for review
filed within thirty days after receipt of a copy of such decision or ruling, or expiration of the period
fixed by law for the Commissioner of Internal Revenue to act on the disputed assessments. x x x.
(Emphasis supplied.)
It is crystal clear from the afore-quoted provisions that to appeal an adverse decision or ruling of
the RTC to the CTA, the taxpayer must file a Petition for Review with the CTA within 30 days from
receipt of said adverse decision or ruling of the RTC.
It is also true that the same provisions are silent as to whether such 30-day period can be extended
or not. However, Section 11 of Republic Act No. 9282 does state that the Petition for Review shall
be filed with the CTA following the procedure analogous to Rule 42 of the Revised
Rules of Civil Procedure. Section 1, Rule 42 of the Revised Rules of Civil Procedure provides that the
Petition for Review of an adverse judgment or final order of the RTC must be filed with the Court of
Appeals within: (1) the original 15-day period from receipt of the judgment or final order to be
appealed; (2) an extended period of 15 days from the lapse of the original period; and (3) only for
the most compelling reasons, another extended period not to exceed 15 days from the lapse of the
first extended period.
Following by analogy, Section 1, Rule 42 of the Revised Rules of Civil Procedure, the 30-day original
period for filing a Petition for Review with the CTA under Section 11 of Republic Act No. 9282, as
implemented by Section 3 (a), Rule 8 of the Revised Rules of the CTA, may be extended for a period
of 15 days. No further extension shall be allowed thereafter, except only for the most compelling
reasons, in which case the extended period shall not exceed 15 days.
x x x x14
Petitioners further contend that the Order of the CTA Second Division granting petitioners' motion
for extension to file their petition for review is invalid, because at the time that the said motion was
granted on March 4, 2008, this Court has not yet promulgated its decision in the above-cited Coca-
Cola case. It was only on August 4, 2009 that this Court issued its decision in the said case and, that
petitioners reason out that the same is inapplicable to the instant case as the ruling therein cannot
be applied retroactively. Petitioners argue that, aside from the Coca-Cola case, the CTA Second
Division had no clear statutory authority or jurisprudential basis in granting petitioners' motion for
extension to file their petition for review.
The Court does not agree.
At the time that the CTA Second Division granted petitioners' motion for extension to file their
petition for review, Republic Act 928215 (RA 9282), which amended certain provisions of RA 1125,16
were already in effect,17 and it is clearly provided therein that appeals from the RTC to the CTA shall
follow a procedure analogous to that provided for under Rule 42 of the Rules of Court. Rule 42 of
the said Rules, in turn, provides that the court may grant an extension of fifteen (15) days within
which to file the petition for review. Thus, independent of the Coca-Cola case, the CTA Second
Division had clear statutory authority in granting petitioners' motion for extension. This Court’s
ruling in Coca-Cola is a mere clarification and affirmation of what is provided for under the
provisions of RA 1125, as amended by RA 9282.
Nonetheless, the Court agrees with petitioners' contention in its second argument that there are
compelling reasons in the present case which justify the relaxation of the rules on verification and
certification of non-forum shopping.
It must be kept in mind that while the requirement of the certification of non-forum shopping is
mandatory, nonetheless, the requirements must not be interpreted too literally and, thus, defeat
the objective of preventing the undesirable practice of forum shopping.18
Time and again, this Court has held that rules of procedure are established to secure substantial
justice.19 Being instruments for the speedy and efficient administration of justice, they must be used
to achieve such end, not to derail it.20 In particular, when a strict and literal application of the rules
on non-forum shopping and verification will result in a patent denial of substantial justice, these
may be liberally construed.21
In the instant case, petitioner Watsons' procedural lapse was its belated submission of a Secretary's
Certificate authorizing Atty. Cruz as its representative. On the other hand, petitioner SM Land, Inc.'s
infraction was not only its late submission of its Secretary's Certificate but also its failure to timely
submit its verification and certification of non-forum shopping.
In a number of cases, this Court has excused the belated filing of the required verification and
certification of non-forum shopping, citing that special circumstances or compelling reasons make
the strict application of the rule clearly unjustified.22 This Court ruled that substantial justice and the
apparent merits of the substantive aspect of the case are deemed special circumstances or
compelling reasons to relax the said rule.
In fact, this Court has held that even if there was complete non-compliance with the rule on
certification against forum shopping, the Court may still proceed to decide the case on the merits,
pursuant to its inherent power to suspend its own rules on grounds, as stated above, of substantial
justice and apparent merit of the case.23
Thus, in Vda. de Formoso v. Philippine National Bank,24 this Court reiterated, in capsule form, the
rule on non-compliance with the requirements on, or submission of defective verification and
certification of non-forum shopping, to wit:
1) A distinction must be made between non-compliance with the requirement on or
submission of defective verification, and non-compliance with the requirement on or
submission of defective certification against forum shopping.
2) As to verification, non-compliance therewith or a defect therein does not necessarily
render the pleading fatally defective. The Court may order its submission or correction or
act on the pleading if the attending circumstances are such that strict compliance with the
Rule may be dispensed with in order that the ends of justice may be served thereby.
3) Verification is deemed substantially complied with when one who has ample
knowledge to swear to the truth of the allegations in the complaint or petition signs the
verification, and when matters alleged in the petition have been made in good faith or are
true and correct.
 4) As to certification against forum shopping, non-compliance therewith or a defect
therein, unlike in verification, is generally not curable by its subsequent submission or
correction thereof, unless there is a need to relax the Rule on the ground of "substantial
compliance" or presence of "special circumstances or compelling reasons."

5) The certification against forum shopping must be signed by all the plaintiffs or
petitioners in a case; otherwise, those who did not sign will be dropped as parties to the
case. Under reasonable or justifiable circumstances, however, as when all the plaintiffs or
petitioners share a common interest and invoke a common cause of action or defense,
the signature of only one of them in the certification against forum shopping substantially
complies with the Rule.

6) Finally, the certification against forum shopping must be executed by the party-pleader,
not by his counsel. If, however, for reasonable or justifiable reasons, the party-pleader is
unable to sign, he must execute a Special Power of Attorney designating his counsel of
record to sign on his behalf.25 (Emphasis supplied)

In the present case, there is no dispute that Tax Ordinance Nos. 7988 and 8011 have already been
declared null and void by this Court as early as 2006 in the case of Coca-Cola Bottlers Philippines,
Inc. v. City of Manila.26 The nullity of the said Tax Ordinances is affirmed in the more recent case of
City of Manila v. Coca-Cola Bottlers, Philippines, Inc.,27 as cited above. Thus, to the mind of this
Court, the unquestioned nullity of the above assailed Tax Ordinances upon which petitioners were
previously taxed, makes petitioners' claim for tax refund clearly meritorious. In fact, petitioners'
sister companies, which were their co-plaintiffs in their Complaint filed with the RTC, were granted
tax refund in accordance with the judgments of the trial court, the CTA Second Division and the CTA
En Banc. On this basis, petitioners’ meritorious claims are compelling reasons to relax the rule on
verification and certification of non-forum shopping.

In any case, it would bear to point out that petitioners and their co-plaintiffs in the trial court
filedtheir claim for tax refund as a collective group, because they share a common interest and
invoke a common cause of action. Hence, the signature of the representative of the other co-
plaintiffs may be considered as substantial compliance with the rule on verification and certification
of non-forum shopping, consistent with this Court's pronouncement that when all the petitioners
share a common interest and invoke a common cause of action or defense, the signature of only
one of them in the certification against forum shopping substantially complies with the rules.28

WHEREFORE, the instant petition is GRANTED. The Decision and Resolution of the Court of Tax
Appeals En Banc, dated December 17, 2010 and May 27, 2011, respectively, in CTA EB No. 548, as
well as the July 3, 2009 Decision and September 30, 2009 Resolution of the Court of Tax Appeals
Second Division in CTA AC No. 51, are REVERSED AND SET ASIDE and the Orders of the Regional Trial
Court of Pasay City, Branch 115, dated July 10, 2007 and December 14, 2007, are REINSTATED.

SO ORDERED.
(11) CIVPRO – RULE MAKING POWER OF SC
G.R. No. 170354 June 30, 2006
EDGARDO PINGA, Petitioner,
vs.
THE HEIRS OF GERMAN, SANTIAGO represented by FERNANDO SANTIAGO, Respondents.
DECISION
TINGA, J.:
The constitutional faculty of the Court to promulgate rules of practice and procedure 1 necessarily
carries the power to overturn judicial precedents on points of remedial law through the amendment
of the Rules of Court. One of the notable changes introduced in the 1997 Rules of Civil Procedure is
the explicit proviso that if a complaint is dismissed due to fault of the plaintiff, such dismissal is
"without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a
separate action."2 The innovation was instituted in spite of previous jurisprudence holding that the
fact of the dismissal of the complaint was sufficient to justify the dismissal as well of the compulsory
counterclaim.3
In granting this petition, the Court recognizes that the former jurisprudential rule can no longer
stand in light of Section 3, Rule 17 of the 1997 Rules of Civil Procedure.
The relevant facts are simple enough. Petitioner Eduardo Pinga was named as one of two
defendants in a complaint for injunction4 filed with Branch 29 of the Regional Trial Court (RTC)5 of
San Miguel, Zamboanga del Sur, by respondent Heirs of German Santiago, represented by Fernando
Santiago. The Complaint6 dated 28 May 1998 alleged in essence that petitioner and co-defendant
Vicente Saavedra had been unlawfully entering the coco lands of the respondent, cutting wood and
bamboos and harvesting the fruits of the coconut trees therein. Respondents prayed that petitioner
and Saavedra be enjoined from committing "acts of depredation" on their properties, and ordered
to pay damages.
In their Amended Answer with Counterclaim,7 petitioner and his co-defendant disputed
respondents’ ownership of the properties in question, asserting that petitioner’s father, Edmundo
Pinga, from whom defendants derived their interest in the properties, had been in possession
thereof since the 1930s.8 They alleged that as far back as 1968, respondents had already been
ordered ejected from the properties after a complaint for forcible entry was filed by the heirs of
Edmundo Pinga. It was further claimed that respondents’ application for free patent over the
properties was rejected by the Office of the President in 1971. Defendants in turn prayed that owing
to respondents’ forcible re-entry in the properties and the irresponsible and reckless filing of the
case, they be awarded various types of damages instead in amounts totaling P2,100,000 plus costs
of suit.9
By July of 2005, the trial of the case had not yet been completed. Moreover, respondents, as
plaintiffs, had failed to present their evidence. It appears that on 25 October 2004, the RTC already
ordered the dismissal of the complaint after respondents’ counsel had sought the postponement of
the hearing scheduled then.10 However, the order of dismissal was subsequently reconsidered by
the RTC in an Order dated 9 June 2005, which took into account the assurance of respondents’
counsel that he would give priority to that case.11
At the hearing of 27 July 2005, plaintiffs’ counsel on record failed to appear, sending in his stead a
representative who sought the postponement of the hearing. Counsel for defendants (who include
herein petitioner) opposed the move for postponement and moved instead for the dismissal of the
case. The RTC noted that it was obvious that respondents had failed to prosecute the case for an
unreasonable length of time, in fact not having presented their evidence yet. On that ground, the
complaint was dismissed. At the same time, the RTC allowed defendants "to present their evidence
ex-parte."12
Respondents filed a Motion for Reconsideration13 of the order issued in open court on 27 July 2005,
opting however not to seek that their complaint be reinstated, but praying instead that the entire
action be dismissed and petitioner be disallowed from presenting evidence ex-parte. Respondents
claimed that the order of the RTC allowing petitioner to present evidence ex-parte was not in accord
with established jurisprudence. They cited cases, particularly City of Manila v. Ruymann14 and
Domingo v. Santos,15 which noted those instances in which a counterclaim could not remain pending
for independent adjudication.
On 9 August 2005, the RTC promulgated an order granting respondents’ Motion for Reconsideration
and dismissing the counterclaim, citing as the only ground therefor that "there is no opposition to
the Motion for Reconsideration of the [respondents]."16 Petitioner filed a Motion for
Reconsideration, but the same was denied by the RTC in an Order dated 10 October 2005.17 Notably,
respondents filed an Opposition to Defendants’ Urgent Motion for Reconsideration, wherein they
argued that the prevailing jurisprudential rule18 is that "compulsory counterclaims cannot be
adjudicated independently of plaintiff’s cause of action," and "a conversu, the dismissal of the
complaint carries with it the dismissal of the compulsory counterclaims."19
The matter was elevated to this Court directly by way of a Petition for Review under Rule 45 on a
pure question of law, the most relevant being whether the dismissal of the complaint necessarily
carries the dismissal of the compulsory counterclaim.
We hold that under Section 3, Rule 17 of the 1997 Rules of Civil Procedure, the dismissal of the
complaint due to the fault of plaintiff does not necessarily carry with it the dismissal of the
counterclaim, compulsory or otherwise. In fact, the dismissal of the complaint is without prejudice
to the right of defendants to prosecute the counterclaim.
On a prefatory note, the RTC, in dismissing the counterclaim, did not expressly adopt respondents’
argument that the dismissal of their complaint extended as well to the counterclaim. Instead, the
RTC justified the dismissal of the counterclaim on the ground that "there is no opposition to
[plaintiff’s] Motion for Reconsideration [seeking the dismissal of the counterclaim]." 20 This
explanation is hollow, considering that there is no mandatory rule requiring that an opposition be
filed to a motion for reconsideration without need for a court order to that effect; and, as posited
by petitioner, the "failure to file an opposition to the Plaintiff’s Motion for Reconsideration is
definitely not one among the established grounds for dismissal [of the counterclaim]." 21 Still, the
dismissal of the counterclaim by the RTC betrays at very least a tacit recognition of respondents’
argument that the counterclaim did not survive the dismissal of the complaint. At most, the
dismissal of the counterclaim over the objection of the defendant (herein petitioner) on grounds
other than the merits of the counterclaim, despite the provisions under Rule 17 of the 1997 Rules
of Civil Procedure, constitutes a debatable question of law, presently meriting justiciability through
the instant action. Indeed, in reviewing the assailed orders of the RTC, it is inevitable that the Court
consider whether the dismissal of the complaint, upon motion of the defendant, on the ground of
the failure to prosecute on plaintiff’s part precipitates or carries with it the dismissal of the pending
counterclaims.
Our core discussion begins with Section 3, Rule 17 of the 1997 Rules of Civil Procedure, which states:
SEC. 3. Dismissal due to fault of plaintiff.—If, for no justifiable cause, the plaintiff fails to appear on
the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for
an unreasonable length of time, or to comply with these Rules or any order of the court, the
complaint may be dismissed upon motion of defendant or upon the court's own motion, without
prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate
action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise
declared by the court.
The express qualification in the provision that the dismissal of the complaint due to the plaintiff’s
fault, as in the case for failure to prosecute, is without prejudice to the right of the defendant to
prosecute his counterclaim in the same or separate action. This stands in marked contrast to the
provisions under Rule 17 of the 1964 Rules of Court which were superseded by the 1997
amendments. In the 1964 Rules, dismissals due to failure to prosecute were governed by Section 3,
Rule 17, to wit:
SEC. 3. Failure to prosecute. — If plaintiff fails to appear at the time of the trial, or to prosecute his
action for an unreasonable length of time, or to comply with these rules or any order of the court,
the action may be dismissed upon motion of the defendant or upon the court’s own motion. This
dismissal shall have the effect of an adjudication upon the merits, unless otherwise provided by
court.
Evidently, the old rule was silent on the effect of such dismissal due to failure to prosecute on the
pending counterclaims. As a result, there arose what one authority on remedial law characterized
as "the nagging question of whether or not the dismissal of the complaint carries with it the
dismissal of the counterclaim."22 Jurisprudence construing the previous Rules was hardly silent on
the matter.
In their arguments before the RTC on the dismissal of the counterclaim, respondents cited in
support City of Manila v.
Ruymann,23 Domingo v. Santos,24 Belleza v. Huntington,25 and Froilan v. Pan Oriental Shipping Co.,26
all of which were decided more than five decades ago. Notably though, none of the complaints in
these four cases were dismissed either due to the fault of the plaintiff or upon the instance of the
defendant.27
The distinction is relevant, for under the previous and current incarnations of the Rules of Civil
Procedure, it is Section 3, Rule 17 that governs the dismissals due to the failure of the plaintiff to
prosecute the complaint, as had happened in the case at bar. Otherwise, it is Section 2, Rule 17,
which then, and still is now, covered dismissals ordered by the trial court upon the instance of the
plaintiff.28 Yet, as will be seen in the foregoing discussion, a discussion of Section 2 cannot be
avoided as the postulate behind that provision was eventually extended as well in cases that should
have properly been governed by Section 3.
Even though the cases cited by respondents involved different factual antecedents, there exists
more appropriate precedents which they could have cited in support of their claim that the
counterclaim should have been dismissed even if the dismissal of the complaint was upon the
defendants’ motion and was predicated on the plaintiff’s fault. BA Finance Corp. v. Co29 particularly
stands out in that regard, although that ruling is itself grounded on other precedents as well.
Elucidation of these cases is in order.
On the general effect of the dismissal of a complaint, regardless of cause, on the pending
counterclaims, previous jurisprudence laid emphasis on whether the counterclaim was compulsory
or permissive in character. The necessity of such distinction was provided in the 1964 Rules itself,
particularly Section 2, Rule 17, which stated that in instances wherein the plaintiff seeks the
dismissal of the complaint, "if a counterclaim has been pleaded by a defendant prior to the service
upon him of the plaintiff’s motion to dismiss, the action shall not be dismissed against the
defendant’s objection unless the counterclaim can remain pending for independent adjudication by
the court."30 The
vaunted commentaries of Chief Justice Moran, remarking on Section 2, Rule 17, noted that "[t]here
are instances in which a counterclaim cannot remain pending for independent adjudication, as,
where it arises out of, or is necessarily connected with, the transaction or occurrence which is the
subject matter of the opposing party’s claim."31
This view expressed in Moran’s Commentaries was adopted by the Court in cases where the
application of Section 2, Rule 17 of the 1964 Rules of Court was called for, such as in Lim Tanhu v.
Ramolete,32 and Dalman v. City Court of Dipolog City.33 The latter case warrants brief elaboration.
Therein, the plaintiff in a civil case for damages moved for the withdrawal of her own case on the
ground that the dispute had not been referred to the barangay council as required by law. Over the
objection of the defendant, who feared that her own counterclaim would be prejudiced by the
dismissal, plaintiff’s motion was granted, the complaint and the counterclaim accordingly dismissed
by the trial court. The Court refused to reinstate the counterclaim, opining without elaboration, "[i]f
the civil case is dismissed, so also is the counterclaim filed therein."34 The broad nature of that
statement gave rise to the notion that the mandatory
dismissal of the counterclaim upon dismissal of the complaint applied regardless of the cause of the
complaint’s dismissal.35
Notably, the qualification concerning compulsory counterclaims was provided in Section 2, Rule 17
of the 1964 Rules, the provision governing dismissals by order of the court, and not Section 3, Rule
17. As stated earlier, Section 3, which covered dismissals for failure to prosecute upon motion of
the defendant or upon motu proprio action of the trial court, was silent on the effect on the
counterclaim of dismissals of such nature.
Spouses Sta. Maria, Jr. v. Court of Appeals,36 decided in 1972, ostensibly supplied the gap on the
effect on the counterclaim of complaints dismissed under Section 3. The defendants therein
successfully moved before the trial court for the dismissal of the complaint without prejudice and
their declaration in default on the counterclaim after plaintiffs therein failed to attend the pre-trial.
After favorable judgment was rendered on the counterclaim, plaintiffs interposed an appeal, citing
among other grounds, that the counterclaim could no longer have been heard after the dismissal of
the complaint. While the Court noted that the adjudication of the counterclaim in question "does
not depend upon the adjudication of the claims made in the complaint since they were virtually
abandoned by the non-appearance of the plaintiffs themselves," it was also added that "[t]he
doctrine invoked is not available to plaintiffs like the petitioners, who prevent or delay the hearing
of their own claims and allegations."37 The Court, through Justice JBL Reyes, noted:
The doctrine that the complaint may not be dismissed if the counterclaim cannot be
independently adjudicated is not available to, and was not intended for the benefit of, a plaintiff
who prevents or delays the prosecution of his own complaint. Otherwise, the trial of counterclaims
would be made to depend upon the maneuvers of the plaintiff, and the rule would offer a premium
to vexing or delaying tactics to the prejudice of the counterclaimants. It is in the same spirit that we
have ruled that a complaint may not be withdrawn over the opposition of the defendant where the
counterclaim is one that arises from, or is necessarily connected with, the plaintiff’s action and
cannot remain pending for independent adjudication.38
There is no doubt that under the 1964 Rules, the dismissal of a complaint due to the failure of the
plaintiff to appear during pre-trial, as what had happened in Sta. Maria, fell within the coverage of
Section 3, Rule 17. On the other hand, Section 2 was clearly limited in scope to those dismissals
sustained at the instance of the plaintiff.39 Nonetheless, by the early 1990s, jurisprudence was
settling on a rule that compulsory counterclaims were necessarily terminated upon the dismissal of
the complaint not only if such dismissal was upon motion of the plaintiff, but at the instance of the
defendant as well. Two decisions from that period stand out in this regard, Metals Engineering
Resources Corp. v. Court of Appeals40 and International Container Terminal Services v. Court of
Appeals.41
In Metals, the complaint was expunged from the record after the defendant had filed a motion for
reconsideration of a trial court order allowing the filing of an amended complaint that corrected a
jurisdictional error in the original complaint pertaining to the specification of the amount of
damages sought. When the defendant was nonetheless allowed to present evidence on the
counterclaim, the plaintiff assailed such allowance on the ground that the counterclaim was
compulsory and could no longer remain pending for independent adjudication. The Court, in finding
for the plaintiff, noted that the counterclaim was indeed compulsory in nature, and as such, was
auxiliary to the proceeding in the original suit and derived its jurisdictional support therefrom. 42 It
was further explained that the doctrine was in consonance with the primary objective of a
counterclaim, which was to avoid and prevent circuitry of action by allowing the entire controversy
between the parties to be litigated and finally determined in one action, and to discourage
multiplicity of suits.43 Also, the Court noted that since the complaint was dismissed for lack of
jurisdiction, it was as if no claim was filed against the defendant, and there was thus no more leg
for the complaint to stand on.44
In International Container, the defendant filed a motion to dismiss which was granted by the trial
court. The defendant’s counterclaim was dismissed as well. The Court summarized the key question
as "what is the effect of the dismissal of a complaint ordered at the instance of the defendant upon
a compulsory counterclaim duly raised in its answer."45 Then it ruled that the counterclaim did not
survive such dismissal. After classifying the counterclaim therein as compulsory, the Court noted
that "[i]t is obvious from the very nature of the counterclaim that it could not remain pending for
independent adjudication, that is, without adjudication by the court of the complaint itself on which
the counterclaim was based."46
Then in 1993, a divided Court ruled in BA Finance that the dismissal of the complaint for
nonappearance of plaintiff at the pre-trial, upon motion of the defendants, carried with it the
dismissal of their compulsory counterclaim.47 The Court reiterated the rule that "a compulsory
counterclaim cannot remain pending for independent adjudication by the court… as it is auxiliary to
the proceeding in the original suit and merely derives its jurisdictional support therefrom." 48 Express
reliance was made on Metals, International Container, and even Dalman in support of the majority’s
thesis. BA Finance likewise advised that the proper remedy for defendants desirous that their
counterclaims not be dismissed along with the main complaint was for them to move to declare the
plaintiffs to be "non-suited" on their complaint and "as in default" on their compulsory
counterclaim, instead of moving for the dismissal of the complaint.49
Justice Regalado, joined by Chief Justice Narvasa, registered a strong objection to the theory of the
majority. They agreed that the trial court could no longer hear the counterclaim, but only on the
ground that defendant’s motion to be allowed to present evidence on the counterclaim was filed
after the order dismissing the complaint had already become final. They disagreed however that
the compulsory counterclaim was necessarily dismissed along with the main complaint, pointing
out that a situation wherein the dismissal of the complaint was occasioned by plaintiff’s failure to
appear during pre-trial was governed under Section 3, Rule 17, and not Section 2 of the same rule.
Justice Regalado, who ironically penned the decision in Metals cited by the majority, explained:
Turning back to Rule 17, it is readily apparent that Sections 2 and 3 thereof envisage different factual
and adjective situations. The dismissal of the complaint under Section 2 is at the instance of plaintiff,
for whatever reason he is minded to move for such dismissal, and, as a matter of procedure, is
without prejudice unless otherwise stated in the order of the court or, for that matter, in plaintiff's
motion to dismiss his own complaint. By reason thereof, to curb any dubious or frivolous strategy
of plaintiff for his benefit or to obviate possible prejudice to defendant, the former may not dismiss
his complaint over the defendant's objection if the latter has a compulsory counterclaim since said
counterclaim would necessarily be divested of juridical basis and defendant would be deprived of
possible recovery thereon in that same judicial proceeding.
Section 3, on the other hand, contemplates a dismissal not procured by plaintiff, albeit justified by
causes imputable to him and which, in the present case, was petitioner's failure to appear at the
pre-trial. This situation is also covered by Section 3, as extended by judicial interpretation, and is
ordered upon motion of defendant or motu proprio by the court. Here, the issue of whether
defendant has a pending counterclaim, permissive or compulsory, is not of determinative
significance. The dismissal of plaintiff's complaint is evidently a confirmation of the failure of
evidence to prove his cause of action outlined therein, hence the dismissal is considered, as a matter
of evidence, an adjudication on the merits. This does not, however, mean that there is likewise such
absence of evidence to prove defendant's counterclaim although the same arises out of the subject
matter of the complaint which was merely terminated for lack of proof. To hold otherwise would
not only work injustice to defendant but would be reading a further provision into Section 3 and
wresting a meaning therefrom although neither exists even by mere implication. Thus understood,
the complaint can accordingly be dismissed, but relief can nevertheless be granted as a matter of
course to defendant on his counterclaim as alleged and proved, with or without any reservation
therefor on his part, unless from his conduct, express or implied, he has virtually consented to the
concomitant dismissal of his counterclaim.50
Justice Regalado also adverted to Sta. Maria and noted that the objections raised and rejected by
the Court therein were the same as those now relied upon by the plaintiff. He pointed out that
Dalman and International Container, both relied upon by the majority, involved the application of
Section 2, Rule 17 and not Section 3, which he insisted as the applicable provision in the case at
bar.51
The partial dissent of Justice Regalado in BA Finance proved opportune, as he happened then to be
a member of the Rules of Court Revision Committee tasked with the revision of the 1964 Rules of
Court. Just a few months after BA Finance was decided, Justice Regalado proposed before the
Committee an amendment to Section 3, Rule 17 that would explicitly provide that the dismissal of
the complaint due to the fault of the plaintiff shall be "without prejudice to the right of the
defendant to prosecute his counterclaim in the same or in a separate action." The amendment,
which was approved by the Committee, is reflected in the minutes of the meeting of the Committee
held on 12 October 1993:
[Justice Regalado] then proposed that after the words "upon the court’s own motion" in the 6th
line of the draft in Sec. 3 of Rule 17, the following provision be inserted: "without prejudice to the
right of the defendant to prosecute his counterclaim in the same or in a separate action." The
Committee agreed with the proposed amendment of Justice Regalado.
Justice Herrera observed that under Secs. 1 to 3 of Rule 17, it is not the action that is dismissed but
the complaint. He asked whether there is any distinction between "complaint" and "action." Justice
Regalado opined that the action of the plaintiff is initiated by his complaint.
Justice Feria then suggested that the dismissal be limited to the complaint[.] Thus, in the 1st line
of Sec. 1, the words "An action" will be changed to "a complaint"; in the 2nd line of Sec. 2, the
words "an action" will be changed to "a complaint" and in Sec. 3, the word "action" on the 5th
line of the draft will be changed to "complaint." The Committee agreed with Justice Feria’s
suggested amendments.
CA Paño believed that there is a need to clarify the counterclaim that the defendant will
prosecute, whether it is permissive or compulsory or all kinds of counterclaims.
Justice Regalado opined that there is no need of making a clarification because it is already
understood that it covers both counterclaims.52
It is apparent from these minutes that the survival of the counterclaim despite the dismissal of the
complaint under Section 3 stood irrespective of whether the counterclaim was permissive or
compulsory. Moreover, when the Court itself approved the revisions now contained in the 1997
Rules of Civil Procedure, not only did Justice Regalado’s amendment to Section 3, Rule 17 remain
intact, but the final version likewise eliminated the qualification formerly offered under Section 2
on "counterclaims that can remain pending for independent adjudication by the court."53 At
present, even Section 2, concerning dismissals on motion of the plaintiff, now recognizes the right
of the defendant to prosecute the counterclaim either in the same or separate action
notwithstanding the dismissal of the complaint, and without regard as to the permissive or
compulsory nature of the counterclaim.
In his commentaries on the 1997 Rules of Civil Procedure, Justice Regalado expounds on the effects
of the amendments to Section 2 and 3 of Rule 17:
2. Under this revised section [2], where the plaintiff moves for the dismissal of his complaint to
which a counterclaim has been interposed, the dismissal shall be limited to the complaint. Such
dismissal shall be without prejudice to the right of the defendant to either prosecute his
counterclaim in a separate action or to have the same resolved in the same action. Should he opt
for the first alternative, the court should render the corresponding order granting and reserving his
right to prosecute his claim in a separate complaint. Should he choose to have his counterclaim
disposed of in the same action wherein the complaint had been dismissed, he must manifest such
preference to the trial court within 15 days from notice to him of plaintiff’s motion to dismiss. These
alternative remedies of the defendant are available to him regardless of whether his counterclaim
is compulsory or permissive. A similar alternative procedure, with the same underlying reason
therefor, is adopted in Sec. 6, Rule 16 and Sec. 3 of this Rule, wherein the complaint is dismissed on
the motion of the defendant or, in the latter instance, also by the court motu proprio.
xxxx
2. The second substantial amendment to [Section 3] is with respect to the disposition of the
defendant’s counterclaim in the event the plaintiff’s complaint is dismissed. As already observed,
he is here granted the choice to prosecute that counterclaim in either the same or a separate action.
xxxx
3. With the aforestated amendments in Secs. 2 and 3 laying down specific rules on the disposition
of counterclaims involved in the dismissal actions, the controversial doctrine in BA Finance
Corporation vs. Co, et al., (G.R. No. 105751, June 30, 1993) has been abandoned, together with
the apparent confusion on the proper application of said Secs. 2 and 3. Said sections were
distinguished and discussed in the author’s separate opinion in that case, even before they were
clarified by the present amendments x x x.54
Similarly, Justice Feria notes that "the present rule reaffirms the right of the defendant to move for
the dismissal of the complaint and to prosecute his counterclaim, as stated in the separate opinion
[of Justice Regalado in BA Finance.]"55 Retired Court of Appeals Justice Herrera pronounces that the
amendment to Section 3, Rule 17 settles that "nagging question" whether the dismissal of the
complaint carries with it the dismissal of the counterclaim, and opines that by reason of the
amendments, the rulings in Metals Engineering, International Container, and BA Finance "may be
deemed abandoned."56 On the effect of amendment to Section 3, Rule 17, the commentators are
in general agreement,57 although there is less unanimity of views insofar as Section 2, Rule 17 is
concerned.58
To be certain, when the Court promulgated the 1997 Rules of Civil Procedure, including the
amended Rule 17, those previous jural doctrines that were inconsistent with the new rules
incorporated in the 1997 Rules of Civil Procedure were implicitly abandoned insofar as incidents
arising after the effectivity of the new procedural rules on 1 July 1997. BA Finance, or even the
doctrine that a counterclaim may be necessarily dismissed along with the complaint, clearly conflicts
with the 1997 Rules of Civil Procedure. The abandonment of BA Finance as doctrine extends as far
back as 1997, when the Court adopted the new Rules of Civil Procedure. If, since then, such
abandonment has not been affirmed in jurisprudence, it is only because no proper case has arisen
that would warrant express confirmation of the new rule. That opportunity is here and now, and
we thus rule that the dismissal of a complaint due to fault of the plaintiff is without prejudice to the
right of the defendant to prosecute any pending counterclaims of whatever nature in the same or
separate action. We confirm that BA Finance and all previous rulings of the Court that are
inconsistent with this present holding are now abandoned.
Accordingly, the RTC clearly erred when it ordered the dismissal of the counterclaim, since Section
3, Rule 17 mandates that the dismissal of the complaint is without prejudice to the right of the
defendant to prosecute the counterclaim in the same or separate action. If the RTC were to dismiss
the counterclaim, it should be on the merits of such counterclaim. Reversal of the RTC is in order,
and a remand is necessary for trial on the merits of the counterclaim.
It would be perfectly satisfactory for the Court to leave this matter at that. Still, an explanation of
the reason behind the new rule is called for, considering that the rationale behind the previous rule
was frequently elaborated upon.
Under Act No. 190, or the Code of Procedure in Civil Actions promulgated in 1901, it was recognized
in Section 127(1) that the plaintiff had the right to seek the dismissal of the complaint at any time
before trial, "provided a counterclaim has not been made, or affirmative relief sought by the cross-
complaint or answer of the defendant."59 Note that no qualification was made then as to the nature
of the counterclaim, whether it be compulsory or permissive. The protection of the defendant’s
right to prosecute the counterclaim was indeed unqualified. In City of Manila, decided in 1918, the
Court explained:
By paragraph 1 [of Section 127], it will be seen that, where the defendant has interposed a
counterclaim, or is seeking affirmative relief by a cross-complaint, that then, and in that case, the
plaintiff cannot dismiss the action so as to affect the right of the defendant in his counterclaim or
prayer for affirmative relief. The reason for that exception is clear. When the answer sets up an
independent action against the plaintiff, it then becomes an action by the defendant against the
plaintiff, and, of course, the plaintiff has no right to ask for a dismissal of the defendant’s action.60
Nonetheless, a new rule was introduced when Act No. 190 was replaced by the 1940 Rules of Court.
Section 2, Rule 30 of the 1940 Rules specified that if a counterclaim is pleaded by a defendant prior
to the service of the plaintiff’s motion to dismiss, the action shall not be dismissed against the
defendant’s objection unless the counterclaim can remain pending for independent adjudication by
the court. This qualification remained intact when the 1964 Rules of Court was introduced. 61 The
rule referred only to compulsory counterclaims, or counterclaims which arise out of or are
necessarily connected with the transaction or occurrence that is the subject matter of the plaintiff’s
claim, since the rights of the parties arising out of the same transaction should be settled at the
same time.62 As was evident in Metals, International Container and BA Finance, the rule was
eventually extended to instances wherein it was the defendant with the pending counterclaim, and
not the plaintiff, that moved for the dismissal of the complaint.
We should not ignore the theoretical bases of the rule distinguishing compulsory counterclaims
from permissive counterclaims insofar as the dismissal of the action is concerned. There is a
particular school of thought that informs the broad proposition in Dalman that "if the civil case is
dismissed, so also is the counterclaim filed therein,"63 or the more nuanced discussions offered in
Metals, International Container, and BA Finance. The most potent statement of the theory may be
found in Metals,64 which proceeds from the following fundamental premises—a compulsory
counterclaim must be set up in the same proceeding or would otherwise be abated or barred in a
separate or subsequent litigation on the ground of auter action pendant, litis pendentia or res
judicata; a compulsory counterclaim is auxiliary to the main suit and derives its jurisdictional support
therefrom as it arises out of or is necessarily connected with the transaction or occurrence that is
the subject matter of the complaint;65 and that if the court dismisses the complaint on the ground
of lack of jurisdiction, the compulsory counterclaim must also be dismissed as it is merely ancilliary
to the main action and no jurisdiction remained for any grant of relief under the counterclaim.
The first point is derived from Section 4, Rule 9, of the 1964 Rules of Court, while the two latter
points are sourced from American jurisprudence. There is no disputing the theoretical viability of
these three points. In fact, the requirement that the compulsory counterclaim must be set up in the
same proceeding remains extant under the 1997 Rules of Civil Procedure.66 At the same time, other
considerations rooted in actual practice provide a counterbalance to the above-cited rationales.
Whatever the nature of the counterclaim, it bears the same integral characteristics as a complaint;
namely a cause (or causes) of action constituting an act or omission by which a party violates the
right of another. The main difference lies in that the cause of action in the counterclaim is
maintained by the defendant against the plaintiff, while the converse holds true with the complaint.
Yet, as with a complaint, a counterclaim without a cause of action cannot survive.
It would then seemingly follow that if the dismissal of the complaint somehow eliminates the
cause(s) of the counterclaim, then the counterclaim cannot survive. Yet that hardly is the case,
especially as a general rule. More often than not, the allegations that form the counterclaim are
rooted in an act or omission of the plaintiff other than the plaintiff’s very act of filing the
complaint. Moreover, such acts or omissions imputed to the plaintiff are often claimed to have
occurred prior to the filing of the complaint itself. The only apparent exception to this
circumstance is if it is alleged in the counterclaim that the very act of the plaintiff in filing the
complaint precisely causes the violation of the defendant’s rights. Yet even in such an instance, it
remains debatable whether the dismissal or withdrawal of the complaint is sufficient to obviate
the pending cause of action maintained by the defendant against the plaintiff.67
These considerations persist whether the counterclaim in question is permissive or compulsory. A
compulsory counterclaim arises out of or is connected with the transaction or occurrence
constituting the subject matter of the opposing party’s claim, does not require for its adjudication
the presence of third parties, and stands within the jurisdiction of the court both as to the amount
involved and the nature of the claim.68 The fact that the culpable acts on which the counterclaim is
based are founded within the same transaction or occurrence as the complaint, is insufficient
causation to negate the counterclaim together with the complaint. The dismissal or withdrawal of
the complaint does not traverse the boundaries of time to undo the act or omission of the plaintiff
against the defendant, or vice versa. While such dismissal or withdrawal precludes the pursuit of
litigation
by the plaintiff, either through his/her own initiative or fault, it would be iniquitous to similarly
encumber the defendant who maintained no such initiative or fault. If the defendant similarly
moves for the dismissal of the counterclaim or neglects to timely pursue such action, let the
dismissal of the counterclaim be premised on those grounds imputable to the defendant, and not
on the actuations of the plaintiff.
The other considerations supplied in Metals are anchored on the premise that the jurisdictional
foundation of the counterclaim is the complaint itself. The theory is correct, but there are other
facets to this subject that should be taken into account as well. On the established premise that a
counterclaim involves separate causes of action than the complaint even if derived from the same
transaction or series of transactions, the counterclaim could have very well been lodged as a
complaint had the defendant filed the action ahead of the complainant. 69 The terms "ancillary" or
"auxiliary" may mislead in signifying that a complaint innately possesses more credence than a
counterclaim, yet there are many instances wherein the complaint is trivial but the counterclaim is
meritorious. In truth, the notion that a counterclaim is, or better still, appears to be merely
"ancillary" or "auxiliary" is chiefly the offshoot of an accident of chronology, more than anything
else.
The formalistic distinction between a complaint and a counterclaim does not detract from the fact
that both of them embody causes of action that have in their end the vindication of rights. While
the distinction is necessary as a means to facilitate order and clarity in the rules of procedure, it
should be remembered that the primordial purpose of procedural rules is to provide the means for
the vindication of rights. A party with a valid cause of action against another party cannot be denied
the right to relief simply because the opposing side had the good fortune of filing the case first. Yet
this in effect was what had happened under the previous procedural rule and correspondent
doctrine, which under their final permutation, prescribed the automatic dismissal of the compulsory
counterclaim upon the dismissal of the complaint, whether upon the initiative of the plaintiff or of
the defendant.
Thus, the present rule embodied in Sections 2 and 3 of Rule 17 ordains a more equitable disposition
of the counterclaims by ensuring that any judgment thereon is based on the merit of the
counterclaim itself and not on the survival of the main complaint. Certainly, if the counterclaim is
palpably without merit or suffers jurisdictional flaws which stand independent of the complaint, the
trial court is not precluded from dismissing it under the amended rules, provided that the judgment
or order dismissing the counterclaim is premised on those defects. At the same time, if the
counterclaim is justified, the amended rules now unequivocally protect such counterclaim from
peremptory dismissal by reason of the dismissal of the complaint.
WHEREFORE, the petition is GRANTED. The Orders dated 9 August 2005 and 10 October 2005 of
Branch 29, Regional Trial Court of San Miguel, Zamboanga del Sur in Civil Case No. 98-012 are SET
ASIDE. Petitioner’s counterclaim as defendant in Civil Case. No. 98-012 is REINSTATED. The Regional
Trial Court is ORDERED to hear and decide the counterclaim with deliberate dispatch.
SO ORDERED.
(13) CIVPRO – PRINCIPLE OF JUDICIAL HIERARCHY
G.R. No. 167533 July 27, 2007
AUDI AG, Petitioner,
vs.
HON. JULES A. MEJIA, in his capacity as Executive Judge of the Regional Trial Court, Alaminos
City; AUTO PROMINENCE CORPORATION; and PROTON PILIPINAS CORPORATION, Respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us for resolution is the instant Petition for Certiorari under Rule 65 of the 1997 Rules of Civil
Procedure, as amended, alleging that respondent Executive Judge Jules A. Mejia of the Regional
Trial Court (RTC), Alaminos City (Pangasinan) acted with grave abuse of discretion in issuing the
Orders dated March 29 and July 6, 2005 in Civil Case No. A-3010, entitled "Auto Prominence
Corporation and Proton Pilipinas Corporation, Plaintiffs, versus Audi AG, Defendant."
The petition alleges that Audi AG, petitioner, is a non-resident foreign company engaged in the
manufacture of "Audi" brand cars. It is organized and existing under the laws of the Federal Republic
of Germany, with principal office at I/VO-3, 85045 Ingolstadt, Germany. It is not licensed to do
business in the Philippines but is suing on an isolated transaction.1
Auto Prominence Corporation and Proton Pilipinas Corporation (Proton), respondents, are
corporations duly organized and existing under Philippine laws engaged in the business of
assembling, buying, selling, distributing, importing, marketing, and servicing of motor vehicles. They
have a common principal office at Barangay Alos, Alaminos City.
On March 21, 2005, respondents filed with the RTC, Alaminos City a complaint for specific
performance and injunction (with application for a temporary restraining order [TRO] and
preliminary injunction) against petitioner Audi AG, docketed as Civil Case No. A-3010. The complaint
alleges inter alia that on August 1, 1996, petitioner appointed respondent Proton as its sole
assembler and distributor of Audi cars in the Philippines under an Assembly Agreement and a
Distributorship Agreement; that respondent Proton was induced to open, promote, develop and
sell Audi brand cars in the Philippines upon petitioner’s representations that it (respondent Proton)
will be the exclusive assembler and distributor of Audi cars and local parts manufacturer for export
purposes, for a period of 12 months and, thereafter, for an indefinite period upon the establishment
of the assembly and distributorship network; that respondent Proton, relying upon petitioner’s
representations, was enticed to: (a) borrow money to establish the assembly plant and building for
petitioner; (b) buy tools and equipment for its assembly plant and distributorship; (c) spend for its
showrooms and offices; and (d) pay its license fees, technical brochure and other expenses; that it
turned out that petitioner did not include the Philippines in its ASEAN Assembly Strategy program,
but only Malaysia, thus frustrating respondent Proton’s assembly preparations; that with evident
bad faith, petitioner has been negotiating for the transfer of the distributorship of the Audi cars to
a third party; and that both respondents were surprised when they received from petitioner a letter
dated September 27, 2004 terminating the assembly and the distributorship agreements for
reasons which to them are unjustified. Thus, the complaint prays that petitioner be ordered to
comply with the exclusive assembly and distributorship agreements; and that, pending the
determination of the merits of the case, a TRO and a writ of preliminary injunction be issued
ordering petitioner, its representative, or any person claiming rights under it, to maintain the status
quo ante, and restrain them from doing any act contrary to the parties’ existing agreements.
After the complaint was filed, respondent Executive Judge Jules A. Mejia issued an Order (a)
directing that summons and a copy of the complaint be served upon petitioner through extra-
territorial service; and (b) setting on March 29, 2005 the hearing of the application for TRO.
On March 29, 2005, after conducting a hearing wherein respondents presented two witnesses,
respondent Executive Judge issued the Order in question directing the issuance of a TRO effective
for twenty (20) days, enjoining petitioner from terminating the contracts executed by the parties,
and directing it or any person claiming rights under it, to maintain the status quo ante. The raffle of
the case was set on April 8, 2005 at two o’clock in the afternoon.
Hence, the instant petition.
Petitioner contends that respondent Executive Judge’s March 29, 2005 Order granting a TRO for
twenty (20) days was "issued in a capricious, arbitrary, and whimsical manner constituting grave
abuse of discretion, amounting to lack or excess of jurisdiction" because (a) the Order violates the
second paragraph of Section 5, Rule 58 of the 1997 Rules of Civil Procedure, as amended; and (b) it
was issued even before Civil Case No. A-3010 was raffled to a ponente.
Meanwhile, petitioner filed with the trial court an Urgent Motion for Voluntary Inhibition of
respondent Executive Judge. But the motion was denied in an Order dated July 6, 2005, prompting
petitioner to file a supplemental petition2 praying for the nullification of this Order.
In their Opposition3 and Comment,4 respondents pray that the petition be dismissed for lack of
merit. Specifically, they alleged that the petition suffers from the following defects: (1) it was filed
in the absence of a motion for reconsideration of the assailed Order; (2) petitioner failed to observe
the doctrine of hierarchy of courts; (3) the certification against forum shopping is defective as it was
executed by counsel for petitioner, not by the latter’s officers; and (4) the issue raised against the
challenged Order of March 29, 2005 had become moot and academic.
The respondents are correct.
Indeed, we cannot ignore the fatal defects in the petition.
First, petitioner failed to file with the trial court the requisite motion for reconsideration of the
challenged Order before resorting to the instant recourse. The well-established rule is that a motion
for reconsideration is an indispensable condition before an aggrieved party can resort to the special
civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended. 5 Thus,
petitioner should have first filed with the trial court a motion for reconsideration, as such special
civil action may be resorted to only when "there is no appeal, nor any plain, speedy, and adequate
remedy
in the ordinary course of law."6 Such indispensable requirement may, in well recognized instances,
be glossed over to prevent a miscarriage of justice, or when the need for relief is extremely urgent
and certiorari is the only adequate and speedy remedy available.7 Petitioner failed to show sufficient
justification for its failure to comply with the requirement.
We cannot accept petitioner’s submission that a motion for reconsideration "is unnecessary" as its
petition raises a question of law and that the assailed Order is a patent nullity. Petitioner may not
arrogate unto itself the determination of whether a motion for reconsideration is necessary or not.8
Its submission runs counter to the purpose of the rule that a motion for reconsideration would
afford the erring court or agency an opportunity to rectify the error/s it may have committed
without the intervention of a higher court. 9 Such motion is not only an expeditious remedy of an
aggrieved party but also obviates an improvident and unnecessary recourse to appellate
proceedings.10
Second, petitioner, by filing directly with this Court its petition, has ignored the established rule on
hierarchy of courts. It must be stressed that the Court of Appeals and the Supreme Court have
original concurrent jurisdiction over petitions for certiorari. The rule on hierarchy of courts
determines the venue of appeals.11 Such rule is necessary to prevent inordinate demands upon the
Court’s precious time and attention which are better devoted to matters within its exclusive
jurisdiction, and to prevent further overcrowding of the Court’s docket.12 Thus, petitioner should
have filed with the Court of Appeals its petition, not directly with this Court.1avvphi1 While such
rule may be relaxed for special and important reasons clearly and specifically set out in the petition,
however, in the instant case, petitioner failed to discharge that burden.1avvphil

Once again, we stress that the rules of procedure exist for a noble 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 not be ignored to suit the convenience of a party.
Adjective law ensures the effective enforcement of substantive rights through the orderly and
speedy administration of justice. Rules are not intended to hamper litigants or complicate litigation.
But they help provide for a vital system of justice where suitors may be heard following judicial
procedure and in the correct forum. Public order and our system of justice are well served by a
conscientious observance by the parties of the procedural rules. 13

WHEREFORE, the instant petition is DISMISSED. Costs against petitioner.

SO ORDERED.
(14) CIVPRO – PRINCIPLE OF JUDICIAL HIERARCHY
G.R. No. 138297 January 27, 2006
DESIDERIO DE LOS REYES and MYRNA VILLANUEVA, Petitioners,
vs.
PEOPLE OF THE PHILIPPINES and HON. ANTONIO M. EUGENIO, JR., Presiding Judge, Regional
Trial Court, Calamba, Laguna, Branch 34, Respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
For our resolution is the instant Petition for Certiorari assailing the Order1 dated February 16, 1998
of the Regional Trial Court (RTC), Branch 34, at Calamba, Laguna, in Civil Case No. 2494-97-C and its
Order dated March 31, 1998.
The instant case stemmed from a complaint filed with the Municipal Trial Court (MTC) of Calauan,
Laguna by the Philippine Coconut Authority against Desiderio De los Reyes and Myrna Villanueva,
petitioners, and several others for violation of Republic Act No. 8048, otherwise known as The
Coconut Preservation Act of 1995, docketed as Criminal Case No. 6768. The complaint reads:
That on August, September and October 1996 in Brgy. Imok, Calauan, Laguna, the above named
respondents did then and there willfully, unlawfully and feloniously cut down and processed more
or less FOUR HUNDRED and FORTY (440) coconut trees without the required permit to cut from the
Philippine Coconut Authority in gross violation of the provisions of R.A. 8048 or the Coconut
Preservation Act of 1995.
On January 31, 1997, the MTC ordered the accused, including petitioners, to file their counter-
affidavits within ten (10) days from notice.
On March 4, 1997, petitioners, instead of submitting their counter-affidavits, filed a Motion for
Preliminary Investigation.
On May 13, 1997, the MTC denied the motion on the ground that in cases cognizable by the MTCs,
an accused is not entitled to a preliminary investigation.
On June 4, 1997, petitioners filed a Motion To Quash the complaint on the ground that the
allegations therein do not constitute an offense.
On October 15, 1997, the MTC issued an Order denying the motion and requiring anew all the
accused to file their counter-affidavits within five (5) days from notice.
Petitioners then filed a petition for certiorari, prohibition, and mandamus with the RTC, docketed
as Civil Case No. 2494-97-C. They alleged that the MTC committed grave abuse of discretion
amounting to lack or excess of jurisdiction when it denied their Motion To Quash.
In an Order dated February 16, 1998, the RTC dismissed the petition and ruled that the MTC did not
gravely abuse its discretion considering that the allegations in the complaint, if hypothetically
admitted, are sufficient to constitute the elements of the offense.
Petitioners seasonably filed a motion for reconsideration, but this was denied by the RTC in its Order
of March 31, 1998.
Petitioners then interposed an appeal to the Court of Appeals.
On November 20, 1998, the Appellate Court rendered its Decision affirming the RTC Orders dated
February 16 and March 31, 1998, holding that since petitioners are raising a question of law, they
should have filed a petition for review on certiorari with the Supreme Court.
Petitioners filed a motion for reconsideration but it was denied by the Court of Appeals in its
Resolution of March 19, 1999.
Thus, petitioners filed with this Court the instant petition for certiorari assailing the Orders of the
RTC in Civil Case No. 2494-97-C dismissing their petition for certiorari on the ground that the MTC
did not gravely abuse its discretion.
There was no procedural lapse when petitioners initially appealed the RTC Orders to the Court of
Appeals. But what they should have done after the Appellate Court rendered its Decision affirming
the RTC Orders was to seasonably file with this Court an appeal via a petition for review on certiorari
pursuant to Rule 45 of the 1997 Rules of Civil Procedure, as amended. Instead, as earlier mentioned,
what they filed with this Court is this petition for certiorari under Rule 65 of the same Rules. Time
and again, we have ruled that certiorari is not a substitute for a lost appeal. 2
Even assuming that the instant petition for certiorari is in order, still we have to dismiss the same.
Petitioners failed to observe the principle of hierarchy of courts. They should have filed their
petition for certiorari with the Court of Appeals. Pursuant to Section 9 of Batas Pambansa Blg. 129,
as amended, the Court of Appeals has original jurisdiction to issue, among others, a writ of
certiorari.
Moreover, records indicate that they filed with this Court the instant petition for certiorari on May
6, 1999. They received a copy of the RTC Order denying their motion to dismiss on March 2, 1998.
On April 21, 1998, they received a copy of the Order denying their motion for reconsideration.
Under Section 4, Rule 65 of the same Rules, they had sixty (60) days from April 21, 1998 to file this
petition for certiorari. However, they filed it only on May 6, 1999, or after one (1) year.
Even on the merits of the case, this petition is vulnerable to dismissal. It is a dictum that when a
motion to quash in a criminal case is denied, the remedy is not certiorari, but for petitioners to go
to trial without prejudice to reiterating the special defenses invoked in their motion to quash. 3 In
the event that an adverse decision is rendered after trial on the merits, an appeal therefrom is the
next legal step.
WHEREFORE, we DISMISS the instant petition. Costs against petitioners.
SO ORDERED.
(15) CIVPRO – PRINCIPLE OF JUDICIAL HIERARCHY
[G.R. No. 151992. September 18, 2002.]
COMMISSION ON ELECTIONS, COMELEC CHAIRMAN ALFREDO L. BENIPAYO, COMELEC
COMMISSIONERS RESURRECCION Z. BORRA and FLORENTINO A. TUASON, JR., Petitioners, v.
JUDGE MA. LUISA QUIJANO-PADILLA, REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 215
and PHOTOKINA MARKETING CORP., Respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
The contracting prerogative of public officers is circumscribed with a heavy burden of
responsibility. They must exercise utmost caution and observe the law in order to protect the
public from unjust and inequitable government contracts.chanrob1es virtua1 1aw 1ibrary
The case at bar provides us with another occasion to stress that with respect to government
contracts, statutes take precedence over the public officers’ freedom to contract. Here, the
primordial question to be resolved is — may a successful bidder compel a government agency to
formalize a contract with it notwithstanding that its bid exceeds the amount appropriated by
Congress for the project?
Before us is a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as
amended, alleging that respondent Judge Ma. Luisa Quijano-Padilla of the Regional Trial Court,
Branch 215, Quezon City, committed grave abuse of discretion in issuing the (a) Resolution 1
dated December 19, 2001 granting private respondent’s application for a writ of preliminary
prohibitory injunction in Special Civil Action No. Q-01-454052; and (b) Resolution 3 dated February
7, 2002 denying petitioners’ Omnibus Motion to dismiss the petition and their motion for
reconsideration of the same Resolution and granting private respondent’s application for a writ of
preliminary mandatory injunction.
The facts are undisputed.
In 1996, the Philippine Congress passed Republic Act No. 8189, otherwise known as the "Voter’s
Registration Act of 1996," providing for the modernization and computerization of the voters’
registration list and the appropriation of funds therefor "in order to establish a clean, complete,
permanent and updated list of voters." 4
Pursuant thereto, the Commission on Elections (COMELEC) promulgated Resolution No. 00-0315 5
approving in principle the Voters’ Registration and Identification System Project (VRIS Project for
brevity). The VRIS Project envisions a computerized database system for the May 2004 Elections.
The idea is to have a national registration of voters whereby each registrant’s fingerprints will be
digitally entered into the system and upon completion of registration, compared and matched
with other entries to eliminate double entries. A tamper-proof and counterfeit-resistant voter’s
identification card will then be issued to each registrant as a visual record of the registration.
On September 9, 1999, the COMELEC issued invitations to pre-qualify and bid for the supply and
installation of information technology equipment and ancillary services for its VRIS Project. 6
Private respondent Photokina Marketing Corporation (PHOTOKINA) pre-qualified and was allowed
to participate as one of the bidders. After the public bidding was conducted, PHOTOKINA’s bid in
the amount of P6.588 Billion Pesos garnered the highest total weighted score and was declared
the winning bidder. Thus, on September 28, 2000, the COMELEC issued Resolution No. 3252 7
approving the Notice of Award to PHOTOKINA, which, in turn, immediately accepted the same.
The parties then proceeded to formalize the contract, with Commissioner Mehol K. Sadain and
Atty. Rodrigo D. Sta. Ana, acting as negotiators for the COMELEC and PHOTOKINA,
respectively.chanrob1es virtua1 1aw 1ibrary
However, under Republic Act No. 8760 8 the budget appropriated by Congress for the COMELEC’s
modernization project was only One (1) Billion Pesos and that the actual available funds under the
Certificate of Availability of Funds (CAF) issued by the Chief Accountant of the COMELEC was only
P1.2 Billion Pesos.
In December 2000, then COMELEC Chairman Harriet O. Demetriou issued a memorandum to the
COMELEC en banc expressing her objections to the contract. Commissioner Sadain, for his part,
submitted a draft of the contract 9 providing a price that would not exceed the certified available
appropriation but covering only Phase I of the VRIS Project, i.e., issuance of registration cards for
1,000,000 voters in certain areas only. 10 Under the draft, the "subsequent completion of the
whole project shall be agreed upon in accordance with the Bid Documents and the annual funds
available for it." 11
On February 2, 2001, the term of former Chairman Demetriou and those of Commissioners Julio F.
Desamito and Teresita Dy-Liacco Flores expired. Appointed as their successors were Alfredo L.
Benipayo as Chairman and Resurreccion Z. Borra and Florentino A. Tuason, Jr. as Commissioners.
Meanwhile, PHOTOKINA, as the winning bidder, wrote several letters to the COMELEC requesting
the formal execution of the contract, but to no avail. 12
Then Chairman Benipayo, through various press releases and public statements, announced that
the VRIS Project has been "scrapped, dropped, junked, or set aside." He further announced his
plan to "re-engineer" the entire modernization program of the COMELEC, emphasizing his
intention to replace the VRIS Project with his own version, the "Triple E Vision." 13
On October 2, 2001, Senator Edgardo J. Angara directed the creation of a technical working group
to "assist the COMELEC in evaluating all programs for the modernization of the COMELEC which
will also consider the PHOTOKINA contract as an alternative program and various competing
programs for the purpose." chanrob1es virtua1 1aw 1ibrary
Unsatisfied with the adverse turn of events, PHOTOKINA filed with the Regional Trial Court,
Branch 215, Quezon City a petition for mandamus, prohibition and damages (with prayer for
temporary restraining order, preliminary prohibitory injunction and preliminary mandatory
injunction) against the COMELEC and all its Commissioners, 14 docketed as Special Civil Action No.
Q-01-45405. PHOTOKINA alleged three causes of action: first, the deliberate refusal of the
COMELEC and its Commissioners to formalize the contract rendered nugatory the perfected
contract between them; second, in announcing that the VRIS Project has been junked and that he
has plans to re-engineer the COMELEC’s entire modernization program, Chairman Benipayo
committed grave abuse of discretion; and third, the COMELEC’s failure to perform its duty under
the contract has caused PHOTOKINA to incur damages since it has spent substantial time and
resources in the preparation of the bid and the draft contract.

In support of its application for writs of preliminary prohibitory and mandatory injunction,
PHOTOKINA adopted the evidence it adduced during the hearing of its application for the issuance
of a temporary restraining order.
On December 19, 2001, respondent Judge Ma. Luisa Quijano-Padilla issued the first assailed
Resolution granting PHOTOKINA’s application for a writ of preliminary prohibitory injunction,
thus:jgc:chanrobles.com.ph
"WHEREFORE, premises considered, the Court resolves to: (1) grant the application for the
issuance of a writ of preliminary prohibitory injunction; and (2) deny the application for the
issuance of a writ of preliminary mandatory injunction.
Accordingly, let a writ of preliminary prohibitory injunction issue enjoining respondents, their
agents, successors and assigns from replacing the VRIS Project upon petitioner’s posting of a bond
in the amount of P20,000,000.00, which bond shall answer for whatever damages which may be
sustained by reason of the issuance of the said writ, if it turns out that the plaintiffs are not
entitled thereto.
SO ORDERED." 15
Both parties filed their respective motions for reconsideration. PHOTOKINA reiterated its plea for
a writ of preliminary mandatory injunction. 16 For their part, the COMELEC and its Commissioners,
through the Solicitor General, prayed that the writ of preliminary prohibitory injunction be set
aside and that the petition for mandamus, prohibition and damages be dismissed. 17chanrob1es
virtua1 1aw 1ibrary
On February 8, 2002, respondent judge issued the second assailed Resolution denying the
COMELEC’s Omnibus Motion and, this time, granting PHOTOKINA’s application for a writ of
preliminary mandatory injunction, thus:jgc:chanrobles.com.ph
"WHEREFORE, premises considered, this Court resolves to: (1) deny Respondents’ Omnibus
Motion for the dismissal of this case and for the reconsideration of this Court’s Resolution
granting the writ of preliminary prohibitory injunction; (2) grant Petitioner’s Motion dated January
2, 2002 insofar as it prays for the issuance of a writ of preliminary mandatory injunction; (3) Grant
the prayer for the reduction of the preliminary prohibitory injunction bond from P20,000,000.00
to P10,000,000.00; (4) Clarify its Resolution dated December 19, 2001 to the extent that the writ
of preliminary prohibitory injunction will also enjoin Respondents, their agents, successors and
assigns from disregarding the contract for the VRIS Project between Petitioner and Respondent
COMELEC; (5) deny Petitioner’s motion to declare Respondents in default.
"Accordingly, let a writ of preliminary mandatory injunction issue directing all respondent
Commissioners to immediately resume negotiations to formalize the execution of the contract
with Petitioner for the VRIS Project upon petitioner’s posting of a bond, separate from the above
bond for the writ of preliminary prohibitory injunction, in the amount of P20,000,000.00, which
bond shall answer for whatever damages that may be sustained by reason of the issuance of the
said writ, if it turns out that Petitioner is not entitled thereto.
"SO ORDERED." 18
Hence, the instant petition for certiorari filed by the Office of the Solicitor General (OSG) in behalf
of then COMELEC Chairman Alfredo L. Benipayo and Commissioners Resurreccion Z. Borra and
Florentino A. Tuason, Jr..
Petitioners contend that: (1) a petition for mandamus and prohibition does not lie to enforce
contractual obligations, hence, PHOTOKINA’s proper recourse before the Regional Trial Court
should have been an action for specific performance; (2) respondent judge, by issuing the
injunctive writs, already assumed that the VRIS Project was lawfully awarded by the COMELEC to
PHOTOKINA, and that there is a valid perfected contract between them, thus, manifesting her
prejudgment; and (3) injunctive writs should not be issued when an action for damages can
adequately compensate for the injuries. Petitioners pray that the two assailed Resolutions be
nullified and Special Civil Action No. Q-01-45405 be dismissed outright. 19
On February 21, 2002, the majority of the COMELEC Commissioners — Luzviminda G. Tancangco,
Rufino S.B. Javier, Ralph C. Lantion and Mehol K. Sadain — filed with this Court a Manifestation 20
that "the Chairman and the two Commissioners who filed the instant Petition acted without
authority from the COMELEC en banc to take such action." chanrob1es virtua1 1aw 1ibrary
PHOTOKINA filed a Comment with Motion to Dismiss, 21 the present petition, on two procedural
grounds. First, the petition violates the doctrine of hierarchy of courts. And second, the OSG has
no authority and/or standing to file the petition considering that the petitioners have not been
authorized by the COMELEC en banc to take such action. Without the concurrence of at least a
majority of the members of the COMELEC, neither petitioners nor the OSG could file the petition
in behalf of the COMELEC.
In refutation of petitioners’ arguments, PHOTOKINA contends that mandamus is an appropriate
remedy since what is involved in Special Civil Action No. Q-01-45405 is the performance of a
ministerial duty. Citing Isada v. Bocar, 22 PHOTOKINA maintains that mandamus may be availed of
by private parties to compel public officers to act on a contract entered into pursuant to law. In its
Supplemental Comment, 23 PHOTOKINA invites the Court’s attention to Metropolitan Manila
Development Authority v. Jancom Environmental Corporation 24 whereby the winning bidder was
afforded every right to seek enforcement of its perfected contract with the government.
The petition is impressed with merit.
Initially, we must resolve the procedural roadblocks.chanrob1es virtua1 1aw 1ibrary
PHOTOKINA alleges that the OSG has no standing to file the present petition since its legal position
is contrary to that espoused by the majority of the COMELEC Commissioners. This is a leap to a
non-sequitur conclusion. The OSG is an independent office. Its hands are not shackled to the cause
of its client agency. In the discharge of its task, the primordial concern of the OSG is to see to it
that the best interest of the government is upheld. 25 This is regardless of the fact that what it
perceived as the "best interest of the government" runs counter to its client agency’s position. 26
Endowed with a broad perspective that spans the legal interest of virtually the entire government
officialdom, the OSG may transcend the parochial concerns of a particular client agency and
instead, promote and protect the public weal. 27 Our ruling in Orbos v. Civil Service Commission,
28 is relevant, thus:jgc:chanrobles.com.ph
". . . It is incumbent upon him (Solicitor General) to present to the court what he considers would
legally uphold the best interest of the government although it may run counter to a client’s
position. . . ..
"In the present case, it appears that after the Solicitor General studied the issues he found merit in
the cause of the petitioner based on the applicable law and jurisprudence. Thus, it is his duty to
represent the petitioner as he did by filing this petition. He cannot be disqualified from appearing
for the petitioner even if in so doing his representation runs against the interests of the CSC.
"This is not the first time that the Office of the Solicitor General has taken a position adverse to his
clients like the CSC, the National Labor Relations Commission, among others, and even the People
of the Philippines. . . ." (Emphasis supplied)
Hence, while petitioners’ stand is contrary to that of the majority of the Commissioners, still, the
OSG may represent the COMELEC as long as in its assessment, such would be for the best interest
of the government. For, indeed, in the final analysis, the client of the OSG is not the agency but no
less than the Republic of the Philippines in whom the plenum of sovereignty resides. 29
Moreover, it must be emphasized that petitioners are also public officials entitled to be
represented by the OSG. Under Executive Order No. 292 30 and Presidential Decree No. 478, 31
the OSG is the lawyer of the government, its agencies and instrumentalities, and its officials or
agents. Surely, this mandate includes the three petitioners 32 who have been impleaded as public
respondents in Special Civil Action No. Q-01-45405.
Anent the alleged breach of the doctrine of hierarchy of courts, suffice it to say that it is not an
iron-clad dictum. On several instances where this Court was confronted with cases of national
interest and of serious implications, it never hesitated to set aside the rule and proceed with the
judicial determination of the case. 33 The case at bar is of similar import. It is in the interest of the
State that questions relating to government contracts be settled without delay. This is more so
when the contract, as in this case, involves the disbursement of public funds and the
modernization of our country’s election process, a project that has long been overdue.
We now resolve the following substantive issues:chanrob1es virtual 1aw library
1) Is a petition for mandamus the appropriate remedy to enforce contractual obligations? and 2)
May a successful bidder compel a government agency to formalize a contract with it
notwithstanding that its bid exceeds the amount appropriated by Congress for the
project?chanrob1es virtua1 1aw 1ibrary
I notwithstanding the COMELEC’s issuance of a Notice of Award and its (PHOTOKINA’s) subsequent
No rule of law is better settled than that mandamus does not lie to enforce the performance of
contractual obligations. 34 As early as 1924, Justice Street, in Quiogue v. Romualdez, 35 already set
forth the justification of this rule, thus:jgc:chanrobles.com.ph
"Upon the facts above stated we are of the opinion that the writ of mandamus is not the
appropriate, or even an admissible remedy. It is manifest that whatever rights the petitioner may
have, upon the facts stated, are derived from her contract with the city; and no rule of law is better
settled than that mandamus never lies to enforce the performance of private contracts. . . . The
petitioner’s remedy, if any she has, is by an original action in the Court of First Instance to compel
the city to pay the agreed price or to pay damages for the breach of contract.
". . . As said in Lowe v. Phelps (14 Bush, 642):chanrob1es virtual 1aw library
‘It must, therefore, appear upon every application for a mandamus that it is the legal duty of the
respondent to do that which it is sought to compel him to do, and that he has upon proper
application refused to perform that duty.’ (Citing numerous authorities).
"It was not intended to aid a plaintiff in the enforcement of a mere contract right, or to take the
place of the other remedies provided by law for the adjudication of disputed claims. Looking at the
case from the standpoint of appellant, it involves nothing more than an ordinary breach of contract.
If, as contended, the appellant had a valid contract with the school board, it also had an adequate
remedy at law to recover damages for its breach; and to permit the writ of mandamus to be used
for the purpose of enforcing a mere contract right would be a wide departure from the settled
practice in respect to the character of cases in which relief by mandamus may be obtained.
"In Parrott v. City of Bridgeport (44 Conn., 180), the writ was refused where the petitioner sought
to compel a city to construct a public street in a certain manner agreeably to the terms of a special
agreement between the petitioner and the city. In the course of the opinion the court
said:jgc:chanrobles.com.ph
" * * * The duty, therefore, if any, which rests upon the city in this regard, is one which it owes to
the petitioner as an individual, not to the public, and the special contract is the foundation upon
which it rests. But the writ of mandamus has never been considered as an appropriate remedy for
the enforcement of contract rights of a private and personal nature and obligations which rest
wholly upon contract and which involve no questions of public trusts or official duty. Indeed, strictly
speaking, it never lies where the party aggrieved has adequate remedy at law, and its aid is only to
be invoked to prevent an absolute failure of justice in cases where ordinary legal processes furnish
no relief." (Emphasis supplied)chanrob1es virtua1 1aw 1ibrary
The passage of time has not eroded the wisdom of the foregoing rule. Its invocation by this Court in
Province of Pangasinan v. Reparation Commission, 36 Aprueba v. Ganzon, 37 City of Manila v.
Posadas, 38 Jacinto v. Director of Lands, 39 National Marketing Corporation v. Cloribel, 40 Astudillo
v. The Board of Directors of People’s Homesite and Housing Corporation, 41 and Sharp International
Marketing v. Court of Appeals, 42 virtually reinforces the rule.
The present case is our latest addition to the above catena of jurisprudence. We carefully read the
pleadings filed in Special Civil Action No. Q-01-45405 and we are convinced that what PHOTOKINA
sought to enforce therein are its rights under the accepted bid proposal. Its petition alleged that
acceptance thereof, the COMELEC still refused to formalize the contract. As a relief, PHOTOKINA
prayed that after trial, petitioners be directed "to review and finalize the formal contract" and to
"implement the VRIS Project." 43 Petitioners, on their part, specifically denied the existence of a
perfected contract and asserted that even if there was one, the same is null and void for lack of
proper appropriation. Petitioners labeled the contract as illegal and against public policy.
Akin to our rulings cited above, we hold that mandamus is not the proper recourse to enforce the
COMELEC’s alleged contractual obligations with PHOTOKINA. It has other adequate remedy in law.
Moreover, worth stressing is the judicial caution that mandamus applies as a remedy only where
petitioner’s right is founded clearly in law and not when it is doubtful. 44 In varying language, the
principle echoed and reechoed is that legal rights may be enforced by mandamus only if those rights
are well-defined, clear and certain. 45 Here, the alleged contract, relied upon by PHOTOKINA as
source of its rights which it seeks to be protected, is being disputed, not only on the ground that it
was not perfected but also because it is illegal and against public policy.
Of course, there are cases in which the writ of mandamus has been used to compel public officers
to perform certain acts, but it will be generally observed that in such cases, the contracts have been
completely performed by the petitioner, and nothing remained to be done except for the
government to make compensation. These exceptional cases are cited in Isada v. Bocar 46 where
the act of the respondent public officer has the effect of setting aside contracts already in the
process of consummation. In contrast with Isada, the alleged contract here has not yet been fully
performed by PHOTOKINA; and though it avers readiness to perform, petitioners raised serious
questions as to its validity. Their posture is tenable. guil
II
To spare PHOTOKINA the drudgery of a fruitless pursuit, we deem it appropriate to lay down the
principles governing government contracts and to apply them to the instant case. Meanwhile, as
PHOTOKINA will later on deduce from the discussion, the contract subject of this controversy is
one that can be slain in sight for being patently void and unenforceable.
Enshrined in the 1987 Philippine Constitution is the mandate that "no money shall be paid out of
the Treasury except in pursuance of an appropriation made by law." 47 Thus, in the execution of
government contracts, the precise import of this constitutional restriction is to require the various
agencies to limit their expenditures within the appropriations made by law for each fiscal year.
Complementary to the foregoing constitutional injunction are pertinent provisions of law and
administrative issuances that are designed to effectuate the above mandate in a detailed manner.
48 Sections 46 and 47, Chapter 8, Subtitle B, Title 1, Book V of Executive Order No. 292, otherwise
known as "Administrative Code of 1987," provide:jgc:chanrobles.com.ph
"SEC. 46. Appropriation Before Entering into Contract. — (1) No contract involving the expenditure
of public funds shall be entered into unless there is an appropriation therefor, the unexpended
balance of which, free of other obligations, is sufficient to cover the proposed expenditure; and . .
. While the contract price under the draft contract 57 is only P1.2 Billion and, thus, within the
"SEC. 47. Certificate Showing Appropriation to Meet Contract. — Except in the case of a contract
for personal service, for supplies for current consumption or to be carried in stock not exceeding
the estimated consumption for three (3) months, or banking transactions of government-owned
or controlled banks, no contract involving the expenditure of public funds by any government
agency shall be entered into or authorized unless the proper accounting official of the agency
concerned shall have certified to the officer entering into the obligation that funds have been duly
appropriated for the purpose and that the amount necessary to cover the proposed contract for
the current calendar year is available for expenditure on account thereof, subject to verification by
the auditor concerned. The certificate signed by the proper accounting official and the auditor
who verified it, shall be attached to and become an integral part of the proposed contract, and the
sum so certified shall not thereafter be available for expenditure for any other purpose until the
obligation of the government agency concerned under the contract is fully
extinguished.chanrob1es virtua1 1aw 1ibrary
It is quite evident from the tenor of the language of the law that the existence of appropriations
and the availability of funds are indispensable pre-requisites to or conditions sine qua non for the
execution of government contracts. The obvious intent is to impose such conditions as a priori
requisites to the validity of the proposed contract. 49 Using this as our premise, we cannot accede
to PHOTOKINA’s contention that there is already a perfected contract. While we held in
Metropolitan Manila Development Authority v. Jancom Environmental Corporation 50 that "the
effect of an unqualified acceptance of the offer or proposal of the bidder is to perfect a contract,
upon notice of the award to the bidder," however, such statement would be inconsequential in a
government where the acceptance referred to is yet to meet certain conditions. To hold otherwise
is to allow a public officer to execute a binding contract that would obligate the government in an
amount in excess of the appropriations for the purpose for which the contract was attempted to
be made. 51 This is a dangerous precedent.
In the case at bar, there seems to be an oversight of the legal requirements as early as the bidding
stage. The first step of a Bids and Awards Committee (BAC) is to determine whether the bids
comply with the requirements. The BAC shall rate a bid "passed" only if it complies with all the
requirements and the submitted price does not exceed the approved budget for the contract." 52
Extant on the record is the fact that the VRIS Project was awarded to PHOTOKINA on account of its
bid in the amount of P6.588 Billion Pesos. However, under Republic Act No. 8760, 53 the only fund
appropriated for the project was P1 Billion Pesos and under the Certification of Available Funds 54
(CAF) only P1.2 Billion Pesos was available. Clearly, the amount appropriated is insufficient to
cover the cost of the entire VRIS Project. There is no way that the COMELEC could enter into a
contract with PHOTOKINA whose accepted bid was way beyond the amount appropriated by law
for the project. This being the case, the BAC should have rejected the bid for being excessive 55 or
should have withdrawn the Notice of Award on the ground that in the eyes of the law, the same is
null and void. 56
The objections of then Chairman Demetriou to the implementation of the VRIS Project, ardently
carried on by her successor Chairman Benipayo, are therefore in order.chanrob1es virtua1 1aw
1ibrary
Even the draft contract submitted by Commissioner Sadain, that provides for a contract price in
the amount of P1.2 Billion Pesos is unacceptable. Indeed, we share the observation of former
Chairman Demetriou that it circumvents the statutory requirements on government contracts.
certified available funds, the same covers only Phase I of the VRIS Project, i.e., the issuance of
identification cards for only 1,000,000 voters in specified areas. 58 In effect, the implementation
of the VRIS Project will be "segmented" or "chopped" into several phases. Not only is such
arrangement disallowed by our budgetary laws and practices, it is also disadvantageous to the
COMELEC because of the uncertainty that will loom over its modernization project for an
indefinite period of time. Should Congress fail to appropriate the amount necessary for the
completion of the entire project, what good will the accomplished Phase I serve? As expected, the
project failed "to sell" with the Department of Budget and Management. Thus, Secretary Benjamin
Diokno, per his letter of December 1, 2000, declined the COMELEC’s request for the issuance of
the Notice of Cash Availability (NCA) and a multi-year obligational authority to assume payment of
the total VRIS Project for lack of legal basis. 59 Corollarily, under Section 33 of R.A. No. 8760, no
agency shall enter into a multi-year contract without a multi-year obligational authority,
thus:jgc:chanrobles.com.ph
"SECTION 33. Contracting Multi-Year Projects. — In the implementation of multi-year projects, no
agency shall enter into a multi-year contract without a multi-year Obligational Authority issued by
the Department of Budget and Management for the purpose. Notwithstanding the issuance of the
multi-year Obligational Authority, the obligation to be incurred in any given calendar year, shall in
no case exceed the amount programmed for implementation during said calendar year."cralaw
virtua1aw library

Petitioners are justified in refusing to formalize the contract with PHOTOKINA. Prudence dictated
them not to enter into a contract not backed up by sufficient appropriation and available funds.
Definitely, to act otherwise would be a futile exercise for the contract would inevitably suffer the
vice of nullity. In Osmeña v. Commission on Audit, 60 this Court held:jgc:chanrobles.com.ph
"The Auditing Code of the Philippines (P.D. 1445) further provides that no contract involving the
expenditure of public funds shall be entered into unless there is an appropriation therefor and the
proper accounting official of the agency concerned shall have certified to the officer entering into
the obligation that funds have been duly appropriated for the purpose and the amount necessary
to cover the proposed contract for the current fiscal year is available for expenditure on account
thereof. Any contract entered into contrary to the foregoing requirements shall be
VOID.chanrob1es virtua1 1aw 1ibrary
"Clearly then, the contract entered into by the former Mayor Duterte was void from the very
beginning since the agreed cost for the project (P8,368,920.00) was way beyond the appropriated
amount (P5,419,180.00) as certified by the City Treasurer. Hence, the contract was properly
declared void and unenforceable in COA’s 2nd Indorsement, dated September 4, 1986. The COA
declared and we agree, that:chanrob1es virtual 1aw library
the legality, propriety and wisdom of the contract they entered into. They must exercise a high
degree of caution so that the Government may not be the victim of ill-advised or improvident
action. 64
In fine, we rule that PHOTOKINA, though the winning bidder, cannot compel the COMELEC to
formalize the contract. Since PHOTOKINA’s bid is beyond the amount appropriated by Congress
for the VRIS Project, the proposed contract is not binding upon the COMELEC and is considered
void; and that in issuing the questioned preliminary writs of mandatory and prohibitory injunction
and in not dismissing Special Civil Action No. Q-01-45405, respondent judge acted with grave
abuse of discretion. Petitioners cannot be compelled by a writ of mandamus to discharge a duty
that involves the exercise of judgment and discretion, especially where disbursement of public
funds is concerned.
WHEREFORE, the petition is GRANTED. The Resolutions dated December 19, 2001 and February 7,
2002 issued by respondent Judge Padilla are SET ASIDE. Special Civil Action No. Q-01-45405 is
hereby ordered DISMISSED.chanrob1es virtua1 1aw 1ibrary
SO ORDERED.

‘The prohibition contained in Sec. 85 of PD 1445 (Government Auditing Code) is explicit and
mandatory. Fund availability is, as it has always been, an indispensable prerequisite to the
execution of any government contract involving the expenditure of public funds by all government
agencies at all levels. Such contracts are not to be considered as final or binding unless such a
certification as to funds availability is issued (Letter of Instruction No. 767, s. 1978). Antecedent of
advance appropriation is thus essential to government liability on contracts (Zobel v. City of
Manila, 47 Phil. 169). This contract being violative of the legal requirements aforequoted, the
same contravenes Sec. 85 of PD 1445 and is null and void by virtue of Sec. 87." ‘

Verily, the contract, as expressly declared by law, is inexistent and void ab initio. 61 This is to say
that the proposed contract is without force and effect from the very beginning or from its
incipiency, as if it had never been entered into, and hence, cannot be validated either by lapse of
time or ratification. 62

Of course, we are not saying that the party who contracts with the government has no other
recourse in law. The law itself affords him the remedy. Section 48 of E.O. No. 292 explicitly
provides that any contract entered into contrary to the above-mentioned requirements shall be
void, and "the officers entering into the contract shall be liable to the Government or other
contracting party for any consequent damage to the same as if the transaction had been wholly
between private parties." So when the contracting officer transcends his lawful and legitimate
powers by acting in excess of or beyond the limits of his contracting authority, the Government is
not bound under the contract. It would be as if the contract in such case were a private one,
whereupon, he binds only himself, and thus, assumes personal liability thereunder. 63 Otherwise
stated, the proposed contract is unenforceable as to the Government.chanrob1es virtua1 1aw
1ibrary

While this is not the proceeding to determine where the culpability lies, however, the
constitutional mandate cited above constrains us to remind all public officers that public office is a
public trust and all public officers must at all times be accountable to the people. The authority of
public officers to enter into government contracts is circumscribed with a heavy burden of
responsibility. In the exercise of their contracting prerogative, they should be the first judges of
(16) CIVPRO – PRINCIPLE OF JUDICIAL HIERARCHY
G.R. No. 187107 January 31, 2012
UNITED CLAIMANTS ASSOCIATION OF NEA (UNICAN), represented by its representative BIENVENIDO R. LEAL,
in his official capacity as its President and in his own individual capacity, EDUARDO R. LACSON, ORENCIO F.
VENIDA, JR., THELMA V. OGENA, BOBBY M. CARANTO, MARILOU B. DE JESUS, EDNA G. RAÑA, and ZENAIDA
P. OLIQUINO, in their own capacities and in behalf of all those similarly situated officials and employees of
the National Electrification Administration, Petitioners,
vs.
NATIONAL ELECTRIFICATION ADMINISTRATION (NEA), NEA BOARD OF ADMINISTRATORS (NEA BOARD),
ANGELO T. REYES as Chairman of the NEA Board of Administrators, EDITHA S. BUENO, Ex-Officio Member and
NEA Administrator, and WILFRED L. BILLENA, JOSPEPH D. KHONGHUN, and FR. JOSE VICTOR E. LOBRIGO,
Members, NEA Board, Respondents.
DECISION
VELASCO, JR., J.:
The Case
This is an original action for Injunction to restrain and/or prevent the implementation of Resolution
Nos. 46 and 59, dated July 10, 2003 and September 3, 2003, respectively, otherwise known as the
National Electrification Administration (NEA) Termination Pay Plan, issued by respondent NEA
Board of Administrators (NEA Board).
The Facts
Petitioners are former employees of NEA who were terminated from their employment with the
implementation of the assailed resolutions.
Respondent NEA is a government-owned and/or controlled corporation created in accordance with
Presidential Decree No. (PD) 269 issued on August 6, 1973. Under PD 269, Section 5(a)(5), the NEA
Board is empowered to organize or reorganize NEA’s staffing structure, as follows:
Section 5. National Electrification Administration; Board of Administrators; Administrator.
(a) For the purpose of administering the provisions of this Decree, there is hereby established a
public corporation to be known as the National Electrification Administration. All of the powers of
the corporation shall be vested in and exercised by a Board of Administrators, which shall be
composed of a Chairman and four (4) members, one of whom shall be the Administrator as ex-
officio member. The Chairman and the three other members shall be appointed by the President of
the Philippines to serve for a term of six years. x x x
xxxx
The Board shall, without limiting the generality of the foregoing, have the following specific powers
and duties.
1. To implement the provisions and purposes of this Decree;
xxxx
5. To establish policies and guidelines for employment on the basis of merit, technical competence
and moral character, and, upon the recommendation of the Administrator to organize or reorganize
NEA’s staffing structure, to fix the salaries of personnel and to define their powers and duties.
(Emphasis supplied.)
Thereafter, in order to enhance and accelerate the electrification of the whole country, including
the privatization of the National Power Corporation, Republic Act No. (RA) 9136, otherwise known
as the Electric Power Industry Reform Act of 2001 (EPIRA Law), was enacted, taking effect on June
26, 2001. The law imposed upon NEA additional mandates in relation to the promotion of the role
of rural electric cooperatives to achieve national electrification. Correlatively, Sec. 3 of the law
provides:
Section 3. Scope. - This Act shall provide a framework for the restructuring of the electric power
industry, including the privatization of the assets of NPC, the transition to the desired competitive
structure, and the definition of the responsibilities of the various government agencies and private
entities. (Emphasis supplied.)
Sec. 77 of RA 9136 also provides:
Section 77. Implementing Rules and Regulations. - The DOE shall, in consultation with the electric
power industry participants and end-users, promulgate the Implementing Rules and Regulations
(IRR) of this Act within six (6) months from the effectivity of this Act, subject to the approval by the
Power Commission.
Thus, the Rules and Regulations to implement RA 9136 were issued on February 27, 2002. Under
Sec. 3(b)(ii), Rule 33 of the Rules and Regulations, all the NEA employees and officers are considered
terminated and the 965 plantilla positions of NEA vacant, to wit:
Section 3. Separation and Other Benefits.
(a) x x x
(b) The following shall govern the application of Section 3(a) of this Rule:
xxxx
(ii) With respect to NEA officials and employees, they shall be considered legally terminated and
shall be entitled to the benefits or separation pay provided in Section 3(a) herein when a
restructuring of NEA is implemented pursuant to a law enacted by Congress or pursuant to Section
5(a)(5) of Presidential Decree No. 269. (Emphasis supplied.)
Meanwhile, on August 28, 2002, former President Gloria Macapagal- Arroyo issued Executive Order
No. 119 directing the NEA Board to submit a reorganization plan. Thus, the NEA Board issued the
assailed resolutions.
On September 17, 2003, the Department of Budget and Management approved the NEA
Termination Pay Plan.
Thereafter, the NEA implemented an early retirement program denominated as the "Early Leavers
Program," giving incentives to those who availed of it and left NEA before the effectivity of the
reorganization plan. The other employees of NEA were terminated effective December 31, 2003.
Hence, We have this petition.
The Issues
Petitioners raise the following issues:
1. The NEA Board has no power to terminate all the NEA employees;
2. Executive Order No. 119 did not grant the NEA Board the power to terminate all NEA
employees; and
3. Resolution Nos. 46 and 59 were carried out in bad faith.

On the other hand, respondents argue in their Comment dated August 20, 2009 that:
1. The Court has no jurisdiction over the petition;
2. Injunction is improper in this case given that the assailed resolutions of the NEA Board
have long been implemented; and
3. The assailed NEA Board resolutions were issued in good faith.
The Court’s Ruling
This petition must be dismissed.
The procedural issues raised by respondents shall first be discussed.
This Court Has Jurisdiction over the Case
Respondents essentially argue that petitioners violated the principle of hierarchy of courts,
pursuant to which the instant petition should have been filed with the Regional Trial Court first
rather than with this Court directly.
We explained the principle of hierarchy of courts in Mendoza v. Villas,1 stating:
In Chamber of Real Estate and Builders Associations, Inc. (CREBA) v. Secretary of Agrarian Reform,
a petition for certiorari filed under Rule 65 was dismissed for having been filed directly with the
Court, violating the principle of hierarchy of courts, to wit:
Primarily, although this Court, the Court of Appeals and the Regional Trial Courts have concurrent
jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and
injunction, such concurrence does not give the petitioner unrestricted freedom of choice of court
forum. In Heirs of Bertuldo Hinog v. Melicor, citing People v. Cuaresma, this Court made the
following pronouncements:
This Court’s original jurisdiction to issue writs of certiorari is not exclusive. It is shared by this Court
with Regional Trial Courts and with the Court of Appeals. This concurrence of jurisdiction is not,
however, to be taken as according to parties seeking any of the writs an absolute, unrestrained
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 serves as a
general determinant of the appropriate forum for petitions for the extraordinary writs. A becoming
regard for that judicial hierarchy most certainly indicates that petitions for the issuance of
extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court,
and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court’s
original jurisdiction to issue these writs should be allowed only when there are special and
important reasons therefor, clearly and specifically set out in the petition. This is [an] established
policy. It is a policy necessary to prevent inordinate demands upon the Court’s time and attention
which are better devoted to those matters within its exclusive jurisdiction, and to prevent further
over-crowding of the Court’s docket. (Emphasis supplied.)
Evidently, the instant petition should have been filed with the RTC. However, as an exception to this
general rule, the principle of hierarchy of courts may be set aside for special and important reasons.
Such reason exists in the instant case involving as it does the employment of the entire plantilla of
NEA, more than 700 employees all told, who were effectively dismissed from employment in one
swift stroke. This to the mind of the Court entails its attention.
Moreover, the Court has made a similar ruling in National Power Corporation Drivers and Mechanics
Association (NPC-DAMA) v. National Power Corporation (NPC).2 In that case, the NPC-DAMA also
filed a petition for injunction directly with this Court assailing NPC Board Resolution Nos. 2002-124
and 2002-125, both dated November 18, 2002, directing the termination of all employees of the
NPC on January 31, 2003. Despite such apparent disregard of the principle of hierarchy of courts,
the petition was given due course. We perceive no compelling reason to treat the instant case
differently.
The Remedy of Injunction Is still Available
Respondents allege that the remedy of injunction is no longer available to petitioners inasmuch as
the assailed NEA Board resolutions have long been implemented.
Taking respondents’ above posture as an argument on the untenability of the petition on the ground
of mootness, petitioners contend that the principle of mootness is subject to exceptions, such as
when the case is of transcendental importance.
In Funa v. Executive Secretary,3 the Court passed upon the seeming moot issue of the appointment
of Maria Elena H. Bautista (Bautista) as Officer-in-Charge (OIC) of the Maritime Industry Authority
(MARINA) while concurrently serving as Undersecretary of the Department of 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 the principle of mootness and that the remedy of
injunction was still available, explaining thus:
A moot and academic case is one that ceases to present a justiciable controversy by virtue of
supervening events, so that a declaration thereon would be of no practical use or value. Generally,
courts decline jurisdiction over such case or dismiss it on ground of mootness. However, as we held
in Public Interest Center, Inc. v. Elma, supervening events, whether intended or accidental, cannot
prevent the Court from rendering a decision if there is a grave violation of the Constitution. Even in
cases where supervening events had made the cases moot, this Court did not hesitate to resolve
the legal or constitutional issues raised to formulate controlling principles to guide the bench, bar,
and public.
As a rule, the writ of prohibition will not lie to enjoin acts already done. However, as an exception
to the rule on mootness, courts will decide a question otherwise moot if it is capable of repetition
yet evading review. (Emphasis supplied.)
Similarly, in the instant case, while the assailed resolutions of the NEA Board may have long been
implemented, such acts of the NEA Board may well be repeated by other government agencies in
the reorganization of their offices. Petitioners have not lost their remedy of injunction.
The Power to Reorganize Includes the Power to Terminate
The meat of the controversy in the instant case is the issue of whether the NEA Board had the power
to pass Resolution Nos. 46 and 59 terminating all of its employees.
This must be answered in the affirmative.
Under Rule 33, Section 3(b)(ii) of the Implementing Rules and Regulations of the EPIRA Law, all NEA
employees shall be considered legally terminated with the implementation of a reorganization
program pursuant to a law enacted by Congress or pursuant to Sec. 5(a)(5) of PD 269 through which
the reorganization was carried out, viz:
Section 5. National Electrification Administration; Board of Administrators; Administrator.
(a) For the purpose of administering the provisions of this Decree, there is hereby established a
public corporation to be known as the National Electrification Administration. x x x
xxxx
The Board shall, without limiting the generality of the foregoing, have the following specific powers
and duties.
xxxx
5. To establish policies and guidelines for employment on the basis of merit, technical competence
and moral character, and, upon the recommendation of the Administrator to organize or reorganize
NEA’s staffing structure, to fix the salaries of personnel and to define their powers and duties.
(Emphasis supplied.)
Thus, petitioners argue that the power granted unto the NEA Board to organize or reorganize does
not include the power to terminate employees but only to reduce NEA’s manpower complement.
Such contention is erroneous.
In Betoy v. The Board of Directors, National Power Corporation,4 the Court upheld the dismissal of
all the employees of the NPC pursuant to the EPIRA Law. In ruling that the power of reorganization
includes the power of removal, the Court explained:
[R]eorganization involves the reduction of personnel, consolidation of offices, or abolition thereof
by reason of economy or redundancy of functions. It could result in the loss of one’s position
through removal or abolition of an office. However, for a reorganization for the purpose of economy
or to make the bureaucracy more efficient to be valid, it must pass the test of good faith; otherwise,
it is void ab initio. (Emphasis supplied.)
Evidently, the termination of all the employees of NEA was within the NEA Board’s powers and may
not successfully be impugned absent proof of bad faith.
Petitioners Failed to Prove that the NEA Board Acted in Bad Faith
Next, petitioners challenge the reorganization claiming bad faith on the part of the NEA Board.
Congress itself laid down the indicators of bad faith in the reorganization of government offices in
Sec. 2 of RA 6656, an Act to Protect the Security of Tenure of Civil Service Officers and Employees
in the Implementation of Government Reorganization, to wit:
Section 2. No officer or employee in the career service shall be removed except for a valid cause
and after due notice and hearing. A valid cause for removal exists when, pursuant to a bona fide
reorganization, a position has been abolished or rendered redundant or there is a need to merge,
divide, or consolidate positions in order to meet the exigencies of the service, or other lawful causes
allowed by the Civil Service Law. The existence of any or some of the following circumstances may
be considered as evidence of bad faith in the removals made as a result of reorganization, giving
rise to a claim for reinstatement or reappointment by an aggrieved party:
(a) Where there is a significant increase in the number of positions in the new staffing pattern of
the department or agency concerned;
(b) Where an office is abolished and other performing substantially the same functions is created;
(c) Where incumbents are replaced by those less qualified in terms of status of appointment,
performance and merit;
(d) Where there is a reclassification of offices in the department or agency concerned and the
reclassified offices perform substantially the same function as the original offices;
(e) Where the removal violates the order of separation provided in Section 3 hereof. (Emphasis
supplied.)
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, ‘basic is the principle that
good faith is presumed and he who alleges bad faith has the duty to prove the same.’ " Moreover,
in Spouses Palada v. Solidbank Corporation,6 the Court stated, "Allegations of bad faith and fraud
must be proved by clear and convincing evidence."
Here, petitioners have failed to discharge such burden of proof.
In alleging bad faith, petitioners cite RA 6656, particularly its Sec. 2, subparagraphs (b) and
(c).1âwphi1 Petitioners have the burden to show that: (1) the abolished offices were replaced by
substantially the same units performing the same functions; and (2) incumbents are replaced by
less qualified personnel.
Petitioners failed to prove such facts. Mere allegations without hard evidence cannot be considered
as clear and convincing proof.
Next, petitioners state that the NEA Board should not have abolished all the offices of NEA and
instead made a selective termination of its employees while retaining the other employees.
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 employees that were
tasked to carry out the continuing mandate of NEA. Petitioners argue in their Memorandum dated
July 27, 2010:
A valid reorganization, pursued in good faith, would have resulted to: (1) the abolition of old
positions in the NEA’s table of organization that pertain to the granting of franchises and rate fixing
functions as these were all abolished by Congress (2) the creation of new positions that pertain to
the additional mandates of the EPIRA Law and (3) maintaining the old positions that were not
affected by the EPIRA Law.
The Court already had the occasion to pass upon the validity of the similar reorganization in the
NPC. In the aforecited case of Betoy,7 the Court upheld the policy of the Executive to terminate all
the employees of the office before rehiring those necessary for its operation. We ruled in Betoy that
such policy is not tainted with bad faith:
It is undisputed that NPC was in financial distress and the solution found by Congress was to pursue
a policy towards its privatization. The privatization of NPC necessarily demanded the restructuring
of its operations. To carry out the purpose, there was a need to terminate employees and re-hire
some depending on the manpower requirements of the privatized companies. The privatization and
restructuring of the NPC was, therefore, done in good faith as its primary purpose was for economy
and to make the bureaucracy more efficient. (Emphasis supplied.)
Evidently, the fact that the NEA Board resorted to terminating all the incumbent employees of NPC
and, later on, rehiring some of them, cannot, on that ground alone, vitiate the bona fides of the
reorganization.
WHEREFORE, the instant petition is hereby DISMISSED. Resolution Nos. 46 and 59, dated July 10,
2003 and September 3, 2003, respectively, issued by the NEA Board of Directors are hereby UPHELD.
No costs.
SO ORDERED.
(17) CIVPRO – PRINCIPLE OF JUDICIAL HIERARCHY
G.R. No. 194994 April 16, 2013
EMMANUEL A. DE CASTRO, Petitioner,
vs.
EMERSON S. CARLOS, Respondent.
DECISION
SERENO, CJ.:
Before us is a Petition for the issuance of a writ of quo warranto under Rule 66 filed by Emmanuel
A. de Castro (petitioner) seeking to oust respondent Emerson S. Carlos (respondent) from the
position of assistant general manager for operations (AGMO) of the Metropolitan Manila
Development Authority (MMDA).
On 29 July 2009, then President Gloria Macapagal Arroyo appointed petitioner as AGM0. 1 His
appointment was concurred in by the members of the Metro Manila Council in MMDA Resolution
No. 09-10, Series of 2009.2 He took his oath on 17 August 2009 before then Chairperson Bayani F.
Fernando.3
Meanwhile, on 29 July 2010, Executive Secretary Paquito Ochoa issued Office of the President (OP)
Memorandum Circular No. 2, Series of 2010, amending OP Memorandum Circular No. 1, Series of
2010.
OP Memorandum Circular No. 2 states:
2. All non-Career Executive Service Officials (non-CESO) occupying Career Executive Service (CES)
positions in all agencies of the executive branch shall remain in office and continue to perform their
duties and discharge their responsibility until October 31, 2010 or until their resignations have been
accepted and/or until their respective replacements have been appointed or designated, whichever
comes first, unless they are reappointed in the meantime.4
On 30 July 2010, Atty. Francis N. Tolentino, chairperson of the MMDA, issued Office Order No. 106,5
designating Corazon B. Cruz as officer-in-charge (OIC) of the Office of the AGMO. Petitioner was
then reassigned to the Legal and Legislative Affairs Office, Office of the General Manager. The
service vehicle and the office space previously assigned to him were withdrawn and assigned to
other employees.
Subsequently, on 2 November 2010, Chairperson Tolentino designated respondent as OIC of the
Office of the AGMO by virtue of Memorandum Order No. 24,6 which in turn cited OP Memorandum
Circular No. 2 as basis. Thereafter, the name of petitioner was stricken off the MMDA payroll, and
he was no longer paid his salary beginning November 2010.
Petitioner sought a clarification7 from the Career Executive Service Board (CESB) as to the proper
classification of the position of AGMO. In her reply,8 Executive Director Maria Anthonette Allones
(Executive Director Allones), CESO I, stated that the position of AGMO had not yet been classified
and could not be considered as belonging to the Career Executive Service (CES). She further stated
that a perusal of the appointment papers of petitioner showed that he was not holding a
coterminous position. In sum, she said, he was not covered by OP Memorandum Circular Nos. 1 and
2.
Petitioner was later offered the position of Director IV of MMDA Public Health and Safety Services
and/or MMDA consultant. He turned down the offer, claiming that it was a demotion in rank.
Demanding payment of his salary and reinstatement in the monthly payroll,9 petitioner sent a letter
on 5 December 2010 to Edenison Faisan, assistant general manager (AGM) for Finance and
Administration; and Lydia Domingo, Director III, Administrative Services. For his failure to obtain an
action or a response from MMDA, he then made a formal demand for his reinstatement as AGMO
through a letter addressed to the Office of the President on 17 December 2010.10
However, on 4 January 2011, President Benigno S. Aquino III (President Aquino) appointed
respondent as the new AGMO of the MMDA.11 On 10 January 2011, the latter took his oath of office.
Hence, the instant Petition.
The Office of the Solicitor General (OSG), representing respondent, filed its Comment on 19 August
2011.12 However, upon motion of petitioner, it was disqualified from representing respondent.
Thus, a private law firm13 entered an appearance as counsel for respondent and adopted the
Comment filed by the OSG.14
Petitioner filed his Reply on 17 November 2011.
ISSUES
Petitioner raises the following issues15 for the consideration of this Court:
(1) Whether respondent Emerson S. Carlos was validly appointed by President Aquino to the
position of AGMO of the MMDA;
(2) Whether petitioner Emmanuel A. de Castro is entitled to the position of AGMO; and
(3) Whether or not respondent should pay petitioner the salaries and financial benefits he received
during his illegal tenure as AGMO of the MMDA.
THE COURT’S RULING
Petitioner contends that Section 2(3), Article IX(B) of the 1987 Constitution guarantees the security
of tenure of employees in the civil service. He further argues that his appointment as AGMO is not
covered by OP Memorandum Circular No. 2, since it is not a CES position as determined by the CESB.
On the other hand, respondent posits that the AGMO position belongs to the CES; thus, in order to
have security of tenure, petitioner, must be a Career Executive Service official (CESO). Respondent
maintains that the function of an AGM is executive and managerial in nature. Thus, considering that
petitioner is a non-CESO occupying a CES position, he is covered by OP Memorandum Circular Nos.
1 and 2. Respondent likewise raises the issue of procedural infirmity in the direct recourse to the
Supreme Court by petitioner, who thereby failed to adhere to the doctrine of hierarchy of courts.
Hierarchy of Courts
As to the procedural issue, petitioner submits that a direct recourse to this Court is warranted by
the urgent demands of public interest, particularly the veritable need for stability in the civil service
and the protection of the rights of civil servants. Moreover, considering that no other than the
President of the Philippines is the appointing authority, petitioner doubts if a trial court judge or an
appellate court justice, with a prospect of promotion in the judiciary would be willing to go against
a presidential appointment.
Although Section 5(1) of Article VIII of the 1987 Constitution explicitly provides that the Supreme
Court has original jurisdiction over petitions for certiorari, prohibition, mandamus, quo warranto,
and habeas corpus, the jurisdiction of this Court is not exclusive but is concurrent with that of the
Court of Appeals and regional trial court and does not give petitioner unrestricted freedom of choice
of court forum.16 The hierarchy of courts must be strictly observed.
Settled is the rule that "the Supreme Court is a court of last resort and must so remain if it is to
satisfactorily perform the functions assigned to it by the fundamental charter and immemorial
tradition."17 A disregard of the doctrine of hierarchy of courts warrants, as a rule, the outright
dismissal of a petition.18
A direct invocation of this Court’s jurisdiction is allowed only when there are special and important
reasons that are clearly and specifically set forth in a petition.19 The rationale behind this policy
arises from the necessity of preventing (1) inordinate demands upon the time and attention of the
Court, which is better devoted to those matters within its exclusive jurisdiction; and (2) further
overcrowding of the Court’s docket.20
In this case, petitioner justified his act of directly filing with this Court only when he filed his Reply
and after respondent had already raised the procedural infirmity that may cause the outright
dismissal of the present Petition. Petitioner likewise cites stability in the civil service and protection
of the rights of civil servants as rationale for disregarding the hierarchy of courts.
Petitioner’s excuses are not special and important circumstances that would allow a direct recourse
to this Court. More so, mere speculation and doubt to the exercise of judicial discretion of the lower
courts are not and cannot be valid justifications to hurdle the hierarchy of courts. Thus, the Petition
must be dismissed.
Nature of the AGMO Position
Even assuming that petitioner’s direct resort to this Court is permissible, the Petition must still be
dismissed for lack of merit.
"A petition for quo warranto is a proceeding to determine the right of a person to use or exercise a
franchise or an office and to oust the holder from the enjoyment, thereof, if the claim is not well-
founded, or if his right to enjoy the privilege has been forfeited." 21 Where the action is filed by a
private person, in his own name, he must prove that he is entitled to the controverted position,
otherwise, respondent has a right to the undisturbed possession of the office.22
The controversy arose from the issuance of OP Memorandum Circular Nos. 1 and 2, which applies
to all non-CESO’s occupying CES positions in all agencies of the executive branch. Petitioner, being
a non-CESO, avers that he is not covered by these OP memoranda considering that the AGMO of
the MMDA is a non-CES position.
In order to settle the controversy, there is a need to determine the nature of the contentious
position of AGMO of the MMDA.
Career vs. non-career
Section 4 of Republic Act No. (R.A.) 7924,23 otherwise known as the MMDA Charter, specifically
created the position of AGMO. It reads as follows:
Sec. 4 Metro Manila Council. x x x.
xxxx
The Council shall be headed by a Chairman, who shall be appointed by the President and who shall
continue to hold office at the discretion of the appointing authority. He shall be vested with the
rank, rights, privileges, disqualifications, and prohibitions of a Cabinet member.
The Chairman shall be assisted by a General Manager, an Assistant General Manager for Finance
and Administration, an Assistant General Manager for Planning and an Assistant General Manager
for Operations, all of whom shall be appointed by the President with the consent and concurrence
of the majority of the Council, subject to civil service laws and regulations. They shall enjoy security
of tenure and may be removed for cause in accordance with law. (Emphasis supplied)
Executive Order No. (E.O.) 292, otherwise known as The Revised Administrative Code of 1987,
provides for two classifications of positions in the civil service: career and non-career.24
Career service is characterized by the existence of security of tenure,25 as contradistinguished from
non-career service whose tenure is coterminous with that of the appointing authority; or subject to
the latter’s pleasure; or limited to a period specified by law or to the duration of a particular project
for which purpose the appointment was made.26
Applying the foregoing distinction to the instant case, this Court finds that an AGMO holds a career
position, considering that the MMDA Charter specifically provides that AGMs enjoy security of
tenure – the core characteristic of a career service, as distinguished from a non-career service
position.
CES vs. non-CES
Career service includes the following:
(1) Open Career positions for appointment to which prior qualification in an appropriate
examination is required;
(2) Closed Career positions which are scientific, or highly technical in nature; these include the
faculty and academic staff of state colleges and universities, and scientific and technical positions in
scientific or research institutions which shall establish and maintain their own merit systems;
(3) Positions in the Career Executive Service; namely, Undersecretary, Assistant Secretary, Bureau
Director, Assistant Bureau Director, Regional Director, Assistant Regional Director, Chief of
Department Service and other officers of equivalent rank as may be identified by the Career
Executive Service Board, all of whom are appointed by the President;
(4) Career officers, other than those in the Career Executive Service, who are appointed by the
President, such as the Foreign Service Officers in the Department of Foreign Affairs;
(5) Commissioned officers and enlisted men of the Armed Forces which shall maintain a separate
merit system;
(6) Personnel of government-owned or controlled corporations, whether performing governmental
or proprietary functions, who do not fall under the non-career service; and
(7) Permanent laborers, whether skilled, semi-skilled, or unskilled.27 (Emphasis supplied)
In Civil Service Commission v. Court of Appeals and PCSO,28 the Court clarified the positions covered
by the CES:
Thus, from the long line of cases cited above, in order for a position to be covered by the CES, two
elements must concur. First, the position must either be (1) a position enumerated under Book V,
Title I, Subsection A, Chapter 2, Section 7(3) of the Administrative Code of 1987, i.e., Undersecretary,
Assistant Secretary, Bureau Director, Assistant Bureau Director, Regional Director, Assistant
Regional Director, Chief of Department Service, or (2) a position of equal rank as those enumerated,
and identified by the Career Executive Service Board to be such position of equal rank. Second, the
holder of the position must be a presidential appointee. Failing in any of these requirements, a
position cannot be considered as one covered by the third-level or CES. (Emphasis supplied)
In sum, there are two elements required for a position to be considered as CES:
1) The position is among those enumerated under Book V, Title I, Subtitle A, Chapter 2, Section 7(3)
of the Administrative Code of 1987 OR a position of equal rank as those enumerated and identified
by the CESB to be such position of equal rank; AND
2) The holder of the position is a presidential appointee. Records show that in reply 29 to Chairperson
Tolentino’s query on whether the positions of general manager and AGM of the MMDA are covered
by the CES,30 the CESB – thru Executive Director Allones – categorically stated that these positions
are not among those covered by the CES.
Upon petitioner’s separate inquiry on the matter,31 the CESB similarly responded that the AGMO’s
position could not be considered as belonging to the CES.32 Additionally, Executive Director Allones
said that petitioner was not covered by OP Memorandum Circular Nos. 1 and 2, to wit:
A cursory perusal of your appointment papers would show that it does not bear any indication that
you are holding a coterminous appointment. Neither your position as AGMO can be considered as
created in excess of the authorized staffing pattern since RA 7924, the law that created the MMDA
clearly provided for such position. As further stated above, your position will not fall under
paragraph No. 2 of OP MC 1 because it is not yet considered as belonging to the CES. Hence, we
posit that you are not covered by OP MC 1 and 2.33
However, contrary to Executive Director Allones’ statement, the CESB, through Resolution No. 799
already declared certain positions meeting the criteria set therein as embraced within the CES.
It is worthy of note that CESB Resolution No. 799 was issued on 19 May 2009, even prior to
petitioner’s appointment on 29 July 2009. Moreover, as early as 31 May 1994, the above
classification was already embodied in CSC Resolution No. 34-2925, circularized in CSC
Memorandum Circular 21, Series of 1994.
Resolution No. 799 classified the following positions as falling within the coverage of the CES:
a. The Career Executive Service includes the positions of Undersecretary, Assistant Secretary,
Bureau director, Assistant Bureau Director, regional Director (department-wide and bureau-wide),
Assistant Regional Director (department-wide and bureau-wide), and Chief of Department Service;
b. Unless provided otherwise, all other managerial or executive positions in the government,
including government-owned or controlled corporations with original charters are embraced within
the CES provided that they meet the following criteria:
i.) The position is a career position;
ii.) The position is above division chief level; and,
iii.) The duties and responsibilities of the position require performance of executive and managerial
functions.
Without a doubt, the AGMO position is not one of those enumerated in the above-cited
paragraph(a) but it clearly falls under paragraph(b) considering that it belongs to a government-
owned and controlled corporation with an original charter. The nature of AGMO is clear from the
provisions of the MMDA Charter.
First, we have already determined that an AGMO is a career position that enjoys security of tenure
by virtue of the MMDA Charter.
Second, it is undisputed that the position of AGMO is above the division chief level, which is
equivalent to the rank of assistant secretary with Salary Grade 29.34
Third, a perusal of the MMDA Charter readily reveals that the duties and responsibilities of the
position require the performance of executive and managerial functions.
Section 12.4, Rule IV of the Rules and Regulations Implementing R.A. 7924 provides the powers,
functions, duties and responsibilities of an AGMO, as follows:
12.4 Assistant General Manager for Operations
The Assistant General Manager for Operations shall perform the following functions:
a. Establish a mechanism for coordinating and operationalizing the delivery of metro-wide basic
services;
b. Maintain a monitoring system for the effective evaluation of the implementation of approved
policies, plans and programs for the development of Metropolitan Manila;
c. Mobilize the participation of local government units, executive departments or agencies of the
national government, and the private sector in the delivery of metro-wide services; and
d. Operate a central radio communication system.
He shall perform such other duties as are incidental or related to the above functions or as may be
assigned from time to time.
An AGMO performs functions that are managerial in character; exercises management over people,
resource, and/or policy; and assumes functions like planning, organizing, directing, coordinating,
controlling, and overseeing the activities of MMDA. The position requires the application of
managerial or supervisory skills necessary to carry out duties and responsibilities involving
functional guidance, leadership, and supervision.
For the foregoing reasons, the position of AGMO is within the coverage of the CES.
In relation thereto, positions in the career service, for which appointments require examinations,
are grouped into three major levels:35
Sec. 8. Classes of positions in the Career Service. — (1) Classes of positions in the career service
appointment to which requires examinations shall be grouped into three major levels as follows:
(a) The first level shall include clerical, trades, crafts and custodial service positions which involve
non-professional or sub-professional work in a non-supervisory or supervisory capacity requiring
less than four years of collegiate studies;
(b) The second level shall include professional, technical, and scientific positions which involve
professional, technical or scientific work in a non-supervisory or supervisory capacity requiring at
least four years of college work up to Division Chief levels; and
(c) The third level shall cover positions in the Career Executive Service. (Emphasis supplied)
Entrance to different levels requires corresponding civil service eligibilities.36 Those at the third level
(CES positions) require career service executive eligibility (CSEE) as a requirement for permanent
appointment.37
Evidently, an AGMO should possess all the qualifications required by third-level career service
within the CES. In this case, petitioner does not have the required eligibility. Therefore, we find that
his appointment to the position of AGMO was merely temporary.
Amores v. Civil Service Commission38 is instructive as to the nature of temporary appointments in
the CES. The Court held therein that an appointee cannot hold a position in a permanent capacity
without the required CES eligibility:
We begin with the precept, firmly established by law and jurisprudence that a permanent
appointment in the civil service is issued to a person who has met the requirements of the position
to which the appointment is made in accordance with law and the rules issued pursuant thereto.
An appointment is permanent where the appointee meets all the requirements for the position to
which he is being appointed, including the appropriate eligibility prescribed, and it is temporary
where the appointee meets all the requirements for the position except only the appropriate civil
service eligibility.
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With particular reference to positions in the career executive service (CES), the requisite civil service
eligibility is acquired upon passing the CES examinations administered by the CES Board and the
subsequent conferment of such eligibility upon passing the examinations. Once a person acquires
eligibility, he either earns the status of a permanent appointee to the CES position to which he has
previously been appointed, or he becomes qualified for a permanent appointment to that position
provided only that he also possesses all the other qualifications for the position. Verily, it is clear
that the possession of the required CES eligibility is that which will make an appointment in the
career executive service a permanent one. Petitioner does not possess such eligibility, however, it
cannot be said that his appointment to the position was permanent.
Indeed, the law permits, on many occasions, the appointment of non-CES eligibles to CES positions
in the government in the absence of appropriate eligibles and when there is necessity in the interest
of public service to fill vacancies in the government. But in all such cases, the appointment is at best
merely temporary as it is said to be conditioned on the subsequent obtention of the required CES
eligibility. This rule, according to De Leon v. Court of Appeals, Dimayuga v. Benedicto, Caringal v.
Philippine Charity Sweepstakes Office, and Achacoso v. Macaraig, is invariable even though the
given appointment may have been designated as permanent by the appointing authority.
xxxx
Security of tenure in the career executive service, which presupposes a permanent appointment,
takes place upon passing the CES examinations administered by the CES Board x x x.
Petitioner undisputedly lacked CES eligibility. Thus, he did not hold the position of AGMO in a
permanent capacity or acquire security of tenure in that position. Otherwise stated, his
appointment was temporary and "co-terminus with the appointing authority."39 In Carillo v. CA,40
this Court ruled that "one who holds a temporary appointment has no fixed tenure of office; his
employment can be terminated at the pleasure of the appointing power, there being no need to
show that the termination is for cause." Therefore, we find no violation of security of tenure when
petitioner was replaced by respondent upon the latter’s appointment to the position of AGMO by
President Aquino.
Even granting for the sake of argument that the position of AGMO is yet to be classified by the CESB,
petitioner’s appointment is still deemed coterminous pursuant to CESB Resolution No. 945 issued
on 14 June 2011, which reads:
WHEREAS, on November 23, 2010, the Supreme Court in the case of PCSO v. CSC, G.R. NO. 185766
and G.R. No. 185767 limited the coverage of positions belonging to the CES to positions requiring
Presidential appointments.
WHEREAS, in the same vein, CES positions have now become synonymous to third level positions
by virtue of the said ruling.
WHEREFORE, foregoing premises considered, the Board RESOLVES, as it is hereby RESOLVED, to
issue the following guidelines to clarify the policy on the coverage of CES and its classification:
1. For career service positions requiring Presidential appointments expressly enumerated under
Section 7(3), Chapter 2, Subtitle A, Title 1, Book V of the Administrative Code of 1987 namely:
Undersecretary, Assistant Secretary, Bureau Director, Assistant Bureau Director, Regional Director,
Assistant Regional Director, and Chief of Department Service, no classification of position is
necessary to place them under the coverage of the CES, except if they belong to Project Offices, in
which case a position classification is required, in consultation with the Department of Budget and
Management (DBM).
2. For positions requiring Presidential appointments other than those enumerated above, a
classification of positions is necessary which shall be conducted by the Board, upon request of the
head of office of the government department/agency concerned, to place them under the coverage
of the CES provided they comply with the following criteria:
i.) The position is a career position;
ii.) The position is above division chief level; and,
iii.)The duties and responsibilities of the position require the performance of executive and
managerial functions.
All appointments to positions which have not been previously classified as part of the CES would be
deemed co-terminus with the appointing authority. (Emphasis supplied)
Therefore, considering that petitioner is an appointee of then President Arroyo whose term ended
on 30 June 2010, petitioner’s term of office was also deemed terminated upon the assumption of
President Aquino.
Likewise, it is inconsequential that petitioner was allegedly replaced by another non-CESO eligible.
In a quo warranto proceeding, the person suing must show that he has a clear right to the office
allegedly held unlawfully by another. Absent a showing of that right, the lack of qualification or
eligibility of the supposed usurper is immaterial.41
All the foregoing considered, the petition merits an outright dismissal for disregarding the hierarchy
of courts and petitioner’s lack of cause of action against respondent for failure to sufficiently show
that he has undisturbed rights to the position of AGMO of the MMDA.
WHEREFORE, premises considered, the Petition is DENIED.
SO ORDERED.